As filed with the Securities and Exchange Commission on February 26, 1999
File Nos. 33-1922
811-4506
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 29 [X]
and
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 32 [X]
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THE PHOENIX-ENGEMANN FUNDS
(formerly called Pasadena Investment Trust)
(Exact Name of Registrant as Specified in Charter)
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600 North Rosemead Boulevard, Pasadena, California 91107-2133
(Address of Principal Executive Office)
(626) 351-9686
(Registrant's Telephone Number, Including Area Code)
ROGER ENGEMANN
600 North Rosemead Boulevard, Pasadena, California 91107-2138
(Name and Address of Agent for Service)
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It is proposed that this filing will become effective:
[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485, or
[ ] on April 30, 1998 pursuant to paragraph (b) of Rule 485, or
[X] 60 days after filing pursuant to paragraph (a)(1) of Rule 485, or
[ ] on pursuant to paragraph (a)(1) of Rule 485, or
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485, or
[ ] on pursuant to paragraph (a)(2) of Rule 485.
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Please Send Copy of Communications to:
Pamela S. Sinofsky
Compliance Officer
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, CT 06115
(860) 403-5261
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<PAGE>
THE PHOENIX-ENGEMANN FUNDS
Phoenix-Engemann Balanced Return Fund
Phoenix-Engemann Global Growth Fund
Phoenix-Engemann Growth Fund
Phoenix-Engemann Nifty Fifty Fund
Phoenix-Engemann Small & Mid-Cap Growth Fund
Phoenix-Engemann Value 25 Fund
CONTENTS OF POST-EFFECTIVE AMENDMENT
This Post-Effective Amendment to the Registration Statement of The
Phoenix-Engemann Funds contains the following documents:
Facing Sheet
Contents of Post-Effective Amendment
Cross-Reference Sheet for the above-referenced Funds
Part A: Prospectus for the above-referenced Funds
Part B: Statement of Additional Information for the above-referenced
Funds
Part C: Other Information
Signature Page
Exhibit Index
<PAGE>
THE PHOENIX-ENGEMANN FUNDS
CROSS REFERENCE SHEET PURSUANT TO RULE 495(a)
<TABLE>
<CAPTION>
Part A:
Information Required in Prospectus
<S> <C> <C>
Item Number Form N-1A Part A Prospectus Caption
- ------------------------------------------------------------- ---------------------------------------------------
1. Front and Back Cover Pages Cover Page, Back Cover Page
2. Risk/Return Summary: Investments, Risks, Investment Risk and Return Summary
Performance
3. Risk/Return Summary: Fee Table Fund Expenses
4. Investment Objectives, Principal Investment Investment Risk and Return Summary; Investment
Strategies, and Related Risks Strategies; Risks Related to Investment Strategies
5. Management's Discussion of Fund Performance Performance Tables
6. Management, Organization, and Capital Structure Management of the Fund
7. Shareholder Information Pricing of Fund Shares; Sales Charges; Your
Account; How to Buy Shares; How to Sell Shares;
Things You Should Know When Selling Shares;
Account Policies; Investor Services; Tax Status of
Distributions
8. Distribution Arrangements Sales Charges
9. Financial Highlights Information Financial Highlights
Part B:
Information Required in Statement of Additional Information
Item Number Form N-1A, Part B Statement of Additional Information Caption
- ------------------------------------------------------------- ---------------------------------------------------
10. Cover Page and Table of Contents Cover Page, Table of Contents
11. Fund History The Fund
12. Description of the Fund and Its Investment Risks Investment Objectives and Policies; Investment
Restrictions
13. Management of the Fund Management of the Trust
14. Control Persons and Principal Holders of Securities Management of the Trust
15. Investment Advisory and Other Services Services of the Adviser; The Distributor;
Distribution Plans; Other Information
16. Brokerage Allocation and Other Practices Portfolio Transactions and Brokerage
17. Capital Stock and Other Securities Other Information
18. Purchase, Redemption, and Pricing of Shares Net Asset Value; How to Buy Shares; Investor
Account Services; Redemption of Shares; Tax
Sheltered Retirement Plans
19. Taxation of the Fund Dividends, Distributions and Taxes
20. Underwriters The Distributor
21. Calculation of Performance Data Performance Information
22. Financial Statements Financial Statements
Part C
Information required to be included in Part C is set forth under the appropriate Item,
so numbered, in Part C of this Registration Statement.
</TABLE>
<PAGE>
Table of Contents
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<TABLE>
<S> <C>
Phoenix-Engemann Balanced Return Fund
Investment Risk and Return Summary .............. 1
Fund Expenses ................................... 4
Investment Strategies ........................... 5
Risks Related to Investment Strategies .......... 6
Phoenix-Engemann Global Growth Fund
Investment Risk and Return Summary .............. 10
Fund Expenses ................................... 13
Investment Strategies ........................... 14
Risks Related to Investment Strategies .......... 16
Phoenix-Engemann Growth Fund
Investment Risk and Return Summary .............. 20
Fund Expenses ................................... 22
Investment Strategies ........................... 23
Risks Related to Investment Strategies .......... 24
Phoenix-Engemann Nifty Fifty Fund
Investment Risk and Return Summary .............. 27
Fund Expenses ................................... 30
Investment Strategies ........................... 31
Risks Related to Investment Strategies .......... 32
Phoenix-Engemann Small & Mid-Cap
Growth Fund
Investment Risk and Return Summary .............. 36
Fund Expenses ................................... 39
Investment Strategies ........................... 40
Risks Related to Investment Strategies .......... 42
Phoenix-Engemann Value 25 Fund
Investment Risk and Return Summary .............. 46
Fund Expenses ................................... 49
Investment Strategies ........................... 50
Risks Related to Investment Strategies .......... 52
Management of the Funds .......................... 55
Pricing of Fund Shares ........................... 56
Sales Charges .................................... 57
Your Account ..................................... 60
> Phoenix How to Buy Shares ................................ 61
Engemann How to Sell Shares 61
Funds Things You Should Know When
Selling Shares .................................. 62
Account Policies ................................. 63
Investor Services ................................ 64
Tax Status of Distributions ...................... 66
Financial Highlights ............................. 67
Additional Information ........................... 82
</TABLE>
<PAGE>
Phoenix-Engemann Balanced Return Fund
Investment Risk and Return Summary
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Investment Objective
Phoenix-Engemann Balanced Return Fund has an investment objective
to maximize total investment return consistent with reasonable
risk. There is no guarantee that the fund will achieve its
objective.
Principal Investment Strategies
[arrow] The fund seeks to invest in high-quality growth
companies and U.S. Government securities. Under normal
circumstances, the fund expects to invest at least 25%
of its net assets in U.S. Government securities.
[arrow] The adviser intends to use moderate asset allocation and
a balanced approach, assessing the opportunity for gain
and the risk of loss, to select securities for the fund.
It intends to provide capital appreciation from
equities, balanced by income and capital preservation
from U.S. Government securities. The adviser hopes to
achieve less volatility using this strategy.
[arrow] The adviser looks to sell securities from the portfolio
when there is a change in the original investment thesis
or the security has appreciated and is no longer
attractive.
[arrow] The adviser will have sole discretion to shift its
emphasis among equity and debt securities, as well as
among various industry sectors, as it may determine
based upon financial trends and changes in economic and
market conditions.
[arrow] The fund generally will invest in well established
companies with larger capitalizations. However, the fund
can invest in companies with smaller capitalizations and
in new issues.
[arrow] The fund may invest up to 35% of its assets in
securities of foreign companies, special situations and
unseasoned companies combined.
Phoenix-Engemann Balanced Return Fund 1
<PAGE>
Principal Risks
If you invest in this fund you risk that you may lose your
investment
The fund will seek to increase the value of your shares by
investing in securities the adviser expects to increase in value.
Conditions affecting the overall economy, specific industries or
companies in which the fund invests can be worse then expected.
As a result, the value of your shares may decrease. In addition,
if the adviser misjudges the return potential, or the ability of
issuers to make scheduled principal and interest payments, the
fund's returns may be lower than prevailing returns.
The fund may be subject to greater risks than a fund that does
not invest in securities with growth characteristics.
The fund may invest in small companies, unseasoned companies and
new issues. Smaller and unseasoned companies may be affected to a
greater extent than larger, established companies by changes in
general economic conditions and conditions in particular
industries. Unseasoned companies will be relatively new to the
primary line of business and small companies may also be
relatively new. These companies may not have the same operating
history and "track record" as larger companies. This could make
future performance of smaller companies, unseasoned companies and
new issues more difficult to predict.
The fund will invest in U.S. Government securities. Obligations
issued or guaranteed by the U.S. government, agencies,
authorities and instrumentalities only guarantee principal and
interest will be timely paid to holders of the securities. The
entities do not guarantee that the value of fund shares will
increase.
The fund may invest in companies in foreign countries. Political
and economic uncertainty as well as less public information about
investments may negatively impact the fund's portfolio. Some
investments may be made in currencies other than U.S. dollars
that will fluctuate in value as a result of changes in the
currency exchange rate. Foreign markets and currencies may not
perform as well as U.S. markets. Emerging market countries and
companies doing business in emerging markets may not have the
same range of opportunities as countries and their companies in
developed nations. They may also have more obstacles to financial
success.
The fund may invest in special situations. Special situations
often involve smaller, unseasoned companies and the securities
may not appreciate as the adviser believed they would. Analysis
of special situations is more complex than for ordinary
investments, making it more difficult for the adviser to
accurately predict risk and return.
2 Phoenix-Engemann Balanced Return Fund
<PAGE>
Performance Tables
The bar chart and table below provide some indication of the
risks of investing in the Phoenix-Engemann Balanced Return Fund.
The bar chart shows changes in the fund's Class A Shares
performance from year to year over the last ten years.(1) The
table below shows how the fund's average annual returns for one,
five and ten years, and for the life of the fund compare to those
of a broad-based securities market index. The fund's past
performance is not necessarily an indication of how the fund will
perform in the future.
[tabular representation of chart]
Phoenix-Engemann Balanced Return Fund
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
32.97% -0.39% 38.89% 4.49% 2.44% -4.43% 27.18% 17.78% 18.98% 29.12%
</TABLE>
[end chart]
(1) The fund's average annual returns in the chart above do not
reflect the deduction of any sales charges. The returns would
have been less than those shown if sales charges were deducted.
During the period shown in the chart above, the highest return
for a quarter was 20.76% (quarter ending December 31, 1998) and
the lowest return for a quarter was (16.28)% (quarter ending
September 30, 1990). Year to date performance (through March 31,
1999) was %.
<TABLE>
<CAPTION>
Average Annual Total Returns(1) One Five Ten
(for the periods ending 12/31/98) Year Years Years Life of the Fund(2)
---------------------------------------------------------------------------------------------------------------------
Class A Class B Class C
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares 22.98% 15.93% 15.23% 15.66% -- --
---------------------------------------------------------------------------------------------------------------------
Class B Shares 24.21% N/A N/A -- 16.06% --
---------------------------------------------------------------------------------------------------------------------
Class C Shares 28.07% N/A N/A -- -- 16.27%
---------------------------------------------------------------------------------------------------------------------
Balanced Benchmark(3) 20.94% 17.15% 14.98% 13.16%(4) 23.76%(5) 23.76%(5)
---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect
the deduction of the maximum sales charge for an investment in
the fund's Class A Shares and a full redemption in the fund's
Class B and Class C Shares.
(2) Class A Shares since June 8, 1987; Class B and Class C Shares
since January 3, 1994.
(3) The Balanced Benchmark is a composite index made up of 60% of
the S&P 500 Index return, 30% of the Lehman Brothers
Government/Corporate Bond Index return and 10% of the 90-day U.S.
Treasury bill return. The index's performance does not reflect
sales charges.
(4) Benchmark performance since June 30, 1998.
(5) Benchmark performance since January 31, 1994.
Phoenix-Engemann Balanced Return Fund 3
<PAGE>
Fund Expenses
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This table illustrates all fees and expenses that you may pay if
you buy and hold shares of the fund.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
--------- --------- ---------------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from
your investment)
Maximum Sales Charge (load) Imposed on
Purchases (as a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (load) (as a None 5%(a) 1% during the
percentage of the lesser of the value redeemed or first year
the amount invested)
Maximum Sales Charge (load) Imposed on
Reinvested Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
-----------------------------------------
Class A Class B Class C
Shares Shares Shares
--------- --------- ---------------
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management Fees 0.76% 0.76% 0.76%
Distribution and Service (12b-1) Fees(b) 0.25% 1.00% 1.00%
Other Expenses 0.62% 0.62% 0.62%
---- -------- ----
Total Annual Fund Operating Expenses 1.63% 2.38% 2.38%(c)
==== ======== ====
</TABLE>
- ----------------
(a) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year. Class B Shares purchased
prior to January 20, 1998 are subject to the sales load schedule as it existed
prior to that date. See "Sales Charges--Class B Shares Purchased Prior to
January 20, 1998" in this prospectus.
(b) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
(c) Class C Shares purchased prior to January 20, 1998 are not subject to the 1%
deferred sales load.
Example
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
4 Phoenix-Engemann Balanced Return Fund
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $633 $965 $1,319 $2,316
Class B $641 $942 $1,270 $2,530
Class C $341 $742 $1,270 $2,716
</TABLE>
You would pay the following expenses if you did not redeem your
shares:
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $633 $965 $1,319 $2,316
Class B $241 $742 $1,270 $2,530
Class C $241 $742 $1,270 $2,716
</TABLE>
Investment Strategies
- --------------------------------------
Investment Objective
The Phoenix-Engemann Balanced Return Fund has an investment
objective to maximize a total investment return consistent with
reasonable risk. There is no guarantee that the fund will achieve
its objective.
Principal Investment Strategies
The fund seeks to invest in high-quality growth companies and
U.S. Government securities. Under normal circumstances, the fund
expects to invest at least 25% of its net assets in U.S.
Government securities.
The adviser intends to use a balanced approach and moderate asset
allocation to select investments for the fund. It intends to
provide capital appreciation from equities, balanced by income
and capital preservation from U.S. Government securities. The
adviser considers both the opportunity for gain and the risk of
loss in making investment decisions. The adviser hopes to achieve
less volatility using this strategy than a portfolio consisting
solely of equity securities. The adviser anticipates that the
volatility of price movement of the equity securities in its
investment portfolio will be less than that of the Standard &
Poor's 500 Stock Index.
A security is sold when there has been a change in the original
investment thesis, such as a reduction in the expected earnings
growth rate of the company or a loss of competitive advantage, or
the security has appreciated to the point where it is no longer
attractive.
Phoenix-Engemann Balanced Return Fund 5
<PAGE>
The adviser will shift its emphasis among equity and debt
securities, 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 advisor's
sole discretion.
The fund generally will invest in well established companies with
larger capitalizations. However, the fund can invest in companies
with smaller capitalizations and in new issues.
The fund may invest up to 35% of its assets in securities of
foreign companies, special situation and unseasoned companies
combined. Foreign securities are securities of non-U.S. issuers
that are listed on a principal foreign or domestic securities
exchange or market, or that are represented by Depository
Receipts. Unseasoned companies generally are smaller and younger
companies that are relatively new to or not yet well established
in its primary line of business. Special situations are created
by developments that apply solely to a particular company.
Developments that create special situations include liquidations,
reorganizations, recapitalizations, corporate restructurings,
mergers and tender offers, technological breakthroughs and new
management.
Temporary Investment Strategy: If the adviser believes conditions
are not favorable to the fund's principal strategies, all or part
of the fund's assets 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.
Risks Related to Investment Strategies
- -------------------------------------------------------
General
The fund's focus is long-term capital appreciation. The adviser
intends to invest fund assets so that your shares increase in
value. However, the value of the fund's investments that support
your share value can decease as well as increase. If between the
time you purchase shares and the time you sell shares the value
of the fund's investments decreases, you will lose money. The
value of the fund's investments can decrease for a number of
reasons. For example, changing economic conditions may cause a
decline in value of many or most investments. Particular
industries can face poor market conditions for their products or
services so that companies engaged in those businesses do not
perform as well as companies in other industries. To the extent
that the fund's investments are affected by general economic
declines and declines in industries, fund share values may
decline. Share values can also decline if the specific companies
selected for fund investment fail to perform as the adviser
expects, regardless of general economic trends, industry trends,
interest rates and other economic factors.
The value of your shares is based on the market value of the
fund's investments. In the case of fixed income securities,
including U.S. Government securities, the value of the security
will be directly affected by trends in interest rates and the
overall condition of credit markets. For
6 Phoenix-Engemann Balanced Return Fund
<PAGE>
example, in times of rising interest rates, the value of these
types of securities tends to decrease. When interest rates fall,
the value of these securities tends to rise. To the extent that
the fund's investments are negatively affected by changes in
economic conditions fund share values may decline. In addition,
if the adviser misjudges the return potential of any of the
fund's portfolio securities, the fund's returns may be lower than
prevailing returns.
In addition to these general risks of investing in the fund,
there are several specific risks of investing in the fund that
you should note.
Growth Stocks
Typically, growth stocks make little or no dividend payments to
shareholders. Investment return is based upon the stocks' capital
appreciation making return more dependent on market increases and
decreases as compared to stocks that provide dividend payments.
Growth stocks also tend to rise faster when markets advance and
drop more sharply when markets fall making them more volatile
than non-growth stocks to market changes. Should a market decline
occur, the fund's price may fall more than that of a non growth
fund.
Government Securities
Obligations issued or guaranteed by the U.S. Government, its
agencies authorities and instrumentalities only guarantee that
principal and interest will be timely paid to holders of the
securities. The entities do not guarantee that the value of fund
shares will increase.
Small Market Capitalization and Unseasoned Companies
The fund may invest in some smaller companies and unseasoned
companies. Companies with small capitalization are often
companies in industries that have recently emerged due to
cultural, economic, regulatory or technological developments.
Such developments can have a significant positive or negative
effect on small capitalization companies and their stock
performance. Given the limited operating history and rapidly
changing fundamental prospects, investment returns from smaller
capitalization companies and unseasoned companies can be highly
volatile. Smaller and unseasoned companies may find their ability
to raise capital impaired by their size or lack of operating
history. Product lines are often less diversified and subject to
competitive threats. Smaller capitalization stocks and stocks of
unseasoned companies are subject to varying patterns of trading
volume and may, at times, be difficult to sell.
New Issues
The fund may invest in new issues. A new issue may be an initial
public offering by a previously private company. There may be
less public information about the company and the company may
have a limited operating history and rapidly changing fundamental
prospects. This may make investment returns of new issues highly
volatile. New issues may also be subject to varying patterns of
trading volume and may, at times, be difficult to sell.
Phoenix-Engemann Balanced Return Fund 7
<PAGE>
Foreign Investing
The fund may invest in non-U.S. companies. Investing in the
securities of non-U.S. companies involves special risks and
considerations not typically associated with investing in U.S.
companies. These include:
o differences in accounting, auditing and financial reporting
standards,
o generally higher commission rates on foreign portfolio
transactions,
o differences and inefficiencies in transaction settlement
systems,
o the possibility of expropriation or confiscatory taxation,
o adverse changes in investment or exchange control
regulations,
o political instability, and
o potential restrictions on the flow of international
capital.
Political and economic uncertainty as well as less public
information about investments may negatively impact the fund's
portfolio.
Foreign securities often trade with less frequency and volume
than domestic securities and therefore may exhibit greater price
volatility. Additionally, dividends and interest payable on
foreign securities may be subject to foreign taxes withheld prior
to receipt by the fund.
Many of the foreign securities held by the fund will not be
registered with, nor will the issuers of those securities be
subject to the reporting requirements of, the U.S. Securities and
Exchange Commission. Accordingly, there may be less publicly
available information about the securities and about the foreign
company or government issuing them than is available about a
domestic company or government entity. Moreover, individual
foreign economies may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payment positions.
Foreign Currency
Portions of the fund's assets may be invested in securities
denominated in foreign currencies. Changes in foreign exchange
rates will affect the value of those securities denominated or
quoted in currencies other than the U.S. dollar. The forces of
supply and demand in the foreign exchange markets determine
exchange rates and these forces are in turn affected by a range
of economic, political, financial, governmental and other
factors. Exchange rate fluctuations can affect the fund's net
asset value (share price) and dividends either positively or
negatively depending upon whether foreign currencies are
appreciating or depreciating in value relative to the U.S.
dollar. Exchange rates fluctuate over both the long and short
terms.
8 Phoenix-Engemann Balanced Return Fund
<PAGE>
On January 1, 1999, eleven European countries began converting
from their sovereign currency to the European Union common
currency called the "Euro". This conversion may expose the fund
to certain risks including the reliability and timely reporting
of pricing information of the fund's portfolio holdings. In
addition, one or more of the following may adversely affect
specific securities in the fund's portfolio:
o Known trends or uncertainties related to the Euro conversion
that an issuer reasonably expects will have a material
impact on revenues, expenses or income from its operations;
o Competitive implications of increased price transparency of
European Union markets (including labor markets) resulting
from adoption of a common currency and issuers' plans for
pricing their own products and services in the Euro;
o Issuers' ability to make required information technology
updates on a timely basis, and costs associated with the
conversion (including costs of dual currency operations
through January 1, 2002);
o Currency exchange rate risk and derivatives exposure
(including the disappearance of price sources, such as
certain interest rate indices); and
o Potential tax consequences.
Special Situations
The fund may invest in special situations. Special situations
often involve much greater risk than ordinary investment
securities. The companies involved often are smaller, unseasoned
companies and the securities may not perform as the adviser
expects. Analysis of special situations is more complex than for
ordinary investments, making it more difficult for the adviser to
accurately predict risk and return.
Impact of the Year 2000 Issue on Fund Investments
The Year 2000 issue is the result of computer programs being
written using two rather than four digits to define the
applicable year. There is the possibility that some or all of an
entity's computer programs that have date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year
2000. If an entity whose securities are held by the fund does not
"fix" its Year 2000 issue, it is possible that its operations and
financial results would be hurt. Also, the cost of modifying
computer programs to become Year 2000 compliant may hurt the
financial performance and market price of companies whose
securities are held by the fund.
Management of The Fund
- ------------------------------------------
The Adviser
Please refer to "Management of the Funds" on page for a
description of the investment adviser, management fees and
portfolio managers.
Phoenix-Engemann Balanced Return Fund 9
<PAGE>
Phoenix-Engemann Global Growth Fund
Investment Risk and Return Summary
- -------------------------------------------------------
Important Notice to Investors
On February 9, 1999, the Board of Trustees of Phoenix-Engemann
Funds (the "Trust") unanimously approved an Agreement and Plan of
Reorganization (the "Agreement") relating to the proposed
combination of the Phoenix-Engemann Global Growth Fund of the
Trust and the Phoenix-Aberdeen Worldwide Opportunities Fund.
Pursuant to the Agreement, the Global Growth Fund will transfer
all or substantially all of its assets to the Worldwide
Opportunities Fund in exchange for shares of the Worldwide
Opportunities Fund and the assumption by the Worldwide
Opportunities Fund of certain identified liabilities of the
Global Growth Fund. Following the exchange, the Global Growth
Fund will distribute the shares of the Worldwide Opportunities
Fund to its shareholders pro rata, in liquidation of the Global
Growth Fund. The effectiveness of these transactions is subject
to the satisfaction of a number of conditions, including approval
by shareholders of the Global Growth Fund. It is currently
anticipated that these matters will be submitted for a vote at a
meeting of shareholders to be held in June 1999.
Investment Objective
Phoenix-Engemann Global Growth Fund has an investment objective
of long-term growth of capital. There is no guarantee that the
fund will achieve its objective.
Principal Investment Strategies
[arrow] The fund may invest in a diversified portfolio of
marketable securities of both U.S. and foreign issuers.
Under normal circumstances, the fund will invest at
least 65% of its total assets in securities of issuers
located in 3 or more countries, one of which typically
will be the United States.
[arrow] The fund expects to invest primarily in common stocks of
U.S. and foreign companies.
[arrow] The fund may invest in preferred stocks, warrants,
options on stocks and stock indices, Depository
Receipts, convertible debt obligations and other debt
obligations.
[arrow] The fund may invest in direct and indirect debt
obligations of the U.S. Government and its agencies,
states and municipalities and their agencies, and
corporate issuers.
[arrow] The fund may also invest in new issues.
[arrow] The fund may:
o maintain any geographic and currency mix,
o invest in securities in both developed markets and
emerging markets,
10 Phoenix-Engemann Global Growth Fund
<PAGE>
o invest with out limit in any one country, and
o invest in companies of any size.
[arrow] In selecting companies for investment, the adviser seeks
to take advantage of investment opportunities created by
a global economy and will look for companies with the
following characteristics: above-average earnings growth
potential, predictable and sustainable earnings growth,
high profitability, financial and management strength,
significant competitive advantages dominant market share
and where possible, limited regulation.
[arrow] The adviser looks to sell securities from the portfolio
when there is a change in the original investment thesis
or the security has appreciated and is no longer
attractive.
Principal Risks
If you invest in this fund you risk that you may lose your
investment.
The fund will seek to increase the value of your shares by
investing in securities the adviser expects to increase in value.
Most of the fund's investments will be in common stocks.
Conditions affecting the overall economy, specific industries or
companies in which the fund invests can be worse then expected.
As a result, the value of your shares may decrease.
The fund will invest in companies in foreign countries including
some "emerging market" countries (countries with markets that are
not fully developed). Political and economic uncertainty as well
as less public information about investments may negatively
impact the fund's portfolio. Some investments may be made in
currencies other than U.S. dollars that will fluctuate in value
as a result of changes in the currency exchange rate. Foreign
markets and currencies may not perform as well as U.S. markets.
Emerging market countries and companies doing business in
emerging markets may not have the same range of opportunities as
countries and their companies in developed nations. They may also
have more obstacles to financial success.
The fund may be subject to greater risks than a fund that does
not invest in securities with growth characteristics.
The fund may invest in small companies, unseasoned companies and
new issues. Smaller and unseasoned companies may be affected to a
greater extent than larger, established companies by changes in
general economic conditions and conditions in particular
industries. Unseasoned companies will be relatively new to the
primary line of business and small companies may also be
relatively new. These companies may not have the same operating
history and "track record" as larger companies. This could make
future performance of smaller companies, unseasoned companies and
new issues more difficult to predict.
The fund may invest in debt obligations believed by the adviser
to offer the potential for capital growth. Debt securities may be
negatively affected by changes in interest rates. Generally when
interest rates rise the value of debt securities fall.
Phoenix-Engemann Global Growth Fund 11
<PAGE>
Performance Tables
The bar chart and table below provide some indication of the
risks of investing in the Phoenix-Engemann Global Growth Fund.
The bar chart shows changes in the fund's Class A Shares
performance from year to year over the life of the fund.(1) The
table below shows how the fund's average annual returns for one
and five years, and for the life of the fund compare to those of
a broad-based securities market index. The fund's past
performance is not necessarily an indication of how the fund will
perform in the future.
[tabular representation of chart]
Phoenix-Engemann Global Growth Fund
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
<S> <C> <C> <C> <C>
25.76% 23.84% 21.77% 11.27% 14.35%
</TABLE>
[end chart]
(1) The fund's average annual returns in the chart above do not
reflect the deduction of any sales charges. The returns would have
been less than those shown if sales charges were deducted. During
the period shown in the chart above, the highest return for a
quarter was 21.85% (quarter ending December 31, 1998) and the
lowest return for a quarter was (19.75)% (quarter ending September
30, 1998). Year to date performance (through March 31, 1999) was
%.
<TABLE>
<CAPTION>
Average Annual Total Returns(1)
(for the periods ending 12/31/98) One Year Five Years Life of the Fund(2)
- ---------------------------------------------------------------------------------------------------------
Class A Class B Class C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares 8.91% 18.11% 20.05% -- --
- ---------------------------------------------------------------------------------------------------------
Class B Shares 9.47% N/A -- 13.94% --
- ---------------------------------------------------------------------------------------------------------
Class C Shares 13.26% N/A -- -- 14.38%
- ---------------------------------------------------------------------------------------------------------
MSCI AC World Index(3) 21.72% 14.48% 14.11% 18.06%(4) 18.63%(5)
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect
the deduction of the maximum sales charge for an investment in the
fund's Class A Shares and a full redemption of the funds Class B
and Class C Shares.
(2) Class A Shares since November 1, 1993; Class B Shares since
September 18, 1996; and Class C Shares since October 21, 1996.
(3) MSCI AC (Morgan Stanley Capital International All Country
World Index) is an unmanaged, commonly used measure of global
stock market total return performance. The index's performance
does not reflect sales charges.
(4) Index performance since September 30, 1996.
(5) Index performance since October 31, 1996.
12 Phoenix-Engemann Global Growth Fund
<PAGE>
Fund Expenses
- -------------------------------
This table illustrates all fees and expenses that you may pay if
you buy and hold shares of the fund.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
-------- -------- ---------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from your
investment)
Maximum Sales Charge (load) Imposed on
Purchases (as a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (load) (as a None 5%(b) 1% during
percentage of the lesser of the value redeemed or the first year
the amount invested)
Maximum Sales Charge (load) Imposed on
Reinvested Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
------------------------------------
Class A Class B Class C
Shares Shares Shares
-------- -------- ---------
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management Fees 1.10% 1.10% 1.10%
Distribution and Service (12b-1) Fees(c) 0.25% 1.00% 1.00%
Other Expenses 0.76% 0.76% 0.76%
---- ----- -----
Total Annual Fund Operating Expenses(a) 2.11% 2.86% 2.86%(d)
===== ===== =====
</TABLE>
----------------
(a) The fund's administrator has agreed to waive a portion of its administration
fee so that other operating expenses of the fund do not exceed 0.60% of the
first $50 million of the average daily net assets. Total Annual Operating
Expenses for the fund, after waiver of administration fees, are 1.94% for Class
A Shares, 2.69% for Class B Shares and 2.69% for Class C Shares.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year. Class B Shares purchased
prior to January 20, 1998 are subject to the sales load schedule as it existed
prior to that date. See "Sales Charges--Class B Shares Purchased Prior to
January 20, 1998" in this prospectus.
(c) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
(d) Class C Shares purchased prior to January 20, 1998 are not subject to the 1%
deferred sales load.
Example
This example is intended to help you compare the cost of
investing in the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the
time periods indicated and then redeem all of your shares at the
end of those periods. The example also assumes that your
investment has a 5% return each year and that the fund's
operating expenses remain the same. In the case of Class B
Shares, it is assumed that your shares are converted to Class A
after eight years. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
Phoenix-Engemann Global Growth Fund 13
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $679 $1,104 $1,555 $2,800
Class B $689 $1,086 $1,508 $3,008
Class C $389 $ 886 $1,508 $3,185
</TABLE>
You would pay the following expenses if you did not redeem your
shares:
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $679 $1,104 $1,555 $2,800
Class B $289 $ 886 $1,508 $3,008
Class C $289 $ 886 $1,508 $3,185
</TABLE>
Note: Your actual expenses may be lower than those shown in the
tables above since the expense levels used to calculate the
figures shown do not include the waiver of expenses over certain
levels by the fund's administrator.
Investment Strategies
- --------------------------------------
Investment Objective
Phoenix-Engemann Global Growth Fund has an investment objective
of long-term growth of capital. There is no guarantee that the
fund will achieve its objective.
Principal Investment Strategies
The fund may invest in a diversified portfolio of marketable
securities of both U.S. and foreign issuers. Under normal
circumstances, the fund will invest at least 65% of its total
assets in securities of issuers located in 3 or more countries,
one of which typically will be the United States. Distribution of
income, such as dividends and interest, is incidental in the
selection of investments for the fund.
The fund invests primarily in equity securities of U.S. and
foreign companies. While the fund expects to invest principally
in common stocks, it may also invest in other types of securities
with equity characteristics including: preferred stocks,
warrants, options on stocks and stock indices, Depository
Receipts and convertible debt obligations that the adviser
believes offer the possibility of capital appreciation over the
long term based on the timing of such investments. Convertible
securities have several unique investment characteristics such
as:
14 Phoenix-Engemann Global Growth Fund
<PAGE>
o higher yields than common stocks but lower yields than
comparable non-convertible securities;
o typically less fluctuation in value than the "underlying"
common stock, that is, the common stock that the investor
receives if he converts;
o the potential for capital appreciation if the market price
of the underlying common stock increases.
The fund may also invest in new issues that the adviser believes
offer good long-term investment potential or an opportunity for
immediate price appreciation.
The fund may maintain any geographic and currency mix, invest in
securities in both developed markets and emerging markets, invest
without limit in any one country and invest in companies of any
size. However, the fund intends to principally invest in
securities of companies located in developed markets, including
the United States.
Through a global investment approach, the adviser 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. In analyzing companies
for investment, the adviser generally will look for one or more
of the following characteristics in relation to the prevailing
price of the securities of such companies:
o above-average earnings growth potential;
o predictable and sustainable earnings growth;
o high profitability;
o strength of management;
o overall financial strength;
o significant competitive advantages;
o dominant market share; and
o where possible, limited regulation.
The adviser may also invest in other debt obligations If interest
rates fall, these investments are likely to increase in value.
Conversely, if interest rates rise, a decrease in value can be
expected.
The fund may invest in direct and indirect debt obligations of
the U.S. Government and its agencies, states and municipalities
and their agencies, and corporate issuers. Debt obligations of
corporate issuers must be rated in the top four investment rating
categories, or if unrated, be of equivalent investment quality as
determined by the adviser. Any security which drops below the
four highest rating categories will be considered by the adviser
in evaluating the overall composition of the portfolio.
Phoenix-Engemann Global Growth Fund 15
<PAGE>
The advisor's portfolio selection method may result in a higher
portfolio turnover rate. High portfolio turnover rates may
increase costs to the fund, may negatively affect fund
performance, and may increase capital gains distributions,
resulting in greater tax liability to you.
A security is sold when there has been a change in the original
investment thesis, such as a reduction in the expected earnings
growth rate of the company or a loss of competitive advantage, or
the security has appreciated to the point where it is no longer
attractive.
Temporary Investment Strategy: In unusual market circumstances
when the adviser believes that foreign investing may involve
undue risks, up to 100% of the funds total assets may be invested
in securities of U.S. issuers. If the adviser believes conditions
are not favorable to the fund's principal strategies, all or part
of the fund's assets 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. The
fund may also hold all or part of fund assets in Depository
Receipts.
Risks Related to Investment Strategies
- -------------------------------------------------------
General
The fund's focus is long-term capital appreciation. The adviser
intends to invest fund assets so that your shares increase in
value. However, the value of the fund's investments that support
your share value can decease as well as increase. If between the
time you purchase shares and the time you sell shares the value
of the fund's investments decreases, you will lose money. The
value of the fund's investments can decrease for a number of
reasons. For example, changing economic conditions may cause a
decline in value of many or most investments. Particular
industries can face poor market conditions for their products or
services so that companies engaged in those businesses do not
perform as well as companies in other industries. Interest rate
changes may improve prospects for certain types of businesses and
they may worsen prospects for others. To the extent that the
fund's investments are affected by general economic declines,
declines in industries, and interest rate changes that negatively
affect the companies in which the fund invests, fund share values
may decline. Share values can also decline if the specific
companies selected for fund investment fail to perform as the
adviser expects, regardless of general economic trends, industry
trends, interest rates and other economic factors.
In addition to these general risks of investing in the fund,
there are several specific risks of investing in the fund that
you should note.
Foreign Investing
The fund will invest in non-U.S. companies. Investing in the
securities of non-U.S. companies involves special risks and
considerations not typically associated with investing in U.S.
companies. These include:
16 Phoenix-Engemann Global Growth Fund
<PAGE>
o differences in accounting, auditing and financial reporting
standards,
o generally higher commission rates on foreign portfolio
transactions,
o differences and inefficiencies in transaction settlement
systems,
o the possibility of expropriation or confiscatory taxation,
o adverse changes in investment or exchange control
regulations,
o political instability, and
o potential restrictions on the flow of international
capital.
Political and economic uncertainty as well as less public
information about investments may negatively impact the fund's
portfolio.
Foreign securities often trade with less frequency and volume
than domestic securities and therefore may exhibit greater price
volatility. Additionally, dividends and interest payable on
foreign securities may be subject to foreign taxes withheld prior
to receipt by the fund.
Many of the foreign securities held by the fund will not be
registered with, nor will the issuers of those securities be
subject to the reporting requirements of, the U.S. Securities and
Exchange Commission. Accordingly, there may be less publicly
available information about the securities and about the foreign
company or government issuing them than is available about a
domestic company or government entity. Moreover, individual
foreign economies may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payment positions.
Foreign Currency
Portions of the fund's assets may be invested in securities
denominated in foreign currencies. Changes in foreign exchange
rates will affect the value of those securities denominated or
quoted in currencies other than the U.S. dollar. The forces of
supply and demand in the foreign exchange markets determine
exchange rates and these forces are in turn affected by a range
of economic, political, financial, governmental and other
factors. Exchange rate fluctuations can affect the fund's net
asset value (share price) and dividends either positively or
negatively depending upon whether foreign currencies are
appreciating or depreciating in value relative to the U.S.
dollar. Exchange rates fluctuate over both the long and short
terms.
On January 1, 1999, eleven European countries began converting
from their sovereign currency to the European Union common
currency called the "Euro". This conversion may expose the fund
to certain risks including the reliability and timely reporting
of pricing information of the fund's portfolio holdings. In
addition, one or more of the following may adversely affect
specific securities in the fund's portfolio:
o Known trends or uncertainties related to the Euro conversion
that an issuer reasonably expects will have a material
impact on revenues, expenses or income from its operations;
Phoenix-Engemann Global Growth Fund 17
<PAGE>
o Competitive implications of increased price transparency of
European Union markets (including labor markets) resulting
from adoption of a common currency and issuers' plans for
pricing their own products and services in the Euro;
o Issuers' ability to make required information technology
updates on a timely basis, and costs associated with the
conversion (including costs of dual currency operations
through January 1, 2002);
o Currency exchange rate risk and derivatives exposure
(including the disappearance of price sources, such as
certain interest rate indices); and
o Potential tax consequences.
Emerging Market Investing
The fund may invest in companies located in emerging market
countries and regions. Investments in less-developed countries
whose markets are still emerging generally presents risks in
greater degree than those presented by investment in foreign
issuers based in countries with developed securities markets and
more advanced regulatory system. Prior governmental approval of
foreign investments may be required under certain circumstances
in some developing countries, and the extent of foreign
investment in domestic companies may be subject to limitation in
other developing countries. The charters of individual companies
in developing countries may impose limitations on foreign
ownership to prevent, among other concerns, violation of foreign
investment limitations.
The economies of developing countries generally are heavily
dependent upon international trade. And accordingly, have been
and may continue to be adversely affected by trade barriers,
exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by
the countries with which they trade. These economies also have
been (and may continue to be) adversely affected by economic
conditions in the countries with which they trade.
Growth Stocks
Typically, growth stocks make little or no dividend payments to
shareholders. Investment return is based upon the stocks' capital
appreciation making return more dependent on market increases and
decreases as compared to stocks that provide dividend payments.
Growth stocks also tend to rise faster when markets advance and
drop more sharply when markets fall making them more volatile
than non-growth stocks to market changes. Should a market decline
occur, the fund's price may fall more than that of a non growth
fund.
New Issues
The fund may invest in new issues. A new issue may be an initial
public offering by a previously private company. There may be
less public information about the company and the company may
have a limited operating history and rapidly changing fundamental
prospects. This may make investment returns of new issues highly
volatile. New issues may also be subject to varying patterns of
trading volume and may, at times, be difficult to sell.
18 Phoenix-Engemann Global Growth Fund
<PAGE>
Small Market Capitalization and Unseasoned Companies
The fund may invest in some smaller companies, unseasoned
companies and new issues. Companies with small capitalization are
often companies in industries that have recently emerged due to
cultural, economic, regulatory or technological developments.
Such developments can have a significant positive or negative
effect on small capitalization companies and their stock
performance. Given the limited operating history and rapidly
changing fundamental prospects, investment returns from smaller
capitalization companies and unseasoned companies can be highly
volatile. Smaller and unseasoned companies may find their ability
to raise capital impaired by their size or lack of operating
history. Product lines are often less diversified and subject to
competitive threats. Smaller capitalization stocks, new issues
and stocks of unseasoned companies are subject to varying
patterns of trading volume and may, at times, be difficult to
sell.
Unrated Securities
The fund may invest in unrated securities. Unrated securities may
not be lower in quality then rated securities but due to their
perceived risk they may not have as broad a market as rated
securities. Analysis of unrated securities is more complex than
for rated securities, making it more difficult for the adviser to
accurately predict risk.
Impact of the Year 2000 Issue on Fund Investments
The Year 2000 issue is the result of computer programs being
written using two rather than four digits to define the
applicable year. There is the possibility that some or all of a
company's computer programs that have date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year
2000. If a company whose securities are held by the fund does not
"fix" its Year 2000 issue, it is possible that its operations and
financial results would be hurt. Also, the cost of modifying
computer programs to become Year 2000 compliant may hurt the
financial performance and market price of companies whose
securities are held by the fund.
Management of the Fund
- ------------------------------------------
Please refer to "Management of the Funds" on page for a
description of the investment adviser, management fees and
portfolio managers.
Phoenix-Engemann Global Growth Fund 19
<PAGE>
Phoenix-Engemann Growth Fund
Investment Risk and Return Summary
- -------------------------------------------------------
Investment Objective
Phoenix-Engemann Growth Fund has an investment objective of
long-term growth of capital. There is no guarantee that the fund
will achieve its objective.
Principal Investment Strategies
[arrow] The fund emphasizes the purchase of common stocks of
domestic corporations with rapidly growing earnings per
share. The companies may have small or large
capitalizations and may be unseasoned or established.
The adviser will also select stocks of companies that
may not be experiencing rapid growth but, in the opinion
of the adviser, are undervalued by other criteria of
their fundamental net worth.
[arrow] The fund may invest in preferred stocks, warrants,
convertible debt obligations and other debt obligations.
[arrow] The fund may invest in direct and indirect debt
obligations of the U.S. Government and its agencies,
states and municipalities and their agencies, and
corporate issuers.
[arrow] The fund may invest up to 30% of its assets in special
situations, such as tender offers or corporate
restructurings, that the adviser believes present
opportunities for capital growth.
[arrow] The adviser looks to sell securities from the portfolio
when there is a change in the original investment thesis
or the security has appreciated and is no longer
attractive.
Principal Risks
If you invest in this fund you risk that you may lose your
investment.
The fund will seek to increase the value of your shares by
investing in securities the adviser expects to increase in value.
Most of the fund's investments will be in common stocks.
Conditions affecting the overall economy, specific industries or
companies in which the fund invests can be worse then expected.
As a result, the value of your shares may decrease.
The fund may be subject to greater risks than a fund that does
not invest in securities with growth characteristics.
The fund may invest in small companies, unseasoned companies and
new issues . Smaller and unseasoned companies may be affected to
a greater extent than larger, established companies by changes in
general economic conditions and conditions in particular
industries. Unseasoned companies will be relatively new to the
primary line of business and small companies may also be
relatively new. These companies may not have the same operating
history and "track record" as larger companies. This could make
future performance of smaller companies, unseasoned companies and
new issues more difficult to predict.
20 Phoenix-Engemann Growth Fund
<PAGE>
The fund may invest in debt obligations believed by the adviser
to offer the potential for capital growth. Debt securities may be
negatively affected by changes in interest rates. Generally when
interest rates rise the value of debt securities fall.
The fund may invest in special situations. Special situations
often involve smaller, unseasoned companies and the securities
may not appreciate as the adviser believed they would. Analysis
of special situations is more complex than for ordinary
investments, making it more difficult for the adviser to
accurately predict risk and return.
Performance Tables
The bar chart and table below provide some indication of the
risks of investing in the Phoenix-Engemann Growth Fund. The bar
chart shows changes in the fund's Class A Shares performance from
year to year over the last ten years.(1) The table below shows
how the fund's average annual returns for one, five and ten
years, and for the life of the fund compare to those of a
broad-based securities market index. The fund's past performance
is not necessarily an indication of how the fund will perform in
the future.
[tabular representation of chart]
Phoenix-Engemann Growth Fund
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
37.75% -4.55% 67.85% 2.24% -5.87% -3.75% 27.16% 22.49% 16.04% 37.41%
</TABLE>
[end chart]
(1) The fund's average annual returns in the chart above do not
reflect the deduction of any sales charges. The returns would have
been less than those shown if sales charges were deducted. During
the period shown in the chart above, the highest return for a
quarter was 35.36% (quarter ending December 31, 1998) and the
lowest return for a quarter was (24.96)% (quarter ending September
30, 1996). Year to date performance (through March 31, 1999) was
%.
<TABLE>
<CAPTION>
Average Annual Total Returns(1) One Five Ten Life of the Fund(2)
(for the periods ending 12/31/98) Year Years Years
--------------------------------------------------------------------------------------------------------
Class A Class B Class C
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares 30.88% 17.88% 17.06% 14.15% -- --
--------------------------------------------------------------------------------------------------------
Class B Shares 32.53% N/A N/A -- 18.13% --
--------------------------------------------------------------------------------------------------------
Class C Shares 36.38% N/A N/A -- -- 18.33%
--------------------------------------------------------------------------------------------------------
S&P 500 Stock Index(3) 28.76% 24.15% 19.22% 16.93% 24.23% 24.23%
--------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B and Class C Shares.
(2) Class A Shares since June 24, 1986; Class B and Class C Shares since January
3, 1994.
(3) The S&P 500 Stock Index is an unmanaged but commonly used measure of common
stock total return performance. The S&P's performance does not reflect sales
charges.
Phoenix-Engemann Growth Fund 21
<PAGE>
Fund Expenses
- -------------------------------
This table illustrates all fees and expenses that you may pay if
you buy and hold shares of the fund.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
------- ------- -------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from
your investment)
Maximum Sales Charge (load) Imposed on
Purchases (as a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (load) (as a None 5%(a) 1% during the
percentage of the lesser of the value redeemed or first year
the amount invested)
Maximum Sales Charge (load) Imposed on
Reinvested Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
---------------------------------
Class A Class B Class C
Shares Shares Shares
------- ------- -------
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management Fees 0.81% 0.81% 0.81%
Distribution and Service (12b-1) Fees(b) 0.25% 1.00% 1.00%
Other Expenses 0.52% 0.52% 0.52%
----- ----- ------
Total Annual Fund Operating Expenses 1.58% 2.33% 2.33%(c)
===== ===== ======
</TABLE>
- ----------------
(a) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year. Class B Shares purchased
prior to January 20, 1998 are subject to the sales load schedule as it existed
prior to that date. See "Sales Charges--Class B Shares Purchased Prior to
January 20, 1998" in this prospectus.
(b) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
(c) Class C Shares purchased prior to January 20, 1998 are not subject to the 1%
deferred sales load.
Example
This example is intended to help you compare the cost of
investing in the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the
time periods indicated and then redeem all of your shares at the
end of those periods. The example also assumes that your
investment has a 5% return each year and that the fund's
operating expenses remain the same. In the case of Class B
Shares, it is assumed that your shares are converted to Class A
after eight years. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
22 Phoenix-Engemann Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $628 $950 $1,295 $2,264
Class B $636 $927 $1,245 $2,479
Class C $336 $727 $1,245 $2,666
</TABLE>
You would pay the following expenses if you did not redeem your
shares:
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $628 $950 $1,295 $2,264
Class B $236 $727 $1,245 $2,479
Class C $236 $727 $1,245 $2,666
</TABLE>
Investment Objective
- -----------------------------------
Phoenix-Engemann Growth Fund has an investment objective of
long-term growth of capital. There is no guarantee that the fund
will achieve its objective.
Principal Investment Strategies
The fund emphasizes the purchase of common stocks of domestic
corporations with rapidly growing earnings per share. The
companies may have small or large capitalizations and may be
unseasoned or established. The adviser will also select stocks of
companies that may not be experiencing rapid growth but, in the
opinion of the adviser, are undervalued by other criteria of
their fundamental net worth. The adviser anticipates that the
fund's volatility will be greater than the Standard & Poor's 500
Stock Index. Distribution of income, such as dividends and
interest, is incidental in the selection of investments for the
fund.
A security is sold when there has been a change in the original
investment thesis, such as a reduction in the expected earnings
growth rate of the company or a loss of competitive advantage, or
the security has appreciated to the point where it is no longer
attractive.
In addition to common stocks, the fund may also invest in
preferred stocks, warrants, and convertible debt obligations.
Convertible securities have several unique investment
characteristics such as:
o Higher yields than common stocks but lower yields than
comparable non-convertible securities;
Phoenix-Engemann Growth Fund 23
<PAGE>
o Typically less fluctuation in value than the "underlying"
common stock, that is, the common stock that the investor
receives if he converts;
o The potential for capital appreciation if the market price
of the underlying common stock increases.
The adviser may also invest in other debt obligations that it
believes offer the possibility of capital appreciation over the
long term based on the timing of such investments. If interest
rates fall, these investments are likely to increase in value.
Conversely, if interest rates rise, a decrease in value can be
expected.
The fund may invest in direct and indirect debt obligations of
the U.S. Government and its agencies, states and municipalities
and their agencies, and corporate issuers. Debt obligations of
corporate issuers must be rated in the top four investment rating
categories, or if unrated, be of equivalent investment quality as
determined by the adviser. Any security which drops below the
four highest rating categories will be considered by the adviser
in evaluating the overall composition of the portfolio.
The fund may invest up to 30% of its total assets in special
situations that the adviser believes present opportunities for
capital growth. Special situations are created by developments
that apply solely to a particular company. Developments that
create special situations include liquidations, reorganizations,
recapitalizations, corporate restructurings, mergers and tender
offers, technological breakthroughs and new management.
Temporary Investment Strategy: If the adviser believes conditions
are not favorable to the fund's principal strategies, all or part
of the fund's assets 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.
Risks Related to Investment Strategies
- -------------------------------------------------------
General
The fund's focus is long-term capital appreciation. The adviser
intends to invest fund assets so that your shares increase in
value. However, the value of the fund's investments that support
your share value can decease as well as increase. If between the
time you purchase shares and the time you sell shares the value
of the fund's investments decreases, you will lose money. The
value of the fund's investments can decrease for a number of
reasons. For example, changing economic conditions may cause a
decline in value of many or most investments. Particular
industries can face poor market conditions for their products or
services so that companies engaged in those businesses do not
perform as well as companies in other industries. Interest rate
changes may improve prospects for certain types of businesses and
they may worsen prospects for others. To the extent that the
fund's investments are affected by general economic declines,
declines in industries, and interest rate changes that negatively
affect the companies in
24 Phoenix-Engemann Growth Fund
<PAGE>
which the fund invests, fund share values may decline. Share
values can also decline if the specific companies selected for
fund investment fail to perform as the adviser expects,
regardless of general economic trends, industry trends, interest
rates and other economic factors.
In addition to these general risks of investing in the fund,
there are several specific risks of investing in the fund that
you should note.
Growth Stocks
Typically, growth stocks make little or no dividend payments to
shareholders. Investment return is based upon the stocks' capital
appreciation making return more dependent on market increases and
decreases as compared to stocks that provide dividend payments.
Growth stocks also tend to rise faster when markets advance and
drop more sharply when markets fall making them more volatile
than non-growth stocks to market changes. Should a market decline
occur, the fund's price may fall more than that of a non growth
fund.
Small Market Capitalization and Unseasoned Companies The fund may
invest in some smaller companies, unseasoned companies and new
issues. Companies with small capitalization are often companies
in industries that have recently emerged due to cultural,
economic, regulatory or technological developments. Such
developments can have a significant positive or negative effect
on small capitalization companies and their stock performance.
Given the limited operating history and rapidly changing
fundamental prospects, investment returns from smaller
capitalization companies and unseasoned companies can be highly
volatile. Smaller and unseasoned companies may find their ability
to raise capital impaired by their size or lack of operating
history. Product lines are often less diversified and subject to
competitive threats. Smaller capitalization stocks, new issues
and stocks of unseasoned companies are subject to varying
patterns of trading volume and may, at times, be difficult to
sell.
Special Situations
The fund may invest in special situations. Special situations
often involve smaller, unseasoned companies and the securities
may not appreciate as the adviser believed they would. Analysis
of special situations is more complex than for ordinary
investments, making it more difficult for the adviser to
accurately predict risk and return.
Impact of the Year 2000 Issue on Fund Investments
The Year 2000 issue is the result of computer programs being
written using two rather than four digits to define the
applicable year. There is the possibility that some or all of a
company's computer programs that have date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year
2000. If a company whose securities are held by the fund does not
"fix" its Year 2000 issue, it is possible that its operations and
financial results would be hurt. Also, the cost of modifying
computer programs to become Year 2000 compliant may hurt the
financial performance and market price of companies whose
securities are held by the fund.
Phoenix-Engemann Growth Fund 25
<PAGE>
Management of The Fund
- ------------------------------------------
The Adviser
Please refer to "Management of the Funds" on page for a
description of the investment adviser, management fees and
portfolio managers.
26 Phoenix-Engemann Growth Fund
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
Investment Risk and Return Summary
- -------------------------------------------------------
Investment Objective
Phoenix-Engemann Nifty Fifty Fund has an investment objective of
long-term growth of capital. There is no guarantee that the fund
will achieve its objective.
Principal Investment Strategies
[arrow] The fund expects to invest in approximately 50 different
securities that the adviser believes represent the best
potential to achieve long-term growth of capital.
However, the fund may, for short periods of time, have
more or less than 50 different securities while it is
adding or deleting a particular position.
[arrow] Under normal circumstances, the fund expects to invest
at least 75% of its assets in common stocks of
high-quality growth companies.
[arrow] The fund may also invest in common stocks with rapidly
growing earnings per share or stocks of companies that
may not be experiencing rapid growth but, in the opinion
of the adviser, are undervalued by other criteria of
their fundamental net worth. The companies may have
small or large capitalizations and may be unseasoned or
established.
[arrow] The adviser looks to sell securities from the portfolio
when there is a change in the original investment thesis
or the security has appreciated and is no longer
attractive.
[arrow] The fund may invest up to 35% of its assets in
securities of foreign companies, special situations and
unseasoned companies combined.
[arrow] The fund may also invest in preferred stocks, warrants,
convertible debt obligations and other debt obligations.
Principal Risks
If you invest in this fund you risk that you may lose your
investment.
The fund will seek to increase the value of your shares by
investing in securities the adviser expects to increase in value.
Most of the fund's investments will be in common stocks.
Conditions affecting the overall economy, specific industries or
companies in which the fund invests can be worse then expected.
As a result, the value of your shares may decrease.
The fund seeks to invest in approximately 50 securities.
Conditions which negatively affect these securities will have a
greater impact on the fund as compared to a fund that is not
limited in the number of issues it holds.
The fund may be subject to greater risks than a fund that does
not invest in securities with growth characteristics.
Phoenix-Engemann Nifty Fifty Fund 27
<PAGE>
The fund may invest in small companies and unseasoned companies.
Smaller and unseasoned companies may be affected to a greater
extent than larger, established companies by changes in general
economic conditions and conditions in particular industries.
Unseasoned companies will be relatively new to the primary line
of business and small companies may also be relatively new. These
companies may not have the same operating history and "track
record" as larger companies. This could make future performance
of smaller and unseasoned companies more difficult to predict.
The fund may invest in companies in foreign countries. Political
and economic uncertainty as well as less public information about
investments may negatively impact the fund's portfolio. Some
investments may be made in currencies other than U.S. dollars
that will fluctuate in value as a result of changes in the
currency exchange rate. Foreign markets and currencies may not
perform as well as U.S. markets. Emerging market countries and
companies doing business in emerging markets may not have the
same range of opportunities as countries and their companies in
developed nations. They may also have more obstacles to financial
success.
The fund may invest in special situations. Special situations
often involve smaller, unseasoned companies and the securities
may not appreciate as the adviser believed they would. Analysis
of special situations is more complex than for ordinary
investments, making it more difficult for the adviser to
accurately predict risk and return.
The fund may invest in debt obligations believed by the adviser
to offer the potential for capital growth. Debt securities may be
negatively affected by changes in interest rates. Generally when
interest rates rise the value of debt securities fall.
28 Phoenix-Engemann Nifty Fifty Fund
<PAGE>
Performance Tables
The bar chart and table below provide some indication of the
risks of investing in the Phoenix-Engemann Nifty Fifty Fund. The
bar chart shows changes in the fund's Class A Shares performance
from year to year over the life of the fund.(1) The table below
shows how the fund's average annual returns for one and five
years, and for the life of the fund compare to those of a
broad-based securities market index. The fund's past performance
is not necessarily an indication of how the fund will perform in
the future.
[tabular representation of chart]
Phoenix-Engemann Nifty Fifty Fund
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C>
67.64% 3.67% -0.52% 1.05% 28.21% 26.52% 19.22% 35.13%
</TABLE>
[end chart]
(1) The fund's average annual returns in the chart above do not
reflect the deduction of any sales charges. The returns would have
been less than those shown if sales charges were deducted. During
the period shown in the chart above, the highest return for a
quarter was 30.70% (quarter ending December 31, 1998) and the
lowest return for a quarter was (12.06)% (quarter ending September
30, 1998). Year to date performance (through March 31, 1999) was
%.
<TABLE>
<CAPTION>
Average Annual Total Returns(1) One Five
(for the periods ending 12/31/98 Year Years Life of the Fund(2)
- --------------------------------------------------------------------------------------------
Class A Class B Class C
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares 28.70% 20.27% 20.01% -- --
- --------------------------------------------------------------------------------------------
Class B Shares 30.30% N/A -- 20.53% --
- --------------------------------------------------------------------------------------------
Class C Shares 34.14% N/A -- -- 20.72%
- --------------------------------------------------------------------------------------------
S&P 500 Stock Index(3) 28.76% 24.15% 20.97% 24.23% 24.23%
- --------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares
and a full redemption in the fund's Class B and Class C Shares.
(2) Class A Shares since December 17, 1990; Class B and Class C Shares since
January 3, 1994.
(3) The S&P 500 Stock Index is an unmanaged but commonly used measure of common
stock total return performance. The S&P's performance does not reflect
sales charges.
Phoenix-Engemann Nifty Fifty Fund 29
<PAGE>
Fund Expenses
- -------------------------------
This table illustrates all fees and expenses that you may pay if
you buy and hold shares of the fund.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
--------- ------------ ---------------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from
your investment)
Maximum Sales Charge (load) Imposed on
Purchases (as a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (load) (as a None 5%(a) 1% during the
percentage of the lesser of the value redeemed or first year
the amount invested)
Maximum Sales Charge (load) Imposed on
Reinvested Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
Class A Class B Class C
Shares Shares Shares
--------- ------------ ---------------
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management Fees 0.82% 0.82% 0.82%
Distribution and Service (12b-1) Fees(b) 0.25% 1.00% 1.00%
Other Expenses 0.53% 0.53% 0.53%
----- ------ -----
Total Annual Fund Operating Expenses 1.60% 2.35% 2.35%(c)
===== ====== =====
</TABLE>
- ----------------
(a) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during
the fourth and fifth years and to 0% after the fifth year. Class B Shares
purchased prior to January 20, 1998 are subject to the sales load schedule
as it existed prior to that date. See "Sales Charges--Class B Shares
Purchased Prior to January 20, 1998" in this prospectus.
(b) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
(c) Class C Shares purchased prior to January 20, 1998 are not subject to the
1% deferred sales load.
Example
This example is intended to help you compare the cost of
investing in the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the
time periods indicated and then redeem all of your shares at the
end of those periods. The example also assumes that your
investment has a 5% return each year and that the fund's
operating expenses remain the same. In the case of Class B
Shares, it is assumed that your shares are converted to Class A
after eight years. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
30 Phoenix-Engemann Nifty Fifty Fund
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $630 $956 $1,304 $2,285
Class B $638 $933 $1,255 $2,499
Class C $338 $733 $1,255 $2,686
</TABLE>
You would pay the following expenses if you did not redeem your
shares:
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $630 $956 $1,304 $2,285
Class B $238 $733 $1,255 $2,499
Class C $238 $733 $1,255 $2,686
</TABLE>
Investment Strategies
- --------------------------------------
Investment Objective
The fund has an investment objective of long-term growth of
capital. There is no guarantee that the fund will achieve the
objective.
Principal Investment Strategies
The fund expects to invest in approximately 50 different
securities that the adviser believes represent the best potential
to achieve long-term growth of capital. However, the fund may,
for short periods of time, have more or less than 50 different
securities while it is adding or deleting a particular position.
Under normal circumstances, the fund expects to invest at least
75% of its assets in common stocks of high-quality growth
companies. High-quality growth companies are companies that
generally exceed $50 million in annual net income and satisfy New
York Stock Exchange listing requirements with respect to
demonstrated earning power, years in operation, number of
publicly held shares, and net tangible assets.
The fund may also invest in common stocks with rapidly growing
earnings per share or stocks of companies that may not be
experiencing rapid growth but, in the opinion of the adviser, are
undervalued by other criteria of their fundamental net worth. The
companies may have small or large capitalizations and may be
unseasoned or established.
A security is sold when there has been a change in the original
investment thesis, such as a reduction in the expected earnings
growth rate of the company or a loss of competitive advantage, or
the security has appreciated to the point where it is no longer
attractive.
Phoenix-Engemann Nifty Fifty Fund 31
<PAGE>
The fund may invest up to 35% of its assets in securities of
foreign companies, special situation and unseasoned companies
combined. Foreign securities are securities of non-U.S. issuers
that are listed on a principal foreign or domestic securities
exchange or market, or that are represented by Depository
Receipts. Unseasoned companies generally are smaller and younger
companies that are relatively new to or not yet well established
in its primary line of business. Special situations are created
by developments that apply solely to a particular company.
Developments that create special situations include liquidations,
reorganizations, recapitalizations, corporate restructurings,
mergers and tender offers, technological breakthroughs and new
management.
The fund may invest in preferred stocks, warrants, convertible
debt obligations and other debt obligations. Convertible
securities have several unique investment characteristics such
as:
o Higher yields than common stocks but lower yields than
comparable non-convertible securities;
o Typically less fluctuation in value than the "underlying"
common stock, that is, the common stock that the investor
receives if he converts;
o The potential for capital appreciation if the market price
of the underlying common stock increases.
Distribution of income, such as dividends and interest, is
incidental in the selection of investments for the fund.
Temporary Investment Strategy: If the adviser believes conditions
are not favorable to the fund's principal strategies, all or part
of the fund's assets 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.
Risks Related to Investment Strategies
- -------------------------------------------------------
General
The fund's focus is long-term capital appreciation. The adviser
intends to invest fund assets so that your shares increase in
value. However, the value of the fund's investments that support
your share value can decease as well as increase. If between the
time you purchase shares and the time you sell shares the value
of the fund's investments decreases, you will lose money. The
value of the fund's investments can decrease for a number of
reasons. For example, changing economic conditions may cause a
decline in value of many or most investments. Particular
industries can face poor market conditions for their products or
services so that companies engaged in those businesses do not
perform as well as companies in other industries. Interest rate
changes may improve prospects for certain types of businesses and
they may worsen
32 Phoenix-Engemann Nifty Fifty Fund
<PAGE>
prospects for others. To the extent that the fund's investments
are affected by general economic declines, declines in
industries, and interest rate changes that negatively affect the
companies in which the fund invests, fund share values may
decline. Share values can also decline if the specific companies
selected for fund investment fail to perform as the adviser
expects, regardless of general economic trends, industry trends,
interest rates and other economic factors.
In addition to these general risks of investing in the fund,
there are several specific risks of investing in the fund that
you should note.
Limited Number of Investments
The fund seeks to invest in approximately 50 securities.
Conditions which negatively affect these securities will have a
greater impact on the fund as compared to a fund that is not
limited in the number of issues it holds. The 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.
Growth Stocks
Typically, growth stocks make little or no dividend payments to
shareholders. Investment return is based upon the stocks' capital
appreciation making return more dependent on market increases and
decreases as compared to stocks that provide dividend payments.
Growth stocks also tend to rise faster when markets advance and
drop more sharply when markets fall making them more volatile
than non-growth stocks to market changes. Should a market decline
occur, the fund's price may fall more than that of a non growth
fund.
Small Market Capitalization and Unseasoned Companies
The fund may invest in some smaller companies and unseasoned
companies. Companies with small capitalization are often
companies in industries that have recently emerged due to
cultural, economic, regulatory or technological developments.
Such developments can have a significant positive or negative
effect on small capitalization companies and their stock
performance. Given the limited operating history and rapidly
changing fundamental prospects, investment returns from smaller
capitalization companies and unseasoned companies can be highly
volatile. Smaller and unseasoned companies may find their ability
to raise capital impaired by their size or lack of operating
history. Product lines are often less diversified and subject to
competitive threats. Smaller capitalization stocks and stocks of
unseasoned companies are subject to varying patterns of trading
volume and may, at times, be difficult to sell.
Foreign Investing
The fund may invest in non-U.S. companies. Investing in the
securities of non-U.S. companies involves special risks and
considerations not typically associated with investing in U.S.
companies. These include:
o differences in accounting, auditing and financial reporting
standards,
o generally higher commission rates on foreign portfolio
transactions,
Phoenix-Engemann Nifty Fifty Fund 33
<PAGE>
o differences and inefficiencies in transaction settlement
systems,
o the possibility of expropriation or confiscatory taxation,
o adverse changes in investment or exchange control
regulations,
o political instability, and
o potential restrictions on the flow of international
capital.
Political and economic uncertainty as well as less public
information about investments may negatively impact the fund's
portfolio.
Foreign securities often trade with less frequency and volume
than domestic securities and therefore may exhibit greater price
volatility. Additionally, dividends and interest payable on
foreign securities may be subject to foreign taxes withheld prior
to receipt by the fund.
Many of the foreign securities held by the fund will not be
registered with, nor will the issuers of those securities be
subject to the reporting requirements of, the U.S. Securities and
Exchange Commission. Accordingly, there may be less publicly
available information about the securities and about the foreign
company or government issuing them than is available about a
domestic company or government entity. Moreover, individual
foreign economies may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payment positions.
Foreign Currency
Portions of the fund's assets may be invested in securities
denominated in foreign currencies. Changes in foreign exchange
rates will affect the value of those securities denominated or
quoted in currencies other than the U.S. dollar. The forces of
supply and demand in the foreign exchange markets determine
exchange rates and these forces are in turn affected by a range
of economic, political, financial, governmental and other
factors. Exchange rate fluctuations can affect the fund's net
asset value (share price) and dividends either positively or
negatively depending upon whether foreign currencies are
appreciating or depreciating in value relative to the U.S.
dollar. Exchange rates fluctuate over both the long and short
terms.
On January 1, 1999, eleven European countries began converting
from their sovereign currency to the European Union common
currency called the "Euro". This conversion may expose the fund
to certain risks including the reliability and timely reporting
of pricing information of the fund's portfolio holdings. In
addition, one or more of the following may adversely affect
specific securities in the fund's portfolio:
o Known trends or uncertainties related to the Euro conversion
that an issuer reasonably expects will have a material
impact on revenues, expenses or income from its operations;
o Competitive implications of increased price transparency of
European Union markets (including labor markets) resulting
from adoption of a common currency and issuers' plans for
pricing their own products and services in the Euro;
34 Phoenix-Engemann Nifty Fifty Fund
<PAGE>
o Issuers' ability to make required information technology
updates on a timely basis, and costs associated with the
conversion (including costs of dual currency operations
through January 1, 2002);
o Currency exchange rate risk and derivatives exposure
(including the disappearance of price sources, such as
certain interest rate indices); and
o Potential tax consequences.
Special Situations
The fund may invest in special situations. Special situations
often involve much greater risk than ordinary investment
securities. The companies involved often are smaller, unseasoned
companies and the securities may not perform as the adviser
expects. Analysis of special situations is more complex than for
ordinary investments, making it more difficult for the adviser to
accurately predict risk and return.
Impact of the Year 2000 Issue on Fund Investments
The Year 2000 issue is the result of computer programs being
written using two rather than four digits to define the
applicable year. There is the possibility that some or all of a
company's computer programs that have date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year
2000. If a company whose securities are held by the fund does not
"fix" its Year 2000 issue, it is possible that its operations and
financial results would be hurt. Also, the cost of modifying
computer programs to become Year 2000 compliant may hurt the
financial performance and market price of companies whose
securities are held by the fund.
Management of The Fund
- ------------------------------------------
The Adviser
Please refer to "Management of the Funds" on page for a
description of the investment adviser, management fees and
portfolio managers.
Phoenix-Engemann Nifty Fifty Fund 35
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
Investment Risk and Return Summary
- -------------------------------------------------------
Investment Objective
Phoenix-Engemann Small and Mid-Cap Growth Fund has an investment
objective of long-term growth of capital. There is no guarantee
that the fund will achieve its objective.
Principal Investment Strategies
[arrow] The fund emphasizes investment primarily in equity
securities of those small and mid-cap companies that the
adviser believes may be leading companies of tomorrow.
Under normal market circumstances, the fund will invest
at least 65% of its total assets in equity securities of
companies that have market capitalizations below $1.5
billion.
[arrow] The fund expects to invest principally in common stocks.
The adviser will select stocks of corporations with
rapidly growing earnings per share. The adviser will
also select stocks of companies that may not be
experiencing rapid growth but, in the opinion of the
adviser, are undervalued by other criteria of their
fundamental net worth.
[arrow] The adviser looks to sell securities from the portfolio
when there is a change in the original investment thesis
or the security has appreciated and is no longer
attractive.
[arrow] Although the fund may invest up to 50% of its total
assets in securities of foreign (non-U.S.) issuers, it
will primarily emphasize investment in U.S. companies.
[arrow] The fund may invest in new issues that the adviser
believes offer good long-term investment potential or an
opportunity for immediate price increase.
[arrow] The fund may invest up to 35% of its assets in special
situations, such as tender offers or corporate
restructurings, that the adviser believes present
opportunities for capital growth.
[arrow] The fund may invest in preferred stocks, warrants,
options on stocks and stock indices and convertible debt
obligations.
Principal Risks
If you invest in this fund you risk that you may lose your
investment.
The fund will seek to increase the value of your shares by
investing in securities the adviser expects to increase in value.
Most of the fund's investments will be in common stocks.
Conditions affecting the overall economy, specific industries or
companies in which the fund invests can be worse then expected.
As a result, the value of your shares may decrease.
The fund may be subject to greater risks than a fund that does
not invest in securities with growth characteristics.
36 Phoenix-Engemann Small & Mid-Cap Growth Fund
<PAGE>
The fund will invest in small and mid-capitalization companies
and new issues. Smaller and mid-capitalization companies may be
affected to a greater extent than larger, established companies
by changes in general economic conditions and conditions in
particular industries. These companies may not have the same
operating history and "track record" as larger companies. This
could make future performance of smaller companies,
mid-capitalization companies and new issues more difficult to
predict.
The fund may invest in companies in foreign countries. Political
and economic uncertainty as well as less public information about
investments may negatively impact the fund's portfolio. Some
investments may be made in currencies other than U.S. dollars
that will fluctuate in value as a result of changes in the
currency exchange rate. Foreign markets and currencies may not
perform as well as U.S. markets.
The fund may invest in special situations. Special situations
often involve smaller, unseasoned companies and the securities
may not appreciate as the adviser believed they would. Analysis
of special situations is more complex than for ordinary
investments, making it more difficult for the adviser to
accurately predict risk and return.
Phoenix-Engemann Small & Mid-Cap Growth Fund 37
<PAGE>
Performance Tables
The bar chart and table below provide some indication of the
risks of investing in the Phoenix-Engemann Small & Mid-Cap Growth
Fund. The bar chart shows changes in the fund's Class A Shares
performance from year to year over the life of the fund.(1) The
table below shows how the fund's average annual returns for one
year and for the life of the fund compare to those of a
broad-based securities market index. The fund's past performance
is not necessarily an indication of how the fund will perform in
the future.
[tabular representation of chart]
Phoenix-Engemann Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
1995 1996 1997 1998
<S> <C> <C> <C>
25.68% 52.37% 26.41% 14.29%
</TABLE>
[end chart]
(1) The fund's average annual returns in the chart above do not
reflect the deduction of any sales charges. The returns would have
been less than those shown if sales charges were deducted. During
the period shown in the chart above, the highest return for a
quarter was 34.28% (quarter ending December 31, 1998) and the
lowest return for a quarter was (22.13)% (quarter ending September
30, 1998). Year to date performance (through March 31, 1999) was
%.
<TABLE>
<CAPTION>
Average Annual Total Returns(1) One Year Life of the Fund(2)
(for the periods ending 12/31/98)
------------------------------------------------------------------------------
Class A Class B Class C
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares 8.87% 31.53% -- --
------------------------------------------------------------------------------
Class B Shares 9.54% -- 22.06% --
------------------------------------------------------------------------------
Class C Shares 13.34% -- -- 18.75%
------------------------------------------------------------------------------
Russell 2000 Index(3) (2.55)% 14.35% 11.14% 10.53%
------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect
the deduction of the maximum sales charge for an investment in
the fund's Class A Shares and a full redemption of the fund's
Class B and Class C Shares.
(2) Class A Shares since October 10, 1994; Class B Shares since
September 18, 1996; and Class C Shares since October 8, 1996.
(3) The Russell 2000 Index is an unmanaged, commonly used measure
of total return performance of small-capitalization stocks. The
Index does not reflect sales charges.
38 Phoenix-Engemann Small & Mid-Cap Growth Fund
<PAGE>
Fund Expenses
- -------------------------------
This table illustrates all fees and expenses that you may pay if
you buy and hold shares of the fund.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
--------- ------------ ---------------------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from
your investment)
Maximum Sales Charge (load) Imposed on
Purchases (as a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (load) (as a None 5%(b) 1% during
percentage of the lesser of the value redeemed or the first year
the amount invested)
Maximum Sales Charge (load) Imposed on
Reinvested Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
Class A Class B Class C
Shares Shares Shares
-------- ------------ ---------------------
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management Fees 0.97% 0.97% 0.97%
Distribution and Service (12b-1) Fees(c) 0.25% 1.00% 1.00%
Other Expenses 0.61% 0.61% 0.61%
---- ----- -----
Total Annual Fund Operating Expenses(a) 1.83% 2.58% 2.58%(d)
==== ===== =====
</TABLE>
----------------
(a) The fund's administrator has agreed to waive a portion of its
administration fee so that other operating expenses of the fund
do not exceed 0.60% of the first $50 million of the average daily
net asset. Total Annual Operating Expenses for the fund, after
waiver of administration fees, are 1.78% for Class A Shares,
2.53% for Class B Shares and 2.53% for Class C Shares.
(b) The maximum deferred sales charge is imposed on Class B Shares
redeemed during the first year; thereafter, it decreases 1%
annually to 2% during the fourth and fifth years and to 0% after
the fifth year. Class B Shares purchased prior to January 20,
1998 are subject to the sales load schedule as it existed prior
to that date. See "Sales Charges--Class B Shares Purchased Prior
to January 20, 1998" in this prospectus.
(c) Distribution and Service Fees represent an asset based sales
charge that, for a long-term shareholder, may be higher than the
maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc. ("NASD").
(d) Class C Shares purchased prior to January 20, 1998 are not
subject to the 1% deferred sales load.
Example
This example is intended to help you compare the cost of
investing in the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the
time periods indicated and then redeem all of your shares at the
end of those periods. The example also assumes that your
investment has a 5% return each year and that the fund's
operating expenses remain the same. In the case of Class B
Shares, it is assumed that your shares are converted to Class A
after eight years. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
Phoenix-Engemann Small & Mid-Cap Growth Fund 39
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $652 $1,023 $1,418 $2,521
Class B $661 $1,002 $1,370 $2,732
Class C $361 $ 802 $1,370 $2,915
</TABLE>
You would pay the following expenses if you did not redeem your
shares:
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $652 $1,023 $1,418 $2,521
Class B $261 $ 802 $1,370 $2,732
Class C $261 $ 802 $1,370 $2,915
</TABLE>
Note: Your actual expenses may be lower than those shown in the
tables above since the expense levels used to calculate the
figures shown do not include the waiver of expenses over certain
levels by the fund's administrator.
Investment Strategies
- --------------------------------------
Investment Objective
Phoenix-Engemann Small and Mid-Cap Growth Fund has an investment
objective of long-term growth of capital. There is no guarantee
that the fund will achieve its objective.
Principal Investment Strategies
The fund seeks to achieve its objective by investing primarily in
equity securities of those small and mid-capitalized companies
that the adviser believes may be leading companies of tomorrow.
The fund emphasizes companies with market capitalizations below
$1.5 billion. Under normal market circumstances, 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. The fund may continue to hold securities of
companies that subsequently increase their market capitalizations
to above $1.5 billion if the company continues to satisfy the
fund's other investment policies.
The fund may invest the remaining 35% of its assets in a small
and mid-cap companies or in equity securities of companies with
larger capitalizations. However, the fund intends to invest
primarily in U.S. equity securities with market capitalizations
of $1.5 billion or below. The fund may invest up to 50% of total
assets in securities of foreign (non-U.S.) issuers.
40 Phoenix-Engemann Small & Mid-Cap Growth Fund
<PAGE>
The adviser will select stocks of companies that show rapidly
growing earnings price per share. The fund may also invest in
companies that may not be experiencing rapid growth but, in the
opinion of the adviser, are undervalued by other criteria of
their fundamental net worth. The adviser anticipates that the
fund's volatility will be greater than the Standard & Poor's 500
Stock Index. Distribution of income, such as dividends and
interest, is incidental in the selection of investments for the
fund.
The fund may also invest in new issues that the adviser believes
offer good long-term investment potential or an opportunity for
immediate price appreciation.
The fund may invest up to 35% of its total assets in special
situations that the adviser believes present opportunities for
capital growth. Special situations are created by developments
that apply solely to a particular company. Developments that
create special situations include liquidations, reorganizations,
recapitalizations, corporate restructurings, mergers and tender
offers, technological breakthroughs and new management.
While the fund expects to invest principally in common stocks, it
may also invest in other types of securities with equity
characteristics including: preferred stocks, warrants, options on
stocks and stock indices and convertible debt obligations that
the adviser believes offer the possibility of capital
appreciation over the long term based on the timing of such
investments. Convertible securities have several unique
investment characteristics such as:
o higher yields than common stocks but lower yields than
comparable non-convertible securities;
o typically less fluctuation in value than the "underlying"
common stock, that is, the common stock that the investor
receives if he converts;
o the potential for capital appreciation if the market price
of the underlying common stock increases.
The advisor's portfolio selection method may result in a higher
portfolio turnover rate. High portfolio turnover rates may
increase costs to the fund, may negatively affect fund
performance, and may increase capital gains distributions,
resulting in greater tax liability to you.
A security is sold when there has been a change in the original
investment thesis, such as a reduction in the expected earnings
growth rate of the company or a loss of competitive advantage, or
the security has appreciated to the point where it is no longer
attractive.
Temporary Investment Strategy: If the adviser believes conditions
are not favorable to the fund's principal strategies, all or part
of the fund's assets 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.
Phoenix-Engemann Small & Mid-Cap Growth Fund 41
<PAGE>
Risks Related to Investment Strategies
- -------------------------------------------------------
General
The fund's focus is long-term capital appreciation. The adviser
intends to invest fund assets so that your shares increase in
value. However, the value of the fund's investments that support
your share value can decease as well as increase. If between the
time you purchase shares and the time you sell shares the value
of the fund's investments decreases, you will lose money. The
value of the fund's investments can decrease for a number of
reasons. For example, changing economic conditions may cause a
decline in value of many or most investments. Particular
industries can face poor market conditions for their products or
services so that companies engaged in those businesses do not
perform as well as companies in other industries. Interest rate
changes may improve prospects for certain types of businesses and
they may worsen prospects for others. To the extent that the
fund's investments are affected by general economic declines,
declines in industries, and interest rate changes that negatively
affect the companies in which the fund invests, fund share values
may decline. Share values can also decline if the specific
companies selected for fund investment fail to perform as the
adviser expects, regardless of general economic trends, industry
trends, interest rates and other economic factors.
In addition to these general risks of investing in the fund,
there are several specific risks of investing in the fund that
you should note.
Small and Medium Market Capitalization Investing
The fund will invest in companies with medium and smaller
capitalization. Companies with small and medium capitalization
are often companies in industries that have recently emerged due
to cultural, economic, regulatory or technological developments.
Such developments can have a significant positive or negative
effect on small and medium capitalization companies and their
stock performance. Given the limited operating history and
rapidly changing fundamental prospects, investment returns from
small and medium capitalization companies can be highly volatile.
Small and medium companies may find their ability to raise
capital impaired by their size or lack of operating history.
Product lines are often less diversified and subject to
competitive threats. Small and medium capitalization stocks are
subject to varying patterns of trading volume and may, at times,
be difficult to sell.
Focusing fund investments in small and mid cap companies may also
subject the fund to greater risks then a fund that invests in a
broad range of securities that do not have the potential to
appreciate. Investment returns may be less for small and mid cap
companies with appreciation potential because return is more
dependent on market increases and decreases as compared to stocks
that provide dividend payments. Should the market decline, the
share value of small and mid cap companies may decline at a
sharper rate than larger, dividend paying companies.
42 Phoenix-Engemann Small & Mid-Cap Growth Fund
<PAGE>
Growth Stocks
Typically, growth stocks make little or no dividend payments to
shareholders. Investment return is based upon the stocks' capital
appreciation making return more dependent on market increases and
decreases as compared to stocks that provide dividend payments.
Growth stocks also tend to rise faster when markets advance and
drop more sharply when markets fall making them more volatile
than non-growth stocks to market changes. Should a market decline
occur, the fund's price may fall more than that of a non growth
fund.
Foreign Investing
The fund may invest in non-U.S. companies. Investing in the
securities of non-U.S. companies involves special risks and
considerations not typically associated with investing in U.S.
companies. These include:
o differences in accounting, auditing and financial reporting
standards,
o generally higher commission rates on foreign portfolio
transactions,
o differences and inefficiencies in transaction settlement
systems,
o the possibility of expropriation or confiscatory taxation,
o adverse changes in investment or exchange control
regulations,
o political instability, and
o potential restrictions on the flow of international
capital.
Political and economic uncertainty as well as less public
information about investments may negatively impact the fund's
portfolio.
Foreign securities often trade with less frequency and volume
than domestic securities and therefore may exhibit greater price
volatility. Additionally, dividends and interest payable on
foreign securities may be subject to foreign taxes withheld prior
to receipt by the fund.
Many of the foreign securities held by the fund will not be
registered with, nor will the issuers of those securities be
subject to the reporting requirements of, the U.S. Securities and
Exchange Commission. Accordingly, there may be less publicly
available information about the securities and about the foreign
company or government issuing them than is available about a
domestic company or government entity. Moreover, individual
foreign economies may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payment positions.
Foreign Currency
Portions of the fund's assets may be invested in securities
denominated in foreign currencies. Changes in foreign exchange
rates will affect the value of those securities denominated or
quoted in currencies other than the U.S. dollar. The forces of
supply and demand in the foreign
Phoenix-Engemann Small & Mid-Cap Growth Fund 43
<PAGE>
exchange markets determine exchange rates and these forces are in
turn affected by a range of economic, political, financial,
governmental and other factors. Exchange rate fluctuations can
affect the fund's net asset value (share price) and dividends
either positively or negatively depending upon whether foreign
currencies are appreciating or depreciating in value relative to
the U.S. dollar. Exchange rates fluctuate over both the long and
short terms.
On January 1, 1999, eleven European countries began converting
from their sovereign currency to the European Union common
currency called the "Euro". This conversion may expose the fund
to certain risks including the reliability and timely reporting
of pricing information of the fund's portfolio holdings. In
addition, one or more of the following may adversely affect
specific securities in the fund's portfolio:
o Known trends or uncertainties related to the Euro conversion
that an issuer reasonably expects will have a material
impact on revenues, expenses or income from its operations;
o Competitive implications of increased price transparency of
European Union markets (including labor markets) resulting
from adoption of a common currency and issuers' plans for
pricing their own products and services in the Euro;
o Issuers' ability to make required information technology
updates on a timely basis, and costs associated with the
conversion (including costs of dual currency operations
through January 1, 2002);
o Currency exchange rate risk and derivatives exposure
(including the disappearance of price sources, such as
certain interest rate indices); and
o Potential tax consequences.
New Issues
The fund may invest in new issues. A new issue may be an initial
public offering by a previously private company. There may be
less public information about the company and the company may
have a limited operating history and rapidly changing fundamental
prospects. This may make investment returns of new issues highly
volatile. New issues may also be subject to varying patterns of
trading volume and may, at times, be difficult to sell.
Special Situations
The fund may invest in special situations. Special situations
often involve much greater risk than ordinary investment
securities. The companies involved often are smaller, unseasoned
companies and the securities may not appreciate as the adviser
believed it would. Analysis of special situations is more complex
than for ordinary investments, making it more difficult for the
adviser to accurately predict risk and return.
44 Phoenix-Engemann Small & Mid-Cap Growth Fund
<PAGE>
Impact of the Year 2000 Issue on Fund Investments
The Year 2000 issue is the result of computer programs being
written using two rather than four digits to define the
applicable year. There is the possibility that some or all of a
company's computer programs that have date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year
2000. If a company whose securities are held by the fund does not
"fix" its Year 2000 issue, it is possible that its operations and
financial results would be hurt. Also, the cost of modifying
computer programs to become Year 2000 compliant may hurt the
financial performance and market price of companies whose
securities are held by the fund.
Management of the Fund
- ------------------------------------------
Please refer to "Management of the Funds" on page for a
description of the investment adviser, management fees and
portfolio managers.
Phoenix-Engemann Small & Mid-Cap Growth Fund 45
<PAGE>
Phoenix-Engemann Value 25 Fund
Investment Risk and Return Summary
- -------------------------------------------------------
Investment Objective
Phoenix-Engemann Value 25 Fund has an investment objective to
provide substantial dividend income and long-term growth of
capital. There is no guarantee that the fund will achieve its
objective.
Principal Investment Strategies
[arrow] The fund expects to invest primarily in common stocks.
Under normal circumstances, at least 80% of the fund's
total assets will be invested in common stocks of
approximately twenty-five (25) companies that
demonstrate high dividend yield and quality earnings.
[arrow] In selecting the twenty-five stocks, the adviser uses a
proprietary quantitative approach to identify the
highest yielding stocks that fit the fund's criteria.
From this group, the adviser selects stocks that it
believes offer the best investment promise. The adviser
will look for one or more of the following
characteristics:
o Established operating history;
o Adequate dividend coverage; and
o Sound balance sheet and other financial characteristics.
[arrow] The adviser looks to sell securities from the portfolio
when there is a change in the original investment thesis
or the security has appreciated and is no longer
attractive.
[arrow] The fund may invest up to 35% of its total assets in
special situations, such as tender offers or corporate
restructurings, that the adviser believes present
opportunities for capital growth.
[arrow] The fund may invest up to 25% of its assets in foreign
(non-U.S. securities).
[arrow] The fund may invest in other securities with equity
characteristics such as preferred stocks, convertible
stocks and bonds, warrants and options on stocks and
stock indices.
Principal Risks
If you invest in this fund you risk that you may lose your
investment
The fund's focus is substantial dividend income and long-term
capital appreciation. The fund will seek to earn current income
and to increase the value of your shares by investing in
securities the adviser expects to pay dividends and to increase
in value. Most of the fund's
46 Phoenix-Engemann Value 25 Fund
<PAGE>
investments will be in common stocks. Conditions affecting the
overall economy, specific industries or companies in which the
fund invests can be worse than expected. As a result, the value
of your shares may decrease. Dividend distributions can also
decrease or be eliminated entirely.
The fund seeks to invest 80% of its assets in 25 securities.
Conditions which negatively affect these 25 securities will have
a greater impact on the fund as compared to a fund that is not
limited in the number of issues it holds.
The fund may invest in companies in foreign countries. Political
and economic uncertainty as well as less public information about
investments may negatively impact the fund's portfolio. Some
investments may be made in currencies other than U.S. dollars
that will fluctuate in value as a result of changes in the
currency exchange rate. Foreign markets and currencies may not
perform as well as U.S. markets.
The fund may invest in special situations. Special situations
often involve smaller, unseasoned companies and the securities
may not perform as the adviser expects. Analysis of special
situations is more complex than for ordinary investments, making
it more difficult for the adviser to accurately predict risk and
return.
Phoenix-Engemann Value 25 Fund 47
<PAGE>
Performance Tables
The bar chart and table below provide some indication of the
risks of investing in the Phoenix-Engemann Value 25 Fund. The bar
chart shows changes in the fund's Class A Shares performance from
year to year over the life of the fund.(1) The table below shows
how the fund's average annual returns for one year and for the
life of the fund compare to those of a broad-based securities
market index. The fund's past performance is not necessarily an
indication of how the fund will perform in the future.
[tabular representation of chart]
Phoenix-Engemann Value 25 Fund
<TABLE>
<CAPTION>
1997 1998
<S> <C>
19.92% 7.23%
</TABLE>
[end chart]
(1) The fund's average annual returns in the chart above do not
reflect the deduction of any sales charges. The returns would have
been less than those shown if sales charges were deducted. During
the period shown in the chart above, the highest return for a
quarter was 17.79% (quarter ending December 31, 1998) and the
lowest return for a quarter was (13.53)% (quarter ending September
30, 1998). Year to date performance (through March 31, 1999) was
%.
<TABLE>
Average Annual Total Returns(1) One Year Life of the Fund(2)
(for periods ending 12/31/98)
------------------------------------------------------------------------------
Class A Class B Class C
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares 2.11% 11.59% -- --
------------------------------------------------------------------------------
Class B Shares 2.57% -- 9.87% --
------------------------------------------------------------------------------
Class C Shares 6.42% -- -- 11.63%
------------------------------------------------------------------------------
S&P 500 Stock Index(3) 28.76% 31.72% 31.14% 31.14%
------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect
the deduction of the maximum sales charge for an investment in
the fund's Class A Shares and a full redemption of the fund's
Class B and Class C Shares.
(2) Class A Shares since December 17, 1996; Class B and Class C
Shares since January 2, 1997.
(3) The S&P 500 Stock Index is an unmanaged but commonly used
measure of common stock total return performance. The S&P's
performance does not reflect sales charges.
48 Phoenix-Engemann Value 25 Fund
<PAGE>
Fund Expenses
- -------------------------------
This table illustrates all fees and expenses that you may pay if
you buy and hold shares of the fund.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
------- ------- -------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from
your investment)
Maximum Sales Charge (load) Imposed on
Purchases (as a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (load) (as a None 5%(b) 1% during
percentage of the lesser of the value redeemed or the first year
the amount invested)
Maximum Sales Charge (load) Imposed on
Reinvested Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management Fees 0.90% 0.90% 0.90%
Distribution and Service (12b-1) Fees (c) 0.25% 1.00% 1.00%
Other Expenses 0.71% 0.71% 0.71%
---- ----- -----
Total Annual Fund Operating Expenses 1.86% 2.61% 2.61%(d)
==== ===== =====
</TABLE>
----------------
(a) The fund's administrator has agreed to waive a portion of its
administration fee so that other operating expenses of the fund
do not exceed 0.60% of the first $50 million of the average daily
net asset. Total Annual Operating Expenses for the fund, after
waiver of administration fees, are 1.75% for Class A Shares,
2.50% for Class B Shares and 2.50% for Class C Shares.
(b) The maximum deferred sales charge is imposed on Class B
Shares redeemed during the first year; thereafter, it decreases
1% annually to 2% during the fourth and fifth years and to 0%
after the fifth year. Class B Shares purchased prior to January
20, 1998 are subject to the sales load schedule as it existed
prior to that date. See "Sales Charges--Class B Shares Purchased
Prior to January 20, 1998" in this prospectus.
(c) Distribution and Service Fees represent an asset based sales
charge that, for a long-term shareholder, may be higher than the
maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc. ("NASD").
(d) Class C Shares purchased prior to January 20, 1998 are not
subject to the 1% deferred sales load.
Example
This example is intended to help you compare the cost of
investing in the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the
time periods indicated and then redeem all of your shares at the
end of those periods. The example also assumes that your
investment has a 5% return each year and that the fund's
operating expenses remain the same. In the case of Class B
Shares, it is assumed that your shares are converted to Class A
after eight years. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
Phoenix-Engemann Value 25 Fund 49
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $655 $1,032 $1,433 $2,551
Class B $664 $1,011 $1,385 $2,762
Class C $364 $ 811 $1,385 $2,944
</TABLE>
You would pay the following expenses if you did not redeem your
shares:
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $655 $1,032 $1,433 $2,551
Class B $264 $ 811 $1,385 $2,762
Class C $264 $ 811 $1,385 $2,944
</TABLE>
Note: Your actual expenses may be lower than those shown in the
tables above since the expense levels used to calculate the
figures shown do not include the waiver of expenses over certain
levels by the fund's administrator.
Investment Strategies
- --------------------------------------
Investment Objective
Phoenix-Engemann Value 25 Fund has an investment objective to
provide substantial dividend income and long-term growth of
capital. There is no guarantee that the fund will achieve its
objective.
Principal Investment Strategies
The fund invests in securities that the adviser believes offer
the best potential for current dividend yield and long term
growth of capital. Under normal circumstances, at least 80% of
the fund's total assets will be invested in common stocks of
approximately twenty-five (25) companies that demonstrate high
dividend yield and quality earnings. The average market
capitalizations of the stocks included will generally be in
excessive of $1 billion.
In selecting the twenty-five stocks, the adviser uses a
proprietary quantitative approach to identify the highest
yielding stocks that fit the fund's criteria. From this group,
the adviser selects stocks that it believes offer the best
investment promise. The adviser will look for one or more of the
following characteristics:
50 Phoenix-Engemann Value 25 Fund
<PAGE>
o Established operating history;
o Adequate dividend coverage; and
o Sound balance sheet and other financial characteristics.
The fund may invest the remainder of fund assets in common stocks
with the potential for capital appreciation and in other types of
securities with equity characteristics such as preferred stocks
and options on stocks and stock indices that the adviser believes
have favorable prospects.
A security is sold when there has been a change in the original
investment thesis, such as a reduction in the expected earnings
growth rate of the company or a loss of competitive advantage, or
the security has appreciated to the point where it is no longer
attractive.
The fund may invest up to 35% of its total assets in special
situations that the adviser believes present opportunities for
capital growth. Special situations are created by developments
that apply solely to a particular company. Developments that
create special situations include liquidations, reorganizations,
recapitalizations, corporate restructurings, mergers and tender
offers, technological breakthroughs and new management.
The fund may invest up to 25% of its assets in foreign
(non-U.S.) securities.
The fund may also invest in, convertible stocks and bonds, and
warrants if the adviser considers them to be consistent with the
fund's investment objective. Convertible securities have several
unique investment characteristics such as:
o higher yields than common stocks but lower yields than
comparable non-convertible securities;
o typically less fluctuation in value than the "underlying"
common stock, that is, the common stock that the investor
receives if he converts;
o the potential for capital appreciation if the market price
of the underlying common stock increases.
The advisor's portfolio selection method may result in a higher
portfolio turnover rate. High portfolio turnover rates may
increase costs to the fund, may negatively affect fund
performance, and may increase capital gains distributions,
resulting in greater tax liability to you.
Temporary Investment Strategy: If the adviser believes conditions
are not favorable to the fund's principal strategies, all or part
of the fund's assets 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.
Phoenix-Engemann Value 25 Fund 51
<PAGE>
Risks Related to Investment Strategies
- -------------------------------------------------------
General
The fund's primary focus is dividend income and capital growth.
The adviser intends to invest fund assets so that your shares
earn current income through dividends and increase in value.
However, companies in which the fund invests may encounter
negative conditions such as poor market conditions for their
products or services that could leave the companies' unable to
continue to pay dividends at expected levels. Neither the adviser
nor the fund can assure you that a particular level of income
will consistently be achieved.
In addition, the value of the fund's investments that support
your share value can decease as well as increase. If between the
time you purchase shares and the time you sell shares the value
of the fund's investments decreases, you will lose money. The
value of the fund's investments can decrease for a number of
reasons. For example, changing economic conditions may cause a
decline in value of many or most investments. Particular
industries can face poor market conditions for their products or
services so that companies engaged in those businesses do not
perform as well as companies in other industries. Interest rate
changes may improve prospects for certain types of businesses and
they may worsen prospects for others. To the extent that the
fund's investments are affected by general economic declines,
declines in industries, and interest rate changes that negatively
affect the companies in which the fund invests, fund share values
may decline. Share values can also decline if the specific
companies selected for fund investment fail to perform as the
adviser expects, regardless of general economic trends, industry
trends, interest rates and other economic factors.
In addition to these general risks of investing in the fund,
there are several specific risks of investing in the fund that
you should note.
Limited Number of Investments
The fund seeks to invest 80% of its assets in 25 securities.
Conditions which negatively affect these 25 securities will have
a greater impact on the fund as compared to a fund that is not
limited in the number of issues it holds. Moreover, the 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.
Foreign Investing
The fund may invest in non-U.S. companies. Investing in the
securities of non-U.S. companies involves special risks and
considerations not typically associated with investing in U.S.
companies. These include:
o differences in accounting, auditing and financial reporting
standards,
o generally higher commission rates on foreign portfolio
transactions,
o differences and inefficiencies in transaction settlement
systems,
52 Phoenix-Engemann Value 25 Fund
<PAGE>
o the possibility of expropriation or confiscatory taxation,
o adverse changes in investment or exchange control
regulations,
o political instability, and
o potential restrictions on the flow of international
capital.
Political and economic uncertainty as well as less public
information about investments may negatively impact the fund's
portfolio.
Foreign securities often trade with less frequency and volume
than domestic securities and therefore may exhibit greater price
volatility. Additionally, dividends and interest payable on
foreign securities may be subject to foreign taxes withheld prior
to receipt by the fund.
Many of the foreign securities held by the fund will not be
registered with, nor will the issuers of those securities be
subject to the reporting requirements of, the U.S. Securities and
Exchange Commission. Accordingly, there may be less publicly
available information about the securities and about the foreign
company or government issuing them than is available about a
domestic company or government entity. Moreover, individual
foreign economies may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payment positions.
Foreign Currency
Portions of the fund's assets may be invested in securities
denominated in foreign currencies. Changes in foreign exchange
rates will affect the value of those securities denominated or
quoted in currencies other than the U.S. dollar. The forces of
supply and demand in the foreign exchange markets determine
exchange rates and these forces are in turn affected by a range
of economic, political, financial, governmental and other
factors. Exchange rate fluctuations can affect the fund's net
asset value (share price) and dividends either positively or
negatively depending upon whether foreign currencies are
appreciating or depreciating in value relative to the U.S.
dollar. Exchange rates fluctuate over both the long and short
terms.
On January 1, 1999, eleven European countries began converting
from their sovereign currency to the European Union common
currency called the "Euro". This conversion may expose the fund
to certain risks including the reliability and timely reporting
of pricing information of the fund's portfolio holdings. In
addition, one or more of the following may adversely affect
specific securities in the fund's portfolio:
o Known trends or uncertainties related to the Euro conversion
that an issuer reasonably expects will have a material
impact on revenues, expenses or income from its operations;
o Competitive implications of increased price transparency of
European Union markets (including labor markets) resulting
from adoption of a common currency and issuers' plans for
pricing their own products and services in the Euro;
Phoenix-Engemann Value 25 Fund 53
<PAGE>
o Issuers' ability to make required information technology
updates on a timely basis, and costs associated with the
conversion (including costs of dual currency operations
through January 1, 2002);
o Currency exchange rate risk and derivatives exposure
(including the disappearance of price sources, such as
certain interest rate indices); and
o Potential tax consequences.
Special Situations
The fund may invest in special situations. Special situations
often involve much greater risk than ordinary investment
securities. The companies involved often are smaller, unseasoned
companies and the securities may not appreciate as the adviser
believed it would. Analysis of special situations is more complex
than for ordinary investments, making it more difficult for the
adviser to accurately predict risk and return.
Impact of the Year 2000 Issue on Fund Investments
The Year 2000 issue is the result of computer programs being
written using two rather than four digits to define the
applicable year. There is the possibility that some or all of a
company's computer programs that have date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year
2000. If a company whose securities are held by the fund does not
"fix" its Year 2000 issue, it is possible that its operations and
financial results would be hurt. Also, the cost of modifying
computer programs to become Year 2000 compliant may hurt the
financial performance and market price of companies whose
securities are held by the fund.
54 Phoenix-Engemann Value 25 Fund
<PAGE>
Management of The Funds
- -------------------------------------------
The Adviser
Roger Engemann & Associates, Inc. ("Engemann") is the investment
adviser to each of the funds and is located at 600 North Rosemead
Boulevard, Pasadena, California 91107. Engemann also acts as
subadviser to two other mutual funds and acts as investment
adviser to institutions and individuals. As of December 31, 1998,
Engemann had $ billion in assets under management. Engemann has
been an investment adviser since 1969.
Subject to the direction of the fund's Board of Trustees,
Engemann is responsible for managing the funds' investment
program and the day-to-day management of the funds' portfolios.
Engemann manages each fund's assets to conform with the
investment policies as described in this prospectus. Each fund
pays Engemann a monthly investment management fee that is accrued
daily against the value of that fund's net assets at the
following rates.
<TABLE>
<CAPTION>
Management Fee 1st $50 Million Next $450 Million Over $500 Million
------------------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Return Fund 0.80% 0.70% 0.60%
------------------------------------------------------------------------------
Global Growth Fund 1.10% 1.00% 0.90%
------------------------------------------------------------------------------
Growth Fund 0.90% 0.80% 0.70%
------------------------------------------------------------------------------
Nifty Fifty Fund 0.90% 0.80% 0.70%
------------------------------------------------------------------------------
Small & Mid-Cap
Growth Fund 1.00% 0.90% 0.80%
------------------------------------------------------------------------------
Value 25 Fund 0.90% 0.80% 0.70%
------------------------------------------------------------------------------
</TABLE>
During the fund's last fiscal year, the fund paid total
management fees of $8,378,334. The ratio of management fees to
average net assets for the fiscal year ended December 31, 1998
was 0.76% for the Balanced Return Fund, 1.10% for the Global
Growth Fund, 0.81% for the Growth Fund, 0.82% for the Nifty Fifty
Fund, 0.97% for the Small & Mid-Cap Growth Fund and 0.90% for the
Value 25 Fund. The advisory fees of each of the funds are greater
than those for most mutual funds; however, the Trustees have
determined that each is comparable to fees charged by other
mutual funds whose investment objectives are similar to those of
the funds.
Portfolio Management
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 Engemann since its inception.
Messrs. Mair and Tilson are both Executive Vice Presidents of
Portfolio Management of Engemann, and both have been with
Engemann since 1983. Messrs. Engemann and Mair have been
Chartered Financial Analysts ("CFAs") since 1972, and Mr. Tilson
has been a CFA since 1974.
Phoenix-Engemann Funds 55
<PAGE>
Lou Abel, Scott Swanson, Ned Brines, James Chen, Yossie Lipsker,
Lou Holtz and Mark Petrie serve as research analysts and
participate as members of the team who are responsible for the
day-to-day management of the funds' portfolios. Messrs. Swanson
and Abel are CFAs and have been with Engemann since 1990 and
1991, respectively. Messrs. Chen and Brines are CFAs and have
been with Engemann since 1994. Mr. Holtz is a CFA and has been
with Engemann since 1996. Messrs. Petrie and Lipsker are CFA
Level III candidates and have been with Engemann since 1992.
Impact of the Year 2000 Issue on Fund Operations
The Trustees have directed management to ensure that the systems
used by service providers (Engemann and its affiliates) in
support of the funds' operations be assessed and brought into
Year 2000 compliance. Based upon preliminary assessments,
Engemann has determined that they will be required to modify or
replace portions of their software so that their computer systems
will properly utilize dates beyond December 31, 1999. Engemann
management believes that the majority of these systems are
already Year 2000 compliant. Engemann believes that with
modifications to existing software and conversions to new
software, the Year 2000 issue will be mitigated. It is
anticipated that such modifications and conversions will be
completed on a timely basis. It is not known at this time if
there could be a material impact on the operations of Engemann or
its affiliates or the fund if such modifications and conversions
are not completed timely.
Engemann will utilize both internal and external resources to
reprogram, or replace, and test the software for Year 2000
modifications. Certain systems are already in the process of
being converted due to previous initiatives and it is expected
that all core systems will be remediated and tested by June 1999.
The total cost to become Year 2000 compliant is not an expense of
the fund and is not expected to have a material impact on the
operating results of Engemann.
Pricing of Fund Shares
- ---------------------------------------
How is the Share Price determined?
The fund calculates a share price for each class of its shares.
The share price is based on the net assets of the fund and the
number of outstanding shares. In general, the fund calculates net
asset value by:
o adding the values of all securities and other assets of the
fund,
o subtracting liabilities, and
o dividing by the total number of outstanding shares of the
fund.
56 Phoenix-Engemann Funds
<PAGE>
Asset Value: The fund's investments are valued at market value.
If market quotations are not available, the fund determines a
"fair value" for an investment according to rules and procedures
approved by the Trustees. Foreign and domestic debt securities
(other than short-term investments) are valued on the basis of
broker quotations or valuations provided by a pricing service
approved by the Trustees when such prices are believed to reflect
the fair value of such securities. Foreign and domestic equity
securities are valued at the last sale price or, if there has
been no sale that day, at the last bid price, generally.
Short-term investments having a remaining maturity of sixty days
or less are valued at amortized cost, which the Trustees have
determined approximates market value.
Liabilities: Class specific expenses, distribution fees, service
fees and other liabilities are deducted from the assets of each
class. Expenses and liabilities that are not class specific (such
as management fees) are allocated to each class in proportion to
each class's net assets, except where an alternative allocation
can be more fairly made.
Net Asset Value: The liability allocated to a class plus any
other expenses are deducted from the proportionate interest of
such class in the assets of the fund. The resulting amount for
each class is then divided by the number of shares outstanding of
that class to produce each class's net asset value per share.
The net asset value per share of each class of the fund is
determined on days when the New York Stock Exchange (the "NYSE")
is open for trading as of the close of trading (normally 4:00 PM
eastern time). The fund will not calculate its net asset values
per share on days when the NYSE is closed for trading. Trading of
securities held by the fund in foreign markets may negatively or
positively impact the value of such securities on days when the
fund neither trades securities nor calculates its net asset
values (i.e., weekends and certain holidays).
At what price are shares purchased?
All investments received by the fund's authorized agents prior to
the close of regular trading on the NYSE (normally 4:00 PM
eastern time) will be executed based on that day's net asset
value. Shares credited to your account from the reinvestment of
fund distributions will be in full and fractional shares that are
purchased at the closing net asset value on the next business day
on which the fund's net asset value is calculated following the
dividend record date.
Sales Charges
- ------------------------------
What are the classes and how do they differ?
The fund presently offers three classes of shares that have
different sales and distribution charges (see "Fund Expenses"
previously in this prospectus). For certain classes of shares,
the fund has adopted distribution and service plans allowed under
Rule 12b-1 of the Investment Company Act of 1940 that authorize
the fund to pay distribution and service fees for the sale of its
shares and for
Phoenix-Engemann Funds 57
<PAGE>
services provided to shareholders. Because these fees are paid
out of the Fund's assets on an on-going basis, over time these
fees will increase the cost of your investment and may cost you
more than paying other types of sales charges.
What arrangement is best for you?
The different classes permit you to choose the method of
purchasing shares that is most beneficial to you. In choosing a
class, consider the amount of your investment, the length of time
you expect to hold the shares, whether you decide to receive
distributions in cash or to reinvest them in additional shares,
and any other personal circumstances. Depending upon these
considerations, the accumulated distribution and service fees and
contingent deferred sales charges of one class may be more or
less than the initial sales charge and accumulated distribution
and service fees of another class of shares bought at the same
time. Because distribution and service fees are paid out of the
fund's assets on an ongoing basis, over time these fees will
increase the cost of your investment and may cost you more than
paying other types of sales charges.
Class A Shares. If you purchase Class A Shares, you will pay a
sales charge at the time of purchase equal to 4.75% of the
offering price (4.99% of the amount invested). The sales charge
may be reduced or waived under certain conditions. Class A Shares
are not subject to any charges by the fund when redeemed. Class A
Shares have lower distribution and service fees (0.25%) and pay
higher dividends than Class B and C Shares.
Class B Shares. If you purchase Class B Shares, you will not pay
a sales charge at the time of purchase. If you sell your Class B
Shares within the first 5 years after they are purchased, you
will pay a sales charge of up to 5% of your shares' value. See
"Deferred Sales Charge Alternative--Class B and C Shares" below.
This charge declines to 0% over a period of 5 years and may be
waived under certain conditions. Class B shares have higher
distribution and service fees (1.00%) and pay lower dividends
than Class A Shares. Class B Shares automatically convert to
Class A Shares eight years after purchase (six years for Class B
Shares purchased prior to January 20, 1998). Purchases of Class B
Shares may be inappropriate for any investor who may qualify for
reduced sales charges of Class A Shares and anyone who is over 85
years of age. The underwriter may decline purchases in such
situations.
Class C Shares. If you purchase Class C Shares, you will not pay
a sales charge at the time of purchase. If you sell your Class C
Shares within the first year after they are purchased, you will
pay a sales charge of 1%. See "Deferred Sales Charge
Alternative--Class B and C Shares" below. Class C Shares have the
same distribution and service fees (1.00%) and pay comparable
dividends as Class B Shares. Class C Shares do not convert to any
other class of shares of the fund.
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A Shares is the net asset
value plus a sales charge that varies depending on the size of
your purchase (see "Class A Shares--Reduced Sales Charges:
Combination Purchase Privilege" in the Statement of Additional
Information). Shares purchased
58 Phoenix-Engemann Funds
<PAGE>
based on the automatic reinvestment of income dividends or
capital gains distributions are not subject to any sales charges.
The sales charge is divided between your investment dealer and
the funds' underwriter (Phoenix Equity Planning Corporation or
"PEPCO").
Sales Charge you may pay to purchase Class A Shares
<TABLE>
<CAPTION>
Sales Charge as
a percentage of
----------------------
Amount of Net
Transaction Offering Amount
at Offering Price Price Invested
- --------------------------------------------------------
<S> <C> <C>
Under $50,000 4.75% 4.99%
$50,000 but under $100,000 4.50 4.71
$100,000 but under $250,000 3.50 3.63
$250,000 but under $500,000 3.00 3.09
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
</TABLE>
Deferred Sales Charge Alternative--
Class B and C Shares
Class B and C Shares are purchased without an initial sales
charge; however, shares sold within a specified time period are
subject to a declining contingent deferred sales charge ("CDSC")
at the rates listed below. The sales charge will be multiplied by
the then current market value or the initial cost of the shares
being redeemed, whichever is less. No sales charge will be
imposed on increases in net asset value or on shares purchased
through the reinvestment of income dividends or capital gains
distributions. To minimize the sales charge, shares not subject
to any charge will be redeemed first, followed by shares held the
longest time. To calculate the amount of shares owned and time
period held, all Class B Shares purchased in any month are
considered purchased on the last day of the preceding month, and
all Class C Shares are considered purchased on the trade date.
Deferred Sales charge you may pay to sell Class B Shares
<TABLE>
<CAPTION>
Year 1 2 3 4 5 6+
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CDSC 5% 4% 3% 2% 2% 0%
</TABLE>
Class B Shares Purchased Prior to January 20, 1998
Class B Shares that were purchased prior to January 20, 1998 are
not subject to the sales load schedule described above but will
continue to be subject to the sales load schedule as it existed
prior to that date. The following is the sales load schedule you
may pay to sell Class B Shares purchased prior to January 20,
1998:
<TABLE>
<CAPTION>
Year 1 2 3 4 5+
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CDSC 5% 4% 3% 3% 0%
</TABLE>
Phoenix-Engemann Funds 59
<PAGE>
Deferred Sales charge you may pay to sell Class C Shares
<TABLE>
<CAPTION>
Year 1 2+
----------------------------------------------------------------
<S> <C> <C>
CDSC 1% 0%
</TABLE>
Class C Shares of the Growth Fund, Balanced Return Fund, and
Nifty Fifty Fund purchased prior to January 20, 1998 are not
subject to the 1% CDSC.
Your Account
- -----------------------------
Opening an Account
Your financial advisor can assist you with your initial purchase
as well as all phases of your investment program. If you are
opening an account by yourself, please follow the instructions
outlined below.
Step 1.
Your first choice will be the initial amount you intend to
invest.
Minimum initial investments:
o $25 for individual retirement accounts, or accounts that use
the systematic exchange privilege, or accounts that use the
Investo-Matic program (see below for more information on the
Investo-Matic program).
o There is no initial dollar requirement for defined
contribution plans, profit-sharing plans, or employee
benefit plans. There is also no minimum for reinvesting
dividends and capital gains into another account.
o $500 for all other accounts.
Minimum additional investments:
o $25 for any account.
o There is no minimum for defined contribution plans,
profit-sharing plans, or employee benefit plans. There is
also no minimum for reinvesting dividends and capital gains
into an existing account.
60 Phoenix-Engemann Funds
<PAGE>
Step 2.
Your second choice will be what class of shares to buy. The fund
offers three classes of shares for individual investors. Each has
different sales and distribution charges. Because all future
investments in your account will be made in the share class you
choose when you open your account, you should make your decision
carefully. Your financial advisor can help you pick the share
class that makes the most sense for your situation.
Step 3.
Your next choice will be how you want to receive any dividends
and capital gain distributions. Your options are:
o Receive both dividends and capital gain distributions in
additional shares
o Receive dividends in cash and capital gain distributions in
additional shares
o Receive both dividends and capital gain distributions in
cash
No interest will be paid on uncashed distribution checks.
How To Buy Shares
- ------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
To Open An Account
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- ----------------------------------------------------------------------------------------------------------------
Complete a New Account Application and send it with a check payable
Through the mail to the fund. Mail them to: State Street Bank, P.O. Box 8301, Boston,
MA 02266-8301.
- ----------------------------------------------------------------------------------------------------------------
By Federal Funds wire Call us at (800) 243-1574 (press 1, then 0).
- ----------------------------------------------------------------------------------------------------------------
Complete the appropriate section on the application and send it with your
By Investo-Matic initial investment payable to the fund. Mail them to: State Street Bank,
P.O. Box 8301, Boston, MA 02266-8301.
- ----------------------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800) 243-1574 (press 1, then 0).
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
How to Sell Shares
- -----------------------------------
You have the right to have the fund buy back shares at the net
asset value next determined after receipt of a redemption order
by the fund's Transfer Agent or an authorized agent. In the case
of a Class B or C Share redemption, you will be subject to the
applicable deferred sales charge, if any, for such shares.
Subject to certain restrictions, shares may be redeemed by
telephone or
Phoenix-Engemann Funds 61
<PAGE>
in writing. In addition, shares may be sold through securities
dealers, brokers or agents who may charge customary commissions
or fees for their services. The fund does not charge any
redemption fees. Payment for shares redeemed is made within seven
days; however, redemption proceeds will not be disbursed until
each check used for purchases of shares has been cleared for
payment by your bank, which may take up to 15 days after receipt
of the check.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
To Sell Shares
------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
------------------------------------------------------------------------------------------------------
Send a letter of instruction and any share certificates (if you hold
certificate shares) to: State Street Bank, P.O. Box 8301, Boston, MA
Through the mail 02266-8301. Be sure to include the registered owner's name, fund and
account number, number of shares or dollar value you wish to sell.
------------------------------------------------------------------------------------------------------
For sales up to $50,000, requests can be made by calling
By telephone (800) 243-1574.
------------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800) 243-1574 (press 1, then 0).
------------------------------------------------------------------------------------------------------
</TABLE>
Things You Should Know When Selling Shares
- ------------------------------------------------------------
You may realize a taxable gain or loss (for federal income tax
purposes) if you redeem shares of the fund. The fund reserves the
right to pay large redemptions "in-kind" (in securities owned by
the fund rather than in cash). Large redemptions are those over
$250,000 or 1% of the fund's net assets. Additional documentation
will be required for redemptions by organizations, fiduciaries,
or retirement plans, or if redemption is requested by anyone but
the shareholder(s) of record. Transfers between broker-dealer
"street" accounts are governed by the accepting broker-dealer.
Questions regarding this type of transfer should be directed to
your financial advisor. Redemption requests will not be honored
until all required documents in proper form have been received.
To avoid delay in redemption or transfer, shareholders having
questions about specific requirements should contact the fund's
Transfer Agent at (800) 243-1574.
Redemptions by Mail
[arrow] Send a clear letter of instructions if all of these
apply:
o Your shares are registered individually, jointly, or as
custodian under the Uniform Gifts to Minors Act or Uniform
Transfers to Minors Act.
o The proceeds do not exceed $50,000.
o The proceeds are payable to the registered owner at the
address on record.
[arrow] Send a clear letter of instructions with a signature
guarantee when any of these apply:
62 Phoenix-Engemann Funds
<PAGE>
o You are selling more than $50,000 worth of shares.
o The name or address on the account has changed within the
last 60 days.
o You want the proceeds to go to a different name or
address than on the account.
If you are selling shares held in a corporate or fiduciary
account, please contact the fund's Transfer Agent at (800)
243-1574.
The signature on your request must be guaranteed by an eligible
guarantor institution as defined by the fund's Transfer Agent in
accordance with its signature guarantee procedures. Currently,
such procedures generally permit guarantees by banks, broker
dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings
associations.
Selling Shares by Telephone
The Transfer Agent will use reasonable procedures to confirm that
telephone instructions are genuine. Address and bank account
information are verified, redemption instructions are taped, and
all redemptions are confirmed in writing.
The individual investor bears the risk from instructions given by
an unauthorized third party that the Transfer Agent reasonably
believed to be genuine.
The Transfer Agent may modify or terminate the telephone
redemption privilege at any time with 60 days notice to
shareholders.
During times of drastic economic or market changes, telephone
redemptions may be difficult to make or temporarily suspended.
Account Policies
- --------------------------------
Account Reinstatement Privilege
For 180 days after you sell your Class A, B, or C Shares, you can
purchase Class A Shares of any fund at net asset value, with no
sales charge, by reinvesting all or part of your proceeds, but
not more. Send your written request to State Street Bank, P.O.
Box 8301, Boston, MA 02266-8301. You can call us at (800)
243-1574 for more information.
Please remember, a redemption and reinvestment are considered to
be a sale and purchase for tax-reporting purposes. Class B
shareholders who have had the contingent deferred sales charge
waived because they are in the Systematic Withdrawal Program are
not eligible for this reinstatement privilege.
Phoenix-Engemann Funds 63
<PAGE>
Redemption of Small Accounts
Due to the high cost of maintaining small accounts, if your
account balance is less than $200, you may receive a notice
requesting you to bring the balance up to $200 within 60 days. If
you do not, the shares in the account will be sold at net asset
value, and a check will be mailed to the address of record.
Exchange Privileges
You should read the prospectus carefully before deciding to make
an exchange. You can obtain a prospectus from your financial
advisor or by calling us at (800) 243-4361 or accessing our Web
site at www.phoenixinvestments.com.
o You may exchange shares for another fund in the same class
of shares; e.g., Class A for Class A.
o Exchanges may be made by phone (800) 243-1574 or by mail
(State Street Bank, P.O. Box 8301, Boston, MA 02266-8301).
o The amount of the exchange must be equal to or greater than
the minimum initial investment required.
o The exchange of shares is treated as a sale and purchase for
federal income tax purposes.
o Because excessive trading can hurt fund performance and harm
other shareholders, the Fund reserves the right to
temporarily or permanently end exchange privileges or reject
an order from anyone who appears to be attempting to time
the market, including investors who request more than one
exchange in any 30-day period. The fund's underwriter has
entered into agreements with certain market timing firms
permitting them to exchange by telephone. These privileges
are limited, and the fund distributor has the right to
reject or suspend them.
Retirement Plans
Shares of the fund may be used as investments under the following
qualified prototype retirement plans: traditional IRA, rollover
IRA, SEP-IRA, SIMPLE IRA, Roth IRA, 401(k) plans, profit-sharing,
money purchase pension plans, and 403(b) plans. For more
information, call (800) 243-4361.
Investor Services
- ---------------------------------
Investo-Matic is a systematic investment plan that allows you to
have a specified amount automatically deducted from your checking
or savings account and then deposited into your mutual fund
account. Just complete the Investo-Matic Section on the
application and include a voided check.
64 Phoenix-Engemann Funds
<PAGE>
Systematic Exchange allows you to automatically move money from
one Phoenix Fund to another on a monthly, quarterly, semiannual
or annual basis. Shares of one Phoenix Fund will be exchanged for
shares of the same class of another fund at the interval you
select. To sign up, just complete the Systematic Exchange Section
on the application.
Telephone Exchange lets you exchange shares of one fund for the
same class of shares in another fund, using our customer service
telephone service. See the Telephone Exchange Section on the
application.
Systematic Withdrawal Program allows you to periodically redeem a
portion of your account on a predetermined monthly, quarterly,
semiannual, or annual basis. Sufficient shares will be redeemed
on the 15th of the month at the closing net asset value so that
the payment is made about the 20th of the month. The program also
provides for redemptions on or about the 10th, 15th, or 25th with
proceeds directed through Automated Clearing House (ACH) to your
bank. The minimum withdrawal is $25, and minimum account balance
requirements continue. Shareholders in the program must own fund
shares worth at least $5,000.
Phoenix-Engemann Funds 65
<PAGE>
Tax Status of Distributions
- -------------------------------------------
The fund plans to make distributions from net investment income
at intervals stated on the table below, and to distribute net
realized capital gains, if any, at least annually.
<TABLE>
<CAPTION>
Fund Dividend Paid
<S> <C>
Balanced Return Fund Annually
Global Growth Fund Annually
Growth Fund Annually
Nifty Fifty Fund Annually
Small & Mid-Cap Growth Fund Annually
Value 25 Fund Semiannually
</TABLE>
Distributions of short-term capital gains and net investment
income are taxable to shareholders as ordinary income. Long-term
capital gains, if any, distributed to shareholders and which are
designated by the fund as capital gains distributions, are
taxable to shareholders as long-term capital gain distributions
regardless of the length of time you have owned your shares.
Unless you elect to receive distributions in cash, dividends and
capital gain distributions are paid in additional shares. All
distributions, cash or additional shares, are subject to federal
income tax and may be subject to state, local and other taxes.
66 Phoenix-Engemann Funds
<PAGE>
Financial Highlights
- -----------------------------------
These tables are intended to help you understand the funds'
financial performance over the past five years or since
inception. Certain information reflects financial results for a
single fund share. The total returns in the tables represent the
rate that an investor would have earned on an investment in the
fund (assuming reinvestment of all dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP,
independent accountants. Their report, together with the funds'
financial statements, are included in the funds' most recent
Annual Report, which is available upon request.
Phoenix-Engemann Balanced Return Fund
<TABLE>
<CAPTION>
Class A
---------------------------------
Year Ended December 31,
---------------------------------
1998 1997
--------- ---------
<S> <C> <C>
Net asset value, beginning of period $29.05 $28.08
Income from investment operations:
Net investment income (loss) 0.40 0.30(1)(2)
Net realized and unrealized gain (loss) 8.03 4.98
------- -------
Total from investment operations 8.43 5.28
------- -------
Less Distributions:
Dividends from net investment income (0.40) (0.32)
Dividends from net realized gains (2.25) (3.99)
------- -------
Total distributions (2.65) (4.31)
------- -------
Net asset value, end of period $34.83 $29.05
======= =======
Total return(4) 29.12% 18.98%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $72,620 $56,610
Ratio to average net assets of:
Operating expenses 1.63% 1.7%(2)
Net investment income 1.15% 1.0%(2)
Portfolio turnover 124% 40.3%
<CAPTION>
Class A
-------------------------------------------------
Year Ended December 31,
-------------------------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period $25.39 $20.54 $21.97
Income from investment operations:
Net investment income (loss) 0.29(1)(3) 0.27(1) 0.39(1)
Net realized and unrealized gain (loss) 4.23 5.31 (1.36)
------- ------- -------
Total from investment operations 4.52 5.58 (0.97)
------- ------- -------
Less Distributions:
Dividends from net investment income (0.30) (0.29) (0.46)
Dividends from net realized gains (1.53) (0.44) --
------- ------- -------
Total distributions (1.83) (0.73) (0.46)
------- ------- -------
Net asset value, end of period $28.08 $25.39 $20.54
======= ======= =======
Total return(4) 17.78%(3) 27.18% (4.43)%
Ratios/supplemental data:
Net assets, end of period (thousands) $51,947 $52,028 $53,047
Ratio to average net assets of:
Operating expenses 2.0%(3) 2.1% 2.1%
Net investment income 1.1%(3) 1.2% 1.8%
Portfolio turnover 35.1% 51.1% 28.2%
</TABLE>
- ----------------
(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
$33,360. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class A shares would have been $.29, 18.98%, 1.7%, and 0.9%,
respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$55,000. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class A shares would have been $.27, 17.66%, 2.1%, and 1.0%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
Phoenix-Engemann Funds 67
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Engemann Balanced Return Fund
<TABLE>
<CAPTION>
Class B
---------------------------------
Year Ended December 31,
---------------------------------
1998 1997
--------- --------
<S> <C> <C>
Net asset value, beginning of period $28.76 $27.85
Income from investment operations:
Net investment income 0.13 0.08(1)(2)
Net realized and unrealized gain (loss) 7.91 4.93
------- ------
Total from investment operations 8.04 5.01
------- ------
Less Distributions:
Dividends from net investment income (0.18) (0.11)
Dividends from net realized gains (2.25) (3.99)
------- ------
Total distributions (2.43) (4.10)
------- ------
Net asset value, end of period $34.37 $28.76
======= ======
Total return(4) 28.06% 18.15%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $11,512 $7,125
Ratio to average net assets of:
Operating expenses 2.38% 2.4%(2)
Net investment income 0.39% 0.3%(2)
Portfolio turnover 124% 40.3%
<CAPTION>
Class B
-----------------------------------------------
Year Ended December 31,
-----------------------------------------------
1996 1995 1994
--------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $25.26 $20.49 $21.89
Income from investment operations:
Net investment income 0.09(1)(3) 0.08(1) 0.26(1)
Net realized and unrealized gain (loss) 4.16 5.29 (1.32)
------ ------ ------
Total from investment operations 4.25 5.37 (1.06)
------ ------ ------
Less Distributions:
Dividends from net investment income (0.13) (0.16) (0.34)
Dividends from net realized gains (1.53) (0.44) --
------ ------ ------
Total distributions (1.66) (0.60) (0.34)
------ ------ ------
Net asset value, end of period $27.85 $25.26 $20.49
====== ====== ======
Total return(4) 16.82%(3) 26.20% (4.85)%
Ratios/supplemental data:
Net assets, end of period (thousands) $4,609 $2,721 $1,223
Ratio to average net assets of:
Operating expenses 2.7%(3) 2.9% 2.9%
Net investment income 0.3%(3) 0.3% 1.3%
Portfolio turnover 35.1% 51.1% 28.2%
</TABLE>
- ----------------
(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
$33,360. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class B shares would have been $.06, 18.15%, 2.5%, and 0.2%,
respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$55,000. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class B shares would have been $.06, 16.74%, 2.8%, and 0.2%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
68 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Engemann Balanced Return Fund
<TABLE>
<CAPTION>
Class C
------------------------------
Year Ended December 31,
------------------------------
1998 1997
-------- --------
<S> <C> <C>
Net asset value, beginning of period $28.80 $27.88
Income from investment operations:
Net investment income (loss) 0.14 0.08(1)(2)
Net realized and unrealized gain (loss) 7.92 4.92
------ ------
Total from investment operations 8.06 5.00
------ ------
Less Distributions:
Dividends from net investment income (0.17) (0.09)
Dividends from net realized gains (2.25) (3.99)
------ ------
Total distributions (2.42) (4.08)
------ ------
Net asset value, end of period $34.44 $28.80
====== ======
Total return(4) 28.07% 18.11%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $7,610 $5,581
Ratio to average net assets of:
Operating expenses 2.38% 2.4%(2)
Net investment income 0.39% 0.3%(2)
Portfolio turnover 124% 40.3%
<CAPTION>
Class C
-----------------------------------------------
Year Ended December 31,
-----------------------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $25.28 $20.48 $21.89
Income from investment operations:
Net investment income (loss) 0.09(1)(3) 0.07(1) 0.25(1)
Net realized and unrealized gain (loss) 4.16 5.30 (1.31)
------ ------ ------
Total from investment operations 4.25 5.37 (1.06)
------ ------ ------
Less Distributions:
Dividends from net investment income (0.12) (0.13) (0.35)
Dividends from net realized gains (1.53) (0.44) --
------ ------ ------
Total distributions (1.65) (0.57) (0.35)
------ ------ ------
Net asset value, end of period $27.88 $25.28 $20.48
====== ====== ======
Total return(4) 16.79%(3) 26.23% (4.85)%
Ratios/supplemental data:
Net assets, end of period (thousands) $4,183 $2,809 $1,449
Ratio to average net assets of:
Operating expenses 2.7%(3) 2.9% 2.9%
Net investment income 0.3%(3) 0.3% 1.3%
Portfolio turnover 35.1% 51.1% 28.2%
</TABLE>
- ----------------
(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
$33,360. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class C shares would have been $.06, 18.11%, 2.5%, and 0.2%,
respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$55,000. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class C shares would have been $.06, 16.71%, 2.8%, and 0.2%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
Phoenix-Engemann Funds 69
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Engemann Global Growth Fund
<TABLE>
<CAPTION>
Class A
---------------------------------------
Year Ended December 31,
---------------------------------------
1998 1997
--------- ---------
<S> <C> <C>
Net asset value, beginning of period $19.83 $19.06
Income from investment operations:(6)
Net investment income (loss) (0.18)(1)(5) (0.19)(1)(2)
Net realized and unrealized gain (loss) 3.02 2.29
------- -------
Total from investment operations 2.84 2.10
------- -------
Less Distributions:
Dividends from net investment income -- --
Dividends from net realized gains (0.20) (1.33)
------- -------
Total distributions (0.33) (1.33)
------- -------
Net asset value, end of period $22.34 $19.83
======= =======
Total return(4) 14.35% 11.27%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $13,453 $11,964
Ratio to average net assets of:
Operating expenses 1.94% 2.0%(2)
Net investment income (loss) (0.81)% (0.9)%(2)
Portfolio turnover 95% 237.2%
<CAPTION>
Class A
------------------------------------------------------
Year Ended December 31,
------------------------------------------------------
1996 1995 1994
-------- --------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $17.27 $14.06 $11.18
Income from investment operations:(6)
Net investment income (loss) 0.03(1)(3) 0.24(1)(3) 0.10(1)(3)
Net realized and unrealized gain (loss) 3.55 3.11 2.78
------ ------- ------
Total from investment operations 3.58 3.35 2.88
------ ------- ------
Less Distributions:
Dividends from net investment income (0.04) -- --
Dividends from net realized gains (1.75) (0.14) --
------ ------- ------
Total distributions (1.79) (0.14) --
------ ------- ------
Net asset value, end of period $19.06 $17.27 $14.06
====== ======= ======
Total return(4) 21.77%(3) 23.84%(3) 25.76%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $7,654 $3,203 $141
Ratio to average net assets of:
Operating expenses 0.8%(3) --%(3) --%(3)
Net investment income (loss) 0.1%(3) (1.4)%(3) 0.8%(3)
Portfolio turnover 220.3% 29.0% 479.3%
</TABLE>
- ----------------
(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
$708. 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 shares would have been $(0.19), 11.27%, 2.0%, and (0.9)%,
respectively.
(3) These amounts reflect the impact of a waiver of Manager fees of $62,438,
$42,545, and $2,784 for the periods ended December 31, 1996, 1995, and
1994, respectively, and the Manager's reimbursement for income taxes of
$13,109 during 1994. Absent waivers and reimbursement, net investment
income (loss) per share, total return and ratios of expenses and net
investment income (loss) to average net assets would have been $(0.21),
21.71%, 2.0% and (1.2)%, respectively, $(0.15), 22.88%, 2.3% and (0.9)%,
respectively, and $(0.21), 14.40%, 10.4% (2.3% if only normal and recurring
expenses are taken into account) and (1.7)%, respectively, for the periods
ended December 31, 1996, 1995, and 1994, respectively.
(4) Total return measures the change in the value of an investment during each
of the periods presented and does not include the impact of paying any
sales charge.
70 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Engemann Global Growth Fund
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $19.65 $19.04 $17.44(6)
Income from investment operations:(5)
Net investment income (loss) (0.34)(1)(4) (0.35)(1)(2) (0.08)(1)
Net realized and unrealized gain 2.95 2.29 1.82
------ ------ ------
Total from investment operations 2.61 1.94 1.74
------ ------ ------
Less Distributions:
Dividends from net investment income -- -- --
Dividends from net realized gains (0.20) (1.33) (0.14)
------ ------ ------
Total distributions (0.33) (1.33) (0.14)
------ ------ ------
Net asset value, end of period $21.93 $19.65 $19.04
====== ====== ======
Total return(3) 13.31% 10.44%(2) 9.98%
Ratios/supplemental data:
Net assets, end of period (thousands) $4,730 $3,312 $874
Ratio to average net assets of:
Operating expenses(4) 2.69% 2.8%(2) 2.7%(7)
Net investment income (loss)(4) (1.59)% (1.7)%(2) (1.9)%(7)
Portfolio turnover 95% 237.2% 220.3%
</TABLE>
- ----------------
(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
$708. 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 B shares would have been $(0.35), 10.44%, 2.8%, and (1.7)%,
respectively.
(3) Total return measures the change in the value of an investment during each
of the periods presented and does not include the impact of paying any
sales charge. Total return for the period ended December 31, 1996 has not
been annualized.
(4) Includes reimbursement of operating expenses by the investment adviser of
$0.04.
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
(6) The beginning net asset value per share of Class B shares equals the net
asset value per share of the Class A shares as of the first day Class B
shares were sold, September 18, 1996.
(7) Annualized.
Phoenix-Engemann Funds 71
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Engemann Global Growth Fund
<TABLE>
<CAPTION>
Class C
-------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $19.65 $19.03 $17.88(6)
Income from investment operations:(5)
Net investment income (loss) (0.33)(1)(4) (0.37)(1)(2) (0.04)(1)
Net realized and unrealized gain 2.93 2.32 1.34
------ ------ ---------
Total from investment operations 2.60 1.95 1.30
------ ------ ---------
Less Distributions:
Dividends from net investment income -- -- (0.01)
Dividends from net realized gains (0.20) (1.33) (0.14)
------ ------ ---------
Total distributions (0.33) (1.33) (0.15)
------ ------ ---------
Net asset value, end of period $21.92 $19.65 $19.03
====== ====== =========
Total return(3) 13.26%(2) 10.50%(2) 7.28%
Ratios/supplemental data:
Net assets, end of period (thousands) $4,282 $3,785 $106
Ratio to average net assets of:
Operating expenses 2.69% 2.7%(2) 2.7%(7)
Net investment income (loss) (1.57)% (1.8)%(2) (1.6)%(7)
Portfolio turnover 95% 237.2% 220.3%
</TABLE>
- ----------------
(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
$708. 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 C shares would have been $(0.37), 10.50%, 2.8%, and (1.8)%,
respectively.
(3) Total return measures the change in the value of an investment during each
of the periods presented and does not include the impact of paying any
sales charge. Total return for the period ended December 31, 1996 has not
been annualized.
(4) Includes reimbursement of operating expenses by the investment adviser of
$0.04.
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
(6) The beginning net asset value per share of Class C shares equals the
net asset value per share of the Class A shares as of the first day
Class C shares were sold, October 21, 1996.
(7) Annualized for periods of less than one year.
72 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Engemann Growth Fund
<TABLE>
<CAPTION>
Class A
-------------------------------------
Year Ended December 31,
-------------------------------------
1998 1997
---------- ----------
<S> <C> <C>
Net asset value, beginning of period $20.43 $21.94
Income from investment operations:
Net investment income (loss) (0.16)(1) (0.16)(1)(2)
Net realized and unrealized gain (loss) 7.76 3.51
-------- -----------
Total from investment operations 7.60 3.35
-------- -----------
Less Distributions:
Dividends from net realized gains -- (4.86)
-------- -----------
Total distributions (1.21) (4.86)
-------- -----------
Net asset value, end of period $26.82 $20.43
======== ===========
Total return(4) 37.41% 16.04%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $441,146 $383,481
Ratio to average net assets of:
Operating expenses 1.58% 1.6%(2)
Net investment income (loss) (0.72)% (0.7)%(2)
Portfolio turnover 119% 70.6%
<CAPTION>
Class A
---------------------------------------------------
Year Ended December 31,
---------------------------------------------------
1996 1995 1994(5)
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $19.28 $15.40 $16.00
Income from investment operations:
Net investment income (loss) (0.14)(1)(3) (0.06)(1) (0.03)(1)
Net realized and unrealized gain (loss) 4.47 4.24 (0.57)
-------- -------- --------
Total from investment operations 4.33 4.18 (0.60)
-------- -------- --------
Less Distributions:
Dividends from net realized gains (1.67) (0.30) --
-------- -------- --------
Total distributions (1.67) (0.30) --
-------- -------- --------
Net asset value, end of period $21.94 $19.28 $15.40
======== ======== ========
Total return(4) 22.49%(3) 27.16% (3.75)%
Ratios/supplemental data:
Net assets, end of period (thousands) $426,785 $415,416 $391,831
Ratio to average net assets of:
Operating expenses 1.6%(3) 1.6% 1.6%
Net investment income (loss) (0.6)%(3) (0.3)% (0.2)%
Portfolio turnover 70.1% 65.9% 53.8%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares
outstanding during each year.
(2) These amounts reflect the impact of a waiver of administration fees of
$18,196. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class A shares would not have changed.
(3) These amounts reflect the impact of a waiver of administration fees of
$30,000. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class A shares would have been $(0.14), 22.49%, 1.6%, and (0.7)%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
Phoenix-Engemann Funds 73
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Engemann Growth Fund
<TABLE>
<CAPTION>
Class B
-------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.61 $21.40 $18.99 $15.28 $15.89
Income from investment operations:
Net investment income (loss)(1) (0.32)(1) (0.34)(2) (0.31)(3) (0.20) (0.14)
Net realized and unrealized gain (loss) 7.41 3.41 4.39 4.21 (0.47)
------- ------- ------- ------- --------
Total from investment operations 7.09 3.07 4.08 4.01 (0.61)
------- ------- ------- ------- --------
Less Distributions:
Dividends from net realized gains (1.21) (4.86) (1.67) (0.30) --
------- ------- ------- ------- --------
Total distributions (1.21) (4.86) (1.67) (0.30) --
------- ------- ------- ------- --------
Net asset value, end of period $25.49 $19.61 $21.40 $18.99 $15.28
======= ======= ======= ======= ========
Total return(4) 36.38% 15.13%(2) 21.52%(3) 26.26% (3.84)%
Ratios/supplemental data:
Net assets, end of period (thousands) $65,986 $54,267 $49,444 $34,786 $11,349
Ratio to average net assets of:
Operating expenses 2.33% 2.4%(2) 2.3%(3) 2.4% 2.3%
Net investment income (loss) (1.47)% (1.5)%(2) (1.5)%(3) (1.1)% (1.0)
Portfolio turnover 119% 70.6% 70.1% 65.9% 53.8%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares
outstanding during each year.
(2) These amounts reflect the impact of a waiver of administration fees of
$18,196. 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 B shares would not have changed.
(3) These amounts reflect the impact of a waiver of administration fees of
$30,000. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class B shares would have been $(0.31), 21.52%, 2.4%, and (1.5)%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(5) Inception date is January 3, 1994.
74 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Engemann Growth Fund
<TABLE>
<CAPTION>
Class C
-------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
--------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.61 $21.40 $18.99 $15.28 $15.89
Income from investment operations:
Net investment income (loss)(1) (0.32)(1) (0.34)(2) (0.31)(3) (0.20) (0.14)
Net realized and unrealized gain (loss 7.41 3.41 4.39 4.21 (0.47)
------- ------- ------- ------- ------
Total from investment operations 7.09 3.07 4.08 4.01 (0.61)
------- ------- ------- ------- ------
Less Distributions:
Dividends from net realized gains (1.21) (4.86) (1.67) (0.30) --
------- ------- ------- ------- ------
Total distributions (1.21) (4.86) (1.67) (0.30) --
------- ------- ------- ------- ------
Net asset value, end of period $25.49 $19.61 $21.40 $18.99 $15.28
======= ======= ======= ======= ======
Total return(4) 36.38% 15.13%(2) 21.52%(3) 26.26% (3.84)%
Ratios/supplemental data:
Net assets, end of period (thousands) $34,580 $29,222 $27,239 $20,497 $6,136
Ratio to average net assets of:
Operating expenses 2.33% 2.4%(2) 2.3%(3) 2.4% 2.3%
Net investment income (loss) (1.47)% (1.5)%(2) (1.5)%(3) (1.1)% (1.0)
Portfolio turnover 119% 70.6% 70.1% 65.9% 53.8%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares
outstanding during each year.
(2) These amounts reflect the impact of a waiver of administration fees of
$18,196. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class C shares would not have changed.
(3) These amounts reflect the impact of a waiver of administration fees of
$30,000. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class C shares would have been $(0.31), 21.52%, 2.4%, and (1.5)%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(5) Inception date is January 3, 1994.
Phoenix-Engemann Funds 75
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Engemann Nifty Fifty Fund
<TABLE>
<CAPTION>
Class A
-------------------------------------
Year Ended December 31,
-------------------------------------
1998 1997
---------- ----------
<S> <C> <C>
Net asset value, beginning of period $29.21 $26.50
Income from investment operations:
Net investment income (loss) (0.20)(1) (0.20)(1)(2)
Net realized and unrealized gain 10.45 5.23
-------- --------
Total from investment operations 10.25 5.03
-------- --------
Less Distributions:
Dividends from net realized gains (0.66) (2.32)
-------- --------
Total distributions (0.66) (2.32)
-------- --------
Net asset value, end of period $38.80 $29.21
======== ========
Total return(3) 35.13% 19.23%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $235,065 $176,378
Ratio to average net assets of:
Operating expenses 1.60% 1.6%(2)
Net investment income (loss) (0.61)% (0.7)%(2)
Portfolio turnover 92% 68.8%
<CAPTION>
Class A
---------------------------------------------------
Year Ended December 31,
---------------------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $22.18 $17.30 $17.12
Income from investment operations:
Net investment income (loss) (0.12)(1)(3) (0.05)(1) (0.03)(1)
Net realized and unrealized gain 6.00 4.93 0.21
-------- -------- --------
Total from investment operations 5.88 4.88 0.18
-------- -------- --------
Less Distributions:
Dividends from net realized gains (1.56) -- --
-------- -------- --------
Total distributions (1.56) -- --
-------- -------- --------
Net asset value, end of period $26.50 $22.18 $17.30
======== ======== ========
Total return(3) 26.53%(3) 28.21% 1.05%
Ratios/supplemental data:
Net assets, end of period (thousands) $145,469 $122,322 $100,596
Ratio to average net assets of:
Operating expenses 1.7%(3) 1.9% 1.9%
Net investment income (loss) (0.4)%(3) (0.3)% (0.2)%
Portfolio turnover 41.9% 26.5% 23.2%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares
outstanding during each year.
(2) These amounts reflect the impact of a waiver of administration fees of
$42,459. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class A shares would have been $(0.20), 19.23%, 1.6%, and (0.7)%,
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 income to average net assets for
Class A shares would have been $(0.13), 26.48%, 1.8%, and (0.5)%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
76 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Engemann Nifty Fifty Fund
<TABLE>
<CAPTION>
Class B
-------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
--------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $28.24 $25.88 $21.85 $17.17 $17.02
Income from investment operations:
Net investment income (loss)(1) (0.43)(1) (0.42)(2) (0.30)(3) (0.21) (0.14)
Net realized and unrealized gain 10.06 5.10 5.89 4.89 0.29
------- ------- ------- ------- --------
Total from investment operations 9.63 4.68 5.59 4.68 0.15
------- ------- ------- ------- --------
Less Distributions:
Dividends from net realized gains (0.66) (2.32) (1.56) -- --
------- ------- ------- ------- --------
Total distributions (0.66) (2.32) (1.56) -- --
------- ------- ------- ------- --------
Net asset value, end of period $37.21 $28.24 $25.88 $21.85 $17.17
======= ======= ======= ======= ========
Total return(4) 34.14% 18.33%(2) 25.60%(3) 27.26% 0.88%
Ratios/supplemental data:
Net assets, end of period (thousands) $96,983 $68,051 $47,143 $27,462 $6,722
Ratio to average net assets of:
Operating expenses 2.35% 2.4%(2) 2.5%(3) 2.6% 2.6%
Net investment income (loss) (1.35)% (1.4)%(2) (1.2)%(3) (1.0)% (0.9)%
Portfolio turnover 92% 68.8% 41.9% 26.5% 23.2%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares
outstanding during each year.
(2) These amounts reflect the impact of a waiver of administration fees of
$42,459. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class B shares would have been $(0.42), 18.33%, 2.4%, and (1.5)%,
respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$70,000. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class B shares would have been $(0.31), 25.55%, 2.5%, and (1.3)%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(5) Inception date is January 3, 1994.
Phoenix-Engemann Funds 77
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Engemann Nifty Fifty Fund
<TABLE>
<CAPTION>
Class C
-------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
--------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $28.24 $25.88 $21.85 $17.17 $17.02
Income from investment operations:
Net investment income (loss)(1) (0.43)(1) (0.42)(2) (0.30)(3) (0.21) (0.15)
Net realized and unrealized gain 10.06 5.10 5.89 4.89 0.30
------- ------- ------- ------- ------
Total from investment operations 9.63 4.68 5.59 4.68 0.15
------- ------- ------- ------- ------
Less Distributions:
Dividends from net realized gains (0.66) (2.32) (1.56) -- --
------- ------- ------- ------- ------
Total distributions (0.66) (2.32) (1.56) -- --
------- ------- ------- ------- ------
Net asset value, end of period $37.21 $28.24 $25.88 $21.85 $17.17
======= ======= ======= ======= ======
Total return(4) 34.14% 18.33%(2) 25.60%(3) 27.26% 0.88%
Ratios/supplemental data:
Net assets, end of period (thousands) $48,401 $39,773 $26,092 $15,105 $4,283
Ratio to average net assets of:
Operating expenses 2.35% 2.4%(2) 2.5%(3) 2.6% 2.6%
Net investment income (loss) (1.35)% (1.4)%(2) (1.2)%(3) (1.0)% (0.9)%
Portfolio turnover 92% 68.8% 41.9% 26.5% 23.2%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares
outstanding during each year.
(2) These amounts reflect the impact of a waiver of administration fees of
$42,459. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class C shares would have been $(0.42), 18.33%, 2.4%, and (1.5)%,
respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$70,000. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class B shares would have been $(0.31), 25.55%, 2.5%, and (1.3)%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(5) Inception date is January 3, 1994.
78 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Engemann Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
Class A
---------------------------------------
Year Ended December 31,
---------------------------------------
1998 1997
--------- ---------
<S> <C> <C>
Net asset value, beginning of period $21.09 $18.39
Income from investment operations:
Net investment income (loss) (0.30)(1)(6) (0.31)(1)(2)
Net realized and unrealized gain 3.31 5.07
------- -------
Total from investment operations 3.01 4.76
------- -------
Less Distributions:
Dividends from net investment income -- --
Dividends from net realized gains -- (2.06)
------- -------
Total distributions (0.02) (2.06)
------- -------
Net asset value, end of period $24.08 $21.09
======= =======
Total return(4) 14.29% 26.41%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $54,187 $27,771
Ratio to average net assets of:
Operating expenses 1.78% 1.8%(2)
Net investment income (loss) (1.39)% (1.4)%(2)
Portfolio turnover 147% 313.5%
<CAPTION>
Class A
-------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------
From
Inception
10/10/94 to
1996 1995 12/31/94
-------- --------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $14.90 $12.07 $10.00
Income from investment operations:
Net investment income (loss) (0.12)(1)(3) 0.22 (1)(3) 0.07(1)(3)
Net realized and unrealized gain 7.45 2.87 2.00
------ ------ ------
Total from investment operations 7.33 3.09 2.07
------ ------ ------
Less Distributions:
Dividends from net investment income (0.28) (0.08) --
Dividends from net realized gains (3.56) (0.18) --
------ ------ ------
Total distributions (3.84) (0.26) --
------ ------ ------
Net asset value, end of period $18.39 $14.90 $12.07
====== ====== ======
Total return(4) 52.37%(3) 25.68%(3) 20.70%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $7,859 $1,742 $121
Ratio to average net assets of:
Operating expenses 1.1%(3) --%(3) --%(5)
Net investment income (loss) (0.7)%(3) 1.5%(3) 2.6%(5)
Portfolio turnover 297.1% 121.4% 157.9%
</TABLE>
- ----------------
(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
$1,128. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class A shares would have been $(0.31), 26.41%, 1.8%, and (1.4)%,
respectively.
(3) These amounts reflect the impact of a waiver of Manager fees of $18,499,
$13,443 and $585 for the periods ended December 31, 1996, 1995 and 1994,
respectively, and the Manager's reimbursement for income taxes of $6,654
during 1994. Had the waivers and reimbursement not been made, net
investment income (loss) per share, total return (not annualized for the
period ended December 31, 1994) and the ratios of expenses and net
investment income (loss) to average net assets (annualized for the period
ended December 31, 1994) would have been $(0.25), 51.35%, 1.9% and (1.4)%,
respectively, $(0.11), 23.40%, 2.3% and (0.8)%, respectively, and $(0.01),
15.10%, 22.1% (2.3% if only normal and recurring expenses are taken into
account) and (0.4)%, respectively, for the periods ended December 31, 1996,
1995 and 1994, respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge. Total return for
the period ended December 31, 1994 has not been annualized.
(5) Annualized.
(6) Includes reimbursement of operating expenses by investment adviser of
$0.01.
Phoenix-Engemann Funds 79
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Engemann Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
Class B
---------------------------------------------------------
From
Year Ended Inception
December 31, 9/18/96 to
1998 1997 12/31/96(6)
--------- --------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period $20.87 $18.35 $16.44
Income from investment
operations:
Net investment income (loss) (0.45)(1)(7) (0.46)(1)(2) (0.32)(1)
Net realized and unrealized gain 3.24 5.04 2.43
------- ------- ------
Total from investment
operations 2.79 4.58 2.11
------- ------- ------
Less Distributions:
Dividends from net realized gains -- (2.06) (0.20)
------- ------- ------
Total distributions (0.02) (2.06) (0.20)
------- ------- ------
Net asset value, end of period $23.64 $20.87 $18.35
======= ======= ======
Total return(4) 13.39% 25.49%(2) 12.84%
Ratios/supplemental data:
Net assets, end of period (thousands) $31,631 $17,298 $1,480
Ratio to average net assets of:
Operating expenses(5) 2.53% 2.6%(2) 2.6%(5)
Net investment income (loss)(5) (2.14)% (2.1)%(2) (2.2)%(5)
Portfolio turnover 147% 313.5% 297.1%
<CAPTION>
Class C
-------------------------------------------------------
From
Year Ended Inception
December 31, 10/8/96 to
1998 1997 12/31/96(6)
--------- -------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period $20.87 $18.35 $17.99
Income from investment
operations:
Net investment income (loss) (0.45)(1)(7) (0.47)(1)(3) (0.29)(1)
Net realized and unrealized gain 3.23 5.05 0.85
------- ------ ------
Total from investment
operations 2.78 4.58 0.56
------- ------ ------
Less Distributions:
Dividends from net realized gains -- (2.06) (0.20)
------- ------ ------
Total distributions (0.02) (2.06) (0.20)
------- ------ ------
Net asset value, end of period $23.63 $20.87 $18.35
======= ====== ======
Total return(4) 13.34% 25.49%(3) 3.12%
Ratios/supplemental data:
Net assets, end of period (thousands) $15,023 $8,080 $54
Ratio to average net assets of:
Operating expenses(5) 2.53% 2.6%(3) 2.6%(5)
Net investment income (loss)(5) (2.14)% (2.1)%(3) (2.2)%(5)
Portfolio turnover 147% 313.5% 297.1%
</TABLE>
- ----------------
(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
$1,128. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class B shares would have been $(0.46), 25.49%, 2.6%, and (2.1)%,
respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$1,128. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class C shares would have been $(0.47), 25.49%, 2.6%, and (2.1)%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge. Total return for
the period ended December 31, 1996 has not been annualized.
(5) Annualized.
(6) The beginning net asset value per share of Class B and Class C shares
equals the net asset value per share of the Class A shares as of the first
day Class B and Class C shares were sold, September 18, 1996 and October 8,
1996, respectively.
(7) Includes reimbursement of operating expenses by the investment adviser of
$0.01.
80 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Engemann Value 25 Fund
<TABLE>
<CAPTION>
Class A
----------------------------------------------------
From
Year Ended Inception
December 31, 12/17/96 to
1998 1997 12/31/96
--------- --------- -----------
<S> <C> <C> <C>
Net asset value, beginning of
period $11.56 $10.11 $10.00
Income from investment
operations:
Net investment income 0.15(1)(7) 0.17 (1)(2) --(1)
Net realized and unrealized
gain (loss) 0.66 1.95 0.11
------- ------- --------
Total from investment
operations 0.81 2.12 0.11
------- ------- --------
Less Distributions:
Dividends from net investment
income (0.14) (0.12) --
Dividends from net realized
gains (0.59) (0.55) --
------- ------- ------
Total distributions (0.73) (0.67) --
------- ------- ------
Net asset value, end of
period $11.64 $11.56 $10.11
======= ======= ======
Total return(4) 7.23% 21.10%(2) 1.10%(6)
Ratios/supplemental data:
Net assets, end of period
(thousands) $18,090 $19,518 $482
Ratio to average net
assets of:
Operating expenses(4) 1.75% 1.8%(2) 1.7%(4)
Net investment income
(loss)(4) 1.25% 1.4%(2) 1.8%(4)
Portfolio turnover 135% 87.7% --%(6)
<CAPTION>
Class B Class C
------------------------------------ ----------------------------------------
From From
Year Ended Inception Year Ended Inception
December 31, 1/9/97 to December 31, 1/9/97 to
1998 12/31/97 1998 12/31/97
------------ -------- ------------ -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $11.53 $10.39(5) $11.52 $10.39(5)
Income from investment
operations:
Net investment income 0.06 (1)(7) 0.08(1)(2) 0.06(1)(6) 0.09 (1)(2)
Net realized and unrealized
gain (loss) 0.65 1.67 0.65 1.66
------- ------ ------ ------
Total from investment
operations 0.71 1.75 0.71 1.75
------- ------ ------ ------
Less Distributions:
Dividends from net investment
income (0.06) (0.06) (0.06) (0.07)
Dividends from net realized
gains (0.59) (0.55) (0.59) (0.55)
------- ------ ------ ------
Total distributions (0.65) (0.61) (0.65) (0.62)
------- ------ ------ ------
Net asset value, end of
period $11.59 $11.53 $11.58 $11.52
======= ====== ====== ======
Total return(4) 6.41% 16.97%(2) 6.42% 17.01%(2)
Ratios/supplemental data:
Net assets, end of period
(thousands) $10,981 $8,799 $6,642 $4,893
Ratio to average net
assets of:
Operating expenses(4) 2.50% 2.6%(4) 2.50% 2.6%(4)
Net investment income
(loss)(4) 0.54% 0.7%(4) 0.52% 0.8%(4)
Portfolio turnover 135% 87.7% 135% 87.7%
</TABLE>
- ----------------
(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
$789. 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 $0.17, $0.08 and $0.08,
respectively, 21.10%, 16.97% and 17.01%, respectively, 1.8%, 2.6% and 2.6%,
respectively, and 1.4%, 0.7% and 0.8%, respectively.
(3) Total return measures the change in the value of an investment during each
of the periods presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge. Total return for
the period from inception (December 17, 1996) through December 31, 1996 has
not been annualized.
(4) Annualized.
(5) The beginning net asset value per share of Class B and Class C shares
equals the net asset value per share of the Class A shares as of the first
day Class B and Class C shares were sold (January 9, 1997).
(6) Includes reimbursement of operating expenses by investment adviser of
$0.01.
Phoenix-Engemann Funds 81
<PAGE>
Additional Information
- ----------------------------------------
Statement of Additional Information
The fund has filed a Statement of Additional Information about the fund, dated
May 1, 1999 with the Securities and Exchange Commission. The Statement contains
more detailed information about the fund. It is incorporated into this
prospectus by reference and is legally part of the prospectus. You may obtain a
free copy of the Statement:
o by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
o by calling (800) 243-4361.
You may also obtain information about the fund from the Securities and Exchange
Commission:
o through its internet site (http://www.sec.gov),
o by visiting its Public Reference Room in Washington, DC or
o by writing to its Public Reference Section, Washington, DC 20549-6009
(a fee may be charged).
Information about the operation of the Public Reference Room may be
obtained by calling (800) SEC-0330.
Shareholder Reports
The fund semiannually mails to its shareholders detailed reports containing
information about the fund's investments. The fund's Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the fund's performance from January 1 through December
31. You may request a free copy of the fund's Annual and Semiannual Reports:
o by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
o by calling (800) 243-4361.
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunication Device (TTY): (800) 243-1926
SEC File Nos. 33-1922 and 811-4506
[Recycle Logo] Printed on recycled paper using soybean ink
82 Phoenix-Engemann Funds
<PAGE>
PHOENIX-ENGEMANN GROWTH FUND PHOENIX-ENGEMANN NIFTY-FIFTY FUND
PHOENIX-ENGEMANN BALANCED RETURN FUND
PHOENIX-ENGEMANN GLOBAL GROWTH FUND
PHOENIX-ENGEMANN SMALL & MID-CAP FUND
PHOENIX-ENGEMANN VALUE 25 FUND
600 North Rosemead Boulevard
Pasadena, California 91107-2133
Statement of Additional Information
, 1999
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current prospectus of The
Phoenix-Engemann Funds (the "Trust"), dated , 1999 (the "Prospectus"), and
should be read in conjunction with it. Such Prospectus may be obtained by
calling Phoenix Equity Planning Corporation ("Equity Planning") at (800)
243-4361 or by writing to Equity Planning at 100 Bright Meadow Boulevard, P.O.
Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE TRUST ..................................... 1
INVESTMENT OBJECTIVES AND POLICIES ............ 1
INVESTMENT RESTRICTIONS ....................... 8
PERFORMANCE INFORMATION ....................... 10
PORTFOLIO TRANSACTIONS AND BROKERAGE .......... 12
PORTFOLIO TURNOVER ............................ 13
SERVICES OF THE ADVISER ....................... 13
NET ASSET VALUE ............................... 15
HOW TO BUY SHARES ............................. 15
ALTERNATIVE PURCHASE ARRANGEMENTS ............. 15
INVESTOR ACCOUNT SERVICES ..................... 18
HOW TO REDEEM SHARES .......................... 19
TAX SHELTERED RETIREMENT PLANS ................ 20
DIVIDENDS, DISTRIBUTIONS AND TAXES ............ 20
THE DISTRIBUTOR ............................... 21
DISTRIBUTION PLANS ............................ 23
MANAGEMENT OF THE TRUST ....................... 25
OTHER INFORMATION ............................. 28
APPENDIX ...................................... 29
</TABLE>
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PXP 2011 (4/99)
<PAGE>
THE TRUST
The Phoenix-Engemann Funds (the "Trust") (formerly called the "Pasadena
Investment Trust") is a diversified open-end management investment company which
was organized under Massachusetts law in 1986 as a business trust. The name
change of the Trust was made on September 3, 1997 in connection with the merger
of an acquisition subsidiary of Phoenix Investment Partners, Ltd. and Pasadena
Capital Corporation. The Trust presently comprises six series: Phoenix-Engemann
Growth Fund, Phoenix-Engemann Nifty Fifty Fund, Phoenix-Engemann Balanced Return
Fund, Phoenix-Engemann Global Growth Fund, Phoenix-Engemann Small & Mid-Cap
Growth Fund and Phoenix-Engemann Value 25 Fund, each a "Fund" and, collectively,
the "Funds."
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Fund is deemed to be a fundamental policy
which may not be changed without the approval of the holders of a majority of
the outstanding shares of each Fund. Investment restrictions described in this
Statement of Additional Information as a fundamental policy may not be changed
without the approval of such Fund's shareholders. Notwithstanding the foregoing,
certain investment restrictions affect more than one series of the Trust and
therefore modifications may require the consent of other shareholders. There is
no assurance that any Fund will meet its investment objective.
Foreign Securities
Each Fund may invest (directly and/or through Depositary Receipts) in
securities principally traded in markets outside the United States. Foreign
investments can be affected favorably or unfavorably by changes in currency
exchange rates and in exchange control regulations. There may be less publicly
available information about a foreign company than about a U.S. company, and the
information available may not be of the same quality. Foreign companies also may
not be subject to accounting, auditing and financial reporting standards and
requirements comparable to those applicable to U.S. companies. Securities of
some foreign companies are less liquid or more volatile than securities of U.S.
companies, and foreign brokerage commissions and custodian fees are generally
higher than in the United States.
Investments in foreign securities can involve other risks different from
those affecting U.S. investments, including local political or economic
developments, expropriation or nationalization of assets and imposition of
withholding taxes on dividend or interest payments. To hedge against possible
variations in currency exchange rates, a Fund (except the Growth Fund, the Nifty
Fifty Fund and the Balanced Return Fund) may purchase and sell forward currency
exchange contracts. These are agreements to purchase or sell specified
currencies at specified dates and prices. A Fund will only purchase and sell
forward currency exchange contracts in amounts which the Adviser deems
appropriate to hedge existing or anticipated portfolio positions and will not
use such forward contracts for speculative purposes. Foreign securities, like
other assets of a Fund, will be held by such Fund's custodian or by an
authorized subcustodian. While none of the Growth, Nifty Fifty and Balanced
Return Funds anticipates investing a significant portion of its assets in
foreign securities, each of these Funds may invest up to 15% of the value of its
total assets (at time of purchase, giving effect thereto) in the securities of
foreign issuers and obligors. The Small & Mid-Cap Growth Fund may invest up to
50% of its assets, the Value 25 Fund may invest up to 25% of its assets and the
Global Growth Fund may invest up to 100% of its assets in foreign securities.
Depositary Receipts. Each Fund's investments in the securities of foreign
issuers may be in the form of Depositary Receipts ("DRs"), e.g., American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs"), Continental Depositary Receipts ("CDRs"), or other
forms of DRs. DRs are receipts typically issued by a United States or foreign
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. The Fund may invest in DRs through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the underlying security and a depository, whereas a depository may
establish an unsponsored facility without participation by the issuer of the
deposited security. The depository of unsponsored DRs generally bears all the
costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Foreign Currency Transactions
In General. As described below, each Fund (except the Growth Fund, the
Nifty Fifty Fund and the Balanced Return Fund) may engage in certain foreign
currency exchange and option transactions. These transactions involve investment
risks and transaction costs to which a Fund would not be subject absent the use
of these strategies. If the Adviser's predictions of movements in the direction
of securities prices or currency exchange rates are inaccurate, the adverse
consequences to a Fund may leave such Fund in a worse position than if it had
not used such strategies. Risks inherent in the use of option and foreign
currency forward and futures contracts include: (1) dependence on the Adviser's
ability to correctly predict movements in the direction of securities prices and
currency exchange rates; (2) imperfect correlation between the price of options
and futures contracts and movements in the prices of the securities or
currencies being hedged; (3) the fact that the skills needed to use these
strategies are different from those needed to select portfolio securities; (4)
the possible absence of a liquid secondary market for any particular instrument
at any time; and (5) the possible need to defer closing out certain hedged
positions to avoid adverse tax consequences.
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Each Fund's ability to enter into futures contracts is also limited by the
requirements of the Internal Revenue Code of 1986, as amended, (the "Code") for
qualification as a regulated investment company.
The Global Growth Fund, Small & Mid-Cap Growth Fund and Value 25 Fund may
engage in currency exchange transactions to protect against uncertainty in the
level of future currency exchange rates. In addition, each Fund may write
covered put and call options on foreign currencies for the purpose of increasing
its return.
Generally, each of the above Funds may engage in both "transaction hedging"
and "position hedging." When it engages in transaction hedging, a Fund enters
into foreign currency transactions with respect to specific receivables or
payables, generally arising in connection with the purchase or sale of portfolio
securities. A Fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. By transaction hedging, a Fund will attempt to protect itself against
a possible loss resulting from an adverse change in the exchange rate between
the U.S. dollar and the applicable foreign currency during the period between
the date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
Each of the above Funds may purchase or sell a foreign currency on a spot
(or cash) basis at the prevailing spot rate in connection with the settlement of
transactions in portfolio securities denominated in that foreign currency. Each
Fund may also enter into contracts to purchase or sell foreign currencies at a
future date ("forward contracts") and purchase and sell foreign currency futures
contracts.
For transaction hedging purposes, each of the above Funds may also purchase
exchange-listed and over-the-counter put and call options on foreign currency
futures contracts and on foreign currencies. A put option on a futures contract
gives a Fund the right to assume a short position in the futures contract until
the expiration of the option. A put option on a currency gives a Fund the right
to sell the currency at an exercise price until the expiration of the option. A
call option on a futures contract gives a Fund the right to assume a long
position in the futures contract until the expiration of the option. A call
option on a currency gives a Fund the right to purchase the currency at the
exercise price until the expiration of the option.
When it engages in position hedging, a Fund enters into foreign currency
exchange transactions to protect against a decline in the values of the foreign
currencies in which its portfolio securities are denominated (or an increase in
the values of currency for securities which such Fund expects to purchase, when
such Fund holds cash or short-term investments). In connection with position
hedging, each of the Funds may purchase put or call options on foreign currency
and on foreign currency futures contracts and buy or sell forward contracts and
foreign currency futures contracts. Each Fund may also purchase or sell foreign
currency on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is also impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward or futures
contract. Accordingly, it may be necessary for a Fund to purchase additional
foreign currency on the spot market (and bear the expense of such purchase) if
the market value of the security or securities being hedged is less than the
amount of foreign currency such Fund is obligated to deliver and a decision is
made to sell the security or securities and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of the
foreign currency received upon the sale of the portfolio security or securities
if the market value of such security or securities exceeds the amount of foreign
currency a Fund is obligated to deliver.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which a Fund owns or intends to purchase or
sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in value of
such currency.
Each of the above Funds may seek to increase its return or to offset some
of the costs of hedging against fluctuations in currency exchange rates by
writing covered put options and covered call options on foreign currencies. A
Fund receives a premium from writing a put or call option, which increases such
Fund's current return if the option expires unexercised or is closed out at a
net profit. A Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option written.
A Fund's currency hedging transactions may call for the delivery of one
foreign currency in exchange for another foreign currency and may at times not
involve currencies in which its portfolio securities are then denominated. The
Adviser will engage in such "cross hedging" activities when it believes that
such transactions provide significant hedging opportunities for a Fund. Cross
hedging transactions by a Fund involve the risk of imperfect correlation between
changes in the values of the currencies to which such transactions relate and
changes in the value of the currency or other asset or liability which is the
subject of the hedge.
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None of the Funds is a commodity pool. The Funds' transactions in futures
and options thereon as described herein will constitute bona fide hedging or
other permissible transactions under regulations promulgated by the Commodity
Futures Trading Commission ("CFTC"). In addition, no Fund may engage in such
transactions if the sum of the amount of initial margin deposits and premiums
paid for unexpired futures and options thereon would exceed 5% of the value of
such Fund's net assets, with certain exclusions as defined in the applicable
CFTC rules. At the time of purchase of a foreign currency exchange contract, a
foreign currency futures contract or related option, liquid assets, such as
cash, U.S. government securities or other appropriate high-grade debt
obligations, marked to market daily equal to the market value of the foreign
currency contract or related option minus the Fund's initial margin deposit will
be deposited in a pledged account with the Funds' custodian to collateralize the
position and thereby ensure that it is not leveraged.
Currency forward and futures contracts. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the contract
as agreed by the parties, at a price set at the time of the contract. The holder
of a cancelable forward contract has the unilateral right to cancel the contract
at maturity by paying a specified fee. The contracts are traded in the interbank
market conducted directly between currency traders (usually large commercial
banks) and their customers. A forward contract generally has no deposit
requirement, and no commissions are charged at any stage for trades. A foreign
currency futures contract is a standardized contract for the future delivery of
a specified amount of a foreign currency at a future date at a price set at the
time of the contract. Foreign currency futures contracts traded in the United
States are designed by and traded on exchanges regulated by the CFTC, such as
the New York Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign currency
futures contracts in certain respects. For example, the maturity date of a
forward contract may be any fixed number of days from the date of the contract
agreed upon by the parties, rather than a predetermined date in a given month.
Forward contracts may be in any amounts agreed upon by the parties rather than
predetermined amounts. Also, forward foreign exchange contracts are traded
directly between currency traders so that no intermediary is required. A forward
contract generally requires no margin or other deposit.
At the maturity of a forward or futures contract, a Fund either may accept
or make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original forward
contract. Closing transactions with respect to futures contracts are effected on
a commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.
Although each Fund (except the Growth Fund, the Nifty Fifty Fund and the
Balanced Return Fund) intends to purchase or sell foreign currency futures
contracts only on exchanges or boards of trade where there appears to be an
active market, there is no assurance that a market on an exchange or board of
trade will exist for any particular contract or at any particular time. In such
event, it may not be possible to close a futures position and, in the event of
adverse price movements, the Fund would continue to be required to make daily
cash payments of variation margin.
Foreign currency options. In general, options on foreign currencies operate
similarly to options on securities and are subject to many similar risks.
Foreign currency options are traded primarily in the over-the-counter market,
although options on foreign currencies have recently been listed on several
exchanges. Options are traded not only on the currencies of individual nations,
but also on the European Currency Unit, which is composed of amounts of a number
of currencies and is the official medium of exchange of the European Community's
European Monetary System.
Each Fund (except the Growth, Nifty Fifty and Balanced Return Funds) will
only purchase or write foreign currency options when the Fund's Adviser believes
that a liquid market exists for such options. There can be, however, no
assurance that a liquid market will exist for a particular option at any
specific time. Options on foreign currencies are affected by all of those
factors which influence foreign exchange rates and investments generally.
The value of any currency, including U.S. dollars and foreign currencies,
may be affected by complex political and economic factors applicable to the
issuing country. In addition, the exchange rates of foreign currencies (and
therefore the values of foreign currency options) may be affected significantly,
fixed, or supported directly or indirectly, by U.S. and foreign government
actions. Government intervention may increase risks involved in purchasing or
selling foreign currency options, since exchange rates may not be free to
fluctuate in response to other market forces.
The value of a foreign currency option reflects the value of an exchange
rate, which in turn reflects the relative values of two currencies, generally
the U.S. dollar and the foreign currency in question. Because foreign currency
transactions occurring in the interbank market involve substantially larger
amounts than those that may be involved in the exercise of foreign currency
options, investors may be disadvantaged by having to deal in an odd-lot market
for the underlying foreign currencies in connection with options at prices that
are less favorable than for round lots. Foreign governmental restrictions or
taxes could result in adverse changes in the cost of acquiring or disposing of
foreign currencies.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information
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is generally representative of very large round-lot transactions in the
interbank market and thus may not reflect exchange rates for smaller odd- lot
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that cannot be reflected in the options markets.
Settlement procedures. Settlement procedures relating to the Funds'
investments in foreign securities and to the Funds' foreign currency exchange
transactions may be more complex than settlements with respect to investments in
debt or equity securities of U.S. issuers, and may involve certain risks not
present in the Funds' domestic investments. For example, settlement of
transactions involving foreign securities or foreign currency may occur within a
foreign country, and a Fund may be required to accept or make delivery of the
underlying securities or currency in conformity with any applicable U.S. or
foreign restrictions or regulations, and may be required to pay any fees, taxes
or charges associated with such delivery. Such investments may also involve the
risk that an entity involved in the settlement may not meet its obligations.
Settlement procedures in many foreign countries are less established than those
in the United States, and some foreign country settlement periods can be
significantly longer than those in the United States.
Foreign currency conversion. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to a
Fund at one rate, while offering a lesser rate of exchange should such Fund
desire to resell that currency to the dealer.
Futures Contracts and Related Options
A financial futures contract sale creates an obligation by the seller to
deliver the type of financial instrument called for in the contract in a
specified delivery month for a stated price. A financial futures contract
purchase creates an obligation by the purchaser to take delivery of the type of
financial instrument called for in the contract in a specified delivery month at
a stated price. The specific instruments delivered or taken, respectively, at
settlement date are not determined until on or near that date. The determination
is made in accordance with the rules of the exchange on which the futures
contract sale or purchase was made. Futures contracts are traded in the United
States only on commodity exchanges or boards of trade--known as "contract
markets"--approved for such trading by the CFTC, and must be executed through a
futures commission merchant or brokerage firm which is a member of the relevant
contract market. None of the Funds that can invest in futures contracts and
related options will invest more than 5% of its net assets in such contracts and
options.
No Fund will deal in commodity contracts per se, and the Global Growth,
Small & Mid-Cap Growth and Value 25 Funds will deal only in futures contracts
involving financial instruments. Although futures contracts by their terms call
for actual delivery or acceptance of securities, in most cases the contracts are
closed out before the settlement date without the making or taking of delivery.
Closing out a futures contract sale is effected by purchasing a futures contract
for the same aggregate amount of the specific type of financial instrument or
commodity with the same delivery date. If the price of the initial sale of the
futures contract exceeds the price of the offsetting purchase, the seller is
paid the difference and realizes a gain. Conversely, if the price of the
offsetting purchase exceeds the price of the initial sale, the seller realizes a
loss. Similarly, the closing out of a futures contract purchase is effected by
the purchaser's entering into a futures contract sale. If the offsetting sale
price exceeds the purchase price, the purchaser realizes a gain, and if the
purchase price exceeds the offsetting sale price, he realizes a loss. Futures
contracts traded on an exchange approved by the CFTC are "marked to market" at
the end of each year, whether or not they are closed out. In general, 40% of the
gain or loss arising from the closing out or marking to market of a futures
contract traded on an exchange approved by the CFTC is treated as short-term
capital gain or loss, and 60% is treated as long-term capital gain or loss.
Unlike when a Fund purchases or sells a security, no price is paid or
received by such Fund upon the purchase or sale of a futures contract. Upon
entering into a contract, such Fund is required to deposit with its custodian in
a segregated account in the name of the futures broker an amount of cash and/or
certain liquid securities. This amount is known as "initial margin." The nature
of initial margin in futures transactions is different from that of margin in
security transactions in that futures contract margin does not involve the
borrowing of funds to finance the transactions. Rather, initial margin is
similar to a performance bond or good faith deposit which is returned to such
Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Futures contracts also involve brokerage costs.
Subsequent payments, called "variation margin," to and from the broker (or
the custodian) are made on a daily basis as the price of the underlying security
or commodity fluctuates, making the long and short positions in the futures
contract more or less valuable, a process known as "marking to the market." For
example, when a Fund has purchased a futures contract on a security and the
price of the underlying security has risen, that position would increase in
value and such Fund would receive from the broker a variation margin payment
based on that increase in value. Conversely, when a Fund has purchased a
security futures contract and the price of the underlying security has declined,
the position would be less valuable and such Fund would be required to make a
variation margin payment to the broker.
A Fund may elect to close some or all of its futures positions at any time
prior to their expiration in order to reduce or eliminate a hedge position then
currently held by such Fund. A Fund may close its positions by taking opposite
positions which will operate
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to terminate such Fund's position in the futures contracts. Final determinations
of variation margin are then made, additional cash is required to be paid by or
released to such Fund, and such Fund realizes a loss or a gain. Such closing
transactions involve additional commission costs.
At the time of purchase of a financial futures contract or a call option on
a futures contract, liquid assets, such as cash, U.S. government securities or
other appropriate high-grade debt obligations, marked to market daily equal to
the market value of the futures contract minus the Fund's initial margin deposit
will be deposited in a pledged account with the Funds' custodian to
collateralize the position and thereby ensure that it is not leveraged.
Options on futures contracts. Each Fund (except the Growth Fund, the Nifty
Fifty Fund and the Balanced Return Fund) may purchase and write put and call
options on futures contracts it may buy or sell and enter into closing
transactions with respect to such options to terminate existing positions.
Options on future contracts give the purchaser the right, in return for the
premium paid, to assume a position in a futures contract at the specified option
exercise price at any time during the period of the option. Each of the above
Funds may use options on futures contracts in lieu of writing or buying options
directly on the underlying securities or purchasing and selling the underlying
futures contracts. For example, to hedge against a possible decrease in the
value of its portfolio securities, a Fund may purchase put options or write call
options on futures contracts rather than selling futures contracts. Similarly, a
Fund may purchase call options or write put options on futures contracts as a
substitute for the purchase of futures contracts to hedge against a possible
increase in the price of securities which such Fund expects to purchase. Such
options generally operate in the same manner as options purchased or written
directly on the underlying investments.
As with options on securities, the holder or writer of an option may
terminate its position by selling or purchasing an offsetting option. There is
no guarantee that such closing transactions can be effected.
The Global Growth, Small & Mid-Cap Growth and Value 25 Funds will be
required to deposit initial margin and maintenance margin with respect to put
and call options on futures contracts written by such Funds pursuant to brokers'
requirements similar to those described above in connection with the discussion
of futures contracts.
Risks of transactions in futures contracts and related options. Successful
use of futures contracts by a Fund is subject to the Adviser's ability to
predict movements in the direction of interest rates and other factors affecting
securities markets. For example, if a Fund has hedged against the possibility of
decline in the values of its investments and the values of its investments
increase instead, such Fund will lose part or all of the benefit of the increase
through payments of daily maintenance margin. A Fund may have to sell
investments at a time when it may be disadvantageous to do so in order to meet
margin requirements. The loss from investing in futures transactions is
potentially unlimited.
Compared to the purchase or sale of futures contracts, the purchase of put
or call options on futures contracts involves less potential risk to a Fund
because the maximum amount at risk is the premium paid for the options (plus
transaction costs). However, there may be circumstances when the purchase of a
put or call option on a futures contract would result in a loss to a Fund when
the purchase or sale of a futures contract would not, such as when there is no
movement in the prices of the hedged investments. The writing of an option on a
futures contract involves risks similar to those risks relating to the sale of
futures contracts.
There is no assurance that higher than anticipated trading activity or
other unforeseen events might not, at times, render certain market clearing
facilities inadequate, and thereby result in the institution by exchanges of
special procedures which may interfere with the timely execution of customer
orders.
To reduce or eliminate a hedge position held by a Fund, such Fund may seek
to close out a position. The ability to establish and close out positions will
be subject to the development and maintenance of a liquid secondary market. It
is not certain that this market will develop or continue to exist for a
particular futures contract or option. Reasons for the absence of a liquid
secondary market on an exchange include the following: (i) there may be
insufficient trading interest in certain contracts or options; (ii) restrictions
may be imposed by an exchange on opening transactions or closing transactions or
both; (iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of contracts or options, or underlying
securities; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or a clearing
corporation may not at all times be adequate to handle current trading volume;
or (vi) one or more exchanges could, for economic or other reasons, decide or be
compelled at some future date to discontinue the trading of contracts or options
(or a particular class or series of contracts or options), in which event the
secondary market on that exchange for such contracts or options (or in the class
or series of contracts or options) would cease to exist, although outstanding
contracts or options on the exchange that had been issued by a clearing
corporation as a result of trades on that exchange would continue to be
exercisable in accordance with their terms.
Index futures contracts. An index futures contract is a contract to buy or
sell units of an index at a specified future date at a price agreed upon when
the contract is made. Entering into a contract to buy units of an index is
commonly referred to as buying or purchasing a contract or holding a long
position in the index. Entering into a contract to sell units of an index is
commonly referred to as selling a contract or holding a short position. A unit
is the current value of the index. Each of the Global Growth, Small
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& Mid-Cap Growth and Value 25 Funds may enter into stock index futures
contracts, debt index futures contracts, or other index futures contracts
appropriate to its objective. Each of these Funds may also purchase and sell
options on index futures contracts.
For example, the Standard & Poor's Composite 500 Stock Price Index ("S&P
500") is composed of 500 selected common stocks, most of which are listed on the
New York Stock Exchange. The S&P 500 assigns relative weightings to the common
stocks included in the index, and the value fluctuates with changes in the
market values of those common stocks. In the case of the S&P 500, contracts are
to buy or sell 500 units. Thus, if the value of the S&P 500 were $150, one
contract would be worth $75,000 (500 units \x $150). A stock index futures
contract specifies that no delivery of the actual stocks making up the index
will take place. Instead, settlement in cash must occur upon the termination of
the contract, with the settlement being the difference between the contract
price and the actual level of the stock index at the expiration of the contract.
For example, if a Fund enters into a futures contract to buy 500 units of the
S&P 500 at a specified future date at a contract price of $150 and the S&P 500
is at $154 on that future date, the Fund will gain $2,000 (500 units \x gain of
$4 per unit). If a Fund enters into a futures contract to sell 500 units of the
stock index at a specified future date at a contract price of $150 and the S&P
500 is at $152 on that future date, the Fund will lose $1,000 (500 units \x loss
of $2 per unit).
There are several risks in connection with the use by the Funds of index
futures as a hedging device. One risk arises because of the imperfect
correlation between movements in the prices of the index futures and movements
in the prices of securities which are the subject of the hedge. The Funds'
Adviser will, however, when engaging in this type of activity, attempt to reduce
this risk by buying or selling, to the extent possible, futures on indices the
movements of which will, in its judgment, have a significant correlation with
movements in the prices of the securities sought to be hedged.
Successful use of index futures by a Fund for hedging purposes is also
subject to the Adviser's ability to predict movements in the direction of the
market. It is possible that, where a Fund has sold futures to hedge its
portfolio against a decline in the market, the index on which the futures are
written may advance and the value of securities held in such Fund's portfolio
may decline. If this occurred, such Fund would lose money on the futures and
also experience a decline in value in its portfolio securities. It is also
possible that, if a Fund has hedged against the possibility of a decline in the
market adversely affecting securities held in its portfolio and securities
prices increase instead, such Fund will lose part or all of the benefit of the
increased value of those securities it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
such Fund has insufficient cash, it may have to sell securities to meet daily
variation margin requirements at a time when it is disadvantageous to do so.
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the index futures and the portion
of the portfolio being hedged, the prices of index futures may not correlate
perfectly with movements in the underlying index due to certain market
distortions. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the index and
futures markets. Second, margin requirements in the futures market are less
onerous than margin requirements in the securities market, and as a result the
futures market may attract more speculators than the securities market does.
Increased participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price distortions in the
futures market and also because of the imperfect correlation between movements
in the index and movements in the prices of index futures, even a correct
forecast of general market trends may not result in a successful hedging
transaction over a short time period.
Options on stock index futures. Options on stock index futures are similar
to options on securities except that options on index futures give the purchaser
the right, in return for the premium paid, to assume a position in an index
futures contract (a long position if the option is a call and a short position
if the option is a put) at a specified exercise price at any time during the
period of the option. Upon exercise of the option, the delivery of the futures
position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's futures
margin account which represents the amount by which the market price of the
index futures contract, at exercise, exceeds (in the case of a call) or is less
than (in the case of a put) the exercise price of the option on the index
future. If an option is exercised on the last trading day prior to its
expiration date, the settlement will be made entirely in cash equal to the
difference between the exercise price of the option and the closing level of the
index on which the future is based on the expiration date. Purchasers of options
who fail to exercise their options prior to the exercise date suffer a loss of
the premium paid.
Options on Indices
As an alternative to purchasing put and call options on index futures, each
of the Global Growth, Small & Mid-Cap Growth and Value 25 Funds may purchase and
sell put and call options on the underlying indices themselves. Such options
would be used in a manner identical to the use of options on index futures.
Index Warrants
Each Fund (except the Growth Fund, the Nifty Fifty Fund and the Balanced
Return Fund) may purchase put warrants and call warrants whose values vary
depending on the change in the value of one or more specified securities indices
("index warrants"). Index warrants are generally issued by banks or other
financial institutions and give the holder the right, at any time during the
term of the warrant, to receive upon exercise of the warrant a cash payment from
the issuer based on the value of the underlying
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index at the time of exercise. In general, if the value of the underlying index
rises above the exercise price of the index warrant, the holder of a call
warrant will be entitled to receive a cash payment from the issuer upon exercise
based on the difference between the value of the index and the exercise price of
the warrant; if the value of the underlying index falls, the holder of a put
warrant will be entitled to receive a cash payment from the issuer upon exercise
based on the difference between the exercise price of the warrant and the value
of the index. The holder of a warrant would not be entitled to any payments from
the issuer at any time when, in the case of a call warrant, the exercise price
is greater than the value of the underlying index, or, in the case of a put
warrant, the exercise price is less than the value of the underlying index. If a
Fund were not to exercise an index warrant prior to its expiration, then such
Fund would lose the amount of the purchase price paid by it for the warrant.
A Fund will normally use index warrants in a manner similar to its use of
options on securities indices. The risks of a Fund's use of index warrants are
generally similar to those relating to its use of index options. Unlike most
index options, however, index warrants are issued in limited amounts and are not
obligations of a regulated clearing agency, but are backed only by the credit of
the bank or other institution which issues the warrant. Also, index warrants
generally have longer terms than index options. Although each Fund will normally
invest only in exchange listed warrants, index warrants are not likely to be as
liquid as certain index options backed by a recognized clearing agency. In
addition, the terms of index warrants may limit a Fund's ability to exercise the
warrants at such time, or in such quantities, as the Fund would otherwise wish
to do.
Securities Loans
Each Fund may make secured loans of its portfolio securities amounting to
not more than 25% of its total assets, thereby increasing its total return. The
risks in lending portfolio securities, as with other extensions of credit,
consist of possible delay in recovery of the securities or possible loss of
rights in the collateral should the borrower fail financially. As a matter of
policy, securities loans are made to broker-dealers pursuant to agreements
requiring that loans be continuously secured by collateral consisting of cash or
high-grade short-term debt obligations at least equal at all times to the value
of the securities on loan, "marked-to-market" daily. The borrower pays to such
Fund an amount equal to any dividends or interest received on securities lent. A
Fund retains all or a portion of the interest received on investment of the cash
collateral or receives a fee from the borrower. Although voting rights, or
rights to consent, with respect to the loaned securities pass to the borrower, a
Fund retains the right to call the loans at any time on reasonable notice, and
it will do so to enable the Fund to exercise the voting rights on any matters
materially affecting the investment. A Fund may also call such loans in order to
sell securities.
Forward Commitments
Each Fund (except the Growth Fund, the Nifty Fifty Fund and the Balanced
Return Fund) may enter into contracts to purchase securities for a fixed price
at a future date beyond customary settlement time ("forward commitments") if the
Fund holds, and maintains until settlement date in a segregated account, cash or
high-grade debt obligations in an amount sufficient to meet the purchase price,
or if the Fund enters into offsetting contracts for the forward sale of other
securities it owns. Forward commitments may be considered securities in
themselves, and involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in the value of the Fund's other assets. Where such
purchases are made through dealers, the Fund relies on the dealer to consummate
the sale. The dealer's failure to do so may result in the loss to the Fund of an
advantageous yield or price. Although each Fund will generally enter into
forward commitments with the intention of acquiring securities for its portfolio
or for delivery pursuant to options contracts it has entered into, such Fund may
dispose of a commitment prior to settlement if the Adviser deems it appropriate
to do so. A Fund may realize short-term profits or losses upon the sale of
forward commitments.
Illiquid Securities
Each of the Global Growth, Small & Mid-Cap Growth, and Value 25 Funds may
invest up to 15% and each of the Growth, Nifty Fifty and Balanced Return Funds
may invest up to 10% of the value of its net assets in securities as to which a
liquid trading market does not exist, provided such investments are consistent
with such Fund's objective and other policies. Such securities may include
securities that are not readily marketable, such as certain securities that are
subject to legal or contractual restrictions on resale, repurchase agreements
providing for settlement in more than seven days after notice, certain options
traded in the over-the-counter market and securities used to cover such options.
As to these securities, a Fund is subject to a risk that should the Fund desire
to sell them when a ready buyer is not available at a price the Fund deems
representative of their value, the value of the Fund could be adversely
affected. When purchasing securities that have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), and are not readily
marketable, each Fund will endeavor to obtain the right to registration at the
expense of the issuer. Generally, there will be a lapse of time between a Fund's
decision to sell any such security and the registration of the security
permitting sale. During any such period, the price of the securities will be
subject to market fluctuations. However, if a substantial market of qualified
institutional buyers develops pursuant to Rule 144A under the 1933 Act for
certain unregistered securities held by a Fund, such Fund intends to treat such
securities as liquid securities in accordance with procedures approved by the
Trust's Board of Trustees. Because it is not possible to predict with any
assurance how the market for restricted securities pursuant to Rule 144A will
develop, the Board of Trustees has directed the Adviser to monitor carefully any
Fund investments in such securities with particular regard to trading activity,
availability or reliable price information and other relevant
7
<PAGE>
information. To the extent that, for a period of time, qualified institutional
buyers cease purchasing such restricted securities pursuant to Rule 144A, a
Fund's investing in such securities may have the effect of increasing the level
of illiquidity in the Fund's portfolio during such period.
Repurchase Agreements
Each Fund may, for temporary defensive purposes, invest its assets in
eligible U.S. Government securities and concurrently enter into repurchase
agreements with respect to such securities. Under such agreements, the seller of
the security agrees to repurchase it at a mutually agreed upon time and price.
The repurchase price may be higher than the purchase price, the difference being
income to the Fund, or the purchase and repurchase prices may be the same, with
interest at a stated rate due to the Fund together with the repurchase price on
repurchase. In either case, the income to the Fund is unrelated to the interest
rate on the U.S. Government security itself. Such repurchase agreements will be
made only with banks with assets of $1 billion or more that are insured by the
Federal Deposit Insurance Corporation or with Government securities dealers
recognized as primary dealers by the Federal Reserve Board and registered as
broker-dealers with the SEC or exempt from such registration. In addition, to
the extent a Fund has over $10 million in assets, the Fund will limit the amount
of its transactions with any one bank or Government securities dealer to a
maximum of 25% of its assets. Any repurchase agreements entered into by a Fund
will be of short duration, from overnight to one week, although the underlying
securities generally have longer maturities. No Fund may enter into a repurchase
agreement with more than seven days to maturity if, as a result, more than 10%
of the value of the Growth, Nifty Fifty or Balanced Return Funds' or 15% of the
value of the Global Growth, Small & Mid-Cap Growth or Value 25 Funds' net assets
would be invested in such repurchase agreements and other illiquid assets.
For purposes of the Investment Company Act of 1940 (the "1940 Act"), a
repurchase agreement is deemed to be a loan from a Fund to the seller of the
U.S. Government security subject to the repurchase agreement. In the event of
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the U.S. Government security before its repurchase under a repurchase
agreement, a Fund may encounter delays and incur costs before being able to sell
the security. Delays may involve loss of interest or a decline in price of the
U.S. Government security. If a court characterizes the transaction as a loan and
the Fund has not perfected a security interest in the U.S. Government security,
the Fund may be required to return the security to the seller's estate and be
treated as an unsecured creditor of the seller. As an unsecured creditor, the
Fund would be at risk of losing some or all of the principal and income involved
in the transaction. As with any unsecured debt instrument purchased for a Fund,
the Adviser seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case the seller of the
U.S. Government security.
Apart from the risk of bankruptcy or insolvency proceedings, there is also
the risk that the seller may fail to repurchase the security. However, each Fund
will always receive as collateral for any repurchase agreement to which it is a
party U.S. Government securities acceptable to it, the market value of which is
equal to at least 100% of the amount invested by the Fund plus accrued interest,
and the Fund will make payment against such securities only upon physical
delivery or evidence of book entry transfer to the account of its Custodian or
other entity authorized by the Trust's Board of Trustees to have custody for
purposes of repurchase agreement transactions. If the market value of the U.S.
Government security subject to the repurchase agreement becomes less than the
repurchase price (including interest), the Fund will direct the seller of the
U.S. Government security to deliver additional securities so that the market
value of all securities subject to the repurchase agreement will equal or exceed
the repurchase price. It is possible that the Fund will be unsuccessful in
seeking to impose on the seller a contractual obligation to deliver additional
securities, however.
Special Situations
Subject to the limitations in the Prospectus, each Fund (except the Global
Growth Fund) may invest in special situations that the Adviser believes present
opportunities for capital growth. Such situations most typically include
corporate restructurings, mergers, and tender offers.
A special situation arises when, in the opinion of the Adviser, the
securities of a particular company will, within a reasonably estimable period of
time, be accorded market recognition at an appreciated value solely by reason of
a development particularly or uniquely applicable to that company and regardless
of general business conditions or movements of the market as a whole.
Developments creating special situations might include, among others, the
following: liquidations, reorganizations, recapitalizations, mergers, or tender
offers; material litigation or resolution thereof; technological breakthroughs;
and new management or management policies. Although large and well-known
companies may be involved, special situations often involve much greater risk
than is inherent in ordinary investment securities.
INVESTMENT RESTRICTIONS
The following restrictions have been adopted as matters of fundamental or
operating policy for the Funds. Fundamental policies may not be changed without
the approval of a majority of the Fund's outstanding voting securities and
approval of the Board of Trustees. Operating policies can be changed by vote of
the Board of Trustees. The Funds may not:
(1) With respect to 75% of a Fund's total assets, purchase any security
(other than obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities) if, as a result, more than 5% of the value of the
Fund's total assets would be
8
<PAGE>
invested in securities of any one issuer. This limitation does not apply with
respect to the remaining 25% of a Fund's total assets (except that neither the
Growth Fund nor the Balanced Return Fund will invest more than 10% of its total
assets in any one non-U.S. Government issuer). [Fundamental Policy]
(2) Purchase securities on margin (but it may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of its
portfolio securities, and may make margin payments in connection with
transactions in permissible futures and options contracts) or make uncovered
short sales. [Operating Policy]
(3) With respect to 75% of the Global Growth, Small & Mid-Cap Growth and
Value 25 Funds' total assets and 100% of the Growth, Nifty Fifty and Balanced
Return Funds' total assets, acquire more than 10% of any one class of securities
of an issuer or more than 10% of the outstanding voting securities of any one
issuer. (For this purpose all common stocks of an issuer are regarded as a
single class, and all preferred stocks of an issuer are regarded as a single
class.) [Fundamental Policy]
(4) Borrow money in excess of 20% (5% for the Growth, the Nifty Fifty and
Balanced Return Funds) of its total assets (taken at cost) and then only as a
temporary measure for extraordinary or emergency reasons and not for investment.
(Each Fund may borrow only from banks and immediately after any such borrowings
there must be an asset coverage [total assets of the Fund, including the amount
borrowed, less liabilities other than such borrowings] of at least 300% of the
amount of all borrowings. In the event that, due to market decline or other
reasons, such asset coverage should at any time fall below 300%, the Fund is
required within three days, not including Sundays and holidays, to reduce the
amount of its borrowings to the extent necessary to cause the asset coverage of
such borrowings to be at least 300%. If this should happen, the Fund may have to
sell securities at a time when it would be disadvantageous to do so.)
[Fundamental Policy]
(5) With respect to the Global Growth, the Small & Mid-Cap Growth and the
Value 25 Funds, pledge more than 25% of its total assets (taken at cost) in
connection with permissible borrowings. For the purposes of this restriction,
the deposit of underlying securities and other assets in connection with the
writing of put and call options and collateral arrangements with respect to
margin for currency futures contracts are not deemed to be a pledge of assets.
[Fundamental Policy]
(6) Invest more than 5% (30% for the Balanced Return Fund) of its total
assets in securities of any one issuer which, together with any predecessor,
has been in continuous operation for less than three years. [Fundamental
Policy]
(7) Invest in securities of any company, if officers and Trustees of the
Trust and officers and directors of the Adviser who beneficially own more than
0.5% of the shares or securities of that company collectively own more than 5%
of such securities. [Fundamental Policy with respect to the Growth, Nifty Fifty,
Balanced Return, Global Growth and Small & Mid-Cap Growth Funds]
(8) Make loans, except (a) by purchase of marketable bonds, debentures,
commercial paper or corporate notes, and similar marketable evidences of
indebtedness which are part of an issue to the public or to financial
institutions, (b) by entry into repurchase agreements, or (c) through the
lending of its portfolio securities with respect to not more than 25% of its
total assets. [Fundamental Policy]
(9) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts or commodities or commodity contracts, except for transactions in
futures contracts and options thereon entered into for hedging purposes, and the
Growth, Nifty Fifty and Balanced Return Funds may purchase marketable securities
of companies or partnerships holding such interests. [Fundamental Policy for the
Global Growth, Small & Mid-Cap Growth and Value 25 Funds]
(10) Act as an underwriter except to the extent that, in connection with
the disposition of its portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws. [Fundamental Policy]
(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
9
<PAGE>
than 15% of the Global Growth, Small & Mid-Cap Growth and Value 25 Funds' net
assets (taken at current value) would be invested in the aggregate in
securities described in (a), (b) and (c) above. [Operating Policy]
(16) Purchase or sell real property (including limited partnership
interests), except that the Fund may (a) purchase or sell readily marketable
interests in real estate investment trusts or readily marketable securities of
companies which invest in real estate, (b) purchase or sell securities that are
secured by interests in real estate or interests therein, or (c) acquire real
estate through exercise of its rights as a holder of obligations secured by real
estate or interests therein or sell real estate so acquired. [Fundamental
Policy]
(17) Participate on a joint or joint and several basis in any securities
trading account. [Operating Policy]
(18) Purchase the securities of any other investment company except (a)
within the limits of the 1940 Act, (b) in a public offering or in the open
market or in privately negotiated transactions where, in either case, to the
best information of the Fund, no commission, profit or sales charge to a sponsor
or dealer (other than a customary broker's commission or underwriting discount)
results from such purchase, (c) if such purchase is part of a merger,
consolidation, or acquisition of assets, or (d) as part of a master-feeder
arrangement (see below). [Fundamental Policy]
(19) With respect to the Growth Fund, the Nifty Fifty Fund and the Balanced
Return Fund, purchase or sell financial futures, commodities or commodities
contracts, including futures contracts on physical commodities.
[Fundamental Policy]
Each Fund, notwithstanding any other investment policy or limitation
(whether or not fundamental), may invest all of its assets in the securities or
beneficial interests of a single pooled investment fund having substantially the
same objective, policies and limitations as such Fund.
Some of the practices referred to above are subject to restrictions
contained in the 1940 Act. In addition to the restrictions described above, a
Fund may from time to time agree to additional investment restrictions for
purposes of compliance with the securities laws of those states and foreign
jurisdictions where such Fund intends to offer or sell its shares. Any such
additional restrictions that would have a material bearing on a Fund's
operations will be reflected in the Prospectus or a Prospectus supplement and
may require shareholder approval.
PERFORMANCE INFORMATION
The Funds may, from time to time, include total return in advertisements or
reports to shareholders or prospective investors. Performance information in
advertisements and sales literature may be expressed as a yield of a class or
Fund and as a total return of any Class or Fund.
Standardized quotations of average annual total return for each Class of
Shares of a Fund will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment in either Class A, Class B, or
Class C Shares of a Fund over periods of 1, 5 and 10 years or up to the life of
the class of shares of a Fund, calculated for each class separately pursuant to
the formula below. All total return figures reflect the deduction of a
proportional share of each class's expenses (on an annual basis), deduction of
the maximum initial sales load in the case of Class A Shares and the maximum
contingent deferred sales charge applicable to a complete redemption of the
investment in the case of Class B and C Shares, and assume that all dividends
and distributions are reinvested when paid.
P(T + 1)n = ERV
where P = a hypothetical initial payment of $1,000,
T = average annual total return,
n = number of years,
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the 1, 5, or 10 year periods at the end of
the 1, 5, or 10 year periods (or fractional portion thereof).
The Funds may from time to time include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc.
Additionally, the Funds may compare performance results to other investment or
savings vehicles (such as certificates of deposit) and may refer to results
published in various publications such as Changing Times, Forbes, Fortune,
Money, Barrons, Business Week, Investor's Daily, Stanger's Mutual Fund Monitor,
The Stanger Register, Stanger's Investment Adviser, The Wall Street Journal, The
New York Times, Consumer Reports, Registered Representative, Financial Planning,
Financial Services Weekly, Financial World, U.S. News and World Report, Standard
& Poor's The Outlook, and Personal Investor. The Funds may from time to time
illustrate the benefits of tax deferral by comparing taxable investments to
investments made through tax-deferred retirement plans. The total return may
also be used to compare the performance of the Funds against certain widely
acknowledged outside standards or indices for stock and bond market performance,
such as the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"),
Russell 2000 Index, Morgan Stanley Capital International All Country World
Index, Dow Jones Industrial Average, Europe Australia Far East Index (EAFE),
Consumer Price Index, Lehman Brothers Corporate Index and Lehman Brothers T-Bond
Index.
10
<PAGE>
Advertisements, sales literature and other communications may contain
information about the Funds and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Funds to
respond quickly to changing market and economic conditions. From time to time
the Funds may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Funds may
separate its cumulative and average annual returns into income and capital gains
components.
Performance information reflects only the performance of a hypothetical
investment in each class during the particular time period on which the
calculations are based. Performance information should be considered in light of
each Fund's investment objectives and policies, characteristics and quality of
the portfolio, and the market condition during the given time period, and should
not be considered as a representation of what may be achieved in the future.
The Funds may also compute aggregate cumulative total return for specified
periods based on a hypothetical Class A, Class B, or Class C account with an
assumed initial investment of $10,000. The aggregate total return is determined
by dividing the net asset value of this account at the end of the specified
period by the value of the initial investment and is expressed as a percentage.
Calculation of aggregate total return reflects payment of the Class A Shares'
maximum sales charge of 4.75% and assumes reinvestment of all income dividends
and capital gain distributions during the period.
The Funds also may quote annual, average annual and annualized total return
and aggregate total return performance data, for each class of shares of the
Funds, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted below. Such data
will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate rate
of return calculations.
The average annual compounded rates of return, or total return, for the
Class A, Class B and Class C shares of each of the Funds for the indicated
periods ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
One Five Ten Inception(1) to
Year Years Years December 31, 1998
Class A -------- -------- ------------- ------------------
<S> <C> <C> <C> <C>
The Growth Fund % % % %
The Balanced Return Fund % % % %
The Nifty Fifty Fund % % % %
The Global Growth Fund* % % N/A %
The Small & Mid-Cap Growth Fund* % N/A %
The Value 25 Fund % N/A %
</TABLE>
<TABLE>
<CAPTION>
One Inception(2) to
Year December 31, 1998
Class B -------- ------------------
<S> <C> <C>
The Growth Fund % %
The Balanced Return Fund % %
The Nifty Fifty Fund % %
The Global Growth Fund % %
The Small & Mid-Cap Growth Fund % %
The Value 25 Fund %
</TABLE>
<TABLE>
<CAPTION>
One Inception(2) to
Year December 31, 1998
Class C -------- ------------------
<S> <C> <C>
The Growth Fund % %
The Balanced Return Fund % %
The Nifty Fifty Fund % %
The Global Growth Fund % %
The Small & Mid-Cap Growth Fund % %
The Value 25 Fund %
</TABLE>
11
<PAGE>
(1) The inception dates of the Funds are as follows:
Growth Fund--June 24, 1986
Balanced Return Fund--June 8, 1987
Nifty Fifty Fund--December 17, 1990
Global Growth Fund--November 1, 1993
Small & Mid-Cap Growth Fund--October 10, 1994
Value 25 Fund--December 17, 1996
(2) The inception date for Class B and Class C shares for the Growth, Nifty
Fifty and Balanced Return Funds was January 3, 1994; the inception date for
the Class B shares for the Global Growth and Small & Mid-Cap Growth Funds
was September 18, 1996; the inception date for the Class C shares for the
Global Growth Fund was October 21, 1996 and the inception date for the
Class C shares of the Small & Mid-Cap Growth Fund was October 8, 1996. The
inception date for Class B and C shares for the Value 25 Fund was January
9, 1997.
* Prior to September 1, 1996, the Global Growth and Small & Mid-Cap Growth
Funds' shares were not offered to the public and, although each Fund's
portfolio was managed substantially in accordance with the investment
policies described in its current Prospectus during that period, some
management differences did occur due primarily to each Fund's small asset
size. Accordingly, each Fund's performance during periods prior to
September 1, 1996 may not be relevant to an assessment of such Fund's
performance subsequent to such date. Additionally, the Adviser waived all
management, administrative and service fees otherwise payable to it by the
Global Growth Fund during 1993, 1994 and 1995 and the Small & Mid-Cap
Growth Fund during 1994 and 1995, which had the effect of increasing each
Fund's total return for those periods.
A Fund may also, from time to time, include a reference to the current
distribution rate of each Class of shares in investor communications and sales
literature preceded or accompanied by a prospectus for such Fund, reflecting the
amounts actually distributed to shareholders of each Class which could include
capital gains and other items of income, as well as interest and dividend income
received by a Fund and distributed to the shareholders. All calculations of a
Class's distribution rate are based on the distributions per share which are
declared, but not necessarily paid, during the fiscal year. The distribution
rate for a Class is determined by dividing the distributions declared during the
period by the maximum offering price per share of the Class on the last day of
the period and annualizing the resulting figure. The distribution rate does not
reflect capital appreciation or depreciation in the price of a Fund's shares and
should not be confused with yield or considered to be a complete indicator of
the return to the investor on his investment.
Investors should note that the investment results of each Fund will
fluctuate over time, and any presentation of a Fund's current yield, total
return or distribution rate for any period should not be considered as a
representation of what an investment may earn or what an investor's total
return, yield or distribution rate may be in any future period.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser places orders for the purchase and sale of securities,
supervises their execution and negotiates brokerage commissions on behalf of the
Funds. It is the practice of the Adviser to seek the best prices and execution
of orders and to negotiate brokerage commissions which in the Adviser's opinion
are reasonable in relation to the value of the brokerage services provided by
the executing broker. Brokers who have executed orders for the Funds are asked
to quote a fair commission for their services. If the execution is satisfactory
and if the requested rate approximates rates currently being quoted by the other
brokers selected by the Adviser, the rate is deemed by the Adviser to be
reasonable. Brokers may ask for higher rates of commission if all or a portion
of the securities involved in the transaction are positioned by the broker, if
the broker believes it has brought the Funds an unusually favorable trading
opportunity, or if the broker regards its research services as being of
exceptional value, and payment of such commissions is authorized by the Adviser
after the transaction has been consummated. If the Adviser more than
occasionally differs with the broker's appraisal of opportunity or value, the
broker would not be selected to execute trades in the future. The Adviser
believes that the Funds benefit with a securities industry comprised of many and
diverse firms and that the long-term interest of shareholders of the Funds is
best served by brokerage policies which include paying a fair commission rather
than seeking to exploit its leverage to force the lowest possible commission
rate. The primary factors considered in determining the firms to which brokerage
orders are given are the Adviser's appraisal of: the firm's ability to execute
the order in the desired manner; the value of research services provided by the
firm; and the firm's attitude toward and interest in mutual funds in general
including the sale of mutual funds managed and sponsored by the Adviser. The
Adviser does not offer or promise to any broker an amount or percentage of
brokerage commissions as an inducement or reward for the sale of shares of the
Funds. Over-the-counter purchases and sales are transacted directly with
principal market-makers except in those circumstances where in the opinion of
the Adviser better prices and execution are available elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller firms
in general tend to provide information and interpretations on a
12
<PAGE>
smaller scale, frequently with a regional emphasis. In addition, several firms
monitor federal, state, local and foreign political developments; many of the
brokers also provide access to outside consultants. The outside research
assistance is particularly useful to the Adviser's staff since the brokers as a
group tend to monitor a broader universe of securities and other matters than
the Adviser's staff can follow. In addition, it provides the Adviser with a
diverse perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to the Adviser and is available
for the benefit of other accounts advised by the Adviser and its affiliates and
not all of this information will be used in connection with the Funds. While
this information may be useful in varying degrees and may tend to reduce the
Adviser's expenses, it is not possible to estimate its value and in the opinion
of the Adviser it does not reduce the Adviser's expenses in a determinable
amount. The extent to which the Adviser makes use of statistical, research and
other services furnished by brokers is considered by the Adviser in the
allocation of brokerage business but there is no formula by which such business
is allocated. The Adviser does so in accordance with its judgment of the best
interest of the Funds and shareholders.
A high rate of portfolio turnover involves a correspondingly higher amount
of brokerage commissions and other costs which must be borne directly by the
Funds and indirectly by shareholders.
Stolper & Company, Inc., of which Michael Stolper, a former Trustee of the
Trust and a Director of Pasadena Capital Corporation, is the sole shareholder,
has in the past received brokerage business from the Adviser. Stolper & Company,
Inc. assists its clients in selecting an investment adviser and offers a service
measuring the performance of investment advisers, in return for which the client
pays cash or directs the investment adviser to execute a portion of the
brokerage business through Bear, Stearns & Company for the credit of Stolper &
Company, Inc. Stolper & Company, Inc. and the Adviser anticipate that such
brokerage allocation from the Adviser will continue. However, neither Michael
Stolper nor Stolper & Company, Inc. will receive or participate in commissions
paid by a Fund nor receive any reciprocal business as a result of commissions
paid by a Fund, although a Fund may pay usual and customary brokerage
commissions to Bear, Stearns & Company for brokerage business by such Fund.
It is possible that purchases or sales of securities for a Fund also may be
considered for other clients of the Adviser or its affiliates, including the
other series of the Trust. Any transactions in such securities at or about the
same time will be allocated among such Fund and such other clients in a manner
deemed equitable to all by the Adviser, taking into account the respective sizes
of the Fund and the other clients' accounts, and the amount of securities to be
purchased or sold. It is recognized that it is possible that in some cases this
procedure could have a detrimental effect on the price or volume of the security
so far as that Fund is concerned. However, in other cases, it is possible that
the ability to participate in volume transactions and to negotiate lower
commissions will be beneficial to such Fund.
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 1996, 1997, and 1998
were $2,301,351, $1,582,638, and $1,196,904, respectively. For the years ended
December 31, 1996, 1997, and 1998, the Balanced Return Fund paid $35,776,
$59,783, and $96,553, respectively, in brokerage commissions. For the years
ended December 31, 1996, 1997, and 1998, the Nifty Fifty Fund paid $245,499,
$506,710, and $588,816, respectively, in brokerage commissions. For the years
ended December 31, 1996, 1997, and 1998, the Global Growth Fund paid $130,703,
$279,069, and $49,508 respectively, in brokerage commissions. For the years
ended December 31, 1996, 1997, and 1998, the Small & Mid-Cap Growth Fund paid
$162,103, $1,412,894, and $248,063 respectively, in brokerage commissions. For
the fiscal years ended December 31, 1997 and 1998, the Value 25 Fund paid
$87,216 and $142,758 in brokerage commissions.
PORTFOLIO TURNOVER
The Funds pay brokerage commissions for purchases and sales of portfolio
securities. A high rate of portfolio turnover generally involves a
correspondingly greater amount of brokerage commissions and other costs which
must be borne directly by a Fund and thus indirectly by its shareholders. It may
also result in the realization of larger amounts of short-term capital gains,
which are taxable to shareholders as ordinary income. If such rate of turnover
exceeds 100%, the Funds will pay more in brokerage commissions than would be the
case if they had lower portfolio turnover rates. Historical turnover rates can
be found under the heading "Financial Highlights" located in the Trust's
Prospectus.
SERVICES OF THE ADVISER
The following information concerning the investment management and
administrative services provided to the Funds supplements the information
contained in the section in the Prospectus entitled "Management of the Funds."
Investment Management Agreement
The Adviser, Roger Engemann & Associates, Inc., ("REA") has entered into an
Investment Management Agreement (the "Management Agreement") with the Trust, on
behalf of each series of the Trust including the Funds, to provide investment
advice and investment management services with respect to the assets of each
Fund, provide personnel, office space, facilities and equipment as may be needed
by the Funds in their day-to-day operations and provide the officers of the
Trust. The Management Agreement has been approved by the Board of Trustees of
the Trust with respect to each Fund, including a majority of the Trustees
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<PAGE>
who are not a party to the Management Agreement or interested persons of a party
to the Management Agreement, and by a majority of the outstanding voting shares
of each Fund at a special meeting of shareholders on August 28, 1997.
The Management Agreement dated as of September 3, 1997 will be in effect
through September 2, 1999. The Management Agreement may be continued thereafter
for successive periods not to exceed one year, provided that such continuance is
specifically approved annually by a vote of a majority of each Fund's
outstanding voting securities or by the Board of Trustees, and by the vote of a
majority of the Trustees who are not parties to the Management Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
REA is an indirect subsidiary of Phoenix Investment Partners, Ltd.
("PXP"). PXP is the 10th largest publicly traded investment company in the
nation, and has served investors for over 70 years. It manages approximately
$50 billion in assets through its investment partners: Aberdeen Fund Managers,
Inc. (Aberdeen) in Aberdeen, London, Singapore and Fort Lauderdale; Duff &
Phelps Investment Management Co. (Duff & Phelps) in Chicago and Cleveland;
Roger Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca Capital
Management LLC (Seneca) in San Francisco; and Phoenix Investment Counsel, Inc.
(Goodwin, Hollister, and Oakhurst divisions) in Hartford, Sarasota, and Scotts
Valley, CA, respectively.
Expenses
Except as set forth in the separate Administration Agreement discussed
below, the Adviser is not responsible under the Management Agreement for any
expenses related to the operation of the Funds.
Under the Management Agreement, each Fund is responsible and has assumed
the obligation for paying all of its expenses, including but not limited to: (i)
brokerage and commission expenses, (ii) federal, state, or local taxes,
including issue and transfer taxes, incurred by or levied on a Fund, (iii)
interest charges on borrowings, (iv) charges and expenses of a Fund's custodian
and transfer agent, (v) payment of all investment advisory and management fees,
(vi) insurance premiums on a Fund's property and personnel, including the
fidelity bond and liability insurance for officers and Trustees, (vii) printing
and mailing of all reports, including semi-annual and annual reports,
prospectuses, and statements of additional information to existing shareholders,
(viii) fees and expenses of registering a Fund's shares under the federal
securities laws and of qualifying its shares under applicable state securities
(Blue Sky) laws subsequent to a Fund's initial fiscal period, including expenses
attendant upon renewing and increasing such registrations and qualifications,
(ix) legal fees and expenses including legal expenses of the independent
Trustees, (x) independent Trustees' fees and auditing expenses, including
auditing fees of independent public accountants, (xi) all costs associated with
shareholders meetings and the preparation and dissemination of proxy
solicitation materials, except for meetings called solely for the Adviser's
benefit, (xii) dues and other costs of membership in industry associations,
subject to the approval of any such membership by the Board of Trustees, (xiii)
service fees paid to dealers and other shareholder service providers pursuant to
Services Agreements between the Trust and such service providers, and (xiv) any
extraordinary and non-recurring expenses, except as otherwise prescribed
therein.
As compensation for its services under the Management Agreement, the
Adviser is paid a monthly fee based on a Fund's average daily net assets at the
following annual rates:
<TABLE>
<CAPTION>
First Next Over
$50 $450 $500
Million Million Million
--------- --------- ----------
<S> <C> <C> <C>
Growth Fund 0.90% 0.80% 0.70%
Nifty Fifty Fund 0.90% 0.80% 0.70%
Balanced Return Fund 0.80% 0.70% 0.60%
Global Growth Fund 1.10% 1.00% 0.90%
Small & Mid-Cap Growth Fund 1.00% 0.90% 0.80%
Value 25 Fund 0.90% 0.80% 0.70%
</TABLE>
For the years ended December 31, 1996, 1997 and 1998, pursuant to the
then-effective investment management agreements with the former Adviser (the
"Former Adviser") (Roger Engemann Management Co., Inc.) and the current Adviser
(REA), the Growth Fund paid management fees to the Former Adviser and REA of
approximately $3,202,000, $3,490,000 and $3,842,000, respectively. For the years
ended December 31, 1996, 1997 and 1998, pursuant to the then-effective
investment management agreements with the Former Adviser and REA, the Balanced
Return Fund paid management fees of approximately $528,000, $551,000 and
$603,000, respectively. For the years ended December 31, 1996, 1997 and 1998,
pursuant to the then-effective investment management agreements with the Former
Adviser and REA, the Nifty Fifty Fund paid management fees of approximately
$1,391,000, $1,967,000 and $2,617,000, respectively. For the Global Growth Fund,
for the period ended December 31, 1996, the Former Adviser was entitled to
receive fees in the amount of $49,793; however, the Former Adviser waived
$27,147 of such fees for the first eight months of said period. For the years
ended December 31, 1997 and 1998, pursuant to the then-effective investment
management agreements with the Former Adviser and REA, the Global Growth Fund
paid management fees of approximately $143,000 and $247,000, respectively. For
the Small & Mid-Cap Growth Fund, for the period ended December 31, 1996, the
Former Adviser was entitled to receive fees in the amount of $25,255; however,
the Former Adviser waived $8,043
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<PAGE>
of such fees for the first eight months of said period. For the years ended
December 31, 1997 and 1998, pursuant to the then-effective investment management
agreements with the Former Adviser and REA, the Small & Mid-Cap Growth Fund paid
management fees of approximately $288,000 and $and 741,000, respectively. For
the years ended December 31, 1997 and 1998, pursuant to the then-effective
investment management agreements with the Former Adviser and REA, the Value 25
Fund paid management fees of approximately $175,000 and $330,000, respectively.
The Management Agreement is terminable with respect to each Fund on
60-days' written notice by vote of a majority of such Fund's outstanding shares,
by vote of a majority of the Board of Trustees, or by the Adviser on 60-days'
written notice. The Management Agreement automatically terminates in the event
of its assignment as defined in the 1940 Act. The Management Agreement provides
that in the absence of willful misfeasance, bad faith, or gross negligence on
the part of the Adviser, or of reckless disregard of its obligations thereunder,
the Adviser is not liable for any action or failure to act in accordance with
its duties.
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Fund does not price securities on
weekends or United States national holidays, the net asset value of a Fund's
foreign assets may be significantly affected on days when the investor has no
access to the Fund. The net asset value per share of a Fund is determined by
adding the values of all securities and other assets of the Fund, subtracting
liabilities, and dividing by the total number of outstanding shares of the Fund.
Assets and liabilities are determined in accordance with generally accepted
accounting principles and applicable rules and regulations of the Securities and
Exchange Commission. The total liability allocated to a class, plus that class's
distribution fee and any other expenses allocated solely to that class, are
deducted from the proportionate interest of such class in the assets of the
Fund, and the resulting amount of each is divided by the number of shares of
that class outstanding to produce the net asset value per share.
A security that is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world, the
calculation of net asset value may not take place for any Fund which invests in
foreign securities contemporaneously with the determination of the prices of the
majority of the portfolio securities of such Fund. All assets and liabilities
initially expressed in foreign currency values will be converted into United
States dollar values at the mean between the bid and ask quotations of such
currencies against United States dollars as last quoted by any recognized
dealer. If an event were to occur after the value of an investment was so
established but before the net asset value per share was determined, which was
likely to materially change the net asset value, then the instrument would be
valued using fair value considerations by the Trustees or their delegates. If at
any time a Fund has investments where market quotations are not readily
available, such investments are valued at the fair value thereof as determined
in good faith by the Trustees although the actual calculations may be made by
persons acting pursuant to the direction of the Trustees.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent
investment is $25. However, both the minimum initial and subsequent investment
amounts are $25 for investments pursuant to the "Investo-Matic" plan, a bank
draft investing program administered by Distributor, or pursuant to the
Systematic Exchange privilege or for an individual retirement account (IRA). In
addition, there are no subsequent investment minimum amounts in connection with
the reinvestment of dividend or capital gain distributions. Completed
applications for the purchase of shares should be mailed to: Phoenix-Engemann
Funds, c/o State Street Bank and Trust Company, P.O. Box 8301, Boston, MA
02266-8301.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased from investment dealers at a price equal to their
net asset value per share, plus a sales charge which, at the election of the
purchaser, may be imposed either (i) at the time of the purchase (the "initial
sales charge alternative") or (ii) on a contingent deferred basis (the "deferred
sales charge alternative"). Orders received by dealers prior to the close of
trading on the New York Stock Exchange are confirmed at the offering price
effective at that time, provided the order is received by the Authorized Agent
prior to its close of business.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is more beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Funds, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the Trust,
the accumulated continuing distribution and services fees and contingent
deferred sales charges on Class B or C Shares would be less than the initial
sales charge and accumulated distribution and services fees on Class A Shares
purchased at the same time.
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<PAGE>
Dividends paid by the Funds, if any, with respect to each class of shares
will be calculated in the same manner at the same time on the same day, except
that fees such as higher distribution and services fees and any incremental
transfer agency costs relating to each class of shares will be borne exclusively
by that class. See "Dividends, Distributions and Taxes."
Class A Shares
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed. Class A
Shares are subject to an ongoing services fee at an annual rate of 0.25% of the
Trust's aggregate average daily net assets attributable to the Class A Shares.
In addition, certain purchases of Class A Shares qualify for reduced initial
sales charges. See the Funds' current Prospectus for additional information.
Class B Shares
Class B Shares do not incur a sales charge when they are purchased, but
they are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions. Class B Shares purchased prior to January 20, 1998 are
subject to the sales charge schedule as it existed prior to that date. See the
Funds' current Prospectus for additional information.
Class B Shares are subject to ongoing distribution and services fees at an
annual rate of up to 1.00% of the Fund's aggregate average daily net assets
attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment is
made. The higher ongoing distribution and services fees paid by Class B Shares
will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class A
Shares. Class B Shares will automatically convert to Class A Shares eight years
after the end of the calendar month in which the shareholder's order to purchase
was accepted (six years for Class B Shares purchased prior to January 20, 1998),
in the circumstances and subject to the qualifications described in the Funds'
Prospectus. The purpose of the conversion feature is to relieve the holders of
the Class B Shares that have been outstanding for a period of time sufficient
for the adviser and the Distributor to have been compensated for distribution
expenses related to the Class B Shares from most of the burden of such
distribution related expenses.
Class B Shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution and services fees. Such
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge.
For purposes of conversion to Class A, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares in
a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub-account) convert to Class A, an equal pro rata
portion of the Class B Share dividends in the sub-account will also convert to
Class A Shares.
Class C Shares
Class C Shares are purchased without an initial sales charge but are
subject to a deferred sales charge if redeemed within one year of purchase.
Class C Shares of the Growth Fund, Balanced Return Fund and Nifty Fifty Fund
purchased prior to January 20, 1998 are not subject to the deferred sales
charge. The deferred sales charge may be waived in connection with certain
qualifying redemptions. Shares issued in conjunction with the automatic
reinvestment of income distributions and capital gain distributions are not
subject to any sales charges. Class C Shares are subject to ongoing distribution
and services fees of up to 1.00% of the Funds' aggregate average daily net
assets attributable to Class C Shares. See the Funds' current Prospectus for
more information.
Class A Shares--Reduced Initial Sales Charges
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
Qualified Purchasers. If you fall within any one of the following
categories, you will not have to pay a sales charge on your purchase of Class A
Shares: (1) any trustee, director or officer of the Phoenix Funds or any other
open-end management investment company advised, subadvised or distributed by the
Adviser, Distributor or any corporate affiliate of either or both the Adviser
and Distributor (an "Affiliated Phoenix Fund"); (2) any director or officer, or
any full-time employee or sales representative (for at least 90 days), of the
Adviser or Distributor; (3) registered representatives and employees of
securities dealers with whom Distributor has sales agreements; (4) any qualified
retirement plan exclusively for persons described above; (5) any officer,
director or employee of a corporate affiliate of the Adviser or Distributor; (6)
any spouse, child, parent, grandparent, brother or sister of any person named in
(1), (2), (3) or (5) above; (7) employee benefit plans for employees of the
Adviser, Distributor and/or their corporate affiliates; (8) any employee or
agent who retires from Phoenix Home Life, Distributor and/or their corporate
affiliates; (9) any account held in the name of a qualified employee benefit
plan, endowment fund or foundation if, on the date of the initial investment,
the plan, fund or foundation has assets of $10,000,000 or more or at least 100
eligible employees; (10) any person with a direct rollover transfer of shares
from an established Phoenix-Engemann Fund or other Phoenix Fund qualified plan;
16
<PAGE>
(11) any Phoenix Home Life separate account which funds group annuity contracts
offered to qualified employee benefit plans; (12) any state, county, city,
department, authority or similar agency prohibited by law from paying a sales
charge; (13) any fully matriculated student in any U.S. service academy; (14)
any unallocated account held by a third party administrator, registered
investment adviser, trust company, or bank trust department which exercises
discretionary authority and holds the account in a fiduciary, agency, custodial
or similar capacity, if in the aggregate such accounts held by such entity equal
or exceed $1,000,000; (15) any person who is investing redemption proceeds from
investment companies other than the Phoenix Funds if, in connection with the
purchases or redemption of the redeemed shares, the investor paid a prior sales
charge provided such investor supplies verification that the redemption occurred
within 90 days of the Phoenix-Engemann Fund purchase and that a sales charge was
paid; (16) any deferred compensation plan established for the benefit of any
Phoenix-Engemann Fund or other Affiliated Phoenix Fund trustee or director;
provided that sales to persons listed in (1) through (15) above are made upon
the written assurance of the purchaser that the purchase is made for investment
purposes and that the shares so acquired will not be resold except to the Trust;
(17) purchasers of Class A Shares bought through investment advisors (including
President's Circle clients of REA) and financial planners who charge an
advisory, consulting or other fee for their services and buy shares for their
own accounts or the accounts of their clients; (18) retirement plans and
deferred compensation plans and trusts used to fund those plans (including, for
example, plans qualified or created under sections 401(a), 403(b) or 457 of the
Internal Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker or agent or
other financial intermediary that has made special arrangements with the
Distributor for such purchases; or (19) clients of investment advisors or
financial planners who buy shares for their own accounts but only if their
accounts are linked to a master account of their investment advisor or financial
planner on the books and records of the broker, agent or financial intermediary
with which the Distributor has made such special arrangements (each of the
investors described in (17) through (19) may be charged a fee by the broker,
agent or financial intermediary for purchasing shares). Class A shareholders who
made their initial investment prior to January 20, 1998 and qualified to
purchase shares without a sales charge, will not have to pay a sales charge on
subsequent purchases of Class A Shares.
Combination Purchase Privilege. Your purchase of any class of shares of the
Funds or any other Affiliated Phoenix Fund (other than Phoenix Money Market Fund
Series Class A Shares), if made at the same time by the same "person," will be
added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 403(b) plans
for the same employer; (d) multiple accounts (up to 200) under a qualified
employee benefit plan or administered by a third party administrator; or (e)
trust companies, bank trust departments, registered investment advisers, and
similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority and
which are held in a fiduciary, agency, custodial or similar capacity, provided
all shares are held of record in the name, or nominee name, of the entity
placing the order.
An "Affiliated Phoenix Fund" means any other mutual fund advised,
subadvised or distributed by the Adviser or Distributor or any corporate
affiliate of either or both the Adviser and Distributor provided such other
mutual fund extends reciprocal privileges to shareholders of the Phoenix Funds.
Letter of Intent. If you sign a Letter of Intent, your purchase of any
class of shares of the Funds or any other Affiliated Phoenix Fund (other than
Phoenix Money Market Fund Series Class A Shares), if made by the same person
within a thirteen month period, will be added together to determine whether you
are entitled to an immediate reduction in sales charges. Sales charges are
reduced based on the overall amount you indicate that you will buy under the
Letter of Intent. The Letter of Intent is a mutually non-binding arrangement
between you and the Distributor. Since the Distributor doesn't know whether you
will ultimately fulfill the Letter of Intent, shares worth 5% of the amount of
each purchase will be set aside until you fulfill the Letter of Intent. When you
buy enough shares to fulfill the Letter of Intent, these shares will no longer
be restricted. If, on the other hand, you do not satisfy the Letter of Intent,
or otherwise wish to sell any restricted shares, you will be given the choice of
either buying enough shares to fulfill the Letter of Intent or paying the
difference between any sales charge you previously paid and the otherwise
applicable sales charge based on the intended aggregate purchases described in
the Letter of Intent. You will be given 20 days to make this decision. If you do
not exercise either election, the Distributor will automatically redeem the
number of your restricted shares needed to make up the deficiency in sales
charges received. The Distributor will redeem restricted Class A or M Shares
before Class C or B Shares, respectively. Oldest shares will be redeemed before
selling newer shares. Any remaining shares will then be deposited to your
account.
Right of Accumulation. Your purchase of any class of shares of the Funds or
any other Affiliated Phoenix Fund, if made over time by the same person may be
added together to determine whether the combined sum entitles you to a
prospective reduction in sales charges. You must provide certain account
information to the Distributor to exercise this right.
Associations. Certain groups or associations may be treated as a "person"
and qualify for reduced Class A Share sales charges. The group or association
must: (1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase
17
<PAGE>
mutual fund shares at a reduced sales charge; (3) work through an investment
dealer; or (4) not be a group whose sole reason for existing is to consist of
members who are credit card holders of a particular company, policyholders of an
insurance company, customers of a bank or a broker-dealer or clients of an
investment adviser.
Class B and C Shares--Waiver of Sales Charges
The CDSC is waived on the redemption (sale) of Class B and C Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section 72(m)(7);
(c) as a mandatory distribution upon reaching age 701/2 under any retirement
plan qualified under Code Sections 401, 408 or 403(b) or resulting from the
tax-free return of an excess contribution to an IRA; (d) by 401(k) plans using
an approved participant tracking system for participant hardships, death,
disability or normal retirement, and loans which are subsequently repaid; (e)
based on the exercise of exchange privileges among Class B and C Shares of this
or any other Affiliated Phoenix Fund; (f) based on any direct rollover transfer
of shares from an established Affiliated Phoenix Fund qualified plan into an
Affiliated Phoenix Fund IRA by participants terminating from the qualified plan;
and (g) based on the systematic withdrawal program (Class B Shares only). If, as
described in condition (a) above, an account is transferred to an account
registered in the name of a deceased's estate, the CDSC will be waived on any
redemption from the estate account occurring within one year of the death. If
the Class B or C Shares are not redeemed within one year of the death, they will
remain subject to the applicable CDSC.
Conversion Feature--Class B Shares
Class B Shares will automatically convert to Class A Shares of the same
Fund eight years after they are purchased. Conversion will be on the basis of
the then prevailing net asset value of Class A and B Shares. There is not sales
load, fee or other charge for this feature. Class B Shares acquired through
dividend or distribution reinvestments will be converted into Class A Shares at
the same time that other Class B Shares are converted based on the proportion
that the reinvested shares bear to purchased Class B Shares. The conversion
feature is subject to the continuing availability of an opinion of counsel or a
ruling of the Internal Revenue Service that the assessment of the higher
distribution fees and associated costs with respect to Class B Shares does not
result in any dividends or distributions constituting "preferential dividends"
under the Code, and that the conversion of shares does not constitute a taxable
event under federal income tax law. If the conversion feature is suspended,
Class B Shares would continue to be subject to the higher distribution fee for
an indefinite period. Even if the Funds were unable to obtain such assurances,
it might continue to make distributions if doing so would assist in complying
with its general practice of distributing sufficient income to reduce or
eliminate federal taxes otherwise payable by the Funds.
INVESTOR ACCOUNT SERVICES
The Funds offer accumulation plans, withdrawal plans and reinvestment and
exchange privileges. Certain privileges may not be available in connection with
all classes. In most cases, changes to account services may be accomplished over
the phone. Inquiries regarding policies and procedures relating to shareholder
account services should be directed to Shareholder Services at (800) 243-1574.
Exchanges. Under certain circumstances, shares of any Phoenix-Engemann Fund
may be exchanged for shares of the same Class of another Phoenix-Engemann Fund
or any other Affiliated Phoenix Fund on the basis of the relative net asset
values per share at the time of the exchange. Exchanges are subject to the
minimum initial investment requirement of the designated Fund, except if made in
connection with the Systematic Exchange privilege. Shareholders may exchange
shares held in book-entry form for an equivalent number (value) of the same
class of shares of any other Phoenix-Engemann Fund or any other Affiliated
Phoenix Fund, if currently offered. On exchanges with share classes that carry a
contingent deferred sales charge, the CDSC schedule of the original shares
purchased continues to apply. The exchange of shares is treated as a sale and
purchase for federal income tax purposes (see also "Dividends, Distributions and
Taxes").
Systematic Exchanges. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Phoenix-Engemann Fund or any other
Affiliated Phoenix Fund automatically on a monthly, quarterly, semi-annual or
annual basis or may cancel this privilege at any time. If you maintain an
account balance of at least $5,000, or $2,000 for tax qualified retirement
benefit plans (calculated on the basis of the net asset value of the shares held
in a single account), you may direct that shares be automatically exchanged at
predetermined intervals for shares of the same class of another Phoenix-Engemann
Fund or any other Affiliated Phoenix Fund. This requirement does not apply to
Phoenix "Self Security" program participants. Systematic exchanges will be
executed upon the close of business on the 10th day of each month or the next
succeeding business day. Systematic exchange forms are available from the
Distributor. Exchanges will be based upon each Fund's net asset value per share
next computed after the close of business on the 10th day of each month (or next
succeeding business day), without sales charge. On Class B and C Share
exchanges, the CDSC schedule of the original shares purchased continues to
apply.
Dividend Reinvestment Across Accounts. If you maintain an account balance
of at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct
18
<PAGE>
that any dividends and distributions paid with respect to shares in that account
be automatically reinvested in a single account of one of the other
Phoenix-Engemann Fund or any other Affiliated Phoenix Fund at net asset value.
You should obtain a current prospectus and consider the objectives and policies
of each Fund carefully before directing dividends and distributions to another
Fund. Reinvestment election forms and prospectuses are available from Equity
Planning. Distributions may also be mailed to a second payee and/or address.
Requests for directing distributions to an alternate payee must be made in
writing with a signature guarantee of the registered owner(s). To be effective
with respect to a particular dividend or distribution, notification of the new
distribution option must be received by the Transfer Agent at least three days
prior to the record date of such dividend or distribution. If all shares in your
account are repurchased or redeemed or transferred between the record date and
the payment date of a dividend or distribution, you will receive cash for the
dividend or distribution regardless of the distribution option selected.
Systematic Withdrawal Program. The Systematic Withdrawal Program allows you
to periodically redeem a portion of your account on a predetermined monthly,
quarterly, semiannual or annual basis. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the month
at the closing net asset value on the date of redemption. The Systematic
Withdrawal Program also provides for redemptions to be tendered on or about the
10th, 15th or 25th of the month with proceeds to be directed through Automated
Clearing House (ACH) to your bank account. In addition to the limitations stated
below, withdrawals may not be less than $25 and minimum account balance
requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Fund worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. Participants
in the Program redeeming Class C Shares will be subject to any applicable
contingent deferred sales charge. The purchase of shares while participating in
the withdrawal program will ordinarily be disadvantageous to the Class A Shares
investor since a sales charge will be paid by the investor on the purchase of
Class A Shares at the same time as other shares are being redeemed. For this
reason, investors in Class A Shares may not participate in an automatic
investment program while participating in the Systematic Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any applicable
contingent deferred sales charge on all shares redeemed. Accordingly, the
purchase of Class B Shares will generally not be suitable for an investor who
anticipates withdrawing sums in excess of the above limits shortly after
purchase.
HOW TO REDEEM SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the Fund to dispose of its securities or to determine fairly the value of
its net assets or during any other period permitted by order of the Securities
and Exchange Commission for the protection of investors. Furthermore, the
Transfer Agent will not mail redemption proceeds until checks received for
shares purchased have cleared, which may take up to 15 days or more. See the
Funds' current Prospectus for further information. Redemptions by Class B and C
shareholders will be subject to the applicable deferred sales charge, if any.
The Trust has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
Redemption of Small Accounts
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the giving
of not less than 60 days written notice to the shareholder mailed to the address
of record. During the 30 day period the shareholder has the right to add to the
account to bring its value to $200 or more.
Telephone Redemptions
Shareholders may redeem up to $50,000 worth of their shares by telephone.
See the Funds' current Prospectus for additional information.
Account Reinstatement Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinvestment of their investment at net
asset value. See the Funds' current Prospectus for more information and
conditions attached to this privilege.
19
<PAGE>
Redemption in Kind
To the extent consistent with state and federal law, the Funds may make
payment of the redemption price in cash or in kind. However, the Funds have
elected to pay in cash all requests for redemption by any shareholder of record,
limited in respect to each shareholder during any 90-day period to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of such
period. This election has been made pursuant to Rule 18f-1 under the Investment
Company Act of 1940 and is irrevocable while the Rule is in effect unless the
Securities and Exchange Commission, by order, permits the withdrawal thereof. In
case of a redemption in kind, securities delivered in payment for shares would
be readily marketable and valued at the same value assigned to them in computing
the net asset value per share of the Fund. A shareholder receiving such
securities would incur brokerage costs when selling the securities.
TAX SHELTERED RETIREMENT PLANS
Shares of the Funds and other Phoenix Funds may be offered in connection
with the following qualified prototype retirement plans: IRA, Rollover IRA,
SEP-IRA, SIMPLE IRA, Roth IRA, 401(k) Profit Sharing and Money Purchase Pension
Plans and 403(b) Retirement Plans. REA and its affiliates may provide
administrative services to these plans and to their participants, in addition to
the services that REA and its affiliates provide to the Phoenix-Engemann Funds
and other Affiliated Phoenix Funds, and may receive compensation therefor. For
information on the terms and conditions applicable to employee participation in
such plans, including information on applicable plan administrative charges and
expenses, prospective investors should consult the plan documentation and
employee enrollment information which is available from participating employers.
Write or call Equity Planning at (800) 243-4361 for information about the plans.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
Each Fund intends to elect to be treated as a regulated investment company
("RIC") and qualify annually as such under certain provision of the Internal
Revenue Code (the "Code"). Under such provisions, each Fund will not be subject
to federal income tax on such part of its ordinary income and net realized
capital gains which it distributes to shareholders provided it meets certain
distribution requirements. To qualify for treatment as a regulated investment
company, each Fund must, among other things: (a) derive in each taxable year at
least 90% of its gross income from dividends, interest and gains from the sale
or other disposition of securities; and (b) meet certain diversification
requirements imposed under the Code at the end of each quarter of the taxable
year. Under certain state tax laws, each Fund must also comply with the
"short-short" test to qualify for treatment as a RIC for state tax purposes.
Under the "short-short" test the Fund must derive less than 30% of its gross
income each taxable year as gains (without deduction for losses) from the sale
or other disposition of securities for less than three months. If in any taxable
year each Fund does not qualify as a regulated investment company, all of its
taxable income will be taxed at corporate rates. In addition, if in any tax year
the Fund does not qualify as a RIC for state tax purposes a capital gain
dividend may not retain its character in the hands of the shareholder for state
tax purposes.
The Code imposes a 4% nondeductible excise tax on a regulated investment
company if it does not distribute to its shareholders during the calendar year
an amount equal to 98% of the Fund's net ordinary income, with certain
adjustments, for such calendar year, plus 98% of each Fund' net capital gains
for the 12-month period ending on October 31 of such calendar year. In addition,
an amount equal to any undistributed investment company taxable income or
capital gain net income from the previous calendar year must also be distributed
to avoid the excise tax. The excise tax is imposed on the amount by which the
regulated investment company does not meet the foregoing distribution
requirements. If each Fund has taxable income that would be subject to the
excise tax, each Fund intends to distribute such income so as to avoid payment
of the excise tax.
Under another provision of the Code, any dividend declared by each Fund to
shareholders of record in October, November and December of any year will be
deemed to have been received by, and will be taxable to shareholders as of
December 31 of such year, provided that the dividend is actually paid by each
Fund before February 1, of the following year.
The Funds' policy is to distribute to its shareholders substantially all
investment company taxable income as defined in the Code and any net realized
capital gains for each year and consistent therewith to meet the distribution
requirements of Part I of subchapter M of the Code. The Funds intend to meet the
other requirements of Part I of subchapter M, including the requirements with
respect to diversification of assets and sources of income, so that the Funds
will pay no taxes on net investment income and net realized capital gains
distributed to shareholders.
Under certain circumstances, the sales charge incurred in acquiring shares
of the Funds may not be taken into account in determining the gain or loss on
the disposition of those shares. This rule applies where shares of the Funds are
disposed of within 90 days after the date on which they were acquired and new
shares of a regulated investment company are acquired without a sales charge or
at a reduced sales charge. In that case, the gain or loss realized on the
disposition will be determined by excluding from the tax basis of the shares
disposed of all or a portion of the sales charge incurred in acquiring those
shares. This exclusion applies to the extent that the otherwise applicable sales
charge with respect to the newly acquired shares is reduced as a result of the
shareholder having incurred a sales charge initially. The portion of the sales
charge affected by this rule will be treated as a sales charge paid for the new
shares.
20
<PAGE>
Distributions by the Funds reduce the net asset value of the Funds' shares.
Should a distribution reduce the net asset value of a share below a
shareholder's cost for the shares, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution by a Fund. The
price of shares purchased at that time may include the amount of the forthcoming
distribution, but the distribution generally would be taxable to them.
Transactions in options on stock indices are subject to the Code rules of
section 1256. Pursuant to these rules, such options, whether sold by the Funds
during a taxable year or held by the Funds at the close of its taxable year,
will be treated as if sold for their market value, with 40% of any resulting
gain or loss treated as short-term and 60% long-term.
A high portfolio turnover rate may result in the realization of larger
amounts of short-term gains, which are taxable to shareholders as ordinary
income.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS Regulations, the Funds may be required to withhold 31% of
all reportable payments including any taxable dividends, capital gains
distributions or share redemption proceeds, for an account which does not have a
taxpayer identification number or social security number and certain required
certifications. The Funds reserve the right to refuse to open an account for any
person failing to provide a taxpayer identification number along with the
required certifications.
The Funds will furnish shareholders, within 31 days after the end of the
calendar year, with information which is required by the Internal Revenue
Service for preparing income tax returns. Investors are urged to consult their
attorney or tax adviser regarding specific questions as to Federal, foreign,
state or local taxes.
THE DISTRIBUTOR
Pursuant to a Distribution Agreement with the Funds, Phoenix Equity
Planning Corporation (the "Distributor"), a wholly-owned subsidiary of Phoenix
Investment Partners, Ltd. and an affiliate of the Adviser, serves as distributor
for the Funds. As such, the Distributor conducts a continuous offering pursuant
to a "best efforts" arrangement requiring the Distributor to take and pay for
only such securities as may be sold to the public. The address of the
Distributor is 100 Bright Meadow Blvd., P.O. Box 2200, Enfield, Connecticut
06083-2200.
The Distribution Agreement may be terminated at any time on not more than
60 days written notice, without payment of a penalty, by the Distributor, by
vote of a majority of the outstanding voting securities of the Funds, or by vote
of a majority of the Funds' Trustees who are not "interested persons" of the
Funds and who have no direct or indirect financial interest in the operation of
the Distribution Plan or in any related agreements. The Distribution Agreement
will terminate automatically in the event of its assignment.
Dealers with whom the Distributor has entered into sales agreements receive
sales charges in accordance with the commission table set forth in the
Prospectus. The Distributor may from time to time pay, from its own resources or
pursuant to the Plan of Distribution described below, a bonus or other incentive
to dealers (other than the Distributor) which employ a registered representative
who sells a minimum dollar amount of the shares of the Funds during a specific
period of time. Such bonus or other incentive may take the form of payment for
travel expenses, including lodging, incurred in connection with trips taken by
qualifying registered representatives and members of their families to places
within or without the United States or other bonuses such as gift certificates
or the cash equivalent of such bonuses. The Distributor may, from time to time,
reallow the entire portion of the sales charge which it normally retains to
individual selling dealers. However, such additional reallowance generally will
be made only when the selling dealer commits to substantial marketing support
such as internal wholesaling through dedicated personnel, internal
communications and mass mailings.
Pasadena Fund Services, Inc. ("PFSI") served as the principal underwriter
for the Funds prior to September 3, 1997. For the year ended December 31, 1996,
PFSI received front-end sales charges of $63,000, $10,000, $64,000, $1,000, and
$5,000 after reallowances of front-end sales charges to dealers of $486,000,
$25,000, $212,000, $4,000, and $20,000, respectively, for sales of the Growth
Fund, the Balanced Return Fund, the Nifty Fifty Fund, the Global Growth Fund and
the Small & Mid-Cap Growth Fund, respectively. For the year ended December 31,
1997, PFSI and the current Distributor received front-end sales charges of
$28,887, $5,953, $62,093, $4,553, $64,754 and $27,827, after reallowance of
front-end sales charges to dealers of $227,451, $54,726, $344,192, $42,899,
$310,371, and $160,656, respectively, for sales of Class A Shares of the Growth
Fund, the Balanced Return Fund, the Nifty Fifty Fund, the Global Growth Fund,
the Small & Mid-Cap Fund and the Value 25 Fund, respectively. For the year ended
December 31, 1998, the current Distributor received front-end sales charges of
$23,886, $8,873, $23,876, $2,570, $34,058 and $8,411, after reallowance of
front-end sales charges to dealers of $222,960, $78,236, $217,524, $22,160,
$299,827 and $78,115, respectively, for sales of Class A Shares of the Growth
Fund, the Balanced Return Fund, the Nifty Fifty Fund, the Global Growth Fund,
the Small & Mid-Cap Fund and the Value 25 Fund, respectively. In some instances
dealers may receive 100% of the sales charge for sales of shares of a Fund and
may, therefore, be deemed "underwriters" under the Securities Act of 1933, as
amended.
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<PAGE>
For the year ended December 31, 1996, PFSI received contingent deferred
sales charges of $247,083, $15,362, $217,219, $337, and $1 for redemptions of
the Class B Shares of the Growth Fund, the Balanced Return Fund, the Nifty Fifty
Fund, the Global Growth Fund and the Small & Mid-Cap Growth Fund, respectively.
For the year ended December 31, 1997, PFSI and the current Distributor received
contingent deferred sales charges of $319,671, $47,433, $294,127, $13,930,
$15,873 and $12,730, for redemptions of the Class B and C Shares of the Growth
Fund, the Balanced Return Fund, the Nifty Fifty Fund, the Global Growth Fund,
the Small & Mid-Cap Growth Fund and the Value 25 Fund, respectively. For the
year ended December 31, 1998, the current Distributor received contingent
deferred sales charges of $192,778, $37,332, $214,850, $22,260, $95,029 and
$43,870, for redemptions of the Class B and C shares of the Growth Fund, the
Balanced Return Fund, the Nifty Fifty Fund, the Global Growth Fund, the Small &
Mid-Cap Growth Fund, and the Value 25 Fund, respectively.
Dealers with whom the Distributor has entered into sales agreements receive
a discount or commission as set forth below.
<TABLE>
<CAPTION>
Dealer Discount
Sales Charge Sales Charge or Agency Fee
Amount of Transaction as Percentage as Percentage as Percentage of
at Offering Price of Offering Price of Amount Invested Offering Price
- ------------------------------- ------------------- -------------------- -----------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but under $100,000 4.50% 4.71% 4.00%
$100,000 but under $250,000 3.50% 3.63% 3.00%
$250,000 but under $500,000 3.00% 3.09% 2.75%
$500,000 but under $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. Your broker, dealer or investment adviser
may also charge you additional commissions or fees for their services in selling
shares to you provided they notify the Distributor of their intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of the
Funds and/or for providing other shareholder services. Depending on the nature
of the services, these fees may be paid either from the Funds through
distribution fees, service fees or transfer agent fees or in some cases, the
Distributor may pay certain fees from its own profits and resources. From its
own profits and resources, the Distributor does intend to: (a) sponsor training
and educational meetings and provide additional compensation to qualifying
dealers in the form of trips, merchandise or expense reimbursements; (b) from
time to time pay special incentive and retention fees to qualified wholesalers,
registered financial institutions and third party marketers; (c) pay
broker/dealers an amount equal to 1% of the first $3 million of Class A Share
purchases by an account held in the name of a qualified employee benefit plan
with at least 100 eligible employees, 0.50% on the next $3 million, plus 0.25%
on the amount in excess of $6 million; and (d) excluding purchases as described
in (c) above, pay broker/dealers an amount equal to 1% of the amount of Class A
Shares sold above $1 million but under $3 million, 0.50% on the next $3 million,
plus 0.25% on the amount in excess of $6 million. If part or all of such
investment as described in (c) and (d) above, including investments by qualified
employee benefit plans, is subsequently redeemed within one year of the
investment date, the broker-dealer will refund to the Distributor such amounts
paid with respect to the investment. In addition, the Distributor may pay the
entire applicable sales charge on purchases of Class A Shares to selected
dealers and agents. Any dealer who receives more than 90% of a sales charge may
be deemed to be an "underwriter" under the Securities Act of 1933.
Administration Agreement
Phoenix Equity Planning Corporation ("PEPCO") has entered into an
Administration Agreement with the Trust on behalf of each series of the Trust
including each Fund. Under the Administration Agreement, PEPCO, in its capacity
as Administrator, (a) furnishes each Fund with various administrative and
shareholder services including, but not limited to, (i) preparing and
distributing all shareholder reports, (ii) preparing all tax returns and other
regulatory filings, (iii) Blue Sky compliance services, and (iv) expenses
related to fund accounting and net asset value determination, and (b) pays for
all of the normal operating fees and expenses of a Fund, except for the fees and
expenses related to the services to be provided by the Adviser under the
Investment Management Agreement, certain professional, fiduciary and audit
expenses, including the legal expenses of the independent Trustees, the
independent auditing expenses and expenses related to compensation of the
independent Trustees and the services fees paid under the Services Agreements,
the distribution fees paid under the Rule 12b-1 distribution plans, brokerage
and commission expenses and certain de minimis fees of its independent auditors,
legal counsel and trustees. See "Plans of Distribution."
The Administration Agreement dated as of September 3, 1997, was approved,
with respect to each Fund, by the Board of Trustees of the Trust, including a
majority of the Trustees who are not parties to the Administration Agreement,
and continues in effect until terminated on behalf of any Fund by either party
on 60-days' written notice.
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
22
<PAGE>
of net assets. For the year ended December 31, 1996, the Growth Fund, the
Balanced Return Fund and the Nifty Fifty Fund paid administrative fees to the
Former Adviser of approximately $3,453,000, $557,000, and $1,485,000,
respectively. For the Global Growth Fund, for the period ended December 31,
1996, the Former Adviser was entitled to receive fees pursuant to the
Administration Agreement then in effect in the amount of $40,856; however, the
Former Adviser waived $28,504 of such fees for said period. For the Small &
Mid-Cap Growth Fund, for the period ended December 31, 1996, the Former Adviser
was entitled to receive fees pursuant to the Administration Agreement then in
effect in the amount of $18,772; however, the Former Adviser waived $8,445 of
such fees for said period. For the year ended December 31, 1997, under the
then-effective Administration Agreements, the Growth Fund, the Balanced Return
Fund, the Nifty Fifty Fund, the Global Growth Fund, the Small & Mid-Cap Fund and
the Value 25 Fund, paid administrative fees to the Former Adviser and PEPCO of
approximately $3,078,000, $400,000, $1,612,000, $78,000, $173,000 and $117,000,
respectively. For the year ended December 31, 1998, the Growth Fund, the
Balanced Return Fund, the Nifty Fifty Fund, the Global Growth Fund, the Small &
Mid-Cap Fund and the Value 25 Fund, paid administrative fees to PEPCO of
approximately $2,420,000, $445,000, $1,656,000, $131,000, $434,000 and $219,000,
respectively.
Equity Planning has voluntarily agreed to waive, when necessary, a portion
of its administration fee so that Other Operating Expenses (operating expenses
excluding management fees and 12b-1 fees) do not exceed the following limits.
<TABLE>
<CAPTION>
Fund 1st $50 million next $450 million next $125 million over $625 million
- ------------------------ ----------------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Growth 0.99% 0.50% 0.30% 0.30%
Balanced Return 1.09% 0.60% 0.40% 0.40%
Nifty Fifty 0.99% 0.50% 0.30% 0.30%
Global Growth 0.60% 0.50% 0.40% 0.40%
Small & Mid-Cap Growth 0.60% 0.50% 0.40% 0.40%
Value 25 0.60% 0.50% 0.40% 0.40%
</TABLE>
DISTRIBUTION PLANS
The Trust has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for Class B and Class C of each series of the Trust (the "Class B
Plan," the "Class C Plan," and collectively the "12b-1 Plans"). The 12b-1 Plans
permit the Funds to reimburse the Distributor for expenses incurred in
connection with activities intended to promote the sale of shares of each class
of shares of the Funds.
Pursuant to the 12b-1 Plans, the Funds may reimburse the Distributor for
actual expenses of the Distributor up to 0.75% of the average daily net assets
of the Funds' Class B and Class C Shares. Expenditures under the 12b-1 Plans
shall consist of: (i) commissions to sales personnel for selling shares of the
Funds (including underwriting fees and financing expenses incurred in connection
with the sale of Class B Shares); (ii) compensation, sales incentives and
payments to sales, marketing and service personnel; (iii) payments to
broker-dealers and other financial institutions which have entered into
agreements with the Distributor in the form of the Dealer Agreement for Phoenix
Funds for services rendered in connection with the sale and distribution of
shares of the Funds; (iv) payment of expenses incurred in sales and promotional
activities, including advertising expenditures related to the Funds; (v) the
costs of preparing and distributing promotional materials; (vi) the cost of
printing the Funds' Prospectuses and Statements of Additional Information for
distribution to potential investors; and (vii) such other similar services that
the Trustees of the Funds determine are reasonably calculated to result in the
sale of shares of the Funds. In addition, the Funds will pay the Distributor
0.25% annually of the average daily net assets of the Funds' shares for
providing services to the shareholders, including assistance in connection with
inquiries related to shareholder accounts (the "Service Fee").
From the Service Fee the Distributor expects to pay a quarterly fee to
qualifying broker/dealer firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such firms. This fee will not exceed on an annual basis 0.25% of the average
annual net asset value of such shares, and will be in addition to sales charges
on Fund shares which are reallowed to such firms. To the extent that the entire
amount of the Service Fee is not paid to such firms, the balance will serve as
compensation for personal and account maintenance services furnished by the
Distributor.
From its own resources or pursuant to the Plan, and subject to the dealers'
prior approval, the Distributor may provide additional compensation to
registered representatives of dealers in the form of travel expenses, meals, and
lodging associated with training and educational meetings sponsored by the
Distributor. The Distributor may also provide gifts amounting in value to less
than $100, and occasional meals or entertainment, to registered representatives
of dealers. Any such travel expenses, meals, lodging, gifts or entertainment
paid will not be preconditioned upon the registered representatives' or dealers'
achievement of a sales target. The Distributor may, from time to time, reallow
the entire portion of the sales charge on Class A shares which it normally
retains to individual selling dealers. However, such additional reallowance
generally will be made only when the selling dealer commits to substantial
marketing support such as internal wholesaling through dedicated personnel,
internal communications and mass mailings.
In order to receive payments under the 12b-1 Plans and/or Services
Agreements (described below), participants must meet such qualifications to be
established in the sole discretion of the Distributor, such as services to the
Funds' shareholders; or services
23
<PAGE>
providing the Funds with more efficient methods of offering shares to coherent
groups of clients, members or prospects of a participant; or services permitting
bulking of purchases or sales, or transmission of such purchases or sales by
computerized tape or other electronic equipment; or other processing. If the
12b-1 Plans are terminated in accordance with their terms, the obligations of
the Funds to make payments to the Distributor pursuant to the 12b-1 Plans will
cease and the Funds will not be required to make any payments past the date on
which each 12b-1 Plan terminates.
On a quarterly basis, the Funds' Trustees review a report on expenditures
under the 12b-1 Plans and the purposes for which expenditures were made. The
Trustees conduct an additional, more extensive review annually in determining
whether the 12b-1 Plans will be continued. By its terms, continuation of the
12b-1 Plans from year to year is contingent on annual approval by a majority of
the Funds' Trustees and by a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the 12b-1 Plans or any related agreements
(the "12b-1 Plan Trustees"). The 12b-1 Plans provide that they may not be
amended to increase materially the costs which the Funds may bear pursuant to
the 12b-1 Plans without approval of the shareholders of the Funds and that other
material amendments to the 12b-1 Plans must be approved by a majority of the
12b-1 Plan Trustees by vote cast in person at a meeting called for the purpose
of considering such amendments. The 12b-1 Plans further provides that while it
is in effect, the selection and nomination of Trustees who are not "interested
persons" shall be committed to the discretion of the Trustees who are not
"interested persons." The 12b-1 Plans may be terminated at any time by vote of a
majority of the 12b-1 Plan Trustees or a majority of the outstanding shares of
the Funds.
The National Association of Securities Dealers, Inc. (the "NASD") regards
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend the Plans.
For the 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. For the year ended December 31, 1997, the Former
Distributor and PEPCO received distribution fees of $405,000, $44,000, $461,000,
$60,000, $17,000 and $34,000, respectively, with respect to the Class B Shares
of the Growth Fund, the Balanced Return Fund, the Nifty Fifty Fund, the Small &
Mid-Cap Fund, the Global Growth Fund and the Value 25 Fund. For the year ended
December 31, 1998, PEPCO received distribution fees of $ , $ , $ , $ , $ and $
respectively, with respect to the Class B Shares of the Growth Fund, the
Balanced Return Fund, the Nifty Fifty Fund, the Small & Mid-Cap Fund, the Global
Growth Fund and the Value 25 Fund. Such amounts were used by the Former
Distributor and PEPCO 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, 1996, the Former Distributor received
distribution fees of $1,122, $47, $1,354, $0 and $0, 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 after
reallowances to dealers of $180,204, $25,170, $140,906, $41 and $37,
respectively. For the year ended December 31, 1997, the Former Distributor and
PEPCO retained distribution fees of $1,334, $43, $1,807, $0, $0 and $59,
respectively, with respect to the Class C Shares of the Growth Fund, the
Balanced Return Fund, the Nifty Fifty Fund, the Small & Mid-Cap Growth Fund, the
Global Growth Fund and the Value 25 Fund, after reallowances to dealers of
$219,294, $37,197, $264,854, $28,012, $13,046 and $14,714, respectively. For the
year ended December 31, 1998, PEPCO retained distribution fees of $ , $ , $ , $
, $ and $ , respectively, with respect to the Class C Shares of the Growth Fund,
the Balanced Return Fund, the Nifty Fifty Fund, the Small & Mid-Cap Growth Fund,
the Global Growth Fund and the Value 25 Fund, after reallowances to dealers of $
, $ , $ , $ , $ and $ , respectively. Such amounts were used by the Former
Distributor and PEPCO in connection with the distribution of the Funds' Class C
Shares to compensate dealers for the sale of such shares.
Services Agreements
Under the Services Agreements, each Fund will pay a continuing service fee
to service providers, in an amount, computed and prorated on a daily basis,
equal to 0.25% per annum of the Fund's average daily net assets, which will
include the Adviser or Phoenix Equity Planning Corporation (the "Distributor")
for shareholder accounts not serviced by other service providers. (Prior to
September 3, 1997, Pasadena Fund Services, Inc. (the "Former Distributor")
served as distributor of the Funds' shares.) Such amounts are compensation for
providing certain services to clients owning shares of such Fund, including
personal services such as processing purchase and redemption transactions,
assisting in change of address requests and similar administrative details, and
providing other information and assistance with respect to such Fund, including
responding to shareholder inquiries.
For the year ended December 31, 1996, the Growth Fund, the Balanced Return
Fund and the Nifty Fifty Fund expensed service fees of approximately $1,223,075,
$145,333, and $469,651, respectively, of which approximately $226,547, $25,811,
and $73,704, respectively, were received by the Former Adviser or the Former
Distributor. For the year ended December 31, 1997, the Growth Fund, the Balanced
Fund, the Nifty Fifty Fund, Small & Mid-Cap Fund, Global Growth Fund and Value
25 Fund expensed service fees of approximately $1,244,000, $161,000, $661,000,
$72,000, $33,000 and $49,000, respectively, of which approximately
24
<PAGE>
$212,000, $28,000, $113,000, $17,000, $15,000 and $21,000, respectively, were
received by the Former Adviser and/or the Former Distributor. For the year ended
December 31, 1998, the Growth Fund, the Balanced Fund, the Nifty Fifty Fund,
Small & Mid-Cap Fund, Global Growth Fund and Value 25 Fund expensed service fees
of approximately $ , $ , $ , $ , $ and $ , respectively, of which $ , $ , $ , $
, $ and $ , respectively, were received by the Former Adviser and/or the Former
Distributor.
During 1996, service fees in the amount of $5,078 were payable by the
Global Growth Fund to the Former Adviser or the Former Distributor. During 1996,
service fees in the amount of $4,340 were payable by the Small & Mid-Cap Growth
Fund to the Former Adviser or the Former Distributor. The Former Adviser waived
$4,559 and $3,216 for the Global Growth Fund and the Small & Mid-Cap Growth Fund
for 1996. The Adviser may choose, in its discretion, to reimburse or waive
expenses specific to one or more Classes on a temporary basis. The amount of any
such expenses waived or reimbursed by the Adviser may vary from Class to Class.
In addition, the Adviser in its discretion may waive or reimburse Trust expenses
and/or Fund expenses (with or without a waiver or reimbursement of
Class-specific expenses) on a temporary basis, but only if the same
proportionate amount of Trust expenses and/or Fund expenses are waived or
reimbursed for each Class.
The Adviser also may act as an investment adviser to other persons,
entities, and corporations, including other investment companies and the Trust's
other series. Personnel of the Adviser are affiliated with another investment
adviser that has numerous advisory clients and will devote portions of their
time to such clients.
MANAGEMENT OF THE TRUST
The Trustees of the Trust are responsible for the overall supervision of
the Funds and perform the various duties imposed on Trustees by the 1940 Act and
Massachusetts business trust law.
Trustees And Officers
The Trustees and Officers of the Trust and their business affiliations for
the past five years are set forth below.
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- ------------------------------- ----------------------- --------------------------------------------------------------
<S> <C> <C>
Roger Engemann* (58) Chairman of the Chairman, President and Director of the Adviser since 1969.
600 North Rosemead Board, President and Chairman, President and Director, Pasadena Capital
Boulevard Trustee Corporation (1988-present) and Roger Engemann Management
Pasadena, California 91107 Co., Inc. (1985-present).
John S. Tilson (55) Chief Financial Executive Vice President, Portfolio Manager and Securities
600 North Rosemead Officer and Secretary Analyst with the Adviser since 1983. Executive Vice
Boulevard President and Director of Pasadena Capital Corporation.
Pasadena, California 91107 Executive Vice President, Roger Engemann Management Co.,
Inc. (1994-present)
Barry E. McKinley (63) Trustee Certified Public Accountant; head of B.E. McKinley &
201 South Lake Avenue Associates, an accounting firm, since its inception in 1971.
Suite 400
Pasadena, California 91101
Robert L. Peterson (61) Trustee Private investor. From 1988-1995, Regional Manager for
P.O. Box 80784 Commercial Real Estate Brokerage in the Pasadena office
San Marino, California 91118 of Jon Douglas Company, a real estate firm. Prior thereto he
was associated with the real estate brokerage firm of R.A.
Rowan & Co.
Richard C. Taylor (52) Trustee President of Richard Taylor Company, Inc., a food ingredients
2100 Huntington Drive, #9 broker, since 1987.
San Marino, California 91108
Angela Wong (47) Trustee Since 1986, Ms. Wong has been of counsel to the law firm of
11355 West Olympic Manatt, Phelps, Phillips & Kantor, specializing in employee
Boulevard benefits.
Los Angeles, California 90064
</TABLE>
* Indicates that the Trustee is an "interested person" of the Trust within
the meaning of the definition set forth in Section 2(a)(19) of the
Investment Company Act of 1940.
For services rendered to the Trust for the fiscal year ended December 31,
1998, the Trustees received an aggregate of $ . For services on the Board of
Trustees, each Trustee who is not an employee of the Adviser or any of its
affiliates
25
<PAGE>
currently receives $2,500 per quarter plus $2,500 for each meeting attended. The
officers of the Trust and the Trustees affiliated with the Adviser receive no
direct compensation for performing the duties of such offices. However, those
officers and Trustees who are affiliated with the Adviser may receive
remuneration indirectly because the Adviser receives management fees from the
Funds.
For the Trust's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
Total
Pension or Compensation
Aggregate Retirement Benefits Estimated From Fund and
Compensation Accrued as Part Annual Benefits Fund Complex
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
- -------------------- -------------- --------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Roger Engemann None None None None
John S. Tilson None None None None
Barry E. McKinley $ None None $
Robert L. Peterson $ None None $
Richard C. Taylor $ None None $
Angela Wong $ None None $
</TABLE>
As of , 1999, the Trustees and Officers of the Trust, as a group, owned
less than 1% of the outstanding shares of the Balanced Return Fund. As of ,
1999, the Trustees and Officers of the Trust, as a group, owned % of the Growth
Fund Class A Shares, % of the Global Growth Fund Class A Shares, % of the Value
25 Fund Class A Shares, % of the Nifty Fifty Fund Class A Shares and % of the
Small & Mid-Cap Growth Fund Class A Shares.
Principal Shareholders
As of , 1999 the following shareholders, to the Trust's
knowledge, owned of record 5% or more of each Fund's outstanding shares by
class, as noted:
<TABLE>
<CAPTION>
Class A Class B Class C
--------- --------- --------
<S> <C> <C> <C>
Phoenix-Engemann Growth Fund % % %
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6485
Phoenix Home Life
56 Prospect St.
Hartford, Connecticut 06103
Phoenix-Engemann Balanced Return Fund % % %
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6485
Phoenix Home Life
56 Prospect St.
Hartford, Connecticut 06103
Phoenix-Engemann Nifty Fifty Fund % % %
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Phoenix Home Life
56 Prospect St.
Hartford, Connecticut 06103
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Class C
------------ ------------ ------------
<S> <C> <C> <C>
Phoenix-Engemann Global Growth Fund
Merrill Lynch, Pierce,
Fenner & Smith, Inc.* % % %
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Pasadena National Trust %
Cust for IRA of
Roger Engemann
731 S. Madre Street
Pasadena, California 91107-5662
Union Bank of California %
FBO Barney Sofro
475 Sansome Street, 11th Floor
San Francisco, California 94111-3103
Phoenix Home Life
56 Prospect St.
Hartford, Connecticut 06103
Phoenix-Engemann Small & Mid-Cap Growth Fund
Merrill Lynch, Pierce, % % %
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Phoenix Home Life
56 Prospect St.
Hartford, Connecticut 06103
Phoenix-Engemann Value 25 Fund
Merrill Lynch, Pierce, % % %
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Pasadena National Trust %
Cust for IRA of
Roger Engemann
731 S. Madre Street
Pasadena, California 91107-5662
Union Bank of California Cust %
FBO Moore Investment Partnership
PO Box 109
San Diego, California 92112-4103
Eileen M. Scamporino
70 Russell St.
Haverhill, Massachusetts 01830
Phoenix Home Life
56 Prospect St.
Hartford, Connecticut 06103
</TABLE>
* Record owner only for its individual customers. To the Trust's knowledge,
no customer beneficially owned 5% or more of the total outstanding shares
of any Class of any Fund.
27
<PAGE>
OTHER INFORMATION
Capital Stock
The Trust was established on May 28, 1986 as a Massachusetts business
trust. The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest. The Trust currently offers shares in different
Funds and different classes of those Funds. Holders of shares of a Fund have
equal rights with regard to voting, redemptions, dividends, distributions, and
liquidations with respect to that Fund, except that Class B and C Shares of any
Fund, which bear higher distribution fees and certain incrementally higher
expenses associated with the deferred sales arrangement, pay correspondingly
lower dividends per share than Class A and M Shares of the same Fund.
Shareholders of all Funds vote on the election of Trustees. On matters affecting
an individual Fund (such as approval of an investment advisory agreement or a
change in fundamental investment policies) and on matters affecting an
individual class (such as approval of matters relating to a Plan of Distribution
for a particular class of shares), a separate vote of that Fund or class is
required. The Trustees will call a meeting when at least 10% of the outstanding
shares so request in writing. If the Trustees fail to call a meeting after being
so notified, the Shareholders may call the meeting. The Trustees will assist the
Shareholders by identifying other shareholders or mailing communications, as
required under Section 16(c) of the Investment Company Act of 1940.
Shares are fully paid, nonassessable, redeemable and fully transferable
when they are issued. Shares do not have cumulative voting rights, preemptive
rights or subscription rights. The assets received by the Funds for the issue or
sale of shares of each Fund, and any class thereof and all income, earnings,
profits and proceeds thereof, are allocated to such Fund, and class,
respectively, subject only to the rights of creditors, and constitute the
underlying assets of such Fund or class. The underlying assets of each Fund are
required to be segregated on the books of account, and are to be charged with
the expenses in respect to such Fund and with a share of the general expenses of
the Trust. Any general expenses of the Trust not readily identifiable as
belonging to particular Fund or class will be allocated by or under the
direction of the Trustees as they determine fair and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a business trust such as the Trust may be personally liable for
debts or claims against the Trust. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Trust and that every written agreement, undertaking or
obligation made or issued by the Trust shall contain a provision to that effect.
The Declaration of Trust provides for indemnification out of the Trust property
for all losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability, which is considered remote, is limited
to circumstances in which the Trust itself would be unable to meet its
obligations.
Independent Accountants
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts
02110, is the independent accountants for the Funds. PricewaterhouseCoopers LLP
audits the Funds' annual financial statements and expresses an opinion thereon.
Custodian and Transfer Agent
The custodian of the assets of the Funds (other than the Global Growth
Fund) is Union Bank of California, 475 Sansome Street, San Francisco, California
94111. The custodian of the assets of the Global Growth Fund is State Street
Bank and Trust Company, P.O. Box 351, Boston, Massachusetts 02101.
Pursuant to a Transfer Agent and Service Agreement with the Trust, Equity
Planning serves as transfer agent for the Funds (the "Transfer Agent") for which
it is paid $14.95 plus certain out of pocket expenses for each designated
shareholder account. The Transfer Agent engages sub-agents to perform certain
shareholder servicing functions for which such agents are paid a fee by Equity
Planning.
Report to Shareholders
The fiscal year of the Trust ends on December 31. The Trust will send
financial statements to its shareholders at least semiannually. An Annual Report
containing financial statements audited by the Trust's independent accountants
will be sent to shareholders each year.
Financial Statements
The Financial Statements for the Fund's fiscal year ended October 31, 1998,
appearing in the Fund's 1998 Annual Report to Shareholders, are incorporated
herein by reference.
28
<PAGE>
APPENDIX
Moody's Investors Service, Inc. Corporate Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa Group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Standard & Poor's Corporation's Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
BB-B-CCC-CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
29
<PAGE>
THE PHOENIX-ENGEMANN FUNDS
FORM N-1 A
PART C--OTHER INFORMATION
Item 23. Exhibits.
<TABLE>
<S> <C>
a.1 Amended and Restated Agreement and Declaration of Trust(5)
b. By-Laws(1)
c. Reference is made to Article of Registrant's Amended and Restated Agreement and Declaration of
Trust, as amended, and filed as described in a.1. above
d. Investment Management Agreement(9)
e.1. Distribution Agreement with Phoenix Equity Planning Corporation(10)
e.2. Form of Sales Agreement between Phoenix Equity Planning Corporation and dealers
e.3. Form of Supplement to Phoenix Family of Funds Sales Agreement
e.4. Form of Financial Institution Sales Contract for the Phoenix Family of Funds
f. Bonus, Profit Sharing, Pension and Other Similar Arrangements--None
g. Custodian Agreement(1)
h.1. Other Material Contracts--Agreement and Plan of Reorganization(1)
h.2. Administration Agreement(10)
h.3. Sub-Administration Agreement(11)
i. Opinion and Consent of Counsel(1)
j. Consents of Certified Public Accountants
k. Financial Statements Omitted from Item 23--Not applicable
l. Letter of Understanding relating to initial capital--Not Applicable
m.1. Rule 12b-1 Plan For Class B Shares
m.2. Rule 12b-1 Plan For Class C Shares
n.27. Financial Data Schedules
o.1. Restated and Amended Multiple Class Plan(11)
p. Powers of Attorney(11)
</TABLE>
- -----------
(1) Previously filed as part of Pre-Effective Amendment No. 3 to the
Registrant's Registration Statement as filed in June 1986.
(2) Previously filed as part of Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement as filed on January 22, 1986.
(3) Previously filed as part of Post-Effective Amendment No. 11 to the
Registrant's Registration Statement as filed on April 16, 1992.
(4) Previously filed as part of Post-Effective Amendment No. 12 to the
Registrant's Registration Statement as filed on December 23, 1992.
(5) Previously filed as part of Post-Effective Amendment No. 14 to the
Registrant's Registration Statement as filed on August 27, 1993.
(6) Previously filed as part of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement as filed on October 29, 1993.
(7) Previously filed as part of Post-Effective Amendment No. 18 to the
Registrant's Registration Statement as filed on August 10, 1994.
(8) Previously filed as part of Post-Effective Amendment No. 20 to the
Registrant's Registration Statement as filed on April 24, 1996.
(9) Previously filed as part of Post-Effective Amendment No. 25 to the
Registrant's Registration Statement as filed on September 4, 1997.
(10) Previously filed as part of Post-Effective Amendment No. 26 to the
Registrant's Registration Statement as filed on September 30, 1997.
C-1
<PAGE>
(11) Previously filed as part of Post-Effective Amendment No. 27 to the
Registrant's Registration Statement as filed on November 21, 1997.
Item 24. Persons Controlled by or Under Common Control with the Fund
None.
Item 25. Indemnification
Please see Article VI of the Registrant's By-Laws, previously filed as an
Exhibit. Pursuant to Rule 484 under the Securities Act of 1933, as amended, the
Registrant furnishes the following undertaking:
"Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer, or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue."
Notwithstanding the provisions contained in the Registrant's By-Laws, in
the absence of authorization by the appropriate court on the merits pursuant to
Sections 4 and 5 of Article VI of said By-Laws, any indemnification under said
Article shall be made by Registrant only if authorized in the manner provided in
either subsection (a) or (b) of Section 6 of said Article VI.
Item 26. Business and Other Connections of Investment Adviser
Please see Parts A and B of this Registration Statement for discussion of
the Adviser.
For information as to the business, profession, vocation or employment of a
substantial nature of the directors and officers of the Adviser, reference is
made to the Adviser's current Form ADV (SEC File No. 801-11586) filed under the
Investment Advisers Act of 1940 and incorporated herein by reference.
Item 27. Principal Underwriters
(a) Equity Planning also serves as the principal underwriter for the following
other registrants:
Phoenix-Aberdeen Series Fund, Phoenix California Tax Exempt Bonds, Inc.,
Phoenix Duff & Phelps Institutional Mutual Funds, Phoenix-Engemann Funds,
Phoenix Equity Series Fund, Phoenix Income and Growth Fund, Phoenix
Investment Trust 97, Phoenix Multi-Portfolio Fund, Phoenix Multi-Sector
Fixed Income Fund, Inc., Phoenix Multi-Sector Short Term Bond Fund,
Phoenix-Seneca Funds, Phoenix Series Fund, Phoenix Strategic Allocation
Fund, Inc., Phoenix Strategic Equity Series Fund, Phoenix Worldwide
Opportunities Fund, PHL Variable Accumulation Account, PHL Variable Separate
Account MVAI, Phoenix Home Life Variable Accumulation Account, Phoenix Home
Life Variable Universal Life Account, Phoenix Life and Annuity Variable
Universal Life Account.
(b) The directors and executive officers of Phoenix Equity Planning
Corporation, the distributor for Registrant, are as follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Position and Offices
Business Address with Distributor with Registrant
- ------------------------- --------------------------- ---------------------
<S> <C> <C>
Michael E. Haylon Director None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Senior Vice President and None
100 Bright Meadow Blvd. Chief Financial Officer
P.O. Box 2200
Enfield, CT 06083-2200
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Position and Offices
Business Address with Distributor with Registrant
- ------------------------- ------------------------------- ----------------------
<S> <C> <C>
John F. Sharry Executive Vice President, None
56 Prospect Street Retail Distribution
P.O. Box 150480
Hartford, CT 06115-0480
Leonard J. Saltiel Managing Director, None
56 Prospect Street Operations and Services
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Mutual Fund None
101 Munson Street Customer Service
Greenfield, MA 01301
Nancy G. Curtiss Vice President and Treasurer, Assistant Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Counsel and Assistant Secretary
56 Prospect Street Secretary
P.O. Box 150480
Hartford, CT 06115-0480
Jacqueline M. Porter Assistant Vice President, None
56 Prospect Street Financial Reporting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
Item 28. Locations of Accounts and Records
The accounts, books or other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules thereunder are kept by
the Registrant at its offices, 600 North Rosemead Boulevard, Pasadena, CA
91107-2133. Phoenix Equity Planning Corporation, 100 Bright Meadow Blvd.,
Enfield, Connecticut 06082, is the Registrant's transfer agent, and maintains
records relating to such activities. State Street Bank and Trust Company, c/o
BFDS, Two Heritage Drive, Boston, MA 02171, as sub-transfer agent, maintains
various shareholder account records and information regarding the Global Growth,
Balanced Return, Growth, Nifty Fifty, Small & Mid-Cap Growth and Value 25 Funds.
The custodian of the assets of the Funds (other than the Global Growth Fund),
Union Bank of California, maintains certain records at 475 Sansome Street, San
Francisco, California 94111. State Street Bank and Trust Company, the custodian
for the Global Growth Fund, maintains records at P.O. Box 351, Boston,
Massachusetts 02101. The Registrant's investment advisor, Roger Engemann &
Associates, Inc., maintains records relating to its services at its offices, 600
North Rosemead Boulevard, Pasadena, California 91107-2133.
Item 29. Management Services
There are no management-related service contracts not discussed in Part A
or Part B of this Registration Statement.
Item 30. Undertakings
Not applicable.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Fund has duly caused this amendment to the
registration statement to be signed on its behalf by the undersigned, duly
authorized, in the City of Pasadena, the State of California, on the 26th day of
February, 1999.
THE PHOENIX-ENGEMANN FUNDS
By: /s/ Roger Engemann*
----------------------------------------------
Roger Engemann
President
Pursuant to the requirements of the Securities Act, this amendment to the
registration statement has been signed below by the following persons in the
capacities indicated on the 26th day of February, 1999.
<TABLE>
<CAPTION>
Signature Title Date
- ----------------------------------------- ---------------------- -----
<S> <C> <C>
Principal Executive
- ---------------------------- Officer and Trustee
Roger Engemann*
Trustee
- ----------------------------
Barry E. McKinley*
Trustee
- ----------------------------
Robert L. Peterson*
Trustee
- ----------------------------
Richard C. Taylor*
/s/ John S. Tilson Chief Financial
- ---------------------------- Officer and Secretary
John S. Tilson
- ----------------------------
Angela Wong* Trustee
By: /s/ Thomas N. Steenburg
- ----------------------------
*Thomas N. Steenburg,
Attorney-in-Fact, pursuant to Powers of
Attorney previously filed
</TABLE>
S-1(c)
