As filed with the Securities and Exchange Commission on December 22, 2000
Registration No. 333-1922
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. ___ [ ] Post-Effective Amendment No. ___
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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
(Registrants Telephone Number, including Area Code)
--------------------
Roger Engemann
600 North Rosemead Boulevard, Pasadena, California 91107-2138
(Name and address of Agent for Service)
Copies of Communications to:
Pamela S. Sinofsky
Compliance Officer
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, Connecticut 06115-0479
and
Geoffrey R.T. Kenyon, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
--------------------
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Registration Statement.
--------------------
Registrant is relying on Section 24(f) of the Investment Company Act of
1940, as amended, which permits registration of an indefinite number of shares
of beneficial interest, of the Registrant. Accordingly, no filing fee is due in
connection with this Registration Statement.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
============================================================================
<PAGE>
THE PHOENIX ENGEMANN FUNDS
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
<TABLE>
<CAPTION>
Caption or Location in
Form N-14 Item No. and Caption Prospectus/Proxy Statement
------------------------------ --------------------------
Part A Information Required in Prospectus/Proxy Statement
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<S> <C> <C>
1. Beginning of Registration Statement Cover Page; Cross Reference Sheet
and Outside Front Cover Page of Prospectus
2. Beginning and Outside Back Cover Table of Contents
Page of Prospectus
3. Fee Table, Synopsis Information and Risk Synopsis; Principal Risk Factors; Comparison of
Factors Investment Objectives and Policies
4. Information about the Transaction Synopsis; The Proposed Reorganization;
Comparative Information on Shareholder Rights;
Appendix A (Form of Agreement and Plan of
Reorganization)
5. Information about the Registrant Cover Page; Synopsis; Principal Risk Factors;
Comparison of Investment Objectives and
Policies; The Proposed Reorganization;
Comparative Information on Distribution
Arrangements; Comparative Information on
Shareholder Services; Comparative Information
on Shareholder Rights; Management and Other
Service Providers; Additional Information About
The Funds; Current Prospectus of Registrant
6. Information about the Company Being Synopsis; Comparison of Investment Objectives
Acquired and Policies; The Proposed Reorganization;
Comparative Information on Distribution
Arrangements; Comparative Information on
Shareholder Services; Comparative Information
on Shareholder Rights; Additional Information
About The Funds; Prospectus of the
Phoenix-Engemann Small Cap Fund, dated August 28, 2000
7. Voting Information Synopsis; The Proposed Reorganization;
Comparative Information on Shareholder Rights;
Voting Information
8. Interest of Certain Persons and Experts The Proposed Reorganization
9. Additional Information Required for Not Applicable
Reoffering By Persons Deemed to be
Underwriters
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Caption or Location in
Form N-14 Item No. and Caption Prospectus/Proxy Statement
------------------------------ --------------------------
Part B: Information Required in Statement of Additional Information
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information about the Registrant Cover Page; Statement of Additional Information
of Registrant, dated January ____ , 2000
13. Additional Information about the Cover Page; Statement of Additional Information
Company Being Acquired of Phoenix Strategic Equity Series Fund, dated
August 28, 2000
14. Financial Statements Annual Report of the Registrant for the year ended
December 31, 1999; Annual Report of Phoenix Strategic
Equity Series Fund for the year ended April 30, 2000;
Semi-Annual Report of the Registrant for the six-month
period ended June 30, 2000; Semi-Annual Report of the
Phoenix Strategic Equity Series Fund for the six-month
period ended October 31, 2000; and Pro Forma Financial
Statements
Part C: Other Information
15. Indemnification Indemnification
16. Exhibits Exhibits
17. Undertakings Undertakings
</TABLE>
<PAGE>
PHOENIX-ENGEMANN SMALL CAP FUND
A SERIES OF
PHOENIX STRATEGIC EQUITY SERIES FUND
101 MUNSON STREET
GREENFIELD, MASSACHUSETTS 01301
1 (800) 243-1574
--------------------------
February 8, 2001
Dear Shareholder:
The Phoenix-Engemann Small Cap Fund, a series of Phoenix Strategic Equity
Series Fund (the "Trust"), will hold a special meeting of shareholders at 2:00
p.m., local time, on May 3, 2001, at the offices of the Trust. At the meeting,
the shareholders of the Phoenix-Engemann Small Cap Fund will vote on an
agreement and plan of reorganization under which the Phoenix-Engemann Small Cap
Fund will be combined with the Phoenix-Engemann Small & Mid-Cap Growth Fund, a
series of The Phoenix-Engemann Funds. The Phoenix-Engemann Small & Mid-Cap
Growth Fund has a substantially identical investment objective to that of the
Phoenix-Engemann Small Cap Fund. If the reorganization agreement is implemented,
you will become a shareholder of the Phoenix-Engemann Small & Mid-Cap Growth
Fund and will receive shares of the corresponding class of the Phoenix-Engemann
Small & Mid-Cap Growth Fund with an aggregate value equal to the aggregate value
of your investment in the Phoenix-Engemann Small Cap Fund. No sales charge will
be imposed in connection with the reorganization. Phoenix Investment Partners,
Ltd. will pay all costs of the reorganization. The reorganization will be
conditioned upon receipt of an opinion of counsel indicating that the
reorganization will qualify as a tax-free reorganization for federal income tax
purposes.
The Board of Trustees of the Trust believes that the reorganization offers
you the opportunity to pursue your goals in a larger fund. The Board of Trustees
has carefully considered and has unanimously approved the proposed
reorganization, as described in the accompanying materials, and believes that
the reorganization is in the best interests of the Phoenix-Engemann Small Cap
Fund and its shareholders. Therefore, the Board of Trustees recommends that you
vote in favor of the reorganization agreement.
Your vote is important no matter how many shares you own. Voting your shares
early will help to avoid costly follow-up mail and telephone solicitation. It is
very important that you vote and that your voting instructions be received no
later than April __, 2001.
Whether or not you plan to attend the meeting in person, please vote your
shares. As a convenience to our shareholders, you may now vote in any one of the
following ways:
oBy telephone, with a toll-free call to the number listed on the
enclosed proxy card and following recorded instructions;
oBy mail, with the enclosed proxy card and postage-paid envelope; or
oIn person at the meeting.
We encourage you to vote by telephone, using the control number that appears
on your enclosed proxy card. Use of telephone voting will reduce the time and
costs associated with this proxy solicitation. Whichever method you choose,
please read the enclosed proxy statement carefully before you vote.
Please note that you may receive more than one proxy package if you hold
shares of the Phoenix-Engemann Small Cap Fund in more than one account. You
should return separate proxy cards for each account. If you have any questions,
please call 800-243-1574, between 8:00 a.m. and 6:00 p.m. Eastern time, Monday
through Friday.
<PAGE>
Sincerely,
Philip R. McLoughlin, President
<PAGE>
PHOENIX-ENGEMANN SMALL CAP FUND
A SERIES OF
PHOENIX STRATEGIC EQUITY SERIES FUND
101 MUNSON STREET
GREENFIELD, MASSACHUSETTS 01301
1 (800) 243-1574
--------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 3, 2001
TO THE SHAREHOLDERS:
The Phoenix-Engemann Small Cap Fund, a series of Phoenix Strategic
Equity Series Fund, a Delaware business trust, will hold a special meeting of
shareholders at the offices of the Trust on May 3, 2001 at 2:00 p.m., local
time, for the following purposes:
1. To consider and act upon a proposal to approve the Agreement and Plan
of Reorganization, dated December __, 2000, and the transactions it
contemplates, including (a) the transfer of all or substantially all of the
assets of the Small Cap Fund to Phoenix-Engemann Small & Mid-Cap Growth Fund, a
series of The Phoenix-Engemann Funds, in exchange solely for shares of the
corresponding class of the Small & Mid-Cap Growth Fund and the assumption by the
Small & Mid-Cap Growth Fund of all known liabilities of the Small Cap Fund and
(b) the distribution of the shares of the Small & Mid-Cap Growth Fund so
received to shareholders of the Small Cap Fund in complete liquidation of the
Small Cap Fund.
2. To consider and act upon any other business as may properly come
before the meeting and any adjournments thereof.
You are entitled to vote at the meeting and any adjournment(s) if you
owned shares of the Small Cap Fund at the close of business on February 5, 2000.
Whether or not you plan to attend the meeting in person, please vote your
shares. As a convenience to our shareholders, you may now vote in any one of the
following ways:
oBy telephone, with a toll-free call to the number listed on the enclosed
proxy card and following recorded instructions;
oBy mail, with the enclosed proxy card and postage-paid envelope; or
oIn person at the meeting.
We encourage you to vote by telephone, using the control number that appears
on your enclosed proxy card. Use of telephone voting will reduce the time and
costs associated with this proxy solicitation. Whichever method you choose,
please read the enclosed proxy statement carefully before you vote.
If you sign, date, and return the proxy card but give no voting
instructions, your shares will be voted "FOR" the proposal noticed above.
<PAGE>
By Order of the Board of Trustees of
Phoenix Strategic Equity Series Fund,
G. Jeffrey Bohne, Secretary
Greenfield, Massachusetts
February 8, 2001
<PAGE>
PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH FUND
A SERIES OF
THE PHOENIX-ENGEMANN FUNDS
600 NORTH ROSEMEAD BOULEVARD
PASADENA, CALIFORNIA 91107-2133
(626) 351-9686
PHOENIX-ENGEMANN SMALL CAP FUND
A SERIES OF
PHOENIX STRATEGIC EQUITY SERIES FUND
101 MUNSON STREET
GREENFIELD, MASSACHUSETTS 01301
1 (800) 243-1574
PROSPECTUS/PROXY STATEMENT
DATED FEBRUARY 8, 2001
This Prospectus/Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Trustees of Phoenix Strategic Equity
Series Fund, a Delaware business trust (the "Trust"), for use at the special
meeting of shareholders of the Phoenix-Engemann Small Cap Fund to be held at
2:00 p.m., local time, on May 3, 2001 at the offices of the Trust, and at any
adjournment(s).
The purpose of the meeting is to consider an agreement and plan of
reorganization that would effect the reorganization of the Small Cap Fund into
the Phoenix-Engemann Small & Mid-Cap Growth Fund, a series of The
Phoenix-Engemann Funds (the "Acquiring Trust"), as described below. Under the
reorganization agreement, all or substantially all of the assets of the Small
Cap Fund would be transferred to the Small & Mid-Cap Growth Fund in exchange
solely for Class A and Class B shares of beneficial interest in the Small &
Mid-Cap Growth Fund and the assumption by the Small & Mid-Cap Growth Fund of all
known liabilities of the Small Cap Fund. These shares of the Small & Mid-Cap
Growth Fund would then be distributed pro rata to the shareholders of the
corresponding classes of the Small Cap Fund, and then the Small Cap Fund would
be liquidated. As a result of the proposed transactions, each shareholder of the
Small Cap Fund would receive a number of full and fractional shares of the
corresponding class of the Small & Mid-Cap Growth Fund with an aggregate net
asset value equal to the aggregate net asset value of the shareholder's Small
Cap Fund shares on the effective date of the reorganization.
The Small & Mid-Cap Growth Fund and the Small Cap Fund are both portfolio
series of open-end management investment companies. The Small & Mid-Cap Growth
Fund has an investment objective of long-term growth of capital. The Small Cap
Fund has an investment objective of long-term capital growth. Roger Engemann &
Associates, Inc. is employed as the investment adviser for the Small & Mid-Cap
Growth Fund and as the subadviser for the Small Cap Fund. Phoenix Investment
Counsel, Inc. is the investment adviser for the Small Cap Fund. As used in this
Prospectus/Proxy Statement, the term "Phoenix" refers to Phoenix Investment
Counsel, Inc. and "Engemann" refers to Roger Engemann & Associates, Inc.
This Prospectus/Proxy Statement, which you should retain for future
reference, sets forth concisely the information that you should know about the
Small Cap Fund, the Small & Mid-Cap Growth Fund, and the transactions
contemplated by the reorganization agreement, before you vote on the proposed
reorganization. As used in this Prospectus/Proxy Statement, the term "funds"
refers to the Small Cap Fund and the Small & Mid-Cap Growth Fund, collectively,
and the term "trusts" refers to the Trust and the Acquiring Trust, collectively.
A copy of the prospectus for the Small & Mid-Cap Growth Fund, dated January __,
2001, is included with this Prospectus/Proxy Statement and is incorporated by
reference in this Prospectus/Proxy Statement.
A Prospectus and a Statement of Additional Information for the Small Cap
Fund, each dated August 28, 2000, have been filed with the Securities and
Exchange Commission ("SEC") and are incorporated by reference in this
Prospectus/Proxy Statement. A Statement of Additional Information for the Small
& Mid-Cap Growth Fund, dated January __, 2001 has also been filed with the SEC
and is incorporated by reference in this Prospectus/Proxy
<PAGE>
Statement. Copies of the above-referenced documents are available upon
written or oral request and without charge by contacting Phoenix Equity Planning
Corporation at 56 Prospect Street, P.O. Box 150480, Hartford, Connecticut
06115-0480, or by telephoning Phoenix Equity Planning Corporation toll-free at
1-800-243-4361.
A Statement of Additional Information, dated February 8, 2001 relating to
the proposed transactions described in this Prospectus/Proxy Statement has been
filed with the SEC and is incorporated by reference in this Prospectus/Proxy
Statement. Copies of this Statement of Additional Information may be obtained
without charge by contacting Phoenix Equity Planning Corporation, at 56 Prospect
Street, P.O. Box 150480, Hartford, Connecticut 06115-0480, or by telephoning
Phoenix Equity Planning Corporation toll free at 1-800-243-4361.
The Securities and Exchange Commission maintains a web site
(http://www.sec.gov) that contains the Statement of Additional Information dated
February 8, 2001 and other material incorporated by reference, together with
other information regarding the Small & Mid-Cap Growth Fund and the Small Cap
Fund.
This Prospectus/Proxy Statement constitutes the proxy statement of the Small
Cap Fund for the meeting and the prospectus for shares of the Small & Mid-Cap
Growth Fund that have been registered with the SEC and are being issued in
connection with the reorganization. This Prospectus/Proxy Statement is expected
to first be sent to shareholders on or about February 12, 2001.
----------------
THE SECURITIES OF THE SMALL & MID-CAP GROWTH FUND HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------
The date of this Prospectus/Proxy Statement is February 8, 2001.
<PAGE>
TABLE OF CONTENTS
Page
----
SYNOPSIS....................................................................1
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PRINCIPAL RISK FACTORS......................................................6
----------------------
THE PROPOSED REORGANIZATION.................................................7
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COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES...........................11
------------------------------------------------
COMPARATIVE INFORMATION ON DISTRIBUTION ARRANGEMENTS.......................13
----------------------------------------------------
COMPARATIVE INFORMATION ON SHAREHOLDER SERVICES............................14
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COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS..............................15
---------------------------------------------
FISCAL YEAR................................................................16
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MANAGEMENT AND OTHER SERVICE PROVIDERS.....................................16
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VOTING INFORMATION.........................................................17
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ADDITIONAL INFORMATION ABOUT THE FUNDS.....................................19
--------------------------------------
MISCELLANEOUS..............................................................20
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OTHER BUSINESS.............................................................26
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[This page intentionally left blank]
<PAGE>
SYNOPSIS
BACKGROUND
The proposed reorganization is the outcome of deliberations by the Boards of
Trustees of the two trusts. Phoenix Investment Counsel, Inc. and Roger Engemann
& Associates, Inc., the advisers to the Small Cap Fund and the Small & Mid-Cap
Growth Fund, respectively, recommended that the Trustees of the respective
trusts consider the benefits that the shareholders would realize if the Small
Cap Fund were to be combined with the Small & Mid-Cap Growth Fund. In response
to their recommendation, the independent trustees of each trust requested that
management outline a specific reorganization proposal for their consideration
and provide an analysis of the specific benefits that shareholders would realize
from the proposal. Independent trustees are trustees who are not "interested
persons" of their respective trusts (as defined in Section 2(a)(19) of the
Investment Company Act of 1940 (the "1940 Act")). After considering the specific
reorganization proposal, the Trustees of the Acquiring Trust and the Trust,
including the independent trustees, at meetings held on September 12, 2000 and
August 24, 2000, respectively, unanimously approved the reorganization.
SUMMARY OF THE PROPOSED REORGANIZATION
The reorganization will be effected in accordance with the terms of a
reorganization agreement, a form of which is attached to this Prospectus/Proxy
Statement as Appendix A. The reorganization agreement provides for:
o the acquisition of all or substantially all of the assets of the Small
Cap Fund by the Small & Mid-Cap Growth Fund in exchange solely for Class\
A and Class B shares of the Small & Mid-Cap Growth Fund;
o the assumption by the Small & Mid-Cap Growth Fund of all known
liabilities of the Small Cap Fund;
o the pro rata distribution of the corresponding class of Small & Mid-Cap
Growth Fund shares to the Small Cap Fund shareholders in exchange for the
outstanding Small Cap Fund shares; and
o the liquidation of the Small Cap Fund.
The reorganization is anticipated to occur on or about May 18, 2001. If the
reorganization agreement is implemented, each Small Cap Fund shareholder will
receive a number of full and fractional shares of the corresponding class of
Small & Mid-Cap Growth Fund shares with an aggregate net asset value equal to
the aggregate net asset value of his or her Small Cap Fund shares, as of the
closing date of the reorganization.
The implementation of the reorganization agreement is subject to a number of
conditions set forth in the reorganization agreement. See "The Proposed
Reorganization." Among the significant conditions (which may not be waived) are:
o the receipt by each trust of an opinion of counsel as to the federal
income tax consequences of the reorganization; and
o the approval of the reorganization agreement by the shareholders of the
Small Cap Fund.
The reorganization agreement provides that Phoenix Investment Partners, Ltd.
will bear all costs and expenses of the reorganization, including the costs of
the meeting, the costs and expenses incurred in the preparation and mailing of
the notice, this Prospectus/Proxy Statement and the proxy, and the solicitation
of proxies.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and principal investment strategies of the Small
Cap Fund and the Small & Mid-Cap Growth Fund are substantially identical:
<PAGE>
o The Small Cap Fund has an investment objective of long-term capital
growth. The Small & Mid-Cap Growth Fund has an investment objective of
long-term growth of capital.
o Under normal circumstances, the Small Cap Fund invests at least 65% of
its total assets in stocks of companies with total market capitalizations
of $1.5 billion or less at the time of investment. Under normal
circumstances, the Small & Mid-Cap Growth Fund also 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.
See "Principal Risk Factors" and "Comparison of Investment Objectives and
Policies" below, for further information on the similarities and differences
between the investment objectives, policies and risks of the Small & Mid-Cap
Growth Fund and the Small Cap Fund. You can also find additional information for
the Small & Mid-Cap Growth Fund in its Prospectus.
DISTRIBUTION AND PURCHASE ARRANGEMENTS
The Small Cap Fund currently offers two classes of shares: Class A and Class
B shares. Shares are offered to the public at a price equal to the net asset
value per share plus applicable sales charges. For Class A Shares, sales charges
are imposed at the time of purchase. For Class B shares, sales charges are
imposed on a contingent deferred basis.
The Small & Mid-Cap Growth Fund currently offers three classes of shares:
Class A, Class B and Class C shares. The Class A and Class B shares of the Small
& Mid-Cap Growth Fund are offered to the public under the same sales charge
arrangements as the Class A and Class B shares of the Small Cap Fund.
See "Comparative Information on Distribution Arrangements" below for further
information on the distribution arrangements of the Small Cap Fund and the Small
& Mid-Cap Growth Fund. You can also find additional information on distribution
arrangements for the Small & Mid-Cap Growth Fund in its Prospectus.
DIVIDENDS AND DISTRIBUTIONS
The Small Cap Fund distributes net investment income semi-annually. The
Small & Mid-Cap Growth Fund distributes net investment income annually. Both
Funds distribute net realized capital gains, if any, at least annually.
All dividends and distributions of the Small Cap Fund and the Small &
Mid-Cap Growth Fund are paid in additional shares of the respective series
unless shareholders elect to receive cash. You can also find additional
information on dividends and distributions for the Small & Mid-Cap Growth Fund
in its Prospectus.
EXCHANGES
The Small Cap Fund and the Small & Mid-Cap Growth Fund currently offer
shareholders identical exchange privileges. Shareholders of the Small Cap Fund
and the Small & Mid-Cap Growth Fund may exchange their shares for shares of a
corresponding class of shares of other affiliated Phoenix funds.
On exchanges with corresponding classes of shares that carry a contingent
deferred sales charge, the contingent deferred sales charge schedule of the
original shares purchased continues to apply. You can also find additional
information on exchanges in the Small & Mid-Cap Growth Fund's Prospectus.
REDEMPTION PROCEDURES
Shareholders of both the Small Cap Fund and the Small & Mid-Cap Growth Fund
may redeem their shares at a redemption price equal to the net asset value of
the shares (minus any applicable contingent deferred sales charge) as next
determined following the receipt of a redemption order in proper form.
Ordinarily, payments of redemption proceeds for redeemed Small Cap Fund and
Small & Mid-Cap Growth Fund shares are made within
2
<PAGE>
seven days after receipt of a redemption request in proper form. See
"Comparative Information on Shareholder Services" for more information. You can
also find additional information on redemption procedures in the Small & Mid-Cap
Growth Fund's Prospectus.
FEDERAL TAX CONSEQUENCES OF PROPOSED REORGANIZATION
At the closing of the reorganization, the Trust and the Acquiring Trust will
receive an opinion of counsel, subject to customary assumptions and
representations, that:
o no gain or loss will be recognized by the Small Cap Fund on the
transfer of the assets of the Small Cap Fund to the Small & Mid-Cap
Growth Fund in exchange for Small & Mid-Cap Growth Fund shares and the
assumption by the Small & Mid-Cap Growth Fund of all known liabilities of
the Small Cap Fund or upon the distribution of Small & Mid-Cap Growth
Fund shares to the Small Cap Fund shareholders in exchange for their
shares of the Small Cap Fund;
o the aggregate tax basis of the Small & Mid-Cap Growth Fund shares,
including any fractional shares, received by each shareholder of the
Small Cap Fund pursuant to the reorganization will be the same as the
aggregate tax basis of the Small Cap Fund shares held by such shareholder
immediately prior to the reorganization; and
o the holding period of the Small & Mid-Cap Growth Fund shares, including
fractional shares, to be received by each shareholder of the Small Cap
Fund will include the period during which the Small Cap Fund shares
exchanged therefore were held by such shareholder (provided that the
Small Cap Fund shares were held as a capital asset on the date of the
reorganization).
See "The Proposed Reorganization--Federal Income Tax Consequences" for more
information.
RISK FACTORS
An investment in the Small & Mid-Cap Growth Fund is subject to specific
risks arising from the types of securities in which the Small & Mid-Cap Growth
Fund invests and general risks arising from investing in any mutual fund.
Investors can lose money by investing in the Small & Mid-Cap Growth Fund. There
is no assurance that the Small & Mid-Cap Growth Fund will meet its investment
objective. Because the Small & Mid-Cap Growth Fund's investment objectives and
policies are substantially identical to those of the Small Cap Fund, an
investment in the Small & Mid-Cap Growth Fund is subject to many of the same
risks as an investment in the Small Cap Fund. See "Principal Risk Factors" for
the principal risks associated with an investment in the Small & Mid-Cap Growth
Fund.
MANAGEMENT AND OTHER SERVICE PROVIDERS
As the investment adviser for the Small & Mid-Cap Growth Fund, Engemann is
responsible for managing the investment program and the general operations of
the Small & Mid-Cap Growth Fund, as well as the day-to-day management of the
Small & Mid-Cap Fund's portfolio. Phoenix is responsible for managing the Small
Cap Fund's investment program and general operations. As sub-adviser to the
Small Cap Fund, Engemann is responsible for the day-to-day management of the
Small Cap Fund's portfolio.
Investment and trading decisions for each fund are made by a team of
managers and analysts. Roger Engemann, Jim Mair and John Tilson oversee the
research and portfolio management function at Engemann. 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. Lou Abel and Yossi Lipsker serve as co-portfolio
managers of both the Small Cap Fund and the Small & Mid-Cap Growth Fund and as
such are responsible for the day-to-day management of both fund portfolios.
Messrs. Abel and Lipsker are both Vice Presidents of Engemann and have been with
Engemann since 1991 and 1995, respectively.
3
<PAGE>
COMPARATIVE FEE TABLES
The tables below are designed to assist an investor in understanding the
various direct and indirect costs and expenses associated with an investment in
the relevant class of shares of each fund. Each table also includes pro forma
information for the combined Small & Mid-Cap Growth Fund resulting from the
reorganization assuming the reorganization took place on October 31, 2000, and
after adjusting such information to reflect current fees. The expense
information for the Small & Mid-Cap Growth Fund and the Small Cap Fund is based
upon expenses for the twelve months ended October 31, 2000.
As indicated in the tables below, immediately upon effectiveness of the
reorganization, the "Total Annual Fund Operating Expenses" for the combined
Small & Mid-Cap Growth Fund are expected to be slightly higher than the "Total
Annual Fund Operating Expenses" for the Small Cap Fund.
<TABLE>
<CAPTION>
CLASS A SHARES
-----------------------------------------------------------------
PRO FORMA
COMBINED SMALL &
SMALL & MID-CAP SMALL CAP MID-CAP GROWTH
GROWTH FUND FUND FUND
--------------------- -------------------- ---------------------
<S> <C> <C> <C>
Annual Fund Operating Expenses
(expenses that are deducted, from fund assets)
Management Fees 0.92% 0.75% 0.88%
Distribution and service (12b-1 Fees) (a) 0.25% 0.25% 0.25%
Other Expenses 0.25% 0.31% 0.23%
----- ----- -----
Total Annual Fund Operating Expenses (b) 1.42% 1.31% 1.36%
===== ===== =====
CLASS B SHARES
----------------------------------------------------------------
PRO FORMA
COMBINED SMALL &
SMALL & MID-CAP SMALL CAP MID-CAP GROWTH
GROWTH FUND FUND FUND
--------------------- -------------------- ---------------------
Annual Fund Operating Expenses
(expenses that are deducted, from fund assets)
Management Fees 0.92% 0.75% 0.88%
Distribution and service (12b-1 Fees) (a) 1.00% 1.00% 1.00%
Other Expenses 0.25% 0.31% 0.23%
----- ----- -----
Total Annual Fund Operating Expenses (b) 2.17% 2.06% 2.11%
===== ===== =====
</TABLE>
The following tables show shareholder transaction expenses currently
applicable to the purchase of Class A and Class B shares of both funds. These
expenses will remain in effect as to the combined Small & Mid-Cap Growth Fund
following the reorganization.
4
<PAGE>
<TABLE>
<CAPTION>
SMALL CAP FUND AND SMALL & MID-CAP GROWTH FUND CLASS A SHARES CLASS B SHARES
---------------------------------------------- -------------- --------------
<S> <C> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases (as a
percentage of offering price) 5.75% None
Maximum Deferred Sales Charge (Load) (as a percentage of the
lesser of the value redeemed or the amount invested) None 5% (c)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None None
Redemption Fee None None
Exchange Fee None None
</TABLE>
-------------------------
(a) 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.
(b) The Small & Mid-Cap Growth Fund's financial agent has agreed to waive a
portion of its administration fee through April 30, 2001 so that other
operating expenses of the fund do not exceed 0.50% of the first $50
million of the average daily net assets. Prior to March 1, 2000, the
fund's financial agent 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.
(c) 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 of the Small & Mid-Cap Growth Fund purchased prior to January
20, 1998 are subject to the sales load schedule as it existed prior to
that date.
EXAMPLE
These examples illustrate the impact of the above fees and expenses on an
account with an initial investment of $10,000, based on the expenses shown
above. They assume a 5% annual return, the reinvestment of all dividends and
distributions and "annual fund operating expenses" remaining the same each year.
These examples are hypothetical; actual fund expenses and returns vary from year
to year, and may be higher or lower than those shown. In the case of Class B
shares, it is assumed that your shares are converted to Class A shares after
eight years.
Fees and expenses if you redeemed your shares at the end of each time
period:
<TABLE>
<CAPTION>
CLASS A SHARES
--------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Small & Mid-Cap Growth Fund............................... $ 711 $ 998 $ 1,307 $ 2,179
Small Cap Fund............................................ $ 701 $ 966 $ 1,252 $ 2,063
Pro Forma Combined Small & Mid-Cap Growth Fund............ $ 706 $ 981 $ 1,277 $ 2,116
CLASS B SHARES
--------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Small & Mid-Cap Growth Fund............................... $ 620 $ 879 $ 1,164 $ 2,313
Small Cap Fund............................................ $ 609 $ 846 $ 1,108 $ 2,197
Pro Forma Combined Small & Mid-Cap Growth Fund............ $ 614 $ 861 $ 1,134 $ 2,250
</TABLE>
5
<PAGE>
Fees and expenses if you did not redeem your shares at the end of each time
period:
<TABLE>
<CAPTION>
CLASS B SHARES
--------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Small & Mid-Cap Growth Fund............................... $ 220 $ 679 $ 1,164 $ 2,313
Small Cap Fund............................................ $ 209 $ 646 $ 1,108 $ 2,197
Pro Forma Combined Small & Mid-Cap Growth Fund............ $ 214 $ 661 $ 1,134 $ 2,250
</TABLE>
Note: Actual expenses for the Small & Mid-Cap Fund may be lower than those
shown in the example above since the expense levels used to calculate the
figures shown do not include the reimbursement of expenses over certain levels
by the Small & Mid-Cap Fund's administrator.
The purpose of the tables above is to help the investor understand the
various costs and expenses that the investor will bear directly or indirectly.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN SHOWN.
PRINCIPAL RISK FACTORS
Because the Small & Mid-Cap Growth Fund's investment objective and
policies are substantially identical to those of the Small Cap Fund, an
investment in the Small & Mid-Cap Growth Fund is subject to many of the same
specific risks as an investment in the Small Cap Fund. The following highlights
the principal similarities and differences between the principal risk factors
associated with an investment in the Small & Mid-Cap Growth Fund as contrasted
with those associated with the Small Cap Fund and is qualified in its entirety
by the more extensive discussion of risk factors in the Prospectuses and
Statements of Additional Information of the Small & Mid-Cap Growth Fund and the
Small Cap Fund, respectively.
An investment in the Small & Mid-Cap Growth Fund is subject to specific
risks arising from the types of securities in which the Small & Mid-Cap Growth
Fund invests and general risks arising from investing in any mutual fund. You
can lose money by investing in the Small & Mid-Cap Growth Fund. There is no
assurance that the Small & Mid-Cap Growth Fund will meet its investment
objective.
GENERAL
The value of the investments of the Small Cap Fund and the Small & Mid-Cap
Growth Fund 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
your fund's investments decreases, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting
the overall economy, specific industries or companies in which your fund invests
can be worse than expected and investments may fail to perform as Phoenix or
Engemann 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 returns are 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
6
<PAGE>
performance. Investment returns of unseasoned and small capitalization companies
can be highly volatile. Product lines are often less diversified and subject to
competitive threats. Small capitalization and unseasoned company stocks are
subject to varying patterns of trading volume and may, at times, be difficult to
sell.
THE PROPOSED REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
The terms and conditions under which the proposed reorganization may be
consummated are set forth in the reorganization agreement. Significant
provisions of the reorganization agreement are summarized below. This summary,
however, is qualified in its entirety by reference to the reorganization
agreement, a form of which is attached to this Prospectus/Proxy Statement as
Appendix A.
The Agreement and Plan of Reorganization contemplates:
o the acquisition by the Small & Mid-Cap Growth Fund, on the closing
date of the reorganization, of all or substantially all of the assets of
the Small Cap Fund in exchange solely for Class A and Class B shares of
the Small & Mid-Cap Growth Fund and the assumption by the Small & Mid-Cap
Growth Fund of all known liabilities of the Small Cap Fund; and
o the distribution of shares of the corresponding class of the Small &
Mid-Cap Growth Fund to the shareholders of the Small Cap Fund in exchange
for their respective shares of the Small Cap Fund.
The assets of the Small Cap Fund to be acquired by the Small & Mid-Cap
Growth Fund include all property, including, without limitation, all cash,
securities, and dividends or interest receivables which are owned by the Small
Cap Fund and any deferred or prepaid expenses shown as an asset on the books of
the Small Cap Fund on the closing date of the reorganization. The Small &
Mid-Cap Growth Fund will assume all liabilities, accrued expenses, costs,
charges, and reserves of the Small Cap Fund reflected on an unaudited statement
of assets and liabilities as of the closing date. The closing of the
reorganization will occur on the first Friday following satisfaction (or waiver)
of the conditions to closing set forth in the reorganization agreement
(currently anticipated to occur on or about May 18, 2001), or such later date as
the parties may agree.
The value of the Small Cap Fund's assets to be acquired and the Small Cap
Fund's liabilities to be assumed by the Small & Mid-Cap Growth Fund and the net
asset value of each class of shares of the Small & Mid-Cap Growth Fund will be
determined immediately after the close of regular trading on the New York Stock
Exchange on the closing date, using the valuation procedures set forth in the
Small & Mid-Cap Growth Fund's then current Prospectus and Statement of
Additional Information. The number of Class A and Class B shares of the Small &
Mid-Cap Growth Fund to be issued to the Small Cap Fund will be determined by
dividing (a) the value of the aggregate net assets attributable to each class of
shares of the Small Cap Fund by (b) the net asset value per share of the
corresponding class of the Small & Mid-Cap Growth Fund.
On the closing date, the Small Cap Fund will liquidate and distribute pro
rata to its shareholders of record the Small & Mid-Cap Growth Fund shares
received by the Small Cap Fund in exchange for their respective shares in the
Small Cap Fund. This liquidation and distribution will be accomplished by
opening an account on the books of the Small & Mid-Cap Growth Fund in the name
of each shareholder of record in the Small Cap Fund and by crediting to each
account the shares due pursuant to the reorganization. Every Small Cap Fund
shareholder will own shares of the corresponding class of the Small & Mid-Cap
Growth Fund immediately after the reorganization, the value of which will be
equal to the value of the shareholder's Small Cap Fund shares immediately prior
to the reorganization.
At or prior to the closing date, the Small Cap Fund will declare a dividend
or dividends which, together with all previous such dividends, will have the
effect of distributing to the Small Cap Fund shareholders all of the Small Cap
Fund's investment company taxable income for all taxable years ending at or
prior to the closing date
7
<PAGE>
(computed without regard to any deduction for dividends paid) and all of its
net capital gains realized (after reduction for any capital loss carry-forward)
in all taxable years ending at or prior to the closing date.
Subject to certain limitations on liability, the Small & Mid-Cap Growth
Fund has agreed to indemnify and hold harmless the Trustees of the Trust who are
not "interested persons" of the adviser or distributor of the Small Cap Fund
(the "Independent Trustees") from and against any and all claims, costs,
expenses (including reasonable attorneys' fees), losses and liabilities of any
sort or kind (collectively "Liability") which may be asserted against them or
for which the Independent Trustees may become liable arising out of or
attributable to the transactions contemplated by the reorganization agreement,
provided that any Independent Trustee seeking the benefit of this
indemnification shall not have materially contributed to the creation of such
Liability by acting in a manner contrary to his or her fiduciary duties as a
trustee under the 1940 Act.
The consummation of the reorganization is subject to a number of conditions
set forth in the reorganization agreement. Certain of these conditions may be
waived by the Board of Trustees of either trust, or by an authorized officer of
each trust, as appropriate.
Among the significant conditions which may not be waived are: (a) the
receipt by the Trust and the Acquiring Trust of an opinion of counsel as to
certain federal income tax aspects of the reorganization and (b) the approval of
the reorganization agreement by the shareholders of the Small Cap Fund. The Plan
may be terminated and the reorganization abandoned at any time, before or after
approval by the shareholders of the Small Cap Fund, prior to the closing date,
by either party by resolution of its Board of Trustees. In addition, the
reorganization agreement may be amended by mutual agreement, except that no
amendment may be made to the reorganization agreement subsequent to the meeting
that would change the provisions for determining the number of Small & Mid-Cap
Growth Fund shares to be issued to shareholders of the Small Cap Fund without
their further approval.
REASONS FOR THE REORGANIZATION
The proposed reorganization is the outcome of deliberations by the Boards of
Trustees of the trusts. Phoenix Investment Counsel, the adviser to the Small Cap
Fund, and Roger Engemann & Associates, the adviser to the Small & Mid-Cap Growth
Fund, recommended that the Trustees of each trust consider the benefits that
shareholders would realize if the Small Cap Fund were to be combined with the
Small & Mid-Cap Growth Fund. In response to this recommendation, the independent
trustees of each trust requested that management outline a specific
reorganization proposal for their consideration and provide an analysis of the
specific benefits to be realized by shareholders from the proposal.
In the course of their review, the Trustees of the Trust noted that the
reorganization would be a means of combining two series with substantially
identical investment objectives and principal investment strategies and would
permit the shareholders of the Small Cap Fund to pursue their investment goals
in a larger fund. In reaching this conclusion, the Board considered a number of
additional factors, including the following:
o the reorganization could result in economies of scale through the
spreading of fixed costs over a larger asset base;
o the total expense ratio of the combined Small & Mid-Cap Growth Fund
following the reorganization is projected to be slightly higher than the
current total expense ratio of the Small Cap Fund;
o the reorganization provides for continuity of distribution and
shareholder servicing arrangements; and
o the reorganization will not result in the recognition of any gain or loss
for federal income tax purposes either to the Small Cap Fund or the Small
& Mid-Cap Growth Fund or to the shareholders of either of the funds.
After considering these and other factors, the Board of Trustees of the
Trust, including the independent trustees, unanimously concluded at a meeting
held on August 24, 2000 that the reorganization would be in the best
8
<PAGE>
interests of the Small Cap Fund and its shareholders and that the interests
of existing Small Cap Fund shareholders will not be diluted as a result of the
transactions contemplated by the reorganization. The Board of Trustees of the
Trust then unanimously voted to approve the reorganization and authorize the
officers of the Trust to submit the reorganization proposal to shareholders for
consideration.
At a meeting held on September 12, 2000, the Board of Trustees of the
Acquiring Trust, including the independent trustees, also unanimously concluded
that the reorganization would be in the best interests of the Small & Mid-Cap
Growth Fund and the shareholders and that the interests of existing Small &
Mid-Cap Growth Fund shareholders will not be diluted as a result of the
reorganization. In the course of their review, the Board of Trustees of the
Acquiring Trust noted that Phoenix Investment Counsel and Roger Engemann &
Associates, Inc. have elected to use the historical financial statements and
performance record of the Small & Mid-Cap Growth Fund.
FEDERAL INCOME TAX CONSEQUENCES
Special counsel to the funds, Goodwin, Procter & Hoar LLP, is to opine that,
subject to customary assumptions and representations, on the basis of the
existing provisions of the Internal Revenue Code (the "Code"), the Treasury
Regulations promulgated thereunder and current administrative and judicial
interpretations thereof, for federal income tax purposes:
o the transfer of all or substantially all of the assets of the Small Cap
Fund solely in exchange for Small & Mid-Cap Growth Fund shares and the
assumption by the Small & Mid-Cap Growth Fund of all known liabilities of
the Small Cap Fund, and the distribution of such shares to the
shareholders of the Small Cap Fund, will constitute a "reorganization"
within the meaning of Section 368(a) of the Code; the Small & Mid-Cap
Growth Fund and the Small Cap Fund will each be a "party to a
reorganization" within the meaning of Section 368(b) of the Code;
o no gain or loss will be recognized by the Small Cap Fund on the transfer
of the assets of the Small Cap Fund to the Small & Mid-Cap Growth Fund in
exchange for Small & Mid-Cap Growth Fund shares and the assumption by the
Small & Mid-Cap Growth Fund of all known liabilities of the Small Cap
Fund or upon the distribution of Small & Mid-Cap Growth Fund shares to
the Small Cap Fund shareholders in exchange for their shares of the Small
Cap Fund;
o the tax basis of the Small Cap Fund's assets acquired by the Small
& Mid-Cap Growth Fund will be the same to the Small & Mid-Cap
Growth Fund as the tax basis of such assets to the Small Cap Fund
immediately prior to the reorganization, and the holding period of the
assets of the Small Cap Fund in the hands of the Small & Mid-Cap Growth
Fund will include the period during which those assets were held by the
Small Cap Fund;
o no gain or loss will be recognized by the Small & Mid-Cap Growth Fund
upon the receipt of the assets of the Small Cap Fund solely in exchange
for the Small & Mid-Cap Growth Fund shares and the assumption by the
Small & Mid-Cap Growth Fund of all known liabilities of the Small Cap
Fund;
o no gain or loss will be recognized by shareholders of the Small Cap Fund
upon the receipt of Small & Mid-Cap Growth Fund shares by such
shareholders, provided such shareholders receive solely Small & Mid-Cap
Growth Fund shares (including fractional shares) in exchange for their
Small Cap Fund shares; and
o the aggregate tax basis of the Small & Mid-Cap Growth Fund shares,
including any fractional shares, received by each shareholder of the
Small Cap Fund pursuant to the reorganization will be the same as the
aggregate tax basis of the Small Cap Fund shares held by such shareholder
immediately prior to the reorganization, and the holding period of the
Small & Mid-Cap Growth Fund shares, including fractional shares, to be
received by each shareholder of the Small Cap Fund will include the
period during which the Small Cap Fund shares exchanged therefor were
held by such shareholder (provided that the Small Cap Fund shares were
held as a capital asset on the date of the reorganization).
9
<PAGE>
The receipt of such an opinion is a condition to the consummation of the
reorganization. The Trust has not obtained an Internal Revenue Service ("IRS")
private letter ruling regarding the federal income tax consequences of the
reorganization, and the IRS is not bound by advice of counsel. If the transfer
of the assets of the Small Cap Fund in exchange for Small & Mid-Cap Growth Fund
shares and the assumption by the Small & Mid-Cap Growth Fund of all known
liabilities of the Small Cap Fund do not constitute a tax-free reorganization,
each Small Cap Fund shareholder generally will recognize gain or loss equal to
the difference between the value of Small & Mid-Cap Growth Fund shares such
shareholder acquires and the tax basis of such shareholder's Small Cap Fund
shares.
Shareholders of the funds should consult their tax advisers regarding the
effect, if any, of the proposed reorganization in light of their individual
circumstances. Since the foregoing discussion relates only to the federal income
tax consequences of the reorganization, shareholders of the funds should also
consult tax advisers as to state and local tax consequences, if any, of the
reorganization.
CAPITALIZATION
The following table sets forth the capitalization of the Small & Mid-Cap
Growth Fund and the Small Cap Fund, and on a pro forma basis for the combined
Small & Mid-Cap Growth Fund as of October 31, 2000 giving effect to the proposed
acquisition of net assets of the Small Cap Fund at net asset value. The pro
forma data reflects an exchange ratio of approximately 0.673628592 and
0.666975439 for Class A and Class B shares, respectively, of the Small & Mid-Cap
Growth Fund issued for each Class A and Class B share, respectively, of the
Small Cap Fund.
<TABLE>
<CAPTION>
PRO FORMA
SMALL & COMBINED
MID-CAP SMALL & MID-
GROWTH FUND SMALL CAP FUND CAP GROWTH FUND
----------- -------------- ---------------
<S> <C> <C> <C>
Net assets
Class A $ 246,569,821 $ 193,577,992 $ 440,147,813
Class B 111,334,934 138,688,934 250,023,868
Class C 81,325,256 N/A 81,325,256
Net asset value per share
Class A $ 44.88 $ 30.23 $ 44.88
Class B 43.47 28.99 43.47
Class C 43.44 N/A 43.44
Shares outstanding
Class A 5,494,280 6,402,987 9,807,515
Class B 2,561,432 4,783,462 5,751,884
Class C 1,872,257 N/A 1,872,257
</TABLE>
The table set forth above should not be relied on to determine the number of
Small & Mid-Cap Growth Fund shares to be received in the reorganization. The
actual number of shares to be received will depend upon the net asset value and
number of shares outstanding of the Small Cap Fund and the Small & Mid-Cap
Growth Fund at the time of the reorganization.
HISTORICAL PERFORMANCE INFORMATION
The following table sets forth the average annual total return of the
Class A, Class B and Class C shares of the Small & Mid-Cap Growth Fund and the
Class A and Class B shares of the Small Cap Fund for the periods indicated.
10
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR
PERIODS ENDING 10/31/00(a)
FUND NAME 1 YEAR 5 YEARS SINCE INCEPTION INCEPTION DATE
------------------------------------------ ------ ------- --------------- --------------
<S> <C> <C> <C> <C>
Small & Mid-Cap Growth Fund
Class A 44.81% 31.94% 33.88% 10/10/1994
Class B 48.53% N/A 29.84% 09/18/1996
Class C 52.53% N/A 27.63% 10/08/1996
Small Cap Fund
Class A 40.63% 29.08% 29.49% 10/16/1995
Class B 44.13% 29.65% 30.05% 10/16/1995
Russell 2000 Index (b) 17.41% 12.39% 13.26% 10/10/1994
Russell 2000 Growth Index (c) 16.16% 11.65% 11.27% 10/16/1995
</TABLE>
Returns indicate past performance, which is not predictive of future
performance. Investment return and net asset value will fluctuate, so that
shares, when redeemed, may be worth more or less than the original cost.
-------------------------
(a) The Small & Mid-Cap Growth Fund's average annual returns in the table
above reflect the deduction of the maximum sales charge for an
investment in Class A shares and a full redemption of Class B and Class
C shares. The Small Cap 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 Class
B shares.
(b) The Russell 2000 Growth Index is an unmanaged, commonly used measure of
total return performance for small-capitalization growth-oriented
stocks. The index does not reflect sales charges.
(c) 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.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The following discussion is a summary of some of the more significant
similarities and differences in the investment objectives, policies and
restrictions of the Small & Mid-Cap Growth Fund and the Small Cap Fund and
assumes the effectiveness of a pending transaction to reorganize the
Phoenix-Engemann Funds from a Massachusetts business trust into a Delaware
business trust and to consider changes to the fundamental investment
restrictions of each series of the Phoenix-Engemann Funds (the
"Redomestication"). The redomestication is currently expected to be effective on
or before the effective date of this transaction. The discussion below is
qualified in its entirety by the discussion elsewhere in this Prospectus/Proxy
Statement, and in each fund's Prospectus and Statement of Additional
Information.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Small & Mid-Cap Growth Fund and the
Small Cap Fund are substantially identical. The Small & Mid-Cap Growth Fund has
an investment objective of long-term growth of capital. The Small Cap Fund has
an investment objective of long-term capital growth. The investment objectives
of the Small & Mid-Cap Growth Fund and the Small Cap Fund are "fundamental
policies" which may not be changed without the approval of the holders of at
least a "majority of the outstanding voting securities" of the respective 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 principal investment strategies of the Small & Mid-Cap Growth Fund are
substantially identical to the principal investment strategies of the Small Cap
Fund.
11
<PAGE>
Both the Small & Mid-Cap Growth Fund and the Small Cap Fund invest at least
65% of their total assets in stocks of companies with market capitalizations of
below $1.5 billion at the time of investment. The Funds emphasize the purchase
of common stocks of domestic corporations with rapidly growing earnings per
share. The Funds may also select stocks of companies that may not be
experiencing rapid growth but which, in the opinion of the adviser, are
undervalued by other criteria of their fundamental net worth.
Investments of the Funds are generally 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 if the
security has appreciated to the point where it is no longer attractive.
As the investment adviser for the Small & Mid-Cap Growth Fund, Engemann is
responsible for managing the investment program and the general operations of
the Small & Mid-Cap Growth Fund, as well as the day-to-day management of the
Small & Mid-Cap Fund's portfolio. Phoenix is responsible for managing the Small
Cap Fund's investment program and general operations. As sub-adviser to the
Small Cap Fund, Engemann is responsible for the day-to-day management of the
Small Cap Fund's portfolio.
CERTAIN INVESTMENT RESTRICTIONS
The Small & Mid-Cap Growth Fund and the Small Cap Fund are subject to
identical investment restrictions that restrict the scope of their investments.
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 (as that term is defined in the 1940 Act).
Each 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, 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 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.
12
<PAGE>
(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 Funds 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 Funds' assets will not constitute a
violation of the restriction.
COMPARATIVE INFORMATION ON DISTRIBUTION ARRANGEMENTS
MULTIPLE CLASS STRUCTURE
The Small & Mid-Cap Growth Fund currently offers three classes of shares:
Class A, Class B and Class C shares. The Small Cap Fund currently offers two
classes of shares: Class A and Class B shares. The Class A and Class B shares of
the Small Cap Fund are offered to the public under the same sales charge
arrangements as the Class A and Class B shares of the Small & Mid-Cap Growth
Fund.
In the proposed reorganization, you will receive the corresponding class of
shares of the Small & Mid-Cap Growth Fund in exchange for your shares in the
Small Cap Fund. The reorganization will be effected at net asset value. No sales
charge will be imposed on your shares. For purposes of calculating the
contingent deferred sales charge that you may pay when you dispose of any Class
B shares acquired as a result of the reorganization, the length of time you hold
shares in the Small & Mid-Cap Growth Fund will be added to the length of time
you held shares in the Small Cap Fund. If you acquire Class B shares as a result
of the reorganization, you will continue to be subject to a contingent deferred
sales charge upon subsequent redemption to the same extent as if you had
continued to hold your shares of the Small Cap Fund.
The shares of the various classes are offered under the following
arrangements:
CLASS A SHARES (CURRENTLY OFFERED BY BOTH FUNDS)
o Are offered to the public at net asset value plus a maximum sales charge of
6.10% of the offering price (5.75% of the amount invested). The sales charge
may be reduced or waived under certain conditions.
o Are not subject to any charges when redeemed.
o Have lower distribution and service fees (0.25%) and pay higher dividends
than Class B and Class C shares.
CLASS B SHARES (CURRENTLY OFFERED BY BOTH FUNDS)
o Are offered to the public at net asset value with no sales charge at the
time of purchase.
o Are subject to a sales charge of up to 5.00% of the shares' value if they
are redeemed within the first five years after purchase. This charge
declines to 0% over a period of five years and may be waived under certain
conditions.
o Will automatically convert to Class A shares eight years after purchase
(six-years for Class B shares of the Small & Mid-Cap Growth Fund purchased
prior to February 20, 1998).
13
<PAGE>
o Have higher distribution and service fees (1.00%) and pay lower dividends
than Class A shares.
CLASS C SHARES (CURRENTLY OFFERED BY THE SMALL & MID-CAP GROWTH FUND ONLY)
o Are offered to the public at net asset value with no sales charge at the
time of purchase.
o Are subject to a sales charge of 1.00% if they are redeemed within the first
year after they are purchased.
o Have the same distribution and service fees (1.00%) as Class B shares and
pay comparable dividends.
o Class C shares do not convert to any other class of shares of the Small &
Mid-Cap Growth Fund.
DISTRIBUTION PLANS
Phoenix Equity Planning Corporation serves as the distributor of shares for
both the Small & Mid-Cap Growth Fund and the Small Cap Fund. The Acquiring Trust
has adopted separate distribution plans under Rule 12b-1 of the 1940 Act for
Class B and Class C shares relating to the sale and promotion of Small & Mid-Cap
Growth Fund shares (the "Acquiring Trust Class B Plan" and the "Acquiring Trust
Class C Plan" and collectively, the "Acquiring Trust Plans").
Under the Acquiring Trust Class B Plan and the Acquiring Trust Class C Plan,
the Funds compensate Phoenix Equity Planning Corporation 0.75% of the average
daily value of the net assets of Class B and Class C shares. In addition,
Phoenix Equity Planning Corporation is paid 0.25% annually of the average daily
net assets of each class of shares for providing services to the shareholders,
including assistance in connection with inquiries related to shareholder
accounts.
The Trust has also adopted distribution plans pursuant to Rule 12b-1 on
behalf of the Class B and Class C shares of the Small Cap Fund, (the "Trust
Class B Plan" and "Trust Class C Plan," and collectively, the "Trust Plans").
Under the Trust Class B Plan and the Trust Class C Plan, the Small Cap Fund
compensates Phoenix Equity Planning Corporation 0.75% of the average daily net
assets of the Small Cap Fund's Class B and Class C shares. In addition, the
Small Cap Fund pays Phoenix Equity Planning Corporation 0.25% annually of the
average daily net assets of each class of Small Cap Fund shares as compensation
for providing services to the shareholders, including assistance in connection
with inquiries related to shareholder accounts.
COMPARATIVE INFORMATION ON SHAREHOLDER SERVICES
Both the Small Cap Fund and the Small & Mid-Cap Growth Fund offer the same
shareholder services, including a Systematic Withdrawal Program, telephone
exchanges, telephone redemptions and access to the Investo-Matic Program, an
automatic investment program.
The Small & Mid-Cap Growth Fund distributes net investment income annually,
and distributes net realized capital gains, if any, at least annually. The Small
Cap Fund distributes net investment income semiannually, and distributes net
realized capital gains, if any, at least annually. All dividends and
distributions with respect to the shares of the Small Cap Fund and the Small &
Mid-Cap Growth Fund are paid in additional shares of the respective fund unless
shareholders elect to receive cash. The number of shares received in connection
with any reinvestment of dividends will be based upon the net asset value per
share of the applicable class of shares of the Small Cap Fund and the Small &
Mid-Cap Growth Fund in effect on the record date.
The Small & Mid-Cap Growth Fund and the Small Cap Fund currently offer
shareholders identical exchange privileges. Shareholders of the Small Cap Fund
and the Small & Mid-Cap Growth Fund may exchange their shares for shares of a
corresponding class of shares of other affiliated Phoenix funds.
Shares of the Small & Mid-Cap Growth Fund and the Small Cap Fund may be
redeemed at a redemption price equal to the net asset value of the shares as
next determined following the receipt of a redemption order and
14
<PAGE>
any other required documentation in proper form. In the case of redemptions of
Class B shares for the Small & Mid-Cap Growth Fund or Class B shares of the
Small Cap Fund, investors will be subject to the applicable determined deferred
sales charges, if any, for such shares. Payment of redemption proceeds for
redeemed Small & Mid-Cap Growth Fund and Small Cap Fund shares are generally
made within seven days after receipt of a redemption request in proper form and
documentation, provided that each check used for purchases of shares has been
cleared for payment.
Because both the Small & Mid-Cap Growth Fund and the Small Cap Fund offer
the same shareholder services, after the closing the same services will continue
to be available to the shareholders of the Small Cap Fund but in their capacity
as shareholders of the Small & Mid-Cap Growth Fund.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS
The following is a summary of certain provisions of the Declarations of Trust of
the Small Cap Fund and the Small & Mid-Cap Growth Fund and assumes the
effectiveness of the Redomestication of the Phoenix-Engemann Funds. The
Declarations of Trust of the Small & Mid-Cap Growth Fund and the Small Cap Fund
are substantially identical.
FORM OF ORGANIZATION
The Small Cap Fund is a series of the Phoenix Strategic Equity Series
Fund, an unincorporated voluntary association organized under the laws of the
State of Delaware as a business trust, pursuant to a Declaration of Trust dated
July 7, 2000, as amended. The Phoenix Strategic Equity Series Fund is the
successor to Phoenix Strategic Equity Series Fund, a business trust organized
under the laws of the Commonwealth of Massachusetts in 1986. The Small & Mid-Cap
Growth Fund is a series of The Phoenix-Engemann Funds, an unincorporated
voluntary association organized under the laws of the State of Delaware as a
business trust, pursuant to an Agreement and Declaration of Trust dated August
17, 2000, as amended. The Phoenix-Engemann Funds is the successor to The
Phoenix-Engemann Funds, a business trust organized under the laws of the
Commonwealth of Massachusetts in 1986. The operations of both the Small &
Mid-Cap Growth Fund and the Small Cap Fund are governed by their respective
Agreement and Declaration of Trust documents and by Delaware law. Both the
Phoenix Strategic Equity Series Fund and The Phoenix-Engemann Funds are
registered with the SEC as open-end management investment companies and are
subject to the provisions of the 1940 Act and the rules and regulations of the
SEC thereunder. The Trustees of each Trust may generally authorize mergers,
consolidations, share exchanges and reorganizations of a new fund or of each
respective Trust with another trust series or other business organization
without shareholder approval.
SHARES
Each Declaration of Trust authorizes the Trustees to create an unlimited
number of series in each trust. Within each series, the Trustees may create an
unlimited number of classes, each with an unlimited number of full and
fractional shares. The Phoenix Strategic Equity Series Fund currently has three
series outstanding: the Phoenix-Engemann Small Cap Fund, the Phoenix-Seneca
Growth Fund and the Phoenix-Seneca Strategic Theme Fund. The Phoenix-Engemann
Funds currently has five series outstanding: the Phoenix-Engemann Balanced
Return Fund, Phoenix-Engemann Focus Growth Fund, Phoenix-Engemann Nifty Fifty
Fund, Phoenix-Engemann Small & Mid-Cap Growth Fund and Phoenix-Engemann Value 25
Fund. In addition to the currently existing series, each trust may organize
other series in the future.
The Small & Mid-Cap Growth Fund currently offers Class A, Class B and Class
C shares. The Small Cap Fund currently offers Class A and Class B shares. When
issued, the shares are fully paid and non-assessable, have no preference,
preemptive or similar rights unless designated by the Trustees, and are freely
transferable. The assets and proceeds received by each trust from the issue or
sale of shares of a series or class are allocated to that series and class and
constitute the rights of that series or class, subject only to the rights of
creditors. Any underlying assets of a series or class are required to be
segregated on the books of account of the trusts. These assets are to be used to
pay the expenses of the series or class as well as a share of the general
expenses of each relevant trust.
15
<PAGE>
MEETINGS
The Trustees or President of both the Small & Mid-Cap Growth Fund and the
Small Cap Fund may call shareholder meetings as necessary. To the extent
required by the 1940 Act, meetings held for the purpose of voting on the removal
of any trustee shall be called by trustees upon written request by shareholders
holding at least ten percent of the outstanding shares entitled to vote.
Generally, one-third of the shares entitled to vote constitutes a quorum at a
shareholder meeting.
SHAREHOLDER LIABILITY
Unlike the stockholders of a corporation, under certain circumstances
shareholders of a business trust may be held personally liable for the debts,
claims or other obligations of a business trust. However, the trust documents of
both the Small & Mid-Cap Growth Fund and the Small Cap Fund limit shareholder
liability.
The Declaration of Trust for each of the Small & Mid-Cap Growth Fund and the
Small Cap Fund provides that shareholders shall not be subject to any personal
liability for the acts or obligations of the Trusts. Each Declaration of Trust
provides for indemnification for any shareholder and any former shareholder who
is exposed to liability by reason of a claim or demand relating to such person
being a shareholder. 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 Trusts themselves would be unable to meet their
obligations.
LIABILITY OF TRUSTEES
The Declaration of Trust for each of the Small & Mid-Cap Growth Fund and the
Small Cap Fund provide that trustees will generally be personally liable only
for willful misfeasance, bad faith, gross negligence or reckless disregard of
duties. The trusts may purchase insurance for trustees to cover potential
liabilities and will generally indemnify a trustee against such claims. The
trusts may also advance payments to a trustee in connection with
indemnification.
VOTING REQUIREMENTS
Each shareholder of the Small & Mid-Cap Growth Fund and the Small Cap Fund
is entitled to one vote for each dollar of net asset value (determined as of the
applicable record date) of each share owned by the shareholder (the number of
shares owned times net asset value per share) on any matter on which such
shareholder is entitled to vote. Each fractional dollar amount shall be entitled
to a proportionate fractional vote.
LIQUIDATION OR DISSOLUTION
In the event of the liquidation or dissolution of either fund, the Trustees
shall distribute the assets of the trusts to the shareholders, according to
their respective rights, after accounting for the liabilities of the trust.
FISCAL YEAR
The Small & Mid-Cap Growth Fund operates on a fiscal year which ends
December 31. The Small Cap Fund operates on a fiscal year which ends April 30.
MANAGEMENT AND OTHER SERVICE PROVIDERS
Responsibility for the overall supervision of the Small & Mid-Cap Growth
Fund rests with The Phoenix-Engemann Funds Board of Trustees. Responsibility for
the overall supervision of the Small Cap Fund rests with the Phoenix Strategic
Equity Series Fund Board of Trustees. Roger Engemann & Associates, Inc. serves
as investment adviser to the Small & Mid-Cap Growth Fund, and as sub-adviser to
the Small Cap Fund. Phoenix Investment Counsel, Inc. serves as investment
adviser to the Small Cap Fund.
16
<PAGE>
Investment and trading decisions for each fund are made by a team of
managers and analysts. Roger Engemann, Jim Mair and John Tilson oversee the
research and portfolio management function at Engemann. Lou Abel and Yossi
Lipsker serve as co-portfolio managers of both the Small & Mid-Cap Growth Fund
and the Small Cap Fund and as such are responsible for the day-to-day management
of both fund 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 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.
Messrs. Abel and Lipsker are both Vice Presidents of Engemann and have been
with Engemann since 1991 and 1995, respectively. Mr. Lipsker also serves as
co-portfolio manager of the Phoenix-Engemann Nifty Fifty Fund of the
Phoenix-Engemann Funds. Mr. Abel earned the right to use the Chartered Financial
Analyst designation in 1993.
Phoenix Equity Planning Corporation serves as administrative agent of the
Small & Mid-Cap Growth Fund and the Small Cap Fund and, as such, performs
administrative, bookkeeping and pricing functions. Phoenix Equity Planning
Corporation also acts as transfer agent for the Small & Mid-Cap Growth Fund and
the Small Cap Fund.
The custodian of the Small & Mid-Cap Growth Fund is Union Bank of
California. State Street Bank and Trust Company serves as custodian of the Small
Cap Fund.
PricewaterhouseCoopers LLP serve as independent accountants for both the
Small Cap Fund and the Small & Mid-Cap Growth Fund.
VOTING INFORMATION
QUORUM AND VOTING REQUIREMENTS
This Prospectus/Proxy Statement is being furnished to the shareholders of
the Small Cap Fund in connection with the solicitation by the Board of Trustees
of Phoenix Strategic Equity Series Fund of proxies to be used at the meeting.
Shareholders of record of the Small Cap Fund at the close of business
on February 5, 2000 will be entitled to vote at the meeting or at any
adjournments thereof. As of the record date, _________ Class A and ____________
Class B shares of the Small Cap Fund were issued and outstanding. Shareholders
are entitled to one vote for each dollar of net asset value (determined as of
the record date) of each share owned by such shareholder (number of shares owned
times net asset value per share) and each fractional dollar amount shall be
entitled to a proportionate fractional vote. Shareholders of the Small Cap Fund
will vote together as a single class on the reorganization proposal. The holders
of thirty-three and one-third percent (33-1/3%) of the shares entitled to vote
shall constitute a quorum for the meeting. Although the Trust instrument
provides that the Trustees of the Small Cap Fund may cause the Small Cap Fund to
merge or consolidate with or into, or sell substantially all of its assets to
another fund without shareholder approval, the Trustees have elected to seek
shareholder approval for the reorganization proposal. The Trustees are seeking
the vote of the lesser of (i) 67% or more of the eligible votes of the Small Cap
Fund if more than 50% of the eligible votes of the Small Cap Fund are present in
person or by proxy or (ii) more than 50% of the eligible votes of the Small Cap
Fund. For purposes of determining the presence of a quorum for transacting
business at the meeting and for determining whether sufficient votes have been
received for approval of the proposal to be acted upon at the meeting,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present at the meeting, but which have not been
voted. For this reason, abstentions and broker non-votes will assist the Small
Cap Fund in obtaining a quorum, but both have the practical effect of a "no"
vote for purposes of obtaining the requisite vote for approval of the proposal.
17
<PAGE>
If either (a) a quorum is not present at the meeting or (b) a quorum is
present but sufficient votes in favor of the reorganization proposal have not
been obtained, then the persons named as proxies may propose one or more
adjournments of the meeting without further notice to shareholders to permit
further solicitation of proxies provided such persons determine, after
consideration of all relevant factors, including the nature of the proposal, the
percentage of votes then cast, the percentage of negative votes then cast, the
nature of the proposed solicitation activities and the nature of the reasons for
such further solicitation, that an adjournment and additional solicitation is
reasonable and in the interests of shareholders. The persons named as proxies
will vote those proxies that such persons are required to vote FOR the
reorganization proposal in favor of such an adjournment and will vote those
proxies required to be voted AGAINST the reorganization proposal against such
adjournment.
The meeting may be adjourned from time to time by the vote of a majority of
the shares represented at the meeting, whether or not a quorum is present. If
the meeting is adjourned to another time or place, notice need not be given of
the adjourned meeting at which the adjournment is taken, unless a new record
date of the adjourned meeting is fixed or unless the adjournment is for more
than sixty (60) days from the date set for the original meeting, in which case
the Trustees shall set a new record date. Notice of any such adjourned meeting
shall be given to each Shareholder of record entitled to vote at the adjourned
meeting in accordance with the provisions of the By-Laws of Phoenix Strategic
Equity Series Fund. At any adjourned meeting, the Trust may transact any
business which might have been transacted at the original meeting.
The individuals named as proxies on the enclosed proxy card will vote in
accordance with the shareholder's direction, as indicated thereon, if the proxy
card is received and is properly executed. If the shareholder properly executes
a proxy and gives no voting instructions with respect to the reorganization
proposal, the shares will be voted in favor of the reorganization proposal. The
proxies, in their discretion, may vote upon such other matters as may properly
come before the meeting. The Board of Trustees of the Trust is not aware of any
other matters to come before the meeting.
Approval of the reorganization proposal by the shareholders of the Small Cap
Fund is a condition of the consummation of the reorganization. If the
reorganization is not approved, the Small Cap Fund will continue as a series of
the Trust and the Board of Trustees of the Trust may consider other alternatives
in the best interests of the shareholders of the Small Cap Fund.
REVOCATION OF PROXIES
Any shareholder who has given a proxy has the right to revoke the proxy any
time prior to its exercise by written notice of the proxy's revocation to the
Secretary of the Trust at the above address prior to the meeting;
o by the subsequent execution and return of another proxy prior to the
meeting;
o by use of any electronic, telephonic or other alternative means
authorized by the Trustees for authorizing the proxy to act; or
o by being present and voting in person at the meeting and giving oral
notice of revocation to the Chairman of the meeting.
NO APPRAISAL RIGHTS
The staff of the SEC has taken the position that any rights to appraisal
arising under state law are preempted by the provisions of the 1940 Act and Rule
22c-1 thereunder, which generally requires that shares of a registered open-end
investment company be valued at their next determined net asset value.
SOLICITATION OF PROXIES
In addition to solicitation of proxies by mail, officers and employees of
Phoenix Investment Partners, Ltd. or its affiliates, may solicit proxies
personally or by telephone or telegram. Phoenix Investment Partners, or other
18
<PAGE>
representatives of the Trust may also use one or more proxy solicitation firms
to assist with the mailing and tabulation effort and any special personal
solicitation of proxies. Banks, brokers, fiduciaries and nominees will, upon
request, be reimbursed by Phoenix Investment Partners for their reasonable
expenses in sending proxy material to be beneficial owners of shares of the
Small Cap Fund. The cost of the solicitation of proxies will be borne by Phoenix
Investment Partners.
If a shareholder wishes to participate in the meeting, but does not wish to
authorize the execution of a proxy by telephone, the shareholder may still
submit the proxy form included with this proxy statement or attend the meeting
in person.
OWNERSHIP OF VOTING SECURITIES
Based on holdings and total shares outstanding as of January __, 2001,
the Trustees and officers of the Trust owned as a group less than 1% of the
outstanding voting securities of the Small Cap Fund. If the reorganization were
consummated as of January __, 2001, the Trustees and officers of the Trust would
own less than 1% of the outstanding voting securities of the combined Small &
Mid-Cap Growth Fund based on their holdings and total shares outstanding as of
February 8, 2001.
The following table contains information about all persons who own
beneficially or of record 5% or more of the outstanding shares of the Small Cap
Fund, Small & Mid-Cap Growth Fund, or the combined Small & Mid-Cap Growth Fund
assuming consummation of the reorganization, based on holdings and total shares
outstanding as of January __, 2001.
<TABLE>
<CAPTION>
PERCENT OF
COMBINED SMALL
& MID-CAP
PERCENT OF PERCENT OF SMALL & GROWTH
SMALL-CAP FUND/ MID-CAP GROWTH FUND/CLASS
NAME AND ADDRESS OF SHAREHOLDER CLASS OWNED FUND/CLASS OWNED OWNED
------------------------------- ----------- ---------------- -----
<S> <C> <C> <C>
</TABLE>
THE BOARD OF TRUSTEES OF THE TRUST, INCLUDING THE INDEPENDENT TRUSTEES OF
THE TRUST, RECOMMEND YOU APPROVE THE PLAN OF REORGANIZATION.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE FILL IN, DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE
IS NECESSARY IF IT IS MAILED IN THE UNITED STATES.
ADDITIONAL INFORMATION ABOUT THE FUNDS
Additional information about the Small & Mid-Cap Growth Fund and the
Acquiring Trust is included in the Small & Mid-Cap Growth Fund's Prospectus
accompanying this document and is incorporated by reference herein. Further
information about the Small & Mid-Cap Growth Fund and the Acquiring Trust is
included in the Statement of Additional information for the Small & Mid-Cap
Growth Fund, dated January __, 2001, which has been filed with the SEC and is
incorporated by reference herein. A copy of the Small & Mid-Cap Growth Fund's
Statement of
19
<PAGE>
Additional Information may be obtained without charge by contacting
Phoenix Equity Planning Corporation at 56 Prospect Street, P.O. Box 150480,
Hartford, Connecticut 06115-0480, or by telephoning Phoenix Equity Planning
Corporation toll-free at 1-800-243-4361.
Additional information about the Small Cap Fund is included in the current
Prospectus of the Small Cap Fund, dated August 28, 2000. A copy of the Small Cap
Fund's Prospectus has been filed with the SEC, and is incorporated by reference
herein. Further information about the Small Cap Fund is included in the
Statement of Additional information for the Small Cap Fund, dated August 28,
2000, which also has been filed with the SEC and is incorporated by reference
herein. A copy of the Small Cap Fund's Prospectus and Statement of Additional
Information may be obtained without charge by contacting Phoenix Equity Planning
Corporation at 56 Prospect Street, P.O. Box 150480, Hartford, Connecticut
06115-0480, or by telephoning Phoenix Equity Planning Corporation toll-free at
1-800-243-4361.
MISCELLANEOUS
AVAILABLE INFORMATION
The Acquiring Trust and the Trust are each registered under the 1940 Act and
are subject to the informational requirements of the Securities Exchange Act of
1934, as amended, and the 1940 Act, and, in accordance therewith, file reports,
proxy materials, and other information with the SEC. Such reports, proxy
materials, and other information can be inspected at the Securities and Exchange
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 as
well as at the following regional offices: New York Regional Office, 75 Park
Place, Room 1228, New York, NY 10007; and Chicago Regional Office, Northwestern
Atrium Center, 500 Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
material also can be obtained from the Public Relations Branch, Office of
Consumer Affairs and Information Services, Securities and Exchange Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The SEC
maintains a Web Site (http://www.sec.gov) that contains this Prospectus,
Statement of Additional Information, material incorporated by reference, and
other information regarding registrants that file electronically with the SEC.
MANAGEMENT'S DISCUSSION OF THE SMALL & MID-CAP GROWTH FUND'S PERFORMANCE FOR THE
YEAR ENDED DECEMBER 31, 1999.
The Small & Mid-Cap Growth Fund seeks to achieve long-term growth of capital
by investing primarily in a diversified portfolio of equity securities of
companies with market capitalizations below $1.5 billion.
The Small & Mid-Cap Growth Fund invests in smaller capitalization companies,
and investors should note that small-company investing involves added risks,
including greater price volatility, less liquidity and increased competitive
threat.
For the twelve months ended December 31, 1999, Class A shares of the Small &
Mid-Cap Growth Fund returned 84.59%, Class B shares returned 83.25%, and Class C
shares returned 83.20%, as compared with a return of 21.26% for the Russell 2000
Index1 and an average return of 62.63% for a peer universe of 263 small-cap
growth funds, according to Lipper, Inc. Investors should consider all
performance periods and the effect of the stock market over the 12 months ended
December 31, 1999 when evaluating funds. All performance figures assume
reinvestment of dividends and exclude the effect of sales charges. The Small &
Mid-Cap Growth Fund achieved those strong results in part because after
struggling for most of the year, small-cap stocks staged a rebound in late 1999.
The Small & Mid-Cap Growth Fund also surged ahead, exceeding the return of
the record-setting Russell 2000 Index for both the final quarter of the year and
the full year. Performance was strong among many holdings in the portfolio, with
most stocks showing double-digit returns. Some climbed more than 100%. Leading
the winners
-----------------------
(1) The Russell 2000 Index is an unmanaged, commonly used measure of small-cap
stock market total return performance. The Index is not available for direct
investment.
20
<PAGE>
by a wide margin was Commerce One Inc., with a remarkable 808% return.
Lending the winners by a wide margin was Commerce One Inc., with a remarketable
808% return. The company, which provides software to large industrial firms to
lower their cost of procuring materials, is one of the leaders in the concept of
business to business commerce. Because Commerce One was one of our largest
holdings, its contribution to performance was significant.
Next in line was Applied Micro Circuits, which was one of our best
performing stocks throughout much of the year. Applied Micro Circuits
manufactures high-performance silicon solutions for communications
infrastructures, BEA Systems was another big contributor to performance. BEA
Systems was another big contributor to performance. The Company provides "middle
ware" software that enables companies to tie together different computer
systems.
All but two of the poorest performing stocks were sold earlier in the year.
Of those remaining in the portfolio, the two with the greatest declines were
Omnicare and Concentric Network, two relatively small positions. Omnicare
continued to suffer in the difficult operating environment that the long-term
health-care industry faced last year. Concentric is a company that provides
Internet solutions for small- and medium-sized companies and consistently
receives top ratings as a service provider. Although the stock was affected by
volatility in its niche of the technology sector over the last year, we believe
the long-range prospects for the company are good.
Investor confidence seems to be broadening, and those who formerly sought
comfort only in large names may now be willing to look for returns from
additional areas. Along with their risks, we believe small stocks also offer
more upside potential and could prove to be an attractive place for investors
seeking to diversify their portfolio.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS(1) PERIODS ENDING 12/31/99
INCEPTION INCEPTION
1 YEAR 5 YEARS TO 12/31/99 DATE
------ ------- ----------- ----
<S> <C> <C> <C> <C>
Class A Shares At NAV(2) 84.59% 38.56% 41.61% 10/10/94
Class A Shares at POP(3) 75.82 37.22 40.30 10/10/94
Class B Shares at NAV(2) 83.25 ------ 38.89 9/18/96
Class B Shares at CDSC(4) 79.25 ------ 38.60 9/18/96
Class C Shares at NAV(2) 83.20 ------ 35.80 10/8/96
Class C Shares at CDSC(4) 83.20 ------ 35.80 10/8/96
Russell 2000 Index(7) 21.26 16.69 Note 5 Note 5
</TABLE>
(1) Total Returns are historical and include changes in share price and the
reinvestment of both dividends and capital gain distributions.
(2) NAV (Net Asset Value) total returns do not include the effect of any
sales charge.
(3) POP (Public Offering Price) total returns include the effect of the
maximum front-end 4.75% sales charge. Prior to 1/20/98, the maximum
front-end sales charge was 5.5%.
(4) CDSC (contingent deferred sales charge) is applied to redemptions of
certain classes of shares that do not have a sales charge applied at
the time of purchase. CDSC charges for B shares decline from 5% to 0%
over a five year period. CDSC charges for C shares are 1% in the first
year and 0% thereafter.
(5) Index performance is 21.26% for Class A (since 10/10/94), 16.69% for
Class B (since 9/18/96) and 15.64% for Class C (since 10/8/96),
respectively.
(6) This chart illustrates POP returns on Class A Shares only. Returns on
Class B and Class C Shares will vary due to differing sales charges.
(7) The Russell 2000 Index is an unmanaged, commonly used measure of total
return performance of small-capitalization growth-oriented stocks. The
Index's performance does not reflect sales charges.
All returns represent past performance which may not be indicative of future
performance. The investment return and principal value of an investment will
fluctuate so that an investor's shares when redeemed, may be worth more or less
than the original cost.
21
<PAGE>
GROWTH OF $10,000
SMALL & MID CAP GROWTH FUND RUSSELL 2000
Date Value Date Value
10/10/1994 $ 9,525.00 10/10/1994 $10,000.00
12/30/1994 $11,496.68 12/31/1994 $ 9,876.93
12/29/1995 $14,448.73 12/31/1995 $12,685.82
12/31/1996 $22,014.81 12/31/1996 $14,778.26
12/31/1997 $27,829.65 12/31/1997 $18,082.85
12/31/1998 $31,806.93 12/31/1998 $17,622.33
12/31/1999 $58,713.37 12/31/1999 $21,368.37
The Growth of $10,000 chart assumes an initial investment of $10,000 made on
10/10/94 in Class A shares and reflects the maximum sales charge of 4.75% on the
initial investment. Performance assumes dividends and capital gains are
reinvested. The performance of other share classes will be greater or less than
that those based on differences in inception dates, fees and sales charges.
SECTOR WEIGHTINGS 12/31/99
As a percentage of equity holdings
Technology 56%
Consumer Cyclicals 18%
Consumer Staples 7%
Financials 5%
Energy 3%
Health-Care 3%
Capital Goods 3%
Other 5%
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS AT DECEMBER 31, 1999 (AS A PERCENTAGE OF TOTAL NET ASSETS)
<S> <C> <C> <C> <C> <C>
1. Ortel Corp. 4.9% 6. Peregrine Systems, Inc. 3.2%
Produces linear fiberoptic products Computer software developer
4.3% 7. Conexant Systems, Inc. 2.3%
2. BEA Systems, Inc. Develops semiconductor products for
Computer software designer communications electronics
3. Applied Micro Circuits Corp. 3.9% 8. Pinnacle Oil International, Inc. 2.3%
Manufacturer of integrated circuits Oil exploration technology company
3.8% 9. Cost Plus, Inc. 2.2%
4. DoubleClick, Inc. Specialty retailer of casual home
Internet advertising provider living and entertaining products
5. Commerce One, Inc. 3.6% 10. Metris Companies, Inc. 2.2%
Provider of business-to-business Direct marketer of consumer credit
electronic commerce solutions products
</TABLE>
LEGAL MATTERS
Certain legal matters in connection with the issuance of the shares of the
Small & Mid-Cap Growth Fund will be passed upon by Goodwin, Procter & Hoar LLP.
22
<PAGE>
ADDITIONAL FINANCIAL INFORMATION
The tables set forth below present certain financial information for the
Small & Mid-Cap Growth Fund. The financial highlights for each year ended
December 31 are derived from the Small & Mid-Cap Growth Fund's audited financial
statements for that year. The data should be read in conjunction with the
audited financial statements and related notes, which are included in the
Statement of Additional Information related to this Prospectus/Proxy Statement.
The financial statements for the Small & Mid-Cap Growth Fund for prior periods
are contained in the Acquiring Trust's Annual Report to Shareholders which are
included in the Statement of Additional Information related to this Prospectus
Proxy/Statement.
23
<PAGE>
PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31
ENDED 6/30/00 -----------------------------------------------------------
(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% 313.50% 297.10% 121.40%
</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, 19998, 1997, 1996 and 1995, respectively.
(4) Annualized.
(5) Not annualized.
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<TABLE>
<CAPTION>
CLASS B
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SIX MONTHS YEAR ENDED DECEMBER 31
ENDED 6/30/00 ----------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996
<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 $17,2987 $1,480
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 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% 313.50% 297.10%
CLASS C
---------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31
ENDED 6/30/00 ----------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996
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) 83.25% 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(3) 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)
25
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Portfolio turnover 55%(5) 105% 147% 313.50% 297.10%
</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 18, 1996 and
October 8, 1996, respectively.
OTHER BUSINESS
The Board of Trustees of the Trust knows of no business to be brought
before the meeting other than the matters set forth in this Prospectus/Proxy
Statement. Should any other matter requiring a vote of Small Cap Fund's
shareholders arise, however, the proxies will vote thereon according to their
best judgment in the interests of the Small Cap Fund and the shareholders of the
Small Cap Fund.
26
<PAGE>
APPENDIX A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this __ day of December, 2000, by and between THE PHOENIX-ENGEMANN FUNDS (the
"Engemann Trust"), a Delaware business trust with its principal place of
business at 600 North Rosemead Boulevard, Pasadena, California 91107-2133, on
behalf of the Phoenix Small & Mid-Cap Growth Fund, a portfolio series thereof
(the "Acquiring Fund") and the PHOENIX STRATEGIC EQUITY SERIES FUND (the
"Strategic Trust"), a Delaware business trust with its principal place of
business at 101 Munson Street, Greenfield, Massachusetts 01301, on behalf of the
Phoenix-Engemann Small Cap Fund, a portfolio series thereof (the "Acquired
Fund").
All references in this Agreement to action taken by the Acquiring Fund or
the Acquired Fund shall be deemed to refer to action taken by the Engemann Trust
or the Strategic Trust, on behalf of the respective portfolio series.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of the transfer by the
Acquired Fund of all or substantially all of the assets of the Acquired Fund to
the Acquiring Fund, in exchange solely for Class A and Class B shares of
beneficial interest in the Acquiring Fund (the "Acquiring Fund Shares"), the
assumption by the Acquiring Fund of all the liabilities of the Acquired Fund,
and the distribution of the Acquiring Fund Shares to the shareholders of the
Acquired Fund in complete liquidation of the Acquired Fund as provided herein,
all upon the terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Engemann Trust and the Strategic Trust are each open-end,
registered investment companies of the management type;
WHEREAS, the Board of Trustees of the Engemann Trust has determined that
the exchange of all or substantially all of the assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of all the liabilities of the Acquired
Fund by the Acquiring Fund is in the best interests of the Acquiring Fund and
that the interests of the existing shareholders of the Acquiring Fund would not
be diluted as a result of this transaction; and
WHEREAS, the Board of Trustees of the Strategic Trust has determined that
the exchange of all or substantially all of the assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of all the liabilities of the Acquired
Fund by the Acquiring Fund is in the best interests of the Acquired Fund and
that the interests of the existing shareholders of the Acquired Fund would not
be diluted as a result of this transaction.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. THE TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING
FUND SHARES, THE ASSUMPTION OF ALL THE LIABILITIES OF THE ACQUIRED FUND
AND THE LIQUIDATION OF THE ACQUIRED FUND
1.1 Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Acquired Fund
agrees to transfer all or substantially all of the Acquired Fund's assets, as
set forth in paragraph 1.2, to the Acquiring Fund, and the Acquiring Fund agrees
in exchange therefor: (i) to deliver to the Acquired Fund the number of full and
fractional Acquiring Fund Shares, computed in the manner and as of the time and
date set forth in Article 2 and (ii) to assume all the liabilities of the
Acquired Fund, as set forth in paragraph 1.3. Such transactions shall take place
at the closing provided for in paragraph 3.1 (the "Closing").
1.2 The assets of the Acquired Fund to be acquired by the Acquiring
Fund shall consist of all property, including, without limitation, all cash,
securities, commodities and futures interests, and dividends or
1
<PAGE>
interest receivable which are owned by the Acquired Fund and any deferred or
prepaid expenses shown as an asset on the books of the Acquired Fund on the
closing date provided in paragraph 3.1 (the "Closing Date").
1.3 The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The Acquiring Fund shall
assume all liabilities, expenses, costs, charges and reserves reflected on an
unaudited statement of assets and liabilities of the Acquired Fund, prepared by
Phoenix Equity Planning Corporation, in its capacity as financial agent for the
Acquired Fund as of the Valuation Date (as defined in paragraph 2.1) in
accordance with generally accepted accounting principles consistently applied
from the prior audited period.
1.4 Immediately after the transfer of assets provided for in paragraph
1.1, the Acquired Fund will distribute pro rata to the Acquired Fund's
shareholders of record, determined as of immediately after the close of business
on the Closing Date (the "Acquired Fund Shareholders"), the Acquiring Fund
Shares received by the Acquired Fund pursuant to paragraph 1.1 and will
completely liquidate. Such distribution and liquidation will be accomplished by
the transfer of the Acquiring Fund Shares then credited to the account of the
Acquired Fund on the books of the Acquiring Fund to open accounts on the share
records of the Acquiring Fund in the names of the Acquired Fund Shareholders and
representing the respective pro rata number of the Acquiring Fund Shares of the
corresponding class due such shareholders. All issued and outstanding shares of
the Acquired Fund will simultaneously be canceled on the books of the Acquired
Fund, although share certificates representing interests in the Acquired Fund
will represent a number of Acquiring Fund Shares after the Closing Date as
determined in accordance with paragraph 2.2. The Acquiring Fund shall not issue
certificates representing the Acquiring Fund Shares in connection with such
exchange. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent.
2. VALUATION
2.1 The value of the Acquired Fund's net assets to be acquired by the
Acquiring Fund hereunder and the net asset value of Acquiring Fund Shares of
each class shall be computed as of immediately after the close of business of
the New York Stock Exchange on the Closing Date (such time and date being
hereinafter called the ("Valuation Date")), using the valuation procedures set
forth in the Acquiring Fund's Declaration of Trust and then-current prospectus
or statement of additional information.
2.2 The number of the Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's assets and the
assumption of liabilities shall be determined by dividing the value of the net
assets of the Acquired Fund attributable to each class of shares of the Acquired
Fund by the net asset value of an Acquiring Fund Share of the corresponding
class.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be the next Friday that is a full business
day following satisfaction (or waiver as provided herein) of all of the
conditions set forth in Articles 6, 7, and 8 of this Agreement (other than those
conditions which may by their terms be satisfied only at the Closing), or such
later date as the parties may agree to in writing. All acts taking place at the
Closing shall be deemed to take place simultaneously as of immediately after the
close of business on the Closing Date unless otherwise agreed to by the parties.
The close of business on the Closing Date shall be as of 4:00 p.m. New York
Time. The Closing shall be held at the offices of Phoenix Investment Counsel,
Inc. ("PIC"), 56 Prospect Street, Hartford, Connecticut 06115-0480, or at such
other time and/or place as the parties may agree.
3.2 The Strategic Trust shall cause Phoenix Equity Planning Corporation
(the "Transfer Agent"), transfer agent of the Acquired Fund, to deliver at the
Closing a certificate of an authorized officer stating that its records contain
the names and addresses of the Acquired Fund Shareholders and the number and
percentage ownership of outstanding shares of each class owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall issue and
deliver a confirmation evidencing the Acquiring Fund Shares to be credited on
2
<PAGE>
the Closing Date to the Secretary of Strategic Trust or provide evidence
satisfactory to the Strategic Trust that such Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the Acquiring Fund. At
the Closing, each party shall deliver to the other such bills of sales, checks,
assignments, share certificates, if any, receipts or other documents as such
other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Strategic Trust represents and warrants to the Engemann Trust as
follows:
(a) The Strategic Trust is a voluntary association with transferable
shares of the type commonly referred to as a Delaware business trust duly
organized and validly existing under the laws of the State of Delaware.
(b) The Strategic Trust is a registered investment company classified
as a management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "Commission"), as an investment company
under the Investment Company Act of 1940, as amended (the 111940 Act"), and the
registration of its shares under the Securities Act of 1933, as amended (the
"1933 Act"), are in full force and effect.
(c) The Strategic Trust is not, and the execution, delivery and
performance of this Agreement will not result, in a material violation of its
Declaration of Trust or By-Laws or of any agreement, indenture, instrument,
contract, lease or other undertaking relating to the Acquired Fund.
(d) The Acquired Fund has no material contracts or other commitments
(other than this Agreement) which will be terminated with liability to the
Acquired Fund prior to the Closing Date.
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or to its knowledge threatened against the Acquired Fund or any of its
properties or assets. The Acquired Fund knows of no facts which might form the
basis for the institution of such proceedings and is not a party to or subject
to the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions herein contemplated.
(f) The Statement of Assets and Liabilities of the Acquired Fund at
April 30, 2000 has been audited by PricewaterhouseCoopers, LLP, independent
accountants, and is in accordance with generally accepted accounting principles
consistently applied and such statement (copies of which have been furnished to
Engemann Trust,) fairly reflects the financial condition of the Acquired Fund as
of such date, and there are no known contingent liabilities of the Acquired Fund
as of such date not disclosed therein.
(g) Since April 30, 2000, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred. For the purposes of this subparagraph
(g), a decline in net asset value per share of the Acquired Fund, the discharge
of Acquired Fund liabilities, or the redemption of Acquired Fund shares by
Acquired Fund Shareholders shall not constitute a material adverse change.
(h) All Federal and other tax returns and reports of the Acquired Fund
required by law to have been filed have been filed and are correct, and all
Federal and other taxes shown as due or required to be shown as due on said
returns and reports have been paid or provision has been made for the payment
thereof, and to the best of the Acquired Fund's knowledge no such return is
currently under audit and no assessment has been asserted with respect to such
returns.
3
<PAGE>
(i) For each taxable year of its operation, the Acquired Fund has met
the requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such.
(j) All issued and outstanding shares of the Acquired Fund are duly and
validly issued and outstanding, fully paid and non-assessable by the Acquired
Fund. The Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the Acquired Fund shares, nor is
there outstanding any security convertible into any Acquired Fund shares (except
for the conversion feature of the Class B shares into Class A shares as
described in the current prospectus of the Acquired Fund).
(k) The execution, delivery and performance of this Agreement has been
duly authorized prior to the Closing Date by all necessary action on the part of
the Board of Trustees of the Strategic Trust, and, subject to the approval of
the Acquired Fund Shareholders, this Agreement constitutes a valid and binding
obligation of the Strategic Trust enforceable in accordance with its terms,
subject as to enforcement, to bankruptcy, insolvency, reorganization, moratorium
and other laws relating to or affecting creditors, rights, and to general equity
principles.
4.2 The Engemann Trust represents and warrants to the Strategic Trust
as follows:
(a) The Engemann Trust is a voluntary association with transferable
shares of the type commonly referred to as a Delaware business trust duly
organized and validly existing under the laws of the State of Delaware.
(b) The Engemann Trust is a registered investment company classified
as a management company of the open-end type, and its registration with the
Commission, as an investment company under the 1940 Act, and the registration of
its shares under the 1933 Act are in full force and effect.
(c) The current prospectus and statement of additional information of
the Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading.
(d) The Engemann Trust is not, and the execution, delivery and
performance of this Agreement will not result in a material violation of the
Acquiring Fund's Declaration of Trust or By-laws or of any agreement, indenture,
instrument, contract, lease or other undertaking relating to the Acquiring Fund.
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquiring Fund or any of its
properties or assets. The Acquiring Fund knows of no facts which might form the
basis for the institution of such proceedings and is not a party to or subject
to the provisions of any order, decree, or judgment of any court or governmental
body which materially and adversely affects the Acquiring Fund's business or its
ability to consummate the transactions herein contemplated.
(f) The Statement of Assets and Liabilities of the Acquiring Fund at
December 31, 1999, has been audited by PricewaterhouseCoopers, LLP, independent
accountants and is in accordance with generally accepted accounting principles
consistently applied and such statement (copies of which have been furnished to
the Strategic Trust), fairly reflects the financial condition of the Acquiring
Fund as of such date, and there are no known contingent liabilities of the
Acquiring Fund as of such date not disclosed therein.
(g) Since December 31, 1999, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred. For the purposes of this
subparagraph (g), a decline in net asset value per share of the Acquiring Fund
Shares, the discharge of Acquiring Fund liabilities, or the redemption of
Acquiring Fund shares by Acquiring Fund shareholders, shall not constitute a
material adverse change.
4
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(h) All Federal and other tax returns and reports of the Acquiring Fund
required by law to have been filed have been filed and are correct, and all
Federal and other taxes shown as due or required to be shown as due on said
returns and reports have been paid or provision has been made for the payment
thereof, and, to the best of the Acquiring Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to such
returns.
(i) For each taxable year of its operation, the Acquiring Fund has met
the requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such.
(j) All issued and outstanding Acquiring Fund Shares are duly and
validly issued and outstanding, fully paid and non-assessable by the Acquiring
Fund. The Acquiring Fund does not have outstanding any options, warrants or
other rights to subscribe for or purchase any Acquiring Fund Shares, nor is
there outstanding any security convertible into any Acquiring Fund Shares
(except for the conversion feature of the Class B shares into Class A shares as
described in the current prospectus of the Acquiring Fund).
(k) The execution, delivery and performance of this Agreement has been
fully authorized prior to the Closing Date by all necessary action, if any, on
the part of the Board of Trustees of the Engemann Trust and this Agreement
constitutes a valid and binding obligation of the Acquiring Fund enforceable in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors
rights, and to general equity principles.
(l) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund for the account of the Acquired Fund Shareholders, pursuant to the
terms of this Agreement at the Closing Date have been duly authorized.
5. COVENANTS OF THE ACQUIRING FUND, AND THE ACQUIRED FUND
5.1 The Acquiring Fund and the Acquired Fund each will operate its
business in the ordinary course between the date hereof and the Closing Date, it
being understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions, the dividends
contemplated by Section 8.6 hereof, and any other distribution that may be
advisable.
5.2 The Strategic Trust will call a meeting of the Acquired Fund
Shareholders to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated herein.
5.3 The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this Agreement.
5.4 The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund Shares.
5.5 Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund will each take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.6 The Strategic Trust will provide the Acquiring Fund with
information reasonably necessary for the preparation of a registration statement
on Form N-14 of the Engemann Trust (the "Registration Statement"), such
Registration Statement to consist of, without limitation, a prospectus (the
"Prospectus") that includes a proxy statement of the Acquired Fund (the "Proxy
Statement").
5
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5.7 The Engemann Trust agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act, and
such of the state blue sky or securities laws as may be necessary in order to
continue the operations of the Acquiring Fund after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Strategic Trust to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Engemann Trust and the Acquiring Fund of all the obligations to be performed by
them hereunder on or before the Closing Date, and, in addition thereto, to the
following further conditions:
6.1 All representations and warranties of the Engemann Trust contained
in this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
6.2 The Engemann Trust shall have delivered to the Strategic Trust a
certificate executed in its name by its President or Vice President and its
Treasurer or Assistant Treasurer, in a form reasonably satisfactory to the
Strategic Trust, and dated as of the Closing Date, to the effect that the
representations and warranties of the Engemann Trust made in this Agreement are
true and correct in all material respects at and as of the Closing Date, except
as they may be affected by the transactions contemplated by this Agreement and
as to such other matters as the Strategic Trust shall reasonably request.
6.3 The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund, for the account of the Acquired Fund Shareholders when so issued
and delivered, shall be duly and validly issued, and shall be fully paid and
nonassessable by the Acquiring Fund.
6.4 The Proxy Statement and Prospectus (only insofar as they relate to
the Acquiring Fund), on the effective date of the Registration Statement and on
the Closing Date, (i) shall comply in all material respects with the applicable
provisions of the 1933 Act, the Securities Exchange Act of 1934, as amended (the
"1934 Act") and the 1940 Act and the regulations thereunder and (ii) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statement herein in light
of the circumstances under which such statements were made, not materially
misleading.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
7.1 The obligations of the Engemann Trust to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Strategic Trust and the Acquired Fund of all of the obligations to be performed
by them hereunder on or before the Closing Date and, in addition thereto, to the
following conditions:
7.2 All representations and warranties of the Strategic Trust contained
in this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
7.3 The Strategic Trust shall have delivered to the Engemann Trust a
statement of the Acquired Fund's assets and liabilities, as of the Closing Date,
certified by the Treasurer of the Acquired Fund; and
7.4 The Strategic Trust shall have delivered to the Engemann Trust on
the Closing Date a certificate executed in its name by its President or Vice
President and its Treasurer or Assistant Treasurer, in form and substance
satisfactory to the Engemann Trust, and dated as of the Closing Date, to the
effect that the representations and warranties of the Strategic Trust made in
this Agreement are true and correct in all material respects at and as of
6
<PAGE>
the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as the Engemann
Trust shall reasonably request.
7.5 The Acquired Fund shall have good and marketable title to the
Acquired Fund's assets to be transferred to the Acquiring Fund pursuant to
paragraph 1.1 and full right, power, and authority to sell, assign, transfer and
deliver such assets hereunder, and, upon delivery and payment for such assets.
7.6 The Proxy Statement and Prospectus (other than information therein
that relates to the Engemann Trust or the Acquiring Fund), on the effective date
of the Registration Statement and on the Closing Date (i) shall comply in all
material respects with the applicable provisions of the 1933 Act, the 1934 Act,
the 1940 Act and the regulations thereunder and (ii) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially misleading.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND
THE ACQUIRED FUND
The obligations of the Strategic Trust and the Engemann Trust to
consummate the transactions contemplated by this Agreement shall be subject, at
their election (except as provided in paragraphs 8.1 and 8.5 below) to the
following conditions:
8.1 The Agreement and the transactions contemplated herein shall have
been approved by the holders of the outstanding shares of beneficial interest in
the Acquired Fund in accordance with the provisions of the Declaration of Trust
and By-Laws of the Strategic Trust and certified copies of the resolutions
evidencing such approval shall have been delivered to the Engemann Trust.
Notwithstanding anything herein to the contrary, neither the Engemann Trust nor
the Strategic Trust may waive the conditions set forth in this paragraph 8.1;
8.2 On the Closing Date, no action, suit or other proceeding shall be
threatened or pending before any court or governmental agency in which it is
sought to restrain or prohibit, or to obtain damages or other relief in
connection with this Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Engemann Trust or the Strategic Trust to permit consummation, in all
material respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain any such consent order or permit would
not involve a risk of a material adverse effect on the assets or properties of
the Engemann Trust or the Strategic Trust.
8.4 The Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5 The parties shall have received an opinion from the law firm of
Goodwin, Procter & Hoar LLP addressed to the Engemann Trust and Strategic Trust
substantially to the effect that the transaction contemplated by this Agreement
shall constitute a tax-free reorganization for Federal income tax purposes. The
delivery of such opinion is conditioned upon receipt by the law firm of Goodwin,
Procter & Hoar LLP of representations it shall request of the Engemann Trust and
the Strategic Trust. Notwithstanding anything herein to the contrary, neither
the Engemann Trust nor the Strategic Trust may waive the condition set forth in
this paragraph 8.5.
8.6 At or immediately prior to the Closing, the Acquired Fund shall
have declared and paid a dividend or dividends which, together with all previous
such dividends, shall have the effect of distributing to the Acquired Fund
Shareholders all of such Acquired Fund's investment company taxable income for
taxable years ending at or
7
<PAGE>
prior to the Closing and all of its net capital gain, if any, realized in
taxable years ending at or prior to the Closing (after reduction for any capital
loss carry-forward)
9. BROKERAGE FEES AND EXPENSES
9.1 The Engemann Trust and the Strategic Trust each represents and
warrants to the other that there are no brokers or finders entitled to receive
any payments in connection with the transactions provided for herein.
9.2 All of the expenses and costs of the Reorganization and the
transactions contemplated thereby shall be borne by Phoenix Investment Partners,
Ltd.
10. ENTIRE AGREEMENT
The Engemann Trust and the Strategic Trust agree that neither party has
made any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
11. TERMINATION
This Agreement and the transactions contemplated hereby may be terminated
and abandoned by either party by resolution of the party's Board of Trustees, at
any time prior to the Closing Date, if circumstances should develop that, in the
opinion of such Board, make proceeding with the Agreement inadvisable. In the
event of any such termination, there shall be no liability for damages on the
part of either the Engemann Trust or the Strategic Trust, or their respective
Trustees or officers, to the other party.
12. AMENDMENT
This agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officers of the
Strategic Trust and the Engemann Trust; provided, however, that following the
meeting of the Acquired Fund Shareholders called by the Strategic Trust pursuant
to paragraph 5.2 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of the Acquiring Fund Shares
to be issued to the Acquired Fund Shareholders under this Agreement to the
detriment of such shareholders without their further approval.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the parties hereto at their
principal place of business.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY
14.1 The Article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts each
of which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
8
<PAGE>
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
14.5 It is expressly agreed that the obligations of the Strategic Trust
hereunder shall not be binding upon any of the trustees, shareholders, nominees,
officers, agents, or employees of the Strategic Trust personally, but shall bind
only the trust property of the Strategic Trust, as provided in the Declaration
of Trust of the Strategic Trust. The execution and delivery by such officers of
the Strategic Trust shall not be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Acquired Fund as provided in the Declaration
of Trust of the Strategic Trust. The Strategic Trust is a series company with
multiple series, and has entered into this Agreement on behalf of one such
series, the Acquired Fund. With respect to any obligation of the Strategic Trust
arising hereunder, the Engemann Trust and the Acquiring Fund shall look for
payment or satisfaction of such obligations solely to the assets and property of
the Acquired Fund.
14.6 It is expressly agreed that the obligations of the Engemann Trust
hereunder shall not be binding upon any of the trustees, shareholders, nominees,
officers, agents or employees of the Engemann Trust personally, but shall bind
only the trust property of the Engemann Trust, as provided in the Declaration of
Trust of the Engemann Trust. The execution and delivery by such officers of the
Engemann Trust shall not be deemed to have been made by any of them individually
or to impose any liability on any of them personally, but shall bind only the
trust property of the Engemann Trust as provided in the Declaration of Trust of
the Engemann Trust. The Engemann Trust is a series company with multiple series,
and has entered into this Agreement on behalf of one such series, the Acquiring
Fund. With respect to any obligation of the Engemann Trust arising hereunder,
the Strategic Trust and the Acquired Fund shall look for payment or satisfaction
of such obligations solely to the assets and property of the Acquiring Fund.
14.7 Subject to the foregoing limitations on liability, the Acquiring
Fund agrees to indemnify and hold harmless the Trustees of the Strategic Trust
who are not "interested persons" of the adviser or distributor of the Acquired
Fund (the "Independent Trustees") from and against any and all claims, costs,
expenses (including reasonable attorneys' fees), losses and liabilities of any
sort or kind (collectively "Liability") which may be asserted against them or
for which the Independent Trustees may become liable arising out of or
attributable to the transactions contemplated by this Agreement, provided that
any Independent Trustee seeking the benefit of this indemnification shall not
have materially contributed to the creation of such Liability by acting in a
manner contrary to his or her fiduciary duties as a trustee under the 1940 Act.
14.8 The sole remedy of a party hereto for a breach of any
representation or warranty made in this Agreement by the other party shall be an
election by the non-breaching party not to complete the transactions
contemplated herein as set forth in Paragraph 6.1 and 7.1.
9
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its President or Vice President and its seal to be
affixed hereto and attested by its Secretary or Assistant Secretary.
<TABLE>
<CAPTION>
THE PHOENIX-ENGEMANN FUNDS,
on behalf of the Phoenix Small & Mid-Cap Growth Fund
ATTEST:
<S> <C> <C>
By:
-------------------------------------------------------- -------------------------------------------------
Tina L. Mitchell Name: Roger Engemann
Secretary Title: President
THE PHOENIX STRATEGIC EQUITY SERIES FUND,
on behalf of the Phoenix-Engemann Small Cap Fund
ATTEST:
By:
-------------------------------------------------------- -------------------------------------------------
G. Jeffrey Bohne Name: Philip R. McLoughlin
Secretary Title: President
</TABLE>
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
Acquisition of the Assets of
PHOENIX-ENGEMANN SMALL CAP FUND
A series of
Phoenix Strategic Equity Series Fund
101 Munson Street
Greenfield, Massachusetts 01301
(800) 243-1574
By and in Exchange for Shares of
PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH FUND
A series of
The Phoenix-Engemann Funds
101 Munson Street
Greenfield, Massachusetts 01301
(800) 243-1574
This Statement of Additional Information, relating specifically to the
proposed transfer of all or substantially all of the assets and all the
liabilities of the Phoenix-Engemann Small Cap Fund, a portfolio series of
Phoenix Strategic Equity Series Fund, to the Phoenix-Engemann Small & Mid Cap
Growth Fund (the "Small & Mid-Cap Growth Fund"), a portfolio series of The
Phoenix-Engemann Funds, in exchange for shares of the corresponding class of the
Small & Mid-Cap Fund, consists of this cover page and the following described
documents, each of which is attached hereto and incorporated by reference
herein:
1) The Statement of Additional Information of The Phoenix-Engemann Funds dated
January ____, 2001;
2) The Statement of Additional Information of Phoenix Strategic Equity Series
Fund dated August 28, 2000;
3) The Annual Report of The Phoenix-Engemann Funds for the year ended
December 31, 1999;
4) The Annual Report of Phoenix Strategic Equity Series Fund for the year ended
April 30, 2000;
5) The Semiannual Report of The Phoenix-Engemann Funds for the six-month period
ended June 30, 2000;
6) The Semiannual Report of Phoenix-Strategic Equity Series Fund for the six-
month period ended October 31, 2000; and
7) The Pro Forma Financial Statements.
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the Pospectus/Proxy Statement
dated February 8, 2001. A copy of the Prospectus/Proxy Statement may be
obtained without charge of contacting Equity Planning, at 56 Prospect Street,
P.O. Box 150480, Hartford, Connecticut 06115-0480 or by telephoning Equity
Planning toll free at 1 (800) 243-4361.
The date of this Statement of Additional Information is February 8,
2001.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
Page
Statement of Additional Information of The Phoenix-Engemann Funds
dated January ____ , 2001 B-
Statement of Additional Information of Phoenix Strategic Equity Series
Fund, dated August 28, 2000 B-
Annual Report of The Phoenix-Engemann Funds for the year ended
December 31, 1999. B-
Annual Report of Phoenix Strategic Equity Series Fund for the year ended
April 30, 2000 B-
Semiannual Report of The Phoenix-Engemann Funds for the six-month
period ended June 30, 2000 B-
Semiannual Report of Phoenix Strategic Equity Series Fund for the
six-month period ended October 31, 2000 B-
Pro Forma Financial Statements. B-
<PAGE>
The Statement of Additional Information
of The Phoenix-Engemann Funds
dated January ___, 2001
to be filed by amendment
<PAGE>
The Statement of Additional Information
of Phoenix Strategic Equity Series Fund
dated August 28, 2000
<PAGE>
PHOENIX-ENGEMANN SMALL CAP FUND
PHOENIX-SENECA GROWTH FUND
PHOENIX-SENECA STRATEGIC THEME FUND
101 Munson Street
Greenfield, MA 01301
STATEMENT OF ADDITIONAL INFORMATION
August 28, 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 Strategic Equity Series Fund (the "Trust"), dated August 28, 2000, and
should be read in conjunction with it. The Trust's 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 ................................................ 9
Portfolio Turnover...................................................... 10
Portfolio Transactions and Brokerage.................................... 10
Services of the Advisers................................................ 11
Net Asset Value......................................................... 12
How to Buy Shares....................................................... 13
Alternative Purchase Arrangements....................................... 13
Investor Account Services............................................... 16
How to Redeem Shares.................................................... 17
Dividends, Distributions and Taxes...................................... 18
Tax Sheltered Retirement Plans.......................................... 19
The Distributor......................................................... 20
Distribution Plans...................................................... 21
Management of the Trust ................................................ 22
Additional Information.................................................. 29
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PXP731 (8/00)
<PAGE>
THE TRUST
Phoenix Strategic Equity Series Fund (the "Trust") is a diversified open-end
management investment company which was organized under Massachusetts law in
1986 as a business trust and was reorganized as a Delaware business trust in
August 2000. The Trust's Prospectus describes the investment objectives of the
Phoenix-Seneca Growth Fund (the "Growth Fund"), formerly the Phoenix-Seneca
Equity Opportunities Fund, the Phoenix-Seneca Strategic Theme Fund (the "Theme
Fund"), and the Phoenix-Engemann Small Cap Fund (the "Small Cap Fund"). The
Growth Fund, Theme Fund and Small Cap Fund are sometimes collectively referred
to as the "Funds."
The Funds' Prospectus describes the investment objectives of the Funds and
the principal strategies that each Fund will employ in seeking to achieve its
investment objective. Each Fund's investment objective is a fundamental policy
and may not be changed without a vote of the majority of the outstanding shares
of the respective Fund. The following discussion describes the Funds' investment
policies and techniques and supplements the description of each Fund's principal
strategies in the Prospectus.
INVESTMENT RESTRICTIONS
The following investment restrictions have been adopted by the Trust with
respect to each of the Funds. 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.
A 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, 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 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
The Funds may utilize the following practices or techniques in pursuing their
investment objectives.
CONVERTIBLE SECURITIES
A convertible security is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock of the same or a different issuer within a particular period of
time at a specified price or formula. A convertible security entitles the holder
to receive interest generally paid or accrued on debt or the dividend paid on
preferred stock until the convertible security matures or is redeemed, converted
or exchanged. Convertible securities have several unique investment
characteristics such as (1) higher yields than common stocks, but lower yields
than comparable nonconvertible securities, (2) a lesser degree of fluctuation in
value than the underlying stock since they have fixed income characteristics,
and (3) the potential for capital appreciation if the market price of the
underlying common stock increases. A convertible security might be subject to
redemption at the option of the issuer at a price established in the convertible
security's governing instrument. If a convertible security held by a Fund is
called for redemption, the Fund may be required to permit the issuer to redeem
the security, convert it into the underlying common stock or sell it to a third
party.
LOWER RATED CONVERTIBLE SECURITIES. Each Fund may invest in convertible
securities that are rated below investment grade (commonly referred to as "junk"
securities). Convertible securities which are not rated in the four highest
categories, in which a Fund may invest, are predominantly speculative with
respect to the issuer's capacity to repay principal and interest and may include
issues on which the issuer defaults.
DERIVATIVE INVESTMENTS
In order to hedge various portfolio positions, including to hedge against
price movements in markets in which the Funds anticipate increasing their
exposure, the Funds may invest in certain instruments which may be characterized
as derivative investments. These investments include various types of interest
rate transactions, options and futures. Such investments also may consist of
indexed securities. Other of such investments have no express quantitative
limitations, although they may be made solely for hedging purposes, not for
speculation, and may in some cases be limited as to the type of counter-party
permitted. Interest rate transactions involve the risk of an imperfect
correlation between the index used in the hedging transactions and that
pertaining to the securities which are the subject of such transactions.
Similarly, utilization of options and futures transactions involves the risk of
imperfect correlation in movements in the price of options and futures and
movements in the price of the securities or interest rates which are the subject
of the hedge. Investments in indexed securities, including inverse securities,
subject the Funds to the risks associated with changes in the particular
indices, which may include reduced or eliminated interest payments and losses of
invested principal.
FINANCIAL FUTURES CONTRACTS AND RELATED OPTIONS
Each Fund may use financial futures contracts and related options to hedge
against changes in the market value of its portfolio securities or securities
which it intends to purchase. Hedging is accomplished when an investor takes a
position in the futures market opposite to his cash market position. There are
two types of hedges--long (or buying) and short (or selling) hedges.
Historically, prices in the futures market have tended to move in concert with
cash market prices, and prices in the futures market have maintained a fairly
predictable relationship to prices in the cash market. Thus, a decline in the
market value of securities in a Fund's portfolio may be protected against to a
considerable extent by gains realized on futures contracts sales. Similarly, it
is possible to protect against an increase in the market price of securities
which a Fund may wish to purchase in the future by purchasing futures contracts.
These Funds may purchase or sell any financial futures contracts which are
traded on a recognized exchange or board of trade. Financial futures contracts
consist of interest rate futures contracts and securities index futures
contracts. A public market presently exists in interest rate futures contracts
covering long-term U.S. Treasury bonds, U.S. Treasury notes, three-month U.S.
Treasury bills and GNMA certificates. Securities index futures contracts are
currently traded with respect to the Standard & Poor's 500 Composite Stock Price
Index and such other broad-based stock market indices as the New York Stock
Exchange Composite Stock Index and the Value Line Composite Stock Price Index. A
clearing corporation associated with the exchange or board of trade on which a
financial futures contract trades assumes responsibility for the completion of
transactions and also guarantees that open futures contracts will be performed.
In contrast to the situation when such Fund purchases or sells a security, no
security is delivered or received by these Funds upon the purchase or sale of a
financial futures contract. Initially, these Funds will be required to deposit
in a segregated account with its custodian bank an amount of cash, U.S. Treasury
bills or liquid high grade debt obligations. This amount is known as initial
margin and is in the nature of a performance bond or good faith deposit on the
contract. The current initial margin deposit required per contract is
approximately 5% of the contract amount. Brokers may establish deposit
requirements higher than this minimum. Subsequent payments, called variation
margin, will be made to and from the account on a daily basis as the price of
the futures contract fluctuates. This process is known as marking to market.
2
<PAGE>
The writer of an option on a futures contract is required to deposit margin
pursuant to requirements similar to those applicable to futures contracts. Upon
exercise of an option on a futures contract, 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 margin
account. This amount will be equal to the amount by which the market price of
the futures contract at the time of 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
futures contract.
Although financial 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 is
accomplished by effecting an offsetting transaction. A futures contract sale is
closed out by effecting a futures contract purchase for the same aggregate
amount of securities and the same delivery date. If the sale price exceeds the
offsetting purchase price, the seller immediately would be paid the difference
and would realize a gain. If the offsetting purchase price exceeds the sale
price, the seller immediately would pay the difference and would realize a loss.
Similarly, a futures contract purchase is closed out by effecting a futures
contract sale for the same securities and the same delivery date. If the
offsetting sale price exceeds the purchase price, the purchaser would realize a
gain, whereas if the purchase price exceeds the offsetting sale price, the
purchaser would realize a loss.
Such Fund will pay commissions on financial futures contracts and related
options transactions. These commissions may be higher than those which would
apply to purchases and sales of securities directly.
LIMITATIONS ON FUTURES CONTRACTS AND RELATED OPTIONS. A Fund may not engage
in transactions in financial futures contracts or related options for
speculative purposes but only as a hedge against anticipated changes in the
market value of its portfolio securities or securities which it intends to
purchase. At the time of purchase of a futures contract or a call option on a
futures contract, any asset, including equity securities and noninvestment grade
debt so long as the asset is liquid, unencumbered and marked to market daily
("liquid assets"), equal to the market value of the futures contract minus a
Fund's initial margin deposit with respect thereto will be deposited in a
pledged account with the Trust's custodian bank to collateralize fully the
position and thereby ensure that it is not leveraged.
The extent to which a Fund may enter into financial futures contracts and
related options also may be limited by the requirements of the Internal Revenue
Code for qualifications as a regulated investment company. See "Dividends,
Distributions and Taxes."
RISKS RELATING TO FUTURES CONTRACTS AND RELATED OPTIONS. Positions in futures
contracts and related options may be closed out only on an exchange which
provides a secondary market for such contracts or options. A Fund will enter
into an option or futures position only if there appears to be a liquid
secondary market. However, there can be no assurance that a liquid secondary
market will exist for any particular option or futures contract at any specific
time. Thus, it may not be possible to close out a futures or related option
position. In the case of a futures position, in the event of adverse price
movements a Fund would continue to be required to make daily margin payments. In
this situation, if a Fund has insufficient cash to meet daily margin
requirements it may have to sell portfolio securities at a time when it may be
disadvantageous to do so. In addition, a Fund may be required to take or make
delivery of the securities underlying the futures contracts it holds. The
inability to close out futures positions also could have an adverse impact on a
Fund's ability to hedge its portfolio effectively.
There are several risks in connection with the use of futures contracts as a
hedging device. While hedging can provide protection against an adverse movement
in market prices, it can also preclude a hedger's opportunity to benefit from a
favorable market movement. In addition, investing in futures contracts and
options on futures contracts will cause a Fund to incur additional brokerage
commissions and may cause an increase in a Fund's portfolio turnover rate.
The successful use of futures contracts and related options also depends on
the ability of the Adviser to forecast correctly the direction and extent of
market movements within a given time frame. To the extent market prices remain
stable during the period a futures contract or option is held by a Fund or such
prices move in a direction opposite to that anticipated, a Fund may realize a
loss on the hedging transaction which is not offset by an increase in the value
of its portfolio securities. As a result, a Fund's return for the period may be
less than if it had not engaged in the hedging transaction.
Utilization of futures contracts by a Fund involves the risk of imperfect
correlation in movements in the price of futures contracts and movements in the
price of the securities which are being hedged. If the price of the futures
contract moves more or less than the price of the securities being hedged, a
Fund will experience a gain or loss which will not be completely offset by
movements in the price of the securities. It is possible that, where a Fund has
sold futures contracts to hedge its portfolio against decline in the market, the
market may advance and the value of securities held in a Fund's portfolio may
decline. If this occurred, a Fund would lose money on the futures contract and
would also experience a decline in value in its portfolio securities. Where
futures are purchased to hedge against a possible increase in the prices of
securities before a Fund is able to invest its cash (or cash equivalents) in
securities (or options) in an orderly fashion, it is possible that the market
may decline; if a Fund then determines not to invest in securities (or options)
at that time because of concern as to possible further market decline or for
other reasons, a Fund will realize a loss on the futures that would not be
offset by a reduction in the price of the securities purchased.
3
<PAGE>
The market prices of futures contracts may be affected if participants in the
futures market also elect to close out their contracts through off-setting
transactions rather than to meet margin deposit requirements. In such case,
distortions in the normal relationship between the cash and futures markets
could result. Price distortions could also result if investors in futures
contracts opt to make or take delivery of the underlying securities rather than
to engage in closing transactions due to the resultant reduction in the
liquidity of the futures market. In addition, due to the fact that, from the
point of view of speculators, the deposit requirements in the futures markets
are less onerous than margin requirements in the cash market, increased
participation by speculators in the futures market could cause temporary price
distortions. Due to the possibility of price distortions in the futures market
and because of the imperfect correlation between movements in the prices of
securities and movements in the prices of futures contracts, a correct forecast
of market trends may still not result in a successful hedging transaction.
Compared to the purchase or sale of futures contracts, the purchase of put or
call options on futures contracts involves less potential risk for 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 an
option on a futures contract would result in a loss to a Fund while the purchase
or sale of the futures contract would not have resulted in a loss, such as when
there is no movement in the price of the underlying securities.
FOREIGN CURRENCY TRANSACTIONS
Each Fund may engage in foreign currency transactions. The following is a
description of these transactions:
FORWARD FOREIGN CURRENCY EXCHANGE 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 ("Term") from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded directly between currency traders (usually
large commercial banks) and their customers.
No Fund will enter into such forward contracts or maintain a net exposure in
such contracts where it would be obligated to deliver an amount of foreign
currency in excess of the value of its portfolio securities and other assets
denominated in that currency. The Adviser believes that it is important to have
the flexibility to enter into such forward contracts when it determines that to
do so is in the best interests of a Fund. The Trust's custodian bank will be
instructed to pledge liquid assets equal to the value of such contracts. If the
value of the securities pledged declines, additional cash or securities will be
added so that the pledged amount is not less than the amount of the Fund's
commitments with respect to such contracts. Generally, no Fund will enter into a
forward contract with a term longer than one year.
FOREIGN CURRENCY OPTIONS. A foreign currency option provides the option buyer
with the right to buy or sell a stated amount of foreign currency at the
exercise price at a specified date or during the option period. A call option
gives its owner the right, but not the obligation, to buy the currency, while a
put option gives its owner the right, but not the obligation, to sell the
currency. The option seller (writer) is obligated to fulfill the terms of the
option sold if it is exercised. However, either seller or buyer may close its
position during the option period for such options any time prior to expiration.
A call rises in value if the underlying currency appreciates. Conversely, a
put rises in value if the underlying currency depreciates. While purchasing a
foreign currency option can protect a Fund against an adverse movement in the
value of a foreign currency, it does not limit the gain which might result from
a favorable movement in the value of such currency. For example, if a Fund were
holding securities denominated in an appreciating foreign currency and had
purchased a foreign currency put to hedge against a decline in the value of the
currency, it would not have to exercise its put. Similarly, if a Fund had
entered into a contract to purchase a security denominated in a foreign currency
and had purchased a foreign currency call to hedge against a rise in the value
of the currency but instead the currency had depreciated in value between the
date of purchase and the settlement date, the Fund would not have to exercise
its call but could acquire in the spot market the amount of foreign currency
needed for settlement.
FOREIGN CURRENCY FUTURES TRANSACTIONS. Each Fund may use foreign currency
futures contracts and options on such futures contracts. Through the purchase or
sale of such contracts, a Fund may be able to achieve many of the same
objectives attainable through the use of foreign currency forward contracts, but
more effectively and possibly at a lower cost.
Unlike forward foreign currency exchange contracts, foreign currency futures
contracts and options on foreign currency futures contracts are standardized as
to amount and delivery period and are traded on boards of trade and commodities
exchanges. It is anticipated that such contracts may provide greater liquidity
and lower cost than forward foreign currency exchange contracts.
FOREIGN SECURITIES
Each of the Funds may purchase foreign securities, including those issued by
foreign branches of U.S. banks. Investing in the securities of foreign companies
involves special risks and considerations not typically associated with
investing in U.S. companies. These include differences in accounting, auditing
and financial reporting standards, generally higher commission rates on foreign
portfolio transactions, the possibility of expropriation or confiscatory
taxation, adverse changes in investment or exchange control regulations,
political instability which could affect U.S. investment or exchange control
regulations, political
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instability which could affect U.S. investments in foreign countries, and
potential restrictions on the flow of international capital. Additionally,
dividends payable on foreign securities may be subject to foreign taxes withheld
prior to distribution. Foreign securities often trade with less frequency and
volume than domestic securities and therefore may exhibit greater price
volatility, and changes in foreign exchange rates will affect the value of those
securities which are denominated or quoted in currencies other than the U.S.
dollar.
Many of the foreign securities held by each Fund will not be registered with
the Commission and the issuers thereof will not be subject to the Commission's
reporting requirements. Accordingly, there may be less publicly available
information about the securities and about the foreign company or government
issuing them than is available about a domestic company or government entity.
Moreover, individual foreign economies may differ favorably or unfavorably from
the United States economy in such respects as growth of Gross National Product,
rate of inflation, capital reinvestment, resource self-sufficiency and balance
of payment positions.
In investing in securities denominated in foreign currencies, the Fund will be
subject to the additional risk of currency fluctuations. An adverse change in
the value of a particular foreign currency as against the U.S. dollar, to the
extent that such change is not offset by a gain in other foreign currencies,
will result in a decrease in the Fund's assets. Any such change may also have
the effect of decreasing or limiting the income available for distribution.
Foreign currencies may be affected by revaluation, adverse political and
economic developments, and governmental restrictions. Although the Fund will
invest only in securities denominated in foreign currencies that are fully
convertible into U.S. dollars without legal restriction at the time of
investment, no assurance can be given that currency exchange controls will not
be imposed on any particular currency at a later date.
Securities of U.S. issuers denominated in foreign currencies may be less
liquid and their prices more volatile than securities issued by domestic issuers
and denominated in U.S. dollars. In addition, investing in securities
denominated in foreign currencies often entails costs not associated with
investment in U.S. dollar-denominated securities of U.S. issuers, such as the
cost of converting foreign currency to U.S. dollars, higher brokerage
commissions, custodial expenses and other fees. Non-U.S. dollar denominated
securities may be subject to certain withholding and other taxes of the relevant
jurisdiction, which may reduce the yield on the securities to the Funds and
which may not be recoverable by the Funds or their investors.
The Funds will calculate their net asset values and complete orders to
purchase, exchange or redeem shares only on a Monday-Friday basis (excluding
holidays on which the New York Stock Exchange is closed). Foreign securities in
which the Funds may invest may be primarily listed on foreign stock exchanges
which may trade on other days (such as Saturdays). As a result, the net asset
value of the Funds' portfolios may be affected by such trading on days when a
shareholder has no access to the Funds.
Investment income received by the Funds from sources within foreign countries
may be subject to foreign income taxes withheld at the source. If a Fund should
have more than 50% of the value of its assets invested in securities of foreign
corporations at the close of its taxable year, the Fund may elect to pass
through to its shareholders their proportionate shares of foreign income taxes
paid. Investors are urged to consult their tax attorney with respect to specific
questions regarding foreign, federal, state or local taxes.
The Trust may use a foreign custodian in connection with its purchases of
foreign securities and may maintain cash and cash equivalents in the care of a
foreign custodian. The amount of cash or cash equivalents maintained in the care
of eligible foreign custodians will be limited to an amount reasonably necessary
to effect the Funds' foreign securities transactions. The use of a foreign
custodian invokes considerations which are not ordinarily associated with
domestic custodians. These considerations include the possibility of
expropriations, restricted access to books and records of the foreign custodian,
inability to recover assets that are lost while under the control of the foreign
custodian, and the impact of political, social or diplomatic developments.
LENDING PORTFOLIO SECURITIES
In order to increase its return on investments, the Theme Fund and Small Cap
Fund may make loans of its portfolio securities, as long as the market value of
the loaned securities does not exceed 33% of the market or other fair value of
that Fund's net assets. Loans of portfolio securities will always be fully
collateralized by cash, U.S. Government Securities or other high quality debt
securities at no less than 100% of the market value of the loaned securities (as
marked to market daily) and made only to borrowers considered by the Adviser to
be creditworthy. Lending portfolio securities involves a risk of delay in the
recovery of the loaned securities and possibly the loss of the collateral if the
borrower fails financially.
LEVERAGE
The Funds may, from time to time, increase the Theme Fund's and Small Cap
Fund's ownership of securities holdings above the amounts otherwise possible by
borrowing from banks at fixed amounts of interest and investing the borrowed
funds. These Funds will borrow only from banks, and only if immediately after
such borrowing the value of the assets of these Funds (including the amount
borrowed) less its liabilities (not including any borrowings) is at least three
times the amount of funds borrowed for investment purposes. The effect of this
provision is to permit the Funds to borrow up to 33(1)/(3)% of the net assets of
these Funds, not including the proceeds of any such borrowings. However, the
amount of the borrowings will be dependent
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upon the availability and cost of credit from time to time. If, due to market
fluctuations or other reasons, the value of such Fund's assets computed as
provided above becomes at any time less than three times the amount of the
borrowings for investment purposes, these Funds, within three business days, is
required to reduce bank debt to the extent necessary to meet the required 300%
asset coverage.
Interest on money borrowed will be an expense of these Funds with respect to
which the borrowing has been made. Because such expense would not otherwise be
incurred, the net investment income of such Funds is not expected to be as high
as it otherwise would be during periods when borrowings for investment purposes
are substantial.
Bank borrowings for investment purposes must be obtained on an unsecured
basis. Any such borrowing must also be made subject to an agreement by the
lender that any recourse is limited to the assets of the Fund with respect to
which the borrowing has been made.
Any investment gains made with the additional monies borrowed in excess of
interest paid will cause the net asset value of these Funds' shares to rise
faster than would otherwise be the case. On the other hand, if the investment
performance of the additional securities purchased fails to cover their cost
(including any interest paid on the monies borrowed) to these Funds, the net
asset value of these Funds will decrease faster than would otherwise be the
case.
OPTIONS
All Funds may write covered call options and purchase call and put options.
Options and the related risks are summarized below.
WRITING AND PURCHASING OPTIONS. Call options written by a Fund normally will
have expiration dates between three and nine months from the date written.
During the option period a Fund may be assigned an exercise notice by the
broker-dealer through which the call option was sold, requiring the Fund to
deliver the underlying security (or cash in the case of securities index calls)
against payment of the exercise price. This obligation is terminated upon the
expiration of the option period or at such earlier time as the Fund effects a
closing purchase transaction. A closing purchase transaction cannot be effected
with respect to an option once the Fund has received an exercise notice.
The exercise price of a call option written by a Fund may be below, equal to
or above the current market value of the underlying security or securities index
at the time the option is written.
A multiplier for an index option performs a function similar to the unit of
trading for an option on an individual security. It determines the total dollar
value per contract of each point between the exercise price of the option and
the current level of the underlying index. A multiplier of 100 means that a
one-point difference will yield $100. Options on different indices may have
different multipliers.
Securities indices for which options are currently traded include the Standard
& Poor's 100 and 500 Composite Stock Price Indices, Computer/Business Equipment
Index, Major Market Index, Amex Market Value Index, Computer Technology Index,
Oil and Gas Index, NYSE Options Index, Gaming/Hotel Index, Telephone Index,
Transportation Index, Technology Index, and Gold/Silver Index. A Fund may write
call options and purchase call and put options on any other indices traded on a
recognized exchange.
Closing purchase transactions will ordinarily be effected to realize a profit
on an outstanding call option written by a Fund to prevent an underlying
security from being called, or to enable a Fund to write another call option
with either a different exercise price or expiration date or both. A Fund may
realize a net gain or loss from a closing purchase transaction depending upon
whether the amount of the premium received on the call option is more or less
than the cost of effecting the closing purchase transaction. If a call option
written by a Fund expires unexercised, a Fund will realize a gain in the amount
of the premium on the option less the commission paid.
The option activities of a Fund may increase its portfolio turnover rate and
the amount of brokerage commissions paid. A Fund will pay a commission each time
it purchases or sells a security in connection with the exercise of an option.
These commissions may be higher than those which would apply to purchases and
sales of securities directly.
LIMITATIONS ON OPTIONS. A Fund may write call options only if they are
covered and if they remain covered so long as a Fund is obligated as a writer.
If a Fund writes a call option on an individual security, a Fund will own the
underlying security at all times during the option period. A Fund will write
call options on indices only to hedge in an economically appropriate way
portfolio securities which are not otherwise hedged with options or financial
futures contracts. Call options on securities indices written by a Fund will be
"covered" by identifying the specific portfolio securities being hedged.
To secure the obligation to deliver the underlying security, the writer of a
covered call option on an individual security is required to deposit the
underlying security or other assets in escrow with the broker in accordance with
clearing corporation and exchange rules. In the case of an index call option
written by a Fund, a Fund will be required to deposit qualified securities. A
"qualified security" is a security against which a Fund has not written a call
option and which has not been hedged by a Fund by
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the sale of a financial futures contract. If at the close of business on any
day the market value of the qualified securities falls below 100% of the current
index value times the multiplier times the number of contracts, a Fund will
deposit an amount of cash or liquid assets equal in value to the difference. In
addition, when a Fund writes a call on an index which is "in-the-money" at the
time the call is written, a Fund will segregate with its custodian bank cash or
liquid assets equal in value to the amount by which the call is "in-the-money"
times the multiplier times the number of contracts. Any amount segregated may be
applied to a Fund's obligation to segregate additional amounts in the event that
the market value of the qualified securities falls below 100% of the current
index value times the multiplier times the number of contracts.
A Fund may invest in exchange-traded or over-the-counter call and put
options. A Fund may sell a call option or a put option which it has previously
purchased prior to the purchase (in the case of a call) or the sale (in the case
of a put) of the underlying security. Any such sale of a call option or a put
option would result in a net gain or loss, depending on whether the amount
received on the sale is more or less than the premium and other transaction
costs paid.
In connection with a Fund qualifying as a regulated investment company under
the Internal Revenue Code, other restrictions on a Fund's ability to enter into
option transactions may apply from time to time. See "Dividends, Distributions
and Taxes."
RISKS RELATING TO OPTIONS. During the option period, the writer of a call
option has, in return for the premium received on the option, given up the
opportunity for capital appreciation above the exercise price should the market
price of the underlying security increase, but has retained the risk of loss
should the price of the underlying security decline. The writer has no control
over the time when it may be required to fulfill its obligation as a writer of
the option.
The risk of purchasing a call option or a put option is that a Fund may lose
the premium it paid plus transaction costs. If a Fund does not exercise the
option and is unable to close out the position prior to expiration of the
option, it will lose its entire investment.
An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. Although a Fund will write
and purchase options only when the Adviser believes that a liquid secondary
market will exist for options of the same series, there can be no assurance that
a liquid secondary market will exist for a particular option at a particular
time and that a Fund, if it so desires, can close out its position by effecting
a closing transaction. If the writer of a covered call option is unable to
effect a closing purchase transaction, it cannot sell the underlying security
until the option expires or the option is exercised. Accordingly, a covered call
writer may not be able to sell the underlying security at a time when it might
otherwise be advantageous to do so.
Possible reasons for the absence of a liquid secondary market on an exchange
include: (i) insufficient trading interest in certain options; (ii) restrictions
on transactions imposed by an exchange; (iii) trading halts, suspensions or
other restrictions imposed with respect to particular classes or series of
options or underlying securities; (iv) inadequacy of the facilities of an
exchange or the clearing corporation to handle trading volume; and (v) a
decision by one or more exchanges to discontinue the trading of options or
impose restrictions on orders.
Each exchange has established limitations governing the maximum number of call
options, whether or not covered, which may be written by a single investor
acting alone or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written on one or more
accounts or through one or more brokers). An exchange may order the liquidation
of positions found to be in violation of these limits and it may impose other
sanctions or restrictions. The Adviser believes that the position limits
established by the exchanges will not have any adverse impact upon a Fund or all
of the Funds, in the aggregate.
RISKS OF OPTIONS ON INDICES. Because the value of an index option depends
upon movements in the level of the index rather than movements in the price of a
particular security, whether a Fund will realize a gain or loss on the purchase
or sale of an option on an index depends upon movements in the level of prices
in the market generally or in an industry or market segment rather than upon
movements in the price of an individual security. Accordingly, successful use by
a Fund of options on indices will be subject to the Adviser's ability to predict
correctly movements in the direction of the market generally or in the direction
of a particular industry. This requires different skills and techniques than
predicting changes in the prices of individual securities.
Index prices may be distorted if trading of certain securities included in the
index is interrupted. Trading in index options also may be interrupted in
certain circumstances, such as if trading were halted in a substantial number of
securities included in the index. If this occurred, a Fund would not be able to
close out options which it had written or purchased and, if restrictions on
exercise were imposed, might be unable to exercise an option it purchased, which
would result in substantial losses to a Fund. However, it is the Trust's policy
to write or purchase options only on indices which include a sufficient number
of securities so that the likelihood of a trading halt in the index is
minimized.
Because the exercise of an index option is settled in cash, an index call
writer cannot determine the amount of its settlement obligation in advance and,
unlike call writing on portfolio securities, cannot provide in advance for its
potential settlement obligation by holding the underlying securities.
Consequently, a Fund will write call options on indices only subject to the
limitations described above.
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Price movements in securities in a Fund's portfolio will not correlate
perfectly with movements in the level of the index and, therefore, a Fund bears
the risk that the price of the securities held by the Fund may not increase as
much as the level of the index. In this event, the Fund would bear a loss on the
call which would not be completely offset by movements in the prices of a Fund's
portfolio securities. It is also possible that the index may rise when the value
of a Fund's portfolio securities does not. If this occurred, the Fund would
experience a loss on the call which would not be offset by an increase in the
value of its portfolio and might also experience a loss in the market value of
portfolio securities.
Unless a Fund has other liquid assets which are sufficient to satisfy the
exercise of a call on an index, a Fund will be required to liquidate portfolio
securities in order to satisfy the exercise. Because an exercise must be settled
within hours after receiving the notice of exercise, if a Fund fails to
anticipate an exercise, to the extent permissible, it may have to borrow from a
bank pending settlement of the sale of securities in its portfolio and pay
interest on such borrowing.
When a Fund has written a call on an index, there is also a risk that the
market may decline between the time a Fund has the call exercised against it, at
a price which is fixed as of the closing level of the index on the date of
exercise, and the time a Fund is able to sell securities in its portfolio. As
with options on portfolio securities, a Fund will not learn that a call has been
exercised until the day following the exercise date but, unlike a call on a
portfolio security where a Fund would be able to deliver the underlying security
in settlement, a Fund may have to sell part of its portfolio securities in order
to make settlement in cash, and the price of such securities might decline
before they could be sold.
If a Fund exercises a put option on an index which it has purchased before
final determination of the closing index value for that day, it runs the risk
that the level of the underlying index may change before closing. If this change
causes the exercised option to fall "out-of-the-money" a Fund will be required
to pay the difference between the closing index value and the exercise price of
the option (multiplied by the applicable multiplier) to the assigned writer.
Although a Fund may be able to minimize this risk by withholding exercise
instructions until just before the daily cutoff time or by selling rather than
exercising an option when the index level is close to the exercise price, it may
not be possible to eliminate this risk entirely because the cutoff times for
index options may be earlier than those fixed for other types of options and may
occur before definitive closing index values are announced.
PRIVATE PLACEMENTS AND RULE 144A SECURITIES
Each Fund may purchase securities which have been privately issued and are
subject to legal restrictions on resale or which are issued to qualified
institutional investors under special rules adopted by the Commission. Such
securities may offer higher yields than comparable publicly traded securities.
Such securities ordinarily can be sold by these Funds in secondary market
transactions to certain qualified investors pursuant to rules established by the
Commission, in privately negotiated transactions to a limited number of
purchasers or in a public offering made pursuant to an effective registration
statement under the Securities Act of 1933 (the "1933 Act"). Public sales of
such securities by the Funds may involve significant delays and expense. Private
sales often require negotiation with one or more purchasers and may produce less
favorable prices than the sale of similar unrestricted securities. Public sales
generally involve the time and expense of the preparation and processing of a
registration statement under the 1933 Act (and the possible decline in value of
the securities during such period) and may involve the payment of underwriting
commissions. In some instances, these Funds may have to bear certain costs of
registration in order to sell such shares publicly. Except in the case of
securities sold to qualifying institutional investors under special rules
adopted by the Commission for which the Trustees of these Funds determine the
secondary market is liquid. Rule 144A securities will be considered illiquid.
Trustees of these Funds may determine the secondary market is liquid based upon
the following factors which will be reviewed periodically as required pursuant
to procedures adopted by these Funds: the number of dealers willing to purchase
or sell the security; the frequency of trades; dealer undertakings to make a
market in the security, and the nature of the security and its market. Investing
in Rule 144A Securities could have the effect of increasing the level of these
Fund's illiquidity to the extent that qualified institutional buyers become, for
a time, uninterested in purchasing these securities.
REPURCHASE AGREEMENTS
Repurchase Agreements are agreements by which the Funds purchases a security
and obtains a simultaneous commitment from the seller (a member bank of the
Federal Reserve System or, to the extent permitted by the Investment Company Act
of 1940, a recognized securities dealer) that the seller will repurchase the
security at an agreed upon price and date. The resale price is in excess of the
purchase price and reflects an agreed upon market rate unrelated to the coupon
rate on the purchased security.
A repurchase transaction is usually accomplished either by crediting the
amount of securities purchased to the account of the custodian of the Funds
maintained in a central depository of book-entry system or by physical delivery
of the securities to the Trust's custodian in return for delivery of the
purchase price to the seller. Repurchase transactions are intended to be
short-term transactions with the seller repurchasing the securities, usually
within seven days.
Even though repurchase transactions usually do not impose market risks on the
purchasing Fund, if the seller of the repurchase agreement defaults and does not
repurchase the underlying securities, the Fund might incur a loss if the value
of the underlying securities declines, and disposition costs may be incurred in
connection with liquidating the underlying securities. In addition, if
bankruptcy proceedings are commenced regarding the seller, realization upon the
underlying securities may be delayed or limited, and a loss may be incurred if
the underlying securities decline in value.
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SMALL CAP ISSUERS
Market capitalizations of small capitalization companies are determined at the
time of purchase. While the issuers in which the Fund will primarily invest may
offer greater opportunities for capital appreciation than larger capitalization
issuers, investments in smaller companies may involve greater risks and thus may
be considered speculative. For example, small companies may have limited product
lines, markets or financial resources, or they may be dependent on a limited
management group. Full development of these companies takes time and, for this
reason, the Fund should be considered as a long-term investment and not as a
vehicle for seeking short-term profits, nor should an investment in the Fund be
considered a complete investment program. In addition, many small company stocks
trade less frequently and in smaller volume, and may be subject to more abrupt
or erratic price movements than stocks of large companies. The securities of
small companies may also be more sensitive to market changes than the securities
of large companies. These factors may result in above-average fluctuations in
the net asset value of the Fund's shares.
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 the yield of a Class or
Fund and as the 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 such Class of Shares of a Fund
over periods of 1, 5 and 10 years or up to the life of a Fund, calculated for
each Class separately pursuant to the following formula: P(1 + T)n = ERV (where
P = a hypothetical initial payment of $1,000, T = the average annual total
return, n = the number of years, and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the period). 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
Class C Shares, and assume that all dividends and distributions are reinvested
when paid. Performance data quoted for Class C Shares covering periods prior to
the inception of Class C Shares will reflect historical performance of Class A
Shares adjusted for the higher operating expenses applicable to Class C Shares.
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 its 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 and Investor's Business Daily, Stanger's Mutual
Fund Monitor, The Stanger Register, Stanger's Investment Adviser, The Wall
Street Journal, The New York Times, Consumer Reports, Registered Representative,
Financial Planning, Financial Services Weekly, Financial World, U.S. News and
World Report, Standard & Poor's The Outlook, and Personal Investor. The Funds
may, from time to time, illustrate the benefits of tax deferral by comparing
taxable investments to investments made through tax-deferred retirement plans.
The total return may also be used to compare the performance of the Funds
against certain widely acknowledged outside standards or indices for stock and
bond market performance, such as the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500"), Standard & Poor's 400 MidCap Index ("S&P 400"), Dow Jones
Industrial Average, Russell 2000 Index, Russell 2000 Growth Index, 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; or cite separately as a return figure the equity or bond portion of
a Fund's portfolio; or compare a Fund's equity or bond return future to
well-known indices of market performance, including, but not limited to: the S&P
500, Dow Jones Industrial Average, CS First Boston High Yield Index and Salomon
Brothers Corporate and Government Bond Indices.
The average annual total return of the Small Cap Fund Class A Shares for the
1-year period ended April 30, 2000 and since inception October 16, 1995 to April
30, 2000, was 75.69% and 32.38%, respectively. The average annual total return
of the Small Cap Fund Class B Shares for the 1-year period ended April 30, 2000
and since inception October 16, 1995 to April 30, 2000, was 81.06% and 32.96%,
respectively. The average annual total return of the Growth Fund Class A Shares
for the seven-month period ended April 30, 2000 and since inception March 8,
1996 to April 30, 2000, was 17.63% and 29.13%, respectively. The average annual
total return of the Growth Fund Class B Shares for the seven-month period ended
April 30, 2000 and since inception July 1, 1998 to April 30, 2000 was 19.10% and
18.23%, respectively. The average annual total return of the Growth Fund Class C
Shares for the seven-month period ended April 30, 2000 and since inception July
1, 1998 to April 30, 2000 was 23.09% and 20.01%, respectively. The average
annual total return of the Growth Fund Class X Shares for the seven-
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month period ended April 30, 2000 and since inception March 8, 1996 to April
30, 2000, was 25.04% and 31.72%, respectively. The average annual total return
of the Theme Fund Class A Shares for the 1-year period ended April 30, 2000 and
since inception October 16, 1995 to April 30, 2000, was 44.45% and 31.27%,
respectively. The average annual total return of the Theme Fund Class B Shares
for the 1-year period ended April 30, 2000 and since inception October 16, 1995
to April 30, 2000, was 48.03% and 31.85%, respectively. The average annual total
return of the Theme Fund Class C Shares for the 1-year period ended April 30,
2000 and since inception November 3, 1997 to April 30, 2000, was 52.09% and
41.20%, respectively.
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.
PORTFOLIO TURNOVER
Portfolio turnover is calculated by dividing the lesser of purchases or sales
of portfolio securities during the fiscal year by the monthly average of the
value of the Fund's securities (excluding from the computation all securities,
including options, with maturities at the time of acquisition of one year or
less). A high rate of portfolio turnover generally involves correspondingly
greater brokerage commission expenses, which must be borne directly by the Fund.
Turnover rates may vary greatly from year to year as well as within a particular
year and may also be affected by cash requirements for redemptions of Fund
shares and by requirements which enable the Fund to receive certain favorable
tax treatment (see "Dividends, Distributions and Taxes"). Historical annual
rates of portfolio turnover for the Fund are set forth in the prospectus under
the heading "Financial Highlights."
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser and/or Subadviser (throughout this section 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 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 its brokerage policies which include
paying a fair commission rather than seeking to exploit its leverage to force
the lowest possible commission rate. The primary factors considered in
determining the firms to which brokerage orders are given are the Adviser's
appraisal of: the firm's ability to execute the order in the desired manner; the
value of research services provided by the firm; and the firm's attitude toward
and interest in mutual funds in general, including the sale of mutual funds
managed and sponsored by the Adviser. The Adviser does not offer or promise to
any broker an amount or percentage of brokerage commissions as an inducement or
reward for the sale of shares of the Funds. Over-the-counter purchases and sales
are transacted directly with principal market-makers except in those
circumstances where in the opinion of the Adviser better prices and execution
are available elsewhere.
In general terms, the nature of research services provided by brokers
encompasses statistical and background information, and forecasts and
interpretations with respect to U.S. and foreign economies, U.S. and foreign
money markets, fixed income markets and equity markets, specific industry
groups, and individual issues. Research services will vary from firm to firm,
with broadest coverage generally from the large full-line firms. Smaller firms
in general tend to provide information and interpretations on a smaller scale,
frequently with a regional emphasis. In addition, several firms monitor federal,
state, local and foreign political developments; many of the brokers also
provide access to outside consultants. The outside research assistance is
particularly useful to the Adviser's staff since the brokers as a group tend to
monitor a broader universe of securities and other matters than the Adviser's
staff can follow. In addition, it provides the Adviser with a diverse
perspective on financial markets. Research and investment information is
provided by these and other brokers at no cost to the Adviser and is available
for the benefit of other
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accounts advised by the Adviser and its affiliates and not all of this
information will be used in connection with the Trust. 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
Trust and its shareholders.
The Trust has adopted a policy and procedures governing the execution of
aggregated advisory client orders ("bunching procedures") in an attempt to lower
commission costs on a per-share and per-dollar basis. According to the bunching
procedures, the Adviser shall aggregate transactions unless it believes in its
sole discretion that such aggregation is inconsistent with its duty to seek best
execution (which shall include the duty to seek best price) for the Trust. No
advisory account of the Adviser is to be favored over any other account and each
account that participates in an aggregated order is expected to participate at
the average share price for all transactions of the Adviser in that security on
a given business day, with all transaction costs shared pro rata based on the
Trust's participation in the transaction. If the aggregated order is filled in
its entirety, it shall be allocated among the Adviser's accounts in accordance
with the allocation order, and if the order is partially filled, it shall be
allocated pro rata based on the allocation order. Notwithstanding the foregoing,
the order may be allocated on a basis different from that specified in the
allocation order if all accounts of the Adviser whose orders are allocated
receive fair and equitable treatment and the reason for such different
allocation is explained in writing and is approved in writing by the Adviser's
compliance officer as soon as practicable after the opening of the markets on
the trading day following the day on which the order is executed. If an
aggregated order is partially filled and allocated on a basis different from
that specified in the allocation order, no account that is benefited by such
different allocation may intentionally and knowingly effect any purchase or sale
for a reasonable period following the execution of the aggregated order that
would result in it receiving or selling more shares than the amount of shares it
would have received or sold had the aggregated order been completely filled. The
Trustees will annually review these procedures or as frequently as shall appear
appropriate.
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 April 30, 1998, 1999 and 2000, brokerage commission
paid by the Trust on portfolio transactions totaled $3,579,420, $2,087,042 and
$1,225,151, respectively. In the fiscal years ended April 30, 1998, 1999 and
2000, W. S. Griffith & Co., Inc., a broker-dealer subsidiary of Phoenix Home
Life, received $0, $5,910 and $0 in fund-related commissions attributed to a
clearing arrangement with an unaffiliated broker/dealer. Brokerage commissions
of $9,195 paid during the fiscal year ended April 30, 2000, were paid on
portfolio transactions aggregating $22,117,787 executed by brokers who provided
research and other statistical information.
SERVICES OF THE ADVISERS
The investment adviser to the Fund is Phoenix Investment Counsel, Inc. ("PIC"
or "Adviser"), which is located at 56 Prospect Street, Hartford, Connecticut
06115-0480. PIC acts as the investment adviser for 14 fund companies totaling 37
mutual funds, as subadviser to two fund companies totaling three mutual funds,
and as adviser to institutional clients. PIC has acted as an investment adviser
for over sixty years. PIC was originally organized in 1932 as John P. Chase,
Inc. As of June 30, 2000, PIC had approximately $25.7 billion in assets under
management. Philip R. McLoughlin, a Trustee and officer of the Fund, is a
director of PIC. All other executive officers of the Fund are officers of PIC.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning" or "Distributor"), a subsidiary of Phoenix
Investment Partners, Ltd. ("PXP"). Phoenix Home Life Mutual Insurance Company
("Phoenix Home Life") of Hartford, Connecticut is a majority shareholder of PXP.
Phoenix Home Life is in the business of writing ordinary and group life and
health insurance and annuities. Its principal offices are located at One
American Row, Hartford, Connecticut, 06115-2520. Equity Planning, a mutual fund
distributor, acts as the national distributor of the Fund's shares and as
Financial Agent of the Fund. The principal office of Equity Planning is located
at 100 Bright Meadow Boulevard, Enfield, Connecticut, 06082.
PXP is a publicly-traded independent registered investment advisory firm and
has served investors for over 70 years. As of June 30, 2000, PXP had over $60.8
billion in assets under management through its investment partners: Aberdeen
Fund Managers, Inc. (Aberdeen) in Aberdeen, London, Singapore and Fort
Lauderdale; Duff & Phelps Investment Management Co. (Duff & Phelps) in Chicago
and Cleveland; Roger Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca
Capital Management LLC (Seneca) in San Francisco; 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.
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Roger Engemann & Associates, Inc. ("Engemann") is the investment subadviser to
the Small Cap Fund and is located at 600 North Rosemead Boulevard, Pasadena,
California 91107. Engemann acts as adviser to six mutual funds, 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.
Seneca Capital Management LLC ("Seneca") is the investment subadviser to the
Growth Fund and Strategic Theme Fund and is located at 909 Montgomery Street,
San Francisco, California 94133. Seneca acts as a subadviser to nine other
mutual funds and as investment adviser to institutions and individuals. As of
December 31, 1999, Seneca had $9.2 billion in assets under management. Seneca
has been (with its predecessor, GMG/Seneca Capital Management LP ("GMG/Seneca"))
an investment adviser since 1989.
The Adviser provides certain services and facilities required to carry on the
day-to-day operations of the Funds (for which it receives a management fee)
other than the costs of printing and mailing proxy materials, reports and
notices to shareholders; legal, auditing and accounting services; regulatory
filing fees and expenses of printing the Trust's registration statement (but the
Distributor purchases such copies of the Funds' prospectuses and reports and
communications to shareholders as it may require for sales purposes); insurance
expense; association membership dues; brokerage fees; and taxes. Each Fund will
pay expenses incurred in its own operation and will also pay a portion of the
Trust's administration expenses allocated on the basis of the asset values of
the respective Fund.
As compensation for its services, PIC receives a fee from the Growth Fund,
which is accrued daily against the value of the Fund's net assets and is paid by
the Fund monthly. The fee is computed at an annual rate of .70% of the Fund's
average daily net assets of up to $1 billion, .65% of the Fund's average daily
net assets from $1 billion to $2 billion, and .60% of the Fund's average net
assets in excess of $2 billion. As compensation for its services, PIC receives a
fee from the Theme Fund and the Small Cap Fund which is accrued daily against
the value of each Fund's net assets and is paid by the Fund monthly. The fee is
computed at an annual rate of 0.75% of the average daily net asset values of
each Fund up to $1 billion; 0.70% of such value between $1 billion and $2
billion; and 0.65% of such value in excess of $2 billion. For the fiscal years
ended April 30, 1998, 1999 and 2000, the management fees paid by each of the
Funds were:
-------------------------------------------------------------------------------
1998 1999 2000
-------------------------------------------------------------------------------
SMALL CAP FUND $2,487,577 $1,885,586 $2,089,096
- -----------------------------------------------------------------------------
GROWTH FUND $1,326,599 $1,352,558 $1,581,392
-------------------------------------------------------------------------------
STRATEGIC THEME FUND $1,139,421 $1,129,085 $2,319,786
-------------------------------------------------------------------------------
The Management Agreements shall continue in effect from year to year, provided
that such continuance is specifically approved annually by a majority of the
Trustees who are not interested persons of the parties thereto (as defined in
the 1940 Act) and by either (a) the Trustees or (b) vote of a majority of the
outstanding securities of the Trust (as defined in the 1940 Act).
The Management Agreements may be terminated without penalty at any time by the
Trustees or by a vote of a majority of the outstanding voting securities of the
Trust upon 60 days written notice addressed to the Adviser at its principal
place of business; and by the Adviser upon 60 days written notice addressed to
the Trust at its principal place of business. The Management Agreements will
terminate automatically in the event of their "assignment" as defined in Section
2(a)(4) of the 1940 Act.
The Trust, its Adviser and Subadvisers, and its Distributor have each adopted
a Code of Ethics pursuant to Rule 17-j1 under the Investment Company Act of
1940. Personnel subject to the Codes 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 preclearance 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 Funds do 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 Funds. 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
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<PAGE>
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. The minimum initial investment for Class
X Shares is $250,000, and the minimum subsequent investment for Class X Shares
is $10,000. Completed applications for the purchase of shares should be mailed
to: Phoenix Funds, c/o State Street Bank and Trust Company, P.O. Box 8301,
Boston, MA 02266-8301.
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.
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"). The Growth Fund also offers one class of shares
(Class X Shares) that may be purchased by certain institutional investors at a
price equal to their net asset value per share.
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 a Fund, 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 services fee on Class A Shares purchased at the same time. NOTE,
ONLY THE GROWTH FUND AND THEME FUND OFFER CLASS C SHARES AND ONLY THE GROWTH
FUND OFFERS CLASS X SHARES.
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 ongoing distribution and service fees at an annual rate of
up to 0.25% of the Funds' 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.
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 are subject to ongoing distribution and service fees at an
aggregate annual rate of up to 1.00% of the Funds' 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,
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<PAGE>
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. 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 service 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 (GROWTH FUND AND THEME FUND ONLY)
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. 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 an ongoing distribution and services fee
at an aggregate annual rate of up to 1.00% of the Fund's aggregate average daily
net assets attributable to Class C Shares.
CLASS X SHARES (GROWTH FUND ONLY)
Class X Shares are offered without any sales charges to institutional
investors, such as pension and profit sharing plans, other employee benefit
trusts, investment advisers, endowments, foundations and corporations, and
others who purchase the minimum amounts.
CLASS A SHARES--REDUCED INITIAL SALES CHARGES
Investors choosing Class A Shares may be entitled to reduced sales charges.
The ways in which sales charges may be avoided or reduced 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)
trustee, director or officer of the Phoenix Funds, the Phoenix-Engemann Funds,
Phoenix-Seneca Funds or any other mutual fund advised, subadvised or distributed
by the Adviser, Distributor or any of their corporate affiliates (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 Fund or any other Affiliated 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, Fund
company, or bank Fund 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 or any other Affiliated Phoenix Fund 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 Fund purchase and that a sales
charge was paid; (16) any deferred compensation plan established for the benefit
of any Phoenix Fund or any other Affiliated Phoenix Fund trustee or director;
provided that sales to persons listed in (1) through (16) 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 Fund;
(17) purchasers of Class A Shares bought through investment advisers 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
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<PAGE>
intermediary that has made special arrangements with the Distributor for such
purchases; (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.
COMBINATION PURCHASE PRIVILEGE. Your purchase of any class of shares of this
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 Fund.
LETTER OF INTENT. If you sign a Letter of Intent, your purchase of any class
of shares of this 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 13-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 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 this 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 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 70 1/2 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, in
which such shares the Distributor has not paid the dealer the Class B sales
commission; (f) based on the exercise of exchange privileges among Class B and C
Shares of this or any other Affiliated Phoenix Fund; (g) based on any direct
rollover transfer of shares from an established Affiliated Phoenix Fund
qualified plan into an Affiliated Phoenix Fund IRA by participants terminating
from the qualified plan; and (h) based on the systematic withdrawal program. If,
as described in condition (a) above, an account is transferred to an account
registered in the name of a deceased's
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<PAGE>
estate, the CDSC will be waived on any redemption from the estate account
occurring within one year of the death. If the Class B Shares are not redeemed
within one year of the death, they will remain subject to the applicable CDSC.
CONVERSION FEATURES--CLASS B SHARES
Class B Shares will automatically convert to Class A Shares of the same
Portfolio eight years after they are purchased. Conversion will be on the basis
of the then-prevailing net asset value of Class A and B Shares. There is no
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 Fund was 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 Fund.
INVESTOR ACCOUNT SERVICES
The Funds offer accumulation plans, withdrawal plans and reinvestment and
exchange privileges. Certain privileges may not be available in connection with
all classes. In most cases, changes to account services may be accomplished over
the phone. Inquiries regarding policies and procedures relating to shareholder
account services should be directed to Shareholder Services at (800) 243-1574.
Broker/dealers may impose their own restrictions and limits on accounts held
through the broker/dealer. Please consult your broker/dealer for account
restrictions and limit information.
EXCHANGES
Under certain circumstances, shares of any Affiliated Phoenix Fund may be
exchanged for shares of the same Class of another 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 or Series, 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 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, without sales
charge. On exchanges with share classes that carry a contingent deferred sales
charge, the CDSC schedule of the original shares purchased continues to apply.
The exchange of shares is treated as a sale and purchase for federal income tax
purposes (see Phoenix Funds, also "Dividends, Distributions and Taxes").
Exchange privileges may not be available for all 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 Affiliated Phoenix Fund automatically on a
monthly, quarterly, semiannual 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 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 Affiliated Phoenix Funds 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
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<PAGE>
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
purchase of the shares, which may take up to 15 days. The Fund and Equity
Planning reserve the right to modify or terminate the Invest-by-Phone service
for any reason or to institute charges for maintaining an Invest-by-Phone
account.
SYSTEMATIC WITHDRAWAL PROGRAM
The Systematic Withdrawal Program allows you to periodically redeem a portion
of your account on a predetermined monthly, quarterly, semiannual or annual
basis. A sufficient number of full and fractional shares will be redeemed so
that the designated payment is made on or about the 20th day of the month.
Shares are tendered for redemption by the Transfer Agent, as agent for the
shareowner, on or about the 15th of the month at the closing net asset value on
the date of redemption. The Systematic Withdrawal Program also provides for
redemptions to be tendered on or about the 10th, 15th or 25th of the month with
proceeds to be directed through Automated Clearing House (ACH) to your bank
account. In addition to the limitations stated below, withdrawals may not be
less than $25 and minimum account balance requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Fund worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. 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 Trust 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 after
receipt of the check.
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.
Redemptions by Class B and Class C shareholders will be subject to the
applicable deferred sales charge, if any.
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.
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<PAGE>
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 30 days written notice to the shareholder mailed to the address of
record. During the 60 day period the shareholder has the right to add to the
account to bring its value to $200 or more. See the Funds' current Prospectus
for more information.
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 Trust redeem the shares. See the Funds' current
Prospectus for more information.
TELEPHONE REDEMPTIONS
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Funds' current Prospectus for
additional information.
REDEMPTION IN KIND
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. However, the Fund has
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 he sold the securities.
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.
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 provisions 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, 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. If in any taxable year a Fund does not
qualify as a regulated investment company, all of its taxable income will be
taxed to the Fund at corporate rates.
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 the Fund's net capital gains
for the 12-month period ending on October 31 of such calendar year. In addition,
an amount equal to any undistributed investment company taxable income or
capital gain net income from the previous calendar year must also be distributed
to avoid the excise tax. The excise tax is imposed on the amount by which the
regulated investment company does not meet the foregoing distribution
requirements. If a Fund has taxable income that would be subject to the excise
tax, the 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 the Funds 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 a Fund
before February 1 of the following year.
The Funds' policy is to distribute to its shareholders all or 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. Each Fund
intends 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 each Fund 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
a Fund may not be taken into account in determining the gain or loss on the
disposition of those shares. This rule applies where shares of a Fund 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
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<PAGE>
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 a Fund reduce the net asset value of the Fund's 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 a Fund
during a taxable year or held by a Fund 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.
Each Fund will furnish its 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.
TAX SHELTERED RETIREMENT PLANS
Shares of the Fund are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover IRA, SEP-IRA, SIMPLE IRA, Roth IRA,
401(k), Profit-Sharing, Money Purchase Pension Plans and 403(b) Retirement
Plans. Write or call Equity Planning (800) 243-4361 for further 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 Service 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 forth 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 or 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.
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THE DISTRIBUTOR
Phoenix Equity Planning Corporation (the "Equity Planning" or "Distributor"),
an indirect, less than wholly-owned subsidiary of Phoenix Home Life and an
affiliate of PIC, serves as Distributor for the Funds. The address of the
Distributor is 100 Bright Meadow Blvd., P.O. Box 2200, Enfield, Connecticut
06083-2200. 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. During the fiscal years 1998, 1999 and
2000, purchasers of Fund shares paid aggregate sales charges of $2,025,485,
$1,723,056 and $1,137,546, respectively, of which the Distributor for the Funds
received net commissions of $1,058,952, $1,279,374 and $552,688, respectively,
for its services, the balance being paid to dealers. For the fiscal year ended
April 30, 2000, the Distributor received net commissions of $71,696 for Class A
Shares and deferred sales charges of $480,992 for Class B and Class C Shares.
The Underwriting 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 Trust, or by vote of a
majority of the Trustees who are not "interested persons" of the Trust and who
have no direct or indirect financial interest in the operation of the
Distribution Plans or in any related agreements. The Underwriting Agreement will
terminate automatically in the event of its assignment.
DEALER CONCESSIONS
Dealers with whom the Distributor has entered into sales agreements receive a
discount or commission as described below.
<TABLE>
<CAPTION>
AMOUNT OF
TRANSACTION SALES CHARGE AS A PERCENTAGE SALES CHARGE AS A PERCENTAGE DEALER DISCOUNT
AT OFFERING PRICE OF OFFERING PRICE OF AMOUNT INVESTED PERCENTAGE OF OFFERING PRICE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Under $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 (the "Plan") due to waiver of the CDSC for
these Plan participants' purchases. 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
Fund 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 Fund
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, including investments by qualified employee benefit plans, is
subsequently redeemed within one year of the investment date, the broker/dealer
will refund to the Distributor such amounts paid with respect to the investment.
In addition, the Distributor may pay the entire applicable sales charge on
purchases of Class A Shares to selected dealers and agents. From its own profits
and resources, the Distributor intends to pay the following additional
compensation to Merrill Lynch, Pierce, Fenner & Smith, Inc.: 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
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<PAGE>
broker of record and which such shares exceed the amount of assets on which
Merrill Lynch is broker of record as of July 1, 1999. 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 Distribution Plans, 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
Equity Planning 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, Equity Planning 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 incremental 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 .015%
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. Equity Planning retains PFPC, Inc. as subagent
for each of the funds for which Equity Planning 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,
Equity Planning 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 the amount that would be found through direct
application of the table illustrated above. For its services during the Trust's
fiscal year ended April 30, 2000, Equity Planning received $694,629.
DISTRIBUTION PLANS
The Trust has adopted a distribution plan for each class of shares (i.e., a
plan for the Class A Shares, a plan for the Class B Shares, and a plan for the
Class C Shares; collectively, the "Plans") in accordance with Rule 12b-1 under
the Act, to compensate the Distributor for the services it provides and for the
expenses it bears under the Underwriting Agreement. Each class of shares pays a
service fee at a rate of 0.25% per annum of the average daily net assets of such
class of the Fund and a distribution fee based on average daily net assets at
the following rates: for Class B Shares at a rate of 0.75% per annum; for Class
C Shares at a rate of 0.75% per annum.
From the Service Fee the Distributor expects to pay a quarterly fee to
qualifying broker/dealer firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such firms. This fee will not exceed on an annual basis 0.25% of the average
annual net asset value of such shares, and will be in addition to sales charges
on Fund shares which are reallowed to such firms. To the extent that the entire
amount of the Service Fee is not paid to such firms, the balance will serve as
compensation for personal and account maintenance services furnished by the
Distributor. The Distributor also pays to dealers as additional compensation
with respect to Class C Shares, 0.75% of the average annual net asset value of
that class.
In order to receive payments under the Plans, participants must meet such
qualifications to be established in the sole discretion of the Distributor, such
as services to the Funds' shareholders; or services providing the Funds with
more efficient methods of offering shares to coherent groups of clients, members
or prospects of a participant; or services permitting bulking of purchases or
sales, or transmission of such purchases or sales by computerized tape or other
electronic equipment; or other processing.
21
<PAGE>
On a quarterly basis, the Trustees review a report on expenditures under the
Plans and the purposes for which expenditures were made. The Trustees conduct an
additional, more extensive review annually in determining whether the Plans will
be continued. By its terms, continuation of the Plans from year to year is
contingent on annual approval by a majority of the 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 Plans
or any related agreements (the "Plan Trustees"). The Plans provide that they may
not be amended to increase materially the costs which the Funds may bear
pursuant to the Plans without approval of the shareholders of the Funds and that
other material amendments to the Plans must be approved by a majority of the
Plan Trustees by vote cast in person at a meeting called for the purpose of
considering such amendments. The Plans further provide that while they are 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 Plans may be terminated at any time by vote of a
majority of the Plan Trustees or a majority of the outstanding shares of the
relevant Class of the Trust.
For the fiscal year ended April 30, 2000, the Funds paid Rule 12b-1 Fees in
the amount of $3,757,065, of which the principal underwriter received
$2,074,317, W.S. Griffith & Co., Inc., an affiliate, received $177,556 and
unaffiliated broker-dealers received $1,505,192. 12b-1 Fees paid by the Funds
during last fiscal year were spent on: (1) advertising, $540,445; (2) printing
and mailing of prospectuses to other than current shareholders, $19,042; (3)
compensation to dealers, $2,398,839; (4) compensation to sales personnel,
$1,264,048; (5) service costs, $176,042 and (6) other, $250,746.
No interested person of the Fund and no Trustee who is not an interested
person of the Fund, as that term is defined in the Investment Company Act of
1940, had any direct or indirect financial interest in the operation of the
Plans.
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.
MANAGEMENT OF THE TRUST
The Trust is an open-end management investment company known as a mutual fund.
The Trustees of the Trust ("Trustees") are responsible for the overall
supervision of the Trust and perform duties imposed on Trustees by the
Investment Company Act and Delaware 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 and, unless otherwise noted, the address of
each executive officer and Trustee is 56 Prospect Street, Hartford, Connecticut,
06115-0480.
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Robert Chesek (66) Trustee Trustee/Director (1981-present) and Chairman (1989-1994), Phoenix
49 Old Post Road Funds. Trustee, Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps
Wethersfield, CT 06109 Institutional Mutual Funds (1996-present) and Phoenix-Seneca Funds
(2000-present).
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
E. Virgil Conway (71) Trustee Chairman, Metropolitan Transportation Authority (1992-present).
9 Rittenhouse Road Trustee/Director, Consolidated Edison Company of New York, Inc.
Bronxville, NY 10708 (1970-present), Pace University (1978-present), Atlantic Mutual
Insurance Company (1974-present), HRE Properties (1989-present),
Greater New York Councils, Boy Scouts of America (1985-present),
Union Pacific Corp. (1978-present), Blackrock Freddie Mac Mortgage
Securities Fund (Advisory Director) (1990-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr., Foundation
(1975-present), The Harlem Youth Development Foundation
(1987-present). Chairman, (1998-present), Accuhealth Trism, Inc.
(1994-present), Realty Foundation of New York (1972-present), and New
York Housing Partnership Development Corp. (1985-present). Vice
Chairman Academy of Political Science (1985-present).
Director/Trustee, Phoenix Funds (1993-present). Trustee,
Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Director, Duff & Phelps Utilities Tax-Free Income Inc. and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1995-present).
Chairman/Member, Audit Committee of the City of New York (1981-1996).
Advisory Director, Blackrock Fannie Mae Mortgage Securities Fund
(1989-1996) and Fund Directions (1993-1998). Chairman, Financial
Accounting Standards Advisory Council (1992-1995).
Harry Dalzell-Payne (71) Trustee Director/Trustee, Phoenix Funds (1993-present). Trustee,
The Flat Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Elmore Court Mutual Funds (1996-present) and Phoenix-Seneca Funds (1999-present).
Elmore, GLOS GL2 6NT, UK Director, Duff & Phelps Utilities Tax-Free Income Inc. and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1995-present). Formerly
a Major General of the British Army.
*Francis E. Jeffries (69) Trustee Director/Trustee, Phoenix Funds (1995-present). Trustee,
8477 Bay Colony Dr. Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Apt. 902 Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Naples, FL 34108 Director, Duff & Phelps Utilities Income Inc. (1987-present), Duff &
Phelps Utilities Tax-Free Income Inc. (1991-present) and Duff &
Phelps Utility and Corporate Bond Trust Inc. (1993-present).
Director, The Empire District Electric Company (1984-present).
Director (1989-1997), Chairman of the Board (1993-1997), President
(1989-1993), and Chief Executive Officer (1989-1995), Phoenix
Investment Partners, Ltd.
Leroy Keith, Jr. (61) Trustee Chairman (1995-present) and Chief Executive Officer (1995-1999),
Chairman Carson Products Company. (1995-present). Director/Trustee, Phoenix
Carson Products Company Funds (1980-present). Trustee, Phoenix-Aberdeen Series Fund, Phoenix
64 Ross Road Duff & Phelps Institutional Mutual Funds (1996-present) and
Savannah, GA 30750 Phoenix-Seneca Funds (2000-present). Director, Equifax Corp.
(1991-present) and Evergreen International Fund, Inc. (1989-present).
Trustee, Evergreen Liquid Trust, Evergreen Tax Exempt Trust,
Evergreen Tax Free Fund, Master Reserves Tax Free Trust, and Master
Reserves Trust.
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
*Philip R. McLoughlin (53) Trustee and Chairman (1997-present), Director (1995-present), Vice Chairman
President (1995-1997) and Chief Executive Officer (1995-present), Phoenix
Investment Partners, Ltd. Director (1994-present) and Executive Vice
President, Investments (1988-present), Phoenix Home Life Mutual
Insurance Company. Director/Trustee and President, Phoenix Funds
(1989-present). Trustee and President, Phoenix-Aberdeen Series Fund
and Phoenix Duff & Phelps Institutional Mutual Funds (1996-present).
Director, Duff & Phelps Utilities Tax-Free Income Inc. (1995-present)
and Duff & Phelps Utility and Corporate Bond Trust Inc.
(1995-present). Trustee, Phoenix-Seneca Funds (1999-present).
Director (1983-present) and Chairman (1995-present), Phoenix
Investment Counsel, Inc. Director (1984-present) and President
(1990-1999), Phoenix Equity Planning Corporation. Chairman and Chief
Executive Officer, Phoenix/Zweig Advisers LLC (1999-present).
Director, PXRE Corporation (Delaware) (1985-present) and World Trust
Fund (1991-present). Director and Executive Vice President, Phoenix
Life and Annuity Company (1996-present). Director and Executive Vice
President, PHL Variable Insurance Company (1995-present). Director,
Phoenix Charter Oak Trust Company (1996-present). Director and Vice
President, PM Holdings, Inc. (1985-present). Director (1992-present)
and President (1992-1994), W.S. Griffith & Co., Inc. Director, PHL
Associates, Inc. (1995-present).
Everett L. Morris (72) Trustee Vice President, W.H. Reaves and Company (1993-present).
164 Laird Road Director/Trustee, Phoenix Funds (1995-present). Trustee,
Colts Neck, NJ 07722 Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Director, Duff & Phelps Utilities Tax-Free Income Inc. (1991-present)
and Duff & Phelps Utility and Corporate Bond Trust Inc.
(1993-present).
*James M. Oates (54) Trustee Chairman, IBEX Capital Markets, Inc. (formerly, IBEX Capital Markets
Managing Director LLC) (1997-present). Managing Director, Wydown Group (1994-present).
The Wydown Group Director, Phoenix Investment Partners, Ltd. (1995-present).
IBEX Capital Markets, Inc. Director/Trustee, Phoenix Funds (1987-present). Trustee,
60 State Street Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Suite 950 Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Boston, MA 02109 Director, AIB Govett Funds (1991-present), Investors Financial
Service Corporation (1995-present), Investors Bank & Trust
Corporation (1995-present), Plymouth Rubber Co. (1995-present),
Stifel Financial (1996-present), Command Systems, Inc.
(1998-present), Connecticut River Bancorp (1998-present) and
Endowment for Health (1999-present). Vice Chairman, Massachusetts
Housing-Partnership (1998-2000). Director, Blue Cross and Blue Shield
of New Hampshire (1994-1999).
Herbert Roth, Jr. (71) Trustee Director/Trustee, Phoenix Funds (1980-present). Trustee,
134 Lake Street Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
P.O. Box 909 Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Sherborn, MA 01770 Director, Boston Edison Company (1978-present), Landauer, Inc.
(medical services) (1970-present), Tech Ops./Sevcon, Inc. (electronic
controllers) (1987-present), and Mark IV Industries (diversified
manufacturer) (1985-present). Member, Directors Advisory Council,
Phoenix Home Life Mutual Insurance Company (1998-present). Director,
Phoenix Home Life Mutual Insurance Company (1972-1998).
24
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Richard E. Segerson (54) Trustee Managing Director, Northway Management Company (1998-present).
102 Valley Road Director/Trustee, Phoenix Funds (1993-present). Trustee,
New Canaan, CT 07840 Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Managing Director, Mullin Associates (1993-1998).
Lowell P. Weicker, Jr. (69) Trustee Trustee/Director, Phoenix Funds (1995-present). Trustee,
731 Lake Avenue Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps Institutional
Greenwich, CT 06830 Mutual Funds (1996-present) and Phoenix-Seneca Funds (2000-present).
Director, UST Inc. (1995-present), HPSC Inc. (1995-present),
Burroughs Wellcome Fund (1996-present) and Compuware (1996-present).
Visiting Professor, University of Virginia (1997-present). Director,
Duty Free International, Inc. (1997). Chairman, Dresing, Lierman,
Weicker (1995-1996). Governor of the State of Connecticut (1991-1995).
Michael E. Haylon (42) Executive Director and Executive Vice President, Investments, Phoenix
Vice Investment Partners, Ltd. (1995-present). Director (1994-present),
President President (1995-present), Executive Vice President (1994-1995), Vice
President (1991-1994), Phoenix Investment Counsel, Inc. Director,
Phoenix Equity Planning Corporation (1995-present). Executive Vice
President, Phoenix Funds (1993-present), Phoenix-Aberdeen Series Fund
(1996-present) and Phoenix-Seneca Funds (2000-present). Executive
Vice President (1997-present), Vice President (1996-1997), Phoenix
Duff & Phelps Institutional Mutual Funds. Senior Vice President,
Securities Investments, Phoenix Home Life Mutual Insurance Company
(1993-1995).
John F. Sharry (48) Executive President, Retail Division (1999-present), Executive Vice President,
Vice Retail Division (1997-1999), Phoenix Investment Partners, Ltd.
President Managing Director, Retail Distribution, Phoenix Equity Planning
Corporation (1995-present). Executive Vice President, Phoenix Funds
(1998-present), Phoenix-Aberdeen Series Fund (1998-present) and
Phoenix-Seneca Funds (2000-present). Managing Director, Director and
National Sales Manager, Putnam Mutual Funds (1992-1995).
J. Roger Engemann (59) Senior President and Director, Roger Engemann & Associates, Inc.
600 Rosemead Blvd. Vice President (1969-present). President and Director, Pasadena Capital Corporation
Pasadena, CA 91107-2138 (1988-present). Chairman, President and Trustee, Phoenix-Engemann
Funds (1986-present). President and Director, Roger Engemann
Management Co., Inc. (1985-present). Managing Director, Equities,
Phoenix Investment Counsel, Inc. (1998-present). Senior Vice
President, The Phoenix Edge Series Fund and Phoenix Series Fund
(1998-present).
Gail P. Seneca (47) Senior Vice Managing Director, Equities, Phoenix Investment Counsel, Inc.
909 Montgomery St. President (1998-present). President (1996-present) and Trustee (1996-2000),
San Francisco, CA 94133 Phoenix-Seneca Funds. President, Chief Executive and Investment
Officer, Seneca Capital Management LLC (1996-present). Chief
Investment Officer and managing general partner (1989-present),
GMG/Seneca Capital Management, L.P. Senior Vice President, The Phoenix
Edge Series Fund (1998-present), Phoenix Multi-Portfolio Fund
(1998-present) and Phoenix Duff & Phelps Institutional Mutual Funds
(1999-present).
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
Robert S. Dreissen (52) Vice President and Vice President and Compliance Officer, Phoenix Investment Partners,
Assistant Secretary Ltd. (1999-present) and Phoenix Investment Counsel, Inc.
(1999-present). Vice President, Phoenix Funds, Phoenix-Aberdeen
Series Fund, Phoenix Duff & Phelps Institutional Mutual Funds
(1999-present) and Phoenix-Seneca Funds (2000-present). Compliance
Officer (2000-present) and Associate Compliance Officer (1999), PXP
Securities Corporation. Vice President, Risk Management Liaison, Bank
of America (1996-1999). Vice President, Securities Compliance, The
Prudential Insurance Company of America (1993-1996). Branch
Chief/Financial Analyst, Securities and Exchange Commission, Division
of Investment Management (1972-1993).
Ronald K. Jacks (35) Vice President Managing Director, Equities, Phoenix Investment Counsel, Inc.
909 Montgomery St. (1998-present). Secretary (1996-present) and Trustee (1996-1997),
San Francisco, CA 94133 Phoenix-Seneca Funds. Portfolio Manager, Seneca Capital Management
LLC (1996-present). Portfolio Manager, GMG/Seneca Capital Management,
L.P. (1990-present). Vice President, The Phoenix Edge Series Fund
(1998-present), Phoenix Multi-Portfolio Fund (1998-present) and
Phoenix Duff & Phelps Institutional Mutual Funds (1999-present).
Richard D. Little (51) Vice President Managing Director, Equities, Phoenix Investment Counsel, Inc.
909 Montgomery St. (1998-present). Vice President, Phoenix-Seneca Funds (1996-present).
San Francisco, CA 94133 General Partner and Director of Equities, GMG/Seneca Capital
Management, L.P. (1989-present). Director of Equities, Seneca Capital
Management LLC (1996-present). Vice President, The Phoenix Edge
Series Fund (1998-present), Phoenix Multi-Portfolio Fund
(1998-present) and Phoenix Duff & Phelps Institutional Mutual Funds
(1999-present).
James E. Mair (58) Vice President Executive Vice President (1994-present), Senior Vice President
600 Rosemead Blvd. (1983-1994), Roger Engemann & Associates, Inc. Director
Pasadena, CA 91107-2138 (1990-present), Executive Vice President (1994-present), Senior Vice
President (1990-1994), Pasadena Capital Corporation. Director,
Pasadena National Trust (1989-present). Executive Vice President
(1994-present), Security Analyst (1983-1994), Roger Engemann
Management Co., Inc. Managing Director, Equities, Phoenix Investment
Counsel, Inc. (1998-present). Vice President, The Phoenix Edge Series
Fund and Phoenix Series Fund (1998-present).
William R. Moyer (55) Vice Executive Vice President and Chief Financial Officer (1999-present),
100 Bright Meadow Blvd. President Senior Vice President and Chief Financial Officer (1995-1999),
P.O. Box 2200 Phoenix Investment Partners, Ltd. (1995-present). Senior Vice
Enfield, CT 06083-2200 President (1990-present), Chief Financial Officer (1996-present),
Finance (until 1996), and Treasurer (1998-present and 1994-1996),
Phoenix Equity Planning Corporation. Director (1998-present), Senior
Vice President (1990-present), Chief Financial Officer (1996-present)
and Treasurer (1994-present), Phoenix Investment Counsel, Inc.
Treasurer (1999-present), Vice President and Chief Financial Officer,
Duff & Phelps Investment Management Co. (1996-1999). Vice President,
Phoenix Funds (1990-present), Phoenix Duff & Phelps Institutional
Mutual Funds (1996-present) and Phoenix Aberdeen Series Fund
(1996-present). Executive Vice President, Phoenix-Seneca Funds
(2000-present). Vice President, Investment Products Finance, Phoenix
Home Life Mutual Insurance Company (1990-1995). Senior Vice
President, Chief Financial Officer, W.S. Griffith & Co., Inc.
(1992-1995) and Townsend Financial Advisers, Inc. (1993-1995).
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH THE TRUST DURING THE PAST 5 YEARS
- --------------------- -------------- -----------------------
<S> <C> <C>
John S. Tilson (56) Vice President Executive Vice President (1994-present), Senior Vice President
600 Rosemead Blvd. (1983-1994), Roger Engemann & Associates, Inc. Director (1990-present),
Pasadena, CA 91107-2138 Executive Vice President (1994-present), Senior Vice President
(1990-1994), Pasadena Capital Corporation. Chief Financial Officer and
Secretary, Phoenix-Engemann Funds (1988-present). Executive Vice
President (1994-present), Security Analyst (1983-1994), Roger Engemann
Management Co., Inc. Managing Director, Equities, Phoenix Investment
Counsel, Inc. (1998-present). Vice President, The Phoenix Edge Series
Fund and Phoenix Series Fund (1998-present).
G. Jeffrey Bohne (52) Secretary Vice President and General Manager, Phoenix Home Life Mutual Insurance
101 Munson Street Co. (1993-present). Vice President, Transfer Agent Operations
Greenfield, MA 01301 (1993-1996), Senior Vice President (1999-present), Vice President
(1996-1999), Mutual Fund Customer Service, Phoenix Equity Planning
Corporation. Secretary/Clerk, Phoenix Funds (1993-present), Phoenix
Duff & Phelps Institutional Mutual Funds (1996-present),
Phoenix-Aberdeen Series Fund (1996-present) and Phoenix-Seneca Funds
(2000-present). Vice President, Home Life of New York Insurance
Company (1984-1992).
Nancy G. Curtiss (47) Treasurer Treasurer, Phoenix Funds (1994-present), Phoenix Duff & Phelps
Institutional Mutual Funds (1996-present), Phoenix-Aberdeen Series
Fund (1996-present) and Phoenix-Seneca Funds (2000-present). Vice
President, Fund Accounting (1994-2000) and Treasurer (1996-2000),
Phoenix Equity Planning Corporation. Second Vice President and
Treasurer, Fund Accounting, Phoenix Home Life Mutual Insurance Company
(1994-1995). Various positions with Phoenix Home Life Insurance
Company (1987-1994).
</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 April 30, 2000,
the Trustees received aggregate remuneration of $44,963. For services on the
Boards of Directors/Trustees of the Phoenix Funds, each Trustee who is not a
full-time employee of the Adviser or any of its affiliates currently receives a
retainer at the annual rate of $40,000 and a fee of $2,500 per joint meeting of
the Boards. Each Trustee who serves on the Audit Committee receives a retainer
at the annual rate of $2,000 and a fee of $2,000 per joint Audit Committee
meeting attended. Each Trustee who serves on the Nominating Committee receives a
retainer at the annual rate of $1,000 and a fee of $1,000 per joint Nominating
Committee meeting attended. Each Trustee who serves on the Executive Committee
and who is not an interested person of the Fund receives a retainer at the
annual rate of $2,000 and $2,000 per joint Executive Committee meeting attended.
The function of the Executive Committee is to serve as a contract review,
compliance review and performance review delegate of the full Board of Trustees.
Costs are allocated equally to each of the Series and Funds within the Fund
complex. The foregoing fees do not include the reimbursement of expenses
incurred in connection with meeting attendance. Officers and employees of the
Advisers who are interested persons are compensated by the Adviser and receive
no compensation from the Trust.
27
<PAGE>
For the Trust's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR FROM TRUST AND
AGGREGATE RETIREMENT BENEFITS ESTIMATED FUND COMPLEX
COMPENSATION ACCRUED AS PART ANNUAL BENEFITS (37 FUNDS)
NAME FROM TRUST OF TRUST EXPENSES UPON RETIREMENT PAID TO TRUSTEES
- ---- ---------- ----------------- --------------- ------------------
<S> <C> <C> <C> <C>
Robert Chesek $4,350 $60,000
E. Virgil Conway+ $5,360 $75,250
Harry Dalzell-Payne+ $5,010 $89,250
Francis E. Jeffries $4,175* $58,000
Leroy Keith, Jr. $4,350 None None $60,500
Philip R. McLoughlin+ $ 0 for any for any $ 0
Everett L. Morris+ $3,785* Trustee Trustee $51,500
James M. Oates+ $4,560 $64,250
Herbert Roth, Jr. + $3,598 $48,500
Richard E. Segerson $4,975* $69,000
Lowell Weicker, Jr. $4,800 $65,750
</TABLE>
*This compensation (and the earnings thereon) will be deferred pursuant to the
Directors' Deferred Compensation Plan. At June 30, 2000, the total amount of
deferred compensation (including interest and other accumulation earned on the
original amounts deferred) accrued for Messrs. Jeffries, Morris, Roth and
Segerson was $472,348.25, $197,344.74, $177,329.63 and $115,043.51,
respectively. At present, by agreement among the Trust, the Distributor and the
electing director, director fees that are deferred are paid by the Trust to the
Distributor. The liability for the deferred compensation obligation appears only
as a liability of the Distributor.
+Messrs. Conway, Dalzell-Payne, McLoughlin, Morris, Oates and Roth are members
of the Executive Committee.
On August 2, 2000, the Trustees and officers of the Fund beneficially owned
less than 1% of the outstanding shares of the Trust.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of August 2, 2000 with respect
to each person who owns of record or is known by the Trust to own of record or
beneficially owns 5% or more of any Class of the Trust's equity securities.
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER FUND AND CLASS NUMBER OF SHARES PERCENT OF CLASS
- ------------------- -------------- ---------------- -----------------
<S> <C> <C> <C>
Merrill Lynch Pierce Fenner & Smith Small Cap Class B 547,693.026 11.32%
For the Sole Benefit of its Customers Growth Fund Class B 91,035.662 11.91%
Attn: Fund Administration Growth Fund Class C 49,993.415 8.87%
4800 Deer Lake Dr. E. 3rd Fl Strategic Theme Class B 570,411.676 7.81%
Jacksonville, FL 32246-6484
Judy C. Swanson TTEE Growth Fund Class X 151,495.018 8.43%
Robert A. Swanson Charitable
Remainder Trust
C/O K&E Management Ltd.
400 S. El Camino Real Ste. 1289
San Mateo, CA 94402-1704
Charles Schwab & Co. Inc. Growth Fund Class X 118,179.953 6.58%
Reinvestment Account
Attn: Mutual Fund Dept.
101 Montgomery St.
San Francisco, CA 94104-4122
Judy C. Swanson TTEE Growth Fund Class X 96,555.236 5.38%
Robert & Judy Swanson 1993
Annuity Trust
C/O K&E Management Ltd.
400 S. El Camino Real Ste. 1289
San Mateo, CA 94402-1704
</TABLE>
28
<PAGE>
ADDITIONAL INFORMATION
CAPITAL STOCK
The Trust was originally organized under Massachusetts law in 1986 as a
business trust. On August 29, 1986, the Trust purchased all of the assets and
assumed all of the liabilities of the Stock Series of National Securities Funds.
National Securities Funds, as such, had been in existence since 1940. The Trust
continued the business of the Stock Series under the name "National Stock Fund."
The Trustees subsequently voted to change the name of the Trust to "Phoenix
Equity Opportunities Fund" to reflect the purchase of the Adviser by Phoenix
Home Life and the affiliation with other Phoenix Funds. On May 24, 1995, the
Trustees again changed the name of the Trust to "Phoenix Strategic Equity Series
Fund." Prior to May 12, 2000, the Growth Fund was known as Phoenix-Seneca Equity
Opportunities Fund, and from August 27, 1999 to May 12, 2000, it was known as
Phoenix Equity Opportunities Fund. Prior to August 27, 1999, the Small Cap Fund
was known as the Phoenix Small Cap Fund and the Strategic Theme Fund was known
as Phoenix Strategic Theme Fund. The fund was reorganized as a Delaware business
trust in August 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.
FINANCIAL STATEMENTS
The Financial Statements for the Small Cap Fund and Theme Fund for the fiscal
year ended April 30, 2000 appearing in the Trust's 2000 Annual Report to
Shareholders are incorporated herein by reference. The Financial Statements for
the Growth Fund for the seven-month period ended April 30, 2000 appearing in the
Phoenix-Seneca Growth Funds' 2000 Annual Report to Shareholders are incorporated
herein by reference.
REPORTS TO SHAREHOLDERS
The fiscal year of the Trust ends on April 30th. The Trust will send
financial statements to its shareholders at least semi-annually. An annual
report, containing financial statements, audited by independent accountants,
will be sent to shareholders each year, and is available without charge upon
request.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, serves as
independent accountants for the Trust (the "Accountants"). The Accountants audit
the annual financial statements and express their opinion on them.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company ("State Street"), P.O. Box 351, Boston,
MA 02101, serves as custodian of the Trust's assets (the "Custodian") and Equity
Planning acts as Transfer Agent for the Trust (the "Transfer Agent"). As
compensation, Equity Planning receives a fee equivalent to $17.95 for each
designated shareholder account plus out-of-pocket expenses. Transfer Agent fees
are also utilized to offset costs and fees paid to subtransfer agents employed
by Equity Planning. State Street serves as a subtransfer agent pursuant to a
Subtransfer Agency Agreement.
29
<PAGE>
The Annual Report of
The Phoenix-Engemann Funds
for the year ended December 31, 1999
<PAGE>
PHOENIX INVESTMENT PARTNERS
ANNUAL REPORT
DECEMBER 31, 1999
ENGEMANN
Phoenix-Engemann
Balanced Return Fund
Phoenix-Engemann
Focus Growth Fund
Phoenix-Engemann
Nifty Fifty Fund
Phoenix-Engemann
Small & Mid-Cap
Growth Fund
Phoenix-Engemann
Value 25 Fund
[LOGO] PHOENIX
INVESTMENT PARTNERS
<PAGE>
MESSAGE FROM THE CHAIRMAN
DEAR SHAREHOLDER:
[PHOTO]
Midst the glee of welcoming in a new millennium and bidding adieu to an
innocuous Y2K bug, there was additional cause for celebration by shareholders in
the Phoenix-Engemann Funds. More details follow, but here is a performance
snapshot.
The Phoenix-Engemann Nifty Fifty Fund and the Phoenix-Engemann Balanced Fund
posted double-digit returns, outperforming their benchmarks. Based on the net
asset value of Class A shares, shareholders in the Phoenix-Engemann Focus Growth
Fund enjoyed an extraordinary return of nearly 50% for the year, and
shareholders in the Phoenix-Engemann Small & Mid-Cap Growth Fund saw their
shares rise over 80% in value. Both funds clearly benefited from the strong
performance tech stocks experienced in 1999.
The selectivity of 1999's advance in stocks was remarkable. Technology
companies were the hands-down winners. In fact, excluding the technology sector,
the S&P 500's(1) 21.1% gain for the year would have been reduced to 3.1%. The
extraordinary market selectivity was also evident in the differential result of
growth and value investment approaches--one reason the Phoenix-Engemann Value 25
Fund lagged in its return. Not only does the Fund emphasize value, it also
emphasizes dividend yield. Last year wasn't the year for value or dividend
yield.
Can the markets continue their unprecedented run of double-digit gains? While
it is impossible to guess what lies ahead, this may be a good time to recall
some old-fashioned "rules of investing": (1) DIVERSIFY, (2) STICK WITH YOUR
LONG-TERM INVESTMENT PLAN, and (3) IGNORE THE HERD.
DIVERSIFICATION can't cure volatility or extreme market selectivity, but it
can be great balm for its pain. If you include large-cap, small-cap, growth,
value, and balanced funds in your portfolio, you may not earn the peak return of
the best one...but you'll avoid having everything in the one category that takes
the biggest fall.
STICK WITH YOUR PLAN is what I refer to as "stay on the train." Decide on your
goal, select the investments you feel comfortable with to get you there, and
then muster the courage to hang on through a bumpy ride. Trying to time the
market is something even experts seldom do successfully.
Mutual funds are not insured by the FDIC; are not
deposits or other obligations of a bank and are not
guaranteed by a bank; and are subject to
investment risks, including possible loss of the
principal invested.
(1) THE S&P 500 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF STOCK MARKET
TOTAL RETURN PERFORMANCE. THE INDEX IS NOT AVAILABLE FOR DIRECT INVESTMENT.
1
<PAGE>
MESSAGE FROM THE CHAIRMAN (CONTINUED)
IGNORE THE HERD when the market slides and headlines rail against stocks. It's
tempting to pull out of the market and tuck your dollars under the mattress, but
that's when it's time to remind yourself that company fundamentals propel stock
prices over the long term.
What is our outlook for the future? Can stocks continue with their
extraordinary upward movement? With many market indices at all-time highs at the
end of the year, there are those that predict misfortune ahead. Certainly in the
early days of 2000, we saw a bit of a correction.
Yet, despite lofty prices and a relentless market climb, particularly in
dot.com issues, we see little cause for a reversal ahead. The economy is strong,
inflation looks as if it will remain tame, and earnings keep on growing. Such
ingredients are typically conducive to a thriving stock market. The Fed may or
may not hike interest rates, but uncertainty over that issue tends to keep a lid
on outlandish investor euphoria.
So as always, we will side with the optimists and say that "yes," we believe
another good year lies ahead. Perhaps not as high into the double digits as
we've seen in the past few years, but pleasantly good nonetheless.
If you have any questions, please contact your financial advisor or call us at
1-800-243-1574 between 8:00 a.m. and 6:00 p.m. Eastern Time, Monday through
Friday.
Sincerely,
/s/ Roger Engemann
Roger Engemann
JANUARY 14, 2000
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Phoenix-Engemann Balanced Return Fund..................................... 4
Phoenix-Engemann Focus Growth Fund........................................ 13
Phoenix-Engemann Nifty Fifty Fund......................................... 21
Phoenix-Engemann Small & Mid-Cap Growth Fund.............................. 30
Phoenix-Engemann Value 25 Fund............................................ 40
Notes to Financial Statements............................................. 48
</TABLE>
3
<PAGE>
PHOENIX-ENGEMANN BALANCED RETURN FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGERS, ROGER ENGEMANN, CFA,
JAMES MAIR, CFA, AND JOHN TILSON, CFA
Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A: The Fund seeks to maximize total investment return, consistent with
reasonable risk by investing in a mix of high quality growth stocks and U.S.
government securities.
Q: HOW DID THE FUND PERFORM FOR THE 12 MONTHS ENDED DECEMBER 31, 1999?
A: The Phoenix-Engemann Balanced Fund had another good year in 1999. Class A
shares returned 18.10%, Class B shares returned 17.22%, and Class C shares
returned 17.22% compared with a return of 12.21% for the Fund's benchmark
index(1) and an average return of 8.69% for a peer universe of 449 balanced
funds, according to Lipper, Inc. All performance figures assume reinvestment of
dividends and exclude the effect of sales charges.
Q: WHAT WERE THE PRIMARY REASONS BEHIND THE FUND'S SUCCESS IN 1999?
A: Our heavy emphasis on the technology sector was the primary reason for the
Fund's outperformance this year. Names like Sun Microsystems, EMC Corp, Cisco
Systems, and Texas Instruments were all up in excess of 100% for the year. In
fact, Sun Microsystems was up 208% for 1999. In non-technology sectors, we saw
strong performance from names like Home Depot (up 69%) and Citigroup (up 70%).
Q: WHAT WERE SOME OF THE DISAPPOINTMENTS OF THE FUND IN 1999?
A: Avon and Tyco were two disappointments this year. Both were new positions for
us in 1999 and both traded down during the year. We expected Avon to grow at a
high-teens rate through a successful restructuring of its operations and
improved growth overseas. This thesis did not play out as we expected, and we
subsequently sold the stock. Tyco's valuation fell during the year as some
questioned the legitimacy of the company's accounting practices. Although we are
disappointed with the stock performance in 1999, our growth expectations for the
company have not changed. We expect Tyco to get past the accounting issue and
look for Tyco to be a strong performer in 2000.
Q: HOW DID THE FIXED-INCOME PORTION OF THE PORTFOLIO PERFORM DURING THE YEAR?
A: Last year was not the best of times for the bonds in the portfolio, given
that the Fed increased interest rates three separate times in 1999. When
interest rates rise, the value of the bonds in the portfolio declines.
However, volatility in the bond market sometimes presents certain
opportunities. In November, we swapped Treasury bonds that matured in 2026 for
ones that matured in 2016. This trade lowered
(1) THE FUND'S BENCHMARK IS A COMPOSITE OF 60% OF THE S&P 500 INDEX RETURN, 30%
OF THE LEHMAN BROTHERS GOVERNMENT/CORPORATE INDEX RETURN, AND 10% OF THE
90-DAY TREASURY BILL RETURN. THE S&P IS A COMMONLY USED MEASURE OF STOCK
MARKET TOTAL RETURN PERFORMANCE. THE LEHMAN BROTHERS GOVERNMENT/ CORPORATE
INDEX IS A COMMONLY USED MEASURE OF BOND MARKET TOTAL RETURN PERFORMANCE.
THE INDICES ARE UNMANAGED AND NOT AVAILABLE FOR DIRECT INVESTMENT. THE
90-DAY TREASURY BILL IS A COMMONLY USED MEASURE OF SHORT-TERM DEBT TOTAL
RETURN PERFORMANCE.
4
<PAGE>
PHOENIX-ENGEMANN BALANCED RETURN FUND (CONTINUED)
the duration (i.e., a technical measure of volatility) of the portfolio, while
increasing the portfolio yield. It also allowed us to realize some capital
losses in the bonds that were used to offset other gains.
Q: WHAT IS THE OUTLOOK FOR THE FUND IN 2000?
A: We continue to see the best growth prospects in the technology sector. The
Fund will continue to emphasize technology in the portfolio, although we expect
the sector to be volatile. We believe the Fund's large weight in fixed-income
should provide our investors an excellent way to participate in this growth
without the level of volatility seen in our other growth funds.
JANUARY 31, 2000
5
<PAGE>
Phoenix-Engemann Balanced Return Fund
AVERAGE ANNUAL TOTAL RETURNS(1) PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
INCEPTION INCEPTION
1 YEAR 5 YEARS 10 YEARS TO 12/31/99 DATE
------ ------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Class A Shares at NAV(2) 18.10% 22.14% 14.42% -- --
Class A Shares at POP(3) 12.49 20.95 13.86 -- --
Class B Shares at NAV(2) 17.22 21.19 -- 16.42% 1/3/94
Class B Shares with CDSC(4) 13.22 21.19 -- 16.42 1/3/94
Class C Shares at NAV(2) 17.22 21.19 -- 16.42 1/3/94
Class C Shares with CDSC(4) 17.22 21.19 -- 16.42 1/3/94
Balanced Benchmark(6) 12.21 19.83 13.85 16.07 Note 7
</TABLE>
(1) Total returns are historical and include changes in share price and the
reinvestment of both dividends and capital gains distributions.
(2) "NAV" (Net Asset Value) total returns do not include the effect of any
sales charge.
(3) "POP" (Public Offering Price) total returns include the effect of the
maximum front-end 4.75% sales charge. Prior to 1/20/98, the maximum
front-end sales charge was 5.5%.
(4) CDSC (contingent deferred sales charge) is applied to redemptions of
certain classes of shares that do not have a sales charge applied at the
time of purchase.
CDSC charges for B shares decline from 5% to 0% over a five year period.
CDSC charges for C shares are 1% in the first year and 0% thereafter.
(5) This chart illustrates POP returns on Class A Shares for ten years. Returns
on Class B and Class C Shares will vary due to differing sales charges.
(6) The Balanced Benchmark is a composite index made up of 60% of the S&P 500
Index return, 30% of the Lehman Brothers Government/Corporate Bond Index
return and 10% of the 90-day Treasury Bill return. The Index's performance
does not reflect sales charges.
(7) Index information from 1/31/94 to 12/31/99.
All returns represent past performance which may not be indicative of
future performance. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
GROWTH OF $10,000 PERIODS ENDING 12/31
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PHOENIX-ENGEMANN BALANCED RETURN FUND CLASS A(5) BALANCED BENCHMARK(6)
<S> <C> <C>
89 $9,525.00 $10,000.00
90 $9,487.00 $10,150.00
91 $13,177.00 $12,558.00
92 $13,768.00 $13,475.00
93 $14,104.00 $14,775.00
94 $13,479.00 $14,807.00
95 $17,142.00 $19,015.00
96 $20,191.00 $21,884.00
97 $24,024.00 $26,955.00
98 $31,019.00 $32,599.00
99 $36,633.00 $36,580.00
</TABLE>
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
12/31/89 in Class A shares and reflects the maximum sales charge of 4.75% on the
initial investment. Performance assumes dividends and capital gains are
reinvested. The performance of other share classes will be greater than that
shown based on differences in inception dates, fees and sales charges.
SECTOR WEIGHTINGS 12/31/99
As a percentage of equity holdings
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Technology 50%
Consumer Cyclicals 18%
Health-Care 13%
Financials 8%
Communication Services 7%
Capital Goods 3%
Consumer Staples 1%
</TABLE>
6
<PAGE>
Phoenix-Engemann Balanced Return Fund
TEN LARGEST HOLDINGS AT DECEMBER 31, 1999 (AS A PERCENTAGE OF TOTAL NET ASSETS)
<TABLE>
<C> <S> <C>
1. U.S. Government Securities 24.5%
U.S. TREASURY BONDS & NOTES
2. Cisco Systems, Inc. 5.4%
LEADING PRODUCER OF SWITCHES AND ROUTERS FOR INTERNETWORKING
3. MCI WorldCom, Inc. 5.1%
COMPREHENSIVE TELECOMMUNICATIONS SERVICE PROVIDER
4. Texas Instruments, Inc. 4.5%
LEADING SUPPLIER OF DIGITAL SIGNAL PROCESSORS FOR THE COMMUNICATION
MARKET
5. Microsoft Corp. 4.2%
WORLD'S LEADING COMPUTER SOFTWARE COMPANY
6. Home Depot, Inc. (The) 4.2%
LEADING HOME IMPROVEMENT RETAILER
7. BMC Software, Inc. 3.7%
DEVELOPER OF IBM-COMPATIBLE SOFTWARE
8. Intel Corp. 3.5%
DESIGNS, DEVELOPS AND MARKETS ADVANCED MICROCOMPUTER COMPONENTS
9. EMC Corp. 2.9%
LEADING SUPPLIER OF ENTERPRISE STORAGE SOLUTIONS
10. Lucent Technologies, Inc. 2.8%
LEADING SUPPLIER OF TELECOMMUNICATIONS EQUIPMENT
</TABLE>
INVESTMENTS AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- -------- ---------------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--24.5%
U.S. TREASURY BONDS--12.9%
U.S. Treasury Bonds 9.25%,
2/15/16....................... AAA $ 18,000 $ 22,223,486
U.S. TREASURY NOTES--11.6%
U.S. Treasury Notes 6.50%,
8/15/05....................... AAA 20,000 19,994,824
- ----------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES
(IDENTIFIED COST $43,430,557) 42,218,310
- ----------------------------------------------------------------------------
<CAPTION>
SHARES
--------
COMMON STOCKS--72.8%
<S> <C> <C> <C>
BANKS (MAJOR REGIONAL)--0.8%
Wells Fargo Co................ 35,000 1,415,312
COMMUNICATIONS EQUIPMENT--5.6%
Lucent Technologies, Inc...... 65,000 4,862,812
Tellabs, Inc.(b).............. 75,000 4,814,062
---------------------
9,676,874
---------------------
COMPUTERS (HARDWARE)--4.5%
Dell Computer Corp.(b)........ 37,000 1,887,000
International Business
Machines Corp................. 16,000 1,728,000
Sun Microsystems, Inc.(b)..... 52,000 4,026,750
---------------------
7,641,750
---------------------
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
COMPUTERS (NETWORKING)--5.4%
Cisco Systems, Inc.(b)........ 87,000 $ 9,319,875
COMPUTERS (PERIPHERALS)--2.9%
EMC Corp.(b).................. 46,000 5,025,500
COMPUTERS (SOFTWARE & SERVICES)--9.6%
America Online, Inc.(b)....... 38,000 2,866,625
BMC Software, Inc.(b)......... 80,000 6,395,000
Microsoft Corp.(b)............ 62,000 7,238,500
---------------------
16,500,125
---------------------
ELECTRICAL EQUIPMENT--1.8%
General Electric Co........... 20,000 3,095,000
ELECTRONICS (SEMICONDUCTORS)--8.0%
Intel Corp.................... 73,000 6,008,812
Texas Instruments, Inc........ 80,000 7,750,000
---------------------
13,758,812
---------------------
FINANCIAL (DIVERSIFIED)--4.6%
American Express Co........... 19,000 3,158,750
Citigroup, Inc................ 70,500 3,917,156
Freddie Mac................... 19,000 894,188
---------------------
7,970,094
---------------------
HEALTH CARE (DIVERSIFIED)--2.6%
Warner-Lambert Co............. 55,000 4,506,563
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--4.5%
Merck & Co., Inc.............. 58,000 3,889,625
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Phoenix-Engemann Balanced Return Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--CONTINUED
Pfizer, Inc................... 120,000 $ 3,892,500
---------------------
7,782,125
---------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--2.2%
Medtronic, Inc................ 104,000 3,789,500
INVESTMENT BANKING/BROKERAGE--0.4%
Merrill Lynch & Co., Inc...... 7,000 584,500
LODGING-HOTELS--1.4%
Carnival Corp................. 50,000 2,390,625
MANUFACTURING (DIVERSIFIED)--0.9%
Tyco International Ltd........ 40,000 1,555,000
RETAIL (BUILDING SUPPLIES)--4.2%
Home Depot, Inc. (The)........ 105,000 7,199,063
RETAIL (DRUG STORES)--0.6%
Walgreen Co................... 36,000 1,053,000
RETAIL (GENERAL MERCHANDISE)--4.7%
Costco Wholesale Corp.(b)..... 30,000 2,737,500
Dayton Hudson Corp.(b)........ 48,000 3,525,000
Wal-Mart Stores, Inc.......... 25,000 1,728,125
---------------------
7,990,625
---------------------
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
RETAIL (SPECIALTY)--0.8%
Staples, Inc.(b).............. 68,000 $ 1,411,000
SERVICES (ADVERTISING/MARKETING)--1.6%
Interpublic Group of Cos.,
Inc. (The).................... 48,000 2,769,000
SERVICES (COMMERCIAL & CONSUMER)--0.6%
Cendant Corp.(b).............. 38,000 1,009,375
TELECOMMUNICATIONS (LONG DISTANCE)--5.1%
MCI WorldCom, Inc.(b)......... 163,500 8,675,719
- ----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $72,614,890) 125,119,437
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS--97.3%
(IDENTIFIED COST $116,045,447) 167,337,747(a)
Cash and receivables, less liabilities--2.7% 4,576,421
---------------------
NET ASSETS--100.0% $ 171,914,168
=====================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $54,354,476 and gross
depreciation of $3,062,176 for federal income tax purposes. At December 31,
1999, the aggregate cost of securities for federal income tax purposes was
$116,045,447.
(b) Non-income producing.
See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Balanced Return Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $116,045,447) $ 167,337,747
Cash 3,240,835
Receivables
Dividends and interest 1,155,077
Fund shares sold 766,688
--------------
Total assets 172,500,347
--------------
LIABILITIES
Payables
Fund shares repurchased 195,930
Distribution fee 181,548
Investment advisory fee 104,046
Administration fee 75,531
Trustees' fee 5,428
Accrued expenses 23,696
--------------
Total liabilities 586,179
--------------
NET ASSETS $ 171,914,168
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 120,639,234
Accumulated net realized loss (17,366)
Net unrealized appreciation 51,292,300
--------------
NET ASSETS $ 171,914,168
==============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $123,482,321) 3,182,804
Net asset value per share $38.80
Offering price per share $38.80/(1-4.75%) $40.73
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $30,579,915) 801,956
Net asset value and offering price per share $38.13
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $17,851,932) 467,186
Net asset value and offering price per share $38.21
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 2,319,314
Dividends 376,564
-------------
Total investment income 2,695,878
-------------
EXPENSES
Investment advisory fee 931,902
Distribution fee, Class A 233,049
Distribution fee, Class B 207,186
Distribution fee, Class C 121,488
Administration 680,433
Professional 20,268
Trustees 12,365
-------------
Total expenses 2,206,691
-------------
NET INVESTMENT INCOME 489,187
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 5,917,606
Net change in unrealized appreciation (depreciation) on
investments 17,431,518
-------------
NET GAIN ON INVESTMENTS 23,349,124
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 23,838,311
=============
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Phoenix-Engemann Balanced Return Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12/31/99 12/31/98
------------ -----------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 489,187 $ 790,648
Net realized gain (loss) 5,917,606 8,795,193
Net change in unrealized appreciation
(depreciation) 17,431,518 11,029,950
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 23,838,311 20,615,791
------------ -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (489,187) (718,900)
Net investment income, Class B -- (51,501)
Net investment income, Class C -- (31,607)
Net realized gains, Class A (6,406,492) (4,454,688)
Net realized gains, Class B (1,606,363) (700,523)
Net realized gains, Class C (906,849) (468,778)
In excess of net investment income,
Class A (25,941) --
In excess of net realized gains,
Class A (29,581) --
In excess of net realized gains,
Class B (7,417) --
In excess of net realized gains,
Class C (4,187) --
------------ -----------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (9,476,017) (6,425,997)
------------ -----------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(1,413,697 and 511,438 shares,
respectively) 51,433,069 16,268,814
Net asset value of shares issued from
reinvestment of distributions
(167,310 and 140,176 shares,
respectively) 6,421,251 4,824,840
Cost of shares repurchased (483,447
and 514,775 shares, respectively) (17,823,682) (16,514,937)
------------ -----------
Total 40,030,638 4,578,717
------------ -----------
CLASS B
Proceeds from sales of shares (521,062
and 131,818 shares, respectively) 18,703,613 4,376,531
Net asset value of shares issued from
reinvestment of distributions
(37,162 and 20,594 shares,
respectively) 1,402,126 699,581
Cost of shares repurchased (91,202 and
72,187 shares, respectively) (3,292,239) (2,275,763)
------------ -----------
Total 16,813,500 2,800,349
------------ -----------
CLASS C
Proceeds from sales of shares (263,121
and 69,806 shares, respectively) 9,526,650 2,171,650
Net asset value of shares issued from
reinvestment of distributions
(21,486 and 13,470 shares,
respectively) 812,372 458,553
Cost of shares repurchased (38,401 and
56,060 shares, respectively) (1,373,573) (1,759,923)
------------ -----------
Total 8,965,449 870,280
------------ -----------
CLASS M
Proceeds from sales of shares (0 and
3,393 shares, respectively) -- 100,100
Cost of shares repurchased (0 and
3,393 shares, respectively) -- (112,685)
------------ -----------
Total -- (12,585)
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARE TRANSACTIONS 65,809,587 8,236,761
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS 80,171,881 22,426,555
------------ -----------
NET ASSETS
Beginning of period 91,742,287 69,315,732
------------ -----------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF $0
AND $0, RESPECTIVELY] $171,914,168 $91,742,287
============ ===========
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Balanced Return Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 34.83 $ 29.05 $ 28.08 $ 25.39 $ 20.54
INCOME FROM INVESTMENT
OPERATIONS(4)
Net investment income (loss) 0.21(1) 0.40 0.30(1) 0.29(1) 0.27(1)
Net realized and unrealized
gain (loss) 6.07 8.03 4.98 4.23 5.31
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS 6.28 8.43 5.28 4.52 5.58
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net
investment income (0.16) (0.40) (0.32) (0.30) (0.29)
Dividends from net realized
gains (2.13) (2.25) (3.99) (1.53) (0.44)
In excess of net investment
income (0.01) -- -- -- --
In excess of net realized
gains (0.01) -- -- -- --
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (2.31) (2.65) (4.31) (1.83) (0.73)
------- ------- ------- ------- -------
Change in net asset value 3.97 5.78 0.97 2.69 4.85
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $38.80 $34.83 $29.05 $28.08 $25.39
======= ======= ======= ======= =======
Total return(2) 18.10% 29.12% 18.98% 17.78% 27.18%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $123,482 $72,620 $56,610 $51,947 $52,028
RATIO TO AVERAGE NET ASSETS
OF:
Operating expenses 1.56% 1.63% 1.7%(3) 2.0%(3) 2.1%
Net investment income (loss) 0.58% 1.15% 1.0% 1.1% 1.2%
Portfolio turnover 41% 124% 40.3% 35.1% 51.1%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratios of operating expenses to average net assets would have been 1.70%
and 2.10% for the periods ended December 31, 1997 and 1996, respectively.
(4) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
See Notes to Financial Statements
11
<PAGE>
Phoenix-Engemann Balanced Return Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $34.37 $28.76 $27.85 $25.26 $20.49
INCOME FROM INVESTMENT OPERATIONS(4)
Net investment income (loss) (0.06)(1) 0.13 0.08(1) 0.09(1) 0.08(1)
Net realized and unrealized gain
(loss) 5.96 7.91 4.93 4.16 5.29
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 5.90 8.04 5.01 4.25 5.37
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.18) (0.11) (0.13) (0.16)
Dividends from net realized gains (2.13) (2.25) (3.99) (1.53) (0.44)
In excess of net realized gains (0.01) -- -- -- --
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (2.14) (2.43) (4.10) (1.66) (0.60)
------- ------- ------- ------- -------
Change in net asset value 3.76 5.61 0.91 2.59 4.77
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $38.13 $34.37 $28.76 $27.85 $25.26
======= ======= ======= ======= =======
Total return(2) 17.22 % 28.06% 18.15% 16.82% 26.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $30,580 $11,512 $7,125 $4,609 $2,721
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.30 % 2.38% 2.4%(3) 2.7%(3) 2.9%
Net investment income (loss) (0.16)% 0.39% 0.3% 0.3% 0.3%
Portfolio turnover 41 % 124% 40.3% 35.1% 51.1%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 34.44 $ 28.80 $ 27.88 $ 25.28 $ 20.48
INCOME FROM INVESTMENT OPERATIONS(4)
Net investment income (loss) (0.06)(1) 0.14 0.08(1) 0.09(1) 0.07(1)
Net realized and unrealized gain
(loss) 5.97 7.92 4.92 4.16 5.30
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 5.91 8.06 5.00 4.25 5.37
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.17) (0.09) (0.12) (0.13)
Dividends from net realized gains (2.13) (2.25) (3.99) (1.53) (0.44)
In excess of net realized gains (0.01) -- -- -- --
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (2.14) (2.42) (4.08) (1.65) (0.57)
------- ------- ------- ------- -------
Change in net asset value 3.77 5.64 0.92 2.60 4.80
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $38.21 $34.44 $28.80 $27.88 $25.28
======= ======= ======= ======= =======
Total return(2) 17.22 % 28.07% 18.11% 16.79% 26.23%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $17,852 $7,610 $5,581 $4,183 $2,809
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.30 % 2.38% 2.4%(3) 2.7%(3) 2.9%
Net investment income (loss) (0.16)% 0.39% 0.3% 0.3% 0.3%
Portfolio turnover 41 % 124% 40.3% 35.1% 51.1%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratios of operating expenses to average net assets would have been 2.50%
and 2.80% for the periods ended December 31, 1997 and 1996, respectively.
(4) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
12
See Notes to Financial Statements
<PAGE>
PHOENIX-ENGEMANN FOCUS GROWTH FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGEMENT TEAM
Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A: The Fund's investment objective is long-term growth of capital.
Q: WHY WAS THE FUND'S NAME CHANGED?
A: We now manage three funds, using our growth approach. The distinguishing
feature of each fund is the number of stocks it holds, which offers investors a
choice in their level of diversification. The Phoenix-Engemann Focus Growth Fund
will typically hold 25-35 stocks.
Q: HOW DID THE FUND PERFORM OVER THE LAST YEAR?
A: For the 12 months ended December 31, 1999, Class A shares returned 49.74%,
Class B shares returned 48.64%, and Class C shares returned 48.64% compared with
a return of 21.14% for the S&P 500 Index(1) and an average return of 38.09% for
a peer universe of 364 growth funds, according to Lipper, Inc. Investors should
consider all performance periods and the effect of the past 12 months' strong
stock market when evaluating funds. All performance figures assume the
reinvestment of distributions and exclude the effect of sales charges.
Q: WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE RESULTS?
A: An emphasis on technology stocks, which we continued to overweight throughout
the year, coupled with good stock selection across several sectors, benefited
performance. We focused on companies that we believed were well positioned
within the fastest growing sectors of the economy. For example, we owned JDS
Uniphase, Nokia, and QUALCOMM, leaders in the rapidly developing wireless and
broadband sector of the telecommunications industry. In addition, several
consumer cyclical holdings performed very well, including Costco, Home Depot,
and Wal-Mart.
Our decision to decrease portfolio exposure to several sectors that lagged
the market also enhanced performance. Primarily, we lowered or eliminated our
exposure to financials, consumer staples, and health-care stocks.
Q: WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
A: We continue to believe a company's earnings growth is key to its stock price.
As in 1999, the market is likely to highly reward companies with demonstrated
earnings power and severely punish companies that disappoint. We expect many
exciting growth stories to continue to come from the technology sector. With
consumers' rapid acceptance of the Internet, the build-out of broadband and
wireless infrastructure has been accelerated. This should ensure another year of
buoyant profit for leading networking and computer companies.
JANUARY 31, 2000
(1) THE S&P 500 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF STOCK MARKET
TOTAL RETURN PERFORMANCE. THE INDEX IS NOT AVAILABLE FOR DIRECT INVESTMENT.
13
<PAGE>
Phoenix-Engemann Focus Growth Fund
AVERAGE ANNUAL TOTAL RETURNS(1) PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
INCEPTION INCEPTION
1 YEAR 5 YEARS 10 YEARS TO 12/31/99 DATE
------- ------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Class A Shares at NAV(2) 49.74% 30.04% 18.63% -- --
Class A Shares at POP(3) 42.63 28.78 18.05 -- --
Class B Shares at NAV(2) 48.64 29.06 -- 22.91% 1/3/94
Class B Shares with CDSC(4) 44.64 29.06 -- 22.91 1/3/94
Class C Shares at NAV(2) 48.64 29.06 -- 22.91 1/3/94
Class C Shares with CDSC(4) 48.64 29.06 -- 22.91 1/3/94
S&P 500 Index(6) 21.14 28.66 18.25 23.71 1/3/94
</TABLE>
(1) Total returns are historical and include changes in share price and the
reinvestment of both dividends and capital gains distributions.
(2) "NAV" (Net Asset Value) total returns do not include the effect of any
sales charge.
(3) "POP" (Public Offering Price) total returns include the effect of the
maximum front-end 4.75% sales charge. Prior to 1/20/98, the maximum
front-end sales charge was 5.5%.
(4) CDSC (contingent deferred sales charge) is applied to redemptions of
certain classes of shares that do not have a sales charge applied at the
time of purchase. CDSC charges for B shares decline from 5% to 0% over a
five year period. CDSC charges for C shares are 1% in the first year and 0%
thereafter.
(5) This chart illustrates POP returns on Class A Shares for ten years. Returns
on Class B and Class C Shares will vary due to differing sales charges.
(6) The S&P 500 Index is an unmanaged, commonly used measure of stock market
total return performance. The Index's performance does not reflect sales
charges.
All returns represent past performance which may not be indicative of
future performance. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
GROWTH OF $10,000 PERIODS ENDING 12/31
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PHOENIX-ENGEMANN FOCUS GROWTH FUND CLASS A(5) S&P 500 INDEX(6)
<S> <C> <C>
89 $9,525.00 $10,000.00
90 $9,092.00 $9,681.00
91 $15,260.00 $12,637.00
92 $15,602.00 $13,609.00
93 $14,686.00 $14,970.00
94 $14,135.00 $15,168.00
95 $17,974.00 $20,857.00
96 $22,017.00 $25,706.00
97 $25,547.00 $34,286.00
98 $35,106.00 $44,145.00
99 $52,567.00 $53,476.00
</TABLE>
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
12/31/89 in Class A shares and reflects the maximum sales charge of 4.75% on the
initial investment. Performance assumes dividends and capital gains are
reinvested. The performance of other share classes will be greater or less than
that shown based on differences in inception dates, fees and sales charges.
SECTOR WEIGHTINGS 12/31/99
As a percentage of equity holdings
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Technology 61%
Consumer Cyclicals 13%
Health-Care 9%
Financials 8%
Communication Services 4%
Capital Goods 3%
Transportation 1%
Other 1%
</TABLE>
14
<PAGE>
Phoenix-Engemann Focus Growth Fund
TEN LARGEST HOLDINGS AT DECEMBER 31, 1999 (AS A PERCENTAGE OF TOTAL NET ASSETS)
<TABLE>
<C> <S> <C>
1. Cisco Systems, Inc. 8.1%
LEADING PRODUCER OF SWITCHES AND ROUTERS FOR INTERNETWORKING
2. Texas Instruments, Inc. 7.0%
LEADING SUPPLIER OF DIGITAL SIGNAL PROCESSORS FOR THE COMMUNICATION
MARKET
3. America Online, Inc. 5.6%
MAJOR PROVIDER OF ONLINE SERVICES TO CUSTOMERS
4. Microsoft Corp. 5.4%
WORLD'S LEADING COMPUTER SOFTWARE COMPANY
5. JDS Uniphase Corp. 4.7%
DIVERSIFIED ELECTRONICS MANUFACTURER
6. MCI WorldCom, Inc. 4.1%
LEADING TELECOMMUNICATIONS SERVICE PROVIDER
7. Yahoo!, Inc. 3.9%
FIRST ONLINE NAVIGATIONAL GUIDE TO THE WORLD WIDE WEB
8. Lucent Technologies, Inc. 3.8%
LEADING SUPPLIER OF TELECOMMUNICATIONS EQUIPMENT
9. QUALCOMM, Inc. 3.6%
A LEADER PROVIDER OF DIGITAL WIRELESS COMMUNICATIONS PRODUCTS
10. General Electric Co. 3.3%
DIVERSIFIED MANUFACTURING AND FINANCIAL SERVICES PROVIDER
</TABLE>
INVESTMENTS AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
------------ ------------
<S> <C> <C> <C>
COMMON STOCKS--95.8%
BROADCASTING (TELEVISION, RADIO & CABLE)--1.0%
Clear Channel Communications, Inc.(b)... 85,000 $ 7,586,250
COMMUNICATIONS EQUIPMENT--10.2%
Lucent Technologies, Inc................ 396,000 29,625,750
QUALCOMM, Inc.(b)....................... 160,000 28,200,000
Tellabs, Inc.(b)........................ 341,100 21,894,356
------------
79,720,106
------------
COMPUTERS (HARDWARE)--5.1%
Dell Computer Corp.(b).................. 300,000 15,300,000
International Business Machines Corp.... 100,000 10,800,000
Sun Microsystems, Inc.(b)............... 185,000 14,325,937
------------
40,425,937
------------
COMPUTERS (NETWORKING)--8.1%
Cisco Systems, Inc.(b).................. 592,224 63,441,996
COMPUTERS (PERIPHERALS)--3.3%
EMC Corp.(b)............................ 234,000 25,564,500
COMPUTERS (SOFTWARE & SERVICES)--16.4%
America Online, Inc.(b)................. 584,000 44,055,500
BMC Software, Inc.(b)................... 150,000 11,990,625
Microsoft Corp.(b)...................... 362,600 42,333,550
Yahoo!, Inc.(b)......................... 70,000 30,288,125
------------
128,667,800
------------
ELECTRICAL EQUIPMENT--3.3%
General Electric Co..................... 170,000 26,307,500
<CAPTION>
SHARES VALUE
------------ ------------
<S> <C> <C> <C>
ELECTRONICS (SEMICONDUCTORS)--14.9%
Intel Corp.............................. 252,800 $ 20,808,600
JDS Uniphase Corp.(b)................... 230,000 37,101,875
Texas Instruments, Inc.................. 569,200 55,141,250
Xilinx, Inc.(b)......................... 85,000 3,864,844
------------
116,916,569
------------
FINANCIAL (DIVERSIFIED)--4.3%
American Express Co..................... 94,000 15,627,500
Citigroup, Inc.......................... 330,000 18,335,625
------------
33,963,125
------------
HEALTH CARE (DIVERSIFIED)--1.8%
Warner-Lambert Co....................... 170,000 13,929,375
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--5.4%
Genentech, Inc.(b)...................... 86,000 11,567,000
Merck & Co., Inc........................ 208,200 13,962,412
Pfizer, Inc............................. 511,800 16,601,512
------------
42,130,924
------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.4%
Medtronic, Inc.......................... 300,200 10,938,538
INVESTMENT BANKING/BROKERAGE--3.1%
Goldman Sachs Group, Inc. (The)......... 100,000 9,418,750
Merrill Lynch & Co., Inc................ 176,000 14,696,000
------------
24,114,750
------------
LODGING-HOTELS--1.8%
Carnival Corp........................... 302,200 14,448,938
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Phoenix-Engemann Focus Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
------------ ------------
RETAIL (BUILDING SUPPLIES)--3.3%
<S> <C> <C> <C>
Home Depot, Inc. (The).................. 375,000 $ 25,710,938
RETAIL (DEPARTMENT STORES)--1.8%
Kohl's Corp.(b)......................... 192,700 13,910,531
RETAIL (GENERAL MERCHANDISE)--3.4%
Costco Wholesale Corp.(b)............... 95,000 8,668,750
Wal-Mart Stores, Inc.................... 259,000 17,903,375
------------
26,572,125
------------
SERVICES (COMMERCIAL & CONSUMER)--2.1%
Cendant Corp.(b)........................ 636,833 16,915,877
TELECOMMUNICATIONS (LONG DISTANCE)--4.1%
MCI WorldCom, Inc.(b)................... 610,500 32,394,656
TRUCKERS --1.0%
United Parcel Service, Inc.............. 119,500 8,245,500
- ------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $301,975,818) 751,905,935
- ------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
------------ ------------
<S> <C> <C> <C>
FOREIGN COMMON STOCKS--1.5%
COMMUNICATIONS EQUIPMENT--1.5%
Nokia Oyj Sponsored ADR (Finland)....... 60,000 $ 11,400,000
- ------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $5,899,206) 11,400,000
- ------------------------------------------------------------------------
TOTAL INVESTMENTS--97.3%
(IDENTIFIED COST $307,875,024) 763,305,935(a)
Cash and receivables, less liabilities--2.7% 21,150,877
------------
NET ASSETS--100.0% $784,456,812
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $457,362,169 and gross
depreciation of $1,931,258 for federal income tax purposes. At December
31,1999, the aggregate cost of securities for federal income tax purposes
was $307,875,024.
(b) Non-income producing.
16
See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Focus Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $307,875,024) $ 763,305,935
Cash 26,335,210
Receivables
Fund shares sold 1,217,125
Dividends and interest 315,122
--------------
Total assets 791,173,392
--------------
LIABILITIES
Payables
Investment securities purchased 3,856,374
Fund shares repurchased 853,601
Option written, at value (premium received $1,017,416) 478,125
Distribution fee 699,102
Investment advisory fee 491,860
Administration fee 290,813
Trustees' fee 5,428
Accrued expenses 41,277
--------------
Total liabilities 6,716,580
--------------
NET ASSETS $ 784,456,812
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 328,486,610
Net unrealized appreciation 455,970,202
--------------
NET ASSETS $ 784,456,812
==============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $621,386,162) 18,692,221
Net asset value per share $33.24
Offering price per share $33.24/(1-4.75%) $34.90
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $106,372,106) 3,435,022
Net asset value and offering price per share $30.97
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $56,698,544) 1,830,971
Net asset value and offering price per share $30.97
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 2,071,025
Interest 997,025
--------------
Total investment income 3,068,050
--------------
EXPENSES
Investment advisory fee 4,836,987
Distribution fee, Class A 1,232,638
Distribution fee, Class B 787,057
Distribution fee, Class C 410,207
Administration 2,981,416
Professional 48,594
Trustees 13,620
--------------
Total expenses 10,310,519
--------------
NET INVESTMENT LOSS (7,242,469)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 85,809,182
Net realized gain on written options 672,473
Net change in unrealized appreciation (depreciation) on
investments 184,418,047
Net change in unrealized appreciation (depreciation) on
written options 539,291
--------------
NET GAIN ON INVESTMENTS 271,438,993
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 264,196,524
==============
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Phoenix-Engemann Focus Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12/31/99 12/31/98
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (7,242,469) $ (4,059,521)
Net realized gain (loss) 86,481,655 77,363,122
Net change in unrealized appreciation
(depreciation) 184,957,338 80,943,604
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 264,196,524 154,247,205
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (103,359,347) (19,191,036)
Net realized gains, Class B (18,563,891) (3,003,744)
Net realized gains, Class C (9,894,149) (1,570,635)
In excess of net realized gains, Class
A (2,793,835) --
In excess of net realized gains, Class
B (501,788) --
In excess of net realized gains, Class
C (267,443) --
------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (135,380,453) (23,765,415)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(2,437,653 and 554,463 shares,
respectively) 77,978,236 12,769,077
Net asset value of shares issued from
reinvestment of distributions
(2,932,699 and 665,077 shares,
respectively) 95,019,463 17,245,429
Cost of shares repurchased (3,126,770
and 3,536,921 shares, respectively) (98,805,876) (79,785,149)
------------ ------------
Total 74,191,823 (49,770,643)
------------ ------------
CLASS B
Proceeds from sales of shares (672,999
and 245,967 shares, respectively) 19,484,473 5,372,379
Net asset value of shares issued from
reinvestment of distributions
(575,602 and 110,700 shares,
respectively) 17,377,421 2,728,756
Cost of shares repurchased (402,631
and 534,746 shares, respectively) (11,482,014) (11,527,013)
------------ ------------
Total 25,379,880 (3,425,878)
------------ ------------
CLASS C
Proceeds from sales of shares (417,135
and 164,645 shares, respectively) 12,312,851 3,582,593
Net asset value of shares issued from
reinvestment of distributions
(308,840 and 58,568 shares,
respectively) 9,323,884 1,443,709
Cost of shares repurchased (251,773
and 356,278 shares, respectively) (7,279,393) (7,561,830)
------------ ------------
Total 14,357,342 (2,535,528)
------------ ------------
CLASS M
Proceeds from sales of shares (0 and
4,866 shares, respectively) -- 100,100
Cost of shares repurchased (0 and
4,866 shares, respectively) -- (108,609)
------------ ------------
Total -- (8,509)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARE TRANSACTIONS 113,929,045 (55,740,558)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 242,745,116 74,741,232
NET ASSETS
Beginning of period 541,711,696 466,970,464
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
$0 AND $0, RESPECTIVELY] $784,456,812 $541,711,696
============ ============
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Focus Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 26.82 $ 20.43 $ 21.94 $ 19.28 $ 15.40
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.31) (0.16) (0.16) (0.14) (0.06)
Net realized and unrealized gain
(loss) 13.48 7.76 3.51 4.47 4.24
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 13.17 7.60 3.35 4.33 4.18
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (6.57) (1.21) (4.86) (1.67) (0.30)
In excess of net realized gains (0.18) -- -- -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (6.75) (1.21) (4.86) (1.67) (0.30)
-------- -------- -------- -------- --------
Change in net asset value 6.42 6.39 (1.51) 2.66 3.88
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 33.24 $ 26.82 $ 20.43 $ 21.94 $ 19.28
======== ======== ======== ======== ========
Total return(2) 49.74 % 37.41 % 16.04 % 22.49 % 27.16 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $621,386 $441,146 $383,481 $426,785 $415,416
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.54 % 1.58 % 1.6 %(3) 1.6 %(3) 1.6 %
Net investment income (loss) (1.04)% (0.72)% (0.7)% (0.6)% (0.3)%
Portfolio turnover 56 % 119 % 70.6 % 70.1 % 65.9 %
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.60% and
1.60% for the periods ended December 31, 1997 and 1996, respectively.
See Notes to Financial Statements
19
<PAGE>
Phoenix-Engemann Focus Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.49 $ 19.61 $ 21.40 $ 18.99 $ 15.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.51) (0.32) (0.34) (0.31) (0.20)
Net realized and unrealized gain
(loss) 12.74 7.41 3.41 4.39 4.21
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 12.23 7.09 3.07 4.08 4.01
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (6.57) (1.21) (4.86) (1.67) (0.30)
In excess of net realized gains (0.18) -- -- -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (6.75) (1.21) (4.86) (1.67) (0.30)
-------- -------- -------- -------- --------
Change in net asset value 5.48 5.88 (1.79) 2.41 3.71
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 30.97 $ 25.49 $ 19.61 $ 21.40 $ 18.99
======== ======== ======== ======== ========
Total return(2) 48.64 % 36.38 % 15.13 % 21.52 % 26.26 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $106,372 $65,986 $54,267 $49,444 $34,786
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.29 % 2.33 % 2.4 %(3) 2.3 %(3) 2.4 %
Net investment income (loss) (1.78)% (1.47)% (1.5)% (1.5)% (1.1)%
Portfolio turnover 56 % 119 % 70.6 % 70.1 % 65.9 %
</TABLE>
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.49 $ 19.61 $ 21.40 $ 18.99 $ 15.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.51) (0.32) (0.34) (0.31) (0.20)
Net realized and unrealized gain
(loss) 12.74 7.41 3.41 4.39 4.21
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 12.23 7.09 3.07 4.08 4.01
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (6.57) (1.21) (4.86) (1.67) (0.30)
In excess of net realized gains (0.18) -- -- -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (6.75) (1.21) (4.86) (1.67) (0.30)
-------- -------- -------- -------- --------
Change in net asset value 5.48 5.88 (1.79) 2.41 3.71
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 30.97 $ 25.49 $ 19.61 $ 21.40 $ 18.99
======== ======== ======== ======== ========
Total return(2) 48.64 % 36.38 % 15.13 % 21.52 % 26.26 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $56,699 $34,580 $29,222 $27,239 $20,497
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.29 % 2.33 % 2.4 %(3) 2.3 %(3) 2.4 %
Net investment income (loss) (1.78)% (1.47)% (1.5)% (1.5)% (1.1)%
Portfolio turnover 56 % 119 % 70.6 % 70.1 % 65.9 %
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.40% and
2.40% for the periods ended December 31, 1997 and 1996, respectively.
20
See Notes to Financial Statements
<PAGE>
PHOENIX-ENGEMANN NIFTY FIFTY FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGERS, ROGER ENGEMANN, CFA,
JAMES MAIR, CFA, AND JOHN TILSON, CFA
Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A: The Fund has an investment objective of long-term growth of capital.
Q: HOW DID THE FUND PERFORM FOR THE FISCAL YEAR?
A: We seek to achieve long-term capital appreciation by investing in
approximately 50 companies that the portfolio management team considers to have
the best prospects for appreciation potential. Our approach has been well
rewarded this year. For the 12 months ended December 31, 1999, Class A shares
returned 32.47%, Class B shares returned 31.47%, and Class C shares returned
31.47% compared with a return of 21.14% for the S&P 500 Index(1). All
performance figures assume the reinvestment of distributions and exclude the
effect of sales charges.
Q: WHAT FACTORS AFFECTED PERFORMANCE IN 1999?
A: While many of the major markets posted new highs, it wasn't a free-for-all
for stocks in general. Well over half the stocks on the New York Stock Exchange
and even the high-flying Nasdaq were selling at lower prices at year-end then
they did at the beginning of the year. Clearly it was a year in which good stock
selection reigned supreme. Our ratio of winners to losers was encouraging.
Another factor contributing to performance was the fact that many of the big
winners were also widely held positions.
Q: WHAT INDUSTRY SECTORS WAS THE PORTFOLIO INVESTED IN PRIMARILY?
A: Tech stocks were the runaway market leaders in 1999, and we were rewarded for
our increased emphasis on this sector. It is interesting to note that the return
for the S&P 500 Index excluding technology stocks was only 3.1%. Many of the
Fund's largest holdings were tech stocks, some with gains of 100% plus.
The portfolio also benefited from underweighted positions in financials and
health care, which lagged the market for the year. However, careful stock
selection within the financial group proved to be a plus, with both Citigroup
and American Express up substantially for the year. Several consumer cyclical
stocks also enhanced performance; for example, Home Depot, Wal-Mart, and
Interpublic Group.
Q: WHAT WERE SOME OF THE MORE DISAPPOINTING HOLDINGS IN THE PORTFOLIO?
A: Staples, one of the three major players in the office products and supplies
industry, underperformed last year due to uncertainties about industry
saturation and the company's Internet strategy. However, we continue to be
optimistic regarding the company's stock and long-term outlook. Freddie Mac was
one of many financial companies victimized by political and interest rate
concerns during the year. But, again we are positive on the stock and believe
strong earnings growth should bolster the potential for future price
appreciation. Another holding that lost ground this year was Pfizer, which was
hurt by worries over
(1) THE S&P 500 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF STOCK MARKET
TOTAL RETURN PERFORMANCE. THE INDEX IS NOT AVAILABLE FOR DIRECT INVESTMENT.
21
<PAGE>
PHOENIX-ENGEMANN NIFTY FIFTY FUND (CONTINUED)
health-care reform. Because of its high valuation, the stock suffered more than
some other pharmaceuticals, but we feel solid fundamentals will eventually put
the company back in the winning column.
Q: WHAT IS YOUR CURRENT OUTLOOK?
A: With lofty stock prices and the relentless market climb, particularly in
dot.com issues, there is apt to be a large dose of volatility ahead. Signs of
that have already emerged in the early days of 2000. The threat of rising
interest rates will also add to nervous investor behavior.
However, even with the expected hikes in interest rates, there appears
little on the horizon that could cause a dramatic reversal in the coming months.
The economy is strong, inflation looks as if it will remain tame, and the
outlook for earnings appears positive. Such ingredients are typically conducive
to a healthy stock market in which high quality, large-cap companies prosper.
JANUARY 28, 2000
22
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
AVERAGE ANNUAL TOTAL RETURNS(1) PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
INCEPTION INCEPTION
1 YEAR 5 YEAR TO 12/31/99 DATE
-------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Class A Shares at NAV(2) 32.47% 28.19% 21.97% 12/17/90
Class A Shares at POP(3) 26.18 26.95 21.32 12/17/90
Class B Shares at NAV(2) 31.47 27.24 22.44 1/3/94
Class B Shares with CDSC(4) 27.47 27.24 22.44 1/3/94
Class C Shares at NAV(2) 31.47 27.24 22.44 1/3/94
Class C Shares with CDSC(4) 31.47 27.24 22.44 1/3/94
S&P 500 Index(7) 21.14 28.66 Note 5 Note 5
</TABLE>
(1) Total returns are historical and include changes in share price and the
reinvestment of both dividends and capital gains distributions.
(2) "NAV" (Net Asset Value) total returns do not include the effect of any
sales charge.
(3) "POP" (Public Offering Price) total returns include the effect of the
maximum front-end 4.75% sales charge. Prior to 1/20/98, the maximum
front-end sales charge was 5.5%.
(4) CDSC (contingent deferred sales charge) is applied to redemptions of
certain classes of shares that do not have a sales charge applied at the
time of purchase. CDSC charges for B shares decline from 5% to 0% over a
five year period. CDSC charges for C shares are 1% in the first year and 0%
thereafter.
(5) Index performance is 21.00% for Class A (since 12/17/90) and 23.71% for
Class B and C (since 1/3/94), respectively.
(6) This chart illustrates POP returns on Class A Shares only. Returns on
Class B and Class C Shares will vary due to differing sales charges.
(7) The S&P 500 Index is an unmanaged, commonly used measure of stock market
total return performance. The Index's performance does not reflect sales
charges.
All returns represent past performance which may not be indicative of
future performance. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
GROWTH OF $10,000 PERIODS ENDING 12/31
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PHOENIX-ENGEMANN NIFTY FIFTY FUND CLASS A(6) S&P 500 INDEX(7)
<S> <C> <C>
90 $9,525.00 $10,000.00
90 $9,489.00 $10,142.00
91 $15,908.00 $13,239.00
92 $16,493.00 $14,258.00
93 $16,407.00 $15,683.00
94 $16,579.00 $15,891.00
95 $21,256.00 $21,851.00
96 $26,894.00 $26,931.00
97 $32,064.00 $35,920.00
98 $43,329.00 $46,249.00
99 $57,400.00 $56,023.00
</TABLE>
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
12/17/90 in Class A shares and reflects the maximum sales charge of 4.75% on the
initial investment. Performance assumes dividends and capital gains are
reinvested. The performance of other share classes will be greater or less than
that shown based on differences in inception dates, fees and sales charges.
SECTOR WEIGHTINGS 12/31/99
As a percentage of equity holdings
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Technology 49%
Consumer Cyclicals 17%
Financials 10%
Health-Care 10%
Communication Services 6%
Capital Goods 4%
Consumer Staples 4%
</TABLE>
23
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
TEN LARGEST HOLDINGS AT DECEMBER 31, 1999 (AS A PERCENTAGE OF TOTAL NET ASSETS)
<TABLE>
<C> <S> <C>
1. EMC Corp. 7.0%
LEADING SUPPLIER OF ENTERPRISE STORAGE SOLUTIONS
2. Cisco Systems, Inc. 6.0%
LEADING PRODUCER OF SWITCHES AND ROUTERS FOR INTERNETWORKING
3. Microsoft Corp. 5.9%
WORLD'S LEADING COMPUTER SOFTWARE COMPANY
4. Texas Instruments, Inc. 5.7%
LEADING SUPPLIER OF DIGITAL SIGNAL PROCESSORS FOR THE COMMUNICATION
MARKET
5. MCI WorldCom, Inc. 5.5%
LEADING TELECOMMUNICATIONS SERVICE PROVIDER
6. Home Depot, Inc. (The) 4.0%
LEADING HOME IMPROVEMENT RETAILER
7. Lucent Technologies, Inc. 3.9%
LEADING SUPPLIER OF TELECOMMUNICATIONS EQUIPMENT
8. America Online, Inc. 3.6%
MAJOR PROVIDER OF ONLINE SERVICES TO CONSUMERS
9. Intel Corp. 3.4%
DESIGNS, DEVELOPS AND MARKETS ADVANCED MICROCOMPUTER COMPONENTS
10. General Electric Co. 2.9%
DIVERSIFIED MANUFACTURING AND FINANCIAL SERVICES PROVIDER
</TABLE>
INVESTMENTS AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMMON STOCKS--96.6%
BANKS (MAJOR REGIONAL)--1.0%
Wells Fargo Co.......................... 134,400 $ 5,434,800
BROADCASTING (TELEVISION, RADIO & CABLE)--0.6%
AT&T Corp.-Liberty Media Group Class
A(b).................................... 53,000 3,007,750
COMMUNICATIONS EQUIPMENT--6.8%
Lucent Technologies, Inc................ 280,000 20,947,500
Tellabs, Inc.(b)........................ 240,000 15,405,000
------------
36,352,500
------------
COMPUTERS (HARDWARE)--4.7%
Dell Computer Corp.(b).................. 100,000 5,100,000
International Business Machines Corp.... 100,000 10,800,000
Sun Microsystems, Inc.(b)............... 120,000 9,292,500
------------
25,192,500
------------
COMPUTERS (NETWORKING)--6.0%
Cisco Systems, Inc.(b).................. 295,874 31,695,502
COMPUTERS (PERIPHERALS)--7.0%
EMC Corp.(b)............................ 340,000 37,145,000
COMPUTERS (SOFTWARE & SERVICES)--12.1%
America Online, Inc.(b)................. 252,000 19,010,250
BMC Software, Inc.(b)................... 120,000 9,592,500
Compuware Corp.(b)...................... 114,000 4,246,500
Microsoft Corp.(b)...................... 268,800 31,382,400
------------
64,231,650
------------
CONSUMER FINANCE--1.2%
MBNA Corp............................... 225,000 6,131,250
ELECTRICAL EQUIPMENT--2.9%
General Electric Co..................... 100,000 15,475,000
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
ELECTRONICS (SEMICONDUCTORS)--9.1%
Intel Corp.............................. 223,000 $ 18,355,687
Texas Instruments, Inc.................. 311,000 30,128,125
------------
48,483,812
------------
ENTERTAINMENT--0.9%
Time Warner, Inc........................ 65,000 4,708,437
FINANCIAL (DIVERSIFIED)--6.1%
American Express Co..................... 40,000 6,650,000
Citigroup, Inc.......................... 225,000 12,501,562
Freddie Mac............................. 100,000 4,706,250
Morgan Stanley Dean Witter & Co......... 60,000 8,565,000
------------
32,422,812
------------
HEALTH CARE (DIVERSIFIED)--1.0%
Warner-Lambert Co....................... 65,000 5,325,937
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--6.0%
Genentech, Inc.(b)...................... 60,000 8,070,000
Merck & Co., Inc........................ 112,600 7,551,238
Pfizer, Inc............................. 365,850 11,867,259
Schering-Plough Corp.................... 100,000 4,218,750
------------
31,707,247
------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--2.8%
Guidant Corp.(b)........................ 65,000 3,055,000
Medtronic, Inc.......................... 322,600 11,754,738
------------
14,809,738
------------
INVESTMENT BANKING/BROKERAGE--1.6%
Goldman Sachs Group, Inc. (The)......... 32,000 3,014,000
Merrill Lynch & Co., Inc................ 66,000 5,511,000
------------
8,525,000
------------
LODGING-HOTELS--1.7%
Carnival Corp........................... 189,700 9,070,031
</TABLE>
24 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
MANUFACTURING (DIVERSIFIED)--1.2%
Tyco International Ltd.................. 90,000 $ 3,498,750
United Technologies Corp................ 40,000 2,600,000
------------
6,098,750
------------
PERSONAL CARE--0.7%
Gillette Co. (The)...................... 83,600 3,443,275
RETAIL (BUILDING SUPPLIES)--5.1%
Home Depot, Inc. (The).................. 307,500 21,082,969
Lowe's Companies., Inc.................. 100,300 5,992,925
------------
27,075,894
------------
RETAIL (COMPUTERS & ELECTRONICS)--1.5%
Best Buy Co., Inc.(b)................... 68,000 3,412,750
Circuit City Stores-Circuit City
Group................................... 100,000 4,506,250
------------
7,919,000
------------
RETAIL (DEPARTMENT STORES)--0.5%
Kohl's Corp.(b)......................... 40,000 2,887,500
RETAIL (DRUG STORES)--1.0%
Walgreen Co............................. 190,000 5,557,500
RETAIL (GENERAL MERCHANDISE)--3.6%
Dayton Hudson Corp.(b).................. 75,000 5,507,813
Wal-Mart Stores, Inc.................... 195,000 13,479,375
------------
18,987,188
------------
RETAIL (SPECIALTY)--1.1%
Staples, Inc.(b)........................ 279,750 5,804,813
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
SERVICES (ADVERTISING/MARKETING)--1.3%
Interpublic Group of Companies, Inc.
(The)................................... 120,000 $ 6,922,500
SERVICES (COMMERCIAL & CONSUMER)--1.6%
Cendant Corp.(b)........................ 325,500 8,646,094
SERVICES (COMPUTER SYSTEMS)--2.0%
Electronic Data Systems Corp............ 160,000 10,710,000
TELECOMMUNICATIONS (LONG DISTANCE)--5.5%
MCI WorldCom, Inc.(b)................... 553,500 29,370,094
- --------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $240,849,873) 513,141,574
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOREIGN COMMON STOCKS--0.5%
ENTERTAINMENT--0.5%
News Corporation Ltd. (The)
Sponsored ADR
(Australia)................ 66,000 2,524,500
- --------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $2,629,211) 2,524,500
- --------------------------------------------------------------------
TOTAL INVESTMENTS--97.1%
(IDENTIFIED COST $243,479,084) 515,666,074(a)
Cash and receivables, less liabilities--2.9% 15,133,167
---------------------
NET ASSETS--100.0% $ 530,799,241
=====================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $274,647,417 and gross
depreciation of $5,807,049 for federal income tax purposes. At December 31,
1999, the aggregate cost of securities for federal income tax purposes was
$246,825,706.
(b) Non-income producing.
See Notes to Financial Statements
25
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $243,479,084) $ 515,666,074
Cash 15,980,207
Receivables
Fund shares sold 925,740
Dividends and interest 156,622
--------------
Total assets 532,728,643
--------------
LIABILITIES
Payables
Fund shares repurchased 650,295
Distribution fee 663,436
Investment advisory fee 353,395
Administration fee 221,916
Trustees' fee 5,428
Accrued expenses 34,932
--------------
Total liabilities 1,929,402
--------------
NET ASSETS $ 530,799,241
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 260,874,252
Accumulated net realized loss (2,262,001)
Net unrealized appreciation 272,186,990
--------------
NET ASSETS $ 530,799,241
==============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $321,298,548) 6,960,086
Net asset value per share $46.16
Offering price per share $46.16/(1-4.75%) $48.46
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $138,625,558) 3,173,377
Net asset value and offering price per share $43.68
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $70,875,135) 1,622,576
Net asset value and offering price per share $43.68
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 1,933,467
Interest 787,659
--------------
Total investment income 2,721,126
--------------
EXPENSES
Investment advisory fee 3,571,794
Distribution fee, Class A 675,811
Distribution fee, Class B 1,137,569
Distribution fee, Class C 563,625
Administration 2,250,464
Professional 36,407
Trustees 17,045
--------------
Total expenses 8,252,715
--------------
NET INVESTMENT LOSS (5,531,589)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 40,441,424
Net change in unrealized appreciation (depreciation) on
investments 93,107,575
--------------
NET GAIN ON INVESTMENTS 133,548,999
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 128,017,410
==============
</TABLE>
26 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12/31/99 12/31/98
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (5,531,589) $ (2,852,205)
Net realized gain (loss) 40,441,424 24,005,577
Net change in unrealized appreciation
(depreciation) 93,107,575 76,678,083
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 128,017,410 97,831,455
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (32,506,365) (3,938,869)
Net realized gains, Class B (14,737,596) (1,688,560)
Net realized gains, Class C (7,456,863) (844,698)
------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (54,700,824) (6,472,127)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(1,492,778 and 1,393,163 shares,
respectively) 63,251,908 45,389,712
Net asset value of shares issued from
reinvestment of distributions
(650,922 and 94,125 shares,
respectively) 29,512,798 3,589,938
Cost of shares repurchased (1,241,476
and 1,467,112 shares, respectively) (53,099,694) (47,556,423)
------------ ------------
Total 39,665,012 1,423,227
------------ ------------
CLASS B
Proceeds from sales of shares (634,388
and 498,534 shares, respectively) 25,899,845 15,592,450
Net asset value of shares issued from
reinvestment of distributions
(300,215 and 40,281 shares,
respectively) 12,885,223 1,473,476
Cost of shares repurchased (367,722
and 341,912 shares, respectively) (15,038,011) (10,575,072)
------------ ------------
Total 23,747,057 6,490,854
------------ ------------
CLASS C
Proceeds from sales of shares (398,511
and 213,942 shares, respectively) 16,321,818 6,658,822
Net asset value of shares issued from
reinvestment of distributions
(154,070 and 20,953 shares,
respectively) 6,611,132 766,453
Cost of shares repurchased (230,854
and 342,357 shares, respectively) (9,311,630) (10,440,823)
------------ ------------
Total 13,621,320 (3,015,548)
------------ ------------
CLASS M
Proceeds from sales of shares (0 and
3,392 shares, respectively) -- 100,100
Cost of shares repurchased (0 and
3,392 shares, respectively) -- (111,184)
------------ ------------
Total -- (11,084)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARE TRANSACTIONS 77,033,389 4,887,449
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 150,349,975 96,246,777
NET ASSETS
Beginning of period 380,449,266 284,202,489
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME
(LOSS) OF $0 AND $0, RESPECTIVELY] $530,799,241 $380,449,266
============ ============
</TABLE>
See Notes to Financial Statements 27
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $38.80 $29.21 $26.50 $22.18 $17.30
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.41) (0.20) (0.20) (0.12) (0.05)
Net realized and unrealized gain
(loss) 12.92 10.45 5.23 6.00 4.93
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 12.51 10.25 5.03 5.88 4.88
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (5.15) (0.66) (2.32) (1.56) --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (5.15) (0.66) (2.32) (1.56) --
-------- -------- -------- -------- --------
Change in net asset value 7.36 9.59 2.71 4.32 4.88
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $46.16 $38.80 $29.21 $26.50 $22.18
======== ======== ======== ======== ========
Total return(2) 32.47 % 35.13 % 19.23 % 26.53 % 28.21 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $321,299 $235,065 $176,378 $145,469 $122,322
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.58 % 1.60 % 1.6 %(3) 1.7 %(3) 1.9 %
Net investment income (loss) (0.97)% (0.61)% (0.7)% (0.4)% (0.3)%
Portfolio turnover 43 % 92 % 68.8 % 41.9 % 26.5 %
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.60% and
1.80% for the periods ended December 31, 1997 and 1996, respectively.
28
See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $37.21 $28.24 $25.88 $21.85 $17.17
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.70) (0.43) (0.42) (0.30) (0.21)
Net realized and unrealized gain
(loss) 12.32 10.06 5.10 5.89 4.89
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 11.62 9.63 4.68 5.59 4.68
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (5.15) (0.66) (2.32) (1.56) --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (5.15) (0.66) (2.32) (1.56) --
-------- -------- -------- -------- --------
Change in net asset value 6.47 8.97 2.36 4.03 4.68
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $43.68 $37.21 $28.24 $25.88 $21.85
======== ======== ======== ======== ========
Total return(2) 31.47 % 34.14 % 18.33 % 25.60 % 27.26 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $138,626 $96,983 $68,051 $47,143 $27,462
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.33 % 2.35 % 2.4 %(3) 2.5 %(3) 2.6 %
Net investment income (loss) (1.72)% (1.35)% (1.4)% (1.2)% (1.0)%
Portfolio turnover 43 % 92 % 68.8 % 41.9 % 26.5 %
</TABLE>
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $37.21 $28.24 $25.88 $21.85 $17.17
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.70) (0.43) (0.42) (0.30) (0.21)
Net realized and unrealized gain
(loss) 12.32 10.06 5.10 5.89 4.89
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 11.62 9.63 4.68 5.59 4.68
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (5.15) (0.66) (2.32) (1.56) --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (5.15) (0.66) (2.32) (1.56) --
-------- -------- -------- -------- --------
Change in net asset value 6.47 8.97 2.36 4.03 4.68
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $43.68 $37.21 $28.24 $25.88 $21.85
======== ======== ======== ======== ========
Total return(2) 31.47 % 34.14 % 18.33 % 25.60 % 27.26 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $70,875 $48,401 $39,773 $26,092 $15,105
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.33 % 2.35 % 2.4 %(3) 2.5 %(3) 2.6 %
Net investment income (loss) (1.72)% (1.35)% (1.4)% (1.2)% (1.0)%
Portfolio turnover 43 % 92 % 68.8 % 41.9 % 26.5 %
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.40% and
2.50% for the periods ended December 31, 1997 and 1996, respectively.
See Notes to Financial Statements
29
<PAGE>
PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGERS, ROGER ENGEMANN, CFA,
JAMES MAIR, CFA, AND JOHN TILSON, CFA
Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A: The Fund seeks long-term growth of capital. Investors should note that
small-company investing involves added risks, such as greater price volatility,
less liquidity, and increased competitive threat.
Q: HOW DID THE FUND PERFORM FOR THE 12 MONTHS ENDED DECEMBER 31, 1999?
A: Class A shares returned 84.59%, Class B shares returned 83.25%, and Class C
shares returned 83.20% compared with a return of 21.26% for the Russell 2000
Index(1) and an average return of 62.63% for a peer universe of 263 small-cap
growth funds, according to Lipper, Inc. Investors should consider all
performance periods and the effect of the past 12 months' strong stock market
when evaluating funds. All performance figures assume reinvestment of dividends
and exclude the effect of sales charges.
Q: WHAT FACTORS HELPED THE FUND ACHIEVE SUCH STRONG RESULTS?
A: After struggling for most of the year, small-cap stocks staged a rebound in
late 1999. Our Fund also surged ahead, exceeding the return of the
record-setting Russell 2000 Index for both the final quarter of the year and the
full year. Performance was strong among many holdings in the portfolio, with
most stocks showing double-digit returns. Some climbed more than 100%.
Q: WHAT WERE SOME OF THE BIG WINNERS AND LOSERS?
A: Leading the winners by a wide margin was Commerce One Inc., with a remarkable
808% return. The company, which provides software to large industrial firms to
lower their cost of procuring materials, is one of the leaders in the concept of
business-to-business e-commerce. Because Commerce One was one of our largest
holdings, its contribution to performance was significant.
Next in line was Applied Micro Circuits, which has been one of our best
performing stocks throughout much of the year. Applied Micro Circuits
manufactures high-performance silicon solutions for communications
infrastructures. BEA Systems was another big contributor to performance. The
company provides "middle ware" software that enables companies to tie together
different computer systems.
All but two of the poorest performing stocks were sold earlier in the year.
Of those remaining in the portfolio, the two with the greatest declines were
Omnicare and Concentric Network, two relatively small positions. Omnicare
continued to suffer in the difficult operating environment that the long-term
health-care industry faced last year.
Concentric is a company that provides Internet solutions for small- and
medium-sized companies and consistently receives top ratings as a service
provider. Although the stock was affected by
(1) THE RUSSELL 2000 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF SMALL-CAP
STOCK MARKET TOTAL RETURN PERFORMANCE. THE INDEX IS NOT AVAILABLE FOR DIRECT
INVESTMENT.
30
<PAGE>
PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH FUND (CONTINUED)
volatility in its niche of the technology sector over the last year, we believe
the long-range prospects for the company are good.
Q: WHAT IS YOUR CURRENT OUTLOOK?
A: We feel the upturn in small stocks at the end of 1999 may bode well for this
segment of the market in the coming months. Investor confidence seems to be
broadening, and those who formerly sought comfort only in large names may now be
willing to look for returns from additional areas. Along with their risks, we
believe small stocks also offer more upside potential and could prove to be an
attractive place for investors seeking to diversify their portfolio.
JANUARY 28, 2000
31
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
AVERAGE ANNUAL TOTAL RETURNS(1) PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
INCEPTION INCEPTION
1 YEAR 5 YEARS TO 12/31/99 DATE
------- -------- ----------- ----------
<S> <C> <C> <C> <C>
Class A Shares at NAV(2) 84.59% 38.56% 41.61% 10/10/94
Class A Shares at POP(3) 75.82 37.22 40.30 10/10/94
Class B Shares at NAV(2) 83.25 -- 38.89 9/18/96
Class B Shares with CDSC(4) 79.25 -- 38.60 9/18/96
Class C Shares at NAV(2) 83.20 -- 35.80 10/8/96
Class C Shares with CDSC(4) 83.20 -- 35.80 10/8/96
Russell 2000 Index(7) 21.26 16.69 Note 5 Note 5
</TABLE>
(1) Total returns are historical and include changes in share price and the
reinvestment of both dividends and capital gains distributions.
(2) "NAV" (Net Asset Value) total returns do not include the effect of any
sales charge.
(3) "POP" (Public Offering Price) total returns include the effect of the
maximum front-end 4.75% sales charge. Prior to 1/20/98, the maximum
front-end sales charge was 5.5%.
(4) CDSC (contingent deferred sales charge) is applied to redemptions of
certain classes of shares that do not have a sales charge applied at the
time of purchase. CDSC charges for B shares decline from 5% to 0% over a
five year period. CDSC charges for C shares are 1% in the first year and 0%
thereafter.
(5) Index performance is 21.26% for Class A (since 10/10/94), 16.69% for Class
B (since 9/18/96) and 15.64% for Class C (since 10/8/96), respectively.
(6) This chart illustrates POP returns on Class A Shares only. Returns on Class
B and Class C Shares will vary due to differing sales charges.
(7) The Russell 2000 Index is an unmanaged, commonly used measure of total
return performance of small-capitalization growth-oriented stocks. The
Index's performance does not reflect sales charges.
All returns represent past performance which may not be indicative of
future performance. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
GROWTH OF $10,000 PERIODS ENDING 12/31
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
RUSSELL 2000 PHOENIX-ENGEMANN SMALL & MID-CAP
GROWTH INDEX(7) GROWTH FUND CLASS A(6)
<S> <C> <C>
10/94 $10,000.00 $9,525.00
94 $9,877.00 $11,497.00
95 $12,686.00 $14,449.00
96 $14,778.00 $22,015.00
97 $18,083.00 $27,830.00
98 $17,622.00 $31,807.00
99 $21,368.00 $58,713.00
</TABLE>
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
10/10/94 in Class A shares and reflects the maximum sales charge of 4.75% on the
initial investment. Performance assumes dividends and capital gains are
reinvested. The performance of other share classes will be greater or less than
that shown based on differences in inception dates, fees and sales charges.
SECTOR WEIGHTINGS 12/31/99
As a percentage of equity holdings
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Technology 56%
Consumer Cyclicals 18%
Consumer Staples 7%
Financials 5%
Energy 3%
Health-Care 3%
Capital Goods 3%
Other 5%
</TABLE>
32
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
TEN LARGEST HOLDINGS AT DECEMBER 31, 1999 (AS A PERCENTAGE OF TOTAL NET ASSETS)
<TABLE>
<C> <S> <C>
1. Ortel Corp. 4.9%
PRODUCES LINEAR FIBEROPTIC PRODUCTS
2. BEA Systems, Inc. 4.3%
COMPUTER SOFTWARE DESIGNER
3. Applied Micro Circuits Corp. 3.9%
MANUFACTURER OF INTEGRATED CIRCUITS
4. DoubleClick, Inc. 3.8%
INTERNET ADVERTISING PROVIDER
5. Commerce One, Inc. 3.6%
PROVIDER OF BUSINESS-TO-BUSINESS ELECTRONIC COMMERCE SOLUTIONS
6. Peregrine Systems, Inc. 3.2%
COMPUTER SOFTWARE DEVELOPER
7. Conexant Systems, Inc. 2.3%
DEVELOPS SEMICONDUCTOR PRODUCTS FOR COMMUNICATIONS ELECTRONICS
8. Pinnacle Oil International, Inc. 2.3%
OIL EXPLORATION TECHNOLOGY COMPANY
9. Cost Plus, Inc. 2.2%
SPECIALTY RETAILER OF CAUSAL HOME LIVING AND ENTERTAINING PRODUCTS
10. Metris Companies, Inc. 2.2%
DIRECT MARKETER OF CONSUMER CREDIT PRODUCTS
</TABLE>
INVESTMENTS AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
COMMON STOCKS--89.0%
AIR FREIGHT--0.7%
Expeditors International of Washington,
Inc..................................... 40,000 $ 1,752,500
BIOTECHNOLOGY--1.7%
Coulter Pharmaceutical, Inc.(b)......... 30,000 680,625
IDEC Pharmaceuticals Corp.(b)........... 12,000 1,179,000
Pharmacyclics, Inc.(b).................. 20,000 825,000
Progenics Pharmaceuticals, Inc.(b)...... 30,000 1,466,250
---------------------
4,150,875
---------------------
BROADCASTING (TELEVISION, RADIO & CABLE)--2.0%
Cumulus Media, Inc.(b).................. 50,000 2,537,500
Salem Communications Corp.(b)........... 50,000 1,131,250
Spanish Broadcasting System, Inc. Class
A(b).................................... 30,000 1,207,500
---------------------
4,876,250
---------------------
COMMUNICATIONS EQUIPMENT--5.7%
Advanced Fibre Communications,
Inc.(b)................................. 42,500 1,899,219
Ortel Corp.(b).......................... 100,000 12,000,000
---------------------
13,899,219
---------------------
COMPUTERS (NETWORKING)--3.4%
Agile Software Corp.(b)................. 16,000 3,475,750
C-bridge Internet Solutions, Inc.(b).... 29,000 1,410,125
ITXC Corp.(b)........................... 24,000 807,000
Retek, Inc.(b).......................... 24,000 1,806,000
Women.com Networks, Inc.(b)............. 20,000 285,000
Xpedior, Inc.(b)........................ 20,000 575,000
---------------------
8,358,875
---------------------
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)--22.1%
BEA Systems, Inc.(b).................... 150,000 $ 10,490,625
Commerce One, Inc.(b)................... 45,000 8,842,500
Concentric Network Corp.(b)............. 50,000 1,540,625
E.piphany, Inc.(b)...................... 12,000 2,677,500
HNC Software, Inc.(b)................... 15,000 1,586,250
Interwoven, Inc.(b)..................... 17,000 2,067,625
Keynote Systems, Inc.(b)................ 28,000 2,065,000
Legato Systems, Inc.(b)................. 60,000 4,128,750
NetZero, Inc.(b)........................ 47,100 1,268,756
New Era of Networks, Inc.(b)............ 35,000 1,666,875
Peregrine Systems, Inc.(b).............. 95,000 7,849,375
Sapient Corp.(b)........................ 36,000 5,073,750
TIBCO Software, Inc.(b)................. 22,000 3,366,000
Verio, Inc.(b).......................... 25,000 1,154,687
ZapMe! Corp.(b)......................... 37,300 321,712
---------------------
54,100,030
---------------------
CONSUMER FINANCE--2.2%
Metris Companies, Inc................... 150,000 5,353,125
ELECTRICAL EQUIPMENT--3.0%
Advanced Energy Industries, Inc.(b)..... 50,000 2,462,500
C-COR.net Corp.(b)...................... 14,000 1,072,750
Flextronics International Ltd.(b)....... 80,000 3,680,000
---------------------
7,215,250
---------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)--1.5%
Caliper Technologies Corp.(b)........... 20,000 1,335,000
NETsilicon, Inc.(b)..................... 110,000 2,206,875
---------------------
3,541,875
---------------------
</TABLE>
See Notes to Financial Statements 33
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
ELECTRONICS (INSTRUMENTATION)--0.5%
Meade Instruments Corp.(b).............. 40,000 $ 1,140,000
ELECTRONICS (SEMICONDUCTORS)--11.4%
Applied Micro Circuits Corp.(b)......... 75,600 9,620,100
Conexant Systems, Inc.(b)............... 86,000 5,708,250
Micrel, Inc.(b)......................... 76,000 4,327,250
SDL, Inc.(b)............................ 15,200 3,313,600
TriQuint Semiconductor, Inc.(b)......... 20,500 2,280,625
Vitesse Semiconductor Corp.(b).......... 50,000 2,621,875
---------------------
27,871,700
---------------------
EQUIPMENT (SEMICONDUCTOR)--2.4%
Cymer, Inc.(b).......................... 73,000 3,358,000
PRI Automation, Inc.(b)................. 18,000 1,208,250
Rudolph Technologies, Inc.(b)........... 40,000 1,340,000
---------------------
5,906,250
---------------------
FINANCIAL (DIVERSIFIED)--1.1%
Federal Agricultural Mortgage Corp.
Class C(b).............................. 63,000 1,271,812
Pinnacle Holdings, Inc.(b).............. 30,000 1,271,250
---------------------
2,543,062
---------------------
GAMING, LOTTERY & PARI-MUTUEL COMPANIES--0.8%
Championship Auto Racing Teams,
Inc.(b)................................. 80,000 1,840,000
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--0.6%
Inhale Therapeutic Systems(b)........... 30,000 1,276,875
ViroPharma, Inc.(b)..................... 6,000 222,000
---------------------
1,498,875
---------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--0.7%
ArthroCare Corp.(b)..................... 14,000 854,000
MiniMed, Inc. (b)....................... 12,000 879,000
---------------------
1,733,000
---------------------
INVESTMENT MANAGEMENT--0.7%
Gabelli Asset Management, Inc. Class
A(b).................................... 110,000 1,787,500
OIL & GAS (EXPLORATION & PRODUCTION)--2.3%
Pinnacle Oil International, Inc.(b)..... 224,500 5,668,625
PUBLISHING--0.8%
Scholastic Corp.(b)..................... 33,000 2,052,188
RAILROADS--1.5%
Kansas City Southern Industries, Inc.... 50,000 3,731,250
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
RESTAURANTS--1.8%
Cheesecake Factory, Inc. (The)(b)....... 80,000 $ 2,800,000
Papa John's International, Inc.(b)...... 65,000 1,694,063
---------------------
4,494,063
---------------------
RETAIL (BUILDING SUPPLIES)--0.9%
Fastenal Co............................. 50,000 2,246,875
RETAIL (DISCOUNTERS)--0.9%
99 Cents Only Stores(b)................. 58,100 2,222,325
RETAIL (FOOD CHAINS)--2.2%
Smart & Final, Inc.(b).................. 96,499 699,618
Whole Foods Market, Inc.(b)............. 100,000 4,637,500
---------------------
5,337,118
---------------------
RETAIL (SPECIALTY)--3.5%
Cost Plus, Inc.(b)...................... 152,775 5,442,609
Linens 'n Things, Inc.(b)............... 36,000 1,066,500
Lithia Motors, Inc. Class A(b).......... 42,500 759,688
Restoration Hardware, Inc.(b)........... 75,000 510,938
uBid, Inc.(b)........................... 30,000 795,000
---------------------
8,574,735
---------------------
RETAIL (SPECIALTY-APPAREL)--0.7%
Children's Place Retail Stores, Inc.
(The)(b)................................ 100,000 1,643,750
SERVICES (ADVERTISING/MARKETING)--5.0%
DoubleClick, Inc.(b).................... 36,750 9,300,047
MyPoints.com, Inc.(b)................... 40,000 2,960,000
---------------------
12,260,047
---------------------
SERVICES (COMMERCIAL & CONSUMER)--3.4%
Charles River Associates, Inc.(b)....... 30,000 1,005,000
Corporate Executive Board Co.
(The)(b)................................ 42,000 2,346,750
MIPS Technologies, Inc. Class A(b)...... 62,800 3,265,600
NCO Group, Inc.(b)...................... 53,000 1,596,625
eCollege.com, Inc.(b)................... 12,000 131,250
---------------------
8,345,225
---------------------
SERVICES (COMPUTER SYSTEMS)--2.1%
CyberSource Corp.(b).................... 30,000 1,552,500
Whittman-Hart, Inc.(b).................. 68,000 3,646,500
---------------------
5,199,000
---------------------
SERVICES (DATA PROCESSING)--0.9%
McAfee.com Corp.(b)..................... 28,000 1,260,000
</TABLE>
34 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
SERVICES (DATA PROCESSING)--CONTINUED
Predictive Systems, Inc.(b)............. 14,000 $ 917,000
---------------------
2,177,000
---------------------
SERVICES (EMPLOYMENT)--0.2%
Edison Schools Inc.(b).................. 30,000 472,500
TELECOMMUNICATIONS (LONG DISTANCE)--1.8%
Network Plus Corp.(b)................... 75,000 1,575,000
WinStar Communications, Inc.(b)......... 38,000 2,845,250
---------------------
4,420,250
---------------------
TEXTILES (APPAREL)--0.5%
bebe Stores, Inc.(b).................... 40,500 1,093,500
- -----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $93,915,604) 217,506,837
- -----------------------------------------------------------------------------
FOREIGN COMMON STOCKS--2.6%
COMMUNICATIONS EQUIPMENT--1.0%
Research in Motion Ltd. (Canada)(b)..... 50,000 2,297,908
<CAPTION>
SHARES VALUE
-------- ---------------------
<S> <C> <C> <C>
INSURANCE (LIFE/HEALTH)--0.4%
London Pacific Group Ltd. Sponsored ADR
(United Kingdom)........................ 29,000 $ 1,044,000
OIL & GAS (EXPLORATION & PRODUCTION)--0.8%
Encal Energy Ltd. (Canada)(b)........... 430,000 1,955,461
SERVICES (DATA PROCESSING)--0.4%
Trintech Group PLC Sponsored ADR
(Ireland)(b)............................ 20,000 990,000
- -----------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $3,085,490) 6,287,369
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS--91.6%
(IDENTIFIED COST $97,001,094) 223,794,206(a)
Cash and receivables, less liabilities--8.4% 20,648,824
---------------------
NET ASSETS--100.0% $ 244,443,030
=====================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $130,109,841 and gross
depreciation of $3,660,421 for federal income tax purposes. At December
31,1999, the aggregate cost of securities for federal income tax purposes
was $97,344,786.
(b) Non-income producing.
See Notes to Financial Statements
35
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $97,001,094) $ 223,794,206
Cash 19,479,540
Receivables
Fund shares sold 2,085,781
Dividends and interest 56,702
--------------
Total assets 245,416,229
--------------
LIABILITIES
Payables
Fund shares repurchased 406,901
Distribution fee 263,154
Investment advisory fee 178,511
Administration fee 96,938
Trustees' fee 5,428
Accrued expenses 22,267
--------------
Total liabilities 973,199
--------------
NET ASSETS $ 244,443,030
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 122,314,202
Accumulated net realized loss (4,664,284)
Net unrealized appreciation 126,793,112
--------------
NET ASSETS $ 244,443,030
==============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $132,996,285) 2,991,773
Net asset value per share $44.45
Offering price per share $44.45/(1-4.75%) $46.67
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $73,862,559) 1,704,950
Net asset value and offering price per share $43.32
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $37,584,186) 868,177
Net asset value and offering price per share $43.29
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 379,168
Dividends 44,806
--------------
Total investment income 423,974
--------------
EXPENSES
Investment advisory fee 1,205,720
Distribution fee, Class A 176,325
Distribution fee, Class B 387,883
Distribution fee, Class C 190,106
Administration 691,595
Professional 17,875
Trustees 11,999
--------------
Total expenses 2,681,503
Less expenses borne by investment adviser (29,874)
--------------
Net expenses 2,651,629
--------------
NET INVESTMENT LOSS (2,227,655)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 6,350,070
Net realized loss on foreign currency transactions (1,903)
Net change in unrealized appreciation (depreciation)
on investments 103,350,257
--------------
NET GAIN ON INVESTMENTS 109,698,424
--------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 107,470,769
==============
</TABLE>
36 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12/31/99 12/31/98
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $(2,227,655) $ (1,330,768)
Net realized gain (loss) 6,348,167 (10,303,702)
Net change in unrealized appreciation
(depreciation) 103,350,257 22,375,638
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 107,470,769 10,741,168
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
In excess of accumulated net realized
gains, Class A -- (48,557)
In excess of accumulated net realized
gains, Class B -- (28,857)
In excess of accumulated net realized
gains, Class C -- (13,819)
------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS -- (91,233)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(2,162,580 and 1,832,747 shares,
respectively) 58,137,050 39,721,245
Net asset value of shares issued from
reinvestment of distributions
(0 and 2,097 shares, respectively) -- 46,145
Cost of shares repurchased (1,421,135
and 901,103 shares, respectively) (38,629,734) (19,287,058)
------------ ------------
Total 19,507,316 20,480,332
------------ ------------
CLASS B
Proceeds from sales of shares (609,129
and 776,437 shares, respectively) 15,875,386 16,692,888
Net asset value of shares issued from
reinvestment of distributions
(0 and 1,267 shares, respectively) -- 27,357
Cost of shares repurchased (242,043
and 268,731 shares, respectively) (5,699,467) (5,454,844)
------------ ------------
Total 10,175,919 11,265,401
------------ ------------
CLASS C
Proceeds from sales of shares (406,932
and 389,879 shares, respectively) 10,621,041 8,174,670
Net asset value of shares issued from
reinvestment of distributions
(0 and 580 shares, respectively) -- 12,526
Cost of shares repurchased (174,616
and 141,833 shares, respectively) (4,172,562) (2,899,692)
------------ ------------
Total 6,448,479 5,287,504
------------ ------------
CLASS M
Proceeds from sales of shares (0 and
5,260 shares, respectively) -- 110,536
Cost of shares repurchased (0 and
5,260 shares, respectively) -- (102,183)
------------ ------------
Total -- 8,353
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARE TRANSACTIONS 36,131,714 37,041,590
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 143,602,483 47,691,525
NET ASSETS
Beginning of period 100,840,547 53,149,022
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF $0
AND $0, RESPECTIVELY] $244,443,030 $100,840,547
============ ============
</TABLE>
See Notes to Financial Statements 37
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 24.08 $ 21.09 $ 18.39 $ 14.90 $ 12.07
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.37) (0.30) (0.31) (0.12) 0.22
Net realized and unrealized gain
(loss) 20.74 3.31 5.07 7.45 2.87
---------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 20.37 3.01 4.76 7.33 3.09
---------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- (0.28) (0.08)
Dividends from net realized gains -- -- (2.06) (3.56) (0.18)
In excess of accumulated net realized
gains -- (0.02) -- -- --
---------- --------- --------- --------- ---------
TOTAL DISTRIBUTIONS -- (0.02) (2.06) (3.84) (0.26)
---------- --------- --------- --------- ---------
Change in net asset value 20.37 2.99 2.70 3.49 2.83
---------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 44.45 $ 24.08 $ 21.09 $ 18.39 $ 14.90
========== ========= ========= ========= =========
Total return(2) 84.59 % 14.29 % 26.41 % 52.37 % 25.68%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $132,996 $54,187 $27,771 $7,859 $1,742
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 1.73 % 1.78 % 1.80 % 1.10 % --%
Net investment income (loss) (1.40)% (1.39)% (1.40)% (0.70)% 1.50%
Portfolio turnover 105 % 147 % 313.5 % 297.1 % 121.4%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.75%,
1.83%, 1.80%, 1.90% and 2.30% for the periods ended December 31, 1999,
1998, 1997, 1996 and 1995, respectively.
38
See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
YEAR ENDED DECEMBER 31
-----------------------------------------------------------
1999 1998 1997 1996
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 23.64 $ 20.87 $ 18.35 $16.44(6)
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.55) (0.45) (0.46) (0.32)
Net realized and unrealized gain
(loss) 20.23 3.24 5.04 2.43
------- ------- ------- ------
TOTAL FROM INVESTMENT OPERATIONS 19.68 2.79 4.58 2.11
------- ------- ------- ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- --
Dividends from net realized gains -- -- (2.06) (0.20)
In excess of accumulated net realized
gains -- (0.02) -- --
------- ------- ------- ------
TOTAL DISTRIBUTIONS -- (0.02) (2.06) (0.20)
------- ------- ------- ------
Change in net asset value 19.68 2.77 2.52 1.91
------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD $ 43.32 $ 23.64 $ 20.87 $18.35
======= ======= ======= ======
Total return(2) 83.25 % 13.39 % 25.49 % 12.84 %(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $73,863 $31,631 $17,298 $1,480
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.48 %(3) 2.53 %(3) 2.60 %(3) 2.60 %(4)
Net investment income (loss) (2.15)% (2.14)% (2.10)% (2.20)%(4)
Portfolio turnover 105 % 147 % 313.5 % 297.1 %
</TABLE>
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------------------
1999 1998 1997 1996
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 23.63 $ 20.87 $18.35 $17.99(6)
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.55) (0.45) (0.47) (0.29)
Net realized and unrealized gain
(loss) 20.21 3.23 5.05 0.85
------- ------- ------ ------
TOTAL FROM INVESTMENT OPERATIONS 19.66 2.78 4.58 0.56
------- ------- ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- --
Dividends from net realized gains -- -- (2.06) (0.20)
In excess of accumulated net realized
gains -- (0.02) -- --
------- ------- ------ ------
TOTAL DISTRIBUTIONS -- (0.02) (2.06) (0.20)
------- ------- ------ ------
Change in net asset value 19.66 2.76 2.52 0.36
------- ------- ------ ------
NET ASSET VALUE, END OF PERIOD $ 43.29 $ 23.63 $20.87 $18.35
======= ======= ====== ======
Total return(2) 83.20 % 13.34 % 25.49 % 3.12 %(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $37,584 $15,023 $8,080 $54
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.48 %(3) 2.53 %(3) 2.60 %(3) 2.60 %(4)
Net investment income (loss) (2.15)% (2.14)% (2.10)% (2.20)%(4)
Portfolio turnover 105 % 147 % 313.5 % 297.1 %
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.50%,
2.58% and 2.60% for the periods ended December 31, 1999, 1998 and 1997,
respectively.
(4) Annualized.
(5) Not annualized.
(6) The beginning net asset value per share of Class B and Class C shares
equals the net asset value per share of the Class A shares as of the first
day Class B and Class C shares were sold, September 18, 1996 and October 8,
1996, respectively.
See Notes to Financial Statements
39
<PAGE>
PHOENIX-ENGEMANN VALUE 25 FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGERS, ROGER ENGEMANN, CFA, JAMES
MAIR, CFA, AND JOHN TILSON, CFA
Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A: The Fund seeks to provide substantial dividend income and long-term growth of
capital by investing primarily in 25 high-yielding stocks of the S&P 500.
Management believes the quantitative investment approach of the Phoenix-Engemann
Value 25 Fund is an alternative to the popular strategy that buys the 10 highest
yielding stocks in the Dow Jones Industrial Average and replaces them the
following year.
Q: HOW DID THE FUND PERFORM FOR THE 12 MONTHS ENDED DECEMBER 31, 1999?
A: Class A shares returned (5.75)%, Class B shares returned (6.46)%, and Class C
shares returned (6.49)% compared with a return of 21.14% for the S&P 500
Index(1) and an average return of 3.34% for a peer universe of 219 equity income
funds, according to Lipper, Inc. All performance figures assume reinvestment of
dividends and exclude the effect of sales charges.
Q: CAN YOU OUTLINE WHAT THE GOALS OF THE FUND ARE AND COMMENT ON HOW YOU FARED
AGAINST THEM?
A: The Fund was developed with the following goals in mind:
1. Provide diversification versus our traditional growth funds.
2. Give investors an opportunity to invest in a contrarian fund.
3. Maximize performance within those guidelines set out by the Fund's
quantitative model.
The Fund was a weak performer compared to the growth funds managed by Roger
Engemann & Associates, Inc. Although we are not pleased with the results this
year, we realize that 1999 was a year for growth, not value. This was the third
year in a row that growth generally outperformed value in the market.
Q: WHY WERE VALUE STOCKS OUT OF FAVOR IN 1999?
A: Value stocks are usually found in cyclical industries such as basic
materials, automotive and energy, and the Phoenix-Engemann Value 25 Fund holds
many stocks from these sectors. Although the operating results for these
companies were not necessarily poor in 1999, they paled in comparison to the
operating results shown by technology companies. As a result, technology
companies were great performers last year, while value stocks were left behind.
Q: WHAT IS YOUR OUTLOOK FOR THE FUND IN 2000?
A: After three years of poor relative performance by value stocks, investors are
most likely tired of waiting for value to rebound. This psychology is reflected
in the low valuation of value stocks, many of which have single-digit
price/earnings valuation multiples. Despite recent performance, we know from
history that both value and growth go through periods of outperformance. Of
course, past performance is not a guarantee of future results, and we can't
predict when a shift to value will happen. However, based on previous market
cycles, we know a shift will eventually take place. We continue to recommend the
Fund to investors who are looking for diversification versus our traditional
growth funds.
JANUARY 31, 2000
(1) THE S&P 500 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF STOCK MARKET
TOTAL RETURN PERFORMANCE. THE INDEX IS NOT AVAILABLE FOR DIRECT INVESTMENT.
40
<PAGE>
Phoenix-Engemann Value 25 Fund
AVERAGE ANNUAL TOTAL RETURNS(1) PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
INCEPTION INCEPTION
1 YEAR TO 12/31/99 DATE
------- ----------- ----------
<S> <C> <C> <C>
Class A Shares at NAV(2) (5.75)% 7.26% 12/17/96
Class A Shares at POP(3) (10.22) 5.56 12/17/96
Class B Shares at NAV(2) (6.46) 6.00 1/9/97
Class B Shares with CDSC(4) (9.63) 5.19 1/9/97
Class C Shares at NAV(2) (6.49) 6.00 1/9/97
Class C Shares with CDSC(4) (6.49) 6.00 1/9/97
S&P 500 Index(7) 21.14 Note 5 Note 5
</TABLE>
(1) Total returns are historical and include changes in share price and the
reinvestment of both dividends and capital gains distributions.
(2) "NAV" (Net Asset Value) total returns do not include the effect of any
sales charge.
(3) "POP" (Public Offering Price) total returns include the effect of the
maximum front-end 4.75% sales charge. Prior to 1/20/98, the maximum
front-end sales charge was 5.5%.
(4) CDSC (contingent deferred sales charge) is applied to redemptions of
certain classes of shares that do not have a sales charge applied at the
time of purchase. CDSC charges for B shares decline from 5% to 0% over a
five year period. CDSC charges for C shares are 1% in the first year and O%
thereafter.
(5) Index performance is 28.14% for Class A (since 12/17/96) and 27.10% for
Class B and Class C (since 1/9/97), respectively.
(6) This chart illustrates POP returns on Class A Shares only. Returns on Class
B and Class C Shares will vary due to differing sales charges.
(7) The S&P 500 Index is an unmanaged, commonly used measure of stock market
total return performance. The Index's performance does not reflect sales
charges.
All returns represent past performance which may not be indicative of
future performance. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
GROWTH OF $10,000 PERIODS ENDING 12/31
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500 INDEX(7) PHOENIX-ENGEMANN VALUE 25 FUND CLASS A(6)
<S> <C> <C>
12/96 $10,000.00 $9,525.00
96 $10,210.00 $9,725.00
97 $13,617.00 $11,662.00
98 $17,533.00 $12,505.00
99 $21,239.00 $11,786.00
</TABLE>
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
12/17/96 in Class A shares and reflects the maximum sales charge of 4.75% on the
initial investment. Performance assumes dividends and capital gains are
reinvested. The performance of other share classes will be greater or less than
that shown based on differences in inception dates, fees and sales charges.
SECTOR WEIGHTINGS 12/31/99
As a percentage of equity holdings
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Consumer Cyclicals 44%
Capital Goods 25%
Consumer Staples 20%
Basic Materials 7%
Energy 4%
</TABLE>
41
<PAGE>
Phoenix-Engemann Value 25 Fund
TEN LARGEST HOLDINGS AT DECEMBER 31, 1999 (AS A PERCENTAGE OF TOTAL NET ASSETS)
<TABLE>
<C> <S> <C>
1. Goodrich (B.F) Co. (The) 4.5%
TWO BUSINESS SEGMENTS: BF GOODRICH AEROSPACE AND BF GOODRICH
PERFORMANCE MATERIALS
2. Crown Cork & Seal Co., Inc. 4.3%
MANUFACTURES PACKAGING PRODUCTS
3. Louisiana-Pacific Corp. 4.2%
BUILDING-PRODUCTS FIRM
4. Fleetwood Enterprises, Inc. 4.2%
MANUFACTURER OF RECREATIONAL VEHICLES
5. Springs Industries, Inc. Class A 4.2%
MANUFACTURER OF HOME FURNISHINGS AND SPECIALTY FABRICS
6. Stanley Works, The 4.2%
MANUFACTURES TOOLS AND DOORS
7. Ford Motor Co. 4.2%
MANUFACTURES AND SELLS AUTOMOBILES, TRUCKS AND RELATED PARTS
GLOBALLY
8. Fortune Brands, Inc. 4.2%
SELLER OF HOME PRODUCTS, OFFICE PRODUCTS, GOLF PRODUCTS AND
DISTILLED SPIRITS.
9. Ashland, Inc. 4.2%
OIL AND GAS REFINER AND MARKETER
10. ConAgra, Inc. 4.2%
DIVERSIFIED FOOD PRODUCTS COMPANY
</TABLE>
INVESTMENTS AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES VALUE
-------- --------------------
<S> <C> <C> <C>
COMMON STOCKS--99.7%
AEROSPACE/DEFENSE--4.5%
Goodrich (B.F) Co. (The)................ 39,500 $ 1,086,250
AUTO PARTS & EQUIPMENT--7.6%
Dana Corp............................... 30,300 907,106
Snap-On Tools Inc....................... 34,700 921,719
--------------------
1,828,825
--------------------
AUTOMOBILES--8.3%
Ford Motor Co........................... 19,000 1,015,312
General Motors Corp..................... 13,800 1,003,087
--------------------
2,018,399
--------------------
BUILDING MATERIALS--3.5%
Armstrong World Industries, Inc......... 25,100 837,712
CONSUMER (JEWELRY, NOVELTIES & GIFTS)--4.2%
American Greetings Corp................. 42,700 1,008,788
CONTAINERS (METAL & GLASS)--4.3%
Crown Cork & Seal Co., Inc.............. 46,400 1,038,200
ELECTRICAL EQUIPMENT--4.0%
Cooper Industries, Inc.................. 24,100 974,544
ENGINEERING & CONSTRUCTION--3.4%
Foster Wheeler Corp..................... 93,400 828,925
FOODS--4.2%
ConAgra, Inc............................ 44,900 1,013,056
HARDWARE & TOOLS--4.2%
Stanley Works, The...................... 33,800 1,018,225
<CAPTION>
SHARES VALUE
-------- --------------------
<S> <C> <C> <C>
HOMEBUILDING--4.2%
Fleetwood Enterprises, Inc.............. 49,800 $ 1,027,125
HOUSEWARES--4.2%
Fortune Brands, Inc..................... 30,700 1,015,019
IRON & STEEL--3.1%
Allegheny Technologies. Inc............. 33,350 748,291
MANUFACTURING (DIVERSIFIED)--4.1%
National Service Industries, Inc........ 33,600 991,200
OIL & GAS (REFINING & MARKETING)--4.2%
Ashland, Inc............................ 30,800 1,014,475
PAPER & FOREST PRODUCTS--4.2%
Louisiana-Pacific Corp.................. 72,100 1,027,425
PERSONAL CARE--4.1%
Avon Products, Inc...................... 29,900 986,700
RETAIL (DRUG STORES)--3.7%
Rite Aid Corp........................... 80,100 896,119
RETAIL (GENERAL MERCHANDISE)--4.1%
Sears, Roebuck & Co..................... 32,800 998,350
SERVICES (COMMERCIAL & CONSUMER)--3.6%
Service Corp. International............. 123,900 859,556
SPECIALTY PRINTING--3.8%
Donnelley (R.R.) & Sons Co.............. 36,600 908,138
TEXTILES (HOME FURNISHINGS)--4.2%
Springs Industries, Inc. Class A........ 25,500 1,018,406
</TABLE>
42 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Value 25 Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- --------------------
<S> <C> <C> <C>
TRUCKS & PARTS--4.0%
PACCAR, Inc............................. 22,000 $ 974,875
- ----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $28,459,025) 24,118,603
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS--99.7%
(IDENTIFIED COST $28,459,025) 24,118,603(a)
Cash and receivables, less liabilities--0.3% 80,463
--------------------
NET ASSETS--100.0% $ 24,199,066
====================
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $548,216 and gross
depreciation of $4,891,044 for federal income tax purposes. At December 31,
1999, the aggregate cost of securities for federal income tax purposes was
$28,461,431.
See Notes to Financial Statements
43
<PAGE>
Phoenix-Engemann Value 25 Fund
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $28,459,025) $ 24,118,603
Receivables
Investment securities sold 331,591
Dividends and interest 72,379
Fund shares sold 15,670
--------------
Total assets 24,538,243
--------------
LIABILITIES
Custodian 164,938
Payables
Fund shares repurchased 80,163
Distribution fee 38,739
Investment advisory fee 15,823
Administration fee 12,565
Trustees' fee 5,428
Accrued expenses 21,521
--------------
Total liabilities 339,177
--------------
NET ASSETS $ 24,199,066
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 28,627,728
Undistributed net investment income 41,897
Accumulated net realized loss (130,137)
Net unrealized depreciation (4,340,422)
--------------
NET ASSETS $ 24,199,066
==============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $13,500,475) 1,462,302
Net asset value per share $9.23
Offering price per share $9.23/(1-4.75%) $9.69
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $7,546,010) 823,212
Net asset value and offering price per share $9.17
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $3,152,581) 343,991
Net asset value and offering price per share $9.16
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 946,811
Interest 8,455
--------------
Total investment income 955,266
--------------
EXPENSES
Investment advisory fee 280,289
Distribution fee, Class A 41,044
Distribution fee, Class B 100,141
Distribution fee, Class C 46,957
Administration 186,765
Professional 17,042
Trustees 11,694
--------------
Total expenses 683,932
Less expenses borne by investment adviser (28,736)
--------------
Net expenses 655,196
--------------
NET INVESTMENT INCOME 300,070
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 3,211,792
Net change in unrealized appreciation (depreciation) on
investments (5,116,766)
--------------
NET LOSS ON INVESTMENTS (1,904,974)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ($ 1,604,904)
==============
</TABLE>
44 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Value 25 Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
12/31/99 12/31/98
----------- -----------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 300,070 $ 334,618
Net realized gain (loss) 3,211,792 2,097,474
Net change in unrealized appreciation
(depreciation) (5,116,766) (352,262)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (1,604,904) 2,079,830
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (199,489) (211,860)
Net investment income, Class B (63,334) (57,698)
Net investment income, Class C (25,820) (35,805)
Net investment income, Class M -- (335)
Net realized gains, Class A (1,953,603) (869,860)
Net realized gains, Class B (1,144,495) (538,067)
Net realized gains, Class C (477,608) (327,380)
In excess of net realized gains, Class
A (71,100) --
In excess of net realized gains, Class
B (41,654) --
In excess of net realized gains, Class
C (17,382) --
----------- -----------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (3,994,485) (2,041,005)
----------- -----------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (174,138
and 447,148 shares, respectively) 2,143,783 5,386,173
Net asset value of shares issued from
reinvestment of distributions
(229,321 and 92,048 shares,
respectively) 2,131,821 1,040,977
Cost of shares repurchased (495,346
and 673,296 shares, respectively) (5,870,932) (7,993,719)
----------- -----------
Total (1,595,328) (1,566,569)
----------- -----------
CLASS B
Proceeds from sales of shares (107,152
and 297,032 shares, respectively) 1,292,314 3,568,146
Net asset value of shares issued from
reinvestment of distributions
(105,576 and 39,114 shares,
respectively) 975,535 439,118
Cost of shares repurchased (336,907
and 151,755 shares, respectively) (3,840,069) (1,790,599)
----------- -----------
Total (1,572,220) 2,216,665
----------- -----------
CLASS C
Proceeds from sales of shares (47,266
and 249,615 shares, respectively) 586,348 2,992,809
Net asset value of shares issued from
reinvestment of distributions
(49,536 and 30,269 shares,
respectively) 459,616 339,363
Cost of shares repurchased (326,376
and 130,943 shares, respectively) (3,792,417) (1,510,855)
----------- -----------
Total (2,746,453) 1,821,317
----------- -----------
CLASS M
Proceeds from sales of shares (0 and
20,926 shares, respectively) -- 256,291
Net asset value of shares issued from
reinvestment of distributions
(0 and 28 shares, respectively) -- 335
Cost of shares repurchased (0 and
20,954 shares, respectively) -- (263,766)
----------- -----------
Total -- (7,140)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARE TRANSACTIONS (5,914,001) 2,464,273
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS (11,513,390) 2,503,098
NET ASSETS
Beginning of period 35,712,456 33,209,358
----------- -----------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
$41,897 AND $30,470, RESPECTIVELY] $24,199,066 $35,712,456
=========== ===========
</TABLE>
See Notes to Financial Statements 45
<PAGE>
Phoenix-Engemann Value 25 Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------
INCEPTION
YEAR ENDED DECEMBER 31, 12/17/96
-------------------------------------- TO
1999 1998 1997 12/31/96
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $ 11.64 $ 11.56 $ 10.11 $ 10.00
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (loss) 0.17 0.15(1) 0.17(1) --(1)
Net realized and unrealized
gain (loss) (0.84) 0.66 1.95 0.11
--------- --------- --------- -----------
TOTAL FROM INVESTMENT
OPERATIONS (0.67) 0.81 2.12 0.11
--------- --------- --------- -----------
LESS DISTRIBUTIONS
Dividends from net
investment income (0.16) (0.14) (0.12) --
Dividends from net realized
gains (1.52) (0.59) (0.55) --
In excess of net realized
gains (0.06) -- -- --
--------- --------- --------- -----------
TOTAL DISTRIBUTIONS (1.74) (0.73) (0.67) --
--------- --------- --------- -----------
Change in net asset value (2.41) 0.08 1.45 0.11
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 9.23 $ 11.64 $ 11.56 $ 10.11
========= ========= ========= ===========
Total return(2) (5.75)% 7.23% 21.10% 1.10%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $13,500 $18,090 $19,518 $482
RATIO TO AVERAGE NET ASSETS
OF:
Operating expenses 1.75%(3) 1.75%(3) 1.80%(3) 1.70%(4)
Net investment income (loss) 1.32% 1.25% 1.40% 1.80%(4)
Portfolio turnover 181% 135% 87.7% --%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.84%,
1.86% and 1.80% for the periods ended December 31, 1999, 1998 and 1997,
respectively.
(4) Annualized.
(5) Not annualized.
46
See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Value 25 Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
-------------------------
YEAR ENDED DECEMBER 31,
-------------------------
1999 1998 1997
<S> <C> <C> <C>
Net asset value, beginning of period $11.59 $ 11.53 $10.39(6)
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.07 0.06(1) 0.08(1)
Net realized and unrealized gain
(loss) (0.83) 0.65 1.67
------ ------- ------
TOTAL FROM INVESTMENT OPERATIONS (0.76) 0.71 1.75
------ ------- ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.08) (0.06) (0.06)
Dividends from net realized gains (1.52) (0.59) (0.55)
In excess of net realized gains (0.06) -- --
------ ------- ------
TOTAL DISTRIBUTIONS (1.66) (0.65) (0.61)
------ ------- ------
Change in net asset value (2.42) 0.06 1.14
------ ------- ------
NET ASSET VALUE, END OF PERIOD $ 9.17 $ 11.59 $11.53
====== ======= ======
Total return(2) (6.46)% 6.41% 16.97%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $7,546 $10,981 $8,799
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 2.50% 2.50% 2.60%(4)
Net investment income (loss) 0.56% 0.54% 0.70%(4)
Portfolio turnover 181% 135% 87.7%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
-------------------------
YEAR ENDED DECEMBER 31,
-------------------------
1999 1998 1997
<S> <C> <C> <C>
Net asset value, beginning of period $11.58 $11.52 $10.39(6)
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.08 0.06(1) 0.09(1)
Net realized and unrealized gain
(loss) (0.84) 0.65 1.66
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.76) 0.71 1.75
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.08) (0.06) (0.07)
Dividends from net realized gains (1.52) (0.59) (0.55)
In excess of net realized gains (0.06) -- --
------ ------ ------
TOTAL DISTRIBUTIONS (1.66) (0.65) (0.62)
------ ------ ------
Change in net asset value (2.42) 0.06 1.13
------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.16 $11.58 $11.52
====== ====== ======
Total return(2) (6.49)% 6.42% 17.01%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $3,153 $6,642 $4,893
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 2.50% 2.50% 2.60%(4)
Net investment income (loss) 0.57% 0.52% 0.80%(4)
Portfolio turnover 181% 135% 87.7%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.59%,
2.61% and 2.60% for the periods ended December 31, 1999, 1998 and 1997,
respectively.
(4) Annualized.
(5) Not annualized.
(6) The beginning net asset value per share of Class B and Class C shares
equals the net asset value per share of the Class A shares as of the first
day Class B and Class C shares were sold, January 9, 1997.
See Notes to Financial Statements
47
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix-Engemann Funds (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. To date, five
Funds are offered for sale: Phoenix-Engemann Balanced Return Fund,
Phoenix-Engemann Focus Growth Fund, Phoenix-Engemann Nifty Fifty Fund, Phoenix-
Engemann Small & Mid-Cap Growth Fund and Phoenix-Engemann Value 25 Fund,
collectively referred to as the "Funds," are series of The Phoenix-Engemann
Funds. Each Fund represents an investment in a separate diversified fund with
its own investment objectives. BALANCED RETURN FUND seeks to maximize a total
investment return consistent with reasonable risk through a balanced approach.
FOCUS GROWTH FUND seeks to achieve long-term capital appreciation. NIFTY FIFTY
FUND seeks to achieve long-term capital appreciation by investing in
approximately 50 different securities. SMALL & MID-CAP GROWTH FUND seeks to
achieve long-term growth of capital by investing primarily in a diversified
portfolio of equity securities of companies with market capitalizations below
$1.5 billion. VALUE 25 FUND seeks to achieve dividend income and long-term
growth of capital by investing in equity securities which the Adviser believes
offer the best potential for current dividend yield and long-term capital
appreciation.
Each Fund offers Class A, Class B and Class C shares. Class M shares have been
closed. Class A shares are sold with a front-end sales charge of up to 4.75%.
Class B shares are sold with a contingent deferred sales charge which declines
from 5% to zero depending on the period of time the shares are held. Class C
shares are sold with a 1% contingent deferred sales charge if redeemed within
one year of purchase. All classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that each
class bears different distribution expenses and has exclusive voting rights with
respect to its distribution plan. Income and expenses of the Funds are borne pro
rata by the holders of all classes of shares, except that each class bears
distribution expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. Actual results could differ from those estimates.
A. SECURITY VALUATION:
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price. Debt securities are valued on the basis of
broker quotations or valuations provided by a pricing service which utilizes
information with respect to recent sales, market transactions in comparable
securities, quotations from dealers and various relationships between securities
in determining value. Short-term investments having a remaining maturity of
60 days or less are valued at amortized cost which approximates market. All
other securities and assets are valued at their fair value as determined in good
faith by or under the direction of the Trustees.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date or, in the case of certain foreign securities, as soon as the Trust is
notified. Realized gains and losses are determined on the identified cost basis.
The Trust does not amortize premiums but does amortize discounts.
C. INCOME TAXES:
Each Fund is treated as a separate taxable entity. It is the policy of each
Fund to comply with the requirements of the Internal Revenue Code (the "Code")
applicable to regulated investment companies, and to distribute all of its
taxable income to its shareholders. In addition, each Fund intends to distribute
an amount sufficient to avoid imposition of any excise tax under Section 4982 of
the Code. Therefore, no provision for federal income taxes or excise taxes has
been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, expiring
capital loss carryforwards, foreign currency gain/loss, partnerships, operating
losses and losses deferred due to wash sales and excise tax regulations.
Permanent book and tax basis differences relating to shareholder distributions
will result in reclassifications to paid in capital.
E. FOREIGN CURRENCY TRANSLATION:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange rates
between the trade and settlement dates of a portfolio transaction is treated as
a gain or loss on foreign currency. Likewise, the gain or loss resulting from a
change in currency exchange rates between the date income is accrued and paid is
treated as a gain or loss on foreign currency. The Trust does not separate that
portion of the results of operations arising from changes in the exchange rates
and that portion arising from changes in the market prices of securities.
48
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
F. FORWARD CURRENCY CONTRACTS:
The Small & Mid-Cap Growth Fund and the Value 25 Fund may enter into forward
currency contracts in conjunction with the planned purchase or sale of foreign
denominated securities in order to hedge the U.S. dollar cost or proceeds.
Forward currency contracts involve, to varying degrees, elements of market risk
in excess of the amount recognized in the Statement of Assets and Liabilities.
Risks arise from the possible movements in foreign exchange rates or if the
counterparty does not perform under the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts are traded directly between currency traders and
their customers. The contract is marked-to-market daily and the change in market
value is recorded by each Fund as an unrealized gain (or loss). When the
contract is closed or offset with the same counterparty, the Fund records a
realized gain (or loss) equal to the change in the value of the contract when it
was opened and the value at the time it was closed or offset.
G. FUTURES CONTRACTS:
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. The Small & Mid-Cap Growth Fund and
the Value 25 Fund may enter into financial futures contracts as a hedge against
anticipated changes in the market value of their portfolio securities. Upon
entering into a futures contract, the Fund is required to pledge to the broker
an amount of cash and/or securities equal to the "initial margin" requirements
of the futures exchange on which the contract is traded. Pursuant to the
contract, the Fund agrees to receive from or pay to the broker an amount of cash
equal to the daily fluctuation in value of the contract. Such receipts or
payments are known as daily variation margin and are recorded by the Fund as
unrealized gains and losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the futures contract may not
correspond to the change in value of the hedged instruments.
H. OPTIONS:
Each Fund may write covered options or purchase options contracts for purpose
of hedging against changes in the market value of the underlying securities or
foreign currencies. Additionally, each Fund may buy and sell options on domestic
and foreign securities indices for hedging purposes.
Each Fund will realize a gain or loss upon the expiration or closing of the
option transaction. Gains and losses on written options are reported separately
in the Statement of Operations. When a written option is exercised, the proceeds
on sales or amounts paid are adjusted by the amount of premium received. Options
written are reported as a liability in the Statement of Assets and Liabilities
and subsequently marked-to-market to reflect the current value of the option.
The risk associated with written options is that the change in value of options
contracts may not correspond to the change in value of the hedged instruments.
In addition, losses may arise from changes in the value of the underlying
instruments, or if a liquid secondary market does not exist from the contracts.
Each Fund may purchase options which are included in the Fund's Schedule of
Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
I. EXPENSES:
Expenses incurred by the Trust with respect to any two or more Funds are
allocated in proportion to the net assets of each Fund, except where allocation
of direct expense to each Fund or an alternative allocation method can be more
fairly made.
J. LOAN AGREEMENTS:
The Funds may invest in direct debt instruments which are invested in amounts
owed by a corporation, governmental, or other borrower to lenders or lending
syndicates. The Funds' investments in loans may be in the form of participations
in loans or assignments of all or a portion of loans from third parties. A loan
is often administered by a bank or other financial institution (the lender) that
acts as agent for all holders. The agent administers the terms of the loan, as
specified in the loan agreement. When investing in a loan participation, the
Funds have the right to receive payments of principal, interest and any fees to
which it is entitled only from the lender selling the loan agreement and only
upon receipt by the lender of payments from the borrower. The Funds generally
have no right to enforce compliance with the terms of the loan agreement with
the borrower. As a result, the Funds may be subject to the credit risk of both
the borrower and lender that is selling the loan agreement. For loans which the
Funds are a participant, the Funds may not sell their participation in the loan
without the lender's prior consent. When the Funds purchase assignments from
lenders it acquires direct rights against the borrower on the loan. Direct
indebtedness of emerging countries involves a risk that the government entities
responsible for the repayment of the debt may be unable, or unwilling to pay the
principal and interest when due.
49
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, the Adviser, Roger Engemann &
Associates, Inc. ("REA", or the "Adviser"), a wholly owned subsidiary of
Pasadena Capital Corporation, which in turn is a wholly owned subsidiary of
Phoenix Investment Partners, Ltd. a publicly-traded company 60% owned by Phoenix
Home Life Mutual Insurance Company, is entitled to a fee, based upon the
following annual rates as a percentage of the average daily net assets of each
Fund:
<TABLE>
<CAPTION>
First $50 Next $450 Over $500
Million Million Million
--------- --------- ---------
<S> <C> <C> <C>
Balanced Return Fund........... 0.80% 0.70% 0.60%
Focus Growth Fund.............. 0.90% 0.80% 0.70%
Nifty Fifty Fund............... 0.90% 0.80% 0.70%
Small & Mid-Cap Growth Fund.... 1.00% 0.90% 0.80%
Value 25 Fund.................. 0.90% 0.80% 0.70%
</TABLE>
The Adviser furnishes advice and recommendations with respect to the Funds'
securities portfolios, supervises the Funds' investments, provides Fund
accounting and pricing, and provides the Trust's Board of Trustees with periodic
and special reports on investment securities, economic conditions and other
pertinent subjects. The Adviser also performs various administrative and
shareholder services for each Fund under separate administration agreements. All
normal operating expenses of the Funds, except for fees and expenses associated
with investment management services, service fees, distribution fees, Trustees'
fees, audit fees and certain legal fees are paid by the Adviser pursuant to the
administration agreements.
Phoenix Equity Planning Corporation ("PEPCO") an indirect majority-owned
subsidiary of PHL, which serves as the national distributor of the Trust's
shares has advised the Trust that it retained net selling commissions of
$165,377 for Class A shares and deferred sales charges of $605,796 for Class B
shares and $104,512 for Class C shares for the year ended December 31, 1999. In
addition, each Fund pays PEPCO a distribution fee at an annual rate of 0.25% for
Class A shares, 1.00% for Class B shares and 1.00% for Class C shares applied to
the average daily net assets of each Fund. The distributor has advised the Trust
that of the total amount expensed for the year ended December 31, 1999
$3,067,353 was retained by the Distributor, $3,181,340 was paid out to
unaffiliated Participants and $62,393 was paid to W.S. Griffith, an indirect
subsidiary of PHL.
As Administrator of the Funds, PEPCO received a fee for bookkeeping,
administration, and pricing services at an annual rate of 0.60% of average daily
net assets up to $50 million, 0.50% of average daily net assets of $50 million
to $500 million, 0.40% of average daily net assets of $500 million through $625
million, and 0.30% of average daily net assets greater than $625 million: a
minimum fee may apply.
PEPCO has voluntarily agreed to waive, when necessary, a portion of its
administration fee so that Other Operating Expenses (operating expenses
excluding management fees and 12b-1 fees) do not exceed the following limits:
<TABLE>
<CAPTION>
1st
$50 Next $450 Next $125 Over $625
Million Million Million Million
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balanced Return
Fund................ 1.09% 0.60% 0.40% 0.40%
Focus Growth Fund..... 0.99% 0.50% 0.30% 0.30%
Nifty Fifty Fund...... 0.99% 0.50% 0.30% 0.30%
Small & Mid-Cap Growth
Fund................ 0.60% 0.50% 0.40% 0.40%
Value 25 Fund......... 0.60% 0.50% 0.40% 0.40%
</TABLE>
PEPCO serves as the Fund's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended December 31, 1999
(excluding U.S. Government and agency securities, short-term securities, futures
contracts and forward currency contracts) aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
-------------- --------------
<S> <C> <C>
Balanced Return Fund................ $105,134,124 $ 50,064,234
Focus Growth Fund................... 325,532,121 370,651,989
Nifty Fifty Fund.................... 184,573,540 180,403,737
Small & Mid Cap Growth Fund......... 145,720,819 130,587,780
Value 25 Fund....................... 55,409,000 64,715,111
</TABLE>
Purchases and sales of U.S. Government and agency securities during the year
ended December 31, 1999, aggregated $41,695,734 and $19,924,453 respectively,
for the Balanced Return Fund.
At December 31, 1999, the Focus Growth Fund had outstanding written options as
follows:
<TABLE>
<CAPTION>
Shares Subject Expiration Exercise Market
Call Options to Call Date Price Value
- ------------ -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Carnival Corp........... 150,000 1/22 $45.00 $384,375
Texas Instruments,
Inc................... 60,000 1/22 110.00 93,750
</TABLE>
50
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
Written option activity for the year ended December 31, 1999, for the Focus
Growth Fund aggregated the following:
<TABLE>
<CAPTION>
Number of Amount of
Options Premium
-------------- --------------
<S> <C> <C>
Options outstanding at December 31,
1998................................... -- $ --
Options written.......................... 6,100 1,623,900
Options canceled in closing purchase
transactions........................... -- --
Options expired.......................... (3,000) (472,234)
Options exercised........................ (1,000) (134,250)
------ ----------
Options outstanding at December 31,
1999................................... 2,100 $1,017,416
====== ==========
</TABLE>
4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a fund's ability to
repatriate such amounts.
5. CAPITAL LOSS CARRYOVERS
The following Funds have capital loss carryovers, expiring in 2006, which may
be used to offset future capital gains.
<TABLE>
<S> <C>
Small & Mid-Cap Growth Fund.............. $ 4,320,592
</TABLE>
Under current tax law, capital loss realized after October 31, may be deferred
and treated as occurring on the first day of the following tax year. For the
calendar year ended December 31, 1999, the Balanced Return Fund and the Value 25
Fund elected to defer losses occurring between November 1, 1999 and December 31,
1999 in the amounts of $17,366 and $139,062, respectively.
6. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Fund has recorded several
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of the Fund and are designed generally to present
undistributed income and realized gains on a tax basis which is considered to be
more informative to the shareholder. As of December 31, 1999, the Funds recorded
the following reclassifications to increase (decrease) the accounts listed
below.
<TABLE>
<CAPTION>
Undistributed Accumulated Capital paid in
net investment net realized on shares of
income (loss) gain (loss) beneficial interest
-------------- -------------- -------------------
<S> <C> <C> <C>
Balanced Return Fund..... $ 25,941 $ 23,819 $ (49,760)
Focus Growth Fund........ 7,242,469 (8,158,548) 916,079
Nifty Fifty Fund......... 5,531,589 (5,050,614) (480,975)
Small & Mid-Cap Growth
Fund................... 2,227,655 1,903 (2,229,558)
</TABLE>
7. OTHER
On October 20, 1999, the Board of Trustees of Phoenix-Engemann Funds
unanimously approved an Agreement and Plan of reorganization relating to the
proposed combination of the Phoenix-Aberdeen Worldwide Opportunities Fund and
the Phoenix-Engemann Global Growth Fund.
51
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 (CONTINUED)
Pursuant to the Agreement, the Global Growth Fund transferred substantially
all of its assets to the Worldwide Opportunities Fund in exchange for shares of
the Worldwide Opportunities Fund and the assumption by the Worldwide
Opportunities Fund of certain identified liabilities of the Global Growth Fund.
Following the exchange, the Global Growth Fund distributed the shares of the
Worldwide Opportunities Fund to its shareholders pro rata, in liquidation of the
Global Growth Fund.
TAX INFORMATION NOTICE (UNAUDITED)
For the fiscal year ended December 31, 1999, the following Funds distributed
long-term capital gain dividends as follows:
<TABLE>
<S> <C>
Balanced Return Fund.................... $ 8,937,070
Focus Growth Fund....................... 122,083,343
Nifty Fifty Fund........................ 43,569,850
Value 25 Fund........................... 201,184
</TABLE>
For federal income tax purposes, a percentage of the ordinary income dividends
paid by the following Funds qualify for the dividends received deduction for
corporate shareholders:
<TABLE>
<S> <C>
Balanced Return Fund........................ 76.54%
Value 25 Fund............................... 28.60%
</TABLE>
This report is not authorized for distribution to prospective investors in the
Phoenix-Engemann Funds unless preceded or accompanied by an effective Prospectus
which includes information concerning the sales charge, the Fund's record and
other pertinent information.
52
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To the Trustees and Shareholders
of The Phoenix-Engemann Funds
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for bond ratings), and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Phoenix-Engemann Balanced Return Fund, Phoenix-Engemann Focus Growth Fund
(formerly Phoenix-Engemann Growth Fund), Phoenix-Engemann Nifty Fifty Fund,
Phoenix-Engemann Small & Mid-Cap Growth Fund, and the Phoenix-Engemann Value 25
Fund (constituting the Phoenix-Engemann Funds, hereafter referred to as the
"Fund") at December 31, 1999, the results of each of their operations for the
year then ended, the changes in each of their net assets for the two years in
the period then ended and the financial highlights for each of the periods
indicated, in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 11, 2000
53
<PAGE>
PHOENIX-ENGEMANN FUNDS
600 North Rosemead Boulevard
Pasadena, California 91107-2133
TRUSTEES
Roger Engemann
Barry E. McKinley
Robert L. Peterson
Richard C. Taylor
Angela Wong
OFFICERS
Roger Engemann, President
Malcolm Axon, Chief Financial Officer
Tina L. Mitchell, Secretary
John S. Tilson, Vice President
Thomas N. Steenburg, General Counsel and
Vice President
INVESTMENT ADVISERS
Roger Engemann & Associates ("REA")
600 North Rosemead Boulevard
Pasadena, California 91107-2133
PRINCIPAL UNDERWRITER
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
CUSTODIAN
Union Bank of California
475 Sansome Street
San Francisco, California 94111
TRANSFER AGENT
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
160 Federal Street
Boston, Massachusetts 02110
HOW TO CONTACT US
The Fund Connection 1-800-243-1574
Customer Service 1-800-243-1574 (option 0)
Investment Strategy Hotline 1-800-243-4361 (option 2)
Marketing Department 1-800-243-4361 (option 3)
Text Telephone 1-800-243-1926
www.phoenixinvestments.com
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION PRSRT STD
PO Box 2200 U.S. Postage
Enfield CT 06083-2200 P A I D
Springfield, MA
Permit No. 444
[LOGO] PHOENIX
INVESTMENT PARTNERS
PXP 2115(2/00)
<PAGE>
The Annual Report of
Phoenix Strategic Equity Series Fund
for the year ended April 30, 2000
<PAGE>
Phoenix Investment Partners
ANNUAL REPORT
APRIL 30, 2000
ENGEMANN Phoenix-Engemann
Small-Cap Fund
-SENECA- Phoenix-Seneca
Growth Fund
(FORMERLY PHOENIX-SENECA
EQUITY OPPORTUNITIES FUND)
Phoenix-Seneca
Strategic Theme Fund
[LOGO]
<PAGE>
MESSAGE FROM THE PRESIDENT
DEAR SHAREHOLDER:
[PHOTO]
We are pleased to provide this annual report for the 12 months ended
April 30, 2000. We are also pleased to report on the strong performance achieved
during the last fiscal year.
For the 12 months ended April 30, 2000, Class A shares of the Phoenix-Engemann
Small Cap Fund rose 86.40%, more than double the 31.38% one-year return for the
Russell 2000 Growth Index.(1) Investors should note that the Fund's return for
the period was achieved largely due to investments in IPOs and a significant
overweighting in technology stocks.(2) Both the Phoenix-Seneca Growth Fund and
the Phoenix-Seneca Strategic Theme Fund also outperformed their benchmark index,
the S&P 500 Index.(3) Phoenix-Seneca Growth Fund Class A shares returned 28.97%
and Phoenix-Seneca Strategic Theme Fund Class A shares were up 53.26% compared
with a return of 10.34% for the S&P 500 Index for the one-year period.
On the following pages, your Funds' portfolio managers discuss their
investment strategy over the last year and their outlook for the next six
months. We hope you find their comments useful and informative. If you have any
questions, please call your financial advisor or a Phoenix customer service
representative at 1-800-243-1574 between 8 a.m. and 6 p.m. Eastern Time, Monday
through Friday.
Sincerely,
/s/ Philip R. McLoughlin
Philip R. McLoughlin
MAY 17, 2000
(1) THE RUSSELL 2000 GROWTH INDEX MEASURES SMALL-COMPANY GROWTH-ORIENTED STOCK
MARKET PERFORMANCE. PERFORMANCE IS CALCULATED ON A TOTAL-RETURN BASIS WITH
DIVIDENDS REINVESTED, AS REPORTED BY FRANK RUSSELL COMPANY. THE INDEX IS
UNMANAGED AND NOT AVAILABLE FOR DIRECT INVESTMENT.
(2) PERFORMANCE WAS ACHIEVED IN RAPIDLY RISING MARKETS AND MAY HAVE RESULTED
FROM PARTICIPATION IN INITIAL PUBLIC OFFERINGS (IPOS). THERE IS NO ASSURANCE
THAT SIMILAR RETURNS WILL BE ACHIEVED IN THE FUTURE.
(3) THE S&P 500 INDEX MEASURES STOCK MARKET PERFORMANCE. PERFORMANCE IS
CALCULATED ON A TOTAL-RETURN BASIS WITH DIVIDENDS REINVESTED, AS REPORTED BY
FRANK RUSSELL COMPANY. THE INDEX IS UNMANAGED AND NOT AVAILABLE FOR DIRECT
INVESTMENT.
Mutual funds are not insured by the FDIC; are not
deposits or other obligations of a bank and are not
guaranteed by a bank; and are subject to investment
risks, including possible loss of the principal
invested.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Phoenix-Engemann Small Cap Fund........................................... 3
Phoenix-Seneca Growth Fund................................................ 12
Phoenix-Seneca Strategic Theme Fund....................................... 20
Notes to Financial Statements............................................. 30
</TABLE>
2
<PAGE>
PHOENIX-ENGEMANN SMALL CAP FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGEMENT TEAM, ROGER ENGEMANN, CFA, LOU
ABEL, CFA, AND YOSSI LIPSKER
Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A: The Fund seeks long-term capital appreciation. The Fund may invest in smaller
capitalization stocks, and investors should note that small-company investing
involves added risks, including greater price volatility, less liquidity and
increased competitive threat.
Q: HOW DID THE FUND PERFORM OVER THE LAST FISCAL YEAR?
A: For the 12 months ended April 30, 2000, Class A shares rose 86.40% and
Class B shares gained 85.06%(1), far surpassing the 18.42% return for the
Russell 2000 Index as well as the 31.38% return for the Russell 2000 Growth
Index.(2) All performance figures assume reinvestment of distributions and
exclude the effect of sales charges.
Q: WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE?
A: The technology sector experienced very strong returns, fueled by
extraordinary growth trends in Internet-related companies, business-to-business
e-commerce and wireless communications. The Fund's overweighting in this sector
was a significant contributor to performance. In addition, some of our largest
holdings were also the biggest gainers. For example, Applied Micro Circuits, our
number one holding in the portfolio, was up nine-fold for the period we owned
it. Other significant contributors to performance included BEA Systems, an
e-commerce infrastructure company, and Commerce One, a business-to-business
e-commerce company.
Q: WHAT WERE SOME DISAPPOINTING PORTFOLIO HOLDINGS?
A: Some stocks that did not meet our expectations and have subsequently been
sold out of the portfolio included Nextcard, a marketer of consumer credit cards
via the Internet, CKE Restaurants, which had difficulty integrating its
acquisition of Hardee's, and Restoration Hardware, which experienced rising
inventory levels and disappointing sales.
Q: WERE ANY NEW STOCKS ADDED TO THE PORTFOLIO OVER THE LAST SIX MONTHS? ANY
POSITIONS SOLD?
A: We continue to find attractive new investment ideas in niche sectors with
exciting growth prospects. One area that we believe offers investor strong
opportunities for growth is the semiconductor capital equipment sector. Two
additions to the portfolio in this sector are PRI Automation and Rudolph
Technologies. We are also selectively adding some stocks in the health-care
industry, such as Onmicare, a pharmaceutical distributor to long-term care
facilities, and IDEC Pharmaceuticals, a biotechnolgy company with strong
prospects for its lead drug Rituxan.
(1) PERFORMANCE WAS ACHIEVED IN RAPIDLY RISING MARKETS AND MAY HAVE RESULTED
FROM PARTICIPATION IN INITIAL PUBLIC OFFERINGS (IPOS). THERE IS NO ASSURANCE
THAT SIMILAR RETURNS WILL BE ACHIEVED IN THE FUTURE.
(2) THE RUSSELL 2000 INDEX MEASURES SMALL-COMPANY STOCK MARKET PERFORMANCE. THE
RUSSELL 2000 GROWTH INDEX MEASURES SMALL-COMPANY GROWTH-ORIENTED STOCK
MARKET PERFORMANCE PERFORMANCE IS CALCULATED ON A TOTAL-RETURN BASIS WITH
DIVIDENDS REINVESTED, AS REPORTED BY FRANK RUSSELL COMPANY. THE INDICES ARE
UNMANAGED AND NOT AVAILABLE FOR DIRECT INVESTMENT.
3
<PAGE>
PHOENIX-ENGEMANN SMALL CAP FUND (CONTINUED)
Q: WHAT IS YOUR CURRENT OUTLOOK?
A: We live in a time of dramatic change and extraordinary opportunity. Wireless
communication, business-to-business e-commerce, biotechnolgy and broad-band
Internet access should all experience explosive growth. Historically, small- to
mid-capitalization companies have been best-positioned to capitalize on change
and benefit from such secular growth trends.
Since the beginning of the year, however, there has been no place to hide
from volatility. Rising interest rates have caused investors to reassess the
possibility that the economy will slow down. Although we continue to see
tremendous opportunity for growth, the market will most likely tread water until
the Federal Reserve stops raising interest rates.
In the meantime, we will maintain our investment strategy. We will stick
with what we deem to be the backbone companies in the most promising sectors --
companies we believe have strong fundamentals, superior management, market
leadership and significant growth potential.
MAY 26, 2000
4
<PAGE>
Phoenix-Engemann Small Cap Fund
AVERAGE ANNUAL TOTAL RETURNS(1) PERIODS ENDING 4/30/00
<TABLE>
<CAPTION>
INCEPTION INCEPTION
1 YEAR TO 4/30/00 DATE
------- ----------- ------------
<S> <C> <C> <C>
Class A Shares at NAV(2) 86.40% 34.12% 10/16/95
Class A Shares at POP(3) 75.69 32.38 10/16/95
Class B Shares at NAV(2) 85.06 33.12 10/16/95
Class B Shares with CDSC(4) 81.06 32.96 10/16/95
Russell 2000 Growth Index(6) 31.38 15.00 10/16/95
Russell 2000 Index(7) 18.42 13.53 10/16/95
</TABLE>
(1) Total returns are historical and include changes in share price and the
reinvestment of both dividends and capital gains distributions.
(2) "NAV" (Net Asset Value) total returns do not include the effect of any
sales charge.
(3) "POP" (Public Offering Price) total returns include the effect of the
maximum front-end 5.75% sales charge.
(4) CDSC (contingent deferred sales charge) is applied to redemptions of
certain classes of shares that do not have a sales charge applied at the
time of purchase. CDSC charges for B shares decline from 5% to 0% over a
five year period.
(5) This chart illustrates POP returns on Class A and Class B Shares since
10/16/95.
(6) The Russell 2000 Growth Index is a measure of small-capitalization growth-
oriented stock performance. The index's performance does not reflect sales
charges.
(7) The Russell 2000 Index is a measure of small-capitalization performance.
The index's performance does not reflect sales charges.
All returns represent past performance which may not be indicative of
future performance. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
GROWTH OF $10,000 PERIODS ENDING 4/30
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PHOENIX SMALL CAP FUND CLASS A(5) PHOENIX SMALL CAP FUND CLASS B(5) RUSSELL 2000 GROWTH INDEX(6) RUSSELL 2000 INDEX(7)
<S> <C> <C> <C> <C>
10/95 $9,425 $10,000 $10,000 $10,000
96 $15,785 $16,680 $12,004 $11,617
97 $13,349 $14,007 $10,378 $11,623
98 $20,335 $21,174 $14,913 $16,551
99 $19,184 $19,821 $14,351 $15,019
00 $35,759 $36,681 $18,854 $17,786
</TABLE>
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
10/16/95 (inception of the Fund) in Class A and Class B shares. The total return
for Class A shares reflects the maximum sales charge of 5.75% on the initial
investment. The total return for Class B shares reflects the CDSC charges which
decline from 5% to 0% over a five year period. Performance assumes dividends and
capital gains are reinvested.
SECTOR WEIGHTINGS 4/30/00
As a percentage of equity holdings
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Technology 52%
Consumer Cyclicals 14
Financials 8
Capital Goods 7
Health-Care 7
Transportation 4
Consumer Staples 4
Other 4
</TABLE>
5
<PAGE>
Phoenix-Engemann Small Cap Fund
TEN LARGEST HOLDINGS AT APRIL 30, 2000 (AS A PERCENTAGE OF TOTAL NET ASSETS)
<TABLE>
<C> <S> <C>
1. Applied Micro Circuits Corp. 5.9%
MANUFACTURER OF INTEGRATED CIRCUITS
2. BEA Systems, Inc. 4.8%
COMPUTER SOFTWARE DESIGNER
3. Advanced Energy Industries, Inc. 3.4%
POWER CONVERSION AND CONTROL SYSTEMS MANUFACTURER
4. Micrel, Inc. 3.2%
ANALOG POWER INTEGRATED CIRCUIT PRODUCER
5. Kansas City Southern Industries, Inc. 3.0%
FINANCIAL SERVICES COMPANY
6. Metris Companies, Inc. 2.7%
DIRECT MARKETER OF CONSUMER CREDIT PRODUCTS
7. Cost Plus, Inc. 2.5%
SPECIALTY RETAILER OF CASUAL HOME LIVING AND ENTERTAINING PRODUCTS
8. Flextronics International Ltd. 2.5%
ELECTRONIC MANUFACTURING SERVICES PROVIDER
9. Peregrine Systems, Inc. 2.0%
COMPUTER SOFTWARE DEVELOPER
10. Commerce One, Inc. 2.0%
PROVIDER OF BUSINESS-TO-BUSINESS ELECTRONIC COMMERCE SOLUTIONS
</TABLE>
INVESTMENTS AT APRIL 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMMON STOCKS--94.6%
AIR FREIGHT--1.2%
Expeditors International of Washington,
Inc..................................... 90,000 $ 3,847,500
BIOTECHNOLOGY--3.1%
Aviron(b)............................... 65,000 1,564,062
Cor Therapeutics, Inc.(b)............... 51,000 3,885,562
Coulter Pharmaceutical, Inc.(b)......... 30,000 547,500
Gene Logic, Inc.(b)..................... 24,000 645,000
Pharmacyclics, Inc.(b).................. 30,000 1,361,250
Progenics Pharmaceuticals, Inc.(b)...... 45,000 2,070,000
------------
10,073,374
------------
BROADCASTING (TELEVISION, RADIO & CABLE)--0.3%
Spanish Broadcasting System, Inc. Class
A(b).................................... 45,000 840,937
COMMUNICATIONS EQUIPMENT--1.3%
Audiovox Corp. Class A(b)............... 45,600 1,564,650
Metawave Communications Corp.(b)........ 66,250 877,812
Ulticom, Inc.(b)........................ 52,000 1,716,000
------------
4,158,462
------------
COMPUTERS (SOFTWARE & SERVICES)--21.2%
Agile Software Corp.(b)................. 40,000 1,482,500
Aspsecure.com Corp.(b)(c)............... 180,000 585,000
BEA Systems, Inc.(b).................... 320,000 15,440,000
Bluestone Software, Inc.(b)............. 111,000 2,337,937
C-bridge Internet Solutions, Inc.(b).... 50,000 1,325,000
Commerce One, Inc.(b)................... 105,000 6,411,562
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)--CONTINUED
E.piphany, Inc.(b)...................... 12,500 $ 825,781
Extensity, Inc.(b)...................... 70,500 863,625
HNC Software, Inc.(b)................... 20,000 990,000
Integrated Information Systems,
Inc.(b)................................. 79,000 538,187
Interwoven, Inc.(b)..................... 30,000 2,077,500
Keynote Systems, Inc.(b)................ 73,000 3,275,875
LivePerson, Inc.(b)..................... 208,000 1,300,000
Luminant Worldwide Corp.(b)............. 100,000 868,750
MatrixOne, Inc.(b)...................... 26,950 889,350
NYFIX, Inc.(b).......................... 170,000 4,579,375
New Era of Networks, Inc.(b)............ 50,000 1,568,750
PC-Tel, Inc.(b)......................... 26,000 871,000
Peregrine Systems, Inc.(b).............. 270,000 6,496,875
Predictive Systems, Inc.(b)............. 41,300 1,946,262
Prime Response, Inc.(b)................. 48,200 313,300
Primus Knowledge Solutions.............. 64,000 2,380,000
PurchasePro.com, Inc.(b)................ 50,500 1,515,000
Sapient Corp.(b)........................ 50,000 3,959,375
Selectica, Inc.(b)...................... 850 32,300
Silverstream Software, Inc.(b).......... 21,000 829,500
Software Technologies Corp.(b).......... 150,000 2,681,250
Versata, Inc.(b)........................ 31,950 970,481
Websense, Inc.(b)....................... 52,000 1,690,000
------------
69,044,535
------------
CONSUMER FINANCE--2.9%
Metris Companies, Inc................... 230,000 8,625,000
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small Cap Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
CONSUMER FINANCE--CONTINUED
NextCard, Inc.(b)....................... 71,000 $ 749,938
------------
9,374,938
------------
ELECTRICAL EQUIPMENT--6.5%
Advanced Energy Industries, Inc.(b)..... 160,000 11,040,000
Flextronics International Ltd.(b)....... 115,000 8,078,750
Viasystems Group, Inc.(b)............... 121,000 1,928,438
------------
21,047,188
------------
ELECTRONICS (INSTRUMENTATION)--3.5%
Aclara Biosciences, Inc.(b)............. 13,000 495,625
Caliper Technologies Corp.(b)........... 15,000 562,500
Meade Instruments Corp.(b).............. 85,000 6,215,625
Rudolph Technologies, Inc.(b)........... 140,000 4,252,500
------------
11,526,250
------------
ELECTRONICS (SEMICONDUCTORS)--20.4%
Anadigics, Inc.(b)...................... 63,500 4,778,375
Applied Micro Circuits Corp.(b)......... 150,000 19,331,250
Conexant Systems, Inc.(b)............... 90,000 5,388,750
Intersil Holding Corp.(b)............... 67,500 2,362,500
Micrel, Inc.(b)......................... 120,000 10,380,000
NETsilicon, Inc.(b)..................... 150,000 2,615,625
Quantam Effect Devices, Inc.(b)......... 27,100 1,578,575
Quicklogic Corp.(b)..................... 102,000 2,996,250
SDL, Inc.(b)............................ 30,000 5,850,000
Silcon Storage Technology, Inc.(b)...... 52,000 5,070,000
TriQuint Semiconductor, Inc.(b)......... 60,000 6,168,750
------------
66,520,075
------------
ENGINEERING & CONSTRUCTION--0.6%
SBA Communications Corp.(b)............. 48,000 1,950,000
EQUIPMENT (SEMICONDUCTORS)--2.7%
Cymer, Inc.(b).......................... 91,000 3,554,688
Mattson Technology, Inc.(b)............. 27,000 1,326,375
PRI Automation, Inc.(b)................. 50,000 3,993,750
------------
8,874,813
------------
FINANCIAL (DIVERSIFIED)--2.2%
Federal Agricultural Mortgage Corp.
Class C(b).............................. 176,000 2,640,000
Pinnacle Holdings, Inc. (b)............. 80,000 4,495,000
------------
7,135,000
------------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--1.4%
Emisphere Technologies, Inc.(b)......... 15,900 $ 652,645
Inhale Therapeutic Systems, Inc.(b)..... 40,000 2,475,000
Tanox, Inc.(b).......................... 39,000 1,140,750
ViroPharma, Inc.(b)..................... 9,000 136,125
------------
4,404,520
------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.4%
MiniMed, Inc. (b)....................... 36,000 4,425,750
HEALTH CARE (SPECIALIZED SERVICES)--0.7%
Omnicare, Inc........................... 145,000 2,202,188
INVESTMENT MANAGEMENT--1.5%
Gabelli Asset Management, Inc. Class
A(b).................................... 241,500 4,799,813
RAILROADS--3.0%
Kansas City Southern Industries, Inc.... 135,000 9,703,125
RESTAURANTS--1.6%
Cheesecake Factory, Inc. (The)(b)....... 130,000 5,321,875
RETAIL (BUILDING SUPPLIES)--0.5%
Fastenal Co............................. 28,000 1,636,250
RETAIL (DISCOUNTERS)--1.8%
99 Cents Only Stores(b)................. 160,000 6,020,000
RETAIL (FOOD CHAINS)--2.0%
Smart & Final, Inc.(b).................. 303,832 2,411,667
Whole Foods Market, Inc.(b)............. 95,000 4,043,438
------------
6,455,105
------------
RETAIL (SPECIALTY)--3.7%
Cost Plus, Inc.(b)...................... 270,000 8,251,875
Williams-Sonoma, Inc.(b)................ 112,000 3,878,000
------------
12,129,875
------------
RETAIL (SPECIALTY-APPAREL)--1.0%
Children's Place Retail Stores, Inc.
(The)(b)................................ 148,000 3,293,000
SERVICES (ADVERTISING/MARKETING)--0.8%
MyPoints.com, Inc.(b)................... 20,000 350,000
Women.com Networks, Inc.(b)............. 455,930 2,279,650
------------
2,629,650
------------
SERVICES (COMMERCIAL & CONSUMER)--6.3%
Corporate Executive Board Co.
(The)(b)................................ 100,000 5,875,000
Diamond Technology Partners, Inc. (b)... 26,500 2,096,813
MIPS Technologies, Inc. Class A(b)...... 90,000 2,598,750
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Phoenix-Engemann Small Cap Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
SERVICES (COMMERCIAL & CONSUMER)--CONTINUED
NCO Group, Inc.(b)...................... 92,000 $ 3,162,500
Pinnacle Oil International, Inc.(b)..... 127,000 3,683,000
Universal Access, Inc.(b)............... 66,300 1,359,150
Vicinity Corp.(b)....................... 57,500 682,813
i3 Mobile, Inc.(b)...................... 52,000 975,000
------------
20,433,026
------------
SERVICES (COMPUTER SYSTEMS)--0.7%
eMachines, Inc.(b)...................... 260,000 2,226,250
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.5%
Dobson Communications Corp. Class
A(b).................................... 69,000 1,768,125
TELECOMMUNICATIONS (LONG DISTANCE)--1.8%
Network Plus Corp.(b)................... 121,000 2,299,000
WinStar Communications, Inc.(b)......... 90,000 3,588,750
------------
5,887,750
------------
- --------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $202,391,047) 307,729,374
- --------------------------------------------------------------------
FOREIGN COMMON STOCKS--3.9%
COMMUNICATIONS EQUIPMENT--0.8%
Research in Motion Ltd. (Canada)(b)..... 60,000 2,550,000
COMPUTERS (SOFTWARE & SERVICES)--0.2%
BreezeCom Ltd. (Israel)(b).............. 26,000 715,000
INSURANCE (LIFE/HEALTH)--1.3%
London Pacific Group Ltd. Sponsored ADR
(United Kingdom)(b)..................... 322,800 4,075,350
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION)--1.6%
Encal Energy Ltd. (Canada)(b)........... 968,800 $ 5,230,890
- --------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $7,716,734) 12,571,240
- --------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--98.5%
(IDENTIFIED COST $210,107,781) 320,300,614
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------ ------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--2.0%
COMMERCIAL PAPER--2.0%
Lexington Parker Capital Co.
LLC 6.06%, 5/1/00............. A-1+ $6,680 6,680,000
- ------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $6,680,000) 6,680,000
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL INVESTMENTS--100.5%
(IDENTIFIED COST $216,787,781) 326,980,614(a)
Cash and receivables, less liabilities--(0.5%) (1,652,552)
------------
NET ASSETS--100.0% $325,328,062
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $137,116,626 and gross
depreciation of $28,069,841 for federal income tax purposes. At April 30,
2000, the aggregate cost of securities for federal income tax purposes was
$217,933,829.
(b) Non-income producing.
(c) Security valued at fair value as determined in good faith by or under the
direction of the Trustees.
8 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small Cap Fund
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $216,787,781) $ 326,980,614
Cash 4,361
Receivables
Investment securities sold 1,981,641
Fund shares sold 384,871
Dividends 46,483
Prepaid expenses 3,171
--------------
Total assets 329,401,141
--------------
LIABILITIES
Payables
Investment securities purchased 2,772,658
Fund shares repurchased 702,439
Investment advisory fee 197,826
Distribution fee 151,148
Transfer agent fee 101,788
Financial agent fee 26,596
Trustees' fee 12,559
Accrued expenses 108,065
--------------
Total liabilities 4,073,079
--------------
NET ASSETS $ 325,328,062
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 146,218,135
Accumulated net realized gain 68,917,094
Net unrealized appreciation 110,192,833
--------------
NET ASSETS $ 325,328,062
==============
CLASS A
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $185,532,582) 6,324,215
Net asset value per share $29.34
Offering price per share $29.34/(1-5.75%) $31.13
CLASS B
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $139,795,480) 4,950,241
Net asset value and offering price per share $28.24
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 329,178
Dividends 118,311
--------------
Total investment income 447,489
--------------
EXPENSES
Investment advisory fee 2,089,096
Distribution fee, Class A 401,625
Distribution fee, Class B 1,178,959
Financial agent 242,575
Transfer agent 608,840
Printing 72,809
Custodian 29,754
Professional 28,617
Trustees 24,632
Registration 20,463
Miscellaneous 33,116
--------------
Total expenses 4,730,486
Custodian fees paid indirectly (3,597)
--------------
Net expenses 4,726,889
--------------
NET INVESTMENT LOSS (4,279,400)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 98,505,362
Net realized gain on foreign currency transactions 668
Net change in unrealized appreciation (depreciation) on
investments 75,397,017
--------------
NET GAIN ON INVESTMENTS 173,903,047
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 169,623,647
==============
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Phoenix-Engemann Small Cap Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
4/30/00 4/30/99
------------- ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (4,279,400) $ (3,189,899)
Net realized gain (loss) 98,506,030 (24,983,780)
Net change in unrealized appreciation
(depreciation) 75,397,017 6,208,917
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 169,623,647 (21,964,762)
------------- ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A -- (5,773,229)
Net realized gains, Class B -- (4,219,826)
------------- ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS -- (9,993,055)
------------- ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(25,110,060 and 18,013,110 shares,
respectively) 524,113,700 273,064,204
Net asset value of shares issued from
reinvestment of distributions
(0 and 360,829 shares, respectively) -- 5,383,573
Cost of shares repurchased (26,495,134
and 22,385,155 shares, respectively) (561,376,449) (343,459,404)
------------- ------------
Total (37,262,749) (65,011,627)
------------- ------------
CLASS B
Proceeds from sales of shares
(1,120,897 and 987,925 shares,
respectively) 25,694,560 14,507,598
Net asset value of shares issued from
reinvestment of distributions
(0 and 243,730 shares, respectively) -- 3,536,528
Cost of shares repurchased (2,025,437
and 4,075,435 shares, respectively) (43,389,442) (61,757,518)
------------- ------------
Total (17,694,882) (43,713,392)
------------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS (54,957,631) (108,725,019)
------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS 114,666,016 (140,682,836)
NET ASSETS
Beginning of period 210,662,046 351,344,882
------------- ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
$0 AND $0, RESPECTIVELY] $ 325,328,062 $210,662,046
============= ============
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small Cap Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------
FROM
YEAR ENDED APRIL 30 INCEPTION
----------------------------------------------- 10/16/95 TO
2000 1999 1998 1997 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.74 $ 17.37 $ 14.13 $ 16.74 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.31) (0.14)(5) (0.08)(5) (0.05)(5) (0.04)(1)(5)
Net realized and unrealized gain (loss) 13.91 (0.88) 6.80 (2.53) 6.79
-------- -------- -------- -------- -------
TOTAL FROM INVESTMENT OPERATIONS 13.60 (1.02) 6.72 (2.58) 6.75
-------- -------- -------- -------- -------
LESS DISTRIBUTIONS
Dividends from net realized gains -- (0.61) (3.48) (0.02) --
In excess of net investment income -- -- -- -- (0.01)
In excess of net realized gains -- -- -- (0.01) --
-------- -------- -------- -------- -------
TOTAL DISTRIBUTIONS -- (0.61) (3.48) (0.03) (0.01)
-------- -------- -------- -------- -------
Change in net asset value 13.60 (1.63) 3.24 (2.61) 6.74
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD $ 29.34 $ 15.74 $ 17.37 $ 14.13 $ 16.74
======== ======== ======== ======== =======
Total return(2) 86.40% (5.66)% 52.33 % (15.43)% 67.48 %(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $185,533 $121,313 $203,560 $155,089 $98,372
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.38 %(6) 1.46 %(6) 1.31 % 1.37 % 1.50 %(3)
Net investment income (loss) (1.22)% (0.95)% (0.48)% (0.28)% (0.53)%(3)
Portfolio turnover 113 % 276% 498% 325% 103 %(4)
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------
FROM
YEAR ENDED APRIL 30 INCEPTION
--------------------------------------------- 10/16/95 TO
2000 1999 1998 1997 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.26 $ 16.99 $ 13.98 $ 16.68 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.47) (0.25)(5) (0.21)(5) (0.17)(5) (0.09)(1)(5)
Net realized and unrealized gain (loss) 13.45 (0.87) 6.70 (2.50) 6.77
-------- ------- -------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 12.98 (1.12) 6.49 (2.67) 6.68
-------- ------- -------- ------- -------
LESS DISTRIBUTIONS
Dividends from net realized gains -- (0.61) (3.48) (0.02) --
In excess of net realized gains -- -- -- (0.01) --
-------- ------- -------- ------- -------
TOTAL DISTRIBUTIONS -- (0.61) (3.48) (0.03) --
-------- ------- -------- ------- -------
Change in net asset value 12.98 (1.73) 3.01 (2.70) 6.68
-------- ------- -------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 28.24 $ 15.26 $ 16.99 $ 13.98 $ 16.68
======== ======= ======== ======= =======
Total return(2) 85.06% (6.39)% 51.16 % (16.03)% 66.80 %(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $139,795 $89,349 $147,785 $97,647 $45,168
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.13 %(6) 2.21 %(6) 2.06 % 2.12 % 2.26 %(3)
Net investment income (loss) (1.97)% (1.70)% (1.22)% (1.03)% (1.44)%(3)
Portfolio turnover 113 % 276 % 498 % 325 % 103 %(4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment advisor of $0.02
and $0.02, respectively.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized
(4) Not annualized
(5) Computed using average shares outstanding.
(6) The ratio of operating expenses to average net assets excludes the effect
of expense offsets for custodian fees; if expense offsets were included,
the ratio would not significantly differ.
See Notes to Financial Statements 11
<PAGE>
PHOENIX-SENECA GROWTH FUND
(FORMERLY CALLED PHOENIX-SENECA EQUITY OPPORTUNITIES FUND)
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGEMENT TEAM, GAIL SENECA, PH.D., RICK
LITTLE, CFA AND RON JACKS, CFA
Q: WHY DID THE FUND'S NAME CHANGE?
A: Effective May 12, 2000, Phoenix-Seneca Growth Fund merged with Phoenix-Seneca
Equity Opportunities Fund. Prior to the funds' merger, Seneca Capital Management
LLC managed both funds using substantially identical investment objectives and
primary investment strategies, which will also be used with the combined fund.
The combined fund is called Phoenix-Seneca Growth Fund, and the benchmark index
is the S&P 500 Index.(1) The total expense ratio is projected to be slightly
lower than the total expense ratios of the former individual funds. The
reorganization was structured as a non-taxable transaction for shareholders.
Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A: The Fund seeks long-term capital appreciation by investing primarily in
common stocks of dynamic, rapidly growing companies and focusing on strong
relative earnings growth. The Fund may invest in smaller capitalization stocks,
and investors should note that small-company investing involves added risks,
including greater price volatility, less liquidity and increased competitive
threat.
Q: HOW DID THE FUND PERFORM OVER THE LAST FISCAL YEAR?
A: For the 12 months ended April 30, 2000, Class A shares rose 28.97% and
Class B shares gained 28.11% compared with a return of 10.34% for the S&P 500
Index.(1) All performance figures assume reinvestment of distributions and
exclude the effect of sales charges.
Q: WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE?
A: Seneca's emphasis on technology companies and good stock selection within the
technology sector have helped performance. Technology was the best performing
sector in the S&P 500 Index, returning 13.3% for the first quarter of 2000, the
most recent reporting period available. Eight of the top ten performing stocks
in the S&P 500 Index were technology names. Technology and communications
companies like Intel (semiconductor manufacturer), Nortel Networks
(communications equipment), Corning (fiber optics) and Nokia (telecommunications
systems and equipment) have all produced excellent results in the last year.
Q: WHAT IS YOUR PERSPECTIVE ON THE MARKET'S FOCUS ON TECHNOLOGY STOCKS?
A: An outstanding feature of the market is its bifurcation into two distinct
camps: the new- and old-economy stocks. Almost without exception, only
new-economy stocks have participated in this year's bull market. This market
divide began in earnest in 1998. Since then, technology stocks have risen at
3-1/2 times the rate of non-tech stocks. The bulk of the market -- the nearly
70% of S&P 500 stocks that are not technology companies -- has not appreciated
markedly in two years.
(1) THE S&P 500 INDEX MEASURES STOCK MARKET PERFORMANCE. PERFORMANCE IS
CALCULATED ON A TOTAL-RETURN BASIS WITH DIVIDENDS REINVESTED, AS REPORTED BY
FRANK RUSSELL COMPANY. THE INDEX IS UNMANAGED AND NOT AVAILABLE FOR DIRECT
INVESTMENT.
12
<PAGE>
PHOENIX-SENECA GROWTH FUND (CONTINUED)
Are we in the midst of a technology mania in the market? Or, is the market
reflecting genuinely revolutionary trends in productivity, which will foster
durable prosperity for the U.S. economy?
We would answer both questions affirmatively. Speculation in "concept"
stocks -- companies with an idea but not a business model -- is rampant.
Traders, many of whom have no apparent understanding of investment fundamentals,
routinely send stocks soaring beyond reason. Excitement over the initial public
offering of Palm Inc., for example, drove Palm's valuation to a level greater
than that of its parent company. Frenzied activity rotates from one set of "hot"
stocks to the next.
We are pleased to have produced such strong results. When the market is as
narrow as it has been, stock selection is crucial. A strong fundamental
research-based approach, such as ours, should continue to excel in this type of
environment, although past performance is not a guarantee of future results.
MAY 17, 2000
13
<PAGE>
Phoenix-Seneca Growth Fund
AVERAGE ANNUAL TOTAL RETURNS(1) PERIODS ENDING 4/30/00
<TABLE>
<CAPTION>
INCEPTION INCEPTION
1 YEAR 5 YEARS 10 YEARS TO 4/30/00 DATES
------ ------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Class A Shares at NAV(2) 28.97% 20.57% 15.46% -- --
Class A Shares at POP(3) 21.56 19.15 14.78 -- --
Class B Shares at NAV(2) 28.11 19.71 -- 18.48% 7/19/94
Class B Shares with CDSC(4) 24.11 19.71 -- 18.48 7/19/94
Russell 2000 Growth Index(6) 31.38 16.96 13.96 17.08 7/19/94
S&P 500 Index(7) 10.34 25.37 18.83 24.66 7/19/94
</TABLE>
(1) Total returns are historical and include changes in share price and the
reinvestment of both dividends and capital gains distributions.
(2) "NAV" (Net Asset Value) total returns do not include the effect of any
sales charge.
(3) "POP" (Public Offering Price) total returns include the effect of the
maximum front-end 5.75% sales charge.
(4) CDSC (contingent deferred sales charge) is applied to redemptions of
certain classes of shares that do not have a sales charge applied at the
time of purchase. CDSC charges for B shares decline from 5% to 0% over a
five year period.
(5) This chart illustrates POP returns on Class A Shares for ten years. Returns
on Class B Shares will vary due to differing sales charges.
(6) The Russell 2000 Growth Index is a measure of small-capitalization growth-
oriented stock performance. The index's performance does not reflect sales
charges.
(7) The S&P 500 Index is a measure of stock market total return performance.
The S&P 500's performance does not reflect sales charges.
All returns represent past performance which may not be indicative of
future performance. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
GROWTH OF $10,000 PERIODS ENDING 4/30
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PHOENIX-SENECA GROWTH RUSSELL 2000 S&P
FUND CLASS A(5) GROWTH INDEX(6) 500
INDEX(7)
<S> <C> <C> <C>
04/90 $9,425 $10,000 $10,000
91 $10,571 $11,279 $11,763
92 $11,659 $12,793 $13,406
93 $13,583 $13,547 $14,645
94 $14,261 $15,517 $15,428
95 $15,568 $16,871 $18,124
96 $20,684 $23,511 $23,610
97 $18,162 $20,326 $29,561
98 $26,273 $29,209 $41,761
99 $30,761 $28,107 $50,871
00 $39,674 $36,928 $56,133
</TABLE>
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
4/30/90 in Class A shares and reflects the maximum sales charge of 5.75% on the
initial investment. Performance assumes dividends and capital gains are
reinvested. The performance of other share classes will be greater or less than
that shown based on differences in inception dates, fees and sales charges.
SECTOR WEIGHTINGS 4/30/00
As a percentage of equity holdings
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Technology 34%
Consumer Staples 11
Health-Care 11
Financials 11
Capital Goods 9
Basic Materials 7
Consumer Cyclicals 7
Other 10
</TABLE>
14
<PAGE>
Phoenix-Seneca Growth Fund
TEN LARGEST HOLDINGS AT APRIL 30, 2000 (AS A PERCENTAGE OF TOTAL NET ASSETS)
<TABLE>
<C> <S> <C>
1. Corning, Inc. 4.9%
SPECIALTY TECHNOLOGY-BASED MANUFACTURER
2. Halliburton Co. 4.3%
LEADING PROVIDER OF OIL FIELD SERVICES
3. STMicroelectronics N.V. (Netherlands) 4.2%
MANUFACTURER OF SEMICONDUCTOR INTEGRATED CIRCUITS
4. General Electric Co. 4.0%
DIVERSIFIED INDUSTRIAL, MANUFACTURING AND FINANCIAL SERVICES
PROVIDER
5. Nokia Oyj Sponsored ADR (Finland) 4.0%
LEADING TELECOMMUNICATIONS EQUIPMENT PROVIDER
6. Morgan Stanley Dean Witter & Co. 3.9%
LEADING GLOBAL FINANCIAL SERVICES
7. AMFM, Inc. 3.9%
RADIO BROADCASTING AND MEDIA-RELATED COMPANY
8. Applied Materials, Inc. 3.8%
SEMICONDUCTOR EQUIPMENT AND MATERIAL SUPPLIER
9. Citigroup, Inc. 3.8%
DIVERSIFIED FINANCIAL SERVICES HOLDING COMPANY
10. Lowe's Companies, Inc. 3.7%
BUILDING MATERIALS RETAILER AND DISTRIBUTOR
</TABLE>
INVESTMENTS AT APRIL 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMMON STOCKS--85.8%
ALUMINUM--2.5%
Alcoa, Inc.............................. 91,750 $ 5,952,281
BANKS (MAJOR REGIONAL)--2.6%
Mellon Financial Corp................... 194,880 6,260,520
BEVERAGES (NON-ALCOHOLIC)--2.3%
Coca-Cola Co. (The)..................... 116,300 5,473,369
BROADCASTING (TELEVISION, RADIO & CABLE)--3.9%
AMFM, Inc.(b)........................... 140,010 9,293,164
CHEMICALS--1.9%
Dow Chemical Co. (The).................. 39,360 4,447,680
COMMUNICATIONS EQUIPMENT--7.6%
General Motors Corp. Class H(b)......... 87,760 8,452,385
Metricom, Inc.(b)....................... 29,700 833,456
Motorola, Inc........................... 73,450 8,745,141
------------
18,030,982
------------
COMPUTERS (HARDWARE)--3.0%
Sun Microsystems, Inc.(b)............... 78,260 7,195,029
COMPUTERS (NETWORKING)--3.1%
Cisco Systems, Inc.(b).................. 105,472 7,312,176
ELECTRICAL EQUIPMENT--4.0%
General Electric Co..................... 60,600 9,529,350
ELECTRONICS (SEMICONDUCTORS)--3.2%
Intel Corp.............................. 59,540 7,550,416
ENTERTAINMENT--2.1%
Walt Disney Co. (The)................... 114,050 4,939,791
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
EQUIPMENT (SEMICONDUCTORS)--4.4%
Applied Materials, Inc.(b).............. 90,000 $ 9,163,125
KLA-Tencor Corp.(b)..................... 17,430 1,305,071
------------
10,468,196
------------
FINANCIAL (DIVERSIFIED)--7.7%
Citigroup, Inc.......................... 153,855 9,144,756
Morgan Stanley Dean Witter & Co......... 121,480 9,323,590
------------
18,468,346
------------
HEALTH CARE (DIVERSIFIED)--2.4%
Johnson & Johnson....................... 70,890 5,848,425
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--6.0%
Merck & Co., Inc........................ 126,240 8,773,680
Pfizer, Inc............................. 131,290 5,530,591
------------
14,304,271
------------
HEALTH CARE (HOSPITAL MANAGEMENT)--2.1%
Columbia/HCA Healthcare Corp............ 179,100 5,093,156
HOUSEHOLD PRODUCTS (NON-DURABLE)--2.4%
Clorox Co. (The)........................ 153,320 5,634,510
MANUFACTURING (DIVERSIFIED)--4.9%
Corning, Inc............................ 59,230 11,697,925
NATURAL GAS--1.9%
El Paso Energy Corp..................... 107,960 4,588,300
OIL & GAS (DRILLING & EQUIPMENT)--5.3%
Diamond Offshore Drilling, Inc.......... 58,770 2,369,166
Halliburton Co.......................... 230,170 10,170,637
------------
12,539,803
------------
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Phoenix-Seneca Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
PAPER & FOREST PRODUCTS--2.6%
Champion International Corp............. 93,000 $ 6,114,750
RETAIL (BUILDING SUPPLIES)--3.7%
Lowe's Cos., Inc........................ 178,240 8,822,880
RETAIL (GENERAL MERCHANDISE)--3.1%
Wal-Mart Stores, Inc.................... 134,820 7,465,657
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--3.1%
Nextel Communications, Inc.
Class A(b).............................. 68,550 7,501,941
- --------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $165,416,142) 204,532,918
- --------------------------------------------------------------------
FOREIGN COMMON STOCKS--11.8%
COMMUNICATIONS EQUIPMENT--7.6%
Nokia Oyj Sponsored ADR (Finland)....... 166,160 9,450,350
Nortel Networks Corp. (Canada).......... 76,580 8,672,685
------------
18,123,035
------------
ELECTRONICS (SEMICONDUCTORS)--4.2%
STMicroelectronics N.V. (Netherlands)... 52,230 9,907,378
- --------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $12,717,055) 28,030,413
- --------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--97.6%
(IDENTIFIED COST $178,133,197) 232,563,331
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------ -----------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--11.2%
COMMERCIAL PAPER--11.2%
Albertson's, Inc. 5.95%,
5/1/00.......................... A-1 $3,305 $ 3,305,000
Pitney Bowes Credit Corp. 6.05%,
5/1/00.......................... A-1+ 7,210 7,210,000
SBC Communications, Inc. 6%,
5/2/00.......................... A-1+ 4,395 4,394,267
Lexington Parker Capital Co. LLC
6.05%, 5/3/00................... A-1+ 7,000 6,997,647
Gannett Co., Inc. 6%, 5/4/00.... A-1+ 2,225 2,223,888
Coca-Cola Co. 6%, 5/10/00....... A-1 2,140 2,136,790
Special Purpose Accounts
Receivable Cooperative Corp.
6.10%, 5/31/00.................. A-1+ 385 383,126
-----------
26,650,718
-----------
- -------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $26,650,635) 26,650,718
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL INVESTMENTS--108.8%
(IDENTIFIED COST $204,783,832) 259,214,049(a)
Cash and receivables, less liabilities--(8.8%) (20,886,617)
-------------
NET ASSETS--100.0% $ 238,327,432
=============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $61,955,414 and gross
depreciation of $7,791,197 for federal income tax purposes. At April 30,
2000, the aggregate cost of securities for federal income tax purposes was
$205,049,832.
(b) Non-income producing.
16 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $204,783,832) $ 259,214,049
Cash 6,740
Receivables
Investment securities sold 2,246,071
Dividends and interest 133,976
Fund shares sold 30,193
Prepaid expenses 2,707
--------------
Total assets 261,633,736
--------------
LIABILITIES
Payables
Investment securities purchased 22,842,711
Fund shares repurchased 128,050
Investment advisory fee 138,364
Distribution fee 51,521
Transfer agent fee 44,410
Financial agent fee 19,653
Trustees' fee 12,559
Accrued expenses 69,036
--------------
Total liabilities 23,306,304
--------------
NET ASSETS $ 238,327,432
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest 159,999,268
Accumulated net realized gain 23,897,947
Net unrealized appreciation 54,430,217
--------------
NET ASSETS $ 238,327,432
==============
CLASS A
Shares of beneficial interest outstanding, $0.0001
par value, unlimited authorization
(Net Assets $234,984,786) 23,994,234
Net asset value per share $9.79
Offering price per share $9.79/(1-5.75%) $10.39
CLASS B
Shares of beneficial interest outstanding, $0.0001
par value, unlimited authorization
(Net Assets $3,342,646) 360,643
Net asset value and offering price per share $9.27
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 1,768,478
Interest 371,646
Foreign taxes withheld (5,819)
--------------
Total investment income 2,134,305
--------------
EXPENSES
Investment advisory fee 1,581,392
Distribution fee, Class A 557,049
Distribution fee, Class B 30,935
Financial agent fee 217,453
Transfer agent 263,837
Printing 38,050
Professional 27,958
Trustees 24,631
Registration 22,795
Custodian 17,492
Miscellaneous 12,343
--------------
Total expenses 2,793,935
--------------
NET INVESTMENT LOSS (659,630)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 47,864,059
Net change in unrealized appreciation (depreciation) on
investments 9,843,515
--------------
NET GAIN ON INVESTMENTS 57,707,574
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 57,047,944
==============
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Phoenix-Seneca Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
4/30/00 4/30/99
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (659,630) $ (414,880)
Net realized gain (loss) 47,864,059 8,800,896
Net change in unrealized appreciation
(depreciation) 9,843,515 22,526,413
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 57,047,944 30,912,429
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (30,911,648) (14,338,287)
Net realized gains, Class B (444,344) (184,555)
------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (31,355,992) (14,522,842)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (526,390
and 776,243 shares, respectively) 5,149,295 6,205,793
Net asset value of shares issued from
reinvestment of distributions
(2,479,898 and 1,318,749 shares,
respectively) 23,274,864 10,444,800
Cost of shares repurchased (2,156,498
and 3,121,846 shares, respectively) (20,610,990) (25,370,488)
------------ ------------
Total 7,813,169 (8,719,895)
------------ ------------
CLASS B
Proceeds from sales of shares (100,517
and 113,886 shares, respectively) 923,422 896,049
Net asset value of shares issued from
reinvestment of distributions
(46,105 and 20,248 shares,
respectively) 412,196 154,289
Cost of shares repurchased (105,845
and 77,292 shares, respectively) (979,088) (601,028)
------------ ------------
Total 356,530 449,310
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 8,169,699 (8,270,585)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 33,861,651 8,119,002
NET ASSETS
Beginning of period 204,465,781 196,346,779
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
$0 AND $0, RESPECTIVELY] $238,327,432 $204,465,781
============ ============
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
YEAR ENDED APRIL 30,
------------------------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.72 $ 8.04 $ 6.89 $ 8.81 $ 7.40
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(2) (0.03) (0.02) (0.04) (0.03) (0.04)
Net realized and unrealized gain
(loss) 2.46 1.33 2.82 (0.90) 2.34
------- ------------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 2.43 1.31 2.78 (0.93) 2.30
------- ------------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (1.36) (0.63) (1.63) (0.94) (0.89)
In excess of net realized gains -- -- -- (0.05) --
------- ------------- --------- --------- ---------
TOTAL DISTRIBUTIONS (1.36) (0.63) (1.63) (0.99) (0.89)
------- ------------- --------- --------- ---------
Change in net asset value 1.07 0.68 1.15 (1.92) 1.41
------- ------------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 9.79 $ 8.72 $ 8.04 $ 6.89 $ 8.81
======= ============= ========= ========= =========
Total return(1) 28.97 % 17.08 % 44.66 % (12.19)% 32.86 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $234,985 $201,789 $194,296 $163,396 $213,600
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.23 % 1.24 %(3) 1.18 % 1.23 % 1.25 %
Net investment income (loss) (0.28)% (0.21)% (0.55)% (0.39)% (0.53)%
Portfolio turnover 124 % 143 % 371 % 412 % 302 %
</TABLE>
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------
YEAR ENDED APRIL 30,
------------------------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.37 $ 7.80 $ 6.77 $ 8.73 $ 7.39
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(2) (0.09) (0.08) (0.10) (0.09) (0.10)
Net realized and unrealized gain
(loss) 2.35 1.28 2.76 (0.88) 2.33
------- ------------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 2.26 1.20 2.66 (0.97) 2.23
------- ------------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (1.36) (0.63) (1.63) (0.94) (0.89)
In excess of net realized gains -- -- -- (0.05) --
------- ------------- --------- --------- ---------
TOTAL DISTRIBUTIONS (1.36) (0.63) (1.63) (0.99) (0.89)
------- ------------- --------- --------- ---------
Change in net asset value 0.90 0.57 1.03 (1.96) 1.34
------- ------------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 9.27 $ 8.37 $ 7.80 $ 6.77 $ 8.73
======= ============= ========= ========= =========
Total return(1) 28.11 % 16.18 % 43.58 % (12.79)% 31.92 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 3,343 $ 2,677 $ 2,051 $ 1,666 $ 1,348
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.98 % 1.99 %(3) 1.93 % 1.98 % 2.06 %
Net investment income (loss) (1.03)% (0.97)% (1.30)% (1.15)% (1.18)%
Portfolio turnover 124 % 143 % 371 % 412 % 302 %
</TABLE>
(1) Maximum sales charge is not reflected in total return calculation.
(2) Computed using average shares outstanding.
(3) For the year ended April 30, 1999, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
See Notes to Financial Statements 19
<PAGE>
PHOENIX-SENECA STRATEGIC THEME FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGEMENT TEAM, GAIL SENECA, PH.D., RICK
LITTLE, CFA AND RON JACKS, CFA
Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A: The Fund seeks long-term capital appreciation. The Fund may invest in smaller
capitalization stocks, and investors should note that small-company investing
involves added risks, including greater price volatility, less liquidity and
increased competitive threat.
Q: HOW DID THE FUND PERFORM OVER THE LAST FISCAL YEAR?
A: For the 12 months ended April 30, 2000, Class A shares rose 53.26%, Class B
shares gained 52.03% and Class C shares were up 52.09%. These returns far
surpassed the 10.34% one-year return for the S&P 500 Index.(1) All performance
figures assume reinvestment of distributions and exclude the effect of sales
charges.
Q: WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE?
A: Seneca's emphasis on companies with strong earnings growth and solid
fundamentals led to our above-market results. Good stock selection within the
technology sector was the primary contributor to performance. Technology-based
companies like Corning, Nokia and Teradyne all produced excellent results. Our
overweighting in semiconductor stocks such as Applied Materials was one of our
strongest themes.
Q: WHAT IS YOUR CURRENT OUTLOOK FOR THE MARKETS?
A: The near ubiquitous media coverage of the stock market that we have witnessed
recently has created, in our view, a perilous "bubble" in many tech and biotech
stocks. The mania, however, does not invalidate the extraordinary business
revolution now unfolding. The last 10 years have delivered the most robust and
most consistent profit growth ever in U.S. history. Analysts expect further
earnings growth this year and next. Productivity has soared, even as inflation
has plateaued at a low level.
Corporations operate far more efficiently than they have in the past and
continue to reinvent themselves in response to tough global competition and the
challenges of newer and faster technology. The American work force is undergoing
a similar transformation toward job mobility, constant retraining and
profit-linked compensation arrangements. The climate for investing in the U.S.
has benefited further from the amazing reversal in the federal budget from
deficit to surplus. These important structural changes bode well for growth and
investment prosperity. The long-term economic and market outlook is excellent,
in our opinion.
In the short term, however, the froth and leverage in the market poses risks
of furious price swings and uncontrollable death spirals of the most
ridiculously priced stocks. With the market vulnerable to ongoing Federal
Reserve tightening, no particular catalyst is required to set off a panic.
We believe the combination of an unfriendly Federal Reserve and massive
overvaluation in some sectors could potentially result in serious losses for
(1) THE S&P 500 INDEX MEASURES STOCK MARKET PERFORMANCE. PERFORMANCE IS
CALCULATED ON A TOTAL-RETURN BASIS WITH DIVIDENDS REINVESTED, AS REPORTED BY
FRANK RUSSELL COMPANY. THE INDEX IS UNMANAGED AND NOT AVAILABLE FOR DIRECT
INVESTMENT.
20
<PAGE>
PHOENIX-SENECA STRATEGIC THEME FUND (CONTINUED)
many investors this year. A severe correction in the most hyped and least
credible stocks need not infect good companies if Federal Reserve policy is
careful and deliberate. Should the Federal Reserve successfully engineer a soft
landing for the economy rather than a crash landing, damage in the stock market
will be contained. We believe this is the most likely outcome. An overall market
advance should be achievable this year.
There will, however, be considerable pain as the mania unfolds. Seneca
believes the key to good performance will be sensible stock selection and
careful portfolio construction. We will continue to thoroughly research
companies, include them in portfolios in prudent proportions and monitor them
diligently.
MAY 17, 2000
21
<PAGE>
Phoenix-Seneca Strategic Theme Fund
AVERAGE ANNUAL TOTAL RETURNS(1) PERIODS ENDING 4/30/00
<TABLE>
<CAPTION>
INCEPTION INCEPTION
1 YEAR TO 4/30/00 DATE
------ ----------- -----------
<S> <C> <C> <C>
Class A Shares at NAV(2) 53.26% 32.99% 10/16/95
Class A Shares at POP(3) 44.45 31.27 10/16/95
Class B Shares at NAV(2) 52.03 32.01 10/16/95
Class B Shares with CDSC(4) 48.03 31.85 10/16/95
Class C Shares at NAV(2) 52.09 41.20 11/3/97
Class C Shares with CDSC(4) 52.09 41.20 11/3/97
S&P 500 Index(7) 10.34 Note 5 Note 5
</TABLE>
(1) Total returns are historical and include changes in share price and the
reinvestment of both dividends and capital gains distributions.
(2) "NAV" (Net Asset Value) total returns do not include the effect of any
sales charge.
(3) "POP" (Public Offering Price) total returns include the effect of the
maximum front-end 5.75% sales charge.
(4) CDSC (contingent deferred sales charge) is applied to redemptions of
certain classes of shares that do not have a sales charge applied at the
time of purchase.
CDSC charges for B shares decline from 5% to 0% over a five year period.
CDSC charges for C shares are 1% in the first year and 0% thereafter.
(5) Index performance is 24.47% for Class A and Class B (since 10/16/95) and
20.95% for Class C (since 11/3/97).
(6) This chart illustrates POP returns on Class A and Class B Shares since
10/16/95. Returns on Class C Shares will vary due to differing sales
charges.
(7) The S&P 500 Index is a measure of stock market total return performance.
The S&P 500's performance does not reflect sales charges.
All returns represent past performance which may not be indicative of
future performance. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
GROWTH OF $10,000 PERIODS ENDING 4/30
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PHOENIX STRATEGIC THEME PHOENIX STRATEGIC THEME S&P
FUND CLASS A(6) FUND CLASS B(6) 500
INDEX(7)
<S> <C> <C> <C>
10/95 $9,425 $10,000 $10,000
96 $11,677 $12,341 $11,356
97 $11,376 $11,933 $14,219
98 $15,497 $16,131 $20,086
99 $22,457 $23,225 $24,468
00 $34,417 $35,308 $26,999
</TABLE>
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
10/16/95 (inception of the Fund) in Class A and Class B shares. The total return
for Class A shares reflects the maximum sales charge of 5.75% on the initial
investment. The total return for Class B shares reflects the CDSC charges which
decline from 5% to 0% over a five year period. Performance assumes dividends and
capital gains are reinvested. The performance of other share classes will be
greater or less than that shown based on differences in inception dates, fees
and sales charges.
SECTOR WEIGHTINGS 4/30/00
As a percentage of equity holdings
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Technology 60%
Energy 14
Consumer Staples 6
Financials 5
Capital Goods 4
Communication Services 4
Health-Care 4
Other 3
</TABLE>
22
<PAGE>
Phoenix-Seneca Strategic Theme Fund
TEN LARGEST EQUITY HOLDINGS AT APRIL 30, 2000 (AS A PERCENTAGE OF TOTAL NET
ASSETS)
<TABLE>
<C> <S> <C>
1. EchoStar Communications Corp. 5.2%
PROVIDER OF DBS (DIRECT BROADCAST SATELLITES) SERVICES AND PRODUCTS
2. Nokia Oyj Sponsored ADR (Finland) 4.7%
LEADING TELECOMMUNICATIONS EQUIPMENT PROVIDER
3. Applied Materials, Inc. 4.6%
SEMICONDUCTOR EQUIPMENT AND MATERIAL SUPPLIER
4. Fairchild Semiconductor International Class A 4.6%
SEMICONDUCTOR AND INTEGRATED CIRCUIT MANUFACTURER
5. Teradyne, Inc. 4.5%
ELECTRONIC SYSTEM AND SOFTWARE MANUFACTURER
6. Corning, Inc. 4.4%
SPECIALTY TECHNOLOGY-BASED MANUFACTURER
7. Intel Corp. 4.3%
SEMICONDUCTOR CHIPS AND MEMORY CIRCUIT MANUFACTURER
8. Sun Microsystems, Inc. 4.1%
PROVIDER OF SERVICES AND SUPPORT SOLUTIONS FOR NETWORK COMPUTING
ENVIRONMENTS
9. LSI Logic Corp. 4.0%
MANUFACTURER OF HIGH-PERFORMANCE CIRCUITS
10. Nortel Networks Corp. (Canada) 4.0%
GLOBAL SUPPLIER OF TELEPHONE NETWORK SOLUTIONS AND SERVICES
</TABLE>
INVESTMENTS AT APRIL 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMMON STOCKS--90.5%
BIOTECHNOLOGY--3.6%
MedImmune, Inc.(b)...................... 178,130 $ 28,489,667
BROADCASTING (TELEVISION, RADIO & CABLE)--6.2%
AMFM, Inc.(b)........................... 120,510 7,998,851
EchoStar Communications Corp.(b)........ 642,400 40,912,850
------------
48,911,701
------------
COMMUNICATIONS EQUIPMENT--6.8%
General Motors Corp. Class H(b)......... 233,500 22,488,969
Metricom, Inc.(b)....................... 157,670 4,424,614
Motorola, Inc........................... 218,960 26,069,925
------------
52,983,508
------------
COMPUTERS (HARDWARE)--10.5%
Alteon Websystems, Inc.(b).............. 188,220 12,798,960
Copper Mountain Networks, Inc.(b)....... 221,670 18,481,736
Extreme Networks, Inc.(b)............... 334,660 19,284,782
Sun Microsystems, Inc.(b)............... 346,010 31,811,294
------------
82,376,772
------------
COMPUTERS (SOFTWARE & SERVICES)--3.5%
Liberate Technologies, Inc.(b).......... 167,000 6,533,875
Mercury Interactive Corp.(b)............ 205,000 18,450,000
Vignette Corp.(b)....................... 53,730 2,589,114
------------
27,572,989
------------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
ELECTRONICS (SEMICONDUCTORS)--14.9%
Analog Devices, Inc.(b)................. 196,000 $ 15,055,250
Fairchild Semiconductor Corp. Class
A(b).................................... 760,900 36,142,750
Intel Corp.............................. 266,540 33,800,604
LSI Logic Corp.(b)...................... 500,770 31,298,125
------------
116,296,729
------------
EQUIPMENT (SEMICONDUCTORS)--15.4%
Applied Materials, Inc.(b).............. 356,650 36,311,428
KLA-Tencor Corp.(b)..................... 376,440 28,185,945
Lam Research Corp.(b)................... 450,000 20,643,750
Teradyne, Inc.(b)....................... 319,200 35,112,000
------------
120,253,123
------------
FINANCIAL (DIVERSIFIED)--2.6%
Citigroup, Inc.......................... 142,650 8,478,759
Morgan Stanley Dean Witter & Co......... 150,600 11,558,550
------------
20,037,309
------------
INSURANCE (PROPERTY-CASUALTY)--2.4%
MGIC Investment Corp.................... 399,240 19,088,663
MANUFACTURING (DIVERSIFIED)--4.4%
Corning, Inc............................ 173,890 34,343,275
OIL & GAS (DRILLING & EQUIPMENT)--14.1%
Grant Prideco, Inc...................... 387,970 7,468,423
Halliburton Co.......................... 627,800 27,740,913
Nabors Industries, Inc.(b).............. 775,750 30,593,641
</TABLE>
See Notes to Financial Statements 23
<PAGE>
Phoenix-Seneca Strategic Theme Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
OIL & GAS (DRILLING & EQUIPMENT)--CONTINUED
Rowan Companies, Inc.(b)................ 890,000 $ 24,864,375
Weatherford International, Inc.(b)...... 487,970 19,823,781
------------
110,491,133
------------
PAPER & FOREST PRODUCTS--0.6%
Smurfit-Stone Container Corp.(b)........ 329,350 5,022,588
SERVICES (COMMERCIAL & CONSUMER)--1.1%
Crown Castle International Corp.(b)..... 223,200 8,565,300
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--4.4%
Nextel Communications, Inc. Class
A(b).................................... 196,100 21,460,694
Nextel Partners, Inc. Class A(b)........ 41,100 901,631
Sprint Corp. (PCS Group)(b)............. 216,000 11,880,000
------------
34,242,325
------------
- --------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $523,601,425) 708,675,082
- --------------------------------------------------------------------
FOREIGN COMMON STOCKS--8.7%
COMMUNICATIONS EQUIPMENT--8.7%
Nokia Oyj Sponsored ADR (Finland)....... 651,600 37,059,750
Nortel Networks Corp. (Canada).......... 274,630 31,101,847
------------
68,161,597
------------
- --------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $45,784,932) 68,161,597
- --------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--99.2%
(IDENTIFIED COST $569,386,357) 776,836,679
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- ------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--4.5%
COMMERCIAL PAPER--4.5%
Koch Industries, Inc. 6.04%,
5/1/00........................ A-1+ $16,710 $ 16,710,000
Marsh USA 6%, 5/8/00.......... A-1+ 4,245 4,240,047
Schering Corp. 6%, 5/11/00.... A-1+ 3,500 3,494,167
American Home Products Corp.
6.02%, 5/12/00................ A-1 4,765 4,756,235
Lexington Parker Capital Co.
LLC 6.08%, 5/15/00............ A-1 2,000 1,993,031
Special Purpose Accounts
Receivable Cooperative Corp.
6.05%, 5/17/00................ A-1 1,000 997,436
Associates Corporation of
North America 6.01%,
5/25/00....................... A-1 3,500 3,485,977
------------
35,676,893
------------
- -------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $35,676,767) 35,676,893
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL INVESTMENTS--103.7%
(IDENTIFIED COST $605,063,124) 812,513,572(a)
Cash and receivables, less liabilities--(3.7%) (29,269,074)
------------
NET ASSETS--100.0% $783,244,498
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $258,734,158 and gross
depreciation of $53,908,947 for federal income tax purposes. At April 30,
2000, the aggregate cost of securities for federal income tax purposes was
$607,688,361.
(b) Non-income producing.
24 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Strategic Theme Fund
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $605,063,124) $ 812,513,572
Cash 2,396
Receivables
Fund shares sold 580,987
Dividends and interest 22,824
Prepaid expenses 6,573
--------------
Total assets 813,126,352
--------------
LIABILITIES
Payables
Investment securities purchased 27,766,813
Fund shares repurchased 1,010,400
Investment advisory fee 465,573
Distribution fee 251,502
Transfer agent fee 181,834
Financial agent fee 31,436
Trustees' fee 16,807
Accrued expenses 157,489
--------------
Total liabilities 29,881,854
--------------
NET ASSETS $ 783,244,498
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 514,706,221
Accumulated net realized gain 61,087,829
Net unrealized appreciation 207,450,448
--------------
NET ASSETS $ 783,244,498
==============
CLASS A
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $620,919,028) 27,449,595
Net asset value per share $22.62
Offering price per share $22.62/(1-5.75%) $24.00
CLASS B
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $157,169,172) 7,241,855
Net asset value per share and offering per share $21.70
CLASS C
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $5,156,298) 237,541
Net asset value per share and offering per share $21.71
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 1,003,622
Interest 684,800
Foreign taxes withheld (23,652)
--------------
Total investment income 1,664,770
--------------
EXPENSES
Investment advisory fee 2,319,786
Distribution fee, Class A 501,517
Distribution fee, Class B 1,066,872
Distribution fee, Class C 20,108
Financial agent fee 234,601
Transfer agent fee 486,982
Printing 50,111
Registration 37,381
Professional 31,613
Trustees 29,138
Custodian 20,115
Miscellaneous 9,051
--------------
Total expenses 4,807,275
Custodian fees paid indirectly (3,701)
--------------
Net expenses 4,803,574
--------------
NET INVESTMENT LOSS (3,138,804)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 95,521,350
Net change in unrealized appreciation (depreciation) on
investments (58,060,755)
--------------
NET GAIN ON INVESTMENTS 37,460,595
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 34,321,791
==============
</TABLE>
See Notes to Financial Statements 25
<PAGE>
Phoenix-Seneca Strategic Theme Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
4/30/00 4/30/99
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (3,138,804) $ (1,592,337)
Net realized gain (loss) 95,521,350 18,354,872
Net change in unrealized appreciation
(depreciation) (58,060,755) 38,225,117
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 34,321,791 54,987,652
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A (26,637,803) (6,923,924)
Net realized gains, Class B (20,732,140) (5,772,230)
Net realized gains, Class C (373,094) (28,108)
------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (47,743,037) (12,724,262)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(4,564,985 and 3,919,529 shares,
respectively) 93,227,507 64,808,215
Net asset value of shares issued from
Phoenix-Seneca Mid Cap Fund merger
(19,654,306 and 0 shares,
respectively) (See Note 6) 510,230,512 --
Net asset value of shares issued from
reinvestment of distributions
(1,381,459 and 419,976 shares,
respectively) 25,705,072 6,560,032
Cost of shares repurchased (4,070,380
and 4,982,395 shares, respectively) (83,306,119) (76,814,571)
------------ ------------
Total 545,856,972 (5,446,324)
------------ ------------
CLASS B
Proceeds from sales of shares (985,214
and 819,204 shares, respectively) 19,346,429 13,391,640
Net asset value of shares issued from
Phoenix-Seneca Mid Cap Fund merger
(1,280,671 and 0 shares,
respectively) (See Note 6) 31,929,692 --
Net asset value of shares issued from
reinvestment of distributions
(1,071,260 and 329,762 shares,
respectively) 19,241,688 5,028,874
Cost of shares repurchased (868,154
and 1,286,009 shares, respectively) (17,020,407) (18,585,029)
------------ ------------
Total 53,497,402 (164,515)
------------ ------------
CLASS C
Proceeds from sales of shares (196,187
and 36,724 shares, respectively) 4,015,847 589,799
Net asset value of shares issued from
reinvestment of distributions
(18,431 and 1,354 shares,
respectively) 332,457 20,648
Cost of shares repurchased (15,485 and
19,484 shares, respectively) (287,819) (266,095)
------------ ------------
Total 4,060,485 344,352
------------ ------------
CLASS M
Cost of shares repurchased (0 and
16,288 shares, respectively) -- (223,551)
------------ ------------
Total -- (223,551)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 603,414,859 (5,490,038)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 589,993,613 36,773,352
NET ASSETS
Beginning of period 193,250,885 156,477,533
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
$0 AND $0, RESPECTIVELY] $783,244,498 $193,250,885
============ ============
</TABLE>
26 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Strategic Theme Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
FROM
YEAR ENDED APRIL 30 INCEPTION
--------------------------------------------- 10/16/95 TO
2000 1999 1998 1997 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.22 $ 13.70 $ 12.03 $ 12.37 $ 10.00
INCOME FROM INVESTMENT OPERATIONS(6)
Net investment income (loss)(5) (0.16) (0.11) (0.04) 0.06 0.00(1)
Net realized and unrealized gain (loss) 8.69 6.03 4.03 (0.38) 2.39
-------- -------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 8.53 5.92 3.99 (0.32) 2.39
-------- -------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- (0.01) --
Dividends from net realized gains (4.13) (1.40) (2.29) -- --
In excess of net investment income -- -- (0.03) -- --
In excess of net realized gains -- -- -- (0.01) --
Tax return of capital -- -- -- -- (0.02)
-------- -------- ------- ------- -------
TOTAL DISTRIBUTIONS (4.13) (1.40) (2.32) (0.02) (0.02)
-------- -------- ------- ------- -------
Change in net asset value 4.40 4.52 1.67 (0.34) 2.37
-------- -------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 22.62 $ 18.22 $ 13.70 $ 12.03 $ 12.37
======== ======== ======= ======= =======
Total return(2) 53.26% 44.91% 36.22% (2.57)% 23.89%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $620,919 $107,871 $89,884 $77,827 $33,393
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.29%(7) 1.38%(7) 1.33% 1.40% 1.40%(3)
Net investment income (loss) (0.77)% (0.72)% (0.26)% 0.49% (0.09)%(3)
Portfolio turnover 157% 205% 618% 532% 175%(4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.04.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) 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.
(7) The ratio of operating expenses to average net assets excludes the effect
of expense offsets for custodian fees; if expense offsets were included,
the ratio would not significantly differ.
See Notes to Financial Statements 27
<PAGE>
Phoenix-Seneca Strategic Theme Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------
FROM
YEAR ENDED APRIL 30 INCEPTION
-------------------------------------------- 10/16/95 TO
2000 1999 1998 1997 4/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.75 $ 13.46 $ 11.91 $ 12.33 $ 10.00
INCOME FROM INVESTMENT OPERATIONS(6)
Net investment income (loss)(5) (0.28) (0.22) (0.14) (0.03) (0.06)(1)
Net realized and unrealized gain (loss) 8.36 5.91 3.98 (0.38) 2.40
-------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 8.08 5.69 3.84(5) (0.41) 2.34
-------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- -- --
Dividends from net realized gains (4.13) (1.40) (2.29) -- --
In excess of net investment income -- -- -- -- --
In excess of net realized gains -- -- -- (0.01) --
Tax return of capital -- -- -- -- (0.01)
-------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (4.13) (1.40) (2.29) (0.01) (0.01)
-------- ------- ------- ------- -------
Change in net asset value 3.95 4.29 1.55 (0.42) 2.33
-------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 21.70 $ 17.75 $ 13.46 $ 11.91 $ 12.33
======== ======= ======= ======= =======
Total return(2) 52.03% 43.98% 35.18% (3.31)% 23.41%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $157,169 $84,698 $66,107 $49,843 $11,920
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.04%(7) 2.13%(7) 2.08% 2.15% 2.16%(3)
Net investment income (loss) (1.47)% (1.48)% (1.02)% (0.23)% (1.06)%(3)
Portfolio turnover 157% 205% 618% 532% 175%(4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.04.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) 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.
(7) The ratio of operating expenses to average net assets excludes the effect
of expense offsets for custodian fees; if expense offsets were included,
the ratio would not significantly differ.
28 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Strategic Theme Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS C
-------------------------------------
FROM
YEAR ENDED APRIL 30 INCEPTION
------------------- 11/3/97 TO
2000 1999 4/30/98
<S> <C> <C> <C>
Net asset value, beginning of period $17.75 $13.47 $14.93
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss)(4) (0.29) (0.22) (0.05)
Net realized and unrealized gain (loss) 8.38 5.90 0.88
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 8.09 5.68 0.83
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net realized gains (4.13) (1.40) (2.29)
------ ------ ------
TOTAL DISTRIBUTIONS (4.13) (1.40) (2.29)
------ ------ ------
Change in net asset value 3.96 4.28 (1.46)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $21.71 $17.75 $13.47
====== ====== ======
Total return(1) 52.09% 43.87% 7.92%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $5,156 $682 $267
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.04%(6) 2.13%(6) 2.08%(2)
Net investment income (loss) (1.53)% (1.47)% (0.87)%(2)
Portfolio turnover 157% 205% 618%(3)
</TABLE>
(1) Maximum sales charge is not reflected in total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
(6) The ratio of operating expenses to average net assets excludes the effect
of expense offsets for custodian fees; if expense offsets were included,
the ratio would not significantly differ.
See Notes to Financial Statements 29
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Strategic Equity Series Fund (the "Trust") is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as a diversified open-end management investment company.
Each Fund has distinct investment objectives. The Small Cap Fund seeks long-term
growth of capital by investing in a diversified portfolio of securities,
primarily common stock, of relatively small companies which the adviser believes
have long-term investment potential. The Growth Fund (formerly Equity
Opportunities) seeks to achieve long-term growth of capital from investment in a
diversified group of stocks or securities convertible into stocks. The Strategic
Theme Fund seeks long-term appreciation of capital through investing in
securities of companies that the adviser believes are particularly well
positioned to benefit from cultural, demographic, regulatory, social or
technological changes worldwide.
Each Fund offers both Class A and Class B shares. The Strategic Theme Fund
also offers Class C shares. Class M shares have been closed. Effective April 3,
2000, Class A shares are sold with a front-end sales charge of up to 5.75%.
Prior to that date, the maximum sales charge was 4.75% Class B shares are sold
with a contingent deferred sales charge which declines from 5% to zero depending
on the period of time the shares are held. Class C shares are sold with a 1%
contingent deferred sales charge if redeemed within one year of purchase. All
classes of shares have identical voting, dividend, liquidation and other rights
and the same terms and conditions, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. Income and expenses of each Fund are borne pro rata by the
holders of all classes of shares, except that each class bears distribution
expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. Actual results could differ from those estimates.
A. SECURITY VALUATION:
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price. Short-term investments having a remaining
maturity of 60 days or less are valued at amortized cost which approximates
market. All other securities and assets are valued at their fair value as
determined in good faith by or under the direction of the Trustees.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign securities,
as soon as the Fund is notified. Interest income is recorded on the accrual
basis. Realized gains and losses are determined on the identified cost basis.
C. INCOME TAXES:
Each Fund is treated as a separate taxable entity. It is the policy of each
Fund in the Trust to comply with the requirements of the Internal Revenue Code
(the "Code") applicable to regulated investment companies, and to distribute all
of its taxable income to its shareholders. In addition, each Fund intends to
distribute an amount sufficient to avoid imposition of any excise tax under
Section 4982 of the Code. Therefore, no provision for federal income taxes or
excise taxes has been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, expiring
capital loss carryforwards, foreign currency gain/loss, partnerships, and losses
deferred due to wash sales and excise tax regulations. Permanent book and tax
basis differences relating to shareholder distributions will result in
reclassifications to paid in capital.
E. FOREIGN CURRENCY TRANSLATION:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange rates
between the trade and settlement dates of a portfolio transaction is treated as
a gain or loss on foreign currency. Likewise, the gain or loss resulting from a
change in currency exchange rates between the date income is accrued and paid is
treated as a gain or loss on foreign currency. The Trust does not separate that
portion of the results of operations arising from changes in exchange rates and
that portion arising from changes in the market prices of securities.
F. EXPENSES:
Expenses incurred by the Trust with respect to any two or more Funds are
allocated in proportion to the net assets of each Fund, except where allocation
of direct expense to each Fund or an alternative allocation method can be more
fairly made.
30
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000 (CONTINUED)
G. OPTIONS:
The Trust may write covered options or purchase options contracts for the
purpose of hedging against changes in the market value of the underlying
securities or foreign currencies.
The Trust will realize a gain or loss upon the expiration or closing of the
option transaction. Gains and losses on written options are reported separately
in the Statement of Operations. When a written option is exercised, the proceeds
on sales or amounts paid are adjusted by the amount of premium received. Options
written are reported as a liability in the Statement of Assets and Liabilities
and subsequently marked-to-market to reflect the current value of the option.
The risk associated with written options is that the change in value of options
contracts may not correspond to the change in value of the hedged instruments.
In addition, losses may arise from changes in the value of the underlying
instruments, or if a liquid secondary market does not exist for the contracts.
The Trust may purchase options which are included in the Trust's Schedule of
Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, the Adviser, Phoenix Investment
Counsel, Inc. ("PIC"), an indirect majority-owned subsidiary of Phoenix Home
Life Mutual Insurance Company ("PHL"), is entitled to a fee based upon the
following annual rates as a percentage of the average daily net assets of each
Fund.
<TABLE>
<CAPTION>
1st $1 $1-2 $2+
Fund Billion Billion Billion
- ---- -------- -------- --------
<S> <C> <C> <C>
Small Cap Fund..................... 0.75% 0.70% 0.65%
Growth Fund........................ 0.70% 0.65% 0.60%
Strategic Theme Fund............... 0.75% 0.70% 0.65%
</TABLE>
Seneca Capital Management LLC ("Seneca") serves as subadviser to PIC for the
Growth Fund and Strategic Theme Fund. For its services, Seneca is paid a fee by
PIC ranging from 0.35% to 0.20% of the average daily net assets of the Equity
Opportunities Fund. A majority of the equity interests of Seneca are owned by
Phoenix Investment Partners Ltd. ("PXP"), an indirect majority-owned subsidiary
of PHL.
Roger Engemann & Associates, Inc. ("REA") serves as subadviser to PIC for the
Small Cap Fund. For its services, REA is paid a fee by the Adviser ranging from
0.375% to 0.20% of the average daily net assets of the Small Cap Fund. REA is a
wholly owned subsidiary of Pasadena Capital Corporation which in turn is a
wholly owned subsidiary of PXP.
As Distributor of the Trust's shares, Phoenix Equity Planning Corp. ("PEPCO"),
an indirect majority-owned subsidiary of PHL, has advised the Trust that it
retained net selling commissions of $71,696 for Class A shares and deferred
sales charges of $479,045 for Class B shares and $1,947 for Class C shares, for
the year ended April 30, 2000. In addition, each Series pays PEPCO a
distribution fee at an annual rate of 0.25% for Class A shares, 1.00% for
Class B shares, 1.00% for Class C shares and, prior to closing, 0.50% for
Class M shares applied to the average daily net assets of each Fund. The
Distribution Plan for Class A shares provides for fees to be paid up to a
maximum on an annual basis of 0.30%; the Distributor has voluntarily agreed to
limit the fee to 0.25%. The Distributor has advised the Trust that of the total
amount expensed for the year ended April 30, 2000, $2,074,317 was earned by the
Distributor, $1,505,192 was earned by unaffiliated participants and $177,556 was
paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent of the Trust, PEPCO receives a financial agent fee equal to
the sum of (1) the documented cost of fund accounting and related services
provided by PFPC, Inc. (subagent to PEPCO), plus (2) the documented cost to
PEPCO to provide financial reporting, tax services and oversight of subagent's
performance. The current fee schedule of PFPC, Inc. ranges from 0.085% to
0.0125% of the average daily net asset values of the Trust. Certain minimum fees
and fee waivers may apply.
PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the year ended April 30, 2000, transfer agent
fees were $1,359,659 of which PEPCO retained $558,243 which is net of the fees
paid to State Street.
At April 30, 2000, PHL and its affiliates held shares of the Trust as follows:
<TABLE>
<CAPTION>
Aggregate
Net Asset
Shares Value
-------- ---------
<S> <C> <C>
Growth Fund--Class A..................... 191 $ 1,870
Growth Fund--Class B..................... 29,391 272,455
</TABLE>
31
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000 (CONTINUED)
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities (excluding short-term securities and
options) for the year ended April 30, 2000, aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Small Cap Fund................... $308,147,162 $371,665,784
Growth Fund...................... 271,466,234 294,791,414
Strategic Theme Fund............. 524,816,230 483,186,391
</TABLE>
There were no purchases or sales of long-term U.S. Government securities.
4. CAPITAL LOSS CARRYOVERS
For the fiscal year ended April 30, 2000, the Small Cap Fund had losses of
$23,761,798 deferred in the prior year which were utilized in the current year.
5. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Funds have recorded
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of each of the Funds and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of April 30, 2000, the
Funds recorded the following reclassifications to increase (decrease) the
accounts listed below:
<TABLE>
<CAPTION>
Undistributed Accumulated
net investment net realized
income gain (loss)
-------------- ------------
<S> <C> <C> <C>
Small Cap Fund.......................... $4,279,400 $(4,279,400)
Growth Fund............................. 659,630 (659,630)
Strategic Theme Fund.................... 3,138,804 (3,138,804)
</TABLE>
6. OTHER
On March 10, 2000, the Phoenix-Seneca Strategic Theme Fund ("Strategic Theme")
acquired all of the net assets of the Phoenix-Seneca Mid Cap Fund ("Mid Cap")
pursuant to an Agreement and Plan of Reorganization approved by Mid Cap
shareholders on February 25, 2000. The acquisition was accomplished by a
tax-free exchange of 19,654,306 Class A shares of Strategic Theme and 1,280,671
Class B shares of Strategic Theme (valued at $510,230,512 and $31,929,692,
respectively) for 18,014,460 Class A shares of Mid Cap and 1,214,380 Class B
shares of Mid Cap outstanding on March 10, 2000. Mid Cap's net assets at that
date of $542,160,204, including $217,805,454 of unrealized appreciation or
depreciation were combined with those of Strategic Theme. The aggregate net
assets of Strategic Theme immediately after the merger were $902,270,416.
7. SUBSEQUENT EVENT
On May 12, 2000, the Phoenix-Seneca Equity Opportunities Fund (the "Acquiring
Fund") acquired the assets and liabilities of the Phoenix-Seneca Growth Fund
(the "Acquired Fund") pursuant to a plan of reorganization approved by its
shareholders on April 28, 2000. The acquisition was accomplished by a tax-free
exchange of shares of the Acquiring Fund in an amount equal to the outstanding
shares of the Acquired Fund. Effective May 12, 2000, the Acquiring Fund was
renamed the Phoenix-Seneca Growth Fund. For financial reporting purposes the
historical results of the Acquired Fund will survive.
TAX INFORMATION NOTICE (UNAUDITED)
For the fiscal year ended April 30, 2000, the following funds distributed
long-term capital gains dividends.
<TABLE>
<S> <C>
Growth Fund.............. $ 8,258,969
Strategic Theme Fund..... 18,808,485
</TABLE>
This report is not authorized for distribution to prospective investors in the
Phoenix Strategic Equity Series Fund unless preceded or accompanied by an
effective prospectus which includes information concerning the sales charge, the
Fund's record and other pertinent information.
32
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To the Trustees and Shareholders of
Phoenix Strategic Equity Series Fund
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Phoenix-Engemann Small Cap Fund,
Phoenix-Seneca Growth Fund (formerly Phoenix-Seneca Equity Opportunities Fund),
and Phoenix-Seneca Strategic Theme Fund (constituting separate series of the
Phoenix Strategic Equity Series Fund, hereinafter referred to as the "Trust") at
April 30, 2000, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended
and the financial highlights for each of the periods presented, in conformity
with accounting principles generally accepted in the United States. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States, which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at April 30, 2000 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
June 1, 2000
33
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
101 Munson Street
Greenfield, Massachusetts 01301
TRUSTEES
Robert Chesek
E. Virgil Conway
Harry Dalzell-Payne
Francis E. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Calvin J. Pedersen
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
OFFICERS
Philip R. McLoughlin, President
Michael E. Haylon, Executive Vice President
William R. Moyer, Executive Vice President
John F. Sharry, Executive Vice President
J. Roger Engemann, Senior Vice President
Gail P. Seneca, Senior Vice President
Steven L. Colton, Vice President
Robert S. Driessen, Vice President
Ron K. Jacks, Vice President
Richard D. Little, Vice President
James E. Mair, Vice President
Michael Kearney, Vice President
John S. Tilson, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary
Nancy J. Engberg, Assistant Secretary
INVESTMENT ADVISER
Phoenix Investment Counsel, Inc.
56 Prospect Street
Hartford, Connecticut 06115-0480
PRINCIPAL UNDERWRITER
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
TRANSFER AGENT
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
160 Federal Street
Boston, Massachusetts 02110
HOW TO CONTACT US
The Fund Connection 1-800-243-1574
Customer Service 1-800-243-1574
Investment Strategy Hotline 1-800-243-4361 (option 2)
Marketing Department 1-800-243-4361 (option 3)
Text Telephone 1-800-243-1926
www.phoenixinvestments.com
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
PO Box 2200
Enfield CT 06083-2200
PRSRT STD
U.S. Postage
PAID
Andrew
Associates
[LOGO]
For more information about
Phoenix mutual funds, please call
your financial representative or
contact us at 1-800-243-4361 or
www.phoenixinvestments.com
PXP 744 (6/00)
<PAGE>
The Semiannual Report of
The Phoenix Engemann Funds
for the six-month period ended June 30, 2000
<PAGE>
Phoenix Investment Partners
SEMIANNUAL REPORT
JUNE 30, 2000
ENGEMANN Phoenix-Engemann
Balanced Return Fund
Phoenix-Engemann
Focus Growth Fund
Phoenix-Engemann
Nifty Fifty Fund
Phoenix-Engemann
Small & Mid-Cap
Growth Fund
Phoenix-Engemann
Value 25 Fund
[LOGO] PHOENIX
INVESTMENT PARTNERS
<PAGE>
MESSAGE FROM THE CHAIRMAN
DEAR SHAREHOLDER:
We are pleased to provide this semiannual financial summary for the
Phoenix-Engemann Funds for the six months ended June 30, 2000.
If you have any questions, please call your financial advisor or a Phoenix
customer service representative at 1-800-243-1574 between 8:00 a.m. and
6:00 p.m. Eastern Time, Monday through Friday. You can also purchase or exchange
shares, check your balance, and review your account history any time by visiting
our INVESTOR CENTER at WWW.PHOENIXINVESTMENTS.COM.
Sincerely,
/s/ Philip R. McLoughlin
Philip R. McLoughlin
JUNE 30, 2000
Mutual funds are not insured by the FDIC; are not
deposits or other obligations of a bank and are not
guaranteed by a bank; and are subject to
investment risks, including possible loss of the
principal invested.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Phoenix-Engemann Balanced Return Fund....................... 3
Phoenix-Engemann Focus Growth Fund.......................... 9
Phoenix-Engemann Nifty Fifty Fund........................... 15
Phoenix-Engemann Small & Mid-Cap Growth Fund................ 21
Phoenix-Engemann Value 25 Fund.............................. 28
Notes to Financial Statements............................... 33
</TABLE>
2
<PAGE>
PHOENIX-ENGEMANN BALANCED RETURN FUND
INVESTMENTS AT JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
-------- -------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--40.5%
U.S. TREASURY BONDS--20.1%
U.S. Treasury Bonds 9.25%,
2/15/16....................... AAA $ 30,000 $ 38,868,750
U.S. TREASURY NOTES--20.4%
U.S. Treasury Notes 6.50%,
8/15/05....................... AAA 39,000 39,414,375
- ------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES
(IDENTIFIED COST $77,819,963) 78,283,125
- ------------------------------------------------------------------
<CAPTION>
SHARES
--------
COMMON STOCKS--53.9%
<S> <C> <C> <C>
BROADCASTING (TELEVISION, RADIO & CABLE)--0.6%
Clear Channel Communications,
Inc.(b)....................... 15,000 1,125,000
COMMUNICATIONS EQUIPMENT--2.3%
Lucent Technologies, Inc...... 47,000 2,784,750
Tellabs, Inc.(b).............. 25,000 1,710,937
------------
4,495,687
------------
COMPUTERS (HARDWARE)--3.1%
International Business
Machines Corp................. 26,000 2,848,625
Sun Microsystems, Inc.(b)..... 34,000 3,091,875
------------
5,940,500
------------
COMPUTERS (NETWORKING)--3.7%
Cisco Systems, Inc.(b)........ 112,000 7,119,000
COMPUTERS (PERIPHERALS)--3.1%
EMC Corp.(b).................. 78,000 6,001,125
COMPUTERS (SOFTWARE & SERVICES)--6.3%
America Online, Inc.(b)....... 47,000 2,479,250
BEA Systems, Inc.(b).......... 12,000 593,250
BMC Software, Inc.(b)......... 40,000 1,459,375
Microsoft Corp.(b)............ 40,000 3,200,000
Oracle Corp.(b)............... 23,000 1,933,437
VERITAS Software Corp.(b)..... 12,000 1,356,187
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)--CONTINUED
Yahoo!, Inc.(b)............... 10,000 $ 1,238,750
------------
12,260,249
------------
ELECTRICAL EQUIPMENT--0.8%
Solectron Corp.(b)............ 35,000 1,465,625
ELECTRONICS (SEMICONDUCTORS)--7.3%
Intel Corp.................... 39,000 5,213,812
JDS Uniphase Corp.(b)......... 10,000 1,198,750
Maxim Integrated Products,
Inc.(b)....................... 25,000 1,698,438
Texas Instruments, Inc........ 88,000 6,044,500
------------
14,155,500
------------
ENTERTAINMENT--0.8%
Viacom, Inc. Class B(b)....... 22,000 1,500,125
FINANCIAL (DIVERSIFIED)--1.7%
American Express Co........... 21,000 1,094,625
Citigroup, Inc................ 35,500 2,138,875
------------
3,233,500
------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--8.2%
Genentech, Inc.(b)............ 8,000 1,376,000
Merck & Co., Inc.............. 30,000 2,298,750
Pfizer, Inc................... 233,750 11,220,000
Pharmacia Corp................ 20,000 1,033,750
------------
15,928,500
------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--3.2%
Guidant Corp.(b).............. 44,000 2,178,000
Medtronic, Inc................ 81,000 4,034,813
------------
6,212,813
------------
LODGING-HOTELS--0.5%
Carnival Corp................. 50,000 975,000
MANUFACTURING (DIVERSIFIED)--1.0%
Tyco International Ltd........ 40,000 1,895,000
RETAIL (BUILDING SUPPLIES)--1.8%
Home Depot, Inc. (The)........ 69,000 3,445,688
</TABLE>
See Notes to Financial Statements 3
<PAGE>
Phoenix-Engemann Balanced Return Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
RETAIL (DRUG STORES)--0.6%
Walgreen Co................... 36,000 $ 1,158,750
RETAIL (GENERAL MERCHANDISE)--2.6%
Costco Wholesale Corp.(b)..... 60,000 1,980,000
Target Corp................... 28,000 1,624,000
Wal-Mart Stores, Inc.......... 25,000 1,440,625
------------
5,044,625
------------
RETAIL (SPECIALTY)--0.5%
Staples, Inc.(b).............. 68,000 1,045,500
SERVICES (ADVERTISING/MARKETING)--1.0%
Interpublic Group of Cos.,
Inc. (The).................... 43,000 1,849,000
SERVICES (COMPUTER SYSTEMS)--1.4%
Electronic Data Systems
Corp.......................... 65,000 2,681,250
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)--3.4%
WorldCom, Inc.(b)............. 143,000 $ 6,560,125
- ------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $62,822,218) 104,092,562
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL INVESTMENTS--94.4%
(IDENTIFIED COST $140,642,181) 182,375,687(a)
Cash and receivables, less liabilities--5.6% 10,867,389
------------
NET ASSETS--100.0% $193,243,076
============
</TABLE>
<TABLE>
<S> <C>
(a) Federal Income Tax Information: Net unrealized appreciation
of investment securities is comprised of gross appreciation
of $46,775,470 and gross depreciation of $5,041,964 for
federal income tax purposes. At June 30, 2000, the aggregate
cost of securities for federal income tax purposes was
$140,642,181.
(b) Non-income producing.
</TABLE>
4 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Balanced Return Fund
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $140,642,181) $182,375,687
Cash 8,872,194
Receivables
Dividends and interest 2,054,139
Fund shares sold 543,446
------------
Total assets 193,845,466
------------
LIABILITIES
Payables
Fund shares repurchased 180,779
Distribution fee 217,978
Investment advisory fee 113,751
Administration fee 66,757
Trustees' fee 5,290
Accrued expenses 17,835
------------
Total liabilities 602,390
------------
NET ASSETS $193,243,076
============
NET ASSETS CONSIST OF:
Capital paid in on shares of
beneficial interest $133,824,932
Undistributed net investment income 928,366
Accumulated net realized gain 16,756,272
Net unrealized appreciation 41,733,506
------------
NET ASSETS $193,243,076
============
CLASS A
Shares of beneficial interest
outstanding, $1.00 par value,
unlimited authorization (Net
Assets $135,687,891) 3,340,463
Net asset value per share $40.62
Offering price per share
$40.62/(1-5.75%) $43.10
CLASS B
Shares of beneficial interest
outstanding, $1.00 par value,
unlimited authorization (Net
Assets $35,385,174) 889,495
Net asset value and offering price
per share $39.78
CLASS C
Shares of beneficial interest
outstanding, $1.00 par value,
unlimited authorization (Net
Assets $22,170,011) 556,193
Net asset value and offering price
per share $39.86
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $2,263,379
Dividends 171,218
----------
Total investment income 2,434,597
----------
EXPENSES
Investment advisory fee 654,892
Distribution fee, Class A 160,008
Distribution fee, Class B 160,443
Distribution fee, Class C 99,565
Administration 412,829
Professional 10,537
Trustees 7,957
----------
Total expenses 1,506,231
----------
NET INVESTMENT INCOME 928,366
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on securities 16,773,638
Net change in unrealized appreciation
(depreciation) on investments (9,558,794)
----------
NET GAIN ON INVESTMENTS 7,214,844
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $8,143,210
==========
</TABLE>
See Notes to Financial Statements 5
<PAGE>
Phoenix-Engemann Balanced Return Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
6/30/00 Year Ended
(Unaudited) 12/31/99
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 928,366 $ 489,187
Net realized gain (loss) 16,773,638 5,917,606
Net change in unrealized appreciation (depreciation) (9,558,794) 17,431,518
------------ ------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 8,143,210 23,838,311
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A -- (489,187)
Net realized gains, Class A -- (6,406,492)
Net realized gains, Class B -- (1,606,363)
Net realized gains, Class C -- (906,849)
In excess of net investment income, Class A -- (25,941)
In excess of net realized gains, Class A -- (29,581)
In excess of net realized gains, Class B -- (7,417)
In excess of net realized gains, Class C -- (4,187)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS -- (9,476,017)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (639,789 and 1,413,697
shares, respectively) 25,420,047 51,433,069
Net asset value of shares issued from reinvestment of
distributions
(0 and 167,310 shares, respectively) -- 6,421,251
Cost of shares repurchased (482,130 and 483,447 shares,
respectively) (19,000,535) (17,823,682)
------------ ------------
Total 6,419,512 40,030,638
------------ ------------
CLASS B
Proceeds from sales of shares (174,879 and 521,062 shares,
respectively) 6,770,307 18,703,613
Net asset value of shares issued from reinvestment of
distributions
(0 and 37,162 shares, respectively) -- 1,402,126
Cost of shares repurchased (87,340 and 91,202 shares,
respectively) (3,417,537) (3,292,239)
------------ ------------
Total 3,352,770 16,813,500
------------ ------------
CLASS C
Proceeds from sales of shares (139,547 and 263,121 shares,
respectively) 5,372,473 9,526,650
Net asset value of shares issued from reinvestment of
distributions
(0, and 21,486 shares, respectively) -- 812,372
Cost of shares repurchased (50,540 and 38,401 shares,
respectively) (1,959,057) (1,373,573)
------------ ------------
Total 3,413,416 8,965,449
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM SHARE
TRANSACTIONS 13,185,698 65,809,587
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 21,328,908 80,171,881
NET ASSETS
Beginning of period 171,914,168 91,742,287
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) OF $928,366 AND $0, RESPECTIVELY] $193,243,076 $171,914,168
============ ============
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Balanced Return Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/00 ----------------------------------------------------------------
(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%(6) 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%(5) 1.56% 1.63% 1.7%(3) 2.0%(3) 2.1%
Net investment income (loss) 1.25%(5) 0.58% 1.15% 1.0% 1.1% 1.2%
Portfolio turnover 29%(6) 41% 124% 40.3% 35.1% 51.1%
</TABLE>
<TABLE>
<C> <S>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return
calculation.
(3) If the investment adviser had not waived fees and
reimbursed expenses, the ratios of operating expenses to
average net assets would have been 1.70% and 2.10% for the
periods ended December 31, 1997 and 1996, respectively.
(4) Distributions are made in accordance with the prospectus;
however, class level per share income from investment
operations may vary from anticipated results depending on
the timing of share purchases and redemptions.
(5) Annualized.
(6) Not annualized.
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Phoenix-Engemann Balanced Return Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/00 ------------------------------------------------------------
(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%(6) 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%(5) 2.30% 2.38% 2.4%(3) 2.7%(3) 2.9%
Net investment income (loss) 0.50%(5) (0.16)% 0.39% 0.3% 0.3% 0.3%
Portfolio turnover 29%(6) 41% 124% 40.3% 35.1% 51.1%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/00 -----------------------------------------------------------
(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%(6) 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%(5) 2.30% 2.38% 2.4%(3) 2.7%(3) 2.9%
Net investment income (loss) 0.50%(5) (0.16)% 0.39% 0.3% 0.3% 0.3%
Portfolio turnover 29%(6) 41% 124% 40.3% 35.1% 51.1%
</TABLE>
<TABLE>
<C> <S>
(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) Annualized.
(6) Not annualized.
</TABLE>
8 See Notes to Financial Statements
<PAGE>
PHOENIX-ENGEMANN FOCUS GROWTH FUND
INVESTMENTS AT JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C> <C>
COMMON STOCKS--93.4%
BROADCASTING (TELEVISION, RADIO & CABLE)--3.0%
Clear Channel Communications,
Inc.(b)............................... 314,000 $ 23,550,000
COMMUNICATIONS EQUIPMENT--5.9%
Lucent Technologies, Inc.............. 396,000 23,463,000
Tellabs, Inc.(b)...................... 344,100 23,549,344
------------
47,012,344
------------
COMPUTERS (HARDWARE)--5.0%
Dell Computer Corp.(b)................ 300,000 14,793,750
Sun Microsystems, Inc.(b)............. 269,000 24,462,187
------------
39,255,937
------------
COMPUTERS (NETWORKING)--10.0%
Cisco Systems, Inc.(b)................ 1,184,448 75,286,476
Genuity, Inc.(b)...................... 385,500 3,529,734
------------
78,816,210
------------
COMPUTERS (PERIPHERALS)--4.6%
EMC Corp.(b).......................... 468,000 36,006,750
COMPUTERS (SOFTWARE & SERVICES)--8.6%
America Online, Inc.(b)............... 584,000 30,806,000
Microsoft Corp.(b).................... 221,600 17,728,000
Oracle Corp.(b)....................... 150,000 12,609,375
Yahoo!, Inc.(b)....................... 58,000 7,184,750
------------
68,328,125
------------
ELECTRICAL EQUIPMENT--3.4%
General Electric Co................... 510,000 27,030,000
ELECTRONICS (SEMICONDUCTORS)--23.4%
Broadcom Corp. Class A(b)............. 106,000 23,207,375
Intel Corp............................ 252,800 33,796,200
JDS Uniphase Corp.(b)................. 460,000 55,142,500
Texas Instruments, Inc................ 718,400 49,345,100
Xilinx, Inc.(b)....................... 278,000 22,952,375
------------
184,443,550
------------
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C> <C>
EQUIPMENT (SEMICONDUCTORS)--0.9%
Applied Materials, Inc.(b)............ 82,000 $ 7,431,250
FINANCIAL (DIVERSIFIED)--4.4%
American Express Co................... 282,000 14,699,250
Citigroup, Inc........................ 330,000 19,882,500
------------
34,581,750
------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--8.5%
Genentech, Inc.(b).................... 86,000 14,792,000
Merck & Co., Inc...................... 208,200 15,953,325
Pfizer, Inc........................... 754,300 36,206,400
------------
66,951,725
------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.9%
Medtronic, Inc........................ 300,200 14,953,712
INVESTMENT BANKING/BROKERAGE--3.8%
Goldman Sachs Group, Inc. (The)....... 100,000 9,487,500
Merrill Lynch & Co., Inc.............. 176,000 20,240,000
------------
29,727,500
------------
RETAIL (BUILDING SUPPLIES)--2.4%
Home Depot, Inc. (The)................ 375,000 18,726,563
RETAIL (GENERAL MERCHANDISE)--2.7%
Costco Wholesale Corp.(b)............. 190,000 6,270,000
Wal-Mart Stores, Inc.................. 259,000 14,924,875
------------
21,194,875
------------
RETAIL (SPECIALTY)--0.9%
Bed Bath & Beyond, Inc.(b)............ 205,000 7,431,250
TELECOMMUNICATIONS (LONG DISTANCE)--3.1%
WorldCom, Inc.(b)..................... 526,500 24,153,188
TRUCKERS--0.9%
United Parcel Service, Inc. Class B... 119,500 7,050,500
- --------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $303,063,413) 736,645,229
- --------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Phoenix-Engemann Focus Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C> <C>
FOREIGN COMMON STOCKS--3.7%
COMMUNICATIONS EQUIPMENT--3.7%
Nokia Oyj Sponsored ADR (Finland)..... 385,000 $ 19,225,938
Nortel Networks Corp. (Canada)........ 150,000 10,237,500
------------
29,463,438
------------
- --------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $21,616,922) 29,463,438
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL INVESTMENTS--97.1%
(IDENTIFIED COST $324,680,335) 766,108,667(a)
Cash and receivables, less liabilities--2.9% 22,761,138
------------
NET ASSETS--100.0% $788,869,805
============
</TABLE>
<TABLE>
<S> <C>
(a) Federal Income Tax Information: Net unrealized appreciation
of investment securities is comprised of gross appreciation
of $444,476,035 and gross depreciation of $3,047,703 for
federal income tax purposes. At June 30, 2000, the aggregate
cost of securities for federal income tax purposes was
$324,680,335.
(b) Non-income producing.
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Focus Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $324,680,335) $ 766,108,667
Cash 26,139,508
Receivables
Fund shares sold 277,365
Dividends and interest 220,216
--------------
Total assets 792,745,756
--------------
LIABILITIES
Payables
Investment securities purchased 1,697,972
Fund shares repurchased 648,970
Distribution fee 773,134
Investment advisory fee 492,845
Administration fee 236,981
Trustees' fee 5,290
Accrued expenses 20,759
--------------
Total liabilities 3,875,951
--------------
NET ASSETS $ 788,869,805
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest 320,733,356
Undistributed net investment loss (4,411,398)
Accumulated net realized gain 31,119,515
Net unrealized appreciation 441,428,332
--------------
NET ASSETS $ 788,869,805
==============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $624,985,000) 18,502,259
Net asset value per share $33.78
Offering price per share $33.78/(1-5.75%) $35.84
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $103,762,843) 3,309,979
Net asset value and offering price per share $31.35
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $60,121,962) 1,917,952
Net asset value and offering price per share $31.35
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 929,418
Interest 755,528
-------------
Total investment income 1,684,946
-------------
EXPENSES
Investment advisory fee 2,970,866
Distribution fee, Class A 760,624
Distribution fee, Class B 522,506
Distribution fee, Class C 288,382
Administration 1,531,730
Professional 14,280
Trustees 7,956
-------------
Total expenses 6,096,344
-------------
NET INVESTMENT LOSS (4,411,398)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 28,756,176
Net realized gain on written options 2,363,339
Net change in unrealized appreciation (depreciation) on
investments (14,541,870)
-------------
NET GAIN ON INVESTMENTS 16,577,645
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 12,166,247
=============
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Phoenix-Engemann Focus Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
6/30/00 Year Ended
(Unaudited) 12/31/99
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (4,411,398) $ (7,242,469)
Net realized gain (loss) 31,119,515 86,481,655
Net change in unrealized appreciation (depreciation) (14,541,870) 184,957,338
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS 12,166,247 264,196,524
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A -- (103,359,347)
Net realized gains, Class B -- (18,563,891)
Net realized gains, Class C -- (9,894,149)
In excess of net realized gains, Class A -- (2,793,835)
In excess of net realized gains, Class B -- (501,788)
In excess of net realized gains, Class C -- (267,443)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS -- (135,380,453)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (1,839,722 and 2,437,653
shares, respectively) 61,316,497 77,978,236
Net asset value of shares issued from reinvestment of
distributions
(0 and 2,932,699 shares, respectively) -- 95,019,463
Cost of shares repurchased (2,029,684 and 3,126,770
shares, respectively) (67,801,234) (98,805,876)
------------ ------------
Total (6,484,737) 74,191,823
------------ ------------
CLASS B
Proceeds from sales of shares (344,066 and 672,999 shares,
respectively) 10,548,325 19,484,473
Net asset value of shares issued from reinvestment of
distributions
(0 and 575,602 shares, respectively) -- 17,377,421
Cost of shares repurchased (469,109 and 402,631 shares,
respectively) (14,475,653) (11,482,014)
------------ ------------
Total (3,927,328) 25,379,880
------------ ------------
CLASS C
Proceeds from sales of shares (249,747 and 417,135 shares,
respectively) 7,684,020 12,312,851
Net asset value of shares issued from reinvestment of
distributions
(0 and 308,840 shares, respectively) -- 9,323,884
Cost of shares repurchased (162,766 and 251,773 shares,
respectively) (5,025,209) (7,279,393)
------------ ------------
Total 2,658,811 14,357,342
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM SHARE
TRANSACTIONS (7,753,254) 113,929,045
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 4,412,993 242,745,116
NET ASSETS
Beginning of period 784,456,812 541,711,696
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) OF
($4,411,398) AND $0, RESPECTIVELY] $788,869,805 $784,456,812
============ ============
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Focus Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/00 --------------------------------------------------------------------
(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%(5) 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%(4) 1.54% 1.58% 1.6%(3) 1.6%(3) 1.6%
Net investment income (loss) (0.99)%(4) (1.04)% (0.72)% (0.7)% (0.6)% (0.3)%
Portfolio turnover 21%(5) 56% 119% 70.6% 70.1% 65.9%
</TABLE>
<TABLE>
<C> <S>
(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) Annualized.
(5) Not annualized.
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Phoenix-Engemann Focus Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/00 ----------------------------------------------------------------
(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) $103,763 $106,372 $65,986 $54,267 $49,444 $34,786
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.17%(4) 2.29% 2.33% 2.4%(3) 2.3%(3) 2.4%
Net investment income (loss) (1.74)%(4) (1.78)% (1.47)% (1.5)% (1.5)% (1.1)%
Portfolio turnover 21%(5) 56% 119% 70.6% 70.1% 65.9%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/00 ---------------------------------------------------------------
(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 $56,699 $34,580 $29,222 $27,239 $20,497
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.17%(4) 2.29% 2.33% 2.4%(3) 2.3%(3) 2.4%
Net investment income (loss) (1.74)%(4) (1.78)% (1.47)% (1.5)% (1.5)% (1.1)%
Portfolio turnover 21%(5) 56% 119% 70.6% 70.1% 65.9%
</TABLE>
<TABLE>
<C> <S>
(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) Annualized.
(5) Not annualized.
</TABLE>
14 See Notes to Financial Statements
<PAGE>
PHOENIX-ENGEMANN NIFTY-FIFTY FUND
INVESTMENTS AT JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMMON STOCKS--95.3%
COMMUNICATIONS EQUIPMENT--7.7%
Lucent Technologies, Inc............... 370,000 $ 21,922,500
Motorola, Inc.......................... 334,000 9,706,875
Tellabs, Inc.(b)....................... 153,000 10,470,937
------------
42,100,312
------------
COMPUTERS (HARDWARE)--4.0%
Dell Computer Corp.(b)................. 159,000 7,840,687
Sun Microsystems, Inc.(b).............. 153,000 13,913,437
------------
21,754,124
------------
COMPUTERS (NETWORKING)--5.9%
Cisco Systems, Inc.(b)................. 506,748 32,210,170
COMPUTERS (PERIPHERALS)--7.2%
EMC Corp.(b)........................... 514,000 39,545,875
COMPUTERS (SOFTWARE & SERVICES)--8.8%
America Online, Inc.(b)................ 185,000 9,758,750
BEA Systems, Inc.(b)................... 384,000 18,984,000
Microsoft Corp.(b)..................... 63,800 5,104,000
Oracle Corp.(b)........................ 75,000 6,304,687
VERITAS Software Corp.(b).............. 52,500 5,933,320
eBay, Inc.(b).......................... 36,000 1,955,250
------------
48,040,007
------------
ELECTRONICS (SEMICONDUCTORS)--13.0%
Intel Corp............................. 176,000 23,529,000
JDS Uniphase Corp.(b).................. 76,000 9,110,500
Maxim Integrated Products, Inc.(b)..... 103,000 6,997,562
Texas Instruments, Inc................. 368,000 25,277,000
Xilinx, Inc.(b)........................ 75,000 6,192,187
------------
71,106,249
------------
ENTERTAINMENT--2.5%
Time Warner, Inc....................... 65,000 4,940,000
Viacom, Inc. Class B(b)................ 53,000 3,613,938
Walt Disney Co. (The).................. 135,000 5,239,688
------------
13,793,626
------------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
EQUIPMENT (SEMICONDUCTORS)--1.0%
Applied Materials, Inc.(b)............. 59,000 $ 5,346,875
FINANCIAL (DIVERSIFIED)--5.7%
American Express Co.................... 231,000 12,040,875
Citigroup, Inc......................... 225,000 13,556,250
Morgan Stanley Dean Witter & Co........ 65,000 5,411,250
------------
31,008,375
------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--12.3%
Genentech, Inc.(b)..................... 105,000 18,060,000
Merck & Co., Inc....................... 75,600 5,792,850
Pfizer, Inc............................ 694,600 33,340,800
Pharmacia Corp......................... 192,070 9,927,618
------------
67,121,268
------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--4.5%
Guidant Corp.(b)....................... 167,000 8,266,500
Medtronic, Inc......................... 322,600 16,069,513
------------
24,336,013
------------
INVESTMENT BANKING/BROKERAGE--2.4%
Merrill Lynch & Co., Inc............... 54,000 6,210,000
Schwab (Charles) Corp. (The)........... 210,000 7,061,250
------------
13,271,250
------------
NATURAL GAS--0.5%
Enron Corp............................. 39,000 2,515,500
RAILROADS--3.7%
Kansas City Southern Industries,
Inc.................................... 229,000 20,309,438
RESTAURANTS--1.1%
Starbucks Corp.(b)..................... 155,000 5,919,063
RETAIL (BUILDING SUPPLIES)--2.0%
Home Depot, Inc. (The)................. 223,500 11,161,031
RETAIL (FOOD CHAINS)--2.1%
Safeway, Inc.(b)....................... 248,000 11,191,000
RETAIL (GENERAL MERCHANDISE)--3.3%
Costco Wholesale Corp.(b).............. 200,500 6,616,500
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Phoenix-Engemann Nifty-Fifty Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
RETAIL (GENERAL MERCHANDISE)--CONTINUED
Wal-Mart Stores, Inc................... 195,000 $ 11,236,875
------------
17,853,375
------------
RETAIL (SPECIALTY)--0.9%
Bed Bath & Beyond, Inc.(b)............. 138,050 5,004,313
SERVICES (ADVERTISING/MARKETING)--0.9%
Interpublic Group of Cos., Inc.
(The).................................. 120,000 5,160,000
SERVICES (COMPUTER SYSTEMS)--2.6%
Electronic Data Systems Corp........... 350,000 14,437,500
SERVICES (DATA PROCESSING)--0.1%
Automatic Data Processing, Inc......... 10,000 535,625
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--1.0%
AT&T Wireless Group(b)................. 200,000 5,575,000
TELECOMMUNICATIONS (LONG DISTANCE)--1.1%
WorldCom, Inc.(b)...................... 132,500 6,078,438
TRUCKERS--1.0%
United Parcel Service, Inc. Class B.... 92,000 5,428,000
- --------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $303,377,991) 520,802,427
- --------------------------------------------------------------------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
FOREIGN COMMON STOCKS--3.1%
COMMUNICATIONS EQUIPMENT--3.1%
Nokia Oyj ADR (Finland)................ 328,000 $ 16,379,500
Nortel Networks Corp. (Canada)......... 10,000 682,500
------------
17,062,000
------------
- --------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $16,609,032) 17,062,000
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL INVESTMENTS--98.4%
(IDENTIFIED COST $319,987,023) 537,864,427(a)
Cash and receivables, less liabilities--1.6% 8,798,540
------------
NET ASSETS--100.0% $546,662,967
============
</TABLE>
<TABLE>
<S> <C>
(a) Federal Income Tax Information: Net unrealized appreciation
of investment securities is comprised of gross appreciation
of $229,988,960 and gross depreciation of $12,212,402 for
federal income tax purposes. At June 30, 2000, the aggregate
cost of securities for federal income tax purposes was
$320,087,869.
(b) Non-income producing.
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $319,987,023) $537,864,427
Cash 10,540,089
Receivables
Fund shares sold 1,215,000
Dividends and interest 147,131
------------
Total assets 549,766,647
------------
LIABILITIES
Payables
Investment securities purchase 1,203,794
Fund shares repurchased 614,042
Distribution fee 726,360
Investment advisory fee 355,400
Administration fee 178,203
Trustees' fee 5,290
Accrued expenses 20,591
------------
Total liabilities 3,103,680
------------
NET ASSETS $546,662,967
============
NET ASSETS CONSIST OF:
Capital paid in on shares of
beneficial interest $262,876,116
Undistributed net investment loss (3,745,120)
Accumulated net realized gain 69,654,567
Net unrealized appreciation 217,877,404
------------
NET ASSETS $546,662,967
============
CLASS A
Shares of beneficial interest
outstanding, $1 par value,
unlimited authorization (Net
Assets $328,566,584) 6,927,903
Net asset value per share $47.43
Offering price per share
$47.43/(1-5.75%) $50.32
CLASS B
Shares of beneficial interest
outstanding, $1 par value,
unlimited authorization (Net
Assets $140,999,555) 3,153,322
Net asset value and offering price
per share $44.71
CLASS C
Shares of beneficial interest
outstanding, $1 par value,
unlimited authorization (Net
Assets $77,096,828) 1,724,341
Net asset value and offering price
per share $44.71
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 757,075
Interest 279,586
Foreign Tax Withheld (9,429)
-----------
Total investment income 1,027,232
-----------
EXPENSES
Investment advisory fee 2,136,019
Distribution fee, Class A 400,491
Distribution fee, Class B 692,205
Distribution fee, Class C 367,100
Administration 1,157,219
Professional 10,287
Trustees 9,031
-----------
Total expenses 4,772,352
-----------
NET INVESTMENT LOSS (3,745,120)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on securities 71,916,568
Net change in unrealized
appreciation (depreciation) on
investments (54,309,586)
-----------
NET GAIN ON INVESTMENTS 17,606,982
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $13,861,862
===========
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
6/30/00 Year Ended
(Unaudited) 12/31/99
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (3,745,120) $ (5,531,589)
Net realized gain (loss) 71,916,568 40,441,424
Net change in unrealized appreciation (depreciation) (54,309,586) 93,107,575
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS 13,861,862 128,017,410
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A -- (32,506,365)
Net realized gains, Class B -- (14,737,596)
Net realized gains, Class C -- (7,456,863)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS -- (54,700,824)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (646,703 and 1,492,778
shares, respectively) 30,159,804 63,251,908
Net asset value of shares issued from reinvestment of
distributions
(0 and 650,922 shares, respectively) -- 29,512,798
Cost of shares repurchased (678,886 and 1,241,476 shares,
respectively) (31,616,770) (53,099,694)
------------ ------------
Total (1,456,966) 39,665,012
------------ ------------
CLASS B
Proceeds from sales of shares (304,595 and 634,388 shares,
respectively) 13,404,563 25,899,845
Net asset value of shares issued from reinvestment of
distributions
(0 and 300,215 shares, respectively) -- 12,885,223
Cost of shares repurchased (324,650 and 367,722 shares,
respectively) (14,373,480) (15,038,011)
------------ ------------
Total (968,917) 23,747,057
------------ ------------
CLASS C
Proceeds from sales of shares (248,372 and 398,511 shares,
respectively) 10,896,175 16,321,818
Net asset value of shares issued from reinvestment of
distributions
(0 and 154,070 shares, respectively) -- 6,611,132
Cost of shares repurchased (146,607 and 230,854 shares,
respectively) (6,468,428) (9,311,630)
------------ ------------
Total 4,427,747 13,621,320
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM SHARE
TRANSACTIONS 2,001,864 77,033,389
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 15,863,726 150,349,975
NET ASSETS
Beginning of period 530,799,241 380,449,266
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME
(LOSS) OF ($3,475,120) AND $0, RESPECTIVELY] $546,662,967 $530,799,241
============ ============
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31
6/30/00 --------------------------------------------------------------------
(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%(4) 1.58% 1.60% 1.6%(3) 1.7%(3) 1.9%
Net investment income (loss) (1.11)%(4) (0.97)% (0.61)% (0.7)% (0.4)% (0.3)%
Portfolio turnover 55%(5) 43% 92% 68.8% 41.9% 26.5%
</TABLE>
<TABLE>
<C> <S>
(1) Computed using average shares outstanding.
(2) Maximum sales load is not reflected in the total return
calculation.
(3) If the investment adviser had not waived fees and
reimbursed expenses, the ratio of operating expenses to
average net assets would have been 1.60% and 1.80% for the
periods ended December 31, 1997 and 1996, respectively.
(4) Annualized.
(5) Not annualized.
</TABLE>
See Notes to Financial Statements 19
<PAGE>
Phoenix-Engemann Nifty Fifty Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31
6/30/00 ----------------------------------------------------------------
(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%(5) 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%(4) 2.33% 2.35% 2.4%(3) 2.5%(3) 2.6%
Net investment income (loss) (1.86)%(4) (1.72)% (1.35)% (1.4)% (1.2)% (1.0)%
Portfolio turnover 55%(5) 43% 92% 68.8% 41.9% 26.5%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31
6/30/00 ---------------------------------------------------------------
(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%(5) 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%(4) 2.33% 2.35% 2.4%(3) 2.5%(3) 2.6%
Net investment income (loss) (1.86)%(4) (1.72)% (1.35)% (1.4)% (1.2)% (1.0)%
Portfolio turnover 55%(5) 43% 92% 68.8% 41.9% 26.5%
</TABLE>
<TABLE>
<C> <S>
(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) Annualized.
(5) Not annualized.
</TABLE>
20 See Notes to Financial Statements
<PAGE>
PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH FUND
INVESTMENTS AT JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMMON STOCKS--86.0%
AIR FREIGHT--0.4%
Expeditors International of Washington,
Inc..................................... 30,000 $ 1,425,000
BIOTECHNOLOGY--4.8%
Aviron(b)............................... 80,000 2,470,000
Charles River Laboratories, Inc......... 52,000 1,153,750
Cor Therapeutics, Inc.(b)............... 47,000 4,009,687
Coulter Pharmaceutical, Inc.(b)......... 30,000 615,000
Enzon, Inc.(b).......................... 25,000 1,062,500
IDEC Pharmaceuticals Corp.(b)........... 36,800 4,317,100
Myriad Genetics, Incorporated........... 20,000 2,961,562
Pharmacyclics, Inc.(b).................. 20,000 1,220,000
------------
17,809,599
------------
BROADCASTING (TELEVISION, RADIO & CABLE)--0.2%
Spanish Broadcasting System, Inc. Class
A(b).................................... 30,000 616,875
COMMUNICATIONS EQUIPMENT--1.0%
Audiovox Corp. Class A(b)............... 34,400 758,950
i3 Mobile, Inc.(b)...................... 48,000 882,000
Metawave Communications Corp.(b)........ 75,000 2,001,562
------------
3,642,512
------------
COMPUTERS (HARDWARE)--0.7%
MMC Networks, Inc.(b)................... 50,000 2,671,875
COMPUTERS (SOFTWARE & SERVICES)--22.1%
Agile Software Corp.(b)................. 32,000 2,262,000
Aspsecure.com Corp.(b).................. 120,000 390,000
BEA Systems, Inc.(b).................... 270,000 13,348,125
Bluestone Software, Inc.(b)............. 150,000 3,853,125
Broadbase Software, Inc.(b)............. 30,000 918,750
C-bridge Internet Solutions, Inc.(b).... 100,000 1,737,500
Commerce One, Inc.(b)................... 90,000 4,085,156
Extensity, Inc.(b)...................... 75,000 2,568,750
Interwoven, Inc.(b)..................... 25,000 2,749,609
Keynote Systems, Inc.(b)................ 80,000 5,645,000
LivePerson, Inc.(b)..................... 192,000 1,668,000
Luminant Worldwide Corp.(b)............. 100,000 893,750
MatrixOne, Inc.(b)...................... 23,050 936,406
NYFIX, Inc.(b).......................... 222,000 9,310,125
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)--CONTINUED
PC-Tel, Inc.(b)......................... 24,000 $ 912,000
Peregrine Systems, Inc.(b).............. 250,000 8,671,875
Precise Software Solutions Ltd.(b)...... 39,000 936,000
Predictive Systems, Inc.(b)............. 75,000 2,695,312
Primus Knowledge Solutions.............. 70,000 3,150,000
PurchasePro.com, Inc.(b)................ 115,000 4,715,000
Sapient Corp.(b)........................ 36,000 3,849,750
Software Technologies Corp.(b).......... 150,000 4,603,125
Ulticom, Inc.(b)........................ 48,000 1,152,750
Websense, Inc.(b)....................... 48,000 1,206,000
------------
82,258,108
------------
CONSUMER FINANCE--2.7%
Metris Cos., Inc........................ 400,000 10,050,000
ELECTRICAL EQUIPMENT--4.3%
Advanced Energy Industries, Inc.(b)..... 160,000 9,430,000
C-COR.net Corp.(b)...................... 28,000 756,000
Flextronics International Ltd.(b)....... 50,000 3,434,375
Manufacturers' Services Ltd.(b)......... 26,000 534,625
Viasystems Group, Inc.(b)............... 111,500 1,804,906
------------
15,959,906
------------
ELECTRONICS (COMPONENT DISTRIBUTORS)--0.2%
Exfo Electro-Optical Engineering,
Inc..................................... 19,500 855,563
ELECTRONICS (INSTRUMENTATION)--3.9%
Aclara Biosciences, Inc.(b)............. 35,000 1,782,812
Caliper Technologies Corp.(b)........... 40,000 1,840,000
Meade Instruments Corp.(b).............. 225,000 5,653,125
Rudolph Technologies, Inc.(b)........... 133,000 5,153,750
------------
14,429,687
------------
ELECTRONICS (SEMICONDUCTORS)--11.6%
ANADIGICS, Inc.(b)...................... 125,000 4,257,813
Applied Micro Circuits Corp.(b)......... 120,000 11,850,000
Micrel, Inc.(b)......................... 152,000 6,602,500
NETsilicon, Inc.(b)..................... 111,500 3,651,625
Quantam Effect Devices, Inc.(b)......... 32,500 1,852,500
Quicklogic Corp.(b)..................... 200,000 4,450,000
Silcon Storage Technology, Inc.(b)...... 40,000 3,532,500
</TABLE>
See Notes to Financial Statements 21
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
ELECTRONICS (SEMICONDUCTORS)--CONTINUED
Stanford Microdevices, Inc.(b).......... 18,750 $ 814,453
TriQuint Semiconductor, Inc.(b)......... 65,000 6,219,688
------------
43,231,079
------------
ENGINEERING & CONSTRUCTION--0.7%
SBA Communications Corp.(b)............. 50,000 2,596,875
EQUIPMENT (SEMICONDUCTORS)--4.3%
Cymer, Inc.(b).......................... 130,000 6,207,500
Mattson Technology, Inc.(b)............. 23,000 747,500
PRI Automation, Inc.(b)................. 135,000 8,827,734
------------
15,782,734
------------
FINANCIAL (DIVERSIFIED)--1.2%
Federal Agricultural Mortgage Corp.
Class C(b).............................. 113,000 1,645,562
Pinnacle Holdings, Inc.(b).............. 50,000 2,700,000
------------
4,345,562
------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--1.5%
Emisphere Technologies, Inc.(b)......... 14,100 600,792
Inhale Therapeutic Systems, Inc.(b)..... 30,000 3,044,063
Tanox, Inc.(b).......................... 40,000 1,892,500
------------
5,537,355
------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.8%
ArthroCare Corp.(b)..................... 50,000 2,662,500
Aspect Medical Systems, Inc............. 30,000 810,000
MiniMed, Inc. (b)....................... 27,000 3,186,000
------------
6,658,500
------------
HEALTH CARE (SPECIALIZED SERVICES)--0.4%
Omnicare, Inc........................... 150,000 1,359,375
INVESTMENT MANAGEMENT--1.5%
Affiliated Managers Group, Inc.(b)...... 60,000 2,730,000
Gabelli Asset Management, Inc. Class
A(b).................................... 110,000 2,750,000
------------
5,480,000
------------
PUBLISHING--0.5%
Scholastic Corp......................... 33,000 2,017,125
RAILROADS--2.3%
Kansas City Southern Industries, Inc.... 95,000 8,425,313
RESTAURANTS--1.5%
Cheesecake Factory, Inc. (The)(b)....... 150,000 4,125,000
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
RESTAURANTS--CONTINUED
Papa John's International, Inc.(b)...... 65,000 $ 1,592,500
------------
5,717,500
------------
RETAIL (BUILDING SUPPLIES)--0.7%
Fastenal Co............................. 50,000 2,531,250
RETAIL (DISCOUNTERS)--1.6%
99 Cents Only Stores(b)................. 150,000 5,981,250
RETAIL (FOOD CHAINS)--2.4%
Smart & Final, Inc.(b).................. 96,499 741,836
Whole Foods Market, Inc.(b)............. 200,000 8,262,500
------------
9,004,336
------------
RETAIL (SPECIALTY)--2.9%
Cost Plus, Inc.(b)...................... 239,375 6,867,070
Williams-Sonoma, Inc.(b)................ 125,000 4,054,688
------------
10,921,758
------------
RETAIL (SPECIALTY-APPAREL)--0.6%
Children's Place Retail Stores, Inc.
(The)(b)................................ 100,000 2,050,000
SERVICES (COMMERCIAL & CONSUMER)--7.6%
Corporate Executive Board Co.
(The)(b)................................ 90,000 5,388,750
Diamond Technology Partners, Inc.(b).... 24,500 2,156,000
Edison Schools Inc...................... 30,000 695,625
Energy Exploration Technology(b)........ 224,500 7,212,063
Exult, Inc.(b).......................... 78,000 780,000
MIPS Technologies, Inc. Class A(b)...... 100,000 4,250,000
NCO Group, Inc.(b)...................... 106,000 2,451,250
Rent Way, Inc.(b)....................... 50,000 1,478,125
Universal Access, Inc.(b)............... 58,700 1,438,150
Universal Compression Holdings.......... 50,000 1,675,000
Vicinity Corp.(b)....................... 42,500 834,063
------------
28,359,026
------------
SERVICES (DATA PROCESSING)--0.6%
StorageNetworks, Inc.(b)................ 26,000 2,346,500
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.9%
Dobson Communications Corp. Class
A(b).................................... 100,000 1,925,000
Teligent, Inc. Class A.................. 65,000 1,535,625
------------
3,460,625
------------
TELECOMMUNICATIONS (LONG DISTANCE)--1.1%
ITXC Corp.(b)........................... 24,000 849,750
Network Plus Corp.(b)................... 125,000 1,773,438
</TABLE>
22 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)--CONTINUED
Winstar Communications, Inc.(b)......... 42,000 $ 1,422,750
------------
4,045,938
------------
- ---------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $232,161,653) 319,571,226
- ---------------------------------------------------------------------
FOREIGN COMMON STOCKS--2.7%
COMMUNICATIONS EQUIPMENT--0.6%
Research in Motion Ltd. (Canada)(b)..... 50,000 2,262,500
INSURANCE (LIFE/HEALTH)--1.2%
London Pacific Group Ltd. ADR (United
Kingdom)................................ 325,000 4,225,000
OFFICE EQUIPMENT & SUPPLIES--0.2%
Trintech Group PLC Sponsored ADR
(Ireland)(b)............................ 40,000 788,125
OIL & GAS (EXPLORATION & PRODUCTION)--0.7%
Encal Energy Ltd. (Canada)(b)........... 430,000 2,728,003
- ---------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $6,899,737) 10,003,628
- ---------------------------------------------------------------------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
PREFERRED STOCKS--0.5%
COMMUNICATIONS EQUIPMENT--0.3%
Metro Optix, Inc. Series B Pfd.......... 91,918 $ 909,988
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.2%
Micro Photonix Series C Pfd............. 123,510 780,003
- ---------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(IDENTIFIED COST $1,689,988) 1,689,991
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL INVESTMENTS--89.2%
(IDENTIFIED COST $240,751,378) 331,264,845(a)
Cash and receivables, less liabilities--10.8% 40,256,359
------------
NET ASSETS--100.0% $371,521,204
============
</TABLE>
<TABLE>
<S> <C>
(a) Federal Income Tax Information: Net unrealized appreciation
of investment securities is comprised of gross appreciation
of $113,288,417 and gross depreciation of $23,470,137 for
federal income tax purposes. At June 30, 2000, the aggregate
cost of securities for federal income tax purposes was
$241,446,565.
(b) Non-income producing.
</TABLE>
See Notes to Financial Statements 23
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $240,751,378) $ 331,264,845
Cash 41,675,294
Receivables
Investment securities sold 2,879,352
Fund shares sold 3,182,387
Dividends and interest 226,421
--------------
Total assets 379,228,299
--------------
LIABILITIES
Payables
Investment securities purchased 6,634,499
Fund shares repurchased 205,239
Distribution fee 473,017
Investment advisory fee 254,374
Administration fee 117,537
Trustees' fee 5,290
Accrued expenses 17,139
--------------
Total liabilities 7,707,095
--------------
NET ASSETS $ 371,521,204
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest 244,904,137
Undistributed net investment loss (2,240,114)
Accumulated net realized gain 38,343,714
Net unrealized appreciation 90,513,467
--------------
NET ASSETS $ 371,521,204
==============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $202,728,812) 4,389,403
Net asset value per share $46.19
Offering price per share 46.19/(1-5.75%) $49.01
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $101,905,903) 2,272,406
Net asset value and offering price per share $44.84
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $66,886,489) 1,492,492
Net asset value and offering price per share $44.82
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 812,141
Dividends 45,828
--------------
Total investment income 857,969
--------------
EXPENSES
Investment advisory fee 1,455,220
Distribution fee, Class A 217,687
Distribution fee, Class B 456,665
Distribution fee, Class C 261,872
Administration 706,639
Professional 12,779
Trustees 7,956
--------------
Total expenses 3,118,818
Less expenses borne by investment adviser (20,735)
--------------
Net expenses 3,098,083
--------------
NET INVESTMENT LOSS (2,240,114)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 43,007,998
Net change in unrealized appreciation (depreciation)
on investments (36,279,645)
--------------
NET GAIN ON INVESTMENTS 6,728,353
--------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 4,488,239
==============
</TABLE>
24 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
6/30/00 Year Ended
(Unaudited) 12/31/99
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (2,240,114) $ (2,227,655)
Net realized gain (loss) 43,007,998 6,348,167
Net change in unrealized appreciation (depreciation) (36,279,645) 103,350,257
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS 4,488,239 107,470,769
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (2,634,632 and 2,162,580
shares, respectively) 125,959,937 58,137,050
Cost of shares repurchased (1,237,002 and 1,421,135
shares, respectively) (59,687,113) (38,629,734)
------------ ------------
Total 66,272,824 19,507,316
------------ ------------
CLASS B
Proceeds from sales of shares (721,993 and 609,129 shares,
respectively) 33,935,985 15,875,386
Cost of shares repurchased (154,537 and 242,043 shares,
respectively) (7,087,158) (5,699,467)
------------ ------------
Total 26,848,827 10,175,919
------------ ------------
CLASS C
Proceeds from sales of shares (720,263 and 406,932 shares,
respectively) 33,814,992 10,621,041
Cost of shares repurchased (95,948 and 174,616 shares,
respectively) (4,346,708) (4,172,562)
------------ ------------
Total 29,468,284 6,448,479
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM SHARE
TRANSACTIONS 122,589,935 36,131,714
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 127,078,174 143,602,483
NET ASSETS
Beginning of period 244,443,030 100,840,547
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) OF ($2,240,114) AND $0, RESPECTIVELY] $371,521,204 $244,443,030
============ ============
</TABLE>
See Notes to Financial Statements 25
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31
6/30/00 --------------------------------------------------------------
(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>
<C> <S>
(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.
</TABLE>
26 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31
6/30/00 ------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996
<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%(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>
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31
6/30/00 -----------------------------------------------
(UNAUDITED) 1999 1998 1997 1996
<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>
<TABLE>
<C> <S>
(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 18, 1996 and October 8, 1996,
respectively.
</TABLE>
See Notes to Financial Statements 27
<PAGE>
PHOENIX-ENGEMANN VALUE 25 FUND
INVESTMENTS AT JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
-------- -----------
<S> <C> <C> <C>
COMMON STOCKS--99.0%
AEROSPACE/DEFENSE--4.2%
Goodrich (B.F) Co. (The)................ 18,500 $ 630,156
AUTO PARTS & EQUIPMENT--15.7%
Cooper Tire & Rubber Co................. 52,900 588,512
Dana Corp............................... 23,300 493,669
Genuine Parts Co........................ 28,300 566,000
Snap-On Tools Inc....................... 25,900 689,587
Visteon Corp.(b)........................ 1,728 20,956
-----------
2,358,724
-----------
AUTOMOBILES--3.8%
Ford Motor Co........................... 13,200 567,600
BUILDING MATERIALS--3.9%
Armstrong Holdings Inc.................. 38,600 591,063
CONSUMER (JEWELRY, NOVELTIES & GIFTS)--3.8%
American Greetings Corp................. 30,000 570,000
CONTAINERS (METAL & GLASS)--4.1%
Crown Cork & Seal Co., Inc.............. 41,700 625,500
ELECTRICAL EQUIPMENT--7.3%
Cooper Industries, Inc.................. 19,500 634,969
Thomas & Betts Corp..................... 24,000 459,000
-----------
1,093,969
-----------
ELECTRONICS (DEFENSE)--3.8%
Raytheon Co. Class B.................... 30,100 579,425
FOODS--4.0%
ConAgra, Inc............................ 31,900 608,094
HARDWARE & TOOLS--4.0%
Stanley Works, The...................... 25,300 600,875
HOUSEWARES--4.1%
Fortune Brands, Inc..................... 26,800 618,075
<CAPTION>
SHARES VALUE
-------- -----------
<S> <C> <C> <C>
MACHINERY (DIVERSIFIED)--4.5%
Milacron, Inc........................... 46,300 $ 671,350
MANUFACTURING (DIVERSIFIED)--3.9%
National Service Industries, Inc........ 29,800 581,100
OIL & GAS (REFINING & MARKETING)--4.3%
Ashland, Inc............................ 18,500 648,656
PAPER & FOREST PRODUCTS--3.5%
Louisiana-Pacific Corp.................. 48,900 531,788
RETAIL (DRUG STORES)--4.4%
Rite Aid Corp........................... 100,000 656,250
SPECIALTY PRINTING--4.2%
Donnelley (R.R.) & Sons Co.............. 28,100 634,006
TEXTILES (APPAREL)--8.6%
Russell Corp............................ 33,600 672,000
V. F. Corp.............................. 26,500 631,031
-----------
1,303,031
-----------
TEXTILES (HOME FURNISHINGS)--3.3%
Springs Industries, Inc. Class A........ 15,600 502,125
TRUCKS & PARTS--3.6%
PACCAR, Inc............................. 13,600 539,750
- --------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $19,403,642) 14,911,537
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TOTAL INVESTMENTS--99.0%
(IDENTIFIED COST $19,403,642) 14,911,537(a)
Cash and receivables, less liabilities--1.0% 153,237
-----------
NET ASSETS--100.0% $15,064,774
===========
</TABLE>
<TABLE>
<S> <C>
(a) Federal Income Tax Information: Net unrealized depreciation
of investment securities is comprised of gross appreciation
of $368,297 and gross depreciation of $4,944,503 for federal
income tax purposes. At June 30, 2000, the aggregate cost of
securities for federal income tax purposes was $19,487,743.
(b) Non-income producing.
</TABLE>
28 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Value 25 Fund
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $19,403,642) $ 14,911,537
Cash 193,776
Receivables
Dividends and interest 28,119
--------------
Total assets 15,133,432
--------------
LIABILITIES
Payables
Fund shares repurchased 1,447
Distribution fee 26,480
Investment advisory fee 11,306
Administration fee 6,860
Trustees' fee 5,290
Accrued expenses 17,275
--------------
Total liabilities 68,658
--------------
NET ASSETS $ 15,064,774
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest 23,380,551
Undistributed net investment income 73,909
Accumulated net realized loss (3,897,581)
Net unrealized depreciation (4,492,105)
--------------
NET ASSETS $ 15,064,774
==============
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $7,727,888) 1,010,131
Net asset value per share $7.65
Offering price per share $7.65/(1-5.75%) $8.12
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $5,365,677) 707,024
Net asset value and offering price per share $7.59
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $1,971,209) 259,754
Net asset value and offering price per share $7.59
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 387,492
Interest 3,754
--------------
Total investment income 391,246
--------------
EXPENSES
Investment advisory fee 81,665
Distribution fee, Class A 11,974
Distribution fee, Class B 30,350
Distribution fee, Class C 12,493
Administration 48,764
Trustees 7,957
Professional 7,643
--------------
Total expenses 200,846
Less expenses borne by investment adviser (15,600)
--------------
Net expenses 185,246
--------------
NET INVESTMENT INCOME 206,000
==============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (3,754,865)
Net change in unrealized appreciation (depreciation) on
investments (151,683)
--------------
NET LOSS ON INVESTMENTS (3,906,548)
==============
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (3,700,548)
==============
</TABLE>
See Notes to Financial Statements 29
<PAGE>
Phoenix-Engemann Value 25 Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
6/30/00 Year Ended
(Unaudited) 12/31/99
----------- -----------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 206,000 $ 300,070
Net realized gain (loss) (3,754,865) 3,211,792
Net change in unrealized appreciation (depreciation) (151,683) (5,116,766)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS (3,700,548) (1,604,904)
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (99,130) (199,489)
Net investment income, Class B (54,157) (63,334)
Net investment income, Class C (20,701) (25,820)
Net realized gains, Class A (5,960) (1,953,603)
Net realized gains, Class B (4,985) (1,144,495)
Net realized gains, Class C (1,634) (477,608)
In excess of net realized gains, Class A -- (71,100)
In excess of net realized gains, Class B -- (41,654)
In excess of net realized gains, Class C -- (17,382)
----------- -----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (186,567) (3,994,485)
----------- -----------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (186,881 and 174,138 shares,
respectively) 1,512,039 2,143,783
Net asset value of shares issued from reinvestment of
distributions
(12,424 and 229,321 shares, respectively) 97,902 2,131,821
Cost of shares repurchased (651,476 and 495,346 shares,
respectively) (5,229,988) (5,870,932)
----------- -----------
Total (3,620,047) (1,595,328)
----------- -----------
CLASS B
Proceeds from sales of shares (92,407 and 107,152 shares,
respectively) 761,208 1,292,314
Net asset value of shares issued from reinvestment of
distributions
(6,541 and 105,576 shares, respectively) 51,309 975,535
Cost of shares repurchased (215,136 and 336,907 shares,
respectively) (1,767,926) (3,840,069)
----------- -----------
Total (955,409) (1,572,220)
----------- -----------
CLASS C
Proceeds from sales of shares (43,352 and 47,266 shares,
respectively) 342,056 586,348
Net asset value of shares issued from reinvestment of
distributions
(2,530 and 49,536 shares, respectively) 19,785 459,616
Cost of shares repurchased (130,119 and 326,376 shares,
respectively) (1,033,562) (3,792,417)
----------- -----------
Total (671,721) (2,746,453)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM SHARE
TRANSACTIONS (5,247,177) (5,914,001)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS (9,134,292) (11,513,390)
NET ASSETS
Beginning of period 24,199,066 35,712,456
----------- -----------
END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) OF $73,909 AND $41,897, RESPECTIVELY] $15,064,774 $24,199,066
=========== ===========
</TABLE>
30 See Notes to Financial Statements
<PAGE>
Phoenix-Engemann Value 25 Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, INCEPTION
6/30/00 ----------------------------------- 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%(3)(4) 1.75%(3) 1.75%(3) 1.80%(3) 1.70%(4)
Net investment income (loss) 2.58%(4) 1.32% 1.25% 1.40% 1.80%(4)
Portfolio turnover 59%(5) 181% 135% 87.7% --%
</TABLE>
<TABLE>
<C> <S>
(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 1.85%, 1.84%, 1.86% and
1.80% for the periods ended June 30, 2000, December 31,
1999, 1998 and 1997, respectively.
(4) Annualized.
(5) Not annualized.
</TABLE>
See Notes to Financial Statements 31
<PAGE>
Phoenix-Engemann Value 25 Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/00 ---------------------------------
(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 YEAR ENDED DECEMBER 31,
6/30/00 --------------------------------
(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>
<TABLE>
<C> <S>
(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.
</TABLE>
32 See Notes to Financial Statements
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix-Engemann Funds (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. To date, five
Funds are offered for sale: Phoenix-Engemann Balanced Return Fund,
Phoenix-Engemann Focus Growth Fund, Phoenix-Engemann Nifty Fifty Fund, Phoenix-
Engemann Small & Mid-Cap Growth Fund and Phoenix-Engemann Value 25 Fund,
collectively referred to as the "Funds," are series of The Phoenix-Engemann
Funds. Each Fund represents an investment in a separate diversified fund with
its own investment objectives. BALANCED RETURN FUND seeks to maximize a total
investment return consistent with reasonable risk through a balanced approach.
FOCUS GROWTH FUND seeks to achieve long-term capital appreciation. NIFTY FIFTY
FUND seeks to achieve long-term capital appreciation by investing in
approximately 50 different securities. SMALL & MID-CAP GROWTH FUND seeks to
achieve long-term growth of capital by investing primarily in a diversified
portfolio of equity securities of companies with market capitalizations below
$1.5 billion. VALUE 25 FUND seeks to achieve dividend income and long-term
growth of capital by investing in equity securities which the Adviser believes
offer the best potential for current dividend yield and long-term capital
appreciation.
Each Fund offers Class A, Class B and Class C shares. Class M shares have been
closed. Effective April 3, 2000, Class A shares are sold with a front-end sales
charge of up to 5.75%. Prior to that date, the maximum sales charge was 4.75%.
Class B shares are sold with a contingent deferred sales charge which declines
from 5% to zero depending on the period of time the shares are held. Class C
shares are sold with a 1% contingent deferred sales charge if redeemed within
one year of purchase. All classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that each
class bears different distribution expenses and has exclusive voting rights with
respect to its distribution plan. Income and expenses of the Funds are borne pro
rata by the holders of all classes of shares, except that each class bears
distribution expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. Actual results could differ from those estimates.
A. SECURITY VALUATION:
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price. Debt securities are valued on the basis of
broker quotations or valuations provided by a pricing service which utilizes
information with respect to recent sales, market transactions in comparable
securities, quotations from dealers and various relationships between securities
in determining value. Short-term investments having a remaining maturity of
60 days or less are valued at amortized cost which approximates market. All
other securities and assets are valued at their fair value as determined in good
faith by or under the direction of the Trustees.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date or, in the case of certain foreign securities, as soon as the Trust is
notified. Realized gains and losses are determined on the identified cost basis.
The Trust does not amortize premiums but does amortize discounts.
C. INCOME TAXES:
Each Fund is treated as a separate taxable entity. It is the policy of each
Fund to comply with the requirements of the Internal Revenue Code (the "Code")
applicable to regulated investment companies, and to distribute all of its
taxable income to its shareholders. In addition, each Fund intends to distribute
an amount sufficient to avoid imposition of any excise tax under Section 4982 of
the Code. Therefore, no provision for federal income taxes or excise taxes has
been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, expiring
capital loss carryforwards, foreign currency gain/loss, partnerships, operating
losses and losses deferred due to wash sales and excise tax regulations.
Permanent book and tax basis differences relating to shareholder distributions
will result in reclassifications to paid in capital.
E. FOREIGN CURRENCY TRANSLATION:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange rates
between the trade and settlement dates of a portfolio transaction is treated as
a gain or loss on foreign currency. Likewise, the gain or loss resulting from a
change in currency exchange rates between the date income is accrued and paid is
treated as a gain or loss on foreign currency. The Trust does not
33
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED) (CONTINUED)
separate that portion of the results of operations arising from changes in the
exchange rates and that portion arising from changes in the market prices of
securities.
F. FORWARD CURRENCY CONTRACTS:
The Small & Mid-Cap Growth Fund and the Value 25 Fund may enter into forward
currency contracts in conjunction with the planned purchase or sale of foreign
denominated securities in order to hedge the U.S. dollar cost or proceeds.
Forward currency contracts involve, to varying degrees, elements of market risk
in excess of the amount recognized in the Statement of Assets and Liabilities.
Risks arise from the possible movements in foreign exchange rates or if the
counterparty does not perform under the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts are traded directly between currency traders and
their customers. The contract is marked-to-market daily and the change in market
value is recorded by each Fund as an unrealized gain (or loss). When the
contract is closed or offset with the same counterparty, the Fund records a
realized gain (or loss) equal to the change in the value of the contract when it
was opened and the value at the time it was closed or offset.
G. FUTURES CONTRACTS:
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. The Small & Mid-Cap Growth Fund and
the Value 25 Fund may enter into financial futures contracts as a hedge against
anticipated changes in the market value of their portfolio securities. Upon
entering into a futures contract, the Fund is required to pledge to the broker
an amount of cash and/or securities equal to the "initial margin" requirements
of the futures exchange on which the contract is traded. Pursuant to the
contract, the Fund agrees to receive from or pay to the broker an amount of cash
equal to the daily fluctuation in value of the contract. Such receipts or
payments are known as daily variation margin and are recorded by the Fund as
unrealized gains and losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. The potential
risk to the Fund is that the change in value of the futures contract may not
correspond to the change in value of the hedged instruments.
H. OPTIONS:
Each Fund may write covered options or purchase options contracts for purpose
of hedging against changes in the market value of the underlying securities or
foreign currencies. Additionally, each Fund may buy and sell options on domestic
and foreign securities indices for hedging purposes.
Each Fund will realize a gain or loss upon the expiration or closing of the
option transaction. Gains and losses on written options are reported separately
in the Statement of Operations. When a written option is exercised, the proceeds
on sales or amounts paid are adjusted by the amount of premium received. Options
written are reported as a liability in the Statement of Assets and Liabilities
and subsequently marked-to-market to reflect the current value of the option.
The risk associated with written options is that the change in value of options
contracts may not correspond to the change in value of the hedged instruments.
In addition, losses may arise from changes in the value of the underlying
instruments, or if a liquid secondary market does not exist from the contracts.
Each Fund may purchase options which are included in the Fund's Schedule of
Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
I. EXPENSES:
Expenses incurred by the Trust with respect to any two or more Funds are
allocated in proportion to the net assets of each Fund, except where allocation
of direct expense to each Fund or an alternative allocation method can be more
fairly made.
J. LOAN AGREEMENTS:
The Funds may invest in direct debt instruments which are invested in amounts
owed by a corporation, governmental, or other borrower to lenders or lending
syndicates. The Funds' investments in loans may be in the form of participations
in loans or assignments of all or a portion of loans from third parties. A loan
is often administered by a bank or other financial institution (the lender) that
acts as agent for all holders. The agent administers the terms of the loan, as
specified in the loan agreement. When investing in a loan participation, the
Funds have the right to receive payments of principal, interest and any fees to
which it is entitled only from the lender selling the loan agreement and only
upon receipt by the lender of payments from the borrower. The Funds generally
have no right to enforce compliance with the terms of the loan agreement with
the borrower. As a result, the Funds may be subject to the credit risk of both
the borrower and lender that is selling the loan agreement. For loans which the
Funds are a participant, the Funds may not sell their participation in the loan
without the lender's prior consent. When the Funds purchase assignments from
lenders it acquires direct rights against the borrower on the loan. Direct
indebtedness of emerging countries
34
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED) (CONTINUED)
involves a risk that the government entities responsible for the repayment of
the debt may be unable, or unwilling to pay the principal and interest when due.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, the Adviser, Roger Engemann &
Associates, Inc. ("REA", or the "Adviser"), a wholly owned subsidiary of
Pasadena Capital Corporation, which in turn is a wholly owned subsidiary of
Phoenix Investment Partners, Ltd. a publicly-traded company 60% owned by Phoenix
Home Life Mutual Insurance Company, is entitled to a fee, based upon the
following annual rates as a percentage of the average daily net assets of each
Fund:
<TABLE>
<CAPTION>
First $50 Next $450 Over $500
Million Million Million
--------- --------- ---------
<S> <C> <C> <C>
Balanced Return Fund........... 0.80% 0.70% 0.60%
Focus Growth Fund.............. 0.90% 0.80% 0.70%
Nifty Fifty Fund............... 0.90% 0.80% 0.70%
Small & Mid-Cap Growth Fund.... 1.00% 0.90% 0.80%
Value 25 Fund.................. 0.90% 0.80% 0.70%
</TABLE>
The Adviser furnishes advice and recommendations with respect to the Funds'
securities portfolios, supervises the Funds' investments, provides Fund
accounting and pricing, and provides the Trust's Board of Trustees with periodic
and special reports on investment securities, economic conditions and other
pertinent subjects. The Adviser also performs various administrative and
shareholder services for each Fund under separate administration agreements. All
normal operating expenses of the Funds, except for fees and expenses associated
with investment management services, service fees, distribution fees, Trustees'
fees, audit fees and certain legal fees are paid by the Adviser pursuant to the
administration agreements.
Phoenix Equity Planning Corporation ("PEPCO") an indirect majority-owned
subsidiary of PHL, which serves as the national distributor of the Trust's
shares has advised the Trust that it retained net selling commissions of
$149,404 for Class A shares and deferred sales charges of $334,977 for Class B
shares and $45,352 for Class C shares for the year ended December 31, 1999. In
addition, each Fund pays PEPCO a distribution fee at an annual rate of 0.25% for
Class A shares, 1.00% for Class B shares and 1.00% for Class C shares applied to
the average daily net assets of each Fund. The distributor has advised the Trust
that of the total amount expensed for the year ended December 31, 1999
$2,344,989 was retained by the Distributor, $2,042,044 was paid out to
unaffiliated participants and $55,332 was paid to W.S. Griffith, an indirect
subsidiary of PHL.
As Administrator of the Funds, PEPCO received a fee for bookkeeping,
administration, and pricing services at an annual rate of 0.60% of average daily
net assets up to $50 million, 0.50% of average daily net assets of $50 million
to $500 million, 0.40% of average daily net assets of $500 million through $625
million, and 0.30% of average daily net assets greater than $625 million: a
minimum fee may apply.
PEPCO has voluntarily agreed to waive, when necessary, a portion of its
administration fee so that Other Operating Expenses (operating expenses
excluding management fees and 12b-1 fees) do not exceed the following limits:
<TABLE>
<CAPTION>
1st
$50 Next $450 Next $125 Over $625
Million Million Million Million
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balanced Return
Fund................ 1.09% 0.60% 0.40% 0.40%
Focus Growth Fund..... 0.99% 0.50% 0.30% 0.30%
Nifty Fifty Fund...... 0.99% 0.50% 0.30% 0.30%
Small & Mid-Cap Growth
Fund*............... 0.50% 0.40% 0.30% 0.30%
Value 25 Fund*........ 0.50% 0.40% 0.30% 0.30%
</TABLE>
PEPCO serves as the Fund's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent.
* Prior to March 1, 2000, the expense limits were 0.60%, 0.50%, 0.40% and
0.40%, respectively.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the six months ended June 30, 2000
(excluding U.S. Government and agency securities, short-term securities, futures
contracts and forward currency contracts) aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Balanced Return Fund................ $ 23,639,556 $ 50,205,579
Focus Growth Fund................... 155,371,153 167,309,344
Nifty Fifty Fund.................... 291,972,885 287,381,516
Small & Mid Cap Growth Fund......... 243,642,686 142,900,394
Value 25 Fund....................... 10,795,868 16,132,249
</TABLE>
Purchases and sales of U.S. Governments and agency securities during the six
months ended June 30, 2000, aggregated $34,386,094 and $0, respectively, for the
Balanced Return Fund.
35
<PAGE>
PHOENIX-ENGEMANN FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 (UNAUDITED) (CONTINUED)
Written option activity during the six months ended June 30, 2000, for the
Focus Growth Fund aggregated the following:
<TABLE>
<CAPTION>
Number of Amount of
Options Premium
--------- ----------
<S> <C> <C>
Options outstanding at December 31,
1999................................... 2,100 $1,017,416
Options written.......................... 9,000 1,721,478
Option canceled in closing purchase
transactions........................... -- --
Options expired.......................... (4,600) (531,445)
Options exercised........................ (6,500) (2,207,449)
------ ----------
Options outstanding at June 30, 2000..... -- --
====== ==========
</TABLE>
4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a fund's ability to
repatriate such amounts.
5. CAPITAL LOSS CARRYOVERS
The following Funds have capital loss carryovers, expiring in 2006, which may
be used to offset future capital gains.
<TABLE>
<S> <C>
Small & Mid-Cap Growth Fund............... $4,320,592
</TABLE>
Under current tax law, capital loss realized after October 31, may be deferred
and treated as occurring on the first day of the following tax year. For the
calendar year ended December 31, 1999, the Balanced Return Fund and the Value 25
Fund elected to defer losses occurring between November 1, 1999 and December 31,
1999 in the amounts of $17,366 and $139,062, respectively.
6. SUBSEQUENT EVENT
Effective July 1, 2000, the Administrative Agreement was changed. PEPCO
receives a financial agent fee equal to the sum of (1) the documented cost of
fund accounting and related services provided by PFPC, Inc. (subagent to PEPCO),
plus (2) the documented cost of the financial agent to provide financial
reporting, tax services and oversight of the subagent's performance. The current
fee schedule of PFPC, Inc. ranges from 0.085% to 0.0125% of the average daily
net asset values of the Fund. Certain minimum fees and fee waivers may apply.
The voluntary expense waiver limitations remain unchanged.
This report is not authorized for distribution to prospective investors in the
Phoenix-Engemann Funds unless preceded or accompanied by an effective Prospectus
which includes information concerning the sales charge, the Fund's record and
other pertinent information.
36
<PAGE>
PHOENIX-ENGEMANN FUNDS
600 North Rosemead Boulevard
Pasadena, California 91107-2133
TRUSTEES
Roger Engemann
Barry E. McKinley
Robert L. Peterson
Richard C. Taylor
Angela Wong
OFFICERS
Roger Engemann, President
Malcolm Axon, Chief Financial Officer
Tina L. Mitchell, Secretary
John S. Tilson, Vice President
Thomas N. Steenburg, General Counsel and
Vice President
INVESTMENT ADVISERS
Roger Engemann & Associates ("REA")
600 North Rosemead Boulevard
Pasadena, California 91107-2133
PRINCIPAL UNDERWRITER
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
CUSTODIAN
Union Bank of California
475 Sansome Street
San Francisco, California 94111
TRANSFER AGENT
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
160 Federal Street
Boston, Massachusetts 02110
HOW TO CONTACT US
<TABLE>
<S> <C>
The Fund Connection 1-800-243-1574
Customer Service 1-800-243-1574 (option
0)
Investment Strategy Hotline 1-800-243-4361 (option
2)
Marketing Department 1-800-243-4361 (option
3)
Text Telephone 1-800-243-1926
www.phoenixinvestments.com
</TABLE>
<PAGE>
Phoenix Equity Planning Corporation
PO Box 2200
Enfield CT 06083-2200
---------------
| PRSRT STD |
| U.S. Postage |
| PAID |
| Andrew |
| Associates |
---------------
[LOGO] PHOENIX
INVESTMENT PARTNERS
For more information about
Phoenix mutual funds, please call
your financial representative or
contact us at 1-800-243-4361 or
www.phoenixinvestments.com.
PXP 2115A (8/00)
<PAGE>
The Semiannual Report of
Phoenix-Strategic Equity Series Fund
for the six-month period ended October 31, 2000
to be filed by amendment
<PAGE>
The Pro Forma
Financial Statements
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund / Phoenix-Engemann Small Cap Fund
Pro Forma Combining Statement of Assets and Liabilities
October 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
================= =================
Phoenix-Engemann Phoenix-Engemann
Small & Mid-Cap Small Cap
Growth Fund Fund
================= =================
<S> <C> <C>
ASSETS
Investment securities at value
(Identified cost $259,352,723, $203,757,275 and $463,109,998) $ 378,952,880 $ 331,033,892
Cash 59,755,169 2,123
Receivables
Investment securities sold 2,812,743 5,657,946
Fund shares sold 2,518,632 3,244,280
Dividends and interest 294,695 12,421
Prepaid expenses 1,801
------------------ -----------------
Total assets 444,334,120 339,952,463
------------------ -----------------
LIABILITIES
Payables
Investment securities purchased 4,215,987 6,934,642
Fund shares repurchased 184,490 184,000
Distribution fee 215,928 162,128
Investment advisory fee 340,321 215,517
Administration fee - -
Transfer agent fee 36,574 124,815
Financial agent fee 26,145 24,278
Trustees' fee 6,462 10,259
Accrued expenses 77,202 29,898
------------------ -----------------
Total liabilities 5,103,109 7,685,537
------------------ -----------------
NET ASSETS $ 439,231,011 $ 332,266,926
================== =================
CLASS A
Shares of beneficial interest outstanding 5,494,280 6,402,987
Net assets $ 246,569,821 $ 193,577,992
Net asset value per share $ 44.88 $ 30.23
Offering price per share NAV/(1- 5.75%) $ 47.62 $ 32.07
CLASS B
Shares of beneficial interest outstanding 2,561,432 4,783,462
Net assets $ 111,334,934 $ 138,688,934
Net asset value and offering price per share $ 43.47 $ 28.99
CLASS C
Shares of beneficial interest outstanding 1,872,257
Net assets $ 81,325,256 $
Net asset value and offering price per share $ 43.44 $
================ ===============
Pro Forma
Adjustments Combining
Portfolios
================ ===============
$ 709,986,772
59,757,292
-
8,470,689
5,762,912
307,116
1,801
---------------- ----------------
- 784,286,583
---------------- ----------------
11,150,629
368,490
378,056
555,838
-
161,389
50,423
16,721
107,100
---------------- ----------------
- 12,788,646
---------------- ----------------
- $ 771,497,937
=============== =================
(2,089,752)(a) 9,807,515
$ 440,147,813
$ 44.88
$ 47.62
(1,593,010)(a) 5,751,884
$ 250,023,868
$ 43.47
1,872,257
$ 81,325,256
$ 43.44
</TABLE>
(a) Adjustment reflects additional shares issued in conversion.
See Notes to Pro Forma Financial Statements.
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund / Phoenix-Engemann Small Cap Fund
Pro Forma Combining Schedule of Investments
October 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
SHARES
=================== ===================================== ========================================
Phoenix-Engemann Phoenix-Engemann Pro Forma
Small & Mid-Cap Small Cap Combining DESCRIPTION
Growth Fund Fund Portfolios
=================== ===================================== ========================================
COMMON STOCKS --83.7%
<S> <C> <C> <C> <C>
90,000 2 90,002 99 Cents Only Stores
52,125 5,875 58,000 Active Power Inc
10,310 10,310 Advanced Switching Communications
76,200 35,000 111,200 Affymetrix Inc
60,600 64,400 125,000 Agile Software Corp.
332,850 220,000 552,850 Applied Micro Circuits Corp.
53,000 47,000 100,000 Arena Pharmaceuticals, Inc
100,000 100,000 ArthroCare Corp.
38,000 38,000 ARX, Inc
120,000 180,000 300,000 Aspsecure.com Corp.
25,000 19,000 44,000 Aurora Biosciences Corp.
2,720 29,960 32,680 Avici Systems, Inc.
100,000 65,000 165,000 Aviron
67,000 55,000 122,000 Barrett Resources Corp.
270,000 225,000 495,000 BEA Systems, Inc.
79,500 52,875 132,375 Bruker Daltonics, Inc.
100,000 59,000 159,000 C-Bridge Internet Solutions, Inc.
26,500 23,500 50,000 California Pizza Kitchen, Inc.
10,900 38,000 48,900 Caliper Technologies Corp.
45,780 45,780 Caliper Technologies Private Placement
52,000 48,000 100,000 Charles River Laboratories, Inc.
150,000 195,000 345,000 Cheesecake Factory, Inc. (The)
46,850 37,430 84,280 Ciphergen Biosystems, Inc.
90,000 90,000 180,000 Commerce One, Inc.
94,000 102,000 196,000 COR Therapeutics, Inc.
180,000 175,000 355,000 Corporate Executive Board Co. (The)
28,825 43,725 72,550 Cosine Communications, Inc.
260,000 270,000 530,000 Cost Plus, Inc.
30,000 30,000 60,000 Coulter Pharmaceutical, Inc.
82,380 66,540 148,920 Curon Medical, Inc.
73,000 146,000 219,000 Cymer, Inc.
39,750 35,250 75,000 Deltagen, Inc.
5,805 4,650 10,455 Eden Bioscience Corp.
96,250 58,750 155,000 Edison Schools Inc.
27,410 22,240 49,650 Elantec Semiconductor, Inc.
43,785 69,960 113,745 Elastic Networks, Inc.
14,450 11,200 25,650 Endwave Corp.
224,500 127,000 351,500 Energy Exploration Technology
25,000 25,000 Enzon, Inc.
30,000 50,000 80,000 Expeditors International of Washington, Inc.
57,000 100,500 157,500 Extensity, Inc.
50,000 28,000 78,000 Fastenal Co.
163,000 211,000 374,000 Federal Agricultural Mortgage Corp. Class C
159,000 62,000 221,000 Forest Oil, Corp.
43,000 43,000 Freemarkets, Inc.
110,000 241,500 351,500 Gabelli Asset Management, Inc. Class A
258,000 200,000 458,000 Grey Wolf, Inc.
86,000 65,000 151,000 Houston Exploration, Co.
36,800 36,200 73,000 IDEC Pharmaceuticals Corp.
53,000 39,950 92,950 Illumina, Inc.
5,510 4,420 9,930 Informax, Inc.
60,000 80,000 140,000 Inhale Therapeutic Systems, Inc.
76,000 76,000 Intertrust Technologies Corp.
50,000 60,000 110,000 Interwoven, Inc.
48,000 48,000 Investors Financial Service Co.
67,150 57,200 124,350 Ista Pharmaceuticals Inc.
5,780 4,480 10,260 Ixia Inc.
43,790 33,120 76,910 JNI Corp.
56,000 103,000 159,000 Keynote Systems, Inc.
10,600 9,400 20,000 Large Scale Biology Corp.
192,000 208,000 400,000 LivePerson, Inc.
98,000 77,000 175,000 Louis Dreyfus Natural Gas Co.
39,750 35,250 75,000 MCData Corp.
80,000 170,000 250,000 Meade Instruments Corp.
47,000 47,000 Medicines Company
65,500 65,500 131,000 Metawave Communications Corp.
400,000 320,000 720,000 Metris Cos., Inc.
152,000 180,000 332,000 Micrel, Inc.
54,000 60,000 114,000 MiniMed, Inc.
100,000 90,000 190,000 MIPS Technologies, Inc. Class A
40,000 40,000 Myriad Genetics, Inc.
106,000 106,000 NCO Group, Inc.
22,100 22,100 Netiq Corp.
111,500 150,000 261,500 NETsilicon, Inc.
316,000 244,000 560,000 NYFIX, Inc.
150,000 145,000 295,000 Omnicare, Inc.
34,025 26,810 60,835 Oplink Communications, Inc.
39,750 29,375 69,125 Opnet Technologies, Inc.
52,000 48,000 100,000 Pain Therapeutics, Inc
52,715 46,745 99,460 Peco II, Inc.
400,000 220,000 620,000 Peregrine Systems, Inc.
20,000 30,000 50,000 Pharmacyclics, Inc.
125,000 200,000 325,000 Pinnacle Holdings, Inc.
79,000 71,000 150,000 Precise Software Solutions Ltd.
75,000 90,000 165,000 Predictive Systems, Inc.
================= ================= ================
Phoenix-Engemann Phoenix-Engemann Pro Forma
Small & Mid-Cap Small Cap Combining
Growth Fund Fund Portfolios
================= ================= ================
2,019,375 45 2,019,420
1,987,266 223,984 2,211,250
105,033 105,033
4,219,575 1,938,125 6,157,700
4,567,725 4,854,150 9,421,875
25,421,419 16,802,500 42,223,919
1,851,688 1,642,063 3,493,750
2,268,750 2,268,750
2,261,000 2,261,000
390,000 585,000 975,000
1,523,438 1,157,813 2,681,250
117,980 1,299,515 1,417,495
6,537,500 4,249,375 10,786,875
2,437,125 2,000,625 4,437,750
19,372,500 16,143,750 35,516,250
2,722,875 1,810,969 4,533,844
1,475,000 870,250 2,345,250
927,500 822,500 1,750,000
614,488 2,142,250 2,756,738
2,580,848 2,580,848
1,365,000 1,260,000 2,625,000
6,646,875 8,640,938 15,287,813
1,452,350 1,160,330 2,612,680
5,776,875 5,776,875 11,553,750
5,311,000 5,763,000 11,074,000
8,302,500 8,071,875 16,374,375
953,027 1,445,658 2,398,684
7,280,000 7,560,000 14,840,000
1,149,375 1,149,375 2,298,750
937,073 756,893 1,693,965
1,825,000 3,650,000 5,475,000
631,031 559,594 1,190,625
219,864 176,119 395,983
2,640,859 1,611,953 4,252,813
3,049,363 2,474,200 5,523,563
270,920 432,878 703,797
207,719 161,000 368,719
3,030,750 1,714,500 4,745,250
1,781,250 1,781,250
1,556,250 2,593,750 4,150,000
726,750 1,281,375 2,008,125
2,871,875 1,608,250 4,480,125
3,565,625 4,615,625 8,181,250
2,196,188 856,375 3,052,563
2,125,813 2,125,813
3,960,000 8,694,000 12,654,000
1,193,250 925,000 2,118,250
1,935,000 1,462,500 3,397,500
7,217,400 7,099,725 14,317,125
1,722,500 1,298,375 3,020,875
153,247 122,931 276,178
2,985,000 3,980,000 6,965,000
760,000 760,000
5,037,500 6,045,000 11,082,500
3,441,000 3,441,000
738,650 629,200 1,367,850
135,469 105,000 240,469
3,900,047 2,949,750 6,849,797
1,344,000 2,472,000 3,816,000
196,763 174,488 371,250
444,000 481,000 925,000
3,142,125 2,468,813 5,610,938
3,313,535 2,938,418 6,251,953
1,465,000 3,113,125 4,578,125
1,415,875 1,415,875
867,875 867,875 1,735,750
12,950,000 10,360,000 23,310,000
6,878,000 8,145,000 15,023,000
3,938,625 4,376,250 8,314,875
4,012,500 3,611,250 7,623,750
4,800,000 4,800,000
2,318,750 2,318,750
1,903,363 1,903,363
1,581,906 2,128,125 3,710,031
12,482,000 9,638,000 22,120,000
2,625,000 2,537,500 5,162,500
829,359 653,494 1,482,853
1,388,766 1,026,289 2,415,055
1,114,750 1,029,000 2,143,750
2,075,653 1,840,584 3,916,238
9,600,000 5,280,000 14,880,000
1,076,250 1,614,375 2,690,625
1,968,750 3,150,000 5,118,750
1,807,125 1,624,125 3,431,250
1,040,625 1,248,750 2,289,375
<PAGE>
230,000 101,000 331,000 PurchasePro.com, Inc.
325,000 187,000 512,000 Quicklogic Corp.
50,000 50,000 Rent Way, Inc.
26,000 20,000 46,000 Retek Inc.
150,000 140,000 290,000 Rudolph Technologies, Inc.
72,000 100,000 172,000 Sapient Corp.
50,000 48,000 98,000 SBA Communications Corp.
33,000 33,000 Scholastic Corp.
120,000 100,000 220,000 Silicon Storage Technology, Inc.
125,000 31,000 156,000 Silverstream Software, Inc.
96,499 303,832 400,331 Smart & Final, Inc.
150,000 150,000 300,000 Software Technologies Corp.
95,915 77,840 173,755 Staar Surgical Co.
18,750 18,750 37,500 Stanford Microdevices, Inc.
190,000 240,000 430,000 Stillwell Financial Inc.
26,000 24,000 50,000 StorageNetworks, Inc.
132,500 117,500 250,000 Synquest, Inc.
6,810 5,875 12,685 Tanox, Inc.
44,000 34,000 78,000 Tetra Tech Inc.
100,000 148,000 248,000 The Chiuldren's Place Retail Stores, Inc.
106,000 106,000 The Medicine Co.
289,460 224,010 513,470 TNPC, Inc.
130,000 120,000 250,000 TriQuint Semiconductor, Inc.
61,975 62,825 124,800 Ulticom, Inc.
58,700 66,300 125,000 Universal Access, Inc.
33,572 22,372 55,944 Universal Compression Holdings
39,400 39,400 Utilicorp Uniited, Inc. DE
27,300 25,200 52,500 Variagenics, Inc.
31,200 28,800 60,000 Vascular Solutions, Inc
58,300 46,460 104,760 Vastera Inc
52,735 46,765 99,500 Viasource Communication, Inc.
119,250 105,750 225,000 Vina Technologies, Inc.
200,000 95,000 295,000 Whole Foods Market, Inc.
118,000 96,000 214,000 Winstar Communications, Inc.
455,930 455,930 Women.com
TOTAL COMMON STOCKS
FOREIGN COMMON STOCKS --6.7%
53,000 47,000 100,000 C-Mac Industries, Inc. (Canada)
430,000 968,800 1,398,800 Encal Energy Ltd. (Canada)
23,400 35,100 58,500 Exfo Electro-Optical Engineering, Inc. (Canada)
100,000 140,000 240,000 Flextronics International Ltd. (Singapore)
60,300 44,860 105,160 Hydrogenics Corp. (Canada)
20,000 16,000 36,000 IONA Technologies PLC ADR (Ireland)
325,000 322,800 647,800 London Pacific Group Ltd. ADR (United Kingdom)
32,000 25,000 57,000 Precision Drilling Corp.
50,000 60,000 110,000 Research in Motion Ltd. (Canada)
55,200 55,200 Trintech Group PLC Sponsored ADR (Ireland)
TOTAL FOREIGN COMMON STOCKS
PREFERRED STOCKS -- 0.4%
91,918 84,848 176,766 Metro Optix, Inc. Series B Pfd.
123,510 114,009 237,519 Micro Photonix Series C Pfd.
TOTAL PREFERRED STOCKS
CONVERTIBLE BONDS -- 0.3%
663,000 587,000 1,250,000 Cyras Systems, Inc. 144A 4.5%, 8/15/05
520,000 480,000 1,000,000 Kestral Solutions, Inc. 144A 5.5%, 7/15/05
TOTAL CONVERTIBLE BONDS
SHORT-TERM OBLIGATIONS --0.9%
COMMERCIAL PAPER --0.9%
6,895,000 6,895,000 Household Finance Corp. 6.62%, 11/1/00
TOTAL SHORT-TERM OBLIGATIONS
TOTAL INVESTMENTS --92.0%
(Identified cost $259,352,723, $203,757,275
and $463,109,998)
Cash and receivables, less liabilities--8.0%
NET ASSETS--100.0%
6,210,000 2,727,000 8,937,000
2,884,375 1,659,625 4,544,000
253,125 253,125
1,025,375 788,750 1,814,125
5,850,000 5,460,000 11,310,000
2,560,500 3,556,250 6,116,750
2,506,250 2,406,000 4,912,250
2,640,000 2,640,000
2,730,000 2,275,000 5,005,000
2,812,500 697,500 3,510,000
663,431 2,088,845 2,752,276
2,550,000 2,550,000 5,100,000
1,342,810 1,089,760 2,432,570
469,922 469,922 939,844
8,514,375 10,755,000 19,269,375
1,649,375 1,522,500 3,171,875
2,194,531 1,946,094 4,140,625
253,673 218,844 472,516
1,529,000 1,181,500 2,710,500
2,593,750 3,838,750 6,432,500
3,193,250 3,193,250
4,812,273 3,724,166 8,536,439
4,980,625 4,597,500 9,578,125
2,959,306 2,999,894 5,959,200
858,488 969,638 1,828,125
969,392 645,992 1,615,383
1,046,563 1,046,563
450,450 415,800 866,250
635,700 586,800 1,222,500
1,034,825 824,665 1,859,490
243,899 216,288 460,188
1,058,344 938,531 1,996,875
9,250,000 4,393,750 13,643,750
2,301,000 1,872,000 4,173,000
669,647 669,647
----------------- -------------- ----------------
352,645,299 293,455,300 646,100,600
----------------- -------------- ----------------
2,941,500 2,608,500 5,550,000
2,604,371 5,867,709 8,472,080
892,125 1,338,188 2,230,313
3,800,000 5,320,000 9,120,000
727,369 541,124 1,268,493
1,315,000 1,052,000 2,367,000
4,590,625 4,559,550 9,150,175
916,000 715,625 1,631,625
5,000,000 6,000,000 11,000,000
586,500 586,500
----------------- -------------- ----------------
23,373,490 28,002,695 51,376,185
----------------- -------------- ----------------
909,988 839,995 1,749,983
780,003 720,001 1,500,004
----------------- -------------- ----------------
1,689,991 1,559,996 3,249,987
----------------- -------------- ----------------
729,300 645,700 1,375,000
514,800 475,200 990,000
----------------- -------------- ----------------
1,244,100 1,120,900 2,365,000
----------------- -------------- ----------------
6,895,000 6,895,000
----------------- -------------- ----------------
- 6,895,000 6,895,000
----------------- -------------- ----------------
378,952,880 331,033,892 709,986,772
60,278,131 1,233,034 61,511,165
----------------- -------------- ----------------
$ 439,231,011 $ 332,266,926 $ 771,497,937
================= ================= ================
</TABLE>
See Notes to Pro Forma Financial Statements.
<PAGE>
Phoenix-Engemann Small & Mid-Cap Growth Fund / Phoenix-Engemann Small Cap Fund
Pro Forma Combining Statement of Operations
October 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Adjustments for
Actual New Expense Structure
================== ======================
Phoenix-Engemann Phoenix-Engemann
Small & Mid-Cap Small & Mid-Cap
Growth Fund Growth Fund
================== ======================
<S> <C> <C>
INVESTMENT INCOME
Interest $ 1,804,146
Dividends 89,923
------------------
Total investment income 1,894,069
------------------
EXPENSES
Investment advisory fee 3,067,716
Distribution fee - Class A 462,079
Distribution fee - Class B 932,574
Distribution fee - Class C 572,055
Financial agent fee 102,253 171,352
Administration Fee 880,019 (880,019)
Transfer agent 120,788 210,848
Registration 17,139 74,912
Printing 54,225 10,095
Professional 22,568 4,381
Custodian 7,631 24,741
Trustees 16,477 -
Miscellaneous 2,561 5,469
------------------ ---------------
Total expenses 6,258,085 (378,221)
Custodian fees paid indirectly (16,185)
Less expenses borne by investment advisor
------------------
Net expenses 6,241,900
------------------
NET INVESTMENT INCOME (LOSS) (4,347,831)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on securities 6,826,409
Net change in unrealized appreciation (depreciation) on investments 63,700,770
Net gain on investments 70,527,178
------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 66,179,347
==================
-
Adjusted
Actual
================== ================== ================== ==================
Phoenix-Engemann Phoenix-Engemann Pro Forma
Small & Mid-Cap Small Cap Adjustments Combining
Growth Fund Fund Portfolios
================== ================== ================== ==================
1,804,146 $ 478,401 $ $ 2,282,547
89,923 119,465 209,388
------------------ -------------------- -------------------- ----------------
1,894,069 597,866 2,491,935
------------------ -------------------- -------------------- ----------------
3,067,716 2,586,307 332,623 (a) 5,986,646
462,079 497,400 959,479
932,574 1,458,806 2,391,380
572,055 - 572,055
273,605 272,188 (163,877) (a) 381,916
- - - -
331,636 583,537 915,173
92,051 24,861 (25,000) (b) 91,912
64,320 80,897 (70,000) (b) 75,217
26,949 19,044 (25,000) (b) 20,993
32,372 35,493 67,865
16,477 24,159 (24,636) (b) 16,000
8,030 34,932 (25,000) (b) 17,962
------------------ -------------------- -------------------- ----------------
5,879,864 5,617,624 (890) 11,496,598
(16,185) - - (16,185)
- - - -
------------------ -------------------- -------------------- ----------------
5,863,679 5,617,624 (890) 11,480,413
------------------ -------------------- -------------------- ----------------
(3,969,610) (5,019,758) 890 (8,988,478)
6,826,409 - 6,826,409
63,700,770 - 63,700,770
70,527,178 - - 70,527,178
------------------ -------------------- -------------------- ----------------
66,557,568 $ (5,019,758) $ 890 61,538,700
================== ==================== ==================== ================
</TABLE>
Adjustments:
(a) Fees were adjusted to reflect the application of the fee schedule in effect
at 10/31/00.
(b) Reflects elimination of target fund contract.
Note: The expenses for Engemann Small & Mid-Cap Growth are based on the
expense schedule which became effective 7/1/00.
See Notes to Pro Forma Financial Statements.
<PAGE>
PHOENIX-ENGEMANN SMALL & MID-CAP GROWTH FUND/ PHOENIX-ENGEMANN SMALL CAP FUND
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
OCTOBER 31, 2000 (UNAUDITED)
1. BASIS OF COMBINATION
The Pro Forma Statement of Assets and Liabilities, including the Pro Forma
Schedule of Investments, and the related Pro Forma Statement of Operations ("Pro
Forma Statements") reflect the accounts of Phoenix-Engemann Small & Mid-Cap
Growth Fund ("Small & Mid-Cap") and Phoenix-Engemann Small Cap Fund ("Small
Cap") as if the reorganization occurred as of and for the year ended October 31,
2000. These statements have been derived from the books and records utilized in
calculating daily net asset value of each fund at October 31, 2000 and for the
year then ended.
The Pro Forma Statements give effect to the proposed transfer of the assets and
stated liabilities of Small Cap in exchange for shares of the respective class
of Small & Mid-Cap. Phoenix Investment Counsel, Inc. ("PIC" or the "Adviser")
will bear all costs and expenses of the reorganization.
The Pro Forma Statements should be read in conjunction with the historical
financial statements of the funds incorporated by reference in the Statement of
Additional Information.
2. SHARES OF BENEFICIAL INTEREST
The Pro Forma net asset value per share assumes the issuance of additional
shares of Small & Mid-Cap which would have been issued at October 31, 2000 in
connection with the proposed reorganization. The amount of additional shares
assumed to be issued was calculated based on the net assets, as of October 31,
2000, of Small Cap Class A of $193,577, 922 and the net asset value of Small &
Mid-Cap Class A of $44.88; and net assets of Small Cap Class B of $138,688,934
and the net asset value of Small & Mid-Cap Class B of $43.47. The Pro Forma
Statement of Assets & Liabilities reflects the combined Pro Forma shares
outstanding as calculated above.
3. PRO FORMA OPERATIONS
Pro Forma operating expenses include the expenses of Small & Mid-Cap restated to
reflect the expense schedule which became effective July, 1, 2000, the actual
expenses of each Small Cap and the combined Fund, with certain expenses adjusted
to reflect the expected expenses of the combined entity. The investment
advisory, distribution and financial agent fees have been calculated for the
combined Fund based on the fee schedule in effect for Small & Mid-Cap at the
combined level of average net assets for the year ended October 31, 2000.
4. PORTFOLIO VALUATION
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price. Debt securities are valued on the basis of
broker quotations or valuations provided by a pricing service which utilizes
information with respect to recent sales, market transactions in comparable
securities, quotations from dealers, and various relationships between
securities in determining value. Short-term investments having a remaining
maturity of 60 days or less are valued at amortized cost which approximates
market. All other securities and assets are valued at fair value as determined
in good faith by or under the direction of the Trustees.
<PAGE>
THE PHOENIX-ENGEMANN FUNDS
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
The response to this item is incorporated by reference to Part A of the
Prospectus/Proxy Statement in this Registration Statement under the caption
"Comparative Information on Shareholder Rights-Liability of Trustees."
ITEM 16. EXHIBIT
(1) Agreement and Declaration of Trust of the registrant to be filed by
pre-effective amendment.
(2) By-laws to be filed by pre-effective amendment.
(3) Not Applicable.
(4) Agreement and Plan of Reorganization (included as Appendix A to the
Prospectus/Proxy Statement contained in Part A of this Registration
Statement).
(5) Reference is hereby made to Registrant's Agreement and Declaration of
Trust referenced in Exhibit 1 above.
(6) Investment Management Agreement.
(7)(1) Distribution Agreement with Phoenix Equity Planning Corporation.
(7)(2) Form of Sales Agreement between Phoenix Equity Planning Corporation and
dealers.
(7)(3) Form of Supplement to Phoenix Family of Funds Sales Agreement.
(7)(4) Form of Financial Institution Sales Contract for the Phoenix Family of
Funds.
(8) Not Applicable.
(9) Custodian Agreement (1).
(10)(1) Rule 12b-1 Plan for Class B Shares.
(10)(2) Rule 12b-1 Plan for Class C Shares.
(11) Opinion and consent of Goodwin, Procter & Hoar LLP with respect to
legality of the shares being issued (to be filed by Pre-Effective
Amendment).
C-1
<PAGE>
(12) Opinion and Consent of Goodwin, Procter & Hoar LLP with respect to tax
matters relating to acquisition of the Phoenix-Engemann Small Cap Fund
(to be filed by Post-Effective Amendment).
(13)(1) Agreement and Plan of Reorganization (1).
(13)(2) Administration Agreement (3).
(13)(3) Sub-Administration Agreement (4).
(13)(4) Amendment to Administration Agreement (5).
(14)* Consent of Independent Accountants.
(15) Not Applicable.
(16)(1) Powers of Attorney (6).
(16)(2)* Power of Attorney for Mr. McLoughlin, to be filed by Pre-Effective
Amendment.
(17)(1)* Form of Proxy Card for Phoenix-Engemann Small Cap Fund.
(17)(2)* Current Prospectus of the Phoenix-Engemann Small & Mid-Cap Growth Fund,
to be filed by Pre-Effective Amendment.
*Filed herewith.
(1) Previously filed as part of Post-Effective Amendment No. 3 to the
Registrant's Registration Statement as filed in June 1986.
(2) Previously filed as part of Post-Effective Amendment No. 14 to the
Registrant's Registration Statement as filed on August 27, 1993.
(3) Previously filed as part of Post-Effective Amendment No. 26 to the
Registrant's Registration Statement as filed on September 30, 1997.
(4) Previously filed as part of Post-Effective Amendment No. 27 to the
Registrant's Registration Statement as filed on November 21, 1997.
(5) Previously filed as part of Post-Effective Amendment No. 32 to the
Registrant's Registration Statement as filed on May 1, 2000.
(6) Previously filed as part of Post-Effective Amendment No. 33 to the
Registrant's Registration Statement as filed on May 1, 2000.
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a
part of this Registration Statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act of 1933, the reoffering prospectus will contain the
information called for by the applicable registration form for
reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
C-2
<PAGE>
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to
the registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities
Act of 1933, each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the
offering of the securities at that time shall be deemed to be the
initial bona fide offering of them.
(3) The undersigned Registrant agrees to file, by post-effective amendment,
an Opinion of Counsel or a copy of an IRS ruling supporting the tax
consequences of the Reorganization within a reasonable time after
receipt of such opinion or ruling.
C-3
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on behalf of the Registrant in the City
of Pasadena and State of California on the 22nd day of December, 2000.
THE PHOENIX-ENGEMANN FUNDS
By:/s/ Roger Engemann*
-------------------------------
Name: Roger Engemann
Title: President
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated as of the 22nd day of December, 2000.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/Malcolm Axon*
-------------------------------------------------
Malcolm Axon Chief Financial Officer
/s/Roger Engemann*
-------------------------------------------------
Roger Engemann Principal Executive Officer and Trustee
/s/Barry E. McKinley*
-------------------------------------------------
Barry E. McKinley Trustee
/s/Philip R. McLoughlin
-------------------------------------------------
Philip R. McLoughlin Trustee
/s/Robert L. Peterson*
-------------------------------------------------
Robert L. Peterson Trustee
/s/Richard C. Taylor*
-------------------------------------------------
Richard C. Taylor Trustee
/s/Angela Wong *
-------------------------------------------------
Angela Wong Trustee
*By:/s/ Nancy J. Engberg
--------------------
Nancy J. Engberg
*Nancy J. Engberg pursuant to powers of attorney filed previously.
</TABLE>
C-4
<PAGE>
Index To Exhibits
(14) Consent of Independent Accountants
(16)(2) Power of Attorney for Mr. McLoughlin
(17)(1) Form of Proxy Card for the Phoenix-Engemann Small Cap Fund
(17)(2) Current Prospectus of the Phoenix-Engemann Small & Mid-Cap Growth Fund
C-5
