As filed with the Securities and Exchange Commission on September 22, 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. 33 |X|
AND
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 36 |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 OFFICES)
(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
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485,
or
[ ] on pursuant to paragraph (a)(1) of Rule 485, or
|X| 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
PART A:
INFORMATION REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER FORM N-1A, PART A PROSPECTUS CAPTION
----------------------------- ------------------
<S> <C> <C>
1. Front and Back Cover Pages............................... Cover Page, Back Cover Page
2. Risk/Return Summary: Investments, Risks, Performance..... Investment Risk and Return Summary
3. Risk/Return Summary: Fee Table........................... Fund Expenses
4. Investment Objectives, Principal Investment
Strategies, and Related Risks.......................... Investment Risk and Return Summary
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
</TABLE>
PART B:
INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM NUMBER FORM N-1A, PART B STATEMENT OF ADDITIONAL INFORMATION CAPTION
----------------------------- --------------------------------------------
<S> <C> <C>
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
</TABLE>
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.
<PAGE>
TABLE OF CONTENTS
--------------------------------------------------------------------------------
Phoenix-Engemann Balanced Return Fund
Investment Risk and Return Summary....................................... 1
Fund Expenses............................................................ 4
Phoenix-Engemann Focus Growth Fund
Investment Risk and Return Summary....................................... 6
Fund Expenses............................................................ 9
Phoenix-Engemann Nifty Fifty Fund
Investment Risk and Return Summary....................................... 11
Fund Expenses............................................................ 14
Phoenix-Engemann Small & Mid-Cap Growth Fund
Investment Risk and Return Summary....................................... 16
Fund Expenses............................................................ 19
Phoenix-Engemann Value 25 Fund
Investment Risk and Return Summary....................................... 21
Fund Expenses............................................................ 24
Additional Investment Techniques.......................................... 26
Management of the Funds................................................... 28
Pricing of Fund Shares.................................................... 30
Sales Charges............................................................. 31
Your Account.............................................................. 34
How to Buy Shares......................................................... 35
How to Sell Shares........................................................ 35
Things You Should Know When Selling Shares................................ 36
Account Policies.......................................................... 38
Investor Services......................................................... 39
Tax Status of Distributions............................................... 40
Financial Highlights...................................................... 41
Additional Information.................................................... 49
^PHOENIX-
ENGEMANN
FUNDS
<PAGE>
PHOENIX-ENGEMANN BALANCED RETURN FUND
INVESTMENT RISK AND RETURN SUMMARY
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Engemann Balanced Return Fund has an investment objective to maximize
total investment return consistent with reasonable risk. There is no guarantee
that the fund will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
^ The fund seeks to achieve capital appreciation from high quality growth
stocks balanced by income and capital preservation from U.S. Government
securities of any maturity. The balance between stocks and U.S.
Government securities, at any time, will be within the sole discretion
of the adviser.
^ The adviser uses a bottom-up stock selection process that looks for
companies that it believes have consistent, substantial earnings
growth, strong management with a commitment to shareholders, financial
strength and favorable long-term outlooks. Generally, these will be
companies with larger capitalizations.
^ Generally, stocks are sold when the characteristics and factors used to
select a security change, such as a reduction in the expected earnings
growth rate, a loss of competitive advantage or the security has
appreciated to the point where it is no longer attractive.
Temporary Defensive Strategy: If the adviser believes conditions are not
favorable to the fund's principal strategies, all or part of the fund's assets
may be held in cash and short-term money market instruments, including
obligations of the U.S. Government, high quality commercial paper, certificates
of deposit, bankers' acceptances, bank interest-bearing demand accounts, and
repurchase agreements secured by U.S. Government securities. When this happens,
the fund may not achieve its objective.
Please see "Additional Investment Techniques" for other investment techniques of
the fund.
Phoenix-Engemann Balanced Return Fund 1
<PAGE>
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
General
The value of your shares and the level of income you receive are subject to
risks associated with the types of securities selected for fund investment.
Neither the fund nor the adviser can assure you that a particular level of
income will consistently be achieved or that the value of the fund's investments
that supports your share value will increase. If the value of fund investments
decreases, your share value will decrease.
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
CREDIT RISK
Credit risk pertains to the issuer's ability to make scheduled interest or
principal payments. Generally, the lower a security's credit rating, the greater
chance that the issuer will be unable to make such payments when due. Credit
risk is determined at the date of investment. If after the date of purchase the
rating declines, the fund is not obligated to sell the security.
INTEREST RATE RISK
Interest rate trends can have an effect on the value of your shares. If interest
rates rise, the value of debt securities generally will fall. Because the fund
may hold securities with longer maturities, the net asset value of the fund may
experience greater price fluctuations in response to changes in interest rates
than funds that hold only securities with short-term maturities. Prices of
longer-term securities are affected more by interest rate changes than prices of
shorter-term securities.
LONG-TERM MATURITIES
Fixed-income securities with longer maturities may be subject to greater price
fluctuations due to interest rate, tax law and general market changes.
U.S. GOVERNMENT OBLIGATIONS
Obligations issued or guaranteed by the U.S. Government, its agencies,
authorities and instrumentalities only guarantee principal and interest will be
timely paid to holders of the securities. The entities do not guarantee that the
value of fund shares will increase. In addition, not all U.S. Government
securities are backed by the full faith and credit of the United States.
2 Phoenix-Engemann Balanced Return Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Engemann Balanced Return Fund. The bar chart shows changes in the
fund's Class A Shares performance from year to year over the last ten years.(1)
The table shows how the fund's average annual returns compare to those of a
broad-based securities market index. The fund's past performance is not
necessarily an indication of how the fund will perform in the future.
[GRAPHIC OMITTED]
CALENDAR YEAR ANNUAL RETURN (%)
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 18.10
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the 10-year period shown in the
chart above, the highest return for a quarter was 20.76% (quarter ending
December 31, 1998) and the lowest return for a quarter was (16.28)% (quarter
ending September 30, 1990). Year-to-date performance (through September 30,
2000) was ______%.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Average Annual Total Returns(1) Life of the Fund (2)
(for the periods ending --------------------
12/31/99) One Year Five Years Ten Years Class A Class B Class C
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares(3) 11.31% 20.70% 13.74% -- -- --
---------------------------------------------------------------------------------------------------------------
Class B Shares 13.22% 21.19% N/A -- 16.42% --
---------------------------------------------------------------------------------------------------------------
Class C Shares 17.22% 21.19% N/A -- -- 16.42%
---------------------------------------------------------------------------------------------------------------
S&P 500 Composite Stock 21.14% 28.66% 18.25% -- 23.71% 23.71%
Price Index(4)
---------------------------------------------------------------------------------------------------------------
Lehman Brothers
Government/Corporate (2.15)% 7.60% 7.65% -- 5.48% 5.48%(7)
Bond Index(5)
---------------------------------------------------------------------------------------------------------------
Balanced Benchmark(6) 12.21% 19.83% 13.85% -- 16.07%(7) 16.07%(7)
---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B and Class C Shares.
(2) Class B and Class C Shares since January 3, 1994.
(3) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(4) The S&P 500 Composite Stock Price Index is a measure of stock market total
return performance. The S&P 500's performance does not reflect sales charges.
(5) The Lehman Brothers Government/Corporate Bond Index is an unmanaged but
commonly used measure of bond performance. It includes securities in the Lehman
Brothers Government and the Lehman Brothers Corporate Indices. The index's
performance does not reflect sales charges.
(6) The Balanced Benchmark is a composite index made up of 60% of the S&P 500
Composite Stock Price Index return, 30% of the Lehman Brothers
Government/Corporate Bond Index return and 10% of the 90-day U.S. Treasury bill
return. The index's performance does not reflect sales charges.
(7) Benchmark performance since January 31, 1994.
Phoenix-Engemann Balanced Return Fund 3
<PAGE>
FUND EXPENSES
--------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
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 percentage of
the lesser of the value redeemed or the amount invested) None 5%(a) 1%(b)
Maximum Sales Charge (load) Imposed on Reinvested None None
Dividends None
Redemption Fee None None None
Exchange Fee None None None
------------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.74% 0.74% 0.74%
Distribution and Service (12b-1) Fees(c) 0.25% 1.00% 1.00%
Other Expenses(d) 0.47% 0.47% 0.47%
----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES(D) 1.46% 2.21% 2.21%
===== ===== =====
</TABLE>
---------------------------------
(a) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year. Class B Shares purchased
prior to January 20, 1998 are subject to the sales load schedule as it existed
prior to that date. See "Sales Charges--Class B Shares Purchased Prior to
January 20, 1998" in this prospectus.
(b) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(c) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
(d) Restated to reflect current fees.
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
4 Phoenix-Engemann Balanced Return Fund
<PAGE>
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class A $715 $1,010 $1,327 $2,221
--------------------------------------------------------------------------------
Class B $624 $891 $1,185 $2,355
--------------------------------------------------------------------------------
Class C $324 $691 $1,185 $2,544
--------------------------------------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class B $224 $691 $1,185 $2,355
--------------------------------------------------------------------------------
Class C $224 $691 $1,185 $2,544
--------------------------------------------------------------------------------
Phoenix-Engemann Balanced Return Fund 5
<PAGE>
PHOENIX-ENGEMANN FOCUS GROWTH FUND
INVESTMENT RISK AND RETURN SUMMARY
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Engemann Focus Growth Fund has an investment objective of long-term
growth of capital. There is no guarantee that the fund will achieve its
objective.
PRINCIPAL INVESTMENT STRATEGIES
^ The fund focuses on purchasing common stocks of domestic corporations
with rapidly growing earnings. The companies may have small or large
capitalizations and may be unseasoned or established. The adviser may
also select stocks of companies that may not be experiencing rapid
growth but, in the opinion of the adviser, are undervalued by other
criteria of their fundamental net worth.
^ The adviser uses a bottom-up selection process to select stocks for the
fund.
^ Generally, stocks are sold when the characteristics and factors used to
select a security change, such as a reduction in the expected earnings
growth rate, a loss of competitive advantage or the security has
appreciated to the point where it is no longer attractive.
Temporary Defensive Strategy: If the adviser believes conditions are not
favorable to the fund's principal strategies, all or part of the fund's assets
may be held in cash and short-term money market instruments, including
obligations of the U.S. Government, high quality commercial paper, certificates
of deposit, bankers' acceptances, bank interest-bearing demand accounts, and
repurchase agreements secured by U.S. Government securities. When this happens,
the fund may not achieve its objective.
Please see "Additional Investment Techniques" for other investment techniques of
the fund.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of the fund's investments that supports your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decrease, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
6 Phoenix-Engemann Focus Growth Fund
<PAGE>
GROWTH STOCKS
Because growth stocks typically make little or no dividend payments to
shareholders, investment return is based on a stock's capital appreciation,
making return more dependent on market increases and decreases. Growth stocks
are therefore more volatile than non-growth stocks to market changes, tending to
rise faster when markets rise and drop more sharply when markets fall.
SMALL CAPITALIZATIONS AND UNSEASONED COMPANIES
Companies with small capitalizations are often companies with a limited
operating history or companies in industries that have recently emerged due to
cultural, economic, regulatory or technological developments. Such developments
can have a significant impact or negative effect on small capitalization
companies and their stock performance. Investment returns of unseasoned and
small capitalizations companies can be highly volatile. Product lines are often
less diversified and subject to competitive threats. Smaller capitalization and
unseasoned company stocks are subject to varying patterns of trading volume and
may, at times, be difficult to sell.
Phoenix-Engemann Focus Growth Fund 7
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Engemann Focus Growth Fund. The bar chart shows changes in the
fund's Class A Shares performance from year to year over the last ten years.(1)
The table shows how the fund's average annual returns compare to those of a
broad-based securities market index. The fund's past performance is not
necessarily an indication of how the fund will perform in the future.
[GRAPHIC OMITTED]
CALENDAR YEAR ANNUAL RETURN (%)
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 49.74
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the 10-year period shown in the
chart above, the highest return for a quarter was 35.36% (quarter ending
December 31, 1998) and the lowest return for a quarter was (24.96)% (quarter
ending September 30, 1990). Year-to-date performance (through
September 30, 2000) was ______%.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Average Annual Total Returns(1) Life of the Fund (2)
(for the periods ending --------------------
12/31/99) One Year Five Years Ten Years Class A Class B Class C
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
Class A Shares(3) 41.13% 28.51% 17.93% -- -- --
---------------------------------------------------------------------------------------------------------------
Class B Shares 44.64% 29.06% N/A -- 22.91% --
---------------------------------------------------------------------------------------------------------------
Class C Shares 48.64% 29.06% N/A -- -- 22.91%
---------------------------------------------------------------------------------------------------------------
S&P 500 Composite Stock 21.14% 28.66% 18.25% -- 23.71% 23.71%
Price Index(4)
---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B and Class C Shares.
(2) Class B and Class C Shares since January 3, 1994.
(3) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(4) The S&P 500 Composite Stock Price Index is an unmanaged but commonly used
measure of common stock total return performance. The S&P's performance does not
reflect sales charges.
8 Phoenix-Engemann Focus Growth Fund
<PAGE>
FUND EXPENSES
--------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
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 percentage of
the lesser of the value redeemed or the amount invested) None 5%(a) 1%(b)
Maximum Sales Charge (load) Imposed on Reinvested None None
Dividends None
Redemption Fee None None None
Exchange Fee None None None
-----------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
Annual Fund Operating Expenses (expenses that are
deducted from fund assets)
Management Fees 0.79% 0.79% 0.79%
Distribution and Service (12b-1) Fees(c) 0.25% 1.00% 1.00%
Other Expenses(d) 0.41% 0.41% 0.41%
----- ----- -----
Total Annual Fund Operating Expenses(d) 1.45% 2.20% 2.20%
===== ===== =====
</TABLE>
(a) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year. Class B Shares purchased
prior to January 20, 1998 are subject to the sales load schedule as it existed
prior to that date. See "Sales Charges--Class B Shares Purchased Prior to
January 20, 1998" in this prospectus.
(b) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(c) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
(d) Restated to reflect current fees.
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
Phoenix-Engemann Focus Growth Fund 9
<PAGE>
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class A $714 $1,007 $1,322 $2,210
--------------------------------------------------------------------------------
Class B $623 $888 $1,180 $2,344
--------------------------------------------------------------------------------
Class C $323 $688 $1,180 $2,534
--------------------------------------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class B $223 $688 $1,180 $2,344
--------------------------------------------------------------------------------
Class C $223 $688 $1,180 $2,534
--------------------------------------------------------------------------------
10 Phoenix-Engemann Focus Growth Fund
<PAGE>
PHOENIX-ENGEMANN NIFTY FIFTY FUND
INVESTMENT RISK AND RETURN SUMMARY
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Engemann Nifty Fifty Fund has an investment objective of long-term
growth of capital. There is no guarantee that the fund will achieve its
objective.
PRINCIPAL INVESTMENT STRATEGIES
^ The fund seeks its investment objective by investing in at least 50
different securities that the adviser believes represent the best
potential to achieve long-term growth of capital. The fund may, for
short periods of time, have more or less than 50 different securities
while it is adding or deleting a particular position.
^ Under normal circumstances, the fund expects to invest at least 75% of its
assets in common stocks of high quality growth companies.
^ The adviser uses a bottom-up stock selection process that looks for
companies that it believes have consistent, substantial earnings
growth, strong management with a commitment to shareholders, financial
strength and favorable long term outlooks. Generally, these will be
larger capitalized companies.
^ Generally, stocks are sold when the characteristics and factors used to
select a security change, such as a reduction in the expected earnings
growth rate, a loss of competitive advantage or the security has
appreciated to the point where it is no longer attractive.
Temporary Defensive Strategy: If the adviser believes conditions are not
favorable to the fund's principal strategies, all or part of the fund's assets
may be held in cash and short-term money market instruments, including
obligations of the U.S. Government, high quality commercial paper, certificates
of deposit, bankers' acceptances, bank interest-bearing demand accounts, and
repurchase agreements secured by U.S. Government securities. When this happens,
the fund may not achieve its objective.
Please refer to "Additional Investment Techniques" for other investment
techniques of the fund.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of the fund's investments that supports your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decrease, you will lose money.
Phoenix-Engemann Nifty Fifty Fund 11
<PAGE>
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
LIMITED NUMBER OF INVESTMENTS
Conditions that negatively affect securities in the portfolio will have a
greater impact on the fund as compared to a fund that holds a greater number of
security positions. In addition, the fund may be more sensitive to changes in
the market value of a single issuer in its portfolio and therefore the value of
your shares may be more volatile.
12 Phoenix-Engemann Nifty Fifty Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Engemann Nifty Fifty Fund. The bar chart shows changes in the
fund's Class A Shares performance from year to year over the life of the
fund.(1) The table shows how the fund's average annual returns compare to those
of a broad-based securities market index. The fund's past performance is not
necessarily an indication of how the fund will perform in the future.
[GRAPHIC OMITTED]
CALENDAR YEAR ANNUAL RETURN (%)
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 32.47
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 30.70% (quarter ending
December 31, 1998) and the lowest return for a quarter was (12.06)% (quarter
ending September 30, 1998). Year-to-date performance (through September 30,
2000) was ______%.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Average Annual Total Returns(1) Life of the Fund (2)
(for the periods ending --------------------
12/31/99) One Year Five Years Class A Class B Class C
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------
Class A Shares(3) 24.86% 26.69% 21.17% -- --
------------------------------------------------------------------------------------------------------
Class B Shares 27.47% 27.24% -- 22.44% --
------------------------------------------------------------------------------------------------------
Class C Shares 31.47% 27.24% -- -- 22.44%
------------------------------------------------------------------------------------------------------
S&P 500 Composite Stock 21.14% 28.66% 21.00% 23.71% 23.71%
Price Index(4)
------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B and Class C Shares.
(2) Class A Shares since December 17, 1990; Class B and Class C Shares since
January 3, 1994.
(3) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(4) The S&P 500 Composite Stock Price Index is an unmanaged but commonly used
measure of common stock total return performance. The S&P's performance does not
reflect sales charges.
Phoenix-Engemann Nifty Fifty Fund 13
<PAGE>
FUND EXPENSES
--------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
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 percentage of
the lesser of the value redeemed or the amount invested) None 5%(a) 1%(b)
Maximum Sales Charge (load) Imposed on Reinvested None None
Dividends None
Redemption Fee None None None
Exchange Fee None None None
----------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
Annual Fund Operating Expenses (expenses that are
deducted from fund assets)
Management Fees 0.81% 0.81% 0.81%
Distribution and Service (12b-1) Fees(c) 0.25% 1.00% 1.00%
Other Expenses(d) 0.42% 0.42% 0.42%
----- ----- -----
Total Annual Fund Operating Expenses(d) 1.48% 2.23% 2.23%
===== ===== =====
</TABLE>
---------------------------------
(a) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to
2% during the fourth and fifth years and to 0% after the fifth year. Class B
Shares purchased prior to January 20, 1998 are subject to the sales load
schedule as it existed prior to that date. See "Sales Charges--Class B Shares
Purchased Prior to January 20, 1998" in this prospectus.
(b) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(c) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
(d) Restated to reflect current fees.
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after eight years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
14 Phoenix-Engemann Nifty Fifty Fund
<PAGE>
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class A $717 $1,106 $1,336 $2,242
--------------------------------------------------------------------------------
Class B $626 $897 $1,195 $2,376
--------------------------------------------------------------------------------
Class C $326 $697 $1,195 $2,565
--------------------------------------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class B $226 $697 $1,195 $2,376
--------------------------------------------------------------------------------
Class C $226 $697 $1,195 $2,565
--------------------------------------------------------------------------------
Phoenix-Engemann Nifty Fifty Fund 15
<PAGE>
PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH FUND
INVESTMENT RISK AND RETURN SUMMARY
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Engemann Small and Mid-Cap Growth Fund has an investment objective of
long-term growth of capital. There is no guarantee that the fund will achieve
its objective.
PRINCIPAL INVESTMENT STRATEGIES
^ Under normal circumstances, the fund invests at least 65% of its total
assets in equity securities of companies that have market capitalizations
of below $1.5 billion at the time of purchase.
^ The fund emphasizes the purchase of common stocks of domestic
corporations with rapidly growing earnings per share. The adviser may
also select stocks of companies that may not be experiencing rapid
growth but, in the opinion of the adviser, are undervalued by other
criteria of their fundamental net worth.
^ The adviser uses a bottom-up selection process to select stocks for the
fund.
^ Generally, stocks are sold when the characteristics and factors used to
select a security change, such as a reduction in the expected earnings
growth rate, a loss of competitive advantage or the security has
appreciated to the point where it is no longer attractive.
Temporary Defensive Strategy: If the adviser believes conditions are not
favorable to the fund's principal strategies, all or part of the fund's assets
may be held in cash and short-term money market instruments, including
obligations of the U.S. Government, high quality commercial paper, certificates
of deposit, bankers' acceptances, bank interest-bearing demand accounts, and
repurchase agreements secured by U.S. Government securities. When this happens,
the fund may not achieve its objective.
Please see "Additional Investment Techniques" for other investment techniques of
the fund.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of the fund's investments that supports your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decrease, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than
16 Phoenix-Engemann Small & Mid-Cap Growth Fund
<PAGE>
expected and investments may fail to perform as the adviser expects. As a
result, the value of your shares may decrease.
GROWTH STOCKS
Because growth stocks typically make little or no dividend payments to
shareholders, investment return is based on a stock's capital appreciation,
making return more dependent on market increases and decreases. Growth stocks
are therefore more volatile than non-growth stocks to market changes, tending to
rise faster when markets rise and drop more sharply when markets fall.
SMALL CAPITALIZATIONS AND UNSEASONED COMPANIES
Companies with small capitalizations are often companies with a limited
operating history or companies in industries that have recently emerged due to
cultural, economic, regulatory or technological developments. Such developments
can have a significant impact or negative effect on small capitalization
companies and their stock performance. Investment returns of unseasoned and
small capitalizations companies can be highly volatile. Product lines are often
less diversified and subject to competitive threats. Smaller capitalization and
unseasoned company stocks are subject to varying patterns of trading volume and
may, at times, be difficult to sell.
Phoenix-Engemann Small & Mid-Cap Growth Fund 17
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Engemann Small & Mid-Cap Growth Fund. The bar chart shows changes
in the fund's Class A Shares performance from year to year over the life of the
fund.(1) The table shows how the fund's average annual returns compare to those
of a broad-based securities market index. The fund's past performance is not
necessarily an indication of how the fund will perform in the future.
[GRAPHIC OMITTED]
CALENDAR YEAR ANNUAL RETURN (%)
1995 25.68
1996 52.37
1997 26.41
1998 14.29
1999 84.59
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the
chart above, the highest return for a quarter was 71.42% (quarter ending
December 31, 1999) and the lowest return for a quarter was (22.13)% (quarter
ending September 30, 1998). Year-to-date performance (through September 30,
2000) was ______%.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Average Annual Total Returns(1) Life of the Fund (2)
(for the periods ending --------------------
12/31/99) One Year Five Years Class A Class B Class C
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------
Class A Shares(3) 73.98% 36.93% 40.02% -- --
------------------------------------------------------------------------------------------------------
Class B Shares 79.25% -- -- 38.60% --
------------------------------------------------------------------------------------------------------
Class C Shares 83.20% -- -- -- 35.80%
------------------------------------------------------------------------------------------------------
Russell 2000 Index(4) 21.26% 16.69% 15.64% 14.13% 13.75%
------------------------------------------------------------------------------------------------------
Russell 2000 Growth Index(5) 43.09% 19.00% 18.14% 17.00% 16.63%
------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption of the fund's Class B and Class C Shares.
(2) Class A Shares since October 10, 1994; Class B Shares since September 18,
1996; and Class C Shares since October 8, 1996.
(3) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(4) The Russell 2000 Index is an unmanaged, commonly used measure of total
return performance of small-capitalization stocks. The Index does not reflect
sales charges.
(5) The Russell 2000 Growth Index is an unmanaged, commonly used measure of
total return performance of small-capitalization growth-oriented stocks. The
Index does not reflect sales charges.
18 Phoenix-Engemann Small & Mid-Cap Growth Fund
<PAGE>
FUND EXPENSES
--------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
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 percentage of
the lesser of the value redeemed or the amount invested) None 5%(b) 1%(c)
Maximum Sales Charge (load) Imposed on Reinvested None None
Dividends None
Redemption Fee None None None
Exchange Fee None None None
--------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.94% 0.94% 0.94%
Distribution and Service (12b-1) Fees(d) 0.25% 1.00% 1.00%
Other Expenses(e) 0.46% 0.46% 0.46%
----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES(A)(E) 1.65% 2.40% 2.40%
===== ===== =====
</TABLE>
-----------------------------------
(a) The fund's financial agent has agreed to waive a portion of its financial
agent fee through April 30, 2001 so that other operating expenses of the fund do
not exceed 0.50% of the first $50 million of the average daily net assets. Prior
to March 1, 2000, the fund's administrator had agreed to waive a portion of its
administration fee so that other operating expenses of the fund would not exceed
0.60% of the first $50 million of the average daily net assets. Total Annual
Operating Expenses for the fund, after waiver of administration fees, are 1.63%
for Class A Shares, 2.38% for Class B Shares and 2.38% for Class C Shares.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year. Class B Shares purchased
prior to January 20, 1998 are subject to the sales load schedule as it existed
prior to that date. See "Sales Charges--Class B Shares Purchased Prior to
January 20, 1998" in this prospectus.
(c) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(d) Distribution and Service Fees represent an asset based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
(e) Restated to reflect current fees.
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same.
Phoenix-Engemann Small & Mid-Cap Growth Fund 19
<PAGE>
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:
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class A $733 $1,065 $1,420 $2,417
--------------------------------------------------------------------------------
Class B $643 $948 $1,280 $2,550
--------------------------------------------------------------------------------
Class C $343 $748 $1,280 $2,736
--------------------------------------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class B $243 $748 $1,280 $2,550
--------------------------------------------------------------------------------
Class C $243 $748 $1,280 $2,736
--------------------------------------------------------------------------------
Note: Your actual expenses may be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
waiver of expenses over certain levels by the fund's administrator.
20 Phoenix-Engemann Small & Mid-Cap Growth Fund
<PAGE>
PHOENIX-ENGEMANN VALUE 25 FUND
INVESTMENT RISK AND RETURN SUMMARY
--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Engemann Value 25 Fund has an investment objective to provide
substantial dividend income and long-term growth of capital. There is no
guarantee that the fund will achieve its objective.
PRINCIPAL INVESTMENT STRATEGIES
^ Under normal circumstances, at least 80% of the fund's total assets
will be invested in common stocks of at least 25 companies that, in the
adviser's opinion, demonstrate high dividend yield and quality
earnings. The fund may, for short periods of time, have more or less
than 25 different securities while it is adding or deleting a
particular position.
^ The adviser uses a proprietary quantitative approach to identify the
highest yielding stocks that fit the fund's criteria and then selects
from this group stocks that it believes offer the best value. The
adviser generally looks for one or more of the following
characteristics: established operating history, dividend payout ratio
and sound balance sheet, and other financial characteristics.
^ Generally, stocks are sold when the characteristics and factors used to
select a security change and no longer satisfy the fund's quantitative
criteria.
Temporary Defensive Strategy: If the adviser believes conditions are not
favorable to the fund's principal strategies, all or part of the fund's assets
may be held in cash and short-term money market instruments, including
obligations of the U.S. Government, high quality commercial paper, certificates
of deposit, bankers' acceptances, bank interest-bearing demand accounts, and
repurchase agreements secured by U.S. Government securities. When this happens,
the fund may not achieve its objective.
Please see "Additional Investment Techniques" for other investment techniques of
the fund.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
GENERAL
The value of the fund's investments that supports your share value can decrease
as well as increase. If between the time you purchase shares and the time you
sell shares the value of the fund's investments decrease, you will lose money.
Phoenix-Engemann Value 25 Fund 21
<PAGE>
Investment values can decrease for a number of reasons. Conditions affecting the
overall economy, specific industries or companies in which the fund invests can
be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
LIMITED NUMBER OF INVESTMENTS
Conditions which negatively affect securities in the portfolio will have a
greater impact on the fund as compared to a fund that holds a greater number of
security positions. In addition, the fund may be more sensitive to changes in
the market value of a single issuer in its portfolio and therefore the value of
your shares may be more volatile.
22 Phoenix-Engemann Value 25 Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Engemann Value 25 Fund. The bar chart shows changes in the fund's
Class A Shares performance from year to year over the life of the fund.(1) The
table shows how the fund's average annual returns compare to those of a
broad-based securities market index. The fund's past performance is not
necessarily an indication of how the fund will perform in the future.
[GRAPHIC OMITTED]
CALENDAR YEAR ANNUAL RETURN (%)
1997 21.10
1998 7.23
1999 -5.75
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 19.30% (quarter ending June 30,
1999) and the lowest return for a quarter was (14.84)% (quarter ending
September 30, 1999). Year-to-date performance (through September 30, 2000) was
______%.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Average Annual Total Returns(1) Life of the Fund (2)
(for the periods ending --------------------
12/31/99) One Year Class A Class B Class C
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
Class A Shares(3) (11.17)% 5.19% -- --
---------------------------------------------------------------------------------------
Class B Shares (9.63)% -- 5.19% --
---------------------------------------------------------------------------------------
Class C Shares (6.49)% -- -- 6.00%
---------------------------------------------------------------------------------------
S&P 500 Composite Stock Price
Index(4) 21.14% 28.14% 27.10% 27.10%
---------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption of the fund's Class B and Class C Shares.
(2) Class A Shares since December 17, 1996; Class B and Class C Shares since
January 9, 1997.
(3) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(4) The S&P 500 Composite Stock Price Index is an unmanaged but commonly used
measure of common stock total return performance. The S&P's performance does not
reflect sales charges.
Phoenix-Engemann Value 25 Fund 23
<PAGE>
FUND EXPENSES
--------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
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 percentage of
the lesser of the value redeemed or the amount invested) None 5%(b) 1%(c)
Maximum Sales Charge (load) Imposed on Reinvested None None
Dividends None
Redemption Fee None None None
Exchange Fee None None None
---------------------------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.90% 0.90% 0.90%
Distribution and Service (12b-1) Fees(d) 0.25% 1.00% 1.00%
Other Expenses(e) 0.59% 0.59% 0.59%
----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES(A)(E) 1.74% 2.49% 2.49%
===== ===== =====
</TABLE>
-----------------------------------
(a) The fund's financial agent has agreed to waive a portion of its financial
agent fee through April 30, 2001 so that other operating expenses of the fund do
not exceed 0.50% of the first $50 million of the average daily net asset. Prior
to March 1, 2000, the fund's administrator had agreed to waive a portion of its
administration fee so that other operating expenses of the fund would not exceed
0.60% of the first $50 million of the average daily net assets. Total Annual
Operating Expenses for the fund, after waiver of administration fees, are 1.65%
for Class A Shares, 2.40% for Class B Shares and 2.40% for Class C Shares.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year. Class B Shares purchased
prior to January 20, 1998 are subject to the sales load schedule as it existed
prior to that date. See "Sales Charges--Class B Shares Purchased Prior to
January 20, 1998" in this prospectus.
(c) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(d) Distribution and Service Fees represent an asset based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
(e) Restated to reflect current fees.
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same.
24 Phoenix-Engemann Value 25 Fund
<PAGE>
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:
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class A $742 $1,091 $1,464 $2,509
--------------------------------------------------------------------------------
Class B $652 $976 $1,326 $2,642
--------------------------------------------------------------------------------
Class C $352 $776 $1,326 $2,826
--------------------------------------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class B $252 $776 $1,326 $2,642
--------------------------------------------------------------------------------
Class C $252 $776 $1,326 $2,826
--------------------------------------------------------------------------------
Note: Your actual expenses may be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
waiver of expenses over certain levels by the fund's administrator.
Phoenix-Engemann Value 25 Fund 25
<PAGE>
ADDITIONAL INVESTMENT TECHNIQUES
--------------------------------------------------------------------------------
In addition to the Principal Investment Strategies and Risks, the
Phoenix-Engemann Balanced Return Fund ("Balanced"), Phoenix-Engemann Focus
Growth Fund ("Focus Growth"), Phoenix-Engemann Nifty Fifty Fund ("Nifty-Fifty"),
Phoenix-Engemann Small & Mid-Cap Growth Fund ("Small & Mid-Cap") and
Phoenix-Engemann Value 25 Fund ("Value 25") each may engage in the following
investment techniques as indicated.
DERIVATIVES
Each of the funds may buy and sell put and call options for hedging purposes and
may also seek to increase its return by writing covered put and call options.
The funds may also buy and sell options on domestic and foreign securities
indexes, put and call warrants issued by banks and other financial institutions,
and may enter into foreign currency exchange contracts.
Derivatives may be less liquid than other securities and the counterparty to
such transaction may not perform as expected. In addition, hedging transactions
may limit returns and premiums paid could be lost.
EQUITY INVESTMENTS
Nifty-Fifty may invest in common stocks with rapidly growing earnings per share
or in common stocks of corporations that are believed to be undervalued by other
criteria used by the adviser. These may be small and unseasoned companies.
Investment return on growth stocks is more dependent on market increases and
decreases and growth stocks are more volatile than non-growth stocks. Investment
returns of unseasoned and small capitalizations companies can be highly volatile
and these securities may, at times, be difficult to sell.
Small & Mid-Cap may invest in securities with larger capitalizations.
FIXED-INCOME INVESTMENTS
The funds' investments may include preferred stocks, warrants and convertible
debt obligations. Focus Growth, Small & Mid-Cap and Value 25 may invest in other
debt obligations that, in the adviser's opinion, offer the possibility of
capital appreciation over the course of approximately two or more years. Such
other debt obligations will generally include direct and indirect obligations of
the U.S. Government and its agencies, states, municipalities and their agencies,
or corporate issuers that are rated within the four highest rating categories.
Typically, debt obligations will decrease in value when interest rates rise.
Credit risk for debt obligations generally increases as the rating declines.
Credit risk is determined at the date of investment. If the rating declines
after such date, the fund is not obligated to sell the security. Securities with
lower credit ratings have a greater chance of principal and interest payment
default. Debt obligations with longer maturities may be subject to price
fluctuations due to interest rates, tax laws and other general market factors.
26 Phoenix-Engemann Funds
<PAGE>
Some fixed-income securities may be unrated. Unrated securities may not have as
broad a market as rated securities and analysis of unrated securities is more
complex, making it more difficult for the adviser to accurately predict risk.
Convertible securities may be subject to redemption at the option of the issuer.
If a security is called for redemption, the fund may have to redeem the
security, convert it into common stock or sell it to a third party at a price
and time that is not beneficial for the fund. In addition, securities
convertible into common stocks may have higher yields than common stocks but
lower yields than comparable non-convertible securities.
Obligations issued or guaranteed by the U.S. Government, agencies, authorities
and instrumentalities only guarantee principal and interest will be timely paid
to holders of the securities. The entities do not guarantee that the value of
fund shares will increase. In addition, not all U.S. Government securities are
backed by the full faith and credit of the United States.
Municipal securities may not be guaranteed by the issuing body and may be thinly
traded.
FOREIGN INVESTMENTS
Each of the funds may invest in foreign securities. Foreign markets and
currencies may not perform as well as U.S. markets. Political and economic
uncertainty as well as less public information about foreign investments may
negatively impact the funds' portfolio. Dividend and other income payable on
foreign securities may be subject to foreign taxes. Some investments may be made
in currencies other than U.S. dollars that will fluctuate in value as a result
of changes in the currency exchange rate.
ILLIQUID SECURITIES
Each of the funds may invest in illiquid securities. Illiquid and restricted
securities may be difficult to sell or may be sold only pursuant to certain
legal restrictions. Difficulty in selling securities may result in a loss to the
fund or entail expenses not normally associated with the sale of a security.
INITIAL PUBLIC OFFERINGS (IPOS)
The funds may invest in IPOs, which typically have less available public
information. Investment returns from IPOs may be highly volatile, may be subject
to varying patterns of trading volume and these securities may, at times, be
difficult to sell. In addition, from time to time, the funds may purchase IPOs
and then immediately sell them. This practice will increase portfolio turnover
rates and may increase costs to the fund, affect fund performance, and may
increase capital gains distributions, resulting in greater tax liability to you.
MUTUAL FUND INVESTING
Each of the funds may invest in other investment companies. Assets invested in
other mutual funds incur a layering of expenses including operating costs,
advisory fees and administrative fees that you, as a shareholder in the funds,
indirectly bear.
Phoenix-Engemann Funds 27
<PAGE>
SECURITIES LENDING
Each of the funds may loan portfolio securities to increase investment returns.
If the borrower is unwilling or unable to return the borrowed securities when
due, the fund can suffer losses.
SPECIAL SITUATIONS
The funds may invest in special situations. Special situations are created by
developments, such as liquidations, reorganizations, technological breakthroughs
and new management, that apply solely to a particular company. Special
situations may involve greater risks than ordinary investment securities. The
companies involved often are smaller, unseasoned companies and the securities
may not perform as the adviser expects. Analysis of special situations is more
complex than for ordinary investments, making it more difficult for the adviser
to accurately predict risk and return.
The funds may buy other types of securities or employ other portfolio management
techniques. Please refer to the Statement of Additional Information for more
detailed information about these and other investment techniques of the funds.
MANAGEMENT OF THE FUNDS
--------------------------------------------------------------------------------
THE ADVISER
Roger Engemann & Associates, Inc. ("Engemann") is the investment adviser to each
of the funds and is located at 600 North Rosemead Boulevard, Pasadena,
California 91107. Engemann also acts as subadviser to four other mutual funds
and acts as investment adviser to institutions and individuals. As of December
31, 1999, Engemann had $10.9 billion in assets under management. Engemann has
been an investment adviser since 1969.
Subject to the direction of the funds' Board of Trustees, Engemann is
responsible for managing the funds' investment program and the day-to-day
management of the funds' portfolios. Engemann manages each fund's assets to
conform with the investment policies as described in this prospectus. Each fund
pays Engemann a monthly investment management fee that is accrued daily against
the value of that funds' net assets at the following rates.
28 Phoenix-Engemann Funds
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Management Fee 1st $50 Million Next $450 Million Over $500 Million
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Return Fund 0.80% 0.70% 0.60%
-----------------------------------------------------------------------------------------------------------------
Focus Growth Fund 0.90% 0.80% 0.70%
-----------------------------------------------------------------------------------------------------------------
Nifty Fifty Fund 0.90% 0.80% 0.70%
-----------------------------------------------------------------------------------------------------------------
Small & Mid-Cap Growth Fund 1.00% 0.90% 0.80%
-----------------------------------------------------------------------------------------------------------------
Value 25 Fund 0.90% 0.80% 0.70%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
During the funds' last fiscal year, the fund paid total management fees of
$10,826,692. The ratio of management fees to average net assets for the fiscal
year ended December 31, 1999 was 0.74% for the Balanced Return Fund, 0.79% for
the Focus Growth Fund, 0.81% for the Nifty Fifty Fund, 0.94% for the Small &
Mid-Cap Growth Fund and 0.90% for the Value 25 Fund.
PORTFOLIO MANAGEMENT
Roger Engemann, Jim Mair and John Tilson oversee the research and portfolio
management function at Engemann. The portfolio managers named below are
responsible for the day-to-day management of the funds' portfolios. Mr. Engemann
has been president of Engemann since its inception. Messrs. Mair and Tilson are
both Executive Vice Presidents of Portfolio Management of Engemann, and both
have been with Engemann since 1983. Messrs. Engemann, Mair and Tilson also
oversee the research and portfolio management function for the Phoenix-Engemann
Aggressive Growth Fund and Phoenix-Engemann Capital Growth Fund of the Phoenix
Series Fund and for the Phoenix-Engemann Small Cap Fund of the Phoenix Strategic
Equity Series Fund. Messrs. Engemann and Mair earned the right to use the
Chartered Financial Analyst designation in 1972, and Mr. Tilson earned the right
to use the Chartered Financial Analyst designation in 1974.
Jim Mair and Lou Holtz serve as co-portfolio managers of the Balanced Return
Fund and as such are responsible for the day-to-day management of the fund's
portfolio. Mr. Mair is an Executive Vice President of Engemann. Mr. Mair has
been with Engemann since 1983. Mr. Holtz has been with Engemann since 1996;
prior to joining Engemann, he was employed as an analyst at Marshall & Stevens
from December 1992 until August 1995. Messrs. Mair and Holtz earned the right to
use the Chartered Financial Analyst designation in 1972 and 1996, respectively.
Scott Swanson and Ned Brines serve as co-portfolio managers of the Focus Growth
Fund and as such are responsible for the day-to-day management of the fund's
portfolio. Messrs. Swanson and Brines are both Vice Presidents of Engemann and
have been with Engemann since 1990 and 1994, respectively. Mr. Brines also
serves as co-portfolio manager of the Phoenix-Engemann Aggressive Growth Fund
and Phoenix-Engemann Capital Growth
Phoenix-Engemann Funds 29
<PAGE>
Fund of the Phoenix Series Fund. Messrs. Swanson and Brines earned the right to
use the Chartered Financial Analyst designation in 1991 and 1997, respectively.
Scott Swanson and Yossi Lipsker serve as co-portfolio managers of the Nifty
Fifty Fund and as such are responsible for the day-to-day management of the
fund's portfolio. Messrs. Swanson and Lipsker are both Vice Presidents of
Engemann and have been with Engemann since 1990 and 1995, respectively. Mr.
Lipsker also serves as co-portfolio manager of the Phoenix-Engemann Small Cap
Fund of the Phoenix Strategic Equity Series Fund. Mr. Swanson earned the right
to use the Chartered Financial Analyst designation in 1991.
Lou Abel and Yossi Lipsker serve as co-portfolio managers of the Small & Mid-Cap
Growth Fund and as such are responsible for the day-to-day management of the
fund's portfolio. Messrs. Abel and Lipsker are both Vice Presidents of Engemann
and have been with Engemann since 1991 and 1995, respectively. Messrs. Abel and
Lipsker also serve as co-portfolio managers of the Phoenix-Engemann Small Cap
Fund of the Phoenix Strategic Equity Series Fund. Mr. Abel earned the right to
use the Chartered Financial Analyst designation in 1993.
Lou Holtz serves as the portfolio manager of the Value 25 Fund and as such is
responsible for the day-to-day management of the fund's portfolio. Mr. Holtz has
been with Engemann since 1996. Prior to joining Engemann, Mr. Holtz was employed
as an analyst at Marshall & Stevens from December 1992 until August 1995. Mr.
Holtz earned the right to use the Chartered Financial Analyst designation in
1996.
PRICING OF FUND SHARES
--------------------------------------------------------------------------------
HOW IS THE SHARE PRICE DETERMINED?
Each fund calculates a share price for each class of its shares. The share price
is based on the net assets of each fund and the number of outstanding shares. In
general, each fund calculates net asset value by:
o adding the values of all securities and other assets of the fund,
o subtracting liabilities, and
o dividing the result by the total number of outstanding shares of the
fund.
Asset Value: Each fund's investments are valued at market value. If market
quotations are not available, each fund determines a "fair value" for an
investment according to rules and procedures approved by the Trustees. Foreign
and domestic debt securities (other than short-term investments) are valued on
the basis of broker quotations or valuations provided by a pricing service
approved by the Trustees when such prices are believed to reflect the fair value
30 Phoenix-Engemann Funds
<PAGE>
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' net assets, except where an alternative
allocation can be more fairly made.
Net Asset Value: The liability allocated to a class plus any other expenses are
deducted from the proportionate interest of such class in the assets of the
funds. The resulting amount for each class is then divided by the number of
shares outstanding of that class to produce each class' net asset value per
share.
The net asset value per share of each class of the funds are determined on days
when the New York Stock Exchange (the "NYSE") is open for trading as of the
close of trading (normally 4:00 PM eastern time). The funds will not calculate
its net asset values per share on days when the NYSE is closed for trading. If
the funds hold securities that are traded on foreign exchanges that trade on
weekends or other holidays when the funds do not price their shares, the net
asset value of the funds' shares may change on days when shareholders will not
be able to purchase or redeem the funds' shares.
AT WHAT PRICE ARE SHARES PURCHASED?
All investments received by the funds' authorized agents prior to the close of
regular trading on the NYSE (normally 4:00 PM eastern time) will be executed
based on that day's net asset value. Shares credited to your account from the
reinvestment of fund distributions will be in full and fractional shares that
are purchased at the closing net asset value on the next business day on which
the funds' net asset value is calculated following the dividend record date.
SALES CHARGES
--------------------------------------------------------------------------------
WHAT ARE THE CLASSES AND HOW DO THEY DIFFER?
Each fund presently offers three classes of shares that have different sales and
distribution charges (see "Fund Expenses" previously in this prospectus). For
certain classes of shares, each fund has adopted distribution and service plans
allowed under Rule 12b-1 of the Investment Company Act of 1940 that authorize
each fund to pay distribution and service fees for the sale of its shares and
for services provided to shareholders.
Phoenix-Engemann Funds 31
<PAGE>
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 funds' assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
CLASS A SHARES. If you purchase Class A Shares, you will pay a sales charge at
the time of purchase equal to 5.75% of the offering price (6.10% of the amount
invested). The sales charge may be reduced or waived under certain conditions.
Class A Shares are not subject to any charges by the fund when redeemed. Class A
Shares have lower distribution and service fees (0.25%) and pay higher dividends
than Class B and Class 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 five
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 Class C
Shares" below. This charge declines to 0% over a period of five years and may be
waived under certain conditions. Class B Shares have higher distribution and
service fees (1.00%) and pay lower dividends than Class A Shares. Class B Shares
automatically convert to Class A Shares eight years after purchase (six years
for Class B Shares purchased prior to January 20, 1998). Purchases of Class B
Shares may be inappropriate for any investor who may qualify for reduced sales
charges of Class A Shares and anyone who is over 85 years of age. The
underwriter may decline purchases in such situations.
CLASS C SHARES. If you purchase Class C Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class C Shares within the first year
after they are purchased, you will pay a sales charge of 1%. See "Deferred Sales
Charge Alternative--Class B and Class 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 Initial Sales Charges: Combination Purchase Privilege" in the
Statement of Additional Information). Shares purchased based on the automatic
reinvestment of income dividends or capital gains distributions are not subject
to any sales charges. The sales charge is divided between your investment dealer
and the funds' underwriter (Phoenix Equity Planning Corporation or "PEPCO").
32 Phoenix-Engemann Funds
<PAGE>
SALES CHARGE YOU MAY PAY TO PURCHASE CLASS A SHARES
<TABLE>
<CAPTION>
SALES CHARGE AS
A PERCENTAGE OF
----------------------------------------------------
AMOUNT 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 CLASS C SHARES
Class B and Class C Shares are purchased without an initial sales charge;
however, shares sold within a specified time period are subject to a declining
contingent deferred sales charge ("CDSC") at the rates listed below. The sales
charge will be multiplied by the then current market value or the initial cost
of the shares being redeemed, whichever is less. No sales charge will be imposed
on increases in net asset value or on shares purchased through the reinvestment
of income dividends or capital gains distributions. To minimize the sales
charge, shares not subject to any charge will be redeemed first, followed by
shares held the longest time. To calculate the amount of shares owned and time
period held, all Class B Shares purchased in any month are considered purchased
on the last day of the preceding month, and all Class C Shares are considered
purchased on the trade date.
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS B SHARES
YEAR 1 2 3 4 5 6+
--------------------------------------------------------------------------------
CDSC 5% 4% 3% 2% 2% 0%
CLASS B SHARES PURCHASED PRIOR TO JANUARY 20, 1998
Class B Shares that were purchased prior to January 20, 1998 are not subject to
the sales load schedule described above but will continue to be subject to the
sales load schedule as it existed prior to that date. The following is the sales
load schedule you may pay to sell Class B Shares purchased prior to January 20,
1998:
YEAR 1 2 3 4 5+
--------------------------------------------------------------------------------
CDSC 5% 4% 3% 3% 0%
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS C SHARES
YEAR 1 2+
--------------------------------------------------------------------------------
CDSC 1% 0%
Phoenix-Engemann Funds 33
<PAGE>
YOUR ACCOUNT
--------------------------------------------------------------------------------
OPENING AN ACCOUNT
Your financial advisor can assist you with your initial purchase as well as all
phases of your investment program. If you are opening an account by yourself,
please follow the instructions outlined below.
STEP 1.
Your first choice will be the initial amount you intend to invest.
Minimum INITIAL investments:
o $25 for individual retirement accounts, or accounts that use the
systematic exchange privilege, or accounts that use the
Investo-Matic program (see below for more information on the
Investo-Matic program).
o There is no initial dollar requirement for defined contribution
plans, profit-sharing plans, or employee benefit plans. There is
also no minimum for reinvesting dividends and capital gains into
another account.
o $500 for all other accounts.
Minimum ADDITIONAL investments:
o $25 for any account.
o There is no minimum for defined contribution plans, profit-sharing
plans, or employee benefit plans. There is also no minimum for
reinvesting dividends and capital gains into an existing account.
The funds reserve the right to refuse any purchase order for any reason.
STEP 2.
Your second choice will be what class of shares to buy. Each fund offers three
classes of shares for individual investors. Each has different sales and
distribution charges. Because all future investments in your account will be
made in the share class you choose when you open your account, you should make
your decision carefully. Your financial advisor can help you pick the share
class that makes the most sense for your situation.
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;
34 Phoenix-Engemann Funds
<PAGE>
o Receive dividends in additional shares and capital gain
distributions in cash;
o Receive dividends in cash and capital gain distributions in
additional shares; or
o Receive both dividends and capital gain distributions in cash.
No interest will be paid on uncashed distribution checks.
HOW TO BUY SHARES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TO OPEN AN ACCOUNT
--------------------------------------------------------------------------------
Through a financial advisor Contact your advisor.
Some advisors may charge a fee and may set
different minimum investments or
limitations on buying shares.
--------------------------------------------------------------------------------
Through the mail Complete a New Account Application and send it
with a check payable to the fund. Mail them to:
State Street Bank, P.O. Box 8301, Boston, MA
02266-8301.
--------------------------------------------------------------------------------
Through express delivery Complete a New Account Application and send it
with a check payable to the fund. Send them to:
Boston Financial Data Services, Attn: Phoenix
Funds, 66 Brooks Drive, Braintree, MA 02184.
--------------------------------------------------------------------------------
By Federal Funds wire Call us at (800) 243-1574 (press 1, then 0).
--------------------------------------------------------------------------------
By Investo-Matic Complete the appropriate section on the
application and send it with your 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).
--------------------------------------------------------------------------------
HOW TO SELL SHARES
--------------------------------------------------------------------------------
You have the right to have the funds buy back shares at the net asset value next
determined after receipt of a redemption order by the funds' Transfer Agent or
an authorized agent. In the case of a Class B or Class 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
funds do not charge any redemption fees. Payment for shares redeemed is made
within seven days; however,
Phoenix-Engemann Funds 35
<PAGE>
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.
--------------------------------------------------------------------------------
TO SELL SHARES
--------------------------------------------------------------------------------
Through a financial advisor Contact your advisor. Some advisors may charge a
fee and may set different minimum on redemptions
of accounts.
--------------------------------------------------------------------------------
Through the mail Send a letter of instruction and
any share certificates (if you hold
certificate shares) to: State Street Bank,
P.O. Box 8301, Boston, MA 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.
--------------------------------------------------------------------------------
Through express delivery Send a letter of instruction and any share
certificates (if you hold certificate shares) to:
Boston Financial Data Services, Attn: Phoenix
Funds, 66 Brooks Drive, Braintree, MA 02184. Be
sure to include the registered owner's name, fund
and account number.
--------------------------------------------------------------------------------
By telephone For sales up to $50,000, requests can be made by
calling (800) 243-1574.
--------------------------------------------------------------------------------
By telephone exchange Call us at (800) 243-1574 (press 1, then 0).
--------------------------------------------------------------------------------
THINGS YOU SHOULD KNOW WHEN SELLING SHARES
--------------------------------------------------------------------------------
You may realize a taxable gain or loss (for federal income tax purposes) if you
redeem shares of the funds. The funds reserve the right to pay large redemptions
"in-kind" (in securities owned by the funds rather than in cash). Large
redemptions are those over $250,000 or 1% of the funds' net assets. Additional
documentation will be required for redemptions by organizations, fiduciaries, or
retirement plans, or if redemption is requested by anyone but the shareholder(s)
of record. Transfers between broker-dealer "street" accounts are governed by the
accepting broker-dealer. Questions regarding this type of transfer should be
directed to your financial advisor. Redemption requests will not be honored
until all required documents in proper form have been received. To avoid delay
in redemption or transfer, shareholders having questions about specific
requirements should contact the fund's Transfer Agent at (800) 243-1574.
36 Phoenix-Engemann Funds
<PAGE>
REDEMPTIONS BY MAIL
^ If you are selling shares held individually, jointly, or as custodian under
the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act.
Send a clear letter of instructions if all of these apply:
o The proceeds do not exceed $50,000.
o The proceeds are payable to the registered owner at the address on
record.
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.
If required, the signature on your request must be made by an eligible guarantor
institution as defined by the fund's Transfer Agent in accordance with its
signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
SELLING SHARES BY TELEPHONE
The Transfer Agent will use reasonable procedures to confirm that telephone
instructions are genuine. Address and bank account information are verified,
redemption instructions are taped, and all redemptions are confirmed in writing.
The individual investor bears the risk from instructions given by an
unauthorized third party that the Transfer Agent reasonably believed to be
genuine.
The Transfer Agent may modify or terminate the telephone redemption privilege at
any time with 60 days notice to shareholders.
During times of drastic economic or market changes, telephone redemptions may be
difficult to make or temporarily suspended.
Phoenix-Engemann Funds 37
<PAGE>
ACCOUNT POLICIES
--------------------------------------------------------------------------------
ACCOUNT REINSTATEMENT PRIVILEGE
For 180 days after you sell your Class A, Class B, or Class 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 and Class C 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 of the fund into to which you want to exchange
before deciding to make an exchange. You can obtain a prospectus from your
financial advisor or by calling us at (800) 243-4361 or accessing our Web site
at www.phoenixinvestments.com.
o You may exchange shares for another fund in the same class of shares;
e.g., Class A for Class A. Exchange privileges may not be available
for all Phoenix Funds, and may be rejected or suspended.
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 a purchase for
federal income tax purposes.
o Because excessive trading can hurt fund performance and harm other
shareholders, the funds reserve the right to temporarily or
permanently end exchange privileges or reject an order from anyone
who appears to be attempting to time the market, including investors
who request more than one exchange in any 30-day period. The fund's
underwriter has entered into agreements with certain market timing
firms
38 Phoenix-Engemann Funds
<PAGE>
permitting them to exchange by telephone. These privileges are
limited, and the funds' distributor has the right to reject or
suspend them.
RETIREMENT PLANS
Shares of the funds may be used as investments under the following qualified
prototype retirement plans: traditional IRA, rollover IRA, SEP-IRA, SIMPLE IRA,
Roth IRA, 401(k) plans, profit-sharing, money purchase pension plans, and 403(b)
plans. For more information, call (800) 243-4361.
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. Exchange privileges may not be available for all
Phoenix Funds, and may be rejected or suspended.
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. Exchange privileges may not be
available for all Phoenix Funds, and may be rejected or suspended.
SYSTEMATIC WITHDRAWAL PROGRAM allows you to periodically redeem a portion of
your account on a predetermined monthly, quarterly, semiannual, or annual basis.
Sufficient shares will be redeemed on the 15th of the month at the closing net
asset value so that the payment is made about the 20th of the month. The program
also provides for redemptions on or about the 10th, 15th, or 25th with proceeds
directed through Automated Clearing House (ACH) to your bank. The minimum
withdrawal is $25, and minimum account balance requirements continue.
Shareholders in the program must own fund shares worth at least $5,000.
Phoenix-Engemann Funds 39
<PAGE>
TAX STATUS OF DISTRIBUTIONS
--------------------------------------------------------------------------------
The funds plan to make distributions from net investment income at intervals
stated on the table below, and to distribute net realized capital gains, if any,
at least annually.
--------------------------------------------------------------------------------
FUND DIVIDEND PAID
---- -------------
--------------------------------------------------------------------------------
Balanced Return Fund Annually
--------------------------------------------------------------------------------
Focus Growth Fund Annually
--------------------------------------------------------------------------------
Nifty Fifty Fund Annually
--------------------------------------------------------------------------------
Small & Mid-Cap Growth Fund Annually
--------------------------------------------------------------------------------
Value 25 Fund Semiannually
--------------------------------------------------------------------------------
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.
40 Phoenix-Engemann Funds
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
These tables are intended to help you understand the funds' financial
performance over the past five years or since inception. Certain information
reflects financial results for a single fund share. The total returns in the
tables represent the rate that an investor would have earned 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 BALANCED RETURN FUND
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------------
SIX MONTHS
ENDED
6/30/00 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1999 1998 1997 1996 1995
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $38.80 $34.83 $29.05 $28.08 $25.39 $20.54
INCOME FROM INVESTMENT OPERATIONS(4)
Net investment income (loss) 0.24 0.21(1) 0.40 0.30(1) 0.29(1) 0.27(1)
Net realized and unrealized gain (loss) 1.58 6.07 8.03 4.98 4.23 5.31
---- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 1.82 6.28 8.43 5.28 4.52 5.58
---- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.16) (0.40) (0.32) (0.30) (0.29)
Dividends from net realized gains -- (2.13) (2.25) (3.99) (1.53) (0.44)
In excess of net investment income -- (0.01) -- -- -- --
In excess of net realized gains -- (0.01) -- -- -- --
---- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS -- (2.31) (2.65) (4.31) (1.83) (0.73)
---- ----- ----- ----- ----- -----
Change in net asset value 1.82 3.97 5.78 0.97 2.69 4.85
---- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $40.62 $38.80 $34.83 $29.05 $28.08 $25.39
====== ====== ====== ====== ====== ======
Total return(2) 4.69%(5) 18.10% 29.12% 18.98% 17.78% 27.18%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $135,688 $123,482 $72,620 $56,610 $51,947 $52,028
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.46%(6) 1.56% 1.63% 1.7%(3) 2.0%(3) 2.1%
Net investment income (loss) 1.25%(6) 0.58% 1.15% 1.0% 1.1% 1.2%
Portfolio turnover 29%(5) 41% 124% 40.3% 35.1% 51.1%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.70% and
2.10% for the periods ended December 31, 1997 and 1996, respectively.
(4) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
(5) Not annualized.
(6) Annualized.
Phoenix-Engemann Funds 41
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
PHOENIX-ENGEMANN BALANCED RETURN FUND
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------------------
SIX MONTHS
ENDED
6/30/00 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1999 1998 1997 1996 1995
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $38.13 $34.37 $28.76 $27.85 $25.26 $20.49
INCOME FROM INVESTMENT OPERATIONS(4)
Net investment income (loss) 0.09 (0.06)(1) 0.13 0.08(1) 0.09(1) 0.08(1)
Net realized and unrealized gain (loss) 1.56 5.96 7.91 4.93 4.16 5.29
---- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 1.65 5.90 8.04 5.01 4.25 5.37
---- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- (0.18) (0.11) (0.13) (0.16)
Dividends from net realized gains -- (2.13) (2.25) (3.99) (1.53) (0.44)
In excess of net realized gains -- (0.01) -- -- -- --
---- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS -- (2.14) (2.43) (4.10) (1.66) (0.60)
---- ----- ----- ----- ----- -----
Change in net asset value 1.65 3.76 5.61 0.91 2.59 4.77
---- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $39.78 $38.13 $34.37 $28.76 $27.85 $25.26
====== ====== ====== ====== ====== ======
Total return(2) 4.33%(5) 17.22% 28.06% 18.15% 16.82% 26.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $35,385 $30,580 $11,512 $7,125 $4,609 $2,721
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.21%(6) 2.30% 2.38% 2.4%(3) 2.7%(3) 2.9%
Net investment income (loss) 0.50%(6) (0.16)% 0.39% 0.3% 0.3% 0.3%
Portfolio turnover 29%(5) 41% 124% 40.3% 35.1% 51.1%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------------------------------
SIX MONTHS
ENDED
6/30/00 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1999 1998 1997 1996 1995
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $38.21 $34.44 $28.80 $27.88 $25.28 $20.48
INCOME FROM INVESTMENT OPERATIONS(4)
Net investment income (loss) 0.09 (0.06)(1) 0.14 0.08(1) 0.09(1) 0.07(1)
Net realized and unrealized gain (loss) 1.56 5.97 7.92 4.92 4.16 5.30
---- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 1.65 5.91 8.06 5.00 4.25 5.37
---- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- (0.17) (0.09) (0.12) (0.13)
Dividends from net realized gains -- (2.13) (2.25) (3.99) (1.53) (0.44)
In excess of net realized gains -- (0.01) -- -- -- --
---- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS -- (2.14) (2.42) (4.08) (1.65) (0.57)
---- ----- ----- ----- ----- -----
Change in net asset value 1.65 3.77 5.64 0.92 2.60 4.80
---- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $39.86 $38.21 $34.44 $28.80 $27.88 $25.28
====== ====== ====== ====== ====== ======
Total return(2) 4.32%(5) 17.22% 28.07% 18.11% 16.79% 26.23%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $22,170 $17,852 $7,610 $5,581 $4,183 $2,809
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.21%(6) 2.30% 2.38% 2.4%(3) 2.7%(3) 2.9%
Net investment income (loss) 0.50%(6) (0.16)% 0.39% 0.3% 0.3% 0.3%
Portfolio turnover 29%(5) 41% 124% 40.3% 35.1% 51.1%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratios of operating expenses to average net assets would have been 2.50% and
2.80% for the periods ended December 31, 1997 and 1996, respectively.
(4) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
(5) Not annualized.
(6) Annualized.
42 Phoenix-Engemann Funds
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
PHOENIX-ENGEMANN FOCUS GROWTH FUND
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------------
SIX MONTHS
ENDED
6/30/00 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1999 1998 1997 1996 1995
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $33.24 $26.82 $20.43 $21.94 $19.28 $15.40
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.16) (0.31) (0.16) (0.16) (0.14) (0.06)
Net realized and unrealized gain (loss) 0.70 13.48 7.76 3.51 4.47 4.24
---- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 0.54 13.17 7.60 3.35 4.33 4.18
---- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- -- --
Dividends from net realized gains -- (6.57) (1.21) (4.86) (1.67) (0.30)
In excess of net realized gains -- (0.18) -- -- -- --
---- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS -- (6.75) (1.21) (4.86) (1.67) (0.30)
---- ----- ----- ----- ----- -----
Change in net asset value 0.54 6.42 6.39 (1.51) 2.66 3.88
---- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $33.78 $33.24 $26.82 $20.43 $21.94 $19.28
====== ====== ====== ====== ====== ======
Total return(2) 1.62%(4) 49.74% 37.41% 16.04% 22.49% 27.16%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $624,985 $621,386 $441,146 $383,481 $426,785 $415,416
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.42%(5) 1.54% 1.58% 1.6%(3) 1.6%(3) 1.6%
Net investment income (loss) (0.99)%(5) (1.04)% (0.72)% (0.7)% (0.6)% (0.3)%
Portfolio turnover 21%(4) 56% 119% 70.6% 70.1% 65.9%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------------------------
SIX MONTHS
ENDED
6/30/00 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1999 1998 1997 1996 1995
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $30.97 $25.49 $19.61 $21.40 $18.99 $15.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.27) (0.51) (0.32) (0.34) (0.31) (0.20)
Net realized and unrealized gain (loss) 0.65 12.74 7.41 3.41 4.39 4.21
---- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 0.38 12.23 7.09 3.07 4.08 4.01
---- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- -- --
Dividends from net realized gains -- (6.57) (1.21) (4.86) (1.67) (0.30)
In excess of net realized gains -- (0.18) -- -- -- --
---- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS -- (6.75) (1.21) (4.86) (1.67) (0.30)
---- ----- ----- ----- ----- -----
Change in net asset value 0.38 5.48 5.88 (1.79) 2.41 3.71
---- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $31.35 $30.97 $25.49 $19.61 $21.40 $18.99
====== ====== ====== ====== ====== ======
Total return(2) 1.23%(4) 48.64% 36.38% 15.13% 21.52% 26.26%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $103,763 $106,372 $65,986 $54,267 $49,444 $34,786
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.17%(5) 2.29% 2.33% 2.4%(6) 2.3%(6) 2.4%
Net investment income (loss) (1.74)%(5) (1.78)% (1.47)% (1.5)% (1.5)% (1.1)%
Portfolio turnover 21%(4) 56% 119% 70.6% 70.1% 65.9%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.60% and
1.60% for the periods ended December 31, 1997 and 1996, respectively.
(4) Not annualized.
(5) Annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.40% and
2.40% for the periods ended December 31, 1997 and 1996, respectively.
Phoenix-Engemann Funds 43
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
PHOENIX-ENGEMANN FOCUS GROWTH FUND
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------------------
SIX MONTHS
ENDED
6/30/00 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1999 1998 1997 1996 1995
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $30.97 $25.49 $19.61 $21.40 $18.99 $15.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.27) (0.51) (0.32) (0.34) (0.31) (0.20)
Net realized and unrealized gain (loss) 0.65 12.74 7.41 3.41 4.39 4.21
---- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 0.38 12.23 7.09 3.07 4.08 4.01
---- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- -- --
Dividends from net realized gains -- (6.57) (1.21) (4.86) (1.67) (0.30)
In excess of net realized gains -- (0.18) -- -- -- --
---- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS -- (6.75) (1.21) (4.86) (1.67) (0.30)
---- ----- ----- ----- ----- -----
Change in net asset value 0.38 5.48 5.88 (1.79) 2.41 3.71
---- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $31.35 $30.97 $25.49 $19.61 $21.40 $18.99
====== ====== ====== ====== ====== ======
Total return(2) 1.23%(5) 48.64% 36.38% 15.13% 21.52% 26.26%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $60,122 $106,372 $65,986 $54,267 $49,444 $34,786
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.17%(6) 2.29% 2.33% 2.4%(3) 2.3%(3) 2.4%
Net investment income (loss) (1.74)%(6) (1.78)% (1.47)% (1.5)% (1.5)% (1.1)%
Portfolio turnover 21%(5) 56% 119% 70.6% 70.1% 65.9%
</TABLE>
PHOENIX-ENGEMANN NIFTY FIFTY FUND
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------
SIX MONTHS
ENDED
6/30/00 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1999 1998 1997 1996 1995
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $46.16 $38.80 $29.21 $26.50 $22.18 $17.30
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.26) (0.41) (0.20) (0.20) (0.12) (0.05)
Net realized and unrealized gain (loss) 1.53 12.92 10.45 5.23 6.00 4.93
---- ----- ----- ----- ----- ----
TOTAL FROM INVESTMENT OPERATIONS 1.27 12.51 10.25 5.03 5.88 4.88
---- ----- ----- ----- ----- ----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- -- --
Dividends from net realized gains -- (5.15) (0.66) (2.32) (1.56) --
---- ----- ----- ----- ----- ----
TOTAL DISTRIBUTIONS -- (5.15) (0.66) (2.32) (1.56) --
---- ----- ----- ----- ----- ----
Change in net asset value 1.27 7.36 9.59 2.71 4.32 4.88
---- ----- ----- ----- ----- ----
NET ASSET VALUE, END OF PERIOD $47.43 $46.16 $38.80 $29.21 $26.50 $22.18
====== ====== ====== ====== ====== ======
Total return(2) 2.75%(5) 32.47% 35.13% 19.23% 26.53% 28.21%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $328,567 $321,299 $235,065 $176,378 $145,469 $122,322
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.49%(6) 1.58% 1.60% 1.6%(4) 1.7%(4) 1.9%
Net investment income (loss) (1.11)%(6) (0.97)% (0.61)% (0.7)% (0.4)% (0.3)%
Portfolio turnover 55%(5) 43% 92% 68.8% 41.9% 26.5%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.40% and
2.40% for the periods ended December 31, 1997 and 1996, respectively.
(4) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.60% and
1.80% for the periods ended December 31, 1997 and 1996, respectively.
(5) Not annualized.
(6) Annualized.
44 Phoenix-Engemann Funds
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
PHOENIX-ENGEMANN NIFTY FIFTY FUND
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------------------
SIX MONTHS
ENDED
6/30/00 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1999 1998 1997 1996 1995
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $43.68 $37.21 $28.24 $25.88 $21.85 $17.17
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.41) (0.70) (0.43) (0.42) (0.30) (0.21)
Net realized and unrealized gain (loss) 1.44 12.32 10.06 5.10 5.89 4.89
---- ----- ----- ----- ----- ----
TOTAL FROM INVESTMENT OPERATIONS 1.03 11.62 9.63 4.68 5.59 4.68
---- ----- ----- ----- ----- ----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- -- --
Dividends from net realized gains -- (5.15) (0.66) (2.32) (1.56) --
---- ----- ----- ----- ----- ----
TOTAL DISTRIBUTIONS -- (5.15) (0.66) (2.32) (1.56) --
---- ----- ----- ----- ----- ----
Change in net asset value 1.03 6.47 8.97 2.36 4.03 4.68
---- ----- ----- ----- ----- ----
NET ASSET VALUE, END OF PERIOD $44.71 $43.68 $37.21 $28.24 $25.88 $21.85
====== ====== ====== ====== ====== ======
Total return(2) 2.36%(4) 31.47% 34.14% 18.33% 25.60% 27.26%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $141,000 $138,626 $96,983 $68,051 $47,143 $27,462
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.24%(5) 2.33% 2.35% 2.4%(3) 2.5%(3) 2.6%
Net investment income (loss) (1.86)%(5) (1.72)% (1.35)% (1.4)% (1.2)% (1.0)%
Portfolio turnover 55%(4) 43% 92% 68.8% 41.9% 26.5%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------------------
SIX MONTHS
ENDED
6/30/00 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1999 1998 1997 1996 1995
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $43.68 $37.21 $28.24 $25.88 $21.85 $17.17
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.41) (0.70) (0.43) (0.42) (0.30) (0.21)
Net realized and unrealized gain (loss) 1.44 12.32 10.06 5.10 5.89 4.89
---- ----- ----- ----- ----- ----
TOTAL FROM INVESTMENT OPERATIONS 1.03 11.62 9.63 4.68 5.59 4.68
---- ----- ----- ----- ----- ----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- -- --
Dividends from net realized gains -- (5.15) (0.66) (2.32) (1.56) --
---- ----- ----- ----- ----- ----
TOTAL DISTRIBUTIONS -- (5.15) (0.66) (2.32) (1.56) --
---- ----- ----- ----- ----- ----
Change in net asset value 1.03 6.47 8.97 2.36 4.03 4.68
---- ----- ----- ----- ----- ----
NET ASSET VALUE, END OF PERIOD $44.71 $43.68 $37.21 $28.24 $25.88 $21.85
====== ====== ====== ====== ====== ======
Total return(2) 2.36%(4) 31.47% 34.14% 18.33% 25.60% 27.26%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $77,097 $70,875 $48,401 $39,773 $26,092 $15,105
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.24%(5) 2.33% 2.35% 2.4%(3) 2.5%(3) 2.6%
Net investment income (loss) (1.86)%(5) (1.72)% (1.35)% (1.4)% (1.2)% (1.0)%
Portfolio turnover 55%(4) 43% 92% 68.8% 41.9% 26.5%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.40% and
2.50% for the periods ended December 31, 1997 and 1996, respectively.
(4) Not annualized.
(5) Annualized.
Phoenix-Engemann Funds 45
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
PHOENIX-ENGEMANN SMALL & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------------
SIX MONTHS
ENDED 6/30/00 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1999 1998 1997 1996 1995
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $44.45 $24.08 $21.09 $18.39 $14.90 $12.07
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.25) (0.37) (0.30) (0.31) (0.12) 0.22
Net realized and unrealized gain (loss) 1.99 20.74 3.31 5.07 7.45 2.87
---- ----- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 1.74 20.37 3.01 4.76 7.33 3.09
---- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- (0.28) (0.08)
Dividends from net realized gains -- -- -- (2.06) (3.56) (0.18)
In excess of accumulated net realized gains -- -- (0.02) -- -- --
---- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS -- -- (0.02) (2.06) (3.84) (0.26)
---- ----- ----- ----- ----- -----
Change in net asset value 1.74 20.37 2.99 2.70 3.49 2.83
NET ASSET VALUE, END OF PERIOD $46.19 $44.45 $24.08 $21.09 $18.39 $14.90
====== ====== ====== ====== ====== ======
Total return(2) 3.91%(5) 84.59% 14.29% 26.41% 52.37% 25.68%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $202,729 $132,996 $54,187 $27,771 $7,859 $1,742
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 1.61%(4) 1.73% 1.78% 1.80% 1.10% --%
Net investment income (loss) (1.07)%(4) (1.40)% (1.39)% (1.40)% (0.70)% 1.50%
Portfolio turnover 55%(5) 105% 147% 313.5% 297.1% 121.4%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------
SIX MONTHS INCEPTION
ENDED 6/30/00 YEAR ENDED DECEMBER 31, 9/18/96 TO
(UNAUDITED) 1999 1998 1997 12/31/96
----------- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $43.32 $23.64 $20.87 $18.35 $16.44(6)
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.41) (0.55) (0.45) (0.46) (0.32)
Net realized and unrealized gain (loss) 1.93 20.23 3.24 5.04 2.43
---- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 1.52 19.68 2.79 4.58 2.11
---- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains -- -- -- (2.06) (0.20)
In excess of accumulated net realized gains -- -- (0.02) -- --
---- ----- ----- ----- -----
TOTAL DISTRIBUTIONS -- -- (0.02) (2.06) (0.20)
---- ----- ----- ----- -----
Change in net asset value 1.52 19.68 2.77 2.52 1.91
---- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $44.84 $43.32 $23.64 $20.87 $18.35
====== ====== ====== ====== ======
Total return(2) 3.53%(5) 83.25% 13.39% 25.49% 12.84%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $101,906 $73,863 $31,631 $17,298 $1,480
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.35%(4)(7) 2.48%(7) 2.53%(7) 2.60%(7) 2.60%(4)
Net investment income (loss) (1.82)%(4) (2.15)% (2.14)% (2.10)% (2.20)%(4)
Portfolio turnover 55%(5) 105% 147% 313.5% 297.1%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.62%, 1.75%,
1.83%, 1.80%, 1.90% and 2.30% for the periods ended June 30, 2000, December 31,
1999, 1998, 1997, 1996 and 1995, respectively.
(4) Annualized.
(5) Not annualized.
(6) The beginning net asset value per share of Class B and Class C shares equals
the net asset value per share of the Class A shares as of the first day Class B
and Class C shares were sold, September 18, 1996 and October 8, 1996,
respectively.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.37%, 2.50%,
2.58% and 2.60% for the periods ended June 30, 2000, December 31, 1999, 1998 and
1997, respectively.
46 Phoenix-Engemann Funds
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
PHOENIX-ENGEMANN SMALL & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
SIX MONTHS INCEPTION
ENDED 6/30/00 YEAR ENDED DECEMBER 31, 9/18/96 TO
(UNAUDITED) 1999 1998 1997 12/31/96
----------- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $43.29 $23.63 $20.87 $18.35 $17.99(6)
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.41) (0.55) (0.45) (0.47) (0.29)
Net realized and unrealized gain (loss) 1.94 20.21 3.23 5.05 0.85
---- ----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS 1.53 19.66 2.78 4.58 0.56
---- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains -- -- -- (2.06) (0.20)
In excess of accumulated net realized gains -- -- (0.02) -- --
---- ----- ----- ----- -----
TOTAL DISTRIBUTIONS -- -- (0.02) (2.06) (0.20)
---- ----- ----- ----- -----
Change in net asset value 1.53 19.66 2.76 2.52 0.36
---- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $44.82 $43.29 $23.63 $20.87 $18.35
====== ====== ====== ====== ======
Total return(2) 3.53%(5) 83.20% 13.34% 25.49% 3.12%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $66,886 $37,584 $15,023 $8,080 $54
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.35%(3)(4) 2.48%(3) 2.53%(3) 2.60%(3) 2.60%(4)
Net investment income (loss) (1.82)%(4) (2.15)% (2.14)% (2.10)% (2.20)%(4)
Portfolio turnover 55%(5) 105% 147% 313.5% 297.1%
</TABLE>
ENGEMANN VALUE 25 FUND
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
SIX MONTHS INCEPTION
ENDED 6/30/00 YEAR ENDED DECEMBER31, 12/17/96 TO
(UNAUDITED) 1999 1998 1997 12/31/96
----------- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.23 $11.64 $11.56 $10.11 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.14 0.17 0.15(1) 0.17(1) --(1)
Net realized and unrealized gain (loss) (1.61) 0.84 0.66 1.95 0.11
----- ----- ----- ----- ----
TOTAL FROM INVESTMENT OPERATIONS (1.47) (0.67) 0.81 2.12 0.11
----- ----- ----- ----- ----
LESS DISTRIBUTIONS
Dividends from net investment income (0.10) (0.16) (0.14) (0.12) --
Dividends from net realized gains (0.01) (1.52) (0.59) (0.55) --
In excess of net realized gains -- (0.06) -- -- --
----- ----- ----- ----- ----
TOTAL DISTRIBUTIONS (0.11) (1.74) (0.73) (0.67) --
----- ----- ----- ----- ----
Change in net asset value (1.58) (2.41) 0.08 1.45 0.11
----- ----- ----- ----- ----
NET ASSET VALUE, END OF PERIOD $7.65 $9.23 $11.64 $11.56 $10.11
===== ===== ====== ====== ======
Total return(2) (16.00)%(5) (5.75)% 7.23% 21.10% 1.10%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $7,728 $13,500 $18,090 $19,518 $482
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.68%(4)(7) 1.75%(7) 1.75%(7) 1.80%(7) 1.70%(4)
Net investment income (loss) 2.58%($) 1.32% 1.25% 1.40% 1.80%(4)
Portfolio turnover 59%(5) 181% 135% 87.7% --%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.37%, 2.50%,
2.58% and 2.60% for the periods ended June 30, 2000, December 31, 1999, 1998 and
1997, respectively.
(4) Annualized.
(5) Not annualized.
(6) The beginning net asset value per share of Class B and Class C shares equals
the net asset value per share of the Class A shares as of the first day Class B
and Class C shares were sold, September 19, 1996 and October 8, 1996,
respectively.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.85%, 1.84%,
1.86% and 1.80% for the periods ended June 30, 2000, December 31, 1999, 1998 and
1997, respectively.
Phoenix-Engemann Funds 47
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
PHOENIX-ENGEMANN VALUE 25 FUND
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------
SIX MONTHS
ENDED 6/30/00 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1999 1998 1997
----------- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.17 $11.59 $11.53 $10.39(6)
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.08 0.07 0.06(1) 0.08(1)
Net realized and unrealized gain (loss) (1.57) (0.83) 0.65 1.67
----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS (1.49) (0.76) 0.71 1.75
----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income (0.08) (0.08) (0.06) (0.06)
Dividends from net realized gains (0.01) (1.52) (0.59) (0.55)
In excess of net realized gains -- (0.06) -- --
----- ----- ----- -----
TOTAL DISTRIBUTIONS (0.09) (1.66) (0.65) (0.61)
----- ----- ----- -----
Change in net asset value (1.58) (2.42) 0.06 1.14
----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $7.59 $9.17 $11.59 $11.53
===== ===== ====== ======
Total return(2) (16.35)%(5) (6.46)% 6.41% 16.97%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $5,366 $7,546 $10,981 $8,799
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 2.43%(4) 2.50% 2.50% 2.60%(4)
Net investment income (loss) 1.94%(4) 0.56% 0.54% 0.70%(4)
Portfolio turnover 59%(5) 181% 135% 87.7%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------
SIX MONTHS
ENDED 6/30/00 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1999 1998 1997
----------- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.16 $11.58 $11.52 $10.39(6)
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.09 0.08 0.06(1) 0.09(1)
Net realized and unrealized gain (loss) (1.57) (0.84) 0.65 1.66
----- ----- ----- -----
TOTAL FROM INVESTMENT OPERATIONS (1.48) (0.76) 0.71 1.75
----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income (0.08) (0.08) (0.06) (0.07)
Dividends from net realized gains (0.01) (1.52) (0.59) (0.55)
In excess of net realized gains -- (0.06) -- --
----- ----- ----- -----
TOTAL DISTRIBUTIONS (0.09) (1.66) (0.65) (0.62)
----- ----- ----- -----
Change in net asset value (1.57) (2.42) 0.06 1.13
----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $7.59 $9.16 $11.58 $11.52
===== ===== ====== ======
Total return(2) (16.27)%(5) (6.49)% 6.42% 17.01%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $1,971 $3,153 $6,642 $4,893
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 2.43%(4) 2.50% 2.50% 2.60%(4)
Net investment income (loss) 1.85%(4) 0.57% 0.52% 0.80%(4)
Portfolio turnover 59%(5) 181% 135% 87.7%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.60%, 2.59%,
2.61% and 2.60% for the periods ended June 30, 2000, December 31, 1999, 1998 and
1997, respectively.
(4) Annualized.
(5) Not annualized.
(6) The beginning net asset value per share of Class B and Class C shares equals
the net asset value per share of the Class A shares as of the first day Class B
and Class C shares were sold, January 9, 1997.
48 Phoenix-Engemann Funds
<PAGE>
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The funds have filed a Statement of Additional Information about the funds,
dated December 15, 2000 with the Securities and Exchange Commission. The
Statement contains more detailed information about the funds. It is incorporated
into this prospectus by reference and is legally part of the prospectus. You may
obtain a free copy of the Statement:
> by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
> by calling (800) 243-4361.
You may also obtain information about the funds from the Securities and Exchange
Commission:
> through its internet site (http://www.sec.gov),
> by visiting its Public Reference Room in Washington, DC,
> by writing to its Public Reference Section, Washington, DC 20549-0102
(a fee may be charged), or
> by electronic request at [email protected] (a fee may be charged).
Information about the operation of the Public Reference Room may be obtained by
calling 1-202-942-8090.
SHAREHOLDER REPORTS
The funds semiannually mail to shareholders detailed reports containing
information about each fund's investments. The funds' Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the funds' performance from January 1 through December
31. You may request a free copy of the funds' Annual and Semiannual Reports:
> by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
> 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
<TABLE>
<S> <C>
SEC File Nos.33-1922 and 811-4506 [RECYCLE LOGO] Printed on recycled paper using soybean ink
</TABLE>
Phoenix-Engemann Funds 49
<PAGE>
PHOENIX-ENGEMANN BALANCED RETURN FUND
PHOENIX-ENGEMANN FOCUS GROWTH FUND
PHOENIX-ENGEMANN NIFTY-FIFTY FUND
PHOENIX-ENGEMANN SMALL & MID-CAP FUND
PHOENIX-ENGEMANN VALUE 25 FUND
600 North Rosemead Boulevard
Pasadena, California 91107-2133
STATEMENT OF ADDITIONAL INFORMATION
December 15, 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 December 15, 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
PAGE
The Trust.............................................................. 1
Investment Restrictions................................................ 1
Investment Techniques and Risks........................................ 2
Performance Information................................................ 10
Portfolio Transactions and Brokerage................................... 12
Portfolio Turnover..................................................... 13
Services of the Adviser................................................ 14
Net Asset Value........................................................ 15
How to Buy Shares...................................................... 15
Alternative Purchase Arrangements...................................... 16
Investor Account Services.............................................. 18
How To Redeem Shares................................................... 20
Tax Sheltered Retirement Plans......................................... 21
Dividends, Distributions and Taxes..................................... 21
The Distributor........................................................ 22
Distribution Plans..................................................... 25
Management of the Trust................................................ 26
Other Information...................................................... 28
Appendix............................................................... 30
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PXP 2011B (12/00)
<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 originally 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 was reorganized as a Delaware business
trust in December 2000. The Trust presently comprises five series:
Phoenix-Engemann Focus Growth Fund, Phoenix-Engemann Nifty Fifty Fund,
Phoenix-Engemann Balanced Return Fund, Phoenix-Engemann Small & Mid-Cap Growth
Fund and Phoenix-Engemann Value 25 Fund, each a "Fund" and, collectively, the
"Funds."
INVESTMENT RESTRICTIONS
The following investment restrictions have been adopted by the Trust with
respect to the Fund. Except as otherwise stated, these investment restrictions
are "fundamental" policies. A "fundamental" policy is defined in the 1940 Act to
mean that the restriction cannot be changed without the vote of a "majority of
the outstanding voting securities" of the Fund. A majority of the outstanding
voting securities is defined in the 1940 Act as the lesser of (a) 67% or more of
the voting securities present at a meeting if the holders of more than 50% of
the outstanding voting securities are present or represented by proxy, or (b)
more than 50% of the outstanding voting securities.
The Fund may not:
(1) With respect to 75% of its total assets, purchase securities of an issuer
(other than the U.S. Government, its agencies, instrumentalities or authorities
or repurchase agreements collateralized by U.S. Government securities and other
investment companies), if: (a) such purchase would, at the time, cause more than
5% of the Fund's total assets taken at market value to be invested in the
securities of such issuer; or (b) such purchase would, at the time, result in
more than 10% of the outstanding voting securities of such issuer being held by
the Fund.
(2) Purchase securities if, after giving effect to the purchase, more than
25% of its total assets would be invested in the securities of one or more
issuers conducting their principal business activities in the same industry
(excluding the U.S. Government or its agencies or instrumentalities).
(3) Borrow money, except (i) in amounts not to exceed one third of the value
of the Fund's total assets (including the amount borrowed) from banks, and (ii)
up to an additional 5% of its total assets from banks or other lenders for
temporary purposes. For purposes of this restriction, (a) investment techniques
such as margin purchases, short sales, forward commitments, and roll
transactions, (b) investments in instruments such as futures contracts, swaps,
and options and (c) short-term credits extended in connection with trade
clearance and settlement, shall not constitute borrowing.
(4) Issue "senior securities" in contravention of the 1940 Act. Activities
permitted by a SEC exemptive orders or staff interpretations shall not be deemed
to be prohibited by this restriction.
(5) Underwrite the securities issued by other persons, except to the extent
that, in connection with the disposition of portfolio securities, the Fund may
be deemed to be an underwriter under applicable law.
(6) Purchase or sell real estate, except that the Fund may (i) acquire or
lease office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interests therein, (iii) invest in mortgage-related
securities and other securities that are secured by real estate or interests
therein, (iv) hold and sell real estate acquired by the Fund as a result of the
ownership of securities.
(7) Purchase or sell commodities or commodity contracts, except the Fund may
purchase and sell derivatives (including, but not limited to, options, futures
contracts and options on futures contracts) whose value is tied to the value of
a financial index or a financial instrument or other asset (including, but not
limited to, securities indexes, interest rates, securities, currencies and
physical commodities).
(8) Make loans, except that the Fund may (i) lend portfolio securities, (ii)
enter into repurchase agreements, (iii) purchase all or a portion of an issue of
debt securities, bank loan participation interests, bank certificates of
deposit, bankers' acceptances, debentures or other securities, whether or not
the purchase is made upon the original issuance of the securities and (iv)
participate in an interfund lending program with other registered investment
companies.
If any percentage restriction described above for the Fund is adhered to at
the time of investment, a subsequent increase or decrease in the percentage
resulting from a change in the value of the Fund's assets will not constitute a
violation of the restriction.
1
<PAGE>
INVESTMENT TECHNIQUES AND RISKS
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 Focus 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.
DEPOSITARY RECEIPTS. Each Fund's investments in the securities of foreign
issuers may be in the form of Depositary Receipts ("DRs"), e.g., American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs"), Continental Depositary Receipts ("CDRs"), or other
forms of DRs. DRs are receipts typically issued by a United States or foreign
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. The Fund may invest in DRs through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the underlying security and a depository, whereas a depository may
establish an unsponsored facility without participation by the issuer of the
deposited security. The depository of unsponsored DRs generally bears all the
costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
FOREIGN CURRENCY TRANSACTIONS
IN GENERAL. As described below, each Fund (except the Focus Growth Fund, the
Nifty Fifty Fund and the Balanced Return Fund) may engage in certain foreign
currency exchange and option transactions. These transactions involve investment
risks and transaction costs to which a Fund would not be subject absent the use
of these strategies. If the Adviser's predictions of movements in the direction
of securities prices or currency exchange rates are inaccurate, the adverse
consequences to a Fund may leave such Fund in a worse position than if it had
not used such strategies. Risks inherent in the use of option and foreign
currency forward and futures contracts include: (1) dependence on the Adviser's
ability to correctly predict movements in the direction of securities prices and
currency exchange rates; (2) imperfect correlation between the price of options
and futures contracts and movements in the prices of the securities or
currencies being hedged; (3) the fact that the skills needed to use these
strategies are different from those needed to select portfolio securities; (4)
the possible absence of a liquid secondary market for any particular instrument
at any time; and (5) the possible need to defer closing out certain hedged
positions to avoid adverse tax consequences. Each Fund's ability to enter into
futures contracts is also limited by the requirements of the Internal Revenue
Code of 1986, as amended, (the "Code") for qualification as a regulated
investment company.
The Small & Mid-Cap Growth Fund and Value 25 Fund may engage in currency
exchange transactions to protect against uncertainty in the level of future
currency exchange rates. In addition, each Fund may write covered put and call
options on foreign currencies for the purpose of increasing its return.
Generally, each of the above Funds may engage in both "transaction hedging"
and "position hedging." When it engages in transaction hedging, a Fund enters
into foreign currency transactions with respect to specific receivables or
payables, generally arising in connection with the purchase or sale of portfolio
securities. A Fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or
2
<PAGE>
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.
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
3
<PAGE>
related option minus the Fund's initial margin deposit will be deposited in a
pledged account with the Funds' custodian to collateralize the position and
thereby ensure that it is not leveraged.
CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the contract
as agreed by the parties, at a price set at the time of the contract. The holder
of a cancelable forward contract has the unilateral right to cancel the contract
at maturity by paying a specified fee. The contracts are traded in the interbank
market conducted directly between currency traders (usually large commercial
banks) and their customers. A forward contract generally has no deposit
requirement, and no commissions are charged at any stage for trades. A foreign
currency futures contract is a standardized contract for the future delivery of
a specified amount of a foreign currency at a future date at a price set at the
time of the contract. Foreign currency futures contracts traded in the United
States are designed by and traded on exchanges regulated by the CFTC, such as
the New York Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign currency
futures contracts in certain respects. For example, the maturity date of a
forward contract may be any fixed number of days from the date of the contract
agreed upon by the parties, rather than a predetermined date in a given month.
Forward contracts may be in any amounts agreed upon by the parties rather than
predetermined amounts. Also, forward foreign exchange contracts are traded
directly between currency traders so that no intermediary is required. A forward
contract generally requires no margin or other deposit.
At the maturity of a forward or futures contract, a Fund either may accept or
make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original forward
contract. Closing transactions with respect to futures contracts are effected on
a commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.
Although each Fund (except the Focus Growth Fund, the Nifty Fifty Fund and
the Balanced Return Fund) intends to purchase or sell foreign currency futures
contracts only on exchanges or boards of trade where there appears to be an
active market, there is no assurance that a market on an exchange or board of
trade will exist for any particular contract or at any particular time. In such
event, it may not be possible to close a futures position and, in the event of
adverse price movements, the Fund would continue to be required to make daily
cash payments of variation margin.
FOREIGN CURRENCY OPTIONS. In general, options on foreign currencies operate
similarly to options on securities and are subject to many similar risks.
Foreign currency options are traded primarily in the over-the-counter market,
although options on foreign currencies have recently been listed on several
exchanges. Options are traded not only on the currencies of individual nations,
but also on the European Currency Unit, which is composed of amounts of a number
of currencies and is the official medium of exchange of the European Community's
European Monetary System.
Each Fund (except the Focus Growth, Nifty Fifty and Balanced Return Funds)
will only purchase or write foreign currency options when the Fund's Adviser
believes that a liquid market exists for such options. There can be, however, no
assurance that a liquid market will exist for a particular option at any
specific time. Options on foreign currencies are affected by all of those
factors which influence foreign exchange rates and investments generally.
The value of any currency, including U.S. dollars and foreign currencies, may
be affected by complex political and economic factors applicable to the issuing
country. In addition, the exchange rates of foreign currencies (and therefore
the values of foreign currency options) may be affected significantly, fixed, or
supported directly or indirectly, by U.S. and foreign government actions.
Government intervention may increase risks involved in purchasing or selling
foreign currency options, since exchange rates may not be free to fluctuate in
response to other market forces.
The value of a foreign currency option reflects the value of an exchange
rate, which in turn reflects the relative values of two currencies, generally
the U.S. dollar and the foreign currency in question. Because foreign currency
transactions occurring in the interbank market involve substantially larger
amounts than those that may be involved in the exercise of foreign currency
options, investors may be disadvantaged by having to deal in an odd-lot market
for the underlying foreign currencies in connection with options at prices that
are less favorable than for round lots. Foreign governmental restrictions or
taxes could result in adverse changes in the cost of acquiring or disposing of
foreign currencies.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information 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.
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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.
No Fund will deal in commodity contracts per se, and the Small & Mid-Cap
Growth and Value 25 Funds will deal only in futures contracts involving
financial instruments. Although futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed out
before the settlement date without the making or taking of delivery. Closing out
a futures contract sale is effected by purchasing a futures contract for the
same aggregate amount of the specific type of financial instrument or commodity
with the same delivery date. If the price of the initial sale of the futures
contract exceeds the price of the offsetting purchase, the seller is paid the
difference and realizes a gain. Conversely, if the price of the offsetting
purchase exceeds the price of the initial sale, the seller realizes a loss.
Similarly, the closing out of a futures contract purchase is effected by the
purchaser's entering into a futures contract sale. If the offsetting sale price
exceeds the purchase price, the purchaser realizes a gain, and if the purchase
price exceeds the offsetting sale price, he realizes a loss. Futures contracts
traded on an exchange approved by the CFTC are "marked to market" at the end of
each year, whether or not they are closed out. In general, 40% of the gain or
loss arising from the closing out or marking to market of a futures contract
traded on an exchange approved by the CFTC is treated as short-term capital gain
or loss, and 60% is treated as long-term capital gain or loss.
Unlike when a Fund purchases or sells a security, no price is paid or
received by such Fund upon the purchase or sale of a futures contract. Upon
entering into a contract, such Fund is required to deposit with its custodian in
a segregated account in the name of the futures broker an amount of cash and/or
certain liquid securities. This amount is known as "initial margin." The nature
of initial margin in futures transactions is different from that of margin in
security transactions in that futures contract margin does not involve the
borrowing of funds to finance the transactions. Rather, initial margin is
similar to a performance bond or good faith deposit which is returned to such
Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Futures contracts also involve brokerage costs.
Subsequent payments, called "variation margin," to and from the broker (or
the custodian) are made on a daily basis as the price of the underlying security
or commodity fluctuates, making the long and short positions in the futures
contract more or less valuable, a process known as "marking to the market." For
example, when a Fund has purchased a futures contract on a security and the
price of the underlying security has risen, that position would increase in
value and such Fund would receive from the broker a variation margin payment
based on that increase in value. Conversely, when a Fund has purchased a
security futures contract and the price of the underlying security has declined,
the position would be less valuable and such Fund would be required to make a
variation margin payment to the broker.
A Fund may elect to close some or all of its futures positions at any time
prior to their expiration in order to reduce or eliminate a hedge position then
currently held by such Fund. A Fund may close its positions by taking opposite
positions which will operate 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.
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At the time of purchase of a financial futures contract or a call option on a
futures contract, liquid assets, such as cash, U.S. government securities or
other appropriate high-grade debt obligations, marked to market daily equal to
the market value of the futures contract minus the Fund's initial margin deposit
will be deposited in a pledged account with the Funds' custodian to
collateralize the position and thereby ensure that it is not leveraged.
OPTIONS ON FUTURES CONTRACTS. Each Fund (except the Focus Growth Fund, the
Nifty Fifty Fund and the Balanced Return Fund) may purchase and write put and
call options on futures contracts it may buy or sell and enter into closing
transactions with respect to such options to terminate existing positions.
Options on future contracts give the purchaser the right, in return for the
premium paid, to assume a position in a futures contract at the specified option
exercise price at any time during the period of the option. Each of the above
Funds may use options on futures contracts in lieu of writing or buying options
directly on the underlying securities or purchasing and selling the underlying
futures contracts. For example, to hedge against a possible decrease in the
value of its portfolio securities, a Fund may purchase put options or write call
options on futures contracts rather than selling futures contracts. Similarly, a
Fund may purchase call options or write put options on futures contracts as a
substitute for the purchase of futures contracts to hedge against a possible
increase in the price of securities which such Fund expects to purchase. Such
options generally operate in the same manner as options purchased or written
directly on the underlying investments.
As with options on securities, the holder or writer of an option may
terminate its position by selling or purchasing an offsetting option. There is
no guarantee that such closing transactions can be effected.
The Small & Mid-Cap Growth and Value 25 Funds will be required to deposit
initial margin and maintenance margin with respect to put and call options on
futures contracts written by such Funds pursuant to brokers' requirements
similar to those described above in connection with the discussion of futures
contracts.
RISKS OF FUTURES CONTRACTS AND RELATED OPTIONS. Successful use of futures
contracts by a Fund is subject to the Adviser's ability to predict movements in
the direction of interest rates and other factors affecting securities markets.
For example, if a Fund has hedged against the possibility of decline in the
values of its investments and the values of its investments increase instead,
such Fund will lose part or all of the benefit of the increase through payments
of daily maintenance margin. A Fund may have to sell investments at a time when
it may be disadvantageous to do so in order to meet margin requirements. The
loss from investing in futures transactions is potentially unlimited.
Compared to the purchase or sale of futures contracts, the purchase of put or
call options on futures contracts involves less potential risk to a Fund because
the maximum amount at risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the purchase of a put or call
option on a futures contract would result in a loss to a Fund when the purchase
or sale of a futures contract would not, such as when there is no movement in
the prices of the hedged investments. The writing of an option on a futures
contract involves risks similar to those risks relating to the sale of futures
contracts.
There is no assurance that higher than anticipated trading activity or other
unforeseen events might not, at times, render certain market clearing facilities
inadequate, and thereby result in the institution by exchanges of special
procedures which may interfere with the timely execution of customer orders.
To reduce or eliminate a hedge position held by a Fund, such Fund may seek to
close out a position. The ability to establish and close out positions will be
subject to the development and maintenance of a liquid secondary market. It is
not certain that this market will develop or continue to exist for a particular
futures contract or option. Reasons for the absence of a liquid secondary market
on an exchange include the following: (i) there may be insufficient trading
interest in certain contracts or options; (ii) restrictions may be imposed by an
exchange on opening transactions or closing transactions or both; (iii) trading
halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of contracts or options, or underlying securities;
(iv) unusual or unforeseen circumstances may interrupt normal operations on an
exchange; (v) the facilities of an exchange or a clearing corporation may not at
all times be adequate to handle current trading volume; or (vi) one or more
exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of contracts or options (or a particular
class or series of contracts or options), in which event the secondary market on
that exchange for such contracts or options (or in the class or series of
contracts or options) would cease to exist, although outstanding contracts or
options on the exchange that had been issued by a clearing corporation as a
result of trades on that exchange would continue to be exercisable in accordance
with their terms.
INDEX FUTURES CONTRACTS. An index futures contract is a contract to buy or
sell units of an index at a specified future date at a price agreed upon when
the contract is made. Entering into a contract to buy units of an index is
commonly referred to as buying or purchasing a contract or holding a long
position in the index. Entering into a contract to sell units of an index is
commonly referred to as selling a contract or holding a short position. A unit
is the current value of the index. Both the Small & Mid-Cap
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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.
INDEX WARRANTS
Each Fund (except the Focus Growth Fund, the Nifty Fifty Fund and the
Balanced Return Fund) may purchase put warrants and call warrants whose values
vary depending on the change in the value of one or more specified securities
indices ("index warrants"). Index warrants are generally issued by banks or
other financial institutions and give the holder the right, at any time during
the term of the warrant, to receive upon exercise of the warrant a cash payment
from the issuer based on the value of the underlying index at the time of
exercise. In general, if the value of the underlying index rises above the
exercise price of the index
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warrant, the holder of a call warrant will be entitled to receive a cash payment
from the issuer upon exercise based on the difference between the value of the
index and the exercise price of the warrant; if the value of the underlying
index falls, the holder of a put warrant will be entitled to receive a cash
payment from the issuer upon exercise based on the difference between the
exercise price of the warrant and the value of the index. The holder of a
warrant would not be entitled to any payments from the issuer at any time when,
in the case of a call warrant, the exercise price is greater than the value of
the underlying index, or, in the case of a put warrant, the exercise price is
less than the value of the underlying index. If a Fund were not to exercise an
index warrant prior to its expiration, then such Fund would lose the amount of
the purchase price paid by it for the warrant.
A Fund will normally use index warrants in a manner similar to its use of
options on securities indices. The risks of a Fund's use of index warrants are
generally similar to those relating to its use of index options. Unlike most
index options, however, index warrants are issued in limited amounts and are not
obligations of a regulated clearing agency, but are backed only by the credit of
the bank or other institution which issues the warrant. Also, index warrants
generally have longer terms than index options. Although each Fund will normally
invest only in exchange listed warrants, index warrants are not likely to be as
liquid as certain index options backed by a recognized clearing agency. In
addition, the terms of index warrants may limit a Fund's ability to exercise the
warrants at such time, or in such quantities, as the Fund would otherwise wish
to do.
OPTIONS
Each Fund may buy and sell put and call options for hedging purposes, and may
also seek to increase its return by writing covered put and call options on
securities it owns or in which it may invest. A Fund receives a premium from
writing a put or call option, which increases such Fund's return if the option
expires unexercised or is closed out at a net profit. When a Fund writes a call
option, it gives up the opportunity to profit from any increase in the price of
the underlying security above the exercise price of the option and the premium
received; when it writes a put option, a Fund takes the risk that it will be
required to purchase the underlying security form the option holder at a price
above the current market price of the security and the premium received. A Fund
may terminate an option that it has written prior to its expiration by entering
into a closing purchase transaction in which it purchases an option having the
same terms as the option written. Each fund's use of these strategies may be
limited by applicable law.
OPTIONS ON SECURITIES INDICES AND PUT AND CALL WARRANTS
Each Fund may buy and sell options on domestic and foreign securities indices
for hedging purposes. A securities index represents a numerical measure of the
changes in value of the securities comprising the index. An option on a
securities index gives the holder the right, in return for the premium paid for
the option, to buy (in the case of a call option) or sell (in the case of a put
option) units of a particular index at an agreed price during the term of the
option. The holder of the option does not receive the right to take or make
delivery of the actual securities making up the index, but has the right instead
to receive a cash settlement amount based on the change, if any, in the value of
the index during the term of the option.
Depending on the change in the value of the underlying index during the term
of the option, the holder may either exercise the option at a profit or permit
the option to expire worthless. For example, if a Fund were to sell a call
option on an index and the value of the index were to increase during the term
of the option, the holder of the index would likely exercise the option and
receive a cash payment from such Fund. In, on the other hand, the value of the
index were to decrease, the option would likely expire worthless, and such Fund
would realize a profit in the amount of the premium received by it when it sold
the option (less and transaction costs). Each Fund will only purchase or sell
options on a securities index to the extent that it holds securities in its
portfolio whose price changes, in the Adviser's judgment, should correlate
closely with changes in the index.
Each of the Funds may also purchase put and call warrants issued by banks and
other financial institutions, whose values are based on the values from time to
time of one or more foreign securities indices. Each Fund's use of such warrants
would be similar to its use of options on securities indices.
SECURITIES LENDING
Each Fund may make secured loans of its portfolio securities to increase its
total return. The risks in lending portfolio securities, as with other
extensions of credit, consist of possible delay in recovery of the securities or
possible loss of rights in the collateral should the borrower fail financially.
As a matter of policy, securities loans are made to broker-dealers pursuant to
agreements requiring that loans be continuously secured by collateral consisting
of cash or high-grade short-term debt obligations at least equal at all times to
the value of the securities on loan, "marked-to-market" daily. The borrower pays
to such Fund an amount equal to any dividends or interest received on securities
lent. A Fund retains all or a portion of the interest received on investment of
the cash collateral or receives a fee from the borrower. Although voting rights,
or rights to consent, with respect to the loaned securities pass to the
borrower, a Fund retains the right to call the loans at any time on reasonable
notice, and it will do so to enable the Fund to exercise the voting rights on
any matters materially affecting the investment. A Fund may also call such loans
in order to sell securities.
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FORWARD COMMITMENTS
Each Fund (except the Focus Growth Fund, the Nifty Fifty Fund and the
Balanced Return Fund) may enter into contracts to purchase securities for a
fixed price at a future date beyond customary settlement time ("forward
commitments") if the Fund holds, and maintains until settlement date in a
segregated account, cash or high-grade debt obligations in an amount sufficient
to meet the purchase price, or if the Fund enters into offsetting contracts for
the forward sale of other securities it owns. Forward commitments may be
considered securities in themselves, and involve a risk of loss if the value of
the security to be purchased declines prior to the settlement date, which risk
is in addition to the risk of decline in the value of the Fund's other assets.
Where such purchases are made through dealers, the Fund relies on the dealer to
consummate the sale. The dealer's failure to do so may result in the loss to the
Fund of an advantageous yield or price. Although each Fund will generally enter
into forward commitments with the intention of acquiring securities for its
portfolio or for delivery pursuant to options contracts it has entered into,
such Fund may dispose of a commitment prior to settlement if the Adviser deems
it appropriate to do so. A Fund may realize short-term profits or losses upon
the sale of forward commitments.
ILLIQUID SECURITIES
The Funds may invest in securities as to which a liquid trading market does
not exist, provided such investments are consistent with such Fund's objective
and other policies. Such securities may include securities that are not readily
marketable, such as certain securities that are subject to legal or contractual
restrictions on resale, repurchase agreements providing for settlement in more
than seven days after notice, certain options traded in the over-the-counter
market and securities used to cover such options. As to these securities, a Fund
is subject to a risk that should the Fund desire to sell them when a ready buyer
is not available at a price the Fund deems representative of their value, the
value of the Fund could be adversely affected. When purchasing securities that
have not been registered under the Securities Act of 1933, as amended (the "1933
Act"), and are not readily marketable, each Fund will endeavor to obtain the
right to registration at the expense of the issuer. Generally, there will be a
lapse of time between a Fund's decision to sell any such security and the
registration of the security permitting sale. During any such period, the price
of the securities will be subject to market fluctuations. However, if a
substantial market of qualified institutional buyers develops pursuant to Rule
144A under the 1933 Act for certain unregistered securities held by a Fund, such
Fund intends to treat such securities as liquid securities in accordance with
procedures approved by the Trust's Board of Trustees. Because it is not possible
to predict with any assurance how the market for restricted securities pursuant
to Rule 144A will develop, the Board of Trustees has directed the Adviser to
monitor carefully any Fund investments in such securities with particular regard
to trading activity, availability or reliable price information and other
relevant information. To the extent that, for a period of time, qualified
institutional buyers cease purchasing such restricted securities pursuant to
Rule 144A, a Fund's investing in such securities may have the effect of
increasing the level of illiquidity in the Fund's portfolio during such period.
REPURCHASE AGREEMENTS
Each Fund may, for temporary defensive purposes, invest its assets in
eligible U.S. Government securities and concurrently enter into repurchase
agreements with respect to such securities. Under such agreements, the seller of
the security agrees to repurchase it at a mutually agreed upon time and price.
The repurchase price may be higher than the purchase price, the difference being
income to the Fund, or the purchase and repurchase prices may be the same, with
interest at a stated rate due to the Fund together with the repurchase price on
repurchase. In either case, the income to the Fund is unrelated to the interest
rate on the U.S. Government security itself. 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.
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
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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
Each Fund may invest in special situations that the Adviser believes present
opportunities for capital growth. Such situations most typically include
corporate restructurings, mergers, and tender offers.
A special situation arises when, in the opinion of the Adviser, the
securities of a particular company will, within a reasonably estimable period of
time, be accorded market recognition at an appreciated value solely by reason of
a development particularly or uniquely applicable to that company and regardless
of general business conditions or movements of the market as a whole.
Developments creating special situations might include, among others, the
following: liquidations, reorganizations, recapitalizations, mergers, or tender
offers; material litigation or resolution thereof; technological breakthroughs;
and new management or management policies. Although large and well-known
companies may be involved, special situations often involve much greater risk
than is inherent in ordinary investment securities.
UNSEASONED COMPANIES
As a matter of operating policy, the Funds may invest to a limited extent in
securities of unseasoned companies and new issues. The Adviser regards a company
as unseasoned when, for example, it is relatively new to or not yet well
established in its primary line of business. Such companies generally are
smaller and younger than companies whose shares are traded on the major stock
exchanges. Accordingly, their shares are often traded over-the-counter and their
share prices may be more volatile than those of larger, exchange-listed
companies. In order to avoid undue risks, a Fund will not invest more than 5% of
its total assets in securities of any one company with a record of fewer than
three years' continuous operation (including that of predecessors).
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.
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
10
<PAGE>
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 5.75% and assumes reinvestment of all income dividends
and capital gain distributions during the period.
The Funds also may quote annual, average annual and annualized total return
and aggregate total return performance data, for each class of shares of the
Funds, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted below. Such data
will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate rate
of return calculations.
The average annual compounded rates of return, or total return, for the Class
A, Class B and Class C shares of each of the Funds for the indicated periods
ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
Inception(2) to
One Year Five Years Ten Years December 31, 1999
-------- ---------- --------- -----------------
Class A(1)
----------
<S> <C> <C> <C> <C>
Balanced Return Fund 11.31% 20.70% 13.74% N/A
Focus Growth Fund 41.13% 28.51% 19.73% N/A
Nifty Fifty Fund 24.86% 26.69% N/A 21.17%
Small & Mid-Cap Growth Fund(4) 73.98% 36.93% N/A 40.02%
Value 25 Fund -11.17% N/A N/A 5.19%
Inception(3) to
One Year Five Years December 31, 1999
-------- ---------- -----------------
Class B
-------
Balanced Return Fund 13.22% 21.19% 16.42%
Focus Growth Fund 44.64% 29.06% 22.91%
Nifty Fifty Fund 27.47% 27.24% 22.44%
Small & Mid-Cap Growth Fund 79.25% N/A 38.60%
Value 25 Fund -9.63% N/A 5.19%
Inception(3) to
One Year Five Years December 31, 1999
-------- ---------- -----------------
Class C
-------
Balanced Return Fund 17.22% 21.19% 16.42%
Focus Growth Fund 48.64% 29.06% 22.91%
Nifty Fifty Fund 31.47% 27.24% 22.44%
Small & Mid-Cap Growth Fund 83.20% N/A 38.80%
Value 25 Fund -6.49% N/A 6.00%
</TABLE>
11
<PAGE>
(1) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(2) The inception dates of the Funds are as follows: Balanced Return Fund--June
8, 1987 Focus Growth Fund--June 24, 1986 Nifty Fifty Fund--December 17, 1990
Small & Mid-Cap Growth Fund--October 10, 1994 Value 25 Fund--December 17,
1996
(3) The inception date for Class B and Class C shares for the Focus Growth,
Nifty Fifty and Balanced Return Funds was January 3, 1994; the inception
date for the Class B shares for the Small & Mid-Cap Growth Funds* was
September 18, 1996; and the inception date for the Class C shares of the
Small & Mid-Cap Growth Fund was October 8, 1996. The inception date for
Class B and C shares for the Value 25 Fund was January 9, 1997.
(4) Prior to September 1, 1996, Small & Mid-Cap Growth Funds' shares were not
offered to the public and, although each Fund's portfolio was managed
substantially in accordance with the investment policies described in its
current Prospectus during that period, some management differences did occur
due primarily to each Fund's small asset size. Accordingly, each Fund's
performance during periods prior to September 1, 1996 may not be relevant to
an assessment of such Fund's performance subsequent to such date.
Additionally, the Adviser waived all management, administrative and service
fees otherwise payable to the Small & Mid-Cap Growth Fund during 1994 and
1995, which had the effect of increasing each Fund's total return for those
periods.
A Fund may also, from time to time, include a reference to the current
distribution rate of each Class of shares in investor communications and sales
literature preceded or accompanied by a prospectus for such Fund, reflecting the
amounts actually distributed to shareholders of each Class which could include
capital gains and other items of income, as well as interest and dividend income
received by a Fund and distributed to the shareholders. All calculations of a
Class's distribution rate are based on the distributions per share which are
declared, but not necessarily paid, during the fiscal year. The distribution
rate for a Class is determined by dividing the distributions declared during the
period by the maximum offering price per share of the Class on the last day of
the period and annualizing the resulting figure. The distribution rate does not
reflect capital appreciation or depreciation in the price of a Fund's shares and
should not be confused with yield or considered to be a complete indicator of
the return to the investor on his investment.
Investors should note that the investment results of each Fund will fluctuate
over time, and any presentation of a Fund's current yield, total return or
distribution rate for any period should not be considered as a representation of
what an investment may earn or what an investor's total return, yield or
distribution rate may be in any future period.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser places orders for the purchase and sale of securities, supervises
their execution and negotiates brokerage commissions on behalf of the Funds. It
is the practice of the Adviser to seek the best prices and execution of orders
and to negotiate brokerage commissions which in the Adviser's opinion are
reasonable in relation to the value of the brokerage services provided by the
executing broker. Brokers who have executed orders for the Funds are asked to
quote a fair commission for their services. If the execution is satisfactory and
if the requested rate approximates rates currently being quoted by the other
brokers selected by the Adviser, the rate is deemed by the Adviser to be
reasonable. Brokers may ask for higher rates of commission if all or a portion
of the securities involved in the transaction are positioned by the broker, if
the broker believes it has brought the Funds an unusually favorable trading
opportunity, or if the broker regards its research services as being of
exceptional value, and payment of such commissions is authorized by the Adviser
after the transaction has been consummated. If the Adviser more than
occasionally differs with the broker's appraisal of opportunity or value, the
broker would not be selected to execute trades in the future. The Adviser
believes that the Funds benefit with a securities industry comprised of many and
diverse firms and that the long-term interest of shareholders of the Funds is
best served by brokerage policies which include paying a fair commission rather
than seeking to exploit its leverage to force the lowest possible commission
rate. The primary factors considered in determining the firms to which brokerage
orders are given are the Adviser's appraisal of: the firm's ability to execute
the order in the desired manner; the value of research services provided by the
firm; and the firm's attitude toward and interest in mutual funds in general
including the sale of mutual funds managed and sponsored by the Adviser. The
Adviser does not offer or promise to any broker an amount or percentage of
brokerage commissions as an inducement or reward for the sale of shares of the
Funds. Over-the-counter purchases and sales are transacted directly with
principal market-makers except in those circumstances where in the opinion of
the Adviser better prices and execution are available elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets
12
<PAGE>
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.
The Board of Trustees of the Trust periodically monitors the operation of
these brokerage policies by reviewing the allocation of brokerage orders.
The Adviser may use its broker/dealer affiliates, or other firms that sell
shares of the Funds, to buy and sell securities for the Funds, provided they
have the execution capability and that their commission rates are comparable to
those of other unaffiliated broker/dealers. Directors of PXP Securities Corp. or
its affiliates receive indirect benefits from the Funds as a result of its usual
and customary brokerage commissions that PXP Securities Corp. may receive for
acting as broker to the Funds in the purchase and sale of portfolio securities.
The investment advisory agreement does not provide for a reduction of the
advisory fee by any portion of the brokerage fees generated by portfolio
transactions of the Funds that PXP Securities Corp. may receive.
For the fiscal years ended December 1997, 1998 and 1999, brokerage
commissions paid by the Trust on portfolio transaction totaled $3,928,310,
$2,322,602 and $1,257,738 respectively. For the fiscal years ended December 31,
1997, 1998 and 1999, no brokerage commissions were paid to affiliates for
portfolio transactions. Brokerage commissions of $54,306 paid during the fiscal
year ended December 31, 1999, were paid on portfolio transactions aggregating
$63,352,682 executed by brokers who provided research and other statistical
information.
PORTFOLIO TURNOVER
The Funds pay brokerage commissions for purchases and sales of portfolio
securities. A high rate of portfolio turnover generally involves a
correspondingly greater amount of brokerage commissions and other costs which
must be borne directly by a Fund and thus indirectly by its shareholders. It may
also result in the realization of larger amounts of short-term capital gains,
which are taxable to shareholders as ordinary income. If such rate of turnover
exceeds 100%, the Funds will pay more in brokerage commissions than would be the
case if they had lower portfolio turnover rates. Historical turnover rates can
be found under the heading "Financial Highlights" located in the Trust's
Prospectus. Portfolio turnover rates varied between 1997 and 1998 due to market
conditions and the various investment strategies employed by the funds'
managers.
13
<PAGE>
SERVICES OF THE ADVISER
The Adviser, Roger Engemann & Associates, Inc., ("Engemann" or the "Adviser")
has entered into an Investment Management Agreement (the "Management Agreement")
with the Trust, on behalf of each series of the Trust, including the Funds, to
provide investment advice and investment management services with respect to the
assets of each Fund, provide personnel, office space, facilities and equipment
as may be needed by the Funds in their day-to-day operations and provide the
officers of the Trust. The Management Agreement has been approved by the Board
of Trustees of the Trust with respect to each Fund, including a majority of the
Trustees who are not a party to the Management Agreement or interested persons
of a party to the Management Agreement, and by a majority of the outstanding
voting shares of each Fund at a special meeting of shareholders on August 28,
1997.
The Management Agreement continues from year to year, provided that such
continuance is specifically approved annually by a vote of a majority of each
Fund's outstanding voting securities or by the Board of Trustees, and by the
vote of a majority of the Trustees who are not parties to the Management
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
Engemann is an indirect subsidiary of Phoenix Investment Partners, Ltd.
("PXP"). PXP is a publicly-traded, independent registered investment advisory
firm, and has served investors for over 70 years. As of December 31, 1999, it
had $64.6 billion in assets under management through its investment partners:
Aberdeen Fund Managers, Inc. (Aberdeen) in Aberdeen, London, Singapore and Fort
Lauderdale; Duff & Phelps Investment Management Co. (Duff & Phelps) in Chicago;
Roger Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca Capital
Management LLC (Seneca) in San Francisco and Phoenix/Zweig Advisers LLC (Zweig)
in New York; and Phoenix Investment Counsel, Inc. (Goodwin, Hollister, and
Oakhurst divisions) in Hartford, Sarasota, and Scotts Valley, CA, respectively.
Except as set forth in the separate Administration Agreement discussed under
"The Distributor: Administration Agreement", the Adviser is not responsible
under the Management Agreement for any expenses related to the operation of the
Funds. Under the Management Agreement, each Fund is responsible and has assumed
the obligation for paying all of its expenses, including but not limited to: (i)
brokerage and commission expenses, (ii) federal, state, or local taxes,
including issue and transfer taxes, incurred by or levied on a Fund, (iii)
interest charges on borrowings, (iv) charges and expenses of a Fund's custodian
and transfer agent, (v) payment of all investment advisory and management fees,
(vi) insurance premiums on a Fund's property and personnel, including the
fidelity bond and liability insurance for officers and Trustees, (vii) printing
and mailing of all reports, including semi-annual and annual reports,
prospectuses, and statements of additional information to existing shareholders,
(viii) fees and expenses of registering a Fund's shares under the federal
securities laws and of qualifying its shares under applicable state securities
(Blue Sky) laws subsequent to a Fund's initial fiscal period, including expenses
attendant upon renewing and increasing such registrations and qualifications,
(ix) legal fees and expenses including legal expenses of the independent
Trustees, (x) independent Trustees' fees and auditing expenses, including
auditing fees of independent public accountants, (xi) all costs associated with
shareholders meetings and the preparation and dissemination of proxy
solicitation materials, except for meetings called solely for the Adviser's
benefit, (xii) dues and other costs of membership in industry associations,
subject to the approval of any such membership by the Board of Trustees, (xiii)
service fees paid to dealers and other shareholder service providers pursuant to
Services Agreements between the Trust and such service providers, and (xiv) any
extraordinary and non-recurring expenses, except as otherwise prescribed
therein.
As compensation for its services under the Management Agreement, the Adviser
is paid a monthly fee based on a Fund's average daily net assets at the
following annual rates:
First Next Over
$50 Million $450 Million $500 Million
----------- ------------ ------------
Balanced Return Fund 0.80% 0.70% 0.60%
Focus Growth Fund 0.90% 0.80% 0.70%
Nifty Fifty Fund 0.90% 0.80% 0.70%
Small & Mid-Cap Growth Fund 1.00% 0.90% 0.80%
Value 25 Fund 0.90% 0.80% 0.70%
14
<PAGE>
For services to the Trust during the fiscal years ended December 31, 1997,
1998 and 1999, the Trust paid management fees (approximately) of $6,614,000,
$8,380,000 and $10,826,692, respectively. Of these totals, the adviser received
fees from each Fund as follows:
Fund 1997 1998 1999
---- ---- ---- ----
Balanced Return Fund $ 551,000 $ 603,000 $ 931,902
Focus Growth Fund $3,490,000 $3,842,000 $4,836,987
Nifty Fifty Fund $1,967,000 $2,617,000 $3,571,794
Small & Mid-Cap Fund $ 288,000 $ 741,000 $1,205,720
Value 25 Fund $ 175,000 $ 330,000 $ 280,289
The Management Agreement is terminable with respect to each Fund on 60-days'
written notice by vote of a majority of such Fund's outstanding shares, by vote
of a majority of the Board of Trustees, or by the Adviser on 60-days' written
notice. The Management Agreement automatically terminates in the event of its
assignment as defined in the 1940 Act. The Management Agreement provides that in
the absence of willful misfeasance, bad faith, or gross negligence on the part
of the Adviser, or of reckless disregard of its obligations thereunder, the
Adviser is not liable for any action or failure to act in accordance with its
duties.
The Trust, its Adviser and Distributor have each adopted a Code of Ethics
pursuant to Rule 17-j1 under the Investment Company Act of 1940. Personnel
subject to the Code of Ethics may purchase and sell securities for their
personal accounts, including securities that may be purchased, sold or held by
the Funds, subject to certain restrictions and conditions. Generally, personal
securities transactions are subject to pre-clearance procedures, reporting
requirements and holding period rules. The Codes also restrict personal
securities transactions in private placements, initial public offerings and
securities in which the Funds have a pending order.
NET ASSET VALUE
The net asset value per share of each Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Fund does not price securities on
weekends or United States national holidays, the net asset value of a Fund's
foreign assets may be significantly affected on days when the investor has no
access to the Fund. The net asset value per share of a Fund is determined by
adding the values of all securities and other assets of the Fund, subtracting
liabilities, and dividing by the total number of outstanding shares of the Fund.
Assets and liabilities are determined in accordance with generally accepted
accounting principles and applicable rules and regulations of the Securities and
Exchange Commission. The total liability allocated to a class, plus that class's
distribution fee and any other expenses allocated solely to that class, are
deducted from the proportionate interest of such class in the assets of the
Fund, and the resulting amount of each is divided by the number of shares of
that class outstanding to produce the net asset value per share.
A security that is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world, the
calculation of net asset value may not take place for any Fund which invests in
foreign securities contemporaneously with the determination of the prices of the
majority of the portfolio securities of such Fund. All assets and liabilities
initially expressed in foreign currency values will be converted into United
States dollar values at the mean between the bid and ask quotations of such
currencies against United States dollars as last quoted by any recognized
dealer. If an event were to occur after the value of an investment was so
established but before the net asset value per share was determined, which was
likely to materially change the net asset value, then the instrument would be
valued using fair value considerations by the Trustees or their delegates. If at
any time a Fund has investments where market quotations are not readily
available, such investments are valued at the fair value thereof as determined
in good faith by the Trustees although the actual calculations may be made by
persons acting pursuant to the direction of the Trustees.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent investment
is $25. However, both the minimum initial and subsequent investment amounts are
$25 for investments pursuant to the "Investo-Matic" plan, a bank draft investing
program administered by Distributor, or pursuant to the Systematic Exchange
privilege or for an individual retirement account (IRA). In addition, there are
no subsequent investment minimum amounts in connection with the reinvestment of
dividend or capital gain distributions. Completed applications for the purchase
of shares should be mailed to: Phoenix-Engemann Funds, c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301.
15
<PAGE>
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 Class 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).
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
subaccount. Each time any Class B Shares in the shareholder's Fund account
(other than those in the subaccount) convert to Class A, an equal pro rata
portion of the Class B Share dividends in the subaccount will also convert to
Class A Shares.
CLASS C SHARES
Class C Shares are purchased without an initial sales charge but are subject
to a deferred sales charge if redeemed within one year of purchase. Class C
Shares of the Focus Growth Fund, Balanced Return Fund and Nifty Fifty Fund
purchased prior to January 20, 1998 are not subject to the deferred sales
charge. The deferred sales charge may be waived in connection with certain
qualifying redemptions. Shares issued in conjunction with the automatic
reinvestment of income distributions and capital gain distributions are not
subject to any sales charges. Class C Shares are subject to ongoing distribution
and services fees of up to 1.00% of the Funds' aggregate average daily net
assets attributable to Class C Shares. See the Funds' current Prospectus for
more information.
16
<PAGE>
CLASS A SHARES--REDUCED INITIAL SALES CHARGES
Investors choosing the initial sales charge alternative under certain
circumstances may be entitled to pay reduced sales charges. The circumstances
under which such investors may pay reduced sales charges are described below.
QUALIFIED PURCHASERS. If you fall within any one of the following categories,
you will not have to pay a sales charge on your purchase of Class A Shares: (1)
any trustee, director or officer of the Phoenix Funds or any other open-end
management investment company advised, subadvised or distributed by the Adviser,
Distributor or any corporate affiliate of either or both the Adviser and
Distributor (an "Affiliated Phoenix Fund"); (2) any director or officer, or any
full-time employee or sales representative (for at least 90 days), of the
Adviser or Distributor; (3) registered representatives and employees of
securities dealers with whom Distributor has sales agreements; (4) any qualified
retirement plan exclusively for persons described above; (5) any officer,
director or employee of a corporate affiliate of the Adviser or Distributor; (6)
any spouse, child, parent, grandparent, brother or sister of any person named in
(1), (2), (3) or (5) above; (7) employee benefit plans for employees of the
Adviser, Distributor and/or their corporate affiliates; (8) any employee or
agent who retires from Phoenix Home Life, Distributor and/or their corporate
affiliates; (9) any account held in the name of a qualified employee benefit
plan, endowment fund or foundation if, on the date of the initial investment,
the plan, fund or foundation has assets of $10,000,000 or more or at least 100
eligible employees; (10) any person with a direct rollover transfer of shares
from an established Phoenix-Engemann Fund or other Phoenix Fund qualified plan;
(11) any Phoenix Home Life separate account which funds group annuity contracts
offered to qualified employee benefit plans; (12) any state, county, city,
department, authority or similar agency prohibited by law from paying a sales
charge; (13) any fully matriculated student in any U.S. service academy; (14)
any unallocated account held by a third party administrator, registered
investment adviser, trust company, or bank trust department which exercises
discretionary authority and holds the account in a fiduciary, agency, custodial
or similar capacity, if in the aggregate such accounts held by such entity equal
or exceed $1,000,000; (15) any person who is investing redemption proceeds from
investment companies other than the Phoenix Funds if, in connection with the
purchases or redemption of the redeemed shares, the investor paid a prior sales
charge provided such investor supplies verification that the redemption occurred
within 90 days of the Phoenix-Engemann Fund purchase and that a sales charge was
paid; (16) any deferred compensation plan established for the benefit of any
Phoenix-Engemann Fund or other Affiliated Phoenix Fund trustee or director;
provided that sales to persons listed in (1) through (15) above are made upon
the written assurance of the purchaser that the purchase is made for investment
purposes and that the shares so acquired will not be resold except to the Trust;
(17) purchasers of Class A Shares bought through investment advisors (including
President's Circle clients of REA) and financial planners who charge an
advisory, consulting or other fee for their services and buy shares for their
own accounts or the accounts of their clients; (18) retirement plans and
deferred compensation plans and trusts used to fund those plans (including, for
example, plans qualified or created under sections 401(a), 403(b) or 457 of the
Internal Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker or agent or
other financial intermediary that has made special arrangements with the
Distributor for such purchases; or (19) 401(k) participants in the Merrill Lynch
Daily K Plan (the "Plan") if the Plan has at least $3 million in assets or 500
or more eligible employees; (20) clients of investment advisors or financial
planners who buy shares for their own accounts but only if their accounts are
linked to a master account of their investment advisor or financial planner on
the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements. Each of the investors
described in (17) through (20) may be charged a fee by the broker, agent or
financial intermediary for purchasing shares. Class A shareholders who made
their initial investment prior to January 20, 1998 and qualified to purchase
shares without a sales charge, will not have to pay a sales charge on subsequent
purchases of Class A Shares.
COMBINATION PURCHASE PRIVILEGE. Your purchase of any class of shares of the
Funds or any other Affiliated Phoenix Fund (other than Phoenix-Goodwin Money
Market Fund and Phoenix-Zweig Government Cash Fund) 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.
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<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-Goodwin Money Market Fund and Phoenix-Zweig Government Cash Fund) 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 Shares before Class C or Class 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 CLASS C SHARES--WAIVER OF SALES CHARGES
The CDSC is waived on the redemption (sale) of Class B and Class C Shares if
the redemption is made (a) within one year of death (i) of the sole shareholder
on an individual account, (ii) of a joint tenant where the surviving joint
tenant is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts
to Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section 72(m)(7);
(c) as a mandatory distribution upon reaching age 701/2 under any retirement
plan qualified under Code Sections 401, 408 or 403(b) or resulting from the
tax-free return of an excess contribution to an IRA; (d) by 401(k) plans using
an approved participant tracking system for participant hardships, death,
disability or normal retirement, and loans which are subsequently repaid; (e)
from the Merrill Lynch Daily K Plan ("Plan") invested in Class B Shares, on
which such shares the Distributor has not paid the dealer the Class B sales
commission; (f) based on the exercise of exchange privileges among Class B and
Class C Shares of this or any other Affiliated Phoenix Fund; (g) based on any
direct rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan into an Affiliated Phoenix Fund IRA by participants terminating
from the qualified plan; and (h) based on the systematic withdrawal program. 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 Class 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 Class 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
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<PAGE>
(800) 243-1574. Broker/dealers may impose their own restrictions on limits on
accounts held through the broker/dealer. Please consult your broker/dealer for
account restrictional limit information.
EXCHANGES
Under certain circumstances, shares of any Phoenix-Engemann Fund may be
exchanged for shares of the same Class of another Phoenix-Engemann Fund or any
other Affiliated Phoenix Fund on the basis of the relative net asset values per
share at the time of the exchange. Exchanges are subject to the minimum initial
investment requirement of the designated Fund, except if made in connection with
the Systematic Exchange privilege. Shareholders may exchange shares held in
book-entry form for an equivalent number (value) of the same class of shares of
any other Phoenix-Engemann Fund or any other Affiliated Phoenix Fund, if
currently offered. 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 Class C
Share exchanges, 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"). Exchange
privileges may not be available for all Phoenix Funds, and may be rejected or
suspended.
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.
DIVIDEND REINVESTMENT ACROSS ACCOUNTS
If you maintain an account balance of at least $5,000, or $2,000 for tax
qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that any dividends
and distributions paid with respect to shares in that account be automatically
reinvested in a single account of one of the other Phoenix-Engemann Fund or any
other Affiliated Phoenix Fund at net asset value. You should obtain a current
prospectus and consider the objectives and policies of each Fund carefully
before directing dividends and distributions to another Fund. Reinvestment
election forms and prospectuses are available from Equity Planning.
Distributions may also be mailed to a second payee and/or address. Requests for
directing distributions to an alternate payee must be made in writing with a
signature guarantee of the registered owner(s). To be effective with respect to
a particular dividend or distribution, notification of the new distribution
option must be received by the Transfer Agent at least three days prior to the
record date of such dividend or distribution. If all shares in your account are
repurchased or redeemed or transferred between the record date and the payment
date of a dividend or distribution, you will receive cash for the dividend or
distribution regardless of the distribution option selected.
INVEST-BY-PHONE
This expedited investment service allows a shareholder to make an investment
in an account by requesting a transfer of funds from the balance of their bank
account. Once a request is phoned in, Equity Planning will initiate the
transaction by wiring a request for monies to the shareholder's commercial bank,
savings bank or credit union via Automated Clearing House (ACH). The
shareholder's bank, which must be an ACH member, will in turn forward the monies
to Equity Planning for credit to the shareholder's account. ACH is a computer
based clearing and settlement operation established for the exchange of
electronic transactions among participating depository institutions.
To establish this service, please complete an Invest-by-Phone Application and
attach a voided check if applicable. Upon Equity Planning's acceptance of the
authorization form (usually within two weeks) shareholders may call toll free
(800) 367-5877 prior to 3:00 p.m. (New York time) to place their purchase
request. Instructions as to the account number and amount to be invested must be
communicated to Equity Planning. Equity Planning will then contact the
shareholder's bank via ACH with appropriate instructions. The purchase is
normally credited to the shareholder's account the day following receipt of the
verbal instructions. The Fund may delay the mailing of a check for redemption
proceeds of Fund shares purchased with a check or via Invest-by-Phone service
until the Fund has assured itself that good payment has been collected for the
purchased of the shares, which may take up to 15 days. The Fund and Equity
Planning reserve the right to modify or terminate the Invest-by-Phone service
for any reason or to institute charges for maintaining an Invest-by-Phone
account.
SYSTEMATIC WITHDRAWAL PROGRAM
The Systematic Withdrawal Program allows you to periodically redeem a portion
of your account on a predetermined monthly, quarterly, semiannual or annual
basis. A sufficient number of full and fractional shares will be redeemed so
that the designated payment is made on or about the 20th day of the month.
Shares are tendered for redemption by the Transfer Agent,
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<PAGE>
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. 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 and Class C 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 and Class C 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 or Class C Shares will generally not be suitable for an
investor who anticipates withdrawing sums in excess of the above limits shortly
after purchase.
HOW TO REDEEM SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the Fund to dispose of its securities or to determine fairly the value of
its net assets or during any other period permitted by order of the Securities
and Exchange Commission for the protection of investors. Furthermore, the
Transfer Agent will not mail redemption proceeds until checks received for
shares purchased have cleared, which may take up to 15 days or more. See the
Funds' current Prospectus for further information. Redemptions by Class B and C
shareholders will be subject to the applicable deferred sales charge, if any.
The Trust has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
A shareholder should contact his/her broker/dealer if he/she wishes to
transfer shares from an existing broker/dealer street name account to a street
name account with another broker/dealer. The Fund has no specific procedures
governing such account transfers.
REDEMPTION OF SMALL ACCOUNTS
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the giving
of not less than 60 days written notice to the shareholder mailed to the address
of record. During the 30 day period the shareholder has the right to add to the
account to bring its value to $200 or more.
BY MAIL
Shareholders may redeem shares by making written request, executed in the
full name of the account, directly to Phoenix Funds, c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written request
to Equity Planning that the Fund redeem the shares.
TELEPHONE REDEMPTIONS
Shareholders may redeem up to $50,000 worth of their shares by telephone. See
the Funds' current Prospectus for additional information.
ACCOUNT REINSTATEMENT PRIVILEGE
Shareholders who may have overlooked features of their investment at the time
they redeemed have a privilege of reinvestment of their investment at net asset
value. See the Funds' current Prospectus for more information and conditions
attached to this privilege.
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<PAGE>
REDEMPTION IN KIND
To the extent consistent with state and federal law, the Funds may make
payment of the redemption price in cash or in kind. However, the Funds have
elected to pay in cash all requests for redemption by any shareholder of record,
limited in respect to each shareholder during any 90-day period to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of such
period. This election has been made pursuant to Rule 18f-1 under the Investment
Company Act of 1940 and is irrevocable while the Rule is in effect unless the
Securities and Exchange Commission, by order, permits the withdrawal thereof. In
case of a redemption in kind, securities delivered in payment for shares would
be readily marketable and valued at the same value assigned to them in computing
the net asset value per share of the Fund. A shareholder receiving such
securities would incur brokerage costs when selling the securities.
TAX SHELTERED RETIREMENT PLANS
Shares of the Funds and other Phoenix Funds may be offered in connection with
the following qualified prototype retirement plans: IRA, Rollover IRA, SEP-IRA,
SIMPLE IRA, Roth IRA, 401(k) Profit Sharing and Money Purchase Pension Plans and
403(b) Retirement Plans. REA and its affiliates may provide administrative
services to these plans and to their participants, in addition to the services
that REA and its affiliates provide to the Phoenix-Engemann Funds and other
Affiliated Phoenix Funds, and may receive compensation therefor. For information
on the terms and conditions applicable to employee participation in such plans,
including information on applicable plan administrative charges and expenses,
prospective investors should consult the plan documentation and employee
enrollment information which is available from participating employers. Write or
call Equity Planning at (800) 243-4361 for information about the plans.
MERRILL LYNCH DAILY K PLAN
Class A Shares of a Fund are made available to Merrill Lynch Daily K Plan
(the "Plan") participants at NAV without an initial sales charge if:
(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch and,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in broker/dealer
funds not advised or managed by Merrill Lynch Asset Management L.P. ("MLAM")
that are made available pursuant to a Service Agreement between Merrill Lynch
and the fund's principal underwriter or distributor and in funds advised or
managed by MLAM (collectively, the "Applicable Investments");
(ii) The Plan is recordkept on a daily valuation basis by an independent
recordkeeper whose services are provided through a contract or alliance
arrangement with Merrill Lynch, and, on the date the Plan Sponsor signs the
Merrill Lynch Recordkeeping Services Agreement, the Plan has $3 million or more
in assets, excluding money market funds, invested in Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by a Merrill
Lynch plan conversion manager, on the date the Plan Sponsor signs the Merrill
Lynch Recordkeeping Service Agreement.
Alternatively, Class B Shares of a Fund are made available to Plan
participants at NAV without a CDSC if the Plan conforms with the requirements
for eligibility set for in (i) through (iii) above but either does not meet the
$3 million asset threshold or does not have 500 or more eligible employees.
Plans recordkept on a daily basis by Merrill Lynch on an independent
recordkeeper under a contract with Merrill Lynch that are currently investing in
Class B Shares of a Fund convert to Class A Shares once the Plan has reached $5
million invested in Applicable Investments, or after the normal holding period
of seven years from the initial date of purchase.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund is treated as a separate entity for federal income tax purposes.
Each Fund intends to elect to be treated as a regulated investment company
("RIC") and qualify annually as such under certain provision of the Internal
Revenue Code (the "Code"). Under such provisions, each Fund will not be subject
to federal income tax on such part of its ordinary income and net realized
capital gains which it distributes to shareholders provided it meets certain
distribution requirements. To qualify for treatment as a regulated investment
company, each Fund must, among other things: (a) derive in each taxable year at
least 90% of its gross income from dividends, interest and gains from the sale
or other disposition of securities; and (b) meet certain diversification
requirements imposed under the Code at the end of each quarter of the taxable
year.
The Code imposes a 4% nondeductible excise tax on a regulated investment
company if it does not distribute to its shareholders during the calendar year
an amount equal to 98% of the Fund's net ordinary income, with certain
adjustments, for such calendar year, plus 98% of each Fund' net capital gains
for the 12-month period ending on October 31 of such calendar year. In addition,
an amount equal to any undistributed investment company taxable income or
capital gain net income from the
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<PAGE>
previous calendar year must also be distributed to avoid the excise tax. The
excise tax is imposed on the amount by which the regulated investment company
does not meet the foregoing distribution requirements. If each Fund has taxable
income that would be subject to the excise tax, each Fund intends to distribute
such income so as to avoid payment of the excise tax.
Under another provision of the Code, any dividend declared by each Fund to
shareholders of record in October, November and December of any year will be
deemed to have been received by, and will be taxable to shareholders as of
December 31 of such year, provided that the dividend is actually paid by each
Fund before February 1, of the following year.
The Funds' policy is to distribute to its shareholders substantially all
investment company taxable income as defined in the Code and any net realized
capital gains for each year and consistent therewith to meet the distribution
requirements of Part I of subchapter M of the Code. The Funds intend to meet the
other requirements of Part I of subchapter M, including the requirements with
respect to diversification of assets and sources of income, so that the Funds
will pay no taxes on net investment income and net realized capital gains
distributed to shareholders.
Under certain circumstances, the sales charge incurred in acquiring shares of
the Funds may not be taken into account in determining the gain or loss on the
disposition of those shares. This rule applies where shares of the Funds are
disposed of within 90 days after the date on which they were acquired and new
shares of a regulated investment company are acquired without a sales charge or
at a reduced sales charge. In that case, the gain or loss realized on the
disposition will be determined by excluding from the tax basis of the shares
disposed of all or a portion of the sales charge incurred in acquiring those
shares. This exclusion applies to the extent that the otherwise applicable sales
charge with respect to the newly acquired shares is reduced as a result of the
shareholder having incurred a sales charge initially. The portion of the sales
charge affected by this rule will be treated as a sales charge paid for the new
shares.
Distributions by the Funds reduce the net asset value of the Funds' shares.
Should a distribution reduce the net asset value of a share below a
shareholder's cost for the shares, such a distribution nevertheless generally
would be taxable to the shareholder as ordinary income or long-term capital
gain, even though, from an investment standpoint, it may constitute a partial
return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution by a Fund. The
price of shares purchased at that time may include the amount of the forthcoming
distribution, but the distribution generally would be taxable to them.
Transactions in options on stock indices are subject to the Code rules of
section 1256. Pursuant to these rules, such options, whether sold by the Funds
during a taxable year or held by the Funds at the close of its taxable year,
will be treated as if sold for their market value, with 40% of any resulting
gain or loss treated as short-term and 60% long-term.
A high portfolio turnover rate may result in the realization of larger
amounts of short-term gains, which are taxable to shareholders as ordinary
income.
IMPORTANT NOTICE REGARDING TAXPAYER IRS CERTIFICATION
Pursuant to IRS Regulations, the Funds may be required to withhold 31% of all
reportable payments including any taxable dividends, capital gains distributions
or share redemption proceeds, for an account which does not have a taxpayer
identification 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.
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Dealers with whom the Distributor has entered into sales agreements receive
sales charges in accordance with the commission table set forth in the
Prospectus. The Distributor may from time to time pay, from its own resources or
pursuant to the Plan of Distribution described below, a bonus or other incentive
to dealers (other than the Distributor) which employ a registered representative
who sells a minimum dollar amount of the shares of the Funds during a specific
period of time. Such bonus or other incentive may take the form of payment for
travel expenses, including lodging, incurred in connection with trips taken by
qualifying registered representatives and members of their families to places
within or without the United States or other bonuses such as gift certificates
or the cash equivalent of such bonuses. The Distributor may, from time to time,
reallow the entire portion of the sales charge which it normally retains to
individual selling dealers. However, such additional reallowance generally will
be made only when the selling dealer commits to substantial marketing support
such as internal wholesaling through dedicated personnel, internal
communications and mass mailings.
Pasadena Fund Services, Inc. ("PFSI") served as the principal underwriter for
the Funds prior to September 3, 1997. For the fiscal years ended December 31,
1997, 1998 and 1999, purchasers of shares of the Funds paid aggregate sales
charges of $2,038,126, $2,334,408 and $2,131,505, respectively, of which PFSI
and/or the Distributor received net commissions of $897,831, $707,783 and
$847,173, respectively, for its services, the balance being paid to dealers. For
the fiscal year ended December 31, 1999, the Distributor received net
commissions of $165,377 for Class A Shares and deferred sales charges of
$710,308 for Class B and Class C Shares.
DEALER CONCESSIONS
Dealers with whom the Distributor has entered into sales agreements receive a
discount or commission as set forth below.
<TABLE>
<CAPTION>
Amount of Transaction Sales Charge as Percentage of Sales Charge as Percentage of Dealer Discount or Agency Fee
at Offering Price Offering Price Amount Invested as Percentage of Offering Price
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.25%
$50,000 but under $100,000 4.75 4.99 4.25
$100,000 but under $250,000 3.75 3.90 3.25
$250,000 but under $500,000 2.75 2.83 2.25
$500,000 but under $1,000,000 2.00 2.04 1.75
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. This sales commission will not be paid to
dealers for sales of Class B or Class C Shares purchased by 401(k) participants
of the Merrill Lynch Daily K Plan due to a waiver of the CDSC for these Plan
participants' purchase. Your broker, dealer or investment adviser may also
charge you additional commissions or fees for their services in selling shares
to you provided they notify the Distributor of their intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of the
Funds and/or for providing other shareholder services. Such fees are in addition
to the sales commissions referenced above and may be based upon the amount of
sales of fund shares by a dealer; the provision of assistance in marketing of
fund shares; access to sales personnel and information dissemination services;
provision of recordkeeping and administrative services to qualified employee
benefit plans; and other criteria as established by the Distributor. Depending
on the nature of the services, these fees may be paid either from the Funds
through distribution fees, service fees or transfer agent fees or in some cases,
the Distributor may pay certain fees from its own profits and resources. From
its own profits and resources, the Distributor does intend to: (a) sponsor
training and educational meetings and provide additional compensation to
qualifying dealers in the form of trips, merchandise or expense reimbursements;
(b) from time to time pay special incentive and retention fees to qualified
wholesalers, registered financial institutions and third party marketers; (c)
pay broker/dealers an amount equal to 1% of the first $3 million of Class A
Share purchases by an account held in the name of a qualified employee benefit
plan with at least 100 eligible employees, 0.50% on the next $3 million, plus
0.25% on the amount in excess of $6 million; and (d) excluding purchases as
described in (c) above, pay broker/dealers an amount equal to 1% of the amount
of Class A Shares sold above $1 million but under $3 million, 0.50% on the next
$3 million, plus 0.25% on the amount in excess of $6 million. If part or all of
such investment as described in (c) and (d) above, including investments by
qualified employee benefit plans, is subsequently redeemed within one year of
the investment date, the broker-dealer will refund to the Distributor such
amounts paid with respect to the investment. From its own resources, the
Distributor intends to pay the following additional compensation to Merrill
Lynch, Pierce, Fenner & Smith, Incorporated: 0.25% on sales of Class A and B
Shares, 0.10% on sales of Class C Shares, 0.10% on sales of Class A shares sold
at net asset value, and 0.10% annually on the average daily net asset value of
fund shares on which Merrill Lynch is broker of record and which such shares
exceed the amount of assets on which Merrill Lynch is
23
<PAGE>
broker of record as of July 1, 1999. In addition, the Distributor may pay the
entire applicable sales charge on purchases of Class A Shares to selected
dealers and agents. Any dealer who receives more than 90% of a sales charge may
be deemed to be an "underwriter" under the Securities Act of 1933. Equity
Planning reserves the right to discontinue or alter such fee payment plans at
any time.
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.
ADMINISTRATIVE SERVICES
Phoenix Equity Planning Corporation ("PEPCO") also acts as administrative
agent of the Trust and as such performs administrative, bookkeeping and pricing
functions for the Funds. For services as financial agent, PEPCO will be paid a
fee equal to the sum of (1) the documented cost of fund accounting and related
services provided by PFPC, Inc. as subagent, to the financial agent, plus (2)
the documented cost of the financial agent to provide financial reporting and
tax services and oversight of the subagent's performance. The current fee
schedule of PFPC, Inc. is based upon the average of the aggregate daily net
asset values of each Fund, at the following annual rates:
First $200 million .085%
$200 million to $400 million .05%
$400 million to $600 million .03%
$600 million to $800 million .02%
$800 million to $1 billion .01%
Greater than $1 billion .0125%
Percentage rates are applied to the aggregate daily net asset values of the
Funds. PFPC, Inc. also charges minimum fees and additional fees for each
additional class of fund shares. PEPCO retains PFPC, Inc. as subagent for each
of the funds for which PEPCO serves as financial agent. PFPC, Inc. agreed to a
modified fee structure and waived certain charges. Because PFPC, Inc.'s
arrangement would have favored smaller funds over larger funds, PEPCO
reallocates PFPC, Inc.'s overall asset-based charges among all funds for which
it serves as financial agent on the basis of the relative net assets of each
fund. As a result, the PFPC, Inc. charges to the Funds are expected to be
slightly less than amount that would be found through direct application of the
table illustrated above.
As compensation for its services and obligations under an Administration
Agreement in effect until June 30, 2000, PEPCO was paid a fee at an annual rate
equal to 0.50% of each Funds' average daily net assets up to $50 million, which
rate was reduced at higher levels of net assets. For services to the Trust
during the fiscal years ended December 31, 1997, 1998 and 1999, (pursuant to a
fee schedule under which the Administrator was paid a monthly fee at an annual
rate equal to 0.60% of each Fund's average daily net assets up to $50 million
and which rate was reduced at higher levels of net assets) the Trust paid
administrative fees (approximately) of $5,458,000, $5,305,000, and $6,790,673
respectively. Of these totals, PEPCO received fees from each Fund as follows:
Fund 1997 1998 1999
---- ---- ---- ----
Balanced Return Fund $ 400,000 $ 445,000 $ 680,433
Focus Growth Fund $3,078,000 $2,420,000 $2,981,416
Nifty Fifty Fund $1,612,000 $1,655,000 $2,250,464
Small & Mid-Cap Fund $ 173,000 $ 434,000 $ 691,595
Value 25 Fund $ 117,000 $ 219,000 $ 186,765
24
<PAGE>
PEPCO has voluntarily agreed to waive, when necessary, a portion of its
financial agent 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 1st $500 Million
---- --------------- ----------------- ----------------
<S> <C> <C> <C>
Balanced Return Fund 1.09% 0.60% 0.40%
Focus Growth Fund 0.99% 0.50% 0.30%
Nifty Fifty Fund 0.99% 0.50% 0.30%
Small & Mid-Cap Growth Fund 0.50% 0.40% 0.30%
Value 25 Fund 0.50% 0.40% 0.30%
</TABLE>
DISTRIBUTION PLANS
The Trust has adopted a separate distribution plan for Class B and Class C
Shares of the Funds (the "Class B Plan," the "Class C Plan," and collectively
the "12b-1 Plans") in accordance with Rule 12b-1 of the 1940 Act. The 12b-1
Plans require the Funds to compensate 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.
On a quarterly basis, the Funds' Trustees review a report on expenditures
under the 12b-1 Plans and the purposes for which expenditures were made. The
Trustees conduct an additional, more extensive review annually in determining
whether the 12b-1 Plans will be continued. By its terms, continuation of the
12b-1 Plans from year to year is contingent on annual approval by a majority of
the Funds' Trustees and by a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of the 12b-1 Plans or any related agreements
(the "12b-1 Plan Trustees"). The 12b-1 Plans provide that they may not be
amended to increase materially the costs which the Funds may bear pursuant to
the 12b-1 Plans without approval of the shareholders of the Funds and that other
material amendments to the 12b-1 Plans must be approved by a majority of the
12b-1 Plan Trustees by vote cast in person at a meeting called for the purpose
of considering such amendments. The 12b-1 Plans further provides that while it
is in effect, the selection and nomination of Trustees who are not "interested
persons" shall be committed to the discretion of the Trustees who are not
"interested persons." The 12b-1 Plans may be terminated at any time by vote of a
majority of the 12b-1 Plan Trustees or a majority of the outstanding shares of
the Funds.
The National Association of Securities Dealers, Inc. (the "NASD") regards
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend the Plans.
For the fiscal year ended December 31, 1999, the Funds paid Rule 12b-1
distribution fees in the amount of $2,022,159, of which the principal
underwriter received $2,000,453. W.S. Griffith & Co., Inc., an affiliate,
received $62,393, and unaffiliated broker-dealers received $959,313.
Distribution fees were used by the Distributor to compensate dealers for the
sale of the Fund's Class B and Class C Shares.
SERVICES AGREEMENT
Under the Services Agreement, each Fund will pay a continuing service fee to
service providers, in an amount, computed and prorated on a daily basis, equal
to 0.25% per annum of the Fund's average daily net assets, which will include
the Adviser or Phoenix Equity Planning Corporation (the "Distributor"), for
shareholder accounts not serviced by other service providers. (Prior to
September 3, 1997, Pasadena Fund Services, Inc. (the "Former Distributor")
served as distributor of the Funds' shares.) Such amounts are compensation for
providing certain services to clients owning shares of such Fund, including
personal services such as processing purchase and redemption transactions,
assisting in change of address requests and similar administrative details, and
providing other information and assistance with respect to such Fund, including
responding to shareholder inquiries.
For the fiscal year ended December 31, 1999, the Funds paid service fees in
the amount of $3,389,679, of which the principal underwriter received $872,157,
and unaffiliated broker-dealers received $2,517,521.
25
<PAGE>
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 OCCUPATION(S)
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
--------------------- -------------- -----------------------
<S> <C> <C>
Roger Engemann* (59) Chairman of the Board, Chairman, President and Director of the Adviser since 1969.
600 North Rosemead President and Trustee Chairman, President and Director, Pasadena Capital
Boulevard Corporation (1988-present) and Roger Engemann Management
Pasadena, California 91107 Co., Inc. (1985-present).
Barry E. McKinley (64) Trustee Certified Public Accountant; head of B.E. McKinley &
300 North Lake Avenue Associates, an accounting firm, since its inception in 1971.
Suite 930
Pasadena, California 91101
Robert L. Peterson (61) Trustee Private investor. From 1988-1995, Regional Manager for
P.O. Box 80784 Commercial Real Estate Brokerage in the Pasadena office
San Marino, California 91118 of Jon Douglas Company, a real estate firm. Prior thereto he
was associated with the real estate brokerage firm of R.A.
Rowan & Co.
Richard C. Taylor (53) Trustee President of Richard Taylor Company, Inc., a food ingredients
2100 Huntington Drive, #9 broker, since 1987.
San Marino, California 91118
Angela Wong (48) Trustee Since August, 1999, Ms. Wong has been General Counsel at
3880 San Rafael Ave. Self Realization Fellowship. From 1986-1999, she was of
Los Angeles, California 90065 counsel to the law firm of Manatt, Phelps, Phillips & Kantor,
specializing in employee benefits.
Malcolm Axon (41) Chief Financial Chief Financial Officer and Secretary of the Adviser since 1995;
600 North Rosemead Officer previously Controller from 1991 to 1995. Chief Financial Officer
Boulevard and Secretary of Roger Engemann Management Co. Inc. since
Pasadena, California 91107 1993 and of Pasadena Capital Corporation since 1995.
Tina L. Mitchell Secretary Vice President, Compliance (since 1999) of the Adviser;
600 North Rosemead previously Compliance Officer from 1997 to 1999 and
Boulevard Assistant Compliance Officer from 1993 to 1997. Compliance
Pasadena, California 91101 Officer of Roger Engemann Management Co., Inc. since 1997;
previously, Assistant Compliance Officer from 1993-1997.
</TABLE>
*Indicates that the Trustee is an "interested person" of the Trust within the
meaning of the definition set forth in Section 2(a)(19) of the Investment
Company Act of 1940.
For services rendered to the Trust for the fiscal year ended December 31,
1999, the Trustees received an aggregate of $80,000. For services on the Board
of Trustees, each Trustee who is not an employee of the Adviser or any of its
affiliates currently receives $2,500 per quarter plus $2,500 for each meeting
attended. The officers of the Trust and the Trustees affiliated with the Adviser
receive no direct compensation for performing the duties of such offices.
However, those officers and Trustees who are affiliated with the Adviser may
receive remuneration indirectly because the Adviser receives management fees
from the Funds.
26
<PAGE>
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 Directors
---- --------- ---------------- --------------- -----------------
<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 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 Balanced Return Fund, the
Focus Growth Fund, the Nifty Fifty Fund and the Value 25 Fund. As of ________,
2000, the Trustees and officers of the Trust, as a group, owned 1.38% of the
Small & Mid-Cap Growth Fund.
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 BALANCED RETURN FUND % % %
Merrill Lynch, Pierce, Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6485
PHOENIX-ENGEMANN FOCUS GROWTH 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 SMALL & Mid-Cap Growth Fund % % %
Merrill Lynch, Pierce, Fenner & Smith, Inc.*
Attn: Book Entry
4800 Deer Lake Drive East
Jacksonville, Florida 32216
Union Bank Trust Nominee %
FBO Moore Investment Partnership
PO Box 85484
San Diego, California 92112-4103
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Barney Sofio %
2307 Blanchard Drive
Glendale, CA 91208-1912
Union Bank Trust Nominee %
FBO Mark MP
PO Box 85484
San Diego, CA 92186-5484
</TABLE>
*Record owner only for its individual customers. To the Trust's knowledge, no
customer beneficially owned 5% or more of the total outstanding shares of any
Class of any Fund.
OTHER INFORMATION
CAPITAL STOCK
The Trust was established on May 28, 1986 as a Massachusetts business trust
and was reorganized as a Delaware business trust in December 2000. 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. 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 Trust does not hold regular meetings
of shareholders. 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 1940 Act.
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 Trust for the issue or sale
of shares of each Fund, and any class thereof and all income, earnings, profits
and proceeds thereof, are allocated to such Fund, and class, respectively,
subject only to the rights of creditors, and constitute the underlying assets of
such Fund or class. The underlying assets of each Fund are required to be
segregated on the books of account, and are to be charged with the expenses in
respect to such Fund and with a share of the general expenses of the Trust. Any
general expenses of the Trust not readily identifiable as belonging to a
particular Fund or class will be allocated by or under the direction of the
Trustees as they determine fair and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a business trust such as the Trust may be personally liable for
debts or claims against the Trust. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Trust. The Declaration of Trust provides for indemnification
out of the Trust property for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability, which
is considered remote, is limited to circumstances in which the Trust itself
would be unable to meet its obligations.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts 02110,
is the independent accountants for the Funds. PricewaterhouseCoopers LLP audits
the Funds' annual financial statements and expresses an opinion thereon.
CUSTODIAN AND TRANSFER AGENT
The custodian of the assets of the Funds is Union Bank of California, 475
Sansome Street, San Francisco, California 94111.
Pursuant to a Transfer Agent and Service Agreement with the Trust, Equity
Planning serves as transfer agent for the Funds (the "Transfer Agent") for which
it is paid $17.95 for each designated shareholder account, plus out-of-pocket
expenses. The Transfer Agent engages subagents 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.
28
<PAGE>
FINANCIAL STATEMENTS
The Financial Statements for the Fund's fiscal year ended December 31, 1999
and the period ended June 30, 2000, appearing in the Fund's 1999 Annual Report
and the June 2000 Semiannual report to Shareholders, are incorporated herein by
reference.
29
<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 compromise 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 sometime 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 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.
30
<PAGE>
THE PHOENIX-ENGEMANN FUNDS
FORM N-1A
PART C--OTHER INFORMATION
ITEM 23. EXHIBITS.
a.1. Amended and Restated Agreement and Declaration of Trust(5)
b. By-Laws(1)
c. Reference is made to Registrant's Amended and Restated
Agreement and Declaration of Trust, as amended, and filed as
described in a.1. above
d. Investment Management Agreement
e.1. Distribution Agreement with Phoenix Equity Planning
Corporation
e.2 Form of Sales Agreement between Phoenix Equity Planning
Corporation and dealers
e.3. Form of Supplement to Phoenix Family of Funds Sales Agreement
e.4. Form of Financial Institution Sales Contract for the Phoenix
Family of Funds
f. Bonus, Profit Sharing, Pension and Other Similar
Arrangements--None
g. Custodian Agreement(1)
h.1. Other Material Contracts--Agreement and Plan of
Reorganization(1)
h.2 Administration Agreement(10)
h.3. Sub-Administration Agreement(11)
h.4. Amendment to Administration Agreement(12)
i. Opinion and Consent of Counsel(1)
j. Consent of Certified Public Accountants(12)
k. Financial Statements Omitted from Item 23--Not applicable
l. Letter of Understanding relating to initial capital--Not
Applicable
m.1 Rule 12b-1 Plan For Class B Shares
m.2 Rule 12b-1 Plan For Class C Shares
n.27. Financial Data Schedules
o.1.* Amended and Restated Multiple Class Plan
p. Codes of Ethics of the Trust, the Adviser and the
Distributor(12)
q.* Powers of Attorney
----------
*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.
C-1
<PAGE>
(5) Previously filed as part of Post-Effective Amendment No. 14 to the
Registrant's Registration Statement as filed on August 27, 1993.
(6) Previously filed as part of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement as filed on October 29, 1993.
(7) Previously filed as part of Post-Effective Amendment No. 18 to the
Registrant's Registration Statement as filed on August 10, 1994.
(8) Previously filed as part of Post-Effective Amendment No. 20 to the
Registrant's Registration Statement as filed on April 24, 1996.
(9) Previously filed as part of Post-Effective Amendment No. 25 to the
Registrant's Registration Statement as filed on September 4, 1997.
(10) Previously filed as part of Post-Effective Amendment No. 26 to the
Registrant's Registration Statement as filed on September 30, 1997.
(11) Previously filed as part of Post-Effective Amendment No. 27 to the
Registrant's Registration Statement as filed on November 21, 1997.
(12) Previously filed as part of Post-Effective Amendment No. 32 to the
Registrant's Registration Statement on May 1, 2000.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
None.
ITEM 25. INDEMNIFICATION
Please see Article VI of the Registrant's By-Laws, previously filed as an
Exhibit. Pursuant to Rule 484 under the Securities Act of 1933, as amended, the
Registrant furnishes the following undertaking:
"Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer, or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue."
Notwithstanding the provisions contained in the Registrant's By-Laws, in
the absence of authorization by the appropriate court on the merits pursuant to
Sections 4 and 5 of Article VI of said By-Laws, any indemnification under said
Article shall be made by Registrant only if authorized in the manner provided in
either subsection (a) or (b) of Section 6 of said Article VI.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
For information as to the business, profession, vocation or employment of a
substantial nature of the directors and officers of the Adviser, reference is
made to the Adviser's current Form ADV (SEC File No. 801-11586) filed under the
Investment Advisers Act of 1940 and incorporated herein by reference.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Equity Planning also serves as the principal underwriter for the following
other registrants:
Phoenix-Aberdeen Series Fund, Phoenix-Aberdeen Worldwide Opportunities Fund,
Phoenix Duff & Phelps Institutional Mutual Funds, Phoenix-Engemann Funds,
Phoenix Equity Series Fund, Phoenix-Euclid Mutual Funds, Phoenix-Goodwin
California Tax Exempt Bond Fund, Phoenix-Goodwin Multi-Series Trust, Phoenix
Investment Fund 97, Phoenix Multi-Portfolio Fund, Phoenix-Oakhurst Income &
Growth Fund, Phoenix-Oakhurst Strategic Allocation Fund, Phoenix-Seneca Funds,
Phoenix Series Fund, Phoenix Strategic Equity Series Fund, Phoenix-Zweig Trust,
PHL Variable Accumulation Account, PHL Variable Separate Account MVAI, Phoenix
Home Life Variable Accumulation Account, Phoenix Home Life Variable Universal
Life Account, Phoenix Life and Annuity Variable Universal Life Account.
C-2
<PAGE>
(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 POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
---------------- ---------------- ---------------
<S> <C> <C>
Michael E. Haylon Director None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and Chairman None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Executive Vice None
100 Bright Meadow Blvd. President, Chief Financial
P.O. Box 2200 Officer and Treasurer
Enfield, CT 06083-2200
John F. Sharry President, None
56 Prospect Street Retail Division
P.O. Box 150480
Hartford, CT 06115-0480
Barry Mandinach Executive Vice President, None
900 Third Avenue Chief Marketing Officer,
New York, NY 10022 Retail Division
Robert Tousingnant Executive Vice President, None
100 Bright Meadow Blvd. Chief Sales Officer,
P.O. Box 2200 Retail Division
Enfield, CT 06083-2200
G. Jeffrey Bohne Vice President, Mutual Fund None
101 Munson Street Customer Service
Greenfield, MA 01301
Robert S. Driessen Vice President, Compliance Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Jacqueline M. Porter Assistant Vice President, Assistant Treasurer
56 Prospect Street Financial Reporting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
ITEM 28. LOCATIONS OF ACCOUNTS AND RECORDS
The accounts, books or other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules thereunder are kept by
the Registrant at its offices, 600 North Rosemead Boulevard, Pasadena, CA
91107-2133. Phoenix Equity Planning Corporation, 100 Bright Meadow Blvd.,
Enfield, Connecticut 06082, is the Registrant's transfer agent, and maintains
records relating to such activities. State Street Bank and Trust Company, c/o
BFDS, Two Heritage Drive, Boston, MA 02171, as sub-transfer agent, maintains
various shareholder account records and information regarding the Balanced
Return, Focus Growth, Nifty Fifty, Small & Mid-Cap Growth and Value 25 Funds.
The custodian of the assets of the Funds, Union Bank of California, maintains
certain records at 475 Sansome Street, San Francisco, California 94111. The
Registrant's investment advisor, Roger Engemann & Associates, Inc., maintains
records relating to its services at its offices, 600 North Rosemead Boulevard,
Pasadena, California 91107-2133.
C-3
<PAGE>
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-4
<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 22nd day of
September, 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 22nd day of September 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Principal Executive
----------------------------------------- Officer and Trustee
Roger Engemann*
Trustee
-----------------------------------------
Barry E. McKinley*
Trustee
-----------------------------------------
Robert L. Peterson*
Trustee
-----------------------------------------
Richard C. Taylor*
Chief Financial
/s/ Malcolm Axon* Officer
-----------------------------------------
Malcolm Axon
Trustee
-----------------------------------------
Angela Wong*
</TABLE>
By /s/ Nancy J. Engberg
-----------------------------------------
*Nancy J. Engberg
Attorney-in-Fact pursuant to Powers of Attorney
S-1(c)
