[COVER]
SEMIANNUAL REPORT
PHOENIX
THE PHOENIX EDGE SERIES FUND
June 30, 1997
[LOGO] PHOENIX
<PAGE>
THIS PAGE LEFT INTENTIONALLY BLANK.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Phoenix Money Market Series .................. 2
Phoenix Growth Series ........................ 7
Phoenix Multi-Sector Fixed Income Series ...... 12
Phoenix Strategic Allocation Series ............ 18
Phoenix International Series .................. 24
Phoenix Balanced Series ........................ 30
Phoenix Real Estate Securities Series ......... 36
Phoenix Strategic Theme Series ............... 40
Phoenix Aberdeen New Asia Series ............... 45
Notes to Financial Statements .................. 50
</TABLE>
<PAGE>
MONEY MARKET SERIES
INVESTMENT REVIEW
Phoenix Edge Money Market Series continued to perform well during this
six-month reporting period. As of June 30, 1997, the seven-day current yield
was 5.13% compared with the 4.97% IBC Money Fund Average as reported in IBC's
Money Fund Report.* Current yield is a seven-day annualized yield computed by
dividing the average net income earned per share during the seven days
preceding the date of calculation by the average daily net asset value per
share for the same period, multiplied by 365.
The fixed-income market experienced significant swings in interest rates
during the first half of 1997. The first quarter was dominated by strong
economic growth, strong payroll numbers and strong consumer confidence data.
The Federal Reserve's decision to tighten monetary policy in late March was
long-awaited and much debated. In the second quarter economic releases began to
support a slower growth scenario, while the inflation environment remained
contained. High cash levels in the short-term market and lack of new issues, as
well as the unlikelihood of a further Fed tightening of monetary policy, caused
interest rates to fall.
The Fund's average maturity was kept slightly shorter during the first
three months of the year as a defensive strategy. In the second quarter, we
gradually lengthened the average maturity to neutral so that the Fund would be
well-positioned should rates move in either direction. We continued to
emphasize high-quality commercial paper and variable-rate instruments to
enhance yield. The average credit quality remains A1/P1.
OUTLOOK
Looking forward, we continue to anticipate a volatile fixed-income market.
Recent economic data has supported a slowdown in activity, but many key areas
remain quite strong. Resurgence of economic activity, especially in
consumer-related segments, is likely to place the market on alert for higher
interest rates.
Our emphasis will continue to be credit quality, focusing on higher
yielding issues, such as commercial paper and variable-rate instruments. Given
the uncertainty in the market, we will maintain a neutral position and be
monitoring any movement in rates or shifts in yield spreads to identify
attractive trading opportunities.
*The IBC Money Fund Average is an average of "first tier" taxable money-market
funds as reported in IBC's Money Fund Report.
2
<PAGE>
MONEY MARKET SERIES
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
FACE
VALUE INTEREST MATURITY
(000) DESCRIPTION RATE DATE VALUE
- --------------------------------- ------------------------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
FEDERAL AGENCY SECURITIES--7.2%
$1,500 Federal Home Loan Banks ...... 5.69% 11/20/97 $ 1,500,000
3,000 Federal Home Loan Banks ...... 5.78 01/28/98 3,000,000
2,000 Federal Home Loan Banks ...... 5.79 01/28/98 2,000,000
2,500 Student Loan Marketing Assoc. 6.00 06/30/98 2,500,000
------------
TOTAL FEDERAL AGENCY SECURITIES ............................................................ 9,000,000
------------
RESET
DATE
-------
FEDERAL AGENCY SECURITIES--VARIABLE (b)--13.0%
3,500 Federal Farm Credit Banks (final 5.41 07/01/97 3,500,000
maturity 4/1/99)
4,500 Federal Farm Credit Banks (final 5.79 07/01/97 4,501,555
maturity 7/24/00)
1,600 Student Loan Marketing Assoc. 5.24 07/01/97 1,600,293
(final maturity 10/30/97)
1,500 Student Loan Marketing Assoc. 5.26 07/01/97 1,498,924
(final maturity 11/10/98)
2,500 Student Loan Marketing Assoc. 5.24 07/01/97 2,500,000
(final maturity 11/24/97)
1,000 Student Loan Marketing Assoc. 5.27 07/01/97 1,000,000
(final maturity 2/22/99)
1,650 Federal National Mortgage Assoc. 5.29 09/14/97 1,648,685
(final maturity 12/14/98) ------------
TOTAL FEDERAL AGENCY SECURITIES--VARIABLE 16,249,457
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S MATURITY
RATING DATE
---------- ----------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER--79.4%
$2,000 AlliedSignal, Inc. ........................... A-1 5.70 07/01/97 2,000,000
1,500 Asset Securitization Cooperative Corp. ...... A-1+ 5.62 07/01/97 1,500,000
2,800 Donnelley (R.R.) & Sons Co. .................. A-1 6.25 07/01/97 2,800,000
3,030 International Lease Finance Corp. ............ A-1 5.54 07/03/97 3,029,067
435 AlliedSignal, Inc. ........................... A-1 5.52 07/07/97 434,600
1,765 AlliedSignal, Inc. ........................... A-1 5.56 07/07/97 1,763,364
2,500 Donnelley (R.R.) & Sons Co. .................. A-1 5.52 07/07/97 2,497,700
1,815 Southwestern Bell Telephone Co. ............ A-1+ 5.50 07/07/97 1,813,336
1,507 Southwestern Bell Telephone Co. ............ A-1+ 5.53 07/07/97 1,505,611
2,000 Warner-Lambert Co. ........................... A-1+ 5.50 07/07/97 1,998,167
515 Warner-Lambert Co. ........................... A-1+ 5.55 07/07/97 514,524
210 Du Pont (E.I.) de Nemours & Co. ............ A-1+ 5.60 07/08/97 209,771
2,000 Goldman Sachs & Co. ........................ A-1+ 5.65 07/08/97 1,997,803
560 Du Pont (E.I.) de Nemours & Co. ............ A-1+ 5.52 07/09/97 559,313
225 Pitney Bowes Credit Corp. .................. A-1+ 5.60 07/09/97 224,720
1,850 Preferred Receivables Funding Corp. ......... A-1 5.65 07/09/97 1,847,677
750 Coca-Cola Co. .............................. A-1+ 5.50 07/10/97 748,969
1,500 Corporate Asset Funding Co., Inc. ............ A-1+ 5.60 07/10/97 1,497,900
400 Du Pont (E.I.) de Nemours & Co. ............ A-1+ 5.55 07/10/97 399,445
1,000 Beta Finance, Inc. ........................... A-1+ 5.60 07/11/97 998,444
2,500 Cargill, Inc. .............................. A-1+ 5.54 07/14/97 2,494,999
1,800 Heinz (H.J.) Co. ........................... A-1 5.60 07/14/97 1,796,360
750 Preferred Receivables Funding Corp. ......... A-1 5.57 07/14/97 748,491
1,655 Private Export Funding Corp. ............... A-1+ 5.35 07/14/97 1,651,695
1,295 Private Export Funding Corp. ............... A-1+ 5.56 07/14/97 1,292,400
1,500 Exxon Imperial U.S., Inc. .................. A-1+ 5.55 07/15/97 1,496,763
1,000 Greenwich Funding Corp. ..................... A-1+ 5.58 07/15/97 997,830
970 Receivables Capital Corp. .................. A-1 5.57 07/15/97 967,899
2,275 Potomac Electric Power Co. .................. A-1 5.52 07/17/97 2,269,419
1,000 Asset Securitization Cooperative Corp. ...... A-1+ 5.57 07/18/97 997,370
2,970 Merrill Lynch & Co., Inc. .................. A-1+ 5.55 07/18/97 2,962,216
600 Receivables Capital Corp. .................. A-1 5.56 07/18/97 598,425
500 Corporate Receivables Corp. .................. A-1 5.67 07/21/97 498,425
3,500 General Electric Capital Corp. ............... A-1+ 5.55 07/22/97 3,500,000
2,000 Asset Securitization Cooperative Corp. ...... A-1+ 5.55 07/25/97 1,992,600
4,380 Private Export Funding Corp. ............... A-1+ 5.61 07/28/97 4,361,571
2,000 General Electric Capital Corp. ............... A-1+ 5.55 07/29/97 2,000,000
1,000 Greenwich Funding Corp. ..................... A-1+ 5.58 07/31/97 995,350
400 Enterprise Funding Corp. ..................... A-1+ 5.58 08/01/97 398,078
2,000 Preferred Receivables Funding Corp. ......... A-1 5.58 08/04/97 1,989,460
1,640 Ciesco L.P. ................................. A-1+ 5.60 08/05/97 1,631,071
1,500 Receivables Capital Corp. .................. A-1 5.62 08/08/97 1,491,102
1,000 Beta Finance, Inc. ........................... A-1+ 5.80 08/14/97 1,000,000
600 Preferred Receivables Funding Corp. ......... A-1 5.60 08/14/97 595,893
</TABLE>
See Notes to Financial Statements
3
<PAGE>
MONEY MARKET SERIES
<TABLE>
<CAPTION>
FACE STANDARD
VALUE & POOR'S INTEREST MATURITY
(000) DESCRIPTION RATING RATE DATE VALUE
- ----------------------------- -------------------------------------------- ---------- ---------- ---------- ---------------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER--continued
$2,000 Corporate Receivables Corp. ............... A-1 5.68% 08/18/97 $ 1,984,853
250 Enterprise Funding Corp. .................. A-1+ 5.71 08/20/97 248,017
2,125 Beta Finance, Inc. ........................ A-1+ 5.30 08/26/97 2,107,481
3,000 Pitney Bowes Credit Corp. ............... A-1+ 5.60 08/27/97 2,973,400
1,000 Cargill, Inc. ........................... A-1+ 5.38 09/03/97 990,436
1,900 CXC, Inc. ................................. A-1+ 5.60 09/10/97 1,879,016
1,135 Beta Finance, Inc. ........................ A-1+ 5.67 09/12/97 1,121,950
1,500 Schering Corp. ........................... A-1+ 5.65 09/16/97 1,481,873
2,410 Greenwich Funding Corp. .................. A-1+ 5.60 09/22/97 2,378,884
1,750 Greenwich Funding Corp. .................. A-1+ 5.65 09/22/97 1,727,204
1,500 Corporate Asset Funding Co. Inc. ......... A-1+ 5.75 10/08/97 1,476,281
3,000 Goldman Sachs & Co. ..................... A-1+ 5.61 10/09/97 2,953,250
1,000 Corporate Receivables Corp. ............... A-1 5.75 10/24/97 981,632
1,000 Beta Finance, Inc. ........................ A-1+ 5.65 10/27/97 981,481
500 Preferred Receivables Funding Corp. ...... A-1 5.80 11/03/97 489,931
2,000 Enterprise Funding Corp. .................. A-1+ 5.73 11/13/97 1,957,025
2,000 Corporate Receivables Corp. ............... A-1 5.35 11/14/97 1,959,578
1,000 Pitney Bowes Credit Corp. ............... A-1+ 5.65 11/17/97 978,185
1,428 Enterprise Funding Corp. .................. A-1+ 5.71 11/25/97 1,394,705
2,000 Enterprise Funding Corp. .................. A-1+ 5.69 02/27/98 1,923,816
-----------------
TOTAL COMMERCIAL PAPER ................................................................................. 99,056,826
-----------------
TOTAL INVESTMENTS--99.6%
(Identified cost $124,306,283) ........................................................................ 124,306,283(a)
Cash and receivables, less liabilities--0.4% ......................................................... 428,237
-----------------
NET ASSETS--100.0% .................................................................................... $ 124,734,520
=================
</TABLE>
(a) Federal Income Tax Information: At June 30, 1997, the aggregate cost of
securities was the same for book and tax purposes.
(b) Variable rate demand notes. The interest rates shown reflect the rate
currently in effect. The maturity dates shown reflect the next interest rate
reset dates.
See Notes to Financial Statements
4
<PAGE>
MONEY MARKET SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Assets
Investment securities at value (Identified cost $124,306,283) ..................... $124,306,283
Cash ........................................................................... 494,223
Receivables
Interest ........................................................................ 380,795
-------------
Total assets .................................................................. 125,181,301
-------------
Liabilities
Payables
Fund shares repurchased ......................................................... 352,322
Investment advisory fee ......................................................... 40,919
Financial agent fee ............................................................ 6,138
Trustees' fee .................................................................. 3,887
Accrued expenses ............................................................... 43,515
-------------
Total liabilities ............................................................ 446,781
-------------
Net Assets ..................................................................... $124,734,520
=============
Net Assets Consist of:
Capital paid in on shares of beneficial interest .............................. $124,734,517
Undistributed net investment income ............................................. 3
-------------
Net Assets ..................................................................... $124,734,520
=============
Shares of beneficial interest outstanding, $1 par value, unlimited authorization .. 12,473,451
=============
Net asset value and offering price per share .................................... $10.00
=============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Investment Income
Interest ................................................ $ 3,487,254
------------
Total investment income ................................. 3,487,254
------------
Expenses
Investment advisory fee ................................. 251,344
Financial agent fee ....................................... 37,702
Printing ................................................ 14,400
Professional ............................................. 11,389
Trustees ................................................ 9,872
Custodian ................................................ 8,200
Miscellaneous ............................................. 3,782
------------
Total expenses .......................................... 336,689
------------
Net investment income .................................... 3,150,565
------------
Net increase in net assets resulting from operations ...... $ 3,150,565
============
</TABLE>
See Notes to Financial Statements
5
<PAGE>
MONEY MARKET SERIES
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 ......................................................... $ 3,150,565 $ 5,274,565
-------------- --------------
Net increase in net assets resulting from operations ........................... 3,150,565 5,274,565
-------------- --------------
From Distributions to Shareholders
Net investment income ......................................................... (3,150,565) (5,303,654)
-------------- --------------
Decrease in net assets from distributions to shareholders ..................... (3,150,565) (5,303,654)
-------------- --------------
From Share Transactions
Proceeds from sales of shares (16,252,189 and 31,500,976 shares, respectively) 162,521,888 315,009,761
Net asset value of shares issued from reinvestment of distributions
(315,056 and 530,365 shares, respectively) .................................... 3,150,565 5,303,654
Cost of shares repurchased (17,229,932 and 29,186,637 shares, respectively) ... (172,299,339) (291,866,357)
-------------- --------------
Increase (decrease) in net assets from share transactions ..................... (6,626,886) 28,447,058
-------------- --------------
Net increase (decrease) in net assets .......................................... (6,626,886) 28,417,969
Net Assets
Beginning of period ............................................................ 131,361,406 102,943,437
-------------- --------------
End of period (including undistributed net investment income of $3 and
$3, respectively) ............................................................ $ 124,734,520 $ 131,361,406
============== ==============
</TABLE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Six Months
Ended
6/30/97
(Unaudited)
----------------
<S> <C>
Net asset value, beginning of period ......... $ 10.00
Income from investment operations
Net investment income ..................... 0.25
----------
Total from investment operations ......... 0.25
----------
Less distributions
Dividends from net investment income ...... (0.25)
----------
Total distributions ..................... (0.25)
----------
Net asset value, end of period ............... $ 10.00
==========
Total return ................................. 2.48%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $ 124,735
Ratio to average net assets of:
Operating expenses ........................ 0.54%(3)
Net investment income ..................... 5.01%(3)
<CAPTION>
Year ended December 31,
1996 1995 1994 1993 1992
------------ --------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
Income from investment operations
Net investment income ..................... 0.50 0.56 0.38(1) 0.28(1) 0.35
-------- ---------- --------- --------- --------
Total from investment operations ......... 0.50 0.56 0.38 0.28 0.35
-------- ---------- --------- --------- --------
Less distributions
Dividends from net investment income ...... (0.50) (0.56) (0.38) (0.28) (0.35)
-------- ---------- --------- --------- --------
Total distributions ..................... (0.50) (0.56) (0.38) (0.28) (0.35)
-------- ---------- --------- --------- --------
Net asset value, end of period ............... $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
======== ========== ========= ========= ========
Total return ................................. 4.98% 5.55% 3.77% 2.80% 3.50%
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $131,361 $ 102,943 $ 94,586 $ 72,946 $ 69,962
Ratio to average net assets of:
Operating expenses ........................ 0.55% 0.53%(2) 0.55% 0.55% 0.50%
Net investment income ..................... 4.89% 5.57% 3.85% 2.84% 3.49%
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.003 and $0.01 per share, respectively.
(2) The ratio of operating expenses to average net assets excludes the effect
of expense offsets for custodian fees; if expense offsets were included,
the ratio would not significantly differ.
(3) Annualized
(4) Not annualized
See Notes to Financial Statements
6
<PAGE>
GROWTH SERIES
INVESTMENT REVIEW
For the six months ended June 30, 1997, Phoenix Edge Growth Series
returned 9.81% compared with a return of 13.85% for a peer group of 684 growth
funds in the variable annuity category, according to Lipper Analytical
Services, Inc. The S&P 500 Stock Index* was up 20.53% over the same period. All
performance figures assume reinvestment of dividends and exclude the effect of
sales charges.
The strong performance of market indices, such as the S&P 500, continued
over the reporting period--a result of the narrowing that has occurred in the
market as an ever decreasing group of large-capitalization companies drove
index performance while the majority of stocks lagged. This trend has been
fueled, in large part, by investor concerns over the sustainability of
corporate earnings trends as well as uncertainty over the direction of interest
rates.
The market's focus on larger companies has detracted from the Fund's
relative performance. While many large-cap stocks are held in the portfolio,
the Fund also contains many mid-cap stocks with rapid growth prospects, which
the market has yet to recognize.
Over the reporting period, the Fund benefited from holdings in steady
growth sectors, such as consumer staples, financial services and health-care.
Our holdings in technology and other economically sensitive areas, including
basic materials and capital goods, held back performance. Energy stocks had
mixed results, beginning the period with a strong surge, then weakening in the
poor seasonal February and March time frame, before rallying during the second
quarter.
OUTLOOK
Looking ahead, we believe that the equity market will continue to be
buffeted by increased volatility. As the economy matures, the ability of
companies to generate abundant earnings growth will become more difficult.
The Fund's goal is to invest in companies that can continue to exhibit
relatively strong growth in a more challenging environment. We believe good
growth trends are available in health-care, financial services and technology
and have overweighted the portfolio in these sectors. We have also added
selected consumer staples stocks.
* The S&P 500 Stock Index is an unmanaged, commonly used measure of total
return stock performance.
7
<PAGE>
GROWTH SERIES
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
----------- ---------------
<S> <C> <C>
COMMON STOCKS--81.4%
Banks--4.5%
Ahmanson (H.F.) & Co. ........................ 464,400 $ 19,969,200
Banc One Corp. ................................. 298,000 14,434,375
Chase Manhattan Corp. ........................ 190,300 18,470,994
Republic New York Corp. ........................ 79,800 8,578,500
---------------
61,453,069
---------------
Chemical--Specialty--1.0%
Praxair, Inc. ................................. 247,900 13,882,400
---------------
Computer Software & Services--1.5%
Adaptec, Inc. (b) .............................. 333,300 11,582,175
HBO & Co. .................................... 130,900 9,015,737
Sterling Commerce, Inc. (b) .................. 1 33
---------------
20,597,945
---------------
Conglomerates--2.0%
Tyco International Ltd. ........................ 385,700 26,830,256
---------------
Cosmetics & Soaps--2.2%
Colgate-Palmolive Co. ........................ 463,000 30,210,750
---------------
Diversified Financial Services--4.0%
American Express Co. ........................... 229,400 17,090,300
Conseco, Inc. ................................. 1,025,700 37,950,900
---------------
55,041,200
---------------
Electronics--1.7%
Intel Corp. .................................... 167,600 23,767,775
---------------
Healthcare--Diversified--1.2%
American Home Products Corp. .................. 210,600 16,110,900
---------------
Healthcare--Drugs--3.6%
Eli Lilly & Co. .............................. 219,800 24,026,888
Pfizer, Inc. ................................. 213,300 25,489,350
---------------
49,516,238
---------------
Hospital Management & Services--6.7%
Genesis Health Ventures, Inc. (b) ............ 386,500 13,044,375
Health Management Association, Inc. Class A (b) 316,200 9,011,700
HEALTHSOUTH Corp. (b) ........................ 944,100 23,543,494
Oxford Health Plans (b) ........................ 257,400 18,468,450
Pacificare Health Systems, Inc. Class B (b) ... 97,900 6,253,362
Tenet Healthcare Corp. (b) ..................... 738,400 21,828,950
---------------
92,150,331
---------------
Insurance--3.9%
Aetna, Inc. .................................... 364,600 37,325,925
Allstate Corp. ................................. 212,400 15,505,200
---------------
52,831,125
---------------
Lodging & Restaurants--1.1%
Wendy's International, Inc. .................. 588,800 15,272,000
---------------
Medical Products & Supplies--2.6%
Johnson & Johnson .............................. 555,500 35,760,313
---------------
Natural Gas--2.2%
Sonat, Inc. .................................... 587,000 30,083,750
---------------
Office & Business Equipment--5.0%
Compaq Computer Corp. (b) ..................... 331,000 32,851,750
EMC Corp. (b) ................................. 553,700 21,594,300
Gateway 2000, Inc. (b) ........................ 408,400 13,247,475
---------------
67,693,525
---------------
Oil--2.8%
Texaco, Inc. ................................. 238,000 25,882,500
Unocal Corp. ................................. 314,800 12,218,175
---------------
38,100,675
---------------
SHARES VALUE
----------- ---------------
<S> <C> <C>
Oil Service & Equipment--2.0%
Halliburton Co. .............................. 175,000 $ 13,868,750
Schlumberger Ltd. .............................. 110,000 13,750,000
---------------
27,618,750
---------------
Paper & Forest Products--1.8%
Kimberly Clark Corp. ........................... 483,900 24,074,025
---------------
Pollution Control--3.4%
U.S. Filter Corp. (b) ........................ 425,800 11,603,050
U.S.A. Waste Services, Inc. (b) ............... 436,500 16,859,812
United Waste Systems, Inc. (b) ............... 434,100 17,798,100
---------------
46,260,962
---------------
Professional Services--1.0%
HFS, Inc. (b) ................................. 236,000 13,688,000
---------------
Retail--6.3%
Home Depot, Inc. .............................. 762,800 52,585,525
Lowe's Companies, Inc. ........................ 353,400 13,119,975
Staples, Inc. (b) .............................. 873,600 20,311,200
---------------
86,016,700
---------------
Retail--Drugs--2.6%
Rite Aid Corp. ................................. 702,700 35,047,163
---------------
Retail--Food--4.4%
Safeway, Inc. (b) .............................. 853,600 39,372,300
Sysco Corp. .................................... 557,600 20,352,400
---------------
59,724,700
---------------
Telecommunications Equipment--6.0%
Andrew Corp. (b) .............................. 395,400 11,120,625
Ascend Communications, Inc. (b) ............... 255,700 10,068,187
Cisco Systems, Inc. (b) ........................ 534,800 35,898,450
Newbridge Networks Corp. (b) .................. 581,800 25,308,300
---------------
82,395,562
---------------
Tobacco--3.8%
Philip Morris Companies, Inc. .................. 1,173,600 52,078,500
---------------
Utility--Telephone--4.1%
LCI International, Inc. (b) .................. 1,461,600 31,972,500
WorldCom, Inc. (b) ........................... 744,800 23,833,600
---------------
55,806,100
---------------
TOTAL COMMON STOCKS
(Identified cost $1,012,089,061) ........................... 1,112,012,714
---------------
FOREIGN COMMON STOCKS--12.0%
Electronics--2.0%
Philips Electronics NV ADR (Netherlands) ...... 381,000 27,384,375
---------------
Healthcare--Drugs--2.3%
SmithKline Beecham PLC Sponsored ADR
(United Kingdom) (b) ........................ 345,800 31,683,925
---------------
Oil--1.5%
Total Compagnie Francaise Des Petroles ADR
(France) .................................... 397,700 20,133,563
---------------
Oil Service & Equipment--2.4%
Elf Aquitane Sponsored ADR (France) ............ 595,900 32,439,306
---------------
Pipelines--1.1%
Eni Spa (Italy) (b) ........................... 2,675,000 15,140,500
---------------
Telecommunications Equipment--2.7%
Oy Nokia Corp. Sponsored ADR (Finland) ......... 502,100 37,029,875
---------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $141,414,318) .............................. 163,811,544
---------------
TOTAL LONG-TERM INVESTMENTS--93.4%
(Identified cost $1,153,503,379) ........................... 1,275,824,258
---------------
</TABLE>
See Notes to Financial Statements
8
<PAGE>
GROWTH SERIES
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
---------- --------- -----------------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--7.5%
Commercial Paper--6.6%
Mobil Corp. 6.25%, 7-1-97 ..................... A-1+ $18,550 $ 18,550,000
Donnelley (R.R.) & Sons Co. 5.52%,
7-7-97 ....................................... A-1 985 984,094
Donnelley (R.R.) & Sons Co. 5.55%,
7-7-97 ....................................... A-1 1,665 1,663,460
Southwestern Bell Telephone Co.
5.50%, 7-7-97 .............................. A-1+ 5,925 5,919,568
Southwestern Bell Telephone Co.
5.65%, 7-7-97 .............................. A-1+ 1,060 1,059,002
General Electric Capital Corp. 5.62%,
7-8-97 ....................................... A-1+ 7,500 7,500,000
Enterprise Funding Corp. 5.60%,
7-10-97 ....................................... A-1+ 3,366 3,361,288
Heinz (H.J.) Co. 5.57%, 7-14-97 ............... A-1 4,570 4,560,808
Preferred Receivables Funding Corp.
5.57%, 7-14-97 .............................. A-1 310 309,376
Private Export Funding Corp. 5.56%,
7-14-97 .................................... A-1+ 765 763,464
Private Export Funding Corp. 5.57%,
7-14-97 ....................................... A-1+ 3,160 3,153,132
Goldman Sachs & Co. 5.57%, 7-15-97 ............. A-1+ 1,755 1,751,198
General Electric Capital Corp. 5.60%,
7-17-97 .................................... A-1+ 3,000 2,991,890
General Electric Co. 5.60%, 7-17-97 ............ A-1+ 11,645 11,616,017
Kellogg Co. 5.55%, 7-18-97 ..................... A-1+ 390 388,978
Du Pont (E.I.) de Nemours & Co.
5.52%, 7-21-97 .............................. A-1+ 2,060 2,053,683
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
---------- --------- -----------------------
<S> <C> <C> <C>
Commercial Paper--continued
Private Export Funding Corp. 5.61%,
7-28-97 .................................... A-1+ $ 5,000 $ 4,978,426
General Electric Capital Corp. 5.55%,
7-31-97 .................................... A-1+ 2,250 2,239,594
Ciesco L.P. 5.60%, 8-5-97 ..................... A-1+ 718 713,979
Receivables Capital Corp. 5.62%,
8-8-97 ....................................... A-1 7,500 7,455,508
Cargill, Inc. 5.55%, 9-5-97 .................. A-1+ 200 197,934
Beta Finance, Inc. 5.55%, 9-12-97 ............ A-1+ 1,115 1,102,278
Schering Corp. 5.65%, 9-16-97 .................. A-1+ 2,390 2,361,272
Goldman Sachs & Co. 5.55%, 10-9-97 .............. A-1+ 1,045 1,028,698
Corporate Receivables Corp. 5.75%,
10-24-97 .................................... A-1 3,250 3,191,370
-----------------
89,895,017
-----------------
Federal Agency Securities--0.9%
Federal Farm Credit Banks 5.55%,
7-1-97 ....................................... 10,000 9,999,969
Student Loan Marketing Assoc. 6%,
6-30-98 .................................... 2,500 2,500,675
-----------------
12,500,644
-----------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $102,395,997) .................. 102,395,661
-----------------
TOTAL INVESTMENTS--100.9%
(Identified cost $1,255,899,376) ............... 1,378,219,919(a)
Cash and receivables, less liabilities--(0.9%) ... (12,956,056)
-----------------
NET ASSETS--100.0% .............................. $ 1,365,263,863
=================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $142,132,103 and gross
depreciation of $19,811,560 for income tax purposes. At June 30, 1997, the
aggregate cost of securities for federal income tax purposes was
$1,255,899,376.
(b) Non-income producing.
See Notes to Financial Statements
9
<PAGE>
GROWTH SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Assets
Investment securities at value (Identified cost $1,255,899,376) .................. $1,378,219,919
Cash ........................................................................... 2,577
Receivables
Investment securities sold ................................................... 25,793,617
Dividends and interest ......................................................... 1,616,252
Fund shares sold ............................................................... 175,209
---------------
Total assets .................................................................. 1,405,807,574
---------------
Liabilities
Payables
Investment securities purchased ................................................ 39,623,075
Investment advisory fee ...................................................... 699,597
Financial agent fee ............................................................ 66,877
Trustees' fee .................................................................. 3,830
Accrued expenses ............................................................... 150,332
---------------
Total liabilities ............................................................ 40,543,711
---------------
Net Assets ..................................................................... $1,365,263,863
===============
Net Assets Consist of:
Capital paid in on shares of beneficial interest .............................. $1,170,060,307
Undistributed net investment income .......................................... 75,845
Accumulated net realized gain ................................................ 72,807,168
Net unrealized appreciation ................................................... 122,320,543
---------------
Net Assets ..................................................................... $1,365,263,863
===============
Shares of beneficial interest outstanding, $1 par value, unlimited authorization 70,131,002
===============
Net asset value and offering price per share .................................... $19.47
===============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Investment Income
Dividends ......................................................... $ 6,663,003
Interest ......................................................... 3,789,316
------------
Total investment income .......................................... 10,452,319
------------
Expenses
Investment advisory fee .......................................... 4,029,178
Financial agent fee ................................................ 384,322
Printing ......................................................... 70,328
Custodian ......................................................... 25,000
Professional ...................................................... 16,908
Trustees ......................................................... 10,872
Miscellaneous ...................................................... 16,477
------------
Total expenses ................................................... 4,553,085
------------
Net investment income ............................................. 5,899,234
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities .................................... 73,683,766
Net realized loss on foreign currency transactions ............... (55,537)
Net change in unrealized appreciation (depreciation) on investments 41,570,427
------------
Net gain on investments ............................................. 115,198,656
------------
Net increase in net assets resulting from operations ............... $121,097,890
============
</TABLE>
See Notes to Financial Statements
10
<PAGE>
GROWTH SERIES
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 ......................................................... $ 5,899,234 $ 11,543,617
Net realized gain ............................................................ 73,628,229 151,631,180
Net change in unrealized appreciation (depreciation) ........................ 41,570,427 (28,811,458)
-------------- --------------
Net increase in net assets resulting from operations ........................ 121,097,890 134,363,339
-------------- --------------
From Distributions to Shareholders
Net investment income ......................................................... (6,562,743) (10,973,300)
Net realized gains ............................................................ (77,550,466) (82,322,855)
-------------- --------------
Decrease in net assets from distributions to shareholders ..................... (84,113,209) (93,296,155)
-------------- --------------
From Share Transactions
Proceeds from sales of shares (6,569,991 and 16,369,935 shares, respectively) 129,331,821 309,035,692
Net asset value of shares issued from reinvestment of distributions
(4,320,484 and 4,853,881 shares, respectively) .............................. 84,113,209 93,296,155
Cost of shares repurchased (6,150,393 and 10,173,971 shares, respectively) ... (120,560,381) (193,393,445)
-------------- --------------
Increase in net assets from share transactions .............................. 92,884,649 208,938,402
-------------- --------------
Net increase in net assets ................................................... 129,869,330 250,005,586
Net Assets
Beginning of period ......................................................... 1,235,394,533 985,388,947
-------------- --------------
End of period (including undistributed net investment income of $75,845 and
$739,354, respectively) ...................................................... $1,365,263,863 $1,235,394,533
============== ==============
</TABLE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Six Months
Ended
6/30/97
(Unaudited)
------------------
<S> <C>
Net asset value, beginning of period ...... $ 18.89
Income from investment operations
Net investment income ..................... 0.09
Net realized and unrealized gain ......... 1.77
----------
Total from investment operations ......... 1.86
----------
Less distributions
Dividends from net investment income ...... (0.10)
Dividends from net realized gains ......... (1.18)
----------
Total distributions ..................... (1.28)
----------
Change in net asset value .................. 0.58
----------
Net asset value, end of period ............ $ 19.47
==========
Total return .............................. 9.81%(6)
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $1,365,264
Ratio to average net assets of:
Operating expenses ........................ 0.71%(5)
Net investment income ..................... 0.92%(5)
Portfolio turnover rate ..................... 186%(6)
Average commission rate paid(4) ............ $ 0.0501
<CAPTION>
Year Ended December 31,
1996 1995 1994 1993 1992
-------------- ---------------- -------------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 18.13 $15.69 $ 16.59 $ 15.01 $ 14.43
Income from investment operations
Net investment income ..................... 0.19 0.20 0.23(1)(3) 0.16(3) 0.22(3)
Net realized and unrealized gain ......... 2.10 4.60 0.02 2.77 1.25
---------- --------- ----------- ---------- ----------
Total from investment operations ......... 2.29 4.80 0.25 2.93 1.47
---------- --------- ----------- ---------- ----------
Less distributions
Dividends from net investment income ...... (0.18) (0.17) (0.23) (0.15) (0.23)
Dividends from net realized gains ......... (1.35) (2.19) (0.92) (1.20) (0.66)
---------- --------- ----------- ---------- ----------
Total distributions ..................... (1.53) (2.36) (1.15) (1.35) (0.89)
---------- --------- ----------- ---------- ----------
Change in net asset value .................. 0.76 2.44 (0.90) 1.58 0.58
---------- --------- ----------- ---------- ----------
Net asset value, end of period ............ $ 18.89 $18.13 $ 15.69 $ 16.59 $ 15.01
========== ========= =========== ========== ==========
Total return .............................. 12.58% 30.85% 1.48% 19.69% 10.29%
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $1,235,395 $985,389 $616,221 $446,368 $245,565
Ratio to average net assets of:
Operating expenses ........................ 0.72% 0.75%(2) 0.80% 0.79% 0.50%
Net investment income ..................... 1.03% 1.12% 1.38% 0.97% 1.66%
Portfolio turnover rate ..................... 167% 173% 185% 185% 214%
Average commission rate paid(4) ............ $ 0.0455 N/A N/A N/A N/A
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.003 per share.
(2) The ratio of operating expenses to average net assets excludes the effect
of expense offsets for custodian fees; if expense offsets were included,
the ratio would not significantly differ.
(3) Computed using average shares outstanding.
(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, mark-downs, or spreads on shares traded on a principal
basis.
(5) Annualized
(6) Not annualized
See Notes to Financial Statements
11
<PAGE>
MULTI-SECTOR FIXED INCOME SERIES
INVESTMENT REVIEW
The Phoenix Edge Multi-Sector Fixed Income Series continued to provide
investors with above-average returns. For the six months ended June 30, 1997,
the Fund was up 4.68% compared with a return of 3.09% for the Lehman Brothers
Aggregate Bond Index.* All performance figures assume reinvestment of dividends
and exclude the effect of sales charges.
Favorable market conditions prevailed as market participants benefited
from lower volatility and solid fundamental credit conditions. Investors were
well-rewarded for taking incremental credit risk. The more conservative
fixed-income sectors, such as Treasuries and top-tier investment-grade
corporate issues, generally lagged the overall market.
The Fund's very strong performance over the last six months resulted from
our emphasis on less traditional sectors of the fixed-income market. The
emerging-market and domestic high-yield sectors continued to outperform all
other fixed-income categories, and the Fund benefited from its exposure in
these areas. Additionally, our decision to focus on high-yielding, non-agency
mortgage-backed securities, rather than more conventional agency
mortgage-backed issues, proved to be rewarding as these less efficient sectors
continued to produce strong results.
OUTLOOK
Given our outlook for moderate growth and benign inflation in the U.S., we
will emphasize higher-rated credits within the domestic high-yield universe as
we move into the later stages of the economic cycle. We will continue to take
advantage of undervalued credits, focusing on oil and gas exploration and
production companies, given the improving fundamentals in this sector.
We also believe the emerging-market sector provides favorable
opportunities for long-term appreciation. The focus has been on identifying
emerging countries that are experiencing the types of improvements in their
infrastructure associated with a better standard of living. Our research has
led us to a number of rewarding investment opportunities in Central and Eastern
Europe.
*The Lehman Brothers Aggregate Bond Index is an unmanaged, commonly used
measure of bond market total return performance.
12
<PAGE>
MULTI-SECTOR FIXED INCOME SERIES
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
MOODY'S PAR
BOND VALUE
RATING (000) VALUE
--------- -------- --------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--15.5%
U.S. Treasury Bonds--4.6%
U.S. Treasury Bonds 6%, '26 (e) ............... Aaa $7,500 $ 6,710,153
U.S. Treasury Bonds 6.625%, '27 ............... Aaa 500 489,062
-------------
7,199,215
-------------
U.S. Treasury Notes--3.1%
U.S. Treasury Inflation Index Notes
3.375%, '07 (d)(e) ........................ Aaa 5,000 4,935,432
-------------
Agency Mortgage-Backed Securities--5.6%
FHLMC 7.50%, '18 .............................. Aaa 148 148,168
FNMA ACES 7.298%, '18 (e) ..................... Aaa 7,000 7,105,000
GNMA 8%, '06 ................................. Aaa 180 186,915
GNMA 6.50%, '23-'26 ........................... Aaa 1,506 1,442,666
-------------
8,882,749
-------------
Agency Non Mortgage-Backed Securities--2.2%
Overseas Private Investment Corp.
6.58%, '01 (e) .............................. Aaa 3,500 3,473,400
-------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $24,495,743) .................................... 24,490,796
-------------
NON-CONVERTIBLE BONDS--45.8%
Asset-Backed Securities--6.0%
Continental Airlines 144A 7.522%, '01 (b) Ba 1,600 1,600,000
Franchise Mortgage Acceptance Co. LLC
Loan Receivables Trust 97-A, D 144A
8.14%, '11 (b) .............................. BBB(c) 500 506,170
Green Tree Financial Corp. 94-1, B2
7.85%, '19 ................................. Baa 3,000 3,023,437
Green Tree Financial Corp. 97-4, M1
7.22%, '28 ................................. Aa 2,500 2,471,875
Team Fleet Financing Corp. 96-1, B
144A 7.10%, '02 (b) ........................ BBB(c) 1,975 1,958,645
-------------
9,560,127
-------------
Auto & Truck Parts--0.9%
Titan Wheel International, Inc. 8.75%,
'07 ....................................... B 1,400 1,428,000
-------------
Building & Materials--0.5%
Neenah Corp. 144A 11.125%, '07 (b) ............ B 800 852,000
-------------
Chemical--1.0%
General Chemical, Inc. 9.25%, '03 ............ B 1,500 1,537,500
-------------
Natural Gas--2.8%
Forcenergy, Inc. 8.50%, '07 .................. B 4,500 4,410,000
-------------
Non-Agency Mortgage-Backed Securities--22.3%
Equitable Life 174, D1 144A 7.77%,
'06 (b) .................................... Baa 2,000 2,075,625
FDIC REMIC Trust 96-C1, 1D 7.25%, '26 Baa 1,500 1,481,719
First Chicago/Lennar Trust 97-CHL1, D
144A 8.11%, '08 (b) ........................ BB(c) 2,000 1,911,875
G.E. Capital Mortgage Services, Inc.
96-8, 2A5 7.50%, '26 ........................ AAA(c) 990 989,721
Kidder Peabody Acceptance Corp.
94-C2, D 7.18%, '05 ........................ BBB(c) 500 501,563
Lehman Structured Securities Corp.
96-1, E1 7.995%, '26 ........................ BBB(c) 2,407 2,465,172
Morgan Stanley Capital Corp. I 96-WF1,
C 144A 6.59%, '06 (b) ..................... A 1,250 1,200,000
MOODY'S PAR
BOND VALUE
RATING (000) VALUE
--------- -------- --------------
<S> <C> <C> <C>
Non-Agency Mortgage-Backed Securities--continued
Mortgage Capital Funding, Inc. 96-MC2,
D 7.257%, '06 .............................. Baa $2,000 $ 1,994,375
Residential Asset Securitization Trust
96-A4, A13 7.50%, '26 ..................... AAA(c) 1,000 999,375
Residential Asset Securitization Trust
96-A8, A1 8%, '26 ........................... AAA(c) 1,662 1,683,180
Resolution Trust Corp. 92-C8, D
8.835%, '23 ................................. Baa 1,871 1,928,188
Resolution Trust Corp. 93-C3, A4
6.55%, '24 ................................. Aaa 136 135,712
Resolution Trust Corp. 95-C2, C 7%,
'27 ....................................... A 1,824 1,813,124
Resolution Trust Corp. 95-1, M2 7.50%,
'28 ....................................... Aa 1,881 1,894,830
Resolution Trust Corp. 95-2, M1 7.15%,
'29 ....................................... Aa 1,536 1,531,165
Resolution Trust Corp. 95-2, C1 7.45%,
'29 ....................................... Baa 1,491 1,489,574
Ryland Mortgage Securities Corp. III
92-A, 1A 8.279%, '30 ........................ A-(c) 888 880,972
Securitized Asset Sales, Inc. 95-6, B3
144A 7%, '10 (b) ........................... NR 1,366 1,229,054
Securitized Asset Sales, Inc. 95-A, M
7.53%, '24 ................................. Aa 1,807 1,798,456
Structured Asset Securities Corp.
93-C1, B 6.60%, '24 (e) ..................... A+(c) 2,250 2,152,443
Structured Asset Securities Corp.
95-C1, D 7.375%, '24 (e) .................. BBB(c) 2,000 1,998,125
Structured Asset Securities Corp.
95-C4, D 7%, '26 (e) ........................ BBB(c) 1,900 1,856,656
Structured Asset Securities Corp.
96-C3, C 144A 7.375%, '30 (b)(e) ............ BBB(c) 1,150 1,153,234
-------------
35,164,138
-------------
Oil--5.0%
Benton Oil & Gas Co. 11.625%, '03 ............ B 1,000 1,097,500
Lomak Petroleum, Inc. 8.75%, '07 ............ B 1,750 1,732,500
Ocean Energy, Inc. 144A 8.875%,
'07 (b) .................................... B 3,000 3,000,000
Snyder Oil Corp. 8.75%, '07 .................. B 2,000 2,000,000
-------------
7,830,000
-------------
Paper & Forest Products--0.6%
Buckeye Cellulose Corp. 8.50%, '05 ............ Ba 950 963,063
-------------
Publishing, Broadcasting, Printing & Cable--2.5%
Cablevision Systems Corp. 9.875%, '23 B 1,000 1,050,000
Hollinger International Publishing, Inc.
9.25%, '07 ................................. B 650 664,625
Poland Communications, Inc. 144A
9.875%, '03 (b) ........................... B 2,200 2,213,750
-------------
3,928,375
-------------
Retail--Food Service--0.0%
ARA Services, Inc. 10.625%, '00 ............... Baa 54 58,995
-------------
Telecommunications--1.5%
Call-Net Enterprises 0%, '04 (d) ............ B 2,000 1,735,000
Orion Network Systems, Inc. 0%,
'07 (d) .................................... B 1,000 580,000
-------------
2,315,000
-------------
</TABLE>
See Notes to Financial Statements
13
<PAGE>
MULTI-SECTOR FIXED INCOME SERIES
<TABLE>
<CAPTION>
MOODY'S PAR
BOND VALUE
RATING (000) VALUE
--------- -------- -------------
<S> <C> <C> <C>
Textile & Apparel--2.7%
Westpoint Stevens, Inc. 9.375%, '05 ...... B $4,000 $ 4,205,000
-------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $71,360,258) .............................. 72,252,198
-------------
FOREIGN GOVERNMENT SECURITIES--7.0%
Dominican Republic--0.3%
Dominican Republic PDI Bearer
6.438%, '09 (d) ........................ B+(c) 500 441,875
-------------
Morocco--1.2%
Morocco R&C Agreement Series A
6.813%, '09 (d) ........................ NR 2,000 1,827,500
-------------
Philippines--0.8%
Republic of Philippines 144A 8.75%,
'16 (b) ................................. Ba 1,301 1,314,173
-------------
Poland--2.2%
Poland PDI Bearer 4%, '14 (d) ............ Baa 4,000 3,420,000
-------------
Slovenia--0.1%
Republic of Slovenia Series 1, 144A
6.75%, '06 (b)(d) ..................... A(c) 132 132,395
Republic of Slovenia Series 2, 144A
6.313%, '06 (b)(d) ..................... A(c) 28 27,527
-------------
159,922
-------------
Venezuela--2.4%
Republic of Venezuela FLIRB A Euro
6.75%, '07 (d) ........................ Ba 2,857 2,660,714
Republic of Venezuela NMB Series A
6.875%, '05 (d) ........................ Ba 1,250 1,167,187
-------------
3,827,901
-------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $9,740,619) ................................. 10,991,371
-------------
FOREIGN NON-CONVERTIBLE BONDS--20.9%
Argentina--3.8%
Bridas Corp. Sr. Note 12.50%, '99 ......... B 1,600 1,756,000
CEI Citicorp Holdings 144A 9.75%,
'07 (b) ................................. BB-(c) 4,000 4,165,000
-------------
5,921,000
-------------
Bahamas--0.6%
Sun International Hotels 9%, '07 ......... Ba 1,000 1,020,000
-------------
Brazil--5.6%
Comp Energetica Sao Paul 144A
9.125%, '07 (b)(d) ..................... NR 1,500 1,456,875
CSN Iron SA 144A 9.125%, '07 (b) ......... NR 1,500 1,460,625
Globo Communicacoes Participacoes
SA 144A 10.50%, '06 (b) ............... BB-(c) 2,000 2,115,000
RBS Participacoes SA 144A 11%,
'07 (b) ................................. BB-(c) 2,500 2,640,625
Tevecap SA 12.625%, '04 .................. NR 1,000 1,080,000
-------------
8,753,125
-------------
Chile--1.2%
Compania Sud Amer Vapore 7.375%,
'03 .................................... BBB(c) 2,000 1,967,500
-------------
Greece--1.2%
Fage Dairy Industries SA 144A 9%,
'07 (b) ................................. B 2,000 1,925,000
-------------
Hong Kong--1.2%
Road King Infrastructure Ltd. 144A
9.50%, '07 (b) ........................ NR 1,875 1,889,062
-------------
MOODY'S PAR
BOND VALUE
RATING (000) VALUE
--------- -------- -------------
<S> <C> <C> <C>
Indonesia--0.5%
Polytama International 11.25%, '07 ...... B $ 750 $ 776,250
-------------
Mexico--3.4%
Coca-Cola Femsa 8.95%, '06 ............... Ba 2,000 2,039,500
Copamex Industries SA 144A 11.375%,
'04 (b) ................................. B 3,000 3,258,750
-------------
5,298,250
-------------
Philippines--1.2%
Philippine Long Distance Telephone Co.
8.35%, '17 .............................. Ba 2,000 1,902,160
-------------
South Korea--1.4%
Hyundai Motor Co. 144A 7.60%,
'07 (b) ................................. NR 2,200 2,198,702
-------------
Venezuela--0.8%
CanTV Finance Ltd. 9.25%, '04 ............ Ba 1,200 1,225,500
-------------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $31,867,224) ............................. 32,876,549
-------------
FOREIGN CONVERTIBLE BONDS--3.6%
Mexico--0.9%
Empresas ICA Sociedad Euro Cv.
5%, '04 ................................. B(c) 1,700 1,351,500
-------------
Russia--2.7%
Lukinter Finance BV 3.50%, '02 ............ NR 3,450 4,312,500
-------------
TOTAL FOREIGN CONVERTIBLE BONDS
(Identified cost $5,549,157) ................................ 5,664,000
-------------
MUNICIPAL BONDS--7.8%
California--1.6%
Orange County Pension A Taxable
7.67%, '09 .............................. Aaa 2,500 2,596,825
-------------
Florida--1.5%
Palm Beach Waste Revenue Project B
Taxable 10.50%, '11 ..................... NR 1,500 1,028,760
University of Miami Exchangeable
Revenue Series A Taxable 7.65%, '20 ..... Aaa 1,290 1,286,775
-------------
2,315,535
-------------
Illinois--1.8%
Illinois Educational Facilities Authority
Revenue--Loyola University Series A
Taxable 7.84%, '24 ..................... Aaa 2,800 2,771,664
-------------
Pennsylvania--2.5%
Pennsylvania Economic Development
6.75%, '07 (e) ........................ NR 1,950 2,011,308
Pennsylvania Economic Development
9.50%, '12 .............................. NR 2,500 1,875,000
-------------
3,886,308
-------------
Virginia--0.4%
Newport News Taxable Series B 7.05%,
'25 .................................... Aa 750 704,168
-------------
TOTAL MUNICIPAL BONDS
(Identified cost $13,182,624) ............................. 12,274,500
-------------
CONVERTIBLE BONDS--0.7%
Entertainment, Leisure & Gaming--0.7%
Comcast Corp. Cv. 1.125%, '07 ............ Ba 2,000 1,145,000
-------------
TOTAL CONVERTIBLE BONDS
(Identified cost $1,136,677) ................................ 1,145,000
-------------
</TABLE>
See Notes to Financial Statements
14
<PAGE>
MULTI-SECTOR FIXED INCOME SERIES
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
PREFERRED STOCKS--0.6%
Paper & Forest Products--0.6%
SD Warren Co. Series B Pfd. PIK 14% ...... 30,000 $ 982,051
-------------
TOTAL PREFERRED STOCKS
(Identified cost $607,500) ........................ 982,051
-------------
WARRANTS--0.1%
Paper & Forest Products--0.1%
SD Warren Co. Warrants 144A (b)(f) ...... 30,000 150,000
-------------
TOTAL WARRANTS
(Identified cost $142,500) ........................ 150,000
-------------
TOTAL LONG-TERM INVESTMENTS--102.0%
(Identified cost $158,082,302) ..................... 160,826,465
-------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
---------- -------- -------------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--6.3%
Commercial Paper--6.3%
Cargill, Inc. 6.05%, 7-1-97 ......... A-1+ $ 245 $ 245,000
Donnelley (R.R.) & Sons Co. 6.25%,
7-1-97 .............................. A-1 1,425 1,425,000
Mobil Corp. 6.25%, 7-1-97 ............ A-1+ 6,195 6,195,000
Du Pont (E.I.) de Nemours & Co.
5.60%, 7-10-97 ..................... A-1+ 1,200 1,198,320
Heinz (H.J.) Co. 5.55%, 7-14-97 ...... A-1 880 878,236
-----------------
9,941,556
-----------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $9,941,556) .............................. 9,941,556
-----------------
TOTAL INVESTMENTS--108.3%
(Identified cost $168,023,858) ........................... 170,768,021(a)
Cash and receivables, less liabilities--(8.3%) ......... (13,168,882)
-----------------
NET ASSETS--100.0% ....................................... $ 157,599,139
=================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $4,735,176 and gross
depreciation of $1,991,013 for income tax purposes. At June 30, 1997, the
aggregate cost of securities for federal income tax purposes was
$168,023,858.
(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 June 30, 1997,
these securities amounted to a value of $40,434,087 or 25.7% of net
assets.
(c) As rated by Standard & Poor's, Fitch or Duff & Phelps.
(d) Variable or step coupon bond; interest rate shown reflects the rate
currently in effect.
(e) Segregated as collateral.
(f) Non-income producing.
See Notes to Financial Statements
15
<PAGE>
MULTI-SECTOR FIXED INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Assets
Investment securities at value (Identified cost $168,023,858) ..................... $170,768,021
Receivables
Investment securities sold ...................................................... 4,921,943
Interest and dividends ......................................................... 2,567,928
Fund shares sold ............................................................... 145,706
-------------
Total assets .................................................................. 178,403,598
-------------
Liabilities
Payables
Custodian ..................................................................... 4,841,501
Investment securities purchased ................................................ 15,824,047
Investment advisory fee ......................................................... 57,379
Financial agent fee ............................................................ 7,683
Trustees' fee .................................................................. 3,217
Accrued expenses ............................................................... 70,632
-------------
Total liabilities ............................................................ 20,804,459
-------------
Net Assets ..................................................................... $157,599,139
=============
Net Assets Consist of:
Capital paid in on shares of beneficial interest .............................. $151,962,316
Undistributed net investment loss ............................................. (61,088)
Accumulated net realized gain ................................................... 2,953,748
Net unrealized appreciation ................................................... 2,744,163
-------------
Net Assets ..................................................................... $157,599,139
=============
Shares of beneficial interest outstanding, $1 par value, unlimited authorization .. 15,281,423
=============
Net asset value and offering price per share .................................... $10.31
=============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Investment Income
Interest ......................................................... $6,028,948
Dividends ......................................................... 46,335
------------
Total investment income .......................................... 6,075,283
------------
Expenses
Investment advisory fee .......................................... 371,276
Financial agent fee ................................................ 44,553
Custodian ......................................................... 32,335
Printing ......................................................... 20,474
Professional ...................................................... 11,512
Trustees ......................................................... 9,872
Miscellaneous ...................................................... 6,918
------------
Total expenses ................................................... 496,940
Less expenses borne by investment adviser ........................ (14,282)
------------
Net expenses ...................................................... 482,658
------------
Net investment income ............................................. 5,592,625
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities .................................... 2,978,603
Net realized gain on foreign currency transactions ............... 15,586
Net change in unrealized appreciation (depreciation) on investments (1,670,869)
------------
Net gain on investments ............................................. 1,323,320
------------
Net increase in net assets resulting from operations ............... $6,915,945
============
</TABLE>
See Notes to Financial Statements
16
<PAGE>
MULTI-SECTOR FIXED INCOME SERIES
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 ............................................................ $ 5,592,625 $ 9,460,659
Net realized gain .................................................................. 2,994,189 7,367,063
Net change in unrealized appreciation (depreciation) .............................. (1,670,869) (2,309,914)
-------------- --------------
Net increase in net assets resulting from operations .............................. 6,915,945 14,517,808
-------------- --------------
From Distributions to Shareholders
Net investment income ............................................................ (6,080,467) (9,238,947)
Net realized gains ............................................................... (1,291,822) (4,270,844)
-------------- --------------
Decrease in net assets from distributions to shareholders ........................ (7,372,289) (13,509,791)
-------------- --------------
From Share Transactions
Proceeds from sales of shares (3,866,914 and 6,711,402 shares, respectively) ...... 39,999,436 69,891,527
Net asset value of shares issued from reinvestment of distributions
(719,971 and 1,316,308 shares, respectively) .................................... 7,372,289 13,509,791
Cost of shares repurchased (3,331,755 and 4,670,077 shares, respectively) ......... (34,360,652) (48,410,465)
-------------- --------------
Increase in net assets from share transactions .................................... 13,011,073 34,990,853
-------------- --------------
Net increase in net assets ......................................................... 12,554,729 35,998,870
Net Assets
Beginning of period ............................................................... 145,044,410 109,045,540
-------------- --------------
End of period (including undistributed net investment income (loss) of
($61,088) and $426,754, respectively) .............................................. $ 157,599,139 $ 145,044,410
============== ==============
</TABLE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Six Months
Ended
6/30/97
(Unaudited)
----------------
<S> <C>
Net asset value, beginning of period ...... $ 10.34
Income from investment operations
Net investment income ..................... 0.38(1)
Net realized and unrealized gain (loss) ... 0.09
----------
Total from investment operations ......... 0.47
----------
Less distributions
Dividends from net investment income ...... (0.41)
Dividends from net realized gains ......... (0.09)
----------
Total distributions ..................... (0.50)
----------
Change in net asset value .................. (0.03)
----------
Net asset value, end of period ............ $ 10.31
==========
Total return .............................. 4.68%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $ 157,599
Ratio to average net assets of:
Operating expenses ........................ 0.65%(4)
Net investment income ..................... 7.53%(4)
Portfolio turnover rate ..................... 90%(5)
<CAPTION>
Year Ended December 31,
1996 1995 1994 1993 1992
------------ ----------------- ----------------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 10.22 $ 8.98 $ 10.27 $ 9.58 $ 9.33
Income from investment operations
Net investment income ..................... 0.79(1) 0.83(1)(2) 0.72(1)(2) 0.66(1)(2) 0.66(2)
Net realized and unrealized gain (loss) ... 0.43 1.22 (1.28) 0.84 0.25
--------- ----------- ----------- ----------- ---------
Total from investment operations ......... 1.22 2.05 (0.56) 1.50 0.91
--------- ----------- ----------- ----------- ---------
Less distributions
Dividends from net investment income ...... (0.78) (0.81) (0.73) (0.66) (0.66)
Dividends from net realized gains ......... (0.32) -- -- (0.15) --
--------- ----------- ----------- ----------- ---------
Total distributions ..................... (1.10) (0.81) (0.73) (0.81) (0.66)
--------- ----------- ----------- ----------- ---------
Change in net asset value .................. 0.12 1.24 (1.29) 0.69 0.25
--------- ----------- ----------- ----------- ---------
Net asset value, end of period ............ $ 10.34 $ 10.22 $ 8.98 $ 10.27 $ 9.58
========= =========== =========== =========== =========
Total return .............................. 12.42% 23.54% (5.47)% 15.90% 10.03%
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $145,044 $ 109,046 $ 74,686 $ 79,393 $ 43,090
Ratio to average net assets of:
Operating expenses ........................ 0.65% 0.65%(3) 0.66% 0.65% 0.50%
Net investment income ..................... 7.80% 8.55% 7.62% 6.71% 7.47%
Portfolio turnover rate ..................... 191% 147% 181% 169% 166%
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.001, $0.002, $0.007, $0.006 and $0.005 per share, respectively.
(2) Computed using average shares outstanding.
(3) The ratio of operating expenses to average net assets excludes the effect
of expense offsets for custodian fees; if expense offsets were included,
the ratio would not significantly differ.
(4) Annualized
(5) Not annualized
See Notes to Financial Statements
17
<PAGE>
STRATEGIC ALLOCATION SERIES
INVESTMENT REVIEW
For the six months ended June 30, 1997, the Fund earned 10.02% compared
with an average return of 10.19% for a peer universe of 477 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 Stock 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 are likely to be
able to drive the market to new highs.
Interest rates appeared to be locked in a narrow trading range over the
last six months as investors debated whether the robust economic growth
reported in the first quarter would serve as a catalyst for higher inflation in
the months ahead. As measured by the 30-year Treasury bond, interest rates
climbed as high as 7.17% in mid-April, but finished June yielding 6.79%--only
0.14% higher than at the start of the reporting period. Higher yielding, lower
quality bonds continued to outperform lower yielding, higher quality bonds.
The Fund's performance was helped by a relatively high equity allocation
of 68.3%. 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. The Fund's
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 emphasizing the most undervalued
bond sectors.
*The S&P 500 Stock Index is an unmanaged, commonly used measure of total return
stock performance.
18
<PAGE>
STRATEGIC ALLOCATION SERIES
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
---------- --------- -------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--11.6%
U.S. Treasury Bonds--0.4%
U.S. Treasury Bonds 6%, '26 ......... AAA $ 1,850 $ 1,655,171
------------
U.S. Treasury Notes--11.2%
U.S. Treasury Notes 6%, '99 ......... AAA 14,050 14,026,396
U.S. Treasury Notes 6.375%, '00 ... AAA 5,250 5,269,687
U.S. Treasury Notes 6.25%, '02 ...... AAA 6,000 5,964,354
U.S. Treasury Notes 6.50%, '06 ...... AAA 1,000 995,110
U.S. Treasury Notes 6.625%, '07 ... AAA 17,950 18,095,844
------------
44,351,391
------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $45,675,580) .............................. 46,006,562
------------
NON-CONVERTIBLE BONDS--4.0%
Asset-Backed Securities--0.5%
Fleetwood Credit Corp. 96-B,
A 6.90%, '12 ..................... AAA 841 847,056
Green Tree Financial Corp. 96-2,
M1 7.60%, '27 ..................... AA- 1,075 1,083,063
------------
1,930,119
------------
Non-Agency Mortgage-Backed Securities--3.4%
CS First Boston Mortgage 95-AE1,
B 7.182%, '27 ..................... AA- 1,350 1,357,385
First Union Lehman Bros. 97-C1,
B 7.43%, '29 ..................... Aa(c) 850 867,000
G.E. Capital Mortgage Services,
Inc. 96-8, M 7.25%, '26 ......... AA 248 243,038
Nationslink Funding Corp. 96-1,
B 7.69%, '05 ..................... AA 450 467,016
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 .............................. AA 988 965,855
Resolution Trust Corp. 93-C1,
B 8.75%, '24 ..................... Aa(c) 1,600 1,597,250
Resolution Trust Corp. 95-C2,
B 6.80%, '27 ..................... Aa(c) 869 864,323
Resolution Trust Corp. 95-2,
M1 7.15%, '29 ..................... Aa(c) 1,306 1,301,476
Securitized Asset Sales, Inc. 93-J,
2B 6.808%, '23 .................. A 976 925,271
Structured Asset Securities Corp.
93-C1, B 6.60%, '24 ............... A+ 1,150 1,100,137
Structured Asset Securities Corp.
95-C4, B 7%, '26 .................. AA 1,650 1,643,812
------------
13,635,247
------------
Paper & Forest Products--0.1%
Buckeye Cellulose Corp. 9.25%,
'08 .............................. BB- 350 364,000
------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $15,964,239) .............................. 15,929,366
------------
FOREIGN GOVERNMENT SECURITIES--2.9%
Argentina--0.7%
Republic of Argentina Discount
L-GL Euro 6.875%, '23 (e) ......... BB 2,400 2,077,500
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
---------- --------- -------------
<S> <C> <C> <C>
Argentina--continued
Republic of Argentina Global Bond
11.375%, '17 ..................... BB $ 200 $ 223,050
Republic of Argentina Par L-GP
5.50%, '23 (e) .................. BB 400 278,000
------------
2,578,550
------------
Brazil--0.3%
Republic of Brazil Discount Z-L
Euro 6.875%, '24 (e) ............ BBB- 800 675,000
Republic of Brazil Par Z-L Euro
5.25%, '24 (e) .................. B(c) 1,000 680,000
------------
1,355,000
------------
Colombia--0.9%
Republic of Colombia Yankee
7.25%, '04 ........................ BBB- 3,500 3,399,428
------------
Mexico--0.5%
United Mexican States 144A
7.875%, '01 (d)(e) ............... BBB- 350 350,560
United Mexican States Euro D
6.813%, '19 (e)(f) ............... BB 1,300 1,209,813
United Mexican States Series B
Euro 6.25%, '19 .................. BB 750 580,781
------------
2,141,154
------------
Venezuela--0.5%
Republic of Venezuela Discount
6.813%, '20 (e)(f) ............... B+ 850 752,250
Republic of Venezuela Par W-A
6.75%, '20 (f) .................. B+ 1,600 1,261,000
------------
2,013,250
------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $10,259,743)......... 11,487,382
------------
FOREIGN NON-CONVERTIBLE BONDS--1.0%
Chile--0.2%
Compania Sud Amer Vapore
7.375%, '03 ..................... BBB 140 137,725
Petropower I Funding Trust 144A
7.36%, '14 (d) .................. BBB 500 475,855
------------
613,580
------------
Colombia--0.8%
Financiera Energ Nacional EMTN
Euro 9%, '99 ..................... BBB- 3,200 3,348,000
------------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $3,913,890) ............................. 3,961,580
------------
MUNICIPAL BONDS--2.2%
California--1.2%
Kern County Pension Obligation
Taxable 7.26%, '14 ............... AAA 1,500 1,483,470
Long Beach Pension Obligation
Taxable 6.87%, '06 ............... AAA 840 832,104
San Bernardino County Obligation
Revenue Taxable 6.87%, '08 ...... AAA 410 401,074
San Bernardino County Obligation
Revenue Taxable 6.94%, '09 ...... AAA 1,110 1,088,999
Ventura County Pension Taxable
6.54%, '05 ........................ AAA 975 952,302
------------
4,757,949
------------
</TABLE>
See Notes to Financial Statements
19
<PAGE>
STRATEGIC ALLOCATION SERIES
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
---------- -------- ------------
<S> <C> <C> <C>
Florida--1.0%
Miami Beach Special Obligation
Taxable 8.60%, '21 ............ AAA $3,210 $ 3,455,308
University of Miami Exchangeable
Revenue Series A Taxable
7.65%, '20 ..................... AAA 540 538,650
------------
3,993,958
------------
TOTAL MUNICIPAL BONDS
(Identified cost $8,906,733) ........................... 8,751,907
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------
<S> <C> <C>
COMMON STOCKS--64.7%
Aerospace & Defense--1.8%
United Technologies Corp. ............ 86,100 7,146,300
-----------
Banks--4.3%
Bank of New York Co., Inc. ......... 94,000 4,089,000
BankAmerica Corp. .................. 96,000 6,198,000
Nationsbank Corp. .................. 61,000 3,934,500
Norwest Corp. ........................ 51,000 2,868,750
-----------
17,090,250
-----------
Beverages--0.8%
PepsiCo, Inc. ........................ 85,800 3,222,863
-----------
Chemical--2.4%
Du Pont (E.I.) de Nemours & Co. ...... 56,400 3,546,150
Monsanto Co. ........................ 135,000 5,813,438
-----------
9,359,588
-----------
Chemical--Specialty--1.0%
Praxair, Inc. ........................ 72,900 4,082,400
-----------
Computer Software & Services--2.7%
BMC Software, Inc. (b) ............... 60,700 3,361,262
Fiserv, Inc. (b) ..................... 48,800 2,177,700
HBO & Co. ........................... 45,900 3,161,363
Sungard Data Systems, Inc. (b) ...... 45,200 2,101,800
-----------
10,802,125
-----------
Conglomerates--2.2%
Tyco International Ltd. ............ 126,700 8,813,569
-----------
Cosmetics & Soaps--2.6%
Gillette Co. ........................ 43,400 4,112,150
Procter & Gamble Co. ............... 43,700 6,172,625
-----------
10,284,775
-----------
Diversified Financial Services--5.4%
American Express Co. ............... 84,100 6,265,450
Merrill Lynch & Co., Inc. ............ 37,500 2,235,937
T. Rowe Price Associates ............ 66,100 3,412,413
Travelers Group, Inc. ............... 153,200 9,661,175
-----------
21,574,975
-----------
Diversified Miscellaneous--1.5%
Service Corporation International ... 184,900 6,078,587
-----------
Electrical Equipment--1.9%
General Electric Co. .................. 116,400 7,609,650
-----------
Electronics--5.6%
Altera Corp. (b) ..................... 71,700 3,620,850
Intel Corp. ........................... 61,900 8,778,194
LSI Logic Corp. (b) .................. 72,500 2,320,000
Linear Technology Corp. ............... 70,900 3,669,075
Tektronix, Inc. ..................... 61,800 3,708,000
-----------
22,096,119
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------- --------------
<S> <C> <C>
Entertainment, Leisure & Gaming--2.1%
Time Warner, Inc. ..................... 90,700 $ 4,376,275
Walt Disney Co. ........................ 47,600 3,819,900
-------------
8,196,175
-------------
Healthcare--Diversified--2.1%
Bristol-Myers Squibb Co. ............... 101,100 8,189,100
-------------
Healthcare--Drugs--5.3%
Amgen, Inc. (b) ........................ 141,600 8,230,500
Merck & Co., Inc. ..................... 71,600 7,410,600
Pfizer, Inc. ........................... 43,900 5,246,050
-------------
20,887,150
-------------
Hospital Management & Services--1.7%
Health Management Association, Inc.
Class A (b) ........................... 97,500 2,778,750
Oxford Health Plans (b) ............... 57,500 4,125,625
-------------
6,904,375
-------------
Household Furnishings & Appliances--0.8%
Newell Companies, Inc. .................. 82,900 3,284,912
-------------
Insurance--2.3%
Allstate Corp. ........................ 55,000 4,015,000
Hartford Financial Services Group, Inc. 60,300 4,989,825
-------------
9,004,825
-------------
Medical Products & Supplies--3.2%
Abbott Laboratories ..................... 60,400 4,031,700
Johnson & Johnson ..................... 61,200 3,939,750
Medtronic, Inc. ........................ 61,100 4,949,100
-------------
12,920,550
-------------
Office & Business Equipment--1.5%
Compaq Computer Corp. (b) ............... 59,200 5,875,600
-------------
Oil--2.0%
Exxon Corp. ........................... 65,400 4,022,100
Texaco, Inc. ........................... 35,800 3,893,250
-------------
7,915,350
-------------
Oil Service & Equipment--4.3%
BJ Services Co. (b) ..................... 61,500 3,297,937
Diamond Offshore Drilling, Inc. (b) ... 44,300 3,460,937
Halliburton Co. ........................ 64,800 5,135,400
Schlumberger Ltd. ..................... 40,100 5,012,500
-------------
16,906,774
-------------
Publishing, Broadcasting, Printing & Cable--2.2%
Clear Channels Communications, Inc. (b) 73,500 4,520,250
Tribune Co. ........................... 92,000 4,421,750
-------------
8,942,000
-------------
Retail--2.8%
Borders Group, Inc. (b) ............... 267,800 6,460,675
TJX Companies, Inc. ..................... 181,600 4,789,700
-------------
11,250,375
-------------
Retail--Drugs--0.5%
CVS Corp. .............................. 38,300 1,962,875
-------------
Tobacco--1.7%
Philip Morris Companies, Inc. ......... 148,900 6,607,438
-------------
TOTAL COMMON STOCKS
(Identified cost $238,864,025) ........................ 257,008,700
-------------
</TABLE>
See Notes to Financial Statements
20
<PAGE>
STRATEGIC ALLOCATION SERIES
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C>
FOREIGN COMMON STOCKS--3.6%
Healthcare--Drugs--1.3%
SmithKline Beecham PLC Sponsored ADR
(United Kingdom) (b) .................. 53,900 $ 4,938,588
-------------
Telecommunications Equipment--2.3%
Oy Nokia Corp. Sponsored ADR (Finland) ... 57,100 4,211,125
Telefonaktiebolaget LM Ericsson Class B ADR
(Sweden) .............................. 127,700 5,028,187
-------------
9,239,312
-------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $12,626,495) ........................ 14,177,900
-------------
TOTAL LONG-TERM INVESTMENTS--90.0%
(Identified cost $336,210,705) ........................ 357,323,397
-------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
---------- -------- ---------------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--4.1%
Commercial Paper--2.1%
McDonald's Corp. 5.90%, 7-3-97 . A-1+ $2,700 $ 2,699,115
Enterprise Funding Corp. 5.60%,
7-10-97 ..................... A-1+ 927 925,702
Receivables Capital Corp. 5.56%,
7-18-97 ..................... A-1+ 2,400 2,393,699
Receivables Capital Corp. 5.62%,
8-8-97 ........................ A-1+ 2,500 2,485,169
-----------------
8,503,685
-----------------
Federal Agency Securities--2.0%
Federal Home Loan Banks 5.25%
8-8-97 (e) .................. 2,500 2,500,975
Federal Farm Credit Banks 5.35%,
3-3-98 ........................ 5,500 5,503,905
-----------------
8,004,880
-----------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $16,503,685) ........................... 16,508,565
-----------------
TOTAL INVESTMENTS--94.1%
(Identified cost $352,714,390) ........................ 373,831,962(a)
Cash and receivables, less liabilities--5.9% ............ 23,406,682
-----------------
NET ASSETS--100.0% ....................................... $ 397,238,644
=================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $24,902,672 and gross
depreciation of $3,785,100 for income tax purposes. At June 30, 1997, the
aggregate cost of securities for federal income tax purposes was
$352,714,390.
(b) Non-income producing.
(c) As rated by Moodys, 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 $826,415 or 0.2% of net
assets.
(e) Variable or step coupon obligation; interest rate shown reflects the rate
currently in effect.
(f) Rights incorporated as a unit.
See Notes to Financial Statements
21
<PAGE>
STRATEGIC ALLOCATION SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Assets
Investment securities at value (Identified cost $352,714,390) ..................... $373,831,962
Cash .............................................................................. 2,788
Receivables
Investment securities sold ...................................................... 45,174,786
Interest and dividends ......................................................... 1,107,999
-------------
Total assets .................................................................. 420,117,535
-------------
Liabilities
Payables
Investment securities purchased ................................................ 22,549,181
Fund shares repurchased ......................................................... 28,073
Investment advisory fee ......................................................... 188,490
Financial agent fee ............................................................ 19,442
Trustees' fee .................................................................. 3,434
Accrued expenses ............................................................... 90,271
-------------
Total liabilities ............................................................ 22,878,891
-------------
Net Assets ..................................................................... $397,238,644
=============
Net Assets Consist of:
Capital paid in on shares of beneficial interest .............................. $347,662,434
Undistributed net investment income ............................................. 32,174
Accumulated net realized gain ................................................... 28,426,464
Net unrealized appreciation ................................................... 21,117,572
-------------
Net Assets ..................................................................... $397,238,644
=============
Shares of beneficial interest outstanding, $1 par value, unlimited authorization 27,119,096
=============
Net asset value and offering price per share .................................... $14.65
=============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Investment Income
Interest ......................................................... $ 4,765,493
Dividends ......................................................... 1,242,330
-----------
Total investment income .......................................... 6,007,823
-----------
Expenses
Investment advisory fee .......................................... 1,110,607
Financial agent fee ................................................ 114,395
Custodian ......................................................... 30,788
Printing ......................................................... 28,453
Professional ...................................................... 13,266
Trustees ......................................................... 9,872
Miscellaneous ...................................................... 6,108
-----------
Total expenses ................................................... 1,313,489
-----------
Net investment income ............................................. 4,694,334
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities .................................... 28,661,807
Net realized loss on written options .............................. (233,706)
Net realized gain on foreign currency transactions ............... 5,900
Net change in unrealized appreciation (depreciation) on investments 3,696,201
-----------
Net gain on investments ............................................. 32,130,202
-----------
Net increase in net assets resulting from operations ............... $36,824,536
===========
</TABLE>
See Notes to Financial Statements
22
<PAGE>
STRATEGIC ALLOCATION SERIES
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 ...................................................... $ 4,694,334 $ 8,315,276
Net realized gain ......................................................... 28,434,001 25,851,907
Net change in unrealized appreciation (depreciation) ........................ 3,696,201 (2,475,007)
------------- -------------
Net increase in net assets resulting from operations ........................ 36,824,536 31,692,176
------------- -------------
From Distributions to Shareholders
Net investment income ...................................................... (5,077,025) (7,996,685)
Net realized gains ......................................................... (4,639,522) (23,234,158)
------------- -------------
Decrease in net assets from distributions to shareholders .................. (9,716,547) (31,230,843)
------------- -------------
From Share Transactions
Proceeds from sales of shares (1,669,983 and 4,387,120 shares, respectively) 23,786,173 61,269,234
Net asset value of shares issued from reinvestment of distributions
(670,617 and 2,254,196 shares, respectively) .............................. 9,716,547 31,230,843
Cost of shares repurchased (2,639,102 and 5,175,253 shares, respectively) ... (37,615,740) (72,555,884)
------------- -------------
Increase (decrease) in net assets from share transactions .................. (4,113,020) 19,944,193
------------- -------------
Net increase in net assets ................................................ 22,994,969 20,405,526
Net Assets
Beginning of period ......................................................... 374,243,675 353,838,149
------------- -------------
End of period (including undistributed net investment income of $32,174
and $414,865, respectively) ................................................ $397,238,644 $ 374,243,675
============= =============
</TABLE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Six Months
Ended
6/30/97
(Unaudited)
----------------
<S> <C>
Net asset value, beginning of period ......... $ 13.65
Income from investment operations
Net investment income ........................ 0.18
Net realized and unrealized gain (loss) ...... 1.18
-----------
Total from investment operations ............ 1.36
-----------
Less distributions
Dividends from net investment income ......... (0.19)
Dividends from net realized gains ............ (0.17)
-----------
Total distributions ........................ (0.36)
-----------
Change in net asset value ..................... 1.00
-----------
Net asset value, end of period ............... $ 14.65
===========
Total return ................................. 10.02%(6)
Ratios/supplemental data:
Net assets, end of period (thousands) ......... $ 397,239
Ratio to average net assets of:
Operating expenses ........................... 0.69%(5)
Net investment income ........................ 2.46%(5)
Portfolio turnover rate ........................ 252%(6)
Average commission rate paid(4) ............... $ 0.0554
<CAPTION>
Year Ended December 31,
1996 1995 1994 1993 1992
----------- ---------------- ------------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 13.63 $ 12.68 $ 13.71 $ 12.86 $ 12.97
Income from investment operations
Net investment income ........................ 0.32 0.45 0.36(1)(3) 0.23(3) 0.37(3)
Net realized and unrealized gain (loss) ...... 0.91 1.84 (0.56) 1.17 0.99
--------- --------- ----------- ---------- ----------
Total from investment operations ............ 1.23 2.29 (0.20) 1.40 1.36
--------- --------- ----------- ---------- ----------
Less distributions
Dividends from net investment income ......... (0.31) (0.45) (0.37) (0.23) (0.37)
Dividends from net realized gains ............ (0.90) (0.89) (0.46) (0.32) (1.10)
--------- --------- ----------- ---------- ----------
Total distributions ........................ (1.21) (1.34) (0.83) (0.55) (1.47)
--------- --------- ----------- ---------- ----------
Change in net asset value ..................... 0.02 0.95 (1.03) 0.85 (0.11)
--------- --------- ----------- ---------- ----------
Net asset value, end of period ............... $ 13.65 $ 13.63 $ 12.68 $ 13.71 $ 12.86
========= ========= =========== ========== ==========
Total return ................................. 9.05% 18.22% (1.45)% 11.02% 10.67%
Ratios/supplemental data:
Net assets, end of period (thousands) ......... $ 374,244 $ 353,838 $ 289,083 $ 256,011 $ 163,628
Ratio to average net assets of:
Operating expenses ........................... 0.70% 0.67%(2) 0.74% 0.74% 0.50%
Net investment income ........................ 2.26% 3.28% 2.71% 1.82% 2.90%
Portfolio turnover rate ........................ 287% 170% 220% 269% 326%
Average commission rate paid(4) ............... $ 0.0530 N/A N/A N/A N/A
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.001 per share.
(2) The ratio of operating expenses to average net assets excludes the effect
of expense offsets for custodian fees; if expense offsets were included,
the ratio would not significantly differ.
(3) Computed using average shares outstanding.
(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, mark-downs, or spreads on shares traded on a principal
basis.
(5) Annualized
(6) Not annualized
See Notes to Financial Statements
23
<PAGE>
INTERNATIONAL SERIES
INVESTMENT REVIEW
The Fund rose 13.31% for the six months ended June 30, 1997 compared with
a 12.70% return for a peer universe of 442 international funds, according to
Lipper Analytical Services, Inc. The EAFE Index* was up 11.21%. All performance
figures are stated in U.S. dollars, assume reinvestment of dividends and
exclude the effect of sales charges. The MSCI total return figures are net of
foreign withholding taxes.
The Fund performed well largely because of its slightly overweighted
position in Europe and good stock selection in those same markets, as well as
its underweighted position in Japan. During May, performance was hampered
somewhat by this underweighting in Japan as that market returned 11.04%, with
the yen up 9.00% for the month. An overweighted position in the UK, which
lagged the rest of Europe, also held back performance.
Over the last six months, the European and Latin American markets have
performed strongly, in some cases even outpacing the United States. Europe has
continued to be supported by low and falling interest rates, particularly in
the peripheral countries. Latin America rose 40.79% in the last six months,
with every country participating in the rally. Brazil and Venezuela led the way
as economic reform and deregulation continued to push slowly forward. Peru,
Mexico and Argentina were boosted by signs of improving economic conditions.
The Pacific Basin produced a more uneven performance. Japan, the largest
market in the region gained 9.07%, while Malaysia lost 11.74%. In the rest of
Asia, only Taiwan and India turned in strong returns. The Thai market has
fallen 33.73%. Hong Kong and Japan experienced an extremely strong last three
months in which Hong Kong rose 20.34% and Japan was up 23.67%.
OUTLOOK
Continued efforts at fiscal restraint on the part of most European
governments is creating a climate of low interest rates and inflation, which is
supporting stock prices. The onus continues to be on companies to generate
earnings growth through internal means, as demand remains relatively sluggish
and pricing ability nonexistent. In Japan, the outlook for 1997 is also modest,
but better than was expected six months ago. We have raised our weighting in
Japan slightly, but would need a substantial improvement in the outlook for
earnings growth to become more positive.
Since our last report, we have reduced our holdings in Hong Kong based on
a potential clamp down on real estate property prices. We redeployed about 9%
of our cash position into Korea and the Philippines. Although Latin America
regions have posted strong gains in the last six months, they are coming off
very low bases and are still relatively inexpensive to the rest of the world.
We are still positive on the outlook for the region for the remainder of the
year.
* The Morgan Stanley Capital International (MSCI) EAFE Index is an
unmanaged, commonly used measure of total return foreign stock performance.
24
<PAGE>
INTERNATIONAL SERIES
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------------------
<S> <C> <C>
FOREIGN COMMON STOCKS--92.8%
Australia--0.5%
Westpac Bank Corp. Ltd. (Diversified
Financial Services) ........................... 176,000 $ 1,050,884
------------
Belgium--1.0%
Credit Communal Holding/Dexia (Banks) ............ 19,300 2,074,951
------------
Brazil--2.4%
Telebras Sponsored ADR (Utility--Telephone) ...... 21,500 3,262,625
Uniao de Bancos Brasileiros SA Sponsored
GDR (Banks) .................................... 43,000 1,596,375
------------
4,859,000
------------
Chile--1.0%
Santa Isabel SA Sponsored ADR (Retail--
Food) .......................................... 64,000 2,064,000
------------
Finland--2.9%
Nokia AB Series A (Telecommunications
Equipment) .................................... 31,800 2,374,806
Raision Tehtaat Oy (Food) ........................ 23,000 1,580,802
The Rauma Group (Machinery) ..................... 85,000 1,947,364
------------
5,902,972
------------
France--7.2%
AXA-UAP (Insurance) .............................. 33,369 2,077,428
Carrefour Supermarche (Retail--Food) ............ 3,020 2,195,466
Elf Aquitaine SA (Oil) ........................... 19,600 2,116,609
Louis Dreyfus Citrus (Food) (b) .................. 42,500 1,588,981
Promodes (Retail) .............................. 6,200 2,417,312
Total SA (Oil) ................................. 21,400 2,165,188
Usinor Sacilor (Steel) ........................... 120,000 2,166,618
------------
14,727,602
------------
Germany--4.8%
Adidas AG (Textile & Apparel) .................. 20,350 2,253,974
BHW Holding AG (Banks) (b) ..................... 120,000 2,031,564
Rhoen-Klinikum AG (Hospital Management &
Services) .................................... 15,850 2,028,436
Schmalbach Lubeca AG (Containers) ............... 8,100 1,817,561
VEBA AG (Utility--Electric) ..................... 28,400 1,597,245
------------
9,728,780
------------
Hong Kong--0.0%
Henderson China Holding Ltd. (Real Estate) ...... 828 1,395
------------
Hungary--0.6%
Gedeon Richter 144A GDS (Health Care--
Drugs) (c) .................................... 12,700 1,170,214
------------
Indonesia--0.1%
Wicaksana Overseas International
(Conglomerates) .............................. 248,500 304,046
------------
Italy--5.3%
Gucci Group NV (Textile & Apparel) ............... 20,600 1,345,787
Gucci Group NV-NY Registered Shares
(Textile & Apparel) ........................... 32,500 2,092,188
Istituto Bancario San Paolo di Torino (Banks) .... 203,223 1,479,831
Stet-Societa' Finanziaria Telefonica SPA
(Utility--Telephone) ........................... 1,020,000 5,934,763
------------
10,852,569
------------
Japan--14.4%
Canon, Inc. (Office & Business Equipment) ...... 124,000 3,380,932
Circle K Japan Co. Ltd. (Retail--Food) ......... 30,000 1,725,072
SHARES VALUE
----------- -----------------------
<S> <C> <C>
Japan--continued
Credit Saison Co. Ltd. (Diversified Financial
Services) .................................... 95,400 $ 2,334,353
DDI Corp. (Utility--Telephone) .................. 175 1,293,804
Hoya Corp. (Machinery) ........................... 21,000 935,943
Matsushita Communication Industrial
(Telecommunications Equipment) ............... 54,000 1,826,269
Meitec (Computer Software & Services) ............ 64,000 1,907,192
Namco (Entertainment, Leisure & Gaming) ......... 44,000 1,699,554
Nintendo Co. Ltd. (Entertainment, Leisure &
Gaming) ....................................... 18,000 1,510,093
Nippon Broadcasting System (Publishing,
Broadcasting, Printing & Cable) ............... 21,000 2,330,683
Paris Miki, Inc. (Retail) ........................ 55,000 1,619,768
Sankyo Co. Ltd. (Health Care--Diversified) ...... 52,000 1,749,541
TDK Corp. (Electronics) ........................ 14,000 1,028,926
Taisho Pharmaceutical Co. (Health Care--
Drugs) ....................................... 56,000 1,512,191
Taiyo Yuden Co. Ltd. (Electrical Equipment) ...... 114,000 1,882,898
Takeda Chemical Industries (Health Care--
Drugs) ....................................... 91,000 2,560,692
------------
29,297,911
------------
Mexico--1.3%
Coca-Cola Femsa SA Sponsored ADR
(Beverages) .................................... 50,000 2,581,250
------------
Netherlands--4.9%
DSM NV (Chemical) .............................. 20,000 1,993,569
ING Groep NV (Diversified Financial
Services) .................................... 46,000 2,124,739
Philips Electronics NV (Electronics) ............ 56,000 4,018,578
VNU-Verenigde Bezit (Publishing,
Broadcasting, Printing & Cable) ............... 85,800 1,900,536
------------
10,037,422
------------
New Zealand--0.2%
Restaurant Brands New Zealand Limited
(Entertainment, Leisure & Gaming) (b) ......... 245,000 425,076
------------
Norway--1.6%
Schibsted ASA (Publishing, Broadcasting,
Printing & Cable) .............................. 97,000 1,921,264
Smedvig ASA A Shares (Oil) ..................... 54,500 1,362,370
------------
3,283,634
------------
Peru--0.9%
Telefonica del Peru SA (Utility--Telephone) ...... 708,945 1,862,902
------------
Philippines--3.6%
Ayala Land, Inc. Class B (Real Estate) ......... 2,747,000 2,525,582
Manila Electric Co. (Utility--Electric) ......... 225,000 1,108,963
Metropolitan Bank & Trust Co. (Banks) ............ 23,000 488,323
Philippine Commercial International Bank
(Banks) ....................................... 101,000 976,456
SM Prime Holdings, Inc. (Real Estate) ............ 4,112,000 1,216,014
San Miguel Corp. Class B (Beverages) ............ 398,000 1,048,718
------------
7,364,056
------------
Poland--0.1%
Bank Handlowy W. Warszawie (Banks) (b) ......... 10,000 115,331
------------
Portugal--2.3%
Electricidade De Portugal SA (Utility--
Electric) .................................... 37,365 686,552
Portugal Telecom SA (Utility--Telephone) ......... 45,700 1,845,782
</TABLE>
See Notes to Financial Statements
25
<PAGE>
INTERNATIONAL SERIES
<TABLE>
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C>
Portugal--continued
Telecel-Comunicacoes Pessoais SA
(Telecommunications Equipment) (b) ............ 26,700 $ 2,217,532
-------------
4,749,866
-------------
South Korea--10.0%
Daewoo Securities Co. (Broker-Dealers) (b) ...... 188,600 3,419,435
Daewoo Telecom Co. (Telecommunications
Equipment) .................................... 99,000 963,243
Dongsuh Securities Co. (Broker-Dealers) (b) ...... 142,200 1,305,100
Hyundai Electronics Industries Co.
(Electronics) ................................. 12,600 645,608
Hyundai Marine & Fire Insurance Co.
(Insurance) (b) .............................. 39,800 1,609,030
Hyundai Securities Co. (Diversified Financial
Services) (b) ................................. 121,400 1,845,607
L.G. Electronics (Electronics) .................. 94,800 1,761,485
L.G. Information & Communication Ltd.
(Telecommunications Equipment) ............... 23,800 2,948,196
L.G. Securities (Diversified Financial Services)
(b) .......................................... 163,200 1,984,864
Oriental Fire & Marine Insurance (Insurance) ..... 59,200 1,493,332
Samsung Electronics Co. (Electronics) ............ 11,344 1,278,882
Samsung Fire & Marine Insurance
(Insurance) .................................... 630 238,804
Sungmi Telecom Electronics Co.
(Telecommunications Equipment) ............... 6,860 909,258
-------------
20,402,844
-------------
Spain--0.8%
Telefonica de Espana (Utility--Telephone) ...... 54,200 1,569,946
-------------
Sweden--1.6%
Astra AB A Shares (Health Care--Drugs) ......... 117,000 2,178,912
Biora AB (Medical Products & Supplies) (b) ...... 50,000 465,580
Biora AB Sponsored ADR (Medical Products
& Supplies) (b) .............................. 19,000 339,625
Hemkopskedjan AB B Shares (Retail--Food) ........ 37,000 380,417
-------------
3,364,534
-------------
Switzerland--5.6%
Ares-Serono Group Bearer Shares (Health
Care--Drugs) ................................. 1,890 2,742,043
Novartis AG Registered Shares (Health
Care--Drugs) ................................. 2,080 3,330,169
Sig Schweizerische Industrie-Gesellschaft
Holding AG Bearer Shares (Machinery) ......... 610 1,851,591
Sig Schweizerische Industrie-Gesellschaft
Holding AG Registered Shares
(Machinery) .................................... 200 297,709
Zurich Verschierungs Registered Shares
(Insurance) .................................... 8,300 3,307,930
-------------
11,529,442
-------------
United Kingdom--19.7%
Avis Europe PLC (Leasing/Rental) (b) ............ 970,000 2,203,812
British Aerospace PLC (Aerospace &
Defense) ....................................... 155,500 3,459,150
Carlton Communications PLC (Publishing,
Broadcasting, Printing & Cable) ............... 208,000 1,756,991
Celltech PLC (Health Care--Drugs) (b) ............ 178,000 795,489
SHARES VALUE
----------- -------------
<S> <C> <C>
United Kingdom--continued
Compass Group PLC (Lodging &
Restaurants) ................................. 304,000 $ 3,410,386
Cordiant PLC (Professional Services) ............ 1,646,000 3,383,505
Corporate Services Group PLC (Professional
Services) .................................... 580,900 1,822,564
GKN PLC (Miscellaneous) ........................ 117,000 2,014,589
Granada Group PLC (Entertainment, Leisure
& Gaming) .................................... 143,000 1,880,326
Lloyds TSB Group PLC (Diversified Financial
Services) .................................... 255,000 2,614,514
Next PLC (Retail) .............................. 154,000 1,739,165
Norwich Union PLC 144A (Insurance) (b)(c) ...... 190,000 1,010,403
Rentokil Initial PLC (Professional Services) ... 544,000 1,910,519
Rolls-Royce PLC (Aerospace & Defense) ............ 410,000 1,566,162
Shell Transport & Trading Co. PLC (Oil) ......... 459,000 3,128,504
Siebe PLC (Electrical Equipment) ............... 156,000 2,640,679
WPP Group PLC (Advertising) ..................... 876,000 3,594,108
Williams PLC (Professional Services) ............ 239,100 1,285,441
-------------
40,216,307
-------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $159,115,011) .................. 189,536,934
-------------
PREFERRED STOCKS--2.4%
Germany--1.5%
Volkswagen AG Pfd. (Autos & Trucks) ............ 5,500 3,093,257
-------------
United Kingdom--0.9%
Egypt Investment Co. (Multi-Industry) (b) ...... 119,000 1,755,250
-------------
TOTAL PREFERRED STOCKS
(Identified cost $3,398,922) ..................... 4,848,507
-------------
TOTAL LONG-TERM INVESTMENTS--95.2%
(Identified cost $162,513,933) .................. 194,385,441
-------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000)
---------- --------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--5.1%
Commercial Paper--3.2%
Anheuser-Busch Cos., Inc. 6%,
7-1-97 ........................ A-1+ $3,500 3,500,000
Albertson's, Inc. 5.52%, 8-15-97 A-1 3,000 2,979,300
-----------------
6,479,300
-----------------
Federal Agency Securities--1.9%
Federal Home Loan Banks 5.42%,
7-2-97 ..................... 1,605 1,604,758
Federal National Mortgage Assoc.
5.47%, 7-3-97 ............... 335 334,949
Federal National Mortgage Assoc.
5.45%, 7-30-97 ............... 2,025 2,016,110
-----------------
3,955,817
-----------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $10,435,117) ..................... 10,435,117
-----------------
TOTAL INVESTMENTS--100.3%
(Identified cost $172,949,050) ..................... 204,820,558(a)
Cash and receivables, less liabilities--(0.3%) ... (688,039)
-----------------
NET ASSETS--100.0% ................................. $ 204,132,519
=================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $35,432,190 and gross
depreciation of $3,708,682 for income tax purposes. At June 30, 1997, the
aggregate cost of securities for federal income tax purposes was
$173,097,050.
(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 June 30,
1997, these securities amounted to a value of $2,180,617 or 1.1% of net
assets.
See Notes to Financial Statements
26
<PAGE>
INTERNATIONAL SERIES
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of
Total Long-Term Investments
(Unaudited)
<TABLE>
<S> <C>
Advertising .................................... 1.9%
Aerospace & Defense .............................. 2.6
Autos & Trucks ................................. 1.6
Banks .......................................... 4.5
Beverages ....................................... 1.9
Broker-Dealers .................................... 2.4
Chemical .......................................... 1.0
Computer Software & Services ..................... 1.0
Conglomerates .................................... 0.2
Containers ....................................... 0.9
Diversified Financial Services .................. 6.2
Electrical Equipment ........................... 2.3
Electronics .................................... 4.5
Entertainment, Leisure & Gaming .................. 2.8
Food ............................................. 1.6
Health Care--Diversified ........................ 0.9
Health Care--Drugs .............................. 7.4
Hospital Management & Services .................. 1.0
Insurance ....................................... 5.0
Leasing/Rental .................................... 1.1
Lodging & Restaurants ........................... 1.8
Machinery ....................................... 2.6
Medical Products & Supplies ..................... 0.4
Miscellaneous .................................... 1.0
Multi-Industry ................................. 0.9
Office & Business Equipment ..................... 1.7
Oil ............................................. 4.5
Professional Services ........................... 4.3
Publishing, Broadcasting, Printing & Cable ...... 4.1
Real Estate ....................................... 1.9
Retail .......................................... 3.0
Retail--Food .................................... 3.3
Steel .......................................... 1.1
Telecommunications Equipment ..................... 5.8
Textile & Apparel .............................. 2.9
Utility--Electric .............................. 1.8
Utility--Telephone .............................. 8.1
------
100.0%
======
</TABLE>
See Notes to Financial Statements
27
<PAGE>
INTERNATIONAL SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Assets
Investment securities at value (Identified cost $172,949,050) .................. $204,820,558
Receivables
Dividends and interest ...................................................... 411,897
Investment securities sold ................................................... 123,076
Fund shares sold ............................................................... 118,461
Tax reclaim .................................................................. 82,594
Net unrealized appreciation on forward currency contracts ..................... 199,127
-------------
Total assets ............................................................... 205,755,713
-------------
Liabilities
Payables
Custodian ..................................................................... 5,433
Investment securities purchased ............................................. 108,100
Closed foreign currency contracts ............................................. 1,276,245
Investment advisory fee ...................................................... 123,664
Custodian fee .................................................................. 27,404
Financial agent fee ......................................................... 9,443
Trustees' fee ............................................................... 3,405
Accrued expenses ............................................................ 69,500
-------------
Total liabilities ............................................................ 1,623,194
-------------
Net Assets ..................................................................... $204,132,519
=============
Net Assets Consist of:
Capital paid in on shares of beneficial interest .............................. $156,743,742
Undistributed net investment income .......................................... 198,102
Accumulated net realized gain ................................................ 15,121,327
Net unrealized appreciation ................................................... 32,069,348
-------------
Net Assets ..................................................................... $204,132,519
=============
Shares of beneficial interest outstanding, $1 par value, unlimited authorization 12,885,617
=============
Net asset value and offering price per share ................................. $15.84
=============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Investment Income
Dividends .............................................................................. $ 1,755,856
Interest .............................................................................. 734,056
Foreign taxes withheld ............................................................... (179,254)
-----------
Total investment income ............................................................... 2,310,658
-----------
Expenses
Investment advisory fee ............................................................... 684,297
Financial agent fee .................................................................. 54,744
Custodian .............................................................................. 76,300
Printing .............................................................................. 20,377
Trustees .............................................................................. 11,586
Professional ........................................................................... 11,013
Miscellaneous ........................................................................ 6,000
-----------
Total expenses ........................................................................ 864,317
-----------
Net investment income .................................................................. 1,446,341
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities ...................................................... 13,092,441
Net realized gain on foreign currency transactions .................................... 2,044,781
Net change in unrealized appreciation (depreciation) on investments .................. 7,878,138
Net change in unrealized appreciation (depreciation) on foreign currency and foreign ... (874,916)
-----------
currency transactions
Net gain on investments ............................................................... 22,140,444
-----------
Net increase in net assets resulting from operations .................................... $23,586,785
===========
</TABLE>
See Notes to Financial Statements
28
<PAGE>
INTERNATIONAL SERIES
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 .................................................................. $ 1,446,341 $ 1,238,905
Net realized gain ..................................................................... 15,137,222 12,048,984
Net change in unrealized appreciation (depreciation) ................................. 7,003,222 13,071,593
------------- -------------
Net increase in net assets resulting from operations ................................. 23,586,785 26,359,482
------------- -------------
From Distributions to Shareholders
Net investment income .................................................................. (2,638,818) (2,156,537)
Net realized gains ..................................................................... (4,630,792) (3,811,548)
In excess of net investment income ...................................................... -- (272,380)
------------- -------------
Decrease in net assets from distributions to shareholders .............................. (7,269,610) (6,240,465)
------------- -------------
From Share Transactions
Proceeds from sales of shares (1,804,932 and 3,516,722 shares, respectively) ......... 27,120,194 48,544,295
Net asset value of shares issued from reinvestment of distributions (468,431 and 435,075
shares, respectively) ............................................................... 7,269,610 6,240,465
Cost of shares repurchased (1,282,726 and 2,645,302 shares, respectively) ............ (19,242,115) (36,690,696)
------------- -------------
Increase in net assets from share transactions ....................................... 15,147,689 18,094,064
------------- -------------
Net increase in net assets ............................................................ 31,464,864 38,213,081
Net Assets
Beginning of period .................................................................. 172,667,655 134,454,574
------------- -------------
End of period (including undistributed net investment income of $198,102 and
$1,390,579, respectively) ............................................................ $204,132,519 $ 172,667,655
============= =============
</TABLE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding through the indicated period)
<TABLE>
<CAPTION>
Six Months
Ended
6/30/97
(Unaudited)
----------------
<S> <C>
Net asset value, beginning of period ......... $ 14.52
Income from investment operations
Net investment income ........................ 0.12
Net realized and unrealized gain (loss) ...... 1.79
-----------
Total from investment operations ............ 1.91
-----------
Less distributions
Dividends from net investment income ......... (0.22)
Dividends from net realized gains ............ (0.37)
In excess of net investment income ......... --
-----------
Total distributions ........................ (0.59)
-----------
Change in net asset value ..................... 1.32
-----------
Net asset value, end of period ............... $ 15.84
===========
Total return ................................. 13.31%(5)
Ratio/supplemental data:
Net assets, end of period (thousands) ......... $ 204,133
Ratio to average of net assets of:
Operating expenses ........................... 0.95%(4)
Net investment income ........................ 1.59%(4)
Portfolio turnover rate ........................ 78%(5)
Average commission rate paid(2) ............... $ 0.0125
<CAPTION>
Year Ended December 31,
1996 1995 1994 1993 1992
-------------- -------------- -------------- ------------------ --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 12.70 $ 11.85 $ 12.21 $ 8.82 $ 10.17
Income from investment operations
Net investment income ........................ 0.11(3) 0.12(3) 0.08(3) 0.07(1)(3) 0.09(3)
Net realized and unrealized gain (loss) ...... 2.25 1.02 (0.07) 3.32 (1.40)
--------- --------- --------- ----------- -----------
Total from investment operations ............ 2.36 1.14 0.01 3.39 (1.31)
--------- --------- --------- ----------- -----------
Less distributions
Dividends from net investment income ......... (0.19) (0.04) (0.03) -- (0.04)
Dividends from net realized gains ............ (0.33) (0.25) (0.34) -- --
In excess of net investment income ......... (0.02) -- -- -- --
--------- --------- --------- ----------- -----------
Total distributions ........................ (0.54) (0.29) (0.37) -- (0.04)
--------- --------- --------- ----------- -----------
Change in net asset value ..................... 1.82 0.85 (0.36) 3.39 (1.35)
--------- --------- --------- ----------- -----------
Net asset value, end of period ............... $ 14.52 $ 12.70 $ 11.85 $ 12.21 $ 8.82
========= ========= ========= =========== ===========
Total return ................................. 18.65% 9.59% 0.03% 38.44% (12.89)%
Ratio/supplemental data:
Net assets, end of period (thousands) ......... $172,668 $134,455 $134,627 $ 61,242 $ 13,772
Ratio to average of net assets of:
Operating expenses ........................... 1.04% 1.07% 1.10% 1.15% 1.50%
Net investment income ........................ 0.80% 0.95% 0.64% 0.49% 1.13%
Portfolio turnover rate ........................ 142% 249% 172% 193% 74%
Average commission rate paid(2) ............... $ 0.0213 N/A N/A N/A N/A
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of
$0.05.
(2) 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.
(3) Computed using average shares outstanding.
(4) Annualized
(5) Not annualized
See Notes to Financial Statements
29
<PAGE>
BALANCED SERIES
INVESTMENT REVIEW
For the six months ended June 30, 1997, the Phoenix Edge Balanced Series
posted a solid gain of 9.77% compared with an average return of 9.57% for a
peer universe of 232 balanced funds, according to Lipper Analytical Services,
Inc. The benchmark index* returned 12.43%. All performance figures assume
reinvestment of dividends and exclude the effect of sales charges.
Despite a sharp sell-off from mid-March through mid-April, the U.S.
equities market continued to climb to record highs during this latest reporting
period. By the end of June, the Dow Jones Industrial Average reached 7673,
rising 1225 points in the last six months. Blue-chip stocks continued to
significantly outperform small- and mid-cap stocks, and health-care and finance
issues led the market in terms of sector performance. The S&P 500's 20.53%
year-to-date return is the fourth strongest first-half gain over the past 50
years.
Interest rates appeared to be locked in a narrow trading range over the
last six months as investors debated whether the robust economic growth
reported in the first quarter would serve as a catalyst for higher inflation in
the months ahead. As measured by the 30-year Treasury bond, interest rates
climbed as high as 7.17% in mid-April, but finished June yielding 6.79%--only
0.14% higher than at the start of the reporting period. Higher yielding, lower
quality bonds continued to outperform lower yielding, higher quality bonds.
Emerging-market debt and domestic high-yield bonds were the best performers,
while Treasury and investment grade issues were among the laggards. As measured
by the Lehman Brothers Aggregate Bond Index, the fixed-income market returned
3.09% over the last six months.
Over this latest reporting period, the Fund benefited from strong stock
selection in the consumer staples and financial services sectors as well as our
decision to increase the portfolio's equity exposure after the stock market
correction in mid-April. Individual stocks that produced strong gains for the
Fund included General Electric, Eli Lilly, Colgate-Palmolive, Perkin Elmer and
Franklin Resources. The fixed-income segment of the portfolio also boosted
results as it outperformed its benchmark, the Lehman Brothers Aggregate Bond
Index. With interest rates moving downward since mid-April, our purchase of
U.S. Treasury zero-coupon bonds proved to be very profitable. Negative
contributors to overall results included the relative underperformance of our
technology and energy exposures, and to a lesser degree, some individual
stocks, most notably U.S. Filter, Ascend, Amgen and Cardinal Health.
OUTLOOK
Looking ahead, we expect a slower domestic economy in the second half of
the year and continued market leadership from blue-chip growth stocks. Although
many blue-chip stocks have had a strong run as of late, we believe there is
still upside potential as investors remain focused on earnings growth, earnings
stability, global opportunities and liquidity. Given this outlook, we continue
to emphasize the financial, technology and health-care sectors.
Within the portfolio's fixed-income holdings, we are maintaining a longer
duration with the expectation that interest rates will continue to move
downward during the year. In addition, we reduced the portfolio's exposure to
emerging-market, high-yield debt. While this sector has provided excellent
returns year-to-date, valuation levels currently look rich from a historical
perspective. Besides these modest adjustments, our fixed-income strategy of
broad diversification and sector rotation remains unchanged. As of June 30, the
bond segment of the portfolio had an average credit quality of "AA" and a
duration of approximately 7.1 years. At the end of the period, the Fund was
positioned with an asset allocation of 55% equities, 35% fixed-income and 10%
cash equivalents.
* The Balanced Benchmark is a composite index consisting of 55% Standard &
Poor's 500 Index, 35% Lehman Brothers Aggregate Bond Index and 10% 90-day
Treasury bills.
30
<PAGE>
BALANCED SERIES
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
---------- --------- -------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--24.3%
U.S. Treasury Bonds--4.8%
U.S. Treasury Bonds Strip, P.O.,
0%, '22 ................................. AAA $36,000 $ 6,329,160
U.S. Treasury Bonds 6%, '26 ............... AAA 4,595 4,111,087
------------
10,440,247
------------
U.S. Treasury Notes--15.0%
U.S. Treasury Notes 6.375%, '99 ......... AAA 3,775 3,793,875
U.S. Treasury Notes 6.375%, '00 ......... AAA 3,000 3,011,250
U.S. Treasury Notes 6.875%, '00 ......... AAA 3,500 3,555,685
U.S. Treasury Notes 6.625%, '01 ......... AAA 4,400 4,444,000
U.S. Treasury Notes 6.50%, '05 ............ AAA 3,300 3,289,407
U.S. Treasury Notes 6.50%, '06 ............ AAA 12,235 12,175,171
U.S. Treasury Notes 6.875%, '06 ......... AAA 2,150 2,194,343
------------
32,463,731
------------
Agency Mortgage-Backed Securities--4.5%
GNMA 6.50%, '23-'26 ..................... AAA 10,151 9,744,192
------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $52,849,408).................................... 52,648,170
------------
NON-CONVERTIBLE BONDS--5.0%
Asset-Backed Securities--0.7%
Fleetwood Credit Corp. 96-B, A
6.90%, '12 .............................. AAA 673 677,645
Green Tree Financial Corp. 96-2,
M1 7.60%, '27 ........................... AA- 675 680,063
TLFC Equipment Lease Trust
96-1A, 5.98%, '02 ..................... AAA 225 224,134
------------
1,581,842
------------
Non-Agency Mortgage-Backed Securities--3.8%
CS First Boston Mortgage
95-AEW1, B 7.182%, '27 .................. AA- 425 427,325
DLJ Mortgage Acceptance Corp.
96-CF1, A1B 144A 7.58%,
'28 (c) ................................. AAA 400 414,250
First Union Lehman Brothers
97-C1, B 7.43%, '29 ..................... Aa(d) 930 948,600
G.E. Capital Mortgage Services,
Inc. 96-8, M 7.25%, '26 ............... AA 248 243,038
Nationslink Funding Corp. 96-1, B
7.69%, '05 .............................. AA 450 467,015
Residential Asset Securitization
Trust 96-A8, A1 8%, '26 ............... AAA 582 589,113
Residential Funding Mortgage I
96-S8, A-4 6.75%, '11 .................. AAA 666 652,504
Residential Funding Mortgage I
96-S1, A11 7.10%, '26 .................. AAA 1,000 974,062
Residential Funding Mortgage I
96-S4, M1 7.25%, '26 .................. AA 988 965,855
Resolution Trust Corp. 93-C1, B
8.75%, '24 .............................. Aa(d) 425 424,270
Resolution Trust Corp. 95-C2, B
6.80%, '27 .............................. Aa(d) 1,113 1,106,125
Resolution Trust Corp. 95-2, M1
7.15%, '29 .............................. Aa(d) 576 574,181
Structured Asset Securities Corp.
93-C1, B 6.60%, '24 ..................... A+ 525 502,237
------------
8,288,575
------------
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
---------- --------- -------------
<S> <C> <C> <C>
Paper & Forest Products--0.4%
Buckeye Cellulose Corp. 8.50%,
'05 .................................... BB- $700 $ 709,625
------------
Truckers & Marine--0.1%
Teekay Shipping Corp. 8.32%, '08 .......... Ba(d) 230 232,875
------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $10,838,173) ............ 10,812,917
------------
FOREIGN GOVERNMENT SECURITIES--3.0%
Argentina--0.5%
Republic of Argentina Bearer FRB
6.75%, '05 (e) ........................ BB- 679 638,684
Republic of Argentina Discount
L-GL Euro 6.875%, '23 (e) ............... BB- 275 238,047
Republic of Argentina Global Bond
11.375%, '17 ........................... BB 100 111,525
Republic of Argentina Par L-GP
5.50%, '23 (e) ........................ BB- 220 152,900
------------
1,141,156
------------
Brazil--0.4%
Republic of Brazil C Bond, PIK
interest capitalization, 8%,
'14 (e) ................................. B+ 728 591,172
Republic of Brazil DCB-L Euro
6.938%, '12 (e) ........................ B+ 425 351,156
------------
942,328
------------
Colombia--0.4%
Republic of Colombia 7.25%, '03 ......... BBB- 500 486,590
Republic of Colombia Yankee
7.25%, '04 .............................. BBB- 475 461,351
------------
947,941
------------
Mexico--0.6%
United Mexican States 144A
7.875%, '01 (c)(e) ..................... Baa(d) 400 400,640
United Mexican States Discount A
6.867%, '19 (e)(f) ..................... BB 205 190,778
United Mexican States Euro D
6.813%, '19 (e)(f) ..................... BB 250 232,656
United Mexican States Series A
Euro 6.25%, '19 ........................ BB 300 232,313
United Mexican States Series B
Euro 6.25%, '19 ........................ BB 350 271,031
------------
1,327,418
------------
Poland--0.6%
Poland Discount Euro 6.938%,
'24 (e) ................................. BBB- 600 588,000
Poland PDI Bearer 4%, '14 (e) ............ BBB- 700 598,500
------------
1,186,500
------------
Venezuela--0.5%
Republic of Venezuela Discount
6.813%, '20 (e)(f) ..................... Ba(d) 815 721,275
Republic of Venezuela Par W-A
6.75%, '20 (f) ........................ Ba(d) 300 236,438
------------
957,713
------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $6,039,671)............... 6,503,056
------------
</TABLE>
See Notes to Financial Statements
31
<PAGE>
BALANCED SERIES
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
---------- --------- -----------
<S> <C> <C> <C>
FOREIGN NON-CONVERTIBLE BONDS--0.7%
Chile--0.2%
Compania Sud Amer Vapore
7.375%, '03 .................. BBB $ 120 $ 118,050
Petropower I Funding Trust 144A
7.36%, '14 (c) ............... BBB 350 333,099
-----------
451,149
-----------
Colombia--0.3%
Financiera Energ Nacional EMTN
Euro 9%, '99 .................. BBB- 440 460,350
-----------
Indonesia--0.2%
Asia Pulp & Paper Co. Yankee
11.75%, '05 .................. BB 400 442,000
-----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $1,312,627) ........................... 1,353,499
-----------
MUNICIPAL BONDS--1.9%
California--0.9%
Kern County Pension Obligation
Taxable 7.26%, '14 ............ AAA 420 415,372
Long Beach Pension Obligation
Taxable 6.87%, '06 ............ AAA 230 227,838
Orange County Pension Series A
Taxable 7.62%, '08 ............ AAA 650 673,322
San Bernardino County Obligation
Revenue Taxable 6.87%, '08 ... AAA 110 107,605
San Bernardino County Obligation
Revenue Taxable 6.94%, '09 ... AAA 300 294,324
Ventura County Pension Taxable
6.54%, '05 ..................... AAA 260 253,947
-----------
1,972,408
-----------
Florida--0.6%
Miami Beach Special Obligation
Taxable 8.60%, '21 ............ AAA 875 941,868
University of Miami Exchangeable
Revenue Series A Taxable
7.65%, '20 ..................... AAA 270 269,325
-----------
1,211,193
-----------
Virginia--0.4%
Newport News Taxable Series B
7.05%, '25 ..................... AA- 1,000 938,890
-----------
TOTAL MUNICIPAL BONDS
(Identified cost $4,200,134) ........................ 4,122,491
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------
<S> <C> <C>
COMMON STOCKS--53.4%
Aerospace & Defense--0.8%
Sundstrand Corp. ........................... 10,800 583,200
United Technologies Corp. .................. 13,500 1,120,500
-----------
1,703,700
-----------
Banks--3.1%
Citicorp ................................. 17,500 2,109,844
First Union Corp. ........................ 2,600 240,500
Mellon Bank Corp. ........................ 52,000 2,346,500
Nationsbank Corp. ........................ 32,000 2,064,000
-----------
6,760,844
-----------
Beverages--1.0%
PepsiCo, Inc. (g) ........................ 57,500 2,159,844
-----------
Chemical--0.2%
Monsanto Co. .............................. 10,400 447,850
-----------
Chemical--Specialty--0.4%
Praxair, Inc. .............................. 14,100 789,600
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
Computer Software & Services--2.1%
Adaptec, Inc. (b) ........................... 5,400 $ 187,650
HBO & Co. .................................... 24,600 1,694,325
Microsoft Corp. (b) ........................... 21,000 2,653,875
-----------
4,535,850
-----------
Conglomerates--0.9%
Tyco International Ltd. ..................... 27,300 1,899,056
-----------
Cosmetics & Soaps--4.4%
Colgate-Palmolive Co. (g) .................. 52,100 3,399,525
Gillette Co. ................................. 46,400 4,396,400
Procter & Gamble Co. (g) ..................... 12,300 1,737,375
-----------
9,533,300
-----------
Diversified Financial Services--2.2%
American Express Co. ........................ 5,900 439,550
Franklin Resources, Inc. ..................... 22,200 1,610,887
Merrill Lynch & Co., Inc. ..................... 6,900 411,413
T. Rowe Price Associates (g) ............... 24,350 1,257,069
Washington Mutual, Inc. ..................... 18,400 1,099,400
-----------
4,818,319
-----------
Electrical Equipment--2.3%
General Electric Co. ........................ 58,800 3,844,050
Honeywell, Inc. .............................. 14,300 1,085,012
-----------
4,929,062
-----------
Electronics--3.8%
Altera Corp. (b) .............................. 10,300 520,150
Intel Corp. (g) .............................. 26,480 3,755,195
Perkin Elmer Corp. ........................... 38,100 3,031,331
Texas Instruments, Inc. ..................... 10,000 840,625
-----------
8,147,301
-----------
Entertainment, Leisure & Gaming--0.7%
Time Warner, Inc. ........................... 13,000 627,250
Walt Disney Co. .............................. 12,500 1,003,125
-----------
1,630,375
-----------
Healthcare--Diversified--1.3%
Bristol-Myers Squibb Co. (g) ............... 34,400 2,786,400
-----------
Healthcare--Drugs--3.8%
Amgen, Inc. (b) .............................. 37,000 2,150,625
Eli Lilly & Co. (g) ........................ 8,200 896,362
Merck & Co., Inc. ........................... 25,400 2,628,900
Pfizer, Inc. ................................. 22,300 2,664,850
-----------
8,340,737
-----------
Hospital Management & Services--0.8%
Columbia/HCA Healthcare Corp. ............... 45,900 1,804,444
-----------
Insurance--2.7%
Allstate Corp. .............................. 30,100 2,197,300
Hartford Financial Services Group, Inc. ...... 22,300 1,845,325
SunAmerica, Inc. .............................. 36,000 1,755,000
-----------
5,797,625
-----------
Machinery--0.5%
Deere & Co. ................................. 19,500 1,070,063
-----------
Medical Products & Supplies--4.8%
Abbott Laboratories ........................... 23,900 1,595,325
Baxter International, Inc. .................. 44,900 2,346,025
Boston Scientific Corp. (b) .................. 41,834 2,570,176
Cardinal Health, Inc. ........................ 28,100 1,608,725
</TABLE>
See Notes to Financial Statements
32
<PAGE>
BALANCED SERIES
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C>
Medical Products & Supplies--continued
Johnson & Johnson .............................. 36,400 2,343,250
------------
10,463,501
------------
Natural Gas--0.3%
Columbia Gas System, Inc. ........................ 9,600 626,400
------------
Office & Business Equipment--1.0%
International Business Machines Corp. (g) ...... 24,400 2,200,575
------------
Oil--0.7%
Exxon Corp. .................................... 24,400 1,500,600
------------
Oil Service & Equipment--3.3%
Camco International, Inc. ........................ 7,800 427,050
ENSCO International, Inc. (b) .................. 20,600 1,086,650
Halliburton Co. ................................. 20,400 1,616,700
Noble Drilling Corp. (b) ........................ 46,200 1,042,388
Schlumberger Ltd. .............................. 17,200 2,150,000
Transocean Offshore, Inc. ........................ 12,300 893,287
------------
7,216,075
------------
Paper & Forest Products--0.6%
Kimberly Clark Corp. ........................... 28,400 1,412,900
------------
Pollution Control--0.5%
U.S. Filter Corp. (b) ........................... 36,600 997,350
------------
Professional Services--0.6%
HFS, Inc. (b) .................................... 21,750 1,261,500
------------
Publishing, Broadcasting, Printing & Cable--1.0%
Gannett Co, Inc. ................................. 11,800 1,165,250
New York Times Co. Class A ..................... 20,800 1,029,600
------------
2,194,850
------------
Real Estate--0.0%
Crescent Operating Inc. (b) ..................... 1,565 18,780
------------
REITS--0.5%
Crescent Real Estate Equities Co. ............... 15,650 496,888
Redwood Trust, Inc. .............................. 15,000 701,250
------------
1,198,138
------------
Retail--2.3%
Home Depot, Inc. ................................. 17,500 1,206,406
Lowe's Companies, Inc. ........................... 26,100 968,963
Staples, Inc. (b) .............................. 118,100 2,745,825
------------
4,921,194
------------
Retail--Drugs--0.5%
CVS Corp. ....................................... 22,100 1,132,625
------------
Retail--Food--0.5%
Safeway, Inc. (b) .............................. 22,300 1,028,587
------------
Telecommunications Equipment--2.6%
Ascend Communications, Inc. (b) .................. 51,550 2,029,781
Cisco Systems, Inc. (b) ........................ 16,200 1,087,425
Lucent Technologies, Inc. ........................ 23,900 1,722,294
Motorola, Inc. ................................. 9,400 714,400
------------
5,553,900
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
Textile & Apparel--0.5%
Nike, Inc. Class B ........................ 18,300 $ 1,068,262
-------------
Tobacco--1.0%
Philip Morris Companies, Inc. ............... 49,200 2,183,250
-------------
Utility--Telephone--1.7%
Ameritech Corp. ........................... 7,300 495,944
Bell Atlantic Corp. ........................ 26,700 2,025,862
LCI International, Inc. (b) ............... 9,100 199,063
SBC Communications, Inc. .................. 14,600 903,375
-------------
3,624,244
-------------
TOTAL COMMON STOCKS
(Identified cost $103,229,336) ....................... 115,757,101
-------------
FOREIGN COMMON STOCKS--1.7%
Electronics--0.8%
Philips Electronics NV ADR (Netherlands) ... 24,100 1,732,187
-------------
Oil--0.5%
Royal Dutch Petroleum Co. ADR NY Registered
(Netherlands) ........................... 20,800 1,131,000
-------------
Pollution Control--0.4%
Philip Services Corp. (Canada) (b) ......... 56,300 893,762
-------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $3,035,774) ......................... 3,756,949
-------------
TOTAL LONG-TERM INVESTMENTS--90.0%
(Identified cost $181,505,123) ....................... 194,954,183
-------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000)
---------- --------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--9.8%
Commercial Paper--9.8%
Mobil Corp. 6.25%, 7-1-97 ......... A-1+ $1,730 1,730,000
Shell Oil Co. 6.15%, 7-1-97 ...... A-1+ 4,495 4,495,000
Preferred Receivables Funding Corp.
5.60%, 7-2-97 .................. A-1 202 201,969
Donnelley (R.R.) & Sons Co. 5.52%,
7-7-97 ........................ A-1 3,185 3,182,070
Asset Securitization Corp. 5.60%,
7-10-97 ........................ A-1+ 2,000 1,997,200
Dupont (E.I.) de Nemours 5.55%,
7-14-97 ........................ A-1+ 275 274,449
Private Export Funding Corp. 5.57%
7-14-97 ........................ A-1+ 1,655 1,651,403
Receivable Capital Corp 5.57%,
7-15-97 ........................ A-1+ 1,030 1,027,769
Private Export Funding Corp. 5.61%,
7-28-97 ........................ A-1+ 2,520 2,509,127
Receivable Capital Corp. 5.62%,
8-8-97 ........................ A-1+ 2,500 2,485,169
Beta Finance Corp. 5.60%, 9-12-97 A-1+ 1,000 988,590
Beta Finance Corp. 5.65%, 10-27-97 A-1+ 750 736,192
-----------------
21,278,938
-----------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $21,279,449) ........................ 21,278,938
-----------------
TOTAL INVESTMENTS--99.8%
(Identified cost $202,784,572)........................ 216,233,121(a)
Cash and receivables, less liabilities--0.2% ......... 490,797
-----------------
NET ASSETS--100.0% .................................... $ 216,723,918
=================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $16,082,947 and gross
depreciation of $2,664,229 for income tax purposes. At June 30, 1997, the
aggregate cost of securities for federal income tax purposes was
$202,814,403.
(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 June 30,
1997, these securities amounted to a value of $1,147,989 or 0.5% of net
assets.
(d) As rated by Moody's, Fitch or Duff & Phelps.
(e) Variable or step coupon bond; interest rate shown reflects the rate
currently in effect.
(f) Rights incorporated as a unit.
(g) Segregated as collateral.
See Notes to Financial Statements
33
<PAGE>
BALANCED SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Assets
Investment securities at value (Identified cost $202,784,572) ..................... $216,233,121
Cash ........................................................................... 107,633
Receivables
Interest and dividends ......................................................... 993,785
Investment securities sold ...................................................... 212,884
-------------
Total assets .................................................................. 217,547,423
-------------
Liabilities
Payables
Fund shares repurchased ......................................................... 329,503
Investment securities purchased ................................................ 194,236
Options written, at value (Premiums received $120,536) ........................... 122,288
Investment advisory fee ......................................................... 97,389
Financial agent fee ............................................................ 10,624
Trustees' fee .................................................................. 3,143
Accrued expenses ............................................................... 66,322
-------------
Total liabilities ............................................................ 823,505
-------------
Net Assets ..................................................................... $216,723,918
=============
Net Assets Consist of:
Capital paid in on shares of beneficial interest .............................. $189,227,746
Undistributed net investment income ............................................. 35,278
Accumulated net realized gain ................................................... 14,014,097
Net unrealized appreciation ................................................... 13,446,797
-------------
Net Assets ..................................................................... $216,723,918
=============
Shares of beneficial interest outstanding, $1 par value, unlimited authorization 17,130,094
=============
Net asset value and offering price per share .................................... $12.65
=============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Investment Income
Interest ............................................................... $ 3,294,909
Dividends ............................................................ 662,660
-----------
Total investment income ............................................. 3,957,569
-----------
Expenses
Investment advisory fee ................................................ 568,120
Financial agent fee ................................................... 61,977
Printing ............................................................... 23,956
Custodian ............................................................ 17,610
Professional ......................................................... 16,100
Trustees ............................................................... 13,106
Miscellaneous ......................................................... 7,604
-----------
Total expenses ...................................................... 708,473
-----------
Net investment income ................................................... 3,249,096
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities ....................................... 14,191,285
Net realized gain on written options ................................. 5,202
Net realized gain on foreign currency and foreign currency transactions 6,754
Net change in unrealized appreciation (depreciation) on investments ... 2,065,168
Net change in unrealized appreciation (depreciation) on written options (1,752)
-----------
Net gain on investments ................................................ 16,266,657
-----------
Net increase in net assets resulting from operations .................. $19,515,753
===========
</TABLE>
See Notes to Financial Statements
34
<PAGE>
BALANCED SERIES
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 ...................................................... $ 3,249,096 $ 5,806,775
Net realized gain ......................................................... 14,203,241 16,867,817
Net change in unrealized appreciation (depreciation) ........................ 2,063,416 (2,671,304)
------------- -------------
Net increase in net assets resulting from operations ........................ 19,515,753 20,003,288
------------- -------------
From Distributions to Shareholders
Net investment income ...................................................... (3,565,032) (5,536,811)
Net realized gains ......................................................... (5,977,747) (18,064,626)
------------- -------------
Decrease in net assets from distributions to shareholders .................. (9,542,779) (23,601,437)
------------- -------------
From Share Transactions
Proceeds from sales of shares (1,200,311 and 2,805,856 shares, respectively) 14,948,263 34,642,833
Net asset value of shares issued from reinvestment of distributions
(759,231 and 1,949,091 shares, respectively) .............................. 9,542,779 23,601,437
Cost of shares repurchased (1,771,298 and 3,529,372 shares, respectively) ... (22,025,330) (43,662,808)
------------- -------------
Increase in net assets from share transactions .............................. 2,465,712 14,581,462
------------- -------------
Net increase in net assets ................................................ 12,438,686 10,983,313
Net Assets
Beginning of period ......................................................... 204,285,232 193,301,919
------------- -------------
End of period (including undistributed net investment income of $35,278
and $351,214, respectively) ................................................ $216,723,918 $ 204,285,232
============= =============
</TABLE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Six Months
Ended
6/30/97
(Unaudited)
----------------
<S> <C>
Net asset value, beginning of period ......... $ 12.06
Income from investment operations
Net investment income ........................ 0.20
Net realized and unrealized gain (loss) ...... 0.97
----------
Total from investment operations ............ 1.17
----------
Less distributions
Dividends from net investment income ......... (0.22)
Dividends from net realized gains ............ (0.36)
----------
Total distributions ........................ (0.58)
----------
Change in net asset value ..................... 0.59
----------
Net asset value, end of period ............... $ 12.65
==========
Total return ................................. 9.77%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) ......... $ 216,724
Ratio to average net assets of:
Operating expenses ........................... 0.69%(1)
Net investment income ........................ 3.15%(1)
Portfolio turnover rate ........................ 87%(5)
Average commission rate paid(6) ............... $ 0.0548
<CAPTION>
From Inception
Year Ended December 31, 5/1/92 to
1996 1995 1994 1993 12/31/92
------------ -------------- ------------------ ----------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 12.30 $ 10.53 $ 11.31 $ 10.77 $ 10.00
Income from investment operations
Net investment income ........................ 0.36 0.40(3) 0.38(2)(3) 0.32(2)(3) 0.19(3)
Net realized and unrealized gain (loss) ...... 0.89 2.02 (0.70) 0.60 0.77
-------- ---------- ----------- ----------- ----------
Total from investment operations ............ 1.25 2.42 (0.32) 0.92 0.96
-------- ---------- ----------- ----------- ----------
Less distributions
Dividends from net investment income ......... (0.35) (0.40) (0.36) (0.32) (0.19)
Dividends from net realized gains ............ (1.14) (0.25) (0.10) (0.06) --
-------- ---------- ----------- ----------- ----------
Total distributions ........................ (1.49) (0.65) (0.46) (0.38) (0.19)
-------- ---------- ----------- ----------- ----------
Change in net asset value ..................... (0.24) 1.77 (0.78) 0.54 0.77
-------- ---------- ----------- ----------- ----------
Net asset value, end of period ............... $ 12.06 $ 12.30 $ 10.53 $ 11.31 $ 10.77
======== ========== =========== =========== ==========
Total return ................................. 10.56% 23.28% (2.80)% 8.57% 9.72%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) ......... $204,285 $ 193,302 $ 161,105 $ 158,144 $ 54,467
Ratio to average net assets of:
Operating expenses ........................... 0.68% 0.65%(4) 0.69% 0.70% 0.50%(1)
Net investment income ........................ 2.93% 3.44% 3.44% 3.16% 3.59%(1)
Portfolio turnover rate ........................ 229% 223% 171% 161% 110%(1)
Average commission rate paid(6) ............... $ 0.0641 N/A N/A N/A N/A
</TABLE>
(1) Annualized
(2) Includes reimbursement of operating expenses by investment adviser of
$0.001 and $0.001 per share, respectively.
(3) Computed using average shares outstanding.
(4) The ratio of operating expenses to average net assets excludes the effect
of expense offsets for custodian fees; if expense offsets were included, the
ratio would not significantly differ.
(5) Not annualized
(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
35
<PAGE>
REAL ESTATE SERIES
INVESTMENT REVIEW
For the six months ended June 30, 1997, the Fund generated a total return
of 7.43%, outperforming the NAREIT Equity Total Return Index* return of 5.73%.
All performance figures assume reinvestment of dividends and exclude the effect
of sales charges.
Our investment strategy is to emphasize market sectors with strong
underlying fundamentals and prospects for growth in excess of market averages
as well as sectors that are significantly undervalued on a risk-adjusted basis.
Over the past six months, the Fund benefited from its significant overweighting
in hotels and apartments. While performance was somewhat tempered by a low
allocation to mall REITs, which generated very strong results, our investments
in the strip-retail REIT sector contributed positively to the Fund's return.
Real estate securities experienced a minor correction during the first
four months of 1997, then recovered slightly over the last two months. REIT
performance was impacted by several factors. First, there was a tremendous
volume of capital-raising activity, which put downward pressure on prices. In
addition, a significant rise in interest rates resulted in dividend yields
that, other than for two brief periods in 1991 and 1994, were below 10-year
Treasury yields for the first time since 1989. On a weighted-average basis,
REIT total return dropped 2.06% from year-end through April, and then
experienced a modest recovery in May and June. The recovery was, in part,
supported by very strong operational performance. First-quarter growth in funds
from operation (FFO) was well above industry analyst expectations, and
second-quarter results are also expected to be better than projected.
OUTLOOK
The outlook for REITs for the remainder of 1997 remains very strong for a
number of reasons. First, the underlying real estate market continues to
evidence stability, with construction levels in most markets trailing expected
demand growth. Second, funds from operations multiples--comparable to a P/E
ratio for non-REITs--are in line with historic levels and well below the
broader market P/E ratios. Third, dividend yields, albeit below pre-1996
levels, are higher than at year-end 1996 and provide a very attractive benefit
relative to the broader market. As of June 30, 1997, the average dividend yield
for REITs was 6.06% compared with a yield of only 1.87% for the S&P 500 Index.
Finally, both individual and institutional investor demand is expected to
continue to expand. We intend to maintain the Fund's emphasis on mixed
office/industrial and hotel REITs, which we believe have good upside potential,
and remain underweighted in the retail sector.
* The NAREIT Equity Total Return Index is a market-weighted total return of all
tax-qualified REITs listed on the New York Stock Exchange, American Stock
Exchange and the NASDAQ National Market System.
36
<PAGE>
REAL ESTATE SERIES
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS--97.5%
REAL ESTATE INVESTMENT TRUSTS--89.2%
COMMERCIAL--28.6%
Office/Industrial--23.1%
Beacon Properties Corp. ............... 24,300 $ 811,012
Cali Realty Corp. ..................... 15,200 516,800
CarrAmerica Realty Corp. ............... 26,400 759,000
Duke Realty Investments, Inc. ......... 38,300 1,551,150
Highwoods Properties, Inc. ............ 59,900 1,916,800
Kilroy Realty Corp. ..................... 15,200 383,800
Reckson Associates Realty Corp. ......... 17,200 395,600
Spieker Properties, Inc. ............... 49,900 1,755,856
Weeks Corp. ........................... 28,900 903,125
------------
8,993,143
------------
Storage--5.5%
Public Storage, Inc. .................. 29,800 871,650
Shurgard Storage Centers, Inc. Class A .. 14,000 392,000
Storage USA, Inc. ..................... 22,900 875,925
------------
2,139,575
------------
TOTAL COMMERCIAL ....................................... 11,132,718
------------
HEALTH CARE--3.2%
Health Care Property Investors, Inc. ... 5,750 202,688
Nationwide Health Properties, Inc. ...... 47,900 1,053,800
------------
1,256,488
------------
HOTELS--12.9%
FelCor Suite Hotels, Inc. ............... 35,500 1,322,375
Patriot American Hospitality, Inc. ...... 91,800 2,340,900
Starwood Lodging Trust .................. 32,100 1,370,269
------------
5,033,544
------------
RESIDENTIAL--28.7%
Apartments--24.8%
Avalon Properties, Inc. ............... 26,500 758,563
Bay Apartment Communities, Inc. ......... 29,900 1,106,300
Camden Property Trust .................. 26,100 825,412
Columbus Realty Trust .................. 20,200 459,550
Equity Residential Properties Trust ... 24,600 1,168,500
Evans Withycombe Residential, Inc. ...... 33,900 703,425
Irvine Apartment Communities, Inc. ...... 33,500 984,062
Merry Land & Investment Co. ............ 33,400 724,363
Oasis Residential, Inc. ............... 32,100 754,350
Post Properties, Inc. .................. 27,100 1,099,244
United Dominion Realty Trust ............ 76,400 1,083,925
------------
9,667,694
------------
Manufactured Homes--3.9%
Manufactured Home Communities, Inc. .... 33,800 779,513
Sun Communities, Inc. .................. 21,300 714,881
------------
1,494,394
------------
TOTAL RESIDENTIAL .................................... 11,162,088
------------
SHARES VALUE
--------- ------------
<S> <C> <C>
RETAIL--15.8%
Community/Neighborhood--7.3%
Developers Diversified Realty Corp. ... 18,000 $ 720,000
Federal Realty Investment Trust ......... 24,800 669,600
Regency Realty Corp. .................. 12,000 327,000
Vornado Realty Trust .................. 15,700 1,132,362
------------
2,848,962
------------
Factory Outlet--2.2%
Chelsea G.C.A. Realty, Inc. ............ 22,600 858,800
------------
Regional Malls--6.3%
Simon DeBartolo Group, Inc. ............ 17,796 569,472
Taubman Centers, Inc. .................. 77,100 1,021,575
The Macerich Company .................. 30,300 840,825
------------
2,431,872
------------
TOTAL RETAIL .......................................... 6,139,634
------------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Identified cost $29,621,772) ........................ 34,724,472
------------
REAL ESTATE OPERATING COMPANIES--8.3%
Hotels--7.4%
CapStar Hotel Co. (b) .................. 33,700 1,078,400
Host Marriott Corp. (b) ............... 100,600 1,791,938
------------
2,870,338
------------
Regional Malls--0.9%
Rouse Co. .............................. 12,500 368,750
------------
TOTAL REAL ESTATE OPERATING COMPANIES
(Identified cost $2,581,365) ........................ 3,239,088
------------
TOTAL COMMON STOCKS
(Identified cost $32,203,137) ........................ 37,963,560
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000)
---------- -------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--2.0%
Commercial Paper--2.0%
Anheuser-Busch Cos., Inc. 6%,
7-1-97 ..................... A-1+ $790 790,000
----------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $790,000) ........................ 790,000
----------------
TOTAL INVESTMENTS--99.5%
(Identified cost $32,993,137) ..................... 38,753,560(a)
Cash and receivables, less liabilities--0.5% ... 178,413
----------------
NET ASSETS--100.0% ................................. $ 38,931,973
================
</TABLE>
(a) Federal Income Tax information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $5,994,643 and gross
depreciation of $234,220 for income tax purposes. At June 30, 1997, the
aggregate cost of securities for federal income tax purposes was
$32,993,137.
(b) Non-income producing.
See Notes to Financial Statements
37
<PAGE>
REAL ESTATE SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Assets
Investment securities at value (Identified cost $32,993,137) .................. $38,753,560
Cash ........................................................................... 3,281
Receivables
Dividends ..................................................................... 176,912
Fund shares sold ............................................................ 55,698
------------
Total assets ............................................................... 38,989,451
------------
Liabilities
Payables
Investment advisory fee ...................................................... 16,534
Trustees' fee ............................................................... 3,105
Financial agent fee ......................................................... 1,858
Accrued expenses ............................................................ 35,981
------------
Total liabilities ............................................................ 57,478
------------
Net Assets ..................................................................... $38,931,973
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest .............................. $32,597,041
Undistributed net investment income .......................................... 275,996
Accumulated net realized gain ................................................ 298,513
Net unrealized appreciation ................................................... 5,760,423
------------
Net Assets ..................................................................... $38,931,973
============
Shares of beneficial interest outstanding, $1 par value, unlimited authorization 2,569,062
============
Net asset value and offering price per share ................................. $15.15
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Investment Income
Dividends ......................................................... $ 828,326
Interest ......................................................... 23,930
----------
Total investment income .......................................... 852,256
----------
Expenses
Investment advisory fee .......................................... 117,394
Financial agent fee ................................................ 9,392
Printing ......................................................... 10,470
Professional ...................................................... 9,988
Trustees ......................................................... 9,457
Custodian ......................................................... 7,358
Miscellaneous ...................................................... 3,110
----------
Total expenses ................................................... 167,169
Less expenses borne by investment adviser ........................ (10,644)
----------
Net expenses ...................................................... 156,525
----------
Net investment income ............................................. 695,731
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities .................................... 299,685
Net change in unrealized appreciation (depreciation) on investments 1,345,216
----------
Net gain on investments ............................................. 1,644,901
----------
Net increase in net assets resulting from operations ............... $2,340,632
==========
</TABLE>
See Notes to Financial Statements
38
<PAGE>
REAL ESTATE SERIES
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 ............................................................ $ 695,731 $ 538,337
Net realized gain .................................................................. 299,685 357,371
Net change in unrealized appreciation (depreciation) .............................. 1,345,216 3,569,257
------------- ------------
Net increase in net assets resulting from operations .............................. 2,340,632 4,464,965
------------- ------------
From Distributions to Shareholders
Net investment income ............................................................ (428,477) (529,595)
Net realized gains ............................................................... (124,358) (234,185)
------------- ------------
Decrease in net assets from distributions to shareholders ........................ (552,835) (763,780)
------------- ------------
From Share Transactions
Proceeds from sales of shares (1,681,265 and 1,121,196 shares, respectively) ...... 24,605,605 14,117,141
Net asset value of shares issued from reinvestment of distributions
(36,890 and 59,531 shares, respectively) .......................................... 552,835 763,780
Cost of shares repurchased (734,737 and 342,758 shares, respectively) ............ (10,724,024) (4,344,888)
------------- ------------
Increase in net assets from share transactions .................................... 14,434,416 10,536,033
------------- ------------
Net increase in net assets ......................................................... 16,222,213 14,237,218
Net Assets
Beginning of period ............................................................... 22,709,760 8,472,542
------------- ------------
End of period (including undistributed net investment income of $275,996 and $8,742,
respectively) ..................................................................... $ 38,931,973 $ 22,709,760
============= ============
</TABLE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Six Months
Ended Year From Inception
6/30/97 Ended 5/1/95 to
(Unaudited) 12/31/96 12/31/95
-------------- -------------- ---------------
<S> <C> <C> <C>
Net asset value, beginning of period ...... $ 14.32 $ 11.33 $ 10.00
Income from investment operations
Net investment income ..................... 0.28(3) 0.50(3) 0.33(3)
Net realized and unrealized gain ......... 0.78 3.14 1.42
--------- --------- ----------
Total from investment operations ......... 1.06 3.64 1.75
--------- --------- ----------
Less distributions
Dividends from net investment income ...... (0.18) (0.50) (0.33)
Dividends from net realized gains ......... (0.05) (0.15) (0.06)
Tax return of capital ..................... -- -- (0.03)
--------- --------- ----------
Total distributions ..................... (0.23) (0.65) (0.42)
--------- --------- ----------
Change in net asset value .................. 0.83 2.99 1.33
--------- --------- ----------
Net asset value, end of period ............ $ 15.15 $ 14.32 $ 11.33
========= ========= ==========
Total return .............................. 7.43%(2) 33.09% 17.79%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $ 38,932 $ 22,710 $ 8,473
Ratio to average net assets of:
Operating expenses ........................ 1.00%(1) 1.00% 1.00%(1)
Net investment income ..................... 4.44%(1) 4.36% 4.80%(1)
Portfolio turnover rate ..................... 6%(2) 21% 10%(2)
Average commission rate paid(4) ............ $ 0.0482 $ 0.0468 N/A
</TABLE>
(1) Annualized
(2) Not annualized
(3) Includes reimbursement of operating expenses by investment adviser of
$0.005, $0.05 and $0.07 per share, respectively.
(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, mark-downs, or spreads on shares traded on a principal
basis.
See Notes to Financial Statements
39
<PAGE>
STRATEGIC THEME SERIES
INVESTMENT REVIEW
The Phoenix Edge Strategic Theme Series returned 6.85% for the six months
ended June 30, 1997, compared with 12.99% for the S&P MidCap 400 Index and
20.53% for the S&P 500 Index. All performance figures assume reinvestment of
dividends and exclude the effect of sales charges.
Over reasonably long time frames, small and mid-cap companies are
generally able to achieve more rapid growth in sales and net income than
larger, well-established companies. We believe that above-average growth leads
to above-average stock market performance over time. The S&P MidCap 400 Index
is an unmanaged index of companies with characteristics that are more
representative of those the Fund favors than is the S&P 500 Index. As a result,
the Fund's benchmark has been changed from the S&P 500 Index to the S&P MidCap
400 Index.*
Over the past six months, the Fund has focused on the small and mid-cap
arenas which offer more opportunities for thematic investing, higher earnings
growth rates and more attractive valuations compared to large-cap stocks. It is
difficult to find emerging themes in the large-cap area because larger,
well-established companies tend to be associated with mature industries. Yet,
large-cap stocks dominated the market, which limited Fund performance. Positive
contributors included our financial services, health-care, telecommunications
and REIT holdings as well as our defensive use of cash during the
February-April sell-off.
We continue to focus on themes with positive dynamics. Our Deregulating
Financial Services theme represents banks, insurance companies and brokerages,
which we believe will continue to witness above-average earnings growth and
benefit from continued industry consolidation. Energy Technology is profiting
from the recovery of the oil sector. This theme represents companies that
provide productivity-enhancing solutions to exploration and production
companies. Next Generation Semiconductors is benefiting from strong growth in
the global PC market, cellular phones and new consumer products. 21st Century
Medicine continues to be an attractive theme due to remarkable advances in
gene-mapping, biotechnology and non-invasive surgical techniques. The Bandwidth
Bottleneck theme represents companies capitalizing on network infrastructure
spending by the telecommunications industry.
OUTLOOK
Looking forward, we believe our key investment themes will serve us well
in this environment. We have also included a strategic component to the Fund's
overall approach which gives us flexibility to use larger cap stocks when we
feel they will be strong performers. We expect the performance disparity
between small, mid and large-cap stocks will close as investors realize that
small and mid-cap stocks offer comparatively higher growth rates and lower
valuations. Finally, as the economy slows, growth stocks should become more
attractive and return to favor. As of June 30, the Fund's asset allocation mix
was 83% equities and 17% cash equivalents.
[PIE CHART]
21st Century Medicine 18.3%
Bandwidth Bottleneck 11.8%
Special Situations 8.8%
Energy Technology 8.2%
Next Generation Semiconductors 4.6%
Wireless Wave 4.1%
Global Consumer 3.4%
Retail Revival 2.9%
Short-term Obligations and Cash 17.5%
Deregulating Financial Services 20.4%
[END OF PIE CHART]
* The S&P MidCap 400 Index is an unmanaged, commonly used measure of mid-cap
stock total return performance. The S&P 500 Index is an unmanaged, commonly
used measure of large-cap stock total return performance.
40
<PAGE>
STRATEGIC THEME SERIES
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------------
<S> <C> <C>
COMMON STOCKS--76.5%
Banks--Money Center--1.0%
BankAmerica Corp. ........................... 6,000 $ 387,375
------------
Banks--Southeast--1.0%
First American Corp. ..................... 10,000 383,750
------------
Commercial Services--Security/Safety--1.0%
Corrections Corporation of America (b) ... 10,000 397,500
------------
Computer--Mini/Micro--1.2%
Dell Computer Corp. (b)(c) ............... 4,000 469,750
------------
Computer--Services--2.7%
America Online, Inc. (b) .................. 19,000 1,056,875
------------
Computer--Software--1.2%
Compuware Corp. (b) ........................ 9,500 453,625
------------
Cosmetics/Personal Care--4.2%
Avon Products, Inc. ........................ 8,000 564,500
Gillette Co. .............................. 8,000 758,000
Weider Nutrition International, Inc. ...... 20,000 317,500
------------
1,640,000
------------
Diversified Operations--2.0%
Corning, Inc. .............................. 14,000 778,750
------------
Electric--Semiconductor Equipment--4.6%
Applied Materials, Inc. (b) ............... 13,500 955,969
Teradyne, Inc. (b) ........................ 21,000 824,250
------------
1,780,219
------------
Electric--Semiconductor Manufacturers--1.0%
Motorola, Inc. .............................. 5,000 380,000
------------
Finance--Investment Bankers--1.9%
Merrill Lynch & Co., Inc. .................. 6,000 357,750
Salomon, Inc. .............................. 7,000 389,375
------------
747,125
------------
Finance--Investment Management--0.9%
T. Rowe Price Associates .................. 7,000 361,375
------------
Financial Services--Miscellaneous--4.0%
American Express Co. ..................... 11,000 819,500
SunAmerica, Inc. ........................... 15,000 731,250
------------
1,550,750
------------
Insurance--Diversified--2.3%
Travelers Group, Inc. ..................... 14,000 882,875
------------
Insurance--Life--5.1%
Hartford Life, Inc. Class A (b) ............ 22,000 825,000
Lincoln National Corp. ..................... 6,000 386,250
Protective Life Corp. ..................... 8,000 402,000
Torchmark Corp. ........................... 5,000 356,250
------------
1,969,500
------------
Insurance--Property/Casualty/Title--3.8%
Allstate Corp. ........................... 10,000 730,000
American International Group, Inc. ......... 5,000 746,875
------------
1,476,875
------------
Medical--Drug/Diversified--3.7%
Bristol-Myers Squibb Co. .................. 10,000 810,000
Warner-Lambert Co. ........................ 5,000 621,250
------------
1,431,250
------------
SHARES VALUE
-------- -------------
<S> <C> <C>
Medical--Ethical Drugs--5.8%
Eli Lilly & Co. ........................... 6,000 $ 655,875
Pfizer, Inc. .............................. 7,000 836,500
Schering-Plough Corp. ..................... 16,000 766,000
------------
2,258,375
------------
Medical--Instruments--4.7%
Medtronic, Inc. ........................... 14,000 1,134,000
Spine-Tech, Inc. (b) ..................... 19,000 705,375
------------
1,839,375
------------
Medical--Products--0.7%
Guidant Corp. .............................. 3,000 255,000
------------
Oil & Gas--Drilling--1.2%
Diamond Offshore Drilling (b) ............ 6,000 468,750
------------
Oil & Gas--Machinery/Equipment--7.0%
Cooper Cameron Corp. (b) .................. 28,000 1,309,000
Smith International, Inc. (b) ............ 11,000 668,250
Varco International, Inc. (b) ............ 22,300 719,175
------------
2,696,425
------------
Retail--Major Discount Chains--0.9%
Costco Companies, Inc. (b) ............... 11,000 361,625
------------
Retail/Wholesale--Building Products--2.0%
Home Depot, Inc. ........................... 11,000 758,312
------------
Telecommunications--Equipment--10.9%
Brightpoint, Inc. (b) ..................... 12,000 390,750
Ciena Corp. (b) ........................... 25,000 1,178,125
Lucent Technologies, Inc. .................. 11,000 792,688
Newbridge Networks Corp. (b) ............... 18,000 783,000
Tellabs, Inc. (b) ........................ 19,000 1,061,625
------------
4,206,188
------------
Transportation--Trucks--1.7%
CNF Transportation, Inc. .................. 20,000 645,000
------------
TOTAL COMMON STOCKS
(Identified cost $25,890,450) .......................... 29,636,644
------------
FOREIGN COMMON STOCKS--6.0%
Banks--0.4%
Uniao de Bancos Brasileiros SA GDR (Brazil)
(b) .................................... 4,000 148,500
------------
Medical--Biomed/Genetics--2.4%
Qiagen NV (Netherlands) (b) ............... 19,000 915,562
------------
Medical--Ethical Drugs--1.0%
Teva Pharmaceutical Industries, Ltd.
Sponsored ADR (Israel) .................. 6,000 388,500
------------
Telecommunications--Equipment--2.1%
Northern Telecom Ltd. (Canada) ............ 4,000 364,000
Oy Nokia Corp. Sponsored ADR (Finland) ... 6,000 442,500
------------
806,500
------------
Transportation--Airlines--0.1%
Ryanair Holdings PLC Sponsored ADR
(Ireland) (b) ........................... 2,000 54,250
------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $2,076,890) .......................... 2,313,312
------------
TOTAL LONG-TERM INVESTMENTS--82.5%
(Identified cost $27,967,340) .......................... 31,949,956
------------
</TABLE>
See Notes to Financial Statements
41
<PAGE>
STRATEGIC THEME SERIES
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
---------- -------- --------------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--18.1%
Commercial Paper--18.1%
Cargill, Inc. 6.05%, 7-1-97 ...... A-1+ $1,610 $ 1,610,000
Preferred Receivables Funding
Corp. 5.60%, 7-2-97 ............ A-1 1,510 1,509,765
AT&T Corp. 5.58%, 7-8-97 ...... A-1+ 1,000 998,915
Exxon Imperial U.S., Inc. 5.55%,
7-15-97 ..................... A-1+ 1,000 997,842
Goldman Sachs & Co. 5.57%,
7-15-97 ..................... A-1+ 745 743,386
General Electric Co. 5.60%,
7-17-97 ..................... A-1+ 1,135 1,132,175
----------------
6,992,083
----------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $6,992,083) ........................ 6,992,083
----------------
TOTAL INVESTMENTS--100.6%
(Identified cost $34,959,423) ........................ 38,942,039(a)
Cash and receivables, less liabilities--(0.6%) ...... (235,621)
----------------
NET ASSETS--100.0% .................................... $ 38,706,418
================
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $3,997,932 and gross
depreciation of $15,316 for income tax purposes. At June 30, 1997, the
aggregate cost of securities for federal income tax purposes was
$34,959,423.
(b) Non-income producing.
(c) Segregated as collateral.
See Notes to Financial Statements
42
<PAGE>
STRATEGIC THEME SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Assets
Investment securities at value (Identified cost $34,959,423) .................. $38,942,039
Cash ........................................................................... 2,068
Receivables
Investment securities sold ................................................... 100,557
Fund shares sold ............................................................ 35,327
Interest and dividends ...................................................... 6,570
------------
Total assets ............................................................... 39,086,561
------------
Liabilities
Payables
Investment securities purchased ............................................. 250,689
Options written, at value (Premiums received $33,879) ........................ 55,000
Investment advisory fee ...................................................... 21,041
Trustees' fee ............................................................... 3,316
Financial agent fee ......................................................... 1,856
Accrued expenses ............................................................ 48,241
------------
Total liabilities ............................................................ 380,143
------------
Net Assets ..................................................................... $38,706,418
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest .............................. $35,452,850
Undistributed net investment income .......................................... 34,910
Accumulated net realized loss ................................................ (742,837)
Net unrealized appreciation ................................................... 3,961,495
------------
Net Assets ..................................................................... $38,706,418
============
Shares of beneficial interest outstanding, $1 par value, unlimited authorization 3,306,693
============
Net asset value and offering price per share ................................. $11.71
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Investment Income
Interest ............................................................... $ 192,685
Dividends ............................................................ 83,591
----------
Total investment income ............................................. 276,276
----------
Expenses
Investment advisory fee ................................................ 122,331
Financial agent fee ................................................... 9,787
Printing ............................................................... 13,694
Custodian ............................................................ 13,302
Trustees ............................................................... 10,131
Professional ......................................................... 9,200
Miscellaneous ......................................................... 5,066
----------
Total expenses ...................................................... 183,511
Less expense borne by investment adviser .............................. (20,402)
----------
Net expenses ......................................................... 163,109
----------
Net investment income ................................................... 113,167
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized loss on securities ....................................... (304,703)
Net change in unrealized appreciation (depreciation) on investments ... 2,461,480
Net change in unrealized appreciation (depreciation) on written options (21,121)
----------
Net gain on investments ................................................ 2,135,656
----------
Net increase in net assets resulting from operations .................. $2,248,823
==========
</TABLE>
See Notes to Financial Statements
43
<PAGE>
STRATEGIC THEME SERIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended From Inception
June 30, 1997 January 29, 1996
(Unaudited) December 31, 1996
--------------- ------------------
<S> <C> <C>
From Operations
Net investment income .................................................................. $ 113,167 $ 94,091
Net realized loss ..................................................................... (304,703) (438,134)
Net change in unrealized appreciation (depreciation) ................................. 2,440,359 1,521,136
------------ --------------
Net increase in net assets resulting from operations ................................. 2,248,823 1,177,093
------------ --------------
From Distributions to Shareholders
Net investment income .................................................................. (78,257) (94,091)
Tax return of capital .................................................................. -- (21,960)
------------ --------------
Decrease in net assets from distributions to shareholders .............................. (78,257) (116,051)
------------ --------------
From Share Transactions
Proceeds from sales of shares (1,281,362 and 3,425,481 shares, respectively) ......... 14,357,970 36,431,726
Net asset value of shares issued from reinvestment of distributions (7,140 and 10,456
shares,
respectively) ........................................................................ 79,597 116,051
Cost of shares repurchased (347,302 and 1,070,444 shares, respectively) ............... (3,873,724) (11,636,810)
------------ --------------
Increase in net assets from share transactions ....................................... 10,563,843 24,910,967
------------ --------------
Net increase in net assets ............................................................ 12,734,409 25,972,009
Net Assets
Beginning of period .................................................................. 25,972,009 0
------------ --------------
End of period (including undistributed net investment income of $34,910 and $0,
respectively) ........................................................................ $ 38,706,418 $ 25,972,009
============ ==============
</TABLE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Six Months
Ended From Inception
6/30/97 1/29/96 to
(Unaudited) 12/31/96
-------------- ---------------
<S> <C> <C>
Net asset value, beginning of period ...... $ 10.98 $ 10.00
Income from investment operations
Net investment income ..................... 0.04(2) 0.04(2)
Net realized and unrealized gain ......... 0.72 0.99
--------- ----------
Total from investment operations ......... 0.76 1.03
--------- ----------
Less distributions
Dividends from net investment income ...... (0.03) (0.04)
Tax return of capital ..................... -- (0.01)
--------- ----------
Total distributions ..................... (0.03) (0.05)
--------- ----------
Change in net asset value .................. 0.73 0.98
--------- ----------
Net asset value, end of period ............ $ 11.71 $ 10.98
========= ==========
Total return .............................. 6.85%(3) 10.33%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) ...... $ 38,706 $ 25,972
Ratio to average net assets of:
Operating expenses ........................ 1.00%(1) 1.00%(1)
Net investment income ..................... 0.69%(1) 0.64%(1)
Portfolio turnover rate ..................... 336%(3) 391%(3)
Average commission rate paid(4) ............ $ 0.0589 $ 0.0587
</TABLE>
(1) Annualized
(2) Includes reimbursement of operating expenses by investment adviser of $0.01
and $0.02 per share, respectively.
(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, mark-downs, or spreads on shares traded on a principal
basis.
See Notes to Financial Statements
44
<PAGE>
ABERDEEN NEW ASIA SERIES
INVESTMENT REVIEW
For the last six months, the Edge Aberdeen New Asia Series returned 1.62%.
During this same period, its benchmark, the Morgan Stanley Capital
International AC Asia Pacific ex Japan Index,* returned 3.07%. All performance
figures assume reinvestment of dividends and exclude the effect of sales
charges.
Our underperformance can be attributed primarily to our underweighting in
Taiwan and our overweighted position in Thailand. While the Far East overall
has continued to grow at a steady rate of around 7%, it is perhaps best to
focus on the successes and failures of the year to obtain a clearer picture of
the future. The biggest disappointment among the markets has been Thailand.
While the country's weak government has been problematic, it has also resulted
in a strong private sector. The economy has suffered a slowdown in exports and
excesses in the property sector, aggravated by a high interest rate environment
designed to support the baht.
While we do not expect any major change in the wake of Hong Kong's
handover to China, we believe current high valuations both for real estate and
stocks do not outweigh the risks. There is widespread belief throughout Asia
that property prices can only rise. As the experience in Thailand shows, this
is not necessarily true. This trend has been restrained in the Philippines, and
we are encouraged by the investment in productive manufacturing assets, which
should enable the country to sustain growth of 6% or over.
Indonesia is enjoying GDP growth of over 6% and inflation under 6%.
However, political succession is a constant worry, and for this reason, we are
unlikely to increase our weighting. The downturn in the electronics cycle has
had a dramatic affect on Korea and Singapore, countries heavily reliant on
exports of these components.
Overall, the companies within the portfolio are experiencing 10-15%
earnings growth and in general, price/earnings ratios are the most attractive
they have been for some years, reinforcing our confidence in future
performance.
OUTLOOK
The economic outlook for the Far East remains as it has been for the last
decade or more. Average real GDP growth is around 7%, economies are generally
well-managed and opportunities for the corporate sector abound. Looking ahead,
we expect the economies of the region to continue to grow strongly over the
next year.
Our focus will remain on the lesser developed countries, which we feel
offer the greatest long-term growth prospects. We recognize that it is critical
to identify those well-managed companies with the right strategies to prosper
in a dynamic economic environment and, therefore, never invest in a company
without first meeting with its management.
* The Morgan Stanley Capital International AC Asia Pacific ex Japan Index is an
unmanaged, commonly used measure of total return foreign stock performance,
excluding Japan.
45
<PAGE>
ABERDEEN NEW ASIA SERIES
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON STOCKS--92.6%
Australia--11.4%
Australian Gas Light Co. Ltd. (Utility-Gas) ...... 50,000 $ 292,179
Commonwealth Bank of Australia--Instalment
Receipt (Banks) ................................. 25,000 218,104
Davids Ltd. (Retail) .............................. 300,000 260,713
Pacific BBA Ltd. (Miscellaneous) .................. 110,000 412,047
QBE Insurance Group Ltd. (Insurance) ............ 90,000 539,407
------------
1,722,450
------------
Hong Kong--22.7%
CDL Hotels International Ltd. (Hotels) ............ 700,000 284,619
Giordano International Ltd. (Retail) ............ 400,000 273,647
HSBC Holdings PLC (Banks) ........................ 24,800 745,870
Hongkong Electric Holdings Ltd.
(Utility-Electric) .............................. 110,000 442,999
Manhattan Card Company Ltd.
(Diversified Financial Services) ............... 650,000 295,752
National Mutual Asia Ltd. (Insurance) ............ 450,000 499,535
Smartone Telecommunications
(Utility-Telephone) (b) ........................ 175,000 397,563
Swire Pacific Ltd. Class B (Miscellaneous) ...... 330,000 500,503
------------
3,440,488
------------
India--6.3%
Grasim Industries Ltd. Sponsored GDR 144A
(Basic Materials) (c) ........................... 22,600 316,400
Industrial Credit & Investment Corporation of
India Ltd. Sponsored GDR (Diversified
Financial Services) (b) ........................ 45,000 646,875
------------
963,275
------------
Indonesia--8.1%
PT Bank Bali (Banks) .............................. 185,000 494,551
PT Duta Anggada Realty (Property) ............... 200,000 193,296
PT Indosat (Utility-Telephone) ..................... 180,000 538,556
------------
1,226,403
------------
Malaysia--8.3%
AMMB Holdings Berhad
(Diversified Financial Services) ............... 50,000 311,014
Malaysian Oxygen Berhad (Chemical) ............... 80,000 405,705
Muhibbah Engineering Berhad (Engineering &
Construction) ................................. 65,000 213,748
Sime UEP Properties Berhad (Property) ............ 153,000 330,369
------------
1,260,836
------------
New Zealand--2.8%
Telecom Corporation of New Zealand Ltd.
(Utility-Telephone) ........................... 85,000 432,057
------------
Philippines--7.1%
Ayala Land, Inc. Class B (Property) ............... 575,000 528,653
Philippine Long Distance Telephone Co.
Sponsored ADR (Utility-Telephone) ............... 8,500 546,125
------------
1,074,778
------------
Singapore--10.1%
Clipsal Industries Ltd. (Electrical Equipment) ... 100,000 354,000
Development Bank of Singapore Ltd. (Banks) ........ 25,000 314,729
Robinson & Co. Ltd. (Retail) ..................... 90,000 468,947
Rothmans Industries Ltd. (Tobacco) ............... 75,000 390,789
------------
1,528,465
------------
SHARES VALUE
----------- ------------
<S> <C> <C>
South Korea--5.6%
Korea Electric Power Corp. Sponsored ADR
(Utility-Electric) .............................. 24,000 $ 440,250
Samsung Electronics Sponsored GDR 144A
Non-Voting Shares (Electronics) (c) ............ 15,248 411,696
------------
851,946
------------
Taiwan--2.2%
Standard Foods Taiwan Ltd. GDR
(Retail-Food) (b) .............................. 35,000 335,125
------------
Thailand--8.0%
Bangkok Bank Public Company Ltd. (Banks) ......... 40,000 274,850
Ruam Pattana Fund II (Closed End Mutual
Fund) .......................................... 1,250,000 376,375
Siam Cement Public Co. Ltd. (Building &
Construction) ................................. 13,500 233,468
Siam Commercial Bank Public Co. Ltd.
(Banks) ....................................... 80,000 327,350
------------
1,212,043
------------
TOTAL COMMON STOCKS
(Identified cost $13,960,794) ................................. 14,047,866
------------
WARRANTS--0.1%
Malaysia--0.1%
AMMB Holdings Berhad Warrants (Banks) (b) ......... 6,000 8,082
------------
TOTAL WARRANTS
(Identified cost $0) .......................................... 8,082
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000)
---------- -------------
<S> <C> <C> <C>
CONVERTIBLE BONDS--0.1%
Malaysia--0.1%
AMMB Holdings Berhad (ICULS)
Cv. 7.50%, '02 (Banks) ...... NR $ 60(d) 21,514
-------------
TOTAL CONVERTIBLE BONDS
(Identified cost $24,024) ................................. 21,514
-------------
NON-CONVERTIBLE BONDS--0.1%
Malaysia--0.1%
AMMB Holdings Berhad 5%, '02
(Banks) ..................... NR 60(d) 20,325
-------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $24,024).................................... 20,325
-------------
TOTAL LONG-TERM INVESTMENTS--92.9%
(Identified cost $14,008,842) .............................. 14,097,787
-------------
SHORT-TERM OBLIGATIONS--7.2%
Brown Brothers Harriman repurchase
agreement, 5.50%, dated 6/30/97 due
7/1/97, repurchase price $1,100,168,
collateralized by U.S. Treasury Note
5.875%, 2/28/99, market value $1,100,000 1,100 1,100,000
-------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $1,100,000)................................. 1,100,000
-------------
TOTAL INVESTMENTS--100.1%
(Identified cost $15,108,842) .............................. 15,197,787(a)
Cash and receivables, less liabilities--(0.1%) ............ (19,079)
-------------
NET ASSETS--100.0% .......................................... $ 15,178,708
=============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $1,341,350 and gross
depreciation of $1,273,870 for income tax purposes. At June 30, 1997 the
aggregate cost of securities for federal income tax purposes was
$15,130,307.
(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 June 30, 1997,
these securities amounted to a value of $728,096 or 4.8% of net assets.
(d) Par value represents Malaysian Ringgits.
See Notes to Financial Statements
46
<PAGE>
ABERDEEN NEW ASIA SERIES
INDUSTRY DIVERSIFICATION
As a Percentage of Total Value of Total Long-Term Investments
(Unaudited)
<TABLE>
<S> <C>
Banks .............................. 17.1%
Basic Materials ..................... 2.2
Building & Construction ............ 1.7
Chemical ........................... 2.9
Closed End Mutual Fund ............... 2.7
Diversified Financial Services ...... 8.9
Electrical Equipment ............... 2.5
Electronics ........................ 2.9
Engineering & Construction ......... 1.5
Hotels .............................. 2.0
Insurance ........................... 7.4
Miscellaneous ........................ 6.5
Property ........................... 7.5
Retail .............................. 7.1
Retail-Food ........................... 2.4
Tobacco .............................. 2.8
Utility-Electric ..................... 6.2
Utility-Gas ........................ 2.1
Utility-Telephone .................. 13.6
------
100.0%
======
</TABLE>
See Notes to Financial Statements
47
<PAGE>
ABERDEEN NEW ASIA SERIES
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Assets
Investment securities at value (Identified cost $15,108,842) .................. $15,197,787
Cash ........................................................................... 81,716
Receivables
Investment securities sold ................................................... 103,868
Fund shares sold ............................................................ 28,892
Dividends and interest ...................................................... 25,337
Tax reclaim .................................................................. 340
------------
Total assets ............................................................... 15,437,940
------------
Liabilities
Payables
Investment securities purchased ............................................. 217,141
Investment advisory fee ...................................................... 7,648
Financial agent fee ......................................................... 2,092
Trustees' fee ............................................................... 3,596
Accrued expenses ............................................................ 28,755
------------
Total liabilities ............................................................ 259,232
------------
Net Assets ..................................................................... $15,178,708
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest .............................. $14,962,521
Undistributed net investment income .......................................... 75,464
Accumulated net realized gain ................................................ 51,807
Net unrealized appreciation ................................................... 88,916
------------
Net Assets ..................................................................... $15,178,708
============
Shares of beneficial interest outstanding, $1 par value, unlimited authorization 1,502,474
============
Net asset value and offering price per share ................................. $10.10
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
Investment Income
Dividends .............................................................................. $ 164,246
Interest .............................................................................. 29,519
Foreign taxes withheld ............................................................... (11,089)
----------
Total investment income ............................................................... 182,676
----------
Expenses
Investment advisory fee ............................................................... 66,215
Financial agent fee .................................................................. 3,973
Custodian .............................................................................. 26,588
Trustees' fee ........................................................................ 9,597
Printing .............................................................................. 9,582
Professional ........................................................................... 8,486
Miscellaneous ........................................................................ 2,374
----------
Total expenses ........................................................................ 126,815
Less expenses borne by investment adviser ............................................. (44,046)
----------
Net expenses ........................................................................ 82,769
----------
Net investment income .................................................................. 99,907
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities ...................................................... 54,192
Net realized loss on foreign currency transactions .................................... (1,657)
Net change in unrealized appreciation (depreciation) on investments .................. 111,496
Net change in unrealized appreciation (depreciation) on foreign currency and foreign
currency transactions ............................................................... 22
----------
Net gain on investments ............................................................... 164,053
----------
Net increase in net assets resulting from operations .................................... $ 263,960
==========
</TABLE>
See Notes to Financial Statements
48
<PAGE>
ABERDEEN NEW ASIA SERIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended From Inception
June 30, 1997 September 17, 1996 to
(Unaudited) December 31, 1996
--------------- ----------------------
<S> <C> <C>
From Operations
Net investment income ............................................................ $ 99,907 $ 58,378
Net realized gain ............................................................... 52,535 3,328
Net change in unrealized appreciation (depreciation) .............................. 111,518 (22,602)
------------ ------------
Net increase in net assets resulting from operations .............................. 263,960 39,104
------------ ------------
From Distributions to Shareholders
Net investment income ............................................................ (20,499) (58,378)
Net realized gains ............................................................... (7,488) --
In excess of net investment income ................................................ -- (512)
------------ ------------
Decrease in net assets from distributions to shareholders ........................ (27,987) (58,890)
------------ ------------
From Share Transactions
Proceeds from sales of shares (585,361 and 1,343,657 shares, respectively) ...... 5,776,921 13,400,256
Net asset value of shares issued from reinvestment of distributions (2,845 and 5,928
shares, respectively) ............................................................ 27,986 58,890
Cost of shares repurchased (248,382 and 186,935 shares, respectively) ............ (2,447,378) (1,854,154)
------------ ------------
Increase in net assets from share transactions .................................... 3,357,529 11,604,992
------------ ------------
Net increase in net assets ...................................................... 3,593,502 11,585,206
Net Assets
Beginning of period ............................................................... 11,585,206 0
------------ ------------
End of period (including undistributed net investment income and distributions in
excess of net investment income of $75,464 and ($3,944), respectively) ............ $ 15,178,708 $ 11,585,206
============ ============
</TABLE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Six Months
Ended From Inception
6/30/97 9/17/96 to
(Unaudited) 12/31/96
-------------- ---------------
<S> <C> <C>
Net asset value, beginning of period ......... $ 9.96 $ 10.00
Income from investment operations
Net investment income ........................ 0.07(1) 0.05(1)
Net realized and unrealized gain (loss) ...... 0.10 (0.04)
--------- ---------
Total from investment operations ............ 0.17 0.01
--------- ---------
Less distributions
Dividends from net investment income ......... (0.02) (0.05)
Dividends from net realized gains ............ (0.01) --
--------- ---------
Total distributions ........................ (0.03) (0.05)
--------- ---------
Change in net asset value ..................... 0.14 (0.04)
--------- ---------
Net asset value, end of period ............... $ 10.10 $ 9.96
========= =========
Total return ................................. 1.62%(3) 0.16%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) ......... $ 15,179 $ 11,585
Ratio to average net assets of:
Operating expenses ........................... 1.25%(2) 1.25%(2)
Net investment income ........................ 1.51%(2) 2.40%(2)
Portfolio turnover rate ........................ 6%(3) 2%(3)
Average commission rate paid(4) ............... $ 0.0098 $ 0.0109
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of $0.03
and $0.03 per share, respectively.
(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, mark-downs, or spreads on shares traded on a principal
basis.
See Notes to Financial Statements
49
<PAGE>
THE PHOENIX EDGE SERIES FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
Note 1--Organization
The Phoenix Edge Series Fund (the "Fund") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940,
as amended, as an open-end management investment company. The Fund is
comprised of the Money Market, Growth, Multi-Sector Fixed Income, Strategic
Allocation (formerly Total Return), International, Balanced, Real Estate
Securities ("Real Estate"), Strategic Theme and Aberdeen New Asia Series.
The Fund was established as part of the December 8, 1986 reorganization of
the Phoenix Home Life Variable Accumulation Account (the Account) from a
management investment company to a unit investment trust under the
Investment Company Act of 1940. The Fund is organized with Series which are
available only to the sub-accounts of the Phoenix Home Life Variable
Accumulation Account, the Phoenix Home Life Variable Universal Life Account,
the PHL Variable Accumulation Account, and the Phoenix Home Life Separate
Accounts B, C, and D.
Each Series has distinct investment objectives. The Money Market Series
seeks to provide maximum current income consistent with capital preservation
and liquidity. The Growth Series seeks to achieve intermediate and long-term
growth of capital, with income as a secondary consideration. The
Multi-Sector Fixed Income Series seeks to provide long-term total return by
investing in a diversified portfolio of high yield and high quality fixed
income securities. The Strategic Allocation Series seeks to realize as high
a level of total rate of return over an extended period of time as is
considered consistent with prudent investment risk by investing in three
market segments; stocks, bonds and money market instruments. The
International Series seeks as its investment objective a high total return
consistent with reasonable risk by investing primarily in an internationally
diversified portfolio of equity securities. The Balanced Series seeks to
provide reasonable income, long-term growth and conservation of capital. The
Real Estate Series seeks to achieve capital appreciation and income with
approximately equal emphasis through investments in real estate investment
trusts and companies that operate, manage, develop or invest in real estate.
The Strategic Theme Series seeks long-term appreciation of capital by
investing in securities that the adviser believes are well positioned to
benefit from cultural, demographic, regulatory, social or technological
changes worldwide. The Aberdeen New Asia Series seeks to provide long-term
capital appreciation by investing primarily in diversified equity securities
of issuers organized and principally operating in Asia, excluding Japan.
Note 2--Significant Accounting Policies
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 their
fair value as determined in good faith by or under the direction of the
Trustees.
The Money Market 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 Series'
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 fair valuation. The Series attempts to maintain a constant net asset
value of $10 per share.
B. Security Transactions and Related Income
Security transactions are recorded on the trade date. Interest income is
recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date, or in the case of certain foreign securities, as soon as
the Fund is notified. The Fund does not amortize premiums except for the
Money Market 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 to comply with the requirements of the Internal Revenue 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 and all
distributions are reinvested into the Fund. 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.
50
<PAGE>
THE PHOENIX EDGE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 1997
(Unaudited)
E. Foreign Currency Translation
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at
the trade date. The gain or loss resulting from a change in currency
exchange rates between the trade and settlement dates of a portfolio
transaction is treated as a gain or loss on foreign currency. Likewise, the
gain or loss resulting from a change in currency exchange rates between the
date income is accrued and paid is treated as a gain or loss on foreign
currency. The Trust does not separate that portion of the results of
operations arising from changes in exchange rates and that portion arising
from changes in the market prices of securities.
F. Forward Currency Contracts
Each 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 the Series as an unrealized gain (or
loss). When the contract is closed or offset with the same counterparty, 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 or
offset.
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 the value of the contract. Such receipts or
payments are known as variation margins 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 the Series is that the change in value of the futures
contract may not correspond to the change in value of the hedged
instruments.
H. Options
Each Series 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.
Each Series 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.
Each Series may purchase options which are included in the Series' 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.
I. Trust Expenses
Expenses incurred by the Fund 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. Credit Risk
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such
investments may be volatile. The consequences of political, social or
economic changes in these markets may have disruptive effects on the market
prices of these investments and the income they generate, as well as a
fund's ability to repatriate such amounts.
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.
51
<PAGE>
THE PHOENIX EDGE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 1997
(Unaudited)
L. Repurchase Agreements
A repurchase agreement is a transaction where a Series acquires a security
for cash and obtains a simultaneous commitment from the seller to repurchase
the security at an agreed upon price and date. The Series, through its
custodian, takes possession of securities collateralizing the repurchase
agreement. The collateral is marked to market daily to ensure that the
market value of the underlying assets remains sufficient to protect the
Series in the event of default by the seller. If the seller defaults and the
value of the collateral declines or, if the seller enters insolvency
proceedings, realization of collateral may be delayed or limited.
Note 3--Investment Advisory Fees and Related Party Transactions
As compensation for its advisory services to the Fund, Phoenix Investment
Counsel, Inc. ("PIC"), 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 listed below:
<TABLE>
<CAPTION>
Rate for first Rate for next Rate for excess
Series $250 million $250 million over $500 million
- ------------------------------------ ---------------- --------------- ------------------
<S> <C> <C> <C>
Money Market .................. 0.40% 0.35% 0.30%
Multi-Sector Fixed Income ...... 0.50 0.45 0.40
Balanced ........................ 0.55 0.50 0.45
Strategic Allocation ............ 0.60 0.55 0.50
Growth ........................ 0.70 0.65 0.60
International .................. 0.75 0.70 0.65
Strategic Theme .................. 0.75 0.70 0.65
</TABLE>
The investment adviser for the Real Estate Series is Phoenix Realty
Securities, Inc. ("PRS"). PRS is an indirect, wholly-owned subsidiary of
PHL. For its services, PRS is entitled to a fee at an annual rate of 0.75%
of the average daily net assets for the first $1 billion. Pursuant to a
Sub-Advisory Agreement with the Series, PRS delegates certain investment
decisions and research functions to ABKB/LaSalle Securities Limited
Partnership ("ABKB") for which ABKB is paid a fee by PRS equal to 0.45% of
the average daily net assets of the Real Estate Series for the first $1
billion.
Phoenix-Aberdeen International Advisors, LLC ("PAIA") serves as the
investment adviser to the Aberdeen New Asia Series. PAIA is a joint venture
between PM Holdings, Inc., a direct subsidiary of PHL, and Aberdeen Fund
Managers, Inc. ("Aberdeen"), a wholly-owned subsidiary of Aberdeen Trust
PLC. PAIA is entitled to a fee, at an annual rate of 1.00% of the average
daily net assets of the Aberdeen New Asia Series. Pursuant to Sub-advisory
agreements, PAIA delegates certain investment decisions and functions to
other entities. PIC receives a fee of 0.30% of the average daily net assets
of the Aberdeen New Asia Series from PAIA for providing research and other
domestic advisory services, as needed. In addition, PAIA also pays a
sub-advisory fee to Aberdeen of 0.40% of the average daily net assets of the
Aberdeen New Asia Series for implementing certain portfolio transactions and
providing research and other services.
Each Series (except the International, Real Estate, Strategic Theme and
Aberdeen New Asia Series) pays a portion or all of its other operating
expenses (not including management fee, interest, taxes, brokerage fees and
commissions), up to 0.15% of its average net assets. The International, Real
Estate, Strategic Theme and Aberdeen New Asia Series pay other operating
expenses up to 0.40%, 0.25%, 0.25% and 0.25%, respectively, of its average
net assets. Expenses above these limits are paid by the Advisers, PIC, PRS,
PAIA and/or PHL and/or PHL Variable Insurance Company.
As Financial Agent to the Fund and to each Series, Phoenix Equity Planning
Corporation ("PEPCO") receives a fee at an annual rate of 0.06% of the
average daily net assets of each Series for bookkeeping, administrative and
pricing services.
At June 30, 1997, PHL and affiliates held shares in the Phoenix Edge Series
Fund and/or in the underlying unit investment trusts which had the following
aggregate value:
<TABLE>
<S> <C>
Growth Series .................. $7,522,072
Real Estate Series ............ 7,693,097
Strategic Theme Series ......... 2,572,136
Aberdeen New Asia Series ...... 3,019,905
</TABLE>
52
<PAGE>
THE PHOENIX EDGE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 1997
(Unaudited)
Note 4--Purchases and Sales of Securities
Purchases and sales of securities during the six months ended June 30, 1997
(excluding U.S. Government and agency securities, short-term securities,
options and forward currency contracts) aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
---------------- ---------------
<S> <C> <C>
Growth Series ........................ $2,163,752,829 $2,236,130,828
Multi-Sector Fixed Income Series ...... 93,356,800 69,187,574
Strategic Allocation Series ............ 621,240,071 657,164,018
International Series .................. 142,106,374 123,535,335
Balanced Series ........................ 145,273,897 163,898,779
Real Estate Series ..................... 16,657,755 1,913,367
Strategic Theme Series ............... 89,446,361 85,084,464
Aberdeen New Asia Series ............... 4,058,739 781,016
</TABLE>
There were no purchases or sales of such securities in the Money Market
Series.
Purchases and sales of long-term U.S. Government and agency securities
during the six months ended June 30, 1997 aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
-------------- ------------
<S> <C> <C>
Multi-Sector Fixed Income Series ...... $ 57,663,042 $64,496,161
Strategic Allocation Series ............ 103,651,416 74,134,244
Balanced Series ........................ 13,255,047 10,157,884
</TABLE>
There were no purchases or sales of long-term U.S. Government and agency
securities in the Money Market, Growth, International, Real Estate,
Strategic Theme or Aberdeen New Asia Series.
At June 30, 1997, the following Series had outstanding written call
options:
<TABLE>
<CAPTION>
Shares Expiration Exercise Market
Balanced Series: Subject to Call Date Price Value
---------------- ----------------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
Bristol-Myers Squibb Co. .................. 8,000 7/97 $ 80 $ 26,000
Colgate-Palmolive Co. ..................... 20,000 7/97 70 1,250
Eli Lilly & Co. ........................... 8,200 7/97 105 48,175
Intel Corp. ................................. 3,800 7/97 180 238
International Business Machines Corp. ...... 9,000 7/97 90 27,000
PepsiCo, Inc. .............................. 28,000 7/97 40 7,000
Procter & Gamble Co. ........................ 6,000 7/97 150 2,625
T. Rowe Price Associates .................. 10,000 7/97 55 10,000
---------
$122,288
=========
Strategic Theme Series:
-----------------------
Dell Computer Corp. ........................ 4,000 8/97 110 $ 55,000
=========
</TABLE>
53
<PAGE>
THE PHOENIX EDGE SERIES FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 1997
(Unaudited)
Written call option activity for the six months ended June 30, 1997
aggregated the following:
<TABLE>
<CAPTION>
Strategic Allocation Series
-----------------------------
# of Amount
Options of Premiums
------------ ----------------
<S> <C> <C>
Options outstanding at December 31, 1996 ......... -- $ --
Options written ................................. 5,299 1,543,694
Options cancelled in closing purchase transactions (5,149) (1,503,833)
Options expired ................................. -- --
Options exercised ................................. (150) (39,861)
-------- --------------
Options outstanding at June 30, 1997 ............ -- $ --
======== ==============
<CAPTION>
Balanced Series Strategic Theme Series
----------------------- ----------------------
# of Amount # of Amount
Options of Premiums Options of Premiums
--------- ------------- --------- ------------
<S> <C> <C> <C> <C>
Options outstanding at December 31, 1996 ......... -- $ -- -- $ --
Options written ................................. 967 138,688 40 33,879
Options cancelled in closing purchase transactions (37) (12,950) -- --
Options expired ................................. -- -- -- --
Options exercised ................................. -- -- -- --
----- ----------- --- --------
Options outstanding at June 30, 1997 ............ 930 $ 120,536 40 $33,879
===== =========== === ========
</TABLE>
Note 5--Forward Currency Contracts
At June 30, 1997, the International Series had entered into various forward
currency contracts which contractually obligate the Series to deliver
currencies at specified dates. Open short contracts were as follows:
<TABLE>
<CAPTION>
In Net
Contracts Exchange Settlement Unrealized
to Deliver For Date Value Appreciation
- --------------- --------------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
FL 20,000,000 US 10,400,957 8/1/97 $10,201,830 $199,127
========
</TABLE>
FL = Dutch Florin
US = U.S. Dollar
Note 6--Capital Loss Carryovers
At December 31, 1996, the Strategic Theme Series had available for federal
income tax purposes unused capital losses of $396,065 expiring in 2003.
Under current tax law, capital losses realized after October 31, 1996 may be
deferred and treated as occurring on the first day of the following tax
year. For the calendar year ended December 31, 1996, the Growth and Aberdeen
New Asia Series elected to defer $613 and $1,755, respectively, in losses
occurring between November 1, 1996 and December 31, 1996.
54
<PAGE>
THE PHOENIX EDGE SERIES FUND
101 Munson Street
Greenfield, Massachusetts 01301
Board of 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
James D. Wehr, Senior Vice President
Hugh Young, Senior Vice President
Curtiss O. Barrows, Vice President
Mary E. Canning, Vice President
Jeanne H. Dorey, Vice President
Jean Claude Gruet, Vice President
William E. Keen, III, Vice President
David Lui, Vice President
William R. Moyer, Vice President
Scott C. Noble, Vice President
C. Edwin Riley, Jr., Vice President
Barbara Rubin, Vice President
Leonard J. Saltiel, Vice President
Julie L. Sapia, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary
Investment Advisers
Phoenix Investment Counsel, Inc.
56 Prospect Street
Hartford, Connecticut 06115-0480
Phoenix Realty Securities, Inc.
(Real Estate Securities Series)
38 Prospect Street
Hartford, Connecticut 06115-0479
Phoenix-Aberdeen International Advisors, LLC
(Aberdeen New Asia Series)
56 Prospect Street
Hartford, Connecticut 06115-0480
Custodians
The Chase Manhattan Bank
1 Chase Manhattan Plaza
Floor 3B
New York, New York 10081
Brown Brothers Harriman & Co.
(Aberdeen New Asia Series and International Series)
40 Water Street
Boston, Massachusetts 02109
State Street Bank and Trust Company
(Real Estate Securities Series)
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
- --------------------------------------------------------------------------------
This report is not authorized for distribution to prospective investors in The
Phoenix Edge Series Fund unless preceded or accompanied by an effective
Prospectus which includes information concerning the Fund's Record and other
pertinent information.
- --------------------------------------------------------------------------------
<PAGE>
THIS PAGE LEFT INTENTIONALLY BLANK.
<PAGE>
THIS PAGE LEFT INTENTIONALLY BLANK.
<PAGE>
[LOGO] PHOENIX
PHL Variable Insurance Company and
Phoenix Home Life Mutual Insurance Company
101 Munson Street
P.O. Box 810
Greenfield, MA 01302-0810
<TABLE>
<S> <C>
OL2531S (8/97) [COPYRIGHT] 1997 Phoenix Home Life Mutual Insurance Company [RECYLE LOGO] Printed on Recycled Paper.
700.04
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> PHOENIX EDGE MONEY MARKET SERIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 124306
<INVESTMENTS-AT-VALUE> 124306
<RECEIVABLES> 381
<ASSETS-OTHER> 494
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 125181
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 446
<TOTAL-LIABILITIES> 446
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 124735
<SHARES-COMMON-STOCK> 12473
<SHARES-COMMON-PRIOR> 13136
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 124735
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3487
<OTHER-INCOME> 0
<EXPENSES-NET> (336)
<NET-INVESTMENT-INCOME> 3151
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3151
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3151)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16252
<NUMBER-OF-SHARES-REDEEMED> (17230)
<SHARES-REINVESTED> 315
<NET-CHANGE-IN-ASSETS> (6626)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 251
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 336
<AVERAGE-NET-ASSETS> 126713
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.25
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.25)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 0.54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> PHOENIX EDGE GROWTH SERIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 1255899
<INVESTMENTS-AT-VALUE> 1378220
<RECEIVABLES> 27585
<ASSETS-OTHER> 3
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1405808
<PAYABLE-FOR-SECURITIES> 39623
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 921
<TOTAL-LIABILITIES> 40544
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1170060
<SHARES-COMMON-STOCK> 70131
<SHARES-COMMON-PRIOR> 65391
<ACCUMULATED-NII-CURRENT> 76
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 72807
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 122321
<NET-ASSETS> 1365264
<DIVIDEND-INCOME> 6663
<INTEREST-INCOME> 3789
<OTHER-INCOME> 0
<EXPENSES-NET> (4553)
<NET-INVESTMENT-INCOME> 5899
<REALIZED-GAINS-CURRENT> 73628
<APPREC-INCREASE-CURRENT> 41571
<NET-CHANGE-FROM-OPS> 121098
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6563)
<DISTRIBUTIONS-OF-GAINS> (77550)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6570
<NUMBER-OF-SHARES-REDEEMED> (6150)
<SHARES-REINVESTED> 4320
<NET-CHANGE-IN-ASSETS> 129869
<ACCUMULATED-NII-PRIOR> 739
<ACCUMULATED-GAINS-PRIOR> 76729
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4029
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4553
<AVERAGE-NET-ASSETS> 1291690
<PER-SHARE-NAV-BEGIN> 18.89
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> 1.77
<PER-SHARE-DIVIDEND> (0.10)
<PER-SHARE-DISTRIBUTIONS> (1.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.47
<EXPENSE-RATIO> 0.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> PHOENIX EDGE MULTI-SECTOR FIXED INCOME SERIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 168024
<INVESTMENTS-AT-VALUE> 170768
<RECEIVABLES> 7636
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 178404
<PAYABLE-FOR-SECURITIES> 15824
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4981
<TOTAL-LIABILITIES> 20805
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 151962
<SHARES-COMMON-STOCK> 15281
<SHARES-COMMON-PRIOR> 14026
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (61)
<ACCUMULATED-NET-GAINS> 2954
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2744
<NET-ASSETS> 157599
<DIVIDEND-INCOME> 46
<INTEREST-INCOME> 6029
<OTHER-INCOME> 0
<EXPENSES-NET> (482)
<NET-INVESTMENT-INCOME> 5593
<REALIZED-GAINS-CURRENT> 2994
<APPREC-INCREASE-CURRENT> (1671)
<NET-CHANGE-FROM-OPS> 6916
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6080)
<DISTRIBUTIONS-OF-GAINS> (1292)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3867
<NUMBER-OF-SHARES-REDEEMED> (3332)
<SHARES-REINVESTED> 720
<NET-CHANGE-IN-ASSETS> 12555
<ACCUMULATED-NII-PRIOR> 427
<ACCUMULATED-GAINS-PRIOR> 1251
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 371
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 497
<AVERAGE-NET-ASSETS> 149741
<PER-SHARE-NAV-BEGIN> 10.34
<PER-SHARE-NII> 0.38
<PER-SHARE-GAIN-APPREC> 0.09
<PER-SHARE-DIVIDEND> (0.41)
<PER-SHARE-DISTRIBUTIONS> (0.09)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.31
<EXPENSE-RATIO> 0.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 04
<NAME> PHOENIX EDGE STRATEGIC ALLOCATION SERIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 352714
<INVESTMENTS-AT-VALUE> 373832
<RECEIVABLES> 46283
<ASSETS-OTHER> 3
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 420118
<PAYABLE-FOR-SECURITIES> 22549
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 330
<TOTAL-LIABILITIES> 22879
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 347662
<SHARES-COMMON-STOCK> 27119
<SHARES-COMMON-PRIOR> 27418
<ACCUMULATED-NII-CURRENT> 32
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 28427
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21118
<NET-ASSETS> 397239
<DIVIDEND-INCOME> 1242
<INTEREST-INCOME> 4766
<OTHER-INCOME> 0
<EXPENSES-NET> (1314)
<NET-INVESTMENT-INCOME> 4694
<REALIZED-GAINS-CURRENT> 28434
<APPREC-INCREASE-CURRENT> 3696
<NET-CHANGE-FROM-OPS> 36824
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5077)
<DISTRIBUTIONS-OF-GAINS> (4640)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1670
<NUMBER-OF-SHARES-REDEEMED> (2639)
<SHARES-REINVESTED> 671
<NET-CHANGE-IN-ASSETS> 22995
<ACCUMULATED-NII-PRIOR> 415
<ACCUMULATED-GAINS-PRIOR> 4632
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1111
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1314
<AVERAGE-NET-ASSETS> 384477
<PER-SHARE-NAV-BEGIN> 13.65
<PER-SHARE-NII> 0.18
<PER-SHARE-GAIN-APPREC> 1.18
<PER-SHARE-DIVIDEND> (0.19)
<PER-SHARE-DISTRIBUTIONS> (0.17)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.65
<EXPENSE-RATIO> 0.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 05
<NAME> PHOENIX EDGE INTERNATIONAL SERIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 172949
<INVESTMENTS-AT-VALUE> 204821
<RECEIVABLES> 935
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 205756
<PAYABLE-FOR-SECURITIES> 108
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1515
<TOTAL-LIABILITIES> 1623
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 156744
<SHARES-COMMON-STOCK> 12886
<SHARES-COMMON-PRIOR> 11895
<ACCUMULATED-NII-CURRENT> 198
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15121
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 32070
<NET-ASSETS> 204133
<DIVIDEND-INCOME> 1576
<INTEREST-INCOME> 734
<OTHER-INCOME> 0
<EXPENSES-NET> (864)
<NET-INVESTMENT-INCOME> 1446
<REALIZED-GAINS-CURRENT> 15138
<APPREC-INCREASE-CURRENT> 7003
<NET-CHANGE-FROM-OPS> 23587
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2639)
<DISTRIBUTIONS-OF-GAINS> (4631)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1805
<NUMBER-OF-SHARES-REDEEMED> (1283)
<SHARES-REINVESTED> 468
<NET-CHANGE-IN-ASSETS> 31465
<ACCUMULATED-NII-PRIOR> 1391
<ACCUMULATED-GAINS-PRIOR> 4615
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 684
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 864
<AVERAGE-NET-ASSETS> 183991
<PER-SHARE-NAV-BEGIN> 14.52
<PER-SHARE-NII> 0.12
<PER-SHARE-GAIN-APPREC> 1.79
<PER-SHARE-DIVIDEND> (0.22)
<PER-SHARE-DISTRIBUTIONS> (0.37)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.84
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 06
<NAME> PHOENIX EDGE BALANCED SERIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 202785
<INVESTMENTS-AT-VALUE> 216233
<RECEIVABLES> 1207
<ASSETS-OTHER> 108
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 217548
<PAYABLE-FOR-SECURITIES> 194
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 630
<TOTAL-LIABILITIES> 824
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 189228
<SHARES-COMMON-STOCK> 17130
<SHARES-COMMON-PRIOR> 16942
<ACCUMULATED-NII-CURRENT> 35
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 14014
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13447
<NET-ASSETS> 216724
<DIVIDEND-INCOME> 663
<INTEREST-INCOME> 3295
<OTHER-INCOME> 0
<EXPENSES-NET> (709)
<NET-INVESTMENT-INCOME> 3249
<REALIZED-GAINS-CURRENT> 14203
<APPREC-INCREASE-CURRENT> 2064
<NET-CHANGE-FROM-OPS> 19516
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3565)
<DISTRIBUTIONS-OF-GAINS> (5978)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1200
<NUMBER-OF-SHARES-REDEEMED> (1771)
<SHARES-REINVESTED> 759
<NET-CHANGE-IN-ASSETS> 12439
<ACCUMULATED-NII-PRIOR> 351
<ACCUMULATED-GAINS-PRIOR> 5789
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 568
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 709
<AVERAGE-NET-ASSETS> 208301
<PER-SHARE-NAV-BEGIN> 12.06
<PER-SHARE-NII> 0.20
<PER-SHARE-GAIN-APPREC> 0.97
<PER-SHARE-DIVIDEND> (0.22)
<PER-SHARE-DISTRIBUTIONS> (0.36)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.65
<EXPENSE-RATIO> 0.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 07
<NAME> PHOENIX EDGE REAL ESTATE SERIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 32993
<INVESTMENTS-AT-VALUE> 38754
<RECEIVABLES> 232
<ASSETS-OTHER> 3
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38989
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57
<TOTAL-LIABILITIES> 57
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32597
<SHARES-COMMON-STOCK> 2569
<SHARES-COMMON-PRIOR> 1586
<ACCUMULATED-NII-CURRENT> 276
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 299
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5760
<NET-ASSETS> 38932
<DIVIDEND-INCOME> 828
<INTEREST-INCOME> 24
<OTHER-INCOME> 0
<EXPENSES-NET> (156)
<NET-INVESTMENT-INCOME> 696
<REALIZED-GAINS-CURRENT> 300
<APPREC-INCREASE-CURRENT> 1345
<NET-CHANGE-FROM-OPS> 2341
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (429)
<DISTRIBUTIONS-OF-GAINS> (124)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1681
<NUMBER-OF-SHARES-REDEEMED> (735)
<SHARES-REINVESTED> 37
<NET-CHANGE-IN-ASSETS> 16222
<ACCUMULATED-NII-PRIOR> 9
<ACCUMULATED-GAINS-PRIOR> 123
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 117
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 167
<AVERAGE-NET-ASSETS> 31565
<PER-SHARE-NAV-BEGIN> 14.32
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> 0.78
<PER-SHARE-DIVIDEND> (0.18)
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.15
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 08
<NAME> PHOENIX EDGE STRATEGIC THEME SERIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 34959
<INVESTMENTS-AT-VALUE> 38942
<RECEIVABLES> 143
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 39087
<PAYABLE-FOR-SECURITIES> 251
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 129
<TOTAL-LIABILITIES> 380
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 35453
<SHARES-COMMON-STOCK> 3307
<SHARES-COMMON-PRIOR> 2365
<ACCUMULATED-NII-CURRENT> 35
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (743)
<ACCUM-APPREC-OR-DEPREC> 3961
<NET-ASSETS> 38706
<DIVIDEND-INCOME> 83
<INTEREST-INCOME> 193
<OTHER-INCOME> 0
<EXPENSES-NET> (163)
<NET-INVESTMENT-INCOME> 113
<REALIZED-GAINS-CURRENT> (305)
<APPREC-INCREASE-CURRENT> 2441
<NET-CHANGE-FROM-OPS> 2249
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (78)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1281
<NUMBER-OF-SHARES-REDEEMED> (347)
<SHARES-REINVESTED> 7
<NET-CHANGE-IN-ASSETS> 12734
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (438)
<GROSS-ADVISORY-FEES> 123
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 184
<AVERAGE-NET-ASSETS> 32892
<PER-SHARE-NAV-BEGIN> 10.98
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.72
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.71
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 09
<NAME> PHOENIX EDGE ABERDEEN NEW ASIA SERIES
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</TABLE>
