[cover]
June 30, 1997
PHOENIX
FUNDS
SEMIANNUAL REPORT
Phoenix Strategic
Allocation Fund, Inc.
[logo] PHOENIX
DUFF & PHELPS
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PHOENIX STRATEGIC ALLOCATION FUND, INC.
INVESTOR PROFILE
Phoenix Strategic Allocation Fund, Inc. is designed for investors seeking
capital appreciation with less volatility than a general equity fund.
INVESTMENT ADVISER'S REPORT
For the six months ended June 30, 1997, Class A shares returned 10.03% and
B shares earned 9.64% compared with an average return of 10.25% for a peer
universe of 217 flexible portfolio funds, according to Lipper Analytical
Services, Inc. All figures assume reinvestment of dividends and exclude the
effect of sales charges.
As measured by the S&P 500 Index, the equity market continued its strong
performance, ending the first half of the year up 20.53%.* The combination of
moderate economic growth, low inflation, falling interest rates and high profit
growth has been the perfect environment for stocks. As a result, valuation
levels are at historically high levels, and there is little margin for further
improvement in fundamentals. Only continued positive investor sentiment and
ongoing inflows to equity mutual funds can drive the market to new highs.
The second-quarter bond market rebound more than erased first-quarter
losses. For the six months ended June 30, the market was up 3.09%, as measured
by the Lehman Brothers Aggregate Bond Index.** Favorable market conditions
prevailed during the quarter as participants benefited from lower volatility and
solid fundamental credit conditions. Fixed-income investors were rewarded for
taking incremental credit risk. The credit sensitive and mortgage sectors were
among the best performers.
The Fund's performance was helped by a relatively high equity allocation of
69.6%. An underweighting in technology, one of the best performing sectors in
the last three months, limited returns. We are currently overweighted in
large-cap technology, which is benefiting performance. Other positive
contributors include a large position in the health-care sector, primarily
pharmaceuticals and medical devices. The financial services and energy sectors
are also overweighted.
The fixed-income segment of the Fund also provided positive results as
emerging-market debt issues were among the best performers, while more
traditional sectors, such as Treasury and investment-grade issues, were among
the laggards.
OUTLOOK
We expect moderate economic growth, stable to lower interest rates and
continued low inflation. In this environment, we are focusing on companies with
the strongest earnings growth and the best earnings visibility. Our emphasis
will remain on the health-care, technology and financial services sectors.
As we move into the second half of the year, we are confident that our
duration-neutral strategy for the fixed-income portion of the Fund will insulate
it from the effects of a volatile interest rate environment. Our fixed-income
strategy continues to focus on the most undervalued bond sectors.
*The S&P 500 Index is an unmanaged, commonly used measure of stock market total
return performance.
**The Lehman Brothers Aggregate Bond Index is an unmanaged, commonly used bond
market total return performance.
1
<PAGE>
Phoenix Strategic Allocation Fund, Inc.
- --------------------------------------------------------------------------------
INVESTMENTS AT JUNE 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
---------- --------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--10.6%
U.S. Treasury Bonds--4.6%
U.S. Treasury Bonds
6.625%, '07 ................................. AAA $14,500 $14,617,813
------------
U.S. Treasury Notes--6.0%
U.S. Treasury Notes 6%,
'99 ....................................... AAA 10,100 10,083,032
U.S. Treasury Notes
6.375%, '00 (g) ........................... AAA 3,000 3,011,250
U.S. Treasury Notes 6.25%,
'02 ....................................... AAA 5,000 4,970,295
U.S. Treasury Notes 6.50%,
'06 ....................................... AAA 1,000 995,110
------------
19,059,687
------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $33,455,513) .................................... 33,677,500
------------
NON-CONVERTIBLE BONDS--4.8%
Asset-Backed Securities--0.6%
Fleetwood Credit Corp.
96-B, A 6.90%, '12 ........................ AAA 841 847,056
Green Tree Financial Corp.
96-2, M1 7.60%, '27 ........................ AA- 1,150 1,158,625
------------
2,005,681
------------
Non-Agency Mortgage-Backed Securities--4.1%
CS First Boston Mortgage
95-AE1, B 7.182%,
'27 (g) .................................... AA- 1,775 1,784,709
First Union Lehman Bros.
97-C1, B 7.43%, '29 ........................ Aa(c) 600 612,000
G.E. Capital Mortgage
Services, Inc. 96-8, M
7.25%, '26 ................................. AA 248 243,039
Nationslink Funding Corp.
96-1, B 7.69%, '05 ........................... AA 325 337,289
Residential Asset
Securitization Trust
96-A8, A1 8%, '26 ........................... AAA 831 841,590
Residential Funding
Mortgage Securities I
96-S1, A11 7.10%, '26 . AAA 1,500 1,461,094
Residential Funding
Mortgage Securities I
96-S4, M1 7.25%,
'26 (g) .................................... AA 494 482,930
Resolution Trust Corp.
93-C1, B 8.75%, '24 (g) ..................... Aa(c) 1,750 1,746,992
Resolution Trust Corp.
95-C2, B 6.80%, '27 (g) ..................... Aa(c) 973 966,926
Resolution Trust Corp.
95-2, M1 7.15%, '29 ........................ Aa(c) 1,421 1,416,419
Non-Agency Mortgage-Backed Securities--continued
Structured Asset Securities
Corp. 93-C1, B 6.60%,
'24 ....................................... A+ $ 1,275 1,219,718
Structured Asset Securities
Corp. 95-C4, B 7%,
'26 (g) .................................... AA 1,850 1,843,062
------------
12,955,768
------------
Paper & Forest Products--0.1%
Buckeye Cellulose Corp.
9.25%, '08 ................................. BB- 350 364,000
------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $15,392,293) .................. 15,325,449
------------
FOREIGN GOVERNMENT SECURITIES--3.6%
Argentina--0.7%
Republic of Argentina
Discount L-GL Euro
6.875%, '23 (e) ........................... BB 1,100 952,188
Republic of Argentina
Global Bond 11.375%,
'17 ....................................... BB 800 892,200
Republic of Argentina Par
L-GP 5.50%, '23 (e) ........................ BB 400 278,000
------------
2,122,388
------------
Brazil--0.5%
Republic of Brazil
Discount Z-L Euro
6.875%, '24 (e) ........................... BBB- 500 421,875
Republic of Brazil Par Z-L
Euro 5.25%, '24 (e) ........................ B(c) 1,900 1,292,000
------------
1,713,875
------------
Colombia--1.2%
Republic of Colombia
Yankee 7.25%, '04 ........................... BBB- 3,900 3,787,934
------------
Mexico--0.7%
United Mexican States
144A 7.875%, '01 (d)(e) ..................... BBB- 375 375,600
United Mexican States Euro
D 6.813%, '19 (e)(f) ........................ BB 1,250 1,163,281
United Mexican States
Series B Euro 6.25%,
'19 ....................................... BB 700 542,062
------------
2,080,943
------------
Venezuela--0.5%
Republic of Venezuela
Discount 6.813%,
'20 (e)(f) ................................. B+ 1,000 885,000
Republic of Venezuela Par
W-A 6.75%, '20 (f) ........................ B+ 1,000 788,125
------------
1,673,125
------------
</TABLE>
See Notes to Financial Statements
2
<PAGE>
Phoenix Strategic Allocation Fund, Inc.
- --------------------------------------------------------------------------------
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
---------- -------- ------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $10,450,143) ........................ $11,378,265
------------
FOREIGN NON-CONVERTIBLE BONDS--1.4%
Chile--0.2%
Compania Sud Amer
Vapore 7.375%, '03 ............ BBB $ 200 196,750
Petropower I Funding Trust
144A 7.36%, '14 (d) ............ BBB 500 475,855
------------
672,605
------------
Colombia--1.2%
Financiera Energ Nacional
EMTN Euro 9%, '99 (g) BBB- 3,600 3,766,500
------------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $4,382,243) ........................ 4,439,105
------------
MUNICIPAL BONDS--3.1%
California--1.7%
Kern County Pension
Obligation Taxable
7.26%, '14 ..................... AAA 1,700 1,681,266
Long Beach Pension Obligation
Taxable 6.87%, '06 ............ AAA 950 941,070
San Bernardino County
Obligation Revenue
Taxable 6.87%, '08 ............ AAA 455 445,095
San Bernardino County
Obligation Revenue
Taxable 6.94%, '09 ............ AAA 1,240 1,216,539
Ventura County Pension
Taxable 6.54%, '05 ............ AAA 1,100 1,074,392
------------
5,358,362
------------
Florida--1.4%
Miami Beach Special
Obligation Taxable
8.60%, '21 ..................... AAA 3,600 3,875,112
University of Miami
Exchangeable Revenue
Series A Taxable 7.65%,
'20 ........................... AAA 595 593,512
------------
4,468,624
------------
TOTAL MUNICIPAL BONDS
(Identified cost $10,000,840) ........................ 9,826,986
------------
SHARES
--------
COMMON STOCKS--65.9%
Aerospace & Defense--1.8%
United Technologies Corp ......... 69,900 5,801,700
-----------
Banks--4.4%
Bank of New York Co., Inc. ...... 76,700 3,336,450
BankAmerica Corp. ............... 78,000 5,035,875
Nationsbank Corp. ............... 49,100 3,166,950
Norwest Corp. .................. 41,500 2,334,375
-----------
13,873,650
-----------
SHARES VALUE
--------- -------------
Beverages--0.8%
PepsiCo, Inc. ........................... 69,700 $ 2,618,106
------------
Chemical--2.4%
Du Pont (E.I.) de Nemours & Co. ......... 45,800 2,879,675
Monsanto Co. ........................... 109,700 4,723,956
------------
7,603,631
------------
Chemical--Specialty--1.1%
Praxair, Inc. ........................... 59,400 3,326,400
------------
Computer Software & Services--2.8%
BMC Software, Inc. (b) .................. 49,300 2,729,987
Fiserv, Inc. (b) ........................ 39,800 1,776,075
HBO & Co. .............................. 36,900 2,541,488
Sungard Data Systems, Inc. (b) ......... 36,900 1,715,850
------------
8,763,400
------------
Conglomerates--2.3%
Tyco International Ltd. ............... 103,300 7,185,806
------------
Cosmetics & Soaps--2.6%
Gillette Co. ........................... 35,300 3,344,675
Procter & Gamble Co. .................. 35,700 5,042,625
------------
8,387,300
------------
Diversified Financial Services--5.5%
American Express Co. ..................... 68,400 5,095,800
Merrill Lynch & Co., Inc. ............... 30,500 1,818,563
T. Rowe Price Associates ............... 53,200 2,746,450
Travelers Group, Inc. .................. 124,500 7,851,281
------------
17,512,094
------------
Diversified Miscellaneous--1.6%
Service Corporation International ...... 151,900 4,993,713
------------
Electrical Equipment--2.0%
General Electric Co. .................. 95,600 6,249,850
------------
Electronics--5.7%
Altera Corp. (b) ........................ 58,400 2,949,200
Intel Corp. ........................... 50,400 7,147,350
LSI Logic Corp. (b) ..................... 59,900 1,916,800
Linear Technology Corp. .................. 57,800 2,991,150
Tektronix, Inc. ........................ 50,700 3,042,000
------------
18,046,500
------------
Entertainment, Leisure & Gaming--2.1%
Time Warner, Inc. ........................ 76,200 3,676,650
Walt Disney Co. ........................ 38,400 3,081,600
------------
6,758,250
------------
Healthcare--Diversified--2.1%
Bristol-Myers Squibb Co. ............... 82,000 6,642,000
------------
Healthcare--Drugs--5.4%
Amgen, Inc. (b) ........................ 115,100 6,690,188
Merck & Co., Inc. ..................... 58,800 6,085,800
Pfizer, Inc. ........................... 36,900 4,409,550
------------
17,185,538
------------
3
<PAGE>
Phoenix Strategic Allocation Fund, Inc.
- --------------------------------------------------------------------------------
SHARES VALUE
--------- -------------
Hospital Management & Services--1.8%
Health Management Association, Inc.
Class A (b) ................................. 80,700 2,299,950
Oxford Health Plans (b) ..................... 47,200 3,386,600
-------------
5,686,550
-------------
Household Furnishings & Appliances--0.8%
Newell Companies, Inc. ........................ 67,300 2,666,763
-------------
Insurance--2.3%
Allstate Corp. ................................. 44,900 3,277,700
Hartford Financial Services Group, Inc. ...... 49,000 4,054,750
-------------
7,332,450
-------------
Medical Products & Supplies--3.3%
Abbott Laboratories ........................... 49,000 3,270,750
Johnson & Johnson .............................. 49,300 3,173,688
Medtronic, Inc. .............................. 49,600 4,017,600
-------------
10,462,038
-------------
Office & Business Equipment--1.4%
Compaq Computer Corp. (b) ..................... 46,200 4,585,350
-------------
Oil--2.0%
Exxon Corp. ................................. 52,700 3,241,050
Texaco, Inc. ................................. 28,800 3,132,000
-------------
6,373,050
-------------
Oil Service & Equipment--4.3%
BJ Services Co. (b) ........................... 50,600 2,713,425
Diamond Offshore Drilling, Inc. (b) ......... 35,700 2,789,062
Halliburton Co. .............................. 52,200 4,136,850
Schlumberger Ltd. ........................... 32,300 4,037,500
-------------
13,676,837
-------------
Publishing, Broadcasting, Printing & Cable--2.3%
Clear Channels Communications, Inc. (b) ...... 59,700 3,671,550
Tribune Co. ................................. 76,600 3,681,587
-------------
7,353,137
-------------
Retail--2.9%
Borders Group, Inc. (b) ..................... 223,600 5,394,350
TJX Companies, Inc. ........................... 147,600 3,892,950
-------------
9,287,300
-------------
Retail--Drugs--0.5%
CVS Corp. .................................... 30,800 1,578,500
-------------
Tobacco--1.7%
Philip Morris Companies, Inc. ............... 120,500 5,347,187
-------------
TOTAL COMMON STOCKS
(Identified cost $194,444,318) .................. 209,297,100
-------------
FOREIGN COMMON STOCKS--3.7%
Healthcare--Drugs--1.3%
SmithKline Beecham PLC Sponsored ADR
(United Kingdom) (b) ........................ 45,300 4,150,612
-------------
Telecommunications Equipment--2.4%
OY Nokia Corp. Sponsored ADR (Finland) . 46,300 3,414,625
Telefonaktiebolaget LM Ericsson Class B
ADR (Sweden) .............................. 104,100 4,098,938
-------------
7,513,563
-------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $10,375,133) .................. 11,664,175
-------------
TOTAL LONG-TERM INVESTMENTS--93.1%
(Identified cost $278,500,483).................. 295,608,580
-------------
PAR
VALUE
(000)
--------
SHORT-TERM OBLIGATIONS--1.7%
Federal Agency Securities--1.7%
Student Loan Marketing Assoc. 6%, 7-1-97 $2,850 2,850,000
Federal Home Loan Banks 5.25%, 8-8-97
(e)(g) .............................. 2,500 2,500,975
-----------------
5,350,975
-----------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $5,350,000) ..................... 5,350,975
-----------------
TOTAL INVESTMENTS--94.8%
(Identified cost $283,850,483) .................. 300,959,555(a)
Cash and receivables, less liabilities--5.2% ... 16,665,359
-----------------
NET ASSETS--100.0% ................................. $ 317,624,914
=================
(a)Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $20,257,326 and gross
depreciation of $3,148,254 for income tax purposes. At June 30, 1997, the
aggregate cost of securities for federal income tax purposes was
$283,850,483.
(b)Non-income producing.
(c)As rated by Moody's, Fitch, or Duff & Phelps.
(d)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 June 30, 1997,
these securities amounted to a value of $851,455 or 0.3% of net assets.
(e)Variable or step coupon obligation; interest rate shown reflects the rate
currently in effect.
(f)Rights incorporated as a unit.
(g)Segregated as collateral.
4 See Notes to Financial Statements
<PAGE>
Phoenix Strategic Allocation Fund, Inc.
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
(Unaudited)
Assets
Investment securities at value
(Identified cost $283,850,483) $300,959,555
Short-term investments held as collateral
for loaned securities 14,083,438
Cash 112
Receivables
Investment securities sold 37,145,931
Fund shares sold 84,970
Interest and dividends 1,032,983
-------------
Total assets 353,306,989
-------------
Liabilities
Payables
Investment securities purchased 18,067,777
Collateral on securities loaned 14,083,438
Fund shares repurchased 3,023,513
Investment advisory fee 170,877
Transfer agent fee 101,835
Distribution fee 71,998
Financial agent fee 12,161
Directors' fee 1,818
Accrued expenses 148,658
-------------
Total liabilities 35,682,075
-------------
Net Assets $317,624,914
=============
Net Assets Consist of:
Capital paid in on shares of common stock $274,376,194
Undistributed net investment loss (99,468)
Accumulated net realized gain 26,239,116
Net unrealized appreciation 17,109,072
-------------
Net Assets $317,624,914
=============
Class A
Shares of common stock, $1 par value,
50,000,000 shares authorized
(Net Assets $307,358,600) 18,426,552
Net asset value per share $16.68
Offering price per share
$16.68/(1-4.75%) $17.51
Class B
Shares of common stock, $1 par value,
50,000,000 shares authorized
(Net Assets $10,266,314) 619,229
Net asset value and offering price per share $16.58
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(Unaudited)
Investment Income
Interest $ 3,979,952
Dividends 1,048,566
Security lending 23,781
-----------
Total investment income 5,052,299
-----------
Expenses
Investment advisory fee 1,032,543
Distribution fee--Class A 384,845
Distribution fee--Class B 49,147
Financial agent fee 73,442
Transfer agent 281,895
Printing 52,617
Registration 27,183
Professional 22,162
Custodian 14,554
Directors 12,573
Miscellaneous 16,178
-----------
Total expenses 1,967,139
-----------
Net investment income 3,085,160
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 26,451,404
Net realized loss on written options (205,711)
Net realized gain on foreign currency transactions 195
Net change in unrealized appreciation (depreciation)
on investments 1,311,409
-----------
Net gain on investments 27,557,297
-----------
Net increase in net assets resulting from
operations $30,642,457
===========
See Notes to Financial Statements
5
<PAGE>
Phoenix Strategic Allocation Fund, Inc.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
--------------- ------------------
<S> <C> <C>
From Operations
Net investment income $ 3,085,160 $ 6,069,898
Net realized gain 26,245,888 32,225,004
Net change in unrealized appreciation (depreciation) 1,311,409 (9,313,255)
------------- -------------
Increase in net assets resulting from operations 30,642,457 28,981,647
------------- -------------
From Distributions to Shareholders
Net investment income--Class A (3,550,882) (5,622,283)
Net investment income--Class B (82,049) (90,090)
Net realized gains--Class A (3,782,943) (29,211,894)
Net realized gains--Class B (125,914) (899,061)
------------- -------------
Decrease in net assets from distributions to shareholders (7,541,788) (35,823,328)
------------- -------------
From Share Transactions
Class A
Proceeds from sales of shares (351,297 and 918,493 shares, respectively) 5,727,609 14,942,495
Net asset value of shares issued from reinvestment of distributions
(367,033 and 1,918,313 shares, respectively) 6,195,519 30,240,866
Cost of shares repurchased (2,244,858 and 5,512,257 shares, respectively) (36,637,796) (90,484,207)
------------- -------------
Total (24,714,668) (45,300,846)
------------- -------------
Class B
Proceeds from sales of shares (47,372 and 168,248 shares, respectively) 767,963 2,738,747
Net asset value of shares issued from reinvestment of distributions
(11,060 and 55,850 shares, respectively) 185,699 875,001
Cost of shares repurchased (60,898 and 108,645 shares, respectively) (986,512) (1,770,975)
------------- -------------
Total (32,850) 1,842,773
------------- -------------
Decrease in net assets from share transactions (24,747,518) (43,458,073)
------------- -------------
Net decrease in net assets (1,646,849) (50,299,754)
Net Assets
Beginning of period 319,271,763 369,571,517
------------- -------------
End of period (including undistributed net investment income (loss) of ($99,468) and
$448,303, respectively) $317,624,914 $ 319,271,763
============= =============
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Phoenix Strategic Allocation Fund, Inc.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
--------------------------------------------
Six Months
Ended
6/30/97 Year Ended December 31,
(Unaudited) 1996 1995
---------------- ----------- ---------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 15.52 $ 15.98 $ 14.82
Income from investment operations
Net investment income 0.17 0.31 0.45
Net realized and unrealized gain (loss) 1.40 1.10 2.22
------------- --------- ----------
Total from investment operations 1.57 1.41 2.67
------------- --------- ----------
Less distributions
Dividends from net investment income (0.20) (0.29) (0.52)
Dividends from net realized gains (0.21) (1.58) (0.99)
------------- --------- ----------
Total distributions (0.41) (1.87) (1.51)
------------- --------- ----------
Change in net asset value 1.16 (0.46) 1.16
------------- --------- ----------
Net asset value, end of period $ 16.68 $ 15.52 $ 15.98
============= ========= ==========
Total return(1) 10.03%(4) 8.78% 18.23%
Ratios/supplemental data:
Net assets, end of period (thousands) $ 307,359 $309,678 $ 361,526
Ratio to average net assets of:
Operating expenses 1.22%(3) 1.21% 1.21%
Net investment income 1.97%(3) 1.78% 2.67%
Portfolio turnover 239%(4) 275% 184%
Average commission rate paid(5) $ 0.0554 $ 0.0529 N/A
<CAPTION>
1994 1993 1992
------------------- -------------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 15.48 $ 14.89 $ 15.22
Income from investment operations
Net investment income 0.34 0.06(2) 0.24
Net realized and unrealized gain (loss) (0.69) 1.49 1.32
------------ ---------- --------
Total from investment operations (0.35) 1.55 1.56
------------ ---------- --------
Less distributions
Dividends from net investment income (0.31) (0.11) (0.25)
Dividends from net realized gains (0.001) (0.85) (1.64)
------------ ---------- --------
Total distributions (0.311) (0.96) (1.89)
------------ ---------- --------
Change in net asset value (0.66) 0.59 (0.33)
------------ ---------- --------
Net asset value, end of period $ 14.82 $ 15.48 $ 14.89
============ ========== ========
Total return(1) (2.26)% 10.49% 10.32%
Ratios/supplemental data:
Net assets, end of period (thousands) $ 335,177 $ 370,440 $ 58,006
Ratio to average net assets of:
Operating expenses 1.24% 1.29% 1.36%
Net investment income 2.18% 1.26% 2.06%
Portfolio turnover 225% 246% 322%
Average commission rate paid(5) N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class B
------------------------------------------------------------
Six Months From
Ended Inception
6/30/97 Year Ended December 31, 10/24/94 to
(Unaudited) 1996 1995 12/31/94
------------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.43 $ 15.89 $ 14.79 $ 14.98
Income from investment operations
Net investment income 0.10 0.19 0.30(2) 0.07
Net realized and unrealized gain (loss) 1.40 1.09 2.22 (0.09)
------------- --------- ---------- ------------
Total from investment operations 1.50 1.28 2.52 (0.02)
------------- --------- ---------- ------------
Less distributions
Dividends from net investment income (0.14) (0.16) (0.43) (0.17)
Dividends from net realized gains (0.21) (1.58) (0.99) --
------------- --------- ---------- ------------
Total distributions (0.35) (1.74) (1.42) (0.17)
------------- --------- ---------- ------------
Change in net asset value 1.15 (0.46) 1.10 (0.19)
------------- --------- ---------- ------------
Net asset value, end of period $ 16.58 $ 15.43 $ 15.89 $ 14.79
============= ========= ========== ============
Total return(1) 9.64%(4) 7.95% 17.31% (0.12)%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 10,266 $ 9,594 $ 8,046 $ 1,328
Ratio to average net assets of:
Operating expenses 1.97%(3) 1.96% 1.97% 2.26% (3)
Net investment income 1.22%(3) 1.01% 1.88% 1.74% (3)
Portfolio turnover 239%(4) 275% 184% 225%
Average commission rate paid(5) $ 0.0554 $ 0.0529 N/A N/A
</TABLE>
(1) Maximum sales load is not reflected in total return calculation.
(2) Computed using average shares outstanding.
(3) Annualized
(4) Not annualized
(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
7
<PAGE>
PHOENIX STRATEGIC ALLOCATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 (Unaudited)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Strategic Allocation Fund, Inc. ("the Fund") is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment objective is to achieve the
highest total return consistent with reasonable risk by investing in stocks,
bonds and money market instruments. The Fund 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 the Fund 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 Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
A. Security valuation:
Equity securities are valued at the last sale price, or if there had been
no sale that day, at the last bid price. Debt securities are valued on the basis
of broker quotations or valuations provided by a pricing service which utilizes
information with respect to recent sales, market transactions in comparable
securities, quotations from dealers, and various relationships between
securities in determining value. Short-term investments having a remaining
maturity of 60 days or less are valued at amortized cost which approximates
market. All other securities and assets are valued at fair value as determined
in good faith by or under the direction of the Directors.
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 Fund is notified. Interest income is recorded on the accrual
basis. The Fund does not amortize premiums but does amortize discounts using the
effective interest method. Realized gains or losses are determined on the
identified cost basis.
C. Income taxes:
It is the policy of the Fund 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, the Fund intends to distribute an amount sufficient to avoid the
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 to shareholders are recorded 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.
E. Foreign currency translation:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange rates
between the trade and settlement dates of a portfolio transaction is treated as
a gain or loss on foreign currency. Likewise, the gain or loss resulting from a
change in currency exchange rates between the date income is accrued and paid is
treated as a gain or loss on foreign currency. The Fund 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.
8
<PAGE>
PHOENIX STRATEGIC ALLOCATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 (Unaudited) (Continued)
F. Options:
The Fund may write covered options or purchase options contracts for the
purpose of hedging against changes in the market value of the underlying
securities or foreign currencies.
The Fund will realize a gain or loss upon the expiration or closing of the
option transaction. Gains and losses on written options are reported separately
in the Statement of Operations. When a written option is exercised, the proceeds
on sales or amounts paid are adjusted by the amount of premium received. Options
written are reported as a liability in the Statement of Assets and Liabilities
and subsequently marked-to-market to reflect the current value of the option.
The risk associated with written options is that the change in value of options
contracts may not correspond to the change in value of the hedged instruments.
In addition, losses may arise from changes in the value of the underlying
instruments, or if a liquid secondary market does not exist for the contracts.
The Fund may purchase options which are included in the Fund's Schedule of
Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
G. Loan agreements:
The Fund may invest in direct debt instruments which are interests in
amounts owned by a corporate, governmental, or other borrower to lenders or
lending syndicates. The Fund's investments in loans may be in the form of
participations in loans or assignments of all or a portion of loans from third
parties. A loan is often administered by a bank or other financial institution
(the lender) that acts as agent for all holders. The agent administers the terms
of the loan, as specified in the loan agreement. When investing in a loan
participation, the Fund has the right to receive payments of principal, interest
and any fees to which it is entitled only from the lender selling the loan
agreement and only upon receipt by the lender of payments from the borrower. The
Fund generally has no right to enforce compliance with the terms of the loan
agreement with the borrower. As a result, the Fund may be subject to the credit
risk of both the borrower and the lender that is selling the loan agreement.
When the Fund purchases assignments from lenders it acquires direct rights
against the borrower on the loan. Direct indebtedness of emerging countries
involves a risk that the government entities responsible for the repayment of
the debt may be unable, or unwilling to pay the principal and interest when due.
H. Security lending:
The Fund loans securities to qualified brokers through an agreement with
State Street Bank and Trust Company (State Street). Under the terms of the
agreement, the Fund receives collateral with a market value not less than 100%
of the market value of loaned securities. 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 Fund net of fees
charged by State Street 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 June
30, 1997, the Fund had loaned securities with a market value of $13,719,623 and
received collateral of $14,083,438.
NOTE 2. INVESTMENT ADVISORY FEES AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Fund, the Investment Adviser,
Phoenix Investment Counsel, Inc., an indirect majority-owned subsidiary of
Phoenix Home Life Mutual Insurance Company ("PHL"), is entitled to a fee at an
annual rate of 0.65% of the average daily net assets of the Fund for the first
$1 billion.
As Distributor of the Fund's shares, Phoenix Equity Planning Corp.
("PEPCO"), an indirect majority-owned subsidiary of PHL, has advised the Fund
that it retained net selling commissions of $8,467 for Class A shares and
deferred sales charges of $28,036 for Class B shares for the six months ended
June 30, 1997. In addition, the Fund pays PEPCO a distribution fee at an annual
rate of 0.25% for Class A shares and 1.00% for Class B shares of the average
daily net assets of the Fund. The Distributor has advised the Fund that of the
total amount expensed for the six months ended June 30, 1997, $105,932 was
retained by the Distributor, $304,141 was paid to unaffiliated participants and
$23,919 was paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent of the Fund, PEPCO receives a fee for bookkeeping,
administration, and pricing services at an annual rate of 0.03% of the average
daily net assets of the Fund through December 31, 1996, and starting on
9
<PAGE>
PHOENIX STRATEGIC ALLOCATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 (Unaudited) (Continued)
January 1, 1997, at an annual rate of 0.05% of average daily net assets up to
$100 million, 0.04% of average daily net assets of $100 million to $300 million,
0.03% of average daily net assets of $300 million through $500 million, and
0.015% of average daily net assets greater than $500 million; a minimum fee may
apply. PEPCO serves as the Fund's Transfer Agent with State Street Bank and
Trust Company as sub-transfer agent. For the six months ended June 30, 1997,
transfer agent fees were $281,895 of which PEPCO retained $101,898 which is net
of the fees paid to State Street.
At June 30, 1997, PHL and affiliates held 50 Class A shares and 8,444 Class
B shares of the Fund with a combined value of $140,845.
NOTE 3. PURCHASES AND SALES OF SECURITIES
During the six months ended June 30, 1997, purchases and sales of
investments, excluding short-term securities and U.S. Government and agency
securities, amounted to $516,436,359 and $566,355,231, respectively. Purchases
and sales of long-term U.S. Government and agency securities amounted to
$72,742,630 and $48,465,687, respectively.
Written option activity for the six months ended June 30, 1997 aggregated
the following:
Call Options
----------------------------
Number of Amount
Options of Premiums
----------- ----------------
Options outstanding at
December 31, 1996 -- $ --
Options written 4,595 1,357,023
Options canceled in closing purchase
transactions (4,445) (1,317,162)
Options expired -- --
Options exercised (150) (39,861)
-------- -------------
Options outstanding at
June 30, 1997 -- $ --
======== =============
10
<PAGE>
PHOENIX STRATEGIC ALLOCATION FUND, INC.
101 Munson Street
Greenfield, Massachusetts 01301
Directors
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
Mary E. Canning, Vice President
William E. Keen, III, Vice President
William R. Moyer, Vice President
Leonard J. Saltiel, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary and Clerk
Investment Adviser
Phoenix Investment Counsel, Inc.
56 Prospect St.
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, Connecticut 06083-2200
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
This report is not authorized for distribution to prospective investors in the
Phoenix Strategic Allocation Fund, Inc. unless preceded or accompanied by an
effective prospectus which includes information concerning the sales charge, the
Fund's record and other pertinent information.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[back cover]
Phoenix Strategic Allocation Fund, Inc.
PO Box 2200
Enfield CT 06083-2200
[indicia]
BULK RATE MAIL
U.S. POSTAGE
PAID
SPRINGFIELD, MA
PERMIT NO. 444
[logo] PHOENIX
DUFF & PHELPS
PDP 462 (8/97)
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