1993 Act/Rule 485(b)
As filed with the Securities and Exchange Commission on September 3, 1996
Registration No. 811-9140
File No. 33-80057
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. 2 [ ]
Post-Effective Amendment No. 2 [x]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 4 [x]
(Check appropriate box or boxes.)
Phoenix Duff & Phelps Institutional Mutual Funds
(Exact Name of Registrant as Specified in Charter)
101 Munson Street, Greenfield, MA
(Address of Principal Executive Offices)
01301
(Zip Code)
(800) 814-1897
(Registrant's Telephone Number, including Area Code)
Philip R. McLoughlin
Vice Chairman and Chief Executive Officer
Phoenix Duff & Phelps Corporation
56 Prospect Street
Hartford, Connecticut 06115
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
[x] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant t paragrpah (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post- effective amendment.
Declaration Pursuant to Rule 24f-2: Registrant has registered an indefinite
number of shares of beneficial interest, $1 par value, under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940
for the fiscal year ended December 31, 1996.
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
Cross Reference Sheet
Pursuant to Rule 495
Under the Securities Act of 1933
PART A
Information Required in Prospectus
Item Number Caption
---------------------------------------- -----------------------------------
1. Cover Page Cover Page
2. Synopsis Introduction; Fund Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Introduction;
Management of the Fund
5. Management of the Fund Management of the Fund;
Custodian and Transfer Agent
6. Capital Stock and Other Securities Management of the Fund; Description
of Shares;
Dividends, Distributions and Taxes;
Additional Information
7. Purchase of Securities Being Offered How to Buy Shares; Net Asset Value;
Distribution Plan; How to Redeem
Shares
8. Redemption or Repurchase How to Buy Shares;
How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
PART B
Information required in Statement of Additional Information
Item Number
---------------------------------------- -----------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History The Fund
13. Investment Objectives and Policies Investment Policies;
Investment Restrictions;
Portfolio Turnover
14. Management of the Registrant Management of the Trust
15. Control Persons and Principal
Holders of Securities Management of the Trust
16. Investment Advisory and Other Management of the Trust;
Services Investment Adviser; The National
Distributor and Distribution Plan
17. Brokerage Allocation Brokerage Allocation
18. Capital Stock and Other Securities Purchase of Shares; How to Redeem
Shares
19. Purchase, Redemption and Pricing of
Securities Being Offered Determination of Net Asset Value;
Purchase of Shares; How to Redeem
Shares
20. Tax Status Taxes
21. Underwriter The National Distributor and
Distribution Plan
22. Calculation of Yield Quotations of
Money Market Fund Performance Information
23. Financial Statements Financial Statements
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
101 Munson Street
Greenfield, MA 01301
(800) 814-1897
PROSPECTUS
September 3, 1996
Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund") is a
diversified, open-end management investment company whose shares are
presently offered in six separate portfolios. Each portfolio generally
operates as a separate fund with its own investment objectives and policies
designed to meet its specific investment goals.
Phoenix Duff & Phelps Institutional Balanced Portfolio ("Balanced
Portfolio") seeks as its investment objectives long-term capital growth,
reasonable income and conservation of capital. It is intended that this
Portfolio will invest in common stocks and fixed income securities, with
emphasis on income-producing securities which appear to the Adviser to have
potential for capital appreciation.
Phoenix Duff & Phelps Institutional Managed Bond Portfolio ("Managed Bond
Portfolio") seeks as its investment objective high current income and
appreciation of capital, consistent with prudent investment risk. It is
intended that this Portfolio will invest primarily in a diversified portfolio
of investment grade fixed income securities.
Phoenix Duff & Phelps Institutional Enhanced Reserves Portfolio ("Enhanced
Reserves Portfolio") seeks as its investment objective high current income
consistent with preservation of capital. It is intended that the Portfolio
will invest primarily in U.S. government securities and high grade corporate
debt obligations.
Phoenix Duff & Phelps Institutional Growth Stock Portfolio ("Growth
Portfolio") seeks as its investment objective long-term appreciation of
capital. Since income is not an objective, any income generated by the
investment of this Portfolio's assets will be incidental to its objective. It
is intended that this Portfolio will invest primarily in the common stocks
which have potential for capital appreciation.
Phoenix Duff & Phelps Institutional Money Market Portfolio ("Money Market
Portfolio") seeks as its investment objective as high a level of current
income as is consistent with the preservation of capital and the maintenance
of liquidity. It is intended that this Portfolio will invest solely in a
portfolio of high-quality money market instruments maturing in less than 397
days. An investment in the Portfolio is neither insured nor guaranteed by the
U.S. Government and there can be no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share.
Phoenix Duff & Phelps Institutional U.S. Government Securities Portfolio
("U.S. Government Securities Portfolio") seeks as its investment objective a
high level of current income consistent with safety of principal. It is
intended that this Portfolio will invest primarily in a diversified portfolio
of securities having a weighted average duration generally not to exceed
approximately three years. The securities will be issued or guaranteed by the
U.S. Government or its agencies and backed by the full faith and credit of
the U.S. Government or supported by the ability to borrow from the U.S.
Treasury or by the credit of an agency or otherwise supported by the U.S.
Government.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. No dealer, salesperson or
other person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, and, if given
or made, such other information or representations must not be relied upon as
having been authorized by the Fund, Adviser or Distributor. This Prospectus
does not constitute an offer to sell or solicitation of an offer to buy any
of the securities offered hereby in any state in which or to any person whom
it is unlawful to make such offer. Investors should read and retain this
Prospectus for future reference. Additional information about the Fund is
contained in the Statement of Additional Information dated September 3, 1996
which has been filed with the Securities and Exchange Commission and is
available at no charge by calling (800) 814-1897 or by writing to Phoenix
Equity Planning Corporation, at 100 Bright Meadow Boulevard, P.O. Box 2200,
Enfield, Connecticut 06083-2200. The Statement of Additional Information is
incorporated herein by reference.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, credit union, or affiliated entity and are not
federally insured or otherwise protected by the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board or any other agency and involve
investment risk, including possible loss of principal.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
-------
INTRODUCTION 3
FUND EXPENSES 4
FINANCIAL HIGHLIGHTS 6
PERFORMANCE INFORMATION 10
INVESTMENT OBJECTIVES AND POLICIES 10
PHOENIX DUFF & PHELPS INSTITUTIONAL BALANCED PORTFOLIO 11
Phoenix Duff & Phelps INSTITUTIONAL Managed Bond PORTFOLIO 11
Phoenix Duff & Phelps INSTITUTIONAL Enhanced Reserves PORTFOLIO 12
Phoenix Duff & Phelps INSTITUTIONAL Growth Stock PORTFOLIO 12
Phoenix Duff & Phelps INSTITUTIONAL Money Market PORTFOLIO 13
Phoenix Duff & Phelps INSTITUTIONAL U.S. Government Securities
PORTFOLIO 14
INVESTMENT TECHNIQUES AND RELATED RISKS 14
INVESTMENT RESTRICTIONS 15
MANAGEMENT OF THE FUND 15
DISTRIBUTION PLAN 16
HOW TO BUY SHARES 17
NET ASSET VALUE 18
HOW TO REDEEM SHARES 19
DIVIDENDS, DISTRIBUTIONS AND TAXES 21
ADDITIONAL INFORMATION 21
APPENDIX 23
2
<PAGE>
INTRODUCTION
This Prospectus describes the shares offered by and the operations of
Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund"). The Fund is a
diversified, open-end management investment company established as a
Massachusetts business trust pursuant to an Agreement and Declaration of
Trust dated December 4, 1995, as amended from time to time. The Fund
presently consists of six separate portfolios (the "Portfolios"). Each
Portfolio has a different investment objective and invests primarily in
certain types of securities and is designed to meet different investment
needs.
The Investment Advisers
Phoenix Investment Counsel, Inc. ("PIC") serves as investment adviser to
the Balanced, Managed Bond, Growth, Money Market, and U.S. Government
Securities Portfolios. PIC is a subsidiary of Phoenix Duff & Phelps
Corporation and, prior to November 1, 1995, was an indirect subsidiary of
Phoenix Home Life Mutual Insurance Company. For managing, or directing the
investments of the following Portfolios, PIC is entitled a monthly fee at the
following annual rates based upon the average aggregate daily net asset
values of each such Portfolio up to $1 billion: (a) 0.60% of the average of
the aggregate daily net asset values of the Growth Portfolio; (b) 0.55% of
the average of the aggregate daily net asset values of the Balanced
Portfolio; (c) 0.45% of the average of the aggregate daily net asset values
of the Managed Bond Portfolio; (d) 0.25% of the average of the aggregate
daily net asset values of the Money Market Portfolio; and, (e) 0.30% of the
average of the aggregate daily net asset values of the U.S. Government
Securities Portfolio. Advisory fees for a Portfolio shall decrease by five
basis points at such time as the average aggregate daily net asset value of
such Portfolio exceeds $1 billion. See "Management of the Fund."
Duff & Phelps Investment Management Co. ("DPM") serves as investment
adviser to the Enhanced Reserves Portfolio. DPM is a subsidiary of Phoenix
Duff & Phelps Corporation. DPM is entitled to a monthly fee for managing, or
directing the investments of the Enhanced Reserves Portfolio, at the annual
rate of 0.24% of the average aggregate daily net asset values of such
Portfolio up to $1 billion. Advisory fees shall decrease by five basis points
at such time as the average aggregate daily net asset value of such Portfolio
exceeds $1 billion. PIC and DPM are sometimes collectively referred to as the
"Adviser."
The Distributor and Distribution Plan
Phoenix Equity Planning Corporation ("Equity Planning" or "Distributor"),
serves as National Distributor of the Fund's shares. See "Distribution Plan"
and the Statement of Additional Information. Equity Planning also acts as
financial agent and the Fund's transfer agent (the "Transfer Agent").
The Fund has adopted a distribution plan for Class Y Shares pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"). The distribution plan adopted for Class Y Shares provides that the
Fund shall reimburse the Distributor up to a maximum annual rate of 0.25% of
the Fund's average daily Class Y Share net assets for distribution expenses
incurred in connection with the sale and promotion of Class Y Shares for
furnishing shareholder services. See "Distribution Plan."
Purchase of Shares
Each Portfolio is currently authorized to offer two classes of shares on a
continuous basis. Class X Shares are available to Plans (as hereafter
defined) and institutional investors which initially purchase Class X Shares
whose net asset value exceeds $5 million. Class Y Shares are offered to Plans
and institutional investors which initially purchase Class Y Shares whose net
asset value exceeds $1 million. The minimum subsequent investment for each
class is $100. "Plans" are defined as corporate, public, union and
governmental pension plans. Shares of each class represent an identical
interest in the investment portfolio of a Portfolio, and generally have the
same rights except that Class Y Shares bear the cost of higher distribution
fees which cause the Class Y Shares to have a higher expense ratio and to
receive lower dividends than Class X Shares. See "How To Buy Shares."
Redemption of Shares
Shares may be redeemed at any time at the net asset value per share next
computed after receipt of a redemption request by the Transfer Agent. See
"How to Redeem Shares."
Risk Factors
There can be no assurance that any Portfolio will achieve its respective
investment objectives. In addition, special risks may be presented by the
particular types of securities in which a Portfolio may invest. To the extent
that a Portfolio invests in lower rated securities ("junk bonds"), such an
investment is speculative and involves risks not associated with investment
in higher-rated securities, including overall greater risk of non-payment of
interest and principal and potentially greater sensitivity to general
economic conditions and changes in interest rates. As a result of a
Portfolio's investment in the stock market, net asset values of such
Portfolio will fluctuate in response to changes in the market and economic
conditions, as well as the financial condition and prospects of issuers in
which such Portfolio invests. Certain Portfolios may invest in options,
foreign securities, and financial futures and related options. The risk
factors relevant to investment in each Portfolio should be reviewed and are
set forth in the "Investment Objectives and Policies" and "Investment
Techniques and Related Risks" sections of this Prospectus and Statement of
Additional Information.
3
<PAGE>
FUND EXPENSES
The following table illustrates all pro-forma expenses and fees that a
shareholder is expected to incur.
<TABLE>
<CAPTION>
Class X Shares
-----------------------------------------------------------------------
Managed Enhanced Money U.S. Gov't
Balanced Bond Reserves Growth Market Securities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- ------------------------------- --------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction
Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage
of offering price) None None None None None None
Maximum Sales Load Imposed on
Reinvested Dividends None None None None None None
Deferred Sales Load None None None None None None
Redemption Fees None None None None None None
Exchange Fee None None None None None None
Annual Fund Operating Expenses
(as a percentage of average
net assets)
Management Fees 0.55% 0.45% 0.24% 0.60% 0.25% 0.30%
12b-1 Fees None None None None None None
Other Operating Expenses
(After Reimbursement) (c) 0.10%(a) 0.10%(a) 0.10%(b) 0.10%(a) 0.10%(a) 0.10%(a)
Total Fund Operating
Expenses 0.65% 0.55% 0.34% 0.70% 0.35% 0.40%
</TABLE>
____________
(a) Phoenix Investment Counsel, Inc. has voluntarily agreed to reimburse or
waive Total Fund Operating Expenses of Class X Shares of each Portfolio
(other than the Enhanced Reserves Portfolio), excluding interest, taxes,
brokerage fees, commissions and extraordinary expenses, until December
31, 2001, to the extent that such expenses exceed: 0.65% of the average
annual net asset values of the Balanced Portfolio; 0.55% of the average
annual net asset values of the Managed Bond Portfolio; 0.70% of the
average annual net asset values of the Growth Portfolio; 0.35% of the
average annual net asset values of the Money Market Portfolio; and 0.40%
of the average annual net asset values of the U.S. Government Securities
Portfolio. Total Fund Operating Expenses are estimated to be 0.83%,
0.71%, 0.76%, 0.96% and 1.02% for the Balanced, Managed Bond, Growth,
Money Market and U.S. Government Securities Portfolios, respectively,
absent such reimbursement or waiver and Other Operating Expenses for such
Portfolios are estimated to be 0.28%, 0.26%, 0.16%, 0.71%, and 0.72%,
respectively, absent such reimbursement or waiver.
(b) Duff & Phelps Investment Management Co. has voluntarily agreed to
reimburse or waive Total Fund Operating Expenses of Class X Shares of the
Enhanced Reserves Portfolio, excluding interest, taxes, brokerage fees,
commissions and extraordinary expenses, until December 31, 1997, to the
extent that such expenses exceed: 0.34% of the average annual net asset
values. Total Fund Operating Expenses for the Enhanced Reserves Portfolio
are estimated to be 0.53% absent such reimbursement or waiver and Other
Operating Expenses is estimated to be 0.29% absent such reimbursement or
waiver.
(c) Based on estimated amounts for the current fiscal year.
4
<PAGE>
<TABLE>
<CAPTION>
Class Y Shares
------------------------------------------------------------
U.S.
Managed Enhanced Money Gov't.
Balanced Bond Reserves Growth Market Securities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- -------------------------------- -------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction
Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price) None None None None None None
Maximum Sales Load Imposed on
Reinvested Dividends None None None None None None
Deferred Sales Load None None None None None None
Redemption Fees None None None None None None
Exchange Fee None None None None None None
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management Fees 0.55% 0.45% 0.24% 0.60% 0.25% 0.30%
12b-1 Fees (c) 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Other Operating Expenses
(After Reimbursement) (d) 0.10%(a) 0.10%(a) 0.10%(b) 0.10%(a) 0.10%(a) 0.10%(a)
Total Fund Operating Expenses 0.90% 0.80% 0.59% 0.95% 0.60% 0.65%
</TABLE>
____________
(a) Phoenix Investment Counsel, Inc. has voluntarily agreed to reimburse or
waive Total Fund Operating Expenses of Class Y Shares of each Portfolio
(other than the Enhanced Reserves Portfolio), excluding interest, taxes,
brokerage fees, commissions and extraordinary expenses, until December
31, 2001, to the extent that such expenses exceed: 0.90% of the average
annual net asset values of the Balanced Portfolio; 0.80% of the average
annual net asset values of the Managed Bond Portfolio; 0.95% of the
average annual net asset values of the Growth Portfolio; 0.60% of the
average annual net asset values of the Money Market Portfolio; and 0.65%
of the average annual net asset values of the U.S. Government Securities
Portfolio. Total Fund Operating Expenses are estimated to be 1.08%,
0.96%, 1.01%, 1.21% and 1.27% for the Balanced, Managed Bond, Growth,
Money Market and U.S. Government Securities Portfolios, respectively,
absent such reimbursement or waiver and Other Operating Expenses for such
Portfolios are estimated to be 0.28%, 0.26%, 0.16%, 0.71%, and 0.72%,
respectively, absent such reimbursement or waiver.
(b) Duff & Phelps Investment Management Co. has voluntarily agreed to
reimburse or waive Total Fund Operating Expenses of Class Y Shares of the
Enhanced Reserves Portfolio, excluding interest, taxes, brokerage fees,
commissions and extraordinary expenses, until December 31, 1997, to the
extent that such expenses exceed: 0.59% of the average annual net asset
values. Total Fund Operating Expenses for the Enhanced Reserves Portfolio
are estimated to be 0.78% absent such reimbursement or waiver and Other
Operating Expenses is estimated to be 0.29% absent such reimbursement or
waiver.
(c) Long-term shareholders may pay more in Rule 12b-1 fees than the
equivalent of the maximum front-end sales charges otherwise permitted by
the National Association of Securities Dealers, Inc.
(d) Based on estimated amounts for the current fiscal year.
5
<PAGE>
Cumulative
Expenses
Paid for the
Period
Example* 1 year 3 years
- ---------------------------------------------------------- ------ --------
An investor would pay the following expenses on a $1,000
investment assuming (1) 5% annual return and
(2) redemption at the end of each time period:
Balanced Portfolio
Class X Shares $ 7 $21
Class Y Shares 9 29
Managed Bond Portfolio
Class X Shares 6 18
Class Y Shares 8 26
Enhanced Reserves Portfolio
Class X Shares 3 11
Class Y Shares 6 19
Growth Portfolio
Class X Shares 7 22
Class Y Shares 10 30
Money Market Portfolio
Class X Shares 4 11
Class Y Shares 6 19
U.S. Government Securities Portfolio
Class X Shares 4 13
Class Y Shares 7 21
*The purpose of the table above is to help the investor understand the
various costs and expenses that the investor will bear directly or
indirectly. The example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
For additional information regarding various costs and expenses, see
"Management of the Fund," and "How to Buy Shares."
6
<PAGE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
(Unaudited)
Class X Class Y
------------- --------------
From
Inception From Inception
3/1/96 to 3/1/96 to
6/30/96 6/30/96
------------- --------------
Net asset value, beginning of period $17.90 $17.90
Income from investment operations
Net investment income 0.18(3) (5) 0.17(3) (5)
Net realized and unrealized gain
(loss) 0.14 0.14
------------- --------------
Total from investment operations 0.32 0.31
------------- --------------
Less distributions
Dividends from net investment income (0.17) (0.15)
Dividends from net realized gains -- --
------------- --------------
Total distributions (0.17) (0.15)
------------- --------------
Change in net asset value 0.15 0.16
------------- --------------
Net asset value, end of period $18.05 $18.06
============= ==============
Total return 1.79% (2) 1.70% (2)
Ratios/supplemental data:
Net assets, end of period (thousands) $44,443 $11,553
Ratio to average net assets of:
Operating expenses 0.65% (1) 0.90% (1)
Net investment income 2.99% (1) 2.77% (1)
Portfolio turnover 97% (2) 97% (2)
Average commission rate paid (4) $0.0635 $0.0635
(1) Annualized
(2) Not annualized
(3) Computed using average shares outstanding.
(4) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
(5) Includes reimbursement of operating expenses by investment adviser of
$0.02 and $0.02, respectively.
7
<PAGE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
(Unaudited)
Class X Class Y
------------- --------------
From
Inception From Inception
3/1/96 to 3/1/96 to
6/30/96 6/30/96
------------- --------------
Net asset value, beginning of period $33.84 $33.84
Income from investment operations
Net investment income 0.86(3)(4) 0.82(3)(4)
Net realized and unrealized gain
(loss) (0.32) (0.32)
------------- --------------
Total from investment operations 0.54 0.50
------------- --------------
Less distributions
Dividends from net investment income (0.76) (0.73)
Distributions from net realized gains -- --
------------- --------------
Total distributions (0.76) (0.73)
------------- --------------
Change in net asset value (0.22) (0.23)
------------- --------------
Net asset value, end of period $33.62 $33.61
============= ==============
Total return 1.57%(2) 1.49%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $59,595 $6,811
Ratio to average net assets of:
Operating expenses 0.55%(1) 0.80%(1)
Net investment income 7.46%(1) 7.22%(1)
Portfolio turnover 83%(2) 83%(2)
(1) Annualized
(2) Not annualized
(3) Computed using average shares outstanding.
(4) Includes reimbursement of operating expenses by investment adviser of
$0.04 and $0.04 per share, respectively.
8
<PAGE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
(Unaudited)
Class X Class Y
------------- --------------
From
Inception From Inception
3/1/96 to 3/1/96 to
6/30/96 6/30/96
------------- --------------
Net asset value, beginning of period $ 48.01 $ 48.01
Income from investment operations
Net investment income 0.12 (4) 0.08 (4)
Net realized and unrealized gain 1.07 1.09
------------- --------------
Total from investment operations 1.19 1.17
------------- --------------
Less distributions
Dividends from net investment income (0.11) (0.07)
Distributions from net realized
gains -- --
------------- --------------
Total distributions (0.11) (0.07)
------------- --------------
Change in net asset value 1.08 1.10
------------- --------------
Net asset value, end of period $ 49.09 $ 49.11
============= ==============
Total return 2.49% (2) 2.43% (2)
Ratios/supplemental data:
Net assets, end of period (thousands) $174,030 $22,650
Ratio to average net assets of:
Operating expenses 0.70%(1) 0.95%(1)
Net investment income 0.71%(1) 0.46%(1)
Portfolio turnover 48%(2) 48%(2)
Average commission rate paid(3) $0.0522 $0.0522
(1) Annualized
(2) Not annualized
(3) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
(4) Includes reimbursement of operating expenses by investment adviser of
$0.02 and $0.02, respectively.
9
<PAGE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
(Unaudited)
Class X Class Y
------------- --------------
From
Inception From Inception
3/1/96 to 3/1/96 to
6/30/96 6/30/96
------------- --------------
Net asset value, beginning of period $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.017(1) 0.016(1)
------------- --------------
Total from investment operations 0.017 0.016
------------- --------------
Less distributions
Dividends from net investment
income (0.017) (0.016)
------------- --------------
Change in net asset value -- --
------------- --------------
Net asset value, end of period $ 1.00 $ 1.00
============= ==============
Total return 1.67%(3) 1.58%(3)
Ratios/supplemental data:
Net assets, end of period
(thousands) $11,141 $ 2,993
Ratio to average net assets of:
Operating expenses 0.35% (2) 0.60% (2)
Net investment income 5.06% (2) 4.81% (2)
(1) Includes reimbursement of operating expenses by investment adviser of
$0.005 and $0.005, respectively.
(2) Annualized
(3) Not annualized
10
<PAGE>
PERFORMANCE INFORMATION
The Fund may, from time to time, include the performance history of any or
all of the Portfolios (and each Class thereof) in advertisements, sales
literature or reports to current or prospective shareholders. Both yield and
total return figures are computed separately for Class X and Class Y Shares
of each Portfolio in accordance with formulas specified by the Securities and
Exchange Commission.
Performance data involving the Balanced, Managed Bond, Growth and U.S.
Government Portfolios is based on each such Portfolio's past performance as
separate investment accounts of Phoenix Home Life Mutual Insurance Company
prior to March 1, 1996. This performance data may be relevant as each such
separate account was managed, in all material respects, using substantially
the same investment objectives and policies as those used by such Portfolio.
Standardized average annual total return of each Class shall be calculated
for the preceding one, five and ten year periods (or since inception of the
applicable separate account if it has been in existence less than five or ten
years) by including the corresponding separate account's total return
calculated in accordance with formulas specified by the Securities and
Exchange Commission. The performance of the separate accounts has been
restated to reflect the deduction of the fees and expenses of the classes of
the corresponding Portfolio described in this Prospectus.
Except as above stated, standardized quotations of average annual total
return for each class of shares of each Portfolio will be expressed in terms
of the average annual compounded rate of return of a hypothetical investment
in either Class X or Class Y Shares of each Portfolio over a period of 1, 5,
and 10 years (or up to the life of the class of shares). Standardized total
return quotations reflect the deduction of a proportional share of each
Class's expenses of such Portfolio (on an annual basis), and assume that all
dividends and distributions are reinvested when paid. It is expected that the
performance of Class X Shares shall be better than that of Class Y Shares as
a result of lower distribution fees and certain incrementally lower expenses
paid by Class X Shares. The Fund may also quote supplementally a rate of
total return over different periods of time by means of aggregate, average,
and year-by-year or other types of total return figures.
Performance information may be expressed as yield, effective yield and
total return of either class of the Money Market Portfolio. Current yield for
the Money Market Portfolio will be based on the income earned by the
Portfolio (or Class) over a given 7-day period (less a hypothetical charge
reflecting deductions for expenses taken during the period) and then
annualized, i.e., the income earned in the period is assumed to be earned
every seven days over a 52-week period and is stated in terms of an annual
percentage return on the investment. Effective yield is calculated similarly
but reflects the compounding effect of earnings on reinvested dividends.
The yield of each Portfolio (other than the Money Market Portfolio) will
be computed by dividing the Portfolio's net investment income over a 30-day
period by an average value of invested assets (using the average number of
shares entitled to receive dividends and the maximum offering price per share
at the end of the period), all in accordance with applicable regulatory
requirements. Such amount will be compounded for six months and then
annualized for a twelve-month period to derive the Portfolio's yield for each
class.
Advertisements, sales literature and other communications may contain
information about the Fund or Adviser's current investment strategies and
management style. Current strategies and style may change to respond to a
changing market and economic conditions. From time to time, the Fund may
discuss specific portfolio holdings or industries in such communications. To
illustrate components of overall performance, the Fund may separate its
cumulative and average annual returns into income results and capital gains
or losses; or cite separately as a return figure the equity or bond portion
of a Portfolio's holdings; or compare a Portfolio's equity or bond return
figure to well-known indices of market performance including but not limited
to: the Standard &Poor's 500 Stock Index, Dow Jones Industrial Average, and
Salomon Brothers Corporate and Government Bond Indices.
Performance information for a Portfolio (and each Class thereof) reflects
only the performance of a hypothetical investment in a Class X Shares or
Class Y Shares of that Portfolio during the particular time period in which
the calculations are based. Performance information is not an indication of
future performance. Performance information should be considered in light of
a particular Portfolio's investment objectives and policies, characteristics
and qualities of the Portfolio, and the market conditions during the given
time period, and should not be considered as a representation of what may be
achieved in the future. Investment results will vary from those Portfolios
which previously existed as separate investment accounts particularly as such
separate investment accounts were not registered under the 1940 Act and
therefore were not subject to certain investment restrictions that are
imposed by the 1940 Act. For a description of the methods used to determine
total return, see the Statement of Additional Information.
The Fund's Annual Report, available upon request and without charge, shall
contain a discussion of the performance of each Portfolio and a comparison of
that performance to a securities market index.
INVESTMENT OBJECTIVES
AND POLICIES
Each Portfolio has a different investment objective and is designed to
meet different investment needs. The differences in objectives and policies
among the Portfolios can be expected to affect the investment return of each
Portfolio and the degree of market and financial risk to which each Portfolio
is subject. The investment objective of each Portfolio is a fundamental
policy which may not be changed without the approval of a vote of a majority
of the outstanding shares of that Portfolio. Risks are inherent in the
ownership of any security and there can be no assurance that any Portfolio
will achieve
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its investment objective. The investment policies of each Portfolio will also
affect the rate of portfolio turnover. A high rate of portfolio turnover
generally involves correspondingly greater brokerage commissions or
transaction costs, which are paid directly by the Fund. The rate for each
Portfolio, except the Money Market Portfolio (which does not normally pay
brokerage commissions), is estimated to be as follows: Balanced Portfolio:
250%; Managed Bond Portfolio: 200%; Enhanced Reserves Portfolio: 150%; Growth
Portfolio: 200%; and U.S. Government Securities Portfolio: 75%.
Phoenix Duff & Phelps Institutional Balanced Portfolio
The investment objective of the Balanced Portfolio is to seek long-term
capital growth, reasonable income and conservation of capital. The Portfolio
intends to invest based on combined considerations of risk, income, capital
enhancement and protection of capital value.
It is intended that the Portfolio may invest in any type or class of stock
believed by the Adviser to offer potential for capital appreciation over the
intermediate and long term. The Portfolio may also invest in securities
convertible into common stocks.
At least 25% of the value of this Portfolio's assets will be invested in
fixed income senior securities. The Portfolio intends to emphasize fixed
income senior securities which are rated within the four highest categories
by recognized rating agencies (i.e., AAA to BBB by Standard & Poor's
Corporation, Aaa to Baa by Moody's Investors Service, Inc., AAA to BBB- by
Duff & Phelps Credit Rating Co. ("D&P"), or AAA to BBB by Fitch Investor
Services Inc. D&P is not affiliated with the Portfolio or DPM. Fixed-income
securities which are rated in these categories are sometimes referred to as
"investment grade" securities.) or in unrated securities determined by the
Adviser to be comparable with such rating categories. If, in the Adviser's
opinion, market conditions warrant, the Portfolio may invest up to 10% of the
Portfolio's total net assets, determined at the time of investment, in high
yield, high risk (non-investment grade) securities ("junk bonds") or
non-rated securities of comparable quality. In an effort to protect its
assets against major market declines, or for other temporary defensive
purposes, this Portfolio may actively pursue a policy of retaining cash or
investing part or all of its assets in cash equivalents, such as government
securities and high grade commercial paper.
The price of fixed income securities will generally move in inverse
proportion to interest rates. Lower rated and non-rated fixed-income
securities are predominantly speculative with respect to the issuer's
capacity to repay principal and pay interest. Investment in lower rated and
non-rated convertible fixed-income securities normally involves a greater
degree of market and credit risk than does investment in securities having
higher ratings. In addition, non-rated securities are often less marketable
than rated securities. To the extent that the Portfolio holds any lower rated
or non-rated securities, it may be negatively affected by adverse economic
developments, increased volatility and lack of liquidity.
Phoenix Duff & Phelps Institutional Managed Bond Portfolio
The investment objective of the Managed Bond Portfolio is to generate a
high level of current income and appreciation of capital, consistent with
prudent investment risk, through investment in a diversified portfolio of
bonds.
The "bonds" which the Portfolio will purchase comprise corporate debt
securities which are issued by United States or Canadian corporations and
government securities, domestic and foreign. It is the Adviser's present
intent to purchase principally those government securities which are issued
or guaranteed by the United States government and its agencies or
instrumentalities and by the Government of Canada or any Canadian province,
municipality or governmental agency thereof. Canadian and other foreign
securities will be purchased only if principal and interest with respect to
such securities is payable in United States dollars.
Under normal circumstances, at least 80% of the value of the Portfolio's
total assets in bonds (other than commercial paper) will be represented by
debt securities which have, at the time of purchase, a rating within the four
highest grades as determined by Moody's Investors Service, Inc. (Aaa, Aa, A
or Baa) or Standard Poor's Corporation (AAA, AA, A or BBB) and debt
securities of banks and other issuers which, although not rated as a matter
of policy by either Moody's Investors Service, Inc. or Standard & Poor's
Corporation, are considered by the Adviser to have investment quality
comparable to investment grade securities. If, in the Adviser's opinion,
market conditions warrant, the Portfolio may invest up to 20% of the
Portfolio's total net assets, determined at the time of investment, in high
yield, high risk (non-investment grade) securities ("junk bonds") or
non-rated securities of comparable quality. The Portfolio will seek to
purchase debt securities which have protection against immediate refunding.
The Portfolio may include debt securities which sell at substantial discounts
from par. These securities are low coupon bonds which, during periods of high
interest rates because of their lower acquisition cost, tend to sell at a
yield basis that approaches current interest rates.
The Portfolio also intends to invest in short-term investments such as
U.S. Treasury notes and bills, obligations issued or guaranteed as to
principal or interest by the United States government or any agency or
authority thereof, obligations of U.S. banks and savings and loan
associations (including foreign branches of U.S. banks and U.S. branches of
foreign banks) such as certificates of deposit, time deposits and bankers
acceptances, commercial paper, repurchase agreements with respect to any of
the foregoing obligations. The Adviser intends to achieve appreciation of
capital through sector selection with emphasis on undervalued securities.
When in the opinion of the Adviser, current cash needs or market or economic
conditions warrant, the Portfolio may temporarily retain its assets in cash
or invest part or all of its assets in cash equivalents.
The price of fixed income securities will generally move in inverse
proportion to interest rates. Lower rated and non-rated
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fixed-income securities are predominantly speculative with respect to the
issuer's capacity to repay principal and pay interest. Investment in lower
rated and non-rated convertible fixed-income securities normally involves a
greater degree of market and credit risk than does investment in securities
having higher ratings. In addition, non-rated securities are often less
marketable than rated securities. To the extent that the Portfolio holds any
lower rated or non-rated securities, it may be negatively affected by adverse
economic developments, increased volatility and lack of liquidity.
Phoenix Duff & Phelps Institutional Enhanced Reserves Portfolio
The investment objective of the Enhanced Reserves Portfolio is to seek a
high level of current income consistent with preservation of capital. The
Portfolio seeks to achieve its objective primarily by investing in a
diversified portfolio of U.S. government securities and high grade corporate
debt obligations.
The Portfolio, which is not a money market fund, is designed for investors
who seek a higher yield than a money market fund and less fluctuation in net
asset value than an intermediate-term or long-term bond fund. Under normal
market conditions, the Portfolio intends to invest at least 65% of the total
value of its assets in U.S. government obligations including mortgage-related
securities issued by the U.S. government or its agencies or
instrumentalities, high grade corporate debt obligations and asset-backed
securities. Under normal market conditions, the Enhanced Reserves Portfolio
will invest in high grade securities comprising debt obligations with
maturities greater than one year rated at the time of purchase AAA, AA, or A
by Standard & Poor's Corporation or Aaa, Aa, or A by Moody's Investors
Service, Inc. or rated AAA, AA, or A by Duff & Phelps Credit Rating Co. or
similarly rated by any nationally recognized statistical rating organization.
Short-term debt obligations acquired by the Portfolio will have equivalent
ratings. Under normal market conditions, the Portfolio's dollar weighted
average portfolio quality is expected to be AA or better by Standard & Poor's
Corporation, Moody's Investors Services, Inc. or similarly rated by any
nationally recognized statistical rating organization. The balance of the
Portfolio's assets may be invested in municipal obligations, mortgage-
related securities of private issuers, bank obligations, certain money market
instruments, repurchase agreements, and foreign securities.
The Portfolio may purchase portfolio securities with maturities of greater
than one year. In normal market conditions, however, the duration of the
Portfolio's aggregate portfolio will be approximately one year. The term
"maturity" refers to the time remaining until the final payment on such
security is due taking no account of the pattern of the securities' payments
prior to maturity. "Duration" refers to an alternate measurement of a
security's price sensitivity to changes in interest rates. Duration measures
the expected life of a security by assessing and weighting the present value
of the security's payment pattern. The value of the Portfolio's holdings can
be expected to fall when interest rates rise and vice-versa, according to
changes in prevailing interest rates.
At times the Adviser may judge that market conditions make pursuing the
Portfolio's basic investment strategy inconsistent with the best interests of
its shareholders. At such times, the Adviser may use alternative strategies
primarily designed to reduce fluctuations in the value of the Portfolio's
assets. In implementing these "temporary defensive" strategies, the Portfolio
may, without limitation, invest in high-grade, short-term securities.
Phoenix Duff & Phelps Institutional Growth Stock Portfolio
The investment objective of the Growth Stock Portfolio is to seek
long-term appreciation of capital. Since income is not an objective, any
income generated by the investment of the Portfolio's assets will be
incidental to its objective.
Under normal conditions, the Portfolio will invest at least 65% of its
total assets in any class or type of stock believed by the Adviser to offer
potential for capital appreciation over both the intermediate and long-term.
The Portfolio may also invest in preferred stocks, convertible securities,
preferred stocks and convertible debentures if, in the Adviser's judgment,
such investment will further its investment objective.
When, for temporary defensive purposes (as when market conditions for
growth stocks are adverse), it is determined that other types of investments
appear advantageous on the basis of combined considerations of risk and the
protection of capital values, investments may be made in investment grade
fixed income securities with or without warrants or conversion features. In
an effort to protect its assets against major market declines, or for other
temporary defensive purposes, the Portfolio may actively pursue a policy
whereby it will retain cash or invest part or all of its assets in cash
equivalents.
Investments in common stocks for capital appreciation are subject to the
risks of changing economic and market conditions which may affect the
profitability and financial conditions of the companies in whose securities
the Portfolio is invested and the Adviser's ability to anticipate those
changes. Since investments normally will consist primarily of securities
considered to have potential for appreciation, the assets of the Portfolio
may be considered to be subject to greater risks than would be involved if
the Portfolio invested in securities which do not have such potential.
Phoenix Duff & Phelps Institutional Money Market Portfolio
The principal investment objective for the Money Market Portfolio is to
achieve as high a level of current income as is consistent with safety of
principal and maintenance of liquidity. Investments shall be solely in high
quality short term securities such as commercial paper, notes payable upon
demand and having maturities varying from one day to 397 days, Treasury or
agency obligations or repurchase agreements, municipal notes, Banker's
Acceptances, Certificates of Deposit or any other form of short term
security. The
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dollar-weighted average maturity for any Portfolio investment shall not
exceed 90 days.
Commercial paper held by the Portfolio will be limited to securities rated
in the two highest "short term" rating categories by at least two nationally
recognized statistical rating organizations (one nationally recognized
statistically rating organization if that security only has one rating) or,
if unrated, be issued by companies with an outstanding debt issue currently
rated AA by Standard & Poor's Corporation or Aa by Moody's Investors Service,
Inc. No more than 5% of the Portfolio assets will be invested in securities
not rated in the highest short-term rating category, and, of those
securities, no more than the greater of 1% of the Portfolio's assets or $1
million can be held by any one issuer. Certificates of Deposits must be
issued by banks which have capital, surplus and undivided profits of at least
$100,000,000.
The Portfolio may not necessarily invest in money market instruments
paying the highest available yield at a particular time as a result of
considerations of liquidity and preservation of capital. Rather, consistent
with its investment objective, the Portfolio will attempt to maximize yields
by engaging in portfolio trading and buying and selling portfolio investments
in anticipation of, or in response to, changing economic and money market
conditions and trends. These policies, as well as the relatively short
maturities of obligations to be purchased by the Portfolio, may result in
frequent changes in its portfolio holdings.
The value of the securities in the Portfolio can be expected to vary
inversely to the changes in prevailing interest rates. Thus, if interest
rates increase after a security was purchased, that security, if sold, might
be sold at less than cost. Conversely, if interest rates decline after
purchase, the security, if sold, might be sold at a profit. In either
instance, if the security were held to maturity, no gain or loss would
normally be realized as a result of these fluctuations. Substantial
redemptions of Portfolio shares could require the sale of portfolio
investments at a time when a sale might not be desirable.
Phoenix Duff & Phelps Institutional
U.S. Government Securities Portfolio
The investment objective of the U.S. Government Securities Portfolio is to
seek a high level of current income consistent with safety of principal by
investing at least 80% of Portfolio assets in a diversified portfolio of
securities consisting of: (1) securities issued and guaranteed by the U.S.
Government, (2) securities issued by U.S. Government agencies and
instrumentalities and backed by the full faith and credit of the United
States, and (3) securities issued by U.S. Government agencies and
instrumentalities which are guaranteed by such agencies and instrumentalities
but are not otherwise backed by the full faith and credit of the United
States. The Portfolio is also authorized to invest up to 20% of its value in
short-term instruments.
U.S. Government Securities include (i) U.S. Treasury obligations which
differ only in their interest rates, maturities and times of issuance as
follows: U.S. Treasury Bills (maturity of one year or less), bonds (generally
maturities of greater than ten years), notes (maturity of one to ten years);
(ii) obligations issued or guaranteed by U.S. Government agencies and
instrumentalities that are backed by the full faith and credit of the United
States; such as securities issued by the Federal Housing Administration, the
Government National Mortgage Association ("GNMA"), the Department of Housing
and Urban Development, the Export-Import Bank, the General Services
Administration and the Maritime Administration and certain securities issued
by the Farmers Home Administration and the Small Business Administration;
(iii) obligations issued or guaranteed by U.S. Government agencies or
instrumentalities that are not backed by the full faith and credit of the
United States; such as securities issued by the Farm Credit Financial
Assistance Corporation, Financing Corporation, Federal Home Loan Bank,
Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage
Association ("FNMA"), Farm Credit Banks, Resolution Funding Corporation and
Student Loan Marketing Association. The weighted average duration of of U.S.
Government Securities expected to be held by the Portfolio will generally not
exceed three years. See "Phoenix Duff & Phelps Institutional Enhanced
Reserves Portfolio" for a discussion of the terms "duration" and "maturity".
Although the payment of interest and principal on a portfolio security may
be guaranteed in certain instances by the U.S. Government or one of its
agencies or instrumentalities, the value of units of the Portfolio will
fluctuate in response to interest rate levels. In general, when interest
rates rise, prices of fixed income securities decline. When interest rates
decline, prices of fixed income securities rise.
INVESTMENT TECHNIQUES AND
RELATED RISKS
In addition to the investment policies described above, each Portfolio,
unless otherwise described, may utilize the following investment practices or
techniques:
"When issued" and "delayed delivery" Securities
Each Portfolio may purchase and sell securities on a "when issued" and
"delayed delivery" basis. A Portfolio accrues no income on such securities
until the Portfolio actually takes delivery of such securities. These
transactions are subject to market fluctuation; the value of the securities
at delivery may be more or less than their purchase price. The yields
generally available on comparable securities when delivery occurs may be
higher than yields on the securities obtained pursuant to such transactions.
Because each Portfolio relies on the buyer or seller to consummate the
transaction, failure by the other party to complete the transaction may
result in a Portfolio missing the opportunity of obtaining a price or yield
considered to be advantageous. Each Portfolio will engage in "when issued"
and "delayed delivery" transactions for the purpose of acquiring securities
consistent with the Portfolio's investment objective and policies and not for
the purpose of investment leverage.
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Securities Lending
Each Portfolio may lend its securities to brokers, dealers and financial
institutions provided that the market value of the securities subject to any
such loans does not exceed 25% of the value of the total assets (taken at
market value) of such Portfolio; and receive, as collateral, cash or cash
equivalents which at all times while the loan is outstanding, will be
maintained in amounts equal to at least 102% of the current market value of
the loaned securities. Any cash collateral will be invested in short-term
securities. All fees or charges earned from securities lending will inure to
the benefit of the Portfolio. A Portfolio will have the right to regain
record ownership of loaned securities within six business days and to
exercise beneficial rights such as voting rights and subscription rights.
While a securities loan is outstanding, the Portfolio will receive amounts
equal to any interest or other distributions with respect to the loaned
securities. Any agreement to lend securities shall provide that borrowers are
obligated to return the identical securities or their equivalent at
termination of the loan and, that the Portfolio shall have the right to
retain any collateral or use the same to purchase equivalent securities
should the borrower fail to return securities as required. Lending portfolio
securities involves a risk of delay in the recovery of the loaned securities
and possibly the loss of the collateral if the borrower fails financially.
See the Statement of Additional Information.
Illiquid Securities
Each Portfolio (other than the Money Market Portfolio) may invest up to
15% of its net assets, taken at market values at the time of investment, in
"illiquid securities". The Money Market Portfolio may invest up to 10% of its
net assets, taken at market values at the time of investment, in "illiquid
securities". For this purpose, illiquid securities include any securities
subject to legal or contractual restrictions on resale, securities which must
be registered with the Securities and Exchange Commission before they can be
sold to the public, repurchase agreements maturing in more than seven days,
securities for which market quotations are not readily available, or other
securities which legally or in the Adviser's or Trustees' opinion may be
deemed illiquid. Among other risks unique to certain illiquid securities (as
described elsewhere in this Prospectus and Statement of Additional
Information), illiquid securities may be thinly or not actively traded, and
as a result, a Portfolio utilizing this investment technique may experience
difficulties in valuing or disposing of these securities.
Short-Term Instruments
Each Portfolio (other than the Enhanced Reserves and Money Market
Portfolios) may invest up to 20% of its assets in short term instruments
other than instruments involving U.S. Government Securities. The Enhanced
Reserves Portfolio may invest up to 100% of its assets in short-term
investments. Short term investments will be in high grade short term
securities such as commercial paper, drafts, notes payable upon demand or
having maturities varying from one day to 397 days, municipal notes, Bankers'
Acceptances, Certificates of Deposit or any other form of short term security
but may also include cash should such a holding appear to be consistent with
the goal of maximizing earnings. It is intended that commercial paper held by
these Portfolios will be rated A-1 by Standard & Poor's Corporation or P-1 by
Moody's Investors Service, Inc. or, if unrated, be issued by companies with
an outstanding debt issue currently rated at least AA by Standard & Poor's
Corporation or Aa by Moody's Investors Service, Inc. Certificates of Deposits
must be issued by banks which have capital, surplus and undivided profits of
at least $100,000,000.
Mortgage-Related Securities
Each Portfolio (other than the Growth and Money Market Portfolios) may
invest in securities that directly or indirectly represent a participation
in, or are secured by and payable from, mortgage loans secured by real
property ("Mortgage-Related Securities"). These instruments are referred to
as "derivatives" as their value is derived from the value of the underlying
security or securities. The Mortgage-Related Securities in which these
Portfolios may invest include those with fixed, floating and variable
interest rates and those with interest rates that change based on multiples
of changes in interest rates. Although certain Mortgage-Related Securities
are guaranteed by a third party or otherwise similarly secured, the market
value of the security, which may fluctuate, is not so secured. If these
Portfolios purchase a Mortgage-Related Security at a premium, all or part of
the premium may be lost if there is a decline in the market value of the
security, whether resulting from changes in interest rates or prepayments in
the underlying mortgage collateral. As with other interest-bearing
securities, the prices of certain Mortgage-Related Securities are inversely
affected by changes in interest rates, while other securities which these
Portfolios may purchase may be structured so that their interest rates will
fluctuate inversely (and thus their price will increase as interest rates
rise and decrease as interest rates fall) in response to changes in interest
rates. Though the value of a Mortgage-Related Security may decline when
interest rates rise, the converse is not necessarily true, since in periods
of declining interest rates the mortgages underlying the security are more
likely to prepay. For this and other reasons, a Mortgage-Related Security's
stated maturity may be shortened by unscheduled prepayments on the underlying
mortgages, and, therefore, it is not possible to predict accurately the
security's return. In addition, regular payments received in respect of
Mortgage-Related Securities include both interest and principal. If the
underlying mortgage securities experience greater than anticipated
prepayments of principal, these Portfolios may fail to fully recoup its
initial investment in these securities even if the securities are rated in
the highest rating category by a nationally recognized statistical rating
organization. No assurance can be given as to the return these Portfolios
will receive when these amounts are reinvested.
Each Portfolio (other than the Growth and Money Market Portfolios) may
also invest in securities issued by corporate and other special purpose
entities in which the source of income payments on the securities is a
dedicated pool of assets
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("Asset-Backed Securities"). The securitization techniques used for
Asset-Backed Securities are similar to those used for Mortgage-Related
Securities. The collateral for these securities has included home equity
loans, automobile and credit card receivables, boat loans, computer leases,
airplane leases, mobile home loans, recreational vehicle loans and hospital
and other account receivables.
Financial Futures and Related Options
Each Portfolio (other than the Enhanced Reserves and Money Market
Portfolios) may enter into financial futures contracts and related options.
These instruments are referred to as "derivatives" as their value is derived
from the value of the underlying security or securities. These Portfolios may
purchase and sell financial futures contracts which are traded on a
recognized exchange or board of trade and may purchase exchange- or
board-traded put and call options on financial futures contracts as a hedge
against anticipated changes in the market value of its portfolio securities
or securities which it intends to purchase.
These Portfolios will engage in transactions in financial futures
contracts and related options only for hedging purposes and not for
speculation. In addition, these Portfolios will not purchase or sell any
financial futures contract or related option if, immediately thereafter, the
sum of the cash or U.S. Treasury bills initially committed with respect to
these Portfolios' existing futures and related options positions and the
premiums paid for related options would exceed 2% of the market value of each
Portfolio's total assets. At the time of purchase of a futures contract or a
call option on a futures contract, an amount of cash, U.S. Government
securities or other appropriate high-grade debt obligations equal to the
market value of the futures contract minus these Portfolios' initial margin
deposit with respect thereto will be deposited in a segregated account with
these Portfolios to collateralize fully the position and thereby ensure that
it is not leveraged.
Engaging in transactions in financial futures contracts involves certain
risks, such as the possibility of an imperfect correlation between futures
market prices and cash market prices and the possibility that the Adviser
could be incorrect in its expectations as to the direction or extent of
various interest rate movements, in which case these Portfolios' return might
have been greater had hedging not taken place. There is also the risk that a
liquid secondary market may not exist. The risk in purchasing an option on a
financial futures contract is that these Portfolios will lose the premium it
paid. There may also be circumstances when the purchase of an option on a
financial future contract would result in a loss to these Portfolios while
the purchase or sale of the contract would not have resulted in a loss.
Futures and options may fail as hedging techniques in cases where the price
movements of the securities underlying the options and futures do not follow
the price movements of the portfolio securities subject to the hedge.
Financial losses relating to futures and options are potentially unlimited.
Foreign Securities
Each Portfolio (other than the Money Market and U.S. Government Securities
Portfolios) may purchase foreign securities, including those issued by
foreign branches of U.S. banks. Such investments in foreign securities will
be less than 15% of the total net asset value of the Growth and Balanced
Portfolios, will not exceed 20% of the total net asset value of the Enhanced
Reserves Portfolio and will not exceed 35% of the total net asset value of
the Managed Bond Portfolio at the time of purchase. The Enhanced Reserves,
Managed Bond and Balanced Portfolios may invest in debt obligations issued by
foreign corporations and by foreign governments and their political
subdivisions, which securities will be denominated, and pay interest and
principal, in U.S. dollars.
Investments in foreign securities, particularly those of non-governmental
issuers, involve considerations which are not ordinarily associated with
investing in domestic issues. These Portfolios may invest in a broad range of
foreign securities including equity, debt and convertible securities and
foreign government securities. In connection with investments in foreign
securities, the Portfolio may enter into forward foreign currency exchange
contracts for the purpose of protecting against losses resulting from
fluctuations in exchange rates between the U.S. dollar and a particular
foreign currency denominating a security which the Portfolio holds or intends
to acquire. These Portfolios will not speculate in forward foreign currency
exchange contracts.
Investing in the securities of foreign companies involves special risks
and considerations not typically associated with investing in U.S. companies.
These include differences in accounting, auditing and financial reporting
standards, generally higher commission rates on foreign portfolio
transactions, the possibility of expropriation or confiscatory taxation,
adverse changes in investment or exchange control regulations, political
instability which could affect U.S. investments in foreign countries,
difficulty in invoking legal process abroad and potential restrictions on the
flow of international capital. Additionally, dividends payable on foreign
securities may be subject to foreign taxes withheld prior to distribution.
Foreign securities often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility. Changes in
foreign exchange rates will affect the value of those securities which are
denominated or quoted in currencies other than the U.S. dollar. Many of the
foreign securities held by these Portfolios will not be registered with the
Securities and Exchange Commission and many of the issuers of foreign
securities will not be subject to the Commission's reporting requirements.
Accordingly, there may be less publicly available information about the
securities and about the foreign company or government issuing them than is
available about a domestic company or government entity. Moreover, individual
foreign economies may compare favorably or unfavorably with the United States
economy with respect to such factors as rate of growth, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payment
positions, and economic trends in foreign countries may be difficult to
assess.
Particular risks are posed by investments in third world countries or
so-called "emerging markets." These securities may be especially volatile
based on relative economic,
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political and market conditions present in these countries. These and other
relevant conditions vary widely between emerging market countries. For
instance, certain emerging market countries are either comparatively
undeveloped or are in the process of becoming developed and may consequently
be economically based on a relatively few or closely interdependent
industries. A high proportion of the shares of many emerging market issuers
may also be held by a limited number of large investors trading significant
blocks of securities. While the Portfolios will strive to be sensitive to
publicized reversals of economic conditions, political unrest and adverse
changes in trading status, unanticipated political and social developments
may affect the values of these Portfolios' investments in such countries and
the availability of additional investments in such countries.
The Portfolio may use foreign custodians or sub-custodians in connection
with purchases of foreign securities and may maintain cash and cash
equivalents in the care of a foreign custodian. The amount of cash or cash
equivalents maintained in the care of eligible foreign custodians will be
limited to an amount reasonably necessary to effect foreign securities
transactions. The use of a foreign custodian invokes considerations which are
not ordinarily associated with domestic custodians. These considerations
include the possibility of expropriation, restricted access to books and
records of the foreign custodian, inability to recover assets that are lost
while under the control of the foreign custodian, and the impact of
political, social or diplomatic developments.
Repurchase Agreements
Each Portfolio (other than Money Market and Growth Portfolios) may agree
to purchase portfolio securities subject to the seller's agreement to
repurchase them at a mutually agreed upon date and price. These Portfolios
will enter into such repurchase agreements only with financial institutions
that are deemed to be creditworthy by the Adviser. During the term of any
repurchase agreement, the Adviser will continue to monitor the
creditworthiness of the seller. Although the securities subject to repurchase
agreements may bear maturities exceeding thirteen months, these Portfolios do
not presently intend to enter into repurchase agreements with deemed
maturities in excess of seven days. If in the future a Portfolio were to
enter into repurchase agreements with deemed maturities in excess of seven
days, such Portfolio would do so only if such investment, together with other
illiquid securities, did not exceed 15% of the net value of that Portfolio's
total assets. Default or bankruptcy of the seller would, however, expose the
Portfolio to possible delay in connection with the disposition of the
underlying securities or loss to the extend that proceeds from a sale of the
underlying securities were less than the repurchase price under the
agreement.
Securities and Index Options
The Balanced and U.S. Government Securities Portfolios may write covered
call options and purchase call and put options. Call options on securities
indices will be written only to hedge in an economically appropriate way
portfolio securities which are not otherwise hedged with options or financial
futures contracts and will be "covered" by identifying the specific portfolio
securities being hedged.
These Portfolios will write call options in order to obtain a return on
its investments from the premiums received and will retain the premiums
whether or not the options are exercised. Any decline in the market value of
portfolio securities will be offset to the extent of the premiums received
(net of transaction costs). If an option is exercised, the premium received
on the option will effectively increase the exercise price.
During the option period the writer of a call option has given up the
opportunity for capital appreciation above the exercise price should the
market price of the underlying security increase, but has retained the risk
of loss should the price of the underlying security decline. Writing call
options also involves risks relating to these Portfolios' ability to close
out options it has written.
These Portfolio may invest up to 2% of its total assets in exchange-traded
call and put options on securities and securities indices for the purpose of
hedging against changes in the market value of its portfolio securities.
These Portfolios will invest in call and put options whenever, in the opinion
of the Adviser, a hedging transaction is consistent with the investment
objectives of these Portfolios. These Portfolios may sell a call option or a
put option which it has previously purchased prior to the purchase (in the
case of a call) or the sale (in the case of a put) of the underlying
security. Any such sale would result in a net gain or loss depending on
whether the amount received on the sale is more or less than the premium and
other transaction costs paid on the call or put which is sold. Purchasing a
call or a put option involves the risk that these Portfolio may lose the
premium it paid plus transaction costs.
"Zero-Coupon" and "Payment-in-Kind" Securities
The Balanced Portfolio may invest in so-called "zero-coupon" and
"payment-in-kind" securities. The Internal Revenue Code of 1986, as amended
(the "Code"), requires that regulated investment companies distribute at
least 90% of their net investment income each year, including tax-exempt and
non-cash income. Accordingly, although a Portfolio will receive no coupon
payments on zero coupon securities prior to their maturity and may receive
additional securities in lieu of cash payments on payment-in-kind securities,
a Portfolio is required, in order to maintain the desired tax treatment, to
include in its distributions to shareholders in each year any income
attributable to such securities that is in excess of 10% of a Portfolio's net
investment income in that year.
Municipal Obligations
When conditions warrant, the Bond, Balanced and Enhanced Reserves
Portfolios may invest in obligations issued by or on behalf of state and
local governmental issuers ("Municipal Obligations"), whether or not the
income thereon is exempt from the Federal income tax. The purchase of
Municipal Obligations may be advantageous when, as a result of prevailing
economic, regulatory or other circumstances, the yield of such securities, on
a pre-tax basis, is comparable to that of corporate or U.S. Government
obligations. Dividends paid by this Portfolio that are derived from interest
on Municipal Obligations would be taxable to the Portfolio's shareholders for
Federal income tax purposes. See the Statement of Additional Information.
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INVESTMENT RESTRICTIONS
Each Portfolio may not invest more than 25% of its assets in any one
industry, except the Money Market Portfolio may invest more than 25% of its
assets in the domestic banking industry; and the U.S. Government Securities
Portfolio will invest at least 80% of its net assets in securities backed or
supported by the U.S. Government. In addition to the investment restrictions
described above, each Portfolio's investment program is subject to further
restrictions which are described in the Statement of Additional Information.
The restrictions for each Portfolio described above are fundamental and may
not be changed without shareholder approval.
MANAGEMENT OF THE FUND
The Fund is a mutual fund, technically known as an open- end, diversified
investment company. The Board of Trustees supervises the business affairs and
investments of the Fund, which is managed on a daily basis by each
Portfolio's investment adviser. The Fund was organized as a Massachusetts
business trust on December 4, 1995. The Fund commenced operations on March 1,
1996. The Fund is currently authorized to offer shares of beneficial interest
in series and is currently offering shares of six Portfolios. Two classes of
shares are currently offered by each Portfolio.
The Advisers
Phoenix Investment Counsel, Inc. ("PIC") is the investment adviser for
each Portfolio other than the Enhanced Reserves Portfolio. PIC is located at
56 Prospect Street, Hartford, Connecticut 06115-0480. PIC was originally
organized in 1932 as John P. Chase, Inc. In addition to these Portfolios, PIC
also serves as investment adviser to other entities including Phoenix Series
Fund, Phoenix Multi-Portfolio Fund (all portfolios other than the Real Estate
Securities Portfolio), Phoenix Total Return Fund, Inc., and The Phoenix Edge
Series Fund (all Series other than the Real Estate Securities Series) and as
subadviser to the Chubb America Fund, Inc., SunAmerica Series Trust, JNL
Trust, and American Skandia Trust, among other investment advisory clients.
As of December 31, 1995, PIC had approximately $18.4 billion in assets under
management on a discretionary basis.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning"), a subsidiary of Phoenix Duff & Phelps
Corporation of Chicago, Illinois. Prior to November 1, 1995, PIC and Equity
Planning were indirect, wholly-owned subsidiaries of Phoenix Home Life Mutual
Insurance Company ("Phoenix Home Life") of Hartford, Connecticut. Phoenix
Home Life is a majority shareholder of Phoenix Duff & Phelps Corporation.
Phoenix Home Life is in the business of writing ordinary and group life and
health insurance and annuities. Its principal offices are located at One
American Row, Hartford, Connecticut 06115. Phoenix Duff & Phelps Corporation
is a New York Stock Exchange traded company that provides various financial
advisory services to institutional investors, corporations and individuals
through operating subsidiaries.
Duff & Phelps Investment Management Co. ("DPM") serves as the investment
adviser to the Enhanced Reserves Portfolio. DPM is a subsidiary of Phoenix
Duff & Phelps Corporation. DPM is located at 55 East Monroe Street, Suite
3800, Chicago, Illinois 60603. As of December 31, 1995, DPM had approximately
$14.8 billion in assets under management on a discretionary basis. PIC and
DPM are sometimes collectively referred to as the "Advisers".
The Advisers continuously furnish an investment program for each
applicable Portfolio and manage the investment and reinvestment of the assets
subject at all times to the supervision of the Trustees. Under the terms of
the Investment Advisory Agreements, each Adviser is entitled to a prescribed
fee. For managing, or directing the investments of the following Portfolios,
PIC is entitled a monthly fee at the following annual rates based upon the
average aggregate daily net asset values of each such Portfolio up to $1
billion: (a) 0.60% of the average of the aggregate daily net asset values of
the Growth Portfolio; (b) 0.55% of the average of the aggregate daily net
asset values of the Balanced Portfolio; (c) 0.45% of the average of the
aggregate daily net asset values of the Managed Bond Portfolio; (d) 0.25% of
the average of the aggregate daily net asset values of the Money Market
Portfolio; and, (e) 0.30% of the average of the aggregate daily net asset
values of the U.S. Government Securities Portfolio. DPM is entitled to a
monthly fee for managing, or directing the investments of the Enhanced
Reserves Portfolio, at the annual rate of 0. 24% of the average aggregate
daily net asset values of such Portfolio up to $1 billion. Advisory fees
payable to PIC or DPM, as applicable, shall decrease by five basis points at
such time as the average aggregate daily net asset value of such Portfolio
exceeds $1 billion.
The Investment Advisory Agreements provide that each Adviser will
reimburse the Fund for the amount, if any, by which the total operating
expenses of any applicable Portfolio (including each investment adviser's
compensation, but excluding interest, taxes, brokerage fees and commissions
and extraordinary expenses) for any fiscal year exceed the level of expenses
which such Portfolio is permitted to bear under the most restrictive expense
limitation (which has not been waived) imposed on mutual funds by any State
in which shares of the Portfolio are then qualified for sale. In addition,
PIC has voluntarily agreed to assume Total Fund Operating Expenses of each
Portfolio (other than the Enhanced Reserves Portfolio), excluding interest,
taxes, brokerage fees, commissions and extraordinary expenses, until December
31, 2001, to the extent that such expenses exceed the following percentages
of average annual net asset values:
Class X Shares Class Y Shares
-------------- ---------------
Balanced Portfolio 0.65% 0.90%
Managed Bond Portfolio 0.55% 0.80%
Growth Portfolio 0.70% 0.95%
Money Market Portfolio 0.35% 0.60%
U.S. Government Securities
Portfolio 0.40% 0.65%
DPM has voluntarily agreed to reimburse or waive Total Fund Operating
Expenses of the Enhanced Reserves Portfolio,
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excluding interest, taxes, brokerage fees, commissions and extraordinary
expenses, until December 31, 1997, to the extent that such expenses exceed:
0.34% of the average annual net asset values of Class X Shares of the
Enhanced Reserves Portfolio and .59% of the average annual net asset values
of Class Y Shares of the Enhanced Reserves Portfolio.
The Portfolio Managers
Balanced Portfolio
Mr. George I. Askew serves as portfolio manager of the Balanced Portfolio
and as such is responsible for the day-to-day management of the Portfolio's
holdings. Mr. Askew has served as a research analyst for Phoenix Home Life
Mutual Insurance Company since 1994, and an associate in the investment
banking division of Merrill Lynch & Co., from 1987 until 1992. Mr. Askew
attended the University of California at Los Angeles from 1992 until 1994,
where he obtained his Masters in Business Administration.
Managed Bond Portfolio
Mr. James D. Wehr serves as portfolio manager of the Managed Bond
Portfolio and as such is responsible for the day-to-day management of the
Portfolio's holdings. Mr. Wehr has served as portfolio manager of the Phoenix
Home Life Separate Account P since 1990, Phoenix Tax-Exempt Bond Portfolio of
the Phoenix Multi-Portfolio Fund; Phoenix California Tax Exempt Bond Fund
since 1993 and has been a Vice President of PIC since 1991.
Enhanced Reserves Portfolio
Mr. Marvin E. Flewellen serves as portfolio manager of the Enhanced
Reserves Portfolio and as such is responsible for the day-to-day management
of the Portfolio's holdings. Mr. Flewellen has served as a Vice President and
a Fixed Income Portfolio Manager with DPM since 1994. Mr. Flewellen was a
Second Vice President and portfolio manager with Northern Trust Bank from
1985 until 1994.
Growth Portfolio
Mr. Thomas Melvin serves as portfolio manager of the Growth Portfolio and
as such is responsible for the day-to-day management of the Portfolio's
holdings. Mr. Melvin has served as portfolio manager of Common Stock, Phoenix
Home Life Mutual Insurance Company from 1991 until 1995, and Portfolio
Manager, Constitution Capital Management from 1987 until 1991, and has been a
Vice President of PIC since 1992.
Money Market Portfolio
Ms. Dorothy J. Skaret serves as portfolio manager of the Money Market
Portfolio and as such is responsible for the day-to-day management of the
Portfolio's holdings. Ms. Skaret has served as the portfolio manager of
Phoenix Home Life Separate Account G from 1990 until 1995. Ms Skaret has also
served as the portfolio manager of the Money Market Fund of The Phoenix Edge
Series Fund from 1990 until the present, which also is advised by the
Adviser. Ms. Skaret is also a Vice President of National Securities &
Research Corporation since 1993.
U.S. Government Securities Portfolio
Mr. Christopher J. Kelleher serves as portfolio manager of the U.S.
Government Securities Portfolio and as such is responsible for the day-to-day
management of the Portfolio's holdings. Mr. Kelleher has served as the
portfolio manager of Phoenix Home Life Separate Account U since 1991. Mr.
Kelleher has been a Vice President of PIC since 1991 and is also a Vice
President of National Securities & Research Corporation (since 1993), and
Vice President of The Phoenix Edge Series Fund (since 1989).
The Financial Agent
Equity Planning serves as financial agent of the Fund and, as such,
performs administrative, bookkeeping and pricing services and certain other
administrative functions. As compensation, Equity Planning receives a
quarterly fee based on the average of the aggregate daily net asset values of
the Fund at an annual rate of $300 per $1 million which is expected to equal
approximately the cost to Equity Planning of providing such services.
The Custodians and Transfer Agent
The custodian of the assets of all Portfolios other than the Enhanced
Reserves Portfolio is The Chase Manhattan Bank, N.A., 1 Chase Manhattan
Plaza, Floor 3B, New York, New York 10081. The custodian for the assets of
the Enhanced Reserves Portfolio is State Street Bank and Trust Company, P.O.
Box 1713, Boston, Massachusetts 02101. The Fund has authorized the custodians
to appoint one or more subcustodians for the assets of the Fund held outside
the United States.
Equity Planning serves as transfer agent for the Fund (the "Transfer
Agent") for which it is paid $19.25 plus out-of-pocket expenses for each
designated shareholder account. The Transfer Agent is authorized to engage
sub-agents to perform certain shareholder servicing functions from time to
time for which such agents shall be paid a fee by the Transfer Agent.
Brokerage Commissions
Although the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. prohibit its members from seeking orders for the
execution of investment company portfolio transactions on the basis of their
sales of investment company shares, under such Rules, sales of investment
company shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers
(excluding Equity Planning) who sell shares of the Fund. The Advisers may
also select affiliated broker-dealers to execute transactions for the Fund,
provided that the commissions, fees or other remuneration paid to such
affiliated brokers is reasonable and fair as compared to that paid to
non-affiliated brokers for comparable transactions.
DISTRIBUTION PLAN
Equity Planning serves as the national distributor of the Fund's shares.
Equity Planning is registered as a broker-dealer
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in fifty states. The principal offices of Equity Planning are located at 100
Bright Meadow Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200.
Philip R. McLoughlin is a Trustee and President of the Fund and a director
and officer of Equity Planning. G. Jeffrey Bohne, James M. Dolan, William R.
Moyer, Leonard J. Saltiel, and Nancy G. Curtiss are officers of the Fund and
officers of Equity Planning.
Equity Planning and the Fund have entered into distribution agreements
under which Equity Planning has agreed to use its best efforts to find
purchasers for Fund shares. The Fund has granted Equity Planning the
exclusive right to purchase from the Fund and resell, as principal, shares
needed to fill unconditional orders for Fund shares. Equity Planning may sell
Fund shares through its registered representatives or through securities
dealers with whom it has sales agreements. Equity Planning may also sell Fund
shares pursuant to sales agreements entered into with banks or bank
affiliated securities brokers who, acting as agent for their customers, place
orders for Fund shares with Equity Planning. Although the Glass-Steagall Act
prohibits banks and bank affiliates from engaging in the business of
underwriting, distributing or selling securities (including mutual fund
shares), banking regulators have not indicated that such institutions are
prohibited from purchasing mutual fund shares upon the order and for the
account of their customers. If, because of changes in law or regulations, or
because of new interpretations of existing law, it is determined that agency
transactions of banks or bank affiliated securities brokers are not permitted
under the Glass-Steagall Act, the Trustees will consider what action, if any,
is appropriate. It is not anticipated that termination of sales agreements
with banks or bank affiliated securities brokers would result in a loss to
their customers or a change in the net asset value per share of a Portfolio
of the Fund. The sale of Fund shares through a bank or a securities broker
affiliated with a bank is not expected to preclude the Fund from borrowing
from such bank or from availing itself of custodial or transfer agency
services offered by such bank.
The Trustees have adopted a distribution plan on behalf of the Class Y
Shares pursuant to Rule 12b-1 under the 1940 Act. The Class Y Share
distribution plan (the "Plan") has been approved by Phoenix Home Life as
initial, sole shareholder. The Plan authorizes the payment to Equity Planning
of amounts not exceeding 0.25% annually of the average of the daily net
assets of Class Y Shares of each respective Portfolio for each year elapsed
after the inception of the Plan. Although under no contractual obligation to
do so, the Fund intends to make such payments to Equity Planning as
commissions for Class Y Shares sold, to enable Equity Planning to (i) pay
maintenance or other fees with respect to Class Y Shares (the "Service Fee"),
and (ii) pay bank affiliated securities brokers maintenance or other fees
relating to Class Y Shares purchased by their customers and remaining on the
Fund's books during the period for which such fee is paid. The portion of the
above fees paid by the Fund to Equity Planning as "Service Fees" shall not
exceed 0.25% annually of Class Y Share average daily net assets. Payments,
less the portion thereof paid by Equity Planning to others, may be used by
Equity Planning for its expenses of distributing Class Y Shares. The Fund is
not required to reimburse Equity Planning if expenses of distributing Class Y
Shares exceed payments and any sales charges retained by Equity Planning.
Conversely, payments and sales charges retained by Equity Planning in excess
of expenses incurred in distributing Class Y Shares shall be retained by
Equity Planning as profit. The Plan requires that at least quarterly the
Trustees must review a written report with respect to the amounts expended
under the Plan and the purposes for which such expenditures were made. While
the Plan is in effect, the Fund will be required to commit the selection and
nomination of candidates for Trustees who are not "interested persons" (as
defined in the 1940 Act) to the discretion of other Trustees who are not
interested persons.
HOW TO BUY SHARES
The Fund currently issues two classes of shares for each Portfolio. Class
X Shares are available to Plans (as hereafter defined) and institutional
investors which initially purchase Class X Shares of the Fund whose net asset
value exceeds $5 million. Class Y Shares are offered to Plans and
institutional investors which initially purchase Class Y Shares of the Fund
whose net asset value exceeds $1 million. "Plans" are defined as corporate,
public, union and governmental pension plans. Completed applications for the
purchase of shares should be mailed to State Street Bank and Trust Company,
P.O. Box 8301, Boston, MA 02266-8301.
The minimum subsequent investment for each class is $100. Shares are sold
at the net asset value per share (as described below) next computed after a
completed application or purchase order is received by State Street Bank and
Trust Company together with good and sufficient funds therefor (certified
checks, federal funds wires, and automated clearing house transactions
("ACH")). Completed orders received on a business day prior to 4:00 p.m.
E.S.T. will be processed based on that day's closing net asset value. Sales
of shares may be made through broker-dealers, pension consultants or other
qualified financial agents/institutions.
The minimum initial investment amounts for the purchase of either class of
Fund shares shall be waived with respect to purchases by: (i) Plans and
institutional investors who have been invested in those separate investment
accounts of Phoenix Home Life Mutual Insurance Company described above as of
March 1, 1996; (ii) trust companies, bank trust departments, broker-dealers
financial planners and investment advisers for funds over which such entity
charges an account management fee and which are held in a fiduciary, agency,
advisory, custodial or similar capacity; or (iii) Plans and institutional
investors where the amounts invested represent the redemption proceeds from
the reorganization or merger of other investment companies.
No trail fees are payable to broker-dealers or others in connection with
the purchase, sale or retention of Class X Shares. Equity Planning may pay
broker-dealers and financial institutions exempt from registration pursuant
to the Securities
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<PAGE>
Exchange Act of 1934, as amended, and related regulations ("exempt financial
institutions"), from its own profits and resources, a percentage of the net
asset value of any shares sold as set forth below:
Payment to
Purchase Amount Broker-Dealer
---------------------------- -----------------------
$0 to $5,000,000 0.50%
$5,000,001 to $10,000,000 0.25%
$10,000,001 or more 0.10%
If part of any investment is subsequently redeemed within one year of the
investment date, the broker/dealer or exempt financial institution will
refund to Equity Planning any such amounts paid with respect to the
investment. Equity Planning will sponsor sales contests, training and
educational meetings and provide to all qualifying agents, from its own
profits and resources, additional compensation in the form of trips,
merchandise or expense reimbursement. Broker-dealers or exempt financial
institutions other than Equity Planning may also levy customary additional
charges to shareholders for their services in effecting transactions, if they
notify the Fund of their intention to do so.
Equity Planning intends to pay broker-dealers and exempt financial
institutions with whom it has a sales agreement a service fee of 0.25% of the
average daily net asset value of Class Y Shares sold by such broker-dealers
and exempt financial institutions, subject to future amendment or
termination. Equity Planning will retain all or a portion of the continuing
distribution fee assessed to Class Y shareholders to finance commissions and
related marketing expenses.
Exchange Privileges
Shareholders may exchange Class X or Class Y Shares held in book-entry
form for shares of the same class of other Portfolios of the Fund provided
the following conditions are met: (1) the shares that will be acquired in the
exchange (the "Acquired Shares") are available for sale in the shareholder's
principal place of business; (2) the Acquired Shares are the same class as
the shares to be surrendered (the "Exchanged Shares"); (3) the Acquired
Shares will be registered to the same shareholder account as the Exchanged
Shares; (4) the account value of the shares to be acquired must equal or
exceed the minimum initial or subsequent investment amount, as applicable,
after the exchange is implemented; and (5) the shareholder is qualified to
acquire Fund shares in accordance with the limitations described in this
Prospectus. The Fund reserves the right to refuse exchange purchases by any
person or broker/dealer if, in the Fund's or Adviser's opinion, (a) the
exchange would adversely affect the Fund's ability to invest according to its
investment objectives and policies; (b) the Fund believes that a pattern of
exchanges coincides with a "market timing" strategy; or (c) otherwise
adversely affect the Fund and its shareholders. The Fund reserves the right
to terminate or modify its exchange privileges at any time upon giving
written notice to shareholders at least 60 days in advance. Shareholders are
urged to review their constituent documents and relevant requirements in
order to verify pertinent limitations imposed by retirement plan or group
annuity contract exchange limits as well as restrictions imposed by governing
law.
Telephone Exchange Privileges
Unless a shareholder elects in writing not to participate in the Telephone
Exchange Privilege, shares for which certificates have not been issued may be
exchanged by calling 800-814-1897 provided that the exchange is made between
accounts with identical registrations. Under the Telephone Exchange
Privilege, telephone exchange orders may also be entered on behalf of the
shareholder by his or her registered representative.
The Fund and the Transfer Agent will employ reasonable procedures to
confirm that telephone instructions are genuine. In addition to requiring
identical registrations on both accounts, the Transfer Agent will require
address verification and will record telephone instructions on tape. All
exchanges will be confirmed in writing to the shareholder. To the extent that
procedures reasonably designed to prevent unauthorized telephone exchanges
are not followed, the Fund and/or the Transfer Agent may be liable for
following telephone instructions for exchange transactions that prove to be
fraudulent. Broker/dealers other than Equity Planning have agreed to bear the
risk of any loss resulting from any unauthorized telephone exchange
instruction from the firm or its registered representatives. However, the
shareholder would bear the risk of loss resulting from instructions entered
by an unauthorized third party that the Fund and/or the Transfer Agent
reasonably believe to be genuine. The Telephone Exchange Privilege may be
modified or terminated at any time on 60 days' notice to shareholders. In
addition, during times of drastic economic or market changes, the Telephone
Exchange Privilege may be difficult to exercise or may be suspended
temporarily. The Telephone Exchange Privilege is available only in States
where shares being acquired may be legally sold.
If a shareholder elects not to use the Telephone Exchange Privilege or if
the shares being exchanged are represented by a certificate or certificates,
in order to exchange shares the shareholder must submit a written request to
Equity Planning, 100 Bright Meadow Blvd., Enfield, CT 06083-2200, ATTN:
Phoenix Funds. If the shares are being exchanged between accounts that are
not registered identically, the signature on such request must be guaranteed
by an eligible guarantor institution as defined by the Transfer Agent in
accordance with its signature guarantee procedures. Currently, such
procedures generally permit guarantees by banks, broker dealers, credit
union, national securities exchanges, registered securities associations,
clearing agencies and savings associations. Any outstanding certificate or
certificates for the tendered shares must be duly endorsed and submitted.
NET ASSET VALUE
The net asset value of the shares of each Portfolio of the Fund is
determined once daily as of the close of trading of the
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New York Stock Exchange (the "Exchange"), on days when the Exchange is open
for trading. Net asset value per share of a Portfolio is determined by adding
the values of all securities and other assets of the Portfolio, subtracting
liabilities and expenses, and dividing by the total number of outstanding
shares of the Portfolio. Assets and liabilities are determined in accordance
with generally accepted accounting principles and applicable rules and
regulations of the Securities and Exchange Commission. The total liability
allocated to a class, plus that class's distribution fee and any other
expenses allocated solely to that class, are deducted from the proportionate
interest of such class in the assets of the Portfolio, and the resulting
amount of each is divided by the number of shares of that class outstanding
to produce the net asset value per share.
In determining the value of the assets of each Portfolio (other than the
Money Market Portfolio), the securities for which market quotations are
readily available are valued at market value. The assets of the Money Market
Portfolio are valued on an amortized cost basis absent extraordinary or
unusual market conditions. Debt securities (other than short-term
obligations) including those for which market quotations are not readily
available are normally valued on the basis of valuations provided by a
pricing service when such prices are believed to reflect the fair value of
such securities. Securities listed or traded on a national securities
exchange are valued at the last sale price or, if there has been no recent
sale, at the last bid price. Securities which are primarily traded on foreign
securities exchanges are generally valued at the preceding closing values of
such securities on their respective exchanges. A security that is listed or
traded on more than one exchange is valued at the quotation on the exchange
determined to be the primary market for such security by the Trustees or
their delegates. Securities traded in the over-the-counter market are valued
at the last bid price. Short-term obligations maturing in less than sixty
days are valued at amortized cost, which the Trustees have determined
approximates market. Equity options are valued at the last sale price unless
the bid or asked price is used. Exchange-traded fixed income options are
valued at the last sale price unless there is no sale price, in which event
current prices by market makers are used. Over-the-counter traded fixed
income options are valued based upon current prices provided by market
makers. Financial futures are valued at the settlement price established each
day by the board of trade or exchange on which they are traded. Illiquid
securities are valued at the price determined in good faith by the Trustees
or the Adviser acting at their direction, considering all relevant factors
including but not limited to, prices disseminated by pricing services (when
such prices are believed to reflect the fair value of such securities) and
the value of any comparable securities for which market quotations are
readily available. If an event were to occur after the value of an investment
was so established but before the net asset value per share was determined,
which was likely to materially change the net asset value, then the
instrument would be valued using fair value considerations by the Trustees or
their delegates. If at any time a Portfolio has other investments, such
investments shall be valued at the fair value thereof as determined in good
faith by the Trustees, although the actual calculations may be made by
persons acting pursuant to the direction of the Trustees.
HOW TO REDEEM SHARES
Any holder of shares of any Portfolio may require the Fund to redeem its
shares at any time at the net asset value per share next computed after
receipt of a redemption request in proper written form by State Street Bank
and Trust Company, P.O. Box 8301, Boston, MA 02266-8301, ATTN: Phoenix Duff &
Phelps Institutional Mutual Funds. To be in proper form to redeem shares, (1)
the signature(s) of duly authorized representative(s) of the shareholder must
appear in the appropriate place upon the stock power; (2) the stock power or
any related instruction transmittal must specify the name and account number
of the shareholder exactly as registered; (3) the name of the Portfolio; and
(4) and all such signatures must be guaranteed by an eligible guarantor
institution as determined in accordance with the standards and procedures
established by the Transfer Agent. Currently, such procedures generally
permit guarantees by banks, broker-dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations. Signature(s) must also be guaranteed on any change
of address request submitted in conjunction with any redemption request.
Additional documentation may be required for redemptions by corporations,
partnerships or other organizations, or if redemption is requested by anyone
other than the shareholder(s) of record. Redemption requests will not be
honored until all required documents in proper form have been received.
In addition, each Portfolio maintains a continuous offer to repurchase its
shares, and shareholders may normally sell their shares through securities
dealers, who may charge customary commissions for their services. The
redemption price in such case will be the price as of the close of the
general trading session of the New York Stock Exchange on that day, provided
the order is received by the dealer prior thereto, and is transmitted to the
Distributor prior to the close of its business. No charge is made by the Fund
on redemptions, but shares tendered through investment dealers may be subject
to service charge by such dealers. Payment for shares redeemed will be made
within three days after receipt of the duly endorsed share certificates (if
issued) or written request; provided, however, that redemption proceeds will
not be disbursed until each check used for purchase of shares has been
cleared for payment by the investor's bank which may take up to 15 days after
receipt of the check.
Telephone Redemption Privileges
Unless a shareholder elects in writing not to participate in the Telephone
Redemption Privilege, shareholders may redeem shares valued at up to $100,000
by calling (800) 814-1897. The Fund and the Transfer Agent will employ
23
<PAGE>
reasonable procedures to confirm that telephone instructions are genuine.
Address and bank account information will be verified, telephone redemption
instructions will be recorded on tape, and all redemptions will be confirmed
in writing to the shareholder. If there has been an address change within the
past 60 days, a telephone redemption will not be authorized. To the extent
that procedures reasonably designed to prevent unauthorized telephone
redemptions are not followed, the Fund and/or the Transfer Agent may be
liable for following telephone instructions for redemption transactions that
prove to be fraudulent. Broker/dealers other than Equity Planning have agreed
to bear the risk of any loss resulting from any unauthorized telephone
redemption instruction from the firm or its registered representatives.
However, the shareholder would bear the risk of loss resulting from
instructions entered by an unauthorized person or third party that the Fund
and/or the Transfer Agent reasonably believe to be genuine. The Telephone
Redemption Privilege may be modified or terminated at any time without prior
notice to shareholders. In addition, during times of drastic economic or
market changes, the telephone redemption privilege may be difficult to
exercise and a shareholder should submit a written redemption request, as
described above.
If the amount of the redemption is $500 or more, the proceeds will be
wired to the shareholder's designated U.S. commercial bank account. If the
amount of the redemption is less than $500, the proceeds will be sent by
check to the address of record on the shareholder's account.
Telephone redemption requests must be received by Equity Planning by the
close of trading on the New York Stock Exchange on any day when Equity
Planning is open for business. Requests made after that time or on a day when
Equity Planning is not open for business cannot be accepted by Equity
Planning. The proceeds of a telephone redemption will normally be sent on the
first business day following receipt of the redemption request. However, with
respect to the telephone redemption of shares purchased by check, such
requests will only be effected after the Fund has assured itself that good
payment has been collected for the purchase of shares, which may take up to
15 days.
Systematic Withdrawal Program
The Systematic Withdrawal Program (the "Program") allows shareholders to
periodically redeem a portion of their shares on predetermined monthly,
quarterly, semi-annual or annual dates. In order to participate in the
Program, shareholders must provide written notice to the Transfer Agent
specifying (a) the frequency in which Program redemptions are to occur, (b)
the routing in which proceeds are to be directed into the shareholder's
account, and (c) the priority among Portfolios and classes of shares in which
redemptions are to occur.
Except as provided below, Program payments will be made on or about the
20th day of the month during the frequency period selected by the
shareholder. Program payments may also be processed through Automated
Clearing House (ACH) to the shareholder's account on or about the 10th, 15th
or 25th day of each month. Participants may not redeem sums in any period in
excess of the equivalent of 1% of aggregate Fund holdings (at the net asset
value on the date of redemption) during each month. Program redemptions will
only be effected after the Fund has assured itself that good payment has been
received for the purchase of shares which are to be redeemed.
Class X shareholders participating in the Program must at all times own
shares of the Fund worth $100,000 or more in the aggregate as determined by
the then current net asset value per share. Class Y shareholders
participating in the Program must at all times own shares of the Fund worth
$50,000 or more in the aggregate as determined by the then current net asset
value per share. A shareholder's participation in the Program will also
automatically terminate if redemptions are made outside the Program.
Checkwriting Privileges
Shareholders owning shares of the Enhanced Reserves, Money Market and/or
U.S. Government Securities Portfolios may elect to redeem shares through
checkwriting privileges offered by Equity Planning. In order to exercise this
privilege, qualified shareholders must (a) complete the appropriate
application, (b) submit the required signature card/ incumbency certificate
containing guaranteed signatures of all authorized check signatories, and (c)
designate the priority among Portfolios and classes of shares in which
redemptions are to occur in order to cover the amount of each check.
Applications are available by contacting Equity Planning at 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200 or by calling (800)
814-1897.
Checkwriting privileges are subject to rules and procedures adopted from
time to time by Equity Planning. Checkwriting privileges may be amended or
withdrawn upon ten days prior notice. Equity Planning reserves the right, in
its sole and absolute discretion, to refuse to honor checks and/or terminate
checkwriting privileges with respect to a shareholder in the event that (a)
amounts drawn in any check are less than $500; (b) the shareholder at any
time owns shares of the Fund worth $50,000 or less, as determined by the then
current net asset value(s) per share; (c) the shareholder owns shares of the
Fund worth less than the amount of any check, as determined on the date of
presentment of such check to the Transfer Agent; or (d) honoring a check
requires redemption of shares purchased with sums from the shareholder which
have not been actually and properly received by the Fund (which may take at
least fifteen days after receipt of the check). Presently, there is no charge
to the shareholder for this privilege. Equity Planning reserves the right,
however, to assess charges in connection with checks drawn against
non-sufficient funds or for research expenses.
When a check is presented to Equity Planning for payment, a sufficient
number of full and fractional shares owned by the shareholder and identified
as being available for such purposes will be redeemed to cover the amount of
the check. The number of shares to be redeemed will be determined on the date
the check is received by the Transfer Agent. Checks will be processed on days
in which the New York Stock Exchange is open. If the net asset value(s) of
the shares owned
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<PAGE>
by the shareholder are insufficient to cover the amount of a check presented,
or if good and sufficient funds required to purchase such shares have not
been actually received by the Fund, Equity Planning shall return such check
marked "Non-sufficient Funds" and no shares shall be redeemed. Canceled
checks returned to shareholders shall be deemed to constitute confirmation of
redemptions. Shareholders may not close an account by a withdrawal check.
Redemption-in-kind
To the extent consistent with state and federal law, the Fund may make
payment of the redemption price either in cash or in kind. The Fund has
elected to pay in cash all requests for redemption by any shareholder of
record, but may limit such cash in respect to each shareholder during any 90
day period to the lesser of $250,000 or 1% of the net asset value of the Fund
at the beginning of such period. This election has been made pursuant to Rule
18f-1 under the 1940 Act and is irrevocable while the Rule is in effect
unless the Securities and Exchange Commission, by order, permits its
withdrawal. In case of a redemption in kind, securities delivered in payment
for shares would be valued at the same value assigned to them in computing
the net asset value per share of the Fund. A shareholder receiving such
securities would incur brokerage costs when it sold the securities.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
Each Portfolio will be treated as a separate mutual fund for federal
income tax purposes. Each Portfolio intends to elect to be taxed as a
regulated investment company ("RIC") and qualify as such annually under
Subchapter M of the Internal Revenue Code (the "Code"). As a RIC, each
Portfolio will not be subject to federal income tax on its ordinary income
and net realized gains distributed to its shareholders. Each Portfolio
intends to distribute sufficient ordinary income and net realized capital
gains, if any, annually to avoid the imposition of federal income tax or a
non-deductible 4% excise tax.
Many investors, including most tax qualified plan investors, may be
eligible for preferential federal income tax treatment on distributions
received from the Portfolio and dispositions of shares of the Portfolio. The
Fund has not sought opinions of counsel or applied for a ruling from the
Internal Revenue Service as to whether the assessment of higher distribution
fees with respect to Class Y Shares may result in any dividends or
distributions constituting "preferential dividends" under the Code. Complete
assurances cannot be given when or whether the Fund will receive a favorable
opinion or ruling or, the potential consequences associated with an adverse
determination. This Prospectus does not attempt to describe in any respect
such preferential tax treatment. Any prospective investor that is a trust or
other entity eligible for special tax treatment under the Code that is
considering purchasing shares of the Fund should consult its tax advisor
about the federal, state or local tax consequences particular to it, as
should persons considering whether to have amounts held for their benefit in
such trusts or other entities which intend to invest in shares of the Fund.
Investors that do not receive preferential tax treatment are subject to
federal income tax on distributions received with respect to their shares of
the Fund. Distributions of the Fund's ordinary income and short-term capital
gains are taxable to shareholders as ordinary income whether received in cash
or shares of the Fund's. Designated long-term capital gains distributions are
taxable as long-term capital gains whether distribution in cash or additional
shares and regardless of how long the shareholder owned the shares of the
Fund; however, a loss recognized on the sale of the shares of a Portfolio
held for six months or less will be treated as a long-term capital loss to
the extent of long-term capital gains distributions received on those shares.
Certain designated dividends paid by the Fund may be eligible for the
dividends-received deduction for corporate shareholders. Shareholders should
consult with their tax advisor for additional information concerning the
federal, state, local and foreign tax consequences of purchasing shares of
the Portfolio.
Dividends from net investment income, if any, of the Money Market
Portfolio and Enhanced Reserves Portfolio will be declared daily and paid
monthly. Dividends from net investment income for all other Portfolios will
be accrued and paid semi-annually. Dividends from net realized capital gains,
if any, will be declared and paid annually for all Portfolios. Dividends and
distributions with respect to the shares of any class of any Portfolio will
be payable in full and fractional shares of such class of Portfolio at the
net asset value on the first business day after the record date, or, at the
option of the shareholder, in cash. Any shareholder who purchases shares of a
Portfolio prior to the close of business on the record date for a dividend or
distribution will be entitled to receive such dividend or distribution.
The foregoing is only a summary of some of the important tax
considerations generally affecting the Portfolios and their shareholders.
Shareholders should consult competent tax advisers regarding specific tax
situations.
ADDITIONAL INFORMATION
Organization of the Fund
The capitalization of the Fund consists solely of an unlimited number of
shares of beneficial interest. The Fund currently offers shares in six
different Portfolios, each offering two classes. Holders of shares of a
Portfolio have equal rights with regard to voting, redemptions, dividends,
distributions, and liquidations with respect to that Portfolio (provided that
Class Y Shares of a Portfolio bear higher distribution fees and pay
correspondingly lower dividends per share than Class X Shares of the same
Portfolio). Shareholders of all Portfolios vote on the election of Trustees.
On matters affecting an individual Portfolio (such as approval of an
investment advisory agreement or a change in fundamental investment
policies), a separate vote of that Portfolio is required. On matters
affecting an individual class (such as approval of matters relating to the
Class Y distribution plan), a separate vote of that class is required. Shares
of each Portfolio are fully paid, nonassessable, redeemable and fully
transferable when
25
<PAGE>
they are issued. Shares do not have cumulative voting rights, conversion,
preemptive rights or subscription rights.
The assets received by the Fund for the issue or sale of shares of each
Portfolio and all income, earnings, profits and proceeds thereof, are
allocated to such Portfolio (and class if applicable) subject only to the
rights of creditors, and constitute the underlying assets of such Portfolio
(and class if applicable). The underlying assets of each Portfolio are
required to be segregated on the books of account, and are to be charged with
the expenses in respect to such Portfolio and with a share of the general
expenses of the Fund. Any general expenses of the Fund not readily
identifiable as belonging to a particular Portfolio or class will be
allocated by or under the direction of the Trustees as they determine fair
and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a Massachusetts business trust such as the Fund may be
personally liable for debts or claims against the Fund. The Declaration of
Trust provides that shareholders shall not be subject to any personal
liability for the acts or obligations of the Fund and that every written
agreement, undertaking or obligation made or issued by the Fund shall contain
a provision to that effect. The Declaration of Trust provides for
indemnification out of the trust property for all losses and expenses of any
shareholder held personally liable for the obligations of the Fund. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability, which is considered remote, is limited to circumstances in which
the Fund itself would be unable to meet its obligations.
Prior to March 1, 1996, the Balanced, Managed Bond, Growth, Money Market
and U.S. Government Securities Portfolios existed as the Managed Bond Account
(Separate Account P), Balanced Account (Separate Account L), Growth Stock
Account (Separate Account S), Money Market Account (Separate Account G), and
U.S. Government Account (Separate Account U), respectively; separate
investment accounts of Phoenix Home Life, pursuant to the insurance laws of
the State of New York and the laws of other States. Each separate account was
maintained for the purpose of investing amounts allocated thereto by Phoenix
Home Life under certain group annuity contracts issued by Phoenix Home Life
in connection with pension or profit-sharing plans which meet the
requirements of Section 401(a) of the Internal Revenue Code of 1986, as
amended. The separate accounts were not investment companies, pursuant to the
1940 Act. Accordingly, a risk factor associated with an investment in the
Fund is that it has no operating history as a mutual fund prior to March 1,
1996.
On October 16, 1995, the Board of Directors of Phoenix Home Life approved
the conversion of each such separate account into a corresponding Portfolio
of the Fund. As of March 1, 1996, the net assets of each separate account
were transferred into the corresponding Portfolio of the Fund in exchange for
shares of that Portfolio which were credited to each contractholder in
accordance with the value of that contractholder's separate account units as
of the close of business on such date. Each separate account was then
terminated.
On June 3, 1996 Phoenix Duff & Phelps Institutional Enhanced Reserves
Portfolio, a portfolio of Phoenix Duff & Phelps Institutional Mutual Funds
entered into an Agreement and Plan of Reorganization with Duff & Phelps
Enhanced Reserves Fund, a series of Duff & Phelps Mutual Funds. The Board of
Trustees of the Phoenix Duff & Phelps Institutional Mutual Funds determined
that the Reorganization to combine the assets of the Enhanced Reserves
Portfolio with those of the Enhanced Reserve Fund will achieve greater
operating economies and increased portfolio diversification. At a Special
Meeting of Shareholders of Duff & Phelps Enhanced Reserves Fund held July 19,
1996, the holders of shares of beneficial interest, approved the Agreement
and Plan of Reorganization pursuant to which the Duff & Phelps Enhanced
Reserves Fund transferred all of its net assets to the Phoenix Duff & Phelps
Institutional Enhanced Reserves Portfolio in exchange for corresponding
shares of beneficial interest, of the Phoenix Funds, which shares were then
distributed to shareholders of the Duff & Phelps Enhanced Reserves Fund.
Additional Inquiries
Inquiries and requests for the Statement of Additional Information, the
Annual Report to Shareholders and the Semi-Annual Report to Shareholders
should be directed to Equity Planning at (800) 814-1897 or 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200.
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APPENDIX
A-1 and P-1 Commercial Paper Ratings
The Money Market Portfolio will only invest in commercial paper which at
the date of investment is rated A-1 by Standard & Poor's Corporation or P-1
by Moody's Investors Service, Inc., or, if not rated, is issued or guaranteed
by companies which at the date of investment have an outstanding debt issue
rated AA by Standard & Poor's or Aa by Moody's.
Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P") has
the following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and
cash flow have an upward trend with allowance made for unusual circumstances.
Typically, the issuer's industry is well established and the issuer has a
strong position within the industry. The reliability and quality of
management are unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's
Investors Service, Inc. ("Moody's"). Among the factors considered by Moody's
in assigning ratings are the following: (1) evaluation of the management of
the issuer; (2) economic evaluation of the issuer's industry or industries
and an appraisal of speculative-type risks which may be inherent in certain
areas; (3) evaluation of the issuer's products in relation to competition and
customer acceptance; (4) liquidity; (5) amount and quality of long-term debt;
(6) trend of earnings over a period of ten years; (7) financial strength of a
parent company and the relationship which exists with the issuer; and (8)
recognition by the management of obligations which may be present or may
arise as a result of public interest questions and preparations to meet such
obligations.
Moody's Investors Service, Inc., Corporate Bond Ratings
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they Comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Ca--Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Standard and Poor's Corporation's Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this
category than for bonds in the A category.
BB-B-CCC-CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some
27
<PAGE>
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
D--Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
Fitch Investor Services, Inc.
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA--Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA". Because bonds
rated in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated "F-1+."
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds with
higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited
margin of safety and the need for reasonable business and economic activity
throughout the life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, and D--Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be valued on the
basis of their ultimate recovery value in liquidation or reorganization of
the obligor. "DDD" represents the highest potential for recovery on these
bonds, and "D" represents the lowest potential for recovery.
Plus (+) Minus (-)--Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus
and minus signs however, are not used in the "DDD", "DD", or "D" categories.
Duff & Phelps Credit Rating Co. Rating Scale--Duff & Phelps (not
affiliated with the Fund or DPM) offers ratings for short-term and long-term
debt, preferred stock, structured financings, and insurer's claims paying
ability. D&P ratings are specific to credit quality, i.e., the likelihood of
timely payment for principal, interest, and in the case of a preferred stock
rating, preferred stock dividends. The insurance company claims paying
ability ratings reflect an insurer's ability to meet its claims obligations.
Long-Term Ratings
AAA Highest Quality
AA+, AA, AA- High Quality
A+, A, A- Good Quality
BBB+, BBB, BBB Satisfactory Quality (investment grade)
BB+, B, B- Non-Investment Grade
B+, B, B- Non-Investment Grade
CCC Speculative
28
<PAGE>
Phoenix Duff & Phelps Institutional Mutual Funds
101 Munson Street, Greenfield, Massachusetts 01301
(800) 814-1897
Statement of Additional Information
September 3, 1996
This Statement of Additional Information is not a prospectus but expands upon
and supplements the information contained in the current Prospectus of the
Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund"), dated
September 3, 1996 and should be read in conjunction with it. A copy may be
obtained by calling Phoenix Equity Planning Corporation ("Equity Planning")
at (800) 814-1897, or by writing to Equity Planning at 100 Bright Meadow
Boulevard, P.O. Box 2200, Enfield, Connecticut 06083-2200.
TABLE OF CONTENTS*
PAGE
THE FUND 1
INVESTMENT OBJECTIVES AND POLICIES (7) 1
INVESTMENT RESTRICTIONS (13) 8
PERFORMANCE INFORMATION (7) 10
PERFORMANCE COMPARISONS 11
PORTFOLIO TURNOVER 12
MANAGEMENT OF THE TRUST (13) 12
THE INVESTMENT ADVISERS (13) 20
BROKERAGE ALLOCATION 20
DETERMINATION OF NET ASSET VALUE (18) 21
PURCHASE OF SHARES (17) 22
TAXES (19) 22
THE NATIONAL DISTRIBUTOR (15) 23
ADDITIONAL INFORMATION 24
*Numbers in parenthesis are cross-references to related pages of the Prospectus.
<PAGE>
THE FUND
Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund") is an
open-end management investment company which was organized under
Massachusetts law on December 4, 1995 as a business trust. Prior to March 1,
1996, the Bond, Balanced, Growth, Money Market and U.S. Government Securities
Portfolios existed as the Managed Bond Account ("Separate Account P"),
Balanced Account ("Separate Account L"), Growth Stock Account ("Separate
Account S"), Money Market Account ("Separate Account G"), and U.S. Government
Account ("Separate Account U"), respectively; separate investment accounts of
Phoenix Home Life Mutual Insurance Company pursuant to the insurance laws of
the State of New York and the laws of other States.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of each Portfolio are described in the
"Investment Objectives and Policies" and "Investment Techniques" sections of
the Prospectus. The following discussion supplements the description of the
Portfolio's investment policies and investment techniques information
contained in the Prospectus.
The investment objective of each Portfolio is deemed to be a fundamental
policy and may not be changed without the approval of the shareholders of
that Portfolio. Investment restrictions described in this Statement of
Additional Information are fundamental policies of the Fund and may not be
changed as to any Portfolio without the approval of the Portfolio's
shareholders.
Money Market Instruments.
Certificates of Deposit. Certificates of deposit are generally short-term,
interest-bearing negotiable certificates issued by banks or savings and loan
associations against funds deposited in the issuing institution.
Time Deposits. Time deposits are deposits in a bank or other financial
institution for a specified period of time at a fixed interest rate for which
a negotiable certificate is not received.
Banker's Acceptances. A bankers' acceptance is a time draft drawn on a
commercial bank by a borrower usually in connection with an international
commercial transaction (to finance the import, export, transfer or storage of
goods). The borrower, as well as the bank, is liable for payment, and the
bank unconditionally guarantees to pay the draft at its face amount on the
maturity date. Most acceptances have maturities of six months or less and are
traded in secondary markets prior to maturity.
Commercial Paper. Commercial paper refers to short-term, unsecured
promissory notes issued by corporations to finance short-term credit needs.
Commercial paper is usually sold on a discount basis and has a maturity at
the time of issuance not exceeding nine months.
Corporate Debt Securities. Corporate debt securities with a remaining
maturity of less than one year tend to become extremely liquid and are traded
as money market securities.
U.S. Government Obligations. Securities issued or guaranteed as to
principal and interest by the United States Government include a variety of
Treasury securities, which differ only in their interest rates, maturities,
and times of issuance. Treasury bills have maturities of one year or less.
Treasury notes have maturities of one to ten years, and Treasury bonds
generally have maturities of greater than ten years. Agencies of the United
States Government which issue or guarantee obligations include, among others,
Export-Import Banks of the United States, Farmers Home Administration,
Federal Housing Administration, Government National Mortgage Association,
Maritime Administration, Small Business Administration and The Tennessee
Valley Authority. Obligations of instrumentalities of the United States
Government include securities issued or guaranteed by, among others, the
Federal National Mortgage Association, Federal Home Loan Banks, Federal Home
Loan Mortgage Corporation, Federal Intermediate Credit Banks, Banks for
Cooperatives, and the U.S. Postal Service. Some of these securities are
supported by the full faith and credit of the U.S. Government; others are
supported by the right of the issuer to borrow from the Treasury, while still
others are supported only by the credit of the instrumentality. The U.S.
Government Securities Fund will invest primarily in securities which are
supported by the full faith and credit of the U.S. Government.
Repurchase Agreements. The repurchase price under the repurchase
agreements described in the Prospectus generally equals the price paid by the
Fund plus interest negotiated on the basis of current short-term rates (which
may be more or less than the rate on the securities underlying the repurchase
agreement). Securities subject to repurchase agreements are held by the
Fund's custodian (or sub-custodian) or in the Federal Reserve/Treasury
book-entry system. Repurchase agreements are considered to be loans under the
Investment Company Act of 1940 as amended (the "1940 Act").
Reverse Repurchase Agreements. At the time the Fund enters into a reverse
repurchase agreement (an agreement under which the Fund sells portfolio
securities and agrees to repurchase them at an agreed-upon date and price),
it will place in a segregated custodial account liquid assets such as U.S.
Government securities or other liquid high grade debt securities having a
value equal to or greater than the repurchase price (including accrued
interest) and will subsequently monitor the account to ensure that such value
is maintained. Reverse repurchase agreements involve the risk that the market
value of the securities sold by the Fund may decline below the price of the
securities it is obligated to repurchase. Reverse repurchase agreements are
considered to be borrowings under the 1940 Act.
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Bank Obligations. For purposes of a Portfolio's investment policies with
respect to bank obligations, the assets of a bank or savings institution will
be deemed to include the assets of its domestic and foreign branches.
Municipal Obligations. Municipal Obligations include debt obligations
issued by or on behalf of states, territories and possessions of the United
States and the District of Columbia and their political subdivisions,
agencies and instrumentalities to obtain funds for various public purposes,
including the construction of a wide range of public facilities, the
refunding of outstanding obligations, the payment of general operating
expenses and the extension of loans to public institutions and facilities.
The two principal classifications of Municipal Obligations consist of
"general obligation" and "revenue" issues. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power for the
payment of principal and interest, and, accordingly, the capacity of the
issuer of a general obligation bond as to the timely payment of interest and
the repayment of principal when due is affected by the issuer's maintenance
of its tax base. Revenue bonds are payable only from the revenues derived
from a particular facility or class of facilities or, in some cases, from the
proceeds of a special tax or other specific revenue source; accordingly, the
timely payment of interest and the repayment of principal in accordance with
the terms of such bonds is a function of the economic viability of such
facility or revenue source. The Bond, Balanced and Enhanced Reserves
Portfolios may include "moral obligation" issues, which are normally issued
by special purpose authorities. There are, of course, variations in the
quality of Municipal Obligations both within a particular classification and
between classifications, and the yields on Municipal Obligations depend upon
a variety of factors, including general money market conditions, the
financial condition of the issuer, general conditions of the municipal bond
market, the size of a particular offering, the maturity of the obligation and
the rating of the issue.
Certain types of Municipal Obligations (private activity bonds) are or
have been issued to obtain funds to provide privately operated housing
facilities, pollution control facilities, convention or trade show
facilities, mass transit, airport, port or parking facilities and certain
local facilities for water supply, gas, electricity or sewage or solid waste
disposal. Private activity bonds are also issued by privately held or
publicly owned corporations in the financing of commercial or industrial
facilities. State and local governments are authorized in most states to
issue private activity bonds for such purposes in order to encourage
corporations to locate within their communities. The principal and interest
on these obligations may be payable from the general revenues of the users of
such facilities.
From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the Federal income tax exemption for
interest on Municipal Obligations. For example, under the Federal tax
legislation enacted in 1986, interest on certain private activity bonds must
be included in an investor's alternative minimum taxable income, and
corporate investors must treat all tax-exempt interest as an item of tax
preference. Dividends paid by the Portfolio that are derived from interest of
Municipal Obligations would be taxable to the Portfolio shareholders for
Federal income tax purposes.
Insured Municipal Obligations. Certain of the Municipal Obligations held
by a Portfolio may be insured as to the timely payment of principal and
interest. The insurance policies will usually be obtained by the issuer of
the Municipal Obligation at the time of its original issuance. In the event
that the issuer defaults on interest or principal payment, the insurer will
be notified and will be required to make payment to the bondholders. There
is, however, no guarantee that the insurer will meet its obligations. In
addition, such insurance will not protect against market fluctuations caused
by changes in interest rates and other factors.
Stand-By Commitments. Under a stand-by commitment, a dealer or bank agrees
to purchase from the Fund, at the Fund's option, specified Municipal
Obligations at their amortized cost value to the Fund plus accrued interest,
if any. Stand-by commitments may be sold, transferred or assigned by the Fund
only with the underlying Municipal Obligation. The Fund expects that stand-by
commitments will generally be available without the payment of any direct or
indirect consideration. However, if necessary or advisable, the Fund may pay
for a stand-by commitment either separately in cash or by paying a higher
price for portfolio securities which are acquired subject to the commitment
(thus reducing the yield to maturity otherwise available for the same
securities). Where the Fund paid any consideration directly or indirectly for
a stand-by commitment, its cost would be reflected as unrealized depreciation
for the period during which the commitment was held by the Fund.
The Fund intends to enter into stand-by commitments only with dealers,
banks and broker-dealers which, in the Adviser's opinion, present minimal
credit risks. The Fund's reliance upon the credit of these dealers, banks and
broker-dealers will be secured by the value of the underlying Municipal
Obligations that are subject to the commitment. In evaluating the
creditworthiness of the issuer of a stand-by commitment, the Adviser will
review periodically the issuer's assets, liabilities, contingent claims and
other relevant financial information. The Fund would acquire stand-by
commitments solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes. Stand-by commitments
acquired by the Fund would be valued at zero in determining net asset value.
When-Issued and Delayed Delivery Transactions. When a Portfolio agrees to
purchase securities on a when-issued or delayed delivery basis, its custodian
will set aside cash, U.S. Government securities or other liquid high-grade
debt obligations equal to the amount of the purchase or the commitment in a
separate account. Normally, the custodian will set aside portfolio securities
to meet this requirement. The market value of the separate account will be
monitored and if such market value declines,
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the Portfolio will be required subsequently to place additional assets in the
separate account in order to ensure that the value of the account remains
equal to the amount of the Portfolio's commitments. Because a Portfolio will
set aside cash or liquid high-grade debt securities in the manner described,
the Portfolio's liquidity and ability to manage its portfolio might be
affected in the event its when-issued purchases or delayed delivery
commitments ever exceeded 25% of the value of its assets. In the case of a
delayed delivery of the sale of portfolio securities, the Portfolio's
custodian will hold the portfolio securities themselves in a segregated
account while the commitment is outstanding.
A Portfolio will make commitments to purchase securities on a when-issued
basis or delayed delivery basis only with the intention of completing the
transaction and actually purchasing or selling the securities. If deemed
advisable as a matter of investment strategy, however, the Portfolio may
dispose of or renegotiate a commitment after it is entered into, and may sell
securities it has committed to purchase before those securities are delivered
to the Portfolio on the settlement date. In these cases the Portfolio may
realize a capital gain or loss. When a Portfolio engages in when-issued and
delayed delivery transactions, it relies on the other party to consummate the
trade. Failure of such party to do so may result in the Portfolio's incurring
a loss or missing an opportunity to obtain a price considered to be
advantageous.
The value of the securities underlying a when-issued purchase or a delayed
delivery to purchase securities, and any subsequent fluctuations in their
value, is taken into account when determining a Portfolio's net asset value
starting on the day a Portfolio agrees to purchase the securities. The
Portfolio does not earn interest on the securities it has committed to
purchase until they are paid for and delivered on the settlement date. When a
Portfolio makes a delayed delivery of the sale of securities it owns, the
proceeds to be received upon settlement are included in the Portfolio's
assets, and fluctuations in the value of the underlying securities are not
reflected in the Portfolio's net asset value as long as the commitment
remains in effect.
Securities and Index Options. The Balanced and U.S. Government Securities
Portfolios may write covered call options and purchase call and put options.
Options and the related risks are summarized below.
Writing and Purchasing Options. Call options written by a Portfolio
normally will have expiration dates between three and nine months from the
date written. During the option period a Portfolio may be assigned an
exercise notice by the broker-dealer through which the call option was
sold, requiring the Portfolio to deliver the underlying security (or cash
in the case of securities index calls) against payment of the exercise
price. This obligation is terminated upon the expiration of the option
period or at such earlier time as the Portfolio effects a closing purchase
transaction. A closing purchase transaction cannot be effected with
respect to an option once the Portfolio has received an exercise notice.
The exercise price of a call option written by a Portfolio may be below,
equal to or above the current market value of the underlying security or
securities index at the time the option is written.
A multiplier for an index option performs a function similar to the unit
of trading for an option on an individual security. It determines the
total dollar value per contract of each point between the exercise price
of the option and the current level of the underlying index. A multiplier
of 100 means that a one-point difference will yield $100. Options on
different indices may have different multipliers.
Securities indices for which options are currently traded include the
Standard & Poor's 100 and 500 Composite Stock Price Indices,
Computer/Business Equipment Index, Major Market Index, Amex Market Value
Index, Computer Technology Index, Oil and Gas Index, NYSE Options Index,
Gaming/Hotel Index, Telephone Index, Transportation Index, Technology
Index, and Gold/Silver Index. A Portfolio may write call options and
purchase call and put options on any other indices traded on a recognized
exchange.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option written by a Portfolio, to prevent an
underlying security from being called, or to enable a Portfolio to write
another call option with either a different exercise price or expiration
date or both. A Portfolio may realize a net gain or loss from a closing
purchase transaction, depending upon whether the amount of the premium
received on the call option is more or less than the cost of effecting the
closing purchase transaction. If a call option written by a Portfolio
expires unexercised, a Portfolio will realize a gain in the amount of the
premium on the option less the commission paid.
The option activities of a Portfolio may increase its portfolio turnover
rate and the amount of brokerage commissions paid. A Portfolio will pay a
commission each time it purchases or sells a security in connection with
the exercise of an option. These commissions may be higher than those
which would apply to purchases and sales of securities directly.
Limitations on Options. A Portfolio may write call options only if they
are covered and if they remain covered so long as a Portfolio is obligated
as a writer. If a Portfolio writes a call option on an individual
security, a Portfolio will own the underlying security at all times during
the option period. A Portfolio will write call options on indices only to
hedge in an economically appropriate way portfolio securities which are
not otherwise hedged with options or financial futures contracts. Call
options on securities indices written by a Portfolio will be "covered" by
identifying the specific portfolio securities being hedged.
To secure the obligation to deliver the underlying security, the writer
of a covered call option on an individual security is required to deposit
the underlying security or other assets in escrow with the broker in
accordance with clearing corporation
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and exchange rules. In the case of an index call option written by a
Portfolio, a Portfolio will be required to deposit qualified securities. A
"qualified security" is a security against which a Portfolio has not
written a call option and which has not been hedged by a Portfolio by the
sale of a financial futures contract. If at the close of business on any
day the market value of the qualified securities falls below 100% of the
current index value times the multiplier times the number of contracts, a
Portfolio will deposit an amount of cash or liquid assets equal in value
to the difference. In addition, when a Portfolio writes a call on an index
which is "in-the-money" at the time the call is written, a Portfolio will
segregate with its custodian bank cash or liquid assets equal in value to
the amount by which the call is "in-the-money" times the multiplier times
the number of contracts. Any amount segregated may be applied to a
Portfolio's obligation to segregate additional amounts in the event that
the market value of the qualified securities falls below 100% of the
current index value times the multiplier times the number of contracts.
A Portfolio may invest up to 2% of its total assets in exchange-traded
call and put options. A Portfolio may sell a call option or a put option
which it has previously purchased prior to the purchase (in the case of a
call) or the sale (in the case of a put) of the underlying security. Any
such sale of a call option or a put option would result in a net gain or
loss, depending on whether the amount received on the sale is more or less
than the premium and other transaction costs paid. In connection with a
Portfolio qualifying as a regulated investment company under the Internal
Revenue Code, other restrictions on a Portfolio's ability to enter into
option transactions may apply from time to time. See "Taxes."
Risks Relating to Options. During the option period, the writer of a call
option has, in return for the premium received on the option, given up the
opportunity for capital appreciation above the exercise price should the
market price of the underlying security increase, but has retained the
risk of loss should the price of the underlying security decline. The
writer has no control over the time when it may be required to fulfill its
obligation as a writer of the option.
The risk of purchasing a call option or a put option is that a Portfolio
may lose the premium it paid plus transaction costs. If a Portfolio does
not exercise the option and is unable to close out the position prior to
expiration of the option, it will lose its entire investment.
An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. Although a Portfolio
will write and purchase options only when the Adviser believes that a
liquid secondary market will exist for options of the same series, there
can be no assurance that a liquid secondary market will exist for a
particular option at a particular time and that a Portfolio, if it so
desires, can close out its position by effecting a closing transaction. If
the writer of a covered call option is unable to effect a closing purchase
transaction, it cannot sell the underlying security until the option
expires or the option is exercised. Accordingly, a covered call writer may
not be able to sell the underlying security at a time when it might
otherwise be advantageous to do so.
Possible reasons for the absence of a liquid secondary market on an
exchange include the following: (i) insufficient trading interest in
certain options; (ii) restrictions on transactions imposed by an exchange;
(iii) trading halts, suspensions or other restrictions imposed with
respect to particular classes or series of options or underlying
securities; (iv) inadequacy of the facilities of an exchange or the
clearing corporation to handle trading volume; and (v) a decision by one
or more exchanges to discontinue the trading of options or impose
restrictions on orders.
Each exchange has established limitations governing the maximum number of
call options, whether or not covered, which may be written by a single
investor acting alone or in concert with others (regardless of whether
such options are written on the same or different exchanges or are held or
written on one or more accounts or through one or more brokers). An
exchange may order the liquidation of positions found to be in violation
of these limits and it may impose other sanctions or restrictions. The
Adviser believes that the position limits established by the exchanges
will not have any adverse impact upon a Portfolio or all of the
Portfolios, in the aggregate.
Risks of Options on Indices. Because the value of an index option depends
upon movements in the level of the index rather than movements in the
price of a particular security, whether a Portfolio will realize a gain or
loss on the purchase or sale of an option on an index depends upon
movements in the level of prices in the market generally or in an industry
or market segment rather than upon movements in the price of an individual
security. Accordingly, successful use by a Portfolio of options on indices
will be subject to the Adviser's ability to predict correctly movements in
the direction of the market generally or in the direction of a particular
industry. This requires different skills and techniques than predicting
changes in the prices of individual securities.
Index prices may be distorted if trading of certain securities included
in the index is interrupted. Trading in index options also may be
interrupted in certain circumstances, such as if trading were halted in a
substantial number of securities included in the index. If this occurred,
a Portfolio would not be able to close out options which it had written or
purchased and, if restrictions on exercise were imposed, might be unable
to exercise an option it purchased, which would result in substantial
losses to a Portfolio. However, it is the Fund's policy to write or
purchase options only on indices which include a sufficient number of
securities so that the likelihood of a trading halt in the index is
minimized.
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Because the exercise of an index option is settled in cash, an index call
writer cannot determine the amount of its settlement obligation in advance
and, unlike call writing on portfolio securities, cannot provide in
advance for its potential settlement obligation by holding the underlying
securities. Consequently, a Portfolio will write call options on indices
only subject to the limitations described above.
Price movements in securities in a Portfolio's holdings will not
correlate perfectly with movements in the level of the index and,
therefore, a Portfolio bears the risk that the price of the securities
held by the Portfolio may not increase as much as the level of the index.
In this event, the Portfolio would bear a loss on the call which would not
be completely offset by movements in the prices of a Portfolio's portfolio
securities. It is also possible that the index may rise when the value of
a Portfolio's holdings securities does not. If this occurred, the
Portfolio would experience a loss on the call which would not be offset by
an increase in the value of its portfolio and might also experience a loss
in the market value of portfolio securities.
Unless a Portfolio has other liquid assets which are sufficient to
satisfy the exercise of a call on an index, a Portfolio will be required
to liquidate portfolio securities in order to satisfy the exercise.
Because an exercise must be settled within hours after receiving the
notice of exercise, if a Portfolio fails to anticipate an exercise, it may
have to borrow from a bank (in an amount not exceeding 10% of a
Portfolio's total assets) pending settlement of the sale of securities in
its portfolio and pay interest on such borrowing.
When a Portfolio has written a call on an index, there is also a risk
that the market may decline between the time a Portfolio has the call
exercised against it, at a price which is fixed as of the closing level of
the index on the date of exercise, and the time a Portfolio is able to
sell securities in its portfolio. As with options on portfolio securities,
a Portfolio will not learn that a call has been exercised until the day
following the exercise date but, unlike a call on a portfolio security
where a Portfolio would be able to deliver the underlying security in
settlement, a Portfolio may have to sell part of its portfolio securities
in order to make settlement in cash, and the price of such securities
might decline before they could be sold.
If a Portfolio exercises a put option on an index which it has purchased
before final determination of the closing index value for that day, it
runs the risk that the level of the underlying index may change before
closing. If this change causes the exercised option to fall
"out-of-the-money" a Portfolio will be required to pay the difference
between the closing index value and the exercise price of the option
(multiplied by the applicable multiplier) to the assigned writer. Although
a Portfolio may be able to minimize this risk by withholding exercise
instructions until just before the daily cutoff time or by selling rather
than exercising an option when the index level is close to the exercise
price, it may not be possible to eliminate this risk entirely because the
cutoff times for index options may be earlier than those fixed for other
types of options and may occur before definitive closing index values are
announced.
Financial Futures and Related Options. Each Portfolio (other than the
Enhanced Reserves and Money Market Portfolios) may use financial futures
contracts and related options to hedge against changes in the market value of
its portfolio securities or securities which it intends to purchase. Hedging
is accomplished when an investor takes a position in the futures market
opposite to his cash market position. There are two types of hedges--long (or
buying) and short (or selling) hedges. Historically, prices in the futures
market have tended to move in concert with cash market prices, and prices in
the futures market have maintained a fairly predictable relationship to
prices in the cash market. Thus, a decline in the market value of securities
in a Portfolio's holdings may be protected against to a considerable extent
by gains realized on futures contracts sales. Similarly, it is possible to
protect against an increase in the market price of securities which a
Portfolio may wish to purchase in the future by purchasing futures contracts.
A Portfolio may purchase or sell any financial futures contracts which are
traded on a recognized exchange or board of trade. Financial futures
contracts consist of interest rate futures contracts and securities index
futures contracts. A public market presently exists in interest rate futures
contracts covering long-term U.S. Treasury bonds, U.S. Treasury notes,
three-month U.S. Treasury bills and GNMA certificates. Securities index
futures contracts are currently traded with respect to the Standard & Poor's
500 Composite Stock Price Index and such other broad-based stock market
indices as the New York Stock Exchange Composite Stock Index and the Value
Line Composite Stock Price Index. A clearing corporation associated with the
exchange or board of trade on which a financial futures contract trades
assumes responsibility for the completion of transactions and also guarantees
that open futures contracts will be performed.
In contrast to the situation when a Portfolio purchases or sells a
security, no security is delivered or received by a Portfolio upon the
purchase or sale of a financial futures contract. Initially, a Portfolio will
be required to deposit in a segregated account with its custodian bank an
amount of cash, U.S. Treasury bills or liquid high grade debt obligations.
This amount is known as initial margin and is in the nature of a performance
bond or good faith deposit on the contract. The current initial margin
deposit required per contract is approximately 5% of the contract amount.
Brokers may establish deposit requirements higher than this minimum.
Subsequent payments, called variation margin, will be made to and from the
account on a daily basis as the price of the futures contract fluctuates.
This process is known as marking to market.
The writer of an option on a futures contract is required to deposit
margin pursuant to requirements similar to those applicable to futures
contracts. Upon exercise of an option on a futures contract, the delivery of
the futures position by the writer of the option
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to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's margin account. This amount will be equal
to the amount by which the market price of the futures contract at the time
of exercise exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract.
Although financial futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery.
Closing out is accomplished by effecting an offsetting transaction. A futures
contract sale is closed out by effecting a futures contract purchase for the
same aggregate amount of securities and the same delivery date. If the sale
price exceeds the offsetting purchase price, the seller immediately would be
paid the difference and would realize a gain. If the offsetting purchase
price exceeds the sale price, the seller immediately would pay the difference
and would realize a loss. Similarly, a futures contract purchase is closed
out by effecting a futures contract sale for the same securities and the same
delivery date. If the offsetting sale price exceeds the purchase price, the
purchaser would realize a gain, whereas if the purchase price exceeds the
offsetting sale price, the purchaser would realize a loss. A Portfolio will
pay commissions on financial futures contracts and related options
transactions. These commissions may be higher than those which would apply to
purchases and sales of securities directly.
Limitations on Futures Contracts and Related Options. A Portfolio may not
engage in transactions in financial futures contracts or related options for
speculative purposes but only as a hedge against anticipated changes in the
market value of its portfolio securities or securities which it intends to
purchase. A Portfolio may not purchase or sell financial futures contracts or
related options if, immediately thereafter, the sum of the amount of initial
margin deposits on a Portfolio's existing futures and related options
positions and the premiums paid for related options would exceed 2% of the
market value of a Portfolio's total assets after taking into account
unrealized profits and losses on any such contracts. At the time of purchase
of a futures contract or a call option on a futures contract, an amount of
cash, U.S. Government securities or other appropriate high-grade debt
obligations equal to the market value of the futures contract minus a
Portfolio's initial margin deposit with respect thereto will be deposited in
a segregated account with a Portfolio's custodian bank to collateralize fully
the position and thereby ensure that it is not leveraged. The extent to which
a Portfolio may enter into financial futures contracts and related options
also may be limited by the requirements of the Internal Revenue Code for
qualification as a regulated investment company. See "Taxes."
Risks Relating to Futures Contracts and Related Options. Positions in
futures contracts and related options may be closed out only on an exchange
which provides a secondary market for such contracts or options. A Portfolio
will enter into an option or futures position only if there appears to be a
liquid secondary market. However, there can be no assurance that a liquid
secondary market will exist for any particular option or futures contract at
any specific time. Thus, it may not be possible to close out a futures or
related option position. In the case of a futures position, in the event of
adverse price movements a Portfolio would continue to be required to make
daily margin payments. In this situation, if a Portfolio has insufficient
cash to meet daily margin requirements it may have to sell portfolio
securities at a time when it may be disadvantageous to do so. In addition, a
Portfolio may be required to take or make delivery of the securities
underlying the futures contracts it holds. The inability to close out futures
positions also could have an adverse impact on a Portfolio's ability to hedge
its portfolio effectively.
There are several risks in connection with the use of futures contracts as
a hedging device. While hedging can provide protection against an adverse
movement in market prices, it can also preclude a hedger's opportunity to
benefit from a favorable market movement. In addition, investing in futures
contracts and options on futures contracts will cause a Portfolio to incur
additional brokerage commissions and may cause an increase in a Portfolio's
portfolio turnover rate.
The successful use of futures contracts and related options also depends
on the ability of the Adviser to forecast correctly the direction and extent
of market movements within a given time frame. To the extent market prices
remain stable during the period a futures contract or option is held by a
Portfolio or such prices move in a direction opposite to that anticipated, a
Portfolio may realize a loss on the hedging transaction which is not offset
by an increase in the value of its portfolio securities. As a result, a
Portfolio's return for the period may be less than if it had not engaged in
the hedging transaction.
Utilization of futures contracts by a Portfolio involves the risk of
imperfect correlation in movements in the price of futures contracts and
movements in the price of the securities which are being hedged. If the price
of the futures contract moves more or less than the price of the securities
being hedged, a Portfolio will experience a gain or loss which will not be
completely offset by movements in the price of the securities. It is possible
that, where a Portfolio has sold futures contracts to hedge its portfolio
against decline in the market, the market may advance and the value of
securities held in a Portfolio's holdings may decline. If this occurred, a
Portfolio would lose money on the futures contract and would also experience
a decline in value in its portfolio securities. Where futures are purchased
to hedge against a possible increase in the prices of securities before a
Portfolio is able to invest its cash (or cash equivalents) in securities (or
options) in an orderly fashion, it is possible that the market may decline;
if a Portfolio then determines not to invest in securities (or options) at
that time because of concern as to possible further market decline or for
other reasons, a Portfolio will realize a loss on the futures that would not
be offset by a reduction in the price of the securities purchased.
The market prices of futures contracts may be affected if participants in
the futures market elect to close out their contracts through off-setting
transactions rather than to meet margin deposit requirements. In such case,
distortions in the normal relationship
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between the cash and futures markets could result. Price distortions could
also result if investors in futures contracts opt to make or take delivery of
the underlying securities rather than to engage in closing transactions due
to the resultant reduction in the liquidity of the futures market. In
addition, due to the fact that, from the point of view of speculators, the
deposit requirements in the futures markets are less onerous than margin
requirements in the cash market, increased participation by speculators in
the futures market could cause temporary price distortions. Due to the
possibility of price distortions in the futures market and because of the
imperfect correlation between movements in the prices of securities and
movements in the prices of futures contracts, a correct forecast of market
trends may still not result in a successful hedging transaction.
Compared to the purchase or sale of futures contracts, the purchase of put
or call options on futures contracts involves less potential risk for a
Portfolio because the maximum amount at risk is the premium paid for the
options plus transaction costs. However, there may be circumstances when the
purchase of an option on a futures contract would result in a loss to a
Portfolio while the purchase or sale of the futures contract would not have
resulted in a loss, such as when there is no movement in the price of the
underlying securities.
Foreign Securities. Each Portfolio (other than the Money Market and U.S.
Government Securities Portfolios) may purchase foreign securities, including
those issued by foreign branches of U.S. banks. In any event, such
investments in foreign securities will be limited to 15% of the total net
asset value of the Growth and Balanced Portfolios and will not exceed 20% of
the total net asset value of the Enhanced Reserves Portfolio or 35% of the
total net asset value of the Managed Bond Portfolio. Investments in foreign
securities, particularly those of non-governmental issuers, involve
considerations which are not ordinarily associated with investing in domestic
issues. These considerations include changes in currency rates, currency
exchange control regulations, the possibility of expropriation, the
unavailability of financial information, the difficulty of interpreting
financial information prepared under foreign securities markets, the impact
of political, social or diplomatic developments, difficulties in invoking
legal process abroad and the difficulty of assessing economic trends in
foreign countries.
The Fund may use a foreign custodian or sub-custodian in connection with
its purchases of foreign securities and may maintain cash and cash
equivalents in the care of a foreign custodian. The amount of cash or cash
equivalents maintained in the care of eligible foreign custodians will be
limited to an amount reasonably necessary to effect the Fund's foreign
securities transactions. The use of a foreign custodian invokes
considerations which are not ordinarily associated with domestic custodians.
These considerations include the possibility of expropriations, restricted
access to books and records of the foreign custodian, inability to recover
assets that are lost while under the control of the foreign custodian, and
the impact of political, social or diplomatic developments.
Mortgage-Backed Securities. Each Portfolio (other than the Growth and
Money Market Portfolios) may invest in Mortgage-Related Securities (as
defined in the Prospectus), including those representing an undivided
ownership interest in a pool of mortgages, such as certificates of the
Government National Mortgage Association ("GNMA") and the Federal Home Loan
Mortgage Corporation ("FHLMC"). These certificates are in most cases
pass-through instruments, through which the holder receives a share of all
interest and principal payments from the mortgages underlying the
certificate, net of certain fees. The average life of a Mortgage-Related
Security varies with the underlying mortgage instruments, which have maximum
maturities of 40 years. The average life is likely to be substantially less
than the original maturity of the mortgage pools underlying the securities as
the result of prepayments, mortgage refinancings or foreclosure. Mortgage
prepayment rates are affected by various factors including the level of
interest rates, general economic conditions, the location and age of the
mortgage and other social and demographic conditions. Such prepayments are
passed through to the registered holder with the regular monthly payments of
principal and interest and have the effect of reducing future payments.
Government securities with nominal remaining maturities in excess of 3-1/2
years that have variable or floating interest rates or demand or put features
may nonetheless be deemed to have remaining maturities of 3-1/2 years or less
so as to be permissible investments for the Fund as follows: (a) a government
security with a variable or floating rate of interest will be deemed to have
a maturity equal to the period remaining until the next readjustment of the
interest rate; (b) a government security with a demand or put feature that
entitles the holder to receive the principal amount of the underlying
security at the time of or sometime after the holder gives notice of demand
or exercise of the put will be deemed to have a maturity equal to the period
remaining until the principal amount can be recovered through demand or
exercise of the put; and (c) a government security with both a variable or
floating rate of interest as described in clause (a) and a demand or put
feature as described in clause (b) will be deemed to have a maturity equal to
the shorter of the period remaining until the next readjustment of the
interest rate or the period remaining until the principal amount can be
recovered through demand or exercise of the put.
Securities issued by Government National Mortgage Association ("GNMA")
are, and securities issued by Federal National Mortgage Association ("FNMA")
include, mortgage-backed securities representing part ownership of a pool of
mortgage loans. In the case of GNMA, the mortgages are insured by the Federal
Housing Administration or Farmers' Home Administration or guaranteed by the
Veteran's Administration. In the case of FNMA, the mortgages are not insured
by an agency of the U.S. Government.
The prices of mortgage-backed securities are inversely affected by changes
in interest rates and, therefore, are subject to the risk of market price
fluctuations. Mortgage-backed securities issued by GNMA and FNMA currently
offer yields which are higher than those available on other securities of the
U.S. Government and its agencies and instrumentalities, but may be less
effective
7
<PAGE>
than these other securities as a means of "locking in" attractive long-term
interest rates. This is a result of the need to reinvest prepayment of
principal and the possibility of significant unscheduled prepayments
resulting from declines in mortgage interest rates. As a result, these
securities have less potential for capital appreciation during periods of
declining interest rates than other investments of comparable risk of decline
in value during periods of rising rates.
Lending Portfolio Securities. In order to increase its return on
investments, each Portfolio may make loans of the portfolio securities as
long as the market value of the loaned securities does not exceed 25% of the
value of that Portfolio's total assets. Loans of portfolio securities will
always be fully collateralized at no less than 102% of the market value of
the loaned securities (as marked to market daily) and made only to borrowers
considered to be creditworthy. Lending portfolio securities involves a risk
of delay in the recovery of the loaned securities and possibly the loss of
the collateral if the borrower fails financially.
Lower Rated Fixed Income Securities. In the event that an issuer of
securities held by a Portfolio experiences difficulties in the timely payment
of principal or interest and such issuer seeks to restructure the terms of
its borrowings, the Portfolio may incur additional expenses and may determine
to invest additional assets with respect to such issuer or the project or
projects to which the Portfolio's portfolio securities relate. Further, the
Portfolio may incur additional expenses to the extent that it is required to
seek recovery upon a default in the payment of interest or the repayment of
principal on its portfolio holdings, and the Portfolio may be unable to
obtain full recovery thereof.
To the extent there is no established secondary market for some of the
medium and lower grade income securities in which the Portfolio may invest,
trading in such securities may be relatively inactive. During periods of
reduced market liquidity or in the absence of readily available market
quotations for medium and lower grade income securities held in the
Portfolio's holdings, the ability of the Investment Adviser to value the
Portfolio's securities becomes more difficult and the Investment Adviser's
use of judgment may play a greater role in the valuation of the Portfolio's
securities due to the reduced availability of reliable objective data.
Further, the Portfolio may have more difficulty selling such securities in a
timely manner and at their stated value than would be the case for securities
for which an established secondary market does exist.
Many medium and lower grade income securities are not listed for trading
on any national securities exchange, and many issuers of medium and lower
grade income securities choose not to have a rating assigned to their
obligations by any nationally recognized statistical rating organization. The
amount of information available about the financial condition of an issuer of
unrated or unlisted securities generally is not as extensive as that which is
available with respect to issuers of listed or rated securities. To the
extent that the Portfolio invests in unrated or unlisted medium and lower
grade income securities, the ability of the Adviser to evaluate the credit
risk of such securities may play a greater role in the ability of the
Portfolio to achieve its investment objective.
The Adviser seeks to minimize the risks involved in investing in medium
and lower grade income securities through portfolio diversification, careful
investment analysis, and attention to current developments and trends in the
economy and financial and credit markets. The Portfolio will rely on the
Adviser's judgment, analysis and experience in evaluating the
creditworthiness of an issue. In its analysis, the Adviser will take into
consideration, among other things, the issuer's financial resources, its
sensitivity to economic conditions and trends, its operating history, the
quality of the issuer's management and regulatory matters. Although the
Adviser's internal business and default risk analysis is independent of the
credit ratings of S&P, Moody's or D&P (or other nationally recognized
statistical rating organization), the Adviser may consider such ratings in
evaluating income securities. Achievement by the Portfolio of its investment
objective will be more dependent on the credit analysis of the Adviser than
is the case for investment companies with investment objectives similar to
the Portfolio's that are more reliant on such rating organizations in
selecting portfolio securities.
INVESTMENT RESTRICTIONS
The Fund's fundamental policies as they affect any Portfolio cannot be
changed without the approval vote of a majority of the outstanding shares of
such Portfolio, which is the lesser of (i) 67% or more of the voting
securities of such Portfolio present at a meeting if the holders of more than
50% of the outstanding voting securities of such Portfolio are present or
represented by proxy or (ii) more than 50% of the outstanding voting
securities of such Portfolio. A proposed change in fundamental policy or
investment objective will be deemed to have been effectively acted upon with
respect to any Portfolio if a majority of the outstanding voting securities
of that Portfolio votes for the approval of the proposal as provided above,
notwithstanding (1) that such matter has not been approved by a majority of
the outstanding securities of any other Portfolio affected by such matter and
(2) that such matter has not been approved by a majority of the outstanding
voting securities of the Fund.
The following investment restrictions are fundamental policies of the Fund
with respect to all Portfolios and may not be changed except as described
above. Each Portfolio may not:
1. Purchase for such Portfolio securities of any issuer, other than
obligations issued or guaranteed as to principal and interest by the
United States Government or its agencies or instrumentalities, if
immediately thereafter (i) more than 5% of such Portfolio's total assets
(taken at market value) would be invested in the securities of such issuer
or (ii) more than 10% of the outstanding securities of any class of such
issuer would be held by such Portfolio or by all Portfolios of the Fund in
the aggregate.
8
<PAGE>
2. Concentrate the portfolio investments of any Portfolio in any one
industry. To comply with this restriction, no security may be purchased
for a Portfolio if such purchase would cause the value of the aggregate
investment of such Portfolio in any one industry to exceed 25% of that
Portfolio's total assets (taken at market value). However, the Money
Market Portfolio may invest more than 25% of its assets in the domestic
banking industry and the Managed Bond Portfolio may invest up to 80% of
that Portfolio's total assets in corporate debt securities. Provided
further, the foregoing restrictions shall be inapplicable to investments
in tax-exempt securities issued by government or political subdivisions of
governments.
3. Act as securities underwriter except as it technically may be deemed
to be an underwriter under the Securities Act of 1933, as amended, in
selling a portfolio security.
4. Purchase securities on margin, but it may obtain short-term credit
as may be necessary for the clearance of purchases and sales of
securities.
5. Make short sales of securities or maintain a short position.
6. Make cash loans, except that the Fund may (i) purchase bonds, notes,
debentures or similar obligations which are customarily purchased by
institutional investors whether publicly distributed or not, and (ii)
enter into repurchase agreements, provided that no more than 15% of any
Portfolio's net assets (taken at market value) may be subject to
repurchase agreements maturing in more than seven days.
7. Make securities loans, except that the Portfolios may make loans of
the portfolio securities of any such Portfolio, provided that the market
value of the securities subject to any such loans does not exceed 25% of
the value of the total assets (taken at market value) of such Portfolio.
8. Make investments in real estate, real estate limited partnerships or
commodities or commodity contracts, although (i) the Fund may purchase
securities of issuers which deal in real estate or commodities and may
purchase securities which are secured by interests in real estate,
specifically, securities issued by real estate investment trusts and (ii)
any Portfolio (excluding the Money Market and U.S. Government Securities
Portfolios) may engage in transactions in financial futures contracts and
related options, provided that the sum of the initial margin deposits on
such Portfolio's existing futures positions and the premiums paid for
related options would not exceed in the aggregate 2% of such Portfolio's
total assets.
9. Invest in oil, gas or other mineral leases, although the Fund may
purchase securities of issuers which engage in whole or in part in such
activities.
10. Invest in puts, calls, straddles and any combination thereof,
except that the Balanced, Enhanced Reserves and U.S. Government Securities
Portfolios may (i) write (sell) exchange-traded covered call options on
portfolio securities and on securities indices and engage in related
closing purchase transactions and (ii) invest up to 2% of its total assets
in exchange-traded call and put options on securities and securities
indices.
11. Purchase securities of companies for the purpose of exercising
management or control.
12. Participate in a joint or joint and several trading account in
securities.
13. Purchase or retain securities of any issuer if any officer or
Trustee of the Fund, or officer or director of its investment adviser,
owns beneficially more than 1/2 of 1% of the outstanding securities or
shares, or both, of such issuer and all such persons owning more than 1/2
of 1% of such securities or shares together own beneficially more than 5%
of such securities or shares.
14. Borrow money, except that the Fund may (i) borrow money for any
Portfolio for temporary administrative purposes provided that any such
borrowing does not exceed 10% of the value of the total assets (taken at
market value) of such Portfolio and (ii) borrow money for any Portfolio
for investment purposes, provided that any such borrowing for investment
purposes with respect to any such Portfolio is (a) authorized by the
Trustees prior to any public distribution of the shares of such Portfolio
or is authorized by the shareholders of such Portfolio thereafter, (b) is
limited to 33-1/3% of the value of the total assets (taken at market
value) of such Portfolio, and (c) is subject to an agreement by the lender
that any recourse is limited to the assets of that Portfolio with respect
to which the borrowing has been made.
15. Pledge, mortgage or hypothecate the assets of any Portfolio to an
extent greater than 10% of the total assets (taken at market value) of
such Portfolio to secure borrowing made pursuant to the provisions of item
15 above.
16. Issue senior securities except to the extent that it is permitted
to (a) borrow money from banks pursuant to the Fund's investment
restrictions regarding the borrowing of money, and (b) enter into
transactions involving forward foreign currency contracts, foreign
currency futures contracts and options thereon as described in the Fund's
Prospectus and this Statement of Additional Information.
17. Invest more than 5% of a Portfolio's net assets, valued at the
lower of cost or market, in warrants or rights. Included within that
amount, but not to exceed 2% of the value of a Portfolio's net assets, may
be warrants not listed on the New York or American Stock Exchange.
9
<PAGE>
The Fund may purchase illiquid securities, including repurchase agreements
providing for settlement more than seven days after notice and restricted
securities (securities that must be registered with the Securities and
Exchange Commission before they can be sold to the public) deemed to be
illiquid, but such securities will not constitute more than 15% of each
Portfolio's net assets (provided that not more than 10% of the Money Market
Portfolio's net assets may constitute illiquid securities). The Board of
Trustees, or the Adviser acting at its direction, values these securities,
taking into consideration quotations available from broker-dealers and
pricing services and other information deemed relevant.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage beyond the specified limit resulting
from a change in values of portfolio securities or amount of net assets shall
not be considered a violation of the restrictions.
PERFORMANCE INFORMATION
Performance information for each Portfolio may appear in advertisements,
sales literature, or reports to shareholders or prospective shareholders.
Performance information in advertisements and sales literature may be
expressed as yield and effective yield of the Money Market Portfolio, as
yield of the other Portfolios offered and as total return of any Portfolio.
Current yield for the Money Market Portfolio will be based on the change in
the value of a hypothetical investment (exclusive of capital changes) over a
particular 7-day period, less a hypothetical charge reflecting deductions for
expenses during the period (the stated as a percentage of the investment at
the start of the base period (the "base period return"). The base period
return is then annualized by multiplying by 365/7, with the resulting yield
figure carried to at least the nearest hundredth of one percent. "Effective
yield" for the Money Market Portfolio assumes that all dividends received
during an annual period have been reinvested. Calculation of "effective
yield" begins with the same "base period return" used in the calculation of
yield, which is then annualized to reflect weekly compounding pursuant to the
following formula:
Effective Yield = [(Base Period Return) + 1) 365/7] - 1
For the 7 day period ended December 31, 1995, the effective yield for
Class X and Class Y shares of the Money Market Portfolio was 5.10% and 4.85%,
respectively.
Quotations of yield for the Balanced, Managed Bond, Enhanced Reserves,
Growth, and U.S. Government Securities Portfolios will be based on all
investment income per share earned during a particular 30-day period
(including dividends and interest), less expenses (including pro rata Fund
expenses and expenses applicable to each particular Portfolio) accrued during
the period ("net investment income"), and are computed by dividing net
investment income by the value of a share of the Portfolio on the last day of
the period, according to the following formula:
YIELD = 2[((a-b)) + 1)6 - 1]
---------
cd
where,
a = dividends and interest earned during the period by the Portfolio
b = expenses accrued for the period (net of any reimbursements),
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the period.
As summarized in the Prospectus under the heading "Performance Information",
total return is a measure of the change in value of an investment in a
Portfolio over the period covered. The formula for total return used herein
includes four steps: (1) adding to the total number of shares purchased by a
hypothetical $1,000 investment in the Portfolio; (2) calculating the value of
the hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of shares of a Portfolio owned at the end of the
period by the net asset value on the last trading day of the period; (3)
assuming maximum sales charge deducted and reinvestment of all dividends at
net asset value and (4) dividing this account value for the hypothetical
investor by the initial $1,000 investment. Total return will be calculated
for one year, five years and ten years or the time period during which the
registration statement including the Portfolio was in effect if a Portfolio
has not been in existence for at least ten years.
Except as above stated, standardized quotations of average annual total
return for each class of shares of each Portfolio will be expressed in terms
of the average annual compounded rate of return of a hypothetical investment
in either Class X or Class Y Shares of each Portfolio over a period of 1, 5,
and 10 years (or up to the life of the class of shares). Standardized total
return quotations reflect the deduction of a proportional share of each
Class's expenses of such Portfolio (on an annual basis), and assume that all
dividends and distributions are reinvested when paid. It is expected that the
performance of Class X Shares shall be better than that of Class Y Shares as
a result of lower distribution fees and certain incrementally lower expenses
paid by Class X Shares. The Fund may also quote supplementally a rate of
total return over different periods of time by means of aggregate, average,
and year-by-year or other types of total return figures.
Performance information for the Portfolio (and each Class thereof) reflects
only the performance of a hypothetical investment in a Class X or Class Y of
a Portfolio during the particular time period in which the calculations are
based. Performance information is not an indication of future performance.
Performance information should be considered in light of a particular
Portfolio's
10
<PAGE>
investment objectives and policies, characteristics and qualities of the
Portfolio, and the market conditions during the given time period, and should
not be considered as a representation of what may be achieved in the future.
Investment results will vary from time to time and are not identical to the
past portfolio investments of those Portfolios which previously existed as
separate accounts.
The manner in which total return will be calculated for public use is
described above. The following table summarizes the calculation of total
return involving the Balanced, Managed Bond, Growth and U.S. Government
Securities Portfolios based on each such Portfolio's past performance as a
separate investment account of Phoenix Home Life Mutual Insurance Company,
for periods before the Fund's registration statement became effective (March
1, 1996). This performance data may be relevant as each such separate account
was managed, in all material respects, using substantially the same
investment objectives, policies and restrictions as those used by such
Portfolio. These separate investment accounts were not registered under the
1940 Act and therefore were not subject to certain investment restrictions
that are imposed by the 1940 Act. If these separate investment accounts had
been registered under the 1940 Act, the separate investment accounts'
performance may have been adversely affected. Standardized average annual
total return of each Class shall be calculated for the preceding one, five
and ten year periods (or since inception of the applicable separate account
if it has been in existence less than five or ten years) by including the
corresponding separate account's total return calculated in accordance with
formulas specified by the Securities and Exchange Commission. The performance
of the separate accounts has been restated to reflect the deduction of the
fees and expenses of the classes of the corresponding Portfolio described in
the Prospectus.
Average Annual Total Return as of December 31, 1995
<TABLE>
<CAPTION>
Periods Ended
-----------------------------------------
10 Years or
1 Year 5 Years Since Inception
--------- ---------- ----------------
<S> <C> <C> <C>
Balanced
Class X 23.32% N/A 13.09%(1)
Class Y 23.01 N/A 12.81(1)
Managed Bond
Class X 19.97 10.59 9.22
Class Y 19.67 10.32 8.95
Enhanced Rsvs.
Class X N/A N/A N/A
Class Y N/A N/A N/A
Growth
Class X 34.73 16.11 16.27
Class Y 34.39 15.82 15.98
U.S. Gov't Sec.
Class X 12.29 N/A 6.95(2)
Class Y 12.01 N/A 6.68(2)
Money Market
Class X 5.68 4.42 6.03
Class Y 5.41 4.16 5.77
</TABLE>
(1) Inception date 5/17/91
(2) Inception date 10/1/91
NOTE: Average annual total return assumes a hypothetical initial payment of
$1,000. At the end of each period, a total redemption is assumed. The ending
redeemable value is divided by the original investment to calculate total
return. Performance information for any Portfolio reflects only the
performance of a hypothetical investment in the Portfolio during the
particular time period on which the calculations are based. Performance
information should be considered in light of the investment objectives and
policies, characteristics and quality of the particular Portfolio, and the
market conditions during the given time period, and should not be considered
as a representation of what may be achieved in the future.
PERFORMANCE COMPARISONS
Each Portfolio may from time to time include in advertisements containing
total return the ranking of those performance figures relative to such
figures for groups of mutual funds having similar investment objectives as
categorized by ranking services such as Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., Weisenberger Financial Services, Inc. and
rating services such as Morningstar, Inc. Additionally, a Portfolio or Class
of Portfolio may compare its performance results to other investment or
savings vehicles (such as certificates of deposit) and may refer to results
published in various publications such as Changing Times, Forbes, Fortune,
Money, Barrons, Business Week and Investor's Daily, Stanger's Mutual Fund
Monitor, The Stanger Register, Stanger's Investment Adviser, The Wall Street
Journal, Pensions & Investments, Institutional Investor, The New York Times,
Consumer Reports, Registered
11
<PAGE>
Representative, Financial Planning, Financial Services Weekly, Financial
World, U.S. News and World Report, Standard and Poors The Outlook, and
Personal Investor. A Portfolio may, from time to time, illustrate the
benefits of tax deferral by comparing taxable investments to investments made
through tax-deferred retirement plans. The total return may also be used to
compare the performance of the Portfolio against certain widely acknowledged
outside standards or indices for stock and bond market performance, such as
the Standard & Poor's 500 Stock Index (the "S&P 500"), Dow Jones Industrial
Average, Europe Australia Far East Index (EAFE), Consumer Price Index,
Shearson Lehman Corporate Index and Shearson Lehman T-Bond Index. The S&P 500
is a commonly quoted market value-weighted and unmanaged index showing the
changes in the aggregate market value of 500 stocks relative to the base
period 1941-43. The S&P 500 is composed almost entirely of common stocks of
companies listed on the New York Stock Exchange, although the common stocks
of a few companies listed on the American Stock Exchange or traded
over-the-counter are included. The 500 companies represented include 400
industrial, 60 transportation and 40 financial services concerns. The S&P 500
represents about 80% of the market value of all issues traded on the New York
Stock Exchange.
Advertisements, sales literature, and other communications may contain
information about the Adviser's current investment strategies and management
style. Current strategies and style may change to allow the Fund to respond
quickly to changing market and economic conditions. From time to time the
Fund may include specific portfolio holdings or industries. To illustrate
components of overall performance, the Fund may separate its cumulative and
average annual returns into income and capital gains components; or cite
separately as a return figure the equity or bond portion of the Fund's
portfolio; or compare the Fund's equity or bond return figure to well-known
indices of market performance, including but not limited to: the S&P 500
Index, Dow Jones Industrial Average, First Boston High Yield Index and
Salomon Brothers Corporate Bond and Government Bond Indices.
PORTFOLIO TURNOVER
Each Portfolio has a different expected annual rate of portfolio turnover,
which is calculated by dividing the lesser of purchases or sales of portfolio
securities during the fiscal year by the monthly average of the value of the
Portfolio's securities (excluding from the computation all securities,
including options, with maturities at the time of acquisition of one year or
less). A high rate of portfolio turnover generally involves correspondingly
greater brokerage commission expenses, which must be borne directly by the
Portfolio. Turnover rates may vary greatly from year to year as well as
within a particular year and may also be affected by cash requirements for
redemptions of each Portfolio's shares and by requirements which enable the
Fund to receive certain favorable tax treatment.
MANAGEMENT OF THE TRUST
The Trustees and executive officers of the Fund and their principal
occupations for at least the last five years are set forth below. Unless
otherwise noted, the address of each executive officer and Trustee is 56
Prospect Street, Hartford, Connecticut 06115-0480.
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
---------------------------- ---------------- ---------------------------------------------
<S> <C> <C>
C. Duane Blinn (68) Trustee Partner in the law firm of Day, Berry &
Day, Berry & Howard Howard. Director/Trustee, Phoenix Funds
CityPlace (1980-present). Trustee, Phoenix-Aberdeen
Hartford, CT 06103 Series Fund (1996-present). Director/Trustee,
the National Affiliated Investment Companies
(until 1993).
Robert Chesek (62) Trustee Trustee/Director, Phoenix Funds
49 Old Post Road (1981-present) and Chairman (1989-1994).
Wethersfield, CT 06109 Trustee, Phoenix-Aberdeen Series Fund
(1996-present). Director/Trustee, the
National Affiliated Investment Companies
(until 1993). Vice President, Common Stock,
Phoenix Home Life Mutual Insurance Company
(1980-1994).
12
<PAGE>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
---------------------------- ---------------- ---------------------------------------------
E. Virgil Conway (67) Trustee Chairman, Metropolitan Transit Authority
9 Rittenhouse Road (1992-present). Trustee/Director,
Bronxville, NY 10708 Consolidated Edison Company of New York, Inc.
(1970-present), Pace University
(1978-present), Atlantic Mutual Insurance
Company (1974-present), HRE Properties (1989-
present), Greater New York Councils, Boy
Scouts of America (1985-present), Union
Pacific Corp. (1978-present), Blackrock Fund
for Fannie Mae Mortgage Securities (Advisory
Director) (1989-present), and Freddie Mac
Mortgage Securities (Advisory Director)
(1990-present), Accuhealth (1994-present),
Trism, Inc. (1994-present), Centennial
Insurance Company (1974-present), Josiah Macy, Jr.,
Foundation (1995-present), and The Harlem
Youth Development Foundation (1987-present).
Board Member, Metropolitan Transportation
Authority (1992-present). Chairman, Audit
Committee of the City of New York
(1981-present). Director/ Trustee, Phoenix
Funds (1993-present). Duff & Phelps Tax-Free
Utilities Income Fund (1995-present), Duff &
Phelps Utility and Corporate Bond Trust
(1995-present). Director, Realty Foundation
of New York (1972-present) and the New York
Housing Partnership Development Corp.
(1981-present). Trustee, Phoneix-Aberdeen
Series Fund (1996-present).
William W. Crawford (68) Trustee Representative, Hilliard, Lyons, Inc.
3003 Gulf Shore Blvd. North (broker-dealer) (1993-present); President and
No. 901 Chief Operating Officer, Hilliard, Lyons,
Naples, FL 33940 Inc. (1960-1993). Trustee, Phoenix-Aberdeen
Series Fund (1996-present).
Harry Dalzell-Payne (67) Trustee Director/Trustee, Phoenix Funds
330 East 39th Street (1983-present). Director, Farragut Mortgage
Apartment 29G Co., Inc. (1991-1994). Director/Trustee, the
New York, NY 10016 National Affiliated Investment Companies
(1983-1993). Trustee, Duff & Phelps Tax-Free
Utilities Income Fund (DTF), (1995-present),
Duff & Phelps Utility and Corporate Bond
Trust (DUC), (1995-present) and
Phoenix-Aberdeen Series Fund (1996-present).
Formerly a Major General of the British Army.
William N. Georgeson (69) Trustee Director, Duff & Phelps Utility and Corporate
575 Glenwood Road Bond Trust Inc. (1994-present); Director,
Lake Forest, IL 60045 Duff & Phelps Utilities Tax-Free Income Inc.
(1993-present); Vice President, Nuveen
Advisory Corp. (1982-1990).
*Francis E. Jeffries (65) Trustee Chairman of the Board, Phoenix Duff & Phelps
Phoenix Duff & Phelps Corporation (1995-present). Director, Trustee
Corporation Duff & Phelps Utilities Income Fund
55 East Monroe Street (1987-present), Duff & Phelps Tax-Free
Suite 3600 Utility Income Fund, (1991-present), Duff &
Chicago, IL 60603 Phelps Utility and Corporate Bond Trust
(1993-present), The Empire District Electric
Company (1984-present), Phoenix-Aberdeen
Series Fund (1996-present). (Director
1989-1995), Chief Executive Officer
(1989-1995) and President (1989-1993), Duff &
Phelps Corporation.
13
<PAGE>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
--------------------------- ---------------- ---------------------------------------------
Leroy Keith, Jr. 57 Trustee Chairman and Chief Executive Officer, Carson
Chairman and Chief Products Company (1995-present).
Executive Officer Director/Trustee, Phoenix Funds
Carson Products Company (1980-present). Director, Equifax Corp.
64 Ross Road (1991-present), and Keystone International
Savannah, GA 31405 Fund, Inc. (1989-present). Trustee, Keystone
Liquid Trust, Keystone Tax Exempt Trust,
Keystone Tax Free Fund, Master Reserves Tax
Free Trust, and Master Reserves Trust.
Phoenix-Aberdeen Series Fund (1996-present).
Director/Trustee, the National Affiliated
Investment Companies (until 1993). Director,
Blue Cross/Blue Shield (1989-1993) and First
Union Bank of Georgia (1989-1993). President,
Morehouse College (1987-1994). Chairman and
Chief Executive Officer, Keith Ventures
(1994-1995).
*Philip R. McLoughlin (49) Trustee/ Vice Chairman and Chief Executive Officer,
President Phoenix Duff & Phelps Corporation
(1995-present); Director (1994-present) and
Executive Vice President, Investments,
Phoenix Home Life Mutual Insurance Company
(1988-present). Director/Trustee and
President, Phoenix Funds (1989-present).
Director, Phoenix Investment Counsel, Inc.
(1983-present), Chairman (1995-present).
Director (1984-present) and President
(1990-present), Phoenix Equity Planning
Corporation. Director, World Trust Fund
(1991-present). Director and Vice President,
PM Holdings, Inc. (1985-present). Director
(1994-present), President and Chief
Executive Officer (1995-present); Director
and President, Phoenix Securities Group, Inc.
(1993-1995); Director, (1992-present) and
President (1993-1994), W.S. Griffith & Co.,
Inc.; Director, Phoenix Founders, Inc. (1981-
present), Phoenix Realty Group, Inc.
(1994-present), Phoenix Realty Advisors, Inc.
(1987-present), Phoenix Realty Investors,
Inc. (1994-present), and Phoenix Realty
Securities, Inc. (1994-present); and Director
and President, Phoenix-Aberdeen Series Fund
(1996-present).
Everett L. Morris (68) Trustee Vice President, W.H. Reaves and Company
164 Laird Road (1993-present); Director/Trustee, Phoenix
Colts Neck, NJ 07722 Funds (1995-present). Director, Duff &
Phelps Utility and Corporate Bond Trust Inc.
(1993-present); Director, Duff & Phelps
Tax-Free Utility Income Fund (1991-Present);
Director, Senior Executive Vice President and
Chief Financial Officer, Public Service
Electric and Gas Company (1986-1992).
President and Chief Operating Officer,
Enterprise Diversified Holdings Incorporated
(1986-1993); Director, First Fidelity Bank,
N.A. (1984-1991). Director, Phoenix-Aberdeen
Series Fund (1996-present).
14
<PAGE>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
---------------------------- ---------------- ---------------------------------------------
James M. Oates (50) Trustee Managing Director, The Wydown Group (1994-
Managing Director present).
The Wydown Group Director, Phoenix Duff &
50 Congress Street Phelps Corporation (1995-present).
Suite 1000 Director/Trustee, Phoenix Funds
Boston, MA 02109 (1987-present). Director, Govett Worldwide
Opportunity Funds, Inc. (1991-present), Blue
Cross and Blue Shield of New Hampshire
(1994-present). Director, Investors Bank and
Trust Corporation (1995-present) Investors
Financial Services Corporation
(1995-present). Plymouth Rubber Co.,
(1995-present) and Phoenix-Aberdeen Series
Fund (1996-present). Director/Trustee, the
National Affiliated Investment Companies
(until 1993). Director (1984-1994), President
(1984-1994) and Chief Executive Officer
(1986-1994), Neworld Bank. Director, Savings
Bank Life Insurance Company (1988-1994), and
Stifel Financial Corporation (1986-1995).
Richard A. Pavia (66) Trustee Director, Speer Financial, Inc.
7145 North Ionia (1981-present). Director, Duff & Phelps
Chicago, IL 60646 Utility and Corporate Bond Fund Inc.
(1992-present); Director, Duff & Phelps
Utilities Tax-Free Income Fund
(1991-present).
*Calvin J. Pedersen (54) Trustee President, Phoenix Duff & Phelps Corporation
Phoenix Duff & Phelps (1995-present); President (1993-1995),
Corporation Executive Vice President (1992-1993), Duff &
55 East Monroe Street, Ste. Phelps Corporation. President and Chief
3800 Executive Officer, Duff & Phelps Utilities
Chicago, IL 60603 Tax-Free Income, Inc. (1995-present);
President and Chief Executive Officer, Duff &
Phelps Utility and Corporate Bond Trust
(1995-present), Chairman, Chief Executive
Officer and Trustee, Duff & Phelps Mutual
Funds. Director/Trustee Phoenix Funds
(1995-present). Trustee, Phoenix-Aberdeen
Series Fund (1996-present).
Philip R. Reynolds (69) Trustee Director/Trustee, Phoenix Funds
43 Montclair Drive (1984-present). Director, Vestaur Securities,
West Hartford, CT 06107 Inc. (1972-present). Trustee and Treasurer,
J. Walton Bissell Foundation Inc.
(1988-present). Trustee, Phoenix-Aberdeen
Series Fund (1996-present). Director/Trustee,
the National Affiliated Investment Companies
(until 1993).
Herbert Roth, Jr. (67) Trustee Director/Trustee, Phoenix Funds
134 Lake Street (1980-present). Director, Boston Edison
P.O. Box 909 Company (1978-present), Phoenix Home Life
Sherborn, MA 01770 Mutual Insurance Company (1972-present),
Landauer, Inc. (medical services)
(1970-present), Tech Ops./Sevcon, Inc.
(electronic controllers) (1987-present), Key
Energy Group (oil rig service) (1988-1994),
and Mark IV Industries (diversified
manufacturer) (1985-present). Trustee,
Phoenix-Aberdeen Series Fund (1996-present).
15
<PAGE>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
---------------------------- ---------------- ---------------------------------------------
Richard E. Segerson (50) Trustee Managing Director, Mullin Associates
102 Valley Road (1993-present). Director/Trustee, Phoenix
New Canaan, CT 06840 Funds, (1993-present). Trustee,
Phoenix-Aberdeen Series Fund (1996-present).
Consultant, Tootal Group (1989-1991). Vice
President and General Manager, Coats & Clark,
Inc. (previously Tootal American, Inc.)
(1991-1993). Director/Trustee, the National
Affiliated Investment Companies (1984-1993).
Lowell P. Weicker, Jr. (65) Trustee Chairman, Dresing-Lierman-Weicker
Dresing Lierman Weicker (1995-present). Trustee/Director, the Phoenix
6931 Arlington Road Funds (1995-present). Former Governor of the
Suite 501 State of Connecticut (1991-1995). Director,
Bethesda, MD 20814 UST, Inc. (1995-present). Director, HPSC,
Inc. (1995-present), Trustee, Phoenix-
Aberdeen Series Fund (1996-present).
</TABLE>
*Trustees identified with an asterisk are considered to be interested persons
of the Fund (within the meaning of the Investment Company Act of 1940, as
amended) because of their affiliation with Phoenix Investment Counsel, Inc.,
Duff & Phelps Investment Management Co., Inc. or Phoenix Equity Planning
Corporation.
<TABLE>
<CAPTION>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
---------------------------- ---------------- ---------------------------------------------
<S> <C> <C> <C>
William J. Newman (57) Senior Vice Executive Vice President, Phoenix Investment
President Counsel, Inc. (1995-present). Senior Vice
President, National Securities & Research
Corporation (1995-present). Senior Vice
President, Phoenix Equity Planning
Corporation (1995-present). Senior Vice
President, Phoenix Strategic Equity Series
Fund (1995-present), The Phoenix Edge Series
Fund (1995-present), Phoenix Multi-Portfolio
Fund (1995-present), Phoenix Income and
Growth Fund (1996-present), Phoenix Series
Fund (1996-present), Phoenix Strategic
Allocation Fund, Inc. (1996-present), and
Phoenix Worldwide Opportunities Fund
(1996-present). Senior Vice President,
Phoenix-Aberdeen Series Fund (1996-present).
Vice President, Common Stock, and Chief
Investment Strategist, Phoenix Home Life
Mutual Insurance Company (April,
1995-November, 1995). Chief Investment
Strategist, Kidder, Peabody Co., Inc.
(1993-1994). Managing Director, Equities,
Bankers Trust (1991-1993) and McKay Shields
(1988-1990).
George I. Askew (33) Vice President Vice President, The Phoenix Edge Series Fund
(1995-present); Vice President, Phoenix
Investment Counsel, Inc. (1994-present);
University of California at Los Angeles (MBA
1994); various positions with Merrill Lynch &
Co. (1987-1992).
16
<PAGE>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
---------------------------- ---------------- ---------------------------------------------
James M. Dolan (47) Vice President Vice President and Compliance Officer (1994-
100 Bright Meadow Blvd. present), and Assistant Secretary
P.O. Box 2200 (1981-present), Phoenix Equity Planning
Enfield, CT 06083-2200 Corporation. Vice President, Phoenix Funds
(1989-present). Vice President
(1991-present), Assistant Clerk and Assistant
Secretary (1982-present), Phoenix Investment
Counsel, Inc. Vice President and Compliance
Officer, Assistant Secretary (1994-present),
Assistant Vice President (1993-1994),
National Securities & Research Corporation.
Vice President and Chief Compliance Officer,
Phoenix Realty Advisors, Inc. (1994-present).
Chief Compliance Officer, Phoenix Realty
Securities, Inc. (1995-present). Vice
President, the National Affiliated Investment
Companies (until 1993) and various other
positions with Phoenix Equity Planning
Corporation (1978-1994). Vice President,
Phoenix-Aberdeen Series Fund (1996-present).
Marvin E. Flewellen (32) Vice President Senior Vice President and Fixed Income
55 East Monroe Street Portfolio Manager, Duff & Phelps Investment
Ste. 3800 Management Co. (1994-present). Second Vice
Chicago, IL 60603 President and Portfolio Manager, Northern
Trust Bank (1985-1994).
Michael E. Haylon (38) Vice President Executive Vice President--Investments,
Phoenix Duff & Phelps Corporation
(1995-present), Executive Vice President,
Phoenix Funds (1995-present). Director
(1994-present), Executive Vice President
(1994-1995) and President (1995-present),
Phoenix Investment Counsel, Inc. Director
(1995-present), Phoenix Equity Planning
Corporation. Director (1994-present) and
Executive Vice President (1994-present),
National Securities & Research Corporation.
Executive Vice President (1996-present),
Phoenix-Aberdeen Series Fund. Various
positions with Phoenix Home Life Mutual
Insurance Company (1990-1993).
Christopher J. Kelleher (41) Vice President Vice President, National Securities &
Research Corporation (1993-present), The
Phoenix Edge Series Fund (1989-present),
Phoenix Series Fund (1989-present), and
Phoenix Investment Counsel, Inc.
(1991-present). Portfolio Manager, Public
Bonds, Phoenix Home Life Mutual Insurance
Company (1991-1995).
Thomas S. Melvin, Jr. (53) Vice President Vice President, Phoenix Investment Counsel,
Inc. (1992-present). Vice President, National
Securities & Research Corporation
(1993-present), Vice President, Phoenix
Multi-Portfolio Fund (1993-present),
Portfolio Manager, Common Stock, Phoenix Home
Life Mutual Insurance Company (1991-1995),
and Portfolio Manager, Constitution Capital
Management (1987-1991).
17
<PAGE>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
---------------------------- ---------------- ---------------------------------------------
William R. Moyer (52) Vice President Director, Senior Vice President and Chief
100 Bright Meadow Blvd. Financial Officer, Phoenix Duff & Phelps
P.O. Box 2200 Corporation (1995-present). Vice President,
Enfield, CT 06083-2200 Phoenix-Aberdeen Series Fund (1996-present).
Vice President, Investment Products Finance,
Phoenix Home Life Mutual Insurance Company
(1990-1995). Senior Vice President, Finance,
and Treasurer, Phoenix Equity Planning
Corporation (1990-present), and Phoenix
Investment Counsel, Inc. (1990-present). Vice
President, Phoenix Funds (1990-present).
Senior Vice President, Finance, Phoenix
Securities Group, Inc. (1993-1995). Senior
Vice President, Finance (1993-present), and
Treasurer (1994-present), National Securities
& Research Corporation. Vice President, the
National Affiliated Investment Companies
(until 1993). Senior Vice President and Chief
Financial Officer (1993-1995) and Treasurer
(1994-1995) W.S. Griffith & Co., Inc. and
Townsend Financial Advisers, Inc.
Leonard J. Saltiel (42) Vice President Vice President, Investment Operations,
Phoenix Home Life Mutual Insurance Company
(1994-1995). Senior Vice President, Phoenix
Equity Planning Corporation (1994-present).
Vice President, Phoenix Funds (1994-present).
Vice President, National Securities &
Research Corporation (1994-present). Vice
President, Phoenix-Aberdeen Series Fund
(1996-present). Various positions with Home
Life Insurance Company and Phoenix Home Life
Mutual Insurance Company (1987-1994).
Dorothy J. Skaret (43) Vice President Vice President, National Securities &
Research Corporation (1993-present), The
Phoenix Edge Series Fund (1991-present),
Phoenix Investment Counsel, Inc.
(1991-present), Phoenix Series Fund
(1990-present), and Phoenix-Aberdeen Series
Fund (1996-present). Director, Public Fixed
Income, Phoenix Home Life Mutual Insurance
Company (1990-1995), and various other
positions with Phoenix Home Life Mutual
Insurance Company (1986-1991).
James D. Wehr (39) Vice President Vice President, Phoenix Multi-Portfolio Fund
(1988-present), Phoenix Series Fund
(1990-present), Managing Director, Public
Fixed Income, Phoenix Home Life Mutual
Insurance Company, (1991-1995). The Phoenix
Edge Series Fund (1991-present), Phoenix
Investment Counsel, Inc. (1991-present),
Phoenix California Tax Exempt Bond Fund, Inc.
(1993-present), and National Securities &
Research Corporation (1993-present). Various
positions with Phoenix Home Life Mutual
Insurance Company (1981-1991).
18
<PAGE>
Position(s) with Principal Occupation(s)
Name, Address and Age the Fund During Past Five Years
---------------------------- ---------------- ---------------------------------------------
Nancy G. Curtiss (43) Treasurer Treasurer, Phoenix Funds (1994-present).
Treasurer, Phoenix-Aberdeen Series Fund
(1996-present). Vice President, Fund
Accounting, Phoenix Equity Planning
Corporation (1994-present). Second Vice
President and Treasurer, Fund Accounting,
Phoenix Home Life Mutual Insurance Company
(1994-1995). Various positions with Phoenix
Home Life Insurance Company (1987-1994).
G. Jeffrey Bohne (48) Secretary Vice President, Transfer Agent Operations,
101 Munson St. Phoenix Equity Planning Corporation
Greenfield, MA 03101 (1993-present). Secretary, the Phoenix Funds
(1993-present). Clerk and Secretary,
Phoenix-Aberdeen Series Fund (1996-present)
and Clerk, Phoenix Investment Counsel, Inc.
(1995-present). Vice President and General
Manager, Phoenix Home Life Mutual Insurance
Company (1993-1995). Vice President, Home
Life Insurance Company (1984-1992).
</TABLE>
For services rendered to the Fund during the period ended December 31, 1995,
the Trustees received an aggregate of $0 from the Fund as Trustees' fees.
Each Trustee who is not a full-time employee of the Adviser or any of its
affiliates currently receives a retainer at the annual rate of $3,000 and
$500 per meeting. Each Trustee who serves on a Committee receives a fee of
$250 for each meeting attended. Officers are compensated for their services
by the Adviser and receive no compensation from the Fund. Estimated payments
for the 1996 fiscal year are noted below:
COMPENSATION TABLE
<TABLE>
<CAPTION>
Pension or Total
Retirement Estimated Compensation
Benefits Annual From Fund and
Aggregate Accrued Benefits Fund Complex
Compensation as Part of Upon Paid to
Name From Fund Fund Expenses Retirement Trustees
----------------------- ----------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
C. Duane Blinn $5,500 None None $61,500
Robert Chesek 5,500 None None 53,500
E. Virgil Conway 5,500 None None 87,500
William W. Crawford 5,500 None None 32,500
Harry Dalzell-Payne 5,500 None None 53,500
William N. Georgeson 5,500 None None 35,000
Francis E. Jeffries None None None None
Leroy Keith, Jr. 5,500 None None 53,500
Philip R. McLoughlin None None None None
Everett L. Morris 5,500 None None 86,000
James M. Oates 5,500 None None 61,500
Richard A. Pavia 5,500 None None 32,500
Calvin J. Pederson None None None None
Philip R. Reynolds 5,500 None None 53,500
Herbert Roth, Jr. 5,500 None None 65,500
Richard E. Segerson 5,500 None None 61,500
Lowell P. Weicker, Jr. 5,500 None None 61,500
</TABLE>
19
<PAGE>
THE INVESTMENT ADVISERS
The offices of Phoenix Investment Counsel, Inc. ("PIC") are located at 56
Prospect Street, Hartford, Connecticut 06115. The offices of Duff & Phelps
Investment Management Co, Inc. ("DPM") are located at 55 East Monroe Street,
Suite 3800, Chicago, Illinois 60603.
All of the outstanding stock of PIC is owned by Phoenix Equity Planning
Corporation ("Equity Planning"), a subsidiary of Phoenix Duff & Phelps
Corporation. DPM is also a subsidiary of Phoenix Duff & Phelps Corporation.
Phoenix Duff & Phelps Corporation is an indirect, less than wholly-owned
subsidiary of Phoenix Home Life Mutual Insurance Company ("Phoenix Home
Life") of Hartford, Connecticut.
Phoenix Home Life is a mutual insurance company engaged in the insurance
and investment businesses. Phoenix Home Life's principal place of business is
located at One American Row, Hartford, Connecticut, where the company manages
combined assets of approximately $13 billion through advisory accounts and
mutual funds.
The Advisers provide certain services and facilities required to carry on
the day-to-day operations of the Fund (for which they receive a management
fee) other than the costs of printing and mailing proxy materials, reports
and notices to shareholders; legal, auditing and accounting services;
regulatory filing fees and expenses of printing the Fund's registration
statements (but the Underwriter purchases such copies of the Fund's
prospectuses and reports and communications to shareholders as it may require
for sales purposes at printer's over-run cost); insurance expense;
association membership dues; brokerage fees; and taxes.
Equity Planning, the National Distributor of the Fund's shares, also
performs bookkeeping, pricing, and administrative services for the Fund. It
provides bookkeeping and pricing services to two other investment companies
advised by the Advisers. (See "The National Distributor"). Equity Planning is
registered as a broker-dealer in fifty states. The principal office of Equity
Planning is located at 100 Bright Meadow Blvd., P.O. Box 2200, Enfield,
Connecticut 06083-2200.
All costs and expenses (other than those specifically referred to as being
borne by the Advisers) incurred in the operation of the Fund are borne by the
Fund. Each Portfolio pays expenses incurred in its own operation and also
pays a portion of the Fund's general administration expenses allocated on the
basis of the asset size of the respective Portfolio, except where an
allocation using an alternative method can be more fairly made. Such expenses
include, but shall not be limited to, all expenses incurred in the operation
of the Fund and any public offering of its shares, including, among others,
interest, taxes, brokerage fees and commissions, fees of Trustees who are not
employees of the Adviser or any of its affiliates, expenses of Trustees' and
shareholders' meetings, including the cost of printing and mailing proxies,
expenses of insurance premiums for fidelity and other coverage, expenses of
repurchase and redemption of shares, expenses of issue and sale of shares (to
the extent not borne by Equity Planning under its agreement with the Fund),
expenses of printing and mailing stock certificates representing shares of
the Fund, association membership dues, charges of custodians, transfer
agents, dividend disbursing agents and financial agents, bookkeeping,
auditing, and legal expenses. The Fund will also pay the fees and bear the
expense of registering and maintaining the registration of the Fund and its
shares with the Securities and Exchange Commission and registering or
qualifying its shares under state or other securities laws and the expense of
preparing and mailing prospectuses and reports to shareholders.
The investment advisory agreements provide that the Advisers shall not be
liable to the Fund or to any shareholder of the Fund for any error of
judgment or mistake of law or for any loss suffered by the Fund or by any
shareholder of the Fund in connection with the matters to which the
investment advisory agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
the Advisers in the performance of its duties thereunder.
As full compensation for the services and facilities furnished to the
Fund, the Advisers are entitled to a fee, payable monthly, as described on
page 14 in the Prospectus. There is no assurance that the Fund will reach net
asset levels high enough to realize reductions in the rates of the advisory
fees. Any reduction in the rate of the advisory fee on all Portfolios will be
prorated among the Portfolios in proportion to their respective averages of
the aggregate daily net asset values for the period for which the fee had
been paid.
The advisory agreements continue in force from year to year for all
Portfolios, provided that, with respect to each Portfolio, the agreement must
be approved at least annually by the Trustees or by vote of a majority of the
outstanding voting securities of the Portfolio. In addition, and in either
event, the terms of the agreement and any renewal thereof must be approved by
the vote of a majority of the Trustees who are not parties to the agreement
or interested persons (as that term is defined in the Investment Company Act
of 1940) of any such party, cast in person at a meeting called for the
purpose of voting on such approval. The agreements will terminate
automatically if assigned and may be terminated at any time, without payment
of any penalty, either by the Fund or by the Adviser, on sixty (60) days
written notice.
BROKERAGE ALLOCATION
In effecting portfolio transactions for the Fund, the Advisers adhere to
the Fund's policy of seeking best execution and price, determined as
described below, except to the extent it is permitted to pay higher brokerage
commissions for "brokerage and research services" as
20
<PAGE>
defined herein. The Advisers may cause the Fund to pay a broker an amount of
commission for effecting a securities transaction in excess of the amount of
commission which another broker or dealer would have charged for effecting
the transaction if the Advisers determine in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or that any offset of direct
expenses of a Portfolio yields the best net price. As provided in Section
28(e) of the Securities Exchange Act of 1934, "brokerage and research
services" include giving advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities; furnishing analyses and reports concerning
issuers, industries, economic factors and trends, portfolio strategy and the
performance of accounts; and effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement). Brokerage
and research services provided by brokers to the Fund or to the Adviser are
considered to be in addition to and not in lieu of services required to be
performed by the Advisers under their contracts with the Fund and may benefit
both the Fund and other clients of the Advisers. Conversely, brokerage and
research services provided by brokers to other clients of the Advisers may
benefit the Fund.
If the securities in which a particular Portfolio of the Fund invests are
traded primarily in the over-the-counter market, where possible the Portfolio
will deal directly with the dealers who make a market in the securities
involved unless better prices and execution are available elsewhere. Such
dealers usually act as principals for their own account. On occasion,
securities may be purchased directly from the issuer. Bonds and money market
instruments are generally traded on a net basis and do not normally involve
either brokerage commission or transfer taxes.
The determination of what may constitute best execution and price in the
execution of a securities transaction by a broker involves a number of
considerations including, without limitation, the overall direct net economic
result to the Fund (involving both price paid or received and any net
commissions and other costs paid), the efficiency with which the transaction
is effected, the ability to effect the transaction at all where a large block
is involved, the availability of the broker to stand ready to execute
possibly difficult transactions in the future and the financial strength and
stability of the broker. Such considerations are judgmental and are weighed
by the Adviser in determining the overall reasonableness of brokerage
commissions paid by the Fund. Some portfolio transactions are, subject to the
Rules of Fair Practice of the National Association of Securities Dealers,
Inc. and subject to obtaining best prices and executions, effected through
dealers (excluding Equity Planning) who sell shares of the Fund.
DETERMINATION OF NET ASSET VALUE
The net asset value of shares of the Fund is determined once daily as of
the close of trading on the New York Stock Exchange on each day during which
the Exchange is open for trading. The New York Stock Exchange is scheduled to
be closed for trading on the following days: New Years Day, Washington's
Birthday, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The Board of Directors of the Exchange
reserves the right to change this schedule as conditions warrant.
Balanced, Managed Bond, Growth, Enhanced Reserves and U.S. Government
Securities Portfolios
In determining the value of the assets of each Portfolio other than the
Money Market Portfolio, the securities for which market quotations are
readily available are valued at market value, which is currently determined
using the last reported sale price, or, if no sales are reported--as is the
case with many securities traded over-the-counter--the last reported bid
price. Debt securities (other than short-term obligations, which are valued
on the basis of amortized cost as defined below) are normally valued on the
basis of valuations provided by a pricing service when such prices are
believed to reflect the fair value of such securities. Prices provided by the
pricing service may be determined without exclusive reliance on quoted prices
and take into account appropriate factors such as institution-size trading in
similar groups of securities, yield, quality of issue, trading
characteristics and other market data. All other securities and assets are
valued at their fair value as determined in good faith by the Trustees
although the actual calculations may be made by persons acting pursuant to
the direction of the Trustees.
Money Market Portfolio
The assets of the Money Market Portfolio are valued on the basis of
amortized cost absent extraordinary or unusual market conditions. Under the
amortized cost method of valuation, securities are valued at cost on the date
of purchase. Thereafter the value of a security is increased or decreased
incrementally each day so that at maturity any purchase discount or premium
is fully amortized and the value of the security is equal to its principal
amount. Due to fluctuations in interest rates, the amortized cost value of
the Money Market Portfolio securities may at times be more or less than their
market value. By using amortized cost valuation, the Money Market Portfolio
seeks to maintain a constant net asset value of $1.00 per share despite minor
shifts in the market value of its portfolio securities.
The yield on a shareholder's investment may be more or less than that
which would be recognized if the Portfolio's net asset value per share was
not constant and was permitted to fluctuate with the market value of the
Portfolio's portfolio securities. However, as a result of the following
procedures, it is believed that any difference will normally be minimal. The
deviation is monitored periodically by comparing the Portfolio net asset
value per share as determined by using available market quotations with its
net asset value per share as determined through the use of the amortized cost
method of valuation. The Adviser will advise the Trustees promptly in the
event of any significant deviation. If the deviation exceeds 1/2 of 1%, the
Trustees will consider what action, if any, should be initiated to provide
fair valuation of the Portfolio's portfolio securities and prevent material
dilution or other unfair results to shareholders. Such action may include
redemption of shares in kind, selling portfolio securities prior to maturity,
withholding dividends or utilizing a net asset value per share as determined
by using available market quotations. Furthermore,
21
<PAGE>
the assets of the Portfolio will not be invested in any security with a
maturity of greater than 397 days, and the average weighted maturity of its
portfolio will not exceed 90 days. Portfolio investments will be limited to
U.S. dollar-denominated securities which present minimal credit risks and are
rated within the two highest "short-term" rating categories as more
particularly described in the Prospectus.
PURCHASE OF SHARES
The Prospectus includes information as to the offering price of shares of
the Portfolio and the minimum initial and subsequent investments which may be
made in a Portfolio. Sales of shares are made through registered
representatives of Equity Planning, or through securities dealers with whom
Equity Planning has sales agreements. Sales of shares are also made to
customers of bank affiliated securities brokers with whom Equity Planning has
sales agreements. Customers purchase shares at the applicable offering price.
Each Portfolio currently declares all income dividends and all capital
gain distributions, if any, payable in shares of the Fund at net asset value
or, at the option of the shareholder, in cash. The Money Market Portfolio
will normally make no capital gain distributions, since its investments will
generally be made in securities which do not generate capital gains. Unless
otherwise specified in writing, shareholders shall automatically receive both
dividends and capital gain distributions in additional shares. If a
shareholder elects to receive dividends and/or distributions in cash and the
check cannot be delivered or remains uncashed by the shareholder due to an
invalid address, then the dividend and/or distribution will be reinvested
after the Transfer Agent has been informed that the proceeds are
undeliverable. Additional shares will be purchased for the shareholder's
account at the then current net asset value. Reinvestment direction forms and
prospectuses are available from Equity Planning. An alternate payee section
has been incorporated into the application allowing distributions to be
mailed to a second payee and/or address. Dividends and capital gain
distributions received in shares are taxable to the shareholder and credited
in full and fractional shares computed at the closing net asset value on the
next business day after the record date. To be effective with respect to a
particular dividend or distribution, notification of the new distribution
option must be received by the Transfer Agent at least three days prior to
the record date of such dividend or distribution. If all shares in the
shareholder's account are repurchased or redeemed or transferred between the
record date and the payment date of a dividend or distribution, he will
receive cash for the dividend or distribution regardless of the distribution
option selected.
TAXES
As stated in the Prospectus, each Portfolio is treated as a separate
entity for federal income tax purposes. Each Portfolio intends to elect to be
treated as a regulated investment company ("RIC") and qualify as such under
Subchapter M of the Internal Revenue Code (the "Code").
The Code sets forth numerous criteria which must be satisfied in order for
each Portfolio to qualify as a RIC. Each Portfolio must, among other things,
meet the following tests for each taxable year: (1) at least 90% of the
Portfolio's gross income must be derived from a) dividends, b) interest, c)
payments with respect to securities loans, d) gains from the sale or other
disposition of stocks or securities or foreign currencies, or e) other income
(including but not limited to gains from options, futures, or forward
contracts) derived by the Portfolio with respect to its business of investing
in stocks, securities or currencies; (2) less than 30% of the Portfolio's
gross income must be derived from gains realized on the sale or other
disposition of: a) stocks or securities b) options, futures or forward
contracts (other than options, futures, or forward contracts on foreign
currencies) held less than three months; and c) foreign currencies (or
options, futures, or forward contracts) not directly related to the Portfolio
business of investing in stocks or securities; and (3) distribute annually at
least 90% of its investment company taxable income and net exempt-interest
income.
In addition to the gross income tests, to qualify as a RIC, each Portfolio
must also diversify its holdings so that, at the close of each quarter of its
taxable year, (1) at least 50% of the value of its total assets consists of
cash, cash items, U.S. Government securities, and other securities limited
generally with respect to any one issuer to not more than 5% of the total
assets of the Portfolio and not more than 10% of the outstanding voting
securities of such issuer, and (2) not more than 25% of the value of its
total assets is invested in the assets of any one issuer (other than U.S.
Government securities). If in any taxable year a Portfolio does not qualify
as a RIC, all of its net investment income and realized capital gains will be
taxed at corporate rates.
In each taxable year that a Portfolio qualifies as a RIC, it (but not its
shareholders) will be relieved of federal income tax on that portion of its
net investment income and net capital gains that are currently distributed
(or deemed distributed) to its shareholders. It is the policy of each
Portfolio to distribute all of its net investment income and net capital
gains to its shareholders in order to avoid any federal income tax liability.
In addition, each Portfolio intends to make timely distribution sufficient in
amount to avoid a non-deductible 4% excise tax. An excise tax will be imposed
on each Portfolio to the extent that it fails to distribute, with respect to
each calendar year, at least 98% of its net ordinary income for such calendar
year and 98% of its net capital gains as determined for the one year period
ending December 31 of such calendar year. In addition, an amount equal to the
undistributed net ordinary income and net capital gains from the previous
calendar year must also be distributed to avoid the excise tax.
The Fund is required to withhold for income taxes 31% of dividends,
distributions and redemption payments, if any of the following circumstances
exist: i) a shareholder fails to provide the Fund with a correct taxpayer
identification number (TIN); ii)
22
<PAGE>
the Portfolio is notified by the Internal Revenue Service that the
shareholder furnished an incorrect TIN; or iii) the Fund is notified by the
Internal Revenue Service that withholding is required because the shareholder
failed to report the receipt of dividends or interest from other sources.
Withholding may also be required for accounts with respect to which a
shareholder fails to certify that i) the TIN provided is correct and ii) the
shareholder is not subject to such withholding. However, withholding will not
be required from certain exempt entities nor those shareholders complying
with the procedures as set forth by the Internal Revenue Service. A
shareholder is required to provide the Fund with a correct TIN. The Fund in
turn is required to report correct taxpayer identification numbers when
filing all tax forms with the Internal Revenue Service. Should the IRS levy a
penalty on a Portfolio for reporting an incorrect TIN and that TIN was
provided by the shareholder, the Portfolio will pass the penalty onto the
shareholder.
Dividends paid by a Portfolio from net investment income and net realized
short-term capital gains to a shareholder who is a nonresident alien
individual, a foreign Fund or estate, a foreign corporation or a foreign
partnership (a foreign shareholder) will be subject to United States
withholding tax at a rate of 30% unless a reduced rate of withholding or a
withholding exemption is provided under applicable treaty law. Foreign
shareholders are urged to consult their own tax advisors concerning the
applicability of the United States withholding tax and any foreign taxes.
The discussion of "Dividends, Distributions and Taxes" in the Prospectus,
in conjunction with the foregoing, is a general and abbreviated summary of
applicable provisions of the Code and Treasury regulations now in effect as
currently interpreted by the courts and the Internal Revenue Service. The
Code and regulations, as well as the current interpretations thereof, may be
changed at any time by legislative, judicial, or administrative action.
Shareholders are urged to consult with their tax advisor regarding specific
questions as to federal, state, local or foreign taxes.
THE NATIONAL DISTRIBUTOR
Phoenix Equity Planning Corporation ("Equity Planning"), which has
undertaken to use its best efforts to find purchasers for shares of the Fund,
serves as the National Distributor of the Fund's shares. Shares of each
Portfolio are offered on a continuous basis. Pursuant to distribution
agreements for each class of shares or distribution method, the Distributor
will purchase shares of the Fund for resale to the public, either directly or
through securities dealers or agents, and is obligated to purchase only those
shares for which it has received purchase orders. Equity Planning may also
sell Fund shares pursuant to sales agreements entered into with
bank-affiliated securities brokers who, acting as agent for their customers,
place orders for Fund shares with Equity Planning. Although the
Glass-Steagall Act prohibits banks and bank affiliates from engaging in the
business of underwriting, distributing or selling securities (including
mutual fund shares), banking regulators have not indicated that such
institutions are prohibited from purchasing mutual fund shares upon the order
and for the account of their customers. In addition, state securities laws on
this issue may differ from the interpretations of federal law and banks and
financial institutions may be required to register as dealers pursuant to
state law. If, because of changes in law or regulations, or because of new
interpretations of existing law, it is determined that agency transactions of
bank-affiliated securities brokers are not permitted, the Trustees will
consider what action, if any, is appropriate. It is not anticipated that
termination of sales agreements with bank-affiliated securities brokers would
result in a loss to their customers or a change in the net asset value per
share of a Portfolio.
Philip R. McLoughlin is a Trustee and an officer of the Fund and a
director and officer of Equity Planning. G. Jeffrey Bohne, James M. Dolan,
William R. Moyer, Leonard J. Saltiel, and Nancy G. Curtiss are officers of
the Fund and officers of Equity Planning.
Pursuant to a Financial Agent Agreement, Equity Planning provides
bookkeeping and pricing services directly to the Fund. As compensation for
such services, Equity Planning receives a quarterly fee based on the average
of the aggregate daily net asset values of the Fund at an annual rate of $300
per million dollars. It is expected that the compensation to Equity Planning
will be approximately equal to the cost to Equity Planning of providing the
services provided for in the Financial Agent Agreement.
In addition, pursuant to an agreement between Equity Planning, the Fund's
Transfer Agent, and State Street Bank and Trust Company, State Street has
been appointed subagent to perform certain shareholder servicing functions
for the Fund. For performing such services State Street receives a monthly
fee from Equity Planning.
23
<PAGE>
ADDITIONAL INFORMATION
Financial Statements
The financial statements for the Fund SAI as of June 30, 1996 are
incorporated by reference.
Independent Accountants
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts, has been
selected as the independent accountants for the Fund. Price Waterhouse LLP
audits the Fund's annual financial statements and expresses an opinion
thereon.
Reports to Shareholders
The fiscal year of the Fund ends on December 31. The Fund will send to its
shareholders at least semi-annually reports showing the securities of the
Fund's portfolio and other information.
24
<PAGE>
INVESTMENTS AT JUNE 30, 1996
(Unaudited)
MOODY'S PAR
BOND VALUE
RATING (000) VALUE
------ ------- -------------
U.S. GOVERNMENT SECURITIES--17.1%
U.S. Treasury Notes--14.0%
U.S. Treasury Notes 7.25%, '96 (h) Aaa $4,100 $ 4,128,946
U.S. Treasury Notes 6.375%, '99 .. Aaa 1,225 1,228,063
U.S. Treasury Notes 6.625%, '01 .. Aaa 1,600 1,610,500
U.S. Treasury Notes 6.875%, '06 .. Aaa 625 631,835
U.S. Treasury Notes 6%, '26 ...... Aaa 260 230,587
-------------
7,829,931
-------------
Agency Mortgage-Backed
Securities--3.1%
GNMA 6.50%, '23 .................. Aaa 1,110 1,034,828
GNMA 6.50%, '26 .................. Aaa 754 702,190
-------------
1,737,018
-------------
TOTAL U.S. GOVERNMENT SECURITIES
(Identified cost $9,605,127) ........................ 9,566,949
-------------
NON-CONVERTIBLE BONDS--8.7%
Non-Agency Mortgage-Backed
Securities--7.6%
Airplanes Pass Through Trust 1D
10.875%, '19 ..................... Ba 100 104,000
CS First Boston Mtg. 95-AE1, B
7.182%, '27 ...................... AA-(d) 191 183,904
DLJ Mortgage 96-CF1, A1B 144A
7.58%, '28 (c) ................... Aaa 75 75,187
G.E. Capital Mortgage Service
96-8, M 7.25%, '26 ............... AA(d) 250 234,922
Green Tree Financial Corp. 96-2,
M1 7.60%, '27 .................... Aa 100 98,062
Green Tree Financial Corp. 96-3,
B1 7.70%, '27 .................... Baa 300 297,000
Lehman Commercial Conduit 95-C2, B
7.18404%, '05 .................... AA(d) 225 218,953
Merrill Lynch Mortgage, Inc.
95-C2, B 7.53%, '21 .............. Aa 96 96,369
Merrill Lynch Mortgage, Inc.
95-C3, B 7.14856%, '25 ........... AA(d) 250 240,977
Non-Agency Mortgage-Backed
Securities--continued
Merrill Lynch Mortgage, Inc.
96-C1, B 7.42%, '28 .............. AA(d) $ 130 $ 127,887
Nationslink Funding Corp. 96-1, B
7.69%, '05 ....................... AA(d) 250 249,844
Residential Funding Mtg. 96-S8, A4
6.75%, '11 ....................... AAA(d) 297 283,733
Residential Funding Mtg. 96-S1,
A11 7.10%, '26 ................... AAA(d) 500 466,484
Residential Funding Mtg. 96-S4, M1
7.25%, '26 ....................... AA(d) 299 281,791
Resolution Trust Corp. 93-C1, B
8.75%, '24 ....................... Aa 200 204,715
Resolution Trust Corp. 95-C2, B
6.80%, '27 ....................... Aa 456 434,722
Resolution Trust Corp. 95-C1, B
6.90%, '27 ....................... Aa 225 214,805
SASC 95-C1, C 7.375%, '24 ........ A(d) 300 290,250
SASC 96-CFL, C 6.525%, '28 ....... A(d) 155 147,444
-------------
4,251,049
-------------
Oil--0.2%
Petropower Funding 144A 7.36%, '14
(c) .............................. BBB(d) 150 139,965
-------------
Paper & Forest Products--0.5%
Buckeye Cellulose Corporation
8.50%, '05 ....................... Ba 300 285,000
-------------
Publishing, Broadcasting, Printing
& Cable--0.2%
Rogers Communications, Inc.
9.125%, '06 ...................... B 100 93,000
-------------
Truckers & Marine--0.2%
Teekay Shipping Corp. 8.32%, '08 . Ba 100 94,000
-------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $5,031,061) ........................ 4,863,014
-------------
See Notes to Financial Statements
2
<PAGE>
FOREIGN GOVERNMENT SECURITIES--2.8%
Argentina--0.7%
Republic of Argentina Discount
L-GL Euro 6.4375%, '23 (f) ....... B $ 350 $ 245,000
Republic of Argentina Global Euro
8.375%, '03 ...................... B 150 130,875
-------------
375,875
-------------
Brazil--0.4%
Republic of Brazil C Bond, PIK
Interest Capitalization, 8%, '14
(f) .............................. B 108 67,451
Republic of Brazil Par Z-L Euro
5%, '24 (f) ...................... B 300 166,125
-------------
233,576
-------------
Colombia--0.5%
Republic of Colombia 7.25%, '03 .. Baa 300 282,399
-------------
Mexico--0.4%
United Mexican Discount B Euro
6.3906%, '19 (e) (f) ............. Ba 300 236,250
-------------
Panama--0.5%
Republic of Panama PDI WI, '49 (b)
(g) .............................. NR 450 275,625
-------------
Poland--0.3%
Republic of Poland PDI B 3.75%,
'14 (f) .......................... Baa 200 152,250
-------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $1,487,145) ........................ 1,555,975
-------------
FOREIGN NON-CONVERTIBLE BONDS--0.7%
Indonesia--0.3%
Asia Pulp & Paper Co. Yankee
11.75%, '05 ...................... Ba 150 154,312
-------------
Philippines--0.4%
Bank of Philippines PCIR Euro
6.25%, '17 (f) ................... Ba 270 215,325
-------------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $350,554) .......................... 369,637
-------------
MUNICIPAL BONDS--4.3%
California--1.1%
Kern County Pension Obligation
Taxable 7.26%, '14 ............... Aaa 200 192,084
Long Beach Pension Obligation
Taxable 6.87%, '06 ............... Aaa 100 97,037
San Bernardino County Obligation
Revenue Taxable 6.87%, '08 ....... Aaa 50 48,242
San Bernardino County Obligation
Revenue Taxable 6.94%, '09 ....... Aaa 135 130,600
Ventura County Pension Taxable
6.54%, '05 ....................... Aaa 125 119,955
-------------
587,918
-------------
Florida--1.5%
Miami Beach Special Obligation
Taxable 8.60%, '21 ............... Aaa $ 395 $ 422,077
University Miami Exchange Revenue
A Taxable 7.65%, '20 ............. Aaa 450 438,224
-------------
860,301
-------------
Michigan--0.3%
Michigan Public Power Agency
Sinker 5.25%, '18 ................ Aaa 185 170,015
-------------
South Carolina--0.2%
South Carolina Public Service
Series C 5%, '25 ................. Aaa 155 133,765
-------------
Virginia--1.2%
Newport News Taxable Series B
7.05%, '25 ....................... Aa 750 689,692
-------------
TOTAL MUNICIPAL BONDS
(Identified cost $2,558,796) ........................ 2,441,691
-------------
SHARES
------
COMMON STOCKS--54.1%
Aerospace & Defense--2.0%
Boeing Company ........................ 7,100 618,587
United Technologies Corp. ............. 4,400 506,000
-------------
1,124,587
-------------
Airlines--2.0%
AMR Corp. (b) ......................... 7,100 646,100
Delta Airlines, Inc. .................. 5,700 473,100
-------------
1,119,200
-------------
Banks--1.9%
Citicorp .............................. 5,500 454,437
NationsBank Corp. ..................... 7,000 578,375
-------------
1,032,812
-------------
Beverages--2.9%
Coca Cola Co. ......................... 14,600 713,575
Northland Cranberries, Inc. Class A ... 30,500 915,000
-------------
1,628,575
-------------
Chemical--0.9%
Monsanto Co. .......................... 15,800 513,500
-------------
Computer Software & Services--4.0%
Computer Associates International, Inc. 6,100 434,625
Computer Sciences Corp. (b) ........... 6,100 455,975
First Data Corp. ...................... 5,800 461,825
Microsoft Corp. (b) ................... 2,700 324,338
Netscape Communications Corp. (b) ..... 4,800 298,800
Oracle Systems Corp. (b) .............. 7,300 287,894
-------------
2,263,457
-------------
Conglomerates--1.0%
Tyco International Ltd. ............... 14,200 578,650
-------------
Diversified Financial Services--1.3%
Green Tree Financial Corp. ............ 9,100 284,374
Travelers Group, Inc. ................. 10,100 460,813
-------------
745,187
-------------
3
<PAGE>
SHARES VALUE
------ ------------
Electrical Equipment--1.2%
General Electric Co. ....................... 7,800 $ 674,700
------------
Electronics--2.1%
Intel Corp. ................................ 4,800 352,500
Perkin Elmer Corp. ......................... 5,900 284,675
Waters Corporation (b) ..................... 16,500 544,500
------------
1,181,675
------------
Entertainment, Leisure & Gaming--0.8%
Walt Disney Co. ............................ 6,700 421,263
------------
Healthcare--Diversified--1.1%
QIAGEN NV (b) (Netherlands) ................ 12,300 186,037
Vical, Inc. (b) ............................ 27,000 432,000
------------
618,037
------------
Healthcare--Drugs--1.0%
Merck & Co., Inc. .......................... 4,400 284,350
Pfizer, Inc. ............................... 3,800 271,225
------------
555,575
------------
Hospital Management & Services--1.1%
U.S. Healthcare, Inc. ...................... 10,600 583,000
------------
Insurance--1.0%
Aetna Life & Casualty Co. .................. 7,800 557,700
------------
Lodging & Restaurants--1.1%
Hilton Hotels Corp. ........................ 5,200 585,000
------------
Machinery--1.0%
Deere & Co. ................................ 14,100 564,000
------------
Medical Products & Supplies--4.1%
Boston Scientific Corp. (b) ................ 13,600 612,000
Guidant Corp. .............................. 11,600 571,300
Medtronic, Inc. ............................ 12,400 694,400
Neuromedical Systems, Inc. (b) ............. 27,400 411,000
------------
2,288,700
------------
Natural Gas--2.2%
Anadarko Petroleum Corp. ................... 7,800 452,400
Apache Corp. ............................... 8,700 286,013
Seagull Energy Corp. (b) ................... 20,600 515,000
------------
1,253,413
------------
Office & Business Equipment--2.4%
Hewlett Packard Co. ........................ 4,000 398,500
Sun Microsystems, Inc. (b) ................. 7,600 447,450
Xerox Corp. ................................ 9,500 508,250
------------
1,354,200
------------
Oil--2.5%
Louisiana Land & Exploration Co. ........... 10,200 587,775
Noble Affiliates, Inc. ..................... 13,900 524,725
Pogo Producing Co. ......................... 7,800 297,375
------------
1,409,875
------------
Oil Service & Equipment--4.6%
Digicon, Inc. (b) .......................... 12,000 $ 201,000
Noble Drilling Corporation (b) ............. 40,600 563,325
Pride Petroleum Services, Inc. (b) ......... 16,800 239,400
Seacor Holdings, Inc. (b) .................. 11,900 532,525
Sonat Offshore Drilling, Inc. .............. 11,100 560,550
Western Atlas, Inc. (b) .................... 8,600 500,950
------------
2,597,750
------------
Professional Services--1.6%
Corrections Corporation of America (b) ..... 7,900 553,000
HFS, Inc. (b) .............................. 4,400 308,000
------------
861,000
------------
Publishing, Broadcasting, Printing &
Cable--2.1%
American Radio Systems Corp. (b) ........... 7,300 313,900
Infinity Broadcasting Corp. Class A (b) .... 8,800 264,000
U.S. Office Products Co. (b) ............... 14,200 596,400
------------
1,174,300
------------
Retail--0.9%
Petsmart, Inc. (b) ......................... 7,600 362,900
Saks Holdings, Inc. (b) .................... 3,500 119,438
------------
482,338
------------
Telecommunications Equipment--2.7%
Cisco Systems, Inc. (b) .................... 8,400 475,650
McLeod, Inc. (b) ........................... 16,700 400,800
Newbridge Networks Corp. (b) ............... 6,000 393,000
U.S. Robotics Corporation (b) .............. 3,100 265,050
------------
1,534,500
------------
Tobacco--2.3%
Philip Morris Companies, Inc. .............. 5,500 572,000
RJR Nabisco Holdings Corp. ................. 22,400 694,400
------------
1,266,400
------------
Truckers & Marine--0.2%
Airnet Systems, Inc. (b) ................... 7,800 124,800
------------
Utility--Telephone--2.1%
AT&T Corp. ................................. 10,900 675,800
MCI Communications Corp. ................... 20,000 512,500
------------
1,188,300
------------
TOTAL COMMON STOCKS
(Identified cost $27,802,971) ....................... 30,282,494
------------
CONVERTIBLE PREFERRED STOCKS--0.7%
Tobacco--0.7%
RJR Nabisco, Inc. 9.25% PERCS .............. 60,700 394,550
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified cost $374,822) .......................... 394,550
------------
TOTAL LONG-TERM INVESTMENTS--88.4%
(Identified cost $47,210,476) ....................... 49,474,310
------------
4
<PAGE>
STANDARD
& PAR
POOR'S VALUE
RATING (000) VALUE
------- ----- -------------
SHORT-TERM OBLIGATIONS--13.7%
Commercial Paper--7.7%
Emerson Electric Co. 5.55%,
7-1-96 ...................... A-1+ $ 210 $ 210,000
Wal-Mart Stores, Inc. 5.27%,
7-1-96 ...................... A-1+ 2,325 2,325,000
Preferred Receivables Funding
Corp. 5.40%, 7-3-96 ......... A-1 945 944,717
General Re Corp. 5.37%,
8-5-96 ...................... A-1+ 845 840,588
-------------
4,320,305
-------------
PAR
VALUE
(000) VALUE
------- --------------
Federal Agency
Securities--6.0%
U.S. Treasury
Bills 4.80%,
7-11-96 ......... $3,360 $ 3,355,520
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost
$7,675,825) ............... 7,675,825
--------------
TOTAL
INVESTMENTS--102.1%
(Identified cost
$54,886,301) .............. 57,150,135(a)
Cash and receivables, less
liabilities--(2.1%) ....... (1,154,385)
--------------
NET ASSETS--100.0% ......... $55,995,750
==============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $3,249,230 and gross
depreciation of $985,396 for income tax purposes. At June 30, 1996, the
aggregate cost of securities for federal income tax purposes was
$54,886,301.
(b) Non-income producing.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30,
1996, these securities amounted to a value of $215,152 or 0.4% of net
assets.
(d) As rated by Standard & Poor's, Fitch or Duff and Phelps.
(e) Rights incorporated as a unit.
(f) Variable or step coupon bond; interest rate shown reflects the rate
currently in effect.
(g) When issued.
(h) Segregated as collateral for the when issued obligation.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(Unaudited)
Assets
Investment securities at value
(Identified cost $54,886,301) $57,150,135
Cash 4,817
Receivables
Investment securities sold 2,330,235
Fund shares sold 8,311
Dividends and interest 242,790
Prepaid expenses 37,332
------------
Total assets 59,773,620
------------
Liabilities
Payables
Investment securities purchased 3,644,046
Fund shares repurchased 71,053
Investment advisory fee 7,082
Trustees' fee 3,832
Transfer agent fee 3,649
Distribution fee 2,443
Financial agent fee 1,395
Accrued expenses 44,370
------------
Total liabilities 3,777,870
------------
Net Assets $55,995,750
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $52,036,295
Undistributed net investment income 65,084
Accumulated net realized gain 1,630,537
Net unrealized appreciation 2,263,834
------------
Net Assets $55,995,750
============
Class X
Shares of beneficial interest outstanding, $1 par
value,
unlimited authorization (Net Assets $44,442,549) 2,461,627
Net asset value and offering price per share $18.05
Class Y
Shares of beneficial interest outstanding, $1 par
value,
unlimited authorization (Net Assets $11,553,201) 639,829
Net asset value and offering price per share $18.06
STATEMENT OF OPERATIONS
FROM INCEPTION MARCH 1, 1996
TO JUNE 30, 1996
(Unaudited)
Investment Income
Dividends $ 130,496
Interest 585,355
------------
Total investment income 715,851
------------
Expenses
Investment advisory fee 107,893
Distribution fee--Class Y 10,557
Financial agent fee 5,885
Registration 36,491
Transfer agent 12,035
Custodian 11,280
Professional 10,200
Trustees 10,040
Printing 5,265
Miscellaneous 3,201
------------
Total expenses 212,847
Less expenses borne by investment adviser (74,779)
------------
Net expenses 138,068
------------
Net investment income 577,783
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 1,630,537
------------
Net unrealized appreciation on investments end of
period 2,263,834
Less net unrealized appreciation in connection with
PHL Pooled Separate Account L 3,354,661
------------
Net change in unrealized appreciation
(depreciation) (1,090,827)
------------
Net gain on investments 539,710
------------
Net increase in net assets resulting from
operations $ 1,117,493
============
6
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
From Inception
3/1/96 to
6/30/96
--------------
From Operations
Net investment income $ 577,783
Net realized gain 1,630,537
Net change in unrealized appreciation (depreciation) (1,090,827)
--------------
Increase in net assets resulting from operations 1,117,493
--------------
From Distributions to Shareholders
Net investment income--Class X (413,704)
Net investment income--Class Y (98,995)
--------------
Decrease in net assets from distributions to
shareholders (512,699)
--------------
From Share Transactions
Class X
Proceeds from sales of shares (182,443 shares) 3,139,446
Net asset value of shares issued from reinvestment of
distributions (23,334 shares) 413,703
Net asset value of shares issued in conjunction with
conversion of PHL Pooled Separate Account L
(2,524,966 shares) 45,200,432
Cost of shares repurchased (269,116 shares) (4,783,107)
--------------
Total 43,970,474
--------------
Class Y
Proceeds from sales of shares (47,262 shares) 853,190
Net asset value of shares issued from reinvestment of
distributions (5,580 shares) 98,995
Net asset value of shares issued in conjunction with
conversion of PHL Pooled Separate Account L (721,462
shares) 12,915,189
Cost of shares repurchased (134,475 shares) (2,446,892)
--------------
Total 11,420,482
--------------
Increase in net assets from share transactions 55,390,956
--------------
Net increase in net assets 55,995,750
Net Assets
Beginning of period 0
--------------
End of period (including undistributed net investment
income of $65,084) $55,995,750
==============
7
<PAGE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
(Unaudited)
Class X Class Y
------------- --------------
From
Inception From Inception
3/1/96 to 3/1/96 to
6/30/96 6/30/96
------------- --------------
Net asset value, beginning of period $17.90 $17.90
Income from investment operations
Net investment income 0.18(3) (5) 0.17(3) (5)
Net realized and unrealized gain
(loss) 0.14 0.14
------------- --------------
Total from investment operations 0.32 0.31
------------- --------------
Less distributions
Dividends from net investment income (0.17) (0.15)
Dividends from net realized gains -- --
------------- --------------
Total distributions (0.17) (0.15)
------------- --------------
Change in net asset value 0.15 0.16
------------- --------------
Net asset value, end of period $18.05 $18.06
============= ==============
Total return 1.79% (2) 1.70% (2)
Ratios/supplemental data:
Net assets, end of period (thousands) $44,443 $11,553
Ratio to average net assets of:
Operating expenses 0.65% (1) 0.90% (1)
Net investment income 2.99% (1) 2.77% (1)
Portfolio turnover 97% (2) 97% (2)
Average commission rate paid (4) $0.0635 $0.0635
(1) Annualized
(2) Not annualized
(3) Computed using average shares outstanding.
(4) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
(5) Includes reimbursement of operating expenses by investment adviser of
$0.02 and $0.02, respectively.
8
<PAGE>
INSTITUTIONAL MANAGED BOND PORTFOLIO
INVESTMENT ADVISER'S REPORT
Over this latest reporting period, the outlook for the U.S. economy has
shifted dramatically. At year-end 1995, the consensus opinion on Wall Street
was for continued slow economic growth and benign inflation. During the first
six months of 1996, however, numerous reports were released which suggested
manufacturing activity, consumer spending and job growth had picked up
dramatically.
Bond investors reacted negatively to this upbeat economic news, believing
that a higher growth rate in the economy could potentially trigger higher
inflation, which would erode the value of their fixed-income securities.
Although we have not yet seen any compelling evidence of inflationary
pressures, bond prices continued to stumble during this reporting period as
interest rates climbed higher and talk of a Fed tightening later this summer
became more widespread. As of June 30, 1996, the yield on the widely watched
30-year Treasury bond has climbed to 6.91%, representing a 96 basis-point
jump year-to-date.
Phoenix Duff & Phelps Institutional Managed Bond Portfolio posted strong
results over this latest reporting cycle, outpacing the overall bond market
by wide margins. For six months ended June 30, 1996, the Fund's Class X
shares provided a total return of 2.00% and Class Y shares returned 1.88%.
According to the Lehman Brothers Aggregate Bond Index, an unmanaged, but
commonly used measure of bond performance, the market returned -1.22% for the
same period. All of these figures assume reinvestment of any distributions,
but exclude the effect of sales charges.
Our strategy of focusing on the more non-traditional sectors of the bond
market continued to pay-off handsomely in this difficult market environment.
Specifically, the Fund's strong performance can be attributed primarily to
its overweighting in emerging markets debt, high-yield corporate bonds,
commercial mortgage-backed securities and taxable municipals.
As we move into the second half of 1996, we have scaled back the Portfolio's
exposure to some of these non-traditional sectors as a result of their strong
performance year-to-date. From a valuation standpoint, current yield spreads
on these bonds appear to be less compelling than they were at the beginning
of the year. Although we are being much more selective, we are still finding
a number of undervalued sectors. Some of these opportunities include emerging
markets debt, commercial and non-agency residential mortgage-backed
securities, and taxable municipal bonds.
Going forward, we have a constructive outlook for the domestic bond market.
Based on the bearish tone of the market during the first six months of the
year, it appears that market participants may have overreacted to the risk of
inflation. In the Managed Bond Portfolio, we will continue to overweight
undervalued sectors of the bond market as our primary means of adding value
relative to our benchmark, the Lehman Brothers Aggregate Bond Index.
Average Annual Total Returns for Periods
Ending 6/30/96
1 Year 5 Year 10 Year
----------------------------------------------------------------
Class X 9.03% 9.52% 8.40%
----------------------------------------------------------------
Class Y 8.77% 9.24% 8.13%
----------------------------------------------------------------
Lehman Brothers Aggregate Bond
Index* 5.02% 8.26% 8.55%
----------------------------------------------------------------
Performance data is based on the Portfolio's past performance as a pooled
separate investment account of Phoenix Home Life Mutual Insurance Company
prior to March 1, 1996 (inception of the Fund). Returns indicate past
performance, which is not indicative of future performance. Investment return
and net asset value will fluctuate, so that your shares, when redeemed, may
be worth more or less than the original cost.
*The Lehman Brothers Aggregate Bond Index is an unmanaged but commonly used
measure of U.S. bond market performance. It is a combination of several
Lehman Brothers fixed income indexes.
9
<PAGE>
INVESTMENTS AT JUNE 30, 1996
(Unaudited)
MOODY'S PAR
BOND VALUE
RATING (000) VALUE
------- ------- -------------
U.S. GOVERNMENT SECURITIES--30.2%
U.S. Treasury Notes--17.8%
U.S. Treasury Notes 6.375%, '99 . Aaa $3,215 $ 3,223,038
U.S. Treasury Notes 6.625%, '01 . Aaa 6,780 6,824,494
U.S. Treasury Notes 6.875%, '06 . Aaa 1,775 1,794,411
-------------
11,841,943
-------------
Agency Mortgage-Backed Securities--12.4%
FHLMC 9%, '04 ................... Aaa 181 182,415
FHLMC 8.50%, '20 ................ Aaa 1,089 1,107,664
FHLMC 6.65%, '23 ................ Aaa 1,890 1,813,342
FNMA 7%, '07 .................... Aaa 1,014 977,257
FNMA 8.70%, '16 ................. Aaa 468 481,949
FNMA 7.50%, '19 ................. Aaa 1,840 1,800,127
FNMA 6.75%, '20 ................. Aaa 1,920 1,857,216
-------------
8,219,970
-------------
TOTAL U.S. GOVERNMENT SECURITIES
(Identified cost $19,811,019) ....................... 20,061,913
-------------
NON-CONVERTIBLE BONDS--34.0%
Non-Agency Mortgage-Backed Securities--30.6%
Airplanes Pass Through Trust 1C
8.15%, '19 ...................... Bbb 1,400 1,399,125
Airplanes Pass Through Trust 1D
10.875%, '19 .................... Ba 650 676,000
CitiCorp Mortgage Securities
91-9, B 9%, '21 ................. Aaa 400 403,375
DLJ Mortgage Acceptance 94-M11,
B1 8.10%, '04 ................... Baa 1,380 1,361,888
Eaglemark Trust 96-1A, 144A
6.25%, '02 (b) .................. Aaa 1,021 1,018,936
Equitable Life 174 C1, 144A
7.52%, '09 (b) .................. A 2,000 1,989,375
Green Tree Financial Corp. 96-4,
A 6 7.4%, '27 ................... Aaa 1,250 1,239,844
Kidder Peabody Acceptance Corp.
94-C2, D 7.18%, '05 ............. BBB(c) 990 950,400
National Car Rental 96-1, A2 144A
6.80%, '00 (b) .................. A(c) 1,000 996,250
Residential Funding Mortgage
93-S25, M3 6.50%, '08 ........... BBB(c) 685 627,328
Resolution Trust Corp. 92-C7, A1C
7.90%, '23 ...................... Aa 78 77,220
Resolution Trust Corp. 93-C3, A4
6.55%, '24 ...................... Aaa 406 404,914
Resolution Trust Corp. 94-C1, D
8%, '26 ......................... BBB(c) 1,155 1,140,479
Resolution Trust Corp. 94-C2, D
8%, '25 ......................... BBB(c) 961 947,712
Resolution Trust Corp. 95-1, M2
7.50%, '28 ...................... Aa 1,501 1,501,634
Non-Agency Mortgage-Backed Securities--continued
Ryland Mtg. Sec. Corp. 92-A, 1A
8.33%, '30 ...................... A-(c) $ 697 $ 690,629
SASC 95-CI B 7.375%, '24 ........ AA(c) 1,865 1,824,786
SASC 96-CFL C 6.525%, '28 ....... A(c) 350 332,938
Securitized Asset Sales 95-A, M
7.53%, '24 ...................... AA+(c) 1,819 1,754,076
White Hall Partners 95-C1, B 144A
7.43%, '25 (b) .................. AA(c) 1,000 1,004,688
-------------
20,341,597
-------------
Oil--1.8%
Petropower Funding 144A 7.36%,
'14 (b) ......................... BBB(c) 1,290 1,203,699
-------------
Retail-Food--0.2%
ARA Services, Inc. 10.625%, '00 . Ba 107 118,369
-------------
Utility-Electric--1.4%
Louisiana Power & Lighting
10.30%, '05 ..................... Baa 901 938,319
-------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $22,343,796) ....................... 22,601,984
-------------
FOREIGN NON-CONVERTIBLE BONDS--5.0%
Chile--1.7%
CSAV 144A 7.375%, '03 (b) ....... BBB(c) 1,240 1,162,500
-------------
Colombia--1.6%
Centragas Yankee 144A 10.65%, '10
(b) ............................. BBB-(c) 1,028 1,052,426
-------------
Indonesia--0.8%
Asia Pulp & Paper Co. Yankee
11.75%, '05 ..................... Ba 500 514,375
-------------
Philippines--0.9%
Bank of Philippines PCIR Euro
6.25%, '17 (d) .................. Ba 750 598,125
-------------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $3,209,496) ........................ 3,327,426
-------------
FOREIGN GOVERNMENT SECURITIES--6.8%
Argentina--2.1%
Republic of Argentina Discount
L-GL Euro 6.4375%, '23 (d) ...... B 1,000 700,000
Republic of Argentina Par 5.25%,
'23 (d) ......................... B 1,250 685,938
-------------
1,385,938
-------------
Brazil--1.7%
Republic of Brazil Par 5%, '24
(d) ............................. B 750 415,312
Republic of Brazil Discount
Series ZL Euro 6.50%, '24 (d) ... B 1,000 710,625
-------------
1,125,937
-------------
See Notes to Financial Statements
10
<PAGE>
Mexico--1.5%
United Mexican Discount Series C
6.35156%, '19 (d)(e) ............ Ba $ 250 $ 196,875
United Mexican States Euro D
6.45313%, '19 (d)(e) ............ Ba 1,000 787,500
-------------
984,375
-------------
Panama--1.5%
Republic of Panama PDI WI '49
(f)(g) .......................... NR 1,600 980,000
-------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $4,183,467) ........................ 4,476,250
-------------
MUNICIPAL BONDS--16.7%
California--1.8%
Orange County Pension A 7.67%,
'09 ............................. Aaa 1,200 1,207,692
-------------
Florida--3.7%
Palm Beach Waste Revenue Project
B Taxable 10.50%, '11 ........... NR 920 942,632
University Miami Exchange Revenue
A Taxable 7.65%, '20 ............ Aaa 1,590 1,548,390
-------------
2,491,022
-------------
Pennsylvania--8.2%
Beth Israel Medical Center A
Taxable 7.58%, '15 .............. Aaa 920 885,969
Pennsylvania Economic Development
Finance Authority 9.50% '12 ..... NR 2,760 2,731,020
Pennsylvania Financial
Development 6.75%, '07 .......... NR 1,840 1,824,470
-------------
5,441,459
-------------
Virginia--3.0%
Newport News Taxable Series B
7.05%, '25 ...................... Aa $ 670 $ 616,125
Pittsylvania County Series B
7.65%, '10 ...................... NR 1,290 1,356,899
-------------
1,973,024
-------------
TOTAL MUNICIPAL BONDS
(Identified cost $11,079,388) ....................... 11,113,197
-------------
TOTAL LONG-TERM INVESTMENTS--92.7%
(Identified cost $60,627,166) ....................... 61,580,770
-------------
STANDARD
& POOR'S
RATING
-------
SHORT-TERM OBLIGATIONS--17.8%
Commercial Paper--17.8%
Allied Signal Inc. 5.40%,
7-1-96 ..................... A-1 2,700 2,700,000
Anheuser-Busch Companies,
Inc. 5.50%, 7-1-96 ......... A-1+ 2,000 2,000,000
Emerson Electric Co. 5.55%,
7-1-96 ..................... A-1+ 2,000 2,000,000
Wal-Mart Stores, Inc. 5.27%,
7-1-96 ..................... A-1+ 3,000 3,000,000
Preferred Receivables
Funding Corp. 5.40%, 7-3-96 A-1 2,095 2,094,371
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $11,794,371) ................ 11,794,371
--------------
TOTAL INVESTMENTS--110.5%
(Identified cost $72,421,537) ................ 73,375,141(a)
Cash and receivables, less
liabilities--(10.5%) ......................... (6,969,098)
--------------
NET ASSETS--100.0% ............................ $66,406,043
==============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $1,415,547 and gross
depreciation of $461,943 for income tax purposes. At June 30, 1996, the
aggregate cost of securities for federal income tax purposes was
$72,421,537.
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30,
1996, these securities amounted to a value of $8,427,874 or 12.7% of net
assets.
(c) As rated by Standard & Poor's, Fitch or Duff & Phelps.
(d) Variable or step coupon; interest rate shown reflects the rate currently
in effect.
(e) Rights incorporated as a unit.
(f) When issued.
(g) Non-income producing.
11
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(Unaudited)
Assets
Investment securities at value
(Identified cost $72,421,537) $73,375,141
Cash 67,133
Receivables
Fund shares sold 4
Interest 851,989
Prepaid expenses 39,818
------------
Total assets 74,334,085
------------
Liabilities
Payables
Investment securities purchased 7,845,837
Fund shares repurchased 17,060
Investment advisory fee 4,826
Trustees' fee 3,832
Transfer agent fee 3,333
Financial agent fee 1,640
Distribution fee 1,413
Accrued expenses 50,101
------------
Total liabilities 7,928,042
------------
Net Assets $66,406,043
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $64,170,326
Undistributed net investment income 191,650
Accumulated net realized gain 1,090,463
Net unrealized appreciation 953,604
------------
Net Assets $66,406,043
============
Class X
Shares of beneficial interest outstanding, $1 par
value, unlimited authorization (Net Assets
$59,594,742) 1,772,831
Net asset value and offering price per share $33.62
Class Y
Shares of beneficial interest outstanding, $1 par
value, unlimited authorization (Net Assets
$6,811,301) 202,643
Net asset value and offering price per share $33.61
STATEMENT OF OPERATIONS
FROM INCEPTION MARCH 1, 1996
TO JUNE 30, 1996
(Unaudited)
Investment Income
Interest $ 1,806,897
------------
Total investment income 1,806,897
------------
Expenses
Investment advisory fee 101,544
Distribution fee--Class Y 5,751
Financial agent fee 6,768
Registration 38,675
Custodian 14,280
Transfer agent 12,866
Professional 11,182
Trustees 10,040
Printing 5,088
Miscellaneous 3,458
------------
Total expenses 209,652
Less expenses borne by investment adviser (79,792)
------------
Net expenses 129,860
------------
Net investment income 1,677,037
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 1,090,463
------------
Net unrealized appreciation on investments end of
period 953,604
Less net unrealized appreciation in connection with
PHL Pooled Separate Account P 2,636,529
------------
Net change in unrealized appreciation
(depreciation) (1,682,925)
------------
Net loss on investments (592,462)
------------
Net increase in net assets resulting from
operations $ 1,084,575
============
12
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
From Inception
3/1/96 to
6/30/96
--------------
From Operations
Net investment income $ 1,677,037
Net realized gain 1,090,463
Net change in unrealized appreciation (depreciation) (1,682,925)
--------------
Increase in net assets resulting from operations 1,084,575
--------------
From Distributions to Shareholders
Net investment income--Class X (1,336,796)
Net investment income--Class Y (148,591)
--------------
Decrease in net assets from distributions to
shareholders (1,485,387)
--------------
From Share Transactions
Class X
Proceeds from sales of shares (52,194 shares) 1,758,314
Net asset value of shares issued from reinvestment of
distributions (17,723 shares) 588,064
Net asset value of shares issued in conjunction with
conversion of PHL Pooled
Separate Account P (1,774,264 shares) 60,037,092
Cost of shares repurchased (71,350 shares) (2,428,615)
--------------
Total 59,954,855
--------------
Class Y
Proceeds from sales of shares (17,451 shares) 587,571
Net asset value of shares issued from reinvestment of
distributions (4,478 shares) 148,591
Net asset value of shares issued in conjunction with
conversion of PHL Pooled
Separate Account P (196,803 shares) 6,659,369
Cost of shares repurchased (16,089 shares) (543,531)
--------------
Total 6,852,000
--------------
Increase in net assets from share transactions 66,806,855
--------------
Net increase in net assets 66,406,043
Net Assets
Beginning of period 0
--------------
End of period (including undistributed net investment
income of $191,650) $66,406,043
==============
13
<PAGE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
(Unaudited)
Class X Class Y
------------- --------------
From
Inception From Inception
3/1/96 to 3/1/96 to
6/30/96 6/30/96
------------- --------------
Net asset value, beginning of period $33.84 $33.84
Income from investment operations
Net investment income 0.86(3)(4) 0.82(3)(4)
Net realized and unrealized gain
(loss) (0.32) (0.32)
------------- --------------
Total from investment operations 0.54 0.50
------------- --------------
Less distributions
Dividends from net investment income (0.76) (0.73)
Distributions from net realized gains -- --
------------- --------------
Total distributions (0.76) (0.73)
------------- --------------
Change in net asset value (0.22) (0.23)
------------- --------------
Net asset value, end of period $33.62 $33.61
============= ==============
Total return 1.57%(2) 1.49%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $59,595 $6,811
Ratio to average net assets of:
Operating expenses 0.55%(1) 0.80%(1)
Net investment income 7.46%(1) 7.22%(1)
Portfolio turnover 83%(2) 83%(2)
(1) Annualized
(2) Not annualized
(3) Computed using average shares outstanding.
(4) Includes reimbursement of operating expenses by investment adviser of
$0.04 and $0.04 per share, respectively.
14
<PAGE>
INSTITUTIONAL GROWTH STOCK PORTFOLIO
INVESTMENT ADVISER'S REPORT
The first half of 1996 saw a continuation of the strong stock market dating
back to early 1995. Equities shrugged off rising interest rates and mounting
earnings concerns to move higher. Economic activity surprised most analysts
by growing at higher than expected rates--raising the specter of higher
inflation. Despite such concerns, the stock market held up very well as it
was pushed higher by increasing investor flows into equity mutual funds.
After posting strong results in 1995, Phoenix Duff & Phelps Institutional
Growth Stock Portfolio got off to a difficult start in the beginning of the
year and lagged the market during this reporting period. For the six months
ended June 30, 1996, the Fund's Class X shares returned 3.07% and Class Y
shares returned 2.96%. During the same period, the Standard & Poor's 500
Composite Stock Index, a commonly used, unmanaged measure of U.S. stock
market performance, earned 10.24%. All of these figures assume reinvestment
of any distributions, but exclude the effect of sales charges.
In the first quarter, equity investors reacted dramatically to strong
economic reports, resulting in superior performance for economically
sensitive stocks. This market shift away from stable, growth-oriented
companies to cyclical stocks hindered the Fund's performance as we were
underweighted in this area. Performance was also hurt because of weakness in
some of our technology and health care holdings. A number of these stocks had
performed exceptionally well in 1995, but were recently sold off as investors
took profits in this highly volatile market.
On the positive side, the Fund benefited most from holdings in three areas.
Our Energy Technology theme provided the greatest boost to overall results.
We expect to see a continuing positive earnings trend in energy service
companies as demand strengthens worldwide. These companies are survivors of a
15-year downsizing in the energy sector and are well-positioned to benefit
from future growth in exploration and production. The second area of
outperformance has been our Move to Outsourcing theme, which capitalizes on
the growing trend of corporate America to increase productivity and
concentrate on core businesses. Lastly, our exposure to such consumer growth
stocks as Gucci, Harrah's, Melville, Home Depot, Coca Cola and Carnival have
all contributed positively to performance.
As of late, the stock market has shown increased volatility to the downside.
While this may not turn into the long awaited "correction" that many have
anticipated, there are many signs of deterioration in the fundamental and
market outlook. Slower earnings growth and reduced earnings visibility are
placing an increasing premium on those companies that can produce predictable
earnings growth. We continue to believe that a shift favoring growth-style
investing is underway, and that our focus on quality growth companies will
pay-off.
Average Annual Total Returns for Periods
Ending 6/30/96
1 Year 5 Year 10 Year
-----------------------------------------------------
Class X 19.89% 13.04% 14.28%
-----------------------------------------------------
Class Y 19.62% 12.77% 14.00%
-----------------------------------------------------
S & P 500
Index* 26.12% 15.75% 13.76%
-----------------------------------------------------
Performance data is based on the Portfolio's past performance as a pooled
separate investment account of Phoenix Home Life Mutual Insurance Company
prior to March 1, 1996 (inception of the Fund). Returns indicate past
performance, which is not indicative of future performance. Investment return
and net asset value will fluctuate, so that your shares, when redeemed, may
be worth more or less than the original cost.
*The S & P 500 Index is an unmanaged but commonly used measure of stock
return performance.
15
<PAGE>
INVESTMENTS AT JUNE 30, 1996
(Unaudited)
SHARES VALUE
------- -------------
COMMON STOCKS--92.3%
Aerospace & Defense--3.9%
Boeing Company ........................ 45,000 $ 3,920,625
United Technologies Corp. ............. 33,000 3,795,000
-------------
7,715,625
-------------
Banks--3.3%
BankAmerica Corp. ..................... 40,000 3,030,000
Citicorp .............................. 42,000 3,470,250
-------------
6,500,250
-------------
Beverages--1.6%
Coca Cola Co. ......................... 64,000 3,128,000
-------------
Chemical--1.4%
Monsanto Co. .......................... 85,000 2,762,500
-------------
Computer Software & Services--7.9%
Computer Associates International, Inc. 28,000 1,995,000
Computer Sciences Corp. (b) ........... 47,000 3,513,250
DST Systems, Inc. (b) ................. 63,000 2,016,000
First Data Corp. ...................... 30,000 2,388,750
Microsoft Corp. (b) ................... 24,600 2,955,075
Oracle Systems Corp. (b) .............. 65,000 2,563,437
Softkey International, Inc. (b) ....... 1,000 18,937
-------------
15,450,449
-------------
Conglomerates--3.9%
Thermo Electron Corp. ................. 91,500 3,808,687
Tyco International Ltd. ............... 94,000 3,830,500
-------------
7,639,187
-------------
Cosmetics & Soaps--3.2%
Colgate Palmolive Co. ................. 40,000 3,390,000
Estee Lauder Co. Class A .............. 70,000 2,957,500
-------------
6,347,500
-------------
Diversified Financial Services--7.5%
American Express Co. .................. 44,900 2,003,662
Associates First Capital Corporation
(b) ................................... 19,000 714,875
Equifax, Inc. ......................... 124,000 3,255,000
Federal National Mortgage Assoc. ...... 100,000 3,350,000
First USA, Inc. ....................... 40,000 2,200,000
Travelers Group, Inc. ................. 72,000 3,285,000
-------------
14,808,537
-------------
Diversified Miscellaneous--1.4%
Duracell International, Inc. .......... 63,000 2,716,875
-------------
Electrical Equipment--1.7%
Raychem Corp. ......................... 45,700 3,284,687
-------------
Electronics--3.3%
Amphenol Corp. Class A (b) ............ 84,000 1,932,000
Intel Corp. ........................... 31,800 2,335,313
Perkin Elmer Corp. .................... 46,000 2,219,500
-------------
6,486,813
-------------
Entertainment, Leisure & Gaming--3.5%
Carnival Corp. ........................ 102,400 2,956,800
Harrah's Entertainment, Inc. (b) ...... 60,200 1,700,650
Walt Disney Co. ....................... 34,800 2,188,050
-------------
6,845,500
-------------
Healthcare--Drugs--4.6%
Amgen, Inc. (b) ....................... 45,000 $ 2,430,000
Lilly (Eli) & Co. ..................... 51,000 3,315,000
Merck & Co., Inc. ..................... 50,500 3,263,563
-------------
9,008,563
-------------
Hospital Management & Services--7.7%
Columbia/HCA Healthcare Corp. ......... 56,000 2,989,000
Genesis Health Ventures, Inc. (b) ..... 78,500 2,462,938
HEALTHSOUTH Corp. (b) ................. 88,500 3,186,000
Manor Care, Inc. ...................... 70,000 2,756,250
PhyCor, Inc. (b) ...................... 96,000 3,648,000
-------------
15,042,188
-------------
Machinery--2.4%
Case Corp. ............................ 39,000 1,872,000
Dover Corp. ........................... 62,800 2,896,650
-------------
4,768,650
-------------
Medical Products & Supplies--4.4%
Boston Scientific Corp. (b) ........... 63,000 2,835,000
Guidant Corp. ......................... 53,000 2,610,250
Johnson & Johnson ..................... 66,400 3,286,800
-------------
8,732,050
-------------
Natural Gas--1.3%
Apache Corp. .......................... 75,000 2,465,625
-------------
Oil Service & Equipment--9.4%
Diamond Offshore Drilling (b) ......... 74,400 4,259,400
Halliburton Co. ....................... 55,000 3,052,500
Schlumberger Ltd. ..................... 33,000 2,780,250
Tidewater, Inc. ....................... 64,000 2,808,000
Weatherford Enterra, Inc. (b) ......... 98,000 2,940,000
Western Atlas, Inc. (b) ............... 45,000 2,621,250
-------------
18,461,400
-------------
Paper & Forest Products--1.7%
Kimberly Clark Corp. .................. 43,400 3,352,650
-------------
Pollution Control--3.1%
U.S.A. Waste Services, Inc. (b) ....... 70,500 2,088,563
WMX Technologies, Inc. ................ 125,000 4,093,750
-------------
6,182,313
-------------
Professional Services--1.1%
Fritz Cos., Inc. (b) .................. 70,000 2,257,500
-------------
Publishing, Broadcasting, Printing & Cable--0.5%
Clear Channels Communication, Inc. (b) 11,900 980,263
-------------
Retail--5.9%
AutoZone, Inc. (b) .................... 63,500 2,206,625
Corporate Express (b) ................. 55,900 2,236,000
Federated Department Stores, Inc. (b) . 60,000 2,047,500
Home Depot, Inc. ...................... 58,000 3,132,000
Melville Corp. ........................ 48,300 1,956,150
-------------
11,578,275
-------------
Telecommunications Equipment--4.3%
Cisco Systems, Inc. (b) ............... 43,500 2,463,188
Lucent Technologies, Inc. (b) ......... 75,000 2,840,625
See Notes to Financial Statements
16
<PAGE>
SHARES VALUE
------ ------------
Telecommunications Equipment--continued
Newbridge Networks Corp. (b) .... 49,100 $ 3,216,050
------------
8,519,863
------------
Utility--Telephone--3.3%
AT&T Corp. ...................... 69,000 4,278,000
MCI Communications Corp. ........ 86,000 2,203,750
------------
6,481,750
------------
TOTAL COMMON STOCKS
(Identified cost $154,957,352) ........... 181,517,013
------------
FOREIGN COMMON STOCKS--3.6%
Chemical--0.7%
Potash Corp. of Saskatchewan,
Inc. (Canada) ................... 22,000 1,457,500
------------
Cosmetics & Soaps--1.8%
Unilever NV (Netherlands) ....... 23,500 3,410,437
------------
Textile & Apparel--1.1%
Gucci Group NV-NY (Italy) (b) ... 33,600 2,167,200
------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $6,465,955) ............. 7,035,137
------------
TOTAL LONG-TERM INVESTMENTS--95.9%
(Identified cost $161,423,307) ........... 188,552,150
------------
STANDARD
& PAR
POOR'S VALUE
RATING (000) VALUE
------- ------ --------------
SHORT-TERM OBLIGATIONS--8.1%
Commercial Paper--8.1%
Allied Signal, Inc. 5.40%,
7-1-96 .................. A-1 $3,855 $3,855,000
Campbell Soup Co. 5.28%,
7-3-96 .................. A-1+ 2,000 1,999,413
Wal-Mart Stores, Inc.
5.40%, 7-8-96 ........... A-1+ 1,389 1,387,542
H.J. Heinz Co. 5.30%,
7-10-96 ................. A-1 775 773,973
Wal-Mart Stores, Inc.
5.35%,
7-10-96 ................. A-1+ 500 499,331
Exxon Imperial U.S., Inc.
5.26%, 7-12-96 .......... A-1+ 3,875 3,868,772
H.J. Heinz Co. 5.33%,
7-16-96 ................. A-1 525 523,834
AT&T Corp. 5.36%,
7-30-96 ................. A-1 3,025 3,011,939
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $15,919,804) ............ 15,919,804
-------------
TOTAL INVESTMENTS--104.0%
(Identified cost $177,343,111) ........... 204,471,954(a)
Cash and receivables, less
liabilities--(4.0%) ...................... (7,792,277)
-------------
NET ASSETS--100.0% ........................ $196,679,677
=============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $30,147,586 and gross
depreciation of $3,018,743 for income tax purposes. At June 30, 1996, the
aggregate cost of securities for federal income tax purposes was
$177,343,111.
(b) Non-income producing.
17
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(Unaudited)
Assets
Investment securities at value
(Identified cost $177,343,111) $204,471,954
Receivables
Investment securities sold 454,526
Dividends and interest 141,425
Fund shares sold 10,694
Prepaid expense 45,556
-------------
Total assets 205,124,155
-------------
Liabilities
Payables
Custodian 11,952
Fund shares repurchased 8,250,451
Investment advisory fee 79,013
Transfer agent fee 5,624
Financial agent fee 5,042
Distribution fee 4,795
Trustees' fee 3,832
Accrued expenses 83,769
-------------
Total liabilities 8,444,478
-------------
Net Assets $196,679,677
=============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $163,164,078
Undistributed net investment income 19,859
Accumulated net realized gain 6,366,897
Net unrealized appreciation 27,128,843
-------------
Net Assets $196,679,677
=============
Class X
Shares of beneficial interest outstanding, $1 par
value, unlimited authorization (Net Assets
$174,029,518) 3,544,982
Net asset value and offering price per share $49.09
Class Y
Shares of beneficial interest outstanding, $1 par
value, unlimited authorization (Net Assets
$22,650,159) 461,213
Net asset value and offering price per share $49.11
STATEMENT OF OPERATIONS
FROM INCEPTION MARCH 1, 1996
TO JUNE 30, 1996
(Unaudited)
Investment Income
Dividends $ 701,334
Interest 276,217
------------
Total investment income 977,551
------------
Expenses
Investment advisory fee 417,205
Distribution fee--Class Y 19,863
Financial agent fee 20,860
Registration 70,201
Transfer agent 15,380
Custodian 13,960
Professional 12,400
Trustees 10,040
Printing 5,360
Miscellaneous 9,299
------------
Total expenses 594,568
Less expenses borne by investment adviser (87,966)
------------
Net expenses 506,602
------------
Net investment income 470,949
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 6,366,897
------------
Net unrealized appreciation on investments end of
period 27,128,843
Less net unrealized appreciation in connection with
PHL Pooled Separate Account S 28,742,823
------------
Net change in unrealized appreciation
(depreciation) (1,613,980)
------------
Net gain on investments 4,752,917
------------
Net increase in net assets resulting from
operations $ 5,223,866
============
18
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
From Inception
3/1/96 to
6/30/96
--------------
From Operations
Net investment income $ 470,949
Net realized gain 6,366,897
Net change in unrealized
appreciation (depreciation) (1,613,980)
--------------
Increase in net assets resulting
from operations 5,223,866
--------------
From Distributions to Shareholders
Net investment income--Class X (416,021)
Net investment income--Class Y (35,069)
--------------
Decrease in net assets from
distributions to shareholders (451,090)
--------------
From Share Transactions
Class X
Proceeds from sales of shares
(108,094 shares) 5,216,360
Net asset value of shares issued
from reinvestment of distributions
(8,696 shares) 416,021
Net asset value of shares issued in
conjunction with conversion of PHL Pooled
Separate Account S (3,807,589 shares) 182,803,604
Cost of shares repurchased (379,397 shares) (18,631,060)
--------------
Total 169,804,925
--------------
Class Y
Proceeds from sales of shares (30,162 shares) 1,452,168
Net asset value of shares issued from
reinvestment of distributions (733 shares) 35,069
Net asset value of shares issued in
conjunction with conversion of PHL Pooled
Separate Account S (493,631 shares) 23,699,396
Cost of shares repurchased (63,313 shares) (3,084,657)
--------------
Total 22,101,976
--------------
Increase in net assets from share transactions 191,906,901
--------------
Net increase in net assets 196,679,677
Net Assets
Beginning of period 0
--------------
End of period (including undistributed
net investment income of $19,859) $196,679,677
==============
19
<PAGE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
(Unaudited)
Class X Class Y
------------- --------------
From
Inception From Inception
3/1/96 to 3/1/96 to
6/30/96 6/30/96
------------- --------------
Net asset value, beginning of period $ 48.01 $ 48.01
Income from investment operations
Net investment income 0.12 (4) 0.08 (4)
Net realized and unrealized gain 1.07 1.09
------------- --------------
Total from investment operations 1.19 1.17
------------- --------------
Less distributions
Dividends from net investment income (0.11) (0.07)
Distributions from net realized
gains -- --
------------- --------------
Total distributions (0.11) (0.07)
------------- --------------
Change in net asset value 1.08 1.10
------------- --------------
Net asset value, end of period $ 49.09 $ 49.11
============= ==============
Total return 2.49% (2) 2.43% (2)
Ratios/supplemental data:
Net assets, end of period (thousands) $174,030 $22,650
Ratio to average net assets of:
Operating expenses 0.70%(1) 0.95%(1)
Net investment income 0.71%(1) 0.46%(1)
Portfolio turnover 48%(2) 48%(2)
Average commission rate paid(3) $0.0522 $0.0522
(1) Annualized
(2) Not annualized
(3) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for securities
trades on which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs, or spreads on shares traded on a principal
basis.
(4) Includes reimbursement of operating expenses by investment adviser of
$0.02 and $0.02, respectively.
20
<PAGE>
INSTITUTIONAL MONEY MARKET PORTFOLIO
INVESTMENT ADVISER'S REPORT
Over this six-month reporting period, Phoenix Duff & Phelps Institutional
Money Market Portfolio produced solid results. As of June 30, 1996, the
Fund's current yield for its Class X shares was 5.13%. This compares
favorably with the 4.72% average yield of taxable money market funds reported
by Donoghue's Money Fund Report. The current yield is a seven-day annualized
yield computed by dividing the average net income earned per share during the
seven-day period preceding the date of calculation by the average daily net
asset value per share for the same period, with resulting figure multiplied
by 365.
The consensus outlook for interest rates changed dramatically over the last
six months. In January, the Federal Reserve cut the federal funds rate from
5.50% to 5.25% in an effort to stimulate what was believed to be a sluggish
U.S. economy. Although it was widely anticipated that the Fed would need to
lower rates again during the first quarter, a surprisingly strong February
employment report provided conflicting evidence about the economy's
condition.
Moving into second quarter, additional data continued to accumulate
supporting the argument that the economy was not nearly as weak as the
financial markets had initially assumed. Most recently, statistics have
indicated that manufacturing activity, consumer spending and job growth have
all picked up dramatically. This upbeat economic news pushed short-term
interest rates up modestly. As of June 30, 1996, the yield on the widely
watched 90-Day Treasury Bill has climbed to 5.20%, representing a 13
basis-point jump year-to-date.
Looking ahead, many on Wall Street are now expecting that the Fed will raise
short-term rates in an attempt to slow down the pace of economic growth and
curb any threat of rising inflation. Since the Central Bank's actions are
often difficult to predict over the short-term, Phoenix Duff & Phelps Money
Market Portfolio continues to be heavily weighted in floating-rate
securities. This type of investment offers attractive yields and some
protection if interest rates should rise over the near term. As always, we
will continue to focus on high credit quality assets for the Fund and
carefully monitor the short-term markets for attractive investment
opportunities.
Average Annual Total Returns for Periods
Ending 6/30/96
1 Year 5 Year 10 Year
-------------------------------------------
Class X 5.64% 4.34% 5.94%
-------------------------------------------
Class Y 5.29% 3.95% 5.55%
-------------------------------------------
90-day
T-bills* 5.43% 4.37% 5.69%
-------------------------------------------
Performance data is based on the Portfolio's past performance as a pooled
separate investment account of Phoenix Home Life Mutual Insurance Company
prior to March 1, 1996 (inception of the Fund). Returns indicate past
performance, which is not indicative of future performance. The Institutional
Money Market Portfolio is neither insured nor guaranteed by the U.S.
government, and there can be no assurance the Fund will be able to maintain a
stable net asset value of $1.00 per share.
*90-day Treasury bills as reported by Salomon Brothers.
21
<PAGE>
INVESTMENTS AT JUNE 30, 1996
(Unaudited)
Face
Amount Interest Maturity
(000) Description Rate Date Value
- --------------------------------------------------------------------------
FEDERAL AGENCY SECURITIES--3.5%
$500 Federal Home Loan Banks ........ 5.75% 10/18/96 $ 500,000
----------
TOTAL FEDERAL AGENCY SECURITIES 500,000
----------
Reset
Date
--------
FEDERAL AGENCY SECURITIES--VARIABLE--35.4% (b)
1,000 Student Loan Marketing Assoc.
(final maturity 08/16/96) ...... 5.61 07/01/96 1,000,000
500 Federal Home Loan Banks (final
maturity 1/14/97) .............. 5.71 07/01/96 500,000
300 Federal Farm Credit Bank (final
maturity 10/2/96) .............. 5.44 07/01/96 300,000
1,500 Student Loan Marketing Assoc.
(final maturity 11/24/97) ...... 5.41 07/02/96 1,500,000
1,000 Student Loan Marketing Assoc.
(final maturity 2/22/99) ....... 5.44 07/02/96 1,000,000
700 Federal National Mortgage Assoc.
(final maturity 12/14/98) ...... 5.52 09/14/96 699,054
----------
TOTAL FEDERAL AGENCY SECURITIES--VARIABLE 4,999,054
----------
Standard
&
Poor's Maturity
Rating Date
----- --------
COMMERCIAL PAPER--60.6%
445 Allied Signal, Inc. .... A-1 5.40 07/01/96 445,000
205 Emerson Electric Co. ... A-1+ 5.55 07/01/96 205,000
305 Bellsouth
Telecommunications, Inc. A-1+ 5.35 07/02/96 304,955
645 Preferred Receivables
Funding Corp. .......... A-1 5.38 07/03/96 644,807
155 H.J. Heinz Co. ......... A-1 5.30 07/09/96 154,817
Standard
Face &
Amount Poor'sInterest Maturity
(000) Description Rating Rate Date Value
- --------------------------------------------------------------------------
COMMERCIAL PAPER--continued
170 Amoco Co. .............. A-1+ 5.35% 07/09/96 $ 169,798
400 H.J. Heinz Co. ......... A-1+ 5.30 07/10/96 399,470
500 Minnesota Mining &
Manufacturing Co. ...... A-1+ 5.40 07/11/96 499,250
285 Shell Oil Co. .......... A-1+ 5.32 07/12/96 284,537
360 Kellogg Co. ............ A-1+ 5.33 07/15/96 359,254
505 Coca Cola Co. .......... A-1+ 5.30 07/18/96 503,736
500 TDK USA, Inc. .......... A-1+ 5.35 07/22/96 498,440
500 E.I. du Pont de Nemours
& Co. .................. A-1+ 5.53 07/23/96 498,299
310 General Re Corp. ....... A-1+ 5.34 07/25/96 308,896
480 Abbott Laboratories .... A-1+ 5.33 07/26/96 478,010
250 Gannett Co. ............ A-1+ 5.33 07/26/96 249,075
250 General Electric Capital
MTN (b) ................ A-1+ 5.41 07/26/96 250,021
310 Merrill Lynch & Co.,
Inc. ................... A-1+ 5.36 07/31/96 308,615
500 Receivable Capital Corp. A-1+ 5.40 08/19/96 496,325
405 Warner-Lambert Co. ..... A-1+ 4.82 08/20/96 402,273
700 General Electric Capital
Corp. (b) .............. A-1+ 5.49 08/22/96 700,056
410 Greenwich Funding Corp. A-1+ 5.40 09/09/96 405,695
----------
TOTAL COMMERCIAL PAPER ..................................... 8,566,329
----------
TOTAL INVESTMENTS--99.5%
(Identified cost $14,065,383) ............................. 14,065,383(a)
Cash and receivables, less liabilities--0.5% .............. 68,127
----------
NET ASSETS--100.0% ......................................... $14,133,510
==========
(a) Federal Income Tax Information: At June 30, 1996, the aggregate cost of
securities was the same for book and tax purposes.
(b) Variable rate demand note. The interest rates shown reflect the rate
currently in effect.
22
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(Unaudited)
Assets
Investment securities at value
(Identified cost $14,065,383) $14,065,383
Cash 8,941
Receivables
Fund shares sold 3,087
Interest 45,953
Receivable from adviser 12,577
Prepaid expenses 37,303
------------
Total assets 14,173,244
------------
Liabilities
Payables
Dividend distributions 7,837
Trustees' fee 3,832
Transfer agent fee 3,321
Distribution fee 546
Financial agent fee 344
Accrued expenses 23,854
------------
Total liabilities 39,734
------------
Net Assets $14,133,510
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $14,129,599
Undistributed net investment income 3,911
------------
Net Assets $14,133,510
============
Class X
Shares of beneficial interest outstanding, $1 par
value, unlimited authorization (Net Assets
$11,140,850) 11,137,735
Net asset value and offering price per share $1.00
Class Y
Shares of beneficial interest outstanding, $1 par
value, unlimited authorization (Net Assets
$2,992,660) 2,991,864
Net asset value and offering price per share $1.00
STATEMENT OF OPERATIONS
FROM INCEPTION MARCH 1, 1996
TO JUNE 30, 1996
(Unaudited)
Investment Income
Interest $242,837
---------
Total investment income 242,837
---------
Expenses
Investment advisory fee 11,219
Distribution fee--Class Y 2,065
Financial agent fee 1,348
Registration 26,891
Transfer agent 11,456
Trustees 10,040
Professional 7,600
Printing 4,988
Custodian 3,800
Miscellaneous 796
---------
Total expenses 80,203
Less expenses borne by investment
adviser (62,432)
---------
Net expenses 17,771
---------
Net investment income 225,066
---------
Net increase in net assets resulting from
operations $225,066
=========
23
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
From Inception
3/1/96 to
6/30/96
--------------
From Operations
Net investment income $ 225,066
--------------
Increase in net assets resulting from operations 225,066
--------------
From Distributions to Shareholders
Net investment income--Class X (182,196)
Net investment income--Class Y (38,959)
--------------
Decrease in net assets from distributions to
shareholders (221,155)
--------------
From Share Transactions
Class X
Proceeds from sales of shares (5,587,798 shares) 5,587,798
Net asset value of shares issued from reinvestment of
distributions (174,046 shares shares) 174,046
Net asset value of shares issued in conjunction with
conversion of PHL Pooled
Separate Account G (8,106,057 shares) 8,106,057
Cost of shares repurchased (2,730,166 shares) (2,730,166)
--------------
Total 11,137,735
--------------
Class Y
Proceeds from sales of shares (2,274,840 shares) 2,274,840
Net asset value of shares issued from reinvestment of
distributions (36,233 shares) 36,233
Net asset value of shares issued in conjunction with
conversion of PHL
Pooled Separate Account G (2,666,813 shares) 2,666,813
Cost of shares repurchased (1,986,022 shares) (1,986,022)
--------------
Total 2,991,864
--------------
Increase in net assets from share transactions 14,129,599
--------------
Net increase in net assets 14,133,510
Net Assets
Beginning of period 0
--------------
End of period (including undistributed net investment
income of $3,911) $14,133,510
==============
24
<PAGE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
(Unaudited)
Class X Class Y
------------- --------------
From
Inception From Inception
3/1/96 to 3/1/96 to
6/30/96 6/30/96
------------- --------------
Net asset value, beginning of period $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.017(1) 0.016(1)
------------- --------------
Total from investment operations 0.017 0.016
------------- --------------
Less distributions
Dividends from net investment
income (0.017) (0.016)
------------- --------------
Change in net asset value -- --
------------- --------------
Net asset value, end of period $ 1.00 $ 1.00
============= ==============
Total return 1.67%(3) 1.58%(3)
Ratios/supplemental data:
Net assets, end of period
(thousands) $11,141 $ 2,993
Ratio to average net assets of:
Operating expenses 0.35% (2) 0.60% (2)
Net investment income 5.06% (2) 4.81% (2)
(1) Includes reimbursement of operating expenses by investment adviser of
$0.005 and $0.005, respectively.
(2) Annualized
(3) Not annualized
25
<PAGE>
Institutional U.S. Government Securities Portfolio
INVESTMENT ADVISER'S REPORT
The first six months of 1996 have been very difficult for the bond market.
Bond investors reacted negatively to the surprisingly strong economic
reports, believing that a higher growth rate in the economy could also
trigger higher inflation. Yields on the 2-year Treasury note and the 10-year
Treasury bond increased 96 and 114 basis points, respectively, over this
six-month reporting cycle. These higher interest rates have translated into
poor returns for the U.S. bond market. According to the Lehman Brothers
Aggregate Bond Index, an unmanaged, but commonly used measure of broad market
performance, bonds returned a disappointing -1.22% year-to-date.
Despite a difficult market environment, the Institutional U.S. Government
Securities Portfolio posted positive returns for the reporting period. For
the six months ended June 30, 1996, the Fund's Class X shares provided a
total return of 1.42% and Class Y shares returned 1.30%. These results were
in line with its benchmark, the Lehman Brothers 1 to 3 year Government Bond
Index. This unmanaged index of non-mortgaged, short-term government
securities returned 1.44% over the same time period. All of these figures
assume reinvestment of any distributions but exclude the effect of sales
charges.
Over the first half of 1996, the Fund's relatively short duration and its
overweighted position in mortgage-backed securities contributed positively to
performance. With the belief that mortgage-backed securities still represent
the best value in the U.S. government securities market, the Fund remains
heavily overweighted in this sector.
Looking ahead, the Fund will continue to emphasize superior credit quality by
investing in "AAA" rated securities. We will also limit the Portfolio's risk
associated with rising interest rates by maintaining a short duration of
approximately 1.75 years. As always, we will carefully monitor valuations in
the U.S. government securities market and will overweight those securities
which we believe represent the best value.
Average Annual Total Returns for Periods
Ending 6/30/96
From Inception
9/30/91 to
1 Year 6/30/96
-----------------------------------------------------------------------
Class X 5.50% 6.52%
-----------------------------------------------------------------------
Class Y 5.24% 6.26%
-----------------------------------------------------------------------
Lehman Brothers 1-3 year Government Bond
Index* 5.48% 5.88%
-----------------------------------------------------------------------
Performance data is based on the Portfolio's past performance as a pooled
separate investment account of Phoenix Home Life Mutual Insurance Company
prior to March 1, 1996 (inception of the Fund). Returns indicate past
performance, which is not indicative of future performance. Investment return
and net asset value will fluctuate, so that your shares, when redeemed, may
be worth more or less than the original cost.
*The Lehman Brothers 1-3 year Government Bond Index is an unmanaged but
commonly used measure of non-mortgaged, short-term government securities
performance.
INVESTMENTS AT JUNE 30, 1996 (Unaudited)
STANDARD
& PAR
POOR'S VALUE
RATING (000) VALUE
------- ----- ----------
U.S. GOVERNMENT SECURITIES--94.0%
U.S. Treasury Notes--14.8%
U.S. Treasury Notes 6.25%, '01 AAA $ 450 $ 445,500
U.S. Treasury Notes 6.875%,
'06 .......................... AAA 1,000 1,010,936
----------
1,456,436
----------
Agency Mortgage-Backed Securities--79.2%
FHLMC 9%, '04 ................ AAA 136 136,640
FHLMC 9.30%, '05 ............. AAA 372 376,649
FHLMC 4.75%, '11 ............. AAA 879 872,986
FNMA 5.75%, '02 .............. AAA 1,000 994,040
FNMA 5.25%, '13 .............. AAA 2,000 1,955,280
FNMA 5.50%, '14 .............. AAA 2,000 1,962,920
FNMA 8.50%, '19 .............. AAA 1,500 1,510,425
----------
7,808,940
----------
PAR
VALUE
(000) VALUE
----- ----- -------------
TOTAL U.S. GOVERNMENT SECURITIES
(Identified cost $9,414,775) ......... $9,265,376
-------------
SHORT-TERM OBLIGATIONS--5.2%
U.S. Treasury
Bills--3.9%
U.S. Treasury Bills 4.80%,
7-11-96 ...................... $380 379,494
-------------
Federal Agency Securities--1.3%
Federal Home Loan Banks 5.29%,
7-8-96 ....................... 130 129,866
-------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $509,360) ........... 509,360
-------------
TOTAL INVESTMENTS--99.2%
(Identified cost $9,924,135) ......... 9,774,736(a)
Cash and receivables, less
liabilities--0.8% ..................... 84,287
-------------
NET ASSETS--100.0% .................... $9,859,023
=============
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $18,486 and gross
depreciation of $167,885 for income tax purposes. At June 30, 1996, the
aggregate cost of securities for federal income tax purposes was
$9,924,135.
26
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(Unaudited)
Assets
Investment securities at value
(Identified cost $9,924,135) $ 9,774,736
Cash 10,848
Receivables
Fund shares sold 103
Interest 54,234
Receivable from adviser 12,814
Prepaid expenses 37,493
------------
Total assets 9,890,228
------------
Liabilities
Payables
Fund shares repurchased 2,358
Trustees' fee 3,832
Transfer agent fee 3,069
Distribution fee 632
Financial agent fee 241
Accrued expenses 21,073
------------
Total liabilities 31,205
------------
Net Assets $ 9,859,023
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $10,113,511
Undistributed net investment income 21,133
Accumulated net realized loss (126,222)
Net unrealized depreciation (149,399)
------------
Net Assets $ 9,859,023
============
Class X
Shares of beneficial interest outstanding, $1 par
value, unlimited authorization (Net Assets
$6,779,574) 512,900
Net asset value and offering price per share $13.22
Class Y
Shares of beneficial interest outstanding, $1 par
value, unlimited authorization (Net Assets
$3,079,449) 233,039
Net asset value and offering price per share $13.21
STATEMENT OF OPERATIONS
FROM INCEPTION MARCH 1, 1996
TO JUNE 30, 1996
(Unaudited)
Investment Income
Interest $ 246,335
----------
Total investment income 246,335
----------
Expenses
Investment advisory fee 12,227
Distribution fee--Class Y 2,712
Financial agent fee 1,224
Registration 24,960
Transfer agent 12,360
Trustees 10,040
Professional 7,360
Printing 4,842
Custodian 3,200
Miscellaneous 797
----------
Total expenses 79,722
Less expenses borne by investment adviser (60,707)
----------
Net expenses 19,015
----------
Net investment income 227,320
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized loss on securities (126,222)
----------
Net unrealized depreciation on investments end of
period (149,399)
Less net unrealized depreciation in connection with
PHL Pooled Separate Account U (162,638)
----------
Net change in unrealized appreciation
(depreciation) 13,239
----------
Net loss on investments (112,983)
----------
Net increase in net assets resulting from
operations $ 114,337
==========
27
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
From Inception
3/1/96 to
6/30/96
--------------
From Operations
Net investment income $ 227,320
Net realized loss (126,222)
Net change in unrealized appreciation (depreciation) 13,239
--------------
Increase in net assets resulting from operations 114,337
--------------
From Distributions to Shareholders
Net investment income--Class X (143,980)
Net investment income--Class Y (62,207)
--------------
Decrease in net assets from distributions to
shareholders (206,187)
--------------
From Share Transactions
Class X
Proceeds from sales of shares (36,172 shares) 484,410
Net asset value of shares issued from reinvestment of
distributions (10,957 shares) 143,979
Net asset value of shares issued in conjunction with
conversion of PHL Pooled Separate Account U (826,222
shares) 11,033,355
Cost of shares repurchased (360,451 shares) (4,824,748)
--------------
Total 6,836,996
--------------
Class Y
Proceeds from sales of shares (154,241 shares) 2,066,861
Net asset value of shares issued from reinvestment of
distributions (4,734 shares) 62,205
Net asset value of shares issued in conjunction with
conversion of PHL Pooled Separate Account U (150,065
shares) 2,003,966
Cost of shares repurchased (76,001 shares) (1,019,155)
--------------
Total 3,113,877
--------------
Increase in net assets from share transactions 9,950,873
--------------
Net increase in net assets 9,859,023
Net Assets
Beginning of period 0
--------------
End of period (including undistributed net investment
income of $21,133) $ 9,859,023
==============
28
<PAGE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
(Unaudited)
Class X Class Y
------------- --------------
From
Inception From Inception
3/1/96 to 3/1/96 to
6/30/96 6/30/96
------------- --------------
Net asset value, beginning of period $13.35 $13.35
Income from investment operations (5)
Net investment income 0.25(3)(4) 0.24(3)(4)
Net realized and unrealized gain
(loss) (0.09) (0.10)
------------- --------------
Total from investment operations 0.16 0.14
------------- --------------
Less distributions
Dividends from net investment income (0.29) (0.28)
Distributions from net realized gains -- --
------------- --------------
Total distributions (0.29) (0.28)
------------- --------------
Change in net asset value (0.13) (0.14)
------------- --------------
Net asset value, end of period $13.22 $13.21
============= ==============
Total return 1.08%(2) 1.00%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $6,780 $3,079
Ratio to average net assets of:
Operating expenses 0.40%(1) 0.65%(1)
Net investment income 5.63%(1) 5.43%(1)
Portfolio turnover 116%(2) 116%(2)
(1) Annualized
(2) Not annualized
(3) Computed using average shares outstanding.
(4) Includes reimbursement of operating expenses by investment adviser of
$0.07 and $0.07, respectively.
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from
anticipated results depending on the time of share purchases and
redemptions.
29
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 (Unaudited)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund") is organized as
a Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end management investment
company whose shares are offered in six separate Portfolios (the
"Portfolios").
Each Portfolio has distinct investment objectives. The Balanced Portfolio
seeks to provide reasonable income, long-term capital growth and conservation
of capital. The Managed Bond Portfolio seeks to generate a high level of
current income and capital appreciation. The Growth Stock Portfolio seeks
long-term appreciation of capital. The Money Market Portfolio seeks to
provide as high a level of current income consistent with capital
preservation and liquidity. The U.S. Government Securities Portfolio seeks a
high level of current income by investing in U.S. Government guaranteed or
backed securities. The Enhanced Reserves Portfolio (not covered in these
financial statements) seeks to provide high current income consistent with
preservation of capital.
Each Portfolio offers both Class X and Class Y shares. Both classes of shares
have identical voting, dividend, liquidation and other rights and the same
terms and conditions, except that Class Y 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 both classes of shares, except that Class X bears no distribution
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles. 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:
In determining the value of the investments of the Balanced Portfolio, the
Managed Bond Portfolio, the Growth Stock Portfolio, and the U.S. Government
Securities Portfolio, the securities for which market quotations are readily
available are valued at market value, which is currently determined using the
last reported sale price, or if no sales are reported, the last reported bid
price. Debt securities (other than short-term obligations, which are valued
on the basis of amortized cost, which approximates market, as defined below)
are valued on the basis of broker quotations or valuations provided by a
pricing service when such prices are believed to reflect the fair value of
such securities. Short-term investments having a remaining maturity of less
than 61 days are valued at amortized cost which approximates market. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices and take into account appropriate factors such as
institution-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other
market data. Use of the pricing service has been approved by the Trustees.
All other securities and assets are valued at their fair value as determined
in good faith by or under the direction of the Trustees.
The Money Market Portfolio uses the amortized cost method of security
valuation which, in the opinion of the Trustees, represents the fair value of
the particular security. The Trustees monitor the deviations between the
classes' net asset value per share as determined by using available market
quotations and its amortized cost per share. If the deviation exceeds 1/2 of
1%, the Board of Trustees will consider what action, if any, should be
initiated to provide a fair valuation. This valuation procedure allows each
class of the Portfolio to maintain a constant net asset value of $1 per
share. The assets of the Portfolio will not be invested in any security with
a maturity of greater than 397 days, and the average weighted maturity of its
portfolio will not exceed 90 days.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign
securities, as soon as the Portfolio is notified. Interest income is recorded
on the accrual basis. The Fund does not amortize premiums except for the
Money Market Portfolio, but does amortize discounts using the effective
interest method. Realized gains and losses are determined on the identified
cost basis.
C. Income taxes:
Each of the Portfolios is treated as a separate taxable entity. It is the
policy of each Portfolio in the Fund to comply with the requirements of the
Internal Revenue Code (the Code), applicable to regulated investment
companies, and to distribute substantially all of its taxable income to its
shareholders. In addition, 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
30
<PAGE>
which may differ from generally accepted accounting principles. These
differences include the treatment of non-taxable dividends, expiring capital
loss carryforwards, foreign currency gain/loss, partnerships, and losses
deferred due to wash sales and excise tax regulations. Permanent book and tax
basis differences relating to shareholder distributions will result in
reclassifications to paid in capital.
E. Foreign currency translation:
Foreign securities, other assets and liabilities are valued using the foreign
currency exchange rate effective at the end of the reporting period. Cost of
investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange
rates between the trade and settlement dates of a portfolio transaction is
treated as a gain or loss on foreign currency. Likewise, the gain or loss
resulting from a change in currency exchange rates, between the date income
is accrued and paid, is treated as a gain or loss on foreign currency. The
Fund does not separate that portion of the results of operations arising from
changes in exchange rates and that portion arising from changes in the market
prices of securities.
F. Forward currency contracts:
Each of the Portfolios, except U.S. Government Securities Portfolio and Money
Market 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, 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. A 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 Portfolio is required to pledge to the broker an amount of cash
and/or securities equal to the "initial margin" requirements of the futures
exchange on which the contract is traded. Pursuant to the contract, the
Portfolio agrees to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in value of the contract. Such receipts or payments
are known as variation margin and are recorded by the 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 a Portfolio is that the change in value of the futures
contract may not correspond to the change in value of the hedged instruments.
H. Expenses:
Expenses incurred by the Fund 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.
NOTE 2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Fund, the Adviser, Phoenix Investment
Counsel, Inc. ("PIC"), an indirect majority-owned subsidiary of PHL, is
entitled to a fee based upon the following annual rates as a percentage of
the average daily net assets of each separate Portfolio:
1st $1+
Portfolio $1 Billion Billion
------------------------------------------------------------
Growth Stock Portfolio 0.60% 0.55%
Balanced Portfolio 0.55% 0.50%
Managed Bond Portfolio 0.45% 0.40%
U.S. Government Securities Portfolio 0.30% 0.25%
Money Market Portfolio 0.25% 0.20%
PIC has voluntarily agreed to assume total fund operating expenses of each
Portfolio, excluding interest, taxes, brokerage fees, commissions and
extraordinary expenses, until December 31, 2001, to the extent that such
expenses exceed the following percentages of average annual net asset values:
31
<PAGE>
Class X Class Y
---------------- -----------------
Balanced Portfolio 0.65% 0.90%
Managed Bond Portfolio 0.55% 0.80%
Growth Stock Portfolio 0.70% 0.95%
Money Market Portfolio 0.35% 0.60%
U.S. Government
Securities Portfolio 0.40% 0.65%
Phoenix Equity Planning Corporation ("PEPCO"), an indirect majority-owned
subsidiary of PHL, serves as the national distributor of the Fund's shares.
Each Portfolio pays PEPCO a distribution fee of an annual rate of 0.25% for
Class Y shares applied to the average daily net assets of each Portfolio. The
distributor has advised the Portfolio that of the total amount expensed for
the period ended June 30, 1996, $30,076 was earned by the Distributor and
$10,872 was earned by unaffiliated participants.
As Financial Agent to the Fund and to each Portfolio, PEPCO receives a fee at
an annual rate of 0.03% of the average daily net assets for bookkeeping,
administrative and pricing services. PEPCO serves as the Funds' Transfer
Agent with State Street Bank and Trust Company as sub-transfer agent. For
the period ended June 30, 1996, transfer agent fees were $64,097 of which
PEPCO retained $23 which is net of fees paid to State Street.
At June 30, 1996, PHL and affiliates held Portfolio shares which aggregated
the following:
Aggregate
Net Asset
Shares Value
---------------- -----------------
Balanced Portfolio Class X 6 $ 100
Balanced Portfolio Class Y 5,634 99,955
Managed Bond Portfolio Class X 3 100
Managed Bond Portfolio Class Y 3,021 100,222
Growth Stock Portfolio Class X 2 100
Growth Stock Portfolio Class Y 2,086 99,821
Money Market Portfolio Class X 101 101
Money Market Portfolio Class Y 101,530 101,530
U.S. Government Securities
Portfolio Class X 8 101
U.S. Government Securities
Portfolio Class Y 7,646 100,464
NOTE 3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the period ended June 30, 1996
(excluding U.S. Government securities and short-term securities) aggregated
the following:
Purchases Sales
---------------- -----------------
Balanced Portfolio $37,514,768 $40,144,417
Managed Bond Portfolio 18,830,438 23,084,242
Growth Stock Portfolio 96,189,527 92,177,803
Purchases and sales of U.S. Government securities during the period ended
June 30, 1996, aggregated the following:
Purchases Sales
---------------- -----------------
Balanced Portfolio $13,014,152 $ 9,279,235
Managed Bond Portfolio 34,199,538 29,244,400
U.S. Government Securities
Portfolio 13,246,016 15,791,426
NOTE 4. MERGERS
The Fund commenced operations on March 1, 1996, other than the Enhanced
Reserves Portfolio which became available for sale on July 19, 1996 following
the tax-free reorganization of the Duff & Phelps Enhanced Reserves Fund with
the Phoenix Duff & Phelps Institutional Enhanced Reserves Portfolio. Prior to
March 1, 1996, the Portfolios, other than Enhanced Reserves Portfolio,
existed as separate accounts of Phoenix Home Life Mutual Insurance Company
("PHL"). Upon commencement of operations, the net assets of each separate
account were transferred into the corresponding Portfolio of the Fund in a
tax-free exchange for an equal number of shares of that Portfolio, other than
the Money Market Portfolio which issued 33.828 shares for each unit of the
separate account. The number of shares and dollars issued are listed in each
Portfolio's Statement of Changes in Net Assets.
The net assets of each Portfolio before and after the reorganization are as
follows:
Before After
---------------- -----------------
Balanced Portfolio $100,100 $ 58,215,721
Managed Bond Portfolio 100,100 66,796,561
Growth Stock Portfolio 100,100 206,603,100
Money Market Portfolio 100,100 10,872,970
U.S. Government Securities
Portfolio 100,100 13,137,421
Enhanced Reserves Portfolio -- 136,554,593
32
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
101 Munson Street
Greenfield, Massachusetts 01301
Board of Trustees
C. Duane Blinn
Robert Chesek
E. Virgil Conway
William W. Crawford
Harry Dalzell-Payne
William N. Georgeson
Francis E. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Richard A. Pavia
Calvin J. Pedersen
Philip R. Reynolds
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
Officers
Philip R. McLoughlin, President
William J. Newman, Senior Vice President
George I. Askew, Vice President
James M. Dolan, Vice President
Marvin E. Flewellen, Vice President
Michael E. Haylon, Vice President
Christopher J. Kelleher, Vice President
Thomas S. Melvin, Jr., Vice President
William R. Moyer, Vice President
Leonard J. Saltiel, Vice President
Dorothy J. Skaret, Vice President
James D. Wehr, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary
Investment Adviser
Phoenix Investment Counsel, Inc.
56 Prospect Street
Hartford, Connecticut 06115-0480
Investment Adviser (Enhanced Reserves Portfolio)
Duff & Phelps Investment Management Co.
55 East Monroe Street
Suite 3800
Chicago, Illinois 60603
Custodians
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
Floor 3B
New York, New York 10081
State Street Bank and Trust Company
(Enhanced Reserves Portfolio)
P.O. Box 1713
Boston, Massachusetts 02101
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by an effective Prospectus which includes
information concerning the sales charge and other pertinent information.
33
<PAGE>
U.S. STOCK FUND SERIES
INVESTMENT ADVISER'S REPORT
Aided by a strong but volatile equity market, the U.S. Stock Fund posted
impressive results over this latest reporting period. For the six months
ended April 30, 1996, Class A shares provided a total return of 21.27% and
Class B shares returned 20.81%. These results were well ahead of the Standard
and Poor's 500 Composite Stock Index, an unmanaged, commonly used measure of
stock performance, which returned 13.80% over the same period. All of these
figures assume reinvestment of any distributions but exclude the effect of
sales charges.
Over the last six months, the Fund's focus on high-growth companies with
strong thematic appeal proved to be a winning strategy in this market
environment. Specifically, we look for companies that have the potential to
increase their revenues, operating profits and earnings per share by at least
20% annually. In keeping with this objective, the portfolio was heavily
concentrated in such sectors as consumer cyclicals, energy, health care and
technology. Despite the highly rotational market we have experienced, our
exposure to each of these sectors has contributed positively to performance
at various stages during the reporting cycle. Some of our strongest
performing stocks over this six-month period included Access Health, Cisco
Systems, Clear Channel Communications, Medisense, Pediatrix Medical Group and
U.S. Robotics.
Looking ahead, we expect further volatility in the equity markets and
continued rotation in market leadership. Our stock selection will remain
focused on those areas where growth is most prevalent and will place
particular emphasis on companies with leadership positions in rapidly growing
industries that can thrive in any economic environment. For example, we
believe that the continued development of the Internet offers unparalleled
growth opportunities for a broad range of industries. Other promising
investment themes that we are focusing on include Deregulating Media, Energy
Technology, Hybrid Network and 21st Century Medicine.
INVESTOR PROFILE
The U.S. Stock Fund is best suited for an investor who desires an
aggressively managed portfolio designed for maximum appreciation of capital
with little or no current income.
INVESTMENTS AT APRIL 30, 1996
(Unaudited)
SHARES VALUE
------- ------------
COMMON STOCKS--95.4%
Computer Software & Services--19.5%
Affiliated Computer Services, Inc. (b) . 25,000 $ 1,190,625
Arbor Software Corp. (b) ............... 35,000 2,695,000
Atria Software, Inc. (b) ............... 25,000 1,362,500
Citrix Systems, Inc. (b) ............... 65,000 5,070,000
CSG Systems International, Inc. (b) .... 50,000 1,600,000
Electronics for Imaging, Inc. (b) ...... 40,000 2,440,000
Enterprise Systems, Inc. (b) ........... 25,000 837,500
Forte Software, Inc. (b) ............... 50,000 3,087,500
Indus Group, Inc. (b) .................. 40,000 850,000
Legato Systems, Inc. (b) ............... 30,000 1,230,000
Netscape Communications Corp. (b) ...... 70,000 4,270,000
Peoplesoft, Inc. (b) ................... 25,000 1,575,000
Pure Software, Inc. (b) ................ 25,000 993,750
Rational Software Corp. (b) ............ 75,000 4,003,125
SQA, Inc. (b) .......................... 25,000 818,750
Shiva Corp. (b) ........................ 80,000 4,780,000
Systemsoft Corporation (b) ............. 25,000 696,875
Transition Systems, Inc. (b) ........... 75,000 1,818,750
Vantive Corporation (b) ................ 125,000 4,531,250
Xylan Corp. (b) ........................ 35,000 2,242,187
------------
46,092,812
------------
Diversified Financial Services--0.7%
Concord EFS, Inc. (b) .................. 50,000 1,675,000
------------
Electrical Equipment--2.2%
Checkpoint Systems, Inc. (b) ........... 175,000 $ 5,228,125
------------
Electronics--2.0%
Pairgain Technologies, Inc. (b) ........ 50,000 4,775,000
------------
Entertainment, Leisure & Gaming--6.0%
Bally Entertainment Corp. (b) .......... 50,000 1,043,750
Circus Circus Enterprises (b) .......... 50,000 1,837,500
Grand Casinos, Inc. (b) ................ 50,000 1,618,750
MGM Grand, Inc. (b) .................... 75,000 3,271,875
Mirage Resorts, Inc. (b) ............... 80,000 4,190,000
Planet Hollywood International, Inc. (b) 25,200 639,450
Showboat, Inc. ......................... 50,000 1,600,000
------------
14,201,325
------------
Healthcare--Diversified--2.4%
Access Health, Inc. (b) ................ 75,000 4,153,125
Human Genome Sciences, Inc. (b) ........ 40,000 1,590,000
------------
5,743,125
------------
Healthcare--Drugs--2.7%
Amylin Pharmaceutical, Inc. (b) ........ 175,000 1,662,500
Biochem Pharmaceutical, Inc. (b) ....... 75,000 3,412,500
Fuisz Technologies Ltd. (b) ............ 50,000 1,275,000
------------
6,350,000
------------
See Notes to Financial Statements
34
<PAGE>
Hospital Management & Services--5.6%
ARV Assisted Living, Inc. (b) .......... 50,000 $ 925,000
American Oncology Resources, Inc. (b) .. 25,000 1,193,750
HEALTHSOUTH Corp. (b) .................. 50,000 1,856,250
Mecon, Inc. (b) ........................ 50,000 1,400,000
NCS Heathcare, Inc. Class A (b) ........ 75,000 2,512,500
Pediatrix Medical Group, Inc. (b) ...... 110,000 5,252,500
------------
13,140,000
------------
Medical Products & Supplies--4.2%
Guidant Corp. .......................... 100,000 5,612,500
Heartport, Inc. (b) .................... 50,000 1,787,500
Interneuron Pharmaceuticals, Inc. (b) .. 10,000 393,750
Physician Sales & Service, Inc. (b) .... 70,000 1,890,000
Ventritex, Inc. (b) .................... 25,000 392,188
------------
10,075,938
------------
Natural Gas--0.5%
Texas Meridian Resources Corp. (b) ..... 125,000 1,312,500
------------
Oil--5.3%
Chesapeake Energy Corp. (b) ............ 75,000 5,306,250
DLB Oil & Gas, Inc. (b) ................ 15,000 106,875
Noble Affiliates, Inc. ................. 100,000 3,512,500
Pogo Producing Co. ..................... 100,000 3,612,500
------------
12,538,125
------------
Oil Service & Equipment--14.8%
Diamond Offshore Drilling (b) .......... 110,000 5,472,500
Digicon, Inc. (b) ...................... 100,000 1,537,500
ENSCO International, Inc. (b) .......... 110,000 3,300,000
Falcon Drilling Company, Inc. (b) ...... 125,000 3,359,375
Input/Output, Inc. (b) ................. 120,000 4,170,000
Marine Drilling Company, Inc. (b) ...... 200,000 1,975,000
Noble Drilling Corp. (b) ............... 200,000 3,000,000
Reading & Bates Corp. (b) .............. 200,000 4,900,000
Rowan Companies, Inc. (b) .............. 200,000 2,950,000
Tidewater, Inc. ........................ 100,000 4,250,000
------------
34,914,375
------------
Professional Services--3.2%
Accustaff, Inc. (b) .................... 80,000 2,380,000
Apollo Group, Inc. Class A (b) ......... 30,000 1,320,000
Cybercash, Inc. (b) .................... 30,000 1,035,000
Intelliquest Information Group, Inc. (b) 75,000 2,887,500
------------
7,622,500
------------
Publishing, Broadcasting, Printing & Cable--10.5%
American Radio Systems Corp. (b) ....... 165,000 5,568,750
Clear Channels Communications, Inc. (b) 100,000 6,775,000
Evergreen Media Corp. Class A (b) ...... 190,000 7,457,500
Infinity Broadcasting Corp. Class A (b) 175,000 5,075,000
------------
24,876,250
------------
Retail--1.8%
Kohls Corp. (b) ........................ 40,000 1,375,000
Oakley, Inc. (b) ....................... 25,000 1,150,000
Ross Stores, Inc. ...................... 50,000 1,725,000
------------
4,250,000
------------
Telecommunications Equipment--12.4%
Aspect Telecommunications Corp. (b) .... 80,000 $ 4,600,000
Cascade Communications Corp. (b) ....... 35,000 3,508,750
Cisco Systems, Inc. (b) ................ 90,000 4,668,750
DSP Communications, Inc. (b) ........... 100,000 3,975,000
Orion Network Systems, Inc. (b) ........ 100,000 1,387,500
Panamsat Corp. (b) ..................... 100,000 3,325,000
Premiere Technologies, Inc. (b) ........ 30,000 1,132,500
U.S. Robotics Corporation (b) .......... 15,000 2,347,500
Westell Technologies, Inc. (b) ......... 60,000 4,312,500
------------
29,257,500
------------
Textile & Apparel--1.6%
Nike, Inc. Class B ..................... 30,000 2,625,000
Quiksilver, Inc. (b) ................... 30,000 1,140,000
------------
3,765,000
------------
TOTAL COMMON STOCKS
(Identified cost $179,731,033) ................... 225,817,575
------------
FOREIGN COMMON STOCKS--4.6%
Computer Software & Services--0.4%
Business Objects SA-SP ADR (France) (b) 10,000 865,000
------------
Healthcare--Drugs--1.4%
Elan PLC ADR (Ireland) (b) ............. 50,000 3,306,250
------------
Textile & Apparel--2.8%
Fila Holding S.P.A. ADR (Italy) ........ 50,000 3,412,500
Gucci Group NV (Netherlands) (b) ....... 60,000 3,262,500
------------
6,675,000
------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $9,630,400) ........... 10,846,250
------------
TOTAL LONG-TERM INVESTMENTS--100.0%
(Identified cost $189,361,433) ......... 236,663,825
------------
STANDARD
& PAR
POOR'S VALUE
RATING (000)
------- ------- -------------
SHORT-TERM
OBLIGATIONS--4.3%
Commercial Paper--4.3%
CXC, Inc. 5.375%,
5-1-96 ................... A-1+ $6,760 6,760,000
H.J. Heinz Co. 5.23%,
5-1-96 ................... A-1+ 125 125,000
McDonald's Corp. 5.20%,
5-1-96 ................... A-1+ 3,255 3,255,000
-------------
10,140,000
-------------
TOTAL SHORT-TERM
OBLIGATIONS
(Identified cost $10,140,000) ................. 10,140,000
-------------
TOTAL INVESTMENTS--104.3%
(Identified cost $199,501,433) ................ 246,803,825(a)
Cash and receivables, less liabilities--(4.3%) (10,114,004)
-------------
NET ASSETS--100.0% ............ $236,689,821
=============
U.S. Stock Fund Series
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $48,561,459 and gross
depreciation of $1,259,067 for income tax purposes. At April 30, 1996,
the aggregate cost of securities for federal income tax purposes was
$199,501,433.
(b) Non-income producing.
ADR--American Depository Receipt
35
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
(Unaudited)
Assets
Investment securities at value
(Identified cost $199,501,433) $246,803,825
Cash 2,930
Receivables
Investment securities sold 3,019,142
Fund shares sold 227,846
-------------
Total assets 250,053,743
-------------
Liabilities
Payables
Investment securities purchased 12,631,383
Fund shares repurchased 459,662
Investment advisory fee 125,281
Transfer agent fee 66,529
Distribution fee 48,271
Trustees' fee 5,587
Financial agent fee 5,369
Accrued expenses 21,840
-------------
Total liabilities 13,363,922
-------------
Net Assets $236,689,821
=============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $170,873,780
Undistributed net investment loss (844,683)
Accumulated net realized gain 19,358,332
Net unrealized appreciation 47,302,392
-------------
Net Assets $236,689,821
=============
Class A
Shares of beneficial interest outstanding, $1 par
value,
unlimited authorization (Net Assets $230,108,674) 13,234,345
Net asset value per share $17.39
Offering price per share
$17.39/(1-4.75%) $18.26
Class B
Shares of beneficial interest outstanding, $1 par
value, unlimited authorization (Net Assets
$6,581,147) 382,957
Net asset value and offering price per share $17.19
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1996
(Unaudited)
Investment Income
Dividends $ 111,025
Interest 272,695
-----------
Total investment income 383,720
-----------
Expenses
Investment advisory fee 699,932
Distribution fee--Class A 244,985
Distribution fee--Class B 19,961
Financial agent fee 29,997
Transfer agent 162,333
Custodian 18,358
Registration 12,436
Professional 8,735
Trustees 8,072
Printing 7,402
Miscellaneous 10,303
-----------
Total expenses 1,222,514
-----------
Net investment loss (838,794)
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 22,175,600
Net realized loss on options (167,152)
Net change in unrealized appreciation (depreciation)
on investments 19,389,661
-----------
Net gain on investments 41,398,109
-----------
Net increase in net assets resulting from operations $40,559,315
===========
36
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Six Months
Ended
April 30, Year Ended
1996 October 31,
(Unaudited) 1995
------------- ---------------
From Operations
Net investment income (loss) $ (838,794) $ 625,864
Net realized gain 22,008,448 22,388,865
Net change in unrealized appreciation
(depreciation) 19,389,661 23,926,580
------------- ---------------
Increase in net assets resulting from
operations 40,559,315 46,941,309
------------- ---------------
From Distributions to Shareholders
Net investment income--Class A (236,510) (1,906,874)
Net investment income--Class B -- (6,562)
Net realized gains--Class A (24,384,267) (9,109,368)
Net realized gains--Class B (370,937) (33,032)
------------- ---------------
Decrease in net assets from
distributions to shareholders (24,991,714) (11,055,836)
------------- ---------------
From Share Transactions
Class A
Proceeds from sales of shares (7,161,267
and 4,239,236 shares, respectively) 111,659,655 62,165,020
Net asset value of shares issued from
reinvestment of distributions
(1,566,906 and 857,273 shares,
respectively) 22,579,121 10,298,375
Cost of shares repurchased (6,413,639
and 4,688,495 shares, respectively) (99,439,226) (67,901,061)
------------- ---------------
Total 34,799,550 4,562,334
------------- ---------------
Class B
Proceeds from sales of shares (274,154
and 152,973 shares, respectively) 4,256,129 2,285,062
Net asset value of shares issued from
reinvestment of distributions
(23,041 and 3,215 shares, respectively) 329,023 38,454
Cost of shares repurchased (60,357 and
34,861 shares, respectively) (942,969) (558,289)
------------- ---------------
Total 3,642,183 1,765,227
------------- ---------------
Increase in net assets from share
transactions 38,441,733 6,327,561
------------- ---------------
Net increase in net assets 54,009,334 42,213,034
Net Assets
Beginning of period 182,680,487 140,467,453
------------- ---------------
End of period (including undistributed
net investment income (loss) of
($844,683) and $230,621, respectively) $236,689,821 $182,680,487
============= ===============
37
<PAGE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------------
Six Months
Ended
4/30/96 Year Ended October 31,
(Unaudited) 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 16.51 $13.33 $14.56 $13.56 $14.88 $10.77
Income from investment operations
(5)
Net investment income (loss) (0.06) 0.06 (4) 0.27 0.22 0.23 0.23
Net realized and unrealized gain
(loss) 3.12 4.21 (0.21) 1.62 0.59 4.05
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 3.06 4.27 0.06 1.84 0.82 4.28
---------- ---------- ---------- ---------- ---------- ----------
Less distributions
Dividends from net investment
income (0.02) (0.19) (0.22) (0.23) (0.25) (0.17)
Dividends from net realized gains (2.16) (0.90) (1.07) (0.61) (1.50) --
Distributions in excess of
accumulated realized gains -- -- -- -- (0.39) --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (2.18) (1.09) (1.29) (0.84) (2.14) (0.17)
---------- ---------- ---------- ---------- ---------- ----------
Change in net asset value 0.88 3.18 (1.23) 1.00 (1.32) 4.11
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 17.39 $16.51 $13.33 $14.56 $13.56 $14.88
========== ========== ========== ========== ========== ==========
Total return (1) 21.27% (3) 35.14% 0.37% 14.15% 7.11% 39.99%
Ratios/supplemental data:
Net assets, end of period
(thousands) $230,109 $180,288 $140,137 $143,035 $128,530 $125,942
Ratio to average net assets of:
Operating expenses 1.20% (2) 1.29% 1.26% 1.17% 1.25% 1.20%
Net investment income (loss) (0.82%)
(2) 0.43% 1.97% 1.58% 1.70% 1.68%
Portfolio turnover 204% (3) 331% 306% 192% 251% 332%
Average commission rate paid $0.0667 N/A N/A N/A N/A N/A
</TABLE>
Class B
-----------------------------------
Six Months From
Ended Year Inception
4/30/96 Ended 7/21/94 to
(Unaudited) 10/31/95 10/31/94
---------- --------- ----------
Net asset value, beginning
of period $ 16.38 $ 13.31 $13.09
Income from investment
operations (5)
Net investment income (0.12)
(loss) (0.03) (4) 0.02
Net realized and
unrealized gain 3.00 4.26 0.20
---------- --------- ----------
Total from investment
operations 2.97 4.14 0.22
---------- --------- ----------
Less distributions
Dividends from net
investment income -- (0.17) --
Dividends from net
realized gains (2.16) (0.90) --
Distributions in excess
of accumulated realized
gains -- -- --
---------- --------- ----------
Total distributions (2.16) (1.07) --
---------- --------- ----------
Change in net asset value 0.81 3.07 0.22
---------- --------- ----------
Net asset value, end of
period $ 17.19 $ 16.38 $13.31
========== ========= ==========
Total return (1) 20.81% (3) 34.15% 1.68% (3)
Ratios/supplemental data:
Net assets, end of period
(thousands) $6,581 $2,393 $330
Ratio to average net
assets of:
Operating expenses 1.96% (2) 2.04% 1.81% (2)
Net investment income (1.60%)
(loss) (2) (0.83%) 1.45% (2)
Portfolio turnover 204% (3) 331% 306%
Average commission rate
paid $0.0667 N/A N/A
(1) Maximum sales load is not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from
anticipated results depending on the timing of share purchases and
redemptions.
38
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
June 30, 1996 (Unaudited)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Duff & Phelps Institutional Mutual Funds (the "Fund") is organized as
a Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end management investment
company whose shares are offered in six separate Portfolios (the
"Portfolios").
Each Portfolio has distinct investment objectives. The Balanced Portfolio
seeks to provide reasonable income, long-term capital growth and conservation
of capital. The Managed Bond Portfolio seeks to generate a high level of
current income and capital appreciation. The Growth Stock Portfolio seeks
long-term appreciation of capital. The Money Market Portfolio seeks to
provide as high a level of current income consistent with capital
preservation and liquidity. The U.S. Government Securities Portfolio seeks a
high level of current income by investing in U.S. Government guaranteed or
backed securities. The Enhanced Reserves Portfolio (not covered in these
financial statements) seeks to provide high current income consistent with
preservation of capital.
Each Portfolio offers both Class X and Class Y shares. Both classes of shares
have identical voting, dividend, liquidation and other rights and the same
terms and conditions, except that Class Y 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 both classes of shares, except that Class X bears no distribution
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles. 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:
In determining the value of the investments of the Balanced Portfolio, the
Managed Bond Portfolio, the Growth Stock Portfolio, and the U.S. Government
Securities Portfolio, the securities for which market quotations are readily
available are valued at market value, which is currently determined using the
last reported sale price, or if no sales are reported, the last reported bid
price. Debt securities (other than short-term obligations, which are valued
on the basis of amortized cost, which approximates market, as defined below)
are valued on the basis of broker quotations or valuations provided by a
pricing service when such prices are believed to reflect the fair value of
such securities. Short-term investments having a remaining maturity of less
than 61 days are valued at amortized cost which approximates market. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices and take into account appropriate factors such as
institution-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other
market data. Use of the pricing service has been approved by the Trustees.
All other securities and assets are valued at their fair value as determined
in good faith by or under the direction of the Trustees.
The Money Market Portfolio uses the amortized cost method of security
valuation which, in the opinion of the Trustees, represents the fair value of
the particular security. The Trustees monitor the deviations between the
classes' net asset value per share as determined by using available market
quotations and its amortized cost per share. If the deviation exceeds 1/2 of
1%, the Board of Trustees will consider what action, if any, should be
initiated to provide a fair valuation. This valuation procedure allows each
class of the Portfolio to maintain a constant net asset value of $1 per
share. The assets of the Portfolio will not be invested in any security with
a maturity of greater than 397 days, and the average weighted maturity of its
portfolio will not exceed 90 days.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign
securities, as soon as the Portfolio is notified. Interest income is recorded
on the accrual basis. The Fund does not amortize premiums except for the
Money Market Portfolio, but does amortize discounts using the effective
interest method. Realized gains and losses are determined on the identified
cost basis.
C. Income taxes:
Each of the Portfolios is treated as a separate taxable entity. It is the
policy of each Portfolio in the Fund to comply with the requirements of the
Internal Revenue Code (the Code), applicable to regulated investment
companies, and to distribute substantially all of its taxable income to its
shareholders. In addition, 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
39
<PAGE>
which may differ from generally accepted accounting principles. These
differences include the treatment of non-taxable dividends, expiring capital
loss carryforwards, foreign currency gain/loss, partnerships, and losses
deferred due to wash sales and excise tax regulations. Permanent book and tax
basis differences relating to shareholder distributions will result in
reclassifications to paid in capital.
E. Foreign currency translation:
Foreign securities, other assets and liabilities are valued using the foreign
currency exchange rate effective at the end of the reporting period. Cost of
investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange
rates between the trade and settlement dates of a portfolio transaction is
treated as a gain or loss on foreign currency. Likewise, the gain or loss
resulting from a change in currency exchange rates, between the date income
is accrued and paid, is treated as a gain or loss on foreign currency. The
Fund does not separate that portion of the results of operations arising from
changes in exchange rates and that portion arising from changes in the market
prices of securities.
F. Forward currency contracts:
Each of the Portfolios, except U.S. Government Securities Portfolio and Money
Market 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, 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. A 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 Portfolio is required to pledge to the broker an amount of cash
and/or securities equal to the "initial margin" requirements of the futures
exchange on which the contract is traded. Pursuant to the contract, the
Portfolio agrees to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in value of the contract. Such receipts or payments
are known as variation margin and are recorded by the 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 a Portfolio is that the change in value of the futures
contract may not correspond to the change in value of the hedged instruments.
H. Expenses:
Expenses incurred by the Fund 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.
NOTE 2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Fund, the Adviser, Phoenix Investment
Counsel, Inc. ("PIC"), an indirect majority-owned subsidiary of PHL, is
entitled to a fee based upon the following annual rates as a percentage of
the average daily net assets of each separate Portfolio:
1st $1+
Portfolio $1 Billion Billion
------------------------------------------------------------
Growth Stock Portfolio 0.60% 0.55%
Balanced Portfolio 0.55% 0.50%
Managed Bond Portfolio 0.45% 0.40%
U.S. Government Securities Portfolio 0.30% 0.25%
Money Market Portfolio 0.25% 0.20%
PIC has voluntarily agreed to assume total fund operating expenses of each
Portfolio, excluding interest, taxes, brokerage fees, commissions and
extraordinary expenses, until December 31, 2001, to the extent that such
expenses exceed the following percentages of average annual net asset values:
40
<PAGE>
Class X Class Y
---------------- -----------------
Balanced Portfolio 0.65% 0.90%
Managed Bond Portfolio 0.55% 0.80%
Growth Stock Portfolio 0.70% 0.95%
Money Market Portfolio 0.35% 0.60%
U.S. Government
Securities Portfolio 0.40% 0.65%
Phoenix Equity Planning Corporation ("PEPCO"), an indirect majority-owned
subsidiary of PHL, serves as the national distributor of the Fund's shares.
Each Portfolio pays PEPCO a distribution fee of an annual rate of 0.25% for
Class Y shares applied to the average daily net assets of each Portfolio. The
distributor has advised the Portfolio that of the total amount expensed for
the period ended June 30, 1996, $30,076 was earned by the Distributor and
$10,872 was earned by unaffiliated participants.
As Financial Agent to the Fund and to each Portfolio, PEPCO receives a fee at
an annual rate of 0.03% of the average daily net assets for bookkeeping,
administrative and pricing services. PEPCO serves as the Funds' Transfer
Agent with State Street Bank and Trust Company as sub-transfer agent. For
the period ended June 30, 1996, transfer agent fees were $64,097 of which
PEPCO retained $23 which is net of fees paid to State Street.
At June 30, 1996, PHL and affiliates held Portfolio shares which aggregated
the following:
Aggregate
Net Asset
Shares Value
---------------- -----------------
Balanced Portfolio Class X 6 $ 100
Balanced Portfolio Class Y 5,634 99,955
Managed Bond Portfolio Class X 3 100
Managed Bond Portfolio Class Y 3,021 100,222
Growth Stock Portfolio Class X 2 100
Growth Stock Portfolio Class Y 2,086 99,821
Money Market Portfolio Class X 101 101
Money Market Portfolio Class Y 101,530 101,530
U.S. Government Securities
Portfolio Class X 8 101
U.S. Government Securities
Portfolio Class Y 7,646 100,464
NOTE 3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the period ended June 30, 1996
(excluding U.S. Government securities and short-term securities) aggregated
the following:
Purchases Sales
---------------- -----------------
Balanced Portfolio $37,514,768 $40,144,417
Managed Bond Portfolio 18,830,438 23,084,242
Growth Stock Portfolio 96,189,527 92,177,803
Purchases and sales of U.S. Government securities during the period ended
June 30, 1996, aggregated the following:
Purchases Sales
---------------- -----------------
Balanced Portfolio $13,014,152 $ 9,279,235
Managed Bond Portfolio 34,199,538 29,244,400
U.S. Government Securities
Portfolio 13,246,016 15,791,426
NOTE 4. MERGERS
The Fund commenced operations on March 1, 1996, other than the Enhanced
Reserves Portfolio which became available for sale on July 19, 1996 following
the tax-free reorganization of the Duff & Phelps Enhanced Reserves Fund with
the Phoenix Duff & Phelps Institutional Enhanced Reserves Portfolio. Prior to
March 1, 1996, the Portfolios, other than Enhanced Reserves Portfolio,
existed as separate accounts of Phoenix Home Life Mutual Insurance Company
("PHL"). Upon commencement of operations, the net assets of each separate
account were transferred into the corresponding Portfolio of the Fund in a
tax-free exchange for an equal number of shares of that Portfolio, other than
the Money Market Portfolio which issued 33.828 shares for each unit of the
separate account. The number of shares and dollars issued are listed in each
Portfolio's Statement of Changes in Net Assets.
The net assets of each Portfolio before and after the reorganization are as
follows:
Before After
---------------- -----------------
Balanced Portfolio $100,100 $ 58,215,721
Managed Bond Portfolio 100,100 66,796,561
Growth Stock Portfolio 100,100 206,603,100
Money Market Portfolio 100,100 10,872,970
U.S. Government Securities
Portfolio 100,100 13,137,421
Enhanced Reserves Portfolio -- 136,554,593
41
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements:
Included in Part A of the Registration Statement:
Financial Highlights
Included in Part B of the Registration Statement:
Independent Auditors' Report (not applicable for this filing)
Statement of Assets and Liabilities
Notes to Financial Statements
(b) Exhibits:
<TABLE>
<S> <C>
(1)(a) Declaration of Trust of the Registrant, filed with Pre-Effective
Amendment No. 1 on February 2, 1996 and incorporated herein by
reference.
(1)(b) Amendment to Declaration of Trust changing names of Portfolios, filed
with Pre-Effective Amendment No. 2 on February 28, 1996 and incorporated
herein by reference.
(2) None
(3) None
(4) Reference is made to Article III, Section 3.4 of Registrant's
Declaration of Trust
(5)(a) Investment Advisory Agreement between Registrant and Duff & Phelps
Investment Management Co. ("DPM"), filed with Pre-Effective Amendment
No. 1 on February 2, 1996 and incorporated herein by reference.
(b) Investment Advisory Agreement between Registrant and Phoenix Investment
Counsel, Inc. ("PIC"), filed with Pre-Effective Amendment No. 1 on
February 2, 1996 and incorporated herein by reference.
(6)(a) Distribution Agreement between Registrant and Phoenix Equity Planning
Corporation, filed with Pre-Effective Amendment No. 1 on February 2,
1996 and incorporated herein by reference.
(b) Form of Sales Agreement between Phoenix Equity Planning Corporation and
dealers, filed with Post-Effective Amendment No. 1 on March 1, 1996 and
incorporated herein by reference.
(7) None
(8)(a) Custodian Agreement between Registrant and State Street Bank and Trust
Company, filed with Pre-Effective Amendment No. 1 to the Registration
Statement/Proxy Statement on Form N-14 on June 3, 1996 and incorporated
herein by reference.
(b) Custodian Agreement between Registrant and The Chase Manhattan Bank,
N.A., filed with Pre-Effective Amendment No. 2 on February 28, 1996 and
incorporated herein by reference.
(9)(a) Financial Agent Agreement between Registrant and Phoenix Equity Planning
Corporation, filed with Pre-Effective Amendment No. 1 on February 2,
1996 and incorporated herein by reference.
(b) Transfer Agent Agreement between Registrant and Phoenix Equity Planning
Corporation, filed with Pre-Effective Amendment No. 2 on February 28,
1996 and incorporated herein by reference.
(10) Opinion of Counsel, filed with Pre-Effective Amendment No. 2 on February
28, 1996 and incorporated herein by reference.
(11) Consent of Accountants, filed with Post-Effective No. 1 on March 1, 1996
and incorporated herein by reference.
(12) None
(13) Initial Capitalization Agreement, filed with Pre-Effective Amendment No.
1 on February 2, 1996 and incorporated herein by reference.
(14) None
(15) Rule 12b-1 Distribution Plan for Class Y Shares, filed with
Pre-Effective Amendment No. 1 on February 2, 1996 and incorporated
herein by reference.
C-1
<PAGE>
(16) Schedule for Computation of Performance Quotations, filed with
Pre-Effective Amendment No. 2 on February 28, 1996 and incorporated
herein by reference.
(17) Financial Data Schedule as reflected on Edgar as Exhibit 27, filed with
Post-Effective Amendment No. 1 on March 1, 1996 and incorporated herein
by reference.
(18) Rule 18f-3 Dual Distribution Plan, filed with Pre-Effective Amendment
No. 2 on February 28, 1996 and incorporated herein by reference.
(19) Powers of Attorney, filed with Pre-Effective Amendment No. 2 on February
28, 1996 and incorporated herein by reference.
</TABLE>
C-2
<PAGE>
Item 25. Persons Controlled by or under Common Control with Registrant.
As of the date hereof, to the best knowledge of the Registrant, no person
is directly or indirectly controlled by or under common control with the
Registrant.
Item 26. Number of Holders of Securities.
As of February 29, 1996:
Class X Shares Class Y Shares
Number of Number of
Record Holders Record Holders
---------------- -----------------
Balanced Portfolio 1 1
Managed Bond Portfolio 1 1
Enhanced Reserves Portfolio 0 0
Growth Portfolio 1 1
Money Market Portfolio 1 1
U.S. Gov't Sec. Portfolio 1 1
Item 27. Indemnification.
Please see Article of the Registrant's Declaration of Trust (incorporated
herein by reference). Registrant's trustees and officers are covered by an
Errors and Omissions Policy. Paragraph 10 of the Investment Advisory
Agreements between the Registrant and its Advisers provide in relevant part
that, in the absence of willful malfeasance, bad faith, gross negligence or
reckless disregard of the obligations or duties under the Investment Advisory
Agreements on the part of each the Adviser, the Advisers shall not be liable
to the Registrant or to any shareholder for any act or omission in the course
of or connected in any way with rendering services or for any losses that may
be sustained in the purchase, holding or sale of any security.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, directors, officers and controlling
persons of the Registrant and the investment advisers and distributor
pursuant to the foregoing provisions or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a trustee, director, officer, or controlling
person of the Registrant and the principal underwriter in connection with the
successful defense or any action, suit or proceeding) is asserted against the
Registrant by such trustee, director, officer or controlling person or the
Distributor in connection with the shares being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Item 28. Business and Other Connections of Investment Adviser.
See "Management of the Fund" in the Prospectus and "Management of the
Trust" in the Statement of Additional Information for information regarding
the business of the Advisers. For information as to the business, profession,
vocation or employment of a substantial nature of directors and officers of
the Advisers, reference is made to the Advisers' current Form ADV (SEC File
Nos. 801- 5995 (PIC) & 14813 (DPM)) filed under the Investment Advisers Act
of 1940, incorporated herein by reference.
Item 29. Principal Underwriter.
(a) The sole principal underwriter for the Registrant is Phoenix Equity
Planning Corporation.
(b) The directors and executive officers of Phoenix Equity Planning
Corporation, the distributor for Registrant, are as follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
-------------------------- ----------------------------- ------------------------
<S> <C> <C>
Michael E. Haylon
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480 Director Vice President
Philip R. McLoughlin
One American Row
Hartford, CT 06115 Director and President Trustee and President
David R. Pepin
56 Prospect Street
P.O. Box 150480 Director and
Hartford, CT 06115-0480 Executive Vice President None
C-3
<PAGE>
Leonard J. Saltiel
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200 Senior Vice President Vice President
William R. Moyer
100 Bright Meadow Blvd.
P.O. Box 2200 Senior Vice President,
Enfield, CT 06083-2200 Finance and Treasurer Vice President
William J. Newman
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480 Senior Vice President Senior Vice President
G. Jeffrey Bohne
100 Bright Meadow Blvd.
P.O. Box 2200 Vice President,
Enfield, CT 06083-2200 Transfer Agent Operations Secretary
Nancy G. Curtiss
56 Prospect Street
P.O. Box 150480 Vice President,
Hartford, CT 06115-0480 Fund Accounting Treasurer
Maris Lambergs
100 Bright Meadow Blvd.
P.O. Box 2200 Vice President,
Enfield, CT 06083-2200 National Sales Manager None
James M. Dolan
100 Bright Meadow Blvd. Vice President and
P.O. Box 2200 Compliance Officer;
Enfield, CT 06083-2200 Assistant Secretary Vice President
Elizabeth R. Sadowinski
100 Bright Meadow Blvd.
P.O. Box 2200 Vice President,
Enfield, CT 06083-2200 Field and Investor Services None
Eugene A. Charon
100 Bright Meadow Blvd.
P.O. Box 2200
Enfield, CT 06083-2200 Controller None
Thomas N. Steenburg
One American Row
Hartford, CT 06115 Secretary Assistant Secretary
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an
affiliated person of the Registrant or an affiliated person of such
affiliated person, directly or indirectly, from the Registrant during the
Registrant's last fiscal year.
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by the
Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules thereunder will be maintained at the offices of the Registrant located
at 56 Prospect Street, Hartford, CT 06115, or its investment advisers, Duff &
Phelps Investment Management Co., 55 East Monroe Street, Suite 3800, Chicago,
Illinois 60610, Phoenix Investment Counsel, Inc., 56 Prospect Street,
Hartford, CT 06115, or the custodians, State Street Bank and Trust Company, 1
Heritage Drive, P2N, North Quincy, MA 02171 or The Chase Manhattan Bank,
N.A., 1 Chase Manhattan Plaza, Floor 3B, New York, NY 10081. All such
accounts, books and other documents required to be maintained by the
principal underwriter will be maintained at Phoenix Equity Planning
Corporation, 100 Bright Meadow Boulevard, Enfield, Connecticut 06083.
C-4
<PAGE>
Item 31. Management Services.
None.
Item 32. Undertakings.
(a) Not applicable.
(b) Registrant undertakes to file a post-effective amendment using
financial statements, which need not be certified, within four to six
months from the effective date of the Registrant's Registration
Statement with respect to the Fund.
(c) Registrant undertakes to furnish to each person to whom a prospectus
is delivered a copy of the Registrant's latest annual report to
shareholders upon request and without charge if the information called
for by Item 5A of Form N-1A is contained in such annual report.
(d) Registrant undertakes to provide the information specified pursuant to
Regulation S-K, Item 512 (Reg.S.S. 229.512), as applicable, the terms
of which are incorporated herein by reference.
(e) Registrant undertakes to call a special meeting of shareholders for
the purpose of voting upon the question of removal of a trustee or
trustees and to assist in communications with other shareholders, as
required by Section 16(c) of the 1940 Act, if requested to do so by
holders of at least 10% of a Portfolio's outstanding shares.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Hartford, and State of
Connecticut on the 3rd day of September, 1996.
PHOENIX DUFF & PHELPS
INSTITUTIONAL MUTUAL FUNDS
ATTEST: /s/ Thomas N. Steenburg By: /s/ Philip R. McLoughlin
Thomas N. Steenburg Philip R. McLoughlin
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons
in the capacities indicated, on this 3rd day of September, 1996.
<TABLE>
<CAPTION>
Signature Title
- ---------------------------------- ---------------------------------
<S> <C>
- ----------------------------------
C. Duane Blinn Trustee
- ----------------------------------
Robert Chesek Trustee
- ----------------------------------
E. Virgil Conway Trustee
- ----------------------------------
William W. Crawford Trustee
- ---------------------------------- Tresurer (principal
Nancy G. Curtiss financial and
accounting officer)
- ----------------------------------
Harry Dalzell-Payne Trustee
- ----------------------------------
William N. Georgeson Trustee
- ----------------------------------
Francis E. Jeffries Trustee
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
Signature Title
- ---------------------------------- ---------------------------------
<S> <C>
- ----------------------------------
Leroy Keith, Jr.* Trustee
- ----------------------------------
/s/ Philip R. McLoughlin Trustee and
Philip R. McLoughlin President
- ----------------------------------
Everett L. Morris Trustee
- ----------------------------------
James M. Oates Trustee
- ----------------------------------
Richard A. Pavia Trustee
- ----------------------------------
Calvin J. Pedersen Trustee
- ----------------------------------
Philip R. Reynolds Trustee
- ----------------------------------
Herbert Roth, Jr. Trustee
- ----------------------------------
Richard E. Segerson Trustee
- ----------------------------------
Lowell P. Weicker, Jr. Trustee
</TABLE>
By: /s/ Philip R. McLoughlin
*Philip R. McLoughlin pursuant to powers of attorney filed with
Pre-Effective Amendment No. 2 on February 28, 1996 and incorporated
herein by reference.
S-2
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 047
<NAME> PHOENIX INSTITUTIONAL MONEY MARKET CLASS X
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> MAR-01-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 14065
<INVESTMENTS-AT-VALUE> 14065
<RECEIVABLES> 62
<ASSETS-OTHER> 46
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14173
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39
<TOTAL-LIABILITIES> 39
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14130
<SHARES-COMMON-STOCK> 11138
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 4
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 14134
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 243
<OTHER-INCOME> 0
<EXPENSES-NET> (18)
<NET-INVESTMENT-INCOME> 225
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 225
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (182)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13694
<NUMBER-OF-SHARES-REDEEMED> (2730)
<SHARES-REINVESTED> 174
<NET-CHANGE-IN-ASSETS> 11141
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 80
<AVERAGE-NET-ASSETS> 13463
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .017
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.017)
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> .35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 048
<NAME> PHOENIX INSTITUTIONAL MONEY MARKET CLASS Y
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> MAR-01-1996
<PERIOD-END> JUN-30-1996
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<INVESTMENTS-AT-VALUE> 14065
<RECEIVABLES> 62
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<TOTAL-ASSETS> 14173
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39
<TOTAL-LIABILITIES> 39
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14130
<SHARES-COMMON-STOCK> 2992
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 4
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 14134
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 243
<OTHER-INCOME> 0
<EXPENSES-NET> (18)
<NET-INVESTMENT-INCOME> 225
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 225
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (39)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4942
<NUMBER-OF-SHARES-REDEEMED> (1986)
<SHARES-REINVESTED> 36
<NET-CHANGE-IN-ASSETS> 2993
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 80
<AVERAGE-NET-ASSETS> 13463
<PER-SHARE-NAV-BEGIN> 1
<PER-SHARE-NII> .016
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.016)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 037
<NAME> PHOENIX INSTITUTIONAL GROWTH STOCK CLASS X
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> MAR-01-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 177343
<INVESTMENTS-AT-VALUE> 204472
<RECEIVABLES> 607
<ASSETS-OTHER> 45
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<TOTAL-ASSETS> 205124
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8444
<TOTAL-LIABILITIES> 8444
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 163164
<SHARES-COMMON-STOCK> 3545
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 20
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6367
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27129
<NET-ASSETS> 196680
<DIVIDEND-INCOME> 702
<INTEREST-INCOME> 276
<OTHER-INCOME> 0
<EXPENSES-NET> (507)
<NET-INVESTMENT-INCOME> 471
<REALIZED-GAINS-CURRENT> 6367
<APPREC-INCREASE-CURRENT> (1614)
<NET-CHANGE-FROM-OPS> 5224
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (416)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3916
<NUMBER-OF-SHARES-REDEEMED> (379)
<SHARES-REINVESTED> 9
<NET-CHANGE-IN-ASSETS> 174030
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 595
<AVERAGE-NET-ASSETS> 208603
<PER-SHARE-NAV-BEGIN> 48.01
<PER-SHARE-NII> .12
<PER-SHARE-GAIN-APPREC> 1.07
<PER-SHARE-DIVIDEND> (.11)
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<EXPENSE-RATIO> .70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
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<NAME> PHOENIX INSTITUTIONAL GROWTH STOCK CLASS Y
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<PERIOD-START> MAR-01-1996
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<ACCUM-APPREC-OR-DEPREC> 27129
<NET-ASSETS> 196680
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<EXPENSES-NET> (507)
<NET-INVESTMENT-INCOME> 471
<REALIZED-GAINS-CURRENT> 6367
<APPREC-INCREASE-CURRENT> (1614)
<NET-CHANGE-FROM-OPS> 5224
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<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 22650
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<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 595
<AVERAGE-NET-ASSETS> 208603
<PER-SHARE-NAV-BEGIN> 48.01
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> 1.09
<PER-SHARE-DIVIDEND> (.07)
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<PER-SHARE-NAV-END> 49.11
<EXPENSE-RATIO> .95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 027
<NAME> PHOENIX INSTITUTIONAL MANAGED BOND CLASS X
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> MAR-01-1996
<PERIOD-END> JUN-30-1996
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<INVESTMENTS-AT-VALUE> 73375
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<PAYABLE-FOR-SECURITIES> 7846
<SENIOR-LONG-TERM-DEBT> 0
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 64170
<SHARES-COMMON-STOCK> 1773
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 192
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1090
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 954
<NET-ASSETS> 66406
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1807
<OTHER-INCOME> 0
<EXPENSES-NET> (130)
<NET-INVESTMENT-INCOME> 1677
<REALIZED-GAINS-CURRENT> 1090
<APPREC-INCREASE-CURRENT> (1683)
<NET-CHANGE-FROM-OPS> 1084
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1337)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1826
<NUMBER-OF-SHARES-REDEEMED> (71)
<SHARES-REINVESTED> 18
<NET-CHANGE-IN-ASSETS> 59595
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 210
<AVERAGE-NET-ASSETS> 67696
<PER-SHARE-NAV-BEGIN> 33.84
<PER-SHARE-NII> .86
<PER-SHARE-GAIN-APPREC> (.32)
<PER-SHARE-DIVIDEND> (.76)
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 33.62
<EXPENSE-RATIO> .55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 028
<NAME> PHOENIX INSTITUTIONAL MANAGED BOND CLASS Y
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> MAR-01-1996
<PERIOD-END> JUN-30-1996
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<INVESTMENTS-AT-VALUE> 73375
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<TOTAL-ASSETS> 74334
<PAYABLE-FOR-SECURITIES> 7846
<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 7928
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<PAID-IN-CAPITAL-COMMON> 64170
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<ACCUMULATED-NET-GAINS> 1090
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 954
<NET-ASSETS> 66406
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<INTEREST-INCOME> 1807
<OTHER-INCOME> 0
<EXPENSES-NET> (130)
<NET-INVESTMENT-INCOME> 1677
<REALIZED-GAINS-CURRENT> 1090
<APPREC-INCREASE-CURRENT> (1683)
<NET-CHANGE-FROM-OPS> 1084
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (148)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 214
<NUMBER-OF-SHARES-REDEEMED> (16)
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 6811
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 102
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 210
<AVERAGE-NET-ASSETS> 67696
<PER-SHARE-NAV-BEGIN> 33.84
<PER-SHARE-NII> .82
<PER-SHARE-GAIN-APPREC> (.32)
<PER-SHARE-DIVIDEND> (.73)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 33.61
<EXPENSE-RATIO> .79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 017
<NAME> PHOENIX INSTITUTIONAL BALANCED PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> MAR-01-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 54886
<INVESTMENTS-AT-VALUE> 57150
<RECEIVABLES> 0
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