<PAGE>
Phoenix Investment Partners
SEMIANNUAL REPORT
[LOGO] PHOENIX
INVESTMENT PARTNERS
OCTOBER 31, 1998
Phoenix
Small Cap Fund
Phoenix Strategic
Theme Fund
Phoenix Equity
Opportunities Fund
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Phoenix Small Cap Fund.................................................... 3
Phoenix Strategic Theme Fund.............................................. 9
Phoenix Equity Opportunities Fund......................................... 15
Notes to Financial Statements............................................. 21
</TABLE>
Mutual Funds are not insured by the FDIC; are not
deposits or other obligations of a bank and are not
guaranteed by a bank; and are subject to
investment risks, including possible loss of the
principal invested.
<PAGE>
MESSAGE FROM THE PRESIDENT
DEAR SHAREHOLDER:
[PHOTO]
We are pleased to provide this annual report for the Strategic Equity Series
for the six months ended October 31, 1998.
The past six months have been a remarkable time for the financial markets. As
a result of the growing economic crises in Russia, Japan and global emerging
markets that began in the summer, investors flocked to the most highly liquid
and "lowest risk" investments available. The largest U.S. stocks widely
outperformed smaller capitalization companies. The S&P 500 Index(1) was
essentially flat at (0.37)%, while the Russell 2000 Index(2), a measure of small
stocks' performance, lost over 21% during the last six months.
During such market extremes, it is important to keep a long-term perspective.
We believe that by remaining true to our investment discipline, we will continue
to add value for our shareholders over the long term. Of course, past
performance is no guarantee of future performance.
On the following pages, the Funds' portfolio managers discuss their investment
strategy and provide an outlook for the next six months. We hope you find their
comments informative. If you have any questions, please contact your financial
advisor or call us at 1-800-243-1574.
Sincerely,
/s/ Philip R. McLoughlin
Philip R. McLoughlin
December 9, 1998
(1) THE S&P 500 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF STOCK MARKET
TOTAL RETURN PERFORMANCE. THE INDEX IS NOT AVAILABLE FOR DIRECT INVESTMENT.
(2) THE RUSSELL 2000 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF TOTAL
RETURN PERFORMANCE FOR SMALL-CAPITALIZATION COMPANIES. THE INDEX IS NOT
AVAILABLE FOR DIRECT INVESTMENT.
1
<PAGE>
PHOENIX SMALL CAP FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGERS, ROGER ENGEMANN, CFA,
JIM MAIR, CFA AND JOHN TILSON, CFA
Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A: The Fund is appropriate for aggressive long-term investors willing to assume
above-average risk in return for above-average capital growth potential. The
Fund may invest in smaller capitalization companies, and investors should note
that small company investing involves added risks, including greater price
volatility, less liquidity and increased competitive threat.
Q: HOW HAS THE FUND PERFORMED OVER THE LAST SIX MONTHS THROUGH OCTOBER 31, 1998?
A: The stock market in general and small caps in particular have been especially
volatile in the last six months. From April 30 both the Fund and the Russell
2000 Index(1) were down about the same percentage, with Class A shares returning
(20.38)%, Class B shares returning (20.72)% and the Russell return at (21.20)%,
while the S&P 500 Index(2) was essentially flat at (0.37)%. By most definitions
that would constitute a bear market in the small-cap sector. Fears of an
economic slowdown in the U.S. coupled with concerns over tighter credit hit
small companies particularly hard. That's why we've chosen to focus on companies
in growing industries that are able to finance their own growth.
Since we took over management of the Fund in July, performance has lagged
the market--down about 22% compared to the Russell 2000's decline of about 17%.
Importantly, though, from the market bottom on October 8 through October 31, the
Fund was up over 33%, beating the Russell 2000's gain of 22%.
Q: SINCE ROGER ENGEMANN & ASSOCIATES, INC. TOOK OVER MANAGEMENT OF THE FUND ON
JULY 1, COULD YOU DESCRIBE THE CHANGES THAT HAVE BEEN MADE TO THE PORTFOLIO AND
COMMENT ON YOUR INVESTMENT PHILOSOPHY?
A: When we assumed management of Phoenix Small Cap Fund, there were over 120
companies in the portfolio with many representing less than 1% of the Fund's
total assets. Our team of analysts spent several weeks reviewing the companies
in their respective industries and making buy/sell recommendations. As a result,
we sold many of the positions in the portfolio and added some new names. Today,
Phoenix Small Cap Fund has approximately 60 companies in the portfolio with most
representing 1-4% of total fund assets.
Our investment style has always been based on fundamental, bottom-up
research. We try to own the best companies in their respective industries and
then take concentrated positions in our best ideas. For instance, today in
Phoenix Small Cap Fund, the top 20 holdings represent over 50% of fund assets.
These are the businesses in which we have the highest confidence.
Q: DISCUSS YOUR OUTLOOK FOR SMALL CAPS.
A: We are very optimistic about the outlook for small caps. First of all, by
almost any historical benchmark, small caps are still very cheap relative to
large caps. On both a relative price-to-cash-flow and price-to-sales basis,
small caps are the cheapest they've been since 1977. Secondly, during prior
periods of easing by the Federal Reserve, small caps on average have
outperformed over the subsequent twelve-month period. This is exactly what we
saw in October and the pattern has also carried through into November. So we
think now is an excellent time to consider increased exposure to small caps.
DECEMBER 2, 1998
(1) THE RUSSELL 2000 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF TOTAL
RETURN PERFORMANCE OF SMALL COMPANY STOCKS. THE INDEX IS NOT AVAILABLE FOR
DIRECT INVESTMENT.
(2) THE S&P 500 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF TOTAL RETURN
STOCK MARKET PERFORMANCE. THE INDEX IS NOT AVAILABLE FOR DIRECT INVESTMENT.
2
<PAGE>
Phoenix Small Cap Fund
TEN LARGEST HOLDINGS AT OCTOBER 31, 1998 (AS A PERCENTAGE OF TOTAL NET ASSETS)
<TABLE>
<C> <S> <C>
1. Action Performance Companies, Inc. 4.3%
DISTRIBUTOR OF MOTOR SPORT COLLECTIBLES
2. United Rentals (North America), Inc. 4.0%
SELLS AND RENTS TOOLS, CONSTRUCTION EQUIPMENT AND SPECIAL EVENT
EQUIPMENT
3. Restoration Hardware, Inc. 2.9%
SPECIALTY RETAILER OF HOME FURNISHINGS AND FUNCTIONAL AND
DECORATIVE HARDWARE
4. Bed Bath & Beyond, Inc. 2.9%
SELLS DOMESTIC MERCHANDISE AND HOME FURNISHINGS
5. International Speedway Corp. 2.8%
CONDUCTS MOTOR SPORT RACEWAY ACTIVITIES AND SYNDICATED RADIO
BROADCASTS
6. 99 Cent Only Stores 2.8%
GENERAL MERCHANDISE RETAILER
7. MSC Industrial Direct Co., Inc. 2.8%
DIRECT MARKETS A BROAD RANGE OF INDUSTRIAL PRODUCTS
8. CKE Restaurants, Inc. 2.7%
OPERATES, FRANCHISES AND LICENSES QUICK-SERVICE RESTAURANTS
9. Shien (Henry), Inc. 2.6%
MARKETER OF HEALTH-CARE PRODUCTS
10. Pier 1 Imports, Inc. 2.4%
SPECIALTY RETAILER OF DECORATIVE HOME FURNISHINGS AND KITCHEN GOODS
</TABLE>
INVESTMENTS AT OCTOBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
COMMON STOCKS--97.0%
BUILDING-PAINT & ALLIED PRODUCTS--1.0%
Valspar Corp............................ 80,000 $2,245,000
CHEMICALS-SPECIALTY--0.3%
North American Scientific, Inc.(b)...... 101,800 712,600
COMMERCIAL LEASING COMPANIES--4.0%
United Rentals (North America),
Inc.(b)................................. 339,000 9,110,625
COMMERCIAL SERVICES-MISCELLANEOUS--6.9%
Abacus Direct Corp.(b).................. 108,000 5,265,000
Condor Technology Solutions, Inc.(b).... 240,000 3,180,000
INSpire Insurance Solutions, Inc.(b).... 158,500 3,962,500
MAXIMUS, Inc.(b)........................ 112,000 3,248,000
-------------
15,655,500
-------------
COMPUTER-LOCAL NETWORKS--2.8%
Legato Systems, Inc.(b)................. 89,700 3,509,512
Xylan Corp.(b).......................... 180,000 2,880,000
-------------
6,389,512
-------------
COMPUTER-MEMORY DEVICES--2.1%
Maxtor Corp.(b)......................... 450,000 4,781,250
COMPUTER-SERVICES--3.1%
Complete Business Solutions, Inc.(b).... 147,300 3,498,375
Sapient Corp.(b)........................ 40,000 1,802,500
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
COMPUTER-SERVICES--CONTINUED
Syntel, Inc.(b)......................... 133,000 $ 1,862,000
-------------
7,162,875
-------------
COMPUTER-SOFTWARE--6.4%
Aspect Development, Inc.(b)............. 145,000 4,581,094
Cambridge Technology Partners,
Inc.(b)................................. 125,000 2,765,625
i2 Technologies, Inc.(b)................ 90,000 1,676,250
New Era of Networks, Inc.(b)............ 43,000 2,117,750
Software AG Systems, Inc.(b)............ 150,000 2,250,000
Walker Interactive Systems, Inc.(b)..... 250,000 1,250,000
-------------
14,640,719
-------------
COMPUTER-SOFTWARE-INTERNET--0.9%
EarthLink Network, Inc.(b).............. 54,000 2,079,000
ELECTRIC-SEMICONDUCTOR EQUIPMENT--1.3%
Applied Micro Circuits Corp.(b)......... 37,500 900,000
Linear Technology Corp.................. 35,000 2,086,875
-------------
2,986,875
-------------
ELECTRICAL-EQUIPMENT--2.2%
Micrel, Inc.(b)......................... 150,000 4,931,250
FINANCE-CONSUMER LOANS--2.2%
Metris Companies, Inc................... 150,000 4,931,250
FINANCE-INVESTMENT BANKERS--1.2%
Donaldson, Lufkin & Jenrette, Inc....... 77,000 2,752,750
</TABLE>
See Notes to Financial Statements 3
<PAGE>
Phoenix Small Cap Fund
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
FINANCE-MORTGAGE & RELATED SERVICES--1.0%
Federal Agricultural Mortgage
Corp.(b)................................ 62,000 $2,356,000
FINANCE-SAVINGS & LOAN--1.2%
Staten Island Bancorp, Inc.............. 145,000 2,637,187
FINANCIAL SERVICES-MISCELLANEOUS--2.2%
HealthCare Financial Partners,
Inc.(b)................................. 67,500 2,067,187
NCO Group, Inc.(b)...................... 92,000 2,898,000
-------------
4,965,187
-------------
INSURANCE-LIFE--1.3%
Annuity and Life Re (Holdings), Ltd..... 130,000 3,038,750
LEISURE-GAMING--1.3%
Dover Downs Entertainment, Inc.......... 210,000 2,861,250
LEISURE-PRODUCTS--5.5%
Action Performance Companies, Inc.(b)... 325,000 9,709,375
Polaris Industries, Inc................. 84,000 2,887,500
-------------
12,596,875
-------------
LEISURE-SERVICES--2.9%
International Speedway Corp............. 210,000 6,483,750
MEDICAL-BIOMED/GENETICS--4.2%
Coulter Pharmaceutical, Inc.(b)......... 120,000 3,390,000
Incyte Pharmaceuticals, Inc.(b)......... 48,750 1,486,875
MedImmune, Inc.(b)...................... 40,000 2,690,000
PAREXEL International Corp.(b).......... 90,000 1,985,625
-------------
9,552,500
-------------
MEDICAL-GENERIC DRUGS--2.2%
Algos Pharmaceutical Corp(b)............ 45,000 1,153,125
Omnicare, Inc........................... 87,000 3,006,937
PharmaPrint, Inc.(b).................... 75,000 745,313
-------------
4,905,375
-------------
MEDICAL-HOSPITALS--3.1%
Curative Health Services, Inc.(b)....... 150,000 4,087,500
Health Management Associates, Inc.(b)... 164,000 2,921,250
-------------
7,008,750
-------------
MEDICAL-PRODUCTS--4.4%
ALZA Corp.(b)........................... 86,000 4,117,250
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
MEDICAL-PRODUCTS--CONTINUED
Schein (Henry), Inc.(b)................. 150,000 $ 5,803,125
-------------
9,920,375
-------------
RETAIL-APPAREL/SHOE--1.5%
Ross Stores, Inc........................ 107,000 3,477,500
RETAIL-DISCOUNT & VARIETY--2.8%
99 Cents Only Stores(b)................. 139,500 6,451,875
RETAIL-HOME FURNISHINGS--10.2%
Bed, Bath & Beyond, Inc.(b)............. 240,000 6,615,000
Cost Plus, Inc.(b)...................... 145,000 4,350,000
Pier 1 Imports, Inc..................... 600,000 5,550,000
Restoration Hardware, Inc.(b)........... 331,500 6,671,438
-------------
23,186,438
-------------
RETAIL-MAIL ORDER & DIRECT--2.8%
MSC Industrial Direct Co., Inc.(b)...... 300,000 6,375,000
RETAIL-MISCELLANEOUS/DIVERSIFIED--1.9%
Lithia Motors, Inc.(b).................. 150,000 2,250,000
United Auto Group, Inc.(b).............. 150,000 2,062,500
-------------
4,312,500
-------------
RETAIL-RESTAURANTS--7.0%
Cheesecake Factory, Inc. (The)(b)....... 240,000 4,590,000
CKE Restaurants, Inc.................... 233,000 6,130,813
Landry's Seafood Restaurants, Inc.(b)... 300,000 2,512,500
Morton's Restaurant Group, Inc.(b)...... 133,000 2,593,500
-------------
15,826,813
-------------
RETAIL-SUPERMARKETS--1.5%
Whole Foods Market, Inc.(b)............. 88,000 3,525,500
RETAIL/WHOLESALE COMPUTERS--2.0%
CDW Computer Centers, Inc.(b)........... 60,000 4,496,250
RETAIL/WHOLESALE-FOOD--1.0%
Smart & Final, Inc...................... 275,000 2,371,875
TELECOMMUNICATIONS-EQUIPMENT--0.6%
Uniphase Corp.(b)....................... 28,000 1,386,000
TEXTILE-APPAREL MFG.--0.0%
Vista 2000, Inc.(b)..................... 72,895 7,290
</TABLE>
4 See Notes to Financial Statements
<PAGE>
Phoenix Small Cap Fund
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
TRANSPORTATION-RAIL--2.0%
Kansas City Southern Industries, Inc.... 120,000 $ 4,635,000
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $228,795,947) 220,757,246
- ------------------------------------------------------------------------------
FOREIGN COMMON STOCKS--0.9%
MEDICAL-ETHICAL DRUGS--0.9%
Shire Pharmaceuticals Group PLC ADR
(United Kingdom)(b)..................... 97,000 2,109,750
- ------------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $1,932,268) 2,109,750
- ------------------------------------------------------------------------------
PREFERRED STOCKS--0.7%
COMPUTER-LOCAL NETWORKS--0.7%
Women.Com(b)............................ 455,930 1,500,009
- ------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(IDENTIFIED COST $1,500,009) 1,500,009
- ------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--98.6%
(IDENTIFIED COST $232,228,224) 224,367,005
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
--------- --------- -------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--1.0%
COMMERCIAL PAPER--1.0%
Corporate Asset Funding Corp., Inc.
5.55%, 11/2/98.......................... A-1+ $ 2,245 $ 2,244,654
- -------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $2,244,654) 2,244,654
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--99.6%
(IDENTIFIED COST $234,472,878) 226,611,659(a)
Cash and receivables, less liabilities--0.4% 929,135
--------------
NET ASSETS--100.0% $ 227,540,794
--------------
--------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $21,375,302 and gross
depreciation of $29,796,711 for income tax purposes. At October 31, 1998,
the aggregate cost of securities for federal income tax purposes was
$235,033,068.
(b) Non-income producing.
See Notes to Financial Statements 5
<PAGE>
Phoenix Small Cap Fund
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $234,472,878) $ 226,611,659
Cash 1,518
Receivables
Investment securities sold 4,984,886
Fund shares sold 1,641,687
Interest and dividends 29,170
--------------
Total assets 233,268,920
--------------
LIABILITIES
Payables
Investment securities purchased 4,857,426
Fund shares repurchased 472,719
Transfer agent fee 135,125
Investment advisory fee 111,103
Distribution fee 95,985
Financial agent fee 15,757
Trustees' fee 3,132
Accrued expenses 36,879
--------------
Total liabilities 5,728,126
--------------
NET ASSETS $ 227,540,794
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 250,883,043
Undistributed net investment loss (1,191,392)
Accumulated net realized loss (14,289,638)
Net unrealized depreciation (7,861,219)
--------------
NET ASSETS $ 227,540,794
--------------
--------------
CLASS A
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $131,590,077) 9,517,733
Net asset value per share $13.83
Offering price per share $13.83/(1-4.75%) $14.52
CLASS B
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $95,950,717) 7,121,406
Net asset value and offering price per share $13.47
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 960,662
Dividends 211,292
Foreign taxes withheld (9,053)
--------------
Total investment income 1,162,901
--------------
EXPENSES
Investment advisory fee 1,028,933
Distribution fee, Class A 196,140
Distribution fee, Class B 587,349
Financial agent 107,034
Transfer agent 336,442
Printing 29,944
Registration 20,424
Custodian 16,906
Professional 11,870
Trustees 10,792
Miscellaneous 8,459
--------------
Total expenses 2,354,293
--------------
NET INVESTMENT LOSS (1,191,392)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (23,992,922)
Net change in unrealized appreciation (depreciation) on
investments (36,448,118)
--------------
NET LOSS ON INVESTMENTS (60,441,040)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (61,632,432)
--------------
--------------
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Phoenix Small Cap Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
10/31/98 Year Ended
(Unaudited) 4/30/98
-------------- -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (1,191,392) $ (2,593,774)
Net realized gain (loss) (23,992,922) 99,577,404
Net change in unrealized appreciation
(depreciation) (36,448,118) 30,589,425
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (61,632,432) 127,573,055
-------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A -- (35,702,853)
Net realized gains, Class B -- (26,132,919)
-------------- -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS -- (61,835,772)
-------------- -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(10,228,229 and 5,292,562 shares,
respectively) 156,131,859 91,738,490
Net asset value of shares issued from
reinvestment of distributions
(0 and 2,365,346 shares,
respectively) -- 34,439,436
Cost of shares repurchased (12,431,001
and 6,909,942 shares, respectively) (193,344,139) (119,890,542)
-------------- -------------
Total (37,212,280) 6,287,384
-------------- -------------
CLASS B
Proceeds from sales of shares (506,584
and 1,984,492 shares, respectively) 7,438,978 35,124,815
Net asset value of shares issued from
reinvestment of distributions
(0 and 1,737,551 shares,
respectively) -- 24,812,223
Cost of shares repurchased (2,083,739
and 2,007,557 shares, respectively) (32,398,354) (33,352,450)
-------------- -------------
Total (24,959,376) 26,584,588
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS (62,171,656) 32,871,972
-------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS (123,804,088) 98,609,255
NET ASSETS
Beginning of period 351,344,882 252,735,627
-------------- -------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT LOSS OF
$(1,191,392) AND $0, RESPECTIVELY] $ 227,540,794 $ 351,344,882
-------------- -------------
-------------- -------------
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Phoenix Small Cap Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------
FROM
SIX MONTHS INCEPTION
ENDED YEAR ENDED APRIL 30 10/16/95
10/31/98 ------------------------- TO
(UNAUDITED) 1998 1997 4/30/96
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.37 $ 14.13 $ 16.74 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.04)(5) (0.08)(5) (0.05)(5) (0.04)(1)(5)
Net realized and unrealized gain
(loss) (3.50) 6.80 (2.53) 6.79
----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS (3.54) 6.72 (2.58) 6.75
----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net realized gains -- (3.48) (0.02) --
In excess of net investment income -- -- -- (0.01)
In excess of accumulated net
realized gains -- -- (0.01) --
----- ----- ----- -----
TOTAL DISTRIBUTIONS -- (3.48) (0.03) (0.01)
----- ----- ----- -----
Change in net asset value (3.54) 3.24 (2.61) 6.74
----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 13.83 $ 17.37 $ 14.13 $ 16.74
----- ----- ----- -----
----- ----- ----- -----
Total return(2) (20.38)%(4) 52.33% (15.43)% 67.48%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $131,590 $203,560 $155,089 $98,372
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 1.39%(3) 1.31% 1.37% 1.50%(3)
Net investment income (loss) (0.55)%(3) (0.48)% (0.28)% (0.53)%(3)
Portfolio turnover 278%(4) 498% 325% 103%(4)
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------
FROM
SIX MONTHS INCEPTION
ENDED YEAR ENDED APRIL 30 10/16/95
10/31/98 ------------------------- TO
(UNAUDITED) 1998 1997 4/30/96
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.99 $ 13.98 $ 16.68 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.10)(5) (0.21)(5) (0.17)(5) (0.09)(1)(5)
Net realized and unrealized gain
(loss) (3.42) 6.70 (2.50) 6.77
----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS (3.52) 6.49 (2.67) 6.68
----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net realized gains -- (3.48) (0.02) --
In excess of accumulated net
realized gains -- -- (0.01) --
----- ----- ----- -----
TOTAL DISTRIBUTIONS -- (3.48) (0.03) --
----- ----- ----- -----
Change in net asset value (3.52) 3.01 (2.70) 6.68
----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 13.47 $ 16.99 $ 13.98 $ 16.68
----- ----- ----- -----
----- ----- ----- -----
Total return(2) (20.72)%(4) 51.16% (16.03)% 66.80%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $95,951 $147,785 $97,647 $45,168
RATIO TO AVERAGE NET ASSETS OF:
Operating Expenses 2.15%(3) 2.06% 2.12% 2.26%(3)
Net investment income (loss) (1.30)%(3) (1.22)% (1.03)% (1.44)%(3)
Portfolio turnover 278%(4) 498% 325% 103%(4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment advisor of $0.02
and $0.02, respectively.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized
(4) Not annualized
(5) Computed using average shares outstanding.
8 See Notes to Financial Statements
<PAGE>
PHOENIX STRATEGIC THEME FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGEMENT TEAM
Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A: Phoenix Strategic Theme Fund is designed for investors seeking capital
appreciation. Investors should note that investing in smaller companies involves
added risks, including greater price volatility, less liquidity and increased
competitive threat.
Q: HOW DID THE FUND PERFORM DURING THIS REPORTING PERIOD?
A: For the six months ended October 31, 1998, Class A shares returned 1.90%,
Class B shares earned 1.56%, and Class C shares were up 1.48% compared with a
return of (0.37)% for the S&P 500 Index.(1) All performance figures assume
reinvestment of distributions and exclude the effect of sales charges.
Q: WHAT FACTORS AFFECTED PERFORMANCE?
A: With the world financial markets in chaos this year, the Fund made a
strategic shift last spring to focus on large-cap stocks with historically
predictable revenue streams and domestic focus. This helped protect the
portfolio from the dramatic selloff in the Russell 2000 Index,(2) which
experienced a severe bear market culminating in a 35% decline from May through
October 8.
The other key factor benefiting performance was our timely themes. INTERNET
ECONOMY represents about 12% of the portfolio because we believe the Internet is
the next technology wave that will affect the way the world works, plays, shops,
and communicates. Internet stocks have been powerful performers over the past
year. Another timely theme, 21ST CENTURY MEDICINE, continues to be attractive
due to remarkable advances in breakthrough drugs such as Viagra, implantable
devices, and non-invasive surgical techniques that are changing the way medicine
is practiced and enhancing the quality of life.
Q: DID YOU MAKE ANY SIGNIFICANT CHANGES TO THE PORTFOLIO?
A: As a result of Fed easing, small- and mid-cap stocks have rallied strongly.
Concurrent with this action, we decided to invest in some of these stocks, which
have been decimated by financial market turbulence. These are niche companies
involved in semiconductors, oil services, and telecommunications. Although we
can't say these are timely themes, some great franchises were practically being
given away at extremely cheap valuations.
Q: WHAT IS YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A: Although the Fed has sent a strong signal by lowering interest rates, we feel
that the recent rebound in the global stock markets may be too much and too
fast. As capital spending trends lower and consumer confidence wanes, we expect
corporate earnings to be sluggish in 1999. We believe our timely themes,
however, will be resilient to these macroeconomic headwinds.
NOVEMBER 10, 1998
(1) THE S&P 500 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF STOCK MARKET
TOTAL RETURN PERFORMANCE. THE INDEX IS NOT AVAILABLE FOR DIRECT INVESTMENT.
(2) THE RUSSELL 2000 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF
SMALL-CAPITALIZATION STOCK MARKET TOTAL RETURN PERFORMANCE. THE INDEX IS NOT
AVAILABLE FOR DIRECT INVESTMENT.
9
<PAGE>
Phoenix Strategic Theme Fund
TEN LARGEST HOLDINGS AT OCTOBER 31, 1998 (AS A PERCENTAGE OF NET ASSETS)
<TABLE>
<C> <S> <C>
1. America Online, Inc. 3.8%
MAJOR PROVIDER OF ONLINE SERVICES TO CONSUMERS
2. Yahoo!, Inc. 3.7%
OFFERS A FAMILY OF BRANDED ONLINE SOURCES
3. International Business Machines Corp. 3.4%
PROVIDES ADVANCED INFORMATION TECHNOLOGIES
4. Microsoft Corp. 3.1%
WORLD'S LEADING COMPUTER SOFTWARE COMPANY
5. General Electric Co. 2.9%
DIVERSIFIED MANUFACTURING AND FINANCIAL SERVICES
6. Wal-Mart Stores, Inc. 2.8%
ONE OF THE LARGEST U.S. DISCOUNT RETAILERS
7. Kohl's Corp. 2.8%
SPECIALTY DEPARTMENT STORES
8. Schering-Plough Corp. 2.7%
DEVELOPS, MAKES AND MARKETS PHARMACEUTICAL AND HEALTH-CARE PRODUCTS
9. AT&T Corp. 2.4%
PROVIDES VOICE, DATA AND VIDEO TELECOMMUNICATIONS SERVICES
10. Safeway, Inc. 2.4%
OPERATES A CHAIN OF FOOD AND DRUG STORES IN THE U.S. AND CANADA
</TABLE>
INVESTMENTS AT OCTOBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
COMMON STOCKS--94.9%
BROADCASTING-TELEVISION, RADIO & CABLE--1.8%
Clear Channel Communications, Inc.(b)... 49,800 $ 2,269,012
COMMERCIAL SERVICES-MISCELLANEOUS--0.5%
ServiceMaster Co. (The)................. 29,800 629,525
COMPUTER-LOCAL NETWORKS--1.9%
Cisco Systems, Inc.(b).................. 39,200 2,469,600
COMPUTER-MEMORY DEVICES--2.0%
EMC Corp.(b)............................ 40,500 2,607,187
COMPUTER-SERVICES--10.2%
America Online, Inc.(b)................. 38,800 4,930,025
eBay, Inc.(b)........................... 14,600 1,213,625
Mastech Corp.(b)........................ 48,100 1,130,350
Usweb Corp.(b).......................... 79,600 1,144,250
Yahoo!, Inc.(b)......................... 36,000 4,710,375
-------------
13,128,625
-------------
COMPUTER-SOFTWARE--13.5%
BMC Software, Inc.(b)................... 50,300 2,417,544
Compuware Corp.(b)...................... 38,500 2,086,219
Edwards (J.D.) & Co.(b)................. 52,200 1,709,550
International Business Machines Corp.... 29,200 4,334,375
Microsoft Corp.(b)...................... 38,000 4,023,250
Oracle Corp.(b)......................... 42,500 1,256,406
Sapient Corp.(b)........................ 33,600 1,514,100
-------------
17,341,444
-------------
CONSUMER PRODUCTS-MISCELLANEOUS--3.8%
Clorox Co. (The)........................ 18,500 2,021,125
Colgate-Palmolive Co.................... 15,600 1,378,650
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
CONSUMER PRODUCTS-MISCELLANEOUS--CONTINUED
Procter & Gamble Co. (The).............. 16,700 $ 1,484,213
-------------
4,883,988
-------------
ELECTRIC-SEMICONDUCTOR EQUIPMENT--3.4%
Cymer, Inc.(b).......................... 122,500 1,500,625
Rambus, Inc............................. 19,400 1,268,881
Uniphase Corp.(b)....................... 32,100 1,588,950
-------------
4,358,456
-------------
ELECTRICAL-EQUIPMENT--2.9%
General Electric Co..................... 42,100 3,683,750
FINANCE-INVESTMENT BANKERS--1.1%
Merrill Lynch & Co., Inc................ 22,700 1,344,975
FINANCIAL SERVICES-MISCELLANEOUS--13.2%
American Express Co..................... 14,000 1,237,250
Bank One Corp........................... 24,400 1,192,550
BankAmerica Corp........................ 29,353 1,685,963
Capital One Financial Corp.............. 23,900 2,431,825
Citigroup, Inc.......................... 41,400 1,948,388
Equitable Companies, Inc................ 47,800 2,342,200
Freddie Mac............................. 49,700 2,857,750
Morgan Stanley Dean Witter & Co......... 19,900 1,288,525
SunAmerica, Inc......................... 28,000 1,974,000
-------------
16,958,451
-------------
DISTRIBUTOR-FOOD & HEALTH--2.0%
Cardinal Health, Inc.................... 27,700 2,619,381
INSURANCE-(PROPERTY, CASUALTY, & TITLE)--1.2%
Progressive Corp. (The)................. 10,400 1,531,400
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Phoenix Strategic Theme Fund
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
LEISURE-SERVICES--1.1%
Carnival Corp. Class A.................. 44,000 $ 1,424,500
MEDICAL-PRODUCTS--14.2%
Becton, Dickinson and Co................ 66,000 2,780,250
Genzyme Corp.(b)........................ 47,900 2,014,794
Medtronic, Inc.......................... 37,500 2,437,500
Pfizer, Inc............................. 28,000 3,004,750
Schering-Plough Corp.................... 34,000 3,497,750
Warner-Lambert Co....................... 32,600 2,555,025
Watson Pharmaceuticals, Inc.(b)......... 35,000 1,946,875
-------------
18,236,944
-------------
OIL & GAS-FIELD SERVICES--0.9%
J. Ray Mcdermott SA..................... 36,200 1,135,775
OIL & GAS-MACHINERY/EQUIPMENT--2.1%
Cooper Cameron Corp.(b)................. 17,600 611,600
Noble Drilling Corp.(b)................. 75,800 1,302,813
Varco International, Inc.(b)............ 66,100 714,706
-------------
2,629,119
-------------
RETAIL-BUILDING SUPPLIES--2.3%
Home Depot, Inc......................... 67,200 2,923,200
RETAIL-DEPARTMENT STORES--2.8%
Kohl's Corp.(b)......................... 74,500 3,562,031
RETAIL-DISCOUNT & VARIETY--2.8%
Wal-Mart Stores, Inc.................... 52,000 3,588,000
RETAIL-FOOD CHAINS--2.4%
Safeway, Inc.(b)........................ 64,400 3,079,125
RETAIL-MAJOR DISCOUNT CHAINS--1.2%
Costco Companies, Inc.(b)............... 26,000 1,475,500
RETAIL-SPECIALTY--2.2%
Amazon.com, Inc.(b)..................... 22,000 2,781,625
TELECOMMUNICATIONS-EQUIPMENT--1.1%
Reltec Corp.(b)......................... 68,500 1,472,750
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
TELECOMMUNICATIONS-SERVICES--4.3%
AirTouch Communications, Inc.(b)........ 44,000 $ 2,464,000
AT&T Corp............................... 50,000 3,112,500
-------------
5,576,500
-------------
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $109,821,022) 121,710,863
- ------------------------------------------------------------------------------
FOREIGN COMMON STOCKS--2.3%
MEDICAL-ETHICAL DRUGS--2.3%
Elan Corp. PLC Sponsored ADR
(Ireland)(b)............................ 42,500 2,977,656
- ------------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $2,984,358) 2,977,656
- ------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--97.2%
(IDENTIFIED COST $112,805,380) 124,688,519
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000)
--------- ---------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--3.4%
COMMERCIAL PAPER--3.4%
Corporate Asset Funding Corp., Inc.
5.55%, 11/2/98.......................... A-1+ $ 4,420 4,419,319
- -------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $4,419,319) 4,419,319
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--100.6%
(IDENTIFIED COST $117,224,699) 129,107,838(a)
Cash and receivables, less liabilities--(0.6%) (779,801)
--------------
NET ASSETS--100.0% $ 128,328,037
--------------
--------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $16,238,648 and gross
depreciation of $4,569,014 for income tax purposes. At October 31, 1998,
the aggregate cost of securities for federal income tax purposes was
$117,438,204.
(b) Non-income producing.
See Notes to Financial Statements 11
<PAGE>
Phoenix Strategic Theme Fund
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $117,224,699) $ 129,107,838
Cash 1,666
Receivables
Fund shares sold 72,373
Dividends and interest 42,812
--------------
Total assets 129,224,689
--------------
LIABILITIES
Payables
Investment securities purchased 165,325
Fund shares repurchased 480,646
Investment advisory fee 73,814
Distribution fee 57,628
Transfer agent fee 52,185
Financial agent fee 9,847
Trustees' fee 8,308
Accrued expenses 48,899
--------------
Total liabilities 896,652
--------------
NET ASSETS $ 128,328,037
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 104,563,907
Undistributed net investment loss (654,337)
Accumulated net realized gain 12,535,328
Net unrealized appreciation 11,883,139
--------------
NET ASSETS $ 128,328,037
--------------
--------------
CLASS A
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $70,972,420) 5,085,759
Net asset value per share $13.96
Offering price per share $13.96/(1-4.75%) $14.66
CLASS B
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $57,181,653) 4,184,046
Net asset value per share and offering per share $13.67
CLASS C
Shares of beneficial interest outstanding,
$0.0001 par value, unlimited authorization
(Net Assets $173,964) 12,727
Net asset value per share and offering per share $13.67
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 299,209
Interest 238,154
Foreign taxes withheld (259)
--------------
Total investment income 537,104
--------------
EXPENSES
Investment advisory fee 506,695
Distribution fee, Class A 94,025
Distribution fee, Class B 298,002
Distribution fee, Class C 941
Distribution fee, Class M 273
Financial agent fee 66,140
Transfer agent 137,120
Registration 32,599
Printing 14,637
Trustees 10,776
Professional 10,716
Custodian 10,669
Miscellaneous 8,848
--------------
Total expenses 1,191,441
--------------
NET INVESTMENT (LOSS) (654,337)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 121,243
Net change in unrealized appreciation (depreciation) on
investments 2,402,507
--------------
NET GAIN ON INVESTMENTS 2,523,750
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,869,413
--------------
--------------
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Phoenix Strategic Theme Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
10/31/98 Year Ended
(Unaudited) 4/30/98
------------- -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (654,337) $ (860,603)
Net realized gain 121,243 37,824,448
Net change in unrealized appreciation
(depreciation) 2,402,507 7,260,964
------------- -------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 1,869,413 44,224,809
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
In excess of net investment income,
Class A -- (101,991)
Net realized gains, Class A -- (13,931,615)
Net realized gains, Class B -- (9,617,855)
Net realized gains, Class C -- (21,083)
Net realized gains, Class M -- (15,426)
------------- -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS -- (23,687,970)
------------- -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(1,031,352 and 1,116,085 shares,
respectively) 13,928,972 15,627,146
Net asset value of shares issued from
reinvestment of distributions
(0 and 1,156,842 shares,
respectively) -- 13,731,378
Cost of shares repurchased (2,507,708
and 2,197,107 shares, respectively) (33,879,757) (29,983,137)
------------- -------------
Total (19,950,785) (624,613)
------------- -------------
CLASS B
Proceeds from sales of shares (148,142
and 666,515 shares, respectively) 1,965,368 9,141,162
Net asset value of shares issued from
reinvestment of distributions
(0 and 783,925 shares, respectively) -- 9,156,239
Cost of shares repurchased (874,003
and 724,153 shares, respectively) (11,709,511) (9,883,220)
------------- -------------
Total (9,744,143) 8,414,181
------------- -------------
CLASS C
Proceeds from sales of shares (5,864
and 18,017 shares, respectively) 67,873 248,777
Net asset value of shares issued from
reinvestment of distributions
(0 and 1,797 shares, respectively) -- 20,990
Cost of shares repurchased (12,951 and
0 shares, respectively) (168,304) --
------------- -------------
Total (100,431) 269,767
------------- -------------
CLASS M
Proceeds from sales of shares (0 and
14,974 shares, respectively) -- 196,112
Net asset value of shares issued from
reinvestment of distributions
(0 and 1,314 shares, respectively) -- 15,357
Cost of shares repurchased (16,288 and
0 shares, respectively) (223,550) --
------------- -------------
Total (223,550) 211,469
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS (30,018,909) 8,270,804
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS (28,149,496) 28,807,643
NET ASSETS
Beginning of period 156,477,533 127,669,890
------------- -------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT LOSS OF
$(654,337) AND $0, RESPECTIVELY] $ 128,328,037 $ 156,477,533
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Phoenix Strategic Theme Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------
SIX FROM
MONTHS INCEPTION
ENDED YEAR ENDED APRIL 30 10/16/95
10/31/98 --------------------- TO
(UNAUDITED) 1998 1997 4/30/96
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $ 13.70 $ 12.03 $ 12.37 $ 10.00
INCOME FROM INVESTMENT
OPERATIONS(6)
Net investment income
(loss) (0.04)(5) (0.04)(5) 0.06(5) 0.00(1)(5)
Net realized and
unrealized gain (loss) 0.30 4.03 (0.38) 2.39
-------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 0.26 3.99 (0.32) 2.39
-------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net
investment income -- -- (0.01) --
Dividends from net
realized gains -- (2.29) -- --
In excess of net
investment income -- (0.03) -- --
In excess of accumulated
net realized gains -- -- (0.01) --
Tax return of capital -- -- -- (0.02)
-------- -------- -------- --------
TOTAL DISTRIBUTIONS -- (2.32) (0.02) (0.02)
-------- -------- -------- --------
Change in net asset value 0.26 1.67 (0.34) 2.37
-------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD $ 13.96 $ 13.70 $ 12.03 $ 12.37
-------- -------- -------- --------
-------- -------- -------- --------
Total return(2) 1.90%(4) 36.22% (2.57)% 23.89%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $70,972 $89,884 $77,827 $33,393
RATIO TO AVERAGE NET ASSETS
OF:
Operating expenses 1.43%(3) 1.33% 1.40% 1.40%(3)
Net investment income
(loss) (0.63)%(3) (0.26)% 0.49% (0.09)%(3)
Portfolio turnover 240%(4) 618% 582% 175%(4)
</TABLE>
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------- -------------------------
SIX FROM FROM
MONTHS INCEPTION SIX MONTHS INCEPTION
ENDED YEAR ENDED APRIL 30 10/16/95 ENDED 11/3/97
10/31/98 --------------------- TO 10/31/98 TO
(UNAUDITED) 1998 1997 4/30/96 (UNAUDITED) 4/30/98
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 13.46 $ 11.91 $ 12.33 $ 10.00 $ 13.47 $ 14.93
INCOME FROM INVESTMENT
OPERATIONS(6)
Net investment income
(loss) (0.09)(5) (0.14)(5) (0.03)(5) (0.06)(1)(5) (0.10)(5) (0.05)(5)
Net realized and
unrealized gain (loss) 0.30 3.98 (0.38) 2.40 0.30 0.88
-------- -------- -------- -------- ----- --------
TOTAL FROM INVESTMENT
OPERATIONS 0.21 3.84(5) (0.41) 2.34 0.20 0.83
-------- -------- -------- -------- ----- --------
LESS DISTRIBUTIONS
Dividends from net
investment income -- -- -- -- -- --
Dividends from net
realized gains -- (2.29) -- -- -- (2.29)
In excess of net
investment income -- -- -- -- -- --
In excess of accumulated
net realized gains -- -- (0.01) -- -- --
Tax return of capital -- -- -- (0.01) -- --
-------- -------- -------- -------- ----- --------
TOTAL DISTRIBUTIONS -- (2.29) (0.01) (0.01) -- (2.29)
-------- -------- -------- -------- ----- --------
Change in net asset value 0.21 1.55 (0.42) 2.33 0.20 (1.46)
-------- -------- -------- -------- ----- --------
NET ASSET VALUE, END OF
PERIOD $ 13.67 $ 13.46 $ 11.91 $ 12.33 $ 13.67 $ 13.47
-------- -------- -------- -------- ----- --------
-------- -------- -------- -------- ----- --------
Total return(2) 1.56%(4) 35.18% (3.31)% 23.41%(4) 1.48%(4) 7.92%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $57,182 $66,107 $49,843 $11,920 $174 $267
RATIO TO AVERAGE NET ASSETS
OF:
Operating expenses 2.18%(3) 2.08% 2.15% 2.16%(3) 2.17%(3) 2.08%(3)
Net investment income
(loss) (1.40)%(3) (1.02)% (0.23)% (1.06)%(3) (1.33)%(3) (0.87)%(3)
Portfolio turnover 240%(4) 618% 532% 175%(4) 240%(4) 618%(4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of $0.04
and $0.04, respectively.
(2) Maximum sales charge is not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
(5) Computed using average shares outstanding.
(6) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
14 See Notes to Financial Statements
<PAGE>
PHOENIX EQUITY OPPORTUNITIES FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGERS, GAIL SENECA, PH.D. AND RICHARD
LITTLE, CFA
Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A: Phoenix Equity Opportunities Fund is appropriate for investors seeking
long-term capital appreciation by investing primarily in stocks of dynamic,
rapidly growing companies and focusing on strong relative earnings growth. The
Fund may invest in smaller capitalization companies, and investors should note
that small company investing involves added risks, including greater price
volatility, less liquidity and increased competitive threat.
Q: HOW HAS THE FUND PERFORMED DURING THIS DIFFICULT MARKET ENVIRONMENT?
A: For the six-month reporting period, the Phoenix Equity Opportunities Class A
shares returned (3.98)% and Class B shares returned (4.36)% compared with a
return of (0.37)% for the S&P 500 Index(1) and (23.47)% for the Russell 2000
Growth Index(2). All performance figures assume reinvestment of distributions
and exclude the effect of sales charges.
Q: HOW WAS THE FUND AFFECTED BY EVENTS AROUND THE WORLD?
A: The growing economic crisis in Russia, Japan and the emerging markets led to
devastating results across all major U.S. stock market indices. Investors
flocked to the most highly liquid and "lowest risk" investments available. U.S.
Treasuries were the only true beneficiaries of this trend. The largest U.S.
stocks widely outperformed smaller capitalization companies. Year-to-date
through October 31, the S&P 500 Index is up 14.73%, while the Russell 2000
Index,(3) a measure of small companies' performance, is down 12.79%.
Q: HOW DID SOME OF THE STOCKS IN THE PORTFOLIO PERFORM?
A: Despite the market carnage, some of our stock holdings advanced for the
quarter: Dell Computer (microcomputers), EMC Corp. (memory devices), Intel Corp.
(semiconductor company), McKesson (drug distributor), and Sun America
(insurance) to name a few. Stocks in our portfolio continue to produce
significantly above-market earnings growth rates.
Q: WHAT IS YOUR OUTLOOK FOR THE MARKET?
A: Unless the fear of global depression is realized, we believe U.S.
corporations should continue to exhibit profit growth in the coming year. This,
and a low inflation, low interest rate environment, should bode well for the
stock market in 1999.
Market volatility and panic liquidation is now so intense that investors can
find no place in the market that has been unaffected by recent events. When the
storm clouds dissipate, as we believe they will, diversified portfolios of
high-quality stocks, such as ours, should be well-positioned.
NOVEMBER 16, 1998
(1) THE S&P 500 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF STOCK MARKET
TOTAL RETURN PERFORMANCE. THE INDEX IS NOT AVAILABLE FOR DIRECT INVESTMENT.
(2) THE RUSSELL 2000 GROWTH INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF
TOTAL RETURN PERFORMANCE FOR SMALL-CAPITALIZATION COMPANIES WITH ABOVE-
AVERAGE GROWTH ORIENTATION. THE INDEX IS NOT AVAILABLE FOR DIRECT
INVESTMENT.
(3) THE RUSSELL 2000 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF TOTAL
RETURN PERFORMANCE FOR SMALL-CAPITALIZATION COMPANIES. THE INDEX IS NOT
AVAILABLE FOR DIRECT INVESTMENT.
15
<PAGE>
Phoenix Equity Opportunities Fund
TEN LARGEST HOLDINGS AT OCTOBER 31, 1998 (AS A PERCENTAGE OF TOTAL NET ASSETS)
<TABLE>
<C> <S> <C>
1. Tyco International Ltd. 3.9%
MAKES AND DISTRIBUTES DISPOSABLE MEDICAL SUPPLIES
2. MCI WorldCom, Inc. 3.8%
COMPREHENSIVE TELECOMMUNICATIONS SERVICE PROVIDER
3. Microsoft Corp. 3.5%
WORLD'S LEADING COMPUTER SOFTWARE COMPANY
4. Colgate-Palmolive Co. 3.4%
PRODUCES AND DISTRIBUTES PERSONAL AND HOUSEHOLD-CARE PRODUCTS
5. General Electric Co. 3.4%
DIVERSIFIED MANUFACTURING AND FINANCIAL SERVICES
6. Bristol-Myers Squibb Co. 3.4%
COMPREHENSIVE HEALTH-CARE COMPANY
7. Anheuser-Busch Companies, Inc. 3.3%
WORLD'S LARGEST BREWER IN ADDITION TO OTHER DIVERSIFIED OPERATIONS
8. Hershey Foods Corp. 3.0%
MAKES AND SELLS CHOCOLATE AND NON-CHOCOLATE CONFECTIONERY PRODUCTS
9. Cardinal Health, Inc. 3.0%
DISTRIBUTES A BROAD LINE OF HEALTH-RELATED PRODUCTS
10. Intel Corp. 2.8%
DESIGNS, DEVELOPS AND MARKETS ADVANCED MICROCOMPUTER COMPONENTS
</TABLE>
INVESTMENTS AT OCTOBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
COMMON STOCKS--89.4%
AEROSPACE/DEFENSE--1.5%
Lockheed Martin Corp.................... 23,820 $ 2,652,952
AUTO PARTS & EQUIPMENT--2.2%
Dana Corp............................... 95,590 3,996,857
BANKS (MAJOR REGIONAL)--3.4%
Mellon Bank Corp........................ 21,920 1,317,940
Star Banc Corp.......................... 63,850 4,828,656
-------------
6,146,596
-------------
BANKS (MONEY CENTER)--2.3%
BankAmerica Corp........................ 71,660 4,115,971
BEVERAGES (ALCOHOLIC)--3.3%
Anheuser-Busch Companies, Inc........... 100,070 5,947,911
BROADCASTING (TELEVISION, RADIO & CABLE)--2.2%
Chancellor Media Corp.(b)............... 104,330 4,003,664
COMPUTERS (HARDWARE)--4.6%
Compaq Computer Corp.................... 107,740 3,407,277
International Business Machines Corp.... 33,120 4,916,250
-------------
8,323,527
-------------
COMPUTERS (NETWORKING)--0.7%
Cisco Systems, Inc.(b).................. 20,238 1,274,994
COMPUTERS (PERIPHERALS)--2.5%
EMC Corp.(b)............................ 69,790 4,492,731
COMPUTERS (SOFTWARE & SERVICES)--3.5%
Microsoft Corp.(b)...................... 60,000 6,352,500
CONSUMER FINANCE--1.3%
Providian Financial Corp................ 30,600 2,428,875
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
DISTRIBUTORS (FOOD & HEALTH)--3.0%
Cardinal Health, Inc.................... 56,890 $ 5,379,661
ELECTRIC COMPANIES--2.2%
PECO Energy Co.......................... 103,030 3,985,973
ELECTRICAL EQUIPMENT--3.4%
General Electric Co..................... 70,000 6,125,000
ELECTRONICS (SEMICONDUCTORS)--2.8%
Intel Corp.............................. 57,440 5,122,930
FINANCIAL (DIVERSIFIED)--1.7%
Citigroup, Inc.......................... 66,780 3,142,834
FOODS--5.1%
General Mills, Inc...................... 52,050 3,825,675
Hershey Foods Corp...................... 80,000 5,425,000
-------------
9,250,675
-------------
HEALTH CARE (DIVERSIFIED)--5.9%
Bristol-Myers Squibb Co................. 55,000 6,080,937
McKesson Corp........................... 60,480 4,656,960
-------------
10,737,897
-------------
HOUSEHOLD PRODUCTS (NON-DURABLES)--5.2%
Colgate-Palmolive Co.................... 69,680 6,157,970
Procter & Gamble Co. (The).............. 35,500 3,155,062
-------------
9,313,032
-------------
INSURANCE (MULTI-LINE)--1.5%
American International Group, Inc....... 32,120 2,738,230
INSURANCE (PROPERTY-CASUALTY)--0.7%
Progressive Corp. (The)................. 9,170 1,350,282
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Phoenix Equity Opportunities Fund
<TABLE>
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
MANUFACTURING (DIVERSIFIED)--3.9%
Tyco International Ltd.................. 114,650 $ 7,101,134
OIL & GAS (DRILLING & EQUIPMENT)--2.5%
Schlumberger Ltd........................ 86,990 4,566,975
OIL (INTERNATIONAL INTEGRATED)--3.4%
Conoco, Inc.(b)......................... 86,000 2,139,250
Exxon Corp.............................. 57,130 4,070,513
-------------
6,209,763
-------------
RESTAURANTS--2.3%
McDonald's Corp......................... 62,730 4,195,069
RETAIL (BUILDING SUPPLIES)--2.1%
Masco Corp.............................. 133,990 3,776,843
RETAIL (FOOD CHAINS)--2.6%
Safeway, Inc.(b)........................ 96,680 4,622,513
RETAIL (GENERAL MERCHANDISE)--1.6%
Dayton Hudson Corp...................... 66,720 2,827,260
RETAIL (SPECIALTY-APPAREL)--1.6%
TJX Companies, Inc. (The)............... 152,250 2,883,234
SERVICES (ADVERTISING/MARKETING)--0.1%
Outdoor Systems, Inc.(b)................ 5,000 110,313
TELECOMMUNICATIONS (LONG DISTANCE)--5.2%
AT&T Corp............................... 39,870 2,481,908
MCI WorldCom, Inc.(b)................... 124,230 6,863,708
-------------
9,345,616
-------------
TELEPHONE--2.6%
SBC Communications, Inc................. 101,730 4,711,371
WASTE MANAGEMENT--2.5%
Waste Management, Inc................... 98,750 4,456,094
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $147,061,135) 161,689,277
- ------------------------------------------------------------------------------
FOREIGN COMMON STOCKS--2.7%
OIL (INTERNATIONAL INTEGRATED)--2.7%
Royal Dutch Petroleum Co. ADR, NY
Registered Shares (Netherlands)......... 98,160 4,834,380
- ------------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $5,068,340) 4,834,380
- ------------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
--------- -------------
<S> <C> <C> <C>
UNIT INVESTMENT TRUSTS--1.2%
S&P 500 Depositary Receipts............. 20,000 $ 2,201,250
- ------------------------------------------------------------------------------
TOTAL UNIT INVESTMENT TRUSTS
(IDENTIFIED COST $2,121,512) 2,201,250
- ------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--93.3%
(IDENTIFIED COST $154,250,987) 168,724,907
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000)
--------- ---------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--6.0%
COMMERCIAL PAPER-- 6.0%
Anheuser-Busch Companies, Inc. 5.55%,
11/2/98................................. A-1 $ 1,895 1,894,708
Donnelley (R.R.) & Sons Co. 5.60%,
11/2/98................................. A-1 7,780 7,778,790
General Electric Capital Corp. 5.10%,
12/1/98................................. A-1+ 1,200 1,194,900
- -------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $10,868,398) 10,868,398
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--99.3%
(IDENTIFIED COST $165,119,385) 179,593,305(a)
Cash and receivables, less liabilities--0.7% 1,218,949
--------------
NET ASSETS--100.0% $ 180,812,254
--------------
--------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $19,291,499 and gross
depreciation of $5,090,277 for federal income tax purposes. At October 31,
1998, the aggregate cost of securities for federal income tax purposes was
$165,392,083.
(b) Non-income producing.
See Notes to Financial Statements 17
<PAGE>
Phoenix Equity Opportunities Fund
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $165,119,385) $ 179,593,305
Cash 617,072
Receivables
Investment securities sold 1,927,978
Dividends and interest 158,540
Fund shares sold 6,737
--------------
Total assets 182,303,632
--------------
LIABILITIES
Payables
Investment securities purchased 1,189,287
Fund shares repurchased 36,945
Investment advisory fee 106,371
Transfer agent fee 46,644
Distribution fee 37,696
Financial agent fee 12,649
Trustees' fee 8,378
Accrued expenses 53,408
--------------
Total liabilities 1,491,378
--------------
NET ASSETS $ 180,812,254
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest 152,171,309
Undistributed net investment loss (140,301)
Accumulated net realized gain 14,307,326
Net unrealized appreciation 14,473,920
--------------
NET ASSETS $ 180,812,254
--------------
--------------
CLASS A
Shares of beneficial interest outstanding, $0.0001
Par value, unlimited authorization
(Net Assets $178,587,912) 23,144,349
Net asset value per share $7.72
Offering price per share $7.72/(1-4.75%) $8.10
CLASS B
Shares of beneficial interest outstanding, $0.0001
par value, unlimited authorization
(Net Assets $2,224,342) 298,285
Net asset value and offering price per share $7.46
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 878,629
Interest 189,571
Foreign taxes withheld (21,844)
--------------
Total investment income 1,046,356
--------------
EXPENSES
Investment advisory fee 667,612
Distribution fee, Class A 235,706
Distribution fee, Class B 10,899
Financial agent fee 82,749
Transfer agent 110,142
Professional 19,895
Printing 15,441
Registration 14,300
Custodian 12,432
Trustees 10,792
Miscellaneous 6,689
--------------
Total expenses 1,186,657
--------------
NET INVESTMENT LOSS (140,301)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 120,990
Net change in unrealized appreciation (depreciation) on
investments (7,586,369)
--------------
NET LOSS ON INVESTMENTS (7,465,379)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (7,605,680)
--------------
--------------
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Phoenix Equity Opportunities Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
10/31/98 Year Ended
(Unaudited) 4/30/98
------------- ---------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (140,301) $ (1,058,136)
Net realized gain 120,990 52,694,656
Net change in unrealized appreciation
(depreciation) on investments (7,586,369) 16,227,091
------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (7,605,680) 67,863,611
------------- ---------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains, Class A -- (35,351,518)
Net realized gains, Class B -- (371,756)
------------- ---------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS -- (35,723,274)
------------- ---------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (555,363
and 580,916 shares, respectively) 4,350,246 4,485,413
Net asset value of shares issued from
reinvestment of distributions
(0 and 3,754,855 shares,
respectively) -- 25,457,918
Cost of shares repurchased (1,582,312
and 3,877,643 shares, respectively) (12,565,520) (30,879,705)
------------- ---------------
Total (8,215,274) (936,374)
------------- ---------------
CLASS B
Proceeds from sales of shares (76,003
and 46,609 shares, respectively) 589,558 361,942
Net asset value of shares issued from
reinvestment of distributions
(0 and 54,117 shares, respectively) -- 357,170
Cost of shares repurchased (40,742 and
83,812 shares, respectively) (303,129) (638,121)
------------- ---------------
Total 286,429 80,991
------------- ---------------
DECREASE IN NET ASSETS FROM SHARE
TRANSACTIONS (7,928,845) (855,383)
------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS (15,534,525) 31,284,954
NET ASSETS
Beginning of period 196,346,779 165,061,825
------------- ---------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT LOSS OF
$(140,301) AND $0, RESPECTIVELY] $ 180,812,254 $ 196,346,779
------------- ---------------
------------- ---------------
</TABLE>
See Notes to Financial Statements 19
<PAGE>
Phoenix Equity Opportunities Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------------------------
SIX
MONTHS
ENDED YEAR ENDED APRIL 30,
10/31/98 -------------------------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 8.04 $ 6.89 $ 8.81 $ 7.40 $ 7.31 $ 9.64
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (loss) (0.01)(4) (0.04)(4) (0.03)(4) (0.04)(4) 0.04 0.05
Net realized and unrealized
gain (loss) (0.31) 2.82 (0.90) 2.34 0.58 0.57
--------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS (0.32) 2.78 (0.93) 2.30 0.62 0.62
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net
investment income -- -- -- -- (0.05) (0.05)
Dividends from net realized
gains -- (1.63) (0.94) (0.89) (0.48) (2.90)
In excess of accumulated net
realized gains -- -- (0.05) -- -- --
--------- --------- --------- --------- --------- ---------
TOTAL DISTRIBUTIONS -- (1.63) (0.99) (0.89) (0.53) (2.95)
--------- --------- --------- --------- --------- ---------
Change in net asset value (0.32) 1.15 (1.92) 1.41 0.09 (2.33)
--------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 7.72 $ 8.04 $ 6.89 $ 8.81 $ 7.40 $ 7.31
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Total return(1) (3.98)%(3) 44.66% (12.19)% 32.86% 9.16% 4.99%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $178,588 $194,296 $163,396 $213,600 $179,666 $186,037
RATIO TO AVERAGE NET ASSETS
OF:
Operating expenses 1.24%(2) 1.18% 1.23% 1.25% 1.32% 1.26%
Net investment income (loss) (0.14)%(2) (0.55)% (0.39)% (0.53)% 0.60% 0.57%
Portfolio turnover 59%(3) 371% 412% 302% 358% 167%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------------
SIX FROM
MONTHS INCEPTION
ENDED YEAR ENDED APRIL 30, 7/19/94
10/31/98 ------------------------------------- TO
(UNAUDITED) 1998 1997 1996 4/30/95
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.80 $ 6.77 $ 8.73 $ 7.39 $ 7.28
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.03)(4) (0.10)(4) (0.09)(4) (0.10)(4) 0.00
Net realized and unrealized gain
(loss) (0.31) 2.76 (0.88) 2.33 0.59
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS (0.34) 2.66 (0.97) 2.23 0.59
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment
income -- -- -- -- --
Dividends from net realized gains -- (1.63) (0.94) (0.89) (0.48)
In excess of accumulated net
realized gains -- -- (0.05) -- --
------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS -- (1.63) (0.99) (0.89) (0.48)
------- ------- ------- ------- -------
Change in net asset value (0.34) 1.03 (1.96) 1.34 0.11
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 7.46 $ 7.80 $ 6.77 $ 8.73 $ 7.39
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Total return(1) (4.36)%(3) 43.8% (12.79)% 31.92% 8.69%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $2,224 $2,051 $1,666 $1,348 $525
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.99%(2) 1.93% 1.98% 2.06% 2.15%(2)
Net investment income (loss) (0.88)%(2) (1.30)% (1.15)% (1.18)% (0.06)%(2)
Portfolio turnover 59%(3) 371% 412% 302% 358%
</TABLE>
(1) Maximum sales charge is not reflected in total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Computed using average shares outstanding.
20 See Notes to Financial Statements
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Strategic Equity Series Fund (the "Fund") is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as a diversified open-end management investment company.
Each Series has distinct investment objectives. The Small Cap Series seeks
long-term growth of capital by investing in a diversified portfolio of
securities, primarily common stock, of relatively small companies which the
adviser believes have long-term investment potential. The Strategic Theme Series
seeks long-term appreciation of capital through investing in securities of
companies that the adviser believes are particularly well positioned to benefit
from cultural, demographic, regulatory, social or technological changes
worldwide. The Equity Opportunities Series seeks to achieve long-term growth of
capital from investment in a diversified group of stocks or securities
convertible into stocks.
Each Series offers both Class A and Class B shares. The Strategic Theme Series
also offers Class C shares. Class M shares have been closed. Class A shares are
sold with a front-end sales charge of up to 4.75%. Class B shares are sold with
a contingent deferred sales charge which declines from 5% to zero depending on
the period of time the shares are held. Class C shares are sold with a 1%
contingent deferred sales charge if redeemed within one year of purchase. All
classes of shares have identical voting, dividend, liquidation and other rights
and the same terms and conditions, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. Income and expenses of each Series are borne pro rata by the
holders of all classes of shares, except that each class bears distribution
expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the 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. 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.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign securities,
as soon as the Series is notified. Interest income is recorded on the accrual
basis. Realized gains and losses are determined on the identified cost basis.
C. INCOME TAXES:
Each of the Series is treated as a separate taxable entity. It is the policy
of each Series in the Fund to comply with the requirements of the Internal
Revenue Code (the "Code") applicable to regulated investment companies, and to
distribute all of its taxable income to its shareholders. In addition, each
Series intends to distribute an amount sufficient to avoid imposition of any
excise tax under Section 4982 of the Code. Therefore, no provision for federal
income taxes or excise taxes has been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Series on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, expiring
capital loss carryforwards, foreign currency gain/loss, partnerships, and losses
deferred due to wash sales and excise tax regulations. Permanent book and tax
basis differences relating to shareholder distributions will result in
reclassifications to paid in capital.
E. FOREIGN CURRENCY TRANSLATION:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange rates
between the trade and settlement dates of a portfolio transaction is treated as
a gain or loss on foreign currency. Likewise, the gain or loss resulting from a
change in currency exchange rates between the date income is accrued and paid is
treated as a gain or loss on foreign currency. The Fund does not separate that
portion of the results of operations arising from changes in exchange rates and
that portion arising from changes in the market prices of securities.
F. 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.
21
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998 (UNAUDITED) (CONTINUED)
G. OPTIONS:
The Fund may write covered options or purchase options contracts for the
purpose of hedging against changes in the market value of the underlying
securities or foreign currencies.
The Fund will realize a gain or loss upon the expiration or closing of the
option transaction. Gains and losses on written options are reported separately
in the Statement of Operations. When a written option is exercised, the proceeds
on sales or amounts paid are adjusted by the amount of premium received. Options
written are reported as a liability in the Statement of Assets and Liabilities
and subsequently marked-to-market to reflect the current value of the option.
The risk associated with written options is that the change in value of options
contracts may not correspond to the change in value of the hedged instruments.
In addition, losses may arise from changes in the value of the underlying
instruments, or if a liquid secondary market does not exist for the contracts.
The Fund may purchase options which are included in the Fund's Schedule of
Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
2.INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
Effective June 1, 1998, National Securities and Research Corporation assigned
its investment advisory agreement for the Equity Opportunities Fund to Phoenix
Investment Counsel, Inc. ("PIC"), both an indirect majority-owned subsidiary of
Phoenix Home Life Mutual Insurance Company ("PHL"). PIC is entitled to a fee
based upon the following annual rates as a percentage of the average daily net
assets of each Series:
<TABLE>
<CAPTION>
1st $1 $1-2 $2+
Series Billion Billion Billion
- ---------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Small Cap Series........................ 0.75% 0.70% 0.65%
Strategic Theme Series.................. 0.75% 0.70% 0.65%
Equity Opportunities Series............. 0.70% 0.65% 0.60%
</TABLE>
Seneca Capital Management LLC ("Seneca") serves as subadviser to PIC for the
Equity Opportunities Fund. For its services, Seneca is paid a fee by PIC ranging
from 0.35% to 0.20% of the average daily net assets of the Equity Opportunities
Fund. A majority of the equity interests of Seneca are owned by Phoenix
Investment Partners Ltd. ("PXP"), an indirect majority-owned subsidiary of PHL.
Roger Engemann & Associates, Inc. ("REA") serves as subadviser to PIC for the
Small Cap Fund. For its services, REA is paid a fee by the Adviser ranging from
0.375% to 0.20% of the average daily net assets of the Small Cap Fund. REA is a
wholly owned subsidiary of Pasadena Capital Corporation which in turn is a
wholly owned subsidiary of PXP.
As Distributor of the Fund's shares, Phoenix Equity Planning Corp. ("PEPCO"),
an indirect majority-owned subsidiary of PHL, has advised the Fund that it
retained net selling commissions of $25,337 for Class A shares and $0 for Class
M shares and deferred sales charges of $711,283 for Class B shares and $0 for
Class C shares, for the six months ended October 31, 1998. In addition, each
Series pays PEPCO a distribution fee at an annual rate of 0.25% for Class A
shares, 1.00% for Class B shares, 1.00% for Class C shares and, prior to
closing, 0.50% for Class M shares applied to the average daily net assets of
each Series. The Distribution Plan for Class A shares provides for fees to be
paid up to a maximum on an annual basis of 0.30%; the Distributor has
voluntarily agreed to limit the fee to 0.25%. The Distributor has advised the
Fund that of the total amount expensed for the year ended October 31, 1998,
$833,770 was earned by the Distributor, $533,316 was earned by unaffiliated
participants and $56,249 was paid to W.S. Griffith, an indirect subsidiary of
PHL.
As Financial Agent of the Fund, PEPCO received a fee for bookkeeping,
administration, and pricing services through May 31, 1998, at an annual rate of
0.05% of average daily net assets up to $100 million, 0.04% of average daily net
assets of $100 million to $300 million, 0.03% of average daily net assets of
$300 million through $500 million, and 0.015% of average daily net assets
greater than $500 million; a minimum fee applied. Effective June 1, 1998, PEPCO
receives a financial agent fee equal to the sum of (1) the documented cost of
fund accounting and related services provided by PFPC, Inc. (subagent to PEPCO),
plus (2) the documented cost to PEPCO to provide financial reporting, tax
services and oversight of subagent's performance. The current fee schedule of
PFPC, Inc. ranges from 0.085% to 0.0125% of the average daily net asset values
of the Fund. Certain minimum fees and fee waivers may apply.
PEPCO serves as the Fund's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the six months ended October 31, 1998,
transfer agent fees were $598,334 of which PEPCO retained $210,524 which is net
of the fees paid to State Street.
At October 31, 1998, PHL and its affiliates held shares of the Fund as
follows:
<TABLE>
<CAPTION>
Aggregate
Net Asset
Shares Value
--------- ---------
<S> <C> <C>
Equity Opportunities Series--Class A.......... 154 $ 1,190
Equity Opportunities Series--Class B.......... 23,469 175,082
</TABLE>
22
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998 (UNAUDITED) (CONTINUED)
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities (excluding short-term securities and options
for the six months ended April 30, 1998, aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
------------ ------------
<S> <C> <C>
Small Cap Series..................... $484,550,729 $492,802,574
Strategic Theme Series............... 199,435,446 223,000,249
Equity Opportunities Series.......... 107,083,476 122,419,540
</TABLE>
There were no purchases or sales of long-term U.S. Government securities.
This report is not authorized for distribution to prospective investors in the
Phoenix Strategic Equity Series Fund unless preceded or accompanied by an
effective prospectus which includes information concerning the sales charge, the
Fund's record and other pertinent information.
23
<PAGE>
RESULTS OF SHAREHOLDER MEETING (UNAUDITED)
A special meeting of Shareholders of Phoenix Equity Opportunities Fund was held
on October 27, 1998 to approve the following matter:
1. Approval of a subadvisory agreement between Phoenix Investment Counsel,
Inc. and Seneca Capital Management LLC.
On the record date for this meeting there were 23,702,333 shares outstanding and
55.89% of the shares outstanding and entitled to vote were present by proxy.
NUMBER OF VOTES:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--------- --------- ---------
<S> <C> <C> <C>
1. Approval of investment subadvisory
agreement 11,699,309 595,704 952,101
</TABLE>
A special meeting of Shareholders of the Phoenix Small Cap Fund was held on
October 27, 1998 to approve the following matter:
1. Approval of a subadvisory agreement between Phoenix Investment Counsel,
Inc. and Roger Engemann & Associates, Inc.
On the record date for this meeting there were 16,652,229 shares outstanding and
57.07% of the shares outstanding and entitled to vote were present by proxy.
NUMBER OF VOTES:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--------- --------- ---------
<S> <C> <C> <C>
1. Approval of investment subadvisory
agreement 8,933,987 169,474 399,210
</TABLE>
24
<PAGE>
PHOENIX STRATEGIC EQUITY SERIES FUND
101 Munson Street
Greenfield, Massachusetts 01301
TRUSTEES
Robert Chesek
E. Virgil Conway
Harry Dalzell-Payne
Francis E. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Calvin J. Pedersen
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
OFFICERS
Philip R. McLoughlin, President
Michael E. Haylon, Executive Vice President
John F. Sharry, Executive Vice President
J. Roger Engemann, Senior Vice President
Gail P. Seneca, Senior Vice President
Ron K. Jacks, Vice President
William E. Keen, III, Vice President
Richard D. Little, Vice President
James E. Mair, Vice President
William R. Moyer, Vice President
Leonard J. Saltiel, Vice President
John S. Tilson, Vice President
Pierre G. Trinque, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary
INVESTMENT ADVISER
Phoenix Investment Counsel, Inc.
56 Prospect Street
Hartford, Connecticut 06115-0480
PRINCIPAL UNDERWRITER
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
TRANSFER AGENT
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
HOW TO CONTACT US
The Fund Connection 1-800-243-1574
Customer Service 1-800-243-1574 (option 0)
Automated Voice Response Unit 1-800-243-1574 (option 1)
Investment Strategy Hotline 1-800-243-4361 (option 2)
Marketing Department 1-800-243-4361 (option 3)
Text Telephone 1-800-243-1926
Internet access:
WWW.PHOENIXINVESTMENTS.COM
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
PO Box 2200
Enfield CT 06083-2200
[logo]PHOENIX
INVESTMENT PARTNERS
PXP 679 (12/98)
- ---------------
BULK RATE MAIL
U.S. POSTAGE
PAID
SPRINGFIELD MA
PERMIT NO. 444
- ---------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000796299
<NAME> PHOENIX STRATEGIC EQUITY SERIES FUND
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<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-END> OCT-31-1998
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<INVESTMENTS-AT-VALUE> 226612
<RECEIVABLES> 6656
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<TOTAL-ASSETS> 233269
<PAYABLE-FOR-SECURITIES> 4857
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<OTHER-ITEMS-LIABILITIES> 871
<TOTAL-LIABILITIES> 5728
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 250883
<SHARES-COMMON-STOCK> 9518
<SHARES-COMMON-PRIOR> 11721
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (1191)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (14290)
<ACCUM-APPREC-OR-DEPREC> (7861)
<NET-ASSETS> 227541
<DIVIDEND-INCOME> 202
<INTEREST-INCOME> 961
<OTHER-INCOME> 0
<EXPENSES-NET> (2354)
<NET-INVESTMENT-INCOME> (1191)
<REALIZED-GAINS-CURRENT> (23993)
<APPREC-INCREASE-CURRENT> (36448)
<NET-CHANGE-FROM-OPS> (61632)
<EQUALIZATION> 0
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<NUMBER-OF-SHARES-SOLD> 10228
<NUMBER-OF-SHARES-REDEEMED> (12431)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (71970)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 9703
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1029
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2354
<AVERAGE-NET-ASSETS> 272145
<PER-SHARE-NAV-BEGIN> 17.37
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> (3.50)
<PER-SHARE-DIVIDEND> 0
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<PER-SHARE-NAV-END> 13.83
<EXPENSE-RATIO> 1.39
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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<PAGE>
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<NAME> PHOENIX STRATEGIC EQUITY SERIES FUND
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1999
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<SHARES-COMMON-STOCK> 7121
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<OVERDISTRIBUTION-GAINS> (14290)
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<NET-CHANGE-FROM-OPS> (61632)
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<NUMBER-OF-SHARES-SOLD> 507
<NUMBER-OF-SHARES-REDEEMED> (2084)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (51834)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 9703
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 1029
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<AVERAGE-NET-ASSETS> 272145
<PER-SHARE-NAV-BEGIN> 16.99
<PER-SHARE-NII> (0.10)
<PER-SHARE-GAIN-APPREC> (3.42)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.47
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
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<CIK> 0000796299
<NAME> PHOENIX STRATEGIC EQUITY SERIES FUND
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<NUMBER> 021
<NAME> PHOENIX STRATEGIC THEME - CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-END> OCT-31-1998
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<TOTAL-ASSETS> 129225
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<TOTAL-LIABILITIES> 897
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<PAID-IN-CAPITAL-COMMON> 104564
<SHARES-COMMON-STOCK> 5086
<SHARES-COMMON-PRIOR> 6562
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<OVERDISTRIBUTION-NII> (654)
<ACCUMULATED-NET-GAINS> 12535
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11883
<NET-ASSETS> 128328
<DIVIDEND-INCOME> 299
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<OTHER-INCOME> 0
<EXPENSES-NET> (1191)
<NET-INVESTMENT-INCOME> (654)
<REALIZED-GAINS-CURRENT> 121
<APPREC-INCREASE-CURRENT> 2402
<NET-CHANGE-FROM-OPS> 1869
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 1031
<NUMBER-OF-SHARES-REDEEMED> (2508)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (18912)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 12414
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 507
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1191
<AVERAGE-NET-ASSETS> 134017
<PER-SHARE-NAV-BEGIN> 13.70
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> (0.30)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.96
<EXPENSE-RATIO> 1.43
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
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<CIK> 0000796299
<NAME> PHOENIX STRATEGIC EQUITY SERIES FUND
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<NAME> PHOENIX STRATEGIC THEME - CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
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<NUMBER-OF-SHARES-REDEEMED> (874)
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<NET-CHANGE-IN-ASSETS> (8925)
<ACCUMULATED-NII-PRIOR> 0
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<PAGE>
<ARTICLE> 6
<CIK> 0000796299
<NAME> PHOENIX STRATEGIC EQUITY SERIES FUND
<SERIES>
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1999
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<NET-INVESTMENT-INCOME> (654)
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000796299
<NAME> PHOENIX STRATEGIC EQUITY SERIES FUND
<SERIES>
<NUMBER> 011
<NAME> PHOENIX EQUITY OPPORTUNITIES FUND-CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-END> OCT-31-1998
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<SHARES-COMMON-PRIOR> 24171
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<OVERDISTRIBUTION-NII> (140)
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<ACCUM-APPREC-OR-DEPREC> 14474
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<DIVIDEND-INCOME> 857
<INTEREST-INCOME> 190
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<EXPENSES-NET> (1187)
<NET-INVESTMENT-INCOME> (140)
<REALIZED-GAINS-CURRENT> 121
<APPREC-INCREASE-CURRENT> (7587)
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<NUMBER-OF-SHARES-REDEEMED> (1582)
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<NET-CHANGE-IN-ASSETS> (15708)
<ACCUMULATED-NII-PRIOR> 0
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</TABLE>
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<PAGE>
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<CIK> 0000796299
<NAME> PHOENIX STRATEGIC EQUITY SERIES FUND
<SERIES>
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<NAME> PHOENIX EQUITY OPPORTUNITIES FUND-CLASS B
<MULTIPLIER> 1000
<S> <C>
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<NET-INVESTMENT-INCOME> (140)
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<APPREC-INCREASE-CURRENT> (7587)
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<NUMBER-OF-SHARES-SOLD> 76
<NUMBER-OF-SHARES-REDEEMED> (41)
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<PER-SHARE-NAV-END> 7.46
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</TABLE>
