AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 29, 1999
REGISTRATION NOS. 333-45675
811-08631
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933 |X|
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 2 |X|
AND/OR
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 4 |X|
(CHECK APPROPRIATE BOX OR BOXES)
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PHOENIX-EUCLID FUNDS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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900 THIRD AVENUE, 31ST FLOOR, NEW YORK, NEW YORK 10022
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(212) 451-1100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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PAMELA S. SINOFSKY
ASSISTANT VICE PRESIDENT AND ASSISTANT COUNSEL
PHOENIX INVESTMENT PARTNERS, LTD.
56 PROSPECT STREET
HARTFORD, CONNECTICUT 06115-0479
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on pursuant to paragraph (b)
|X| 60 days after filing pursuant to paragraph (a)(i)
[ ] on pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE>
PHOENIX-EUCLID FUNDS
Cross Reference Sheet Pursuant to Rule 495(a)
(Under The Securities Act of 1933)
<TABLE>
<CAPTION>
PART A
INFORMATION REQUIRED IN PROSPECTUS
ITEM NUMBER FORM N-1A, PART A PROSPECTUS CAPTION
- ----------------------------- ------------------
<S> <C> <C>
1. Front and Back Cover Pages............................... Cover Page, Back Cover Page
2. Risk/Return Summary: Investments, Risks, Performance..... Investment Risk and Return Summary
3. Risk/Return Summary: Fee Table........................... Fund Expenses
4. Investment Objectives, Principal Investment Strategies,
and Related Risks........................................ Investment Risk and Return Summary,
Additional Investment Techniques
5. Management's Discussion of Fund Performance.............. Performance Tables
6. Management, Organization, and Capital Structure.......... Management of the Fund
7. Shareholder Information.................................. Pricing of Fund Shares; Sales Charges; Your
Account; How to Buy Shares; How to Sell Shares;
Things You Should Know When Selling Shares;
Account Policies; Investor Services; Tax Status of
Distributions
8. Distribution Arrangements................................ Sales Charges
9. Financial Highlights Information......................... Financial Highlights
</TABLE>
<TABLE>
<CAPTION>
PART B
INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
ITEM NUMBER FORM N-1A, PART B STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ----------------------------- -------------------------------------------
<S> <C> <C>
10. Cover Page and Table of Contents......................... Cover Page, Table of Contents
11. Fund History............................................. The Fund
12. Description of the Fund and Its Investment Risks......... Investment Objectives and Policies; Investment
Restrictions
13. Management of the Fund................................... Management of the Fund
14. Control Persons and Principal Holders of Securities...... Management of the Fund
15. Investment Advisory and Other Services................... Services of the Adviser; The Distributor;
Distribution Plans; Other Information
16. Brokerage Allocation and Other Practices................. Portfolio Transactions and Brokerage
17. Capital Stock and Other Securities...................... Other Information
18. Purchase, Redemption, and Pricing of Shares.............. Net Asset Value; How to Buy Shares; Investor
Account Services; Redemption of Shares; Tax
Sheltered Retirement Plans
19. Taxation of the Fund..................................... Dividends, Distributions and Taxes
20. Underwriters............................................. The Distributor
21. Calculation of Performance Data.......................... Performance Information
22. Financial Statements..................................... Financial Statements
</TABLE>
PART C
INFORMATION REQUIRED TO BE INCLUDED IN PART C IS
SET FORTH UNDER THE APPROPRIATE ITEM, SO NUMBERED, IN
PART C OF THIS REGISTRATION STATEMENT.
<PAGE>
TABLE OF CONTENTS
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Phoenix-Euclid Market Neutral Fund
Investment Risk and Return Summary..................... 1
Fund Expenses.......................................... 4
Additional Investment Techniques....................... 5
Management of the Fund.................................. 7
Pricing of Fund Shares.................................. 9
Sales Charges...........................................10
Your Account............................................12
How to Buy Shares.......................................14
How to Sell Shares......................................14
Things You Should Know When Selling Shares..............15
Account Policies........................................16
Investor Services.......................................18
Tax Status of Distributions.............................18
Financial Highlights....................................19
Additional Information..................................22
[arrow] PHOENIX-
EUCLID
FUNDS
<PAGE>
PHOENIX-EUCLID MARKET NEUTRAL FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Euclid Market Neutral Fund has an investment objective to seek long-term
capital appreciation while maintaining minimal portfolio exposure to general
equity market risk. There is no guarantee that the fund will achieve its
objective.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The goal of market neutral investing is to generate returns that are
independent of the direction of the stock market. The fund attempts to
maintain minimal exposure to general market risk by always having both
long and substantial short positions in equity securities. The fund
strives to have long positions in stocks that it believes will
outperform the market and short positions in stocks that it believes
will underperform the market. Under normal circumstances, the fund seeks
to maintain a balance between investments that are expected to benefit
from a general rise in stock prices and investments that are expected to
benefit from a general stock market decline.
[arrow] The fund utilizes proprietary stock selection models that are designed
to predict relative attractiveness of stocks. The models collect
fundamental data such as earnings, dividends, cash flow, revenues, and
book value. The fundamental data is then used to analyze characteristics
such as growth prospects, valuation and momentum. Each stock is then
given a score. The fund strives to profit by purchasing stocks that have
relatively high scores and selling-short stocks that have relatively low
scores.
[arrow] In selecting stocks for fund investment, the fund uses a blended
strategy, investing in both growth and value stocks.
[arrow] In addition to purchasing or selling short individual securities, the
fund may purchase or sell short any type of future or option related to
such investment.
[arrow] The fund seeks a total return greater than the return on 3-month U.S.
Treasury Bills.
[arrow] The fund's turnover rate is expected to be higher than that of other
mutual funds.
The investment objective and policies of the fund may be changed without
shareholder approval, except as explicitly set forth in this prospectus or in
the Statement of Additional Information.
Phoenix-Euclid Market Neutral Fund 1
<PAGE>
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
EQUITY SECURITIES
Although the fund seeks to minimize market risk, it can not be eliminated.
Conditions affecting the overall economy or specific industries or companies in
which the fund invests can be worse than expected. The fund's long positions may
decline in value at the same time that the value of the securities sold short
increases, thereby increasing the potential for losses. As a result, the value
of your shares may decrease.
SHORT SALES
In order to establish a short position in a security, the fund must first borrow
the security from a broker or other institution to complete the sale. The fund
may not always be able to borrow a security, or to close out a short position at
a particular time or at an acceptable price. If the price of the borrowed
security increases between the date of the short sale and the date on which the
fund replaces the security, the fund may experience losses. Potential for loss
on short sales is limited only by the maximum attainable price of the security
less the price at which the security was sold short.
FUTURES AND OPTIONS
Futures and options involve market risk in excess of their value. The use of
futures or options may result in larger losses or smaller gains than otherwise
would be the case. The prices of futures and options and the price movements of
the securities that the future or option is intended to simulate may not
correlate well.
Liquidity of futures and options markets can be adversely effected by market
factors. If the fund cannot close out its futures position, it may be compelled
to continue to make daily cash payments to the broker to meet margin
requirements, thus increasing transaction costs. Generally there are more
speculators in futures and options markets than general securities markets which
can result in price distortions.
2 Phoenix-Euclid Market Neutral Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Euclid Market Neutral Fund. The bar chart shows changes in the
fund's Class A Shares performance from year to year.(1) The table shows how the
fund's average annual returns over the life of the fund compare to those of a
broad-based securities market index. The fund's past performance is not
necessarily an indication of how the fund will perform in the future.
[GRAPHIC OMITTED]
CALENDAR YEAR ANNUAL RETURN(%)
1998
1999
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was ___% (quarter ending
_________________) and the lowest return for a quarter was (___)% (quarter
ending _________________).
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Average Annual Total Returns
(for the periods ending 12/31/99)(1) One Year Life of the Fund(2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A Shares ___% ___%
- -----------------------------------------------------------------------------------------------------------------
Class B Shares ___% --
- -----------------------------------------------------------------------------------------------------------------
Class C Shares ___% --
- -----------------------------------------------------------------------------------------------------------------
Class I Shares ___% --
- -----------------------------------------------------------------------------------------------------------------
3-month Treasury Bill(3) ___% ___%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B Shares.
(2) Since inception May 1, 1998.
(3) The Benchmark is calculated based upon the performance of a 3-month U.S.
Treasury Bill. Part of the return from a market neutral strategy is from
interest on the proceeds from short sales which will approximate the 3-month
Treasury Bill return. Unlike Treasury Bills, which have a fixed rate of return
and are backed by the United States, market neutral investing in the market
neutral funds involves risk of losing your capital.
Phoenix-Euclid Market Neutral Fund 3
<PAGE>
FUND EXPENSES
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
<S> <C> <C> <C> <C>
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 5.50% None None None
Maximum Deferred Sales Charge (load) (as a percentage of
the lesser of the value redeemed or the amount invested) None(b) 5%(c) 1.25%(d) None
Maximum Sales Charge (load) Imposed on Reinvested None None None None
Dividends
Redemption Fee None None None None
Exchange Fee None None None None
--------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 1.50% 1.50% 1.50% 1.50%
Distribution and Service (12b-1) Fees (e) 0.30% 1.00% 1.00% None
Other Expenses:
Dividends on Short Sales 1.54% 1.54% 1.54% 1.54%
Remainder of Other Expenses 0.54% 0.54% 0.54% 0.54%
----- ----- ----- -----
Total Other Expenses 2.08% 2.08% 2.08% 2.08%
TOTAL ANNUAL FUND OPERATING EXPENSES (a) 3.88% 4.58% 4.58% 3.58%
==== ==== ==== ====
</TABLE>
- ----------
(a) The adviser has voluntarily undertaken to limit expenses (exclusive of
taxes, interest, dividends on short sales, brokerage commissions, 12b-1 fees and
extraordinary expenses) until [December 31, 2000] to 2.00% of the fund's average
net assets. Total Annual Fund Operating Expenses, after expense reimbursement
and excluding dividends on short sales, were 2.34 % for Class A Shares, 3.04%
for Class B Shares, 3.04% for Class C Shares, and 2.04% for Class I Shares.
(b) A 1% CDSC is imposed on redemptions within 12 months of purchases of $1
million or more originally purchased without an initial sales charge as
described under "Class A Shares - Reduced Sales Charges" in the Statement of
Additional Information.
(c) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 3% during the
third and fourth years and to 0% after the sixth year.
(d) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(e) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your
4 Phoenix-Euclid Market Neutral Fund
<PAGE>
investment has a 5% return each year and that the fund's operating expenses
remain the same. In the case of Class B Shares, it is assumed that your shares
are converted to Class A after seven years. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $919 $1,669 $2,435 $4,429
- -----------------------------------------------------------------------------------------------------------------
Class B $859 $1,683 $2,414 $4,458
- -----------------------------------------------------------------------------------------------------------------
Class C $584 $1,383 $2,314 $4,677
- -----------------------------------------------------------------------------------------------------------------
Class I $361 $1,097 $1,855 $3,845
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B $459 $1,383 $2,314 $4,458
- -----------------------------------------------------------------------------------------------------------------
Class C $459 $1,383 $2,314 $4,677
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Your actual expenses may be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
reimbursement of expenses over certain levels by the fund's manager. Refer to
the section "Management of the Fund" for information about expense
reimbursement.
ADDITIONAL INVESTMENT TECHNIQUES
- --------------------------------------------------------------------------------
In addition to the Principal Strategies and Risks, Phoenix-Euclid Market Neutral
Fund may engage in the following investment techniques:
MONEY MARKET INSTRUMENTS
To meet margin requirements, redemptions or for investment purposes, the fund
will hold money market instruments including full faith and credit obligations
of the United States, high quality short-term notes and commercial paper.
Phoenix-Euclid Market Neutral Fund 5
<PAGE>
REPURCHASE AGREEMENTS
The funds may invest in repurchase agreements with commercial banks, brokers and
dealers considered by the adviser to be creditworthy. Default or insolvency of
the other party presents a risk to the fund.
FOREIGN INVESTING
The fund may invest in equity securities of foreign issuers if they are
principally traded in U.S. markets and up to 5% of assets may be invested in
securities of issuers that are principally traded outside the United States.
Foreign markets and currencies may not perform as well as U.S. markets.
Political and economic uncertainty in foreign countries as well as less public
information about foreign investments may negatively impact the fund's
portfolio. Dividends and other income payable on foreign securities may be
subject to foreign taxes. Some investments may be made in currencies other than
U.S. dollars that will fluctuate in value as a result of changes in the currency
exchange rate.
ILLIQUID SECURITIES
The fund may invest up to 15% of its net assets in illiquid securities. The
inability of the fund to dispose of such securities in a timely manner and at a
fair price at a time when it might be necessary or advantageous to do so may
harm the fund.
SECURITIES LENDING
The fund may lend securities to broker/dealers and institutions in order to
increase investment returns. If the borrower is unwilling or unable to return
the borrowed securities when due, the fund can suffer losses.
BORROWING
The fund may make temporary borrowings from banks to cover redemptions. If the
fund's performance fails to cover interest and other costs of borrowing, the
value of fund shares could decrease at a rate faster than if the fund had not
borrowed at all.
Please refer to the Statement of Additional Information for more detailed
information about these and other investment techniques of the fund.
6 Phoenix-Euclid Market Neutral Fund
<PAGE>
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
THE ADVISER
Euclid Advisors LLC ("Euclid") is the investment adviser to the fund and is
located at 900 Third Avenue, New York, NY 10022. Euclid may also act as the
investment adviser for other accounts. As of December 31, 1999, Euclid had $___
million in assets under management.
Euclid is a wholly-owned subsidiary of Zweig/Glaser Advisers, LLC which is a
wholly-owned subsidiary of Phoenix Investment Partners, Ltd. ("PXP"), a Delaware
corporation, located at 56 Prospect Street, Hartford, Connecticut 06115. PXP is
a publicly traded independent registered investment advisory firm, and has
served investors for over 70 years. As of December 31, 1999, PXP had over $___
billion in assets under management.
Subject to the direction of the fund's Board of Trustees, Euclid is responsible
for managing the funds' investment program, the general operations and
day-to-day management of the fund. Euclid manages the fund's assets to conform
with the investment policies as described in this prospectus.
The fund pays Euclid a monthly investment management fee that is accrued daily
against the value of the fund's net assets at the annual rate of 1.50%.
The adviser has voluntarily agreed to assume operating expenses of the Market
Neutral Fund (excluding interest, taxes, brokerage commissions, 12b-1 fees, and
extraordinary expenses) until [December 31, 2000] to the extent that such
expenses exceed 0.35% of the average annual net assets of that fund.
During the fund's last fiscal year, the fund paid total management fees of
$1,990,121. The ratio of management fees to average net assets for the fiscal
year ended October 31, 1999 was 1.50%.
PORTFOLIO MANAGEMENT
Sung Chung is the fund's portfolio manager. He serves as Vice President of the
Trust and also of Phoenix-Zweig Trust. Until he assumed the role of portfolio
manager of the fund on January 1, 2000, Mr. Chung, since joining Euclid in June
1999, was responsible for research on the stock selection models used in
managing the fund. Previously, Mr. Chung served as a Vice President for
Mitchell Hutchins Asset Management where he was responsible for managing
indexed, enhanced-indexed, and market neutral products, as well as conducting
quantitative research. Mr. Chung received his B.A. in Political Science from the
University of Pennsylvania and an MBA in Finance from New York University (Stern
School of Business).
PRIOR INVESTMENT PERFORMANCE OF EUCLID
Euclid Advisors LLC has also served as the manager of other accounts. The
performance information shown below is based on a composite of all accounts with
investment objectives, policies and strategies that were substantially similar
to those of the Fund managed by Euclid
Phoenix-Euclid Market Neutral Fund 7
<PAGE>
Advisors LLC or by Euclid Advisors, Inc., the Adviser's predecessor, and
Zweig/Katzen Investors, L.P. (collectively, the "Accounts"). David Katzen was
the portfolio manager for each of the Accounts since inception. The performance
information shown in the tables below has been adjusted to reflect expenses
(without giving effect to any expense waivers or reimbursements) of the
different classes of shares during the Fund's last fiscal year. The information
below should not be considered a prediction of future performance of the Fund.
The Accounts were not registered under the 1940 Act and therefore were not
subject to the diversification and other requirements of the 1940 Act and the
Internal Revenue Code. If the Accounts had been subject to these requirements,
their performance might have been adversely affected. The performance of the
Accounts was computed using a method based on the standards developed by the
Association of Investment Management & Research ("AIMR"), which differs from the
performance standards required by the Securities and Exchange Commission for
mutual funds. Mutual funds compute net asset values every day, while the AIMR
method does not. Therefore, while mutual funds account for cash flows on a daily
basis, they are accounted for on a monthly basis under the AIMR method. As a
result, the performance of the Fund may be higher or lower than the performance
of the Accounts.
An investment in 3-month U.S. Treasury Bills is different from an investment in
the Fund or in the Accounts because Treasury Bills are backed by the full faith
and credit of the United States, have a fixed rate of return and a short
duration, and investors in Treasury Bills do not risk losing capital. It has
been standard for market neutral managers of private accounts, including Euclid,
to use the 3-month Treasury Bill as a benchmark. Traditional benchmarks for
stock funds are not appropriate because market neutral returns are not tied to
the direction of the stock market. Moreover, part of the return from a market
neutral strategy is from interest on the proceeds from short sales, which will
approximate the 3-month Treasury Bill return. Unlike Treasury Bills, however,
please keep in mind that market neutral investing involves risk -- stock prices
are more volatile and there is a risk of losing your capital.
<TABLE>
<CAPTION>
PERFORMANCE OF ACCOUNTS (ADJUSTED FOR FROM
THE FEES AND EXPENSES OF THE DIFFERENT INCEPTION ON
CLASSES OF SHARES OF THE FUND) FOR JANUARY 1, 1990
PERIODS ENDED DECEMBER 31, 1999: ONE YEAR THREE YEARS FIVE YEARS TO DEC. 31, 1999
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A with maximum sales charge
Class A with no sales charge
Class B with CDSC
Class B with no CDSC
Class C with CDSC
Class C with no CDSC
Class I
</TABLE>
Performance of 3-month U.S. Treasury Bills*
*Source: Morningstar, Inc.
The above table is not the performance of the Fund. Giving effect to the expense
limitation described above, the average annual total return of the Accounts for
the one-year, three-year,
8 Phoenix-Euclid Market Neutral Fund
<PAGE>
five-year periods and since inception would have been approximately __% higher
for all classes of shares.
IMPACT OF THE YEAR 2000 ISSUE ON FUND OPERATIONS
The Trustees have directed management to ensure that the systems used by service
providers (Euclid and its affiliates) in support of the funds' operations be
assessed and brought into Year 2000 compliance. Based upon its assessments,
Euclid determined that they would be required to modify or replace portions of
their software so that their computer systems would properly utilize dates
beyond December 31, 1999. As of October 31, 1999, Euclid completed upgrades and
testing for Year 2000 compliance on its mission-critical systems. Euclid has
also identified critical business functions and developed contingency plans.
Euclid believes that the modifications and conversions to new software and
contingency planning will mitigate the Year 2000 issue. However, if the problem
is not fully addressed, the fund may be negatively impacted.
The total cost to become Year 2000 compliant is not an expense of the fund and
is not expected to have a material impact on the operating results of Euclid.
PRICING OF FUND SHARES
- --------------------------------------------------------------------------------
HOW IS THE SHARE PRICE DETERMINED?
The fund calculates a share price for each class of its shares. The share price
is based on the net assets of the fund and the number of outstanding shares. In
general, the fund calculates net asset value by:
[bullet] adding the values of all securities and other assets of the
fund,
[bullet] subtracting liabilities, and
[bullet] dividing by the total number of outstanding shares of the fund.
Asset Value: The fund's investments are valued at market value. If market
quotations are not available, the fund determines a "fair value" for an
investment according to rules and procedures approved by the Trustees. Foreign
and domestic debt securities (other than short-term investments) are valued on
the basis of broker quotations or valuations provided by a pricing service
approved by the Trustees when such prices are believed to reflect the fair value
of such securities. Foreign and domestic equity securities are valued at the
last sale price or, if there has been no sale that day, at the last bid price,
generally. Short-term investments having a remaining maturity of sixty days or
less are valued at amortized cost, which the Trustees have determined
approximates market value.
Phoenix-Euclid Market Neutral Fund 9
<PAGE>
Liabilities: Class specific expenses, distribution fees, service fees and other
liabilities are deducted from the assets of each class. Expenses and liabilities
that are not class specific (such as management fees) are allocated to each
class in proportion to each class' net assets, except where an alternative
allocation can be more fairly made.
Net Asset Value: The liability allocated to a class plus any other expenses are
deducted from the proportionate interest of such class in the assets of the
fund. The resulting amount for each class is then divided by the number of
shares outstanding of that class to produce each class' net asset value per
share.
The net asset value per share of each class of the fund is determined on days
when the New York Stock Exchange (the "NYSE") is open for trading as of the
close of trading (normally 4:00 PM eastern time). The fund will not calculate
its net asset values per share on days when the NYSE is closed for trading.
Trading of securities held by the fund in foreign markets may negatively or
positively impact the value of such securities on days when the fund neither
trades securities nor calculates its net asset values (i.e., weekends and
certain holidays).
AT WHAT PRICE ARE SHARES PURCHASED?
All investments received by the fund's authorized agents prior to the close of
regular trading on the NYSE (normally 4:00 PM eastern time) will be executed
based on that day's net asset value. Shares credited to your account from the
reinvestment of fund distributions will be in full and fractional shares that
are purchased at the closing net asset value on the next business day on which
the fund's net asset value is calculated following the dividend record date.
SALES CHARGES
- --------------------------------------------------------------------------------
WHAT ARE THE CLASSES AND HOW DO THEY DIFFER?
The fund presently offers four classes of shares that have different sales and
distribution charges (see "Fund Expenses" previously in this prospectus). The
fund has adopted distribution and service plans allowed under Rule 12b-1 of the
Investment Company Act of 1940 that authorize the fund to pay distribution and
service fees for the sale of its shares and for services provided to
shareholders.
WHAT ARRANGEMENT IS BEST FOR YOU?
The different classes permit you to choose the method of purchasing shares that
is most beneficial to you. In choosing a class, consider the amount of your
investment, the length of time you expect to hold the shares, whether you decide
to receive distributions in cash or to reinvest them in additional shares, and
any other personal circumstances. Depending upon these considerations, the
accumulated distribution and service fees and contingent deferred sales charges
of one class may be more or less than the initial sales charge and accumulated
10 Phoenix-Euclid Market Neutral Fund
<PAGE>
distribution and service fees of another class of shares bought at the same
time. Because distribution and service fees are paid out of the fund's assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
CLASS A SHARES. If you purchase Class A Shares, you will pay a sales charge at
the time of purchase equal to 5.50% of the offering price (5.82% of the amount
invested). The sales charge may be reduced or waived under certain conditions.
Generally, Class A Shares are not subject to any charges by the fund when
redeemed; however, a 1% CDSC is imposed on redemptions within the first 12
months on purchases of $1 million or more if originally purchased without an
initial sales charge. Class A Shares have lower distribution and service fees
(0.30%) and pay higher dividends than any other class.
CLASS B SHARES. If you purchase Class B Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class B Shares within the first six
years after they are purchased, you will pay a sales charge of up to 5% of your
shares' value. See "Deferred Sales Charge Alternative--Class B and C Shares"
below. This charge declines to 0% over a period of six years and may be waived
under certain conditions. Class B shares have higher distribution and service
fees (1.00%) and pay lower dividends than Class A Shares. Class B Shares
automatically convert to Class A Shares seven years after purchase. Purchase of
Class B Shares may be inappropriate for any investor who may qualify for reduced
sales charges of Class A Shares and anyone who is over 85 years of age. The
underwriter may decline purchases in such situations.
CLASS C SHARES. If you purchase Class C Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class C Shares within the first year
after they are purchased, you will pay a sales charge of 1.25%. See "Deferred
Sales Charge Alternative--Class B and C Shares" below. Class C Shares have the
same distribution and service fees (1.00%) and pay comparable dividends as Class
B Shares. Class C Shares do not convert to any other class of shares of the
fund.
CLASS I SHARES. Class I Shares are only available to persons subject to the
adviser's Code of Ethics relating to securities transactions, to tax-exempt
retirement plans specifically affiliated with the adviser, as well as certain
institutional investors. If you are eligible to purchase and do purchase Class I
Shares, you will pay no sales charge at any time. There are no distribution and
services fees applicable to Class I Shares. Class I Shares are not available in
all states. Please refer to "Alternative Purchase Arrangements" in the Statement
of Additional Information to see if you qualify.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The public offering price of Class A Shares is the net asset value plus a sales
charge that varies depending on the size of your purchase (see "Class A
Shares--Reduced Sales Charges: Combination Purchase Privilege" in the Statement
of Additional Information). Shares purchased based on the automatic reinvestment
of income dividends or capital gains distributions are not subject to any sales
charges. The sales charge is divided between your investment dealer and the
fund's underwriter (Phoenix Equity Planning Corporation or "PEPCO").
Phoenix-Euclid Market Neutral Fund 11
<PAGE>
SALES CHARGE YOU MAY PAY TO PURCHASE CLASS A SHARES
<TABLE>
<CAPTION>
SALES CHARGE AS
A PERCENTAGE OF
----------------------------------------------------
AMOUNT OF NET
TRANSACTION OFFERING AMOUNT
AT OFFERING PRICE PRICE INVESTED
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Under $50,000 5.50% 5.82%
$50,000 but under $100,000 4.75 4.99
$100,000 but under $250,000 3.75 3.90
$250,000 but under $500,000 2.75 2.83
$500,000 but under $1,000,000 1.75 1.78
$1,000,000 or more None None
</TABLE>
DEFERRED SALES CHARGE ALTERNATIVE--CLASS B AND C SHARES
Class B and C Shares are purchased without an initial sales charge; however,
shares sold within a specified time period are subject to a declining contingent
deferred sales charge ("CDSC") at the rates listed below. The sales charge will
be multiplied by the then current market value or the initial cost of the shares
being redeemed, whichever is less. No sales charge will be imposed on increases
in net asset value or on shares purchased through the reinvestment of income
dividends or capital gains distributions. To minimize the sales charge, shares
not subject to any charge will be redeemed first, followed by shares held the
longest time. To calculate the amount of shares owned and time period held, all
Class B Shares purchased in any month are considered purchased on the last day
of the preceding month, and all Class C Shares are considered purchased on the
trade date.
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS B SHARES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR 1 2 3 4 5 6 7
- ----------------------------------------------------------------------------------------------------------------
CDSC 5% 4% 3% 3% 2% 1% 0%
</TABLE>
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS C SHARES
YEAR 1 2+
- --------------------------------------------------------------------------------
CDSC 1.25% 0%
YOUR ACCOUNT
- --------------------------------------------------------------------------------
OPENING AN ACCOUNT
Your financial advisor can assist you with your initial purchase as well as all
phases of your investment program. If you are opening an account by yourself,
please follow the instructions outlined below.
12 Phoenix-Euclid Market Neutral Fund
<PAGE>
STEP 1.
Your first choice will be the initial amount you intend to invest.
Minimum INITIAL investments:
[bullet] $25 for individual retirement accounts, or accounts that use the
systematic exchange privilege, or accounts that use the
Investo-Matic program (see below for more information on the
Investo-Matic program).
[bullet] There is no initial dollar requirement for defined contribution
plans, profit-sharing plans, or employee benefit plans. There is
also no minimum for reinvesting dividends and capital gains into
another account.
[bullet] $500 for all other accounts.
Minimum ADDITIONAL investments:
[bullet] $25 for any account.
[bullet] There is no minimum for defined contribution plans, profit-sharing
plans, or employee benefit plans. There is also no minimum for
reinvesting dividends and capital gains into an existing account.
STEP 2.
Your second choice will be what class of shares to buy. The fund offers Class A,
Class B and Class C Shares for individual investors, as well as Class I Shares
to qualified investors. Each has different sales and distribution charges.
Because all future investments in your account will be made in the share class
you choose when you open your account, you should make your decision carefully.
Your financial advisor can help you pick the share class that makes the most
sense for your situation.
STEP 3.
Your next choice will be how you want to receive any dividends and capital gain
distributions. Your options are:
[bullet] Receive both dividends and capital gain distributions in
additional shares;
[bullet] Receive dividends in additional shares and capital gains in
distributions in cash;
[bullet] Receive dividends in cash and capital gain distributions in
additional shares; or
[bullet] Receive both dividends and capital gain distributions in cash.
No interest will be paid on uncashed distribution checks.
Phoenix-Euclid Market Neutral Fund 13
<PAGE>
<TABLE>
<CAPTION>
HOW TO BUY SHARES
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
TO OPEN AN ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- -----------------------------------------------------------------------------------------------------------------
Complete a New Account Application and send it with a check payable to the
Through the mail fund. Mail them to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301.
- -----------------------------------------------------------------------------------------------------------------
Complete a New Account Application and send it with a check payable to the
Through express delivery fund. Send them to: Boston Financial Data Services, Attn: Phoenix Funds,
66 Brooks Drive, Braintree, MA 02184.
- -----------------------------------------------------------------------------------------------------------------
By Federal Funds wire Call us at (800)243-1574 (press 1, then 0).
----------------------------------------------------------------------------------------------------------------
Complete the appropriate section on the application and send it with your
By Investo-Matic initial investment payable to the fund. Mail them to: State Street Bank,
P.O. Box 8301, Boston, MA 02266-8301.
- -----------------------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You have the right to have the fund buy back shares at the net asset value next
determined after receipt of a redemption order by the fund's Transfer Agent or
an authorized agent. In the case of a Class B or Class C Share redemption, you
will be subject to the applicable deferred sales charge, if any, for such
shares. Subject to certain restrictions, shares may be redeemed by telephone or
in writing. In addition, shares may be sold through securities dealers, brokers
or agents who may charge customary commissions or fees for their services. The
fund does not charge any redemption fees. Payment for shares redeemed is made
within seven days; however, redemption proceeds will not be disbursed until each
check used for purchases of shares has been cleared for payment by your bank,
which may take up to 15 days after receipt of the check.
14 Phoenix-Euclid Market Neutral Fund
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
TO SELL SHARES
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- ---------------------------------------------------------------------------------------------------------------
Send a letter of instruction and any share certificates (if you hold
certificate shares) to: State Street Bank, P.O. Box 8301, Boston, MA
Through the mail 02266-8301. Be sure to include the registered owner's name, fund and
account number, number of shares or dollar value you wish to sell.
- ---------------------------------------------------------------------------------------------------------------
Send a letter of instruction and any share certificates (if you hold
certificate shares) to: Boston Financial Data Services, Attn: Phoenix
Through express delivery Funds, 66 Brooks Drive, Braintree, MA 02184. Be sure to include the
registered owner's name, fund and account number.
- ---------------------------------------------------------------------------------------------------------------
By telephone For sales up to $50,000, requests can be made by calling (800)243-1574.
- ---------------------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
THINGS YOU SHOULD KNOW WHEN SELLING SHARES
- --------------------------------------------------------------------------------
You may realize a taxable gain or loss (for federal income tax purposes) if you
redeem shares of the fund. The fund reserves the right to pay large redemptions
"in-kind" (in securities owned by the fund rather than in cash). Large
redemptions are those over $250,000 or 1% of the fund's net assets. Additional
documentation will be required for redemptions by organizations, fiduciaries, or
retirement plans, or if redemption is requested by anyone but the shareholder(s)
of record. Transfers between broker-dealer "street" accounts are governed by the
accepting broker-dealer. Questions regarding this type of transfer should be
directed to your financial advisor. Redemption requests will not be honored
until all required documents in proper form have been received. To avoid delay
in redemption or transfer, shareholders having questions about specific
requirements should contact the fund's Transfer Agent at (800) 243-1574.
REDEMPTIONS BY MAIL
[arrow] If you are selling shares held individually, jointly, or as custodian
under the Uniform Gifts to Minors Act or Uniform Transfers to Minors
Act.
Send a clear letter of instruction if all of these apply:
[bullet] The proceeds do not exceed $50,000.
[bullet] The proceeds are payable to the registered owner at the address
on record.
Phoenix-Euclid Market Neutral Fund 15
<PAGE>
Send a clear letter of instruction with a signature guarantee when any
of these apply:
[bullet] You are selling more than $50,000 worth of shares.
[bullet] The name or address on the account has changed within the
last 60 days.
[bullet] You want the proceeds to go to a different name or address
than on the account.
[arrow] If you are selling shares held in a corporate or fiduciary account,
please contact the fund's Transfer Agent at (800) 243-1574.
If required, the signature guarantee on your request must be made by an eligible
guarantor institution as defined by the fund's Transfer Agent in accordance with
its signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
SELLING SHARES BY TELEPHONE
The Transfer Agent will use reasonable procedures to confirm that telephone
instructions are genuine. Address and bank account information are verified,
redemption instructions are taped, and all redemptions are confirmed in writing.
The individual investor bears the risk from instructions given by an
unauthorized third party that the Transfer Agent reasonably believed to be
genuine.
The Transfer Agent may modify or terminate the telephone redemption privilege at
any time with 60 days notice to shareholders.
During times of drastic economic or market changes, telephone redemptions may be
difficult to make or temporarily suspended.
ACCOUNT POLICIES
- --------------------------------------------------------------------------------
ACCOUNT REINSTATEMENT PRIVILEGE
For 180 days after you sell your Class A, Class B, or C Shares, you can purchase
Class A Shares of any fund at net asset value, with no sales charge, by
reinvesting all or part of your proceeds, but not more. Send your written
request to State Street Bank, P.O. Box 8301, Boston, MA 02266-8301. You can call
us at (800) 243-1574 for more information.
Please remember, a redemption and reinvestment are considered to be a sale and
purchase for tax-reporting purposes. Class B shareholders who have had the
contingent deferred sales charge waived because they are in the Systematic
Withdrawal Program are not eligible for this reinstatement privilege.
16 Phoenix-Euclid Market Neutral Fund
<PAGE>
REDEMPTION OF SMALL ACCOUNTS
Due to the high cost of maintaining small accounts, if your account balance is
less than $200, you may receive a notice requesting you to bring the balance up
to $200 within 60 days. If you do not, the shares in the account will be sold at
net asset value, and a check will be mailed to the address of record.
EXCHANGE PRIVILEGES
You should read the prospectus carefully before deciding to make an exchange.
You can obtain a prospectus from your financial advisor or by calling us at
(800) 243-1574 or accessing our Web site at www.phoenixinvestments.com.
[bullet] You may exchange shares of the fund for shares of the same
class of any other of the funds of Phoenix-Zweig Trust; e.g.,
Class A for Class A.
[bullet] Exchanges may be made by phone (800) 243-1574 or by mail (State
Street Bank, P.O. Box 8301, Boston, MA 02266-8301).
[bullet] The amount of the exchange must be equal to or greater than the
minimum initial investment required.
[bullet] The exchange of shares is treated as a sale and a purchase for
federal income tax purposes.
[bullet] Because excessive trading can hurt fund performance and harm
other shareholders, the fund reserves the right to temporarily
or permanently end exchange privileges or reject an order from
anyone who appears to be attempting to time the market,
including investors who request more than one exchange in any
30-day period. The fund's underwriter has entered into
agreements with certain market timing firms permitting them to
exchange by telephone. These privileges are limited, and the
fund distributor has the right to reject or suspend them.
No exchanges may currently be made between Phoenix-Euclid Market Neutral Fund
and other Phoenix Funds.
RETIREMENT PLANS
Shares of the fund may be used as investments under the following qualified
prototype retirement plans: traditional IRA, rollover IRA, SEP-IRA, SIMPLE IRA,
Roth IRA, 401(k) plans, profit-sharing, money purchase pension plans, and 403(b)
plans. For more information, call (800) 243-4361.
Phoenix-Euclid Market Neutral Fund 17
<PAGE>
INVESTOR SERVICES
- --------------------------------------------------------------------------------
INVESTO-MATIC is a systematic investment plan that allows you to have a
specified amount automatically deducted from your checking or savings account
and then deposited into your mutual fund account. Just complete the Automatic
Investment Plan section on the application and include a voided check.
SYSTEMATIC EXCHANGE allows you to automatically move money from the fund to one
of the funds of Phoenix-Zweig Trust on a monthly, quarterly, semiannual or
annual basis. Shares of the fund will be exchanged for shares of the same class
of another fund at the interval you select. To sign up, just complete the
Systematic Exchange Section on the application. No exchange privilege is
currently available between Phoenix-Euclid Market Neutral Fund and other Phoenix
Funds.
TELEPHONE EXCHANGE lets you exchange shares of one fund for the same class of
shares of one of the funds of Phoenix-Zweig Trust, using our customer service
telephone service. See the Telephone Exchange Section on the application.
SYSTEMATIC WITHDRAWAL PROGRAM allows you to periodically redeem a portion of
your account on a predetermined monthly, quarterly, semiannual, or annual basis.
Sufficient shares will be redeemed on the 15th of the month at the closing net
asset value so that the payment is made about the 20th of the month. The program
also provides for redemptions on or about the 10th, 15th, or 25th with proceeds
directed through Automated Clearing House (ACH) to your bank. The minimum
withdrawal is $25, and minimum account balance requirements continue.
Shareholders in the program must own fund shares worth at least $5,000 and elect
to have all dividends reinvested.
TAX STATUS OF DISTRIBUTIONS
- --------------------------------------------------------------------------------
The fund plans to make distributions from net investment income annually and to
distribute net realized capital gains, if any, at least annually. Distributions
of short-term capital gains and net investment income are taxable to
shareholders as ordinary income. Long-term capital gains, if any, distributed to
shareholders and which are designated by the fund as capital gains
distributions, are taxable to shareholders as long-term capital gain
distributions regardless of the length of time you have owned your shares.
Unless you elect to receive distributions in cash, dividends and capital gain
distributions are paid in additional shares. All distributions, cash or
additional shares, are subject to federal income tax and may be subject to
state, local and other taxes.
18 Phoenix-Euclid Market Neutral Fund
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
These tables are intended to help you understand the fund's financial
performance since inception. Certain information reflects financial results for
a single fund share. The total returns in the table represent the rate that an
investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, independent accountants. Their report,
together with the fund's financial statements, are included in the fund's most
recent Annual Report, which is available upon request.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------
YEAR ENDED FROM INCEPTION
OCTOBER 31, 1999 5/1/98 TO 10/31/98
---------------- ------------------
<S> <C> <C>
Net asset value, beginning of year $10.84 $11.34
------ ------
Net investment income 0.26 0.09
Net realized and unrealized gain (losses) (0.29) (0.59)
------ ------
Total from investment operations (0.03) (0.50)
Dividends from net investment income (0.13) --
------ ------
Decrease in net asset value (0.16) (0.50)
------ ------
Net asset value, end of year $10.68 $10.84
====== ======
Total return*** (0.40)% (4.41)%**
RATIOS TO AVERAGE NET ASSETS
Expenses (excluding dividends on short sales)
after expense reimbursement 2.34% 2.30%*
Expenses (including dividends on short sales)
after expense reimbursement 3.88% 3.65%*
Expenses (including dividends on short sales
before expense reimbursement 3.88% 3.69%*
Net investment income before
expense reimbursement 1.94% 2.29%*
Net investment income after
expense reimbursement 1.94% 2.33%*
Portfolio turnover rate 453% 216%
Net assets, end of year (in thousands) $20,648 $39,331
</TABLE>
- ----------------
During 1998, the Manager voluntarily reimbursed each Class $.003 per share
(0.04% ratio of expenses to average net assets).
* Annualized
** Not annualized
*** Total return does not consider the effect of any initial or contingent
deferred sales charge.
Phoenix-Euclid Market Neutral Fund 19
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------
YEAR ENDED FROM INCEPTION
OCTOBER 31, 1999 5/1/98 TO 10/31/98
---------------- ------------------
<S> <C> <C>
Net asset value, beginning of year $10.81 $11.34
------ ------
Net investment income 0.15 0.06
Net realized and unrealized gain (losses) (0.26) (0.59)
------ ------
Total from investment operations (0.11) (0.53)
Dividends from net investment income (0.08) --
------ ------
Decrease in net asset value (0.19) (0.53)
------ ------
Net asset value, end of year $10.62 $10.81
====== ======
Total return*** (1.02)% (4.67)%**
RATIOS TO AVERAGE NET ASSETS
Expenses (excluding dividends on short sales)
after expense reimbursement 3.04% 3.00%*
Expenses (including dividends on short sales)
after expense reimbursement 4.58% 4.35%*
Expenses (including dividends on short sales)
before expense reimbursement 4.58% 4.39%*
Net investment income before
expense reimbursement 1.24% 1.59%*
Net investment income after
expense reimbursement 1.24% 1.63%*
Portfolio turnover rate 453% 216%
Net assets, end of year (in thousands) $34,290 $47,794
</TABLE>
<TABLE>
<CAPTION>
CLASS C
-------------------------------------------
YEAR ENDED FROM INCEPTION
OCTOBER 31, 1999 5/1/98 TO 10/31/98
---------------- ------------------
<S> <C> <C>
Net asset value, beginning of year $10.80 $11.34
------ ------
Net investment income 0.19 0.06
Net realized and unrealized gain (losses) (0.31) (0.60)
------ ------
Total from investment operations (0.12) (0.54)
Dividends from net investment income (0.09) --
------ ------
Decrease in net asset value (0.21) (0.54)
------ ------
Net asset value, end of year $10.59 $10.80
====== ======
Total return*** (1.12)% (4.76)%**
RATIOS TO AVERAGE NET ASSETS
Expenses (excluding dividends on short sales)
after expense reimbursement 3.04% 3.00%*
Expenses (including dividends on short sales)
after expense reimbursement 4.58% 4.35%*
Expenses (including dividends on short sales)
before expense reimbursement 4.58% 4.39%*
Net investment income before
expense reimbursement 1.24% 1.59%*
Net investment income after
expense reimbursement 1.24% 1.63%*
Portfolio turnover rate 453% 216%
Net assets, end of year (in thousands) $25,364 $56,874
</TABLE>
- ----------------
During 1998, the Manager voluntarily reimbursed each Class $.003 per share
(0.04% ratio of expenses to average net assets).
* Annualized
** Not annualized
*** Total return does not consider the effect of any initial or contingent
deferred sales charge.
20 Phoenix-Euclid Market Neutral Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS I
-------------------------------------------
YEAR ENDED FROM INCEPTION
OCTOBER 31, 1999 5/1/98 TO 10/31/98
---------------- ------------------
<S> <C> <C>
Net asset value, beginning of year $10.85 $11.34
------ ------
Net investment income 0.28 0.14
Net realized and unrealized gain (losses) (0.28) (0.63)
------ ------
Total from investment operations -- (0.49)
Dividends from net investment income (0.23) --
------ ------
Decrease in net asset value (0.23) (0.49)
------ ------
Net asset value, end of year $10.62 $10.85
====== ======
Total return*** (0.01)% (4.32)%**
RATIOS TO AVERAGE NET ASSETS
Expenses (excluding dividends on short sales)
after expense reimbursement 2.04% 2.00%*
Expenses (including dividends on short sales)
after expense reimbursement 3.58% 3.35%*
Expenses (including dividends on short sales)
before expense reimbursement 3.58% 3.39%*
Net investment income before
expense reimbursement 2.24% 2.59%*
Net investment income after
expense reimbursement 2.24% 2.63%*
Portfolio turnover rate 453% 216%
Net assets, end of year (in thousands) $19,549 $20,846
</TABLE>
- ----------------
During 1998, the Manager voluntarily reimbursed each Class $.003 per share
(0.04% ratio of expenses to average net assets).
* Annualized
** Not annualized
*** Total return does not consider the effect of any initial or contingent
deferred sales charge.
Phoenix-Euclid Market Neutral Fund 21
<PAGE>
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The fund has filed a Statement of Additional Information about the fund, dated
February 28, 2000, with the Securities and Exchange Commission. The Statement
contains more detailed information about the fund. It is incorporated into this
prospectus by reference and is legally part of the prospectus. You may obtain a
free copy of the Statement:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
[arrow] by calling (800) 243-4361.
You may also obtain information about the fund from the Securities and Exchange
Commission:
[arrow] through its internet site (http://www.sec.gov),
[arrow] by visiting its Public Reference Room in Washington, DC or
[arrow] by writing to its Public Reference Section, Washington, DC 20549-6009 (a
fee may be charged).
Information about the operation of the Public Reference Room may be obtained by
calling (800) SEC-0330.
SHAREHOLDER REPORTS
The fund semiannually mails to its shareholders detailed reports containing
information about the fund's investments. The fund's Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the fund's performance from November 1 through October
31. You may request a free copy of the fund's Annual and Semiannual Reports:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
[arrow] by calling (800) 243-4361.
CUSTOMER SERVICE: (800) 243-1574
MARKETING: (800) 243-4361
TELEPHONE ORDERS: (800) 367-5877
TELECOMMUNICATION DEVICE (TTY): (800) 243-1926
<TABLE>
<CAPTION>
<S> <C>
SEC File Nos. 333-45675 and 811-08631 [recycle logo] Printed on recycled paper using soybean ink
</TABLE>
22 Phoenix-Euclid Market Neutral Fund
<PAGE>
EUCLID MARKET NEUTRAL FUND
A SERIES OF
PHOENIX-EUCLID FUNDS
900 Third Avenue
New York, New York 10022-4728
Statement of Additional Information
February 28, 2000
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of
Phoenix-Euclid Funds, dated February 28, 2000, and should be read in conjunction
with it. The Fund's Prospectus may be obtained by calling (800) 243-1574 or by
writing to Phoenix Equity Planning Corporation at 100 Bright Meadow Boulevard,
P.O. Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
PAGE
----
The Fund................................................................ 1
Investment Objectives and Policies...................................... 1
Investment Restrictions................................................. 1
Investment Techniques................................................... 2
Performance Information ................................................ 5
Portfolio Turnover...................................................... 7
Portfolio Transactions and Brokerage.................................... 7
Services of the Adviser................................................. 8
Net Asset Value......................................................... 9
How to Buy Shares....................................................... 9
Alternative Purchase Arrangements....................................... 9
Investor Account Services............................................... 12
How to Redeem Shares.................................................... 14
Dividends, Distributions and Taxes...................................... 15
Tax Sheltered Retirement Plans.......................................... 16
The Distributor......................................................... 16
Distribution Plans...................................................... 18
Management of the Fund ................................................. 20
Additional Information.................................................. 23
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY): (800) 243-1926
PXP 1206 (2/00)
<PAGE>
THE FUND
Phoenix-Euclid Funds (the "Fund") is an open-end diversified management
investment company which was organized under Delaware law in 1998 as a business
trust. The following discussion supplements the description of the Fund's
investment policies and investment techniques in the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objective and policies and permitted investments are
described in the Prospectus under the headings "Investment Risk and Return
Summary" and "Additional Investment Techniques." Set forth below is additional
information with respect to the investment policies and a description of certain
financial instruments and techniques utilized by the Fund. Except as explicitly
set forth in this Statement of Additional Information, the investment objective
and policies of the Fund may be changed without shareholder approval.
INVESTMENT RESTRICTIONS
The first eight investment restrictions set forth below are fundamental
policies of the Fund. These restrictions cannot be changed without a vote of a
majority of the outstanding voting securities of the Fund. However, these
policies may be modified by the Trustees without shareholder approval to the
extent necessary to facilitate the implementation of a master-feeder structure
for the Fund (i.e., a structure under which the Fund acts as a feeder and
invests all of its assets in a single pooled master fund with substantially the
same investment objectives and policies).
FUNDAMENTAL RESTRICTIONS
The following investment restrictions constitute fundamental policies of the
Fund which may be changed only upon approval by the holders of a majority of the
outstanding shares of the Fund, except as stated above with respect to a
master-feeder structure. The Fund cannot:
1. Purchase the securities of issuers conducting their principal business
activities in the same industry if immediately after such purchase the value of
the Fund's investments in such industry would be 25% or more of the value of its
total assets (there is no such limitation with respect to obligations of the
U.S. Government, its agencies or instrumentality's or with respect to
investments in other investment companies complying with such policy).
2. With respect to 75% of the Fund's assets, purchase the securities of any
one issuer if immediately after such purchase (I) more than 5% of the value of
the Fund's total assets would be invested in such issuer or (ii) the Fund would
own more than 10% of the outstanding voting securities of such issuer. (Such
limitations do not apply to securities issued by the U.S. Government, its
agencies or instrumentality's or with respect to investments in other investment
companies complying with such policy).
3. Invest in real estate, provided that this limitation shall not prohibit
the purchase of securities issued by companies that invest in real estate or
interests therein, including real estate investment trusts.
4. Make loans, except that this restriction shall not prohibit the purchase
and holding of a portion of an issue of publicly distributed debt securities,
the lending of portfolio securities (if the aggregate value of the loaned
securities does not at any time exceed one-third of the total assets of the
Fund), or the entry into repurchase agreements.
5. Issue "senior securities," except as permitted under the Investment
Company Act of 1940.
6. Act as an underwriter, except that the Fund technically may be deemed to
be an underwriter in a registration under the Securities Act of 1933 to resell
restricted securities.
7. Invest in physical commodities or commodity contracts: provided that this
limitation shall not prevent the Fund from purchasing and selling futures
contracts and options.
8. Borrow money in excess of 20% of its total assets taken at cost or at
market value, whichever is lower, and then only from banks as a temporary
measure for extraordinary or emergency purposes. If such borrowings exceed 5% of
the Fund's total assets, the Fund will make no further investments until such
borrowing is repaid. (Short sales and related borrowings of securities are not
subject to these restrictions.)
NON-FUNDAMENTAL RESTRICTIONS
The following investment restrictions do not constitute fundamental policies
and may be changed without shareholder approval. The Fund cannot:
1. Maintain a short position, or sell securities short if, when added
together, more than 100% of the value of the Fund's net assets would be (I)
deposited as collateral for the obligation to replace securities borrowed to
effect short sales, and (ii) allocated to segregated accounts in connection with
short sales. Short sales "against the box" are not considered in applying this
limitation.
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<PAGE>
2. Pledge its assets in an amount greater than 10% of the value of its total
assets, and then only to secure borrowings permitted by Restriction 8
(collateral or deposit arrangements with respect to short sales, swaps and other
derivatives, or the deposit of initial or maintenance margin in connection with
futures contracts, will not be deemed to be a pledge of the Fund's assets).
3. Purchase securities on margin, except for such short-term credits as are
necessary for the clearance of transactions and initial and variation margin
payments in connection with transactions in futures and options contracts.
(Short sales may be made in a margin account).
4. Purchase securities which are not readily marketable, such as securities
subject to legal or contractual restrictions on resale or securities which are
otherwise illiquid including repurchase agreements having more than seven days
remaining to maturity, if, as a result, more than 15% of the Fund's net assets
would consist of such securities.
5. Purchase securities of any other investment company, except (I) by
purchase in the open market involving only customary brokers' commissions, (ii)
in connection with a merger, consolidation, reorganization or acquisition of
assets, or (iii) as otherwise permitted by applicable law.
6. Participate on a joint or a joint and several basis in any trading account
in securities. (The bunching of orders for the sale or purchase of portfolio
securities of two or more accounts managed by the Manager or its affiliates
shall not be considered participation in a joint securities trading account).
Limitations apply at the time an investment is made: a subsequent increase or
decrease in percentage resulting from changes in values or net assets will not
be deemed to be an investment that is contrary to these restrictions.
The phrases "shareholder approval" and "vote of a majority of the outstanding
voting securities", as used in the Prospectus or in this Statement of Additional
Information means the affirmative vote of (I) 67% or more of the Fund's voting
securities present at a meeting of shareholders if the holders of more than 50%
of the Fund's outstanding voting securities are present in person or by proxy,
or (ii) more than 50% of the Fund's outstanding voting securities, whichever is
less. Shares of the Fund have voting power based on dollar value and are thus
allocated in proportion to the value of each shareholder's investment on the
record date.
The Board of Trustees, which has the primary responsibility for the overall
management of the Fund, has determined that, while there are certain risks
inherent in using short sales, futures and options, the Adviser has demonstrated
its expertise and ability to use these financial instruments and investment
techniques effectively. The flexibility and potential for enhanced long-term
performance and risk reduction warrant their use, in the opinion of the Board of
Trustees.
INVESTMENT TECHNIQUES
The Fund may utilize the following practices or techniques in pursuing its
investment objectives.
SHORT SALES
The Fund will seek to neutralize the exposure of its long equity positions to
general equity market risk and to realize additional gains through the use of
short sales (selling a security it does not own) in anticipation of a decline in
the value of the security sold short relative to the long positions held by the
Fund. Historically, the Fund has maintained a short position exposure within 5%
of its long position exposure. To complete such a transaction, the Fund must
borrow the security to make delivery to the buyer. The Fund then is obligated to
replace the security borrowed by purchasing it at the market price at the time
of replacement. The price at such time may be more or less than the price at
which the security was sold by the Fund. Until the security is replaced, the
Fund is required to repay the lender any dividends or interest that accrue
during the period of the loan. To borrow the security, the Fund also may be
required to pay a premium, which would increase the cost of the security sold.
The net proceeds of the short sale will be retained by the broker (or by the
Fund's custodian in a special custody account) until the short position is
closed out, to the extent necessary to meet margin requirements. The Fund also
will incur transaction costs in effecting short sales. The amount of any gain
will be decreased, and the amount of any loss increased, by the amount of the
premium, dividends, interest or expenses a Fund may be required to pay in
connection with a short sale. An increase in the value of a security sold short
by the Fund over the price at which it was sold short will result in a loss to
the Fund, and there can be no assurance that the Fund will be able to close out
the position at any particular time or at an acceptable price.
INDEX FUTURES, AND INDEX AND EQUITY OPTIONS
In addition to purchasing or selling short individual securities, the Fund
may purchase or sell short any type of future or option related to its
investments. These may include options not traded on exchanges, futures or
options tied to stock indexes or averages and options on individual securities.
Futures and options also may be used or combined with each other in order to
implement the Fund's overall strategy.
Futures and options tied to a securities index such as the Standard & Poor's
500 Composite Stock Price Index (the "S&P 500") have been used by mutual funds
for many years to manage their portfolios more efficiently. An S&P 500 futures
contract is a contract to buy or sell units of the S&P 500 at a specified future
date at a price agreed upon when the contract is made. A unit
2
<PAGE>
is the value of the S&P 500 from time to time. Entering into a contract to buy
units is commonly referred to as buying or purchasing a contract, or holding a
long position in the S&P 500. Entering into a contract to sell units is commonly
referred to as selling a contract, or holding a short position in the S&P 500.
FUTURES CONTRACTS
In contrast to purchases of a common stock, no price is paid or received by
the Fund upon the purchase of a futures contract. Upon entering into a futures
contract, the Fund will be required to deposit in an account for the futures
broker a specified amount of cash or liquid securities, currently 2% to 5% of
the contract amount. This is known as "initial margin." The type of instruments
that may be deposited as initial margin, and the required amount of initial
margin, are determined by the futures exchange(s) on which the futures are
traded. The nature of initial margin in futures transactions is different from
that of margin in securities transactions in that futures contract margin does
not involve the borrowing of funds by the customer to finance the transactions.
Rather, the initial margin is in the nature of a performance bond or good faith
deposit on the contract which is returned to the Fund upon termination of the
futures contract, assuming all contractual obligations have been satisfied. In
addition to initial margin, the Fund is required to deposit cash, liquid debt
securities, liquid equity securities or cash equivalents in an amount equal to
the notional value of all long futures contracts, less the initial margin
amount, in a segregated account with the custodian to ensure that the use of
such futures contracts is not leveraged. If the value of the securities placed
in the segregated account declines, additional securities, cash or cash
equivalents must be placed in the segregated account so that the value of the
account will at least equal the amount of the Fund's commitments with respect to
such futures contracts. Subsequent payments to and from the broker, called
"variation margin," will be made on a daily basis as the price of the future
fluctuates, a process known as "marking to the market." For example, if the Fund
purchases an S&P 500 future and the S&P 500 has risen, the Fund's corresponding
futures position will increase in value and the Fund will receive from the
broker a variation margin payment equal to that increase in value. Conversely,
when the S&P 500 declines, the Fund's futures position will be less valuable and
the Fund will be required to make a variation margin payment to the broker. When
the Fund terminates a position in a futures contract, a final determination of
variation margin is made, additional cash is paid to or by the Fund, and the
Fund realizes a gain or a loss.
The price of index futures may not correlate perfectly with movement in the
underlying index due to certain market distortions. First, all participants in
the futures market are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transactions, which could distort the
normal relationship between the index and futures markets. Secondly, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market, and as a result the futures market may attract more
speculators than does the securities market which also may cause temporary price
distortions.
Positions in futures contracts may be closed out only if there is a secondary
market for such futures. Although the Fund intends to purchase or sell futures
only where there appears to be an active secondary market, there is no assurance
that a liquid secondary market will exist for any particular contract or at any
particular time. In such event, it may not be possible to close a futures
position and, in the event of adverse price movements, the Fund would continue
to be required to make daily cash payments of maintenance margin.
Generally, a futures contract is terminated by entering into an offsetting
transaction. An offsetting transaction for a futures contract sale is effected
by the Fund entering into a futures contract purchase for the same aggregate
amount of the specific type of financial instrument with the same delivery date.
If the price in the sale exceeds the price in the offsetting purchase, the Fund
immediately is paid the difference and thus realizes a gain. If the offsetting
purchase price exceeds the price in the sale, the Fund pays the difference and
realizes a loss. Similarly, the closing out of a futures contract purchase is
effected by the Fund entering into a futures contract sale. If the offsetting
sale price exceeds the purchase price, the Fund realizes a gain, and if the
purchase price exceeds the offsetting price, the Fund realizes a loss.
The hours of trading for futures contracts may not conform to the hours
during which the underlying securities are traded. To the extent that the
futures contracts markets close after the markets for the underlying securities,
significant price movements can take place in the futures contracts markets that
cannot be reflected in the markets of the underlying securities.
Successful use of futures contracts by the Fund is also subject to the
Manager's ability to correctly predict movements in the direction of prices for
securities. Due to the possibility of price distortion in the futures market and
because of the imperfect correlation between movements in securities prices and
movements in the prices of futures contracts, a correct forecast of securities
prices by the Manager may still not result in a successful hedging transaction
over a short period of time. The Fund does not intend to devote more than 15% of
its assets to margin on futures contracts.
OPTIONS. When the Fund purchases an option, an amount equal to the premium
paid by the Fund for the option (its cost) is recorded initially as an
investment. The amount of the investment is "marked-to-the-market" daily to
reflect the current market value of the option. If the current market value of
an option exceeds the premium paid, the excess represents unrealized
appreciation; conversely, if the premium paid exceeds the current market value,
the excess represents unrealized depreciation.
3
<PAGE>
When the Fund writes an option, an amount equal to the premium received by
the Fund is recorded as an asset and as an offsetting liability. The amount of
the liability is "marked-to-the-market" daily to reflect the current market
value of the option. If an option written by the Fund expires, or the Fund
enters into a closing purchase transaction, the Fund will realize a gain (or a
loss if the cost of a closing transaction exceeds the premium received) and the
liability related to such option will be extinguished.
If the Fund writes a covered call option and is unable to effect a closing
purchase transaction in a secondary market, it will not be able to sell the
underlying security until the option expires and may be required to deliver the
underlying security upon exercise. Although the Fund generally will purchase or
write only those options for which there appears to be an active secondary
market, there is no assurance that a liquid secondary market exists for any
particular option, or at any particular time, and for some options no secondary
market on an exchange may exist. In such event, it might not be possible to
effect closing transactions in particular options, with the result that the Fund
would have to exercise the option in order to realize any profit or would incur
transaction costs on the sale of underlying securities pursuant to the exercise
of put options it had written.
Reasons for the absence of a liquid secondary market include the following:
(a) there may be insufficient interest in trading certain options; (b)
restrictions may be imposed by an exchange on opening transactions or closing
transactions or both; (c) trading halts, suspensions or other restrictions may
be imposed with respect to particular classes or series of options or underlying
securities; (d) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (e) the facilities of an exchange or the Options
Clearing Corporation (the "OCC") may not at all times be adequate to handle
current trading volume; or (f) one or more exchanges might, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that exchange (or in that class or series of options)
would cease to exist, although outstanding options on that exchange that had
been issued by the OCC as a result of trades on that exchange would continue to
be exercisable in accordance with their terms.
In addition, there is no assurance that higher-than-anticipated trading
activity or other unforeseen events might not, at times, render certain of the
facilities of the OCC inadequate, and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders. In the event of a shortage of the underlying securities
deliverable on exercise of a listed option, the OCC has the authority to permit
other, generally comparable securities to be delivered in fulfillment of option
exercise obligations. If the OCC exercises its discretionary authority to allow
such other securities to be delivered, it may also adjust the exercise prices of
the affected options by setting different prices at which otherwise ineligible
securities may be delivered. As an alternative to permitting such substitute
deliveries, the OCC may impose special exercise settlement procedures.
The Fund is required to deposit cash, liquid debt securities, liquid equity
securities or cash equivalents in an amount equal to the exercise price of any
options it has written in a segregated account with the custodian to ensure that
the use of such options is not leveraged. The Fund does not intend to devote
more than 5% of its assets to option premiums.
OPTIONS ON FUTURES CONTRACTS. Options on index futures contracts give the
purchaser the right, in return for the premium paid, to assume a position in an
index futures contract at a specified exercise price at any time during the
period of the option. Upon exercise of the option, the holder of the long
position would assume the underlying futures position and would receive a
variation margin payment of cash or securities approximating the increase in the
value of the holder's option position. If an option is exercised on the last
trading day prior to the expiration date of the futures contract, the settlement
will be made entirely in cash based on the difference between the exercise price
of the option and the final settlement price of the futures contract on the
expiration date.
The ability to establish and close out positions in options on futures
contracts will be subject to the development and maintenance of a liquid
secondary market. It is not certain that such a market will develop. Although
the Fund generally will purchase only those options for which there appears to
be an active secondary market, there is no assurance that a liquid secondary
market on an exchange will exist for any particular option or at any particular
time. In the event no such market exists for particular options, it might not be
possible to effect closing transactions in such options, with the result that
the Fund would have to exercise the options in order to realize any profit.
Compared to the purchase or sale of futures contracts, the purchase of
options on futures contracts may involve less potential risk to the Fund because
the maximum amount at risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the use of an option on a
futures contract would result in a loss to the Fund when the use of a futures
contract would not, such as when there is no movement in the prices of debt
securities. Purchasers of options who fail to exercise their options prior to
the exercise date suffer a loss of the premium paid.
Writing an option on a futures contract involves risks similar to those
arising in the sale of futures contracts.
In purchasing and selling futures contracts and in purchasing options on
futures contracts, the Fund presently intends to comply with rules and
interpretations of the Commodity Futures Trading Commission ("CFTC") under which
it is exempted from regulation as a commodity pool operator. The CFTC
regulations which exempt the Fund from regulation as a commodity pool operator
require, among other things, (i) that futures and related options be used solely
for bona fide hedging purposes, as
4
<PAGE>
defined in CFTC regulations or, alternatively, with respect to each long futures
or options position, the Fund will ensure that the underlying commodity value of
such contract does not exceed the sum of segregated cash or money market
instruments, margin deposits on such contracts, cash proceeds from investments
due in 30 days and accrued profits on such contracts held by the commodity
broker, and (ii) that the Fund not enter into futures and related options for
which the aggregate initial margin and premiums exceed 5% of the fair market
value of the Fund's total assets. There is no other limitation on the percentage
of the Fund's assets that may be invested in futures and related options.
REPURCHASE AGREEMENTS. In a repurchase agreement transaction, the Fund agrees
to purchase and resell, and the seller also agrees to buy back, usually on the
next business day, a security at a fixed time and price which reflects an
agreed-upon market rate. Repurchase agreements may be thought of as loans to the
seller collateralized by the security to be repurchased. The risk to the Fund is
the ability of the seller to pay the agreed-upon sum on the repurchase date. In
the event of default, the repurchase agreement provides that the Fund is
entitled to sell the collateral. If the seller defaults when the value of the
underlying collateral is less than the repurchase price, the Fund could incur a
loss of both principal and interest. The manager monitors the value of the
collateral daily during the term of the repurchase agreement to determine that
the value of the collateral equals or exceeds the agreed-upon repurchase price.
If a defaulting seller were to be subject to a Federal bankruptcy proceeding,
the ability of the Fund to liquidate the collateral could be delayed or impaired
because of certain provisions of the bankruptcy laws. Except for temporary
defensive purposes, the Fund does not intend to invest more than 20% of its
assets in repurchase agreements.
MONEY MARKET INSTRUMENTS
To meet margin requirements, redemptions or for investment purposes, the Fund
will hold a portion of its assets in full faith and credit obligations of the
United States (e.g., U.S. Treasury Bills), high quality short-term notes,
commercial paper or other money market instruments. To be considered "high
quality" such obligations must be rated at least "A-2" or "AA" by Standard &
Poor's ("S&P") or Prime 2 or "Aa" by Moody's Investors Service, Inc.
("Moody's"), issued by companies having an outstanding debt issue rated at least
"AA" by S&P or at least "Aa" by Moody's, or determined by the Manager to be of
comparable quality to any of the foregoing.
SECURITIES OF FOREIGN ISSUERS
The Fund's long and short positions may include equity securities of foreign
issuers if they are principally traded in the markets of the United States and
may also include up to 5% of its assets in securities that are principally
traded outside the United States. Foreign issuers may be subject to different,
and often less comprehensive, accounting, reporting and disclosure standards
than comparable U.S. companies and may be subject to risks related to economic
and political conditions in foreign countries, including possible
nationalization or expropriation of their assets. Securities of foreign issuers
may be less liquid and at times more volatile than securities of comparable U.S.
companies.
ILLIQUID SECURITIES
Illiquid securities may be difficult to sell promptly at an acceptable price,
or may be sold only pursuant to certain legal restrictions. Difficulty in
selling securities may result in a loss or entail expenses not normally
associated with the sale of a portfolio security. No more than 15% of the Fund's
net assets may be invested in illiquid securities.
BORROWING
The Fund may make temporary borrowings from banks to cover redemptions.
Although the Fund does not anticipate the need to borrow, if it should and the
performance of the Fund's investments failed to cover interest and other costs
of borrowing, the net asset value of its shares would decrease faster than if
the Fund had no borrowings outstanding.
PERFORMANCE INFORMATION
The Fund may, from time to time, include performance information in
advertisements, sales literature or reports to shareholders or prospective
investors. Performance information in advertisements and sales literature may be
expressed as a yield of a class and as a total return of any class of the Fund.
Standardized quotations of average annual total return for Class A, Class B,
Class C or Class I shares will be expressed in terms of the average annual
compounded rate of return for a hypothetical investment in either Class A, Class
B, Class C or Class I shares over periods of 1, 5 and 10 years or up to the life
of the class of shares), calculated for each class separately pursuant to the
following formula: P(1+T)n = ERV (where P = a hypothetical initial payment of
$1,000, T = the average annual total return, n = the number of years, and ERV =
the ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period). All total return figures reflect the deduction of a
proportional share of each Class's expenses (on an annual basis), deduction of
the maximum initial sales load in the case of Class A shares and the maximum
contingent deferred sales charge applicable to a complete redemption of the
investment in the case of Class B and Class C shares, and assume that all
dividends and distributions are on Class A, Class B, Class C and Class I shares
reinvested when paid.
The Fund may from time to time include in advertisements containing total
return the ranking of those performance figures relative to such figures for
groups of mutual funds having similar investment objectives as categorized by
ranking services such as
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Age Wave, Inc.; the American Association of Retired Persons; Baron's; Business
Week; CDA/Wiesenberger Investment Companies Service; Dalbar Surveys; Donoghue's
Money Fund Report, Financial Planning; Financial World; Forbes; Fortune;
Fundscope, Hulbert Financial Digest; Ibbotson Associates; Individual Investor,
Investment Advisor, Investors Business Daily; The Liscio Report; Lipper
Analytical Services, Inc.; Micropal Inc.; Money; Morningstar Mutual Funds;
Mutual Fund Forecaster; Mutual Funds Magazine; The National Center for Education
Statistics; The New York Times; The Philatelic Foundation; Smart Money; USA
Today, U.S. News & World Report; The Wall Street Journal; Worth and other
industry publications. The Fund may from time to time illustrate the benefits of
tax deferral by comparing taxable investments to investments made through
tax-deferred retirement plans. The total return may also be used to compare the
performance of the Fund against certain widely acknowledged outside standards or
indices for stock and bond market performance, such as the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500"), Dow Jones Industrial Average,
Europe Australia Far East Index (EAFE), Consumer Price Index, Lehman Brothers
Corporate Index and Lehman Brothers T-Bond Index.
Advertisements, sales literature and other communications may contain
information about the Fund and Adviser's current investment strategies and
management style. Current strategies and style may change to allow the Fund to
respond quickly to changing market and economic conditions. From time to time
the Fund may include specific portfolio holdings or industries, such as IBM or
health care, in such communications. To illustrate components of overall
performance, the Fund may separate its cumulative and average annual returns
into income and capital gains components; or cite separately as a return figure
the equity or bond portion of the Fund's portfolio; or compare the Fund's equity
or bond return future to well-known indices of market performance, including,
but not limited to: the S&P 500, Dow Jones Industrial Average, CS First Boston
High Yield Index and Salomon Brothers Corporate Bond and Government Bond
Indices.
Quotations of yield for the Fund will be based on all investment income per
share earned during a particular 30-day period (including dividends and
interest), less expenses accrued during the period ("net investment income"),
and is computed by dividing net investment income by the value of a share on the
last day of the period according to the following formula:
Yield = 2[(a - b + 1)(6)-1]
-----
c x d
Where a = dividends and interest earned during the period by the Fund,
b = expenses accrued for the period (net of any reimbursements),
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the
period.
For the period ended October 31, 1999, the yield of the Class A Shares, Class
B Shares, Class C Shares and Class I Shares was __%, __%, __% and __%,
respectively.
The manner in which total return is calculated for public use is described
above. The following table illustrates average annual total return for the Fund
for the 1-year period ended October 31, 1999 and for the period since inception
(May 1, 1998) through October 31, 1999:
Average Annual Total Return as of October 31, 1999
<TABLE>
------------------------------------- ----------------------------------- -----------------------------------
<CAPTION>
One Year Since Inception
------------------------------------- ----------------------------------- -----------------------------------
<S> <C> <C>
Class A (5.88)% (6.80)%
------------------------------------- ----------------------------------- -----------------------------------
Class B (5.97)% (6.38)%
------------------------------------- ----------------------------------- -----------------------------------
Class C (2.36)% (3.98)%
------------------------------------- ----------------------------------- -----------------------------------
Class I (0.01)% (2.95)%
------------------------------------- ----------------------------------- -----------------------------------
</TABLE>
Performance information reflects only the performance of a hypothetical
investment in each class during the particular time period on which the
calculations are based. Performance information should be considered in light of
the Fund's investment objectives and policies, characteristics and quality of
the portfolio, and the market condition during the given time period, and should
not be considered as a representation of what may be achieved in the future.
The fund also may quote annual, average annual and annualized total return
and aggregate total return performance data, for both classes of shares of the
Fund, both as a percentage and as a dollar amount based on a hypothetical
$10,000 investment for various periods other than those noted below. Such data
will be computed as described above, except that (1) the rates of return
calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum applicable sales
charge will not be included with respect to annual, annualized or aggregate rate
of return calculations.
6
<PAGE>
PORTFOLIO TURNOVER
Portfolio turnover is calculated by dividing the lesser of purchases or sales
of portfolio securities during the fiscal year by the monthly average of the
value of the Fund's securities (excluding from the computation all securities,
including options, with maturities at the time of acquisition of one year or
less). The adviser does not usually consider the length of time the Fund has
held a position when making investment decisions. The Fund's turnover rate is
expected to be higher than that of other mutual Funds (a portfolio turnover rate
in excess of 100% may be deemed to be high) and will vary significantly from
time to time depending on the volatility of economic and market conditions.
Although the rate of portfolio turnover was significantly higher for its initial
six months of operations, it is anticipated that the annual portfolio turnover
rate of the Fund may be approximately 200% under normal circumstances. Short
sales and associated closing transactions are not included in portfolio turnover
because there is no intention to maintain the short position for more than one
year. It is, however, impossible to predict portfolio turnover in future years.
Portfolio turnover may result in realization of taxable capital gains, and
generally involves some expense, including brokerage costs. To the extent
portfolio turnover results in the realization of net short-term capital gains,
such gains ordinarily are taxed to shareholders at ordinary income tax rates.
Historical annual rates of portfolio turnover for the Fund are set forth in the
prospectus under the heading "Financial Highlights."
PORTFOLIO TRANSACTIONS AND BROKERAGE
The current Distributor, Phoenix Equity Planning Corporation ("Equity
Planning"), began distribution activities as of March 1, 1999. No principal
transactions are effected with Equity Planning. The prior Distributor for the
Fund was PXP Securities Corp., formerly Zweig Securities Corp., an affiliate of
Equity Planning. Officers and Trustees of the Fund and officers of the Adviser
who are also officers or Directors of PXP Securities Corp. or its affiliates
receive indirect benefits from the Fund as a result of its usual and customary
brokerage commissions which PXP Securities Corp. may receive for acting as
broker to the Fund in the purchase and sale of portfolio securities. The
Management Agreement does not provide for a reduction of the advisory fee by any
portion of the brokerage fees generated by portfolio transactions of the Fund
which PXP Securities Corp. may receive.
Allocation of transactions, including their frequency, to various dealers is
determined by the Adviser in its best judgment and in a manner deemed fair and
reasonable to shareholders. The primary consideration is prompt and efficient
execution of orders in an effective manner at the most favorable price. Subject
to this consideration, dealers who provide supplemental investment research,
statistical or other services to the Adviser may receive orders for transactions
by the Fund. Information so received will enable the Adviser to supplement its
own research and analysis with the views and information of other securities
firms. Such information may be useful and of value to the Adviser and its
affiliates in servicing other clients as well as the Fund; in addition,
information obtained by the Adviser and its affiliates in servicing other
clients may be useful and of value to the Adviser in servicing the Fund. No
principal transactions are effected with PXP Securities Corp. or any of its
affiliates.
The Fund may from time to time allocate brokerage commissions to firms that
furnish research and statistical information to the Adviser. The supplementary
research supplied by such firms is useful in varying degrees and is of
indeterminable value. Such research may, among other things, include advice
regarding economic factors and trends, advice as to occasional transactions in
specific securities and similar information relating to securities. No formula
has been established for the allocation of business to such brokers.
Consideration may be given to research provided and payment may be made of a fee
higher than that charged by another broker-dealer which does not furnish
research services or which furnishes research services deemed to be of lesser
value, so long as the criteria of Section 28(e) of the Securities Exchange Act
of 1934, as amended (the "1934 Act") are met. Section 28(e) of the 1934 Act
specifies that a person with investment discretion shall not be deemed to have
acted unlawfully or to have breached a fiduciary duty solely because such person
has caused the account to pay a higher commission than the lowest available
under certain circumstances. To obtain the benefit of Section 28(e), the person
so exercising investment discretion must make a good faith determination that
the commissions paid are reasonable in relation to the value of the brokerage
and research services provided viewed in terms of either that particular
transaction or his overall responsibilities with respect to the accounts as to
which he exercises investment discretion.
Currently, it is not possible to determine the extent to which commissions
that reflect an element of value for research services might exceed commissions
that would be payable for execution series alone, nor generally can the value of
research services be measured. Research services furnished might be useful and
of value to the Adviser and its affiliates in serving other clients as well as
the Trust, but on the other hand any research service obtained by the Adviser or
the Distributor from the placement of portfolio brokerage of other clients might
be useful and of value to the Adviser in carrying out its obligation to the
Fund.
The exercise of calls written by a Fund may cause the Fund to sell portfolio
securities, thus increasing its turnover rate. The exercise of puts also may
cause a sale of securities and increase turnover. Although such exercise is
within the Fund's control, holding a protective put might cause the Fund to sell
the underlying securities for reasons which would not exist in the absence of
the put. A Fund will pay a brokerage commission each time it buys or sells a
security in connection with the exercise of a put or call. Some commissions may
be higher than those which would apply to direct purchases or sales of portfolio
securities.
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During the fiscal years ended October 31, 1998 and 1999, brokerage
commissions paid by the Fund totaled $___________ and $___________,
respectively. In the fiscal year ended October 31, 1999, the Fund paid PXP
Securities Corp. $13,093 in brokerage commissions, or ____% of total brokerage
commissions for the year. Total brokerage commissions paid during the fiscal
year ended October 31, 1999 included brokerage commissions of $_________ on
portfolio transactions aggregating $____________ executed by brokers who
provided research and other statistical and factual information.
SERVICES OF THE ADVISER
The investment adviser to the fund is Euclid Advisors LLC ("Euclid" or
"Adviser"), which is located at 900 Third Avenue, 31st floor, New York, NY
10022-4728. Euclid is a wholly-owned subsidiary of Zweig/Glaser Advisers, LLC,
which is a wholly-owned subsidiary of Phoenix Investment Partners, Ltd. ("PXP").
PXP is a New York Stock Exchange traded company that provides investment
management and related services to institutional investors, corporations and
individuals through operating subsidiaries. Phoenix Home Life Mutual Insurance
Company ("Phoenix Home Life") of Hartford, Connecticut is a majority shareholder
of PXP. Phoenix Home Life is in the business of writing ordinary and group life
and health insurance and annuities. Its principal offices are located at One
American Row, Hartford, Connecticut 06115-2520. Equity Planning, a mutual fund
distributor, acts as the national distributor of the Fund's shares and as
Financial Agent of the Fund. The principal office of Equity Planning is located
at 100 Bright Meadow Boulevard, Enfield, Connecticut 06082.
PXP is a publicly-traded independent registered investment advisory firm and
has served investors for over 70 years. It manages over $___ billion in assets
(as of December 31, 1999) through its investment partners: Aberdeen Fund
Managers, Inc. (Aberdeen) in Aberdeen, London, Singapore and Fort Lauderdale;
Duff & Phelps Investment Management co. (Duff & Phelps) in Chicago and
Cleveland; Roger Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca
Capital Management LLC (Seneca) in San Francisco; Zweig/Glaser Advisers, LLC
(Zweig) in New York; and Phoenix Investment Counsel, Inc. (Goodwin, Hollister,
and Oakhurst divisions) in Hartford, Sarasota and Scotts Valley, CA,
respectively.
Overall responsibility for the management and supervision of the Fund rests
with the Trustees of the Phoenix-Euclid Funds (the "Trustees"). Euclid's
services under its Management Agreement are subject to the direction of the
Trustees.
Pursuant to the Management Agreement, the Adviser: (a) supervises and assists
in the management of the assets of the Fund, furnishes the Fund with research,
statistical and advisory services and provides regular reports to the Trustees;
(b) provides advice and assistance with the operations of the Fund, compliance
support, preparation of the Fund's registration statements, proxy materials and
other documents and advice and assistance of the Adviser's General Counsel; (c)
makes investment decisions for the Fund; (d) selects brokers and dealers to
execute transactions for the Fund; (e) ensures that investments follow the
investment objective, strategies, and policies of the Fund and comply with
government regulations; and (f) furnishes office facilities, personnel necessary
to provide advisory services to the Fund, personnel to serve without salaries as
officers or agents of the Fund and compensation and expenses of any Trustees who
are also full-time employees of the Adviser or any of its affiliates.
The Fund pays the Adviser for its services pursuant to the Management
Agreement a monthly fee at the annual rate of 1.50% of the average daily net
assets of the Fund. For the fiscal years ended October 31, 1998 and 1999, fees
paid to the Adviser by the Fund aggregated $833,943 and $1,990,121,
respectively, before expense reimbursement. The Adviser has voluntarily
undertaken to limit the expenses of the Fund (exclusive of taxes, interest,
dividends paid on securities sold short, brokerage commissions, 12b-1 fees and
extraordinary expenses) until [December 31, 2000] to 2.00% of its average daily
net assets. For the period May 1, 1998 (commencement of operations) to October
31, 1998, the Adviser's reimbursements to the Fund aggregated $52,190.
The Management Agreement will continue in effect from year to year if
specifically approved annually by a majority of the Board of Trustees who are
not parties to such contract or interested persons of any such party. The
Management Agreement may be terminated without penalty by either of the parties
on 60 days' written notice and must terminate in the event of its assignment.
The Management Agreement was last approved by the Trustees on January 12, 1999
and by shareholders on February 25, 1999.
The Management Agreement provides that the Adviser is liable only for its
acts or omissions caused by its willful misfeasance, bad faith or gross
negligence in the performance of its duties or reckless disregard of its
obligations under the Management Agreement. The Management Agreement permits the
Adviser to render services to others and to engage in other activities.
The Adviser may draw upon the resources of the Distributor and its qualified
affiliates in rendering its services to the Fund. The Distributor or its
affiliates may provide the Adviser (without charge to the Fund) with investment
information and recommendations that may serve as the principal basis for
investment decisions with respect to the Fund.
The Adviser has adopted a Code of Ethics (the "Code") that requires all
persons subject to the Code to pre-clear any proposed non-exempt personal
securities transaction. Permission for any proposed transaction will be granted
provided it is determined that such would not negatively impact activity in
clients accounts. In the event that a client of Adviser's affiliates also
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owns such security, or it is proposed that such client purchase such security,
available investments or opportunities for sales will be allocated in a manner
deemed to be equitable by the Adviser.
NET ASSET VALUE
The net asset value per share of the Fund is determined as of the close of
trading of the New York Stock Exchange (the "Exchange") on days when the
Exchange is open for trading. The Exchange will be closed on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Since the Fund does not price securities on
weekends or United States national holidays, the net asset value of the Fund's
foreign assets may be significantly affected on days when the investor has no
access to the Fund. The net asset value per share of the Fund is determined by
adding the values of all securities and other assets of the Fund, subtracting
liabilities, and dividing by the total number of outstanding shares of the Fund.
Assets and liabilities are determined in accordance with generally accepted
accounting principles and applicable rules and regulations of the Securities and
Exchange Commission. The total liability allocated to a class, plus that class's
distribution plan fees and any other expenses allocated solely to that class,
are deducted from the proportionate interest of such class in the assets of the
Fund, and the resulting amount of each is divided by the number of shares of
that class outstanding to produce the net asset value per share.
A security that is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary exchange for such
security by the Trustees or their delegates. Because of the need to obtain
prices as of the close of trading on various exchanges throughout the world, the
calculation of net asset value may not take place for the Fund if it invests in
foreign securities contemporaneously with the determination of the prices of the
majority of the portfolio securities of the Fund. All assets and liabilities
initially expressed in foreign currency values will be converted into United
States dollar values at the mean between the bid and ask quotations of such
currencies against United States dollars as last quoted by any recognized
dealer. If an event were to occur after the value of an investment was so
established but before the net asset value per share was determined, which was
likely to materially change the net asset value, then the instrument would be
valued using fair value considerations by the Trustees or their delegates. If at
any time the Fund has investments where market quotations are not readily
available, such investments are valued at the fair value thereof as determined
in good faith by the Trustees although the actual calculations may be made by
persons acting pursuant to the direction of the Trustees.
HOW TO BUY SHARES
The minimum initial investment is $500, and the minimum subsequent investment
is $25 for Class A, Class B or Class C Shares. However, both the minimum initial
and subsequent investment amounts are $25 for investments pursuant to the
"Investo-Matic" plan (a bank draft investing program administered by the
Distributor), or pursuant to the Systematic Exchange privilege, or for an
individual retirement account (IRA). In addition, there are no subsequent
investment minimum amounts in connection with the reinvestment of dividend or
capital gain distributions. The minimum initial investment for Class I Shares is
$1,000,000 with no minimum subsequent investment. Completed applications for the
purchase of shares should be mailed to: Phoenix-Euclid Funds, c/o State Street
Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301.
The Fund has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased from investment dealers at a price equal to their net
asset value per share, plus a sales charge which, at the election of the
purchaser, may be imposed either (i) at the time of the purchase (the "initial
sales charge alternative") or (ii) on a contingent deferred basis (the "deferred
sales charge alternative"). Orders received by dealers prior to the close of
trading on the New York Stock Exchange are confirmed at the offering price
effective at that time, provided the order is received by the Authorized Agent
prior to its close of business.
The alternative purchase arrangements permit an investor to choose the method
of purchasing shares that is more beneficial given the amount of the purchase,
the length of time the investor expects to hold the shares, whether the investor
wishes to receive distributions in cash or to reinvest them in additional shares
of the Funds, and other circumstances. Investors should consider whether, during
the anticipated life of their investment in the Fund, the accumulated continuing
distribution and services fees and contingent deferred sales charges on Class B
or C Shares would be less than the initial sales charge and accumulated
distribution services fee on Class A Shares purchased at the same time.
Dividends paid by the Fund, if any, with respect to each Class of Shares will
be calculated in the same manner at the same time on the same day, except that
fees such as higher distribution and services fees and any incremental transfer
agency costs relating to each Class of Shares will be borne exclusively by that
class. See "Dividends, Distributions and Taxes."
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CLASS A SHARES
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed, except
that a 1.00% deferred sales charge applies to shares purchased by an investor in
amounts over $1 million if redeemed within 12 months of purchase. Such deferred
sales charge may be waived under certain conditions. Class A Shares are subject
to ongoing distribution and services fees at an annual rate of 0.30% of the
Fund's aggregate average daily net assets attributable to the Class A Shares. In
addition, certain purchases of Class A Shares qualify for reduced initial sales
charges. See Class A Shares--Reduced Initial Sales Charge.
CLASS B SHARES
Class B Shares do not incur a sales charge when they are purchased, but they
are subject to a sales charge if they are redeemed within six years of purchase.
The deferred sales charge may be waived in connection with certain qualifying
redemptions. See Class B and C Shares--Waiver of Sales Charges.
Class B Shares are subject to ongoing distribution and services fees at an
aggregate annual rate of up to 1.00% of the Fund's aggregate average daily net
assets attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment is
made. The higher ongoing distribution and services fees paid by Class B Shares
will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class A
Shares. Class B Shares will automatically convert to Class A Shares seven years
after the end of the calendar month in which the shareholder's order to purchase
was accepted subject to the qualifications described in the Funds' Prospectus.
The purpose of the conversion feature is to relieve the holders of the Class B
Shares that have been outstanding for a period of time from most of the burden
of such distribution related expenses. The seven-year time limit has been deemed
sufficient for the Adviser and the Distributor to have been compensated for
distribution expenses related to the Class B Shares.
Class B Shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
seven years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution and services fees. Such
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge.
For purposes of conversion to Class A Shares, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares in
a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub-account) convert to Class A, an equal pro rata
portion of the Class B Share dividends in the sub-account will also convert to
Class A Shares.
CLASS C SHARES
Class C Shares are purchased without an initial sales charge but are subject
to a deferred sales charge if redeemed within one year of purchase. The deferred
sales charge may be waived in connection with certain qualifying redemptions.
Shares issued in conjunction with the automatic reinvestment of income
distributions and capital gain distributions are not subject to any sales
charges. Class C Shares are subject to ongoing distribution and services fees at
an aggregate annual rate of up to 1.00% of the Fund's aggregate average daily
net assets. See the Funds' current Prospectus for more information.
CLASS I SHARES
Class I Shares are offered primarily to persons subject to the Investment
Adviser's Code of Ethics relating to personal securities transactions and to
tax-exempt retirement plans specifically affiliated with the Investment Adviser,
as well as certain institutional investors. If you are eligible to purchase and
do purchase Class I Shares, you will pay no sales charge at any time. There are
no distribution and service fees applicable to Class I Shares. Class I Shares
are not available in all states.
CLASS A SHARES--REDUCED INITIAL SALES CHARGES
Investors choosing Class A Shares may be entitled to reduced sales charges.
The ways in which sales charges may be avoided or reduced are described below.
QUALIFIED PURCHASERS. If you fall within any one of the following categories,
you will not have to pay a sales charge on your purchase of Class A Shares: (1)
trustee, director or officer of the Phoenix Funds, the Phoenix-Zweig Funds, the
Phoenix-Engemann Funds, Phoenix-Seneca Funds or any other mutual fund advised,
subadvised or distributed by the Adviser, Distributor or any of their corporate
affiliates (an "Affiliated Phoenix Fund"); (2) any director or officer, or any
full-time employee or sales representative (for at least 90 days) of the Adviser
or Distributor; (3) registered representatives and employees of securities
dealers with whom Distributor has sales agreements; (4) any qualified retirement
plan exclusively for persons described above; (5) any officer, director or
employee of a corporate affiliate of the Adviser or Distributor; (6) any spouse,
child, parent, grandparent, brother or sister of any person named in (1), (2),
(3) or (5) above; (7) employee benefit plans for employees of the Adviser,
Distributor and/or their corporate affiliates; (8) any employee or agent who
retires from Phoenix Home Life, Distributor and/or their corporate affiliates;
(9) any account held in the name of a qualified employee benefit plan, endowment
fund or foundation if, on the date of the initial investment, the plan, fund or
foundation has assets of $10,000,000 or more or at least 100 eligible employees;
(10) any person with a
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direct rollover transfer of shares from an established Phoenix-Zweig Funds
qualified plan; (11) any Phoenix Home Life separate account which funds group
annuity contracts offered to qualified employee benefit plans; (12) any state,
county, city, department, authority or similar agency prohibited by law from
paying a sales charge; (13) any fully matriculated student in any U.S. service
academy; (14) any unallocated account held by a third party administrator,
registered investment adviser, trust company, or bank trust department which
exercises discretionary authority and holds the account in a fiduciary, agency,
custodial or similar capacity, if in the aggregate such accounts held by such
entity equal or exceed $1,000,000 and by retirement plans with assets of
$1,000,000 or more or at least 50 eligible employees; (15) any person who is
investing redemption proceeds from investment companies other than the Phoenix
Funds, Phoenix-Zweig Funds, Phoenix-Engemann Funds or Phoenix-Seneca Funds if,
in connection with the purchases or redemption of the redeemed shares, the
investor paid a prior sales charge provided such investor supplies verification
that the redemption occurred within 90 days of the Phoenix Fund purchase and
that a sales charge was paid; (16) any deferred compensation plan established
for the benefit of any Phoenix Fund, Phoenix-Zweig Fund, Phoenix-Engemann Fund
or Phoenix-Seneca Fund trustee or director; provided that sales to persons
listed in (1) through (16) above are made upon the written assurance of the
purchaser that the purchase is made for investment purposes and that the shares
so acquired will not be resold except to the Fund; (17) purchasers of Class A
Shares bought through investment advisers and financial planners who charge an
advisory, consulting or other fee for their services and buy shares for their
own accounts or the accounts of their clients; (18) retirement plans and
deferred compensation plans and trusts used to fund those plans (including, for
example, plans qualified or created under sections 401(a), 403(b) or 457 of the
Internal Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker or agent or
other financial intermediary that has made special arrangements with the
Distributor for such purchases; (19) 401(k) participants in the Merrill Lynch
Daily K Plan (the "Plan") if the Plan has at least $3 million in assets or 500
or more eligible employees; or (20) clients of investment advisors or financial
planners who buy shares for their own accounts but only if their accounts are
linked to a master account of their investment advisor or financial planner on
the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of the investors
described in (17) through (20) may be charged a fee by the broker, agent or
financial intermediary for purchasing shares).
COMBINATION PURCHASE PRIVILEGE. Your purchase of any class of shares of the
Phoenix-Euclid Funds and Phoenix-Zweig Funds if made at the same time by the
same "person," will be added together to determine whether the combined sum
entitles you to an immediate reduction in sales charges. A "person" is defined
in this and the following sections as (a) any individual, their spouse and minor
children purchasing shares for his or their own account (including an IRA
account) including his or their own trust; (b) a trustee or other fiduciary
purchasing for a single trust, estate or single fiduciary account (even though
more than one beneficiary may exist); (c) multiple employer trusts or Section
403(b) plans for the same employer; (d) multiple accounts (up to 200) under a
qualified employee benefit plan or administered by a third party administrator;
or (e) trust companies, bank trust departments, registered investment advisers,
and similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority and
which are held in a fiduciary, agency, custodial or similar capacity, provided
all shares are held of record in the name, or nominee name, of the entity
placing the order.
LETTER OF INTENT. If you sign a Letter of Intent, your purchase of any class
of shares of the Phoenix-Euclid Funds and Phoenix-Zweig Funds if made by the
same person within a 13-month period, will be added together to determine
whether you are entitled to an immediate reduction in sales charges. Sales
charges are reduced based on the overall amount you indicate that you will buy
under the Letter of Intent. The Letter of Intent is a mutually non-binding
arrangement between you and the Distributor. Since the Distributor doesn't know
whether you will ultimately fulfill the Letter of Intent, shares worth 5% of the
amount of each purchase will be set aside until you fulfill the Letter of
Intent. When you buy enough shares to fulfill the Letter of Intent, these shares
will no longer be restricted. If, on the other hand, you do not satisfy the
Letter of Intent, or otherwise wish to sell any restricted shares, you will be
given the choice of either buying enough shares to fulfill the Letter of Intent
or paying the difference between any sales charge you previously paid and the
otherwise applicable sales charge based on the intended aggregate purchases
described in the Letter of Intent. You will be given 20 days to make this
decision. If you do not exercise either election, the Distributor will
automatically redeem the number of your restricted shares needed to make up the
deficiency in sales charges received. The Distributor will redeem restricted
Class A Shares before Class C or B Shares, respectively. Oldest shares will be
redeemed before selling newer shares. Any remaining shares will then be
deposited to your account.
RIGHT OF ACCUMULATION. Your purchase of any class of shares of the
Phoenix-Euclid Funds, if made over time by the same person may be added together
to determine whether the combined sum entitles you to a prospective reduction in
sales charges. You must provide certain account information to the Distributor
to exercise this right.
ASSOCIATIONS. Certain groups or associations may be treated as a "person" and
qualify for reduced Class A Share sales charges. The group or association must:
(1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge; (3)
work through an investment dealer; or (4) not be a group whose sole reason for
existing is to consist of members who are credit card holders of a particular
company, policyholders of an insurance company, customers of a bank or a
broker-dealer or clients of an investment adviser.
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CLASS A SHARES--WAIVER OF DEFERRED SALES CHARGE
The 1% CDSC will be waived where the investor's dealer of record, due to the
nature of the investor's account, notifies the distributor prior to the time of
the investment that the dealer waives the commission otherwise payable to the
dealer, or agrees to receive such commissions ratably over a 12-month period.
CLASS B AND C SHARES--WAIVER OF SALES CHARGES
The CDSC is waived on the redemption (sale) of Class B and C Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section 72(m)(7);
(c) as a mandatory distribution upon reaching age 70 1/2 under any retirement
plan qualified under Code Sections 401, 408 or 403(b) or resulting from the
tax-free return of an excess contribution to an IRA; (d) by 401(k) plans using
an approved participant tracking system for participant hardships, death,
disability or normal retirement, and loans which are subsequently repaid; (e)
from certain other Class A and Class C Share retirement plans; (f) from the
Merrill Lynch Daily K Plan invested in Class B Shares, on which such shares the
Distributor has not paid the dealer the Class B sales commission; (g) based on
the exercise of exchange privileges among Class B and C Shares of this Fund and
any other Phoenix-Zweig Fund; (h) based on any direct rollover transfer of
shares from an established Fund qualified plan into another Affiliated Phoenix
Fund IRA by participants terminating from the qualified plan; and (i) based on
the systematic withdrawal program. If, as described in condition (a) above, an
account is transferred to an account registered in the name of a deceased's
estate, the CDSC will be waived on any redemption from the estate account
occurring within one year of the death. If the Class B or C Shares are not
redeemed within one year of the death, they will remain subject to the
applicable CDSC when redeemed. Shareholders between the ages of 59 1/2 and 70
1/2 receiving a CDSC waiver on distributions under retirement plans described in
condition (c) above prior to May 1, 1999, will continue to receive the waiver.
CONVERSION FEATURE--CLASS B SHARES
Class B Shares will automatically convert to Class A Shares of the Fund seven
years after they are bought. Conversion will be on the basis of the then
prevailing net asset value of Class A and B Shares. There is no sales load, fee
or other charge for this feature. Class B Shares acquired through dividend or
distribution reinvestments will be converted into Class A Shares at the same
time that other Class B Shares are converted based on the proportion that the
reinvested shares bear to purchased Class B Shares. The conversion feature is
subject to the continuing availability of an opinion of counsel or a ruling of
the Internal Revenue Service that the assessment of the higher distribution fees
and associated costs with respect to Class B Shares does not result in any
dividends or distributions constituting "preferential dividends" under the Code,
and that the conversion of shares does not constitute a taxable event under
federal income tax law. If the conversion feature is suspended, Class B Shares
would continue to be subject to the higher distribution fee for an indefinite
period. Even if the Trust were unable to obtain such assurances, it might
continue to make distributions if doing so would assist in complying with its
general practice of distributing sufficient income to reduce or eliminate
federal taxes otherwise payable by the Fund.
IMMEDIATE INVESTMENT
In order to obtain immediate investment of funds, initial and subsequent
purchases of shares of a Fund may also be made by wiring Federal Funds (monies
held in a bank account with a Federal Reserve Bank) directly pursuant to the
following instructions:
(1) For initial investments, telephone the Trust at (800) 367-5877. Certain
information will be requested from you regarding the account, and an
account number will be assigned.
(2) Once an account number has been assigned, direct your bank to wire the
Federal Funds to State Street Bank and Trust Company, Custody &
Shareholder Services Division, Boston, Massachusetts 02105, attention of
the Phoenix-Euclid Market Neutral Fund. Your bank must include the
account number and the name(s) in which your account is registered in its
wire and also request a telephone advice. Your bank may charge a fee to
you for transmitting funds by wire.
An order for shares of a Fund purchased with Federal Funds will be accepted
on the business day Federal Funds are wired provided the Federal Funds are
received by 4:00 p.m. on that day; otherwise, the order will not be accepted
until the next business day. Shareholders should bear in mind that wire
transfers may take two or more hours to complete.
Promptly after an initial purchase of shares made by wiring Federal Funds
directly, the shareholder should complete and mail an Account Application to
Equity Planning.
INVESTOR ACCOUNT SERVICES
The Fund offers accumulation plans, withdrawal plans and reinvestment and
exchange privileges. Certain privileges may not be available in connection with
all classes. In most cases, changes to account services may be accomplished over
the phone.
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Inquiries regarding policies and procedures relating to shareholder
account services should be directed to Shareholder Services at (800) 243-1574.
The Fund and the Distributor reserve the right to modify or terminate these
services upon reasonable notice.
EXCHANGES
Under certain circumstances, shares of the Fund may be exchanged for shares
of the same class of another Phoenix-Zweig Fund on the basis of the relative net
asset values per share at the time of the exchange. Exchanges are subject to the
minimum initial investment requirement of the designated Fund, except if made in
connection with the Systematic Exchange privilege. Shareholders may exchange
shares held in book-entry form for an equivalent number (value) of the same
class of shares of any other Phoenix-Zweig Fund if currently offered. On
exchanges with share classes that carry a contingent deferred sales charge, the
CDSC schedule of the original shares purchased continues to apply. The exchange
of shares is treated as a sale and purchase for federal income tax purposes (see
also "Dividends, Distributions and Taxes").
SYSTEMATIC EXCHANGES. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Phoenix-Zweig Fund automatically on a
monthly, quarterly, semiannual or annual basis or may cancel this privilege at
any time. If you maintain an account balance of at least $5,000, or $2,000 for
tax qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that shares be
automatically exchanged at predetermined intervals for shares of the same class
of another Phoenix-Zweig Fund. This requirement does not apply to Phoenix "Self
Security" program participants. Systematic exchanges will be executed upon the
close of business on the 10th day of each month or the next succeeding business
day. Systematic exchange forms are available from the Distributor. Exchanges
will be based upon each Fund's net asset value per share next computed after the
close of business on the 10th day of each month (or next succeeding business
day), without sales charge.
DIVIDEND REINVESTMENT ACROSS ACCOUNTS
If you maintain an account balance of at least $5,000, or $2,000 for tax
qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that any dividends
and distributions paid with respect to shares in that account be automatically
reinvested in a single account of one of the other Phoenix-Zweig Funds at net
asset value. You should obtain a current prospectus and consider the objectives
and policies of each Fund carefully before directing dividends and distributions
to another Fund. Reinvestment election forms and prospectuses are available from
Equity Planning. Distributions may also be mailed to a second payee and/or
address. Requests for directing distributions to an alternate payee must be made
in writing with a signature guarantee of the registered owner(s). To be
effective with respect to a particular dividend or distribution, notification of
the new distribution option must be received by the Transfer Agent at least
three days prior to the record date of such dividend or distribution. If all
shares in your account are repurchased or redeemed or transferred between the
record date and the payment date of a dividend or distribution, you will receive
cash for the dividend or distribution regardless of the distribution option
selected.
INVEST-BY-PHONE
This expedited investment service allows a shareholder to make an investment
in an account by requesting a transfer of funds from the balance of their bank
account. Once a request is phoned in, Equity Planning will initiate the
transaction by wiring a request for monies to the shareholder's commercial bank,
savings bank or credit union via Automated Clearing House (ACH). The
shareholder's bank, which must be an ACH member, will in turn forward the monies
to Equity Planning for credit to the shareholder's account. ACH is a computer
based clearing and settlement operation established for the exchange of
electronic transactions among participating depository institutions.
To establish this service, please complete an Invest-by-Phone Application and
attach a voided check if applicable. Upon Equity Planning's acceptance of the
authorization form (usually within two weeks) shareholders may call toll free
(800) 367-5877 prior to 3:00 p.m. (New York time) to place their purchase
request. Instructions as to the account number and amount to be invested must be
communicated to Equity Planning. Equity Planning will then contact the
shareholder's bank via ACH with appropriate instructions. The purchase is
normally credited to the shareholder's account the day following receipt of the
verbal instructions. The Fund may delay the mailing of a check for redemption
proceeds of Fund shares purchased with a check or via Invest-by-Phone service
until the Trust has assured itself that good payment has been collected for the
purchase of the shares, which may take up to 15 days.
The Fund and Equity Planning reserve the right to modify or terminate the
Invest-by-Phone service for any reason or to institute charges for maintaining
an Invest-by-Phone account.
SYSTEMATIC WITHDRAWAL PROGRAM
The Systematic Withdrawal Program allows you to periodically redeem a portion
of your account on a predetermined monthly, quarterly, semiannual or annual
basis. A sufficient number of full and fractional shares will be redeemed so
that the designated payment is made on or about the 20th day of the month.
Shares are tendered for redemption by the Transfer Agent, as agent for the
shareowner, on or about the 15th of the month at the closing net asset value on
the date of redemption. The Systematic Withdrawal Program also provides for
redemptions to be tendered on or about the 10th, 15th or 25th of the month with
proceeds to be
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<PAGE>
directed through Automated Clearing House (ACH) to your bank account. In
addition to the limitations stated below, withdrawals may not be less than $25
and minimum account balance requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of the Fund worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. The purchase
of shares while participating in the withdrawal program will ordinarily be
disadvantageous to the Class A Shares investor since a sales charge will be paid
by the investor on the purchase of Class A Shares at the same time as other
shares are being redeemed. For this reason, investors in Class A Shares may not
participate in an automatic investment program while participating in the
Systematic Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any applicable
contingent deferred sales charge on all shares redeemed. Accordingly, the
purchase of Class B Shares will generally not be suitable for an investor who
anticipates withdrawing sums in excess of the above limits shortly after
purchase.
HOW TO REDEEM SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefore postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the Fund to dispose of its securities or to determine fairly the value of
its net assets or during any other period permitted by order of the Securities
and Exchange Commission for the protection of investors. Furthermore, the
Transfer Agent will not mail redemption proceeds until checks received for
shares purchased have cleared, which may take up to 15 days or more after
receipt of the check.
The Fund has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
Redemptions by Class B and Class C shareholders will be subject to the
applicable deferred sales charge, if any.
REDEMPTION OF SMALL ACCOUNTS
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the giving
of not less than 60 days written notice to the shareholder mailed to the address
of record. During the 60-day period the shareholder has the right to add to the
account to bring its value to $200 or more. See the Funds' current Prospectus
for more information.
BY MAIL
Shareholders may redeem shares by making a written request, executed in the
full name of the account, directly to Phoenix-Zweig Funds, c/o State Street Bank
and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when
certificates for shares are in the possession of the shareholder, they must be
mailed or presented, duly endorsed in the full name of the account, with a
written request to Equity Planning that the Trust redeem the shares. See the
Funds' current Prospectus for more information.
TELEPHONE REDEMPTIONS
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Funds' current Prospectus for
additional information.
REDEMPTION IN KIND
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. However, the Fund has
elected to pay in cash all requests for redemption by any shareholder of record,
limited in respect to each shareholder during any 90-day period to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of such
period. This election has been made pursuant to Rule 18f-1 under the Investment
Company Act of 1940 and is irrevocable while the Rule is in effect unless the
Securities and Exchange Commission, by order, permits the withdrawal thereof. In
case of a redemption in kind, securities delivered in payment for shares would
be readily marketable and valued at the same value assigned to them in computing
the net asset value per share of the Fund. A shareholder receiving such
securities would incur brokerage costs when he sold the securities.
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<PAGE>
ACCOUNT REINSTATEMENT PRIVILEGE
Shareholders who may have overlooked features of their investment at the time
they redeemed have a privilege of reinvestment of their investment at net asset
value. See the Funds' current Prospectus for more information.
DIVIDENDS, DISTRIBUTIONS AND TAXES
TAX STATUS
By paying dividends representing its investment company taxable income within
the time periods specified in the Internal Revenue Code of 1986, as amended (the
Code) and by meeting certain other requirements, the Fund intends to qualify as
a regulated investment company under the Code. Since the Fund intends to
distribute annually its investment company taxable income, net capital gains,
and capital gain net income, it will not be subject to income or excise taxes
otherwise applicable to undistributed income of a regulated investment company.
If the Fund were to fail to distribute all its income and gains, it would be
subject to income tax and, in certain circumstances, a 4% excise tax.
TAXATION OF SHAREHOLDERS
Dividends from net investment income and distributions from short-term
capital gains are taxable to shareholders as ordinary income. Regardless of how
long the Fund shares have been held, distributions of long-term gains realized
upon the sale of capital assets are subject to a maximum federal income tax rate
for noncorporate taxpayers of 20% if held for more than 12 months (10% for
individuals in the 15% tax bracket). Any loss realized by a shareholder upon the
disposition of Fund shares held for six months or less will be treated as
long-term capital loss to the extent of any amounts treated as distributions of
long-term capital gain held for more than one year during such six-month period.
Distributions by the Fund out of dividend income from domestic corporations
may qualify in whole or in part for the dividends received deduction if the
distributing Fund does not sell the stock in respect of which it received such
dividends before satisfying a 46-day holding period requirement (91 days for
certain preferred stock), and the shareholder holds Fund shares for at least 46
days. For this purpose, the distributing Fund holding period in such stock may
be reduced for periods during which the Fund reduces its risk of loss from
holding the stock (e.g., by entering into option contracts).
Investors who purchase shares shortly before the record date for a
distribution will pay a share price that includes the value of the anticipated
distribution and will be taxed on the distribution when it is received even
though with respect to them the distribution in effect represents a return of a
portion of their purchase price. Any loss realized on a sale or exchange of
shares will be disallowed if the shares disposed of are replaced within a period
of 61 days beginning 30 days before being acquired.
Individuals and certain other non-exempt payees will be subject to a 31%
backup Federal withholding tax on dividends and other distributions from the
Fund, as well as on the proceeds of redemptions if the Fund is not provided with
the shareholder's correct taxpayer identification number and certification that
the shareholder is not subject to such backup withholding, or if the Internal
Revenue Service notifies the Fund that the shareholder has failed to report
proper interest or dividends. For most individuals, the taxpayer identification
number is the taxpayer's social security number.
TAX TREATMENT OF CERTAIN TRANSACTIONS
In general, and as explained more fully below, if the Fund enters into
combinations of investment positions by virtue of which its risk of loss from
holding an investment position is reduced on account of one (or more) other
positions (i) losses realized on one position may be deferred to the extent of
any unrecognized gain on another position and (ii) long-term capital gains or
short-term capital losses may be recharacterized, respectively, as short-term
gains and long-term losses. Investments in foreign currency denominated
instruments or securities may generate, in whole or in part, ordinary income or
loss. The Federal income tax treatment of gains and losses realized from
transactions involving options on stock or securities entered into by a Fund
will be as follows: Gain or loss from a closing transaction with respect to
options written by the Fund, or gain from the lapse of any such option, will be
treated as short-term capital gain or loss. Gain or loss from the sale of put
and call options that the Fund purchases, and loss attributable to the lapse of
such options, will be treated as capital gain or loss. For this purpose, an
unexercised option will be deemed to have been sold on the date it expired. It
should be noted, however, that if a put is acquired at a time when the
underlying stock or security has been held for not more than one year, or if
shares of the underlying stock or security are acquired while such put is held,
any gain on the subsequent exercise, sale or expiration of the put will
generally be short-term gain.
Any regulated futures contract or listed non-equity option held by a Fund at
the close of its taxable year will be treated as sold for its fair market value
on the last business day of such taxable year. Sixty percent of any gain or loss
with respect to such deemed sales, as well as the gain or loss from the
termination during the taxable year of the Fund's obligation (or rights) with
respect to such contracts by offsetting, by taking or making delivery, by
exercise or being exercised, by assignment or being assigned, by lapse, or
otherwise, will be treated as long-term capital gain or loss and the remaining
forty percent will be treated as short term capital gain or loss. A Fund may
make certain elections that modify the above tax treatment with respect to
regulated futures contracts or listed non-equity options that are part of a
mixed straddle, as defined by the Code.
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<PAGE>
The Fund may invest in certain investments that may cause it to realize
income prior to the receipt of cash distributions, including securities bearing
original issue discount. The level of such investments is not expected to affect
a Fund's ability to distribute adequate income to qualify as a regulated
investment company.
Treasury Regulations pursuant to Section 1092 provide for the coordination of
the wash sale rules and the short sale rules with the straddle rules. Generally,
the wash sale rules prevent the recognition of loss where a position is sold at
a loss and a substantially identical position is acquired within a prescribed
period. The short sale rules generally prevent the use of short sales to convert
short-term capital gain to long-term capital gain and long-term capital loss to
short-term capital loss.
In addition to the Federal income tax consequences described above relating
to an investment in the Fund, there may be other Federal, state, local or
foreign tax considerations that depend upon the circumstances of each particular
investor. Prospective shareholders are therefore urged to consult their tax
advisers with respect to the effects of this investment on their specific
situations.
TAX SHELTERED RETIREMENT PLANS
Shares of the Fund are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover IRA, SEP-IRA, SIMPLE IRA, Roth IRA,
401(k), Profit-Sharing, Money Purchase Pension Plans and 403(b) Retirement
Plans. Write or call Equity Planning (800) 243-4361 for further information
about the plans.
MERRILL LYNCH DAILY K PLAN
Class A Shares of the Fund are made available to Merrill Lynch Daily K Plan
(the "Plan") participants at NAV without an initial sales charge if:
(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch and,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in broker/dealer
funds not advised or managed by Merrill Lynch Asset Management L.P. ("MLAM")
that are made available pursuant to a Service Agreement between Merrill Lynch
and the fund's principal underwriter or distributor and in funds advised or
managed by MLAM (collectively, the "Applicable Investments");
(ii) the Plan is recordkept on a daily valuation basis by an independent
recordkeeper whose services are provided through a contract or alliance
arrangement with Merrill Lynch, and, on the date the Plan Sponsor signs the
Merrill Lynch Recordkeeping Service Agreement, the Plan has $3 million or more
in assets, excluding money market funds, invested in Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by a Merrill
Lynch plan conversion manager, on the date the Plan Sponsor signs the Merrill
Lynch Recordkeeping Service Agreement.
Alternatively, Class B Shares of the Fund are made available to Plan
participants at NAV without a CDSC if the Plan conforms with the requirements
for eligibility set forth in (i) through (iii) above but either does not meet
the $3 million asset threshold or does not have 500 or more eligible employees.
Plans recordkept on a daily basis by Merrill Lynch or an independent
recordkeeper under a contract with Merrill Lynch that are currently investing in
Class B Shares of the Fund convert to Class A Shares once the Plan has reached
$5 million invested in Applicable Investments, or after the normal holding
period of seven years from the initial date of purchase.
THE DISTRIBUTOR
Pursuant to its Distribution Agreement with the Fund (the "Distribution
Agreement"), Phoenix Equity Planning Corporation ("Equity Planning") acts as
distributor of the Fund's shares and receives: with respect to Class A Shares, a
front-end sales commission, as described in the Prospectus under "Sales
Charges," and a 1% CDSC which may apply on redemptions within 12 months of
purchases not subject to a sales charge; with respect to Class B Shares, a
declining CDSC ranging from 5% to 1% of the gross proceeds of a redemption of
shares held for less than seven years; and, with respect to Class C Shares, a
CDSC of 1.25% of the gross proceeds of a redemption of shares held for less than
one year. A 1% CDSC may apply to redemptions within 12 months of purchases of
Class A Shares not subject to a sales charge. The Distributor also is
compensated under the Rule 12b-1 distribution plans as described more fully
below. The amendment of the Distribution Agreement naming Equity Planning as
Distributor was last approved by the Trustees on January 12, 1999.
Equity Planning has undertaken to use its best efforts to find purchasers for
shares of the Fund. Shares of the Fund are offered on a continuous basis.
Pursuant to distribution agreements for each class of shares or distribution
method, the Distributor will purchase shares of the Fund for resale to the
public, either directly or through securities dealers or agents, and is
obligated to purchase only those shares for which it has received purchase
orders. Equity Planning may also sell Fund shares pursuant to sales agreements
entered into with bank-affiliated securities brokers who, acting as agent for
their customers, place orders for Fund shares with Equity Planning. If, because
of changes in law or regulations, or because of new interpretations of
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<PAGE>
existing law, it is determined that agency transactions of bank-affiliated
securities brokers are not permitted, the Trustees will consider what action, if
any, is appropriate. It is not anticipated that termination of sales agreements
with bank-affiliated securities brokers would result in a loss to their
customers or a change in the net asset value per share of a Fund.
For its services under the Distribution Agreement, the Distributor receives
sales charges on transactions in Fund shares and retains such charges less the
portion thereof allowed to its registered representatives and to securities
dealers and securities brokers with whom it has sales agreements. In addition,
the Distributor may receive payments from the Fund pursuant to the Distribution
Plans described below. PXP Securities Corp., formerly known as Zweig Securities
Corp., served as the distributor for the Fund prior to March 1, 1999. For the
fiscal years ended October 31, 1998 and 1999, purchasers of shares of the Fund
paid aggregate sales charges of $______ and $______, respectively, of which PXP
Securities Corp. and/or the Distributor received net commissions of $______ and
$______, respectively for its services, the balance being paid to dealers. For
the fiscal year ended October 31, 1999, PXP Securities Corp. and/or the
Distributor received net commissions of $1,308 for Class A Shares and deferred
sales charges of $713,293 for Class B and Class C Shares.
DEALER CONCESSIONS
Dealers with whom the Distributor has entered into sales agreements receive a
discount or commission as described below.
<TABLE>
<CAPTION>
Amount of Dealer Discount or Agency Fee
Transaction Sales Charge as a Percentage Sales Charge as a Percentage as Percentage of Offering
at Offering Price of Offering Price of Amount Invested Price
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Under $50,000 5.50% 5.82% 4.75%
$50,000 but under $100,000 4.75 4.99 4.00
$100,000 but under $250,000 3.75 3.90 3.25
$250,000 but under $500,000 2.75 2.83 2.25
$500,000 but under $1,000,000 1.75 1.78 1.50
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. This sales commission will not be paid to
dealers for sales of Class B or Class C Shares purchased by 401(k) participants
of the Merrill Lynch Daily K Plan (the "Plan") due to waiver of the CDSC for
these Plan participants' purchases. There is no dealer compensation payable on
Class I Shares. Your broker, dealer or investment adviser may also charge you
additional commissions or fees for their services in selling shares to you
provided they notify the Distributor of their intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of the
Funds and/or for providing other shareholder services. Such fees are in addition
to the sales commissions referenced above and may be based upon the amount of
sales of fund shares by a dealer; the provision of assistance in marketing of
fund shares; access to sales personnel and information dissemination services;
provision of recordkeeping and administrative services to qualified employee
benefit plans; and other criteria as established by the Distributor. Depending
on the nature of the services, these fees may be paid either from the Funds
through distribution fees, service fees or transfer agent fees or in some cases,
the Distributor may pay certain fees from its own profits and resources. From
its own profits and resources, the Distributor does intend to: (a) sponsor
training and educational meetings and provide additional compensation to
qualifying dealers in the form of trips, merchandise or expense reimbursements;
(b) from time to time pay special incentive and retention fees to qualified
wholesalers, registered financial institutions and third party marketers; (c)
pay broker/dealers an amount equal to 1% of the first $3 million of Class A
Share purchases by an account held in the name of a qualified employee benefit
plan with at least 100 eligible employees, 0.50% on the next $3 million, plus
0.25% on the amount in excess of $6 million; and (d) excluding purchases as
described in (c) above, pay broker/dealers an amount equal to 1% of the amount
of Class A Shares sold above $1 million but under $3 million, 0.50% on the next
$3 million, plus 0.25% on the amount in excess of $6 million. If part or all of
such investment as described in (c) and (d) above, including investments by
qualified employee benefit plans, is subsequently redeemed within one year of
the investment date, a 1% CDSC will apply, except for redemptions of shares
purchased by an investor in amounts of $1 million or more where such investor's
dealer of record, due to the nature of the investor's account, notifies the
distributor prior to the time of the investment that the dealer waives the
commission otherwise payable to the dealer, or agrees to receive such
commissions ratably over a 12 month period. In addition, the Distributor may pay
the entire applicable sales charge on purchases of Class A Shares to selected
dealers and agents. Any dealer who receives more than 90% of a sales charge may
be deemed to be an "underwriter" under the Securities Act of 1933. Equity
Planning reserves the right to discontinue or alter such fee payment plans at
any time.
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<PAGE>
ADMINISTRATIVE SERVICES
Equity Planning also acts as administrative agent of the Funds and as such
performs administrative, bookkeeping and pricing functions for the Funds. For
its services, Equity Planning will be paid a fee equal to the sum of (1) the
documented cost of fund accounting and related services provided by PFPC, Inc.,
as subagent, plus (2) the documented cost to Equity Planning to provide
financial reporting and tax services and to oversee the subagent's performance.
The current fee schedule of PFPC, Inc. is based upon the average of the
aggregate daily net asset values of the Funds, at the following incremental
annual rates:
First $200 million .085%
$200 million to $400 million .05%
$400 million to $600 million .03%
$600 million to $800 million .02%
$800 million to $1 billion .015%
Greater than $1 billion .0125%
Percentage rates are applied to the aggregate daily net asset values of the
Funds. PFPC, Inc. also charges minimum fees and additional fees for each
additional class of fund shares. Equity Planning retains PFPC, Inc. as subagent
for each of the funds for which Equity Planning serves as administrative agent.
PFPC, Inc. agreed to a modified fee structure and waived certain charges.
Because PFPC, Inc.'s arrangement would have favored smaller funds over larger
funds, Equity Planning reallocates PFPC, Inc.'s overall asset-based charges
among all funds for which it serves as administrative agent on the basis of the
relative net assets of each fund. As a result, the PFPC, Inc. charges to the
Fund are expected to be slightly less than the amount that would be found
through direct application of the table illustrated above. For its services
during the Fund's fiscal year ended October 31, 1999, Equity Planning received
$_________.
DISTRIBUTION PLANS
The Fund has adopted a distribution plan for each class of shares, except
Class I Shares, in accordance with Rule 12b-1 under the Act (the "Plan"), to
compensate the Distributor for the services it provides and for the expenses it
bears under the Distribution Agreement. Each class of shares (other than Class I
Shares) pays a service fee at a rate of 0.25% per annum of the average daily net
assets of such class and a distribution fee based on average daily net assets at
a rate of 0.05% per annum for Class A Shares and 0.75% per annum for Class B
Shares and Class C Shares. If the Distributor receives any Rule 12b-1 payments
in excess of actual distribution expenses, the difference could be viewed as
profit to the Distributor for that year.
From the Service Fee the Distributor expects to pay a quarterly fee to
qualifying broker/dealer firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such firms. This fee will not exceed on an annual basis 0.25% of the average
annual net asset value of such shares, and will be in addition to sales charges
on Fund shares which are reallowed to such firms. To the extent that the entire
amount of the Service Fee is not paid to such firms, the balance will serve as
compensation for personal and account maintenance services furnished by the
Distributor. The Distributor also pays to dealers as additional compensation
with respect to Class C Shares, 0.75% of the average annual net asset value of
that class.
From its own resources or pursuant to the Plan, and subject to the dealers'
prior approval, the Distributor may provide additional compensation to
registered representatives of dealers in the form of travel expenses, meals, and
lodging associated with training and educational meetings sponsored by the
distributor. The Distributor may also provide gifts amounting in value to less
than $100, and occasional meals or entertainment, to registered representatives
of dealers. Any such travel expenses, meals, lodging, gifts or entertainment
paid will not be preconditioned upon the registered representatives' or dealers'
achievement of a sales target. The Distributor may, from time to time, reallow
the entire portion of the sales charge on class A shares which it normally
retains to individual selling dealers. However, such additional reallowance
generally will be made only when the selling dealer commits to substantial
marketing support such as internal wholesaling through dedicated personnel,
internal communications and mass mailings.
A report of the amounts expended under the Plans must be made to the Board of
Trustees and reviewed by the Board at least quarterly. In addition, the Plans
provide that they may not be amended to increase materially the costs which the
Trust may bear for distribution pursuant to the Plans without shareholder
approval and that other material amendments to the Plans must be approved by a
majority of the Board, including a majority of the Board who are neither
interested persons of the Trust (as defined in the 1940 Act) nor have any direct
or indirect financial interest in the operation of the Plans (the "Qualified
Trustees"), by vote cast in person at a meeting called for the purpose of
considering such amendments.
The Plans are subject to annual approval by a majority of the Board of
Trustees, including a majority of the Qualified Trustees, by vote cast in person
at a meeting called for the purpose of voting on the Plans. The Plans are
terminable at any time by vote of a majority of the Qualified Trustees or, with
respect to any Class or Fund, by vote of a majority of the shares of such Class
or Fund. Pursuant to the Plans, any new trustees who are not interested persons
must be nominated by existing trustees who are not interested persons.
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<PAGE>
If the Plans are terminated (or not renewed) with respect to one or more
Classes or Funds, they may continue in effect with respect to any Class or Fund
as to which they have not been terminated (or have not been renewed).
Benefits from the Plans may accrue to the Trust and its shareholders from the
growth in assets due to sales of shares to the public pursuant to the Plans.
Increases in a Fund's net assets from sales pursuant to its Plan may benefit
shareholders by reducing per share expenses, permitting increased investment
flexibility and diversification of the Fund's assets, and facilitating economies
of scale (e.g., block purchases) in the Fund's securities transactions. Under
their terms, the Plans will continue from year to year, provided that such
continuance is approved annually by a vote of the Trustees in the manner
described above.
The continuance of the Plans for Class A, Class B and C Shares and for Class
I Shares is approved annually by the Board of Trustees, including a majority of
the Qualified Trustees. Prior to approving the continuance of the Plans, the
Board requested and received from the Distributor all the information which it
deemed necessary to arrive at an informed determination as to such continuance
and adoption of the Plans. In making its determination to continue the Plans,
the Board considered, among other factors: (1) the Trust's experience under the
Plan's and the previous Rule 12b-1 Plan's of the Trust, and whether such
experience indicates that the Plans would operate as anticipated; (2) the
benefits the Trust had obtained under the Plans and would be likely to obtain
under the Plans; (3) what services would be provided under the Plans by the
Distributor to the Trust and its shareholders; and (4) the reasonableness of the
fees to be paid to the Distributor for its services under the Plans. Based upon
their review, the Board, including each of the Qualified Trustees, determined
that the continuance of the Plans would be in the best interest of the Trust,
and that there was a reasonable likelihood that the Plans would benefit the
Trust and its shareholders. In the Board's quarterly review of the Plans, they
will consider their continued appropriateness and the level of compensation
provided therein.
The Board of Trustees has the right to terminate the Rule 12b-1 Plan for the
Class B Shares, and in the event of such termination, no further payments would
be made thereunder. However, in the event the Board of Trustees were to
terminate the Rule 12b-1 Plan for the Class B Shares for the Fund, the Trust may
not thereafter adopt a new Rule 12b-1 Plan for a class of that Fund having, in
the good faith determination of the Board of Trustees, substantially similar
economic characteristics to the Class B Shares. Termination of the Rule 12b-1
Plan for the Class B Shares or the Distribution Agreement does not affect the
obligation of the Class B shareholders to pay CDSCs. The Distributor has sold
its right to receive certain payments under the Distribution Agreement to a
financial institution in order to finance the distribution of the Class B
Shares.
For the fiscal year ended October 31, 1999, the Fund paid Rule 12b-1 fees in
the amount of $928,779, of which the Distributor received $______, unaffiliated
broker-dealers received $______, PXP Securities Corp., an affiliate, received
$_______, and W.S. Griffith & Co., Inc., an affiliate, received $______. The
12b-1 payments were used for (1) compensating dealers, $_______, (2)
compensating sales personnel, $______, (3) advertising, $______, (4) printing
and mailing of prospectuses to other than current shareholders, $______, (5)
service costs, $______, and (6) other, $_____.
Because all amounts paid pursuant to the Plans are paid to the Distributor,
the Distributor and its officers, directors and employees, all may be deemed to
have a direct or indirect financial interest in the operation of the Plans. None
of the Trustees who is not an interested person of the Trust has a direct or
indirect financial interest in the operation of the Plans.
The Board of Trustees has also adopted a Rule 18f-3 Multi-Class Share Plan
permitting the issuance of shares in multiple classes.
19
<PAGE>
MANAGEMENT OF THE FUND
The Trust is an open-end management investment company known as a mutual
fund. The Trustees of the Trust ("Trustees") are responsible for the overall
supervision of the Trust and perform duties imposed on Trustees by the
Investment Company Act and Massachusetts business trust law.
TRUSTEES AND OFFICERS
The Trustees and Officers of the Trust and their business affiliations for
the past five years are set forth below.
<TABLE>
<CAPTION>
Position With Principal Occupation
Name, Address and Age the Trust During Past 5 Years
- --------------------- --------- -------------------
<S> <C> <C>
James Balog (71) Trustee Retired; Director and member of the Audit, Investment, Stock Option
2205 N. South Wind Blvd. and Compensation Committees of Transatlantic Holdings, Inc.
Vero Beach, FL 32963 (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 Phoenix-Zweig 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 Advisors, L.P. and Chairman of Lambert Brussels Capital
Corporation (investments).
Claire B. Benenson (80) Trustee Consultant on Financial Conferences and Former Director of Financial
870 U.N. Plaza Conferences and Chairman, Department of Business and Financial
New York, NY 10017 Affairs, The New School for Social Research. President of the Money
Marketeers of New York University; Trustee of Phoenix-Zweig Trust
and of Simms Global Fund; and Director of The Burnham Fund Inc.; Former
Director of Zweig Cash Fund Inc.
S. Leland Dill (69) Trustee Retired; Director of Coutts & Co. Trust Holdings Limited, Coutts &
5070 North Ocean Dr. Co. Group, Coutts & Co. (USA) (private banking), Trustee of BT
Singer Island, FL 33404 Portfolios; BT Investment Funds and Phoenix-Zweig Trust. Former
partner of Peat Marwick Mitchell & Co. and Director of Zweig Cash
Fund Inc. and Vintners International Company, Inc. (winery).
Eugene J. Glaser (59)* Chairman, President of the Adviser and of Zweig/Glaser Advisers LLC; Chairman
900 Third Avenue Chief Executive and Trustee of Phoenix-Zweig Trust; and former President and Director
New York, NY 10022 Officer and Trustee of PXP Securities Corp.; and Director of Zweig Cash Fund Inc. and The
Zweig Fund, Inc.
Donald B. Romans (68) Trustee President of Romans & Company (private investors and financial
233 East Wacker Dr. consultants); Director of Phoenix-Zweig Trust and The Burnham Fund
Chicago, IL 60601 Inc.; Former Consultant to and Executive Vice President and Chief
Financial Officer of Bally Manufacturing Corporation and Director of
Zweig Cash Fund Inc.
Martin E. Zweig President President of the Adviser and Zweig Consulting LLC; Chairman of the
Board and President of The Zweig Total Return Fund, Inc. and The
Zweig Fund, Inc.; President and Director of Zweig-DiMenna
International Managers, Inc. and Zweig Securities Advisory Service
Inc.; Managing Director of Zweig-DiMenna Associates LLC; President
and Director of Gotham Advisors, Inc.; Member of the Undergraduate
Executive Board of the Wharton School, University of Pennsylvania.
Former President of Zweig Cash Fund Inc. Former President and
Director of Zweig Advisors Inc. and Zweig Total Return Advisors, Inc.
General Partner of Zweig Katzen Investors, L.P.; Former Chairman of
the Zweig/Glaser Advisers LLC.
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Position With Principal Occupation
Name, Address and Age the Trust During Past 5 Years
- --------------------- --------- -------------------
<S> <C> <C>
Michael E. Haylon (41) Executive Vice Director and Executive Vice President-Investments, Phoenix Investment
56 Prospect St. President Partners, Ltd. (1995-present). Executive Vice President, Zweig/Glaser
Hartford, CT 06115 Advisers LLC (1999-present). Director (1994-present), President
(1995-present), Executive Vice President (1994-1995), Vice President
(1991-1994), Phoenix Investment Counsel, Inc. Director
(1994-present), President (1996-present), Executive Vice President
(1994-1996), Vice President (1993-1994), National Securities &
Research Corporation. Director, Phoenix Equity Planning Corporation
(1995-present). Executive Vice President, Phoenix Funds
(1993-1995-present). Executive Vice President, Phoenix Funds
(1993-present) and Phoenix-Aberdeen Series Fund (1996-present).
Executive Vice President (1997-present), Vice President (1996-1997),
Phoenix Duff & Phelps Institutional Mutual Funds. Senior Vice
President, Securities Investments, Phoenix Home Life Mutual Insurance
Company (1993-1995).
William R. Moyer (55) Executive Vice Executive Vice President and Chief Financial Officer (1999-present),
100 Bright Meadow Blvd. President Senior Vice President and Chief Financial Officer, Phoenix Investment
P.O. Box 2200 Partners, Ltd. (1995-1999). Director (1998-present), Senior Vice
Enfield, CT 06083-2200 President, Finance (1990-present), Chief Financial Officer
(1996-present), and Treasurer (1994-1996 and 1998-present), Phoenix
Equity Planning Corporation. Director (1998-present), Senior Vice
President (1990-present), Chief Financial Officer (1996-present) and
Treasurer (1994-present), Phoenix Investment Counsel, Inc. Senior
Vice President and Chief Financial Officer, Duff & Phelps Investment
Management Co. (1996-present). Vice President, Phoenix Funds
(1990-present), Phoenix-Duff & Phelps Institutional Mutual Funds
(1996-present), Phoenix-Aberdeen Series Fund (1996-present). Senior
Vice President and Chief Financial Officer, W.S. Griffith & Co., Inc.
(1992-1995) and Townsend Financial Advisers, Inc. (1993-1995). Vice
President, Investment Products Finance, Phoenix Home Life Mutual
Insurance Company (1990-1995).
John F. Sharry (46) Executive Vice Managing Director, Retail distribution, Phoenix Equity Planning
56 Prospect Street President Corporation (1995-present). Executive Vice President, Phoenix Funds
Hartford, CT 06115 and Phoenix-Aberdeen Series Funds (1998-present). Managing Director,
Director and National Sales Manager, Putnam Mutual Funds (until 1995).
Carlton B. Neel (DOB) Senior Vice First Vice President of the Adviser; Vice President of Zweig Advisors
900 Third Avenue President Inc. and Zweig Total Return Advisors, Inc. Formerly, Vice President
New York, NY 10022 of J.P. Morgan & Co., Inc.
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Position With Principal Occupation
Name, Address and Age the Trust During Past 5 Years
- --------------------- --------- -------------------
<S> <C> <C>
Thomas N. Steenburg (50) Senior Vice President Senior Vice President (1999-present), Vice President, Secretary and
55 East Monroe Street Counsel (1995-1999), Phoenix Investment Partners, Ltd. Executive Vice
Chicago, IL 60603 President (1999-present), Vice President and Counsel (1996-1999),
Duff & Phelps Investment Management Co. Senior Vice President,
Zweig/Glaser Advisers LLC (1999-present). Director and President, PXP
Securities Corp. (1999-present). Vice President, Counsel and
Secretary, Phoenix Investment Counsel, Inc., National Securities &
Research Corporation and Phoenix Equity Planning Corporation
(1996-present). Vice President-Compliance, Phoenix-Aberdeen
International Advisors LLC (1996-present). Vice President, Counsel
and Compliance Officer, Seneca Capital Management, LLC
(1997-present). Vice President, Counsel and Secretary, Roger Engemann
& Associates, Inc. (1998-present). Counsel, Phoenix Home Life Mutual
Insurance Company (1991-1995).
Barry Mandinach (43) First Vice Executive Vice President of the Zweig Securities Corp.; Senior Vice
900 Third Avenue President President of the Adviser and of Zweig/Glaser Advisers. First Vice
New York, NY 10022 President of Phoenix-Zweig Trust.
Sung Chung (31) Vice President Vice President of Phoenix-Zweig Trust. Formerly, Vice President,
900 Third Avenue Mitchell Hutchins Asset Management and Senior Associate, Scudder
New York, NY 10022 Kemper.
Beth Abraham (44) Assistant Vice Assistant Vice President of Zweig/Glaser Advisers and Phoenix-Zweig
900 Third Avenue President Trust.
New York, NY 10022
Rhonda Lee Berzner (34) Assistant Vice Senior Research Analyst for the Adviser and Zweig/Glaser Advisers;
900 Third Avenue President and Assistant Vice President of Phoenix-Zweig Trust.
New York, NY 10022
David O'Brien (DOB) Assistant Vice Assistant Vice President of Phoenix-Zweig Trust. Assistant Portfolio
900 Third Avenue President Manager of Phoenix-Euclid Market Neutral Fund, the Phoenix-Zweig
New York, NY 10022 Strategy Fund, Phoenix-Zweig Appreciation Fund and Phoenix-Zweig
Growth & Income Fund. Formerly, Assistant Vice President, PaineWebber
(1993 to 1998).
Marc Baltuch (54) Secretary First Vice President, Chief Compliance Officer and Secretary of PXP
900 Third Avenue Securities Corp.; Director and President of Watermark Securities,
New York, NY 10022 Inc. Secretary of Phoenix-Zweig Trust; Assistant Secretary of Gotham
Advisors, Inc. Former First Vice President of the Adviser and of
Zweig/Glaser Advisers LLC; Secretary of Zweig Cash Fund Inc.
Nancy G. Curtiss (47) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer
(1996-present), Phoenix Equity Planning Corporation. Treasurer,
Phoenix Funds (1994-present) and Phoenix Duff & Phelps Institutional
Mutual Funds (1995-present). Second Vice President and Treasurer,
Fund Accounting, Phoenix Home Life Mutual Insurance Company
(1994-1995). Various positions with Phoenix Home Life Insurance
Company (1987-1994).
</TABLE>
_______________
*Designates a trustee who is an interested person of the trust within the
meaning of the 1940 Act.
Those Trustees and officers of the Trust who are affiliated with the
Distributor or the Manager are not separately compensated for their services as
Trustees of officers of the Trust. The Fund currently pays each of its
"disinterested" Trustees a fee of $2,500 per year, plus $750 per meeting
attended ($250 per phone meeting) and reimburses their expenses for attendance
at meetings. For the period fiscal year ended October 31, 1999, the fees and
expenses of disinterested Trustees, as a group, were
22
<PAGE>
$21,893. As of October 31, 1999, except for Dr. Zweig, the Trustees and officers
of the Trust, as a group, owned less than 1% of any Class of the Fund.
For the Fund's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
Total
Compensation from the Fund
Aggregate and Fund Complex (2 Funds)
Name of Person, Position Compensation from the Fund Paid to the Trustees
- ------------------------ -------------------------- --------------------
<S> <C> <C>
James Balog $5,000 $17,000
Claire B. Benenson 5,500 23,500
S. Leland Dill 5,500 23,500
Eugene J. Glaser 0 0
Donald B. Romans 5,500 23,500
</TABLE>
Trustees may be removed from office at any meeting of shareholders by a vote
of two-thirds of the outstanding shares of the Trust. A shareholders meeting may
be called by the Trustees or by the President of the Trust, or shall be called
promptly by the Trustees upon the written request of shareholders of the Trust
holding at least ten percent (10%) of the outstanding shares entitled to vote.
Except as set forth above, the Trustees shall continue to hold office and may
appoint their successors.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of February ___, 1999 with
respect to each person owning of record 5% or more of any class of the Fund's
shares:
<TABLE>
<S> <C> <C>
Name of Shareholder Class of Shares Percent of Class
------------------- --------------- ----------------
</TABLE>
The following table sets forth information as of February ___, 1999 with
respect to each person who beneficially owns 5% or more of any class of the
Fund's shares:
<TABLE>
<S> <C> <C>
Name of Shareholder Class of Shares Percent of Class
------------------- --------------- ----------------
</TABLE>
ADDITIONAL INFORMATION
CAPITOL STOCK
The Trust was established as a Delaware business trust on February 3, 1998.
The Board of Trustees directs the management of the business of the Trust. The
Board has duties and responsibilities comparable to those of the boards of
directors of corporations, not to those of trustees under customary trust
principles. The Trustees oversee the Trust's activities, elect the officers of
the Trust who are responsible for its day-to-day operations, review contractual
arrangements with the companies that provide services to the Trust, and review
investment performance.
The Trust, an open-end, diversified, management investment company, has an
unlimited number of shares of beneficial interest which, without shareholder
approval, may be divided by the Trustees into an unlimited number of funds and
classes. Voting rights are based on a shareholder's total dollar interest in a
Series and are thus allocated in proportion to the value of each shareholder's
investment. Shares vote together on matters that concern the entire Trust, or by
individual fund or class when the Board of Trustees determines that the matter
affects only the interests of a particular fund or class.
FINANCIAL STATEMENTS
The Financial Statements for the fiscal year ended October 31, 1999 appearing
in the Fund's 1999 Annual Report to Shareholders, are incorporated herein by
reference.
REPORTS TO SHAREHOLDERS
The fiscal year of the Fund ends on October 31. The Fund will send financial
statements to its shareholders at least semi-annually. An annual report,
containing financial statements audited by the Fund's independent accountants
will be sent to shareholders each year, and is available without charge upon
request.
23
<PAGE>
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1301 Avenue of the Americas, New York, NY 10019
has been selected as the independent accountants for the Fund.
PricewaterhouseCoopers LLP audits the Fund's annual financial statements and
expresses an opinion thereon.
CUSTODIAN AND TRANSFER AGENT
The Bank of New York, One Wall Street, New York, New York 10286 serves as
custodian.
Phoenix Equity Planning Corporation ("PEPCO"), 100 Bright Meadow Boulevard,
P.O. Box 2200, Enfield, CT 06083-2200, serves as Transfer Agent for the Fund.
PEPCO receives a fee equivalent of $13.50 for each shareholder account, plus
out-of-pocket expenses. The Transfer Agent is authorized to engage subagents to
perform certain shareholder servicing functions from time to time for which such
agents are paid a fee by the Transfer Agent. State Street Bank and Trust Company
serves as subtransfer agent pursuant to a Subtransfer Agency Agreement.
24
<PAGE>
PHOENIX-EUCLID FUNDS
PART C--OTHER INFORMATION
ITEM 23. EXHIBITS
a. Agreement and Declaration of Trust, filed as Exhibit 1 with Registrant's
registration statement on Form N-1A on February 5, 1998, and incorporated
herein by reference.
b. Bylaws of the Trust, filed as Exhibit 2 with Registrant's registration
statement on Form N-1A on February 5, 1998, and incorporated herein by
reference.
c. None.
d. Management Agreement between the Trust and Euclid Advisors, LLC, filed as
Exhibit 5 with Registrant's Pre-Effective Amendment No. 2 on or about
April 28, 1998, and incorporated herein by reference.
e. Distribution Agreement between the Trust and Phoenix Equity Planning
Corporation.
f. None.
g. Custodian Agreement between the Trust and The Bank of New York, filed as
Exhibit 8 with Registrant's Pre-Effective Amendment No. 2 on or about
April 28, 1998, and incorporated herein by reference.
h.1. Transfer Agency and Service Agreement between the Trust and Phoenix
Equity Planning Corporation.
h.2. Financial Agent Agreement between the Trust and Phoenix Equity Planning
Corporation.
i. Opinion of Counsel.
j. Consent of independent accountants.
k. None.
l. Subscription Agreement for Shares of the Fund, filed as Exhibit 13 with
Registrant's Pre-Effective Amendment No. 2 on or about April 28, 1998,
and incorporated herein by reference.
m.1* Amended and Restated Rule 12b-1 Distribution Plan for Class A and C
Shares, filed herewith.
m.2* Amended and Restated Rule 12b-1 Distribution Plan for Class B Shares,
filed herewith.
n. Financial Data Schedule.
o. Rule 18f-3 Plan, filed as Exhibit 18 with Registrant's Pre-Effective
Amendment No. 2 on or about April 28, 1998, and incorporated herein by
reference.
p. Code of Ethics.
q. Powers of Attorney, filed as Exhibit 19 with Registrant's Pre-Effective
Amendment No. 2 on or about April 28, 1998, and incorporated herein by
reference.
_______________
* Filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
No person is controlled by, or under common control, with the Fund.
ITEM 25. INDEMNIFICATION
All officers, Trustees, employees and agents of the Trust are to be
indemnified as set forth in Article VII of the Agreement and Declaration of
Trust. The Trust (i) may indemnify an agent of the Trust or any person who is
serving or has served at the Trust's request as an agent of another organization
in which the Trust has any interest as a shareholder, creditor or otherwise and
(ii) shall indemnify each person who is, or has been, a Trustee, officer or
employee of the Trust and any person who is serving or has served at the Trust's
request as a director, officer, trustee or employee of another organization in
which the Trust has any interest as a shareholder, creditor or otherwise, to the
fullest extent consistent with the Investment Company Act of 1940 and in the
manner provided by the By-Laws; provided that such indemnification shall not be
available to any of the foregoing persons in connection with a claim, suit or
other proceeding by such person against the Trust or a series (or class)
thereof. To this end, the Trust intends to obtain an Officers' and Trustees'
Errors and Omissions Insurance Policy for liability and for all expenses
reasonably incurred or paid or expected to be paid by a Trustee, officer,
employee or agent of the Trust in connection with any
C-1
<PAGE>
claim, action, suit or proceeding in which he or she becomes involved by virtue
of his or her capacity or former capacity with the Trust.
Insofar as indemnification for liability arising under the Securities Act of
1933, as amended (the "1933 Act") may be permitted for trustees, officers and
controlling persons of the Trust pursuant to the foregoing provisions, or
otherwise, the Trust 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 Trust of
expenses incurred or paid by a trustee, officer or controlling person of the
Trust 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 Trust 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 1933 Act and will be governed by the
final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
See "Management of the Fund" in the Prospectus and "Services of the Adviser"
and "Management of the Fund" in the Statement of Additional Information, which
is included in this Post-Effective Amendment. For information as to the
business, profession, vocation or employment of a substantial nature of
directors and officers of Euclid Advisors LLC, the Adviser, reference is made to
the Adviser's current Form ADV (SEC File No. 801-54263) filed under the
Investment Advisers Act of 1940 and incorporated herein by reference.
ITEM 27. PRINCIPAL UNDERWRITER
(a) Equity Planning also serves as the principal underwriter for the
following other investment companies:
Phoenix-Aberdeen Series Fund, Phoenix-Aberdeen Worldwide Opportunities Fund,
Phoenix Duff & Phelps Institutional Mutual Funds, Phoenix-Engemann Funds,
Phoenix Equity Series Fund, Phoenix-Euclid Funds, Phoenix-Goodwin California Tax
Exempt Bonds, Inc., Phoenix-Goodwin Multi-Sector Fixed Income Fund, Inc.,
Phoenix-Goodwin Multi-Sector Short Term Bond Fund, Phoenix Investment Trust 97,
Phoenix-Multi-Portfolio Fund, Phoenix-Oakhurst Income & Growth Fund,
Phoenix-Seneca Funds, Phoenix Series Fund, Phoenix-Oakhurst Strategic Allocation
Fund, Inc., Phoenix Strategic Equity Series Fund, Phoenix-Zweig Trust, Phoenix
Home Life Variable Universal Life Account, Phoenix Home Life Variable
Accumulation Account, PHL Variable Accumulation Account, Phoenix Life and
Annuity Variable Universal Life Account and PHL Variable Separate Account MVA1.
(b) Directors and executive officers of Phoenix Equity Planning Corporation
are as follows:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES POSITION AND OFFICES
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
---------------- ---------------- ---------------
<S> <C> <C>
Michael E. Haylon Director Executive Vice President
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President None
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Senior Vice President, Executive Vice President
100 Bright Meadow Blvd. Chief Financial Officer and Treasurer
P.O. Box 2200
Enfield, CT 06083-2200
John F. Sharry President, Executive Vice President
100 Bright Meadow Blvd. Retail Distribution
P.O. Box 2200
Enfield, CT 06083-2200
Leonard J. Saltiel Managing Director, None
56 Prospect St. Operations and Service
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES POSITION AND OFFICES
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
---------------- ---------------- ---------------
<S> <C> <C>
G. Jeffrey Bohne Vice President None
101 Munson Street
P.O. Box 810
Greenfield, MA 01302-0810
Nancy G. Curtiss Vice President and Treasurer, Treasurer
56 Prospect St. Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Counsel and Senior Vice President
56 Prospect St. Secretary
P.O. Box 150480
Hartford, CT 06115-0480
Jacqueline M. Porter Assistant Vice President, Assistant Treasurer
56 Prospect Street Financial Reporting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an affiliated
person of the Registrant or an affiliated person of such affiliated person,
directly or indirectly, from the Registrant during the Registrant's last fiscal
year.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the rules thereunder will be
maintained at the offices of (1) the Registrant at 900 Third Avenue, 31st Floor,
New York, New York 10022. (2) Phoenix-Euclid Advisors, LLC, at 900 Third Avenue,
New York, New York 10022. (3) State Street Bank and Trust Company, at 1776
Heritage Drive, North Quincy, Massachusetts 02171-2197. (4) Registrant's
Transfer Agent, Phoenix Equity Planning Corporation, at 100 Bright Meadow
Boulevard, Enfield, CT 06082.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
Not applicable.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment
Company Act, the Fund has duly caused this amendment to the registration
statement to be signed on its behalf by the undersigned, duly authorized, in the
City of New York, and State of New York on the 29th day of December, 1999.
PHOENIX-EUCLID FUNDS
ATTEST: By: /s/ EUGENE J. GLASER
-----------------------------------
EUGENE J. GLASER,
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act, this amendment to the
registration statement has been signed below by the following persons in the
capacities indicated, on this 29th day of December, 1999.
Signature Title
--------- -----
/s/ James Balog* Trustee
-----------------------------------------
James Balog
/s/ Claire B. Benenson* Trustee
-----------------------------------------
Claire B. Benenson
/s/ Nancy G. Curtiss Treasurer (Principal
----------------------------------------- Account Officer)
Nancy G. Curtiss
/s/ S. Leland Dill* Trustee
-----------------------------------------
S. Leland Dill
/s/ Eugene J. Glaser Chairman,
----------------------------------------- Chief Executive Officer
Eugene J. Glaser and Trustee
/s/ Donald B. Romans* Trustee
-----------------------------------------
Donald B. Romans*
*By /s/ Eugene J. Glaser
--------------------------------------------
* Eugene J. Glaser by Power of Attorney
S-1
Exhibit m.1
PHOENIX-EUCLID FUNDS
Class A Shares and Class C Shares
RULE 12b-1 DISTRIBUTION PLAN
<PAGE>
PHOENIX-EUCLID FUNDS
Class A Shares and Class C Shares
RULE 12b-1 DISTRIBUTION PLAN
----------------------------
As amended and restated
As of March 1, 1999
This distribution plan (the "Rule 12b-1 Distribution Plan" or
the "Plan"), has been adopted by the Class A Shares and Class C Shares of
Phoenix-Euclid Market Neutral Fund, a series of Phoenix-Euclid Funds (the
"Trust"), a Delaware business trust, and is restated effective March 1, 1999,
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"Act").
W H E R E A S:
The Trust is an open-end management investment company and is
registered as such under the Act. The Trust has the above listed series which is
currently being offered, and the Board of Trustees may establish and offer
additional series in the future. The Trust has a multi-class distribution system
that allows each series to offer investors the option of purchasing shares
either subject to a front-end sales charge (which may be reduced or waived under
certain circumstances as described in the Trust's Prospectus) coupled with a
Rule 12b-1 Plan distribution fee (the "Class A Shares"), subject to a declining
contingent deferred sales charge (if sold within six years after purchase), a
Rule 12b-1 Plan distribution fee and a service fee (the "Class B Shares") or
subject to a contingent deferred sales charge (if sold within one year after
purchase), a Rule 12b-1 Plan distribution fee and a service fee (the "Class C
Shares"). Phoenix-Euclid Market Neutral Fund (the "Fund") offers investors the
option of purchasing a fourth class of shares (the "Class I Shares"), which does
not have a Rule 12b-1 Plan. This Plan, however, governs only the Class A Shares
and Class C Shares of each series of the Trust. The Trust may, from time to
time, distribute shares of any class of any series through a contractual
arrangement (the "Distribution Agreement") with a principal distributor (the
"Principal Distributor") for such class of shares of such series duly qualified
to act on behalf of the Trust in such capacity, it being understood that the
Trust may change the Principal Distributor for any class of shares of any series
from time to time. The Board of Trustees, including a majority of the Qualified
Trustees (as defined in paragraph 6 herein), has determined to adopt this Plan.
In voting to approve this Plan, the Trustees have determined, in the exercise of
their reasonable business judgment and in light of their fiduciary duty, that
there is a reasonable likelihood that this Plan will benefit the Class A Shares
and Class C Shares of the Fund.
NOW, THEREFORE, in consideration of the foregoing, the Trust
hereby adopts this Plan in accordance with Rule 12b-1 under the Act on the
following terms and conditions:
1. The Trust shall pay to the Principal Distributor of Class A
Shares of any series of the Trust a fee at the rate of .30 of 1% per annum of
the average daily net asset value of the Class A Shares of each series of the
Trust. If at any time this Plan shall not be in effect with respect
<PAGE>
to the Class A Shares of all series, the above fee shall be calculated on the
basis of the net assets of Class A Shares of those series for which the Plan is
in effect. The fee shall be calculated and accrued daily and paid monthly or at
such other intervals as the Board of Trustees shall determine.
2. The Trust shall pay to the Principal Distributor of Class C
Shares of any series of the Trust a distribution fee at the rate of 1% per annum
of the average daily net assets of the Class C Shares of each series of the
Trust. The fee for all such payments made to the Distributor under this
paragraph includes a service fee of .25 of 1% per annum of the average daily net
assets of the Class C Shares of each series. The fee is paid to financial
services firms including National Association of Securities Dealers, Inc.
("NASD") member firms (commencing one year after purchase with respect to Class
C Shares) for continuous personal service by such firms to investors in such
Class C Shares. If at any time this Plan shall not be in effect with respect to
the Class C Shares of all series, the above fees shall be calculated on the
basis of the net assets of Class C Shares of those series for which the Plan is
in effect. The fees shall be calculated and accrued daily and paid monthly or at
such other intervals as the Board of Trustees shall determine. For purposes of
applying the limitation set forth in the Rules of Conduct of NASD Regulation,
Inc. on the maximum amount of the Distribution Fee payable in respect of the
Class C Shares of any series, the Trust hereby elects to add to six and one
quarter percent (6.25%) of the issue price of the Class C Shares interest
thereon at the rate of prime plus one percent per annum.
3. The amounts set forth in paragraphs 1 and 2 of this Plan
shall be paid for the Principal Distributor's services and expenses as
distributor of the Class A Shares and Class C Shares of the Trust and may be
spent by the Principal Distributor, in its discretion, on, among other things,
compensation to and expenses (including overhead and telephone expenses) of
account executives or other employees of the Principal Distributor or of other
broker-dealers who engage in or support distribution of shares; printing of
prospectuses and reports for other than existing shareholders; advertising;
preparation, printing and distribution of sales literature; and allowances to
other broker-dealers. In addition, whether or not required to be provided for in
a Rule 12b-1 plan, to the extent approved by the shareholders of a particular
class or series and the Board of Trustees of the Trust, a class or series may
pay or reimburse the Principal Distributor and others for all of its
organizational and initial offering expenses. Such amounts are in addition to
and not limited by the amounts as set forth in paragraphs 1 and 2 herein.
4. This Plan shall not take effect with respect to the Class A
Shares of a series until it has been approved by a vote of at least a majority
(as defined in the Act) of the outstanding voting securities of Class A Shares
of the series. With respect to the submission of this Plan for such a vote, it
shall have been effectively approved with respect to Class A Shares of any
series if a majority of the outstanding voting securities of Class A Shares of
that series votes for the approval of this Plan, notwithstanding that: (1) this
Plan has not been approved by a majority of the outstanding voting securities of
Class A Shares of any other series, or (2) the matter has not been approved by a
majority of the outstanding voting securities of Class A Shares of the Trust.
5. This Plan shall not take effect with respect to the Class C
Shares of a series until it has been approved by a vote of at least a majority
(as defined in the Act) of the outstanding
2
<PAGE>
voting securities of Class C Shares of the series. With respect to the
submission of this Plan for such a vote, it shall have been effectively approved
with respect to Class C Shares of any series if a majority of the outstanding
voting securities of Class C Shares of that series votes for the approval of
this Plan, notwithstanding that: (1) this Plan has not been approved by a
majority of the outstanding voting securities of Class C Shares of any other
series, or (2) the matter has not been approved by a majority of the outstanding
voting securities of Class C Shares of the Trust.
6. This Plan shall not become effective with respect to the
Class A Shares or Class C Shares of a series without the approval, together with
the approval of any related agreements, of a majority vote of both (i) the Board
of Trustees and (ii) those Trustees who are not "interested persons" of the
Trust (as defined in the Act) and have no direct or indirect financial interest
in the operation of this Plan or any agreements related to it (the "Qualified
Trustees"), cast in person at a meeting called for the purpose of voting on this
Plan and such related agreements.
7. This Plan shall continue in effect for so long as such
continuance is specifically approved at least annually in the manner provided
for approval of this Plan in paragraph 6 herein.
8. In each year that this Plan remains in effect, any person
authorized to direct the disposition of monies paid or payable by the Trust
pursuant to this Plan or any related agreement shall prepare and furnish to the
Board and the Board shall review, at least quarterly, written reports, complying
with the requirements of Rule 12b-1 under the Act, of the amounts expended under
this Plan and purposes for which such expenditures were made.
9. This Plan may be terminated at any time with respect to the
Class A Shares of any series by a majority vote of the Qualified Trustees or by
vote of a majority of the outstanding voting securities of Class A Shares of
that series. This Plan may remain in effect with respect to the Class A Shares
of a series even if it has been terminated in accordance with this paragraph
with respect to one or more other series of the Trust.
10. This Plan may be terminated at any time with respect to
the Class C Shares of any series by a majority vote of the Qualified Trustees or
by vote of a majority of the outstanding voting securities of Class C Shares of
that series. This Plan may remain in effect with respect to the Class C Shares
of a series even if it has been terminated in accordance with this paragraph
with respect to one or more other series of the Trust.
11. This Plan may not be amended in order to increase
materially the amount of distribution expenses provided for in paragraphs 1 and
2 herein unless such amendment is approved in the manner provided in paragraphs
4 and 5 herein, and no material amendment to this Plan shall be made unless
approved in the manner provided in paragraph 6 herein.
12. While this Plan shall be in effect, the selection and
nomination of Trustees who are not interested persons of the Trust (as defined
in the Act) shall be committed to the discretion of the Trustees then in office
who are not interested persons of the Trust.
3
<PAGE>
The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 8 herein, for a period of
not less than six years from the date of this Plan, or the agreements or such
report, as the case may be, the first two years in an easily accessible place.
The Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Delaware and notice is hereby given that this
Plan is adopted 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 Plan are
not binding upon the Trustees, officers or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
Notice is hereby given that the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a particular
series of the Trust shall be enforceable against the assets of such series only,
and not against the assets of the Trust generally.
Date: March 1, 1999
4
Exhibit m.2
PHOENIX-EUCLID FUNDS
Class B Shares
RULE 12b-1 DISTRIBUTION PLAN
<PAGE>
PHOENIX-EUCLID FUNDS
Class B Shares
RULE 12b-1 DISTRIBUTION PLAN
----------------------------
As amended and restated
As of March 1, 1999
This distribution plan (the "Rule 12b-1 Distribution Plan" or
the "Plan") had been adopted by the Class B Shares of Phoenix-Euclid Market
Neutral Fund which is a series of Euclid Mutual Funds (the "Trust"), a Delaware
business trust, and is restated effective March 1, 1999, pursuant to Rule 12b-1
under the Investment Company Act of 1940 as amended (the "Act").
W H E R E A S:
The Trust is an open-end management investment company and is
registered as such under the Act. The Trust has the above listed series which is
currently being offered, and the Board of Trustees may establish and offer
additional series in the future. The Trust has a multi-class distribution system
that allows each series to offer investors the option of purchasing shares
either subject to a front-end sales charge (which may be reduced or waived under
certain circumstances as described in the Trust's Prospectus) coupled with a
Rule 12b-1 Plan distribution fee (the "Class A Shares"), subject to a declining
contingent deferred sales charge (if sold within six years after purchase), a
Rule 12b-1 Plan distribution fee and a service fee (the "Class B Shares") or
subject to a contingent deferred sales charge (if sold within one year after
purchase), a Rule 12b-1 Plan distribution fee and a service fee (the "Class C
Shares"). Phoenix-Euclid Market Neutral Fund offers investors the option of
purchasing a fourth class of shares (the "Class I Shares") which does not have a
Rule 12b-1 Plan. This Plan, however, governs only the Class B Shares of each
series of the Trust. The Trust may, from time to time, distribute shares of any
class of any series through a contractual arrangement (the "Distribution
Agreement") with a principal distributor (the "Principal Distributor") for such
class of shares of such series duly qualified to act on behalf of the Trust in
such capacity, it being understood that the Trust may change the Principal
Distributor for any class of shares of any series from time to time. The Board
of Trustees, including a majority of the Qualified Trustees (as defined in
paragraph 5 herein), has determined to adopt the Plan. In voting to approve the
Plan, the Trustees have determined, in the exercise of their reasonable business
judgment and in light of their fiduciary duty, that there is a reasonable
likelihood that this Plan will benefit the Class B Shares of Phoenix-Euclid
Market Neutral Fund.
NOW, THEREFORE, in consideration of the foregoing, the Trust
hereby adopts this Plan in accordance with Rule 12b-1 under the Act on the
following terms and conditions:
1. The Trust shall pay to each Principal Distributor of Class
B Shares of any series (including Phoenix-Euclid Market Neutral Fund) its
"Allocable Portion," as hereinafter
<PAGE>
2
defined, of the distribution fee allowable under the Rules of Conduct of NASD
Regulation, Inc. (the "Rules of Conduct") in respect of such Class of Shares of
such series, consisting of a distribution fee at the rate of three quarters of
one percent (0.75%) per annum of the average daily net assets of such Class of
Shares (the "Distribution Fee") and a service fee at the rate of one quarter of
one percent (0.25%) of the average daily net assets of such Class of Shares of
such series of the Trust (as described in the Prospectus). For purposes of
applying the limitation set forth in the Rules of Conduct on the maximum amount
of the Distribution Fee payable in respect of the Class B Shares of any series,
the Trust hereby elects to add to six and one quarter percent (6.25%) of the
issue price of the Class B Shares interest thereon at the rate of prime plus one
percent per annum. A contingent deferred sales charge ("CDSC") also shall be
payable by the holders of Class B Shares in the case of early redemption of such
Class B Shares (as described in the Prospectus).
2. The amounts set forth in paragraph 1 of this Plan shall be
paid for the Principal Distributor's services and expenses as distributor of the
Class B Shares of the Trust and may be spent by the Principal Distributor, in
its discretion, on, among other things, compensation to and expenses (including
overhead and telephone expenses) of account executives or other employees of the
Principal Distributor or of other broker-dealers who engage in or support
distribution of shares; printing of prospectuses and reports for other than
existing shareholders; advertising; preparation, printing and distribution of
sales literature; and allowances to other broker-dealers. In addition, whether
or not required to be provided for in this Rule 12b-1 Distribution Plan, to the
extent approved by the shareholders of a particular series and the Board of
Trustees of the Trust, the Class B Shares or a series may pay or reimburse the
Principal Distributor and others for all of its organizational and initial
offering expenses. Such amounts are in addition to and not limited by the
amounts as set forth in paragraph 1 herein.
3. Any Distribution Agreement in respect of Class B Shares of
any series may provide that: (I) the Principal Distributor in respect of such
Distribution Agreement will be deemed to have fully earned its Allocable Portion
of the Distribution Fee payable in respect of Class B Shares of such series upon
the sale of each "Initial Issue Commission Share" (as hereinafter defined) of
such series taken into account in determining such Principal Distributor's
Allocable Portion of such Distribution Fee; (II) except as provided in (III)
below, the Trust's obligation to pay such Principal Distributor its Allocable
Portion of the Distribution Fee payable in respect of the Class B Shares of such
series shall be absolute and unconditional and shall not be subject to dispute,
offset, counterclaim or any defense whatsoever (it being understood that such
provision is not a waiver of the Trust's right to pursue such Principal
Distributor and enforce such claims against the assets of such Principal
Distributor other than its right to the Distribution Fees and CDSCs in respect
of the Class B Shares of such series); (III) the Trust's obligation to pay such
Principal Distributor its Allocable Portion of the Distribution Fee payable in
respect of the Class B Shares of such series shall not be terminated or modified
except to the extent required by a change in the Act or the Rules of Conduct
enacted or promulgated after September 15, 1995 (a "Change-in-Applicable-Law"),
or in connection with a "Complete Termination" (as hereinafter defined) of this
Plan in respect of the
<PAGE>
3
Class B Shares of such series; (IV) the Trust will not waive or change any CDSC
in respect of the Class B Shares of such series, except as provided in the
Trust's Prospectus or statement of additional information without the consent of
the Principal Distributor (or its assigns); (V) except to the extent required by
a Change-in-Applicable-Law, neither the termination of such Principal
Distributor's role as principal distributor of the Class B Shares of such
series, nor the termination of such Distribution Agreement nor the termination
of this Plan will terminate such Principal Distributor's right to its Allocable
Portion of the CDSCs in respect of Class B Shares of such series sold prior to
such termination; (VI) except as provided in the Trust's Prospectus and
statement of additional information, until such Principal Distributor has been
paid its Allocable Portion of the Distribution Fees in respect of the Class B
Shares of such series, the Trust will not adopt a plan of liquidation in respect
of such series without the consent of such Principal Distributor (or its
assigns); and (VII) such Principal Distributor may sell and assign its rights to
its Allocable Portion of the Distribution Fees and CDSCs (but not such Principal
Distributor's obligations to the Trust under the Distribution Agreement) to
raise funds to make the expenditures related to the distribution of Class B
Shares of such series and in connection therewith, upon receipt of notice of
such sale and assignment, the Trust shall pay to the purchaser or assignee such
portion of the Principal Distributor's Allocable Portion of the Distribution
Fees in respect of the Class B Shares of such series so sold or assigned. For
purposes of this Plan, the term "Allocable Portion" means, in respect of
Distribution Fees payable in respect of the Class B Shares of any series as
applied to any Principal Distributor, the portion of such Distribution Fees and
CDSCs allocated to such Principal Distributor in accordance with the Allocation
Schedule (as hereinafter defined). For purposes of this Plan, the term "Complete
Termination" of this Plan means, in respect of any series, a termination of this
Plan involving the cessation of payments of Distribution Fees hereunder in
respect of Class B Shares of such series and the cessation of payments of
distribution fees pursuant to every other rule 12b-1 plan of the Trust in
respect of such series for every future class of shares which, in the good faith
determination of the Board of Trustees of the Trust, has substantially similar
economic characteristics to the Class B Shares taking into account the total
sales charge, contingent deferred sales charge and other similar charges, it
being understood that the existing Class A Shares and the existing Class C
Shares do not have substantially similar economic characteristics to the Class B
Shares. For purposes of this Plan, the term "Allocation Schedule" means, in
respect of the Class B Shares of any series, a schedule which shall be approved
in the same manner as this Plan as contemplated by Section 5 hereof for
assigning to each Principal Distributor of Class B Shares of such series the
portion of the total Distribution Fees payable by the Trust in respect of the
Class B Shares of such series which has been earned by such Principal
Distributor, which shall be attached to and become a part of any Distribution
Agreement in respect of Class B Shares. For purposes of clause (I) of the first
sentence of this Section 3, the term "Initial Issue Commission Share" shall
mean, in respect of any series, a Class B Share which is a Commission Share
issued by such series under circumstances other than in connection with a
permitted free exchange with another fund. For purposes of the foregoing
definition a "Commission Share" shall mean, in respect of any series, each Class
B Share of such series which is issued under circumstances which would normally
give rise to an obligation of the holder of such Class B Share to pay a CDSC
upon redemption of such Share, including, without limitation, any Class B Share
of such Fund issued in connection with a permitted free exchange, and
<PAGE>
4
any such Class B Share shall not cease to be a Commission Share prior to the
redemption (including a redemption in connection with a permitted free exchange)
or conversion even though the obligation to pay the CDSC shall have expired or
conditions for thereof still exist.
4. This Plan shall not take effect until it has been approved
by a vote of at least a majority (as defined in the Act) of the outstanding
voting securities of Class B Shares of the Series. With respect to the
submission of this Plan for such a vote, it shall have been effectively approved
with respect to Class B Shares of any series if a majority of the outstanding
voting securities of Class B Shares of that series votes for the approval of
this Plan, notwithstanding that: (1) this Plan has not been approved by a
majority of the outstanding voting securities of Class B Shares of any other
series, or (2) the matter has not been approved by a majority of the outstanding
voting securities of Class B Shares of the Trust.
5. This Plan shall become effective with respect to the Class
B Shares of a series upon approval, together with any related agreements, by a
majority vote of both (i) the Board of Trustees and (ii) those Trustees who are
not "interested persons" of the Trust (as defined in the Act) and have no direct
or indirect financial interest in the operation of this Plan or any agreements
related to it (the "Qualified Trustees"), cast in person at a meeting called for
the purpose of voting on this Plan and such related agreements.
6. This Plan shall continue in effect for so long as such
continuance is specifically approved at least annually in the manner provided
for approval of this Plan in paragraph 5 herein.
7. In each year that this Plan remains in effect, any person
authorized to direct the disposition of monies paid or payable by the Trust
pursuant to this Plan or any related agreement shall prepare and furnish to the
Board and the Board shall review, at least quarterly, written reports, complying
with the requirements of Rule 12b-1 under the Act, of the amounts expended under
this Plan and purposes for which such expenditures were made.
8. This Plan may be terminated at any time with respect to the
Class B Shares of any series by a majority vote of the Qualified Trustees or by
vote of a majority of the outstanding voting securities of Class B Shares of
that series. This Plan may remain in effect with respect to the Class B Shares
of a series even if it has been terminated in accordance with this paragraph
with respect to one or more other series of the Trust.
9. This Plan may not be amended in order to increase
materially the amount of distribution expenses provided for in paragraph 1
herein unless such amendment is approved by a majority (as defined in the Act)
of the outstanding voting securities of Class B Shares and no material amendment
to this Plan shall be made unless approved in the manner provided in paragraph 5
herein.
<PAGE>
5
10. While this Plan shall be in effect, the selection and
nomination of Trustees who are not interested persons of the Trust (as defined
in the Act) shall be committed to the discretion of the Trustees then in office
who are not interested persons of the Trust.
The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 7 herein, for a period of
not less than six years from the date of this Plan, or the agreements or such
report, as the case may be, the first two years in an easily accessible place.
The Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Delaware and notice is hereby given that this
Plan is adopted 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 Plan are
not binding upon the Trustees, officers or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
Notice is hereby given that the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a particular
series of the Trust shall be enforceable against the assets of such series only,
and not against the assets of the Trust generally.
Date: March 1, 1999
