PHOENIX ENGEMANN FUNDS, 485BPOS, 1997-10-01

PHOENIX ENGEMANN FUNDS
485BPOS, 1997-10-01

Previous: MFS SERIES TRUST X, 497, 1997-10-01

Next: VIRAGEN EUROPE LTD, 10-K405, 1997-10-01

<PAGE>

As filed with the Securities and Exchange Commission on September 30, 1997

File Nos. 33-1922
811-4506

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

F O R M N-1A

Registration Statement Under the Securities Act of 1933
Post-Effective Amendment No. 26 /x/

and

Registration Statement Under the Investment Company Act of 1940
Amendment No. 29 /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)

----------

It is proposed that this filing will become effective:

Immediately upon filing pursuant to paragraph (b) of Rule 485, or
---
X on September 30, 1997 pursuant to paragraph (b) of Rule 485, or
---
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.
---

The Registrant's Notice required by Rule 24f-2 for its fiscal year ended
December 31, 1996 was filed on or before February 28, 1997.

----------

Please Send Copy of Communications to:

JULIE ALLECTA, ESQ.
KELVIN K. LEUNG, ESQ
Paul, Hastings, Janofsky & Walker, LLP
345 California Street, 29th Floor
San Francisco, California 94104
(415) 835-1600

<PAGE>

PHOENIX-ENGEMANN FUNDS

PHOENIX-ENGEMANN GROWTH FUND-SM-
PHOENIX-ENGEMANN NIFTY FIFTY FUND-SM-
PHOENIX-ENGEMANN BALANCED RETURN FUND-SM-
PHOENIX-ENGEMANN GLOBAL GROWTH FUND-SM-
PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH FUND-SM-
PHOENIX-ENGEMANN VALUE 25 FUND-SM-

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 Sheets for the above-referenced Funds

- Part A: Supplement to Prospectus 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

i
<PAGE>

THE PHOENIX-ENGEMANN FUNDS

CROSS REFERENCE SHEET

FORM N-1A

N-1A Location in
Item No. Item Registration Statement
- -------- ---- ----------------------

Part A: Information Required in Prospectus
----------------------------------

1. Cover Page Cover Page

2. Synopsis "Synopsis" and "Expense and Fee
Tables"

3. Condensed Financial "Financial Highlights"
Information

4. General Description of "Synopsis," "Investment Objectives
Registrant and Policies," and "Description of
the Trust"

5. Management of the Fund "Management"

5A. Management's Discussion of "Performance Information"
Fund Performance

6. Capital Stock and Other "Synopsis," "Alternative Purchase
Securities Arrangements," "Description of the
Trust," "Dividends, Distributions,
and Taxes" and "General
Information"

7. Purchase of Securities "Synopsis," "Alternative Purchase
Being Offered Arrangements," "Purchase of
Shares" and "Determination of Net
Asset Value"

8. Redemption or Repurchase "Synopsis," "Redemption of Shares"
and "Alternative Purchase
Arrangements"

9. Pending Legal Proceedings Not Applicable

ii
<PAGE>

Part B: Information Required in Statement
of Additional Information
---------------------------------

10. Cover Page Cover Page

11. Table of Contents Cover Page

12. General Information "General"
and History

13. Investment Objectives "Investment Objectives and
and Policies Policies"

14. Management of the "Management of the Trust"
Fund

15. Control Persons and "Management of the Trust"
Principal Holders of and "General"
Securities

16. Investment Advisory "Management of the Trust,"
and Other Services "Investment Management
Services" and "Class B and
Class C Distribution Plans"

17. Brokerage Allocation "Brokerage Allocation and
and Other Practices Other Practices"

18. Capital Stock and See "Description of the
Other Securities Trust" in Prospectus

19. Purchase, Redemption "Purchase, Redemption and
and Pricing of Pricing of Fund Shares"
Securities Being
Offered

20. Tax Status "Distributions and Tax
Status"

21. Underwriters "Principal Underwriter" and
"Class B and Class C
Distribution Plans"

22. Calculation of "Performance Information"
Performance Data

23. Financial Statements "Financial Statements"

iii

<PAGE>

Part A
-----------------------------------

SUPPLEMENT TO PROSPECTUS

PHOENIX-ENGMANN GROWTH FUND-Registered Trademark-
PHOENIX-ENGEMANN NIFTY FIFTY FUND-Registered Tradmark-
PHOENIX-ENGEMANN BALANCED RETURN FUND-Registered Tradmark-
PHOENIX-ENGEMANN GLOBAL GROWTH FUND-SM-
PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH FUND-SM-
PHOENIX-ENGEMANN VALUE 25 FUND-SM-

<PAGE>

SUPPLEMENT TO THE PHOENIX-ENGEMANN FUNDS COMBINED PROSPECTUS

THE PHOENIX-ENGEMANN FUNDS
SUPPLEMENT DATED OCTOBER 1, 1997 TO
PROSPECTUS DATED SEPTEMBER 30, 1997

The following paragraph should be inserted after the section titled
"Distribution Plans" in the Prospectus.

DEALER CONCESSIONS

In connection with aggregate purchases (net of redemptions) of any
combination of Classes of Shares of the following Funds between
October 1, 1997 and December 31, 1997, Equity Planning may pay
participating broker/dealers, out of its profits and resources, an
additional dealer discount or sales commission equal to 0.50% of the
purchase price. This fee does not apply to shares purchased through
non-commissionable exchanges.

Phoenix-Engemann Funds:

-- Growth Fund -- Nifty Fifty Fund
-- Balanced Return Fund -- Global Growth Fund
-- Small & Mid-Cap Growth Fund -- Value 25 Fund

PHOENIX EQUITY SERIES FUND

-- Core Equity Fund -- Growth and Income Fund

<PAGE>
PART A

-----------------------

PROSPECTUS

PHOENIX-ENGEMANN GROWTH FUND-Registered Trademark-
PHOENIX-ENGEMANN NIFTY FIFTY FUND-Registered Trademark-
PHOENIX-ENGEMANN BALANCED RETURN FUND-Registered Trademark-
PHOENIX-ENGEMANN GLOBAL GROWTH FUND-SM-
PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH FUND-SM-
PHOENIX-ENGEMANN VALUE 25 FUND-SM-

-----------------------

<PAGE>

PHOENIX-ENGEMANN PHOENIX-ENGEMANN
GROWTH GLOBAL GROWTH
FUND-SM- FUND-SM-

THE PHOENIX-ENGEMANN GROUP PHOENIX-ENGEMANN PHOENIX-ENGEMANN
OF MUTUAL FUNDS-SM- NIFTY FIFTY FUND-SM- SMALL & MID-CAP GROWTH
FUND-SM-

PHOENIX-ENGEMANN PHOENIX-ENGEMANN
BALANCED RETURN VALUE 25
FUND-SM- FUND-SM-

PHOENIX-ENGEMANN GROWTH FUND (formerly "The Pasadena Growth 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 (formerly "The Pasadena
Nifty-Fifty Fund") seeks to achieve long-term capital appreciation by
investing in approximately 50 different securities which its Manager believes
offer the best potential for long-term growth of capital.

PHOENIX-ENGEMANN BALANCED RETURN FUND (formerly "The Pasadena
Balanced Return Fund") seeks to maximize a total investment return consistent
with reasonable risk through a balanced approach using moderate asset
allocation by its Manager.

PHOENIX-ENGEMANN GLOBAL GROWTH FUND (formerly "The Pasadena Global
Growth 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 (formerly "The Pasadena
Small & Mid-Cap Growth Fund") seeks to achieve long-term growth of capital by
investing primarily in a diversified portfolio of equity securities of
companies with market capitalizations below $1.5 billion.

PHOENIX-ENGEMANN VALUE 25 FUND (formerly "The Pasadena Value 25 Fund")
seeks to achieve substantial dividend income and long-term growth of capital
by investing in equity securities which the Manager believes offer the best
potential for current dividend yield and long-term capital appreciation.

Roger Engemann & Associates, Inc. is the investment manager for the Funds. Each
Fund is a separate series of the Phoenix-Engemann Funds (the "Trust"), and each
offers three classes of shares (Class A, Class B and Class C shares). See
"Synopsis - Purchase and Redemption of Shares" below. The minimum initial
investment for each Fund is $1,000 per account ($250 for individual retirement
and minor's custodial accounts and for initial purchases under a Systematic
Purchase Plan). Minimum subsequent investments are $50. See "Purchase of
Shares."

This Prospectus sets forth concisely the information about the Funds that a
prospective investor should know before investing. Please read it and retain it
for future reference. Additional information about the Funds and the Trust is
included in the Trust's Statement of Additional Information regarding the Funds
dated September 30, 1997, as it may be amended from time to time. The Statement
of Additional Information, which is incorporated by reference into this
Prospectus, has been filed with the Securities and Exchange Commission and is
available without charge upon request to the Trust at 600 North Rosemead
Boulevard, Pasadena, California 91107-2133 (telephone: (626) 351-9686 or (800)
648-8050).

- --------------------------------------------------------------------------------
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.

PROSPECTUS SEPTEMBER 30, 1997

<PAGE>

TABLE OF CONTENTS

PAGE

Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Expense and Fee Tables . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . 19

Alternative Purchase Arrangements . . . . . . . . . . . . . . . . . . . . 30

Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . . . . 46

Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . 47

Performance Information . . . . . . . . . . . . . . . . . . . . . . . . . 48

Description of the Trust . . . . . . . . . . . . . . . . . . . . . . . . 49

Shareholder Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . 49

General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Backup Withholding Instructions . . . . . . . . . . . . . . . . . . . . . 50

- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------

-i-
<PAGE>

SYNOPSIS

The following synopsis is qualified in its entirety by the detailed
information contained elsewhere in this Prospectus or the Statement of
Additional Information.

THE FUNDS. The Phoenix-Engemann Group of Mutual Funds consists of six
separate series of the Phoenix-Engemann Funds (the "Trust"), a Massachusetts
business trust, organized as a diversified, open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"). The series (each, a "Fund," and collectively, the "Funds")
described in this Prospectus are:

- Phoenix-Engemann Growth Fund (the "Growth Fund")

- Phoenix-Engemann Nifty Fifty Fund (the "Nifty Fifty Fund")

- Phoenix-Engemann Balanced Return Fund (the "Balanced Return Fund")

- Phoenix-Engemann Global Growth Fund (the "Global Growth Fund")

- Phoenix-Engemann Small & Mid-Cap Growth Fund (the "Small & Mid-Cap
Growth Fund")

- Phoenix-Engemann Value 25 Fund (the "Value 25 Fund")

THE MANAGER. Roger Engemann & Associates, Inc. (the "Manager") provides
investment advice to the Funds and manages the Funds' investments for an annual
management fee, which is computed and prorated daily. Phoenix Equity Planning
Corporation (the "Administrator") performs, and/or assumes the expenses for, the
Funds' administrative and most shareholder services, for which it receives an
annual administration fee based on the average daily net assets of each Fund.
Currently, the Manager, pursuant to a Sub-Administration Agreement with the
Administrator, performs various administrative services on behalf of the
Administrator. The Funds will not incur any other expenses in connection with
its normal operations other than (i) certain fiduciary and professional
expenses, including compensation to independent trustees, auditing fees and
legal expenses for independent trustees (this amount is currently estimated not
to exceed 0.02% per annum of the aggregate average daily net assets of each
Fund); (ii) a fee paid by each class of shares to dealers and others, including
the Manager and its affiliates, for servicing shareholder accounts equal to
0.25% per annum of the aggregate average daily net assets of each Fund
attributable to the class; and (iii) an ongoing distribution fee payable by
Class B shares and Class C shares at an annual rate of 0.75% of each Fund's
average daily net assets attributable to each such class. See "Expense and Fee
Tables" and "Management."

PURCHASE AND REDEMPTION OF SHARES. The Funds offer their shares
continuously and redeem their shares upon a shareholder's request. Each Fund
offers three classes of shares (each, a "Class"). Shares may be purchased
through authorized investment dealers at the public offering price next
determined after the Funds' sub-transfer agent, Boston Financial Data
Services, Inc. (the "Sub-Transfer Agent"), the Fund, or another authorized
agent or subagent of the Fund, receives a purchase order. The public offering
price of the Class A shares is the net asset value per share plus a maximum
sales charge of 5.50% of the offering price, reduced on purchases of $50,000
or more. The public offering price of the Class B shares and Class C shares
is their net asset value per share. The Class B shares are subject to a
contingent deferred sales charge (sometimes referred to as the "CDSC") of up
to 5% of the offering price imposed on most redemptions made within four
years of purchase and the Class C shares of the Global Growth, Small &
Mid-Cap Growth and Value 25 Funds are subject to a CDSC of 1% of the offering

1
<PAGE>

price imposed on most redemptions made within the first year of purchase. For
more information about the different purchase arrangements, see "Alternative
Purchases Arrangements." For more information about the various expenses borne
by each Class, see "Comparison of Classes" and "Expense and Fee Tables."

The minimum initial investment is $1,000 per account ($250 for individual
retirement and minor's custodial accounts and for initial purchases under a
Systematic Purchase Plan). Minimum subsequent investments are $50. See
"Purchase of Shares." Shares are redeemed at their net asset value per share
next determined after the Sub-Transfer Agent, the Fund, or another authorized
agent or subagent of the Fund, receives a redemption request in proper form
(less the CDSC, if any, with respect to the Class B and Class C shares). See
"Redemption of Shares."

RISKS. Every investment carries some market risk. In addition to the risks
described under "Risk Considerations," an investment in a Fund is subject to
the inherent risk that market prices or interest rates will not agree with the
Manager's estimation of fundamental security values or market trends. The Funds
are designed to be long-term investments. Therefore, because each Fund's net
asset value per share will fluctuate with daily changes in the market prices of
its portfolio securities (as well as with changes in foreign currency exchange
rates for securities not traded in United States dollars), an investment in a
Fund may not be suitable for investors with specific short-term investment
return needs. Each Fund also may invest part of its assets in securities with
special risks, such as foreign securities (which may be denominated in foreign
currencies), and each Fund (except the Global Growth Fund) may invest part of
its assets in securities representing special situations. The Value 25 Fund's
emphasis on stocks of established, high dividend paying companies, as well as
its possible exposure to fixed-income securities, could limit the Fund's
potential for capital appreciation. Sharply rising interest rates could also
decrease the value of stocks purchased by the Value 25 Fund, further
restraining total return. See "Investment Objective and Policies" and "Risk
Considerations."

Shares of the Funds are not deposits or obligations of, or guaranteed or
endorsed by, any financial institution, and are not insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
Shares of the Funds involve investment risk, including possible loss of
principal.

EXPENSE AND FEE TABLES

Expenses are one of several factors to consider when investing in a
Fund. The purpose of the following tables is to provide an understanding of
the various costs and expenses that shareholders of each Class will bear
directly or indirectly. Because Rule 12b-1 distribution charges are accounted
for on a Class-level basis (and not on an individual shareholder-level
basis), individual long-term investors in the Class B shares and Class C
shares of a Fund may, over time, pay more than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Securities Dealers Regulation, Inc. ("NASDR"), even though all shareholders
of those Classes in the aggregate will not. This is recognized and permitted
by the NASDR (see "Management").

2
<PAGE>

Phoenix-Engemann Growth Fund

Class A Class B Class C
------- ------- -------
SHAREHOLDER TRANSACTION EXPENSES:

Maximum Sales "Load" Imposed on Purchases
(as percentage of offering price) . . . . 5.50% None None
Maximum Sales "Load" Imposed on
Reinvestment of Distributions . . . . . . None None None
Maximum Deferred Sales Charge . . . . . . None 5.00% None
Redemption Fees+ . . . . . . . . . . . . None None None
Exchange Fees . . . . . . . . . . . . . . None None None
ANNUAL FUND OPERATING EXPENSES*:
Management Fees . . . . . . . . . . . . . 0.81% 0.81% 0.81%
12b-1 Fees . . . . . . . . . . . . . . . None 0.75% 0.75%
Other Expenses

Administration Fees . . . . . . . 0.51%
Services Fees . . . . . . . . . . 0.25%
Fiduciary/Audit Expenses . . . . 0.02%
-----
Total Other Expenses . . . . . . . . . 0.78% 0.78% 0.78%
----- ----- -----
Total Fund Operating Expenses . . . . . . 1.59% 2.34% 2.34%
----- ----- -----
----- ----- -----

+ A $10.00 fee may be charged for redemptions made by bank wire (see p. 40).
* Operating expense information for the Funds have been restated to reflect
current fees.

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:

Class A Class B Class C
------- ------- -------
1 year . . . . . . . . . . . . . . . . . . $ 70 $ 74 $ 24
3 years . . . . . . . . . . . . . . . . . 102 103 73
5 years . . . . . . . . . . . . . . . . . 137 125 125
10 years . . . . . . . . . . . . . . . . . 233 232** 268

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:

Class A Class B Class C
------- ------- -------
1 year . . . . . . . . . . . . . . . . . . $ 70 $ 24 $ 24
3 years . . . . . . . . . . . . . . . . . 102 73 73
5 years . . . . . . . . . . . . . . . . . 137 125 125
10 years . . . . . . . . . . . . . . . . . 233 232** 268

** Ten-year figure assumes conversion of Class B shares to Class A shares at
beginning of seventh year following the date of purchase.

3
<PAGE>

Phoenix-Engemann Balanced Return Fund

Class A Class B Class C
------- ------- -------
SHAREHOLDER TRANSACTION EXPENSES:

Maximum Sales "Load" Imposed on Purchases
(as a percentage of offering price) . . . . 5.50% None None
Maximum Sales "Load" Imposed on Reinvested
Dividends (and other Distributions) . . . . None None None
Maximum Deferred Sales Charge (as a
percentage of redemption price) . . . . . . None 5.00% None
Redemption Fees+ . . . . . . . . . . . . . None None None
Exchange Fees . . . . . . . . . . . . . . . None None None
ANNUAL FUND OPERATING EXPENSES*:
Management Fees . . . . . . . . . . . . . . 0.79 0.79% 0.79%
12b-1 Fees . . . . . . . . . . . . . . . . None 0.75% 0.75%
Other Expenses

Administration Fees . . . . . . . . 0.59%
Services Fees . . . . . . . . . . . 0.25%
Fiduciary/Audit Expenses . . . . . 0.02%
-----
Total Other Expenses . . . . . . . . . . 0.86% 0.86% 0.86%
----- ----- -----
Total Fund Operating Expenses . . . . . . . 1.65% 2.40% 2.40%
----- ----- -----
----- ----- -----

+ A $10.00 fee may be charged for redemptions made by bank wire (see p. 40).
* Operating expense information for the Funds have been restated to reflect
current fees.

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:

Class A Class B Class C
------- ------- -------
1 year . . . . . . . . . . . . . . . . . . $ 71 $ 74 $ 24
3 years . . . . . . . . . . . . . . . . . 104 105 75
5 years . . . . . . . . . . . . . . . . . 140 128 128
10 years . . . . . . . . . . . . . . . . . 240 238** 274

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:

Class A Class B Class C
------- ------- -------
1 year . . . . . . . . . . . . . . . . . . $ 71 $ 24 $ 24
3 years . . . . . . . . . . . . . . . . . 104 75 75
5 years . . . . . . . . . . . . . . . . . 140 128 128
10 years . . . . . . . . . . . . . . . . . 240 238** 274

** Ten-year figure assumes conversion of Class B shares to Class A shares at
beginning of seventh year following the date of purchase.

4
<PAGE>

Phoenix-Engemann Nifty Fifty Fund

Class A Class B Class C
------- ------- -------
SHAREHOLDER TRANSACTION EXPENSES:

Maximum Sales "Load" Imposed on Purchases (as
percentage of offering price) . . . . . . . . 5.50% None None
Maximum Sales "Load" Imposed on Reinvestment
of Distributions . . . . . . . . . . . . . . None None None
Maximum Deferred Sales Charge . . . . . . . . None 5.00% None
Redemption Fees+ . . . . . . . . . . . . . . None None None
Exchange Fees . . . . . . . . . . . . . . . . None None None
ANNUAL FUND OPERATING EXPENSES*:
Management Fees . . . . . . . . . . . . . . . 0.83% 0.83% 0.83%
12b-1 Fees . . . . . . . . . . . . . . . . . None 0.75% 0.75%
Other Expenses

Administration Fees . . . . . . . . . 0.53%
Services Fees . . . . . . . . . . . . 0.25%
Fiduciary/Audit Expenses . . . . . . 0.02%
-----
Total Other Expenses . . . . . . . . . . . 0.80% 0.80% 0.80%
----- ----- -----
Total Fund Operating Expenses . . . . . . . . 1.63% 2.38% 2.38%
----- ----- -----
----- ----- -----

+ A $10.00 fee may be charged for redemptions made by bank wire (see p. 40).
* Operating expense information for the Funds have been restated to reflect
current fees.

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:

Class A Class B Class C
------- ------- -------
1 year . . . . . . . . . . . . . . . . . . $ 70 $ 74 $ 24
3 years . . . . . . . . . . . . . . . . . 103 104 74
5 years . . . . . . . . . . . . . . . . . 139 127 127
10 years . . . . . . . . . . . . . . . . . 238 236** 272

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:

Class A Class B Class C
------- ------- -------
1 year . . . . . . . . . . . . . . . . . . $ 70 $ 24 $ 24
3 years . . . . . . . . . . . . . . . . . 103 74 74
5 years . . . . . . . . . . . . . . . . . 139 127 127
10 years . . . . . . . . . . . . . . . . . 238 236** 272

** Ten-year figure assumes conversion of Class B shares to Class A shares at
beginning of seventh year following the date of purchase.

5
<PAGE>

Phoenix-Engemann Global Growth Fund

Class A Class B Class C
------- ------- -------
SHAREHOLDER TRANSACTION EXPENSES:

Maximum Sales "Load" Imposed on Purchases
(as percentage of offering price) . . . . . 5.50% None None
Maximum Sales "Load" Imposed on
Reinvestment of Distributions . . . . . . . None None None
Maximum Deferred Sales Charge . . . . . . . None 5.00% 1.00%
Redemption Fees+ . . . . . . . . . . . . . None None None
Exchange Fees . . . . . . . . . . . . . . . None None None
ANNUAL FUND OPERATING EXPENSES*:
(After Fee and Expense Waivers)
Management Fees . . . . . . . . . . . . . . 1.10% 1.10% 1.10%
12b-1 Fees . . . . . . . . . . . . . . . . None 0.75% 0.75%
Other Expenses

Administration Fees . . . . . . . . 0.58%
Services Fees . . . . . . . . . . . 0.25%
Fiduciary/Audit Expenses . . . . . 0.02%
-----
Total Other Expenses . . . . . . . . . . 0.85% 0.85% 0.85%
----- ----- -----
Total Fund Operating Expenses . . . . . . . 1.95% 2.70% 2.70%
----- ----- -----
----- ----- -----

+ A $10.00 fee may be charged for redemptions made by bank wire (see p. 40).
* Operating expense information for the Funds have been restated to reflect
current fees.

EXAMPLES

An investor would bear the following transaction and operating expenses in
each Class of a Fund over different time periods, assuming a $1,000
investment, a 5% annual return, and redemption at the end of each time period:

Class A Class B Class C
------- ------- -------
1 year . . . . . . . . . . . . . . . . . . $ 74 $ 77 $ 37
3 years . . . . . . . . . . . . . . . . . 113 114 84
5 years . . . . . . . . . . . . . . . . . 154 143 143
10 years . . . . . . . . . . . . . . . . . 270 269** 303

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:

Class A Class B Class C
------- ------- -------
1 year . . . . . . . . . . . . . . . . . . $ 74 $ 27 $ 27
3 years . . . . . . . . . . . . . . . . . 113 84 84
5 years . . . . . . . . . . . . . . . . . 154 143 143
10 years . . . . . . . . . . . . . . . . . 270 269** 303

** Ten-year figure assumes conversion of Class B shares to Class A shares at
beginning of seventh year following the date of purchase.

<PAGE>

Phoenix-Engemann Small & Mid-Cap Growth Fund

Class A Class B Class C
------- ------- -------
SHAREHOLDER TRANSACTION EXPENSES:

Maximum Sales "Load" Imposed on Purchases
(as percentage of offering price) . . . . . 5.50% None None
Maximum Sales "Load" Imposed on Reinvestment
of Distributions . . . . . . . . . . . . . None None None
Maximum Deferred Sales Charge . . . . . . . None 5.00% 1.00%
Redemption Fees+ . . . . . . . . . . . . . None None None
Exchange Fees . . . . . . . . . . . . . . . None None None
ANNUAL FUND OPERATING EXPENSES*:
(After Fee and Expense Waivers)
Management Fees . . . . . . . . . . . . . . 1.00% 1.00% 1.00%
12b-1 Fees . . . . . . . . . . . . . . . . None 0.75% 0.75%
Other Expenses

Administration Fees . . . . . . . . 0.58%
Services Fees . . . . . . . . . . . 0.25%
Fiduciary/Audit Expenses . . . . . 0.02%
-----
Total Other Expenses . . . . . . . . . . 0.85% 0.85% 0.85%
----- ----- -----
Total Fund Operating Expenses . . . . . . . 1.85% 2.60% 2.60%
----- ----- -----
----- ----- -----

+ A $10.00 fee may be charged for redemptions made by bank wire (see p. 40).
* Operating expense information for the Funds have been restated to reflect
current fees.

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:

Class A Class B Class C
------- ------- -------
1 year . . . . . . . . . . . . . . . . . . $ 73 $ 76 $ 36
3 years . . . . . . . . . . . . . . . . . 110 111 81
5 years . . . . . . . . . . . . . . . . . 149 138 138
10 years . . . . . . . . . . . . . . . . . 260 258** 293

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:

Class A Class B Class C
------- ------- -------
1 year . . . . . . . . . . . . . . . . . . $ 73 $ 26 $ 26
3 years . . . . . . . . . . . . . . . . . 110 81 81
5 years . . . . . . . . . . . . . . . . . 149 138 138
10 years . . . . . . . . . . . . . . . . . 260 258** 293

** Ten-year figure assumes conversion of Class B shares to Class A shares at
beginning of seventh year following the date of purchase.

7
<PAGE>

Phoenix-Engemann Value 25 Fund

Class A Class B Class C
------- ------- -------
SHAREHOLDER TRANSACTION EXPENSES:

Maximum Sales "Load" Imposed on Purchases
(as percentage of offering price) . . . . . 5.50% None None
Maximum Sales "Load" Imposed on Reinvestment
of Distributions . . . . . . . . . . . . . None None None
Maximum Deferred Sales Charge . . . . . . . None 5.00% 1.00%
Redemption Fees+ . . . . . . . . . . . . . None None None
Exchange Fees . . . . . . . . . . . . . . . None None None
ANNUAL FUND OPERATING EXPENSES*:
(After Fee and Expense Waivers)
Management Fees . . . . . . . . . . . . . . 0.90% 0.90% 0.90%
12b-1 Fees . . . . . . . . . . . . . . . . None 0.75% 0.75%
Other Expenses

Administration Fees . . . . . . . . 0.58%
Services Fees . . . . . . . . . . . 0.25%
Fiduciary/Audit Expenses . . . . . 0.02%
-----
Total Other Expenses . . . . . . . . . . 0.85% 0.85% 0.85%
----- ----- -----
Total Fund Operating Expenses . . . . . . . 1.75% 2.50% 2.50%
----- ----- -----
----- ----- -----

+ A $10.00 fee may be charged for redemptions made by bank wire (see p. 40).
* Operating expense information for the Funds have been restated to reflect
current fees.

EXAMPLES

Class A Class B Class C
------- ------- -------
1 year . . . . . . . . . . . . . . . . . . $ 72 $ 75 $ 35
3 years . . . . . . . . . . . . . . . . . 107 108 78

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:

Class A Class B Class C
------- ------- -------
1 year . . . . . . . . . . . . . . . . . . $ 72 $ 25 $ 25
3 years . . . . . . . . . . . . . . . . . 107 78 78

THE EXAMPLES SHOWN ABOVE SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR
FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
IN ADDITION, FEDERAL REGULATIONS REQUIRE THE EXAMPLE TO ASSUME A 5% ANNUAL
RETURN, BUT THE ACTUAL RETURN MAY BE HIGHER OR LOWER. SEE "PURCHASE OF SHARES"
AND "MANAGEMENT."

8
<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. 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.

<PAGE>

<TABLE>
<CAPTION>
Phoenix-Engemann Growth Fund(7)
---------------------------------------------------------------------------------------------------------
For the Six-Months Ended For the Year Ended December 31,
June 30, 1997 ---------------------------------------------------------------------
(Unaudited) 1996 1995
---------------------------------- --------------------------------- ---------------------------------
Class A Class B Class C Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <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 $15.40 $15.28 $15.28
--------- --------- --------- --------- --------- --------- --------- --------- ---------
GAIN (LOSS) FROM
INVESTMENT OPERATIONS:

Net investment
loss(1) . . . . . . . (.06)(2) (.16)(2) (.16)(2) (.14)(3) (.31)(3) (.31)(3) (.06) (.20) (.20)

Net realized and
unrealized gain
(loss) on
investments. . . . . . 2.10 2.03 2.03 4.47 4.39 4.39 4.24 4.21 4.21
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total gain (loss)
from investment
operations . . . . . . 2.04 1.87 1.87 4.33 4.08 4.08 4.18 4.01 4.01
--------- --------- --------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:

Capital gains . . . . . -- -- -- (1.67) (1.67) (1.67) (.30) (.30) (.30)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total distributions . . -- -- -- (1.67) (1.67) (1.67) (.30) (.30) (.30)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end
of period. . . . . . . $23.98 $23.27 $23.27 $21.94 $21.40 $21.40 $19.28 $18.99 $18.99
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------

TOTAL RETURN(4). . . . 9.30%(2) 8.74%(2) 8.74%(2) 22.49%(3) 21.52%(3) 21.52%(3) 27.16% 26.26% 26.26%

RATIOS/SUPPLEMENTAL
DATA:

Net assets, end of
period
(in thousands) . . . . $405,689 $54,094 $29,897 $426,785 $49,444 $27,239 $415,416 $34,786 $20,497

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) 1.6% 2.4% 2.4%

Ratio of net investment
loss to average net
assets(5). . . . . . . (0.5)%(2) (1.5)%(2) (1.5)%(2) (.06)%(3) (1.5)%(3) (1.5)%(3) (0.3)% (1.1)% (1.1)%

Portfolio turnover
rate . . . . . . . . . 45.8% 45.8% 45.8% 70.1% 70.1% 70.1% 65.9% 65.9% 65.9%

Average commission
rate paid per
share(6) . . . . . . . $0.0592 $0.0592 $0.0592 $0.0578 $0.0578 $0.0578 N/A N/A N/A

For the Year Ended December 31,
-----------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987
------------------------------- --------- --------- --------- --------- --------- --------- --------
Class A Class B Class C Class A Class A Class A Class A Class A Class A Class A
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of
period . . . . . . . . $16.00 $15.89 $15.89 $17.00 $16.80 $10.04 $10.53 $8.41 $6.19 $6.99
-------- --------- --------- --------- --------- --------- --------- --------- --------- ---------

GAIN (LOSS) FROM
INVESTMENT OPERATIONS:

Net investment
loss(1) . . . . . . . (.03) (.14) (.14) (.02) (.05) (.08) (.09) (.04) -- (.06)

Net realized and
unrealized gain
(loss) on
investments. . . . . . (.57) (.47) (.47) (.98) .43 6.89 (.39) 3.19 2.22 (.74)
-------- --------- --------- --------- --------- --------- --------- --------- --------- ---------

Total gain (loss)
from investment
operations . . . . . . (.60) (.61) (.61) (1.00) .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. . . . . . . $15.40 $15.28 $15.28 $16.00 $17.00 $16.80 $10.04 $10.53 $8.41 $6.19
-------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
-------- --------- --------- --------- --------- --------- --------- --------- --------- ---------

TOTAL RETURN(4). . . . (3.75)% (3.84)% (3.84)% (5.87)% 2.24% 67.83% (4.55)% 37.75% 35.78% (11.45)%

RATIOS/SUPPLEMENTAL
DATA:

Net assets, end of
period
(in thousands) . . . . $391,831 $11,349 $6,136 $532,208 $625,624 $323,484 $80,639 $36,722 $18,049 $10,923

Ratio of expenses to
average net
assets(5). . . . . . . 1.6% 2.3% 2.3% 1.6% 1.6% 1.8% 2.2% 1.8% 1.8% 2.0%

Ratio of net investment
loss to average net
assets(5). . . . . . . (0.2)% (1.0)% (1.0)% -- (0.3)% (0.6)% (0.9)% (0.5)% -- (0.9)%

Portfolio turnover
rate . . . . . . . . . 53.8% 53.8% 53.8% 22.9% 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 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.

(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 administrative 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 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 Growth Fund.

10, 11

<PAGE>

<TABLE>
<CAPTION>
Phoenix-Engemann Balanced Return Fund(7)
---------------------------------------------------------------------------------------------------------
For the Six-Months Ended For the Year Ended December 31,
June 30, 1997 ---------------------------------------------------------------------
(Unaudited) 1996 1995
--------------------------------- --------------------------------- ---------------------------------
Class A Class B Class C Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <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 $20.54 $20.49 $20.48
--------- --------- --------- --------- --------- --------- --------- --------- ---------

GAIN (LOSS) FROM
INVESTMENT OPERATIONS:

Net investment
income(1). . . . . . . 14(2) .03(2) .03(2) .29(3) .09(3) .09(3) .27 .08 .07

Net realized and
unrealized gain (loss)
on investments . . . . 3.06 3.04 3.04 4.23 4.16 4.16 5.31 5.29 5.30
--------- --------- --------- --------- --------- --------- --------- --------- ---------

Total gain (loss) from
investment operations . 3.20 3.07 3.07 4.52 4.25 4.25 5.58 5.37 5.37
--------- --------- --------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:

Net investment income . -- -- -- (.30) (.13) (.12) (.29) (.16) (.13)

Capital gains . . . . . -- -- -- (1.53) (1.53) (1.53) (.44) (.44) (.44)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total distributions. . . -- -- -- (1.83) (1.66) (1.65) (.73) (.60) (.57)

Net asset value, end
of period. . . . . . . $31.28 $30.92 $30.95 $28.08 $27.85 $27.88 $25.39 $25.26 $25.28
--------- --------- --------- --------- --------- --------- --------- --------- --------
--------- --------- --------- --------- --------- --------- --------- --------- --------
TOTAL RETURN(4). . . . . 11.40%(2) 11.02%(2) 11.01%(2) 17.78%(2) 16.82%(3) 16.79%(3) 27.18%(3) 26.20% 26.23%

RATIOS/SUPPLEMENTAL DATA:

Net assets, end of
period (in thousands). $53,639 $5,931 $4,889 $51,947 $4,609 $4,183 $52,028 $2,721 $2,809

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) 2.1% 2.9% 2.9%

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) 1.2% 0.3% 0.3%

Portfolio turnover rate . 13.5% 13.5% 13.5% 35.1% 35.1% 35.1% 51.1% 51.1% 51.1%

Average commission rate
paid per share(6). . . $0.0593 $0.0593 $0.0593 $0.0597 $0.0597 $0.0597 N/A N/A N/A

For the Year Ended December 31,
--------------------------------------------------------------------------------------------------------

1994 1993 1992 1991 1990 1989 1988
------------------------------- ------- ------- ------- ------- ------- -------
Class A Class B Class C Class A Class A Class A Class A Class A Class A
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

PER SHARE OPERATING
PERFORMANCE:

Net asset value,
beginning of period. . $21.97 $21.89 $21.89 $21.76 $20.95 $15.30 $15.91 $12.51 $11.50
------- ------- ------- ------- ------- ------- ------- ------- -------

GAIN (LOSS) FROM
INVESTMENT OPERATIONS:

Net investment
income(1) . . . . . . .39 .26 .25 .32 .25 .24 .16 .18 .13

Net realized and
unrealized gain (loss)
on investments . . . . (1.36) (1.32) (1.31) .21 .69 5.70 (.25) 3.94 1.38
------- ------- ------- ------- ------- ------- ------- ------- -------

Total gain (loss) from
investment operations . (.97) (1.06) (1.06) .53 .94 5.94 (.09) 4.12 1.51
------- ------- ------- ------- ------- ------- ------- ------- -------

LESS DIVIDENDS AND
DISTRIBUTIONS:

Net investment income . (.46) (.34) (.35) (.32) (.13) (.16) (.19) (.19) (.41)

Capital gains . . . . . -- -- -- -- -- (.13) (.33) (.53) (.09)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total dividends
and distributions. . . (.46) (.34) (.35) (.32) (.13) (.29) (.52) (.72) (.50)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end
of period. . . . . . . $20.54 $20.49 $20.48 $21.97 $21.76 $20.95 $15.30 $15.91 $12.51
------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL RETURN(4). . . . . (4.43)% (4.85)% (4.85)% 2.44% 4.49% 38.89% (.39)% 32.98% 13.42%

RATIOS/SUPPLEMENTAL DATA:

Net assets, end of
period (in thousands). $53,047 $1,223 $1,449 $84,591 $75,143 $16,020 $5,001 $3,747 $1,924

Ratio of expenses to
average net assets(5). 2.1% 2.9% 2.9% 2.1% 2.3% 2.5% 2.5% 2.1% 2.0%

Ratio of net investment
income to average net
assets(5). . . . . . . 1.8% 1.3% 1.3% 1.5% 1.2% 1.3% 1.0% 1.5% 1.7%

Portfolio turnover rate . 28.2% 28.2% 28.2% 4.8% 6.3% 4.9% 35.8% 24.3% 30.6%

Average commission rate
paid per share(6). . . N/A N/A N/A N/A N/A N/A N/A N/A N/A

Inception
(June 6,
1987) to
December 31,
1987
-------
Class A
-------
<S> <C>

PER SHARE OPERATING
PERFORMANCE:

Net asset value,
beginning of period. . $10.00
-------

GAIN (LOSS) FROM
INVESTMENT OPERATIONS:

Net investment
income(1). . . . . . . .16

Net realized and
unrealized gain (loss)
on investments . . . . 1.34
-------

Total gain (loss) from
investment operations . 1.50
-------

LESS DIVIDENDS AND
DISTRIBUTIONS:

Net investment income . --

Capital gains . . . . . --
-------
Total dividends
and distributions. . . --
-------
Net asset value, end
of period. . . . . . . $11.50
-------
-------
TOTAL RETURN(4). . . . . 15.00%

RATIOS/SUPPLEMENTAL DATA:

Net assets, end of
period (in thousands). $ 742

Ratio of expenses to
average net assets(5). --

Ratio of net investment
income to average net
assets(5). . . . . . . 5.3%

Portfolio turnover rate . 13.1%

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 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 net investment loss 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.

12, 13

<PAGE>

Phoenix-Engemann Nifty Fifty Fund(7)
-------------------------------------------------------------------------------------------------------
For the Six-Months Ended For the Year Ended December 31,
June 30, 1997 ----------------------------------------------------------------
(Unaudited) 1996 1995
-------------------------------------------------------------------------------------------------------
Class A Class B Class C Class A Class B Class C Class A Class B Class C
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <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 $17.30 $17.17 $17.17
--------- --------- --------- --------- --------- --------- --------- --------- ---------

GAIN (LOSS) FROM
INVESTMENT
OPERATIONS:

Net investment
loss(1). . . . . . . . (.08)(2) (.18)(2) (.18)(2) (.12)(3) (.30)(3) (.30)(3) (.05) (.21) (.21)

Net realized and
unrealized gain
(loss) on
investments. . . . . 4.01 3.90 3.90 6.00 5.89 5.89 4.93 4.89 4.89
--------- --------- --------- --------- --------- --------- --------- --------- ---------

Total gain (loss) from
investment
operations . . . . . 3.93 3.72 3.72 5.88 5.59 5.59 4.88 4.68 4.68
--------- --------- --------- --------- --------- --------- --------- --------- ---------

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 $22.18 $21.85 $21.85
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN(4). . . . . . 14.83%(2) 14.37%(2) 14.37%(2) 26.53%(3) 25.60%(3) 25.60%(3) 28.21% 27.26% 27.26%

RATIOS/SUPPLEMENTAL
DATA:

Net assets, end of
period (in
thousands) . . . . . $165,823 $62,923 $37,009 $145,469 $47,143 $26,092 $122,322 $27,462 $15,105

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) 1.9% 2.6% 2.6%

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) (0.3)% (1.0)% (1.0)%

Portfolio turn
over rate. . . . . . 28.7% 28.7% 28.7% 41.9% 41.9% 41.9% 26.5% 26.5% 26.5%

Average
commission rate
paid per share(6). . $0.0597 $0.0597 $0.0597 $0.0585 $0.0585 $0.0585 N/A N/A N/A

Inception
December 17,
For the Year Ended December 31, 1990) to
-------------------------------------------------------------------- December 31,
1994 1993 1992 1991 1990
---------------------------------- ---------- --------- --------- -------------
Class A Class B Class C Class A Class A Class A Class A
--------- --------- --------- --------- --------- --------- -------------
<S> <C> <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 $ 10.00
--------- --------- --------- --------- --------- --------- -------------

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 (.03)
--------- --------- --------- --------- --------- --------- -------------

Total gain (loss) from
investment
operations . . . . . .18 .15 .15 (0.9) .61 6.73 (.03)
--------- --------- --------- --------- --------- --------- -------------
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 $ 9.97
--------- --------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- --------- -------------

TOTAL RETURN(4). . . . . . 1.05% 0.88% 0.88% (0.52)% 3.67% 67.64% (.37)%

RATIOS/SUPPLEMENTAL
DATA:

Net assets, end of
period (in
thousands) . . . . . $100,596 $ 6,722 $ 4,283 $134,284 $195,067 $64,156 $ 528

Ratio of expenses to
average net
assets(5). . . . . . 1.9% 2.6% 2.6% 1.8% 1.9% 1.9% 1.2%

Ratio of net
investment loss
to average net
assets(5). . . . . . (0.2)% (0.9)% (0.9)% -- (0.3)% (0.1)% 0.4%

Portfolio turn
over rate. . . . . . 23.2% 23.2% 23.2% 2.2% 12.9% 27.6% 0.9%

Average
commission rate
paid per share(6). . N/A 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 The 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 administrative 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.

(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 Fifty Nifty
Fund.

14, 15
<PAGE>

Phoenix-Engemann Global Growth Fund(7)
------------------------------------------------------------------------------------------------------
Inception
(November
1, 1993)
For the Six-Months Ended For the Year Ended December 31, through
June 30, 1997 -------------------------------------------------------- December
(Unaudited) 1996 1995 1994 31, 1993
------------------------------------------------------------------------------------------------------
Class A Class B Class C Class A Class B(5) Class C(5) Class A Class A Class A
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <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 $10.00
--------- --------- --------- --------- --------- --------- --------- --------- ---------

GAIN (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(1) . . . . . . . . (.04) (.10) (.07) .03(2) (.08) (.04) .24(2) .10(2) .01(2)

Net realized and
unrealized
gain on
investments . . . . . . . 2.92 2.89 2.87 3.55 1.82 1.34 3.11 2.78 1.17
--------- --------- --------- --------- --------- --------- --------- --------- --------

Total gain from
investment operations. . 2.88 2.79 2.80 3.58 1.74 1.30 3.35 2.88 1.18
--------- --------- --------- --------- --------- --------- --------- --------- ---------

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 $11.18
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN(3). . . . . . . 15.11% 14.65% 14.71% 21.77%(2) 9.98% 7.28% 23.84%(2) 25.76%(2) 11.80%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (in
thousands) . . . . . . . $7,634 $2,197 $1,725 $7,654 $874 $106 $3,203 $141 $112
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) 0.0%(2)
Ratio of net
investment income
(loss) to average
net assets(4). . . . . . (0.4)% (1.1)% (1.1)% 0.1%(2) (1.9)% (1.6)% 1.4%(2) 0.8%(2) 0.8%(2)
Portfolio turnover
rate . . . . . . . . . . 93.1% 93.1% 93.1% 220.3% 220.3% 220.3% 29.0% 479.3% 215.8%
Average commission
rate paid per
share(6) . . . . . . . . $0.0150 $0.0150 $0.0150 $0.0301 $0.0301 $0.0301 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 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 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.
(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.

16
<PAGE>

Phoenix-Engemann Small & Mid-Cap Growth Fund7
---------------------------------------------------------------------------------------------
Inception
(October
10, 1994)
For the Six-Months Ended For the Year Ended December 31, through
June 30, 1997 --------------------------------------------- December
(Unaudited) 1996 1995 31, 1994
---------------------------------------------------------------------------------------------
Class A Class B Class C Class A Class B(5) Class 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 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% 3.41% 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 N/A 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 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. Absent the waivers and reimbursement, 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, 1994 (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.

17
<PAGE>

Phoenix-Engemann Value 25 Fund5
---------------------------------------------
Inception
(December
17, 1996)
through
For the Six-Months Ended December
June 30, 1997 31, 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 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 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.

<PAGE>

COMPARISON OF CLASSES. The following table compares certain aspects relating to
the purchase of shares of the three Classes:

Class A Class B Class C
___________________
<S> <C> <C> <C>
Sales Charges . . . . . . Initial sales charge CDSC of 5% to 3% No initial sales
at time of investment applies to any charge; CDSC of
of up to 5.50%, shares redeemed 1% applies to any
depending on amount within the first shares of each of
of investment. four years the Global Growth,
following their Small & Mid-Cap
On investments of purchase; no Growth and Value
$1 million or more, CDSC after four 25 Funds redeemed
no initial sales years. within the first
charge. year.

12b-1 Distribution Fee . None. 0.75% each year 0.75% each year.
for the first No conversion to
six years. At Class A shares.
the beginning
of the seventh
year, Class B
shares convert
automatically to
Class A shares
(with no sales
charge).

Service Fee . . . . . . . 0.25% each year. 0.25% each year. 0.25% each year.

</TABLE>
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.

19
<PAGE>

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 Manager. 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 Manager'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 Manager'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 Manager
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 Manager 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 Manager. 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

20
<PAGE>

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 a limited
extent preferred stocks, warrants, and convertible debt obligations, if deemed
appropriate by the Manager in meeting the Fund's objective.

THE BALANCED RETURN FUND. The Balanced Return Fund seeks to achieve its
investment objective through a balanced approach using moderate asset allocation
by its Manager through investments in high-quality growth companies and U.S.
Government securities.

The Manager 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 Manager'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 Manager 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 Manager 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

21
<PAGE>

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 Manager 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. 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.

Although the Global Growth Fund intends to primarily invest in securities
of companies located in developed countries, the Fund 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 Manager 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.

At times the Manager 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 Manager 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 Manager 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

22
<PAGE>

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 Manager 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 Manager
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 Manager'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 Manager'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 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 Policies" 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 Manager believes offer the
best potential for current dividend yield and long-term growth of capital.

23
<PAGE>

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 Manager 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 Manager generally will look for one or more of the
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 Manager may invest those assets in
other equity securities that the Manager 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 WITH SPECIAL RISKS

Certain investment practices which may be used by one or more of the Funds
involve 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

24
<PAGE>

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.

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
Manager 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
Manager, 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

25
<PAGE>

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 Manager'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 total
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

26
<PAGE>

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 Manager believes present opportunities for
capital growth. A special situation arises when, in the opinion of the Manager,
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; 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.

27
<PAGE>

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 POLICIES

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 A SINGLE INDUSTRY.

Each Fund will not invest more than 25% of its total assets in the
securities of issuers in any one industry.

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) 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.

(e) UNSEASONED COMPANIES.

As a matter of operating policy, the Funds may invest to a limited extent
in securities of unseasoned companies and new issues. The Manager regards a
company as unseasoned when, for example, it is relatively new to or not

28
<PAGE>

yet well established in its primary line of business. 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.

(f) 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.

(g) TEMPORARY DEFENSIVE INVESTMENTS.

From time to time, depending on the Manager'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.

(h) INVESTMENT IN OTHER INVESTMENT COMPANIES.

As a matter of operating policy, 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.

(i) 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 Manager have certain
interests, and the borrowing of not

29
<PAGE>

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 Objective and Policies."

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 in the
Internal Revenue Code of 1986, as amended (the "Code") 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
Global Growth Fund is expected to be 20%-100%. The annual portfolio turnover
rate for the Small & Mid-Cap Growth Fund is not expected to exceed 150%. The
annual portfolio turnover rate for the Value 25 Fund is not expected to exceed
200%. However, from time to time, the annual portfolio turnover rate for each
Fund may be higher than these projections. High portfolio activity increases a
Fund's transaction costs, including brokerage commissions. See "Financial
Highlights" above.

ALTERNATIVE PURCHASE ARRANGEMENTS

Each Fund offers investors three Classes of shares which bear sales and
distribution charges in different forms and amounts:

CLASS A SHARES. An investor who purchases Class A shares pays an up-front
sales charge at the time of purchase of up to 5.50% of the public offering price
per share. Certain purchases of Class A shares may also qualify for reduced
sales charges, and purchases of $1 million or more are made at net asset value
with no sales charge. Class A shares are not subject to any charges when they
are redeemed, nor are they subject to a 12b-1 distribution fee. Accordingly,
Class A shares pay correspondingly higher dividends per share, to the extent any
dividends are paid, than Class B shares or Class C shares. However, because
initial sales charges are deducted at the time of purchase, investors purchasing
Class A shares would not have all of their funds invested initially and,
therefore, would initially own fewer shares. See "Purchase of Shares - Initial
Sales Charge Alternative -- Class A Shares."

CLASS B SHARES. Class B shares are sold without an initial sales charge,
but are subject to a contingent deferred sales charge ("CDSC") of up to 5% if
redeemed within four years of purchase. Class B shares are subject to a 12b-1
distribution fee at the annual rate of 0.75% of the average net assets
attributable to the Class B shares. Class B shares will automatically convert
into Class A shares, based on relative net asset values, at the beginning of the
seventh year after purchase. Class B shares provide an investor the benefit of
putting all of the investor's dollars to work from the time the investment is
made, but (until conversion into Class A shares which do not pay a 12b-1
distribution fee) will have a higher expense ratio and pay lower dividends than
Class A shares due to the Class B 12b-1 distribution fee. Phoenix Equity
Planning Corporation (the "Distributor") will pay out of its own resources

30
<PAGE>

to the selling dealer a commission equal to 4.25% of the amount of the purchase.
See "Purchase of Shares - Deferred Sales Charge Alternative -- Class B Shares."

CLASS C SHARES. Class C shares are sold without an initial sales charge
but are subject to a CDSC of 1% if redeemed within one year of purchase (CDSC
applicable to the Global Growth, Small & Mid-Cap Growth and Value 25 Funds
only). Class C shares are subject to a 12b-1 distribution fee at the annual
rate of 0.75% of the average net assets attributable to the Class C shares.
Class C shares have no conversion feature, and therefore purchasers of Class C
shares should expect to pay the 12b-1 distribution fee for as long as the shares
are owned. The distribution fee paid by Class C shares will cause them to have
a higher expense ratio and to pay lower dividends, to the extent any dividends
are paid, than Class A shares. The Distributor will pay out of its own
resources to the selling dealer a commission equal to 1% of the amount of the
purchase. See "Purchase of Shares - Pay-As-You-Go Alternative -- Class C
Shares."

WHICH PURCHASE ARRANGEMENT IS BETTER FOR YOU? The decision as to which
Class of shares provides a more suitable investment for a particular investor
depends on a number of factors, including the amount and intended length of the
investment, whether the investor wishes to receive distributions in cash or to
reinvest them in additional shares of a Fund, and other circumstances.
Investors making investments that qualify for reduced sales charges might
consider Class A shares. Investors who prefer not to pay an initial sales
charge and who plan to hold their investment for at least seven years might
consider Class B shares. Investors who prefer not to pay an initial sales
charge and who are not sure of their intended holding period might consider
Class C shares. To assist investors in making this determination, the tables
under the caption "Expense and Fee Tables" show examples of the charges
applicable to each Class of each Fund. Selling dealers and sales personnel may
receive different compensation depending on which Class of shares they sell.

PURCHASE OF SHARES

GENERAL

Shares of the Funds are offered continuously for purchase through
investment dealers at the public offering price next determined after a purchase
order in proper form is received by Boston Financial Data Services, Inc. (the
"Sub-Transfer Agent"), the Fund, or another authorized agent or subagent of the
Fund. The public offering price is effective for orders received by the
Sub-Transfer Agent, the Fund, or another authorized agent or subagent of the
Fund, prior to the time of the next determination of the applicable Fund's net
asset value. Orders received after the time of the next determination of the
applicable Fund's net asset value will be entered at the next calculated public
offering price. WHEN PURCHASING SHARES OF A FUND, YOU MUST SPECIFY WHETHER YOU
WISH TO PURCHASE CLASS A, CLASS B OR CLASS C SHARES. An unspecified purchase
order will be considered an order for Class A shares.

The public offering price per share is equal to the net asset value per
share, plus a sales charge in the case of Class A Shares as described below.
Reduced sales charges apply to quantity purchases of Class A shares made at one
time by (i) an individual, (ii) members of a family (I.E., an individual, spouse
and children or grandchildren under age 21), or (iii) a trustee or fiduciary of
a single trust estate or a single fiduciary account. (See also "Rights of
Accumulation" below.) For Class B shares and Class C shares, the public
offering price is equal to the net asset value per share with no initial sales
charge.

31
<PAGE>

INITIAL SALES CHARGE ALTERNATIVE - CLASS A SHARES

The public offering price of Class A shares for purchasers choosing the
initial sales charge alternative is the net asset value per share plus a sales
charge depending upon the amount purchased, as described in the following table.

SALES CHARGE AS PERCENTAGE OF
PUBLIC NET DEALER COMMISSION

AMOUNT OF PURCHASE OFFERING AMOUNT AS PERCENTAGE OF

AT THE PRICE INVESTED THE PUBLIC OFFERING PRICE
PUBLIC OFFERING PRICE
- ---------------------------- ----- -------- ---------------------------
<S> <C> <C> <C>

Less than $50,000 . . . . . . . . . . . . . . . 5.50% 5.82% 5.00%
$50,000 but less than $100,000. . . . . . . . . 4.75% 4.99% 4.25%
$100,000 but less than $250,000 . . . . . . . . 3.75% 3.90% 3.25%
$250,000 but less than $500,000 . . . . . . . . 2.50% 2.56% 2.00%
$500,000 but less than $1,000,000 . . . . . . . 2.00% 2.04% 1.75%
$1,000,000 or more. . . . . . . . . . . . . . . None None 1.00%*

</TABLE>

_________________
* Paid by the Manager from its own resources, as described below under
"Purchase at Net Asset Value -- Class A Shares."

RIGHTS OF ACCUMULATION -- CLASS A SHARES

The reduced sales charges applicable to purchases of Class A shares apply
on a cumulative basis over any period of time. Thus, the value of all Class A
shares of all of the Funds in The Phoenix-Engemann Group of Mutual Funds owned
by an investor (including the investor's own account, Individual Retirement
Account ("IRA"), spousal or other account), taken at the current net asset
value, can be combined with a current purchase of Class A shares of any of the
Funds to determine the rate of sales charge applicable to the current purchase.
In order to receive the cumulative quantity reduction, the existing Class A
shares of all of the Funds held by an investor must be called to the attention
of the Distributor at the time of the current purchase. Rights of accumulation
are not available for purchases of Class B shares or Class C shares.

LETTER OF INTENT -- CLASS A SHARES

An investor may qualify for an immediate reduced sales charge on a purchase
of Class A shares of any of the Funds by completing the Letter of Intent section
of the Investment Application (the "Letter of Intent"), in which the investor
states an intention to purchase during the next 13 months a specified amount of
Class A shares which, if made at one time, would qualify for a reduced sales
charge. Class A shares of any of the Funds acquired within 90 days prior to the
first order under the Letter of Intent may be used to satisfy the intended
purchase amount. The terms of the Letter of Intent include provisions granting
a security interest to the Distributor in 5% of the amount of the investor's
total intended purchase to assure that the full applicable sales charge will be
paid if the investor does not complete the intended purchase. A minimum initial
investment equal to 5% of the total intended amount is required in the Class A
shares of one of the Funds. Additional information regarding the Letter of
Intent is provided in the Statement of Additional Information. Letters of
Intent are not available for purchases of Class B shares or Class C shares.

32
<PAGE>

PURCHASE AT NET ASSET VALUE -- CLASS A SHARES

Class A shares may be purchased at net asset value by officers, trustees,
directors and full-time employees of the Trust, the Manager, the Distributor and
affiliates of such companies, by their family members, by direct investment
advisory clients of the Managers and their family members, and by such other
persons who are determined by the Trust's Board of Trustees to have acquired
such shares under special circumstances not involving any sales expense to the
Fund or the Distributor. Class A shares may also be purchased at net asset
value by registered broker-dealers and their affiliates, by their registered
personnel and employees and by their immediate family members, in accordance
with the internal policies and procedures of the broker-dealer. Class A shares
may also be acquired at net asset value by unit trusts, insurance companies or
other separate accounts including accounts at broker-dealers or advisers who
provide additional consulting or asset allocation services for the benefit of
their clients and funds organized and offered outside of the United States, and
by broker-dealers who charge their brokerage clients an asset-based fee in lieu
of brokerage commissions, and which acquire and hold such shares of the Funds as
part of a program or separate offering being made by them.

Class A shares may be purchased at net asset value with no sales charge by
investors who are existing Class A shareholders of any of the Funds if their
initial purchases (excluding shares of the Balanced Return Fund purchased at net
asset value during the special 1992 and 1993 offering periods) were made at net
asset value; purchases at net asset value apply only to purchases for
preexisting accounts and new accounts which are directly or indirectly
beneficially owned by such shareholder. Such sales are made with the
understanding by the purchaser that the purchase is made for investment purposes
and that the shares will not be transferred or resold except through redemption
or repurchase by or on behalf of the Funds. An investor must indicate
eligibility for this privilege at the time of the investment. The Manager or
the Distributor may, in its discretion, waive the minimum initial investment
requirements for certain of these investors.

Class A shares may be purchased by any single purchaser at net asset value
with no sales charge in amounts of $1 million or more in one or more of the
Funds, and may also be purchased at net asset value by employee benefit plans
qualified under Section 401(a) of the Code, including salary reduction plans
qualified under Section 401(k) of the Code, subject to minimum requirements with
respect to number of employees or amount of purchase, which may be established
from time to time by the Distributor. Currently, the Distributor has not
established any such minimum requirements. Employee benefit plans not qualified
under Section 401(a) of the Code may be afforded the same privilege if they meet
the above requirements as well as the uniform criteria for qualified groups, if
any, established by the Distributor from time to time to enable the Distributor
to realize economies of scale in its sales efforts and sales-related expenses.

Class A shares may also be purchased at net asset value by trust companies
and other financial institutions, bank trust departments and fee-based financial
planners and investment advisors for funds or accounts over which they exercise
exclusive discretionary investment authority and which are held in a fiduciary,
agency, advisory, custodial or similar capacity. Such purchases are also
subject to minimum requirements with respect to amount of purchase which may be
established by the Distributor from time to time. Currently, the Distributor
has not established any such minimum requirements. Such institutions may charge
their clients transaction or other fees connected with the purchase of Fund
shares.

If an investment in Class A shares meeting the above-referenced
requirements is made through a dealer who has executed a dealer agreement with
respect to the Funds, the Manager may pay out of its own resources a one-time
fee to such dealers, as follows: 1% on purchases up through $2 million, plus
0.80% on the next $1 million, plus 0.20% on the next $2 million, and 0.10% on
the excess over $5 million. The entire amount of such fee will be paid

33
<PAGE>

following settlement of each purchase. Such transactions must be brought to the
attention of the Distributor at the time of the initial investment. In lieu of
this one-time fee, the Manager may pay out of its own resources to dealers or
other persons who provide certain recordkeeping and administrative services
related to qualified employee benefit plans invested in the Funds, a continuing
fee of up to 0.20% per annum of the Funds' assets represented by such
investments. In addition, the Manager pays to Merrill, Lynch, Pierce, Fenner &
Smith Incorporated ("ML"), out of the Manager's own resources, for additional
shareholder services and shareholder account maintenance, a continuing quarterly
fee of up to .15% per annum of the aggregate net asset value of the Class A
shares of any Fund held by customers of ML for more than four years.

DEFERRED SALES CHARGE ALTERNATIVE -- CLASS B SHARES

GENERAL. Investors choosing the deferred sales charge alternative may
purchase Class B shares of any Fund at net asset value per share without the
imposition of a sales charge at the time of purchase. The Class B shares are
sold without an initial sales charge so that the Fund and the investor will
realize the effect of having the full amount of the investor's purchase payment
available for investment by the Fund.

Proceeds from the CDSC assessed on shares redeemed within four years from
the date of purchase will be paid to the Distributor and used in whole or in
part by the Distributor to defray its expenses in providing distribution-related
services to the Funds in connection with the sale of its Class B shares, such as
the payments of an up-front commission by the Distributor to selected dealers
and agents for selling Class B shares. The combination of the CDSC and the
Class B distribution fee facilitates the ability of the Funds to sell the
Class B shares without a sales charge being deducted at the time of purchase.

CONTINGENT DEFERRED SALES CHARGE. Class B shares which are redeemed within
four years of purchase will be subject to a CDSC at the rates set forth below
charged as a percentage of the dollar amount subject thereto. The charge will
be assessed on an amount equal to the lesser of the original cost of the shares
being redeemed or their net asset value at the time of redemption. Accordingly,
no sales charge will be imposed on increases in net asset value above the
initial purchase price. In addition, no sales charge will be assessed on shares
derived from reinvestment of dividends or capital gains distributions.

The amount of the CDSC, if any, will vary depending on the number of years
from the time of payment for the purchase of Class B shares until the time of
redemption of such shares (the "CDSC Period"), as described below:

CDSC as a
Percentage of
Dollar Amount
Year Since Purchase Subject to Charge
------------------- -----------------

First . . . . . . . . . . . . . . . . . . . . . . . .5%
Second. . . . . . . . . . . . . . . . . . . . . . . .4%
Third . . . . . . . . . . . . . . . . . . . . . . . .3%
Fourth. . . . . . . . . . . . . . . . . . . . . . . .3%
Fifth and Thereafter. . . . . . . . . . . . . . . . .None

In determining whether a CDSC is applicable to a redemption of Class B
shares, the calculation will be determined in the manner that results in the
lowest rate being charged. Therefore, it will be assumed that the redemption is
first of any Class B shares representing capital appreciation, second of Class B
shares acquired

34
<PAGE>

pursuant to reinvestment of dividends or distributions, and third of Class B
shares held for the longest period of time.

To illustrate, assume an investor purchased 100 shares at $10 per share (at
a cost of $1,000) and during the second year after purchase, the net asset value
per share is $12 and, during such time, the investor has acquired 10 additional
shares through reinvestment of dividends. If the investor then makes his first
redemption of 50 shares (proceeds of $600), 10 shares will not be subject to the
CDSC because they were acquired through reinvestment of dividends. With respect
to the remaining 40 shares, the charge is applied only to the original cost of
$10 per share and not to the increase in net asset value of $2 per share.
Therefore, $400 of the $600 redemption will be charged at a rate of 4% (the
applicable rate in the second year after purchase), for a total CDSC payable of
$16, which will be deducted from the redemption proceeds.

CLASS B CONVERSION FEATURE. Class B shares include all shares purchased
pursuant to the deferred sales charge alternative which have been outstanding
for less than the period ending on the first business day of the month next
following the sixth anniversary of their purchase (the "Class B Holding
Period"). At the end of the Class B Holding Period, Class B shares will
automatically convert to Class A shares and will no longer be subject to the
Class B distribution fee or a CDSC. Such conversion will be on the basis of the
relative net asset values of the two Classes, without the imposition of any
sales charge, fee or other expense. The purpose of the conversion feature is to
eliminate the distribution fee paid by the holders of Class B shares that have
been outstanding for a period of time sufficient for the Distributor to have
been compensated for having incurred the initial distribution expenses related
to those Class B shares.

For purposes of conversion to Class A shares, Class B shares purchased
through the reinvestment of dividends and distributions paid in respect of
Class B shares in a shareholder's account will be considered to be held in a
separate sub-account. Each time any Class B shares in the shareholder's account
(other than those in the sub-account) convert to Class A, a pro rata portion of
the Class B shares in the sub-account will also convert to Class A shares.

PAY-AS-YOU-GO ALTERNATIVE -- CLASS C SHARES

Investors choosing the pay-as-you-go alternative purchase Class C shares at
the net asset value per share without the imposition of a sales charge either at
the time of purchase or upon redemption (provided such shares are held for more
than one year). Class C shares are sold without an initial sales charge so that
the Fund will receive the full amount of the investor's purchase payment and
with a CDSC imposed only on shares of the Global Growth Fund, Small & Mid-Cap
Growth Fund, and Value 25 Fund redeemed within the first year so that the
investor will receive as proceeds upon redemption the entire net asset value of
his or her Class C shares. The continuing 12b-1 distribution fee, which the
Distributor intends to reallow to the selling dealer in addition to an up-front
commission paid by the Distributor from its own resources, enables the Fund to
sell Class C shares without either an initial sales charge or CDSC that extends
beyond one year. Class C shares redeemed within the first twelve months after
their purchase may not be repurchased by the same investor until at least twelve
months have elapsed from the date of their redemption. Class C shares do not
convert to any other Class of shares of the Fund, and will thus have a higher
expense ratio and pay correspondingly lower dividends, if any, than Class A
shares.

WAIVERS OF CONTINGENT DEFERRED SALES CHARGE. The CDSC is waived on
redemptions of shares (i) following the death or disability (as defined in
Section 72(m)(7) of the Code) of a shareholder if redemption is made within one
year of death or disability, (ii) to the extent that the redemption represents a
minimum required distribution from an IRA or other retirement plan to a
shareholder who has attained the age of 70 1/2, (iii) made under a Systematic
Withdrawal Plan (as described below), with some limitations, (iv) followed by a
reinvestment in such shares

35
<PAGE>

effected within 60 days of the redemption (this allows investors who redeemed or
otherwise had second thoughts about having redeemed their Class B or Class C
shares to reinvest the proceeds in such shares plus the amount of any CDSC
previously paid), and (v) by tax-exempt employee benefit plans resulting from
the enactment of any law or the promulgation by the Internal Revenue Service
(the "IRS") or the Department of Labor of any regulation pursuant to which
continuation of the investment in such shares would be improper, subject to the
Funds' right to require an opinion of counsel to the effect that the
continuation of such an investment would be improper. Upon any reinvestment
made in accordance with clause (iv) above, which is a one-time privilege, the
amount reinvested will be subject to the same CDSC to which such amount was
subject prior to the redemption, and the CDSC Period with respect to the amount
will continue to run from the original investment date, but will be extended by
the number of days between the redemption and the reinvestment dates.

PURCHASE PROCEDURE

The principal underwriter and distributor for the shares of the Funds is
Phoenix Equity Planning Corporation, 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Distributor"). Generally, shares may be purchased only
through investment dealers that have selling agreements with the Distributor. It
is the responsibility of such investment dealers to transmit orders so they will
be received by the Distributor (in care of the Sub-Transfer Agent) on a timely
basis. Orders placed with dealers prior to that day's determination of the
applicable Fund's offering price must be received by the Distributor (c/o the
Sub-Transfer Agent) prior to its close of business on the same day.

Investment applications, accompanied by a check, in U.S. dollars, payable
to "The Phoenix-Engemann Group of Mutual Funds," should be sent by the
investment dealer to the Distributor in care of the Sub-Transfer Agent, P.O. Box
8505, Boston, Massachusetts 02266-8505. No subscriptions will be accepted
without payment. Third party checks will only be accepted if they are payable to
an existing shareholder of the Fund who is an individual and if they are
endorsed over to the Phoenix-Engemann Group of Mutual Funds. With respect to
the redemption of shares purchased by check or periodic automatic investment,
such requests will only be effected after the Fund has assured itself that good
payment has been collected for the purchase of shares, which may take up to 15
days. For direct purchases by an investment dealer for its client, payment for
the shares purchased must be received by the dealer. Full and fractional shares
will be issued for the amount of the purchase. PURCHASE ORDERS MUST SPECIFY
WHICH CLASS OF EACH FUND IS BEING PURCHASED, OR THEY WILL BE DEEMED ORDERS FOR
THE PURCHASE OF CLASS A SHARES.

The minimum initial investment for each Fund is $1,000 per account ($250
for individual retirement accounts and custodial accounts for minors under the
Uniform Transfers to Minors Act and for the initial purchase under a Systematic
Purchase Plan). Minimum additional investments are $50. The Manager or
Distributor may, in its discretion, reduce or waive the minimum investment
requirements.

The Funds and the Distributor each reserve the right in its sole discretion
to reject any purchase order in whole or in part, and may suspend the offering
of each Fund's shares at any time. For investors wishing to purchase shares by
wire, please call the Funds or your investment dealer for information on the
procedures to be followed.

SHAREHOLDERS' OPEN ACCOUNTS

When an investor purchases shares in a Fund, the appropriate Fund opens a
Shareholder's Open Account for that investor or for the investment dealer
holding the Fund's shares for the investor. Any additional shares purchased are
likewise credited to the Shareholder's Open Account.

36
<PAGE>

The Funds maintain a continuous permanent record of each Shareholder's Open
Account and send a written statement of every transaction in the account,
including information concerning the status of the account. These statements
provide an annual record of investments in shares of each Fund, which are held
for the shareholder in uncertificated form by the appropriate Fund's transfer
agent. No share certificates are issued.

SYSTEMATIC PURCHASE PLAN

Under the Funds' Systematic Purchase Plan, a shareholder may arrange to
make additional purchases (minimum $50) of Fund shares automatically on a
monthly basis by electronic funds transfer from the shareholder's checking
account if the bank which maintains the account is a member of the Automated
Clearing House, or by preauthorized checks drawn on the shareholder's bank
account. A shareholder may, of course, terminate the program at any time.
Investors may obtain more information concerning this program, including the
application form, from their investment dealer or the Funds.

The market value of the shares of each Fund is subject to fluctuation.
Before undertaking any plan for systematic investment, the investor should keep
in mind that such a program does not assure a profit or protect against a loss.

RETIREMENT PLANS

Individuals may purchase shares of the Funds through an Individual
Retirement Account ("IRA") available from the Funds or through other established
retirement plans. An IRA using a trust account maintained by Pasadena National
Trust Company, an affiliate of the Manager, is available with no separate fees.

<PAGE>

PURCHASING SHARES:

- --------------------------------------------------------------------------------
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
- --------------------------------------------------------------------------------

By mail: See "Purchase Procedures" for $50 minimum for subsequent
initial minimum requirements. purchases. Complete the form
Complete account application at the bottom of a recent
in its entirety, sign and account statement, make your
return with your check made check payable to "The Phoenix-
payable to The "Phoenix-Engemann Engemann Group of Mutual
Group of Mutual Funds" to the Funds", write your account
address listed on the account number on the check and mail
application. in the envelope provided
with your account statement.
- --------------------------------------------------------------------------------
By wire: Not currently available. Instruct your bank to wire
funds to:

State Street Bank and Trust
Boston, MA
ABA #011000028
DDA #99046526

Also reference:
- Name of Phoenix-Engemann
Fund specifying Class A,
B, or C shares
- Fund account number
- --------------------------------------------------------------------------------
By Visit any investment dealer Mail directly to your
contacting who is registered in the state investment dealer's address
your where the purchase is made and printed on your account
investment who has a sales agreement with statement, or to the Sub-
dealer: Phoenix Equity Planning Transfer Agent at P.O. Box
Corporation 8505, Boston, MA 02266-8505
- --------------------------------------------------------------------------------

EXCHANGE PRIVILEGE

Shares of a specific Class of one Fund may only be exchanged for shares
of that same Class of another of the Funds. Such exchanges will be on the
basis of the shares' relative net asset values (with no sales charge,
exchange fee or CDSC at the time of the exchange.) Shares of a Fund may not
be exchanged for shares of another Fund unless the amount exchanged satisfies
the other Fund's minimum investment requirement. Exchange instructions may be
given to the Funds in writing in care of the Sub-Transfer Agent, P.O. Box
8505, Boston, Massachusetts 02266-8505, or to the Phoenix-Engemann Group
Service Center by telephone at (800) 648-8050. Exchanges, which involve the
redemption of shares of a Fund and the purchase of shares of another Fund,
may only be made in states where shares of such Funds are qualified for sale,
and investors should note that an exchange may result in recognition of a
gain or loss for income tax purposes. Exchange privileges may be modified or
suspended by the Funds upon 60-days' prior notice to shareholders.

38
<PAGE>

For purposes of computing both (i) the time remaining before Class B shares
of a Fund ("New Class B shares") acquired through an exchange for Class B shares
of another Fund ("Original Class B shares") convert to Class A shares of the
"new" Fund and (ii) the CDSC, if any, payable upon disposition of the New Class
B shares, the holding period of the Original Class B shares is added to the
holding period of the New Class B shares. For purposes of computing the CDSC,
if any, payable upon the disposition of Class C shares of a Fund ("New Class C
Shares") acquired through an exchange for Class C shares of another Fund
("Original Class C Shares"), the holding period of the Original Class C shares
is added to the holding period of the New Class C Shares. For example, if
shares of the Original Fund are purchased in Year One and are exchanged into
shares of the New Fund in Year Three, the holding period of the New Fund shares
is computed from Year One.

TELEPHONE EXCHANGE PRIVILEGE. Shareholders will be deemed to have elected
the telephone exchange privilege unless they indicate to the contrary by marking
the appropriate section of the investment application. By electing the
telephone exchange privilege, investors authorize the Funds to act upon
instructions by telephone to exchange shares from the Fund account for which
such service has been authorized. (See "Telephone Redemption Privilege" below
for information regarding the use of telephone authorizations.)

GENERAL

Class A shares of the Funds may, on a one-time only basis by any
shareholder, be repurchased at the then current net asset value with no sales
charge up to the amount of any redemption of such shares by the shareholder
within the prior 60-day period. Shares of the Funds may also be sold in foreign
jurisdictions through financial institutions and intermediaries at their current
net asset value plus a sales charge or commission which is different from those
described in this Prospectus. Telephone orders from dealers and requests for
information from dealers or shareholders will be recorded for the protection of
the Funds.

The Distributor, at its expense, will from time to time also provide
additional compensation to dealers who sell shares of any of the Funds.
Compensation may include financial assistance to dealers in connection with
conferences, sales training or promotional programs for their employees,
seminars for the public, advertising campaigns regarding one or more of the
Funds and/or other dealer-sponsored special events. In some instances, this
compensation will be made available only to dealers whose representatives have
sold or are expected to sell significant amounts of such shares. Dealers may
not use sales of any of the Funds' shares to qualify for this compensation to
the extent such may be prohibited by the laws or regulations of any state or any
self-regulatory agency, such as the NASDR. Compensation may include payment for
travel expenses, including lodging at luxury resorts, incurred in connection
with trips taken by invited registered representatives and members of their
families to locations within or outside of the United States for meetings or
seminars of a business nature.

REDEMPTION OF SHARES

GENERAL

The Funds will redeem all or any portion of a shareholder's account. When
requested, proceeds will be held subject to prior collection by the Funds'
custodian of the purchase price of the shares being redeemed. With respect to
the redemption of shares purchased by check or periodic automatic investment,
such requests will only be effected after the Fund has assured itself that good
payment has been collected for the purchase of shares, which may take up to 15
days. Except for any CDSC which may be applicable to redemptions of Class B or
Class C shares, there is no redemption charge and the redemption price will be
the net asset value per share next determined after receipt in proper form of
the redemption request by the Sub-Transfer Agent, the Fund, or another
authorized agent or subagent of the Fund. See "Determination of Net Asset
Value."

<PAGE>

Shareholders may redeem shares by sending a signed request for redemption
to their investment dealer or to the Funds c/o Boston Financial Data Services,
Inc., P.O. Box 8505, Boston, Massachusetts 02266-8505. IF AN INVESTOR OWNS MORE
THAN ONE CLASS OF SHARES IN A FUND, THE REDEMPTION REQUEST MUST SPECIFY WHICH
CLASS IS BEING REDEEMED. ABSENT SUCH SPECIFICATION, THE SHAREHOLDER'S SHARES
WILL BE REDEEMED IN THE FOLLOWING ORDER: FIRST, CLASS C SHARES; SECOND, CLASS A
SHARES; AND THIRD, CLASS B SHARES.

The signature on the redemption request must be guaranteed by an eligible
guarantor institution, unless the proceeds are less than $50,000 and are payable
to the shareholder and sent to the shareholder's current address on the Fund's
records (provided that the shareholder's address of record has not been changed
within the preceding 30 days) or directly to a predesignated bank account (see
below). Corporations, partnerships, trusts and other fiduciaries may be required
to furnish further documentation, such as certified copies of trust documents,
corporate resolutions, or tax waivers for redemption purposes. Investment
dealers holding shares of a Fund for the account of their clients may also
require the Fund to repurchase such shares at the next determined net asset
value (less the CDSC, if any, with respect to the Class B and Class C shares).

Because of the expense of maintaining small accounts, a Fund, at its
option, may redeem accounts with a market value of $800 or less as a result of
redemptions, after a prior written notice of at least 60 days to provide the
shareholder an opportunity to purchase sufficient shares to bring the account up
to a value of at least $1,000 ($200 and $250, respectively, for accounts
requiring an initial minimum investment of $250).

WIRE TRANSFERS

A wire transfer procedure is available for redemptions made directly
through the Funds, which permits the proceeds of a redemption of the Fund's
shares to be wired to a designated bank account on the second business day
following the redemption. A shareholder desiring to redeem shares by this
procedure must provide the Sub-Transfer Agent with a written authorization,
including specific bank account information, which instructs the Sub-Transfer
Agent to honor wire redemption requests. A fee of $10 may be deducted from the
proceeds of each redemption to cover the costs of the wire transfer. This
privilege may be modified or terminated at any time by the Funds or the
Sub-Transfer Agent upon notice to shareholders.

TELEPHONE REDEMPTION PRIVILEGE

A shareholder will be deemed to have elected the telephone redemption
privilege unless he or she indicates to the contrary by marking the appropriate
section of the investment application. By electing the telephone redemption
privilege, shareholders authorize the Funds or the Sub-Transfer Agent to act
upon instructions by telephone, which are reasonably believed to be genuine, to
redeem shares from the Fund account for which such service has been authorized
and, in the case of wire redemptions, to transfer the proceeds to the bank or
other account designated in the prior authorization. Shareholders agree that
the Funds and/or the Sub-Transfer Agent will be liable for any loss, expense or
cost suffered or incurred by shareholders arising out of any telephone
redemption or exchange request, including any fraudulent or unauthorized
requests, only if reasonable procedures are not followed. In an effort to
confirm that telephone requests are genuine, the Funds employ reasonable
procedures, which include requesting the taxpayer identification number and
other information known only to the shareholder, and recording the telephone
instructions.

40
<PAGE>

SYSTEMATIC WITHDRAWAL PLAN

Under a Systematic Withdrawal Plan, a shareholder with an account value in
one of the Funds of $10,000 or more may receive (or send to a third party)
periodic payments of $100 or more from the shareholder's account in that Fund on
a monthly or quarterly basis. (Minimum account value for quarterly withdrawals
is $5,000.) Shares of the applicable Class of the applicable Fund will be
redeemed as necessary in order to meet withdrawal payments. Dividends and
distributions on shares of a Class held in a Systematic Withdrawal Plan account
will be reinvested in additional shares of the same Class at net asset value. A
Class B shareholder may withdraw under a Plan up to 12% annually of the
shareholder's initial account balance of Class B shares of any Fund without
incurring a CDSC on the redemptions. The initial account balance is the amount
of the shareholder's investment in the Class B shares of a Fund on the date that
the shareholder established the Systematic Withdrawal Plan for those Class B
shares.

Purchases of additional Class A shares concurrently with periodic
withdrawals from the shareholder's account may be disadvantageous because of
sales charges applied when purchases of Class A shares are made. Purchases of
additional shares of any Class concurrently with withdrawals from the
shareholder's account may also be disadvantageous because some or all of any
loss on redemption of any Class may be disallowed under certain "wash sale"
rules for federal income tax purposes. While a Systematic Withdrawal Plan is in
effect, each additional purchase of the applicable Fund's shares must be equal
to at least three times the scheduled annual withdrawals or $5,000, whichever is
less. Shareholders should recognize that, to the extent withdrawals exceed
purchases plus any dividends and distributions reinvested, the value of their
account will be reduced and ultimately may be exhausted. Each withdrawal may
result in gain or loss which generally must be recognized for federal or state
income tax purposes.

To initiate a Systematic Withdrawal Plan, a shareholder should complete the
authorization form which may be obtained from the Funds or the shareholder's
investment dealer. The Funds and the Sub-Transfer Agent each reserve the right
to modify or terminate this privilege at any time upon notice to the
shareholder, and the Plan will terminate automatically if the value of the
shareholder's shares in the applicable Fund is reduced below $800, or upon such
Fund's receipt of notification of the death or incapacity of the shareholder.

41
<PAGE>

REDEEMING SHARES:

- --------------------------------------------------------------------------------
METHOD PROCEDURE
- --------------------------------------------------------------------------------
By writing to The Phoenix-Engemann Send a letter of instruction specifying
Group of Mutual Funds, c/o the the name of the Fund, the number of
Sub-Transfer Agent, P.O. Box 8505, shares or dollar amount to be sold,
Boston, Massachusetts 02266-8505: the Class of shares to be sold, your
name and account number. For
redemptions over $50,000, and for
certain redemptions of $50,000 or less
(trusts, corporations, partnerships and
retirement plans), additional
documentation may be required and your
signature must be guaranteed by a bank,
savings association, credit union, or
member firm of a domestic stock exchange
or the National Association of
Securities Dealers, Inc., that is an
eligible guarantor institution. You
should verify with the institution that
it is an eligible guarantor prior to
signing. Notarization by a Notary
Public is not an acceptable signature
guarantee.
- --------------------------------------------------------------------------------
By contacting your investment If you redeem shares through your
dealer: investment dealer, you may be charged
for this service. Shares held for you
in your investment dealer's street name
must be redeemed through the dealer.
- --------------------------------------------------------------------------------
By telephone-contact one of our If you have previously authorized
Mutual Fund Representatives at telephone privileges on your account
(800) 648-8050: application, you may redeem up to
$50,000 per account over the telephone,
provided the check is made payable to
the shareholder(s) of record and is sent
to the address of record (the address
must have been in effect for at least 30
days prior to the redemption). Certain
accounts cannot be processed over the
telephone (trusts, corporations,
partnerships and retirement plans) since
additional documentation may be
required.
- --------------------------------------------------------------------------------
By wire: Any redemption request that has been
received in proper order, may be wired
to the shareholder(s) bank provided the
information has been previously placed
in the computer, or if accompanied by a
signature guaranteed letter requesting
that funds be wired. A fee of $10 may
be deducted from the proceeds of each
redemption to cover the costs of the
wire transfer.
- --------------------------------------------------------------------------------

42
<PAGE>

MANAGEMENT

The Board of Trustees of the Trust oversees the business and affairs of the
Funds and exercises all powers normally associated with running a business. The
Board has delegated the management and administration of the Funds' day-to-day
operations to the Trust's officers and the Manager.

INVESTMENT MANAGEMENT AND ADMINISTRATIVE SERVICES

The Manager is Roger Engemann & Associates, Inc., a California corporation
whose office is located at 600 North Rosemead Boulevard, Pasadena, California
91107-2101. The Manager's telephone numbers are (626) 351-9686 and
(800) 882-2855 (toll-free).

Roger Engemann & Associates, Inc. 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
Insurance Company. Roger Engemann is the Chairman of the Board and President of
the Manager, Pasadena Capital and the Trust. The Manager 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 Manager as of December 31, 1996, were
approximately $5.1 billion.

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 Manager since its inception. Messrs. Mair and Tilson are both Executive
Vice Presidents of Portfolio Management of the Manager, and both have been with
the Manager since 1983. Messrs. Engemann and Mair have been Chartered Financial
Analysts ("CFAs") since 1972, and Mr. Tilson has been a CFA since 1974.

The Manager serves under an investment management agreement (the
"Management Agreement") with the Trust on behalf of the Funds. Under the
Management Agreement, the Manager furnishes investment advice and investment
management services with respect to each Fund's portfolio of securities and
investments, provides personnel, office space, facilities and equipment as may
be needed by the Funds in their day-to-day operations, and provides the officers
of the Trust. The Manager also performs, under a sub-administration agreement
(the "Sub-Administration Agreement") with Phoenix Equity Planning Corporation
(the "Administrator") administrative and shareholder servicing for the Funds.
The Administrator pays for all other normal operating expenses of each Fund,
except for the fees and expenses associated with investment management and the
service fees paid by the Funds to dealers and others and independent fiduciary
and audit expenses. The Administrator and the Sub-Administrator also provide the
Funds with fund accounting, including assistance and personnel necessary to
price the portfolio securities of each Fund, calculates each Fund's net asset
value, and maintains the books and records of each Fund's investment portfolio
as required by applicable law.

The Manager may consider a number of factors in determining which brokers
or dealers to use for the Funds' portfolio transactions. While these are more
fully discussed in the Statement of Additional Information, the factors may
include, but are not limited to, the reasonableness of commissions, the quality
of services and executions, sales of the Funds' shares, and the availability of
research which the Manager and its affiliates may lawfully and appropriately use
in their investment advisory capacity.

43
<PAGE>

MANAGEMENT AND ADMINISTRATION FEES AND EXPENSES

For the services provided under the Management Agreement, the Manager
receives a management fee from each Fund (paid monthly) computed and prorated
on a daily basis. For the Growth Fund, Nifty Fifty Fund, and the Value 25
Fund, the management fee is equal to the annual rate of 0.90% of the Fund's
average daily net assets up to $50 million, plus 0.80% of net assets over $50
million up to $500 million, plus 0.70% of net assets over $500 million. For
the Balanced Return Fund, the management fee is equal to the annual rate of
0.80% of the Fund's average daily net assets up to $50 million, plus 0.70% of
net assets over $50 million up to $500 million, plus 0.60% of net assets over
$500 million. For the Global Growth Fund, the management fee is equal to the
annual rate of 1.10% of the Fund's average daily net assets up to $50
million, plus 1.00% of net assets over $50 million up to $500 million, plus
0.90% of net assets over $500 million. For the Small & Mid-Cap Growth Fund,
the management fee is equal to the annual rate of 1.00% of the Fund's average
daily net assets up to $50 million, plus 0.90% of net assets over $50 million
up to $500 million, plus 0.80% of net assets over $500 million. For services
provided under the Administration Agreement, the Administrator receives an
administration fee from each Fund (paid monthly) computed and prorated on a
daily basis. The Administrator pays the fees of the Sub-Administrator out of
its own expense. Therefore, the Funds are responsible for the fees of the
Administrator, but are not responsible for the fees of the Sub-Administrator.
For each of the Funds, the administrative fee is equal to the annual rate of
0.60% of the Fund's average daily net assets up to $50 million, plus 0.50% of
net assets over $50 million up to $500 million, plus 0.40% of net assets over
$500 million up to $625 million, plus 0.30% of net assets over $625 million,
and is potentially subject to a partial waiver, as discussed below.

Phoenix Equity Planning Corporation, in its capacity as Administrator of
the Funds, bears the cost for all normal operating expenses of each Fund
(except for the fees and expenses, including brokerage, associated with
investment management services; the fees paid to dealers and others providing
services to shareholder accounts; the distribution fees paid by Class B
shares and Class C shares; and independent fiduciary and audit expenses)
which are normally paid directly by other investment companies, such as cost
of shareholder reports, insurance, and all fees and expenses of each Fund's
transfer agent and sub-transfer agent, dividend disbursing agent, custodian,
accountants, attorneys and other parties performing services or operational
functions for such Fund. As a result, each Fund will not incur any expenses
in connection with its normal operations other than the fees and expenses
described parenthetically above. (See "Expense and Fee Tables" beginning on
page 3)

Each Fund will be directly responsible to service providers for independent
fiduciary and audit expenses including the legal expenses of the independent
Trustees, the independent auditing expenses and expenses relating to
compensation of independent Trustees. These fees in the aggregate
historically have not exceeded two basis points (0.02%) and the economic
effect of having these fees paid directly by the Funds is de minimis. The
New Administrator has agreed to waive, when necessary, a portion of its
administration fee so that the total of each Fund's operating expenses does
not exceed, in terms of a percentage of Fund assets, the percentage which
would have resulted under the preexisting fee arrangement.

Prior to September 3, 1997, the Funds, known as Pasadena Funds, were managed
by Roger Engemann Management Co., Inc. (The "predecessor Manager"). The
predecessor Manager also served as administrator for the Funds. During the
fiscal years ended December 31, 1995 and 1994, the predecessor Manager waived
and absorbed all management and administration fees otherwise payable by the
Global Growth Fund and the Small & Mid-Cap Fund to the Manager. Also, see
the Statement of Additional Information -- "Investment Management and
Administrative Services."

Since October 1, 1996, the predecessor Manager has waived certain
administration fees otherwise payable to it by the Growth Fund, the Nifty
Fifty Fund and the Balanced Return Fund to maintain total operating expenses
for those Funds at approximately those levels which would have resulted from
application of the rate schedule for the Value 25 Fund during the same period.

44
<PAGE>

DISTRIBUTION PLANS

The Trust's Board of Trustees and the initial shareholder of the Class B
shares and Class C shares of each Fund have approved, and each Fund has entered
into, a distribution plan (each a "Plan") with the Distributor for Class B
shares and Class C shares. Under the Plans, each Fund will pay distribution fees
to the Distributor at an annual rate of 0.75% of such Fund's aggregate average
daily net assets attributable to its Class B shares and Class C shares,
respectively, to reimburse the Distributor for its distribution costs with
respect to those Classes. There is no Plan or distribution fee for the Class A
shares.

Each Plan provides that the Distributor may use the distribution fees
received from the Class covered by the Plan to pay for the distribution expenses
of that Class, including, but not limited to (i) incentive compensation paid to
the directors, officers and employees of, agents for and consultants to, the
Distributor or any other broker-dealer or financial institution that engages in
the distribution of that Class; and (ii) compensation to broker-dealers,
financial institutions or other persons for providing distribution assistance
with respect to that Class. Distribution fees may also be used for
(i) marketing and promotional activities, including, but not limited to, direct
mail promotions and television, radio, newspaper, magazine and other mass media
advertising for that Class; (ii) costs of printing and distributing
prospectuses, statements of additional information and reports of the Fund to
prospective investors in that Class; (iii) costs involved in preparing, printing
and distributing sales literature pertaining to the Fund and that Class; and
(iv) costs involved obtaining whatever information, analysis and reports with
respect to marketing and promotional activities that the Fund may, from time to
time, deem advisable with respect to the distribution of that Class.
Distribution fees are accrued daily and paid monthly, and are charged as
expenses of the Class B shares and Class C shares as accrued.

In adopting each Plan, the Board of Trustees determined that there was a
reasonable likelihood that such Plan would benefit the Fund and the shareholders
of the Class to which it relates. Information with respect to distribution
revenues and expenses is presented to the Board of Trustees quarterly for its
consideration in connection with its deliberations as to the continuance of the
Plans. In its review of the Plans, the Board of Trustees is asked to take into
consideration expenses incurred in connection with the distribution of each
Class of shares separately.

The Class B shares and Class C shares are not obligated under the Plans to
pay any distribution expense in excess of the distribution fee. Thus, if a Plan
were terminated or otherwise not continued, no amounts (other than current
amounts accrued but not yet paid) would be owed by the Class to the Distributor.

The distribution fee attributable to the Class B shares is designed to
permit an investor to purchase Class B shares through broker-dealers without the
assessment of a front-end sales charge and at the same time to permit the
Distributor to recover its costs of paying an up-front commission to
broker-dealers in connection with the sale of the Class B shares. The
distribution fee attributable to the Class C shares is designed to permit an
investor to purchase Class C shares through broker-dealers without the
assessment of a front-end sales charge, and at the same time to permit the
Distributor to compensate broker-dealers on an ongoing basis in connection with
the sale of the Class C Shares.

45
<PAGE>

Each Plan provides that it shall continue in effect from year to year
provided that a majority of the Board of Trustees of the Trust, including a
majority of the Trustees who are not "interested persons" of the Trust (as
defined in the 1940 Act) and who have no direct or indirect financial interest
in the operation of the Plan or any agreement related to the Plan (the
"Independent Trustees"), vote annually to continue the Plan. Each Plan may be
terminated at any time by vote of a majority of the Independent Trustees or of a
majority of the outstanding shares (as defined in the 1940 Act) of the Class to
which the Plan applies.

All distribution fees paid by the Funds under the Plans will be paid in
accordance with Rule 2830 of the NASDR Conduct Rule, as such Rule may change
from time to time.

SERVICE FEES AND INDEPENDENT FIDUCIARY/AUDIT EXPENSES

The Funds will also pay dealers and others, including the Funds' Manager
and 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.

In addition, the Funds will also pay for certain audit, independent
fiduciary and professional expenses like the legal expenses of the independent
Trustees, the independent auditing expenses and expenses related to compensation
of independent trustees. Such fees are not expected to exceed 0.02% per annum
of the average net asset value of the Funds' shares.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS. 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 Board, however, may declare dividends more or
less frequently. Dividends paid by a Fund, if any, with respect to Class A,
Class B and Class C shares will be calculated in the same manner at the same
time on the same day and will be in the same amount, except that the
distribution fees relating to Class B and Class C shares will be borne
exclusively by each such Class. The per share income dividends and
distributions, if any, on Class B shares and Class C shares will be lower than
the per share income dividends and distributions, if any, on Class A shares as a
result of the distribution fees applicable to the Class B and Class C shares but
not to the Class A shares.

Unless a shareholder has previously requested in writing that payment be
made in cash, dividends and capital gain distributions are reinvested in
additional shares of the applicable Fund at a purchase price equal to the net
asset value per share (without any sales charge) as of 4:15 p.m., Eastern Time,
on the dividend or distribution reinvestment date. Each shareholder's account
is subsequently credited with the purchased shares on the dividend or
distribution payment date. A shareholder may change his or her election at any
time prior to the record date for a particular dividend or distribution by
written request.

Shareholders may not receive immediate confirmation of automatic dividend
and capital gain reinvestment transactions, but may instead receive confirmation
of such transactions in a periodic statement. Shareholders can

46
<PAGE>

also obtain information on their accounts by calling the telephone number listed
below under "Shareholder Inquiries."

Any dividend or distribution paid by the Funds reduces the net asset value
per share by the per share amount of the dividend or distribution. Therefore, a
dividend or distribution paid shortly after a purchase of shares by an investor
would represent, in substance, a partial return of capital to the shareholder
(to the extent it is paid on the shares so purchased), even though it would be
subject to income taxes, as discussed below.

TAXES. Each Fund (with the exception of the Value 25 Fund which intends to
qualify and elect) has qualified and elected, and intends to continue to
qualify, to be treated as a regulated investment company under Subchapter M of
the Code. By satisfying certain requirements relating to the sources of the
Fund's income and the diversification of its assets and by distributing
substantially all of its net investment income and net realized capital gains
for each fiscal year, in addition to meeting other requirements imposed by the
Code, a Fund will not be subject to any federal income taxes to the extent its
earnings are distributed.

Dividends and capital gain distributions of a Fund, whether reinvested in
additional shares or received in cash, will be subject to current federal income
tax, except to tax-exempt shareholders which have not borrowed to purchase or
carry Fund shares. Dividends of net investment income and the excess of net
short-term capital gains over net long-term capital losses are taxable to
shareholders as ordinary income. Distributions of the excess of net long-term
capital gains over net short-term capital losses are treated as long-term
capital gains regardless of how long a shareholder has held shares of the Fund.

In the case of corporate shareholders, distributions from the Fund may
qualify for the corporate dividends-received deduction to the extent the Fund
designates the amount distributed as a qualifying dividend. Availability of the
dividends-received deduction is subject to certain holding period and
debt-financing limitations.

Under certain circumstances, depending on the percentage of a Fund's assets
invested in foreign securities, such Fund may be able to elect to pass-through
to its shareholders the pro-rata portion of income or other taxes paid by such
Fund to foreign governments during a year, which would then allow the
shareholders to deduct or claim a foreign tax credit for such amount.

Distributions will be taxable in the year in which they are received except
for certain distributions received in January, which will be taxable as if
received the prior December. Shareholders will be informed annually of the
amount and nature of each Fund's distributions, the portion, if any, that
qualifies for the corporate dividends-received deduction, the portion, if any,
that should be treated as a return of capital, and the amount, if any, of income
tax withheld or foreign taxes eligible for "pass through" to shareholders.

Additional information about taxes is set forth in the Statement of
Additional Information. The foregoing discussion has been prepared by the
management of the Funds, and does not purport to be a complete description of
all tax implications of an investment in any Fund. Shareholders should consult
their own advisers concerning the application of federal, state and local tax
laws to their particular situations.

DETERMINATION OF NET ASSET VALUE

The net asset value of the Funds is determined as of 4:15 p.m., Eastern
Time, on each day the New York Stock Exchange is open and during which a
purchase subscription or redemption request is received (or at such earlier time
as the Exchange may close). Net asset value per share is calculated by dividing
the total value of each Fund's investments and other assets, less all
liabilities, by the number of Fund shares outstanding. For this calculation,
each

47
<PAGE>

Fund's assets include accrued dividends (from their ex-dividend date) and
interest, and liabilities include accrued expenses.

In valuing a Fund's assets for calculating net asset value, portfolio
securities with readily available market quotations are valued at their market
value and other assets are valued in such manner as the Board of Trustees deems
appropriate to reflect their fair value. Foreign securities quoted in foreign
currencies are translated into U.S. dollars at the then-current exchange rates
or at such other value as the Board of Trustees may determine in computing net
asset value. As a result, fluctuations in the value of such currencies in
relation to the U.S. dollar will affect the net asset value of Fund shares even
though there may be no change in the market value of such securities. See the
Statement of Additional Information under "Purchase, Redemption, and Pricing of
Fund Shares" for more detailed information on the valuation of the Fund's
assets.

The net asset values per share of the Class B shares and Class C shares of
a Fund are expected to be approximately the same; the net asset value per share
of the Class A shares of such Fund is expected, under normal circumstances, to
be higher due to the daily expense accruals of the distribution fees applicable
to the Class B shares and Class C shares but not to the Class A shares.
However, the per share net asset value of the three Classes of a Fund will tend
to converge on that Fund's ex-dividend date, and the per share dividends will
differ by approximately the amount of the expense accrual differential among the
Classes.

PERFORMANCE INFORMATION

From time to time, each Fund may publish its total return in advertisements
and communications to shareholders. Total return is computed separately for the
Class A, Class B and Class C shares of each Fund. Total return information will
include the total return for the subject Class of each Fund over the most recent
fiscal year and over the period from the inception of each Class. The Funds
also may advertise aggregate and average total return information over different
periods of time. Each Fund's total return will be expressed as a percentage and
will be calculated using a hypothetical $1,000 investment (including the maximum
initial sales charge for Class A shares) at the beginning of the specified
period and the net asset value of such investment at the end of the period,
assuming reinvestment of all distributions at net asset value and deduction of
any applicable CDSC on Class B and Class C shares. Each Fund also may publish a
cumulative return for each Class over a specified period based on the change in
net asset value over such period. ln addition, each Fund may publish a
distribution rate for each Class in prospective investor communications preceded
or accompanied by a copy of its current Prospectus. The current distribution
rate for each Class of the Funds will be calculated by dividing the maximum
offering price per share into the annualization of the total distributions made
by each Class of the Funds during the stated period. In each case, distribution
rates and total return figures will reflect all recurring charges against the
Funds' income. In addition, each Fund may compare its performance to various
indices of investment performance published by third parties.

Investors should note that the investment results of the Funds will
fluctuate over time, and any presentation of a Fund's performance for any prior
period should not be considered as a representation or prediction of what an
investor's total return may be in any future period. For further information,
including the formula and an example of the total return calculation, see the
Statement of Additional Information.

The Annual Report to Shareholders and subsequent Semiannual Report to
Shareholders, if applicable, contain additional performance information
respecting the Funds and their shares. A copy of each Report is available
without charge upon request to the Trust at the address or telephone number set
forth on the front page of this Prospectus.

48
<PAGE>

DESCRIPTION OF THE TRUST

Each Fund is a series of the Trust, which was organized as a Massachusetts
business trust on May 28, 1986. The Trust's Agreement and Declaration of Trust
permits the Board of Trustees to issue an unlimited number of full and
fractional shares of beneficial interest without par value, which may be issued
in any number of series (called funds). The assets and liabilities of each
series are separate and distinct from any other series. Currently, the Trust
issues redeemable shares in the six series or Funds offered in this Prospectus.
Each of the Funds is authorized to issue Class A, Class B and Class C shares.
The Board of Trustees from time to time may authorize additional series or the
termination of existing series of the Trust. Shares issued by a Fund have no
preemptive, conversion, or sinking rights.

Each of the Class A, Class B and Class C shares of a Fund represents an
interest in the assets of that Fund and has identical voting, dividend,
liquidation and other rights on the same terms and conditions, except that
expenses related to the distribution of each Class are borne separately by that
Class and each Class has exclusive voting rights with respect to provisions of
the Rule 12b-1 distribution plan which pertains to that Class (only Class B
shares and Class C shares are subject to such distribution plans).

Shareholders of each Fund, as a separate series of the Trust, vote
separately on matters affecting only that Fund (e.g., approval of the Management
Agreement); shareholders of all the Funds vote as a single class on matters
affecting all Funds jointly or the Trust as a whole (e.g., election or removal
of Trustees). Voting rights are not cumulative, so the holders of more than 50%
of the shares of all Funds voting in any election of Trustees, can, if they
choose to do so, elect all of the Trustees. While the Funds are not required
to, nor do they intend to, hold annual meetings of shareholders, such meetings
may be called by the Trustees in their discretion or upon demand by the holders
of 10% or more of the outstanding shares of the Trust for the purpose of
electing or removing Trustees. As noted above, the Class B and Class C
shareholders of a Fund have exclusive voting rights with respect to the
provisions of the distribution plan covering that Class.

The Trust's Board of Trustees has determined that currently no conflict of
interest exists among the Class A, Class B and Class C shares of any Fund. On
an ongoing basis, the Trust's Board of Trustees, pursuant to their fiduciary
duties under the 1940 Act and state laws, will seek to ensure that no such
conflict arises.

SHAREHOLDER INQUIRIES

Shareholder inquiries should be directed to the Phoenix-Engemann Group
Service Center at 600 North Rosemead Boulevard, Pasadena, California 91107-2133
(telephone toll free: (800) 648-8050).

GENERAL INFORMATION

State Street Bank and Trust Company serves as Custodian of the Global
Growth Fund's assets.

The Union Bank of California serves as Custodian of the assets of each of
the other Funds.

Pasadena National Trust Company ("PNTC"), which is wholly-owned by Mr.
Roger Engemann, is the Transfer and Dividend Disbursing Agent for the Funds.
PNTC has entered into a Sub-Transfer Agency and Service Agreement with State
Street Bank and Trust Company, which will perform (through its affiliate, Boston
Financial Data Services, Inc.) on behalf of PNTC certain of the shareholder
accounting, recordkeeping and administrative functions required by the Funds.

49
<PAGE>

Price Waterhouse LLP serves as independent auditors for the Funds.
Previously, Cooper & Lybrand LLP served as independent auditor for the Funds.
Reports containing financial statements, at least one of which will be audited,
will be sent to shareholders twice during each fiscal year of the Funds, which
ends on December 31. Only one copy of each report may be sent to shareholders
at the same address, and statements for accounts having the same address may be
consolidated in single mailings unless otherwise requested.

The validity of the shares offered by the Prospectus will be passed on by
Paul, Hastings, Janofsky & Walker, LLP, 345 California Street, San Francisco,
California 94104.

Shares of each Funds may be purchased by one or more investment funds
organized outside the jurisdiction of the United States, whose shares are
offered to investors who are not residents or citizens of the United States.
The percentage of each Fund's shares owned by such offshore fund will be
disclosed in this Prospectus and/or the Statement of Additional Information, as
it may be amended from time to time. To the extent the number of shares of a
Fund owned by any such offshore fund becomes a significant percentage of that
Fund's outstanding shares, a risk to such Fund may exist to the extent the Fund
is forced to liquidate portfolio securities quickly to meet any significant
redemption requests by the offshore fund. However, as of the date of this
Prospectus no such ownership exists, and even in the event a substantial
percentage of any Fund's outstanding shares subsequently are held by such an
offshore fund, the ability of the Fund to redeem its shares in kind (as
described in the Statement of Additional Information) should substantially
reduce any adverse effect on the Fund of any significant redemption of Fund
shares by the offshore fund.

No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and information
or representations not herein contained, if given or made, must not be relied
upon as having been authorized by a Fund. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy securities in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction.

BACKUP WITHHOLDING INSTRUCTIONS

You are required by law to provide the Fund with your correct social
security or taxpayer identification number (each a "TIN"), regardless of whether
you file tax returns. Failure to do so may subject you to certain penalties.
Failure to provide your correct TIN and to complete the section of the
Investment Application entitled "Taxpayer Identification Number Certification
and Signature(s)" could result in backup withholding by the Fund of federal
income tax at the rate of 31% with respect to distributions, redemptions and
other payments made with respect to your account.

Any tax withheld may be credited against taxes owed on your federal income
tax return.

If you do not have a TIN, you should apply for one immediately by
contacting your local office of the Social Security Administration or the IRS.
Backup withholding could apply to payments made to your account while you are
awaiting receipt of a TIN.

Special rules apply for certain entities. For example, for an account
established under the Uniform Transfers to Minors Act, the TIN of the minor
should be furnished.

If you have been notified by the IRS that you are subject to backup
withholding because you have failed to report interest or dividend income on
your tax return and you have not been notified by the IRS that such withholding
should cease, you should strike clause (2) of the section entitled "Taxpayer
Identification Number Certification and

50
<PAGE>

Signature(s)." If you are an exempt recipient, you should furnish your TIN and
check the appropriate box in that section. Exempt recipients include
corporations, financial institutions, registered securities and commodities
dealers and others.

For further information regarding backup withholding, see Section 3406 of
the Code and consult your tax adviser.

<PAGE>

PART B

-----------------------

STATEMENT OF
ADDITIONAL INFORMATION

-----------------------
<PAGE>

600 North Rosemead Boulevard
Pasadena, California 91107-2133
(800) 648-8050 (Toll-Free)
(818) 351-9686

-----------------------

STATEMENT OF ADDITIONAL INFORMATION

September 30, 1997

The Phoenix-Engemann Funds (formerly called "Pasadena Investment Trust")
(the "Trust") is a diversified, open-end management investment company
offering redeemable shares of beneficial interest in six separate series:
Phoenix-Engemann Growth Fund (formerly called "The Pasadena Growth Fund")
(the "Growth Fund"), Phoenix-Engemann Nifty Fifty Fund (formerly called
"The Pasadena Nifty Fifty Fund") (the "Nifty Fifty Fund"),
Phoenix-Engemann Balanced Return Fund (formerly called "The Pasadena Balanced
Return Fund") (the "Balanced Return Fund"), Phoenix-Engemann Global
Growth Fund (formerly called "The Pasadena Global Growth Fund") (the "Global
Growth Fund"), Phoenix-Engemann Small & Mid-Cap Growth Fund (formerly
called "The Pasadena Small & Mid-Cap Growth Fund") (the "Small & Mid-Cap
Growth Fund") and Phoenix-Engemann Value 25 Fund (formerly called "The
Pasadena Value 25 Fund") (the "Value 25 Fund") (collectively referred to as
the "Funds.")

This Statement of Additional Information is not a prospectus. It contains
information which supplements the Prospectus for the Funds dated September 30,
1997, as it may be amended from time to time. This Statement of Additional
Information is to be read in conjunction with such Prospectus, which is
hereinafter referred to as the "Prospectus." Some of

B-1
<PAGE>
the information required in this Statement of Additional Information has been
included in the Prospectus. A copy of the Prospectus may be obtained from the
Trust, 600 North Rosemead Boulevard, Pasadena, California 91107-2133.

The Growth Fund and the Nifty Fifty Fund each have an investment objective
of long-term capital appreciation. In seeking its objective, the Growth Fund
invests primarily in securities issued by companies that Roger Engemann &
Associates, Inc. (the "Manager") believes are rapidly growing or are undervalued
by the market. The Nifty Fifty Fund seeks to achieve its objective by investing
in approximately 50 different securities which the Manager believes offer the
best potential for long-term capital appreciation. The Balanced Return Fund
seeks to maximize a total investment return consistent with reasonable risk
through a balanced approach using moderate asset allocation by its Manager. The
Global Growth's investment objective is long-term growth of capital, which it
seeks to achieve through investments in a globally diversified portfolio of
securities. The Small & Mid-Cap Growth Fund's investment objective is long-term
capital appreciation, which it seeks to achieve through investments primarily in
equity securities of companies with market capitalizations below $1.5 billion.
The Value 25 Fund's investment objective is to achieve substantial dividend
income and long-term growth of capital by investing in securities which the
Manager believes offer the best potential for current dividend yield and long-
term capital appreciation.

B-2
<PAGE>
TABLE OF CONTENTS

PAGE

The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . B-3
Management of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . B-29
Investment Management and Administrative Services . . . . . . . . . . . . . B-33
Brokerage Allocation and Other Practices . . . . . . . . . . . . . . . . . B-40
Principal Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . B-42
Class B and Class C Distribution Plans . . . . . . . . . . . . . . . . . . B-44
Purchase, Redemption, and Pricing of Fund Shares . . . . . . . . . . . . . B-47
Distributions and Tax Status . . . . . . . . . . . . . . . . . . . . . . . B-54
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . . . B-59
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-64
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . B-67
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-68

THE TRUST

The Phoenix-Engemann Funds (formerly called "Pasadena Investment Trust")
(the "Trust") is an open-end diversified management investment company organized
as a Massachusetts business trust. The Trust issues shares of beneficial
interest in six series each of which is covered by this Statement of Additional
Information. Each of the Funds has a separate investment objective and
policies, and maintains a separate investment portfolio. Each of the Funds is
authorized to issue three classes of shares (Class A, Class B and Class C
shares) (each a "Class"). As of January 1, 1994, all of the previous
outstanding classes of each of the Growth, Nifty Fifty and Balanced Return Funds
were redesignated as Class A shares without any other changes.

INVESTMENT OBJECTIVE AND POLICIES

The following information concerning the investment objective and policies
of the Funds supplements the Prospectus. The information contained in the
Prospectus relating to each Fund's Investment Objective and Policies is
incorporated herein by reference.

FOREIGN SECURITIES

B-3
<PAGE>
Each Fund may invest (directly and/or through Depositary Receipts) in
securities principally traded in markets outside the United States. Foreign
investments can be affected favorably or unfavorably by changes in currency
exchange rates and in exchange control regulations. There may be less publicly
available information about a foreign company than about a U.S. company, and the
information available may not be of the same quality. Foreign companies also
may not be subject to accounting, auditing and financial reporting standards and
requirements comparable to those applicable to U.S. companies. Securities of
some foreign companies are less liquid or more volatile than securities of U.S.
companies, and foreign brokerage commissions and custodian fees are generally
higher than in the United States.

Investments in foreign securities can involve other risks different from
those affecting U.S. investments, including local political or economic
developments, expropriation or nationalization of assets and imposition of
withholding taxes on dividend or interest payments. To hedge against possible
variations in currency exchange rates, a Fund (except the Growth Fund, the Nifty
Fifty Fund and the Balanced Return Fund) may purchase and sell forward currency
exchange contracts. These are agreements to purchase or sell specified
currencies at specified dates and prices. A Fund will only purchase and sell
forward currency exchange contracts in amounts which the Manager 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.

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 Manager's predictions of movements
in the direction of securities prices or currency exchange rates are inaccurate,
the adverse consequences to a Fund

B-4
<PAGE>
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 Manager'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.

Each of the above Funds 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

B-5
<PAGE>
also enter into contracts to purchase or sell foreign currencies at a
future date ("forward contracts") and purchase and sell foreign currency futures
contracts.

For transaction hedging purposes each of the above Funds may also purchase
exchange-listed and over-the-counter put and call options on foreign currency
futures contracts and on foreign currencies. A put option on a futures contract
gives a Fund the right to assume a short position in the futures contract until
the expiration of the option. A put option on a currency gives a Fund the right
to sell the currency at an exercise price until the expiration of the option. A
call option on a futures contract gives a Fund the right to assume a long
position in the futures contract until the expiration of the option. A call
option on a currency gives a Fund the right to purchase the currency at the
exercise price until the expiration of the option.

When it engages in position hedging, a Fund enters into foreign currency
exchange transactions to protect against a decline in the values of the foreign
currencies in which its portfolio securities are denominated (or an increase in
the values of currency for securities which such Fund expects to purchase, when
such Fund holds cash or short-term investments). In connection with position
hedging, each of the Funds may purchase put or call options on foreign currency
and on foreign currency futures contracts and buy or sell forward contracts and
foreign currency futures contracts. Each Fund may also purchase or sell foreign
currency on a spot basis.

B-6
<PAGE>
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

B-7
<PAGE>
portfolio securities are then denominated. The Manager 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 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

B-8
<PAGE>
exchange contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires no margin or
other deposit.

At the maturity of a forward or futures contract, a Fund either may accept
or make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original forward
contract. Closing transactions with respect to futures contracts are effected
on a commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.

Although each Fund (except the Growth Fund, the Nifty Fifty Fund and the
Balanced Return Fund) intends to purchase or sell foreign currency futures
contracts only on exchanges or boards of trade where there appears to be an
active market, there is no assurance that a market on an exchange or board of
trade will exist for any particular contract or at any particular time. In such
event, it may not be possible to close a futures position and, in the event of
adverse price movements, the Fund would continue to be required to make daily
cash payments of variation margin.

FOREIGN CURRENCY OPTIONS. In general, options on foreign currencies
operate similarly to options on securities and are subject to many similar
risks. Foreign currency options are traded primarily in the over-the-counter
market, although options on foreign currencies have recently been listed on
several exchanges. Options are traded not only on the currencies of individual
nations, but also on the European Currency Unit, which is composed of amounts of
a number of currencies and is the official medium of exchange of the European
Community's European Monetary System.

Each Fund (except the Growth, Nifty Fifty and Balanced Return Funds) will
only purchase or write foreign currency options when the Fund's Manager 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.

B-9
<PAGE>
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

B-10
<PAGE>
foreign currency may occur within a foreign country, and a Fund may be
required to accept or make delivery of the underlying securities or currency
in conformity with any applicable U.S. or foreign restrictions or
regulations, and may be required to pay any fees, taxes or charges associated
with such delivery. Such investments may also involve the risk that an
entity involved in the settlement may not meet its obligations. Settlement
procedures in many foreign countries are less established than those in the
United States, and some foreign country settlement periods can be
significantly longer than those in the United States.

FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to a
Fund at one rate, while offering a lesser rate of exchange should such Fund
desire to resell that currency to the dealer.

FUTURES CONTRACTS AND RELATED OPTIONS

A financial futures contract sale creates an obligation by the seller to
deliver the type of financial instrument called for in the contract in a
specified delivery month for a stated price. A financial futures contract
purchase creates an obligation by the purchaser to take delivery of the type of
financial instrument called for in the contract in a specified delivery month at
a stated price. The specific instruments delivered or taken, respectively, at
settlement date are not determined until on or near that date. The
determination is made in accordance with the rules of the exchange on which the
futures contract sale or purchase was made. Futures contracts are traded in the
United States only on commodity exchanges or boards of trade -- known as
"contract markets" -- approved for such trading by the CFTC, and must be
executed through a futures commission merchant or brokerage firm which is a
member of the relevant contract market. None of the Funds that can invest in
futures contracts and related options will invest more than 5% of its net assets
in such contracts and options.

B-11
<PAGE>
No Fund will not 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

B-12
<PAGE>
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

B-13
<PAGE>
offsetting option. There is no guarantee that such closing transactions can
be effected.

Each of the above Funds will be required to deposit initial margin and
maintenance margin with respect to put and call options on futures contracts
written by it 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 Manager's ability to
predict movements in the direction of interest rates and other factors affecting
securities markets. For example, if a Fund has hedged against the possibility
of decline in the values of its investments and the values of its investments
increase instead, such Fund will lose part or all of the benefit of the increase
through payments of daily maintenance margin. A Fund may have to sell
investments at a time when it may be disadvantageous to do so in order to meet
margin requirements.

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

B-14
<PAGE>
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

B-15
<PAGE>
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'
Manager 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 Manager'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.

B-16
<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.

B-17
<PAGE>
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

B-18
<PAGE>
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 (except the Growth, Nifty Fifty and Balanced Return Funds) may
make secured loans of its portfolio securities amounting to not more than 50%
(25% for the Value 25 Fund) of its total assets, thereby increasing its total
return. The risks in lending portfolio securities, as with other extensions of
credit, consist of possible delay in recovery of the securities or possible loss
of rights in the collateral should the borrower fail financially. As a matter
of policy, securities loans are made to broker-dealers pursuant to agreements
requiring that loans be continuously secured by collateral consisting of cash or
high-grade short-term debt obligations at least equal at all times to the value
of the securities on loan, "marked-to-market" daily. The borrower pays to such
Fund an amount equal to any dividends or interest received on securities lent.
A Fund retains all or a portion of the interest received on investment of the
cash collateral or receives a fee from the borrower. Although voting rights, or
rights to consent, with respect to the loaned securities pass to the borrower, a
Fund retains the right to call the loans at any time on reasonable notice, and
it will do so to enable the Fund to exercise the voting rights on any matters
materially affecting the investment. A Fund may also call such loans in order
to sell securities.

FORWARD COMMITMENTS

Each Fund (except the Growth Fund, the Nifty Fifty Fund and the Balanced
Return Fund) may enter into contracts to purchase securities for a fixed price
at a future date beyond customary settlement time ("forward commitments") if the
Fund holds, and maintains until settlement date in a segregated account, cash or
high-grade debt obligations in an amount sufficient to meet the purchase price,
or if the Fund enters into offsetting contracts for the forward sale of other
securities it owns. Forward commitments may be considered securities in
themselves, and involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in

B-19
<PAGE>
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 Manager deems it appropriate to do so. A Fund may realize short-term
profits or losses upon the sale of forward commitments.

DEPOSITARY RECEIPTS

The Global Growth Fund may invest up to 100%, the Small & Mid-Cap Growth
Fund may invest up to 50%, and the Value 25 Fund may invest up to 25% and each
of the Growth, Nifty Fifty and Balanced Return Funds may invest up to 15% of the
value of its net assets in the securities of foreign issuers 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.

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

B-20
<PAGE>
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 Manager 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

B-21
<PAGE>
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 Manager seeks to minimize the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligor, in this
case the seller of the U.S. Government security.

Apart from the risk of bankruptcy or insolvency proceedings, there is also
the risk that the seller may fail to repurchase the security. However, each
Fund will always receive as collateral for any repurchase agreement to which it
is a party U.S. Government securities acceptable to it, the market value of
which is equal to at least 100% of the amount invested by the Fund plus

B-22
<PAGE>
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 Manager 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 Manager, 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.

B-23
<PAGE>
OTHER INVESTMENT RESTRICTIONS

The following restrictions have been adopted as matters of fundamental or
operating policy for the Fund. 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

B-24
<PAGE>
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 Manager who beneficially own more than
0.5% of the shares or securities of that company collectively own more than 5%
of such securities. [Fundamental Policy with respect to the Growth, Nifty
Fifty, Balanced Return, Global Growth and Small & Mid-Cap Growth Funds]

(8) Make loans, except (a) by purchase of marketable bonds, debentures,
commercial paper or corporate notes, and similar marketable evidences of
indebtedness which are part of an issue to the public or to financial
institutions, (b) by entry into repurchase agreements, or (c) through the
lending of its portfolio securities with respect to not more than 25% of its
total assets. [Fundamental Policy]

(9) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts or commodities or commodity contracts, except for transactions in
futures contracts and options thereon entered into for hedging purposes, and the
Growth, Nifty Fifty and Balanced Return Funds may purchase marketable securities
of companies or partnerships holding such interests. [Fundamental

B-25
<PAGE>
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

B-26
<PAGE>
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.

B-27
<PAGE>

PORTFOLIO TURNOVER. As stated in the Prospectus, each Fund may purchase
and sell securities without regard to the length of time the security is to be
held or has been held. The increase in the portfolio turnover rate for each of
the Nifty Fifty, Global Growth, and Small & Mid-Cap Growth Funds is primarily
due to an increase in the amount of short-term portfolio trades by such Funds.

MANAGEMENT OF THE TRUST

The Trustees of the Trust have been appointed for an indefinite term. They
are responsible for the overall management of the Trust, including general
supervision and review of the Funds' investment activities. The Trustees, in
turn, elect the officers of the Trust who are responsible for administering the
day-to-day operations of the Trust and the Funds. The current Trustees and
officers of the Trust and their principal occupations during the last five years
are the following:

Positions(s) Held Principal Occupation(s)
Name, Address and Age With the Trust During Past Five Years
- ----------------------- ---------------------- -------------------------
ROGER ENGEMANN* Chairman of the Board, President of the Manager
600 North Rosemead President and Trustee since 1972. President and
Boulevard a Director of Pasadena
Pasadena, Capital Corporation.
California 91107
(56)

JOHN S. TILSON Chief Financial Officer Executive Vice President,
600 North Rosemead and Secretary Portfolio Manager and
Boulevard Securities Analyst with
Pasadena, the Manager since 1983.
California 91107 Officer and a Director of
(53) Pasadena Capital
Corporation.

BARRY E. MCKINLEY Trustee Certified Public
Accountant; head of B.E.
McKinley & Associates, an
accounting firm, since its
inception in 1971.

Martin Werbelow & Associates
300 North Lake Ave.
Suite #930
Pasadena, California 91101

B-28
<PAGE>
Positions(s) Held Principal Occupation(s)
Name, Address and Age With the Trust During Past Five Years
- ----------------------- ---------------------- -------------------------
ROBERT L. PETERSON Trustee Private investor. From
P.O. Box 80784 1988-1995, Regional
San Marino, Manager for Commercial
California 91118 Real Estate Brokerage in
(59) the Pasadena office 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 Trustee President of Richard
2100 Huntington Taylor Company, Inc., a
Drive, #9 food ingredients broker,
San Marino, since 1987.
California 91108
(50)

ANGELA WONG Trustee Since 1986, Ms. Wong has
11355 West Olympic been of counsel to the law
Boulevard firm of Manatt, Phelps,
Los Angeles, Phillips & Kantor,
California 90064 specializing in employee
(45) benefits.

B-29
<PAGE>

Positions(s) Held Principal Occupation(s)
Name, Address and Age With the Trust During Past Five Years
- ----------------------- ---------------------- -------------------------
RICHARD A. WATSON Controller - Fund Vice President and
600 North Rosemead Accounting and Controller - Fund
Boulevard Assistant Secretary Accounting of Roger
Pasadena, Engemann Management Co.,
California 91107 Inc., the predecessor
(43) Manager. From September
1988 to June 1993, Mutual
Fund Operations 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.

- ----------
* Trustee who is an "interested person," as defined in the 1940 Act.

Prior to September 3, 1997, and as shown in the following table, the
Manager paid the fees of the Trustees who are not affiliated with the Manager.
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 Manager receive no direct compensation for
performing the duties of such offices. However, those officers and Trustees who
are affiliated with the Manager may receive remuneration indirectly because the
Manager 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).

B-30
<PAGE>
Total
Pension or Compensation
Retirement Respecting
Benefits Estimated Registrant
Accrued As Annual And
Name of Part of Benefits Fund Complex
Person, Aggregate Fund Upon Paid to
Position Compensation Expenses Retirement Trustees
-------- ------------ ---------- ---------- ------------
Roger Engemann None None None None
Chairman of the
Board, President
and Trustee
John S. Tilson None None None None
Chief Financial
Officer, Secretary

Barry E. McKinley $10,000 None None $10,000
Trustee

Robert L. Peterson $10,000 None None $10,000
Trustee
Richard C. Taylor $10,000 None None $10,000
Trustee

Angela Wong $10,000 None None $10,000
Trustee
Richard A. Watson None None None None
Controller - Fund
Accounting and
Assistant Secretary

As of July 29, 1997, the Trustees and Officers of the Trust, as a
group, owned less than 1% of the outstanding shares of each Fund.

INVESTMENT MANAGEMENT AND ADMINISTRATIVE SERVICES

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."

INVESTMENT MANAGEMENT AGREEMENT

The Manager, 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

B-31
<PAGE>

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 Manager 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

B-32
<PAGE>

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
Manager'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.

As compensation for its services under the Management Agreement, the
Manager 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 Manager
(Roger Engemann Management Co., Inc.), the Growth Fund paid management fees to
the Former Manager 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 Manager,
the Balanced Return Fund paid management fees to the Former Manager of
approximately $596,000, $512,000, and $528,000 respectively. For the years
ended

B-33
<PAGE>

December 31, 1994, 1995, and 1996 pursuant to the then-effective
investment management agreement, the Nifty Fifty Fund paid management fees to
the Former Manager 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 Manager 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 Manager was entitled to receive fees
under the Management Agreement in the amounts of $5,845, and $25,255,
respectively. The Former Manager 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 Manager 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 Manager, or of reckless disregard of its obligations thereunder,
the Manager is not liable for any action or failure to act in accordance with
its duties.

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 (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 Manager under the
Investment Management Agreement, the fees under the Administration Agreement,
the services fees paid under the Services Agreements, the

B-34
<PAGE>
distribution fees paid under the Class B and Class C Rule 12b-1 distribution
plans, brokerage and commission expenses and certain DE MINIMIS fees of its
independent auditors, legal counsel and trustees. See "Class B and Class C
Distribution Plans."

Pursuant to a Sub-Administration Agreement between PEPCO and the
Manager, the Manager 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 Manager ("Former Manager") 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 Manager 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 Manager 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 Manager 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 Manager 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 Manager 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,

B-35
<PAGE>
respectively, for the first eight months of 1996. The Administrator has
contractually agreed to limit expenses for these Funds. Please refer to the
Prospectus dated for details.

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 Manager 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.

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 Manager 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
Manager 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 Manager 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 Manager 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 Manager or the Former

B-36
<PAGE>

Distributor. The Former Manager 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.

Notwithstanding the above-described division of expenses, the Manager
will reduce its fees to a Fund under the Management Agreement for the amount, if
any, by which the Fund's annual operating expenses, expressed as a percentage of
average daily net assets, exceeds certain limits as set forth in the Prospectus.
Operating expenses for these purposes include the Manager's management and
administration fee and the fiduciary/audit fees but do not include any taxes,
interest, brokerage commissions, expenses incurred in connection with any merger
or reorganization, the distribution fees paid under the Class B and Class C Rule
12b-1 distribution plans, and, with the prior written approval of any state
securities commission requiring the same, any extraordinary expenses, such as
litigation. The Manager also 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 Manager may vary from Class to
Class. In addition, the Manager 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 Manager 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 Manager are affiliated with another investment
adviser that has numerous advisory clients and will devote portions of their
time to such clients.

B-37
<PAGE>
BROKERAGE ALLOCATION AND OTHER PRACTICES

The Manager, in connection with advising each Fund on its portfolio
decisions and subject to instructions of the Board of Trustees, will select the
broker or dealer for each Fund's portfolio transactions. In executing a Fund's
portfolio transactions, the Manager seeks to obtain the total costs or proceeds
in each transaction which are most favorable under all the circumstances, taking
into account such factors as the net economic result to such Fund (involving
both price paid or received and any commission or spread and other costs paid),
the efficiency of the transaction execution, the ability to effect the
transaction when a large block of securities is involved, the known practices of
brokers and their availability to execute possibly difficult transactions in the
future, and the financial strength and stability of the broker or dealer. While
the Manager generally seeks reasonably competitive commission rates or spreads
as part of this policy, a Fund may not necessarily pay the lowest commission or
spread available for a particular transaction.

Each Fund and the Manager may direct portfolio transactions to persons
or firms because of research and investment services provided by such persons or
firms if the commissions or spreads on the transactions are reasonable in
relation to the value of the investment information provided. Among such
research and investment services are those that brokerage houses customarily
provide to institutional investors and include statistical and economic data and
research reports on companies and industries. Such research provides lawful and
appropriate assistance to the Manager in the performance of its investment
decision-making responsibilities. The Manager may use these services in
connection with all of its investment activities, and some services obtained in
connection with a Fund's transactions may be used in connection with other
investment advisory clients of the Manager, including other mutual funds, other
series of the Trust, or the Manager's affiliates.

Each Fund may invest in securities that are traded exclusively in the
over-the-counter market. Each Fund may also purchase securities listed on a
national securities exchange through the "third market" (I.E., through markets
other than the exchanges on which the securities are listed). When executing
transactions in the over-the-counter market or the third market, the Manager
will seek to execute transactions through brokers or

B-38
<PAGE>
dealers that, in the Manager's opinion, will provide the best overall price
and execution so that the resultant price to such Fund is as favorable as
possible under prevailing market conditions.

None of the Funds allocates brokerage business in return for sales of
its shares, although such sales may be a factor in selecting broker-dealers for
portfolio transactions, provided the Fund is receiving best execution. Neither
the Manager, the Distributor nor any affiliated person thereof will participate
in commissions or spreads paid by a Fund to brokers or dealers nor will they
receive any reciprocal business, directly or indirectly, as a result of such
commissions or spreads.

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 Manager.
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 Manager anticipate
that such brokerage allocation from the Manager will continue. However, neither
Michael Stolper nor Stolper & Company, Inc. will receive or participate in
commissions paid by a Fund nor receive any reciprocal business as a result of
commissions paid by a Fund, although a Fund may pay usual and customary
brokerage commissions to Bear, Stearns & Company for brokerage business by such
Fund.

It is possible that purchases or sales of securities for a Fund also
may be considered for other clients of the Manager 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 Manager, 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.

B-39
<PAGE>

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.

PRINCIPAL UNDERWRITER

Phoenix Equity Planning Corporation (the "Distributor") acts as the
principal underwriter for the Funds in a continuous offering of the Funds'
shares. The Distributor uses its best efforts to distribute the Funds' shares,
primarily through investment dealers, and is not obligated to purchase or
distribute any specified number of shares. Prior to September 3, 1997, Pasadena
Fund Services, Inc. (the "Former Distributor") served as distributor of the
Funds' shares.

An underwriting agreement (the "Underwriting Agreement") dated as of
September 3, 1997, as amended, between the Trust, on behalf of each Fund, and
the Distributor is currently in effect through September 2, 1998. The
Underwriting Agreement shall continue in effect thereafter for periods not
exceeding one year if approved at least annually by (i) the Board of Trustees or
a vote of a majority of the outstanding shares of the Trust (as defined in the
1940 Act) and (ii) a majority of the Trustees who are not interested persons of
any such party, in each case cast in person at a meeting called for the purpose
of voting on such approval. The Underwriting Agreement may be terminated
without

B-40
<PAGE>
penalty by the parties thereto upon 60-days' written notice, and is
automatically terminated in the event of its assignment as defined in the 1940
Act.

Pursuant to the Underwriting Agreement, the Distributor is entitled to
receive a front-end sales charge in connection with certain sales of Class A
shares, and a contingent deferred sales charge (a "CDSC") in connection with
certain redemptions of Class B and Class C shares. The Distributor reallows all
or a portion of the sales charges to selected dealers and agents for selling
Class A shares.

For the year ended December 31, 1994, the Former Distributor 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, the Former Distributor
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, 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, the Former Distributor 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.

For the year ended December 31, 1994, the Former Distributor 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, the Former
Distributor 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, the Former Distributor 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

B-41
<PAGE>

The Distributor is responsible for certain expenses of distribution of
the shares of the Funds, including advertising expenses, costs of printing sales
material and prospectuses used to offer such shares to the public and expenses
of preparing and printing amendments to the Trust's registration statement if
the amendment is necessitated by the actions of the Distributor. In some
instances dealers may receive 100% of the sales charge for sales of shares of
the Funds and may, therefore, be deemed "underwriters" under the Securities Act
of 1933, as amended.

The Distributor is a wholly owned subsidiary of Phoenix Duff & Phelps
Corporation.

CLASS B AND CLASS C DISTRIBUTION PLANS

Pursuant to separate Distribution Plans (each a "Plan" and
collectively the "Plans") adopted by each of the Funds pursuant to Rule 12b-1
under the 1940 Act, the Distributor incurs the expenses of distributing the
Funds' Class B and Class C shares. See "Principal Underwriter."

On July 13, 1993, the Board of Trustees of the Trust, including a
majority of the Trustees who are not interested persons of the Trust and who
have no direct or indirect financial interest in the operation of the Plans or
in any agreement related to any Plan (the "Rule 12b-1 Trustees"), at a meeting
called for the purpose of voting on each Plan, adopted a Plan of distribution
for the Class B and Class C shares of each series of the Trust.

Under the Plans, each Fund pays distribution fees to the Distributor
at an annual rate of 0.75% of the Fund's aggregate average daily net assets
attributable to its Class B shares and Class C shares, respectively, to
reimburse the Distributor for its expenses in connection with the promotion and
distribution of those Classes. On July 8, 1997, the Rule 12b-1 Trustees voted to
approve the continuation of the Plan with the Manager and the Distributor.

Each Plan provides that the Distributor may use the distribution fees
received from the Class of a Fund covered by that Plan only to pay for the
distribution expenses of that Class. Distribution fees are accrued daily and
paid monthly, and

B-42
<PAGE>
are charged as expenses of the Class B and Class C shares as
accrued.

Class B and Class C shares are not obligated under the Plans to pay
any distribution expense in excess of the distribution fee. Thus, if a Plan
were terminated or otherwise not continued, no amounts (other than current
amounts accrued but not yet paid) would be owed by the Class to the Distributor.

Each Plan provides that it shall continue in effect from year to year
provided that a majority of the Board of Trustees of the Trust, including a
majority of the Rule 12b-1 Trustees, vote annually to continue the Plan. Each
Plan (and any distribution agreement between the Distributor and a selling agent
with respect to the Class C shares) may be terminated without penalty upon at
least 60-days' notice by the Distributor, or by a Fund by vote of a majority of
the Rule 12b-1 Trustees, or by vote of a majority of the outstanding shares (as
defined in the 1940 Act) of the Class to which the Plan applies.

All distribution fees paid by a Fund under the Plans will be paid in
accordance with Rule 2830 of the NASDR Conduct Rules, as such Rule may change
from time to time. Pursuant to each Plan, the Board of Trustees will review at
least quarterly a written report of the distribution expenses incurred by the
Distributor on behalf of the Class B and Class C shares of each Fund. In
addition, as long as the Plans remain in effect, the selection and nomination of
Trustees who are not interested persons (as defined in the 1940 Act) of the
Trust shall be made by the Trustees then in office who are not interested
persons of the Trust.

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

B-43
<PAGE>

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.

PURCHASE, REDEMPTION, AND PRICING OF FUND SHARES

Reference is made to the information under the captions, "Purchase of
Shares," "Redemption of Shares," "Determination of Net Asset Value," and
"Dividends, Distributions, and Taxes" in the Prospectus. The Prospectus sets
forth certain minimum investment and other requirements. From time to time, the
Funds' management in its discretion may elect to waive such requirements in
connection with individual purchases and sales. The following is additional
information regarding purchase, redemption, and pricing of Fund shares:

ALTERNATIVE PURCHASE ARRANGEMENTS. Each Fund offers investors three
Classes of shares which bear sales and distribution charges in different forms
and amounts. Class A shares are subject to a maximum front-end sales charge at
time of purchase of 5.50% of the public offering price per share. Certain
purchases of Class A shares may qualify for reduced sales charges. Class A
shares do not pay a 12b-1 distribution fee, and redemptions of Class A shares
are not subject to a CDSC. Class B shares are sold without an initial sales
charge, but are subject to a CDSC of up to 5.00% if redeemed within four years
of

B-44
<PAGE>
purchase. Class B shares are subject to a 12b-1 distribution fee at the
annual rate of 0.75% of the average net assets attributable to the Class B
shares. Class B shares will automatically convert into Class A shares, based on
relative net asset values, at the beginning of the seventh year after purchase.
Class C shares are not subject to a front-end sales charge, but are subject to a
CDSC of 1% if redeemed within one year of purchase (CDSC applies to the Global
Growth Fund, the Small & Mid-Cap Fund and Value 25 Fund only). Class C shares
are subject to an ongoing 12b-1 distribution fee at the annual rate of 0.75% of
the average net assets attributable to the Class C shares. Class C shares have
no conversion feature, and therefore purchasers of Class C shares should expect
to pay the 12b-1 distribution fee for as long as the shares are owned.

DETERMINATION OF NET ASSET VALUE

The net asset value of each Fund is determined once daily as of 4:15
p.m. New York City Time on each day the New York Stock Exchange (the "Exchange")
is open for trading (or such earlier time if the Exchange closes early for any
reason). Portfolio securities will be priced at 4:00 p.m., at the close of
trading on the Exchange, and any equity options or futures contracts and index
options will be priced as of their close of trading on the same days at 4:10
p.m. and 4:15 p.m., respectively. It is expected that during 1997 the Exchange
will be closed on Saturdays and Sundays and for Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and
New Year's Day. The Funds do not expect to determine the net asset value of its
shares on any day when the Exchange is not open for trading even if there is
sufficient market movement with respect to its portfolio securities in other
markets on such days to materially affect the net asset value per share.

In valuing a Fund's assets for the purpose of calculating net asset
value, portfolio securities listed on a national securities exchange or on
Nasdaq for which market quotations are readily available are valued at the last
sale price on the exchange or Nasdaq on the day as of which such value is being
determined. If there has been no sale on such exchange or on Nasdaq on such
day, the security is valued at the last sale price on the business day the
security was last traded. Trading in certain securities (such as foreign
securities) may be substantially completed each day at various times prior to
the

B-45
<PAGE>
close of the Exchange. The values of these securities used in determining
the net asset value of a Fund's shares are computed as of such times and
included in the pricing at 4:00 p.m. Securities traded only in the over-the-
counter market, and not on Nasdaq, for which market quotations are readily
available are valued at the current or last bid price. If no bid price is
quoted on such day, the security is valued by such method as the Board of
Trustees shall determine in good faith to reflect the security's fair value.
All other assets of a Fund are valued in such manner as the Board of Trustees in
good faith deems appropriate to reflect their fair value.

U.S. Government securities are traded in the over-the-counter market
and will be valued as follows: securities having a maturity of 60 days or less
will be valued at cost with interest accrued or discount amortized to date of
valuation included in the interest receivable; securities having a maturity of
more than 60 days and for which market quotations are readily available will be
valued at the last reported bid price; securities having a maturity of over 60
days and for which market quotations are not readily available will be valued on
the basis of market quotations for securities of comparable maturity, quality
and type. Securities for which reliable quotations are not readily available
and all other assets will be valued at their respective fair value as determined
in good faith by, or under procedures established by, the Board of Trustees. A
Fund may utilize a pricing service, bank, or broker/dealer experienced in such
matters to perform any of the pricing functions under procedures approved by the
Board of Trustees.

Reliable market quotations may not be considered to be readily
available for certain U.S. and foreign securities. These investments are stated
at fair value in accordance with procedures approved by the Trustees.

If any securities held by a Fund are restricted as to resale, the
Funds' Manager will determine their fair value following procedures approved by
the Board of Trustees. The Trustees periodically review such valuations and
procedures. The fair value of such securities is generally determined as the
amount which such Fund could reasonably expect to realize from an orderly
disposition of such securities over a reasonable period of time. The valuation
procedures applied in any specific instance are likely to vary from case to
case. However, consideration is generally given to analytical data relating to

B-46
<PAGE>
the investment and to the nature of the restrictions on disposition of the
securities (including any registration expenses that might be borne by such Fund
in connection with such disposition). In addition, specific factors are also
generally considered, such as the cost of the investment, the market value of
any unrestricted securities of the same class (both at the time of purchase and
at the time of valuation), the size of the holding, the prices of any recent
transactions or offers with respect to such securities, and any available
analysts' reports regarding the issuer.

Occasionally, events affecting the values of a Fund's securities may
occur between the times at which the values are determined and the close of
trading on the Exchange, and the effect of these events will not be reflected in
the computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then their valuation may
be adjusted to reflect their fair value as of the close of trading on the
Exchange as determined in good faith by, or under procedures established by, the
Board of Trustees. The Funds may utilize a pricing service, bank, or
broker/dealer experienced in such matters to perform any of the pricing
functions under procedures approved by the Board of Trustees.

PURCHASE OF SHARES

If an order for the purchase of a Fund's shares, together with payment
in proper form, is received by the Fund, the Distributor, or another authorized
agent or subagent of such Fund, before 4:15 p.m., New York City time, Fund
shares will be purchased at the public offering price (I.E., net asset value,
plus the applicable sales charge set forth in the Prospectus for the Class A
shares only) determined on that day. Otherwise, Fund shares will be purchased
at the offering price determined as of the close of trading on the next business
day. It is the responsibility of any securities firm to transmit orders placed
through it so that they will be received by the Distributor on a timely basis as
described in the Prospectus. If an application for the purchase of shares of a
Fund is received by the Fund, the Distributor, or another authorized agent or
subagent of such Fund, without the appointment of an investment dealer, the
Distributor intends to assign the account to an investment dealer, which may
include the Distributor, for servicing and pay the applicable dealer concession
to such firm. The appointment of a dealer of record does not change or affect
in any way the

B-47
<PAGE>
price at which shares of a Fund are purchased or the rights of
the shareholder, and the shareholder may change at any time the designation of
the dealer of record to any other dealer by written notice to such Fund.

When purchasing shares of a Fund, an investor must specify whether he
wishes to purchase Class A, Class B or Class C shares. An unspecified purchase
order will be considered an order for Class A shares.

PURCHASE OF CLASS A SHARES AT NET ASSET VALUE.

Certain family members of officers, trustees, directors and full-time
employees of the Trust, the Manager, the Distributor and their affiliates and
such other persons who are determined by the Board of Trustees under
circumstances not involving any sales expense to such Fund or the Distributor
may purchase Class A shares of a Fund at net asset value. Family members are
defined as current spouse, children, parents, grandchildren, grandparents,
uncles, aunts, siblings, nephews, nieces, step relatives, relations at law and
cousins.

LETTER OF INTENT -- CLASS A SHARES ONLY.

An investor may qualify for an immediate reduced front-end sales
charge on the purchase of Class A shares of any of the Funds in The Phoenix-
Engemann Group of Mutual Funds by completing the Letter of Intent section of the
application for investment (the "Letter of Intent" or "Letter"), in which the
investor states its intention to purchase during the following 13 months a
specified amount of Class A shares which, if made at one time, would qualify for
a reduced sales charge. To qualify, a minimum initial investment equal to 5% of
such specified amount is required in one of the Funds. After the investor files
the Letter of Intent, each additional investment made in Class A shares of any
of the Funds will be entitled to the sales charge applicable to the level of
investment indicated in the Letter of Intent as described above. Sales charge
reductions based upon purchases of Class A shares in more than one of the Funds
will be included in the Letter of Intent only if notification is given to the
Distributor that the investment qualifies for a discount. Investments in Class
A shares of a Fund within 90 days before the Letter of Intent is filed will be
counted towards completion of the Letter of Intent but will not be entitled to a
retroactive downward adjustment of the sales charge. If the purchase

B-48
<PAGE>
specified in the Letter of Intent is not completed within the 13-month
period, there will be an upward adjustment of the sales charge as specified
below, depending upon the amount actually purchased during the period.

The Letter of Intent requires that five percent (5%) of the amount of
the total intended purchase will be reserved in Class A shares of the applicable
fund, registered in the investor's name, to assure that the full applicable
sales charge will be paid if the investor does not complete the intended
purchase. However, the reserved shares will be included in the total Class A
shares owned as reflected on the quarterly statement, and any income and capital
gain distributions on the reserved shares will be paid as directed. The
reserved shares will not be available for disposal by the investor until the
Letter of Intent has been completed, or the higher sales charge paid. If the
total purchases equal or exceed the amount specified under the Letter, the
reserved Class A shares will be deposited to the investor's Open Account. If
the total amount of purchases exceeds the amount specified under the Letter and
is an amount which would qualify for a further quantity discount, a retroactive
price adjustment will be made by the Distributor and the dealer through whom
purchases were made pursuant to the Letter of Intent (to reflect such further
quantity discount) on purchases of Class A shares made after filing the Letter.
The resulting difference in offering price will be applied to the purchase of
additional Class A shares at the offering price applicable to a single purchase
or the dollar amount of the total purchases. If the total purchases are less
than the amount specified under the Letter, the investor will remit to the
Distributor an amount equal to the difference in the dollar amount of sales
charge actually paid and the amount of sales charge which would have applied to
the aggregate purchases of Class A shares if the total of such purchases had
been made at a single time. Upon such remittance, the reserved Class A shares
held for the investor's account will be deposited to its Open Account. If
within 20 days after written request such difference in sales charge is not
paid, the redemption of an appropriate number of reserved Class A shares to
realize such difference will be made. In the event of a total redemption of the
Class A shares in the account prior to fulfillment of the Letter of Intent, the
additional sales charge due will be deducted from the proceeds of the redemption
and the balance will be forwarded to the investor.

B-49
<PAGE>
By completing the Letter of Intent section of the application, the
investor grants to the Distributor a security interest in the reserved Class A
shares and agrees to irrevocably appoint the Distributor as its attorney-in-fact
to surrender for redemption any or all such shares with full power of
substitution. This power of attorney is coupled with an interest. The investor
or its dealer must inform the Distributor that this Letter of Intent is in
effect each time a purchase is made.

REDEMPTION OF SHARES.

The right of redemption may not be suspended and the date of payment
upon redemption postponed for more than seven days (or such shorter period as
may be required by applicable law or regulation) after a shareholder's
redemption request made in accordance with the procedures set forth above,
except for any period during which the Exchange is closed (other than customary
weekend and holiday closings) or during which the SEC determines that trading
thereon is restricted, or for any period during which an emergency (as
determined by the SEC) exists as a result of which disposal by such Fund of
securities owned by it is not reasonably practicable or as a result of which it
is not reasonably practicable for a Fund fairly to determine the value of its
net assets, or for such other period as the SEC may by order permit for the
protection of security holders of such Fund.

A Fund may pay the redemption price (net of any CDSC imposed on Class
B and Class C shares) either in cash or in portfolio securities of such Fund
(selected in the discretion of the Board of Trustees and taken at their value
used in determining net asset value), or partly in cash and partly in portfolio
securities. As a practice, a Fund will redeem shares wholly in cash unless the
Board of Trustees believes that economic conditions make cash redemption
detrimental to such Fund's interests. If payment for redeemed shares is made
wholly or partly in portfolio securities, the shareholder will ordinarily incur
brokerage costs in converting the securities to cash. The Trust has filed a
formal election with the SEC stating that each Fund may effect a redemption in
portfolio securities provided it pays redemptions in cash during any 90-day
period for any shareholder equal to the lesser of $250,000 or 1% of the Fund's
total net assets at the beginning of such period. Each Fund currently expects,
however, that the amount of a redemption request would have to be significantly
greater than $250,000 or

B-50
<PAGE>
1% of total net assets before the Fund would make a redemption in portfolio
securities. Any such redemptions will be subject to receipt by the Fund of
any necessary regulatory approvals.

Class B shares are subject to payment of a CDSC of up to 5.00% if
redeemed within four years of purchase. Class C shares of the Global Growth,
Small & Mid-Cap Growth and Value 25 Funds are subject to a CDSC of 1% if
redeemed within one year of purchase. See "Alternative Purchase Arrangements."

If an investor owns more than one class of shares in a Fund, the
redemption request must specify which class is being redeemed. Absent such
specification, the investor's shares will be redeemed in the following order:
First, Class C shares; second, Class A shares; third, Class B shares.

DISTRIBUTIONS AND TAX STATUS

Reference is made to the information contained under the caption
"Dividends, Distributions, and Taxes" in the Prospectus, which is incorporated
herein by reference. The following is additional information with reference to
the Funds' distributions and tax status:

DIVIDENDS AND DISTRIBUTIONS

Each Fund declares and pays income dividends and any capital gain
distributions at least once a year as stated in the Prospectus except the Value
25 Fund expects to pay income dividends on a quarterly basis.

Each shareholder may elect either to receive dividends and
distributions in cash or to have them reinvested in additional whole or
fractional shares of a Fund. The election to receive dividends and
distributions in cash or shares is made at the time of the subscription order.
A shareholder may change such election at any time prior to the record date for
a particular dividend or distribution by written request to such Fund. The
value of whole and fractional shares shall be computed in accordance with the
provisions of "Determination of Net Asset Value." No sales or other types of
charge will be assessed in connection with the reinvestment of dividends and
capital gain distributions.

B-51
<PAGE>
TAXES

Each Fund is treated as a separate entity for federal income tax
purposes. Each Fund has qualified, and intends to continue to qualify and elect
(except the Value 25 Fund which intends to qualify), to be treated as a
"regulated investment company" under Subchapter M of the Code, and intends to
maintain such qualification. See "Dividends, Distributions and Taxes" in the
Prospectus. Qualification as a "regulated investment company" does not involve
supervision of a Fund's management or investment practices or policies by any
governmental agency. By distributing substantially all of its net investment
income and realized net capital gains for any fiscal year and by satisfying
certain other requirements relating to the sources of its income and
diversification of its assets, a Fund will not be liable for federal income
taxes, to the extent its earnings are distributed, or excise taxes based on net
income with respect to such year.

Dividends of net investment income (including any net realized short-
term capital gains) paid by a Fund are taxable to the recipient shareholders as
ordinary income. In the case of corporate shareholders, such distributions may
qualify for the corporate dividends-received deduction to the extent such Fund
designates the amount distributed as a qualifying dividend. The aggregate
amount so designated cannot, however, exceed the aggregate amount of qualifying
dividends received by a Fund for its taxable year. In view of each Fund's
investment policies, it is expected that dividends from domestic corporations
will be part of such Fund's gross income and that, accordingly, part of such
distributions by the Fund may be eligible for the dividends-received deduction
for corporate shareholders; however, the portion of the Fund's gross income
attributable to qualifying dividends is largely dependent on the Fund's
investment activities for a particular year and therefore cannot be predicted
with any certainty. Availability of the dividends-received deduction is subject
to certain holding period and debt-financing limitations. Also, to the extent
that a Fund's assets are invested in foreign securities, such dividends-received
deduction would not be applicable.

Distributions of net capital gains (I.E., the excess of net long-term
capital gains over net short-term capital losses) by a Fund are taxable to the
recipient shareholders as a long-term capital gain, without regard to the length
of time a shareholder has held Fund shares. Capital gain distributions are not

B-52
<PAGE>
eligible for the dividends-received deduction referred to in the preceding
paragraph. Any loss on a sale or exchange of shares of a Fund held for six
months or less will be treated as long-term capital loss to the extent of such
long-term capital gain distributions with respect to those shares.

Exchanges and redemptions of shares of a Fund may result in gains or
losses for tax purposes to the extent of the difference between the proceeds
from the shares disposed of and the shareholder's adjusted tax basis for such
shares. If a shareholder of such Fund exercises the exchange privilege within
90 days of acquiring shares in the Fund, any loss that would otherwise be
recognized on the exchange will be reduced (or any gain increased) to the extent
the sales charge paid on the purchase of the shares surrendered reduces any
sales charge that would be payable on the purchase of the new shares in the
absence of the exchange privilege. Instead, the amount of the reduction in loss
(or increase in gain) will be treated as an amount paid for the new shares. The
conversion of Class B shares of a Fund into Class A shares of the Fund will not
result in gain or loss for federal income tax purposes.

CERTAIN FOREIGN CURRENCY-RELATED TRANSACTIONS

Foreign exchange gains and losses realized by a Fund in connection
with certain transactions involving foreign currency- denominated securities are
subject to Section 988 of the Code, which will generally cause such gains and
losses to be treated as ordinary income and losses rather than capital gains and
losses, and may affect the amount, timing and character of distributions to
shareholders.

HEDGING TRANSACTIONS

If a Fund engages in hedging transactions, including hedging
transactions in futures contracts and straddles, or other similar transactions,
it will be subject to special tax rules (including mark-to-market, straddle,
wash sale, and short sale rules), the effect of which may be to accelerate
income to such Fund, defer losses to the Fund, cause adjustments in the holding
periods of the Fund's securities, or convert short-term capital losses into
long-term capital losses. These rules could therefore affect the amount,
timing, and character of distributions to Fund shareholders. Each Fund will
endeavor to make any available

B-53
<PAGE>
elections pertaining to such transactions in a manner believed to be in the
best interests of such Fund's shareholders.

Certain of a Fund's hedging activities (including its transactions, if
any, in foreign currencies or foreign currency-denominated instruments) are
likely to produce a difference between its book income and its taxable income.
If a Fund's book income exceeds its taxable income, the distribution (if any) of
such excess will be treated as a dividend to the extent of such Fund's remaining
earnings and profits, and thereafter as a return of capital or as gain from the
sale or exchange of a capital asset, as the case may be. If a Fund's book
income is less than its taxable income, such Fund could be required to make
distributions exceeding book income to qualify as a regulated investment company
that is accorded special tax treatment under Subchapter M of the Code.

Under one of the requirements for qualification as a "regulated
investment company" under the Code, each Fund will be limited in selling assets
held or considered under Code rules to have been held for less than three
months, and in engaging in certain hedging transactions (including hedging
transactions in options and futures) that in some circumstances could cause
certain Fund assets to be treated as held for less than three months.

DEBT SECURITIES ISSUED OR PURCHASED AT A DISCOUNT

Any investment by a Fund in debt securities issued at a discount and
certain other obligations will (and investments in debt securities purchased at
a discount may) require such Fund to accrue and distribute income not yet
received. In order to generate sufficient cash to make the requisite
distributions, a Fund may be required to sell securities in its portfolio that
it otherwise would have continued to hold.

CERTAIN FOREIGN ISSUES

If more than 50% of a Fund's assets at year-end consist of securities
of foreign corporations, such Fund may qualify for and make the election
permitted under Section 853 of the Code so that shareholders will be able to
claim a credit or deduction on their income tax returns for, and will be
required to treat as part of the amount distributed to them, their pro rata
portion of qualified taxes paid by the Fund to foreign countries (which

B-54
<PAGE>
taxes relate primarily to investment income). A shareholder's ability to
claim such a foreign tax credit will be subject to certain limitations
imposed by the Code, as a result of which a shareholder may not be able to
use currently a credit for the full amount of foreign tax so paid by the
Fund. Shareholders who do not itemize deductions on their federal income tax
returns may claim a credit (but no deduction) for such foreign taxes.

Investment by a Fund in certain "passive foreign investment companies"
could subject such Fund to additional U.S. federal income tax or other charge on
the proceeds from the disposition of its investment in such a company; however,
this tax can be avoided by making an election to mark such investments to market
annually or to treat the passive foreign investment company as a "qualified
electing fund" which passes its annual income through to the Fund regardless of
whether the company makes distributions.

GENERAL

A shareholder of a Fund who does not fall within one of certain exempt
categories may be subject to backup withholding at the rate of 31% with respect
to dividends and capital gain distributions paid to shareholders or reinvested
by such Fund and other amounts distributed by the Fund, including proceeds of
redemptions, unless such shareholder provides a social security or taxpayer
identification number, certifies as to exemption from backup withholding, and
otherwise complies with applicable requirements of the Code.

Reports containing appropriate federal income tax information
(relating to the tax status of dividends and capital gain distributions by a
Fund) will be furnished to each shareholder following the close of the calendar
year during which the payments are made.

The discussions herein and in the Prospectus have been prepared by the
management of the Trust, are general by nature and do not purport to be a
complete description of all tax implications of an investment in a Fund. Paul,
Hastings, Janofsky & Walker, the Trust's counsel, has expressed no opinion in
respect thereof. Investors should consult their own tax advisers for further
details and for the application of federal, state and local tax laws to their
particular situations.

B-55
<PAGE>
PERFORMANCE INFORMATION

From time to time, a Fund may state its total return in advertisements
and investor communications. Total return is computed separately for Class A,
Class B and Class C shares of each Fund. Total return may be stated for any
relevant period as specified in the advertisement or communication. Any
statements of total return or other performance data for any Class of a Fund
will be accompanied by information on that Class's average annual compounded
rate of return over the most recent four calendar quarters and the period from
the inception of the Class. A Fund may also advertise aggregate and average
total return information over different periods of time.

Each Fund's average annual compounded rate of return is determined by
reference to a hypothetical $1,000 investment that includes capital appreciation
and depreciation for the stated period, according to the following formula:

P(1+T)to the power of n = ERV

Where: P = a hypothetical initial purchase order of $1,000 from
which the maximum sales charge is deducted

T = average annual total return

n = number of years

ERV = ending redeemable value of the hypothetical $1,000
purchase at the end of the period

Aggregate total return is calculated in a similar manner, except that
the results are not annualized. Each calculation assumes the maximum sales
charge is deducted from the initial $1,000 investment at the time it is made and
that all dividends and distributions are reinvested at net asset value on the
reinvestment dates during the period.

Aggregate total return is calculated in a similar manner, except that
the results are not annualized. Each calculation assumes that the maximum
front-end sales charge (Class A shares only) is deducted from the initial $1,000
investment at the time it is made and that all dividends and distributions are
reinvested at net asset value on the reinvestment dates during

B-56
<PAGE>
the period. Each calculation for Class B shares also assumes that the
maximum applicable contingent deferred sales charge has been paid upon
redemption at the end of the period.

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 A
-------

One Five Inception(1) to
Year* Years December 31, 1996*
----- ----- ------------------
The Growth Fund 15.77% 6.39% 11.97%

The Balanced 11.30% 7.68% 13.91%
Return Fund

The Nifty Fifty 19.57% 9.82% 17.65%
Fund

The Global Growth Fund 15.04% N/A 24.55%

The Small & Mid-Cap
Growth Fund 43.96% N/A 42.08%

CLASS B
-------

One Inception(2) to
Year December 31, 1996
---- -----------------
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%

B-57
<PAGE>

CLASS C
-------

One Inception(2) to
Year December 31, 1996
---- -----------------
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%

- ---------
(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 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

B-58
<PAGE>
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 Manager 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.

Each Fund may also state its yield in advertisements and investor
communications. The yield computation is determined by dividing the net
investment income per share earned during the period by the maximum offering
price per share on the last day of the period and annualizing the resulting
figure, according to the following formula:

Yield = 2 [((a-b) + 1)to the power of 6 - 1]
-----------
cd
where

a = dividends and interest earned during the period;

b = expenses accrued for the period (net of reimbursements);

c = the average daily number of shares outstanding during the period that
were entitled to receive dividends;

d = the maximum offering price per share on the last day of the period.

Yield calculations assume the maximum sales charge applicable to such
Fund. Actual yield may be affected by variances in sales charges on
investments. Until such time as this Statement of Additional Information is
amended to include the amount of yield for a Fund for the applicable 30-day
period, the amount of such yield will not be advertised on behalf of such Fund.

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

B-59
<PAGE>
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.

The performance of a Fund may be compared to that of various indices
of investment performance published by third parties (including, for example and
not limited to, the Dow Jones Industrial Index, Standard & Poor's 500 Stock
Index, Nasdaq Composite Index, the Value Line Arithmetic Index, the Value Line
Geometric Index, Russell 1000, Russell 2000, Russell 3000, Wilshire 4500,
Wilshire 5000, various EAFAE Indices, Goldman Sachs Convertible 100 Index,
Lipper Non-Government Money Market Average and Lipper Government Money Market
Average). Furthermore, a Fund's standard performance may also be compared to
such Fund's performance calculated as if no sales charges were deducted.

From time to time, information concerning a Fund's performance by
independent sources such as Morningstar, Lipper Analytical Services, Inc., and
other organizations may also be used in advertisements and in information
furnished to present or prospective investors in such Fund.

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.

B-60
<PAGE>

GENERAL

Each Fund is a separate and distinct series of The Phoenix-Engemann
Funds, a Massachusetts business trust. The shareholders of a Massachusetts
business trust could, under certain circumstances, be held personally liable as
partners for the obligations of the Trust. However, the Trust's Amended and
Restated Agreement and Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Trust and the Funds. The
Declaration of Trust also provides for indemnification and reimbursement of
expenses out of Trust assets, including the Funds, for any shareholder held
personally liable for obligations of the Trust. The Declaration of Trust
provides that the Trust shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the Trust and satisfy
any judgment thereon. All such rights are limited to the assets of the Funds of
which a shareholder holds shares. The Declaration of Trust further provides
that the Trust may maintain appropriate insurance (for example, fidelity bonding
and errors and omissions insurance) for the protection of the Trust, its
shareholders, trustees, officers, employees, and agents to cover possible tort
and other liabilities. Furthermore, the activities of the Trust as an
investment company as distinguished from an operating company would not likely
give rise to liabilities in excess of the Trust's total assets. Thus, the risk
of a shareholder's incurring financial loss on account of shareholder liability
is limited to circumstances in which both inadequate insurance exists and the
Trust itself is unable to meet its obligations.

The Trust is registered with the Securities and Exchange Commission as
a management investment company. Such a registration does not involve
supervision of the management or policies of a Fund. The Prospectus and this
Statement of Additional Information omit certain information contained in the
Registration Statement of the Trust filed with the Securities and Exchange
Commission. Copies of such information may be obtained from the Commission upon
payment of the prescribed fee.

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:

Class A Class B Class C
------- ------- -------

B-61
<PAGE>

PHOENIX-ENGEMANN GROWTH FUND

Merrill Lynch, Pierce, 49.14% 51.19% 71.89%
Fenner & Smith, Inc.*
Attn: Book Entry
4801 Deer Lake Drive East
Jacksonville, Florida 32246-6485

PHOENIX-ENGEMANN BALANCED RETURN FUND

Merrill Lynch, Pierce, 29.17% 53.22% 77.68%
Fenner & Smith, Inc.*
Attn: Book Entry
4801 Deer Lake Drive East
Jacksonville, Florida 32246-6485

PHOENIX-ENGEMANN NIFTY FIFTY FUND

Merrill Lynch, Pierce, 50.35% 52.21% 73.01%
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

B-62
<PAGE>

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

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

- ---------
* 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.

B-63
<PAGE>
FINANCIAL STATEMENTS

The Funds' audited financial statements contained in their Annual
Reports to Shareholders for the period ended December 31, 1996 (the "Reports"),
are incorporated herein by reference to the Reports which have been filed with
the Securities and Exchange Commission. Any person not receiving the Reports
with this Statement of Additional Information should call or write to the Trust
to obtain a free copy.

B-64
<PAGE>
APPENDIX "A"
BOND RATINGS

MOODY'S INVESTORS SERVICE. Bonds which are rated Aaa are judged to be
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 positions of such issues.
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.
Bonds which are rated A possess many favorable investment attributes and are to
be considered as "upper medium grade" obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Bonds which are rated Baa are considered "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. 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. 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.

In Moody's corporate bond rating system, Moody's applies numerical
modifiers, 1, 2, and 3, in each generic rating classification from Aa through B.
The modifier 1 indicates that

B-65
<PAGE>
the security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of its generic rating category.

In Moody's municipal bond rating system, those bonds in the Aa, A, Baa,
Ba, and B groups which Moody's believes possess the strongest investment
attributes are designated by the symbols Aa 1, A 1, Baa 1, Ba 1, and B 1.

STANDARD & POOR'S CORPORATION. Bonds which are rated AAA have received
the highest rating assigned by Standard & Poor's to a debt obligation,
indicating an extremely strong capacity to pay interest and repay principal.
Debt rated AA has a very strong capacity to pay interest and repay principal and
differs from the higher rated issues only in a small degree. Debt rated A has a
strong capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in the higher rated categories. Debt rated BBB is regarded
as having adequate capacity to pay interest and repay principal. Whereas such
rating normally exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to weakened
capacity to pay interest and repay principal for debt in this category than in
higher rated categories. Debt rated in categories below BBB (I.E., BB, B, CCC,
and CC) is considered to be predominately speculative with respect to 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.

B-66
<PAGE>
PART C

-----------------------

OTHER INFORMATION

-----------------------

<PAGE>
PHOENIX-ENGEMANN FUNDS

F O R M N-1A

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 Global Growth Fund and the
Phoenix-Engemann Small & Mid-Cap 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
Global Growth 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:

(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)

C-1
<PAGE>

(6)(A) Distribution Agreement with Phoenix Equity Planning Corporation
(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) 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) Form of Rule 12b-1 Plan For Class B/C Shares(6)
(16) Performance Calculations(3)
(17) Financial Data Schedules
(18) Multiple Class Plan (Amended)(8)
__________________

(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.

Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

None.

C-2
<PAGE>
Item 26. NUMBER OF HOLDERS OF SECURITIES.

As of June 30, 1997, the Registrant had the following approximate number of
shareholder accounts:
Number of
Title of Class Accounts
-------------- --------
Shares of beneficial interest:

Phoenix-Engemann Growth Fund 13,935

Phoenix-Engemann Balanced Return Fund 2,140

Phoenix-Engemann Nifty Fifty Fund 6,291

Phoenix-Engemann Global Growth Fund 934

Phoenix-Engemann Small & Mid-Cap Growth Fund 747

Phoenix-Engemann Value 25 Fund 533

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

C-3
<PAGE>
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.

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.

Item 29. PRINCIPAL UNDERWRITERS.

(a) Not Applicable.

(b) The directors and executive officers of Phoenix Equity Planning
Corporation, the distributor for Registrant, are as follows:

Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
------------------ ------------- -------------
Michael E. Haylon Director None
56 Prospect Street
P.O. Box 150480
Hartford, CT
06115-0480

Philip R. McLoughlin Director and None
One American Row President
Hartford, CT 06115

David R. Pepin Director and None
56 Prospect Street Executive Vice
P.O. Box 150480 President
Hartford, CT
06115-0480

Leonard J. Saltiel Senior Vice None
100 Bright Meadow President
Blvd.
P.O. Box 2200
Enfield, CT 06083-2200

William R. Moyer Senior Vice None
100 Bright Meadow President, Finance,
Blvd. and Treasurer
P.O. Box 2200
Enfield, CT 06083-2200

William J. Newman Senior Vice None
56 Prospect Street President
P.O. Box 150480
Hartford, CT
06115-0480

C-4
<PAGE>

Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
------------------ ------------- -------------
G. Jeffrey Bohne Vice President, None
101 Munson Street Transfer Agent
Greenfield, MA 01301 Operations

Nancy G. Curtiss Vice President, None
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT
06115-0480

Maris Lambergs Vice President, None
100 Bright Meadow National Sales
Blvd. Manager
P.O. Box 2200
Enfield, CT 06083-2200

James M. Dolan Vice President and None
100 Bright Meadow Compliance Officer;
Blvd. Assistant Secretary
P.O. Box 2200
Enfield, CT 06083-2200

Elizabeth R. Vice President, None
Sadowinski Field and Investor
100 Bright Meadow Services
Blvd.
P.O. Box 2200
Enfield, CT 06083-2200

Eugene A. Charon Controller None
100 Bright Meadow
Blvd.
P.O. Box 2200
Enfield, CT 06083-2200

Thomas N. Steenburg Secretary None
One American Row
Hartford, CT 06115

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. Pasadena National Trust Company, 600 North Rosemead Boulevard,
Pasadena, CA 91107-2138, 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

C-5
<PAGE>
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-6
<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 26th day of September, 1997.

PASADENA INVESTMENT TRUST

By: 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.

ROGER ENGEMANN* Principal September 26, 1997
--------------------- Executive Officer
Roger Engemann and Trustee

BARRY E. McKINLEY* Trustee September 26, 1997
---------------------
Barry E. McKinley

ROBERT L. PETERSON* Trustee September 26, 1997
---------------------
Robert L. Peterson

RICHARD C. TAYLOR* Trustee September 26, 1997
---------------------
Richard C. Taylor

ANGELA WONG* Trustee September 26, 1997
---------------------
Angela Wong

*By: /s/ Julie Allecta
-----------------------------------------------
Julie Allecta, Attorney-in-Fact,
pursuant to Powers of Attorney previously filed.

C-7
<PAGE>
File Nos. 33-1922
811-4506

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

E X H I B I T S

F O R M N-1A

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

POST-EFFECTIVE AMENDMENT NO. 26

AND

REGISTRATION STATEMENT

UNDER

THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 29

__________________

THE PHOENIX-ENGEMANN FUNDS
(Exact name of Registrant as specified in its charter)

C-8
<PAGE>
EXHIBIT INDEX

Exhibit
-------

C-9
<PAGE>

EXHIBIT INDEX

---------------

Exhibit No.
------- ---

Distribution Agmt 6(A)

Administration Agmt 9

Independent Auditor's Consent 11

<PAGE>

EXHIBIT 6(A)

--------------

Distribution Agreement

<PAGE>

DISTRIBUTION AGREEMENT

THIS AGREEMENT made as of this 3rd day of September, 1997, by and between
The Phoenix-Engemann Funds, a Massachusetts business trust having a place of
business located at 600 North Rosemead Boulevard, Pasadena, California (the
"Trust") and Phoenix Equity Planning Corporation, a Connecticut corporation
having a place of business located at 100 Bright Meadow Boulevard, Enfield,
Connecticut (the "Distributor").

WITNESSETH THAT:

1. The Trust hereby grants to the Distributor the right to purchase shares
of beneficial interest of each class of each series of the Trust established and
designated as of the date hereof and of any additional series and classes
thereof which the Trustees may establish and designate during the term of this
Agreement (collectively called the "Series") and to resell shares of each Series
(collectively called the "Shares") as principal and not as agent. The
Distributor accepts such appointment and agrees to render the services described
in this Agreement for the compensation herein provided.

2. The Distributor's right to purchase Shares shall be exclusive except that
the terms of this Agreement shall not apply to Shares issued or transferred:

a) pursuant to an offer of exchange exempted under Section 22(d) of
the Investment Company Act of 1940, as amended (the "Act") by reason of the fact
that said offer is permitted by Section 11 of the Act, including any offer made
pursuant to clause (1) or (2) of Section 11(b);

b) upon the sale to a registered unit investment trust which is the
issuer of periodic payment plan certificates the net proceeds of which are
invested in redeemable securities;

c) pursuant to an offer made solely to all registered holders of
Shares, or all registered holders of Shares of any Series, proportionate to
their holdings or proportionate to any cash distribution made to them by the
Trust (subject to appropriate qualifications designed solely to avoid issuance
of fractional securities);

d) in connection with any merger or consolidation of the Trust or of
any Series with any other investment company or the acquisition by the Trust, by
purchase or otherwise, of any other investment company;

<PAGE>

e) pursuant to sales exempted from Section 22(d) of the Act, by rule
or regulation or order of the Securities and Exchange Commission as provided in
the then current registration statement of the Trust; or

f) in connection with the reinvestment by Trust shareholders of
dividend and capital gains distributions.

3. The "Net Asset Value" and the "Public Offering Price" of the Shares of
each Series as referred to in this Agreement shall be computed in accordance
with the provisions of the then current registration statement of the Trust. The
Distributor shall be notified promptly by the Trust of such computations.

4. Each day the Distributor shall have the right to purchase from the Trust,
as principal, the amount of Shares of each Series needed to fill unconditional
orders for Shares of such Series received by the Distributor from dealers or
investors, but no more than the Shares needed, at a price equal to the Net Asset
Value of the Shares of such Series. Any purchase of Shares by the Distributor
under this Agreement shall be subject to reasonable adjustment for clerical
errors, delays and errors of transmission and cancellation of orders.

5. With respect to transactions other than with dealers, the Distributor
will sell Shares of each Series only at the Public Offering Price then in
effect, except to the extent that sales at less than the Public Offering Price
may be allowed by the Act, any rule or regulation promulgated thereunder or by
order of the Securities and Exchange Commission, provided, however, that any
such sales at less than the Public Offering Price shall be consistent with the
terms of the then current registration statement of the Trust. Any sale of
Shares of each Series to or through a person other than a dealer will be at the
Public Offering Price; however, the Distributor may pay a commission to such
person equal to no more than the difference between the Public Offering Price
and the Net Asset Value of those Shares. The Distributor will sell at Net Asset
Value Shares of any Series which are offered by the then current registration
statement or prospectus of the Trust of sale at such Net Asset Value.

6. Sales at a discount from the Public Offering Price shall be made in
accordance with the terms and conditions of uniform selling agreements allowing
such discounts. Such discounts shall not exceed the difference between the Net
Asset Value and the Public Offering Price.

7. The Trust shall furnish the Distributor with copies of its Declaration of
Trust, as amended from time to time. The Trust shall also furnish the
Distributor with any other

<PAGE>

documents of the Trust which will assist the Distributor in the performance of
its duties hereunder.

8. The Distributor agrees to use its best efforts (in states where it may
lawfully do so) to obtain from investors unconditional orders for Shares
authorized for issue by the Trust and registered under applicable Federal
securities laws, and, so long as it does so, nothing herein contained shall
prevent the Distributor from entering into similar arrangements with other
registered investment companies. The Distributor may, in the exercise of its
discretion, refuse to accept orders for Shares from any person.

9. Upon receipt by the Trust of a purchase order from the Distributor,
accompanied by proper applications for the purchase of Shares and delivery
instructions, the Trust shall, as promptly as practicable thereafter, cause
evidence of ownership of such Shares to be delivered as indicated in such
purchase order. Payment for such Shares shall be made by the Distributor to the
Trust in a manner acceptable to the Trust, provided that the Distributor shall
pay for such Shares no later than the third business day after the Distributor
shall have contracted to purchase such shares.

10. In connection with offering for sale and selling Shares, the Trust
authorizes the Distributor to give only such information and to make only such
statements or representations as are contained in the then current registration
statement of the Trust or in then current sales literature or advertisements.

11. The Trust agrees to pay the following expenses:

a) the cost of mailing stock certificates representing Shares;

b) fees and expenses (including legal expenses) of registering and
maintaining registrations of the Trust and of each Series with the Securities
and Exchange Commission including the preparation and printing of registration
statements and prospectuses for filing with said Commission;

c) fees and expenses (including legal expenses) incurred in
registering and qualifying Shares for sale with any state regulatory agency and
fees and expenses of maintaining, renewing, increasing or amending such
registrations and qualifications;

d) the expense of any issue or transfer taxes upon the sale of Shares
to the Distributor by the Trust; and

e) the cost of preparing and distributing reports and notices to
shareholders.

<PAGE>

12. The Distributor agrees to pay the following expenses:

a) all expenses of printing prospectuses and statements of additional
information used in connection with the sale of Shares and printing and
preparing all other sales literature;

b) all fees and expenses in connection with the qualification of the
Distributor as a dealer in the various states and countries;

c) the expense of any stock transfer tax required in connection with
the sale of Shares by the Distributor as principal to dealers or to investors;
and

d) all other expenses in connection with offering for sale and the
sale of Shares which have not been herein specifically allocated to the Trust.

13. The Trust hereby appoints the Distributor its agent to receive requests
to accept the Trust's offer to repurchase Shares upon such terms and conditions
as may be described in the Trust's then current registration statement. The
agency granted in this paragraph 13 is terminable at the discretion of the
Trust.

14. The Trust agrees to indemnify and hold harmless the Distributor, its
officers and directors and each person, if any, who controls the Distributor
within the meaning of Section 15 of the Securities Act of 1933, as amended,
against any losses, claims, damages, liabilities and expenses (including the
cost of any legal fees incurred in connection therewith) which the Distributor,
its officers, directors or any such controlling person may incur under said Act,
under any other statute, at common law or otherwise, arising out of or based
upon

a) any untrue statement or alleged untrue statement of a material fact
contained in the Trust's registration statement or prospectus (including
amendments and supplements thereto), or

b) any omission or alleged omission to state a material fact required
to be stated in the Trust's registration statement or prospectus or necessary to
make the statements in either not misleading, provided, however, that insofar as
losses, claims, damages, liabilities or expenses arise out of or are based upon
any such untrue statement or omission or alleged untrue statement or omission
made in reliance and in conformity with information furnished to the Trust by
the Distributor for use in the Trust's registration statement or prospectus,
such indemnification is not applicable. In no case shall the Trust indemnify the
Distributor or its controlling persons as to any amounts incurred for any

4
<PAGE>

liability arising out of or based upon any action for which the Distributor, its
officers and directors or any controlling person would otherwise be subject to
liability by reason of willful misfeasance, bad faith, or gross negligence in
the performance of its duties or by reason of the reckless disregard of its
obligations and duties under this Agreement.

15. The Distributor agrees to indemnify and hold harmless the Trust, its
officers and trustees and each person, if any, who controls the Trust within the
meaning of Section 15 of the Securities Act of 1933, as amended, against any
losses, claims, damages, liabilities and expenses (including the cost of any
legal fees incurred in connection therewith) which the Trust, its officers,
trustees or any such controlling person any incur under said Act, under any
other statute, at common law or otherwise arising out of the acquisition of any
shares by any person which

a) may be based upon any wrongful act by the Distributor or any of its
employees or representatives, or

b) may be based upon any untrue statement or alleged untrue statement
of a material fact contained in the Trust's registration statement or prospectus
(including amendments and supplements thereto), or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading if such statement or omission was
made in reliance upon information furnished or confirmed in writing to the Trust
by the Distributor.

16. It is understood that:

a) trustees, officers, employees, agents and shareholders of the Trust
are or may be interested persons, as that term is defined in the Act
("Interested Persons"), of the Distributor as directors, officers, stockholders
or otherwise;

b) directors, officers, employees, agents and stockholders of the
Distributor are or may be Interested Persons of the Trust as trustees, officers,
shareholders or otherwise;

c) the Distributor may be an Interested Person of the Trust as
shareholder or otherwise; and

d) the existence of any such dual interest shall not offset the
validity hereof or of any transactions hereunder.

17. The Trust may terminate this Agreement by 60 days written notice to the
Distributor at any time, without the payment of any penalty, by vote of the
Trustees or by

<PAGE>

a vote of a majority of the outstanding voting securities, as that term is
defined in the Act, of the Trust. The Distributor may terminate this Agreement
by 60 days written notice to the Trust, without the payment of any penalty. This
Agreement shall immediately terminate in the event of its assignment, as that
term is defined in the Act.

18. Subject to prior termination as provided in paragraph 17, this Agreement
shall continue in force for one year from the date of execution and from year to
year thereafter so long as the continuance after such one year period shall be
specifically approved at least annually by vote of the Trustees, or by a vote of
a majority of the appropriate class of outstanding voting securities, as that
term is defined in the Act, of the Trust. Additionally, each annual renewal of
this Agreement must be approved by the vote of a majority of the Trustees who
are not parties to the Agreement or Interested Persons of any such party, cast
in person at a meeting of the Trustees called for the purpose of voting on such
approval.

19. It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but bind only the trust property of
the Trust, as provided in the Declaration of Trust. The execution and delivery
of this Agreement by the President of the Trust has been authorized by the
Trustees acting as such, and neither such execution and delivery by such officer
nor such authorization by such Trustees shall be deemed to have been made by any
of them individually or be binding upon or impose any liability on any of them
personally, but shall bind only the trust property of the Trust as provided in
the Declaration of Trust. The Declaration of Trust is on file with the Secretary
of The Commonwealth of Massachusetts.

20. This Agreement shall become effective upon the date first set forth
above. This Agreement shall be governed by the laws of The Commonwealth of
Massachusetts and shall be binding on the successors and assigns of the parties
to the extend permitted by law.

<PAGE>

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first written above.

PHOENIX-ENGEMANN FUNDS

By:
-------------------------------------

Title:
----------------------------------

PHOENIX EQUITY PLANNING CORPORATION

By:
-------------------------------------

Title:
----------------------------------

<PAGE>

EXHIBIT 9

--------------

Administration Agreement

<PAGE>

ADMINISTRATION AGREEMENT

THIS AGREEMENT is made as of the 3rd day of September, 1997 by and between
THE PHOENIX-ENGEMANN FUNDS, a Massachusetts business trust (the "Trust"), and
PHOENIX EQUITY PLANNING CORPORATION, a Connecticut corporation (the
"Administrator"), with respect to each Series or Fund of the Trust set forth in
Appendix A hereto, as may be amended from time to time (the "Funds").

WITNESSETH

WHEREAS, the Trust is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and

WHEREAS, the Trust wishes to retain the Administrator to provide the
administrative and shareholder services needed for each Fund, and the
Administrator is willing to furnish 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 Trust hereby appoints the Administrator to provide
certain administrative and shareholder services to the Fund and to pay for all
normal operating expenses of each Fund, except for fees and expenses associated
with investment management services and service fees to be paid to service
providers in whose name or nominee's name shares of a Fund are registered for
services to the holders of such shares, for the period and on such terms set
forth in this Agreement. The Administrator accepts such appointment and agrees
to furnish such services in return for compensation as provided in Paragraph 8
of this Agreement. The Administrator agrees to comply with all relevant
provisions of the 1940 Act and applicable rules and regulations thereunder.

2. SERVICES AND RESPONSIBILITIES ON A CONTINUING BASIS.

(a) The Administrator will provide for the following services on a
regular basis which shall be daily, weekly or as otherwise appropriate, unless
otherwise specified by the Trust:

(i) 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;

<PAGE>

(ii) issuing correspondence to shareholders (including, upon
request, copies, but not originals, of regular
correspondence, confirmations or regular statements of
account);

(iii) mailing shareholder reports and prospectuses pursuant to
requests of shareholders;

(iv) 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

(v) 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.

(b) The Administrator will pay for the following expenses on behalf
of each Fund:

(i) the fees and expenses of service providers employed by
the Trust to perform services with respect to all aspects
of each Fund's normal operations (except fees and
expenses to be paid to or borne by the Manager under the
Investment Management Agreement referenced in Section 7
of this Agreement for investment management and other
services and service fees to be paid by each Fund to
service providers in whose name or nominee's name shares
of a Fund are registered for services to the holders of
such shares), including all matters relating to the
functions of the custodian, transfer agent, dividend
disbursing agent, auditors, attorneys and other parties
performing services or operational functions for each
Fund; and

(ii) all other fees and expenses incurred in the normal
operations of the Funds to the extent not provided by the

<PAGE>

Administrator pursuant to Paragraph 2(a) above (except
fees and expenses to be paid to or borne by the Manager
under the Investment Management Agreement referenced in
Section 7 of this Agreement for investment management and
other services and service fees to be paid by each Fund
to service providers in whose name or nominee's name
shares of a Fund are registered for services to the
holders of such shares), including but not limited to:
insurance premiums; printing and mailing of all reports,
prospectuses, and statements of additional information to
existing and potential shareholders; all costs associated
with shareholder meetings and the preparation and
dissemination of proxy solicitation materials; state and
federal filing fees; and dues and other costs of
membership in industry associations.

3. STANDARD OF CARE. The Administrator shall be under no duty to take
any action on behalf of the Funds except as specifically set forth herein or as
may be specifically agreed to by the Administrator in writing. In the
performance of its duties hereunder, the Administrator 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, the Administrator shall not be liable for delays or
errors or loss of data occurring by reason of circumstances beyond the
Administrator's control.

4. RELIANCE UPON INSTRUCTIONS. The Trust agrees that the Administrator
shall be entitled to rely upon any instructions, oral or written, actually
received by the Administrator and shall incur no liability to the Trust in
acting upon such oral or written instructions, provided such instructions
reasonably appear to have been received from an officer of the Trust or any
other person duly authorized by the Board of Trustees of the Trust to give oral
or written instructions on behalf of the Trust or any Fund.

5. CONFIDENTIALITY. The Administrator agrees on behalf of itself and its
employees to treat confidentially all records and other information relative to
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, which approval shall not be unreasonably withheld, and
may not be withheld where the Administrator 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 Trust.

<PAGE>

6. EQUIPMENT FAILURES. In the event of equipment failures or the
occurrence of events beyond the Administrator's control which render the
performance of the Administrator's functions under this Agreement impossible,
the Administrator shall take reasonable steps to minimize service interruptions
and is authorized to engage the services of third parties to prevent or remedy
such service interruptions.

7. INDEPENDENT CONTRACTOR. The Administrator 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 Trust or the Funds in any way, or in any way be deemed an agent
for the Trust or for the Funds. It is expressly understood and agreed that the
services to be rendered by the Administrator to the Funds under the provisions
of this Agreement are not to be deemed exclusive, and the Administrator shall be
free to render similar or different services to others so long as its ability to
render the services provided for in this Agreement shall not be impaired
thereby. It is further understood that performance under this Agreement by the
Administrator does not limit or expand the duties and responsibilities of Roger
Engemann & Associates, Inc., as each Fund's Manager under the Investment
Management Agreement dated September 3, 1997.

8. COMPENSATION.

(a) As compensation for the services rendered by, and
responsibilities assumed by, the Administrator during the term of this
Agreement, the Funds will pay to the Administrator an 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 administration fee shall be accrued daily by each of the
Funds and paid to the Administrator upon request.

<PAGE>

9. INDEMNIFICATION. The Trust agrees to indemnify and hold harmless the
Administrator 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 the
Administrator 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 Trust or (ii) upon oral or
written instructions from an officer of the Trust, provided, that the
Administrator shall not be indemnified against any liability to the Trust or to
shareholders (or any expenses incident to such liability) arising out of the
Administrator's own willful misfeasance, bad faith, negligence or reckless
disregard of its duties and obligations under this Agreement. The Administrator
agrees to indemnify and hold harmless the Trust and its officers and Trustees
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 the Administrator 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 Trust or arising out of the Administrator'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
termination by the Trust or the Administrator 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. The Administrator agrees that all records which it
maintains for each Fund are the property of such Fund, and the Administrator
will surrender promptly to such Fund any such records upon the Fund's request.
The Administrator further agrees to maintain and preserve any such records for
the periods prescribed under the Rules promulgated under the 1940 Act.

<PAGE>

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.

(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) The Administrator acknowledges that it has received notice of and
accepts the limitations of the Trust's liability set forth in Article VIII of
this Agreement and Declaration of Trust. The Administrator agrees that the
Trust's obligations under this Agreement shall be limited to the Funds and to
their assets, and that the Administrator shall not seek satisfaction of any such
obligation from the shareholders of the Funds nor from any trustee, officer,
employee or agent of the Trust or the Funds.

(f) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.

(g) 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.

THE PHOENIX-ENGEMANN FUNDS

By:
-------------------------------------
Roger Engemann,
President

PHOENIX EQUITY PLANNING CORPORATION

By:
-------------------------------------
Name:
-------------------------------
Title:
-------------------------------

Appendix A attached.

<PAGE>

APPENDIX A

List of Funds subject to Administration Agreement:

1. Phoenix-Engemann Growth Fund

2. Phoenix-Engemann Balanced Return Fund

3. Phoenix-Engemann Nifty Fifty Fund

4. Phoenix-Engemann Global Growth Fund

5. Phoenix-Engemann Small & Mid-Cap Growth Fund

6. Phoenix-Engemann Value 25 Fund

<PAGE>

EXHIBIT 11

-----------------

Independent Auditor's Consent

<PAGE>

[LETTERHEAD] Coopers & Lybrand L.L.P.

a professional services firm

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. 26
to the Registration Statement on Form N-1A of 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" and "General
Information" in the Prospectus.

/s/ Coopers & Lybrand L.L.P.

Los Angeles, California
September 29, 1997

COOPERS & LYBRAND L.L.P., A REGISTERED LIMITED LIABILITY PARTNERSHIP, IS A
MEMBER FIRM OF COOPERS & LYBRAND (INTERNATIONAL).