As filed with the Securities and Exchange Commission on March 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. 31 [X]
and
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 34 [X]
-------------
THE PHOENIX-ENGEMANN FUNDS
(formerly called Pasadena Investment Trust)
(Exact Name of Registrant as Specified in Charter)
-------------
600 North Rosemead Boulevard, Pasadena, California 91107-2133
(Address of Principal Executive Office)
(626) 351-9686
(Registrant's Telephone Number, Including Area Code)
ROGER ENGEMANN
600 North Rosemead Boulevard, Pasadena, California 91107-2138
(Name and Address of Agent for Service)
-------------
It is proposed that this filing will become effective:
[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485, or
[ ] on pursuant to paragraph (b) of Rule 485, or
[X] 60 days after filing pursuant to paragraph (a)(1) of Rule 485, or
[ ] on pursuant to paragraph (a)(1) of Rule 485, or
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485, or
[ ] on pursuant to paragraph (a)(2) of Rule 485.
-------------
Please Send Copy of Communications to:
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; Investment
Strategies, and Related Risks Strategies; Risks Related to Investment Strategies
5. Management's Discussion of Fund Performance Performance Tables
6. Management, Organization, and Capital Structure Management of the Fund
7. Shareholder Information Pricing of Fund Shares; Sales Charges; Your
Account; How to Buy Shares; How to Sell Shares;
Things You Should Know When Selling Shares;
Account Policies; Investor Services; Tax Status of
Distributions
8. Distribution Arrangements Sales Charges
9. Financial Highlights Information Financial Highlights
Part B:
Information Required in Statement of Additional Information
Item Number Form N-1A, Part B Statement of Additional Information Caption
10. Cover Page and Table of Contents Cover Page, Table of Contents
11. Fund History The Fund
12. Description of the Fund and Its Investment Risks Investment Objectives and Policies; Investment
Restrictions
13. Management of the Fund Management of the Trust
14. Control Persons and Principal Holders of Securities Management of the Trust
15. Investment Advisory and Other Services Services of the Adviser; The Distributor;
Distribution Plans; Other Information
16. Brokerage Allocation and Other Practices Portfolio Transactions and Brokerage
17. Capital Stock and Other Securities Other Information
18. Purchase, Redemption, and Pricing of Shares Net Asset Value; How to Buy Shares; Investor
Account Services; Redemption of Shares; Tax
Sheltered Retirement Plans
19. Taxation of the Fund Dividends, Distributions and Taxes
20. Underwriters The Distributor
21. Calculation of Performance Data Performance Information
22. Financial Statements Financial Statements
Part C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C of this Registration Statement.
</TABLE>
<PAGE>
> Phoenix-
Engemann
Funds
Table of Contents
- -----------------------------------------------------
<TABLE>
<S> <C>
Phoenix-Engemann Balanced Return Fund
Investment Risk and Return Summary .............. 1
Fund Expenses ................................... 4
Investment Strategies ........................... 5
Risks Related to Investment Strategies .......... 6
Phoenix-Engemann Focus Growth Fund
Investment Risk and Return Summary .............. 10
Fund Expenses ................................... 12
Investment Strategies ........................... 13
Risks Related to Investment Strategies .......... 14
Phoenix-Engemann Nifty Fifty Fund
Investment Risk and Return Summary .............. 16
Fund Expenses ................................... 19
Investment Strategies ........................... 20
Risks Related to Investment Strategies .......... 21
Phoenix-Engemann Small & Mid-Cap
Growth Fund
Investment Risk and Return Summary .............. 23
Fund Expenses ................................... 26
Investment Strategies ........................... 27
Risks Related to Investment Strategies .......... 28
Phoenix-Engemann Value 25 Fund
Investment Risk and Return Summary .............. 32
Fund Expenses ................................... 35
Investment Strategies ........................... 36
Risks Related to Investment Strategies .......... 37
Management of the Funds .......................... 39
Pricing of Fund Shares ........................... 40
Sales Charges .................................... 41
Your Account ..................................... 43
How to Buy Shares ................................ 45
How to Sell Shares ............................... 45
Things You Should Know When
Selling Shares ................................... 46
Account Policies ................................. 47
Investor Services ................................ 48
Tax Status of Distributions 49
Financial Highlights ............................. 49
Additional Information ........................... 62
</TABLE>
<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 invest in high-quality growth companies, as defined below,
and U.S. Government securities. Under normal circumstances, the fund expects
to invest at least 25% of its net assets in U.S. Government securities.
> The fund intends to provide capital appreciation from equities, primarily
companies that are financially strong with large capitalizations and a
competitive advantage ("high quality" companies), balanced by income and
capital preservation from U.S. Government securities of any maturity. The
adviser hopes to achieve less volatility using this strategy.
> The adviser looks to sell securities from the portfolio when there is a
change in the original factors used to select a security or the security has
appreciated and is no longer attractive.
> The adviser will have sole discretion to shift its emphasis among equity and
debt securities, as well as among various industry sectors, as it may
determine based upon financial trends and changes in economic and market
conditions.
> The fund generally will invest in well established companies with larger
capitalizations. However, the fund can invest in companies with smaller
capitalizations and in new issues.
> The fund may invest up to 35% of its assets in securities of foreign
companies, special situations, such as corporate restructurings or management
changes, and unseasoned companies combined.
Phoenix-Engemann Balanced Return Fund 1
<PAGE>
Principal Risks
If you invest in this fund, you risk that you may lose your investment.
Conditions affecting the overall economy, specific industries or companies in
which the fund invests can be worse then expected. As a result, the value of
your shares may decrease. In addition, if the adviser misjudges the return
potential, or the ability of issuers to make scheduled principal and interest
payments, the fund's returns may be lower than prevailing returns.
The fund may be subject to greater risks than a fund that does not invest in
securities with growth characteristics.
Smaller and unseasoned companies may be affected to a greater extent than
larger, established companies by changes in general economic conditions and
conditions in particular industries. Unseasoned companies will be relatively new
to the primary line of business and small companies may also be relatively new.
These companies may not have the same operating history and "track record" as
larger companies. This could make future performance of smaller companies,
unseasoned companies and new issues more difficult to predict.
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.
Debt securities with longer maturities may be subject to greater price
fluctuations due to interest rates, tax laws, and other general market factors
than securities with shorter maturities.
Generally, the value of debt securities is inversely related to changes in
interest rates. If interest rates rise, the value of debt securities will fall.
This may cause the value of your shares to decrease.
Political and economic uncertainty in foreign countries, as well as less public
information about foreign investments, may negatively impact the fund's
portfolio. Some investments may be made in currencies other than U.S. dollars
that will fluctuate in value as a result of changes in the currency exchange
rate. Foreign markets and currencies may not perform as well as U.S. markets.
Emerging market countries and companies doing business in emerging markets may
not have the same range of opportunities as more developed countries and their
companies. They may also have more obstacles to financial success.
Special situations often involve smaller, unseasoned companies and the
securities may not appreciate as the adviser believed they would. Analysis of
special situations is more complex than for ordinary investments, making it more
difficult for the adviser to accurately predict risk and return.
2 Phoenix-Engemann Balanced Return Fund
<PAGE>
Performance Tables
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Engemann Balanced Return Fund. The bar chart shows changes in the
fund's Class A Shares performance from year to year over the last ten years.(1)
The table 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.
Phoenix-Engemann Balanced Return Fund
[TABULAR REPRESENTATION OF BAR CHART]
Annual Return (%)
<TABLE>
<S> <C>
1990 -0.39
1991 38.89
1992 4.49
1993 2.44
1994 -4.43
1995 27.18
1996 17.78
1997 18.98
1998 29.12
1999
</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 % (quarter ending) and the
lowest return for a quarter was % (quarter ending). Year to date performance
(through March 31, 2000) was %.
<TABLE>
<CAPTION>
Average Annual Total Returns(1) One Five Ten
(for the periods ending 12/31/99) Year Years Years Life of the Fund(2)
- ------------------------------------------------------------------------------------------------------
Class A Class B Class C
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares % % % -- -- --
- ------------------------------------------------------------------------------------------------------
Class B Shares % % N/A -- % --
- ------------------------------------------------------------------------------------------------------
Class C Shares % % N/A -- --
- ------------------------------------------------------------------------------------------------------%
Balanced Benchmark(3) % % % %(6) %(7) %(7)
- ------------------------------------------------------------------------------------------------------
S&P 5000 Consumer
Stock Price Index(4)
- ------------------------------------------------------------------------------------------------------
Lehman Brothers Government/
Corporate Bond Index(5)
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B and Class C Shares.
(2) Class A Shares since June 8, 1987; Class B and Class C Shares since January
3, 1994.
(3) The Balanced Benchmark is a composite index made up of 60% of the S&P 500
Index return, 30% of the Lehman Brothers Government/Corporate Bond Index return
and 10% of the 90-day U.S. Treasury bill return. The index's performance does
not reflect sales charges.
(4) [to come]
(5) [to come]
(6) Benchmark performance since June 30, 1997.
(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 % % %
Distribution and Service (12b-1) Fees(c) 0.25% 1.00% 1.00%
Other Expenses % % %
----- ----- -----
Total Annual Fund Operating Expenses % % %
===== ===== =====
</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. Class C Shares purchased prior to January 20, 1998 are not
subject to the 1% deferred sales charge.
(c) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
Example
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
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 $ $ $ $
Class B $ $ $ $
Class C $ $ $ $
</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 $ $ $ $
</TABLE>
Investment Strategies
- ---------------------
Investment Objective
The fund has an investment objective to maximize a total investment return
consistent with reasonable risk. There is no guarantee that the fund will
achieve its objective.
Principal Investment Strategies
The fund seeks to invest in high-quality growth companies and U.S. Government
securities. Under normal circumstances, the fund expects to invest at least 25%
of its net assets in U.S. Government securities.
Securities for fund investment are selected based on a moderate asset allocation
and balanced approach. The adviser considers both the opportunity for gain and
the risk of loss in making investment decisions. The fund intends to provide
capital appreciation from equities, primarily high quality growth companies.
High quality growth companies have large capitalizations, are profitable,
financially strong, stable and have a competitive advantage. In addition to
these characteristics, the adviser may also consider valuations based upon
P/E's, growth rates and competitive standards to select equity securities for
fund investment. The fund intends to balance capital appreciation by income and
capital preservation from U.S. Government securities of any maturity. The
adviser hopes to achieve less volatility using this strategy. The adviser
anticipates that the volatility of price movement of the equity securities in
its portfolio will be less than that of the Standard and Poor's 500 Stock Index.
A security is sold when there has been a change in the original factors used to
select a security, such as a reduction in the expected earnings growth rate of
the company or a loss of competitive advantage, or the security has appreciated
to the point where it is no longer attractive.
Phoenix-Engemann Balanced Return Fund 5
<PAGE>
The adviser will shift its emphasis among equity and debt securities, as well as
among various industry sectors, as it may determine based upon financial trends
and changes in economic and market conditions. The balance between equities and
U.S. Government securities at any time will be within the adviser's sole
discretion.
The fund generally will invest in well established companies with larger
capitalizations. However, the fund can invest in companies with smaller
capitalizations and in new issues.
The fund may invest up to 35% of its assets in securities of foreign companies,
special situation and unseasoned companies combined. Foreign securities are
securities of non-U.S. issuers that are listed on a principal foreign or
domestic securities exchange or market, or that are represented by Depository
Receipts. Unseasoned companies generally are smaller and younger companies that
are relatively new to or not yet well established in its primary line of
business. Special situations are created by developments that apply solely to a
particular company. Developments that create special situations include
liquidations, reorganizations, recapitalizations, corporate restructurings,
mergers and tender offers, technological breakthroughs and new management.
Temporary 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 investment objective.
Please refer to the Statement of Additional Information for more detailed
information about these and other investment techniques of the fund.
Risks Related to Investment Strategies
- --------------------------------------
General
The value of the fund's investments that support your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decreases, you will lose money.
The value of the fund's investments can decrease for a number of reasons. For
example, changing economic conditions may cause a decline in value of many or
most investments. Particular industries can face poor market conditions for
their products or services so that companies engaged in those businesses do not
perform as well as companies in other industries. To the extent that the fund's
investments are affected by general economic declines and declines in
industries, fund share values may decline. Share values can also decline if the
specific companies selected for fund investment fail to perform as the adviser
expects, regardless of general economic trends, industry trends, interest rates
and other economic factors.
6 Phoenix-Engemann Balanced Return Fund
<PAGE>
The value of your shares is based on the market value of the fund's investments.
In the case of fixed income securities, including U.S. Government securities,
the value of the security will be directly affected by trends in interest rates
and the overall condition of credit markets. For example, in times of rising
interest rates, the value of these types of securities tends to decrease. When
interest rates fall, the value of these securities tends to rise. To the extent
that the fund's investments are negatively affected by changes in economic
conditions fund share values may decline. In addition, if the adviser misjudges
the return potential of any of the fund's portfolio securities, the fund's
returns may be lower than prevailing returns.
In addition to these general risks of investing in the fund, there are several
specific risks of investing in the fund that you should note.
Growth Stocks
Typically, growth stocks make little or no dividend payments to shareholders.
Investment return is based upon the stocks' capital appreciation making return
more dependent on market increases and decreases as compared to stocks that
provide dividend payments. Growth stocks also tend to rise faster when markets
advance and drop more sharply when markets fall making them more volatile than
non-growth stocks to market changes. Should a market decline occur, the fund's
price may fall more than that of a non-growth fund.
Government Securities
Obligations issued or guaranteed by the U.S. Government, its agencies
authorities and instrumentalities only guarantee that principal and interest
will be timely paid to holders of the securities. The entities do not guarantee
that the value of fund shares will increase.
Long Term Maturities
Debt securities with longer maturities may be subject to greater price
fluctuations due to interest rates, tax laws, and other general market factors
than securities with shorter maturities.
Small Market Capitalization and Unseasoned Companies
Companies with small capitalization are often companies in industries that have
recently emerged due to cultural, economic, regulatory or technological
developments. Such developments can have a significant positive or negative
effect on small capitalization companies and their stock performance. Given the
limited operating history and rapidly changing fundamental prospects, investment
returns from smaller capitalization companies and unseasoned companies can be
highly volatile. Smaller and unseasoned companies may find their ability to
raise capital impaired by their size or lack of operating history. Product lines
are often less diversified and subject to competitive threats. Smaller
capitalization stocks and stocks of unseasoned companies are subject to varying
patterns of trading volume and may, at times, be difficult to sell.
Phoenix-Engemann Balanced Return Fund 7
<PAGE>
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.
Foreign Investing
Investing in the securities of non-U.S. companies involves special risks and
considerations not typically associated with investing in U.S. companies. These
include:
o differences in accounting, auditing and financial reporting standards;
o generally higher commission rates on foreign portfolio transactions;
o differences and inefficiencies in transaction settlement systems;
o the possibility of expropriation or confiscatory taxation;
o adverse changes in investment or exchange control regulations;
o political instability; and
o potential restrictions on the flow of international capital.
Political and economic uncertainty in foreign countries, as well as less public
information about foreign investments, may negatively impact the fund's
portfolio.
Foreign securities often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility. Additionally,
dividends and interest payable on foreign securities may be subject to foreign
taxes withheld prior to receipt by the fund.
Many of the foreign securities held by the fund will not be registered with, nor
will the issuers of those securities be subject to the reporting requirements
of, the U.S. Securities and Exchange Commission. Accordingly, there may be less
publicly available information about the securities and about the foreign
company or government issuing them than is available about a domestic company or
government entity. Moreover, individual foreign economies may differ favorably
or unfavorably from the U.S. economy in such respects as growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payment positions.
Foreign Currency
Changes in foreign exchange rates will affect the value of those securities
denominated or quoted in currencies other than the U.S. dollar. The forces of
supply and demand in the foreign exchange markets determine exchange rates and
these forces are in turn affected by a range of economic, political, financial,
governmental and other factors. Exchange rate fluctuations can
8 Phoenix-Engemann Balanced Return Fund
<PAGE>
affect the fund's net asset value (share price) and dividends either positively
or negatively depending upon whether foreign currencies are appreciating or
depreciating in value relative to the U.S. dollar. Exchange rates fluctuate over
both the long and short terms.
On January 1, 1999, eleven European countries began converting from their
sovereign currency to the European Union common currency called the "Euro". This
conversion may expose the fund to certain risks including the reliability and
timely reporting of pricing information of the fund's portfolio holdings. In
addition, one or more of the following may adversely affect specific securities
in the fund's portfolio:
o known trends or uncertainties related to the Euro conversion that an issuer
reasonably expects will have a material impact on revenues, expenses or
income from its operations;
o competitive implications of increased price transparency of European Union
markets (including labor markets) resulting from adoption of a common
currency and issuers' plans for pricing their own products and services in
the Euro;
o issuers' ability to make required information technology updates on a timely
basis, and costs associated with the conversion (including costs of dual
currency operations through January 1, 2002);
o currency exchange rate risk and derivatives exposure (including the
disappearance of price sources, such as certain interest rate indices); and
o potential tax consequences.
Special Situations
Special situations often involve much greater risk than ordinary investment
securities. The companies involved often are smaller, unseasoned companies and
the securities may not perform as the adviser expects. Analysis of special
situations is more complex than for ordinary investments, making it more
difficult for the adviser to accurately predict risk and return.
Phoenix-Engemann Balanced Return Fund 9
<PAGE>
Phoenix-Engemann Focus Growth Fund
Investment Risk and Return Summary
- ----------------------------------
Investment Objective
Phoenix-Engemann Growth Fund has an investment objective of long-term growth of
capital. There is no guarantee that the fund will achieve its objective.
Principal Investment Strategies
> The fund emphasizes the purchase of common stocks of domestic corporations
with rapidly growing earnings per share. The companies may have small or
large capitalizations and may be unseasoned or established. The adviser will
also select stocks of companies that may not be experiencing rapid growth
but, in the opinion of the adviser, are undervalued by other criteria of
their fundamental net worth.
> The fund may invest up to 30% of its assets in special situations, such as
tender offers or corporate restructurings, that the adviser believes present
opportunities for capital growth.
> The adviser looks to sell securities from the portfolio when there is a
change in the original factors used to select a security or the security has
appreciated and is no longer attractive.
Principal Risks
If you invest in this fund, you risk that you may lose your investment.
Conditions affecting the overall economy, specific industries or companies in
which the fund invests can be worse then expected. As a result, the value of
your shares may decrease.
The fund may be subject to greater risks than a fund that does not invest in
securities with growth characteristics.
Smaller and unseasoned companies may be affected to a greater extent than
larger, established companies by changes in general economic conditions and
conditions in particular industries. Unseasoned companies will be relatively new
to the primary line of business and small companies may also be relatively new.
These companies may not have the same operating history and "track record" as
larger companies. This could make future performance of smaller companies,
unseasoned companies and new issues more difficult to predict.
Special situations often involve smaller, unseasoned companies and the
securities may not appreciate as the adviser believed they would. Analysis of
special situations is more complex than for ordinary investments, making it more
difficult for the adviser to accurately predict risk and return.
10 Phoenix-Engemann Focus Growth Fund
<PAGE>
Performance Tables
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Engemann Growth Fund. The bar chart shows changes in the fund's
Class A Shares performance from year to year over the last ten years.(1) The
table 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.
Phoenix-Engemann Focus Growth Fund
[TABULAR REPRESENTATION OF BAR CHART]
Annual Return (%)
<TABLE>
<S> <C>
1990 -4.55
1991 67.85
1992 2.24
1993 -5.87
1994 -3.75
1995 27.16
1996 22.49
1997 16.04
1998 37.41
1999
</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 % (quarter ending) and the
lowest return for a quarter was % (quarter ending). Year to date performance
(through March 31, 2000) was %.
<TABLE>
Average Annual Total Returns(1) One Five Ten
(for the periods ending 12/31/99) Year Years Years Life of the Fund(2)
- ------------------------------------------------------------------------------------------------
Class A Class B Class C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares % % % % -- --
- ------------------------------------------------------------------------------------------------
Class B Shares % % N/A -- % --
- ------------------------------------------------------------------------------------------------
Class C Shares % % N/A -- -- %
- ------------------------------------------------------------------------------------------------
S&P 500 Composite Stock Price
Index(3) % % % % % %
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B and Class C Shares.
(2) Class A Shares since June 24, 1986; Class B and Class C Shares since January
3, 1994.
(3) The S&P 500 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 Focus Growth Fund 11
<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 % % %
Distribution and Service (12b-1) Fees(c) 0.25% 1.00% 1.00%
Other Expenses % % %
----- ----- -----
Total Annual Fund Operating Expenses % % %
===== ===== =====
</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. Class C Shares purchased prior to January 20, 1998 are not
subject to the 1% deferred sales charge.
(c) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
Example
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
12 Phoenix-Engemann Focus Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $ $ $ $
Class B $ $ $ $
Class C $ $ $ $
</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 $ $ $ $
</TABLE>
Investment Strategies
- ---------------------
Investment Objective
The fund has an investment objective of long-term growth of capital. There is no
guarantee that the fund will achieve its objective.
Principal Investment Strategies
The fund emphasizes the purchase of common stocks of domestic corporations with
rapidly growing earnings per share. The companies may have small or large
capitalizations and may be unseasoned or established. The adviser will also
select stocks of companies that may not be experiencing rapid growth but, in the
opinion of the adviser, are undervalued by other criteria of their fundamental
net worth. The adviser anticipates that the fund's volatility will be greater
than the Standard & Poor's 500 Stock Index. Distribution of income, such as
dividends and interest, is incidental in the selection of investments for the
fund.
A security is sold when there has been a change in the original factors used to
select a security, such as a reduction in the expected earnings growth rate of
the company or a loss of competitive advantage, or the security has appreciated
to the point where it is no longer attractive.
The fund may invest up to 30% of its total assets in special situations that the
adviser believes present opportunities for capital growth. Special situations
are created by developments that apply solely to a particular company.
Developments that create special situations include liquidations,
reorganizations, recapitalizations, corporate restructurings, mergers and tender
offers, technological breakthroughs and new management.
Phoenix-Engemann Focus Growth Fund 13
<PAGE>
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 refer to the Statement of Additional Information for more detailed
information about these and other investment techniques of the fund.
Risks Related to Investment Strategies
- --------------------------------------
General
The value of the fund's investments that support your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decreases, you will lose money.
The value of the fund's investments can decrease for a number of reasons. For
example, changing economic conditions may cause a decline in value of many or
most investments. Particular industries can face poor market conditions for
their products or services so that companies engaged in those businesses do not
perform as well as companies in other industries. To the extent that the fund's
investments are affected by general economic declines and declines in industries
that negatively affect the companies in which the fund invests, fund share
values may decline. Share values can also decline if the specific companies
selected for fund investment fail to perform as the adviser expects, regardless
of general economic trends, industry trends and other economic factors.
In addition to these general risks of investing in the fund, there are several
specific risks of investing in the fund that you should note.
Growth Stocks
Typically, growth stocks make little or no dividend payments to shareholders.
Investment return is based upon the stocks' capital appreciation making return
more dependent on market increases and decreases as compared to stocks that
provide dividend payments. Growth stocks also tend to rise faster when markets
advance and drop more sharply when markets fall making them more volatile than
non-growth stocks to market changes. Should a market decline occur, the fund's
price may fall more than that of a non-growth fund.
Small Market Capitalization and Unseasoned Companies
Companies with small capitalization are often companies in industries that have
recently emerged due to cultural, economic, regulatory or technological
developments. Such developments can have a significant positive or negative
effect on small capitalization companies and their stock performance. Given the
limited operating history and rapidly changing fundamental prospects, investment
returns from smaller capitalization companies and
14 Phoenix-Engemann Focus Growth Fund
<PAGE>
unseasoned companies can be highly volatile. Smaller and unseasoned companies
may find their ability to raise capital impaired by their size or lack of
operating history. Product lines are often less diversified and subject to
competitive threats. Smaller capitalization stocks, new issues and stocks of
unseasoned companies are subject to varying patterns of trading volume and may,
at times, be difficult to sell.
Special Situations
Special situations often involve much greater risk than ordinary investment
securities. The companies involved are often smaller, unseasoned companies and
the securities may not perform as the adviser expects. Analysis of special
situations is more complex than for ordinary investments, making it more
difficult for the adviser to accurately predict risk and return.
Phoenix-Engemann Focus Growth Fund 15
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
Investment Risk and Return Summary
- ----------------------------------
Investment Objective
Phoenix-Engemann Nifty Fifty Fund has an investment objective of long-term
growth of capital. There is no guarantee that the fund will achieve its
objective.
Principal Investment Strategies
> The fund expects to invest in approximately 50 different securities that the
adviser believes represent the best potential to achieve long-term growth of
capital. However, the fund may, for short periods of time, have more or less
than 50 different securities while it is adding or deleting a particular
position.
> Under normal circumstances, the fund expects to invest at least 75% of its
assets in common stocks of high-quality growth companies, companies that have
demonstrated earning power and are financially strong.
> The fund may also invest in common stocks with rapidly growing earnings per
share or stocks of companies that may not be experiencing rapid growth but,
in the opinion of the adviser, are undervalued by other criteria of their
fundamental net worth. The companies may have small or large capitalizations
and may be unseasoned or established.
> The adviser looks to sell securities from the portfolio when there is a
change in the original factors used to select a security or the security has
appreciated and is no longer attractive.
> The fund may invest up to 35% of its assets in securities of foreign
companies, special situations and unseasoned companies combined.
Principal Risks
If you invest in this fund, you risk that you may lose your investment.
Conditions affecting the overall economy, specific industries or companies in
which the fund invests can be worse then expected. As a result, the value of
your shares may decrease.
The fund seeks to invest in approximately 50 securities. Conditions which
negatively affect these securities will have a greater impact on the fund as
compared to a fund that is not limited in the number of issues it holds.
The fund may be subject to greater risks than a fund that does not invest in
securities with growth characteristics.
16 Phoenix-Engemann Nifty Fifty Fund
<PAGE>
Smaller and unseasoned companies may be affected to a greater extent than
larger, established companies by changes in general economic conditions and
conditions in particular industries. Unseasoned companies will be relatively new
to the primary line of business and small companies may also be relatively new.
These companies may not have the same operating history and "track record" as
larger companies. This could make future performance of smaller and unseasoned
companies more difficult to predict.
Special situations often involve smaller, unseasoned companies and the
securities may not appreciate as the adviser believed they would. Analysis of
special situations is more complex than for ordinary investments, making it more
difficult for the adviser to accurately predict risk and return.
Phoenix-Engemann Nifty Fifty Fund 17
<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.
Phoenix-Engemann Nifty fifty Fund
[TABULAR REPRESENTATION OF BAR CHART]
Annual Return (%)
<TABLE>
<S> <C>
1991 67.64
1992 3.67
1993 -0.52
1994 1.05
1995 28.21
1996 26.53
1997 19.23
1998 35.13
1999
</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 % (quarter ending) and the lowest
return for a quarter was % (quarter ending). Year to date performance (through
March 31, 2000) was %.
<TABLE>
<CAPTION>
Average Annual Total Returns(1) One Five
(for the periods ending 12/31/99) Year Years Life of the Fund(2)
- -----------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares % % % -- --
- -----------------------------------------------------------------------------------
Class B Shares % % -- % --
- -----------------------------------------------------------------------------------
Class C Shares % % -- -- %
- -----------------------------------------------------------------------------------
S&P 500 Composite Stock Price
Index(3) % % % % %
- -----------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B and Class C Shares.
(2) Class A Shares since December 17, 1990; Class B and Class C Shares since
January 3, 1994.
(3) The S&P 500 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.
18 Phoenix-Engemann Nifty Fifty 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 % % %
Distribution and Service (12b-1) Fees(c) 0.25% 1.00% 1.00%
Other Expenses % % %
----- ----- -----
Total Annual Fund Operating Expenses % % %
===== ===== =====
</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. Class C Shares purchased prior to January 20, 1998 are not
subject to the 1% deferred sales charge.
(c) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
Example
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
Phoenix-Engemann Nifty Fifty Fund 19
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $ $ $ $
Class B $ $ $ $
Class C $ $ $ $
</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 $ $ $ $
</TABLE>
Investment Strategies
- ---------------------
Investment Objective
The fund has an investment objective of long-term growth of capital. There is no
guarantee that the fund will achieve the objective.
Principal Investment Strategies
The fund expects to invest in approximately 50 different securities that the
adviser believes represent the best potential to achieve long-term growth of
capital. However, the fund may, for short periods of time, have more or less
than 50 different securities while it is adding or deleting a particular
position.
Under normal circumstances, the fund expects to invest at least 75% of its
assets in common stocks of high-quality growth companies. High-quality growth
companies are companies that generally exceed $50 million in annual net income
and satisfy New York Stock Exchange listing requirements with respect to
demonstrated earning power, years in operation, number of publicly-held shares,
and net tangible assets.
The fund may also invest in common stocks with rapidly growing earnings per
share or stocks of companies that may not be experiencing rapid growth but, in
the opinion of the adviser, are undervalued by other criteria of their
fundamental net worth. The companies may have small or large capitalizations and
may be unseasoned or established.
A security is sold when there has been a change in the original factors used to
select the security, such as a reduction in the expected earnings growth rate of
the company or a loss of competitive advantage, or the security has appreciated
to the point where it is no longer attractive.
20 Phoenix-Engemann Nifty Fifty Fund
<PAGE>
The fund may invest up to 30% of its assets in special situations. Special
situations are created by developments that apply solely to a particular
company. Developments that create special situations include liquidations,
reorganizations, recapitalizations, corporate restructurings, mergers and tender
offers, technological breakthroughs and new management.
Distribution of income, such as dividends and interest, is incidental in the
selection of investments for the fund.
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 investment objective.
Please refer to the Statement of Additional Information for more detailed
information about these and other investment techniques of the fund.
Risks Related to Investment Strategies
- --------------------------------------
General
The value of the fund's investments that support your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decreases, you will lose money.
The value of the fund's investments can decrease for a number of reasons. For
example, changing economic conditions may cause a decline in value of many or
most investments. Particular industries can face poor market conditions for
their products or services so that companies engaged in those businesses do not
perform as well as companies in other industries. To the extent that the fund's
investments are affected by general economic declines and declines in industries
that negatively affect the companies in which the fund invests, fund share
values may decline. Share values can also decline if the specific companies
selected for fund investment fail to perform as the adviser expects, regardless
of general economic trends, industry trends and other economic factors.
In addition to these general risks of investing in the fund, there are several
specific risks of investing in the fund that you should note.
Limited Number of Investments
The fund seeks to invest in approximately 50 securities. Conditions which
negatively affect these securities will have a greater impact on the fund as
compared to a fund that is not limited in the number of issues it holds. The
fund may be more sensitive to changes in the market value of a single issuer or
industry in its portfolio and therefore may present a greater risk than is
usually associated with a more widely diversified mutual fund.
Phoenix-Engemann Nifty Fifty Fund 21
<PAGE>
Growth Stocks
Typically, growth stocks make little or no dividend payments to shareholders.
Investment return is based upon the stocks' capital appreciation making return
more dependent on market increases and decreases as compared to stocks that
provide dividend payments. Growth stocks also tend to rise faster when markets
advance and drop more sharply when markets fall making them more volatile than
non-growth stocks to market changes. Should a market decline occur, the fund's
price may fall more than that of a non-growth fund.
Small Market Capitalization and Unseasoned Companies
Companies with small capitalization are often companies in industries that have
recently emerged due to cultural, economic, regulatory or technological
developments. Such developments can have a significant positive or negative
effect on small capitalization companies and their stock performance. Given the
limited operating history and rapidly changing fundamental prospects, investment
returns from smaller capitalization companies and unseasoned companies can be
highly volatile. Smaller and unseasoned companies may find their ability to
raise capital impaired by their size or lack of operating history. Product lines
are often less diversified and subject to competitive threats. Smaller
capitalization stocks and stocks of unseasoned companies are subject to varying
patterns of trading volume and may, at times, be difficult to sell.
Special Situations
Special situations often involve much greater risk than ordinary investment
securities. The companies involved often are often 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.
22 Phoenix-Engemann Nifty Fifty Fund
<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
> The fund emphasizes investment primarily in equity securities of those small
and mid-cap companies that the adviser believes may be leading companies of
tomorrow. Under normal market circumstances, the fund will invest at least
65% of its total assets in equity securities of companies that have market
capitalizations below $1.5 billion.
> The fund expects to invest principally in common stocks. The adviser will
select stocks of corporations with rapidly growing earnings per share. The
adviser will also select stocks of companies that may not be experiencing
rapid growth but, in the opinion of the adviser, are undervalued by other
criteria of their fundamental net worth.
> The adviser looks to sell securities from the portfolio when there is a
change in the original factors used to select a security, or the security has
appreciated and is no longer attractive.
> Although the fund may invest up to 50% of its total assets in securities of
foreign (non-U.S.) issuers, it will primarily emphasize investment in U.S.
companies.
> The fund may invest in new issues that the adviser believes offer good
long-term investment potential or an opportunity for immediate price
increase.
> The fund may invest up to 35% of its assets in special situations, such as
tender offers or corporate restructurings, that the adviser believes present
opportunities for capital growth.
Principal Risks
If you invest in this fund, you risk that you may lose your investment.
Conditions affecting the overall economy, specific industries or companies in
which the fund invests can be worse then expected. As a result, the value of
your shares may decrease.
The fund may be subject to greater risks than a fund that does not invest in
securities with growth characteristics.
Phoenix-Engemann Small & Mid-Cap Growth Fund 23
<PAGE>
Smaller and mid-capitalization companies may be affected to a greater extent
than larger, established companies by changes in general economic conditions and
conditions in particular industries. These companies may not have the same
operating history and "track record" as larger companies. This could make future
performance of smaller companies, mid-capitalization companies and new issues
more difficult to predict.
Political and economic uncertainty in foreign countries, as well as less public
information about foreign investments, may negatively impact the fund's
portfolio. Some investments may be made in currencies other than U.S. dollars
that will fluctuate in value as a result of changes in the currency exchange
rate. Foreign markets and currencies may not perform as well as U.S. markets.
Special situations often involve smaller, unseasoned companies and the
securities may not appreciate as the adviser believed they would. Analysis of
special situations is more complex than for ordinary investments, making it more
difficult for the adviser to accurately predict risk and return.
24 Phoenix-Engemann Small & Mid-Cap Growth Fund
<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.
Phoenix-Engemann Small & Mid-Cap Growth Fund
[TABULAR REPRESENTATION OF BAR CHART]
Annual Return (%)
<TABLE>
<S> <C>
1995 25.68
1996 52.37
1997 26.41
1998 14.29
1999
</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 % (quarter ending) and the lowest
return for a quarter was % (quarter ending). Year to date performance (through
March 31, 2000) was %.
<TABLE>
<CAPTION>
Average Annual Total Returns(1)
(for the periods ending 12/31/99) One Year Life of the Fund(2)
- --------------------------------------------------------------------------------
Class A Class B Class C
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares % 31.53% -- --
- --------------------------------------------------------------------------------
Class B Shares % -- 22.06% --
- --------------------------------------------------------------------------------
Class C Shares % -- -- 18.74%
- --------------------------------------------------------------------------------
Russell 2000 Index(3) % 14.35% 11.14% 10.53%
- --------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption of the fund's Class B and Class C Shares.
(2) Class A Shares since October 10, 1994; Class B Shares since September 18,
1996; and Class C Shares since October 8, 1996.
(3) The Russell 2000 Index is an unmanaged, commonly used measure of total
return performance of small-capitalization stocks. The Index does not reflect
sales charges.
Phoenix-Engemann Small & Mid-Cap Growth Fund 25
<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 % % %
Distribution and Service (12b-1) Fees(d) 0.25% 1.00% 1.00%
Other Expenses % % %
----- ----- -----
Total Annual Fund Operating Expenses(a) % % %
===== ===== =====
</TABLE>
- ----------------
(a) The fund's administrator has agreed to waive a portion of its administration
fee so that other operating expenses of the fund do not exceed 0.60% of the
first $50 million of the average daily net assets. Total Annual Operating
Expenses for the fund, after waiver of administration fees, are % for Class A
Shares, % for Class B Shares and % 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. Class C Shares purchased prior to January 20, 1998 are not
subject to the 1% deferred sales charge.
(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").
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:
26 Phoenix-Engemann Small & Mid-Cap Growth Fund
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $ $ $ $
Class B $ $ $ $
Class C $ $ $ $
</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 $ $ $ $
</TABLE>
Note: Your actual expenses may be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
waiver of expenses over certain levels by the fund's administrator.
Investment Strategies
- ---------------------
Investment Objective
The fund has an investment objective of long-term growth of capital. There is no
guarantee that the fund will achieve its objective.
Principal Investment Strategies
The fund seeks to achieve its objective by investing primarily in equity
securities of those small and mid-cap companies that the adviser believes may be
leading companies of tomorrow. The fund emphasizes companies with market
capitalizations below $1.5 billion. Under normal market circumstances, the fund
will invest at least 65% of its total assets in equity securities of companies
that are in that market capitalization range at the time of purchase. The fund
may continue to hold securities of companies that subsequently increase their
market capitalizations to above $1.5 billion if the company continues to satisfy
the fund's other investment policies.
The fund may invest the remaining 35% of its assets in a small and mid-cap
companies or in equity securities of companies with larger capitalizations.
However, the fund intends to invest primarily in U.S. equity securities with
market capitalizations of $1.5 billion or below. The fund may invest up to 50%
of total assets in securities of foreign (non-U.S.) issuers.
Phoenix-Engemann Small & Mid-Cap Growth Fund 27
<PAGE>
The adviser will select stocks of companies that show rapidly growing earnings
price per share. The fund may also invest in companies that may not be
experiencing rapid growth but, in the opinion of the adviser, are undervalued by
other criteria of their fundamental net worth. The adviser anticipates that the
fund's volatility will be greater than the Standard & Poor's 500 Stock Index.
Distribution of income, such as dividends and interest, is incidental in the
selection of investments for the fund.
The fund may also invest in new issues that the adviser believes offer good
long-term investment potential or an opportunity for immediate price
appreciation.
The fund may invest up to 35% of its total assets in special situations that the
adviser believes present opportunities for capital growth. Special situations
are created by developments that apply solely to a particular company.
Developments that create special situations include liquidations,
reorganizations, recapitalizations, corporate restructurings, mergers and tender
offers, technological breakthroughs and new management.
The adviser's portfolio selection method may result in a higher portfolio
turnover rate. High portfolio turnover rates may increase costs to the fund, may
negatively affect fund performance, and may increase capital gains
distributions, resulting in greater tax liability to you.
A security is sold when there has been a change in the original factors used to
select a security, such as a reduction in the expected earnings growth rate of
the company or a loss of competitive advantage, or the security has appreciated
to the point where it is no longer attractive.
Temporary 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 refer to the Statement of Additional Information for more detailed
information about these and other investment techniques of the fund.
Risks Related to Investment Strategies
- --------------------------------------
General
The value of the fund's investments that support your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decreases, you will lose money.
The value of the fund's investments can decrease for a number of reasons. For
example, changing economic conditions may cause a decline in value of many or
most investments. Particular industries can face poor market conditions for
their products or services so that companies engaged in those businesses do not
28 Phoenix-Engemann Small & Mid-Cap Growth Fund
<PAGE>
perform as well as companies in other industries. To the extent that the fund's
investments are affected by general economic declines and declines in industries
that negatively affect the companies in which the fund invests, fund share
values may decline. Share values can also decline if the specific companies
selected for fund investment fail to perform as the adviser expects, regardless
of general economic trends, industry trends and other economic factors.
In addition to these general risks of investing in the fund, there are several
specific risks of investing in the fund that you should note.
Small and Medium Market Capitalization Investing
Companies with small and medium capitalization are often companies in industries
that have recently emerged due to cultural, economic, regulatory or
technological developments. Such developments can have a significant positive or
negative effect on small and medium capitalization companies and their stock
performance. Given the limited operating history and rapidly changing
fundamental prospects, investment returns from small and medium capitalization
companies can be highly volatile. Small and medium companies may find their
ability to raise capital impaired by their size or lack of operating history.
Product lines are often less diversified and subject to competitive threats.
Small and medium capitalization stocks are subject to varying patterns of
trading volume and may, at times, be difficult to sell.
Focusing fund investments in small and mid-cap companies may also subject the
fund to greater risks then a fund that invests in a broad range of securities
that do not have the potential to appreciate. Investment returns may be less for
small and mid-cap companies with appreciation potential because return is more
dependent on market increases and decreases as compared to stocks that provide
dividend payments. Should the market decline, the share value of small and
mid-cap companies may decline at a sharper rate than larger, dividend-paying
companies.
Growth Stocks
Typically, growth stocks make little or no dividend payments to shareholders.
Investment return is based upon the stocks' capital appreciation making return
more dependent on market increases and decreases as compared to stocks that
provide dividend payments. Growth stocks also tend to rise faster when markets
advance and drop more sharply when markets fall making them more volatile than
non-growth stocks to market changes. Should a market decline occur, the fund's
price may fall more than that of a non-growth fund.
Foreign Investing
Investing in the securities of non-U.S. companies involves special risks and
considerations not typically associated with investing in U.S. companies. These
include:
o differences in accounting, auditing and financial reporting standards;
o generally higher commission rates on foreign portfolio transactions;
o differences and inefficiencies in transaction settlement systems;
Phoenix-Engemann Small & Mid-Cap Growth Fund 29
<PAGE>
o the possibility of expropriation or confiscatory taxation;
o adverse changes in investment or exchange control regulations;
o political instability; and
o potential restrictions on the flow of international capital.
Political and economic uncertainty in foreign countries, as well as less public
information about foreign investments, may negatively impact the fund's
portfolio.
Foreign securities often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility. Additionally,
dividends and interest payable on foreign securities may be subject to foreign
taxes withheld prior to receipt by the fund.
Many of the foreign securities held by the fund will not be registered with, nor
will the issuers of those securities be subject to the reporting requirements
of, the U.S. Securities and Exchange Commission. Accordingly, there may be less
publicly available information about the securities and about the foreign
company or government issuing them than is available about a domestic company or
government entity. Moreover, individual foreign economies may differ favorably
or unfavorably from the U.S. economy in such respects as growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payment positions.
Foreign Currency
Changes in foreign exchange rates will affect the value of those securities
denominated or quoted in currencies other than the U.S. dollar. The forces of
supply and demand in the foreign exchange markets determine exchange rates and
these forces are in turn affected by a range of economic, political, financial,
governmental and other factors. Exchange rate fluctuations can affect the fund's
net asset value (share price) and dividends either positively or negatively
depending upon whether foreign currencies are appreciating or depreciating in
value relative to the U.S. dollar. Exchange rates fluctuate over both the long
and short terms.
On January 1, 1999, eleven European countries began converting from their
sovereign currency to the European Union common currency called the "Euro". This
conversion may expose the fund to certain risks including the reliability and
timely reporting of pricing information of the fund's portfolio holdings. In
addition, one or more of the following may adversely affect specific securities
in the fund's portfolio:
o known trends or uncertainties related to the Euro conversion that an issuer
reasonably expects will have a material impact on revenues, expenses or
income from its operations;
o competitive implications of increased price transparency of European Union
markets (including labor markets) resulting from adoption of a common
currency and issuers' plans for pricing their own products and services in
the Euro;
30 Phoenix-Engemann Small & Mid-Cap Growth Fund
<PAGE>
o issuers' ability to make required information technology updates on a timely
basis, and costs associated with the conversion (including costs of dual
currency operations through January 1, 2002);
o currency exchange rate risk and derivatives exposure (including the
disappearance of price sources, such as certain interest rate indices); and
o potential tax consequences.
New Issues
A new issue may be an initial public offering by a previously private company.
There may be less public information about the company and the company may have
a limited operating history and rapidly changing fundamental prospects. This may
make investment returns of new issues highly volatile. New issues may also be
subject to varying patterns of trading volume and may, at times, be difficult to
sell.
Special Situations
Special situations often involve much greater risk than ordinary investment
securities. The companies involved often are smaller, unseasoned companies and
the securities may not perform as the adviser expects. Analysis of special
situations is more complex than for ordinary investments, making it more
difficult for the adviser to accurately predict risk and return.
Phoenix-Engemann Small & Mid-Cap Growth Fund 31
<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
> The fund expects to invest primarily in common stocks. Under normal
circumstances, at least 80% of the fund's total assets will be invested in
common stocks of approximately twenty-five (25) companies that demonstrate
high dividend yield and quality earnings based on the adviser's proprietary
quantitative analysis.
> In selecting the twenty-five stocks, the adviser uses a proprietary
quantitative approach to identify the highest yielding stocks that fit the
fund's criteria. From this group, the adviser selects stocks of any
capitalization that it believes offer the best investment promise. The
adviser will look for one or more of the following characteristics:
o established operating history;
o dividend payout ratio; and
o sound balance sheet and other financial characteristics.
> The adviser looks to sell securities from the portfolio when there is a
change in the original factors used to select a security or the security has
appreciated and is no longer attractive.
> The fund may invest up to 35% of its total assets in special situations, such
as tender offers or corporate restructurings, that the adviser believes
present opportunities for capital growth.
Principal Risks
If you invest in this fund, you risk that you may lose your investment
The fund will seek to earn current income and to increase the value of your
shares by investing in securities the adviser expects to pay dividends and to
increase in value. Most of the fund's investments will be in common stocks.
Conditions affecting the overall economy, specific industries or companies in
which the fund invests can be worse than expected. As a result, the value of
your shares may decrease. Dividend distributions can also decrease or be
eliminated entirely.
32 Phoenix-Engemann Value 25 Fund
<PAGE>
Conditions which negatively affect the approximately 25 securities in which the
fund invests will have a greater impact on the fund as compared to a fund that
is not limited in the number of issues it holds.
Special situations often involve smaller, unseasoned companies and the
securities may not perform as the adviser expects. Analysis of special
situations is more complex than for ordinary investments, making it more
difficult for the adviser to accurately predict risk and return.
Phoenix-Engemann Value 25 Fund 33
<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.
Phoenix-Engemann Value 25 Fund
[TABULAR REPRESENTATION OF BAR CHART]
Annual Return (%)
<TABLE>
<S> <C>
1997 21.10
1998 7.23
1999
</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 % (quarter ending) and the lowest
return for a quarter was % (quarter ending). Year to date performance (through
March 31, 2000) was %.
<TABLE>
<CAPTION>
Average Annual Total Returns(1)
(for periods ending 12/31/99) One Year Life of the Fund(2)
- ---------------------------------------------------------------------------------
Class A Class B Class C
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Shares % % -- --
- ---------------------------------------------------------------------------------
Class B Shares % -- % --
- ---------------------------------------------------------------------------------
Class C Shares % -- -- %
- ---------------------------------------------------------------------------------
S&P 500 Composite Stock Price Index(3) % % % %
- ---------------------------------------------------------------------------------
</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) 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.
34 Phoenix-Engemann Value 25 Fund
<PAGE>
Fund Expenses
- -------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
------- ------- -------
<S> <C> <C> <C>
Shareholder Fees (fees paid directly from
your investment)
Maximum Sales Charge (load) Imposed on
Purchases (as a percentage of offering price) 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 % % %
----- ----- -----
Total Annual Fund Operating Expenses(a) % % %
===== ===== =====
</TABLE>
- ----------------
(a) The fund's administrator has agreed to waive a portion of its administration
fee so that other operating expenses of the fund do not exceed 0.60% of the
first $50 million of the average daily net asset. Total Annual Operating
Expenses for the fund, after waiver of administration fees, are 1.75% for Class
A Shares, 2.50% for Class B Shares and 2.50% for Class C Shares.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year. Class B Shares purchased
prior to January 20, 1998 are subject to the sales load schedule as it existed
prior to that date. See "Sales Charges--Class B Shares Purchased Prior to
January 20, 1998" in this prospectus.
(c) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only. Class C Shares purchased prior to January 20, 1998 are not
subject to the 1% deferred sales charge.
(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").
Example
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
Phoenix-Engemann Value 25 Fund 35
<PAGE>
<TABLE>
<CAPTION>
Class 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $ $ $ $
Class B $ $ $ $
Class C $ $ $ $
</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 $ $ $ $
</TABLE>
Note: Your actual expenses may be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
waiver of expenses over certain levels by the fund's administrator.
Investment Strategies
- ---------------------
Investment Objective
The fund has an investment objective to provide substantial dividend income and
long-term growth of capital. There is no guarantee that the fund will achieve
its objective.
Principal Investment Strategies
The fund invests in securities that the adviser believes offer the best
potential for current dividend yield and long-term growth of capital. Under
normal circumstances, at least 80% of the fund's total assets will be invested
in common stocks of approximately twenty-five (25) companies that demonstrate
high dividend yield and quality earnings based on the adviser's proprietary
quantitative analysis. The average market capitalizations of the stocks included
will generally be in excess of $1 billion.
In selecting the twenty-five stocks, the adviser uses a proprietary quantitative
approach to identify the highest yielding stocks that fit the fund's criteria.
From this group, the adviser selects stocks that it believes offer the best
investment promise. The adviser will look for one or more of the following
characteristics:
36 Phoenix-Engemann Value 25 Fund
<PAGE>
o established operating history;
o dividend payout ratio; and
o sound balance sheet and other financial characteristics.
A security is sold when there has been a change in the original factors used to
select a security, such as a reduction in the expected earnings growth rate of
the company or a loss of competitive advantage, or the security has appreciated
to the point where it is no longer attractive.
The fund may invest up to 35% of its total assets in special situations that the
adviser believes present opportunities for capital growth. Special situations
are created by developments that apply solely to a particular company.
Developments that create special situations include liquidations,
reorganizations, recapitalizations, corporate restructurings, mergers and tender
offers, technological breakthroughs and new management.
The adviser's portfolio selection method may result in a higher portfolio
turnover rate. High portfolio turnover rates may increase costs to the fund, may
negatively affect fund performance, and may increase capital gains
distributions, resulting in greater tax liability to you.
Temporary 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 investment objective.
Please refer to the Statement of Additional Information for more detailed
information about these and other investment techniques of the fund.
Risks Related to Investment Strategies
- --------------------------------------
General
Companies in which the fund invests may encounter negative conditions such as
poor market conditions for their products or services that could leave the
companies' unable to continue to pay dividends at expected levels. Neither the
adviser nor the fund can assure you that a particular level of income will
consistently be achieved.
In addition, the value of the fund's investments that support your share value
can decrease as well as increase. If between the time you purchase shares and
the time you sell shares the value of the fund's investments decreases, you will
lose money. The value of the fund's investments can decrease for a number of
reasons. For example, changing economic conditions may cause a decline in value
of many or most investments. Particular industries can face poor market
conditions for their products or services so that companies engaged in those
businesses do not
Phoenix-Engemann Value 25 Fund 37
<PAGE>
perform as well as companies in other industries. To the extent that the fund's
investments are affected by general economic declines and declines in industries
that negatively affect the companies in which the fund invests, fund share
values may decline. Share values can also decline if the specific companies
selected for fund investment fail to perform as the adviser expects, regardless
of general economic trends, industry trends and other economic factors.
In addition to these general risks of investing in the fund, there are several
specific risks of investing in the fund that you should note.
Limited Number of Investments
Conditions which negatively affect the approximately 25 securities in which the
fund invests will have a greater impact on the fund as compared to a fund that
is not limited in the number of issues it holds. Moreover, the fund may be more
sensitive to changes in the market value of a single issuer or industry in its
portfolio and therefore may present a greater risk than is usually associated
with a more widely diversified mutual fund.
Special Situations
Special situations often involve much greater risk than ordinary investment
securities. The companies involved often are smaller, unseasoned companies and
the securities may not perform as the adviser expects. Analysis of special
situations is more complex than for ordinary investments, making it more
difficult for the adviser to accurately predict risk and return.
38 Phoenix-Engemann Value 25 Fund
<PAGE>
Management of The Funds
- -----------------------
The Adviser
Roger Engemann & Associates, Inc. ("Engemann") is the investment adviser to each
of the funds and is located at 600 North Rosemead Boulevard, Pasadena,
California 91107. Engemann also acts as subadviser to two other mutual funds and
acts as investment adviser to institutions and individuals. As of December 31,
1999, Engemann had $10.9 billion in assets under management. Engemann has been
an investment adviser since 1969.
Subject to the direction of the fund's Board of Trustees, Engemann is
responsible for managing the funds' investment program and the day-to-day
management of the funds' portfolios. Engemann manages each fund's assets to
conform with the investment policies as described in this prospectus. Each fund
pays Engemann a monthly investment management fee that is accrued daily against
the value of that fund's net assets at the following rates.
<TABLE>
<CAPTION>
Management Fee 1st $50 Million Next $450 Million Over $500 Million
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Return Fund 0.80% 0.70% 0.60%
- ------------------------------------------------------------------------------
Focus Growth Fund 0.90% 0.80% 0.70%
- ------------------------------------------------------------------------------
Nifty Fifty Fund 0.90% 0.80% 0.70%
- ------------------------------------------------------------------------------
Small & Mid-Cap 1.00% 0.90% 0.80%
- ------------------------------------------------------------------------------
Growth Fund
Value 25 Fund 0.90% 0.80% 0.70%
- ------------------------------------------------------------------------------
</TABLE>
During the fund's last fiscal year, the fund paid total management fees of $ .
The ratio of management fees to average net assets for the fiscal year ended
December 31, 1999 was % for the Balanced Return Fund, % for the Focus Growth
Fund, % for the Nifty Fifty Fund, % for the Small & Mid-Cap Growth Fund and
0.90% for the Value 25 Fund.
Portfolio Management
Roger Engemann, James E. Mair and John S. Tilson are primarily responsible for
the day-to-day management of the funds. Mr. Engemann has been president of
Engemann since its inception. Messrs. Mair and Tilson are both Executive Vice
Presidents of Portfolio Management of Engemann, and both have been with Engemann
since 1983. Messrs. Engemann and Mair have been Chartered Financial Analysts
("CFAs") since 1972, and Mr. Tilson has been a CFA since 1974.
Lou Abel, Scott Swanson, Ned Brines, James Chen, Yossie Lipsker, Lou Holtz and
Mark Petrie serve as research analysts and participate as members of the team
who are responsible for the day-to-day management of the funds' portfolios.
Messrs. Swanson and Abel are CFAs and
Phoenix-Engemann Funds 39
<PAGE>
have been with Engemann since 1990 and 1991, respectively. Messrs. Chen and
Brines are CFAs and have been with Engemann since 1994. Mr. Holtz is a CFA and
has been with Engemann since 1996. Messrs. Petrie and Lipsker are CFA Level III
candidates and have been with Engemann since 1992.
Pricing of Fund Shares
- ----------------------
How is the Share Price determined?
The fund calculates a share price for each class of its shares. The share price
is based on the net assets of the fund and the number of outstanding shares. In
general, the fund calculates net asset value by:
o adding the values of all securities and other assets of the fund,
o subtracting liabilities, and
o dividing by the total number of outstanding shares of the fund.
Asset Value: The fund's investments are valued at market value. If market
quotations are not available, the fund determines a "fair value" for an
investment according to rules and procedures approved by the Trustees. Foreign
and domestic debt securities (other than short-term investments) are valued on
the basis of broker quotations or valuations provided by a pricing service
approved by the Trustees when such prices are believed to reflect the fair value
of such securities. Foreign and domestic equity securities are valued at the
last sale price or, if there has been no sale that day, at the last bid price,
generally. Short-term investments having a remaining maturity of sixty days or
less are valued at amortized cost, which the Trustees have determined
approximates market value.
Liabilities: Class specific expenses, distribution fees, service fees and other
liabilities are deducted from the assets of each class. Expenses and liabilities
that are not class specific (such as management fees) are allocated to each
class in proportion to each class's net assets, except where an alternative
allocation can be more fairly made.
Net Asset Value: The liability allocated to a class plus any other expenses are
deducted from the proportionate interest of such class in the assets of the
fund. The resulting amount for each class is then divided by the number of
shares outstanding of that class to produce each class's net asset value per
share.
The net asset value per share of each class of the fund is determined on days
when the New York Stock Exchange (the "NYSE") is open for trading as of the
close of trading (normally 4:00 PM eastern time). The fund will not calculate
its net asset values per share on days when
40 Phoenix-Engemann Funds
<PAGE>
the NYSE is closed for trading. Trading of securities held by the fund in
foreign markets may negatively or positively impact the value of such securities
on days when the fund neither trades securities nor calculates its net asset
values (i.e., weekends and certain holidays).
At what price are shares purchased?
All investments received by the fund's authorized agents prior to the close of
regular trading on the NYSE (normally 4:00 PM eastern time) will be executed
based on that day's net asset value. Shares credited to your account from the
reinvestment of fund distributions will be in full and fractional shares that
are purchased at the closing net asset value on the next business day on which
the fund's net asset value is calculated following the dividend record date.
Sales Charges
- -------------
What are the classes and how do they differ?
The fund presently offers three classes of shares that have different sales and
distribution charges (see "Fund Expenses" previously in this prospectus). For
certain classes of shares, the fund has adopted distribution and service plans
allowed under Rule 12b-1 of the Investment Company Act of 1940 that authorize
the fund to pay distribution and service fees for the sale of its shares and for
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 class of shares bought at the same
time. Because distribution and service fees are paid out of the fund's assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
Class A Shares. If you purchase Class A Shares, you will pay a sales charge at
the time of purchase equal to 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
Phoenix-Engemann Funds 41
<PAGE>
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").
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
42 Phoenix-Engemann Funds
<PAGE>
any charge will be redeemed first, followed by shares held the longest time. To
calculate the amount of shares owned and time period held, all Class B Shares
purchased in any month are considered purchased on the last day of the preceding
month, and all Class C Shares are considered purchased on the trade date.
Deferred Sales charge you may pay to sell Class B Shares
<TABLE>
<CAPTION>
Year 1 2 3 4 5 6+
- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CDSC 5% 4% 3% 2% 2% 0%
</TABLE>
Class B Shares Purchased Prior to January 20, 1998
Class B Shares that were purchased prior to January 20, 1998 are not subject to
the sales load schedule described above but will continue to be subject to the
sales load schedule as it existed prior to that date. The following is the sales
load schedule you may pay to sell Class B Shares purchased prior to January 20,
1998:
<TABLE>
<CAPTION>
Year 1 2 3 4 5+
- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CDSC 5% 4% 3% 3% 0%
</TABLE>
Deferred Sales charge you may pay to sell Class C Shares
<TABLE>
<CAPTION>
Year 1 2+
- ---------------------------
<S> <C> <C>
CDSC 1% 0%
</TABLE>
Class C Shares of the Growth Fund, Balanced Return Fund, and Nifty Fifty Fund
purchased prior to January 20, 1998 are not subject to the 1% CDSC.
Your Account
- ------------
Opening an Account
Your financial advisor can assist you with your initial purchase as well as all
phases of your investment program. If you are opening an account by yourself,
please follow the instructions outlined below.
Step 1.
Your first choice will be the initial amount you intend to invest.
Phoenix-Engemann Funds 43
<PAGE>
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. The fund offers three
classes of shares for individual investors. Each has different sales and
distribution charges. Because all future investments in your account will be
made in the share class you choose when you open your account, you should make
your decision carefully. Your financial advisor can help you pick the share
class that makes the most sense for your situation.
Step 3.
Your next choice will be how you want to receive any dividends and capital gain
distributions. Your options are:
o Receive both dividends and capital gain distributions in additional shares
o Receive dividends in cash and capital gain distributions in additional
shares
o Receive both dividends and capital gain distributions in cash
No interest will be paid on uncashed distribution checks.
44 Phoenix-Engemann Funds
<PAGE>
How To Buy Shares
- -----------------
<TABLE>
<CAPTION>
To Open An Account
- ---------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- ---------------------------------------------------------------------------------------------------------
Complete a New Account Application and send it with a check payable
Through the mail to the fund. Mail them to: State Street Bank, P.O. Box 8301, Boston,
MA 02266-8301.
- ---------------------------------------------------------------------------------------------------------
By Federal Funds wire Call us at (800) 243-1574 (press 1, then 0).
- ---------------------------------------------------------------------------------------------------------
Complete the appropriate section on the application and send it with your
By Investo-Matic initial investment payable to the fund. Mail them to: State Street Bank,
P.O. Box 8301, Boston, MA 02266-8301.
- ---------------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800) 243-1574 (press 1, then 0).
- ---------------------------------------------------------------------------------------------------------
</TABLE>
How to Sell Shares
- ------------------
You have the right to have the fund buy back shares at the net asset value next
determined after receipt of a redemption order by the fund's Transfer Agent or
an authorized agent. In the case of a Class B or C Share redemption, you will be
subject to the applicable deferred sales charge, if any, for such shares.
Subject to certain restrictions, shares may be redeemed by telephone or in
writing. In addition, shares may be sold through securities dealers, brokers or
agents who may charge customary commissions or fees for their services. The fund
does not charge any redemption fees. Payment for shares redeemed is made within
seven days; however, redemption proceeds will not be disbursed until each check
used for purchases of shares has been cleared for payment by your bank, which
may take up to 15 days after receipt of the check.
<TABLE>
<CAPTION>
To Sell Shares
- ----------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- ----------------------------------------------------------------------------------------------------
Send a letter of instruction and any share certificates (if you hold
certificate shares) to: State Street Bank, P.O. Box 8301, Boston, MA
Through the mail 02266-8301. Be sure to include the registered owner's name, fund and
account number, number of shares or dollar value you wish to sell.
- ----------------------------------------------------------------------------------------------------
For sales up to $50,000, requests can be made by calling
By telephone (800) 243-1574.
- ----------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800) 243-1574 (press 1, then 0).
- ----------------------------------------------------------------------------------------------------
</TABLE>
Phoenix-Engemann Funds 45
<PAGE>
Things You Should Know When Selling Shares
- ------------------------------------------
You may realize a taxable gain or loss (for federal income tax purposes) if you
redeem shares of the fund. The fund reserves the right to pay large redemptions
"in-kind" (in securities owned by the fund rather than in cash). Large
redemptions are those over $250,000 or 1% of the fund's net assets. Additional
documentation will be required for redemptions by organizations, fiduciaries, or
retirement plans, or if redemption is requested by anyone but the shareholder(s)
of record. Transfers between broker-dealer "street" accounts are governed by the
accepting broker-dealer. Questions regarding this type of transfer should be
directed to your financial advisor. Redemption requests will not be honored
until all required documents in proper form have been received. To avoid delay
in redemption or transfer, shareholders having questions about specific
requirements should contact the fund's Transfer Agent at (800) 243-1574.
Redemptions by Mail
> Send a clear letter of instructions if all of these apply:
o Your shares are registered individually, jointly, or as custodian under
the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act.
o The proceeds do not exceed $50,000.
o The proceeds are payable to the registered owner at the address on record.
> Send a clear letter of instructions with a signature guarantee when any of
these apply:
o You are selling more than $50,000 worth of shares.
o The name or address on the account has changed within the last 60 days.
o You want the proceeds to go to a different name or address than on the
account.
If you are selling shares held in a corporate or fiduciary account, please
contact the fund's Transfer Agent at (800) 243-1574.
The signature on your request must be guaranteed by an eligible guarantor
institution as defined by the fund's Transfer Agent in accordance with its
signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
Selling Shares by Telephone
The Transfer Agent will use reasonable procedures to confirm that telephone
instructions are genuine. Address and bank account information are verified,
redemption instructions are taped, and all redemptions are confirmed in writing.
46 Phoenix-Engemann Funds
<PAGE>
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.
Redemption of Small Accounts
Due to the high cost of maintaining small accounts, if your account balance is
less than $200, you may receive a notice requesting you to bring the balance up
to $200 within 60 days. If you do not, the shares in the account will be sold at
net asset value, and a check will be mailed to the address of record.
Exchange Privileges
You should read the prospectus carefully before deciding to make an exchange.
You can obtain a prospectus from your financial advisor or by calling us at
(800) 243-4361 or accessing our Web site at www.phoenixinvestments.com.
o You may exchange shares for another fund in the same class of shares;
e.g., Class A for Class A.
o Exchanges may be made by phone (800) 243-1574 or by mail (State Street
Bank, P.O. Box 8301, Boston, MA 02266-8301).
o The amount of the exchange must be equal to or greater than the minimum
initial investment required.
o The exchange of shares is treated as a sale and purchase for federal
income tax purposes.
Phoenix-Engemann Funds 47
<PAGE>
o Because excessive trading can hurt fund performance and harm other
shareholders, the Fund reserves the right to temporarily or permanently
end exchange privileges or reject an order from anyone who appears to be
attempting to time the market, including investors who request more than
one exchange in any 30-day period. The fund's underwriter has entered into
agreements with certain market timing firms permitting them to exchange by
telephone. These privileges are limited, and the fund distributor has the
right to reject or suspend them.
Retirement Plans
Shares of the fund may be used as investments under the following qualified
prototype retirement plans: traditional IRA, rollover IRA, SEP-IRA, SIMPLE IRA,
Roth IRA, 401(k) plans, profit-sharing, money purchase pension plans, and 403(b)
plans. For more information, call (800) 243-4361.
Investor Services
- -----------------
Investo-Matic is a systematic investment plan that allows you to have a
specified amount automatically deducted from your checking or savings account
and then deposited into your mutual fund account. Just complete the
Investo-Matic Section on the application and include a voided check.
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.
48 Phoenix-Engemann Funds
<PAGE>
Tax Status of Distributions
- ---------------------------
The fund plans to make distributions from net investment income at intervals
stated on the table below, and to distribute net realized capital gains, if any,
at least annually.
<TABLE>
<CAPTION>
Fund Dividend Paid
- ---------------------------------------------
<S> <C>
Balanced Return Fund Annually
- ---------------------------------------------
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.
Phoenix-Engemann Funds 49
<PAGE>
Phoenix-Engemann Balanced Return Fund
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $29.05 $28.08 $25.39 $20.54 $21.97
Income from investment operations:
Net investment income (loss) 0.40 0.30 (1)(2) 0.29 (1)(3) 0.27 (1) 0.39 (1)
Net realized and unrealized gain (loss) 8.03 4.98 4.23 5.31 (1.36)
------ ------ ------ ------ ------
Total from investment operations 8.43 5.28 4.52 5.58 (0.97)
------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income (0.40) (0.32) (0.30) (0.29) (0.46)
Dividends from net realized gains (2.25) (3.99) (1.53) (0.44) --
------ ------ ------ ------ ------
Total distributions (2.65) (4.31) (1.83) (0.73) (0.46)
------ ------ ------ ------ ------
Change in net asset value 5.78 0.97 2.69 4.85 (1.43)
------ ------ ------ ------ ------
Net asset value, end of period $34.83 $29.05 $28.08 $25.39 $20.54
====== ====== ====== ====== ======
Total return(4) 29.12% 18.98%(2) 17.78%(3) 27.18% (4.43)%
Ratios/supplemental data:
Net assets, end of period (thousands) $72,620 $56,610 $51,947 $52,028 $53,047
Ratio to average net assets of:
Operating expenses 1.63% 1.7%(2) 2.0%(3) 2.1% 2.1%
Net investment income 1.15% 1.0%(2) 1.1%(3) 1.2% 1.8%
Portfolio turnover 124% 40.3% 35.1% 51.1% 28.2%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares outstanding
during each period.
(2) These amounts reflect the impact of a waiver of administration fees of
$33,360. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class A shares would have been $.29, 18.98%, 1.7%, and 0.9%,
respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$55,000. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class A shares would have been $.27, 17.66%, 2.1%, and 1.0%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
50 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- --------------------------------
Phoenix-Engemann Balanced Return Fund
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $28.76 $27.85 $25.26 $20.49 $21.89
Income from investment operations:
Net investment income 0.13 0.08 (1)(2) 0.09 (1)(3) 0.08 (1) 0.26(1)
Net realized and unrealized gain (loss) 7.91 4.93 4.16 5.29 (1.32)
------ ------ ------ ------ ------
Total from investment operations 8.04 5.01 4.25 5.37 (1.06)
------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income (0.18) (0.11) (0.13) (0.16) (0.34)
Dividends from net realized gains (2.25) (3.99) (1.53) (0.44) --
------ ------ ------ ------ ------
Total distributions (2.43) (4.10) (1.66) (0.60) (0.34)
------ ------ ------ ------ ------
Change in net asset value 5.61 0.91 2.59 4.77 (1.40)
------ ------ ------ ------ ------
Net asset value, end of period $34.37 $28.76 $27.85 $25.26 $20.49
====== ====== ====== ====== ======
Total return(4) 28.06% 18.15%(2) 16.82%(3) 26.20% (4.85)%
Ratios/supplemental data:
Net assets, end of period (thousands) $11,512 $7,125 $4,609 $2,721 $1,223
Ratio to average net assets of:
Operating expenses 2.38% 2.4%(2) 2.7%(3) 2.9% 2.9%
Net investment income 0.39% 0.3%(2) 0.3%(3) 0.3% 1.3%
Portfolio turnover 124% 40.3% 35.1% 51.1% 28.2%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares outstanding
during each period.
(2) These amounts reflect the impact of a waiver of administration fees of
$33,360. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class B shares would have been $.06, 18.15%, 2.5%, and 0.2%,
respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$55,000. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class B shares would have been $.06, 16.74%, 2.8%, and 0.2%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(5) Inception date for Class B shares was January 3, 1994.
Phoenix-Engemann Funds 51
<PAGE>
Financial Highlights (continued)
- ---------------------------------------------
Phoenix-Engemann Balanced Return Fund
<TABLE>
<CAPTION>
Class C
-----------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $28.80 $27.88 $25.28 $20.48 $21.89
Income from investment operations:
Net investment income (loss) 0.14 0.08 (1)(2) 0.09 (1)(3) 0.07 (1) 0.25 (1)
Net realized and unrealized gain (loss) 7.92 4.92 4.16 5.30 (1.31)
------ ------ ------ ------ ------
Total from investment operations 8.06 5.00 4.25 5.37 (1.06)
------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income (0.17) (0.09) (0.12) (0.13) (0.35)
Dividends from net realized gains (2.25) (3.99) (1.53) (0.44) --
------ ------ ------ ------ ------
Total distributions (2.42) (4.08) (1.65) (0.57) (0.35)
------ ------ ------ ------ ------
Change in net asset value 5.64 0.92 2.60 4.80 (1.41)
------ ------ ------ ------ ------
Net asset value, end of period $34.44 $28.80 $27.88 $25.28 $20.48
====== ====== ====== ====== ======
Total return(4) 28.07% 18.11%(2) 16.79%(3) 26.23% (4.85)%
Ratios/supplemental data:
Net assets, end of period (thousands) $7,610 $5,581 $4,183 $2,809 $1,449
Ratio to average net assets of:
Operating expenses 2.38% 2.4%(2) 2.7%(3) 2.9% 2.9%
Net investment income 0.39% 0.3%(2) 0.3%(3) 0.3% 1.3%
Portfolio turnover 124% 40.3% 35.1% 51.1% 28.2%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares outstanding
during each period.
(2) These amounts reflect the impact of a waiver of administration fees of
$33,360. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class C shares would have been $.06, 18.11%, 2.5%, and 0.2%,
respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$55,000. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class C shares would have been $.06, 16.71%, 2.8%, and 0.2%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(5) Inception date for Class C shares was January 3, 1994.
52 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- --------------------------------
Phoenix-Engemann Focus Growth Fund
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $20.43 $21.94 $19.28 $15.40 $16.00
Income from investment operations:
Net investment income (loss) (0.16)(1) (0.16)(1)(2) (0.14)(1)(3) (0.06)(1) (0.03)(1)
Net realized and unrealized gain (loss) 7.76 3.51 4.47 4.24 (0.57)
------ ------ ------ ------ ------
Total from investment operations 7.60 3.35 4.33 4.18 (0.60)
------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (1.21) (4.86) (1.67) (0.30) --
------ ------ ------ ------ ------
Total distributions (1.21) (4.86) (1.67) (0.30) --
------ ------ ------ ------ ------
Change in net asset value 6.39 (1.51) 2.66 3.88 (0.60)
------ ------ ------ ------ ------
Net asset value, end of period $26.82 $20.43 $21.94 $19.28 $15.40
====== ====== ====== ====== ======
Total return(4) 37.41% 16.04%(2) 22.49%(3) 27.16% (3.75)%
Ratios/supplemental data:
Net assets, end of period (thousands) $441,146 $383,481 $426,785 $415,416 $391,831
Ratio to average net assets of:
Operating expenses 1.58% 1.6%(2) 1.6%(3) 1.6% 1.6%
Net investment income (loss) (0.72)% (0.7)%(2) (0.6)%(3) (0.3)% (0.2)%
Portfolio turnover 119% 70.6% 70.1% 65.9% 53.8%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares outstanding
during each year.
(2) These amounts reflect the impact of a waiver of administration fees of
$18,196. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class A shares would not have changed.
(3) These amounts reflect the impact of a waiver of administration fees of
$30,000. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class A shares would have been $(0.14), 22.49%, 1.6%, and (0.7)%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
Phoenix-Engemann Funds 53
<PAGE>
Financial Highlights (continued)
- -------------------------------
Phoenix-Engemann Focus Growth Fund
<TABLE>
<CAPTION>
Class B
----------------------------------------------------------------------------
Year Ended December 31,
----------------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.61 $21.40 $18.99 $15.28 $15.89
Income from investment operations:
Net investment income (loss)(1) (0.32)(1) (0.34)(1)(2) (0.31)(1)(3) (0.20)(1) (0.14)(1)
Net realized and unrealized gain (loss) 7.41 3.41 4.39 4.21 (0.47)
------ ------ ------ ------ ------
Total from investment operations 7.09 3.07 4.08 4.01 (0.61)
------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (1.21) (4.86) (1.67) (0.30) --
------ ------ ------ ------ ------
Total distributions (1.21) (4.86) (1.67) (0.30) --
------ ------ ------ ------ ------
Change in net asset value 5.88 (1.79) 2.41 3.71 (0.61)
------ ------ ------ ------ ------
Net asset value, end of period $25.49 $19.61 $21.40 $18.99 $15.28
====== ====== ====== ====== ======
Total return(4) 36.38% 15.13%(2) 21.52%(3) 26.26% (3.84)%
Ratios/supplemental data:
Net assets, end of period (thousands) $65,986 $54,267 $49,444 $34,786 $11,349
Ratio to average net assets of:
Operating expenses 2.33% 2.4%(2) 2.3%(3) 2.4% 2.3%
Net investment income (loss) (1.47)% (1.5)%(2) (1.5)%(3) (1.1)% (1.0)%
Portfolio turnover 119% 70.6% 70.1% 65.9% 53.8%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares outstanding
during each year.
(2) These amounts reflect the impact of a waiver of administration fees of
$18,196. Absent the waiver, net investment income per share, total return
and the ratios of expenses and net investment income to average net assets
for Class B shares would not have changed.
(3) These amounts reflect the impact of a waiver of administration fees of
$30,000. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class B shares would have been $(0.31), 21.52%, 2.4%, and (1.5)%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(5) Inception date is January 3, 1994.
54 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- --------------------------------
Phoenix-Engemann Focus Growth Fund
<TABLE>
<CAPTION>
Class C
------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.61 $21.40 $18.99 $15.28 $15.89
Income from investment operations:
Net investment income (loss)(1) (0.32)(1) (0.34)(1)(2) (0.31)(1)(3) (0.20)(1) (0.14)(1)
Net realized and unrealized gain (loss) 7.41 3.41 4.39 4.21 (0.47)
------ ------ ------ ------ ------
Total from investment operations 7.09 3.07 4.08 4.01 (0.61)
------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (1.21) (4.86) (1.67) (0.30) --
------ ------ ------ ------ ------
Total distributions (1.21) (4.86) (1.67) (0.30) --
------ ------ ------ ------ ------
Change in net asset value 5.88 (1.79) 2.41 3.71 (0.61)
------ ------ ------ ------ ------
Net asset value, end of period $25.49 $19.61 $21.40 $18.99 $15.28
====== ====== ====== ====== ======
Total return(4) 36.38% 15.13%(2) 21.52%(3) 26.26% (3.84)%
Ratios/supplemental data:
Net assets, end of period (thousands) $34,580 $29,222 $27,239 $20,497 $6,136
Ratio to average net assets of:
Operating expenses 2.33% 2.4%(2) 2.3%(3) 2.4% 2.3%
Net investment income (loss) (1.47)% (1.5)%(2) (1.5)%(3) (1.1)% (1.0)%
Portfolio turnover 119% 70.6% 70.1% 65.9% 53.8%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares outstanding
during each year.
(2) These amounts reflect the impact of a waiver of administration fees of
$18,196. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class C shares would not have changed.
(3) These amounts reflect the impact of a waiver of administration fees of
$30,000. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class C shares would have been $(0.31), 21.52%, 2.4%, and (1.5)%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(5) Inception date is January 3, 1994.
Phoenix-Engemann Funds 55
<PAGE>
Financial Highlights (continued)
- ---------------------------------------------
Phoenix-Engemann Nifty Fifty Fund
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $29.21 $26.50 $22.18 $17.30 $17.12
Income from investment operations:
Net investment income (loss) (0.20)(1) (0.20)(1)(2) (0.12)(1)(3) (0.05)(1) (0.03)(1)
Net realized and unrealized gain 10.45 5.23 6.00 4.93 0.21
------ ------ ------ ------ ------
Total from investment operations 10.25 5.03 5.88 4.88 0.18
------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (0.66) (2.32) (1.56) -- --
------ ------ ------ ------ ------
Total distributions (0.66) (2.32) (1.56) -- --
------ ------ ------ ------ ------
Change in net asset value 9.59 2.71 4.32 4.88 0.18
------ ------ ------ ------ ------
Net asset value, end of period $38.80 $29.21 $26.50 $22.18 $17.30
====== ====== ====== ====== ======
Total return(4) 35.13% 19.23%(2) 26.53%(3) 28.21% 1.05%
Ratios/supplemental data:
Net assets, end of period (thousands) $235,065 $176,378 $145,469 $122,322 $100,596
Ratio to average net assets of:
Operating expenses 1.60% 1.6%(2) 1.7%(3) 1.9% 1.9%
Net investment income (loss) (0.61)% (0.7)%(2) (0.4)%(3) (0.3)% (0.2)%
Portfolio turnover 92% 68.8% 41.9% 26.5% 23.2%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares outstanding
during each year.
(2) These amounts reflect the impact of a waiver of administration fees of
$42,459. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class A shares would have been $(0.20), 19.23%, 1.6%, and (0.7)%,
respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$70,000. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class A shares would have been $(0.13), 26.48%, 1.8%, and (0.5)%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
56 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- --------------------------------
Phoenix-Engemann Nifty Fifty Fund
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $28.24 $25.88 $21.85 $17.17 $17.02
Income from investment operations:
Net investment income (loss)(1) (0.43)(1) (0.42)(1)(2) (0.30)(1)(3) (0.21)(1) (0.14)(1)
Net realized and unrealized gain 10.06 5.10 5.89 4.89 0.29
------ ------ ------ ------ ------
Total from investment operations 9.63 4.68 5.59 4.68 0.15
------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (0.66) (2.32) (1.56) -- --
------ ------ ------ ------ ------
Total distributions (0.66) (2.32) (1.56) -- --
------ ------ ------ ------ ------
Change in net asset value 8.97 2.36 4.03 4.68 0.15
------ ------ ------ ------ ------
Net asset value, end of period $37.21 $28.24 $25.88 $21.85 $17.17
====== ====== ====== ====== ======
Total return(4) 34.14% 18.33%(2) 25.60%(3) 27.26% 0.88%
Ratios/supplemental data:
Net assets, end of period (thousands) $96,983 $68,051 $47,143 $27,462 $6,722
Ratio to average net assets of:
Operating expenses 2.35% 2.4%(2) 2.5%(3) 2.6% 2.6%
Net investment income (loss) (1.35)% (1.4)%(2) (1.2)%(3) (1.0)% (0.9)%
Portfolio turnover 92% 68.8% 41.9% 26.5% 23.2%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares outstanding
during each year.
(2) These amounts reflect the impact of a waiver of administration fees of
$42,459. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class B shares would have been $(0.42), 18.33%, 2.4%, and (1.5)%,
respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$70,000. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class B shares would have been $(0.31), 25.55%, 2.5%, and (1.3)%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(5) Inception date is January 3, 1994.
Phoenix-Engemann Funds 57
<PAGE>
Financial Highlights (continued)
- --------------------------------
Phoenix-Engemann Nifty Fifty Fund
<TABLE>
<CAPTION>
Class C
------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------------------------
1998 1997 1996 1995 1994(5)
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $28.24 $25.88 $21.85 $17.17 $17.02
Income from investment operations:
Net investment income (loss)(1) (0.43)(1) (0.42)(1)(2) (0.30)(1)(3) (0.21)(1) (0.15)(1)
Net realized and unrealized gain 10.06 5.10 5.89 4.89 0.30
------ ------ ------ ------ ------
Total from investment operations 9.63 4.68 5.59 4.68 0.15
------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (0.66) (2.32) (1.56) -- --
------ ------ ------ ------ ------
Total distributions (0.66) (2.32) (1.56) -- --
------ ------ ------ ------ ------
Change in net asset value 8.97 2.36 4.03 4.68 0.15
------ ------ ------ ------ ------
Net asset value, end of period $37.21 $28.24 $25.88 $21.85 $17.17
====== ====== ====== ====== ======
Total return(4) 34.14% 18.33%(2) 25.60%(3) 27.26% 0.88%
Ratios/supplemental data:
Net assets, end of period (thousands) $48,401 $39,773 $26,092 $15,105 $4,283
Ratio to average net assets of:
Operating expenses 2.35% 2.4%(2) 2.5%(3) 2.6% 2.6%
Net investment income (loss) (1.35)% (1.4)%(2) (1.2)%(3) (1.0)% (0.9)%
Portfolio turnover 92% 68.8% 41.9% 26.5% 23.2%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares outstanding
during each year.
(2) These amounts reflect the impact of a waiver of administration fees of
$42,459. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class C shares would have been $(0.42), 18.33%, 2.4%, and (1.5)%,
respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$70,000. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment income to average net assets for
Class C shares would have been $(0.31), 25.55%, 2.5%, and (1.3)%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(5) Inception date is January 3, 1994.
58 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- --------------------------------
Phoenix-Engemann Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------------------
From
Year Ended December 31, Inception
----------------------------------------------------------- 10/10/94 to
1998 1997 1996 1995 12/31/94
------ ------ ------ ------ -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $21.09 $18.39 $14.90 $12.07 $10.00
Income from investment operations:
Net investment income (loss) (0.30)(1)(6) (0.31)(1)(2) (0.12)(1)(3) 0.22(1)(3) 0.07(1)(3)
Net realized and unrealized gain 3.31 5.07 7.45 2.87 2.00
------ ------ ------ ------ ------
Total from investment operations 3.01 4.76 7.33 3.09 2.07
------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income -- -- (0.28) (0.08) --
Dividends from net realized gains -- (2.06) (3.56) (0.18) --
In excess of accumulated net realized gains (0.02) -- -- -- --
------ ------ ------ ------ ------
Total distributions (0.02) (2.06) (3.84) (0.26) --
------ ------ ------ ------ ------
Change in net asset value 2.99 2.70 3.49 2.83 2.07
------ ------ ------ ------ ------
Net asset value, end of period $24.08 $21.09 $18.39 $14.90 $12.07
====== ====== ====== ====== ======
Total return(4) 14.29% 26.41%(2) 52.37%(3) 25.68%(3) 20.70%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $54,187 $27,771 $7,859 $1,742 $121
Ratio to average net assets of:
Operating expenses 1.78% 1.8%(2) 1.1%(3) --%(3) --%(3)(5)
Net investment income (loss) (1.39)% (1.4)%(2) (0.7)%(3) 1.5%(3) 2.6%(3)(5)
Portfolio turnover 147% 313.5% 297.1% 121.4% 157.9%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares outstanding
during each period.
(2) These amounts reflect the impact of a waiver of administration fees of
$1,128. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class A shares would have been $(0.31), 26.41%, 1.8%, and (1.4)%,
respectively.
(3) These amounts reflect the impact of a waiver of Manager fees of $18,499,
$13,443 and $585 for the periods ended December 31, 1996, 1995 and 1994,
respectively, and the Manager's reimbursement for income taxes of $6,654
during 1994. Had the waivers and reimbursement not been made, net investment
income (loss) per share, total return (not annualized for the period ended
December 31, 1994) and the ratios of expenses and net investment income
(loss) to average net assets (annualized for the period ended December 31,
1994) would have been $(0.25), 51.35%, 1.9% and (1.4)%, respectively,
$(0.11), 23.40%, 2.3% and (0.8)%, respectively, and $(0.01), 15.10%, 22.1%
(2.3% if only normal and recurring expenses are taken into account) and
(0.4)%, respectively, for the periods ended December 31, 1996, 1995 and
1994, respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge. Total return for
the period ended December 31, 1994 has not been annualized.
(5) Annualized.
(6) Includes reimbursement of operating expenses by investment adviser of $0.01.
Phoenix-Engemann Funds 59
<PAGE>
Financial Highlights (continued)
- --------------------------------
Phoenix-Engemann Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
Class B Class C
--------------------------------------- ------------------------------------------
From From
Year Ended Inception Year Ended Inception
December 31, 9/18/96 to December 31, 10/8/96 to
1998 1997 12/31/96 1998 1997 12/31/96
------ ------ ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $20.87 $18.35 $16.44(6) $20.87 $18.35 $17.99(6)
Income from investment operations:
Net investment income (loss) (0.45)(1)(7) (0.46)(1)(2) (0.32)(1) (0.45)(1)(7) (0.47)(1)(3) (0.29)(1)
Net realized and unrealized gain 3.24 5.04 2.43 3.23 5.05 0.85
------ ------ ------ ------ ------ ------
Total from investment operations 2.79 4.58 2.11 2.78 4.58 0.56
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income -- -- -- -- -- --
Dividends from net realized gains -- (2.06) (0.20) -- (2.06) (0.20)
In excess of accumulated net realized
gains (0.02) -- -- (0.02) -- --
------ ------ ------ ------ ------ ------
Total distributions (0.02) (2.06) (0.20) (0.02) (2.06) (0.20)
------ ------ ------ ------ ------ ------
Change in net asset value 2.77 7.52 1.91 2.76 2.52 0.36
------ ------ ------ ------ ------ ------
Net asset value, end of period $23.64 $20.87 $18.35 $23.63 $20.87 $18.35
====== ====== ====== ====== ====== ======
Total return(4) 13.39% 25.49%(2) 12.84% 13.34% 25.49%(3) 3.12%
Ratios/supplemental data:
Net assets, end of period (thousands) $31,631 $17,298 $1,480 $15,023 $8,080 $54
Ratio to average net assets of:
Operating expenses(5) 2.53% 2.6%(2) 2.6%(5) 2.53% 2.6%(3) 2.6%(5)
Net investment income (loss)(5) (2.14)% (2.1)%(2) (2.2)%(5) (2.14)% (2.1)%(3) (2.2)%(5)
Portfolio turnover 147% 313.5% 297.1% 147% 313.5% 297.1%
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares outstanding
during each period.
(2) These amounts reflect the impact of a waiver of administration fees of
$1,128. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class B shares would have been $(0.46), 25.49%, 2.6%, and (2.1)%,
respectively.
(3) These amounts reflect the impact of a waiver of administration fees of
$1,128. Absent the waiver, net investment loss per share, total return and
the ratios of expenses and net investment loss to average net assets for
Class C shares would have been $(0.47), 25.49%, 2.6%, and (2.1)%,
respectively.
(4) Total return measures the change in the value of an investment during each
of the years presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge. Total return for
the period ended December 31, 1996 has not been annualized.
(5) Annualized.
(6) The beginning net asset value per share of Class B and Class C shares equals
the net asset value per share of the Class A shares as of the first day
Class B and Class C shares were sold, September 18, 1996 and October 8,
1996, respectively.
(7) Includes reimbursement of operating expenses by the investment adviser of
$0.01.
60 Phoenix-Engemann Funds
<PAGE>
Financial Highlights (continued)
- --------------------------------
Phoenix-Engemann Value 25 Fund
<TABLE>
<CAPTION>
Class A
-------------------------------------------
From
Year Ended Inception
December 31, 12/17/96 to
1998 1997 12/31/96
------ ------ ----------
<S> <C> <C> <C>
Net asset value, beginning of
period $11.56 $10.11 $10.00
Income from investment
operations:
Net investment income 0.15(1)(6) 0.17(1)(2) --(1)
Net realized and unrealized
gain (loss) 0.66 1.95 0.11
------ ------ ------
Total from investment
operations 0.81 2.12 0.11
------ ------ ------
Dividends from net investment
income (0.14) (0.12) --
Dividends from net realized
gains (0.59) (0.55) --
------ ------ ------
Total distributions (0.73) (0.67) --
------ ------ ------
Change in net asset value 0.08 1.45 0.11
------ ------ ------
Net asset value, end of
period $11.64 $11.56 $10.11
====== ====== ======
Total return(3) 7.23% 21.10%(2) 1.10%(6)
Ratios/supplemental data:
Net assets, end of period
(thousands) $18,090 $19,518 $482
Ratio to average net
assets of:
Operating expenses(4) 1.75% 1.8%(2) 1.7%(4)
Net investment income
(loss)(4) 1.25% 1.4%(2) 1.8%(4)
Portfolio turnover 135% 87.7% --%(6)
</TABLE>
<TABLE>
<CAPTION>
Class B Class C
----------------------------------- ------------------------------------
From From
Year Ended Inception Year Ended Inception
December 31, 1/9/97 to December 31, 1/9/97 to
1998 12/31/97 1998 12/31/97
----------- --------- ------------ ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $11.53 $10.39(5) $11.52 $10.39(5)
Income from investment
operations:
Net investment income 0.06 (1)(6) 0.08 (1)(2) 0.06 (1)(6) 0.09 (1)(2)
Net realized and unrealized
gain (loss) 0.65 1.67 0.65 1.66
------ ------ ------ ------
Total from investment
operations 0.71 1.75 0.71 1.75
------ ------ ------ ------
Less Distributions:
Dividends from net investment
income (0.06) (0.06) (0.06) (0.07)
Dividends from net realized
gains (0.59) (0.55) (0.59) (0.55)
------ ------ ------ ------
Total distributions (0.65) (0.61) (0.65) (0.62)
------ ------ ------ ------
Change in net asset value 0.06 1.14 0.06 1.13
------ ------ ------ ------
Net asset value, end of
period $1.59 $11.53 $11.58 $11.52
====== ====== ====== ======
Total return(3) 6.41% 16.97%(2) 6.42% 17.01%(2)
Ratios/supplemental data:
Net assets, end of period
(thousands) $10,981 $8,799 $6,642 $4,893
Ratio to average net
assets of:
Operating expenses(4) 2.50% 2.6%(4) 2.50% 2.6%(4)
Net investment income
(loss)(4) 0.54% 0.7%(4) 0.52% 0.8%(4)
Portfolio turnover 135% 87.7% 135% 87.7 %
</TABLE>
- ----------------
(1) This information was prepared using the average number of shares outstanding
during each period.
(2) These amounts reflect the impact of a waiver of administration fees of $789.
Absent the waiver, net investment income per share, total return and the
ratios of expenses and net investment income to average net assets for Class
A, Class B and Class C shares would have been $0.17, $0.08 and $0.08,
respectively, 21.10%, 16.97% and 17.01%, respectively, 1.8%, 2.6% and 2.6%,
respectively, and 1.4%, 0.7% and 0.8%, respectively.
(3) Total return measures the change in the value of an investment during each
of the periods presented and does not include the impact of paying any
applicable front-end or contingent deferred sales charge. Total return for
the period from inception (December 17, 1996) through December 31, 1996 and
inception (January 9, 1997) through December 31, 1997 has not been
annualized.
(4) Annualized.
(5) The beginning net asset value per share of Class B and Class C shares equals
the net asset value per share of the Class A shares as of the first day
Class B and Class C shares were sold (January 9, 1997).
(6) Includes reimbursement of operating expenses by investment adviser of $0.01.
Phoenix-Engemann Funds 61
<PAGE>
Additional Information
- ---------------------------------------
Statement of Additional Information
The fund has filed a Statement of Additional Information about the fund, dated
May 1, 2000 with the Securities and Exchange Commission. The Statement contains
more detailed information about the fund. It is incorporated into this
prospectus by reference and is legally part of the prospectus. You may obtain a
free copy of the Statement:
o by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
o by calling (800) 243-4361.
You may also obtain information about the fund from the Securities and Exchange
Commission:
o through its internet site (http://www.sec.gov),
o by visiting its Public Reference Room in Washington, DC,
o by writing to its Public Reference Section, Washington, DC 20549-0102 (a
fee may be charged), or
o by electronic request at publicinfo.sec.gov (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 fund semiannually mails to its shareholders detailed reports containing
information about the fund's investments. The fund's Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the fund's performance from January 1 through December
31. You may request a free copy of the fund's Annual and Semiannual Reports:
o by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
o by calling (800) 243-4361.
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunication Device (TTY): (800) 243-1926
SEC File Nos. 33-1922 and 811-4506
[Recycle Logo] Printed on recycled paper using soybean ink
62 Phoenix-Engemann Funds
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
PHOENIX-ENGEMANN GROWTH FUND PHOENIX-ENGEMANN NIFTY-FIFTY FUND
PHOENIX-ENGEMANN BALANCED RETURN FUND
PHOENIX-ENGEMANN GLOBAL GROWTH FUND
PHOENIX-ENGEMANN SMALL & MID-CAP FUND
PHOENIX-ENGEMANN VALUE 25 FUND
600 North Rosemead Boulevard
Pasadena, California 91107-2133
Statement of Additional Information
May 1, 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 ................................... 18
HOW TO REDEEM SHARES ........................................ 19
TAX SHELTERED RETIREMENT PLANS .............................. 20
DIVIDENDS, DISTRIBUTIONS AND TAXES .......................... 20
THE DISTRIBUTOR ............................................. 21
DISTRIBUTION PLANS .......................................... 23
MANAGEMENT OF THE TRUST ..................................... 24
OTHER INFORMATION ........................................... 27
APPENDIX .................................................... 28
</TABLE>
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PXP 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 six series:
Phoenix-Engemann Growth Fund, Phoenix-Engemann Nifty Fifty Fund,
Phoenix-Engemann Balanced Return Fund, Phoenix-Engemann Global Growth Fund,
Phoenix-Engemann Small & Mid-Cap Growth Fund and Phoenix-Engemann Value 25
Fund, each a "Fund" and, collectively, the "Funds."
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Fund is deemed to be a fundamental policy
which may not be changed without the approval of the holders of a majority of
the outstanding shares of each Fund. Investment restrictions described in this
Statement of Additional Information as a fundamental policy may not be changed
without the approval of such Fund's shareholders. Notwithstanding the
foregoing, certain investment restrictions affect more than one series of the
Trust and therefore modifications may require the consent of other
shareholders. There is no assurance that any Fund will meet its investment
objective.
Foreign Securities
Each Fund may invest (directly and/or through Depositary Receipts) in
securities principally traded in markets outside the United States. Foreign
investments can be affected favorably or unfavorably by changes in currency
exchange rates and in exchange control regulations. There may be less publicly
available information about a foreign company than about a U.S. company, and
the information available may not be of the same quality. Foreign companies
also may not be subject to accounting, auditing and financial reporting
standards and requirements comparable to those applicable to U.S. companies.
Securities of some foreign companies are less liquid or more volatile than
securities of U.S. companies, and foreign brokerage commissions and custodian
fees are generally higher than in the United States.
Investments in foreign securities can involve other risks different from
those affecting U.S. investments, including local political or economic
developments, expropriation or nationalization of assets and imposition of
withholding taxes on dividend or interest payments. To hedge against possible
variations in currency exchange rates, a Fund (except the Growth Fund, the
Nifty Fifty Fund and the Balanced Return Fund) may purchase and sell forward
currency exchange contracts. These are agreements to purchase or sell specified
currencies at specified dates and prices. A Fund will only purchase and sell
forward currency exchange contracts in amounts which the Adviser deems
appropriate to hedge existing or anticipated portfolio positions and will not
use such forward contracts for speculative purposes. Foreign securities, like
other assets of a Fund, will be held by such Fund's custodian or by an
authorized subcustodian. While none of the Growth, Nifty Fifty and Balanced
Return Funds anticipates investing a significant portion of its assets in
foreign securities, each of these Funds may invest up to 15% of the value of
its total assets (at time of purchase, giving effect thereto) in the securities
of foreign issuers and obligors. The Small & Mid-Cap Growth Fund may invest up
to 50% of its assets, the Value 25 Fund may invest up to 25% of its assets and
the Global Growth Fund may invest up to 100% of its assets in foreign
securities.
Depositary Receipts. Each Fund's investments in the securities of foreign
issuers may be in the form of Depositary Receipts ("DRs"), e.g., American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs"), Continental Depositary Receipts ("CDRs"), or
other forms of DRs. DRs are receipts typically issued by a United States or
foreign bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. The Fund may invest in DRs through "sponsored"
or "unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the underlying security and a depository, whereas a depository may
establish an unsponsored facility without participation by the issuer of the
deposited security. The depository of unsponsored DRs generally bears all the
costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Foreign Currency Transactions
In General. As described below, each Fund (except the Growth Fund, the
Nifty Fifty Fund and the Balanced Return Fund) may engage in certain foreign
currency exchange and option transactions. These transactions involve
investment risks and transaction costs to which a Fund would not be subject
absent the use of these strategies. If the Adviser's predictions of movements
in the direction of securities prices or currency exchange rates are
inaccurate, the adverse consequences to a Fund may leave such Fund in a worse
position than if it had not used such strategies. Risks inherent in the use of
option and foreign currency forward and futures contracts include: (1)
dependence on the Adviser's ability to correctly predict movements in the
direction of securities prices and currency exchange rates; (2) imperfect
correlation between the price of options and futures contracts and movements in
the prices of the securities or currencies being hedged; (3) the fact that the
skills needed to use these strategies are different from those needed to select
portfolio securities; (4) the possible absence of a liquid secondary market for
any particular instrument at any time; and (5) the possible need to defer
closing out certain hedged positions to avoid adverse tax consequences.
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Each Fund's ability to enter into futures contracts is also limited by the
requirements of the Internal Revenue Code of 1986, as amended, (the "Code") for
qualification as a regulated investment company.
The Global Growth Fund, Small & Mid-Cap Growth Fund and Value 25 Fund may
engage in currency exchange transactions to protect against uncertainty in the
level of future currency exchange rates. In addition, each Fund may write
covered put and call options on foreign currencies for the purpose of
increasing its return.
Generally, each of the above Funds may engage in both "transaction
hedging" and "position hedging." When it engages in transaction hedging, a Fund
enters into foreign currency transactions with respect to specific receivables
or payables, generally arising in connection with the purchase or sale of
portfolio securities. A Fund will engage in transaction hedging when it desires
to "lock in" the U.S. dollar price of a security it has agreed to purchase or
sell, or the U.S. dollar equivalent of a dividend or interest payment in a
foreign currency. By transaction hedging, a Fund will attempt to protect itself
against a possible loss resulting from an adverse change in the exchange rate
between the U.S. dollar and the applicable foreign currency during the period
between the date on which the security is purchased or sold, or on which the
dividend or interest payment is declared, and the date on which such payments
are made or received.
Each of the above Funds may purchase or sell a foreign currency on a spot
(or cash) basis at the prevailing spot rate in connection with the settlement
of transactions in portfolio securities denominated in that foreign currency.
Each Fund may also enter into contracts to purchase or sell foreign currencies
at a future date ("forward contracts") and purchase and sell foreign currency
futures contracts.
For transaction hedging purposes, each of the above Funds may also
purchase exchange-listed and over-the-counter put and call options on foreign
currency futures contracts and on foreign currencies. A put option on a futures
contract gives a Fund the right to assume a short position in the futures
contract until the expiration of the option. A put option on a currency gives a
Fund the right to sell the currency at an exercise price until the expiration
of the option. A call option on a futures contract gives a Fund the right to
assume a long position in the futures contract until the expiration of the
option. A call option on a currency gives a Fund the right to purchase the
currency at the exercise price until the expiration of the option.
When it engages in position hedging, a Fund enters into foreign currency
exchange transactions to protect against a decline in the values of the foreign
currencies in which its portfolio securities are denominated (or an increase in
the values of currency for securities which such Fund expects to purchase, when
such Fund holds cash or short-term investments). In connection with position
hedging, each of the Funds may purchase put or call options on foreign currency
and on foreign currency futures contracts and buy or sell forward contracts and
foreign currency futures contracts. Each Fund may also purchase or sell foreign
currency on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is also impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward or futures
contract. Accordingly, it may be necessary for a Fund to purchase additional
foreign currency on the spot market (and bear the expense of such purchase) if
the market value of the security or securities being hedged is less than the
amount of foreign currency such Fund is obligated to deliver and a decision is
made to sell the security or securities and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio security or
securities if the market value of such security or securities exceeds the
amount of foreign currency a Fund is obligated to deliver.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which a Fund owns or intends to purchase or
sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they
tend to limit any potential gain which might result from the increase in value
of such currency.
Each of the above Funds may seek to increase its return or to offset some
of the costs of hedging against fluctuations in currency exchange rates by
writing covered put options and covered call options on foreign currencies. A
Fund receives a premium from writing a put or call option, which increases such
Fund's current return if the option expires unexercised or is closed out at a
net profit. A Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it
purchases an option having the same terms as the option written.
A Fund's currency hedging transactions may call for the delivery of one
foreign currency in exchange for another foreign currency and may at times not
involve currencies in which its portfolio securities are then denominated. The
Adviser will engage in such "cross hedging" activities when it believes that
such transactions provide significant hedging opportunities for a Fund. Cross
hedging transactions by a Fund involve the risk of imperfect correlation
between changes in the values of the currencies to which such transactions
relate and changes in the value of the currency or other asset or liability
which is the subject of the hedge.
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None of the Funds is a commodity pool. The Funds' transactions in futures
and options thereon as described herein will constitute bona fide hedging or
other permissible transactions under regulations promulgated by the Commodity
Futures Trading Commission ("CFTC"). In addition, no Fund may engage in such
transactions if the sum of the amount of initial margin deposits and premiums
paid for unexpired futures and options thereon would exceed 5% of the value of
such Fund's net assets, with certain exclusions as defined in the applicable
CFTC rules. At the time of purchase of a foreign currency exchange contract, a
foreign currency futures contract or related option, liquid assets, such as
cash, U.S. government securities or other appropriate high-grade debt
obligations, marked to market daily equal to the market value of the foreign
currency contract or related option minus the Fund's initial margin deposit
will be deposited in a pledged account with the Funds' custodian to
collateralize the position and thereby ensure that it is not leveraged.
Currency forward and futures contracts. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract as agreed by the parties, at a price set at the time of the
contract. The holder of a cancelable forward contract has the unilateral right
to cancel the contract at maturity by paying a specified fee. The contracts are
traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement, and no commissions are charged at any
stage for trades. A foreign currency futures contract is a standardized
contract for the future delivery of a specified amount of a foreign currency at
a future date at a price set at the time of the contract. Foreign currency
futures contracts traded in the United States are designed by and traded on
exchanges regulated by the CFTC, such as the New York Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign currency
futures contracts in certain respects. For example, the maturity date of a
forward contract may be any fixed number of days from the date of the contract
agreed upon by the parties, rather than a predetermined date in a given month.
Forward contracts may be in any amounts agreed upon by the parties rather than
predetermined amounts. Also, forward foreign exchange contracts are traded
directly between currency traders so that no intermediary is required. A
forward contract generally requires no margin or other deposit.
At the maturity of a forward or futures contract, a Fund either may accept
or make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original
forward contract. Closing transactions with respect to futures contracts are
effected on a commodities exchange; a clearing corporation associated with the
exchange assumes responsibility for closing out such contracts.
Although each Fund (except the Growth Fund, the Nifty Fifty Fund and the
Balanced Return Fund) intends to purchase or sell foreign currency futures
contracts only on exchanges or boards of trade where there appears to be an
active market, there is no assurance that a market on an exchange or board of
trade will exist for any particular contract or at any particular time. In such
event, it may not be possible to close a futures position and, in the event of
adverse price movements, the Fund would continue to be required to make daily
cash payments of variation margin.
Foreign currency options. In general, options on foreign currencies
operate similarly to options on securities and are subject to many similar
risks. Foreign currency options are traded primarily in the over-the-counter
market, although options on foreign currencies have recently been listed on
several exchanges. Options are traded not only on the currencies of individual
nations, but also on the European Currency Unit, which is composed of amounts
of a number of currencies and is the official medium of exchange of the
European Community's European Monetary System.
Each Fund (except the Growth, Nifty Fifty and Balanced Return Funds) will
only purchase or write foreign currency options when the Fund's Adviser
believes that a liquid market exists for such options. There can be, however,
no assurance that a liquid market will exist for a particular option at any
specific time. Options on foreign currencies are affected by all of those
factors which influence foreign exchange rates and investments generally.
The value of any currency, including U.S. dollars and foreign currencies,
may be affected by complex political and economic factors applicable to the
issuing country. In addition, the exchange rates of foreign currencies (and
therefore the values of foreign currency options) may be affected
significantly, fixed, or supported directly or indirectly, by U.S. and foreign
government actions. Government intervention may increase risks involved in
purchasing or selling foreign currency options, since exchange rates may not be
free to fluctuate in response to other market forces.
The value of a foreign currency option reflects the value of an exchange
rate, which in turn reflects the relative values of two currencies, generally
the U.S. dollar and the foreign currency in question. Because foreign currency
transactions occurring in the interbank market involve substantially larger
amounts than those that may be involved in the exercise of foreign currency
options, investors may be disadvantaged by having to deal in an odd-lot market
for the underlying foreign currencies in connection with options at prices that
are less favorable than for round lots. Foreign governmental restrictions or
taxes could result in adverse changes in the cost of acquiring or disposing of
foreign currencies.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information
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is generally representative of very large round-lot transactions in the
interbank market and thus may not reflect exchange rates for smaller odd- lot
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that cannot be reflected in the options markets.
Settlement procedures. Settlement procedures relating to the Funds'
investments in foreign securities and to the Funds' foreign currency exchange
transactions may be more complex than settlements with respect to investments
in debt or equity securities of U.S. issuers, and may involve certain risks not
present in the Funds' domestic investments. For example, settlement of
transactions involving foreign securities or foreign currency may occur within
a foreign country, and a Fund may be required to accept or make delivery of the
underlying securities or currency in conformity with any applicable U.S. or
foreign restrictions or regulations, and may be required to pay any fees, taxes
or charges associated with such delivery. Such investments may also involve the
risk that an entity involved in the settlement may not meet its obligations.
Settlement procedures in many foreign countries are less established than those
in the United States, and some foreign country settlement periods can be
significantly longer than those in the United States.
Foreign currency conversion. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to a
Fund at one rate, while offering a lesser rate of exchange should such Fund
desire to resell that currency to the dealer.
Futures Contracts and Related Options
A financial futures contract sale creates an obligation by the seller to
deliver the type of financial instrument called for in the contract in a
specified delivery month for a stated price. A financial futures contract
purchase creates an obligation by the purchaser to take delivery of the type of
financial instrument called for in the contract in a specified delivery month
at a stated price. The specific instruments delivered or taken, respectively,
at settlement date are not determined until on or near that date. The
determination is made in accordance with the rules of the exchange on which the
futures contract sale or purchase was made. Futures contracts are traded in the
United States only on commodity exchanges or boards of trade--known as
"contract markets"--approved for such trading by the CFTC, and must be executed
through a futures commission merchant or brokerage firm which is a member of
the relevant contract market. None of the Funds that can invest in futures
contracts and related options will invest more than 5% of its net assets in
such contracts and options.
No Fund will deal in commodity contracts per se, and the Global Growth,
Small & Mid-Cap Growth and Value 25 Funds will deal only in futures contracts
involving financial instruments. Although futures contracts by their terms call
for actual delivery or acceptance of securities, in most cases the contracts
are closed out before the settlement date without the making or taking of
delivery. Closing out a futures contract sale is effected by purchasing a
futures contract for the same aggregate amount of the specific type of
financial instrument or commodity with the same delivery date. If the price of
the initial sale of the futures contract exceeds the price of the offsetting
purchase, the seller is paid the difference and realizes a gain. Conversely, if
the price of the offsetting purchase exceeds the price of the initial sale, the
seller realizes a loss. Similarly, the closing out of a futures contract
purchase is effected by the purchaser's entering into a futures contract sale.
If the offsetting sale price exceeds the purchase price, the purchaser realizes
a gain, and if the purchase price exceeds the offsetting sale price, he
realizes a loss. Futures contracts traded on an exchange approved by the CFTC
are "marked to market" at the end of each year, whether or not they are closed
out. In general, 40% of the gain or loss arising from the closing out or
marking to market of a futures contract traded on an exchange approved by the
CFTC is treated as short-term capital gain or loss, and 60% is treated as
long-term capital gain or loss.
Unlike when a Fund purchases or sells a security, no price is paid or
received by such Fund upon the purchase or sale of a futures contract. Upon
entering into a contract, such Fund is required to deposit with its custodian
in a segregated account in the name of the futures broker an amount of cash
and/or certain liquid securities. This amount is known as "initial margin." The
nature of initial margin in futures transactions is different from that of
margin in security transactions in that futures contract margin does not
involve the borrowing of funds to finance the transactions. Rather, initial
margin is similar to a performance bond or good faith deposit which is returned
to such Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Futures contracts also involve brokerage
costs.
Subsequent payments, called "variation margin," to and from the broker (or
the custodian) are made on a daily basis as the price of the underlying
security or commodity fluctuates, making the long and short positions in the
futures contract more or less valuable, a process known as "marking to the
market." For example, when a Fund has purchased a futures contract on a
security and the price of the underlying security has risen, that position
would increase in value and such Fund would receive from the broker a variation
margin payment based on that increase in value. Conversely, when a Fund has
purchased a security futures contract and the price of the underlying security
has declined, the position would be less valuable and such Fund would be
required to make a variation margin payment to the broker.
A Fund may elect to close some or all of its futures positions at any time
prior to their expiration in order to reduce or eliminate a hedge position then
currently held by such Fund. A Fund may close its positions by taking opposite
positions which will operate
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to terminate such Fund's position in the futures contracts. Final
determinations of variation margin are then made, additional cash is required
to be paid by or released to such Fund, and such Fund realizes a loss or a
gain. Such closing transactions involve additional commission costs.
At the time of purchase of a financial futures contract or a call option
on a futures contract, liquid assets, such as cash, U.S. government securities
or other appropriate high-grade debt obligations, marked to market daily equal
to the market value of the futures contract minus the Fund's initial margin
deposit will be deposited in a pledged account with the Funds' custodian to
collateralize the position and thereby ensure that it is not leveraged.
Options on futures contracts. Each Fund (except the Growth Fund, the Nifty
Fifty Fund and the Balanced Return Fund) may purchase and write put and call
options on futures contracts it may buy or sell and enter into closing
transactions with respect to such options to terminate existing positions.
Options on future contracts give the purchaser the right, in return for the
premium paid, to assume a position in a futures contract at the specified
option exercise price at any time during the period of the option. Each of the
above Funds may use options on futures contracts in lieu of writing or buying
options directly on the underlying securities or purchasing and selling the
underlying futures contracts. For example, to hedge against a possible decrease
in the value of its portfolio securities, a Fund may purchase put options or
write call options on futures contracts rather than selling futures contracts.
Similarly, a Fund may purchase call options or write put options on futures
contracts as a substitute for the purchase of futures contracts to hedge
against a possible increase in the price of securities which such Fund expects
to purchase. Such options generally operate in the same manner as options
purchased or written directly on the underlying investments.
As with options on securities, the holder or writer of an option may
terminate its position by selling or purchasing an offsetting option. There is
no guarantee that such closing transactions can be effected.
The Global Growth, Small & Mid-Cap Growth and Value 25 Funds will be
required to deposit initial margin and maintenance margin with respect to put
and call options on futures contracts written by such Funds pursuant to
brokers' requirements similar to those described above in connection with the
discussion of futures contracts.
Risks of transactions in futures contracts and related options. Successful
use of futures contracts by a Fund is subject to the Adviser's ability to
predict movements in the direction of interest rates and other factors
affecting securities markets. For example, if a Fund has hedged against the
possibility of decline in the values of its investments and the values of its
investments increase instead, such Fund will lose part or all of the benefit of
the increase through payments of daily maintenance margin. A Fund may have to
sell investments at a time when it may be disadvantageous to do so in order to
meet margin requirements. The loss from investing in futures transactions is
potentially unlimited.
Compared to the purchase or sale of futures contracts, the purchase of put
or call options on futures contracts involves less potential risk to a Fund
because the maximum amount at risk is the premium paid for the options (plus
transaction costs). However, there may be circumstances when the purchase of a
put or call option on a futures contract would result in a loss to a Fund when
the purchase or sale of a futures contract would not, such as when there is no
movement in the prices of the hedged investments. The writing of an option on a
futures contract involves risks similar to those risks relating to the sale of
futures contracts.
There is no assurance that higher than anticipated trading activity or
other unforeseen events might not, at times, render certain market clearing
facilities inadequate, and thereby result in the institution by exchanges of
special procedures which may interfere with the timely execution of customer
orders.
To reduce or eliminate a hedge position held by a Fund, such Fund may seek
to close out a position. The ability to establish and close out positions will
be subject to the development and maintenance of a liquid secondary market. It
is not certain that this market will develop or continue to exist for a
particular futures contract or option. Reasons for the absence of a liquid
secondary market on an exchange include the following: (i) there may be
insufficient trading interest in certain contracts or options; (ii)
restrictions may be imposed by an exchange on opening transactions or closing
transactions or both; (iii) trading halts, suspensions or other restrictions
may be imposed with respect to particular classes or series of contracts or
options, or underlying securities; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of an exchange
or a clearing corporation may not at all times be adequate to handle current
trading volume; or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
of contracts or options (or a particular class or series of contracts or
options), in which event the secondary market on that exchange for such
contracts or options (or in the class or series of contracts or options) would
cease to exist, although outstanding contracts or options on the exchange that
had been issued by a clearing corporation as a result of trades on that
exchange would continue to be exercisable in accordance with their terms.
Index futures contracts. An index futures contract is a contract to buy or
sell units of an index at a specified future date at a price agreed upon when
the contract is made. Entering into a contract to buy units of an index is
commonly referred to as buying or purchasing a contract or holding a long
position in the index. Entering into a contract to sell units of an index is
commonly referred to as selling a contract or holding a short position. A unit
is the current value of the index. Each of the Global Growth, Small
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& Mid-Cap Growth and Value 25 Funds may enter into stock index futures
contracts, debt index futures contracts, or other index futures contracts
appropriate to its objective. Each of these Funds may also purchase and sell
options on index futures contracts.
For example, the Standard & Poor's Composite 500 Stock Price Index ("S&P
500") is composed of 500 selected common stocks, most of which are listed on
the New York Stock Exchange. The S&P 500 assigns relative weightings to the
common stocks included in the index, and the value fluctuates with changes in
the market values of those common stocks. In the case of the S&P 500, contracts
are to buy or sell 500 units. Thus, if the value of the S&P 500 were $150, one
contract would be worth $75,000 (500 units \x $150). A stock index futures
contract specifies that no delivery of the actual stocks making up the index
will take place. Instead, settlement in cash must occur upon the termination of
the contract, with the settlement being the difference between the contract
price and the actual level of the stock index at the expiration of the
contract. For example, if a Fund enters into a futures contract to buy 500
units of the S&P 500 at a specified future date at a contract price of $150 and
the S&P 500 is at $154 on that future date, the Fund will gain $2,000 (500
units \x gain of $4 per unit). If a Fund enters into a futures contract to sell
500 units of the stock index at a specified future date at a contract price of
$150 and the S&P 500 is at $152 on that future date, the Fund will lose $1,000
(500 units \x loss of $2 per unit).
There are several risks in connection with the use by the Funds of index
futures as a hedging device. One risk arises because of the imperfect
correlation between movements in the prices of the index futures and movements
in the prices of securities which are the subject of the hedge. The Funds'
Adviser will, however, when engaging in this type of activity, attempt to
reduce this risk by buying or selling, to the extent possible, futures on
indices the movements of which will, in its judgment, have a significant
correlation with movements in the prices of the securities sought to be hedged.
Successful use of index futures by a Fund for hedging purposes is also
subject to the Adviser's ability to predict movements in the direction of the
market. It is possible that, where a Fund has sold futures to hedge its
portfolio against a decline in the market, the index on which the futures are
written may advance and the value of securities held in such Fund's portfolio
may decline. If this occurred, such Fund would lose money on the futures and
also experience a decline in value in its portfolio securities. It is also
possible that, if a Fund has hedged against the possibility of a decline in the
market adversely affecting securities held in its portfolio and securities
prices increase instead, such Fund will lose part or all of the benefit of the
increased value of those securities it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
such Fund has insufficient cash, it may have to sell securities to meet daily
variation margin requirements at a time when it is disadvantageous to do so.
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the index futures and the
portion of the portfolio being hedged, the prices of index futures may not
correlate perfectly with movements in the underlying index due to certain
market distortions. First, all participants in the futures market are subject
to margin deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
offsetting transactions which could distort the normal relationship between the
index and futures markets. Second, margin requirements in the futures market
are less onerous than margin requirements in the securities market, and as a
result the futures market may attract more speculators than the securities
market does. Increased participation by speculators in the futures market may
also cause temporary price distortions. Due to the possibility of price
distortions in the futures market and also because of the imperfect correlation
between movements in the index and movements in the prices of index futures,
even a correct forecast of general market trends may not result in a successful
hedging transaction over a short time period.
Options on stock index futures. Options on stock index futures are similar
to options on securities except that options on index futures give the
purchaser the right, in return for the premium paid, to assume a position in an
index futures contract (a long position if the option is a call and a short
position if the option is a put) at a specified exercise price at any time
during the period of the option. Upon exercise of the option, the delivery of
the futures position by the writer of the option to the holder of the option
will be accompanied by delivery of the accumulated balance in the writer's
futures margin account which represents the amount by which the market price of
the index futures contract, at exercise, exceeds (in the case of a call) or is
less than (in the case of a put) the exercise price of the option on the index
future. If an option is exercised on the last trading day prior to its
expiration date, the settlement will be made entirely in cash equal to the
difference between the exercise price of the option and the closing level of
the index on which the future is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
Options on Indices
As an alternative to purchasing put and call options on index futures,
each of the Global Growth, Small & Mid-Cap Growth and Value 25 Funds may
purchase and sell put and call options on the underlying indices themselves.
Such options would be used in a manner identical to the use of options on index
futures.
Index Warrants
Each Fund (except the Growth Fund, the Nifty Fifty Fund and the Balanced
Return Fund) may purchase put warrants and call warrants whose values vary
depending on the change in the value of one or more specified securities
indices ("index warrants"). Index warrants are generally issued by banks or
other financial institutions and give the holder the right, at any time during
the term of the warrant, to receive upon exercise of the warrant a cash payment
from the issuer based on the value of the underlying
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index at the time of exercise. In general, if the value of the underlying index
rises above the exercise price of the index warrant, the holder of a call
warrant will be entitled to receive a cash payment from the issuer upon
exercise based on the difference between the value of the index and the
exercise price of the warrant; if the value of the underlying index falls, the
holder of a put warrant will be entitled to receive a cash payment from the
issuer upon exercise based on the difference between the exercise price of the
warrant and the value of the index. The holder of a warrant would not be
entitled to any payments from the issuer at any time when, in the case of a
call warrant, the exercise price is greater than the value of the underlying
index, or, in the case of a put warrant, the exercise price is less than the
value of the underlying index. If a Fund were not to exercise an index warrant
prior to its expiration, then such Fund would lose the amount of the purchase
price paid by it for the warrant.
A Fund will normally use index warrants in a manner similar to its use of
options on securities indices. The risks of a Fund's use of index warrants are
generally similar to those relating to its use of index options. Unlike most
index options, however, index warrants are issued in limited amounts and are
not obligations of a regulated clearing agency, but are backed only by the
credit of the bank or other institution which issues the warrant. Also, index
warrants generally have longer terms than index options. Although each Fund
will normally invest only in exchange listed warrants, index warrants are not
likely to be as liquid as certain index options backed by a recognized clearing
agency. In addition, the terms of index warrants may limit a Fund's ability to
exercise the warrants at such time, or in such quantities, as the Fund would
otherwise wish to do.
Securities Loans
Each Fund may make secured loans of its portfolio securities amounting to
not more than 25% of its total assets, thereby increasing its total return. The
risks in lending portfolio securities, as with other extensions of credit,
consist of possible delay in recovery of the securities or possible loss of
rights in the collateral should the borrower fail financially. As a matter of
policy, securities loans are made to broker-dealers pursuant to agreements
requiring that loans be continuously secured by collateral consisting of cash
or high-grade short-term debt obligations at least equal at all times to the
value of the securities on loan, "marked-to-market" daily. The borrower pays to
such Fund an amount equal to any dividends or interest received on securities
lent. A Fund retains all or a portion of the interest received on investment of
the cash collateral or receives a fee from the borrower. Although voting
rights, or rights to consent, with respect to the loaned securities pass to the
borrower, a Fund retains the right to call the loans at any time on reasonable
notice, and it will do so to enable the Fund to exercise the voting rights on
any matters materially affecting the investment. A Fund may also call such
loans in order to sell securities.
Forward Commitments
Each Fund (except the Growth Fund, the Nifty Fifty Fund and the Balanced
Return Fund) may enter into contracts to purchase securities for a fixed price
at a future date beyond customary settlement time ("forward commitments") if
the Fund holds, and maintains until settlement date in a segregated account,
cash or high-grade debt obligations in an amount sufficient to meet the
purchase price, or if the Fund enters into offsetting contracts for the forward
sale of other securities it owns. Forward commitments may be considered
securities in themselves, and involve a risk of loss if the value of the
security to be purchased declines prior to the settlement date, which risk is
in addition to the risk of decline in the value of the Fund's other assets.
Where such purchases are made through dealers, the Fund relies on the dealer to
consummate the sale. The dealer's failure to do so may result in the loss to
the Fund of an advantageous yield or price. Although each Fund will generally
enter into forward commitments with the intention of acquiring securities for
its portfolio or for delivery pursuant to options contracts it has entered
into, such Fund may dispose of a commitment prior to settlement if the Adviser
deems it appropriate to do so. A Fund may realize short-term profits or losses
upon the sale of forward commitments.
Illiquid Securities
Each of the Global Growth, Small & Mid-Cap Growth, and Value 25 Funds may
invest up to 15% and each of the Growth, Nifty Fifty and Balanced Return Funds
may invest up to 10% of the value of its net assets in securities as to which a
liquid trading market does not exist, provided such investments are consistent
with such Fund's objective and other policies. Such securities may include
securities that are not readily marketable, such as certain securities that are
subject to legal or contractual restrictions on resale, repurchase agreements
providing for settlement in more than seven days after notice, certain options
traded in the over-the-counter market and securities used to cover such
options. As to these securities, a Fund is subject to a risk that should the
Fund desire to sell them when a ready buyer is not available at a price the
Fund deems representative of their value, the value of the Fund could be
adversely affected. When purchasing securities that have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), and are not
readily marketable, each Fund will endeavor to obtain the right to registration
at the expense of the issuer. Generally, there will be a lapse of time between
a Fund's decision to sell any such security and the registration of the
security permitting sale. During any such period, the price of the securities
will be subject to market fluctuations. However, if a substantial market of
qualified institutional buyers develops pursuant to Rule 144A under the 1933
Act for certain unregistered securities held by a Fund, such Fund intends to
treat such securities as liquid securities in accordance with procedures
approved by the Trust's Board of Trustees. Because it is not possible to
predict with any assurance how the market for restricted securities pursuant to
Rule 144A will develop, the Board of Trustees has directed the Adviser to
monitor carefully any Fund investments in such securities with particular
regard to trading activity, availability or reliable price information and
other relevant
7
<PAGE>
information. To the extent that, for a period of time, qualified institutional
buyers cease purchasing such restricted securities pursuant to Rule 144A, a
Fund's investing in such securities may have the effect of increasing the level
of illiquidity in the Fund's portfolio during such period.
Repurchase Agreements
Each Fund may, for temporary defensive purposes, invest its assets in
eligible U.S. Government securities and concurrently enter into repurchase
agreements with respect to such securities. Under such agreements, the seller
of the security agrees to repurchase it at a mutually agreed upon time and
price. The repurchase price may be higher than the purchase price, the
difference being income to the Fund, or the purchase and repurchase prices may
be the same, with interest at a stated rate due to the Fund together with the
repurchase price on repurchase. In either case, the income to the Fund is
unrelated to the interest rate on the U.S. Government security itself. Such
repurchase agreements will be made only with banks with assets of $1 billion or
more that are insured by the Federal Deposit Insurance Corporation or with
Government securities dealers recognized as primary dealers by the Federal
Reserve Board and registered as broker-dealers with the SEC or exempt from such
registration. In addition, to the extent a Fund has over $10 million in assets,
the Fund will limit the amount of its transactions with any one bank or
Government securities dealer to a maximum of 25% of its assets. Any repurchase
agreements entered into by a Fund will be of short duration, from overnight to
one week, although the underlying securities generally have longer maturities.
No Fund may enter into a repurchase agreement with more than seven days to
maturity if, as a result, more than 10% of the value of the Growth, Nifty Fifty
or Balanced Return Funds' or 15% of the value of the Global Growth, Small &
Mid-Cap Growth or Value 25 Funds' net assets would be invested in such
repurchase agreements and other illiquid assets.
For purposes of the Investment Company Act of 1940 (the "1940 Act"), a
repurchase agreement is deemed to be a loan from a Fund to the seller of the
U.S. Government security subject to the repurchase agreement. In the event of
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the U.S. Government security before its repurchase under a repurchase
agreement, a Fund may encounter delays and incur costs before being able to
sell the security. Delays may involve loss of interest or a decline in price of
the U.S. Government security. If a court characterizes the transaction as a
loan and the Fund has not perfected a security interest in the U.S. Government
security, the Fund may be required to return the security to the seller's
estate and be treated as an unsecured creditor of the seller. As an unsecured
creditor, the Fund would be at risk of losing some or all of the principal and
income involved in the transaction. As with any unsecured debt instrument
purchased for a Fund, the Adviser seeks to minimize the risk of loss through
repurchase agreements by analyzing the creditworthiness of the obligor, in this
case the seller of the U.S. Government security.
Apart from the risk of bankruptcy or insolvency proceedings, there is also
the risk that the seller may fail to repurchase the security. However, each
Fund will always receive as collateral for any repurchase agreement to which it
is a party U.S. Government securities acceptable to it, the market value of
which is equal to at least 100% of the amount invested by the Fund plus accrued
interest, and the Fund will make payment against such securities only upon
physical delivery or evidence of book entry transfer to the account of its
Custodian or other entity authorized by the Trust's Board of Trustees to have
custody for purposes of repurchase agreement transactions. If the market value
of the U.S. Government security subject to the repurchase agreement becomes
less than the repurchase price (including interest), the Fund will direct the
seller of the U.S. Government security to deliver additional securities so that
the market value of all securities subject to the repurchase agreement will
equal or exceed the repurchase price. It is possible that the Fund will be
unsuccessful in seeking to impose on the seller a contractual obligation to
deliver additional securities, however.
Special Situations
Subject to the limitations in the Prospectus, each Fund (except the Global
Growth Fund) may invest in special situations that the Adviser believes present
opportunities for capital growth. Such situations most typically include
corporate restructurings, mergers, and tender offers.
A special situation arises when, in the opinion of the Adviser, the
securities of a particular company will, within a reasonably estimable period
of time, be accorded market recognition at an appreciated value solely by
reason of a development particularly or uniquely applicable to that company and
regardless of general business conditions or movements of the market as a
whole. Developments creating special situations might include, among others,
the following: liquidations, reorganizations, recapitalizations, mergers, or
tender offers; material litigation or resolution thereof; technological
breakthroughs; and new management or management policies. Although large and
well-known companies may be involved, special situations often involve much
greater risk than is inherent in ordinary investment securities.
Unseasoned Companies
As a matter of operating policy, the Funds may invest to a limited extent
in securities of unseasoned companies and new issues. The Adviser regards a
company as unseasoned when, for example, it is relatively new to or not yet
well established in its primary line of business. Such companies generally are
smaller and younger than companies whose shares are traded on the major stock
exchanges. Accordingly, their shares are often traded over-the-counter and
their share prices may be more volatile than those of larger, exchange-listed
companies. In order to avoid undue risks, a Fund will not invest more than 5%
of its total assets in securities
8
<PAGE>
of any one company with a record of fewer than three years' continuous
operation (including that of predecessors). Investments by the Nifty Fifty Fund
and the Balanced Return Fund in the securities of unseasoned companies may not
exceed 5% and 30% respectively of each Fund's total assets.
New Issues
The Funds may invest in new issues. A new issue may be an initial public
offering by a previously private company. There may be less public information
about the company and the company may have a limited operating history and
rapidly changing fundamental prospects. This may make investment returns of new
issues highly volatile. New issues may also be subject to varying patterns of
trading volume and may, at times, be difficult to sell.
INVESTMENT RESTRICTIONS
The following restrictions have been adopted as matters of fundamental or
operating policy for the Funds. Fundamental policies may not be changed without
the approval of a majority of the Fund's outstanding voting securities and
approval of the Board of Trustees. Operating policies can be changed by vote of
the Board of Trustees. The Funds may not:
(1) With respect to 75% of a Fund's total assets, purchase any security
(other than obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities) if, as a result, more than 5% of the value of
the Fund's total assets would be invested in securities of any one issuer. This
limitation does not apply with respect to the remaining 25% of a Fund's total
assets (except that neither the Growth Fund nor the Balanced Return Fund will
invest more than 10% of its total assets in any one non-U.S. Government
issuer). [Fundamental Policy]
(2) Purchase securities on margin (but it may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of its
portfolio securities, and may make margin payments in connection with
transactions in permissible futures and options contracts) or make uncovered
short sales. [Operating Policy]
(3) With respect to 75% of the Global Growth, Small & Mid-Cap Growth and
Value 25 Funds' total assets and 100% of the Growth, Nifty Fifty and Balanced
Return Funds' total assets, acquire more than 10% of any one class of
securities of an issuer or more than 10% of the outstanding voting securities
of any one issuer. (For this purpose all common stocks of an issuer are
regarded as a single class, and all preferred stocks of an issuer are regarded
as a single class.) [Fundamental Policy]
(4) Borrow money in excess of 20% (5% for the Growth, the Nifty Fifty and
Balanced Return Funds) of its total assets (taken at cost) and then only as a
temporary measure for extraordinary or emergency reasons and not for
investment. (Each Fund may borrow only from banks and immediately after any
such borrowings there must be an asset coverage [total assets of the Fund,
including the amount borrowed, less liabilities other than such borrowings] of
at least 300% of the amount of all borrowings. In the event that, due to market
decline or other reasons, such asset coverage should at any time fall below
300%, the Fund is required within three days, not including Sundays and
holidays, to reduce the amount of its borrowings to the extent necessary to
cause the asset coverage of such borrowings to be at least 300%. If this should
happen, the Fund may have to sell securities at a time when it would be
disadvantageous to do so.) [Fundamental Policy]
(5) With respect to the Global Growth, the Small & Mid-Cap Growth and the
Value 25 Funds, pledge more than 25% of its total assets (taken at cost) in
connection with permissible borrowings. For the purposes of this restriction,
the deposit of underlying securities and other assets in connection with the
writing of put and call options and collateral arrangements with respect to
margin for currency futures contracts are not deemed to be a pledge of assets.
[Fundamental Policy]
(6) Invest more than 5% (30% for the Balanced Return Fund) of its total
assets in securities of any one issuer which, together with any predecessor,
has been in continuous operation for less than three years. [Fundamental
Policy]
(7) Invest in securities of any company, if officers and Trustees of the
Trust and officers and directors of the Adviser who beneficially own more than
0.5% of the shares or securities of that company collectively own more than 5%
of such securities. [Fundamental Policy with respect to the Growth, Nifty
Fifty, Balanced Return, Global Growth and Small & Mid-Cap Growth Funds]
(8) Make loans, except (a) by purchase of marketable bonds, debentures,
commercial paper or corporate notes, and similar marketable evidences of
indebtedness which are part of an issue to the public or to financial
institutions, (b) by entry into repurchase agreements, or (c) through the
lending of its portfolio securities with respect to not more than 25% of its
total assets. [Fundamental Policy]
(9) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts or commodities or commodity contracts, except for transactions in
futures contracts and options thereon entered into for hedging purposes, and
the Growth, Nifty Fifty and Balanced Return Funds may purchase marketable
securities of companies or partnerships holding such interests. [Fundamental
Policy for the Global Growth, Small & Mid-Cap Growth and Value 25 Funds]
(10) Act as an underwriter except to the extent that, in connection with
the disposition of its portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws. [Fundamental Policy]
9
<PAGE>
(11) Make investments for the purpose of exercising control of a company's
management. [Operating Policy]
(12) Concentrate its investments in particular industries, and in no event
invest more than 25% of the value of its total assets in any one industry.
[Fundamental Policy]
(13) Engage in puts, calls, straddles, spreads or any combination thereof,
except that, to the extent described in the Prospectus and this Statement of
Additional Information, a Fund may buy and sell put and call options (and any
combination thereof) on securities, on financial futures contracts, on
securities indices, on currency futures contracts and on foreign currencies and
may buy and sell put and call warrants, the values of which are based upon
securities indices. [Operating Policy]
(14) Purchase warrants if, as a result, its warrant holdings, valued at
the lower of cost or market, would exceed 5% of the Fund's net assets, with no
more than 2% of net assets in warrants not listed on the New York or American
Stock Exchanges. [Operating Policy]
(15) Invest in (a) securities which at the time of such investment are not
readily marketable, (b) securities restricted as to resale (excluding
securities determined by the Trustees of the Funds, or by a person designated
by the Trustees of the Funds, to make such determinations pursuant to
procedures adopted by the Trustees to be readily marketable), and (c)
repurchase agreements maturing in more than seven days, if, as a result, more
than 10% of the Growth, Nifty Fifty and Balanced Return Funds' and more than
15% of the Global Growth, Small & Mid-Cap Growth and Value 25 Funds' net assets
(taken at current value) would be invested in the aggregate in securities
described in (a), (b) and (c) above. [Operating Policy]
(16) Purchase or sell real property (including limited partnership
interests), except that the Fund may (a) purchase or sell readily marketable
interests in real estate investment trusts or readily marketable securities of
companies which invest in real estate, (b) purchase or sell securities that are
secured by interests in real estate or interests therein, or (c) acquire real
estate through exercise of its rights as a holder of obligations secured by
real estate or interests therein or sell real estate so acquired. [Fundamental
Policy]
(17) Participate on a joint or joint and several basis in any securities
trading account. [Operating Policy]
(18) Purchase the securities of any other investment company except (a)
within the limits of the 1940 Act, (b) in a public offering or in the open
market or in privately negotiated transactions where, in either case, to the
best information of the Fund, no commission, profit or sales charge to a
sponsor or dealer (other than a customary broker's commission or underwriting
discount) results from such purchase, (c) if such purchase is part of a merger,
consolidation, or acquisition of assets, or (d) as part of a master-feeder
arrangement (see below). [Fundamental Policy]
(19) With respect to the Growth Fund, the Nifty Fifty Fund and the
Balanced Return Fund, purchase or sell financial futures, commodities or
commodities contracts, including futures contracts on physical commodities.
[Fundamental Policy]
(20) Issue senior securities, as such term is defined in the Investment
Company Act of 1940, as amended, except as otherwise permitted under these
fundamental investment restrictions. [Fundamental Policy]
Each Fund, notwithstanding any other investment policy or limitation
(whether or not fundamental), may invest all of its assets in the securities or
beneficial interests of a single pooled investment fund having substantially
the same objective, policies and limitations as such Fund.
Some of the practices referred to above are subject to restrictions
contained in the 1940 Act. In addition to the restrictions described above, a
Fund may from time to time agree to additional investment restrictions for
purposes of compliance with the securities laws of those states and foreign
jurisdictions where such Fund intends to offer or sell its shares. Any such
additional restrictions that would have a material bearing on a Fund's
operations will be reflected in the Prospectus or a Prospectus supplement and
may require shareholder approval.
10
<PAGE>
PERFORMANCE INFORMATION
The Funds may, from time to time, include total return in advertisements
or reports to shareholders or prospective investors. Performance information in
advertisements and sales literature may be expressed as a yield of a class or
Fund and as a total return of any Class or Fund.
Standardized quotations of average annual total return for each Class of
Shares of a Fund will be expressed in terms of the average annual compounded
rate of return for a hypothetical investment in either Class A, Class B, or
Class C Shares of a Fund over periods of 1, 5 and 10 years or up to the life of
the class of shares of a Fund, calculated for each class separately pursuant to
the formula below. All total return figures reflect the deduction of a
proportional share of each class's expenses (on an annual basis), deduction of
the maximum initial sales load in the case of Class A Shares and the maximum
contingent deferred sales charge applicable to a complete redemption of the
investment in the case of Class B and C Shares, and assume that all dividends
and distributions are reinvested when paid.
P(T + 1)n = ERV
where P = a hypothetical initial payment of $1,000,
T = average annual total return,
n = number of years,
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1, 5, or 10 year periods at the end of the
1, 5, or 10 year periods (or fractional portion thereof).
The Funds may from time to time include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc.
Additionally, the Funds may compare performance results to other investment or
savings vehicles (such as certificates of deposit) and may refer to results
published in various publications such as Changing Times, Forbes, Fortune,
Money, Barrons, Business Week, Investor's Daily, Stanger's Mutual Fund Monitor,
The Stanger Register, Stanger's Investment Adviser, The Wall Street Journal,
The New York Times, Consumer Reports, Registered Representative, Financial
Planning, Financial Services Weekly, Financial World, U.S. News and World
Report, Standard & Poor's The Outlook, and Personal Investor. The Funds may
from time to time illustrate the benefits of tax deferral by comparing taxable
investments to investments made through tax-deferred retirement plans. The
total return may also be used to compare the performance of the Funds against
certain widely acknowledged outside standards or indices for stock and bond
market performance, such as the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500"), Russell 2000 Index, Morgan Stanley Capital International
All Country World Index, Dow Jones Industrial Average, Europe Australia Far
East Index (EAFE), Consumer Price Index, Lehman Brothers Corporate Index and
Lehman Brothers T-Bond Index.
Advertisements, sales literature and other communications may contain
information about the Funds and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Funds to
respond quickly to changing market and economic conditions. From time to time
the Funds may include specific portfolio holdings or industries in such
communications. To illustrate components of overall performance, the Funds may
separate its cumulative and average annual returns into income and capital
gains components.
Performance information reflects only the performance of a hypothetical
investment in each class during the particular time period on which the
calculations are based. Performance information should be considered in light
of each Fund's investment objectives and policies, characteristics and quality
of the portfolio, and the market condition during the given time period, and
should not be considered as a representation of what may be achieved in the
future.
The Funds may also compute aggregate cumulative total return for specified
periods based on a hypothetical Class A, Class B, or Class C account with an
assumed initial investment of $10,000. The aggregate total return is determined
by dividing the net asset value of this account at the end of the specified
period by the value of the initial investment and is expressed as a percentage.
Calculation of aggregate total return reflects payment of the Class A Shares'
maximum sales charge of 4.75% and assumes reinvestment of all income dividends
and capital gain distributions during the period.
The Funds also may quote annual, average annual and annualized total
return and aggregate total return performance data, for each class of shares of
the Funds, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted below. Such data
will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate
rate of return calculations.
11
<PAGE>
The average annual compounded rates of return, or total return, for the
Class A, Class B and Class C shares of each of the Funds for the indicated
periods ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
One Five Ten Inception(1) to
Class A Year Years Years December 31, 1999
------- ---- ----- ----- -----------------
<S> <C> <C> <C> <C>
The Growth Fund % % % %
The Balanced Return Fund % % % %
The Nifty Fifty Fund % % N/A %
The Global Growth Fund* % % N/A %
The Small & Mid-Cap Growth Fund* % N/A N/A %
The Value 25 Fund % N/A N/A %
</TABLE>
<TABLE>
<CAPTION>
One Inception(2) to
Class B Year December 31, 1999
------- ---- ------------------
<S> <C> <C>
The Growth Fund % %
The Balanced Return Fund % %
The Nifty Fifty Fund % %
The Global Growth Fund % %
The Small & Mid-Cap Growth Fund % %
The Value 25 Fund % %
</TABLE>
<TABLE>
<CAPTION>
One Inception(2) to
Class C Year December 31, 1999
------- ---- ------------------
<S> <C> <C>
The Growth Fund % %
The Balanced Return Fund % %
The Nifty Fifty Fund % %
The Global Growth Fund % %
The Small & Mid-Cap Growth Fund % %
The Value 25 Fund % %
</TABLE>
(1) The inception dates of the Funds are as follows:
Growth Fund--June 24, 1986
Balanced Return Fund--June 8, 1987
Nifty Fifty Fund--December 17, 1990
Global Growth Fund--November 1, 1993
Small & Mid-Cap Growth Fund--October 10, 1994
Value 25 Fund--December 17, 1996
(2) The inception date for Class B and Class C shares for the Growth, Nifty
Fifty and Balanced Return Funds was January 3, 1994; the inception date for
the Class B shares for the Global Growth* and Small & Mid-Cap* Growth Funds
was September 18, 1996; the inception date for the Class C shares for the
Global Growth Fund* was October 21, 1996 and the inception date for the
Class C shares of the Small & Mid-Cap Growth Fund* was October 8, 1996. The
inception date for Class B and C shares for the Value 25 Fund was January 9,
1997.
* Prior to September 1, 1996, the Global Growth and Small & Mid-Cap Growth
Funds' shares were not offered to the public and, although each Fund's
portfolio was managed substantially in accordance with the investment
policies described in its current Prospectus during that period, some
management differences did occur due primarily to each Fund's small asset
size. Accordingly, each Fund's performance during periods prior to September
1, 1996 may not be relevant to an assessment of such Fund's performance
subsequent to such date. Additionally, the Adviser waived all management,
administrative and service fees otherwise payable to it by the Global Growth
Fund during 1993, 1994 and 1995 and the Small & Mid-Cap Growth Fund during
1994 and 1995, which had the effect of increasing each Fund's total return
for those periods.
A Fund may also, from time to time, include a reference to the current
distribution rate of each Class of shares in investor communications and sales
literature preceded or accompanied by a prospectus for such Fund, reflecting
the amounts actually distributed to shareholders of each Class which could
include capital gains and other items of income, as well as interest and
dividend income received by a Fund and distributed to the shareholders. All
calculations of a Class's distribution rate are based on the distributions per
share which are declared, but not necessarily paid, during the fiscal year. The
distribution rate for a Class is determined by dividing the distributions
declared during the period by the maximum offering price per share of the Class
on the last day of the period and annualizing the resulting figure. The
distribution rate does not reflect capital appreciation or depreciation in the
price of a Fund's shares and should not be confused with yield or considered to
be a complete indicator of the return to the investor on his investment.
12
<PAGE>
Investors should note that the investment results of each Fund will
fluctuate over time, and any presentation of a Fund's current yield, total
return or distribution rate for any period should not be considered as a
representation of what an investment may earn or what an investor's total
return, yield or distribution rate may be in any future period.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser places orders for the purchase and sale of securities,
supervises their execution and negotiates brokerage commissions on behalf of
the Funds. It is the practice of the Adviser to seek the best prices and
execution of orders and to negotiate brokerage commissions which in the
Adviser's opinion are reasonable in relation to the value of the brokerage
services provided by the executing broker. Brokers who have executed orders for
the Funds are asked to quote a fair commission for their services. If the
execution is satisfactory and if the requested rate approximates rates
currently being quoted by the other brokers selected by the Adviser, the rate
is deemed by the Adviser to be reasonable. Brokers may ask for higher rates of
commission if all or a portion of the securities involved in the transaction
are positioned by the broker, if the broker believes it has brought the Funds
an unusually favorable trading opportunity, or if the broker regards its
research services as being of exceptional value, and payment of such
commissions is authorized by the Adviser after the transaction has been
consummated. If the Adviser more than occasionally differs with the broker's
appraisal of opportunity or value, the broker would not be selected to execute
trades in the future. The Adviser believes that the Funds benefit with a
securities industry comprised of many and diverse firms and that the long-term
interest of shareholders of the Funds is best served by brokerage policies
which include paying a fair commission rather than seeking to exploit its
leverage to force the lowest possible commission rate. The primary factors
considered in determining the firms to which brokerage orders are given are the
Adviser's appraisal of: the firm's ability to execute the order in the desired
manner; the value of research services provided by the firm; and the firm's
attitude toward and interest in mutual funds in general including the sale of
mutual funds managed and sponsored by the Adviser. The Adviser does not offer
or promise to any broker an amount or percentage of brokerage commissions as an
inducement or reward for the sale of shares of the Funds. Over-the-counter
purchases and sales are transacted directly with principal market-makers except
in those circumstances where in the opinion of the Adviser better prices and
execution are available elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller firms
in general tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor
federal, state, local and foreign political developments; many of the brokers
also provide access to outside consultants. The outside research assistance is
particularly useful to the Adviser's staff since the brokers as a group tend to
monitor a broader universe of securities and other matters than the Adviser's
staff can follow. In addition, it provides the Adviser with a diverse
perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to the Adviser and is available
for the benefit of other accounts advised by the Adviser and its affiliates and
not all of this information will be used in connection with the Funds. While
this information may be useful in varying degrees and may tend to reduce the
Adviser's expenses, it is not possible to estimate its value and in the opinion
of the Adviser it does not reduce the Adviser's expenses in a determinable
amount. The extent to which the Adviser makes use of statistical, research and
other services furnished by brokers is considered by the Adviser in the
allocation of brokerage business but there is no formula by which such business
is allocated. The Adviser does so in accordance with its judgment of the best
interest of the Funds and shareholders.
A high rate of portfolio turnover involves a correspondingly higher amount
of brokerage commissions and other costs which must be borne directly by the
Funds and indirectly by shareholders.
Stolper & Company, Inc., of which Michael Stolper, a former Trustee of the
Trust and a Director of Pasadena Capital Corporation, is the sole shareholder,
has in the past received brokerage business from the Adviser. Stolper &
Company, Inc. assists its clients in selecting an investment adviser and offers
a service measuring the performance of investment advisers, in return for which
the client pays cash or directs the investment adviser to execute a portion of
the brokerage business through Bear, Stearns & Company for the credit of
Stolper & Company, Inc. Stolper & Company, Inc. and the Adviser anticipate that
such brokerage allocation from the Adviser will continue. However, neither
Michael Stolper nor Stolper & Company, Inc. will receive or participate in
commissions paid by a Fund nor receive any reciprocal business as a result of
commissions paid by a Fund, although a Fund may pay usual and customary
brokerage commissions to Bear, Stearns & Company for brokerage business by such
Fund.
It is possible that purchases or sales of securities for a Fund also may
be considered for other clients of the Adviser or its affiliates, including the
other series of the Trust. Any transactions in such securities at or about the
same time will be allocated among such Fund and such other clients in a manner
deemed equitable to all by the Adviser, taking into account the respective
sizes of the Fund and the other clients' accounts, and the amount of securities
to be purchased or sold. It is recognized that it is possible that in some
cases this procedure could have a detrimental effect on the price or volume of
the security so far as that Fund is concerned. However, in other cases, it is
possible that the ability to participate in volume transactions and to
negotiate lower commissions will be beneficial to such Fund.
13
<PAGE>
The Board of Trustees of the Trust periodically monitors the operation of
these brokerage policies by reviewing the allocation of brokerage orders. For
the fiscal years ended December 31, 1996, 1997 and 1998, brokerage commissions
paid by the Trust on Fund transactions totaled $2,875,432, $3,928,310 and
$2,322,602, respectively. Brokerage commissions of $316,877 paid during the
fiscal year ended December 31, 1998 were paid on fund transactions aggregating
$279,064,805 executed by brokers who provided research and other statistical
and factual information. None of such commissions was paid to a broker who was
an affiliated person of the Trust or and affiliated person of such a person, or
to the knowledge of the Trust, to a broker an affiliated person of which was an
affiliated person of the Trust, its advisers or its national distributor.
PORTFOLIO TURNOVER
The Funds pay brokerage commissions for purchases and sales of portfolio
securities. A high rate of portfolio turnover generally involves a
correspondingly greater amount of brokerage commissions and other costs which
must be borne directly by a Fund and thus indirectly by its shareholders. It
may also result in the realization of larger amounts of short-term capital
gains, which are taxable to shareholders as ordinary income. If such rate of
turnover exceeds 100%, the Funds will pay more in brokerage commissions than
would be the case if they had lower portfolio turnover rates. Historical
turnover rates can be found under the heading "Financial Highlights" located in
the Trust's Prospectus. Portfolio turnover rates varied between 1997 and 1998
due to market conditions and the various investment strategies employed by the
funds' managers.
SERVICES OF THE ADVISER
The following information concerning the investment management and
administrative services provided to the Funds supplements the information
contained in the section in the Prospectus entitled "Management of the Funds."
Investment Management Agreement
The Adviser, Roger Engemann & Associates, Inc., ("REA") has entered into
an Investment Management Agreement (the "Management Agreement") with the Trust,
on behalf of each series of the Trust including the Funds, to provide
investment advice and investment management services with respect to the assets
of each Fund, provide personnel, office space, facilities and equipment as may
be needed by the Funds in their day-to-day operations and provide the officers
of the Trust. The Management Agreement has been approved by the Board of
Trustees of the Trust with respect to each Fund, including a majority of the
Trustees who are not a party to the Management Agreement or interested persons
of a party to the Management Agreement, and by a majority of the outstanding
voting shares of each Fund at a special meeting of shareholders on August 28,
1997.
The Management Agreement dated as of September 3, 1997 will be in effect
through September 2, 1999. The Management Agreement may be continued thereafter
for successive periods not to exceed one year, provided that such continuance
is specifically approved annually by a vote of a majority of each Fund's
outstanding voting securities or by the Board of Trustees, and by the vote of a
majority of the Trustees who are not parties to the Management Agreement or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval.
REA is an indirect subsidiary of Phoenix Investment Partners, Ltd.
("PXP"). PXP is a publicly-traded, independent registered investment advisory
firm, and has served investors for over 70 years. It manages over $57 billion
in assets through its investment partners: Aberdeen Fund Managers, Inc.
(Aberdeen) in Aberdeen, London, Singapore and Fort Lauderdale; Duff & Phelps
Investment Management Co. (Duff & Phelps) in Chicago and Cleveland; Roger
Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca Capital Management
LLC (Seneca) in San Francisco and Zweig/Glaser Advisers LLC in New York; and
Phoenix Investment Counsel, Inc. (Goodwin, Hollister, and Oakhurst divisions)
in Hartford, Sarasota, and Scotts Valley, CA, respectively.
Expenses
Except as set forth in the separate Administration Agreement discussed
below, the Adviser is not responsible under the Management Agreement for any
expenses related to the operation of the Funds.
Under the Management Agreement, each Fund is responsible and has assumed
the obligation for paying all of its expenses, including but not limited to:
(i) brokerage and commission expenses, (ii) federal, state, or local taxes,
including issue and transfer taxes, incurred by or levied on a Fund, (iii)
interest charges on borrowings, (iv) charges and expenses of a Fund's custodian
and transfer agent, (v) payment of all investment advisory and management fees,
(vi) insurance premiums on a Fund's property and personnel, including the
fidelity bond and liability insurance for officers and Trustees, (vii) printing
and mailing of all reports, including semi-annual and annual reports,
prospectuses, and statements of additional information to existing
shareholders, (viii) fees and expenses of registering a Fund's shares under the
federal securities laws and of qualifying its shares under applicable state
securities (Blue Sky) laws subsequent to a Fund's initial fiscal period,
including expenses attendant upon renewing and increasing such registrations
and qualifications, (ix) legal fees and expenses including legal expenses of
the independent Trustees, (x) independent Trustees' fees and auditing expenses,
including auditing fees of independent public accountants, (xi) all costs
associated with shareholders meetings and the preparation and dissemination of
proxy solicitation materials, except for meetings called solely for the
Adviser's benefit, (xii) dues and other costs of membership in industry
associations, subject to the approval of any such membership by the Board of
Trustees, (xiii) service fees paid to dealers and other shareholder service
providers pursuant to Services Agreements between the Trust and such service
providers, and (xiv) any extraordinary and non-recurring expenses, except as
otherwise prescribed therein.
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<PAGE>
As compensation for its services under the Management Agreement, the
Adviser is paid a monthly fee based on a Fund's average daily net assets at the
following annual rates:
<TABLE>
<CAPTION>
First Next Over
$50 $450 $500
Million Million Million
--------- --------- ----------
<S> <C> <C> <C>
Focus Growth Fund 0.90% 0.80% 0.70%
Nifty Fifty Fund 0.90% 0.80% 0.70%
Balanced Return Fund 0.80% 0.70% 0.60%
Small & Mid-Cap Growth Fund 1.00% 0.90% 0.80%
Value 25 Fund 0.90% 0.80% 0.70%
</TABLE>
For services to the Trust during the fiscal years ended December 31, 1996,
1997 and 1998, pursuant to the then-effective management agreements with the
former adviser (the "Former Adviser") (Roger Engemann Management Co., Inc.) and
the current Adviser (REA), the Trust paid management fees (approximately) of
$5,160,858, $6,614,000 and $8,380,000, respectively. Of these totals, the
Former Adviser and/or REA received fees from each Fund as follows:
<TABLE>
<CAPTION>
Fund 1996 1997 1998
- ---------------------- ---------------- ------------- -------------
<S> <C> <C> <C>
Focus Growth Fund $3,202,000 $3,490,000 $3,842,000
Nifty Fifty Fund $1,391,000 $1,967,000 $2,617,000
Balanced Return Fund $ 528,000 $ 551,000 $ 603,000
Small & Mid-Cap Fund $ 17,212** $ 288,000 $ 741,000
Value 25 Fund N/A $ 175,000 $ 330,000
</TABLE>
* Former Adviser was entitled to $49,798; however, the Former Adviser waived
$27,147 of such fees for the first eight months of 1996.
** Former Adviser was entitled to $25,255; however, the Former Adviser waived
$8,043 of such fees for the first eight months of 1996.
The Management Agreement is terminable with respect to each Fund on 60-days'
written notice by vote of a majority of such Fund's outstanding shares, by vote
of a majority of the Board of Trustees, or by the Adviser on 60-days' written
notice. The Management Agreement automatically terminates in the event of its
assignment as defined in the 1940 Act. The Management Agreement provides that
in the absence of willful misfeasance, bad faith, or gross negligence on the
part of the Adviser, or of reckless disregard of its obligations thereunder,
the Adviser is not liable for any action or failure to act in accordance with
its duties.
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close
of trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Fund does not price securities on
weekends or United States national holidays, the net asset value of a Fund's
foreign assets may be significantly affected on days when the investor has no
access to the Fund. The net asset value per share of a Fund is determined by
adding the values of all securities and other assets of the Fund, subtracting
liabilities, and dividing by the total number of outstanding shares of the
Fund. Assets and liabilities are determined in accordance with generally
accepted accounting principles and applicable rules and regulations of the
Securities and Exchange Commission. The total liability allocated to a class,
plus that class's distribution fee and any other expenses allocated solely to
that class, are deducted from the proportionate interest of such class in the
assets of the Fund, and the resulting amount of each is divided by the number
of shares of that class outstanding to produce the net asset value per share.
A security that is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world,
the calculation of net asset value may not take place for any Fund which
invests in foreign securities contemporaneously with the determination of the
prices of the majority of the portfolio securities of such Fund. All assets and
liabilities initially expressed in foreign currency values will be converted
into United States dollar values at the mean between the bid and ask quotations
of such currencies against United States dollars as last quoted by any
recognized dealer. If an event were to occur after the value of an investment
was so established but before the net asset value per share was determined,
which was likely to materially change the net asset value, then the instrument
would be valued using fair value considerations by the Trustees or their
delegates. If at any time a Fund has investments where market quotations are
not readily available, such investments are valued at the fair value thereof as
determined in good faith by the Trustees although the actual calculations may
be made by persons acting pursuant to the direction of the Trustees.
15
<PAGE>
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent
investment is $25. However, both the minimum initial and subsequent investment
amounts are $25 for investments pursuant to the "Investo-Matic" plan, a bank
draft investing program administered by Distributor, or pursuant to the
Systematic Exchange privilege or for an individual retirement account (IRA). In
addition, there are no subsequent investment minimum amounts in connection with
the reinvestment of dividend or capital gain distributions. Completed
applications for the purchase of shares should be mailed to: Phoenix-Engemann
Funds, c/o State Street Bank and Trust Company, P.O. Box 8301, Boston, MA
02266-8301.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased from investment dealers at a price equal to their
net asset value per share, plus a sales charge which, at the election of the
purchaser, may be imposed either (i) at the time of the purchase (the "initial
sales charge alternative") or (ii) on a contingent deferred basis (the
"deferred sales charge alternative"). Orders received by dealers prior to the
close of trading on the New York Stock Exchange are confirmed at the offering
price effective at that time, provided the order is received by the Authorized
Agent prior to its close of business.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is more beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Funds, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the Trust,
the accumulated continuing distribution and services fees and contingent
deferred sales charges on Class B or C Shares would be less than the initial
sales charge and accumulated distribution and services fees on Class A Shares
purchased at the same time.
Dividends paid by the Funds, if any, with respect to each class of shares
will be calculated in the same manner at the same time on the same day, except
that fees such as higher distribution and services fees and any incremental
transfer agency costs relating to each class of shares will be borne
exclusively by that class. See "Dividends, Distributions and Taxes."
Class A Shares
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed. Class
A Shares are subject to an ongoing services fee at an annual rate of 0.25% of
the Trust's aggregate average daily net assets attributable to the Class A
Shares. In addition, certain purchases of Class A Shares qualify for reduced
initial sales charges. See the Funds' current Prospectus for additional
information.
Class B Shares
Class B Shares do not incur a sales charge when they are purchased, but
they are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions. Class B Shares purchased prior to January 20, 1998 are
subject to the sales charge schedule as it existed prior to that date. See the
Funds' current Prospectus for additional information.
Class B Shares are subject to ongoing distribution and services fees at an
annual rate of up to 1.00% of the Fund's aggregate average daily net assets
attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment
is made. The higher ongoing distribution and services fees paid by Class B
Shares will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class A
Shares. Class B Shares will automatically convert to Class A Shares eight years
after the end of the calendar month in which the shareholder's order to
purchase was accepted (six years for Class B Shares purchased prior to January
20, 1998), in the circumstances and subject to the qualifications described in
the Funds' Prospectus. The purpose of the conversion feature is to relieve the
holders of the Class B Shares that have been outstanding for a period of time
sufficient for the adviser and the Distributor to have been compensated for
distribution expenses related to the Class B Shares from most of the burden of
such distribution related expenses.
Class B Shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution and services fees.
Such conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge.
For purposes of conversion to Class A, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares
in a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub-account) convert to Class A, an equal pro rata
portion of the Class B Share dividends in the sub-account will also convert to
Class A Shares.
Class C Shares
Class C Shares are purchased without an initial sales charge but are
subject to a deferred sales charge if redeemed within one year of purchase.
Class C Shares of the Growth Fund, Balanced Return Fund and Nifty Fifty Fund
purchased prior to January
16
<PAGE>
20, 1998 are not subject to the deferred sales charge. The deferred sales
charge may be waived in connection with certain qualifying redemptions. Shares
issued in conjunction with the automatic reinvestment of income distributions
and capital gain distributions are not subject to any sales charges. Class C
Shares are subject to ongoing distribution and services fees of up to 1.00% of
the Funds' aggregate average daily net assets attributable to Class C Shares.
See the Funds' current Prospectus for more information.
Class A Shares--Reduced Initial Sales Charges
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
Qualified Purchasers. If you fall within any one of the following
categories, you will not have to pay a sales charge on your purchase of Class A
Shares: (1) any trustee, director or officer of the Phoenix Funds or any other
open-end management investment company advised, subadvised or distributed by the
Adviser, Distributor or any corporate affiliate of either or both the Adviser
and Distributor (an "Affiliated Phoenix Fund"); (2) any director or officer, or
any full-time employee or sales representative (for at least 90 days), of the
Adviser or Distributor; (3) registered representatives and employees of
securities dealers with whom Distributor has sales agreements; (4) any qualified
retirement plan exclusively for persons described above; (5) any officer,
director or employee of a corporate affiliate of the Adviser or Distributor; (6)
any spouse, child, parent, grandparent, brother or sister of any person named in
(1), (2), (3) or (5) above; (7) employee benefit plans for employees of the
Adviser, Distributor and/or their corporate affiliates; (8) any employee or
agent who retires from Phoenix Home Life, Distributor and/or their corporate
affiliates; (9) any account held in the name of a qualified employee benefit
plan, endowment fund or foundation if, on the date of the initial investment,
the plan, fund or foundation has assets of $10,000,000 or more or at least 100
eligible employees; (10) any person with a direct rollover transfer of shares
from an established Phoenix-Engemann Fund or other Phoenix Fund qualified plan;
(11) any Phoenix Home Life separate account which funds group annuity contracts
offered to qualified employee benefit plans; (12) any state, county, city,
department, authority or similar agency prohibited by law from paying a sales
charge; (13) any fully matriculated student in any U.S. service academy; (14)
any unallocated account held by a third party administrator, registered
investment adviser, trust company, or bank trust department which exercises
discretionary authority and holds the account in a fiduciary, agency, custodial
or similar capacity, if in the aggregate such accounts held by such entity equal
or exceed $1,000,000; (15) any person who is investing redemption proceeds from
investment companies other than the Phoenix Funds if, in connection with the
purchases or redemption of the redeemed shares, the investor paid a prior sales
charge provided such investor supplies verification that the redemption occurred
within 90 days of the Phoenix-Engemann Fund purchase and that a sales charge was
paid; (16) any deferred compensation plan established for the benefit of any
Phoenix-Engemann Fund or other Affiliated Phoenix Fund trustee or director;
provided that sales to persons listed in (1) through (15) above are made upon
the written assurance of the purchaser that the purchase is made for investment
purposes and that the shares so acquired will not be resold except to the Trust;
(17) purchasers of Class A Shares bought through investment advisors (including
President's Circle clients of REA) and financial planners who charge an
advisory, consulting or other fee for their services and buy shares for their
own accounts or the accounts of their clients; (18) retirement plans and
deferred compensation plans and trusts used to fund those plans (including, for
example, plans qualified or created under sections 401(a), 403(b) or 457 of the
Internal Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker or agent or
other financial intermediary that has made special arrangements with the
Distributor for such purchases; or (19) clients of investment advisors or
financial planners who buy shares for their own accounts but only if their
accounts are linked to a master account of their investment advisor or financial
planner on the books and records of the broker, agent or financial intermediary
with which the Distributor has made such special arrangements (each of the
investors described in (17) through (19) may be charged a fee by the broker,
agent or financial intermediary for purchasing shares). Class A shareholders who
made their initial investment prior to January 20, 1998 and qualified to
purchase shares without a sales charge, will not have to pay a sales charge on
subsequent purchases of Class A Shares.
Combination Purchase Privilege. Your purchase of any class of shares of the
Funds or any other Affiliated Phoenix Fund (other than Phoenix Money Market Fund
Series Class A Shares), if made at the same time by the same "person," will be
added together to determine whether the combined sum entitles you to an
immediate reduction in sales charges. A "person" is defined in this and the
following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 403(b) plans
for the same employer; (d) multiple accounts (up to 200) under a qualified
employee benefit plan or administered by a third party administrator; or (e)
trust companies, bank trust departments, registered investment advisers, and
similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority and
which are held in a fiduciary, agency, custodial or similar capacity, provided
all shares are held of record in the name, or nominee name, of the entity
placing the order.
An "Affiliated Phoenix Fund" means any other mutual fund advised,
subadvised or distributed by the Adviser or Distributor or any corporate
affiliate of either or both the Adviser and Distributor provided such other
mutual fund extends reciprocal privileges to shareholders of the Phoenix Funds.
17
<PAGE>
Letter of Intent. If you sign a Letter of Intent, your purchase of any
class of shares of the Funds or any other Affiliated Phoenix Fund (other than
Phoenix Money Market Fund Series Class A Shares), if made by the same person
within a thirteen month period, will be added together to determine whether you
are entitled to an immediate reduction in sales charges. Sales charges are
reduced based on the overall amount you indicate that you will buy under the
Letter of Intent. The Letter of Intent is a mutually non-binding arrangement
between you and the Distributor. Since the Distributor doesn't know whether you
will ultimately fulfill the Letter of Intent, shares worth 5% of the amount of
each purchase will be set aside until you fulfill the Letter of Intent. When
you buy enough shares to fulfill the Letter of Intent, these shares will no
longer be restricted. If, on the other hand, you do not satisfy the Letter of
Intent, or otherwise wish to sell any restricted shares, you will be given the
choice of either buying enough shares to fulfill the Letter of Intent or paying
the difference between any sales charge you previously paid and the otherwise
applicable sales charge based on the intended aggregate purchases described in
the Letter of Intent. You will be given 20 days to make this decision. If you
do not exercise either election, the Distributor will automatically redeem the
number of your restricted shares needed to make up the deficiency in sales
charges received. The Distributor will redeem restricted Class A or M Shares
before Class C or B Shares, respectively. Oldest shares will be redeemed before
selling newer shares. Any remaining shares will then be deposited to your
account.
Right of Accumulation. Your purchase of any class of shares of the Funds
or any other Affiliated Phoenix Fund, if made over time by the same person may
be added together to determine whether the combined sum entitles you to a
prospective reduction in sales charges. You must provide certain account
information to the Distributor to exercise this right.
Associations. Certain groups or associations may be treated as a "person"
and qualify for reduced Class A Share sales charges. The group or association
must: (1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge;
(3) work through an investment dealer; or (4) not be a group whose sole reason
for existing is to consist of members who are credit card holders of a
particular company, policyholders of an insurance company, customers of a bank
or a broker-dealer or clients of an investment adviser.
Class B and C Shares--Waiver of Sales Charges
The CDSC is waived on the redemption (sale) of Class B and C Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section
72(m)(7); (c) as a mandatory distribution upon reaching age 701/2 under any
retirement plan qualified under Code Sections 401, 408 or 403(b) or resulting
from the tax-free return of an excess contribution to an IRA; (d) by 401(k)
plans using an approved participant tracking system for participant hardships,
death, disability or normal retirement, and loans which are subsequently
repaid; (e) based on the exercise of exchange privileges among Class B and C
Shares of this or any other Affiliated Phoenix Fund; (f) based on any direct
rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan into an Affiliated Phoenix Fund IRA by participants terminating
from the qualified plan; and (g) based on the systematic withdrawal program
(Class B Shares only). If, as described in condition (a) above, an account is
transferred to an account registered in the name of a deceased's estate, the
CDSC will be waived on any redemption from the estate account occurring within
one year of the death. If the Class B or C Shares are not redeemed within one
year of the death, they will remain subject to the applicable CDSC.
Conversion Feature--Class B Shares
Class B Shares will automatically convert to Class A Shares of the same
Fund eight years after they are purchased. Conversion will be on the basis of
the then prevailing net asset value of Class A and B Shares. There is not sales
load, fee or other charge for this feature. Class B Shares acquired through
dividend or distribution reinvestments will be converted into Class A Shares at
the same time that other Class B Shares are converted based on the proportion
that the reinvested shares bear to purchased Class B Shares. The conversion
feature is subject to the continuing availability of an opinion of counsel or a
ruling of the Internal Revenue Service that the assessment of the higher
distribution fees and associated costs with respect to Class B Shares does not
result in any dividends or distributions constituting "preferential dividends"
under the Code, and that the conversion of shares does not constitute a taxable
event under federal income tax law. If the conversion feature is suspended,
Class B Shares would continue to be subject to the higher distribution fee for
an indefinite period. Even if the Funds were unable to obtain such assurances,
it might continue to make distributions if doing so would assist in complying
with its general practice of distributing sufficient income to reduce or
eliminate federal taxes otherwise payable by the Funds.
INVESTOR ACCOUNT SERVICES
The Funds offer accumulation plans, withdrawal plans and reinvestment and
exchange privileges. Certain privileges may not be available in connection with
all classes. In most cases, changes to account services may be accomplished
over the phone. Inquiries regarding policies and procedures relating to
shareholder account services should be directed to Shareholder Services at
(800) 243-1574.
Exchanges. Under certain circumstances, shares of any Phoenix-Engemann
Fund may be exchanged for shares of the same Class of another Phoenix-Engemann
Fund or any other Affiliated Phoenix Fund on the basis of the relative net
asset values per
18
<PAGE>
share at the time of the exchange. Exchanges are subject to the minimum initial
investment requirement of the designated Fund, except if made in connection
with the Systematic Exchange privilege. Shareholders may exchange shares held
in book-entry form for an equivalent number (value) of the same class of shares
of any other Phoenix-Engemann Fund or any other Affiliated Phoenix Fund, if
currently offered. On exchanges with share classes that carry a contingent
deferred sales charge, the CDSC schedule of the original shares purchased
continues to apply. The exchange of shares is treated as a sale and purchase
for federal income tax purposes (see also "Dividends, Distributions and
Taxes").
Systematic Exchanges. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Phoenix-Engemann Fund or any other
Affiliated Phoenix Fund automatically on a monthly, quarterly, semi-annual or
annual basis or may cancel this privilege at any time. If you maintain an
account balance of at least $5,000, or $2,000 for tax qualified retirement
benefit plans (calculated on the basis of the net asset value of the shares
held in a single account), you may direct that shares be automatically
exchanged at predetermined intervals for shares of the same class of another
Phoenix-Engemann Fund or any other Affiliated Phoenix Fund. This requirement
does not apply to Phoenix "Self Security" program participants. Systematic
exchanges will be executed upon the close of business on the 10th day of each
month or the next succeeding business day. Systematic exchange forms are
available from the Distributor. Exchanges will be based upon each Fund's net
asset value per share next computed after the close of business on the 10th day
of each month (or next succeeding business day), without sales charge. On Class
B and C Share exchanges, the CDSC schedule of the original shares purchased
continues to apply.
Dividend Reinvestment Across Accounts. If you maintain an account balance
of at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct that any dividends and distributions paid with respect
to shares in that account be automatically reinvested in a single account of
one of the other Phoenix-Engemann Fund or any other Affiliated Phoenix Fund at
net asset value. You should obtain a current prospectus and consider the
objectives and policies of each Fund carefully before directing dividends and
distributions to another Fund. Reinvestment election forms and prospectuses are
available from Equity Planning. Distributions may also be mailed to a second
payee and/or address. Requests for directing distributions to an alternate
payee must be made in writing with a signature guarantee of the registered
owner(s). To be effective with respect to a particular dividend or
distribution, notification of the new distribution option must be received by
the Transfer Agent at least three days prior to the record date of such
dividend or distribution. If all shares in your account are repurchased or
redeemed or transferred between the record date and the payment date of a
dividend or distribution, you will receive cash for the dividend or
distribution regardless of the distribution option selected.
Systematic Withdrawal Program. The Systematic Withdrawal Program allows
you to periodically redeem a portion of your account on a predetermined
monthly, quarterly, semiannual or annual basis. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the month
at the closing net asset value on the date of redemption. The Systematic
Withdrawal Program also provides for redemptions to be tendered on or about the
10th, 15th or 25th of the month with proceeds to be directed through Automated
Clearing House (ACH) to your bank account. In addition to the limitations
stated below, withdrawals may not be less than $25 and minimum account balance
requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Fund worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. Participants
in the Program redeeming Class C Shares will be subject to any applicable
contingent deferred sales charge. The purchase of shares while participating in
the withdrawal program will ordinarily be disadvantageous to the Class A Shares
investor since a sales charge will be paid by the investor on the purchase of
Class A Shares at the same time as other shares are being redeemed. For this
reason, investors in Class A Shares may not participate in an automatic
investment program while participating in the Systematic Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any
applicable contingent deferred sales charge on all shares redeemed.
Accordingly, the purchase of Class B Shares will generally not be suitable for
an investor who anticipates withdrawing sums in excess of the above limits
shortly after purchase.
HOW TO REDEEM SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the Fund to dispose of its
19
<PAGE>
securities or to determine fairly the value of its net assets or during any
other period permitted by order of the Securities and Exchange Commission for
the protection of investors. Furthermore, the Transfer Agent will not mail
redemption proceeds until checks received for shares purchased have cleared,
which may take up to 15 days or more. See the Funds' current Prospectus for
further information. Redemptions by Class B and C shareholders will be subject
to the applicable deferred sales charge, if any.
The Trust has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when
an authorized broker or, if applicable, a broker's authorized designee, accepts
the order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
Redemption of Small Accounts
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the
giving of not less than 60 days written notice to the shareholder mailed to the
address of record. During the 30 day period the shareholder has the right to
add to the account to bring its value to $200 or more.
Telephone Redemptions
Shareholders may redeem up to $50,000 worth of their shares by telephone.
See the Funds' current Prospectus for additional information.
Account Reinstatement Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinvestment of their investment at net
asset value. See the Funds' current Prospectus for more information and
conditions attached to this privilege.
Redemption in Kind
To the extent consistent with state and federal law, the Funds may make
payment of the redemption price in cash or in kind. However, the Funds have
elected to pay in cash all requests for redemption by any shareholder of
record, limited in respect to each shareholder during any 90-day period to the
lesser of $250,000 or 1% of the net asset value of the Fund at the beginning of
such period. This election has been made pursuant to Rule 18f-1 under the
Investment Company Act of 1940 and is irrevocable while the Rule is in effect
unless the Securities and Exchange Commission, by order, permits the withdrawal
thereof. In case of a redemption in kind, securities delivered in payment for
shares would be readily marketable and valued at the same value assigned to
them in computing the net asset value per share of the Fund. A shareholder
receiving such securities would incur brokerage costs when selling the
securities.
TAX SHELTERED RETIREMENT PLANS
Shares of the Funds and other Phoenix Funds may be offered in connection
with the following qualified prototype retirement plans: IRA, Rollover IRA,
SEP-IRA, SIMPLE IRA, Roth IRA, 401(k) Profit Sharing and Money Purchase Pension
Plans and 403(b) Retirement Plans. REA and its affiliates may provide
administrative services to these plans and to their participants, in addition
to the services that REA and its affiliates provide to the Phoenix-Engemann
Funds and other Affiliated Phoenix Funds, and may receive compensation
therefor. For information on the terms and conditions applicable to employee
participation in such plans, including information on applicable plan
administrative charges and expenses, prospective investors should consult the
plan documentation and employee enrollment information which is available from
participating employers. Write or call Equity Planning at (800) 243-4361 for
information about the plans.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
Each Fund intends to elect to be treated as a regulated investment company
("RIC") and qualify annually as such under certain provision of the Internal
Revenue Code (the "Code"). Under such provisions, each Fund will not be subject
to federal income tax on such part of its ordinary income and net realized
capital gains which it distributes to shareholders provided it meets certain
distribution requirements. To qualify for treatment as a regulated investment
company, each Fund must, among other things: (a) derive in each taxable year at
least 90% of its gross income from dividends, interest and gains from the sale
or other disposition of securities; and (b) meet certain diversification
requirements imposed under the Code at the end of each quarter of the taxable
year.
The Code imposes a 4% nondeductible excise tax on a regulated investment
company if it does not distribute to its shareholders during the calendar year
an amount equal to 98% of the Fund's net ordinary income, with certain
adjustments, for such calendar year, plus 98% of each Fund' net capital gains
for the 12-month period ending on October 31 of such calendar year. In
addition, an amount equal to any undistributed investment company taxable
income or capital gain net income from the previous calendar year must also be
distributed to avoid the excise tax. The excise tax is imposed on the amount by
which the regulated investment company does not meet the foregoing distribution
requirements. If each Fund has taxable income that would be subject to the
excise tax, each Fund intends to distribute such income so as to avoid payment
of the excise tax.
20
<PAGE>
Under another provision of the Code, any dividend declared by each Fund to
shareholders of record in October, November and December of any year will be
deemed to have been received by, and will be taxable to shareholders as of
December 31 of such year, provided that the dividend is actually paid by each
Fund before February 1, of the following year.
The Funds' policy is to distribute to its shareholders substantially all
investment company taxable income as defined in the Code and any net realized
capital gains for each year and consistent therewith to meet the distribution
requirements of Part I of subchapter M of the Code. The Funds intend to meet
the other requirements of Part I of subchapter M, including the requirements
with respect to diversification of assets and sources of income, so that the
Funds will pay no taxes on net investment income and net realized capital gains
distributed to shareholders.
Under certain circumstances, the sales charge incurred in acquiring shares
of the Funds may not be taken into account in determining the gain or loss on
the disposition of those shares. This rule applies where shares of the Funds
are disposed of within 90 days after the date on which they were acquired and
new shares of a regulated investment company are acquired without a sales
charge or at a reduced sales charge. In that case, the gain or loss realized on
the disposition will be determined by excluding from the tax basis of the
shares disposed of all or a portion of the sales charge incurred in acquiring
those shares. This exclusion applies to the extent that the otherwise
applicable sales charge with respect to the newly acquired shares is reduced as
a result of the shareholder having incurred a sales charge initially. The
portion of the sales charge affected by this rule will be treated as a sales
charge paid for the new shares.
Distributions by the Funds reduce the net asset value of the Funds'
shares. Should a distribution reduce the net asset value of a share below a
shareholder's cost for the shares, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution by a Fund. The
price of shares purchased at that time may include the amount of the
forthcoming distribution, but the distribution generally would be taxable to
them.
Transactions in options on stock indices are subject to the Code rules of
section 1256. Pursuant to these rules, such options, whether sold by the Funds
during a taxable year or held by the Funds at the close of its taxable year,
will be treated as if sold for their market value, with 40% of any resulting
gain or loss treated as short-term and 60% long-term.
A high portfolio turnover rate may result in the realization of larger
amounts of short-term gains, which are taxable to shareholders as ordinary
income.
Important Notice Regarding Taxpayer IRS Certification
Pursuant to IRS Regulations, the Funds may be required to withhold 31% of
all reportable payments including any taxable dividends, capital gains
distributions or share redemption proceeds, for an account which does not have
a taxpayer identification number or social security number and certain required
certifications. The Funds reserve the right to refuse to open an account for
any person failing to provide a taxpayer identification number along with the
required certifications.
The Funds will furnish shareholders, within 31 days after the end of the
calendar year, with information which is required by the Internal Revenue
Service for preparing income tax returns. Investors are urged to consult their
attorney or tax adviser regarding specific questions as to Federal, foreign,
state or local taxes.
THE DISTRIBUTOR
Pursuant to a Distribution Agreement with the Funds, Phoenix Equity
Planning Corporation (the "Distributor"), a wholly-owned subsidiary of Phoenix
Investment Partners, Ltd. and an affiliate of the Adviser, serves as
distributor for the Funds. As such, the Distributor conducts a continuous
offering pursuant to a "best efforts" arrangement requiring the Distributor to
take and pay for only such securities as may be sold to the public. The address
of the Distributor is 100 Bright Meadow Blvd., P.O. Box 2200, Enfield,
Connecticut 06083-2200.
The Distribution Agreement may be terminated at any time on not more than
60 days written notice, without payment of a penalty, by the Distributor, by
vote of a majority of the outstanding voting securities of the Funds, or by
vote of a majority of the Funds' Trustees who are not "interested persons" of
the Funds and who have no direct or indirect financial interest in the
operation of the Distribution Plan or in any related agreements. The
Distribution Agreement will terminate automatically in the event of its
assignment.
Dealers with whom the Distributor has entered into sales agreements
receive sales charges in accordance with the commission table set forth in the
Prospectus. The Distributor may from time to time pay, from its own resources
or pursuant to the Plan of Distribution described below, a bonus or other
incentive to dealers (other than the Distributor) which employ a registered
representative who sells a minimum dollar amount of the shares of the Funds
during a specific period of time. Such bonus or other incentive may take the
form of payment for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives and members of their
families to places within or without the United States or other bonuses such as
21
<PAGE>
gift certificates or the cash equivalent of such bonuses. The Distributor may,
from time to time, reallow the entire portion of the sales charge which it
normally retains to individual selling dealers. However, such additional
reallowance generally will be made only when the selling dealer commits to
substantial marketing support such as internal wholesaling through dedicated
personnel, internal communications and mass mailings.
Pasadena Fund Services, Inc. ("PFSI") served as the principal underwriter
for the Funds prior to September 3, 1997. For the fiscal years ended December
31, 1996, 1997 and 1998, purchasers of shares of the Funds paid aggregate sales
charges of $1,370,002, $2,038,126 and $2,334,408, respectively, of which PFSI
and/or the Distributor received net commissions of $623,002, $897,831 and
$707,783, respectively, for its services, the balance being paid to dealers.
For the fiscal year ended December 31, 1998, the Distributor received net
commissions of $101,674 for Class A Shares and deferred sales charges of
$606,109 for Class B and Class C Shares.
Dealer Concessions
Dealers with whom the Distributor has entered into sales agreements
receive a discount or commission as set forth below.
<TABLE>
<CAPTION>
Dealer Discount
Sales Charge Sales Charge or Agency Fee
Amount of Transaction as Percentage as Percentage as Percentage of
at Offering Price of Offering Price of Amount Invested Offering Price
- ------------------------------- ------------------- -------------------- -----------------
<S> <C> <C> <C>
Less than $50,000 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. Your broker, dealer or investment adviser
may also charge you additional commissions or fees for their services in
selling shares to you provided they notify the Distributor of their intention
to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of
the Funds and/or for providing other shareholder services. Depending on the
nature of the services, these fees may be paid either from the Funds through
distribution fees, service fees or transfer agent fees or in some cases, the
Distributor may pay certain fees from its own profits and resources. From its
own profits and resources, the Distributor does intend to: (a) sponsor training
and educational meetings and provide additional compensation to qualifying
dealers in the form of trips, merchandise or expense reimbursements; (b) from
time to time pay special incentive and retention fees to qualified wholesalers,
registered financial institutions and third party marketers; (c) pay
broker/dealers an amount equal to 1% of the first $3 million of Class A Share
purchases by an account held in the name of a qualified employee benefit plan
with at least 100 eligible employees, 0.50% on the next $3 million, plus 0.25%
on the amount in excess of $6 million; and (d) excluding purchases as described
in (c) above, pay broker/dealers an amount equal to 1% of the amount of Class A
Shares sold above $1 million but under $3 million, 0.50% on the next $3
million, plus 0.25% on the amount in excess of $6 million. If part or all of
such investment as described in (c) and (d) above, including investments by
qualified employee benefit plans, is subsequently redeemed within one year of
the investment date, the broker-dealer will refund to the Distributor such
amounts paid with respect to the investment. In addition, the Distributor may
pay the entire applicable sales charge on purchases of Class A Shares to
selected dealers and agents. Any dealer who receives more than 90% of a sales
charge may be deemed to be an "underwriter" under the Securities Act of 1933.
Administration Agreement
Phoenix Equity Planning Corporation ("PEPCO") has entered into an
Administration Agreement with the Trust on behalf of each series of the Trust
including each Fund. Under the Administration Agreement, PEPCO, in its capacity
as Administrator, (a) furnishes each Fund with various administrative and
shareholder services including, but not limited to, (i) preparing and
distributing all shareholder reports, (ii) preparing all tax returns and other
regulatory filings, (iii) Blue Sky compliance services, and (iv) expenses
related to fund accounting and net asset value determination, and (b) pays for
all of the normal operating fees and expenses of a Fund, except for the fees
and expenses related to the services to be provided by the Adviser under the
Investment Management Agreement, certain professional, fiduciary and audit
expenses, including the legal expenses of the independent Trustees, the
independent auditing expenses and expenses related to compensation of the
independent Trustees and the services fees paid under the Services Agreements,
the distribution fees paid under the Rule 12b-1 distribution plans, brokerage
and commission expenses and certain de minimis fees of its independent
auditors, legal counsel and trustees. See "Plans of Distribution."
The Administration Agreement dated as of September 3, 1997, was approved,
with respect to each Fund, by the Board of Trustees of the Trust, including a
majority of the Trustees who are not parties to the Administration Agreement,
and continues in effect until terminated on behalf of any Fund by either party
on 60-days' written notice.
22
<PAGE>
As compensation for its services and obligations under the Administration
Agreement, the Administrator is paid a monthly fee at an annual rate equal to
0.60% of each Funds' average daily net assets up to $50 million, which rate is
reduced at higher levels of net assets. For services to the Trust during the
fiscal years ended December 31, 1996, 1997 and 1998, pursuant to the then-
effective Administration Agreement with the former adviser (the "Former
Adviser") (Roger Engemann Management Co., Inc.) and the current Distributor
(PEPCO), the Trust paid administrative fees (approximately) of $5,517,679,
$5,458,000, and $5,305,000, respectively. Of these totals, the Former Adviser
and/or PEPCO received fees from each Fund as follows:
<TABLE>
<CAPTION>
Fund 1996 1997 1998
- ---------------------- --------------- ------------- -------------
<S> <C> <C> <C>
Growth Fund $3,453,000 $3,078,000 $2,420,000
Nifty Fifty Fund $1,485,000 $1,612,000 $1,655,000
Balanced Return Fund $ 557,000 $ 400,000 $ 445,000
Global Growth Fund $ 12,352* $ 78,000 $ 131,000
Small & Mid-Cap Fund $ 10,327** $ 173,000 $ 434,000
Value 25 Fund N/A $ 117,000 $ 219,000
</TABLE>
* Former Adviser was entitled to $40,856; however, the Former Adviser waived
$28,504 of such fees for 1996.
** Former Adviser was entitled to $18,772; however, the Former Adviser waived
$8,445 of such fees for 1996.
PEPCO has voluntarily agreed to waive, when necessary, a portion of its
administration fee so that Other Operating Expenses (operating expenses
excluding management fees and 12b-1 fees) do not exceed the following limits.
<TABLE>
<CAPTION>
Fund 1st $50 million next $450 million next $125 million over $625 million
- ------------------------ ----------------- ------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Growth 0.99% 0.50% 0.30% 0.30%
Nifty Fifty 0.99% 0.50% 0.30% 0.30%
Balanced Return 1.09% 0.60% 0.40% 0.40%
Global Growth 0.60% 0.50% 0.40% 0.40%
Small & Mid-Cap Growth 0.60% 0.50% 0.40% 0.40%
Value 25 0.60% 0.50% 0.40% 0.40%
</TABLE>
DISTRIBUTION PLANS
The Trust has adopted separate distribution plans under Rule 12b-1 of the
1940 Act for Class B and Class C of each series of the Trust (the "Class B
Plan," the "Class C Plan," and collectively the "12b-1 Plans"). The 12b-1 Plans
permit the Funds to reimburse the Distributor for expenses incurred in
connection with activities intended to promote the sale of shares of each class
of shares of the Funds.
Pursuant to the 12b-1 Plans, the Funds pay the Distributor 0.75% of the
average daily net assets of the Funds' Class B and Class C Shares,
respectively. Expenditures under the 12b-1 Plans shall consist of: (i)
commissions to sales personnel for selling shares of the Funds (including
underwriting fees and financing expenses incurred in connection with the sale
of Class B Shares); (ii) compensation, sales incentives and payments to sales,
marketing and service personnel; (iii) payments to broker-dealers and other
financial institutions which have entered into agreements with the Distributor
in the form of the Dealer Agreement for Phoenix Funds for services rendered in
connection with the sale and distribution of shares of the Funds; (iv) payment
of expenses incurred in sales and promotional activities, including advertising
expenditures related to the Funds; (v) the costs of preparing and distributing
promotional materials; (vi) the cost of printing the Funds' Prospectuses and
Statements of Additional Information for distribution to potential investors;
and (vii) such other similar services that the Trustees of the Funds determine
are reasonably calculated to result in the sale of shares of the Funds.
From its own resources or pursuant to the Plan, and subject to the
dealers' prior approval, the Distributor may provide additional compensation to
registered representatives of dealers in the form of travel expenses, meals,
and lodging associated with training and educational meetings sponsored by the
Distributor. The Distributor may also provide gifts amounting in value to less
than $100, and occasional meals or entertainment, to registered representatives
of dealers. Any such travel expenses, meals, lodging, gifts or entertainment
paid will not be preconditioned upon the registered representatives' or
dealers' achievement of a sales target. The Distributor may, from time to time,
reallow the entire portion of the sales charge on Class A shares which it
normally retains to individual selling dealers. However, such additional
reallowance generally will be made only when the selling dealer commits to
substantial marketing support such as internal wholesaling through dedicated
personnel, internal communications and mass mailings.
In order to receive payments under the 12b-1 Plans and/or Services
Agreements (described below), participants must meet such qualifications to be
established in the sole discretion of the Distributor, such as services to the
Funds' shareholders; or services providing the Funds with more efficient
methods of offering shares to coherent groups of clients, members or prospects
of a participant; or services permitting bulking of purchases or sales, or
transmission of such purchases or sales by computerized tape or other
electronic equipment; or other processing. If the 12b-1 Plans are terminated in
accordance with their terms, the obligations
23
<PAGE>
of the Funds to make payments to the Distributor pursuant to the 12b-1 Plans
will cease and the Funds will not be required to make any payments past the
date on which each 12b-1 Plan terminates.
On a quarterly basis, the Funds' Trustees review a report on expenditures
under the 12b-1 Plans and the purposes for which expenditures were made. The
Trustees conduct an additional, more extensive review annually in determining
whether the 12b-1 Plans will be continued. By its terms, continuation of the
12b-1 Plans from year to year is contingent on annual approval by a majority of
the Funds' Trustees and by a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the 12b-1 Plans or any related
agreements (the "12b-1 Plan Trustees"). The 12b-1 Plans provide that they may
not be amended to increase materially the costs which the Funds may bear
pursuant to the 12b-1 Plans without approval of the shareholders of the Funds
and that other material amendments to the 12b-1 Plans must be approved by a
majority of the 12b-1 Plan Trustees by vote cast in person at a meeting called
for the purpose of considering such amendments. The 12b-1 Plans further
provides that while it is in effect, the selection and nomination of Trustees
who are not "interested persons" shall be committed to the discretion of the
Trustees who are not "interested persons." The 12b-1 Plans may be terminated at
any time by vote of a majority of the 12b-1 Plan Trustees or a majority of the
outstanding shares of the Funds.
The National Association of Securities Dealers, Inc. (the "NASD") regards
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend the Plans.
For the fiscal year ended December 31, 1998, the Funds paid Rule 12b-1
distribution fees in the amount of $3,898,100, of which the principal
underwriter received $1,470,657. W.S. Griffith & Co., Inc., an affiliate,
received $16,306, and unaffiliated broker-dealers reeived $2,411,137.
Distribution fees were used by the Distributor to compensate dealers for the
sale of the Fund's Class B and Class C Shares.
Services Agreements
Under the Services Agreement, each Fund will pay a continuing service fee
to service providers, in an amount, computed and prorated on a daily basis,
equal to 0.25% per annum of the Fund's average daily net assets, which will
include the Adviser or Phoenix Equity Planning Corporation (the "Distributor"),
for shareholder accounts not serviced by other service providers. (Prior to
September 3, 1997, Pasadena Fund Services, Inc. (the "Former Distributor")
served as distributor of the Funds' shares.) Such amounts are compensation for
providing certain services to clients owning shares of such Fund, including
personal services such as processing purchase and redemption transactions,
assisting in change of address requests and similar administrative details, and
providing other information and assistance with respect to such Fund, including
responding to shareholder inquiries.
For the fiscal year ended December 31, 1998, the Funds paid service fees
in the amount of $665,554, of which the principal underwriter received
$446,872, and unaffiliated broker-dealers received $218,682.
MANAGEMENT OF THE TRUST
The Trustees of the Trust are responsible for the overall supervision of
the Funds and perform the various duties imposed on Trustees by the 1940 Act
and Massachusetts business trust law.
Trustees And Officers
The Trustees and Officers of the Trust and their business affiliations for
the past five years are set forth below.
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- ---------------------------- ----------------------- ------------------------------------------------------------
<S> <C> <C>
Roger Engemann* (58) Chairman of the Chairman, President and Director of the Adviser since 1969.
600 North Rosemead Board, President and Chairman, President and Director, Pasadena Capital
Boulevard Trustee Corporation (1988-present) and Roger Engemann Management
Pasadena, California 91107 Co., Inc. (1985-present).
Malcolm Axon Chief Financial
600 North Rosemead Officer and Secretary
Boulevard
Pasadena, California 91107
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name, Address and Age With the Trust During the Past 5 Years
- ------------------------------- ---------------- --------------------------------------------------------------
<S> <C> <C>
Barry E. McKinley (63) Trustee Certified Public Accountant; head of B.E. McKinley &
201 South Lake Avenue Associates, an accounting firm, since its inception in 1971.
Suite 400
Pasadena, California 91101
Robert L. Peterson (61) Trustee Private investor. From 1988-1995, Regional Manager for
P.O. Box 80784 Commercial Real Estate Brokerage in the Pasadena office
San Marino, California 91118 of Jon Douglas Company, a real estate firm. Prior thereto he
was associated with the real estate brokerage firm of R.A.
Rowan & Co.
Richard C. Taylor (52) Trustee President of Richard Taylor Company, Inc., a food ingredients
2100 Huntington Drive, #9 broker, since 1987.
San Marino, California 91108
Angela Wong (47) Trustee Since 1986, Ms. Wong has been of counsel to the law firm of
11355 West Olympic Manatt, Phelps, Phillips & Kantor, specializing in employee
Boulevard benefits.
Los Angeles, California 90064
</TABLE>
* Indicates that the Trustee is an "interested person" of the Trust within the
meaning of the definition set forth in Section 2(a)(19) of the Investment
Company Act of 1940.
For services rendered to the Trust for the fiscal year ended December 31,
1999, the Trustees received an aggregate of $ . For services on the Board
of Trustees, each Trustee who is not an employee of the Adviser or any of its
affiliates 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 , 2000, the Trustees and Officers of the Trust, as a group, owned
less than 1% of the outstanding shares of the Nifty Fifty Fund and the Balanced
Return Fund. As of , 2000, the Trustees and Officers of the Trust, as a
group, owned % of the Growth Fund Class A Shares, % of the Global Growth
Fund Class A Shares, % of the Value 25 Fund Class A Shares, and % of the
Small & Mid-Cap Growth Fund Class A Shares.
Principal Shareholders
As of , 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 Growth Fund % % %
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6485
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Class C
--------- --------- --------
<S> <C> <C> <C>
Phoenix-Engemann Balanced Return Fund % % %
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6485
Phoenix-Engemann Nifty Fifty Fund % % %
Merrill Lynch, Pierce,
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Phoenix-Engemann Global Growth Fund
Merrill Lynch, Pierce,
Fenner & Smith, Inc.* % % %
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Pasadena National Trust %
Cust for IRA of
Roger Engemann
731 S. Madre Street
Pasadena, California 91107-5662
Union Bank of California %
FBO Barney Sofro
475 Sansome Street, 11th Floor
San Francisco, California 94111-
3103
Phoenix-Engemann Small & Mid-Cap Growth Fund
Merrill Lynch, Pierce, % % %
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Phoenix-Engemann Value 25 Fund
Pasadena National Trust %
Cust for IRA #1 of
Roger Engemann
731 S. Madre Street
Pasadena, California 91107-5662
Union Bank of California Cust %
FBO Moore Investment Partnership
PO Box 109
San Diego, California 92112-4103
Merrill Lynch, Pierce, % % %
Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Pasadena National Trust %
Cust for IRA #2 of
Roger Engemann
731 S. Madre Street
Pasadena, California 91107-5662
</TABLE>
*Record owner only for its individual customers. To the Trust's knowledge, no
customer beneficially owned 5% or more of the total outstanding shares of any
Class of any Fund.
26
<PAGE>
OTHER INFORMATION
Capital Stock
The Trust was established on May 28, 1986 as a Massachusetts business
trust. The capitalization of the Trust consists solely of an unlimited number
of shares of beneficial interest. The Trust currently offers shares in
different Funds and different classes of those Funds. Holders of shares of a
Fund have equal rights with regard to voting, redemptions, dividends,
distributions, and liquidations with respect to that Fund, except that Class B
and C Shares of any Fund, which bear higher distribution fees and certain
incrementally higher expenses associated with the deferred sales arrangement,
pay correspondingly lower dividends per share than Class A and M Shares of the
same Fund. Shareholders of all Funds vote on the election of Trustees. On
matters affecting an individual Fund (such as approval of an investment
advisory agreement or a change in fundamental investment policies) and on
matters affecting an individual class (such as approval of matters relating to
a Plan of Distribution for a particular class of shares), a separate vote of
that Fund or class is required. The Trustees will call a meeting when at least
10% of the outstanding shares so request in writing. If the Trustees fail to
call a meeting after being so notified, the Shareholders may call the meeting.
The Trustees will assist the Shareholders by identifying other shareholders or
mailing communications, as required under Section 16(c) of the Investment
Company Act of 1940.
Shares are fully paid, nonassessable, redeemable and fully transferable
when they are issued. Shares do not have cumulative voting rights, preemptive
rights or subscription rights. The assets received by the Funds for the issue
or sale of shares of each Fund, and any class thereof and all income, earnings,
profits and proceeds thereof, are allocated to such Fund, and class,
respectively, subject only to the rights of creditors, and constitute the
underlying assets of such Fund or class. The underlying assets of each Fund are
required to be segregated on the books of account, and are to be charged with
the expenses in respect to such Fund and with a share of the general expenses
of the Trust. Any general expenses of the Trust not readily identifiable as
belonging to particular Fund or class will be allocated by or under the
direction of the Trustees as they determine fair and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a business trust such as the Trust may be personally liable for
debts or claims against the Trust. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Trust and that every written agreement, undertaking or
obligation made or issued by the Trust shall contain a provision to that
effect. The Declaration of Trust provides for indemnification out of the Trust
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability, which is considered remote,
is limited to circumstances in which the Trust itself would be unable to meet
its obligations.
Independent Accountants
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts
02110, is the independent accountants for the Funds. PricewaterhouseCoopers LLP
audits the Funds' annual financial statements and expresses an opinion thereon.
Custodian and Transfer Agent
The custodian of the assets of the Funds (other than the Global Growth
Fund) is Union Bank of California, 475 Sansome Street, San Francisco,
California 94111. The custodian of the assets of the Global Growth Fund is
State Street Bank and Trust Company, P.O. Box 351, Boston, Massachusetts 02101.
Pursuant to a Transfer Agent and Service Agreement with the Trust, Equity
Planning serves as transfer agent for the Funds (the "Transfer Agent") for
which it is paid $14.95 plus certain out of pocket expenses for each designated
shareholder account. The Transfer Agent engages sub-agents to perform certain
shareholder servicing functions for which such agents are paid a fee by Equity
Planning.
Report to Shareholders
The fiscal year of the Trust ends on December 31. The Trust will send
financial statements to its shareholders at least semiannually. An Annual
Report containing financial statements audited by the Trust's independent
accountants will be sent to shareholders each year.
Financial Statements
The Financial Statements for the Fund's fiscal year ended December 31,
1999, appearing in the Fund's 1999 Annual Report to Shareholders, are
incorporated herein by reference.
27
<PAGE>
APPENDIX
Moody's Investors Service, Inc. Corporate Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa Group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Standard & Poor's Corporation's Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
BB-B-CCC-CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
28
<PAGE>
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)
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. Restated and Amended Multiple Class Plan(11)
p. 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.
C-1
<PAGE>
(11) Previously filed as part of Post-Effective Amendment No. 27 to the
Registrant's Registration Statement as filed on November 21, 1997.
Item 24. Persons Controlled by or Under Common Control with the Fund
None.
Item 25. Indemnification
Please see Article VI of the Registrant's By-Laws, previously filed as an
Exhibit. Pursuant to Rule 484 under the Securities Act of 1933, as amended, the
Registrant furnishes the following undertaking:
"Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue."
Notwithstanding the provisions contained in the Registrant's By-Laws, in
the absence of authorization by the appropriate court on the merits pursuant to
Sections 4 and 5 of Article VI of said By-Laws, any indemnification under said
Article shall be made by Registrant only if authorized in the manner provided
in either subsection (a) or (b) of Section 6 of said Article VI.
Item 26. Business and Other Connections of Investment Adviser
Please see Parts A and B of this Registration Statement for discussion of
the Adviser.
For information as to the business, profession, vocation or employment of
a substantial nature of the directors and officers of the Adviser, reference is
made to the Adviser's current Form ADV (SEC File No. 801-11586) filed under the
Investment Advisers Act of 1940 and incorporated herein by reference.
Item 27. Principal Underwriters
(a) Equity Planning also serves as the principal underwriter for the following
other registrants:
Phoenix-Aberdeen Series Fund, Phoenix-Aberdeen Worldwide Opportunities
Fund, Phoenix-Goodwin California Tax Exempt Bonds, Inc., Phoenix Duff &
Phelps Institutional Mutual Funds, Phoenix-Engemann Funds, Phoenix Equity
Series Fund, Phoenix-Euclid Funds, Phoenix-Oakhurst Income & Growth Fund,
Phoenix Investment Trust 97, Phoenix Multi-Portfolio Fund,
Phoenix-Goodwiin Multi-Sector Fixed Income Fund, Inc., Phoenix-Goodwin
Multi-Sector Short Term Bond Fund, Phoenix-Seneca Funds, Phoenix Series
Fund, Phoenix Strategic Allocation Fund, Inc., 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 President None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Senior Vice President and None
100 Bright Meadow Blvd. Chief Financial Officer
P.O. Box 2200
Enfield, CT 06083-2200
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Position and Offices
Business Address with Distributor with Registrant
- ------------------------- ------------------------------- ----------------------
<S> <C> <C>
John F. Sharry President, None
56 Prospect Street Retail Distribution
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Mutual Fund None
101 Munson Street Customer Service
Greenfield, MA 01301
Nancy G. Curtiss Vice President and Treasurer, Assistant Treasurer
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Counsel and Assistant Secretary
55 East Monroe St. Secretary
Suite 3606
Chicago, IL 60603
Jacqueline M. Porter Assistant Vice President, None
56 Prospect Street Financial Reporting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
Item 28. Locations of Accounts and Records
The accounts, books or other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder
are kept by the Registrant at its offices, 600 North Rosemead Boulevard,
Pasadena, CA 91107-2133. Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., Enfield, Connecticut 06082, is the Registrant's transfer agent, and
maintains records relating to such activities. State Street Bank and Trust
Company, c/o BFDS, Two Heritage Drive, Boston, MA 02171, as sub-transfer agent,
maintains various shareholder account records and information regarding the
Global Growth, Balanced Return, Growth, Nifty Fifty, Small & Mid-Cap Growth and
Value 25 Funds. The custodian of the assets of the Funds (other than the Global
Growth Fund), Union Bank of California, maintains certain records at 475
Sansome Street, San Francisco, California 94111. State Street Bank and Trust
Company, the custodian for the Global Growth Fund, maintains records at P.O.
Box 351, Boston, Massachusetts 02101. The Registrant's investment advisor,
Roger Engemann & Associates, Inc., maintains records relating to its services
at its offices, 600 North Rosemead Boulevard, Pasadena, California 91107-2133.
Item 29. Management Services
There are no management-related service contracts not discussed in Part A
or Part B of this Registration Statement.
Item 30. Undertakings
Not applicable.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Fund has duly caused this amendment to the
registration statement to be signed on its behalf by the undersigned, duly
authorized, in the City of Pasadena, the State of California, on the 1st day of
March, 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 March 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*
/s/ Malcoln Axon Chief Financial
- ---------------------------- Officer
Malcoln 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)
