AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 25, 2000
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. 4 |X|
AND/OR
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 6 |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)
---------------------
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)
---------------------
It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on February 28, 2000 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>
<TABLE>
<CAPTION>
PHOENIX-EUCLID FUNDS
Cross Reference Sheet Pursuant to Rule 495(a)
(Under The Securities Act of 1933)
PART A
INFORMATION REQUIRED IN PROSPECTUS
<S> <C>
ITEM NUMBER FORM N-1A, PART A PROSPECTUS CAPTION
----------------------------- ------------------
1. Front and Back Cover Pages............................... Cover Page, Back Cover Page
2. Risk/Return Summary: Investments, Risks, Performance..... Investment Risk and Return Summary
3. Risk/Return Summary: Fee Table........................... Fund Expenses
4. Investment Objectives, Principal Investment Strategies,
and Related Risks Investment Risk and Return Summary
5. Management's Discussion of Fund Performance.............. Performance Tables
6. Management, Organization, and Capital Structure.......... Management of the Fund
7. Shareholder Information.................................. Pricing of Fund Shares; Sales Charges; Your
Account; How to Buy Shares; How to Sell Shares;
Things You Should Know When Selling Shares;
Account Policies; Investor Services; Tax Status of
Distributions
8. Distribution Arrangements................................ Sales Charges
9. Financial Highlights Information......................... Financial Highlights
PART B
INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
ITEM NUMBER FORM N-1A, PART B STATEMENT OF ADDITIONAL INFORMATION CAPTION
----------------------------- -------------------------------------------
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
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.
</TABLE>
<PAGE>
TABLE OF CONTENTS
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Investment Risk and Return Summary.................. 1
Fund Expenses....................................... 4
Additional Investment Techniques.................... 5
Management of the Fund.............................. 7
Pricing of Fund Shares.............................. 8
Sales Charges....................................... 9
Your Account........................................ 11
How to Buy Shares................................... 13
How to Sell Shares.................................. 13
Things You Should Know When Selling Shares.......... 14
Account Policies.................................... 15
Investor Services................................... 17
Tax Status of Distributions......................... 17
Financial Highlights................................ 18
Additional Information.............................. 21
[triangle] Phoenix-
Euclid
Market
Neutral
Fund
<PAGE>
PHOENIX-EUCLID MARKET NEUTRAL FUND
INVESTMENT RISK AND RETURN SUMMARY
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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 short positions in equity securities. The fund has a long
position when it owns the security and has "sold short" a position when
it sells a security it does not own. When the fund has "sold short," it
must borrow the security in order to settle the sell and buy the
security at a later date to pay back the lender. The fund must maintain
collateral at least equal to the current market value of the security
sold short. The fund will not make a short sale if the market value of
all short positions would exceed 100% of the value of the fund's net
assets giving effect to such sale.
[arrow] 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.
Phoenix-Euclid Market Neutral Fund 1
<PAGE>
[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. A high portfolio turnover rate may increase costs to the
fund, may negatively affect fund performance, and may increase capital
gains distributions, resulting in greater tax liability to you.
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.
Please see "Additional Investment Techniques" for other investment techniques of
the fund.
PRINCIPAL RISKS
If you invest in this fund, you risk that you may lose your investment.
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.
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 affected 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.
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 a loss. The fund's loss on a
short sale is limited only by the maximum attainable price of the security
(which could be limitless) less the price the fund paid for the security at the
time it was borrowed.
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 the fund's Class
A Shares performance.(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 (%)
1999 -5.53
(1) The fund's annual return in the chart above does not reflect the deduction
of any sales charges. The return would have been less than that shown if sales
charges were deducted. During the period shown in the chart above, the highest
return for a quarter was 2.41% (quarter ending September 30, 1999) and the
lowest return for a quarter was (7.41)% (quarter ending March 31, 1999).
Year-to-date performance (through September 30, 2000) was ______%.
--------------------------------------------------------------------------------
Average Annual Total Returns
(for the periods ending 12/31/99)(1) One Year Life of the Fund(2)
--------------------------------------------------------------------------------
Class A Shares(3) (10.96)% (7.46)%
--------------------------------------------------------------------------------
Class B Shares (9.88)% (6.96)%
--------------------------------------------------------------------------------
Class C Shares (6.41)% (4.90)%
--------------------------------------------------------------------------------
Class I Shares (5.29)% (3.88)%
--------------------------------------------------------------------------------
3-month Treasury Bill(4) 4.76% 4.83%
--------------------------------------------------------------------------------
(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) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(4) 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
------- ------- ------- -------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID
DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (load) Imposed
on Purchases (as a percentage of
offering price) 5.75% None 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 Dividends None None None None
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%
==== ==== ==== ====
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</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 February 28, 2001 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").
4 Phoenix-Euclid Market Neutral Fund
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after seven years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class A $943 $1,691 $2,455 $4,443
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Class B $859 $1,683 $2,414 $4,528
--------------------------------------------------------------------------------
Class C $584 $1,383 $2,314 $4,677
--------------------------------------------------------------------------------
Class I $361 $1,097 $1,855 $3,845
--------------------------------------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
--------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Class B $459 $1,383 $2,314 $4,528
--------------------------------------------------------------------------------
Class C $459 $1,383 $2,314 $4,677
--------------------------------------------------------------------------------
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, the fund may engage in the
following investment techniques:
BORROWING
The fund may obtain fixed interest rate loans in amounts up to one-third the
value of its net assets and invest the loan proceeds in other assets. If the
securities purchased with such
Phoenix-Euclid Market Neutral Fund 5
<PAGE>
borrowed money decrease in value or do not increase enough to cover interest and
other borrowing costs, the fund will suffer greater losses than if no borrowing
took place.
Please refer to the Statement of Additional Information for more detailed
information about these and other investment techniques of the fund.
FOREIGN INVESTING
The fund may invest in equity securities of foreign (non-U.S.) issuers. Foreign
equity investments are generally limited to securities traded on U.S. exchanges.
Investments in non-U.S. securities involve additional risks and conditions,
including differences in accounting standards, generally higher commission
rates, differences in transaction settlement systems, political instability,
and the possibility of confiscatory or expropriation taxes, all of which may
negatively impact the fund. Dividends and other income payable on foreign
securities may also be subject to foreign taxes.
Some foreign 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. In
addition, foreign markets and currencies may not perform as well as U.S.
markets.
ILLIQUID SECURITIES
The fund may invest 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.
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.
REPURCHASE AGREEMENTS
The fund may invest in repurchase agreements. Default or insolvency of the other
party presents a risk to the fund.
SECURITIES LENDING
The fund may loan portfolio securities with a value up to one-third of its total
assets to increase investment returns. If the borrower is unwilling or unable to
return the borrowed securities when due, the fund can suffer losses.
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 $85.9
million in assets under management.
Euclid is a wholly-owned subsidiary of Phoenix/Zweig, 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 $64.6
billion in assets under management.
Subject to the direction of the fund's Board of Trustees, Euclid is responsible
for managing the fund's 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 fund
(excluding interest, taxes, dividends on short sales, brokerage commissions,
12b-1 fees, and extraordinary expenses) until February 28, 2001 to the extent
that such expenses exceed 0.50% of the average annual net assets of the 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
Carlton Neel and David Dickerson serve as Co-Portfolio Managers of the fund.
Mr. Neel is a Senior Vice President of the fund, Euclid Advisors LLC and
Phoenix/Zweig Advisers LLC. He has served as the Senior Portfolio Manager
for the Phoenix-Zweig Strategy Fund, Phoenix-Zweig Appreciation Fund and
Phoenix-Zweig Growth & Income Fund since January 2000; for Phoenix-Zweig
Managed Assets and Phoenix-Zweig Government Fund since July 1995; and for the
Phoenix-Zweig Foreign Equity Fund since its inception in November 1997. Mr. Neel
received a dual B.A. in Economics and Political Science from Brown University.
Prior to joining the Zweig Companies, he was a Vice President with J.P. Morgan &
Co., Inc. Mr. Dickerson began his investment career at Phoenix/Zweig Advisers in
1993. He was promoted to Assistant Portfolio Manager of Zweig Managed Assets in
1996, where he was responsible for managing the U.S. stock portion of the fund.
He was promoted to Co-Portfolio Manager of Phoenix-Zweig Strategy Fund in
January 2000. Mr. Dickerson earned a B.A. in Psychology from Harvard University
and an M.B.A. in Finance and Economics from New York University (Stern School of
Business).
Phoenix-Euclid Market Neutral Fund 7
<PAGE>
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:
o adding the values of all securities and other assets of the fund,
o subtracting liabilities, and
o dividing the result by the total number of outstanding shares of the
fund.
Asset Value: 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.
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. If
the fund holds securities that are traded on foreign exchanges that trade on
weekends or other holidays when the fund does not price its shares, the net
asset value of the fund's shares may change on days when shareholders will not
be able to purchase or redeem the fund's shares.
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
8 Phoenix-Euclid Market Neutral Fund
<PAGE>
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
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 5.75% of the offering price (6.10% 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 Class 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
Phoenix-Euclid Market Neutral Fund 9
<PAGE>
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 Initial Sales Charges: Combination Purchase Privilege" in the
Statement of Additional Information). Shares purchased based on the automatic
reinvestment of income dividends or capital gains distributions are not subject
to any sales charges. The sales charge is divided between your investment dealer
and the fund's underwriter (Phoenix Equity Planning Corporation or "PEPCO").
SALES CHARGE YOU MAY PAY TO PURCHASE CLASS A SHARES
SALES CHARGE AS
A PERCENTAGE OF
-------------------------------
AMOUNT OF NET
TRANSACTION OFFERING AMOUNT
AT OFFERING PRICE PRICE INVESTED
--------------------------------------------------------------------------------
Under $50,000 5.75% 6.10%
$50,000 but under $100,000 4.75 4.99
$100,000 but under $250,000 3.75 3.90
$250,000 but under $500,000 2.75 2.83
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
DEFERRED SALES CHARGE ALTERNATIVE--CLASS B AND CLASS C SHARES
Class B and Class C Shares are purchased without an initial sales charge;
however, shares sold within a specified time period are subject to a declining
contingent deferred sales charge ("CDSC") at the rates listed below. The sales
charge will be multiplied by the then current market value or the initial cost
of the shares being redeemed, whichever is less. No sales charge will be imposed
on increases in net asset value or on shares purchased through the reinvestment
of income dividends or capital gains distributions. To minimize the sales
charge,
10 Phoenix-Euclid Market Neutral Fund
<PAGE>
shares not subject to any charge will be redeemed first, followed by shares held
the longest time. To calculate the amount of shares owned and time period held,
all Class B Shares purchased in any month are considered purchased on the last
day of the preceding month, and all Class C Shares are considered purchased on
the trade date.
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS B SHARES
YEAR 1 2 3 4 5 6 7
--------------------------------------------------------------------------------
CDSC 5% 4% 3% 3% 2% 1% 0%
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.
STEP 1.
Your first choice will be the initial amount you intend to invest.
Minimum INITIAL investments:
o $25 for individual retirement accounts, or accounts that use the
systematic exchange privilege, or accounts that use the
Investo-Matic program (see below for more information on the
Investo-Matic program).
o There is no initial dollar requirement for defined contribution
plans, profit-sharing plans, or employee benefit plans. There is
also no minimum for reinvesting dividends and capital gains into
another account.
o $500 for all other accounts.
Phoenix-Euclid Market Neutral Fund 11
<PAGE>
Minimum ADDITIONAL investments:
o $25 for any account.
o There is no minimum for defined contribution plans, profit-sharing
plans, or employee benefit plans. There is also no minimum for
reinvesting dividends and capital gains into an existing account.
The fund reserves the right to refuse any purchase order for any reason.
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:
o Receive both dividends and capital gain distributions in additional
shares;
o Receive dividends in additional shares and capital gain in
distributions in cash;
o Receive dividends in cash and capital gain distributions in
additional shares; or
o Receive both dividends and capital gain distributions in cash.
No interest will be paid on uncashed distribution checks.
12 Phoenix-Euclid Market Neutral Fund
<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 and may set
different minimum investments or limitations on buying shares.
----------------------------------- ----------------------------------------------------------------------------
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.
Phoenix-Euclid Market Neutral Fund 13
<PAGE>
<TABLE>
<CAPTION>
------------------------------------ -----------------------------------------------------------------------------
TO SELL SHARES
------------------------------------ -----------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee and may set
different minimums on redemptions of accounts.
------------------------------------ -----------------------------------------------------------------------------
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, and 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, and number of shares or
dollar value you wish to sell.
------------------------------------ -----------------------------------------------------------------------------
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:
o The proceeds do not exceed $50,000.
o The proceeds are payable to the registered owner at the address on
record.
14 Phoenix-Euclid Market Neutral Fund
<PAGE>
Send a clear letter of instruction with a signature guarantee when any
of these apply:
o You are selling more than $50,000 worth of shares.
o The name or address on the account has changed within the last 60
days.
o You want the proceeds to go to a different name or address than on
the account.
[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 Class C Shares, you can
purchase Class A Shares of any fund at net asset value, with no sales charge, by
reinvesting all or part of your proceeds, but not more. Send your written
request to State Street Bank, P.O. Box 8301, Boston, MA 02266-8301. You can call
us at (800) 243-1574 for more information.
Please remember, a redemption and reinvestment are considered to be a sale and
purchase for tax-reporting purposes. Class B and Class C shareholders who have
had the contingent deferred sales charge waived because they are in the
Systematic Withdrawal Program are not eligible for this reinstatement privilege.
Phoenix-Euclid Market Neutral Fund 15
<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 of the fund into which you want to exchange
before deciding to make an exchange. You can obtain a prospectus from your
financial advisor or by calling us at (800) 243-1574 or accessing our Web site
at www.phoenixinvestments.com.
o You may exchange shares for another fund in the same class of
shares; e.g., Class A for Class A. Exchange privileges may not be
available for all Phoenix Funds, and may be rejected or suspended.
o Exchanges may be made by phone (800) 243-1574 or by mail (State
Street Bank, P.O. Box 8301, Boston, MA 02266-8301).
o The amount of the exchange must be equal to or greater than the
minimum initial investment required.
o The exchange of shares is treated as a sale and a purchase for
federal income tax purposes.
o Because excessive trading can hurt fund performance and harm other
shareholders, the 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.
16 Phoenix-Euclid Market Neutral Fund
<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
Investo-Matic Section on the application and include a voided check.
SYSTEMATIC EXCHANGE allows you to automatically move money from one Phoenix Fund
to another on a monthly, quarterly, semiannual or annual basis. Shares of one
Phoenix Fund will be exchanged for shares of the same class of another fund at
the interval you select. To sign up, just complete the Systematic Exchange
Section on the application. Exchange privileges may not be available for all
Phoenix Funds, and may be rejected or suspended.
TELEPHONE EXCHANGE lets you exchange shares of one fund for the same class of
shares of one of the funds of Phoenix-Zweig Trust, using our customer service
telephone service. See the Telephone Exchange Section on the application.
Exchange privileges may not be available for all Phoenix Funds, and may be
rejected or suspended.
SYSTEMATIC WITHDRAWAL PROGRAM allows you to periodically redeem a portion of
your account on a predetermined monthly, quarterly, semiannual, or annual basis.
Sufficient shares will be redeemed on the 15th of the month at the closing net
asset value so that the payment is made about the 20th of the month. The program
also provides for redemptions on or about the 10th, 15th, or 25th with proceeds
directed through Automated Clearing House (ACH) to your bank. The minimum
withdrawal is $25, and minimum account balance requirements continue.
Shareholders in the program must own fund shares worth at least $5,000 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.
In addition, short-sale transactions will be subject to special tax rules which
could result in the fund realizing more short-term capital gains and ordinary
income taxed at ordinary income rates.
Phoenix-Euclid Market Neutral Fund 17
<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
---------------------------------------------
SIX MONTHS FROM
ENDED YEAR INCEPTION
4/30/00 ENDED 5/1/98 TO
(UNAUDITED) 10/31/99 10/31/98
----------- -------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period $10.68 $10.84 $11.34
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.13(5) 0.26 0.09
Net realized and unrealized gain (loss) (0.81) (0.29) (0.59)
---- ---- ----
TOTAL FROM INVESTMENT OPERATIONS (0.68) (0.03) (0.50)
---- ---- ----
LESS DISTRIBUTIONS
Dividends from net investment income (0.26) (0.13) --
---- ---- ----
Change in net asset value (0.94) (0.16) (0.50)
---- ---- ----
NET ASSET VALUE, END OF PERIOD $ 9.74 $10.68 $10.84
==== ==== ====
Total return(1) (6.40)%(3) (0.40)% (4.41)%(3)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands) $10,229 $20,648 $39,331
RATIOS TO AVERAGE NET ASSETS OF:
Operating expenses (excluding dividends on short
sales, after expense reimbursement) 2.34%(2) 2.34% 2.30%(2)
Operating expenses (including dividends on short
sales, after expense reimbursement) 3.91%(2)(4) 3.88% 3.65%(2)(4)
Net investment income 2.64%(2) 1.94% 2.33%(2)
Portfolio turnover rate 187%(3) 453% 216%
------------------------------
</TABLE>
(1)Maximum sales charge is not reflected in total return calculation.
(2)Annualized.
(3)Not annualized.
(4)If the investment adviser has not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets (including dividends on
short sales) would have been 3.99% and 3.69% for the periods ended April 30,
2000 and October 31, 1998, respectively.
(5)Computed using average shares outstanding.
18 Phoenix-Euclid Market Neutral Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------
SIX MONTHS FROM
ENDED YEAR INCEPTION
4/30/00 ENDED 5/1/98 TO
(UNAUDITED) 10/31/99 10/31/98
----------- -------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period $10.62 $10.81 $11.34
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.10(6) 0.15 0.06
Net realized and unrealized gain (loss) (0.82) (0.26) (0.59)
---- ---- ----
TOTAL FROM INVESTMENT OPERATIONS (0.72) (0.11) (0.53)
---- ---- ----
LESS DISTRIBUTIONS
Dividends from net investment income (0.19) (0.08) --
---- ---- ----
Change in net asset value (0.91) (0.19) (0.53)
---- ---- ----
NET ASSET VALUE, END OF PERIOD $ 9.71 $10.62 $10.81
==== ==== ====
Total return(1) (6.83)%(3) (1.02)% (4.67)%(3)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands) $17,532 $34,290 $47,794
RATIOS TO AVERAGE NET ASSETS OF:
Operating expenses (excluding dividends on short
sales, after expense reimbursement) 3.04%(2) 3.04% 3.00%(2)
Operating expenses (including dividends on short
sales, after expense reimbursement) 4.61%(2)(4) 4.58% 4.35%(2)(4)
Net investment income 1.94%(2) 1.24% 1.63%(2)
Portfolio turnover rate 187%(3) 453% 216%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------
SIX MONTHS FROM
ENDED YEAR INCEPTION
4/30/00 ENDED 5/1/98 TO
(UNAUDITED) 10/31/99 10/31/98
----------- -------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period $10.59 $10.80 $11.34
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.10(6) 0.19 0.06
Net realized and unrealized gain (loss) (0.82) (0.31) (0.60)
---- ---- ----
TOTAL FROM INVESTMENT OPERATIONS (0.72) (0.12) (0.54)
---- ---- ----
LESS DISTRIBUTIONS
Dividends from net investment income (0.19) (0.09) --
---- ---- ----
Change in net asset value (0.91) (0.21) (0.54)
---- ---- ----
NET ASSET VALUE, END OF PERIOD $ 9.68 $10.59 $10.80
==== ==== ====
Total return(1) (6.78)%(3) (1.12)% (4.76)%(3)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands) $11,308 $25,364 $56,874
RATIOS TO AVERAGE NET ASSETS OF:
Operating expenses (excluding dividends on short
sales, after expense reimbursement) 3.04%(2) 3.04% 3.00%(2)
Operating expenses (including dividends on short
sales, after expense reimbursement) 4.61%(2)(5) 4.58% 4.35%(2)(5)
Net investment income 1.93%(2) 1.24% 1.63%(2)
Portfolio turnover rate 187%(3) 453% 216%
------------------------------
</TABLE>
(1)Maximum sales charge is not reflected in total return calculation.
(2)Annualized.
(3)Not annualized.
(4)If the investment adviser has not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets (including dividends on
short sales) would have been 4.69% and 4.39% for the periods ended April 30,
2000 and October 31, 1998, respectively.
(5)If the investment adviser has not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets (including dividends on
short sales) would have been 4.68% and 4.39% for the periods ended April 30,
2000 and October 31, 1998, respectively.
(6)Computed using average shares outstanding.
Phoenix-Euclid Market Neutral Fund 19
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS I
---------------------------------------------
SIX MONTHS FROM
ENDED YEAR INCEPTION
4/30/00 ENDED 5/1/98 TO
(UNAUDITED) 10/31/99 10/31/98
----------- -------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period $10.62 $10.85 $11.34
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.15(5) 0.28 0.14
Net realized and unrealized gain (loss) (0.81) (0.28) (0.63)
---- ---- ----
TOTAL FROM INVESTMENT OPERATIONS (0.66) -- (0.49)
---- ---- ----
LESS DISTRIBUTIONS
Dividends from net investment income (0.29) (0.23) --
---- ---- ----
Change in net asset value (0.95) (0.23) (0.49)
---- ---- ----
NET ASSET VALUE, END OF PERIOD $ 9.67 $10.62 $10.85
==== ==== ====
Total return(1) (6.35)%(3) (0.01)% (4.32)%(3)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (thousands) $13,324 $19,549 $20,846
RATIOS TO AVERAGE NET ASSETS OF:
Operating expenses (excluding dividends on short
sales, after expense reimbursement) 2.05%(2) 2.04% 2.00%(2)
Operating expenses (including dividends on short
sales, after expense reimbursement) 3.62%(2)(4) 3.58% 3.35%(2)(4)
Net investment income 2.93%(2) 2.24% 2.63%(2)
Portfolio turnover rate 187%(3) 453% 216%
---------------------------
</TABLE>
(1)Maximum sales charge is not reflected in total return calculation.
(2)Annualized.
(3)Not annualized.
(4)If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets (including dividends on
short sales) would have been 3.70% and 3.39% for the periods ended April 30,
2000 and October 31, 1998, respectively.
(5)Computed using average shares outstanding.
20 Phoenix-Euclid Market Neutral Fund
<PAGE>
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The fund has filed a Statement of Additional Information about the fund, dated
October 31, 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,
[arrow] by writing to its Public Reference Section, Washington, DC 20549-0102
(a fee may be charged), or
[arrow] by electronic request at [email protected] (a fee may be charged).
Information about the operation of the Public Reference Room may be obtained by
calling 1-202-942-8090.
SHAREHOLDER REPORTS
The 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
SEC File Nos. 333-45675 and 811-08631 [logo] Printed on recycled paper
using soybean ink
Phoenix-Euclid Market Neutral Fund 21
<PAGE>
PHOENIX-EUCLID MARKET NEUTRAL FUND
A SERIES OF
PHOENIX-EUCLID FUNDS
900 Third Avenue
New York, New York 10022-4728
STATEMENT OF ADDITIONAL INFORMATION
October 31, 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 October 31, 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 Restrictions.................................................... 1
Investment Techniques and Risks............................................ 2
Performance Information ................................................... 5
Portfolio Turnover......................................................... 6
Portfolio Transactions and Brokerage....................................... 6
Services of the Adviser.................................................... 7
Net Asset Value............................................................ 8
How to Buy Shares.......................................................... 9
Alternative Purchase Arrangements.......................................... 9
Investor Account Services.................................................. 12
How to Redeem Shares....................................................... 13
Tax Sheltered Retirement Plans............................................. 14
Dividends, Distributions and Taxes......................................... 15
The Distributor............................................................ 16
Distribution Plans......................................................... 18
Management of the Fund .................................................... 19
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 "Trust") is an open-end diversified management
investment company which was organized under Delaware law in 1998 as a business
trust.
The Trust's Prospectus describes the investment objectives of the
Phoenix-Euclid Market Neutral Fund (the "Fund") and the principal strategies
that the Fund will employ in seeking to achieve its investment objective. The
Fund's investment objective is a fundamental policy of the Fund and may not be
changed without the vote of a majority of the outstanding voting securities of
the Fund. The following discussion describes the Fund's investment policies and
techniques and supplements the description of the Fund's principal strategies in
the Prospectus.
INVESTMENT RESTRICTIONS
The following investment restrictions have been adopted by the Trust with
respect to the Fund. Except as otherwise stated, these investment restrictions
are "fundamental" policies. A "fundamental" policy is defined in the 1940 Act to
mean that the restriction cannot be changed without the vote of a "majority of
the outstanding voting securities" of the Fund. A majority of the outstanding
voting securities is defined in the 1940 Act as the lesser of (a) 67% or more of
the voting securities present at a meeting if the holders of more than 50% of
the outstanding voting securities are present or represented by proxy, or (b)
more than 50% of the outstanding voting securities.
The Fund may not:
(1) With respect to 75% of its total assets, purchase securities of an
issuer (other than the U.S. Government, its agencies, instrumentalities or
authorities or repurchase agreements collateralized by U.S. Government
securities and other investment companies), if: (a) such purchase would, at the
time, cause more than 5% of the Fund's total assets taken at market value to be
invested in the securities of such issuer; or (b) such purchase would, at the
time, result in more than 10% of the outstanding voting securities of such
issuer being held by the Fund.
(2) Purchase securities if, after giving effect to the purchase, more than
25% of its total assets would be invested in the securities of one or more
issuers conducting their principal business activities in the same industry
(excluding the U.S. Government, its agencies or instrumentalities).
(3) Borrow money, except (i) in amounts not to exceed one third of the
value of the Fund's total assets (including the amount borrowed) from banks, and
(ii) up to an additional 5% of its total assets from banks or other lenders for
temporary purposes. For purposes of this restriction, (a) investment techniques
such as margin purchases, short sales, forward commitments, and roll
transactions, (b) investments in instruments such as futures contracts, swaps,
and options and (c) short-term credits extended in connection with trade
clearance and settlement, shall not constitute borrowing.
(4) Issue "senior securities" in contravention of the 1940 Act. Activities
permitted by SEC exemptive orders or staff interpretations shall not be deemed
to be prohibited by this restriction.
(5) Underwrite the securities issued by other persons, except to the extent
that, in connection with the disposition of portfolio securities, the Fund may
be deemed to be an underwriter under applicable law.
(6) Purchase or sell real estate, except that the Fund may (i) acquire or
lease office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interests therein, (iii) invest in mortgage-related
securities and other securities that are secured by real estate or interests
therein, (iv) hold and sell real estate acquired by the Fund as a result of the
ownership of securities.
(7) Purchase or sell commodities or commodity contracts, except the Fund
may purchase and sell derivatives (including, but not limited to, options,
futures contracts and options on futures contracts) whose value is tied to the
value of a financial index or a financial instrument or other asset (including,
but not limited to, securities indexes, interest rates, securities, currencies
and physical commodities).
(8) Make loans, except that the Fund may (i) lend portfolio securities,
(ii) enter into repurchase agreements, (iii) purchase all or a portion of an
issue of debt securities, bank loan participation interests, bank certificates
of deposit, bankers' acceptances, debentures or other securities, whether or not
the purchase is made upon the original issuance of the securities and (iv)
participate in an interfund lending program with other registered investment
companies.
If any percentage restriction described above for the Fund is adhered to at
the time of investment, a subsequent increase or decrease in the percentage
resulting from a change in the value of the Fund's assets will not constitute a
violation of the restriction.
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INVESTMENT TECHNIQUES AND RISKS
The Fund may utilize the following practices or techniques in pursuing its
investment objectives.
BORROWING
The Fund may obtain fixed-interest loans and invest the loan proceeds in
other assets. If it should do so, 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.
FOREIGN ISSUERS
The Fund's long and short positions may include equity securities of foreign
issuers. 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.
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.
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<PAGE>
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.
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.
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 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.
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.
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.
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
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<PAGE>
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.
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 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.
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.
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
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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.
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 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
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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 (5.88)%, (5.97)%, (2.36)% and
(0.01)%, 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
-------------------------------------------------------------------------------
One Year Since Inception(2)
-------------------------------------------------------------------------------
Class A(1) (6.13)% (6.96)%
-------------------------------------------------------------------------------
Class B (5.97)% (6.38)%
-------------------------------------------------------------------------------
Class C (2.36)% (3.98)%
-------------------------------------------------------------------------------
Class I (0.01)% (2.95)%
-------------------------------------------------------------------------------
(1) Class A Share performance has been restated to reflect the deduction of the
current maximum sales charge.
(2) Since May 1, 1998.>
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.
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
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<PAGE>
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.
For the period May 1, 1998 (commencement of operations) to October 31, 1998
and for the fiscal year ended October 31, 1999, brokerage commission paid by the
Fund on portfolio transactions totaled $958,971 and $1,726,617, respectively.
For the period May 1, 1998 to October 1, 1998 and for the fiscal year ended
October 31, 1999, the Fund paid PXP Securities Corp., an affiliate, $825 and
$13,093, respectively, for brokerage commissions on portfolio transactions. For
the fiscal year ended October 31, 1999, the amount paid to PXP Securities Corp.
was 0.76% of total brokerage commissions paid by the Trust and was paid on
transactions amounting to 0.21% of the aggregate dollar amount of transactions
involving the payment of commissions. Brokerage commissions of $33,730 paid
during the fiscal year ended October 31, 1999, were paid on portfolio
transactions aggregating $14,364,266 executed by brokers who provided research
and other statistical 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 Phoenix/Zweig Advisers, LLC,
which is a wholly-owned subsidiary of Phoenix Investment Partners, Ltd. ("PXP").
Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life") of Hartford,
Connecticut is a majority shareholder of PXP. Phoenix Home Life is in the
business of writing ordinary and group life and health insurance and annuities.
Its principal offices are located at One American Row, Hartford, Connecticut
06115-2520. Equity Planning, a mutual fund distributor, acts as the national
distributor of the Fund's shares and as Financial Agent of the Fund. The
principal office of Equity Planning is located at 100 Bright Meadow Boulevard,
Enfield, Connecticut 06082.
PXP is a publicly-traded independent registered investment advisory firm and
has served investors for over 70 years. It manages over $____ billion in assets
(as of September 30, 2000) through its investment partners: Aberdeen Fund
Managers, Inc. (Aberdeen) in Aberdeen, London, Singapore and Fort Lauderdale;
Duff & Phelps Investment Management co. (Duff & Phelps) in Chicago and
Cleveland; Roger Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca
Capital Management LLC (Seneca) in San Francisco; Phoenix/Zweig Advisers, LLC
(Zweig) in New York; and Phoenix Investment Counsel, Inc. (Goodwin, Hollister,
and Oakhurst divisions) in Hartford, Sarasota and Scotts Valley, CA,
respectively.
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.
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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 February 28, 2001 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 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 Fund, its Adviser and Distributor have each adopted a Code of Ethics
pursuant to Rule 17-j1 under the Investment Company Act of 1940. Personnel
subject to the Codes of Ethics may purchase and sell securities for their
personal accounts, including securities that may be purchased, sold or held by
the Fund, subject to certain restrictions and conditions. Generally, personal
securities transactions are subject to preclearance procedures, reporting
requirements and holding period rules. The Codes also restrict personal
securities transactions in private placements, initial public offerings and
securities in which the Fund has a pending order.
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.
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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."
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 Class 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.
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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
subaccount. Each time any Class B Shares in the shareholder's Fund account
(other than those in the subaccount) convert to Class A, an equal pro rata
portion of the Class B Share dividends in the subaccount will also convert to
Class A Shares.
CLASS C SHARES
Class C Shares are purchased without an initial sales charge but are subject
to a deferred sales charge if redeemed within one year of purchase. 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 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 this
or any other Affiliated Phoenix Fund (other than Phoenix-Goodwin Money Market
Fund and Phoenix-Zweig Government Cash Fund Class A Shares), if made at the same
time by the same "person," will be added together to determine whether the
combined sum entitles you to an
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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 this or any other Affiliated Phoenix Fund (other than
Phoenix-Goodwin Money Market Fund and Phoenix-Zweig Government Cash Fund Class A
Shares), if made by the same person within a 13-month period, will be added
together to determine whether you are entitled to an immediate reduction in
sales charges. Sales charges are reduced based on the overall amount you
indicate that you will buy under the Letter of Intent. The Letter of Intent is a
mutually non-binding arrangement between you and the Distributor. Since the
Distributor doesn't know whether you will ultimately fulfill the Letter of
Intent, shares worth 5% of the amount of each purchase will be set aside until
you fulfill the Letter of Intent. When you buy enough shares to fulfill the
Letter of Intent, these shares will no longer be restricted. If, on the other
hand, you do not satisfy the Letter of Intent, or otherwise wish to sell any
restricted shares, you will be given the choice of either buying enough shares
to fulfill the Letter of Intent or paying the difference between any sales
charge you previously paid and the otherwise applicable sales charge based on
the intended aggregate purchases described in the Letter of Intent. You will be
given 20 days to make this decision. If you do not exercise either election, the
Distributor will automatically redeem the number of your restricted shares
needed to make up the deficiency in sales charges received. The Distributor will
redeem restricted Class A Shares before Class C or B Shares, respectively.
Oldest shares will be redeemed before selling newer shares. Any remaining shares
will then be deposited to your account.
RIGHT OF ACCUMULATION. Your purchase of any class of this or any other
Affiliated Phoenix Fund, if made over time by the same person may be added
together to determine whether the combined sum entitles you to a prospective
reduction in sales charges. You must provide certain account information to the
Distributor to exercise this right.
ASSOCIATIONS. Certain groups or associations may be treated as a "person" and
qualify for reduced Class A Share sales charges. The group or association must:
(1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge; (3)
work through an investment dealer; or (4) not be a group whose sole reason for
existing is to consist of members who are credit card holders of a particular
company, policyholders of an insurance company, customers of a bank or a
broker-dealer or clients of an investment adviser.
CLASS 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 CLASS 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 Affiliated Phoenix 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 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 Class 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
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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. Inquiries regarding policies and procedures relating to shareholder
account services should be directed to Shareholder Services at (800) 243-1574.
Broker/dealers may impose their own restrictions and limits on accounts held
through the broker/dealer. Please consult your broker/dealer for account
restriction and limit information. 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 Affiliated Phoenix Fund on the basis of the
relative net asset values per share at the time of the exchange. Exchanges are
subject to the minimum initial investment requirement of the designated fund,
except if made in connection with the Systematic Exchange privilege.
Shareholders may exchange shares held in book-entry form for an equivalent
number (value) of the same class of shares of any other Affiliated Phoenix Fund,
if currently offered. Exchanges will be based upon each Fund's net asset value
per share next computed following receipt of a properly executed exchange
request, without sales charge. On exchanges with share classes that carry a
contingent deferred sales charge, the CDSC schedule of the original shares
purchased continues to apply. The exchange of shares is treated as a sale and
purchase for federal income tax purposes (see also "Dividends, Distributions and
Taxes"). Exchange privileges may not be available for all Phoenix Funds, and may
be rejected or suspended.
SYSTEMATIC EXCHANGES. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Affiliated Phoenix Fund automatically on a
monthly, quarterly, semiannual or annual basis or may cancel this privilege at
any time. If you maintain an account balance of at least $5,000, or $2,000 for
tax qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that shares be
automatically exchanged at predetermined intervals for shares of the same class
of another Affiliated Phoenix Fund. This requirement does not apply to Phoenix
"Self Security" program participants. Systematic exchanges will be executed upon
the close of business on the 10th day of each month or the next succeeding
business day. Systematic exchange forms are available from the Distributor.
DIVIDEND REINVESTMENT ACROSS ACCOUNTS
If you maintain an account balance of at least $5,000, or $2,000 for tax
qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that any dividends
and distributions paid with
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respect to shares in that account be automatically reinvested in a single
account of one of the other Affiliated Phoenix Funds at net asset value. You
should obtain a current prospectus and consider the objectives and policies of
each Fund carefully before directing dividends and distributions to another
Fund. Reinvestment election forms and prospectuses are available from Equity
Planning. Distributions may also be mailed to a second payee and/or address.
Requests for directing distributions to an alternate payee must be made in
writing with a signature guarantee of the registered owner(s). To be effective
with respect to a particular dividend or distribution, notification of the new
distribution option must be received by the Transfer Agent at least three days
prior to the record date of such dividend or distribution. If all shares in your
account are repurchased or redeemed or transferred between the record date and
the payment date of a dividend or distribution, you will receive cash for the
dividend or distribution regardless of the distribution option selected.
INVEST-BY-PHONE
This expedited investment service allows a shareholder to make an investment
in an account by requesting a transfer of funds from the balance of their bank
account. Once a request is phoned in, Equity Planning will initiate the
transaction by wiring a 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 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 and Class C shareholders may withdraw up to 1%
of their aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B and Class C shareholders redeeming more shares
than the percentage permitted by the withdrawal program will be subject to any
applicable contingent deferred sales charge on all shares redeemed. Accordingly,
the purchase of Class B or Class C Shares will generally not be suitable for an
investor who anticipates withdrawing sums in excess of the above limits shortly
after purchase.
HOW TO REDEEM SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment 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
13
<PAGE>
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.
A shareholder should contact his/her broker/dealer if he/she wishes to
transfer shares from an existing broker/dealer street name account to a street
name account with another broker/dealer. The Fund has no specific procedures
governing such account transfers.
REDEMPTION OF SMALL ACCOUNTS
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the giving
of not less than 60 days written notice to the shareholder mailed to the address
of record. During the 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 Funds, c/o State Street Bank and
Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when certificates
for shares are in the possession of the shareholder, they must be mailed or
presented, duly endorsed in the full name of the account, with a written request
to Equity Planning that the Trust redeem the shares. See the Funds' current
Prospectus for more information.
TELEPHONE REDEMPTIONS
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Funds' current Prospectus for
additional information.
REDEMPTION IN KIND
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. However, the Fund has
elected to pay in cash all requests for redemption by any shareholder of record,
limited in respect to each shareholder during any 90-day period to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of such
period. This election has been made pursuant to Rule 18f-1 under the Investment
Company Act of 1940 and is irrevocable while the Rule is in effect unless the
Securities and Exchange Commission, by order, permits the withdrawal thereof. In
case of a redemption in kind, securities delivered in payment for shares would
be readily marketable and valued at the same value assigned to them in computing
the net asset value per share of the Fund. A shareholder receiving such
securities would incur brokerage costs when he sold the securities.
ACCOUNT REINSTATEMENT PRIVILEGE
Shareholders who may have overlooked features of their investment at the time
they redeemed have a privilege of reinvestment of their investment at net asset
value. See the Funds' current Prospectus for more information.
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");
14
<PAGE>
(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.
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
15
<PAGE>
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.
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.
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.
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 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 $140,333 and $727,344, respectively, of which
PXP Securities Corp. and/or the Distributor received net commissions of $119,622
and $724,174, 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 $10,880 for Class A Shares and deferred
sales charges of $713,293 for Class B and Class C Shares.
16
<PAGE>
DEALER CONCESSIONS
Dealers with whom the Distributor has entered into sales agreements receive a
discount or commission as described below.
<TABLE>
<CAPTION>
AMOUNT OF
TRANSACTION SALES CHARGE AS A PERCENTAGE SALES CHARGE AS A PERCENTAGE DEALER DISCOUNT OR AGENCY FEE
AT OFFERING PRICE OF OFFERING PRICE OF AMOUNT INVESTED AS PERCENTAGE OF OFFERING PRICE
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Under $50,000 5.75% 6.10% 5.25%
$50,000 but under $100,000 4.75 4.99 4.25
$100,000 but under $250,000 3.75 3.90 3.25
$250,000 but under $500,000 2.75 2.83 2.25
$500,000 but under $1,000,000 2.00 2.04 1.75
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. This sales commission will not be paid to
dealers for sales of Class B or Class C Shares purchased by 401(k) participants
of the Merrill Lynch Daily K Plan (the "Plan") due to waiver of the CDSC for
these Plan participants' purchases. 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.
From its own resources or pursuant to the Plan, and subject to the dealers'
prior approval, the Distributor may provide additional compensation to
registered representatives of dealers in the form of travel expenses, meals, and
lodging associated with training and educational meetings sponsored by the
distributor. The Distributor may also provide gifts amounting in value to less
than $100, and occasional meals or entertainment, to registered representatives
of dealers. Any such travel expenses, meals, lodging, gifts or entertainment
paid will not be preconditioned upon the registered representatives' or dealers'
achievement of a sales target. The Distributor may, from time to time, reallow
the entire portion of the sales charge on class A shares which it normally
retains to individual selling dealers. However, such additional reallowance
generally will be made only when the selling dealer commits to substantial
marketing support such as internal wholesaling through dedicated personnel,
internal communications and mass mailings.
ADMINISTRATIVE SERVICES
Effective November 1, 1999, Equity Planning also acts as administrative agent
of the Fund and as such performs administrative, bookkeeping and pricing
functions for the Fund. For its services, Equity Planning is entitled to a fee,
payable monthly and based upon the average of the aggregate daily net asset
value of the Fund, at the following incremental annual rates:
17
<PAGE>
First $50 million .07%
$50 million to $200 million .06%
Greater than $200 million .01%
Equity Planning retains PFPC, Inc. as subagent for the Fund. For its
services during the Fund's fiscal year ended October 31, 1999, the
previous administrative agent, Bank of New York, received $139,611
under an administration agreement that provided for compensation at the
same rates as described above.
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.
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.
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
18
<PAGE>
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 and the previous distributor,
PXP Securities Corp., an affiliate, received $620,262, and unaffiliated
broker-dealers received $305,517. The 12b-1 payments were used for (1)
compensating dealers, $825,722, (2) compensating sales personnel, $140,683, (3)
advertising, $404,575, (4) printing and mailing of prospectuses to other than
current shareholders, $10,849, (5) service costs, $13,794, and (6) other,
$8,391.
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.
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 Delaware business trust law.
TRUSTEES AND OFFICERS
The Trustees and Officers of the Trust and their business affiliations for
the past five years are set forth below.
<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. Southwinds 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; 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). Former Director and Member of the
Technical Advisory Board of Galen Partners (health care).
Claire B. Benenson (81) Trustee Consultant on Financial Conferences, The School for Social Research.
870 U.N. Plaza Director of The Burnham Fund Inc. and Trustee of the Phoenix-Zweig
New York, NY 10017 Trust. President of the Money Marketeers of New York University.
Trustee of Simms Global Fund and Director of Phoenix-Zweig Government
Cash Fund Inc. Former Director of Financial Conferences and Chairman,
Department of Business and Financial Affairs, The New School for
Social Research.
S. Leland Dill (69) Trustee Trustee and Chairman of the Audit Committee of Deutsche Asset
5070 North Ocean Dr. Management mutual funds. Trustee, Phoenix-Zweig Trust. Former
Singer Island, FL 33404 Director and Chairman of the Audit Committee of Coutts & Co. Trust
Holdings Limited, Coutts & Co. Group, Coutts & Co. International
(USA) (private banking). Former partner of Peat Marwick Mitchell &
Co. and Director of Zweig Cash Fund Inc. and Vintners International
Company, Inc. (winery).
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE THE TRUST DURING PAST 5 YEARS
--------------------- ------------- --------------------
<S> <C> <C>
*Philip R. McLoughlin (53) Trustee and Chairman (1997-present), Director (1995-present), Vice Chairman
President (1995-1997) and Chief Executive Officer (1995-present), Phoenix
Investment Partners, Ltd. Director (1994-present) and Executive Vice
President, Investments (1988-present), Phoenix Home Life Mutual
Insurance Company. Director/Trustee and President, Phoenix Funds
(1989-present). Trustee and President, Phoenix-Aberdeen Series Fund
and Phoenix Duff & Phelps Institutional Mutual Funds (1996-present).
Director, Duff & Phelps Utilities Tax-Free Income Inc. (1995-present)
and Duff & Phelps Utility and Corporate Bond Trust Inc.
(1995-present). Trustee, Phoenix-Seneca Funds (1999-present). Trustee
and Chairman, Phoenix-Zweig Trust (2000-present). Director
(1983-present) and Chairman (1995-present), Phoenix Investment
Counsel, Inc. Director (1984-present) and President (1990-1999),
Phoenix Equity Planning Corporation. Director, PXRE Corporation
(Delaware) (1985-present), and World Trust Fund (1991-present).
Director and Executive Vice President, Phoenix Life and Annuity
Company (1996-present). Director and Executive Vice President, PHL
Variable Insurance Company (1995-present). Director, Phoenix Charter
Oak Trust Company (1996-present). Director and Vice President, PM
Holdings, Inc. (1985-present). Director, PHL Associates, Inc.
(1995-present). Director (1992-present) and President (1992-1994),
W.S. Griffith & Co., Inc.
Donald B. Romans (69) 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 (57) President President of the Adviser and Zweig Consulting LLC; President,
900 Third Avenue Phoenix-Zweig Trust; Chairman of the Board and President of The Zweig
New York, NY 10022 Total Return Fund, Inc. and The Zweig Fund, Inc.; Managing Director
of Zweig-DiMenna Associates LLC; President of Zweig-DiMenna
International Managers, Inc.; Zweig-DiMenna Associates, Inc. and
Gotham Advisors, Inc.; Member of the Undergraduate Executive Board of
the Wharton School, University of Pennsylvania. Trustee, Manhattan
Institute. Former President of Zweig Cash Fund Inc. Former President
and Director of Zweig Advisors Inc., Zweig Total Return Advisors,
Inc., and Zweig Securities Advisory Services Inc. General Partner of
Zweig Katzen Investors, L.P.; Former Chairman of the Adviser and
Euclid Advisors LLC.
Michael E. Haylon (42) Executive Vice Director and Executive Vice President-Investments, Phoenix Investment
56 Prospect St. President Partners, Ltd. (1995-present). Director (1994-present), President
Hartford, CT 06115 (1995-present), Executive Vice President (1994-1995), Vice President
(1991-1994), Phoenix Investment Counsel, Inc. Director, Phoenix
Equity Planning Corporation (1995-present). Executive Vice President,
Phoenix Funds (1993-present), Phoenix-Aberdeen Series Fund
(1996-present) and Phoenix-Seneca Funds (2000-present). Executive
Vice President (1997-present), Vice President (1996-1997), Phoenix
Duff & Phelps Institutional Mutual Funds. Senior Vice President,
Securities Investments, Phoenix Home Life Mutual Insurance Company
(1993-1995).
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE THE TRUST DURING PAST 5 YEARS
--------------------- ------------- --------------------
<S> <C> <C>
William R. Moyer (56) 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).
Executive Vice President, Phoenix-Seneca Funds (2000-present). Vice
President, Investment Products Finance, Phoenix Home Life Mutual
Insurance Company (1990-1995).
John F. Sharry (48) Executive Vice President, Retail Division (1999-present), Executive Vice President,
56 Prospect Street President Retail Division (1997-1999), Phoenix Investment Partners, Ltd.
Hartford, CT 06115 President (1999-present), Managing Director, Retail Distribution
(1995-1999), Phoenix Equity Planning Corporation. Executive Vice
President, Phoenix Funds, The Phoenix Edge Series Fund
(1998-present), Phoenix-Aberdeen Series Fund (1998-present) and
Phoenix-Seneca Funds (2000-present). Managing Director, Director and
National Sales Manager, Putnam Mutual Funds (1993-1995).
Carlton B. Neel (32) Senior Vice First Vice President of the Adviser. Former Vice President of
900 Third Avenue President Zweig/Advisors Inc. and Zweig Total Return Advisors, Inc. Formerly,
New York, NY 10022 Vice President of J.P. Morgan & Co., Inc.
Barry Mandinach (43) First Vice Executive Vice President of the PXP Securities Corp.; Senior Vice
900 Third Avenue President President of the Adviser and of Phoenix/Zweig Advisers LLC. First
New York, NY 10022 Vice President of Phoenix-Zweig Trust.
Beth Abraham (44) Assistant Vice Assistant Vice President of Phoenix/Zweig Advisers LLC and
900 Third Avenue President Phoenix-Zweig Trust.
New York, NY 10022
David O'Brien (35) 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 Director and President of Watermark Securities, Inc. Secretary of
900 Third Avenue Phoenix-Zweig Trust; Assistant Secretary of Gotham Advisors, Inc.
New York, NY 10022 Former First Vice President of the Adviser and of Phoenix/Zweig
Advisers LLC; Secretary of Zweig Cash Fund Inc. Former First Vice
President, Chief Compliance Officer and Secretary of PXP Securities
Corp.
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE THE TRUST DURING PAST 5 YEARS
--------------------- ------------- --------------------
<S> <C> <C>
Nancy G. Curtiss (47) Treasurer Vice President, Fund Accounting (1994-present) and Treasurer
(1996-present), Phoenix Equity Planning Corporation. Treasurer,
Phoenix Funds (1994-present), Phoenix-Aberdeen Series Fund
(1996-present), Phoenix Duff & Phelps Institutional Mutual Funds
(1995-present) and Phoenix-Seneca Funds (2000-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.
For the fiscal year ended October 31, 1999, the fees and expenses of
disinterested Trustees, as a group, were $21,893. 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 Trust 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 Fund's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
TOTAL
COMPENSATION FROM THE FUND
AGGREGATE AND FUND COMPLEX (8 FUNDS)
NAME OF PERSON 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>
As of October __, 2000, except for Dr. Zweig, the Trustees and officers of
the Trust, as a group, owned less than 1% of any Class of the Fund.
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 October __, 2000 with
respect to each person who owns of record or is known by the Trust to own of
record or beneficially own 5% or more of any class of the Fund's equity
securities:
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER CLASS OF SHARES NUMBER OF SHARES PERCENT OF CLASS
------------------- --------------- ---------------- ----------------
<S> <C> <C> <C>
Prudential Securities Inc. FBO Market Neutral Fund
Mr. William M. Hope & Class A
Sharon Hope JT Ten
3615 Oakton Rdg.
Minnetonka, MN 55305-4440
Charles Schwab & Co., Inc. Market Neutral Fund
Special Custody Acct. for Class A
The Benefit of Customers
101 Montgomery Street
San Francisco, CA 94104-4122
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER CLASS OF SHARES NUMBER OF SHARES PERCENT OF CLASS
------------------- --------------- ---------------- ----------------
<S> <C> <C> <C>
MLPF&S Market Neutral Fund
For the Sole Bene. of its Customer Class A
Attn. Fund Administration 977T2
4800 Deer Lake Dr. E. Fl. 2
Jacksonville, FL 32246-6484
MLPF&S Market Neutral Fund
For the Sole Bene. of its Customer Class B
Attn. Fund Administration 975Y4 Market Neutral Fund
4800 Deer Lake Dr. E. Fl. 2 Class C
Jacksonville, FL 32246-6484
Union Bank Trust Nominee Market Neutral Fund
FBO OLT Pension Class C
#30168611
P.O. Box 85484
San Diego, CA 92186-5484
Mollie F. Zwieg Market Neutral Fund
625 Park Avenue Class I
New York, NY 10021-6545
Martin E. Zwieg Market Neutral Fund
C/O Zwieg Companies Class I
900 3rd Ave.
New York, NY 10022-4728
The Loomis Institute Market Neutral Fund
Christopher Wejchert CFO Class I
4 Batchelder Rd.
Windsor, CT 06095-3031
Raymond Larsen Market Neutral Fund
7914 Fisher Island Drive Class I
Fisher Island, FL 33109-0993
R & L Equity Partners Market Neutral Fund
Attn: Mr. Paul S. Rosenblum Class I
5400 Jefferson Hwy.
Harahan, LA 70123-4212
</TABLE>
ADDITIONAL INFORMATION
CAPITAL 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 and for the six months ended
April 30, 2000 appearing in the Fund's Semiannual Report to sharesholders, are
incorporated herein by reference.
23
<PAGE>
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.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, NY 10036
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. Form of Financial Agent Agreement between the Trust and Phoenix Equity
Planning Corporation, filed with Post-Effective Amendment No. 3 on
February 28, 2000, and incorporated herein by reference.
i. Opinion of Counsel.
j. Consent of independent accountants, filed with Post-Effective Amendment
No. 3 on February 28, 2000, and incorporated herein by reference.
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 with Registrant's Post-Effective Amendment No. 2 on or about
December 29, 1999, and incorporated herein by reference.
m.2 Amended and Restated Rule 12b-1 Distribution Plan for Class B Shares,
filed with Registrant's Post-Effective Amendment No. 2 on or about
December 29, 1999, and incorporated herein by reference.
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 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
C-1
<PAGE>
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 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 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 Bond Fund, Phoenix Investment Trust 97, Phoenix Multi-Portfolio Fund,
Phoenix Multi-Series Trust, 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 Chairman Trustee and Chairman
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Executive 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 Division
P.O. Box 2200
Enfield, CT 06083-2200
Barry Mandinach Executive Vice President, None
900 Third Avenue Chief Marketing Officer,
New York, NY 10022 Retail Division
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES POSITION AND OFFICES
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
---------------- ---------------- ---------------
<S> <C> <C>
Robert Tousingnant Executive Vice President, None
100 Bright Meadow Blvd. Chief Sales Officer,
P.O. Box 2200 Retail Division
Enfield, CT 06083-2200
G. Jeffrey Bohne Vice President None
101 Munson Street
P.O. Box 810
Greenfield, MA 01302-0810
Robert S. Dreissen Vice President, Compliance Vice President
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Jacqueline M. Porter Assistant Vice President, Assistant Treasurer
56 Prospect Street Financial Reporting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(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 25th day of August, 2000.
PHOENIX-EUCLID FUNDS
ATTEST: /S/ PAMELA S. SINOFSKY BY: /S/ MARTIN E. ZWEIG
----------------------------- ------------------------------
PAMELA S. SINOFSKY MARTIN E. ZWEIG,
ASSISTANT SECRETARY PRESIDENT
Pursuant to the requirements of the Securities Act, this amendment to the
registration statement has been signed below by the following persons in the
capacities indicated, on this 25th day of August, 2000.
SIGNATURE TITLE
--------- -----
Trustee
-----------------------------------------
James Balog*
Trustee
-----------------------------------------
Claire B. Benenson*
/s/ Nancy G. Curtiss Treasurer (Principal
----------------------------------------- Account Officer)
Nancy G. Curtiss
Trustee
-----------------------------------------
S. Leland Dill*
Trustee and Chairman
-----------------------------------------
Philip R. McLoughlin*
Trustee
-----------------------------------------
Donald B. Romans*
/s/ Martin E. Zweig President (Principal
----------------------------------------- Executive Officer)
Martin E. Zweig
*By /s/ Pamela S. Sinofsky
---------------------------------------
* Pamela S. Sinofsky, Attorney-in-fact pursuant to powers of attorney.
S-1
