As filed with the Securities and Exchange Commission on May 1, 2000
File Nos. 33-1922
811-4506
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933
[X]
Post-Effective Amendment No. 32
[X]
and
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940
[X]
Amendment No. 35
[X]
-------------
THE PHOENIX-ENGEMANN FUNDS
(formerly called Pasadena Investment Trust)
(Exact Name of Registrant as Specified in Charter)
-------------
600 North Rosemead Boulevard, Pasadena, California 91107-2133
(Address of Principal Executive Office)
(626) 351-9686
(Registrant's Telephone Number, Including Area Code)
ROGER ENGEMANN
600 North Rosemead Boulevard, Pasadena, California 91107-2138
(Name and Address of Agent for Service)
-------------
It is proposed that this filing will become effective:
[X] Immediately upon filing pursuant to paragraph (b) of Rule 485, or
- on pursuant to paragraph (b) of Rule 485, or
- 60 days after filing pursuant to paragraph (a)(1) of Rule 485, or
- on pursuant to paragraph (a)(1) of Rule 485, or
- 75 days after filing pursuant to paragraph (a)(2) of Rule 485, or
- on pursuant to paragraph (a)(2) of Rule 485.
-------------
Please Send Copy of Communications to:
Pamela S. Sinofsky
Assistant Vice President and Assistant Counsel
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, CT 06115
(860) 403-6785
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE PHOENIX-ENGEMANN FUNDS
CROSS REFERENCE SHEET PURSUANT TO RULE 495(a)
UNDER THE SECURITIES ACT OF 1933
<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; Additional
Strategies, and Related Risks Investment Techniques
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>
[FRONT COVER]
Phoenix Investment Partners
Prospectus
May 1, 2000
ENGEMANN
Phoenix-Engemann
Balanced Return Fund
Phoenix-Engemann
Focus Growth Fund
Phoenix-Engemann
Nifty Fifty Fund
Phoenix-Engemann
Small & Mid-Cap
Growth Fund
Phoenix-Engemann
Value 25 Fund
Neither the Securities and Exchange
Commission nor any state securities
commission has approved or
disapproved of these securities or
determined if this prospectus is
truthful or complete. Any representation
to the contrary is a criminal offense.
This prospectus contains important
information about the Phoenix-
Engemann Balanced Return Fund,
Phoenix-Engemann Focus Growth
Fund, Phoenix-Engemann Nifty
Fifty Fund, Phoenix-Engemann Small
& Mid-Cap Growth Fund, and
Phoenix-Engemann Value 25 Fund
that you should know before investing.
Please read it carefully and retain it
for future reference.
[LOGO] PHOENIX
INVESTMENT PARTNERS, LTD.
<PAGE>
Table of Contents
- -----------------------------------------------------
<TABLE>
<S> <C>
Phoenix-Engemann Balanced Return Fund
Investment Risk and Return Summary .......... 1
Fund Expenses ............................... 4
Phoenix-Engemann Focus Growth Fund
Investment Risk and Return Summary .......... 6
Fund Expenses ............................... 9
Phoenix-Engemann Nifty Fifty Fund
Investment Risk and Return Summary .......... 11
Fund Expenses ............................... 14
Phoenix-Engemann Small & Mid-Cap
Growth Fund
Investment Risk and Return Summary .......... 16
Fund Expenses ............................... 19
Phoenix-Engemann Value 25 Fund
Investment Risk and Return Summary .......... 21
Fund Expenses ............................... 24
Additional Investment Techniques ............. 26
Management of the Funds ...................... 28
Pricing of Fund Shares ....................... 30
Sales Charges ................................ 31
Your Account ................................. 34
How to Buy Shares ............................ 35
How to Sell Shares ........................... 35
Things You Should Know When
Selling Shares ............................. 36
Account Policies ............................. 37
Investor Services ........................... 39
Tax Status of Distributions .................. 40
Financial Highlights ......................... 40
Additional Information ....................... 48
</TABLE>
> Phoenix-
Engemann
Funds
<PAGE>
Phoenix-Engemann Balanced Return Fund
Investment Risk and Return Summary
- -------------------------------------------------------
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
> The fund seeks to achieve capital appreciation from high
quality growth stocks balanced by income and capital
preservation from U.S. Government securities. Under normal
circumstances, the fund expects to invest at least 25% of its
net assets in U.S. Government securities of any maturity.
However, the balance between stocks and U.S. Government
securities, at any time, will be within the sole discretion of
the adviser.
> The adviser uses a bottom-up stock selection process that
looks for companies that it believes have consistent,
substantial earnings growth, strong management with a
commitment to shareholders, financial strength and favorable
long-term outlooks. Generally, these will be companies with
larger capitalizations.
> Generally, stocks are sold when the characteristics and
factors used to select a security change, such as a reduction
in the expected earnings growth rate, a loss of competitive
advantage or the security has appreciated to the point where
it is no longer attractive.
Temporary Defensive 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. When this happens, the fund may not achieve its
objective.
Please see "Additional Investment Techniques" for other
investment techniques of the fund.
Phoenix-Engemann Balanced Return Fund 1
<PAGE>
Principal Risks
If you invest in this fund, you risk that you may lose your
investment.
General
The value of your shares and the level of income you receive are
subject to risks associated with the types of securities
selected for fund investment. Neither the fund nor the adviser
can assure you that a particular level of income will
consistently be achieved or that the value of the fund's
investments that supports your share value will increase. If the
value of fund investments decreases, your share value will
decrease.
Investment values can decrease for a number of reasons.
Conditions affecting the overall economy, specific industries or
companies in which the fund invests can be worse than expected
and investments may fail to perform as the adviser expects. As a
result, the value of your shares may decrease.
Interest Rate Risk
Interest rate trends can have an effect on the value of your
shares. If interest rates rise, the value of debt securities
generally will fall.
Credit risk
Credit risk pertains to the issuer's ability to make scheduled
interest or principal payments. Generally, the lower a
security's credit rating, the greater chance that the issuer
will be unable to make such payments when due.
Long-Term Maturities
Fixed-income securities with longer maturities may be subject to
greater price fluctuations due to interest rate, tax law and
general market changes.
U.S. Government Obligations
Obligations issued or guaranteed by the U.S. Government, its
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. In addition, not all U.S. Government
securities are backed by the full faith and credit of the United
States.
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 shows how the fund's average annual returns 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.
[Bar chart data]
Balanced Return Fund
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -0.39% 38.89% 4.49% 2.44% -4.43% 27.18% 17.78% 18.98% 29.12% 18.10%
</TABLE>
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the 10-year period shown in the
chart above, the highest return for a quarter was 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, 2000)
was 6.91%.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Life of the Fund(2)
Average Annual Total Returns(1) One Five Ten
(for the periods ending 12/31/99) Year Years Years Class A Class B Class C
Class A Shares(3) 11.31% 20.70% 13.74% -- -- --
Class B Shares 13.22% 21.19% N/A -- 16.42% --
Class C Shares 17.22% 21.19% N/A -- -- 16.42%
S&P 500 Composite
Stock Price Index(4) 21.14% 28.66% 18.25% -- 23.71% 23.71%
Lehman Brothers Government/
Corporate Bond Index(5) (2.15)% 7.60% 7.65% -- 5.48% 5.48%
Balanced Benchmark(6) 12.21% 19.83% 13.85% -- 16.07%(7) 16.07%(7)
</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 B and Class C Shares since January 3, 1994.
(3) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(4) The S&P 500 Composite Stock Price Index is a measure of stock market total
return performance. The S&P 500's performance does not reflect sales charges.
(5) The Lehman Brothers Government/Corporate Bond Index is an unmanaged but
commonly used measure of bond performance. It includes securities in the Lehman
Brothers Government and the Lehman Brothers Corporate Indices. The index's
performance does not reflect sales charges.
(6) The Balanced Benchmark is a composite index made up of 60% of the S&P 500
Composite Stock Price 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.
(7) Benchmark performance since January 31, 1994.
Phoenix-Engemann Balanced Return Fund 3
<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) 5.75% None None
Maximum Deferred Sales Charge (load) (as a None 5%(a) 1%(b)
percentage of the lesser of the value redeemed or
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 0.74% 0.74% 0.74%
Distribution and Service (12b-1) Fees(c) 0.25% 1.00% 1.00%
Other Expenses(d) 0.47% 0.47% 0.47%
---- -------- ---------
Total Annual Fund Operating Expenses(d) 1.46% 2.21% 2.21%
==== ======== =========
</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) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(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) Restated to reflect current fees.
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 $715 $1,010 $1,327 $2,221
Class B $624 $891 $1,185 $2,355
Class C $324 $691 $1,185 $2,544
</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 B $224 $691 $1,185 $2,355
Class C $224 $691 $1,185 $2,544
</TABLE>
Phoenix-Engemann Balanced Return Fund 5
<PAGE>
Phoenix-Engemann Focus Growth Fund
Investment Risk and Return Summary
- -------------------------------------------------------
Investment Objective
Phoenix-Engemann Focus 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 focuses on purchasing common stocks of domestic
corporations with rapidly growing earnings. The companies may
have small or large capitalizations and may be unseasoned or
established. The adviser may 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 uses a bottom-up selection process to select
stocks for the fund.
> Generally, stocks are sold when the characteristics and
factors used to select a security change, such as a reduction
in the expected earnings growth rate, a loss of competitive
advantage or the security has appreciated to the point where
it is no longer attractive.
Temporary Defensive 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. When this happens, the fund may not achieve its
objective.
Please see "Additional Investment Techniques" for other
investment techniques of the fund.
Principal Risks
If you invest in this fund, you risk that you may lose your
investment.
General
The value of the fund's investments that supports your share
value can decrease as well as increase. If between the time you
purchase shares and the time you sell shares the value of the
fund's investments decrease, you will lose money.
Investment values can decrease for a number of reasons.
Conditions affecting the overall economy, specific industries or
companies in which the fund invests can be worse than expected
and investments may fail to perform as the adviser expects. As a
result, the value of your shares may decrease.
6 Phoenix-Engemann Focus Growth Fund
<PAGE>
Growth Stocks
Because growth stocks typically make little or no dividend
payments to shareholders, investment return is based on a
stock's capital appreciation, making return more dependent on
market increases and decreases. Growth stocks are therefore more
volatile than non-growth stocks to market changes, tending to
rise faster when markets rise and drop more sharply when markets
fall.
Small Capitalizations and Unseasoned Companies
Companies with small capitalizations are often companies with a
limited operating history or companies in industries that have
recently emerged due to cultural, economic, regulatory or
technological developments. Such developments can have a
significant impact or negative effect on small capitalization
companies and their stock performance. Investment returns of
unseasoned and small capitalizations companies can be highly
volatile. Product lines are often less diversified and subject
to competitive threats. Smaller capitalization and unseasoned
company stocks are subject to varying patterns of trading volume
and may, at times, be difficult to sell.
Phoenix-Engemann Focus Growth Fund 7
<PAGE>
Performance Tables
The bar chart and table below provide some indication of the
risks of investing in the Phoenix-Engemann Focus 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 shows how the fund's average annual returns 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.
[Bar chart data]
Focus Growth Fund
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -4.55% 67.85% 2.24% -5.87% -3.75% 27.16% 22.49% 16.04% 37.41% 49.74%
</TABLE>
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the 10-year period shown in the
chart above, the highest return for a quarter was 35.36% (quarter ending
December 31, 1998) and the lowest return for a quarter was (24.96)% (quarter
ending September 30, 1998). Year-to-date performance (through March 31, 2000)
was 7.22%.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Life of the Fund(2)
Average Annual Total Returns(1) One Five Ten
(for the periods ending 12/31/99) Year Years Years Class A Class B Class C
Class A Shares(3) 41.13% 28.51% 17.93% -- -- --
Class B Shares 44.64% 29.06% N/A -- 22.91% --
Class C Shares 48.64% 29.06% N/A -- -- 22.91%
S&P 500 Composite
Stock Price Index(4) 21.14% 28.66% 18.25% -- 23.71% 23.71%
</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 B and Class C Shares since January 3, 1994.
(3) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(4) The S&P 500 Composite Stock Price Index is an unmanaged but commonly used
measure of common stock total return performance. The S&P's performance does not
reflect sales charges.
8 Phoenix-Engemann Focus 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) 5.75% None None
Maximum Deferred Sales Charge (load) (as a None 5%(a) 1%(b)
percentage of the lesser of the value redeemed or
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 0.79% 0.79% 0.79%
Distribution and Service (12b-1) Fees(c) 0.25% 1.00% 1.00%
Other Expenses(d) 0.41% 0.41% 0.41%
---- -------- ---------
Total Annual Fund Operating Expenses(d) 1.45% 2.20% 2.20%
==== ======== =========
</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) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(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) Restated to reflect current fees.
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 Focus Growth Fund 9
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $714 $1,007 $1,322 $2,210
Class B $623 $888 $1,180 $2,344
Class C $323 $688 $1,180 $2,534
</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 B $223 $688 $1,180 $2,344
Class C $223 $688 $1,180 $2,534
</TABLE>
10 Phoenix-Engemann Focus Growth Fund
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
Investment Risk and Return Summarys
- -------------------------------------------------------
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
> The fund seeks its investment objective by investing in at
least 50 different securities that the adviser believes
represent the best potential to achieve long-term growth of
capital. 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.
> The adviser uses a bottom-up stock selection process that
looks for companies that it believes have consistent,
substantial earnings growth, strong management with a
commitment to shareholders, financial strength and favorable
long term outlooks. Generally, these will be larger
capitalized companies.
> Generally, stocks are sold when the characteristics and
factors used to select a security change, such as a reduction
in the expected earnings growth rate, a loss of competitive
advantage or the security has appreciated to the point where
it is no longer attractive.
Temporary Defensive 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. When this happens, the fund may not achieve its
objective.
Please see "Additional Investment Techniques" for other
investment techniques of the fund.
Principal Risks
If you invest in this fund, you risk that you may lose your
investment
General
The value of the fund's investments that supports your share
value can decrease as well as increase. If between the time you
purchase shares and the time you sell shares the value of the
fund's investments decrease, you will lose money.
Phoenix-Engemann Nifty Fifty Fund 11
<PAGE>
Investment values can decrease for a number of reasons.
Conditions affecting the overall economy, specific industries or
companies in which the fund invests can be worse than expected
and investments may fail to perform as the adviser expects. As a
result, the value of your shares may decrease.
Limited Number of Investments
Conditions that negatively affect securities in the portfolio
will have a greater impact on the fund as compared to a fund
that holds a greater number of security positions. In addition,
the fund may be more sensitive to changes in the market value of
a single issuer in its portfolio and therefore the value of your
shares may be more volatile.
12 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 shows
how the fund's average annual returns 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.
[Bar chart data]
Nifty Fifty Fund
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
67.64% 3.67% -0.52% 1.05% 28.21% 26.53% 19.23% 35.13% 32.47%
</TABLE>
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the 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, 2000) was 7.28%.
<TABLE>
<CAPTION>
Average Annual Total Returns(1) One Five
(for the periods ending 12/31/99) Year Years Life of the Fund(2)
<S> <C> <C> <C> <C> <C>
Class A Class B Class C
Class A Shares(3) 24.86% 26.69% 21.17% -- --
Class B Shares 27.47% 27.24% -- 22.44% --
Class C Shares 31.47% 27.24% -- -- 22.44%
S&P 500 Composite
Stock Price Index(4) 21.14% 28.66% 21.00% 23.71% 23.71%
</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) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(4) The S&P 500 Composite Stock Price 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 13
<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) 5.75% None None
Maximum Deferred Sales Charge (load) (as a None 5%(a) 1%(b)
percentage of the lesser of the value redeemed or
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(c) 0.25% 1.00% 1.00%
Other Expenses(d) 0.42% 0.42% 0.42%
---- -------- ---------
Total Annual Fund Operating Expenses(d) 1.48% 2.23% 2.23%
==== ======== =========
</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) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(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) Restated to reflect current fees.
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:
14 Phoenix-Engemann Nifty Fifty Fund
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $717 $1,106 $1,336 $2,242
Class B $626 $897 $1,195 $2,376
Class C $326 $697 $1,195 $2,565
</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 B $226 $697 $1,195 $2,376
Class C $226 $697 $1,195 $2,565
</TABLE>
Phoenix-Engemann Nifty Fifty Fund 15
<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
> Under normal circumstances, the fund invests at least 65% of
its total assets in equity securities of companies that have
market capitalizations of below $1.5 billion at the time of
purchase.
> The fund expects to invest principally in common stocks. The
fund emphasizes the purchase of common stocks of domestic
corporations with rapidly growing earnings per share. The
adviser may 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 uses a bottom-up selection process to select
stocks for the fund.
> Generally, stocks are sold when the characteristics and
factors used to select a security change, such as a reduction
in the expected earnings growth rate, a loss of competitive
advantage or the security has appreciated to the point where
it is no longer attractive.
Temporary Defensive 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. When this happens, the fund may not achieve its
objective.
Please see "Additional Investment Techniques" for other
investment techniques of the fund.
Principal Risks
If you invest in this fund, you risk that you may lose your
investment.
General
The value of the fund's investments that supports your share
value can decrease as well as increase. If between the time you
purchase shares and the time you sell shares the value of the
fund's investments decrease, you will lose money.
16 Phoenix-Engemann Small & Mid-Cap Growth Fund
<PAGE>
Investment values can decrease for a number of reasons.
Conditions affecting the overall economy, specific industries or
companies in which the fund invests can be worse than expected
and investments may fail to perform as the adviser expects. As a
result, the value of your shares may decrease.
Growth Stocks
Because growth stocks typically make little or no dividend
payments to shareholders, investment return is based on a
stock's capital appreciation, making return more dependent on
market increases and decreases. Growth stocks are therefore more
volatile than non-growth stocks to market changes, tending to
rise faster when markets rise and drop more sharply when markets
fall.
Small Capitalizations and Unseasoned Companies
Companies with small capitalizations are often companies with a
limited operating history or companies in industries that have
recently emerged due to cultural, economic, regulatory or
technological developments. Such developments can have a
significant impact or negative effect on small capitalization
companies and their stock performance. Investment returns of
unseasoned and small capitalizations companies can be highly
volatile. Product lines are often less diversified and subject
to competitive threats. Smaller capitalization and unseasoned
company stocks are subject to varying patterns of trading volume
and may, at times, be difficult to sell.
Phoenix-Engemann Small & Mid-Cap Growth Fund 17
<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 shows how the fund's average annual returns
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.
[Bar chart data]
Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999
<S> <C> <C> <C> <C>
25.68% 52.37% 26.41% 14.29% 84.59%
</TABLE>
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 71.42% (quarter ending December 31,
1999) and the lowest return for a quarter was (22.13)% (quarter ending September
30, 1998). Year-to-date performance (through March 31, 2000) was 16.36%.
<TABLE>
<S> <C> <C> <C> <C> <C>
Life of the Fund(2)
Average Annual Total Returns (1) One Five
(for the periods ending 12/31/99) Year Years Class A Class B Class C
Class A Shares(3) 73.98% 36.93% 40.02% -- --
Class B Shares 79.25% -- -- 38.60% --
Class C Shares 83.20% -- -- -- 35.80%
Russell 2000 Index(4) 21.26% 16.69% 15.64% 14.13% 13.75%
Russell 2000 Growth Index(5) 43.09% 19.00% 18.14% 17.00% 16.63%
</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) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(4) 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.
(5) The Russell 2000 Growth Index is an unmanaged, commonly used measure of
total return performance of small-capitalization growth-oriented stocks. The
Index does not reflect sales charges.
18 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) 5.75% None None
Maximum Deferred Sales Charge (load) (as a None 5%(b) 1%(c)
percentage of the lesser of the value redeemed or
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 0.94% 0.94% 0.94%
Distribution and Service (12b-1) Fees(d) 0.25% 1.00% 1.00%
Other Expenses(e) 0.46% 0.46% 0.46%
---- -------- ---------
Total Annual Fund Operating Expenses(a)(e) 1.65% 2.40% 2.40%
==== ======== =========
</TABLE>
- ----------------
(a) The fund's administrator has agreed to waive a portion of its administration
fee through April 30, 2001 so that other operating expenses of the fund do not
exceed 0.50% of the first $50 million of the average daily net assets. Prior to
March 1, 2000, the fund's administrator had agreed to waive a portion of its
administration fee so that other operating expenses of the fund would 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 1.63%
for Class A Shares, 2.38% for Class B Shares and 2.38% 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) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(d) 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").
(e) Restated to reflect current fees.
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 19
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $733 $1,065 $1,420 $2,417
Class B $643 $948 $1,280 $2,550
Class C $343 $748 $1,280 $2,736
</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 B $243 $748 $1,280 $2,550
Class C $243 $748 $1,280 $2,736
</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.
20 Phoenix-Engemann Small & Mid-Cap Growth Fund
<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
> Under normal circumstances, at least 80% of the fund's total
assets will be invested in common stocks of at least 25
companies that, in the adviser's opinion, demonstrate high
dividend yield and quality earnings. The fund may, for short
periods of time, have more or less than 25 different
securities while it is adding or deleting a particular
position.
> The adviser uses a proprietary quantitative approach to
identify the highest yielding stocks that fit the fund's
criteria and then selects from this group stocks that it
believes offer the best value. The adviser generally looks for
one or more of the following characteristics: established
operating history, dividend payout ratio and sound balance
sheet, and other financial characteristics.
> Generally, stocks are sold when the characteristics and
factors used to select a security change and no longer satisfy
the fund's quantitative criteria.
Temporary Defensive 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. When this happens, the fund may not achieve its
objective.
Please see "Additional Investment Techniques" for other
investment techniques of the fund.
Principal Risks
If you invest in this fund, you risk that you may lose your
investment.
General
The value of the fund's investments that supports your share
value can decrease as well as increase. If between the time you
purchase shares and the time you sell shares the value of the
fund's investments decrease, you will lose money.
Investment values can decrease for a number of reasons.
Conditions affecting the overall economy, specific industries or
companies in which the fund invests can be worse than expected
and investments may fail to perform as the adviser expects. As a
result, the value of your shares may decrease.
Phoenix-Engemann Value 25 Fund 21
<PAGE>
Limited Number of Investments
Conditions which negatively affect securities in the portfolio
will have a greater impact on the fund as compared to a fund
that holds a greater number of security positions. In addition,
the fund may be more sensitive to changes in the market value of
a single issuer in its portfolio and therefore the value of your
shares may be more volatile.
22 Phoenix-Engemann Value 25 Fund
<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 shows
how the fund's average annual returns 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.
[Bar chart data]
Value 25 Fund
<TABLE>
<CAPTION>
1997 1998 1999
<S> <C> <C>
21.10% 7.23% -5.75%
</TABLE>
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 19.30% (quarter ending June 30,
1999) and the lowest return for a quarter was (14.84)% (quarter ending September
30, 1999). Year-to-date performance (through March 31, 2000) was (12.68)%.
<TABLE>
<S> <C> <C> <C> <C>
Life of the Fund(2)
Average Annual Total Returns(1)
(for periods ending 12/31/99) One Year Class A Class B Class C
Class A Shares(3) (11.17)% 5.19% -- --
Class B Shares (9.63)% -- 5.19% --
Class C Shares (6.49)% -- -- 6.00%
S&P 500 Composite Stock Price Index(4) 21.14% 28.14% 27.10% 27.10%
</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 9, 1997.
(3) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(4) The S&P 500 Composite Stock Price 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 Value 25 Fund 23
<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) 5.75% None None
Maximum Deferred Sales Charge (load) (as a None 5%(b) 1%(c)
percentage of the lesser of the value redeemed or
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 0.90% 0.90% 0.90%
Distribution and Service (12b-1) Fees(d) 0.25% 1.00% 1.00%
Other Expenses(e) 0.59% 0.59% 0.59%
---- -------- ---------
Total Annual Fund Operating Expenses(a)(e) 1.74% 2.49% 2.49%
==== ======== =========
</TABLE>
- ----------------
(a) The fund's administrator has agreed to waive a portion of its administration
fee through April 30, 2001 so that other operating expenses of the fund do not
exceed 0.50% of the first $50 million of the average daily net asset. Prior to
March 1, 2000, the fund's administrator had agreed to waive a portion of its
administration fee so that other operating expenses of the fund would 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 1.65%
for Class A Shares, 2.40% for Class B Shares and 2.40% 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) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(d) 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").
(e) Restated to reflect current fees.
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:
24 Phoenix-Engemann Value 25 Fund
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $742 $1,091 $1,464 $2,509
Class B $652 $976 $1,326 $2,642
Class C $352 $776 $1,326 $2,826
</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 B $252 $776 $1,326 $2,642
Class C $252 $776 $1,326 $2,826
</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.
Phoenix-Engemann Value 25 Fund 25
<PAGE>
Additional Investment Techniques
- ---------------------------------------------------
In addition to the Principal Investment Strategies and Risks,
the Phoenix-Engemann Balanced Return Fund ("Balanced"),
Phoenix-Engemann Focus Growth Fund ("Focus Growth"),
Phoenix-Engemann Nifty Fifty Fund ("Nifty-Fifty"),
Phoenix-Engemann Small & Mid-Cap Growth Fund ("Small & Mid-Cap")
and Phoenix-Engemann Value 25 Fund ("Value 25") each may engage
in the following investment techniques as indicated.
Fixed-Income Investments
The funds' investments may include preferred stocks, warrants
and convertible debt obligations. Focus Growth, Small & Mid-Cap
and Value 25 may invest in other debt obligations that, in the
adviser's opinion, offer the possibility of capital appreciation
over the course of approximately two or more years. Such other
debt obligations will generally include direct and indirect
obligations of the U.S. Government and its agencies, states,
municipalities and their agencies, or corporate issuers that are
rated within the four highest rating categories.
Typically, debt obligations will decrease in value when interest
rates rise. Credit risk for debt obligations generally increases
as the rating declines. Credit risk is determined at the date of
investment. If the rating declines after such date, the fund is
not obligated to sell the security. Securities with lower credit
ratings have a greater chance of principal and interest payment
default. Debt obligations with longer maturities may be subject
to price fluctuations due to interest rates, tax laws and other
general market factors.
Some fixed-income securities may be unrated. Unrated securities
may not have as broad a market as rated securities and analysis
of unrated securities is more complex, making it more difficult
for the adviser to accurately predict risk.
Convertible securities may be subject to redemption at the
option of the issuer. If a security is called for redemption,
the fund may have to redeem the security, convert it into common
stock or sell it to a third party at a price and time that is
not beneficial for the fund. In addition, securities convertible
into common stocks may have higher yields than common stocks but
lower yields than comparable non-convertible 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. In addition, not all U.S. Government
securities are backed by the full faith and credit of the United
States.
Municipal securities may not be guaranteed by the issuing body
and may be thinly traded.
Equity Investments
Nifty-Fifty may invest the remaining portion of its portfolio in
common stocks with rapidly growing earnings per share or in
common stocks of corporations that are believed to be
undervalued by other criteria used by the adviser. These may be
small and unseasoned
26 Phoenix-Engemann Funds
<PAGE>
companies. Investment return on growth stocks is more dependent
on market increases and decreases and growth stocks are more
volatile than non-growth stocks. Investment returns of
unseasoned and small capitalizations companies can be highly
volatile and these securities may, at times, be difficult to
sell.
Small & Mid-Cap may invest up to 35% of its total assets in
securities with larger capitalizations.
Foreign Investments
Small & Mid-Cap may invest up to 50% of its assets in foreign
securities, Value 25 may invest up to 25% of its assets in
foreign securities and Balanced, Focus Growth and Nifty-Fifty
each may invest up to 15% of its assets in foreign securities.
Foreign markets and currencies may not perform as well as U.S.
markets. Political and economic uncertainty as well as less
public information about foreign investments may negatively
impact the funds' portfolio. Dividend and other income payable
on foreign securities may be subject to foreign taxes. 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.
Initial Public Offerings (IPOs)
The funds may invest in IPOs, which typically have less
available public information. Investment returns from IPOs may
be highly volatile, may be subject to varying patterns of
trading volume and these securities may, at times, be difficult
to sell. In addition, from time to time, the funds may purchase
IPOs and then immediately sell them. This practice will increase
portfolio turnover rates and may increase costs to the fund,
affect fund performance, and may increase capital gains
distributions, resulting in greater tax liability to you.
Derivatives
Each of the funds may buy and sell put and call options for
hedging purposes and may also seek to increase its return by
writing covered put and call options. The funds may also buy and
sell options on domestic and foreign securities indexes, put and
call warrants issued by banks and other financial institutions,
and may enter into foreign currency exchange contracts.
Derivatives may be less liquid than other securities and the
counterparty to such transaction may not perform as expected. In
addition, hedging transactions may limit returns and premiums
paid could be lost.
Securities Lending
Each of the funds may loan portfolio securities with a value up
to 25% of its total assets. If the borrower is unwilling or
unable to return the borrowed securities when due, the fund can
suffer losses.
Mutual Fund Investing
Each of the funds may invest in other investment companies.
Assets invested in other mutual funds incur a layering of
expenses including operating costs, advisory fees and
administrative fees that you, as a shareholder in the funds,
indirectly bear.
Phoenix-Engemann Funds 27
<PAGE>
Illiquid Securities
Each of Small & Mid Cap and Value 25 may invest up to 15% of its
assets in illiquid securities and each of Balanced Return, Focus
Growth and Nifty Fifty may invest up to 10% of its assets in
illiquid securities. Illiquid and restricted securities may be
difficult to sell or may be sold only pursuant to certain legal
restrictions. Difficulty in selling securities may result in a
loss to the fund or entail expenses not normally associated with
the sale of a security.
Special Situations
Small & Mid-Cap and Value 25 each may invest up to 35% of its
assets in special situations and Balanced, Focus Growth and
Nifty Fifty each may invest up to 30% in special situations.
Special situations are created by developments, such as
liquidations, reorganizations, technological breakthroughs and
new management, that apply solely to a particular company.
Special situations may involve greater risks 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.
The funds may buy other types of securities or employ other
portfolio management techniques. Please refer to the Statement
of Additional Information for more detailed information about
these and other investment techniques of the funds.
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, 1999, Engemann had $10.9 billion in assets under
management. Engemann has been an investment adviser since 1969.
Subject to the direction of the funds' 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 funds' net assets at the
following rates.
28 Phoenix-Engemann Funds
<PAGE>
<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%
Focus 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 funds' last fiscal year, the fund paid total
management fees of $10,826,692. The ratio of management fees to
average net assets for the fiscal year ended December 31, 1999
was 0.74% for the Balanced Return Fund, 0.79% for the Focus
Growth Fund, 0.81% for the Nifty Fifty Fund, 0.94% for the Small
& Mid-Cap Growth Fund and 0.90% for the Value 25 Fund.
Portfolio Management
Roger Engemann, Jim Mair and John Tilson oversee the research
and portfolio management function at Engemann. The portfolio
managers named below are responsible for the day-to-day
management of the funds' portfolios. 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, Mair and Tilson also oversee the
research and portfolio management function for the
Phoenix-Engemann Aggressive Growth Fund and Phoenix-Engemann
Capital Growth Fund of the Phoenix Series Fund and for the
Phoenix-Engemann Small Cap Fund of the Phoenix Strategic Equity
Series Fund. Messrs. Engemann and Mair earned the right to use
the Chartered Financial Analyst designation in 1972, and Mr.
Tilson earned the right to use the Chartered Financial Analyst
designation in 1974.
Jim Mair and Lou Holtz serve as co-portfolio managers of the
Balanced Return Fund and as such are responsible for the
day-to-day management of the fund's portfolio. Mr. Mair is an
Executive Vice President of Engemann. Mr. Mair has been with
Engemann since 1983. Mr. Holtz has been with Engemann since
1996; prior to joining Engemann, he was employed as an analyst
at Marshall & Stevens from December 1992 until August 1995.
Messrs. Mair and Holtz earned the right to use the Chartered
Financial Analyst designation in 1972 and 1996, respectively.
Scott Swanson and Ned Brines serve as co-portfolio managers of
the Focus Growth Fund and as such are responsible for the
day-to-day management of the fund's portfolio. Messrs. Swanson
and Brines are both Vice Presidents of Engemann and have been
with Engemann since 1990 and 1994, respectively. Mr. Brines also
serves as co-portfolio manager of the Phoenix-Engemann
Aggressive Growth Fund and Phoenix-Engemann Capital Growth Fund
of the Phoenix Series Fund. Messrs. Swanson and Brines earned
the right to use the Chartered Financial Analyst designation in
1991 and 1997, respectively.
Phoenix-Engemann Funds 29
<PAGE>
Scott Swanson and Yossi Lipsker serve as co-portfolio managers
of the Nifty Fifty Fund and as such are responsible for the
day-to-day management of the fund's portfolio. Messrs. Swanson
and Lipsker are both Vice Presidents of Engemann and have been
with Engemann since 1990 and 1995, respectively. Mr. Lipsker
also serves as co-portfolio manager of the Phoenix-Engemann
Small Cap Fund of the Phoenix Strategic Equity Series Fund. Mr.
Swanson earned the right to use the Chartered Financial Analyst
designation in 1991.
Lou Abel and Yossi Lipsker serve as co-portfolio managers of the
Small & Mid-Cap Growth Fund and as such are responsible for the
day-to-day management of the fund's portfolio. Messrs. Abel and
Lipsker are both Vice Presidents of Engemann and have been with
Engemann since 1991 and 1995, respectively. Messrs. Abel and
Lipsker also serve as co-portfolio managers of the
Phoenix-Engemann Small Cap Fund of the Phoenix Strategic Equity
Series Fund. Mr. Abel earned the right to use the Chartered
Financial Analyst designation in 1993.
Lou Holtz serves as the portfolio manager of the Value 25 Fund
and as such is responsible for the day-to-day management of the
fund's portfolio. Mr. Holtz has been with Engemann since 1996.
Prior to joining Engemann, Mr. Holtz was employed as an analyst
at Marshall & Stevens from December 1992 until August 1995. Mr.
Holtz earned the right to use the Chartered Financial Analyst
designation in 1996.
Pricing of Fund Shares
- ---------------------------------------
How is the Share Price determined?
Each fund calculates a share price for each class of its shares.
The share price is based on the net assets of each fund and the
number of outstanding shares. In general, each 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.
Asset Value: Each fund's investments are valued at market value.
If market quotations are not available, each 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.
30 Phoenix-Engemann Funds
<PAGE>
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' 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 funds. The resulting amount for
each class is then divided by the number of shares outstanding
of that class to produce each class' net asset value per share.
The net asset value per share of each class of the funds are
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 funds will not calculate its net asset values
per share on days when the NYSE is closed for trading. If the
funds hold securities that are traded on foreign exchanges that
trade on weekends or other holidays when the funds do not price
their shares, the net asset value of the funds' shares may
change on days when shareholders will not be able to purchase or
redeem the funds' shares.
At what price are shares purchased?
All investments received by the funds' 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 funds' net asset value is calculated
following the dividend record date.
Sales Charges
- ------------------------------
What are the classes and how do they differ?
Each 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,
each fund has adopted distribution and service plans allowed
under Rule 12b-1 of the Investment Company Act of 1940 that
authorize each fund to pay distribution and service fees for the
sale of its shares and for services provided to shareholders.
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
Phoenix-Engemann Funds 31
<PAGE>
class of shares bought at the same time. Because distribution
and service fees are paid out of the funds' 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 5.75% of the
offering price (6.10% 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 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").
32 Phoenix-Engemann Funds
<PAGE>
Sales Charge you may pay to purchase Class A Shares
<TABLE>
<CAPTION>
Sales Charge as
a percentage of
--------------------
Amount of Net
Transaction Offering Amount
at Offering Price Price Invested
- --------------------------------- ---------- ---------
<S> <C> <C>
Under $50,000 5.75% 6.10%
$50,000 but under $100,000 4.75 4.99
$100,000 but under $250,000 3.75 3.90
$250,000 but under $500,000 2.75 2.83
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
</TABLE>
Deferred Sales Charge Alternative--
Class B and C Shares
Class B and C Shares are purchased without an initial sales
charge; however, shares sold within a specified time period are
subject to a declining contingent deferred sales charge ("CDSC")
at the rates listed below. The sales charge will be multiplied
by the then current market value or the initial cost of the
shares being redeemed, whichever is less. No sales charge will
be imposed on increases in net asset value or on shares
purchased through the reinvestment of income dividends or
capital gains distributions. To minimize the sales charge,
shares not subject to any charge will be redeemed first,
followed by shares held the longest time. To calculate the
amount of shares owned and time period held, all Class B Shares
purchased in any month are considered purchased on the last day
of the preceding month, and all Class C Shares are considered
purchased on the trade date.
Deferred Sales charge you may pay to sell Class B Shares
Year 1 2 3 4 5 6+
----------------------------------------------------------------
CDSC 5% 4% 3% 2% 2% 0%
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:
Year 1 2 3 4 5+
----------------------------------------------------------------
CDSC 5% 4% 3% 3% 0%
Phoenix-Engemann Funds 33
<PAGE>
Deferred Sales charge you may pay to sell Class C Shares
Year 1 2+
----------------------------------------------------------------
CDSC 1% 0%
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.
Step 2.
Your second choice will be what class of shares to buy. Each
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.
34 Phoenix-Engemann Funds
<PAGE>
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 additional shares and capital gain
distributions in cash;
o Receive dividends in cash and capital gain distributions in
additional shares; or
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>
Contact your advisor. Some advisors may charge a fee and may set
Through a financial advisor different minimum investments or limitations on buying shares.
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.
Complete a New Account Application and send it with a check payable
Through express delivery to the fund. Send them to: Boston Financial Data Services,
Attn: Phoenix Funds, 66 Brooks Drive, Braintree, MA 02184.
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 funds buy back shares at the net
asset value next determined after receipt of a redemption order
by the funds' Transfer Agent or an authorized agent. In the case
of a Class B or C Share redemption, you will be subject to the
applicable deferred sales charge, if any, for such shares.
Subject to certain restrictions, shares may be redeemed by
telephone or in writing. In addition, shares may be sold through
securities dealers, brokers or
Phoenix-Engemann Funds 35
<PAGE>
agents who may charge customary commissions or fees for their
services. The funds do not charge any redemption fees. Payment
for shares redeemed is made within seven days; 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>
Contact your advisor. Some advisors may charge a fee and may set
Through a financial advisor different minimum on redemptions of accounts.
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.
Send a letter of instruction and any share certificates (if you hold
certificate shares) to: Boston Financial Data Services, Attn: Phoenix
Through express delivery Funds, 66 Brooks Drive, Braintree, MA 02184. Be sure to include the
registered owner's name, fund and account number.
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 funds. The funds reserve
the right to pay large redemptions "in-kind" (in securities
owned by the funds rather than in cash). Large redemptions are
those over $250,000 or 1% of the funds' 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
> If you are selling shares held individually, jointly, or as
custodian under the Uniform Gifts to Minors Act or Uniform
Transfers to Minors Act.
Send a clear letter of instructions if all of these apply:
o The proceeds do not exceed $50,000.
o The proceeds are payable to the registered owner at the
address on record.
36 Phoenix-Engemann Funds
<PAGE>
Send a clear letter of instructions with a signature
guarantee when any of these apply:
o You are selling more than $50,000 worth of shares.
o The name or address on the account has changed within
the last 60 days.
o You want the proceeds to go to a different name or
address than on the account.
> If you are selling shares held in a corporate or fiduciary
account, please contact the funds' Transfer Agent at (800)
243-1574.
If required, the signature guarantee on your request must be
made by an eligible guarantor institution as defined by the
funds' 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 37
<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 carefully read the prospectus of the fund into to
which you want to exchange 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 funds reserve 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 funds' underwriter
has entered into agreements with certain market timing
firms permitting them to exchange by telephone. These
privileges are limited, and the funds' distributor has the
right to reject or suspend them.
Retirement Plans
Shares of the funds 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.
38 Phoenix-Engemann Funds
<PAGE>
Investor Services
- ---------------------------------
Investo-Matic is a systematic investment plan that allows you to
have a specified amount automatically deducted from your
checking or savings account and then deposited into your mutual
fund account. Just complete the Investo-Matic Section on the
application and include a voided check.
Systematic Exchange allows you to automatically move money from
one Phoenix Fund to another on a monthly, quarterly, 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 39
<PAGE>
Tax Status of Distributions
- -------------------------------------------
The funds plan 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
Focus 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.
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 or lost 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.
40 Phoenix-Engemann Funds
<PAGE>
Financial Highlights
- ------------------------------------
Phoenix-Engemann Balanced Return Fund
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------------------
Year Ended December 31,
1999 1998 1997 1996 1995
----------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $34.83 $29.05 $28.08 $25.39 $20.54
Income from investment operations(4)
Net investment income (loss) 0.21(1) 0.40 0.30(1) 0.29(1) 0.27(1)
Net realized and unrealized gain (loss) 6.07 8.03 4.98 4.23 5.31
-------------- ------- ------------ ------------ -----------
Total from investment operations 6.28 8.43 5.28 4.52 5.58
-------------- ------- ------------ ------------ -----------
Less distributions
Dividends from net investment income (0.16) (0.40) (0.32) (0.30) (0.29)
Dividends from net realized gains (2.13) (2.25) (3.99) (1.53) (0.44)
In excess of net investment income (0.01) -- -- -- --
In excess of net realized gains (0.01) -- -- -- --
-------------- ------- ------------ ------------ -----------
Total distributions (2.31) (2.65) (4.31) (1.83) (0.73)
-------------- ------- ------------ ------------ -----------
Change in net asset value 3.97 5.78 0.97 2.69 4.85
-------------- ------- ------------ ------------ -----------
Net asset value, end of period $38.80 $34.83 $29.05 $28.08 $25.39
============== ======= ============ ============ ===========
Total return(2) 18.10% 29.12% 18.98% 17.78% 27.18%
Ratios/supplemental data:
Net assets, end of period (thousands) $123,482 $72,620 $56,610 $51,947 $52,028
Ratio to average net assets of:
Operating expenses 1.56% 1.63% 1.7%(3) 2.0%(3) 2.1%
Net investment income (loss) 0.58% 1.15% 1.0% 1.1% 1.2%
Portfolio turnover 41% 124% 40.3% 35.1% 51.1%
</TABLE>
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------------------------------
Year Ended December 31,
1999 1998 1997 1996 1995
----------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $34.37 $28.76 $27.85 $25.26 $20.49
Income from investment operations(4)
Net investment income (loss) (0.06)(1) 0.13 0.08(1) 0.09(1) 0.08(1)
Net realized and unrealized gain (loss) 5.96 7.91 4.93 4.16 5.29
----------- ------- ------------ ------------ -----------
Total from investment operations 5.90 8.04 5.01 4.25 5.37
----------- ------- ------------ ------------ -----------
Less distributions
Dividends from net investment income -- (0.18) (0.11) (0.13) (0.16)
Dividends from net realized gains (2.13) (2.25) (3.99) (1.53) (0.44)
In excess of net realized gains (0.01) -- -- -- --
----------- ------- ------------ ------------ -----------
Total distributions (2.14) (2.43) (4.10) (1.66) (0.60)
----------- ------- ------------ ------------ -----------
Change in net asset value 3.76 5.61 0.91 2.59 4.77
----------- ------- ------------ ------------ -----------
Net asset value, end of period $38.13 $34.37 $28.76 $27.85 $25.26
=========== ======= ============ ============ ===========
Total return(2) 17.22% 28.06% 18.15% 16.82% 26.20%
Ratios/supplemental data:
Net assets, end of period (thousands) $30,580 $11,512 $7,125 $4,609 $2,721
Ratio to average net assets of:
Operating expenses 2.30% 2.38% 2.4%(5) 2.7%(5) 2.9%
Net investment income (loss) (0.16)% 0.39% 0.3% 0.3% 0.3%
Portfolio turnover 41% 124% 40.3% 35.1% 51.1%
</TABLE>
- ----------------
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratios of operating expenses to average net assets would have been 1.70% and
2.10% for the periods ended December 31, 1997 and 1996, respectively.
(4) 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.
(5) If the investment adviser had not waived fees and reimbursed expenses, the
ratios of operating expenses to average net assets would have been 2.50% and
2.80% for the periods ended December 31, 1997 and 1996, respectively.
Phoenix-Engemann Funds 41
<PAGE>
Financial Highlights (continued)
- ---------------------------------------------
Phoenix-Engemann Balanced Return Fund
<TABLE>
<CAPTION>
Class C
------------------------------------------------------------------------------------
Year Ended December 31,
1999 1998 1997 1996 1995
----------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $34.44 $28.80 $27.88 $25.28 $20.48
Income from investment operations(4)
Net investment income (loss) (0.06)(1) 0.14 0.08(1) 0.09(1) 0.07(1)
Net realized and unrealized gain (loss) 5.97 7.92 4.92 4.16 5.30
----------- -------- ------------ ------------ -----------
Total from investment operations 5.91 8.06 5.00 4.25 5.37
----------- -------- ------------ ------------ -----------
Less distributions
Dividends from net investment income -- (0.17) (0.09) (0.12) (0.13)
Dividends from net realized gains (2.13) (2.25) (3.99) (1.53) (0.44)
In excess of net realized gains (0.01) -- -- -- --
----------- -------- ------------ ------------ -----------
Total distributions (2.14) (2.42) (4.08) (1.65) (0.57)
----------- -------- ------------ ------------ -----------
Change in net asset value 3.77 5.64 0.92 2.60 4.80
----------- -------- ------------ ------------ -----------
Net asset value, end of period $38.21 $34.44 $28.80 $27.88 $25.28
=========== ======== ============ ============ ===========
Total return(2) 17.22% 28.07% 18.11% 16.79% 26.23%
Ratios/supplemental data:
Net assets, end of period (thousands) $17,852 $7,610 $5,581 $4,183 $2,809
Ratio to average net assets of:
Operating expenses 2.30% 2.38% 2.4%(3) 2.7%(3) 2.9%
Net investment income (loss) (0.16)% 0.39% 0.3% 0.3% 0.3%
Portfolio turnover 41% 124% 40.3% 35.1% 51.1%
</TABLE>
Phoenix-Engemann Focus Growth Fund
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------------
Year Ended December 31,
1999 1998 1997 1996 1995
--------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $26.82 $20.43 $21.94 $19.28 $15.40
Income from investment operations
Net investment income (loss)(1) (0.31) (0.16) (0.16) (0.14) (0.06)
Net realized and unrealized gain (loss) 13.48 7.76 3.51 4.47 4.24
--------- ------- --------- --------- --------
Total from investment operations 13.17 7.60 3.35 4.33 4.18
--------- ------- --------- --------- --------
Less distributions
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (6.57) (1.21) (4.86) (1.67) (0.30)
In excess of net realized gains (0.18) -- -- -- --
--------- ------- --------- --------- --------
Total distributions (6.75) (1.21) (4.86) (1.67) (0.30)
--------- ------- --------- --------- --------
Change in net asset value 6.42 6.39 (1.51) 2.66 3.88
--------- ------- --------- --------- --------
Net asset value, end of period $33.24 $26.82 $20.43 $21.94 $19.28
========= ======= ========= ========= ========
Total return(2) 49.74% 37.41% 16.04% 22.49% 27.16%
Ratios/supplemental data:
Net assets, end of period (thousands) $621,386 $441,146 $383,481 $426,785 $415,416
Ratio to average net assets of:
Operating expenses 1.54% 1.58% 1.6%(5) 1.6%(5) 1.6%
Net investment income (loss) (1.04)% (0.72)% (0.7)% (0.6)% (0.3)%
Portfolio turnover 56% 119% 70.6% 70.1% 65.9%
</TABLE>
- ----------------
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratios of operating expenses to average net assets would have been 2.50% and
2.80% for the periods ended December 31, 1997 and 1996, respectively.
(4) 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.
(5) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.60% and
1.60% for the periods ended December 31, 1997 and 1996, respectively.
42 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- ---------------------------------------------
Phoenix-Engemann Focus Growth Fund
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------------------------------
Year Ended December 31,
1999 1998 1997 1996 1995
--------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $25.49 $19.61 $21.40 $18.99 $15.28
Income from investment operations
Net investment income (loss)(1) (0.51) (0.32) (0.34) (0.31) (0.20)
Net realized and unrealized gain (loss) 12.74 7.41 3.41 4.39 4.21
--------- ------- --------- --------- --------
Total from investment operations 12.23 7.09 3.07 4.08 4.01
--------- ------- --------- --------- --------
Less distributions
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (6.57) (1.21) (4.86) (1.67) (0.30)
In excess of net realized gains (0.18) -- -- -- --
--------- ------- --------- --------- --------
Total distributions (6.75) (1.21) (4.86) (1.67) (0.30)
--------- ------- --------- --------- --------
Change in net asset value 5.48 5.88 (1.79) 2.41 3.71
--------- ------- --------- --------- --------
Net asset value, end of period $30.97 $25.49 $19.61 $21.40 $18.99
========= ======= ========= ========= ========
Total return(2) 48.64% 36.38% 15.13% 21.52% 26.26%
Ratios/supplemental data:
Net assets, end of period (thousands) $106,372 $65,986 $54,267 $49,444 $34,786
Ratio to average net assets of:
Operating expenses 2.29% 2.33% 2.4%(3) 2.3%(3) 2.4%
Net investment income (loss) (1.78)% (1.47)% (1.5)% (1.5)% (1.1)%
Portfolio turnover 56% 119% 70.6% 70.1% 65.9%
</TABLE>
<TABLE>
<CAPTION>
Class C
--------------------------------------------------------------------------------------
Year Ended December 31,
1999 1998 1997 1996 1995
--------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $25.49 $19.61 $21.40 $18.99 $15.28
Income from investment operations
Net investment income (loss)(1) (0.51) (0.32) (0.34) (0.31) (0.20)
Net realized and unrealized gain (loss) 12.74 7.41 3.41 4.39 4.21
--------- ------- --------- --------- --------
Total from investment operations 12.23 7.09 3.07 4.08 4.01
--------- ------- --------- --------- --------
Less distributions
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (6.57) (1.21) (4.86) (1.67) (0.30)
In excess of net realized gains (0.18) -- -- -- --
--------- ------- --------- --------- --------
Total distributions (6.75) (1.21) (4.86) (1.67) (0.30)
--------- ------- --------- --------- --------
Change in net asset value 5.48 5.88 (1.79) 2.41 3.71
--------- ------- --------- --------- --------
Net asset value, end of period $30.97 $25.49 $19.61 $21.40 $18.99
========= ======= ========= ========= ========
Total return(2) 48.64% 36.38% 15.13% 21.52% 26.26%
Ratios/supplemental data:
Net assets, end of period (thousands) $56,699 $34,580 $29,222 $27,239 $20,497
Ratio to average net assets of:
Operating expenses 2.29% 2.33% 2.4%(3) 2.3%(3) 2.4%
Net investment income (loss) (1.78)% (1.47)% (1.5)% (1.5)% (1.1)%
Portfolio turnover 56% 119% 70.6% 70.1% 65.9%
</TABLE>
- ----------------
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.40% and
2.40% for the periods ended December 31, 1997 and 1996, respectively.
Phoenix-Engemann Funds 43
<PAGE>
Financial Highlights (continued)
- ---------------------------------------------
Phoenix-Engemann Nifty Fifty Fund
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------------
Year Ended December 31,
1999 1998 1997 1996 1995
--------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $38.80 $29.21 $26.50 $22.18 $17.30
Income from investment operations
Net investment income (loss)(1) (0.41) (0.20) (0.20) (0.12) (0.05)
Net realized and unrealized gain (loss) 12.92 10.45 5.23 6.00 4.93
--------- ------- --------- --------- --------
Total from investment operations 12.51 10.25 5.03 5.88 4.88
--------- ------- --------- --------- --------
Less distributions
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (5.15) (0.66) (2.32) (1.56) --
--------- ------- --------- --------- --------
Total distributions (5.15) (0.66) (2.32) (1.56) --
--------- ------- --------- --------- --------
Change in net asset value 7.36 9.59 2.71 4.32 4.88
--------- ------- --------- --------- --------
Net asset value, end of period $46.16 $38.80 $29.21 $26.50 $22.18
========= ======= ========= ========= ========
Total return(2) 32.47% 35.13% 19.23% 26.53% 28.21%
Ratios/supplemental data:
Net assets, end of period (thousands) $321,299 $235,065 $176,378 $145,469 $122,322
Ratio to average net assets of:
Operating expenses 1.58% 1.60% 1.6%(3) 1.7%(3) 1.9%
Net investment income (loss) (0.97)% (0.61)% (0.7)% (0.4)% (0.3)%
Portfolio turnover 43% 92% 68.8% 41.9% 26.5%
</TABLE>
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------------------------------
Year Ended December 31,
1999 1998 1997 1996 1995
--------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $37.21 $28.24 $25.88 $21.85 $17.17
Income from investment operations
Net investment income (loss)(1) (0.70) (0.43) (0.42) (0.30) (0.21)
Net realized and unrealized gain (loss) 12.32 10.06 5.10 5.89 4.89
--------- ------- --------- --------- --------
Total from investment operations 11.62 9.63 4.68 5.59 4.68
--------- ------- --------- --------- --------
Less distributions
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (5.15) (0.66) (2.32) (1.56) --
--------- ------- --------- --------- --------
Total distributions (5.15) (0.66) (2.32) (1.56) --
--------- ------- --------- --------- --------
Change in net asset value 6.47 8.97 2.36 4.03 4.68
--------- ------- --------- --------- --------
Net asset value, end of period $43.68 $37.21 $28.24 $25.88 $21.85
========= ======= ========= ========= ========
Total return(2) 31.47% 34.14% 18.33% 25.60% 27.26%
Ratios/supplemental data:
Net assets, end of period (thousands) $138,626 $96,983 $68,051 $47,143 $27,462
Ratio to average net assets of:
Operating expenses 2.33% 2.35% 2.4%(4) 2.5%(4) 2.6%
Net investment income (loss) (1.72)% (1.35)% (1.4)% (1.2)% (1.0)%
Portfolio turnover 43% 92% 68.8% 41.9% 26.5%
</TABLE>
- ----------------
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.60% and
1.80% for the periods ended December 31, 1997 and 1996, respectively.
(4) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.40% and
2.50% for the periods ended December 31, 1997 and 1996, respectively.
44 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- ---------------------------------------------
Phoenix-Engemann Nifty Fifty Fund
<TABLE>
<CAPTION>
Class C
--------------------------------------------------------------------------------------
Year Ended December 31,
1999 1998 1997 1996 1995
--------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $37.21 $28.24 $25.88 $21.85 $17.17
Income from investment operations
Net investment income (loss)(1) (0.70) (0.43) (0.42) (0.30) (0.21)
Net realized and unrealized gain (loss) 12.32 10.06 5.10 5.89 4.89
--------- ------- --------- --------- --------
Total from investment operations 11.62 9.63 4.68 5.59 4.68
--------- ------- --------- --------- --------
Less distributions
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (5.15) (0.66) (2.32) (1.56) --
--------- ------- --------- --------- --------
Total distributions (5.15) (0.66) (2.32) (1.56) --
--------- ------- --------- --------- --------
Change in net asset value 6.47 8.97 2.36 4.03 4.68
--------- ------- --------- --------- --------
Net asset value, end of period $43.68 $37.21 $28.24 $25.88 $21.85
========= ======= ========= ========= ========
Total return(2) 31.47% 34.14% 18.33% 25.60% 27.26%
Ratios/supplemental data:
Net assets, end of period (thousands) $70,875 $48,401 $39,773 $26,092 $15,105
Ratio to average net assets of:
Operating expenses 2.33% 2.35% 2.4%(3) 2.5%(3) 2.6%
Net investment income (loss) (1.72)% (1.35)% (1.4)% (1.2)% (1.0)%
Portfolio turnover 43% 92% 68.8% 41.9% 26.5%
</TABLE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------------
Year Ended December 31,
1999 1998 1997 1996 1995
----------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $24.08 $21.09 $18.39 $14.90 $12.07
Income from investment operations
Net investment income (loss)(1) (0.37) (0.30) (0.31) (0.12) 0.22
Net realized and unrealized gain (loss) 20.74 3.31 5.07 7.45 2.87
----------- ------- ------- ------- --------
Total from investment operations 20.37 3.01 4.76 7.33 3.09
----------- ------- ------- ------- --------
Less distributions
Dividends from net investment income -- -- -- (0.28) (0.08)
Dividends from net realized gains -- -- (2.06) (3.56) (0.18)
In excess of accumulated net realized gains -- (0.02) -- -- --
----------- ------- ------- ------- --------
Total distributions -- (0.02) (2.06) (3.84) (0.26)
----------- ------- ------- ------- --------
Change in net asset value 20.37 2.99 2.70 3.49 2.83
----------- ------- ------- ------- --------
Net asset value, end of period $44.45 $24.08 $21.09 $18.39 $14.90
=========== ======= ======= ======= ========
Total return(2) 84.59% 14.29% 26.41% 52.37% 25.68%
Ratios/supplemental data:
Net assets, end of period (thousands) $132.996 $54,187 $27,771 $7,859 $1,742
Ratio to average net assets of:
Operating expenses(4) 1.73% 1.78% 1.80% 1.10% --%
Net investment income (loss) (1.40)% (1.39)% (1.40)% (0.70)% 1.50%
Portfolio turnover 105% 147% 313.5% 297.1% 121.4%
</TABLE>
- ----------------
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.40% and
2.50% for the periods ended December 31, 1997 and 1996, respectively.
(4) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.75%,
1.83%, 1.80%, 1.90% and 2.30% for the periods ended December 31, 1999,
1998, 1997, 1996 and 1995, respectively.
Phoenix-Engemann Funds 45
<PAGE>
Financial Highlights (continued)
- ---------------------------------------------
Phoenix-Engemann Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------------------------
Inception
Year Ended December 31, 9/18/96 to
1999 1998 1997 12/31/96
----------- ---- ---- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $23.64 $20.87 $18.35 $16.44(6)
Income from investment operations
Net investment income (loss)(1) (0.55) (0.45) (0.46) (0.32)
Net realized and unrealized gain (loss) 20.23 3.24 5.04 2.43
----------- -------- -------- -----------
Total from investment operations 19.68 2.79 4.58 2.11
----------- -------- -------- -----------
Less distributions
Dividends from net investment income -- -- -- --
Dividends from net realized gains -- -- (2.06) (0.20)
In excess of accumulated net realized gains -- (0.02) -- --
----------- -------- -------- -----------
Total distributions -- (0.02) (2.06) (0.20)
----------- -------- -------- -----------
Change in net asset value 19.68 2.77 2.52 1.91
----------- -------- -------- -----------
Net asset value, end of period $43.32 $23.64 $20.87 $18.35
=========== ======== ======== ===========
Total return(2) 83.25% 13.39% 25.49% 12.84%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $73,863 $31,631 $17,298 $1,480
Ratio to average net assets of:
Operating expenses 2.48%(3) 2.53%(3) 2.60%(3) 2.60%(4)
Net investment income (loss) (2.15)% (2.14)% (2.10)% (2.20)%(4)
Portfolio turnover 105% 147% 313.5% 297.1%
</TABLE>
<TABLE>
<CAPTION>
Class C
------------------------------------------------------------------------------
Inception
Year Ended December 31, 9/18/96 to
1999 1998 1997 12/31/96
----------- ---- ---- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $23.63 $20.87 $18.35 $17.99(6)
Income from investment operations
Net investment income (loss)(1) (0.55) (0.45) (0.47) (0.29)
Net realized and unrealized gain (loss) 20.21 3.23 5.05 0.85
----------- -------- -------- -----------
Total from investment operations 19.66 2.78 4.58 0.56
----------- -------- -------- -----------
Less distributions
Dividends from net investment income -- -- -- --
Dividends from net realized gains -- -- (2.06) (0.20)
In excess of accumulated net realized gains -- (0.02) -- --
----------- -------- -------- -----------
Total distributions -- (0.02) (2.06) (0.20)
----------- -------- -------- -----------
Change in net asset value 19.66 2.76 2.52 0.36
----------- -------- -------- -----------
Net asset value, end of period $43.29 $23.63 $20.87 $18.35
=========== ======== ======== ===========
Total return(2) 83.20% 13.34% 25.49% 3.12%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $37,584 $15,023 $8,080 $54
Ratio to average net assets of:
Operating expenses 2.48%(3) 2.53%(3) 2.60%(3) 2.60%(4)
Net investment income (loss) (2.15)% (2.14)% (2.10)% (2.20)%(4)
Portfolio turnover 105% 147% 313.5% 297.1%
</TABLE>
- ----------------
(1) Computed using average share outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.50%,
2.58% and 2.60% for the periods December 31, 1999, 1998 and 1997,
respectively.
(4) Annualized.
(5) Not 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.
46 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- ---------------------------------------------
Phoenix-Engemann Value 25 Fund
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------------------
Inception
Year Ended December 31, 12/17/96 to
1999 1998 1997 12/31/96
----------- ----- ----- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.64 $11.56 $10.11 $10.00
Income from investment operations
Net investment income (loss) 0.17 0.15 (1) 0.17 (1) --(1)
Net realized and unrealized gain (loss) 0.84 0.66 1.95 0.11
----------- ----------- ----------- --------
Total from investment operations (0.67) 0.81 2.12 0.11
----------- ----------- ----------- --------
Less distributions
Dividends from net investment income (0.16) (0.14) (0.12) --
Dividends from net realized gains (1.52) (0.59) (0.55) --
In excess of net realized gains (0.06) -- -- --
----------- ----------- ----------- --------
Total distributions (1.74) (0.73) (0.67) --
----------- ----------- ----------- --------
Change in net asset value (2.41) 0.08 1.45 0.11
----------- ----------- ----------- --------
Net asset value, end of period $9.23 $11.64 $11.56 $10.11
=========== =========== =========== ========
Total return(2) (5.75)% 7.23% 21.10% 1.10%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $13,500 $18,090 $19,518 $482
Ratio to average net assets of:
Operating expenses 1.75%(3) 1.75%(3) 1.80%(3) 1.70%(4)
Net investment income (loss) 1.32% 1.25% 1.40% 1.80%(4)
Portfolio turnover 181% 135% 87.7% --%
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------
Year Ended
December 31,
1999 1998
--------- ----
<S> <C> <C>
Net asset value, beginning of period $11.59 $11.53
Income from investment operations
Net investment income (loss) 0.07 0.06 (1)
Net realized and unrealized gain (loss) (0.83) 0.65
--------- ------------
Total from investment operations (0.76) 0.71
--------- ------------
Less distributions
Dividends from net investment income (0.08) (0.06)
Dividends from net realized gains (1.52) (0.59)
In excess of net realized gains (0.06) --
--------- ------------
Total distributions (1.66) (0.65)
--------- ------------
Change in net asset value (2.42) 0.06
--------- ------------
Net asset value, end of period $9.17 $11.59
========= ============
Total return(2) (6.46)% 6.41%
Ratios/supplemental data:
Net assets, end of period (thousands) $7,546 $10,981
Ratio to average net assets of:
Operating expenses(7) 2.50% 2.50%
Net investment income (loss) 0.56% 0.54%
Portfolio turnover 181% 135%
<CAPTION>
Class C
---------------------------------------------
Inception Year Ended Inception
1/9/97 to December 31, 1/9/97 to
12/31/97 1999 1998 12/31/97
---------- --------- ---- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.39(6) $11.58 $11.52 $10.39(6)
Income from investment operations
Net investment income (loss) 0.08 (1) 0.08 0.06 (1) 0.09 (1)
Net realized and unrealized gain (loss) 1.67 (0.84) 0.65 1.66
---------- --------- ------------ ----------
Total from investment operations 1.75 (0.76) 0.71 1.75
---------- --------- ------------ ----------
Less distributions
Dividends from net investment income (0.06) (0.08) (0.06) (0.07)
Dividends from net realized gains (0.55) (1.52) (0.59) (0.55)
In excess of net realized gains -- (0.06) -- --
---------- --------- ------------ ----------
Total distributions (0.61) (1.66) (0.65) (0.62)
---------- --------- ------------ ----------
Change in net asset value 1.14 (2.42) 0.06 1.13
---------- --------- ------------ ----------
Net asset value, end of period $11.53 $9.16 $11.58 $11.52
========== ========= ============ ==========
Total return(2) 16.97%(5) (6.49)% 6.42% 17.01%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $8,799 $3,153 $6,642 $4,893
Ratio to average net assets of:
Operating expenses(7) 2.60%(4) 2.50% 2.50% 2.60%(4)
Net investment income (loss) 0.70%(4) 0.57% 0.52% 0.80%(4)
Portfolio turnover 87.7 % 181% 135% 87.7 %
</TABLE>
- ----------------
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.84%,
1.86% and 1.80% for the periods ended December 31, 1999, 1998 and 1997,
respectively.
(4) Annualized.
(5) Not 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, January 9, 1997.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.59%,
2.61% and 2.60% for the periods ended December 31, 1999, 1998 and 1997,
respectively.
Phoenix-Engemann Funds 47
<PAGE>
Additional Information
- ---------------------------------------
Statement of Additional Information
The funds have filed a Statement of Additional Information about the
funds, dated May 1, 2000 with the Securities and Exchange Commission. The
Statement contains more detailed information about the funds. 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 funds 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,
o by writing to its Public Reference Section, Washington, DC 20549-0102
(a fee may be charged), or
o by electronic request at [email protected] (a fee may be charged).
Information about the operation of the Public Reference Room may be
obtained by calling
1-202-942-8090.
Shareholder Reports
The funds semiannually mail to shareholders detailed reports containing
information about each fund's investments. The funds' Annual Report
contains a detailed discussion of the market conditions and investment
strategies that significantly affected the funds' performance from January
1 through December 31. You may request a free copy of the funds' 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
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48 Phoenix-Engemann Funds
<PAGE>
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[BACK PAGE]
Phoenix Equity Planning Corporation ---------------
PO Box 2200 PRSRT STD
Enfield CT 06083-2200 U.S. Postage
PAID
Andrew
Associates
---------------
[LOGO] PHOENIX
INVESTMENT PARTNERS
For more information about
Phoenix mutual funds, please call
your financial representative or
contact us at 1-800-243-4361 or
www.phoenixinvestments.com.
PXP 2011 (5/00)
[recycle logo] Printed on recycled paper using soybean ink
<PAGE>
PHOENIX-ENGEMANN BALANCED RETURN FUND PHOENIX-ENGEMANN FOCUS GROWTH FUND
PHOENIX-ENGEMANN NIFTY-FIFTY FUND
PHOENIX-ENGEMANN SMALL & MID-CAP FUND
PHOENIX-ENGEMANN VALUE 25 FUND
600 North Rosemead Boulevard
Pasadena, California 91107-2133
Statement of Additional Information
May 1, 2000
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current prospectus of The
Phoenix-Engemann Funds (the "Trust"), dated May 1, 2000 (the "Prospectus"), and
should be read in conjunction with it. Such Prospectus may be obtained by
calling Phoenix Equity Planning Corporation ("Equity Planning") at (800)
243-4361 or by writing to Equity Planning at 100 Bright Meadow Boulevard, P.O.
Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
The Trust ..................................... 1
Investment Objectives and Policies ............ 1
Investment Restrictions ....................... 9
Performance Information ....................... 11
Portfolio Transactions and Brokerage .......... 13
Portfolio Turnover ............................ 14
Services of the Adviser ....................... 14
Net Asset Value ............................... 15
How to Buy Shares ............................. 16
Alternative Purchase Arrangements ............. 16
Investor Account Services ..................... 19
How To Redeem Shares .......................... 20
Tax Sheltered Retirement Plans ................ 21
Dividends, Distributions and Taxes ............ 21
The Distributor ............................... 22
Distribution Plans ............................ 24
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 2011B (5/00)
<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 five series:
Phoenix-Engemann Focus Growth Fund, Phoenix-Engemann Nifty Fifty Fund,
Phoenix-Engemann Balanced Return 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 neither of the Focus 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 and the Value 25 Fund may invest up to 25% 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 Focus Growth Fund,
the Nifty Fifty Fund and the Balanced Return Fund) may engage in certain
foreign currency exchange and option transactions. These transactions involve
investment risks and transaction costs to which a Fund would not be subject
absent the use of these strategies. If the Adviser's predictions of movements
in the direction of securities prices or currency exchange rates are
inaccurate, the adverse consequences to a Fund may leave such Fund in a worse
position than if it had not used such strategies. Risks inherent in the use of
option and foreign currency forward and futures contracts include: (1)
dependence on the Adviser's ability to correctly predict movements in the
direction of securities prices and currency exchange rates; (2) imperfect
correlation between the price of options and futures contracts and movements in
the prices of the securities or currencies being hedged; (3) the fact that the
skills needed to use these strategies are different from those needed to select
portfolio securities; (4) the possible absence of a liquid secondary market for
any particular instrument at any time; and (5) the possible need to defer
closing out certain hedged positions to avoid adverse tax consequences. Each
Fund's ability to enter into futures contracts is also limited by the
requirements of the Internal Revenue Code of 1986, as amended, (the "Code") for
qualification as a regulated investment company.
1
<PAGE>
The 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.
2
<PAGE>
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 Focus 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 Focus 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
3
<PAGE>
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 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
4
<PAGE>
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 Focus 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 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. Both the Small & Mid-Cap Growth
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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.
Index Warrants
Each Fund (except the Focus 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
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underlying index at the time of exercise. In general, if the value of the
underlying index rises above the exercise price of the index warrant, the
holder of a call warrant will be entitled to receive a cash payment from the
issuer upon exercise based on the difference between the value of the index and
the exercise price of the warrant; if the value of the underlying index falls,
the holder of a put warrant will be entitled to receive a cash payment from the
issuer upon exercise based on the difference between the exercise price of the
warrant and the value of the index. The holder of a warrant would not be
entitled to any payments from the issuer at any time when, in the case of a
call warrant, the exercise price is greater than the value of the underlying
index, or, in the case of a put warrant, the exercise price is less than the
value of the underlying index. If a Fund were not to exercise an index warrant
prior to its expiration, then such Fund would lose the amount of the purchase
price paid by it for the warrant.
A Fund will normally use index warrants in a manner similar to its use of
options on securities indices. The risks of a Fund's use of index warrants are
generally similar to those relating to its use of index options. Unlike most
index options, however, index warrants are issued in limited amounts and are
not obligations of a regulated clearing agency, but are backed only by the
credit of the bank or other institution which issues the warrant. Also, index
warrants generally have longer terms than index options. Although each Fund
will normally invest only in exchange listed warrants, index warrants are not
likely to be as liquid as certain index options backed by a recognized clearing
agency. In addition, the terms of index warrants may limit a Fund's ability to
exercise the warrants at such time, or in such quantities, as the Fund would
otherwise wish to do.
Options
Each Fund may buy and sell put and call options for hedging purposes, and
may also seek to increase its return by writing covered put and call options on
securities it owns or in which it may invest. A Fund receives a premium from
writing a put or call option, which increases such Fund's return if the option
expires unexercised or is closed out at a net profit. When a Fund writes a call
option, it gives up the opportunity to profit from any increase in the price of
the underlying security above the exercise price of the option and the premium
received; when it writes a put option, a Fund takes the risk that it will be
required to purchase the underlying security form the option holder at a price
above the current market price of the security and the premium received. A Fund
may terminate an option that it has written prior to its expiration by entering
into a closing purchase transaction in which it purchases an option having the
same terms as the option written. The aggregate value of the securities
underlying options may not exceed 25% of a Fund's assets. Each Fund's use of
these strategies also may be limited by applicable law.
Options on Securities Indices and Put and Call Warrants
Each Fund may buy and sell options on domestic and foreign securities
indices for hedging purposes. A securities index represents a numerical measure
of the changes in value of the securities comprising the index. An option on a
securities index gives the holder the right, in return for the premium paid for
the option, to buy (in the case of a call option) or sell (in the case of a put
option) units of a particular index at an agreed price during the term of the
option. The holder of the option does not receive the right to take or make
delivery of the actual securities making up the index, but has the right
instead to receive a cash settlement amount based on the change, if any, in the
value of the index during the term of the option.
Depending on the change in the value of the underlying index during the
term of the option, the holder may either exercise the option at a profit or
permit the option to expire worthless. For example, if a Fund were to sell a
call option on an index and the value of the index were to increase during the
term of the option, the holder of the index would likely exercise the option
and receive a cash payment from such Fund. In, on the other hand, the value of
the index were to decrease, the option would likely expire worthless, and such
Fund would realize a profit in the amount of the premium received by it when it
sold the option (less and transaction costs). Each Fund will only purchase or
sell options on a securities index to the extent that it holds securities in
its portfolio whose price changes, in the Adviser's judgment, should correlate
closely with changes in the index. No Fund will purchase or sell options on
securities indices if as a result of the premiums paid and premiums received by
a Fund on outstanding options would exceed 5% of such Fund's net assets.
Each of the Funds may also purchase put and call warrants issued by banks
and other financial institutions, whose values are based on the values from
time to time of one or more foreign securities indices. Each Fund's use of such
warrants would be similar to its use of options on securities indices.
Securities Loans
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.
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Forward Commitments
Each Fund (except the Focus 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
Both the Small & Mid-Cap Growth, and Value 25 Funds may invest up to 15%
and each of the Focus Growth, Nifty Fifty and Balanced Return Funds may invest
up to 10% of the value of its net assets in securities as to which a liquid
trading market does not exist, provided such investments are consistent with
such Fund's objective and other policies. Such securities may include
securities that are not readily marketable, such as certain securities that are
subject to legal or contractual restrictions on resale, repurchase agreements
providing for settlement in more than seven days after notice, certain options
traded in the over-the-counter market and securities used to cover such
options. As to these securities, a Fund is subject to a risk that should the
Fund desire to sell them when a ready buyer is not available at a price the
Fund deems representative of their value, the value of the Fund could be
adversely affected. When purchasing securities that have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), and are not
readily marketable, each Fund will endeavor to obtain the right to registration
at the expense of the issuer. Generally, there will be a lapse of time between
a Fund's decision to sell any such security and the registration of the
security permitting sale. During any such period, the price of the securities
will be subject to market fluctuations. However, if a substantial market of
qualified institutional buyers develops pursuant to Rule 144A under the 1933
Act for certain unregistered securities held by a Fund, such Fund intends to
treat such securities as liquid securities in accordance with procedures
approved by the Trust's Board of Trustees. Because it is not possible to
predict with any assurance how the market for restricted securities pursuant to
Rule 144A will develop, the Board of Trustees has directed the Adviser to
monitor carefully any Fund investments in such securities with particular
regard to trading activity, availability or reliable price information and
other relevant information. To the extent that, for a period of time, qualified
institutional buyers cease purchasing such restricted securities pursuant to
Rule 144A, a Fund's investing in such securities may have the effect of
increasing the level of illiquidity in the Fund's portfolio during such period.
Repurchase Agreements
Each Fund may, for temporary defensive purposes, invest its assets in
eligible U.S. Government securities and concurrently enter into repurchase
agreements with respect to such securities. Under such agreements, the seller
of the security agrees to repurchase it at a mutually agreed upon time and
price. The repurchase price may be higher than the purchase price, the
difference being income to the Fund, or the purchase and repurchase prices may
be the same, with interest at a stated rate due to the Fund together with the
repurchase price on repurchase. In either case, the income to the Fund is
unrelated to the interest rate on the U.S. Government security itself. Such
repurchase agreements will be made only with banks with assets of $1 billion or
more that are insured by the Federal Deposit Insurance Corporation or with
Government securities dealers recognized as primary dealers by the Federal
Reserve Board and registered as broker-dealers with the SEC or exempt from such
registration. In addition, to the extent a Fund has over $10 million in assets,
the Fund will limit the amount of its transactions with any one bank or
Government securities dealer to a maximum of 25% of its assets. Any repurchase
agreements entered into by a Fund will be of short duration, from overnight to
one week, although the underlying securities generally have longer maturities.
No Fund may enter into a repurchase agreement with more than seven days to
maturity if, as a result, more than 10% of the value of the Growth, Nifty Fifty
or Balanced Return Funds' or 15% of the value of the Global Growth, Small &
Mid-Cap Growth or Value 25 Funds' net assets would be invested in such
repurchase agreements and other illiquid assets.
For purposes of the Investment Company Act of 1940 (the "1940 Act"), a
repurchase agreement is deemed to be a loan from a Fund to the seller of the
U.S. Government security subject to the repurchase agreement. In the event of
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the U.S. Government security before its repurchase under a repurchase
agreement, a Fund may encounter delays and incur costs before being able to
sell the security. Delays may involve loss of interest or a decline in price of
the U.S. Government security. If a court characterizes the transaction as a
loan and the Fund has not perfected a security interest in the U.S. Government
security, the Fund may be required to return the security to the seller's
estate and be treated as an unsecured creditor of the seller. As an unsecured
creditor, the Fund would be at risk of losing some or all of the principal and
income involved in the transaction. As with any unsecured debt instrument
purchased for a Fund, the Adviser seeks to minimize the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligor, in this
case the seller of the U.S. Government security.
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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 may invest in
special situations that the Adviser believes present opportunities for capital
growth. Such situations most typically include corporate restructurings,
mergers, and tender offers.
A special situation arises when, in the opinion of the Adviser, the
securities of a particular company will, within a reasonably estimable period
of time, be accorded market recognition at an appreciated value solely by
reason of a development particularly or uniquely applicable to that company and
regardless of general business conditions or movements of the market as a
whole. Developments creating special situations might include, among others,
the following: liquidations, reorganizations, recapitalizations, mergers, or
tender offers; material litigation or resolution thereof; technological
breakthroughs; and new management or management policies. Although large and
well-known companies may be involved, special situations often involve much
greater risk than is inherent in ordinary investment securities.
Unseasoned Companies
As a matter of operating policy, the Funds may invest to a limited extent
in securities of unseasoned companies and new issues. The Adviser regards a
company as unseasoned when, for example, it is relatively new to or not yet
well established in its primary line of business. Such companies generally are
smaller and younger than companies whose shares are traded on the major stock
exchanges. Accordingly, their shares are often traded over-the-counter and
their share prices may be more volatile than those of larger, exchange-listed
companies. In order to avoid undue risks, a Fund will not invest more than 5%
of its total assets in securities of any one company with a record of fewer
than three years' continuous operation (including that of predecessors).
Investments by the Nifty Fifty Fund and the Balanced Return Fund in the
securities of unseasoned companies may not exceed 5% and 30% respectively of
each Fund's total assets.
New Issues
The Funds may invest in new issues. A new issue may be an initial public
offering by a previously private company. There may be less public information
about the company and the company may have a limited operating history and
rapidly changing fundamental prospects. This may make investment returns of new
issues highly volatile. New issues may also be subject to varying patterns of
trading volume and may, at times, be difficult to sell.
INVESTMENT RESTRICTIONS
The following restrictions have been adopted as matters of fundamental or
operating policy for the Funds. Fundamental policies may not be changed without
the approval of a majority of the Fund's outstanding voting securities and
approval of the Board of Trustees. Operating policies can be changed by vote of
the Board of Trustees. The Funds may not:
(1) With respect to 75% of a Fund's total assets, purchase any security
(other than obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities) if, as a result, more than 5% of the value of
the Fund's total assets would be invested in securities of any one issuer. This
limitation does not apply with respect to the remaining 25% of a Fund's total
assets (except that neither the Focus 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 Small & Mid-Cap Growth and Value 25 Funds'
total assets and 100% of the Focus 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 Focus 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
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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 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 Focus Growth, Nifty
Fifty, Balanced Return 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 Focus Growth, Nifty Fifty and Balanced Return Funds may purchase marketable
securities of companies or partnerships holding such interests. [Fundamental
Policy for the 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 Focus Growth, Nifty Fifty and Balanced Return Funds' and more
than 15% of the 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]
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(19) With respect to the Focus Growth Fund, the Nifty Fifty Fund and the
Balanced Return Fund, purchase or sell financial futures, commodities or
commodities contracts, including futures contracts on physical commodities.
[Fundamental Policy]
(20) Issue senior securities, as such term is defined in the Investment
Company Act of 1940, as amended, except as otherwise permitted under these
fundamental investment restrictions. [Fundamental Policy]
Each Fund, notwithstanding any other investment policy or limitation
(whether or not fundamental), may invest all of its assets in the securities or
beneficial interests of a single pooled investment fund having substantially
the same objective, policies and limitations as such Fund.
Some of the practices referred to above are subject to restrictions
contained in the 1940 Act. In addition to the restrictions described above, a
Fund may from time to time agree to additional investment restrictions for
purposes of compliance with the securities laws of those states and foreign
jurisdictions where such Fund intends to offer or sell its shares. Any such
additional restrictions that would have a material bearing on a Fund's
operations will be reflected in the Prospectus or a Prospectus supplement and
may require shareholder approval.
PERFORMANCE INFORMATION
The Funds may, from time to time, include total return in advertisements
or reports to shareholders or prospective investors. Performance information in
advertisements and sales literature may be expressed as a yield of a class or
Fund and as a total return of any Class or Fund.
Standardized quotations of average annual total return for each Class of
Shares of a Fund will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment in either Class A, Class B, or
Class C Shares of a Fund over periods of 1, 5 and 10 years or up to the life of
the class of shares of a Fund, calculated for each class separately pursuant to
the formula below. All total return figures reflect the deduction of a
proportional share of each class's expenses (on an annual basis), deduction of
the maximum initial sales load in the case of Class A Shares and the maximum
contingent deferred sales charge applicable to a complete redemption of the
investment in the case of Class B and C Shares, and assume that all dividends
and distributions are reinvested when paid.
P(T + 1)n = ERV
where P = a hypothetical initial payment of $1,000,
T = average annual total return,
n = number of years,
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the 1, 5, or 10 year periods at the end of
the 1, 5, or 10 year periods (or fractional portion thereof).
The Funds may from time to time include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc.
Additionally, the Funds may compare performance results to other investment or
savings vehicles (such as certificates of deposit) and may refer to results
published in various publications such as Changing Times, Forbes, Fortune,
Money, Barrons, Business Week, Investor's Daily, Stanger's Mutual Fund Monitor,
The Stanger Register, Stanger's Investment Adviser, The Wall Street Journal,
The New York Times, Consumer Reports, Registered Representative, Financial
Planning, Financial Services Weekly, Financial World, U.S. News and World
Report, Standard & Poor's The Outlook, and Personal Investor. The Funds may
from time to time illustrate the benefits of tax deferral by comparing taxable
investments to investments made through tax-deferred retirement plans. The
total return may also be used to compare the performance of the Funds against
certain widely acknowledged outside standards or indices for stock and bond
market performance, such as the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500"), Russell 2000 Index, Morgan Stanley Capital International
All Country World Index, Dow Jones Industrial Average, Europe Australia Far
East Index (EAFE), Consumer Price Index, Lehman Brothers Corporate Index and
Lehman Brothers T-Bond Index.
Advertisements, sales literature and other communications may contain
information about the Funds and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Funds to
respond quickly to changing market and economic conditions. From time to time
the Funds may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Funds may
separate its cumulative and average annual returns into income and capital
gains components.
Performance information reflects only the performance of a hypothetical
investment in each class during the particular time period on which the
calculations are based. Performance information should be considered in light
of each Fund's investment objectives and policies, characteristics and quality
of the portfolio, and the market condition during the given time period, and
should not be considered as a representation of what may be achieved in the
future.
11
<PAGE>
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 5.75% 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, 1999 were as follows:
<TABLE>
<CAPTION>
One Five Ten Inception(2) to
Year Years Years December 31, 1999
Class A(1) ----------- ----------- ----------- ------------------
<S> <C> <C> <C> <C>
Balanced Return Fund 11.31% 20.70% 13.74% N/A
Focus Growth Fund 41.13% 28.51% 19.73% N/A
Nifty Fifty Fund 24.86% 26.69% N/A 21.17%
Small & Mid-Cap Growth Fund(4) 73.98% 36.93% N/A 40.02%
Value 25 Fund -11.17% N/A N/A 5.19%
</TABLE>
<TABLE>
<CAPTION>
One Five Inception(3) to
Year Years December 31, 1999
Class B ----------- ----------- ------------------
<S> <C> <C> <C>
Balanced Return Fund 13.22% 21.19% 16.42%
Focus Growth Fund 44.64% 29.06% 22.91%
Nifty Fifty Fund 27.47% 27.24% 22.44%
Small & Mid-Cap Growth Fund 79.25% N/A 38.60%
Value 25 Fund -9.63% N/A 5.19%
</TABLE>
<TABLE>
<CAPTION>
One Five Inception(3) to
Year Years December 31, 1999
Class C ----------- ----------- ------------------
<S> <C> <C> <C>
Balanced Return Fund 17.22% 21.19% 16.42%
Focus Growth Fund 48.64% 29.06% 22.91%
Nifty Fifty Fund 31.47% 27.24% 22.44%
Small & Mid-Cap Growth Fund 83.20% N/A 35.80%
Value 25 Fund -6.49% N/A 6.00%
</TABLE>
(1) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(2) The inception dates of the Funds are as follows:
Balanced Return Fund--June 8, 1987
Focus Growth Fund--June 24, 1986
Nifty Fifty Fund--December 17, 1990
Small & Mid-Cap Growth Fund--October 10, 1994
Value 25 Fund--December 17, 1996
(3)The inception date for Class B and Class C shares for the Focus Growth, Nifty
Fifty and Balanced Return Funds was January 3, 1994; the inception date for
the Class B shares for the Small & Mid-Cap Growth Funds* was September 18,
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.
(4)Prior to September 1, 1996, 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 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
12
<PAGE>
dividend income received by a Fund and distributed to the shareholders. All
calculations of a Class's distribution rate are based on the distributions per
share which are declared, but not necessarily paid, during the fiscal year. The
distribution rate for a Class is determined by dividing the distributions
declared during the period by the maximum offering price per share of the Class
on the last day of the period and annualizing the resulting figure. The
distribution rate does not reflect capital appreciation or depreciation in the
price of a Fund's shares and should not be confused with yield or considered to
be a complete indicator of the return to the investor on his investment.
Investors should note that the investment results of each Fund will
fluctuate over time, and any presentation of a Fund's current yield, total
return or distribution rate for any period should not be considered as a
representation of what an investment may earn or what an investor's total
return, yield or distribution rate may be in any future period.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser places orders for the purchase and sale of securities,
supervises their execution and negotiates brokerage commissions on behalf of
the Funds. It is the practice of the Adviser to seek the best prices and
execution of orders and to negotiate brokerage commissions which in the
Adviser's opinion are reasonable in relation to the value of the brokerage
services provided by the executing broker. Brokers who have executed orders for
the Funds are asked to quote a fair commission for their services. If the
execution is satisfactory and if the requested rate approximates rates
currently being quoted by the other brokers selected by the Adviser, the rate
is deemed by the Adviser to be reasonable. Brokers may ask for higher rates of
commission if all or a portion of the securities involved in the transaction
are positioned by the broker, if the broker believes it has brought the Funds
an unusually favorable trading opportunity, or if the broker regards its
research services as being of exceptional value, and payment of such
commissions is authorized by the Adviser after the transaction has been
consummated. If the Adviser more than occasionally differs with the broker's
appraisal of opportunity or value, the broker would not be selected to execute
trades in the future. The Adviser believes that the Funds benefit with a
securities industry comprised of many and diverse firms and that the long-term
interest of shareholders of the Funds is best served by brokerage policies
which include paying a fair commission rather than seeking to exploit its
leverage to force the lowest possible commission rate. The primary factors
considered in determining the firms to which brokerage orders are given are the
Adviser's appraisal of: the firm's ability to execute the order in the desired
manner; the value of research services provided by the firm; and the firm's
attitude toward and interest in mutual funds in general including the sale of
mutual funds managed and sponsored by the Adviser. The Adviser does not offer
or promise to any broker an amount or percentage of brokerage commissions as an
inducement or reward for the sale of shares of the Funds. Over-the-counter
purchases and sales are transacted directly with principal market-makers except
in those circumstances where in the opinion of the Adviser better prices and
execution are available elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller firms
in general tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor
federal, state, local and foreign political developments; many of the brokers
also provide access to outside consultants. The outside research assistance is
particularly useful to the Adviser's staff since the brokers as a group tend to
monitor a broader universe of securities and other matters than the Adviser's
staff can follow. In addition, it provides the Adviser with a diverse
perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to the Adviser and is available
for the benefit of other accounts advised by the Adviser and its affiliates and
not all of this information will be used in connection with the Funds. While
this information may be useful in varying degrees and may tend to reduce the
Adviser's expenses, it is not possible to estimate its value and in the opinion
of the Adviser it does not reduce the Adviser's expenses in a determinable
amount. The extent to which the Adviser makes use of statistical, research and
other services furnished by brokers is considered by the Adviser in the
allocation of brokerage business but there is no formula by which such business
is allocated. The Adviser does so in accordance with its judgment of the best
interest of the Funds and shareholders.
A high rate of portfolio turnover involves a correspondingly higher amount
of brokerage commissions and other costs which must be borne directly by the
Funds and indirectly by shareholders.
Stolper & Company, Inc., of which Michael Stolper, a former Trustee of the
Trust and a Director of Pasadena Capital Corporation, is the sole shareholder,
has in the past received brokerage business from the Adviser. Stolper &
Company, Inc. assists its clients in selecting an investment adviser and offers
a service measuring the performance of investment advisers, in return for which
the client pays cash or directs the investment adviser to execute a portion of
the brokerage business through Bear, Stearns & Company for the credit of
Stolper & Company, Inc. Stolper & Company, Inc. and the Adviser anticipate that
such brokerage allocation from the Adviser will continue. However, neither
Michael Stolper nor Stolper & Company, Inc. will receive or participate in
commissions 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
13
<PAGE>
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 Adviser may use its broker/dealer affiliates, or other firms that sell
shares of the Funds, to buy and sell securities for the Funds, provided they
have the execution capability and that their commission rates are comparable to
those of other unaffiliated broker/dealers. Directors of PXP Securities Corp.
or its affiliates receive indirect benefits from the Funds as a result of its
usual and customary brokerage commissions that PXP Securities Corp. may receive
for acting as broker to the Funds in the purchase and sale of portfolio
securities. The investment advisory agreement does not provide for a reduction
of the advisory fee by any portion of the brokerage fees generated by portfolio
transactions of the Funds that PXP Securities Corp. may receive.
For the fiscal years ended December 1997, 1998 and 1999, brokerage
commissions paid by the Trust on portfolio transaction totaled $3,928,310,
$2,322,602 and $1,257,738 respectively. For the fiscal years ended December 31,
1997, 1998 and 1999, no brokerage commissions were paid to affiliates for
portfolio transactions. Brokerage commissions of $54,306 paid during the fiscal
year ended December 31, 1999, were paid on portfolio transactions aggregating
$63,352,682 executed by brokers who provided research and other statistical
information.
PORTFOLIO TURNOVER
The Funds pay brokerage commissions for purchases and sales of portfolio
securities. A high rate of portfolio turnover generally involves a
correspondingly greater amount of brokerage commissions and other costs which
must be borne directly by a Fund and thus indirectly by its shareholders. It
may also result in the realization of larger amounts of short-term capital
gains, which are taxable to shareholders as ordinary income. If such rate of
turnover exceeds 100%, the Funds will pay more in brokerage commissions than
would be the case if they had lower portfolio turnover rates. Historical
turnover rates can be found under the heading "Financial Highlights" located in
the Trust's Prospectus. Portfolio turnover rates varied between 1997 and 1998
due to market conditions and the various investment strategies employed by the
funds' managers.
SERVICES OF THE ADVISER
The Adviser, Roger Engemann & Associates, Inc., ("REA" or the "Adviser")
has entered into an Investment Management Agreement (the "Management
Agreement") with the Trust, on behalf of each series of the Trust, including
the Funds, to provide investment advice and investment management services with
respect to the assets of each Fund, provide personnel, office space, facilities
and equipment as may be needed by the Funds in their day-to-day operations and
provide the officers of the Trust. The Management Agreement has been approved
by the Board of Trustees of the Trust with respect to each Fund, including a
majority of the Trustees who are not a party to the Management Agreement or
interested persons of a party to the Management Agreement, and by a majority of
the outstanding voting shares of each Fund at a special meeting of shareholders
on August 28, 1997.
The Management Agreement continues from year to year, provided that such
continuance is specifically approved annually by a vote of a majority of each
Fund's outstanding voting securities or by the Board of Trustees, and by the
vote of a majority of the Trustees who are not parties to the Management
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
REA is an indirect subsidiary of Phoenix Investment Partners, Ltd.
("PXP"). PXP is a publicly-traded, independent registered investment advisory
firm, and has served investors for over 70 years. As of December 31, 1999, it
had $64.6 billion in assets under management through its investment partners:
Aberdeen Fund Managers, Inc. (Aberdeen) in Aberdeen, London, Singapore and Fort
Lauderdale; Duff & Phelps Investment Management Co. (Duff & Phelps) in Chicago
and Cleveland; Roger Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca
Capital Management LLC (Seneca) in San Francisco and Zweig/Glaser Advisers LLC
in New York; and Phoenix Investment Counsel, Inc. (Goodwin, Hollister, and
Oakhurst divisions) in Hartford, Sarasota, and Scotts Valley, CA, respectively.
Except as set forth in the separate Administration Agreement discussed
under "The Distributor: Administration Agreement", 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--
14
<PAGE>
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>
Balanced Return Fund 0.80% 0.70% 0.60%
Focus 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>
For services to the Trust during the fiscal years ended December 31, 1997,
1998 and 1999, the Trust paid management fees (approximately) of $6,614,000,
$8,380,000 and $10,826,692, respectively. Of these totals, the adviser received
fees from each Fund as follows:
<TABLE>
<CAPTION>
Fund 1997 1998 1999
- ---------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Balanced Return Fund $551,000 $603,000 $931,902
Focus Growth Fund $3,490,000 $3,842,000 $4,836,987
Nifty Fifty Fund $1,967,000 $2,617,000 $3,571,794
Small & Mid-Cap Fund $288,000 $741,000 $1,205,720
Value 25 Fund $175,000 $330,000 $280,289
</TABLE>
The Management Agreement is terminable with respect to each Fund on 60-days'
written notice by vote of a majority of such Fund's outstanding shares, by vote
of a majority of the Board of Trustees, or by the Adviser on 60-days' written
notice. The Management Agreement automatically terminates in the event of its
assignment as defined in the 1940 Act. The Management Agreement provides that
in the absence of willful misfeasance, bad faith, or gross negligence on the
part of the Adviser, or of reckless disregard of its obligations thereunder,
the Adviser is not liable for any action or failure to act in accordance with
its duties.
The Trust, its Adviser and Distributor have each adopted a Code of Ethics
pursuant to Rule 17-j1 under the Investment Company Act of 1940. Personnel
subject to the Code of Ethics may purchase and sell securities for their
personal accounts, including securities that may be purchased, sold or held by
the Funds, subject to certain restrictions and conditions. Generally, personal
securities transactions are subject to pre-clearance procedures, reporting
requirements and holding period rules. The Codes also restrict personal
securities transactions in private placements, initial public offerings and
securities in which the Funds have a pending order.
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,
Presidents' 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.
15
<PAGE>
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.
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.
16
<PAGE>
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 Focus 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;
(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)
401(k) participants in the Merrill Lynch Daily K Plan (the "Plan") if the Plan
has at least $3 million in assets or 500 or more eligible employees; (20)
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 (20) 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
17
<PAGE>
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 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) from the Merrill Lynch Daily K Plan ("Plan") invested in Class B
Shares, on which such shares the Distributor has not paid the dealer the Class
B sales commission; (f) based on the exercise of exchange privileges among
Class B and C Shares of this or any other Affiliated Phoenix Fund; (g) 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 (h) 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
18
<PAGE>
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. Broker/dealers may impose their own restrictions on limits on
accounts held through the broker/dealer. Please consult your broker/dealer for
account restrictional limit information.
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 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.
Invest-by-Phone. This expedited investment service allows a shareholder to
make an investment in an account by requesting a transfer of funds from the
balance of their bank account. Once a request is phoned in, Equity Planning
will initiate the transaction by wiring a request for monies to the
shareholder's commercial bank, savings bank or credit union via Automated
Clearing House (ACH). The shareholder's bank, which must be an ACH member, will
in turn forward the monies to Equity Planning for credit to the shareholder's
account. ACH is a computer based clearing and settlement operation established
for the exchange of electronic transactions among participating depository
institutions.
To establish this service, please complete an Invest-by-Phone Application
and attach a voided check if applicable. Upon Equity Planning's acceptance of
the authorization form (usually within two weeks) shareholders may call toll
free (800) 367-5877 prior to 3:00 p.m. (New York time) to place their purchase
request. Instructions as to the account number and amount to be invested must
be communicated to Equity Planning. Equity Planning will then contact the
shareholder's bank via ACH with appropriate instructions. The purchase is
normally credited to the shareholder's account the day following receipt of the
verbal instructions. The Fund may delay the mailing of a check for redemption
proceeds of Fund shares purchased with a check or via Invest-by-Phone
19
<PAGE>
service until the Fund has assured itself that good payment has been collected
for the purchased of the shares, which may take up to 15 days. The Fund and
Equity Planning reserve the right to modify or terminate the Invest-by-Phone
service for any reason or to institute charges for maintaining an
Invest-by-Phone account.
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.
By Mail
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds, c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written
request to Equity Planning that the Fund redeem the shares.
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.
20
<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.
Merrill Lynch Daily K Plan
Class A Shares of a Fund are made available to Merrill Lynch Daily K Plan
(the "Plan") participants at NAV without an initial sales charge if:
(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch and,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in
broker/dealer funds not advised or managed by Merrill Lynch Asset
Management L.P. ("MLAM") that are made available pursuant to a Service
Agreement between Merrill Lynch and the fund's principal underwriter or
distributor and in funds advised or managed by MLAM (collectively, the
"Applicable Investments");
(ii) The Plan is recordkept on a daily valuation basis by an independent
recordkeeper whose services are provided through a contract or alliance
arrangement with Merrill Lynch, and, on the date the Plan Sponsor signs
the Merrill Lynch Recordkeeping Services Agreement, the Plan has $3
million or more in assets, excluding money market funds, invested in
Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by a Merrill
Lynch plan conversion manager, on the date the Plan Sponsor signs the
Merrill Lynch Recordkeeping Service Agreement.
Alternatively, Class B Shares of a Fund are made available to Plan
participants at NAV without a CDSC if the Plan conforms with the requirements
for eligibility set for in (i) through (iii) above but either does not meet the
$3 million asset threshold or does not have 500 or more eligible employees.
Plans recordkept on a daily basis by Merrill Lynch on an independent
recordkeeper under a contract with Merrill Lynch that are currently investing
in Class B Shares of a Fund convert to Class A Shares once the Plan has reached
$5 million invested in Applicable Investments, or after the normal holding
period of seven years from the initial date of purchase.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
Each Fund intends to elect to be treated as a regulated investment company
("RIC") and qualify annually as such under certain provision of the Internal
Revenue Code (the "Code"). Under such provisions, each Fund will not be subject
to federal income tax on such part of its ordinary income and net realized
capital gains which it distributes to shareholders provided it meets certain
distribution requirements. To qualify for treatment as a regulated investment
company, each Fund must, among other things: (a) derive in each taxable year at
least 90% of its gross income from dividends, interest and gains from the sale
or other disposition of securities; and (b) meet certain diversification
requirements imposed under the Code at the end of each quarter of the taxable
year.
The Code imposes a 4% nondeductible excise tax on a regulated investment
company if it does not distribute to its shareholders during the calendar year
an amount equal to 98% of the Fund's net ordinary income, with certain
adjustments, for such calendar year, plus 98% of each Fund' net capital gains
for the 12-month period ending on October 31 of such calendar year. In
addition, an amount equal to any undistributed investment company taxable
income or capital gain net income from the previous calendar year must also be
distributed to avoid the excise tax. The excise tax is imposed on the amount by
which the regulated investment
21
<PAGE>
company does not meet the foregoing distribution requirements. If each Fund has
taxable income that would be subject to the excise tax, each Fund intends to
distribute such income so as to avoid payment of the excise tax.
Under another provision of the Code, any dividend declared by each Fund to
shareholders of record in October, November and December of any year will be
deemed to have been received by, and will be taxable to shareholders as of
December 31 of such year, provided that the dividend is actually paid by each
Fund before February 1, of the following year.
The Funds' policy is to distribute to its shareholders substantially all
investment company taxable income as defined in the Code and any net realized
capital gains for each year and consistent therewith to meet the distribution
requirements of Part I of subchapter M of the Code. The Funds intend to meet
the other requirements of Part I of subchapter M, including the requirements
with respect to diversification of assets and sources of income, so that the
Funds will pay no taxes on net investment income and net realized capital gains
distributed to shareholders.
Under certain circumstances, the sales charge incurred in acquiring shares
of the Funds may not be taken into account in determining the gain or loss on
the disposition of those shares. This rule applies where shares of the Funds
are disposed of within 90 days after the date on which they were acquired and
new shares of a regulated investment company are acquired without a sales
charge or at a reduced sales charge. In that case, the gain or loss realized on
the disposition will be determined by excluding from the tax basis of the
shares disposed of all or a portion of the sales charge incurred in acquiring
those shares. This exclusion applies to the extent that the otherwise
applicable sales charge with respect to the newly acquired shares is reduced as
a result of the shareholder having incurred a sales charge initially. The
portion of the sales charge affected by this rule will be treated as a sales
charge paid for the new shares.
Distributions by the Funds reduce the net asset value of the Funds'
shares. Should a distribution reduce the net asset value of a share below a
shareholder's cost for the shares, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution by a Fund. The
price of shares purchased at that time may include the amount of the
forthcoming distribution, but the distribution generally would be taxable to
them.
Transactions in options on stock indices are subject to the Code rules of
section 1256. Pursuant to these rules, such options, whether sold by the Funds
during a taxable year or held by the Funds at the close of its taxable year,
will be treated as if sold for their market value, with 40% of any resulting
gain or loss treated as short-term and 60% long-term.
A high portfolio turnover rate may result in the realization of larger
amounts of short-term gains, which are taxable to shareholders as ordinary
income.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS Regulations, the Funds may be required to withhold 31% of
all reportable payments including any taxable dividends, capital gains
distributions or share redemption proceeds, for an account which does not have
a taxpayer identification 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
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<PAGE>
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 fiscal years ended December
31, 1997, 1998 and 1999, purchasers of shares of the Funds paid aggregate sales
charges of $2,038,126, $2,334,408 and $2,131,505, respectively, of which PFSI
and/or the Distributor received net commissions of $897,831, $707,783 and
$847,173, respectively, for its services, the balance being paid to dealers.
For the fiscal year ended December 31, 1999, the Distributor received net
commissions of $165,377 for Class A Shares and deferred sales charges of
$710,308 for Class B and Class C Shares.
Dealer Concessions
Dealers with whom the Distributor has entered into sales agreements
receive a discount or commission as set forth below.
<TABLE>
<CAPTION>
Dealer Discount
Sales Charge Sales Charge or Agency Fee
Amount of Transaction as Percentage as Percentage as Percentage of
at Offering Price of Offering Price of Amount Invested Offering Price
- ------------------------------- ------------------- -------------------- -----------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.25%
$50,000 but under $100,000 4.75% 4.99% 4.25%
$100,000 but under $250,000 3.75% 3.90% 3.25%
$250,000 but under $500,000 2.75% 2.83% 2.25%
$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. This sales commission will not be paid to
dealers for sales of Class B or Class C Shares purchased by 401(k) participants
of the Merrill Lynch Daily K Plan due to a waiver of the CDSC for these Plan
participants' purchase. 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. Such fees are in
addition to the sales commissions referenced above and may be based upon the
amount of sales of fund shares by a dealer; the provision of assistance in
marketing of fund shares; access to sales personnel and information
dissemination services; provision of recordkeeping and administrative services
to qualified employee benefit plans; and other criteria as established by the
Distributor. 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. From its own
resources, the Distributor intends to pay the following additional compensation
to Merrill Lynch, Pierce, Fenner & Smith, Incorporated: 0.25% on sales of Class
A and B Shares, 0.10% on sales of Class C Shares, 0.10% on sales of Class A
shares sold at net asset value, and 0.10% annually on the average daily net
asset value of fund shares on which Merrill Lynch is broker of record and which
such shares exceed the amount of assets on which Merrill Lynch is broker of
record as of July 1, 1999. 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. Equity Planning
reserves the right to discontinue or alter such fee payment plans at any time.
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)
23
<PAGE>
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
0.50% of each Funds' average daily net assets up to $50 million, which rate is
reduced at higher levels of net assets. For services to the Trust during the
fiscal years ended December 31, 1997, 1998 and 1999, (pursuant to a fee
schedule under which the Administrator was paid a monthly fee at an annual rate
equal to 0.60% of each Fund's average daily net assets up to $50 million and
which rate was reduced at higher levels of net assets) the Trust paid
administrative fees (approximately) of $5,458,000, $5,305,000, and $6,790,673
respectively. Of these totals, PEPCO received fees from each Fund as follows:
<TABLE>
<CAPTION>
Fund 1997 1998 1999
- ---------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Balanced Return Fund $400,000 $445,000 $680,433
Focus Growth Fund $3,078,000 $2,420,000 $2,981,416
Nifty Fifty Fund $1,612,000 $1,655,000 $2,250,464
Small & Mid-Cap Fund $173,000 $434,000 $691,595
Value 25 Fund $117,000 $219,000 $186,765
</TABLE>
PEPCO has voluntarily agreed to waive, when necessary, a portion of its
administration fee so that Other Operating Expenses (operating expenses
excluding management fees and 12b-1 fees) do not exceed the following limits.
<TABLE>
<CAPTION>
Fund 1st $50 million next $450 million over $500 million
- ------------------------ ----------------- ------------------- ------------------
<S> <C> <C> <C>
Balanced Return 1.09% 0.60% 0.40%
Focus Growth 0.99% 0.50% 0.30%
Nifty Fifty 0.99% 0.50% 0.30%
Small & Mid-Cap Growth 0.50% 0.40% 0.30%
Value 25 0.50% 0.40% 0.30%
</TABLE>
DISTRIBUTION PLANS
The Trust has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for Class B and Class C of each series of the Trust (the "Class B
Plan," the "Class C Plan," and collectively the "12b-1 Plans"). The 12b-1 Plans
permit the Funds to reimburse the Distributor for expenses incurred in
connection with activities intended to promote the sale of shares of each class
of shares of the Funds.
Pursuant to the 12b-1 Plans, the Funds pay the Distributor 0.75% of the
average daily net assets of the Funds' Class B and Class C Shares,
respectively. Expenditures under the 12b-1 Plans shall consist of: (i)
commissions to sales personnel for selling shares of the Funds (including
underwriting fees and financing expenses incurred in connection with the sale
of Class B Shares); (ii) compensation, sales incentives and payments to sales,
marketing and service personnel; (iii) payments to broker-dealers and other
financial institutions which have entered into agreements with the Distributor
in the form of the Dealer Agreement for Phoenix Funds for services rendered in
connection with the sale and distribution of shares of the Funds; (iv) payment
of expenses incurred in sales and promotional activities, including advertising
expenditures related to the Funds; (v) the costs of preparing and distributing
promotional materials; (vi) the cost of printing the Funds' Prospectuses and
Statements of Additional Information for distribution to potential investors;
and (vii) such other similar services that the Trustees of the Funds determine
are reasonably calculated to result in the sale of shares of the Funds.
From its own resources or pursuant to the Plan, and subject to the
dealers' prior approval, the Distributor may provide additional compensation to
registered representatives of dealers in the form of travel expenses, meals,
and lodging associated with training and educational meetings sponsored by the
Distributor. The Distributor may also provide gifts amounting in value to less
than $100, and occasional meals or entertainment, to registered representatives
of dealers. Any such travel expenses, meals, lodging, gifts or entertainment
paid will not be preconditioned upon the registered representatives' or
dealers' achievement of a sales target. The Distributor may, from time to time,
reallow the entire portion of the sales charge on Class A shares which it
normally retains
24
<PAGE>
to individual selling dealers. However, such additional reallowance generally
will be made only when the selling dealer commits to substantial marketing
support such as internal wholesaling through dedicated personnel, internal
communications and mass mailings.
In order to receive payments under the 12b-1 Plans and/or Services
Agreements (described below), participants must meet such qualifications to be
established in the sole discretion of the Distributor, such as services to the
Funds' shareholders; or services providing the Funds with more efficient
methods of offering shares to coherent groups of clients, members or prospects
of a participant; or services permitting bulking of purchases or sales, or
transmission of such purchases or sales by computerized tape or other
electronic equipment; or other processing. If the 12b-1 Plans are terminated in
accordance with their terms, the obligations of the Funds to make payments to
the Distributor pursuant to the 12b-1 Plans will cease and the Funds will not
be required to make any payments past the date on which each 12b-1 Plan
terminates.
On a quarterly basis, the Funds' Trustees review a report on expenditures
under the 12b-1 Plans and the purposes for which expenditures were made. The
Trustees conduct an additional, more extensive review annually in determining
whether the 12b-1 Plans will be continued. By its terms, continuation of the
12b-1 Plans from year to year is contingent on annual approval by a majority of
the Funds' Trustees and by a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the 12b-1 Plans or any related
agreements (the "12b-1 Plan Trustees"). The 12b-1 Plans provide that they may
not be amended to increase materially the costs which the Funds may bear
pursuant to the 12b-1 Plans without approval of the shareholders of the Funds
and that other material amendments to the 12b-1 Plans must be approved by a
majority of the 12b-1 Plan Trustees by vote cast in person at a meeting called
for the purpose of considering such amendments. The 12b-1 Plans further
provides that while it is in effect, the selection and nomination of Trustees
who are not "interested persons" shall be committed to the discretion of the
Trustees who are not "interested persons." The 12b-1 Plans may be terminated at
any time by vote of a majority of the 12b-1 Plan Trustees or a majority of the
outstanding shares of the Funds.
The National Association of Securities Dealers, Inc. (the "NASD") regards
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend the Plans.
For the fiscal year ended December 31, 1999, the Funds paid Rule 12b-1
distribution fees in the amount of $2,022,159, of which the principal
underwriter received $2,000,453. W.S. Griffith & Co., Inc., an affiliate,
received $62,393, and unaffiliated broker-dealers received $959,313.
Distribution fees were used by the Distributor to compensate dealers for the
sale of the Fund's Class B and Class C Shares.
Services Agreements
Under the Services Agreement, each Fund will pay a continuing service fee
to service providers, in an amount, computed and prorated on a daily basis,
equal to 0.25% per annum of the Fund's average daily net assets, which will
include the Adviser or Phoenix Equity Planning Corporation (the "Distributor"),
for shareholder accounts not serviced by other service providers. (Prior to
September 3, 1997, Pasadena Fund Services, Inc. (the "Former Distributor")
served as distributor of the Funds' shares.) Such amounts are compensation for
providing certain services to clients owning shares of such Fund, including
personal services such as processing purchase and redemption transactions,
assisting in change of address requests and similar administrative details, and
providing other information and assistance with respect to such Fund, including
responding to shareholder inquiries.
For the fiscal year ended December 31, 1999, the Funds paid service fees
in the amount of $3,389,679, of which the principal underwriter received
$872,157, and unaffiliated broker-dealers received $2,517,521.
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.
25
<PAGE>
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* (59) 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).
Barry E. McKinley (64) Trustee Certified Public Accountant; head of B.E. McKinley &
300 North Lake Avenue Associates, an accounting firm, since its inception in 1971.
Suite 930
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 (53) Trustee President of Richard Taylor Company, Inc., a food ingredients
2100 Huntington Drive, #9 broker, since 1987.
San Marino, California 91108
Angela Wong (48) Trustee Since August, 1999, Ms. Wong has been General Counsel at
3880 San Rafael Ave. Self Realization Fellowship. From 1986-1999, she was of
Los Angeles, California 90065 counsel to the law firm of Manatt, Phelps, Phillips & Kantor,
specializing in employee benefits.
Malcolm Axon (41) Chief Financial Chief Financial Officer and Secretary of the Adviser since 1995;
600 North Rosemead Officer previously Controller from 1991 to 1995. Chief Financial Officer
Boulevard and Secretary of Roger Engemann Management Co. Inc. since
Pasadena, California 91107 1993 and of Pasadena Capital Corporation since 1995.
Tina L. Mitchell Secretary Vice President, Compliance (since 1999) of the Adviser;
600 North Rosemead Boulevard previously Compliance Officer from 1997 to 1999 and
Pasadena, California 91101 Assistant Compliance Officer from 1993 to 1997. Compliance
Officer of Roger Enemann Management Co., Inc. since 1997;
previously, Assistant Compliance Officer from 1993-1997.
</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,
1999, the Trustees received an aggregate of $80,000. For services on the Board
of Trustees, each Trustee who is not an employee of the Adviser or any of its
affiliates currently receives $2,500 per quarter plus $2,500 for each meeting
attended. The officers of the Trust and the Trustees affiliated with the
Adviser receive no direct compensation for performing the duties of such
offices. However, those officers and Trustees who are affiliated with the
Adviser may receive remuneration indirectly because the Adviser receives
management fees from the Funds.
For the Trust's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
Total
Pension or Compensation
Aggregate Retirement Benefits Estimated From Fund and
Compensation Accrued as Part Annual Benefits Fund Complex
Name From Fund of Fund Expenses Upon Retirement Paid to Trustees
- -------------------- -------------- --------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Roger Engemann None None None None
John S. Tilson None None None None
Barry E. McKinley $20,000 None None $20,000
Robert L. Peterson $20,000 None None $20,000
Richard C. Taylor $20,000 None None $20,000
Angela Wong $20,000 None None $20,000
</TABLE>
As of April 5, 2000, the Trustees and officers of the Trust as a group,
owned less than 1% of the outstanding shares of the Balanced Return Fund, the
Focus Growth Fund, the Nifty Fifty Fund and the Value 25 Fund. As of April 5,
2000, the Trustees and officers of the Trust, as a group, owned 1.38% of the
Small & Mid-Cap Growth Fund.
26
<PAGE>
Principal Shareholders
As of April 5, 2000 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 Balanced Return Fund 27.98% 38.50% 51.47%
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6485
Phoenix-Engemann Focus Growth Fund 42.11% 46.17% 55.31%
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6485
Phoenix-Engemann Nifty Fifty Fund 35.61% 42.16% 64.40%
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Phoenix-Engemann Small & Mid-Cap Growth Fund
Merrill Lynch, Pierce, 35.62% 36.61% 43.90%
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Phoenix-Engemann Value 25 Fund
Merrill Lynch, Pierce, 11.74% 29.66% 62.31%
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Union Bank Trust Nominee 11.24%
FBO Moore Investment Partnership
PO Box 85484
San Diego, California 92112-4103
Barney Sofio 6.45%
2307Blanchard Dr
Glendale, CA 91208-1912
Union Bank Trust Nominee 5.70%
FBO Mark MP
PO Box 85484
San Diego, CA 92186-5484
</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.
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
27
<PAGE>
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 is Union Bank of California, 475
Sansome Street, San Francisco, California 94111.
Pursuant to a Transfer Agent and Service Agreement with the Trust, Equity
Planning serves as transfer agent for the Funds (the "Transfer Agent") for
which it is paid $14.95 plus certain out of pocket expenses for each designated
shareholder account. The Transfer Agent engages sub-agents to perform certain
shareholder servicing functions for which such agents are paid a fee by Equity
Planning.
Report to Shareholders
The fiscal year of the Trust ends on December 31. The Trust will send
financial statements to its shareholders at least semiannually. An Annual
Report containing financial statements audited by the Trust's independent
accountants will be sent to shareholders each year.
Financial Statements
The Financial Statements for the Fund's fiscal year ended December 31,
1999, appearing in the Fund's 1999 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>
Phoenix-Engemann Balanced Return Fund
INVESTMENTS AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- ---------------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--24.5%
U.S. TREASURY BONDS--12.9%
U.S. Treasury Bonds 9.25%,
2/15/16....................... AAA $ 18,000 $ 22,223,486
U.S. TREASURY NOTES--11.6%
U.S. Treasury Notes 6.50%,
8/15/05....................... AAA 20,000 19,994,824
- - ----------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES
(IDENTIFIED COST $43,430,557) 42,218,310
- - ----------------------------------------------------------------------------
<CAPTION>
SHARES
--------
COMMON STOCKS--72.8%
<S> <C> <C> <C>
BANKS (MAJOR REGIONAL)--0.8%
Wells Fargo Co................ 35,000 1,415,312
COMMUNICATIONS EQUIPMENT--5.6%
Lucent Technologies, Inc...... 65,000 4,862,812
Tellabs, Inc.(b).............. 75,000 4,814,062
---------------------
9,676,874
---------------------
COMPUTERS (HARDWARE)--4.5%
Dell Computer Corp.(b)........ 37,000 1,887,000
International Business
Machines Corp................. 16,000 1,728,000
Sun Microsystems, Inc.(b)..... 52,000 4,026,750
---------------------
7,641,750
---------------------
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
COMPUTERS (NETWORKING)--5.4%
Cisco Systems, Inc.(b)........ 87,000 $ 9,319,875
COMPUTERS (PERIPHERALS)--2.9%
EMC Corp.(b).................. 46,000 5,025,500
COMPUTERS (SOFTWARE & SERVICES)--9.6%
America Online, Inc.(b)....... 38,000 2,866,625
BMC Software, Inc.(b)......... 80,000 6,395,000
Microsoft Corp.(b)............ 62,000 7,238,500
---------------------
16,500,125
---------------------
ELECTRICAL EQUIPMENT--1.8%
General Electric Co........... 20,000 3,095,000
ELECTRONICS (SEMICONDUCTORS)--8.0%
Intel Corp.................... 73,000 6,008,812
Texas Instruments, Inc........ 80,000 7,750,000
---------------------
13,758,812
---------------------
FINANCIAL (DIVERSIFIED)--4.6%
American Express Co........... 19,000 3,158,750
Citigroup, Inc................ 70,500 3,917,156
Freddie Mac................... 19,000 894,188
---------------------
7,970,094
---------------------
HEALTH CARE (DIVERSIFIED)--2.6%
Warner-Lambert Co............. 55,000 4,506,563
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--4.5%
Merck & Co., Inc.............. 58,000 3,889,625
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Phoenix-Engemann Balanced Return Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--CONTINUED
Pfizer, Inc................... 120,000 $ 3,892,500
---------------------
7,782,125
---------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--2.2%
Medtronic, Inc................ 104,000 3,789,500
INVESTMENT BANKING/BROKERAGE--0.4%
Merrill Lynch & Co., Inc...... 7,000 584,500
LODGING-HOTELS--1.4%
Carnival Corp................. 50,000 2,390,625
MANUFACTURING (DIVERSIFIED)--0.9%
Tyco International Ltd........ 40,000 1,555,000
RETAIL (BUILDING SUPPLIES)--4.2%
Home Depot, Inc. (The)........ 105,000 7,199,063
RETAIL (DRUG STORES)--0.6%
Walgreen Co................... 36,000 1,053,000
RETAIL (GENERAL MERCHANDISE)--4.7%
Costco Wholesale Corp.(b)..... 30,000 2,737,500
Dayton Hudson Corp.(b)........ 48,000 3,525,000
Wal-Mart Stores, Inc.......... 25,000 1,728,125
---------------------
7,990,625
---------------------
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
RETAIL (SPECIALTY)--0.8%
Staples, Inc.(b).............. 68,000 $ 1,411,000
SERVICES (ADVERTISING/MARKETING)--1.6%
Interpublic Group of Cos.,
Inc. (The).................... 48,000 2,769,000
SERVICES (COMMERCIAL & CONSUMER)--0.6%
Cendant Corp.(b).............. 38,000 1,009,375
TELECOMMUNICATIONS (LONG DISTANCE)--5.1%
MCI WorldCom, Inc.(b)......... 163,500 8,675,719
- - ----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $72,614,890) 125,119,437
- - ----------------------------------------------------------------------------
TOTAL INVESTMENTS--97.3%
(IDENTIFIED COST $116,045,447) 167,337,747(a)
Cash and receivables, less liabilities--2.7% 4,576,421
---------------------
NET ASSETS--100.0% $ 171,914,168
=====================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $54,354,476 and gross
depreciation of $3,062,176 for federal income tax purposes. At December 31,
1999, the aggregate cost of securities for federal income tax purposes was
$116,045,447.
(b) Non-income producing.
See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Balanced Return Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $116,045,447) $ 167,337,747
Cash 3,240,835
Receivables
Dividends and interest 1,155,077
Fund shares sold 766,688
--------------
Total assets 172,500,347
--------------
LIABILITIES
Payables
Fund shares repurchased 195,930
Distribution fee 181,548
Investment advisory fee 104,046
Administration fee 75,531
Trustees' fee 5,428
Accrued expenses 23,696
--------------
Total liabilities 586,179
--------------
NET ASSETS $ 171,914,168
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 120,639,234
Accumulated net realized loss (17,366)
Net unrealized appreciation 51,292,300
--------------
NET ASSETS $ 171,914,168
==============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $123,482,321) 3,182,804
Net asset value per share $38.80
Offering price per share $38.80/(1-4.75%) $40.73
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $30,579,915) 801,956
Net asset value and offering price per share $38.13
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $17,851,932) 467,186
Net asset value and offering price per share $38.21
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 2,319,314
Dividends 376,564
-------------
Total investment income 2,695,878
-------------
EXPENSES
Investment advisory fee 931,902
Distribution fee, Class A 233,049
Distribution fee, Class B 207,186
Distribution fee, Class C 121,488
Administration 680,433
Professional 20,268
Trustees 12,365
-------------
Total expenses 2,206,691
-------------
NET INVESTMENT INCOME 489,187
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 5,917,606
Net change in unrealized appreciation (depreciation) on
investments 17,431,518
-------------
NET GAIN ON INVESTMENTS 23,349,124
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 23,838,311
=============
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Phoenix-Engemann Balanced Return Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12/31/99 12/31/98
------------ -----------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 489,187 $ 790,648
Net realized gain (loss) 5,917,606 8,795,193
Net change in unrealized appreciation
(depreciation) 17,431,518 11,029,950
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 23,838,311 20,615,791
------------ -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (489,187) (718,900)
Net investment income, Class B -- (51,501)
Net investment income, Class C -- (31,607)
Net realized gains, Class A (6,406,492) (4,454,688)
Net realized gains, Class B (1,606,363) (700,523)
Net realized gains, Class C (906,849) (468,778)
In excess of net investment income,
Class A (25,941) --
In excess of net realized gains,
Class A (29,581) --
In excess of net realized gains,
Class B (7,417) --
In excess of net realized gains,
Class C (4,187) --
------------ -----------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (9,476,017) (6,425,997)
------------ -----------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(1,413,697 and 511,438 shares,
respectively) 51,433,069 16,268,814
Net asset value of shares issued from
reinvestment of distributions
(167,310 and 140,176 shares,
respectively) 6,421,251 4,824,840
Cost of shares repurchased (483,447
and 514,775 shares, respectively) (17,823,682) (16,514,937)
------------ -----------
Total 40,030,638 4,578,717
------------ -----------
CLASS B
Proceeds from sales of shares (521,062
and 131,818 shares, respectively) 18,703,613 4,376,531
Net asset value of shares issued from
reinvestment of distributions
(37,162 and 20,594 shares,
respectively) 1,402,126 699,581
Cost of shares repurchased (91,202 and
72,187 shares, respectively) (3,292,239) (2,275,763)
------------ -----------
Total 16,813,500 2,800,349
------------ -----------
CLASS C
Proceeds from sales of shares (263,121
and 69,806 shares, respectively) 9,526,650 2,171,650
Net asset value of shares issued from
reinvestment of distributions
(21,486 and 13,470 shares,
respectively) 812,372 458,553
Cost of shares repurchased (38,401 and
56,060 shares, respectively) (1,373,573) (1,759,923)
------------ -----------
Total 8,965,449 870,280
------------ -----------
CLASS M
Proceeds from sales of shares (0 and
3,393 shares, respectively) -- 100,100
Cost of shares repurchased (0 and
3,393 shares, respectively) -- (112,685)
------------ -----------
Total -- (12,585)
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARE TRANSACTIONS 65,809,587 8,236,761
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS 80,171,881 22,426,555
------------ -----------
NET ASSETS
Beginning of period 91,742,287 69,315,732
------------ -----------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF $0
AND $0, RESPECTIVELY] $171,914,168 $91,742,287
============ ===========
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Balanced Return Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 34.83 $ 29.05 $ 28.08 $ 25.39 $ 20.54
INCOME FROM INVESTMENT
OPERATIONS(4)
Net investment income (loss) 0.21(1) 0.40 0.30(1) 0.29(1) 0.27(1)
Net realized and unrealized
gain (loss) 6.07 8.03 4.98 4.23 5.31
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS 6.28 8.43 5.28 4.52 5.58
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net
investment income (0.16) (0.40) (0.32) (0.30) (0.29)
Dividends from net realized
gains (2.13) (2.25) (3.99) (1.53) (0.44)
In excess of net investment
income (0.01) -- -- -- --
In excess of net realized
gains (0.01) -- -- -- --
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (2.31) (2.65) (4.31) (1.83) (0.73)
------- ------- ------- ------- -------
Change in net asset value 3.97 5.78 0.97 2.69 4.85
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $38.80 $34.83 $29.05 $28.08 $25.39
======= ======= ======= ======= =======
Total return(2) 18.10% 29.12% 18.98% 17.78% 27.18%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $123,482 $72,620 $56,610 $51,947 $52,028
RATIO TO AVERAGE NET ASSETS
OF:
Operating expenses 1.56% 1.63% 1.7%(3) 2.0%(3) 2.1%
Net investment income (loss) 0.58% 1.15% 1.0% 1.1% 1.2%
Portfolio turnover 41% 124% 40.3% 35.1% 51.1%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratios of operating expenses to average net assets would have been 1.70%
and 2.10% for the periods ended December 31, 1997 and 1996, respectively.
(4) 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.
See Notes to Financial Statements
11
<PAGE>
Phoenix-Engemann Balanced Return Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $34.37 $28.76 $27.85 $25.26 $20.49
INCOME FROM INVESTMENT OPERATIONS(4)
Net investment income (loss) (0.06)(1) 0.13 0.08(1) 0.09(1) 0.08(1)
Net realized and unrealized gain
(loss) 5.96 7.91 4.93 4.16 5.29
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 5.90 8.04 5.01 4.25 5.37
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.18) (0.11) (0.13) (0.16)
Dividends from net realized gains (2.13) (2.25) (3.99) (1.53) (0.44)
In excess of net realized gains (0.01) -- -- -- --
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (2.14) (2.43) (4.10) (1.66) (0.60)
------- ------- ------- ------- -------
Change in net asset value 3.76 5.61 0.91 2.59 4.77
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $38.13 $34.37 $28.76 $27.85 $25.26
======= ======= ======= ======= =======
Total return(2) 17.22 % 28.06% 18.15% 16.82% 26.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $30,580 $11,512 $7,125 $4,609 $2,721
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.30 % 2.38% 2.4%(3) 2.7%(3) 2.9%
Net investment income (loss) (0.16)% 0.39% 0.3% 0.3% 0.3%
Portfolio turnover 41 % 124% 40.3% 35.1% 51.1%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 34.44 $ 28.80 $ 27.88 $ 25.28 $ 20.48
INCOME FROM INVESTMENT OPERATIONS(4)
Net investment income (loss) (0.06)(1) 0.14 0.08(1) 0.09(1) 0.07(1)
Net realized and unrealized gain
(loss) 5.97 7.92 4.92 4.16 5.30
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 5.91 8.06 5.00 4.25 5.37
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.17) (0.09) (0.12) (0.13)
Dividends from net realized gains (2.13) (2.25) (3.99) (1.53) (0.44)
In excess of net realized gains (0.01) -- -- -- --
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (2.14) (2.42) (4.08) (1.65) (0.57)
------- ------- ------- ------- -------
Change in net asset value 3.77 5.64 0.92 2.60 4.80
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $38.21 $34.44 $28.80 $27.88 $25.28
======= ======= ======= ======= =======
Total return(2) 17.22 % 28.07% 18.11% 16.79% 26.23%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $17,852 $7,610 $5,581 $4,183 $2,809
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.30 % 2.38% 2.4%(3) 2.7%(3) 2.9%
Net investment income (loss) (0.16)% 0.39% 0.3% 0.3% 0.3%
Portfolio turnover 41 % 124% 40.3% 35.1% 51.1%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratios of operating expenses to average net assets would have been 2.50%
and 2.80% for the periods ended December 31, 1997 and 1996, respectively.
(4) 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.
12
See Notes to Financial Statements
<PAGE>
PHOENIX-ENGEMANN FOCUS GROWTH FUND
INVESTMENTS AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
------------ ------------
<S> <C> <C> <C>
COMMON STOCKS--95.8%
BROADCASTING (TELEVISION, RADIO & CABLE)--1.0%
Clear Channel Communications, Inc.(b)... 85,000 $ 7,586,250
COMMUNICATIONS EQUIPMENT--10.2%
Lucent Technologies, Inc................ 396,000 29,625,750
QUALCOMM, Inc.(b)....................... 160,000 28,200,000
Tellabs, Inc.(b)........................ 341,100 21,894,356
------------
79,720,106
------------
COMPUTERS (HARDWARE)--5.1%
Dell Computer Corp.(b).................. 300,000 15,300,000
International Business Machines Corp.... 100,000 10,800,000
Sun Microsystems, Inc.(b)............... 185,000 14,325,937
------------
40,425,937
------------
COMPUTERS (NETWORKING)--8.1%
Cisco Systems, Inc.(b).................. 592,224 63,441,996
COMPUTERS (PERIPHERALS)--3.3%
EMC Corp.(b)............................ 234,000 25,564,500
COMPUTERS (SOFTWARE & SERVICES)--16.4%
America Online, Inc.(b)................. 584,000 44,055,500
BMC Software, Inc.(b)................... 150,000 11,990,625
Microsoft Corp.(b)...................... 362,600 42,333,550
Yahoo!, Inc.(b)......................... 70,000 30,288,125
------------
128,667,800
------------
ELECTRICAL EQUIPMENT--3.3%
General Electric Co..................... 170,000 26,307,500
<CAPTION>
SHARES VALUE
------------ ------------
<S> <C> <C> <C>
ELECTRONICS (SEMICONDUCTORS)--14.9%
Intel Corp.............................. 252,800 $ 20,808,600
JDS Uniphase Corp.(b)................... 230,000 37,101,875
Texas Instruments, Inc.................. 569,200 55,141,250
Xilinx, Inc.(b)......................... 85,000 3,864,844
------------
116,916,569
------------
FINANCIAL (DIVERSIFIED)--4.3%
American Express Co..................... 94,000 15,627,500
Citigroup, Inc.......................... 330,000 18,335,625
------------
33,963,125
------------
HEALTH CARE (DIVERSIFIED)--1.8%
Warner-Lambert Co....................... 170,000 13,929,375
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--5.4%
Genentech, Inc.(b)...................... 86,000 11,567,000
Merck & Co., Inc........................ 208,200 13,962,412
Pfizer, Inc............................. 511,800 16,601,512
------------
42,130,924
------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.4%
Medtronic, Inc.......................... 300,200 10,938,538
INVESTMENT BANKING/BROKERAGE--3.1%
Goldman Sachs Group, Inc. (The)......... 100,000 9,418,750
Merrill Lynch & Co., Inc................ 176,000 14,696,000
------------
24,114,750
------------
LODGING-HOTELS--1.8%
Carnival Corp........................... 302,200 14,448,938
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Phoenix-Engemann Focus Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
------------ ------------
RETAIL (BUILDING SUPPLIES)--3.3%
<S> <C> <C> <C>
Home Depot, Inc. (The).................. 375,000 $ 25,710,938
RETAIL (DEPARTMENT STORES)--1.8%
Kohl's Corp.(b)......................... 192,700 13,910,531
RETAIL (GENERAL MERCHANDISE)--3.4%
Costco Wholesale Corp.(b)............... 95,000 8,668,750
Wal-Mart Stores, Inc.................... 259,000 17,903,375
------------
26,572,125
------------
SERVICES (COMMERCIAL & CONSUMER)--2.1%
Cendant Corp.(b)........................ 636,833 16,915,877
TELECOMMUNICATIONS (LONG DISTANCE)--4.1%
MCI WorldCom, Inc.(b)................... 610,500 32,394,656
TRUCKERS --1.0%
United Parcel Service, Inc.............. 119,500 8,245,500
- - ------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $301,975,818) 751,905,935
- - ------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
------------ ------------
<S> <C> <C> <C>
FOREIGN COMMON STOCKS--1.5%
COMMUNICATIONS EQUIPMENT--1.5%
Nokia Oyj Sponsored ADR (Finland)....... 60,000 $ 11,400,000
- - ------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $5,899,206) 11,400,000
- - ------------------------------------------------------------------------
TOTAL INVESTMENTS--97.3%
(IDENTIFIED COST $307,875,024) 763,305,935(a)
Cash and receivables, less liabilities--2.7% 21,150,877
------------
NET ASSETS--100.0% $784,456,812
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $457,362,169 and gross
depreciation of $1,931,258 for federal income tax purposes. At December
31,1999, the aggregate cost of securities for federal income tax purposes
was $307,875,024.
(b) Non-income producing.
16
See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Focus Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $307,875,024) $ 763,305,935
Cash 26,335,210
Receivables
Fund shares sold 1,217,125
Dividends and interest 315,122
--------------
Total assets 791,173,392
--------------
LIABILITIES
Payables
Investment securities purchased 3,856,374
Fund shares repurchased 853,601
Option written, at value (premium received $1,017,416) 478,125
Distribution fee 699,102
Investment advisory fee 491,860
Administration fee 290,813
Trustees' fee 5,428
Accrued expenses 41,277
--------------
Total liabilities 6,716,580
--------------
NET ASSETS $ 784,456,812
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 328,486,610
Net unrealized appreciation 455,970,202
--------------
NET ASSETS $ 784,456,812
==============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $621,386,162) 18,692,221
Net asset value per share $33.24
Offering price per share $33.24/(1-4.75%) $34.90
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $106,372,106) 3,435,022
Net asset value and offering price per share $30.97
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $56,698,544) 1,830,971
Net asset value and offering price per share $30.97
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 2,071,025
Interest 997,025
--------------
Total investment income 3,068,050
--------------
EXPENSES
Investment advisory fee 4,836,987
Distribution fee, Class A 1,232,638
Distribution fee, Class B 787,057
Distribution fee, Class C 410,207
Administration 2,981,416
Professional 48,594
Trustees 13,620
--------------
Total expenses 10,310,519
--------------
NET INVESTMENT LOSS (7,242,469)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 85,809,182
Net realized gain on written options 672,473
Net change in unrealized appreciation (depreciation) on
investments 184,418,047
Net change in unrealized appreciation (depreciation) on
written options 539,291
--------------
NET GAIN ON INVESTMENTS 271,438,993
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 264,196,524
==============
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Phoenix-Engemann Focus Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12/31/99 12/31/98
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (7,242,469) $ (4,059,521)
Net realized gain (loss) 86,481,655 77,363,122
Net change in unrealized appreciation
(depreciation) 184,957,338 80,943,604
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 264,196,524 154,247,205
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (103,359,347) (19,191,036)
Net realized gains, Class B (18,563,891) (3,003,744)
Net realized gains, Class C (9,894,149) (1,570,635)
In excess of net realized gains, Class
A (2,793,835) --
In excess of net realized gains, Class
B (501,788) --
In excess of net realized gains, Class
C (267,443) --
------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (135,380,453) (23,765,415)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(2,437,653 and 554,463 shares,
respectively) 77,978,236 12,769,077
Net asset value of shares issued from
reinvestment of distributions
(2,932,699 and 665,077 shares,
respectively) 95,019,463 17,245,429
Cost of shares repurchased (3,126,770
and 3,536,921 shares, respectively) (98,805,876) (79,785,149)
------------ ------------
Total 74,191,823 (49,770,643)
------------ ------------
CLASS B
Proceeds from sales of shares (672,999
and 245,967 shares, respectively) 19,484,473 5,372,379
Net asset value of shares issued from
reinvestment of distributions
(575,602 and 110,700 shares,
respectively) 17,377,421 2,728,756
Cost of shares repurchased (402,631
and 534,746 shares, respectively) (11,482,014) (11,527,013)
------------ ------------
Total 25,379,880 (3,425,878)
------------ ------------
CLASS C
Proceeds from sales of shares (417,135
and 164,645 shares, respectively) 12,312,851 3,582,593
Net asset value of shares issued from
reinvestment of distributions
(308,840 and 58,568 shares,
respectively) 9,323,884 1,443,709
Cost of shares repurchased (251,773
and 356,278 shares, respectively) (7,279,393) (7,561,830)
------------ ------------
Total 14,357,342 (2,535,528)
------------ ------------
CLASS M
Proceeds from sales of shares (0 and
4,866 shares, respectively) -- 100,100
Cost of shares repurchased (0 and
4,866 shares, respectively) -- (108,609)
------------ ------------
Total -- (8,509)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARE TRANSACTIONS 113,929,045 (55,740,558)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 242,745,116 74,741,232
NET ASSETS
Beginning of period 541,711,696 466,970,464
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
$0 AND $0, RESPECTIVELY] $784,456,812 $541,711,696
============ ============
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Focus Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 26.82 $ 20.43 $ 21.94 $ 19.28 $ 15.40
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.31) (0.16) (0.16) (0.14) (0.06)
Net realized and unrealized gain
(loss) 13.48 7.76 3.51 4.47 4.24
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 13.17 7.60 3.35 4.33 4.18
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (6.57) (1.21) (4.86) (1.67) (0.30)
In excess of net realized gains (0.18) -- -- -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (6.75) (1.21) (4.86) (1.67) (0.30)
-------- -------- -------- -------- --------
Change in net asset value 6.42 6.39 (1.51) 2.66 3.88
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 33.24 $ 26.82 $ 20.43 $ 21.94 $ 19.28
======== ======== ======== ======== ========
Total return(2) 49.74 % 37.41 % 16.04 % 22.49 % 27.16 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $621,386 $441,146 $383,481 $426,785 $415,416
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.54 % 1.58 % 1.6 %(3) 1.6 %(3) 1.6 %
Net investment income (loss) (1.04)% (0.72)% (0.7)% (0.6)% (0.3)%
Portfolio turnover 56 % 119 % 70.6 % 70.1 % 65.9 %
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.60% and
1.60% for the periods ended December 31, 1997 and 1996, respectively.
See Notes to Financial Statements
19
<PAGE>
Phoenix-Engemann Focus Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.49 $ 19.61 $ 21.40 $ 18.99 $ 15.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.51) (0.32) (0.34) (0.31) (0.20)
Net realized and unrealized gain
(loss) 12.74 7.41 3.41 4.39 4.21
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 12.23 7.09 3.07 4.08 4.01
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (6.57) (1.21) (4.86) (1.67) (0.30)
In excess of net realized gains (0.18) -- -- -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (6.75) (1.21) (4.86) (1.67) (0.30)
-------- -------- -------- -------- --------
Change in net asset value 5.48 5.88 (1.79) 2.41 3.71
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 30.97 $ 25.49 $ 19.61 $ 21.40 $ 18.99
======== ======== ======== ======== ========
Total return(2) 48.64 % 36.38 % 15.13 % 21.52 % 26.26 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $106,372 $65,986 $54,267 $49,444 $34,786
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.29 % 2.33 % 2.4 %(3) 2.3 %(3) 2.4 %
Net investment income (loss) (1.78)% (1.47)% (1.5)% (1.5)% (1.1)%
Portfolio turnover 56 % 119 % 70.6 % 70.1 % 65.9 %
</TABLE>
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.49 $ 19.61 $ 21.40 $ 18.99 $ 15.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.51) (0.32) (0.34) (0.31) (0.20)
Net realized and unrealized gain
(loss) 12.74 7.41 3.41 4.39 4.21
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 12.23 7.09 3.07 4.08 4.01
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (6.57) (1.21) (4.86) (1.67) (0.30)
In excess of net realized gains (0.18) -- -- -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (6.75) (1.21) (4.86) (1.67) (0.30)
-------- -------- -------- -------- --------
Change in net asset value 5.48 5.88 (1.79) 2.41 3.71
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 30.97 $ 25.49 $ 19.61 $ 21.40 $ 18.99
======== ======== ======== ======== ========
Total return(2) 48.64 % 36.38 % 15.13 % 21.52 % 26.26 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $56,699 $34,580 $29,222 $27,239 $20,497
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.29 % 2.33 % 2.4 %(3) 2.3 %(3) 2.4 %
Net investment income (loss) (1.78)% (1.47)% (1.5)% (1.5)% (1.1)%
Portfolio turnover 56 % 119 % 70.6 % 70.1 % 65.9 %
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.40% and
2.40% for the periods ended December 31, 1997 and 1996, respectively.
20
See Notes to Financial Statements
<PAGE>
PHOENIX-ENGEMANN NIFTY FIFTY FUND
INVESTMENTS AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMMON STOCKS--96.6%
BANKS (MAJOR REGIONAL)--1.0%
Wells Fargo Co.......................... 134,400 $ 5,434,800
BROADCASTING (TELEVISION, RADIO & CABLE)--0.6%
AT&T Corp.-Liberty Media Group Class
A(b).................................... 53,000 3,007,750
COMMUNICATIONS EQUIPMENT--6.8%
Lucent Technologies, Inc................ 280,000 20,947,500
Tellabs, Inc.(b)........................ 240,000 15,405,000
------------
36,352,500
------------
COMPUTERS (HARDWARE)--4.7%
Dell Computer Corp.(b).................. 100,000 5,100,000
International Business Machines Corp.... 100,000 10,800,000
Sun Microsystems, Inc.(b)............... 120,000 9,292,500
------------
25,192,500
------------
COMPUTERS (NETWORKING)--6.0%
Cisco Systems, Inc.(b).................. 295,874 31,695,502
COMPUTERS (PERIPHERALS)--7.0%
EMC Corp.(b)............................ 340,000 37,145,000
COMPUTERS (SOFTWARE & SERVICES)--12.1%
America Online, Inc.(b)................. 252,000 19,010,250
BMC Software, Inc.(b)................... 120,000 9,592,500
Compuware Corp.(b)...................... 114,000 4,246,500
Microsoft Corp.(b)...................... 268,800 31,382,400
------------
64,231,650
------------
CONSUMER FINANCE--1.2%
MBNA Corp............................... 225,000 6,131,250
ELECTRICAL EQUIPMENT--2.9%
General Electric Co..................... 100,000 15,475,000
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
ELECTRONICS (SEMICONDUCTORS)--9.1%
Intel Corp.............................. 223,000 $ 18,355,687
Texas Instruments, Inc.................. 311,000 30,128,125
------------
48,483,812
------------
ENTERTAINMENT--0.9%
Time Warner, Inc........................ 65,000 4,708,437
FINANCIAL (DIVERSIFIED)--6.1%
American Express Co..................... 40,000 6,650,000
Citigroup, Inc.......................... 225,000 12,501,562
Freddie Mac............................. 100,000 4,706,250
Morgan Stanley Dean Witter & Co......... 60,000 8,565,000
------------
32,422,812
------------
HEALTH CARE (DIVERSIFIED)--1.0%
Warner-Lambert Co....................... 65,000 5,325,937
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--6.0%
Genentech, Inc.(b)...................... 60,000 8,070,000
Merck & Co., Inc........................ 112,600 7,551,238
Pfizer, Inc............................. 365,850 11,867,259
Schering-Plough Corp.................... 100,000 4,218,750
------------
31,707,247
------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--2.8%
Guidant Corp.(b)........................ 65,000 3,055,000
Medtronic, Inc.......................... 322,600 11,754,738
------------
14,809,738
------------
INVESTMENT BANKING/BROKERAGE--1.6%
Goldman Sachs Group, Inc. (The)......... 32,000 3,014,000
Merrill Lynch & Co., Inc................ 66,000 5,511,000
------------
8,525,000
------------
LODGING-HOTELS--1.7%
Carnival Corp........................... 189,700 9,070,031
</TABLE>
24 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
MANUFACTURING (DIVERSIFIED)--1.2%
Tyco International Ltd.................. 90,000 $ 3,498,750
United Technologies Corp................ 40,000 2,600,000
------------
6,098,750
------------
PERSONAL CARE--0.7%
Gillette Co. (The)...................... 83,600 3,443,275
RETAIL (BUILDING SUPPLIES)--5.1%
Home Depot, Inc. (The).................. 307,500 21,082,969
Lowe's Companies., Inc.................. 100,300 5,992,925
------------
27,075,894
------------
RETAIL (COMPUTERS & ELECTRONICS)--1.5%
Best Buy Co., Inc.(b)................... 68,000 3,412,750
Circuit City Stores-Circuit City
Group................................... 100,000 4,506,250
------------
7,919,000
------------
RETAIL (DEPARTMENT STORES)--0.5%
Kohl's Corp.(b)......................... 40,000 2,887,500
RETAIL (DRUG STORES)--1.0%
Walgreen Co............................. 190,000 5,557,500
RETAIL (GENERAL MERCHANDISE)--3.6%
Dayton Hudson Corp.(b).................. 75,000 5,507,813
Wal-Mart Stores, Inc.................... 195,000 13,479,375
------------
18,987,188
------------
RETAIL (SPECIALTY)--1.1%
Staples, Inc.(b)........................ 279,750 5,804,813
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
SERVICES (ADVERTISING/MARKETING)--1.3%
Interpublic Group of Companies, Inc.
(The)................................... 120,000 $ 6,922,500
SERVICES (COMMERCIAL & CONSUMER)--1.6%
Cendant Corp.(b)........................ 325,500 8,646,094
SERVICES (COMPUTER SYSTEMS)--2.0%
Electronic Data Systems Corp............ 160,000 10,710,000
TELECOMMUNICATIONS (LONG DISTANCE)--5.5%
MCI WorldCom, Inc.(b)................... 553,500 29,370,094
- - --------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $240,849,873) 513,141,574
- - --------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOREIGN COMMON STOCKS--0.5%
ENTERTAINMENT--0.5%
News Corporation Ltd. (The)
Sponsored ADR
(Australia)................ 66,000 2,524,500
- - --------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $2,629,211) 2,524,500
- - --------------------------------------------------------------------
TOTAL INVESTMENTS--97.1%
(IDENTIFIED COST $243,479,084) 515,666,074(a)
Cash and receivables, less liabilities--2.9% 15,133,167
---------------------
NET ASSETS--100.0% $ 530,799,241
=====================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $274,647,417 and gross
depreciation of $5,807,049 for federal income tax purposes. At December 31,
1999, the aggregate cost of securities for federal income tax purposes was
$246,825,706.
(b) Non-income producing.
See Notes to Financial Statements
25
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $243,479,084) $ 515,666,074
Cash 15,980,207
Receivables
Fund shares sold 925,740
Dividends and interest 156,622
--------------
Total assets 532,728,643
--------------
LIABILITIES
Payables
Fund shares repurchased 650,295
Distribution fee 663,436
Investment advisory fee 353,395
Administration fee 221,916
Trustees' fee 5,428
Accrued expenses 34,932
--------------
Total liabilities 1,929,402
--------------
NET ASSETS $ 530,799,241
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 260,874,252
Accumulated net realized loss (2,262,001)
Net unrealized appreciation 272,186,990
--------------
NET ASSETS $ 530,799,241
==============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $321,298,548) 6,960,086
Net asset value per share $46.16
Offering price per share $46.16/(1-4.75%) $48.46
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $138,625,558) 3,173,377
Net asset value and offering price per share $43.68
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $70,875,135) 1,622,576
Net asset value and offering price per share $43.68
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 1,933,467
Interest 787,659
--------------
Total investment income 2,721,126
--------------
EXPENSES
Investment advisory fee 3,571,794
Distribution fee, Class A 675,811
Distribution fee, Class B 1,137,569
Distribution fee, Class C 563,625
Administration 2,250,464
Professional 36,407
Trustees 17,045
--------------
Total expenses 8,252,715
--------------
NET INVESTMENT LOSS (5,531,589)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 40,441,424
Net change in unrealized appreciation (depreciation) on
investments 93,107,575
--------------
NET GAIN ON INVESTMENTS 133,548,999
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 128,017,410
==============
</TABLE>
26 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12/31/99 12/31/98
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (5,531,589) $ (2,852,205)
Net realized gain (loss) 40,441,424 24,005,577
Net change in unrealized appreciation
(depreciation) 93,107,575 76,678,083
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 128,017,410 97,831,455
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (32,506,365) (3,938,869)
Net realized gains, Class B (14,737,596) (1,688,560)
Net realized gains, Class C (7,456,863) (844,698)
------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (54,700,824) (6,472,127)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(1,492,778 and 1,393,163 shares,
respectively) 63,251,908 45,389,712
Net asset value of shares issued from
reinvestment of distributions
(650,922 and 94,125 shares,
respectively) 29,512,798 3,589,938
Cost of shares repurchased (1,241,476
and 1,467,112 shares, respectively) (53,099,694) (47,556,423)
------------ ------------
Total 39,665,012 1,423,227
------------ ------------
CLASS B
Proceeds from sales of shares (634,388
and 498,534 shares, respectively) 25,899,845 15,592,450
Net asset value of shares issued from
reinvestment of distributions
(300,215 and 40,281 shares,
respectively) 12,885,223 1,473,476
Cost of shares repurchased (367,722
and 341,912 shares, respectively) (15,038,011) (10,575,072)
------------ ------------
Total 23,747,057 6,490,854
------------ ------------
CLASS C
Proceeds from sales of shares (398,511
and 213,942 shares, respectively) 16,321,818 6,658,822
Net asset value of shares issued from
reinvestment of distributions
(154,070 and 20,953 shares,
respectively) 6,611,132 766,453
Cost of shares repurchased (230,854
and 342,357 shares, respectively) (9,311,630) (10,440,823)
------------ ------------
Total 13,621,320 (3,015,548)
------------ ------------
CLASS M
Proceeds from sales of shares (0 and
3,392 shares, respectively) -- 100,100
Cost of shares repurchased (0 and
3,392 shares, respectively) -- (111,184)
------------ ------------
Total -- (11,084)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARE TRANSACTIONS 77,033,389 4,887,449
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 150,349,975 96,246,777
NET ASSETS
Beginning of period 380,449,266 284,202,489
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME
(LOSS) OF $0 AND $0, RESPECTIVELY] $530,799,241 $380,449,266
============ ============
</TABLE>
See Notes to Financial Statements 27
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $38.80 $29.21 $26.50 $22.18 $17.30
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.41) (0.20) (0.20) (0.12) (0.05)
Net realized and unrealized gain
(loss) 12.92 10.45 5.23 6.00 4.93
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 12.51 10.25 5.03 5.88 4.88
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (5.15) (0.66) (2.32) (1.56) --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (5.15) (0.66) (2.32) (1.56) --
-------- -------- -------- -------- --------
Change in net asset value 7.36 9.59 2.71 4.32 4.88
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $46.16 $38.80 $29.21 $26.50 $22.18
======== ======== ======== ======== ========
Total return(2) 32.47 % 35.13 % 19.23 % 26.53 % 28.21 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $321,299 $235,065 $176,378 $145,469 $122,322
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.58 % 1.60 % 1.6 %(3) 1.7 %(3) 1.9 %
Net investment income (loss) (0.97)% (0.61)% (0.7)% (0.4)% (0.3)%
Portfolio turnover 43 % 92 % 68.8 % 41.9 % 26.5 %
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.60% and
1.80% for the periods ended December 31, 1997 and 1996, respectively.
28
See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $37.21 $28.24 $25.88 $21.85 $17.17
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.70) (0.43) (0.42) (0.30) (0.21)
Net realized and unrealized gain
(loss) 12.32 10.06 5.10 5.89 4.89
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 11.62 9.63 4.68 5.59 4.68
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (5.15) (0.66) (2.32) (1.56) --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (5.15) (0.66) (2.32) (1.56) --
-------- -------- -------- -------- --------
Change in net asset value 6.47 8.97 2.36 4.03 4.68
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $43.68 $37.21 $28.24 $25.88 $21.85
======== ======== ======== ======== ========
Total return(2) 31.47 % 34.14 % 18.33 % 25.60 % 27.26 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $138,626 $96,983 $68,051 $47,143 $27,462
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.33 % 2.35 % 2.4 %(3) 2.5 %(3) 2.6 %
Net investment income (loss) (1.72)% (1.35)% (1.4)% (1.2)% (1.0)%
Portfolio turnover 43 % 92 % 68.8 % 41.9 % 26.5 %
</TABLE>
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $37.21 $28.24 $25.88 $21.85 $17.17
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.70) (0.43) (0.42) (0.30) (0.21)
Net realized and unrealized gain
(loss) 12.32 10.06 5.10 5.89 4.89
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 11.62 9.63 4.68 5.59 4.68
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (5.15) (0.66) (2.32) (1.56) --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (5.15) (0.66) (2.32) (1.56) --
-------- -------- -------- -------- --------
Change in net asset value 6.47 8.97 2.36 4.03 4.68
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $43.68 $37.21 $28.24 $25.88 $21.85
======== ======== ======== ======== ========
Total return(2) 31.47 % 34.14 % 18.33 % 25.60 % 27.26 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $70,875 $48,401 $39,773 $26,092 $15,105
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.33 % 2.35 % 2.4 %(3) 2.5 %(3) 2.6 %
Net investment income (loss) (1.72)% (1.35)% (1.4)% (1.2)% (1.0)%
Portfolio turnover 43 % 92 % 68.8 % 41.9 % 26.5 %
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.40% and
2.50% for the periods ended December 31, 1997 and 1996, respectively.
See Notes to Financial Statements
29
<PAGE>
PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH FUND
INVESTMENTS AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
COMMON STOCKS--89.0%
AIR FREIGHT--0.7%
Expeditors International of Washington,
Inc..................................... 40,000 $ 1,752,500
BIOTECHNOLOGY--1.7%
Coulter Pharmaceutical, Inc.(b)......... 30,000 680,625
IDEC Pharmaceuticals Corp.(b)........... 12,000 1,179,000
Pharmacyclics, Inc.(b).................. 20,000 825,000
Progenics Pharmaceuticals, Inc.(b)...... 30,000 1,466,250
---------------------
4,150,875
---------------------
BROADCASTING (TELEVISION, RADIO & CABLE)--2.0%
Cumulus Media, Inc.(b).................. 50,000 2,537,500
Salem Communications Corp.(b)........... 50,000 1,131,250
Spanish Broadcasting System, Inc. Class
A(b).................................... 30,000 1,207,500
---------------------
4,876,250
---------------------
COMMUNICATIONS EQUIPMENT--5.7%
Advanced Fibre Communications,
Inc.(b)................................. 42,500 1,899,219
Ortel Corp.(b).......................... 100,000 12,000,000
---------------------
13,899,219
---------------------
COMPUTERS (NETWORKING)--3.4%
Agile Software Corp.(b)................. 16,000 3,475,750
C-bridge Internet Solutions, Inc.(b).... 29,000 1,410,125
ITXC Corp.(b)........................... 24,000 807,000
Retek, Inc.(b).......................... 24,000 1,806,000
Women.com Networks, Inc.(b)............. 20,000 285,000
Xpedior, Inc.(b)........................ 20,000 575,000
---------------------
8,358,875
---------------------
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)--22.1%
BEA Systems, Inc.(b).................... 150,000 $ 10,490,625
Commerce One, Inc.(b)................... 45,000 8,842,500
Concentric Network Corp.(b)............. 50,000 1,540,625
E.piphany, Inc.(b)...................... 12,000 2,677,500
HNC Software, Inc.(b)................... 15,000 1,586,250
Interwoven, Inc.(b)..................... 17,000 2,067,625
Keynote Systems, Inc.(b)................ 28,000 2,065,000
Legato Systems, Inc.(b)................. 60,000 4,128,750
NetZero, Inc.(b)........................ 47,100 1,268,756
New Era of Networks, Inc.(b)............ 35,000 1,666,875
Peregrine Systems, Inc.(b).............. 95,000 7,849,375
Sapient Corp.(b)........................ 36,000 5,073,750
TIBCO Software, Inc.(b)................. 22,000 3,366,000
Verio, Inc.(b).......................... 25,000 1,154,687
ZapMe! Corp.(b)......................... 37,300 321,712
---------------------
54,100,030
---------------------
CONSUMER FINANCE--2.2%
Metris Companies, Inc................... 150,000 5,353,125
ELECTRICAL EQUIPMENT--3.0%
Advanced Energy Industries, Inc.(b)..... 50,000 2,462,500
C-COR.net Corp.(b)...................... 14,000 1,072,750
Flextronics International Ltd.(b)....... 80,000 3,680,000
---------------------
7,215,250
---------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)--1.5%
Caliper Technologies Corp.(b)........... 20,000 1,335,000
NETsilicon, Inc.(b)..................... 110,000 2,206,875
---------------------
3,541,875
---------------------
</TABLE>
See Notes to Financial Statements 33
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
ELECTRONICS (INSTRUMENTATION)--0.5%
Meade Instruments Corp.(b).............. 40,000 $ 1,140,000
ELECTRONICS (SEMICONDUCTORS)--11.4%
Applied Micro Circuits Corp.(b)......... 75,600 9,620,100
Conexant Systems, Inc.(b)............... 86,000 5,708,250
Micrel, Inc.(b)......................... 76,000 4,327,250
SDL, Inc.(b)............................ 15,200 3,313,600
TriQuint Semiconductor, Inc.(b)......... 20,500 2,280,625
Vitesse Semiconductor Corp.(b).......... 50,000 2,621,875
---------------------
27,871,700
---------------------
EQUIPMENT (SEMICONDUCTOR)--2.4%
Cymer, Inc.(b).......................... 73,000 3,358,000
PRI Automation, Inc.(b)................. 18,000 1,208,250
Rudolph Technologies, Inc.(b)........... 40,000 1,340,000
---------------------
5,906,250
---------------------
FINANCIAL (DIVERSIFIED)--1.1%
Federal Agricultural Mortgage Corp.
Class C(b).............................. 63,000 1,271,812
Pinnacle Holdings, Inc.(b).............. 30,000 1,271,250
---------------------
2,543,062
---------------------
GAMING, LOTTERY & PARI-MUTUEL COMPANIES--0.8%
Championship Auto Racing Teams,
Inc.(b)................................. 80,000 1,840,000
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--0.6%
Inhale Therapeutic Systems(b)........... 30,000 1,276,875
ViroPharma, Inc.(b)..................... 6,000 222,000
---------------------
1,498,875
---------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--0.7%
ArthroCare Corp.(b)..................... 14,000 854,000
MiniMed, Inc. (b)....................... 12,000 879,000
---------------------
1,733,000
---------------------
INVESTMENT MANAGEMENT--0.7%
Gabelli Asset Management, Inc. Class
A(b).................................... 110,000 1,787,500
OIL & GAS (EXPLORATION & PRODUCTION)--2.3%
Pinnacle Oil International, Inc.(b)..... 224,500 5,668,625
PUBLISHING--0.8%
Scholastic Corp.(b)..................... 33,000 2,052,188
RAILROADS--1.5%
Kansas City Southern Industries, Inc.... 50,000 3,731,250
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
RESTAURANTS--1.8%
Cheesecake Factory, Inc. (The)(b)....... 80,000 $ 2,800,000
Papa John's International, Inc.(b)...... 65,000 1,694,063
---------------------
4,494,063
---------------------
RETAIL (BUILDING SUPPLIES)--0.9%
Fastenal Co............................. 50,000 2,246,875
RETAIL (DISCOUNTERS)--0.9%
99 Cents Only Stores(b)................. 58,100 2,222,325
RETAIL (FOOD CHAINS)--2.2%
Smart & Final, Inc.(b).................. 96,499 699,618
Whole Foods Market, Inc.(b)............. 100,000 4,637,500
---------------------
5,337,118
---------------------
RETAIL (SPECIALTY)--3.5%
Cost Plus, Inc.(b)...................... 152,775 5,442,609
Linens 'n Things, Inc.(b)............... 36,000 1,066,500
Lithia Motors, Inc. Class A(b).......... 42,500 759,688
Restoration Hardware, Inc.(b)........... 75,000 510,938
uBid, Inc.(b)........................... 30,000 795,000
---------------------
8,574,735
---------------------
RETAIL (SPECIALTY-APPAREL)--0.7%
Children's Place Retail Stores, Inc.
(The)(b)................................ 100,000 1,643,750
SERVICES (ADVERTISING/MARKETING)--5.0%
DoubleClick, Inc.(b).................... 36,750 9,300,047
MyPoints.com, Inc.(b)................... 40,000 2,960,000
---------------------
12,260,047
---------------------
SERVICES (COMMERCIAL & CONSUMER)--3.4%
Charles River Associates, Inc.(b)....... 30,000 1,005,000
Corporate Executive Board Co.
(The)(b)................................ 42,000 2,346,750
MIPS Technologies, Inc. Class A(b)...... 62,800 3,265,600
NCO Group, Inc.(b)...................... 53,000 1,596,625
eCollege.com, Inc.(b)................... 12,000 131,250
---------------------
8,345,225
---------------------
SERVICES (COMPUTER SYSTEMS)--2.1%
CyberSource Corp.(b).................... 30,000 1,552,500
Whittman-Hart, Inc.(b).................. 68,000 3,646,500
---------------------
5,199,000
---------------------
SERVICES (DATA PROCESSING)--0.9%
McAfee.com Corp.(b)..................... 28,000 1,260,000
</TABLE>
34 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
SERVICES (DATA PROCESSING)--CONTINUED
Predictive Systems, Inc.(b)............. 14,000 $ 917,000
---------------------
2,177,000
---------------------
SERVICES (EMPLOYMENT)--0.2%
Edison Schools Inc.(b).................. 30,000 472,500
TELECOMMUNICATIONS (LONG DISTANCE)--1.8%
Network Plus Corp.(b)................... 75,000 1,575,000
WinStar Communications, Inc.(b)......... 38,000 2,845,250
---------------------
4,420,250
---------------------
TEXTILES (APPAREL)--0.5%
bebe Stores, Inc.(b).................... 40,500 1,093,500
- - -----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $93,915,604) 217,506,837
- - -----------------------------------------------------------------------------
FOREIGN COMMON STOCKS--2.6%
COMMUNICATIONS EQUIPMENT--1.0%
Research in Motion Ltd. (Canada)(b)..... 50,000 2,297,908
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
INSURANCE (LIFE/HEALTH)--0.4%
London Pacific Group Ltd. Sponsored ADR
(United Kingdom)........................ 29,000 $ 1,044,000
OIL & GAS (EXPLORATION & PRODUCTION)--0.8%
Encal Energy Ltd. (Canada)(b)........... 430,000 1,955,461
SERVICES (DATA PROCESSING)--0.4%
Trintech Group PLC Sponsored ADR
(Ireland)(b)............................ 20,000 990,000
- - -----------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $3,085,490) 6,287,369
- - -----------------------------------------------------------------------------
TOTAL INVESTMENTS--91.6%
(IDENTIFIED COST $97,001,094) 223,794,206(a)
Cash and receivables, less liabilities--8.4% 20,648,824
---------------------
NET ASSETS--100.0% $ 244,443,030
=====================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $130,109,841 and gross
depreciation of $3,660,421 for federal income tax purposes. At December
31,1999, the aggregate cost of securities for federal income tax purposes
was $97,344,786.
(b) Non-income producing.
See Notes to Financial Statements
35
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $97,001,094) $ 223,794,206
Cash 19,479,540
Receivables
Fund shares sold 2,085,781
Dividends and interest 56,702
--------------
Total assets 245,416,229
--------------
LIABILITIES
Payables
Fund shares repurchased 406,901
Distribution fee 263,154
Investment advisory fee 178,511
Administration fee 96,938
Trustees' fee 5,428
Accrued expenses 22,267
--------------
Total liabilities 973,199
--------------
NET ASSETS $ 244,443,030
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 122,314,202
Accumulated net realized loss (4,664,284)
Net unrealized appreciation 126,793,112
--------------
NET ASSETS $ 244,443,030
==============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $132,996,285) 2,991,773
Net asset value per share $44.45
Offering price per share $44.45/(1-4.75%) $46.67
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $73,862,559) 1,704,950
Net asset value and offering price per share $43.32
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $37,584,186) 868,177
Net asset value and offering price per share $43.29
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 379,168
Dividends 44,806
--------------
Total investment income 423,974
--------------
EXPENSES
Investment advisory fee 1,205,720
Distribution fee, Class A 176,325
Distribution fee, Class B 387,883
Distribution fee, Class C 190,106
Administration 691,595
Professional 17,875
Trustees 11,999
--------------
Total expenses 2,681,503
Less expenses borne by investment adviser (29,874)
--------------
Net expenses 2,651,629
--------------
NET INVESTMENT LOSS (2,227,655)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 6,350,070
Net realized loss on foreign currency transactions (1,903)
Net change in unrealized appreciation (depreciation)
on investments 103,350,257
--------------
NET GAIN ON INVESTMENTS 109,698,424
--------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 107,470,769
==============
</TABLE>
36 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12/31/99 12/31/98
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $(2,227,655) $ (1,330,768)
Net realized gain (loss) 6,348,167 (10,303,702)
Net change in unrealized appreciation
(depreciation) 103,350,257 22,375,638
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 107,470,769 10,741,168
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
In excess of accumulated net realized
gains, Class A -- (48,557)
In excess of accumulated net realized
gains, Class B -- (28,857)
In excess of accumulated net realized
gains, Class C -- (13,819)
------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS -- (91,233)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(2,162,580 and 1,832,747 shares,
respectively) 58,137,050 39,721,245
Net asset value of shares issued from
reinvestment of distributions
(0 and 2,097 shares, respectively) -- 46,145
Cost of shares repurchased (1,421,135
and 901,103 shares, respectively) (38,629,734) (19,287,058)
------------ ------------
Total 19,507,316 20,480,332
------------ ------------
CLASS B
Proceeds from sales of shares (609,129
and 776,437 shares, respectively) 15,875,386 16,692,888
Net asset value of shares issued from
reinvestment of distributions
(0 and 1,267 shares, respectively) -- 27,357
Cost of shares repurchased (242,043
and 268,731 shares, respectively) (5,699,467) (5,454,844)
------------ ------------
Total 10,175,919 11,265,401
------------ ------------
CLASS C
Proceeds from sales of shares (406,932
and 389,879 shares, respectively) 10,621,041 8,174,670
Net asset value of shares issued from
reinvestment of distributions
(0 and 580 shares, respectively) -- 12,526
Cost of shares repurchased (174,616
and 141,833 shares, respectively) (4,172,562) (2,899,692)
------------ ------------
Total 6,448,479 5,287,504
------------ ------------
CLASS M
Proceeds from sales of shares (0 and
5,260 shares, respectively) -- 110,536
Cost of shares repurchased (0 and
5,260 shares, respectively) -- (102,183)
------------ ------------
Total -- 8,353
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARE TRANSACTIONS 36,131,714 37,041,590
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 143,602,483 47,691,525
NET ASSETS
Beginning of period 100,840,547 53,149,022
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF $0
AND $0, RESPECTIVELY] $244,443,030 $100,840,547
============ ============
</TABLE>
See Notes to Financial Statements 37
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 24.08 $ 21.09 $ 18.39 $ 14.90 $ 12.07
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.37) (0.30) (0.31) (0.12) 0.22
Net realized and unrealized gain
(loss) 20.74 3.31 5.07 7.45 2.87
---------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 20.37 3.01 4.76 7.33 3.09
---------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- (0.28) (0.08)
Dividends from net realized gains -- -- (2.06) (3.56) (0.18)
In excess of accumulated net realized
gains -- (0.02) -- -- --
---------- --------- --------- --------- ---------
TOTAL DISTRIBUTIONS -- (0.02) (2.06) (3.84) (0.26)
---------- --------- --------- --------- ---------
Change in net asset value 20.37 2.99 2.70 3.49 2.83
---------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 44.45 $ 24.08 $ 21.09 $ 18.39 $ 14.90
========== ========= ========= ========= =========
Total return(2) 84.59 % 14.29 % 26.41 % 52.37 % 25.68%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $132,996 $54,187 $27,771 $7,859 $1,742
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 1.73 % 1.78 % 1.80 % 1.10 % --%
Net investment income (loss) (1.40)% (1.39)% (1.40)% (0.70)% 1.50%
Portfolio turnover 105 % 147 % 313.5 % 297.1 % 121.4%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.75%,
1.83%, 1.80%, 1.90% and 2.30% for the periods ended December 31, 1999,
1998, 1997, 1996 and 1995, respectively.
38
See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
YEAR ENDED DECEMBER 31
-----------------------------------------------------------
1999 1998 1997 1996
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 23.64 $ 20.87 $ 18.35 $16.44(6)
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.55) (0.45) (0.46) (0.32)
Net realized and unrealized gain
(loss) 20.23 3.24 5.04 2.43
------- ------- ------- ------
TOTAL FROM INVESTMENT OPERATIONS 19.68 2.79 4.58 2.11
------- ------- ------- ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- --
Dividends from net realized gains -- -- (2.06) (0.20)
In excess of accumulated net realized
gains -- (0.02) -- --
------- ------- ------- ------
TOTAL DISTRIBUTIONS -- (0.02) (2.06) (0.20)
------- ------- ------- ------
Change in net asset value 19.68 2.77 2.52 1.91
------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD $ 43.32 $ 23.64 $ 20.87 $18.35
======= ======= ======= ======
Total return(2) 83.25 % 13.39 % 25.49 % 12.84 %(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $73,863 $31,631 $17,298 $1,480
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.48 %(3) 2.53 %(3) 2.60 %(3) 2.60 %(4)
Net investment income (loss) (2.15)% (2.14)% (2.10)% (2.20)%(4)
Portfolio turnover 105 % 147 % 313.5 % 297.1 %
</TABLE>
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------------------
1999 1998 1997 1996
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 23.63 $ 20.87 $18.35 $17.99(6)
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.55) (0.45) (0.47) (0.29)
Net realized and unrealized gain
(loss) 20.21 3.23 5.05 0.85
------- ------- ------ ------
TOTAL FROM INVESTMENT OPERATIONS 19.66 2.78 4.58 0.56
------- ------- ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- --
Dividends from net realized gains -- -- (2.06) (0.20)
In excess of accumulated net realized
gains -- (0.02) -- --
------- ------- ------ ------
TOTAL DISTRIBUTIONS -- (0.02) (2.06) (0.20)
------- ------- ------ ------
Change in net asset value 19.66 2.76 2.52 0.36
------- ------- ------ ------
NET ASSET VALUE, END OF PERIOD $ 43.29 $ 23.63 $20.87 $18.35
======= ======= ====== ======
Total return(2) 83.20 % 13.34 % 25.49 % 3.12 %(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $37,584 $15,023 $8,080 $54
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.48 %(3) 2.53 %(3) 2.60 %(3) 2.60 %(4)
Net investment income (loss) (2.15)% (2.14)% (2.10)% (2.20)%(4)
Portfolio turnover 105 % 147 % 313.5 % 297.1 %
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.50%,
2.58% and 2.60% for the periods ended December 31, 1999, 1998 and 1997,
respectively.
(4) Annualized.
(5) Not 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.
See Notes to Financial Statements
39
<PAGE>
PHOENIX-ENGEMANN VALUE 25 FUND
INVESTMENTS AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
-------- --------------------
<S> <C> <C> <C>
COMMON STOCKS--99.7%
AEROSPACE/DEFENSE--4.5%
Goodrich (B.F) Co. (The)................ 39,500 $ 1,086,250
AUTO PARTS & EQUIPMENT--7.6%
Dana Corp............................... 30,300 907,106
Snap-On Tools Inc....................... 34,700 921,719
--------------------
1,828,825
--------------------
AUTOMOBILES--8.3%
Ford Motor Co........................... 19,000 1,015,312
General Motors Corp..................... 13,800 1,003,087
--------------------
2,018,399
--------------------
BUILDING MATERIALS--3.5%
Armstrong World Industries, Inc......... 25,100 837,712
CONSUMER (JEWELRY, NOVELTIES & GIFTS)--4.2%
American Greetings Corp................. 42,700 1,008,788
CONTAINERS (METAL & GLASS)--4.3%
Crown Cork & Seal Co., Inc.............. 46,400 1,038,200
ELECTRICAL EQUIPMENT--4.0%
Cooper Industries, Inc.................. 24,100 974,544
ENGINEERING & CONSTRUCTION--3.4%
Foster Wheeler Corp..................... 93,400 828,925
FOODS--4.2%
ConAgra, Inc............................ 44,900 1,013,056
HARDWARE & TOOLS--4.2%
Stanley Works, The...................... 33,800 1,018,225
<CAPTION>
SHARES VALUE
-------- --------------------
<S> <C> <C> <C>
HOMEBUILDING--4.2%
Fleetwood Enterprises, Inc.............. 49,800 $ 1,027,125
HOUSEWARES--4.2%
Fortune Brands, Inc..................... 30,700 1,015,019
IRON & STEEL--3.1%
Allegheny Technologies. Inc............. 33,350 748,291
MANUFACTURING (DIVERSIFIED)--4.1%
National Service Industries, Inc........ 33,600 991,200
OIL & GAS (REFINING & MARKETING)--4.2%
Ashland, Inc............................ 30,800 1,014,475
PAPER & FOREST PRODUCTS--4.2%
Louisiana-Pacific Corp.................. 72,100 1,027,425
PERSONAL CARE--4.1%
Avon Products, Inc...................... 29,900 986,700
RETAIL (DRUG STORES)--3.7%
Rite Aid Corp........................... 80,100 896,119
RETAIL (GENERAL MERCHANDISE)--4.1%
Sears, Roebuck & Co..................... 32,800 998,350
SERVICES (COMMERCIAL & CONSUMER)--3.6%
Service Corp. International............. 123,900 859,556
SPECIALTY PRINTING--3.8%
Donnelley (R.R.) & Sons Co.............. 36,600 908,138
TEXTILES (HOME FURNISHINGS)--4.2%
Springs Industries, Inc. Class A........ 25,500 1,018,406
</TABLE>
42 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Value 25 Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- --------------------
<S> <C> <C> <C>
TRUCKS & PARTS--4.0%
PACCAR, Inc............................. 22,000 $ 974,875
- - ----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $28,459,025) 24,118,603
- - ----------------------------------------------------------------------------
TOTAL INVESTMENTS--99.7%
(IDENTIFIED COST $28,459,025) 24,118,603(a)
Cash and receivables, less liabilities--0.3% 80,463
--------------------
NET ASSETS--100.0% $ 24,199,066
====================
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $548,216 and gross
depreciation of $4,891,044 for federal income tax purposes. At December 31,
1999, the aggregate cost of securities for federal income tax purposes was
$28,461,431.
See Notes to Financial Statements
43
<PAGE>
Phoenix-Engemann Value 25 Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $28,459,025) $ 24,118,603
Receivables
Investment securities sold 331,591
Dividends and interest 72,379
Fund shares sold 15,670
--------------
Total assets 24,538,243
--------------
LIABILITIES
Custodian 164,938
Payables
Fund shares repurchased 80,163
Distribution fee 38,739
Investment advisory fee 15,823
Administration fee 12,565
Trustees' fee 5,428
Accrued expenses 21,521
--------------
Total liabilities 339,177
--------------
NET ASSETS $ 24,199,066
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 28,627,728
Undistributed net investment income 41,897
Accumulated net realized loss (130,137)
Net unrealized depreciation (4,340,422)
--------------
NET ASSETS $ 24,199,066
==============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $13,500,475) 1,462,302
Net asset value per share $9.23
Offering price per share $9.23/(1-4.75%) $9.69
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $7,546,010) 823,212
Net asset value and offering price per share $9.17
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $3,152,581) 343,991
Net asset value and offering price per share $9.16
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 946,811
Interest 8,455
--------------
Total investment income 955,266
--------------
EXPENSES
Investment advisory fee 280,289
Distribution fee, Class A 41,044
Distribution fee, Class B 100,141
Distribution fee, Class C 46,957
Administration 186,765
Professional 17,042
Trustees 11,694
--------------
Total expenses 683,932
Less expenses borne by investment adviser (28,736)
--------------
Net expenses 655,196
--------------
NET INVESTMENT INCOME 300,070
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 3,211,792
Net change in unrealized appreciation (depreciation) on
investments (5,116,766)
--------------
NET LOSS ON INVESTMENTS (1,904,974)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ($ 1,604,904)
==============
</TABLE>
44 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Value 25 Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12/31/99 12/31/98
----------- -----------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 300,070 $ 334,618
Net realized gain (loss) 3,211,792 2,097,474
Net change in unrealized appreciation
(depreciation) (5,116,766) (352,262)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (1,604,904) 2,079,830
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (199,489) (211,860)
Net investment income, Class B (63,334) (57,698)
Net investment income, Class C (25,820) (35,805)
Net investment income, Class M -- (335)
Net realized gains, Class A (1,953,603) (869,860)
Net realized gains, Class B (1,144,495) (538,067)
Net realized gains, Class C (477,608) (327,380)
In excess of net realized gains, Class
A (71,100) --
In excess of net realized gains, Class
B (41,654) --
In excess of net realized gains, Class
C (17,382) --
----------- -----------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (3,994,485) (2,041,005)
----------- -----------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (174,138
and 447,148 shares, respectively) 2,143,783 5,386,173
Net asset value of shares issued from
reinvestment of distributions
(229,321 and 92,048 shares,
respectively) 2,131,821 1,040,977
Cost of shares repurchased (495,346
and 673,296 shares, respectively) (5,870,932) (7,993,719)
----------- -----------
Total (1,595,328) (1,566,569)
----------- -----------
CLASS B
Proceeds from sales of shares (107,152
and 297,032 shares, respectively) 1,292,314 3,568,146
Net asset value of shares issued from
reinvestment of distributions
(105,576 and 39,114 shares,
respectively) 975,535 439,118
Cost of shares repurchased (336,907
and 151,755 shares, respectively) (3,840,069) (1,790,599)
----------- -----------
Total (1,572,220) 2,216,665
----------- -----------
CLASS C
Proceeds from sales of shares (47,266
and 249,615 shares, respectively) 586,348 2,992,809
Net asset value of shares issued from
reinvestment of distributions
(49,536 and 30,269 shares,
respectively) 459,616 339,363
Cost of shares repurchased (326,376
and 130,943 shares, respectively) (3,792,417) (1,510,855)
----------- -----------
Total (2,746,453) 1,821,317
----------- -----------
CLASS M
Proceeds from sales of shares (0 and
20,926 shares, respectively) -- 256,291
Net asset value of shares issued from
reinvestment of distributions
(0 and 28 shares, respectively) -- 335
Cost of shares repurchased (0 and
20,954 shares, respectively) -- (263,766)
----------- -----------
Total -- (7,140)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARE TRANSACTIONS (5,914,001) 2,464,273
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS (11,513,390) 2,503,098
NET ASSETS
Beginning of period 35,712,456 33,209,358
----------- -----------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
$41,897 AND $30,470, RESPECTIVELY] $24,199,066 $35,712,456
=========== ===========
</TABLE>
See Notes to Financial Statements 45
<PAGE>
Phoenix-Engemann Value 25 Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------
INCEPTION
YEAR ENDED DECEMBER 31, 12/17/96
-------------------------------------- TO
1999 1998 1997 12/31/96
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $ 11.64 $ 11.56 $ 10.11 $ 10.00
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (loss) 0.17 0.15(1) 0.17(1) --(1)
Net realized and unrealized
gain (loss) (0.84) 0.66 1.95 0.11
--------- --------- --------- -----------
TOTAL FROM INVESTMENT
OPERATIONS (0.67) 0.81 2.12 0.11
--------- --------- --------- -----------
LESS DISTRIBUTIONS
Dividends from net
investment income (0.16) (0.14) (0.12) --
Dividends from net realized
gains (1.52) (0.59) (0.55) --
In excess of net realized
gains (0.06) -- -- --
--------- --------- --------- -----------
TOTAL DISTRIBUTIONS (1.74) (0.73) (0.67) --
--------- --------- --------- -----------
Change in net asset value (2.41) 0.08 1.45 0.11
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 9.23 $ 11.64 $ 11.56 $ 10.11
========= ========= ========= ===========
Total return(2) (5.75)% 7.23% 21.10% 1.10%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $13,500 $18,090 $19,518 $482
RATIO TO AVERAGE NET ASSETS
OF:
Operating expenses 1.75%(3) 1.75%(3) 1.80%(3) 1.70%(4)
Net investment income (loss) 1.32% 1.25% 1.40% 1.80%(4)
Portfolio turnover 181% 135% 87.7% --%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.84%,
1.86% and 1.80% for the periods ended December 31, 1999, 1998 and 1997,
respectively.
(4) Annualized.
(5) Not annualized.
46
See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Value 25 Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
-------------------------
YEAR ENDED DECEMBER 31,
-------------------------
1999 1998 1997
<S> <C> <C> <C>
Net asset value, beginning of period $11.59 $ 11.53 $10.39(6)
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.07 0.06(1) 0.08(1)
Net realized and unrealized gain
(loss) (0.83) 0.65 1.67
------ ------- ------
TOTAL FROM INVESTMENT OPERATIONS (0.76) 0.71 1.75
------ ------- ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.08) (0.06) (0.06)
Dividends from net realized gains (1.52) (0.59) (0.55)
In excess of net realized gains (0.06) -- --
------ ------- ------
TOTAL DISTRIBUTIONS (1.66) (0.65) (0.61)
------ ------- ------
Change in net asset value (2.42) 0.06 1.14
------ ------- ------
NET ASSET VALUE, END OF PERIOD $ 9.17 $ 11.59 $11.53
====== ======= ======
Total return(2) (6.46)% 6.41% 16.97%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $7,546 $10,981 $8,799
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 2.50% 2.50% 2.60%(4)
Net investment income (loss) 0.56% 0.54% 0.70%(4)
Portfolio turnover 181% 135% 87.7%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
-------------------------
YEAR ENDED DECEMBER 31,
-------------------------
1999 1998 1997
<S> <C> <C> <C>
Net asset value, beginning of period $11.58 $11.52 $10.39(6)
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.08 0.06(1) 0.09(1)
Net realized and unrealized gain
(loss) (0.84) 0.65 1.66
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.76) 0.71 1.75
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.08) (0.06) (0.07)
Dividends from net realized gains (1.52) (0.59) (0.55)
In excess of net realized gains (0.06) -- --
------ ------ ------
TOTAL DISTRIBUTIONS (1.66) (0.65) (0.62)
------ ------ ------
Change in net asset value (2.42) 0.06 1.13
------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.16 $11.58 $11.52
====== ====== ======
Total return(2) (6.49)% 6.42% 17.01%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $3,153 $6,642 $4,893
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 2.50% 2.50% 2.60%(4)
Net investment income (loss) 0.57% 0.52% 0.80%(4)
Portfolio turnover 181% 135% 87.7%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.59%,
2.61% and 2.60% for the periods ended December 31, 1999, 1998 and 1997,
respectively.
(4) Annualized.
(5) Not 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, January 9, 1997.
See Notes to Financial Statements
47
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix-Engemann Funds (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. To date, five
Funds are offered for sale: Phoenix-Engemann Balanced Return Fund,
Phoenix-Engemann Focus Growth Fund, Phoenix-Engemann Nifty Fifty Fund, Phoenix-
Engemann Small & Mid-Cap Growth Fund and Phoenix-Engemann Value 25 Fund,
collectively referred to as the "Funds," are series of The Phoenix-Engemann
Funds. Each Fund represents an investment in a separate diversified fund with
its own investment objectives. BALANCED RETURN FUND seeks to maximize a total
investment return consistent with reasonable risk through a balanced approach.
FOCUS GROWTH FUND seeks to achieve long-term capital appreciation. NIFTY FIFTY
FUND seeks to achieve long-term capital appreciation by investing in
approximately 50 different securities. SMALL & MID-CAP GROWTH FUND seeks to
achieve long-term growth of capital by investing primarily in a diversified
portfolio of equity securities of companies with market capitalizations below
$1.5 billion. VALUE 25 FUND seeks to achieve dividend income and long-term
growth of capital by investing in equity securities which the Adviser believes
offer the best potential for current dividend yield and long-term capital
appreciation.
Each Fund offers Class A, Class B and Class C shares. Class M shares have been
closed. Class A shares are sold with a front-end sales charge of up to 4.75%.
Class B shares are sold with a contingent deferred sales charge which declines
from 5% to zero depending on the period of time the shares are held. Class C
shares are sold with a 1% contingent deferred sales charge if redeemed within
one year of purchase. All classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that each
class bears different distribution expenses and has exclusive voting rights with
respect to its distribution plan. Income and expenses of the Funds are borne pro
rata by the holders of all classes of shares, except that each class bears
distribution expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. Actual results could differ from those estimates.
A. SECURITY VALUATION:
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price. Debt securities are valued on the basis of
broker quotations or valuations provided by a pricing service which utilizes
information with respect to recent sales, market transactions in comparable
securities, quotations from dealers and various relationships between securities
in determining value. Short-term investments having a remaining maturity of
60 days or less are valued at amortized cost which approximates market. All
other securities and assets are valued at their fair value as determined in good
faith by or under the direction of the Trustees.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date or, in the case of certain foreign securities, as soon as the Trust is
notified. Realized gains and losses are determined on the identified cost basis.
The Trust does not amortize premiums but does amortize discounts.
C. INCOME TAXES:
Each Fund is treated as a separate taxable entity. It is the policy of each
Fund to comply with the requirements of the Internal Revenue Code (the "Code")
applicable to regulated investment companies, and to distribute all of its
taxable income to its shareholders. In addition, each Fund intends to distribute
an amount sufficient to avoid imposition of any excise tax under Section 4982 of
the Code. Therefore, no provision for federal income taxes or excise taxes has
been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, expiring
capital loss carryforwards, foreign currency gain/loss, partnerships, operating
losses and losses deferred due to wash sales and excise tax regulations.
Permanent book and tax basis differences relating to shareholder distributions
will result in reclassifications to paid in capital.
E. FOREIGN CURRENCY TRANSLATION:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange rates
between the trade and settlement dates of a portfolio transaction is treated as
a gain or loss on foreign currency. Likewise, the gain or loss resulting from a
change in currency exchange rates between the date income is accrued and paid is
treated as a gain or loss on foreign currency. The Trust does not separate that
portion of the results of operations arising from changes in the exchange rates
and that portion arising from changes in the market prices of securities.
48
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
F. FORWARD CURRENCY CONTRACTS:
The Small & Mid-Cap Growth Fund and the Value 25 Fund may enter into forward
currency contracts in conjunction with the planned purchase or sale of foreign
denominated securities in order to hedge the U.S. dollar cost or proceeds.
Forward currency contracts involve, to varying degrees, elements of market risk
in excess of the amount recognized in the Statement of Assets and Liabilities.
Risks arise from the possible movements in foreign exchange rates or if the
counterparty does not perform under the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts are traded directly between currency traders and
their customers. The contract is marked-to-market daily and the change in market
value is recorded by each Fund as an unrealized gain (or loss). When the
contract is closed or offset with the same counterparty, the Fund records a
realized gain (or loss) equal to the change in the value of the contract when it
was opened and the value at the time it was closed or offset.
G. FUTURES CONTRACTS:
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. The Small & Mid-Cap Growth Fund and
the Value 25 Fund may enter into financial futures contracts as a hedge against
anticipated changes in the market value of their portfolio securities. Upon
entering into a futures contract, the Fund is required to pledge to the broker
an amount of cash and/or securities equal to the "initial margin" requirements
of the futures exchange on which the contract is traded. Pursuant to the
contract, the Fund agrees to receive from or pay to the broker an amount of cash
equal to the daily fluctuation in value of the contract. Such receipts or
payments are known as daily variation margin and are recorded by the Fund as
unrealized gains and losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the futures contract may not
correspond to the change in value of the hedged instruments.
H. OPTIONS:
Each Fund may write covered options or purchase options contracts for purpose
of hedging against changes in the market value of the underlying securities or
foreign currencies. Additionally, each Fund may buy and sell options on domestic
and foreign securities indices for hedging purposes.
Each Fund will realize a gain or loss upon the expiration or closing of the
option transaction. Gains and losses on written options are reported separately
in the Statement of Operations. When a written option is exercised, the proceeds
on sales or amounts paid are adjusted by the amount of premium received. Options
written are reported as a liability in the Statement of Assets and Liabilities
and subsequently marked-to-market to reflect the current value of the option.
The risk associated with written options is that the change in value of options
contracts may not correspond to the change in value of the hedged instruments.
In addition, losses may arise from changes in the value of the underlying
instruments, or if a liquid secondary market does not exist from the contracts.
Each Fund may purchase options which are included in the Fund's Schedule of
Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
I. EXPENSES:
Expenses incurred by the Trust with respect to any two or more Funds are
allocated in proportion to the net assets of each Fund, except where allocation
of direct expense to each Fund or an alternative allocation method can be more
fairly made.
J. LOAN AGREEMENTS:
The Funds may invest in direct debt instruments which are invested in amounts
owed by a corporation, governmental, or other borrower to lenders or lending
syndicates. The Funds' investments in loans may be in the form of participations
in loans or assignments of all or a portion of loans from third parties. A loan
is often administered by a bank or other financial institution (the lender) that
acts as agent for all holders. The agent administers the terms of the loan, as
specified in the loan agreement. When investing in a loan participation, the
Funds have the right to receive payments of principal, interest and any fees to
which it is entitled only from the lender selling the loan agreement and only
upon receipt by the lender of payments from the borrower. The Funds generally
have no right to enforce compliance with the terms of the loan agreement with
the borrower. As a result, the Funds may be subject to the credit risk of both
the borrower and lender that is selling the loan agreement. For loans which the
Funds are a participant, the Funds may not sell their participation in the loan
without the lender's prior consent. When the Funds purchase assignments from
lenders it acquires direct rights against the borrower on the loan. Direct
indebtedness of emerging countries involves a risk that the government entities
responsible for the repayment of the debt may be unable, or unwilling to pay the
principal and interest when due.
49
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, the Adviser, Roger Engemann &
Associates, Inc. ("REA", or the "Adviser"), a wholly owned subsidiary of
Pasadena Capital Corporation, which in turn is a wholly owned subsidiary of
Phoenix Investment Partners, Ltd. a publicly-traded company 60% owned by Phoenix
Home Life Mutual Insurance Company, is entitled to a fee, based upon the
following annual rates as a percentage of the average daily net assets of each
Fund:
<TABLE>
<CAPTION>
First $50 Next $450 Over $500
Million Million Million
--------- --------- ---------
<S> <C> <C> <C>
Balanced Return Fund........... 0.80% 0.70% 0.60%
Focus 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>
The Adviser furnishes advice and recommendations with respect to the Funds'
securities portfolios, supervises the Funds' investments, provides Fund
accounting and pricing, and provides the Trust's Board of Trustees with periodic
and special reports on investment securities, economic conditions and other
pertinent subjects. The Adviser also performs various administrative and
shareholder services for each Fund under separate administration agreements. All
normal operating expenses of the Funds, except for fees and expenses associated
with investment management services, service fees, distribution fees, Trustees'
fees, audit fees and certain legal fees are paid by the Adviser pursuant to the
administration agreements.
Phoenix Equity Planning Corporation ("PEPCO") an indirect majority-owned
subsidiary of PHL, which serves as the national distributor of the Trust's
shares has advised the Trust that it retained net selling commissions of
$165,377 for Class A shares and deferred sales charges of $605,796 for Class B
shares and $104,512 for Class C shares for the year ended December 31, 1999. In
addition, each Fund pays PEPCO a distribution fee at an annual rate of 0.25% for
Class A shares, 1.00% for Class B shares and 1.00% for Class C shares applied to
the average daily net assets of each Fund. The distributor has advised the Trust
that of the total amount expensed for the year ended December 31, 1999
$3,067,353 was retained by the Distributor, $3,181,340 was paid out to
unaffiliated Participants and $62,393 was paid to W.S. Griffith, an indirect
subsidiary of PHL.
As Administrator of the Funds, PEPCO received a fee for bookkeeping,
administration, and pricing services at an annual rate of 0.60% of average daily
net assets up to $50 million, 0.50% of average daily net assets of $50 million
to $500 million, 0.40% of average daily net assets of $500 million through $625
million, and 0.30% of average daily net assets greater than $625 million: a
minimum fee may apply.
PEPCO has voluntarily agreed to waive, when necessary, a portion of its
administration fee so that Other Operating Expenses (operating expenses
excluding management fees and 12b-1 fees) do not exceed the following limits:
<TABLE>
<CAPTION>
1st
$50 Next $450 Next $125 Over $625
Million Million Million Million
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balanced Return
Fund................ 1.09% 0.60% 0.40% 0.40%
Focus Growth Fund..... 0.99% 0.50% 0.30% 0.30%
Nifty Fifty Fund...... 0.99% 0.50% 0.30% 0.30%
Small & Mid-Cap Growth
Fund................ 0.60% 0.50% 0.40% 0.40%
Value 25 Fund......... 0.60% 0.50% 0.40% 0.40%
</TABLE>
PEPCO serves as the Fund's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended December 31, 1999
(excluding U.S. Government and agency securities, short-term securities, futures
contracts and forward currency contracts) aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
-------------- --------------
<S> <C> <C>
Balanced Return Fund................ $105,134,124 $ 50,064,234
Focus Growth Fund................... 325,532,121 370,651,989
Nifty Fifty Fund.................... 184,573,540 180,403,737
Small & Mid Cap Growth Fund......... 145,720,819 130,587,780
Value 25 Fund....................... 55,409,000 64,715,111
</TABLE>
Purchases and sales of U.S. Government and agency securities during the year
ended December 31, 1999, aggregated $41,695,734 and $19,924,453 respectively,
for the Balanced Return Fund.
At December 31, 1999, the Focus Growth Fund had outstanding written options as
follows:
<TABLE>
<CAPTION>
Shares Subject Expiration Exercise Market
Call Options to Call Date Price Value
- - ------------ -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Carnival Corp........... 150,000 1/22 $45.00 $384,375
Texas Instruments,
Inc................... 60,000 1/22 110.00 93,750
</TABLE>
50
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
Written option activity for the year ended December 31, 1999, for the Focus
Growth Fund aggregated the following:
<TABLE>
<CAPTION>
Number of Amount of
Options Premium
-------------- --------------
<S> <C> <C>
Options outstanding at December 31,
1998................................... -- $ --
Options written.......................... 6,100 1,623,900
Options canceled in closing purchase
transactions........................... -- --
Options expired.......................... (3,000) (472,234)
Options exercised........................ (1,000) (134,250)
------ ----------
Options outstanding at December 31,
1999................................... 2,100 $1,017,416
====== ==========
</TABLE>
4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a fund's ability to
repatriate such amounts.
5. CAPITAL LOSS CARRYOVERS
The following Funds have capital loss carryovers, expiring in 2006, which may
be used to offset future capital gains.
<TABLE>
<S> <C>
Small & Mid-Cap Growth Fund.............. $ 4,320,592
</TABLE>
Under current tax law, capital loss realized after October 31, may be deferred
and treated as occurring on the first day of the following tax year. For the
calendar year ended December 31, 1999, the Balanced Return Fund and the Value 25
Fund elected to defer losses occurring between November 1, 1999 and December 31,
1999 in the amounts of $17,366 and $139,062, respectively.
6. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Fund has recorded several
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of the Fund and are designed generally to present
undistributed income and realized gains on a tax basis which is considered to be
more informative to the shareholder. As of December 31, 1999, the Funds recorded
the following reclassifications to increase (decrease) the accounts listed
below.
<TABLE>
<CAPTION>
Undistributed Accumulated Capital paid in
net investment net realized on shares of
income (loss) gain (loss) beneficial interest
-------------- -------------- -------------------
<S> <C> <C> <C>
Balanced Return Fund..... $ 25,941 $ 23,819 $ (49,760)
Focus Growth Fund........ 7,242,469 (8,158,548) 916,079
Nifty Fifty Fund......... 5,531,589 (5,050,614) (480,975)
Small & Mid-Cap Growth
Fund................... 2,227,655 1,903 (2,229,558)
</TABLE>
7. OTHER
On October 20, 1999, the Board of Trustees of Phoenix-Engemann Funds
unanimously approved an Agreement and Plan of reorganization relating to the
proposed combination of the Phoenix-Aberdeen Worldwide Opportunities Fund and
the Phoenix-Engemann Global Growth Fund.
51
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
Pursuant to the Agreement, the Global Growth Fund transferred 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 distributed the shares of the
Worldwide Opportunities Fund to its shareholders pro rata, in liquidation of the
Global Growth Fund.
TAX INFORMATION NOTICE (UNAUDITED)
For the fiscal year ended December 31, 1999, the following Funds distributed
long-term capital gain dividends as follows:
<TABLE>
<S> <C>
Balanced Return Fund.................... $ 8,937,070
Focus Growth Fund....................... 122,083,343
Nifty Fifty Fund........................ 43,569,850
Value 25 Fund........................... 201,184
</TABLE>
For federal income tax purposes, a percentage of the ordinary income dividends
paid by the following Funds qualify for the dividends received deduction for
corporate shareholders:
<TABLE>
<S> <C>
Balanced Return Fund........................ 76.54%
Value 25 Fund............................... 28.60%
</TABLE>
This report is not authorized for distribution to prospective investors in the
Phoenix-Engemann Funds unless preceded or accompanied by an effective Prospectus
which includes information concerning the sales charge, the Fund's record and
other pertinent information.
52
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To the Trustees and Shareholders
of The Phoenix-Engemann Funds
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for bond ratings), and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Phoenix-Engemann Balanced Return Fund, Phoenix-Engemann Focus Growth Fund
(formerly Phoenix-Engemann Growth Fund), Phoenix-Engemann Nifty Fifty Fund,
Phoenix-Engemann Small & Mid-Cap Growth Fund, and the Phoenix-Engemann Value 25
Fund (constituting the Phoenix-Engemann Funds, hereafter referred to as the
"Fund") at December 31, 1999, the results of each of their operations for the
year then ended, the changes in each of their net assets for the two years in
the period then ended and the financial highlights for each of the periods
indicated, in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 11, 2000
53
<PAGE>
PXP 2115(2/00)
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 Registrant's Amended and Restated Agreement and Declaration of Trust, as
amended, and filed as described in a.1. above
d. Investment Management Agreement
e.1. Distribution Agreement with Phoenix Equity Planning Corporation
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)
h.4.* Amendment to Administration Agreement
i. Opinion and Consent of Counsel(1)
j.* Consent 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.* Amended and Restated Multiple Class Plan
p.* Codes of Ethics of the Trust, the Adviser and the Distributor
q. Powers of Attorney(11)
</TABLE>
- -----------
* Filed herewith
(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.
(11) Previously filed as part of Post-Effective Amendment No. 27 to the
Registrant's Registration Statement as filed on November 21, 1997.
C-1
<PAGE>
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
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-Aberdeen Worldwide Opportunities
Fund, Phoenix Duff & Phelps Institutional Mutual Funds, Phoenix-Engemann
Funds, Phoenix Equity Series Fund, Phoenix-Euclid Mutual Funds,
Phoenix-Goodwin California Tax Exempt Bonds, Inc., Phoenix-Goodwin
Multi-Sector Fixed Income Fund, Inc., Phoenix-Goodwin Multi-Sector Short
Term Bond Fund, Phoenix Investment Fund 97, Phoenix Multi-Portfolio Fund,
Phoenix-Oakhurst Income & Growth Fund, Phoenix-Oakhurst Strategic
Allocation Fund, Inc., Phoenix-Seneca Funds, Phoenix Series Fund, Phoenix
Strategic Equity Series Fund, Phoenix-Zweig Trust, 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 Chairman None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Executive Vice None
100 Bright Meadow Blvd. President, Chief Financial
P.O. Box 2200 Officer and Treasurer
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 President, None
56 Prospect Street Retail Division
P.O. Box 150480
Hartford, CT 06115-0480
Barry Mandinach Executive Vice President, None
900 Third Avenue Chief Marketing Officer,
New York, NY 10022 Retail Division
Robert Tousingnant Executive Vice President, None
100 Bright Meadow Blvd. Chief Sales Officer,
P.O. Box 2200 Retail Division
Enfield, CT 06083-2200
G. Jeffrey Bohne Vice President, Mutual Fund None
101 Munson Street Customer Service
Greenfield, MA 01301
Robert S. Dreissen Vice President, Compliance Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Jacqueline M. Porter Assistant Vice President, Assistant Treasurer
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
Balanced Return, Focus Growth, Nifty Fifty, Small & Mid-Cap Growth and Value 25
Funds. The custodian of the assets of the Funds, Union Bank of California,
maintains certain records at 475 Sansome Street, San Francisco, California
94111. 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 certifies that it meets all of the
requirements for effectiveness of this registration statement under Rule 485(b)
of the Securities Act and 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 1st day of May, 2000.
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 1st day of May 2000.
<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*
Chief Financial
/s/ Malcolm Axon Officer
- ----------------------------
Malcolm Axon
Trustee
- ----------------------------
Angela Wong*
By: /s/ Thomas N. Steenburg
--------------------------
*Thomas N. Steenburg,
Attorney-in-Fact, pursuant to Powers of
Attorney previously filed
</TABLE>
S-1(c)
AMENDMENT TO ADMINISTRATION AGREEMENT
DATED SEPTEMBER 3, 1997
(effective March 1, 2000)
Section 8 (a) of the Administration Agreement is amended to read as follows:
(a) As compensation for the services rendered by, and responsibilities assumed
by, the Administrator during the term of this Agreement, the Funds will pay
to the Administrator an administration fee in an amount equal to the per
annum rate of each Funds average daily net asset as follows:
0.50% of the value of net assets up to and including $50,000,000; and
0.40% of the value of net assets over $50,000,000 up to and including
$500,000,000; and
0.30% of the value of net assets over $500,000,000.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 32 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated February 11, 2000, relating to the financial
statements and financial highlights appearing in the December 31, 1999 Annual
Report to Shareholders of the Phoenix-Engemann Funds, which are also
incorporated by reference into the Registration Statement. We also consent to
the reference to us under the heading "Financial Highlights" in the Prospectus
and under the heading "Other Information - Independent Accountants" in the
Statement of Additional Information.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 26, 2000
AMENDED AND RESTATED
MULTIPLE CLASS PLAN
OF
THE PHOENIX-ENGEMANN FUNDS
SECTION 1. General. This Multiple Class Plan (the "Plan") adopted in
accordance with Rule 18f-3 promulgated under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), shall govern the terms and conditions
under which The Phoenix-Engemann Funds (the "Trust") may issue separate classes
of shares representing interests in the Trust's series of portfolios (the
"Funds") listed on Appendix A. To the extent that a subject matter herein is
covered by the Trust's Agreement and Declaration of Trust or Bylaws, the
Agreement and Declaration of Trust and/or Bylaws will control in the event of
any inconsistencies with the descriptions herein.
SECTION 2. Rights and Obligations. Except as set forth herein, all
classes of shares issued in respect to a Fund have identical voting, dividend,
liquidation and other right, preferences, powers, restrictions, limitations,
qualifications, designations, and terms and conditions. The only difference
among the various classes of shares relate solely to the following factors: (a)
each class may be subject to different class expenses as discussed under Section
4 of this Plan; (b) each class may bear different identifying designations; (c)
each class will have exclusive voting rights with respect to matters pertaining
to any distribution plans adopted pursuant to Rule 12b-1 under the Investment
Company Act (see Section 7 below); (d) each class may have different exchange
privileges; and (e) certain classes may provide for the conversion of such class
into another class.
SECTION 3. Classes of Shares and Designation Thereof. Each Fund may
offer any or all of the following classes of shares:
(a) Class A Shares. "Class A Shares" will be sold at net asset
value plus a front-end sales load. The sales load will be subject to
reductions or elimination for larger purchases, under a quantity
discount, under a right of accumulation, or under a letter of intent.
The front-end sales load will be subject to certain other deductions
permitted by Section 22(d) of the Investment Company Act.
Class A Shares also will be subject to a service fee in an amount,
computed and prorated on a daily basis, equal to 0.25% per annum of the
Class A Shares' average daily net assets, payable to broker-dealers and
other service providers, including Roger Engemann & Associates, Inc.
(the "Manager") for shareholder accounts not serviced by other service
providers, pursuant to services agreements.
<PAGE>
(b) Class B Shares. "Class B Shares" will be sold to investors at
net asset value without the imposition of a front-end sales load.
However, an investor's proceeds from a redemption of Class B Shares
made within five (5) years after their purchase (the "CDSC Period")
generally will be subject to a Contingent Deferred Sales Charge
("CDSC") payable to Phoenix Equity Planning Corp. (the "Distributor").
The CDSC Period and CDSC schedule are set forth in Appendix B hereto.
No CDSC will be imposed on (1) redemptions of Class B Shares that occur
more than six years after the end of the calendar month in which such
shares were purchased; (2) shares derived from reinvestment of
dividends and distributions attributable to Class B Shares; or (3)
amounts representing an increase in the value of the shareholder's
account resulting from capital appreciation above the amount paid for
the shares purchased during the CDSC Period. As a result, in effect,
the amount of the CDSC applicable to Class B Shares will be assessed on
an amount equal to the lesser of the then current market value or the
original cost of the Class B Shares being redeemed. In determining
whether a CDSC is applicable, it will be assumed that a redemption is
made, first, of Class B Shares representing capital appreciation;
second, of Class B Shares representing reinvestment of dividends and
capital gain distributions; and finally third, of Class B Shares held
by the shareholder for the longest period of time. The CDSC may be
waived under the circumstances listed on Appendix C attached hereto.
Class B Shares also will be subject to a Rule 12b-1 distribution
fee and service fee at a combined annual rate of up to 1% of the daily
net assets attributable to the Class B Shares. Of this amount, up to
0.75% of the average daily net assets attributable to the Class B
Shares is payable to the Distributor as a Rule 12b-1 distribution fee,
and 0.25% of the average daily net assets attributable to the Class B
Shares is payable as a service fee to service providers pursuant to
service agreements between the Trust and such service providers.
(c) Class C Shares. "Class C Shares" will be sold to investors at
net asset value without the imposition of a front-end sales load.
However, an investor's proceeds from a redemption of Class C Shares
made within one (1) year after their purchase (the "CDSC Period")
generally will be subject to a Contingent Deferred Sales Charge
("CDSC") payable to Phoenix Equity Planning Corp. (the "Distributor").
No CDSC will be imposed on (1) redemptions of Class C Shares that occur
after one year after the end of the calendar month in which such shares
were purchased; (2) shares derived from reinvestment of dividends and
distributions attributable to Class C Shares; or (3)
2
<PAGE>
amounts representing an increase in the value of the shareholder's
account resulting from capital appreciation above the amount paid for
the shares purchased during the CDSC Period. As a result, in effect,
the amount of the CDSC applicable to Class C Shares will be assessed on
an amount equal to the lesser of the then current market value of the
original cost of the Class C Shares being redeemed. In determining
whether a CDSC is applicable, it will be assumed that a redemption is
made, first, of Class C Shares representing capital appreciation;
second, of Class C Shares representing reinvestment of dividends and
capital gain distributions; and finally third, of Class C Shares held
by the shareholder for the longest period of time. The CDSC may be
waived under the circumstances listed on Appendix C attached hereto.
Class C Shares also will be subject to a Rule 12b-1 distribution
fee and service fee at a combined annual rate of up to 1% of the daily
net assets attributable to the Class C Shares. Of this amount, up to
0.75% of the average daily net assets attributable to the Class C
Shares is payable to the Distributor as a Rule 12b-1 distribution fee,
and 0.25% of the average daily net assets attributable to the Class C
Shares is payable as a service fee to service providers pursuant to
service agreements between the Trust and such service providers.
SECTION 4. Allocation of Expenses.
(a) Class Expenses. Each class of shares shall be subject to
different class expenses consisting of (1) Rule 12b-a plan distribution
and service fees, if applicable to a particular class, and (2)
incremental expenses which the Board of Trustees, including a majority
of Trustees who are not "interested persons" of the Trust as defined in
Section 2(a)19 of the Investment Company Act (the "Independent
Trustees") determine should be allocated or charged on a class basis,
which expenses shall be limited to any litigation expenses relating
solely to the class (collectively, the "Class Expenses").
(b) Other Expenses. Except for the Class Expenses discussed above
(which will be allocated to the appropriate class), all other expenses
incurred by each Fund (such as the management and administrative fees)
will be allocated to each class of shares on the basis of the relative
net assets of each class of shares.
(c) Waivers and Reimbursements of Expenses. The Manager may choose
to reimburse or waive Class Expenses on certain classes on a voluntary,
temporary basis. The amount of Class Expenses waived or reimbursed by
3
<PAGE>
the Manager may vary from class to class. The Manager (or any entity
related thereto that charges a fee for a Class Expense) may waive or
reimburse its fee for Class Expenses of a class of a Fund in whole or
in part only if the revised fee more accurately reflects the relative
costs of providing to each class the service for which the Class
Expense is charged. In addition, the Manager may waive or reimburse
Trust expenses and/or Fund expenses (with or without a waiver of Class
Expenses) but only if the same proportionate amount of Trust expenses
and/or Fund Expenses are waived or reimbursed for each class. Thus, any
Trust expenses that are waived or reimbursed would be credited to each
Fund of the Trust according to the relative net assets of the Funds,
and in turn credited to each class of each Fund based on the relative
net assets of the classes. Similarly, any Fund expenses that are waived
or reimbursed would be credited to each class of that Fund according to
the relative net assets of the classes.
(d) Allocation Worksheet. Attached as Appendix D is an explanation
of the effect of the implementation of the multiple class arrangements
described in this Plan on the Funds' financial statements.
SECTION 5. Allocation of Income. The Funds will allocate income and
realized and unrealized capital gains and losses based on the relative net
assets of each class of shares.
SECTION 6. Exchange Privileges. Shares of a specific class of one Fund
may only be exchanged for shares of that same class of any other Fund advised by
the Manager that offer an exchange privilege, subject to such conditions as may
be imposed from time to time and as disclosed on Appendix E.
SECTION 7. Conversions. All Class B Shares of the Funds shall convert
automatically to Class A Shares on the first business day of the month next
following the eighth anniversary of their issuance. For purposes of calculating
the holding period required for such conversion, Class B Shares shall be deemed
to have been issued on (1) the date on which the issuance of such Class B Shares
occurred or (2) for Class B Shares obtained through an exchange, or a series of
exchanges, the date on which the issuance of the original Class B Shares
occurred. For purposes of conversion to Class A Shares, shares purchased through
the reinvestment of dividends and other distributions will be considered held in
a separate sub-account. Each time any Class B Shares in a shareholder's account
convert to Class A Shares, a proportionate number of the Class B Shares in the
sub-account also will convert to Class A Shares. Class B Shares will convert to
Class A Shares on the basis of the relative net asset value of the two classes,
without the imposition of any sales load, fee, or other charge. After
conversion, the converted shares will be subject to the usual Class A Share
service fee.
4
<PAGE>
If a Fund adopts and implements a Rule 12b-1 Plan for its Class A
Shares (or, if presented to shareholders, implements any amendment to a Rule
12b-1 Plan previously adopted, or any amendment to a services agreement with
respect to its Class A Shares), the existing Class B Shares of the Fund will
stop converting into Class A Shares unless the Class B shareholders, voting
separately as a class, approve the proposal. Should the Class B Shareholders
fail to approve such amendment or adoption; The Board of Trustees shall take
such action as is necessary to: (1) create a new class (the "New Class A
Shares")which shall be identical in all material respects to the Class A Shares
as they existed prior to the implementation of the amendment or adoption; and
(2) ensure that the existing Class B Shares will be exchanged or converted into
New Class A Shares no later than the date such Class B Shares previously were
scheduled to convert to Class A Shares. If deemed advisable by the Board of
Trustees to implement the foregoing, and at the sole discretion of the Board of
Trustees, such action may include the exchange of all Class B Shares for a new
class (the "New Class B Shares"), identical in all respects to the Class B
Shares except that the New Class B Shares will automatically convert into the
New Class A Shares. Such exchanges or conversions shall be effected in a manner
that the Board of Trustees reasonably believes will not be subject to federal
taxation.
SECTION 8. Effective Date of Plan. This Plan shall be included as an
exhibit to the Trust's Form N-1A Registration Statement pursuant to a
post-effective amendment thereto. This Plan shall take effect upon the
effectiveness of such post-effective amendment. A majority of the Trustees of
the Trust, including a majority of the Independent Trustees, have previously
approved the multiple class arrangements and expense allocations described in
this Plan as being in the best interests of each class of shares of each Fund
and each Fund, individually, and the Trust as a whole.
SECTION 9. Amendment. This Plan may not be amended to change materially
the provisions of the Plan unless such amendment is approved by a majority of
the Trustees of the Trust, including a majority of the Independent Trustees,
that such amendment is in the best interests of each class of each Fund and each
Fund, individually, and the Trust as a whole.
5
<PAGE>
APPENDIX A
TO MULTIPLE CLASS PLAN
OF
THE PHOENIX-ENGEMANN FUNDS
Phoenix-Engemann Focus Growth Fund
Class A Shares
Class B Shares
Class C Shares
Phoenix-Engemann Nifty Fifty Fund
Class A Shares
Class B Shares
Class C Shares
Phoenix-Engemann Balanced Return Fund
Class A Shares
Class B Shares
Class C Shares
Phoenix-Engemann Small & Mid-Cap Fund
Class A Shares
Class B Shares
Class C Shares
Phoenix-Engemann Value 25 Fund
Class A Shares
Class B Shares
Class C Shares
6
<PAGE>
APPENDIX B
TO MULTIPLE CLASS PLAN
OF
THE PHOENIX-ENGEMANN FUNDS
CDSC SCHEDULE AND CDSC PERIOD
Class B Shares may be redeemed on any business day at the net asset
value per share next determined following receipt of the redemption order, less
the applicable contingent deferred sales charge shown in the tables below.
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge
as a Percentage of
Redemption During Amount Redeemed
----------------- ---------------
<S> <C>
1st Year Following Purchase 5.0%
2nd Year Following Purchase 4.0%
3rd Year Following Purchase 3.0%
4th Year Following Purchase 2.0%
5th Year Following Purchase 2.0%
and Thereafter None
</TABLE>
Class C Shares may be redeemed on any business day at the net asset
value per share next determined following receipt of the redemption order, less
the applicable contingent deferred sales charge shown in the tables below.
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge
as a Percentage of
Redemption During Amount Redeemed
----------------- ---------------
<S> <C>
1st Year Following Purchase 1.0%
and Thereafter None
</TABLE>
7
<PAGE>
APPENDIX C
TO MULTIPLE CLASS PLAN
OF
THE PHOENIX-ENGEMANN FUNDS
CDSC WAIVERS
CLASS B and C SHARES: The Funds have the ability to waive or reduce the
CDSC in some or all of the following circumstances:
(1) following the death or disability, as defined in Section 72(m)(7)
of the Internal Revenue Code of 1986, as amended, of a shareholder if redemption
is made within one year of death or disability of the shareholder;
(2) in connection with certain mandatory distributions from an
Individual Retirement Account, or other qualified retirement plan, to a
shareholder who has attained the age of 70 1/2;
(3) in connection with certain redemptions of shares made pursuant to a
shareholder's participation in any systematic withdrawal plan adopted by a Fund;
and
(4) in connection with redemptions of shares by tax-exempt employee
benefit plans resulting from the enactment of any law or the promulgation by the
U.S. Internal Revenue Service or the U.S. Department of Labor of any regulation
pursuant to which continuation of the investment of such shares would be
improper.
If the Funds waive or reduce the CDSC, such waiver or reduction will be
uniformly applied to all offerees in the class specified. Also, in waiving or
reducing the CDSC, the Funds will comply with the requirements of Rule 22d-1
under the Investment Company Act.
In addition, the Distributor may provide a pro rata refund out of its
own assets of any CDSC paid in connection with a redemption of Class B and/or C
Shares, the proceeds of which are reinvested in Class B and/or C Shares of the
same Fund within 365 days after such redemption.
8
<PAGE>
APPENDIX D
TO MULTIPLE CLASS PLAN
OF
THE PHOENIX-ENGEMANN FUNDS
MULTIPLE CLASS ACCOUNTING
Overview
The Trust has adopted a multiple class share structure for the Funds.
The Funds will offer up to three separate classes of shares. Class A shares will
be offered with a front-end sales load ("FESL"). Class B shares will be offered
without a FESL, but will be subject to a contingent deferred sales charge
("CDSC"), and are subject to a Distribution Fee computed and prorated on a daily
basis equal to the annual rate of 0.75% of average daily net assets. Class C
shares will be offered without a FESL, but will be subject to a CDSC, and are
subject to a Distribution Fee computed and prorated on a daily basis equal to
the annual rate of 0.75% of average daily net assets.
Net Asset Value And Dividend/Distribution Determinations
As a result of differences in fees charged to each class of shares and
other circumstances that can cause the net asset values ("NAV") to vary,
separate NAV calculations must be performed and separate dividend/distribution
declarations must be made for each class of shares.
The procedures for calculating NAV and dividend distributions depend
upon the dividend/distribution policy of each Fund. Presently, it is the Funds'
policy to declare dividends from net investment income and distributions from
net realized long-term and/or short-term capital gains on at least an annual
basis.
Income and Expenses
In maintaining the records for the Funds, the income, expense, gain and
loss accounts must be allocated to each class of shares within each Fund. On a
daily basis, income and realized and unrealized gains and losses will be
allocated to each class based upon the relative percentage of net assets at the
beginning of the day in each class, after such assets are adjusted for the prior
business day's capital share transactions.
On a daily basis, the allocation of expenses to each class of shares
will depend upon the nature of each expense. Expenses fall into two categories:
1. Fund Expenses - expenses attributable to all classes of shares
that are allocated based upon the adjusted net assets of each
class (Management Fee; Administration Fee; Service Fee and
Fiduciary/Audit Fees).
9
<PAGE>
2. Class Expenses - expenses attributable to a specific class of
shares (Distribution Fee).
Prior to determining each day's NAV or dividends/distributions, the
following expense items will be calculated as indicated:
Management, Administration, Service and Fiduciary/Audit Fees
The current day's accrual for Management, Administration and Services
Fees will be calculated using the beginning of the day's net assets of each
class of shares, before such assets are adjusted for the prior day/s capital
share transactions. Fiduciary/Audit Fees are estimated and charged to the Funds
daily on a pro rata basis.
Distribution Fee
The current day's accrual for the Distribution Fee will be calculated
using the beginning of the day's net assets, before such assets are adjusted for
the prior day's capital share transactions, attributable to Class B and C
shares.
In designing accounting procedures and controls relating to the
allocation of income and expenses and the calculation of NAV and
dividends/distributions for each class of shares, the following objectives must
be met:
1. Determining that class expenses attributable to each class of
shares are properly charged to each class of shares and recorded
in the Fund's accounting records.
2. Determining that income and other expenses and realized and
unrealized gains and losses are allocated properly to each class
of shares based upon the relative percentage of net assets by
class.
3. Determining that undistributed net investment income and
undistributed net realized gains and daily NAV calculations for
each class of shares are properly calculated.
To satisfy these objectives, the attached Multiple Class Pricing
Worksheet (or its equivalent) must be completed for each Fund employing more
than one class of shares.
NAV and Dividends/Distributions
Dividends from net investment income will be determined as follows:
o Dividends will be determined pursuant to authority of the Fund's
Trustees, before the deduction of
10
<PAGE>
class expenses, for all classes of shares combined.
o From this amount, an amount equal to the per share amount of class
expenses accrued during the period to which the dividend relates
is subtracted.
o The result is the rate per share payable to each class.
Distributions from net realized capital gains will be determined by
dividing the total amount of gains to be distributed as declared pursuant to
authority of the Trustees by the total number of shares outstanding of the
record date.
NAV by class will be determined by dividing the ending total net assets
by class by the number of shares outstanding in each class. Amounts will be
arrived at by completing the Multiple Class Pricing Worksheet (or its
equivalent).
11
<PAGE>
Multiple Class Pricing Worksheet
Fund: ___________________________ Date:____________________
<TABLE>
<CAPTION>
============================================================================================================
Composite Class A Class B Class C
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Prior Day NAV per Share
- ------------------------------------------------------------------------------------------------------------
NET ASSET ALLOCATION
- ------------------------------------------------------------------------------------------------------------
2. Total Net Assets at Beg. of Day
- ------------------------------------------------------------------------------------------------------------
3. Net Share Activity
- ------------------------------------------------------------------------------------------------------------
4. Adjusted Total Net Assets
- ------------------------------------------------------------------------------------------------------------
5. % of Total Net Assets
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
INCOME AND EXPENSES
- ------------------------------------------------------------------------------------------------------------
6. Dividend Income
- ------------------------------------------------------------------------------------------------------------
7. Interest Income
- ------------------------------------------------------------------------------------------------------------
8. Total Gross Income
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
9. Management Fee
- ------------------------------------------------------------------------------------------------------------
10. Administration Fee
- ------------------------------------------------------------------------------------------------------------
11. Service Fee
- ------------------------------------------------------------------------------------------------------------
12. Fiduciary/Audit Fees
- ------------------------------------------------------------------------------------------------------------
13. Total Fund Expenditures
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
14. Distribution Fee
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
15. Total Expenses
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
16. Net Investment Income
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
17. Dividend Rate
- ------------------------------------------------------------------------------------------------------------
18. Gross Dividend
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
CAPITAL
- ------------------------------------------------------------------------------------------------------------
19. Change in Undistributed Net Income
============================================================================================================
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================
Composite Class A Class B Class C
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
20. Current Day Share Activity
- ------------------------------------------------------------------------------------------------------------
21. Daily Realized Gain/Loss
- ------------------------------------------------------------------------------------------------------------
22. Distributions from Net Capital Gains
- ------------------------------------------------------------------------------------------------------------
23. Change in Unrealized Gain/Loss
- ------------------------------------------------------------------------------------------------------------
24. Daily Change in Net Assets
- ------------------------------------------------------------------------------------------------------------
25. Prior Day's Net Assets
- ------------------------------------------------------------------------------------------------------------
26. Current Day's Net Assets
- ------------------------------------------------------------------------------------------------------------
27. Current Day's Shares O/S
- ------------------------------------------------------------------------------------------------------------
28. NAV per Share
- ------------------------------------------------------------------------------------------------------------
29. Maximum Sales Load
- ------------------------------------------------------------------------------------------------------------
30. Maximum Offering Price
============================================================================================================
</TABLE>
Prepared by: _____________________ Reviewed by: __________________________
13
<PAGE>
MULTIPLE CLASS PRICING WORKSHEET
EXPLANATION
<TABLE>
<CAPTION>
Line # Explanation
------ -----------
<S> <C>
1. NAV per share from prior day's worksheet.
2. Net Assets at the beginning of the day per line 26 of prior day's worksheet.
3. Prior day's net capital share activity, in dollars, as reported in the current day by the
Fund's transfer agent.
4. Adjusted total net assets for the current day. Equal to line 2 plus line 3.
5. The percentage of net assets each class of shares represents. Equal to line 4 for each class
divided by composite net assets.
6-7. Daily investment income from the Fund's accounting records allocated based on the percentage
in line 5.
8. Total daily gross income (Sum of lines 6 and 7).
9-11. Daily Management, Administration and Service fees
calculated in accordance with relevant agreements.
Calculated as appropriate daily rate multiplied by
composite net assets at the beginning of the current day
(line 2) and allocated based on the percentage in line 5.
12. Daily Fiduciary/Audit Fees
13. Daily Total Fund Expenses. Equal to lines 9 through 12.
14. Daily Distribution Fee amount calculated as applicable percentage of total net assets for each
class (line 2).
15. Total of all daily expenses. Equal to line 13 plus line 14.
16. Total daily net investment income. Equal to line 8 minus line 15.
17. Dividend rate per share as declared by the Board of Trustees.
18. Gross dividend, if any. Calculated by multiplying line 17 by line 27.
19. Daily change in undistributed net income. Equal to line 16 less line 18. (Will be same as
line 16 except on dividend record days.)
20. Net dollar amount of capital share transactions for each class of shares (from line 3).
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Line # Explanation
------ -----------
<S> <C>
21. Daily amount of net capital gain/loss realized in the sale of investments allocated based on
the percentage in line 5.
22. Distribution of net realized capital gains as declared by the Board of Trustees.
23. Daily change in appreciation/depreciation based on the current day's market value of
investments allocated to each class based on the percentage of net assets (line 5).
24. Daily change in net assets. Equal to the sum of lines 19 through 23.
25. Closing net assets per prior day's worksheet.
26. Current day's total net assets. Equal to line 24 plus line 25.
27. Total number of shares outstanding at the close of the current day as reported by the Fund's
transfer agent.
28. Current day's NAV per share. Equal to line 26 divided by line 27.
29. Maximum allowable sales load for each class of shares per the Funds' prospectus.
30. Current day's Maximum Offering Price per share. Equal to line 28 divided by (100% less line 29).
</TABLE>
15
<PAGE>
FINANCIAL REPORTING
The shareholder reports of each Fund will disclose the respective
expenses and performance data applicable to each class of Shares as outlined
below.
Statement of Assets and Liabilities
o Assets and liabilities and the composition of net assets on a combined
basis.
o Net Asset Value per share and Maximum Offering Price per share (where
applicable) as follows for each offered class:
Net Asset Value per share ($______[divided by]______ Shares of
beneficial interest) $x.xx
Maximum Offering Price per share
($x.xx [divided by] .xxx) $x.xx
Statement of Operations
o Standard reporting format with explicit disclosure of class specific
expenses.
Statement of Changes in Net Assets
o Standard reporting format on a combined basis with the addition of explicit
disclosure of dividends and distributions paid to each class and
transactions in Fund shares (both dollars and shares) for each class either
therein or in a separate footnote.
Selected per share data and ratios
o For each required reporting period per share data and ratios will be shown
for each class, except for portfolio turnover which will be calculated on a
Fund level.
Notes to Financial Statements
o Include a note on methodology for allocating income, expenses and realized
and unrealized gains and losses.
o Include a note on transactions in Fund shares (both dollars and shares) for
each class for two years if not included in statement of changes in net
assets.
o Include in the note describing the distribution agreements disclosure on
any class 12b-1 fee arrangements.
16
<PAGE>
APPENDIX E
TO MULTIPLE CLASS PLAN
OF
THE PHOENIX-ENGEMANN FUNDS
EXCHANGE PRIVILEGE
Shareholders of the Funds Discussed herein may participate in an
exchange privilege as described below.
Shares of a specific class of any Fund may be exchanged for shares that
same class of any other Fund.
An exchange is permitted only in the following circumstances:
(1) if the Funds offer more than one class of shares, the exchange must
be between the same class of shares (e.g., Class A and Class B shares of a
multiple class Fund cannot be exchanged for each other);
(2) exchanges will be on the basis of the shares' relative net asset
values (with no sales charge, exchange fee or CDSC);
(3) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the Fund acquired through such
exchange; and
(4) the shares of the Fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides.
EXCHANGE PRIVILEGES MAY BE MODIFIED OR SUSPENDED BY THE FUNDS UPON
SIXTY (60) DAYS' PRIOR NOTICE TO SHAREHOLDERS.
17
PHOENIX-ENGEMANN FUNDS
AMENDED AND RESTATED
CODE OF ETHICS
1. Statement of Ethical Principles
When Fund Access Persons covered by the terms of this Code of Ethics engage
in personal securities transactions, they must adhere to the following
general principles as well as to the Code's specific provisions:
A. At all times, the interests of Fund shareholders must be paramount;
B. Personal transactions must be conducted consistent with this Code
of Ethics in a manner that avoids any actual or potential conflict of
interest; and
C. No inappropriate advantage should be taken of any position of trust
and responsibility.
2. Definitions
A. "Trust" means The Phoenix-Engemann Funds.
B. "Fund" means each and every fund, series and/or portfolio of the
Trust.
C. "Access Person" means any Trustee (other than a Disinterested
Trustee who does not obtain information concerning recommendations
made to the Fund regarding the purchase or sale of a security),
officer, general partner, Portfolio Manager or Advisory Person of the
Fund or (i) any temporary or permanent employee of the Fund or of any
company in a control relationship to the Fund, who, in connection with
his regular functions or duties, makes, participates in or obtains
information regarding the purchase or sale of a security by the Fund,
or whose functions relate to the making of any recommendations with
respect to such purchases or sales; and (ii) any natural person in a
control relationship to the Fund who obtains information concerning
recommendations made to the Fund with regard to the purchase or sale
of a security. For purposes of Section 4, "Access Person" shall not
include Advisory Persons nor Portfolio Managers. The Compliance
Department shall maintain a list of the Fund's Access Persons.
p. 1
<PAGE>
D. "Advisory Person" means any Portfolio Manager or other investment
person, such as an analyst or trader, who provides information and
advice to a Portfolio Manager or assists in the execution of the
investment decisions. For purposes of Section 4, "Advisory Person"
shall not include Portfolio Managers.
E. A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and
communicated and, with respect to the Advisory Person making the
recommendation, when such person seriously considers making such a
recommendation.
F. "Beneficial ownership" shall be interpreted in the same manner as
it would be in determining whether a person is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 and
the rules and regulations thereunder, except that the determination of
direct or indirect beneficial ownership shall apply to all securities
which an Access Person has or acquires.
G. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Investment Company Act, as amended.
H. "Disinterested Trustee" means a Trustee of a Fund who is not an
"interested person" of the Fund within the meaning of Section 2(a)(19)
of the Investment Company Act, as amended.
I. "Initial Public Offering" means a public sale of an issue not
previously offered to the public.
J. "Managed Fund" shall mean those Funds, individually and
collectively, for which the Portfolio Manager makes buy and sell
decisions.
K. "Portfolio Manager" means the person entrusted to make the buy and
sell decisions for a Fund.
L. "Private Placement" shall have the same meaning as that set forth
in Section 4(2) of the Securities Exchange Act.
M. "Purchase or sale of a security" includes inter alia, the writing
of an option or the purchase or sale of a security that is
exchangeable for or convertible into, a security that is held or to be
acquired by a Fund.
N. "Security" shall have the meaning set forth in Section 2(a)(36) of
the Investment Company Act, as amended, except that it shall not
include securities issued by the Government of the United States,
bankers' acceptances, bank certificates of deposit, commercial paper
and shares of registered open-end investment companies.
p. 2
<PAGE>
THE FOLLOWING SECTIONS 3 AND 4 DO NOT SUPERSEDE THE PROVISIONS OF ROGER
ENGEMANN & ASSOCIATES, INC. ("REA") STATEMENT OF POLICY ON PERSONAL TRADING
AND CONFIDENTIAL INFORMATION ("STATEMENT OF POLICY"). ALL ASSOCIATES OF REA
MUST COMPLY WITH THE REA STATEMENT OF POLICY.
3. Exempted Transactions
The prohibitions of Section 4 of this Code shall not apply to:
A. Purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control in the
reasonable estimation of the Compliance Officer.
B. Purchases or sales of securities (1) not eligible for purchase or
sale by the Fund; or (2) specified from time to time by the Trustees,
subject to such rules, if any, as the Trustees shall specify.
C. Purchases or sales which are non-volitional on the part of either
the Access Person or the Fund.
D. Purchases of shares necessary to establish an automatic dividend
reinvestment plan or pursuant to an automatic dividend reinvestment
plan, and subsequent sales of such securities.
E. Purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities, to the extent
such rights were acquired from such issuer, and sales of such rights
so acquired.
4. Prohibited Activities
A. IPO Rule: No Advisory Person or Portfolio Manager may purchase
securities in an Initial Public Offering, except with the prior
approval of the Compliance Officer of the Fund.
B. Private Placement Rule: No Advisory Person or Portfolio Manager may
purchase securities in a Private Placement unless such purchase has
been approved by the Compliance Officer of the Fund. Any such approved
purchase should be disclosed to the Fund if that issuer's securities
are being considered for purchase or sale by the Fund. Such
consideration for purchase or sale shall be conducted by a person
other than the interested Advisory Person or Portfolio Manager.
C. Preclearance Rule: No Access Person, Advisory Person nor Portfolio
Manager may purchase or sell a security unless such purchase or sale
has been precleared by the Compliance Officer of the Fund.
Preclearance shall be valid through the business day next following
the day Preclearance is given.
p. 3
<PAGE>
Exceptions: The following securities transactions are exempt from the
pre-clearance requirement:
1. Purchases or sales of up to 1,000 shares of securities of
issuers ranked within the top 200 of the Standard & Poor's
500 Composite Stock Index (S&P 500) (the "Large Cap List")
at the time of purchase or sale. The Compliance Officer of
the Fund shall distribute an updated list of such securities
quarterly.
2. Purchase orders sent directly to the issuer via mail (other
than in connection with a Private Placement) or sales of
such securities which are redeemed directly by the issuer
via mail.
Note: The Compliance Officer of the Fund may deny approval of any
transaction requiring preclearance under this Preclearance Rule, even
if nominally permitted under this Code of Ethics, if he/she reasonably
believes that denying preclearance is necessary for the protection of
a Fund. Any such denial may be appealed to the Fund's Counsel. The
decision of Counsel shall be final.
D. Open Order Rule: No Access Person, Advisory Person or Portfolio
Manager may purchase or sell, directly or indirectly, any security in
which he has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership, when a Fund has a pending "buy" or
"sell" order for that security of the same type (i.e. buy or sell) as
the proposed personal trade, until the Fund's order is executed or
withdrawn.
Exceptions: The following securities transactions are exempt from the
Open Order Rule:
1. Purchases or sales of up to 1,000 shares of securities of
issuer on the Large Cap List at the time of the transaction.
2. Purchases or sales approved by the Compliance Officer of the
Fund in his/her discretion.
Any profits realized on a personal trade in violation of this Section
4D must be disgorged.
E. Blackout Rule: If a Portfolio Manager's Managed Fund holds a
security that is the subject of a proposed personal trade by that
Portfolio Manager, such personal trade may be permitted only as
follows:
1. If the proposed personal trade is on the same side as the
last Managed Fund transaction in that security, the personal
trade cannot occur within two days of such Managed Fund
transaction (i.e. neither at T nor T + 1 calendar day).
p. 4
<PAGE>
2. If the proposed personal trade is on the opposite side of
the last Managed Fund transaction in that security, the
personal trade cannot occur unless (a) it is more than two
days after the Managed Fund transaction (i.e. T + 2 calendar
days or later) and (b) the Preclearance Request, if required
for such personal transaction (i.e. it is not eligible for
the Large Cap List exception to the Preclearance Rule) sets
forth, to the reasonable satisfaction of the Compliance
Officer, an explanation of the reasons the Managed Fund is
not effecting a similar transaction.
Transactions permitted under the Blackout Rule must also satisfy the
Open Order Rule and the Preclearance Rule if and to the extent the
transaction is not covered by exceptions to those rules.
Any profits realized by a Portfolio Manager on a personal trade in
violation of this Section 4E must be disgorged.
F. Holding Period Rule: Access Persons, Advisory persons and Portfolio
Managers must hold each Security, other than those described in
Section 3B (securities (1) not eligible for purchase or sale by the
Client; or (2) specified from time to time by the Trustees, subject to
such rules, if any, as the Trustees shall specify) for a period of not
less than six (6) months, whether or not the purchase of such Security
was an exempt transaction under any other provision of Section 3.
Any profits realized in contravention of this policy must be
disgorged.
G. No Advisory Person shall accept any gift or other item of more than
de minimis value from any person or entity that does business with or
on behalf of the Fund.
H. No Advisory Person shall serve on the board of directors of a
publicly traded company without prior authorization by the President
or the Compliance Officer of the Fund. If board service is authorized,
such Advisory Person shall have no role in making investment decisions
with respect to the publicly traded company.
5. Compliance Procedures
A. All Access Persons shall direct their brokers to supply, at the
same time that they are sent to the Access Person, a copy of the
confirmation for each personal securities trade and a copy of each
periodic account statement to the Fund's Compliance Officer.
B. Every Access Person shall report to the Fund the information
described in Section 5D of this Code with respect to transactions in
any security in which such Access Person has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership in
the security; provided, however, that an Access Person shall not be
required to make a report with respect to transactions effected for
any account over which such person does not have any direct or
indirect influence.
p. 5
<PAGE>
Note: Any Access person who is required to submit a quarterly
"Personal Securities Transaction and Regulatory Report" to Roger
Engemann & Associates, Inc., the Trust's investment adviser, pursuant
to Roger Engemann & Associates, Inc. "Statement of Policy on Personal
Trading and Confidential Information", is not required to also submit
a report pursuant to this section.
C. A Disinterested Trustee of the Fund need only report a transaction
in a security if such Trustee, at the time of that transaction knew
or, in the ordinary course of fulfilling his official duties as a
Trustee of the Fund, should have known that, (1) during the 7-day
period immediately preceding or after the date of the transaction by
the Trustee, such security was purchased or sold by the Fund or (2)
such security was being considered for purchase or sale by the Fund.
D. Every report required pursuant to Section 5B above shall be made
not later than 10 days after the end of the calendar quarter in which
the transaction to which the report relates was effected, and shall
contain the following information:
(i) The date of the transaction, the title and the number of
shares, and the principal amount of each security involved;
(ii) The nature of the transaction (i.e., purchase, sale, or any
other type of acquisition or disposition);
(iii) The price at which the transaction was effected;
(iv) The name of the broker, dealer or bank with or through whom
the transaction was effected; and
(v) The date of approval of the transaction and the person who
approved it as required by Section 4B or C above.
E. Each Access Person shall submit a report listing all personal
securities holdings to the Compliance Department upon the commencement
of service and annually thereafter. This annual report shall include a
certification by the Access Person that he or she has read and
understood the Code of Ethics and has complied with the Code's
requirements.
F. Any report made under this Section 5 may contain a statement that
the report shall not be construed as an admission by the person making
such report that he or she has any direct or indirect beneficial
ownership in the security to which the report relates.
G. The Compliance Officer shall submit an annual report to the Fund's
Board of Trustees that summarizes the current Code of Ethics
procedures, identifies any violations requiring significant remedial
action, and recommends appropriate changes to the Code, if any.
p. 6
<PAGE>
H. Any Access Person or Disinterested Trustee shall immediately report
any potential violation of this Code of which he or she becomes aware
to the Fund's Compliance Officer.
6. Sanctions
Upon discovering a violation of this Code, the Board of Trustees of the
Fund may impose such sanctions as it deems appropriate, including inter
alia, a letter of censure or suspension or termination of employment, or
suspension of personal trading privileges for such period as it may deem
appropriate.
(Phoenix-EngemannCode of Ethics98.doc)
p. 7
<PAGE>
THE PHOENIX-ENGEMANN FUNDS
AMENDED AND RESTATED
CODE OF ETHICS
ACKNOWLEDGMENT
Name of Access Person:________________________________
(please print name)
I fully understand and hereby subscribe to, and acknowledge receipt of, this
Code of Ethics.
- ------------------- ------------------------------
Date Signature of Access Person
p. 8
<PAGE>
ROGER ENGEMANN & ASSOCIATES, INC.
================================================================================
Amended and Restated
Statement of Policy
on
Personal Trading
and Confidential Information
================================================================================
As a registered investment adviser under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), with substantial responsibility to it's
advisory clients, ROGER ENGEMANN & ASSOCIATES, INC. (the "Company") has an
obligation to implement and maintain a meaningful policy governing the personal
trading and use of confidential and material nonpublic information by it's
officers, directors and employees. The purpose of this Statement of Policy is to
minimize conflicts of interest (including the appearance of such conflicts), as
well as to comply with the Insider Trading and Securities Fraud Transaction Act
of 1988, as amended ("ITSFEA") and the Advisers Act. In addition, this Statement
of Policy is designed to provide a program for educating, detecting and
preventing insider trading by, the officers, directors and employees of the
Company.
INSIDER TRADING
A. Background
1. Insider Trading. It is unlawful to engage in "insider trading."
This means, in general, that no "insider" may (i) purchase or sell
a security on the basis of material, nonpublic information or (ii)
communicate material, nonpublic information to another where the
communication leads to, or is intended to lead to, a purchase or
sale of securities. Although the insider trading prohibitions
extend to the activities of each employee of the Company, it is
not anticipated that such persons will routinely receive "inside
information." However, to educate the Company's employees, more
information describing "insider trading" and the penalties for
such trading is set forth below. Compliance procedures regarding
the use of inside information, if any, obtained by any of the
Company's employees also are described.
<PAGE>
2. Other Confidential Information. Certain information obtained by
the Company that does not constitute "inside" information still
constitutes confidential information that must be protected by the
Company and it's employees. Compliance procedures regarding the
use and treatment of all confidential information are set forth
below.
3. Conflicts of Interest. Because the Company is a fiduciary to it's
clients, each employee of the Company must avoid actual and
apparent conflicts of interest with the Company's clients. Such
conflicts of interest could arise if securities are bought or sold
for personal accounts in a manner that would significantly compete
with the purchase or sale of securities for clients or if
securities are bought or sold for client accounts in a manner that
is advantageous to such personal accounts. More information
describing such conflicts of interest and the compliance
procedures for avoiding such conflicts of interest are set forth
below.
B. Insider Trading
1. Insider Trading Defined. The term "insider trading" is generally
used to refer to (i) a person's use of material, nonpublic
information in connection with transactions in securities and (ii)
certain communications of material, nonpublic information.
The laws concerning insider trading generally prohibit:
o The purchase or sale of securities by an insider, on the basis of
material, nonpublic information;
o The purchase or sale of securities by a non-insider, on the basis
of material, nonpublic information if the information was
disclosed to the non-insider in violation of an insider's duty to
keep the information confidential or was misappropriated; or
o The communication of material, nonpublic information in violation
of a confidentiality obligation where the information leads to a
purchase or sale of securities.
a. Who Is An Insider? The concept of "insider" is broad. It includes
the officers, directors, employees and majority shareholders of a
company. In addition, a person can be considered a "temporary
insider" of a company if he or she enters into a confidential
relationship in the conduct of the company's affairs and, as a
result, is given access to company information that is intended to
be used solely for company purposes. A temporary insider can
include, among others, a company's attorneys, accountants,
consultants, investment bankers, commercial bankers and the
employees of such organizations. In order for a person to be
1
<PAGE>
considered a temporary insider of a particular company, the
company must expect that the person receiving the information will
keep the information confidential and the relationship between the
company and the person must at least imply such a duty. Analysts
are usually not considered insiders of the company that they
follow, although if an analyst is given confidential information
by a company's representative in a manner in which the analyst
knows or should know to be a breach of that representative's
duties to the company, the analyst may become a temporary insider.
b. What is Material Information? Trading on inside information is not
a basis for liability unless the information is "material."
"Material" information is generally defined as information that a
reasonable investor would likely consider important in making his
or her investment decision, or information that is reasonably
certain to have a substantial effect on the price of a company's
securities. Information that should be considered material
includes, but is not limited to: dividend changes, earnings
estimates, changes in previously released earnings estimates,
significant merger or acquisition proposals or agreement, major
litigation, liquidity problems and extraordinary management
developments. Material information does not have to relate to a
company's business, it can be significant market information. (For
example, a reporter for The Wall Street Journal was found
criminally liable for disclosing to ------------------------
others the dates on which reports on various companies would
appear in The Wall Street Journal ------------------------ and
whether or not those reports would be favorable.)
c. What is Nonpublic Information? Information is nonpublic unless it
has been effectively communicated to the market place. For
information to be considered public, one must be able to point to
some fact to show that the information has been generally
disseminated to the public. For example, information found in a
report filed with the SEC or appearing in Dow Jones, Reuters
Economic Services, The Wall Street Journal or another publication
of general circulation is considered public. Market rumors are not
considered public information.
2. Penalties for Insider Trading. Penalties for trading on or
communicating material, nonpublic information are severe, both for
the individuals involved in the unlawful conduct and for its
employers. A person can be subject to some or all of the penalties
set forth below even if he or she does not personally benefit from
the violation. Penalties include:
o civil injunctions;
o disgorgement of profits;
o jail sentences;
2
<PAGE>
o fines for the person who committed the violation of up to three
times the profit gained or loss avoided (per violation, or illegal
trade), whether or not the person actually benefited from the
violation; and
o fines for the employer or other controlling person of the person
who committed the violation of up to the greater of $1,000,000 or
three times the amount of the profit gained or loss avoided per
violation, or illegal trade.
In addition, any violation of the procedures set forth in this
Statement of Policy can be expected to result in serious sanctions
by the Company, including dismissal of the persons involved.
3. Procedures Regarding the Receipt of Material Nonpublic
Information. Because the Company does not have an investment
banking division or affiliate, it does not anticipate it's
officers, directors and employees routinely being in receipt of
material, nonpublic information. However, such persons may from
time-to-time receive such information. If any such person receives
any information which may constitute such material, nonpublic
information, such person (i) should not buy or sell any securities
(including options or other securities convertible into or
exchangeable for such securities) for a personal account or a
client account, (ii) should not communicate such information to
any other person (other than the Compliance Officer) and (iii)
should discuss promptly such information with the Compliance
Officer. Under no circumstances should such information be shared
with any persons not employed by the Company, including family
members and friends.
C. Other Confidential Information
1. Generally. In addition to material, nonpublic information, the
Company or it's employees may receive other confidential
information from it's clients, issuers of securities or other
third parties. Such confidential information may include, among
other things, (i) proprietary information that is important to the
client, issuer or other party, but that is not "material" or (ii)
information that could be embarrassing for the client, issuer or
third party if disclosed. Even information that appears
commonplace, such as the name of a client, issuer or third party
may, either alone or when coupled with other available
information, constitute proprietary, sensitive or confidential
information. Therefore, all information that an employee obtains
through the Company should be considered confidential unless that
information is specifically available to the public.
2. Procedures Regarding Use and Treatment of Confidential
Information.
3
<PAGE>
a. No Personal Use. All confidential information, whatever the
source, may be used only in the discharge of the employee's duties
with the Company. Confidential information may not be used for any
personal purpose, including the purchase or sale of securities.
b. Treatment of Confidential Information. The Company encourages each
of it's employees to be aware of, and sensitive to, such
employee's treatment of confidential information. Each employee is
encouraged not to discuss such information unless necessary as
part of his or her duties and responsibilities with the Company,
not to store confidential information in plain view where anyone
entering the room may see it, and to remove confidential
information from conference rooms, reception areas or other areas
where third parties may inadvertently see it. Particular care
should be exercised if confidential information must be discussed
in public places, such as elevators, taxicabs, trains or
airplanes, where such information may be overheard. Under no
circumstances may confidential information be shared with any
person, including the spouse or other family member, who is not an
employee of the Company.
PERSONAL TRADING
D. Conflicts of Interest Involving Trading for Personal Accounts
1. Fiduciary Duty to Avoid Conflicts of Interest. As noted above,
because the Company is a fiduciary to it's clients, the Company
and each of it's employees must avoid actual and apparent
conflicts of interest with the Company's clients. In addition,
non-employee "access persons" with respect to the mutual funds
advised by the Company are covered by this section of the
Statement of Policy.
2. Who is Covered. The following persons are subject to this section
of this Statement of Policy: all employees of the Company (also
referred to as "Associates") and all non-employee "access persons"
as that term is defined in Rule 17j-1 under the Investment Company
Act of 1940. Directors of the Company and Trustees of the
Investment Company directly advised by the Company are
non-employee access persons. Such non-employee access persons
include both interested mutual fund Trustees and independent (or
disinterested) mutual fund Trustees. All non-employee Directors of
the Company and interested mutual fund Trustees are referred to
herein as reporting non-employee access persons. Independent
mutual fund Trustees are referred to as non-reporting non-employee
access persons.
3. Personal Account Defined. The "personal account" of an employee of
the Company or non-employee access person shall include each and
4
<PAGE>
every account for which such employee or non-employee access
person, directly or indirectly, influences or controls the
investment decisions of such account. This would include any
account of (i) any employee or non-employee access person, (ii)
the spouse of such employee or non-employee access person, (iii)
any children under the age of 22 of such employee or non-employee
access person, and/or (iv) any other person residing in the same
household of such employee or non-employee access person. Each
account shall be deemed a personal account of the employee or
non-employee access person unless such employee or non-employee
access person certifies in writing to the Compliance Department
for each applicable personal account that: (x) the certifying
employee or non-employee access person does not influence the
investment decisions for such account, and (y) the person or
persons making the investment decisions for such account do not
make such decisions, in whole or in part, based upon any
information provided by the certifying employee or non-employee
access person. (For example, if an employee or non-employee access
person has established an account with an investment adviser or
broker/dealer and has signed a written contract giving the
investment adviser or broker/dealer full discretion over the
account.)
4. Securities Defined. The term "security" shall have the same
meaning as that set forth in Section 2(a)(36) of the Investment
Company Act of 1940, as amended, except that it shall not include
securities issued by the Government of the United States, bankers'
acceptances, bank certificates of deposit, commercial paper and
shares of registered open-end investment Company.
E. Procedures Regarding Conflicts of Interest Involving Personal Accounts
1. Limitations on Certain Personal Transactions. We take the subject
of personal trading extremely seriously. In order to avoid any
conflict of interest, or the appearance of any conflict of
interest, the following rules have been adopted by the Company.
2. Preclearance Rule: All employees of the Company are required to
obtain written approval from Jim Mair or John Tilson and the
Compliance Officer before a security transaction may be executed
for the employee's personal account (as defined in Section D3).
a. Exempt Preclearance Rule Transactions: The following securities
transactions are exempt from the preclearance rule:
1. Purchase or sale of up to 1,000 shares of any security listed
on the Company's Large Cap List (the "List"). The List will
contain names of securities that are currently ranked within
the top 200 of the Standard & Poor's 500 Composite Stock
Index as of the beginning of each calendar
5
<PAGE>
quarter. The List will be maintained, updated and distributed
at the beginning of each quarter by the Compliance
Department. (Please note that updates and/or changes to the
List can only be made by the Compliance Department and will
only be made at the end of each quarter.)
2. Purchase of a security as part of an automatic dividend
reinvestment plan;
3. Purchase and/or redemption of open-end investment company
securities (open-end mutual funds);
4. Purchase or sale of securities issued by the Government of
the United States (U.S Treasury Notes or Bonds);
5. Purchase or sale of any banker's acceptances, bank
certificates of deposit and commercial paper; and
6. Purchase or sale of any security effected in any account over
which the employee has no direct or indirect influence and/or
control (for example: a full discretionary account).
3. Prohibited Transactions: No employee may:
a. purchase any security in an initial public offering;
b. purchase or sell any precleared security within seven (7)
calendar days before and after any executed trade has taken
place for a client or shareholders account in that same
security; (Blackout Period)
c. sell within six months of purchasing or acquiring any
security, except for those described in 2 through 6 of
Section E2A above, for their personal account; (Short-term
trading)
d. purchase privately offered securities of a company that has a
class of publicly traded securities without prior written
approval from Jim Mair or John Tilson and the Compliance
Officer;
e. receive any gift or other item of more than a de minims value
from any person or entity that does business with the
Company;
f. serve as a director of any publicly traded company, unless a
determination has been made that service would be consistent
with the interests of the clients and shareholders and prior
authorization is given; and
6
<PAGE>
g. buy or sell a security on the basis of material, nonpublic
information, or communicate such information to another.
F. Reports of Personal Transactions.
1. Submission of Quarterly Reports. In order for the Company to
monitor compliance with it's insider trading and conflict of
interest policies and procedures, and to comply with SEC Rule
204-2(a)(12) under the Advisers Act and Rule 17j-1 under the
Investment Company Act, every employee and reporting non-employee
access person shall be required to sign, date and submit to the
Compliance Department a "Personal Securities Transaction and
Regulatory Report" no later than 10 days after the end of each
calendar quarter reporting any security transactions, except for
transactions listed in F2 below, that were executed during such
calendar quarter for any personal account in which the employee or
non-employee access person had any direct or indirect beneficial
influence and/or control. Independent Trustees of mutual funds
advised by the Company, as non-reporting non-employee access
persons, are not required to file such reports unless (i) they
have actual knowledge of the trading activity being engaged in on
behalf of the mutual funds and (ii) they wish to trade in the same
securities within 15 days of the mutual funds' trades.
2. Exempt Reporting Transactions. The following securities
transactions are exempt from the reporting requirement:
1. Purchase of a security as part of an automatic dividend
reinvestment plan;
2. Purchase and/or redemption of open-end investment company
securities (open-end mutual funds);
3. Purchase or sale of securities issued by the Government of
the United States (U.S Treasury Notes or Bonds);
4. Purchase or sale of any banker's acceptances, bank
certificates of deposit and commercial paper; and
5. Purchase or sale of any security effected in any account over
which the employee has no direct or indirect influence and/or
control (for example: a full discretionary account).
3. Review and Retention of Quarterly Reports. The Compliance
Department shall be responsible for ensuring that all employees
and reporting non-employee access persons submit such reports in a
timely manner as described in section G-1 above. A consistent
failure to submit
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<PAGE>
timely reports shall be communicated to the President of the
Company for appropriate action. The Compliance Department shall
review each such report as soon as practicable to determine that
this Statement of Policy has been complied with and shall maintain
such quarterly reports for each employee and reporting
non-employee access person as part of the books and records
required by the Advisers Act and the Investment Company Act and
the rules promulgated thereunder. No person shall review his or
her own report.
4. Sanctions. If the Compliance Officer determines that a violation
of this Policy has or may have occurred, he/she shall submit a
written determination and any additional explanatory material
provided by the employee, to the President of the Company, who
shall make an independent determination of whether any
non-complying transaction has occurred. If it is determined by the
President that a violation has occurred, the President may impose
such sanctions as he deems appropriate, including dismissal from
the Company, and/or a disgorging of any profits made by the
violator.
G. Summary
1. Importance of Adherence to Procedures. It is very important that
all employees and non-employee access persons adhere strictly to
this Statement of Policy on Personal Trading and Confidential
Information. Any violations of such policies and procedures may
result in serious sanctions, including dismissal from the Company.
2. Questions. Any questions regarding the Company's policies and
procedures regarding insider trading, confidential information and
conflicts of interest should be referred directly to the
Compliance Officer.
March 22, 1999
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<PAGE>
ACKNOWLEDGMENT
To: Compliance Department
This will acknowledge that I have read and understand the
Statement of Policy on Personal Trading and Confidential Information for Roger
Engemann & Associates, Inc., dated March 22, 1999.
--------------------------
Signature
--------------------------
Name of Associate
Date:______________________
9
<PAGE>
PHOENIX FUNDS
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
PHOENIX-ABERDEEN SERIES FUND
PHOENIX EQUITY PLANNING CORP.
AMENDED AND RESTATED
CODE OF ETHICS
1. Statement of Ethical Principles
When Fund Access Persons covered by the terms of this Code of Ethics
engage in personal securities transactions, they must adhere to the
following general principles as well as to the Code's specific
provisions:
A. At all times, the interests of Fund shareholders must be
paramount;
B. Personal transactions must be conducted consistent with
this Code of Ethics in a manner that avoids any actual or
potential conflict of interest; and
C. No inappropriate advantage should be taken of any position
of trust and responsibility.
2. Definitions
A. "Fund" means each and every investment company, or series
thereof, or other institutional account managed by the
Adviser, individually and collectively.
B. "Access Person" means any Trustee (other than a
Disinterested Trustee who does not obtain information
concerning recommendations made to the Fund regarding the
purchase or sale of a security), officer, general partner,
Portfolio Manager or Advisory Person of the Fund or (i) any
temporary or permanent employee of the Fund or of any company
in a control relationship to the Fund, who, in connection with
his regular functions or duties, makes, participates in or
obtains information regarding the purchase or sale of a
security by the Fund, or whose functions relate to the making
of any recommendations with respect to such purchases or
sales; and (ii) any natural person in a control relationship
to the Fund who obtains information concerning recommendations
made to the Fund with regard to the purchase or sale of a
security. The Compliance Officer of each Fund shall maintain a
list of the Fund's Access Persons.
C. "Advisory Person" means any Portfolio Manager or other
investment person, such as an analyst or trader, who provides
information and advice to a Portfolio Manager or assists in
the execution of the investment decisions. For purposes of
Section 4, "Advisory Person" shall not include Portfolio
Managers.
p. 1
<PAGE>
D. A security is "being considered for purchase or sale" when
a recommendation to purchase or sell a security has been made
and communicated and, with respect to the Advisory Person
making the recommendation, when such person seriously
considers making such a recommendation.
E. "Beneficial ownership" shall be interpreted in the same
manner as it would be in determining whether a person is
subject to the provisions of Section 16 of the Securities
Exchange Act of 1934 and the rules and regulations thereunder,
except that the determination of direct or indirect beneficial
ownership shall apply to all securities which an Access Person
has or acquires.
F. "Control" shall have the same meaning as that set forth in
Section 2(a)(9) of the Investment Company Act, as amended.
G. "Disinterested Trustee" means a Trustee of a Fund who is
not an "interested person" of the Fund within the meaning of
Section 2(a)(19) of the Investment Company Act, as amended.
H. "Initial Public Offering" means a public sale of an issue
not previously offered to the public.
I. "Managed Fund" shall mean those Funds, individually and
collectively, for which the Portfolio Manager makes buy and
sell decisions.
J. "Portfolio Manager" means the person entrusted to make the
buy and sell decisions for a Fund.
K. "Private Placement" shall have the same meaning as that set
forth in Section 4(2) of the Securities Exchange Act.
L. "Purchase or sale of a security" includes inter alia, the
writing of an option or the purchase or sale of a security
that is exchangeable for or convertible into, a security that
is held or to be acquired by a Fund.
M. "Security" shall have the meaning set forth in Section
2(a)(36) of the Investment Company Act, as amended, except
that it shall not include securities issued by the Government
of the United States, bankers' acceptances, bank certificates
of deposit, commercial paper and shares of registered open-end
investment companies.
3. Exempted Transactions
The prohibitions of Section 4 of this Code shall not apply to:
A. Purchases or sales effected in any account over which the
Access Person has no direct or indirect influence or control
in the reasonable estimation of the Compliance Officer.
p. 2
<PAGE>
B. Purchases or sales of securities (1) not eligible for
purchase or sale by the Fund; or (2) specified from time to
time by the Trustees, subject to such rules, if any, as the
Trustees shall specify.
C. Purchases or sales which are non-volitional on the part of
either the Access Person or the Fund.
D. Purchases of shares necessary to establish an automatic
dividend reinvestment plan or pursuant to an automatic
dividend reinvestment plan, and subsequent sales of such
securities.
E. Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities,
to the extent such rights were acquired from such issuer, and
sales of such rights so acquired.
4. Prohibited Activities
A. IPO Rule: No Advisory Person or Portfolio Manager may
purchase securities in an Initial Public Offering, except with
the prior approval of the Compliance Officer of the Fund.
B. Private Placement Rule: No Advisory Person or Portfolio
Manager may purchase securities in a Private Placement unless
such purchase has been approved by the Compliance Officer of
the Fund. Any such approved purchase should be disclosed to
the Fund if that issuer's securities are being considered for
purchase or sale by the Fund.
C. Preclearance Rule: No Access Person, Advisory Person nor
Portfolio Manager may purchase or sell a security unless such
purchase or sale has been precleared by the Compliance Officer
of the Fund. Preclearance is shall be valid through the
business day next following the day preclearance is given.
Exceptions: The following securities transactions are exempt
from the pre-clearance requirement:
1. Purchases or sales of up to 1,000 shares of
securities of issuers ranked within the top 200
Standard & Poor's 500 Composite Stock Index (S&P
500) ("Large Cap List") at the time of purchase or
sale. The Compliance Officer of the Fund shall
distribute an updated list of such securities
quarterly.
2. Purchase orders sent directly to the issuer via mail
(other than in connection with a Private Placement)
or sales of such securities which are redeemed
directly by the issuer via mail.
p. 3
<PAGE>
Note: The Compliance Officer of the Fund may deny approval of
any transaction requiring preclearance under this Preclearance
Rule, even if nominally permitted under this Code of Ethics,
if he/she reasonably believes that denying preclearance is
necessary for the protection of a Fund. Any such denial may be
appealed to the Fund's Counsel. The decision of Counsel shall
be final.
D. Open Order Rule: No Access Person, Advisory Person or
Portfolio Manager may purchase or sell, directly or
indirectly, any security in which he has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership, when a Fund has a pending "buy" or "sell" order for
that security of the same type (i.e. buy or sell) as the
proposed personal trade, until the Fund's order is executed or
withdrawn.
Exceptions: The following securities transactions are exempt
from the Open Order Rule:
1. Purchases or sales of up to 1,000 shares of
securities of issuers on the Large Cap List at the
time of the transaction.
2. Purchases or sales approved by the Compliance
Officer of the Fund in his/her discretion.
Any profits realized on a personal trade in violation of this
Section 4D must be disgorged.
E. Blackout Rule: If a Portfolio Manager's Managed Fund holds
a security that is the subject of a proposed personal trade by
that Portfolio Manager, such personal trade may be permitted
only as follows:
1. If the proposed personal trade is on the same side
as the last Managed Fund transaction in that
security, the personal trade cannot occur within two
days of such Managed Fund transaction (i.e. neither
at T nor T + 1 calendar day).
2. If the proposed personal trade is on the opposite
side of the last Managed Fund transaction in that
security, the personal trade cannot occur unless (a)
it is more than two days after the Managed Fund
transaction (i.e. T + 2 calendar days or later) and
(b) the Preclearance Request, if required for such
personal transaction (i.e. it is not eligible for
The Large Cap List exception to the Preclearance
Rule) sets forth, to the reasonable satisfaction of
the Compliance Officer, an explanation of the
reasons the Managed Fund is not effecting a similar
transaction.
Transactions permitted under the Blackout Rule must also
satisfy the Open Order Rule and the Preclearance Rule if and
to the extent the transaction is not covered by exceptions to
those rules.
Any profits realized by a Portfolio Manager on a personal
trade in violation of this Section 4E must be disgorged.
p. 4
<PAGE>
F. Holding Period Rule: Access Persons, Advisory Persons and
Portfolio Managers must hold each Security, other than those
described in Section 3B, (securities (1) not eligible for
purchase or sale by the Fund; or (2) specified from time to
time by the Trustees, subject to such rules, if any, as the
Trustees shall specify) for a period of not less than six (6)
months, whether or not the purchase of such Security was an
exempt transaction under any other provision of Section 4.
Any profits realized on trading in contravention of this
policy must be disgorged.
G. No Advisory Person shall annually accept any gift or other
item of more than de minimis value from any person or entity
that does business with or on behalf of the Fund.
H. No Advisory Person shall serve on the board of directors of
a publicly traded company without prior authorization by the
President or the Compliance Officer of the Fund. If board
service is authorized, such Advisory Person shall have no role
in making investment decisions with respect to the publicly
traded company.
5. Compliance Procedures
A. All Access Persons shall direct their brokers to supply, at
the same time that they are sent to the Access Person, a copy
of the confirmation for each personal securities trade and a
copy of each periodic account statement to the Fund's
Compliance Officer.
B. Every Access Person shall report to the Fund the
information described in Section 5D of this Code with respect
to transactions in any security in which such Access Person
has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership in the security; provided,
however, that an Access Person shall not be required to make a
report with respect to transactions effected for any account
over which such person does not have any direct or indirect
influence.
C. A Disinterested Trustee of the Fund need only report a
transaction in a security if such Trustee, at the time of that
transaction knew or, in the ordinary course of fulfilling his
official duties as a Trustee of the Fund, should have known
that, (1) during the 7-day period immediately preceding or
after the date of the transaction by the Trustee, such
security was purchased or sold by the Fund or (2) such
security was being considered for purchase or sale by the
Fund.
D. Every report required pursuant to Section 5B above shall be
made not later than 10 days after the end of the calendar
quarter in which the transaction to which the report relates
was effected, and shall contain the following information:
(i) The date of the transaction, the title and the
number of shares, and the principal amount of each
security involved;
(ii) The nature of the transaction (i.e., purchase, sale,
or any other type of acquisition or disposition);
(iii) The price at which the transaction was effected;
p. 5
<PAGE>
(iv) The name of the broker, dealer or bank with or
through whom the transaction was effected; and
(v) The date of approval of the transaction and the
person who approved it as required by Section 4B or
C above.
E. Each Access Person shall submit a report listing all
personal securities holdings to the Compliance Officer upon
the commencement of service and annually thereafter. This
annual report shall be and include a certification by the
Access Person that he or she has read and understood the Code
of Ethics and has complied with the Code's requirements.
F. Any report made under this Section 5 may contain a
statement that the report shall not be construed as an
admission by the person making such report that he or she has
any direct or indirect beneficial ownership in the security to
which the report relates.
G. The Compliance Officer shall submit an annual report to the
Fund's Board of Trustees that summarizes the current Code of
Ethics procedures, identifies any violations requiring
significant remedial action, and recommends appropriate
changes to the Code, if any.
H. Any Access Person or Disinterested Trustee shall
immediately report any potential violation of this Code of
which he or she becomes aware to the Fund's Compliance
Officer.
6. Sanctions
Upon discovering a violation of this Code, the Board of Trustees of the
Fund may impose such sanctions as it deems appropriate, including inter
alia, a letter of censure or suspension or termination of employment,
or suspension of personal trading privileges for such period as it may
deem appropriate.
p. 6
<PAGE>
PHOENIX FUNDS
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
PHOENIX-ABERDEEN SERIES FUND
AMENDED AND RESTATED
CODE OF ETHICS
ADDENDUM
As stated in Section 3B(2) of the Code of Ethics, the Trustees/Directors may
specify from time to time, Exempted Transactions, which are purchases or sales
of securities which are exempt from Section 4 of the Code.
The following transactions have been specified as Exempt Transactions by the
Trustees/Directors:
1. Purchases or sales of securities trading at less than $5.00 per share at
the time of the trade. (Nov. '96)
2. Purchases or sales of securities issued by Phoenix Investment Partners,
Ltd. (Aug. '97)
3. Purchases or sales by Directors or Trustees who are not employees of the
adviser or distributor of a fund or any affiliates thereof provided such
Director or Trustee does not obtain information concerning recommendations
to the Fund regarding the purchase or sale of a security. (Nov. '97)
p. 7
