[FRONT COVER]
December 31, 1996
PHOENIX
FUNDS
ANNUAL REPORT
Phoenix Duff &
Phelps Institutional
Mutual Funds
o BALANCED PORTFOLIO
o MANAGED BOND PORTFOLIO
o GROWTH STOCK PORTFOLIO
o MONEY MARKET PORTFOLIO
o U.S. GOVERNMENT
SECURITIES PORTFOLIO
o ENHANCED RESERVES
PORTFOLIO
[Phoenix
Duff & Phelps logo]
<PAGE>
Table of Contents
Page
Balanced Portfolio 1
Managed Bond Portfolio 9
Growth Stock Portfolio 17
Money Market Portfolio 24
U.S. Government Securities Portfolio 29
Enhanced Reserves Portfolio 34
Notes to Financial Statements 40
<PAGE>
INSTITUTIONAL BALANCED PORTFOLIO
INVESTMENT ADVISER'S REPORT
Despite increasing interest rates and waning corporate earnings momentum,
U.S. stock prices forged higher over this reporting period, fueled by
unprecedented cash inflows into equity mutual funds and continued corporate
share buybacks. Although this remarkable rally dates back to December 1994,
the past year has been one of tremendous rotation among various sectors of
the stock market--a manifestation of increasing investor uncertainty over the
direction of interest rates and the economy. As measured by the Standard &
Poor's 500 Composite Index, the U.S. equity market returned an impressive
23.25% during 1996.
While it may have been another record year for U.S. equities, the overall
bond market produced less than stellar results. For the twelve months ended
December 31, 1996, the Lehman Brothers Aggregate Bond Index, an unmanaged
gauge of bond market performance, returned a mere 3.63%. Shifting market
opinion over the direction of U.S. economy contributed to much of the
volatility in interest rates during this reporting period. As measured by the
benchmark 30-year Treasury bond, interest rates started the year at 5.95%,
climbed as high as 7.19% in July, and finished 1996 yielding 6.64%. Generally
speaking, investors were well rewarded for moving down the credit- risk
spectrum last year, as lower-quality bonds generally outperformed
higher-quality issues.
Aided by the long bull market in U.S. stocks, Phoenix Duff & Phelps
Institutional Balanced Portfolio posted double-digit gains during this latest
fiscal year. For the twelve months ended December 31, 1996, the Fund's class X
shares provided a total return of 10.86% and class Y shares earned 10.58%.
Despite these respectable results, the Fund trailed its composite benchmark,
which returned 14.33% over the same period.* All of these figures assume
reinvestment of any distributions.
Fund results over this latest reporting cycle were held back primarily
because of weakness in some of our technology, consumer cyclical and health
care holdings. Positive contributors to performance included excellent stock
selection within the energy and finance sectors as well as our decision to
overweight the strongly performing energy group. Additionally, the
portfolio's fixed-income segment continued to outperform its benchmark, the
Lehman Brothers Aggregate Bond Index, throughout this reporting period. Our
exposure to such non-traditional sectors of the bond market as taxable
municipals, commercial and non-agency residential mortgage-backed securities,
and emerging markets debt paid off handsomely during the year.
As we head into 1997, our near-term outlook calls for continued moderate
economic growth, mild inflation and decelerating earnings growth. Given this
investment environment, our equity strategy currently emphasizes quality,
large-cap growth stocks and focuses on such compelling investment themes as
21st Century Medicine (health care), Hybrid Network (technology) and
Deregulating Financial Services (financial services). In terms of our
fixed-income allocation, we continue to follow our sector rotation approach,
with a strong emphasis on U.S. Treasuries and mortgage-backed securities. As
of December 31, 1996, the Fund's asset allocation mix was 59% equity, 33%
fixed income and 8% cash equivalents.
- --------------------------------------------------------------------------------
[LINE CHART]
Institutional Balanced Balanced
Portfolio-class X Benchmark*
5/17/91 10000 10000
12/31/91 12396 10926.2
12/31/92 13665.4 11716.6
12/31/93 14787.3 12799.9
12/31/94 14329.4 12824.5
12/31/95 17670.9 16316.4
12/31/96 19589.8 18655.3
- --------------------------------------------------------------------------------
Average Annual Total Returns for Periods
Ending 12/31/96
From Inception
5/17/91 to
1 Year 5 Years 12/31/96
- --------------------- -------- --------- ----------------
Class X 10.86% 9.58% 12.69%
- --------------------- ------- -------- ---------------
Class Y 10.58% 9.31% 12.40%
- --------------------- ------- -------- ---------------
Balanced Benchmark* 14.33% 11.29% 11.80%**
- --------------------- ------- -------- ---------------
This chart assumes an intial gross investment of $10,000 made on 5/17/91 for
Class X shares. The total return for Class X shares assumes reinvestment of
dividends and capital gains. Class Y share performance will be greater or
less than that shown based on differences in inception dates and fees.
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 Balanced Benchmark is calculated by Frank Russell Company based on
the following indexes: 55% S&P 500, 35% Lehman Brothers Aggregate Bond Index
and 10% 90-day Treasury Bills.
** Balanced Benchmark from 5/31/91 to 12/31/96.
1
<PAGE>
Institutional Balanced Portfolio
INVESTMENTS AT DECEMBER 31, 1996
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- -------------
U.S. GOVERNMENT AND AGENCY
SECURITIES--12.5%
U.S. Treasury Bonds--5.8%
U.S. Treasury Bonds 6.50%, '06 Aaa $ 2,840 $2,855,975
-----------
U.S. Treasury Notes--3.1%
U.S. Treasury Notes 6.375%, '99 Aaa 325 327,844
U.S. Treasury Notes 6.625%, '01 Aaa 1,200 1,219,124
-----------
1,546,968
-----------
Agency Mortgage-Backed Securities--3.6%
GNMA 6.50%, '23-'26 Aaa 1,823 1,745,619
-----------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $6,163,982) 6,148,562
-----------
NON-CONVERTIBLE BONDS--10.7%
Asset Backed Securities--1.5%
Airplanes Pass Through Trust 1D
10.875%, '19 Ba 100 110,307
Fleetwood Credit Corp. 96-B,
A 6.90%, '12 Aaa 190 191,436
Green Tree Financial Corp. 96-2, M1
7.60%, '27 Aa 100 100,406
Green Tree Financial Corp. 96-3, B1
7.70%, '27 Aa 300 302,344
-----------
704,493
-----------
Non-Agency Mortgage-Backed Securities--8.4%
CS First Boston Mortgage
95-AE1, B 7.182%, '27 Aaa 190 189,198
DLJ Mortgage Acceptance 96-CF1, A1B
144A 7.58%, '28 (c) Aaa 75 77,531
GE Capital Mortgage Service 96-8,
M, 7.25%, '26 AA(d) 249 242,177
Lehman Commercial Conduit 95-C2, B
7.184%, '05 AA(d) 225 226,055
Merrill Lynch Mortgage, Inc. 95-C2,
B 7.61%, '21 Aa 89 90,459
Merrill Lynch Mortgage, Inc. 95-C3,
B 7.149%, '25 Aa 250 249,375
Merrill Lynch Mortgage, Inc. 96-C1,
B 7.42%, '28 AA(d) 130 131,402
Nationslink Funding Corp. 96-1, B
7.69%, '05 Aa 250 259,375
Residential Asset Securitization
Trust 96-A8, A1 8%, '26 AAA(d) 287 291,639
Residential Funding Mortgage 96-S1,
A11 7.10%, '26 AAA(d) 500 486,484
Residential Funding Mortgage 96-S4,
M1 7.25%, '26 AA(d) 298 289,320
Non-Agency Mortgage-Backed Securities--continued
Residential Funding Mortgage 96-S8,
A4 6.75%, '11 AAA(d) $291 $285,187
Resolution Trust Corp. 93-C1,
B 8.75%, '24 Aa 200 204,558
Resolution Trust Corp. 95-C1,
B 6.90%, '27 Aa 225 222,961
Resolution Trust Corp. 95-C2,
B 6.80%, '27 Aa 446 441,040
Structured Asset Securities Corp.
95-C1, C 7.375%, '24 A(d) 300 299,953
Structured Asset Securities Corp.
96-CFL, C 6.525%, '28 A(d) 155 151,513
-----------
4,138,227
-----------
Paper & Forest Products--0.6%
Buckeye Cellulose Corp. 8.50%, '05 Ba 300 300,750
-----------
Truckers & Marine--0.2%
Teekay Shipping Corp. 8.32%, '08 Ba 100 100,250
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $5,235,996) 5,243,720
-----------
FOREIGN NON-CONVERTIBLE BONDS--0.9%
Chile--0.3%
Petropower Funding 144A 7.36%, '14
(c) BBB(d) 150 143,145
-----------
Indonesia--0.3%
Asia Pulp & Paper Co. Yankee
11.75%, '05 Ba 150 161,625
-----------
Sweden--0.3%
Astra Overseas Financial 144A
8.75%, '03 (c) NR 150 151,875
-----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $447,321) 456,645
-----------
FOREIGN GOVERNMENT SECURITIES--4.7%
Argentina--0.7%
Republic of Argentina Discount L-GL
Euro 6.375%, '23 (f) B 250 192,969
Republic of Argentina Global Euro
8.375%, '03 B 150 143,062
-----------
336,031
-----------
Brazil--0.8%
Republic of Brazil DCB-L Euro
6.563%, '12 (f) B 250 189,531
Republic of Brazil Par Z-L Euro 5%,
'24 (f) B 300 189,000
-----------
378,531
-----------
See Notes to Financial Statements
2
<PAGE>
Institutional Balanced Portfolio
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- -------------
Foreign Government Securities--continued
Colombia--0.6%
Republic of Colombia 7.25%, '03 Baa $300 $290,328
-----------
Croatia--0.6%
Croatia Series A 6.688%, '10 (f) NR 300 290,438
-----------
Mexico--0.7%
United Mexican States 144A 7.563%,
'01 (c) (f) Baa 115 115,270
United Mexican Discount B Euro
6.375%, '19 (e) (f) Ba 300 258,750
-----------
374,020
-----------
Panama--0.8%
Panama PDI 144A, PIK interest
capitalization, 6.75%, '16 (c) (f) NR 535 423,978
-----------
Poland--0.5%
Poland Discount Euro 6.50%, '24 (f) Baa 250 243,125
-----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $2,091,404) 2,336,451
-----------
MUNICIPAL BONDS--4.5%
California--1.2%
Kern County Pension Obligation
Taxable 7.26%, '14 Aaa 200 197,132
Long Beach Pension Obligation
Taxable 6.87%, '06 Aaa 100 100,227
San Bernardino County Obligation
Revenue Taxable 6.87%, '08 Aaa 50 49,635
San Bernardino County Obligation
Revenue Taxable 6.94%, '09 Aaa 135 134,540
Ventura County Pension Taxable
6.54%, '05 Aaa 125 123,111
-----------
604,645
-----------
Florida--1.8%
Dade County Ed. Facs. Authority
5.75%, '20 Aaa 95 96,166
Miami Beach Special Obligation
Taxable 8.60%, '21 Aaa 395 432,316
University Miami Exchange Revenue
Taxable A 7.65%, '20 Aaa 355 358,312
-----------
886,794
-----------
Virgina--1.5%
Newport News Taxable Series B
7.05%, '25 Aa 750 707,145
-----------
TOTAL MUNICIPAL BONDS
(Identified cost $2,242,444) 2,198,584
-----------
SHARES VALUE
-------- ------------
COMMON STOCKS--58.2%
Aerospace & Defense--1.9%
Boeing Co. 3,800 $ 404,225
United Technologies Corp. 7,800 514,800
----------
919,025
----------
Autos & Trucks--0.2%
Chrysler Corp. 3,000 99,000
----------
Banks--2.3%
BankAmerica Corp. 3,200 319,200
Chase Manhattan Corp. 2,900 258,825
Citicorp 2,500 257,500
Mellon Bank Corp. 2,900 205,900
Nationsbank Corp. 1,100 107,525
----------
1,148,950
----------
Beverages--1.8%
Coca-Cola Co. 5,300 278,913
PepsiCo, Inc. 19,400 567,450
Seagram Ltd. 1,300 50,375
----------
896,738
----------
Chemical--1.8%
Du Pont (E.I.) de Nemours & Co. 3,800 358,625
Monsanto Co. 10,800 419,850
Philip Environmental, Inc. (b) 8,000 116,000
----------
894,475
----------
Computer Software & Services--2.8%
Computer Associates International, Inc. 7,400 368,150
First Data Corp. 9,000 328,500
Microsoft Corp. (b) 3,400 280,925
Oracle Corp. (b) 10,000 417,500
----------
1,395,075
----------
Conglomerates--2.1%
AlliedSignal, Inc. 3,800 254,600
Thermo Electron Corp. (b) 2,800 115,500
Tyco International Ltd. 12,500 660,938
----------
1,031,038
----------
Cosmetics & Soaps--2.1%
Colgate Palmolive Co. 1,700 156,825
Gillette Co. 4,700 365,425
Procter & Gamble Co. 5,000 537,500
----------
1,059,750
----------
Diversified Financial Services--3.5%
Conseco, Inc. 6,400 408,000
First USA, Inc. 12,300 425,887
MBNA Corp. 5,000 207,500
T. Rowe Price Associates 7,100 308,850
Travelers Group, Inc. 8,433 382,648
----------
1,732,885
----------
Diversified Miscellaneous--0.5%
Minnesota Mining & Manufacturing Co. 2,800 232,050
----------
Electrical Equipment--1.6%
Emerson Electric Co. 600 58,050
General Electric Co. 5,400 533,925
Westinghouse Electric Corp. 10,000 198,750
----------
790,725
----------
See Notes to Financial Statements
3
<PAGE>
Institutional Balanced Portfolio
SHARES VALUE
-------- ------------
Common Stocks--continued
Electronics--3.2%
Intel Corp. 6,100 $ 798,719
Micron Technology, Inc. 3,700 107,762
Perkin Elmer Corp. 4,300 253,163
Texas Instruments, Inc. 2,350 149,812
3Com Corp. (b) 3,400 249,475
----------
1,558,931
----------
Entertainment, Leisure & Gaming--0.5%
Walt Disney Co. 3,500 243,687
----------
Food--1.1%
Campbell Soup Co. 3,000 240,750
Hudson Foods, Inc. Class A 16,500 313,500
----------
554,250
----------
Healthcare--Diversified--1.7%
American Home Products Corp. 5,200 304,850
Bristol-Myers Squibb Co. 3,900 424,125
Warner-Lambert Co. 1,400 105,000
----------
833,975
----------
Healthcare--Drugs--2.4%
Amgen, Inc. (b) 3,500 190,312
Lilly (Eli) & Co. 1,400 102,200
Merck & Co., Inc. 6,500 515,125
Pfizer, Inc. 4,300 356,363
----------
1,164,000
----------
Hospital Management & Services--1.2%
Columbia/HCA Healthcare Corp. 14,000 570,500
----------
Household Furnishings & Appliances--1.0%
Sunbeam Corp., Inc. 18,700 481,525
----------
Insurance--2.7%
Allstate Corp. 9,300 538,237
American International Group, Inc. 3,000 324,750
Chubb Corp. 1,900 102,125
ITT Hartford Group, Inc. (b) 1,000 67,500
TIG Holdings, Inc. 8,100 274,388
----------
1,307,000
----------
Lodging & Restaurants--1.0%
Hilton Hotels Corp. 18,400 480,700
----------
Machinery--0.5%
Deere & Co. 6,000 243,750
----------
Medical Products & Supplies--1.3%
Abbott Laboratories 2,000 101,500
Boston Scientific Corp. (b) 4,500 270,000
Johnson & Johnson 5,000 248,750
----------
620,250
----------
Natural Gas--2.2%
Apache Corp. 5,900 208,712
Columbia Gas System, Inc. 2,400 152,700
Consolidated Natural Gas Co. 3,700 204,425
Enron Corp. 11,900 513,188
----------
1,079,025
----------
Common Stocks--continued
Office & Business Equipment--2.6%
International Business Machines Corp. 4,200 $ 634,200
Sun Microsystems, Inc. (b) 17,000 436,687
Xerox Corp. 4,000 210,500
----------
1,281,387
----------
Oil--2.6%
Chevron Corp. 6,400 416,000
Exxon Corp. 3,300 323,400
Mobil Corp. 500 61,125
Noble Affiliates, Inc. 9,900 473,963
----------
1,274,488
----------
Oil Service & Equipment--4.1%
Noble Drilling Corporation (b) 23,800 473,025
Schlumberger Ltd. 2,500 249,688
Seacor Holdings, Inc. (b) 8,200 516,600
Transocean Offshore, Inc. 4,000 250,500
Western Atlas, Inc. (b) 7,600 538,650
----------
2,028,463
----------
Pollution Control--0.7%
Republic Industries, Inc. (b) 3,000 93,562
U.S.A. Waste Services, Inc. (b) 8,100 258,188
----------
351,750
----------
Professional Services--2.0%
Cognizant Corp. 9,000 297,000
Corrections Corporation of America (b) 4,000 122,500
HFS, Inc. (b) 5,700 340,575
Marsh & McLennan Cos., Inc. 2,000 208,000
----------
968,075
----------
Publishing, Broadcasting, Printing & Cable--0.2%
New York Times Co. 3,000 114,000
----------
Real Estate Investment Trusts--0.2%
Redwood Trust, Inc. 2,800 104,300
----------
Retail--2.0%
Office Depot, Inc. (b) 3,000 53,250
Sears Roebuck & Co. 7,000 322,875
Staples, Inc. (b) 13,500 243,844
TJX Companies, Inc. 8,000 379,000
----------
998,969
----------
Retail--Food--1.0%
Safeway, Inc. (b) 12,000 513,000
----------
Telecommunications Equipment--2.1%
Cisco Systems, Inc. (b) 15,600 992,550
Lucent Technologies, Inc. 1,100 50,875
----------
1,043,425
----------
Textile & Apparel--0.8%
Nike, Inc. Class B 6,600 394,350
----------
Utility--Telephone--0.5%
Ameritech Corp. 1,900 115,187
Bell Atlantic Corp. 1,700 110,075
----------
225,262
----------
TOTAL COMMON STOCKS
(Identified cost $25,926,240) 28,634,773
----------
See Notes to Financial Statements
4
<PAGE>
Institutional Balanced Portfolio
SHARES VALUE
-------- ------------
FOREIGN COMMON STOCKS--1.0%
Oil--1.0%
British Petroleum PLC ADR (United
Kingdom) 1,500 $ 212,063
Royal Dutch Petroleum Co. ADR NY
Registered Shares (Netherlands) 1,600 273,200
----------
485,263
----------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $455,766) 485,263
----------
TOTAL LONG-TERM INVESTMENTS--92.5%
(Identified cost $42,563,153) 45,503,998
----------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------ ---------
SHORT-TERM OBLIGATIONS--7.1%
Commercial Paper--6.9%
Campbell Soup Co. 6.75%,
1-2-97 A-1+ $ 1,690 1,689,683
Amoco Co. 5.25%, 1-6-97 A-1+ 75 74,945
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- ----------------
Commercial Paper--continued
AT&T Corp. 5.58%, 1-6-97 A-1+ $ 1,000 $ 999,225
Exxon Imperial U.S., Inc.
5.41%, 1-13-97 A-1+ 175 174,684
Vermont American Corp. 5.37%,
1-22-97 A-1+ 464 462,547
---------------
3,401,084
---------------
Federal Agency Securities--0.2%
Federal Home Loan Mortgage
Corp. 5.70%, 1-2-97 75 74,989
---------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $3,476,073) 3,476,073
---------------
TOTAL INVESTMENTS--99.6%
(Identified cost $46,039,226) 48,980,071(a)
Cash and receivables, less liabilities--0.4% 176,819
---------------
NET ASSETS--100.0% $49,156,890
===============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $3,523,473 and gross
depreciation of $681,463 for income tax purposes. At December 31, 1996,
the aggregate cost of securities for federal income tax purposes was
$46,138,061.
(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 December 31,
1996, these securities amounted to a value of $911,799 or 1.9% 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.
See Notes to Financial Statements
5
<PAGE>
Institutional Balanced Portfolio
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investment securities at value
(Identified cost $46,039,226) $48,980,071
Cash 17,299
Receivables
Investment securities sold 411
Fund shares sold 21,679
Dividends and interest 234,364
Prepaid expenses 8,997
------------
Total Assets 49,262,821
------------
Liabilities
Payables
Investment securities purchased 3,630
Fund shares repurchased 9,632
Investment advisory fee 19,466
Transfer agent fee 4,906
Distribution fee 2,525
Trustees' fee 1,575
Financial agent fee 1,304
Accrued expenses 62,893
------------
Total Liabilities 105,931
------------
Net Assets $49,156,890
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $44,940,027
Undistributed net investment income 41,710
Accumulated net realized gain 1,234,308
Net unrealized appreciation 2,940,845
------------
Net Assets $49,156,890
============
Class X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $37,146,771) 2,046,904
Net asset value and offering price per share $18.15
Class Y
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $12,010,119) 661,780
Net asset value and offering price per share $18.15
STATEMENT OF OPERATIONS
FROM INCEPTION MARCH 1, 1996
TO DECEMBER 31, 1996
Investment Income
Dividends $ 273,663
Interest 1,409,324
----------
Total investment income 1,682,987
----------
Expenses
Investment advisory fee 251,989
Distribution fee--Class Y 25,096
Financial agent fee 13,745
Registration 86,827
Transfer agent 44,785
Professional 20,700
Custodian 17,000
Printing 14,565
Trustees 14,100
Miscellaneous 8,934
----------
Total expenses 497,741
Less expenses borne by investment adviser (174,840)
----------
Net expenses 322,901
----------
Net investment income 1,360,086
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 3,729,791
Net realized gain on foreign currency transactions 897
----------
Net realized gain 3,730,688
----------
Net change in unrealized appreciation on investments end
of period 2,940,845
Less net unrealized appreciation in connection with PHL
Pooled Separate Account L 3,354,661
----------
Net change in unrealized appreciation (depreciation) (413,816)
----------
Net gain on investments 3,316,872
----------
Net increase in net assets resulting from operations $4,676,958
==========
See Notes to Financial Statements
6
<PAGE>
Institutional Balanced Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
March 1, 1996 to
December 31, 1996
------------------
<S> <C>
From Operations
Net investment income $ 1,360,086
Net realized gain 3,730,688
Net change in unrealized appreciation (depreciation) (413,816)
-----------------
Increase in net assets resulting from operations 4,676,958
-----------------
From Distributions to Shareholders
Net investment income--Class X (1,072,486)
Net investment income--Class Y (283,103)
Net realized gains--Class X (1,923,139)
Net realized gains--Class Y (583,212)
-----------------
Decrease in net assets from distributions to shareholders (3,861,940)
-----------------
From Share Transactions
Class X
Proceeds from sales of shares (282,929 shares) 5,116,425
Net asset value of shares issued from reinvestment of distributions (152,545 shares) 2,779,558
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 (913,536 shares) (16,577,547)
-----------------
Total 36,518,868
-----------------
Class Y
Proceeds from sales of shares (123,668 shares) 2,267,577
Net asset value of shares issued from reinvestment of distributions (47,488 shares) 866,311
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 (230,838 shares) (4,226,073)
-----------------
Total 11,823,004
-----------------
Increase in net assets from share transactions 48,341,872
-----------------
Net increase in net assets 49,156,890
Net Assets
Beginning of period 0
-----------------
End of period (including undistributed net investment income of $41,710) $ 49,156,890
=================
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Institutional Balanced Portfolio
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
Class X Class Y
---------------- ----------------
From Inception From Inception
3/1/96 to 3/1/96 to
12/31/96 12/31/96
---------------- ----------------
Net asset value, beginning of period $17.90 $17.90
Income from investment operations
Net investment income 0.51(4) 0.46(4)
Net realized and unrealized gain 1.17 1.18
-------------- ---------------
Total from investment operations 1.68 1.64
-------------- ---------------
Less distributions
Dividends from net investment income (0.49) (0.45)
Distributions from net realized gains (0.94) (0.94)
-------------- ---------------
Total distributions (1.43) (1.39)
-------------- ---------------
Change in net asset value 0.25 0.25
-------------- ---------------
Net asset value, end of period $18.15 $18.15
============== ===============
Total return 9.43%(2) 9.20%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $37,147 $12,010
Ratio to average net assets of:
Operating expenses 0.65%(1) 0.90%(1)
Net investment income 3.02%(1) 2.78%(1)
Portfolio turnover 209%(2) 209%(2)
Average commission rate paid(3) $0.0630 $0.0630
(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
$0.06 and $0.06, respectively.
See Notes to Financial Statements
8
<PAGE>
INSTITUTIONAL MANAGED BOND PORTFOLIO
INVESTMENT ADVISER'S REPORT
After posting stellar gains in 1995, last year's bond market results were
clearly less than impressive. Most of the disappointing performance occurred
in the first half of 1996, when nervous investors pushed interest rates
higher (and bond prices lower) in response to the unexpectedly strong U.S.
economy. The consensus opinion on Wall Street was that too much economic
growth could lead to higher inflation. For the first six months of the year,
the fixed-income market, as measured by the Lehman Brothers Aggregate Bond
Index, returned a discouraging -1.22%.
By late summer, market sentiment had turned positive again and interest
rates finally broke out of their trading range and headed downward. This more
optimistic mood among fixed-income investors was based on numerous reports
suggesting that the U.S. economy was now growing at a more moderate pace and
that core inflation was still in check. In this declining interest rate
environment, the bond market recouped all of its losses from the first half
of the year and moved into positive territory. Based on the Lehman Brothers
Aggregate Bond Index, bond market performance improved considerably during
the second-half of 1996, returning a respectable 4.90% over this latest
six-month period.
Generally speaking, bond investors were well rewarded for moving down the
credit-risk spectrum in 1996. The emerging markets sector finally received
front-page recognition as this group significantly outperformed all other
bond categories as well as most of the world's equity markets. Domestic
high-yield bonds also posted double-digit returns last year, aided by a
favorable economic climate and strong demand from mutual fund investors.
Conversely, the more conservative fixed-income sectors (treasuries, agencies
and top-tier investment-grade corporates) generally lagged the overall market
in 1996, as the bond market clearly favored higher yield over higher credit
quality.
Phoenix Duff & Phelps Institutional Managed Bond Portfolio posted strong
results in 1996. For the twelve months ended December 31, 1996, class X
shares returned 8.70% and class Y shares earned 8.39%. These results outpaced
its benchmark, the Lehman Brothers Aggregate Bond Index, which returned 3.63%
over the same period. All of these figures assume reinvestment of any
distributions.
Our emphasis on the less traditional sectors of the fixed-income market paid
off handsomely and contributed to much of the Fund's outperformance during
the year. Over the last twelve months, performance in the emerging markets
sector continued to surpass all other fixed-income categories and the
portfolio benefited from its exposure in this area. Additionally, our
decision to focus on commercial and non-agency residential mortgage-backed
securities, rather than more conventional agency mortgage-backed securities,
proved to be rewarding as these less efficient sectors continued to produce
strong results.
As we head into the new year, the U.S. economy currently appears to be in
good shape. The core inflation rate (CPI excluding food and energy costs)
rose just 2.6% in 1996 and the economy now appears to be growing at a more
moderate and sustainable pace. While news of this nature can go a long way in
restoring confidence in a shaky bond market, we are not convinced that the
threat of inflation is completely behind us. Although it may currently be
well contained, it is always a risk to the bond market.
With a few minor adjustments, we believe that the investment strategy we
successfully implemented last year can also perform well in 1997. In the
mortgage-backed arena, we are of the opinion that commercial and non-agency
residential securities continue to offer better relative value than their
agency counterparts. We also like the underfollowed taxable municipal sector,
which currently provides a significant yield advantage over comparably rated
corporate bonds. Lastly, despite its extended rally, we remain bullish on
emerging markets debt. While last year's gains were exceptionally strong
relative to other fixed-income groups, returns of this nature are not
unprecedented for this sector.
Overall, we are pleased with the Managed Bond Portfolio's performance during
1996 and believe that the Fund is well positioned for the new year. We remain
convinced that for those willing and able to do the research, the less
efficient sectors of the fixed-income market will typically offer the
greatest investment potential. As always, 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.
9
<PAGE>
Institutional Managed Bond Portfolio
- --------------------------------------------------------------------------------
[LINE CHART]
Institutional Managed Bond Lehman Brothers Aggregate
Portfolio-Class X Bond Index*
12/31/86 10000 10000
12/31/87 10088.2 10276.2
12/31/88 10912.3 11086.7
12/31/89 12240.5 12698.1
12/31/90 12694.8 13835.8
12/31/91 15070.1 16049.9
12/31/92 16411.8 17237.7
12/31/93 18403.9 18918.5
12/31/94 17507.8 18366.8
12/31/95 21003.9 21760.7
12/31/96 22830.3 22550.7
- --------------------------------------------------------------------------------
Average Annual Total Returns for Periods
Ending 12/31/96
1 Year 5 Years 10 Years
- --------------------------------------- -------- --------- -----------
Class X 8.70% 8.66% 8.61%
- --------------------------------------- ------- -------- ---------
Class Y 8.39% 8.38% 8.33%
- --------------------------------------- ------- -------- ---------
Lehman Brothers Aggregate Bond Index* 3.63% 7.04% 8.47%
- --------------------------------------- ------- -------- ---------
This chart assumes an initial gross investment of $10,000 made on 12/31/86
for Class X shares. The total return for Class X shares assumes reinvestment
of dividends and capital gains. Class Y share performance will be greater or
less than that shown based on differences in inception dates and fees.
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.
See Notes to Financial Statements
10
<PAGE>
Institutional Managed Bond Portfolio
INVESTMENTS AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- --------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--14.7%
U.S. Treasury Notes--2.5%
U.S. Treasury Notes 6.125%, '01 Aaa $ 2,000 $ 1,991,520
------------
Agency Mortgage-Backed Securities--12.2%
FHLMC 9%, '04 Aaa 23 22,993
FHLMC 8.50%, '20 Aaa 812 823,595
FHLMC 6.65%, '23 Aaa 1,890 1,865,940
FNMA 7%, '07 Aaa 934 916,453
FNMA 8.70%, '16 Aaa 398 406,636
FNMA 7.50%, '19 Aaa 1,840 1,843,238
FNMA 6.75%, '20 Aaa 1,920 1,883,923
GNMA 6.50%, '26 Aaa 1,871 1,784,276
------------
9,547,054
------------
TOTAL U.S. GOVERNMENT AND AGENCY
SECURITIES
(Identified cost $11,206,875) 11,538,574
------------
NON-CONVERTIBLE BONDS--35.3%
Asset-Backed Securities--7.2%
Airplanes Pass Through Trust 1C 8.15%, '19 Baa 1,400 1,453,718
Airplanes Pass Through Trust 1D 10.875%, '19 Ba 650 716,995
Capital Equipment Receivable Trust 96-1, B
6.57%, '01 Aa 1,250 1,255,273
Green Tree Financial Corp. 96-4, A6 7.40%,
'27 Aaa 1,250 1,259,180
National Car Rental 96-1, A2 144A 6.80%, '00
(b) A(c) 1,000 1,004,687
------------
5,689,853
------------
Conglomerates--0.4%
Allied Waste North America 144A 10.25%, '06
(b) B 300 316,500
------------
Non-Agency Mortgage-Backed Securities--24.5%
DLJ Mortgage Acceptance 94-M11, B1 8.10%,
'04 Baa 1,380 1,408,031
Eaglemark Trust 96-1, A 144A 6.25%, '02 (b) Aaa 768 769,472
Equitable Life 174, C1 144A 7.52%, '06 (b) A 2,000 2,045,937
Kidder Peabody Acceptance Corp. 94-C2, D
7.18%, '05 BBB(c) 990 993,713
Lehman Structured Securities Corp. 96-1, E1
7.955%, '26 BBB(c) 1,229 1,248,659
Merrill Lynch Mortgage, Inc. 95-C2, C 7.87%,
'21 A 1,118 1,138,704
Mortgage Capital Funding, Inc. 96-MC2, A3
7.008%, '06 Aaa 2,000 1,998,125
Residential Accredit Loans, Inc. 96-QS4,
AI10 7.90%, '26 AAA(c) 800 814,750
Non-Agency Mortgage-Backed Securities--continued
Residential Asset Securitization Trust
96-A8, C2 8%, '26 AAA(c) $ 958 $ 972,129
Residential Funding Mortgage 93-S25, M3
6.50%, '08 AA(c) 663 626,210
Resolution Trust Corp. 93-C3, A4 6.55%, '24
(g) BBB(c) 219 218,621
Resolution Trust Corp. 94-C2, D 8%, '25 (g) BBB(c) 947 965,705
Resolution Trust Corp. 95-1, M2 7.50%, '28 BBB(c) 1,338 1,352,663
Ryland Mortgage Sec. Corp. 92-A, 1A 8.33%,
'30 A-(c) 663 665,360
Securitized Asset Sales, Inc. 95-A, M 7.53%,
'24 Aa 1,808 1,790,103
Structured Asset Securities Corp. 95-C1, B
7.375%, '24 AA(c) 1,865 1,877,822
Structured Asset Securities Corp. 96-CFL, C
6.525%, '28 AA(c) 350 342,125
------------
19,228,129
------------
Publishing, Broadcasting, Printing & Cable--1.8%
Poland Communications, Inc. 144A 9.875%, '03
(b) B 1,400 1,391,782
------------
Retail--Food Service--0.2%
ARA Services, Inc. 10.625%, '00 Ba 107 118,904
------------
Utility--Electric--1.2%
Louisiana Power & Lighting 10.30%, '05 Baa 901 928,859
------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $26,943,989) 27,674,027
------------
Foreign Government Securities--13.7%
Argentina--2.6%
Republic of Argentina Discount L-GL Euro
6.375%, '23 (d) B 1,300 1,003,438
Republic of Argentina Par L-GP 5.25%, '23
(d) B 1,575 1,004,063
------------
2,007,501
------------
Brazil--3.1%
Republic of Brazil Discount ZL Euro 6.50%,
'24 (d) B 1,600 1,235,000
Republic of Brazil Par Z-L Euro 4.25%, '24
(d) B 1,925 1,212,750
------------
2,447,750
------------
Croatia--1.1%
Croatia Series A 6.688%, '10 (d) NR 925 895,516
------------
</TABLE>
See Notes to Financial Statements
11
<PAGE>
Institutional Managed Bond Portfolio
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- --------------
<S> <C> <C> <C>
Mexico--3.2%
United Mexican Discount Series C 6.375%, '19
(d) (e) Ba $ 250 $ 215,625
United Mexican States 144A 7.563%, '01 (b)
(d) Baa 525 526,234
United Mexican States Euro D 6.352%, '19
(d)(e) Ba 1,000 862,500
United Mexican States Series A Euro 6.25%,
'19 (e) Ba 250 183,438
United Mexican States Series B Euro 6.25%,
'19 (e) Ba 1,000 733,750
------------
2,521,547
------------
Panama--2.2%
Panama PDI PIK interest capitalization,
6.75%, '16 (d) NR 575 455,677
Panama PDI 144A, PIK interest
capitalization, 6.75%, '16 (b) (d) NR 1,600 1,267,972
------------
1,723,649
------------
Russia--1.5%
Russian Interest Notes WI 6.41% (d) (f) NR 1,650 1,146,750
------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $9,788,898) 10,742,713
------------
FOREIGN NON-CONVERTIBLE BONDS--8.1%
Bermuda--0.4%
AES China Generating Co. Yankee 10.125%, '06
(d) Ba 275 285,313
------------
Chile--3.1%
CSAV 144A 7.375%, '03 (b) (d) BBB(c) 1,240 1,221,400
Petropower Funding 144A 7.36%, '14 (b) BBB(c) 1,290 1,231,047
------------
2,452,447
------------
Colombia--1.4%
Centragas Yankee 144A 10.65%, '10 (b) (d) BBB-(c) 1,028 1,108,967
------------
Indonesia--1.3%
Asia Pulp & Paper Co. Yankee 11.75%, '05 Ba 925 996,688
------------
Mexico--1.9%
Coca-Cola Femsa 8.95%,
'06 (d) Ba 1,500 1,501,875
------------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $6,165,488) 6,345,290
------------
MUNICIPAL BONDS--15.0%
California--1.6%
Orange County Pension A 7.67%, '09 Aaa $ 1,200 $ 1,251,276
------------
Florida--3.5%
Dade County Ed. Facs. Authority 5.75%, '20 Aaa 335 339,114
Palm Beach Waste Revenue Project B Taxable
10.50%, '11 NR 920 915,667
University Miami Exchange Revenue Taxable
7.40%, '11 Aaa 250 254,880
University Miami Exchange Revenue A Taxable
7.65%, '20 Aaa 1,255 1,266,709
------------
2,776,370
------------
Michigan--0.8%
Hartland Consolidated School District
5.125%, '22 Aaa 690 642,376
------------
Pennsylvania--5.7%
Pennsylvania Economic Development Finance
Authority 9.50%, '12 NR 2,760 2,592,192
Pennsylvania Economic Development Finance
Authority 6.75%, '07 NR 1,840 1,883,718
------------
4,475,910
------------
Texas--0.8%
Texas Turnpike Authority 5.25%, '23 Aaa 690 658,998
------------
Virginia--2.6%
Newport News Taxable Series B 7.05%, '25 Aa 670 631,716
Pittslyvania County Series B 7.65%, '10 NR 1,290 1,379,178
------------
2,010,894
------------
TOTAL MUNICIPAL BONDS
(Identified cost $11,770,900) 11,815,824
------------
TOTAL LONG-TERM INVESTMENTS--86.8%
(Identified cost $65,876,150) 68,116,428
------------
</TABLE>
See Notes to Financial Statements
12
<PAGE>
Institutional Managed Bond Portfolio
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- ----------------
SHORT-TERM OBLIGATIONS--13.3%
Commercial Paper--13.3%
CXC, Inc. 6.85%, 1-2-97 A-1+ $ 3,210 $ 3,209,389
Shell Oil Co. 6.40%, 1-2-97 A-1+ 1,500 1,499,733
Ciesco L.P. 5.375%, 1-7-97 A-1+ 2,295 2,292,944
General Electric Capital
Corp. 5.28%, 1-8-97 A-1+ 265 264,728
Asset Securitization Corp.
5.40%, 1-23-97 A-1+ 3,200 3,189,440
---------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $10,456,234) 10,456,234
---------------
TOTAL INVESTMENTS--100.1%
(Identified cost $76,332,384) 78,572,662(a)
Cash and receivables, less liabilities--(0.1%) (80,798)
---------------
NET ASSETS--100% $78,491,864
===============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $2,637,001 and gross
depreciation of $396,723 for income tax purposes. At December 31, 1996,
the aggregate cost of securities for federal income tax purposes was
$76,332,384.
(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 December 31,
1996, these securities amounted to a value of $10,883,998 or 13.9% 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) Segregated as collateral.
See Notes to Financial Statements
13
<PAGE>
Institutional Managed Bond Portfolio
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investment securities at value
(Identified cost $76,332,384) $78,572,662
Cash 14,966
Receivables
Investment securities sold 1,262,052
Fund shares sold 4,342
Interest 977,462
Prepaid expenses 9,642
------------
Total assets 80,841,126
------------
Liabilities
Payables
Investment securities purchased 1,791,375
Fund shares repurchased 440,000
Investment advisory fee 37,642
Transfer agent fee 4,443
Financial agent fee 1,966
Trustees' fee 1,675
Distribution fee 1,473
Accrued expenses 70,688
------------
Total liabilities 2,349,262
------------
Net Assets $78,491,864
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $75,916,251
Undistributed net investment income 33,752
Accumulated net realized gain 301,583
Net unrealized appreciation 2,240,278
------------
Net Assets $78,491,864
============
Class X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $71,482,361) 2,103,969
Net asset value and offering price per share $33.98
Class Y
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $7,009,503) 206,320
Net asset value and offering price per share $33.97
STATEMENT OF OPERATIONS
FROM INCEPTION MARCH 1, 1996
TO DECEMBER 31, 1996
Investment Income
Interest $4,424,498
-----------
Total investment income 4,424,498
-----------
Expenses
Investment advisory fee 258,587
Distribution fee--Class Y 14,323
Financial agent fee 17,239
Registration 97,423
Transfer agent 41,646
Professional 21,982
Custodian 16,700
Trustees 14,200
Printing 11,888
Miscellaneous 8,740
-----------
Total expenses 502,728
Less expenses borne by investment adviser (172,354)
-----------
Net expenses 330,374
-----------
Net investment income 4,094,124
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 1,618,621
Net realized gain on foreign currency transactions 5,803
-----------
Net realized gain 1,624,424
-----------
Net change in unrealized appreciation on investments end
of period 2,240,278
Less net unrealized appreciation in connection with
PHL Pooled Separate Account P 2,636,529
-----------
Net change in unrealized appreciation
(depreciation) (396,251)
-----------
Net gain on investments 1,228,173
-----------
Net increase in net assets resulting from operations $5,322,297
===========
See Notes to Financial Statements
14
<PAGE>
Institutional Managed Bond Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
March 1, 1996 to
December 31, 1996
------------------
<S> <C>
From Operations
Net investment income $ 4,094,124
Net realized gain 1,624,424
Net change in unrealized appreciation (depreciation) (396,251)
-----------------
Increase in net assets resulting from operations 5,322,297
-----------------
From Distributions to Shareholders
Net investment income--Class X (3,719,461)
Net investment income--Class Y (374,664)
In excess of net investment income--Class X (19,201)
In excess of net investment income--Class Y (1,934)
Net realized gains--Class X (1,199,095)
Net realized gains--Class Y (118,493)
-----------------
Decrease in net assets from distributions to shareholders (5,432,848)
-----------------
From Share Transactions
Class X
Proceeds from sales of shares (538,250 shares) 18,818,739
Net asset value of shares issued from reinvestment of distributions (123,928 shares) 4,187,321
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 (332,473 shares) (11,414,976)
-----------------
Total 71,628,176
-----------------
Class Y
Proceeds from sales of shares (34,115 shares) 1,164,449
Net asset value of shares issued from reinvestment of distributions (14,700 shares) 495,088
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 (39,298 shares) (1,344,667)
-----------------
Total 6,974,239
-----------------
Increase in net assets from share transactions 78,602,415
-----------------
Net increase in net assets 78,491,864
Net Assets
Beginning of period 0
-----------------
End of period (including undistributed net investment income of $33,752) $ 78,491,864
=================
</TABLE>
See Notes to Financial Statements
15
<PAGE>
Institutional Managed Bond Portfolio
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class X Class Y
---------------- ----------------
From Inception From Inception
3/1/96 to 3/1/96 to
12/31/96 12/31/96
---------------- ----------------
<S> <C> <C>
Net asset value, beginning of period $33.84 $33.84
Income from investment operations
Net investment income 2.03(3)(4) 1.98(3)(4)
Net realized and unrealized gain (loss) 0.69 0.66
-------------- ---------------
Total from investment operations 2.72 2.64
-------------- ---------------
Less distributions
Dividends from net investment income (1.96) (1.89)
Distribution in excess of net investment income (0.01) (0.01)
Distributions from net realized gains (0.61) (0.61)
-------------- ---------------
Total distributions (2.58) (2.51)
-------------- ---------------
Change in net asset value 0.14 0.13
-------------- ---------------
Net asset value, end of period $33.98 $33.97
============== ===============
Total return 8.24%(2) 7.98%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $71,482 $7,010
Ratio to average net assets of:
Operating expenses 0.55%(1) 0.80%(1)
Net investment income 7.15%(1) 6.91%(1)
Portfolio turnover 199%(2) 199%(2)
</TABLE>
(1) Annualized
(2) Not annualized
(3) Computed using average shares outstanding.
(4) Includes reimbursement of operating expenses by investment adviser of
$0.09 and $0.09 per share, respectively.
See Notes to Financial Statements
16
<PAGE>
INSTITUTIONAL GROWTH STOCK PORTFOLIO
INVESTMENT ADVISER'S REPORT
Aided by record mutual fund inflows and corporate share buybacks, the U.S.
equity market continued to climb dramatically higher in 1996, breaking one
record after another in its wake. The widely followed Dow Jones Industrial
Average finished the year at a remarkable 6448 -- some 1331 points above
where it stood twelve months ago. Given last year's investment climate of
slower earnings growth and higher interest rates, combined with the stellar
equity returns posted during 1995, many on Wall Street were surprised by the
stock market's continued strength.
Market volatility increased and sector rotation intensified during 1996, as
investor opinion shifted dramatically over the direction of the economy and
interest rates. We believe that this type of market environment should be
expected in the later stages of a long bull market as it illustrates some of
the uncertainty felt by investors. In the end, large-cap stocks significantly
outdistanced their small-cap counterparts, while technology and finance
companies provided some of last year's biggest gains.
For the twelve-month reporting period ended December 31, 1996, Phoenix Duff
& Phelps Institutional Growth Stock Portfolio's class X shares returned
11.34% and its class Y shares earned 11.06%. During the same period, the
Standard & Poor's 500 Stock Index, an unmanaged, commonly used measure of
stock performance, returned 23.25% over the same period. All of these figures
assume reinvestment of any distributions, but exclude the effect of sales
charges.
Our equity exposure in the consumer cyclical sector as well as weakness in
some of our health care and technology holdings held back performance during
this reporting period. Positive contributors included our strong stock
selection in the energy and basic materials sectors as well as our decision
to overweight the strongly performing capital goods sector. Some of our best
individual performers during this period included such companies as Diamond
Offshore Drilling, Monsanto, Intel, Microsoft and SunAmerica.
In a market caught between long-term concerns and intermediate
opportunities, we are maintaining exposure to growth companies that have some
sensitivity to the domestic economy and/or foreign sales growth. This
includes our 21st Century Medicine theme, which identifies companies that
offer innovative solutions to pressing health care problems. Deregulating
Financial Services, another high conviction theme, capitalizes on companies
that can benefit from the demographic shift to savings and investments and
the continued trend of government deregulation. Lastly, we continue to
emphasize our Energy Technology theme which represents energy service firms
that provide productivity enhancing solutions to exploration and production
companies.
After two back-to-back years of powerful performance, the equity risk level
is rising. We believe that the key to 1997 outperformance lies in taking
advantage of market inefficiencies within a volatile trading range combined
with individual stock selection. Moving forward, we believe our key
investment themes will serve us well in this environment, given their ability
to capture change and identify strong earnings growth in a timely manner. As
of December 31, 1996, the Fund's asset allocation mix was 96.4% equities and
3.6% cash equivalents.
17
<PAGE>
Institutional Growth Stock Portfolio
- --------------------------------------------------------------------------------
[LINE CHART]
Institutional Growth stock S&P 500 Stock
Portfolio-Class X Index*
12/31/86 10000 10000
12/31/87 10864.3 10517.3
12/31/88 12658.9 12252.7
12/31/89 17179 16104.4
12/31/90 17736.6 15589.9
12/31/91 24934.1 20351.6
12/31/92 25480.9 21916.8
12/31/93 28039.3 24108.5
12/31/94 27786.9 24427.5
12/31/95 37435.9 33589.6
12/31/96 41679.7 41398.3
- --------------------------------------------------------------------------------
Average Annual Total Returns for Periods
Ending 12/31/96
1 Year 5 Years 10 Years
- ------------------------ -------- --------------------
Class X 11.34% 10.82% 15.34%
- ------------------------ ------- -------- ---------
Class Y 11.06% 10.55% 15.06%
- ------------------------ ------- -------- ---------
S & P 500 Stock Index* 23.25% 15.26% 15.27%
- ------------------------ ------- -------- ---------
This chart assumes an initial gross investment of $10,000 made on 12/31/86
for Class X shares. The total return for Class X shares assumes reinvestment
of dividends and capital gains. Class Y share performance will be greater or
less than that shown based on differences in inception dates and fees.
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 Stock Index is an unmanaged but commonly used measure of
stock return performance.
18
<PAGE>
Institutional Growth Stock Portfolio
INVESTMENTS AT DECEMBER 31, 1996
SHARES VALUE
-------- ---------------
COMMON STOCKS--92.3%
Aerospace & Defense--3.2%
Boeing Co. 16,300 $ 1,733,912
United Technologies Corp. 25,400 1,676,400
--------------
3,410,312
--------------
Banks--6.8%
BankAmerica Corp. 17,700 1,765,575
Chase Manhattan Corp. 20,000 1,785,000
Citicorp 17,400 1,792,200
Nationsbank Corp. 18,500 1,808,375
--------------
7,151,150
--------------
Beverages--1.4%
Seagram Ltd. 39,400 1,526,750
--------------
Chemical--1.6%
Monsanto Co. 42,700 1,659,962
--------------
Computer Software & Services--7.7%
Computer Associates International, Inc. 26,600 1,323,350
Computer Sciences Corp. (b) 19,600 1,609,650
First Data Corp. 41,400 1,511,100
Microsoft Corp. (b) 26,000 2,148,250
Oracle Corp. (b) 37,300 1,557,275
--------------
8,149,625
--------------
Conglomerates--2.7%
Thermo Electron Corp. (b) 31,300 1,291,125
Tyco International Ltd. 29,900 1,580,962
--------------
2,872,087
--------------
Cosmetics & Soaps--3.1%
Colgate Palmolive Co. 17,500 1,614,375
Estee Lauder Co. Class A 33,900 1,724,662
--------------
3,339,037
--------------
Diversified Financial Services--6.5%
Associates First Capital Corp. Class A 35,800 1,579,675
Federal National Mortgage Assoc. 54,000 2,011,500
First USA, Inc. 48,000 1,662,000
Travelers Group, Inc. 35,533 1,612,310
--------------
6,865,485
--------------
Diversified Miscellaneous--4.2%
CUC International, Inc. (b) 45,100 1,071,125
Duracell International, Inc. 25,200 1,760,850
Equifax, Inc. 50,800 1,555,750
--------------
4,387,725
--------------
Electrical Equipment--1.6%
Raychem Corp. 21,400 1,714,675
--------------
Electronics--5.6%
Applied Materials, Inc. (b) 35,300 1,268,594
Intel Corp. 15,800 2,068,812
Perkin Elmer Corp. 28,200 1,660,275
Xilinx, Inc. (b) 24,700 909,269
--------------
5,906,950
--------------
Entertainment, Leisure & Gaming--1.5%
Walt Disney Co. 22,300 1,552,637
--------------
Food--1.5%
Ralston-Ralston Purina Group 21,000 $ 1,540,875
--------------
Healthcare--Drugs--5.4%
Biochem Pharmaceutical, Inc. (b) 17,300 869,325
Genzyme Corp. (b) 33,800 735,150
Lilly (Eli) & Co. 27,900 2,036,700
Merck & Co., Inc. 26,000 2,060,500
--------------
5,701,675
--------------
Hospital Management & Services--1.2%
Columbia/HCA Healthcare Corp. 31,300 1,275,475
--------------
Insurance--2.2%
Allstate Corp. 21,800 1,261,675
SunAmerica, Inc. 24,700 1,096,062
--------------
2,357,737
--------------
Machinery--2.4%
Deere & Co. 30,300 1,230,938
Dover Corp. 26,000 1,306,500
--------------
2,537,438
--------------
Medical Products & Supplies--5.0%
Boston Scientific Corp. (b) 27,100 1,626,000
Guidant Corp. 19,000 1,083,000
Johnson & Johnson 25,800 1,283,550
Medtronic, Inc. 19,200 1,305,600
--------------
5,298,150
--------------
Natural Gas--2.9%
Apache Corp. 43,100 1,524,662
Burlington Resources, Inc. 30,700 1,546,513
--------------
3,071,175
--------------
Oil Service & Equipment--7.8%
BJ Services Co. (b) 25,400 1,295,400
Diamond Offshore Drilling (b) 21,500 1,225,500
ENSCO International, Inc. (b) 26,000 1,261,000
Halliburton Co. 26,200 1,578,550
Schlumberger Ltd. 15,300 1,528,088
Western Atlas, Inc. (b) 18,500 1,311,187
--------------
8,199,725
--------------
Paper & Forest Products--1.6%
Kimberly Clark Corp. 17,700 1,685,925
--------------
Pollution Control--2.5%
U.S.A. Waste Services, Inc. (b) 43,100 1,373,812
U.S. Filter Corp. (b) 41,500 1,317,625
--------------
2,691,437
--------------
Professional Services--1.0%
ADT Ltd. (b) 47,300 1,081,988
--------------
Retail--6.7%
CVS Corp. 39,600 1,638,450
Home Depot, Inc. 31,000 1,553,875
Lowe's Companies, Inc. 42,600 1,512,300
Price/Costco, Inc. (b) 52,400 1,316,550
Staples, Inc. (b) 58,600 1,058,463
--------------
7,079,638
--------------
See Notes to Financial Statements
19
<PAGE>
Institutional Growth Stock Portfolio
SHARES VALUE
-------- -------------
Telecommunications Equipment--3.2%
Ascend Communications, Inc. (b) 14,900 $ 925,663
Cascade Communications Corp. (b) 16,000 882,000
Cisco Systems, Inc. (b) 24,800 1,577,900
-----------
3,385,563
-----------
Tobacco--1.5%
Philip Morris Companies, Inc. 14,500 1,633,063
-----------
Utility-Telephone--1.5%
SBC Communications, Inc. 30,000 1,552,500
-----------
TOTAL COMMON STOCKS
(Identified cost $81,884,653) 97,628,759
-----------
FOREIGN COMMON STOCKS--4.1%
Chemical--1.4%
Potash Corp. of Saskatchewan, Inc.
(Canada) 17,000 1,445,000
-----------
Cosmetics & Soaps--2.1%
Unilever NV (Netherlands) 12,600 2,208,150
-----------
Textile & Apparel--0.6%
Gucci Group NV-NY (Italy) 9,900 632,363
-----------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $3,722,472) 4,285,513
-----------
TOTAL LONG-TERM INVESTMENTS--96.4%
(Identified cost $85,607,125) 101,914,272
-----------
STANDARD &
POOR'S
RATING PAR VALUE
(Unaudited) (000) VALUE
------------ --------- ---------------
SHORT-TERM OBLIGATIONS--2.7%
Commercial Paper--2.7%
AlliedSignal, Inc., 6.10%,
1-2-97 A-1 $ 825 $ 824,860
Campbell Soup Co. 6.75%,
1-2-97 A-1+ 2,030 2,029,620
--------------
2,854,480
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $2,854,480) 2,854,480
--------------
TOTAL INVESTMENTS--99.1%
(Identified cost $88,461,605) 104,768,752(a)
Cash and receivables, less liabilities--0.9% 947,705
--------------
NET ASSETS--100.0% $105,716,457
==============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $17,686,428 and gross
depreciation of $1,499,620 for income tax purposes. At December 31, 1996,
the aggregate cost of securities for federal income tax purposes was
$88,581,944.
(b) Non-income producing.
See Notes to Financial Statements
20
<PAGE>
Institutional Growth Stock Portfolio
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investment securities at value
(Identified cost $88,461,605) $104,768,752
Cash 12,402
Receivables
Investment securities sold 1,768,719
Dividends and interest 76,774
Fund shares sold 947,711
Prepaid expenses 10,964
--------------
Total assets 107,585,322
--------------
Liabilities
Payables
Investment securities purchased 1,636,901
Fund shares repurchased 2,036
Investment advisory fee 121,351
Transfer agent fee 5,966
Distribution fee 4,848
Financial agent fee 3,630
Trustees' fee 1,575
Accrued expenses 92,558
--------------
Total liabilities 1,868,865
--------------
Net Assets $105,716,457
==============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $ 75,928,438
Undistributed net investment income 66,653
Accumulated net realized gain 13,414,219
Net unrealized appreciation 16,307,147
--------------
Net Assets $105,716,457
==============
Class X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $82,738,934) 1,744,768
Net asset value and offering price per share $47.42
Class Y
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $22,977,523) 484,477
Net asset value and offering price per share $47.43
STATEMENT OF OPERATIONS
FROM INCEPTION MARCH 1, 1996
TO DECEMBER 31, 1996
Investment Income
Dividends $ 1,444,837
Interest 590,345
--------------
Total investment income 2,035,182
--------------
Expenses
Investment advisory fee 906,089
Distribution fee--Class Y 47,509
Financial agent fee 45,304
Registration 120,373
Transfer agent 49,450
Custodian 26,400
Professional 25,900
Printing 16,400
Trustees 14,100
Miscellaneous 15,097
--------------
Total expenses 1,266,622
Less expenses borne by investment adviser (162,010)
--------------
Net expenses 1,104,612
--------------
Net investment income 930,570
--------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 28,236,344
Net realized gain on foreign currency transactions 92
--------------
Net realized gain 28,236,436
--------------
Net change in unrealized appreciation on investments end
of period 16,307,147
Less net unrealized appreciation in connection with PHL
Pooled Separate Account S 28,742,823
--------------
Net change in unrealized appreciation
(depreciation) (12,435,676)
--------------
Net gain on investments 15,800,760
--------------
Net increase in net assets resulting from operations $ 16,731,330
==============
See Notes to Financial Statements
21
<PAGE>
Institutional Growth Stock Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
March 1, 1996 to
December 31, 1996
------------------
<S> <C>
From Operations
Net investment income $ 930,570
Net realized gain 28,236,436
Net change in unrealized appreciation (depreciation) (12,435,676)
-----------------
Increase in net assets resulting from operations 16,731,330
-----------------
From Distributions to Shareholders
Net investment income--Class X (835,353)
Net investment income--Class Y (86,185)
Net realized gains--Class X (12,433,098)
Net realized gains--Class Y (2,389,027)
-----------------
Decrease in net assets from distributions to shareholders (15,743,663)
-----------------
From Share Transactions
Class X
Proceeds from sales of shares (200,121 shares) 9,732,878
Net asset value of shares issued from reinvestment of distributions (275,344 shares) 13,268,434
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 (2,538,286 shares) (124,359,905)
-----------------
Total 81,445,011
-----------------
Class Y
Proceeds from sales of shares (68,980 shares) 3,405,171
Net asset value of shares issued from reinvestment of distributions (51,358 shares) 2,475,206
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 (129,492 shares) (6,295,994)
-----------------
Total 23,283,779
-----------------
Increase in net assets from share transactions 104,728,790
-----------------
Net increase in net assets 105,716,457
Net Assets
Beginning of period 0
-----------------
End of period (including undistributed net investment income of $66,653) $ 105,716,457
=================
</TABLE>
See Notes to Financial Statements
22
<PAGE>
Institutional Growth Stock Portfolio
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
Class X Class Y
---------------- ----------------
From Inception From Inception
3/1/96 to 3/1/96 to
12/31/96 12/31/96
---------------- ----------------
Net asset value, beginning of period $48.01 $48.01
Income from investment operations(5)
Net investment income 0.34(4) 0.18(4)
Net realized and unrealized gain (loss) 4.89 4.95
-------------- ---------------
Total from investment operations 5.23 5.13
-------------- ---------------
Less distributions
Dividends from net investment income (0.30) (0.19)
Distributions from net realized gains (5.52) (5.52)
-------------- ---------------
Total distributions (5.82) (5.71)
-------------- ---------------
Change in net asset value (0.59) (0.58)
-------------- ---------------
Net asset value, end of period $47.42 $47.43
============== ===============
Total return 10.71%(2) 10.48%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $82,739 $22,978
Ratio to average net assets of:
Operating expenses 0.70%(1) 0.95%(1)
Net investment income 0.65%(1) 0.39%(1)
Portfolio turnover 99%(2) 99%(2)
Average commission rate paid(3) $0.0543 $0.0543
(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
$0.04 and $0.04, respectively, 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 time of share purchases and
redemptions.
See Notes to Financial Statements
23
<PAGE>
INSTITUTIONAL MONEY MARKET PORTFOLIO
INVESTMENT ADVISOR'S REPORT
Over the last twelve months, Phoenix Duff & Phelps Institutional Money Market
Portfolio continued to produce strong results for its shareholders. As of
December 31, 1996, the current yield on the Fund's Class X and Y shares were
5.15% and 4.90%, respectively, as compared with the 4.82% average yield of
taxable money market funds reported by IBC Donoghue's Money Market 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 the resulting figure multiplied by 365.
Shifting market opinion over the direction of the U.S. economy was
responsible for much of the volatility in short-term interest rates during
this latest twelve-month reporting period. In January, the Central Bank cut
the Fed Funds Rate from 5.50% to 5.25% in an effort to stimulate what was
believed to be a sluggish economy. Although it was widely anticipated that
the Federal Reserve would have to lower rates again, a surprisingly strong
February employment report provided conflicting evidence about the economy's
health. As more data became available, it became evident that the economy had
grown robustly during the first half of 1996. During this period, short-term
interest rates were moved higher as the financial markets had to consider the
threat of future inflation.
By late summer, the consensus view on Wall Street shifted once again as signs
of more moderate economic growth became increasingly apparent and concerns
over inflation declined. With the exception of the last few weeks in
December, short-term interest rates trended lower for the remainder of this
reporting period. In the end, despite all these market gyrations during 1996,
the 90-day Treasury bill finished the year yielding 5.19%--only 12 basis
points higher than where it stood one year ago.
Looking ahead, the Fund continues to focus on high-quality assets as
represented by the portfolio's average credit quality of A1/P1 as of December
31, 1996. In terms of our asset allocation strategy, we are currently
emphasizing top-tier commercial paper and U.S. Government obligations. As
always, we remain committed to carefully monitoring the short-term markets
for attractive investment opportunities.
- --------------------------------------------------------------------------------
[LINE CHART]
MONTHLY YIELD COMPARISON
IBC Donoghue Money Money Market
Fund Report*** Portfolio
1/96 5.03% 5.29%
2/96 4.8 4.98
3/96 4.69 4.81
4/96 4.68 5.07
5/96 4.67 5.05
6/96 4.7 5.06
7/96 4.73 5.1
8/96 4.74 5.13
9/96 4.75 5.18
10/96 4.75 5.06
11/96 4.75 5.04
12/96 4.78 5.12
- --------------------------------------------------------------------------------
Money market monthly yield is the average annualized yield, without
compounding, for the 30-day period ending on the last day of the month
indicated.
**Average monthly yield of taxable Money Market funds as reported by IBC
Donoghue's Money Fund Report.
Average Annual Total Returns for Periods Ending 12/31/96
1 Year 5 Years 10 Years
---------------- -------- --------- -----------
Class X 5.53% 4.31% 5.90%
---------------- ------- -------- ---------
Class Y 5.24% 3.94% 5.51%
---------------- ------- -------- ---------
90-day T-bills* 5.25% 4.37% 5.67%
---------------- ------- -------- ---------
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). The total return assumes
reinvestment of dividends and capital gains. 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.
24
<PAGE>
Institutional Money Market Portfolio
INVESTMENTS AT DECEMBER 31, 1996
Face
Amount Interest Maturity
(000) Description Rate Date Value
- -------- --------------------------- --------- ----------- -----------
FEDERAL AGENCY SECURITIES--0.4%
$ 70 Federal Home Loan Mortgage Assoc. 5.28% 01/31/97 $ 69,692
---------
Reset
Date
---------
FEDERAL AGENCY SECURITIES--VARIABLE--21.4% (b)
500 Federal Home Loan Banks (final
maturity 01/14/97) 5.70 01/02/97 500,000
1,500 Student Loan Marketing Assoc.
(final maturity 11/24/97) 5.39 01/07/97 1,500,000
1,000 Student Loan Marketing Assoc.
(final maturity 02/22/99) 5.42 01/07/97 1,000,000
700 Federal National Mortgage Assoc.
(final maturity 12/14/98) 5.18 03/14/97 699,249
---------
TOTAL FEDERAL AGENCY SECURITIES--VARIABLE 3,699,249
---------
<TABLE>
<CAPTION>
Standard
& Poor's
Rating Interest Maturity
(Unaudited) Rate Date Value
------------ ---------------------- ------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER--55.0%
295 Shell Oil Co. A-1+ 6.25 01/02/97 294,949
640 Abbott Laboratories A-1+ 5.75 01/07/97 639,387
200 Cargill, Inc. A-1+ 5.43 01/10/97 199,728
210 Heinz (H.J.) Co. A-1+ 5.40 01/10/97 209,716
350 Exxon Imperial U.S., Inc. A-1+ 5.41 01/13/97 349,369
500 Greenwich Funding Corp. A-1+ 5.60 01/15/97 498,911
150 Preferred Receivables
Funding Corp. A-1 5.35 01/16/97 149,666
500 General Electric Capital
Corp. A-1+ 6.00 01/18/97 499,417
400 Cargill, Inc. A-1+ 5.41 01/22/97 398,738
173 General Electric Capital
Corp. A-1+ 5.31 01/22/97 173,000
250 AlliedSignal, Inc. A-1 5.65 01/23/97 249,137
325 Albertson's, Inc. A-1 5.48 01/29/97 323,615
</TABLE>
<TABLE>
<CAPTION>
Standard
Face & Poor's
Amount Rating Interest Maturity
(000) Description (Unaudited) Rate Date Value
- -------- -------------------------------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER--continued
$500 United Parcel
Service, Inc. A-1+ 5.35 01/30/97 $ 497,845
400 Heinz (H.J.) Co. A-1+ 5.40 02/03/97 398,020
320 Kellogg Co. A-1+ 5.35 02/05/97 318,335
195 Kellogg Co. A-1+ 5.37 02/07/97 193,924
500 Vermont American
Corp. A-1+ 5.47 02/07/97 497,189
500 Schering Corp. A-1+ 5.40 02/11/97 496,925
255 Corporate
Receivables Corp. A-1 5.37 02/12/97 253,402
150 Preferred
Receivables Funding
Corp. A-1 5.35 02/13/97 149,041
350 Goldman Sachs & Co. A-1+ 5.35 02/14/97 347,711
300 Receivables Capital
Corp. A-1+ 5.40 02/14/97 298,020
25 Corporate
Receivables Corp. A-1 5.35 02/20/97 24,814
500 Southwestern Bell
Telephone Co. A-1+ 5.43 02/25/97 495,852
500 Bellsouth
Telecommunications,
Inc. A-1+ 5.34 03/04/97 495,402
380 First Deposit
Funding Trust A-1+ 5.33 03/14/97 375,949
400 CXC, Inc. A-1+ 5.32 03/17/97 395,567
300 Receivables Capital
Corp. A-1+ 5.39 05/01/97 294,610
---------------
TOTAL COMMERCIAL PAPER 9,518,239
---------------
TOTAL INVESTMENTS--76.8%
(Identified cost $13,287,180) 13,287,180(a)
Cash and receivables, less liabilities--23.2% 4,024,005
---------------
NET ASSETS--100.0% $17,311,185
===============
</TABLE>
(a) Federal Income Tax Information: At December 31, 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.
See Notes to Financial Statements
25
<PAGE>
Institutional Money Market Portfolio
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investment securities at value
(Identified cost $13,287,180) $13,287,180
Cash 22,181
Receivables
Fund shares sold 4,579,358
Interest 22,925
Receivable from adviser 35,210
------------
Total assets 17,946,854
------------
Liabilities
Payables
Fund shares repurchased 569,348
Dividend distributions 14,638
Transfer agent fee 3,802
Trustees' fee 1,375
Distribution fee 448
Financial agent fee 324
Accrued expenses 45,734
------------
Total liabilities 635,669
------------
Net Assets $17,311,185
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $17,311,185
------------
Net Assets $17,311,185
============
Class X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $15,181,531) 15,181,531
Net asset value and offering price per share $1.00
Class Y
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $2,129,654) 2,129,654
Net asset value and offering price per share $1.00
STATEMENT OF OPERATIONS
FROM INCEPTION MARCH 1, 1996
TO DECEMBER 31, 1996
Investment Income
Interest $ 608,661
----------
Total investment income 608,661
----------
Expenses
Investment advisory fee 28,000
Distribution fee--Class Y 5,661
Financial agent fee 3,360
Registration 28,589
Transfer agent 38,616
Professional 18,900
Trustees 13,900
Printing 10,688
Custodian 7,000
Miscellaneous 728
----------
Total expenses 155,442
Less expenses borne by investment adviser (110,582)
----------
Net expenses 44,860
----------
Net investment income 563,801
----------
Net increase in net assets resulting from
operations $ 563,801
==========
See Notes to Financial Statements
26
<PAGE>
Institutional Money Market Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
March 1, 1996 to
December 31, 1996
------------------
<S> <C>
From Operations
Net investment income $ 563,801
-----------------
Increase in net assets resulting from operations 563,801
-----------------
From Distributions to Shareholders
Net investment income--Class X (454,271)
Net investment income--Class Y (109,530)
-----------------
Decrease in net assets from distributions to shareholders (563,801)
-----------------
From Share Transactions
Class X
Proceeds from sales of shares (17,010,234 shares) 17,010,234
Net asset value of shares issued from reinvestment of distributions (438,107 shares) 438,107
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 (10,372,867 shares) (10,372,867)
-----------------
Total 15,181,531
-----------------
Class Y
Proceeds from sales of shares (2,849,561 shares) 2,849,561
Net asset value of shares issued from reinvestment of distributions (105,240 shares) 105,240
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 (3,491,960 shares) (3,491,960)
-----------------
Total 2,129,654
-----------------
Increase in net assets from share transactions 17,311,185
-----------------
Net increase in net assets 17,311,185
Net Assets
Beginning of period 0
-----------------
End of period $ 17,311,185
=================
</TABLE>
See Notes to Financial Statements
27
<PAGE>
Institutional Money Market Portfolio
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
Class X Class Y
---------------- ----------------
From Inception From Inception
3/1/96 to 3/1/96 to
12/31/96 12/31/96
---------------- ----------------
Net asset value, beginning of period $1.00 $1.00
Income from investment operations
Net investment income 0.043(1) 0.040(1)
-------------- ---------------
Total from investment operations 0.043 0.040
-------------- ---------------
Less distributions
Dividends from net investment income (0.043) (0.040)
-------------- ---------------
Change in net asset value -- --
-------------- ---------------
Net asset value, end of period $1.00 $1.00
============== ===============
Total return 4.34%(3) 4.11%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $15,182 $ 2,130
Ratio to average net assets of:
Operating expenses 0.35%(2) 0.60%(2)
Net investment income 5.08%(2) 4.84%(2)
(1) Includes reimbursement of operating expenses by investment adviser of for
less than $0.01.
(2) Annualized
(3) Not annualized
See Notes to Financial Statements
28
<PAGE>
INSTITUTIONAL U.S. GOVERNMENT SECURITIES PORTFOLIO
INVESTMENT ADVISER'S REPORT
While it may have been another record year for U.S. equities, the bond
market produced mixed results. Shifting market opinion over the direction of
the U.S. economy contributed to much of the volatility in interest rates
during 1996. As measured by the two-year Treasury note, short-term interest
rates started the year at 5.2%, climbed as high as 6.4% in July, and finished
1996 yielding 5.9%. Surprisingly strong economic growth led to rekindled
inflation fears, which plagued the bond market during the first half of the
year. Fortunately, by late summer, market sentiment turned positive again and
interest rates moved downward allowing investors to recoup their earlier
losses.
The Phoenix Duff & Phelps Institutional U.S. Government Securities Portfolio
produced strong results during 1996. For the twelve months ended December 31,
1996, the Fund's class X shares returned 5.21% and class Y shares earned
4.87%. Over the same reporting period, the Lehman Brothers 1 to 3 year
Government Bond Index returned 5.09%. All of these figures assume
reinvestment of any distributions, but exclude the effect of sales charges.
During the year, the Fund benefited from its significant exposure to
mortgage-backed securities. Specifically, short duration mortgage-backed
securities provided higher relative returns versus short duration U.S.
Treasuries. Given our belief that mortgage-backed securities continue to
represent the best relative value when compared to other U.S. government
securities, we remain overweighted in this fixed-income sector. As of
year-end, we are maintaining a short duration of approximately 1.6 years with
an average portfolio quality of AAA. Moving forward, we will continue to seek
out the best value in the U.S. government securities market.
- --------------------------------------------------------------------------------
[LINE CHART]
Institutional U.S Gov't Lehman 1-3 year Gov't
Securities Portfoilio-Class X Bond Index*
9/30/91 10000 10000
12/31/91 10424.1 10367
12/31/92 11105.9 11014.3
12/31/93 11838 11607.4
12/31/94 11852.8 11667.2
12/31/95 13308.94 12931.9
12/31/96 14002.3 13590.6
- --------------------------------------------------------------------------------
Average Annual Total Returns for Periods Ending 12/31/96
From Inception
9/30/91 to
1 Year 5 Years 12/31/96
- -------------------------- -------- --------- ----------------
Class X 5.21% 6.08% 6.61%
- -------------------------- ------- -------- ---------------
Class Y 4.87% 5.80% 6.33%
- -------------------------- ------- -------- ---------------
Lehman Brothers 1-3 year
Government Bond Index* 5.09% 5.56% 6.01%
- -------------------------- ------- -------- ---------------
This chart assumes an initial gross investment of $10,000 made on 9/30/91 for
Class X shares. The total return for Class X shares assumes reinvestment of
dividends and capital gains. Class Y share performance will be greater or
less than that shown based on differences in inception dates and fees.
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.
See Notes to Financial Statements
29
<PAGE>
Institutional U.S. Government Securities Portfolio
INVESTMENTS AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------- ---------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--81.8%
U.S. Treasury Bonds--6.1%
U.S. Treasury Bonds 6.50%, '06 AAA $ 500 $ 502,813
--------------
U.S. Treasury Notes--9.0%
U.S. Treasury Notes 5.875%, '98 AAA 750 749,062
--------------
Agency Mortgage-Backed Securities--66.7%
FHLMC 9%, '04 AAA 17 17,223
FHLMC 9.30%, '05 AAA 107 107,434
FHLMC 4.75%, '11 AAA 458 456,374
FNMA 5.75%, '02 AAA 1,000 997,010
FNMA 5.25%, '13 AAA 2,000 1,980,640
FNMA 5.50%, '14 AAA 2,000 1,986,000
--------------
5,544,681
--------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $6,772,935) 6,796,556
--------------
MUNICIPAL BONDS (b)--5.4%
Chicago Public Building Taxable
7%, '07 AAA $ 450 $ 454,662
TOTAL MUNICIPAL BONDS
(Identified cost $447,689) 454,662
--------------
TOTAL LONG-TERM INVESTMENTS--87.2%
(Identified cost $7,220,624) 7,251,218
--------------
SHORT-TERM OBLIGATIONS--8.6%
Federal Agency Securities--8.6%
Federal Home Loan Mortgage Corp. 5.70%, 1-2-97 715 714,887
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $714,887) 714,887
--------------
TOTAL INVESTMENTS--95.8%
(Identified cost $7,935,511) 7,966,105(a)
Cash and receivables, less liabilities--4.2% 346,356
--------------
NET ASSETS--100.0% $8,312,461
==============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $39,942 and gross
depreciation of $9,348 for income tax purposes. At December 31, 1996, the
aggregate cost of securities for federal income tax purposes was
$7,935,511.
(b) These municipal bonds are fully defeased by U.S. Government Treasury
Obligations.
See Notes to Financial Statements
30
<PAGE>
Institutional U.S. Government Securities Portfolio
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investment securities at value
(Identified cost $7,935,511) $7,966,105
Cash 3,337
Receivables
Fund shares sold 310,121
Interest 51,895
Receivable from adviser 22,143
Prepaid expenses 9,157
-----------
Total assets 8,362,758
-----------
Liabilities
Payables
Fund shares repurchased 100
Transfer agent fee 3,916
Trustees' fee 1,475
Distribution fee 685
Financial agent fee 201
Accrued expenses 43,920
-----------
Total liabilities 50,297
-----------
Net Assets $8,312,461
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $8,524,474
Accumulated net realized loss (242,607)
Net unrealized appreciation 30,594
-----------
Net Assets $8,312,461
===========
Class X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $4,734,029) 359,963
Net asset value and offering price per share $13.15
Class Y
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $3,578,432) 272,294
Net asset value and offering price per share $13.14
STATEMENT OF OPERATIONS
FROM INCEPTION MARCH 1, 1996
TO DECEMBER 31, 1996
Investment Income
Interest $ 508,661
----------
Total investment income 508,661
----------
Expenses
Investment advisory fee 25,541
Distribution fee--Class Y 6,615
Financial agent fee 2,554
Registration 74,176
Transfer agent 35,900
Professional 17,500
Trustees 14,000
Printing 8,102
Custodian 2,700
Miscellaneous 2,784
----------
Total expenses 189,872
Less expenses borne by investment adviser (149,202)
----------
Net expenses 40,670
----------
Net investment income 467,991
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized loss on securities (236,317)
----------
Net change in unrealized appreciation on investments end
of period 30,594
Less net unrealized depreciation in connection with PHL
Pooled Separate Account U (162,639)
----------
Net change in unrealized appreciation
(depreciation) 193,233
----------
Net loss on investments (43,084)
----------
Net increase in net assets resulting from operations $ 424,907
==========
See Notes to Financial Statements
31
<PAGE>
Institutional U.S. Government Securities Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
March 1, 1996 to
December 31, 1996
-----------------
<S> <C>
From Operations
Net investment income $ 467,991
Net realized loss (236,317)
Net change in unrealized appreciation (depreciation) 193,233
----------------
Increase in net assets resulting from operations 424,907
----------------
From Distributions to Shareholders
Net investment income--Class X (297,193)
Net investment income--Class Y (170,798)
In excess of net investment income--Class X (33,911)
In excess of net investment income--Class Y (19,488)
----------------
Decrease in net assets from distributions to shareholders (521,390)
----------------
From Share Transactions
Class X
Proceeds from sales of shares (68,722 shares) 922,793
Net asset value of shares issued from reinvestment of distributions (21,717 shares) 285,465
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 (556,698 shares) (7,465,688)
----------------
Total 4,775,925
----------------
Class Y
Proceeds from sales of shares (199,852 shares) 2,672,950
Net asset value of shares issued from reinvestment of distributions (14,474 shares) 190,283
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 (92,097 shares) (1,234,180)
----------------
Total 3,633,019
----------------
Increase in net assets from share transactions 8,408,944
----------------
Net increase in net assets 8,312,461
Net Assets
Beginning of period 0
----------------
End of period (including undistributed net investment income of $0) $ 8,312,461
================
</TABLE>
See Notes to Financial Statements
32
<PAGE>
Institutional U.S. Government Securities Portfolio
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
Class X Class Y
---------------- ----------------
From Inception From Inception
3/1/96 to 3/1/96 to
12/31/96 12/31/96
---------------- ----------------
Net asset value, beginning of period $13.35 $13.35
Income from investment operations(5)
Net investment income 0.62(3)(4) 0.59(3)(4)
Net realized and unrealized gain (loss) 0.02 0.01
-------------- ---------------
Total from investment operations 0.64 0.60
-------------- ---------------
Less distributions
Dividends from net investment income (0.75) (0.73)
In excess of net investment income (0.09) (0.08)
-------------- ---------------
Total distributions (0.84) (0.81)
-------------- ---------------
Change in net asset value (0.20) (0.21)
-------------- ---------------
Net asset value, end of period $13.15 $13.14
============== ===============
Total return 4.86%(2) 4.56%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $4,734 $3,578
Ratio to average net assets of:
Operating expenses 0.40%(1) 0.65%(1)
Net investment income 5.58%(1) 5.32%(1)
Portfolio turnover 175%(2) 175%(2)
(1) Annualized
(2) Not annualized
(3) Computed using average shares outstanding.
(4) Includes reimbursement of operating expenses by investment adviser of
$0.19 and $0.19, 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.
See Notes to Financial Statements
33
<PAGE>
INSTITUTIONAL ENHANCED RESERVES PORTFOLIO
INVESTMENT ADVISER'S REPORT
Throughout 1996, interest rates were extremely volatile as the market
repeatedly shifted its perception of economic growth and the implications to
monetary policy. The net result of this was higher interest rates across the
entire maturity spectrum and a steeper short-term yield curve. Within this
environment, Phoenix Duff & Phelps Institutional Enhanced Reserves Portfolio
lagged its benchmark, the Merrill Lynch 1-Year Treasury Bills Index. For the
twelve months ended December 31, 1996, the Fund's class X shares returned
4.72%, while the Index returned 5.50%. Since its November 1, 1996, inception
date, the Fund's class Y shares earned 0.71% through year-end. All of these
figures assume reinvestment of any distributions.
Despite the Fund's extra yield and a slightly defensive duration strategy,
the relative sharp increases in interest rates beyond the one-year maturity
mitigated these advantages. Over the last twelve months, the yield on the
one-year Treasury increased 36 basis points compared to 72 basis points for
the two-year note and 80 basis points for the three-year note.
Spread sector securities continued to be a performance winner in 1996. Short
corporates and asset-backed securities performed extremely well versus their
comparable benchmarks. The demand
for short-yield product was enhanced by a volatile Treasury curve, foreign
interest and a flat credit curve. The Fund increased exposure to these
sectors throughout the year at the expense of Treasury securities.
Additionally, the Fund increased exposure to floating-rate securities in
anticipation of further narrowing in discount margin due to intense demand.
Looking forward, we anticipate a continuation of a choppy market. Divergent
economic information is likely to trickle in over the near term and this will
keep the market in a trading range. The inflation outlook remains under
control, but there have been several troubling signs that could alter that
outlook. Over the past few years, the first quarter has proven to set the
tone for the year. Resurgence of economic activity above the targeted growth
level and further employment strength will likely place the market on alert
for higher interest rates.
Given this outlook, we intend to remain slightly defensive relative to the
Merrill Lynch 1-Year Treasury Bills Index. We will be emphasizing short-term
yield products which should continue to perform well given the strong
technicals. Interest rate sensitive floaters will also be emphasized versus
extremely short fixed-rate securities.
- --------------------------------------------------------------------------------
[DESCRIPTION OF LINE CHART
Institutional Enchanced Merrill Lynch 1 Year
Reserves Portfolio-Class X Treasury Bill
6/27/94 10000 10000
12/31/94 10205.2 10098.9
12/31/95 11001.1 11209.3
12/31/96 11520. 11589
- --------------------------------------------------------------------------------
Average Annual Total Returns for Periods Ending 12/31/96
From Inception From Inception
11/1/96 to 6/27/94 to
1 Year 12/31/96 12/31/96
- -------------------------- ----------- ------------------ ------------------
Class X 4.72% N/A 5.78%
- -------------------------- --------- ---------------- -----------------
Class Y -- 0.71% --
- -------------------------- --------- ---------------- -----------------
Merrill Lynch
1 year Treasury Bill 5.50% 0.84% 6.06%*
- -------------------------- --------- ---------------- -----------------
This chart assumes an initial gross investment of $10,000 made on 6/27/94 for
Class X shares. The total return for Class X shares assumes reinvestment of
dividends and capital gains. Class Y share performance will be greater or
less than that shown based on differences in inception dates and fees.
Performance data is based on the Portfolio's past performance as Duff &
Phelps Enhanced Reserves Fund prior to July 19, 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.
*1 year Treasury bill as reported by Merrill Lynch.
Information from 7/1/94 to 12/31/96.
34
<PAGE>
Institutional Enhanced Reserves Portfolio
INVESTMENTS AT DECEMBER 31, 1996
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ -------- -------------
U.S. Government And Agency Securities--16.2%
U.S. Treasury Notes--7.5%
U.S. Treasury Notes 5.625%, '98 Aaa $3,000 $ 2,986,170
U.S. Treasury Notes 7.75%, '99 Aaa 6,000 6,275,622
-----------
9,261,792
-----------
Agency Mortgage-Backed Securities--8.7%
GNMA 8.50%, '26 3,841 3,986,062
FHLMC 7.50% WI, '11 (c) 5,000 5,068,750
FNMA 7.835%, '20 1,662 1,721,405
-----------
10,776,217
-----------
Total U.S. Government And Agency Securities
(Identified cost $20,027,061) 20,038,009
-----------
Non-Convertible Bonds--61.9%
Asset-Backed Securities--43.3%
Chase Manhattan Grantor 95-A, A 6%,
'01 Aaa 2,635 2,646,372
CIT RV Trust 96-A, A 5.40%, '11 Aaa 2,207 2,164,561
Citibank Credit Card Master Trust I
96-6, A 5.62%, '08 (b) Aaa 3,000 2,999,063
Discover Card Master Trust 96-4, A
5.98%, '13 (b) Aaa 2,500 2,546,725
First Chicago Master Trust 93-F,
5.93%, '00 (b) Aaa 5,000 5,021,900
First Plus Home Loan 96-2, A1
6.80%, '05 Aaa 4,962 4,979,249
Fleetwood Credit Corp. 93-A, A 6%,
'08 Aaa 2,416 2,419,880
Ford Credit Auto Owner Trust 96-A,
A1 5.67%, '97 P-1 1,708 1,711,942
Ford Credit Grantor Trust 95-A, A
5.90%, '00 Aaa 1,613 1,618,941
Fremont Small Business Loan 6.11%,
'99 (b) Baa 1,800 1,802,698
Green Tree Financial Corp. 96-8, A2
6.55%, '27 Aaa 3,000 3,021,562
Green Tree Home Improvement 95-A,
A1 7%, '20 Aaa 16 16,058
Green Tree Home Improvement 96-A,
A1 5.70%, '26 Aaa 1,912 1,913,117
Household Consumer Loan 96-2, A2
5.931%, '06 (b) Aa 3,000 2,998,594
MBNA Master Credit Card 94-B, A
5.47%, '02 (b) Aaa 2,500 2,509,125
Nationsbank Auto 96-A, A-1 5.776%,
'97 P-1 1,681 1,684,128
Standard Credit Card Master Trust
95-4, A 5.60%, '00 (b) Aaa 3,000 3,004,680
Asset-Backed Securities--continued
The Money Store 96-CA1, 6.70%, '08 Aaa $4,463 $ 4,467,835
Western Financial Grantor 95-2, A1
7.10%, '00 Aaa 2,096 2,127,029
World Omni Auto Trust 95-A, A
6.05%, '01 Aaa 3,780 3,796,590
-----------
53,450,049
-----------
Banks--4.1%
General Electric Corp. 5.55%, '98
(b) Aaa 5,000 5,018,540
-----------
Diversified Financial Services--6.8%
Dean Witter Discover Co. 6%, '98 A 3,800 3,802,250
General Motors Acceptance Corp.
7.50%, '97 A 4,500 4,561,722
-----------
8,363,972
-----------
Non-Agency Mortgage-Backed Securities--4.8%
Independent National Mortgage Corp.
96-E, A2 6.93%, '26 Aaa 2,959 2,933,470
Residential Asset Securitization
Trust 96-A9, A1 7.50%, '27 Aaa 2,973 2,983,876
-----------
5,917,346
-----------
Retail--2.9%
Sears Roebuck Co. 8.45%, '98 A 3,500 3,637,155
-----------
Total Non-Convertible Bonds
(Identified cost $76,177,978) 76,387,062
-----------
Total Long-Term Investments--78.1%
(Identified cost $96,205,039) 96,425,071
-----------
STANDARD
& POOR'S
RATING
(Unaudited)
----------
Short-Term Obligations--21.9%
Commercial Paper--18.6%
Beneficial Corp. 5.406%, 1-13-97 A-1 5,000 5,000,000
Ford Motor Credit Co. 5.638%,
1-13-97 A-1 5,000 5,000,000
Merrill Lynch & Co., Inc. 5.671%,
1-16-97 A-1+ 5,000 5,000,000
CIT Group Holdings 5.635%, 1-22-97 A-1 5,000 5,000,000
Deere (John) Capital Corp. 5.53%,
1-30-97 A-1 3,000 3,000,000
-----------
23,000,000
-----------
See Notes to Financial Statements
35
<PAGE>
Institutional Enhanced Reserves Portfolio
PAR
VALUE
(000) VALUE
-------- ---------------
Repurchase Agreements--3.3%
State Street Repurchase Agreement
4.90% dated 12/31/96 due 1/2/97,
repurchase price $4,116,120,
collateralized by U.S. Treasury
Note 7.25%, 2/15/98, market value
$4,201,094 $4,115 $ 4,115,000
--------------
Total Short-Term Obligations
(Identified cost $27,115,000) 27,115,000
--------------
Total Investments--100.0%
(Identified cost $123,320,039) 123,540,071(a)
Cash and receivables, less liabilities--0.0% (25,855)
--------------
Net Assets--100.0% $123,514,216
==============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $289,717 and gross
depreciation of $82,643 for income tax purposes. At December 31, 1996,
the aggregate cost of securities for income tax purposes was
$123,332,997.
(b) Variable or step coupon; interest rate shown reflects the rate currently
in effect.
(c) When issued.
See Notes to Financial Statements
36
<PAGE>
Institutional Enhanced Reserves Portfolio
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investment securities at value
(Identified cost $123,320,039) $123,540,071
Cash 1,346
Receivables
Investment securities sold 4,566,348
Interest 636,442
Receivable from adviser 97,824
--------------
Total assets 128,842,031
--------------
Liabilities
Payables
Investment securities purchased 5,076,563
Dividend distributions 158,487
Transfer agent fee 3,502
Financial agent fee 3,095
Trustees' fee 1,313
Distribution fee 243
Accrued expenses 84,612
--------------
Total liabilities 5,327,815
--------------
Net Assets $123,514,216
==============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $123,678,944
Undistributed net investment income 13,193
Accumulated net realized loss (397,953)
Net unrealized appreciation 220,032
--------------
Net Assets $123,514,216
==============
Class X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $122,010,341) 12,258,962
Net asset value and offering price per share $9.95
Class Y
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $1,503,875) 151,152
Net asset value and offering price per share $9.95
STATEMENT OF OPERATIONS
FROM INCEPTION JULY 19, 1996
TO DECEMBER 31, 1996
Investment Income
Interest $3,326,723
-----------
Total investment income 3,326,723
-----------
Expenses
Investment advisory fee 132,690
Distribution fee--Class Y 342
Financial agent fee 16,586
Registration 22,500
Professional 19,717
Transfer agent 17,187
Custodian 9,126
Printing 9,043
Trustees 6,938
Miscellaneous 2,500
-----------
Total expenses 236,629
Less expenses borne by investment adviser (48,309)
-----------
Net expenses 188,320
-----------
Net investment income 3,138,403
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized loss on securities (212,416)
-----------
Net change in unrealized appreciation on investments end
of period 220,032
Less net unrealized depreciation in connection with Duff
& Phelps Enhanced Reserves Fund (58,648)
-----------
Net change in unrealized appreciation
(depreciation) 278,680
-----------
Net gain on investments 66,264
-----------
Net increase in net assets resulting from operations $3,204,667
===========
See Notes to Financial Statements
37
<PAGE>
Institutional Enhanced Reserves Portfolio
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
July 19, 1996 to
December 31, 1996
------------------
<S> <C>
From Operations
Net investment income $ 3,138,403
Net realized loss (212,416)
Net change in unrealized appreciation (depreciation) 278,680
-----------------
Increase in net assets resulting from operations 3,204,667
-----------------
From Distributions to Shareholders
Net investment income--Class X (3,113,690)
Net investment income--Class Y (7,637)
-----------------
Decrease in net assets from distributions to shareholders (3,121,327)
-----------------
From Share Transactions
Class X
Proceeds from sales of shares (18,754,392 shares) 186,663,642
Net asset value of shares issued from reinvestment of distributions (291,631 shares) 2,902,589
Net asset value of shares issued in conjunction with the acquisition of Duff & Phelps
Enhanced Reserves Fund (13,730,413 shares) 136,554,593
Cost of shares repurchased (20,517,474 shares) (204,195,925)
-----------------
Total 121,924,899
-----------------
Class Y
Proceeds from sales of shares (150,567 shares) 1,500,150
Net asset value of shares issued from reinvestment of distributions (585 shares) 5,827
-----------------
Total 1,505,977
-----------------
Increase in net assets from share transactions 123,430,876
-----------------
Net increase in net assets 123,514,216
Net Assets
Beginning of period 0
-----------------
End of period (including undistributed net investment income of $13,193) $ 123,514,216
=================
</TABLE>
See Notes to Financial Statements
38
<PAGE>
Institutional Enhanced Reserves Portfolio
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
Class X Class Y
---------------- ----------------
From Inception From Inception
7/19/96 to 11/1/96 to
12/31/96 12/31/96
---------------- ----------------
Net asset value, beginning of period $9.95 $9.97
Income from investment operations(5)
Net investment income 0.26(3) 0.09(3)
Net realized and unrealized gain (loss) -- (0.02)
-------------- ---------------
Total from investment operations 0.26 0.07
-------------- ---------------
Less distributions
Dividends from net investment income (0.26) (0.09)
Distributions from net realized gains -- --
-------------- ---------------
Total distributions (0.26) (0.09)
-------------- ---------------
Change in net asset value -- (0.02)
-------------- ---------------
Net asset value, end of period $9.95 $9.95
============== ===============
Total return 2.57%(2) 0.71%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $122,010 $1,504
Ratio to average net assets of:
Operating expenses 0.34%(1) 0.59%(1)
Net investment income 5.68%(1) 5.58%(1)
Portfolio turnover 122%(2) 122%(2)
(1) Annualized
(2) Not annualized
(3) Includes reimbursement of operating expenses by investment adviser of
less than $0.01.
See Notes to Financial Statements
39
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
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 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 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. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and
expenses. Actual results could differ from those estimates.
A. Security valuation:
Equity securities are valued at the last sale price, or if there had been
no sale that day, at the last bid price. Debt securities are valued on the
basis of broker quotations or valuations provided by a pricing service which
utilizes information with respect to recent sales, market transactions in
comparable securities, quotations from dealers, and various relationships
between securities in determining value. Short-term investments having a
remaining maturity of 60 days or less are valued at amortized cost which
approximates market. All other securities and assets are valued at their fair
value as determined in good faith by or under the direction of the Trustees.
The Money Market 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 and Enhanced Reserves 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 which may differ from generally accepted accounting
principles. These differences include the treatment of non-taxable dividends,
non-deductible expenses, 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
40
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 (Continued)
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.
I. When-Issued and delayed delivery transactions:
Each Portfolio may engage in when-issued or delayed delivery transactions.
The Portfolios record when-issued securities on the trade date and maintain
collateral for the securities purchased. Securities purchased on a when-
issued or delayed delivery basis begin earning interest on the settlement
date.
NOTE 2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Fund, the Advisers, Phoenix
Investment Counsel, Inc. ("PIC"), an indirect majority-owned subsidiary of
Phoenix Home Life Mutual Insurance Company ("PHL") and Duff & Phelps
Management Co. ("DPM"), a subsidiary of Phoenix Duff & Phelps Corporation,
are 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 Adviser $1 Billion Billion
------------------------------ ---------------------- ----------
Balanced Portfolio PIC 0.55% 0.50%
Managed Bond Portfolio PIC 0.45% 0.40%
Growth Stock Portfolio PIC 0.60% 0.55%
Money Market Portfolio PIC 0.25% 0.20%
U.S. Government Securities
Portfolio PIC 0.30% 0.25%
Enhanced Reserves Portfolio DPM 0.24% 0.19%
PIC has voluntarily agreed to assume total fund operating expenses of each
Portfolio it advises, 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 assets:
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%
41
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 (Continued)
DPM has voluntarily agreed to reimburse or waive total fund operating
expenses 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% and 0.59%, respectively,
of the average annual net assets of Class X and Y, respectively.
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 that class. The
distributor has advised the Portfolio that of the total amount expensed for
the period ended December 31, 1996, $28,999 was earned by the Distributor and
$70,547 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 Fund's Transfer
Agent with State Street Bank and Trust Company as sub-transfer agent. For
the period ended December 31, 1996, transfer agent fees were $227,584 of
which PEPCO retained $97 which is net of fees paid to State Street.
At December 31, 1996, PHL and affiliates held Portfolio shares which
aggregated the following:
Aggregate
Net Asset
Shares Value
------------ -------------
Balanced Portfolio-Class X 6 $ 109
Balanced Portfolio-Class Y 6,017 109,202
Managed Bond Portfolio-Class X 964,810 32,784,247
Managed Bond Portfolio-Class Y 3,179 107,980
Growth Stock Portfolio-Class X 2 111
Growth Stock Portfolio-Class Y 2,330 110,485
Money Market Portfolio-Class X 4,188,211 4,188,211
Money Market Portfolio-Class Y 104,000 104,000
U.S. Government Securities Portfolio-
Class X 8 105
U.S. Government Securities Portfolio-
Class Y 7,957 104,559
NOTE 3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the period ended December 31,
1996 (excluding U.S. Government and agency securities and short-term
securities) aggregated the following:
Purchases Sales
-------------- --------------
Balanced Portfolio $ 78,618,645 $ 83,001,463
Managed Bond Portfolio 41,193,818 32,078,713
Growth Stock Portfolio 162,155,076 255,823,389
U.S. Government
Securities Portfolio 447,655 --
Enhanced Reserves
Portfolio 28,603,158 37,816,786
Purchases and sales of U.S. Government and agency securities during the
period ended December 31, 1996, aggregated the following:
Purchases Sales
-------------- --------------
Balanced Portfolio $20,333,715 $21,567,310
Managed Bond Portfolio 90,065,593 93,826,124
U.S. Government
Securities Portfolio 16,343,443 21,423,027
Enhanced Reserves
Portfolio 92,701,698 91,373,139
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. Acquired
unrealized appreciation (depreciation) is reflected in each Portfolio's
Statement of Operations.
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
42
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 (Continued)
NOTE 5. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Portfolios of the Fund
have recorded several reclassifications in the capital accounts. These
reclassifications have no impact on the net asset value of the Portfolios and
are designed generally to present undistributed income and realized gains on
a tax basis which is considered to be more informative to the shareholder. As
of December 31, 1996, the Portfolios recorded the following reclassifications
to increase (decrease) the accounts listed below:
Capital paid
Undistributed Accumulated in on shares
net investment net realized of beneficial
income (loss) gain (loss) interest
---------------- -------------- ---------------
Balanced Portfolio $37,213 $ 9,971 $(47,184)
Managed Bond
Portfolio 54,888 (5,253) (49,635)
Growth Stock
Portfolio 57,621 (92) (57,529)
U.S. Government
Securities
Portfolio 53,399 (6,290) (47,109)
Enhanced Reserves
Portfolio (3,883) (185,537) 189,420
NOTE 6. CAPITAL LOSS CARRYOVERS
At December 31, 1996, the Portfolios had available for federal income tax
purposes unused capital losses as follows:
Expiring in
2003 2004
--------- -----------
U.S. Government
Securities Portfolio $ -- $235,004
Enhanced Reserves
Portfolio 189,419 128,718
For the Enhanced Reserves Portfolio, capital loss carryovers include
$189,419 acquired in connection with the merger of the Duff & Phelps Enhanced
Reserves Fund.
Under current tax law, capital losses realized after October 31, 1996 may be
deferred and treated as occurring on the first day of the following tax year.
For the year ended December 31, 1996, the U.S. Government Securities
Portfolio and the Enhanced Reserves Portfolio elected to defer $7,603 and
$66,858, respectively, in losses occurring between November 1, 1996 and
December 31, 1996.
NOTE 7. OTHER
As of December 31, 1996, the Portfolios had shareholders who each
individually owned more than 10% of shares outstanding, none of whom are
affiliated with PHL or PDP as follows. In addition, affiliate holdings are
presented in the table located within Note 2.
Number of % of Total
shareholders shares outstanding
--------------- --------------------
Balanced Portfolio 1 11.7%
Managed Bond Portfolio 1 12.6%
Growth Stock Portfolio 1 12.8%
Money Market Portfolio 1 16.4%
US Government Securities
Portfolio 1 13.6%
Enhanced Reserves
Portfolio 3 50.0%
TAX INFORMATION NOTICE (Unaudited)
For the fiscal year ended December 31, 1996, the following Portfolio's
distributed long-term capital gains dividends as follows:
Balanced Portfolio $1,255,831
Managed Bond Portfolio 748,876
Growth Stock Portfolio 8,379,943
For federal income tax purposes 3.84% and 9.51% of the ordinary income
dividends paid by the Balanced Portfolio and the Growth Stock Portfolio,
respectively, qualify for the dividends received deduction for corporate
shareholders.
43
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP [Price Waterhouse logo]
To the Shareholders and Trustees of
Phoenix Duff & Phelps Institutional Mutual Funds
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for bond ratings), and the
related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the financial
position of the Balanced Portfolio, the Managed Bond Portfolio, the Growth
Stock Portfolio, the Money Market Portfolio, the U.S. Government Securities
Portfolio and the Enhanced Reserves Portfolio (constituting the Phoenix Duff
& Phelps Institutional Mutual Funds, hereinafter referred to as the "Fund")
at December 31, 1996, and the results of each of their operations, the
changes in each of their net assets and the financial highlights for each of
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that our audits,
which included confirmation of securities at December 31, 1996 by
correspondence with the custodians and brokers, and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Boston, Massachusetts
February 14, 1997
44
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
101 Munson Street
Greenfield, Massachusetts 01301
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
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
C. Edwin Riley, 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 Advisers
Phoenix Investment Counsel, Inc.
56 Prospect Street
Hartford, Connecticut 06115-0480
Duff & Phelps Investment Management Co.
(Enhanced Reserves Portfolio)
55 East Monroe Street
Suite 3800
Chicago, Illinois 60603
Custodians
The Chase Manhattan Bank
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
Transfer Agent
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by an effective Prospectus which includes
information concerning the Fund's record and other pertinent information.
45
<PAGE>
[BACK COVER]
Phoenix Duff & Phelps Institutional Mutual Funds
P.O. Box 2200
Enfield, CT 06083-2200
[Phoenix Duff & Phelps logo]
PDP 092 (2/97)
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<DISTRIBUTIONS-OTHER> 0
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<NUMBER-OF-SHARES-REDEEMED> 0
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<PER-SHARE-NAV-BEGIN> 9.97
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<PER-SHARE-GAIN-APPREC> (0.02)
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<PER-SHARE-NAV-END> 9.95
<EXPENSE-RATIO> 0.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
