<PAGE>
MAY 31, 1998
PHOENIX FUNDS
SEMIANNUAL REPORT
- PHOENIX TAX-EXEMPT BOND PORTFOLIO
- PHOENIX MID CAP PORTFOLIO
- PHOENIX INTERNATIONAL PORTFOLIO
- PHOENIX REAL ESTATE SECURITIES PORTFOLIO
- PHOENIX EMERGING MARKETS BOND PORTFOLIO
- PHOENIX STRATEGIC INCOME PORTFOLIO
[LOGO] PHOENIX INVESTMENT PARTNERS
<PAGE>
- ------------------------------------------------------------------------------
Mutual funds are not insured by the FDIC; are not deposits or other
obligations of a bank and are not guaranteed by a bank; and are subject to
investment risks, including possible loss of the principal invested.
- ------------------------------------------------------------------------------
<PAGE>
PRESIDENT'S
MESSAGE
Dear Multi-Portfolio Fund Shareholder:
I'm pleased to make you aware that we recently changed
our corporate name to Phoenix Investment Partners, Ltd. We
feel this name better reflects the growing investment
management firm we have been building as well as our
commitment to partnership with you and your advisor in
helping you reach your long-term investment goals.
Over the past year, we have added some of the industry's
most experienced and talented money managers to our team to
provide you with a wider array of quality investment
products. You now have access to the distinct investment
styles of independent money managers across the U.S. and
around the world:
Aberdeen Fund Managers, Inc.
Duff & Phelps Investment Management Co.
Phoenix Investment Counsel, Inc.
Seneca Capital Management LLC.
Roger Engemann & Associates, Inc.
Classic Value, led by Chris Bertelsen
Quantitative Value, led by Steve Colton and Dong Hao Zhang
As always, we are committed to providing you and your
financial advisor with outstanding service and investments
-- now with even more choices, including value-style mutual
funds. To learn more about our new partners and their
distinctive investment styles, contact
your financial advisor or call a Phoenix marketing
specialist at 1-800-243-4361.
Sincerely,
[LOGO]
Philip R. McLoughlin
PRESIDENT, PHOENIX FUNDS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Phoenix Tax-Exempt Bond Portfolio................ 1
Phoenix Mid Cap Portfolio........................ 9
Phoenix International Portfolio.................. 15
Phoenix Real Estate Securities Portfolio......... 23
Phoenix Emerging Markets Bond Portfolio.......... 29
Phoenix Strategic Income Portfolio............... 37
Notes to Financial Statements.................... 44
</TABLE>
<PAGE>
PHOENIX TAX-EXEMPT BOND PORTFOLIO
- ------------------------------------------------------
INVESTOR PROFILE
Phoenix Tax-Exempt Bond Portfolio is designed for investors seeking to
maximize tax-exempt yield and after-tax total return. Income from the Fund may
be subject to state and local taxes and the alternative minimum tax, if
applicable.
INVESTMENT ADVISER'S REPORT
For the six months ended May 31, 1998, Phoenix Tax-Exempt Bond Portfolio Class
A shares returned 3.46% and Class B shares returned 3.15% compared with 3.78%
for the Lehman Brothers Municipal Bond Index.* All performance figures assume
reinvestment of dividends and exclude the effect of sales charges.
Over the six-month reporting period, long U.S. Treasury rates declined by 35
basis points as continued global nervousness surrounding Asia'a economic and
political problems persisted; the U.S. inflation environment remained benign;
and the Federal Reserve's monetary policy continued unchanged despite the
growing economy and tight labor markets. However, municipal bond rates ended the
period approximately 18 basis points lower.
During this time, the U.S. Treasury market outperformed the municipal market
due primarily to supply and demand factors. As interest rates declined over the
second half of 1997 and into 1998, municipal issuers flooded the market with new
supply in an effort to take advantage of the lower interest rates. Retail demand
for municipals also slowed during this period, putting further pressure on the
market. The year 1997 marked the highest level of new municipal issuance since
1993 and the third largest year on record. This record pace has continued into
1998, with the first three months of the year experiencing the largest amount of
new issues ever in a first quarter.
We continue to emphasize higher quality issues as the yield premium between
higher quality bonds and lower quality bonds is currently at or near
historically narrow levels across the municipal yield curve. For example, at the
beginning of the reporting period, 30-year "BBB"-rated bonds were yielding 33
basis points above "AAA"-rated insured bonds. At the end of this reporting
period, the spread relationship was just 17 basis points and had been as tight
as 15 basis points during the six months. This tightening of yield spreads held
back the Fund's performance given the portfolio's average quality rating of
"A+/A1," with 56% of our issues rated "AA" or higher.
OUTLOOK
As we move forward, factors that we believe could drive the relative value of
municipal bonds over the balance of the year include: the relative strength of
the economy and its effect on the overall bond market, especially absolute yield
levels, legislative developments, including potential changes to the current tax
system, which could change the tax status for municipal bonds; and finally, but
probably most important, the new issue supply environment, which has been very
heavy over the past six months. We must also consider that continued strength in
the U.S. stock market may divert money away from the tax-exempt sector, thus
putting pressure on municipals. Despite these potential risks, the municipal
market represents good relative value at current levels, in our opinion.
Continued good news on the inflation front and a slowdown in new municipal
issues should benefit the market for the balance of 1998.
* The Lehman Brothers Municipal Bond Index is an unmanaged, commonly used
measure of municipal bond market total return performance.
1
<PAGE>
PHOENIX TAX-EXEMPT BOND PORTFOLIO
- ------------------------------------------------------
INVESTMENTS AT MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
-------- ------- -------------
<S> <C> <C> <C>
MUNICIPAL TAX-EXEMPT BONDS--97.0%
ALABAMA--2.8%
Alabama Special Care Facility 5%, 11/1/25...................... AA+ $3,500 $ 3,377,500
-------------
ALASKA--1.1%
Valdez Marine Terminal Revenue 7%, 12/1/25..................... AA 1,125 1,236,094
-------------
ARIZONA--0.9%
Pima County Pre-refunded 6.75%, 7/1/15 (FGIC Insured).......... AAA 460 499,675
Pima County Unrefunded 6.75%, 7/1/15 (FGIC Insured)............ AAA 540 583,875
-------------
1,083,550
-------------
ARKANSAS--1.3%
Drew County Public Facilities Board 7.90%, 8/1/11 (FNMA
Collateralized).............................................. Aaa(b) 288 313,667
Jacksonville Residential Housing 7.90%, 1/1/11 (FNMA
Collateralized).............................................. Aaa(b) 486 526,277
Lonoke County Residential Housing 7.90%, 4/1/11 (FNMA
Collateralized).............................................. Aaa(b) 488 542,629
Stuttgart Public Facilities Board 7.90%, 9/1/11 (FNMA
Collateralized).............................................. Aaa(b) 225 242,559
-------------
1,625,132
-------------
CALIFORNIA--6.3%
California Housing Financing Agency Series A 7.75% 8/1/17...... AA- 250 260,625
Pittsburg Redevelopment Series A 4.625%, 8/1/21 (AMBAC
Insured)..................................................... AAA 1,650 1,522,125
Riverside County 8.625%, 5/1/16 (GNMA Collateralized).......... AAA 4,300 5,837,250
-------------
7,620,000
-------------
COLORADO--3.7%
Arapahoe County Highway Revenue Pre-refunded 6.90%, 8/31/15.... Aaa(b) 2,500 2,965,625
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
-------- ------- -------------
<S> <C> <C> <C>
COLORADO--CONTINUED
Jefferson County School District 6.50%, 12/15/07 (MBIA
Insured)..................................................... AAA $1,250 $ 1,448,437
-------------
4,414,062
-------------
CONNECTICUT--4.2%
Connecticut State Health and Educational Facilities Authority
Revenue Bond 5.125%, 10/1/12................................. BBB 1,000 1,002,500
Mashantucket Western Pequot Tribe Pre-refunded 144A 6.50%,
9/1/05 (e)................................................... AAA 845 953,794
Mashantucket Western Pequot Tribe Pre-refunded 144A 6.50%,
9/1/06 (e)................................................... AAA 495 564,300
Mashantucket Western Pequot Tribe Unrefunded 144A 6.50%, 9/1/05
(e).......................................................... BBB- 855 956,531
Mashantucket Western Pequot Tribe Unrefunded 144A 6.50%, 9/1/06
(e).......................................................... BBB- 505 569,387
Mashantucket Western Pequot Tribe 144A 5.60%, 9/1/09 (e)....... Baa(b) 1,000 1,051,250
-------------
5,097,762
-------------
FLORIDA--1.4%
Martin County Industrial Cogeneration 7.875%, 12/15/25......... BBB- 1,500 1,743,750
-------------
GEORGIA--5.2%
Atlanta Water and Sewer Revenue 4.50%, 1/1/18 (FGIC Insured)... AAA 2,250 2,075,625
Cartersville Development Authority Revenue 5.625%, 5/1/09...... A+ 2,000 2,147,500
Georgia Electric Authority Series Z 5.50%, 1/1/20 (FGIC
Insured)..................................................... AAA 2,000 2,110,000
-------------
6,333,125
-------------
ILLINOIS--6.8%
Chicago Board of Education 6%, 1/1/20 (MBIA Insured)........... AAA 500 561,875
Chicago Gas Supply Revenue 7.50%, 3/1/15....................... AA- 1,000 1,068,750
</TABLE>
2 See Notes to Financial Statements
<PAGE>
PHOENIX TAX-EXEMPT BOND PORTFOLIO
- ------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
-------- ------- -------------
<S> <C> <C> <C>
ILLINOIS--CONTINUED
Chicago O'Hare International Airport 8.85%, 5/1/18............. BB+ $ 855 $ 956,531
Illinois Development Finance Authority 7.60%, 9/1/13 (d)....... A+ 2,000 2,145,000
Illinois Health Facilities Authority 7%, 4/1/08 (FSA
Insured)..................................................... AAA 1,100 1,302,125
Illinois Housing Development Authority Residential 7%,
8/1/17....................................................... A+ 475 485,459
Metropolitan Pier & Exposition Authority Pre-refunded 6.50%,
6/15/07 (FGIC Insured)....................................... AAA 1,470 1,646,400
Metropolitan Pier & Exposition Authority Unrefunded 6.50%,
6/15/07 (FGIC Insured)....................................... Aaa(b) 30 33,262
-------------
8,199,402
-------------
INDIANA--2.8%
Indianapolis Public Improvement Series A 0%, 2/1/05............ Aa(b) 1,765 1,312,719
Indianapolis Public Improvement Series C 0%, 1/1/03............ A1(b) 2,500 2,043,750
-------------
3,356,469
-------------
KENTUCKY--2.5%
Kentucky Turnpike Authority 0%, 1/1/10 (FGIC Insured).......... AAA 3,300 1,918,125
Perry County Solid Waste Disposal Revenue 7%, 6/1/24........... NR 1,000 1,090,000
-------------
3,008,125
-------------
LOUISIANA--2.8%
St. Mary Public Authority 7.625%, 3/25/12...................... Aaa(b) 84 93,535
St. Tammany Parish Sales Tax 4.70%, 4/1/09 (FGIC Insured)...... AAA 2,000 2,007,500
St. Tammany Parish Sales Tax 4.80%, 4/1/02 (FGIC Insured)...... AAA 1,105 1,109,144
St. Tammany Public Authority 7%, 6/1/02 (FNMA
Collateralized).............................................. Aaa(b) 109 114,406
-------------
3,324,585
-------------
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
-------- ------- -------------
<S> <C> <C> <C>
MARYLAND--0.5%
Baltimore G.O. 7%, 10/15/09 (MBIA Insured)..................... AAA $ 500 $ 613,125
-------------
MASSACHUSETTS--1.6%
Massachusetts Bay Transportation Authority Series B 6.20%,
3/1/16....................................................... AA- 1,000 1,146,250
Massachusetts Industrial Financing Agency 0%, 8/1/05........... A+ 1,100 800,250
-------------
1,946,500
-------------
MICHIGAN--2.8%
Western Townships Utilities Authority 8.20%, 1/1/18............ BBB+ 1,500 1,565,340
Williamston Community School 5.50%, 5/1/25 (MBIA Insured)...... AAA 1,725 1,837,125
-------------
3,402,465
-------------
MISSISSIPPI--1.5%
Lowndes County Waste Disposal 6.80%, 4/1/22.................... A 1,450 1,769,000
-------------
NEBRASKA--1.3%
Nebraska Higher Education 6.70%, 12/1/02....................... A(b) 1,500 1,599,375
-------------
NEVADA--1.3%
Clark County School District Series B 0%, 6/1/03 (MBIA
Insured)..................................................... AAA 2,000 1,622,500
-------------
NEW JERSEY--2.2%
Atlantic City Improvement Authority Pre-refunded 8.875%,
2/1/10....................................................... NR 1,000 1,032,930
Camden County Municipal Utilities Authority 0%, 9/1/11 (FGIC
Insured)..................................................... AAA 3,000 1,593,750
-------------
2,626,680
-------------
NEW YORK--8.9%
Erie County Water Authority 0%, 12/1/17 (AMBAC Insured)........ AAA 550 135,993
Long Island Power Authority 5.25%, 12/1/26..................... A- 2,000 1,977,500
New York State Dormitory Authority Pre-refunded 6.375%,
7/1/08....................................................... BBB+ 575 633,219
New York State Dormitory Authority Unrefunded 6.375%, 7/1/08... BBB+ 425 459,000
</TABLE>
See Notes to Financial Statements 3
<PAGE>
PHOENIX TAX-EXEMPT BOND PORTFOLIO
- ------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
-------- ------- -------------
<S> <C> <C> <C>
NEW YORK--CONTINUED
Niagara Falls Bridge Commission 5.25%, 10/1/15 (FGIC Insured)
(d).......................................................... AAA $4,000 $ 4,190,000
Port Authority Revenue 6.75%, 10/1/11.......................... NR 3,000 3,352,500
-------------
10,748,212
-------------
NORTH CAROLINA--1.3%
North Carolina Municipal Power Agency 6%, 1/1/09 (AMBAC
Insured)..................................................... AAA 1,385 1,544,275
-------------
PENNSYLVANIA--12.1%
Delaware County Finance Authority 5.70%, 7/1/27 (AMBAC
Insured)..................................................... AAA 2,000 2,190,000
Pennsylvania Economic Development Financing Authority 6.40%,
1/1/09....................................................... BBB- 5,000 5,306,250
Pennsylvania Economic Development Financing Authority 9.25%,
1/1/22(f).................................................... NR 3,995 2,716,600
Pennsylvania Finance Authority 6.60%, 11/1/09.................. A 4,000 4,395,000
-------------
14,607,850
-------------
TENNESSEE--1.4%
Metropolitan Government Health & Educational Facilities Board
6%,
12/1/16 (AMBAC Insured)...................................... AAA 1,500 1,676,250
-------------
TEXAS--9.2%
Alliance Airport Authority 7%, 12/1/11......................... BBB- 1,100 1,304,875
Austin Convention Center 8.25%, 11/15/14....................... Aaa(b) 955 1,030,206
Brazos River Authority 7.75%, 10/1/15.......................... A- 750 773,820
Brazos River Authority 7.625%, 5/1/19.......................... A- 1,000 1,055,990
Colorado River Water District Pre-refunded 8.25%, 1/1/15....... NR 540 594,000
Hurst Euless Bedford Independent School District 4.75%,
8/15/28...................................................... AAA 2,000 1,867,500
San Antonio Electric & Gas 5%, 2/1/12 (d)...................... AA 2,000 2,050,000
Texas Public Finance Authority 6.25%, 8/1/09 (MBIA Insured).... AAA 1,250 1,432,813
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
-------- ------- -------------
<S> <C> <C> <C>
TEXAS--CONTINUED
Texas Water Resources Finance Authority 7.625%, 8/15/08........ A $ 940 $ 976,425
-------------
11,085,629
-------------
VIRGINIA--5.3%
Pittsylvania County Revenue Series A 7.30%, 1/1/04............. NR 1,000 1,077,500
Pittsylvania County Revenue Series A 7.45%, 1/1/09............. NR 3,000 3,315,000
Upper Occoquan Sewer Authority 5.15%, 7/1/20 (MBIA Insured).... AAA 2,000 2,040,000
-------------
6,432,500
-------------
WEST VIRGINIA--2.6%
Upshur Solid Waste Revenue 7%, 7/15/25......................... NR 2,000 2,192,500
West Virginia Housing Development 6.625%, 7/1/20 (FHA
Insured)..................................................... AA 1,000 1,001,490
-------------
3,193,990
-------------
WISCONSIN--1.0%
Wisconsin Clean Water Revenue 6.875%, 6/1/11................... AA+ 750 905,625
Wisconsin Housing & Economic Development Authority 7.375%,
9/1/17....................................................... A+ 275 277,406
-------------
1,183,031
-------------
WYOMING--0.4%
Wyoming Community Development Authority 7.875%, 6/1/18 (FHA
Insured)..................................................... AA 505 523,502
-------------
OTHER TERRITORIES--1.8%
Puerto Rico Commonwealth Aqueduct & Sewer Authority 7.875%,
7/1/17....................................................... AAA 500 511,615
Puerto Rico Commonwealth Highway & Transportation Authority
6.625%, 7/1/12 (d)........................................... A 1,500 1,638,750
-------------
2,150,365
-------------
TOTAL MUNICIPAL TAX-EXEMPT BONDS
(Identified cost $109,020,784).................................................... 117,144,805
-------------
</TABLE>
4 See Notes to Financial Statements
<PAGE>
PHOENIX TAX-EXEMPT BOND PORTFOLIO
- ------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
-------- ------- -------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--4.0%
COMMERCIAL PAPER--4.0%
Marsh & McLennan Cos., Inc. 5.60%, 6/1/98...................... A-1+ $3,915 $ 3,915,000
Sara Lee Corp. 5.53%, 6/2/98................................... A-1+ 985 984,849
-------------
4,899,849
-------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $4,899,849)...................................................... 4,899,849
-------------
TOTAL INVESTMENTS--101.0%
(Identified cost $113,920,633) ................................................... 122,044,654(a)
Cash and receivables, less liabilities--(1.0%).................................... (1,245,146)
-------------
NET ASSETS--100.0%.................................................................. $ 120,799,508
-------------
-------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $9,635,061 and gross
depreciation of $1,455,450 for federal income tax purposes. At May 31,
1998, the aggregate cost of securities for federal income tax purposes was
$113,865,043.
(b) As rated by Moody's, Fitch or Duff & Phelps.
(c) Variable or step coupon security; interest rate reflects the rate currently
in effect.
(d) All or a portion segregated as collateral.
(e) 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 May 31, 1998,
these securities amounted to a value of $4,095,262 or 3.4% of net assets.
(f) Non-income producing.
At May 31, 1998, 31.3% of the securities in the portfolio are backed by
insurance of financial institutions and financial guaranty assurance
agencies. Insurers with a concentration greater than 10% of net assets are
as follows: FGIC, 11.9%.
See Notes to Financial Statements 5
<PAGE>
PHOENIX TAX-EXEMPT BOND PORTFOLIO
- ------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $113,920,633) $ 122,044,654
Receivables
Interest 1,977,332
Fund shares sold 102,663
-------------
Total assets 124,124,649
-------------
LIABILITIES
Payables
Variation margin for futures contracts 8,312
Investment securities purchased 3,065,615
Custodian 6,402
Dividend distributions 105,038
Fund shares repurchased 4,015
Investment advisory fee 45,818
Distribution fee 29,311
Transfer agent fee 11,163
Financial agent fee 6,964
Trustees' fee 6,814
Accrued expenses 35,689
-------------
Total liabilities 3,325,141
-------------
NET ASSETS $ 120,799,508
-------------
-------------
NET ASSETS CONSIST OF:
Capital paid in shares of beneficial interest $ 113,157,014
Undistributed net investment loss (50,859)
Accumulated net realized loss (367,731)
Net unrealized appreciation 8,061,084
-------------
NET ASSETS $ 120,799,508
-------------
-------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $114,577,332) 10,177,420
Net asset value per share $11.26
Offering price per share
$11.26/(1-4.75%) $11.82
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $6,222,176) 550,335
Net asset value and offering price per share $11.31
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 3,800,627
-----------
Total investment income 3,800,627
-----------
EXPENSES
Investment advisory fee 277,971
Distribution fee--Class A 146,882
Distribution fee--Class B 30,186
Financial agent fee 40,888
Transfer agent 53,346
Professional 16,953
Registration 13,506
Trustees 10,616
Printing 9,171
Custodian 7,344
Miscellaneous 4,301
-----------
Total expenses 611,164
-----------
NET INVESTMENT INCOME 3,189,463
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (278,274)
Net realized loss on futures contracts (26,557)
Net change in unrealized appreciation (depreciation) on investments 1,463,158
-----------
NET GAIN ON INVESTMENTS 1,158,327
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 4,347,790
-----------
-----------
</TABLE>
6 See Notes to Financial Statements
<PAGE>
PHOENIX TAX-EXEMPT BOND PORTFOLIO
- ------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
MAY 31, 1998 NOVEMBER 30,
(UNAUDITED) 1997
------------- -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 3,189,463 $ 7,025,130
Net realized gain (loss) (304,831) 175,101
Net change in unrealized appreciation
(depreciation) 1,463,158 420,432
------------- -------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 4,347,790 7,620,663
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income--Class A (2,987,462) (6,755,466)
Net investment income--Class B (129,217) (233,919)
In excess of net investment income--Class A -- (5,836)
In excess of net investment income--Class B -- (202)
Net realized gain--Class A (162,461) (1,898,761)
Net realized gain--Class B (7,776) (65,944)
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS (3,286,916) (8,960,128)
------------- -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (2,534,623 and
5,119,900 shares, respectively) 28,450,305 56,427,974
Net asset value of shares issued from
reinvestment of distributions
(151,272 and 458,029 shares, respectively) 1,703,762 5,044,059
Cost of shares repurchased (3,494,724 and
6,702,201 shares, respectively) (39,357,851) (73,960,582)
------------- -------------
Total (9,203,784) (12,488,549)
------------- -------------
CLASS B
Proceeds from sales of shares (82,816 and
200,165 shares, respectively) 937,182 2,212,684
Net asset value of shares issued from
reinvestment of distributions
(6,386 and 15,780 shares, respectively) 72,200 174,441
Cost of shares repurchased (55,723 and 119,828
shares, respectively) (626,660) (1,319,055)
------------- -------------
Total 382,722 1,068,070
------------- -------------
DECREASE IN NET ASSETS FROM SHARE TRANSACTIONS (8,821,062) (11,420,479)
------------- -------------
NET DECREASE IN NET ASSETS (7,760,188) (12,759,944)
NET ASSETS
Beginning of period 128,559,696 141,319,640
------------- -------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET
INVESTMENT LOSS AND DISTRIBUTIONS IN EXCESS OF
NET INVESTMENT INCOME OF ($50,859) AND
($123,643), RESPECTIVELY) $120,799,508 $128,559,696
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements 7
<PAGE>
PHOENIX TAX-EXEMPT BOND PORTFOLIO
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------
SIX MONTHS
ENDED
5/31/98 YEAR ENDED NOVEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.17 $ 11.28 $ 11.40 $ 10.09 $ 11.58 $ 11.10
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.29 0.59 0.60 0.61 0.65 0.60(4)
Net realized and unrealized gain (loss) 0.11 0.05 (0.12) 1.34 (1.49) 0.76
----------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.40 0.64 0.48 1.95 (0.84) 1.36
----------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income (0.29) (0.59) (0.60) (0.61) (0.65) (0.60)
Dividends from net realized gains (0.02) (0.16) -- (0.03) -- (0.28)
----------- --------- --------- --------- --------- ---------
TOTAL DISTRIBUTIONS (0.31) (0.75) (0.60) (0.64) (0.65) (0.88)
----------- --------- --------- --------- --------- ---------
Change in net asset value 0.09 (0.11) (0.12) 1.31 (1.49) 0.48
----------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $11.26 $ 11.17 $ 11.28 $ 11.40 $ 10.09 $ 11.58
----------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- ---------
Total return(1) 3.46%(3) 6.04% 4.30% 19.87% (7.55)% 12.79%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $114,577 $122,763 $136,558 $147,821 $141,623 $171,272
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 0.95%(2) 0.96% 0.94% 0.97% 0.96% 0.75%
Net investment income 5.20%(2) 5.36% 5.42% 5.65% 5.65% 5.33%
Portfolio turnover 14%(3) 15% 27% 25% 54% 62%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------
SIX MONTHS FROM
ENDED INCEPTION
5/31/98 YEAR ENDED NOVEMBER 30, 3/16/94 TO
(UNAUDITED) 1997 1996 1995 11/30/94
----------- ------ ------- ------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.22 $11.32 $ 11.44 $ 10.12 $11.21
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.25 0.50 0.52 0.53 0.39
Net realized and unrealized gain (loss) 0.11 0.06 (0.12) 1.35 (1.09)
----------- ------ ------- ------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.36 0.56 0.40 1.88 (0.70)
----------- ------ ------- ------- ----------
LESS DISTRIBUTIONS
Dividends from net investment income (0.25) (0.50) (0.52) (0.53) (0.39)
Dividends from net realized gains (0.02) (0.16) -- (0.03) --
----------- ------ ------- ------- ----------
TOTAL DISTRIBUTIONS (0.27) (0.66) (0.52) (0.56) (0.39)
----------- ------ ------- ------- ----------
Change in net asset value 0.09 (0.10) (0.12) 1.32 (1.09)
----------- ------ ------- ------- ----------
NET ASSET VALUE, END OF PERIOD $11.31 $11.22 $ 11.32 $ 11.44 $10.12
----------- ------ ------- ------- ----------
----------- ------ ------- ------- ----------
Total return(1) 3.15%(3) 5.13% 3.60% 19.07% (6.42)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of perid (thousands) $6,222 $5,797 $4,762 $3,142 $1,147
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.70%(2) 1.71% 1.69% 1.72% 1.54%(2)
Net investment income 4.47%(2) 4.60% 4.68% 4.90% 5.07%(2)
Portfolio turnover 14%(3) 15% 27% 25% 54%(3)
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Includes reimbursement of operating expenses by investment adviser of $0.03.
8 See Notes to Financial Statements
<PAGE>
PHOENIX MID CAP PORTFOLIO
- ------------------------------------------------------
INVESTOR PROFILE
Phoenix Mid Cap Portfolio is designed for
long-term investors seeking long-term capital appreciation, primarily through
investments in mid-capitalization stocks.
INVESTMENT ADVISER'S REPORT
Phoenix Mid Cap Portfolio Class A shares returned 4.68% and Class B shares
returned 4.28% for the six months ended May 31, 1998. During the same period,
the S&P MidCap 400 Index returned 12.14%.* All performance figures assume
reinvestment of dividends and exclude the effect of sales charges.
Stocks staged a strong rebound in the beginning of 1998, but once again
repercussions from Asia have taken center stage and trimmed gains in May.
Although mid-cap stocks again lagged the performance of large-caps, our
disposition to the mid-cap market is still favorable, given their higher growth
rate potential and attractive valuations compared with the large-cap arena.
Performance was helped by our investment in a number of key themes. Our
INTERNET COMMERCE IGNITION theme, representing companies benefiting from the
growth of Internet usage, posted exceptionally strong performance during the
period. The theme of 21ST CENTURY MEDICINE was also a strong contributor, with
investments focusing on gene-mapping, biotechnology, and non-invasive surgical
techniques. However, holdings in the energy sector and an underweighted position
in the retail sector hindered performance.
OUTLOOK
The current environment represents many challenges for equity investors.
Looking ahead, we expect economic growth to moderate later this year as the
effect of Asia becomes more evident. Corporate profit growth is likely to slow,
further fueling the volatility and rotation in the market.
Given our macroeconomic assessment, we believe the portfolio is
well-positioned for the current investment climate. The portfolio should benefit
from continued strength in our driving themes and the addition of domestic
retail stocks. We have also scaled back our energy holdings but, given their
attractive risk/reward characteristics, remain constructive over the
intermediate term.
* The S&P MidCap 400 Index is an unmanaged, commonly used measure of performance
of mid-capitalization stocks. The Index is not available for direct
investment.
9
<PAGE>
PHOENIX MID CAP PORTFOLIO
- ------------------------------------------------------
INVESTMENTS AT MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
COMMON STOCKS--74.6%
AEROSPACE/DEFENSE--0.7%
Orbital Sciences Corp. (b)...................... 57,000 $ 2,329,875
------------
AIRLINES--1.1%
AMR Corp. (b)................................... 23,000 3,540,562
------------
BANKS (MONEY CENTER)--1.5%
BankAmerica Corp................................ 60,000 4,961,250
------------
BIOTECHNOLOGY--2.2%
Amgen, Inc. (b)................................. 119,000 7,199,500
------------
COMMUNICATIONS EQUIPMENT--4.6%
Ascend Communications, Inc. (b)................. 183,000 7,903,312
Globalstar Telecommunications Ltd. (b).......... 25,000 1,481,250
Lucent Technologies, Inc. (b)................... 78,000 5,533,125
------------
14,917,687
------------
COMPUTERS (PERIPHERALS)--1.7%
Seagate Technology, Inc. (b).................... 234,000 5,411,250
------------
COMPUTERS (SOFTWARE & SERVICES)--14.1%
America Online, Inc. (b)........................ 38,000 3,165,875
Cambridge Technology Partners, Inc. (b)......... 79,000 3,962,344
Computer Sciences Corp. (b)..................... 146,000 7,582,875
Compuware Corp. (b)............................. 153,000 7,028,437
DST Systems, Inc. (b)........................... 73,000 3,859,875
Excite, Inc. (b)................................ 28,000 1,522,500
HBO & Co........................................ 170,000 9,812,187
Sungard Data Systems, Inc....................... 107,000 3,651,375
Yahoo!, Inc. (b)................................ 50,000 5,475,000
------------
46,060,468
------------
CONSUMER FINANCE--3.2%
American Express Co............................. 102,000 10,467,750
------------
ELECTRIC COMPANIES--0.5%
NIPSCO Industries, Inc.......................... 62,000 1,666,250
------------
FINANCIAL (DIVERSIFIED)--5.0%
Capital One Financial Corp...................... 51,000 5,090,438
Morgan Stanley, Dean Witter & Co................ 142,000 11,084,875
------------
16,175,313
------------
HEALTH CARE (DRUGS--MAJOR PHARMACEUTICALS)--5.3%
Forest Laboratories, Inc. (b)................... 94,000 3,102,000
Lilly (Eli) & Co................................ 78,000 4,792,125
Pfizer, Inc..................................... 60,000 6,288,750
Schering Plough Corp............................ 38,000 3,180,125
------------
17,363,000
------------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--3.2%
Boston Scientific Corp. (b)..................... 60,000 $ 3,825,000
Sofamor Danek Group, Inc. (b)................... 80,000 6,650,000
------------
10,475,000
------------
HEALTH CARE (SPECIALIZED SERVICES)--2.8%
Alza Corp. (b).................................. 186,000 8,997,750
------------
INVESTMENT BANKING/BROKERAGE--1.2%
Merrill Lynch & Co., Inc........................ 42,000 3,759,000
------------
MANUFACTURING (SPECIALIZED)--1.1%
Harley-Davidson, Inc............................ 94,000 3,460,375
------------
METALS MINING--1.7%
Newmont Mining Corp............................. 228,000 5,685,750
------------
NATURAL GAS--1.0%
Illinova Co..................................... 57,000 1,656,562
Unicom Corp..................................... 48,000 1,650,000
------------
3,306,562
------------
OIL & GAS (DRILLING & EQUIPMENT)--9.4%
Cooper Cameron Corp. (b)........................ 141,000 8,389,500
Schlumberger Ltd................................ 156,000 12,177,750
Transocean Offshore, Inc........................ 67,000 3,303,938
Varco International, Inc. (b)................... 266,000 6,932,625
------------
30,803,813
------------
RAILROADS--1.8%
Kansas City Southern Industries, Inc............ 140,000 5,932,500
------------
RETAIL (DEPARTMENT STORES)--3.6%
Dillard's, Inc. (b)............................. 78,000 3,280,875
Kohl's Corp. (b)................................ 112,000 5,327,000
Nordstrom, Inc.................................. 46,000 3,314,875
------------
11,922,750
------------
RETAIL (GENERAL MERCHANDISE)--2.0%
Dollar General Corp............................. 86,000 3,278,750
Proffitt's, Inc. (b)............................ 84,000 3,297,000
------------
6,575,750
------------
SERVICES (ADVERTISING/MARKETING)--1.4%
Snyder Communication Corp. (b).................. 86,000 3,466,875
Young & Rubicam, Inc. (b)....................... 40,000 1,120,000
------------
4,586,875
------------
SERVICES (DATA PROCESSING)--2.1%
Paychex, Inc.................................... 190,500 6,858,000
------------
</TABLE>
10 See Notes to Financial Statements
<PAGE>
PHOENIX MID CAP PORTFOLIO
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C> <C>
TELEPHONE--3.4%
Frontier Corp................................... 131,000 $ 3,987,313
Teleport Communications Group, Inc.
Class A (b)................................... 127,000 7,104,063
------------
11,091,376
------------
TOTAL COMMON STOCKS
(Identified cost $236,466,389)....................................... 243,548,406
------------
FOREIGN COMMON STOCKS--3.5%
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--2.6%
Elan PLC Sponsored ADR (Ireland) (b)............ 137,000 8,382,687
------------
COMMUNICATIONS EQUIPMENT--0.9%
Northern Telecom Ltd. (Canada).................. 50,000 3,200,000
------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $10,854,068)........................................ 11,582,687
------------
TOTAL LONG-TERM INVESTMENTS--78.1%
(Identified cost $247,320,457)....................................... 255,131,093
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000)
-------- --------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--25.3%
COMMERCIAL PAPER--25.3%
Cargill, Inc. 5.49%, 6/1/98..................... A-1+ $ 285 285,000
Cargill, Inc. 5.55%, 6/1/98..................... A-1+ 2,705 2,705,000
Exxon Imperial U.S., Inc. 5.60%, 6/1/98......... A-1+ 4,715 4,715,000
Marsh & McLennan Cos. 5.60%, 6/1/98............. A-1- 1,630 1,630,000
Receivables Capital Corp. 5.60%, 6/1/98......... A-1+ 1,980 1,980,000
Du Pont (E.I.) de Nemours & Co. 5.53%, 6/3/98... A-1+ 5,000 4,998,464
General Electric Capital Corp. 5.53%, 6/3/98.... A-1+ 3,240 3,240,000
Enterprise Funding Corp. 5.55%, 6/4/98.......... A-1+ 306 305,858
Exxon Imperial U.S., Inc. 5.50%, 6/4/98......... A-1+ 5,520 5,517,470
Greenwich Funding Corp. 5.53%, 6/4/98........... A-1+ 260 259,880
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
-------- -------- ------------
<S> <C> <C> <C>
COMMERCIAL PAPER--CONTINUED
Albertson's, Inc. 5.50%, 6/5/98................. A-1- $ 1,210 $ 1,209,260
Sara Lee Corp. 5.56%, 6/5/98.................... A-1- 5,000 4,996,911
Beta Finance, Inc. 5.54%, 6/8/98................ A-1+ 5,421 5,415,160
Donnelley (R.R.) & Sons Co. 5.52%, 6/9/98....... A-1- 3,870 3,865,253
Du Pont (E.I.) de Nemours & Co. 5.51%, 6/9/98... A-1+ 2,745 2,741,639
General Electric Capital Corp. 5.52%, 6/9/98.... A-1+ 4,142 4,142,000
Preferred Receivables Funding Corp. 5.51%,
6/9/98........................................ A-1- 3,615 3,610,574
Corporate Asset Funding Co., Inc. 5.53%,
6/10/98....................................... A-1- 3,395 3,390,306
Greenwich Funding Corp. 5.56%, 6/10/98.......... A-1+ 3,565 3,560,045
Corporate Asset Funding Co., Inc. 5.53%,
6/11/98....................................... A-1- 1,150 1,148,233
General Electric Capital Corp. 5.58%, 6/11/98... A-1+ 2,500 2,500,000
Enterprise Funding Corp. 5.52%, 6/12/98......... A-1+ 6,270 6,259,425
Receivables Capital Corp. 5.55%, 6/12/98........ A-1+ 473 472,198
Schering Corp. 5.52%, 6/12/98................... A-1+ 4,940 4,931,668
Receivables Capital Corp. 5.53%, 6/15/98........ A-1+ 5,136 5,124,955
Receivables Capital Corp. 5.51%, 6/16/98........ A-1+ 3,675 3,666,563
------------
82,670,862
------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $82,670,862)....................................... 82,670,862
------------
TOTAL INVESTMENTS--103.4%
(Identified cost $329,991,319) ..................................... 337,801,955(a)
Cash and receivables, less liabilities--(3.4%)...................... (10,997,462)
------------
NET ASSETS--100.0%.................................................... $326,804,493
------------
------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $15,319,270 and gross
depreciation of $7,508,634 for federal income tax purposes. At May 31,
1998, the aggregate cost of securities for federal income tax purposes was
$329,991,319.
(b) Non-income producing.
See Notes to Financial Statements 11
<PAGE>
PHOENIX MID CAP PORTFOLIO
- ------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $329,991,319) $337,801,955
Short-term investments held as collateral for
loaned securities 15,434,200
Cash 1,319
Receivables
Investment securities sold 11,458,368
Dividends and interest 63,232
Fund shares sold 307,276
------------
Total assets 365,066,350
------------
LIABILITIES
Payables
Investment securities purchased 21,434,694
Collateral on securities loaned 15,434,200
Fund shares repurchased 840,842
Investment advisory fee 218,285
Transfer agent fee 113,498
Distribution fee 83,813
Financial agent fee 13,148
Trustees' fee 7,106
Accrued expenses 116,271
------------
Total liabilities 38,261,857
------------
NET ASSETS $326,804,493
------------
------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $253,622,828
Undistributed net investment loss (130,478)
Accumulated net realized gain 65,501,507
Net unrealized appreciation 7,810,636
------------
NET ASSETS $326,804,493
------------
------------
CLASS A
Shares of beneficial interest outstanding, $1 par value, unlimited
authorization (Net Assets $310,049,813) 15,853,075
Net asset value per share $19.56
Offering price per share
$19.56/(1-4.75%) $20.54
CLASS B
Shares of beneficial interest outstanding, $1 par value, unlimited
authorization (Net Assets $16,754,680) 885,320
Net asset value and offering price per share $18.92
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 1,528,290
Dividends 649,833
Security lending 103,989
-----------
Total investment income 2,282,112
-----------
EXPENSES
Investment advisory fee 1,341,690
Distribution fee--Class A 424,654
Distribution fee--Class B 90,305
Financial agent fee 79,596
Transfer agent 361,346
Printing 39,043
Professional 22,638
Custodian 17,736
Registration 17,406
Trustees 10,908
Miscellaneous 7,268
-----------
Total expenses 2,412,590
-----------
NET INVESTMENT LOSS (130,478)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 65,348,405
Net change in unrealized appreciation (depreciation) on investments (47,807,579)
-----------
NET GAIN ON INVESTMENTS 17,540,826
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $17,410,348
-----------
-----------
</TABLE>
12 See Notes to Financial Statements
<PAGE>
PHOENIX MID CAP PORTFOLIO
- ------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MAY 31, 1998 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1997
------------ -----------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (130,478) $ (450,831)
Net realized gain 65,348,405 36,321,860
Net change in unrealized appreciation (depreciation) (47,807,579) (8,036,315)
------------ -----------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 17,410,348 27,834,714
------------ -----------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains--Class A (32,834,537) (51,980,339)
Net realized gains--Class B (1,762,236) (2,025,912)
------------ -----------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (34,596,773) (54,006,251)
------------ -----------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (1,554,611 and 2,046,000 shares, respectively) 30,878,131 41,010,257
Net asset value of shares issued from reinvestment of distributions
(1,768,894 and 2,624,028 shares, respectively) 32,229,250 49,101,364
Cost of shares repurchased (4,915,279 and 8,074,195 shares, respectively) (96,856,475) (156,230,117)
------------ -----------------
Total (33,749,094) (66,118,496)
------------ -----------------
CLASS B
Proceeds from sales of shares (42,717 and 229,655 shares, respectively) 820,598 4,456,304
Net asset value of shares issued from reinvestment of distributions
(96,344 and 102,293 shares, respectively) 1,704,319 1,877,087
Cost of shares repurchased (177,894 and 234,195 shares, respectively) (3,421,155) (4,479,411)
------------ -----------------
Total (896,238) 1,853,980
------------ -----------------
DECREASE IN NET ASSETS FROM SHARE TRANSACTIONS (34,645,332) (64,264,516)
------------ -----------------
NET DECREASE IN NET ASSETS (51,831,757) (90,436,053)
NET ASSETS
Beginning of period 378,636,250 469,072,303
------------ -----------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT LOSS OF
($130,478) AND $0, RESPECTIVELY) $326,804,493 $378,636,250
------------ -----------------
------------ -----------------
</TABLE>
See Notes to Financial Statements 13
<PAGE>
PHOENIX MID CAP PORTFOLIO
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------------
SIX MONTHS
ENDED
5/31/98 YEAR ENDED NOVEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.64 $ 21.65 $ 22.03 $ 18.03 $ 18.70 $ 17.95
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) --(1) (0.02)(1) (0.03)(1) 0.05(1) 0.11 0.11
Net realized and unrealized gain 0.84 1.52 2.53 4.74 0.10 1.44
----------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.84 1.50 2.50 4.79 0.21 1.55
----------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- (0.06) (0.10) (0.13)
Dividends from net realized gains (1.92) (2.51) (2.88) (0.73) (0.78) (0.67)
----------- --------- --------- --------- --------- ---------
TOTAL DISTRIBUTIONS (1.92) (2.51) (2.88) (0.79) (0.88) (0.80)
----------- --------- --------- --------- --------- ---------
Change in net asset value (1.08) (1.01) (0.38) 4.00 (0.67) 0.75
----------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 19.56 $ 20.64 $ 21.65 $ 22.03 $ 18.03 $ 18.70
----------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- ---------
Total return(2) 4.68%(4) 8.12% 13.52% 27.87% 1.03% 8.94%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $310,050 $360,053 $451,474 $487,674 $419,760 $426,027
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.31%(3) 1.33% 1.35% 1.42% 1.36% 1.34%
Net investment income (loss) (0.04)%(3) (0.08)% (0.17)% 0.28% 0.59% 0.64%
Portfolio turnover 166%(4) 161% 242% 218% 227% 174%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------------------
SIX MONTHS FROM
ENDED INCEPTION
5/31/98 YEAR ENDED NOVEMBER 30, 7/18/94 TO
(UNAUDITED) 1997 1996 1995 11/30/94
----------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.11 $ 21.30 $ 21.85 $ 17.97 $ 17.68
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) (0.07)(1) (0.16)(1) (0.18)(1) (0.12)(1) (0.01)
Net realized and unrealized gain 0.80 1.47 2.51 4.75 0.30
----------- --------- --------- --------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.73 1.31 2.33 4.63 0.29
----------- --------- --------- --------- ----------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- -- (0.02) --
Dividends from net realized gains (1.92) (2.50) (2.88) (0.73) --
----------- --------- --------- --------- ----------
TOTAL DISTRIBUTIONS (1.92) (2.50) (2.88) (0.75) --
----------- --------- --------- --------- ----------
Change in net asset value (1.19) (1.19) (0.55) 3.88 0.29
----------- --------- --------- --------- ----------
NET ASSET VALUE, END OF PERIOD $ 18.92 $ 20.11 $ 21.30 $ 21.85 $ 17.97
----------- --------- --------- --------- ----------
----------- --------- --------- --------- ----------
Total return(2) 4.28%(4) 7.27% 12.75% 26.92% 1.64%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $16,755 $18,583 $17,599 $10,908 $1,519
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.06%(3) 2.08% 2.11% 2.18% 2.05%(3)
Net investment income (loss) (0.79)%(3) (0.85)% (0.92)% (0.58)% (0.23)%(3)
Portfolio turnover 166%(4) 161% 242% 218% 227%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) Annualized
(4) Not annualized
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
14 See Notes to Financial Statements
<PAGE>
PHOENIX INTERNATIONAL PORTFOLIO
- ------------------------------------------------------
INVESTOR PROFILE
Phoenix International Portfolio is designed for long-term investors seeking
above-average capital appreciation. Investors should note that foreign investing
involves special risks, such as currency fluctuation, less public disclosure,
and economic and political risks.
INVESTMENT ADVISER'S REPORT
For the six months ended May 31, 1998, Phoenix International Portfolio Class A
shares returned 32.40% and Class B shares earned 31.82% compared with 16.22% for
the Morgan Stanley Capital International (MSCI) EAFE Index.* All performance
figures assume reinvestment of dividends and exclude the effect of sales
charges.
The Fund's very strong performance against its benchmark was largely due to
our lack of exposure to Southeast Asia. Early last year, we had determined that
we would not invest in the region until the extent of the bad debt problem in
the banking system was clarified and steps to resolve the problems had been
taken. The Portfolio also benefited from our underweighted position in Japan.
An overweighting in Europe versus the benchmark was very positive for the
Portfolio. The areas that contributed most to performance were the U.K., Italy,
France, Spain, and the Netherlands. The region has benefited from the continued
good news on European Monetary Union as well as economic recovery.
We have moderate exposure to Latin America where our primary focus is Brazil.
Although the
region has suffered external shocks due to the Asian crisis as well as
collapsing oil prices, the countries and companies are fundamentally sound and
should exhibit the higher growth expected in emerging economies.
OUTLOOK
We believe that Europe will continue to outperform the world during the rest
of the year. There are many factors that are driving these markets that should
remain in place as the year progresses. Low and falling interest rates, economic
recovery, and growth in corporate earnings provide a positive backdrop for more
gains. We intend to emphasize financial and domestically sensitive stocks since
these areas stand to gain the most from continuing European economic recovery
and the Economic Monetary Union.
All of Asia, on the other hand, has many problems that still need to be
addressed and rectified for the markets to have any meaningful recovery. Japan
is the key to the region as it is the largest and most financially secure
country. In our view, Japan will have difficulty in increasing economic growth,
and exports are certain to slow as other Asian economies demand for imports
diminishes.
Latin America continues to be plagued by the effects of the financial crisis
in Southeast Asia. The combination of higher emerging country risk and the
uncertainty of how the region will fare with slowing exports to Asia and, more
importantly, increased competition from Asian exports has dampened investor
interest. We will continue to monitor events in this region.
* The Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged,
commonly used measure of foreign stock fund performance. The Index is not
available for direct investment.
15
<PAGE>
PHOENIX INTERNATIONAL PORTFOLIO
- ------------------------------------------------------
INVESTMENTS AT MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
--------- ---------------
<S> <C> <C> <C>
FOREIGN COMMON STOCKS--95.7%
AUSTRALIA--0.4%
Westpac Banking Corporation Ltd. (Banks-Major-Regional)........ 131,000 $ 865,648
---------------
BELGIUM--1.2%
Kredietbank NV (Banks-Major-Regional).......................... 3,200 2,246,865
---------------
BRAZIL--0.8%
Telecomunicacoes Brasilieras SA Sponsored ADR (Telephone)...... 13,900 1,482,087
---------------
CANADA--1.0%
Bank of Montreal (Banks-Money Center).......................... 35,400 1,991,457
---------------
FINLAND--3.3%
Merita PLC Class A (Banks-Major-Regional)...................... 142,800 898,763
Raisio Group PLC (Foods) (b)................................... 21,000 3,934,123
Tieto Corp. Class B (Computer Software & Services)............. 7,000 1,537,473
---------------
6,370,359
---------------
FRANCE--11.9%
Alcatel Alsthom (Telecommunications-Cellular/Wireless)......... 19,600 4,193,375
Atos SA (Computer Software & Services) (b)..................... 5,400 992,851
Axa-UAP (Insurance-Multi-Line)................................. 24,931 2,837,818
Banque Nationale de Paris (Banks-Money Center)................. 54,000 4,612,245
Coflexip SA (Oil & Gas-Drilling & Equipment)................... 10,800 1,619,250
Galeries Lafayette (Retail-General Merchandise)................ 1,390 1,347,536
Natexis (Investment Banking/Brokerage)......................... 20,000 1,467,548
Pinault-Printemps Redoute SA (Retail-General Merchandise)...... 1,250 1,028,997
Scor (Insurance-Multi-Line).................................... 15,400 970,420
Societe Generale (Banks-Money Center).......................... 20,300 4,020,796
---------------
23,090,836
---------------
GERMANY--5.5%
Adidas AG (Textiles-Apparel)................................... 8,050 1,422,349
Bayerische Motoren Werke AG (Automobiles)...................... 1,600 1,694,423
Bayerische Motoren Werke AG New (Automobiles).................. 320 337,449
Deutsche Lufthansa AG (Airlines)............................... 118,750 2,970,765
Mannesmann AG (Industrial)..................................... 2,300 2,251,247
<CAPTION>
SHARES VALUE
--------- ---------------
<S> <C> <C> <C>
GERMANY--CONTINUED
Muenchener Rueckversicherungs-Gesellschaft AG (Insurance-
Reinsurance)................................................. 4,400 $ 2,000,348
---------------
10,676,581
---------------
HONG KONG--0.0%
Henderson China Holding Ltd. (Real Estate)..................... 780 372
---------------
HUNGARY--0.6%
Magyar Tavkozlesi Rt. Unsponsored ADR (Telecommunications-Long
Distance) (b)................................................ 40,700 1,139,600
---------------
IRELAND--0.5%
Elan Corp. PLC Sponsored ADR (Health Care (Medical Products &
Supplies)) (b)............................................... 15,515 949,324
---------------
ITALY--9.4%
Banca Fideuram SPA (Banks-Major-Regional)...................... 173,100 1,084,338
Banca Popolare di Brescia (Financial-Diversified).............. 107,000 2,213,940
Ericsson SPA (Communications Equipment)........................ 30,000 1,931,352
Istituto Mobiliare Italiano SPA (Diversified-Miscellaneous).... 139,200 2,384,972
La Fondiaria Assicurazioni (Insurance-Multi-Line) (b).......... 172,300 1,116,105
Mediaset SPA (Publishing) (b).................................. 265,100 1,701,390
Mediolanum SPA (Insurance-Multi-Line) (b)...................... 61,000 2,045,139
Telecom Italia Mobile di Risp (Communications Equipment)....... 474,000 1,721,380
Telecom Italia Mobile SPA (Communications Equipment)........... 365,000 2,159,708
Telecom Italia SPA (Communications Equipment).................. 255,000 1,928,321
---------------
18,286,645
---------------
MEXICO--2.5%
Cemex SA de C.V. Class B (Building Materials).................. 142,500 693,424
Coca-Cola Femsa SA Sponsored ADR (Beverages-Non Alcoholic)
(c).......................................................... 84,900 1,443,300
Grupo Financiero Bancomer SA de C.V. Class B
(Banks-Major-Regional)....................................... 1,210,000 606,645
Telefonos de Mexico SA Sponsored ADR Class L (Telephone)....... 43,800 2,077,762
---------------
4,821,131
---------------
</TABLE>
16 See Notes to Financial Statements
<PAGE>
PHOENIX INTERNATIONAL PORTFOLIO
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- ---------------
<S> <C> <C> <C>
NETHERLANDS--8.6%
AKZO Nobel NV (Chemical) (b)................................... 12,800 $ 2,677,126
Getronics NV (Computer Software & Services).................... 43,700 2,175,125
IHC Caland NV (Oil & Gas-Drilling & Equipment)................. 29,400 1,650,666
ING Groep NV (Banks-Money Center).............................. 49,500 3,402,527
Vendex International NV (Retail-General Merchandise) (b)....... 52,300 3,540,327
VNU-Verenigde Bezit (Publishing)............................... 96,400 3,310,769
---------------
16,756,540
---------------
NORWAY--1.5%
Merkantildata ASA (Computer Software & Services)............... 205,000 2,871,282
---------------
PERU--1.0%
Telefonica del Peru SA Sponsored ADR (Telephone)............... 86,500 1,870,562
---------------
POLAND--0.2%
Amica Wronki SA (Retail-General Merchandise) (b)............... 33,856 349,129
---------------
PORTUGAL--2.7%
Brisa-Auto Estradas de Portugal SA (Truckers & Marine)......... 3,100 141,025
Portugal Telecom SA (Communications Equipment)................. 47,500 2,499,314
Telecel-Comunicacoes Pessoais SA (Communications Equipment)
(b).......................................................... 14,600 2,560,701
---------------
5,201,040
---------------
SPAIN--6.1%
Banco Popular Espanol SA (Banks-Major-Regional)................ 45,200 3,590,549
Banco Santander SA (Banks-Money Center)........................ 87,100 4,391,983
Telefonica de Espana (Telephone)............................... 86,400 3,865,631
---------------
11,848,163
---------------
SWEDEN--3.0%
ForeningsSparbanken AB (Banks-Major-Regional).................. 48,000 1,443,507
Skandia Forsakrings AB (Insurance-Multi-Line).................. 301,500 4,408,384
---------------
5,851,891
---------------
SWITZERLAND--9.6%
Credit Suisse Group Registered Shares (Banks-Major-Regional)... 15,500 3,417,353
Novartis AG Registered Shares (Health Care Diversified)........ 3,040 5,156,341
<CAPTION>
SHARES VALUE
--------- ---------------
<S> <C> <C> <C>
SWITZERLAND--CONTINUED
Schweizerische Lebensversicherungs-und Rentenanstalt Bearer
(Insurance-Life/ Health)..................................... 4,260 $ 3,445,730
Schweizerische Rueckversicherungs-Gesellschaft Registered
(Insurance-Reinsurance)...................................... 800 1,846,574
Zurich Versicherungs-Gesellschaft Registered Shares
(Insurance-Multi-Line)....................................... 7,710 4,823,215
---------------
18,689,213
---------------
UNITED KINGDOM--25.9%
British Aerospace PLC (Aerospace & Defense).................... 562,000 4,976,371
Cable & Wireless Communications PLC
(Telecommunications-Cellular/ Wireless) (b).................. 447,100 3,437,660
Compass Group PLC (Lodging & Restaurants)...................... 149,300 3,092,005
GKN PLC (Auto Parts & Equipment)............................... 177,400 2,638,305
Granada Group PLC (Leisure Time Products)...................... 61,000 1,142,948
Kingfisher PLC (Retail-General Merchandise).................... 51,900 918,277
Legal & General Group PLC (Financial-Diversified).............. 348,500 3,847,406
Lloyds TSB Group PLC (Financial-Diversified)................... 354,500 5,142,080
Misys PLC (Computer Software & Services)....................... 40,600 2,447,004
National Express Group PLC (Railroads)......................... 119,600 2,124,883
Next PLC (Retail-General Merchandise).......................... 250,500 2,263,050
Norwich Union PLC (Insurance-Life/ Health)..................... 140,000 1,013,649
Rentokil Initial PLC (Services-Facilities & Environmental)..... 408,000 2,842,620
SEMA Group PLC (Telecommunications-Cellular/Wireless).......... 24,000 939,289
Siebe PLC (Electrical Equipment)............................... 89,000 2,227,794
SmithKline Beecham PLC (Health Care (Drugs-Major
Pharmaceuticals))............................................ 78,760 852,164
Stagecoach Holdings PLC (Professional Services) (b)............ 110,700 2,441,527
Vodafone Group PLC (Telephone)................................. 255,000 2,798,542
WPP Group PLC (Services-Advertising/ Marketing)................ 552,000 3,508,339
Williams PLC (Diversified Miscellaneous)....................... 243,000 1,743,555
---------------
50,397,468
---------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $128,506,990)....................................................... 185,756,193
---------------
</TABLE>
See Notes to Financial Statements 17
<PAGE>
PHOENIX INTERNATIONAL PORTFOLIO
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
--------- ---------------
<S> <C> <C> <C>
PREFERRED STOCKS--3.5%
GERMANY--3.5%
SAP AG-Vorzug Pfd. (Computer Software & Services).............. 12,100 $ 6,719,243
---------------
TOTAL PREFERRED STOCKS
(Identified cost $2,944,141)......................................................... 6,719,243
---------------
RIGHTS--0.0%
MEXICO--0.0%
Cemex SA de C.V. Class B Rights (Building Materials) (b)....... 142,500 0
---------------
TOTAL RIGHTS
(Identified cost $0)................................................................. 0
---------------
TOTAL LONG-TERM INVESTMENTS--99.2%
(Identified cost $131,451,131)....................................................... 192,475,436
---------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
----------- --------- ---------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--2.7%
COMMERCIAL PAPER--2.7%
Ciesco L.P. 5.65%, 6/1/98...................................... A-1+ $ 2,380 $ 2,380,000
Sara Lee Corp. 5.53%, 6/2/98................................... A-1+ 2,820 2,819,567
---------------
5,199,567
---------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $5,199,567)........................................................... 5,199,567
---------------
TOTAL INVESTMENTS--101.9%
(Identified cost $136,650,698)......................................................... 197,675,003(a)
Cash and receivables, less liabilities--(1.9%).........................................
(3,664,323)
---------------
NET ASSETS--100.0%....................................................................... $ 194,010,680
---------------
---------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $62,484,631 and gross
depreciation of $1,460,326 for federal income tax purposes. At May 31,
1998, the aggregate cost of securities for federal income tax purposes was
$136,650,698.
(b) Non-income producing.
(c) All or a portion segregated as collateral.
18 See Notes to Financial Statements
<PAGE>
PHOENIX INTERNATIONAL PORTFOLIO
- ------------------------------------------------------
INDUSTRY DIVERSIFICATION
AS A PERCENTAGE OF TOTAL VALUE OF LONG-TERM INVESTMENTS
(UNAUDITED)
<TABLE>
<S> <C>
Aerospace/Defense................................................ 2.6 %
Airlines......................................................... 1.5 %
Auto Parts & Equipment........................................... 1.4 %
Automobiles...................................................... 1.1 %
Banks-Major-Regional............................................. 5.6 %
Banks-Money Center............................................... 9.6 %
Beverages........................................................ 0.7 %
Building Materials............................................... 0.4 %
Chemical......................................................... 1.4 %
Communications Equipment......................................... 6.6 %
Computer-Software & Services..................................... 8.7 %
Diversified-Miscellaneous........................................ 2.1 %
Electrical Equipment............................................. 1.2 %
Financial-Diversified............................................ 7.6 %
Foods............................................................ 2.0 %
Health Care-Diversified.......................................... 2.7 %
Health Care-Drugs-Major Pharmaceuticals.......................... 0.4 %
Health Care-Medical Products & Supplies.......................... 0.5 %
Industrial....................................................... 1.2 %
Insurance-Reinsurance............................................ 2.0 %
Insurance-Life/Health............................................ 2.3 %
Insurance-Multi-Line............................................. 8.4 %
Investment Banking/Brokerage..................................... 0.8 %
Leisure Time Products............................................ 0.6 %
Lodging & Restaurants............................................ 1.6 %
Oil & Gas-Drilling & Equipment................................... 1.7 %
Professional Services............................................ 1.3 %
Publishing....................................................... 2.6 %
Railroads........................................................ 1.1 %
Real Estate...................................................... 0.0 %
Retail-General Merchandise....................................... 4.9 %
Services-Facilities & Environmental.............................. 1.5 %
Services-Advertising/Marketing................................... 1.8 %
Telecommunications-Long Distance................................. 0.6 %
Telecommunications-Cellular/Wireless............................. 4.4 %
Telephone........................................................ 6.3 %
Textiles-Apparel................................................. 0.7 %
Truckers & Marine................................................ 0.1 %
------
100.0 %
------
------
</TABLE>
See Notes to Financial Statements 19
<PAGE>
PHOENIX INTERNATIONAL PORTFOLIO
- ------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investment securities at value
(Identified cost $136,650,698) $197,675,003
Cash 6,157
Foreign currency at value
(Identified cost $503) 503
Receivables
Dividends and interest 539,410
Fund shares sold 182,213
Tax reclaim 141,613
------------
Total assets 198,544,899
------------
LIABILITIES
Payables
Fund shares repurchased 1,943,040
Net unrealized depreciation on foreign currency contracts 2,143,063
Closed foreign currency contracts 69,627
Investment advisory fee 123,978
Distribution fee 51,212
Transfer agent fee 36,641
Financial agent fee 8,481
Trustees' fee 7,106
Accrued expenses 151,071
------------
Total liabilities 4,534,219
------------
NET ASSETS $194,010,680
------------
------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $129,662,295
Undistributed net investment income 244,190
Accumulated net realized gain 5,227,711
Net unrealized appreciation 58,876,484
------------
NET ASSETS $194,010,680
------------
------------
CLASS A
Shares of beneficial interest outstanding, $1 par value, unlimited
authorization (Net Assets $179,398,303) 10,705,333
Net asset value per share $16.76
Offering price per share
$16.76/(1-4.75%) $17.60
CLASS B
Shares of beneficial interest outstanding, $1 par value, unlimited
authorization (Net Assets $14,612,377) 898,979
Net asset value and offering price per share $16.25
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 1,697,865
Interest 230,246
Foreign taxes withheld (114,745)
-----------
Total investment income 1,813,366
-----------
EXPENSES
Investment advisory fee 641,365
Distribution fee--Class A 197,662
Distribution fee--Class B 64,507
Financial agent fee 45,177
Transfer agent 128,111
Custodian 85,516
Professional 26,380
Printing 18,523
Registration 12,658
Trustees 10,909
Miscellaneous 5,930
-----------
Total expenses 1,236,738
-----------
NET INVESTMENT INCOME 576,628
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 6,247,591
Net realized gain on foreign currency transactions 508,040
Net change in unrealized appreciation (depreciation) on investments 42,018,738
Net change in unrealized appreciation (depreciation) on foreign
currency and foreign currency transactions (2,147,821)
-----------
NET GAIN ON INVESTMENTS 46,626,548
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $47,203,176
-----------
-----------
</TABLE>
20 See Notes to Financial Statements
<PAGE>
Phoenix International Portfolio
- ------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MAY 31, 1998 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1997
------------ -----------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 576,628 $ 234,826
Net realized gain 6,755,631 11,443,109
Net change in unrealized appreciation (depreciation) 39,870,917 (622,326)
------------ -----------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 47,203,176 11,055,609
------------ -----------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income--Class A -- (2,608,239)
Net investment income--Class B -- (129,259)
Net realized gains--Class A (12,005,464) (12,021,547)
Net realized gains--Class B (942,871) (658,133)
------------ -----------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (12,948,335) (15,417,178)
------------ -----------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (3,423,280 and 4,286,206 shares,
respectively) 52,613,331 59,385,258
Net asset value of shares issued from reinvestment of
distributions
(829,298 and 1,013,490 shares, respectively) 10,631,599 12,960,134
Cost of shares repurchased (3,000,890 and 5,208,361 shares,
respectively) (46,895,135) (72,329,439)
------------ -----------------
Total 16,349,795 15,953
------------ -----------------
CLASS B
Proceeds from sales of shares (330,066 and 728,032 shares,
respectively) 4,728,274 9,939,001
Net asset value of shares issued from reinvestment of
distributions
(68,327 and 56,632 shares, respectively) 852,722 713,037
Cost of shares repurchased (248,486 and 524,764 shares,
respectively) (3,672,639) (7,287,447)
------------ -----------------
Total 1,908,357 3,364,591
------------ -----------------
INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS 18,258,152 3,380,544
------------ -----------------
NET INCREASE (DECREASE) IN NET ASSETS 52,512,993 (981,025)
NET ASSETS
Beginning of period 141,497,687 142,478,712
------------ -----------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME
AND DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME OF
$244,190 AND ($332,438), RESPECTIVELY) $194,010,680 $141,497,687
------------ -----------------
------------ -----------------
</TABLE>
See Notes to Financial Statements 21
<PAGE>
PHOENIX INTERNATIONAL PORTFOLIO
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------
SIX MONTHS
ENDED
5/31/98 YEAR ENDED NOVEMBER 30,
(UNAUDITED) 1997 1996 1995 1994 1993
----------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.89 $ 14.48 $ 12.20 $ 12.63 $ 11.16 $ 8.96
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) 0.05(1) 0.03(1) 0.04(1) 0.03(1) (0.01) --
Net realized and unrealized gain 4.06 1.01 2.28 0.42 1.48 2.20
----------- --------- --------- --------- --------- --------
TOTAL FROM INVESTMENT OPERATIONS 4.11 1.04 2.32 0.45 1.47 2.20
----------- --------- --------- --------- --------- --------
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.29) -- -- -- --
Dividends from net realized gains (1.24) (1.34) (0.04) (0.88) -- --
----------- --------- --------- --------- --------- --------
TOTAL DISTRIBUTIONS (1.24) (1.63) (0.04) (0.88) -- --
----------- --------- --------- --------- --------- --------
Change in net asset value 2.87 (0.59) 2.28 (0.43) 1.47 2.20
----------- --------- --------- --------- --------- --------
NET ASSET VALUE, END OF PERIOD $16.76 $ 13.89 $ 14.48 $ 12.20 $ 12.63 $ 11.16
----------- --------- --------- --------- --------- --------
----------- --------- --------- --------- --------- --------
Total return(2) 32.40%(4) 8.21% 19.03% 4.12% 13.17% 24.55%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $179,398 $131,338 $135,524 $129,352 $167,918 $91,196
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.38%(3) 1.56% 1.57% 1.70% 1.47% 1.78%
Net investment income (loss) 0.72%(3) 0.22% 0.33% 0.23% 0.20% (0.04)%
Portfolio turnover 32%(4) 167% 151% 236% 186% 191%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------
SIX MONTHS FROM
ENDED INCEPTION
5/31/98 YEAR ENDED NOVEMBER 30, 7/15/94 TO
(UNAUDITED) 1997 1996 1995 11/30/94
----------- -------- ------- ------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.56 $ 14.22 $ 12.07 $ 12.60 $12.80
INCOME FROM INVESTMENT OPERATIONS(5)
Net investment income (loss) 0.00(1) (0.08)(1) (0.05)(1) (0.07)(1) (0.01)
Net realized and unrealized gain (loss) 3.93 1.00 2.24 0.42 (0.19)
----------- -------- ------- ------- ----------
TOTAL FROM INVESTMENT OPERATIONS 3.93 0.92 2.19 0.35 (0.20)
----------- -------- ------- ------- ----------
LESS DISTRIBUTIONS
Dividends from net investment income -- (0.24) -- -- --
Dividends from net realized gains (1.24) (1.34) (0.04) (0.88) --
----------- -------- ------- ------- ----------
TOTAL DISTRIBUTIONS (1.24) (1.58) (0.04) (0.88) --
----------- -------- ------- ------- ----------
Change in net asset value 2.69 (0.66) 2.15 (0.53) (0.20)
----------- -------- ------- ------- ----------
NET ASSET VALUE, END OF PERIOD $16.25 $ 13.56 $ 14.22 $ 12.07 $12.60
----------- -------- ------- ------- ----------
----------- -------- ------- ------- ----------
Total return(2) 31.82%(4) 7.37% 18.16% 3.28% (1.56)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $14,612 $10,159 $ 6,955 $ 3,261 $1,991
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.13%(3) 2.31% 2.31% 2.50% 1.93%(3)
Net investment income (loss) 0.07%(3) (0.55)% (0.39)% (0.61)% 0.36%(3)
Portfolio turnover 32%(4) 167% 151% 236% 186%
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in total return calculation.
(3) Annualized
(4) Not annualized
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
22 See Notes to Financial Statements
<PAGE>
PHOENIX REAL ESTATE SECURITIES PORTFOLIO
- ----------------------------------------------------------------
INVESTOR PROFILE
Phoenix Real Estate Securities Portfolio is designed for investors seeking
portfolio diversification and investment in real assets. The Portfolio's
objective is to emphasize appreciation and current yield equally. Real estate
investing involves certain risks, including refinancing, economic impact on the
industry, changes in the value of properties owned, dependency on management
skills and liquidity risks similar to those linked with small company investing.
INVESTMENT ADVISER'S REPORT
For the six months ended May 31, 1998, Phoenix Real Estate Securities
Portfolio provided a return of -5.26% for Class A shares and -5.56% for Class B
shares compared with -2.13% for the NAREIT Equity Total Return Index.* All
performance figures assume reinvestment of dividends and exclude the effect of
sales charges.
At the end of the first five months of 1998 the REIT (real estate investment
trusts) sector, while exhibiting strong earnings growth and good fundamentals,
continued to lag the price strength seen in the broader equity market. The S&P
500 Index** was up 13.1% and the Russell 2000 Index gained 4.7%.*** In
comparison, REITs at the end of the first five months, according to the NAREIT
Equity Total Return Index had a loss of -4.4%. In May the NAREIT Equity Total
Return Index fell -0.70% and the S&P 500 fell -1.75%.
First-quarter numbers indicated average growth in Funds From Operations
(similar to a price-to-earnings ratio) above 13%, meeting and exceeding
expectations. However, investors have been focused on the following factors: (1)
continued high volume of equity and debt offerings that are running ahead of
demand; (2) new record highs in the broader equity market, which has attracted
capital away from the REIT sector to highly valued "growth" companies; (3) lower
expected earnings growth rates; (4) the uncertainty about modifications to the
REIT structure proposed by the Administration and being worked through Congress;
(5) higher prices paid for acquisitions and overbuilding concerns in the hotel,
office, and industrial sectors; and (6) defensive investors' preference for
utilities.
As REITs experience price weakness, the number of equity offerings is
declining. In addition, the number of management teams that implement equity
repurchase programs is likely to increase. We should also see an increase in the
recycling of capital as management teams sell "fully valued" real estate
holdings to reinvest the capital in those that offer greater upside.
OUTLOOK
We continue to believe the broader market will moderate this year, leaving
investors looking for diversification and defensive investments supported by
dividend yield. Historically, REITs have demonstrated a low and declining
correlation with the broader equity market, which ultimately provides a
diversification benefit. Secondly, the dividend yield of the NAREIT Equity Total
Return Index was 6.07% at the end of May. This compares favorably to a yield of
4.35% for the S&P Utilities Index and a yield of 5.57% on a 10-year Treasury
bond at month end. We believe REITs offer excellent dividend protection, and we
believe a large number of REITs will increase their dividends this year at the
rate of their earnings growth. Many REITs are paying out only 60-65% of their
cash flow in dividends right now and approaching minimum payout levels. Should
Funds From Operations growth slow to 8-9% from current levels, we would still
find that an attractive rate, given the consensus 1998 earnings growth estimate
for the S&P 500 is less than 7%.
Concerns regarding modifications to the REIT tax structure by Congress are
overblown, in our opinion. Only four equity REITs will have to
23
<PAGE>
PHOENIX REAL ESTATE SECURITIES PORTFOLIO
- ----------------------------------------------------------------
adjust their future real estate acquisition structure to match that of the 179
other equity REITs if required to de-link real estate operations from ownership.
Cap rates on acquisitions have come down as the real estate cycle across most
sectors has moved closer to equilibrium. In certain sub-
markets (the Southeast, for example) and certain sectors (rural, extended stay,
or mid- to low-priced hotels, for example), we have seen overbuilding and have
avoided these areas in the portfolio. However, as a percentage of existing real
estate, we are not concerned about development and believe that overall, it is
warranted.
* The NAREIT (National Association of Real Estate Investment Trusts) Index is
an unmanaged, commonly used measure of the real estate equity market. The
Index is not available for direct investment.
** The S&P 500 Index is an unmanaged, commonly used measure of common stock
total return performance. The Index is not available for direct investment.
*** The Russell 2000 Index is an unmanaged, commonly used measure of small
company total return performance. The Index is not available for direct
investment.
24
<PAGE>
Phoenix Real Estate Securities Portfolio
- ------------------------------------------------------
INVESTMENTS AT MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
--------- ---------------
<S> <C> <C> <C>
COMMON STOCKS--98.0%
REAL ESTATE INVESTMENT TRUSTS--97.9%
COMMERCIAL--35.3%
OFFICE/INDUSTRIAL--33.2%
Boston Properties, Inc......................................... 92,200 $ 3,134,800
Duke Realty Investments, Inc................................... 93,400 2,113,175
Equity Office Properties Trust................................. 40,360 1,109,900
First Industrial Realty Trust, Inc............................. 59,000 1,829,000
Highwoods Properties, Inc...................................... 73,000 2,409,000
Mack-Cali Realty Corp.......................................... 57,900 2,084,400
Reckson Associates Realty Corp................................. 60,700 1,509,912
Spieker Properties, Inc........................................ 79,400 3,161,113
Weeks Corp..................................................... 37,300 1,191,269
---------------
18,542,569
---------------
STORAGE--2.1%
Storage USA, Inc............................................... 31,700 1,178,844
---------------
TOTAL COMMERCIAL....................................................................... 19,721,413
---------------
DIVERSIFIED--16.3%
Colonial Properties Trust...................................... 55,000 1,670,625
Crescent Real Estate Equities Co............................... 126,400 4,329,200
Vornado Realty Trust........................................... 81,500 3,127,563
---------------
9,127,388
---------------
HEALTH CARE--3.3%
Nationwide Health Properties, Inc.............................. 56,400 1,353,600
OMEGA Healthcare Investors, Inc................................ 14,000 482,125
---------------
1,835,725
---------------
HOTELS--13.9%
Patriot American Hospitality, Inc.............................. 111,301 2,664,268
Starwood Hotels & Resorts combined certificate................. 72,600 3,425,812
Sunstone Hotel Investors, Inc.................................. 118,200 1,699,125
---------------
7,789,205
---------------
NET LEASE--3.7%
TriNet Corporate Realty Trust, Inc............................. 60,000 2,092,500
---------------
RESIDENTIAL--15.4%
APARTMENTS--11.8%
Bay Apartment Communities, Inc................................. 40,700 1,495,725
Equity Residential Properties Trust............................ 54,800 2,681,775
Essex Property Trust, Inc...................................... 38,400 1,248,000
Irvine Apartment Communities, Inc.............................. 40,500 1,209,937
---------------
6,635,437
---------------
<CAPTION>
SHARES VALUE
--------- ---------------
<S> <C> <C> <C>
MANUFACTURED HOMES--3.6%
Manufactured Home Communities, Inc............................. 41,500 $ 1,034,906
Sun Communities, Inc........................................... 28,200 957,037
---------------
1,991,943
---------------
TOTAL RESIDENTIAL...................................................................... 8,627,380
---------------
RETAIL--10.0%
COMMUNITY/NEIGHBORHOOD--1.7%
Developers Diversified Realty Corp............................. 24,600 964,013
---------------
FACTORY OUTLET--2.3%
Chelsea GCA Realty, Inc........................................ 31,600 1,265,975
---------------
REGIONAL MALLS--6.0%
Macerich Co. (The)............................................. 43,800 1,182,600
Rouse Co. (The)................................................ 16,500 496,031
Simon DeBartolo Group, Inc..................................... 22,208 741,192
Urban Shopping Centers, Inc.................................... 28,000 924,000
---------------
3,343,823
---------------
TOTAL RETAIL........................................................................... 5,573,811
---------------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Identified cost $48,229,890)........................................................ 54,767,422
---------------
REAL ESTATE OPERATING COMPANIES--0.1%
HEALTH CARE--0.1%
OMEGA Worldwide, Inc. (b)...................................... 4,641 40,319
---------------
TOTAL REAL ESTATE OPERATING COMPANIES
(Identified cost $34,816)............................................................ 40,319
---------------
TOTAL COMMON STOCKS
(Identified cost $48,264,706)........................................................ 54,807,741
---------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000)
----------- ---------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--2.1%
COMMERCIAL PAPER--2.1%
Marsh & McLennan Cos., Inc. 5.60%, 6/1/98...................... A-1+ $1,195 1,195,000
---------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $1,195,000)........................................................... 1,195,000
---------------
TOTAL INVESTMENTS--100.1%
(Identified cost $49,459,706).......................................................... 56,002,741(a)
Cash and receivables, less liabilities--(0.1)%......................................... (55,297)
---------------
NET ASSETS--100.0%....................................................................... $ 55,947,444
---------------
---------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $7,675,680 and gross
depreciation of $1,133,647 for federal income tax purposes. At May 31,
1998, the aggregate cost of securities for federal income tax purposes was
$49,460,708.
(b) Non-income producing.
See Notes to Financial Statements 25
<PAGE>
Phoenix Real Estate Securities Portfolio
- ------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investment securities at value
(Identified cost $49,459,706) $ 56,002,741
Cash 3,818
Receivables
Fund shares sold 75,980
Dividends 58,536
-------------
Total assets 56,141,075
-------------
LIABILITIES
Payables
Fund shares repurchased 88,323
Distribution fee 27,417
Investment advisory fee 27,328
Trustees' fee 9,179
Financial agent fee 6,964
Transfer agent fee 3,262
Accrued expenses 31,158
-------------
Total liabilities 193,631
-------------
NET ASSETS $ 55,947,444
-------------
-------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial
interest $ 48,620,326
Undistributed net investment income 168,971
Accumulated net realized gain 615,112
Net unrealized appreciation 6,543,035
-------------
NET ASSETS $ 55,947,444
-------------
-------------
CLASS A
Shares of beneficial interest outstanding, $1
par value, unlimited authorization (Net
Assets $32,485,386) 2,272,939
Net asset value per share $14.29
Offering price per share
$14.29/(1-4.75%) $15.00
CLASS B
Shares of beneficial interest outstanding, $1
par value, unlimited authorization (Net
Assets $23,462,058) 1,648,822
Net asset value and offering price per share $14.23
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 1,138,907
Interest 27,349
------------
Total investment income 1,166,256
------------
EXPENSES
Investment advisory fee 219,356
Distribution fee--Class A 43,302
Distribution fee--Class B 119,264
Financial agent fee 40,888
Transfer agent 47,457
Registration 14,455
Professional 13,004
Printing 9,900
Trustees 6,981
Custodian 5,099
Miscellaneous 793
------------
Total expenses 520,499
Less expenses borne by investment adviser (50,835)
------------
Net expenses 469,664
------------
NET INVESTMENT INCOME 696,592
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 616,848
Net change in unrealized appreciation
(depreciation) on investments (4,576,527)
------------
NET LOSS ON INVESTMENTS (3,959,679)
------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS ($ 3,263,087)
------------
------------
</TABLE>
26 See Notes to Financial Statements
<PAGE>
Phoenix Real Estate Securities Portfolio
- ------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MAY 31, 1998 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1997
------------- -------------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 696,592 $ 1,449,798
Net realized gain 616,848 3,771,039
Net change in unrealized appreciation (depreciation) (4,576,527) 6,590,856
------------- -------------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (3,263,087) 11,811,693
------------- -------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income--Class A (486,821) (1,017,253)
Net investment income--Class B (253,284) (412,660)
Net realized gains--Class A (2,255,194) (436,592)
Net realized gains--Class B (1,515,151) (164,397)
------------- -------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (4,510,450) (2,030,902)
------------- -------------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (299,860 and 1,072,429 shares, respectively) 4,533,570 15,754,217
Net asset value of shares issued from reinvestment of distributions
(173,443 and 96,059 shares, respectively) 2,592,244 1,368,531
Cost of shares repurchased (417,948 and 692,074 shares, respectively) (6,373,264) (10,024,000)
------------- -------------------
Total 752,550 7,098,748
------------- -------------------
CLASS B
Proceeds from sales of shares (268,406 and 851,567 shares, respectively) 4,039,246 12,428,285
Net asset value of shares issued from reinvestment of distributions
(102,339 and 32,975 shares, respectively) 1,525,694 472,566
Cost of shares repurchased (136,637 and 100,202 shares, respectively) (2,022,696) (1,484,452)
------------- -------------------
Total 3,542,244 11,416,399
------------- -------------------
INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS 4,294,794 18,515,147
------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS (3,478,743) 28,295,938
NET ASSETS
Beginning of period 59,426,187 31,130,249
------------- -------------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $168,971 AND $212,484,
RESPECTIVELY) $55,947,444 $ 59,426,187
------------- -------------------
------------- -------------------
</TABLE>
See Notes to Financial Statements 27
<PAGE>
Phoenix Real Estate Securities Portfolio
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
SIX MONTHS FROM
ENDED YEAR ENDED NOVEMBER 30, INCEPTION
5/31/98 3/1/95 TO
(UNAUDITED) 1997 1996 11/30/95
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $16.39 $ 13.14 $ 10.72 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.21(5) 0.49(4)(5) 0.53(5) 0.43(4)(5)
Net realized and unrealized gain (loss) (1.02) 3.52 2.50 0.55
----------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS (0.81) 4.01 3.03 0.98
----------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income (0.22) (0.51) (0.59) (0.26)
Dividends from net realized gains (1.07) (0.25) (0.02) --
----------- --------- --------- ---------
TOTAL DISTRIBUTIONS (1.29) (0.76) (0.61) (0.26)
----------- --------- --------- ---------
Change in net asset value (2.10) 3.25 2.42 0.72
----------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $14.29 $ 16.39 $ 13.14 $ 10.72
----------- --------- --------- ---------
----------- --------- --------- ---------
Total return(1) (5.26)%(3) 31.44% 29.20% 9.87%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $32,485 $36,336 $22,872 $13,842
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.30%(2) 1.30% 1.30% 1.30%(2)
Net investment income 2.69%(2) 3.34% 4.55% 5.79%(2)
Portfolio turnover 6%(3) 54% 24% 9%(3)
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
SIX MONTHS FROM
ENDED YEAR ENDED INCEPTION
5/31/98 NOVEMBER 30, 3/1/95 TO
(UNAUDITED) 1997 1996 11/30/95
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $16.32 $ 13.10 $ 10.68 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.15(6) 0.38(4)(6) 0.46(6) 0.36(4)(6)
Net realized and unrealized gain (loss) (1.01) 3.50 2.47 0.56
----------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS (0.86) 3.88 2.93 0.92
----------- --------- --------- ---------
Less distributions
Dividends from net investment income (0.16) (0.41) (0.49) (0.24)
Dividends from net realized gains (1.07) (0.25) (0.02) --
----------- --------- --------- ---------
TOTAL DISTRIBUTIONS (1.23) (0.66) (0.51) (0.24)
----------- --------- --------- ---------
Change in net asset value (2.09) 3.22 2.42 0.68
----------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $14.23 $ 16.32 $ 13.10 $ 10.68
----------- --------- --------- ---------
----------- --------- --------- ---------
Total return(1) (5.56)%(3) 30.44% 28.25% 9.21%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $23,462 $23,091 $ 8,259 $ 2.239
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.05%(2) 2.05% 2.05% 2.05%(2)
Net investment income 1.94%(2) 2.55% 3.95% 5.03%(2)
Portfolio turnover 6%(3) 54% 24% 9%(3)
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of $0.01,
$0.04, $0.07 and $0.12, respectively.
(6) Includes reimbursement of operating expenses by investment adviser of $0.01,
$0.04, $0.07 and $0.12, respectively.
28 See Notes to Financial Statements
<PAGE>
PHOENIX EMERGING MARKETS BOND PORTFOLIO
- ------------------------------------------------------------
INVESTOR PROFILE
Phoenix Emerging Markets Bond Portfolio is designed for long-term investors
seeking high current income and long-term capital appreciation by investing in
emerging-market debt instruments. Investors should note that foreign investments
pose additional risks, such as currency fluctuations, less public information,
and political and economic uncertainty.
INVESTMENT ADVISER'S REPORT
For the six months ended May 31, 1998, Phoenix Emerging Markets Bond Portfolio
Class A shares returned 0.04% and Class B shares returned -0.45% compared with
5.38% for the J.P. Morgan Emerging Markets Bond Index Plus.* All performance
figures assume reinvestment of dividends and exclude the effect of sales
charges.
For the first time since its inception, the Fund had disappointing, or
basically flat, performance. During this reporting period, we experienced
declines in emerging markets worldwide in "sympathy" with Southeast Asia's
difficulties even though the Fund had a very small position in the region. Most
of our underperformance was due to an overweighted position in Russia, which had
very strong results in the beginning of the year and in prior years but was very
laggard in May. Although short-term performance has been weak, long-term results
have been quite strong, and we believe this will again be the case once the
global situation stabilizes. Therefore, we have used the recent weakness to add
to long-term holdings.
OUTLOOK
We continue to believe emerging markets offer the potential for above-average
returns. We have taken advantage of recent weakness to selectively add to
positions in developing nations that we consider fundamentally attractive. Our
largest weighting is in Latin America. Brazil, for example, has used the Asian
"crisis" to accelerate reform programs that will ultimately improve economic
conditions.
* The J.P. Morgan Emerging Markets Bond Index Plus tracks total return for
traded external debt instruments in emerging markets. The Index is not
available for direct investment.
29
<PAGE>
Phoenix Emerging Markets Bond Portfolio
- ------------------------------------------------------
INVESTMENTS AT MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MOODY'S PAR
BOND VALUE
RATING (000) VALUE
-------- -------- --------------
<S> <C> <C> <C>
FOREIGN GOVERNMENT SECURITIES--75.4%
ALGERIA--7.6%
Algeria Tranch 1 Unaffected Loans 7.313%, 3/4/00 (c)........... NR $ 2,455 $ 2,288,864
Algeria Tranch A Loans 6.625%, 9/4/06 (c) ..................... NR 5,682 4,318,182
Algeria Tranch 3 Loans 6.625%, 3/4/10 (c)...................... NR 2,000 1,490,000
--------------
8,097,046
--------------
ARGENTINA--16.8%
Republic of Argentina Bocon Pre3 Euro, PIK interest
capitalization, 3.108%, 9/1/02 (c)........................... Ba 1,125(g) 927,816
Republic of Argentina Bocon Pro1 M1, PIK interest
capitalization, 3.108%, 4/1/07 (c)........................... Ba 15,113(g) 10,676,714
Republic of Argentina RegS 8.75%, 7/10/02...................... Ba 7,250(g) 6,380,000
Republic of Argentina RegS 11.75%, 2/12/07..................... Ba 30(g) 29,250
--------------
18,013,780
--------------
BRAZIL--11.8%
Republic of Brazil C Bond, PIK interest capitalization, 8%,
4/15/14 (c).................................................. B 14,010 10,801,429
Republic of Brazil C Bond Registered, PIK interest
capitalization, 8%, 4/15/14 (c).............................. B 2,320 1,789,057
--------------
12,590,486
--------------
BULGARIA--2.2%
Republic of Bulgaria FLIRB RegA 2.25%, 7/28/12 (c)............. B 1,250 825,000
Republic of Bulgaria FLIRB Series A Bearer Euro 2.25%, 7/28/12
(c)(e)....................................................... B 2,365 1,560,900
--------------
2,385,900
--------------
ECUADOR--3.2%
Ecuador Bearer PDI Euro, PIK interest capitalization, 6.625%,
2/27/15 (c).................................................. B 4,741 2,915,216
</TABLE>
<TABLE>
<CAPTION>
MOODY'S PAR
BOND VALUE
RATING (000) VALUE
-------- -------- --------------
<S> <C> <C> <C>
ECUADOR--CONTINUED
Ecuador Registered PDI, PIK interest capitalization, 6.625%,
2/27/15 (c).................................................. B $ 890 $ 547,444
--------------
3,462,660
--------------
IVORY COAST--2.0%
Ivory Coast FLIRB 2%, 3/29/18 (c).............................. NR 4,500 1,608,750
Ivory Coast FLIRB Series FRF 2%, 3/29/18 (c)................... NR 950(h) 53,592
Ivory Coast PDI 2%, 3/29/18 (c)................................ NR 1,000 408,750
Ivory Coast PDI Series FRF 1.90%, 3/29/18 (c).................. NR 630(h) 40,937
--------------
2,112,029
--------------
KOREA--1.9%
Korean Won Denominated 0%, 4/26/99............................. NR 2,600,000(k) 1,562,734
Republic of Korea 8.875%, 4/15/08.............................. Ba 500 471,250
--------------
2,033,984
--------------
MEXICO--7.6%
United Mexican States Global Bond 11.50%, 5/15/26.............. Ba 7,000 8,163,750
--------------
NIGERIA--3.5%
Nigeria Promissory Notes 5.092%, 1/5/10........................ NR 5,492 3,783,656
--------------
PANAMA--0.5%
Panama IRB 3.75%, 7/17/14 (c).................................. Ba 700 539,875
--------------
PERU--0.7%
Peru FLIRB 3.75%, 3/7/17 (c)................................... BB(f) 1,250 752,344
--------------
POLAND--1.0%
Poland Treasury Bill 0%, 1/13/99............................... NR 4,310(i) 1,091,211
--------------
RUSSIA--6.3%
Russia Principal Loans, PIK interest capitalization, 6.719%,
12/15/20 (c)................................................. NR 5,250 2,966,250
Russian GKO Note 0%, 9/12/01................................... NR 52,874(j) 3,753,819
--------------
6,720,069
--------------
</TABLE>
30 See Notes to Financial Statements
<PAGE>
PHOENIX EMERGING MARKETS BOND PORTFOLIO
- ------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S PAR
BOND VALUE
RATING (000) VALUE
-------- -------- --------------
<S> <C> <C> <C>
TURKEY--2.5%
Turkey T-Bill 0%, 6/4/98....................................... NR 300,000,000(l) $ 1,104,444
Turkey T-Bill 0%, 9/16/98...................................... NR 580,000,000(l) 1,631,642
--------------
2,736,086
--------------
UKRAINE--1.8%
Ukraine Fiduciary 0%, 8/12/98.................................. NR $2,000 1,890,000
--------------
VENEZUELA--6.0%
Republic of Venezuela 9.25%, 9/15/27........................... Ba 7,613 6,389,210
--------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $86,144,037).......................................................... 80,762,086
--------------
FOREIGN CORPORATE BONDS--12.7%
ARGENTINA--0.8%
CEI Citicorp 144A 11.25%, 2/14/07 (Banks (Money Center)) (d)... NR 1,000(g) 890,000
--------------
BRAZIL--1.3%
TV Bandeirantes 144A 12.875%, 5/15/06 (Publishing (Newspapers))
(d).......................................................... B 1,500 1,406,250
--------------
CHINA--1.3%
Greater Beijing First RegS 9.25%, 6/15/04 (Industrial)......... Ba 2,000 1,420,000
--------------
INDONESIA--2.7%
APP Finance VII Mauritius 12%, 2/15/04 (Paper & Forest
Products) (c)................................................ Caa 3,890 2,849,425
--------------
JAMAICA--1.3%
Mechala Group Jamaica Series B 12.75%, 12/30/99 (Engineering &
Construction)................................................ NR 1,500 1,425,000
--------------
NETHERLANDS--0.8%
TJIWI Kim-Global 13.25%, 8/1/01 (Paper & Forest Products)...... Caa 1,000 810,000
--------------
RUSSIA--4.5%
Rossiyskiy Kredit Bank RegS 10.25%, 9/29/00 (Banks (Major
Regional))................................................... B(f) 6,000 4,777,500
--------------
TOTAL FOREIGN CORPORATE BONDS
(Identified cost $14,344,045).......................................................... 13,578,175
--------------
</TABLE>
<TABLE>
<CAPTION>
MOODY'S PAR
BOND VALUE
RATING (000) VALUE
-------- -------- --------------
FOREIGN CONVERTIBLE BONDS--6.2%
<S> <C> <C> <C>
CANADA--0.6%
PLD Telekom Cv. 144A 9%, 6/1/06 (Telephone) (d)................ NR $ 600 $ 673,500
--------------
CHINA--0.6%
APP Finance VII Mauritius 144A Cv. 3.50%, 4/30/03 (Paper &
Forest Products) (d)......................................... CCC+(f) 800 642,000
--------------
PHILIPPINES--1.0%
JG Summit Cayman Cv. Ltd. 3.50%, 12/23/03 (Banks (Major
Regional))................................................... NR 1,700 990,250
--------------
RUSSIA--4.0%
Lukinter Finance BV Cv. RegS 3.50%, 5/6/02 (Oil (International
Integrated))................................................. B 4,300 4,310,750
--------------
TOTAL FOREIGN CONVERTIBLE BONDS
(Identified cost $8,628,250)............................................................ 6,616,500
--------------
TOTAL LONG-TERM INVESTMENTS--94.3%
(Identified cost $109,116,332).......................................................... 100,956,761
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS
----------
<S> <C> <C>
OPTIONS--1.0%
Argentina FRB Call Options 6/8/98 $91.45 (b)
(Par subject to call $9,785,000)................................................ 10.3 2,799
Brazil C Call Options 6/5/98, $83.75 (b)
(Par subject to call $15,000,000)............................................... 15 27,075
Brazil EI Call Options 8/12/98 $87.688 (b)
(Par subject to call $12,367,500)............................................... 12.75 73,710
Brazil IDU Call Options 6/8/98 $96.85 (b)
(Par subject to call $14,000,000)............................................... 20 35,000
Bulgaria FLIRB Call Options 6/5/98 $66.875 (b)
(Par subject to call $10,000,000)............................................... 10 32,000
Bulgaria IAB Call Options 7/20/98 $79.625 (b)
(Par subject to call $7,000,000)................................................ 7 49,000
Bulgaria IAB Call Options 7/20/98 $79.75 (b)
(Par subject to call $25,250,000)............................................... 25.25 87,365
</TABLE>
See Notes to Financial Statements 31
<PAGE>
PHOENIX EMERGING MARKETS BOND PORTFOLIO
- ------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS VALUE
---------- ----------
OPTIONS--CONTINUED
<S> <C> <C>
Ecuador Bearer PDI Call Options 6/22/98 $63.875 (b)
(Par subject to call $5,250,000)................................................ 5.25 $ 29,447
Peru PDI Call Options 6/9/98 $65.625 (b)
(Par subject to call $10,000,000)............................................... 10 136,820
Poland Bearer PDI Call Options 6/8/98 $90.375 (b)
(Par subject to call $10,300,000)............................................... 10.3 73,439
Poland Bearer PDI Call Options 7/27/98 $90 (b)
(Par subject to call $10,000,000)............................................... 10 180,000
Russian Principal Call Options 6/1/98 $59.938 (b)
(Par subject to call $10,000,000)............................................... 10 1,000
Russian Principal Call Options 7/27/98 $62.375 (b)
(Par subject to call $5,000,000)................................................ 5 12,500
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF
CONTRACTS VALUE
------------ ------------
<S> <C> <C>
Russian Principal Call Options 7/28/98 $62.50 (b)
(Par subject to call $20,000,000)............................................... 20 $ 159,000
Venezuela Call Options 7/23/98 $89.10 (b)
(Par subject to call $12,250,000)............................................... 12.25 68,343
Venezuela Call Options 8/13/98 $89.063 (b)
(Par subject to call $19,047,600)............................................... 20 110,933
Venezuela Call Options 8/13/98 $89.188 (b)
(Par subject to call $2,619,045)................................................ 2.75 14,138
------------
TOTAL OPTIONS
(Identified cost $4,306,038)...................................................................... 1,092,569
------------
TOTAL INVESTMENTS--95.3%
(Identified cost $113,422,370).................................................................... 102,049,330(a)
Cash and receivables, less liabilities--4.7%...................................................... 5,040,227
------------
NET ASSETS--100.0%.................................................................................. $107,089,557
------------
------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $664,683 and gross
depreciation of $12,037,723 for income tax purposes. At May 31, 1998, the
aggregate cost of securities for federal income tax purposes was
$113,422,370.
(b) Non-income producing.
(c) Variable or step coupon security; interest rate reflects the rate currently
in effect.
(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 May 31, 1998,
these securities amounted to a value of $3,611,750 or 3.4% of net assets.
(e) All or a portion segregated as collateral.
(f) As rated by Standard & Poor's, Fitch or Duff & Phelps.
(g) Par value represents Argentine Pesos.
(h) Par value represents French Francs.
(i) Par value represents Polish Zloty.
(j) Par value represents Russian Rubles.
(k) Par value represents South Korean Won.
(l) Par value represents Turkish Lira.
32 See Notes to Financial Statements
<PAGE>
Phoenix Emerging Markets Bond Portfolio
- ------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investment securities at value
(Identified cost $113,422,370) $ 102,049,330
Cash 4,637,344
Receivables
Investment securities sold 6,223,173
Interest 1,678,875
Fund shares sold 643,322
--------------
Total assets 115,232,044
--------------
LIABILITIES
Payables
Investment securities purchased 7,419,386
Fund shares repurchased 548,458
Investment advisory fee 72,693
Distribution fee 55,596
Financial agent fee 7,984
Trustees' fee 6,361
Transfer agent fee 4,459
Accrued expenses 27,550
--------------
Total liabilities 8,142,487
--------------
NET ASSETS $ 107,089,557
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial
interest $ 127,859,911
Undistributed net investment income 617,004
Accumulated net realized loss (10,014,318)
Net unrealized depreciation (11,373,040)
--------------
NET ASSETS $ 107,089,557
--------------
--------------
CLASS A
Shares of beneficial interest outstanding,
$1 par value, unlimited authorization (Net
Assets $60,578,894) 5,630,579
Net asset value per share $10.76
Offering price per share
$10.76/(1-4.75%) $11.30
CLASS B
Shares of beneficial interest outstanding,
$1 par value, unlimited authorization (Net
Assets $45,954,663) 4,301,651
Net asset value and offering price per share $10.68
CLASS C
Shares of beneficial interest outstanding,
$1 par value, unlimited authorization (Net
Assets $556,000) 51,767
Net asset value and offering price per share $10.74
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 7,792,583
------------
Total investment income 7,792,583
------------
EXPENSES
Investment advisory fee 426,874
Distribution fee--Class A 86,777
Distribution fee--Class B 221,199
Distribution fee--Class C 860
Financial agent fee 43,025
Transfer agent 76,140
Custodian 33,479
Registration 16,329
Professional 15,167
Trustees 10,163
Printing 6,147
Miscellaneous 1,579
------------
Total expenses 937,739
------------
NET INVESTMENT INCOME 6,854,844
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (481,306)
Net realized loss on foreign currency
transactions (95,699)
Net realized gain on written options 49,783
Net change in unrealized appreciation
(depreciation) on investments (6,799,921)
------------
NET LOSS ON INVESTMENTS (7,327,143)
------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ (472,299)
------------
------------
</TABLE>
See Notes to Financial Statements 33
<PAGE>
Phoenix Emerging Markets Bond Portfolio
- ------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED MAY 31,
1998 YEAR ENDED NOVEMBER
(UNAUDITED) 30, 1997
-------------- -------------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 6,854,844 $ 7,435,613
Net realized gain (loss) (527,222) 1,466,964
Net change in unrealized appreciation (depreciation) (6,799,921) (7,091,439)
-------------- -------------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (472,299) 1,811,138
-------------- -------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income--Class A (4,084,451) (4,916,690)
Net investment income--Class B (2,505,780) (2,280,551)
Net investment income--Class C (9,697) --
Net realized gains--Class A (7,203,878) (4,477,700)
Net realized gains--Class B (4,183,034) (1,490,259)
-------------- -------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (17,986,840) (13,165,200)
-------------- -------------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (1,306,844 and 4,047,705 shares, respectively) 15,797,302 56,372,468
Net asset value of shares issued from reinvestment of distributions
(807,491 and 636,006 shares, respectively) 9,138,552 8,387,234
Cost of shares repurchased (1,770,591 and 1,401,387 shares, respectively) (21,225,128) (19,377,800)
-------------- -------------------
Total 3,710,726 45,381,902
-------------- -------------------
CLASS B
Proceeds from sales of shares (1,484,156 and 2,934,383 shares, respectively) 17,335,282 41,013,074
Net asset value of shares issued from reinvestment of distributions
(317,976 and 163,679 shares, respectively) 3,578,552 2,172,877
Cost of shares repurchased (528,057 and 727,786 shares, respectively) (6,249,207) (10,039,719)
-------------- -------------------
Total 14,664,627 33,146,232
-------------- -------------------
CLASS C
Proceeds from sales of shares (51,551 and 0 shares, respectively) 622,785 --
Net asset value of shares issued from reinvestment of distributions
(216 and 0 shares, respectively) 2,480 --
Cost of shares repurchased (0 and 0 shares, respectively) -- --
-------------- -------------------
Total 625,265 --
-------------- -------------------
INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS 19,000,618 78,528,134
-------------- -------------------
NET INCREASE IN NET ASSETS 541,479 67,174,072
NET ASSETS
Beginning of period 106,548,078 39,374,006
-------------- -------------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$617,004 AND $362,088, RESPECTIVELY) $ 107,089,557 $ 106,548,078
-------------- -------------------
-------------- -------------------
</TABLE>
34 See Notes to Financial Statements
<PAGE>
Phoenix Emerging Markets Bond Portfolio
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------
SIX MONTHS FROM
ENDED INCEPTION
5/31/98 YEAR ENDED NOVEMBER 30, 9/5/95 TO
(UNAUDITED) 1997 1996 11/30/95
------------ --------- --------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.84 $ 14.80 $ 10.18 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.74(4) 1.38(4) 1.26(5) 0.25(4)(5)
Net realized and unrealized gain (loss) (0.72) 0.17 4.56 0.18
------ --------- --------- ------
TOTAL FROM INVESTMENT OPERATIONS 0.02 1.55 5.82 0.43
------ --------- --------- ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.71) (1.28) (1.20) (0.25)
Dividends from net realized gains (1.39) (2.23) -- --
------ --------- --------- ------
TOTAL DISTRIBUTIONS (2.10) (3.51) (1.20) (0.25)
------ --------- --------- ------
Change in net asset value (2.08) (1.96) 4.62 0.18
------ --------- --------- ------
NET ASSET VALUE, END OF PERIOD $ 10.76 $ 12.84 $ 14.80 $ 10.18
------ --------- --------- ------
------ --------- --------- ------
Total return(1) 0.04%(3) 11.91% 60.18% 4.40%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $60,579 $67,875 $29,661 $12,149
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.36%(2) 1.40%(7) 1.50% 1.50%(2)
Net investment income 12.36%(2) 9.90% 10.41% 10.48%(2)
Portfolio turnover 204%(3) 614% 378% 38%(3)
</TABLE>
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------
SIX MONTHS FROM
ENDED INCEPTION
5/31/98 YEAR ENDED NOVEMBER 30, 9/5/95 TO
(UNAUDITED) 1997 1996 11/30/95
------------ --------- --------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.77 $ 14.78 $ 10.18 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.68(4) 1.26(4) 1.19(6) 0.22(4)(6)
Net realized and unrealized gain (loss) (0.70) 0.18 4.53 0.20
------ --------- --------- ------
TOTAL FROM INVESTMENT OPERATIONS (0.02) 1.44 5.72 0.42
------ --------- --------- ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.68) (1.22) (1.12) (0.24)
Dividends from net realized gains (1.39) (2.23) -- --
------ --------- --------- ------
TOTAL DISTRIBUTIONS (2.07) (3.45) (1.12) (0.24)
------ --------- --------- ------
Change in net asset value (2.09) (2.01) 4.60 0.18
------ --------- --------- ------
NET ASSET VALUE, END OF PERIOD $ 10.68 $ 12.77 $ 14.78 $ 10.18
------ --------- --------- ------
------ --------- --------- ------
Total return(1) (0.45)%(3) 11.07% 58.94% 4.22%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $45,955 $38,673 $ 9,713 $596
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.11%(2) 2.15%(7) 2.25% 2.25%(2)
Net investment income 11.54%(2) 9.14% 9.79% 10.29%(2)
Portfolio turnover 204%(3) 614% 378% 38%(3)
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of $0.07
and $0.03, respectively.
(6) Includes reimbursement of operating expenses by investment adviser of $0.07
and $0.03, respectively.
(7) For the year ended November 30, 1997, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian fees.
Prior period ratios include these amounts.
See Notes to Financial Statements 35
<PAGE>
PHOENIX EMERGING MARKETS BOND PORTFOLIO
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS C
----------------
FROM INCEPTION
3/26/98 TO
5/31/98
(UNAUDITED)
----------------
<S> <C>
Net asset value, beginning of period $ 12.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.30(4)
Net realized and unrealized gain (loss) (1.60)
------
TOTAL FROM INVESTMENT OPERATIONS (1.30)
------
LESS DISTRIBUTIONS
Dividends from net investment income (0.21)
Dividends from net realized gains --
------
TOTAL DISTRIBUTIONS (0.21)
------
Change in net asset value (1.51)
------
NET ASSET VALUE, END OF PERIOD $ 10.74
------
------
Total return(1) (10.73)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $556
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.07%(2)
Net investment income 13.35%(2)
Portfolio turnover 204%(3)
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
36 See Notes to Financial Statements
<PAGE>
PHOENIX STRATEGIC INCOME PORTFOLIO
- ------------------------------------------------------
INVESTOR PROFILE
Phoenix Strategic Income Portfolio (formerly the Diversified Income Portfolio)
is designed for investors seeking high current income through investments in
debt securities, including emerging-market debt and high yield issues. Investors
should note that foreign investing involves special risks, such as currency
fluctuation, less public disclosure as well as economic and political risks.
High yielding fixed-income securities generally are subject to greater market
fluctuations and risk of loss of income and principal than are investments in
lower yielding fixed-income securities.
INVESTMENT ADVISER'S REPORT
Since their inception on March 27, 1998, the return on Phoenix Strategic
Income Portfolio Class A shares is -1.59%, Class B shares, -1.65%, and Class C
shares, -1.66% compared with a return of 1.5% for Lehman Brothers Aggregate
Index over the same period.* For the six months ended May 31, 1998, Class X
shares, which have an inception date of April 1993, earned 2.90% compared with a
return of 4.09% for the Fund's benchmark. Fund expenses prior to March 27, 1998
were lower than current expenses. Had the current expense structure been in
place prior to this date, Class X performance would have been lower than
indicated. All performance figures assume reinvestment of dividends and exclude
the effect of sales charges.
The troubles in Asia, which began last summer, have extended to markets in
developing countries around the world. Given the Fund's aggressive investment
objective, we have maintained the 35% maximum exposure to emerging-market debt,
which has negatively impacted results for the last two months.
Our focus has been on sovereign debt issues of Argentina, Brazil, Venezuela,
and Russia, which we believe have strong underlying fundamentals despite recent
weakness. We try to identify emerging countries that are experiencing the types
of improvements in their infrastructure associated with a better standard of
living.
About 35% of the Fund is invested in high-yield credits. Technical factors
remain very positive, with increased demand from collateralized bond obligations
and non-traditional investors, such as insurance companies and pension plans. As
a result, we will continue to view the high yield sector as a core position in
the portfolio.
The Fund's overweighting in such non-conventional fixed-income sectors as
municipals, and commercial and non-agency mortgage-backed securities contributed
positively to performance.
OUTLOOK
Our focus is on identifying undervalued sectors of the fixed-income market,
including sovereign debt and domestic high-yield issues. We continue to believe
that emerging markets offer the opportunity for long-term appreciation. Given
our outlook for sustained economic growth, domestic high-yield issues remain
attractive, particularly telecommunications carriers and oil and gas exploration
and production companies. The Fund maintains a neutral duration to minimize
interest rate risk.
* The Lehman Brothers Index is an unmanaged, commonly used measure of total
return performance of the fixed-income market. The Index is not available for
direct investment.
37
<PAGE>
Phoenix Strategic Income Portfolio
- ------------------------------------------------------
INVESTMENTS AT MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MOODY'S PAR
BOND VALUE
RATING (000) VALUE
---------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS--4.7%
FLORIDA--0.7%
University of Miami Exchangeable Revenue Series
A Taxable 7.65%, 4/1/20....................... Aaa $ 45 $ 47,588
------------
ILLINOIS--2.0%
Illinois Educational Facilities Authority
Revenue - Loyola University Series A Taxable
7.84%, 7/1/24................................. Aaa 125 135,937
------------
PENNSYLVANIA--2.0%
Pennsylvania Economic Development Financing
Authority 9.50%, 1/1/12 (e)................... NR 200 136,000
------------
TOTAL MUNICIPAL BONDS
(Identified cost $378,169)............................................. 319,525
------------
ASSET-BACKED SECURITIES--0.7%
Green Tree Financial Corp. 95-8, A2 6.15%,
12/15/26...................................... Aaa 48 48,472
------------
TOTAL ASSET-BACKED SECURITIES
(Identified cost $48,216).............................................. 48,472
------------
CORPORATE BONDS--32.2%
BROADCASTING (TELEVISION, RADIO & CABLE)--2.5%
Fox Family Worldwide, Inc. 0%, 11/1/07 (c)...... B 275 172,219
------------
COMPUTER SOFTWARE & SERVICES--1.5%
PSINET, Inc. 144A 10%, 2/15/05 (b).............. B 100 101,750
------------
COSMETICS/PERSONAL CARE--2.0%
Revlon Worldwide Corp. 0%, 3/15/01.............. B 175 136,062
------------
DRUGS--MAJOR PHARMACEUTICALS--1.2%
Schein Pharmaceutical, Inc. 144A 8.727%,
12/15/04 (b)(c)............................... B 85 85,000
------------
HEALTH CARE--DIVERSIFIED--1.5%
Global Health Sciences Series 144A 11%, 5/1/08
(b)........................................... Caa 100 101,500
------------
INDUSTRIAL--1.5%
Indesco International, Inc. 144A 9.75%, 4/15/08
(b)........................................... B 100 100,000
------------
METALS MINING--2.6%
NSM Steel Ltd. 144A 12%, 2/1/06 (b)............. B 200 182,000
------------
<CAPTION>
MOODY'S PAR
BOND VALUE
RATING (000) VALUE
---------- --------- ------------
<S> <C> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION)--3.6%
Forcenergy, Inc. 8.50%, 2/15/07................. B $ 175 $ 170,625
Lomak Petroleum, Inc. 8.75%, 1/15/07............ B 75 76,500
------------
247,125
------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--1.5%
Comcast Cellular 9.50%, 5/1/07.................. Ba 100 103,250
------------
TELECOMMUNICATIONS (LONG DISTANCE)--5.0%
RCN Corp. 144A 0%, 2/15/08 (b)(c)............... B 275 173,594
RSL Communications PLC 144A 0%, 3/1/08 (b)(c)... B 275 169,125
------------
342,719
------------
TELEPHONE--9.3%
Global Crossing 144A 9.625%, 5/15/08 (b)........ NR 100 103,250
Interamericas Communication Corp. Unit 144A 14%,
10/27/07 (b).................................. NR 170 171,700
Pathnet, Inc. 144A 12.25%, 4/15/08 (b).......... NR 175 194,250
Teligent, Inc. 11.50%, 12/1/07.................. Caa 170 174,250
------------
643,450
------------
TOTAL CORPORATE BONDS
(Identified cost $2,206,125)........................................... 2,215,075
------------
NON-AGENCY MORTGAGE BACKED SECURITIES--18.5%
ContiMortgage Home Equity Loan Trust 98-1B
7.86%, 4/15/29................................ Baa 200 202,562
DLJ Mortgage Acceptance Corp. 97-CF2, B2 144A
7.14%, 11/15/08 (b)........................... Baa 100 100,938
First Chicago/Lennar Trust 97-CHL1, E 144A
6.929%, 2/28/11 (b)(c)........................ B(d) 175 154,766
General Electric Mortgage Services, Inc. 97-1,
A14 7.50%, 5/25/26............................ AAA(d) 221 226,927
Norwest Asset Securities Corp. 96-3, B2 7.25%,
9/25/26....................................... BBB(d) 148 148,661
Resolution Trust Corp. 92-C3, B 9.05%,
8/25/23....................................... AA(d) 137 137,157
Structured Asset Securities Corp. 95-C1, D
7.375%, 9/25/24............................... BBB(d) 150 151,453
Structured Asset Securities Corp. 95-C4, D 7%,
6/25/26 (f)................................... BBB(d) 150 150,000
------------
TOTAL NON-AGENCY MORTGAGE BACKED SECURITIES
(Identified cost $1,244,862)........................................... 1,272,464
------------
</TABLE>
38 See Notes to Financial Statements
<PAGE>
PHOENIX STRATEGIC INCOME PORTFOLIO
- ------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S PAR
BOND VALUE
RATING (000) VALUE
---------- --------- ------------
<S> <C> <C> <C>
FOREIGN GOVERNMENT SECURITIES--30.0%
ARGENTINA--3.6%
Republic of Argentina RegS 11.75%, 2/12/07...... Ba 250 (g) $ 243,870
------------
BRAZIL--3.6%
Republic of Brazil C Bond, PIK interest
capitalization, 8%, 4/15/14 (c)............... B $ 319 245,076
------------
BULGARIA--2.7%
Republic of Bulgaria IAB PDI Euro 6.563%,
7/28/11 (c)................................... B 250 188,906
------------
ECUADOR--4.0%
Ecuador Bearer PDI Euro, PIK interest
capitalization, 6.625%, 2/27/15 (c)........... B 445 271,491
------------
KOREA--2.7%
Republic of Korea 8.75%, 4/15/03................ Ba 100 95,750
Republic of Korea 8.875%, 4/15/08............... Ba 100 94,250
------------
190,000
------------
MEXICO--3.8%
United Mexican States Global Bond 11.375%,
9/15/16....................................... Ba 125 143,281
United Mexican States Global Bond 11.50%,
5/15/26....................................... Ba 100 116,625
------------
259,906
------------
PANAMA--1.0%
Republic of Panama 8.875%, 9/30/27.............. Ba 75 71,625
------------
PERU--1.2%
Peru PDI 4%, 3/7/17 (c)......................... BB(d) 125 83,125
------------
POLAND--2.2%
Poland Treasury Bill 0%, 2/17/99................ NR 600 (h) 149,611
------------
RUSSIA--5.2%
Russia Ian Series US 6.719%, 12/15/15 (c)....... NR 250 162,813
Russia Principal Loan, PIK interest
capitalization, 6.719%, 12/15/20 (c).......... NR 350 197,750
------------
360,563
------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $2,137,870)........................................... 2,064,173
------------
FOREIGN CORPORATE BONDS--9.5%
CHINA--2.3%
AES China Generating Co. Yankee 10.125%,
12/15/06 (Electric Companies)................. Ba 175 157,500
------------
<CAPTION>
MOODY'S PAR
BOND VALUE
RATING (000) VALUE
---------- --------- ------------
<S> <C> <C> <C>
GERMANY--2.2%
Kabelmedia Holding 0%, 8/1/06 (Industrial)
(c)........................................... B $ 200 $ 154,750
------------
INDONESIA--1.0%
APP Finance VII Mauritius 12%, 12/29/49 (Paper &
Forest Products).............................. Caa 100 73,250
------------
NETHERLANDS--2.6%
Netia Holdings BV 144A 0%, 11/1/07 (Financial)
(b)(c)........................................ B 250 178,125
------------
TURKEY--1.4%
Kazkommertsbank International 144A 11.25%,
5/8/01 (Banks (Major Regional)) (b)........... B 100 95,750
------------
TOTAL FOREIGN CORPORATE BONDS
(Identified cost $693,512)............................................. 659,375
------------
FOREIGN CONVERTIBLE BONDS--0.6%
INDONESIA--0.6%
APP Finance VII Mauritius CV, 144A 3.50%,
4/30/03 (Paper & Forest Products) (b)......... CCC(d) 50 40,125
------------
TOTAL FOREIGN CONVERTIBLE BONDS
(Identified cost $50,000).............................................. 40,125
------------
TOTAL LONG-TERM INVESTMENTS--96.2%
(Identified cost $6,758,754)........................................... 6,619,209
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF
CONTRACTS
---------
<S> <C> <C> <C>
OPTIONS--0.1%
Argentina FLIRB Call Options 6/8/98 $91.45 (e)
(Par Subject to Call $200,000)................ 0.20 55
Brazil Call Options 6/5/98 $83.75 (e)
(Par Subject to Call $232,000)................ 0.20 361
Brazil EI Call Options 8/12/98 $87.688 (e)
(Par Subject to Call $250,000)................ 0.25 1,445
Bulgaria FLIRB A Call Options 6/5/98 $66.875 (e)
(Par Subject to Call $250,000)................ 0.25 800
Bulgaria IAB Call Options 7/20/98 $79.75 (e)
(Par Subject to Call 250,000)................. 0.25 865
Ecuador Bearer PDI Call Options 6/22/98 $63.88
(e)
(Par Subject to Call $250,000)................ 0.25 1,402
Poland Bearer PDI Call Options 6/8/98 $90.375
(e)
(Par Subject to Call $200,000)................ 0.20 1,426
</TABLE>
See Notes to Financial Statements 39
<PAGE>
PHOENIX STRATEGIC INCOME PORTFOLIO
- ------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
CONTRACTS VALUE
--------- ------------
<S> <C> <C> <C>
OPTIONS--CONTINUED
Venezuela Call Options 7/23/98 $89.10 (e)
(Par Subject to Call $250,000)................ 0.25 $ 1,395
Venezuela Call Options 8/13/98 $89.188 (e)
(Par Subject to Call $250,000)................ 0.25 1,285
Venezuela DCB Call Options 6/8/98 $90.13 (e)
(Par Subject to Call $185,714)................ 0.20 11
------------
TOTAL OPTIONS
(Identified cost $44,757)............................................. 9,045
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000)
---------- ---------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--2.6%
COMMERCIAL PAPER--2.6%
Merrill Lynch & Co., Inc. 5.52%, 6/1/98......... A-1+ $ 180 180,000
---------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $180,000)............................................. 180,000
---------
TOTAL INVESTMENTS--98.9%
(Identified cost $6,983,511)........................................... 6,808,254(a)
Cash and receivables, less liabilities--1.1%........................... 75,112
---------
NET ASSETS--100.0%....................................................... $6,883,366
---------
---------
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $150,259 and gross
depreciation of $325,059 for federal income tax purposes. At May 31, 1998,
the aggregate cost of securities for federal income tax purposes was
$6,983,054.
(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 May 31, 1998,
these securities amounted to a value of $1,951,873 or 28.4% of net assets.
(c) Variable or step coupon security; the interest rate shown reflects the rate
currently in affect.
(d) As rated by Standard & Poor's, Fitch, or Duff & Phelps.
(e) Non-income producing.
(f) All or a portion segregated as collateral.
(g) Par value represents Argentine Pesos.
(h) Par value represents Polish Zloty.
40 See Notes to Financial Statements
<PAGE>
Phoenix Strategic Income Portfolio
- ------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $6,983,511) $ 6,808,254
Receivables
Investments securities sold 200,272
Interest 168,903
Fund shares sold 6,435
-----------
Total assets 7,183,864
-----------
LIABILITIES
Payables
Investment securities purchased 176,862
Custodian 91,377
Trustees' fee 9,985
Financial agent fee 8,712
Transfer agent fee 6,009
Investment advisory fee 3,103
Distribution fee 250
Accrued expenses 4,200
-----------
Total liabilities 300,498
-----------
NET ASSETS $ 6,883,366
-----------
-----------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial
interest $ 6,985,007
Undistributed net investment income 23,540
Accumulated net realized gain 50,076
Net unrealized depreciation (175,257)
-----------
NET ASSETS $ 6,883,366
-----------
-----------
CLASS X
Shares of beneficial interest outstanding, $1
par value, unlimited authorization (Net
Assets $6,369,681) 671,063
Net asset value and offering price per share $9.49
CLASS A
Shares of beneficial interest outstanding, $1
par value, unlimited authorization (Net
Assets $170,502) 17,962
Net asset value per share $9.49
Offering price per share
$9.49/(1-4.75%) $9.96
CLASS B
Shares of beneficial interest outstanding, $1
par value, unlimited authorization (Net
Assets $244,763) 25,805
Net asset value and offering price per share $9.49
CLASS C
Shares of beneficial interest outstanding, $1
par value, unlimited authorization (Net
Assets $98,420) 10,373
Net asset value and offering price per share $9.49
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 300,199
Dividends 9,182
----------
Total investment income 309,381
----------
EXPENSES
Investment advisory fee 17,245
Distribution fee--Class A 53
Distribution fee--Class B 240
Distribution fee--Class C 204
Financial agent 41,024
Transfer agent 13,512
Professional 11,179
Trustees 6,857
Registration 6,092
Printing 3,844
Custodian 3,797
Miscellaneous 847
----------
Total expenses 104,894
Less expenses borne by investment adviser (79,288)
----------
Net expenses 25,606
----------
NET INVESTMENT INCOME 283,775
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 60,235
Net realized loss on foreign currency
transactions (826)
Net realized loss on options (9,380)
Net change in unrealized appreciation
(depreciation) on investments (153,234)
----------
NET LOSS ON INVESTMENTS (103,205)
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 180,570
----------
----------
</TABLE>
See Notes to Financial Statements 41
<PAGE>
Phoenix Strategic Income Portfolio
- ------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MAY 31, 1998 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1997
------------- -------------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 283,775 $ 466,575
Net realized gain 50,029 251,177
Net change in unrealized appreciation (depreciation) (153,234) (194,058)
------------- -------------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 180,570 523,694
------------- -------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income--Class X (268,345) (469,335)
Net investment income--Class A (2,438) --
Net investment income--Class B (2,954) --
Net investment income--Class C (1,335) --
Net realized gains--Class X (241,378) (72,586)
------------- -------------------
DECREASE IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS (516,450) (541,921)
------------- -------------------
FROM SHARE TRANSACTIONS
CLASS X
Proceeds from sales of shares (0 and 27,068 shares, respectively) -- 263,374
Net asset value of shares issued from reinvestment of
distributions (52,872 and 54,582 shares, respectively) 509,722 541,924
Cost of shares repurchased (30,675 and 27,376 shares, respectively) (300,003) (273,623)
------------- -------------------
Total 209,719 531,675
------------- -------------------
CLASS A
Proceeds from sales of shares (17,744 and 0 shares, respectively) 173,992 --
Net asset value of shares issued from reinvestment of
distributions (235 and 0 shares, respectively) 2,273 --
Cost of shares repurchased (17 and 0 shares, respectively) (169) --
------------- -------------------
Total 176,096 --
------------- -------------------
CLASS B
Proceeds from sales of shares (25,666 and 0 shares, respectively) 250,523 --
Net asset value of shares issued from reinvestment of
distributions (171 and 0 shares, respectively) 1,660 --
Cost of shares repurchased (32 and 0 shares, respectively) (316) --
------------- -------------------
Total 251,867 --
------------- -------------------
CLASS C
Proceeds from sales of shares (10,235 and 0 shares, respectively) 100,100 --
Net asset value of shares issued from reinvestment of
distributions (138 and 0 shares, respectively) 1,334 --
Cost of shares repurchased (0 and 0 shares, respectively) -- --
------------- -------------------
Total 101,434 --
------------- -------------------
INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS 739,116 531,675
------------- -------------------
NET INCREASE IN NET ASSETS 403,236 513,448
NET ASSETS
Beginning of period 6,480,130 5,966,682
------------- -------------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $23,540 AND $14,837,
RESPECTIVELY) $ 6,883,366 $ 6,480,130
------------- -------------------
------------- -------------------
</TABLE>
42 See Notes to Financial Statements
<PAGE>
Phoenix Strategic Income Portfolio
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS X
---------------------------------------------------------------------------------
SIX MONTHS FROM
ENDED INCEPTION
5/31/98 YEAR ENDED NOVEMBER 30, 4/1/93 TO
(UNAUDITED) 1997 1996 1995 1994 11/30/93
----------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.99 $ 10.03 $ 9.45 $ 8.97 $10.12 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.41(2) 0.74(2)(8) 0.78(2) 0.91(2) 0.63(2) 0.40(2)
Net realized and unrealized gain (loss) (0.14) 0.09 0.59 0.51 (1.13) 0.12
----------- ------- ------- ------- ------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.27 0.83 1.37 1.42 (0.50) 0.52
----------- ------- ------- ------- ------- ----------
LESS DISTRIBUTIONS
Dividends from net investment income (0.40) (0.75) (0.79) (0.94) (0.59) (0.40)
Dividends from net realized gains (0.37) (0.12) -- -- (0.06) --
----------- ------- ------- ------- ------- ----------
TOTAL DISTRIBUTIONS (0.77) (0.87) (0.79) (0.94) (0.65) (0.40)
----------- ------- ------- ------- ------- ----------
Change in net asset value (0.50) (0.04) 0.58 0.48 (1.15) 0.12
----------- ------- ------- ------- ------- ----------
NET ASSET VALUE, END OF PERIOD $ 9.49 $ 9.99 $10.03 $ 9.45 $ 8.97 $10.12
----------- ------- ------- ------- ------- ----------
----------- ------- ------- ------- ------- ----------
Total return(1) 2.90%(7) 8.58% 15.32% 16.65% (5.26)% 5.35%(7)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $6,370 $6,480 $5,967 $5,170 $1,780 $1,989
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 0.72%(6) 0.65% 0.65% 0.65% 0.65% 0.65%(6)
Net investment income 8.47%(6) 7.45% 8.11% 7.60% 6.64% 6.13%(6)
Portfolio turnover 95%(7) 194% 231% 618% 124% 183%(7)
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------ ------------ ------------
FROM FROM FROM
INCEPTION INCEPTION INCEPTION
3/27/98 TO 3/27/98 TO 3/27/98 TO
5/31/98 5/31/98 5/31/98
(UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.78 $ 9.78 $ 9.78
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.13(3) 0.11(4) 0.14(5)
Net realized and unrealized gain (loss) (0.28) (0.27) (0.30)
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.15) (0.16) (0.16)
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.14) (0.13) (0.13)
Dividends from net realized gains -- -- --
------ ------ ------
TOTAL DISTRIBUTIONS (0.14) (0.13) (0.13)
------ ------ ------
Change in net asset value (0.29) (0.29) (0.29)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.49 $ 9.49 $ 9.49
------ ------ ------
------ ------ ------
Total return (1) (1.59)%(7) (1.65)%(7) (1.66)%(7)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 171 $ 245 $ 98
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.00%(6) 1.75%(6) 1.75%(6)
Net investment income 8.89%(6) 8.05%(6) 8.36%(6)
Portfolio turnover 95%(7) 95%(7) 95%(7)
</TABLE>
(1) Maximum sales charges are not included in total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of $0.12,
$0.22, $0.15, $0.40, $0.34 and $0.35, respectively.
(3) Includes reimbursement of operating expenses by investment adviser of $0.05.
(4) Includes reimbursement of operating expenses by investment adviser of $0.05.
(5) Includes reimbursement of operating expenses by investment adviser of $0.05.
(6) Annualized.
(7) Not annualized.
(8) Computed using average shares outstanding.
See Notes to Financial Statements 43
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix Multi-Portfolio Fund ("the Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. To date, six
Portfolios are offered for sale: Tax-Exempt Bond Portfolio, Mid Cap Portfolio,
International Portfolio, Real Estate Securities Portfolio, Emerging Markets Bond
Portfolio, and Strategic Income Portfolio (formerly the Diversified Income
Portfolio.) Each Portfolio has distinct investment objectives. The Tax-Exempt
Bond Portfolio seeks as high a level of current income exempt from federal
income taxation as is consistent with preservation of capital. The Mid Cap
Portfolio seeks as its investment objective long-term appreciation of capital.
The International Portfolio seeks a high total return consistent with reasonable
risk through investment in an internationally diversified portfolio of equity
securities. The Real Estate Securities Portfolio seeks capital appreciation and
income with approximately equal emphasis. The Emerging Markets Bond Portfolio
seeks to achieve high current income with a secondary objective of long-term
capital appreciation. The Strategic Income Portfolio seeks to maximize current
income by investing in debt securities, with a secondary objective of capital
appreciation.
The Trust offers both Class A and Class B shares on each Portfolio and two
additional classes of shares Class C and Class M on Emerging Markets Bond
Portfolio and Class C and Class X on the Strategic Income Portfolio. Class A
shares are sold with a front-end sales charge of up to 4.75%. Class B shares are
sold with a contingent deferred sales charge which declines from 5% to zero
depending on the period of time the shares are held. Class C shares are sold
with a 1% contingent deferred sales charge if redeemed within one year of
purchase. Class M and Class X are currently closed to new investors. Each class
of shares has identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that such class bears different distribution
expenses and has exclusive voting rights with respect to its distribution plan.
Income and expenses of each Portfolio are borne pro rata by the holders of each
class of shares, except that each class bears distribution expenses unique to
that class.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
A. SECURITY VALUATION:
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price. Debt securities are valued on the basis of
broker quotations or valuations provided by a pricing service which utilizes
information with respect to recent sales, market transactions in comparable
securities, quotations from dealers, and various relationships between
securities in determining value. Short-term investments having a remaining
maturity of 60 days or less are valued at amortized cost which approximates
market. All other securities and assets are valued at fair value as determined
in good faith by or under the direction of the Trustees.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date or, in the case of certain foreign securities, as soon as the Portfolio is
notified. Realized gains and losses are determined on the identified cost basis.
The Trust does not amortize premiums but does amortize discounts except for the
Tax-Exempt Bond Portfolio which amortizes both premiums and discounts over the
life of the respective securities using the effective interest method.
C. INCOME TAXES:
Each of the Portfolios is treated as a separate taxable entity. It is the
policy of each Portfolio in the Trust to comply with the requirements of the
Internal Revenue Code (the Code), applicable to regulated investment companies,
and to distribute substantially all of its taxable and tax-exempt income to its
shareholders. In addition, each Portfolio 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 Portfolio 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, operating
losses and losses deferred due to wash sales and excise tax regulations.
Permanent book and tax basis differences relating to shareholder distributions
will result in reclassifications to paid in capital.
44
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998 (UNAUDITED) (CONTINUED)
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:
The Mid Cap Portfolio, the Emerging Markets Bond Portfolio, the International
Portfolio and the Strategic Income Portfolio may enter into forward currency
contracts in conjunction with the planned purchase or sale of foreign
denominated securities in order to hedge the U.S. dollar cost or proceeds.
Forward currency contracts involve, to varying degrees, elements of market risk
in excess of the amount recognized in the statement of assets and liabilities.
Risks arise from the possible movements in foreign exchange rates or if the
counterparty does not perform under the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts are traded directly between currency traders and
their customers. The contract is marked-to-market daily and the change in market
value is recorded by each Portfolio as an unrealized gain (or loss). When the
contract is closed or offset with the same counterparty, the Portfolio 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. Each Portfolio (other than the Real
Estate Portfolio) 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 Portfolios are 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 Portfolios agree to receive from or pay to the broker an
amount of cash equal to the daily fluctuation in value of the contract. Such
receipts or payments are known as variation margin and are recorded by the
Portfolio as unrealized gains or losses. When the contract is closed, the
Portfolio 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 Portfolio 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 Portfolio (other than the Real Estate Portfolio), 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 Portfolio 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 Portfolios may purchase options which are included in the Portfolio'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.
I. LOAN AGREEMENTS:
The Trust may invest in direct debt instruments which are interests in amounts
owed by a corporate, governmental, or other borrower to lenders or lending
syndicates. The Trust's investments in loans may be in the form of
participations in loans or assignments of all or a portion of loans from third
parties. A loan is often administered by a bank or other financial institution
(the lender) that acts as agent for all holders. The agent administers the terms
of the loan, as specified in the loan agreement. When investing in a loan
participation, the Trust has the right to receive payments of principal,
interest and any fees to which it is entitled only from the lender selling the
loan agreement and only upon receipt by the lender of payments from the
borrower. The Trust generally has no right to enforce compliance with the terms
of the loan agreement with the borrower. As a result, the Trust may be
45
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998 (UNAUDITED) (CONTINUED)
subject to the credit risk of both the borrower and the lender that is selling
the loan agreement. When the Trust purchases assignments from lenders it
acquires direct rights against the borrower on the loan. Direct indebtedness of
emerging countries involves a risk that the government entities responsible for
the repayment of the debt may be unable, or unwilling to pay the principal and
interest when due.
J. SECURITY LENDING:
The Trust (with the exception of the Real Estate Securities Portfolio) loans
securities to qualified brokers through an agreement with State Street Bank &
Trust (the Custodian) and Brown Brothers, Harriman, custodian for the
International Portfolio. Under the terms of the agreement, the Trust receives
collateral with a market value not less than 100% of the market value of loaned
securities. Collateral consists of cash, securities issued or guaranteed by the
U.S. Government or its agencies and the sovereign debt of foreign countries.
Interest earned on the collateral and premiums paid by the borrower are recorded
as income by the Trust net of fees charged by the Custodian for its services in
connection with this securities lending program. Lending portfolio securities
involves a risk of delay in the recovery of the loaned securities or in the
foreclosure on collateral. At May 31, 1998, the Trust had the following market
value of security loans and collateral:
<TABLE>
<CAPTION>
VALUE OF
SECURITIES VALUE OF
ON LOAN COLLATERAL
---------- ----------
<S> <C> <C>
Mid Cap Portfolio................. $14,933,661 $15,434,200
</TABLE>
K. EXPENSES:
Expenses incurred by the Trust with respect to any two or more Portfolios are
allocated in proportion to the net assets of each Portfolio, except where
allocation of direct expense to each Portfolio or an alternative allocation
method can be more fairly made.
L. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS:
The Trust may engage in when-issued or delayed delivery transactions. The
Trust records when-issued securities on the trade date and maintains collateral
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis begin earning interest on the settlement date.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, the Advisers, Phoenix
Investment Counsel, Inc., an indirect majority-owned subsidiary of Phoenix Home
Life Insurance Company ("PHL"), and Duff & Phelps Investment Management ("DPIM")
Co., an indirect wholly-owned subsidiary of PHL, the Adviser for the Real Estate
Securities Portfolio, are entitled to a fee, based upon the following annual
rates as a percentage of the average daily net assets of each Portfolio:
<TABLE>
<CAPTION>
1ST $1-2 $2+
$1 BILLION BILLION BILLION
------------- ----------- -----------
<S> <C> <C> <C>
Tax-Exempt Bond Portfolio...... 0.45% 0.40% 0.35%
Mid Cap Portfolio.............. 0.75% 0.70% 0.65%
International Portfolio........ 0.75% 0.70% 0.65%
Real Estate Securities
Portfolio..................... 0.75% 0.70% 0.65%
Emerging Markets Bond
Portfolio..................... 0.75% 0.70% 0.65%
Strategic Income Portfolio..... 0.55% 0.50% 0.45%
</TABLE>
The respective Advisers have agreed to reimburse the Real Estate Securities
Portfolio and the Strategic Income Portfolio to the extent that total expenses
(excluding interest, taxes, brokerage fees and commissions, and extraordinary
expenses) exceed 1.30% and 1.00%, respectively, of the average daily net assets
for Class A shares, and 2.05% and 1.75%, for Class B shares and 1.75% and 0.75%
for Class C and Class X, respectively. Prior to March 27, 1998, the rate for the
Strategic Income Portfolio Class X was 0.65%.
Phoenix Equity Planning Corporation ("PEPCO") an indirect majority-owned
subsidiary of PHL, which serves as the national distributor of the Trust's
shares has advised the Trust that it retained net selling commissions of $87,882
for Class A shares and deferred sales charges of $228,071 for Class B shares for
the six months ended May 31, 1998. In addition, each Portfolio pays PEPCO a
distribution fee at an annual rate of 0.25% for Class A shares and 1.00% for
Class B and Class C shares applied to the average daily net assets of each
Portfolio. The distributor has advised the Trust that of the total amount
expensed for the six months ended May 31, 1998, $552,963 was retained by the
Distributor and $721,575 was paid out to unaffiliated Participant and $151,557
was paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent of the Trust, PEPCO received a fee for bookkeeping,
administration, and pricing services 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, 0.015% of average daily net assets greater than $500 million; a minimum
fee may apply. PEPCO serves as the Trust's Transfer Agent with State Street Bank
and Trust Company as sub-transfer agent. For the six months ended May 31, 1998,
transfer agent fees were $679,912 of which PEPCO retained $266,963 which is net
of fees paid to State Street.
46
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998 (UNAUDITED) (CONTINUED)
At May 31, 1998 PHL and its affiliates held Phoenix Multi-Portfolio Fund
shares which aggregated the following:
<TABLE>
<CAPTION>
AGGREGATE
NET ASSET
SHARES VALUE
--------- --------------
<S> <C> <C>
Tax-Exempt Bond Portfolio
--Class A............. 159,674 $ 1,797,929
Real Estate Securities Portfolio
--Class A............. 506,071 7,231,755
--Class B............. 12,127 172,567
Emerging Markets Bond Portfolio
--Class A............. 2,040,137 21,951,874
--Class B............. 17,151 183,173
--Class C............. 8,233 88,422
Strategic Income Portfolio
--Class A............. 10,297 97,719
--Class B............. 10,294 97,690
--Class C............. 10,292 97,671
--Class X............. 661,424 6,276,914
</TABLE>
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the six months ended May 31, 1998
(excluding U.S. Government and agency securities, short-term securities, futures
contracts and forward currency contracts) aggregated the following:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -------------
<S> <C> <C>
Tax-Exempt Bond Portfolio...... $14,322,855 $ 21,432,843
Mid Cap Portfolio.............. 497,611,380 596,160,622
International Portfolio........ 64,958,025 51,498,762
Real Estate Securities
Portfolio..................... 4,439,072 3,297,314
Emerging Markets Bond
Portfolio..................... 222,035,102 235,746,269
Strategic Income Portfolio..... 5,551,958 5,096,170
</TABLE>
Purchase and sales of U.S. Government and agency, securities during the six
months ended May 31, 1998, aggregated the following:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -------------
<S> <C> <C>
Strategic Income Portfolio..... $ 861,791 $ 1,117,838
</TABLE>
At May 31, 1998, the Tax-Exempt Bond Portfolio had entered into futures
contracts as follows:
<TABLE>
<CAPTION>
VALUE OF
CONTRACTS MARKET NET
NUMBER OF WHEN VALUE OF UNREALIZED
DESCRIPTION CONTRACTS OPENED CONTRACTS DEPRECIATION
- ------------------ --------------- --------- --------- -------------
<S> <C> <C> <C> <C>
U.S. Treasury Bond
Sept 98
(Short).......... 38 $4,554,063 $4,617,000 $ (62,937)
</TABLE>
Written option activity for the six months ended May 31, 1998 aggregated the
following:
<TABLE>
<CAPTION>
CALL OPTIONS
----------------------------
NUMBER OF AMOUNT
EMERGING MARKETS BOND PORTFOLIO OPTIONS OF PREMIUMS
- ---------------------------------- ------------- -------------
<S> <C> <C>
Options outstanding at
November 30, 1997................ -- $ --
Options written................... 21.0 84,804
Options canceled in closing
purchase transactions............ (5.0) (36,547)
Options expired................... (16.0) (48,257)
Options exercised................. -- --
----- -------------
Options outstanding at May 31,
1998............................. -- $ --
----- -------------
----- -------------
</TABLE>
47
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998 (UNAUDITED) (CONTINUED)
4. FORWARD CURRENCY CONTRACTS
As of May 31, 1998, the International Portfolio had entered into the following
forward currency contracts which contractually obligate the Portfolio to deliver
currencies at specified dates:
<TABLE>
<CAPTION>
NET
CONTRACTS TO IN EXCHANGE SETTLEMENT UNREALIZED
DELIVER FOR DATE VALUE DEPRECIATION
- ----------------- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C>
FF 65,240,000 US10,819,239 06/02/98 $10,906,471 $ (87,232)
DM 17,000,000 US 9,439,200 06/02/98 9,536,471 (97,271)
FL 11,200,000 US 5,517,242 06/02/98 5,575,024 (57,782)
SP 1,170,000,000 US 7,607,975 06/17/98 7,725,743 (117,768)
PE 768,000,000 US 4,139,604 06/17/98 4,210,248 (70,644)
BF 61,200,000 US 1,607,506 07/01/98 1,667,848 (60,342)
FF 27,600,000 US 4,463,997 07/01/98 4,619,896 (155,899)
DM 2,700,000 US 1,463,970 07/01/98 1,515,917 (51,947)
FM 25,700,000 US 4,584,292 07/01/98 4,753,977 (169,685)
IL 18,300,000,000 US10,093,767 07/01/98 10,412,700 (318,933)
IL 10,405,500,000 US 5,695,589 07/01/98 5,920,729 (225,140)
NK 15,000,000 US 1,962,067 07/01/98 1,984,243 (22,176)
FL 2,800,000 US 1,346,348 07/01/98 1,394,603 (48,255)
FL 15,200,000 US 7,364,341 07/01/98 7,570,701 (206,360)
SK 40,400,000 US 5,037,281 07/01/98 5,146,340 (109,059)
SP 310,700,000 US 1,978,855 07/01/98 2,050,837 (71,982)
SF 26,300,000 US17,533,333 07/01/98 17,790,465 (257,132)
PE 75,400,000 US 397,994 07/01/98 413,450 (15,456)
------------
(2,143,063)
------------
------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
FF= French Franc
DM= German Deutschemark
FL= Dutch Florin
SP= Spanish Peseta
PE= Portugese Escudo
BF= Belgian Franc
FM= Finnish Markum
IL= Italian Lira
NK= Norwegian Krone
SK= Swedish Krone
US= U.S. Dollar
SF= Swiss Francs
</TABLE>
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.
This report is not authorized for distribution to prospective investors in
the Phoenix Multi-Portfolio Fund unless preceded or accompanied by an effective
prospectus which includes information concerning the sales charge, the Fund's
record and other pertinent information.
48
<PAGE>
PHOENIX MULTI-PORTFOLIO FUND
101 Munson Street
Greenfield, MA 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
William J. Newman, Senior Vice President
James D. Wehr, Senior Vice President
David L. Albrycht, Vice President
Timothy M. Heaney, Vice President
William E. Keen, III, Vice President
Peter S. Lannigan, Vice President
William R. Moyer, Vice President
Leonard J. Saltiel, Vice President
Michael Schatt, Vice President
Pierre G. Trinque, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary
INVESTMENT ADVISERS
Phoenix Investment Counsel, Inc.
56 Prospect Street
Hartford, CT 06115-0480
Duff & Phelps Investment Management Co.
(Real Estate Securities Portfolio)
55 East Monroe Street, Suite 3600
Chicago, IL 60603
PRINCIPAL UNDERWRITER
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
CUSTODIANS
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Brown Brothers Harriman & Co.
(International Portfolio)
40 Water Street
Boston, MA 02109
TRANSFER AGENT
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, CT 06083-2200
<PAGE>
PHOENIX FUNDS
PO Box 2200
Enfield CT 06083-2200
[LOGO] PHOENIX INVESTMENT PARTNERS
PXP 490A (7/98)
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