<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
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EUCLID MUTUAL FUNDS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
PRELIMINARY COPY
________________
EUCLID MUTUAL FUNDS
900 THIRD AVENUE, NEW YORK, NEW YORK 10022
January 13, 1999
Dear Fellow Shareholders:
As you may be aware, the financial services industry has seen many
mergers and acquisitions over the last few years. A number of well-known
organizations have recently combined to build stronger companies with greater
resources. These same strategic objectives motivated the pending acquisition of
Euclid Advisors LLC by Phoenix Investment Partners, Ltd. ("Phoenix"). Phoenix
is a 60%-owned subsidiary of Phoenix Home Life Insurance Company. A special
meeting of Shareholders of Euclid Mutual Funds regarding the proposed
acquisition is scheduled for February 25, 1999.
Attached are the Notice and Proxy Statement for the Special Meeting
which describe a number of matters on which you, the Shareholders, are being
asked to vote (i) approval of a new investment management agreement; (ii)
election of Trustees; and (iii) ratification of the selection of independent
public accountants. The Fund's Board unanimously recommends that you approve
these proposals.
The proposed acquisition offers the following opportunities for Euclid
Market Neutral Fund (the "Fund") shareholders:
* Continuity of the Fund's objective, policies, investment
style and portfolio manager.
* No increase in fee rates payable by the Fund.
* Increased distribution capabilities.
* Business synergies between the two organizations, including
increased product diversification, global brand enhancement and
broadened geographic coverage.
Your vote is important. Please take a moment now to sign and return
your proxy card in the enclosed postage-paid envelope. If we do not hear from
you after a reasonable amount of time, you may receive a telephone call from
our proxy solicitor, Shareholder Communications Corporation, reminding you to
vote your shares. You may vote electronically or by touch-tone telephone. If
you have any questions concerning the proposals to be considered at the special
meeting on February 25, 1999, please contact __________________________ at
1-800-___-____. Thank you.
Sincerely,
Eugene J. Glaser
Chairman and President
<PAGE> 3
PRELIMINARY COPY
________________
EUCLID MUTUAL FUNDS
900 THIRD AVENUE, 31ST FLOOR
NEW YORK, NY 10022
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 25, 1999 AND PROXY STATEMENT
January 13, 1999
To the Shareholders:
You are invited to attend a special meeting of shareholders of
the Euclid Market Neutral Fund (the "Fund").
The meeting will be held at the offices of the Fund at 900
Third Avenue, 31st Floor in New York, NY on Thursday, February 25, 1999 at 10:30
a.m., for the following purposes and to transact such other business as may
properly come before the meeting or any adjournment of the meeting:
1. To approve a new investment management agreement with Euclid
Advisors LLC on the same terms as the current agreement.
2. To elect Trustees.
3. To ratify the selection of PricewaterhouseCoopers LLP as
independent accountants for the current fiscal year.
The Board of Trustees has selected the close of business on
January 7, 1999 as the record date for determination of shareholders of the Fund
entitled to notice of and to vote at the meeting.
By Order of the Board of Trustees
Eugene J. Glaser
Chairman and President
<PAGE> 4
PRELIMINARY PROXY STATEMENT
___________________________
[This document speaks as of January 13, 1999 and describes certain matters
which have not yet occurred.]
EUCLID MUTUAL FUNDS
PROXY STATEMENT
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 25, 1999
INTRODUCTION
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Trustees of Euclid Mutual Funds (the
"Board") for voting at the special meeting of shareholders of the Euclid Market
Neutral Fund (the "Fund") to be held at 10:30 a.m. (local time) on Thursday,
February 25, 1999, at the offices of the Fund at 900 Third Avenue, New York, NY
10022 and at any and all adjournments thereof (the "Meeting"), for the purposes
set forth in the accompanying Notice of Special Meeting of Shareholders dated
January 13, 1999.
Euclid Mutual Funds, an open-end, diversified management
investment company organized as a Delaware business trust (the "Trust"), is
authorized to issue shares of beneficial interest in separate series. The only
series is the Fund, which may issue shares in one or more classes. The Fund
issues Class A, Class B, Class C and Class I Shares. Each dollar of net asset
value of the Fund as of the record date is entitled to one vote on each matter
submitted to a vote of the shareholders at the Meeting, and fractional dollar
amounts are entitled to fractional votes. No shares have cumulative voting
rights.
A copy of the Fund's 1998 annual report has been sent to all
shareholders. You may request an additional copy by writing to the Fund at 900
Third Avenue, New York, New York 10022 or by calling 1-800-272-2700.
Each valid proxy will be voted in accordance with your
instructions and as the persons named in the proxy determine on such other
business as may come before the Meeting. If no instructions are given, the proxy
will be voted FOR approval of the new investment management agreement, FOR the
nominees for election as Trustees and FOR the selection of
PricewaterhouseCoopers LLP as independent accountants for the Fund. Shareholders
who execute proxies may revoke them at any time before they are voted, either by
writing to the Fund or in person at the Meeting. Proxies given by telephone or
electronically transmitted instruments may be counted if obtained pursuant to
procedures designed to verify that such instructions have been authorized.
The Board recommends an affirmative vote on all items set
forth in this proxy statement. This proxy statement was first mailed to
shareholders on or about January 13, 1999.
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<PAGE> 5
THE SHAREHOLDERS VOTE UPON THREE ITEMS
Approval of ITEM 1 requires the affirmative vote of a
"majority of the outstanding voting securities" of each Fund. As defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act"), the
term "majority of the outstanding voting securities" for the Fund means: the
lesser of (i) 67% or more of the voting securities of the Fund present at the
meeting if more than 50% of the outstanding shares of the Fund are present in
person or by proxy or (ii) more than 50% of the outstanding shares of the Fund.
Election of each Trustee, ITEM 2, requires a plurality of the votes of all
shares of the Fund. Approval of ITEM 3 requires the affirmative vote of more
than 50% of the votes cast at the meeting (either in person or by proxy).
The Board has fixed the close of business on January 7, 1999
as the record date (the "Record Date") for determining holders of the Funds'
shares entitled to notice of and to vote at the Meeting. Each shareholder will
be entitled to one vote for each dollar of total net asset value of the
shareholder's Fund shares and a fractional vote for each fractional dollar. At
the close of business on December 31, 1998, the following shares were
outstanding:
Total
Class A Class B Class C Class I Fund
Fund Shares Shares Shares Shares Shares
- ---- -------- -------- -------- ------- -------
Euclid Market Neutral
Fund ...............
________________________________________________________________________________
THE REASON FOR THE MEETING
Euclid Advisors LLC (the "Adviser"), a wholly owned subsidiary
of Zweig/Glaser Advisers, is the investment manager for the Fund. Phoenix
Investment Partners, Ltd., a Delaware corporation ("Phoenix") has entered into
an agreement (the "Acquisition Agreement") with the Adviser, Zweig/Glaser
Advisers, Zweig Advisors Inc., Zweig Total Return Advisors, Inc. and Zweig
Securities Corp. (collectively, the "Zweig Group") and the equityholders of the
Zweig Group. Pursuant to the Acquisition Agreement, the Zweig Group will be
acquired by Phoenix (the "Acquisition").
Phoenix is a large, diversified financial services
organization and is a 60 percent owned subsidiary of Phoenix Home Life Mutual
Insurance Company. Through its operating subsidiaries and affiliates, Phoenix
provides a variety of investment products and services to investors throughout
the United States and abroad. Phoenix provides management, administrative and
distribution services for 54 mutual funds, as well as individual and
institutional clients. As of December 31, 1998, Phoenix had over $51 billion in
assets under management. The Phoenix mutual funds are distributed through a
network of broker-dealers, financial planners and investment advisers. Phoenix
is headquartered in Hartford, Connecticut, and its common stock is listed on the
New York Stock Exchange.
3
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Consummation of the Acquisition would constitute an
"assignment," as that term is defined in the Investment Company Act, of the
current investment management agreement with Adviser. As required by the
Investment Company Act, the current investment management agreement provides for
its automatic termination in the event of its assignment. In anticipation of the
acquisition of the Adviser and in order to assure that the Adviser can continue
to serve as investment manager to the Fund, a new investment management
agreement between the Trust and the Adviser ("Management Agreement") is being
proposed for approval by shareholders of the Fund. Except for the effective
dates, the new Management Agreement is on the same terms as the current
Management Agreement. The new Management Agreement is attached hereto as Exhibit
A.
ITEM 1. NEW INVESTMENT MANAGEMENT AGREEMENT
Except for the effective date, the terms of the new Management
Agreement are identical in all material aspects to those of the current
Management Agreement, which is dated April 16, 1998. The following is a summary
of the current and new Management Agreements.
The Adviser acts as investment adviser, conducts and maintains
a continuous review of the Fund's portfolio of securities and investments, and
advises and assists each Fund with respect to the selection, acquisition,
holding and disposal of securities. In so doing, the Adviser shall be guided by
the investment objectives and policies of the Fund as delineated and limited by
the Registration Statement on Form N-1A filed with the Securities and Exchange
Commission (the "SEC"), as amended from time to time, by policies adopted by the
Board and by the provisions of the Investment Company Act and the rules
promulgated thereunder, so that at all times the Fund shall be in compliance
with its policies and the provisions of the Investment Company Act.
In rendering investment management services to the Fund, the
Adviser may employ, retain or otherwise avail itself of the services or
facilities of other persons or organizations, for the purpose of providing
statistical and other factual information, advice regarding economic factors and
trends, advice as to occasional transactions in specific securities or such
other information, advice or assistance as the Adviser may deem necessary,
appropriate or convenient for the discharging of its obligations as investment
manager.
The Adviser is authorized to allocate brokerage and principal
business to firms that provide services or facilities or to cause the Fund to
pay a member of a securities exchange or any other securities broker or dealer
an amount of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer would have
charged for effecting that transaction. Such allocation of brokerage is
permissible if the Adviser or such person determine in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services (as defined in Section 28(e) of the Securities Exchange Act of
1934, as amended (the "1934 Act") provided by such member, broker or dealer,
viewed in terms of either that particular transaction or the Adviser or such
member, broker or dealer's overall responsibilities with respect to the accounts
as to which the Adviser or such member, broker or dealer's exercise investment
discretion.
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<PAGE> 7
In addition, the Adviser keeps the books and financial records
of the Fund and performs such other services as are reasonably incidental to the
foregoing duties. The Adviser assists in the computation of the net asset value
of the shares of the Fund and furnishes to the Fund and its distributor any
statements with respect to the net asset value of the shares of the Fund. The
Adviser also furnishes the Fund with office space reasonably suited to its
operations and with bookkeeping, internal accounting and administrative
services, and permits such of its officers and employees as may be elected as
Trustees or officers of the Fund to serve in the capacities to which they are
elected.
The Fund assumes and pays, or reimburses the Adviser for, all
expenses incurred in the operation of the Fund. The Fund bears the cost of and
pays all interest, taxes, fees and commissions of every kind, expenses of issue,
repurchase or redemption of shares, expenses of registering or qualifying shares
for sale, insurance, association membership dues, all charges of custodians
(including fees as custodian, escrow agent, for keeping books and performing
portfolio valuations), transfer agents, registrars, dividend disbursing agents,
independent auditors and legal counsel, expenses of preparing, printing and
distributing prospectuses and all proxy materials, reports and notices to
shareholders, expenses of distribution of shares in accordance with a plan
adopted pursuant to Rule 12b-1 under the Investment Company Act, out-of-pocket
expenses of the Trustees and fees of Trustees who are not "interested persons",
and all other costs incident to the Trust's existence.
As compensation for management services, the Fund pays the
Adviser, with respect to the Class A, Class B, Class C and Class I shares of the
Fund a monthly management fee at the annual rate of 1.50% of the average daily
net assets of the Fund.
The Adviser and its affiliates may execute brokerage
transactions for the Fund and charge brokerage commissions and make a profit
from effecting those transactions, provided such payments to the Adviser and its
affiliates are reviewed periodically by the Board as required by the 1940 Act.
The Adviser is liable for its own acts and omissions caused by
its willful misfeasance, bad faith or gross negligence in the performance of its
duties or by its reckless disregard of its obligations under the Management
Agreement. The Adviser shall not be liable for the acts and omissions of any
agent employed by it, nor for those of any bank, trust company, broker or other
person with whom, or into whose hands, any monies, shares of the Trust or
securities and investments may be deposited or come, pursuant to the provisions
of the Management Agreement. Subject to the first sentence of this paragraph,
the Adviser shall not be liable for any action taken or omitted on advice,
obtained in good faith, of counsel, provided such counsel is satisfactory to the
Fund.
The Management Agreement may be terminated at any time,
without the payment of any penalty, upon sixty (60) days' written notice. The
Management Agreement automatically terminates in the event of its assignment.
5
<PAGE> 8
For the fiscal period ended October 31, 1998, the Fund paid
investment management fees to the Adviser in the amount of $883,943 before
reimbursement of $52,190 of the Fund's expenses by the Adviser, and the Fund
paid brokerage commissions to Zweig Securities Corp. and its affiliates in the
amount of $832, which represents ___% of that Fund's total brokerage
commissions.
Unless sooner terminated, the new Management Agreement
continues in effect for an initial term ending two years from the date of the
Acquisition, and may continue thereafter from year to year if specifically
approved at least annually by vote of "a majority of the outstanding voting
securities" of the Fund, as defined under the Investment Company Act, or by the
Board, and, in either event, the vote of a majority of the Trustees who are not
"interested persons," cast in person at a meeting called for such purpose.
The Adviser has acted as investment manager for the Fund since
it commenced the public offering of its shares on May 1, 1998. The current
Management Agreement was approved by the initial shareholder of the Fund on
April 22, 1998 and was approved by the Trustees on April 16, 1998.
INFORMATION CONCERNING PHOENIX
The following information concerning Phoenix and the
Acquisition has been provided to the Fund by Phoenix.
Phoenix is a large, diversified financial services
organization and is a 60 percent owned subsidiary of Phoenix Home Life Mutual
Insurance Company. Through its operating subsidiaries and affiliates, Phoenix
provides a variety of investment products and services to investors throughout
the United States and abroad. Phoenix provides management, administrative and
distribution services for 54 mutual funds, as well as individual and
institutional clients. As of December 31, 1998, Phoenix had over $51 billion in
assets under management. The Phoenix mutual funds are distributed through a
network of broker-dealers, financial planners and investment advisers. Phoenix
is headquartered in Hartford, Connecticut, and its common stock is listed on the
New York Stock Exchange, symbol: PXP.
The names, addresses and principal occupations of the
principal executive officers of Phoenix, which is located at 56 Prospect Street,
Hartford, CT 06115, are as follows. The address of each individual, as it
relates to his duties at Phoenix, is the same as that of Phoenix.
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Name and Address Principal Occupation
- ---------------- ---------------------------------------------------
Philip R. McLoughlin....... Chairman of the Board and Chief Executive Officer
of Phoenix since May 1997. Before that, Mr.
McLoughlin was Vice Chairman of the Board and
Chief Executive Officer of Phoenix. He has also
been a Director of Phoenix Home Life since
February 1994 and has been employed by Phoenix
Home Life as Executive Vice-President Investment
since December 1988. In addition, Mr. McLoughlin
serves as President of Phoenix Equity Planning
Corporation ("PEPCO"), Chairman of Phoenix
Investment Counsel, Inc. and Chairman and Chief
Executive Officer of National Securities &
Research Corporation. He also is a member of the
Board of Directors of Duff & Phelps Utilities
Tax-Free Income Inc. and Duff & Phelps Utility and
Corporate Bond Trust, Inc. Mr. McLoughlin also
serves as President and as a Director or Trustee
of the Phoenix Funds, Phoenix Duff & Phelps
Institutional Mutual Funds and Phoenix-Aberdeen
Series Fund. He is also a Director of PM Holdings,
Phoenix Charter Oak Trust Company, The World
Trust, a Luxembourg closed-end fund, The Emerging
World Trust Fund, a Luxembourg closed-end fund,
and of PXRE Corporation, a publicly traded
corporation, and of its wholly owned subsidiary,
PXRE Reinsurance Company.
Calvin J. Pedersen......... A member of the Board of Directors of Phoenix since
1992 and President of Phoenix since July 1993. From
January 1992 to July 1993, Mr. Pedersen served as
an Executive Vice President of Phoenix. Mr.
Pedersen was also an Executive Vice President of
Duff & Phelps, Inc., the former parent of Phoenix's
operating subsidiaries, from 1988 until its
dissolution in 1992. Mr. Pedersen is also President
and Chief Executive Officer of Duff & Phelps
Utilities Income Inc., Duff & Phelps Utilities
Tax-Free Income Inc., and Duff & Phelps Utility and
Corporate Bond Trust Inc. and serves as a Director
or Trustee of the Phoenix Funds, Phoenix Duff &
Phelps Institutional Mutual Funds and
Phoenix-Aberdeen Series Fund.
7
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Name and Address Principal Occupation
- ---------------- -----------------------------------------------------
Michael E. Haylon....... Executive Vice President of Phoenix since November 1,
1995. From February 1993 to November 1, 1995, Mr.
Haylon was Senior Vice President Securities
Investments of Phoenix Home Life. Mr. Haylon is also
President of Phoenix Investment Counsel, Inc.,
Executive Vice President of National Securities &
Research Corporation and Executive Vice President of
the Phoenix Funds, Phoenix Duff & Phelps
Institutional Mutual Funds and Phoenix-Aberdeen
Series Fund. Mr. Haylon also serves as a member of
the Board of Directors of Phoenix Investment Counsel,
Inc., PEPCO and National Securities & Research
Corporation.
John F. Sharry.......... Executive Vice President of Phoenix since January
1998. From 1995 through 1997 Mr. Sharry was Managing
Director, Retail, Phoenix Equity Planning
Corporation. Mr. Sharry is also Executive Vice
President of the Phoenix Funds and Phoenix-Aberdeen
Series Fund. Previously Mr. Sharry was Managing
Director and National Sales Manager of Putnam Funds
from December 1992 through 1994.
Thomas N. Steenburg..... Senior Vice President of Phoenix since January 1999.
From 1995 through 1998 Mr. Steenburg was Vice
President and Counsel of Phoenix, and from 1991
through 1994 he was Counsel to Phoenix Home Life
Mutual Insurance Company. Mr. Steenburg also serves
as General Counsel to Seneca Capital Management LLC
and to Roger Engelmann & Associates, Inc., and as
Executive Vice President of Duff & Phelps Investment
Management Co. Mr. Steenburg serves as Secretary or
Assistant Secretary to each of the Phoenix Funds,
Phoenix-Aberdeen Series Fund, Phoenix Duff & Phelps
Institutional Mutual Funds, Phoenix-Seneca Funds,
Phoenix-Engelmann Funds, Duff & Phelps Utilities
Tax-Free Income Inc. and Duff & Phelps Utility and
Corporate Bond Trust Inc.
William R. Moyer........ Senior Vice President and Chief Financial Officer of
Phoenix since 1995. Mr. Moyer is also the Chief
Financial Officer and a Senior Vice President of
PEPCO, National Securities & Research Corporation and
Phoenix Investment Counsel, Inc. In addition, Mr.
Moyer also serves as Treasurer of National Securities
& Research Corporation and Phoenix Investment
Counsel, Inc. Mr. Moyer also is a Vice President of
the Phoenix-Aberdeen Series Fund and the Phoenix Duff
& Phelps Institutional Mutual Funds.
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INFORMATION CONCERNING THE ACQUISITION
The Adviser, Zweig/Glaser Advisers, Zweig Advisors Inc., Zweig Total
Return Advisors, Inc. and Zweig Securities Corp. (collectively, the "Zweig
Group"), and the equityholders of the Zweig Group entered into an Acquisition
Agreement with Phoenix dated as of December 15, 1998. The Acquisition Agreement
provides that the purchase price for the Zweig Group is to be $135 million,
which is subject to upward and downward price adjustments that could cause the
ultimate purchase price to be as much as $164 million.
The obligation of Phoenix to close the Acquisition is subject to
various conditions and requirements, including filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. Some conditions include
obtaining approvals by the Board and shareholders of the Fund. As a condition of
Phoenix's obligation to close the Acquisition, the Board has approved a new
Management Agreement and a new underwriting agreement, and the shareholders
shall have approved the new Management Agreement.
In addition, pursuant to the Acquisition Agreement, certain employees
of the Adviser, Eugene Glaser, Manager and President, David Katzen, Executive
Vice President and Barry Mandinach, Senior Vice President, have entered into
3-year employment agreements, effective upon the closing of the Acquisition, for
the continuation of their employment. The agreements each provide that the
employee's responsibilities shall be commensurate with his responsibilities
prior to the closing and that he may hold such other positions with the Adviser,
to which he may be elected or appointed during the term of the agreement,
subject to the employee's consent. Each agreement also provides for both salary
and annual incentive compensation, certain benefits, confidentiality provisions,
covenants not to compete and severance payments. Upon consummation of the
Acquisition, Mr. Glaser will sign a five year non competition agreement.
The Board has approved a new underwriting and distribution agreement
with Phoenix Equity Planning Corporation ("PEPCO"), 100 Bright Meadow Boulevard,
P.O. Box 2200, Enfeld, CT 06083, a wholly owned subsidiary of Phoenix, that will
be effective with the closing of the Acquisition. The Investment Company Act
requires such approval because the Acquisition by Phoenix terminates the current
underwriting agreement with Zweig Securities Corp. The new distribution
agreement is on the same terms as the current distribution agreement with Zweig
Securities Corp.
As a condition to the completion of the Acquisition, the composition
of the Board of the Fund is to be reasonably acceptable to Phoenix. See
"Investment Company Act Considerations" below.
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<PAGE> 12
INVESTMENT COMPANY ACT CONSIDERATIONS
Pursuant to Section 15 of the Investment Company Act, the current
Management Agreement between the Trust and the Adviser terminates automatically
upon its assignment, which is deemed to include any change of control of the
investment adviser. Section 15(a) of the Investment Company Act prohibits any
person from serving as an investment adviser to a registered investment company
except pursuant to a written contract that has been approved by the
shareholders. Therefore, in order for the Adviser to be able to provide
investment advisory services to the Fund after the Acquisition, the shareholders
must approve a new Management Agreement.
The Acquisition Agreement specifically commits the Adviser and Phoenix
to comply with the requirements of Section 15(f) of the Investment Company Act
which provides, in pertinent part, that the Adviser, the investment adviser, may
receive an amount or benefit in connection with a sale of the investment adviser
which results in an assignment of a fund's investment advisory contract if (i)
for a period of three years after the sale, at least 75% of the members of the
board of trustees of such fund are independent -- i.e., not "interested persons"
(as defined in the Investment Company Act) -- of the new or old investment
adviser; and (ii) for a two-year period there is no "unfair burden" imposed on
the investment company as a result of the Acquisition. The term "unfair burden"
is defined in Section 15(f) to include any arrangement during the two-year
period after the Acquisition whereby the investment adviser, or any interested
person of any such adviser, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its shareholders (other
than fees for bona fide investment advisory or other services) or from any
person in connection with the purchase or sale of securities or other property
to, from or on behalf of the investment company (other than bona fide ordinary
compensation as principal underwriter for such investment company). In the
Acquisition Agreement, Phoenix has agreed that it would impose no unfair burden
on the Fund as a result of the Acquisition. Phoenix has agreed to indemnify and
hold the Zweig Group and its equityholders harmless from and against and in
respect of any and all losses or damages arising in connection with the
imposition of any unfair burden on the Fund that is caused by acts or conduct
within the control of Phoenix or its affiliates. Also, the Investment Company
Act provides that the nomination and selection of any new or additional
independent Trustees is committed exclusively to the current independent
Trustees.
The new Management Agreement, if approved by the shareholders, will
commence at the closing of the Acquisition. The new Management Agreement will
remain in effect for an initial term of two years and will continue in effect
thereafter with respect to the Fund for successive periods if and so long as
such continuance is specifically approved annually by (a) the Board of Trustees
or (b) a majority vote of the Fund's shareholders, provided that, in either
event, the continuance also is approved by a majority of the Trustees who are
not "interested persons" by vote cast in person at a meeting called for the
purposes of voting on such approval.
As a condition to the completion of the Acquisition, the composition of
the Board of the Trust is to be reasonably acceptable to Phoenix. In order to
comply with Section 16(b) and Section 15(f)(1)(A) of the Investment Company Act,
any vacancy on the Board of an independent
10
<PAGE> 13
Trustee must be filled by a person who is selected and proposed by a majority of
the independent Trustees and who is elected by the shareholders. However, a
vacancy due to death, disqualification or bona fide resignation can be filled by
the Board pursuant to Section 16(a). Further, Rule 12b-1 requires that the
selection and nomination of the independent Trustees are committed to the
discretion of the disinterested Trustees. At this Meeting the shareholders are
being asked to vote on the continuation of the Board, which includes two
interested and four independent Trustees. Mr. David Katzen, a current interested
Trustee is not standing for re-election as a Trustee, in order that the Board
might comply with the requirements of Section 15(f)(1)(A) of the Investment
Company Act.
INFORMATION CONCERNING THE ADVISER
The Adviser is a wholly owned subsidiary of Zweig/Glaser Advisers,
which is controlled by Eugene J. Glaser and Dr. Martin E. Zweig. The address of
the Adviser and Zweig Securities Corp., the underwriter for the Trust, is 900
Third Avenue, New York, NY 10022. The names and principal occupations of the
principal executive officers of the Adviser, who are also executive officers
and/or Trustees of the Fund, are set forth below. The address of each, as it
relates to his or her duties with the Adviser or the Fund, is the same as
that of the Adviser.
<TABLE>
<CAPTION>
Position with
Name the Trust Principal Occupation
- ------------------- ------------------------- --------------------------------------------------------
<S> <C> <C>
Eugene J. Glaser Chairman, President, CEO President, Euclid Advisors LLC and Zweig/Glaser
and Trustee Advisers; President and Director, Zweig Securities
Corp.; Director, The Zweig Fund, Inc. and The Zweig
Total Return Fund, Inc.; and Chairman, CEO and Trustee,
Zweig Series Trust
David Katzen Executive Vice President Executive Vice President, Euclid Advisors LLC; Senior
and Trustee Vice President, Zweig/Glaser Advisers; Vice President,
Zweig Advisors Inc.; and Senior Vice President, Zweig
Series Trust
Charles I. Leone First Vice President and First Vice President and Chief Financial Officer,
Assistant Secretary Euclid Advisors LLC and Zweig/Glaser Advisors; First
Vice President, Chief Financial Officer and Assistant
Secretary, Zweig Securities Corp.; and First Vice
President and Assistant Secretary, Zweig Series Trust
Barry M. Mandinach First Vice President Senior Vice President, Euclid Advisors LLC and
Zweig/Glaser Advisers ; Executive Vice President, Zweig
Securities Corp.; and First Vice President, Zweig
Series Trust
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
Position with
Name the Trust Principal Occupation
- ------------------- ------------------------- --------------------------------------------------------
<S> <C> <C>
Alfred J. Ratcliffe First Vice President, First Vice President, Euclid Advisors LLC and
Treasurer, Principal Zweig/Glaser Advisers; First Vice President, Treasurer,
Accounting Officer and Principal Accounting Officer and Assistant Secretary,
Assistant Secretary Zweig Series Trust; and formerly Vice President, The
Bank of New York
Marc Baltuch Secretary First Vice President and Secretary, Euclid Advisors LLC
and Zweig/Glaser Advisers; First Vice President, Chief
Compliance Officer, Secretary and Director, Zweig
Securities Corp.; Chief Compliance Officer and
Assistant Secretary, Zweig Advisors Inc. and Zweig
Total Return Advisors, Inc.; President and Director,
Watermark Securities, Inc.; Assistant Secretary, Gotham
Advisors, Inc.; and Secretary, Zweig Series Trust
Annemarie Gilly First Vice President First Vice President, Euclid Advisors LLC and
Zweig/Glaser Advisers and Zweig Securities Corp.;
Director, The Zweig Fund, Inc. and The Zweig Total
Return Fund, Inc.; and First Vice President, Zweig
Series Trust
</TABLE>
Upon consummation of the Acquisition, it is anticipated that Philip R.
McLoughlin, Chairman and Chief Executive Officer of Phoenix, will become Chief
Executive Officer of the Adviser and Eugene J. Glaser will remain as President
of the Adviser.
BOARD OF TRUSTEES' CONSIDERATION
[It is anticipated that the following has or will take place at the Board
meeting scheduled for January 12, 1999.]
The Board met on December 16, 1998 and on January 12, 1999 to consider
the Acquisition and its anticipated effects upon the Adviser and the investment
management and other services provided to the Fund by the Adviser and its
affiliates. On January 12, 1999, the Board, including a majority of the Trustees
who are not parties to the Management Agreement or interested persons of any
such party, voted to approve the new Management Agreement and to recommend the
agreement to shareholders for their approval. If the Acquisition is not
completed, then the current Management Agreement will continue in effect.
The independent Trustees retain their own counsel on a regular basis to
assist them in evaluating various matters, including the matters discussed in
this proxy statement. The Board of Trustees believes each of the items set forth
in this proxy statement, including the new Management Agreement, is in the best
interests of the Fund and its shareholders.
12
<PAGE> 15
In making its recommendation to the shareholders, the Board exercised
its independent judgment based on a careful review of the proposed changes and
potential benefits. The Trustees' considerations are described in the following
section. The Trustees' approval and recommendation that shareholders approve the
new Management Agreement is based on various considerations, including the
following:
o Portfolio Management Continuity -- No change in the portfolio
management of the Fund is expected to result from the Acquisition.
o Administrative Services -- The administrative services and management
functions for the Fund initially will continue to be performed by the
same personnel. Phoenix has represented that at least the present level
and quality of services for the Fund and the shareholders will be
maintained after the Acquisition.
o Fees -- The aggregate fee rates payable under the new Management
Agreement will be the same rates as payable by the Fund under the
current Management Agreement.
o Increased Distribution Capabilities -- PEPCO will undertake the
distribution of the Fund through its existing relationships with
broker-dealers, financial planners and investment advisers. The PEPCO
marketing and sales organization is significantly larger and more
extensive than the marketing and sales organization of Zweig Securities
Corp., which currently has responsibility for distribution of the
shares of the Fund. The Trustees believe that the potential growth in
size of the Fund that will likely result from these expanded selling
relationships would benefit the Fund and its shareholders. Further, as
the Fund grows, its expense ratio can be expected to decline.
o Benefits from Phoenix Relationship -- Although the Adviser will act
independently of Phoenix in providing investment management services to
the Fund, the experience of Phoenix in managing investment companies
may provide an additional resource of information for the Adviser in
performing its investment management and administration functions.
Moreover, the Adviser expects, over time, to shift certain
administrative functions to Phoenix as part of its larger mutual fund
administrative activities. Phoenix assured the Trustees that the Fund
will share the benefit of such efficiencies.
During its review and deliberations, the Board of Trustees evaluated
the potential benefits, detriments and costs to the Fund and its shareholders of
the proposed Acquisition. The Board received information regarding the new
Management Agreement. The Board received information from Phoenix regarding its
management, history, qualifications and other relevant information, including
portfolio transaction practices. Representatives of Phoenix made presentations
and were available for questions at the Board meetings.
13
<PAGE> 16
The Board also considered the qualifications and capabilities
of the Adviser to continue to serve as the investment manager for the Fund. In
this regard, the Board considered those senior executive officers that have
agreed to continue their employment with the Adviser.
The Adviser's new parent company, Phoenix, through its
predecessors, has been in operation since 1932 and has been in the investment
management business since 1979. Phoenix has extensive experience managing
investment companies. As of December 31, 1998, Phoenix had over $51 billion in
assets under management, including $____ billion in institutional accounts,
$____ billion in closed-end and open-end investment companies, and $____ billion
in the Phoenix Home Life general account.
In evaluating the Acquisition, including the new Management
Agreement with the Adviser, the Board determined that the Fund's shareholders
would likely benefit from the expected retention and the continued availability
of the management expertise of the Adviser, including its senior portfolio
managers. Specifically, the Board deemed it beneficial that Messrs. Glaser,
Katzen and Mandinach, have signed employment contracts, and that Mr. Glaser will
continue as Chairman, President, Chief Executive Officer and a Trustee of the
Fund.
In addition, the Board had extensive discussions with
representatives of Phoenix regarding continuity of management functions and the
level and quality of services affecting the Fund, and considered the
representations by Phoenix of its intention to maintain the continuity of
management functions and the current level and quality of services obtained by
the Fund after the Acquisition. In addition, the Board deemed it beneficial to
shareholders for the Fund to be affiliated with the Phoenix organization for
several reasons, including the greater financial strength of the sponsoring
entity and Phoenix's larger technological infrastructure. Moreover, with the
proposed change in the ownership of the investment manager, the Fund's
shareholders would gain access to a broader array of investment products. The
Board also considered the fact that potential benefits from the larger Phoenix
organization were being obtained with the expected retention of the current
portfolio managers for the Fund, thereby causing no significant changes in the
portfolio management of the Fund.
The Board determined that the proposed Management Agreement
was beneficial and in the best interests of the Fund in that the contractual
rates for investment management fees would be the same as the current fees. The
Board considered the nature and quality of service to be provided, and the
performance of the funds managed by Phoenix.
The Adviser and Phoenix assured the Board that they intend to
comply with Section 15(f) of the Investment Company Act. As discussed above,
Section 15(f) provides a safe harbor for an investment manager to an investment
company or any of its affiliated persons to receive payments in connection with
a change in control of the investment adviser so long as certain conditions are
met. These conditions include that no "unfair burden" be imposed on the Fund for
a two-year period. The Adviser and Phoenix informed the Board that they are not
aware of any express or implied term, condition, arrangement or understanding
that would impose an unfair burden on the Fund as a result
14
<PAGE> 17
of the Acquisition. Phoenix agreed that it and its affiliates will take no
action that would have the effect of imposing an "unfair burden" on the Fund as
a result of the Acquisition.
Based upon its evaluation of the relevant information
presented to them, and in light of their fiduciary duties under federal and
state law, the Board, including all the disinterested Trustees of the Fund,
determined that the transactions contemplated by the Acquisition, including the
new Management Agreement, are advisable and in the best interests of the Fund
and its shareholders. The Board recommends the approval of Item 1 by the
shareholders.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
NEW MANAGEMENT AGREEMENT.
ITEM 2. ELECTION OF THE BOARD OF TRUSTEES
The Board currently consists of six individuals. Eugene J.
Glaser and David Katzen are the only Trustees who are affiliated with the
Adviser or Zweig Securities Corp. David Katzen is not standing for re-election
as a Trustee as discussed under "Investment Company Act Considerations". At a
Board meeting held on January 12, 1999, all of the following five individuals
were nominated by the Board for election by the shareholders as Trustees of the
Fund.
The following table shows certain information regarding the
Trustees who are standing for election and their age, principal occupation or
employment during the past five years and other public memberships. The table
also shows the year in which each nominee was elected to the Board.
Position with the
Name, Address and Age Euclid Mutual Funds Five-Year Business Experience
- --------------------- ------------------- -----------------------------
CLAIRE B. BENENSON Trustee since 1998 Consultant on Financial Conferences;
870 U.N. Plaza Director of The Burnham Fund Inc.;
New York, NY 10017 Trustee of Zweig Series Trust and
(79) Simms Global Fund; Former Director
of Financial Conferences and
Chairman, Department of Business and
Financial Affairs, The New York
School for Social Research and
Former Director of The Zweig Cash
Fund Inc.
15
<PAGE> 18
Position with the
Name, Address and Age Euclid Mutual Funds Five-Year Business Experience
- --------------------- ------------------- -----------------------------
JAMES BALOG Trustee since 1998 Retired; Director and Member of the
2205 N. Southwinds Blvd. Audit, Investment, Stock Option and
Vero Beach, FL 32963 Compensation Committees of
(70) Transatlantic Holdings, Inc.
(reinsurance); Director and Member
of the Executive Committee of Elan,
Plc (pharmaceuticals); Director and
Member of the Executive and
Investment & Credit Committees of
Great West Life and Annuity
Insurance Company; Member of the
Technical Advisory Board of Galen
Partners (health care) and Trustee
of Zweig Series Trust. Former
Director, Chairman of the Audit
Committee and Member of the
Executive Committee of A.L. Pharma,
Inc. (health care); Chairman of 1838
Investment Advisers, L.P. and
Chairman of Lambert Brussels Capital
Corporation (investments).
S. LELAND DILL Trustee since 1998 Retired; Director of Coutts
5070 North Ocean Dr. International (USA) (private
Singer Island, FL 33404 banking); Trustee of BT Portfolios,
(68) BT Investment Fund and Zweig Series
Trust. Former partner of KPMG Peat
Marwick. Former Director of The
Zweig Cash Fund Inc., Coutts Trust
Holdings Limited, Coutts Group and
Vintners International Company, Inc.
(winery).
EUGENE J. GLASER* Chairman and President of the Manager and Euclid
900 Third Avenue Chief Executive Advisers LLC; President and Director
New York, NY 10022 Officer Trustee of the Distributor, Director of The
(58) since 1998 Zweig Fund, Inc. and The Zweig Total
Return Fund, Inc.; Chairman,
President, Chief Executive Officer
and Trustee of Zweig Series Trust;
Former Director of The Zweig Cash
Fund Inc.
DONALD B. ROMANS Trustee since 1998 President of Romans & Company
233 East Wacker Dr. (private investors and financial
Chicago, IL 60601 consultants); Chairman, Merlin
(67) Corp.; Director of the Burnham Fund
Inc.; and Trustee of Zweig Series
Trust. Former Consultant to and
Executive Vice President and Chief
Financial Officer of Bally
Manufacturing Corporation, and
Former Director of The Zweig Cash
Fund, Inc.
- -----------------------
* "Interested Person" as defined under the Investment Company Act.
16
<PAGE> 19
The following table shows the number of shares held at
December 21, 1998 in the Fund by each Trustee:
Claire James S. Leland Eugene Donald
Benenson Balog Dill Glaser Romans
--------- ------- --------- ------ -------
Euclid Market Neutral
Fund ............... -- 4,433 -- 132,072 --
As of December 21, 1998, the Trustees and officers of the Trust, as a group,
owned less than 2% of the Fund.
The Board of Trustees met four times during the calendar year
ended December 31, 1998. Each Trustee attended all of the meetings of the Board.
The Board does not have any committees.
The table below shows, for each Trustee, the total
compensation including reimbursement of expenses paid or accrued by the Zweig
Series Trust and the Euclid Mutual Funds, for each Trustee during the year ended
December 31, 1998.
Aggregate Compensation
and Expense Reimbursement Total
--------------------------- Compensation
Euclid Mutual Zweg Series Paid to the
Name and Position Funds Turst Tustees
- ----------------- -------------- ----------- -----------
James Balog, Trustee ....... $ 5,500 $ 18,000 $ 23,500
Claire B. Benenson, Trustee $ 5,500 $ 18,000 $ 23,500
S. Leland Dill, Trustee .... $ 5,514 $ 19,400 $ 24,914
Eugene J. Glaser*, Chairman,
Chief Executive Officer
and Trustee ............... $ -0- $ -0- $ -0-
Donald B. Romans, Trustee .. $ 5,546 $ 19,567 $ 25,113
_____________
* "Interested Person" as defined in the Investment Company Act.
Those Trustees and officers of the Fund who are affiliated
with the Adviser or Zweig Securities Corp., the distributor of the Fund, are not
separately compensated for their services as Trustees or officers of the Trust.
The Trust currently pays each of its independent Trustees a fee of $2,500 per
year, plus $750 per meeting attended ($500 per phone meeting) and reimburses
their expenses for attendance at meetings. For the year ended December 31, 1998,
the fees and expenses
17
<PAGE> 20
of disinterested Trustees, as a group, were $22,060 from
the Euclid Mutual Funds and $74,967 from the Zweig Series Trust.
Trustees may be removed from office at any meeting of
shareholders by a vote of two-thirds of the outstanding shares of the Trust.
Except as set forth above and as required by the Investment Company Act, the
Trustees shall continue to hold office and may appoint their successors.
As of December 31, 1998, those persons owning beneficially
more than 5% of the outstanding shares of each Fund were those listed in Exhibit
B.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION
OF ALL NOMINEES AS TRUSTEES.
ITEM 3. TO RATIFY THE SELECTION OF INDEPENDENT ACCOUNTANTS
At the Board meeting held on December 16, 1998, the firm of
PricewaterhouseCoopers LLP, 1301 Avenue of the Americas, New York, New York
10019, was selected as independent accountants for the Trust by a vote of the
non-interested Trustees, for the 1999 fiscal year to certify the financial
statements of the Trust. As required by the Investment Company Act, the vote of
the Board is subject to the right of the Fund, by vote of a majority of its
outstanding voting securities at any meeting called for the purpose of voting on
such action, to terminate such employment without penalty.
PricewaterhouseCoopers LLP has advised the Board that it has no direct or
material indirect ownership interest in the Fund.
PricewaterhouseCoopers LLP served as the independent auditors
for the Fund during the most recent fiscal year. Services performed by
PricewaterhouseCoopers LLP during such time have included (i) the audit of
annual financial statements and limited review of unaudited semiannual financial
statements; (ii) assistance and consultation in connection with filings with the
SEC; and (iii) the preparation of federal income tax returns filed on behalf of
the Fund. In recommending the continuation and selection of the Fund's
accountants, the Board reviewed the nature and scope of the services to be
provided (including non-audit services) and whether the performance of such
services would affect the accountants' independence. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Meeting, will be
given the opportunity to make a statement if they so desire and are expected to
be available to respond to appropriate questions.
The ratification of the selection of PricewaterhouseCoopers
LLP as the independent accountants of the Fund requires the affirmative vote of
a majority of votes cast at the Meeting by shareholders.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS.
18
<PAGE> 21
OTHER INFORMATION
SHAREHOLDER MEETING COSTS
The cost of preparing, printing and mailing the enclosed
proxy, accompanying notice and proxy statement and all other costs in connection
with solicitation of proxies related to the required approvals will be paid by
the Adviser and Phoenix, including any additional solicitation made by letter,
telephone or telegraph. In addition to solicitation by mail, certain officers
and representatives of the Fund, officers and employees of the Adviser and
Phoenix and certain financial services firms and their representatives, who will
receive no extra compensation for their services, may solicit proxies by
telephone, telegram or personally. The Adviser and Phoenix may retain a firm to
solicit proxies on behalf of the Board; the fee for which will be borne by the
Adviser and Phoenix.
ANNUAL REPORTS
A copy of the Fund's annual report for the fiscal year ended
October 31, 1998 has been sent to all shareholders of record. You may obtain an
additional copy without charge upon request by writing to the Fund at 900 Third
Avenue, New York, NY 10022 or by calling 1-800-272-2700.
PROPOSALS OF SHAREHOLDERS
Under Delaware law, the Trust is not required to hold an
annual shareholder meeting, but it will hold special meetings as required or
deemed desirable, or upon request by holders of 10% of the shares. Since the
Fund does not hold regular meetings of shareholders, the anticipated date of the
next special shareholder meeting cannot be provided. If an annual meeting is
called, any shareholder who wishes to submit a proposal for consideration at the
meeting should submit the proposal promptly to the Secretary of the Trust. Any
proposal to be considered for submission to shareholders must comply with Rule
14a-8 under the Securities Exchange Act of 1934.
In tallying shareholder votes, abstentions (i.e., shares for
which a proxy is presented, but which abstains from voting on one or more
matters) and "broker non-votes" (i.e., shares held by brokers or nominees for
which proxies are presented but as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote and (ii) the
broker or nominee does not have discretionary voting power on a particular
matter because it is a non-routine matter) will be counted for purposes of
determining whether a quorum is present for the conduct of business at the
Meeting. Broker non-votes do not constitute votes for or against any proposal,
do not constitute an abstention, and will be disregarded in determining votes
cast. Broker non-votes are not likely to be relevant to this meeting because all
three items to be voted upon by the shareholders involve matters that are
considered routine and within the discretion of brokers to vote if no customer
instructions are received.
Proxies given by telephone or electronically transmitted
instruments may be counted if obtained pursuant to procedures designed to verify
that such instructions have been authorized.
19
<PAGE> 22
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Trustees is not aware of any matters that will be
presented for action at the Meeting other than the matters set forth herein.
Should any other matters requiring a vote of shareholders arise, the proxy in
the accompanying form will confer upon the person or persons entitled to vote
the shares represented by such proxy the discretionary authority to vote matters
in accordance with their best judgment.
By Order of the Board of Trustees
Eugene J. Glaser
Chairman and President
January 13, 1999
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
20
<PAGE> 23
EXHIBIT A
---------
EUCLID MUTUAL FUNDS
MANAGEMENT AGREEMENT
March __,1999
EUCLID ADVISORS LLC
900 Third Avenue
New York, New York 10022-4728
Gentlemen:
Euclid Mutual Funds, a Delaware business trust (the "Trust"),
is an investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Trust currently offers shares of one series,
Euclid Market Neutral Fund, with four classes of shares, designated as Class A,
Class B, Class C and Class I shares. In the future the Trust may authorize and
issue other series and other classes of shares.
Each series of the Trust invests and reinvests its assets in a
portfolio of securities and investments. The Trust hereby engages you to act as
its investment manager for each series of the Trust authorized now or in the
future subject to the terms and conditions of this Agreement.
SECTION 1. Investment Management Services.
-------------------------------
You shall use your staff and other facilities to conduct and
maintain a continuous review of each series' portfolio of securities and
investments, and shall advise and assist each series of the Trust with respect
to the selection, acquisition, holding and disposal of securities and
investments. In so doing, you shall be guided by the investment objectives and
policies of each series as delineated and limited in documents filed with the
Securities and Exchange Commission (the "SEC"), as amended from time to time, by
policies adopted by the Board of Trustees of the Trust (the "Board") and by the
provisions of the 1940 Act and the rules promulgated thereunder, so that at all
times the Trust shall be in compliance with its policies and the provisions of
the 1940 Act. The Trust agrees to supply you with copies of all such documents
and to notify you of any changes in its investment objectives, policies and
restrictions.
In rendering services to the Trust pursuant to this Agreement,
you may employ, retain or otherwise avail yourself of the services or facilities
of other persons or organizations for the purpose of providing you or the Trust
with such statistical and other factual information, such advice regarding
economic factors and trends, such advice as to occasional transactions in
specific securities, or such other information, advice or assistance as you may
deem necessary, appropriate or convenient for the discharge of your obligations
under this Agreement or otherwise helpful to the Trust or in the discharge of
your overall responsibilities with respect to the other accounts which you or
your affiliates serve as investment manager.
You and any person performing executive, administrative or
trading functions for the Trust, whose services were made available to the Trust
by you, are specifically authorized to allocate brokerage and principal business
to firms that provide such services or facilities or to cause the Trust to pay a
member of a securities exchange or any other securities broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange or broker or dealer would
have charged for effecting that transaction if you or such person determine in
good faith that such amount of commission is reasonable in relation to the value
of the brokerage and research services (as such services are defined in Section
28(e) of the Securities Exchange Act of 1934, as amended (the "1934 Act"))
provided by such member, broker or dealer, viewed in terms of either that
particular
A-1
<PAGE> 24
transaction or your or such person's over-all responsibilities with
respect to the accounts as to which you or such person exercises investment
discretion.
SECTION 2. Resumes and Reports, etc.
-------------------------
You shall maintain a record of all the investments and
securities which comprise the portfolios of each series of the Trust and shall
furnish to the Board, at its regularly scheduled meetings and at such other
times as the Board may reasonably request, a resume of the portfolios and report
on all matters pertaining to your services as investment manager. In addition,
you shall furnish the Trust with such statistical information reasonably
available to you as the Board shall reasonably request.
SECTION 3. Additional Services to be Furnished.
------------------------------------
You shall maintain the books and financial records of the
Trust and shall perform such other services as are reasonably incidental to the
foregoing duties including supervising the Trust Custodian's recordkeeping. You
shall assist in the computation of the net asset value of the shares of each
class of each series of the Trust (in accordance with the Trust's Prospectus and
the instructions of the Board) and shall furnish to the Trust and its
distributor any statements with respect to the net asset value of each class of
each series of the Trust and the net asset value per share of each class of each
series of the Trust at such times, and in such forms, as the Trust may
prescribe. You shall also furnish the Trust with office space reasonably suited
to its operations and with bookkeeping, internal accounting and administrative
services, and shall permit such of your directors, officers and employees as may
be elected as Trustees or officers of the Trust to serve in the capacities to
which they are elected. All services to be furnished by you under this Agreement
may be furnished through directors, officers or employees of you or your
affiliates.
In acting under this Agreement, you shall be an independent
contractor and shall not be an agent of the Trust. The investment policies, the
administration of its business and affairs and all other acts of the Trust are
and shall at all times be subject to the approval and direction of the Board.
SECTION 4. Multiple Capacities.
--------------------
Nothing in this Agreement shall be deemed to prohibit you or
your affiliates from acting, and being separately compensated for acting, in one
or more capacities on behalf of the Trust including, but not limited to, the
capacities of broker or distributor. The Trust understands that you and your
affiliates may act as investment manager or in other capacities on behalf of
other investment companies and customers. While information and recommendations
you supply to the Trust shall in your judgment be appropriate under the
circumstances and in light of the investment objectives and policies of the
Trust, they may be different from the information and recommendations you supply
to other investment companies and customers. You shall give the Trust equitable
treatment under the circumstances in supplying information, recommendations and
any other services requested of you but you shall not be required to give
preferential treatment to the Trust as compared with the treatment given to any
other investment company or customer. Whenever you shall act in multiple
capacities on behalf of the Trust, you shall maintain the appropriate separate
accounts and records for each such capacity. All information and advice supplied
by you to the Trust hereunder shall be for its own use exclusively.
SECTION 5. Payment of Expenses.
--------------------
You shall assume and pay all of your own costs and expenses
under this Agreement. The Trust shall assume and pay, or reimburse you for, all
expenses incurred in the operation of the Trust (to the extent not specifically
allocated to you hereunder) and, in particular but without limitation, the Trust
shall bear the cost of and pay all interest, taxes, fees and commissions of
every kind, expenses of issue, repurchase or redemption of shares, expenses of
registering or qualifying shares for sale, insurance, association membership
dues, all charges of custodians (including
A-2
<PAGE> 25
fees as custodian, escrow agent, for keeping books and performing portfolio
valuations), transfer agents, registrars, dividend disbursing agents,
independent auditors and legal counsel, expenses of preparing, printing and
distributing prospectuses and all proxy materials, reports and notices to
shareholders, expenses of distribution of shares in accordance with a plan
adopted pursuant to Rule 12b-1 under the 1940 Act, out-of-pocket expenses of
trustees and fees of trustees who are not "interested persons", and all other
costs incident to the Trust's existence.
SECTION 6. Compensation for Services.
--------------------------
Each series of the Trust will pay to you monthly, a management
fee determined daily at the rate set forth below times its net assets.
Euclid Market Neutral Fund 1/365 (1/366 for Leap Years) of 1.50%.
Notwithstanding the foregoing, nothing shall preclude you or
your affiliates from executing brokerage transactions for the Trust, charging
the Trust brokerage commissions therefor and deriving profit therefrom, provided
such payments to you by the Trust are reviewed in connection with each annual
continuation of this Agreement required by the 1940 Act and Section 9 below.
SECTION 7. Liability of the Investment Manager, etc.
-----------------------------------------
You shall be liable for your own acts and omissions caused by
your willful misfeasance, bad faith or gross negligence in the performance of
your duties or by your reckless disregard of your obligations under this
Agreement, and nothing in this Agreement shall protect you against any such
liability to the Trust or its security holders. You shall not be liable for the
acts and omissions of any agent employed by you, nor for those of any bank,
trust company, broker or other person with whom, or into whose hands, any
monies, shares of the Trust or securities and investments may be deposited or
come, pursuant to the provisions of this Agreement. You shall not be liable for
any defect in title of any property acquired, nor for any loss unless it shall
occur through your own willful default. Subject to the first sentence of this
section, you shall not be liable for any action taken or omitted on advice,
obtained in good faith, of counsel, provided such counsel is satisfactory to the
Trust.
SECTION 8. Termination of Agreement, Assignment, etc.
------------------------------------------
This Agreement may be terminated at any time, without the
payment of any penalty, upon sixty (60) days' written notice by the terminating
party to the other party, by you or by the Trust, acting pursuant to a
resolution adopted by its Board or by a vote of shareholders in accordance with
the requirements of the 1940 Act. This Agreement shall automatically terminate
in the event of its assignment. Termination shall not affect rights of the
parties which have accrued prior thereto.
SECTION 9. Duration of Agreement.
----------------------
Unless sooner terminated, this Agreement shall continue in
effect for two years, and thereafter until terminated, provided that the
continuation of this Agreement and the terms thereof are specifically approved
annually in accordance with the requirements of the 1940 Act by a majority of
the Trustees, including a majority of the Trustees who are not "interested
persons" of you or of the Trust, cast in person at a meeting called for the
purpose of voting on such approval.
SECTION 10. Definitions.
------------
The terms "assignment" and "interested person" when used in
this Agreement shall have the meanings given such terms in the 1940 Act and the
rules and regulations thereunder.
A-3
<PAGE> 26
SECTION 11. Obligation of the Trust.
------------------------
The Trust's Agreement and Declaration of Trust is on file with
the Secretary of the State of Delaware and notice is hereby given that this
Agreement is made and executed on behalf of the Trust, and not by the Trustees
or officers of the Trust individually, and the obligations of or arising out of
this Agreement are not binding upon the Trustees, officers or shareholders of
the Trust individually but are binding only upon the assets and property of one
or more classes or series of the Trust.
SECTION 12. Concerning Applicable Provisions of Law, etc.
----------------------------------------------
This Agreement shall be subject to all applicable provisions
of law, including, without limitation, the applicable provisions of the 1940
Act, and, to the extent that any provisions in this Agreement contained conflict
with any such applicable provisions of law, the latter shall control.
SECTION 13. Counterparts.
-------------
This Agreement may be executed by any one or more of the
parties in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
SECTION 14. Effective Date.
---------------
This Agreement shall be effective upon the closing of the
acquisition of the Adviser by Phoenix Investment Partners, Ltd., and after its
initial approval by the Board of Trustees and shareholders in accordance with
the 1940 Act.
Very truly yours,
EUCLID MUTUAL FUNDS
By:___________________________
Name:
Title:
Attest:________________________
Accepted and agreed to this _______ day of ______________ 1999.
EUCLID ADVISORS LLC
By:____________________________
Name:
Title:
Attest:________________________
A-4
<PAGE> 27
EXHIBIT B
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LIST OF 5% SHAREHOLDERS
Name Euclid Market Neutral Fund Percent
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B-1
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EUCLID MUTUAL FUNDS
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 25, 1999
PROXY SOLICITED ON BEHALF OF BOARD OF TRUSTEES
The undersigned shareholder of the Euclid Market Neutral Fund, hereby
appoints EUGENE J. GLASER, Al. Ratcliffe and DAVID KATZEN, and each of them,
with full power and substitution and revocation, as proxies to represent the
undersigned at the Special Meeting of Shareholders of the Fund to be held at the
offices of Zweig Series Trust, located at 900 Third Avenue, New York, New York,
on February 25, 1999 at 10:30 A.M., at any and all adjournments thereof, and
thereat to vote all shares of the Fund which the undersigned would be entitled
to vote, with all powers the undersigned would possess if personally present in
accordance with the instructions on the reverse side of this proxy.
WHEN THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY
WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR APPROVAL OF ALL MATTERS LISTED ON THIS PROXY AND IN THE DISCRETION OF
THE PROXIES WITH RESPECT TO ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE
MEETING AND ANY ADJOURNMENTS THEREOF. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF
THE ACCOMPANYING NOTICE OF SPECIAL MEETING AND PROXY STATEMENT.
(CONTINUED, AND TO BE SIGNED AND DATED ON THE REVERSE SIDE).
PLEASE MARK BOXES [*] OR [X] IN BLUE OR BLACK INK.
1. To approve the new Management Agreement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. GRANTING [ ] WITHHOLDING [ ] authority to vote for the election as
Trustees of all nominees listed below:
Claire B. Benenson, James Balog, S. Leland Dill, Eugene J. Glaser and Donald
B. Romans (To withhold authority to vote for any individual nominee, strike
a line through the nominee's name.)
3. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
In their discretion, on such other matters as may properly come before the
meeting and any adjournments thereof.
Please sign exactly as name or names appear on this
proxy. If stock is held jointly, each holder should
sign. If signing as attorney, trustee, executor,
administrator, custodian, guardian or corporate
officer, please give full title.
Dated: _________________________, 1999
______________________________________
Signature
______________________________________
Signature
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
