[FRONT COVER]
OCTOBER 31, 1996
Phoenix
Series Fund
Annual Report
Balanced Fund Series
Convertible Fund Series
Growth Fund Series
Aggressive Growth Fund Series
High Yield Fund Series
U.S. Government Securities Fund Series
Money Market Fund Series
[LOGOTYPE] PHOENIX
DUFF & PHELPS
PHOENIX
ANNUAL REPORT
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Chairman's
Message
Dear Shareholders:
We are pleased to provide this consolidated report for the Phoenix Series
Fund, covering the twelve months ended October 31, 1996.
In addition to the summary of economic and market activity outlined below,
this report includes portfolio commentary and a complete list of investments for
each Phoenix Series Fund.
The Economy and the Markets
Over this latest reporting period, the financial markets remained volatile
as Wall Street debated whether the U.S. economy was growing too fast. While a
robust economy may be good for corporate profits, it can also serve as a
catalyst for higher inflation. Although economic activity has clearly
accelerated since year-end 1995 and labor markets are currently very tight, we
have yet to see any conclusive evidence of broad price increases as measured by
the Consumer Price Index (CPI) and Producer Price Index (PPI). Based on the
Federal Reserve's continued reluctance to raise short-term rates and the bond
market's strong rally since mid-September, it would appear that some of the
inflation fears plaguing the financial markets have dissipated.
Despite increasing interest rates and waning corporate earnings momentum
during 1996, U.S. stock prices forged higher, fueled by unprecedented cash
inflows into equity mutual funds and continued corporate share buybacks. As
measured by the Standard & Poor's 500 Composite Index, the U.S. stock market
posted an impressive total return of 24.20% over this twelve month period.
Although this remarkable rally dates back to December 1994, the past year has
been one of tremendous rotation among various sectors of the stock market--a
manifestation of increasing investor uncertainty over the direction of interest
rates and the economy.
After a disappointing first half of 1996, the bond market began showing
signs of renewed strength as concerns over inflation diminished. During this
latest reporting cycle, interest rates fluctuated dramatically, as nervous
investors pushed the yield on the bell weather 30-year Treasury bond as high as
7.19% and as low as 5.95%. Despite all the market gyrations, the "long bond"
finished the fiscal reporting period at 6.64%--only 0.35% higher than where it
stood one year ago. Relative to the stellar gains of 1995, the bond market, as
measured by the Lehman Brothers Aggregate Bond Index, posted only a modest
return of 5.85% over the last twelve months.
Outlook
As we move closer to 1997, we are encouraged to see that much of the
pessimism that has afflicted the bond market this year appears to have subsided.
Although concerns over inflation are still present, the latest reports suggest
that we could see more moderate economic growth going forward. If this outlook
is correct, it will not only be a welcome relief for fixed-income investors, but
will also add further confidence to an already bullish stock market. Since we
view the U.S. equity market as being mature and late-cycle, we continue to
believe that stock selection will be critical and that growth-oriented companies
should provide market leadership in this type of investment environment.
On behalf of the Phoenix Funds, I want to thank you for investing with us.
We look forward to continuing to serve your investment needs.
Sincerely,
/s/ Philip R. McLoughlin
Philip R. McLoughlin, Chairman
<PAGE>
Table of Contents
Page
Equity Funds
The Balanced Fund Series 1
The Convertible Fund Series 10
The Growth Fund Series 18
The Aggressive Growth Fund Series 26
Fixed Income Funds
The High Yield Fund Series 33
The U.S. Government Securities Fund Series 41
The Money Market Fund Series 47
Notes to Financial Statements 53
Fund Features and General Information 58
<PAGE>
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BALANCED FUND SERIES
- -------------------------------------------------------------------------------
INVESTMENT ADVISER'S REPORT
Aided by the long bull market in U.S. stocks, Phoenix Balanced Fund posted
double-digit gains during this fiscal reporting period. For the twelve months
ended October 31, 1996, Class A shares provided a total return of 12.03% and
Class B shares returned 11.24%. Despite these solid results, the Fund trailed
its composite benchmark, which returned 15.64% over the same period.* All of
these figures assume reinvestment of any distributions, but exclude the
effect of sales charges.
The Fund's results over this latest reporting cycle were held back
primarily because of the relative underperformance of our consumer cyclical,
health care and consumer staples stocks. Positive contributors to performance
included excellent stock selection within the energy and basic materials
sectors as well as a modest overweighting within the strongly performing
capital goods group. Additionally, the portfolio's fixed-income segment
continued to significantly outperform its benchmark, the Lehman Brothers
Aggregate Bond Index, throughout this reporting period.
Moving ahead, we have positioned the equity portion of the Fund for a less
robust economic climate and slower earnings growth. In this type of
environment, "true-growth" companies have historically provided superior
returns relative to "value" stocks. More specifically, our strategy
emphasizes high-quality, large-cap growth stocks and focuses on such
compelling investment themes as 21st Century Medicine (health care), Hybrid
Network (technology) and Deregulating Financial Services (financial
services). In terms of our fixed-income allocation, we continue to utilize
our sector rotation approach with a strong emphasis on U.S. treasuries and
mortgage-backed securities. As of October 31, 1996, the Fund's asset
allocation mix was 55% equity, 38% fixed income and 7% cash equivalents.
*The Balanced Benchmark is calculated by Frank Russell Company based on
the performance of the following indexes: 55% S&P 500, 35% Lehman Brothers
Aggregate Bond Index and 10% U.S. Treasury Bills.
INVESTOR PROFILE
The Balanced Fund is best suited for an investor seeking to supplement
current income while maintaining the potential for future growth and the
conservation of capital.
1
<PAGE>
- --------------------------------------------------------------------------------
Balanced Fund Series
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[LINE CHART]
Phoenix
Balanced Balanced
Benchmark Fund --
S&P 500* Index** Class A
-------- ----- -------
1986 10000 10000 9525
1987 10641 10619 10551
1988 12183 11982 10776
1989 15377 14310 12996
1990 14221 14152 13608
1991 18985 17599 17181
1992 20875 19265 18859
1993 23986 21705 20730
1994 24929 21981 20050
1995 31514 26478 23161
1996 39140 30619 25949
[/LINE CHART]
<TABLE>
<CAPTION>
Average Annual Total Returns for the Periods Ending 10/31/96 From Inception
7/15/94 to
1 Year 5 Years 10 Years 10/31/96
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A with 4.75% sales charge 6.71% 7.54% 10.00% --
- --------------------------------------------------------------------------------
Class A at net asset value 12.03% 8.60% 10.54% --
- --------------------------------------------------------------------------------
Class B with CDSC 7.24% -- -- 10.18%
- --------------------------------------------------------------------------------
Class B at net asset value 11.24% -- -- 11.33%
- --------------------------------------------------------------------------------
Balanced Benchmark** 15.64% 11.71% 11.84% 24.21%***
- --------------------------------------------------------------------------------
S&P 500 Index* 24.20% 15.57% 14.62% 16.73%
- --------------------------------------------------------------------------------
</TABLE>
This chart assumes an initial investment of $10,000 made on 10/31/86 for Class A
shares. 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 inception date, fees and sales charges. The total return
(since inception 7/15/94) 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).
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 Stock Index is an unmanaged but commonly used measure of stock
total return performance. The S&P 500 performance does not reflect sales
charges.
**The Balanced Benchmark is calculated based upon the performance of the
following indexes: 55% S&P 500/35% Lehman Brothers' Aggregate Bond Index/10%
U.S. Treasury Bills and is produced by Frank Russell Company. The index's
performance does not reflect sales charges.
***Index information from 7/31/94 to 10/31/96.
2
<PAGE>
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Balanced Fund Series
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INVESTMENTS AT OCTOBER 31, 1996
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- ---------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--23.2%
U.S. Treasury Notes--13.7%
U.S. Treasury Notes 4.75%, '98 AAA $ 30,000 $ 29,492,700
U.S. Treasury Notes 6.375%, '99 AAA 50,000 50,630,000
U.S. Treasury Notes 6.875%, '00 AAA 61,000 62,660,420
U.S. Treasury Notes 6.25%, '01 AAA 120,000 120,806,040
-----------
263,589,160
-----------
U.S. Treasury Bonds--5.4%
U.S. Treasury Bonds 6.50%, '06 AAA 102,505 103,530,050
-----------
Agency Mortgage-Backed Securities--4.1%
GNMA 6.50%, '23-'26 AAA 82,268 79,097,342
-----------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $445,202,047) 446,216,552
-----------
NON-CONVERTIBLE BONDS--8.3%
Asset-Backed Securities--1.1%
Airplanes Pass Through Trust 1D 10.875%, '19 BB 2,050 2,224,250
Fleetwood Credit Corp. 96-B, A 6.90%, '12 AAA 4,027 4,088,579
Green Tree Financial Corp. 96-2, M1 7.60%, '27 AA- 7,150 7,125,422
Green Tree Financial Corp. 96-4, M1 7.75%, '27 AA- 3,475 3,558,400
Green Tree Financial Corp. 96-4, A6 7.40%, '27 AAA 4,500 4,561,172
-----------
21,557,823
-----------
Non-Agency Mortgage-Backed Securities--6.7%
CS First Boston Mtg. 95-AE1, B 7.182%, '27
AA- 6,260 6,236,525
DLJ Mortgage Corp. 96-CF1, A1B 144A 7.58%, '28 (c) AAA 4,975 5,142,906
G.E. Capital Mortgage Service 96-8, M 7.25%, '26 AA 4,186 4,096,883
Lehman Commercial Conduit 95-C2, B 7.184%, '05 AA 6,442 6,462,401
Merrill Lynch Mortgage, Inc. 95-C2, B 7.53%, '21 AA(d) 3,277 3,335,459
Merrill Lynch Mortgage, Inc. 95-C3, B 7.149%, '25 AA 7,500 7,422,656
Merrill Lynch Mortgage, Inc. 96-C1, B 7.42%, '28 AA 7,080 7,148,587
Nationslink Funding Corp. 96-1, B 7.69%, '05 AA 5,907 6,045,426
Prudential Home Mortgage Securities 93-L, 2B3 144A 6.641%, '23
(c) A(d) 5,000 4,678,125
Residential Asset Securitization Trust 96-A8, C2 8%, '26 AAA 4,497 4,572,887
Residential Funding Mortgage 96-S8, A4 6.75%, '11 AAA 2,787 2,739,822
Non-Agency Mortgage-Backed Securities--continued
Residential Funding Mortgage 96-S1, A11 7.10%, '26 AAA $ 7,000 $ 6,698,125
Residential Funding Mortgage 96-S4, M1 7.25%, '26 AA 5,691 5,537,803
Resolution Trust Corp. 93-C1, B 8.75%, '24 AA(d) 5,675 5,822,195
Resolution Trust Corp. 95-C1, B 6.90%, '27 AA(d) 6,900 6,805,125
Resolution Trust Corp. 95-C2, B 6.80%, '27 AA(d) 14,381 13,981,425
Resolution Trust Corp. 95-2, M2 7.009%, '29 AA(d) 4,965 4,959,018
Securitized Asset Sales 93-J, 2B 6.808%, '23 A(d) 7,290 6,804,736
Structured Asset Securities Corp. 95-C1, C 7.375%, '24 A 10,151 10,065,351
Structured Asset Securities Corp. 95-C4, B 7%, '26 AA 5,000 4,892,188
Structured Asset Securities Corp. 96-CFL, C 6.525%, '28 A 5,460 5,291,081
-----------
128,738,724
-----------
Paper & Forest Products--0.2%
Buckeye Cellulose Corp. 9.25%, '08 BB- 4,185 4,237,312
-----------
Publishing, Broadcasting, Printing & Cable--0.1%
Rogers Communications, Inc. 9.125%, '06 BB- 1,000 945,000
-----------
Truckers & Marine--0.1%
Teekay Shipping Corp. 8.32%, '08 BB 1,675 1,628,938
-----------
Utility--Gas--0.1%
Petropower Funding 144A 7.36%, '14 (c) BBB 2,900 2,782,492
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $159,703,819) 159,890,289
-----------
FOREIGN GOVERNMENT SECURITIES--3.0%
Argentina--0.5%
Republic of Argentina Discount L-GL Euro 6.438%, '23 (f) BB- 9,500 6,893,437
Republic of Argentina Par L-GP 5.25%, '23 (f) BB- 5,750 3,424,844
-----------
10,318,281
-----------
Brazil--0.6%
Republic of Brazil Discount Series ZL Euro 6.50%, '24 (f) B+ 8,500 6,268,750
Republic of Brazil Par Z-L Euro 4.25%, '24 (f) B(d) 9,000 5,400,000
-----------
11,668,750
-----------
See Notes to Financial Statements
3
<PAGE>
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Balanced Fund Series
- --------------------------------------------------------------------------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- ---------------
Colombia--0.7%
Republic of Colombia 7.25%, '03 BBB- $ 8,950 $ 8,612,496
Republic of Colombia Euro
9%, '97 BBB- 5,000 5,053,800
-------------
13,666,296
-------------
Mexico--0.7%
United Mexican Discount B Euro 6.391%, '19 (e) (f) BB 8,500 6,991,250
United Mexican States Series B Euro 6.25%, '19 (e) BB 3,500 2,454,375
United Mexican States 144A 7.688%, '01 (c) (f) BAA(d) 4,235 4,236,270
-------------
13,681,895
-------------
Panama--0.5%
Panama IRB 144A 3.50%, '14 (c) (f) NR 7,000 4,620,000
Panama PDI 144A 6.75%, '16 (c) (f) NR 6,000 4,462,500
-------------
9,082,500
-------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $54,110,016) 58,417,722
-------------
FOREIGN NON-CONVERTIBLE BONDS--0.4%
Indonesia--0.2%
Asia Pulp & Paper Co. Yankee 11.75%, '05 BB 3,545 3,682,369
-------------
Sweden--0.2%
Astra Overseas Financial 144A 8.75%, '03 (c) NR 4,100 4,100,000
-------------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $7,584,277) 7,782,369
-------------
MUNICIPAL BONDS--2.5%
California--1.5%
Kern County Pension Obligation Taxable 7.26%, '14 AAA 6,830 6,771,399
Long Beach Pension Obligation Taxable 6.87%, '06 AAA 3,090 3,070,966
Orange County Pension Series A Taxable 7.62%, '08 AAA 9,310 9,706,140
San Bernardino County Obligation Revenue Taxable 6.87%, '08 AAA 1,480 1,462,003
San Bernardino County Obligation Revenue Taxable 6.94%, '09 AAA 4,035 4,000,743
Ventura County Pension Taxable 6.58%, '06 AAA 3,560 3,459,786
-------------
28,471,037
-------------
Florida--0.9%
Dade County Educational Facs Authority 5.75%, '20 AAA 975 983,063
Florida--continued
Miami Beach Special Obligation Taxable 8.60%, '21 AAA $ 11,675 $12,686,522
University Miami Exchange Revenue A 7.65%, '20 AAA 3,460 3,458,789
-------------
17,128,374
-------------
Virginia--0.1%
Newport News Taxable Series B 7.05%, '25 AA- 1,500 1,427,415
-------------
TOTAL MUNICIPAL BONDS
(Identified cost $47,081,108) 47,026,826
-------------
CONVERTIBLE BONDS--0.5%
Retail--0.5%
Staples, Inc. Subordinate Debenture Convertible 144A 4.50%, '00
(c) B+ 10,000 10,400,000
-------------
TOTAL CONVERTIBLE BONDS
(Identified cost $10,000,000) 10,400,000
-------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------
<S> <C> <C>
COMMON STOCKS--53.2%
Aerospace & Defense--1.6%
Boeing Co. 200,100 19,084,537
United Technologies Corp. 92,500 11,909,375
-----------
30,993,912
-----------
Auto & Truck Parts--0.6%
Lear Corp. (b) 300,600 11,122,200
-----------
Banks--2.7%
BankAmerica Corp. 88,000 8,052,000
Chase Manhattan Corp. 262,200 22,483,650
Citicorp 221,600 21,938,400
-----------
52,474,050
-----------
Beverages--1.6%
Coca-Cola Co. 375,000 18,937,500
PepsiCo, Inc. 374,500 11,094,562
-----------
30,032,062
-----------
Chemical--1.7%
Du Pont (E.I.) de Nemours & Co. 75,000 6,956,250
Monsanto Co. 650,000 25,756,250
-----------
32,712,500
-----------
Computer Software & Services--3.4%
Computer Associates International, Inc. 350,000 20,693,750
First Data Corp. 266,700 21,269,325
Netscape Communications Corp. (b) 285,300 12,624,525
Oracle Corp. (b) 250,000 10,578,125
-----------
65,165,725
-----------
Conglomerates--0.7%
AlliedSignal, Inc. 200,000 13,100,000
-----------
Cosmetics & Soaps--1.5%
Colgate Palmolive Co. 10,600 975,200
Gillette Co. 250,000 18,687,500
Procter & Gamble Co. 100,000 9,900,000
-----------
29,562,700
-----------
</TABLE>
See Notes to Financial Statements
4
<PAGE>
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Balanced Fund Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- ----------------
<S> <C> <C>
Diversified Financial Services--3.2%
Conseco, Inc. 200,000 $ 10,700,000
Donaldson Lufkin & Jenrette 150,000 4,818,750
First USA, Inc. 300,000 17,250,000
MBNA Corp. 170,000 6,417,500
Travelers Group, Inc. 401,200 21,765,100
-------------
60,951,350
Electrical Equipment--2.9% -------------
General Electric Co. 400,000 38,700,000
Honeywell, Inc. 175,000 10,871,875
Westinghouse Electric Corp. 380,000 6,507,500
-------------
56,079,375
Electronics--2.5% -------------
Intel Corp. 434,000 47,685,750
-------------
Food--0.4%
Campbell Soup Co. 100,000 8,000,000
-------------
Healthcare--Diversified--0.5%
Bristol-Myers Squibb Co. 90,000 9,517,500
-------------
Healthcare--Drugs--2.6%
Amgen, Inc. (b) 125,000 7,664,063
Merck & Co., Inc. 287,200 21,288,700
Pfizer, Inc. 265,000 21,928,750
-------------
50,881,513
Hospital Management & Services--1.0% -------------
Columbia/HCA Healthcare Corp. 525,000 18,768,750
-------------
Insurance--2.4%
Allstate Corp. 400,000 22,450,000
American International Group, Inc. 194,400 21,116,700
TIG Holdings, Inc. 100,000 2,887,500
-------------
46,454,200
Lodging & Restaurants--1.3% -------------
Hilton Hotels Corp. 300,000 9,112,500
Marriott International, Inc. 280,000 15,925,000
-------------
25,037,500
-------------
Machinery--0.8%
Dover Corp. 299,000 15,361,125
-------------
Medical Products & Supplies--2.1%
Abbott Laboratories 100,000 5,062,500
Johnson & Johnson 214,300 10,554,275
Medtronic, Inc. 374,900 24,134,188
-------------
39,750,963
-------------
Natural Gas--1.5%
Anadarko Petroleum Corp. 175,000 11,134,375
Columbia Gas System, Inc. 85,000 5,163,750
Consolidated Natural Gas Co. 150,000 7,968,750
PanEnergy Corp. 140,000 5,390,000
-------------
29,656,875
-------------
Office & Business Equipment--3.2%
International Business Machines Corp. 194,100 25,038,900
Sun Microsystems, Inc. (b) 380,000 23,180,000
Xerox Corp. 300,000 13,912,500
-------------
62,131,400
-------------
Oil--1.0%
Chevron Corp. 300,000 19,725,000
-------------
Oil Service & Equipment--3.7%
Baker Hughes, Inc. 366,600 $ 13,060,125
ENSCO International, Inc. (b) 432,900 18,722,925
Halliburton Co. 132,700 7,514,137
Schlumberger Ltd. 100,000 9,912,500
Tidewater, Inc. 244,700 10,705,625
Transocean Offshore, Inc. 175,000 11,068,750
-------------
70,984,062
-------------
Polution Control--0.2%
U.S.A. Waste Services, Inc. (b) 100,000 3,200,000
-------------
Professional Services--2.1%
CellNet Data Systems (b) 91,500 1,338,188
Corrections Corporations of America (b) 357,100 9,284,600
HFS, Inc. (b) 251,800 18,444,350
Marsh & McLennan Cos., Inc. 100,000 10,412,500
-------------
39,479,638
-------------
Retail--3.5%
Federated Department Stores, Inc. (b) 300,000 9,900,000
Home Depot, Inc. 320,000 17,520,000
Lowe's Companies, Inc. 125,000 5,046,875
Melville Corp. 450,000 16,762,500
Petsmart, Inc. (b) 635,900 17,169,300
-------------
66,398,675
-------------
Retail--Food--1.2%
Safeway, Inc. (b) 529,100 22,685,162
-------------
Telecommunications Equipment--2.1%
Cisco Systems, Inc. (b) 450,000 27,843,750
Newbridge Networks Corp. (b) 422,100 13,348,913
-------------
41,192,663
Textile & Apparel--1.2% -------------
Nike, Inc. Class B 400,000 23,550,000
-------------
TOTAL COMMON STOCKS
(Identified cost $905,663,332) 1,022,654,650
-------------
FOREIGN COMMON STOCKS--1.5%
Oil--1.5%
British Petroleum PLC ADR (United Kingdom) 75,000 9,646,875
Royal Dutch Petroleum Co. ADR NY Reg.
(Netherlands) 120,000 19,845,000
-------------
29,491,875
TOTAL FOREIGN COMMON STOCKS -------------
(Identified cost $28,187,373) 29,491,875
-------------
TOTAL LONG-TERM INVESTMENTS--92.6%
(Identified cost $1,657,531,972) 1,781,880,283
-------------
</TABLE>
See Notes to Financial Statements
5
<PAGE>
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Balanced Fund Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ -------- -----------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--8.0%
Commercial Paper--6.8%
CXC, Inc. 5.70%, 11-1-96 A-1+ $ 6,180 $ 6,180,000
Amoco Co. 5.20%, 11-6-96 A-1+ 1,165 1,164,159
Shell Oil Co. 5.20%, 11-6-96 A-1+ 1,185 1,184,144
Coca-Cola Co. 5.18%, 11-7-96 A-1+ 13,145 13,133,651
Corporate Receivables Corp. 5.23%, 11-7-96 A-1 25,000 24,978,208
Gannett Co. 5.23%, 11-7-96 A-1 5,000 4,995,642
Southwestern Bell Telephone Co. 5.37%, 11-14-96 A-1+ 930 928,021
Beta Finance, Inc. 5.50%, 11-15-96 A-1+ 1,990 1,985,744
Preferred Receivables Funding Corp. 5.26%,
11-19-96 A-1 18,575 18,526,148
McKenna Triangle National Corp. 5.25%, 12-5-96 A-1+ 13,085 13,020,120
Private Export Funding Corp. 5.45%, 12-5-96 A-1+ 5,000 4,973,951
Exxon Imperial U.S., Inc. 5.23%, 12-11-96 A-1+ 12,500 12,427,361
Cargill, Inc. 5.37%, 12-12-96 A-1+ 4,280 4,253,824
Minnesota Mining & Manufacturing Co. 5.21%,
12-20-96 A-1+ 16,826 16,698,012
Private Export Funding Corp. 5.30%, 1-28-97 A-1+ 5,000 4,934,500
Beta Finance, Inc. 5.38%, 2-25-97 A-1+ 2,000 1,965,560
-------------
131,349,045
-------------
Federal Agency Securities--1.2%
Federal National Mortgage Assoc. 5.26%, 11-18-96 $ 2,500 $ 2,493,398
Federal National Mortgage Assoc. 5.25%, 11-27-96 2,620 2,609,806
Federal National Mortgage Assoc. 5.63%, 12-19-96 5,000 5,002,088
Federal Home Loan Banks 5.28%, 3-27-97 5,000 4,893,850
Federal Farm Credit Bank 5.40%, 4-1-97 3,000 3,001,530
Federal Farm Credit Bank 5.64%, 11-3-97(f) 5,000 5,003,700
-------------
23,004,372
-------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $154,352,109) 154,353,417
-------------
TOTAL INVESTMENTS--100.6%
(Identified cost $1,811,884,081) 1,936,233,700(a)
Cash and receivables, less liabilities--(0.6%) (12,719,060)
-------------
NET ASSETS--100.0% $1,923,514,640
=============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $147,116,372 and gross
depreciation of $24,101,011 for income tax purposes. At October 31, 1996,
the aggregate cost of securities for federal income tax purposes was
$1,813,218,339.
(b) Non-income producing.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
1996, these securities amounted to a value of $40,422,293 or 2.1% of net
assets.
(d) As rated by Moody's, Fitch or Duff and Phelps.
(e) Mexico Value Recovery Euro Rights incorporated as a unit.
(f) Variable or step coupon bond; interest rate shown reflects the rate
currently in effect.
ADR--American Depository Receipt
See Notes to Financial Statements
6
<PAGE>
- --------------------------------------------------------------------------------
Balanced Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment securities at value
(Identified cost $1,811,884,081) $1,936,233,700
Short-term investments held as collateral for loaned
securities 48,955,252
Cash 54,100
Receivables
Investment securities sold 8,618,448
Fund shares sold 274,704
Dividends and interest 7,051,474
---------------
Total assets 2,001,187,678
---------------
Liabilities
Payables
Collateral on securities loaned 48,955,252
Investment securities purchased 19,274,697
Fund shares repurchased 7,168,538
Investment advisory fee 830,593
Transfer agent fee 690,689
Distribution fee 430,011
Financial agent fee 49,608
Trustees' fee 11,502
Accrued expenses 262,148
---------------
Total liabilities 77,673,038
---------------
Net Assets $1,923,514,640
===============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $1,599,486,131
Undistributed net investment income 4,825,975
Accumulated net realized gain 194,852,915
Net unrealized appreciation 124,349,619
---------------
Net Assets $1,923,514,640
===============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $1,897,305,528) 108,037,856
Net asset value per share $17.56
Offering price per share
$17.56/(1-4.75%) $18.44
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $26,209,112) 1,494,605
Net asset value and offering price per share $17.54
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Dividends $ 16,952,843
Interest 63,756,623
Security lending 794,362
------------
Total investment income 81,503,828
------------
Expenses
Investment advisory fee 11,281,357
Distribution fee--Class A 5,381,611
Distribution fee--Class B 223,213
Financial agent fee 652,490
Transfer agent 3,692,149
Printing 475,575
Custodian 199,667
Professional 72,566
Registration 47,619
Trustees 19,434
Miscellaneous 18,408
------------
Total expenses 22,064,089
------------
Net investment income 59,439,739
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 195,766,827
Net realized loss on foreign currency transactions (300)
Net change in unrealized appreciation (depreciation) on
investments (9,808,717)
------------
Net gain on investments 185,957,810
------------
Net increase in net assets resulting from operations $245,397,549
============
</TABLE>
See Notes to Financial Statements
7
<PAGE>
- --------------------------------------------------------------------------------
Balanced Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996 October 31, 1995
----------------- -----------------
<S> <C> <C>
From Operations
Net investment income $59,439,739 $79,057,337
Net realized gain 195,766,527 145,666,021
Net change in unrealized appreciation (depreciation) (9,808,717) 118,762,724
----------- -----------
Increase in net assets resulting from operations 245,397,549 343,486,082
----------- -----------
From Distributions to Shareholders
Net investment income--Class A (62,440,078) (77,388,590)
Net investment income--Class B (463,570) (288,920)
Net realized gains--Class A (124,234,079) --
Net realized gains--Class B (996,128) --
----------- -----------
Decrease in net assets from distributions to shareholders (188,133,855) (77,677,510)
----------- -----------
From Share Transactions
Class A
Proceeds from sales of shares (8,800,790 and 12,302,449 shares,
respectively) 149,289,059 194,015,940
Net asset value of shares issued from reinvestment of
distributions
(10,383,411 and 4,436,794 shares, respectively) 172,128,352 70,169,584
Cost of shares repurchased (48,762,578 and 49,930,419 shares,
respectively) (825,995,436) (784,885,316)
----------- -----------
Total (504,578,025) (520,699,792)
----------- -----------
Class B
Proceeds from sales of shares (616,550 and 769,217 shares,
respectively) 10,464,882 12,085,660
Net asset value of shares issued from reinvestment of
distributions
(80,135 and 16,234, respectively) 1,326,954 261,080
Cost of shares repurchased (199,574 and 91,818 shares,
respectively) (3,374,422) (1,481,587)
----------- -----------
Total 8,417,414 10,865,153
----------- -----------
Decrease in net assets from share transactions (496,160,611) (509,834,639)
----------- -----------
Net decrease in net assets (438,896,917) (244,026,067)
Net Assets
Beginning of period 2,362,411,557 2,606,437,624
----------- -----------
End of period (including undistributed net investment income of
$4,825,975 and $8,469,986, respectively) $1,923,514,640 $2,362,411,557
=========== ===========
</TABLE>
See Notes to Financial Statements
8
<PAGE>
- --------------------------------------------------------------------------------
Balanced Fund Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------------------
Year Ended October 31,
1996 1995 1994 1993 1992
---------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.04 $15.23 $16.64 $15.92 $16.05
Income from investment operations
Net investment income 0.48 0.52 0.48 0.46 0.52
Net realized and unrealized gain (loss) 1.46 1.80 (1.01) 1.08 0.92
------- ------- ------- ------- -------
Total from investment operations 1.94 2.32 (0.53) 1.54 1.44
------- ------- ------- ------- -------
Less distributions
Dividends from net investment income (0.49) (0.51) (0.49) (0.46) (0.54)
Dividends from net realized gains (0.93) -- (0.39) (0.36) (1.03)
------- ------- ------- ------- -------
Total distributions (1.42) (0.51) (0.88) (0.82) (1.57)
------- ------- ------- ------- -------
Change in net asset value 0.52 1.81 (1.41) 0.72 (0.13)
------- ------- ------- ------- -------
Net asset value, end of period $17.56 $17.04 $15.23 $16.64 $15.92
======= ======= ======= ======= =======
Total return(1) 12.03% 15.52% -3.28% 9.92% 9.77%
Ratios/supplemental data:
Net assets, end of period (thousands) $1,897,306 $2,345,440 $2,601,808 $3,126,014 $2,146,726
Ratio to average net assets of:
Operating expenses 1.01% 1.02% 0.96% 0.95% 0.98%
Net investment income 2.74% 3.27% 3.03% 2.88% 3.55%
Portfolio turnover 191% 197% 159% 130% 136%
Average commission rate paid(4) $0.0546 N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------
From
Inception
Year Ended October 31, 7/15/94 to
1996 1995 10/31/94
----------- --------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period $17.01 $15.23 $15.27
Income from investment operations
Net investment income 0.35 0.40 0.09
Net realized and unrealized gain (loss) 1.47 1.80 (0.04)
------- ------- -------
Total from investment operations 1.82 2.20 0.05
------- ------- -------
Less distributions
Dividends from net investment income (0.36) (0.42) (0.09)
Dividends from net realized gains (0.93) -- --
------- ------- -------
Total distributions (1.29) (0.42) (0.09)
------- ------- -------
Change in net asset value 0.53 1.78 (0.04)
------- ------- -------
Net asset value, end of period $17.54 $17.01 $15.23
======= ======= =======
Total return(1) 11.24% 14.68% 0.34%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $26,209 $16,971 $4,629
Ratio to average net assets of:
Operating expenses 1.76% 1.78% 1.65%(2)
Net investment income 1.96% 2.46% 2.36%(2)
Portfolio turnover 191% 197% 159%
Average commission rate paid(4) $0.0546 N/A N/A
</TABLE>
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, or spreads on shares traded on a principal basis.
See Notes to Financial Statements
9
<PAGE>
- --------------------------------------------------------------------------------
CONVERTIBLE FUND SERIES
- --------------------------------------------------------------------------------
INVESTMENT ADVISER'S REPORT
Supported by the strong performance in the convertible securities market,
Phoenix Convertible Fund posted double-digit gains over this latest reporting
period. For the twelve months ended October 31, 1996, the Fund's Class A
shares provided a total return of 13.55% and Class B shares returned 12.72%.
Despite these solid one-year results, the Fund lagged the CS First Boston
Convertible Securities Index, which earned 16.11% for the same period*. All
of these figures assume reinvestment of any distributions, but exclude the
effect of sales charges.
Over this latest reporting cycle, the Fund's typically conservative
investment profile held back its overall results in this rapidly rising
market. To a lesser degree, the portfolio's exposure to the media industry
during the earlier part of the year also hindered returns. Positive
contributors to performance included our strong stock selection in both the
energy and technology sectors. Some of the Fund's biggest individual gainers
for the period included U.S. Surgical, Perkin-Elmer, California Energy and
Intel.
Moving ahead, we continue to find attractive growth areas in this extended
bull market. The Fund has currently focused its attention on such investment
themes as 21st Century Medicine (health care), Clean Energy Demand (energy)
and Deregulating Media (consumer cyclical). As always, we remain committed to
our goal of attaining upside participation in rising equity markets, while
providing some measure of protection against downside volatility. As of
October 31, 1996, the Fund's asset allocation mix was 71% convertible
securities, 26% common stock and 3% cash equivalents.
*The CS First Boston Convertible Securities Index is an unmanaged but
commonly used index that tracks the returns of approximately 300 convertible
bonds and preferred stocks rated "B-" or better by Standard & Poor's.
INVESTOR PROFILE
The Convertible Fund is best suited for an investor seeking to supplement
current income while maintaining the potential for growth.
10
<PAGE>
- --------------------------------------------------------------------------------
Convertible Fund Series
- --------------------------------------------------------------------------------
[LINE CHART]
First Boston
Convertible Convertible
Securities Fund --
S&P 500* Index** Class A
1986 10000 10000 9525
1987 10641 9830 10405
1988 12183 11266 10915
1989 15377 12679 12753
1990 14221 11217 13052
1991 18985 15020 15136
1992 20875 17343 17220
1993 23986 21600 19387
1994 24929 21215 19100
1995 31514 24496 21288
1996 39140 28441 24172
[/LINE CHART]
Average Annual Total Returns for the Periods Ending 10/31/96
<TABLE>
<CAPTION>
From Inception
7/15/94 to
1 Year 5 Years 10 Years 10/31/96
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A with 4.75% sales charge 8.15% 8.74% 9.23% --
- --------------------------------------------------------------------------------------------
Class A at net asset value 13.55% 9.81% 9.76% --
- --------------------------------------------------------------------------------------------
Class B with CDSC 8.72% -- -- 9.14%
- --------------------------------------------------------------------------------------------
Class B at net asset value 12.72% -- -- 10.29%
- --------------------------------------------------------------------------------------------
First Boston Convertible Securities Index** 16.11% 13.62% 11.02% 14.39%***
- --------------------------------------------------------------------------------------------
S&P 500 Index* 24.20% 15.57% 14.62% 24.21%
- --------------------------------------------------------------------------------------------
</TABLE>
This chart assumes an initial investment of $10,000 made on 10/31/86 for Class A
shares. 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 inception date, fees and sales charges. The total return
(from inception 7/15/94) 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).
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 but commonly used measure of stock total
return performance. The S&P 500 performance does not reflect sales charges.
**The First Boston Convertible Securities Index is an unmanaged but commonly
used index that tracks the returns of 250 to 300 convertible bonds and
preferreds rated B- or better by Standard and Poor's. The index's performance
does not reflect sales charges.
***Index information from 7/31/94 to 10/31/96.
11
<PAGE>
- --------------------------------------------------------------------------------
Convertible Fund Series
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1996
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------------- ---------------
<S> <C> <C> <C>
CONVERTIBLE BONDS--57.1%
Advertising--1.5%
Interpublic Group Euro. Cv. 3.75%, '02 NR $ 2,000 $ 2,197,500
Interpublic Group Cv. 144A 3.75%, '02 (c) NR 1,000 1,098,750
------------
3,296,250
------------
Auto & Truck Parts--0.5%
Pep Boys Cv. 0%, '11 BBB- 2,000 1,112,500
------------
Banks--1.3%
Mitsubishi Bank Global Cv. 3%, '02 A+ 2,500 2,753,125
------------
Electrical Equipment--0.7%
General Signal Corp. Cv. 5.75%, '02 A- 500 552,500
Plasma & Materials Technology Cv. 7.125%, '01 NR 1,000 1,005,000
------------
1,557,500
------------
Electronics--0.5%
Altera Corp. Cv. 144A 5.75%, '02 (c) B 400 551,000
Analog Devices Cv. 3.50%, '00 BBB 500 580,625
------------
1,131,625
------------
Entertainment, Leisure & Gaming--8.5%
Comcast Corp. Cv. 3.375%,
'05 (e) BB- 5,000 4,318,750
Comcast Corp. Cv. 1.125%, '07 BB- 10,700 4,908,625
Time Warner, Inc., Hasbro Cv. 0%, '12 BBB- 3,000 1,110,000
Turner Broadcasting Cv. 144A 0%, '07 (c) BB- 4,000 1,905,000
Turner Warner, Inc. Cv. 0%, '13 BBB- 15,500 6,568,125
------------
18,810,500
------------
Food--2.3%
Grand Metropolitan PLC Cv. 144A 6.50%, '00 (c) A+ 4,250 4,988,438
------------
Healthcare--Diversified--6.3%
Roche Holdings, Inc. Cv. 144A 0%, '10 (c) NR 24,000 10,680,000
Sandoz Capital BVI Ltd. Cv. 144A 2%, '02 (c) NR 3,000 3,300,000
------------
13,980,000
------------
Healthcare--Drugs--2.3%
Alza Corp. Cv. 5%, '06 BBB- 2,000 1,905,000
Chiron Corp. Cv. 144A 1.90%, '00 (c) BBB+ 3,500 3,220,000
------------
5,125,000
------------
Insurance--2.1%
Chubb Corp. Cv. 6%, '98 AA $ 4,000 $ 4,675,000
------------
Lodging & Restaurants--0.4%
Marriott International, Inc. Cv. 144A 0%, '11 (c) NR 1,500 858,750
------------
Medical Products & Supplies--0.4%
Uromed Corp. Cv. 144A 6%,
'03 (c) NR 1,000 972,500
------------
Metals & Mining--1.5%
Agnico Eagle Mines Cv. 3.50%, '04 B+ 1,000 896,250
Coeur D'Alene Euro Cv. 6%, '02 B- 1,000 881,250
Inco Limited Cv. 7.75%, '16 BBB- 1,500 1,578,750
------------
3,356,250
------------
Natural Gas--2.7%
Apache Corp. Cv. 144A 6%,
'02 (c) BBB- 2,000 2,525,000
Consolidated Natural Gas Co. Cv. 7.25%, '15 A+ 3,250 3,485,625
------------
6,010,625
------------
Office & Business Equipment--0.6%
Conner Peripherals Cv. 6.50%, '02 BB+ 1,000 1,237,500
------------
Oil--0.5%
Pennzoil Co. Series US Cv. 4.75%, '03 BBB 1,000 1,169,900
------------
Oil Service & Equipment--1.7%
Baker Hughes, Inc. Cv. 0%, '08 A- 2,000 1,487,500
Nabors Industries, Inc. Cv. 5%, '06 BBB- 1,000 1,103,750
Pride Pete Services, Inc. Cv. 6.25%, '06 B- 750 1,155,000
------------
3,746,250
------------
Pollution Control--5.9%
Chemical Waste Management, Inc. Cv. 0%, '10 A 15,000 6,618,750
Molten Metal Technology Cv. 144A 5.50%, '06 (c) NR 2,750 1,925,000
WMX Technologies, Inc. Cv. 2%, '05 A 4,750 4,524,375
------------
13,068,125
------------
Publishing, Broadcasting, Printing & Cable--0.9%
Hollinger Lyons Cv. 0%, '13 BB- 6,000 2,062,500
------------
Retail--3.1%
Federated Department Stores, Inc. Cv. 5%, '03 BB- 1,000 1,120,000
Home Depot, Inc. Cv. 3.25%, '01 A+ 3,375 3,391,875
See Notes to Financial Statements
12
<PAGE>
- --------------------------------------------------------------------------------
Convertible Fund Series
- --------------------------------------------------------------------------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------------- ---------------
Retail--continued
Saks Holdings, Inc. Cv. 5.50%, '06 B $ 1,250 $ 1,303,125
The Sports Authority, Inc. 144A Cv. 5.25%, '01
(c) B 1,000 992,500
------------
6,807,500
------------
Retail--Drug--4.9%
Rite Aid Corp. Cv. 0%, '06 BBB 19,000 10,711,250
------------
Retail--Food--0.5%
Food Lion, Inc. Cv. 144A 5%, '03 (c) Aaa(d) 1,000 1,125,000
------------
Telecommunications Equipment--1.2%
BBN Corp. Cv. 6%, '12 Baa(d) 2,850 2,650,500
------------
Truckers & Marine--1.2%
Seacor Holdings, Inc. Cv. 144A 5.375%, '06 (c) BB+ 2,500 2,575,000
------------
Utility--Telephone--5.6%
U.S. West, Inc. Euro Cv. 0%, '11 BBB 35,000 12,425,000
------------
TOTAL CONVERTIBLE BONDS
(Identified cost $123,176,663) 126,206,588
------------
FOREIGN CONVERTIBLE BONDS--1.1%
Banks--0.6%
Sumitomo Bank International Cv. 0.75%, '01
(Japan) Aa(d) 128,000(f) 1,232,282
------------
Insurance--0.5%
Republic of Italy Cv. 5%, '01 Aaa(d) 1,000 1,005,000
------------
TOTAL FOREIGN CONVERTIBLE BONDS
(Identified cost $2,175,174) 2,237,282
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS--12.6%
Banks--0.5%
H.F. Ahmanson & Co. Cv. Pfd. 6% 16,000 1,082,000
---------
Chemical--1.0%
Merrill Lynch, IGL (STRYPES) Cv. Pfd. 55,000 2,158,750
---------
Computer Software & Services--0.5%
Vanstar Financial Trust 144A Cv. Pfd. 6.75% (c) 20,000 1,035,000
---------
Containers--1.0%
Crown Cork & Seal 4.50% 50,000 2,325,000
---------
Electrical Equipment--1.0%
Westinghouse Electric Corp. Cv. Pfd. 144A $1.30
(c) 150,000 2,306,250
---------
Entertainment, Leisure & Gaming--0.8%
Tyco Toys, Inc. Cv. Pfd. $0.4125 250,000 1,656,250
---------
Medical Products & Supplies--0.5%
U.S. Surgical Corp. Cv. Pfd. $2.20 Series A 30,000 1,200,000
---------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------- --------------
<S> <C> <C>
Metals & Mining--0.8%
Coeur D'Alene Cv. Pfd. 7% 35,000 $ 581,875
Freeport-McMoRan Copper Cv. Pfd. 7%, '02
(e) 40,000 1,090,000
------------
1,671,875
------------
Oil--3.9%
Chieftain International, Inc. Cv. Pfd. 40,500 1,209,937
Noram Financing Cv. Pfd. 13,000 828,750
Occidental Petroleum Corp. Cv. Pfd. 144A
$3.875 (c) 60,000 3,502,500
Parker & Parsley CAP LLC 144A (c) 20,000 1,135,000
Valero Energy Corp. Cv. Pfd. $3.125, '49 37,900 2,008,700
------------
8,684,887
------------
Oil Service & Equipment--0.6%
Noble Drilling Corp. Cv. Pfd. 29,000 1,355,750
------------
Publishing, Broadcasting, Printing & Cable--1.1%
American Radio Cv. Pfd. 144A 7% (c) 25,000 1,212,500
Merrill Lynch, Cox (STRYPES) Cv. Pfd. 6% 60,000 1,162,500
------------
2,375,000
------------
Telecommunications Equipment--0.5%
Global Star Telecom Cv. Pfd. 144A 6.50% (c) 16,000 752,000
TCI Pacific Communications Cv. Pfd. 5%, '06 5,000 415,000
------------
1,167,000
------------
Utility--Electric--0.4%
California Energy Capital Trust Cv. Pfd.
144A 6.25% (c) 15,000 877,500
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified cost $25,182,936) 27,895,262
------------
COMMON STOCKS--24.9%
Airlines--1.5%
AMR Corp. (b) 40,400 3,393,600
------------
Autos & Trucks--1.1%
United Auto Group, Inc. (b) 71,300 2,450,937
------------
Computer Software & Services--1.0%
Microsoft Corp. (b) 8,500 1,166,625
Oracle Corp. (b) 25,200 1,066,275
------------
2,232,900
------------
Diversified Financial Services--0.7%
First USA, Inc. 26,600 1,529,500
------------
Diversified Miscellaneous--0.5%
Pioneer Hi Bred International, Inc. 16,100 1,080,712
------------
Electronic Equipment--0.8%
General Electric Co. 18,100 1,751,175
------------
Electronics--2.6%
Intel Corp. 14,400 1,582,200
Perkin Elmer Corp. 78,700 4,220,288
------------
5,802,488
------------
See Notes to Financial Statements
13
<PAGE>
- --------------------------------------------------------------------------------
Convertible Fund Series
- --------------------------------------------------------------------------------
SHARES VALUE
--------- --------------
Insurance--2.3%
Allstate Corp. 31,400 $ 1,762,325
American International Group, Inc. 15,300 1,661,963
Chubb Corp. 32,800 1,640,000
------------
5,064,288
------------
Lodging & Restaurants--1.4%
Sun International Hotels Ltd. (b) 65,200 3,080,700
------------
Medical Products & Supplies--0.5%
Guidant Corp. 25,100 1,157,737
------------
Natural Gas--3.6%
Columbia Gas System, Inc. 10,100 613,575
Consolidated Natural Gas Co. 16,100 855,312
Enron Corp. 27,400 1,274,100
KN Energy, Inc. 13,200 493,350
New Jersey Resources Corp. 8,100 223,763
Pacific Enterprises 35,500 1,091,625
PanEnergy Corp. 38,900 1,497,650
Questar Corp. 13,200 475,200
Tejas Gas Corp. (b) 13,200 536,250
Williams Companies, Inc. 16,100 841,225
------------
7,902,050
------------
Oil--5.5%
Atlantic Richfield Co. 26,200 3,471,500
Chevron Corp. 18,500 1,216,375
KCS Energy, Inc. 18,600 802,125
NGC Corp. 74,000 1,332,000
Noble Affiliates, Inc. 122,783 5,341,058
------------
12,163,058
------------
Oil Service & Equipment--2.2%
ENSCO International, Inc. (b) 28,000 1,211,000
Halliburton Co. 11,200 634,200
Pool Energy Services Co. (b) 30,000 442,500
Schlumberger Ltd. 7,000 693,875
Tidewater, Inc. 26,000 1,137,500
Weatherford Enterra, Inc. (b) 22,100 640,900
------------
4,759,975
------------
Telecommunications Equipment--0.5%
Cisco Systems, Inc. (b) 17,300 1,070,438
------------
Utility--Electric--0.6%
Calenergy, Inc. (b) 44,444 $ 1,288,889
------------
Utility--Gas--0.1%
MCN Corp. 9,100 250,250
------------
TOTAL COMMON STOCKS
(Identified cost $50,386,315) 54,978,697
------------
FOREIGN COMMON STOCKS--1.0%
Oil--1.0%
Royal Dutch Petroleum Co. ADR NY Reg.
(Netherlands) 13,000 2,149,875
------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $2,139,448) 2,149,875
------------
TOTAL LONG-TERM INVESTMENTS--96.7%
(Identified cost $203,060,536) 213,467,704
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------ --------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--5.2%
Commercial Paper--2.3%
CXC, Inc. 5.70%, 11-1-96 A-1+ $1,370 1,370,000
Potomac Electric Power 5.22%,
11-7-96 A-1 3,735 3,731,751
--------------
5,101,751
--------------
Federal Agency Securities--2.9%
Federal National Mortgage
Assoc. 5.17%, 11-5-96 3,385 3,383,055
Federal National Mortgage
Assoc. 5.18%, 11-5-96 3,090 3,088,222
--------------
6,471,277
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $11,573,028) 11,573,028
--------------
TOTAL INVESTMENTS--101.9%
(Identified cost $214,633,564) 225,040,732(a)
Cash and receivables, less liabilities--(1.9%) (4,220,043)
--------------
NET ASSETS--100.0% $220,820,689
==============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $15,266,089 and gross
depreciation of $4,850,882 for income tax purposes. At October 31, 1996,
the aggregate cost of securities for federal income tax purposes was
$214,625,525.
(b) Non-income producing.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
1996, these securities amounted to a value of $47,537,688 or 21.5% of net
assets.
(d) As rated by Moody's, Fitch or Duff & Phelps.
(e) Variable or step coupon; interest rate shown reflects the rate currently
in effect.
(f) Par value represents Japanese Yen.
ADR -- American Depository Receipt
See Notes to Financial Statements
14
<PAGE>
- --------------------------------------------------------------------------------
Convertible Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment securities at value
(Identified cost $214,633,564) $225,040,732
Short-term investments held as collateral for loaned
securities 6,226,300
Cash 8,390
Receivables
Dividends and interest 1,046,668
Fund shares sold 29,140
------------
Total assets 232,351,230
------------
Liabilities
Payables
Collateral on securities loaned 6,226,300
Investment securities purchased 4,788,400
Fund shares repurchased 172,152
Investment advisory fee 122,357
Transfer agent fee 81,618
Distribution fee 50,870
Trustees' fee 11,476
Financial agent fee 5,647
Accrued expenses 71,721
------------
Total liabilities 11,530,541
------------
Net Assets $220,820,689
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $196,114,533
Undistributed net investment income 657,595
Accumulated net realized gain 13,641,393
Net unrealized appreciation 10,407,168
------------
Net Assets $220,820,689
============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $214,873,926) 11,156,269
Net asset value per share $19.26
Offering price per share
$19.26/(1-4.75%) $20.22
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $5,946,763) 309,692
Net asset value and offering price per share $19.20
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Dividends $ 2,001,333
Interest 8,882,782
Security lending 68,362
-----------
Total investment income 10,952,477
-----------
Expenses
Investment advisory fee 1,444,901
Distribution fee--Class A 543,092
Distribution fee--Class B 50,553
Financial agent fee 66,688
Transfer agent 361,719
Printing 53,684
Custodian 37,547
Professional 33,520
Registration 31,947
Trustees 20,352
Miscellaneous 4,779
-----------
Total expenses 2,648,782
-----------
Net investment income 8,303,695
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 13,764,508
Net change in unrealized appreciation (depreciation) on
investments 6,532,321
-----------
Net gain on investments 20,296,829
-----------
Net increase in net assets resulting from operations $28,600,524
===========
</TABLE>
See Notes to Financial Statements
15
<PAGE>
- --------------------------------------------------------------------------------
Convertible Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996 October 31, 1995
----------------- -----------------
<S> <C> <C>
From Operations
Net investment income $8,303,695 $10,546,200
Net realized gain 13,764,508 6,913,139
Net change in unrealized appreciation (depreciation) 6,532,321 6,261,043
----------- -----------
Increase in net assets resulting from operations 28,600,524 23,720,382
----------- -----------
From Distributions to Shareholders
Net investment income--Class A (8,803,953) (12,970,385)
Net investment income--Class B (164,704) (119,217)
Net realized gains--Class A (6,839,551) (2,391,510)
Net realized gains--Class B (129,752) (12,867)
----------- -----------
Decrease in net assets from distributions to shareholders (15,937,960) (15,493,979)
----------- -----------
From Share Transactions
Class A
Proceeds from sales of shares (906,746 and 1,382,175
shares, respectively) 16,946,702 24,342,158
Net asset value of shares issued from reinvestment of
distributions (703,569 and 722,912 shares, respectively) 12,908,037 12,522,376
Cost of shares repurchased (2,489,652 and 2,957,778
shares, respectively) (46,749,267) (51,872,715)
----------- -----------
Total (16,894,528) (15,008,181)
----------- -----------
Class B
Proceeds from sales of shares (125,709 and 158,935 shares,
respectively) 2,344,422 2,790,598
Net asset value of shares issued from reinvestment of
distributions (11,529 and
6,511 shares, respectively) 211,321 114,320
Cost of shares repurchased (31,996 and 9,767 shares,
respectively) (602,797) (173,872)
----------- -----------
Total 1,952,946 2,731,046
----------- -----------
Decrease in net assets from share transactions (14,941,582) (12,277,135)
----------- -----------
Net decrease in net assets (2,279,018) (4,050,732)
Net Assets
Beginning of period 223,099,707 227,150,439
----------- -----------
End of period (including undistributed net investment
income of $657,595 and $1,322,557, respectively) $220,820,689 $223,099,707
=========== ===========
</TABLE>
See Notes to Financial Statements
16
<PAGE>
- --------------------------------------------------------------------------------
Convertible Fund Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------
Year Ended October 31,
1996 1995 1994 1993 1992
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.23 $17.56 $19.34 $18.86 $18.36
Income from investment operations
Net investment income 0.70(4) 0.87 0.78 0.68 0.77
Net realized and unrealized gain (loss) 1.68 1.04 (1.06) 1.53 1.54
------- ------- ------- ------- -------
Total from investment operations 2.38 1.91 (0.28) 2.21 2.31
------- ------- ------- ------- -------
Less distributions
Dividends from net investment income (0.77) (1.05) (0.69) (0.73) (0.72)
Dividends from net realized gains (0.58) (0.19) (0.81) (1.00) (1.09)
------- ------- ------- ------- -------
Total distributions (1.35) (1.24) (1.50) (1.73) (1.81)
------- ------- ------- ------- -------
Change in net asset value 1.03 0.67 (1.78) 0.48 0.50
------- ------- ------- ------- -------
Net asset value, end of period $19.26 $18.23 $17.56 $19.34 $18.86
======= ======= ======= ======= =======
Total return(1) 13.55% 11.45% -1.48% 12.58% 13.77%
Ratios/supplemental data:
Net assets, end of period (thousands) $219,384 $226,294 $252,072 $200,944
$214,874
Ratio to average net assets of:
Operating expenses 1.17% 1.18% 1.14% 1.15% 1.20%
Net investment income 3.75% 4.78% 4.27% 3.70% 4.28%
Portfolio turnover 141% 79% 91% 94% 200%
Average commission rate paid(5) $0.0619 N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
---------------------------------
From
Inception
Year Ended October 31, 7/15/94 to
1996 1995 10/31/94
--------- --------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period $18.17 $17.55 $17.59
Income from investment operations
Net investment income 0.55(4) 0.70(4) 0.15
Net realized and unrealized gain (loss) 1.68 1.07 (0.06)
------- ------- -------
Total from investment operations 2.23 1.77 0.09
------- ------- -------
Less distributions
Dividends from net investment income (0.62) (0.96) (0.13)
Dividends from net realized gains (0.58) (0.19) --
------- ------- -------
Total distributions (1.20) (1.15) (0.13)
------- ------- -------
Change in net asset value 1.03 0.62 (0.04)
------- ------- -------
Net asset value, end of period $19.20 $18.17 $17.55
======= ======= =======
Total return(1) 12.72% 10.59% 0.49%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $5,947 $3,715 $856
Ratio to average net assets of:
Operating expenses 1.92% 1.95% 1.83%(2)
Net investment income 2.95% 3.92% 3.29%(2)
Portfolio turnover 141% 79% 91%
Average commission rate paid(5) $0.0619 N/A N/A
</TABLE>
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
See Notes to Financial Statements
17
<PAGE>
- --------------------------------------------------------------------------------
GROWTH FUND SERIES
- --------------------------------------------------------------------------------
INVESTMENT ADVISER'S REPORT
With the stock market continuing its remarkable rally dating back to
December 1994, the Phoenix Growth Fund posted strong results over this latest
reporting cycle. For the twelve months ended October 31, 1996, the Fund's Class
A shares returned 16.34% and Class B shares returned 15.48%. In spite of these
solid gains, the Fund lagged the Standard & Poor's 500 Composite Index, an
unmanaged, commonly used measure of stock market performance, which returned
24.20%. All of these figures assume reinvestment of any distributions, but
exclude the effect of sales charges.
We have viewed the stock market as in the late stages of a cyclical
upswing. Since October 1990, stocks have moved higher virtually without a major
interruption. The excellent returns have bred an environment of complacency and
high expectations that has pushed investors further out on the risk spectrum.
During the second quarter of 1996, we witnessed a tremendous influx of money
into aggressive growth and smaller company funds that showcased this speculative
impulse. The correction of July 1996 cleansed the excesses in this area of the
market. Since July, the focus has shifted to larger company outperformance.
Investors have poured money into very large companies believed to provide steady
growth characteristics and ample liquidity. This more recent tactic has pushed
market indices (such as S&P 500 and the Dow Jones Industrials) higher, while
broader measures of stock performance have lagged.
In retrospect, the Fund's performance was held back by a more guarded
stance toward the stock market. Our approach met with good results through
August 1996, and especially in the difficult market environment during July.
But, the dramatic rebound in equity prices during the last two months of the
fiscal year was the primary reason for lagging the S&P 500 Index. Positive
contributors to performance during the year included our excellent stock
selection in both the energy and basic materials sectors as well as the Fund's
overweighting in the strongly performing capital goods group. Specific areas
which hindered our relative performance included weakness in some of our
technology holdings as well the Fund's modest underweighting in the financial
sector.
Looking ahead, we continue to feel that the energy sector is in a
long-term, secular upswing and will provide excellent returns. Health care and
selected areas of technology will continue to exhibit excellent growth. Also, we
continue to increase commitments to companies that are internationally focused
and will be beneficiaries of developing country demand (including larger,
foreign-based multinational corporations). Since we feel that the U.S. economy
is in the mature stage of the growth cycle, the challenge ahead will be to
identify companies that can continue to grow earnings despite a slower growth
economic scenario, and that sell at relatively attractive prices to their growth
rates.
Finally, we remind shareholders that, despite recent experience, markets
move in both directions. Our investment goal is to outperform over a market
cycle. That means taking measures to protect against potentially adverse market
environments. We feel that this is a period when the quest to make money in the
stock market should be balanced with the instinct to protect capital--especially
at a time when the level of complacency among investors is high. In this spirit,
we continue to be well invested in stocks (with moderate cash reserves), but
reinforce the fact that we remain true to the conservative growth objective of
the Fund.
INVESTOR PROFILE
The Growth Fund is best suited for an investor seeking the potential for
long-term growth through investments in quality common stocks. At times, the
Fund may invest in stocks of non-U.S. companies. Investors should note that
foreign investments pose added risks, such as currency fluctuations, less public
information, and, political and economic uncertainty.
18
<PAGE>
- --------------------------------------------------------------------------------
Growth Fund Series
- --------------------------------------------------------------------------------
[LINE CHART]
Growth Fund
S&P 500* -- Class A
-------- ----------
1986 10000 9525
1987 10641 10471
1988 12183 11203
1989 15377 13604
1990 14221 14019
1991 18985 18362
1992 20875 19637
1993 23986 21051
1994 24929 21485
1995 31514 26622
1996 39140 30973
[/LINE CHART]
<TABLE>
<CAPTION>
Average Annual Total Returns for the Periods Ending 10/31/96 From Inception
7/15/94 to
1 Year 5 Years 10 Years 10/31/96
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A with 4.75% sales charge 10.82% 9.94% 11.97% --
---------------------------------------------------------------------------------
Class A at net asset value 16.34% 11.02% 12.52% --
---------------------------------------------------------------------------------
Class B with CDSC 11.48% -- -- 17.18%
---------------------------------------------------------------------------------
Class B at net asset value 15.48% -- -- 18.23%
---------------------------------------------------------------------------------
S&P 500 Index* 24.20% 15.57% 14.62% 24.21%
---------------------------------------------------------------------------------
</TABLE>
This chart assumes an initial gross investment of $10,000 made on 10/31/86 for
Class A shares. 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 inception dates, fees and sales charges. The total
return (since inception 7/15/94) 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). 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 but commonly used measure of common stock
total return performance. The S&P 500's performance does not reflect sales
charges.
19
<PAGE>
- --------------------------------------------------------------------------------
Growth Fund Series
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
------------ ---------------
<S> <C> <C>
COMMON STOCKS--80.4%
Aerospace & Defense--6.9%
Boeing Company 500,000 $ 47,687,500
General Motors Corp. Class H 500,000 26,687,500
Lockheed Martin Corp. 600,000 53,775,000
Raytheon Co. 730,000 35,952,500
---------
164,102,500
Banks--2.3% ---------
Bankers Trust New York Corp. 300,000 25,350,000
Citicorp 300,000 29,700,000
---------
55,050,000
Beverages--1.1% ---------
Seagram Ltd. 700,000 26,512,500
---------
Chemical--4.1%
IMC Global, Inc. 850,000 31,875,000
Monsanto Co. 1,700,000 67,362,500
---------
99,237,500
Computer Software & Services--2.4% ---------
First Data Corp. 250,000 19,937,500
Informix Corp. (b) 600,000 13,312,500
Microsoft Corp. (b) 30,600 4,199,850
Oracle Corp. (b) 500,000 21,156,250
---------
58,606,100
Conglomerates--0.8% ---------
ITT Corp. (b) 440,000 18,480,000
---------
Cosmetics & Soaps--1.6%
Gillette Co. 500,000 37,375,000
---------
Diversified Financial Services--2.8%
American Express Co. 600,000 28,200,000
Federal National Mortgage Association 1,000,000 39,125,000
---------
67,325,000
Diversified Miscellaneous--3.3% ---------
CUC International, Inc. (b) 1,350,000 33,075,000
Equifax, Inc. 1,532,100 45,579,975
---------
78,654,975
Electrical Equipment--1.6% ---------
Raychem Corp. 500,000 39,062,500
---------
Electronics--1.5%
Intel Corp. 75,000 8,240,625
Perkin Elmer Corp. 500,000 26,812,500
---------
Entertainment, Leisure & Gaming--1.2% 35,053,125
---------
Carnival Corp. Class A 966,800 29,124,850
---------
Food--1.2%
Ralston-Purina Group 450,000 29,756,250
---------
Healthcare-Diversified--0.9%
Mallinckrodt, Inc. 500,000 21,750,000
---------
Healthcare-Drugs--2.1%
Amgen, Inc. (b) 400,000 24,525,000
Pharmacia & Upjohn, Inc. 700,000 25,200,000
---------
49,725,000
Hospital Management & Services--2.6% ---------
Columbia/HCA Healthcare Corp.
1,050,000 $ 37,537,500
MedPartners, Inc. (b) 1,161,600 24,538,800
---------
62,076,300
Insurance--4.0% ---------
Allstate Corp.
600,000 33,675,000
American International Group, Inc. 350,000 38,018,750
General Re Corp. 170,000 25,032,500
---------
96,726,250
Lodging & Restaurants--2.6% ---------
Hilton Hotels Corp. 800,000 24,300,000
Marriott International, Inc. 650,000 36,968,750
---------
61,268,750
Machinery--1.9% ---------
Deere & Co. 1,100,000 45,925,000
Medical Products & Supplies--4.8% ---------
Allegiance Corp. (b) 200,000 3,750,000
Baxter International, Inc. 1,000,000 41,625,000
Johnson & Johnson 1,000,000 49,250,000
Medtronic, Inc. 300,000 19,312,500
---------
Miscellaneous--0.2% 113,937,500
---------
Sabre Group Holdings, Inc. Class A (b) 155,900 4,754,950
---------
Natural Gas--3.6%
Anadarko Petroleum Corp. 230,000 14,633,750
Apache Corp. 1,100,000 39,050,000
Burlington Resources, Inc. 400,000 20,150,000
Enron Oil & Gas Co. 500,000 12,875,000
---------
Office & Business Equipment--0.9% 86,708,750
---------
Xerox Corp. 450,000 20,868,750
---------
Oil--1.1%
Amoco Corp. 345,000 26,133,750
Oil Service & Equipment--10.4% ---------
Diamond Offshore Drilling (b) 619,000 37,681,625
Dresser Industries, Inc. 500,000 16,437,500
ENSCO International, Inc. (b) 600,000 25,950,000
Halliburton Co. 1,014,000 57,417,750
Schlumberger Ltd. 500,000 49,562,500
Tidewater, Inc. 707,400 30,948,750
Transocean Offshore, Inc. 368,000 23,276,000
Varco International, Inc. (b) 400,000 7,900,000
---------
249,174,125
Paper & Forest Products--1.2% ---------
Kimberly-Clark Corp. 300,000 27,975,000
---------
Pollution Control--2.3%
WMX Technologies, Inc. 1,600,000 55,000,000
---------
</TABLE>
See Notes to Financial Statements
20
<PAGE>
- --------------------------------------------------------------------------------
Growth Fund Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------------ ---------------
<S> <C> <C>
Professional Services--1.6%
ADT Ltd. (b) 900,000 $ 17,775,000
Marsh & McLennan Cos., Inc. 200,000 20,825,000
-------------
38,600,000
-------------
Rails--0.9%
Burlington Northern, Inc. 275,000 22,653,125
-------------
Retail--4.4%
Footstar, Inc. (b) 345,480 7,600,560
Home Depot, Inc. 500,000 27,375,000
Melville Corp. 1,200,000 44,700,000
Price/Costco, Inc. (b) 1,300,000 25,837,500
-------------
105,513,060
-------------
Retail--Food--1.5%
American Stores Co. 850,000 35,168,750
-------------
Telecommunications Equipment--2.4%
Cisco Systems, Inc. (b) 450,000 27,843,750
General Instrument Corp. (b) 900,000 18,112,500
Lucent Technologies, Inc. 226,858 10,662,326
-------------
56,618,576
-------------
Truckers & Marine--0.2%
Avondale Industries, Inc. (b) 365,000 5,976,875
-------------
TOTAL COMMON STOCKS
(Identified cost $1,632,463,766) 1,924,894,811
-------------
FOREIGN COMMON STOCKS--8.4%
Chemical--1.5%
Potash Corp. of Saskatchewan, Inc. (Canada) 500,000 35,437,500
-------------
Cosmetics & Soaps--1.8%
Unilever NV (Netherlands) 275,000 42,040,625
-------------
Healthcare-Drugs--3.1%
Astra AB Series A (Sweden) 805,000 37,038,050
SmithKline Beecham PLC ADR
(United Kingdom) 600,000 37,575,000
-------------
74,613,050
-------------
Oil Service & Equipment--1.2%
Elf Aquitane Sponsored ADR (France) 700,000 28,087,500
-------------
Rails--0.8%
Canadian Pacific Ltd. (Canada) 785,000 19,821,250
-------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $157,372,145) 199,999,925
-------------
TOTAL LONG-TERM INVESTMENTS--88.8%
(Identified cost $1,789,835,911) 2,124,894,736
-------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ -------- --------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--11.9%
Commercial Paper--8.9%
Corporate Receivables Corp. 5.70%, 11-1-96 A-1 $ 4,980 $ 4,980,000
Preferred Receivables Funding Corp. 5.40%, 11-4-96 A-1 4,344 4,342,045
BellSouth Telecommunications, Inc. 5.22%, 11-5-96 A-1+ 1,965 1,963,860
Preferred Receivables Funding Corp. 5.40%, 11-5-96 A-1 6,900 6,894,729
Kimberly-Clark Corp. 5.27%, 11-8-96 A-1+ 13,745 13,730,915
Abbott Laboratories 5.20%, 11-12-96 A-1+ 4,600 4,592,691
Coca-Cola Co. 5.20%, 11-12-96 A-1+ 10,440 10,423,412
Preferred Receivables Funding Corp. 5.27%,
11-12-96 A-1 2,000 1,996,779
AlliedSignal, Inc. 5.24%, 11-13-96 A-1 5,785 5,774,896
Ameritech Capital Funding Corp. 5.27%, 11-18-96 A-1+ 3,010 3,001,802
McDonald's Corp. 5.21%, 11-19-96 A-1+ 7,890 7,869,447
BellSouth Telecommunications, Inc. 5.36%, 11-19-96 A-1+ 8,260 8,236,201
Minnesota Mining & Manufacturing Co. 5.37%,
11-20-96 A-1+ 8,855 8,827,999
Vermont American Corp. 5.22%, 11-21-96 A-1+ 4,440 4,427,124
Albertson's, Inc. 5.23%, 11-22-96 A-1 10,160 10,129,004
Minnesota Mining & Manufacturing Co. 5.22%,
11-22-96 A-1+ 100 99,696
General Electric Capital Corp. 5.24%, 11-26-96 A-1+ 10,000 10,000,000
Heinz (H.J.) Co. 5.24%, 12-2-96 A-1 3,880 3,862,493
International Lease Finance Corp. 5.28%, 12-2-96 A-1 10,000 9,954,533
Shell Oil Co. 5.22%, 12-2-96 A-1+ 9,650 9,606,623
Cargill, Inc. 5.27%, 12-3-96 A-1+ 10,440 10,388,377
Preferred Receivables Funding Corp. 5.25%, 12-3-96 A-1 900 895,800
Preferred Receivables Funding Corp. 5.45%, 12-3-96 A-1 3,170 3,154,343
McKenna Triangle National Corp. 5.25%, 12-5-96 A-1+ 9,220 9,174,283
Private Export Funding Corp. 5.45%, 12-5-96 A-1+ 1,530 1,522,029
Southwestern Bell Telephone Co. 5.24%, 12-5-96 A-1+ 15,000 14,925,766
See Notes to Financial Statements
21
<PAGE>
- --------------------------------------------------------------------------------
Growth Fund Series
- --------------------------------------------------------------------------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ -------- --------------
Commercial Paper--continued
Beta Finance, Inc. 5.48%, 12-6-96 A-1+ $ 6,800 $ 6,704,447
International Lease Finance Corp. 5.28%, 12-6-96 A-1 14,615 14,535,388
Procter & Gamble Co. 5.38%, 12-10-96 A-1+ 4,285 4,260,048
Coca-Cola Co. 5.20%, 12-13-96 A-1+ 3,610 3,586,690
Kellogg Co. 5.25%, 12-13-96 A-1+ 425 422,397
Procter & Gamble Co. 5.22%, 12-18-96 A-1+ 610 605,690
Beta Finance, Inc. 5.35%, 4-4-97 A-1+ 11,000 10,746,670
-------------
211,636,177
-------------
Federal Agency Securities--1.3%
Student Loan Marketing Assn. 5.53%, 11-1-96 12,700 12,700,000
Federal Home Loan Banks 5.16%,
11-8-96 7,000 6,992,977
Federal Farm Credit Bank 5.14%,
11-20-96 12,140 12,107,067
-------------
31,800,044
-------------
</TABLE>
<TABLE>
<CAPTION>
PAR
VALUE
(000) VALUE
--------- --------------
<S> <C> <C>
U.S. Treasury Bills--1.7%
U.S. Treasury Bills 4.85%, 11-14-96 $31,675 $ 31,619,525
U.S. Treasury Bills 4.86%, 2-6-97 5,000 4,931,650
U.S. Treasury Bills 4.90%, 2-6-97 5,000 4,931,650
------------
41,482,825
------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $284,999,811) 284,919,046
------------
TOTAL INVESTMENTS--100.7%
(Identified cost $2,074,835,722) 2,409,813,782(a)
Cash and receivables, less liabilities--(0.7%) (17,016,942)
------------
NET ASSETS--100.0% $2,392,796,840
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $369,505,144 and gross
depreciation of $34,674,515 for income tax purposes. At October 31, 1996,
the aggregate cost of securities for federal income tax purposes was
$2,074,983,153.
(b) Non-income producing.
ADR--American Depository Receipt
See Notes to Financial Statements
22
<PAGE>
- --------------------------------------------------------------------------------
Growth Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $2,074,835,722) $2,409,813,782
Short-term investments held as collateral for loaned
securities 9,081,798
Cash 914
Receivables
Investment securities sold 2,892,616
Fund shares sold 1,721,169
Dividends and interest 1,664,140
-------------
Total assets 2,425,174,419
-------------
Liabilities
Payables
Investment securities purchased 15,107,903
Collateral on securities loaned 9,081,798
Fund shares repurchased 5,184,798
Investment advisory fee 1,303,330
Transfer agent fee 747,518
Distribution fee 540,089
Financial agent fee 61,414
Trustees' fee 11,212
Accrued expenses 339,517
-------------
Total liabilities 32,377,579
-------------
Net Assets $2,392,796,840
=============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $1,649,890,053
Undistributed net investment income 4,797,802
Accumulated net realized gain 403,130,925
Net unrealized appreciation 334,978,060
-------------
Net Assets $2,392,796,840
=============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $2,347,470,584) 87,356,082
Net asset value per share $26.87
Offering price per share
$26.87/(1-4.75%) $28.21
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $45,326,256) 1,702,044
Net asset value and offering price per share $26.63
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
Investment Income
Dividends $29,430,202
Interest 17,786,591
Security lending 81,367
-------------
Total investment income 47,298,160
-------------
Expenses
Investment advisory fee 15,914,996
Distribution fee--Class A 5,925,509
Distribution fee--Class B 322,959
Financial agent fee 720,750
Transfer agent 4,346,850
Printing 696,479
Custodian 225,245
Professional 63,857
Registration 56,365
Trustees 19,479
Miscellaneous 13,106
-------------
Total expenses 28,305,595
-------------
Net investment income 18,992,565
-------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 403,222,187
Net realized loss on foreign currency (200,388)
Net change in unrealized appreciation (depreciation) on
investments (60,960,282)
-------------
Net gain on investments 342,061,517
-------------
Net increase in net assets resulting from operations $361,054,082
=============
</TABLE>
See Notes to Financial Statements
23
<PAGE>
- --------------------------------------------------------------------------------
Growth Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996 October 31, 1995
---------------- -----------------
<S> <C> <C>
From Operations
Net investment income $18,992,565 $19,910,168
Net realized gain 403,021,799 155,621,706
Net change in unrealized appreciation (depreciation) (60,960,282) 290,325,083
------------- -------------
Increase in net assets resulting from operations 361,054,082 465,856,957
------------- -------------
From Distributions to Shareholders
Net investment income--Class A (22,644,345) (29,146,274)
Net investment income--Class B (98,685) (70,729)
Net realized gains--Class A (149,324,628) (80,021,516)
Net realized gains--Class B (1,479,427) (163,754)
------------- -------------
Decrease in net assets from distributions to shareholders (173,547,085) (109,402,273)
------------- -------------
From Share Transactions
Class A
Proceeds from sales of shares (9,835,907 and 11,080,464 shares,
respectively) 250,496,105 244,386,687
Net asset value of shares issued from reinvestment of
distributions
(6,641,514 and 5,065,877 shares, respectively) 158,927,977 100,757,525
Cost of shares repurchased (21,426,723 and 24,592,373 shares,
respectively) (546,897,194) (539,504,775)
------------- -------------
Total (137,473,112) (194,360,563)
------------- -------------
Class B
Proceeds from sales of shares (1,000,869 and 726,554 shares,
respectively) 25,339,947 16,077,649
Net asset value of shares issued from reinvestment of
distributions
(59,359 and 10,621 shares, respectively) 1,409,232 212,004
Cost of shares repurchased (171,122 and 64,169 shares,
respectively) (4,348,366) (1,445,729)
------------- -------------
Total 22,400,813 14,843,924
------------- -------------
Decrease in net assets from share transactions (115,072,299) (179,516,639)
------------- -------------
Net increase in net assets 72,434,698 176,938,045
Net Assets
Beginning of period 2,320,362,142 2,143,424,097
------------- -------------
End of period (including undistributed net investment income of
$4,797,802 and $8,762,468, respectively) $2,392,796,840 $2,320,362,142
============= =============
</TABLE>
See Notes to Financial Statements
24
<PAGE>
- --------------------------------------------------------------------------------
Growth Fund Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------------------------
Year Ended October 31,
1996 1995 1994 1993 1992
---------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $24.92 $21.24 $21.53 $20.76 $22.60
Income from investment operations(5)
Net investment income 0.20(4) 0.26 0.26 0.32 0.36
Net realized and unrealized gain 3.63 4.53 0.17 1.15 0.97
-------- -------- -------- -------- --------
Total from investment operations 3.83 4.79 0.43 1.47 1.33
-------- -------- -------- -------- --------
Less distributions
Dividends from net investment income (0.25) (0.30) (0.24) (0.32) (0.45)
Dividends from net realized gains (1.63) (0.81) (0.48) (0.38) (2.72)
-------- -------- -------- -------- --------
Total distributions (1.88) (1.11) (0.72) (0.70) (3.17)
-------- -------- -------- -------- --------
Change in net asset value 1.95 3.68 (0.29) 0.77 (1.84)
-------- -------- -------- -------- --------
Net asset value, end of period $26.87 $24.92 $21.24 $21.53 $20.76
======== ======== ======== ======== ========
Total return(1) 16.34% 23.91% 2.06% 7.20% 6.95%
Ratios/supplemental data:
Net assets, end of period (thousands) $2,347,471 $2,300,251 $2,140,458 $2,563,442 $2,186,868
Ratio to average net assets of:
Operating expenses 1.17% 1.20% 1.19% 1.18% 1.17%
Net investment income 0.80% 0.92% 1.22% 1.55% 1.86%
Portfolio turnover 116% 109% 118% 176% 192%
Average commission rate paid(6) $0.0534 N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
---------------------------------
From
Year Ended October 31, Inception
7/15/94 to
1996 1995 10/31/94
--------- --------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period $24.74 $21.19 $20.48
Income from investment operations(5)
Net investment income --(4) --(4) 0.01
Net realized and unrealized gain 3.61 4.60 0.70
-------- -------- --------
Total from investment operations 3.61 4.60 0.71
-------- -------- --------
Less distributions
Dividends from net investment income (0.09) (0.24) --
Dividends from net realized gains (1.63) (0.81) --
-------- -------- --------
Total distributions (1.72) (1.05) --
-------- -------- --------
Change in net asset value 1.89 3.55 0.71
-------- -------- --------
Net asset value, end of period $26.63 $24.74 $21.19
======== ======== ========
Total return(1) 15.48% 23.02% 3.47%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $45,326 $20,111 $2,966
Ratio to average net assets of:
Operating expenses 1.93% 1.97% 1.87%(2)
Net investment income 0.01% 0.01% 0.32%(2)
Portfolio turnover 116% 109% 118%
Average commission rate paid(6) $0.0534 N/A N/A
</TABLE>
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) 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 time of share purchases and
redemptions.
(6) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
See Notes to Financial Statements
25
<PAGE>
- --------------------------------------------------------------------------------
AGGRESSIVE GROWTH FUND SERIES
- --------------------------------------------------------------------------------
INVESTMENT ADVISER'S REPORT
The continued rally in the U.S. stock market helped the Aggressive Growth
Fund post strong double-digit returns over this latest reporting period. For the
twelve months ended October 31, 1996, Class A shares provided a total return of
17.43% and Class B shares returned 16.52%. Although these results were
impressive on an absolute basis, they did lag behind Standard & Poor's 500
Composite Stock Index, an unmanaged, commonly used measure of stock performance,
which returned 24.20% over the same period. All of these figures assume
reinvestment of any distributions, but exclude the effect of sales charges.
Over the last twelve months, the Fund continued to focus on high-growth
companies with strong thematic appeal. With this objective, we found a number of
compelling investment opportunities within the energy sector which provided
outstanding results throughout the reporting period. Aided by a surprisingly
robust U.S. economy during the first half of 1996, the Fund's substantial
exposure to economically-sensitive stocks also boosted results. Negative
contributors to Fund performance during this period included the portfolio's
relative underweighting in the solidly performing financial and capital goods
sectors. Severe profit-taking in some of our technology and health care holdings
during the July selloff also hindered returns.
Moving forward, we are forecasting a more moderate economic climate and
slower earnings growth for the overall stock market. Since we firmly believe
that stock performance tracks earnings growth in the long-run, the main thrust
of our research continues to be on finding young growth companies that can turn
into tomorrow's market leaders. Investment themes that we believe can provide
above-average growth potential in this environment include Software Solutions
(technology), Energy Technology (energy) and 21st Century Medicine (health
care). As of October 31, 1996, the Fund's asset allocation mix was 96% equity
and 4% cash equivalents.
INVESTOR PROFILE
The Aggressive Growth Fund is best suited for an investor who desires an
aggressively managed portfolio designed for maximum appreciation of capital with
little or no current income.
26
<PAGE>
- --------------------------------------------------------------------------------
Aggressive Growth Fund Series
- --------------------------------------------------------------------------------
[LINE CHART]
Aggressive
Growth Fund
S&P 500* -- Class A
-------- ----------
1986 10000 9525
1987 10641 10769
1988 12183 11256
1989 15377 13349
1990 14221 11577
1991 18985 16206
1992 20875 17359
1993 23986 19815
1994 24929 19889
1995 31514 26878
1996 39140 31563
[/LINE CHART]
Average Annual Total Returns for the Periods Ending 10/31/96
From Inception
7/21/94 to
1 Year 5 Years 10 Years 10/31/96
- --------------------------------------------------------------------------------
Class A with 4.75% sales charge 11.87% 13.16% 12.18% --
- --------------------------------------------------------------------------------
Class A at net asset value 17.43% 14.26% 12.72% --
- --------------------------------------------------------------------------------
Class B with CDSC 12.52% -- -- 21.39%
- --------------------------------------------------------------------------------
Class B at net asset value 16.52% -- -- 22.42%
- --------------------------------------------------------------------------------
S&P 500 Index* 24.20% 15.57% 14.62% 24.61%
- --------------------------------------------------------------------------------
This chart assumes an initial gross investment of $10,000 made on 10/31/86 for
Class A shares. 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 inception dates, fees and sales charges. The total
return (since inception 7/21/94) 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). 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 but commonly used measure of stock total
return performance. The S&P 500's performance does not reflect sales charges.
27
<PAGE>
- --------------------------------------------------------------------------------
Aggressive Growth Fund Series
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C>
COMMON STOCKS--91.1%
Advertising--2.5%
Outdoor Systems, Inc. (b) 65,000 $ 2,908,750
Snyder Communications, Inc. (b) 50,000 975,000
Universal Outdoor Holdings, Inc. (b) 75,000 2,203,125
-----------
6,086,875
-----------
Aerospace & Defense--0.2%
Triumph Group, Inc. (b) 28,600 643,500
-----------
Computer Software & Services--24.3%
Amati Communications Corp. (b) 100,000 1,725,000
Brooktrout Technology, Inc. (b) 100,000 3,225,000
Chips & Technologies, Inc. (b) 302,400 6,010,200
Cognos, Inc. (b) 75,000 2,353,125
Electronics Arts, Inc. Class A (b) 135,000 5,062,500
Forte Software, Inc. (b) 50,000 1,887,500
Inso Corp. (b) 50,000 2,462,500
McAfee Associates, Inc. (b) 105,000 4,777,500
Network Appliance, Inc. (b) 35,000 1,225,000
Object Design, Inc. (b) 120,000 1,372,500
PairGain Technologies, Inc. (b) 70,000 4,821,250
Parametric Technology Corp. (b) 112,500 5,498,437
Rational Software Corp. (b) 75,000 2,878,125
Remedy Corp. (b) 130,000 6,337,500
Security Dynamics Technologies, Inc. (b) 20,000 1,625,000
Verilink Corp. (b) 35,000 1,260,000
Veritas Software Corp. (b) 90,000 4,545,000
Videoserver, Inc. (b) 50,000 2,368,750
-----------
59,434,887
-----------
Diversified Financial Services--5.4%
Concord EFS, Inc. (b) 135,000 3,915,000
Conseco, Inc. 100,000 5,350,000
Money Store, Inc. 150,000 3,862,500
-----------
13,127,500
-----------
Diversified Miscellaneous--2.4%
Central Garden & Pet Company (b) 250,000 5,906,250
-----------
Electrical Equipment--2.0%
Jabil Circuit, Inc. (b) 200,000 4,800,000
-----------
Electronics--5.9%
3Com Corp. (b) 90,000 6,086,250
S3, Inc. (b) 200,000 3,775,000
Sawtek, Inc. (b) 150,000 4,537,500
-----------
14,398,750
-----------
Healthcare--Drugs--2.0%
Agouron Pharmaceuticals, Inc. (b) 50,000 2,862,500
Amylin Pharmaceuticals, Inc. (b) 175,000 1,968,750
-----------
4,831,250
-----------
Household Furnishings & Appliances--1.6%
Ethan Allen Interiors, Inc. 110,000 3,932,500
-----------
Lodging & Restaurants--1.7%
Starbucks Corp. (b) 125,000 $ 4,062,500
-----------
Medical Products & Supplies--1.8%
Idexx Laboratories, Inc. (b) 50,000 1,962,500
U.S. Surgical Corp. 60,000 2,512,500
-----------
4,475,000
-----------
Office & Business Equipment--2.0%
Compaq Computer Corp. (b) 50,000 3,481,250
Splash Technology Holdings, Inc. (b) 100,000 1,375,000
-----------
4,856,250
-----------
Oil Service & Equipment--16.6%
Diamond Offshore Drilling (b) 110,000 6,696,250
ENSCO International, Inc. (b) 125,000 5,406,250
Falcon Drilling Company, Inc. (b) 175,000 6,190,625
Marine Drilling Company, Inc. (b) 200,000 2,775,000
Pride Petroleum Services, Inc. (b) 200,000 3,500,000
Schlumberger Ltd. 75,000 7,434,375
Smith International, Inc. (b) 125,000 4,750,000
Transocean Offshore, Inc. 60,000 3,795,000
-----------
40,547,500
-----------
Professional Services--1.8%
HFS, Inc. (b) 60,000 4,395,000
-----------
Publishing, Broadcasting, Printing & Cable--6.5%
American Radio Systems Corp. Class A (b) 50,000 1,525,000
Chancellor Broadcasting Class A (b) 50,000 1,612,500
Consolidated Graphics, Inc. (b) 84,800 3,074,000
Evergreen Media Corp. Class A (b) 149,999 4,049,973
Heftel Broadcasting Corp. Class A (b) 50,000 1,812,500
Telemundo Group, Inc. Class A (b) 50,000 1,387,500
Univision Communications, Inc. Class A (b) 70,000 2,362,500
-----------
15,823,973
-----------
Retail--1.8%
Eagle Hardware & Garden, Inc. (b) 150,000 4,293,750
-----------
Retail--Drug--1.8%
Jones Medical Industries, Inc. 100,000 4,350,000
-----------
Textile & Apparel--2.6%
Nike, Inc. Class B 50,000 2,943,750
Pacific Sunwear of California (b) 150,000 3,337,500
-----------
6,281,250
-----------
Telecommunications Equipment--6.9%
ADC Telecommunications, Inc. (b) 50,000 3,418,750
Andrew Corp. (b) 25,000 1,218,750
Cisco Systems, Inc. (b) 15,000 928,125
Digital Microwave Corp. (b) 150,000 3,431,250
Natural Microsystems Corp. (b) 60,000 3,195,000
Pacific Gateway Exchange, Inc. (b) 50,000 1,550,000
Stanford Telecommunications, Inc. (b) 17,600 501,600
U.S. Robotics Corp. (b) 40,000 2,515,000
-----------
16,758,475
-----------
</TABLE>
See Notes to Financial Statements
28
<PAGE>
- --------------------------------------------------------------------------------
Aggressive Growth Fund Series
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- --------------
<S> <C> <C>
Utility--Telephone--1.3%
ACC Corp. (b) 75,000 $ 3,187,500
------------
TOTAL COMMON STOCKS
(Identified cost $200,926,461) 222,192,710
------------
WARRANTS--4.5%
Chemical--0.9%
BJ Services Co. Warrants (b) 100,000 2,112,500
------------
Electronics--3.6%
Intel Corp. Warrants (b) 125,000 8,861,325
------------
TOTAL WARRANTS
(Identified cost $8,524,147) 10,973,825
------------
TOTAL LONG-TERM INVESTMENTS--95.6%
(Identified cost $209,450,608) 233,166,535
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- ---------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--0.9%
Commercial Paper--0.9%
Corporate Receivables Corp. 5.70%, 11-1-96 A-1 $ 480 $ 480,000
AlliedSignal, Inc. 5.26%, 11-4-96 A-1 1,650 1,649,277
-------------
2,129,277
-------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $2,129,277) 2,129,277
-------------
TOTAL INVESTMENTS--96.5%
(Identified cost $211,579,885) 235,295,812(a)
Cash and receivables, less liabilities--3.5% 8,658,419
-------------
NET ASSETS--100.0% $243,954,231
=============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $28,431,958 and gross
depreciation of $5,165,009 for income tax purposes. At October 31, 1996,
the aggregate cost of securities for federal income tax purposes was
$212,028,863.
(b) Non-income producing.
See Notes to Financial Statements
29
<PAGE>
- --------------------------------------------------------------------------------
Aggressive Growth Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $211,579,885) $235,295,812
Short-term investments held as collateral for loaned
securities 11,123,400
Cash 1,790,497
Receivables
Investment securities sold 10,932,765
Fund shares sold 7,238,750
-------------
Total assets 266,381,224
-------------
Liabilities
Payables
Collateral on securities loaned 11,123,400
Investment securities purchased 10,779,853
Fund shares repurchased 184,605
Investment advisory fee 142,682
Distribution fee 59,198
Transfer agent fee 51,231
Trustees' fee 11,245
Financial agent fee 6,282
Accrued expenses 68,497
-------------
Total liabilities 22,426,993
-------------
Net Assets $243,954,231
=============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $185,675,889
Accumulated net realized gain 34,562,415
Net unrealized appreciation 23,715,927
-------------
Net Assets $243,954,231
=============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $233,487,799) 13,863,607
Net asset value per share $16.84
Offering price per share
$16.84/(1-4.75%) $17.68
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $10,466,432) 631,461
Net asset value and offering price per share $16.57
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
Investment Income
Dividends $195,895
Interest 500,090
Security lending 159,276
-----------
Total investment income 855,261
-----------
Expenses
Investment advisory fee 1,537,430
Distribution fee--Class A 533,170
Distribution fee--Class B 63,649
Financial agent fee 65,890
Transfer agent 302,803
Printing 49,306
Professional 37,723
Custodian 37,123
Registration 26,278
Trustees 20,644
Miscellaneous 2,607
-----------
Total expenses 2,676,623
-----------
Net investment loss (1,821,362)
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 40,305,515
Net realized loss on purchased options (1,265,699)
Net change in unrealized appreciation (depreciation) on
investments (4,196,804)
-----------
Net gain on investments 34,843,012
-----------
Net increase in net assets resulting from operations $33,021,650
===========
</TABLE>
See Notes to Financial Statements
30
<PAGE>
- --------------------------------------------------------------------------------
Aggressive Growth Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996 October 31, 1995
----------------- -----------------
<S> <C> <C>
From Operations
Net investment income (loss) $(1,821,362) $625,864
Net realized gain 39,039,816 22,388,865
Net change in unrealized appreciation
(depreciation) (4,196,804) 23,926,580
------------ ------------
Increase in net assets resulting from operations 33,021,650 46,941,309
------------ ------------
From Distributions to Shareholders
Net investment income--Class A (230,621) (1,906,874)
Net investment income--Class B -- (6,562)
Net realized gains--Class A (24,390,155) (9,109,368)
Net realized gains--Class B (370,937) (33,032)
------------ ------------
Decrease in net assets from distributions to
shareholders (24,991,713) (11,055,836)
------------ ------------
From Share Transactions
Class A
Proceeds from sales of shares (20,593,244 and
4,239,236 shares, respectively) 339,736,195 62,165,020
Net asset value of shares issued from
reinvestment of distributions
(1,566,906 and 857,273 shares, respectively) 22,579,121 10,298,375
Cost of shares repurchased (19,216,354 and
4,688,495 shares, respectively) (316,940,541) (67,901,061)
------------ ------------
Total 45,374,775 4,562,334
------------ ------------
Class B
Proceeds from sales of shares (739,574 and
152,973 shares, respectively) 12,090,017 2,285,062
Net asset value of shares issued from
reinvestment of distributions
(23,041 and 3,215 shares, respectively) 329,024 38,454
Cost of shares repurchased (277,273 and 34,861
shares, respectively) (4,550,009) (558,289)
------------ ------------
Total 7,869,032 1,765,227
------------ ------------
Increase in net assets from share transactions 53,243,807 6,327,561
------------ ------------
Net increase in net assets 61,273,744 42,213,034
Net Assets
Beginning of period 182,680,487 140,467,453
------------ ------------
End of period (including undistributed net
investment income of $0 and $230,621,
respectively) $243,954,231 $182,680,487
============ ============
</TABLE>
See Notes to Financial Statements
31
<PAGE>
- --------------------------------------------------------------------------------
Aggressive Growth Fund Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------
Year Ended October 31,
1996 1995 1994 1993 1992
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.51 $13.33 $14.56 $13.56 $14.88
Income from investment operations(5)
Net investment income (loss) (0.13)(4) 0.06(4) 0.27 0.22 0.23
Net realized and unrealized gain (loss) 2.64 4.21 (0.21) 1.62 0.59
-------- -------- -------- -------- --------
Total from investment operations 2.51 4.27 0.06 1.84 0.82
-------- -------- -------- -------- --------
Less distributions
Dividends from net investment income (0.02) (0.19) (0.22) (0.23) (0.25)
Dividends from net realized gains (2.16) (0.90) (1.07) (0.61) (1.50)
Distributions in excess of accumulated realized gains -- -- -- -- (0.39)
-------- -------- -------- -------- --------
Total distributions (2.18) (1.09) (1.29) (0.84) (2.14)
-------- -------- -------- -------- --------
Change in net asset value 0.33 3.18 (1.23) 1.00 (1.32)
-------- -------- -------- -------- --------
Net asset value, end of period $16.84 $16.51 $13.33 $14.56 $13.56
======== ======== ======== ======== ========
Total return(1) 17.43% 35.14% 0.37% 14.15% 7.11%
Ratios/supplemental data:
Net assets, end of period (thousands) $233,488 $180,288 $140,137 $143,035 $128,530
Ratio to average net assets of:
Operating expenses 1.20% 1.29% 1.26% 1.17% 1.25%
Net investment income (loss) (0.81%) 0.43% 1.97% 1.58% 1.70%
Portfolio turnover 401% 331% 306% 192% 251%
Average commission rate paid(6) $0.0655 N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
--------------------------------------
From
Inception
Year Ended October 31, 7/21/94 to
1996 1995 10/31/94
------------ ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period $16.38 $13.31 $13.09
Income from investment operations(5)
Net investment income (loss) (0.25)(4) (0.12)(4) 0.02
Net realized and unrealized gain 2.60 4.26 0.20
-------- -------- --------
Total from investment operations 2.35 4.14 0.22
-------- -------- --------
Less distributions
Dividends from net investment income -- (0.17) --
Dividends from net realized gains (2.16) (0.90) --
-------- -------- --------
Total distributions (2.16) (1.07) --
-------- -------- --------
Change in net asset value 0.19 3.07 0.22
-------- -------- --------
Net asset value, end of period $16.57 $16.38 $13.31
======== ======== ========
Total return(1) 16.52% 34.15% 1.68%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $10,466 $2,393 $330
Ratio to average net assets of:
Operating expenses 1.95% 2.04% 1.81%(2)
Net investment income (loss) (1.57%) (0.83%) 1.45%(2)
Portfolio turnover 401% 331% 306%
Average commission rate paid(6) $0.0655 N/A N/A
</TABLE>
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) 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.
(6) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
See Notes to Financial Statements
32
<PAGE>
- --------------------------------------------------------------------------------
HIGH YIELD FUND SERIES
- --------------------------------------------------------------------------------
INVESTMENT ADVISER'S REPORT
Phoenix High Yield Fund posted impressive results over this latest fiscal
reporting period. For the twelve months ended October 31, 1996, the Fund's Class
A shares provided a total return of 15.95% and Class B shares returned 14.88%.
These results compare very favorably with the market, as measured by the CS
First Boston High Yield Index, which returned 10.47% over this same period.* All
of these results assume reinvestment of any distributions, but exclude the
effect of sales charges.
During this reporting cycle, the most significant factor contributing to
the Fund's strong performance was our sizable allocation to emerging markets
securities. This group not only outperformed all other sectors in the
fixed-income universe, but also outdistanced a bullish U.S. equity market. Over
the last twelve months, our research in this area has led us to a number of
rewarding investment opportunities in such countries as Poland, Russia, Mexico
and Argentina. Besides emerging markets, the Fund also benefited from its U.S.
high-yield exposure. Our strategy of focusing on non-cyclical industries worked
well and we are particularly pleased with the solid performance from our energy
and media holdings.
Given our outlook for slower economic growth in the U.S., the Fund's
investment strategy will emphasize defensive industries such as oil and gas,
health care and food and beverage. When opportunities present themselves, we
will also continue to invest in good credits from such out of favor industries
as cable television and pulp and paper. Lastly, despite the extended rally in
emerging markets bonds, we still remain bullish on this sector. Currently, we
are finding attractive valuations in such countries as Croatia and Venezuela as
well as from select corporate issues found in Mexico and Central Europe.
*The CS First Boston High Yield Index is an unmanaged, but commonly used
index that tracks returns of all new publicly offered debt of more than $75
million rated below "BBB" or "BBB/BB+."
INVESTOR PROFILE
The High Yield Fund is best suited for risk-tolerant investors seeking a
long-term investment to provide for high current income. High-yield fixed-income
securities generally are subject to greater market fluctuations and risk of loss
of income and principal than are investments in low-yielding fixed-income
securities. Foreign investing involves special risks, such as currency
fluctuation, less public disclosure as well as economic and political risks.
33
<PAGE>
- --------------------------------------------------------------------------------
High Yield Fund Series
- --------------------------------------------------------------------------------
[LINE CHART]
CS First Boston High Yield
High Yield Fund --
Index* Class A
------ -------
1986 10000 9525
1987 9977 9302
1988 11990 10949
1989 12170 11020
1990 11088 10470
1991 16091 13273
1992 18568 15433
1993 22103 18810
1994 22468 18327
1995 25893 20377
1996 28604 23628
[/LINE CHART]
Average Annual Total Returns for Periods Ending 10/31/96 From Inception
2/16/94 to
1 Year 5 Years 10 Years 10/31/96
- --------------------------------------------------------------------------------
Class A with 4.75% sales charge 10.41% 11.33% 9.09% --
- --------------------------------------------------------------------------------
Class A at net asset value 15.95% 12.41% 9.63% --
- --------------------------------------------------------------------------------
Class B with CDSC 10.88% -- -- 5.10%
- --------------------------------------------------------------------------------
Class B at net asset value 14.88% -- -- 6.04%
- --------------------------------------------------------------------------------
First Boston High Yield Index* 10.47% 12.19% 11.08% 8.32%**
- --------------------------------------------------------------------------------
This chart assumes an initial gross investment of $10,000 made on 10/31/86 for
Class A shares. 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 inception dates, fees and sales charges. The total
return (since inception 2/16/94) 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). 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 CS First Boston High Yield Index is an unmanaged but commonly used index
that tracks the returns of all new publicly offered debt of more than $75
million rated below BBB or BBB/BB+. The index's performance does not reflect
sales charges.
**Index information from 2/28/94 to 10/31/96.
34
<PAGE>
- --------------------------------------------------------------------------------
High Yield Fund Series
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1996
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- ---------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--1.1%
U.S. Treasury Notes--1.1%
U.S. Treasury Notes WI 5.875%, '99 (g) Aaa $ 5,750 $ 5,747,700
------------
TOTAL U.S. GOVERNMENT SECURITIES
(Identified cost $5,736,775) 5,747,700
------------
NON-CONVERTIBLE BONDS--62.6%
Advertising--1.9%
Outdoor Systems, Inc. 9.375%, '06 B 6,000 5,970,000
Universal Outdoor, Inc. 9.75%, '06 B 4,000 3,960,000
------------
9,930,000
------------
Asset-Backed Securities--1.4%
Airplanes Pass Through Trust 1D 10.875%, '19 Ba 7,000 7,595,000
------------
Chemical--1.9%
General Chemical 9.25%, '03 B 7,300 7,446,000
ISP Holdings, Inc. 9%, '03 Ba 2,500 2,518,750
------------
9,964,750
------------
Containers--4.3%
Owens-Illinois, Inc. 11%, '03 Ba 11,000 12,113,750
Portola Packaging, Inc. 10.75%, '05 B 10,000 10,450,000
------------
22,563,750
------------
Food & Beverages--2.2%
Canandaigua Wine 144A 8.75%, '03 (b) B 5,000 4,762,500
International Home Foods, Inc. 144A 10.375%,
'06 (b) B 7,000 7,070,000
------------
11,832,500
------------
Hospital Management & Services--4.7%
Healthsouth Rehabilitation 9.50%, '01 Ba 2,625 2,795,625
Tenet Healthcare Corp. 10.125%, '05 Ba 20,250 22,275,000
------------
25,070,625
------------
Industrial--1.1%
AAF-McQuay, Inc. 8.875%, '03 B 5,750 5,699,687
------------
Non-Agency Mortgage-Backed Securities--6.8%
Chase Mortgage Finance Corp. Private 93-2, B8
6.95%, '24 (i) BB(c) 4,323 3,534,866
DLJ Mortgage Acceptance Corp. 94-MF4, B2 144A
8.50%, '01 (b) BB(c) 3,000 2,723,438
Fund America Structured Trust 96-1, A 144A 0%, '26
(b) Baa 3,000 2,163,750
Non-Agency Mortgage-Backed Securities--continued
Merrill Lynch Mortgage 94-M1, E 144A 8.23%, '22 (b) Ba $ 4,000 $ 3,491,875
Prudential Home Mortgage Security Corp. 95-F, B1
144A 6.625%, '24 (b) Ba 1,329 1,048,206
Resolution Trust Corp. 95-2, B2 7%, '29 (h) Baa 5,672 5,551,689
Resolution Trust Corp. 95-2, C1 7.45%, '29 (h) Baa 3,212 3,187,243
Ryland Mortgage Security Corp. III 92-A, 1C 8.33%,
'30 BB(c) 1,000 768,750
Salomon Brothers Mortgage VII 95 C1 144A 6.801%,
'08 (b) B 9,201 6,935,159
SML, Inc. 94-C1, B2 10.30%, '99 (h) BB(c) 5,000 4,879,688
Structured Asset Securities Corp. 96-CFL, F 7.75%,
'28 BB(c) 1,600 1,423,000
------------
35,707,664
------------
Oil & Gas--5.5%
Benton Oil & Gas Co. 11.625%, '03 (h) NR 4,350 4,774,125
Flores & Rucks, Inc. 9.75%, '06 (h) B 8,000 8,220,000
Forcenergy, Inc. 9.50%, '06 B 2,000 2,027,500
Nuevo Energy Co. 9.50%, '06 B 13,500 13,905,000
------------
28,926,625
------------
Oil Service & Equipment--4.2%
NS Group, Inc. 13.50%, '03 B 10,500 10,539,375
Noble Drilling Corp. 9.125%, '06 Ba 10,800 11,421,000
------------
21,960,375
------------
Paper & Forest Products--4.0%
Buckeye Cellulose Corp. 9.25%, '08 Ba 5,500 5,568,750
SD Warren Co. Series B 12%, '04 B 4,250 4,590,000
Stone Container Corp. 11.875%, '98 B 10,500 11,116,875
------------
21,275,625
------------
Publishing, Broadcasting, Printing & Cable--12.5%
Comcast Corp. 9.375%, '05 B 6,000 6,000,000
Comcast Corp. 9.50%, '08 B 1,350 1,343,250
Comcast Corp. 10.625%, '12 B 5,000 5,318,750
Continental Cablevision 9.50%, '13 Ba 5,700 6,412,500
Frontiervision 11%, '06 B 7,000 6,965,000
Galaxy Telecom 12.375%, '05 B 8,000 8,380,000
Granite Broadcasting Corp. 10.375%, '05 B 7,000 7,105,000
See Notes to Financial Statements
35
<PAGE>
- --------------------------------------------------------------------------------
High Yield Fund Series
- --------------------------------------------------------------------------------
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- ---------------
Publishing, Broadcasting, Printing & Cable--continued
Poland Communications, Inc. 144A 9.875%, '03 (b) B $ 7,400 $ 7,400,000
SCI Television 11%, '05 B 15,800 16,886,250
------------
65,810,750
------------
Retail--1.9%
Eyecare Centers of America 12%, '03 (h) B 6,500 6,955,000
Scotty's Inc. Series A 11.25%, '15 (h) NR 3,200 2,968,000
------------
9,923,000
------------
Telecommunications--4.3%
Commnet Cellular 11.25%, '05 Caa 4,000 4,225,000
Sprint Spectrum L.P. 11%, '06 B 8,100 8,221,500
USA Mobile Communications 14%, '04 B 3,500 3,920,000
Viatel, Inc. 0%, '05 (e) B 3,500 2,170,000
Western Wireless 144A 10.50%, '07 (b) B 4,000 4,010,000
------------
22,546,500
------------
Truckers & Marine--1.2%
Viking Star Shipping 9.625%, '03 Ba 6,000 6,195,000
------------
Utility--Electric--4.7%
AES Corp. 9.75%, '00 Ba 8,000 8,280,000
California Energy 9.875%, '03 Ba 5,000 5,231,250
California Energy 0%, '04 (e) Ba 11,000 11,330,000
------------
24,841,250
------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $320,628,967) 329,843,101
------------
FOREIGN NON-CONVERTIBLE BONDS--19.3%
Argentina--3.1%
Bridas Corp. 12.50%, '99 B 11,500 12,103,750
Transportadora de Gas del Sur 10.25%, '01 B 4,000 4,110,000
------------
16,213,750
------------
Bermuda--1.0%
Sea Containers Ltd. 10.50%, '03 Ba 5,000 5,087,500
------------
Canada--5.3%
Call-Net Enterprises 0%,
'04 (e) B 12,000 9,330,000
Groupe Videotron Ltee 10.625%, '05 Ba 4,000 4,380,000
Gulf Canada Resources 9.625%, '05 Ba 7,000 7,402,500
Videotron Ltd. 10.25%, '02 Ba 6,500 7,003,750
------------
28,116,250
------------
Colombia--2.7%
Comunicacion Celular SA 0%, '03 (e) B 7,500 4,725,000
Occidente Y Caribe Celular 144A 0%, '04 (b) (e) B 19,085 9,542,500
------------
14,267,500
------------
Mexico--3.9%
Aerovias De Mexico Euro. 144A 9.75%, '00 (b) NR $ 1,150 $ 1,086,750
Aerovias De Mexico SA 9.75%, '00 NR 2,350 2,220,750
Coca-Cola Femsa 8.95%,
'06 Ba 2,000 2,008,750
Grupo Televisa SA 0%,
'08 (e) Ba 5,600 3,458,000
Ispat Mexicana SA Euro 10.375%, '01 NR 12,000 12,030,000
------------
20,804,250
------------
Philippines--0.8%
Subic Power Corp. 144A 9.50%, '08 (b) NR 3,879 4,044,181
------------
United Kingdom--2.5%
Comcast UK Cable 0%,
'07 (e) B 7,500 4,875,000
Diamond Cable Comm. Co. 0%, '04 (e) B 1,150 914,250
Videotron PLC 0%,
'04 (e) B 9,000 7,290,000
------------
13,079,250
------------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $97,882,856) 101,612,681
------------
FOREIGN CONVERTIBLE BONDS--0.5%
Mexico--0.5%
Consorcio Grupo Dina Cv. 8%, '04 (e) CCC(c) 1,500 930,000
Empresas ICA Sociedad Euro Cv. 5%, '04 (e) B 2,500 1,712,500
------------
2,642,500
------------
TOTAL FOREIGN CONVERTIBLE BONDS
(Identified cost $2,703,528) 2,642,500
------------
FOREIGN GOVERNMENT SECURITIES--12.4%
Croatia--2.1%
Croatia Series A 6.688%,
'10 (e) NR 12,000 11,100,000
------------
Dominican Republic--0.3%
Dominican Republic 6.438%, '24 (e) NR 2,500 1,887,500
------------
Mexico--0.7%
United Mexican States Discount A 6.453%,
'19 (e) (f) Ba 4,500 3,701,250
------------
Morocco--1.6%
Morocco R&C Agreement Series A 6.438%, '09 (e) NR 10,800 8,572,500
------------
Panama--2.8%
Panama PDI 144A PIK interest capitalization 6.75%,
'16 (b) NR 19,500 14,503,125
------------
Peru--1.5%
Peru FLIRB WI 3.25%, '49 (e) (g) NR 4,000 2,210,000
Peru PDI WI 4%, '49 (e) (g) NR 9,000 5,433,750
------------
7,643,750
------------
See Notes to Financial Statements
36
<PAGE>
- --------------------------------------------------------------------------------
High Yield Fund Series
- --------------------------------------------------------------------------------
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- ---------------
Venezuela--3.4%
Banco Central Venezuela NMB B-NP 6.625%, '05 (e) Ba $ 1,000 $ 820,625
Banco Central Venezuela NMB B-P 6.625%, '05 (e) Ba 5,000 4,103,125
Republic of Venezuela Series A NMB 6.75%, '05 (e) Ba 7,000 5,744,375
Venezuela-FLIRB A Euro 6.625%, '07 (e) Ba 5,000 4,159,375
Venezuela FLIRB B 6.50%, '07 (e) Ba 4,000 3,327,500
------------
18,155,000
------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $58,834,372) 65,563,125
------------
SHARES
---------
PREFERRED STOCKS--0.7%
Paper & Forest Products--0.7%
SD Warren Co. Pfd. PIK 144A Series B (b) 115,000 3,645,225
------------
TOTAL PREFERRED STOCKS
(Identified cost $2,421,900) 3,645,225
------------
CONVERTIBLE PREFERRED STOCKS--0.3%
Publishing, Broadcasting, Printing & Cable--0.3%
Granite Broadcasting Corp. Cv. Pfd 30,000 1,800,000
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified cost $2,025,000) 1,800,000
------------
COMMON STOCKS--0.3%
Publishing, Broadcasting, Printing & Cable--0.0%
Sullivan Holdings, Inc. Class C (d) 76 0
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------ -------------
<S> <C> <C>
Telecommunications Equipment--0.3%
Viatel, Inc. (d) 126,350 $ 1,516,200
-----------
TOTAL COMMON STOCKS
(Identified cost $850,646) 1,516,200
-----------
WARRANTS--0.2%
Comunicacion Celular Warrants 144A (b) (d) 7,500 525,000
Eye Care Centers of America Warrants (d) 6,500 32,500
SD Warren Warrants
144A (b) (d) 115,000 345,000
-----------
902,500
-----------
TOTAL WARRANTS
(Identified cost $1,093,100) 902,500
-----------
TOTAL LONG-TERM INVESTMENTS--97.4%
(Identified cost $492,177,144) 513,273,032
-----------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------ ------------ ---------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--2.3%
Commercial Paper--0.8%
Corporate Asset Funding Co., Inc. 5.60%, 11-1-96 A-1+ $4,500 4,500,000
------------
Federal Agency Securities--1.5%
Federal Home Loan Banks 5.53%, 11-1-96 7,720 7,720,000
------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $12,220,000) 12,220,000
------------
TOTAL INVESTMENTS--99.7%
(Identified cost $504,397,144) 525,493,032(a)
Cash and receivables, less liabilities--0.3% 1,366,704
------------
NET ASSETS--100.0% $526,859,736
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $24,805,409 and gross
depreciation of $3,704,015 for income tax purposes. At October 31, 1996,
the aggregate cost of securities for federal income tax purposes was
$504,391,638. At October 31, 1996, the Fund had capital loss
carryforwards for tax purposes aggregating $304,541,724 which may be used
to offset future capital gains. Of this amount, $223,463,597 was acquired
in connection with the merger of National Bond Fund into the Fund which
expire as follows: $177,036,784 through 1997; and, $46,426,813 through
1998. The Fund has additional capital loss carryforwards of $81,078,127
which expire as follows: $20,045,739 through 1998; $14,103,053 through
2002; and, $46,929,335 through 2003.
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
1996, these securities amounted to a value of $73,296,709 or 13.9% of net
assets.
(c) As rated by Standard & Poor's, Duff & Phelps or Fitch.
(d) Non-income producing.
(e) Variable or step coupon security; interest rate shown reflects the rate
currently in effect.
(f) Mexico Value Recovery Euro Rights incorporated as a unit.
(g) When issued.
(h) Segregated as collateral.
(i) Private placement; acquisition cost $3,912,520, acquisition date 8/30/93.
The Fund will bear any costs, including those involved in registration
under the Securities Act of 1933, in connection with the disposition of
such securities.
See Notes to Financial Statements
37
<PAGE>
- --------------------------------------------------------------------------------
High Yield Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $504,397,144) $525,493,032
Cash 1,280
Receivables
Investment securities sold 22,307,277
Fund shares sold 1,298,933
Dividends and interest 9,958,403
------------
Total assets 559,058,925
------------
Liabilities
Payables
Investment securities purchased 31,112,245
Fund shares repurchased 348,080
Investment advisory fee 280,970
Transfer agent fee 184,081
Distribution fee 128,633
Financial agent fee 12,968
Trustees' fee 11,288
Accrued expenses 120,924
------------
Total liabilities 32,199,189
------------
Net Assets $526,859,736
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $584,843,221
Undistributed net investment income 2,038,026
Accumulated net realized loss (81,117,399)
Net unrealized appreciation 21,095,888
------------
Net Assets $526,859,736
============
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $501,264,973) 58,077,669
Net asset value per share $8.63
Offering price per share
$8.63/(1-4.75%) $9.06
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $25,594,763) 2,964,497
Net asset value and offering price per share $8.63
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
Investment Income
Interest $52,270,502
Dividends 1,589,287
Security lending 71,573
------------
Total investment income 53,931,362
------------
Expenses
Investment advisory fee 3,366,120
Distribution fee--Class A 1,254,146
Distribution fee--Class B 181,101
Financial agent fee 155,359
Transfer agent 936,760
Printing 121,237
Custodian 75,495
Professional 54,551
Registration 35,927
Trustees 19,101
Miscellaneous 12,480
------------
Total expenses 6,212,277
------------
Net investment income 47,719,085
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 26,433,066
Net change in unrealized appreciation (depreciation) on
investments 2,635,081
------------
Net gain on investments 29,068,147
------------
Net increase in net assets resulting from operations $76,787,232
============
</TABLE>
See Notes to Financial Statements
38
<PAGE>
- --------------------------------------------------------------------------------
High Yield Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996 October 31, 1995
---------------- -----------------
<S> <C> <C>
From Operations
Net investment income $47,719,085 $51,288,841
Net realized gain (loss) 26,433,066 (45,170,764)
Net change in unrealized appreciation
(depreciation) 2,635,081 47,776,602
------------ ------------
Increase in net assets resulting from operations 76,787,232 53,894,679
------------ ------------
From Distributions to Shareholders
Net investment income--Class A (46,688,677) (49,483,730)
Net investment income--Class B (1,579,272) (817,976)
------------ ------------
Decrease in net assets from distributions to
shareholders (48,267,949) (50,301,706)
------------ ------------
From Share Transactions
Class A
Proceeds from sales of shares (8,790,783 and
9,926,312 shares, respectively) 73,572,017 78,513,605
Net asset value of shares issued from
reinvestment of distributions (2,806,249 and
3,110,460 shares, respectively) 23,385,527 24,479,580
Cost of shares repurchased (15,647,656 and
16,450,118 shares, respectively) (131,021,265) (130,311,090)
------------ ------------
Total (34,063,721) (27,317,905)
------------ ------------
Class B
Proceeds from sales of shares (1,998,410 and
915,297 shares, respectively) 16,749,310 7,282,409
Net asset value of shares issued from
reinvestment of distributions (76,435 and 36,805
shares, respectively) 639,323 292,115
Cost of shares repurchased (616,763 and 190,541
shares, respectively) (5,170,475) (1,491,768)
------------ ------------
Total 12,218,158 6,082,756
------------ ------------
Decrease in net assets from share transactions (21,845,563) (21,235,149)
------------ ------------
Net increase (decrease) in net assets 6,673,720 (17,642,176)
Net Assets
Beginning of period 520,186,016 537,828,192
------------ ------------
End of period (including undistributed net
investment income of $2,038,026 and $2,426,413,
respectively) $526,859,736 $520,186,016
============ ============
</TABLE>
See Notes to Financial Statements
39
<PAGE>
- --------------------------------------------------------------------------------
High Yield Fund Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------
Year Ended October 31,
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.17 $8.11 $9.11 $8.14 $7.70
Income from investment operations
Net investment income 0.78 0.80 0.76 0.74 0.77
Net realized and unrealized gain (loss) 0.46 0.04 (0.97) 0.97 0.44
------- ------- ------- ------- -------
Total from investment operations 1.24 0.84 (0.21) 1.71 1.21
------- ------- ------- ------- -------
Less distributions
Dividends from net investment income (0.78) (0.78) (0.76) (0.74) (0.77)
Tax return of capital -- -- (0.03) -- --
------- ------- ------- ------- -------
Total distributions (0.78) (0.78) (0.79) (0.74) (0.77)
------- ------- ------- ------- -------
Change in net asset value 0.46 0.06 (1.00) 0.97 0.44
------- ------- ------- ------- -------
Net asset value, end of period $8.63 $8.17 $8.11 $9.11 $8.14
======= ======= ======= ======= =======
Total return(1) 15.95% 11.19% -2.57% 21.87% 16.28%
Ratios/supplemental data:
Net assets end of period (thousands) $501,265 $507,855 $531,773 $182,333 $113,197
Ratio to average net assets of:
Operating expenses 1.17% 1.21% 1.19% 1.04% 1.08%
Net investment income 9.21% 10.01% 9.01% 8.46% 9.51%
Portfolio turnover 162% 147% 222% 157% 205%
</TABLE>
<TABLE>
<CAPTION>
Class B
---------------------------------
From
Year Ended October Inception
31, 2/16/94 to
1996 1995 10/31/94
--------- --------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period $8.19 $8.13 $9.38
Income from investment operations
Net investment income 0.71 0.72 0.54
Net realized and unrealized gain (loss) 0.45 0.07 (1.25)
------- ------- -------
Total from investment operations 1.16 0.79 (0.71)
------- ------- -------
Less distributions
Dividends from net investment income (0.72) (0.73) (0.52)
Tax return of capital -- -- (0.02)
------- ------- -------
Total distributions (0.72) (0.73) (0.54)
------- ------- -------
Change in net asset value 0.44 0.06 (1.25)
------- ------- -------
Net asset value, end of period $8.63 $8.19 $8.13
======= ======= =======
Total return(1) 14.88% 10.44% -7.67%(3)
Ratios/supplemental data:
Net assets end of period (thousands) $25,595 $12,331 $6,056
Ratio to average net assets of:
Operating expenses 1.92% 1.97% 1.80%(2)
Net investment income 8.47% 9.18% 9.12%(2)
Portfolio turnover 162% 147% 222%
</TABLE>
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
See Notes to Financial Statements
40
<PAGE>
- --------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES FUND SERIES
- --------------------------------------------------------------------------------
INVESTMENT ADVISER'S REPORT
With interest rates rising for most of this fiscal reporting period, it has
been a difficult market environment for bond investors. For the twelve months
ended October 31, 1996, the U.S. Government Securities Fund's Class A shares
provided a total return of 4.05% and Class B shares returned 3.39%. These
results modestly lagged the Lehman Brothers Government Bond Index. This commonly
used, unmanaged index of non-mortgaged U.S. government securities returned 5.12%
over the same period. All of these figures assume reinvestment of any
distributions, but exclude the effect of sales charges.
During the first six months of this reporting period, the Fund was
significantly overweighted in mortgage-backed securities. As this sector
performed well and their yield advantage concurrently declined, we began taking
profits in this area. More specifically, we gradually decreased our
mortgage-backed exposure from its high of 68% to its current portfolio weighting
of 10%. We believe the modest yield advantage which mortgage-backed securities
currently provide is not adequate compensation for the prepayment risk inherent
in these securities.
Looking ahead, our outlook for the bond market over the near term is fairly
optimistic, given the current environment of moderate economic growth and benign
inflation. We will continue to overweight U.S. Treasuries until the yield
advantage offered by mortgage-backed securities is adequate compensation for
their assumed risk. As always, we will continue to conservatively manage the
Fund, emphasizing those U.S. government securities that we believe offer the
best value in this segment of the market.
INVESTOR PROFILE
The U.S. Government Securities Fund is well suited for investors seeking a
high level of current income consistent with safety of principal.
41
<PAGE>
- --------------------------------------------------------------------------------
U.S. Government Securities Fund Series
- --------------------------------------------------------------------------------
[LINE CHART]
Lehman Brothers U.S. Government
Government Securities
Bond Index* Fund -- Class A
3/9/87 10000 9525
1987 9874 9013
1988 10834 9997
1989 12138 10852
1990 12859 11484
1991 14736 13119
1992 16256 14398
1993 18392 15864
1994 17571 15232
1995 20272 17488
1996 21309 18198
[/LINE CHART]
Average Annual Total Returns for Periods Ending 10/31/96
From From
Inception Inception
3/9/87 to 2/24/94 to
1 Year 5 Years 10/31/96 10/31/96
- --------------------------------------------------------------------------------
Class A with 4.75% sales charge -0.90% 5.86% 6.40% --
- --------------------------------------------------------------------------------
Class A at net asset value 4.05% 6.89% 6.94% --
- --------------------------------------------------------------------------------
Class B with CDSC -0.56% -- -- 3.70%
- --------------------------------------------------------------------------------
Class B at net asset value 3.39% -- -- 4.73%
- --------------------------------------------------------------------------------
Lehman Brothers Government Bond Index* 5.12% 7.66% 8.13%** 6.25%***
- --------------------------------------------------------------------------------
This chart assumes an initial gross investment of $10,000 made on 3/9/87 for
Class A shares. 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 inception dates, fees and sales charges. The total
return (from inception 2/24/94) 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). 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 Lehman Brothers Government Bond Index is an unmanaged but commonly used
measure of non-mortgaged government securities performance. The index's
performance does not reflect sales charges.
**Index information from 2/28/87 to 10/31/96.
***Index information from 2/28/94 to 10/31/96.
42
<PAGE>
- --------------------------------------------------------------------------------
U.S. Government Securities Fund Series
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1996
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- ---------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--86.8%
U.S. Treasury Bonds--20.4%
U.S. Treasury Bonds 7.125%, '23 AAA $15,000 $ 15,695,100
U.S. Treasury Bonds 6.875%, '25 AAA 11,000 11,249,920
U.S. Treasury Bonds 6%,
'26 AAA 1,500 1,369,217
U.S. Treasury Bonds 6.75%, '26 AAA 15,000 15,162,300
------------
43,476,537
------------
U.S. Treasury Notes--56.4%
U.S. Treasury Notes 5.375%, '97 AAA 15,000 14,970,450
U.S. Treasury Notes 6.50%, '97 AAA 10,000 10,079,700
U.S. Treasury Notes 5.875%, '98 AAA 30,000 30,075,000
U.S. Treasury Notes WI 5.875%, '99 (b) AAA 13,000 12,994,800
U.S. Treasury Notes 6.25%, '01 AAA 34,000 34,228,378
U.S. Treasury Notes 6.50%, '06 AAA 18,000 18,180,000
------------
120,528,328
------------
Agency Mortgage-Backed Securities--10.0%
FHLMC 9.30%, '05 AAA 285 286,488
FHLMC 6.75%, '19 AAA 1,500 1,499,415
FNMA 10%, '04 AAA 3,983 4,281,581
FNMA 8.70%, '16 AAA 1,068 1,100,400
FNMA 6.65%, '17 AAA 1,500 1,489,978
Agency Mortgage-Backed Securities--continued
FNMA 6.50%, '18 AAA $ 1,500 $ 1,482,329
FNMA 8.50%, '19 AAA 2,221 2,230,416
FNMA 6.75%, '19-'22 AAA 8,442 8,237,412
GNMA 8.50%, '01-'22 AAA 543 566,821
GNMA 8%, '05-'06 AAA 174 179,327
------------
21,354,167
------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $185,532,667) 185,359,032
------------
MUNICIPAL BONDS (c)--2.9%
Chicago Public Building Taxable 6.25%, '99 AAA 2,000 2,006,160
Chicago Public Building Taxable 6.65%, '01 AAA 1,000 1,010,010
Chicago Public Building Taxable 7%, '06 AAA 2,000 2,047,680
Chicago Public Building Taxable 7%, '07 AAA 1,050 1,069,404
------------
TOTAL MUNICIPAL BONDS
(Identified cost $6,037,186) 6,133,254
------------
SHORT-TERM OBLIGATIONS--16.0%
Federal Agency Securities--16.0%
Student Loan Marketing Assoc.
5.53%, 11-1-96 34,135 34,135,000
------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $34,135,000) 34,135,000
------------
TOTAL INVESTMENTS--105.7%
(Identified cost $225,704,853) 225,627,286(a)
Cash and receivables, less liabilities--(5.7%) (12,199,893)
------------
NET ASSETS--100.0% $213,427,393
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $1,609,889 and gross
depreciation of $1,688,121 for income tax purposes. At October 31, 1996,
the aggregate cost of securities for federal income tax purposes was
$225,705,518. At October 31, 1996, the Fund had capital loss
carryforwards for tax purposes aggregating $26,857,569 which may be used
to offset future capital gains. Of this amount $15,739,163 was acquired
in connection with the merger of National Federal Securities Trust Fund
into the Fund which expires as follows: $13,922,859 through 1997; and
$1,816,304 through 1998. The availability of these capital loss
carryforwards to offset future capital gains is subject to an annual
limitation determined under the Internal Revenue Code of 1986, as
amended. The Fund has additional capital loss carryforwards of
$11,118,406 which expire as follows: $8,684,579 through 2002; and
$2,433,827 through 2004.
(b) When issued.
(c) These Series 1996 bonds are fully defeased by U.S. Government Treasury
Obligations.
See Notes to Financial Statements
43
<PAGE>
- --------------------------------------------------------------------------------
U.S. Government Securities Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $225,704,853) $225,627,286
Cash 6,874
Receivables
Fund shares sold 85,484
Interest 1,384,574
-----------
Total assets 227,104,218
-----------
Liabilities
Payables
Investment securities purchased 12,975,300
Fund shares repurchased 383,629
Transfer agent fee 96,050
Investment advisory fee 81,314
Distribution fee 48,256
Trustees' fee 11,211
Financial agent fee 5,421
Accrued expenses 75,644
-----------
Total liabilities 13,676,825
-----------
Net Assets $213,427,393
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $224,359,908
Undistributed net investment income 264,123
Accumulated net realized loss (11,119,071)
Net unrealized depreciation (77,567)
-----------
Net Assets $213,427,393
===========
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $208,552,088) 22,017,731
Net asset value per share $9.47
Offering price per share
$9.47/(1-4.75%) $9.94
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $4,875,305) 515,906
Net asset value and offering price per share $9.45
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Interest $14,755,247
Security lending 99,724
------------
Total investment income 14,854,971
------------
Expenses
Investment advisory fee 1,016,243
Distribution fee--Class A 553,708
Distribution fee--Class B 43,484
Financial agent fee 67,750
Transfer agent 493,839
Printing 56,039
Professional 37,938
Custodian 31,354
Registration 27,335
Trustees 20,808
Miscellaneous 4,393
------------
Total expenses 2,352,891
------------
Net investment income 12,502,080
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized loss on securities (2,717,827)
Net change in unrealized appreciation (depreciation) on
investments (904,425)
------------
Net loss on investments (3,622,252)
------------
Net increase in net assets resulting from operations $8,879,828
============
</TABLE>
See Notes to Financial Statements
44
<PAGE>
- --------------------------------------------------------------------------------
U.S. Government Securities Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996 October 31, 1995
---------------- -----------------
<S> <C> <C>
From Operations
Net investment income $12,502,080 $ 15,179,991
Net realized gain (loss) (2,717,827) 4,645,956
Net change in unrealized appreciation
(depreciation) (904,425) 15,291,582
------------ ------------
Increase in net assets resulting from operations 8,879,828 35,117,529
------------ ------------
From Distributions to Shareholders
Net investment income--Class A (11,752,701) (14,898,311)
Net investment income--Class B (201,921) (135,148)
Distributions in excess of net investment
income--Class A -- (124,677)
Distributions in excess of net investment
income--Class B -- (1,132)
------------ ------------
Decrease in net assets from distributions to
shareholders (11,954,622) (15,159,268)
------------ ------------
From Share Transactions
Class A
Proceeds from sales of shares (3,190,243 and
1,623,549 shares, respectively) 30,366,623 14,794,526
Net asset value of shares issued from reinvestment
of distributions (680,397 and 853,155 shares,
respectively) 6,412,886 7,809,721
Cost of shares repurchased (6,419,884 and 7,434,464
shares, respectively) (61,087,957) (68,623,281)
------------ ------------
Total (24,308,448) (46,019,034)
------------ ------------
Class B
Proceeds from sales of shares (241,903 and 351,124
shares, respectively) 2,287,444 3,208,563
Net asset value of shares issued from reinvestment
of distributions (11,893 and 6,855 shares,
respectively) 111,576 63,105
Cost of shares repurchased (119,425 and 116,132
shares, respectively) (1,122,209) (1,072,281)
------------ ------------
Total 1,276,811 2,199,387
------------ ------------
Decrease in net assets from share transactions (23,031,637) (43,819,647)
------------ ------------
Net decrease in net assets (26,106,431) (23,861,386)
Net Assets
Beginning of period 239,533,824 263,395,210
------------ ------------
End of period (including undistributed net
investment income of $264,123 and $0,
respectively) $213,427,393 $239,533,824
============ ============
</TABLE>
See Notes to Financial Statements
45
<PAGE>
- --------------------------------------------------------------------------------
U.S. Government Securities Fund Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------
Year Ended October 31,
1996 1995 1994 1993 1992
------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.60 $8.88 $9.87 $9.91 $9.65
Income from investment operations
Net investment income 0.52 0.55 0.64 0.62(1) 0.65(1)
Net realized and unrealized gain (loss) (0.15) 0.72 (1.02) 0.34 0.26
------- ------- ------- ------- -------
Total from investment operations 0.37 1.27 (0.38) 0.96 0.91
------- ------- ------- ------- -------
Less distributions
Dividends from net investment income (0.50) (0.55) (0.45) (0.62) (0.65)
Dividends from net realized gains -- -- (0.02) (0.38) --
Tax return of capital -- -- (0.14) -- --
------- ------- ------- ------- -------
Total distributions (0.50) (0.55) (0.61) (1.00) (0.65)
------- ------- ------- ------- -------
Change in net asset value (0.13) 0.72 (0.99) (0.04) 0.26
------- ------- ------- ------- -------
Net asset value, end of period $9.47 $9.60 $8.88 $9.87 $9.91
======= ======= ======= ======= =======
Total return(2) 4.05% 14.81% -3.98% 10.18% 9.74%
Ratios/supplemental data:
Net assets, end of period (thousands) $235,879
$208,552 $262,157 $57,072 $40,365
Ratio to average net assets of:
Operating expenses 1.03% 0.99% 0.98% 0.75% 0.77%
Net investment income 5.55% 6.01% 5.92% 6.19% 6.64%
Portfolio turnover 379% 178% 101% 264% 285%
</TABLE>
<TABLE>
<CAPTION>
Class B
--------------------------------
From
Year Ended October Inception
31, 2/24/94 to
1996 1995 10/31/94
-------- -------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $9.58 $8.86 $9.61
Income from investment operations
Net investment income 0.44 0.48 0.39
Net realized and unrealized gain (loss) (0.14) 0.72 (0.75)
------- ------- -------
Total from investment operations 0.30 1.20 (0.36)
------- ------- -------
Less distributions
Dividends from net investment income (0.43) (0.48) (0.30)
Dividends from net realized gains -- -- --
Tax return of capital -- -- (0.09)
------- ------- -------
Total distributions (0.43) (0.48) (0.39)
------- ------- -------
Change in net asset value (0.13) 0.72 (0.75)
------- ------- -------
Net asset value, end of period $9.45 $9.58 $8.86
======= ======= =======
Total return(2) 3.39% 13.82% -3.83%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $4,875 $3,655 $1,238
Ratio to average net assets of:
Operating expenses 1.78% 1.73% 2.00%(3)
Net investment income 4.79% 5.23% 4.49%(3)
Portfolio turnover 379% 178% 101%
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.03 and $0.04 respectively.
(2) Maximum sales load is not reflected in the total return calculation.
(3) Annualized
(4) Not annualized
See Notes to Financial Statements
46
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET FUND SERIES
- --------------------------------------------------------------------------------
INVESTMENT ADVISER'S REPORT
Over the last twelve months, Phoenix Money Market Fund continued to produce
solid results for its shareholders. As of October 31, 1996, the current yield on
the Fund's Class A and B shares were 4.52% and 4.23%, respectively, as compared
with the 4.75% average yield of taxable money market funds reported by IBC
Donoghue's Money Fund Report. The current yield is a seven-day annualized yield
computed by dividing the average net income earned per share during the
seven-day period preceding the date of calculation by the average daily net
asset value per share for the same period, with the resulting figure multiplied
by 365.
Shifting market opinion over the direction of the U.S. economy was
responsible for much of the volatility in short-term interest rates during this
latest twelve-month reporting period. During December and January, the Federal
Reserve cut the Fed Funds Rate in an effort to stimulate what was believed to be
a sluggish economy. Although it was widely anticipated that the Fed would have
to lower rates again, a surprisingly strong February employment report provided
conflicting evidence about the economy's condition. As more information became
available, it became evident that the economy had grown robustly over the first
half of 1996. During this period, interest rates were pushed higher as the
financial markets had to consider the threat of future inflation.
By late summer, the consensus view on Wall Street shifted once again as
signs of more moderate economic growth became increasingly more apparent and
concerns over inflation declined. These signs of a slower economy allowed
interest rates to fall for the remainder of the reporting period. In the end,
despite all these market gyrations over the last twelve months, the yield on the
90-Day Treasury Bill declined only 33 basis points, from 5.47% to 5.14%.
Looking ahead, the Fund continues to focus on high quality assets as
represented by the portfolio's average credit quality of A1/P1 as of October 31,
1996. In terms of our asset allocation strategy, we are currently emphasizing
top-tier commercial paper, variable-rate instruments and U.S. Government
obligations. As always, we remain committed to carefully monitoring the
short-term markets for attractive investment opportunities.
INVESTOR PROFILE
Investors seeking high current income with high liquidity are best suited
for this Fund. Phoenix Money Market Fund is neither insured nor guaranteed by
the U.S. government, and there can be no assurance the Fund will be able to
maintain a stable net asset value of $1.00 per share.
Monthly Yield Comparison
[LINE CHART]
IBC Donoghue
Money Fund Money Market
Report* Fund -- Class A
------- ---------------
11/95 5.17 5.04
12/95 5.15 5.06
1/96 5.03 4.87
2/96 4.8 4.52
3/96 4.49 4.49
4/96 4.68 4.54
5/96 4.67 4.47
6/96 4.7 4.46
7/96 4.73 4.55
8/96 4.74 4.58
9/96 4.75 4.64
10/96 4.75 4.64
[/LINE CHART]
The above graph covers the period from October 31, 1995 to October 31, 1996. The
results are not indicative of the rate of return which may be realized from an
investment made in the Money Market Fund today. The Money Market Fund Series is
neither insured nor guaranteed by the U.S. Government, and there can be no
assurance that the Fund will be able to maintain a stable Net Asset Value at
$1.00 per share.
*Average monthly yield of taxable Money Market Funds as reported by IBC
Donoghue's Money Fund Report.
47
<PAGE>
- --------------------------------------------------------------------------------
Money Market Fund Series
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1996
<TABLE>
<CAPTION>
Face
Amount Interest Maturity
(000) Description Rate Date Value
- ---------- -------------------------------- --------- ----------- -------------
<S> <C> <C>
U.S. TREASURY BILLS--0.6%
$ 1,255 U.S. Treasury Bills 4.80% 02/06/97 $1,241,576
-----------
TOTAL U.S. TREASURY BILLS 1,241,576
-----------
U.S. TREASURY NOTES--3.4%
7,000 U.S. Treasury Notes 6.88 02/28/97 7,038,834
-----------
TOTAL U.S. TREASURY NOTES 7,038,834
-----------
FEDERAL AGENCY SECURITIES--3.7%
3,500 Federal Home Loan Banks 5.27 02/28/97 3,500,000
4,000 Federal Home Loan Banks 5.40 03/20/97 3,998,162
-----------
TOTAL FEDERAL AGENCY SECURITIES 7,498,162
-----------
FEDERAL AGENCY SECURITIES--VARIABLE--19.7% (b)
</TABLE>
<TABLE>
<CAPTION>
Reset
Date
-----------
<S> <C> <C>
3,500 Federal Farm Credit Bank (final maturity
02/24/97) 5.51 11/01/96 3,499,626
10,500 Federal Farm Credit Bank (final maturity
07/24/00) 5.54 11/01/96 10,504,414
3,500 Student Loan Marketing Association (final
maturity 11/10/98) 5.37 11/01/96 3,496,256
1,000 Student Loan Marketing Association (final
maturity 10/14/97) 5.35 11/05/96 997,812
1,000 Student Loan Marketing Association (final
maturity 11/24/97) 5.35 11/05/96 1,000,000
2,000 Student Loan Marketing Association (final
maturity 02/22/99) 5.38 11/05/96 2,000,000
3,000 Student Loan Marketing Association (final
maturity 03/07/01) 5.44 11/05/96 3,000,000
3,500 Student Loan Marketing Association (final
maturity 10/30/97) 5.53 11/05/96 3,501,922
4,000 Federal Home Loan Banks (final maturity
01/14/97) 5.70 11/07/96 4,000,000
5,000 Student Loan Marketing Association (final
maturity 02/08/99) 5.39 11/08/96 5,000,000
3,000 Federal National Mortgage Association (final
maturity 12/14/98) 5.53 12/14/96 2,996,510
-----------
TOTAL FEDERAL AGENCY SECURITIES--VARIABLE 39,996,540
-----------
</TABLE>
<TABLE>
<CAPTION>
Standard
Face & Poor's
Amount Rating Interest Maturity
(000) Description (Unaudited) Rate Date Value
- ---------- -------------------------------- ---------- -------------------- -------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER--81.6%
$ 9,535 CXC, Inc. A-1+ 5.70% 11/01/96 $9,535,000
1,318 Preferred Receivables Funding
Corp. A-1 5.25 11/01/96 1,318,000
4,505 Albertson's, Inc. A-1 5.23 11/04/96 4,503,038
1,500 Beta Finance, Inc. A-1+ 5.35 11/04/96 1,499,331
3,572 Merrill Lynch & Co., Inc. A-1+ 5.45 11/04/96 3,570,378
1,435 Preferred Receivables Funding
Corp. A-1 5.25 11/04/96 1,434,372
2,000 AlliedSignal, Inc. A-1 5.37 11/04/96 1,998,807
1,000 Receivables Capital Corp. A-1 5.31 11/06/96 999,262
5,500 Kimberly-Clark Corp. A-1+ 5.27 11/08/96 5,494,364
2,440 Abbott Laboratories A-1+ 5.20 11/12/96 2,436,123
2,865 Coca-Cola Co. A-1+ 5.20 11/12/96 2,860,448
4,125 Kellogg Co. A-1+ 5.23 11/12/96 4,118,408
6,160 AlliedSignal, Inc. A-1 5.24 11/14/96 6,146,252
6,185 Goldman Sachs & Co. A-1+ 5.30 11/14/96 6,173,163
500 Gannett Co. A-1 5.27 11/15/96 498,975
7,390 Shell Oil Co. A-1+ 5.20 11/15/96 7,375,056
4,000 Ameritech Capital Funding Corp. A-1+ 5.27 11/18/96 3,990,046
2,955 Goldman Sachs & Co. A-1+ 5.28 11/19/96 2,947,199
6,550 McDonald's Corp. A-1+ 5.21 11/19/96 6,532,937
1,090 Minnesota Mining & Manufacturing
Co. A-1+ 5.22 11/20/96 1,086,997
7,910 Minnesota Mining & Manufacturing
Co. A-1+ 5.37 11/20/96 7,887,002
5,500 General Electric Capital Corp. A-1+ 5.25 11/21/96 5,500,000
985 Corporate Asset Funding Co., Inc. A-1+ 5.25 11/22/96 981,983
1,721 Receivables Capital Corp. A-1 5.26 11/22/96 1,715,649
500 General Electric Capital Corp. A-1+ 5.28 11/25/96 498,240
4,000 Preferred Receivables Funding
Corp. A-1 5.29 11/25/96 3,985,893
1,415 Greenwich Funding Corp. A-1+ 5.27 11/27/96 1,409,614
3,750 Albertson's, Inc. A-1 5.24 12/03/96 3,732,533
775 Preferred Receivables Funding
Corp. A-1 5.27 12/03/96 771,370
See Notes to Financial Statements
48
<PAGE>
- --------------------------------------------------------------------------------
Money Market Fund Series
- --------------------------------------------------------------------------------
Standard
Face & Poor's
Amount Rating Interest Maturity
(000) Description (Unaudited) Rate Date Value
- ---------- -------------------------------- ---------- --------- ----------- -------------
COMMERCIAL PAPER--continued
$830 Preferred Receivables Funding
Corp. A-1 5.45% 12/03/96 $825,979
4,005 First Deposit Funding Trust A-1 5.50 12/04/96 3,984,808
1,300 AlliedSignal, Inc. A-1 5.25 12/05/96 1,293,554
1,865 McKenna Triangle National Corp. A-1+ 5.25 12/05/96 1,855,753
8,400 Private Export Funding Corp. A-1+ 5.45 12/05/96 8,356,763
4,450 Receivables Capital Corp. A-1 5.28 12/05/96 4,427,809
4,040 BellSouth Telecommunications A-1+ 5.23 12/06/96 4,019,458
3,615 International Lease Finance A-1 5.27 12/06/96 3,596,478
7,500 Coca-Cola Co. A-1+ 5.20 12/13/96 7,454,500
208 Kellogg Co. A-1+ 5.25 12/13/96 206,726
2,670 Greenwich Funding Corp. A-1+ 5.26 12/16/96 2,652,445
COMMERCIAL PAPER--continued
$5,460 Warner-Lambert Co. A-1+ 5.25% 12/16/96 $5,424,169
7,190 Procter & Gamble Co. A-1+ 5.22 12/18/96 7,141,000
4,275 Southwestern Bell Telephone Co. A-1+ 5.23 12/19/96 4,245,189
5,000 General RE Corp. A-1+ 5.25 12/24/96 4,961,354
1,105 Preferred Receivables Funding
Corp. A-1 5.27 12/26/96 1,096,103
3,216 First Deposit Funding Trust A-1 5.34 01/30/97 3,173,066
-----------
TOTAL COMMERCIAL PAPER 165,715,594
-----------
MEDIUM-TERM NOTES--2.0%
4,000 Beta Finance, Inc. 5.80 08/14/97 4,000,000
-----------
TOTAL MEDIUM-TERM NOTES 4,000,000
-----------
TOTAL INVESTMENTS--111.0%
(Identified cost $225,490,706) 225,490,706(a)
Cash and receivables, less liabilities--(11.0%) (22,408,762)
-----------
NET ASSETS--100.0% $203,081,944
===========
</TABLE>
(a) Federal Income Tax Information: At October 31, 1996, the aggregate cost
of securities was the same for book and tax purposes.
(b) Variable rate demand note. The interest rates shown reflect the rate
currently in effect.
See Notes to Financial Statements
49
<PAGE>
- --------------------------------------------------------------------------------
Money Market Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $225,490,706) $225,490,706
Cash 100,250
Receivables
Fund shares sold 677,809
Interest 543,556
-----------
Total assets 226,812,321
-----------
Liabilities
Payables
Fund shares repurchased 23,347,427
Dividend distributions 162,599
Investment advisory fee 73,308
Transfer agent fee 67,374
Trustees' fee 11,289
Distribution fee 6,128
Financial agent fee 5,331
Accrued expenses 56,921
-----------
Total liabilities 23,730,377
-----------
Net Assets $203,081,944
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $203,081,944
-----------
Net Assets $203,081,944
===========
Class A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $192,859,407) 192,859,407
Net asset value and offering price per share $1.00
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $10,222,537) 10,222,537
Net asset value and offering price per share $1.00
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Interest $11,194,770
Security lending 1,145
-----------
Total investment income 11,195,915
-----------
Expenses
Investment advisory fee 811,036
Distribution fee--Class B 67,828
Financial agent fee 60,828
Transfer agent fee 611,435
Printing 76,670
Registration 54,703
Custodian 37,798
Professional 35,713
Trustees 20,797
Miscellaneous 470
-----------
Total expenses 1,777,278
-----------
Net investment income $9,418,637
===========
</TABLE>
See Notes to Financial Statements
50
<PAGE>
- --------------------------------------------------------------------------------
Money Market Fund Series
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996 October 31, 1995
----------------- -----------------
<S> <C> <C>
From Operations
Net investment income $9,418,637 $10,911,215
------------ ------------
From Distributions to Shareholders
Net investment income--Class A (9,064,115) (10,599,772)
Net investment income--Class B (354,522) (311,443)
------------ ------------
Decrease in net assets from distributions to
shareholders (9,418,637) (10,911,215)
------------ ------------
From Share Transactions
Class A
Proceeds from sales of shares (1,212,801,272 and
591,523,801 shares, respectively) 1,212,801,272 591,523,801
Net asset value of shares issued from
reinvestment of distributions (8,374,618 and
9,841,714 shares, respectively) 8,374,618 9,841,714
Cost of shares repurchased (1,221,850,524 and
604,397,117 shares, respectively) (1,221,850,524) (604,397,117)
------------ ------------
Total (674,634) (3,031,602)
------------ ------------
Class B
Proceeds from sales of shares (16,991,839 and
16,688,133 shares, respectively) 16,991,839 16,688,133
Net asset value of shares issued from
reinvestment of distributions (281,654 and
248,387 shares, respectively) 281,654 248,387
Cost of shares repurchased (15,556,837 and
10,516,662 shares, respectively) (15,556,837) (10,516,662)
------------ ------------
Total 1,716,656 6,419,858
------------ ------------
Increase in net assets from share transactions 1,042,022 3,388,256
------------ ------------
Net increase in net assets 1,042,022 3,388,256
Net Assets
Beginning of period 202,039,922 198,651,666
------------ ------------
End of period $203,081,944 $202,039,922
============ ============
</TABLE>
See Notes to Financial Statements
51
<PAGE>
- --------------------------------------------------------------------------------
Money Market Fund Series
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------
Year Ended October 31,
1996 1995 1994 1993 1992
------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations
Net investment income 0.047 0.053 0.032 0.025(1) 0.035(1)
------- ------- ------- ------- -------
Total from investment operations 0.047 0.053 0.032 0.025 0.035
------- ------- ------- ------- -------
Less distributions
Dividends from net investment income (0.047) (0.053) (0.032) (0.025) (0.035)
------- ------- ------- ------- -------
Change in net asset value -- -- -- -- --
------- ------- ------- ------- -------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
Total return 4.67% 5.32% 3.20% 2.50% 3.50%
Ratios/supplemental data:
Net assets, end of period (thousands) $192,859 $193,534 $196,566 $170,334 $180,786
Ratio to average net assets of:
Operating expenses 0.84% 0.71% 0.85% 0.85% 0.85%
Net investment income 4.68% 5.31% 3.19% 2.53% 3.50%
</TABLE>
<TABLE>
<CAPTION>
Class B
---------------------------------
From
Inception
Year Ended October 31, 7/15/94 to
1996 1995 10/31/94
--------- --------- ------------
<S> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00
Income from investment operations
Net investment income 0.039 0.046 0.007
------- ------- -------
Total from investment operations 0.039 0.046 0.007
------- ------- -------
Less distributions
Dividends from net investment income (0.039) (0.046) (0.007)
------- ------- -------
Change in net asset value -- -- --
------- ------- -------
Net asset value, end of period $1.00 $1.00 $1.00
======= ======= =======
Total return 3.93% 4.63% 0.70%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $10,223 $8,506 $2,086
Ratio to average net assets of:
Operating expenses 1.59% 1.44% 1.60%(2)
Net investment income 3.92% 4.62% 3.46%(2)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.0001 and $0.001, respectively.
(2) Annualized
(3) Not annualized
See Notes to Financial Statements
52
<PAGE>
PHOENIX SERIES FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix 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. Each Series has
distinct investment objectives. The Balanced Fund Series seeks to provide
reasonable income, long-term capital growth and conservation of capital. The
Convertible Fund Series seeks as its investment objectives income and the
potential for capital appreciation; these objectives are to be considered as
relatively equal. The Growth Fund Series seeks long-term appreciation of
capital. The Aggressive Growth Fund Series (formerly the U.S. Stock Fund
Series) seeks appreciation of capital through the use of aggressive
investment techniques. The High Yield Fund Series seeks to provide high
current income. The U.S. Government Securities Fund Series seeks a high level
of current income by investing in U.S. Government guaranteed or backed
securities. The Money Market Fund Series seeks to provide as high a level of
current income consistent with capital preservation and liquidity.
Each Series offers both Class A and Class B shares. 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. Both 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 Series are borne pro rata by the holders of
both 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 their fair
value as determined in good faith by or under the direction of the Trustees.
The Money Market Fund Series uses the amortized cost method of security
valuation which, in the opinion of the Trustees, represents the fair value of
the particular security. The Trustees monitor the deviations between the
classes' net asset value per share as determined by using available market
quotations and its amortized cost per share. If the deviation exceeds 1/2 of
1%, the Board of Trustees will consider what action, if any, should be
initiated to provide a fair valuation. This valuation procedure allows each
class of the Series to maintain a constant net asset value of $1 per share.
The assets of the Series will not be invested in any security with a maturity
of greater than 397 days, and the average weighted maturity of its portfolio
will not exceed 90 days.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign
securities, as soon as the Series is notified. Interest income is recorded on
the accrual basis. The Trust does not amortize premiums except for the Money
Market Fund Series, but does amortize discounts using the effective interest
method. Realized gains and losses are determined on the identified cost
basis.
C. Income taxes:
Each of the Series is treated as a separate taxable entity. It is the policy
of each Series in the Trust to comply with the requirements of the Internal
Revenue Code (the Code), applicable to regulated investment companies, and to
distribute substantially all of its taxable income to its shareholders. In
addition, each Series 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 Series 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, expiring
capital loss carryforwards, foreign currency gain/loss, partnerships, 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.
53
<PAGE>
PHOENIX SERIES FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1996 (Continued)
E. Foreign currency translation:
Foreign securities, 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 of the Series, except U.S. Government Securities Fund Series and Money
Market Fund Series, 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 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 Series as an unrealized gain (or loss). When
the contract is closed, the Series 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.
G. Futures contracts:
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. A Series may enter into financial
futures contracts as a hedge against anticipated changes in the market value
of their portfolio securities. Upon entering into a futures contract the
Series is required to pledge to the broker an amount of cash and/or
securities equal to the "initial margin" requirements of the futures exchange
on which the contract is traded. Pursuant to the contract, the Series agrees
to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
variation margin and are recorded by the Series as unrealized gains or
losses. When the contract is closed, the Series records a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed. The potential risk to a
Series is that the change in value of the futures contract may not correspond
to the change in value of the hedged instruments.
H. Security lending:
The Trust loans securities to qualified brokers through an agreement with
State Street Bank & Trust (the Custodian). Under the terms of the agreement,
the Trust receives collateral with a market value not less than 100% of the
market value of loaned securities. Collateral is adjusted daily in connection
with changes in the market value of securities on loan. Collateral consists
of cash, securities issued or guaranteed by the U.S. Government or its
agencies and the sovereign debt of foreign countries. Interest earned on the
collateral and premiums paid by the borrower are recorded as income by the
Trust net of fees charged by the Custodian for its services in connection
with this securities lending program. Lending portfolio securities involves a
risk of delay in the recovery of the loaned securities or in the foreclosure
on collateral. At October 31, 1996, the Trust had the following amounts of
security loans:
<TABLE>
<CAPTION>
Value of
Value of Securities
Collateral on Loan
-------------- --------------
<S> <C> <C>
Balanced Fund Series $48,955,252 $46,601,326
Convertible Fund Series 6,226,300 5,861,788
Growth Fund Series 9,081,798 8,752,225
Aggressive Growth Fund Series 11,123,400 10,521,025
</TABLE>
I. Expenses:
Expenses incurred by the Trust with respect to any two or more Series are
allocated in proportion to the net assets of each Series, except where
allocation of direct expense to each Series or an alternative allocation
method can be more fairly made.
J. Options:
Each Series may purchase put or call options on securities and securities
indices and foreign currencies for the purpose of hedging against changes in
the market value of the underlying securities or foreign currencies. The
Series pays a premium which is included in the Series' Schedule of
Investments and subsequently marked to market to reflect the current value of
the option. The risk associated with purchasing put and call options is
limited to the premium paid.
54
<PAGE>
PHOENIX SERIES FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1996 (Continued)
K. When-Issued and Delayed Delivery Transactions:
Each Series may engage in when-issued or delayed delivery transactions. The
Series record when-issued securities on the trade date and maintain
collateral for the securities purchased. Securities purchased on a when-
issued or delayed delivery basis begin earning interest on the settlement
date.
NOTE 2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, the Adviser, Phoenix
Investment Counsel, Inc., an indirect majority-owned subsidiary of Phoenix
Home Life Mutual Insurance Company ("PHL"), is entitled to a fee based upon
the following annual rates as a percentage of the average daily net assets of
each separate Series:
<TABLE>
<CAPTION>
1st $1-2 $2+
Series $1 Billion Billion Billion
- ----------------------------------------- ------------- --------- ----------
<S> <C> <C> <C>
Growth Fund Series 0.70% 0.65% 0.60%
Aggressive Growth Fund Series 0.70% 0.65% 0.60%
Convertible Fund Series 0.65% 0.60% 0.55%
High Yield Fund Series 0.65% 0.60% 0.55%
Balanced Fund Series 0.55% 0.50% 0.45%
U.S. Government Securities Fund Series 0.45% 0.40% 0.35%
Money Market Fund Series 0.40% 0.35% 0.30%
</TABLE>
The Adviser has agreed to assume expenses and reduce the advisory fee for
the benefit of the Money Market Fund Series to the extent that total expenses
(excluding interest, taxes, brokerage fees and commissions and extraordinary
expenses) exceed 0.85% for Class A shares and 1.60% for Class B shares of the
average of the aggregate daily net asset value.
Phoenix Equity Planning Corporation (PEPCO), an indirect majority-owned
subsidiary of PHL, which serves as the national distributor of the Trust's
shares, has advised the Fund that it retained selling commissions of $691,327
for Class A shares and deferred sales charges of $221,156 for Class B shares,
for the year ended October 31, 1996. In addition, each Series except the
Money Market Fund Series pays PEPCO a distribution fee of an annual rate of
0.25% for Class A shares and 1.00% for Class B shares applied to the average
daily net assets of each Series; the distribution fee for the Money Market
Fund Series is 0% and 0.75% for Class A and Class B, respectively. The
distributor has advised the Series that of the total amount expensed for the
year ended October 31, 1996, $2,527,185 was earned by the Distributor and
$12,616,838 was earned by unaffiliated participants.
As Financial Agent to the Trust and to each Series, PEPCO receives a fee
at an annual rate of 0.03% of the average daily net assets for bookkeeping,
administrative and pricing services. PEPCO serves as the Funds' Transfer
Agent with State Street Bank and Trust Company as sub- transfer agent. For
the year ended October 31, 1996, transfer agent fees were $10,745,555 of
which PEPCO retained $3,890,559 which is net of fees paid to State Street.
At October 31, 1996, PHL and affiliates held Phoenix Series Fund shares
which aggregated the following:
<TABLE>
<CAPTION>
Aggregate
Net Asset
Shares Value
------------- -------------
<S> <C> <C>
High Yield Fund Series Class A 362 $ 3,122
Aggressive Growth Fund Series
Class B 9,692 160,685
Money Market Fund Series Class A 10,622,054 10,622,054
U.S. Government Securities Fund
Series Class A 282 2,673
</TABLE>
NOTE 3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended October 31, 1996
(excluding U.S. Government and Agency securities and short-term securities)
aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
--------------- ---------------
<S> <C> <C>
Balanced Fund Series $2,394,146,110 $2,614,915,287
Convertible Fund Series 290,043,437 286,658,132
Growth Fund Series 2,403,162,847 2,697,422,595
Aggressive Growth Fund Series 865,015,594 842,042,215
High Yield Fund Series 554,894,266 583,153,492
U.S. Government Securities Fund Series 6,037,330 --
</TABLE>
Purchases and sales of U.S. Government and Agency securities during the
year ended October 31, 1996, aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
--------------- ---------------
<S> <C> <C>
Balanced Fund Series $1,266,498,878 $1,548,778,844
Convertible Fund Series -- --
Growth Fund Series -- --
Aggressive Growth Fund Series -- --
High Yield Fund Series 270,059,637 274,754,781
U.S. Government Securities Fund Series 796,734,826 836,454,917
</TABLE>
55
<PAGE>
PHOENIX SERIES FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1996 (Continued)
NOTE 4. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Series of the Fund have
recorded several reclassifications in the capital accounts. These
reclassifications have no impact on the net asset value 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 October 31, 1996, the Series recorded the following reclassifications to
increase (decrease) the accounts listed below:
<TABLE>
<CAPTION>
Capital paid
Undistributed Accumulated in on shares
net investment net realized of beneficial
income (loss) gains (losses) interest
---------------- --------------- ---------------
<S> <C> <C> <C>
Balanced Fund Series $ (180,102) $ 251,293 $ (71,191)
Growth Fund Series (214,201) 118,510 95,691
Aggressive Growth Fund Series 1,821,362 (1,821,397) 35
High Yield Fund Series 160,477 (23,971,504) 23,811,027
U.S. Government Securities Fund
Series (283,335) 283,335 --
</TABLE>
NOTE 5. CAPITAL LOSS CARRYOVERS
For the year ended October 31, 1996, the High Yield Series was able to
utilize losses deferred in the prior year against current year capital gains
in the amount of $26,087,927.
TAX INFORMATION NOTICE (Unaudited)
For the fiscal year ended October 31, 1996, the following Series distributed
long-term capital gains dividends as follows:
<TABLE>
<CAPTION>
<S> <C>
Balanced Fund Series $ 21,375,501
Convertible Fund Series 2,232,990
Growth Fund Series 105,434,273
Aggressive Growth Fund Series 1,742,840
</TABLE>
For federal income tax purposes, 8.5%, 9.5% and 24.6% of the ordinary
income dividends paid by the Balanced Fund Series, the Convertible Fund
Series and the Growth Fund Series, respectively, qualify for the dividends
received deduction for corporate shareholders.
56
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGOTYPE] Price Waterhouse LLP [LOGO]
To the Shareholders and Trustees of
Phoenix 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
the Balanced Fund Series, the Convertible Fund Series, the Growth Fund Series,
the Aggressive Growth Fund Series (formerly the U.S. Stock Fund Series), the
High Yield Fund Series, the U.S. Government Securities Fund Series and the Money
Market Fund Series (constituting the Phoenix Series Fund, hereinafter referred
to as the "Fund") at October 31, 1996, the results of each of their operations
for the year then ended, the changes in each of their net assets for each of the
two years in the period then ended 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 October
31, 1996 by correspondence with the custodian and brokers, and the application
of alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Boston, Massachusetts
December 13, 1996
57
<PAGE>
WHAT IS THE PHOENIX SERIES FUND?
Phoenix Series Fund is your investment for a lifetime! Consisting of seven
individual portfolios, each with a separate investment objective, the Series
Fund is a mutual fund designed to provide you with convenience and flexibility
in making your investment decisions. As your personal financial needs change,
you can easily redirect your investment to a more suitable portfolio within the
Series Fund.
WHO MANAGES MY FUND?
Phoenix Investment Counsel, Inc. provides skilled and professional
management services, including investment selection and portfolio supervision.
WHY ARE THERE SEVEN FUNDS?
We have designed seven separate funds, each with different investment
objectives, in order to meet a variety of investment goals.
Phoenix Balanced Fund Series seeks as its investment objectives reasonable
income, long-term capital growth and conservation of capital.
Phoenix Convertible Fund Series seeks as its investment objectives income
and the potential for capital appreciation; these objectives are to be
considered relatively equal.
Phoenix Growth Fund Series seeks as its investment objective long-term
appreciation of capital. Since income is not an objective, any income generated
by the investment of this Series' assets will be incidental to its objective.
Phoenix High Yield Fund Series seeks as its investment objective high
current income. Capital growth is a secondary objective which will also be
considered when consistent with the primary objective of high current income.
Phoenix Money Market Fund Series seeks as its investment objective as high
a level of current income as is consistent with the preservation of capital and
the maintenance of liquidity.
Phoenix Aggressive Growth Fund Series seeks as its investment objective
appreciation of capital through the use of aggressive investment techniques.
Phoenix U.S. Government Securities Fund Series seeks as its investment
objective a high level of current income consistent with safety of principal.
WHAT IF MY FINANCIAL NEEDS CHANGE?
Just call us. At your request, the value of shares in any account can be
exchanged toward the purchase of shares of any other fund within the Series Fund
by using the Exchange Privilege.
HOW DOES THE EXCHANGE PRIVILEGE WORK?
Our Exchange Privilege offers the flexibility needed to assure the most
suitable portfolio throughout your lifetime. At any time you may redirect some
or all of your present holdings into another fund in the Series Fund which
better serves your needs. Just call us with the details. We'll process the
exchange free of charge. The toll-free number to call with your exchange request
is 800-367-5877. The exchange privilege may be modified or terminated, as noted
in the prospectus.
HOW DO I MAKE ADDITIONAL INVESTMENTS?
Send your check directly to State Street Bank and Trust Company, P.O. Box
8301, Boston, MA 02266-8301. Please include either the bottom section of your
confirmation statement or a simple letter of instruction.
CAN I MAKE AUTOMATIC MONTHLY INVESTMENTS?
You may authorize automatic monthly investments for as little as $25 to be
made directly from your personal checking account. An application is available
from the Series Fund.
CAN I ESTABLISH AN INDIVIDUAL RETIREMENT ACCOUNT (IRA) WITH PHOENIX SERIES
FUND?
Yes! The Phoenix Series Fund is an appropriate investment vehicle for
qualified retirement plans including IRAs, Keoghs, Pension and Profit Sharing
Plans.
HOW DO I ESTABLISH AN IRA?
Just call us. We'll send you our EASY IRA KIT which includes an IRA
application and other required documents.
HOW MUCH CAN I INVEST INTO AN IRA?
Individuals may invest up to $2,000 or 100% of earned income, whichever is
less. If you have an unemployed spouse, the maximum contribution could increase
to $2,250. Please refer to the Phoenix EASY IRA KIT for clarification.
WHAT ARE THE TAX ADVANTAGES OF ESTABLISHING AN IRA?
Individuals who meet the deductibility requirements may deduct their yearly
IRA contributions from their taxable income, and thus, pay less tax.
Additionally, the account's earnings still accumulate tax-free until you
withdraw your money at retirement.
WHO CAN ANSWER MY QUESTIONS?
Most questions can be answered by our Customer Service Department. We are
equipped with computer terminals which allow quick and easy access to
information on your account. In most cases, your questions can be answered by
calling us toll-free at 800-243-1574.
58
<PAGE>
PHOENIX SERIES FUND
101 Munson Street
Greenfield, Massachusetts 01301
Trustees
C. Duane Blinn
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
Philip R. Reynolds
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
Officers
Philip R. McLoughlin, President
Michael E. Haylon, Executive Vice President
David R. Pepin, Executive Vice President
William J. Newman, Senior Vice President
Michael K. Arends, Vice President
Curtiss O. Barrows, Vice President
Mary E. Canning, Vice President
John M. Hamlin, Vice President
Van Harissis, Vice President
Christopher J. Kelleher, Vice President
William R. Moyer, Vice President
C. Edwin Riley, Jr., Vice President
Amy L. Robinson, Vice President
Leonard J. Saltiel, Vice President
Dorothy J. Skaret, Vice President
James D. Wehr, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary
Investment Adviser
Phoenix Investment Counsel, Inc.
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
Transfer Agent
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Legal Counsel
Jorden, Burt, Berenson & Johnson LLP
Suite 400 East
1025 Thomas Jefferson Street, N.W.
Washington, D.C. 20007-0805
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
This report is not authorized for distribution to prospective investors in
the Phoenix Series Fund unless preceded or accompanied by an effective
Prospectus which includes information concerning the sales charge, Fund's record
and other pertinent information.
<PAGE>
Phoenix Series Fund [POSTAGE]
P.O. Box 2200 Bulk Rate Mail
Enfield, CT 06083-2200 U.S. Postage
PAID
Springfield, MA
Permit No. 444
[LOGOTYPE] PHOENIX
DUFF & PHELPS
[DALBAR LOGO]
PDP 394 (12/96)
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<GROSS-ADVISORY-FEES> 1537
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2676
<AVERAGE-NET-ASSETS> 219633
<PER-SHARE-NAV-BEGIN> 16.51
<PER-SHARE-NII> (0.13)
<PER-SHARE-GAIN-APPREC> 2.64
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> (2.16)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.84
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 072
<NAME> PHOENIX AGGRESSIVE GROWTH FUND SERIES B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 211580
<INVESTMENTS-AT-VALUE> 235296
<RECEIVABLES> 18172
<ASSETS-OTHER> 12913
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 266381
<PAYABLE-FOR-SECURITIES> 10780
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11647
<TOTAL-LIABILITIES> 22427
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 185676
<SHARES-COMMON-STOCK> 631
<SHARES-COMMON-PRIOR> 146
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 34562
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23716
<NET-ASSETS> 243954
<DIVIDEND-INCOME> 196
<INTEREST-INCOME> 659
<OTHER-INCOME> 0
<EXPENSES-NET> (2676)
<NET-INVESTMENT-INCOME> (1821)
<REALIZED-GAINS-CURRENT> 39040
<APPREC-INCREASE-CURRENT> (4197)
<NET-CHANGE-FROM-OPS> 33022
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (371)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 740
<NUMBER-OF-SHARES-REDEEMED> (277)
<SHARES-REINVESTED> 23
<NET-CHANGE-IN-ASSETS> 12859
<ACCUMULATED-NII-PRIOR> 231
<ACCUMULATED-GAINS-PRIOR> 22105
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1537
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2676
<AVERAGE-NET-ASSETS> 219633
<PER-SHARE-NAV-BEGIN> 16.38
<PER-SHARE-NII> (0.25)
<PER-SHARE-GAIN-APPREC> 2.60
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (2.16)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.57
<EXPENSE-RATIO> 1.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 051
<NAME> PHOENIX HIGH YIELD FUND SERIES A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 504397
<INVESTMENTS-AT-VALUE> 525493
<RECEIVABLES> 33565
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 559059
<PAYABLE-FOR-SECURITIES> 31112
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1087
<TOTAL-LIABILITIES> 32199
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 584843
<SHARES-COMMON-STOCK> 58078
<SHARES-COMMON-PRIOR> 62128
<ACCUMULATED-NII-CURRENT> 2038
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (81117)
<ACCUM-APPREC-OR-DEPREC> 21096
<NET-ASSETS> 526860
<DIVIDEND-INCOME> 1589
<INTEREST-INCOME> 52342
<OTHER-INCOME> 0
<EXPENSES-NET> (6212)
<NET-INVESTMENT-INCOME> 47719
<REALIZED-GAINS-CURRENT> 26433
<APPREC-INCREASE-CURRENT> 2635
<NET-CHANGE-FROM-OPS> 76787
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (46689)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8791
<NUMBER-OF-SHARES-REDEEMED> (15648)
<SHARES-REINVESTED> 2806
<NET-CHANGE-IN-ASSETS> (6590)
<ACCUMULATED-NII-PRIOR> 2426
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (83579)
<GROSS-ADVISORY-FEES> 3366
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6212
<AVERAGE-NET-ASSETS> 519768
<PER-SHARE-NAV-BEGIN> 8.17
<PER-SHARE-NII> 0.78
<PER-SHARE-GAIN-APPREC> 0.46
<PER-SHARE-DIVIDEND> (0.78)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.63
<EXPENSE-RATIO> 1.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 052
<NAME> PHOENIX HIGH YIELD FUND SERIES B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 504397
<INVESTMENTS-AT-VALUE> 525493
<RECEIVABLES> 33565
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 559059
<PAYABLE-FOR-SECURITIES> 31112
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1087
<TOTAL-LIABILITIES> 32199
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 584843
<SHARES-COMMON-STOCK> 2964
<SHARES-COMMON-PRIOR> 1506
<ACCUMULATED-NII-CURRENT> 2038
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (81117)
<ACCUM-APPREC-OR-DEPREC> 21096
<NET-ASSETS> 526860
<DIVIDEND-INCOME> 1589
<INTEREST-INCOME> 52342
<OTHER-INCOME> 0
<EXPENSES-NET> (6212)
<NET-INVESTMENT-INCOME> 47719
<REALIZED-GAINS-CURRENT> 26433
<APPREC-INCREASE-CURRENT> 2635
<NET-CHANGE-FROM-OPS> 76787
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1579)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1998
<NUMBER-OF-SHARES-REDEEMED> (617)
<SHARES-REINVESTED> 76
<NET-CHANGE-IN-ASSETS> 13264
<ACCUMULATED-NII-PRIOR> 2426
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (83579)
<GROSS-ADVISORY-FEES> 3366
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6212
<AVERAGE-NET-ASSETS> 519768
<PER-SHARE-NAV-BEGIN> 8.19
<PER-SHARE-NII> 0.71
<PER-SHARE-GAIN-APPREC> 0.45
<PER-SHARE-DIVIDEND> (0.72)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.63
<EXPENSE-RATIO> 1.92
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 081
<NAME> PHOENIX U.S.GOVT FUND SERIES A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 225705
<INVESTMENTS-AT-VALUE> 225627
<RECEIVABLES> 1470
<ASSETS-OTHER> 7
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 227104
<PAYABLE-FOR-SECURITIES> 12975
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 702
<TOTAL-LIABILITIES> 13677
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 224360
<SHARES-COMMON-STOCK> 22018
<SHARES-COMMON-PRIOR> 24567
<ACCUMULATED-NII-CURRENT> 264
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (11119)
<ACCUM-APPREC-OR-DEPREC> (78)
<NET-ASSETS> 213427
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14855
<OTHER-INCOME> 0
<EXPENSES-NET> (2353)
<NET-INVESTMENT-INCOME> 12502
<REALIZED-GAINS-CURRENT> (2718)
<APPREC-INCREASE-CURRENT> (904)
<NET-CHANGE-FROM-OPS> 8880
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (11753)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3190
<NUMBER-OF-SHARES-REDEEMED> (6420)
<SHARES-REINVESTED> 680
<NET-CHANGE-IN-ASSETS> (27327)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1016
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2353
<AVERAGE-NET-ASSETS> 225832
<PER-SHARE-NAV-BEGIN> 9.60
<PER-SHARE-NII> 0.52
<PER-SHARE-GAIN-APPREC> (0.15)
<PER-SHARE-DIVIDEND> (0.50)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.47
<EXPENSE-RATIO> 1.03
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 082
<NAME> PHOENIX U.S. GOVT FUND SERIES B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 225705
<INVESTMENTS-AT-VALUE> 225627
<RECEIVABLES> 1470
<ASSETS-OTHER> 7
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 227104
<PAYABLE-FOR-SECURITIES> 12975
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 702
<TOTAL-LIABILITIES> 13677
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 224360
<SHARES-COMMON-STOCK> 516
<SHARES-COMMON-PRIOR> 382
<ACCUMULATED-NII-CURRENT> 264
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (11119)
<ACCUM-APPREC-OR-DEPREC> (78)
<NET-ASSETS> 213427
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14855
<OTHER-INCOME> 0
<EXPENSES-NET> (2353)
<NET-INVESTMENT-INCOME> 12502
<REALIZED-GAINS-CURRENT> (2718)
<APPREC-INCREASE-CURRENT> (904)
<NET-CHANGE-FROM-OPS> 8880
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (202)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 242
<NUMBER-OF-SHARES-REDEEMED> (119)
<SHARES-REINVESTED> 12
<NET-CHANGE-IN-ASSETS> 1220
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1016
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2353
<AVERAGE-NET-ASSETS> 225832
<PER-SHARE-NAV-BEGIN> 9.58
<PER-SHARE-NII> .44
<PER-SHARE-GAIN-APPREC> (0.14)
<PER-SHARE-DIVIDEND> (0.43)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.45
<EXPENSE-RATIO> 1.78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 061
<NAME> PHOENIX MONEY MARKET FUND SERIES A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 225491
<INVESTMENTS-AT-VALUE> 225491
<RECEIVABLES> 1221
<ASSETS-OTHER> 100
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 226812
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23730
<TOTAL-LIABILITIES> 23730
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 203082
<SHARES-COMMON-STOCK> 192859
<SHARES-COMMON-PRIOR> 193534
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 203082
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11196
<OTHER-INCOME> 0
<EXPENSES-NET> (1777)
<NET-INVESTMENT-INCOME> 9419
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 9419
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9064)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1213
<NUMBER-OF-SHARES-REDEEMED> (1222)
<SHARES-REINVESTED> 8375
<NET-CHANGE-IN-ASSETS> (675)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 811
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1777
<AVERAGE-NET-ASSETS> 202759
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.47
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.47)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 062
<NAME> PHOENIX MONEY MARKET FUND SERIES B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 225491
<INVESTMENTS-AT-VALUE> 225491
<RECEIVABLES> 1221
<ASSETS-OTHER> 100
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 226812
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23730
<TOTAL-LIABILITIES> 23730
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 203802
<SHARES-COMMON-STOCK> 10223
<SHARES-COMMON-PRIOR> 8506
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 203082
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11196
<OTHER-INCOME> 0
<EXPENSES-NET> (1777)
<NET-INVESTMENT-INCOME> 9419
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 9419
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (355)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16992
<NUMBER-OF-SHARES-REDEEMED> (15557)
<SHARES-REINVESTED> 282
<NET-CHANGE-IN-ASSETS> 1717
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 811
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1777
<AVERAGE-NET-ASSETS> 202759
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.39
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.39)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
