<PAGE>
AUGUST 31, 1998
P H O E N I X
F U N D S
A N N U A L R E P O R T
-->PHOENIX CORE EQUITY FUND
-->PHOENIX GROWTH AND
INCOME FUND
[LOGO] PHOENIX
INVESTMENT PARTNERS
<PAGE>
TABLE OF CONTENTS
- ------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
Phoenix Core Equity Fund......................... 1
Phoenix Growth and Income Fund................... 9
Notes to Financial Statements.................... 20
</TABLE>
Mutual funds are not insured by the FDIC; are
not deposits or other obligations of a bank and
are not guaranteed by a bank; and are subject to
investment risks, including possible loss of the
principal invested.
<PAGE>
PRESIDENT'S MESSAGE
- ------------------------------------------------------
Dear Shareholder:
At Phoenix Investment Partners, formerly Phoenix Duff & Phelps, we are
creating a new kind of investment company, one that preserves the independent,
distinct investment processes of each of our partners. Experience has shown that
investment professionals perform best when they remain focused, disciplined, and
distanced from activities that distract them from managing your investments. At
Phoenix Investment Partners, we have enabled our money managers to do just
that--solely manage your money.
Over the past year, we have added some of the industry's most experienced and
talented money management teams to provide you with a wider array of quality
investment products. You now have access to seven distinct investment styles
from money managers across the U.S. and around the world:
<TABLE>
<CAPTION>
OUR PARTNERS THEIR DISTINCTIVE STYLES THEIR LOCATIONS
<S> <C> <C>
Aberdeen Fund Managers, Inc. International and global Scotland, Singapore,
equity and global fixed London, and
income Ft. Lauderdale, FL
Duff & Phelps Investment Management Core equity and core fixed Chicago, IL and
Co. income Cleveland, OH
Phoenix Investment Counsel, Inc. Classic value equity, Sarasota, FL,
systematic value equity, Scotts Valley, CA
growth equity, and multi- and Hartford, CT
sector fixed income
Seneca Capital Management LLC Growth with controlled risk San Francisco, CA
equity and value-driven
fixed
income
Roger Engemann & Associates, Inc. Classic growth equity Pasadena, CA
</TABLE>
In this report, two of our partners, Diane Mustain, portfolio manager of the
Core Equity Fund, and Steve Colton, portfolio manager of the Growth and Income
Fund, discuss how their portfolios have performed over the last fiscal year and
give their near-term outlook. We hope you will find their comments informative.
To learn more about our other partners and their distinctive investment
styles, please contact your financial advisor or call Phoenix Investment
Partners National Sales Desk at 1-800-243-4361 to obtain a prospectus that
includes additional information, including charges and expenses. Please read the
prospectus carefully before you invest or send money.
Sincerely,
[SIGNATURE]
Philip R. McLoughlin
<PAGE>
PHOENIX CORE EQUITY FUND
- ------------------------------------------------------
INVESTOR PROFILE
Phoenix Core Equity Fund is designed for long-term investors seeking long-term
capital appreciation by investing in a diversified portfolio of common stocks.
INVESTMENT ADVISER'S REPORT
Since the Fund's inception on September 25, 1997 through the end of the
reporting period, August 31, 1998, Class A shares returned -0.93%, Class B
shares returned -1.61%, and Class C shares earned -1.52% compared with a return
of 2.82% for the S&P 500(1) during this period. All performance figures assume
reinvestment of dividends and exclude the effect of sales charges.
The Fund performed in line with the S&P 500 Index from inception through June
30, 1998, earning 22.45% compared with a return of 21.49% for the Index.
Subsequent to the market's peak in mid-July, the Fund underperformed the market
significantly through August of 1998. This underperformance resulted from a
sharp correction in financial stocks, an area in which we have been
overweighted. Financial stocks had been strong performers in 1997 and in the
first half of 1998 but declined substantially in July and August of 1998 as
investors fled this sector principally due to concerns about exposure to
emerging markets. Many of our financial stocks had limited international
exposure, other than Chase Manhattan and NationsBank Corp., via its acquisition
of BankAmerica. Nevertheless, all financial stocks were unduly punished during
this period. Also, ongoing weakness in oil service stocks hurt our performance
as these stocks lagged due to declining oil prices and resulting downward
earnings estimate revisions. Finally, our lack of exposure to utilities, which
outperformed following the market's peak in mid-July, also hurt our performance.
A final factor that contributed to our underperformance in this period was the
strong outperformance of growth stocks, which typically have higher
price-to-earnings ratios than the market versus value stocks, which typically
have lower-than-market price-to-earnings ratios. Our style as a core manager is
a blend of growth and value with an emphasis on stocks with attractive valuation
levels relative to their historic price-to-earnings level and relative to their
future earnings growth prospects. While we own some stocks with
higher-than-market price-to-earnings ratios and some with below-market ratios,
it is our discipline to always maintain a weighted-average price-to-earnings
ratio for the total portfolio that is lower than the market.
Given the strong appreciation of many growth stocks in mid-1998, we had
trimmed positions in our higher price-to-earnings ratio stocks as our valuation
models indicated that they were fully valued. Unfortunately, many of these
stocks continued to appreciate to extreme valuation levels, in our view,
subsequent to our sale or reduction. Nevertheless, we believe that our valuation
methodology has merit, and we continue to adhere to our discipline of selling
stocks that we consider fully valued.
OUTLOOK
We are maintaining our overweighting in financial stocks as we believe that
these stocks have been substantially oversold with valuation levels for many of
these companies at levels not seen since 1990, a recessionary period. Although
domestic economic growth is likely to continue to slow in our view, we do not
anticipate a recession in the U.S. and therefore, feel that these stocks are
very attractively priced with strong fundamentals. Furthermore, a potential
interest rate cut by the Federal Reserve could provide a stimulus for this group
to rebound in the remainder of 1998.
(1) The S&P 500 Index is an unmanaged, commonly used measure of stock market
total return performance. The Index is not available for direct investment.
1
<PAGE>
PHOENIX CORE EQUITY FUND
- ------------------------------------------------------
We also remain overweighted in retailers, such as Dayton-Hudson, Home Depot
and Federated Department Stores, as we believe this sector will perform well,
benefiting from improved inventory management, high consumer confidence levels
and favorable rates of domestic employment. This group also has no emerging
market exposure, which is a positive in light of current worldwide events.
We anticipate U.S. economic growth will continue to slow in the remainder of
1998 and into 1999 based on declining benefits of productivity gains as well as
the impact of weaker international growth. We expect inflation will remain
subdued and interest rates could possibly head lower based on the Federal
Reserve's current neutral stance on inflation. We believe high-quality stocks
that can exhibit consistent earnings growth will continue to outperform in this
environment. We believe that this should bode well for our future investment
performance.
2
<PAGE>
PHOENIX CORE EQUITY FUND
- ------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PHOENIX CORE EQUITY FUND-- PHOENIX CORE EQUITY FUND-- PHOENIX CORE EQUITY FUND--
CLASS A CLASS B CLASS C S&P 500 INDEX*
<S> <C> <C> <C> <C>
9/25/97 $9,524 $10,000 $10,000 $10,000
8/31/98 $9,435 $9,348 $9,750 $10,283
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURNS FOR PERIOD ENDING 8/31/98
<S> <C>
FROM INCEPTION
9/25/97 TO
8/31/98
- --------------------------------------------------------
Class A with 4.75% sales charge (5.65)%
- --------------------------------------------------------
Class A at net asset value (0.93)%
- --------------------------------------------------------
Class B with CDSC (6.52)%
- --------------------------------------------------------
Class B at net asset value (1.61)%
- --------------------------------------------------------
Class C with CDSC (2.50)%
- --------------------------------------------------------
Class C at net asset value (1.52)%
- --------------------------------------------------------
Class M with 3.50% sales charge (4.52)%
- --------------------------------------------------------
Class M at net asset value (1.08)%
- --------------------------------------------------------
S&P 500 Index* 2.82%
- --------------------------------------------------------
</TABLE>
This chart assumes an initial gross investment of $10,000 made on 9/25/97
(inception of the Fund) for Class A, B and C shares. Class M shares are closed
to investors. The total return for Class A shares reflects the maximum sales
charge of 4.75% on the initial investment and assumes reinvestment of dividends
and capital gains. Class B share performance will be greater or less than that
shown based on differences in fees and sales charges. The total return for Class
B shares reflects the 5% contingent deferred sales charge (CDSC), which is
applicable on all shares redeemed during the 1st year after purchase and 4% for
all shares redeemed during the 2nd year after purchase (scaled down to 3%--3rd
year; 2%--4th and 5th year and 0% thereafter.) The total return for Class C
shares reflects the 1% contingent deferred sales charge (CDSC) which is
applicable on all shares redeemed within one year of purchase. Returns indicate
past performance, which is not predictive of future performance. Investment
return and net asset value will fluctuate, so that your shares, when redeemed
may be worth more or less than the original cost.
* The S&P 500 Index is an unmanaged, commonly used measure of stock market total
return performance. The S&P 500's performance does not reflect sales charges.
3
<PAGE>
PHOENIX CORE EQUITY FUND
- ------------------------------------------------------
INVESTMENTS AT AUGUST 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
COMMON STOCKS--98.4%
BANKS (MAJOR REGIONAL)--2.0%
Fleet Financial Group, Inc....... 9,800 $ 642,512
-------------
BANKS (MONEY CENTER)--5.2%
Chase Manhattan Corp............. 8,300 439,900
NationsBank Corp................. 21,628 1,232,796
-------------
1,672,696
-------------
BEVERAGES (NON-ALCOHOLIC)--1.2%
PepsiCo, Inc..................... 14,000 387,625
-------------
BUILDING MATERIALS--3.0%
Masco Corp....................... 41,400 952,200
-------------
CHEMICALS--2.3%
Du Pont (E.I.) de Nemours &
Co............................. 12,700 732,631
-------------
COMPUTERS (HARDWARE)--3.1%
Compaq Computer Corp............. 35,550 993,178
-------------
COMPUTERS (NETWORKING)--2.7%
Cisco Systems, Inc. (b).......... 10,675 874,016
-------------
COMPUTERS (SOFTWARE & SERVICES)--1.3%
Microsoft Corp. (b).............. 4,200 402,938
-------------
CONSUMER FINANCE--1.3%
Household International, Inc..... 11,486 424,264
-------------
ELECTRICAL EQUIPMENT--3.1%
Emerson Electric Co.............. 17,250 983,250
-------------
ELECTRONICS (DEFENSE)--2.2%
Raytheon Co. Class A............. 16,100 721,481
-------------
ENTERTAINMENT--1.0%
Walt Disney Co. (The)............ 11,300 310,044
-------------
FINANCIAL (DIVERSIFIED)--4.8%
Fannie Mae....................... 7,900 448,819
MGIC Investment Corp............. 26,500 1,099,750
-------------
1,548,569
-------------
HEALTH CARE (DIVERSIFIED)--4.1%
American Home Products Corp...... 26,400 1,323,300
-------------
HEALTH CARE (DRUGS--MAJOR PHARMACEUTICALS)--6.4%
Lilly (Eli) & Co................. 17,600 1,152,800
Schering-Plough Corp............. 10,500 903,000
-------------
2,055,800
-------------
HEALTH CARE (LONG TERM CARE)--2.9%
HEALTHSOUTH Corp. (b)............ 48,700 922,256
-------------
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--3.6%
Medtronic, Inc................... 22,400 $ 1,150,800
-------------
INSURANCE (MULTI-LINE)--1.9%
Hartford Financial Services
Group, Inc..................... 13,400 599,650
-------------
INSURANCE (PROPERTY-CASUALTY)--2.4%
Allstate Corp.................... 20,600 772,500
-------------
INSURANCE BROKERS--1.1%
Marsh & McLennan Companies,
Inc............................ 7,400 358,900
-------------
LODGING-HOTELS--2.6%
Marriott International, Inc.
Class A........................ 29,300 822,231
-------------
MANUFACTURING (DIVERSIFIED)--1.0%
Corning, Inc..................... 13,150 323,819
-------------
OFFICE EQUIPMENT & SUPPLIES--2.6%
Pitney Bowes, Inc................ 17,000 843,625
-------------
OIL & GAS (DRILLING & EQUIPMENT)--1.7%
Cooper Cameron Corp. (b)......... 6,900 146,625
Halliburton Co................... 14,750 391,797
-------------
538,422
-------------
PERSONAL CARE--4.0%
Avon Products, Inc............... 15,350 965,131
Gillette Co...................... 8,000 329,000
-------------
1,294,131
-------------
RESTAURANTS--3.2%
McDonald's Corp.................. 18,100 1,014,731
-------------
RETAIL (BUILDING SUPPLIES)--2.1%
Home Depot, Inc.................. 17,800 685,300
-------------
RETAIL (DEPARTMENT STORES)--3.3%
Federated Department Stores, Inc.
(b)............................ 24,300 1,058,569
-------------
RETAIL (FOOD CHAINS)--3.0%
Albertson's, Inc................. 19,000 960,688
-------------
RETAIL (GENERAL MERCHANDISE)--2.9%
Dayton Hudson Corp............... 26,100 939,600
-------------
SAVINGS & LOAN COMPANIES--3.6%
Washington Mutual, Inc........... 35,900 1,148,800
-------------
SERVICES (COMMERCIAL & CONSUMER)--4.6%
Service Corporation
International.................. 43,750 1,482,031
-------------
SERVICES (DATA PROCESSING)--2.7%
First Data Corp.................. 42,550 880,253
-------------
</TABLE>
4 See Notes to Financial Statements
<PAGE>
PHOENIX CORE EQUITY FUND
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)--3.3%
WorldCom, Inc. (b)............... 26,050 $ 1,066,422
-------------
TELEPHONE--2.2%
Ameritech Corp................... 7,100 334,588
Bell Atlantic Corp............... 8,600 379,475
-------------
714,063
-------------
TOTAL COMMON STOCKS
(Identified cost $36,226,495)............................. 31,601,295
-------------
TOTAL LONG-TERM INVESTMENTS--98.4%
(Identified cost $36,226,495)............................. 31,601,295
-------------
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--0.7%
MONEY MARKET MUTUAL FUNDS--0.7%
State Street Global Advisors
Money Market Fund (5.49% seven
day effective yield)........... 217,993 $ 217,993
-------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $217,993)................................ 217,993
-------------
TOTAL INVESTMENTS--99.1%
(Identified cost $36,444,488)............................. 31,819,288(a)
Cash and receivables, less liabilities--0.9%.............. 277,694
-------------
NET ASSETS--100.0%.......................................... $ 32,096,982
-------------
-------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $734,670 and gross
depreciation of $5,383,672 for federal income tax purposes. At August 31,
1998, the aggregate cost of securities for federal income tax purposes was
$36,468,290.
(b) Non-income producing.
See Notes to Financial Statements 5
<PAGE>
PHOENIX CORE EQUITY FUND
- ------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $36,444,488) $31,819,288
Cash 64
Receivables
Investment securities sold 471,345
Fund shares sold 289,348
Dividends and interest 41,879
Receivable from adviser 41,182
Prepaid expenses 5,018
-------------
Total assets 32,668,124
-------------
LIABILITIES
Payables
Investment securities purchased 415,801
Fund shares repurchased 58,573
Distribution fee 14,304
Transfer agent fee 11,200
Trustees' fee 8,156
Financial agent fee 6,363
Accrued expenses 56,745
-------------
Total liabilities 571,142
-------------
NET ASSETS $32,096,982
-------------
-------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $36,412,543
Undistributed net investment income 10,231
Accumulated net realized gain 299,408
Net unrealized depreciation (4,625,200)
-------------
NET ASSETS $32,096,982
-------------
-------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $22,682,744) 2,298,064
Net asset value per share $9.87
Offering price per share $9.87/(1-4.75%) $10.36
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $6,801,334) 693,145
Net asset value and offering price per share $9.81
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $2,513,925) 256,120
Net asset value and offering price per share $9.82
CLASS M
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $98,979) 10,032
Net asset value per share $9.87
Offering price per share $9.87/(1-3.50%) $10.23
</TABLE>
STATEMENT OF OPERATIONS
FROM INCEPTION SEPTEMBER 25, 1997
TO AUGUST 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 190,936
Interest 25,788
------------
Total investment income 216,724
------------
EXPENSES
Investment advisory fee 128,133
Distribution fee--Class A 29,782
Distribution fee--Class B 37,289
Distribution fee--Class C 13,369
Distribution fee--Class M 529
Financial agent fee 72,100
Registration 91,657
Transfer agent 75,647
Custodian 23,134
Printing 21,253
Professional 21,159
Trustees 20,069
Miscellaneous 8,387
------------
Total expenses 542,508
Less expenses borne by investment adviser (290,700)
------------
Net expenses 251,808
------------
NET INVESTMENT LOSS (35,084)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 299,408
Net change in unrealized appreciation (depreciation) on
investments (4,625,200)
------------
NET LOSS ON INVESTMENTS (4,325,792)
------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ (4,360,876)
------------
------------
</TABLE>
6 See Notes to Financial Statements
<PAGE>
PHOENIX CORE EQUITY FUND
- ------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FROM INCEPTION
SEPTEMBER 25, 1997 TO
AUGUST 31, 1998
----------------------
<S> <C>
FROM OPERATIONS
Net investment loss $ (35,084)
Net realized gain 299,408
Net change in unrealized appreciation (depreciation) (4,625,200)
----------------------
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (4,360,876)
----------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
In excess of net investment income--Class A (25,288)
In excess of net investment income--Class B (5,118)
In excess of net investment income--Class C (1,736)
In excess of net investment income--Class M (233)
----------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (32,375)
----------------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (2,412,970 shares) 26,993,822
Net asset value of shares issued from reinvestment of distributions (2,335 shares) 23,837
Cost of shares repurchased (117,241 shares) (1,316,501)
----------------------
Total 25,701,158
----------------------
CLASS B
Proceeds from sales of shares (716,086 shares) 8,046,048
Net asset value of shares issued from reinvestment of distributions (166 shares) 1,696
Cost of shares repurchased (23,107 shares) (279,158)
----------------------
Total 7,768,586
----------------------
CLASS C
Proceeds from sales of shares (279,432 shares) 3,172,538
Net asset value of shares issued from reinvestment of distributions (85 shares) 865
Cost of shares repurchased (23,397 shares) (253,111)
----------------------
Total 2,920,292
----------------------
CLASS M
Proceeds from sales of shares (10,123 shares) 101,258
Net asset value of shares issued from reinvestment of distributions (23 shares) 233
Cost of shares repurchased (114 shares) (1,294)
----------------------
Total 100,197
----------------------
INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS 36,490,233
----------------------
NET INCREASE IN NET ASSETS 32,096,982
NET ASSETS
Beginning of period 0
----------------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $10,231) $ 32,096,982
----------------------
----------------------
</TABLE>
See Notes to Financial Statements 7
<PAGE>
PHOENIX CORE EQUITY FUND
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS M
-------------- -------------- -------------- --------------
FROM INCEPTION FROM INCEPTION FROM INCEPTION FROM INCEPTION
9/25/97 TO 9/25/97 TO 9/25/97 TO 9/25/97 TO
8/31/98 8/31/98 8/31/98 8/31/98
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.00 $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS(1)
Net investment income (loss) 0.00(2)(3) (0.08)(2)(3) (0.08)(2)(3) (0.01)(2)(3)
Net realized and unrealized gain
(loss) (0.09) (0.08) (0.07) (0.10)
------- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.09) (0.16) (0.15) (0.11)
------- ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net realized gains -- -- -- --
In excess of net investment income (0.04) (0.03) (0.03) (0.02)
------- ------ ------ ------
TOTAL DISTRIBUTIONS (0.04) (0.03) (0.03) (0.02)
------- ------ ------ ------
Change in net asset value (0.13) (0.19) (0.18) (0.13)
------- ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.87 $ 9.81 $ 9.82 $ 9.87
------- ------ ------ ------
------- ------ ------ ------
Total return(4) (0.93%)(5) (1.61%)(5) (1.52%)(5) (1.08%)(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $22,683 $6,801 $2,514 $99
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.25%(6) 2.00%(6) 2.00%(6) 1.50%(6)
Net investment income (loss) 0.02%(6) (0.73%)(6) (0.73%)(6) (0.12%)(6)
Portfolio turnover 83%(5) 83%(5) 83%(5) 83%(5)
</TABLE>
(1) Distributions are made in accordance with the Prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
(2) Computed using average shares outstanding.
(3) Includes reimbursement of operating expenses by investment adviser of $0.19,
$0.19, $0.19 and $0.19, respectively.
(4) Maximum sales charges are not reflected in the total return calculation.
(5) Not annualized.
(6) Annualized.
8 See Notes to Financial Statements
<PAGE>
PHOENIX GROWTH AND INCOME FUND
- ------------------------------------------------------
INVESTOR PROFILE
The Phoenix Growth and Income Fund is appropriate for long-term investors
seeking dividend growth, current income and capital appreciation through
investments in common stocks.
INVESTMENT ADVISER'S REPORT
Phoenix Growth and Income Fund Class A shares returned 5.39% from its
September 25, 1997 inception date through the end of the Fund's fiscal year,
August 31, 1998. Class B shares returned 4.59%, and Class C shares returned
4.67% for the same period. The total return for Class A shares was 2.57
percentage points higher than the 2.82% return of the Fund's benchmark, the S&P
500 Index,(1) and 10.48 percentage points higher than the average growth and
income fund, placing the Fund in the top 5% of its Lipper peer group, a universe
of 708 funds, according to Lipper Analytical Services, Inc. All performance
figures assume reinvestment of dividends and exclude the effect of sales charges
Since the inception of the Growth and Income Fund on September 25, 1997, the
equity market has taken a roller coaster ride: mostly rising through mid-July,
then taking the plunge, and setting a near-term bottom on August 31. Rising
stock prices had been fueled by declining interest rates, rising corporate
profits, robust cash flows into equity mutual funds, mergers and acquisitions,
and share buybacks. Then in mid-July, the collapse of the Russian economy, a
worsening situation in Asia, problems in certain Latin American countries, as
well as President Clinton's difficulties, caused a sharp correction in the S&P
500 Index and a bear market in small-cap stocks. From July 17 to August 31, the
S&P 500 fell 19.19% and the Russell 2000 Index(2) fell 26.79%.
Global economic events over the last 11 months had a significant influence on
investment styles. Large-capitalization stocks dominated small-cap issues. Over
the time frame the Fund has been in existence, the large-cap S&P 500 returned
2.82% versus a negative 24.90% return for the Russell 2000 Index. Portfolio
managers favored large-cap stocks for their superior liquidity. Small-cap stocks
suffered from selling pressure due to mutual fund redemptions and oversupply due
to a glut of initial public offerings (IPOs).
Growth stocks returned more than value type companies. The S&P BARRA Growth
Index(3) returned 11.00% versus a negative 6.14% return for the S&P BARRA Value
Index(4). As economic growth projections and corporate earnings forecasts were
lowered because of slower global growth expectations, there was a "flight to
quality" as investors sought refuge in blue-chip growth names due to their
greater earnings predictability.
(1) The S&P 500 Index is an unmanaged, commonly used measure of stock market
total return performance. The Index is not available for direct investment.
(2) The Russell 2000 Index is an unmanaged, commonly used measure of small-cap
stock market total return performance. The Index is not available for direct
investment.
(3) The S&P BARRA Growth Index is a capitalization-weighted index of all the
stocks in the S&P 500 Index that have high price-to-book ratios. It is
designed so that approximately 50% of the S&P market capitalization is in
the Index. The Index is not available for direct investment.
(4) The S&P BARRA Value Index is a capitalization-weighted index of all the
stocks in the S&P 500 Index that have low price-to-book ratios. It is
designed so that approximately 50% of the S&P market capitalization is in
the Index. The Index is not available for direct investment.
9
<PAGE>
PHOENIX GROWTH AND INCOME FUND
- ------------------------------------------------------
The Fund's 257 basis point return above the S&P 500 Index was the result of
overweighted positions in consumer cyclicals, technology, and
telecommunications. An underweighted position in the energy sector was also to
the portfolio's advantage.
In the consumer cyclical sector, our Wal-Mart and Home Depot shares performed
well as strong employment growth and a robust housing market stimulated consumer
spending. In the technology sector, Microsoft was a stellar performer due to
strong sales of Windows 98, Office 97, and expectations of a robust new product
cycle later in 1999. In the telecommunications sector, BellSouth benefited from
four consecutive quarters of double digit earnings growth and positive earnings
surprises. The strong earnings growth was driven by sales of high-margin
services, such as call-waiting and caller ID, and growth in new phone lines due
to the strong housing cycle and new business formations. Our underweighted
position in the energy sector also benefited performance. Crude oil fell sharply
because of reduced demand from troubled Asian economies. Energy-related company
share prices began to drop due to earnings shortfalls and reduced estimates.
OUTLOOK
Five-year operating earnings for the S&P 500 Index are expected to rise about
7% in 1999, with a projected 1.5% dividend yield. The risk is that earnings fail
to meet expectations. In uncertain times like these, investors must be prepared
for near-term volatility in the stock market. It is quite normal to experience
corrections in stock indices. Since 1925 there have been 22 declines of more
than 10%, roughly one every 3.5 years.
One needs to put this volatility in perspective. Over time, investments in
common stocks have historically been the best way to accumulate wealth relative
to T-bills and long-term government bonds. Although past performance can't
predict future performance, over the last 20 years, the average return for the
S&P 500 Index has been nearly 16%, and for the 10-period through August 31,
1998, the average return was over 17%. In contrast, the average return for
T-bills was 7.3% over the same 20-year period and 5.5% for the last 10 years
through August 31, 1998. The average return for the 30-year Treasury bond was 9%
for the 20-year period and 7% for the corresponding 10-year period.
Our policy is to remain fully invested in common stocks. At the end of this
reporting period, we held shares in 235 companies. Our largest sector weightings
at the end of our statement period were financial services and technology. The
financial services stocks are trading at the cheapest multiples relative to the
S&P 500 since the early 1990 recession, and we believe they are a good value.
Technology stocks, such as personal computer manufacturers, have worked off
excess inventories and are entering their seasonally strongest period.
10
<PAGE>
PHOENIX GROWTH AND INCOME FUND
- ------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PHOENIX GROWTH & INCOME-- PHOENIX GROWTH & INCOME-- PHOENIX GROWTH & INCOME-- PHOENIX GROWTH & INCOME--
CLASS A CLASS B CLASS C S&P 500 INDEX*
<S> <C> <C> <C> <C>
9/25/97 $9,524 $10,000 $10,000 $10,000
8/31/98 $10,038 $9,959 $10,367 $10,283
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURNS FOR PERIOD ENDING 8/31/98
<S> <C>
FROM INCEPTION
9/25/97 TO
8/31/98
- --------------------------------------------------------
Class A with 4.75% sales charge 0.38%
- --------------------------------------------------------
Class A at net asset value 5.39%
- --------------------------------------------------------
Class B with CDSC (0.04)%
- --------------------------------------------------------
Class B at net asset value 4.59%
- --------------------------------------------------------
Class C with CDSC 3.67%
- --------------------------------------------------------
Class C at net asset value 4.67%
- --------------------------------------------------------
Class M with 3.50% sales charge 1.26%
- --------------------------------------------------------
Class M at net asset value 4.91%
- --------------------------------------------------------
S&P 500 Index* 2.82%
- --------------------------------------------------------
</TABLE>
This chart assumes an initial gross investment of $10,000 made on 9/25/97
(inception of the Fund) for Class A, B and C shares. Class M shares are closed
to investors. The total return for Class A shares reflects the maximum sales
charge of 4.75% on the initial investment and assumes reinvestment of dividends
and capital gains. Class B shares performance will be greater or less than shown
based on differences in fees and sales charges. The total return for Class B
shares reflects the 5% contingent deferred sales charge (CDSC), which is
applicable on all shares redeemed during the 1st year after purchase and 4% for
all shares redeemed during the 2nd year after purchase (scaled down to 3%--3rd
year; 2%--4th and 5th year and 0% thereafter.) The total return for Class C
shares reflects the 1% contingent deferred sales charge (CDSC) which is
applicable on all shares redeemed within one year of purchase. Returns indicate
past performance, which is not predictive of future performance. Investment
return and net asset value will fluctuate, so that your shares, when redeemed
may be worth more or less than the original cost.
* The S&P 500 Index is an unmanaged, commonly used measure of stock market total
return performance. The S&P 500's performance does not reflect sales charges.
11
<PAGE>
PHOENIX GROWTH AND INCOME FUND
- ------------------------------------------------------
INVESTMENTS AT AUGUST 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
COMMON STOCKS--92.3%
AEROSPACE/DEFENSE--1.1%
AAR Corp.................... 2,900 $ 64,162
Cordant Technologies Corp.,
Inc....................... 8,100 288,562
General Dynamics Corp....... 10,300 489,894
Sundstrand Corp............. 9,700 441,956
-------------
1,284,574
-------------
AGRICULTURAL PRODUCTS--0.2%
Archer-Daniels-Midland
Co........................ 18,900 283,500
-------------
AIRLINES--0.9%
AMR Corp. (b)............... 15,300 833,850
ASA Holdings, Inc........... 1,100 37,675
Alaska Air Group, Inc.
(b)....................... 3,100 120,706
Continental Airlines, Inc.
Class B (b)............... 2,500 103,125
U.S. Airways Group, Inc.
(b)....................... 600 34,950
-------------
1,130,306
-------------
ALUMINUM--0.1%
Aluminum Company of
America................... 2,600 155,675
-------------
AUTOMOBILES--2.7%
Chrysler Corp............... 24,000 1,071,000
Ford Motor Co............... 48,400 2,129,600
-------------
3,200,600
-------------
BANKS (MAJOR REGIONAL)--3.3%
Banc One Corp............... 29,300 1,113,400
BankBoston Corp............. 6,300 224,831
Fleet Financial Group,
Inc....................... 4,700 308,144
PNC Bank Corp............... 5,200 223,600
SunTrust Banks, Inc......... 12,900 722,400
Wells Fargo & Co............ 5,000 1,409,375
-------------
4,001,750
-------------
BANKS (MONEY CENTER)--6.8%
BankAmerica Corp............ 9,000 576,562
Bankers Trust Corp.......... 3,200 237,800
Chase Manhattan Corp........ 50,100 2,655,300
First Chicago NBD Corp...... 11,400 722,475
First Union Corp............ 43,100 2,090,350
NationsBank Corp............ 31,300 1,784,100
-------------
8,066,587
-------------
BEVERAGES (ALCOHOLIC)--0.1%
Canandaigua Brands, Inc.
Class A (b)............... 1,600 66,800
Coors (Adolph) Co. Class
B......................... 2,000 82,500
-------------
149,300
-------------
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
BEVERAGES (NON-ALCOHOLIC)--0.6%
Coca-Cola Co................ 1,000 $ 65,125
PepsiCo, Inc................ 22,000 609,125
-------------
674,250
-------------
BIOTECHNOLOGY--0.3%
Amgen, Inc. (b)............. 5,300 322,637
-------------
BUILDING MATERIALS--0.6%
Fleetwood Enterprises,
Inc....................... 8,300 277,531
Lafarge Corp................ 7,200 205,650
Southdown, Inc.............. 100 4,225
Vulcan Materials Co......... 2,500 278,750
-------------
766,156
-------------
CHEMICALS--0.1%
Dow Chemical Co............. 1,700 132,600
-------------
CHEMICALS (DIVERSIFIED)--0.6%
Goodrich (B.F.) Co.......... 20,200 546,662
Lyondell Chemical Co........ 9,500 204,844
-------------
751,506
-------------
CHEMICALS (SPECIALTY)--0.5%
Engelhard Corp.............. 17,400 319,725
International Speciality
Products, Inc. (b)........ 14,500 222,031
-------------
541,756
-------------
COMMUNICATIONS EQUIPMENT--1.2%
CIENA Corp. (b)............. 5,500 154,687
Level One Communications,
Inc. (b).................. 1,300 22,669
Lucent Technologies, Inc.... 16,000 1,134,000
QUALCOMM, Inc. (b).......... 600 26,362
Vitesse Semiconductor Corp.
(b)....................... 2,000 54,250
-------------
1,391,968
-------------
COMPUTERS (HARDWARE)--2.6%
Apple Computer, Inc. (b).... 17,000 530,187
Compaq Computer Corp........ 18,500 516,844
Dell Computer Corp. (b)..... 7,000 700,000
Hewlett-Packard Co.......... 3,700 179,681
International Business
Machines Corp............. 8,700 979,837
Sun Microsystems, Inc.
(b)....................... 4,800 190,200
-------------
3,096,749
-------------
COMPUTERS (NETWORKING)--0.9%
Cisco Systems, Inc. (b)..... 11,900 974,312
FORE Systems, Inc. (b)...... 5,400 93,150
Xylan Corp. (b)............. 3,900 59,475
-------------
1,126,937
-------------
</TABLE>
12 See Notes to Financial Statements
<PAGE>
PHOENIX GROWTH AND INCOME FUND
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
COMPUTERS (PERIPHERALS)--0.5%
EMC Corp. (b)............... 11,400 $ 515,137
Storage Technology Corp.
(b)....................... 2,700 58,725
-------------
573,862
-------------
COMPUTERS (SOFTWARE & SERVICES)--5.3%
Autodesk, Inc............... 11,200 261,800
Cadence Design Systems, Inc.
(b)....................... 13,400 283,075
Computer Associates
International, Inc........ 6,300 170,100
Computer Horizons Corp.
(b)....................... 3,900 91,162
Compuware Corp. (b)......... 3,200 145,400
Comverse Technology, Inc.
(b)....................... 5,600 215,600
Electronic Arts, Inc. (b)... 2,300 87,687
Learning Co., Inc. (The)
(b)....................... 8,000 141,500
Mastech Corp. (b)........... 1,900 39,009
Microsoft Corp. (b)......... 34,700 3,329,031
Oracle Corp. (b)............ 17,700 352,894
PeopleSoft, Inc. (b)........ 4,100 115,312
Platinum Technology, Inc.
(b)....................... 4,800 90,000
Siebel Systems, Inc. (b).... 3,500 65,625
Sterling Software, Inc.
(b)....................... 10,100 207,681
Symantec Corp. (b).......... 7,700 126,087
Synopsys, Inc. (b).......... 8,300 216,837
Systems & Computer
Technology Corp. (b)...... 4,800 65,400
Unisys Corp. (b)............ 21,400 383,862
-------------
6,388,062
-------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)--0.0%
Zale Corp. (b).............. 800 18,400
-------------
CONSUMER FINANCE--0.0%
Countrywide Credit
Industries, Inc........... 1,500 56,156
-------------
DISTRIBUTORS (FOOD & HEALTH)--0.6%
AmeriSource Health Corp.
Class A (b)............... 2,400 112,950
Bergen Brunswig Corp. Class
A......................... 4,400 150,150
Cardinal Health, Inc........ 4,300 376,250
Rexall Sundown, Inc. (b).... 4,500 82,125
-------------
721,475
-------------
ELECTRIC COMPANIES--6.1%
Baltimore Gas and Electric
Co........................ 26,000 801,125
Central & Southwest Corp.... 11,500 300,437
DTE Energy Co............... 48,600 2,047,275
Edison International........ 23,400 665,437
Houston Industries, Inc..... 20,100 579,131
LG&E Energy Corp............ 62,100 1,591,312
Minnesota Power, Inc........ 24,700 1,051,294
Public Service Enterprise
Group, Inc................ 7,300 267,362
-------------
7,303,373
-------------
ELECTRICAL EQUIPMENT--0.9%
General Electric Co......... 14,000 1,120,000
-------------
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
ELECTRONICS (INSTRUMENTATION)--0.4%
EG&G, Inc................... 18,200 $ 426,562
-------------
ELECTRONICS (SEMICONDUCTORS)--0.7%
Intel Corp.................. 11,500 818,656
-------------
ENGINEERING & CONSTRUCTION--0.2%
Fluor Corp.................. 5,500 217,594
-------------
ENTERTAINMENT--0.2%
Viacom, Inc. Class B (b).... 4,800 238,200
-------------
FINANCIAL (DIVERSIFIED)--4.5%
Fannie Mae.................. 52,500 2,982,656
Freddie Mac................. 6,800 268,600
Morgan Stanley Dean Witter &
Co........................ 36,000 2,090,250
-------------
5,341,506
-------------
FOODS--3.9%
Dole Food Co., Inc.......... 3,100 134,075
Earthgrains Co.............. 9,000 247,500
General Mills, Inc.......... 13,400 876,862
Hormel Foods Corp........... 23,000 633,938
Interstate Bakeries Corp.... 18,400 479,550
Quaker Oats Co.............. 32,500 1,726,563
Suiza Foods Corp. (b)....... 2,300 111,263
Universal Foods Corp........ 18,900 399,263
-------------
4,609,014
-------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES--0.1%
International Game
Technology................ 8,400 162,750
-------------
HEALTH CARE (DIVERSIFIED)--1.6%
Bristol-Myers Squibb Co..... 7,400 724,275
Johnson & Johnson........... 1,600 110,400
Mallinckrodt, Inc........... 800 18,300
Mylan Laboratories, Inc..... 5,000 114,375
Warner-Lambert Co........... 14,600 952,650
-------------
1,920,000
-------------
HEALTH CARE (DRUGS--MAJOR PHARMACEUTICALS)--5.5%
American Home Products
Corp...................... 800 40,100
Barr Laboratories, Inc.
(b)....................... 3,300 84,563
Biogen, Inc. (b)............ 500 23,125
Genentech, Inc. (b)......... 17,700 1,168,200
ICN Pharmaceuticals, Inc.... 5,700 87,638
Lilly (Eli) & Co............ 17,700 1,159,350
Medicis Pharmaceutical Corp.
Class A (b)............... 4,000 131,000
Merck & Co., Inc............ 2,600 301,438
Pfizer, Inc................. 18,800 1,748,400
Schering-Plough Corp........ 21,200 1,823,200
Watson Pharmaceuticals, Inc.
(b)....................... 600 27,038
-------------
6,594,052
-------------
</TABLE>
See Notes to Financial Statements 13
<PAGE>
PHOENIX GROWTH AND INCOME FUND
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
HEALTH CARE (HOSPITAL MANAGEMENT)--0.9%
HBO & Co.................... 30,800 $ 654,500
Integrated Health Services,
Inc....................... 1,600 31,000
PacifiCare Health Systems,
Inc. Class B (b).......... 5,900 371,700
-------------
1,057,200
-------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.6%
Allegiance Corp............. 12,800 361,600
Allergan, Inc............... 8,400 396,900
Arterial Vascular
Engineering, Inc. (b)..... 4,900 171,500
Genzyme Corp. (b)........... 1,000 27,000
Guidant Corp................ 5,800 358,150
Hillenbrand Industries,
Inc....................... 9,300 498,131
IDEXX Laboratories, Inc.
(b)....................... 8,300 145,250
-------------
1,958,531
-------------
HEALTH CARE (SPECIALIZED SERVICES)--0.1%
Total Renal Care Holdings,
Inc. (b).................. 5,300 100,700
-------------
HOMEBUILDING--0.2%
Centex Corp................. 4,600 162,725
Pulte Corp.................. 1,400 40,425
-------------
203,150
-------------
HOUSEHOLD FURN. & APPLIANCES--0.9%
Maytag Corp................. 4,200 181,125
Whirlpool Corp.............. 17,200 853,550
-------------
1,034,675
-------------
HOUSEHOLD PRODUCTS (NON-DURABLES)--0.7%
Procter & Gamble Co......... 11,300 864,450
-------------
HOUSEWARES--0.4%
Fortune Brands, Inc......... 16,000 441,000
-------------
INSURANCE (LIFE/HEALTH)--0.3%
Equitable Companies, Inc.... 5,900 337,406
-------------
INSURANCE (MULTI-LINE)--3.7%
CIGNA Corp.................. 10,100 587,694
Conseco, Inc................ 2,600 71,825
Lincoln National Corp....... 20,200 1,737,200
Travelers Group, Inc........ 46,800 2,076,750
-------------
4,473,469
-------------
INSURANCE (PROPERTY-CASUALTY)--1.8%
Allstate Corp............... 57,800 2,167,500
-------------
INSURANCE BROKERS--0.2%
Gallagher (Arthur J.) &
Co........................ 7,800 288,600
-------------
INVESTMENT BANKING/BROKERAGE--0.5%
Bear Stearns Companies, Inc.
(The)..................... 4,600 169,913
Lehman Brothers Holdings,
Inc....................... 4,300 169,313
Merrill Lynch & Co., Inc.... 1,000 66,000
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
INVESTMENT BANKING/BROKERAGE--CONTINUED
Paine Webber Group, Inc..... 4,500 $ 156,375
-------------
561,601
-------------
IRON & STEEL--0.7%
Bethlehem Steel Corp. (b)... 5,000 35,938
Harsco Corp................. 22,700 832,806
-------------
868,744
-------------
MACHINERY (DIVERSIFIED)--1.0%
Caterpillar, Inc............ 8,900 375,469
Deere & Co.................. 6,200 204,213
Ingersoll-Rand Co........... 15,300 608,175
McDermott International,
Inc....................... 2,200 44,138
-------------
1,231,995
-------------
MANUFACTURING (DIVERSIFIED)--3.3%
AlliedSignal, Inc........... 11,800 404,888
Pentair, Inc................ 4,500 125,438
Thermo Electron Corp. (b)... 4,600 74,750
Tredegar Industries, Inc.... 15,900 256,388
Tyco International Ltd...... 13,600 754,800
United Technologies Corp.... 32,800 2,380,050
-------------
3,996,314
-------------
NATURAL GAS--0.7%
Sempra Energy............... 22,000 559,625
UGI Corp.................... 10,300 226,600
-------------
786,225
-------------
OFFICE EQUIPMENT & SUPPLIES--0.3%
Lexmark International Group,
Inc. Class A (b).......... 400 24,225
Pitney Bowes, Inc........... 4,300 213,388
United Stationers, Inc.
(b)....................... 3,000 177,750
-------------
415,363
-------------
OIL (DOMESTIC INTEGRATED)--0.1%
USX-Marathon Group.......... 6,100 158,600
-------------
OIL (INTERNATIONAL INTEGRATED)--1.4%
Chevron Corp................ 3,000 222,188
Exxon Corp.................. 22,000 1,439,625
-------------
1,661,813
-------------
OIL & GAS (DRILLING & EQUIPMENT)--0.8%
Diamond Offshore Drilling,
Inc....................... 1,900 39,663
Dresser Industries, Inc..... 3,100 79,244
ENSCO International, Inc.... 2,500 26,250
Schlumberger Ltd............ 6,300 276,019
Tidewater, Inc.............. 2,500 52,500
Transocean Offshore, Inc.... 12,700 311,944
Varco International, Inc.
(b)....................... 16,700 118,988
-------------
904,608
-------------
</TABLE>
14 See Notes to Financial Statements
<PAGE>
PHOENIX GROWTH AND INCOME FUND
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION)--0.0%
MDU Resources Group, Inc.... 1,800 $ 46,013
-------------
OIL & GAS (REFINING & MARKETING)--0.9%
Imperial Oil Ltd............ 10,100 142,663
Piedmont Natural Gas Co.,
Inc....................... 25,400 715,963
Sun Co., Inc................ 6,800 224,825
-------------
1,083,451
-------------
PHOTOGRAPHY/IMAGING--1.4%
Eastman Kodak Co............ 15,900 1,242,188
Xerox Corp.................. 5,300 465,406
-------------
1,707,594
-------------
PUBLISHING (NEWSPAPERS)--0.1%
Gannett Co., Inc............ 700 41,300
Hollinger International,
Inc....................... 5,500 77,000
-------------
118,300
-------------
REITS--0.1%
Meditrust Companies......... 10,000 155,000
-------------
RETAIL (BUILDING SUPPLIES)--0.4%
Home Depot, Inc............. 7,800 300,300
Hughes Supply, Inc.......... 1,000 27,250
Lowe's Companies, Inc....... 5,500 192,844
-------------
520,394
-------------
RETAIL (COMPUTERS & ELECTRONICS)--0.2%
Best Buy Co., Inc. (b)...... 3,400 133,875
CHS Electronics, Inc. (b)... 5,600 70,700
-------------
204,575
-------------
RETAIL (DEPARTMENT STORES)--0.0%
Penney (J.C.) Co., Inc...... 500 24,781
-------------
RETAIL (FOOD CHAINS)--0.2%
Albertson's, Inc............ 4,800 242,700
-------------
RETAIL (GENERAL MERCHANDISE)--2.5%
Dayton Hudson Corp.......... 2,800 100,800
Fingerhut Companies, Inc.... 4,200 101,850
Kmart Corp. (b)............. 22,200 283,050
Office Depot, Inc. (b)...... 6,100 155,550
Ross Stores, Inc............ 7,000 254,625
Wal-Mart Stores, Inc........ 34,800 2,044,500
-------------
2,940,375
-------------
RETAIL (SPECIALTY)--0.1%
Michaels Stores, Inc. (b)... 1,700 39,950
Republic Industries, Inc.
(b)....................... 1,800 31,838
-------------
71,788
-------------
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
RETAIL (SPECIALTY-APPAREL)--0.7%
Limited, Inc................ 16,200 $ 338,175
Payless ShoeSource, Inc.
(b)....................... 3,200 131,600
TJX Companies, Inc.......... 13,700 305,681
-------------
775,456
-------------
SERVICES (ADVERTISING/MARKETING)--0.2%
Snyder Communication, Inc.
(b)....................... 3,600 108,450
True North Communications,
Inc....................... 3,800 86,450
-------------
194,900
-------------
SERVICES (COMMERCIAL & CONSUMER)--1.8%
Deluxe Corp................. 39,300 1,139,700
Hawaiian Electric
Industries, Inc........... 12,400 465,775
Hertz Corp. Class A......... 4,100 154,775
Interim Services, Inc.
(b)....................... 2,500 51,250
Ogden Corp.................. 1,200 27,675
Viad Corp................... 12,200 253,150
-------------
2,092,325
-------------
SERVICES (COMPUTER SYSTEMS)--0.3%
NCR Corp. (b)............... 11,200 296,100
Zebra Technologies Corp.
(b)....................... 1,900 59,019
-------------
355,119
-------------
SPECIALTY PRINTING--0.1%
Bowne & Co., Inc............ 5,200 81,900
-------------
TELECOMMUNICATIONS (LONG DISTANCE)--2.5%
AT&T Corp................... 59,300 2,972,413
-------------
TELEPHONE--6.2%
Ameritech Corp.............. 1,200 56,550
Bell Atlantic Corp.......... 27,200 1,200,200
BellSouth Corp.............. 34,800 2,385,975
GTE Corp.................... 10,400 520,000
SBC Communications, Inc..... 26,400 1,003,200
US West, Inc................ 42,400 2,204,800
-------------
7,370,725
-------------
TEXTILES (APPAREL)--0.5%
Fruit of The Loom, Inc.
Class A (b)............... 5,100 114,431
Jones Apparel Group, Inc.
(b)....................... 3,600 69,750
Nautica Enterprises, Inc.
(b)....................... 800 15,450
Tommy Hilfiger Corp. (b).... 1,500 70,125
V. F. Corp.................. 9,800 371,175
-------------
640,931
-------------
TOBACCO--1.1%
Philip Morris Companies,
Inc....................... 24,100 1,001,656
Universal Corp.............. 10,900 343,350
-------------
1,345,006
-------------
</TABLE>
See Notes to Financial Statements 15
<PAGE>
PHOENIX GROWTH AND INCOME FUND
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
TRUCKS & PARTS--0.3%
PACCAR, Inc................. 7,600 $ 311,600
-------------
TOTAL COMMON STOCKS
(Identified cost $125,974,737)....................... 110,353,803
-------------
FOREIGN COMMON STOCKS--3.0%
CHEMICALS (DIVERSIFIED)--0.9%
Akzo Nobel N.V. Sponsored
ADR (Netherlands)......... 28,000 1,106,000
-------------
COMMUNICATIONS EQUIPMENT--0.5%
Northern Telecom Ltd.
(Canada).................. 11,600 553,900
-------------
COMPUTERS (SOFTWARE & SERVICES)--0.1%
Check Point Software
Technologies Ltd. (Israel)
(b)....................... 3,300 59,813
-------------
HOUSEHOLD FURN. & APPLIANCES--0.6%
Royal Philips Electronics NV
NY Registered Shares
(Netherlands)............. 11,500 689,281
-------------
OIL (INTERNATIONAL INTEGRATED)--0.9%
Royal Dutch Petroleum Co. NY
Registered Shares
(Netherlands)............. 27,700 1,101,075
-------------
SERVICES (COMPUTER SYSTEMS)--0.0%
Saville Systems PLC
Sponsored ADR (Ireland)... 2,200 36,025
-------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $4,490,424)......................... 3,546,094
-------------
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C> <C>
UNIT INVESTMENT TRUSTS--3.6%
S&P 500 Depositary
Receipts.................. 44,400 $ 4,248,525
-------------
TOTAL UNIT INVESTMENT TRUSTS
(Identified cost $4,857,552)......................... 4,248,525
-------------
TOTAL LONG-TERM INVESTMENTS--98.9%
(Identified cost $135,322,713)....................... 118,148,422
-------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(UNAUDITED) (000)
----------- ------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--1.7%
COMMERCIAL PAPER--1.7%
Goldman Sachs 5.83%, 9/1/98...... A-1+ $2,085 2,085,000
------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $2,085,000).......................... 2,085,000
------------
TOTAL INVESTMENTS--100.6%
(Identified cost $137,407,713)........................ 120,233,422(a)
Cash and receivables, less liabilities--(0.6%)........ (700,751)
------------
NET ASSETS--100.0%...................................... $119,532,671
------------
------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $1,811,056 and gross
depreciation of $19,052,790 for federal income tax purposes. At August 31,
1998, the aggregate cost of securities for federal income tax purposes was
$137,475,156.
(b) Non-income producing.
16 See Notes to Financial Statements
<PAGE>
PHOENIX GROWTH AND INCOME FUND
- ------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $137,407,713) $120,233,422
Cash 2,070
Receivables
Fund shares sold 1,604,605
Dividends and interest 192,036
Prepaid expenses 5,052
--------------
Total assets 122,037,185
--------------
LIABILITIES
Payables
Investment securities purchased 1,673,440
Fund shares repurchased 522,533
Investment advisory fee 118,048
Distribution fee 56,053
Financial agent fee 22,213
Trustees' fee 8,156
Transfer agent fee 7,000
Accrued expenses 97,071
--------------
Total liabilities 2,504,514
--------------
NET ASSETS $ 119,532,671
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 135,267,832
Undistributed net investment income 176,925
Accumulated net realized gain 1,262,205
Net unrealized depreciation (17,174,291)
--------------
NET ASSETS $ 119,532,671
--------------
--------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $76,399,299) 7,297,945
Net asset value per share $10.47
Offering price per share $10.47/(1-4.75%) $10.99
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $31,902,450) 3,066,798
Net asset value and offering price per share $10.40
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $11,108,340) 1,067,596
Net asset value and offering price per share $10.41
CLASS M
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $122,582) 11,751
Net asset value per share $10.43
Offering price per share $10.43/(1-3.50%) $10.81
</TABLE>
STATEMENT OF OPERATIONS
FROM INCEPTION SEPTEMBER 25, 1997
TO AUGUST 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 801,778
Interest 64,329
Foreign taxes withheld (2,548)
-------------
Total investment income 863,559
-------------
EXPENSES
Investment advisory fee 355,855
Distribution fee--Class A 77,734
Distribution fee--Class B 114,099
Distribution fee--Class C 46,697
Distribution fee--Class M 1,370
Financial agent fee 87,950
Registration 117,531
Transfer agent 75,062
Printing 38,658
Custodian 41,265
Professional 21,159
Trustees 20,069
Miscellaneous 17,416
-------------
Total expenses 1,014,865
Less expenses borne by investment adviser (300,459)
-------------
Net expenses 714,406
-------------
NET INVESTMENT INCOME 149,153
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 1,300,955
Net change in unrealized appreciation (depreciation) on
investments (17,174,291)
-------------
NET LOSS ON INVESTMENTS (15,873,336)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (15,724,183)
-------------
-------------
</TABLE>
See Notes to Financial Statements 17
<PAGE>
PHOENIX GROWTH AND INCOME FUND
- ------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FROM INCEPTION
SEPTEMBER 25, 1997 TO
AUGUST 31, 1998
----------------------
<S> <C>
FROM OPERATIONS
Net investment income $ 149,153
Net realized gain 1,300,955
Net change in unrealized appreciation (depreciation) (17,174,291)
----------------------
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (15,724,183)
----------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income--Class A (42,177)
Net investment income--Class B (8,886)
Net investment income--Class C (2,045)
Net investment income--Class M (666)
Net realized gains--Class A (28,476)
Net realized gains--Class B (7,740)
Net realized gains--Class C (1,972)
Net realized gains--Class M (562)
----------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (92,524)
----------------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (7,752,380 shares) 91,918,012
Net asset value of shares issued from reinvestment of distributions (6,829 shares) 69,035
Cost of shares repurchased (461,264 shares) (5,511,853)
----------------------
Total 86,475,194
----------------------
CLASS B
Proceeds from sales of shares (3,273,232 shares) 38,849,933
Net asset value of shares issued from reinvestment of distributions (1,596 shares) 16,121
Cost of shares repurchased (208,030 shares) (2,497,896)
----------------------
Total 36,368,158
----------------------
CLASS C
Proceeds from sales of shares (1,126,262 shares) 13,154,434
Net asset value of shares issued from reinvestment of distributions (382 shares) 3,862
Cost of shares repurchased (59,048 shares) (700,659)
----------------------
Total 12,457,637
----------------------
CLASS M
Proceeds from sales of shares (52,446 shares) 542,477
Net asset value of shares issued from reinvestment of distributions (121 shares) 1,227
Cost of shares repurchased (40,816 shares) (495,315)
----------------------
Total 48,389
----------------------
INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS 135,349,378
----------------------
NET INCREASE IN NET ASSETS 119,532,671
NET ASSETS
Beginning of period 0
----------------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $176,925) $ 119,532,671
----------------------
----------------------
</TABLE>
18 See Notes to Financial Statements
<PAGE>
PHOENIX GROWTH AND INCOME FUND
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS M
-------------- -------------- -------------- --------------
FROM INCEPTION FROM INCEPTION FROM INCEPTION FROM INCEPTION
9/25/97 TO 9/25/97 TO 9/25/97 TO 9/25/97 TO
8/31/98 8/31/98 8/31/98 8/31/98
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS(1)
Net investment income (loss) 0.06(2)(3) (0.02)(2)(3) (0.02)(2)(3) 0.05(2)(3)
Net realized and unrealized gain
(loss) 0.48 0.48 0.49 0.44
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.54 0.46 0.47 0.49
------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.04) (0.03) (0.03) (0.03)
Dividends from net realized gains (0.03) (0.03) (0.03) (0.03)
------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.07) (0.06) (0.06) (0.06)
------ ------ ------ ------
Change in net asset value 0.47 0.40 0.41 0.43
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.47 $10.40 $10.41 $10.43
------ ------ ------ ------
------ ------ ------ ------
Total return(4) 5.39%(5) 4.59%(5) 4.67%(5) 4.91%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $76,399 $31,902 $11,108 $123
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.25%(6) 2.00%(6) 2.00%(6) 1.50%(6)
Net investment income (loss) 0.57%(6) (0.19%)(6) (0.18%)(6) 0.46%(6)
Portfolio turnover 106%(5) 106%(5) 106%(5) 106%(5)
</TABLE>
(1) Distributions are made in accordance with the Prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of the share purchases and redemptions.
(2) Computed using average shares outstanding.
(3) Includes reimbursement of operating expenses by investment adviser of $0.07,
$0.07, $0.07 and $0.07, respectively.
(4) Maximum sales charges are not reflected in the total return calculation.
(5) Not annualized
(6) Annualized
See Notes to Financial Statements 19
<PAGE>
PHOENIX EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix Equity Series Fund (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company whose shares
are offered in two separate Series, each a "Fund". Each Fund has distinct
investment objectives.
Phoenix Core Equity Fund seeks long-term capital appreciation by investing in
a diversified portfolio of common stocks. Phoenix Growth and Income Fund seeks
dividend growth, current income and capital appreciation by investing in common
stocks.
Each Fund offers Class A, Class B and Class C shares. Class M shares have been
closed to new investors. Class A shares are sold with a front-end sales charge
of up to 4.75%. Class B shares are sold with a contingent deferred sales charge
which declines from 5% to zero depending on the period of time the shares are
held. Class C shares are sold with a 1% contingent deferred sales charge if
redeemed within one year of purchase. Class M shares are sold with a front-end
sales charge of up to 3.50%. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. Income and expenses of each Fund
are borne pro rata by the holders of all classes of shares, except that each
class bears distribution expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
A. SECURITY VALUATION:
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price. Debt securities are valued on the basis of
broker quotations or valuations provided by a pricing service which utilizes
information with respect to recent sales, market transactions in comparable
securities, quotations from dealers, and various relationships between
securities in determining value. Short-term investments having a remaining
maturity of 60 days or less are valued at amortized cost which approximates
market. All other securities and assets are valued at fair value as determined
in good faith by or under the direction of the Trustees.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date or, in the case of certain foreign securities, as soon as the Fund is
notified. The Trust does not amortize premiums but does accrete discounts using
the effective interest method. Realized gains and losses are determined on the
identified cost basis.
C. INCOME TAXES:
Each Fund is treated as a separate taxable entity. It is the policy of each
Fund in the Trust to comply with the requirements of the Internal Revenue Code
(the "Code"), applicable to regulated investment companies, and to distribute
all of its taxable and tax-exempt income to its shareholders. In addition, each
Fund intends to distribute an amount sufficient to avoid imposition of any
excise tax under Section 4982 of the Code. Therefore, no provision for federal
income taxes or excise taxes has been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, foreign
currency gain/loss, partnerships, operating losses and losses deferred due to
wash sales and excise tax regulations. Permanent book and tax basis differences
relating to shareholder distributions will result in reclassifications to paid
in capital.
E. FOREIGN CURRENCY TRANSLATION:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange rates
between the trade and settlement dates of a portfolio transaction is treated as
a gain or loss on foreign currency. Likewise, the gain or loss resulting from a
change in currency exchange rates between the date income is accrued and paid is
treated as a gain or loss on foreign currency. The Trust does not separate that
portion of the results of operations arising from changes in exchange rates and
that portion arising from changes in the market prices of securities.
F. FORWARD CURRENCY CONTRACTS:
Each Fund may enter into forward currency contracts in conjunction with the
planned purchase or sale of foreign denominated securities in order to hedge the
U.S. dollar cost or proceeds. Forward currency contracts involve, to varying
degrees, elements of market risk in excess of the amount recognized in the
statement of assets and liabilities. Risks arise from the possible movements in
foreign exchange rates or if the counterparty does not perform under the
contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts
20
<PAGE>
PHOENIX EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998 (CONTINUED)
are traded directly between currency traders and their customers. The contract
is marked-to-market daily and the change in market value is recorded by each
Fund as an unrealized gain (or loss). When the contract is closed or offset with
the same counterparty, the Fund records a realized gain (or loss) equal to the
change in the value of the contract when it was opened and the value at the time
it was closed or offset.
G. EXPENSES:
Expenses incurred by the Trust with respect to more than one Fund are
allocated in proportion to the net assets of each Fund, except where allocation
of direct expense to each Fund or an alternative allocation method can be more
fairly made.
H. REPURCHASE AGREEMENTS:
A repurchase agreement is a transaction where a Fund acquires a security for
cash and obtains a simultaneous commitment from the seller to repurchase the
security at an agreed upon price and date. Each Fund, through its custodian,
takes possession of securities collateralizing the repurchase agreement. The
collateral is marked-to-market daily to ensure that the market value of the
underlying assets remains sufficient to protect the Fund in the event of default
by the seller. If the seller defaults and the value of the collateral declines,
or, if the seller enters insolvency proceedings, realization of collateral may
be delayed or limited.
2. INVESTMENT ADVISORY FEE AND
RELATED PARTY TRANSACTIONS
The advisers to the Trust are Duff & Phelps Investment Management Co. ("DPIM")
and Phoenix Investment Counsel, Inc. ("PIC"). DPIM is a subsidiary of Phoenix
Investment Partners Ltd., which is an indirect, majority-owned subsidiary of
Phoenix Home Life Mutual Insurance Company ("PHL"). PIC is an indirect,
majority-owned subsidiary of PHL. As compensation for their services to the
Trust, the Advisers are entitled to a fee based upon the following annual rates
as a percentage of the average daily net assets of each separate Fund:
<TABLE>
<CAPTION>
1ST $1-2
FUND ADVISER $1 BILLION BILLION $2+ BILLION
- --------------------- --------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Core Equity Fund..... DPIM 0.75% 0.70% 0.65%
Growth and Income
Fund............... PIC 0.75% 0.70% 0.65%
</TABLE>
The Advisers have voluntarily agreed to assume total fund operating expenses
of each respective Fund, excluding interest, taxes, brokerage fees, commissions
and extraordinary expenses until August 31, 1998, to the extent that such
expenses exceed the following percentages of average annual net assets:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS M
- ------------ ------------ ------------ ------------
<S> <C> <C> <C>
1.25% 2.00% 2.00% 1.50%
</TABLE>
Phoenix Equity Planning Corporation ("PEPCO"), an indirect, majority-owned
subsidiary of PHL, serves as the national distributor of the Trust's shares.
PEPCO has advised the Trust that it retained net selling commissions of $81,953
for Class A shares and $2,217 for Class M shares, and deferred sales charges of
$26,077 for Class B shares and $6,052 for Class C shares for the period ended
August 31, 1998. In addition, each Fund pays PEPCO a distribution fee at an
annual rate of 0.25% for Class A shares, 1.00% for Class B shares, 1.00% for
Class C shares and 0.50% for Class M shares applied to the average daily net
assets of the Fund. The Distributor has advised the Trust that of the total
amount expensed for the period ended August 31, 1998, $189,766 was earned by the
Distributor, $115,712 was paid to unaffiliated participants, and $15,391 was
paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent of the Trust, PEPCO received a fee for bookkeeping,
administration, and pricing services through May 31, 1998, at an annual rate of
0.005% of average daily net assets up to $100 million, 0.04% of average daily
net assets of $100 million to $300 million, 0.03% of average daily net assets of
$300 million through $500 million, and 0.015% of average daily net assets
greater than $500 million; a minimum fee applied. Effective June 1, 1998, PEPCO
receives a financial agent fee equal to the sum of (1) the documented cost of
fund accounting and related services provided by PFPC Inc. (subagent to PEPCO),
plus (2) the documented cost to PEPCO to provide financial reporting, tax
services and oversight of the subagent's performance. The current fee schedule
of PFPC Inc. ranges from 0.085% to 0.0125% of the average daily net asset values
of each Fund. Certain minimum fees and fee waivers may apply.
PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the period ended August 31, 1998, transfer
agent fees were $150,709 of which PEPCO retained $13,702 which is net of the
fees paid to State Street.
At August 31, 1998, PHL and affiliates held Trust shares which aggregated the
following:
<TABLE>
<CAPTION>
AGGREGATE
NET ASSET
SHARES VALUE
------------ ------------
<S> <C> <C>
Core Equity Fund-Class A............. 470,000 $ 4,638,900
Core Equity Fund-Class B............. 10,029 98,384
Core Equity Fund-Class C............. 10,028 98,475
Core Equity Fund-Class M............. 10,023 98,927
Growth and Income Fund-Class A....... 473,115 4,953,514
Growth and Income Fund-Class B....... 10,056 104,582
Growth and Income Fund-Class C....... 10,054 104,662
Growth and Income Fund-Class M....... 10,058 104,905
</TABLE>
21
<PAGE>
PHOENIX EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1998 (CONTINUED)
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the period ended August 31, 1998
(excluding U.S. Government and agency securities and short-term securities)
aggregated the following:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Core Equity Fund.................... $ 50,939,688 $ 15,012,597
Growth and Income Fund.............. 188,265,165 54,243,372
</TABLE>
There were no purchases or sales of long-term U.S. Government and agency
securities during the period ended August 31, 1998.
4. MARKET RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a Fund's ability to
repatriate such amounts.
5. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Funds have recorded
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of each of the series and are designed generally
to present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of August 31, 1998,
each Fund recorded the following reclassifications to increase (decrease) the
accounts listed below:
<TABLE>
<CAPTION>
CAPITAL
PAID
IN ON
SHARES
UNDISTRIBUTED ACCUMULATED OF
NET INVESTMENT NET REALIZED BENEFICIAL
INCOME GAIN (LOSS) INTEREST
-------------- -------------- -----------
<S> <C> <C> <C>
Core Equity Fund.... 77,690 -- (77,690)
Growth & Income
Fund.............. 81,546 -- (81,546)
</TABLE>
This report is not authorized for distribution to prospective investors in the
Phoenix Equity Series Fund unless preceded or accompanied by an effecive
Prospectus which includes information concerning the sales charge, the Fund's
record and other pertinent information.
22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ------------------------------------------------------
[LOGO]
To the Trustees and Shareholders of
Phoenix Equity Series Fund
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for bond ratings), and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Phoenix Core Equity Fund and Phoenix Growth and Income Fund (constituting the
Phoenix Equity Series Fund, hereinafter referred to as the "Fund") at August 31,
1998, the results of each of their operations, the changes in each of their net
assets and the financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
October 14, 1998
23
<PAGE>
PHOENIX EQUITY SERIES FUND
101 Munson Street
Greenfield, Massachusetts 01301
TRUSTEES
Robert Chesek
E. Virgil Conway
Harry Dalzell-Payne
Francis E. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Calvin J. Pedersen
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
OFFICERS
Philip R. McLoughlin, President
Michael E. Haylon, Executive Vice President
John F. Sharry, Executive Vice Presidents
Steven L. Colton, Vice President
William E. Keen, III, Vice President
William R. Moyer, Vice President
Diane L. Mustain, Vice President
Leonard J. Saltiel, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Clerk and Secretary
INVESTMENT ADVISERS
Duff & Phelps Investment Management Co.
(Phoenix Core Equity Fund)
55 East Monroe Street
Suite 3800
Chicago, Illinois 60603
Phoenix Investment Counsel, Inc.
(Phoenix Growth and Income Fund)
56 Prospect Street
Hartford, Connecticut 06115-0480
PRINCIPAL UNDERWRITER
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
TRANSFER AGENT
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
160 Federal Street
Boston, Massachusetts 02110
HOW TO CONTACT US
Toll-Free Numbers
The Fund Connection 1-800-243-1574
Customer Service 1-800-243-1574 (option 0)
Investment Strategy Hotline 1-800-243-4361 (option 2)
Marketing Department 1-800-243-4361 (option 3)
Text Telephone 1-800-243-1926
Internet access:
www.phoenixinvestments.com
<PAGE>
PHOENIX FUNDS
PO Box 2200
Enfield CT 06083-2200 BULK RATE MAIL
U.S. POSTAGE
PAID
SPRINGFIELD, MA
PERMIT NO. 444
[LOGO] PHOENIX
INVESTMENT PARTNERS
PXP 213 (10/98)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0001040892
<NAME> PHOENIX EQUITY SERIES FUND
<SERIES>
<NUMBER> 011
<NAME> PHOENIX CORE EQUITY FUND - A CLASS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-25-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 36444
<INVESTMENTS-AT-VALUE> 31819
<RECEIVABLES> 844
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32668
<PAYABLE-FOR-SECURITIES> 416
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 155
<TOTAL-LIABILITIES> 571
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 36412
<SHARES-COMMON-STOCK> 2298
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 10
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 299
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4625)
<NET-ASSETS> 32097
<DIVIDEND-INCOME> 191
<INTEREST-INCOME> 26
<OTHER-INCOME> 0
<EXPENSES-NET> (252)
<NET-INVESTMENT-INCOME> (35)
<REALIZED-GAINS-CURRENT> 299
<APPREC-INCREASE-CURRENT> (4625)
<NET-CHANGE-FROM-OPS> (4361)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (25)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2413
<NUMBER-OF-SHARES-REDEEMED> (117)
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 22683
<ACCUMULATED-NII-PRIOR> 0
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