As filed with the Securities and Exchange Commission on ________, 2004
Registration Nos. _______/_________
================================================================================
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. ___
--------------------
PHOENIX EQUITY TRUST
(Formerly, Phoenix-Aberdeen Worldwide Opportunities Fund)
(Exact Name of Registrant as Specified in Charter)
--------------------
c/o Phoenix Equity Planning Corporation
101 Munson Street, Greenfield, Massachusetts 01301
(Address of Principal Executive Offices)
(800) 243-1574
(Registrant's Telephone Number, including Area Code)
--------------------
John R. Flores, Esq.
c/o Phoenix Life Insurance Company
One American Row, Hartford, Connecticut 06102-5056
(Name and address of Agent for Service)
Copies of Communications to:
Matthew A. Swendiman, Esq.
c/o Phoenix Life Insurance Company
One American Row, Hartford, Connecticut 06102-5056
Richard L. Teigen
Foley & Lardner LLP
777 East Wisconsin Avenue
Milwaukee, WI 53202
--------------------
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Registration Statement.
It is proposed that this filing will become effective on _______, 2004,
pursuant to Rule 488 under the Securities Act of 1933.
--------------------
Title of Securities Being Registered: Shares of beneficial interest,
no par value per share.
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 Phoenix Mid-Cap Value Fund. 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.
================================================================================
PHOENIX EQUITY TRUST
(FORMERLY, PHOENIX-ABERDEEN WORLDWIDE OPPORTUNITIES FUND)
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
Form N-14 Item No. and Caption Caption or Location in Prospectus/Proxy Statement
- ----------------------------------------------------------- ----------------------------------------------------
Part A: Information Required in Prospectus/Proxy Statement
- ------
1. Beginning of Registration Statement and Outside Cover Page; Cross Reference Sheet
Front Cover Page of Prospectus
2. Beginning and Outside Back Cover Page of Prospectus Table of Contents
3. Fee Table, Synopsis Information and Risk Factors Synopsis; Principal Risk Factors; Comparison of
Investment Objectives and Policies
4. Information about the Transaction Synopsis; The Proposed Reorganization; Comparative
Information on Shareholder Rights; Exhibit A (Form of
Agreement and Plan of Reorganization)
5. Information about the Registrant Cover Page; Synopsis; Principal Risk Factors;
Substantially the Same 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
6. Information about the Company Being Acquired Synopsis; Comparison of Investment Objectives and
Policies; The Proposed Reorganization; Comparative
Information on Distribution Arrangements;
Comparative Information on Shareholder Services;
Comparative Information on Shareholder Rights;
Prospectus of the FMI Mutual Funds, Inc., dated
October 30, 2003, as supplemented
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 Reoffering By Not Applicable
Persons Deemed to be Underwriters
Part B: Information Required in Statement of Additional Information
- ------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information about the Registrant Cover Page
2
Form N-14 Item No. and Caption Caption or Location in Prospectus/Proxy Statement
- ----------------------------------------------------------- ----------------------------------------------------
<c>
13. Additional Information about the Company Being Acquired Cover Page; Statement of Additional Information of
FMI Mutual Funds, Inc. dated October 30, 2003, as
supplemented
14. Financial Statements Annual Report of the Registrant for the year ended June 30, 2004;
Annual Report of FMI Mutual Funds, Inc. for the year
ended June 30, 2004; Semi-Annual Report of FMI Mutual
Funds, Inc. for the six-month period ended
December 31, 2003; and Pro Forma Financial Statements
Part C: Other Information
- ------
15. Indemnification Indemnification
16. Exhibits Exhibits
17. Undertakings Undertakings
3
FMI SASCO CONTRARIAN VALUE FUND
A SERIES OF FMI MUTUAL FUNDS, INC.
225 EAST MASON STREET
MILWAUKEE, WISCONSIN 53202
(800) 811-5311
----------------------
_______, 2004
Dear Shareholder:
The FMI Sasco Contrarian Value Fund (the "Merging Series"), a series of FMI
Mutual Funds, Inc. (the "FMI Company"), will hold a Special Meeting of
Shareholders at 2:00 p.m., local time, on _______, 2004, at the offices of
Phoenix Investment Partners, Ltd., 56 Prospect Street, Hartford, CT 06115-0480.
At the Special Meeting, the shareholders of the Merging Series will vote on an
Agreement and Plan of Reorganization under which the Merging Series will be
combined with the Phoenix Mid-Cap Value Fund (the "Surviving Series"), a series
of Phoenix Equity Trust. The investment objective and policies of the Surviving
Series are the same as those of the Merging Series. If the reorganization
agreement is implemented, you will become a shareholder of the Surviving Series
and will receive Class A shares of the Surviving Series with an aggregate net
asset value equal to the aggregate net asset value of your investment in the
Merging Series. No sales charge will be imposed in connection with the
reorganization. Phoenix Investment Counsel, Inc. will pay all costs of the
reorganization.
The Board of Directors of the FMI Company believes that the reorganization
will provide shareholders of the Merging Series with reduced shareholder
expenses by reason of a provision of the Agreement and Plan of Reorganization
obligating the Surviving Series to limit total fund operating expenses to 1.25%
of total net assets, while maintaining the same investment objective, strategies
and techniques of the Merging Series. The Board of Directors 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 Merging Series and its shareholders. Therefore, the
Board of Directors recommends that you vote in favor of the Agreement and Plan
of Reorganization.
We have enclosed a copy of the Notice of Special Meeting of Shareholders, the
Proxy Statement and a proxy card. This card should be used to register your vote
on the proposals to be acted upon at the Special Meeting. It is important for
you to provide voting instructions with respect to the issues described in the
accompanying Prospectus/Proxy Statement. We recommend that you read the Proxy
Statement in its entirety as the explanations will help you to decide what
voting instructions you would like to provide.
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 the following
ways:
o BY MAIL - using the enclosed Proxy Card(s) and postage paid envelope
o IN PERSON - at the Special Meeting
We encourage you to vote. 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 Merging Series in more than one account. You should return
separate proxy cards for each account. If you have any questions, please call
[________________], between 8:00 a.m. and 6:00 p.m. Eastern time, Monday through
Friday.
YOUR VOTE ON THESE MATTERS IS IMPORTANT. PLEASE COMPLETE EACH PROXY CARD AND
RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. PLEASE RESPOND - IN ORDER TO AVOID
THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK THAT YOU VOTE PROMPTLY.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED.
Sincerely,
Donald S. Wilson
Secretary
FMI SASCO CONTRARIAN VALUE FUND
A SERIES OF FMI MUTUAL FUNDS, INC.
225 EAST MASON STREET
MILWAUKEE, WISCONSIN 53202
(800) 811-5311
----------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ________, 2004
TO THE SHAREHOLDERS:
The FMI Sasco Contrarian Value Fund, a series of FMI Mutual Funds, Inc., a
Wisconsin corporation, will hold a Special Meeting of Shareholders at the
offices of Phoenix Investment Partners, Ltd., 56 Prospect Street, Hartford, CT
06115-0480, on ________, 2004 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 _____, 2004, and the transactions it contemplates,
including (a) the transfer of all of the assets of the FMI Sasco
Contrarian Value Fund, a series of FMI Mutual Funds, Inc., to the
Phoenix Mid-Cap Value Fund, a series of Phoenix Equity Trust, in
exchange solely for Class A shares of the Phoenix Mid-Cap Value Fund and
the assumption by the Phoenix Mid-Cap Value Fund of all liabilities of
the FMI Sasco Contrarian Value Fund and (b) the distribution of the
shares of the FMI Sasco Contrarian Value Fund so received to
shareholders of the Phoenix Mid-Cap Value Fund in complete liquidation
of the FMI Sasco Contrarian Value Fund.
2. To consider and act upon any other business as may properly come before
the meeting and any adjournment(s) thereof.
You are entitled to vote at the meeting and any adjournment(s) if you owned
shares of the FMI Sasco Contrarian Value Fund at the close of business on August
31, 2004.
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 the following
ways:
o BY MAIL - using the enclosed Proxy Card(s) and postage paid envelope
o IN PERSON - at the Special Meeting
We encourage you to vote. 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.
By Order of the Board of Directors of
FMI Mutual Funds, Inc.
Donald S. Wilson
Secretary
Milwaukee, Wisconsin
_________, 2004
INTENTIONALLY LEFT BLANK
PHOENIX MID-CAP VALUE FUND
A SERIES OF PHOENIX EQUITY TRUST
C/O PHOENIX EQUITY PLANNING CORPORATION
101 MUNSON STREET
GREENFIELD, MASSACHUSETTS 01301
(800) 243-1574
FMI SASCO CONTRARIAN VALUE FUND
A SERIES OF FMI MUTUAL FUNDS, INC.
225 EAST MASON STREET
MILWAUKEE, WISCONSIN 53202
(800) 811-5311
PROSPECTUS/PROXY STATEMENT
DATED ________, 2004
This Prospectus/Proxy Statement is being furnished to you in connection with
the solicitation of proxies by the Board of Directors of FMI Mutual Funds, Inc.
(the "FMI Company"), for use at the Special Meeting of Shareholders of the FMI
Sasco Contrarian Value Fund (the "Merging Series") to be held at 2:00 p.m.,
local time, on ______, 2004 at the offices of Phoenix Investment Partners, Ltd.,
56 Prospect Street, Hartford, CT 06115-0480 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 Merging Series into
the Phoenix Mid-Cap Value Fund ("Surviving Series"), a series of Phoenix Equity
Trust (the "Acquiring Trust"), as described below. Under the reorganization
agreement, all of the assets of the Merging Series would be transferred to the
Surviving Series in exchange solely for Class A shares of the Surviving Series
and the Surviving Series will assume all liabilities of the Merging Series.
These shares of the Surviving Series would then be distributed pro rata to the
shareholders of the corresponding class of the Merging Series, and then the
Merging Series would be liquidated. As a result of the proposed transactions,
each shareholder of the Merging Series would receive a number of full and
fractional shares of the Class A shares of the Surviving Series with an
aggregate net asset value equal to the aggregate net asset value of the
shareholder's Merging Series shares on the effective date of the reorganization.
The Surviving Series and the Merging Series are each portfolio series of
open-end management investment companies. The Surviving Series has been
established by the Acquiring Trust to facilitate the reorganization with the
Merging Series. It will have no operations prior to the proposed reorganization.
The investment objective, strategies and risk factors of the Surviving Series
are substantially the same as those of the Merging Series. The Merging Series
predominantly invests in and the Surviving Series will predominantly invest in
larger small capitalization companies and mid-capitalization companies. The
portfolio managers of the series look, or will look in the case of the Surviving
Series, for companies with restructuring and turnaround potential that are
selling at a substantial discount to their private market value and future
earnings power. Phoenix Investment Counsel, Inc. ("PIC Adviser") is employed as
the investment adviser for the Surviving Series and Sasco Capital, Inc.
("Sasco") is employed as the subadviser for the Surviving Series. Fiduciary
Management, Inc. ("FMI Adviser") is employed as the investment adviser for the
Merging Series and Sasco is employed as the subadviser for the Merging Series.
This Prospectus/Proxy Statement, which you should retain for future
reference, sets forth concisely the information that you should know about the
Merging Series, the Surviving Series, and the transactions contemplated by the
reorganization agreement. As used in this Prospectus/Proxy Statement, the term
"series" collectively refers to the Merging Series and the Surviving Series.
Additional information about the Merging Series is included in the current
Prospectus of FMI Mutual Funds, Inc., dated October 31, 2003, as supplemented. A
copy of such prospectus has been filed with the SEC, and is incorporated by
reference herein. Further information about the Merging Series is included in
the Statement of Additional Information for FMI Mutual Funds, Inc., dated
October 31, 2003, as supplemented, which also has been filed with the SEC and is
incorporated by reference herein. A copy of the Merging Series' Prospectus and
Statement of Additional Information may be obtained without charge by contacting
FMI Mutual Funds, Inc., 225 East Mason Street, Milwaukee, Wisconsin 53202, or by
telephoning FMI Mutual Funds, Inc. toll-free at 1-800-811-5311.
A Statement of Additional Information to this Prospectus/Proxy Statement
dated ______, 2004 relating specifically to the proposed transfer of all of the
assets and liabilities of the Merging Series, a series of the FMI Company, to
the Surviving Series, in exchange for Class A shares of the Surviving Series, is
incorporated herein by reference. A copy of the Statement of Additional
Information to this Prospectus/Proxy Statement 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 Acquiring Trust files reports, proxy materials and other information with
the SEC. You may inspect those reports, proxy materials and other information at
the public reference facilities maintained by the SEC at 450 Fifth Street N.W.,
Washington, D.C. 20549. Copies of such materials may also be obtained from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, 450 Fifth Street, Washington, D.C. 20549, at
prescribed rates, or at no charge from the EDGAR database on the SEC's web site
at www.sec.gov.
This Prospectus/Proxy Statement constitutes the proxy statement of the
Merging Series for the Special Meeting and the prospectus for shares of the
Surviving Series 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 ________, 2004.
-------------------------
THE SECURITIES OF THE SURVIVING SERIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE DISCLOSURE IN THIS
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-------------------------
The date of this Prospectus/Proxy Statement is ________, 2004.
2
TABLE OF CONTENTS
Page
SYNOPSIS.......................................................................5
PRINCIPAL RISK FACTORS........................................................10
THE PROPOSED REORGANIZATION...................................................11
INVESTMENT OBJECTIVES AND POLICIES............................................15
COMPARATIVE INFORMATION ON DISTRIBUTION ARRANGEMENTS..........................17
COMPARATIVE INFORMATION ON SHAREHOLDER SERVICES...............................18
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS.................................18
FISCAL YEAR...................................................................20
MANAGEMENT AND OTHER SERVICE PROVIDERS........................................20
VOTING INFORMATION............................................................21
MISCELLANEOUS.................................................................23
OTHER BUSINESS................................................................27
3
INTENTIONALLY LEFT BLANK
4
SYNOPSIS
BACKGROUND
The proposed reorganization is the outcome of deliberations by the Board of
Directors of the FMI Company and the Board of Trustees of the Acquiring Trust.
FMI Adviser and PIC Adviser, the advisers to the Merging Series and the
Surviving Series, respectively, recommended that the Directors of the FMI
Company and the Trustees of the Acquiring Trust consider the benefits that the
shareholders would realize if the Merging Series was to be combined with the
Surviving Series; namely, that the reorganization will provide shareholders of
the Merging Series with reduced shareholder expenses by reason of a provision of
the Agreement and Plan of Reorganization obligating the Surviving Series to
limit total fund operating expenses to 1.25% of total net assets, while
maintaining the same investment objective, strategies and techniques of the
Merging Series. In response to their recommendation, the independent directors
of the FMI Company and the independent trustees of the Acquiring 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 directors and trustees are
directors and trustees who are not "interested persons" of their respective
corporation or trust (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")). After considering the specific reorganization
proposal, the Board of Directors of the FMI Company and the Board of Trustees of
the Acquiring Trust, including the independent directors and trustees, as
applicable, at meetings held on June 11, 2004 and August 17, 2004, respectively,
approved the reorganization.
THE ACQUIRING TRUST
On August 17, 2004, the Acquiring Trust changed its name from
Phoenix-Aberdeen Worldwide Opportunities Fund to Phoenix Equity Trust (i.e., the
Acquiring Trust) and the Board of Trustees designated the Phoenix-Aberdeen
Worldwide Opportunities Fund as a series of the Acquiring Trust and authorized
an additional series of the Acquiring Trust, the Phoenix Mid-Cap Value Fund
(i.e., the Surviving Series).
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 Exhibit A. The reorganization agreement provides for:
o the acquisition of all of the assets of the Merging Series by the
Surviving Series in exchange solely for shares in the
Surviving Series;
o the assumption by the Surviving Series of all liabilities of the
Merging Series;
o the pro rata distribution of the Surviving Series shares to the Merging
Series shareholders in exchange for the outstanding Merging Series
shares; and
o the liquidation of the Merging Series.
The reorganization is anticipated to occur on or about _____________, 2004.
If the reorganization agreement is implemented, each Merging Series shareholder
will receive a number of full and fractional shares of the Surviving Series with
an aggregate net asset value equal to the aggregate net asset value of his or
her Merging Series 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 the FMI Company and the Acquiring Trust of an opinion of
counsel as to the Federal income tax consequences of the
reorganization; and
5
o the approval of the reorganization agreement by the shareholders of the
Merging Series.
The reorganization agreement provides that Phoenix Investment Counsel, Inc.
will bear all costs and expenses of the reorganization, including the costs of
the Special Meeting, the costs and expenses incurred in the preparation and
mailing of the notice, this Prospectus/Proxy Statement and the proxy, and any
solicitation of proxies.
SURVIVING SERIES AS SUCCESSOR OF MERGING SERIES
The Surviving Series has been established by the Acquiring Trust to
facilitate the reorganization with the Merging Series. It will have no
operations prior to the proposed reorganization. As a result of the proposed
reorganization, the Surviving Series will be the successor of the Merging
Series. The Surviving Series will assume the past performance of the Merging
Series, a series with the same investment objectives, policies and techniques,
as its own.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Surviving Series and the Merging Series is to
seek long-term growth of capital. Under normal circumstances, the Merging Series
invests at least 80% of its assets in securities of larger small capitalization
companies and mid-capitalization companies. These are companies having a market
capitalization between $1.0 billion and $7.0 billion at the time of purchase.
The portfolio manager of the Merging Series looks for companies with
restructuring and turnaround potential that are selling at a substantial
discount to their private market value and future earnings power. The Surviving
Series has the same investment objectives and policies as the Merging Series.
You may also see "Principal Risk Factors" and "Investment Objectives and
Policies" below for further information on the investment objectives, policies
and risks of the Surviving Series and the Merging Series.
DISTRIBUTION AND PURCHASE ARRANGEMENTS
The Surviving Series will offer two classes of shares: Class A and Class C
shares. The Merging Series currently offers only one class of shares, which
shares are offered to the public at a price equal to the net asset value per
share. Existing shareholders of the Merging Series who become shareholders of
the Surviving Series through the proposed reorganization will receive Class A
shares of the Surviving Series in exchange for their shares of the Merging
Series and will not be required to pay a sales load for new purchases of Class A
shares of the Surviving Series.
See "Comparative Information on Distribution Arrangements" below for further
information on the distribution arrangements of each series.
DIVIDENDS AND DISTRIBUTIONS
The Merging Series distributes and the Surviving Series will distribute
substantially all of its net investment income and substantially all of its net
realized capital gains (if any) annually.
Shareholders of either series can elect one of the following four
distribution options:
o All reinvestment option - both dividend and capital gain
distributions will be reinvested in additional shares of the
applicable series.
o Partial reinvestment option - dividends will be paid in cash
and capital gain distributions will be reinvested in
additional shares of the applicable series.
o Partial reinvestment option - dividends will be reinvested in
additional shares of the applicable series and capital gain
distributions will be paid in cash.
o All cash option - both dividend and capital gain distributions
will be paid in cash.
6
EXCHANGES
Shareholders of the Merging Series may currently exchange their shares for
shares of a corresponding class of shares of other affiliated FMI funds.
Shareholders of the Surviving Series will be able to exchange their shares for
shares of a corresponding class of shares of other affiliated Phoenix funds.
REDEMPTION PROCEDURES
Shareholders of both the Merging Series and the Surviving Series may redeem
their shares at a redemption price equal to the net asset value of the shares
(minus any contingent deferred sales charge applicable to the Class C shares of
the Surviving Series) as next determined following the receipt of a redemption
order in proper form. Ordinarily, checks for payments of redemption proceeds for
redeemed Merging Series or Surviving Series shares are mailed or will be mailed,
respectively, within 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 the Surviving Series'
redemption procedures in its Prospectus.
FEDERAL TAX CONSEQUENCES OF PROPOSED REORGANIZATION
At the closing of the reorganization, the FMI Company and the Acquiring Trust
will receive an opinion of counsel, subject to certain assumptions and
representations, that:
o no gain or loss will be recognized by the Merging Series on the
transfer of the assets of the Merging Series to the Surviving Series in
exchange for Surviving Series shares and the assumption by the
Surviving Series of all liabilities of the Merging Series or upon the
distribution of Surviving Series shares to the Merging Series
shareholders in exchange for their shares of the Merging Series;
o the aggregate tax basis of the Surviving Series shares, including any
fractional shares, received by each shareholder of the Merging Series
pursuant to the reorganization will be the same as the aggregate tax
basis of the Merging Series shares held by such shareholder immediately
prior to the reorganization; and
o the holding period of the Surviving Series shares, including fractional
shares, to be received by each shareholder of the Merging Series will
include the period during which the Merging Series shares exchanged
therefor were held by such shareholder (provided that the Merging
Series 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
The Merging Series and the Surviving Series are subject to the same risks.
The series are subject to general investment risk. In addition, because the
Merging Series invests and the Surviving Series will invest in larger small
capitalization and mid-capitalization companies, the market for their equity
securities is likely to be more sensitive to changes in the economy, earnings
results and investor expectations. They are likely to have more limited product
lines and financial resources and experience sharper swings in market values.
Shares in mid-capitalization companies may be harder to sell at the times and at
the prices that the subadviser thinks is appropriate. Investors can lose money
by investing in either series. There is no assurance that a series will meet its
investment objective. You may also see "Principal Risk Factors" for the
principal risks associated with an investment in a series.
MANAGEMENT AND OTHER SERVICE PROVIDERS
As the investment adviser for the Surviving Series, PIC Adviser is to be
responsible for managing the Surviving Series' investment program. Sasco is to
be the subadviser for the Surviving Series, and is to be responsible for the
day-to-day management of the Surviving Series' portfolio. FMI Adviser, as the
investment adviser for the Merging Series, is responsible for managing the
Merging Series' investment program. Sasco is the subadviser for the
7
Merging Series, and is responsible for the day-to-day management of the Merging
Series' portfolio. See "Substantially Similar Investment Objectives and Policies
- - Management and Other Service Providers" for more information.
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
shares of each series. The following tables show shareholder transaction
expenses that are currently applicable to the purchase of shares of the Merging
Series or will be applicable to the purchase of shares of the Surviving Series.
These expenses will remain in effect as to the combined Surviving Series
following the reorganization.
Please note that the Merging Series currently offers only one class of
shares. Existing shareholders of the Merging Series who become shareholders of
the Surviving Series through the reorganization will receive Class A shares of
the Surviving Series in exchange for their shares of the Merging Series and will
not be required to pay a sales load for new purchases of Class A shares of the
Surviving Series.
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT) SURVIVING SURVIVING
SERIES SERIES MERGING
CLASS A CLASS C SERIES
------------ ---------- ----------
Maximum Sales Charge (Load) Imposed on Purchase (as a 5.75% None None
percentage of offering price)
Maximum Deferred Sales Charge (Load) (as a percentage None 1.00%(a) None
of the lesser of the value redeemed or the amount
invested)
Maximum Sales Charge (Load) Imposed on Reinvested None None None
Dividends
Redemption Fee None None None
Exchange Fee None None None
(a) The contingent deferred sales charge is imposed on Class C shares redeemed
during the first year only.
The tables below also include pro forma information for the combined
Surviving Series resulting from the reorganization, assuming the reorganization
took place on June 30, 2004, and after adjusting such information to reflect
current fees. The expense information for the Merging Series is based upon
expenses for the twelve months ended June 30, 2004.
8
CLASS A SHARES
------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT
ARE OR WILL BE, AS APPLICABLE, DEDUCTED FROM PRO FORMA COMBINED
SERIES ASSETS) SURVIVING SERIES MERGING SERIES SURVIVING SERIES
---------------- -------------- ------------------
Management Fees 0.00% 1.00% 0.75%
Distribution and Service (12b-1) Fees(a) 0.00% 0.00% 0.25%
Other Expenses 0.00% 0.30% 0.25%
TOTAL ANNUAL SERIES OPERATING EXPENSES 0.00% 1.30%(b) 1.25%(c)
CLASS C SHARES
------------------------------------------------------------
ANNUAL SERIES OPERATING EXPENSES (EXPENSES THAT
ARE OR WILL BE, AS APPLICABLE, DEDUCTED FROM PRO FORMA COMBINED
SERIES ASSETS) SURVIVING SERIES MERGING SERIES SURVIVING SERIES
---------------- -------------- ------------------
Management Fees 0.00% N/A 0.75%
Distribution and Service (12b-1) Fees(a) 0.00% N/A 1.00%
Other Expenses 0.00% N/A 0.25%
TOTAL ANNUAL SERIES OPERATING EXPENSES 0.00% N/A 2.00%(c)
(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 Merging Series' adviser has voluntarily reimbursed the series for
expenses over 1.30% of its daily net assets. Absent such reimbursement,
total expenses would have been 2.76%.
(c) PIC has agreed to cap total operating expenses at 1.25% (on an annualized
basis) of the Surviving Series' average daily net assets. PIC may not
discontinue this cap on total operating expenses for a minimum period of at
least two years from _______, 2004. Total expenses for Class A and Class C
Shares would have been 4.71% and 5.46%, respectively, absent such waiver or
reimbursement.
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 series expenses and returns vary from
year to year and may be higher or lower than those shown(4). Please note that
the Merging Series currently offers only one class of shares. Therefore, the
tables below provide information about that class only. Existing shareholders of
the Merging Series who become shareholders of the Surviving Series through the
reorganization will receive Class A shares of the Surviving Series in exchange
for their shares of the Merging Series and will not be required to pay a sales
load for new purchases of Class A shares of the Surviving Series.
------------------------
4 The examples assumes the expense reimbursement obligations of PIC with
respect to the Surviving Series are in effect for only the first two
years. Thereafter this example does not reflect any expense
reimbursement obligations.
9
Fees and expenses if you redeemed your shares at the end of each time period:
SERIES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Merging Series $132 $570 $1,190 $2,868
Surviving Series $0 $0 $0 $0
Pro Forma Combined Series - Class A $695 $1,298 $2,259 $4,687
Pro Forma Combined Series - Class C $303 $990 $2,138 $4,962
Fees and expenses if you did not redeem your shares at the end of each time
period:
SERIES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Merging Series $132 $570 $1,190 $2,868
Surviving Series $0 $0 $0 $0
Pro Forma Combined Series - Class A $695 $1,298 $2,259 $4,687
Pro Forma Combined Series - Class C $203 $990 $2,138 $4,962
Note: Actual expenses for the Merging and ProForma Combined Series 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 their respective investment advisers after the first two
years.
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
The Surviving Series has been established by the Acquiring Trust to
facilitate the reorganization with the Merging Series. It will have no
operations prior to the proposed reorganization. As such, the principal risk
factors associated with an investment in either series are the same.
An investment in a series is subject to general risks arising from investing
in any mutual fund. You can lose money by investing in either series. There is
no assurance that the series will meet its investment objective.
GENERAL
The value of the investments of the series that supports your share value may
decrease. If between the time you purchase shares and the time you sell shares
the value of your series' 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 a series invests
can be worse than expected and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease.
MID-CAPITALIZATION COMPANIES
Compared to larger companies, mid-capitalizations companies, and the market
for their equity securities, are likely to be more sensitive to changes in the
economy, earnings results and investor expectations. They are likely to have
more limited product lines and financial resources and experience sharper swings
in market values. Shares in mid-capitalization companies may be harder to sell
at the times and the prices a subadviser thinks is appropriate.
10
MARKET RISK
The prices of the securities in which the series invests or will invest, as
applicable, may decline for a number of reasons. The price declines of common
stocks, in particular, may be steep, sudden and/or prolonged.
VALUE INVESTING RISK
The series primarily invest or will invest in, as applicable, "value" stocks.
A portfolio manager may be wrong in its assessment of a company's value and the
stocks the series hold may not reach what the portfolio manager believes are
their full values. From time to time, "value" investing falls out of favor with
investors. During those periods, the relative performance of the series may
suffer.
Because of these risks a series is a suitable investment only for those
investors who have long-term investment goals. Prospective investors who are
uncomfortable with an investment that will fluctuate in value should not invest
in the series.
Since the risk factors of the Surviving Series are the same as those of the
Merging Series, the discussion of risk factors in the Prospectus and Statement
of Additional Information of the Merging Series will apply to the Surviving
Series as well. Please refer to the Prospectus and Statement of Additional
Information of the Merging Series for more detailed information about the risk
factors associated with the series.
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
Exhibit A.
The Agreement and Plan of Reorganization contemplates:
o the acquisition by the Surviving Series, on the closing date of the
reorganization, of all of the assets of the Merging Series in exchange
solely for Class A shares of the Surviving Series and the assumption by
the Surviving Series of all liabilities of the Merging Series; and
o the distribution of shares of the corresponding class of the Surviving
Series to the shareholders of the Merging Series in exchange for their
respective shares of the Merging Series.
The assets of the Merging Series to be acquired by the Surviving Series
include all property, including, without limitation, all cash, securities,
commodities and futures interests, and dividends or interest receivables which
are owned by the Merging Series and any deferred or prepaid expenses shown as an
asset on the books of the Merging Series on the closing date of the
reorganization. The Merging Series will endeavor to discharge all of its known
liabilities and obligations prior to the closing date of the reorganization. The
Surviving Series will assume all liabilities, accrued or contingent, known or
unknown, of the Merging Series reflected on the valuation date specified in the
reorganization agreement. The closing of the reorganization will occur following
satisfaction or waiver of the conditions to closing set forth in the
reorganization agreement, currently anticipated to be on or about __________,
2004, or such later date as the parties may agree.
The value of the Merging Series' assets to be acquired and the Merging
Series' liabilities to be assumed by the Surviving Series and the net asset
value of each class of shares of the Surviving Series will be determined
immediately after the close of regular trading on the New York Stock Exchange
and after the declaration of any dividends on the closing date, using the
valuation procedures set forth in the series' then current Prospectuses and
Statements of Additional Information. The number of shares of each class of the
Surviving Series to be issued to the
11
Merging Series will be determined by dividing (a) the value of the aggregate net
assets attributable to shares of the Merging Series by (b) the net asset value
per share of Class A of the Surviving Series.
On the closing date, the Merging Series will liquidate and distribute pro
rata to its shareholders of record the Surviving Series shares received by the
Merging Series in exchange for their respective shares in the Merging Series.
This liquidation and distribution will be accomplished by opening an account on
the books of the Surviving Series in the name of each shareholder of record of
the Merging Series and by crediting to each account the shares due pursuant to
the reorganization. Every Merging Series shareholder will own Class A shares of
the Surviving Series immediately after the reorganization, the value of which
will be equal to the value of the shareholder's Merging Series shares
immediately prior to the reorganization.
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 Directors, the Board of Trustees or by an authorized
officer of the FMI Company or the Acquiring Trust, as appropriate.
Among the significant conditions which may not be waived are: (a) the receipt
by the FMI Company 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 Merging Series. The Plan
may be terminated and the reorganization abandoned at any time, before or after
approval by the shareholders of the Merging Series, prior to the closing date,
by either party by resolution of its Board of Directors or its Board of
Trustees, as applicable. 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 Special Meeting that would change the
provisions for determining the number of Surviving Series shares to be issued to
shareholders of the Merging Series without their further approval.
REASONS FOR THE REORGANIZATION
The proposed reorganization is the outcome of the deliberation by the Board
of Directors of the FMI Company and Board of Trustees of the Acquiring Trust.
The advisers to each series recommended that the Directors or Trustees of the
FMI Company or the Acquiring Trust, as applicable, consider the benefits that
shareholders would realize if the Merging Series were to be combined with the
Surviving Series. In response to this recommendation, the independent directors
and trustees of the FMI Company or Acquiring Trust, as applicable, 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. Management reported that the reorganization
would provide shareholders of the Merging Series with reduced shareholder
expenses by reason of a provision of the Agreement and Plan of Reorganization
obligating the Surviving Series to limit total fund operating expenses to 1.25%
of total net assets, while maintaining the same investment objective, strategies
and techniques of the Merging Series.
After considering these and other factors, the Board of Directors of the FMI
Company, including the independent directors, concluded at a meeting held on
June 11, 2004 that the reorganization would be in the best interests of the
Merging Series and its shareholders and that the interests of existing Merging
Series' shareholders will not be diluted as a result of the transactions
contemplated by the reorganization. The Board of Directors of the FMI Company
then voted to approve the reorganization and authorized the officers of the FMI
Company to submit the reorganization proposal to shareholders for consideration.
At a meeting held on June 23, 2004, the Executive Committee of the Acquiring
Trust, including the independent trustees of the Committee, also concluded that
the reorganization would be in the best interests of the Surviving Series. On
August 17, 2004, the Board of Trustees for the Acquiring Trust ratified the
actions of the Executive Committee. In the course of their review, the Board of
Trustees of the Acquiring Trust noted that the advisers to each series have
elected to use the historical financial statements and performance record of the
Merging Series, since the Surviving Series is the successor of the Merging
Series.
12
FEDERAL INCOME TAX CONSEQUENCES
General
-------
The reorganization has been structured with the intention that it qualify for
Federal income tax purposes as a tax-free reorganization under Section 368(a) of
the Internal Revenue Code (the "Code"). This means that, in the opinion of
counsel, no gain or loss will be recognized by a shareholder of the Merging
Series for Federal income tax purposes as a result of the reorganization.
As a condition to the closing of the reorganization, the Merging Series and
the Surviving Series will receive an opinion of Foley & Lardner LLP,
substantially to the effect that, among other things, for federal income tax
purposes, upon consummation of the reorganization (i) no gain or loss will be
recognized by the Merging Series or the Surviving Series as a result of the
reorganization, (ii) no gain or loss will be recognized by a shareholder of the
Merging Series upon his or her receipt of shares of the Surviving Series in the
reorganization solely in exchange for his or her shares of the Merging Series,
(iii) the Merging Series and the Surviving Series will be a "party to a
reorganization" under Section 368(b) of the Code, (iv) the holding period of the
assets of the Merging Series acquired by the Surviving Series will include the
period during which such assets were held by the Merging Series, (v) the holding
period for shares of the Surviving Series received by each shareholder of the
Merging Series in exchange for his or her shares in the Merging Series will
include the period during which such shareholder held shares of the Merging
Series (provided the Merging Series shares were held as capital assets on the
date of the exchange), and (vi) immediately after the reorganization, the tax
basis of the shares of the Surviving Series received by shareholders of the
Merging Series in the reorganization will be equal, in the aggregate, to the tax
basis of the shares of the Merging Series surrendered in exchange therefore.
Foley & Lardner LLP's opinion will be based upon certain assumptions and
representations made by the Merging Series and the Surviving Series.
An opinion of counsel does not have the effect of a private letter ruling
from the Internal Revenue Service ("IRS") and is not binding on the IRS or any
court.
If the reorganization is consummated but fails to qualify as a reorganization
within the meaning of Section 368(a) of the Code, the reorganization would be
treated as a taxable sale of assets followed by a taxable liquidation of the
Merging Series, and Merging Series' shareholders would recognize a taxable gain
or loss equal to the difference between their basis in the Merging Series shares
and the fair market value of the shares in the Surviving Series received.
To the extent the Surviving Series has unrealized capital gains at the time
of the reorganization, the Merging Series' shareholders may incur taxable gains
in the year that the Surviving Series realizes and distributes those gains. This
will be true notwithstanding that the unrealized gains were reflected in the
price of the Surviving Series' shares at the time they were exchanged for assets
of the Merging Series in the reorganization. Conversely, shareholders of the
Surviving Series would share in unrealized capital gains of the Merging Series
after the reorganization and bear a tax consequence on the subsequent
realization of such gains.
To the extent that the Merging Series has loss carry-forwards at the time of
the reorganization, the Merging Series' shareholders may not be able to benefit
from such loss carry-forwards after the reorganization.
Shareholders should consult their tax advisers regarding the effect of the
reorganization in light of their individual circumstances. As the foregoing
relates only to Federal income tax consequences, shareholders also should
consult their tax advisers as to the foreign, state, local and other tax
consequences of the reorganization.
Status as a Regulated Investment Company
- ----------------------------------------
The Merging Series and the Surviving Series have elected and qualified to be
taxed as regulated investment companies under Sections 851-855 of the Code, and
after the reorganization, the Surviving Series intends to operate or continue to
operate so as to qualify as a regulated investment company. The Merging Series'
existence as a separate series of the FMI Company will be terminated as part of
the reorganization.
13
CAPITALIZATION
The Surviving Series has been established by the Acquiring Trust to
facilitate the reorganization with the Merging Series. It will have no
operations prior to the proposed reorganization. The following table sets forth
the capitalization of the Merging Series and on a pro forma basis the combined
capitalization of the Surviving Series as of June 30, 2004 giving effect to the
proposed acquisition of net assets of the Merging Series at net asset value. The
Merging Series currently offers only one class of shares. The Surviving Series
will offer two classes of shares: Class A shares and Class C shares. The pro
forma data reflects an exchange ratio of approximately 1.0 for Class A shares of
the Surviving Series issued for each share of the Merging Series.
[PRO FORMA COMBINED
MERGING SERIES SURVIVING SERIES SERIES]
----------------------------------------------------------------------------
Net Assets
Class A $6,403,562 $ 0 $6,403,562
Class C N/A N/A N/A
Net Asset Value per share
Class A $17.04 $ 0 $17.04
Class C N/A N/A N/A
Shares outstanding
Class A 375,784 0 375,784
Class C N/A N/A N/A
The table set forth above should not be relied on to determine the number of
Surviving Series 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 Merging Series and the Surviving Series at the time of
the reorganization.
HISTORICAL PERFORMANCE INFORMATION
As a result of the reorganization, the Surviving Series will be the successor
of the Merging Series, which will be reorganized as a series of the Acquiring
Trust pursuant to the proposed reorganization. The Surviving Series treats the
past performance of the Merging Series, a series with substantially the same
investment objectives, policies and philosophies, as its own.
The performance table below therefore includes the performance, which has not
been restated to reflect any differences in any applicable sales charges, of the
shares of the Merging Series prior to the Surviving Series' commencement date.
The Merging Series, which commenced operations on December 30, 1997, offered
only one class of shares. Therefore, the tables below provide information about
the performance for that one class only. The Merging Series' past performance is
not necessarily an indication of how the Surviving Series will perform in the
future.
AVERAGE ANNUAL TOTAL RETURNS FOR
PERIODS ENDING JUNE 30, 2004(1)
MERGING SERIES - FMI SASCO
CONTRARIAN INCEPTION TO
VALUE FUND 1 YEAR 5 YEARS JUNE 30, 2004 INCEPTION DATE
- ------------------------------------- -------- ------- ------------- ---------------
Shares at NAV 40.03% 12.96% 9.59% 12/30/97
Russell Midcap Index(1) 29.38% 6.51% 8.21% 12/30/97
- -----------------
(1) The Russell Midcap Index consists of the smallest 800 securities in the
Russell 1000 Index as ranked by total market capitalization. This index
attempts to capture the performance of the medium-sized universe of common
stocks. Reflects no deduction for fees, expenses or taxes.
14
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.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives, policies and restrictions of the Surviving Series
and the Merging Series are the same.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of the Surviving Series and the
Merging Series are the same except that the Merging Series cannot purchase or
sell commodities, including financial futures. The series have an investment
objective of long-term growth of capital. The investment objective of the
Surviving Series may be changed without shareholder approval.
PRINCIPAL INVESTMENT STRATEGIES
The principal investment strategies of the Surviving Series and the Merging
Series are the same.
o Under normal circumstances, a series will invest at least 80% of its
assets in securities of larger small capitalization companies and
mid-capitalization companies. These are companies having a market capitalization
between $1.0 billion and $7.0 billion at the time of purchase.
o The subadviser will look for companies with restructuring and turnaround
potential that are selling at a substantial discount to their private market
value and future earnings power.
o The subadviser will utilize a "bottom-up" investment approach. The
subadviser will look for companies that are both selling at a substantial
discount to their private market value and have restructuring and turnaround
potential. The subadviser will look for companies where there is potential for
significant increase in future earnings leading to significant price
appreciation.
o The subadviser will employ a sell discipline pursuant to which it will
sell a position when the price of the stock reaches the subadviser's target
price; sell a position when it has diminished confidence that management can
execute the turnaround strategy; and sell a position when key management
departs.
Temporary defensive strategy: If the subadviser of a series believes that
market conditions are not favorable to the series' principal strategies, such
series may invest without limit in U.S. government securities and in money
market instruments. When this allocation happens, such series may not achieve
its investment objective.
Since the principal investment strategies and policies of the Surviving
Series are the same, except as noted above, as those of the Merging Series, the
discussion of the investment strategies in the Prospectus and Statement of
Additional Information of the Merging Series applies to the Surviving Series as
well. Please refer to the Prospectus and the Statement of Additional Information
of the Merging Series for more detailed information about these and other
investment techniques of the series.
MANAGEMENT AND OTHER SERVICE PROVIDERS
As the investment adviser for the Surviving Series, PIC Adviser is
responsible for managing the Surviving Series' investment program and the
general operations of the Surviving Series. Sasco is the subadviser for the
Surviving Series, and is responsible for the day-to-day management of the
Surviving Series' portfolio. FMI Adviser, as the investment adviser for the
Merging Series, is responsible for managing the Merging Series' investment
program and the general operations of the Merging Series. FMI Adviser is a
registered investment adviser controlled by Mr. Ted D. Kellner. Sasco is the
subadviser for the Merging Services and is responsible for the day-to-day
management of the Merging Series' portfolio.
15
Bruce Bottomley, Daniel Leary, and Mark Helderman at Sasco are primarily
responsible for the day-to-day management of the portfolio of the Merging
Series, and are to be primarily responsible for the day-to-day management of the
portfolio of the Surviving Series. Mr. Bottomley is Managing Director of Sasco
and also serves as Portfolio Manager of Sasco. He has thirty-two years of
investment experience and joined Sasco at the time of its inception in 1986. He
received his MBA from the University of Chicago. Mr. Leary is Managing Director
of Sasco and also serves as Portfolio Manager of Sasco. He has thirty-three
years of investment experience and joined Sasco at the time of its inception in
1986. Mr. Leary is a graduate of the Boston College School of Management. Mr.
Helderman is Managing Director of Sasco and also serves as Portfolio Manager of
Sasco. He has eighteen years of investment experience and joined Sasco in 1997.
Mr. Helderman is a graduate of the University of Dayton.
CERTAIN INVESTMENT RESTRICTIONS
The Surviving Series and the Merging Series are subject to substantially
identical investment restrictions that restrict the scope of their investments.
These investment restrictions are "fundamental policies".
The investment restrictions for the Surviving Series are:
(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 respective 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. With respect to the Phoenix Mid-Cap Value Fund,
borrow money, except for temporary bank borrowings (not in excess of 5% of
the value of its net assets) or for emergency or extraordinary purposes.
Neither Fund will pledge any of its assets, except to secure borrowings and
only to an extent not greater than 10% of the value of its assets. 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 exemptive orders or staff interpretations of the Securities
and Exchange Commission 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 Funds
may be deemed to be underwriters under applicable law.
(6) Purchase or sell real estate, except that the Funds may (i) acquire or
lease office space for their 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
Funds as a result of the ownership of securities.
(7) Purchase or sell commodities or commodity contracts, except the Funds 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).
16
(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. The Phoenix Mid-Cap Value Fund may
not lend its portfolio securities and may only enter into repurchase
agreements if those maturing in more than seven days plus all other
illiquid securities will not exceed 10% of the Fund's net assets.
Except with respect to investment restriction (3) above, if any percentage
restriction described above for the Series 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 Series' assets will not constitute a violation of the
restriction. With respect to investment restriction (3), in the event that asset
coverage for all borrowings shall at any time fall below 300%, the series shall,
within three days hereafter (not including Sundays and holidays) or such longer
period as the SEC may prescribe by rules and regulations, reduce the amount of
its borrowings to an extent that the asset coverage of such borrowings shall be
at least 300%.
COMPARATIVE INFORMATION ON DISTRIBUTION ARRANGEMENTS
MULTIPLE CLASS STRUCTURE
The Merging Series currently offers only one class of shares. The Surviving
Series will offer two classes of shares: Class A and Class C shares.
In the proposed reorganization, you will receive Class A shares of the
Surviving Series in exchange for your shares in the Merging Series. The
reorganization will be effected at net asset value. No sales charge will be
imposed on your shares and you will not be required to pay a sales load for new
purchases of Class A shares of the Surviving Series.
The shares of the various classes are offered under the following
arrangements:
CLASS A SHARES (CURRENTLY OFFERED BY BOTH SERIES)
o Are offered to the public at net asset value plus a maximum sales
charge of 5.75% of the offering price (6.10% 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 With respect to the Surviving Series, Class A shares have lower
distribution and service fees (0.25%) and pay higher dividends than
Class C shares.
o Existing shareholder of the Merging Series who become shareholders of
the Surviving Series through the reorganization will receive Class A
shares of the Surviving Series in exchange for their shares of the
Merging Series and will not be required to pay a sales load for new
purchases of Class A shares of the Merging Series.
CLASS C SHARES (OFFERED BY SURVIVING SERIES 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 deferred sales charge of 1.00% if they are redeemed
within the first year after they are purchased. The deferred sales
charge may be waived under certain conditions.
o Are subject to an ongoing distribution and service fee (1.00%).
17
DISTRIBUTION PLANS
Phoenix Equity Planning Corporation will serve as the distributor ("Surviving
Distributor") of shares for the Surviving Series. The Acquiring Trust has
adopted a distribution plan for each class of shares of the Acquiring Trust
under Rule 12b-1 under the 1940 Act relating to the sale and promotion of the
Surviving Series' shares.
Under the Acquiring Trust's distribution plan, the Surviving Series will
compensate the Distributor 0.75% of the average daily value of the net assets of
Class C shares. In addition, the Distributor will be paid 0.25% annually of the
average daily net assets of each class of shares (including Class A) as
compensation for providing services to the shareholders, including assistance in
connection with inquiries related to shareholder accounts.
The FMI Company has also adopted distribution plans pursuant to Rule 12b-1 on
behalf of the shares of the Merging Series (collectively, the "FMI Plans"). The
Merging Series does not currently employ a distributor. Under the FMI Plans, the
Merging Series may incur a distribution fee of 0.25% based on average daily net
assets. The Merging Series, however, did not utilize the plan or pay 12b-1 fees
for the year ended June 30, 2004.
COMPARATIVE INFORMATION ON SHAREHOLDER SERVICES
The Merging Series and the Surviving Series offer similar shareholder
services including a Systematic Withdrawal Program, telephone exchanges,
telephone redemptions, and an automatic investment program. The Merging Series
distributes net investment income annually and net realized capital gains, if
any, at least annually. The Surviving Series will distribute net investment
income semiannually and net realized capital gains, if any, at least annually.
All dividends and distributions with respect to the shares of the Merging Series
and the Surviving Series are or will be, as applicable, paid in additional
shares of the respective series 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 Merging Series and the
Surviving Series in effect on the record date.
Shareholders of the Merging Series may currently exchange their shares for
shares of a corresponding class of shares of other affiliate FMI Company series.
Shareholders of the Surviving Series will be able to exchange their shares for
shares of a corresponding class of shares of other affiliated Phoenix funds.
Shares of the Merging Series and the Surviving Series 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 any other required documentation
in proper form. Payment of redemption proceeds for redeemed Merging Series and
Surviving Series shares generally are or will be, respectively mailed 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. Redemptions by Class C shareholders will be subject to the
applicable deferred sales charge, if any.
Because the Surviving Series and the Merging Series offer similar shareholder
services, after the closing similar services will continue to be available to
Merging Series shareholders in their capacity as Surviving Series shareholders.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS
The following is a summary of certain differences in the legal structure of
each of the Merging Series and the Surviving Series.
FORMS OF LEGAL STRUCTURE
The FMI Company is a Wisconsin corporation. The operation of the FMI Company
is governed by its Articles of Incorporation and by Wisconsin law. The FMI
Company is registered with the SEC as an open-end management investment company
and is subject to the provisions of the 1940 Act and the rules and regulations
of the SEC thereunder. The Board of Directors of the FMI Company may generally
authorize mergers, consolidations, shares
18
exchanges and reorganizations of a new series or a respective series with
another series or other business organization subject to shareholder approval.
The Acquiring Trust is a Delaware Statutory Trust. The operations of this
trust are governed by its Declaration of Trust and by Delaware law. The
Acquiring Trust is registered with the SEC as an open-end management investment
company and is subject to the provisions of the 1940 Act and the rules and
regulations of the SEC thereunder. The Trustees of the Acquiring Trust may
generally authorize mergers, consolidations, share exchanges and reorganizations
of a new series or of each respective series with another series or other
business organization subject to shareholder approval.
SHARES
The FMI Company offers shares in five series, each of which have one class of
shares outstanding: the Merging Series, FMI Provident Trust Strategy Fund, FMI
Winslow Growth Fund, FMI Knappenberger Partners Emerging Growth Fund and FMI
Woodland Small Capitalization Value Fund. The FMI Company may also organize
other series in the future. When issued, the shares are fully paid and
non-assessable, have no preference, preemptive or similar rights unless
designated by the Directors, and are freely transferable. The assets and
proceeds received by the FMI Company from the issue or sale of shares of a
series are allocated to that series and constitute the rights of that series,
subject only to the rights of creditors. Any underlying assets of a series are
required to be segregated on the books of account of the FMI Company. These
assets are to be used to pay the expenses of the series as well as a share of
the general expenses of the FMI Company.
The Acquiring Trust will offer shares of two series, each of which will have
different classes: the Surviving Series and the Phoenix-Aberdeen Worldwide
Opportunities Fund. The Acquiring Trust may also organize other series in the
future. 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 the trust from the
issue or sale of shares of a series or class are allocated to that series and
constitute the rights of that series, 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 Acquiring Trust. 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
the Acquiring Trust.
MEETINGS
The Board of Directors or Board of Trustees of the FMI Company or Acquiring
Trust, as applicable, 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 directors or trustees, as applicable, upon
written request by shareholders holding at least ten percent of the outstanding
shares entitled to vote. One-third of the shares entitled to vote constitutes a
quorum at a shareholder meeting of the Surviving Series. A majority of the
shares entitled to vote constitutes a quorum at a shareholder meeting of the
Merging Series.
SHAREHOLDER LIABILITY
Unlike the stockholders of a corporation, under certain circumstances
shareholders of a statutory trust may be held personally liable for the debts,
claims or other obligations of a statutory trust. However, the Declaration of
Trust of the Acquiring Trust limits shareholder liability. Such 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 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 Acquiring Trust itself would be unable to meet its
obligations.
19
LIABILITY OF TRUSTEES
The Articles of Incorporation of the FMI Company provides that directors will
generally be personally liable only for willful misfeasance, bad faith, gross
negligence or reckless disregard of duties.
The Declaration of Trust of the Acquiring Trust provides that trustees will
generally be personally liable only for willful misfeasance, bad faith, gross
negligence or reckless disregard of duties. The Acquiring Trust may purchase
insurance for trustees to cover potential liabilities and will generally
indemnify a trustee against such claims. The Acquiring Trust may also advance
payments to a trustee in connection with indemnification.
LIQUIDATION OR DISSOLUTION
In the event of the liquidation or dissolution of the Merging series, the
Directors of the FMI Company Trust shall distribute the assets of the Merging
Series to the shareholders, according to their respective rights, after
accounting for the liabilities of the FMI Company.
In the event of the liquidation or dissolution of the Surviving Series, the
Trustees of the Acquiring Trust shall distribute the assets of the Surviving
Series to the shareholders, according to their respective rights, after
accounting for the liabilities of the Acquiring Trust.
FISCAL YEAR
Both series operate on a fiscal year which ends June 30.
MANAGEMENT AND OTHER SERVICE PROVIDERS
Responsibility for the overall supervision of each series rests with the
Board of Directors of the FMI Company and the Board of Trustees of the Acquiring
Trust.
As the investment adviser for the Surviving Series, PIC Adviser is
responsible for managing the Surviving Series' investment program and the
general operations of the Surviving Series. Sasco is the subadviser for the
Surviving Series, and is responsible for the day-to-day management of the
Surviving Series' portfolio. FMI Adviser, as the investment adviser for the
Merging Series, is responsible for managing the Merging Series' investment
program and the general operations of the Merging Series. FMI Adviser is a
registered investment adviser controlled by Mr. Ted D. Kellner. Sasco is the
subadviser for the Merging Services and is responsible for the day-to-day
management of the Merging Series' portfolio.
Bruce Bottomley, Daniel Leary, and Mark Helderman at Sasco are primarily
responsible for the day-to-day management of the portfolio of the Merging
Series, and are to be primarily responsible for the day-to-day management of the
portfolio of the Surviving Series. Mr. Bottomley is Managing Director of Sasco
and also serves as Portfolio Manager of Sasco. He has thirty-two years of
investment experience and joined Sasco at the time of its inception in 1986. He
received his MBA from the University of Chicago. Mr. Leary is Managing Director
of Sasco and also serves as Portfolio Manager of Sasco. He has thirty-three
years of investment experience and joined Sasco at the time of its inception in
1986. Mr. Leary is a graduate of the Boston College School of Management. Mr.
Helderman is Managing Director of Sasco and also serves as Portfolio Manager of
Sasco. He has eighteen years of investment experience and joined Sasco in 1997.
Mr. Helderman is a graduate of the University of Dayton.
Phoenix Equity Planning Corporation serves as financial agent of the
Surviving Series and, as such, performs administrative, bookkeeping and pricing
functions. Phoenix Equity Planning Corporation also serves as the transfer agent
for the Surviving Series.
Fiduciary Management, Inc. serves as financial agent of the Merging Series
and, as such, performs administrative, bookkeeping and pricing functions. U.S.
Bancorp Fund Services, LLC serves as the transfer agent for the Merging Series.
20
The State Street Bank and Trust Company serves as the custodian of the
Acquiring Trust's assets and as a subtransfer agent for the Surviving Series.
U.S. Bank, N.A. serves as the custodian of the FMI Company's assets.
PricewaterhouseCoopers LLP serves as the Independent Registered Public
Accounting Firm for both series.
VOTING INFORMATION
QUORUM AND VOTING REQUIREMENTS
This Prospectus/Proxy Statement is being furnished to the shareholders of the
Merging Series in connection with the solicitation by the Board of Directors of
the FMI Company of proxies to be used at the meeting. Shareholders of record of
the Merging Series at the close of business on August 31, 2004 ("Record Date")
will be entitled to vote at the meeting or at any adjournments thereof. As of
the Record Date, _____________ shares of the Merging Series were issued and
outstanding.
You can provide voting instructions in the following ways:
o BY MAIL - using the enclosed Proxy Card(s) and postage paid envelope
o IN PERSON - at the Special Meeting
Proxies executed by shareholders may be revoked at any time before they are
exercised by a written revocation received by the Secretary of the FMI Company,
by properly executing a later-dated proxy (in writing, or by telephone or by the
Internet) or by attending the meeting and voting in person.
The Board of Directors of the FMI Company knows of no business, other than
that mentioned in the Notice of Special Meeting, that will be presented for
consideration at the Special Meeting. If any other matter is properly presented,
it is the intention of the persons named on the enclosed proxy cards to vote in
accordance with their best judgment.
Shareholders are entitled to one vote for each share (determined as of the
Record Date) owned by such shareholder and each fractional share amount shall
be entitled to a proportionate fractional vote. A majority of the shares
entitled to vote shall constitute a quorum for the meeting. The affirmative vote
of a majority of the outstanding voting securities of the Trust must approve the
herein contemplated reorganization. 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 Merging Series 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.
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 Special 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.
21
The Special Meeting may be adjourned from time to time by the vote of a
majority of the shares represented at the Special Meeting. If the Special
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 or must be fixed. 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 the FMI Company. At
any adjourned meeting, the FMI Company 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 Directors of the FMI Company is not aware
of any other matters to come before the meeting.
Approval of the reorganization proposal by the shareholders of the Merging
Series is a condition of the consummation of the reorganization. If the
reorganization is not approved, the Merging Series will continue as a series of
the FMI Company and the Board of Directors of the FMI Company may consider other
alternatives in the best interests of the shareholders of the Merging Series.
REVOCATION OF PROXIES
Any shareholder who has given a proxy has the right to revoke the proxy at
any time prior to its exercise:
o by written notice of the proxy's revocation to the Secretary of the FMI
Company at the above address prior to the meeting;
o by the subsequent execution and return of another proxy card prior to the
meeting; 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 Counsel, Inc., or its affiliates, may solicit proxies
personally or by telephone or telegram. The FMI Company 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 Counsel, Inc.
for their reasonable expenses in sending proxy material to beneficial owners of
shares of the Merging Series. While a proxy solicitation firm is not expected to
be engaged for this proxy solicitation, should such a firm be so engaged, the
cost of the solicitation of proxies will be borne by Phoenix Investment Counsel,
Inc.
OWNERSHIP OF VOTING SECURITIES
Based on holdings and total shares outstanding as of August 31, 2004, the
Directors and officers of the FMI Company owned as a group less than __% of the
outstanding voting securities of the Merging Series. If the reorganization were
consummated as of August 31, 2004, the Directors and officers of the FMI Company
would own less than __% of the outstanding voting securities of the combined
Surviving Series based on their holdings and total shares outstanding as of
August 31, 2004.
22
One shareholder, U.S. Trust, owns beneficially, or of record, 5% or more of
the outstanding shares of the Merging Series, based on holdings and total shares
outstanding as of August 31, 2004. No other person owns beneficially, or of
record, 5% or more of the outstanding shares of a Series as of the Record Date.
THE BOARD OF DIRECTORS OF THE FMI COMPANY, INCLUDING THE INDEPENDENT
DIRECTORS OF THE FMI COMPANY, RECOMMENDS 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. IN THE ALTERNATIVE, WE
ENCOURAGE YOU TO VOTE USING THE TELEPHONE OR INTERNET.
MISCELLANEOUS
AVAILABLE INFORMATION
The Acquiring Trust and the FMI Company 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 Reference
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.
PERFORMANCE FOR THE PERIOD ENDING JUNE 30, 2004
The period prior to June 30, 2004, when the Surviving Series began operating,
represents the performance of the Merging Series, a fund with substantially the
same investment objectives, policies and philosophies. The Surviving Series
treats the past performance of the Merging Series as its own. This past
performance has not been adjusted to reflect the expenses of the Surviving
Series. Please note that the Merging Series offered only one class of shares.
Therefore, the tables below provide information about the performance for that
class only.
AVERAGE ANNUAL TOTAL RETURNS
(FOR THE PERIODS ENDING JUNE 30, 2004)
LIFE OF THE INCEPTION
1 YEAR 5 YEARS SERIES DATE
---------- ---------- ------------ ------------
MERGING SERIES - FMI SASCO CONTRARIAN
VALUE FUND
Merging Series shares 40.03% 12.96% 9.59% 12/30/97
Russell Midcap Index(1) 29.38% 6.51% 8.21% 12/30/97
- -----------------
1 The Russell Midcap Index consists of the smallest 800 securities in the
Russell 1000 Index as ranked by total market capitalization. This index
attempts to capture the performance of the medium-sized universe of common
stocks. Reflects no deduction for fees, expenses or taxes.
23
GROWTH OF $10,000
(FOR THE PERIODS ENDING JUNE 30, 2004)
MERGING SERIES - FMI SASCO CONTRARIAN VALUE FUND
RUSSELL MIDCAP
YEAR SHARES INDEX(1)
- -------------- -------------- ----------------
12/30/97 $10,000 $10,000
06/30/98 $10,410 $10,942
06/30/99 $ 9,860 $12,180
06/30/00 $ 9,217 $13,720
06/30/01 $12,901 $13,852
06/30/02 $14,048 $12,574
06/30/03 $12,953 $12,905
06/30/04 $18,137 $16,697
This growth of $10,000 chart assumes an initial investment of $10,000 made on
the inception dates in the tables above. Performance assumes dividends and
capital gains are reinvested.
SECTOR WEIGHTINGS AT JUNE 30, 2004 (AS A PERCENT OF EQUITY HOLDINGS)
FMI SASCO CONTRARIAN
SECTOR VALUE FUND
- -------------------------------------- ---------------------------------------
Consumer Discretionary $ 1,513,421 30.13%
Consumer Staples $ 336,816 6.71%
Energy $ 161,250 3.21%
Financials $ - 0.00%
Health Care $ - 0.00%
Industrials $ 1,055,435 21.01%
Information Technology $ - 0.00%
Materials $ 1,107,802 22.06%
Telecommunication Services $ - 0.00%
Utilities $ 848,018 16.88%
Total Equity Holdings $ 5,022,742 100.00%
- -----------------
1 The Russell Midcap Index consists of the smallest 800 securities in the
Russell 1000 Index as ranked by total market capitalization. This index
attempts to capture the performance of the medium-sized universe of common
stocks. Reflects no deduction for fees, expenses or taxes.
24
ASSET MIX AT JUNE 30, 2004 (AS A PERCENTAGE OF TOTAL ASSETS)
MERGING SERIES - FMI SASCO
ASSET MIX CONTRARIAN VALUE FUND
- ---------------------------------- --------------------------------
Common Stock 78.44%
Short Term Obligations 22.44%
Other assets and liabilities, net -0.88%
Total Net Assets 100.00%
TEN LARGEST FMI SASCO CONTRARIAN VALUE FUND HOLDINGS AT JUNE 30, 2004 (AS A
PERCENTAGE OF TOTAL NET ASSETS)
MERGING SERIES - FMI SASCO CONTRARIAN VALUE FUND
1. Foot Locker, Inc. 5.4%
2. Duke Energy Corp. 4.0%
3. FirstEnergy Corp. 3.5%
4. Raytheon Co. 3.5%
5. Limited Brands 3.4%
6. Hercules Inc. 3.4%
7. Del Monte Foods Co. 3.3%
8. Thomas & Betts Corp. 3.3%
9. ONEOK, Inc. 3.3%
10. Packaging Corp of America 3.2%
LEGAL MATTERS
Matthew A. Swendiman, Esq., Counsel, Phoenix Life Insurance Company, will
pass upon certain legal matters in connection with the issuance of the shares of
the Surviving Series.
ADDITIONAL FINANCIAL INFORMATION
The tables set forth below present certain financial information for the
Merging Series. The financial highlights for each year ended June 30 are derived
from the Merging Series' 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.
25
MERGING SERIES - FMI SASCO CONTRARIAN VALUE FUND
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
For the Years Ended June 30,
------------------------------------------------------------
2004 2003 2002 2001 2000
------ ------ ------ ------ ------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $12.18 $13.21 $12.15 $ 8.74 $ 9.47
INCOME FROM INVESTMENT OPERATIONS:
Net investment (loss) income (a) (0.01) 0.01 (0.01) 0.02 0.08
Net realized and unrealized
gains (losses) on investments 4.88 (1.04) 1.09 3.46 (0.70)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 4.87 (1.03) 1.08 3.48 (0.62)
LESS DISTRIBUTIONS:
Dividends from net investment income (0.01) -- (0.02) (0.07) (0.11)
Distributions from net realized gains -- -- -- -- --
------ ------ ------ ------ ------
Total from distributions (0.01) -- (0.02) (0.07) (0.11)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR $17.04 $12.18 $13.21 $12.15 $ 8.74
====== ====== ====== ====== ======
TOTAL RETURN 40.03% (7.80%) 8.89% 39.98% (6.52%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's $) 6,404 3,800 5,240 4,901 5,568
Ratio of expenses (after reimbursement)
to average net assets (b) 1.30% 1.30% 1.30% 1.30% 1.30%
Ratio of net investment (loss)
income to average net assets (c) (0.06%) 0.09% (0.05%) 0.17% 0.88%
Portfolio turnover rate 53.19% 22.94% 49.36% 27.44% 42.53%
(a) In 2004, 2003, 2002, 2001 and 2000, net investment (loss) income per share
is calculated using average shares outstanding.
(b) Computed after giving effect to adviser's expense limitation undertaking.
If the Fund had paid all of its expenses, the ratios would have been for
the years ended June 30, 2004, 2003, 2002, 2001 and 2000, 2.76%, 3.05%,
2.68%, 2.25% and 1.76%, respectively.
(c) If the Fund had paid all of its expenses, the ratios would have been for
the years ended June 30, 2004, 2003, 2002, 2001 and 2000, (1.52%),
(1.66%), (1.43%), (0.78%) and 0.42%, respectively.
26
FUTURE SHAREHOLDER MEETINGS
As a Delaware Statutory Trust, the Acquiring Trust does not hold shareholder
meetings unless required by the 1940 Act. Other than this meeting, the Acquiring
Trust does not anticipate holding any future meetings of shareholders unless
required.
OTHER BUSINESS
The Board of Directors of the FMI Company 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 Merging Series'
shareholders arise, however, the proxies will vote thereon according to their
best judgment in the interests of the Merging Series and the shareholders of the
Merging Series.
By Order of the Board of Trustees,
Donald S. Wilson
Secretary
Milwaukee, Wisconsin
______, 2004
27
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this _____ day of _____________, 200__, by and between Phoenix Equity Trust,
a Massachusetts business trust (the "Trust"), with its principal place of
business at 101 Munson Street, Greenfield, Massachusetts 01301, on behalf of the
Phoenix Mid-Cap Value Fund (the "Acquiring Fund"), a separate series of the
Trust, and FMI Mutual Funds, Inc., a Wisconsin corporation (the "FMI Company"),
on behalf of the FMI Sasco Contrarian Value Fund (the "Acquired Fund"), another
separate series of the FMI Company.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of the transfer of all of the
assets of the Acquired Fund to the Acquiring Fund in exchange solely for voting
shares of beneficial interest of the Acquiring Fund (the "Acquiring Fund
Shares"), the assumption by the Acquiring Fund of all 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.
The Acquired Fund is a separate series of the FMI Company and the Acquiring Fund
is a separate series of the Trust, each of which is an open-end, registered
investment company of the management type. The Acquired Fund owns securities
that generally are assets of the character in which the Acquiring Fund is
permitted to invest.
The Board of Trustees of the Trust, including a majority of the Trustees who are
not "interested persons" of the trust, as defined in the Investment Company Act
of 1940, as amended (the "1940 Act"), has determined, with respect to the
Acquiring Fund, that the exchange of all of the assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of all liabilities of the Acquired Fund
by the Acquiring Fund is in the best interests of the Acquiring Fund which is a
newly created series of the Trust formed for the specific purposes of entering
into the Agreement, and its shareholder and that the interests of the existing
sole shareholder of the Acquiring Fund would not be diluted as a result of this
transaction.
The Board of Directors of the FMI Company, including a majority of the Directors
who are not "interested persons" of the FMI Company, as defined in the 1940 Act,
has also determined, with respect to the Acquired Fund, that the exchange of all
of the assets of the Acquired Fund for Acquiring Fund Shares and the assumption
of all liabilities of the Acquired Fund by the Acquiring Fund is in the best
interests of the Acquired Fund and its shareholders 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. TRANSACTION
1.1 Subject to the requisite approval of the Acquired Fund shareholders
and the other terms and conditions herein set forth and on the basis of the
representations and warranties contained herein, the Acquired Fund agrees to
transfer 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, determined by dividing the value of the Acquired Fund's net assets,
computed in the manner and as of the time and date set forth in paragraph 2.1,
by the net asset value of one Acquiring Fund Share, computed in the manner and
as of the time and date set forth in paragraph 2.2; and (ii) to assume all
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 Date").
1.2 The assets of the Acquired Fund to be acquired by the Acquiring
Fund shall consist of all assets and property, including, without limitation,
all cash, securities, commodities and futures interests and dividends or
28
interests receivable, that 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 (collectively, the "Assets").
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
also assume all of the liabilities of the Acquired Fund, whether accrued or
contingent, known or unknown, existing at the Valuation Date, as defined in
paragraph 2.1 (collectively, "Liabilities"). On or as soon as practicable prior
to the Closing Date, the Acquired Fund will declare and pay to its shareholders
of record one or more dividends and/or other distributions so that it will have
distributed substantially all (and in no event less than 98%) of its investment
company taxable income and realized net capital gain, if any, for the current
taxable year through the Closing Date.
1.4 Immediately after the transfer of Assets provided for in paragraph
1.1, the Acquired Fund will distribute 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"), on a pro rata basis, 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,
with respect to the Acquired Fund's shares, 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. The aggregate net asset value of
Acquiring Fund Shares to be so credited to Acquired Fund Shareholders shall be
equal to the aggregate net asset value of the Acquired Fund shares owned by such
shareholders on the Closing Date. All issued and outstanding shares of the
Acquired Fund will simultaneously be canceled on the books of the Acquired Fund.
1.5 Ownership of Acquiring Fund Shares will be shown on the books of
the Acquiring Fund or its transfer agent, as defined in paragraph 3.3.
1.6 Any reporting responsibility of the Acquired Fund including, but
not limited to, the responsibility for filing of regulatory reports, tax
returns, or other documents with the U.S. Securities and Exchange Commission
(the "Commission"), any state securities commission, and any federal, state or
local tax authorities or any other relevant regulatory authority, is and shall
remain the responsibility of the Acquired Fund.
2. VALUATION
2.1 The value of the Assets shall be the value computed as of
immediately after the close of business of the New York Stock Exchange and after
the declaration of any dividends on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures
established by the Trust's Board of Trustees, which shall be described in the
then-current prospectus and statement of additional information with respect to
the Acquiring Fund.
2.2 The net asset value of the Acquiring Fund Shares shall be the net
asset value per share computed as of the Valuation Date, using the valuation
procedures established by the Trust's Board of Trustees which shall be described
in the Acquiring Fund's then-current prospectus and statement of additional
information.
2.3 The number of Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's Assets shall be
determined by dividing the value of the net assets with respect to the shares of
the Acquired Fund determined using the same valuation procedures referred to in
paragraph 2.1, by the net asset value of a Acquiring Fund Share, determined in
accordance with paragraph 2.2.
2.4 Phoenix Equity Planning Corporation shall make all computations of
value, in its capacity as financial agent for the Trust.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be October 8, 2004, or such other date as
the parties may agree. All acts taking place at the closing of the transaction
(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.,
Eastern Time. The Closing shall be held at the offices of Simpson Thacher &
Bartlett LLP or at such other time and/or place as the parties may agree.
29
3.2 The FMI Company shall direct U.S. Bank, N.A. (formerly Firstar
Trust Company), as custodian for the Acquired Fund (the "Custodian"), to
deliver, on the next business day after the Closing, a certificate of an
authorized officer stating that (i) the Assets shall have been delivered in
proper form to the Acquiring Fund on the next business day following the Closing
Date, and (ii) all necessary taxes in connection with the delivery of the
Assets, including all applicable federal and state stock transfer stamps, if
any, have been paid or provision for payment has been made. The Acquired Fund's
portfolio securities represented by a certificate or other written instrument
shall be presented by the Acquired Fund Custodian to the custodian for the
Acquiring Fund for examination no later than on the next business day following
the Closing Date, and shall be transferred and delivered by the Acquired Fund on
the next business day following the Closing Date for the account of the
Acquiring Fund duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof. The Custodian shall deliver as of the Closing
Date by book entry, in accordance with the customary practices of such
depositories and the Custodian, the Acquired Fund's portfolio securities and
instruments deposited with a securities depository, as defined in Rule 17f-4
under the 1940 Act. The cash to be transferred by the Acquired Fund shall be
delivered by wire transfer of federal funds on the Closing Date.
3.3 The FMI Company shall direct U.S. Bancorp Fund Services LLC (the
"Transfer Agent"), on behalf of the Acquired Fund, to deliver on the next
business day following 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
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 the Closing Date to the Secretary of the Acquiring Fund, or
provide evidence satisfactory to the Acquired Fund 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 sale, checks, assignments, share certificates, if any, receipts or other
documents as such other party or its counsel may reasonably request.
3.4 In the event that on the Valuation Date (a) the New York Stock
Exchange or another primary trading market for portfolio securities of the
Acquired Fund shall be closed to trading or trading thereupon shall be
restricted, or (b) trading or the reporting of trading on such Exchange or
elsewhere shall be disrupted so that accurate appraisal of the value of the net
assets of the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first Friday after the day when trading shall have been
fully resumed and reporting shall have been restored.
4. REPRESENTATIONS AND WARRANTIES
4.1 The FMI Company, on behalf of the Acquired Fund, represents and
warrants as follows:
(a) The Acquired Fund is duly organized as a series of the FMI Company,
which is a corporation duly organized, validly existing and in good standing
under the laws of the State of Wisconsin, with power under the FMI Company's
Restated Articles of Incorporation ("Articles of Incorporation"), to own all of
its Assets and to carry on its business as it is now being conducted;
(b) The FMI Company 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
shares of the Acquired Fund under the Securities Act of 1933, as amended ("1933
Act"), is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act")
and the 1940 Act and such as may be required by state securities laws;
(d) The current prospectus and statement of additional information of
the Acquired Fund and each prospectus and statement of additional information of
the Acquired Fund used at all times previous to the date of this Agreement
conforms or conformed at the time of its use 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 does not or did not at the time of
its use include any untrue statement of a material fact or omit to state any
material fact required to be
30
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
(e) On the Closing Date, the FMI Company, on behalf of the Acquired
Fund, will have good and marketable title to the Assets and full right, power,
and authority to sell, assign, transfer and deliver such Assets hereunder free
of any liens or other encumbrances, and upon delivery and payment for such
Assets; the Trust, on behalf of the Acquiring Fund, will acquire good and
marketable title thereto, subject to no restrictions on the full transfer
thereof, including such restrictions as might arise under the 1933 Act, other
than as disclosed to the Acquiring Fund;
(f) The Acquired Fund is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a material
violation of the FMI Company's Articles of Incorporation or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the FMI
Company on behalf of the Acquired Fund is a party or by which it is bound, or
(ii) the acceleration of any obligation, or the imposition of any penalty, under
any agreement, indenture, instrument, contract, lease, judgment or decree to
which the FMI Company on behalf of the Acquired Fund is a party or by which it
is bound;
(g) All material contracts or other commitments of the Acquired Fund
(other than this Agreement and certain investment contracts, including options,
futures and forward contracts) will terminate without liability to the Acquired
Fund on or prior to the Closing Date;
(h) Except as otherwise disclosed in writing to and accepted by the
Trust, on behalf of the Acquiring Fund, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the FMI Company on
behalf of the Acquired Fund or any of its properties or assets that, if
adversely determined, would materially and adversely affect its financial
condition or the conduct of its business. The FMI Company, on behalf of 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;
(i) The Statement of Assets and Liabilities, Statements of Operations
and Changes in Net Assets, and Schedule of Investments of the Acquired Fund at
June 30, 2004, have been audited by PricewaterhouseCoopers, LLP ("PwC"),
independent registered public accountants, and are in accordance with generally
accepted accounting principles ("GAAP") consistently applied, and such
statements (copies of which have been furnished to the Acquiring Fund) present
fairly, in all material respects, the financial condition of the Acquired Fund
as of such date in accordance with GAAP, and there are no known contingent
liabilities of the Acquired Fund required to be reflected on a balance sheet
(including the notes thereto) in accordance with GAAP as of such date not
disclosed therein;
(j) Since June 30, 2004, 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, except as otherwise disclosed to and
accepted by the Acquiring Fund. For the purposes of this subparagraph (j), a
decline in net asset value per share of the Acquired Fund due to declines in
market values of securities in the Acquired Fund's portfolio, the discharge of
Acquired Fund liabilities, or the redemption of Acquired Fund Shares by
shareholders of the Acquired Fund shall not constitute a material adverse
change;
(k) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquired Fund required by
law to have been filed by such date (including any extensions) shall have been
filed and are or will be correct in all material respects, and all Federal and
other taxes shown as due or required to be shown as due on said returns and
reports shall have been paid or provision shall have 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;
(l) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Fund has met (or will meet) the
requirements of Subchapter M of the Code for qualification as a regulated
31
investment company, has been (or will be) eligible to and has computed (or will
compute) its federal income tax under Section 852 of the Code, and will have
distributed all of its investment company taxable income and net capital gain
(as defined in the Code) that has accrued through the Closing Date, and before
the Closing Date will have declared dividends sufficient to distribute all of
its investment company taxable income and net capital gain for the period ending
on the Closing Date;
(m) All issued and outstanding shares of the Acquired Fund are, and on
the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable and have been offered and sold in every state and the
District of Columbia in compliance in all material respects with applicable
registration requirements of the 1933 Act and state securities laws. All of the
issued and outstanding shares of the Acquired Fund will, at the time of Closing,
be held by the persons and in the amounts set forth in the records of the
Transfer Agent, on behalf of the Acquired Fund, as provided in paragraph 3.3.
The Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the shares of the Acquired Fund, nor
is there outstanding any security convertible into any of the Acquired Fund
shares;
(n) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action, if any,
on the part of the Board of Directors of the FMI Company, on behalf of the
Acquired Fund, and, subject to the approval of the shareholders of the Acquired
Fund, this Agreement will constitute a valid and binding obligation of the
Acquired 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;
(o) The information to be furnished by the Acquired Fund for use in
registration statements, proxy materials and other documents filed or to be
filed with any federal, state or local regulatory authority (including the NASD,
Inc.), which may be necessary in connection with the transactions contemplated
hereby, shall be accurate and complete in all material respects and shall comply
in all material respects with Federal securities and other laws and regulations
thereunder applicable thereto; and
(p) The proxy statement of the Acquired Fund (the "Proxy Statement") to
be included in the Registration Statement referred to in paragraph 4.2(p),
insofar as it relates to the Acquired Fund, will, on the effective date of the
Registration Statement and on the Closing Date (i) 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
provided, however, that the representations and warranties in this subparagraph
(p) shall not apply to statements in or omissions from the Proxy Statement and
the Registration Statement made in reliance upon and in conformity with
information that was furnished by the Acquiring Fund for use therein, and (ii)
comply in all material respects with the provisions of the 1933 Act, the 1934
Act and the 1940 Act and the rules and regulations thereunder.
4.2 The Trust, on behalf of the Acquiring Fund, represents and warrants
as follows:
(a) The Acquiring Fund is duly organized as a series of the Trust,
which is a business trust duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts with power under the Trust's
Declaration of Trust to own all of its assets and to carry on its business as it
is now being conducted;
(b) The 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
shares of the Acquiring Fund under the 1933 Act, is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state
securities laws;
(d) The current prospectus and statement of additional information of
the Acquiring Fund and each prospectus and statement of additional information
of the Acquiring Fund as of the date of this Agreement conforms
32
or conformed at the time of its use 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 does not or did not at the time of its use 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;
(e) The Acquiring Fund is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a material
violation of the Trust's Declaration of Trust or of any agreement, indenture,
instrument, contract, lease or other undertaking to which the Trust on behalf of
the Acquiring Fund is a party or by which it is bound, or (ii) the acceleration
of any obligation, or the imposition of any penalty, under any agreement,
indenture, instrument, contract, lease, judgment or decree to which the Trust on
behalf of the Acquiring Fund is a party or by which it is bound;
(f) Except as otherwise disclosed in writing to and accepted by the FMI
Company, on behalf of the Acquired Fund, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the Trust on behalf
of the Acquiring Fund or any of the Acquiring Fund's properties or assets that,
if adversely determined, would materially and adversely affect the Acquiring
Fund's financial condition or the conduct of the Acquiring Fund's business. The
Trust on behalf of 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 the
Acquiring Fund's ability to consummate the transactions herein contemplated;
(g) On the Closing Date, the Acquiring Fund has only nominal assets and
outstanding shares, solely for the purpose of voting on matters related to the
reorganization contemplated by the Agreement;
(h) There are no known or contingent liabilities of the Acquiring Fund
as of the date hereof or the Closing Date;
(i) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquiring Fund required by
law to have been filed by such date (including any extensions) shall have been
filed and are or will be correct in all material respects, and all Federal and
other taxes shown as due or required to be shown as due on said returns and
reports shall have been paid or provision shall have 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;
(k) The Acquiring Fund intends to meet the requirements of Subchapter M
of the Code for qualification as a regulated investment company and has elected
to be treated as such;
(l) All issued and outstanding Acquiring Fund Shares are, and on the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable (recognizing that, under Massachusetts law, it is theoretically
possible that shareholders of the Acquired Fund could, under certain
circumstances, be held personally liable for obligations of the Acquired Fund)
and have been offered and sold in every state and the District of Columbia in
compliance in all material respects with applicable registration requirements of
the 1933 Act. 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;
(m) The execution, delivery and performance of this Agreement will have
been fully authorized prior to the Closing Date by all necessary action, if any,
on the part of the Trustees of the Trust on behalf of the Acquiring Fund and
this Agreement will constitute a valid and binding obligation of the Trust on
behalf 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;
(n) 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, will on the Closing Date have been duly
33
authorized and, when so issued and delivered, will be duly and validly issued
Acquiring Fund Shares, and will be fully paid and non-assessable (recognizing
that, under Massachusetts law, it is theoretically possible that shareholders of
the Acquired Fund could, under certain circumstances, be held personally liable
for obligations of the Acquired Fund);
(o) The information to be furnished by the Trust for use in the
registration statements, proxy materials and other documents that may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations applicable
thereto; and
(p) That insofar as it relates to the Acquiring Fund, the Form N-1A
Registration Statement of the Trust relating to the Acquiring Fund (the
"Registration Statement") and the Form N-14 Registration Statement of the Trust
with respect to the Acquiring Fund (the "Proxy Statement"), and any amendment or
supplement to the foregoing, will, from the effective date of the Registration
Statement or the Proxy Statement through the date of the meeting of shareholders
of the Acquired Fund contemplated therein (i) 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 misleading provided,
however, that the representations and warranties in this subparagraph (p) shall
not apply to statements in or omissions from the Registration Statement or the
Proxy Statement made in reliance upon and in conformity with information that
was furnished by the Acquired Fund for use therein, and (ii) comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and the 1940
Act and the rules and regulations thereunder.
(o) The Acquiring Fund 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 its operations after the Closing Date.
5. COVENANTS OF THE FMI COMPANY ON BEHALF OF THE ACQUIRED FUND
5.1 The Acquired Fund will operate its business in the ordinary course
between the date hereof and the Closing Date except as contemplated by this
Agreement.
5.2 The FMI Company will call a meeting of the shareholders of the
Acquired Fund 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 shall assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably request concerning the holders of
the Acquired Fund's shares.
5.5 Subject to the provisions of this Agreement, 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 As soon as is reasonably practicable after the Closing, the
Acquired Fund will make a liquidating distribution to its shareholders
consisting of the Acquiring Fund Shares received at the Closing.
5.7 The Acquired Fund shall use its reasonable best efforts to fulfill
or obtain the fulfillment of the conditions precedent to effect the transactions
contemplated by this Agreement as promptly as practicable.
5.8 The FMI Company, on behalf of the Acquired Fund, covenants that it
will, from time to time, as and when reasonably requested by the Trust on behalf
of the Acquiring Fund, execute and deliver or cause to be executed and delivered
all such assignments and other instruments, and will take or cause to be taken
such further
34
action as the Trust on behalf of the Acquiring Fund may reasonably deem
necessary or desirable in order to vest in and confirm (a) the FMI Company's, on
behalf of the Acquired Fund's, title to and possession of the Acquiring Fund
Shares to be delivered hereunder, and (b) the Trust's, on behalf of the
Acquiring Fund's, title to and possession of all the assets, and to carry out
the intent and purpose of this Agreement.
6. COVENANTS OF THE TRUST ON BEHALF OF THE ACQUIRING FUND
6.1 The Acquiring Fund will operate its business in the ordinary course
between the date hereof and the Closing Date except as contemplated by this
Agreement.
6.2 Subject to the provisions of this Agreement, the Acquiring Fund
will 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.
6.3 The Acquiring Fund shall use its reasonable best efforts to fulfill
or obtain the fulfillment of the conditions precedent to effect the transactions
contemplated by this Agreement as promptly as practicable.
6.4 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 knowledge of the parties thereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
6.5 The Acquiring Fund will 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
its operations after the Closing Date.
6.6 The Acquiring Fund shall, for a two-year period after the Closing,
limit total annual fund operating expenses to 1.25% of total net assets.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the FMI Company, on behalf of the Acquired Fund, to
consummate the transactions provided for herein shall be subject, at the FMI
Company's election, to the performance by the Trust, on behalf of the Acquiring
Fund, of all the obligations to be performed by it hereunder on or before the
Closing Date, and, in addition thereto, the following further conditions:
7.1 All representations and warranties of the Trust, on behalf of the
Acquiring Fund, 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;
7.2 The Trust, on behalf of the Acquiring Fund, shall have performed
all of the covenants and complied with all of the provisions required by this
Agreement to be performed or complied with by the Trust, on behalf of the
Acquiring Fund on or before the Closing Date; and
7.3 The Acquiring Fund shall have delivered to the Acquired Fund a
certificate executed in the Acquiring Fund's name by its President or Vice
President, and its Treasurer or Assistant Treasurer, in a form reasonably
satisfactory to the Acquired Fund, and dated as of the Closing Date, to the
effect that the representations and warranties of the Acquiring Fund made in
this Agreement are true and correct 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 Acquired Fund shall reasonably request.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Trust, on behalf of the Acquiring Fund, to
consummate the transactions provided for herein shall be subject, at the Trust's
election, to the performance by the FMI Company, on behalf of the Acquired
35
Fund, of all of the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following further conditions:
8.1 All representations and warranties of the FMI Company, on behalf of
the Acquired Fund, 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;
8.2 The FMI Company shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, as of the Closing Date,
certified by the Treasurer of the FMI Company;
8.3. The FMI Company, on behalf of the Acquired Fund, shall have
performed all of the covenants and complied with all of the provisions required
by this Agreement to be performed or complied with by FMI Company, on behalf of
the Acquired Fund, on or before the Closing Date;
8.4 The Acquired Fund shall have declared and paid a distribution or
distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its shareholders (i) all
of its investment company taxable income and all of its net realized capital
gains, if any, for the period from the close of its last fiscal year to 4:00
p.m. Eastern time on the Closing; and (ii) any undistributed investment company
taxable income and net realized capital gains from any period to the extent not
otherwise already distributed; and
8.5 The Acquired Fund shall have delivered to the Acquiring Fund a
certificate executed in the Acquired Fund's name by its President or Vice
President, and its Treasurer or Assistant Treasurer, in a form reasonably
satisfactory to the Acquiring Fund, and dated as of the Closing Date, to the
effect that the representations and warranties of the Acquired Fund made in this
Agreement are true and correct 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 Acquiring Fund shall reasonably request.
9. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND
THE ACQUIRED FUND
If any of the conditions set forth below have not been satisfied on or
before the Closing Date with respect to the FMI Company, on behalf of the
Acquired Fund, or the Trust, on behalf of the Acquiring Fund, the other party to
this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
9.1 The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of the FMI Company's
Articles of Incorporation, applicable Wisconsin law and the 1940 Act.
Notwithstanding anything herein to the contrary, neither the FMI Company nor the
Trust may waive the conditions set forth in this paragraph 9.1;
9.2 On the Closing Date no action, suit or other proceeding shall be
pending or, to its knowledge, threatened before any court or governmental agency
in which it is sought to restrain or prohibit, or obtain damages or other relief
in connection with, this Agreement or the transactions contemplated herein;
9.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the FMI Company and the 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 Acquiring Fund or
the Acquired Fund, provided that either party hereto may for itself waive any of
such conditions;
9.4 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; and
36
9.5 The parties shall have received the opinion of Foley & Lardner LLP,
addressed to the Trust substantially to the effect that, based upon certain
facts, assumptions, and representations, the transaction contemplated by this
Agreement, shall for federal income tax purposes, qualify under the continuity
of business enterprise (COBE) requirements for corporate reorganizations as a
tax free reorganization described in Section 368(a) of the Code. The delivery of
such opinion is conditioned upon receipt of representations it shall request of
the Trust. Notwithstanding anything herein to the contrary, the Trust may not
waive the condition set forth in this paragraph 9.5.
10. BROKERAGE FEES AND EXPENSES
10.1 The FMI Company on behalf of the Acquired Fund and the Trust on
behalf of the Acquiring Fund represent and warrant to each other that there are
no brokers or finders entitled to receive any payments in connection with the
transactions provided for herein.
10.2 The expenses relating to the proposed Reorganization will be borne
by Phoenix Investment Counsel, Inc. The costs of the Reorganization shall
include, but not be limited to, costs associated with obtaining any necessary
order of exemption from the 1940 Act, preparation of the Registration Statement,
printing and distributing the Acquiring Fund's prospectus and the Acquired
Fund's proxy materials, legal fees, accounting fees, securities registration
fees, and expenses of holding shareholders' meetings. Notwithstanding any of the
foregoing, expenses will in any event be paid by the party directly incurring
such expenses if and to the extent that the payment by another person of such
expenses would result in the disqualification of such party as a "regulated
investment company" within the meaning of Section 851 of the Code.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1 The FMI Company and the Trust have not made any representation,
warranty or covenant not set forth herein; this Agreement constitutes the entire
agreement between the parties.
11.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall not survive the consummation of the transactions contemplated hereunder.
The covenants to be performed after the Closing shall survive the Closing.
12. TERMINATION
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by either party by (i) mutual agreement of the parties,
or (ii) by either party if the Closing shall not have occurred on or before
December 31, 2004, unless such date is extended by mutual agreement of the
parties, or (iii) by either party if the other party shall have materially
breached its obligations under this Agreement or made a material and intentional
misrepresentation herein or in connection herewith. In the event of any such
termination, this Agreement shall become void and there shall be no liability
hereunder on the part of any party or their respective Trustees, Directors or
officers, except for any such material breach or intentional misrepresentation,
as to each of which all remedies at law or in equity of the party adversely
affected shall survive.
13. WAIVER
The Acquiring Fund and the Acquired Fund, after consultation with their
respective counsel and by mutual consent of their respective Board of Trustees
and Board of Directors, may waive any condition to their respective obligations
hereunder.
14. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be deemed necessary or advisable by the authorized officers of the FMI
Company and the Trust; provided, however, that following the meeting of the
shareholders of the Acquired Fund called by the Acquired Fund 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.
37
15. 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
facsimile, personal service or prepaid or certified mail addressed to Phoenix
Equity Trust, 101 Munson Street, Greenfield, Massachusetts 01301, Attn: General
Counsel.
16. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY
15.1 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.
15.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
15.3 This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts without regard to its
principles of conflicts of laws.
15.4 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.
15.5 It is expressly agreed that the obligations of the Acquired Fund
hereunder shall not be binding upon any of the Directors, shareholders,
nominees, officers, agents, or employees of the Acquired Fund personally, but
shall bind only the property of the Acquired Fund, as provided in the Articles
of Incorporation of the Acquired Fund. The execution and delivery by such
officers of the Acquired Fund 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 property of the Acquired Fund as provided in the Articles of
Incorporation of the Acquired Fund.
15.6 It is expressly agreed that the obligations of the parties
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Acquiring Fund personally, but shall bind
only the Trust property of the Acquiring Fund, as provided in the Declaration of
Trust of the Acquiring Fund. The execution and delivery by such officers of the
Acquiring Fund 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 Acquiring Fund as provided in the Declaration of Trust of
the Acquiring Fund.
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 thereto and attested by its Secretary or Assistant Secretary.
Attest: PHOENIX EQUITY TRUST ON BEHALF OF ITS
PHOENIX MID-CAP VALUE FUND
__________________________________ By: _______________________________
By:
Title: Title: _______________________________
Attest: FMI MUTUAL FUNDS, INC. ON BEHALF OF ITS
FMI SASCO CONTRARIAN VALUE FUND
__________________________________ By: _______________________________
By:
Title: Title: _______________________________
38
PART B
STATEMENT OF ADDITIONAL INFORMATION
ACQUISITION OF THE ASSETS OF
FMI SASCO CONTRARIAN VALUE FUND
A SERIES OF
FMI MUTUAL FUNDS, INC.
225 EAST MASON STREET
MILWAUKEE, WISCONSIN 53202
(800) 811-5311
BY AND IN EXCHANGE FOR SHARES OF
PHOENIX MID-CAP VALUE FUND
A SERIES OF
PHOENIX EQUITY TRUST, (FORMERLY, PHOENIX-ABERDEEN WORLDWIDE OPPORTUNITIES FUND)
101 MUNSON STREET
GREENFIELD, MASSACHUSETTS 01301
(800) 243-1574
September __, 2004
This Statement of Additional Information, relating specifically to the
proposed transfer of all of the assets and all the liabilities of FMI Sasco
Contrarian Value Fund (the "Merging Series"), a series of FMI Mutual Funds, Inc,
in exchange for shares of the corresponding class of the Phoenix Mid-Cap Value
Fund, a series of Phoenix Equity Trust, (formerly, Phoenix-Aberdeen Worldwide
Opportunities Fund) (the "Surviving Series"), consists of this cover page and
the following described documents:
1) the Statement of Additional Information of the Phoenix Equity Trust
(formerly, Phoenix Aberdeen Worldwide Opportunities Fund), to be
filed via EDGAR on Form N-1A (File No. 002-16590) effective
September __, 2004 with Post-Effective Amendment No. 75 and to be
incorporated by reference (to be filed by Amendment);
2) the Statement of Additional Information of the FMI Mutual Funds,
Inc., as filed via EDGAR on Form N-1A (File No. 033-06836) on
October 30, 2003 with Post-Effective Amendment No. 24 to the
Prospectus dated October 31, 2003, and incorporated by reference;
3) the Annual Report of the Phoenix Equity Trust (formerly, Phoenix
Aberdeen Worldwide Opportunities Fund) for the year ended June 30,
2004 to be filed via EDGAR on Form N-CSR (File No. 811-00945) on
September 6, 2004 and incorporated by reference (to be filed by
Amendment);
4) the Annual Report of the FMI Mutual Funds, Inc. for the year ended
June 30, 2004 as filed via EDGAR on Form N-CSR (File No. 811-04722)
on August 11, 2004, and incorporated by reference (to be filed by
Amendment);
5) the Pro Forma Financial Statements filed herewith.
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the Prospectus/Proxy
Statement dated September__, 2004. A copy of the Prospectus/Proxy Statement may
be obtained without charge by contacting Phoenix Equity Planning Corporation
("Equity Planning") at 56 Prospect Street, P. O. Box 150480, Hartford, CT
06115-0480 or by telephoning Equity Planning toll free at (800) 243-4361.
The date of this Statement of Additional Information is September __,
2004.
Phoenix Mid Cap Value Fund/FMI Sasco Contrarian Value Fund
Pro Forma Combined Schedule of Investments
June 30, 2004 (Unaudited)
Shares or Par Value (in thousands) Value
==================================== ======================================== ============= ============ ============
Phoenix FMI Sascon ProForma Phoenix FMI Sascon ProForma
Mid-Cap Contrarian Combined Mid-Cap Contrarian Combined
Value Fund Value Fund Portfolios DESCRIPTION Value Fund Value Fund Portfolios
=========== =========== =========== ======================================= ============= ============ ============
COMMON STOCKS--78.5%
- 682 682 Alleghany Corp. (b) - 195,734 195,734
- 2,400 2,400 Arch Coal, Inc. - 87,816 87,816
- 14,000 14,000 Big Lots, Inc. (b) - 202,440 202,440
- 3,000 3,000 Brunswick Corp. - 122,400 122,400
- 18,400 18,400 Crown Holdings, Inc. (b) - 183,448 183,448
- 21,100 21,100 Del Monte Foods Co. (b) - 214,376 214,376
- 12,500 12,500 Duke Energy Corp. - 253,625 253,625
- 37,800 37,800 Dynegy Inc. - 161,028 161,028
- 6,000 6,000 FirstEnergy Corp. - 224,460 224,460
- 14,200 14,200 Foot Locker, Inc. - 345,628 345,628
- 2,400 2,400 Fortune Brands, Inc. - 181,032 181,032
- 6,200 6,200 Goodyear Tire & Rubber Co. (b) - 56,358 56,358
- 17,700 17,700 Hercules Inc. (b) - 215,763 215,763
- 5,400 5,400 J.C. Penney Company, Inc. (Holding Co.) - 203,904 203,904
- 3,200 3,200 Joy Global Inc. - 95,808 95,808
- 14,300 14,300 Laidlaw International Inc. (b) - 185,328 185,328
- 3,100 3,100 Lear Corp. - 182,869 182,869
- 11,700 11,700 Limited Brands - 218,790 218,790
- 9,647 9,647 Methanex Corp. - 127,543 127,543
- 4,200 4,200 NOVA Chemicals Corp. - 121,506 121,506
- 9,500 9,500 ONEOK, Inc. - 208,905 208,905
- 8,600 8,600 Packaging Corp of America - 205,540 205,540
- 1,400 1,400 Peabody Energy Corp. - 78,386 78,386
- 4,300 4,300 Premcor Inc. (b) - 161,250 161,250
- 6,200 6,200 Raytheon Co. - 221,774 221,774
- 4,000 4,000 SUPERVALU INC. - 122,440 122,440
- 7,700 7,700 Thomas & Betts Corp. - 209,671 209,671
- 2,500 2,500 United States Steel Corp. - 87,800 87,800
- 4,800 4,800 Waste Management, Inc. - 147,120 147,120
---------- ----------- -----------
TOTAL COMMON STOCKS - 5,022,742 5,022,742
SHORT-TERM OBLIGATIONS--22.4
- 310 310 American Family Financial Services, 0.96% - 310,000 310,000
- 817 817 U.S. Bank, N.A., 1.11% - 816,940 816,940
- 310 310 Wisconsin Corporate Central Credit Union, 1.03% - 310,000 310,000
---------- ----------- -----------
TOTAL SHORT-TERM OBLIGATIONS - 1,436,940 1,436,940
TOTAL INVESTMENTS--100.9% - 6,459,682 6,459,682 (a)
(Identified cost $0, $5,162,703 and $5,162,703)
Other assets and liabilities, net---(0.9)% - (56,120) (56,120)
---------- ----------- -----------
NET ASSETS--100.0% $ - $ 6,403,562 $ 6,403,562
========== =========== ===========
(a) Federal Income Tax Information: Net unrealized appreciation of
investment securities is comprised of gross appreciation of
$1,319,483 and gross depreciation of $129,520 for federal income
tax purposes. At June 30, 2004, the aggregate cost of securities
for federal income tax purposes was $5,269,719.
(b) Non-income producing.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
Phoenix Mid-Cap Value Fund/FMI Sasco Contrarian Value Fund
Pro Forma Combined Statement of Assets and Liabilities
June 30, 2004 (Unaudited)
================ ================ ============== ==============
Phoenix Mid-Cap FMI Sasco Pro Forma
Value Fund Contrarian Value Adjustments Combined
Fund Portfolios
================ ================ ============== ==============
ASSETS
Investment securities at value
(Identified cost $0, $5,162,703 and $5,162,703) $ - $ 6,459,682 $ - $ 6,459,682
Cash - 12,537 - 12,537
Receivables
Fund shares sold - 117,045 - 117,045
Dividends and Interest - 1,923 - 1,923
---------------- --------------- -------------- --------------
Total assets - 6,591,187 - 6,591,187
---------------- --------------- -------------- --------------
LIABILITIES
Payables
Investment securities purchased - 179,975 - 179,975
Management and administrative fees - 5,313 - 5,313
Directors' fees - 800 - 800
Other liabilities - 1,537 - 1,537
---------------- --------------- -------------- --------------
Total liabilities - 187,625 - 187,625
---------------- --------------- -------------- --------------
NET ASSETS $ - $ 6,403,562 $ - $ 6,403,562
================ =============== -------------- ==============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $ - $ 6,284,777 $ - $ 6,284,777
Undistributed net investment income (loss) - - - -
Accumulated net realized gain (loss) - (1,178,194) - (1,178,194)
Net unrealized appreciation - 1,296,979 - 1,296,979
---------------- --------------- -------------- --------------
Net Assets - $ 6,403,562 $ - $ 6,403,562
================ =============== ============== ==============
Shares of beneficial interest outstanding, $0.01 par value,
300,000,000 shares unauthorized - 375,784 - 375,784
Net assets $ - $ 6,403,562 $ - $ 6,403,562
Net asset value per share $ - $ 17.04 $ - $ 17.04
See Notes to Pro Forma Financial Statements.
Phoenix Mid-Cap Value Fund/FMI Sasco Contrarian Value Fund
Pro Forma Combined Statement of Operations
July 1 2003 through June 30, 2004 (Unaudited)
================ ================ ============== ===============
Phoenix Mid-Cap FMI Sasco Pro Forma
Value Fund Contrarian Value Combined
Fund Adjustments Portfolios
================ ================ ============== ===============
INVESTMENT INCOME
Dividends $ - $ 53,469 $ $ 53,469
Interest - 3,198 3,198
--------------- ---------------- --------------- ----------------
Total investment income - 56,667 - 56,667
--------------- ---------------- --------------- -----------------
EXPENSES
Management fee - 45,830 (10,707) 35,123
Service fees, Class A - - 11,457 11,457
Distribution and service fees, Class C - - 1,000 1,000
Financial agent fee - - 36,502 36,502
Administration fee - 12,860 (12,860) -
Transfer agent fee - 14,448 25,552 40,000
Registration fee - 8,862 24,629 33,491
Printing - 1,952 10,048 12,000
Professional - 28,488 4,832 33,320
Custodian - 8,350 6,750 15,100
Trustees - 3,600 24,960 28,560
Miscellaneous - 2,154 7,546 9,700
--------------- ---------------- -------------- ---------------
Total expenses - 126,544 129,709 256,253
Less expenses borne by investment advisor (66,965) (130,001) (196,966)
--------------- ---------------- -------------- --------------
Net expenses - 59,579 (292) 59,287
--------------- ---------------- -------------- ---------------
NET INVESTMENT INCOME (LOSS) - (2,912) 292 (2,620)
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on securities - 696,164 - 696,164
Net change in unrealized appreciation
(depreciation) on investments - 803,649 - 803,649
--------------- ---------------- -------------- ---------------
Net gain (loss) on investments - 1,499,813 - 1,499,813
--------------- ---------------- -------------- ---------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ - $ 1,496,901 $ 292 $ 1,497,193
=============== ================ ============== ===============
Adjustments:
See Notes to Pro Forma Financial Statements.
PHOENIX MID-CAP VALUE FUND/FMI SASCO CONTRARIAN VALUE FUND
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
JUNE 30, 2004 (UNAUDITED)
1. BASIS OF COMBINATION
The unaudited Pro Forma Combined Portfolio of Investments, Pro Forma Combined
Statement of Assets and Liabilities and Pro Forma Combined Statement of
Operations give effect to the proposed merger of the FMI Sasco Contrarian Value
Fund ("FMI Sasco") into the Phoenix Mid-Cap Fund ("Mid-Cap"). The proposed
merger will be accounted for by the method of accounting for tax-free mergers of
investment companies. The merger provides for the transfer of all of the assets
of FMI Sasco to Mid-Cap and the subsequent liquidation of FMI Sasco. The
accounting survivor in the proposed merger will be FMI Sasco and the legal
survivor in the proposed merger will be Mid-Cap. This is because the Surviving
Fund will invest in a style that is similar to the way in which FMI Sasco is
currently operated (including hedging and investment in debt securities).
The pro forma combined statements should be read in conjunction with the
historical financial statements of the constituent fund and the notes thereto
incorporated by reference in the Registration Statement filed on Form N-14. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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.
FMI Sasco and Mid-Cap are both, open-end, management investment companies
registered under the Investment Company Act of 1940, as amended.
2. SHARES OF BENEFICIAL INTEREST
The Pro Forma net asset value per share assumes the issuance of additional
shares of Mid-Cap which would have been issued at June 30, 2004 in connection
with the proposed reorganization. The amount of additional shares assumed to be
issued was calculated based on the net assets, as of June 30, 2004, of FMI Sasco
of $6,403,562 and the net asset value of FMI Sasco of $17.04. 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 are based on the expected expense schedule of
Mid-Cap as of June 30, 2004, the actual expenses of FMI Sasco and the combined
Fund, with certain expenses adjusted to reflect the expected expenses of the
combined entity. The investment advisory and financial agent fees have been
calculated for the combined Fund based on the fee schedule to be in effect for
Mid-Cap at the combined level of average net assets for the period ended June
30, 2004.
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. Certain foreign common
stocks may be fair valued in cases where closing prices are not readily
available or are deemed not reflective of readily available market prices. For
example, significant events (such as movement in the U.S. securities market, or
other regional and local developments) may occur between the time that foreign
markets close (where the security is principally traded) and the time that the
Fund calculates its net asset value (generally, the close of the NYSE) that may
impact the value of securities traded in these foreign markets. In these cases,
information from an external vendor may be utilized to adjust closing market
prices of certain foreign common stocks to reflect their fair value. Because the
frequency of significant events is not predictable, fair valuation of certain
foreign common stocks may occur on a frequent basis.
5. COMPLIANCE
As of October 8, 2004, all the securities held by the Merging Series would
comply with the compliance guidelines, investment restrictions and
diversification requirements under the Investment Company Act of 1940, as
amended. The Surviving Series has elected to be taxed as a "regulated investment
company" under the requirements of Subchapter M of the Internal Revenue Code
("IRC"). After the acquisition, the Surviving Series intends to continue to
qualify as a regulated investment company by complying with the provisions
available to certain investment companies, as defined in applicable sections of
the IRC, and to make distributions of taxable income sufficient to relieve it
from all, or substantially all, Federal income taxes.
6. FEDERAL INCOME TAX INFORMATION
The Funds have capital loss carryovers as of June 30, 2004, which may be used to
offset future capital gains, as follows:
Acquiring Fund Target fund
Phoenix Mid-Cap FMI-Sasco Contrarian
Expiration Date Value Fund Value Fund
June 30, 2008 $ -- $1,056,844
June 30, 2011 -- 14,334
------------ -----------
Total $ -- $1,071,178
============ ===========
The Funds have no deferred post-October losses.
The Funds may not realize the benefit of these losses to the extent each Fund
does not realize gains on investments prior to the expiration of the capital
loss carryover.
PART C
PHOENIX EQUITY TRUST
(formerly Phoenix Aberdeen Worldwide Opportunities Fund)
PART C
OTHER INFORMATION
Item 15. Indemnification
The Agreement and Declaration of Trust dated August 17, 2000 and the
Bylaws of the Registrant provide that no trustee or officer will be indemnified
against any liability to which the Registrant would otherwise be subject by
reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties. The Management Agreement, Underwriting
Agreement, Custody Agreement and Transfer Agency Agreement each provides that
the Trust will indemnify the other party (or parties, as the case may be) to the
agreement for certain losses.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "Act"), may be available to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 16. Exhibits
(1) Agreement and Declaration of Trust of the Registrant, dated August
17, 2000, filed via EDGAR with Post-Effective Amendment No. 69 (File
No. 002-16590) on October 30, 2000 and incorporated herein by
reference.
(2) Bylaws of the Registrant filed via EDGAR with Post-Effective
Amendment No. 69 (File No. 002-16590) on October 30, 2000 and
incorporated herein by reference.
(3) Not Applicable.
(4) Agreement and Plan of Reorganization (included as Exhibit 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 and Registrant's Bylaws
referenced in Exhibit 2 above.
(6)(a) Amended and Restated Investment Advisory Agreement between
Registrant and Phoenix Investment Counsel, Inc. dated November 20,
2002, as filed via EDGAR on Form N-1A on October 28, 2003 with
Post-Effective Amendment No. 74 (File No. 002-16590) and incorporated
herein by reference.
(6)(b) Subadvisory Agreement between Phoenix Investment Counsel, Inc. and
Aberdeen Fund Managers, Inc. dated October 27, 1998, as filed via
EDGAR on Form N-1A on December 15, 1998 with Post-Effective Amendment
No. 66 (File No. 002-16590) and incorporated herein by reference.
C-1
(6)(c) Amendment to Sub-Advisory Agreement between Phoenix Investment
Counsel, Inc. and Aberdeen Fund Managers, Inc. dated November 20,
2002 as filed via EDGAR on Form N-1A on October 28, 2003 with
Post-Effective Amendment No. 74 (File No. 002-16590) and incorporated
herein by reference.
(7)(a) Underwriting Agreement between Registrant and Phoenix Equity
Planning Corporation dated November 19, 1997, as filed via EDGAR on
Form N-1A on October 6, 1998 with Post-Effective Amendment No. 64
(File No. 002-16590) and herein incorporated by reference.
(7)(b) Updated Form of Sales Agreement between Phoenix Equity Planning
Corporation and dealers, as filed via EDGAR on Form N-1A on October
28, 2003 with Post-Effective Amendment No. 74 (File No. 002-16590)
and incorporated herein by reference.
(8) Not Applicable.
(9) Custody Agreement between Registrant and Brown Brothers Harriman &
Co., dated August 11, 1994, filed via EDGAR on October 24, 1997 on
Form N-1A with Post-Effective Amendment No. 63 (File No. 002-16590)
and incorporated herein by reference.
(10)(a) Amended and Restated Distribution Plan Pursuant to Rule 12b-1 for
Class A Shares as filed via EDGAR on Form N-1A (File No. 002-16590)
on October 24, 1997 with Post-Effective Amendment No. 63 and
incorporated herein by reference.
(10)(b) Distribution Plan Pursuant to Rule 12b-1 for Class B Shares as filed
via EDGAR on Form N-1A (File No. 002-16590) on August 7, 2000 with
Post-Effective Amendment No. 68 and incorporated herein by reference.
(10)(c) Distribution Plan Pursuant to Rule 12b-1 for Class C Shares as filed
via EDGAR Form N-1A (File No. 002-16590) on August 7, 2000 with
Post-Effective Amendment No. 68 and incorporated herein by reference.
(10)(d) First Amendment of Phoenix Aberdeen Worldwide Opportunities Fund to
the Amended and Restated Distribution Plan for Class A Shares, as
filed via EDGAR on Form N-1A (File No. 002-16590) on October 28, 2003
with Post-Effective Amendment No. 74 and incorporated herein by
reference.
(10)(e) Fourth Amended and Restated Plan Pursuant to Rule 18f-3 effective
July 1, 2003, filed via EDGAR on Form N-1A (File No. 002-16590) on
October 28, 2003 with Post-Effective Amendment No. 74 and
incorporated herein by reference.
(11) Opinion and Consent of Matthew A. Swendiman, Esq. with respect to the
legality of the shares being issued (to be filed by Amendment).
(12) Opinion and Consent of Foley & Lardner LLP with respect to a tax free
reorganization (to be filed by Amendment).
(13)(a). Transfer Agency and Service Agreement between Registrant and Phoenix
Equity Planning Corporation, dated June 1, 1994 as filed via EDGAR
on Form N-1A (File No. 002-16590) with Post-Effective Amendment No.
63 on October 24, 1997 and incorporated herein by reference.
(13)(a)(1) First Amendment to Transfer Agency and Service Agreement between
Registrant and Phoenix Equity Planning Corporation, dated February
28, 2004, (to be filed by Amendment).
C-2
(13)(b) Sub-Transfer Agent Agreement: Sub-Transfer Agency and Service
Agreement between Phoenix Equity Planning Corporation and State
Street Bank and Trust Company, effective June 1, 1994 as filed via
EDGAR on Form N-1A (File No. 002-16590) with Post-Effective Amendment
No. 64 on October 6, 1998 and herein incorporated by reference.
(13)(c) Amended and Restated Financial Agent Agreement between Registrant and
Phoenix Equity Planning Corporation, dated November 19, 1997, as
filed via EDGAR with Form N-1A (File No. 002-16590) with
Post-Effective Amendment No. 64 on October 6, 1998 and herein
incorporated by reference.
(13)(d) First Amendment to the Amended and Restated Financial Agent Agreement
between Registrant and Phoenix Equity Planning Corporation, dated
March 23, 1998, as filed via EDGAR with Form N-1A (File No.
002-16590) with Post-Effective Amendment No. 64 on October 6, 1998
and herein incorporated by reference.
(13)(e) Second Amendment to the Amended and Restated Financial Agent
Agreement between Registrant and Phoenix Equity Planning Corporation,
dated July 31, 1998, as filed via EDGAR with Form N-1A (File No.
002-16590) with Post-Effective Amendment No. 64 on October 6, 1998
and herein incorporated by reference.
(13)(f) Third Amendment to the Amended and Restated Financial Agent Agreement
between Registrant and Phoenix Equity Planning Corporation dated
January 1, 2003 as filed via EDGAR with Form N-1A (File No.
002-16590) with Post-Effective Amendment No. 74 on October 28, 2003
and herein incorporated by reference.
(13)(g) Codes of Ethics of the Fund, the Adviser and the Distributor as filed
via EDGAR on Form N-1A (File No. 002-16590) on August 30, 2002 with
Post-Effective Amendment No. 71and incorporated herein by reference.
(14) Consent of PricewaterhouseCoopers LLP, filed herewith.
(15) Not Applicable.
(16) Powers of Attorney filed via EDGAR with Form N-1A (File No. 002-
16590) on October 28, 2003 with Post-Effective Amendment No. 74 and
incorporated herein by reference. Power of Attorney for Nancy
Curtiss, Treasurer as filed via EDGAR with Form N-1A (File No. 002-
16590) on August 30, 2002 with Post-Effective Amendment No. 71 and
incorporated herein by reference.
(17)(a) Form of Proxy Card for FMI Sasco Contrarian Value Fund, (to be filed
by Amendment).
(17)(b) Current Prospectus of the Phoenix Equity Trust, as filed via EDGAR on
Form N-1A (File No. 002-16590) on October 28, 2003 and dated October
29, 2003 with Post-Effective Amendment No. 74 and incorporated by
reference.
- -------------------
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.
(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
C-3
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-4
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 Hartford and State of Connecticut on the 12th day of August, 2004.
PHOENIX EQUITY TRUST
By:/s/ Philip R. McLoughlin
---------------------------
Name: Philip R. McLoughlin
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 12th day of August, 2004.
Signature Title
- --------- -----
Trustee
- -----------------------------------------
E. Virgil Conway*
/s/ Nancy G. Curtiss Treasurer
- ----------------------------------------- (Principal Financial and Accounting
Nancy G. Curtiss* Officer)
Trustee
- ----------------------------------------
Harry Dalzell-Payne*
Trustee
- ----------------------------------------
Francis E. Jeffries*
Trustee
- ----------------------------------------
Leroy Keith, Jr.*
Trustee
- ----------------------------------------
Marilyn E. LaMarche*
/s/ Philip R. McLoughlin President and Trustee
- ---------------------------------------- (Principal Executive Officer)
Philip R. McLoughlin*
Trustee
- ----------------------------------------
Geraldine M. McNamara*
S-1
Trustee
- ----------------------------------------
Everett L. Morris*
Trustee
- ----------------------------------------
James M. Oates*
Trustee
- ----------------------------------------
Richard E. Segerson*
Trustee
- ----------------------------------------
Lowell P. Weicker, Jr.*
*By /s/ Philip R. McLoughlin
------------------------------
*Philip R. McLoughlin, pursuant to powers of attorney, filed via EDGAR with
Post-Effective Amendment No. 74 on October 28, 2003 and incorporated herein by
reference. Nancy Curtiss, pursuant to power of attorney filed via EDGAR with
Post-Effective Amendment No. 71 on August 30, 2002, and incorporated herein by
reference.
S-2
Index To Exhibits
(14) Consent of PricewaterhouseCoopers LLP