As filed with the Securities and Exchange Commission on November 21, 1997
File Nos. 33-1922
811-4506
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933
[X]
Post-Effective Amendment No. 27
[X]
and
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940
[X]
Amendment No. 30
[X]
-------------
THE PHOENIX-ENGEMANN FUNDS
(formerly called Pasadena Investment Trust)
(Exact Name of Registrant as Specified in Charter)
-------------
600 North Rosemead Boulevard, Pasadena, California 91107-2133
(Address of Principal Executive Office)
(626) 351-9686
(Registrant's Telephone Number, Including Area Code)
ROGER ENGEMANN
600 North Rosemead Boulevard, Pasadena, California 91107-2138
(Name and Address of Agent for Service)
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It is proposed that this filing will become effective:
[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485,
or
[ ] on September 30, 1997 pursuant to paragraph (b) of Rule 485, or
[X] 60 days after filing pursuant to paragraph (a)(1) of Rule 485,
or
[ ] on pursuant to paragraph (a)(1) of Rule 485, or
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485,
or
[ ] on pursuant to paragraph (a)(2) of Rule 485.
-------------
Please Send Copy of Communications to:
Thomas N. Steenburg
Vice President, Counsel and Secretary
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, CT 06115
(860) 403-5261
================================================================================
<PAGE>
THE PHOENIX-ENGEMANN FUNDS
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
CONTENTS OF POST-EFFECTIVE AMENDMENT
This Post-Effective Amendment to the Registration Statement of The
Phoenix-Engemann Funds contains the following documents:
Facing Sheet
Contents of Post-Effective Amendment
Cross-Reference Sheet for the above-referenced Funds
Part A: Prospectus for the above-referenced Funds
Part B: Statement of Additional Information for the above-referenced
Funds
Part C: Other Information
Signature Page
Exhibit Index
<PAGE>
THE PHOENIX-ENGEMANN FUNDS
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-1A
N-1A Location in
Item No. Item Registration Statement
- ---------- ----------------------------------------------------- ---------------------------------------------------
<S> <C> <C>
Part A:
Information Required in Prospectus
1. Cover Page Cover Page
2. Synopsis "Introduction" and "Fund Expenses"
3. Condensed Financial Information "Financial Highlights"
4. General Description of Registrant "Introduction," "Investment Objectives and
Policies," and "Additional Information"
5. Management of the Fund "Management of the Funds"
5A. Management's Discussion of Fund Performance "Performance Information"
1. Capital Stock and Other Securities "Introduction," "How to Buy Shares," "Dividends,
Distributions, and Taxes" and "Additional
Information"
2. Purchase of Securities Being Offered "Synopsis," "How to Buy Shares," "Investor
Account Services" and "Net Asset Value"
3. Redemption or Repurchase "Introduction," "How to Redeem Shares"
4. Pending Legal Proceedings Not Applicable
Part B:
Information Required in Statement of Additional Information
1. Cover Page Cover Page
2. Table of Contents Table of Contents
3. General Information and History "The Trust"
4. Investment Objectives and Policies "Investment Objectives and Policies," "Investment
Restrictions" and "Investment Techniques"
5. Management of the Fund "Services of the Adviser," "Trustees and Officers"
and "Other Information"
6. Control Persons and Principal Holders of Securities "Other Information"
7. Investment Advisory and Other Services "Services of the Adviser," "The Distributor" and
"Plans of Distribution"
8. Brokerage Allocation and Other Practices "Portfolio Transactions and Brokerage"
9. Capital Stock and Other Securities "Net Asset Value," "How to Buy Shares" and
"Alternative Purchase Arrangements"
10. Purchase, Redemption and Pricing of Securities "Net Asset Value," "How to Buy Shares,"
Being Offered "Alternative Purchase Arrangements" and
"Redemption of Shares"
11. Tax Status "Dividends, Distributions and Taxes"
12. Underwriters "The Distributor" and "Plans of Distribution"
13. Calculation of Performance Data "Performance Information"
14. Financial Statements "Financial Statements"
</TABLE>
<PAGE>
PHOENIX
ENGEMANN
Prospectus [arrow] DECEMBER XX, 1997
[arrow] PHOENIX-ENGEMANN
GROWTH FUND
[arrow] PHOENIX-ENGEMANN
NIFTY FIFTY FUND
[arrow] PHOENIX-ENGEMANN
BALANCED RETURN FUND
[arrow] PHOENIX-ENGEMANN
GLOBAL GROWTH FUND
[arrow] PHOENIX-ENGEMANN
SMALL & MID-CAP GROWTH FUND
[arrow] PHOENIX-ENGEMANN
VALUE 25 FUND
[Phoenix Duff & Phelps logo]
<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
PROSPECTUS
January 20, 1998
Phoenix-Engemann Growth Fund (the "Growth Fund" or "Fund") seeks to
achieve long-term capital appreciation by emphasizing investments in companies
with rapidly growing earnings per share, some of which may be smaller emerging
growth companies.
Phoenix-Engemann Nifty Fifty Fund (the "Nifty Fifty Fund" or "Fund") seeks
to achieve long-term capital appreciation by investing in approximately 50
different securities which its Adviser believes offer the best potential for
long-term growth of capital.
Phoenix-Engemann Balanced Return Fund (the "Balanced Return Fund" or
"Fund") seeks to maximize a total investment return consistent with reasonable
risk through a balanced approach using moderate asset allocation by its
Adviser.
Phoenix-Engemann Global Growth Fund (the "Global Growth Fund" or "Fund")
seeks to achieve long-term growth of capital by investing in a globally
diversified portfolio of equity securities, which may be traded in securities
markets in foreign countries and the United States.
Phoenix-Engemann Small & Mid-Cap Growth Fund (the "Small & Mid-Cap Growth
Fund" or "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.
Phoenix-Engemann Value 25 Fund (the "Value 25 Fund" or "Fund") seeks to
achieve substantial 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.
The Phoenix-Engemann Funds (the "Trust") is an open-end management investment
company whose shares are offered in six series (each a "Fund" and collectively
the "Funds"). Each Fund represents an investment in a separate diversified fund
with its own investment objectives and policies designed to meet its specific
investment goals. There can be no assurance that any Fund will achieve its
objective.
This Prospectus sets forth concisely the information about the Funds that
a prospective investor should know before investing. No dealer, salesperson or
any other person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given or
made, such information or representations must not be relied upon as having
been authorized by the Funds, Adviser or Distributor. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state in which, or to any person to whom, it
is unlawful to make such offer. Neither the delivery of this Prospectus nor any
sale hereunder shall, under any circumstances, create any implication that
information herein is correct at any time subsequent to its date. Investors
should read and retain this Prospectus for future reference. Additional
information about the Funds and the Trust is contained in the Statement of
Additional Information, dated January 20, 1998, which has been filed with the
Securities and Exchange Commission (the "Commission") and is available upon
request at no charge by calling (800) 243-4361 or by writing to Phoenix Equity
Planning Corporation at 100 Bright Meadow Boulevard, P.O. Box 2200, Enfield,
Connecticut 06083-2200. The Statement of Additional Information is incorporated
herein by reference. The Commission maintains a Web site (http://www.sec.gov)
that contains this Prospectus, the Statement of Additional Information,
material incorporated by reference, and other information regarding registrants
that file electronically with the Commission.
Shares of the Funds are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union, or affiliated entity, and are not
federally insured or otherwise protected by the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board, or any other agency, and involve
investment risk, including possible loss of principal.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY) (800) 243-1926
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
INTRODUCTION ........................... 3
FUND EXPENSES .......................... 4
PERFORMANCE INFORMATION ................ 10
FINANCIAL HIGHLIGHTS ................... 11
INVESTMENT OBJECTIVES AND POLICIES ..... 18
INVESTMENT RESTRICTIONS ................ 23
PORTFOLIO TURNOVER ..................... 24
MANAGEMENT OF THE FUNDS ................ 24
DISTRIBUTION PLANS ..................... 25
HOW TO BUY SHARES ...................... 27
INVESTOR ACCOUNT SERVICES .............. 30
NET ASSET VALUE ........................ 32
HOW TO REDEEM SHARES ................... 32
DIVIDENDS, DISTRIBUTIONS AND TAXES ..... 33
ADDITIONAL INFORMATION ................. 34
</TABLE>
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and the operations of The
Phoenix-Engemann Funds (the "Trust"). The Trust is a diversified, open-end
management investment company established as a Massachusetts business trust.
Shares of the Trust are divided into six series, each a "Fund" and collectively
the "Funds." Each Fund has a different investment objective, and is designed to
meet different investment needs.
The Investment Adviser
Roger Engemann & Associates, Inc. ("REA" or the "Adviser") serves as
investment adviser to the Funds. The Adviser is a subsidiary of Phoenix Duff &
Phelps Corporation. See "Management of the Fund" for a description of the
Investment Management Agreements and management fees.
Distributor and Distribution Plans
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
serves as national distributor of the Funds' shares. See "Distribution Plans"
and the Statement of Additional Information. Equity Planning also acts as
Administrator of the Funds and as such receives a fee. See "The Administrator."
Equity Planning also serves as the Funds' transfer agent. See "The Custodian
and Transfer Agent."
The Funds have adopted distribution plans pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act") for Classes B, C
and M of all Funds. Pursuant to the distribution plan adopted for Class B
Shares, Class C Shares and Class M Shares, the Funds shall reimburse the
Distributor up to a maximum annual rate of 0.75%, 0.75% and 0.25%,
respectively, of the average daily net assets of each Fund for distribution
expenditures incurred in connection with the sale and promotion of each Class
of Shares of each Fund. See "Distribution Plans." The Funds also will pay
dealers and others, including the Distributor, a continuing service fee equal
to 0.25% per annum of the average net asset value of the Funds' shares held by
such persons in order to compensate them for providing certain services to
their clients, including processing redemption transactions and providing
account maintenance and certain information and assistance with respect to the
Funds, and responding to shareholder inquiries.
Purchase of Shares
Each Fund currently offers four classes of shares which may be purchased
at a price equal to their net asset value per share, plus a sales charge which,
at the election of the purchaser, may be imposed (i) at the time of the
purchase ("Class A Shares" and "Class M Shares") or (ii) on a contingent
deferred basis ("Class B Shares" and "Class C Shares").
Class A and M Shares are offered to the public at the next determined net
asset value after receipt of the order by State Street Bank and Trust Company
("State Street Bank") plus a sales charge. The maximum initial sales charge is
4.75% and 3.50%, respectively, of the offering price on single purchases of
less than $50,000. The sales charges are reduced on a graduated scale on single
purchases of $50,000 or more.
Class B and C Shares are offered to the public at the next determined net
asset value after receipt of an order by State Street Bank with no sales
charge. Class B Shares are subject to a sales charge if they are redeemed
within five years of purchase. Class C Shares redeemed within one year of
purchase are subject to a 1% sales charge.
Shares of each Class represent an identical interest in the investment
portfolio of a Fund and have the same rights. For more information on fees and
charges applicable for each Fund and Class, refer to "Fund Expenses" and "How
to Buy Shares."
Completed applications for the purchase of shares should be mailed to The
Phoenix-Engemann Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301. See "How to Buy Shares."
Minimum Initial and Subsequent Investments
The minimum initial investment is $500 ($25 if using the bank draft
investment program designated "Investo-Matic") and the minimum subsequent
investment is $25. Exceptions to the minimum and subsequent investment amounts
are available under certain circumstances. See "How to Buy Shares."
Redemption of Shares
Class A and M Shares of a Fund may be redeemed at any time at the net
asset value per share next computed after receipt of a redemption request by
State Street Bank. Class B and C shareholders redeeming shares within certain
time periods of the date of purchase will normally be assessed a contingent
deferred sales charge. See "How to Redeem Shares."
Risk Factors
There can be no assurances that a Fund will achieve its investment
objectives. As a result of each Fund's substantial investment in the stock
market, the net asset value of a Fund's shares will fluctuate significantly in
response to changes in market and economic conditions, as well as the financial
condition and prospects of issuers in which each Fund invests.
See "Investment Objectives and Policies" and "Investment Techniques and
Related Risks" for more information on relevant risks.
3
<PAGE>
FUND EXPENSES
The following table illustrates all pro forma fees and expenses a
shareholder is expected to incur.
<TABLE>
<CAPTION>
Growth Fund
-------------
Class A
Shares
<S> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.75%
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested None
Dividends
Deferred Sales Load (as a percentage of original None
purchase price or redemption proceeds, as
applicable)
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses(b)
(as a percentage of average net assets)
Management Fees 0.81%
12b-1 Fees and Servicing Fees(d) 0.25%
Other Expenses 0.53%
----
Total Fund Operating Expenses 1.59%
====
<CAPTION>
Growth Fund
---------------------------------------------------------------------
Class B Class C Class M
Shares Shares Shares
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None None 3.50%
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested None None None
Dividends
Deferred Sales Load (as a percentage of original 5% during the first year, 1% during the None
purchase price or redemption proceeds, as decreasing 1% annually to first year (c)
applicable) 2% during the fourth and
fifth years; decreasing to 0%
after the fifth year (a)
Redemption Fee None None None
Exchange Fee None None None
Annual Fund Operating Expenses(b)
(as a percentage of average net assets)
Management Fees 0.81% 0.81% 0.81%
12b-1 Fees and Servicing Fees(d) 1.00% 1.00% 0.50%
Other Expenses 0.53% 0.53% 0.53%
---- ---- ----
Total Fund Operating Expenses 2.34% 2.34% 1.84%
==== ==== ====
</TABLE>
Examples:
An investor would bear the following transaction and operating expenses in
each Class of the Growth Fund over different time periods, assuming a $1,000
investment, a 5% annual return, and redemption at the end of each time period:
<TABLE>
<CAPTION>
Class A Class B Class C Class M
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 year $ 63 $ 64 $ 34 $ 53
3 years 95 93 73 91
5 years 130 125 125 131
10 years 227 249(e) 268 243
</TABLE>
An investor would bear the following transaction and operating expenses on
the same $1,000 investment, assuming no redemption at the end of each time
period:
<TABLE>
<CAPTION>
Class A Class B Class C Class M
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 year $ 63 $ 24 $ 24 $ 53
3 years 95 73 73 91
5 years 130 125 125 131
10 years 227 249(e) 268 243
</TABLE>
- -----------
(a) Class B Shares purchased prior to January 20, 1998 are subject to the sales
load schedule as it existed prior to that date. See "How to Buy
Shares--Class B Shares Purchased Prior to January 20, 1998."
(b) Operating expense information for the Fund has been restated to reflect
current fees.
(c) Class C Shares purchased prior to January 20, 1998 are not subject to the
1% deferred sales load.
(d) "12b-1 Fees" represent an asset based sales charge that, for a long term
shareholder, may be higher than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. ("NASD").
(e) Ten-year figure assumes conversion of Class B shares to Class A shares
eight years following the date of purchase.
4
<PAGE>
<TABLE>
<CAPTION>
Balanced Return Fund
--------------------
Class A
Shares
<S> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.75%
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested None
Dividends
Deferred Sales Load (as a percentage of original None
purchase price or redemption proceeds, as
applicable)
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses(b)
(as a percentage of average net assets)
Management Fees 0.79%
12b-1 Fees and Servicing Fees(d) 0.25%
Other Expenses 0.61%
----
Total Fund Operating Expenses 1.65%
====
<CAPTION>
Balanced Return Fund
---------------------------------------------------------------------
Class B Class C Class M
Shares Shares Shares
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None None 3.50%
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested None None None
Dividends
Deferred Sales Load (as a percentage of original 5% during the first year, 1% during the None
purchase price or redemption proceeds, as decreasing 1% annually to first year (c)
applicable) 2% during the fourth and
fifth years; decreasing to 0%
after the fifth year (a)
Redemption Fee None None None
Exchange Fee None None None
Annual Fund Operating Expenses(b)
(as a percentage of average net assets)
Management Fees 0.79% 0.79% 0.79%
12b-1 Fees and Servicing Fees(d) 1.00% 1.00% 0.50%
Other Expenses 0.61% 0.61% 0.61%
---- ---- ----
Total Fund Operating Expenses 2.40% 2.40% 1.90%
==== ==== ====
</TABLE>
Examples:
An investor would bear the following transaction and operating expenses in
each Class of the Balanced Return Fund over different time periods, assuming a
$1,000 investment, a 5% annual return, and redemption at the end of each time
period:
<TABLE>
<CAPTION>
Class A Class B Class C Class M
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 year $ 63 $ 64 $ 34 $ 54
3 years 97 95 75 93
5 years 133 128 128 134
10 years 234 255(e) 274 249
</TABLE>
An investor would bear the following transaction and operating expenses on
the same $1,000 investment, assuming no redemption at the end of each time
period:
<TABLE>
<CAPTION>
Class A Class B Class C Class M
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 year $ 63 $ 24 $ 24 $ 54
3 years 97 75 75 93
5 years 133 128 128 134
10 years 234 255(e) 274 249
</TABLE>
- -----------
(a) Class B Shares purchased prior to January 20, 1998 are subject to the sales
load schedule as it existed prior to that date. See "How to Buy
Shares--Class B Shares Purchased Prior to January 20, 1998."
(b) Operating expense information for the Fund has been restated to reflect
current fees.
(c) Class C Shares purchased prior to January 20, 1998 are not subject to the
1% deferred sales load.
(d) "12b-1 Fees" represent an asset based sales charge that, for a long term
shareholder, may be higher than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. ("NASD").
(e) Ten-year figure assumes conversion of Class B shares to Class A shares
eight years following the date of purchase.
5
<PAGE>
<TABLE>
<CAPTION>
Nifty Fifty Fund
-----------------
Class A
Shares
<S> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.75%
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested None
Dividends
Deferred Sales Load (as a percentage of original None
purchase price or redemption proceeds, as
applicable)
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses(b)
(as a percentage of average net assets)
Management Fees 0.83%
12b-1 Fees and Servicing Fees(d) 0.25%
Other Expenses 0.55%
----
Total Fund Operating Expenses 1.63%
====
<CAPTION>
Nifty Fifty Fund
---------------------------------------------------------------------
Class B Class C Class M
Shares Shares Shares
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None None 3.50%
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested None None None
Dividends
Deferred Sales Load (as a percentage of original 5% during the first year, 1% during the None
purchase price or redemption proceeds, as decreasing 1% annually to first year (c)
applicable) 2% during the fourth and
fifth years; decreasing to 0%
after the fifth year (a)
Redemption Fee None None None
Exchange Fee None None None
Annual Fund Operating Expenses(b)
(as a percentage of average net assets)
Management Fees 0.83% 0.83% 0.83%
12b-1 Fees and Servicing Fees(d) 1.00% 1.00% 0.50%
Other Expenses 0.55% 0.55% 0.55%
---- ---- ----
Total Fund Operating Expenses 2.38% 2.38% 1.88%
==== ==== ====
</TABLE>
Examples:
An investor would bear the following transaction and operating expenses in
each Class of the Nifty Fifty Fund over different time periods, assuming a
$1,000 investment, a 5% annual return, and redemption at the end of each time
period:
<TABLE>
<CAPTION>
Class A Class B Class C Class M
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 year $ 63 $ 64 $ 34 $ 53
3 years 96 94 74 92
5 years 132 127 127 133
10 years 232 253(e) 272 247
</TABLE>
An investor would bear the following transaction and operating expenses on
the same $1,000 investment, assuming no redemption at the end of each time
period:
<TABLE>
<CAPTION>
Class A Class B Class C Class M
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 year $ 63 $ 24 $ 24 $ 53
3 years 96 74 74 92
5 years 132 127 127 133
10 years 232 253(e) 272 247
</TABLE>
- -----------
(a) Class B Shares purchased prior to January 20, 1998 are subject to the sales
load schedule as it existed prior to that date. See "How to Buy
Shares--Class B Shares Purchased Prior to January 20, 1998."
(b) Operating expense information for the Fund has been restated to reflect
current fees.
(c) Class C Shares purchased prior to January 20, 1998 are not subject to the
1% deferred sales load.
(d) "12b-1 Fees" represent an asset based sales charge that, for a long term
shareholder, may be higher than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. ("NASD").
(e) Ten-year figure assumes conversion of Class B shares to Class A shares
eight years following the date of purchase.
6
<PAGE>
<TABLE>
<CAPTION>
Global Growth Fund
----------------------------------------------------------------------------
Class A Class B Class C Class M
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.75% None None 3.50%
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested None None None None
Dividends
Deferred Sales Load (as a percentage of original None 5% during the first year, 1% during the None
purchase price or redemption proceeds, as decreasing 1% annually to first year
applicable) 2% during the fourth and
fifth years; decreasing to 0%
after the fifth year (a)
Redemption Fee None None None None
Exchange Fee None None None None
Annual Fund Operating Expenses(b)
(as a percentage of average net assets)
Management Fees 1.10% 1.10% 1.10% 1.10%
12b-1 Fees and Servicing Fees(c) 0.25% 1.00% 1.00% 0.50%
Other Expenses 0.60% 0.60% 0.60% 0.60%
---- ---- ---- ----
Total Fund Operating Expenses 1.95% 2.70% 2.70% 2.20%
==== ==== ==== ====
</TABLE>
Examples:
An investor would bear the following transaction and operating expenses in
each Class of the Global Growth Fund over different time periods, assuming a
$1,000 investment, a 5% annual return, and redemption at the end of each time
period:
<TABLE>
<CAPTION>
Class A Class B Class C Class M
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 year $ 66 $ 67 $ 37 $ 57
3 years 106 104 84 101
5 years 148 143 143 149
10 years 264 285(d) 303 280
</TABLE>
An investor would bear the following transaction and operating expenses on
the same $1,000 investment, assuming no redemption at the end of each time
period:
<TABLE>
<CAPTION>
Class A Class B Class C Class M
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 year $ 66 $ 27 $ 27 $ 57
3 years 106 84 84 101
5 years 148 143 143 149
10 years 264 285(d) 303 280
</TABLE>
- -----------
(a) Class B Shares purchased prior to January 20, 1998 are subject to the sales
load schedule as it existed prior to that date. See "How to Buy
Shares--Class B Shares Purchased Prior to January 20, 1998."
(b) Operating expense information for the Fund has been restated to reflect
current fees.
(c) "12b-1 Fees" represent an asset based sales charge that, for a long term
shareholder, may be higher than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. ("NASD").
(d) Ten-year figure assumes conversion of Class B shares to Class A shares
eight years following the date of purchase.
7
<PAGE>
<TABLE>
<CAPTION>
Small & Mid-Cap Growth Fund
----------------------------------------------------------------------------
Class A Class B Class C Class M
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.75% None None 3.50%
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested None None None None
Dividends
Deferred Sales Load (as a percentage of original None 5% during the first year, 1% during the None
purchase price or redemption proceeds, as decreasing 1% annually to first year
applicable) 2% during the fourth and
fifth years; decreasing to 0%
after the fifth year (a)
Redemption Fee None None None None
Exchange Fee None None None None
Annual Fund Operating Expenses(b)
(as a percentage of average net assets)
Management Fees 1.00% 1.00% 1.00% 1.00%
12b-1 Fees and Servicing Fees(c) 0.25% 1.00% 1.00% 0.50%
Other Expenses 0.60% 0.60% 0.60% 0.60%
---- ---- ---- ----
Total Fund Operating Expenses 1.85% 2.60% 2.60% 2.10%
==== ==== ==== ====
</TABLE>
Examples:
An investor would bear the following transaction and operating expenses in
each Class of the Small & Mid-Cap Growth Fund over different time periods,
assuming a $1,000 investment, a 5% annual return, and redemption at the end of
each time period:
<TABLE>
<CAPTION>
Class A Class B Class C Class M
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 year $ 65 $ 66 $ 36 $ 56
3 years 103 101 81 98
5 years 143 138 138 144
10 years 254 275(d) 293 270
</TABLE>
An investor would bear the following transaction and operating expenses on
the same $1,000 investment, assuming no redemption at the end of each time
period:
<TABLE>
<CAPTION>
Class A Class B Class C Class M
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 year $ 65 $ 26 $ 26 $ 56
3 years 103 81 81 98
5 years 143 138 138 144
10 years 254 275(d) 293 270
</TABLE>
- -----------
(a) Class B Shares purchased prior to January 20, 1998 are subject to the sales
load schedule as it existed prior to that date. See "How to Buy
Shares--Class B Shares Purchased Prior to January 20, 1998."
(b) Operating expense information for the Fund has been restated to reflect
current fees.
(c) "12b-1 Fees" represent an asset based sales charge that, for a long term
shareholder, may be higher than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. ("NASD").
(d) Ten-year figure assumes conversion of Class B shares to Class A shares
eight years following the date of purchase.
8
<PAGE>
<TABLE>
<CAPTION>
Value 25 Fund
----------------------------------------------------------------------------
Class A Class B Class C Class M
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases 4.75% None None 3.50%
(as a percentage of offering price)
Maximum Sales Load Imposed on Reinvested None None None None
Dividends
Deferred Sales Load (as a percentage of original None 5% during the first year, 1% during the None
purchase price or redemption proceeds, as decreasing 1% annually to first year
applicable) 2% during the fourth and
fifth years; decreasing to 0%
after the fifth year (a)
Redemption Fee None None None None
Exchange Fee None None None None
Annual Fund Operating Expenses(b)
(as a percentage of average net assets)
Management Fees 0.90% 0.90% 0.90% 0.90%
12b-1 Fees and Servicing Fees(c) 0.25% 1.00% 1.00% 0.50%
Other Expenses 0.60% 0.60% 0.60% 0.60%
---- ---- ---- ----
Total Fund Operating Expenses 1.75% 2.50% 2.50% 2.00%
==== ==== ==== ====
</TABLE>
Examples:
An investor would bear the following transaction and operating expenses in
each Class of the Value 25 Fund over different time periods, assuming a $1,000
investment, a 5% annual return, and redemption at the end of each time period:
<TABLE>
<CAPTION>
Class A Class B Class C Class M
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 year $ 64 $ 65 $ 35 $ 55
3 years 100 98 78 95
5 years 138 133 133 139
10 years 244 265(d) 284 260
</TABLE>
An investor would bear the following transaction and operating expenses on
the same $1,000 investment, assuming no redemption at the end of each time
period:
<TABLE>
<CAPTION>
Class A Class B Class C Class M
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1 year $ 64 $ 25 $ 25 $ 55
3 years 100 78 78 95
5 years 138 133 133 139
10 years 244 265(d) 284 260
</TABLE>
- -----------
(a) Class B Shares purchased prior to January 20, 1998 are subject to the sales
load schedule as it existed prior to that date. See "How to Buy
Shares--Class B Shares Purchased Prior to January 20, 1998."
(b) Operating expense information for the Fund has been restated to reflect
current fees.
(c) "12b-1 Fees" represent an asset based sales charge that, for a long term
shareholder, may be higher than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. ("NASD").
(d) Ten-year figure assumes conversion of Class B shares to Class A shares
eight years following the date of purchase.
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 Examples should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. See
"Management of the Funds," "Distribution Plans" and "How to Buy Shares."
9
<PAGE>
PERFORMANCE INFORMATION
Each Fund may, from time to time, include its yield and total return in
advertisements or reports to shareholders or prospective investors. Both yield
and total return figures are computed separately for each Class of Shares of
each Fund in accordance with formulas specified by the Securities and Exchange
Commission and are based on historical earnings and are not intended to
indicate future performance.
The yield of each Fund will be computed by dividing the Fund's net
investment income over a 30-day period by an average value of invested assets
(using the average number of shares entitled to receive dividends and the
maximum offering price per share at the end of the period), all in accordance
with applicable regulatory requirements. Such amount will be compounded for six
months and then annualized for a twelve-month period to derive the Fund's
yield.
Standardized quotations of average annual total return for each Class of
Shares of a Fund will be expressed in terms of the average annual compound rate
of return of a hypothetical investment in such Class of Shares over a period of
1, 5 and 10 years (or up to the life of the Fund). Standardized total return
quotations reflect the deduction of a proportional share of each class's
expenses (on an annual basis), deduction of the maximum initial sales load in
the case of Class A and M Shares and the maximum contingent deferred sales
charge applicable to a complete redemption of the investment in the case of
Class B and C Shares, and assume that all dividends and distributions are
reinvested when paid. Each Fund may also quote supplementally a rate of total
return over different periods of time by means of aggregate, average, and
year-by-year or other types of total return figures. In addition, each Fund may
from time to time publish materials citing historical volatility for shares of
that Fund.
Each 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, each Fund may compare that Fund's 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 each 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 ("S&P 500"), Dow Jones Industrial Average, Russell 2000 Index,
Morgan Stanley Capital International All Country World Index, Europe Australia
Far East Index (EAFE), Consumer Price Index, Lehman Brothers Corporate Index
and Lehman Brothers T-Bond Index. The S&P 500 is a commonly quoted measure of
stock market performance and represents common stocks of companies of varying
sizes segmented across 90 different industries which are listed on the New York
Stock Exchange, the American Stock Exchange or traded over the NASDAQ National
Market System.
Advertisements, sales literature and other communications may contain
information about a Fund or Adviser's current investment strategies and
management style. Current strategies and style may change to allow a Fund to
respond quickly to changing market and economic conditions. From time to time,
a Fund may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, a Fund may
separate its cumulative and average annual returns into income and capital
gains components.
Performance information for a Fund reflects only the performance of a
hypothetical investment in Class A, Class B, Class C or Class M Shares of the
Fund during the particular time period in which the calculations are based.
Performance information should be considered in light of each Fund's investment
objectives and policies, characteristics and quality of its portfolio, and the
market conditions during the given time period, and should not be considered as
a representation of what may be achieved in the future. For a description of
the methods used to determine total return for each Fund, see the Statement of
Additional Information.
The Trust's Annual Report and Semi-Annual Report, available upon request
and without charge, contains a discussion of the performance of each Fund and a
comparison of that performance to a securities market index.
1
10
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables contain information for one Class A, Class B, and
Class C share of beneficial interest outstanding for each of the Funds for the
periods indicated. Class M Shares were not offered during those periods. The
following information for all Funds (other than the Value 25 Fund which is a
new series that commenced operation in December of 1996) has been audited by
Coopers & Lybrand LLP for the periods from inception through December 31, 1996.
For the Value 25 Fund, the information from inception is unaudited. The
financial highlights should be read in conjunction with the financial
statements contained in the Funds' Annual Report for the year ended December
31, 1996 which is incorporated by reference in the Statement of Additional
Information. The financial information for the six-months ended June 30, 1997
is unaudited.
Phoenix-Engemann Growth Fund(7)
<TABLE>
<CAPTION>
For the Year Ended December 31,
For the Six-Months Ended --------------------------------------
June 30, 1997 (Unaudited) 1996
--------------------------------------- --------------------------------------
Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period ... $ 21.94 $ 21.40 $ 21.40 $ 19.28 $ 18.99 $ 18.99
Gain/(loss) from investment operations:
Net investment loss(1)................. (.06)(2) (.16)(2) (.16)(2) (.14)(3) (.31)(3) (.31)(3)
Net realized and unrealized
gain/(loss) on investments............ 2.10 2.03 2.03 4.47 4.39 4.39
-------- --------- --------- -------- --------- ---------
Total gain/(loss) from
investment operations ............... 2.04 1.87 1.87 4.33 4.08 4.08
-------- --------- --------- -------- --------- ---------
Less distributions:
Capital gains ......................... -- -- -- (1.67) (1.67) (1.67)
-------- --------- --------- -------- --------- ---------
Total distributions .................. -- -- -- (1.67) (1.67) (1.67)
-------- --------- --------- -------- --------- ---------
Net asset value, end of period ......... $ 23.98 $ 23.27 $ 23.27 $ 21.94 $ 21.40 $ 21.40
======== ========= ========= ======== ========= =========
Total return(4) ......................... 9.30%(2) 8.74%(2) 8.74%(2) 22.49%(3) 21.52%(3) 21.52%(3)
Ratios/Supplemental Data:
Net assets, end of period (in 000s) ..... $405,689 $ 54,094 $ 29,897 $426,785 $ 49,444 $ 27,239
Ratio of expenses to average
net asset .............................. 1.6%(2) 2.3%(2) 2.3%(2) 1.6%(3) 2.3%(3) 2.3%(3)
Ratio of net investment loss to
average net assets(5) .................. (0.5)%(2) (1.5)%(2) (1.5)%(2) (0.6)%(3) (1.5)%(3) (1.5)%(3)
Portfolio turnover rate ................. 45.8% 45.8% 45.8% 70.1% 70.1% 70.1%
Average commission rate paid
per share(6) ........................... $ 0.0592 $ .0592 $ 0.0592 $ 0.0578 $ 0.0578 $ 0.0578
<CAPTION>
For the Year Ended December 31,
-----------------------------------
1995
-----------------------------------
Class A Class B Class C
------------ ----------- ----------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period ... $ 15.28 $ 15.28 $ 15.28
Gain/(loss) from investment operations:
Net investment loss(1) ................ (.06) (.20) (.20)
Net realized and unrealized
gain/(loss) on investments ........... 4.24 4.21 4.21
-------- -------- --------
Total gain/(loss) from
investment operations ............... 4.18 4.01 4.01
-------- -------- --------
Less distributions:
Capital gains ......................... (.30) (.30) (.30)
-------- -------- --------
Total distributions .................. (.30) (.30) (.30)
-------- -------- --------
Net asset value, end of period ......... $ 19.28 $ 18.99 $ 18.99
======== ======== ========
Total return(4) ........................ 27.16% 26.26% 26.26%
Ratios/Supplemental Data:
Net assets, end of period (in 000s) .... $415,416 $ 34,786 $ 20,497
Ratio of expenses to average
net asset ............................. 1.6% 2.4% 2.4%
Ratio of net investment loss to
average net assets(5) ................. (0.3)% (1.1)% (1.1)%
Portfolio turnover rate ................ 65.9% 65.9% 65.9%
Average commission rate paid
per share(6) ........................... N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------------------
1994 1993
--------------------------------- -------
Class A Class B Class C Class A
------- ------- ------- -------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period .... $ 16.00 $ 15.89 $ 15.89 $ 17.00
Gain/(loss) from investment operations:
Net investment loss(1).................. (.03) (.14) (.14) (.02)
Net realized and unrealized gain/
(loss) on investments ................. (.57) (.47) (.47) (.98)
------- ------- ------- -------
Total gain/(loss) from
investment operations ................ (.60) (.61) (.61) (1.00)
------- ------- ------- -------
Less distributions:
Capital gains .......................... -- -- -- --
------- ------- ------- -------
Total distributions ................... -- -- -- --
------- ------- ------- -------
Net asset value, end of period $ 15.40 $ 15.28 $ 15.28 $ 16.00
======== ========= ========= ========
Total return(4).......................... (3.75)% (3.84)% (3.84)% (5.87)%
Ratios/Supplemental Data:
Net assets, end of period (in 000s) $391,831 $ 11,349 $ 6,136 $532,208
Ratio of expenses to average
net asset .............................. 1.6% 2.3% 2.3% 1.6%
Ratio of net investment loss to
average net assets(5)................... (0.2)% (1.0)% (1.0)% --
Portfolio turnover rate ................. 53.8% 53.8% 53.8% 22.9%
Average commission rate paid
per share(6)............................ N/A N/A N/A N/A
<CAPTION>
For the Year Ended December 31,
---------------------------------------------------------------------
1992 1991 1990 1989 1988 1987
-------- -------- --------- ------- ------- --------
Class A Class A Class A Class A Class A Class A
-------- -------- --------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period ... $ 16.80 $ 10.04 $ 10.53 $ 8.41 $ 6.19 $ 6.99
Gain/(loss) from investment operations:
Net investment loss(1) ................ (.05) (.08) (.09) (.04) -- (.06)
Net realized and unrealized gain/
(loss) on investments ................ .43 6.89 (.39) 3.19 2.22 (.74)
-------- ------- ------- ------- ------- --------
Total gain/(loss) from
investment operations ............... .38 6.81 (.48) 3.15 2.22 (.80)
-------- ------- ------- ------- ------- --------
Less distributions:
Capital gains ......................... (.18) (.05) (.01) (1.03) -- --
-------- ------- ------- ------- ------- --------
Total distributions .................. (.18) (.05) (.01) (1.03) -- --
-------- ------- ------- ------- ------- --------
Net asset value, end of period $ 17.00 $ 16.80 $ 10.04 $ 10.53 $ 8.41 $ 6.19
======== ======== ========= ======= ======= ========
Total return(4)......................... 2.24% 67.83% (4.55)% 37.75 35.78% (11.45)%
Ratios/Supplemental Data:
Net assets, end of period (in 000s) $625,624 $323,484 $ 80,639 $36,722 $18,049 $ 10,923
Ratio of expenses to average
net asset ............................. 1.6% 1.8% 2.2% 1.8% 1.8% 2.0%
Ratio of net investment loss to
average net assets(5) ................. (0.3)% (0.6)% (0.9)% (0.5)% -- (0.9)%
Portfolio turnover rate ................ 24.5% 23.5% 32.0% 93.8% 99.3% 114.5%
Average commission rate paid
per share(6) .......................... N/A N/A N/A N/A N/A N/A
</TABLE>
The table above provides condensed information concerning income and capital
changes for one share of Phoenix-Engemann Growth Fund. Such information is
based on the Fund's unaudited financial statements for the six-months ended
June 30, 1997, and the Fund's audited financial statements for all other
periods presented.
11
<PAGE>
- -----------
(1) This information was prepared using the average number of shares outstanding
during each period.
(2) These amounts reflect the impact of a waiver of administration fees of
$35,000. 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 $(.06), $(.16) and
$(.16), respectively, 9.30%, 8.74% and 8.74%, respectively, 1.6%, 2.3% and
2.3%, respectively, and (0.5)%, (1.5)% and (1.5)% respectively.
(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 indicated. It does not include the impact of paying any
applicable front-end or contingent deferred sales charges.
(5) Annualized for periods of less than one year.
(6) This disclosure, effective for the first time in 1996, has not been applied
retroactively.
(7) Prior to September 3, 1997, this Fund was called The Pasadena Growth Fund.
12
<PAGE>
Phoenix-Engemann Balanced Return Fund(7)
<TABLE>
<CAPTION>
For the Year Ended December 31,
For the Six-Months Ended --------------------------------------
June 30, 1997 (Unaudited) 1996
--------------------------------------- --------------------------------------
Class A Class B Class C Class A Class B Class C
---------- -------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 28.08 $ 27.85 $ 27.88 $ 25.39 $ 25.26 $ 25.28
Gain/(loss) from investment operations:
Net investment income(1) .............. .142 .032 .032 .293 .093 .093
Net realized and unrealized
gain/(loss) on investments ........... 3.06 3.04 3.04 4.23 4.16 4.16
---------- -------- ---------- --------- --------- ---------
Total gain/(loss) from
investment operations ............... 3.20 3.07 3.07 4.52 4.25 4.25
---------- -------- ---------- --------- --------- ---------
Less distributions:
Net investment income .................. -- -- -- (.30) (.13) (.12)
Capital gains ......................... -- -- -- (1.53) (1.53) (1.53)
---------- -------- ---------- --------- --------- ---------
Total distributions .................. -- -- -- (1.83) (1.66) (1.65)
---------- -------- ---------- --------- --------- ---------
Net asset value, end of period ......... $ 31.28 $ 30.92 $ 30.95 $ 28.08 $ 27.85 $ 27.88
========== ======== ========= ========= ========= ========
Total return(4) ........................ 11.40%(2) 11.02%(2) 11.01%(2) 17.78%(3) 16.82%(3) 16.79%(3)
Ratios/Supplemental Data:
Net assets, end of period (in 000s) .... $ 53,639 $ 5,931 $ 4,889 $ 51,947 $ 4,609 $ 4,183
Ratio of expenses to average
net assets(5) ......................... 1.7%(2) 2.5%(2) 2.5%(2) 2.0%(3) 2.7%(3) 2.7%(3)
Ratio of net investment income
to average ............................ 0.9%(2) 0.2%(2) 0.2%(2) 1.1%(3) 0.3%(3) 0.3%(3)
Portfolio turnover rate ................ 13.5% 13.5% 13.5% 35.1% 35.1% 35.1%
Average commission rate paid
per share(6) .......................... $ 0.0593 $ 0.0593 $ 0.0593 $ 0.0597 $ 0.0597 $ 0.0597
<CAPTION>
For the Year Ended December 31,
--------------------------------
1995
--------------------------------
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period .. $ 20.54 $ 20.49 $ 20.48
Gain/(loss) from investment operations:
Net investment income(1) ............. .27 .08 .07
Net realized and unrealized
gain/(loss) on investments .......... 5.31 5.29 5.30
------- ------- -------
Total gain/(loss) from
investment operations .............. 5.58 5.37 5.37
------- ------- -------
Less distributions:
Net investment income ................. (.29) (.16) (.13)
Capital gains ........................ (.44) (.44) (.44)
------- ------- -------
Total distributions ................. (.73) (.60) (.57)
------- ------- -------
Net asset value, end of period ........ $ 25 39 $ 25.26 $ 25.28
======= ======= =======
Total return(4) ....................... 27.18% 26.20% 26.23%
Ratios/Supplemental Data:
Net assets, end of period (in 000s) ... $52,028 $ 2,721 $ 2,809
Ratio of expenses to average
net assets(5)......................... 2.1% 2.9% 2.9%
Ratio of net investment income
to average ........................... 1.2% 0.3% 0.3%
Portfolio turnover rate ............... 51.1% 51.1% 51.1%
Average commission rate paid
per share(6).......................... N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------------------
1994 1993
-------------------------------------- -----------
Class A Class B Class C Class A
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period ... $ 21.97 $ 21.89 $ 21.89 $ 21.76
Gain/(loss) from investment operations:
Net investment income(1) .............. .39 .26 .25 .32
Net realized and unrealized
gain/(loss) on investments ........... (1.36) (1.32) (1.31) .21
--------- --------- --------- -------
Total gain/(loss) from
investment operations ............... (.97) (1.06) (1.06) .53
--------- --------- --------- -------
Less distributions:
Net investment income .................. (.46) (.34) (.35) (.32)
Capital gains ......................... -- -- -- --
--------- --------- --------- -------
Total distributions .................. (.46) (.34) (.35) (.32)
--------- --------- --------- -------
Net asset value, end of period ......... $ 20 54 $ 20.49 $ 20.48 $ 21.97
========= ========= ========= =======
Total return(4) ........................ (4.43)% (4.85)% (4.85)% 2.44%
Ratios/Supplemental Data:
Net assets, end of period (in 000s) $ 53,047 $ 1,223 $ 1,449 $84,591
Ratio of expenses to average
net assets(5).......................... 2.1% 2.9% 2.9% 2.1%
Ratio of net investment income
to average ............................ 1.8% 1.3% 1.3% 1.5%
Portfolio turnover rate ................ 28.2% 28.2% 28.2% 4.8%
Average commission rate paid
per share(6)........................... N/A N/A N/A N/A
<CAPTION>
Inception
For the Year Ended December 31, (June 8, 1987)
-------------------------------------------------- to December 31,
1992 1991 1990 1989 1988 1987
-------- ------- -------- ------- --------------------
Class A Class A Class A Class A Class A Class A
-------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period ... $ 20.95 $ 15.30 $ 15.91 $ 12.51 $ 11.50 $10.00
Gain/(loss) from investment operations:
Net investment income(1) .............. .25 .24 .16 .18 .13 .16
Net realized and unrealized
gain/(loss) on investments ........... .69 5.70 (.25) 3.94 1.38 1.34
------- ------- ------- ------- -------- ------
Total gain/(loss) from
investment operations ............... .94 5.94 (.09) 4.12 1.51 1.50
------- ------- ------- ------- -------- ------
Less distributions:
Net investment income .................. (.13) (.16) (.19) (.19) (.41) --
Capital gains ......................... -- (.13) (.33) (.53) (.09) --
------- ------- ------- ------- -------- ------
Total distributions .................. (.13) (.29) (.52) (.72) (.50) --
------- ------- ------- ------- -------- ------
Net asset value, end of period ......... $ 21.76 $ 20.95 $ 15.30 $ 15.91 $ 12.51 $11.50
======= ======= ======== ======= ======= ======
Total return(4) ........................ 4.49% 38.89% (.39)% 32.98% 13.42% 15.00%
Ratios/Supplemental Data:
Net assets, end of period (in 000s) ... $75,143 $16,020 $ 5,001 $ 3,747 $ 1,924 $ 742
Ratio of expenses to average
net assets(5) ........................ 2.3% 2.5% 2.5% 2.1% 2.0% --
Ratio of net investment income
to average ............................ 1.2% 1.3% 1.0% 1.5% 1.7% 5.3%
Portfolio turnover rate ................ 6.3% 4.9% 35.8% 24.3% 30.6% 13.1%
Average commission rate paid
per share(6) .......................... N/A N/A N/A N/A N/A N/A
</TABLE>
The table above provides condensed information concerning income and capital
changes for one share of Phoenix-Engemann Balanced Return Fund. Such
information is based on the Fund's unaudited financial statements for the
six-months ended June 30, 1997, and the Fund's audited financial statements for
all other periods presented.
- -----------
(1) This information was prepared using the average number of shares outstanding
during each period.
(2) These amounts reflect the impact of a waiver of administration fees of
$65,000. 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 $.11, $.00 and $.00
respectively, 11.40%, 11.02% and 11.01%, respectively, 1.9%, 2.7% and 2.7%,
respectively, and 0.7%, 0.0% and 0.0%, 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 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 periods indicated. It does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(5) Annualized for periods of less than one year.
(6) This disclosure, effective for the first time in 1996, has not been applied
retroactively.
(7) Prior to September 3, 1997, this Fund was called The Pasadena Balanced
Return Fund.
13
<PAGE>
Phoenix-Engemann Nifty Fifty Fund(7)
<TABLE>
<CAPTION>
For the Year Ended December 31,
For the Six-Months Ended -----------------------------------------
June 30, 1997 (Unaudited) 1996
------------------------------------------ --------------------------------------
Class A Class B Class C Class A Class B Class C
--------- --------- --------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period ... $ 26.50 $ 25.88 $ 25.88 $ 22.18 $ 21.85 $ 21.85
Gain/(loss) from investment
operations:
Net investment loss(1) ................ (.08)(2) (.18)(2) (.18)(2) (.12)(3) (.30)(3) (.30)(3)
Net realized and unrealized
gain/(loss) on investments ........... 4.01 3.90 3.90 6.00 5.89 5.89
-------- -------- -------- -------- -------- --------
Total gain/(loss) from
investment operations ............... 3.93 3.72 3.72 5.88 5.59 5.59
-------- -------- -------- -------- -------- --------
Less distributions:
Capital gains ......................... -- -- -- (1.56) (1.56) (1.56)
-------- -------- -------- -------- -------- --------
Total distributions .................. -- -- -- (1.56) (1.56) (1.56)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ......... $ 30.43 $ 29.60 $ 29.60 $ 26.50 $ 25.88 $ 25.88
======== ======== ======== ======== ======== ========
Total return(4) ........................ 14.83%(2) 14.37%(2) 14.37%(2) 26.53%(3) 25.60%(3) 25.60%(3)
Ratios/Supplemental Data:
Net assets, end of period (in 000s) .... $165,823 $ 62,923 $ 37,009 $145,469 $ 47,143 $ 26,092
Ratio of expenses to average net ....... 1.6%(2) 2.3%(2) 2.3%(2) 1.7%(3) 2.5%(3) 2.5%(3)
Ratio of net investment loss to
average net assets(5) ................. (0.6)%(2) (1.3)%(2) (1.3)%(2) (0.4)%(3) (1.2)%(3) (1.2)%(3)
Portfolio turnover rate ................ 28.7% 28.7% 28.7% 41.9% 41.9% 41.9%
Average commission rate paid
per share(6) .......................... $ 0.0597 $ 0.0597 $ 0.0597 $ 0.0585 $ 0.0585 $ 0.0585
<CAPTION>
For the Year Ended December 31,
------------------------------
1995
------------------------------
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period .. $ 17.30 $ 17.17 $ 17.17
Gain/(loss) from investment
operations:
Net investment loss(1) ............... (.05) (.21) (.21)
Net realized and unrealized
gain/(loss) on investments .......... 4.93 4.89 4.89
------- ------- ------
Total gain/(loss) from
investment operations .............. 4.88 4.68 4.68
------- ------- ------
Less distributions:
Capital gains ........................ -- -- --
------- ------- ------
Total distributions ................. -- -- --
------- ------- ------
Net asset value, end of period ........ $ 22.18 $ 21.85 $ 21.85
======= ======= =======
Total return(4) ....................... 28.21% 27.26% 27.26
Ratios/Supplemental Data:
Net assets, end of period (in 000s) ... $122,322 $27,462 $15,105
Ratio of expenses to average net ...... 1.9% 2.6% 2.6%
Ratio of net investment loss to
average net assets(5) ................ (0.3)% (1.0)% (1.0)%
Portfolio turnover rate ............... 26.5% 26.5% 26.5%
Average commission rate paid
per share(6) ......................... N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------------------------------
1994 1993 1992 1991
--------------------------------- ------- -------- -------
Class A Class B Class C Class A Class A Class A
--------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period ............. $ 17.12 $ 17.02 $ 17.02 $ 17.21 $ 16.60 $ 9.97
Gain/(loss) from investment operations:
Net investment loss(1) .......................... (.03) (.14) (.15) (.06) (.05) (.01)
Net realized and unrealized gain/(loss)
on investments ................................. .21 .29 .30 (.03) .66 6.74
Total gain/(loss) from investment operations ... .18 .15 .15 (.09) .61 6.73
Less distributions:
Capital gains ................................... -- -- -- -- -- (.10)
Total distributions ............................ -- -- -- -- -- (.10)
--------- ------- ------- -------- -------- -------
Net asset value, end of period ................... $ 17.30 $ 17.17 $ 17.17 $ 17.12 $ 17.21 $ 16.60
========= ======= ======= ======== ======== =======
Total return(4) .................................. 1.05% 0.88% 0.88% (0.52)% 3.67% 67.64%
Ratios/Supplemental Data:
Net assets, end of period (in 000s) .............. $ 100,596 $ 6,722 $ 4,283 $134,284 $195,067 $64,156
Ratio of expenses to average net ................. 1.9% 2.6% 2.6% 1.8% 1.9% 1.9%
Ratio of net investment loss to average
net assets(5) ................................... (0.2)% (0.9) -- (0.3)% (0.1)%
Portfolio turnover rate .......................... 23.2% 23.2% 23.2% 2.2% 12.9% 27.6%
Average commission rate paid per share(6) ........ N/A N/A N/A N/A N/A N/A
<CAPTION>
Inception
(December 17, 1990)
to December 31,
1990
--------------------
Class A
--------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period ........... $ 10.00
Gain/(loss) from investment operations:
Net investment loss(1) ........................ --
Net realized and unrealized gain/(loss)
on investments ............................... (.03)
Total gain/(loss) from investment operations.. (.03)
Less distributions:
Capital gains ................................. --
Total distributions .......................... --
--------
Net asset value, end of period ................. $ 9.97
========
Total return(4) ................................ (.37)%
Ratios/Supplemental Data:
Net assets, end of period (in 000s) ............ $ 528
Ratio of expenses to average net ............... 1.2%
Ratio of net investment loss to average
net assets(5) ................................. 0.4%
Portfolio turnover rate ........................ 0.9%
Average commission rate paid per share(6) ...... N/A
</TABLE>
The table above provides condensed information concerning income and capital
changes for one share of Phoenix-Engemann Nifty Fifty Fund. Such information is
based on the Fund's unaudited financial statements for the six-months ended
June 30, 1997, and the Fund's audited financial statements for all other
periods presented.
- -----------
(1) This information was prepared using the average number of shares outstanding
during each period.
(2) These amounts reflect the impact of a waiver of administration fees of
$82,000. Absent the waiver, net investment loss per share, total return and
ratios of expenses and net investment loss to average net assets for Class
A, Class B and Class C shares would have been $(.09), $(.19) and $(.19)
respectively, 14.83%, 14.37% and 14.37%, respectively, 1.7%, 2.4% and 2.4%,
respectively, and (0.6)%, (1.4)% and (1.4)%, 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 periods indicated. It does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(5) Annualized for periods of less than one year.
(6) This disclosure, effective for the first time in 1996, has not been applied
retroactively.
(7) Prior to September 3, 1997, this Fund was called The Pasadena Nifty Fifty
Fund.
14
<PAGE>
Phoenix-Engemann Global Growth Fund(7)
<TABLE>
<CAPTION>
For the
Six Months Ended For the Year Ended December 31,
June 30, 1997 ------------------------------------
(Unaudited) 1996
----------------------------------------- ------------------------------------
Class A Class B Class C Class A Class B(5) Class C(5)
-------- -------- -------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period ................................ $ 19.06 $ 19.04 $ 19.03 $ 17.27 $ 17.44 $ 17.88
Gain/(loss) from investment
operations:
Net investment income (loss)(1) ....... (.04) (.10) (.07) .032 (.08) (.04)
Net realized and unrealized gain
on investments ....................... 2.92 2.89 2.87 3.55 1.82 1.34
-------- -------- -------- ------- ------- -------
Total gain from investment
operations .......................... 2.88 2.79 2.80 3.58 1.74 1.30
-------- -------- -------- ------- ------- -------
Less distributions:
Net investment income ................. -- -- -- .04 -- (.01)
Capital gains ......................... -- -- -- (1.75) (.14) (.14)
-------- -------- -------- ------- ------- -------
Total distributions .................. -- -- -- (1.79) (.14) (.15)
-------- -------- -------- ------- ------- -------
Net asset value, end of period ......... $ 21.94 $ 21.83 $ 21.83 $ 19.06 $ 19.04 $ 19.03
======== ======== ======== ======== ======= =======
Total return(3) ........................ 15.11% 14.65% 14.71% 21.77%(2) 9.98% 7.28%
Ratio/Supplemental Data:
Net assets, end of period (in 000s) .... $ 7,634 $ 2,197 $ 1,725 $ 7,654 $ 874 $ 106
Ratio of expenses to average net
assets(4) ............................. 2.0% 2.8% 2.8% 0.8%(2) 2.7% 2.7%
Ratio of net investment income
(loss) to average net assets(4) ....... (0.4)% (1.1)% (1.1)% 0.1%(2) (1.9)% (1.6)%
Portfolio turnover rate ................ 93.1% 93.1% 93.1% 220.3% 220.3% 220.3%
Average commission rate paid
per share(6) .......................... $ 0.0150 $ 0.0150 $ 0.0150 $ 0.0301 $0.0301 $ 0.0301
<CAPTION>
Inception
(November 1, 1993)
For the Year Ended December 31, through
------------------------------- December 31,
1995 1994 1993
--------- ---------- ------------------
Class A Class A Class A
--------- ---------- ------------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period ............................ $ 14.06 $ 11.18 $ 10.00
Gain/(loss) from investment
operations:
Net investment income (loss)(1) ... .242 .102 .012
Net realized and unrealized gain
on investments ................... 3.11 2.78 1.17
--------- ---------- ----------
Total gain from investment
operations ...................... 3.35 2.88 1.18
--------- ---------- ----------
Less distributions:
Net investment income ............. -- -- --
Capital gains ..................... (.14) -- --
--------- ---------- ----------
Total distributions .............. (.14) -- --
--------- ---------- ----------
Net asset value, end of period ..... $ 17.27 $ 14.06 $ 11.18
========= ========== ==========
Total return(3) .................... 23.84%(2) 25.76%(2) 11.80%(2)
Ratio/Supplemental Data:
Net assets, end of period (in 000s).. $ 3,203 $ 141 $ 112
Ratio of expenses to average net
assets(4) .......................... 0.0%(2) 0.0%(2) 0.0%(2)
Ratio of net investment income
(loss) to average net assets(4) .... 1.4%(2) 0.8%(2) 0.8%(2)
Portfolio turnover rate ............. 29.0% 479.3% 215.8%
Average commission rate paid
per share(6) ....................... N/A N/A N/A
</TABLE>
The table above provides condensed information concerning income and capital
changes for one share of Phoenix-Engemann Global Growth Fund. Such information
is based on the Fund's unaudited financial statements for the six-months ended
June 30, 1997, and the Fund's audited financial statements for all other
periods presented.
- -----------
(1) This information was prepared using the average number of shares outstanding
during each period.
(2) These amounts reflect the impact of a waiver of adviser fees of $62,438,
$42,545, $2,784 and $410 for the periods ended December 31, 1996, 1995, 1994
and 1993, respectively, and the Adviser's reimbursement for income taxes of
$13,109 during 1994. Absent the waivers and reimbursement, net investment
income (loss) per share, total return (not annualized for the period ended
December 31, 1993) and the ratios of expenses and net investment income
(loss) to average net assets (annualized for the period ended December 31,
1993) would have been $(.21), 21.71%, 2.0% and (1.2)%, respectively, $(.15),
22.88%, 2.3% and (0.9)%, respectively, $(.21), 14.40%, 10.4% (2.3% if only
normal and recurring expenses are taken into account) and (1.7)%,
respectively, and $(.03), 11.40%, 2.3% and (1.5)%, respectively, for the
periods ended December 31, 1996, 1995, 1994, and 1993, respectively.
(3) Total return measures the change in the value of an investment during the
period indicated and does not include the impact of paying any sales charge.
Total return for the period ended December 31, 1996 for Class B and Class C
shares and from inception (November 1, 1993) through December 31, 1993, has
not been annualized.
(4) Annualized for periods of less than one year.
(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, September 18, 1996 and October 21,
1996, respectively.
(6) This disclosure, effective for the first time in 1996, has not been applied
retroactively.
(7) Prior to September 3, 1997, this Fund was called The Pasadena Global Growth
Fund.
15
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund(7)
<TABLE>
<CAPTION>
For the For the Year Ended December 31,
Six Months Ended -------------------------------------------------
June 30, 1997
(Unaudited) 1996 1995
--------------------------------- ---------------------------------- ------------
Class A Class B Class C Class A Class B(5) Class C(5) Class A
--------- ------- ------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period...... $ 18.39 $ 18.35 $ 18.35 $ 14.90 $ 16.44 $ 17.99 $ 12.07
Gain/(loss) from investment
operations:
Net investment income (loss)(1).......... (.15) (.22) (.22) (.12)(2) (.32) (.29) .222
Net realized and unrealized gain
on investments .......................... 2.70 2.68 2.68 7.45 2.43 .85 2.87
------- ------- ------ --------- ------- ------- ---------
Total gain from investment
operations ............................ 2.55 2.46 2.46 7.33 2.11 .56 3.09
------- ------- ------ --------- ------- ------- ---------
Less distributions:
Net investment income ................... -- -- -- (.28) -- -- (.08)
Capital gains ........................... -- -- -- (3.56) (.20) (.20) (.18)
------- ------- ------ --------- ------- ------- ---------
Total distributions .................... -- -- -- (3.84) (.20) (.20) (.26)
------- ------- ------ --------- ------- ------- ---------
Net asset value, end of period ........... $ 20.94 $ 20.81 $ 20.81 $ 18.39 $ 18.35 $ 18.35 $ 14.90
======= ======= ======= ========= ======= ======= =========
Total return(3) .......................... 13.87% 13.41% 13.41% 52.37%(2) 12.84% 3.12% 25.68%(2)
Ratios/Supplemental Data:
Net assets, end of period (in 000s) ...... $15,137 $ 6,119 $ 3,353 $ 7,859 $ 1,480 $ 54 $ 1,742
Ratio of expenses to average net
assets(4) ............................... 1.8% 2.5% 2.5% 1.1%(2) 2.6% 2.6% 0.0%(2)
Ratio of net investment income
(loss) to average net assets(4) ......... (1.6)% (2.3)% (2.3)% (0.7)%(2) (2.2)% (2.2)% 1.5%(2)
Portfolio turnover rate .................. 176.2% 176.2% 176.2% 297.1% 297.1% 297.1% 121.4%
Average commission rate paid per
share(6) ................................ $0.0562 $0.0562 $0.0562 $ 0.0547 $0.0547 $0.0547 N/A
<CAPTION>
Inception
(October 10, 1994)
through
December 31,
1994
-------------------
Class A
-------------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period ..... $ 10.00
Gain/(loss) from investment
operations:
Net investment income (loss)(1) ......... .07(2)
Net realized and unrealized gain
on investments .......................... 2.00
------------
Total gain from investment
operations ............................ 2.07
------------
Less distributions:
Net investment income ................... --
Capital gains ........................... --
------------
Total distributions .................... --
------------
Net asset value, end of period ........... $ 12.07
============
Total return(3) .......................... 20.70%(2)
Ratios/Supplemental Data:
Net assets, end of period (in 000s) ...... $ 121
Ratio of expenses to average net
assets(4) ............................... 0.0%(2)
Ratio of net investment income
(loss) to average net assets(4) ......... 2.6%(2)
Portfolio turnover rate .................. 157.9%
Average commission rate paid per
share(6) ................................ N/A
</TABLE>
The table above provides condensed information concerning income and capital
changes for one share of Phoenix-Engemann Small & Mid-Cap Growth Fund. Such
information is based on the Fund's unaudited financial statements for the
six-months ended June 30, 1997, and the Fund's audited financial statements for
all other periods presented.
- -----------
(1) This information was prepared using the average number of shares outstanding
during each period.
(2) These amounts reflect the impact of a waiver of Adviser fees of $18,499,
$13,443, and $585 for the periods ended December 31, 1996, 1995 and 1994,
respectively, and the Adviser'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 $(0.25), 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.
(3) Total return measures the change in the value of an investment during the
period indicated 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 shares only) and December 31,
1995 have not been annualized.
(4) Annualized for periods of less than one year.
(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, September 18, 1996 and October 8,
1996, respectively.
(6) This disclosure, effective for the first time in 1996, has not been applied
retroactively.
(7) Prior to September 3, 1997, this Fund was called The Pasadena Small &
Mid-Cap Growth Fund.
16
<PAGE>
Phoenix-Engemann Value 25 Fund(5)
<TABLE>
<CAPTION>
Inception
For the (December 17, 1996)
Six-Months Ended to December 31,
June 30, 1997 1996
(Unaudited) (Unaudited)
------------------------------------- ------------------
Class A Class B(4) Class C(4) Class A
------- ---------- ---------- ------------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period ..................... $ 10.21 $ 10.39 $ 10.39 $ 10.00
Gain from investment operations:
Net investment income(1) ................................ .08 -- -- --
Net realized and unrealized gain on investments ......... 1.26 1.13 1.13 .21
------- ------- ------- -------
Total gain from investment operations .................. 1.34 1.13 1.13 .21
------- ------- ------- -------
Less distributions:
Net investment income ................................... (.04) (.03) (.03) --
------- ------- ------- -------
Total distributions .................................... (.04) (.03) (.03) --
------- ------- ------- -------
Net asset value, end of period ........................... $ 11.51 $ 11.49 $ 11.49 $ 10.21
======= ======= ======= =======
Total return(2) .......................................... 13.12% 10.86% 10.86% 2.10%
Ratios/Supplemental Data:
Net assets, end of period (in 000s) ...................... $13,126 $ 5,540 $ 1,863 $ 487
Ratio of expenses to average net assets(3) ............... 1.8% 2.5% 2.5% 1.8%
Ratio of net investment income to average net assets(3) .. 1.4% 0.6% 0.6% 1.2%
Portfolio turnover rate .................................. 33.1% 33.1% 33.1% 0.0%
Average commission rate paid per share ................... $0.0602 $0.0602 $0.0602 $0.0600
</TABLE>
The table above provides condensed information concerning income and capital
changes for one share of Phoenix-Engemann Value 25 Fund. Such information is
based on the Fund's unaudited financial statements for the six-months ended
June 30, 1997 and the Fund's unaudited financial statements for the period
ended December 31, 1996.
- -----------
(1) This information was prepared using the average number of shares outstanding
during each period.
(2) Total return measures the change in the value of an investment during the
period indicated and does not include the impact of paying any sales charge.
(3) Annualized.
(4) 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).
(5) Prior to September 3, 1997, this Fund was called The Pasadena Value 25 Fund.
17
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Investment Objectives and Strategies
The investment objective of each of the Growth Fund, the Nifty Fifty Fund,
the Global Growth Fund and the Small & Mid-Cap Growth Fund is long-term growth
of capital. The investment objective of the Balanced Return Fund is to maximize
a total investment return consistent with reasonable risk. The investment
objective of the Value 25 Fund is to provide substantial dividend income and
long-term growth of capital.
The investment objective for each Fund is "fundamental," meaning that it
will not be changed without the approval of a majority of that Fund's voting
securities, as defined in the 1940 Act. There is, of course, no assurance that
any of the Funds will achieve its investment objective, although each Fund will
always follow the investment strategies discussed below.
The Growth Fund
The Growth Fund emphasizes the purchase of common stocks of domestic
corporations with rapidly growing earnings per share. Some of the companies in
its portfolio may be unseasoned, although others may be well-known and
established. Many of the companies in the Growth Fund's portfolio may have a
small capitalization (i.e., less than $500 million). The Growth Fund also
invests in stocks of companies that, although not growing rapidly, are
undervalued by other criteria of their fundamental net worth in the opinion of
the Adviser. The volatility of its investment portfolio is likely to be greater
than that of the Standard & Poor's 500 Stock Index and greater than that of the
Balanced Return Fund. For this reason, the net asset value per share of the
Growth Fund may fluctuate substantially, and the Fund may not be appropriate
for short-term investors. Dividend and interest income received from portfolio
securities is largely incidental.
The Growth Fund's investments may also include preferred stocks, warrants,
convertible debt obligations and other debt obligations that, in the Adviser's
opinion, offer the possibility of capital appreciation over the course of
approximately two or more years because of the timing of such investments. In
addition to the interest received from such debt instruments, if interest rates
fall these instruments are likely to increase in value. Conversely, if interest
rates rise a decrease in value can be expected. The Growth Fund does not,
however, anticipate investing a significant portion of its total assets in such
instruments.
The debt obligations which may be acquired by the Growth Fund include
direct and indirect obligations of the U.S. Government and its agencies, states
and municipalities and their agencies, or corporate issuers. Any corporate debt
obligations in which the Growth Fund may invest must be rated at least BBB or
Baa or better by national agencies, or, if unrated, are, in the Adviser's
opinion, of equivalent investment quality. Securities which are rated "BBB" or
"Baa" are generally regarded as having an adequate capacity to pay interest and
repay principal in accordance with the terms of the obligation, but may have
some speculative characteristics. In addition, such securities are generally
more sensitive to changes in economic conditions than securities rated in the
higher categories, which tend to be more sensitive to interest rate changes. In
the event that the rating for any security held in the Growth Fund's portfolio
drops below "BBB" or "Baa," such change will be considered by the Fund's
Adviser in evaluating the overall composition of the Fund's portfolio. See the
Appendix in the Statement of Additional Information.
The Nifty Fifty Fund
The Nifty Fifty Fund seeks its objective through investment in
approximately 50 different securities which the Adviser believes represent the
best potential to achieve long-term growth of capital. Dividend and interest
income to be received from portfolio securities is largely incidental.
Under normal market conditions, it is expected that at least 75% of the
Nifty Fifty Fund's assets will be invested in common stocks of high-quality
growth companies (i.e., companies which generally exceed $50 million in annual
net income) which, at the time of investment, would satisfy the applicable
listing requirements of the New York Stock Exchange with respect to
demonstrated earning power, years in operation, number of publicly held shares,
and net tangible assets.
It is expected that the remaining portion of the Nifty Fifty Fund's
investment portfolio will be invested in common stocks of corporations with
rapidly growing earnings per share or in common stocks of corporations that are
believed to be undervalued by other criteria used by the Adviser. Some of these
companies may be unseasoned, although others may be well-known and established.
Many of the companies in this portion of the Nifty Fifty Fund's investment
portfolio may be considered small (i.e., less than $50 million in annual net
income), and the volatility of price movements of these securities and,
accordingly, the Fund's investment portfolio as a whole is likely to be greater
than that of the Standard & Poor's 500 Stock Index. For this reason, the net
asset value per share of the Nifty Fifty Fund may also fluctuate substantially,
and the Fund may not be appropriate for short-term investors.
While the Nifty Fifty Fund anticipates being fully invested at all times,
except for temporary defensive purposes, it may for short periods of time have
more or less than 50 different securities while it is establishing or
eliminating a particular position.
The Nifty Fifty Fund may invest in the securities of companies listed on
any exchange or traded in the over-the-counter market, and is expected to
invest principally in common stocks. The Fund's investments may also include to
a limited extent preferred stocks, warrants, and convertible debt obligations,
if deemed appropriate by the Adviser in meeting the Fund's objective.
18
<PAGE>
The Balanced Return Fund
The Balanced Return Fund seeks to achieve its investment objective through
a balanced approach using moderate asset allocation by its Adviser through
investments in high-quality growth companies and U.S. Government securities.
The Adviser will shift its emphasis among equity and debt investments, as
well as among various industry sectors, as it may determine based upon
financial trends and changes in economic and market conditions. The balance
between equities and U.S. Government securities at any time will be within the
Adviser's sole discretion. Under normal market conditions, the Fund expects to
maintain at least 25% of its net assets in U.S. Government securities.
While the Adviser considers both the opportunity for gain and the risk of
loss in making investments, its intention is to provide capital appreciation
from equities, balanced by income and capital preservation from U.S. Government
securities, to achieve less volatility than a portfolio consisting solely of
equity securities. Using a balance of equities and U.S. Government securities,
the Fund is expected, in the long run, to entail less investment risk and
volatility (and potentially less investment return) than a mutual fund
investing exclusively in common stocks. Of course, all fixed-income securities,
like common stocks, are subject to market risk, and will fluctuate in value.
The Balanced Return Fund is a more conservatively managed fund than the
other Funds, and the Adviser anticipates that the volatility of price movement
of the equity securities in its investment portfolio generally will be less
than that of the securities in the Standard & Poor's 500 Stock Index. Although
the Balanced Return Fund generally will invest in the stocks of more
well-established companies with larger capitalization, many of which will be
listed on the New York Stock Exchange, it may also invest in the securities of
companies listed on any exchange or traded in the over-the counter market.
The Global Growth Fund
The Global Growth Fund seeks to achieve its investment objective through
investments in a diversified portfolio of marketable securities of issuers
which are organized or domiciled in the United States and in foreign countries.
Dividend or interest income will be incidental to any investment decision.
In seeking growth of capital, the Global Growth Fund follows a global
investment strategy of investing primarily in the equity securities of U.S. and
foreign companies which may be traded in securities markets located throughout
the world. This global investment approach seeks to take advantage of the
growing investment opportunities created by a global economy that has become
more highly integrated in economic, industrial and financial terms, resulting
in an increase in growth stocks from developed and developing countries
worldwide. For these purposes, the Global Growth Fund defines an emerging or
developing country as having an economy and market that are or would be
considered by the World Bank or the United Nations to be emerging or
developing.
The Global Growth Fund will under normal market conditions invest at least
65% of its total assets in securities of companies located in at least three
different countries, one of which typically will be the United States. The
Global Growth Fund is not required to maintain any particular geographic or
currency mix of its investments, and there is no limitation or requirement on
the percentage of its assets which may be invested in securities of companies
domiciled in any one country. Historically, the Global Growth Fund has invested
a substantial percentage of its assets in companies organized or domiciled in
the United States, although it may at times invest up to 100% of its total
assets in securities principally traded in securities markets outside the
United States. In unusual market circumstances when the Adviser believes that
foreign investing may involve undue risks, up to 100% of the Global Growth
Fund's total assets may be invested temporarily in securities of issuers
organized or domiciled in the United States. The Global Growth Fund also may
invest a portion of its assets in cash or money market instruments (up to 100%
of its total assets) for temporary defensive purposes. Securities of foreign
issuers may be owned by the Global Growth Fund through the purchase of
Depositary Receipts (e.g., American, European, Global, Continental, etc.),
which are traded in the United States securities markets or foreign markets and
denominated in U.S. dollars or foreign currencies. The Global Growth Fund may
invest up to 100% of its total assets in Depositary Receipts.
The Global Growth Fund intends to primarily invest in securities of
companies located in developed countries, but reserves the right to invest in
emerging or developing countries, without limitation. Emerging or developing
countries may have relatively unstable governments, economies based on only a
few industries, and less developed securities exchanges or markets which trade
a small number of securities. Although prices on these exchanges tend to be
volatile, in the past they have offered greater potential for gain, as well as
loss, than exchanges in developed countries. It is possible that certain Global
Growth Fund investments could be subject to foreign expropriation or exchange
control restrictions. See "Risk Considerations."
In analyzing companies for investment, the Adviser generally will look for
one or more of the following characteristics: above-average earnings growth
potential; predictable and sustainable earnings growth; high profitability;
strength of management; overall financial strength; significant competitive
advantages; dominant market share; and where possible, limited regulation--all
in relation to the prevailing prices of the securities of such companies. When
appropriate, the Global Growth Fund may invest in new issues that the Manager
believes offer good long-term investment prospects or an opportunity for
immediate price appreciation.
The Global Growth Fund is permitted to invest on a worldwide basis in
companies and other organizations of any size, regardless of country of
organization or place of principal business activity.
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At times the Adviser may judge that conditions in the international
securities markets make pursuing the Global Growth Fund's basic investment
strategy inconsistent with the best interests of the Global Growth Fund's
shareholders. At such times the Adviser may temporarily use alternative
strategies, primarily designed to reduce fluctuations in the value of the
Global Growth Fund's assets. In implementing these "defensive" strategies, the
Global Growth Fund may invest solely in equity securities traded primarily in
U.S. markets, or in domestic or foreign debt securities, preferred stocks, cash
or money market instruments, or in other securities the Adviser considers to be
consistent with such defensive strategies. It is impossible to predict when, or
for how long, the Global Growth Fund will use these alternative strategies.
The Global Growth Fund is designed for long-term investors who can accept
international investment risk. The Global Growth Fund's share price will
reflect the price movements of the different securities markets in which it is
invested as well as the currencies in which its investments are denominated.
The strength or weakness of the U.S. dollar against foreign currencies also may
account for part of the Global Growth Fund's investment performance. As with
any long-term investment, the value of the Global Growth Fund's shares when
sold may be higher or lower than when they were purchased. Because of the
Global Growth Fund's global investment policies and the investment
considerations discussed above, investment in shares of the Global Growth Fund
should not be considered a complete investment program.
The Small & Mid-Cap Growth Fund
The Small & Mid-Cap Growth Fund seeks to achieve its objective by
investing primarily in equity securities of those small to mid-capitalized
companies that the Adviser believes may be the leading companies of tomorrow.
The Small & Mid-Cap Growth Fund will select its portfolio investments primarily
from among U.S. and foreign companies and will emphasize companies with market
capitalizations below $1.5 billion; under normal market conditions, the Fund
will invest at least 65% of its total assets in equity securities of companies
that are in that market capitalization range at the time of purchase. Depending
upon market conditions, the remaining portion of the Fund's investment
portfolio (up to 35% of its total assets) will be invested in a similar manner
or in the equity securities of companies that, at the time of investment, have
a larger market capitalization. The Small & Mid-Cap Growth Fund may continue to
hold its investment in a company whose capitalization subsequently increases to
$1.5 billion or more if the company continues to satisfy the Fund's other
investment policies. When appropriate, the Small & Mid-Cap Growth Fund may
invest in new issues that the Adviser believes offer good long-term investment
prospects or an opportunity for immediate price appreciation.
The Small & Mid-Cap Growth Fund emphasizes the purchase of equity
securities of companies with rapidly growing earnings per share. The Fund also
invests in companies that, although not growing rapidly, are undervalued by
other criteria compared to the Adviser's opinion of their fundamental net
worth.
The Small & Mid-Cap Growth Fund may invest in the securities of companies
listed on any exchange or traded in the over-the-counter market, and is
expected to invest principally in common stocks. The Fund's investments may
also include other types of securities with equity characteristics such as
preferred stocks, warrants, options on stocks and stock indices, and
convertible debt obligations that, in the Adviser's opinion, offer the
possibility of capital appreciation over the course of approximately two or
more years because of the timing of such investments. The Small & Mid-Cap
Growth Fund does not, however, anticipate investing a significant portion of
its total assets in such instruments. Convertible debt instruments pay interest
but are more interest rate sensitive. If interest rates fall these instruments
are likely to increase in value. Conversely, if interest rates rise a decrease
in value can be expected. Dividend and interest income received from portfolio
securities is largely incidental.
Except for temporary defensive and liquidity purposes and its investments
in convertible debt securities described above, the Small & Mid-Cap Growth Fund
will not under normal market conditions invest in debt securities. While the
Fund primarily emphasizes investments in U.S. companies, it can invest up to
50% of its total assets in securities of foreign companies (directly or through
Depositary Receipts) which meet the same criteria applicable to domestic
investments.
Because prices of common stocks and other securities fluctuate, the value
of an investment in the Small & Mid-Cap Growth Fund will vary, based upon the
Small & Mid-Cap Growth Fund's investment performance. The volatility of the
Small & Mid-Cap Growth Fund's investment portfolio is likely to be greater than
that of the Standard & Poor's 500 Stock Index. For this and other reasons
described below in "Investment Restrictions" and "Risk Considerations," the net
asset value per share of the Small & Mid-Cap Growth Fund may fluctuate
substantially, and the Small & Mid-Cap Growth Fund may not be appropriate for
short-term investors.
The Value 25 Fund
The Value 25 Fund seeks to achieve its investment objective through
investments in securities which its Adviser believes offer the best potential
for current dividend yield and long-term growth of capital.
Under normal conditions at least 80% of the Value 25 Fund's total assets
will be invested in common stocks of approximately twenty-five companies
demonstrating high dividend yield and quality earnings. The average market
capitalization of the stocks included will generally be in excess of $1
billion. In selecting the twenty-five stocks, the Adviser uses a proprietary
quantitative approach to identify the highest yielding stocks that fit the
Fund's criteria and then selects from this group of stocks that it believes
offer the best investment promise. The Adviser generally will look for one or
more of the
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following characteristics: established operating history; adequate dividend
coverage; and sound balance sheet and other financial characteristics.
It is expected that the remaining portion of the Value 25 Fund's
investment portfolio will be invested in similar stocks or in common stocks
with the potential for capital appreciation, but the Adviser may invest those
assets in other equity securities that the Adviser believes have favorable
prospects. The Value 25 Fund may also purchase foreign securities, convertible
stocks and bonds, and warrants when considered consistent with the Value 25
Fund's investment objective.
Other Investment Practices
A Fund may also engage to a limited extent in the following investment
practices, each of which involves certain special risks.
Foreign Securities. The Growth Fund, the Balanced Return Fund, the Nifty
Fifty Fund and the Value 25 Fund may occasionally purchase foreign securities
(typically less than 5% of its assets). The Small & Mid-Cap Growth Fund may
invest up to 50% of its assets, and the Global Growth Fund may invest up to
100% of its assets in foreign securities that are listed on a principal foreign
securities exchange or over-the-counter market, or that are represented by
Depositary Receipts (e.g., American, European, Global, Continental, etc.)
listed on a domestic securities exchange, or are traded in the domestic
over-the-counter market.
Because foreign securities are normally denominated and traded in foreign
currencies, the value of the assets of a Fund may be affected favorably or
unfavorably by changes in currency exchange rates and exchange control
regulations. There may be less information publicly available about a foreign
company than about a U.S. company, and the information that is available may
not be of the same quality. Foreign companies are not generally subject to
accounting, auditing and financial reporting standards and practices comparable
to those in the United States. The securities of some foreign companies are
less liquid and at times more volatile than securities of comparable U.S.
companies. Foreign brokerage commissions and other fees are also generally
higher than in the United States. Foreign settlement procedures and trade
regulations may involve certain risks (such as delay in payment or delivery of
securities or in the recovery of a Fund's assets held abroad) and expenses not
present in the settlement of domestic investments.
In addition, there may be a possibility of nationalization or
expropriation of assets, imposition of currency exchange controls, limitations
on the removal of securities or other assets, confiscatory taxation, political,
social or financial instability, and diplomatic developments which could affect
the value of a Fund's investments in certain foreign countries. Legal remedies
available to investors in certain foreign countries may be more limited than
those available with respect to investments in the United States or in other
foreign countries. The laws of some foreign countries may limit a Fund's
ability to invest in securities of certain issuers located in those foreign
countries, and special tax considerations apply to foreign securities,
including withholding of foreign taxes on dividends and interest paid with
respect to a Fund's portfolio investments in such countries. These risks may be
enhanced for investments in emerging or developing countries.
Foreign Currency Exchange Transactions. Each Fund (except the Growth
Fund, the Nifty Fifty Fund and the Balanced Return Fund) may engage in various
foreign currency exchange transactions to protect itself against adverse
changes in exchange rates. These Funds may engage in foreign currency exchange
transactions both in connection with the purchase and sale of portfolio
securities ("transaction hedging"), and to protect itself against changes in
the value of specific portfolio positions ("position hedging"). However,
because of the long-term nature of each Fund's investments, it is not likely
that a Fund regularly will engage in these types of transactions. Accordingly,
any such transactions may be limited and there can be no assurance that even if
utilized, they will be successful.
Transaction hedging is designed to protect against a change in foreign
currency exchange rates between the date on which a Fund contracts to purchase
or sell a security and the settlement date, or to "lock in" the U.S. dollar
equivalent of a dividend or interest payment in a foreign currency. Each Fund
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.
If conditions warrant, each of the Global Growth Fund, the Small & Mid-Cap
Growth Fund and the Value 25 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 as a hedge against changes in foreign
currency exchange rates between the trade and settlement dates on particular
transactions and not for speculation. A foreign currency forward contract is a
negotiated agreement to exchange currency at a future time at a rate or rates
that may be higher or lower than the spot rate. Foreign currency futures
contracts are standardized exchange-traded contracts and have margin
requirements. For transaction hedging purposes each Fund may also purchase or
sell exchange-listed and over-the-counter put and call options on foreign
currency futures contracts and on foreign currencies.
Position hedging is intended to protect against a decline relative to the
U.S. dollar in the value of the currencies in which a Fund's portfolio
securities are denominated or quoted (or against an increase in the value of
the currencies in which the securities a Fund intends to buy are denominated,
when such Fund holds cash or short-term investments). For position hedging
purposes, each Fund may purchase or sell foreign currency futures contracts,
foreign currency forward contracts and options on foreign currency futures
contracts and on foreign currencies on exchanges or in over-the-counter
markets. In connection with position hedging, each Fund may also purchase or
sell foreign currency on a spot basis.
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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.
Hedging transactions involve costs and may result in losses. Each Fund
will engage in over-the-counter transactions only when appropriate
exchange-traded transactions are unavailable and when, in the opinion of the
Adviser, the pricing mechanism and liquidity are satisfactory and the
participants are responsible parties likely to meet their contractual
obligations. There is no assurance that appropriate foreign currency exchange
transactions will be available with respect to all currencies in which such
Fund's investments may be denominated. Each Fund's ability to engage in hedging
transactions also may be limited by tax considerations, and such Fund's hedging
transactions may affect the character or amount of such Fund's distributions.
A more detailed explanation of foreign investments and foreign currency
exchange transactions, and the risks and special tax considerations associated
with them, is included in the Statement of Additional Information.
Options. Each of the Global Growth Fund and the Small & Mid-Cap Growth
Fund may buy and sell put and call options for hedging purposes, and may also
seek to increase its return by writing covered put and call options on
securities it owns or in which it may invest. A Fund receives a premium from
writing a put or call option, which increases such Fund's return if the option
expires unexercised or is closed out at a net profit. When a Fund writes a call
option, it gives up the opportunity to profit from any increase in the price of
the underlying security above the exercise price of the option and the premium
received; when it writes a put option, a Fund takes the risk that it will be
required to purchase the underlying security from the option holder at a price
above the current market price of the security and the premium received. 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. The aggregate value of the securities
underlying options may not exceed 25% of a Fund's assets. Each Fund's use of
these strategies also may be limited by applicable law.
Options on Securities Indices and Put and Call Warrants. Each of the
Global Growth Fund and the Small & Mid-Cap Growth Fund, and to a limited
extent, the Value 25 Fund may buy and sell options on domestic and foreign
securities indices for hedging purposes. A securities index represents a
numerical measure of the changes in value of the securities comprising the
index. An option on a securities index gives the holder the right, in return
for the premium paid for the option, to buy (in the case of a call option) or
sell (in the case of a put option) units of a particular index at an agreed
price during the term of the option. The holder of the option does not receive
the right to take or make delivery of the actual securities making up the
index, but has the right instead to receive a cash settlement amount based on
the change, if any, in the value of the index during the term of the option.
Depending on the change in the value of the underlying index during the
term of the option, the holder may either exercise the option at a profit or
permit the option to expire worthless. For example, if a Fund were to sell a
call option on an index and the value of the index were to increase during the
term of the option, the holder of the index would likely exercise the option
and receive a cash payment from such Fund. If, on the other hand, the value of
the index were to decrease, the option would likely expire worthless, and such
Fund would realize a profit in the amount of the premium received by it when it
sold the option (less any transaction costs). Each Fund will only purchase or
sell options on a securities index to the extent that it holds securities in
its portfolio whose price changes, in the Adviser's judgment, should correlate
closely with changes in the index. No Fund will purchase or sell options on
securities indices if as a result the sum of the premiums paid and premiums
received by a Fund on outstanding options would exceed 5% of such Fund's net
assets.
Each of the Global Growth Fund, Small & Mid-Cap Growth Fund and Value 25
Fund may also purchase put and call warrants issued by banks and other
financial institutions, whose values are based on the values from time to time
of one or more foreign securities indices. Each Fund's use of such warrants
would be similar to its use of options on securities indices.
Securities Loans and Forward Commitments. Each Fund may lend portfolio
securities amounting to not more than 25% of its total assets to
broker-dealers, so long as they are fully collateralized at all times. This may
involve some risk to a Fund because the other party might default on its
obligation, which would cause such Fund to be delayed or prevented from
recovering the collateral. Each Fund may also purchase securities for future
delivery, which may increase its overall investment exposure and involves a
risk of loss if the value of the securities declines before the settlement
date.
Special Situations. Each Fund (except the Global Growth Fund) may invest
in special situations which the Adviser believes present opportunities for
capital growth. A special situation arises when, in the opinion of the Adviser,
the securities of a particular company will, within a reasonable 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;
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material litigation or resolution thereof; technological breakthroughs; and new
management or management policies.
Diversification. The Nifty Fifty Fund and the Value 25 Fund are each a
diversified mutual fund. However, because each such Fund's portfolio may
contain securities of a limited number of companies, each Fund may be more
sensitive to changes in the market value of a single issuer or industry in its
portfolio and therefore may present a greater risk than is usually associated
with a more widely diversified mutual fund.
General Risk Considerations
Because prices of common stocks and other securities fluctuate, the value
of an investment in each Fund will vary, based upon each Fund's investment
performance. Each Fund attempts to reduce its overall exposure to risk from
declines in individual securities by spreading its investments over different
companies and a variety of industries.
Like any investment program, an investment in any Fund entails certain
inherent risks. The stock market tends to be cyclical, with periods when stock
prices generally rise and periods when stock prices generally decline.
Investments in debt securities are also exposed to interest rate risk--i.e.,
fluctuations in the market value of bonds due to changing interest rates.
Derivatives. The Funds (except the Growth Fund, the Nifty Fifty Fund and
the Balanced Return Fund) may use derivatives to complement their basic
investment strategy. These derivatives include foreign currency exchange
instruments, and options on securities indices. These instruments and their
rates are described in this Prospectus. These derivatives do not exhibit
extreme sensitivity to interest rates and are commonly used by investment
professionals. No Fund will invest more than 5% of its total assets in these
securities.
Special Situations. A Fund's investment in special situations often
involves much greater risk than is inherent in ordinary investment securities
due to the often unusual circumstances surrounding each special situation.
Small Cap and Unseasoned Companies. A Funds' investment in small cap or
unseasoned companies carries more risk than investments in larger or more
established companies. Reliance by small cap or unseasoned companies on limited
product lines, management, markets, financial resources and other factors may
make them more susceptible to market or economic setbacks or downturns. Also,
the securities of small cap or unseasoned companies may trade less frequently
and in limited volume, and only in the over-the-counter market or a regional
securities exchange. As a result, the stock prices of small cap or unseasoned
companies may be particularly volatile.
INVESTMENT RESTRICTIONS
In addition to the investment criteria described above, the Funds will
follow the investment policies set forth below which, unless otherwise
indicated as an operating policy, are fundamental policies that may not be
changed without prior shareholder approval as defined in the 1940 Act.
References below to certain percentages of a Fund's total assets mean the total
assets at the time the percentage is determined.
(a) Diversification of Investments.
With respect to at least 75% of each Fund's total assets, a Fund will not
invest more than 5% of its total assets in the securities of any one issuer,
other than obligations either issued or guaranteed by the U.S. Government or
its agencies or instrumentalities. 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).
(b) No Concentration of Investments in an Industry.
Each Fund will not invest more than 25% of its total assets in the
securities of issuers in any one industry.
(c) Limitation on Percentage Ownership of an Issuer.
With respect to at least 75% of each Fund's total assets, a Fund will not
acquire more than 10% of the outstanding voting securities or of any one class
of securities of any one issuer. This limitation does not apply with respect to
the remaining 25% of a Fund's assets (except for the Growth Fund and the
Balanced Return Fund which will apply this limitation to 100% of their assets;
and the holdings by the other Funds in the same issuer will be included for
purposes of this limitation).
(d) Foreign Securities.
Each of the Growth Fund, the Balanced Return Fund and the Nifty Fifty Fund
may invest up to 15% of its assets (subject to the aggregate limitations
referred to below with respect to the Nifty Fifty Fund and the Balanced Return
Fund), the Value 25 Fund may invest up to 25% of its assets, the Small & Mid-
Cap Growth Fund may invest up to 50% of its assets, and the Global Growth Fund
may invest up to 100% of assets in foreign securities that are listed on a
principal foreign securities exchange or over-the-counter market, or that are
represented by Depositary Receipts (e.g., American, European, Global,
Continental, etc.) listed on a domestic securities exchange, or are traded in
the domestic over-the-counter market.
(e) Special Situations.
As a matter of operating policy investments by the Small & Mid-Cap Growth
Fund and the Value 25 Fund in special situations may not exceed 35% of each
Fund's total assets and investments by the Growth Fund, the Balanced Return
Fund and the Nifty Fifty Fund in special situations may not exceed 30% of each
Fund's total assets; such investments by the Balanced Return Fund and the Nifty
Fifty Fund are subject to the aggregate limitations referred to below.
(f) Unseasoned Companies.
As a matter of operating policy, the Funds may invest to a limited extent
in securities of unseasoned companies and new
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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 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, subject to the aggregate
limitations referred to below.
(g) Warrants.
As a matter of operating policy, each Fund will not invest more than 5% of
its net assets in warrants, subject to the restriction that not more than 2%
may be in warrants not listed on the New York or American Stock Exchanges.
While any warrants purchased by a Fund have a readily determined market value
which will generally move in correlation with the market price of the
underlying equity security, warrants nevertheless become worthless if they are
not sold or exercised prior to their designated expiration date.
(h) Temporary Defensive Investments.
From time to time, depending on the Adviser's analysis of market and other
considerations, all or part of the assets of a Fund may be held in cash and
short-term money market instruments, including obligations of the U.S.
Government, high quality commercial paper, certificates of deposit, bankers'
acceptances, bank interest-bearing demand accounts, and repurchase agreements
secured by U.S. Government securities. All such investments will be made for
temporary defensive purposes to protect against the erosion of capital and
pending investment in other securities. Under a repurchase agreement, a Fund
acquires a U.S. Government security from a financial institution that
simultaneously agrees to repurchase the same security at a specified time and
price. The repurchase price reflects an agreed-upon rate of return not
determined by the coupon rate on the underlying security. Under the 1940 Act,
repurchase agreements are considered to be loans by a Fund. In any repurchase
transaction in which a Fund engages, such Fund's position during the entire
term of the repurchase agreement will be fully collateralized. If the seller
defaults on its obligation to repurchase the underlying security, a Fund may
experience delay or difficulty in exercising its rights to realize upon the
security, may incur a loss if the value of the security declines and may incur
disposition costs in liquidating the security.
(i) Investment in Other Investment Companies.
Each Fund may invest in securities issued by other investment companies,
including, in the case of the Global Growth, Small & Mid-Cap Growth and Value 25
Funds, investment companies which principally invest in securities of foreign
issuers, within the limits contained in the 1940 Act. Pursuant to such limits, a
Fund currently may not invest in such securities if, at the time of purchase,
(i) more than 5% of the Fund's total assets are invested in any one investment
company, (ii) more than 3% of the total voting stock of any one investment
company is owned by the Fund, and (iii) more than 10% of the Fund's total assets
are in the aggregate invested in such investment companies.
(j) Other Investment Restrictions.
The investments by the Balanced Return Fund and the Nifty Fifty Fund in
securities of foreign companies, special situation and unseasoned companies may
not in the aggregate exceed 35% of each Fund's total assets.
Each Fund has adopted additional restrictions, both fundamental and
operating, that prohibit or restrict certain investments or practices,
including the purchase of illiquid securities, prohibiting the purchase of
securities of issuers in which officers or trustees of the Trust or the Adviser
have certain interests, and the borrowing of not more than 20% of its total
assets (5% for the Growth Fund, the Balanced Return Fund, and the Nifty Fifty
Fund) for temporary or emergency purposes only. These additional restrictions
are described in the Statement of Additional Information under "Investment
Restrictions."
Each Fund has reserved the right, if approved by the Board of Trustees, to
convert in the future to a "feeder" fund which would invest all of its assets
in a "master" fund having substantially the same investment objective, policies
and restrictions as currently exist for the respective Fund. Prior notice of
any such action would be given to all shareholders if and when such a proposal
is approved, although no such action has been proposed as of the date of this
Prospectus.
PORTFOLIO TURNOVER
Each Fund may purchase and sell securities without regard to the length of
time the security is to be held or has been held, subject to a limit under
certain state tax laws on the amount of income that may be realized on the sale
of assets held for less than 3 months. This factor, together with the
adjustment of the investment portfolio whenever deemed advisable, may, from
time to time, result in a relatively high rate of portfolio turnover. (The
portfolio turnover rate is computed by dividing the lesser of total purchases
or proceeds of sales effected during the period, excluding short-term
securities, by the monthly average of the value of portfolio securities during
that period.) The annual portfolio turnover rate for the Value 25 Fund is not
expected to exceed 200%. High portfolio activity increases a Fund's transaction
costs, including brokerage commissions. See "Financial Highlights" above.
MANAGEMENT OF THE FUNDS
The Trust is an open-end management investment company known as a mutual
fund. The Trustees of the Trust are responsible for the overall supervision of
the Funds and
24
<PAGE>
perform the various duties imposed on Trustees by the 1940 Act and
Massachusetts business trust law.
The Adviser
Roger Engemann & Associates, Inc. ("REA" or the "Adviser") is the
investment adviser for each Fund. REA is a California corporation whose office
is located at 600 North Rosemead Boulevard, Pasadena, California 91107-2101.
REA is a wholly owned subsidiary of Pasadena Capital Corporation, which in turn
is a wholly owned subsidiary of Phoenix Duff & Phelps Corporation, a
publicly-traded company 60% owned by Phoenix Home Life Mutual Insurance
Company. Phoenix Home Life is in the business of writing ordinary and group
life and health insurance and annuities. Its principal offices are located at
One American Row, Hartford, Connecticut 06115. Phoenix Duff & Phelps
Corporation is a New York Stock Exchange traded company that provides various
financial advisory services to institutional investors, corporations and
individuals through operating subsidiaries. Roger Engemann is the Chairman of
the Board and President of the Adviser, Pasadena Capital Corporation and the
Trust. The Adviser has been engaged in the investment management business since
1969, and provides investment counseling services to retirement plans,
colleges, corporations, trusts and individuals. Assets under management by the
Adviser as of December 31, 1996, were approximately $5.1 billion.
Management Fees
The Adviser continuously furnishes an investment program for each Fund and
manages the investment and reinvestment of the assets subject at all times to
the supervision of the Trustees. Under the terms of the Investment Management
Agreement for each Fund, the Adviser is entitled to a prescribed fee, payable
upon request by the Adviser, at the following annual rates based on the
aggregate daily net asset values of such Fund.
<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>
During the fiscal year ended December, 31, 1996, the management fees paid
by each of the Funds were as follows: .65% Growth Fund; .74% Nifty Fifty Fund;
.90% Balanced Return Fund; .44% Global Growth Fund; and .55% Small & Mid-Cap
Growth Fund.
The Portfolio Managers
Roger Engemann, James E. Mair and John S. Tilson are primarily responsible
for the day-to-day management of the Funds. Mr. Engemann has been president of
the Adviser since its inception. Messrs. Mair and Tilson are both Executive
Vice Presidents of Portfolio Management of the Adviser, and both have been with
the Adviser since 1983. Messrs. Engemann and Mair have been Chartered Financial
Analysts ("CFAs") since 1972, and Mr. Tilson has been a CFA since 1974.
Lou Abel, Scott Swanson, Ned Brines, James Chen, Yossie Lispker, Lou Holtz
and Mark Petrie serve as research analysts and participate as members of the
team who are responsible for the day-to-day management of the Funds'
portfolios. Messrs. Swanson and Abel are CFAs and have been with the Adviser
since 1990 and 1991, respectively. Messrs. Chen and Brines are CFAs and have
been with the Adviser since 1994. Mr. Holtz is a CFA and has been with the
Adviser since 1996. Messrs. Petrie and Lispker are CFA Level III candidates and
have been with the Adviser since 1992.
The Administrator
Equity Planning acts as Administrator of the Funds and, as such, performs
administrative, bookkeeping and pricing functions for the Funds as well as
certain shareholder services. As compensation, Equity Planning is entitled to
an administrative fee from each Fund, payable monthly and based upon the
average of the aggregate daily net asset values of each Fund, at the following
incremental annual rates:
<TABLE>
<S> <C>
First $50 million .60%
Over $50 million through $450 million .50%
Over $450 million through $625 million .40%
Greater than $625 million .30%
</TABLE>
The 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
(each custodian is called the "Custodian").
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.
Brokerage Commissions
Although the Conduct Rules of the National Association of Securities
Dealers, Inc. ("NASD") prohibit its members from seeking orders for the
execution of investment company portfolio transactions on the basis of their
sales of investment company shares, under such Rules, sales of investment
company shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Funds.
DISTRIBUTION PLANS
Equity Planning and the Funds have entered into a distribution agreement
under which Equity Planning has agreed to use its best efforts to find
purchasers for shares of
25
<PAGE>
the Funds sold subject to an initial sales charge and those sold subject to a
contingent deferred sales charge. The Funds have granted Equity Planning the
exclusive right to purchase from the Funds and resell, as principal, shares
needed to fill unconditional orders for shares of the Funds. Equity Planning
may sell shares of the Funds through its registered representatives or through
securities dealers with whom it has sales agreements. Equity Planning may also
sell shares of the Funds pursuant to sales agreements entered into with banks
or bank-affiliated securities brokers who, acting as agent for their customers,
place orders for shares of the Funds with Equity Planning. Although the
Glass-Steagall Act prohibits banks and bank affiliates from engaging in the
business of underwriting, distributing or selling securities (including mutual
fund shares), banking regulators have not indicated that such institutions are
prohibited from purchasing mutual fund shares upon the order and for the
account of their customers. If, because of changes in law or regulations, or
because of new interpretations of existing law, it is determined that agency
transactions of banks or bank-affiliated securities brokers are not permitted
under the Glass-Steagall Act, the Trustees will consider what action, if any,
is appropriate. It is not anticipated that termination of sales agreements with
banks or bank-affiliated securities brokers would result in a loss to their
customers or a change in the net asset value per share of a Fund.
The sale of Fund shares through a securities broker affiliated with a
particular bank is not expected to preclude the Funds from borrowing from such
bank or from availing itself of custodial or transfer agency services offered
by such bank.
The Trustees have adopted separate distribution plans under Rule 12b-1 of
the 1940 Act for Class B, Class C and Class M Shares of each Fund of the Trust
(the "12b-1 Plan" and collectively, the "12b-1 Plans") and a shareholder
servicing plan for each class of shares of the Funds (the "Servicing Plan").
The 12b-1 Plans permit the Funds to reimburse the Distributor for expenses
incurred in connection with the sale and promotion of Fund shares and the
furnishing of shareholder services. A 12b-1 fee paid by one series may be used
to finance distribution of the shares of another series based on the number of
shareholder accounts within the Funds. Pursuant to the Servicing Plan, the
Funds will pay the Distributor for actual expenses of the Distributor of 0.25%
annually for the average daily net assets of the Funds. Pursuant to the 12b-1
Plans, the Funds may reimburse the Distributor for actual expenses of the
Distributor up to 0.75% annually for the average daily net assets of the Funds'
Class B and C Shares, and up to 0.25% annually for the average daily net assets
of the Funds' Class M Shares.
Expenditures incurred under the 12b-1 Plans and the Servicing Plan may
consist of: (i) commissions to sales personnel for selling shares of the Funds
(including underwriting commissions and finance charges related to the payment
of commissions for sales of Class B and C Shares); (ii) compensation, sales
incentives and payments to sales, marketing and service personnel; (iii)
payments to broker-dealers and other financial institutions which have entered
into agreements with the Distributor for services rendered in connection with
the sale and distribution of shares of the Funds and provision of shareholder
services; (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' Prospectus and Statement of Additional Information for
distribution to potential investors; (vii) such other similar services that the
Trustees determine are reasonably calculated to result in the sale of shares of
the Funds, provided, however that a portion of such fee, which portion shall be
equal to or less than 0.25% annually of the average daily net assets of each
Fund, may be paid for reimbursing the costs of providing services to
shareholders, including assistance in connection with inquiries related to
shareholder accounts (the "Service Fee"). From the Service Fee, the Distributor
expects to pay a quarterly fee to qualifying broker/dealer firms, as
compensation for providing personal services to shareholders and/or maintaining
shareholder accounts, with respect to shares sold by such firms. This fee will
not exceed on an annual basis 0.25% of the average annual net asset value of
such shares, and will be in addition to sales charges on Fund shares which are
reallowed to such firms. To the extent that the entire amount of the Service
Fee is not paid to such firms, the balance will serve as compensation for
personal and account maintenance services furnished by the Distributor. The
Distributor also pays to dealers, as additional compensation with respect to
sales of Class C and M shares, 0.75% and 0.25% of the average annual net asset
value of each class, respectively.
In order to receive payments under the 12b-1 Plans and/or the Servicing
Plan, participants must meet such qualifications as are 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 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
batch processing.
On a quarterly basis, the Trustees review a report on expenditures under
each 12b-1 Plan and the purposes for which expenditures were made. The Trustees
conduct an additional, more extensive review annually in determining whether
each 12b-1 Plan will be continued. By its terms, continuation of each 12b-1
Plan from year to year is contingent on annual approval by a majority of the
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 any 12b-1 Plan or any related agreements. Each 12b-1 Plan
provides that it may not be amended to increase materially the costs which the
Funds may bear without approval of the applicable class of shareholders of the
affected Fund of the Trust and that other material amendments must be approved
by a majority of the Trustees who are not "interested persons" by vote cast in
26
<PAGE>
person at a meeting called for the purpose of considering such amendments. Each
12b-1 Plan further provides that while it is in effect, the selection and
nomination of Trustees who are not "interested persons" shall be committed to
the discretion of the Trustees who are not "interested persons." Each 12b-1
Plan may be terminated at any time by vote of a majority of the Trustees who
are not "interested persons" or a majority of the applicable class of
outstanding shares of the each Fund.
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 any or all of the
12b-1 Plans.
HOW TO BUY SHARES
How do you invest?
You may open a fund account with an initial investment of $500. This
amount is reduced to $25 for investments made under the "Investo-Matic" plan
(see the Funds' Application), individual retirement accounts or under the
systematic exchange privilege described below. The initial investment
requirement is waived for investments made under pension, profit sharing or
employee benefit plans as well as in connection with reinvested dividends and
distributions.
You may make additional investments at any time with at least $25. The
subsequent investment minimum is waived for investments made under pension,
profit sharing or employee benefit plans as well as in connection with
reinvested dividends and distributions.
An application should be completed to open a new Phoenix-Engemann Funds
account. A check for the amount you wish to invest, made payable to the "The
Phoenix-Engemann Funds" (along with the completed application if opening a new
account), must be sent to: The Phoenix-Engemann Funds, c/o State Street Bank
and Trust Company ("State Street Bank"), P.O. Box 8301, Boston, MA 02266-8301.
You may also write to the Distributor at 100 Bright Meadow Boulevard, Enfield,
Connecticut 06083-2200 or call (800) 243-1574.
Shares are sold at the public offering price based on the net asset value
for the class of shares purchased next determined after State Street Bank
receives your order. In most cases, in order to receive that day's public
offering price, State Street Bank must receive your order before the close of
regular trading on the New York Stock Exchange. See "Net Asset Value."
Ownership of shares is recorded electronically in book-entry form; no share
certificates are available. The Funds reserve the right to designate additional
agents to receive orders.
What are the classes and how do they differ?
Each Fund presently offers investors four classes of shares which bear
sales and distribution/service ("Rule 12b-1 fees") charges in different
amounts.
Class A Shares. If you buy Class A Shares, you will pay a sales charge at
the time of purchase equal to 4.75% of the offering price (4.99% of the amount
invested). The sales charge may be reduced or waived under certain conditions.
Class A Shares are not subject to any charges by the Funds when they are sold.
Class A Shares are not subject to Rule 12b-1 fees and pay higher dividends than
any other class.
Class B Shares. If you buy Class B Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class B Shares within the first 5
years after they are purchased, you will pay a sales charge of up to 5% of your
shares' value. See "Deferred Sales Charge Alternative--Class B Shares." This
charge declines over a five year period to zero and may be waived under certain
conditions. Class B shares have higher Rule 12b-1 fees and pay lower dividends
than Class A and M Shares. Class B Shares automatically convert to Class A
Shares eight years after purchase. The Distributor intends to limit investments
in Class B Shares to: (a) $250,000 for any person; (b) $1 million for any
unallocated employer sponsored plan; and (c) $250,000 for each participant in
any allocated qualified employer sponsored plan, including 401(k) plans,
provided such plan uses an approved participant tracking system. Class B Shares
will not be sold to any qualified employee benefit plan, endowment fund or
foundation if, on the date of the initial investment, such entity has assets of
over $10 million or more than 200 participant employees. Class B Shares will
not be sold to anyone who is over 85 years old.
Class C Shares. If you buy Class C Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class C Shares within the first year
after they are purchased, you will pay a sales charge of 1% of your shares'
value. See "Deferred Sales Charge Alternative--Class C Shares." Class C Shares
have the same Rule 12b-1 fees and pay comparable dividends as Class B Shares.
Class C Shares do not convert to any other class of shares of the Funds.
Class M Shares. If you buy Class M Shares, you will pay a sales charge at
the time of purchase equal to 3.50% of the offering price (3.63% of the amount
invested). Class M Shares are not subject to any charges by the Funds when they
are sold. Class M Shares have lower Rule 12b-1 fees and pay higher dividends
than Class B and C Shares. Class M Shares do not convert to any other class of
shares of the Funds.
What arrangement is best for you?
The alternative purchase arrangement permits you to choose the method of
buying shares that is most beneficial to you given the amount of the purchase,
the length of time you expect to hold the shares, whether you wish to receive
distributions in cash or to reinvest them in additional shares, and other
circumstances. You should consider whether, during the anticipated term of your
investment, the accumulated continuing distribution and service fees and
contingent deferred sales charges of one class would be more than the initial
sales charge and accumulated distribution and service fees of another class of
shares bought at the same time. See "Distribution Plans" and "Fund Expenses."
Initial Sales Charge Alternative--Class A and M Shares
The public offering price of Class A and M Shares is the net asset value
plus a sales charge that varies depending on the
27
<PAGE>
size of any "person's" (see "How To Obtain Reduced Initial Sales Charges--Class
A and M Shares: Combination Purchase Privilege") purchase. Shares issued based
on the automatic reinvestment of income dividends or capital gains
distributions are not subject to any sales charges. The sales charge is divided
between your investment dealer and the Distributor as shown in the following
tables.
Class A Shares
<TABLE>
<CAPTION>
Sales Charge as
a percentage of
-----------------------
Amount of Net Dealer Discount
Transaction Offering Amount Percentage of
at Offering Price Price Invested Offering Price
- -------------------- -------- -------- ---------------
<S> <C> <C> <C>
Under $50,000 4.75% 4.99% 4.25%
$50,000 but under
$100,000 4.50 4.71 4.00
$100,000 but under
$250,000 3.50 3.63 3.00
$250,000 but under
$500,000 3.00 3.09 2.75
$500,000 but under
$1,000,000 2.00 2.04 1.75
$1,000,000 or more None None None
</TABLE>
Class M Shares
<TABLE>
<CAPTION>
Sales Charge as
a percentage of
-----------------------
Amount of Net Dealer Discount
Transaction Offering Amount Percentage of
at Offering Price Price Invested Offering Price
- ------------------- ---------- ---------- ----------------
<S> <C> <C> <C>
Under $50,000 3.50% 3.63% 3.00%
$50,000 but under
$100,000 2.50 2.56 2.00
$100,000 but under
$250,000 1.50 1.52 1.00
$250,000 but under
$500,000 1.00 1.01 1.00
$500,000 or more None None None
</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 (the "CDSC") at the rates set forth below. The
charge will be multiplied by the then current market value or the initial cost
of the shares being redeemed, whichever is less. No sales charge will be
imposed on increases in net asset value. In addition, shares issued based on
the automatic reinvestment of income dividends or capital gains distributions
are not subject to any sales charges. To minimize the CDSC, shares not subject
to any charge will be redeemed first, followed by shares held the longest time.
The Distributor will add up all shares bought in any month and use the last day
of the preceding month in calculating the amount of shares owned and time
period held for Class B Shares. The trade date will be used for purposes of
aging Class C Share investments.
Deferred Sales charge you may pay to sell
Class B Shares
<TABLE>
<CAPTION>
Year 1 2 3 4 5 6+
- ---- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
CDSC 5% 4% 3% 2% 2% 0%
</TABLE>
Class B Shares Purchased Prior to January 20, 1998
Class B Shares that are purchased prior to January 20, 1998 are not
subject to the sales load schedule described above but will continue to be
subject to the sales load schedule as it existed prior to that date. The
following is the sales load schedule you may pay to sell Class B Shares
purchased prior to January 20, 1998:
<TABLE>
<CAPTION>
Year 1 2 3 4 5+
- ---- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
CDSC 5% 4% 3% 3% 0%
</TABLE>
In addition, Class B Shares purchased prior to January 20, 1998, will
convert to Class A Shares the month following the sixth anniversary of their
purchase.
Deferred Sales charge you may pay to sell
Class C Shares
<TABLE>
<CAPTION>
Year 1 2+
- ---- -- --
<S> <C> <C>
CDSC 1% 0%
</TABLE>
Class C shares of the Growth Fund, Balanced Return Fund and Nifty Fifty
Fund purchased prior to January 20, 1998 are not subject to the 1% CDSC.
Dealer Concessions
In addition to the dealer discount on purchases of Class A and M Shares,
the Distributor intends to pay investment dealers a sales commission of 4% of
the sale price of Class B Shares and a sales commission of 1% of the sale price
of Class C Shares sold by such dealers. Your broker, dealer or investment
adviser may also charge you additional commissions or fees for their services
in selling shares to you provided they notify the Distributor of their
intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of
the Funds and/or for providing other shareholder services. Depending on the
nature of the services, these fees may be paid either from the Trust through
distribution fees, service fees or transfer agent fees or in some cases, the
Distributor may pay certain fees from its own profits and resources. From its
own profits and resources, the Distributor does intend to: (a) sponsor sales
contests, training and educational meetings and provide additional compensation
to qualifying dealers in the form of trips, merchandise or expense
reimbursements; (b) from time to time pay special incentive and retention fees
to qualified wholesalers, registered financial institutions and third party
marketers; (c) pay broker/dealers an amount equal to 1% of the first $3 million
of Class A Share purchases by an account held in the name of a qualified
employee benefit plan with at least 100 eligible employees, 0.50% on the next
$3 million, plus 0.25% on the amount in excess of $6 million; and (d) excluding
28
<PAGE>
purchases as described in (c) above, pay broker/dealers an amount equal to 1%
of the amount of Class A Shares sold above $1 million but under $3 million,
0.50% on the next $3 million, plus 0.25% on the amount in excess of $6 million.
If part or all of such investment, including investments by qualified employee
benefit plans, is subsequently redeemed within one year of the investment date,
the broker-dealer will refund to the Distributor such amounts paid with respect
to the investment. In addition, the Distributor may pay the entire applicable
sales charge on purchases of Class A Shares to selected dealers and agents. Any
dealer who receives more than 90% of a sales charge may be deemed to be an
"underwriter" under the Securities Act of 1933.
How To Obtain Reduced Initial Sales Charges--
Class A and M Shares
Investors choosing Class A or M Shares may be entitled to reduced sales
charges. The five ways in which sales charges may be avoided or reduced are
described below.
Qualified Purchasers. If you fall within any one of the following
categories, you will not have to pay a sales charge on your purchase of Class A
or M Shares: (1) 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; (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 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 or M 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).
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" includes any other open-end management
investment company advised, subadvised or distributed by the Adviser or
Distributor or any corporate
29
<PAGE>
affiliate of either or both the Adviser and Distributor provided such other
investment company extends reciprocal privileges to shareholders of the Phoenix
Funds.
Letter of Intent. If you sign a Letter of Intent, your purchase of any
class of shares of 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 and Class M Share sales charges. The group or
association must: (1) have been in existence for at least six months; (2) have
a legitimate purpose other than to purchase mutual fund shares at a reduced
sales charge; (3) work through an investment dealer; or (4) not be a group
whose sole reason for existing is to consist of members who are credit card
holders of a particular company, policyholders of an insurance company,
customers of a bank or a broker-dealer or clients of an investment adviser.
How To Obtain Reduced Deferred Sales Charges--
Class B and C Shares
The CDSC is waived on the redemption (sale) of Class B and C Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section
72(m)(7); (c) as a mandatory distribution upon reaching age 70-1/2 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 no 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 Trust mails periodic statements and reports to shareholders. In order
to reduce the volume and cost of mailings, to the extent possible, only one
copy of most Fund reports will be mailed to households for multiple accounts
with the same surname at the same household address. Please contact Equity
Planning to request additional copies of shareholder reports toll free at (800)
243-4361.
In most cases, changes to any shareholder account may be accomplished by
calling Shareholder Services at (800) 243-1574.
30
<PAGE>
More information relating to the shareholder account services can be found in
the Funds' Statement of Additional Information ("SAI").
Bank Draft Investing Program (Investo-Matic Plan). By completing the
Investo-Matic Section of the New Account Application, you may authorize the
bank named in the form to draw $25 or more from your personal checking or
savings account to be used to purchase additional shares for your account. The
amount you designate will be made available, in form payable to the order of
the Transfer Agent, by the bank on the date the bank draws on your account and
will be used to purchase shares at the applicable offering price.
Distribution Option. The Funds currently declare all income dividends and
all capital gain distributions, if any, payable in shares of the Funds at net
asset value or, at your option, in cash. By exercising the distribution option,
you may elect to: (1) receive both dividends and capital gain distributions in
additional shares or (2) receive dividends in cash and capital gain
distributions in additional shares or (3) receive both dividends and capital
gain distributions in cash. If you elect to receive dividends and/or
distributions in cash and the check cannot be delivered or remains uncashed due
to an invalid address, then the dividend and/or distribution will be reinvested
after the Transfer Agent has been informed that the proceeds are undeliverable.
Additional shares will be purchased in your account at the then current net
asset value. Dividends and capital gain distributions received in shares are
taxable to you and credited to your account in full and fractional shares
computed at the closing net asset value on the next business day after the
record date. No interest will accrue on amounts represented by uncashed
distribution or redemption checks.
Systematic Withdrawal Program. The Systematic Withdrawal Program allows
you to periodically redeem a portion of your account on a predetermined
monthly, quarterly, semiannual or annual basis. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the month
at the closing net asset value on the date of redemption. The Systematic
Withdrawal Program also provides for redemptions to be tendered on or about the
10th, 15th or 25th of the month with proceeds to be directed through Automated
Clearing House (ACH) to your bank account. In addition to the limitations
stated below, withdrawals may not be less than $25 and minimum account balance
requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a 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 or M
Shares investor since a sales charge will be paid by the investor on the
purchase of Class A or M Shares at the same time as other shares are being
redeemed. For this reason, investors in Class A or M Shares may not participate
in an automatic investment program while participating in the Systematic
Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any
applicable contingent deferred sales charge on all shares redeemed.
Accordingly, the purchase of Class B Shares will generally not be suitable for
an investor who anticipates withdrawing sums in excess of the above limits
shortly after purchase.
Tax Sheltered Retirement Plans. Shares of the Funds are offered in
connection with the following qualified prototype retirement plans: IRA,
Rollover IRA, SEP-IRA, SIMPLE IRA, SIMPLE 401(k), Profit-Sharing and Money
Purchase Pension Plans which can be adopted by self-employed persons ("Keogh")
and by corporations and 403(b) Retirement Plans. Write or call Equity Planning
at (800) 243-4361 for further information about the plans.
Exchange Privileges
You may exchange shares of one Fund in the Phoenix-Engemann Funds for shares of
another Fund in the Phoenix-Engemann Funds or any other affiliated Phoenix Fund
without paying any fees or sales charges.
On exchanges with share classes that carry a contingent deferred sales
charge, the CDSC schedule of the original shares purchased continues to apply.
Shares held in book-entry form may be exchanged for shares of the same class of
any other affiliated Phoenix Fund, provided the following conditions are met:
(1) the shares that will be acquired in the exchange (the "Acquired Shares")
are available for sale; (2) the Acquired Shares are the same class as the
shares to be surrendered (the "Exchanged Shares"); (3) the Acquired Shares will
be registered to the same shareholder account as the Exchanged Shares; (4) the
account value of the Fund whose shares are to be acquired must equal or exceed
the minimum initial investment amount required by that Fund after the exchange
is made; and (5) if you have elected not to use the telephone exchange
privilege (see below), a properly executed exchange request must be received by
the Distributor. Exchanges may be made over the telephone or in writing and may
be made at one time or systematically over a period of time. Note, each Fund
has different investment objectives and policies. You should read the
prospectus of the Fund into which the exchange is to be made before making any
exchanges. Class C and Class M Shares are not offered on all affiliated Phoenix
Funds. This privilege may be modified or terminated at any time on 60 days'
notice.
31
<PAGE>
Market Timer Restrictions. Because excessive trading can hurt Fund
performance and harm shareholders, the Funds reserve the right to temporarily
or permanently terminate exchange privileges or reject any specific order from
anyone whose transactions seem to follow a timing pattern, including those who
request more than one exchange out of a fund within any 30 day period. The
Distributor has entered into agreements with certain market timer entities
permitting them to exchange their clients' shares by telephone. These
privileges are limited under those agreements. The Distributor has the right to
reject or suspend these privileges upon reasonable notice.
Telephone Exchanges. If permitted in your state and unless you waive this
privilege in writing, you or your broker may sell or exchange your shares over
the phone by calling the Distributor at (800) 243-1574. Reasonable procedures
will be used to confirm that telephone instructions are genuine. In addition to
requiring that the exchange is only made between accounts with identical
registrations, the Distributor may require address or other forms of
identification and will record telephone instructions. All exchanges will be
confirmed in writing to you. If procedures reasonably designed to prevent
unauthorized telephone exchanges are not followed, the Funds and/or Distributor
may be liable for following telephone instructions that prove to be fraudulent.
Broker/dealers other than the Distributor assume the risk of any loss resulting
from any unauthorized telephone exchange instructions from their firm or their
registered representatives. You assume the risk if the Distributor acts upon
unauthorized instructions it reasonably believes to be genuine. During times of
severe economic or market changes, this privilege may be difficult to exercise
or may be temporarily suspended. In such event, an exchange may be effected by
written request by the registered shareowner(s).
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close
of regular trading of the New York Stock Exchange (the "Exchange") on days when
the Exchange is open for trading. The net asset value per share of 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. 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.
The Funds' investments are valued at market value or, where market
quotations are not available, at fair value as determined in good faith by the
Trustees or their delegates. Foreign and domestic debt securities (other than
short-term investments) are valued on the basis of broker quotations or
valuations provided by a pricing service approved by the Trustees when such
prices are believed to reflect the fair value of such securities. Foreign and
domestic equity securities are valued at the last sale price or, if there has
been no sale that day, at the last bid price, generally. Short-term investments
having a remaining maturity of less than sixty-one days are valued at amortized
cost, which the Trustees have determined approximates market value. For further
information about security valuations, see the Statement of Additional
Information.
HOW TO REDEEM SHARES
You have the right to have the Funds buy back shares at the net asset
value next determined after receipt of a redemption order, and any other
required documentation in proper form, by Phoenix Funds c/o State Street Bank
and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. In the case of a Class
B or C Share redemption, you will be subject to the applicable contingent
deferred sales charge, if any, for such shares (see "Deferred Sales Charge
Alternative--Class B and C Shares," above). Subject to certain restrictions,
shares may be redeemed by telephone or in writing. In addition, shares may be
sold through securities dealers, brokers or agents who may charge customary
commissions or fees for their services. The Funds do not charge any redemption
fees. Payment for shares redeemed is made within seven days, provided that
redemption proceeds will not be disbursed until each check used for purchases
of shares has been cleared for payment by your bank, which may take up to 15
days after receipt of the check.
The requirements to redeem shares are outlined in the table below.
Additional documentation may be required for redemptions by corporations,
partnerships or other organizations, executors, administrators, trustees,
custodians, guardians, or from IRA's or other retirement plans, or if
redemption is requested by anyone but the shareholder(s) of record. To avoid
delay in redemption or transfer, shareholders having questions about specific
requirements should contact the Funds at (800) 243-1574. Redemption requests
will not be honored until all required documents in proper form have been
received.
How can I sell my Shares?
[graphic] By Phone [bullet] Sales up to $50,000
[bullet] Not available on most retirement accounts
(800) 243-1574 [bullet] Requests received after 4 PM will be
executed on the following business day
[graphic]
In Writing [bullet] Letter of instruction from the registered
owner including the fund and account
number and the number of shares or dollar
amount you wish to sell
[bullet] No signature guarantee is required if your
shares are registered individually, jointly,
or as custodian under the Uniform Gifts to
Minors Act or Uniform Transfers to Minors
Act, the proceeds of the redemption do not
exceed $50,000, and the proceeds are
payable to the registered owner(s) at the
address of record
Shares previously issued in certificate form cannot be redeemed until the
certificated shares have been deposited to your account.
32
<PAGE>
Telephone Redemptions
The Funds and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. Address and bank account
information will be verified, telephone redemption instructions will be
recorded on tape, and all redemptions will be confirmed in writing to you. If
there has been an address change within the past 60 days, a telephone
redemption will not be authorized. To the extent that procedures reasonably
designed to prevent unauthorized telephone redemptions are not followed, the
Funds and/or the Transfer Agent may be liable for following telephone
instructions for redemption transactions that prove to be fraudulent. Broker/
dealers other than Equity Planning have agreed to bear the risk of any loss
resulting from any unauthorized telephone redemption instruction from the firm
or its registered representatives. However, you would bear the risk of loss
resulting from instructions entered by an unauthorized third party that the
Funds and/or the Transfer Agent reasonably believe to be genuine. The Telephone
Redemption Privilege may be modified or terminated at any time on 60 days'
notice to shareholders. In addition, during times of drastic economic or market
changes, the Telephone Redemption Privilege may be difficult to exercise or may
be temporarily suspended. In such event, a redemption may be effected by
written request by following the procedure outlined above.
Written Redemptions
If you elect not to use the telephone redemption or telephone exchange
privileges, you must submit your request in writing. If the shares are being
exchanged between accounts that are not identically registered, the signature
on such request must be guaranteed by an eligible guarantor institution as
defined by the Transfer Agent in accordance with its signature guarantee
procedures. Currently, such procedures generally permit guarantees by banks,
broker dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings associations.
Account Reinstatement Privilege
You have a one time privilege of using redemption proceeds from Class A,
B, C and M Shares to purchase Class A Shares of any affiliated Phoenix Fund
with no sales charge (at net asset value next determined after the request for
reinvestment is made). For Federal income tax purposes, a redemption and
reinvestment will be treated as a sale and purchase of shares. Special rules
may apply in computing the amount of gain or loss in these situations. (See
"Dividends, Distributions and Taxes" for information on the Federal income tax
treatment of a disposition of shares.) A written request to reinstate your
account must be received by the Transfer Agent within 180 days of the
redemption, accompanied by payment for the shares (not in excess of the
redemption value). Class B shareholders who have had the contingent deferred
sales charge waived through participation in the Systematic Withdrawal Program
are not eligible to use the Reinstatement Privilege.
Redemption of Small Accounts
Due to the relatively high cost of maintaining small accounts, the Funds
reserve 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
Funds redeem these shares, the shareholder will be given notice that the value
of the shares in the account is less than the minimum amount and will be
allowed 60 days to make an additional investment in an amount which will
increase the value of the account to at least $200.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
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 Subchapter M of the Internal Revenue
Code (the "Code"). In addition, each Fund intends to distribute annually to
shareholders all or substantially all of its net investment income and net
realized capital gains, after utilization of any capital loss carryover. As a
result, each Fund will not be subject to Federal income tax on the net
investment income and net capital gains that it distributes. The discussion
below is based upon the assumption that each Fund will qualify as a RIC.
Each Fund intends to declare a dividend equal to substantially all of its
net investment income (including any net short-term capital gains realized by
the Fund and any net realized foreign currency gains and losses, if any) and a
distribution of substantially all net realized long-term capital gains at least
once each calendar year, typically in December, except that the Value 25 Fund
intends to declare dividends from investment income on a semi-annual basis. The
Trustees, however, may declare dividends more or less frequently.
Each Fund will be subject to a nondeductible 4% excise tax if it fails to
meet certain calendar year distribution requirements. In order to prevent
imposition of the excise tax, it may be necessary for the Funds to make
distributions more frequently than described in the previous paragraph.
Unless a shareholder elects to receive distributions in cash, dividends
and capital gain distributions will be paid in additional shares of the Funds
credited at the net asset value per share on the ex-date. Dividends and
distributions, whether received in cash or in additional shares of the Funds,
generally are subject to Federal income tax and may be subject to state, local,
and other taxes. Shareholders will be notified annually about the amount and
character of distributions made to them by the Funds.
Long-term capital gains, if any, distributed to shareholders and which are
designated by the Funds as capital gain distributions, are taxable to
shareholders as long-term capital gain distributions regardless of the length
of time shares of the Funds have been held by the shareholder. Distributions of
short-term capital gains and net investment income, if any, are taxable to
shareholders as ordinary income.
Dividends and distributions generally will be taxable to shareholders in
the taxable year in which they are received. However, dividends and
distributions declared by the Funds in October, November or December of any
calendar year, with
33
<PAGE>
a record date in such a month, and paid during the following January, will be
treated as if they were paid by the Funds and received by shareholders on
December 31 of the calendar year in which they were declared.
A redemption or other disposition (including an exchange) of shares of the
Funds generally will result in the recognition of a taxable gain or loss, which
will be a long- or short-term capital gain or loss (assuming the shares were a
capital asset in the hands of the shareholder), depending upon a shareholder's
holding period for his or her shares. In addition, if shares of a Fund are
disposed of at a loss and are replaced (either through purchases or through
reinvestment of dividends) within a period commencing thirty days before and
ending thirty days after the disposition of such shares, the realized loss will
be disallowed and appropriate adjustments to the tax basis of the new shares
will be made. In addition, special rules may apply to determine the amount of
gain or loss realized on any exchange.
The foregoing is only a summary of some of the important tax
considerations generally affecting a Fund and its shareholders. In addition to
the Federal income tax consequences described above, which are applicable to
any investment in a Fund, there may be state or local tax considerations, and
estate tax considerations, applicable to the circumstances of a particular
investor. Also, legislation may be enacted in the future that could affect the
tax consequences described above. Investors are urged to consult their
attorneys or tax advisers regarding specific questions as to Federal, foreign,
state or local taxes. Foreign shareholders may be subject to U.S. Federal
income tax rules that differ from those described above. For more information
regarding distributions and taxes, see "Dividends, Distributions and Taxes" in
the Statement of Additional Information.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS regulations, the Funds may be required to withhold 31% of
all reportable payments including any taxable dividends, capital gain
distributions or share redemption proceeds for any account which does not have
a taxpayer identification number or social security number and certain required
certifications.
The 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.
Each Fund will send to its shareholders, within 31 days after the end of
the calendar year, information which is required by the Internal Revenue
Service for preparing federal income tax returns. Investors are urged to
consult their attorney or tax adviser regarding specific questions as to
Federal, foreign, state or local taxes.
ADDITIONAL INFORMATION
Description of Shares
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 a 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.
Registration Statement
This Prospectus omits certain information included in the Statement of
Additional Information and Part C of the Registration Statement filed with the
Securities and Exchange Commission under the Securities Act of 1933 and the
1940 Act. A copy of the Registration Statement may be obtained from the
Securities and Exchange Commission in Washington, D.C.
34
<PAGE>
BACKUP WITHHOLDING INFORMATION
Step 1. Please make sure that the social security number or taxpayer
identification number (TIN) which appears on the Application complies
with the following guidelines:
<TABLE>
<S> <C>
Account Type Give Social Security Number or Tax Identification Number of:
- -------------------------------------------------------------------------------------------------------
Individual Individual
- -------------------------------------------------------------------------------------------------------
Joint (or Joint Tenant) Owner who will be paying tax
- -------------------------------------------------------------------------------------------------------
Uniform Gifts to Minors Minor
- -------------------------------------------------------------------------------------------------------
Legal Guardian Ward, Minor or Incompetent
- -------------------------------------------------------------------------------------------------------
Sole Proprietor Owner of Business (also provide owner's name)
- -------------------------------------------------------------------------------------------------------
Trust, Estate, Pension Plan Trust Trust, Estate, Pension Plan Trust (not personal TIN of fiduciary)
- -------------------------------------------------------------------------------------------------------
Corporation, Partnership,
Other Organization Corporation, Partnership, Other Organization
- -------------------------------------------------------------------------------------------------------
Broker/Nominee Broker/Nominee
- -------------------------------------------------------------------------------------------------------
</TABLE>
Step 2. If you do not have a TIN, you must obtain Form SS-5 (Application for
Social Security Number) or Form SS-4 (Application for Employer
Identification Number) from your local Social Security or IRS office and
apply for one. Write "Applied For" in the space on the application.
Step 3. If you are one of the entities listed below, you are exempt from
backup withholding.
[bullet] A corporation
[bullet] Financial institution
[bullet] Section 501(a) exempt organization (IRA, Corporate Retirement
Plan, 403(b), Keogh)
[bullet] United States or any agency or instrumentality thereof
[bullet] A State, the District of Columbia, a possession of the United
States, or any subdivision or instrumentality thereof
[bullet] International organization or any agency or instrumentality
thereof
[bullet] Registered dealer in securities or commodities registered in
the U.S. or a possession of the U.S.
[bullet] Real estate investment trust
[bullet] Common trust fund operated by a bank under section 584(a)
[bullet] An exempt charitable remainder trust, or a non-exempt trust
described in section 4947(a)(1)
[bullet] Regulated Investment Company
If you are in doubt as to whether you are exempt, please contact the Internal
Revenue Service.
Step 4. IRS Penalties--If you do not supply us with your TIN, you will be
subject to an IRS $50 penalty unless your failure is due to reasonable
cause and not willful neglect. If you fail to report interest, dividend
or patronage dividend income on your federal income tax return, you will
be treated as negligent and subject to an IRS 5% penalty tax on any
resulting underpayment of tax unless there is clear and convincing
evidence to the contrary. If you falsify information on this form or
make any other false statement resulting in no backup withholding on an
account which should be subject to a backup withholding, you may be
subject to an IRS $500 penalty and certain criminal penalties including
fines and imprisonment.
- -----------
This Prospectus sets forth concisely the information about the Phoenix-Engemann
Funds (the "Trust") which you should know before investing. Please read it
carefully and retain it for future reference.
The Phoenix-Engemann Funds has filed with the Securities and Exchange
Commission a Statement of Additional Information about the Trust, dated January
20, 1998. The Statement contains more detailed information about the Trust and
is incorporated into this Prospectus by reference. You may obtain a free copy
of the Statement by writing the Trust c/o Phoenix Equity Planning Corporation,
100 Bright Meadow, P.O. Box 2200, Enfield, Connecticut 06083-2200 or by calling
(800) 243-4361.
Financial Information relating to the Trust is contained in the Semiannual
Report to Shareholders for the period ended June 30, 1997 and is incorporated
into the Statement of Additional Information by reference.
[logo] Printed on recycled paper using soybean ink
<PAGE>
-----------------
Phoenix Funds BULK RATE MAIL
PO Box 2200 U.S. PAID POSTAGE
Enfield CT 06083-2200 SPRINGFIELD, MA
PERMIT NO. 444
-----------------
[logo] Phoenix Duff & Phelps
PDP 2011 (1/98)
<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
January 20, 1998
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 January 20, 1998 (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 ................ 1
INVESTMENT TECHNIQUES ................... 2
PERFORMANCE INFORMATION ................. 10
PORTFOLIO TRANSACTIONS AND BROKERAGE .... 12
SERVICES OF THE ADVISER ................. 13
THE DISTRIBUTOR ......................... 14
PLANS OF DISTRIBUTION ................... 15
NET ASSET VALUE ......................... 17
HOW TO BUY SHARES ....................... 18
ALTERNATIVE PURCHASE ARRANGEMENTS ....... 18
INVESTOR ACCOUNT SERVICES ............... 19
REDEMPTION OF SHARES .................... 19
DIVIDENDS, DISTRIBUTIONS AND TAXES ...... 20
TAX SHELTERED RETIREMENT PLANS .......... 21
TRUSTEES AND OFFICERS ................... 21
OTHER INFORMATION ....................... 22
APPENDIX ................................ 25
</TABLE>
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PDP 2011 (1/98)
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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
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.
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' 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]
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(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]
(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]
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.
INVESTMENT TECHNIQUES
The Funds may utilize the following practices or techniques in pursuing their
investment objectives.
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
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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. 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
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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.
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.
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.
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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 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
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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 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.
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
6
<PAGE>
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.
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 & 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.
7
<PAGE>
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 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.
8
<PAGE>
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, 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 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.
9
<PAGE>
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.
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, Class
C or Class M 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 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 and
M Shares and the maximum contingent deferred sales charge applicable to a
complete redemption of the investment in the case of Class B and C Shares, and
assume that all dividends and distributions are reinvested when paid.
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
10
<PAGE>
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, Class C or Class M 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 and M Shares' maximum sales charge of 4.75% and 3.50%, respectively, 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.
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, 1996 were as follows (Class M shares were not
offered during those periods):
<TABLE>
<CAPTION>
One Five Inception(1) to
Class A Year Years December 31, 1996
------- ------ ----- -----------------
<S> <C> <C> <C>
The Growth Fund 15.77% 6.39% 11.97%
The Balanced Return Fund 11.30% 7.68% 13.91%
The Nifty Fifty Fund 19.57% 9.82% 17.65%
The Global Growth Fund* 15.04% N/A 24.55%
The Small & Mid-Cap Growth Fund* 43.96% N/A 42.08%
</TABLE>
<TABLE>
<CAPTION>
One Inception(2) to
Class B Year December 31, 1996
------- ------ -----------------
<S> <C> <C>
The Growth Fund 16.52% 13.09%
The Balanced Return Fund 11.82% 11.16%
The Nifty Fifty Fund 20.60% 16.56%
The Global Growth Fund N/A 4.98%
The Small & Mid-Cap Growth Fund N/A 7.84%
</TABLE>
<TABLE>
<CAPTION>
One Inception(2) to
Class C Year December 31, 1996
------- ------ -----------------
<S> <C> <C>
The Growth Fund 21.52% 13.87%
The Balanced Return Fund 16.79% 11.97%
The Nifty Fifty Fund 25.60% 17.30%
The Global Growth Fund N/A 6.28%
The Small & Mid-Cap Growth Fund N/A 2.12%
</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
(2) The inception date for Class B and Class C shares for the Growth, Nifty
Fifty and Balanced Return Funds was January 1, 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.
*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.
11
<PAGE>
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.
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
12
<PAGE>
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.
The Board of Trustees of the Trust periodically monitors the operation of
these brokerage policies by reviewing the allocation of brokerage orders. The
total brokerage commissions paid by the Growth Fund during 1994, 1995, and
1996, were $1,411,544, 839,679, and $2,301,351, respectively. For the years
ended December 31, 1994, 1995, and 1996, the Balanced Return Fund paid $94,899,
$33,853, and $35,776, respectively, in brokerage commissions. For the years
ended December 31, 1994, 1995, and 1996, the Nifty Fifty Fund paid $123,205,
$132,426, and $245,499, respectively, in brokerage commissions. For the years
ended December 31, 1994, 1995, and 1996, the Global Growth Fund paid $10,627,
$4,931, and $130,703, respectively, in brokerage commissions. For the years
ended December 31, 1994, 1995, and 1996, the Small & Mid-Cap Growth Fund paid
$2,400, $2,523, and $162,103 respectively, in brokerage commissions. The
amounts shown for each Fund for 1993 and 1994 include mark-ups paid by the Fund
on principal trades.
The increase in brokerage commissions for the Nifty Fifty, Global Growth
and Small & Mid-Cap Growth Funds is due to increased portfolio turnover for
these Funds.
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., 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.
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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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: 0.90% of each of the Growth and Nifty Fifty Fund's
average daily net assets up to $50 million (0.80% for the next $450 million of
average daily net assets and 0.70% for average daily net assets over $500
million); 0.80% of the Balanced Return Fund's average daily net assets up to
$50 million (0.70% for the next $450 million of average daily net assets and
0.60% for average daily net assets over $500 million); 1.10% of the Global
Growth Fund's average daily net assets up to $50 million (1.00% for the next
$450 million of average daily net assets and 0.90% for average daily net assets
over $500 million); 1.00% of the Small & Mid-Cap Growth Fund's average daily
net assets up to $50 million (0.90% for the next $450 million of average daily
net assets and 0.80% for average daily net assets over $500 million); 0.90% of
the Value 25 Fund's average daily net assets up to $50 million (0.80% for the
next $450 million of average daily net assets and 0.70% for average daily net
assets over $500 million).
For the years ended December 31, 1994, 1995 and 1996, pursuant to the
then-effective investment management agreements with the former Adviser (the
"Former Adviser") (Roger Engemann Management Co., Inc.), the Growth Fund paid
management fees to the Former Adviser of approximately $2,951,000, $2,985,000,
and $3,202,000, respectively. For the years ended December 31, 1994, 1995, and
1996, pursuant to the then-effective investment management agreements with the
Former Adviser, the Balanced Return Fund paid management fees to the Former
Adviser of approximately $596,000, $512,000, and $528,000, respectively. For
the years ended December 31, 1994, 1995, and 1996 pursuant to the
then-effective investment management agreement, the Nifty Fifty Fund paid
management fees to the Former Adviser of approximately $940,000, $1,131,000 and
$1,391,000, respectively. For the Global Growth Fund for the periods ended
December 31, 1994, 1995 and 1996, the Former Adviser was entitled to receive
fees under the Management Agreement in the amounts of $1,210, $18,498, and
$49,793, respectively. For the Small & Mid-Cap Growth Fund for the periods
ended December 31, 1995 and 1996, the Former Adviser was entitled to receive
fees under the Management Agreement in the amounts of $5,845, and $25,255,
respectively. The Former Adviser has waived receipt of all such fees for the
years 1994 and 1995 and waived $27,147 and $8,043 for the Global Growth Fund
and the Small & Mid-Cap Growth Fund, respectively, 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.
THE DISTRIBUTOR
Pursuant to a Distribution Agreement with the Funds, Phoenix Equity
Planning Corporation (the "Distributor"), an wholly-owned subsidiary of Phoenix
Duff & Phelps Corporation 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
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 year ended December 31, 1994,
PFSI received front-end sales charges of $116,677, $18,160, and $34,210, after
reallowances to dealers of $754,323, $52,840, and $198,790, respectively, for
sales of Class A shares of the Growth Fund, the Balanced Return Fund, and the
Nifty Fifty Fund, respectively. For the year ended December 31, 1995, PFSI
received front-end sales charges of $67,982, $6,600, and $36,183, after
reallowances of front-end sales charges to dealers of $857,929, $55,177, and
$491,687,
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<PAGE>
respectively, for sales of Class A shares of the Growth Fund, the Balanced
Return Fund, and the Nifty Fifty Fund, respectively. For the year ended
December 31, 1996, PFSI received front-end sales charges of $63,000, $10,000,
$64,000, $1,000, and $5,000 after reallowances of front-end sales charges to
dealers of $486,000, $25,000, $212,000, $4,000, and $20,000, respectively, for
sales of the Growth Fund, the Balanced Return Fund, the Nifty Fifty Fund, the
Global Growth Fund and the Small & Mid-Cap Growth Fund, respectively. In some
instances dealers may receive 100% of the sales charge for sales of shares of a
Fund and may, therefore, be deemed "underwriters" under the Securities Act of
1933, as amended.
For the year ended December 31, 1994, PFSI received contingent deferred
sales charges of $6,132, $196, and $6,662 for redemptions of the Class B shares
of the Growth Fund, the Balanced Return Fund, and the Nifty Fifty Fund,
respectively. For the year ended December 31, 1995, PFSI received contingent
deferred sales charges of $77,111, $18,276, and $71,711 for redemptions of the
Class B shares of the Growth Fund, the Balanced Return Fund, and the Nifty
Fifty Fund, respectively. For the year ended December 31, 1996, PFSI received
contingent deferred sales charges of $247,083, $15,362, $217,219, $337, and $1
for redemptions of the Class B shares of the Growth Fund, the Balanced Return
Fund, the Nifty Fifty Fund, the Global Growth Fund and the Small & Mid-Cap
Growth Fund, respectively.
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, the fees under the Administration Agreement,
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."
Pursuant to a Sub-Administration Agreement between PEPCO and the Adviser,
the Adviser serves as sub-administrator of the Funds (the "Sub-Administrator").
PEPCO is responsible for paying all fees to the Sub-Administrator under the
Sub-Administration Agreement.
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.
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 the year ended December 31, 1994,
under the then effective Administration Agreement, the Growth Fund, the
Balanced Return Fund and the Nifty Fifty Fund paid administrative fees to the
Former Adviser of approximately $3,179,000, $630,000, and $997,000,
respectively. For the year ended December 31, 1995, the Growth Fund, the
Balanced Return Fund and the Nifty Fifty Fund paid administrative fees to the
Former Adviser of approximately $3,212,000, $541,000, and $1,203,000,
respectively. For the year ended December 31, 1996, the Growth Fund, the
Balanced Return Fund and the Nifty Fifty Fund paid administrative fees to the
Former Adviser of approximately $3,453,000, $557,000, and $1,485,000,
respectively. For the Global Growth Fund, for the periods ended December 31,
1994, 1995 and 1996, the Former Adviser was entitled to receive fees pursuant
to the Administration Agreement then in effect in the amounts of $1,271,
$19,423 and $40,856, respectively. For the Small & Mid-Cap Growth Fund, for the
periods ended December 31, 1994, 1995, and 1996, the Former Adviser was
entitled to receive fees pursuant to the Administration Agreement then in
effect in the amounts of $267, $6,137, and $18,772, respectively. The Former
Adviser has waived receipt of all such fees for the years 1994 and 1995 and
waived $28,504 and $8,445 for the Global Growth Fund and the Small & Mid-Cap
Growth Fund, respectively, for the first eight months of 1996.
PLANS OF DISTRIBUTION
The Trust has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for Class B, Class C and Class M of each series of the Trust (the
"Class B Plan," the "Class C Plan," the "Class M 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 may reimburse the Distributor for
actual expenses of the Distributor up to 0.75% of the average daily net assets
of the Funds' Class B and of Class C Shares, and up to 0.25% of the average
daily net assets of the Funds' Class M Shares. 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
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<PAGE>
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; provided however, a portion of such amount paid to
the Distributor, which portion shall be equal to or less than 0.25% annually of
the average daily net assets of the Funds' shares may be paid for reimbursing
the costs of providing services to the shareholders, including assistance in
connection with inquiries related to shareholder accounts (the "Service Fee").
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 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.
For the year ended December 31, 1994, the Former Distributor received
distribution fees of $39,764, $5,918, and $18,699, respectively, with respect
to the Class B shares of the Growth Fund, the Balanced Return Fund, and the
Nifty Fifty Fund. For the year ended December 31, 1995, the Former Distributor
received distribution fees of $183,948, $14,223, and $135,151, respectively,
with respect to the Class B shares of the Growth Fund, the Balanced Return
Fund, and the Nifty Fifty Fund. For the year ended December 31, 1996, the
Former Distributor received distribution fees of $320,195, $47,353, $247,408,
$337, and $1,200, respectively, with respect to the Class B shares of the
Growth Fund, the Balanced Return Fund, the Nifty Fifty Fund, the Global Growth
Fund and the Small & Mid-Cap Growth Fund. Such amounts were used by the Former
Distributor in connection with the distribution of the Funds' Class B shares to
compensate dealers for the sale of such shares.
For the year ended December 31, 1994, the Former Distributor retained
distribution fees of $204, $32, and $95, respectively, with respect to the
Class C shares of the Growth Fund, the Balanced Return Fund, and the Nifty
Fifty Fund, after reallowances to dealers of $23,519, $5,940, and $12,102,
respectively. For the year ended December 31, 1995, the Former Distributor
retained distribution fees of $729, $47, and $1,254, respectively, with respect
to the Class C shares of the Growth Fund, the Balanced Return Fund, and the
Nifty Fifty Fund, after reallowances to dealers of $92,591, $13,900, and
$68,639, respectively. For the year ended December 31, 1996, the Former
Distributor received distribution fees of $181,326, $25,217, $142,260, $37, and
$41, respectively, with respect to the Class C shares of the Growth Fund, the
Balanced Return Fund, the Nifty Fifty Fund, the Global Growth Fund and the
Small & Mid-Cap Growth Fund. Such amounts were used by the Former Distributor
in connection with the distribution of the Funds' Class C shares to compensate
dealers for the sale of such shares.
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.
Services Agreements
Under the Services Agreements, 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, 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.
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<PAGE>
For the year ended December 31, 1994, the Growth Fund, the Balanced Fund
and the Nifty Fifty Fund paid service fees of approximately $1,124,000,
$168,000, and $284,000, respectively, of which approximately $191,000, $31,000,
and $41,000, respectively, were received by the Former Adviser or the Former
Distributor. For the year ended December 31, 1995, the Growth Fund, the
Balanced Return Fund and the Nifty Fifty Fund paid service fees of
approximately $1,133,000, $140,000, and $363,000, respectively, of which
approximately $199,000, $24,000, and $51,000, respectively, were received by
the Former Adviser or the Former Distributor. For the year ended December 31,
1996, the Growth Fund, the Balanced Return Fund and the Nifty Fifty Fund paid
service fees of approximately $1,223,075, $145,333, and $469,651, respectively,
of which approximately $226,547, $25,811, and $73,704, respectively, were
received by the Former Adviser or the Former Distributor.
During 1994, 1995, and 1996, service fees in the amounts of $303, $4,624,
and $5,078, respectively, were payable by the Global Growth Fund to the Former
Adviser or the Former Distributor. During 1994, 1995, and 1996, service fees in
the amounts of $64, $1,461 and $4,340 were payable by the Small & Mid-Cap
Growth Fund to the Former Adviser or the Former Distributor. The Former Adviser
has waived receipt of all such fees for the years 1994 and 1995 and waived
$4,559 and $3,216 for the Global Growth Fund and the Small & Mid-Cap Growth
Fund, respectively, for the first eight months of 1996. The Adviser may choose,
in its discretion, to reimburse or waive expenses specific to one or more
Classes on a temporary basis. The amount of any such expenses waived or
reimbursed by the Adviser may vary from Class to Class. In addition, the
Adviser in its discretion may waive or reimburse Trust expenses and/or Fund
expenses (with or without a waiver or reimbursement of Class-specific expenses)
on a temporary basis, but only if the same proportionate amount of Trust
expenses and/or Fund expenses are waived or reimbursed for each Class.
The Adviser also may act as an investment adviser to other persons,
entities, and corporations, including other investment companies and the
Trust's other series. Personnel of the Adviser are affiliated with another
investment adviser that has numerous advisory clients and will devote portions
of their time to such clients.
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close
of regular trading of the New York Stock Exchange (the "Exchange") on days when
the Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King 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.
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
17
<PAGE>
(ii) on a contingent deferred basis (the "deferred sales charge alternative").
Orders received by dealers prior to the close of trading on the New York Stock
Exchange are confirmed at the offering price effective at that time, provided
the order is received by the Distributor prior to its close of business.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is more beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the 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 services fee on Class A or M 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, 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 20, 1998 are not subject to the 1% 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 M Shares
Class M Shares incur a sales charge at the time of purchase but are not
subject to any sales charge when redeemed. Certain purchases of Class M Shares
may qualify for reduced initial sales charges as described in the Funds'
Prospectus. Class M Shares are subject to ongoing distribution and services
fees of up to 0.50% of the Funds' aggregate average daily net assets
attributable to Class M Shares.
18
<PAGE>
INVESTOR ACCOUNT SERVICES
The Funds offer combination purchase privileges, letters of intent,
accumulation plans, withdrawal plans and reinvestment and exchange privileges
as described in the Funds' current Prospectus. 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 share at the time of the exchange.
An "affiliated Phoenix Fund" includes any other open-end management
investment company advised, subadvised or distributed by the Adviser or
Distributor or any corporate affiliate of either or both the Adviser and
Distributor provided such other investment company extends reciprocal
privileges to shareholders of the Phoenix Funds. 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.
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 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.
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. See the Funds' current
Prospectus for more information.
Telephone Redemptions
Shareholders may redeem up to $50,000 worth of their shares by telephone.
See the Funds' current Prospectus for additional information.
19
<PAGE>
Reinvestment Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinvestment of their investment at net
asset value. See the Funds' current Prospectus for more information and
conditions attached to this privilege.
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. Under certain state tax laws, each Fund must also comply with the
"short-short" test to qualify for treatment as a RIC for state tax purposes.
Under the "short-short" test the Fund must derive less than 30% of its gross
income each taxable year as gains (without deduction for losses) from the sale
or other disposition of securities for less than three months. If in any
taxable year each Fund does not qualify as a regulated investment company, all
of its taxable income will be taxed at corporate rates. In addition, if in any
tax year the Fund does not qualify as a RIC for state tax purposes a capital
gain dividend may not retain its character in the hands of the shareholder for
state tax purposes.
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.
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
20
<PAGE>
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.
TAX SHELTERED RETIREMENT PLANS
Shares of the Funds and other Phoenix Funds may be offered in connection
with employer-sponsored 401(k) 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.
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* (56) Chairman of the President of the Adviser since 1972. President and a Director
600 North Rosemead Board, President and of Pasadena Capital Corporation.
Boulevard Trustee
Pasadena, California 91107
John S. Tilson (53) Chief Financial Executive Vice President, Portfolio Manager and Securities
600 North Rosemead Officer and Secretary Analyst with the Adviser since 1983. Officer and a Director of
Boulevard Pasadena Capital Corporation.
Pasadena, California 91107
Barry E. McKinley (61) 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, Californa 91101
Robert L. Peterson (59) 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 (50) Trustee President of Richard Taylor Company, Inc., a food ingredients
2100 Huntington Drive, #9 broker, since 1987.
San Marino, California 91108
Angela Wong (45) 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>
21
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- ---------------------------- --------------------- ------------------------------------------------------------
<S> <C> <C>
Richard A. Watson (43) Controller--Fund Vice President and Controller--Fund Accounting of Roger
600 North Rosemead Accounting and Engemann Management Co., Inc., the predecessor Adviser.
Boulevard Assistant Secretary From September 1988 to June 1993, Mutual Fund Operations
Pasadena, California 91107 Manager of The Phoenix-Engemann Group of Mutual Funds
and Chief Financial Officer of Roger Engemann Management
Co., Inc. A Director of Pasadena Capital Corporation. Prior
thereto, Mr. Watson was an Audit Manager with Coopers &
Lybrand.
</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.
Prior to September 3, 1997, and as shown in the following table, the
Adviser paid the fees of the Trustees who are not affiliated with the Adviser.
Effective September 3, 1997, such fees are paid directly from the assets of the
Trust. Prior to January 1, 1997, such fees are $1,250 per quarter plus $1,250
for each meeting attended. Effective January 1, 1997, such fees are $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. The table provides information
regarding all Funds in the Phoenix-Engemann Group of Mutual Funds for the
fiscal year ended December 31, 1996 (during that period, it was called the
Pasadena Group of Mutual Funds).
<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 $10,000 None None $10,000
Robert L. Peterson $10,000 None None $10,000
Richard C. Taylor $10,000 None None $10,000
Angela Wong $10,000 None None $10,000
Richard A. Watson None None None None
</TABLE>
As of September 30, 1997, the Trustees and Officers of the Trust, as a
group, owned less than 1% of the outstanding shares of the Balanced Return and
Nifty Fifty Funds. As of September 30, 1997, the Trustees and Officers of the
Trust, as a group, owned 1.07% of the Growth Fund, 11.60% of the Global Growth
Fund, 12.80% of the Value 25 Fund and 5.50% of the Small to Mid-Cap Growth
Fund.
OTHER INFORMATION
Five Percent Shareholders
As of September 25, 1997 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 49.14% 51.19% 71.89%
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4801 Deer Lake Drive East
Jacksonville, Florida 32246-6485
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Phoenix-Engemann Balanced 29.17% 53.22% 77.68%
Return Fund
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4801 Deer Lake Drive East
Jacksonville, Florida 32246-6485
Phoenix-Engemann Nifty Fifty 50.35% 52.21% 73.01%
Fund
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4801 Deer Lake Drive East
Jacksonville, Florida 32216
Phoenix-Engemann Global
Growth Fund
Merrill Lynch, Pierce, 12.82% 40.72% 68.28%
Fenner & Smith, Inc.*
Attn: Book Entry
4801 Deer Lake Drive East
Jacksonville, Florida 32216
Pasadena National Trust 8.72%
Cust for IRA of
Roger Engemann
731 S. Madre Street
Pasadena, California 91107-5662
Union Bank of California 6.57%
FBO Barney Sofro
475 Sansome Street, 11th Floor
San Francisco, California 94111-
3103
Phoenix-Engemann Small & Mid-Cap Growth Fund
Merrill Lynch, Pierce, 44.19% 61.93% 77.60%
Fenner & Smith, Inc.*
Attn: Book Entry
4801 Deer Lake Drive East
Jacksonville, Florida 32216
Pasadena National Trust 7.17%
Cust for IRA of
Roger Engemann
731 S. Madre Street
Pasadena, California 91107-5662
Phoenix-Engemann Value 25
Fund
Merrill Lynch, Pierce, 19.61% 66.12% 84.00%
Fenner & Smith, Inc.*
Attn: Book Entry
4801 Deer Lake Drive East
Jacksonville, Florida 32216
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Phoenix-Engemann Value 25 Fund
Pasadena National Trust 15.21%
Cust for IRA of
Roger Engemann
731 S. Madre Street
Pasadena, California 91107-5662
Union Bank of California Cust 6.81%
FBO Moore Investment Partnership
PO Box 109
San Diego, California 92112-4103
</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.
Independent Accountants
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110, is
the independent accountants for the Funds. Price Waterhouse LLP audits the
Funds' annual financial statements and expresses an opinion thereon. Prior to
July, 1997, Coopers & Lybrand LLP was the independent accountants for the
Funds.
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 Funds ends on December 31. The Funds will send
financial statements to shareholders at least semi-annually. An annual report,
containing financial statements, audited by independent accountants, will be
sent to shareholders each year, and is available without charge upon request.
Financial Statements
The Funds' audited financial statements contained in their Semiannual
Reports to Shareholders for the period ended June 30, 1997 and their Annual
Reports to Shareholders for the fiscal year ended December 31, 1996 (the
"Reports"), are incorporated herein by reference to the Reports which have been
filed with the Securities and Exchange Commission. The financial information
relating to the Funds is available by calling Equity Planning at (800)
243-4361, or by writing to Equity Planning at 100 Bright Meadow Boulevard, P.O.
Box 2200, Enfield, Connecticut 06083-2200. A copy of the Semiannual Report must
precede or accompany this Statement of Additional Information.
24
<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.
25
<PAGE>
THE PASADENA GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
COMMON STOCKS
ADVERTISING - 2.4%
The Interpublic Group of
Companies, Inc................ 195,000 $ 11,956
-----------
BANKING - 2.2%
Wells Fargo & Company .......... 40,000 10,780
-----------
BEVERAGES - 3.1%
The Coca-Cola Company........... 95,000 6,412
PepsiCo, Inc.................... 240,000 9,015
-----------
15,427
-----------
BUSINESS SERVICES - 4.1%
First Data Corporation.......... 290,000 12,742
Reuters Holdings PLC ADS B...... 115,000 7,245
-----------
19,987
-----------
COMMERCIAL INFORMATION
SERVICES - 1.6%
America Online, Inc.* .......... 140,000 7,787
-----------
COMMUNICATIONS EQUIPMENT - 4.4%
Cisco Systems*.................. 170,000 11,411
MRV Communications, Inc.*....... 155,000 4,573
3Com Corp.*..................... 120,000 5,400
-----------
21,384
-----------
COMPUTER HARDWARE - 2.1%
COMPAQ Computer*................ 60,000 5,955
Hewlett-Packard ................ 75,000 4,200
-----------
10,155
-----------
COMPUTER SOFTWARE - 8.8%
Legato Systems, Inc.* .......... 150,000 2,775
McAfee Associates Inc.*......... 105,000 6,628
Microsoft Corporation*.......... 95,000 12,006
Oracle Systems* ................ 165,000 8,312
PeopleSoft, Inc.*............... 190,000 10,023
Rational Software
Corporation*.................. 200,000 3,363
-----------
43,107
-----------
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
CONSUMER PRODUCTS - 5.3%
The Gillette Company............ 240,000 $ 22,740
Luxottica Group S.p.A.
sponsored ADR ................ 45,000 3,051
-----------
25,791
-----------
DIVERSIFIED
MANUFACTURING - 0.6%
General Electric................ 45,000 2,942
-----------
ELECTRONICS & ELECTRICAL
EQUIPMENT - 8.4%
Applied Materials, Inc.* ....... 70,000 4,957
Etec Systems, Inc.*............. 65,000 2,787
Intel Corporation. ............. 70,000 9,927
Linear Technology
Corporation................... 120,000 6,210
Maxim Integrated Products,
Inc.*......................... 70,000 3,981
Texas Instruments
Incorporated.................. 120,000 10,088
Xilinx, Inc.*................... 70,000 3,434
-----------
41,384
-----------
FINANCIAL SERVICES - 9.9%
Federal Home Loan Mortgage
Corporation................... 385,000 13,234
Federal National Mortgage
Association................... 290,000 12,651
Green Tree Financial
Corporation................... 480,000 17,100
MBNA Corporation................ 145,000 5,311
-----------
48,296
-----------
FINANCIAL SERVICES/
BROKERAGE - 1.0%
The Charles Schwab
Corporation................... 120,000 4,883
-----------
GAMING - 0.2%
Circus Circus Enterprises,
Inc.*......................... 45,000 1,108
-----------
HEALTHCARE SERVICES - 3.1%
HBO & Company................... 70,000 4,821
Oxford Health Plans, Inc.*...... 145,000 10,404
-----------
15,225
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
THE PASADENA GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED) (CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
HOSPITAL COMPANIES - 1.0%
Columbia/HCA Healthcare
Corporation................... 120,000 $ 4,717
-----------
HOUSEHOLD PRODUCTS - 2.0%
Colgate-Palmolive Company....... 93,000 6,068
The Procter & Gamble
Company ...................... 25,000 3,531
-----------
9,599
-----------
INVESTMENT MANAGEMENT - 2.1%
AMVESCAP PLC sponsored ADR...... 115,000 6,699
T. Rowe Price Associates,
Inc........................... 70,000 3,614
-----------
10,313
-----------
LEISURE - 4.6%
Carnival Corporation............ 190,000 7,837
The Walt Disney Company......... 70,000 5,617
HFS, Incorporated* ............. 100,000 5,800
Signature Resorts, Inc.* ....... 95,000 3,283
-----------
22,537
-----------
MANUFACTURING - CIGARS - 0.6%
General Cigar Holdings,
Inc.*......................... 95,000 2,797
-----------
MEDICAL EQUIPMENT &
SUPPLIES - 4.9%
Boston Scientific
Corporation*.................. 175,000 10,752
Johnson & Johnson............... 75,000 4,828
Medtronic, Inc.................. 105,000 8,505
-----------
24,085
-----------
PHARMACEUTICALS - 9.2%
Elan Corporation, plc
sponsored ADR*................ 95,000 4,299
Merck & Co., Inc................ 120,000 12,420
Pfizer Inc...................... 380,000 22,705
Roche Holdings Ltd. ADR......... 60,000 5,452
-----------
44,876
-----------
RESTAURANTS - 0.4%
McDonald's Corporation.......... 45,000 2,174
-----------
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
RETAIL - APPAREL & ACCESSORY
STORES - 0.5%
Kohl's Corporation*............ 45,000 $ 2,382
-----------
RETAIL - AUTO SUPPLY
STORES - 0.9%
AutoZone, Inc. *............... 190,000 4,477
-----------
RETAIL - CATALOG - 0.7%
Viking Office Products,
Inc.*........................ 190,000 3,610
-----------
RETAIL - GENERAL
MERCHANDISE - 3.8%
Consolidated Stores
Corporation*................. 75,000 2,606
Dollar General Corporation..... 145,000 5,437
Sears, Roebuck and Company..... 200,000 10,750
-----------
18,793
-----------
RETAIL - HOME FURNITURE,
FURNISHINGS & EQUIPMENT
STORES - 0.5%
Bed Bath & Beyond, Inc.*....... 75,000 2,278
-----------
RETAIL - SPECIALTY - 2.4%
CompUSA Inc.*.................. 190,000 4,085
PETsMART, Inc.* ............... 200,000 2,300
Staples, Inc.*................. 240,000 5,580
-----------
11,965
-----------
TELECOMMUNICATIONS
EQUIPMENT - 6.0%
Ascend Communications,
Inc.*........................ 250,000 9,844
Pairgain Technologies,
Inc.*........................ 403,000 6,247
Telefonaktiebolaget LM
Ericsson sponsored ADR ...... 200,000 7,875
Tellabs, Inc.*................. 95,000 5,308
-----------
29,274
-----------
TELECOMMUNICATIONS
SERVICES - 0.3%
360 DEG. Communications
Company*..................... 95,000 1,627
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
THE PASADENA GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED) (CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
TOBACCO PRODUCTS - 2.4%
Philip Morris Companies
Inc.......................... 260,000 $ 11,538
-----------
TOTAL COMMON STOCKS - 99.5%
(COST $268,539).............. 487,254
-----------
TOTAL INVESTMENT IN
SECURITIES - 99.5%
(COST $268,539).............. $ 487,254
-----------
-----------
</TABLE>
- --------------
* Non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
THE PASADENA NIFTY FIFTY FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
COMMON STOCKS
ADVERTISING - 1.8%
The Interpublic Group of
Companies, Inc............... 80,000 $ 4,905
-----------
BANKING - 3.0%
Wells Fargo & Company ......... 30,000 8,085
-----------
BEVERAGES - 4.7%
The Coca-Cola Company.......... 100,000 6,750
PepsiCo, Inc................... 150,000 5,634
-----------
12,384
-----------
BUSINESS SERVICES - 4.6%
Automatic Data Processing,
Inc.......................... 50,000 2,350
First Data Corporation......... 150,000 6,591
Reuters Holdings PLC ADS B..... 50,000 3,150
-----------
12,091
-----------
COMMUNICATIONS
EQUIPMENT - 4.3%
Cisco Systems*................. 70,000 4,699
3Com Corp.*.................... 150,000 6,750
-----------
11,449
-----------
COMPUTER HARDWARE - 1.8%
COMPAQ Computer*............... 20,000 1,985
Hewlett-Packard ................ 50,000 2,800
-----------
4,785
-----------
COMPUTER SOFTWARE - 4.7%
Microsoft Corporation*......... 60,000 7,583
Oracle Systems*................ 100,000 5,038
-----------
12,621
-----------
CONSUMER PRODUCTS - 5.3%
The Gillette Company........... 150,000 14,212
-----------
DIVERSIFIED
MANUFACTURING - 1.2%
General Electric............... 50,000 3,269
-----------
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
ELECTRONICS & ELECTRICAL
EQUIPMENT - 7.0%
Intel Corporation.............. 50,000 $ 7,091
Linear Technology
Corporation.................. 100,000 5,175
Texas Instruments
Incorporated................. 75,000 6,305
-----------
18,571
-----------
FINANCIAL SERVICES - 10.9%
American Express Company....... 65,000 4,842
Federal Home Loan Mortgage
Corporation.................. 180,000 6,187
Federal National Mortgage
Association.................. 100,000 4,362
Green Tree Financial
Corporation.................. 225,000 8,016
MBNA Corporation............... 150,000 5,494
-----------
28,901
-----------
FINANCIAL SERVICES/BROKERAGE - 1.5%
The Charles Schwab
Corporation.................. 100,000 4,069
-----------
GAMING - 1.2%
Circus Circus Enterprises,
Inc.*........................ 125,000 3,078
-----------
HEALTHCARE SERVICES - 2.6%
Oxford Health Plans, Inc.*..... 95,000 6,816
-----------
HOSPITAL COMPANIES - 1.8%
Columbia/HCA Healthcare
Corporation.................. 125,000 4,914
-----------
HOUSEHOLD PRODUCTS - 2.5%
Colgate-Palmolive Company...... 100,000 6,525
-----------
INVESTMENT MANAGEMENT - 1.5%
T. Rowe Price Associates,
Inc.......................... 75,000 3,872
-----------
LEISURE - 3.5%
Carnival Corporation........... 75,000 3,094
The Walt Disney Company........ 40,000 3,210
HFS, Incorporated*............. 50,000 2,900
-----------
9,204
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
THE PASADENA NIFTY FIFTY FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED) (CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
MEDICAL EQUIPMENT &
SUPPLIES - 7.9%
Boston Scientific
Corporation*................. 120,000 $ 7,372
Johnson & Johnson.............. 110,000 7,081
Medtronic, Inc................. 80,000 6,480
-----------
20,933
-----------
PHARMACEUTICALS - 10.1%
Merck & Co., Inc............... 100,000 10,350
Pfizer Inc..................... 200,000 11,950
Roche Holdings Ltd. ADR........ 50,000 4,544
-----------
26,844
-----------
RESTAURANTS - 0.9%
McDonald's Corporation......... 50,000 2,416
-----------
RETAIL - APPAREL &
ACCESSORY STORES - 1.6%
Kohl's Corporation*............ 80,000 4,235
-----------
RETAIL - AUTO SUPPLY STORES - 0.9%
AutoZone, Inc.*................ 100,000 2,356
-----------
RETAIL - GENERAL
MERCHANDISE - 3.0%
Sears, Roebuck and Company..... 150,000 8,062
-----------
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
RETAIL - SPECIALTY - 3.4%
CompUSA Inc.*.................. 200,000 $ 4,300
Staples, Inc.*................. 200,000 4,650
-----------
8,950
-----------
TELECOMMUNICATIONS
EQUIPMENT - 2.2%
Telefonaktiebolaget LM
Ericsson sponsored ADR ...... 150,000 5,906
-----------
TOBACCO PRODUCTS - 2.5%
Philip Morris Companies
Inc.......................... 150,000 6,656
-----------
TOTAL COMMON STOCKS - 96.4%
(COST $149,438).............. 256,109
-----------
TOTAL INVESTMENT IN
SECURITIES - 96.4%
(COST $149,438).............. $ 256,109
-----------
-----------
</TABLE>
- - -------------
* Non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
THE PASADENA BALANCED RETURN FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
--------- ---------
<S> <C> <C>
COMMON STOCKS
ADVERTISING - 2.4%
The Interpublic Group of
Companies, Inc.................. 25,000 $ 1,533
---------
BANKING - 2.1%
Wells Fargo & Company............. 5,000 1,348
---------
BEVERAGES - 4.2%
The Coca-Cola Company............. 15,000 1,013
PepsiCo, Inc...................... 45,000 1,690
---------
2,703
---------
BUSINESS SERVICES - 3.4%
Reuters Holdings PLC ADS B........ 17,000 1,071
Automatic Data Processing, Inc.... 10,000 470
First Data Corporation............ 15,000 659
---------
2,200
---------
COMMUNICATIONS EQUIPMENT - 2.1%
Cisco Systems*.................... 20,000 1,343
---------
COMPUTER HARDWARE - 1.2%
Hewlett-Packard................... 14,000 784
---------
COMPUTER SOFTWARE - 4.5%
Microsoft Corporation*............ 14,000 1,769
Oracle Systems*................... 22,500 1,133
---------
2,902
---------
CONSUMER PRODUCTS - 5.2%
The Gillette Company.............. 35,000 3,316
---------
ELECTRONICS & ELECTRICAL
EQUIPMENT - 4.5%
Intel Corporation................. 10,000 1,418
Linear Technology Corporation..... 7,000 362
Texas Instruments Incorporated.... 10,000 841
Xilinx, Inc.*..................... 6,000 294
---------
2,915
---------
<CAPTION>
SHARES VALUE
--------- ---------
<S> <C> <C>
FINANCIAL SERVICES - 6.0%
Federal Home Loan Mortgage
Corporation..................... 45,000 $ 1,547
Federal National Mortgage
Association..................... 28,000 1,222
Green Tree Financial
Corporation..................... 30,000 1,069
---------
3,838
---------
GAMING - 1.1%
Circus Circus Enterprises,
Inc.*........................... 30,000 739
---------
HEALTHCARE SERVICES - 2.7%
HBO & Company..................... 10,000 689
Oxford Health Plans, Inc.*........ 15,000 1,076
---------
1,765
---------
HOSPITAL COMPANIES - 1.8%
Columbia/HCA Healthcare
Corporation..................... 30,000 1,179
---------
HOUSEHOLD PRODUCTS - 4.0%
Colgate-Palmolive Company......... 24,000 1,566
The Procter & Gamble Company...... 7,000 989
---------
2,555
---------
LEISURE - 5.0%
Carnival Corporation.............. 30,000 1,237
The Walt Disney Company........... 15,000 1,204
HFS, Incorporated*................ 14,000 812
---------
3,253
---------
MEDICAL EQUIPMENT &
SUPPLIES - 5.2%
Boston Scientific Corporation*.... 10,000 614
Johnson & Johnson................. 24,000 1,545
Medtronic, Inc.................... 15,000 1,215
---------
3,374
---------
PHARMACEUTICALS - 8.9%
Merck & Co., Inc.................. 18,000 1,863
Pfizer Inc........................ 50,000 2,987
Roche Holdings Ltd. ADR........... 10,000 909
---------
5,759
---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
THE PASADENA BALANCED RETURN FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED) (CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
--------- ---------
<S> <C> <C>
RESTAURANTS - 1.5%
McDonald's Corporation............ 20,000 $ 966
---------
RETAIL - AUTO SUPPLY STORES - 1.0%
AutoZone, Inc.*................... 27,000 636
---------
RETAIL - GENERAL
MERCHANDISE - 2.1%
Sears, Roebuck and Company........ 25,000 1,344
---------
TOBACCO PRODUCTS - 2.7%
Philip Morris Companies Inc....... 39,000 1,731
---------
TOTAL COMMON STOCKS - 71.6%
(COST $21,954).................. 46,183
---------
<CAPTION>
FACE
AMOUNT VALUE
--------- ---------
<S> <C> <C>
UNITED STATES TREASURY OBLIGATIONS
United States Treasury Bonds, 6%,
02/15/2026...................... $ 9,300 $ 8,323
United States Treasury Notes,
6.5%, 08/15/2005................ 8,900 8,875
---------
TOTAL UNITED STATES TREASURY
OBLIGATIONS - 26.7%
(COST $17,501).................. 17,198
---------
TOTAL INVESTMENT IN
SECURITIES - 98.3%
(COST $39,455).................. $ 63,381
---------
---------
</TABLE>
- -------------
* Non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
THE PASADENA SMALL & MID-CAP GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
COMMON STOCKS
BANKING - 2.2%
Hamilton Bancorp, Inc.*........ 20,000 $ 535
-----------
BEVERAGES - 1.7%
Triarc Companies, Inc.*........ 20,000 408
-----------
BUSINESS SERVICES - 4.5%
MAXIMUS, Inc.*................. 20,000 357
U.S. Rentals, Inc.*............ 30,000 759
-----------
1,116
-----------
COMMUNICATIONS
EQUIPMENT - 3.6%
MRV Communications, Inc.*...... 30,000 885
-----------
COMPUTER SOFTWARE - 20.5%
Abacus Direct Corporation*..... 15,000 488
Arbor Software Corporation*.... 5,000 176
Dr Solomon's Group PLC*........ 15,000 381
Fusion Systems Corporation*.... 10,000 396
Indus Group, Inc.*............. 10,000 203
Legato Systems, Inc.*.......... 20,000 370
McAfee Associates Inc.*........ 7,500 473
New Era of Networks, Inc.*..... 20,000 330
NICE-Systems Ltd. sponsored
ADR*......................... 15,000 450
Rational Software
Corporation*................. 20,000 336
Stratasys, Inc.*............... 15,000 242
Tecnomatix Technologies
Ltd.*........................ 20,000 650
Vantive Corporation*........... 10,000 283
Walker Interactive Systems,
Inc.*........................ 20,000 280
-----------
5,058
-----------
CONSUMER SERVICES - 0.6%
Expeditors International of
Washington, Inc.............. 5,000 142
-----------
<CAPTION>
SHARES VALUE
------ ---------
<S> <C> <C>
DIVERSIFIED
MANUFACTURING - 2.4%
Ballantyne of Omaha, Inc.*..... 30,000 $ 540
Optimal Robotics Corp.*........ 15,000 60
-----------
600
-----------
ELECTRONICS & ELECTRICAL
EQUIPMENT - 8.6%
Advanced Lighting
Technologies, Inc.*.......... 10,000 253
ANADIGICS, Inc.*............... 5,000 155
Etec Systems, Inc.*............ 10,000 429
Integrated Process Equipment
Corporation*................. 20,000 506
Micrel, Inc.*................... 5,000 255
Microchip Technology
Incorporated*................ 5,000 149
Photon Dynamics, Inc.*......... 50,000 325
RF Micro Devices Inc.*......... 2,500 48
-----------
2,120
-----------
FINANCIAL SERVICES - 9.0%
ARM Financial Group, Inc.*..... 2,000 40
BA Merchant Services, Inc.*.... 35,000 667
Delta Financial
Corporation*................. 25,000 478
The Money Store................ 7,500 215
Ocwen Asset Investment
Corp......................... 40,000 810
-----------
2,210
-----------
FUNERAL SERVICES - 1.4%
The Loewen Group Inc........... 10,000 348
-----------
HEALTHCARE SERVICES - 7.9%
Advanced Health
Corporation*................. 35,000 643
ArQule, Inc.*.................. 25,000 434
Closure Medical
Corporation*................. 15,000 289
Healthcare Recoveries,
Inc.*........................ 30,000 581
-----------
1,947
-----------
INDUSTRIAL/DIRECT MAIL
DISTRIBUTOR - 2.7%
JLK Direct Distribution
Inc.*........................ 2,000 51
MSC Industrial Direct Co.,
Inc.*........................ 15,000 602
-----------
653
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
THE PASADENA SMALL & MID-CAP GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED) (CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
LEISURE - 6.4%
Regal Cinemas, Inc.*........... 15,000 $ 495
Signature Resorts, Inc.*....... 20,000 691
Silverleaf Resorts, Inc.*...... 25,000 384
-----------
1,570
-----------
MANUFACTURING - CIGARS - 1.2%
General Cigar Holdings,
Inc.*........................ 10,000 294
-----------
MANUFACTURING -
MISCELLANEOUS - 1.1%
Roper Industries, Inc.......... 5,000 259
-----------
MEDICAL EQUIPMENT &
SUPPLIES - 1.8%
Mentor Corporation............. 15,000 444
-----------
PHARMACEUTICALS - 1.1%
Kos Pharmaceuticals, Inc.*..... 10,000 278
-----------
RETAIL - CATALOG - 2.3%
Viking Office Products,
Inc.*........................ 30,000 570
-----------
RETAIL - GENERAL
MERCHANDISE - 6.3%
Cost Plus, Inc.*............... 20,000 525
Mazel Stores, Inc.*............ 15,000 262
99 Cents Only Stores*.......... 25,000 753
-----------
1,540
-----------
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
RETAIL - SPECIALTY - 4.5%
Barnes & Noble, Inc.*.......... 5,000 $ 215
CompUSA Inc.*.................. 20,000 430
PETsMART, Inc.*................ 40,000 460
-----------
1,105
-----------
TELECOMMUNICATIONS
EQUIPMENT - 2.4%
Ascend Communications,
Inc.*........................ 15,000 591
-----------
TOTAL COMMON STOCKS - 92.2%
(COST $19,956)............... 22,673
-----------
WARRANTS
ELECTRONICS & ELECTRICAL
EQUIPMENT - 0.8%
Intel Corporation (expires
1998)*....................... 2,000 203
-----------
TOTAL WARRANTS - 0.8%
(COST $188).................. 203
-----------
TOTAL INVESTMENT IN
SECURITIES - 93.0%
(COST $20,144)............... $ 22,876
-----------
-----------
</TABLE>
- --------------
* Non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
THE PASADENA GLOBAL GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
-------- ---------
<S> <C> <C>
COMMON STOCKS
ARGENTINA - 0.9%
TELECOMMUNICATIONS
SERVICES - 0.9%
Telecom Argentina STET -
France Telecom S.A.
sponsored ADR................ 1,000 $ 53
Telefonica de Argentina
sponsored ADR................ 1,500 52
-----------
TOTAL ARGENTINA.............. 105
-----------
AUSTRALIA - 1.0%
BEVERAGES - 1.0%
Coca-Cola Amatil sponsored
ADR.......................... 4,700 121
-----------
BRAZIL - 2.8%
RETAIL - GENERAL
MERCHANDISE - 1.0%
Companhia Brasileira de
Distribuicao sponsored
ADR.......................... 5,000 114
-----------
TELECOMMUNICATIONS
SERVICES - 1.8%
Telecomunicacoes Brasileiras
sponsored ADR................ 1,400 212
-----------
TOTAL BRAZIL................. 326
-----------
CHINA - 0.9%
UTILITIES - ELECTRIC - 0.9%
Huaneng Power International,
Inc. sponsored ADR........... 4,000 102
-----------
CZECH REPUBLIC - 0.8%
MEDIA & BROADCASTING - 0.8%
Central European Media
Enterprises Ltd.*............ 3,700 96
-----------
<CAPTION>
SHARES VALUE
-------- ---------
<S> <C> <C>
FINLAND - 0.9%
TELECOMMUNICATIONS
EQUIPMENT - 0.9%
Nokia Corporation sponsored
ADR.......................... 1,400 $ 103
-----------
FRANCE - 1.0%
OFFSHORE DRILLING - 1.0%
Elf Aquitaine sponsored ADR.... 2,200 120
-----------
GERMANY - 2.8%
AUTO/TRUCK PARTS &
EQUIPMENT - 0.7%
Bayerische Motoren Werke
Aktiengesellschaft........... 100 83
-----------
COMPUTER SOFTWARE - 1.1%
SAP Aktiengesellschaft
sponsored ADR*............... 1,800 125
-----------
MANUFACTURING -
CHEMICALS - 1.0%
Hoechst Aktiengesellschaft..... 2,800 119
-----------
TOTAL GERMANY................ 327
-----------
HONG KONG - 11.4%
BANKING - 3.5%
HSBC Holdings plc sponsored
ADR.......................... 1,350 406
-----------
COMPUTER SOFTWARE - 1.0%
Founder Limited................ 160,761 109
-----------
CONGLOMERATE - 1.8%
First Pacific Company Limited
sponsored ADR............... 18,000 115
Hutchison Whampoa Limited
ADR.......................... 2,250 97
-----------
212
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
THE PASADENA GLOBAL GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED) (CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
-------- ---------
<S> <C> <C>
CONSUMER PRODUCTS - 2.2%
Amway Asia Pacific Ltd.*....... 3,700 $ 161
Nu Skin Asia Pacific, Inc.*.... 3,700 98
-----------
259
-----------
FINANCIAL SERVICES - 0.5%
AEON Credit Service (Asia)
Company Limited*............. 175,000 59
-----------
INFRASTRUCTURE - 0.6%
New World Infrastructure
Limited*..................... 22,000 62
-----------
INSURANCE - 0.7%
National Mutual Asia
Limited...................... 74,000 82
-----------
MEDIA & BROADCASTING - 0.6%
Television Broadcasts
Limited...................... 15,000 67
-----------
PROPERTY DEVELOPMENT - 0.5%
Sun Hung Kai Properties
Limited...................... 5,000 60
-----------
TOTAL HONG KONG.............. 1,316
-----------
INDIA - 2.1%
BANKING - 0.7%
State Bank of India GDR*....... 2,900 77
-----------
ENGINEERING & CONSTRUCTION - 0.8%
Larsen & Toubro Limited
GDR*......................... 5,300 91
-----------
INVESTMENT COMPANIES - 0.6%
The India Fund, Inc............ 7,500 72
-----------
TOTAL INDIA.................. 240
-----------
INDONESIA - 2.4%
BANKING - 0.9%
PT Bank International
Indonesia* ................... 58,500 51
PT Bank Tiara Asia*............ 38,000 45
-----------
96
-----------
<CAPTION>
SHARES VALUE
-------- -----------
<S> <C> <C>
TELECOMMUNICATIONS
SERVICES - 1.0%
Perusahaan Persero P.T.
Telekom sponsored ADR........ 3,600 $ 117
-----------
TOBACCO PRODUCTS - 0.5%
PT Hanjaya Mandala
Sampoerna*................... 16,000 61
-----------
TOTAL INDONESIA.............. 274
-----------
IRELAND - 1.5%
COMPUTER SOFTWARE - 0.7%
Iona Technologies PLC
sponsored ADR................ 4,200 83
-----------
PHARMACEUTICALS - 0.8%
Elan Corporation, plc
sponsored ADR*............... 1,900 86
-----------
TOTAL IRELAND................ 169
-----------
ISRAEL - 2.6%
COMPUTER SOFTWARE - 2.6%
NICE-Systems Ltd. sponsored
ADR*......................... 4,400 132
Tecnomatix Technologies
Ltd.*........................ 5,300 172
-----------
TOTAL ISRAEL................. 304
-----------
ITALY - 1.3%
CONSUMER PRODUCTS - 0.9%
Luxottica Group S.p.A.
sponsored ADR................ 1,500 102
-----------
RETAIL - HOME FURNITURE - 0.4%
Industrie Natuzzi S.p.A.
sponsored ADR................ 1,700 44
-----------
TOTAL ITALY.................. 146
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
THE PASADENA GLOBAL GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED) (CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
JAPAN - 2.6%
ELECTRONICS & ELECTRICAL
EQUIPMENT - 2.0%
Kyocera Corporation sponsored
ADR.......................... 700 $ 111
Sony Corp. sponsored ADR....... 1,400 123
-----------
234
-----------
OFFICE EQUIPMENT - 0.6%
Canon, Inc. sponsored ADR...... 450 61
-----------
TOTAL JAPAN.................. 295
-----------
KOREA - 2.2%
BANKING - 0.7%
Kookmin Bank sponsored GDR..... 3,575 78
-----------
ELECTRONICS & ELECTRICAL
EQUIPMENT - 0.5%
Samsung Electronics Co., Ltd.
sponsored GDR................ 914 53
-----------
TELECOMMUNICATIONS
SERVICES - 0.2%
SK Telecom Co. Ltd. ADR........ 2,900 29
-----------
UTILITIES - ELECTRIC - 0.8%
Korea Electric Power
Corporation sponsored ADR.... 5,100 95
-----------
TOTAL KOREA.................. 255
-----------
MEXICO - 3.3%
BEVERAGES - 2.0%
Coca-Cola Femsa, S.A. de C.V.
sponsored ADR................. 4,500 232
-----------
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
RETAIL - GENERAL
MERCHANDISE - 1.3%
Cifra, S.A. de C.V. ADR........ 81,300 $ 149
-----------
TOTAL MEXICO. 381
-----------
NETHERLANDS - 3.7%
BEVERAGES - 0.4%
Heineken N.V. ADR.............. 300 51
-----------
COMPUTER SOFTWARE - 1.2%
Baan Company N.V.*............. 2,000 138
-----------
INSURANCE - 1.0%
ING Groep N.V.................. 2,542 117
-----------
PUBLISHING - 1.1%
Wolters Kluwer N.V............. 1,000 122
-----------
TOTAL NETHERLANDS............ 428
-----------
PERU - 0.9%
TELECOMMUNICATIONS
SERVICES - 0.9%
Telefonica del Peru sponsored
ADR.......................... 4,100 107
-----------
PHILIPPINES - 2.1%
CONGLOMERATE - 0.5%
Ayala Corp, Inc................ 83,750 60
-----------
INFRASTRUCTURE - 0.4%
International Container
Terminal Services, Inc.*..... 91,500 47
-----------
PROPERTY DEVELOPMENT - 0.2%
Fil-Estate Land, Inc.*......... 74,700 22
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
THE PASADENA GLOBAL GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED) (CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
TELECOMMUNICATIONS
SERVICES - 0.7%
Philippine Long Distance
Telephone Company sponsored
ADR.......................... 1,200 $ 77
-----------
UTILITIES - ELECTRIC - 0.3%
Manila Electric Company, Class
B*........................... 6,800 34
-----------
TOTAL PHILIPPINES............ 240
-----------
RUSSIA - 1.1%
TELECOMMUNICATIONS
SERVICES - 1.1%
Open Joint Stock Company
Vimpel Communications
sponsored ADR*............... 3,350 127
-----------
SINGAPORE - 1.1%
COMPUTER SOFTWARE - 1.1%
Datacraft Asia* 40,000 127
-----------
SPAIN - 1.9%
TELECOMMUNICATIONS
SERVICES - 1.9%
Telefonica de Espana, S.A.
sponsored ADR................ 2,500 216
-----------
SWEDEN - 3.7%
CAPITAL GOODS EQUIPMENT - 0.6%
ABB AB sponsored ADR........... 500 70
-----------
TELECOMMUNICATIONS
EQUIPMENT - 3.1%
Telefonaktiebolaget LM
Ericsson sponsored ADR....... 9,200 362
-----------
TOTAL SWEDEN................. 432
-----------
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
SWITZERLAND - 5.8%
CAPITAL GOODS EQUIPMENT - 0.4%
ABB AG - Sponsored ADR......... 270 $ 41
-----------
INSURANCE - 1.3%
Zurich Insurance Group......... 375 149
-----------
PHARMACEUTICALS - 4.1%
Novartis Aktiengesellschaft.... 130 208
Roche Holdings Ltd. sponsored
ADR.......................... 3,000 272
-----------
480
-----------
TOTAL SWITZERLAND............ 670
-----------
TAIWAN - 0.5%
ELECTRONICS & ELECTRICAL
EQUIPMENT - 0.5%
ASE Test Limited............... 1,500 63
-----------
UNITED KINGDOM - 10.3%
BUSINESS SERVICES - 3.0%
Hays PLC....................... 10,900 103
Rentokil Initial PLC........... 15,600 55
Reuters Holdings PLC ADS B..... 3,000 189
-----------
347
-----------
COMPUTER SOFTWARE - 2.6%
Dr Solomon's Group PLC ADR*.... 10,000 254
Sema Group PLC................. 2,200 45
-----------
299
-----------
GAMING - 1.3%
Ladbroke Group PLC............. 39,300 155
-----------
INSURANCE - 0.5%
Prudential Corporation PLC..... 5,300 52
-----------
INVESTMENT MANAGEMENT - 1.3%
AMVESCAP PLC sponsored ADR..... 2,600 152
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
THE PASADENA GLOBAL GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED) (CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
RESTAURANTS - 0.8%
Whitbread PLC.................. 7,500 $ 95
-----------
TELECOMMUNICATIONS
SERVICES - 0.8%
Vodafone Group Plc sponsored
ADR.......................... 1,800 87
-----------
TOTAL UNITED KINGDOM......... 1,187
-----------
UNITED STATES - 24.0%
ADVERTISING - 1.6%
The Interpublic Group of
Companies, Inc............... 3,000 184
-----------
BANKING - 1.6%
Citicorp....................... 500 60
Wells Fargo & Company.......... 450 121
-----------
181
-----------
BEVERAGES - 0.4%
The Coca-Cola Company.......... 600 41
-----------
COMMUNICATIONS
EQUIPMENT - 1.6%
Cisco Systems*................. 2,700 181
-----------
COMPUTER HARDWARE - 0.3%
Hewlett-Packard................ 700 39
-----------
COMPUTER SOFTWARE - 3.6%
Microsoft Corporation*......... 550 70
Oracle Systems*................ 3,500 176
Rational Software
Corporation*................. 10,000 168
-----------
414
-----------
CONSUMER PRODUCTS - 1.9%
The Gillette Company. 2,300 218
-----------
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
CONSUMER SERVICES - 0.4%
Expeditors International of
Washington, Inc.............. 1,800 $ 51
-----------
DIVERSIFIED MANUFACTURING -
0.3%
General Electric............... 450 29
-----------
ELECTRONICS & ELECTRICAL
EQUIPMENT - 2.0%
Intel Corporation.............. 1,300 184
Linear Technology
Corporation.................. 900 47
-----------
231
-----------
FINANCIAL SERVICES - 1.7%
American Express Company....... 600 45
Green Tree Financial
Corporation.................. 4,300 153
-----------
198
-----------
HOUSEHOLD PRODUCTS - 0.8%
Colgate-Palmolive Company...... 1,500 98
-----------
INSURANCE - 0.6%
American International Group,
Inc.......................... 450 67
-----------
LEISURE - 1.0%
HFS, Incorporated*............. 1,600 93
The Walt Disney Company........ 350 28
-----------
121
-----------
MEDICAL EQUIPMENT &
SUPPLIES - 3.5%
Boston Scientific
Corporation*................. 4,000 246
Johnson & Johnson.............. 850 55
Medtronic, Inc................. 1,300 105
-----------
406
-----------
PHARMACEUTICALS - 1.7%
Merck & Co., Inc............... 700 73
Pfizer Inc..................... 1,000 120
-----------
193
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
THE PASADENA GLOBAL GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED) (CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
RESTAURANTS - 0.3%
McDonald's Corporation......... 800 $ 39
-----------
TOBACCO PRODUCTS - 0.7%
Philip Morris Companies
Inc.......................... 1,900 84
-----------
TOTAL UNITED STATES.......... 2,775
-----------
TOTAL COMMON STOCKS - 95.6%
(COST $9,933)................ 11,052
-----------
TOTAL INVESTMENT IN
SECURITIES - 95.6%
(COST $9,933)................ $ 11,052
-----------
-----------
</TABLE>
- --------------
* Non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
THE PASADENA VALUE 25 FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
--------- ---------
<S> <C> <C>
COMMON STOCKS
AUTO/TRUCK PARTS & EQUIPMENT
REPLACEMENT - 1.3%
Echlin, Inc.............................. 7,410 $ 267
---------
CHEMICALS - SPECIALTY - 4.2%
Eastman Chemical Company................. 13,495 857
---------
DISTRIBUTION - AUTO PARTS &
EQUIPMENT - 3.5%
Genuine Parts Company.................... 21,240 719
---------
FOOD PRODUCTS - WHOLESALE - 4.1%
SUPERVALU, Inc........................... 24,065 830
---------
HOME FURNISHINGS - 4.1%
Springs Industries, Inc. (Class A)....... 16,065 847
---------
HOUSEHOLD APPLIANCES - 4.0%
Maytag Corporation....................... 31,073 812
---------
INTEGRATED STEEL - 4.5%
USX-U.S. Steel Group..................... 26,555 931
---------
MANUFACTURING - AUTO PARTS &
EQUIPMENT - 4.1%
Dana Corporation......................... 21,860 831
---------
MANUFACTURING - AUTOMOBILES &
TRUCKS - 16.2%
Chrysler Corporation..................... 24,335 798
Ford Motor Company....................... 23,260 878
General Motors Corporation............... 13,425 748
PACCAR Inc............................... 19,510 906
---------
3,330
---------
<CAPTION>
SHARES VALUE
--------- ---------
<S> <C> <C>
MANUFACTURING - CHEMICALS - 3.8%
The Dow Chemical Company................. 9,025 $ 786
---------
MANUFACTURING - MISCELLANEOUS - 4.0%
Cooper Industries, Inc................... 16,615 827
---------
METALS - COPPER - 3.9%
Phelps Dodge Corporation................. 9,485 808
---------
METALS - PRODUCERS - 4.1%
ASARCO Incorporated...................... 27,580 845
---------
OIL - EXPLORATION & PRODUCTION - 3.6%
Kerr-McGee Corporation................... 11,610 736
---------
OIL - INTEGRATED - 3.5%
Texaco, Inc.............................. 6,625 720
---------
OIL PRODUCTION - 10.9%
Amoco Corporation........................ 8,280 720
Phillips Petroleum Company............... 17,650 772
USX-Marathon Group....................... 25,750 744
---------
2,236
---------
PAPER & RELATED PRODUCTS - 3.9%
Westvaco Corporation..................... 25,120 790
---------
PUBLISHING - 4.0%
The McGraw-Hill Companies, Inc........... 14,045 826
---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
THE PASADENA VALUE 25 FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1997 (UNAUDITED) (CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
SHARES VALUE
--------- ---------
<S> <C> <C>
TELECOMMUNICATIONS SERVICES - 11.0%
AT&T Corp................................ 20,410 $ 716
BellSouth Corporation.................... 14,840 688
SBC Communications, Inc.................. 13,770 852
---------
2,256
---------
TOTAL COMMON STOCKS - 98.7%
(COST $18,601)......................... 20,254
---------
TOTAL INVESTMENT IN SECURITIES - 98.7%
(COST $18,601)......................... $ 20,254
---------
---------
</TABLE>
- - -------------
* Non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
(This page has been left blank intentionally.)
33
<PAGE>
THE PASADENA GROWTH, NIFTY FIFTY, BALANCED RETURN,
SMALL & MID-CAP GROWTH, GLOBAL GROWTH AND VALUE 25 FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND RELATED CALCULATIONS.)
<TABLE>
<CAPTION>
The The
The The The Pasadena Pasadena The
Pasadena Pasadena Pasadena Small & Global Pasadena
Growth Nifty Fifty Balanced Mid-Cap Growth Value 25
Fund Fund Return Fund Growth Fund Fund Fund
---------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in securities, at value
(Cost $268,539, $149,438, $39,455,
$20,144, $9,933, and $18,601)
See accompanying schedules........... $ 487,254 $ 256,109 $ 63,381 $ 22,876 $ 11,052 $ 20,254
Cash................................... 4,280 10,044 881 1,553 386 37
Receivable for investments sold........ -- -- -- -- 33 --
Receivable for Fund shares sold........ 150 395 3 272 85 250
Dividends and interest receivable...... 393 239 463 5 32 49
Deposit with broker for investments
sold short........................... -- -- -- -- -- 247
---------- ---------- ---------- ---------- ---------- ----------
Total assets....................... 492,077 266,787 64,728 24,706 11,588 20,837
---------- ---------- ---------- ---------- ---------- ----------
LIABILITIES:
Payable for Fund shares repurchased.... 1,084 329 88 -- 2 4
Accrued administration fees............ 272 140 30 12 5 9
Accrued investment management fees..... 266 153 48 19 10 14
Accrued service fees................... 623 238 82 12 7 10
Accrued distribution fees.............. 152 171 20 13 6 8
Investments sold short, at value
(proceeds $247)...................... -- -- -- -- -- 263
Payable for investments purchased...... -- -- -- 40 2 --
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities.................. 2,397 1,031 268 96 32 308
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AT JUNE 30, 1997............ $ 489,680 $ 265,756 $ 64,460 $ 24,610 $ 11,556 $ 20,529
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS CONSIST OF:
Capital paid-in........................ $ 237,290 $ 149,361 $ 37,408 $ 21,144 $ 9,170 $ 18,881
Accumulated undistributed income:
Net investment income................ -- -- 258 -- -- 8
Net realized gain on investments..... 33,675 9,724 2,868 734 1,267 3
Net unrealized appreciation in value
of investments....................... 218,715 106,671 23,926 2,732 1,119 1,637
---------- ---------- ---------- ---------- ---------- ----------
$ 489,680 $ 265,756 $ 64,460 $ 24,610 $ 11,556 $ 20,529
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
PER SHARE VALUES:
CLASS A
Net asset value and redemption price
($405,688,835 DIVIDED BY
16,921,028, $165,823,130
DIVIDED BY 5,449,959, $53,639,150
DIVIDED BY 1,714,566, $15,137,467
DIVIDED BY 722,744, $7,633,587
DIVIDED BY 347,918 and $13,125,609
DIVIDED BY 1,139,970)............... $ 23.98 $ 30.43 $ 31.28 $ 20.94 $ 21.94 $ 11.51
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Maximum offering price [NAV per share
DIVIDED BY
(1 - maximum sales load)]............ $ 25.38 $ 32.20 $ 33.10 $ 22.16 $ 23.22 $ 12.18
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
CLASS B
Net asset value, offering price and
redemption price ($54,094,093
DIVIDED BY 2,324,341, $62,923,313
DIVIDED BY 2,125,611, $5,931,235
DIVIDED BY 191,812, $6,119,492
DIVIDED BY 293,996, $2,196,883
DIVIDED BY 100,627 and $5,539,819
DIVIDED BY 482,316)................. $ 23.27 $ 29.60 $ 30.92 $ 20.81 $ 21.83 $ 11.49
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
CLASS C
Net asset value, offering price and
redemption price ($29,896,897
DIVIDED BY 1,284,622, $37,009,393
DIVIDED BY 1,250,220, $4,889,245
DIVIDED BY 157,959, $3,353,450
DIVIDED BY 161,108, $1,725,139
DIVIDED BY 79,019 and $1,863,097
DIVIDED BY 162,203)................. $ 23.27 $ 29.60 $ 30.95 $ 20.81 $ 21.83 $ 11.49
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
THE PASADENA GROWTH, NIFTY FIFTY, BALANCED RETURN,
SMALL & MID-CAP GROWTH, GLOBAL GROWTH AND VALUE 25 FUNDS
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE SIX-MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
The The
The The The Pasadena Pasadena The
Pasadena Pasadena Pasadena Small & Global Pasadena
Growth Nifty Fifty Balanced Mid-Cap Growth Value 25
Fund Fund Return Fund Growth Fund Fund Fund
---------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................... $ 1,929 $ 1,113 $ 234 $ 4 $ 83 $ 170
Interest and other........... 588 116 587 15 -- 8
---------- ---------- ---------- ---------- ---------- ----------
Total investment income.... 2,517 1,229 821 19 83 178
---------- ---------- ---------- ---------- ---------- ----------
EXPENSES:
Administration fees.......... 1,662 843 239 48 32 34
Investment management
fees....................... 1,584 848 275 80 58 51
Service fees................. 609 300 77 20 13 14
Distribution fees - Class
B.......................... 189 203 20 14 6 7
Distribution fees - Class
C.......................... 105 116 17 5 2 1
---------- ---------- ---------- ---------- ---------- ----------
Total expenses before
Manager's waivers........ 4,149 2,310 628 167 111 107
Manager's expense
waivers.................. (35) (82) (65) -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total expenses - net....... 4,114 2,228 563 167 111 107
---------- ---------- ---------- ---------- ---------- ----------
Net investment income
(loss)................... (1,597) (999) 258 (148) (28) 71
---------- ---------- ---------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on
investments................ 33,621 8,247 2,839 641 477 3
Net increase in unrealized
appreciation............... 10,489 26,186 3,647 2,363 1,057 1,636
---------- ---------- ---------- ---------- ---------- ----------
Net gain on investments.... 44,110 34,433 6,486 3,004 1,534 1,639
---------- ---------- ---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.... $ 42,513 $ 33,434 $ 6,744 $ 2,856 $ 1,506 $ 1,710
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
35
<PAGE>
THE PASADENA GROWTH, NIFTY FIFTY, BALANCED RETURN,
SMALL & MID-CAP GROWTH, GLOBAL GROWTH, AND VALUE 25 FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
The Pasadena The Pasadena
Growth Fund Nifty Fifty Fund
----------------------------- -----------------------------
Six-Months Six-Months
Ended Year Ended Ended Year Ended
June 30, 1997 December 31, June 30, 1997 December 31,
(unaudited) 1996 (unaudited) 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
Operations:
Net investment income
(loss)..................... $ (1,597) $ (3,735) $ (999) $ (1,344)
Net realized gain on
investments................ 33,621 35,738 8,247 14,376
Net increase (decrease) in
unrealized appreciation in
value of investments....... 10,489 67,038 26,186 30,983
------------- ------------- ------------- -------------
Net increase in net assets
resulting from
operations................. 42,513 99,041 33,434 44,015
------------- ------------- ------------- -------------
Distributions to shareholders:
Net investment income........ -- -- -- --
Capital gains................ -- (35,995) -- (12,204)
------------- ------------- ------------- -------------
Decrease in net assets
resulting from
distributions to
shareholders............... -- (35,995) -- (12,204)
------------- ------------- ------------- -------------
Capital share transactions:
Net increase (decrease) in
net assets resulting from
capital share
transactions............... (56,301) (30,277) 13,618 22,004
------------- ------------- ------------- -------------
Total increase (decrease) in
net assets................. (13,788) 32,769 47,052 53,815
NET ASSETS:
Beginning of period............ 503,468 470,699 218,704 164,889
------------- ------------- ------------- -------------
End of period.................. $ 489,680 $ 503,468 $ 265,756 $ 218,704
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
THE PASADENA GROWTH, NIFTY FIFTY, BALANCED RETURN,
SMALL & MID-CAP GROWTH, GLOBAL GROWTH, AND VALUE 25 FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
The Pasadena The Pasadena The Pasadena
Balanced Return Fund Small & Mid-Cap Growth Fund Global Growth Fund
----------------------------- ----------------------------- -----------------------------
Six-Months Six-Months Six-Months
Ended Year Ended Ended Year Ended Ended Year Ended
June 30, 1997 December 31, June 30, 1997 December 31, June 30, 1997 December 31,
(unaudited) 1996 (unaudited) 1996 (unaudited) 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
Operations:
Net investment income
(loss)..................... $ 258 $ 577 $ (148) $ (21) $ (28) $ 5
Net realized gain on
investments................ 2,839 3,223 641 469 477 1,243
Net increase (decrease) in
unrealized appreciation in
value of investments....... 3,647 5,744 2,363 279 1,057 (268)
------------- ------------- ------------- ------------- ------------- -------------
Net increase in net assets
resulting from
operations................. 6,744 9,544 2,856 727 1,506 980
------------- ------------- ------------- ------------- ------------- -------------
Distributions to shareholders:
Net investment income........ -- (564) -- (25) -- (12)
Capital gains................ -- (3,123) -- (398) -- (455)
------------- ------------- ------------- ------------- ------------- -------------
Decrease in net assets
resulting from
distributions to
shareholders............... -- (3,687) -- (423) -- (467)
------------- ------------- ------------- ------------- ------------- -------------
Capital share transactions:
Net increase (decrease) in
net assets resulting from
capital share
transactions............... (3,023) (2,676) 12,361 7,347 1,416 4,918
------------- ------------- ------------- ------------- ------------- -------------
Total increase (decrease) in
net assets................. 3,721 3,181 15,217 7,651 2,922 5,431
NET ASSETS:
Beginning of period............ 60,739 57,558 9,393 1,742 8,634 3,203
------------- ------------- ------------- ------------- ------------- -------------
End of period.................. $ 64,460 $ 60,739 $ 24,610 $ 9,393 $ 11,556 $ 8,634
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
<CAPTION>
The Pasadena
Value 25 Fund
-----------------------------
Inception
Six-Months (December 17,
Ended 1996) through
June 30, 1997 December 31,
(unaudited) 1996
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
Operations:
Net investment income
(loss)..................... $ 71 $ --
Net realized gain on
investments................ 3 --
Net increase (decrease) in
unrealized appreciation in
value of investments....... 1,636 1
------------- -------------
Net increase in net assets
resulting from
operations................. 1,710 1
------------- -------------
Distributions to shareholders:
Net investment income........ (62) --
Capital gains................ -- --
------------- -------------
Decrease in net assets
resulting from
distributions to
shareholders............... (62) --
------------- -------------
Capital share transactions:
Net increase (decrease) in
net assets resulting from
capital share
transactions............... 18,394 486
------------- -------------
Total increase (decrease) in
net assets................. 20,042 487
NET ASSETS:
Beginning of period............ 487 --
------------- -------------
End of period.................. $ 20,529 $ 487
------------- -------------
------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
37
<PAGE>
THE PASADENA GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Year Ended December 31,
For the Six-Months Ended -------------------------------------
June 30, 1997
(Unaudited) 1996
------------------------------------- -------------------------------------
Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..... $ 21.94 $ 21.40 $ 21.40 $ 19.28 $ 18.99 $ 18.99
--------- --------- --------- --------- --------- ---------
GAIN (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss(1)................. (.06)(2) (.16)(2) (.16)(2) (.14)(3) (.31)(3) (.31)(3)
Net realized and unrealized gain
(loss) on investments................ 2.10 2.03 2.03 4.47 4.39 4.39
--------- --------- --------- --------- --------- ---------
Total gain (loss) from investment
operations........................... 2.04 1.87 1.87 4.33 4.08 4.08
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Capital gains.......................... -- -- -- (1.67) (1.67) (1.67)
--------- --------- --------- --------- --------- ---------
Total distributions.................... -- -- -- (1.67) (1.67) (1.67)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period........... $ 23.98 $ 23.27 $ 23.27 $ 21.94 $ 21.40 $ 21.40
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL RETURN(4).......................... 9.30%(2) 8.74%(2) 8.74%(2) 22.49%(3) 21.52%(3) 21.52%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................... $405,689 $ 54,094 $ 29,897 $426,785 $ 49,444 $ 27,239
Ratio of expenses to average net
assets(5)............................ 1.6%(2) 2.3%(2) 2.3%(2) 1.6%(3) 2.3%(3) 2.3%(3)
Ratio of net investment loss to
average net assets(5)................ (0.5)%(2) (1.5)%(2) (1.5)%(2) (0.6)%(3) (1.5)%(3) (1.5)%(3)
Portfolio turnover rate................ 45.8% 45.8% 45.8% 70.1% 70.1% 70.1%
Average commission rate paid per
share(6)............................. $ 0.0592 $ 0.0592 $ 0.0592 $ 0.0578 $ 0.0578 $ 0.0578
</TABLE>
- --------------
The table above provides condensed information concerning income and
capital changes for one share of The Pasadena Growth Fund. Such information
is based on the Fund's unaudited financial statements for the six-months
ended June 30, 1997, and the Fund's audited financial statements for all
other periods presented.
(1) This information was prepared using the average number of shares
outstanding during each period.
(2) These amounts reflect the impact of a waiver of administration fees of
$35,000. 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
$(.06), $(.16) and $(.16), respectively, 9.30%, 8.74% and 8.74%,
respectively, 1.6%, 2.3% and 2.3%, respectively, and (0.5)%, (1.5)%
and (1.5)%, respectively.
(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 periods indicated. It does not include the impact of
paying any applicable front-end or contingent deferred sales charges.
(5) Annualized for periods of less than one year.
(6) This disclosure, effective for the first time in 1996, has not been
applied retroactively.
SEE NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
THE PASADENA GROWTH FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------------------------------------
1995 1994
------------------------------------- -------------------------------------
Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..... $ 15.40 $ 15.28 $ 15.28 $ 16.00 $ 15.89 $ 15.89
--------- --------- --------- --------- --------- ---------
GAIN (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss(1)................. (.06) (.20) (.20) (.03) (.14) (.14)
Net realized and unrealized gain
(loss) on investments................ 4.24 4.21 4.21 (.57) (.47) (.47)
--------- --------- --------- --------- --------- ---------
Total gain (loss) from investment
operations........................... 4.18 4.01 4.01 (.60) (.61) (.61)
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Capital gains.......................... (.30) (.30) (.30) -- -- --
--------- --------- --------- --------- --------- ---------
Total distributions.................... (.30) (.30) (.30) -- -- --
--------- --------- --------- --------- --------- ---------
Net asset value, end of period........... $ 19.28 $ 18.99 $ 18.99 $ 15.40 $ 15.28 $ 15.28
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL RETURN(4).......................... 27.16% 26.26% 26.26% (3.75)% (3.84)% (3.84)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................... $415,416 $ 34,786 $ 20,497 $391,831 $ 11,349 $ 6,136
Ratio of expenses to average net
assets(5)............................ 1.6% 2.4% 2.4% 1.6% 2.3% 2.3%
Ratio of net investment loss to
average net assets(5)................ (0.3)% (1.1)% (1.1)% (0.2)% (1.0)% (1.0)%
Portfolio turnover rate................ 65.9% 65.9% 65.9% 53.8% 53.8% 53.8%
Average commission rate paid per
share(6).............................
<CAPTION>
For the Year Ended
December 31,
-----------------------
1993 1992
--------- ---------
Class A Class A
--------- ---------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $ 17.00 $ 16.80
--------- ---------
GAIN (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss(1)................ (.02) (.05)
Net realized and unrealized gain
(loss) on investments............... (.98) .43
--------- ---------
Total gain (loss) from investment
operations.......................... (1.00) .38
--------- ---------
LESS DISTRIBUTIONS:
Capital gains......................... -- (.18)
--------- ---------
Total distributions................... -- (.18)
--------- ---------
Net asset value, end of period.......... $ 16.00 $ 17.00
--------- ---------
--------- ---------
TOTAL RETURN(4)......................... (5.87)% 2.24%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands).......................... $532,208 $625,624
Ratio of expenses to average net
assets(5)........................... 1.6% 1.6%
Ratio of net investment loss to
average net assets(5)............... --% (0.3)%
Portfolio turnover rate............... 22.9% 24.5%
Average commission rate paid per
share(6)............................
</TABLE>
- - -------------
The table above provides condensed information concerning income and
capital changes for one share of The Pasadena Growth Fund. Such information
is based on the Fund's unaudited financial statements for the six-months
ended June 30, 1997, and the Fund's audited financial statements for all
other periods presented.
(1) This information was prepared using the average number of shares
outstanding during each period.
(2) These amounts reflect the impact of a waiver of administration fees of
$35,000. 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
$(.06), $(.16) and $(.16), respectively, 9.30%, 8.74% and 8.74%,
respectively, 1.6%, 2.3% and 2.3%, respectively, and (0.5)%, (1.5)%
and (1.5)%, respectively.
(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 periods indicated. It does not include the impact of
paying any applicable front-end or contingent deferred sales charges.
(5) Annualized for periods of less than one year.
(6) This disclosure, effective for the first time in 1996, has not been
applied retroactively.
SEE NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
THE PASADENA NIFTY FIFTY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Year Ended December 31,
For the Six-Months Ended -------------------------------------
June 30, 1997
(Unaudited) 1996
------------------------------------- -------------------------------------
Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..... $ 26.50 $ 25.88 $ 25.88 $ 22.18 $ 21.85 $ 21.85
--------- --------- --------- --------- --------- ---------
GAIN (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss(1)................. (.08)(2) (.18)(2) (.18)(2) (.12)(3) (.30)(3) (.30)(3)
Net realized and unrealized gain on
investments.......................... 4.01 3.90 3.90 6.00 5.89 5.89
--------- --------- --------- --------- --------- ---------
Total gain (loss) from investment
operations........................... 3.93 3.72 3.72 5.88 5.59 5.59
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Capital gains.......................... -- -- -- (1.56) (1.56) (1.56)
--------- --------- --------- --------- --------- ---------
Total distributions.................... -- -- -- (1.56) (1.56) (1.56)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period......... $ 30.43 $ 29.60 $ 29.60 $ 26.50 $ 25.88 $ 25.88
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL RETURN(4).......................... 14.83%(2) 14.37%(2) 14.37%(2) 26.53%(3) 25.60%(3) 25.60%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................... $165,823 $ 62,923 $ 37,009 $145,469 $ 47,143 $ 26,092
Ratio of expenses to average net
assets(5)............................ 1.6%(2) 2.3%(2) 2.3%(2) 1.7%(3) 2.5%(3) 2.5%(3)
Ratio of net investment loss to
average net assets(5)................ (0.6)%(2) (1.3)%(2) (1.3)%(2) (0.4)%(3) (1.2)%(3) (1.2)%(3)
Portfolio turnover rate................ 28.7% 28.7% 28.7% 41.9% 41.9% 41.9%
Average commission rate paid per
share(6)............................. $ 0.0597 $ 0.0597 $ 0.0597 $ 0.0585 $ 0.0585 $ 0.0585
</TABLE>
- - -------------
The table above provides condensed information concerning income and
capital changes for one share of The Pasadena Nifty Fifty Fund. Such
information is based on the Fund's unaudited financial statements for the
period ended June 30, 1997, and the Fund's audited financial statements for
all other periods presented.
(1) This information was prepared using the average number of shares
outstanding during each period.
(2) These amounts reflect the impact of a waiver of administration fees of
$82,000. 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
$(.09), $(.19) and $(.19) respectively, 14.83%, 14.37% and 14.37%,
respectively, 1.7%, 2.4% and 2.4%, respectively, and (0.6)%, (1.4)%
and (1.4)%, 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 investment income 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 periods indicated. It does not include the impact of
paying any applicable front-end or contingent deferred sales charge.
(5) Annualized for periods of less than one year.
(6) This disclosure, effective for the first time in 1996, has not been
applied retroactively.
SEE NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
THE PASADENA NIFTY FIFTY FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------------------------------------
1995 1994
------------------------------------- -------------------------------------
Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..... $ 17.30 $ 17.17 $ 17.17 $ 17.12 $ 17.02 $ 17.02
--------- --------- --------- --------- --------- ---------
GAIN (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss(1)................. (.05) (.21) (.21) (.03) (.14) (.15)
Net realized and unrealized gain on
investments.......................... 4.93 4.89 4.89 .21 .29 .30
--------- --------- --------- --------- --------- ---------
Total gain (loss) from investment
operations........................... 4.88 4.68 4.68 .18 .15 .15
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Capital gains.......................... -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Total distributions.................... -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Net asset value, end of period......... $ 22.18 $ 21.85 $ 21.85 $ 17.30 $ 17.17 $ 17.17
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL RETURN(4).......................... 28.21% 27.26% 27.26% 1.05% 0.88% 0.88%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................... $122,322 $ 27,462 $ 15,105 $100,596 $ 6,722 $ 4,283
Ratio of expenses to average net
assets(5)............................ 1.9% 2.6% 2.6% 1.9% 2.6% 2.6%
Ratio of net investment loss to
average net assets(5)................ (0.3)% (1.0)% (1.0)% (0.2)% (0.9)% (0.9)%
Portfolio turnover rate................ 26.5% 26.5% 26.5% 23.2% 23.2% 23.2%
Average commission rate paid per
share(6).............................
<CAPTION>
For the Year Ended
December 31,
-----------------------
1993 1992
--------- ---------
Class A Class A
--------- ---------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..... $ 17.21 $ 16.60
--------- ---------
GAIN (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss(1)................. (.06) (.05)
Net realized and unrealized gain on
investments.......................... (.03) .66
--------- ---------
Total gain (loss) from investment
operations........................... (.09) .61
--------- ---------
LESS DISTRIBUTIONS:
Capital gains.......................... -- --
--------- ---------
Total distributions.................... -- --
--------- ---------
Net asset value, end of period......... $ 17.12 $ 17.21
--------- ---------
--------- ---------
TOTAL RETURN(4).......................... (0.52)% 3.67%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................... $134,284 $195,067
Ratio of expenses to average net
assets(5)............................ 1.8% 1.9%
Ratio of net investment loss to
average net assets(5)................ --% (0.3)%
Portfolio turnover rate................ 2.2% 12.9%
Average commission rate paid per
share(6).............................
</TABLE>
- --------------
The table above provides condensed information concerning income and
capital changes for one share of The Pasadena Nifty Fifty Fund. Such
information is based on the Fund's unaudited financial statements for the
period ended June 30, 1997, and the Fund's audited financial statements for
all other periods presented.
(1) This information was prepared using the average number of shares
outstanding during each period.
(2) These amounts reflect the impact of a waiver of administration fees of
$82,000. 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
$(.09), $(.19) and $(.19) respectively, 14.83%, 14.37% and 14.37%,
respectively, 1.7%, 2.4% and 2.4%, respectively, and (0.6)%, (1.4)%
and (1.4)%, 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 investment income 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 periods indicated. It does not include the impact of
paying any applicable front-end or contingent deferred sales charge.
(5) Annualized for periods of less than one year.
(6) This disclosure, effective for the first time in 1996, has not been
applied retroactively.
SEE NOTES TO FINANCIAL STATEMENTS.
41
<PAGE>
THE PASADENA BALANCED RETURN FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Six-Months Ended
June 30, 1997 For the Year Ended
(Unaudited) December 31, 1996
------------------------------------- -------------------------------------
Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..... $ 28.08 $ 27.85 $ 27.88 $ 25.39 $ 25.26 $ 25.28
--------- --------- --------- --------- --------- ---------
GAIN (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(1)............... .14(2) .03(2) .03(2) .29(3) .09(3) .09(3)
Net realized and unrealized gain
(loss) on investments................ 3.06 3.04 3.04 4.23 4.16 4.16
--------- --------- --------- --------- --------- ---------
Total gain (loss) from investment
operations........................... 3.20 3.07 3.07 4.52 4.25 4.25
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Net investment income.................. -- -- -- (.30) (.13) (.12)
Capital gains.......................... -- -- -- (1.53) (1.53) (1.53)
--------- --------- --------- --------- --------- ---------
Total distributions.................... -- -- -- (1.83) (1.66) (1.65)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period........... $ 31.28 $ 30.92 $ 30.95 $ 28.08 $ 27.85 $ 27.88
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL RETURN(4).......................... 11.40%(2) 11.02%(2) 11.01%(2) 17.78%(3) 16.82%(3) 16.79%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................... $ 53,639 $ 5,931 $ 4,889 $ 51,947 $ 4,609 $ 4,183
Ratio of expenses to average net
assets(5)............................ 1.7%(2) 2.5%(2) 2.5%(2) 2.0%(3) 2.7%(3) 2.7%(3)
Ratio of net investment income to
average net assets(5)................ 0.9%(2) 0.2%(2) 0.2%(2) 1.1%(3) 0.3%(3) 0.3%(3)
Portfolio turnover rate................ 13.5% 13.5% 13.5% 35.1% 35.1% 35.1%
Average commission rate paid per
share(6)............................. $ 0.0593 $ 0.0593 $ 0.0593 $ 0.0597 $ 0.0597 $ 0.0597
</TABLE>
- --------------
The table above provides condensed information concerning income and
capital changes for one share of The Pasadena Balanced Return Fund. Such
information is based on the Fund's unaudited financial statements for the
period ended June 30, 1997, and the Fund's audited financial statements for
all other periods presented.
(1) This information was prepared using the average number of shares
outstanding during each period.
(2) These amounts reflect the impact of a waiver of administration fees of
$65,000. 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 $.11, $.00 and $.00 respectively, 11.40%, 11.02% and 11.01%,
respectively, 1.9%, 2.7% and 2.7%, respectively, and 0.7%, 0.0% and
0.0%, 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 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 periods indicated. It does not include the impact of
paying any applicable front-end or contingent deferred sales charge.
(5) Annualized for periods of less than one year.
(6) This disclosure, effective for the first time in 1996, has not been
applied retroactively.
SEE NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
THE PASADENA BALANCED RETURN FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------------------------------------
1995 1994
------------------------------------- -------------------------------------
Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..... $ 20.54 $ 20.49 $ 20.48 $ 21.97 $ 21.89 $ 21.89
--------- --------- --------- --------- --------- ---------
GAIN (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(1)............... .27 .08 .07 .39 .26 .25
Net realized and unrealized gain
(loss) on investments................ 5.31 5.29 5.30 (1.36) (1.32) (1.31)
--------- --------- --------- --------- --------- ---------
Total gain (loss) from investment
operations........................... 5.58 5.37 5.37 (.97) (1.06) (1.06)
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Net investment income.................. (.29) (.16) (.13) (.46) (.34) (.35)
Capital gains.......................... (.44) (.44) (.44) -- -- --
--------- --------- --------- --------- --------- ---------
Total distributions.................... (.73) (.60) (.57) (.46) (.34) (.35)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period........... $ 25.39 $ 25.26 $ 25.28 $ 20.54 $ 20.49 $ 20.48
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL RETURN(4).......................... 27.18% 26.20% 26.23% (4.43)% (4.85)% (4.85)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................... $ 52,028 $ 2,721 $ 2,809 $ 53,047 $ 1,223 $ 1,449
Ratio of expenses to average net
assets(5)............................ 2.1% 2.9% 2.9% 2.1% 2.9% 2.9%
Ratio of net investment income to
average net assets(5)................ 1.2% 0.3% 0.3% 1.8% 1.3% 1.3%
Portfolio turnover rate................ 51.1% 51.1% 51.1% 28.2% 28.2% 28.2%
Average commission rate paid per
share(6).............................
<CAPTION>
For the Year Ended
December 31,
-----------------------
1993 1992
--------- ---------
Class A Class A
--------- ---------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..... $ 21.76 $ 20.95
--------- ---------
GAIN (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(1)............... .32 .25
Net realized and unrealized gain
(loss) on investments................ .21 .69
--------- ---------
Total gain (loss) from investment
operations........................... .53 .94
--------- ---------
LESS DISTRIBUTIONS:
Net investment income.................. (.32) (.13)
Capital gains.......................... -- --
--------- ---------
Total distributions.................... (.32) (.13)
--------- ---------
Net asset value, end of period........... $ 21.97 $ 21.76
--------- ---------
--------- ---------
TOTAL RETURN(4).......................... 2.44% 4.49%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................... $ 84,591 $ 75,143
Ratio of expenses to average net
assets(5)............................ 2.1% 2.3%
Ratio of net investment income to
average net assets(5)................ 1.5% 1.2%
Portfolio turnover rate................ 4.8% 6.3%
Average commission rate paid per
share(6).............................
</TABLE>
- - -------------
The table above provides condensed information concerning income and
capital changes for one share of The Pasadena Balanced Return Fund. Such
information is based on the Fund's unaudited financial statements for the
period ended June 30, 1997, and the Fund's audited financial statements for
all other periods presented.
(1) This information was prepared using the average number of shares
outstanding during each period.
(2) These amounts reflect the impact of a waiver of administration fees of
$65,000. 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 $.11, $.00 and $.00 respectively, 11.40%, 11.02% and 11.01%,
respectively, 1.9%, 2.7% and 2.7%, respectively, and 0.7%, 0.0% and
0.0%, 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 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 periods indicated. It does not include the impact of
paying any applicable front-end or contingent deferred sales charge.
(5) Annualized for periods of less than one year.
(6) This disclosure, effective for the first time in 1996, has not been
applied retroactively.
SEE NOTES TO FINANCIAL STATEMENTS.
43
<PAGE>
THE PASADENA SMALL & MID-CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Inception
(October
For the Year Ended December 31, 10,
------------------------------------------------ 1994)
For the Six-Months Ended through
June 30, 1997 1996 December
(Unaudited) ------------------------------------ 1995 31, 1994
------------------------------ Class Class --------- --------
Class A Class B Class C Class A B(5) C(5) Class A Class A
-------- -------- -------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period....................... $ 18.39 $ 18.35 $ 18.35 $ 14.90 $ 16.44 $ 17.99 $ 12.07 $ 10.00
-------- -------- -------- -------- -------- -------- --------- --------
GAIN (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(1).................. (.15) (.22) (.22) (.12)(2) (.32) (.29) .22(2) .07(2)
Net realized and unrealized
gain on investments........ 2.70 2.68 2.68 7.45 2.43 .85 2.87 2.00
-------- -------- -------- -------- -------- -------- --------- --------
Total gain from investment
operations................. 2.55 2.46 2.46 7.33 2.11 .56 3.09 2.07
-------- -------- -------- -------- -------- -------- --------- --------
LESS DISTRIBUTIONS:
Net investment income........ -- -- -- (.28) -- -- (.08) --
Capital gains................ -- -- -- (3.56) (.20) (.20) (.18) --
-------- -------- -------- -------- -------- -------- --------- --------
Total distributions.......... -- -- -- (3.84) (.20) (.20) (.26) --
-------- -------- -------- -------- -------- -------- --------- --------
Net asset value, end of
period....................... $ 20.94 $ 20.81 $ 20.81 $ 18.39 $ 18.35 $ 18.35 $ 14.90 $ 12.07
-------- -------- -------- -------- -------- -------- --------- --------
-------- -------- -------- -------- -------- -------- --------- --------
TOTAL RETURN(3)................ 13.87% 13.41% 13.41% 52.37%(2) 12.84% 3.12% 25.68%(2) 20.70%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)............. $15,137 $ 6,119 $ 3,353 $ 7,859 $ 1,480 $ 54 $ 1,742 $ 121
Ratio of expenses to average
net assets(4).............. 1.8% 2.5% 2.5% 1.1%(2) 2.6% 2.6% 0.0%(2) 0.0%(2)
Ratio of net investment
income (loss) to average
net assets(4).............. (1.6)% (2.3)% (2.3)% (0.7)%(2) (2.2)% (2.2)% 1.5%(2) 2.6%(2)
Portfolio turnover rate...... 176.2% 176.2% 176.2% 297.1% 297.1% 297.1% 121.4% 157.9%
Average commission rate paid
per share(6)............... $0.0562 $0.0562 $0.0562 $0.0547 $0.0547 $0.0547
</TABLE>
- --------------
The table above provides condensed information concerning income and
capital changes for one share of The Pasadena Small & Mid-Cap Growth Fund.
Such information is based on the Fund's unaudited financial statements for
the six months ended June 30, 1997, and the Fund's audited financial
statements for all other periods presented.
(1) This information was prepared using the average number of shares
outstanding during each period.
(2) 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.
(3) Total return measures the change in the value of an investment during
the period indicated and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(4) Annualized for periods of less than one year.
(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, September 18, 1996
and October 8, 1996, respectively.
(6) This disclosure, effective for the first time in 1996, has not been
applied retroactively.
SEE NOTES TO FINANCIAL STATEMENTS.
44
<PAGE>
THE PASADENA GLOBAL GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------------------------------
For the Six-Months Ended
June 30, 1997 1996
(Unaudited) --------------------------------- 1995 1994
------------------------------ Class Class -------- --------
Class A Class B Class C Class A B(5) C(5) Class A Class A
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period....................... $ 19.06 $ 19.04 $ 19.03 $ 17.27 $ 17.44 $ 17.88 $ 14.06 $ 11.18
-------- -------- -------- -------- -------- -------- -------- --------
GAIN (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(1).................. (.04) (.10) (.07) .03(2) (.08) (.04) .24(2) .10(2)
Net realized and unrealized
gain on investments........ 2.92 2.89 2.87 3.55 1.82 1.34 3.11 2.78
-------- -------- -------- -------- -------- -------- -------- --------
Total gain from investment
operations................. 2.88 2.79 2.80 3.58 1.74 1.30 3.35 2.88
-------- -------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Net investment income........ -- -- -- (.04) -- (.01) -- --
Capital gains................ -- -- -- (1.75) (.14) (.14) (.14) --
-------- -------- -------- -------- -------- -------- -------- --------
Total distributions.......... -- -- -- (1.79) (.14) (.15) (.14) --
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period....................... $ 21.94 $ 21.83 $ 21.83 $ 19.06 $ 19.04 $ 19.03 $ 17.27 $ 14.06
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
TOTAL RETURN(3)................ 15.11% 14.65% 14.71% 21.77%(2) 9.98% 7.28% 23.84%(2) 25.76%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)............. $ 7,634 $ 2,197 $ 1,725 $ 7,654 $ 874 $ 106 $ 3,203 $ 141
Ratio of expenses to average
net assets(4).............. 2.0% 2.8% 2.8% 0.8%(2) 2.7% 2.7% 0.0%(2) 0.0%(2)
Ratio of net investment
income to average net
assets(4).................. (0.4)% (1.1)% (1.1)% 0.1%(2) (1.9)% (1.6)% 1.4%(2) 0.8%(2)
Portfolio turnover rate...... 93.1% 93.1% 93.1% 220.3% 220.3% 220.3% 29.0% 479.3%
Average commission rate paid
per share(6)............... $0.0150 $0.0150 $0.0150 $0.0301 $0.0301 $0.0301
<CAPTION>
Inception
(November 1,
1993) through
December 31,
1993
-------------
Class A
-------------
<S> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period....................... $ 10.00
-------------
GAIN (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(1).................. .01(2)
Net realized and unrealized
gain on investments........ 1.17
-------------
Total gain from investment
operations................. 1.18
-------------
LESS DISTRIBUTIONS:
Net investment income........ --
Capital gains................ --
-------------
Total distributions.......... --
-------------
Net asset value, end of
period....................... $ 11.18
-------------
-------------
TOTAL RETURN(3)................ 11.80%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)............. $ 112
Ratio of expenses to average
net assets(4).............. 0.0%(2)
Ratio of net investment
income to average net
assets(4).................. 0.8%(2)
Portfolio turnover rate...... 215.8%
Average commission rate paid
per share(6)...............
</TABLE>
- --------------
The table above provides condensed information concerning income and
capital changes for one share of The Pasadena Global Growth Fund. Such
information is based on the Fund's unaudited financial statements for the
six-months ended June 30, 1997, and the Fund's audited financial statements
for all other periods presented.
(1) This information was prepared using the average number of shares
outstanding during each period.
(2) These amounts reflect the impact of a waiver of Manager fees of
$62,438, $42,545, $2,784 and $410 for the periods ended December 31,
1996, 1995, 1994 and 1993, 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 (not annualized for the period ended December 31, 1993) and
ratios of expenses and net investment income (loss) to average net
assets (annualized for the periods ended December 31, 1993) would
have been $(.21), 21.71%, 2.0% and (1.2)%, respectively, $(.15),
22.88%, 2.3%, and (0.9)%, respectively, $(.21), 14.40%, 10.4% (2.3%
if only normal and recurring expenses are taken into account) and
(1.7)%, respectively, and $(.03), 11.40%, 2.3% and (1.5)%,
respectively, for the periods ended December 31, 1996, 1995, 1994 and
1993, respectively.
(3) Total return measures the change in the value of an investment during
the period indicated and does not include the impact of paying any
sales charge.
(4) Annualized for periods of less than one year.
(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, September 18, 1996
and October 21, 1996, respectively.
(6) This disclosure effective for the first time in 1996, has not been
applied retroactively.
SEE NOTES TO FINANCIAL STATEMENTS.
45
<PAGE>
THE PASADENA VALUE 25 FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Inception
For the Six-Months Ended (December 17,
June 30, 1997 1996) to
(Unaudited) December 31,
------------------------------------- 1996
Class Class -------------
Class A B(4) C(4) Class A
--------- --------- --------- -------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..... $ 10.21 $ 10.39 $ 10.39 $ 10.00
--------- --------- --------- -------------
GAIN FROM INVESTMENT OPERATIONS:
Net investment income(1)............... .08 -- -- --
Net realized and unrealized gain on
investments.......................... 1.26 1.13 1.13 .21
--------- --------- --------- -------------
Total gain from investment
operations........................... 1.34 1.13 1.13 .21
--------- --------- --------- -------------
LESS DISTRIBUTIONS:
Net investment income.................. (.04) (.03) (.03) --
--------- --------- --------- -------------
Total distributions.................... (.04) (.03) (.03) --
--------- --------- --------- -------------
Net asset value, end of period........... $ 11.51 $ 11.49 $ 11.49 $ 10.21
--------- --------- --------- -------------
--------- --------- --------- -------------
TOTAL RETURN(2).......................... 13.12% 10.86% 10.86% 2.10%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)....................... $ 13,126 $ 5,540 $ 1,863 $ 487
Ratio of expenses to average net
assets(3)............................ 1.8% 2.5% 2.5% 1.8%
Ratio of net investment income to
average net assets(3)................ 1.4% 0.6% 0.6% 1.2%
Portfolio turnover rate................ 33.1% 33.1% 33.1% 0.0%
Average commission rate paid per
share................................ $ 0.0602 $ 0.0602 $ 0.0602 $ 0.0600
</TABLE>
- --------------
The table above provides condensed information concerning income and
capital changes for one share of The Pasadena Value 25 Fund. Such
information is based on the Fund's unaudited financial statements for the
six-months ended June 30, 1997 and the Fund's audited financial statements
for the period ended December 31, 1996.
(1) This information was prepared using the average number of shares
outstanding during each period.
(2) Total return measures the change in the value of an investment during
the period indicated and does not include the impact of paying any
sales charge.
(3) Annualized.
(4) 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).
SEE NOTES TO FINANCIAL STATEMENTS.
46
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES: The Pasadena Growth Fund, The Pasadena Nifty
Fifty Fund, The Pasadena Balanced Return Fund, The Pasadena Small & Mid-Cap
Growth Fund, The Pasadena Global Growth Fund and The Pasadena Value 25 Fund,
collectively referred to as the "Funds," are series of the Pasadena Investment
Trust (the "Trust"), a Massachusetts business trust registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. Each Fund offers three Classes (Class A, Class B and Class C) of no par
value shares (an unlimited number of which have been authorized). Class A shares
are sold with a maximum front-end sales charge of 5.5% of the offering price.
Class B and Class C shares are sold at their respective net asset values. Class
B shares redeemed during the first four years of ownership may be subject to a
contingent deferred sales charge ("CDSC") of up to 5%. Class C shares of The
Pasadena Small & Mid-Cap Growth Fund, The Pasadena Global Growth Fund and The
Pasadena Value 25 Fund redeemed in the first year of ownership may be subject to
a CDSC of 1%. At the beginning of the seventh year after purchase, Class B
shares automatically convert into Class A shares based upon the relative net
asset values of the two Classes, without imposition of any sales charges. The
significant accounting policies of the Funds are as follows:
A. SECURITIES VALUATION. Securities traded on a securities exchange (foreign or
domestic) or on Nasdaq are stated at the last sale price determined as of
4:00 p.m. Eastern Time on the day of valuation; securities for which no sale
was reported on that date are stated at the last sale price on the business
day the security was last traded. Securities traded only in the
over-the-counter market and not on Nasdaq are valued at the current or last
quoted bid price. If no bid price is quoted that day, and in the case of
U.S. Government securities if no bid prices of comparable issues exist, the
security is valued by such method as the Trust's Board of Trustees shall
determine in good faith reflects the security's fair value.
B. INCOME AND EXPENSE ALLOCATION. All items of income and expense not directly
related to a specific Class of shares are allocated among the three Classes
based upon the relative aggregate value of the outstanding shares of each
Class.
C. FEDERAL INCOME TAXES. It is the Funds' policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of their taxable income to their
shareholders. Accordingly, no federal income tax provisions are required.
Distributions of income and capital gains are determined in accordance with
income tax regulations which differ in certain respects from generally
accepted accounting principles. Accordingly, the Funds have reclassified to
capital paid-in the effects of permanent differences included in
undistributed income. The aggregate cost of securities for financial
statement purposes approximates their cost for federal income tax purposes.
D. FOREIGN CURRENCY TRANSACTIONS. The books and records of the Funds are
maintained in U.S. dollars. Assets and liabilities denominated in foreign
currencies are converted into U.S. dollars using the exchange rates existing
at the end of each period. Purchases and sales of investment securities,
dividend and interest income, and expenses are translated at the rates of
exchange prevailing on the respective dates of such transactions. Net
realized foreign exchange gains and losses arise from the differences
between asset and liability amounts initially stated in foreign currencies
and the U.S. dollar value of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the
unrealized value of assets and liabilities at the end of the reporting
period resulting from changes in the exchange rates. The Funds do not
isolate that portion of their results of operations resulting from changes
in foreign exchange rates on investments from fluctuations arising from
changes in the market prices of securities held. The Funds did not have any
material exchange gains or losses during the periods covered by these
financial statements.
E. OTHER. The Funds recognize security transactions on the trade date. Realized
gains and losses on sales of investments are determined on the identified
cost basis. Dividend income less foreign taxes withheld (if any) and
distributions to shareholders are recorded on the ex-dividend date. Interest
income is recorded on an accrual basis.
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES: Under separate investment
management agreements, Roger Engemann Management Co., Inc. (the "Manager")
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
47
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued):
other pertinent subjects. The Manager also performs various administrative and
shareholder services to 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 and distribution fees, are
paid by the Manager pursuant to the administration agreements.
For the services provided and expenses assumed under the management and
administration agreements, the Manager receives separate fees computed and
prorated on a daily basis as follows:
<TABLE>
<CAPTION>
NET ASSETS LEVEL MANAGEMENT FEE ADMINISTRATION FEE
---------------- -------------- ------------------
<S> <C> <C> <C>
The Pasadena Growth, First $30,000 1.00%
Balanced Return and Next $70,000 0.80%
Nifty Fifty Funds Next $400,000 0.60%
Over $500,000 0.40%
First $30,000 0.50%
Next $20,000 0.70%
Next $50,000 0.50%
Over $100,000 0.70%
The Pasadena Small & Mid- First $50,000 1.00% 0.60%
Cap Growth Fund Next $450,000 0.90% 0.50%
Over $500,000 0.80% 0.40%
The Pasadena Global First $50,000 1.10% 0.60%
Growth Fund Next $450,000 1.00% 0.50%
Over $500,000 0.90% 0.40%
The Pasadena Value 25 Fund First $50,000 0.90% 0.60%
Next $450,000 0.80% 0.50%
Over $500,000 0.70% 0.40%
</TABLE>
Broker/dealers and other service providers, including the Manager and the Funds'
distributor, Pasadena Fund Services, Inc. (the "Distributor"), receive service
fees at an annualized 0.25% of each Fund's average daily net asset value for
services to shareholders.
Pursuant to the distribution plans (the "Plans") adopted by the Funds, each Fund
pays distribution fees to the Distributor at an annualized rate of 0.75% of its
average daily net assets attributable to Class B and Class C shares. The fees
reimburse the Distributor for distribution costs (principally payments to
broker/dealers) incurred on behalf of the Funds with respect to Class B and
Class C shares. Under the Plans, Class B and Class C shares are not obligated to
pay any distribution costs in excess of the distribution fee paid or accrued
even if the Plans are terminated or otherwise discontinued.
Roger Engemann & Associates, Inc., a wholly-owned subsidiary of Pasadena Capital
Corporation (PCC), owns 93.5% of the Manager's capital stock. The Distributor is
also a wholly-owned subsidiary of PCC. Roger Engemann, the controlling
shareholder of PCC, is Chairman of the Board and President of the Trust.
48
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued):
During 1997 the Manager elected to waive the above fees as follows:
<TABLE>
<CAPTION>
EXPENSE WAIVED TIME PERIOD AMOUNT
------------------- ----------------------- ---------
<S> <C> <C> <C>
The Pasadena Growth Fund Administration fees January 1, 1997 - April $ 35
14, 1997
The Pasadena Nifty Fifty Fund Administration fees January 1, 1997 - April $ 82
14, 1997
The Pasadena Balanced Return Fund Administration fees January 1, 1997 - April $ 65
14, 1997
</TABLE>
3. INVESTMENT TRANSACTIONS: For the six months ended June 30, 1997, purchases
and sales of securities, other than short-term securities, aggregated $168,790
and $233,391, respectively, for The Pasadena Growth Fund, $76,970 and $67,953
respectively, for The Pasadena Nifty Fifty Fund, $8,158 (which includes $889 in
U.S. government obligations) and $10,907, respectively, for The Pasadena
Balanced Return Fund, $37,590 and $26,531, respectively, for The Pasadena Small
& Mid-Cap Growth Fund, $10,345 and $9,230, respectively, for The Pasadena Global
Growth Fund and $23,173 and $4,684, respectively, for The Pasadena Value 25
Fund.
At June 30, 1997, the aggregate cost of securities for The Pasadena Growth Fund,
The Pasadena Nifty Fifty Fund, The Pasadena Balanced Return Fund, The Pasadena
Small & Mid-Cap Growth Fund, The Pasadena Global Growth Fund and The Pasadena
Value 25 Fund was $268,539, $149,438, $39,455, $20,144, $9,933 and $18,601,
respectively. Net unrealized appreciation aggregated $218,715, $106,671,
$23,926, $2,732, $1,119 and $1,653, respectively, of which $227,578, $108,272,
$24,650, $3,452, $1,305 and $1,686, respectively, related to appreciated
securities and $8,863, $1,601, $724, $720, $186, and $133, respectively, related
to depreciated securities.
At June 30, 1997, The Pasadena Value 25 Fund was "short against the box" 7,310
shares of Echlin Inc. The proceeds on deposit with the broker total $247. The
value of the shares total $263.
49
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
4. CAPITAL SHARE TRANSACTIONS: The Funds' capital share transactions were as
follows:
<TABLE>
<CAPTION>
Net Assets Shares
----------------------------- -----------------------------
Six-Months Six-Months
Ended June Year Ended Ended June Year Ended
30, 1997 December 31, 30, 1997 December 31,
The Pasadena Growth Fund (unaudited) 1996 (unaudited) 1996
- ------------------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold......................... $ 5,130 $ 19,445 230 914
Shares issued in reinvestment of
distributions..................... -- 27,035 -- 1,236
Shares repurchased.................. (61,959) (90,882) (2,760) (4,242)
------------- ------------- ------------- -------------
Net decrease........................ (56,829) (44,402) (2,530) (2,092)
------------- ------------- ------------- -------------
CLASS B
Shares sold......................... 3,862 13,137 178 625
Shares issued in reinvestment of
distributions..................... -- 3,299 -- 154
Shares repurchased.................. (3,602) (6,393) (164) (300)
------------- ------------- ------------- -------------
Net increase........................ 260 10,043 14 479
------------- ------------- ------------- -------------
CLASS C
Shares sold......................... 2,772 7,457 127 356
Shares issued in reinvestment of
distributions..................... -- 1,798 -- 84
Shares repurchased.................. (2,504) (5,173) (115) (247)
------------- ------------- ------------- -------------
Net increase........................ 268 4,082 12 193
------------- ------------- ------------- -------------
Net decrease resulting from capital
share transactions................ $ (56,301) $ (30,277) (2,504) (1,420)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
The Pasadena Nifty Fifty Fund
- - -----------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold......................... $ 15,567 $ 19,958 561 803
Shares issued in reinvestment of
distributions..................... -- 7,236 -- 273
Shares repurchased.................. (16,751) (27,395) (601) (1,101)
------------- ------------- ------------- -------------
Net decrease........................ (1,184) (201) (40) (25)
------------- ------------- ------------- -------------
CLASS B
Shares sold......................... 11,402 16,788 419 680
Shares issued in reinvestment of
distributions..................... -- 2,450 -- 95
Shares repurchased.................. (3,182) (5,120) (115) (210)
------------- ------------- ------------- -------------
Net increase........................ 8,220 14,118 304 565
------------- ------------- ------------- -------------
CLASS C
Shares sold......................... 10,253 12,251 376 493
Shares issued in reinvestment of
distributions..................... -- 1,358 -- 52
Shares repurchased.................. (3,671) (5,522) (134) (228)
------------- ------------- ------------- -------------
Net increase........................ 6,582 8,087 242 317
------------- ------------- ------------- -------------
Net increase resulting from capital
share transactions................ $ 13,618 $ 22,004 506 857
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
50
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Net Assets Shares
----------------------------- -----------------------------
Six-Months Six-Months
Ended June Year Ended Ended June Year Ended
30, 1997 December 31, 30, 1997 December 31,
The Pasadena Balanced Return Fund (unaudited) 1996 (unaudited) 1996
- --------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold......................... $ 1,011 $ 1,671 35 61
Shares issued in reinvestment of
distributions..................... -- 2,918 -- 104
Shares repurchased.................. (5,026) (9,904) (171) (363)
------------- ------------- ------------- -------------
Net decrease........................ (4,015) (5,315) (136) (198)
------------- ------------- ------------- -------------
CLASS B
Shares sold......................... 1,272 1,909 43 70
Shares issued in reinvestment of
distributions..................... -- 224 -- 8
Shares repurchased.................. (496) (562) (17) (20)
------------- ------------- ------------- -------------
Net increase........................ 776 1,571 26 58
------------- ------------- ------------- -------------
CLASS C
Shares sold......................... 824 2,078 28 77
Shares issued in reinvestment of
distributions..................... -- 217 -- 8
Shares repurchased.................. (608) (1,227) (20) (46)
------------- ------------- ------------- -------------
Net increase........................ 216 1,068 8 39
------------- ------------- ------------- -------------
Net decrease resulting from capital
share transactions................ $ (3,023) $ (2,676) (102) (101)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
The Pasadena Small & Mid-Cap Growth Fund
- ----------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold......................... $ 8,912 $ 7,102 477 391
Shares issued in reinvestment of
distributions..................... -- 405 -- 24
Shares repurchased.................. (3,438) (1,683) (182) (105)
------------- ------------- ------------- -------------
Net increase........................ 5,474 5,824 295 310
------------- ------------- ------------- -------------
CLASS B
Shares sold......................... 4,179 1,491 223 82
Shares issued in reinvestment of
distributions..................... -- 12 -- 1
Shares repurchased.................. (178) (34) (10) (2)
------------- ------------- ------------- -------------
Net increase........................ 4,001 1,469 213 81
------------- ------------- ------------- -------------
CLASS C
Shares sold......................... 2,928 75 160 4
Shares issued in reinvestment of
distributions..................... -- 1 -- --
Shares repurchased.................. (42) (22) (2) (1)
------------- ------------- ------------- -------------
Net increase........................ 2,886 54 158 3
------------- ------------- ------------- -------------
Net increase resulting from capital
share transactions................ $ 12,361 $ 7,347 666 394
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
51
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Net Assets Shares
----------------------------- -----------------------------
Six-Months Six-Months
Ended June Year Ended Ended June Year Ended
30, 1997 December 31, 30, 1997 December 31,
The Pasadena Global Growth Fund (unaudited) 1996 (unaudited) 1996
- ------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold......................... $ 2,802 $ 5,512 141 295
Shares issued in reinvestment of
distributions..................... -- 459 -- 26
Shares repurchased.................. (3,936) (2,005) (195) (105)
------------- ------------- ------------- -------------
Net increase (decrease)............. (1,134) 3,966 (54) 216
------------- ------------- ------------- -------------
CLASS B
Shares sold......................... 1,296 842 66 46
Shares issued in reinvestment of
distributions..................... -- 6 -- --
Shares repurchased.................. (202) -- (11) --
------------- ------------- ------------- -------------
Net increase........................ 1,094 848 55 46
------------- ------------- ------------- -------------
CLASS C
Shares sold......................... 1,477 103 74 6
Shares issued in reinvestment of
distributions..................... -- 1 -- --
Shares repurchased.................. (21) -- (1) --
------------- ------------- ------------- -------------
Net increase........................ 1,456 104 73 6
------------- ------------- ------------- -------------
Net increase resulting from capital
share transactions................ $ 1,416 $ 4,918 74 268
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
Net Assets Shares
----------------------------- -----------------------------
Inception Inception
Six-Months (December 17, Six-Months (December 17,
Ended June 1996) through Ended June 1996) through
30, 1997 December 31, 30, 1997 December 31,
The Pasadena Value 25 Fund (unaudited) 1996 (unaudited) 1996
- -------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold......................... $ 13,645 $ 486 1,302 48
Shares issued in reinvestment of
distributions..................... 35 -- 3 --
Shares repurchased.................. (2,349) -- (213) --
------------- ------------- ------------- -------------
Net increase........................ 11,331 486 1,092 48
------------- ------------- ------------- -------------
CLASS B
Shares sold......................... 5,348 -- 491 --
Shares issued in reinvestment of
distributions..................... 4 -- -- --
Shares repurchased.................. (104) -- (9) --
------------- ------------- ------------- -------------
Net increase........................ 5,248 -- 482 --
------------- ------------- ------------- -------------
CLASS C
Shares sold......................... 1,826 -- 163 --
Shares issued in reinvestment of
distributions..................... 1 -- -- --
Shares repurchased.................. (12) -- (1) --
------------- ------------- ------------- -------------
Net increase........................ 1,815 -- 162 --
------------- ------------- ------------- -------------
Net increase resulting from capital
share transactions................ $ 18,394 $ 486 1,736 48
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
52
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
5. DISTRIBUTIONS: Distributions to shareholders were as follows:
<TABLE>
<CAPTION>
The Pasadena The Pasadena The Pasadena
Growth Fund Nifty Fifty Fund Balanced Return Fund
----------------------------- ----------------------------- -----------------------------
Six-Months Six-Months Six-Months
Ended Year Ended Ended Year Ended Ended Year Ended
June 30, 1997 December 31, June 30, 1997 December 31, June 30, 1997 December 31,
(unaudited) 1996 (unaudited) 1996 (unaudited) 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income:
Class A....................... $ -- $ -- $ -- $ -- $ -- $ 526
Class B....................... -- -- -- -- -- 21
Class C....................... -- -- -- -- -- 17
Capital gains:
Class A....................... -- 30,458 -- 8,069 -- 2,670
Class B....................... -- 3,565 -- 2,685 -- 238
Class C....................... -- 1,972 -- 1,450 -- 215
------------- ------------- ------------- ------------- ------------- -------------
Total........................... $ -- $ 35,995 $ -- $ 12,204 $ -- $ 3,687
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
The Pasadena The Pasadena The Pasadena
Small & Mid-Cap Growth Fund Global Growth Fund Value 25 Fund
----------------------------- ----------------------------- -----------------------------
Inception
Six-Months Six-Months Six-Months (December 17,
Ended Year Ended Ended Year Ended Ended 1996) through
June 30, 1997 December 31, June 30, 1997 December 31, June 30, 1997 December 31,
(unaudited) 1996 (unaudited) 1996 (unaudited) 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income:
Class A....................... $ -- $ 25 $ -- $ 12 $ 44 $ --
Class B....................... -- -- -- -- 13 --
Class C....................... -- -- -- -- 5 --
Capital gains:
Class A....................... -- 385 -- 449 -- --
Class B....................... -- 12 -- 5 -- --
Class C....................... -- 1 -- 1 -- --
------------- ------------- ------------- ------------- ------------- -------------
Total........................... $ -- $ 423 $ -- $ 467 $ 62 $ --
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
6. PENDING ACQUISITION: On June 9, 1997, Pasadena Capital Corporation signed a
definitive Agreement and Plan of Merger with Phoenix Duff & Phelps Corporation,
a diversified financial services company. The acquisition is subject to the
approval of new management agreements with Roger Engemann & Associates, Inc.
53
<PAGE>
THE PHOENIX-ENGEMANN FUNDS
FORM N-1 A
PART C--OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Audited financial statements for the year ended December 31, 1996, for
each 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 and the Phoenix-Engemann Global Growth Fund
(formerly called The Pasadena Growth Fund, The Pasadena Nifty Fifty Fund,
The Pasadena Balanced Return Fund, The Pasadena Small & Mid-Cap Growth
Fund and The Pasadena Global Growth Fund, respectively), including the
Report of Independent Accountants, Statements of Assets and Liabilities,
Schedules of Investment in Securities, Statements of Operations,
Statements of Changes in Net Assets, Financial Highlights, and Notes to
Financial Statements, are incorporated in the Statement of Additional
Information relating to such Funds by reference to the Annual Report to
Shareholders of such Funds for the year ended December 31, 1996.
Unaudited financial statements for the six-months ended June 30, 1997,
for each 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 Global
Growth Fund and the Phoenix-Engemann Value 25 Fund (formerly called The
Pasadena Growth Fund, The Pasadena Nifty Fifty Fund, The Pasadena Balanced
Return Fund, The Pasadena Small & Mid-Cap Growth Fund, The Pasadena Global
Growth Fund and The Pasadena Value 25 Fund, respectively), including the
Statements of Assets and Liabilities, Schedules of Investment in
Securities, Statements of Operations, Statements of Changes in Net Assets,
Financial Highlights, and Notes to Financial Statements, are incorporated
in the Statement of Additional Information relating to such Funds by
reference to the SemiAnnual Report to Shareholders of such Funds for the
period ended June 30, 1997.
(b) Exhibits:
<TABLE>
<S> <C>
(1) Amended and Restated Agreement and Declaration of Trust(5)
(2) By-Laws(1)
(3) Voting Trust Agreement--Not Applicable
(4) Specimen Share Certificate--Not Applicable
(5) Investment Management Agreement(9)
(6)(A) Distribution Agreement with Phoenix Equity Planning Corporation(10)
(6)(B) Form of Master Selling Agreement(4)
(7) Bonus, Profit Sharing, Pension and Other Similar Arrangements--Not Applicable
(8) Custodian Agreement(1)
(9)(A) Other Material Contracts--Agreement and Plan of Reorganization(1)
(9)(B) Administration Agreement(10)
(9)(C) Sub-Administration Agreement
(10) Opinion and Consent of Counsel(1)
(11) Consents of Certified Public Accountants
(12) Financial Statements Omitted from Item 23--Not Applicable
(13) Letter of Understanding relating to initial capital--Not Applicable
(14) Model Retirement Plans(2)
(15)(A) Form of Rule 12b-1 Plan For Class B/C Shares(6)
(15)(B) Form of Rule 12b-1 Plan For Class M Shares
(16) Performance Calculations(3)
(17) Financial Data Schedules
(18)(A) Multiple Class Plan (Amended)(8)
(18)(B) Restated and Amended Multiple Class Plan
(19) Powers of Attorney
</TABLE>
C-1
<PAGE>
- -----------
(1) Previously filed as part of Pre-Effective Amendment No. 3 to the
Registrant's Registration Statement as filed in June 1986.
(2) Previously
filed as part of Pre-Effective Amendment No. 1 to the Registrant's
Registration Statement as filed on January 22, 1986.
(3) Previously filed as part of Post-Effective Amendment No. 11 to the
Registrant's Registration Statement as filed on April 16, 1992.
(4) Previously filed as part of Post-Effective Amendment No. 12 to the
Registrant's Registration Statement as filed on December 23, 1992.
(5) Previously filed as part of Post-Effective Amendment No. 14 to the
Registrant's Registration Statement as filed on August 27, 1993.
(6) Previously filed as part of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement as filed on October 29, 1993.
(7) Previously filed as part of Post-Effective Amendment No. 18 to the
Registrant's Registration Statement as filed on August 10, 1994.
(8) Previously filed as part of Post-Effective Amendment No. 20 to the
Registrant's Registration Statement as filed on April 24, 1996.
(9) Previously filed as part of Post-Effective Amendment No. 25 to the
Registrant's Registration Statement as filed on September 4, 1997.
(10) Previously filed as part of Post-Effective Amendment No. 26 to the
Registrant's Registration Statement as filed on September 30, 1997.
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Holders of Securities
As of September 30, 1997, the Registrant had the following approximate
number of shareholder accounts:
<TABLE>
<CAPTION>
Number of
Title of Class Accounts
- ------------------------------------------------ ----------
<S> <C>
Shares of beneficial interest:
Phoenix-Engemann Growth Fund 13,609
Phoenix-Engemann Balanced Return Fund 2,181
Phoenix-Engemann Nifty Fifty Fund 6,765
Phoenix-Engemann Global Growth Fund 745
Phoenix-Engemann Small & Mid-Cap Growth Fund 1,282
Phoenix-Engemann Value 25 Fund 965
</TABLE>
Item 27. Indemnification
Please see Article VI of the Registrant's By-Laws, previously filed as an
Exhibit. Pursuant to Rule 484 under the Securities Act of 1933, as amended, the
Registrant furnishes the following undertaking:
"Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue."
Notwithstanding the provisions contained in the Registrant's By-Laws, in
the absence of authorization by the appropriate court on the merits pursuant to
Sections 4 and 5 of Article VI of said By-Laws, any indemnification under said
Article shall be made by Registrant only if authorized in the manner provided
in either subsection (a) or (b) of Section 6 of said Article VI.
C-2
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Please see Parts A and B of this Registration Statement for discussion of
the Investment Adviser.
For information as to the business, profession, vocation or employment of
a substantial nature of the directors and officers of the Adviser, reference is
made to the Adviser's current Form ADV (SEC File No. 801-11586) filed under the
Investment Advisers Act of 1940 and incorporated herein by reference.
Item 29. Principal Underwriters
(a) Equity Planning also serves as the principal underwriter for the following
other registrants:
Phoenix Series Fund, Phoenix Strategic Allocation Fund, Inc., Phoenix Duff
& Phelps Institutional Mutual Funds, Phoenix Multi-Sector Fixed Income
Fund, Inc., Phoenix Multi-Sector Short Term Bond Fund, Phoenix
Multi-Portfolio Fund, Phoenix California Tax Exempt Bonds, Inc., Phoenix
Income and Growth Fund, Phoenix Worldwide Opportunities Fund, Phoenix
Strategic Equity Series Fund, Phoenix Equity Series Fund, Phoenix-Aberdeen
Series Fund, Phoenix-Engemann Funds, Phoenix Investment Trust 97, Phoenix
Home Life Variable Universal Life Account, Phoenix Home Life Variable
Accumulation Account, PHL Variable Accumulation Account, Phoenix Life and
Annuity Variable Universal Life Account and PHL Variable Separate Account
MVA1.
(b) The directors and executive officers of Phoenix Equity Planning
Corporation, the distributor for Registrant, are as follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Position and Offices
Business Address with Distributor with Registrant
- ------------------------- -------------------------- ---------------------
<S> <C> <C>
Michael E. Haylon Director None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
David R. Pepin Director and Executive None
56 Prospect Street Vice President
P.O. Box 150480
Hartford, CT 06115-0480
Leonard J. Saltiel Managing Director, None
56 Prospect Street Infrastructure/Operations
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Senior Vice President, None
100 Bright Meadow Blvd. Finance, and Treasurer
P.O. Box 2200
Enfield, CT 06083-2200
William J. Newman Senior Vice President None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Transfer None
101 Munson Street Agent Operations
Greenfield, MA 01301
Nancy G. Curtiss Vice President, Fund None
56 Prospect Street Accounting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Position and Offices
Business Address with Distributor with Registrant
- ------------------------- ------------------------------- ----------------------
<S> <C> <C>
Elizabeth R. Sadowinski Vice President, Administrator None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Eugene A. Charon Controller None
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200
Thomas N. Steenburg Secretary None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
William E. Keen, III Assistant Vice President, None
100 Bright Meadow Blvd. Mutual Fund Regulation
P.O. Box 2200
Enfield, CT 06083-2200
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an affiliated
person of the Registrant or an affiliated person of such affiliated person,
directly or indirectly, from the Registrant during the Registrant's last fiscal
year.
Item 30. Locations of Accounts and Records
The accounts, books or other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder
are kept by the Registrant at its offices, 600 North Rosemead Boulevard,
Pasadena, CA 91107-2133. Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., Enfield, Connecticut 06082, is the Registrant's transfer agent, and
maintains records relating to such activities. State Street Bank and Trust
Company, c/o BFDS, Two Heritage Drive, Boston, MA 02171, as sub-transfer agent,
maintains various shareholder account records and information regarding the
Global Growth, Balanced Return, Growth, Nifty Fifty, Small & Mid-Cap Growth and
Value 25 Funds.
Item 31. Management Services
There are no management-related service contracts not discussed in Part A
or Part B of this Registration Statement.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant has duly
caused this Amendment to Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Pasadena, the State
of California, on the 21st day of November, 1997.
THE PHOENIX-ENGEMANN FUNDS
By: /s/ Roger Engemann*
-----------------------------------
Roger Engemann
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registrant's Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------ --------------------- --------------------
<S> <C> <C>
- ---------------------------- Principal Executive November 21, 1997
Roger Engemann* Officer and Trustee
- ---------------------------- Trustee November 21, 1997
Barry E. McKinley*
- ---------------------------- Trustee November 21, 1997
Robert L. Peterson*
- ---------------------------- Trustee November 21, 1997
Richard C. Taylor*
- ---------------------------- Trustee November 21, 1997
Angela Wong*
by: /s/ Thomas N. Steenburg
--------------------------------------------------
*Thomas N. Steenburg, Attorney-in-Fact, pursuant to
Powers of Attorney filed herewith
</TABLE>
S-1(c)
<PAGE>
File Nos. 33-1922
811-4506
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
EXHIBITS
TO
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 27
AND
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 30
------------------
THE PHOENIX-ENGEMANN FUNDS
(Exact name of Registrant as specified in its charter)
<PAGE>
EXHIBIT INDEX
Exhibit No.
- ------- ---
Form of Sub-Administration Agreement 9(C)
Independent Auditor's Consent 11
Form of Rule 12b-1 Plan for Class M shares 15(b)
Restated and Amended Multiple Class Plan 18(b)
Power of Attorney 19
EXHIBIT NO. 9(C)
FORM OF SUB-ADMINISTRATION AGREEMENT
<PAGE>
SUB-ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of the 3rd day of September, 1997 by and
between ROGER ENGEMANN & ASSOCIATES, INC., a California corporation ("REA"), and
PHOENIX EQUITY PLANNING CORPORATION, a Connecticut corporation (the
"Administrator").
WITNESSETH
WHEREAS, the Administrator provides administrative services to the
Phoenix-Engemann Funds (the "Trust"), a diversified open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act") pursuant to an Administration Agreement dated September 3, 1997; and
WHEREAS, the Administrator desires to retain REA to render certain
sub-administrative services to each series of the Trust listed on Appendix A
hereto, as the same may be amended from time to time (each, a "Fund" and
collectively, the "Funds"), and REA is willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Administrator hereby appoints REA as a
Sub-Administrator on the terms set forth in this Agreement. REA accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. Duties as Sub-Administrator. Subject to the supervision and
direction of the Administrator, REA, as Sub-Administrator, will assist in
supervising various aspects of the Fund's administrative operations and
undertakes to perform the following services on a regular basis which shall be
daily, weekly or as otherwise appropriate, unless otherwise specified by the
Administrator, the Trust, or the Funds:
(a) preparing any or all tax returns, securities, filings, periodic
financial reports, prospectuses, statements of additional
information, shareholder reports and other regulatory reports
that are required of the Funds;
(b) issuing correspondence to shareholders (including, upon
request, copies, but not originals, of regular correspondence,
confirmations or regular statements of account);
<PAGE>
(c) mailing shareholder reports and prospectuses pursuant to
requests of shareholders;
(d) providing assistance and personnel necessary to maintain each
Fund's qualification and/or registration to sell shares in each
state where the Administrator has determined such qualification
and/or registration to be advisable; and
(e) providing Fund accounting services, including without
limitation furnishing assistance and personnel necessary to
price the portfolio securities of each Fund, calculate each
Fund's net asset value for purposes of reporting to the public
and other purposes, and prepare and maintain the books and
records with respect to the Fund's investment portfolio as
required by applicable laws.
3. Standard of Care. REA shall be under no duty to take any action on
behalf of the Trust, the Funds or the Administrator except as specifically set
forth herein or as may be specifically agreed to by REA in writing. In the
performance of its duties hereunder, REA shall be obligated to exercise due care
and diligence and to act in good faith and to use its best efforts. Without
limiting the generality of the foregoing or of any other provision of this
Agreement, REA shall not be liable for delays or errors or loss of data
occurring by reason of circumstances beyond REA's control.
4. Reliance Upon Instructions. The Administrator agrees that REA shall
be entitled to rely upon any instructions, oral or written, actually received by
REA and shall incur no liability to the Administrator in acting upon such oral
or written instructions, provided such instructions reasonably appear to have
been received from an officer of the Administrator or any other person duly
authorized by the Administrator to give oral or written instructions on behalf
of the Administrator.
5. Confidentiality. REA agrees on behalf of itself and its employees to
treat confidentially all records and other information relative to the
Administrator, the Funds and the Trust, and all prior, present or potential
Shareholders of the Fund, except after prior notification to, and approval of
release of information in writing by, the Trust or the Administrator, which
approval shall not be unreasonably withheld, and may not be withheld where REA
may be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Administrator or the Trust.
6. Equipment Failures. In the event of equipment failures or the
occurrence of events beyond REA's control which render the performance of REA's
functions under this Agreement impossible, REA shall take reasonable steps to
minimize service
<PAGE>
interruptions and is authorized to engage the services of third parties to
prevent or remedy such service interruptions.
7. Independent Contractor. REA shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Administrator, the Trust or the Funds in any way, or in any way be deemed an
agent for the Administrator, the Trust or for the Funds. It is expressly
understood that performance under this Agreement by REA does not limit or expand
the duties and responsibilities of REA, as each Fund's Manager under the
Investment Management Agreement dated September __, 1997.
8. Compensation.
(a) As compensation for the services rendered by, and
responsibilities assumed by, REA during the term of this Agreement, the
Administrator will pay to REA a sub-administration fee in an amount equal to the
per annum rate of each Fund's average daily net assets as follows:
0.60% of the value of net assets up to and including $50,000,000;
and
0.50% of the value of net assets over $50,000,000 up to and
including $500,000,000; and
0.40% of the value of net assets over $500,000,000 up to and
including $625,000,000; and
0.30% of the value of net assets over $625,000,000.
(b) The sub-administration fee shall be accrued daily by the
Administrator and paid to REA upon request.
9. Indemnification. The Administrator agrees to indemnify and hold
harmless REA from all taxes, charges, expenses, assessments, claims and
liabilities (including, without limitation, liabilities arising under the
Securities Act of 1933, the Securities Exchange Act of 1934, the 1940 Act, and
any state and foreign securities laws, all as amended from time to time) and
expenses, including (without limitation) reasonable attorneys' fees and
disbursements, arising directly or indirectly from any action or thing which REA
takes or does or omits to take or do (i) at the request or on the direction of
or in reliance on the advice of the Administrator, the Trust or the Funds or
(ii) upon oral or written instructions from an officer of the Administrator, the
Trust or the Funds, provided, that REA shall not be indemnified against any
liability to the Administrator (or any expenses incident to such liability)
arising out of REA's own willful misfeasance, bad faith, negligence or reckless
disregard of its duties and obligations under this Agreement.
<PAGE>
REA agrees to indemnify and hold harmless the Administrator and its officers and
directors from all claims and liabilities (including, without limitation,
liabilities arising under the Securities Act of 1933, the Securities Exchange
Act of 1934, the 1940 Act, and any state and foreign securities laws, all as
amended from time to time) and expenses, including (without limitation)
reasonable attorneys' fees and disbursements, arising directly or indirectly
from any action or thing which REA takes or does or omits to take or do which
is in violation of this Agreement or not in accordance with instructions
properly given by an officer of the Administrator, the Trust or the Funds or
arising out of REA's own willful misfeasance, bad faith, negligence or reckless
disregard of its duties and obligations under this Agreement.
10. Duration and Termination. This Agreement shall continue until
December 31, 1997 unless terminated earlier by the Administrator or REA on 60
days' written notice to the other. This Agreement may be terminated as to one or
more of the Funds without affecting its validity to any other Fund as to which
it is not terminated. All notices and other communications hereunder shall be in
writing.
11. Amendments. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such charge or waiver is sought.
12. Books and Records. REA agrees that all records which it maintains
for each Fund are the property of such Fund, and REA will surrender promptly to
such Fund or the Administrator any such records upon the Fund's or the
Administrator's request. REA further agrees to maintain and preserve any such
records for the periods prescribed under the Rules promulgated under the 1940
Act.
13. Miscellaneous.
(a) This Agreement embodies the entire agreement and understanding
between the parties thereto, and supersedes all prior agreements and
understandings, relating to the subject matter hereof.
(b) The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of California as applicable to contracts between
California residents entered into and to be performed entirely within
California.
<PAGE>
(d) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
(e) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
(f) This Agreement may not be assigned without the mutual consent of
the parties.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
ROGER ENGEMANN & ASSOCIATES, INC.
By: ____________________________
Roger Engemann,
President
PHOENIX EQUITY PLANNING CORPORATION
By: ____________________________
Name: ______________________
Title: _____________________
Appendix A attached.
13593.01
<PAGE>
APPENDIX A
List of Funds subject to Sub-Administration Agreement:
1. The Phoenix-Engemann Growth Fund
2. The Phoenix-Engemann Balanced Return Fund
3. The Phoenix-Engemann Nifty Fifty Fund
4. The Phoenix-Engemann Global Growth Fund
5. The Phoenix-Engemann Small & Mid-Cap Growth Fund
6. The Phoenix-Engemann Value 25 Fund
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the reference to us under the heading "Other Information--
Independent Accountants" in the Statement of Additional Information constituting
part of this Post-Effective Amendment No. 27 to the registration statement on
Form N-1A for the Phoenix-Engemann Funds.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
November 19, 1997
<PAGE>
Consent of Independent Accountants
To the Board of Trustees and Shareholders
of Phoenix-Engemann Funds:
We consent to the incorporation by reference in Post-Effective Amendment No. 27
to the Registration Statement on Form N-1A of The Phoenix-Engemann Funds
(formerly Pasadena Investment Trust) (File Nos. 33-1922 and 811-4506) of our
report dated February 14, 1997 on our audit of the financial statements and
financial highlights of the Phoenix-Engemann Growth Fund (formerly The Pasadena
Growth Fund), the Phoenix-Engemann Nifty Fifty Fund (formerly The Pasadena Nifty
Fifty Fund), the Phoenix-Engemann Balanced Return Fund (formerly The Pasadena
Balanced Return Fund), the Phoenix-Engemann Global Growth Fund (formerly The
Pasadena Global Growth Fund) and the Phoenix-Engemann Small & Mid-Cap Growth
Fund (formerly The Pasadena Small & Mid-Cap Growth Fund) which report is
included in the Annual Report to Shareholders for the year ended December 31,
1996 which is incorporated by reference in the Registration Statement. We also
consent to the references of our Firm under the captions "Financial Highlights"
in the Prospectus and "Other Information - Independent Accountants" in the
Statement of Additional Information constituting part of this Post-Effective
Amendment No. 27 to the Registration Statement on Form N-1A.
/s/ Coopers & Lybrand L.L.P.
Los Angeles, California
November 19, 1997
THE PHOENIX-ENGEMANN FUNDS
(the "Funds")
CLASS M SHARES
AMENDED AND RESTATED DISTRIBUTION PLAN
PURSUANT TO RULE 12b-1
under the
INVESTMENT COMPANY ACT OF 1940
1. Introduction
The Funds and Phoenix Equity Planning Corporation (the "Distributor"),
a broker-dealer registered under the Securities Exchange Act of 1934, have
entered into a Distribution Agreement pursuant to which the Distributor will act
as principal underwriter of each class of shares of the Funds for sale to the
permissible purchasers. The Trustees of the Funds have determined to adopt this
Distribution Plan (the "Plan"), in accordance with the requirements of Section
12b-1 of the Investment Company Act of 1940, as amended (the "Act") with respect
to Class M shares of the Funds and have determined that there is a reasonable
likelihood that the Plan will benefit the Funds and its Class M shareholders.
2. Rule 12b-1 Fees
The Funds shall reimburse the Distributor, at the end of each month, up
to a maximum on an annual basis of 0.25% of the average daily value of the net
assets of each Funds Class M shares, subject to any applicable restrictions
imposed by rules of the National Association of Securities Dealers, Inc., for
distribution expenditures incurred by Distributor subsequent to the
effectiveness of this Plan, in connection with the sale and promotion of the
Class M shares of the Funds and the furnishing of services to Class M
shareholders of the Funds. Such expenditures shall consist of: (i) commissions
to sales personnel for selling Class M shares of the Funds (including
underwriting commissions and finance charges related to the payment of
commissions); (ii) compensation, sales incentives and payments to sales,
marketing and service personnel; (iii) payments to broker-dealers and other
financial institutions which have entered into selling agreements with the
Distributor for services rendered in connection with the sale and distribution
of Class M shares of the Funds; (iv) payment of expenses incurred in sales and
promotional activities, including advertising expenditures related to the Class
M shares of the Funds; (v) the costs of preparing and distributing promotional
materials; (vi) the cost of printing the Funds' Prospectus and Statement 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 Class M shares of the Funds. The Funds shall
[also] pay the Distributor, at the end of each month, an amount on an annual
basis equal to 0.25% of the average daily value of the net assets of each Funds
Class M shares, as compensation for providing personal service to shareholders,
including assistance in connection with inquiries relating to shareholder
accounts, and for maintaining shareholder accounts (the "Service Fee").
<PAGE>
Any reduction to amounts payable under this Plan shall first be to the
extent of the Service Fee, and then from the balance of the 12b-1 Fee.
Amounts paid or payable by the Funds under this Plan or any agreement
with any person or entity relating to the implementation of this Plan ("related
agreement") shall only be used to pay for, or reimburse payment for, the
distribution expenditures described in the preceding paragraph and shall, given
all surrounding circumstances, represent charges within the range of what would
have been negotiated at arm's length as payment for the specific sales or
promotional services and activities to be financed hereunder and any related
agreement, as determined by the Trustees of the Funds, in the exercise of
reasonable business judgment, in light of fiduciary duties under state law and
Sections 36(a) and (b) of the Act and based upon appropriate business estimates
and projections.
3. Reports
At least quarterly in each year this Plan remains in effect, the Funds
Principal Accounting Officer or Treasurer, or such other person authorized to
direct the disposition of monies paid or payable by the Funds, shall prepare and
furnish to the Trustees of the Funds for their review, and the Trustees shall
review, a written report complying with the requirements of Rule 12b-l under the
Act regarding the amounts expended under this Plan and the purposes for which
such expenditures were made.
4. Required Approval
This Plan shall not take effect until it, together with any related
agreement, has been approved by a vote of at least a majority of the Funds
Trustees as well as a vote of at least a majority of the Trustees of the Funds
who are not interested persons (as defined in the Act) of the Funds and who have
no direct or indirect financial interest in the operation of this Plan or in any
related agreement (the "Disinterested Trustees"), cast in person at a meeting
called for the purpose of voting on this Plan or any related agreement and this
Plan shall not take effect with respect to the Funds until it has been approved
by a vote of at least a majority of the outstanding voting Class M shares (as
such phrase is defined in the Act).
5. Term
This Plan shall remain in effect for one year from the date of its
adoption and may be continued thereafter if specifically approved at least
annually by a vote of at least a majority of the Trustees of the Funds as well
as a majority of the Disinterested Trustees. This Plan may be amended at any
time, provided that (a) the Plan may not be amended to increase materially the
amount of the distribution expenses provided in Paragraph 2 hereof (including
the Service Fee) without the approval of at least a majority of the outstanding
voting securities (as defined in the Act) of the Class M shares of the Funds and
(b) all material amendments to this Plan must be approved by a majority vote of
the Trustees of the Funds and of the Disinterested Trustees cast in person at a
meeting called for the purpose of such vote.
<PAGE>
6. Selection of Disinterested Trustees
While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Funds shall be
committed to the discretion of the Disinterested Trustees then in office.
7. Related Agreements
Any related agreement shall be in writing and shall provide that (a)
such agreement shall be subject to termination, without penalty, by vote of a
majority of the outstanding voting securities (as defined in the Act) of the
Class M shares of the Funds on not more than 60 days' written notice to the
other party to the agreement and (b) such agreement shall terminate
automatically in the event of its assignment.
8. Termination
This Plan may be terminated at any time by a vote of a majority of the
Disinterested Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Class M shares of the Funds. In the
event this Plan is terminated or otherwise discontinued, no further payments
hereunder will be made hereunder.
9. Records
The Funds shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Paragraph 3 hereof, and any other information,
estimates, projections and other materials that serve as a basis therefor,
considered by the Trustees of the Funds, for a period of not less than six years
from the date of this Plan, the agreement or report, as the case may be, the
first two years in an easily accessible place.
10. Non-Recourse
The Funds Amended and Restated Agreement and Declaration of Trust dated
July 13, 1993, a copy of which, together with the amendments thereto
("Declaration"), is on file in the office of the Secretary of the Commonwealth
of Massachusetts, refers to the Trustees under the Declaration of Trust
collectively as Trustees, but not as individuals or personally, and no Trustee,
shareholder, officer, employee or agent of the Funds may be held to any personal
liability, nor may any resort be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of the Funds but the Funds property only shall be liable.
AMENDED AND RESTATED
MULTIPLE CLASS PLAN
OF
THE PHOENIX-ENGEMANN FUNDS
SECTION 1. General. This Multiple Class Plan (the "Plan")
adopted in accordance with Rule 18f-3 promulgated under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), shall govern the terms
and conditions under which The Phoenix-Engemann Funds (the "Trust") may issue
separate classes of shares representing interests in the Trust's series of
portfolios (the "Funds") listed on Appendix A. To the extent that a subject
matter herein is covered by the Trust's Agreement and Declaration of Trust or
Bylaws, the Agreement and Declaration of Trust and/or Bylaws will control in the
event of any inconsistencies with the descriptions herein.
SECTION 2. Rights and Obligations. Except as set forth herein,
all classes of shares issued in respect to a Fund have identical voting,
dividend, liquidation and other right, preferences, powers, restrictions,
limitations, qualifications, designations, and terms and conditions. The only
difference among the various classes of shares relate solely to the following
factors: (a) each class may be subject to different class expenses as discussed
under Section 4 of this Plan; (b) each class may bear different identifying
designations; (c) each class will have exclusive voting rights with respect to
matters pertaining to any distribution plans adopted pursuant to Rule 12b-1
under the Investment Company Act (see Section 7 below); (d) each class may have
different exchange privileges; and (e) certain classes may provide for the
conversion of such class into another class.
SECTION 3. Classes of Shares and Designation Thereof. Each
Fund may offer any or all of the following classes of shares:
(a) Class A Shares. "Class A Shares" will be sold at
net asset value plus a front-end sales load. The sales load
will be subject to reductions or elimination for larger
purchases, under a quantity discount, under a right of
accumulation, or under a letter of intent. The front-end sales
load will be subject to certain other deductions permitted by
Section 22(d) of the Investment Company Act.
Class A Shares also will be subject to a service fee
in an amount, computed and prorated on a daily basis, equal to
0.25% per annum of the Class A Shares' average daily net
assets, payable to broker-dealers and other service providers,
including Roger Engemann & Associates, Inc. (the "Manager")
for shareholder accounts not serviced by other service
providers, pursuant to services agreements.
(b) Class B Shares. "Class B Shares" will be sold to
investors at net asset value without the imposition of a
<PAGE>
front-end sales load. However, an investor's proceeds from a
redemption of Class B Shares made within five (5) years after
their purchase (the "CDSC Period") generally will be subject
to a Contingent Deferred Sales Charge ("CDSC") payable to
Phoenix Equity Planning Corp. (the "Distributor"). The CDSC
Period and CDSC schedule are set forth in Appendix B hereto.
No CDSC will be imposed on (1) redemptions of Class B Shares
that occur more than six years after the end of the calendar
month in which such shares were purchased; (2) shares derived
from reinvestment of dividends and distributions attributable
to Class B Shares; or (3) amounts representing an increase in
the value of the shareholder's account resulting from capital
appreciation above the amount paid for the shares purchased
during the CDSC Period. As a result, in effect, the amount of
the CDSC applicable to Class B Shares will be assessed on an
amount equal to the lesser of the then current market value or
the original cost of the Class B Shares being redeemed. In
determining whether a CDSC is applicable, it will be assumed
that a redemption is made, first, of Class B Shares
representing capital appreciation; second, of Class B Shares
representing reinvestment of dividends and capital gain
distributions; and finally third, of Class B Shares held by
the shareholder for the longest period of time. The CDSC may
be waived under the circumstances listed on Appendix C
attached hereto.
Class B Shares also will be subject to a Rule 12b-1
distribution fee and service fee at a combined annual rate of
up to 1% of the daily net assets attributable to the Class B
Shares. Of this amount, up to 0.75% of the average daily net
assets attributable to the Class B Shares is payable to the
Distributor as a Rule 12b-1 distribution fee, and 0.25% of the
average daily net assets attributable to the Class B Shares is
payable as a service fee to service providers pursuant to
service agreements between the Trust and such service
providers.
(c) Class C Shares. "Class C Shares" will be sold to
investors at net asset value without the imposition of a
front-end sales load. However, an investor's proceeds from a
redemption of Class C Shares made within one (1) year after
their purchase (the "CDSC Period") generally will be subject
to a Contingent Deferred Sales Charge ("CDSC") payable to
Phoenix Equity Planning Corp. (the "Distributor"). No CDSC
will be imposed on (1) redemptions of Class C Shares that
occur after one year after the end of the calendar month in
which such shares were purchased; (2) shares derived from
reinvestment of dividends and distributions attributable to
Class C Shares; or (3) amounts representing an increase in the
value of the shareholder's account resulting from capital
appreciation above the amount paid for the shares purchased
during the CDSC Period. As a result, in effect, the amount of
the CDSC applicable to Class C Shares will be assessed on an
amount equal to the lesser of the then current market value of
the original cost of the Class C Shares being redeemed. In
2
<PAGE>
determining whether a CDSC is applicable, it will be assumed
that a redemption is made, first, of Class C Shares
representing capital appreciation; second, of Class C Shares
representing reinvestment of dividends and capital gain
distributions; and finally third, of Class C Shares held by
the shareholder for the longest period of time. The CDSC may
be waived under the circumstances listed on Appendix C
attached hereto.
Class C Shares also will be subject to a Rule 12b-1
distribution fee and service fee at a combined annual rate of
up to 1% of the daily net assets attributable to the Class C
Shares. Of this amount, up to 0.75% of the average daily net
assets attributable to the Class C Shares is payable to the
Distributor as a Rule 12b-1 distribution fee, and 0.25% of the
average daily net assets attributable to the Class C Shares is
payable as a service fee to service providers pursuant to
service agreements between the Trust and such service
providers.
(c) Class M Shares. "Class M Shares" will be sold at
net asset value plus a front-end sales load. The sales load
will be subject to reductions or elimination for larger
purchases, under a quantity discount, under a right of
accumulation, or under a letter of intent. The front-end sales
load will be subject to certain other deductions permitted by
Section 22(d) of the Investment Company Act.
Class M Shares also will be subject to a Rule 12b- 1
distribution fee and service fee at a combined annual rate of
up to 0.50% of the daily net assets attributable to the Class
M Shares. Of this amount, up to 0.25% of the average daily net
assets attributable to the Class M Shares is payable to the
Distributor as a Rule 12b-1 distribution fee, and 0.25% of the
average daily net assets attributable to the Class M Shares is
payable as a service fee to service providers pursuant to
service agreements between the Trust and such service
providers.
SECTION 4. Allocation of Expenses.
(a) Class Expenses. Each class of shares shall be
subject to different class expenses consisting of (1) Rule
12b-a plan distribution and service fees, if applicable to a
particular class, and (2) incremental expenses which the Board
of Trustees, including a majority of Trustees who are not
"interested persons" of the Trust as defined in Section 2(a)19
of the Investment Company Act (the "Independent Trustees")
3
<PAGE>
determine should be allocated or charged on a class basis,
which expenses shall be limited to any litigation expenses
relating solely to the class (collectively, the "Class
Expenses").
(b) Other Expenses. Except for the Class Expenses
discussed above (which will be allocated to the appropriate
class), all other expenses incurred by each Fund (such as the
management and administrative fees) will be allocated to each
class of shares on the basis of the relative net assets of
each class of shares.
(c) Waivers and Reimbursements of Expenses. The
Manager may choose to reimburse or waive Class Expenses on
certain classes on a voluntary, temporary basis. The amount of
Class Expenses waived or reimbursed by the Manager may vary
from class to class. The Manager (or any entity related
thereto that charges a fee for a Class Expense) may waive or
reimburse its fee for Class Expenses of a class of a Fund in
whole or in part only if the revised fee more accurately
reflects the relative costs of providing to each class the
service for which the Class Expense is charged. In addition,
the Manager may waive or reimburse Trust expenses and/or Fund
expenses (with or without a waiver of Class Expenses) but only
if the same proportionate amount of Trust expenses and/or Fund
Expenses are waived or reimbursed for each class. Thus, any
Trust expenses that are waived or reimbursed would be credited
to each Fund of the Trust according to the relative net assets
of the Funds, and in turn credited to each class of each Fund
based on the relative net assets of the classes. Similarly,
any Fund expenses that are waived or reimbursed would be
credited to each class of that Fund according to the relative
net assets of the classes.
(d) Allocation Worksheet. Attached as Appendix D is
an explanation of the effect of the implementation of the
multiple class arrangements described in this Plan on the
Funds' financial statements.
SECTION 5. Allocation of Income. The Funds will allocate
income and realized and unrealized capital gains and losses based on the
relative net assets of each class of shares.
SECTION 6. Exchange Privileges. Shares of a specific class of
one Fund may only be exchanged for shares of that same class of any other Fund
advised by the Manager that offer an exchange privilege, subject to such
conditions as may be imposed from time to time and as disclosed on Appendix E.
4
<PAGE>
SECTION 7. Conversions. All Class B Shares of the Funds shall
convert automatically to Class A Shares on the first business day of the month
next following the eighth anniversary of their issuance. For purposes of
calculating the holding period required for such conversion, Class B Shares
shall be deemed to have been issued on (1) the date on which the issuance of
such Class B Shares occurred or (2) for Class B Shares obtained through an
exchange, or a series of exchanges, the date on which the issuance of the
original Class B Shares occurred. For purposes of conversion to Class A Shares,
shares purchased through the reinvestment of dividends and other distributions
will be considered held in a separate sub-account. Each time any Class B Shares
in a shareholder's account convert to Class A Shares, a proportionate number of
the Class B Shares in the sub-account also will convert to Class A Shares. Class
B Shares will convert to Class A Shares on the basis of the relative net asset
value of the two classes, without the imposition of any sales load, fee, or
other charge. After conversion, the converted shares will be subject to the
usual Class A Share service fee.
If a Fund adopts and implements a Rule 12b-1 Plan for its
Class A Shares (or, if presented to shareholders, implements any amendment to a
Rule 12b-1 Plan previously adopted, or any amendment to a services agreement
with respect to its Class A Shares), the existing Class B Shares of the Fund
will stop converting into Class A Shares unless the Class B shareholders, voting
separately as a class, approve the proposal. Should the Class B Shareholders
fail to approve such amendment or adoption; The Board of Trustees shall take
such action as is necessary to: (1) create a new class (the "New Class A
Shares")which shall be identical in all material respects to the Class A Shares
as they existed prior to the implementation of the amendment or adoption; and
(2) ensure that the existing Class B Shares will be exchanged or converted into
New Class A Shares no later than the date such Class B Shares previously were
scheduled to convert to Class A Shares. If deemed advisable by the Board of
Trustees to implement the foregoing, and at the sole discretion of the Board of
Trustees, such action may include the exchange of all Class B Shares for a new
class (the "New Class B Shares"), identical in all respects to the Class B
Shares except that the New Class B Shares will automatically convert into the
New Class A Shares. Such exchanges or conversions shall be effected in a manner
that the Board of Trustees reasonably believes will not be subject to federal
taxation.
SECTION 8. Effective Date of Plan. This Plan shall be included
as an exhibit to the Trust's Form N-1A Registration Statement pursuant to a
post-effective amendment thereto. This Plan shall take effect upon the
effectiveness of such post-effective amendment. A majority of the Trustees of
the Trust, including a majority of the Independent Trustees, have previously
approved the multiple class arrangements and expense allocations described in
this Plan as being in the best interests of each class of shares of each Fund
and each Fund, individually, and the Trust as a whole.
SECTION 9. Amendment. This Plan may not be amended to change
materially the provisions of the Plan unless such amendment is approved by a
majority of the Trustees of the Trust, including a majority of the Independent
Trustees, that such amendment is in the best interests of each class of each
Fund and each Fund, individually, and the Trust as a whole.
5
<PAGE>
APPENDIX A
TO MULTIPLE CLASS PLAN
OF
THE PHOENIX-ENGEMANN FUNDS
Phoenix-Engemann Growth Fund
Class A Shares
Class B Shares
Class C Shares
Class M Shares
Phoenix-Engemann Nifty Fifty Fund
Class A Shares
Class B Shares
Class C Shares
Class M Shares
Phoenix-Engemann Balanced Return Fund
Class A Shares
Class B Shares
Class C Shares
Class M Shares
Phoenix-Engemann Global Growth Fund
Class A Shares
Class B Shares
Class C Shares
Class M Shares
Phoenix-Engemann Small & Mid-Cap Fund
Class A Shares
Class B Shares
Class C Shares
Class M Shares
Phoenix-Engemann Value 25 Fund
Class A Shares
Class B Shares
Class C Shares
Class M Shares
6
<PAGE>
APPENDIX B
TO MULTIPLE CLASS PLAN
OF
THE PHOENIX-ENGEMANN FUNDS
CDSC SCHEDULE AND CDSC PERIOD
Class B Shares may be redeemed on any business day at the net
asset value per share next determined following receipt of the redemption order,
less the applicable contingent deferred sales charge shown in the tables below.
Contingent Deferred Sales Charge as a
Redemption During Percentage of Amount Redeemed
----------------- -----------------------------
1st Year Following Purchase 5.0%
2nd Year Following Purchase 4.0%
3rd Year Following Purchase 3.0%
4th Year Following Purchase 2.0%
5th Year Following Purchase 2.0%
and Thereafter None
Class C Shares may be redeemed on any business day at the net asset value
per share next determined following receipt of the redemption order, less the
applicable contingent deferred sales charge shown in the tables below.
Contingent Deferred Sales Charge as a
Redemption During Percentage of Amount Redeemed
----------------- -----------------------------
1st Year Following Purchase 1.0%
and Thereafter None
7
<PAGE>
APPENDIX C
TO MULTIPLE CLASS PLAN
OF
THE PHOENIX-ENGEMANN FUNDS
CDSC WAIVERS
CLASS B and C SHARES: The Funds have the ability to waive or reduce the
CDSC in some or all of the following circumstances:
(1) following the death or disability, as defined in Section 72(m)(7) of
the Internal Revenue Code of 1986, as amended, of a shareholder if redemption is
made within one year of death or disability of the shareholder;
(2) in connection with certain mandatory distributions from an Individual
Retirement Account, or other qualified retirement plan, to a shareholder who has
attained the age of 70 1/2;
(3) in connection with certain redemptions of shares made pursuant to a
shareholder's participation in any systematic withdrawal plan adopted by a Fund;
and
(4) in connection with redemptions of shares by tax-exempt employee benefit
plans resulting from the enactment of any law or the promulgation by the U.S.
Internal Revenue Service or the U.S. Department of Labor of any regulation
pursuant to which continuation of the investment of such shares would be
improper.
If the Funds waive or reduce the CDSC, such waiver or reduction will be
uniformly applied to all offerees in the class specified. Also, in waiving or
reducing the CDSC, the Funds will comply with the requirements of Rule 22d-1
under the Investment Company Act.
In addition, the Distributor may provide a pro rata refund out of its own
assets of any CDSC paid in connection with a redemption of Class B and/or C
Shares, the proceeds of which are reinvested in Class B and/or C Shares of the
same Fund within 365 days after such redemption.
8
<PAGE>
APPENDIX D
TO MULTIPLE CLASS PLAN
OF
THE PHOENIX-ENGEMANN FUNDS
MULTIPLE CLASS ACCOUNTING
Overview
The Trust has adopted a multiple class share structure for the Funds. The
Funds will offer up to four separate classes of shares. Class A shares will be
offered with a front-end sales load ("FESL"). Class B shares will be offered
without a FESL, but will be subject to a contingent deferred sales charge
("CDSC"), and are subject to a Distribution Fee computed and prorated on a daily
basis equal to the annual rate of 0.75% of average daily net assets. Class C
shares will be offered without a FESL, but will be subject to a CDSC, and are
subject to a Distribution Fee computed and prorated on a daily basis equal to
the annual rate of 0.75% of average daily net assets. Class M shares will be
offered with a FESL, will not be subject to a CDSC, but are subject to a
Distribution Fee computed and prorated on a daily basis equal to the annual rate
of 0.25% of average daily net assets.
Net Asset Value And Dividend/Distribution Determinations
As a result of differences in fees charged to each class of shares and
other circumstances that can cause the net asset values ("NAV") to vary,
separate NAV calculations must be performed and separate dividend/distribution
declarations must be made for each class of shares.
The procedures for calculating NAV and dividend distributions depend upon
the dividend/distribution policy of each Fund. Presently, it is the Funds'
policy to declare dividends from net investment income and distributions from
net realized long-term and/or short-term capital gains on at least an annual
basis.
Income and Expenses
In maintaining the records for the Funds, the income, expense, gain and
loss accounts must be allocated to each class of shares within each Fund. On a
daily basis, income and realized and unrealized gains and losses will be
allocated to each class based upon the relative percentage of net assets at the
beginning of the day in each class, after such assets are adjusted for the prior
business day's capital share transactions.
On a daily basis, the allocation of expenses to each class of shares will
depend upon the nature of each expense. Expenses fall into two categories:
1. Fund Expenses - expenses attributable to all classes of shares that
are allocated based upon the adjusted net assets of each class
(Management Fee; Administration Fee; Service Fee and Fiduciary/Audit
Fees).
9
<PAGE>
2. Class Expenses - expenses attributable to a specific class of
shares (Distribution Fee).
Prior to determining each day's NAV or dividends/distributions, the
following expense items will be calculated as indicated:
Management, Administration, Service and Fiduciary/Audit Fees
The current day's accrual for Management, Administration and Services Fees
will be calculated using the beginning of the day's net assets of each class of
shares, before such assets are adjusted for the prior day/s capital share
transactions. Fiduciary/Audit Fees are estimated and charged to the Funds daily
on a pro rata basis.
Distribution Fee
The current day's accrual for the Distribution Fee will be calculated using
the beginning of the day's net assets, before such assets are adjusted for the
prior day's capital share transactions, attributable to Class B,C and M shares.
In designing accounting procedures and controls relating to the allocation
of income and expenses and the calculation of NAV and dividends/distributions
for each class of shares, the following objectives must be met:
1. Determining that class expenses attributable to each class of
shares are properly charged to each class of shares and recorded in
the Fund's accounting records.
2. Determining that income and other expenses and realized and
unrealized gains and losses are allocated properly to each class of
shares based upon the relative percentage of net assets by class.
3. Determining that undistributed net investment income and
undistributed net realized gains and daily NAV calculations for each
class of shares are properly calculated.
To satisfy these objectives, the attached Multiple Class Pricing Worksheet
(or its equivalent) must be completed for each Fund employing more than one
class of shares.
NAV and Dividends/Distributions
Dividends from net investment income will be determined as follows:
10
<PAGE>
[bullet] Dividends will be determined pursuant to authority of the Fund's
Trustees, before the deduction of class expenses, for all classes of
shares combined.
[bullet] From this amount, an amount equal to the per share amount of class
expenses accrued during the period to which the dividend relates is
subtracted.
[bullet] The result is the rate per share payable to each class.
Distributions from net realized capital gains will be determined by
dividing the total amount of gains to be distributed as declared pursuant to
authority of the Trustees by the total number of shares outstanding of the
record date.
NAV by class will be determined by dividing the ending total net assets by
class by the number of shares outstanding in each class. Amounts will be arrived
at by completing the Multiple Class Pricing Worksheet (or its equivalent).
11
<PAGE>
Multiple Class Pricing Worksheet
Fund: ___________________________ Date:____________________
<TABLE>
<CAPTION>
Composite Class A Class B Class C Class M
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Prior Day NAV per Share
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET ALLOCATION
- ---------------------------------------------------------------------------------------------------------------------
2. Total Net Assets at Beg. of Day
- ---------------------------------------------------------------------------------------------------------------------
3. Net Share Activity
- ---------------------------------------------------------------------------------------------------------------------
4. Adjusted Total Net Assets
- ---------------------------------------------------------------------------------------------------------------------
5. % of Total Net Assets
- ---------------------------------------------------------------------------------------------------------------------
INCOME AND EXPENSES
- ---------------------------------------------------------------------------------------------------------------------
6. Dividend Income
- ---------------------------------------------------------------------------------------------------------------------
7. Interest Income
- ---------------------------------------------------------------------------------------------------------------------
8. Total Gross Income
- ---------------------------------------------------------------------------------------------------------------------
9. Management Fee
- ---------------------------------------------------------------------------------------------------------------------
10. Administration Fee
- ---------------------------------------------------------------------------------------------------------------------
11. Service Fee
- ---------------------------------------------------------------------------------------------------------------------
12. Fiduciary/Audit Fees
- ---------------------------------------------------------------------------------------------------------------------
13. Total Fund Expenditures
- ---------------------------------------------------------------------------------------------------------------------
14. Distribution Fee
- ---------------------------------------------------------------------------------------------------------------------
15. Total Expenses
- ---------------------------------------------------------------------------------------------------------------------
16. Net Investment Income
- ---------------------------------------------------------------------------------------------------------------------
17. Dividend Rate
- ---------------------------------------------------------------------------------------------------------------------
18. Gross Dividend
- ---------------------------------------------------------------------------------------------------------------------
CAPITAL
- ---------------------------------------------------------------------------------------------------------------------
19. Change in Undistributed Net Income
- ---------------------------------------------------------------------------------------------------------------------
20. Current Day Share Activity
- ---------------------------------------------------------------------------------------------------------------------
12
<PAGE>
Composite Class A Class B Class C Class M
- ---------------------------------------------------------------------------------------------------------------------
21. Daily Realized Gain/Loss
- ---------------------------------------------------------------------------------------------------------------------
22. Distributions from Net Capital Gains
- ---------------------------------------------------------------------------------------------------------------------
23. Change in Unrealized Gain/Loss
- ---------------------------------------------------------------------------------------------------------------------
24. Daily Change in Net Assets
- ---------------------------------------------------------------------------------------------------------------------
25. Prior Day's Net Assets
- ---------------------------------------------------------------------------------------------------------------------
26. Current Day's Net Assets
- ---------------------------------------------------------------------------------------------------------------------
27. Current Day's Shares O/S
- ---------------------------------------------------------------------------------------------------------------------
28. NAV per Share
- ---------------------------------------------------------------------------------------------------------------------
29. Maximum Sales Load
- ---------------------------------------------------------------------------------------------------------------------
30. Maximum Offering Price
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Prepared by: _____________________ Reviewed by: __________________________
13
<PAGE>
MULTIPLE CLASS PRICING WORKSHEET
EXPLANATION
Line # Explanation
- ------ ------------
1. NAV per share from prior day's worksheet.
2. Net Assets at the beginning of the day per line 26 of prior day's
worksheet.
3. Prior day's net capital share activity, in dollars, as reported in
the current day by the Fund's transfer agent.
4. Adjusted total net assets for the current day. Equal to line 2
plus line 3.
5. The percentage of net assets each class of shares represents.
Equal to line 4 for each class divided by composite net assets.
6-7. Daily investment income from the Fund's accounting records
allocated based on the percentage in line 5.
8. Total daily gross income (Sum of lines 6 and 7).
9-11. Daily Management, Administration and Service fees
calculated in accordance with relevant agreements.
Calculated as appropriate daily rate multiplied by
composite net assets at the beginning of the current day
(line 2) and allocated based on the percentage in line 5.
12. Daily Fiduciary/Audit Fees
13. Daily Total Fund Expenses. Equal to lines 9 through 12.
14. Daily Distribution Fee amount calculated as applicable
percentage of total net assets for each class (line 2).
15. Total of all daily expenses. Equal to line 13 plus line 14.
16. Total daily net investment income. Equal to line 8 minus line 15.
17. Dividend rate per share as declared by the Board of Trustees.
18. Gross dividend, if any. Calculated by multiplying line 17 by
line 27.
19. Daily change in undistributed net income. Equal to line 16 less
line 18 . (Will be same as line 16 except on dividend
record days.)
20. Net dollar amount of capital share transactions for each
class of shares (from line 3).
14
Line # Explanation
- ------ ------------
21. Daily amount of net capital gain/loss realized in the sale
of investments allocated based on the percentage in line 5.
22. Distribution of net realized capital gains as declared
by the Board of Trustees.
23. Daily change in appreciation/depreciation based on the
current day's market value of investments allocated to
each class based on the percentage of net assets (line 5).
24. Daily change in net assets. Equal to the sum of lines 19
through 23.
25. Closing net assets per prior day's worksheet.
26. Current day's total net assets. Equal to line 24 plus
line 25.
27. Total number of shares outstanding at the close of the
current day as reported by the Fund's transfer agent.
28. Current day's NAV per share. Equal to line 26 divided by
line 27.
29. Maximum allowable sales load for each class of shares per
the Funds' prospectus.
30. Current day's Maximum Offering Price per share. Equal to
line 28 divided by (100% less line 29).
15
<PAGE>
FINANCIAL REPORTING
The shareholder reports of each Fund will disclose the
respective expenses and performance data applicable to each class of Shares as
outlined below.
Statement of Assets and Liabilities
Assets and liabilities and the composition of net assets on a combined
basis.
Net Asset Value per share and Maximum Offering Price per share (where
applicable) as follows for each offered class:
Net Asset Value per share ($______/______ Shares of
beneficial interest) $x.xx Maximum Offering Price per share
($x.xx /> .xxx) $x.xx
Statement of Operations
Standard reporting format with explicit disclosure of class specific
expenses.
Statement of Changes in Net Assets
Standard reporting format on a combined basis with the addition of
explicit disclosure of dividends and distributions paid to each class
and transactions in Fund shares (both dollars and shares) for each
class either therein or in a separate footnote.
Selected per share data and ratios
For each required reporting period per share data and ratios will be
shown for each class, except for portfolio turnover which will be
calculated on a Fund level.
Notes to Financial Statements
Include a note on methodology for allocating income, expenses and
realized and unrealized gains and losses.
Include a note on transactions in Fund shares (both dollars and
shares) for each class for two years if not included in statement of
changes in net assets.
Include in the note describing the distribution agreements disclosure
on any class 12b-1 fee arrangements.
16
<PAGE>
APPENDIX E
TO MULTIPLE CLASS PLAN
OF
THE PHOENIX-ENGEMANN FUNDS
EXCHANGE PRIVILEGE
Shareholders of the Funds Discussed herein may participate in an exchange
privilege as described below.
Shares of a specific class of any Fund may be exchanged for shares that
same class of any other Fund.
An exchange is permitted only in the following circumstances:
(1) if the Funds offer more than one class of shares, the exchange must be
between the same class of shares (e.g., Class A and Class B shares of a multiple
class Fund cannot be exchanged for each other);
(2) exchanges will be on the basis of the shares' relative net asset values
(with no sales charge, exchange fee or CDSC);
(3) the dollar amount of the exchange must be at least equal to the minimum
investment applicable to the shares of the Fund acquired through such exchange;
and
(4) the shares of the Fund acquired through exchange must be qualified for
sale in the state in which the shareholder resides.
EXCHANGE PRIVILEGES MAY BE MODIFIED OR SUSPENDED BY THE FUNDS UPON SIXTY
(60) DAYS' PRIOR NOTICE TO SHAREHOLDERS.
17
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The
Phoenix-Engemann Funds, hereby constitute and appoint Thomas N. Steenburg as my
true and lawful attorney and agent with full power to sign for me in the
capacity indicated below, any or all Registration Statements or amendments
thereto filed with the Securities and Exchange Commission under the Securities
Act of 1933 and/or the Investment Company Act of 1940 relating to The
Phoenix-Engemann Funds, and hereby ratify and confirm my signature as it may be
signed by said attorney and agent.
WITNESS my hand and seal on the date set forth below.
November 20, 1997 /s/ Roger Engemann
------------------------------
Roger Engemann, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The
Phoenix-Engemann Funds, hereby constitute and appoint Thomas N. Steenburg as my
true and lawful attorney and agent with full power to sign for me in the
capacity indicated below, any or all Registration Statements or amendments
thereto filed with the Securities and Exchange Commission under the Securities
Act of 1933 and/or the Investment Company Act of 1940 relating to The
Phoenix-Engemann Funds, and hereby ratify and confirm my signature as it may be
signed by said attorney and agent.
WITNESS my hand and seal on the date set forth below.
November 20, 1997 /s/ Barry E. McKinley
Barry E. McKinley, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The
Phoenix-Engemann Funds, hereby constitute and appoint Thomas N. Steenburg as my
true and lawful attorney and agent with full power to sign for me in the
capacity indicated below, any or all Registration Statements or amendments
thereto filed with the Securities and Exchange Commission under the Securities
Act of 1933 and/or the Investment Company Act of 1940 relating to The
Phoenix-Engemann Funds, and hereby ratify and confirm my signature as it may be
signed by said attorney and agent.
WITNESS my hand and seal on the date set forth below.
November 20, 1997 /s/ Robert L. Peterson
---------------------------
Robert L. Peterson, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The
Phoenix-Engemann Funds, hereby constitute and appoint Thomas N. Steenburg as my
true and lawful attorney and agent with full power to sign for me in the
capacity indicated below, any or all Registration Statements or amendments
thereto filed with the Securities and Exchange Commission under the Securities
Act of 1933 and/or the Investment Company Act of 1940 relating to The
Phoenix-Engemann Funds, and hereby ratify and confirm my signature as it may be
signed by said attorney and agent.
WITNESS my hand and seal on the date set forth below.
November 20, 1997 /s/ Richard C. Taylor
--------------------------
Richard C. Taylor, Trustee
<PAGE>
POWER OF ATTORNEY
I, the undersigned member of the Board of Trustees of The
Phoenix-Engemann Funds, hereby constitute and appoint Thomas N. Steenburg as my
true and lawful attorney and agent with full power to sign for me in the
capacity indicated below, any or all Registration Statements or amendments
thereto filed with the Securities and Exchange Commission under the Securities
Act of 1933 and/or the Investment Company Act of 1940 relating to The
Phoenix-Engemann Funds, and hereby ratify and confirm my signature as it may be
signed by said attorney and agent.
WITNESS my hand and seal on the date set forth below.
November 20, 1997 /s/ Angela Wong
--------------------
Angela Wong, Trustee
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<SHARES-COMMON-PRIOR> 1008
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9724
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<ACCUM-APPREC-OR-DEPREC> 106671
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<NET-INVESTMENT-INCOME> (204)
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<NET-CHANGE-IN-ASSETS> 10925
<ACCUMULATED-NII-PRIOR> (999)
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 110
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 374
<AVERAGE-NET-ASSETS> 31252
<PER-SHARE-NAV-BEGIN> 25.88
<PER-SHARE-NII> (.18)
<PER-SHARE-GAIN-APPREC> 3.90
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 29.60
<EXPENSE-RATIO> 2.3
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<AVG-DEBT-PER-SHARE> 0
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<SERIES>
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<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
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<INVESTMENTS-AT-VALUE> 22876
<RECEIVABLES> 277
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<TOTAL-ASSETS> 24706
<PAYABLE-FOR-SECURITIES> 40
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 56
<TOTAL-LIABILITIES> 96
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21144
<SHARES-COMMON-STOCK> 723
<SHARES-COMMON-PRIOR> 427
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 734
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2732
<NET-ASSETS> 24610
<DIVIDEND-INCOME> 3
<INTEREST-INCOME> 10
<OTHER-INCOME> 0
<EXPENSES-NET> 100
<NET-INVESTMENT-INCOME> (87)
<REALIZED-GAINS-CURRENT> 428
<APPREC-INCREASE-CURRENT> 1465
<NET-CHANGE-FROM-OPS> 1806
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 477
<NUMBER-OF-SHARES-REDEEMED> 182
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7280
<ACCUMULATED-NII-PRIOR> (21)
<ACCUMULATED-GAINS-PRIOR> 469
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 54
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 100
<AVERAGE-NET-ASSETS> 11045
<PER-SHARE-NAV-BEGIN> 18.39
<PER-SHARE-NII> (.15)
<PER-SHARE-GAIN-APPREC> 2.70
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.94
<EXPENSE-RATIO> 1.8
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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<TABLE> <S> <C>
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<CIK> 0000784880
<NAME> PASADENA INVESTMENT TRUST
<SERIES>
<NUMBER> 11
<NAME> THE PASADENA SMALL & MID-CAP GROWTH FUND - CLASS B SHARES
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
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<PAID-IN-CAPITAL-COMMON> 21144
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<ACCUMULATED-NET-GAINS> 734
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2732
<NET-ASSETS> 24610
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<EXPENSES-NET> 49
<NET-INVESTMENT-INCOME> (44)
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<NET-CHANGE-FROM-OPS> 640
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 223
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<NET-CHANGE-IN-ASSETS> 4641
<ACCUMULATED-NII-PRIOR> (21)
<ACCUMULATED-GAINS-PRIOR> 469
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19
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<GROSS-EXPENSE> 49
<AVERAGE-NET-ASSETS> 3828
<PER-SHARE-NAV-BEGIN> 18.35
<PER-SHARE-NII> (.22)
<PER-SHARE-GAIN-APPREC> 2.68
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</TABLE>
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<NAME> PASADENA INVESTMENT TRUST
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<NAME> THE PASADENA SMALL & MID-CAP GROWTH FUND - CLASS C SHARES
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<CURRENCY> US DOLLARS
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1997
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<ACCUMULATED-NET-GAINS> 734
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<ACCUM-APPREC-OR-DEPREC> 2732
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<NET-INVESTMENT-INCOME> (17)
<REALIZED-GAINS-CURRENT> 76
<APPREC-INCREASE-CURRENT> 351
<NET-CHANGE-FROM-OPS> 410
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
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<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 160
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<NET-CHANGE-IN-ASSETS> 3296
<ACCUMULATED-NII-PRIOR> (21)
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<AVERAGE-NET-ASSETS> 1516
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<PER-SHARE-NII> (.22)
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</TABLE>
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<SERIES>
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<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
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<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1267
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1119
<NET-ASSETS> 11556
<DIVIDEND-INCOME> 63
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 80
<NET-INVESTMENT-INCOME> (17)
<REALIZED-GAINS-CURRENT> 372
<APPREC-INCREASE-CURRENT> 759
<NET-CHANGE-FROM-OPS> 1114
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 141
<NUMBER-OF-SHARES-REDEEMED> 195
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (20)
<ACCUMULATED-NII-PRIOR> 5
<ACCUMULATED-GAINS-PRIOR> 1243
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 45
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 80
<AVERAGE-NET-ASSETS> 7942
<PER-SHARE-NAV-BEGIN> 19.06
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> 2.92
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.94
<EXPENSE-RATIO> 2.0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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