December 31, 1997
PHOENIX
FUNDS
ANNUAL REPORT
Phoenix Duff &
Phelps Institutional
Mutual Funds
[ARROW] BALANCED PORTFOLIO
[ARROW] MANAGED BOND PORTFOLIO
[ARROW] GROWTH STOCK PORTFOLIO
[ARROW] MONEY MARKET PORTFOLIO
[ARROW] U.S. GOVERNMENT
SECURITIES PORTFOLIO
[ARROW] ENHANCED RESERVES
PORTFOLIO
[PHOENIX
DUFF&PHELPS LOGO]
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Institutional Balanced Portfolio ............................ 1
Institutional Managed Bond Portfolio ........................ 10
Institutional Growth Stock Portfolio ........................ 18
Institutional Money Market Portfolio ........................ 25
Institutional U.S. Government Securities Portfolio .......... 31
Institutional Enhanced Reserves Portfolio ................... 37
Notes to Financial Statements ............................... 44
</TABLE>
<PAGE>
INSTITUTIONAL BALANCED PORTFOLIO
INVESTMENT ADVISER'S REPORT
The Institutional Balanced Portfolio posted double-digit gains last year.
For the 12 months ended December 31, 1997, the Fund's Class X and Y shares
returned 18.80% and 18.50%, respectively. The Fund's benchmark, a composite
consisting of 55% S&P 500 Index, 35% Lehman Brothers Aggregate Bond Index and
10% 90-day Treasury bills, returned 21.95% over this same reporting cycle. All
performance figures assume reinvestment of dividends and are net of fees.
Despite increased volatility in the fourth quarter, 1997 was another good
year for U.S. investors. In fact, the Dow Jones Industrial Average ended the
year at more than 10 times its 1982 low. Overseas, however, the picture was not
as bright: high jobless rates continued in Europe, turmoil continues in the
Middle East and Latin America is recovering slowly. The surprise was the
collapse of many markets in the Asia-Pacific region. While it will be some time
before we see the real impact of the Asian problems on the earnings of domestic
and global companies, the U.S. market reacted to the uncertainty with a violent
rotation to defensive issues. The strongest sectors in the fourth quarter were
communication services, utilities and consumer staples--slow but steady
growers.
Positive contributors to overall results during 1997 included strong stock
selection in the consumer staples, energy and capital goods sectors, in
addition to our modest overweighting in the strongly performing financial
services sector. With interest rates trending downward since mid-April, our
decision to raise the average duration of the Portfolio's bond holdings also
boosted returns. Areas that held back performance during this period included
the relative underperformance of some of our technology and health-care
holdings as well as our underweighted position in communication services.
OUTLOOK
While our long-term outlook remains constructive, there are more reasons
than ever to maintain a cautious investment posture. On the positive side, the
economy continues to grow at a healthy, sustainable pace; inflation remains
benign; and the overall outlook for corporate earnings is still upbeat. On the
other hand, analysts' estimates for 1998 earnings are probably too high, and we
believe that the frequency of earnings disappointments will increase.
Our stock selection continues to focus on firms that possess above-average
earnings growth potential, superior management and
global opportunities outside Asia. We expect interest rates to continue to
trend down and would not be surprised if the Fed actually cut rates during the
year, which would partially offset the negative impact of slightly slower
earnings growth on equity prices. While the Asian "meltdown" introduces a new
element of uncertainty in the outlook for the financial markets, we do not
believe the real impact will be great. Health-care, financial services and
technology continue to be the sectors in which we have the greatest confidence
for exceptional long-term growth.
1
<PAGE>
Institutional Balanced Portfolio
- --------------------------------------------------------------------------------
[LINE CHART]
Institutional Balanced Portfolio
Institutional
Balanced
Portfolio Balanced
-- Class X Benchmark*
------------ ----------
5/17/91 5,000,000 5,000,000
12/31/91 6,198,010 5,463,100
12/31/92 6,827,720 5,858,280
12/31/93 7,393,660 6,399,970
12/31/94 7,164,710 6,412,250
12/31/95 8,835,460 8,168,200
12/31/96 9,794,900 9,327,630
12/31/97 11,636,600 11,375,300
[/LINE CHART]
Average Annual Total Returns for Periods
Ending 12/31/97
<TABLE>
<CAPTION>
From Inception
5/17/91 to
1 Year 5 Years 12/31/97
- -------------------------------------------------------------------
<S> <C> <C> <C>
Class X 18.80% 11.25% 13.59%
- -------------------------------------------------------------------
Class Y 18.50% 10.97% 13.30%
- -------------------------------------------------------------------
Balanced Benchmark* 21.95% 14.19% 13.28%**
- -------------------------------------------------------------------
</TABLE>
This chart assumes an intial gross investment of $5,000,000 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 12/31/97.
2
<PAGE>
Institutional Balanced Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
--------------- ------------ ----------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--4.4%
U.S. Treasury Notes--4.4%
U.S. Treasury Notes 6%, 8/15/00 ................................ Aaa $ 80 $ 80,575
U.S. Treasury Notes 6.625%,
6/30/01 ...................................................... Aaa 1,200 1,233,750
---------
1,314,325
---------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $1,276,297) ................................................................. 1,314,325
---------
MUNICIPAL BONDS--6.2%
California--1.9%
California State Department Water
System Series S 5%, 12/1/29 .................................. Aa 60 58,336
L.A. County Public Works
Financing Authority Series A
5.125%, 12/1/29 .............................................. Aaa 90 88,423
Long Beach Pension Obligation
Taxable 6.87%, 9/1/06 ........................................ Aaa 100 104,037
San Bernardino County Pension
Obligation Revenue Taxable
6.87%, 8/1/08 ................................................ Aaa 50 51,969
San Bernardino County Pension
Obligation Revenue Taxable
6.94%, 8/1/09 ................................................ Aaa 135 141,224
Ventura County Pension
Obligation Taxable 6.54%,
11/1/05 ...................................................... Aaa 125 127,430
---------
571,419
---------
Florida--0.9%
Florida State Department of
Transportation Series A 5%,
7/1/27 ....................................................... Aa 75 72,986
University of Miami Exchangeable
Revenue Series A Taxable
7.65%, 4/1/20 ................................................ Aaa 180 189,992
---------
262,978
---------
Massachusetts--0.3%
Massachusetts State Water Authority
Series D 5%, 8/1/24 .......................................... Aaa 75 72,861
---------
Texas--0.3%
Houston Water & Sewer
Refunding, Jr. Lien, Series D
5%, 12/1/25 .................................................. Aaa 90 88,026
---------
Virginia--2.5%
Newport News Series B Taxable
7.05%, 1/15/25 ............................................... Aa 750 756,683
---------
Washington--0.3%
Washington State Series E Taxable
5%, 7/1/22 ................................................... Aa 90 88,512
---------
TOTAL MUNICIPAL BONDS
(Identified cost $1,798,934) ................................................................. 1,840,479
---------
</TABLE>
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
--------------- ------------ ----------------
<S> <C> <C> <C>
NON-CONVERTIBLE BONDS--11.7%
Asset-Backed Securities--2.6%
AESOP Funding II LLC 144A
97-1, A2 6.40%, 10/20/03 (c) ................................. Aaa $ 250 $ 252,031
Capita Equipment Receivables
Trust 97-1, B 6.45%, 8/15/02 ................................. Aa 120 120,188
Chase Credit Card Master Trust
97-2, A 6.30%, 4/15/03 ....................................... Aaa 150 151,107
Fleetwood Credit Corp. 96-B, A
6.90%, 3/15/12 ............................................... Aaa 146 146,829
Green Tree Financial Corp. 96-2,
M1 7.60%, 4/15/27 ............................................ Aa 100 104,313
---------
774,468
---------
Non-Agency Mortgage-Backed Securities--8.8%
CS First Boston Mortgage
Securities Corp. 95-AE, B
7.182%, 11/25/27 ............................................. AA-(d) 190 191,306
DLJ Mortgage Acceptance Corp.
96-CF1, A1B 144A 7.58%,
3/13/28 (c) .................................................. Aaa 75 79,430
First Union Lehman Bros. 97-C1,
B 7.43%, 4/18/29 ............................................. Aa 275 287,977
G.E. Capital Mortgage Services,
Inc. 96-8, M 7.25%, 5/25/26 .................................. AA(d) 245 247,382
Lehman Large Loan 97-LL1, B
6.95%, 3/12/07 ............................................... Aa 325 332,871
Nationslink Funding Corp. 96-1, B
7.69%, 12/20/05 .............................................. AA(d) 250 265,859
Residential Asset Securitization
Trust 96-A8, A1 8%, 12/25/26 ................................. AAA(d) 198 200,868
Residential Funding Mortgage
Securities I 96-S1, A11 7.10%,
1/25/26 ...................................................... AAA(d) 500 506,094
Residential Funding Mortgage
Securities I 96-S8, A4 6.75%,
3/25/11 ...................................................... AAA(d) 279 280,918
Resolution Trust Corp. 93-C1, B
8.75%, 5/25/24 ............................................... Aa 92 91,999
Structured Asset Securities Corp.
93-C1, B 6.60%, 10/25/24 ..................................... AA+(d) 135 132,311
---------
2,617,015
---------
Truckers--0.3%
Teekay Shipping Corp. 8.32%,
2/1/08 ....................................................... Ba 100 102,000
---------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $3,434,573) .............................................................. 3,493,483
---------
FOREIGN GOVERNMENT SECURITIES--8.1%
Argentina--0.6%
Republic of Argentina Bearer FRB
6.688%, 3/31/05 (e) .......................................... Ba 202 180,180
---------
</TABLE>
See Notes to Financial Statements
3
<PAGE>
Institutional Balanced Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- ------- ------------
<S> <C> <C> <C>
Brazil--0.6%
Republic of Brazil NMB-L Bearer
6.75%, 4/15/09 (e) .................... B $235 $ 189,909
---------
Bulgaria--0.3%
Republic of Bulgaria FLIRB RegA
2.25%, 7/28/12 (e) .................... B 155 94,356
---------
Colombia--0.6%
Republic of Colombia 7.25%,
2/15/03 ............................... Baa 190 184,300
---------
Croatia--0.3%
Croatia Series A 6.625%,
7/31/10 (e) ........................... Baa 105 92,400
---------
Ecuador--0.6%
Ecuador Bearer PDI Euro,
PIK interest capitalization
6.688%, 2/27/15 (e) ................... B 257 170,551
---------
Mexico--1.1%
United Mexican States Global
Bond 11.50%, 5/15/26 .................. Ba 265 313,561
---------
Panama--0.6%
Panama 8.875%, 9/30/27 .................. Ba 200 188,200
---------
Peru--0.6%
Peru PDI 4%, 3/7/17 (e) ................. BB(d) 250 164,375
---------
Poland--0.8%
Poland Bearer PDI 4%,
10/27/14 (e) .......................... Baa 280 242,550
---------
Russia--1.4%
Russia Interest Notes Series US
144A 6.719%, 12/15/15 (c) (e) ......... NR 575 408,250
---------
Venezuela--0.6%
Republic of Venezuela 9.25%,
9/15/27 ............................... Ba 215 192,291
---------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $2,332,058).................................... 2,420,923
---------
FOREIGN NON-CONVERTIBLE BONDS--0.6%
Chile--0.6%
Compania Sud Americana de
Vapores SA 7.375%, 12/8/03 ............ BBB(d) 30 29,813
Petropower I Funding Trust 144A
7.36%, 2/15/14 (c) .................... BBB(d) 150 151,926
---------
181,739
---------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $179,414) ..................................... 181,739
---------
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------
<S> <C> <C>
COMMON STOCKS--55.1%
Banks (Major Regional)--4.6%
AmSouth Bancorporation ...................... 1,200 65,175
Banc One Corp. .............................. 5,200 282,425
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
Banks (Major Regional)--continued
BankBoston Corp. .............................. 3,200 $ 300,600
Compass Bankshares, Inc. ...................... 1,000 43,750
Mellon Bank Corp. ............................. 3,150 190,969
NationsBank Corp. ............................. 3,000 182,438
Southtrust Corp. .............................. 1,600 101,500
Washington Mutual, Inc. ....................... 3,000 191,437
---------
1,358,294
---------
Banks (Money Center)--1.3%
BankAmerica Corp. ............................. 3,400 248,200
Citicorp ...................................... 1,200 151,725
---------
399,925
---------
Biotechnology--0.3%
Centocor, Inc. (b) ............................ 3,100 103,075
---------
Broadcasting (Television, Radio, & Cable)--0.3%
Chancellor Media Corp. (b) .................... 1,200 89,550
---------
Chemicals (Specialty)--0.4%
Solutia, Inc. (b) ............................. 4,200 112,087
---------
Communications Equipment--1.7%
Ciena Corp. (b) ............................... 4,800 293,400
Lucent Technologies, Inc. ..................... 2,700 215,663
---------
509,063
---------
Computers (Hardware)--3.2%
International Business Machines Corp. ......... 9,000 941,062
---------
Computers (Networking)--0.4%
Cisco Systems, Inc. (b) ....................... 2,400 133,800
---------
Computers (Peripherals)--0.3%
EMC Corp. (b) ................................. 3,400 93,287
---------
Computers (Software & Services)--3.8%
Adaptec, Inc. (b) ............................. 7,600 282,150
BMC Software, Inc. (b) ........................ 6,300 413,438
Compuware Corp. (b) ........................... 9,100 291,200
Edwards (J.D.) & Co. (b) ...................... 3,300 97,350
Yahoo!, Inc. (b) .............................. 700 48,475
---------
1,132,613
---------
Distributors (Food & Health)--1.0%
Cardinal Health, Inc. ......................... 3,850 289,231
---------
Electrical Equipment--1.1%
General Electric Co. .......................... 4,500 330,187
---------
Electronics (Instrumentation)--0.3%
Linear Technology Corp. ....................... 1,400 80,675
---------
Electronics (Semiconductors)--1.4%
National Semiconductor Corp. (b) .............. 10,200 264,563
Texas Instruments, Inc. ....................... 3,600 162,000
---------
426,563
---------
Entertainment--1.0%
Tele-Comm Liberty Media Group (b) ............. 7,900 286,375
---------
Financial (Diversified)--0.6%
American Express Co. .......................... 2,000 178,500
---------
Health Care (Diversified)--2.2%
Bristol-Myers Squibb Co. ...................... 3,150 298,069
Warner-Lambert Co. ............................ 2,800 347,200
---------
645,269
---------
</TABLE>
See Notes to Financial Statements
4
<PAGE>
Institutional Balanced Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------------------ ----------------
<S> <C> <C>
Health Care (Drugs-Major Pharmaceuticals)--3.2%
Lilly (Eli) & Co. ............................ 2,100 $ 146,213
Pfizer, Inc. ................................. 8,200 611,412
Watson Pharmaceuticals, Inc. (b) ............. 5,700 184,894
----------
942,519
----------
Health Care (Hospital Management)--1.0%
HBO & Co. .................................... 6,500 312,000
----------
Health Care (Long Term Care)--0.7%
HEALTHSOUTH Corp. (b) ........................ 7,000 194,250
----------
Health Care (Medical Products & Supplies)--1.7%
Guidant Corp. ................................ 4,900 305,025
Medtronic, Inc. .............................. 3,700 193,556
----------
498,581
----------
Household Furn. & Appliances--0.6%
Sunbeam Corp., Inc. .......................... 4,500 189,563
----------
Household Products (Non-Durables)--0.7%
Colgate-Palmolive Co. ........................ 2,900 213,150
----------
Insurance (Life/Health)--0.3%
UNUM Corp. ................................... 1,900 103,313
----------
Insurance (Multi-Line)--1.0%
ReliaStar Financial Corp. .................... 600 24,713
Travelers Group, Inc. ........................ 5,300 285,537
----------
310,250
----------
Insurance (Property-Casualty)--0.9%
Allstate Corp. ............................... 2,950 268,081
----------
Investment Banking/Brokerage--0.3%
Merrill Lynch & Co., Inc. .................... 1,250 91,172
----------
Machinery (Diversified)--0.7%
Deere & Co. .................................. 3,500 204,094
----------
Manufacturing (Diversified)--1.7%
Tyco International Ltd. ...................... 11,300 509,206
----------
Oil (Domestic Integrated)--1.1%
Tosco Corp. .................................. 8,500 321,406
----------
Oil & Gas (Drilling & Equipment)--5.0%
BJ Services Co. (b) .......................... 2,500 179,844
Cooper Cameron Corp. (b) ..................... 1,200 73,200
Diamond Offshore Drilling, Inc. .............. 3,600 173,250
Halliburton Co. .............................. 6,100 316,819
Nabors Industries, Inc. (b) .................. 1,100 34,581
Noble Drilling Corp. (b) ..................... 2,600 79,625
Rowan Companies, Inc. (b) .................... 2,400 73,200
Schlumberger Ltd. ............................ 4,500 362,250
Transocean Offshore, Inc. .................... 3,800 183,112
----------
1,475,881
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------ ----------------
<S> <C> <C>
Oil & Gas (Refining & Marketing)--0.3%
Santa Fe International Corp. ................. 2,500 $ 101,719
----------
Personal Care--1.2%
Gillette Co. ................................. 3,500 351,531
----------
Retail (Building Supplies)--1.0%
Home Depot, Inc. ............................. 5,000 294,375
----------
Retail (Drug Stores)--2.2%
CVS Corp. .................................... 4,900 313,906
Rite Aid Corp. ............................... 5,700 334,519
----------
648,425
----------
Retail (Food Chains)--1.4%
Safeway, Inc. (b) ............................ 6,500 411,125
----------
Retail (General Merchandise)--1.1%
Borders Group, Inc. (b) ...................... 4,100 128,381
Staples, Inc. (b) ............................ 7,200 199,800
----------
328,181
----------
Telecommunications (Cellular/Wireless)--1.6%
AirTouch Communications, Inc. (b) ............ 11,500 477,969
----------
Telecommunications (Long Distance)--2.0%
AT&T Corp. ................................... 9,800 600,250
----------
Tobacco--1.5%
Philip Morris Companies, Inc. ................ 9,800 444,062
----------
TOTAL COMMON STOCKS
(Identified cost $14,968,521) ................................. 16,400,659
----------
FOREIGN COMMON STOCKS--3.7%
Banks (Major Regional)--0.0%
Banco Rio de La Plata SA ADR
(Argentina) (b) ............................ 200 2,800
----------
Computers (Software & Services)--0.1%
Baan Company NV (Netherlands) (b) ............ 1,200 39,600
----------
Health Care (Drugs-Major Pharmaceuticals)--0.9%
SmithKline Beecham PLC Sponsored
ADR (United Kingdom) ....................... 5,400 277,762
----------
Health Care (Medical Products & Supplies)--0.3%
Elan PLC Sponsored ADR (Ireland) (b) ......... 1,900 97,256
----------
Household Furn. & Appliances--1.5%
Philips Electronics NV ADR NY
Registered Shares (Netherlands) ............ 7,200 435,600
----------
Oil (International Integrated)--0.9%
Elf Aquitane Sponsored ADR (France) .......... 4,300 252,088
----------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $1,165,496) ................................. 1,105,106
----------
TOTAL LONG-TERM INVESTMENTS--89.8%
(Identified cost $25,155,293) ................................ 26,756,714
----------
</TABLE>
See Notes to Financial Statements
5
<PAGE>
Institutional Balanced Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- -------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--10.0%
Commercial Paper--9.7%
Anheuser-Busch Cos., Inc.
6.25%, 1/2/98 ................. A-1 $1,180 $1,179,795
Exxon Imperial U.S., Inc.
6.07%, 1/5/98 ................. A-1+ 1,200 1,199,191
Sara Lee Corp. 6.05%, 1/7/98 .... A-1+ 500 499,496
----------
2,878,482
----------
</TABLE>
<TABLE>
<CAPTION>
PAR
VALUE
(000) VALUE
------- -----------------
<S> <C> <C>
Federal Agency Securities--0.3%
FNMA 5.70%, 1/13/98 ......................... $85 $ 84,838
-------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $2,963,320) ........................ 2,963,320
-------------
TOTAL INVESTMENTS--99.8%
(Identified cost $28,118,613) ....................... 29,720,034(a)
Cash and receivables, less liabilities--0.2% ....... 66,748
-------------
NET ASSETS--100.0% ................................... $ 29,786,782
=============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $2,236,809 and gross
depreciation of $635,388 for income tax purposes. At December 31, 1997,
the aggregate cost of securities for federal income tax purposes was
$28,118,613.
(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,
1997, these securities amounted to a value of $891,637 or 3.0% of net
assets.
(d) As rated by Standard & Poor's, Fitch or Duff & Phelps.
(e) Variable or step coupon security; interest rate shown reflects the rate
currently in effect.
See Notes to Financial Statements
6
<PAGE>
Institutional Balanced Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $28,118,613) $29,720,034
Cash 119,517
Receivables
Investment securities sold 781,076
Dividends and interest 131,301
Fund shares sold 67,113
Receivable from adviser 2,839
-----------
Total assets 30,821,880
-----------
Liabilities
Payables
Investment securities purchased 835,803
Fund shares repurchased 128,783
Financial agent fee 6,115
Transfer agent fee 4,325
Distribution fee 1,402
Trustees' fee 1,122
Accrued expenses 57,548
-----------
Total liabilities 1,035,098
-----------
Net Assets $29,786,782
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $27,099,114
Accumulated net realized gain 1,086,247
Net unrealized appreciation 1,601,421
-----------
Net Assets $29,786,782
===========
Class X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $23,528,472) 1,455,399
Net asset value and offering price per share $16.17
Class Y
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $6,258,310) 386,801
Net asset value and offering price per share $16.18
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
Investment Income
Interest $1,056,343
Dividends 230,645
----------
Total investment income 1,286,988
----------
Expenses
Investment advisory fee 201,006
Distribution fee--Class Y 22,735
Financial agent fee 72,000
Transfer agent 49,654
Registration 39,232
Custodian 25,043
Professional 18,124
Trustees 13,309
Printing 3,166
Miscellaneous 12,149
----------
Total expenses 456,418
Less expenses borne by investment adviser (196,130)
----------
Net expenses 260,288
----------
Net investment income 1,026,700
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 6,825,623
Net realized gain on written options 1,338
Net change in unrealized appreciation (depreciation)
on investments (1,339,424)
----------
Net gain on investments 5,487,537
----------
Net increase in net assets resulting from
operations $6,514,237
==========
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Institutional Balanced Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
Year Ended March 1, 1996 to
December 31, 1997 December 31, 1996
------------------- ------------------
<S> <C> <C>
From Operations
Net investment income $ 1,026,700 $ 1,360,086
Net realized gain 6,826,961 3,730,688
Net change in unrealized appreciation (depreciation) (1,339,424) (413,816)
------------- -------------
Increase in net assets resulting from operations 6,514,237 4,676,958
------------- -------------
From Distributions to Shareholders
Net investment income--Class X (856,383) (1,072,486)
Net investment income--Class Y (212,027) (283,103)
Net realized gains--Class X (5,505,499) (1,923,139)
Net realized gains--Class Y (1,467,013) (583,212)
In excess of net investment income--Class X (8,380) --
In excess of net investment income--Class Y (2,075) --
------------- -------------
Decrease in net assets from distributions to shareholders (8,051,377) (3,861,940)
------------- -------------
From Share Transactions
Class X
Proceeds from sales of shares (173,733 and 282,929 shares, respectively) 3,331,056 5,116,425
Net asset value of shares issued from reinvestment of distributions (386,169 and
152,545 shares, respectively) 6,370,247 2,779,558
Net asset value of shares issued in conjunction with conversion of PHL Pooled
Separate Account L (0 and 2,524,966 shares, respectively) -- 45,200,432
Cost of shares repurchased (1,151,407 and 913,536 shares, respectively) (21,859,715) (16,577,547)
------------- -------------
Total (12,158,412) 36,518,868
------------- -------------
Class Y
Proceeds from sales of shares (66,028 and 123,668 shares, respectively) 1,272,503 2,267,577
Net asset value of shares issued from reinvestment of distributions (101,742 and
47,488 shares, respectively) 1,681,177 866,311
Net asset value of shares issued in conjunction with conversion of PHL Pooled
Separate Account L (0 and 721,462 shares, respectively) -- 12,915,189
Cost of shares repurchased (442,749 and 230,838 shares, respectively) (8,628,236) (4,226,073)
------------- -------------
Total (5,674,556) 11,823,004
------------- -------------
Increase (decrease) in net assets from share transactions (17,832,968) 48,341,872
------------- -------------
Net increase (decrease) in net assets (19,370,108) 49,156,890
Net Assets
Beginning of period 49,156,890 0
------------- -------------
End of period (including undistributed net investment income of $0 and
$41,710, respectively) $ 29,786,782 $ 49,156,890
============= =============
</TABLE>
See Notes to Financial Statements
8
<PAGE>
Institutional Balanced Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class X Class Y
----------------------------------------- ----------------------------------------
From Inception From Inception
Year Ended 3/1/96 to Year Ended 3/1/96 to
12/31/97 12/31/96 12/31/97 12/31/96
---------------------- ---------------- ---------------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $18.15 $17.90 $18.15 $17.90
Income from investment operations
Net investment income 0.54(4)(6) 0.51(4) 0.49(5)(6) 0.46(5)
Net realized and unrealized gain 2.70 1.17 2.70 1.18
-------- --------- -------- -------
Total from investment operations 3.24 1.68 3.19 1.64
-------- --------- -------- -------
Less distributions
Dividends from net investment income (0.65) (0.49) (0.59) (0.45)
Dividends from net realized gains (4.56) (0.94) (4.56) (0.94)
In excess of net investment income (0.01) -- (0.01) --
-------- --------- -------- -------
Total distributions (5.22) (1.43) (5.16) (1.39)
-------- --------- -------- -------
Change in net asset value (1.98) 0.25 (1.97) 0.25
-------- --------- -------- -------
Net asset value, end of period $16.17 $18.15 $16.18 $18.15
======== ========= ======== =======
Total return 18.80% 9.43%(2) 18.50% 9.20%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $23,528 $37,147 $6,258 $12,010
Ratio to average net assets of:
Operating expenses 0.65% 0.65%(1) 0.90% 0.90%(1)
Net investment income 2.87% 3.02%(1) 2.62% 2.78%(1)
Portfolio turnover 214% 209%(2) 214% 209%(2)
Average commission rate paid(3) $0.0517 $0.0630 $0.0517 $0.0630
</TABLE>
(1) Annualized
(2) Not annualized
(3) 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 $0.10
and $0.06, respectively.
(5) Includes reimbursement of operating expenses by investment adviser of $0.10
and $0.06, respectively.
(6) Computed using average shares outstanding.
See Notes to Financial Statements
9
<PAGE>
INSTITUTIONAL MANAGED BOND PORTFOLIO
INVESTMENT ADVISER'S REPORT
For the 12 months ended December 31, 1997, Class X shares returned 9.75%
and Class Y shares returned 9.52% compared with a return of 9.65% for the
Lehman Brothers Aggregate Bond Index. All performance figures assume
reinvestment of dividends and are net of fees.
The fourth quarter culminated an excellent year for the bond market.
Interest rates declined along the yield curve, but with a pronounced tendency
for a flatter curve as the yield on the two-year Treasury declined by only 13
basis points, while that of the 30-year bond declined by almost 48 basis
points. The year ended with a sub 6% yield at every point on the Treasury yield
curve.
By far the most important "event" of the year was the decline of various
Asian economies and financial markets. The "Asian flu" had numerous
implications for our bond market. First, we experienced a significant "flight
to quality" driven purchase of our market. Second, as the perception of the
magnitude of the problems grew, so did the view of the implications for growth
in our economy and the potential for inflationary pressures. Focus now is more
on the impact of slowing exports braking the economy and, if not outright
deflation, at least a continuation of low inflation due to competitive
pressures arising from Asian countries. This in combination with concerns about
the stability of the world financial markets stays the Fed's hand from further
tightening, and in some quarters, is now seen as likely to induce the Fed to
eventually ease monetary policy.
Third, a reevaluation of both equity and credit-sensitive bond valuations
occurred. Asian credit spreads widened dramatically and other Yankee issuers
that could be even remotely perceived as potentially affected also widened
significantly. Additionally, other credits, notably banks, that were viewed as
potentially affected by their exposure to Asia also widened, but to a smaller
extent. Finally, corporate spreads in general were under pressure due to
weakness in the equity markets and general concern about future growth and
competitive pressures.
OUTLOOK
Looking forward, we see room for debate about the direction of interest
rates. While we agree that the economy should probably slow in 1998 and
inflation will remain quiescent, we recognize both that this scenario may not
play out and that even if it does, current interest rate levels may have fully
reflected this.
In the corporate sector we continue to like selected credits and see value
in corporate bond equivalents, such as bank trust preferreds with an excess
spread of approximately 150 basis points and "AAA"-rated taxable municipals at
70 basis points. We also view asset-backed securities as attractive, especially
given their spread widening in the fourth quarter. Similarly, the commercial
mortgage-backed sector continues to look appealing.
Our largest allocation deviation from the market continues to be in the
mortgage sector. We are convinced that the combination of increased market
volatility and the level of prepayments we will witness at these lower rate
levels will cause spreads to widen dramatically. We have reduced our position
in this sector and will reduce it further if mortgages were to tighten to
Treasuries.
10
<PAGE>
Institutional Managed Bond Portfolio
- --------------------------------------------------------------------------------
[LINE CHART]
Institutional Managed Bond Portfolio
Institutional
Managed Bond
Portfolio Lehman Brothers
--Class X Aggregate Bond Index*
-------------- ---------------------
12/31/87 5,000,000 5,000,000
12/31/88 5,408,440 5,394,370
12/31/89 6,066,740 6,178,420
12/31/90 6,291,910 6,731,980
12/31/91 7,489,550 7,809,290
12/31/92 8,134,160 8,387,210
12/31/93 9,121,470 9,205,020
12/31/94 8,677,380 8,936,570
12/31/95 10,410,100 10,587,900
12/31/96 11,315,300 10,972,300
12/31/97 12,418,100 12,031,400
[/LINE CHART]
Average Annual Total Returns for Periods
Ending 12/31/97
1 Year 5 Years 10 Years
- -----------------------------------------------------------------------------
Class X 9.75% 8.83% 9.52%
- -----------------------------------------------------------------------------
Class Y 9.52% 8.56% 9.25%
- -----------------------------------------------------------------------------
Lehman Brothers Aggregate Bond Index* 9.65% 7.48% 9.18%
- -----------------------------------------------------------------------------
This chart assumes an initial gross investment of $5,000,000 made on
12/31/87 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.
11
<PAGE>
Institutional Managed Bond Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
--------------- ------------- ----------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--6.6%
U.S. Treasury Notes--1.2%
U.S. Treasury Notes 5.625%,
10/31/99 ............................... Aaa $ 830 $ 828,962
U.S. Treasury Notes 5.75%,
11/30/02 ............................... Aaa 150 150,141
----------
979,103
----------
Agency Mortgage-Backed Securities--5.4%
FHLMC 8.50%, 8/15/20 ..................... NR 438 442,045
FHLMC 6.65%, 6/15/23 ..................... NR 1,890 1,925,494
FNMA 6.75%, 6/25/20 ...................... Aaa 1,920 1,924,397
----------
4,291,936
----------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $5,024,796) ........................................... 5,271,039
----------
MUNICIPAL BONDS--14.1%
California--3.2%
California State Department of
Water Resources Revenue
Series S 5%, 12/1/29 ................... Aa 795 772,955
Oakland Pension Obligation
Sub Series A Taxable 6.98%,
12/15/09 ............................... Aaa 400 420,880
Orange County Pension
Obligation Series A Taxable
7.67%, 9/1/09 .......................... Aaa 1,200 1,325,892
----------
2,519,727
----------
Colorado--2.2%
Denver City and County School
District 01 Taxable 6.76%,
12/15/07 ............................... Aaa 1,700 1,754,043
----------
Florida--1.8%
Palm Beach County Solid Waste
Industrial Development
Revenue Project B Taxable
10.50%, 1/1/11 (f) ..................... NR 920 515,200
University of Miami
Exchangeable Revenue
Series A Taxable 7.40%,
4/1/11 ................................. Aaa 170 180,074
University of Miami
Exchangeable Revenue
Series A Taxable 7.65%,
4/1/20 ................................. Aaa 725 765,245
----------
1,460,519
----------
Illinois--3.3%
Illinois Educational Facilities
Authority Revenue-Loyola
University Series A Taxable
7.84%, 7/1/24 .......................... Aaa 2,425 2,631,270
----------
</TABLE>
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
--------------- ------------- ----------------
<S> <C> <C> <C>
New Hampshire--0.9%
New Hampshire Higher
Educational & Health
Facilities Authority Revenue
Dartmouth College Series A
5.125%, 6/1/28 ......................... Aaa $ 730 $ 716,349
----------
Pennsylvania--1.5%
Pennsylvania Economic
Development Financing
Authority Revenue Series B
9.50%, 1/1/12 .......................... NR 1,750 1,190,000
----------
Virginia--1.2%
Newport News Taxable Series B
7.05%, 1/15/25 ......................... Aa 970 978,643
----------
TOTAL MUNICIPAL BONDS
(Identified cost $11,628,055) ......................................... 11,250,551
----------
NON-CONVERTIBLE BONDS--36.8%
Asset-Backed Securities--7.0%
BankBoston RV Asset Backed
Trust 97-1 B 6.98%, 11/15/17 Baa 1,600 1,619,000
California Infrastructure SCE-1
97-1 A2 6.14%, 3/25/02 ................. Aaa 1,000 1,001,250
Capita Equipment Receivables
Trust 97-1B 6.45%, 8/15/02 Aa 600 600,938
Green Tree Financial Corp.
95-8 A2 6.15%, 12/15/26 ................ Aaa 113 113,054
Green Tree Financial Corp.
96-10 A3 6.16%, 11/15/28 ............... AAA(c) 680 679,681
Green Tree Financial Corp.
97-4 M1 7.22%, 2/15/29 ................. Aa 1,500 1,528,125
----------
5,542,048
----------
Banks (Major Regional)--1.8%
NationsBank Capital Trust III
6.308%, 1/15/27 (d) .................... A 1,450 1,404,147
----------
Consumer Finance--1.0%
Ford Motor Credit Corp.
6.625%, 6/30/03 ........................ A 800 815,960
----------
Gaming, Lottery, & Parimutuel Cos.--1.5%
Mashantucket Pequot 144A
6.91%, 9/1/12 (b) ...................... Aaa 1,100 1,154,241
----------
Insurance (Property-Casualty)--0.7%
HSB Capital I 6.668%,
7/15/27 (d) ............................ NR 550 539,745
----------
Non-Agency Mortgage-Backed Securities--24.2%
CS First Boston Mortgage
Securities Corp. 97-SPCE, D
144A 7.33%, 4/20/08 (b) ................ BBB(c) 986 987,233
</TABLE>
See Notes to Financial Statements
12
<PAGE>
Institutional Managed Bond Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
--------------- ------------- ----------------
<S> <C> <C> <C>
Non-Agency Mortgage-Backed Securities--continued
Chase Commercial Mortgage
Securities Corp. 97-2, A1
6.45%, 12/19/04 ............................ AAA(c) $ 195 $ 195,731
Criimi Mae Trust I 96-C1, A2
144A 7.56%, 6/30/33 (b) .................... BBB(c) 1,475 1,500,352
FFCA Secured Lending Corp.
144A 97-1 A1B 7.45%,
10/18/11 (b) ............................... Aaa 1,400 1,470,000
G.E. Capital Mortgage Services,
Inc. 96-8, 2A5 7.50%,
5/25/26 .................................... AAA(c) 172 177,185
G.E. Capital Mortgage Services,
Inc. 97-1, A14 7.50%,
3/25/27 .................................... AAA(c) 1,720 1,774,287
GMAC Commerical Mortgage
Securities, Inc. 97-C2, A3
6.57%, 11/15/07 ............................ Aaa 900 907,312
General Growth Properties 1, C2
144A 6.81%, 11/15/07 (b) ................... A 1,700 1,710,094
Merrill Lynch Mortgage, Inc.
95-C2, C 7.59%, 6/15/21 .................... A 1,098 1,126,010
Residential Accredit 96-QS4,
AI10 7.90%, 8/25/26 ........................ AAA(c) 900 934,594
Residential Asset Securitization
Trust 96-A8, A1 8%, 12/25/26 ............... AAA(c) 792 803,470
Residential Funding Mortgage
93-S25, M3 6.50%, 7/25/08 .................. BBB(c) 622 613,299
Resolution Trust Corp. 92-C3,
B 9.05%, 8/25/23 ........................... AA(c) 134 135,657
Resolution Trust Corp. 95-1,
M2 7.50%, 10/25/28 ......................... Aa 1,231 1,249,935
Resolution Trust Corp. 95-2,
M1 7.15%, 5/25/29 .......................... Aa 177 180,091
Ryland Mortgage Securities
Corp. III 92-A, 1A 8.27%,
3/29/30 .................................... A(c) 603 612,020
Securitized Asset Sales 95-A,
M 7.53%, 3/25/24 ........................... Aa 1,943 1,994,952
Structured Asset Securities Corp.
95-C1, D 7.375%, 9/25/24 ................... BBB(c) 1,865 1,872,285
Structured Asset Securities
Corp. 95-C4, D 7%, 6/25/26 BBB(c) 1,000 989,687
----------
19,234,194
----------
Services (Commercial & Consumer)--0.1%
ARA Services, Inc. 10.625%,
8/1/00 ..................................... Baa 107 115,827
----------
Telephone--0.5%
InterAmericas Communication
Corp. Unit 144A 14%,
10/27/07 (b) (g) ........................... NR 415 419,150
----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $28,703,189) .............................................. 29,225,312
----------
</TABLE>
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
--------------- ------------- ----------------
<S> <C> <C> <C>
FOREIGN GOVERNMENT SECURITIES--19.9%
Bulgaria--0.8%
Bulgaria FLIRB Series A Bearer
Euro 2.25%, 7/28/12 (d) .................... B $1,020 $ 620,925
----------
Colombia--1.4%
Republic of Colombia 7.625%,
2/15/07 .................................... Baa 1,200 1,125,588
----------
Croatia--1.5%
Croatia Series A 6.625%,
7/31/10 (d) ................................ Baa 665 585,200
Croatia Series B 6.625%,
7/31/06 (d) ................................ Baa 633 578,000
----------
1,163,200
----------
Ecuador--0.9%
Ecuador Bearer PDI Euro, PIK
interest capitalization
6.688%, 2/27/15 (d) ........................ B 1,121 743,891
----------
Mexico--3.7%
United Mexican States Global
Bond 11.50%, 5/15/26 ....................... Ba 905 1,070,841
United Mexican States Series A
Euro 6.25%, 12/31/19 ....................... Ba 175 146,125
United Mexican States Series B
Euro 6.25%, 12/31/19 ....................... Ba 1,000 835,000
United Mexican States Series
Par W-B 6.25%, 12/31/19 (e) ................ Ba 1,050 876,750
----------
2,928,716
----------
Panama--3.0%
Panama 8.875%, 9/30/27 ....................... Ba 2,555 2,404,255
----------
Peru--0.9%
Peru PDI 4%, 3/7/17 (d) ...................... BB(c) 1,100 723,250
----------
Poland--1.3%
Poland Global Reg'd RSTA
3.75%, 10/27/24 (d) ........................ Baa 1,500 1,012,500
----------
Russia--3.2%
Russia Interest Notes Series US
144A 6.719%, 12/15/15 (b) (d) .............. NR 3,610 2,563,100
----------
Venezuela--3.2%
Republic of Venezuela 9.25%,
9/15/27 .................................... Ba 2,800 2,504,250
----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $15,146,307) .......................................... 15,789,675
----------
FOREIGN NON-CONVERTIBLE BONDS--5.7%
Chile--3.4%
Compania Sud Amer Vapore
144A 7.375%, 12/8/03 (b) ................... BBB(c) 1,240 1,232,250
Petropower I Funding Trust
144A 7.36%, 2/15/14 (b) .................... BBB(c) 1,400 1,417,976
----------
2,650,226
----------
</TABLE>
See Notes to Financial Statements
13
<PAGE>
Institutional Managed Bond Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- --------------
<S> <C> <C> <C>
Mexico--1.9%
Banco Nacional de Mexico
144A 7.57%, 12/31/00 (b) ........ NR $ 1,500 $ 1,507,969
-----------
Venezuela--0.4%
Petrozuata Finance, Inc. 144A
8.22%, 4/1/17 (b) ............... Baa 325 342,810
-----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $4,339,183) ............................. 4,501,005
-----------
SHARES
-------
PREFERRED STOCKS--4.8%
REITS--4.8%
Home Ownership Funding 2, Step-down
Pfd. 144A 13.338% (b) ....................... 3,900 3,802,266
-----------
TOTAL PREFERRED STOCKS
(Identified cost $3,700,681) ............................. 3,802,266
-----------
TOTAL LONG-TERM INVESTMENTS--87.9%
(Identified cost $68,542,211) ............................ 69,839,848
-----------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- -------- -------------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--10.5%
Commercial Paper--9.8%
Anheuser-Busch Cos., Inc.
6.25%, 1/2/98 .............. A-1 $ 448 $ 447,922
Cargill, Inc. 6.25%, 1/2/98 .. A-1+ 2,000 1,999,653
Warner-Lambert Co. 6.10%,
1/5/98 ..................... A-1+ 2,100 2,098,577
Corporate Receivables Corp.
5.90%, 1/6/98 .............. A-1 1,070 1,069,123
Exxon Imperial U.S., Inc.
6.10%, 1/6/98 .............. A-1+ 2,175 2,173,157
-------------
7,788,432
-------------
Federal Agency Securities--0.7%
FNMA 5.72%, 1/13/98 ...................... 580 578,894
-------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $8,367,326)....................... 8,367,326
-------------
TOTAL INVESTMENTS--98.4%
(Identified cost $76,909,537) ..................... 78,207,174(a)
Cash and receivables, less liabilities--1.6% ...... 1,264,854
-------------
NET ASSETS--100.0% ................................. $ 79,472,028
=============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $2,413,348 and gross
depreciation of $1,371,529 for income tax purposes. At December 31, 1997,
the aggregate cost of securities for federal income tax purposes was
$77,165,355.
(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,
1997, these securities amounted to a value of $18,107,441 or 22.8% of net
assets.
(c) As rated by Standard & Poor's, Fitch or Duff & Phelps.
(d) Variable or step coupon security; interest rate shown reflects the rate
currently in effect.
(e) Rights incorporated as a unit.
(f) Non-income producing.
(g) Warrants incorporated as a unit.
See Notes to Financial Statements
14
<PAGE>
Institutional Managed Bond Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $76,909,537) $78,207,174
Cash 875,332
Receivables
Interest 998,351
Investment securities sold 430,375
Fund shares sold 237
-----------
Total Assets 80,511,469
-----------
Liabilities
Payables
Investment securities purchased 948,375
Fund shares repurchased 1,404
Investment advisory fee 14,703
Financial agent fee 6,964
Transfer agent fee 4,310
Distribution fee 1,434
Trustees' fee 1,122
Accrued expenses 61,129
-----------
Total liabilities 1,039,441
-----------
Net Assets $79,472,028
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $78,175,761
Accumulated net realized loss (1,370)
Net unrealized appreciation 1,297,637
-----------
Net Assets $79,472,028
===========
Class X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $72,747,482) 2,193,072
Net asset value and offering price per share $33.17
Class Y
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $6,724,546) 202,686
Net asset value and offering price per share $33.18
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
Investment Income
Interest $5,487,116
Dividends 361,699
----------
Total investment income 5,848,815
----------
Expenses
Investment advisory fee 352,253
Distribution fee--Class Y 15,527
Financial agent fee 82,000
Transfer agent 47,993
Registration 42,594
Custodian 28,104
Professional 21,627
Trustees 13,209
Printing 2,669
Miscellaneous 12,926
----------
Total expenses 618,902
Less expenses borne by investment adviser (172,844)
----------
Net expenses 446,058
----------
Net investment income 5,402,757
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 3,000,960
Net change in unrealized appreciation (depreciation) (942,641)
----------
Net gain on investments 2,058,319
----------
Net increase in net assets resulting from
operations $7,461,076
==========
</TABLE>
See Notes to Financial Statements
15
<PAGE>
Institutional Managed Bond Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
Year Ended March 1, 1996 to
December 31, 1997 December 31, 1996
------------------- ------------------
<S> <C> <C>
From Operations
Net investment income $ 5,402,757 $ 4,094,124
Net realized gain 3,000,960 1,624,424
Net change in unrealized appreciation (depreciation) (942,641) (396,251)
------------- -------------
Increase in net assets resulting from operations 7,461,076 5,322,297
------------- -------------
From Distributions to Shareholders
Net investment income--Class X (5,037,525) (3,719,461)
Net investment income--Class Y (398,984) (374,664)
Net realized gains--Class X (2,936,548) (1,199,095)
Net realized gains--Class Y (262,528) (118,493)
In excess of net investment income--Class X (382,909) (19,201)
In excess of net investment income--Class Y (30,327) (1,934)
------------- -------------
Decrease in net assets from distributions to shareholders (9,048,821) (5,432,848)
------------- -------------
From Share Transactions
Class X
Proceeds from sales of shares (482,929 and 538,250 shares, respectively) 16,708,642 18,818,739
Net asset value of shares issued from reinvestment of distributions (245,591 and
123,928 shares, respectively) 8,172,835 4,187,321
Net asset value of shares issued in conjunction with conversion of PHL Pooled
Separate Account P (0 and 1,774,264 shares, respectively) -- 60,037,092
Cost of shares repurchased (639,417 and 332,473 shares, respectively) (22,159,462) (11,414,976)
------------- -------------
Total 2,722,015 71,628,176
------------- -------------
Class Y
Proceeds from sales of shares (69,564 and 34,115 shares, respectively) 2,431,562 1,164,449
Net asset value of shares issued from reinvestment of distributions (20,824 and
14,700 shares, respectively) 691,833 495,088
Net asset value of shares issued in conjunction with conversion of PHL Pooled
Separate Account P (0 and 196,803 shares, respectively) -- 6,659,369
Cost of shares repurchased (94,022 and 39,298 shares, respectively) (3,277,501) (1,344,667)
------------- -------------
Total (154,106) 6,974,239
------------- -------------
Increase in net assets from share transactions 2,567,909 78,602,415
------------- -------------
Net increase in net assets 980,164 78,491,864
Net Assets
Beginning of period 78,491,864 0
------------- -------------
End of period (including undistributed net investment income of $0 and
$33,752, respectively) $ 79,472,028 $ 78,491,864
============= =============
</TABLE>
See Notes to Financial Statements
16
<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
Year Ended 3/1/96 to Year Ended 3/1/96 to
12/31/97 12/31/96 12/31/97 12/31/96
---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $33.98 $33.84 $33.97 $33.84
Income from investment operations
Net investment income 2.37(3)(5) 2.03(3)(5) 2.27(4)(5) 1.98(4)(5)
Net realized and unrealized gain 0.85 0.69 0.88 0.66
------- -------- ------- --------
Total from investment operations 3.22 2.72 3.15 2.64
------- -------- ------- --------
Less distributions
Dividends from net investment income (2.42) (1.96) (2.33) (1.89)
Dividends from net realized gains (1.43) (0.61) (1.43) (0.61)
In excess of net investment income (0.18) (0.01) (0.18) (0.01)
------- -------- ------- --------
Total distributions (4.03) (2.58) (3.94) (2.51)
------- -------- ------- --------
Change in net asset value (0.81) 0.14 (0.79) 0.13
------- -------- ------- --------
Net asset value, end of period $33.17 $33.98 $33.18 $33.97
======= ======== ======= ========
Total return 9.75% 8.24%(2) 9.52% 7.98%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $72,747 $71,482 $6,725 $7,010
Ratio to average net assets of:
Operating expenses 0.55% 0.55%(1) 0.80% 0.80%(1)
Net investment income 6.92% 7.15%(1) 6.65% 6.91%(1)
Portfolio turnover 176% 199%(2) 176% 199%(2)
</TABLE>
(1) Annualized
(2) Not annualized
(3) Includes reimbursement of operating expenses by investment adviser of $0.08
and $0.09 per share, respectively.
(4) Includes reimbursement of operating expenses by investment adviser of $0.08
and $0.09 per share, respectively.
(5) Computed using average shares outstanding.
See Notes to Financial Statements
17
<PAGE>
INSTITUTIONAL GROWTH STOCK PORTFOLIO
INVESTMENT ADVISER'S REPORT
For the 12 month period ended December 31, 1997, the Institutional Growth
Stock Portfolio earned 25.76% and 25.46%, respectively, for Class X and Y
shares. Over the same reporting cycle, the S&P 500 Index returned 33.38%. All
performance figures assume reinvestment of dividends and are net of fees.
Despite increased volatility in the fourth quarter, 1997 was another good
year for U.S. investors. In fact, the Dow Jones Industrial Average ended the
year at more than 10 times its 1982 low. Overseas, however, the picture was not
as bright: high jobless rates continued in Europe, turmoil continues in the
Middle East and Latin America is recovering slowly. The surprise was the
collapse of many markets in the Asia-Pacific region. While it will be some time
before we see the real impact of the Asian problems on the earnings of domestic
and global companies, the U.S. market reacted to the uncertainty with a violent
rotation to defensive issues. The strongest sectors in the fourth quarter were
communication services, utilities and consumer staples--slow but steady
growers.
Positive contributors to overall results during 1997 included strong stock
selection in the financial services, basic materials and energy sectors. In
addition, our decision to overweight the strongly performing health-care and
financial services groups also benefited performance. Areas which held back
results during this period included the relative underperformance of some of
our technology and capital goods holdings as well as the Portfolio's
underweighted position in communication services.
OUTLOOK
While our long-term outlook remains constructive, there are more reasons
than ever to maintain a cautious investment posture. On the positive side, the
economy continues to grow at a healthy, sustainable pace; inflation remains
benign; and the overall outlook for corporate earnings is still upbeat. On the
other hand, analysts' estimates for 1998 earnings are probably too high, and we
believe that the frequency of earnings disappointments will increase.
Our stock selection continues to focus on firms that possess above-average
earnings growth potential, superior management and global opportunities outside
Asia. We expect interest rates to continue to trend down and would not be
surprised if the Fed actually cut rates during the year, which would partially
offset the negative impact of slightly slower earnings growth on equity prices.
While the Asian "meltdown" introduces a new element of uncertainty in the
outlook for the financial markets, we do not believe the real impact will be
great. Health-care, financial services and technology continue to be the
sectors in which we have the greatest confidence for exceptional long-term
growth.
18
<PAGE>
Institutional Growth Stock Portfolio
- --------------------------------------------------------------------------------
[LINE CHART]
Institutional Growth Stock Portfolio
Institutional
Growth Stock
Portfolio S&P 500
--Class X Stock Index*
------------ ------------
12/31/87 5,000,000 5,000,000
12/31/88 5,825,880 5,825,030
12/31/89 7,906,130 7,656,130
12/31/90 8,182,750 7,411,560
12/31/91 11,475,200 9,675,320
12/31/92 11,726,700 10,419,400
12/31/93 12,904,300 11,461,400
12/31/94 12,788,100 11,613,000
12/31/95 17,228,800 15,968,700
12/31/96 19,181,900 19,681,100
12/31/97 24,122,400 26,249,800
[/LINE CHART]
Average Annual Total Returns for Periods Ending 12/31/97
1 Year 5 Years 10 Years
- ---------------------------------------------------------------
Class X 25.76% 15.52% 17.04%
- ---------------------------------------------------------------
Class Y 25.46% 15.23% 16.75%
- ---------------------------------------------------------------
S&P 500 Stock Index* 33.38% 20.30% 18.04%
- ---------------------------------------------------------------
This chart assumes an initial gross investment of $5,000,000 made on
12/31/87 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.
19
<PAGE>
Institutional Growth Stock Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------------------ ----------------
<S> <C> <C>
COMMON STOCKS--93.4%
Banks (Major Regional)--6.7%
AmSouth Bancorporation ........................ 3,600 $ 195,525
Banc One Corp. ................................ 18,500 1,004,781
BankBoston Corp. .............................. 11,200 1,052,100
Compass Bancshares, Inc. ...................... 4,600 201,250
Mellon Bank Corp. ............................. 11,100 672,938
NationsBank Corp. ............................. 10,600 644,612
Southtrust Corp. .............................. 5,700 361,594
----------
4,132,800
----------
Banks (Money Center)--3.1%
BankAmerica Corp. ............................. 16,900 1,233,700
Citicorp ...................................... 5,600 708,050
----------
1,941,750
----------
Biotechnology--0.6%
Centocor, Inc. (b) ............................ 11,100 369,075
----------
Broadcasting (Television, Radio, & Cable)--0.7%
Chancellor Media Corp. (b) .................... 6,000 447,750
----------
Chemicals (Specialty)--0.6%
Solutia, Inc. (b) ............................. 14,500 386,969
----------
Communications Equipment--2.9%
Ciena Corp. (b) ............................... 16,700 1,020,787
Lucent Technologies, Inc. ..................... 9,300 742,837
----------
1,763,624
----------
Computers (Hardware)--5.3%
International Business Machines Corp. ......... 31,300 3,272,806
----------
Computers (Networking)--0.8%
Cisco Systems, Inc. (b) ....................... 8,450 471,087
----------
Computers (Peripherals)--0.5%
EMC Corp. (b) ................................. 11,900 326,506
----------
Computers (Software & Services)--6.4%
Adaptec, Inc. (b) ............................. 26,300 976,388
BMC Software, Inc. (b) ........................ 21,800 1,430,625
Compuware Corp. (b) ........................... 31,500 1,008,000
Edwards (J.D.) & Co. (b) ...................... 11,700 345,150
Yahoo!, Inc. (b) .............................. 2,800 193,900
----------
3,954,063
----------
Distributors (Food & Health)--1.6%
Cardinal Health, Inc. ......................... 13,100 984,137
----------
Electrical Equipment--2.0%
General Electric Co. .......................... 16,500 1,210,688
----------
Electronics (Instrumentation)--0.4%
Linear Technology Corp. ....................... 4,800 276,600
----------
Electronics (Semiconductors)--2.5%
National Semiconductor Corp. (b) .............. 36,400 944,125
Texas Instruments, Inc. ....................... 13,200 594,000
----------
1,538,125
----------
Entertainment--1.7%
Tele-Comm Liberty Media Group (b) ............. 28,700 1,040,375
----------
Financial (Diversified)--1.0%
American Express Co. .......................... 7,000 624,750
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------ ----------------
<S> <C> <C>
Health Care (Diversified)--3.6%
Bristol-Myers Squibb Co. ...................... 10,800 $1,021,950
Warner-Lambert Co. ............................ 9,800 1,215,200
----------
2,237,150
----------
Health Care (Drugs--Major Pharmaceuticals)--5.5%
Lilly (Eli) & Co. ............................. 7,500 522,188
Pfizer, Inc. .................................. 29,900 2,229,419
Watson Pharmaceuticals, Inc. (b) .............. 19,500 632,531
----------
3,384,138
----------
Health Care (Hospital Management)--1.7%
HBO & Co. ..................................... 22,100 1,060,800
----------
Health Care (Long Term Care)--1.1%
HEALTHSOUTH Corp. (b) ......................... 24,600 682,650
----------
Health Care (Medical Products & Supplies)--2.8%
Guidant Corp. ................................. 16,600 1,033,350
Medtronic, Inc. ............................... 13,500 706,219
----------
1,739,569
----------
Household Furn. & Appliances--1.1%
Sunbeam Corp., Inc. ........................... 16,000 674,000
----------
Household Products (Non-Durables)--1.2%
Colgate-Palmolive Co. ......................... 10,000 735,000
----------
Insurance (Life/Health)--0.6%
UNUM Corp. .................................... 6,600 358,875
----------
Insurance (Multi-Line)--1.8%
ReliaStar Financial Corp. ..................... 2,400 98,850
Travelers Group, Inc. ......................... 19,399 1,045,094
----------
1,143,944
----------
Insurance (Property-Casualty)--1.5%
AllState Corp. ................................ 10,400 945,100
----------
Investment Banking/Brokerage--0.5%
Merrill Lynch & Co., Inc. ..................... 4,400 320,925
----------
Machinery (Diversified)--1.1%
Deere & Co. ................................... 12,000 699,750
----------
Manufacturing (Diversified)--2.9%
Tyco International Ltd. ....................... 40,000 1,802,500
----------
Oil (Domestic Integrated)--1.9%
Tosco Corp. ................................... 30,800 1,164,625
----------
Oil & Gas (Drilling & Equipment)--8.4%
BJ Services Co. (b) ........................... 8,900 640,244
Cooper Cameron Corp. (b) ...................... 4,200 256,200
Diamond Offshore Drilling, Inc. ............... 12,900 620,813
Halliburton Co. ............................... 21,600 1,121,850
Nabors Industries, Inc. (b) ................... 4,300 135,181
Noble Drilling Corp. (b) ...................... 9,000 275,625
Rowan Companies, Inc. (b) ..................... 8,100 247,050
Schlumberger Ltd. ............................. 15,800 1,271,900
Transocean Offshore, Inc. ..................... 13,600 655,350
----------
5,224,213
----------
Oil & Gas (Refining & Marketing)--0.6%
Santa Fe International Corp. .................. 8,800 358,050
----------
Personal Care--2.1%
Gillette Co. .................................. 12,880 1,293,635
----------
</TABLE>
See Notes to Financial Statements
20
<PAGE>
Institutional Growth Stock Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-------- --------------
<S> <C> <C>
Retail (Building Supplies)--1.8%
Home Depot, Inc. ............................. 19,400 $ 1,142,175
------------
Retail (Drug Stores)--3.5%
CVS Corp. .................................... 17,500 1,121,094
Rite Aid Corp. ............................... 18,300 1,073,981
------------
2,195,075
------------
Retail (Food Chains)--2.3%
Safeway, Inc. (b) ............................ 22,200 1,404,150
------------
Retail (General Merchandise)--1.9%
Borders Group, Inc. (b) ...................... 15,000 469,688
Staples, Inc. (b) ............................ 24,600 682,650
------------
1,152,338
------------
Telecommunications (Cellular/Wireless)--2.7%
AirTouch Communications, Inc. (b) ............ 41,000 1,704,063
------------
Telecommunications (Long Distance)--3.4%
AT&T Corp. ................................... 34,500 2,113,125
------------
Tobacco--2.6%
Philip Morris Companies, Inc. ................ 35,700 1,617,656
------------
TOTAL COMMON STOCKS
(Identified cost $50,081,522) ........................ 57,894,611
------------
FOREIGN COMMON STOCKS--6.6%
Computers (Software & Services)--0.3%
Baan Company NV (Netherlands) (b) ............ 5,000 165,000
------------
Health Care (Drugs--Major Pharmaceuticals)--1.6%
SmithKline Beecham PLC Sponsored
ADR (United Kingdom) ....................... 19,200 987,600
------------
Health Care (Medical Products & Supplies)--0.5%
Elan PLC Sponsored ADR (Ireland) (b) ......... 6,600 337,838
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------- --------------
<S> <C> <C>
Household Furn. & Appliances--2.7%
Philips Electronics NV ADR NY
Registered shares (Netherlands) ............ 27,500 $ 1,663,750
------------
Oil (International Integrated)--1.5%
Elf Aquitane SA Sponsored ADR (France) 15,500 908,687
------------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $4,252,478) ........................... 4,062,875
------------
TOTAL LONG-TERM INVESTMENTS--100.0%
(Identified cost $54,334,000) .......................... 61,957,486
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------- -------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--0.7%
Commercial Paper--0.7%
Marsh & McLennan Cos.
6.20%, 1/5/98 ................................ A-1+ $270 269,814
Private Export Funding
Corp. 5.99%, 1/7/98 .......................... A-1+ 190 189,810
------------
459,624
------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $459,624) ............................................ 459,624
------------
TOTAL INVESTMENTS--100.7%
(Identified cost $54,793,624) ......................................... 62,417,110(a)
Cash and receivables, less liabilities--(0.7%) ...................... (435,638)
------------
NET ASSETS--100.0% ..................................................... $61,981,472
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $9,610,885 and gross
depreciation of $2,113,195 for income tax purposes. At December 31, 1997,
the aggregate cost of securities for federal income tax purposes was
$54,919,420.
(b) Non-income producing.
See Notes to Financial Statements
21
<PAGE>
Institutional Growth Stock Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $54,793,624) $62,417,110
Receivables
Investment securities sold 9,996,581
Fund shares sold 109,878
Dividends and interest 78,499
-----------
Total assets 72,602,068
-----------
Liabilities
Payables
Custodian 70,159
Fund shares repurchased 10,321,956
Investment securities purchased 127,173
Investment advisory fee 22,023
Financial agent fee 5,266
Transfer agent fee 4,400
Distribution fee 3,830
Trustees' fee 1,122
Accrued expenses 64,667
-----------
Total liabilities 10,620,596
-----------
Net Assets $61,981,472
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $48,995,450
Accumulated net realized gain 5,362,536
Net unrealized appreciation 7,623,486
-----------
Net Assets $61,981,472
===========
Class X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $44,350,168) 1,310,362
Net asset value and offering price per share $ 33.85
Class Y
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $17,631,304) 520,694
Net asset value and offering price per share $ 33.86
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
Investment Income
Dividends $ 882,176
Interest 269,325
-----------
Total investment income 1,151,501
-----------
Expenses
Investment advisory fee 515,459
Distribution fee--Class Y 52,154
Financial agent fee 62,000
Transfer agent 50,376
Registration 43,182
Custodian 23,646
Professional 19,322
Trustees 13,309
Printing 2,226
Miscellaneous 15,227
-----------
Total expenses 796,901
Less expenses borne by investment adviser (143,366)
-----------
Net expenses 653,535
-----------
Net investment income 497,966
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 27,922,808
Net realized loss on foreign currency transactions (132)
Net change in unrealized appreciation (depreciation) (8,683,661)
-----------
Net gain on investments 19,239,015
-----------
Net increase in net assets resulting from
operations $19,736,981
===========
</TABLE>
See Notes to Financial Statements
22
<PAGE>
Institutional Growth Stock Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
Year Ended March 1, 1996 to
December 31, 1997 December 31, 1996
------------------- ------------------
<S> <C> <C>
From Operations
Net investment income $ 497,966 $ 930,570
Net realized gain 27,922,676 28,236,436
Net change in unrealized appreciation (depreciation) (8,683,661) (12,435,676)
------------- --------------
Increase in net assets resulting from operations 19,736,981 16,731,330
------------- --------------
From Distributions to Shareholders
Net investment income--Class X (454,672) (835,353)
Net investment income--Class Y (109,947) (86,185)
Net realized gains--Class X (27,451,354) (12,433,098)
Net realized gains--Class Y (8,523,137) (2,389,027)
In excess of net investment income--Class X (20,589) --
In excess of net investment income--Class Y (4,979) --
------------- --------------
Decrease in net assets from distributions to shareholders (36,564,678) (15,743,663)
------------- --------------
From Share Transactions
Class X
Proceeds from sales of shares (186,821 and 200,121 shares, respectively) 8,631,368 9,732,878
Net asset value of shares issued from reinvestment of distributions (760,770 and
275,344 shares, respectively) 27,925,887 13,268,434
Net asset value of shares issued in conjunction with conversion of PHL Pooled
Separate Account S (0 and 3,807,589 shares, respectively) -- 182,803,604
Cost of shares repurchased (1,381,997 and 2,538,286 shares, respectively) (61,947,854) (124,359,905)
------------- --------------
Total (25,390,599) 81,445,011
------------- --------------
Class Y
Proceeds from sales of shares (34,497 and 68,980 shares, respectively) 1,706,016 3,405,171
Net asset value of shares issued from reinvestment of distributions (235,940 and
51,358 shares, respectively) 8,638,038 2,475,206
Net asset value of shares issued in conjunction with conversion of PHL Pooled
Separate Account S (0 and 493,631 shares, respectively) -- 23,699,396
Cost of shares repurchased (234,220 and 129,492 shares, respectively) (11,860,743) (6,295,994)
------------- --------------
Total (1,516,689) 23,283,779
------------- --------------
Increase (decrease) in net assets from share transactions (26,907,288) 104,728,790
------------- --------------
Net increase (decrease) in net assets (43,734,985) 105,716,457
Net Assets
Beginning of period 105,716,457 0
------------- --------------
End of period (including undistributed net investment income of $0 and
$66,653, respectively) $ 61,981,472 $ 105,716,457
============= ==============
</TABLE>
See Notes to Financial Statements
23
<PAGE>
Institutional Growth Stock Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class X Class Y
----------------------------------------- ----------------------------------------
From Inception From Inception
Year Ended 3/1/96 to Year Ended 3/1/96 to
12/31/97 12/31/96 12/31/97 12/31/96
---------------------- ---------------- ---------------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $47.42 $48.01 $47.43 $48.01
Income from investment operations(6)
Net investment income 0.31(4)(7) 0.34(4) 0.18(5)(7) 0.18(5)
Net realized and unrealized gain 10.60 4.89 10.59 4.95
------------- ----------- ------------- -----------
Total from investment operations 10.91 5.23 10.77 5.13
------------- ----------- ------------- -----------
Less distributions
Dividends from net investment income (0.39) (0.30) (0.31) (0.19)
Dividends from net realized gains (24.07)(8) (5.52) (24.02)(8) (5.52)
In excess of net investment income (0.02) -- (0.01) --
------------- ----------- ------------- -----------
Total distributions (24.48) (5.82) (24.34) (5.71)
------------- ----------- ------------- -----------
Change in net asset value (13.57) (0.59) (13.57) (0.58)
------------- ----------- ------------- -----------
Net asset value, end of period $33.85 $47.42 $33.86 $47.43
============= ============= =============== =============
Total return 25.76% 10.71%(2) 25.46% 10.48%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $44,350 $82,739 $17,631 $22,978
Ratio to average net assets of:
Operating expenses 0.70% 0.70%(1) 0.95% 0.95%(1)
Net investment income 0.64% 0.65%(1) 0.39% 0.39%(1)
Portfolio turnover 148% 99%(2) 148% 99%(2)
Average commission rate paid(3) $0.0503 $0.0543 $0.0503 $0.0543
</TABLE>
(1) Annualized
(2) Not annualized
(3) 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 $0.08
and $0.04, respectively.
(5) Includes reimbursement of operating expenses by investment adviser of $0.08
and $0.04, respectively.
(6) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from
anticipated results depending on the timing of share purchases and
redemptions.
(7) Computed using average shares outstanding.
(8) Includes amounts distributed as income and redesignated for tax purposes.
See Notes to Financial Statements
24
<PAGE>
INSTITUTIONAL MONEY MARKET PORTFOLIO
INVESTMENT ADVISER'S REPORT
Institutional Money Market Portfolio continued to perform well during this
12-month reporting period. As of December 31, 1997, the seven-day current yield
for Class X shares was 5.48% and 5.23% for Class Y shares compared with the
5.05% IBC Money Fund Average as reported in IBC's Money Fund Report. Current
yield is a seven-day annualized yield computed by dividing the average net
income earned per share during the seven days preceding the date of calculation
by the average daily net asset value per share for the same period multiplied
by 365.
Money markets were quite volatile over the last year. Fourth-quarter GDP
rose 4.3%, showing strength in the employment and wages components. Continued
strength into the first quarter of 1997 and growing concerns over inflation
prompted the Federal Reserve to preemptively raise rates from 5.25% to 5.50%.
In the months that followed the tightening, economic data continued to show
pockets of strength. Concerns over the strength of the economy and fears of
rekindled inflation increased cash flows in the short end of the market.
However, moderate growth with well-behaved inflation kept the Federal Reserve on
hold indefinitely.
The summer months were marked by continued mixed economic data. Warnings
from the Federal Reserve referencing an over enthusiastic stock market and signs
of rising inflation rumbled through the markets. Short-term interest rates were
very volatile at this time, and by early fall there was a definitive feeling in
the markets of another rate increase. Subsequently, unexpected turmoil in the
Asian markets caused unstable markets globally, most likely keeping the Fed on
hold indefinitely.
Uncertainty as to how the Asian turmoil would impact the domestic markets
prevailed through year-end. Normal year-end pressures offered attractive buying
opportunities to extend the Fund's average maturity to 52 days.
Throughout most of the year, average maturity was held relatively neutral.
Our strategy has been to manage the Fund's average maturity as opposed to
predicting rates. The volatility in the world markets has proven this strategy
to be effective. We continued to emphasize high-quality commercial paper and
variable-rate securities to enhance yield. The Fund's average credit quality
remains A1/P1.
OUTLOOK
For the near future, we anticipate slower U.S. economic growth due to the
recent shakeup in the world markets. Growth is expected to decelerate with
inflation remaining subdued. However, if inflation fears are rekindled, the Fed
is likely to be diligent in reacting by raising rates.
We will continue to emphasize credit quality, focusing on higher yielding
issues, such as commercial paper and variable-rate securities. Given the
uncertainty in the market, we will be monitoring any movement in interest rates
or shifts in yield spreads to identify attractive trading opportunities.
25
<PAGE>
Institutional Money Market Portfolio
- --------------------------------------------------------------------------------
[LINE CHART]
Monthly Yield Comparison
Institutional
Money Market
Portfolio IBC Money
--Class X Fund Report**
------------ -------------
1/97 5.08% 4.77%
2/97 5.05% 4.75%
3/97 5.10% 4.75%
4/97 5.18% 4.85%
5/97 5.25% 4.91%
6/97 5.24% 4.95%
7/97 5.26% 4.94%
8/97 5.26% 4.94%
9/97 5.23% 4.93%
10/97 5.23% 4.92%
11/97 5.26% 4.97%
12/97 5.39% 5.05%
[/LINE CHART]
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's
Money Fund Report.
Average Annual Total Returns for Periods
Ending 12/31/97
1 Year 5 Years 10 Years
- ------------------------------------------------------
Class X 5.34% 4.65% 5.78%
- ------------------------------------------------------
Class Y 5.08% 4.31% 5.40%
- ------------------------------------------------------
90-day T-bills* 5.24% 4.70% 5.60%
- ------------------------------------------------------
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.
26
<PAGE>
Institutional Money Market Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
Face
Amount Interest Maturity
(000) Description Rate Date Value
- --------- ------------- ---------- --------- ------------
<S> <C> <C> <C> <C>
FEDERAL AGENCY SECURITIES--8.8%
$ 110 FNMA (c) .. 6.05% 1/12/98 $ 110,002
260 FNMA (c) .. 6.02 1/20/98 260,008
500 FHLB ...... 5.78 1/28/98 500,000
----------
TOTAL FEDERAL AGENCY SECURITIES . . . . . . 870,010
----------
Reset
Date
-------
FEDERAL AGENCY SECURITIES--VARIABLE--17.3% (b)
1,000 SLMA (final
maturity
2/22/99) ... 5.63 1/6/98 1,000,000
700 FNMA (final
maturity
12/14/98) .. 5.51 3/14/98 699,634
----------
TOTAL FEDERAL AGENCY SECURITIES--VARIABLE 1,699,634
----------
</TABLE>
<TABLE>
<CAPTION>
Standard
& Poor's
Rating Maturity
(Unaudited) Date
----------- --------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER--80.1%
500 Koch Industries,
Inc. ................. A-1+ 6.70 1/2/98 499,907
290 AlliedSignal, Inc. ..... A-1 6.00 1/5/98 289,807
200 General Electric
Capital Corp. ........ A-1+ 6.25 1/5/98 199,861
350 Greenwich Funding
Corp. ................ A-1+ 5.78 1/5/98 349,775
235 Preferred
Receivables
Funding Corp. ........ A-1 5.95 1/6/98 234,806
100 Sara Lee Corp. ......... A-1+ 6.05 1/7/98 99,899
250 Minnesota Mining
& Manufacturing
Co. .................. A-1+ 5.90 1/9/98 249,672
270 Potomac Electric
Power Co. ............ A-1 6.10 1/9/98 269,634
265 Receivables Capital
Corp. ................ A-1+ 5.90 1/9/98 264,652
220 International Lease
Finance Corp. ........ A-1 5.95 1/12/98 219,600
330 Exxon Imperial
U.S., Inc. ........... A-1+ 5.82 1/13/98 329,360
</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
$ 250 Corporate Receivables
Corp. .................. A-1 5.875% 1/14/98 $ 249,470
300 Deutsche Bank, NY ........ A-1+ 5.64 1/15/98 300,000
455 Koch Industries, Inc. A-1+ 5.90 1/15/98 453,956
425 Vermont American
Corp. .................. A-1+ 6.20 1/16/98 423,902
250 General Electric Co. ..... A-1+ 5.75 1/21/98 249,201
250 Receivables Capital
Corp. .................. A-1+ 5.81 1/26/98 248,991
350 CXC, Inc. ................ A-1+ 5.57 1/27/98 348,592
365 Goldman, Sachs
& Co. .................. A-1+ 5.85 1/30/98 363,280
250 Merrill Lynch & Co.,
Inc. ................... A-1+ 5.58 1/30/98 248,876
300 Pitney Bowes Credit
Corp. .................. A-1+ 5.52 1/30/98 298,666
345 Corporate Asset
Funding Co., Inc. ...... A-1+ 5.90 2/4/98 343,077
350 Procter & Gamble Co. A-1+ 5.63 2/11/98 347,756
250 Preferred Receivables
Funding Corp. .......... A-1 5.83 2/12/98 248,300
240 AT&T Corp. ............... A-1+ 5.75 2/27/98 237,815
255 Enterprise Funding
Corp. .................. A-1+ 5.69 2/27/98 252,703
270 General Re Corp. ......... A-1+ 5.73 3/13/98 266,949
-------------
TOTAL COMMERCIAL PAPER ................................................. 7,888,507
-------------
MEDIUM-TERM NOTES--5.1%
100 General Electric
Capital Corp. .......... A-1+ 7.125 4/6/98 100,321
400 Associates
Corporation of
North America .......... AA- 6.375 8/15/98 401,077
-------------
TOTAL MEDIUM-TERM NOTES ................................................ 501,398
-------------
TOTAL INVESTMENTS--111.3%
(Identified cost $10,959,549).......................................... 10,959,549(a)
Cash and receivables, less liabilities--(11.3%) ....................... (1,109,175)
-------------
NET ASSETS--100.0% .................................................... $ 9,850,374
=============
</TABLE>
(a) Federal Income Tax Information: At December 31, 1997, the aggregate cost of
securities was the same for book and tax purposes.
(b) Variable rate demand notes. The interest rates shown reflect the rates
currently in effect.
(c) Medium-term Note.
See Notes to Financial Statements
27
<PAGE>
Institutional Money Market Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $10,959,549) $10,959,549
Cash 8,759
Receivables
Fund shares sold 149,080
Interest 60,453
Receivable from adviser 10,680
-----------
Total assets 11,188,521
-----------
Liabilities
Payables
Fund shares repurchased 1,262,532
Dividend distributions 12,184
Transfer agent fee 4,250
Financial agent fee 3,992
Trustees' fee 1,122
Distribution fee 347
Accrued expenses 53,720
-----------
Total liabilities 1,338,147
-----------
Net Assets $9,850,374
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $9,850,374
-----------
Net Assets $9,850,374
===========
Class X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $8,128,849) 8,128,849
Net asset value and offering price per share $1.00
Class Y
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $1,721,525) 1,721,525
Net asset value and offering price per share $1.00
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
Investment Income
Interest $647,426
--------
Total investment income 647,426
--------
Expenses
Investment advisory fee 29,153
Distribution fee--Class Y 4,269
Financial agent fee 46,998
Transfer agent 46,157
Registration 28,766
Professional 16,901
Trustees 13,509
Custodian 11,423
Printing 4,962
Miscellaneous 5,982
--------
Total expenses 208,120
Less expenses borne by investment adviser (163,040)
--------
Net expenses 45,080
--------
Net investment income 602,346
--------
Net increase in net assets resulting from
operations $602,346
========
</TABLE>
See Notes to Financial Statements
28
<PAGE>
Institutional Money Market Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
Year Ended March 1, 1996 to
December 31, 1997 December 31, 1996
------------------- ------------------
<S> <C> <C>
From Operations
Net investment income $ 602,346 $ 563,801
------------- -------------
Increase in net assets resulting from operations 602,346 563,801
------------- -------------
From Distributions to Shareholders
Net investment income--Class X (517,729) (454,271)
Net investment income--Class Y (84,617) (109,530)
------------- -------------
Decrease in net assets from distributions to shareholders (602,346) (563,801)
------------- -------------
From Share Transactions
Class X
Proceeds from sales of shares (13,237,363 and 17,010,234 shares, respectively) 13,237,363 17,010,234
Net asset value of shares issued from reinvestment of distributions (504,476 and 438,107
shares, respectively) 504,476 438,107
Net asset value of shares issued in conjunction with conversion of PHL Pooled
Separate Account G (0 and 8,106,057 shares, respectively) -- 8,106,057
Cost of shares repurchased (20,794,521 and 10,372,867 shares, respectively) (20,794,521) (10,372,867)
------------- -------------
Total (7,052,682) 15,181,531
------------- -------------
Class Y
Proceeds from sales of shares (1,448,463 and 2,849,561 shares, respectively) 1,448,463 2,849,561
Net asset value of shares issued from reinvestment of distributions (83,278 and 105,240
shares, respectively) 83,278 105,240
Net asset value of shares issued in conjunction with conversion of PHL
Pooled Separate Account G (0 and 2,666,813 shares, respectively) -- 2,666,813
Cost of shares repurchased (1,939,870 and 3,491,960 shares, respectively) (1,939,870) (3,491,960)
------------- -------------
Total (408,129) 2,129,654
------------- -------------
Increase (decrease) in net assets from share transactions (7,460,811) 17,311,185
------------- -------------
Net increase (decrease) in net assets (7,460,811) 17,311,185
Net Assets
Beginning of period 17,311,185 0
------------- -------------
End of period $ 9,850,374 $ 17,311,185
============= =============
</TABLE>
See Notes to Financial Statements 29
<PAGE>
Institutional Money Market Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class X Class Y
--------------------------------- --------------------------------
From Inception From Inception
Year Ended 3/1/96 to Year Ended 3/1/96 to
12/31/97 12/31/96 12/31/97 12/31/96
-------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00
Income from investment operations
Net investment income 0.052(3) 0.043(3) 0.050(4) 0.040(4)
---------- ---------- ---------- ----------
Total from investment operations 0.052 0.043 0.050 0.040
---------- ---------- ---------- ----------
Less distributions
Dividends from net investment income (0.052) (0.043) (0.050) (0.040)
---------- ---------- ---------- ----------
Change in net asset value -- -- -- --
---------- ---------- ---------- ----------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00
========== ========== ========== ==========
Total return 5.34% 4.34%(2) 5.08% 4.11%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $8,129 $15,182 $1,722 $2,130
Ratio to average net assets of:
Operating expenses 0.35% 0.35%(1) 0.60% 0.60%(1)
Net investment income 5.20% 5.08%(1) 4.96% 4.84%(1)
</TABLE>
(1) Annualized
(2) Not annualized
(3) Includes reimbursement of operating expenses by investment adviser of $0.01
and less than $0.01, respectively.
(4) Includes reimbursement of operating expenses by investment adviser of $0.01
and less than $0.01, respectively.
See Notes to Financial Statements
30
<PAGE>
INSTITUTIONAL U.S. GOVERNMENT SECURITIES PORTFOLIO
INVESTMENT ADVISER'S REPORT
For the 12 months ended December 31, 1997, U.S. Government Securities
Portfolio Class X shares returned 6.69% and Class Y shares earned 6.44%
compared with 6.65% for the Lehman Brothers 1-2.99 Year Government Bond Index.
All performance figures assume reinvestment of dividends and are net of fees.
Favorable market conditions continued to prevail during 1997 as the
economy settled into a more moderate, sustainable pace and inflation remained
in check. For the first three quarters of the year, investors were rewarded for
taking incremental risk. The credit-sensitive and mortgage sectors of the
fixed-income market were the top performers.
However, in late October the economic turmoil in Asia spilled over to
markets around the world. Spreads widened as investors moved to high-quality
issues, particularly Treasuries. Because of our large position in Treasuries,
the Portfolio benefited from this "flight to quality." Performance also
benefited from our weighting in short-term mortgage-backed issues during the
first part of the year.
OUTLOOK
The bond market is likely to remain volatile until the Asian "crisis" is
resolved, and the after effects are more clearly understood. Treasuries
continue to be attractive as the domestic economy remains on track and
inflation stays in check.
The low interest rate environment has raised investor concern over
prepayment risk in the mortgage-backed sector. We will continue to monitor
market developments to identify an opportunity to selectively add to our
position in high-quality short-term mortgage-backed issues.
Duration will be kept equal to the Portfolio's benchmark to minimize
interest rate surprises. As always, we will continue to conservatively manage
the Portfolio to maximize total return.
31
<PAGE>
Institutional U.S. Government Securities Portfolio
- --------------------------------------------------------------------------------
[LINE CHART]
Institutional
U.S. Gov't
Securities Lehmann 1-2.99
Portfolio Year Gov't
--Class X Bond Index*
------------- --------------
9/30/91 5,000,000 5,000,000
12/31/91 5,212,030 5,183,470
12/31/92 5,552,930 5,507,170
12/31/93 5,919,000 5,803,720
12/31/94 5,926,390 5,883,610
12/31/95 6,654,470 6,465,930
12/31/96 7,001,150 6,795,280
12/31/97 7,469,754 7,247,458
[/LINE CHART]
Average Annual Total Returns for Periods
Ending 12/31/97
From Inception
9/30/91 to
1 Year 5 Years 12/31/97
- -----------------------------------------------------------------------
Class X 6.69% 6.11% 6.63%
- -----------------------------------------------------------------------
Class Y 6.44% 6.35% 5.82%
- -----------------------------------------------------------------------
Lehman Brothers 1-2.99 Year
Government Bond Index* 6.65% 5.65% 6.11%
- -----------------------------------------------------------------------
This chart assumes an initial gross investment of $5,000,000 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 1-2.99 year Government Bond Index is an unmanaged but
commonly used measure of non-mortgaged, short-term government securities
performance.
32
<PAGE>
Institutional U.S. Government Securities Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
--------------- --------- ------------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--74.2%
U.S. Treasury Notes--41.7%
U.S. Treasury Notes 5.875%,
10/31/98 .................................. AAA $ 250 $ 250,390
U.S. Treasury Notes 5.875%,
2/28/99 ................................... AAA 500 501,360
U.S. Treasury Notes 5.625%,
10/31/99 .................................. AAA 1,500 1,498,125
U.S. Treasury Notes 5.75%,
11/30/02 .................................. AAA 750 750,703
U.S. Treasury Notes 6.50%,
10/15/06 .................................. AAA 500 523,460
----------
3,524,038
------------
Agency Mortgage-Backed Securities--32.5%
FNMA 5.25%, 8/25/13 ......................... AAA 1,417 1,409,320
FNMA 5.50%, 2/25/14 ......................... AAA 1,343 1,336,974
----------
2,746,294
------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $6,221,942) ........................................ 6,270,332
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
--------------- --------- ------------------
<S> <C> <C> <C>
MUNICIPAL BONDS--5.7%
Chicago Public Building
Taxable 7%, 1/1/07 (b) .................... AAA $ 450 $ 479,776
------------
TOTAL MUNICIPAL BONDS
(Identified cost $447,854) ............................................ 479,776
------------
TOTAL LONG-TERM INVESTMENTS--79.9%
(Identified cost $6,669,796) .......................................... 6,750,108
------------
SHORT-TERM OBLIGATIONS--19.5%
Federal Agency Securities--19.5%
FHLMC 5.75%, 1/20/98 ...................................... 1,655 1,649,978
------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $1,649,978) .......................................... 1,649,978
------------
TOTAL INVESTMENTS--99.4%
(Identified cost $8,319,774) .......................................... 8,400,086(a)
Cash and receivables, less liabilities--0.6% ......................... 51,353
------------
NET ASSETS--100.0% ...................................................... $8,451,439
============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $80,312 and gross
depreciation of $0 for income tax purposes. At December 31, 1997, the
aggregate cost of securities for federal income tax purposes was
$8,319,774.
(b) These municipal bonds are fully defeased by U.S. Government Treasury
Obligations.
See Notes to Financial Statements
33
<PAGE>
Institutional U.S. Government Securities Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $8,319,774) $8,400,086
Cash 15,575
Receivables
Interest 65,729
Fund shares sold 20,794
Receivable from adviser 9,224
----------
Total assets 8,511,408
----------
Liabilities
Payables
Fund shares repurchased 146
Financial agent fee 6,964
Transfer agent fee 3,725
Trustees' fee 1,122
Distribution fee 858
Accrued expenses 47,154
----------
Total liabilities 59,969
----------
Net Assets $8,451,439
==========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $8,569,084
Undistributed net investment income 3,572
Accumulated net realized loss (201,529)
Net unrealized appreciation 80,312
----------
Net Assets $8,451,439
==========
Class X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $4,432,450) 334,198
Net asset value and offering price per share $13.26
Class Y
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $4,018,989) 303,212
Net asset value and offering price per share $13.25
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
Investment Income
Interest $470,872
--------
Total investment income 470,872
--------
Expenses
Investment advisory fee 25,340
Distribution fee--Class Y 10,506
Financial agent fee 82,000
Transfer agent 41,097
Registration 34,931
Professional 17,286
Trustees 13,409
Printing 3,916
Custodian 2,976
Miscellaneous 3,908
--------
Total expenses 235,369
Less expenses borne by investment adviser (191,076)
--------
Net expenses 44,293
--------
Net investment income 426,579
--------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 75,919
Net change in unrealized appreciation (depreciation) on
investments 49,718
--------
Net gain on investments 125,637
--------
Net increase in net assets resulting from
operations $552,216
========
</TABLE>
See Notes to Financial Statements
34
<PAGE>
Institutional U.S. Government Securities Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
Year Ended March 1, 1996 to
December 31, 1997 December 31, 1996
------------------- ------------------
<S> <C> <C>
From Operations
Net investment income $ 426,579 $ 467,991
Net realized gain (loss) 75,919 (236,317)
Net change in unrealized appreciation (depreciation) 49,718 193,233
------------ ------------
Increase in net assets resulting from operations 552,216 424,907
------------ ------------
From Distributions to Shareholders
Net investment income--Class X (215,503) (297,193)
Net investment income--Class Y (211,076) (170,798)
In excess of net investment income--Class X (21,208) (33,911)
In excess of net investment income--Class Y (20,773) (19,488)
------------ ------------
Decrease in net assets from distributions to shareholders (468,560) (521,390)
------------ ------------
From Share Transactions
Class X
Proceeds from sales of shares (112,978 and 68,722 shares, respectively) 1,507,428 922,793
Net asset value of shares issued from reinvestment of distributions (17,887 and
21,717 shares, respectively) 236,709 285,465
Net asset value of shares issued in conjunction with conversion of PHL Pooled
Separate Account U (0 and 826,222 shares, respectively) -- 11,033,355
Cost of shares repurchased (156,630 and 556,698 shares, respectively) (2,080,993) (7,465,688)
------------ ------------
Total (336,856) 4,775,925
------------ ------------
Class Y
Proceeds from sales of shares (146,257 and 199,852 shares, respectively) 1,941,555 2,672,950
Net asset value of shares issued from reinvestment of distributions (17,536 and
14,474 shares, respectively) 231,847 190,283
Net asset value of shares issued in conjunction with conversion of PHL Pooled
Separate Account U (0 and 150,065 shares, respectively) -- 2,003,966
Cost of shares repurchased (132,875 and 92,097 shares, respectively) (1,781,224) (1,234,180)
------------ ------------
Total 392,178 3,633,019
------------ ------------
Increase in net assets from share transactions 55,322 8,408,944
------------ ------------
Net increase in net assets 138,978 8,312,461
Net Assets
Beginning of period 8,312,461 0
------------ ------------
End of period (including undistributed net investment income of $3,572
and $0, respectively) $ 8,451,439 $ 8,312,461
============ ============
</TABLE>
See Notes to Financial Statements
35
<PAGE>
Institutional U.S. Government Securities Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class X Class Y
--------------------------------------------- ---------------------------------------------
From Inception From Inception
Year Ended 3/1/96 to Year Ended 3/1/96 to
12/31/97 12/31/96 12/31/97 12/31/96
---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $13.15 $13.35 $13.14 $13.35
Income from investment operations(6)
Net investment income 0.69(3)(5) 0.62(3)(5) 0.65(4)(5) 0.59(4)(5)
Net realized and unrealized gain 0.18 0.02 0.19 0.01
-------------- -------------- -------------- --------------
Total from investment operations 0.87 0.64 0.84 0.60
-------------- -------------- -------------- --------------
Less distributions
Dividends from net investment income (0.69) (0.75) (0.66) (0.73)
In excess of net investment income (0.07) (0.09) (0.07) (0.08)
-------------- -------------- -------------- --------------
Total distributions (0.76) (0.84) (0.73) (0.81)
-------------- -------------- -------------- --------------
Change in net asset value 0.11 (0.20) 0.11 (0.21)
-------------- -------------- -------------- --------------
Net asset value, end of period $13.26 $13.15 $13.25 $13.14
============== ============== ============== ==============
Total return 6.69% 4.86%(2) 6.44% 4.56%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $4,432 $4,734 $4,019 $3,578
Ratio to average net assets of:
Operating expenses 0.40% 0.40%(1) 0.65% 0.65%(1)
Net investment income 5.18% 5.58%(1) 4.92% 5.32%(1)
Portfolio turnover 232% 175%(2) 232% 175%(2)
</TABLE>
(1) Annualized
(2) Not annualized
(3) Includes reimbursement of operating expenses by investment adviser of $0.30
and $0.19, respectively.
(4) Includes reimbursement of operating expenses by investment adviser of $0.30
and $0.19, respectively.
(5) Computed using average shares outstanding.
(6) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from
anticipated results depending on the timing of share purchases and
redemptions.
See Notes to Financial Statements
36
<PAGE>
INSTITUTIONAL ENHANCED RESERVES PORTFOLIO
INVESTMENT ADVISER'S REPORT
For the 12 months ended December 31, 1997, Class X shares provided a total
return of 6.03% and Class Y shares returned 5.75% compared with 5.95% for the
Merrill Lynch 1-Year Treasury Bill. All performance figures assume reinvestment
of dividends and are net of fees.
The U.S. fixed-income market received a significant demand boost in the
fourth quarter due to worldwide uncertainty with regard to the deterioration of
Southeast Asia. The lingering negative worldwide implications caused investors
to turn to the "safe haven" of the U.S. Treasury market. Lower yields also
generated significant increases in supply, especially in the asset-backed and
corporate markets.
The deluge of supply, highlighted by an increase in worldwide swap
spreads, caused spreads to Treasuries to widen during the quarter. The positive
implications of the international crisis were the potential dampening impact on
the domestic economy and inflationary pressures that practically removed the
likelihood of a tightening of monetary policy.
The tremendous rally sparked by the "flight to quality" and the potential
slowdown in the U.S. economy provided the Portfolio with another great
opportunity to add incremental value. Additionally, the benign inflationary
outlook sent yields on longer securities close to levels not seen since October
1993.
Despite the recent wider spreads in non-Treasury securities, performance
still exceeded the benchmark index. Our ability to actively manage duration and
yield curve exposure were key to our success. Also, the ability to include a
wide array of high quality and liquid securities proved beneficial despite the
modest widening in spreads.
OUTLOOK
The bond market has apparently already priced in the persistent worldwide
crisis and its possible implications to U.S. monetary policy. The yields on
Treasuries that mature within one year are trading below the targeted Fed funds
rate of 5.50%. Strong domestic economic underpinnings probably limit much price
upside from these current levels given that the Fed still has not publicly
shifted from its pro-tightening bias.
A further decline in interest rates would suggest that the market was
anticipating an ease in monetary policy. We plan to add value by remaining
duration neutral with an increased bias to add yield to the Portfolio. We
believe recent market turmoil and its effects on spreads present a long-term
opportunity.
37
<PAGE>
Institutional Enhanced Reserves Portfolio
- --------------------------------------------------------------------------------
[LINE CHART]
Institutional Merrill Lynch
Enhanced Reserves 1 Year
Portfolio--Class X Treasury Bill*
------------------ --------------
6/27/94 5,000,000 5,000,000
12/31/94 5,102,600 5,089,750
12/31/95 5,550,530 5,492,360
12/31/96 5,760,170 5,794,400
12/31/97 $6,107,597 $6,139,053
[/LINE CHART]
Average Annual Total Returns for Periods
Ending 12/31/97
From Inception From Inception
6/27/94 to 11/1/96 to
1 Year 12/31/97 12/31/97
- ---------------------------------------------------------------------------
Class X 6.03% 5.85 % --
- ---------------------------------------------------------------------------
Class Y 5.75% -- 5.45%
- ---------------------------------------------------------------------------
Merrill Lynch
1 Year Treasury Bill 5.95% 6.03%* 5.84%
- ---------------------------------------------------------------------------
This chart assumes an initial gross investment of $5,000,000 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 12/31/97.
38
<PAGE>
Institutional Enhanced Reserves Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
--------------- ------------ -----------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--18.9%
U.S. Treasury Notes--12.1%
U.S. Treasury Notes 7.75%,
1/31/00 ..................................................... Aaa $4,000 $4,161,248
U.S. Treasury Notes 5.75%,
10/31/02 .................................................... Aaa 5,200 5,206,500
----------
9,367,748
----------
Agency Asset-Backed Securities--5.2%
SLMA 97-1, A1 5.715%,
10/25/05 (b) ................................................ Aaa 2,686 2,683,059
SLMA 97-2, A1 5.795%,
10/25/05 (b) ................................................ Aaa 1,359 1,351,762
----------
4,034,821
----------
Agency Mortgage-Backed Securities--1.6%
FNMA 7.739%, 3/1/20 ........................................... Aaa 1,162 1,219,320
----------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $14,597,637) ............................................................. 14,621,889
----------
NON-CONVERTIBLE BONDS--68.8%
Asset-Backed Securities--41.4%
Amresco 97-2, A9 6.179%,
6/25/27 (b) ................................................. Aaa 1,739 1,739,304
CIT RV Trust 96-A, A 5.40%,
12/15/11 .................................................... Aaa 1,582 1,570,449
Case Equipment Loan Trust
94-C, A2 8.10%, 6/15/01 ..................................... Aaa 1,291 1,302,159
ContiMortgage Home Equity
Loan Trust 97-3, A10 6.19%,
8/15/28 (b) ................................................. Aaa 1,760 1,758,546
Discover Card Master Trust 96-4,
A 6.355%, 10/16/13 (b) ...................................... Aaa 2,500 2,547,225
First Plus Home Loan Trust
96-2, A1 6.80%, 6/20/05 ..................................... Aaa 875 873,321
First Plus Home Loan Trust
97-3, A1 6.10%, 4/10/06 (b) ................................. AAA(c) 2,135 2,134,301
Fleetwood Credit Corporation
Grantor Trust 93-A, A 6%,
1/15/08 ..................................................... Aaa 1,791 1,783,761
Ford Credit Grantor Trust 95-A,
A 5.90%, 5/15/00 ............................................ Aaa 687 687,852
Green Tree Financial Corp.
96-8, A2 6.55%, 10/15/27 .................................... Aaa 3,000 3,043,500
Green Tree Home Improvement
Loan Trust 97-A, HEAR
6.17%, 3/15/27 (b) .......................................... AAA(c) 2,128 2,125,461
Household Consumer Loan Trust
96-2, A2 6.30%, 8/15/06 (b) ................................. Aa 3,000 3,005,337
MBNA Master Credit Card Trust
94-B, A 5.77%, 1/15/02 (b) .................................. Aaa 2,500 2,508,175
Money Store (The) 96-C, A1
6.70%, 9/15/08 .............................................. Aaa 398 399,823
</TABLE>
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
--------------- ------------ -----------------
<S> <C> <C> <C>
Asset-Backed Securities--continued
Money Store (The) 95-A, A7
6.645%, 6/15/25 (b) ......................................... Aaa $1,851 $1,869,312
UCFC Home Equity Loan
96-B1, A3 7.30%, 4/15/14 .................................... Aaa 1,000 1,012,500
UCFC Home Equity Loan 97-D,
A3 6.51%, 1/15/16 ........................................... Aaa 2,500 2,506,250
Western Financial Grantor Trust
95-2, A1 7.10%, 7/1/00 ...................................... Aaa 1,066 1,075,104
----------
31,942,380
----------
Banks (Major Regional)--3.1%
Northern Trust Capital 6.278%,
1/15/27 (b) ................................................. A 2,500 2,409,375
----------
Banks (Money Center)--3.2%
Chase Capital II 6.25%,
2/1/27 (b) .................................................. Aa 2,500 2,431,250
----------
Broker-Dealers--3.2%
Morgan Stanley Group MTNC
5.976%, 12/28/98 (b) ........................................ A 2,500 2,501,250
----------
Consumer Finance--3.2%
General Motors Acceptance
Corp. Global Bond 5.906%,
4/29/02 (b) ................................................. A 2,500 2,500,450
----------
Non-Agency Mortgage-Backed Securities--12.1%
Independent National Mortgage
Corp. 96-E, A2 6.93%,
5/25/26 ..................................................... Aaa 2,277 2,280,004
Residential Accredit Loans, Inc.
97-QS9, A1 6.75%, 9/25/27 ................................... Aaa 3,032 3,034,003
Residential Accredit Loans, Inc.
98-QS1 7%, 12/25/27 (d) ..................................... Aaa 2,000 2,000,937
Residential Funding Mortgage
Securities I 97-S9, A20
7.50%, 7/25/27 .............................................. Aaa 2,000 2,053,125
----------
9,368,069
----------
Retail (General Merchandise)--2.6%
Sears Roebuck Co. 8.45%,
11/1/98 ..................................................... A 2,000 2,039,714
----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $53,105,499) ..................................................... 53,192,488
----------
TOTAL LONG-TERM INVESTMENTS--87.7%
(Identified cost $67,703,136) ..................................................... 67,814,377
----------
</TABLE>
See Notes to Financial Statements
39
<PAGE>
Institutional Enhanced Reserves Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- -------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--10.4%
Commercial Paper--8.7%
Ford Motor Credit Co. 5.857%,
1/7/98 ......................... P1 $2,000 $2,000,000
American Express Credit Co.
5.838%, 1/8/98 ................. P1 1,500 1,500,000
General Motors Acceptance
Corp. 5.863%, 2/24/98 .......... P1 1,250 1,250,063
General Electric Capital Corp.
5.781%, 3/10/98 ................ P1 2,000 1,999,940
----------
6,750,003
----------
</TABLE>
<TABLE>
<CAPTION>
PAR
VALUE
(000) VALUE
--------- -----------------
<S> <C> <C>
Repurchase Agreement--1.7%
State Street Bank and Trust Co. Repurchase
Agreement, 5.15%, dated 12/31/97 due
1/2/98, repurchase price $1,289,369,
collateralized by U.S. Treasury Note
5.625%, 11/30/99, market value
$1,320,478 .................................. $1,289 $ 1,289,000
-------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $8,039,000) ............................. 8,039,003
-------------
TOTAL INVESTMENTS--98.1%
(Identified cost $75,742,136) ............................ 75,853,380(a)
Cash and receivables, less liabilities--1.9% ............ 1,430,077
-------------
NET ASSETS--100.0% ........................................ $ 77,283,457
=============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $247,994 and gross
depreciation of $136,750 for income tax purposes. At December 31, 1997,
the aggregate cost of securities for income tax purposes was $75,742,136.
(b) Variable or step coupon security; interest rate shown reflects the rate
currently in effect.
(c) As rated by Standard & Poor's.
(d) When issued.
See Notes to Financial Statements
40
<PAGE>
Institutional Enhanced Reserves Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $75,742,136) $75,853,380
Cash 1,040,919
Receivables
Investment securities sold 2,000,860
Interest 542,101
Receivable from adviser 158
-----------
Total assets 79,437,418
-----------
Liabilities
Payables
Investment securities purchased 2,000,938
Dividend distributions 80,739
Financial agent fee 6,964
Transfer agent fee 3,625
Trustees' fee 1,122
Distribution fee 430
Accrued expenses 60,143
-----------
Total liabilities 2,153,961
-----------
Net Assets $77,283,457
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $77,579,071
Distributions in excess of net investment income (43,059)
Accumulated net realized loss (363,799)
Net unrealized appreciation 111,244
-----------
Net Assets $77,283,457
===========
Class X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $75,269,459) 7,564,860
Net asset value and offering price per share $9.95
Class Y
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $2,013,998) 202,502
Net asset value and offering price per share $9.95
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
Investment Income
Interest $5,447,262
----------
Total investment income 5,447,262
----------
Expenses
Investment advisory fee 211,566
Distribution fee--Class Y 5,092
Financial agent fee 82,000
Registration 47,028
Transfer agent 41,612
Professional 22,039
Trustees 13,571
Custodian 13,186
Printing 3,476
Miscellaneous 1,466
----------
Total expenses 441,036
Less expenses borne by investment adviser (136,227)
----------
Net expenses 304,809
----------
Net investment income 5,142,453
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized loss on securities (15,822)
Net change in unrealized appreciation (depreciation) on
investments (108,788)
----------
Net loss on investments (124,610)
----------
Net increase in net assets resulting from
operations $5,017,843
==========
</TABLE>
See Notes to Financial Statements
41
<PAGE>
Institutional Enhanced Reserves Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
From Inception
Year Ended July 19, 1996 to
December 31, 1997 December 31, 1996
------------------- ------------------
<S> <C> <C>
From Operations
Net investment income $ 5,142,453 $ 3,138,403
Net realized loss (15,822) (212,416)
Net change in unrealized appreciation (depreciation) (108,788) 278,680
-------------- --------------
Increase in net assets resulting from operations 5,017,843 3,204,667
-------------- --------------
From Distributions to Shareholders
Net investment income--Class X (5,018,041) (3,113,690)
Net investment income--Class Y (113,618) (7,637)
-------------- --------------
Decrease in net assets from distributions to shareholders (5,131,659) (3,121,327)
-------------- --------------
From Share Transactions
Class X
Proceeds from sales of shares (21,169,694 and 18,754,392 shares, respectively) 210,525,776 186,663,642
Net asset value of shares issued from reinvestment of distributions (495,501 and 291,631
shares, respectively) 4,927,719 2,902,589
Net asset value of shares issued in conjunction with the acquisition of Duff & Phelps
Enhanced Reserves Fund (0 and 13,730,413 shares, respectively) -- 136,554,593
Cost of shares repurchased (26,359,297 and 20,517,474 shares, respectively) (262,080,920) (204,195,925)
-------------- --------------
Total (46,627,425) 121,924,899
-------------- --------------
Class Y
Proceeds from sales of shares (70,612 and 150,567 shares, respectively) 702,004 1,500,150
Net asset value of shares issued from reinvestment of distributions
(8,690 and 585 shares, respectively) 86,399 5,827
Cost of shares repurchased (27,952 and 0 shares, respectively) (277,921) --
-------------- --------------
Total 510,482 1,505,977
-------------- --------------
Increase (decrease) in net assets from share transactions (46,116,943) 123,430,876
-------------- --------------
Net increase (decrease) in net assets (46,230,759) 123,514,216
Net Assets
Beginning of period 123,514,216 0
-------------- --------------
End of period (including distributions in excess of net investment income and
undistributed net investment income of ($43,059) and $13,193, respectively) $ 77,283,457 $ 123,514,216
============== ==============
</TABLE>
See Notes to Financial Statements
42
<PAGE>
Institutional Enhanced Reserves Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class X Class Y
----------------------------------------- ---------------------------------------
From Inception From Inception
Year Ended 7/19/96 to Year Ended 11/1/96 to
12/31/97 12/31/96 12/31/97 12/31/96
--------------------- ----------------- --------------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.95 $9.95 $9.95 $9.97
Income from investment operations(5)
Net investment income 0.58(3)(6) 0.26(3) 0.56(4)(6) 0.09(4)
Net realized and unrealized gain (loss) -- -- -- (0.02)
------------ ----------- ------------ -----------
Total from investment operations 0.58 0.26 0.56 0.07
------------ ----------- ------------ -----------
Less distributions
Dividends from net investment income (0.58) (0.26) (0.56) (0.09)
------------ ----------- ------------ -----------
Total distributions (0.58) (0.26) (0.56) (0.09)
------------ ----------- ------------ -----------
Change in net asset value -- -- -- (0.02)
------------ ----------- ------------ -----------
Net asset value, end of period $9.95 $9.95 $9.95 $9.95
============ =========== ============ ===========
Total return 6.03% 2.57%(2) 5.75% 0.71%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $75,269 $122,010 $2,014 $1,504
Ratio to average net assets of:
Operating expenses 0.34% 0.34%(1) 0.59% 0.59%(1)
Net investment income 5.84% 5.68%(1) 5.59% 5.58%(1)
Portfolio turnover 177% 122%(2) 177% 122%(2)
</TABLE>
(1) Annualized
(2) Not annualized
(3) Includes reimbursement of operating expenses by investment adviser of $0.02
and less than $0.01, respectively.
(4) Includes reimbursement of operating expenses by investment adviser of $0.02
and less than $0.01, 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 timing of share purchases and
redemptions.
(6) Computed using average shares outstanding.
See Notes to Financial Statements
43
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
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. To date, seven Portfolios are offered for sale: Balanced
Portfolio, Managed Bond Portfolio, Growth Stock Portfolio, Money Market
Portfolio, U.S. Government Securities Portfolio, Enhanced Reserves Portfolio,
and Real Estate Equity Securities Portfolio. The Real Estate Equity Securities
Portfolio is reported separately from these financial statements.
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
a high 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.
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 accrete 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 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.
44
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 (Continued)
E. Foreign currency translation:
Foreign securities, other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at
the trade date. The gain or loss resulting from a change in currency exchange
rates between the trade and settlement dates of a portfolio transaction is
treated as a gain or loss on foreign currency. Likewise, the gain or loss
resulting from a change in currency exchange rates between the date income is
accrued and paid is treated as a gain or loss on foreign currency. The Fund
does not separate that portion of the results of operations arising from
changes in exchange rates and that portion arising from changes in the market
prices of securities.
F. Forward currency contracts:
Each of the Portfolios, except U.S. Government Securities Portfolio and
Money Market Portfolio, may enter into forward currency contracts in
conjunction with the planned purchase or sale of foreign denominated securities
in order to hedge the U.S. dollar cost or proceeds. Forward currency contracts
involve, to varying degrees, elements of market risk in excess of the amount
recognized in the statement of assets and liabilities. Risks arise from the
possible movements in foreign exchange rates or if the counterparty does not
perform under the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts are traded directly between currency traders and
their customers. The contract is marked-to-market daily and the change in
market value is recorded by each Portfolio as an unrealized gain (or loss).
When the contract is closed or offset, the Portfolio records a realized gain
(or loss) equal to the change in the value of the contract when it was opened
and the value at the time it was closed or offset.
G. Futures contracts:
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. A Portfolio may enter into financial
futures contracts as a hedge against anticipated changes in the market value of
their portfolio securities. Upon entering into a futures contract the Portfolio
is required to pledge to the broker an amount of cash and/or securities equal
to the "initial margin" requirements of the futures exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as variation margin
and are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The potential risk to a Portfolio is that the
change in value of the futures contract may not correspond to the change in
value of the hedged instruments.
H. Options:
Each Portfolio may write covered options or purchase options contracts for
the purpose of hedging against changes in the market value of the underlying
securities or foreign currencies.
Each Portfolio will realize a gain or loss upon the expiration or closing
of the option transaction. Gains and losses on written options are reported
separately in the Statement of Operations. When a written option is exercised,
the proceeds on sales or amounts paid are adjusted by the amount of premium
received. Options written are reported as a liability in the Statement of
Assets and Liabilities and subsequently marked-to-market to reflect the current
value of the option. The risk associated with written options is that the
change in value of options contracts may not correspond to the change in value
of the hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, or if a liquid secondary market does not
exist for the contracts.
Each Portfolio may purchase options which are included in the Portfolio's
Schedule of Investments and subsequently marked-to-market to reflect the
current value of the option. When a purchased option is exercised, the cost of
the security is adjusted by the amount of premium paid. The risk associated
with purchased options is limited to the premium paid.
I. 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.
J. 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.
45
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 (Continued)
NOTE 2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
The Advisers to the Fund are Phoenix Investment Counsel, Inc. ("PIC") and
Duff & Phelps Investment Management Co. ("DPIM"). PIC is an indirect, majority-
owned subsidiary of Phoenix Home Life Mutual Insurance Company ("PHL"). DPIM is
a subsidiary of Phoenix Duff & Phelps Corporation, which is an indirect,
majority-owned subsidiary of PHL. As compensation for their services to the
Fund, the Advisers are entitled to a fee based upon the following annual rates
as a percentage of the average daily net assets of each separate Portfolio:
<TABLE>
<CAPTION>
1st $1+
Portfolio Adviser $1 Billion Billion
- ------------------------------------- --------- ------------ ----------
<S> <C> <C> <C>
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 ......... DPIM 0.24% 0.19%
</TABLE>
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:
<TABLE>
<CAPTION>
Class X Class Y
--------- ----------
<S> <C> <C>
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%
</TABLE>
DPIM had 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 exceeded 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
year ended December 31, 1997, $15,050 was earned by the Distributor, $24,458
was earned by unaffiliated participants, and $70,775 was paid to W.S. Griffith,
an indirect subsidiary of PHL.
As Financial Agent of the Fund, PEPCO receives a fee for bookkeeping,
administrative and pricing services at an annual rate of 0.05% of average daily
net assets up to $100 million, 0.04% of average daily net assets of $100
million to $300 million, 0.03% of average daily net assets of $300 million
through $500 million, and 0.015% of average daily net assets greater than $500
million; a minimum fee may apply. PEPCO serves as the Fund's Transfer Agent
with State Street Bank and Trust Company as sub-transfer agent. For the year
ended December 31, 1997, transfer agent fees were $276,889 of which PEPCO
retained $267 which is net of fees paid to State Street.
At December 31, 1997, PHL and affiliates held Portfolio shares which
aggregated the following:
<TABLE>
<CAPTION>
Aggregate
Net Asset
Shares Value
---------- -------------
<S> <C> <C>
Balanced Portfolio--Class X ............. 8 $ 130
Balanced Portfolio--Class Y ............. 7,998 129,401
Managed Bond Portfolio--Class X ......... 801,324 26,579,918
Managed Bond Portfolio--Class Y ......... 3,564 118,263
Growth Stock Portfolio--Class X ......... 4 139
Growth Stock Portfolio--Class Y ......... 4,094 138,611
Money Market Portfolio--Class X ......... 109 109
Money Market Portfolio--Class Y ......... 109,276 109,276
U.S. Government Securities
Portfolio-- Class X ................... 80,954 1,073,455
U.S. Government Securities
Portfolio-- Class Y ................... 8,399 111,293
</TABLE>
NOTE 3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended December 31, 1997
(excluding U.S. Government and agency securities and short-term securities)
aggregated the following:
<TABLE>
<CAPTION>
Purchases Sales
-------------- --------------
<S> <C> <C>
Balanced Portfolio ......... $48,562,787 $67,795,855
Managed Bond Portfolio ..... 87,414,407 81,159,771
Growth Stock Portfolio ..... 118,746,559 177,866,832
Enhanced Reserves
Portfolio ................ 52,795,232 71,744,411
</TABLE>
Purchases and sales of U.S. Government and agency securities during the
year ended December 31, 1997, aggregated the following:
46
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 (Continued)
<TABLE>
<CAPTION>
Purchases Sales
-------------- --------------
<S> <C> <C>
Balanced Portfolio ......... $22,523,460 $27,570,799
Managed Bond Portfolio ..... 41,266,887 48,016,692
U.S. Government
Securities Portfolio ..... 17,471,751 18,101,359
Enhanced Reserves
Portfolio ................ 88,164,818 97,618,699
</TABLE>
Written option activity for the year ended December 31, 1997 aggregated
the following:
<TABLE>
<CAPTION>
Balanced Portfolio Call Options
- ----------------------------- --------------------------
Number of Amount
Options of Premiums
----------- ------------
<S> <C> <C>
Options outstanding at
December 31, 1996 ......... -- $ --
Options written ............. 200 26,471
Options canceled in
closing purchase
transactions .............. (26) (6,349)
Options expired ............. (102) (8,579)
Options exercised ........... (72) (11,543)
---- -------
Options outstanding at
December 31, 1997 ......... -- $ --
==== =======
</TABLE>
NOTE 4. MERGERS
The Fund commenced operations on March 1, 1996, other than the Enhanced
Reserves Portfolio which became available for sale on July 19, 1996 following
the tax-free reorganization of the Duff & Phelps Enhanced Reserves Fund with
the Phoenix Duff & Phelps Institutional Enhanced Reserves Portfolio.
Prior to March 1, 1996, the Portfolios, other than Enhanced Reserves
Portfolio, existed as separate accounts of Phoenix Home Life Mutual Insurance
Company ("PHL"). Upon commencement of operations, the net assets of each
separate account were transferred into the corresponding Portfolio of the Fund
in a tax-free exchange for an equal number of shares of that Portfolio, other
than the Money Market Portfolio which issued 33,828 shares for each unit of the
separate account. The number of shares and dollars issued are listed in each
Portfolio's Statement of Changes in Net Assets.
The net assets of each Portfolio before and after the reorganization are
as follows:
<TABLE>
<CAPTION>
Before After
----------- --------------
<S> <C> <C>
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
</TABLE>
NOTE 5. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market price of these
investments and the income they generate, as well as a Portfolio's ability to
repatriate such amounts.
NOTE 6. 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, 1997, the Portfolios recorded the following reclassifications to
increase (decrease) the accounts listed below:
<TABLE>
<CAPTION>
Capital
paid in on
Undistributed Accumulated shares of
net investment net realized beneficial
income (loss) gain (loss) interest
---------------- -------------- -------------
<S> <C> <C> <C>
Balanced Portfolio $10,455 $ (2,510) $ (7,945)
Managed Bond
Portfolio ......... 413,236 (104,837) (308,399)
Growth Stock
Portfolio ......... 25,568 132 (25,700)
U.S. Government
Securities
Portfolio ......... 45,553 (34,841) (10,712)
Enhanced Reserves
Portfolio ......... (67,046) 49,976 17,070
</TABLE>
47
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 (Continued)
NOTE 7. CAPITAL LOSS CARRYOVERS
At December 31, 1997, the Portfolios had available for federal income tax
purposes unused capital losses as follows:
<TABLE>
<CAPTION>
Expiring in
2003 2004 2005
---------- ----------- ---------
<S> <C> <C> <C>
U.S. Government
Securities Portfolio ......... $ -- $201,529 $ --
Enhanced Reserves
Portfolio .................... 189,419 128,718 36,912
</TABLE>
For the Enhanced Reserves Portfolio, capital loss carryovers include
$189,419 acquired in connection with the merger of the Duff & Phelps Enhanced
Reserves Fund.
In addition, the U.S. Government Securities Portfolio was able to utilize
losses deferred in the prior year against current year capital gains in the
amount of $33,475.
Under current tax law, capital losses realized after October 31, 1997, may
be deferred and treated as occurring on the first day of the following tax
year. For the year ended December 31, 1997, the U.S. Government Securities
Portfolio and the Enhanced Reserves Portfolio were able to utilize losses
deferred in the prior year in the amounts of $7,603 and $66,858, respectively.
NOTE 8. OTHER
As of December 31, 1997, 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.
<TABLE>
<CAPTION>
Number of % of Total
shareholders shares outstanding
-------------- -------------------
<S> <C> <C>
Balanced Portfolio ......... 2 25.8%
Managed Bond Portfolio ..... 2 25.5%
Growth Stock Portfolio ..... 2 22.6%
Money Market Portfolio ..... 2 39.9%
U.S. Government
Securities Portfolio ..... 3 46.1%
Enhanced Reserves
Portfolio ................ 3 69.3%
</TABLE>
- --------------------------------------------------------------------------------
TAX INFORMATION NOTICE (Unaudited)
Long-Term Capital Gains:
The Taxpayer Relief Act of 1997 included changes in the taxability of
long-term capital gains for individuals and certain other taxpayers. The
long-term capital gain distributions these shareholders receive from the
Portfolios are now taxed at either a 28% or 20% maximum rate, depending on how
long an asset was held and when it was sold. For the fiscal year ended December
31, 1997, the Portfolios distributed long-term capital gain dividends as
follows:
<TABLE>
<CAPTION>
28% rate gain 20% rate gain
Portfolio distributions distributions
- -------------------------------- --------------- --------------
<S> <C> <C>
Balanced Portfolio ............. $1,166,855 $ 211,591
Managed Bond Portfolio ......... 954,187 583,914
Growth Stock Portfolio ......... 16,408,493 4,382,236
</TABLE>
Corporate Dividends Received Deduction:
For federal income tax purposes, 2.84% and 7.16% 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.
48
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[Price Waterhouse LLP] [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 portfolios of the Phoenix Duff &
Phelps Institutional Mutual Funds, hereafter referred to as the "Fund") at
December 31, 1997, 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, 1997 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 19, 1998
49
<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
Eileen A. Moran
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
Michael E. Haylon, Executive Vice President
William J. Newman, Senior Vice President
James D. Wehr, Senior Vice President
Marvin E. Flewellen, Vice President
John D. Kattar, Vice President
William E. Keen, III, Vice President/Assistant Secretary
Christopher J. Kelleher, Vice President
William R. Moyer, Vice President
Scott C. Noble, Vice President
Barbara Rubin, Vice President
Leonard J. Saltiel, Vice President
Julie L. Sapia, Vice President
Michael Schatt, Vice President
Dorothy J. Skaret, Vice President
Pierre G. Trinque, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary
Investment Advisers
Phoenix Investment Counsel, Inc.
56 Prospect Street
Hartford, Connecticut 06115-0480
Duff & Phelps Investment Management Co.
(Enhanced Reserves Portfolio)
55 East Monroe Street
Suite 3800
Chicago, Illinois 60603
Principal Underwriter
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
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 351
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.
50
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Phoenix Duff & Phelps Institutional Mutual Funds
PO Box 2200
Enfield CT 06083-2200
[PHOENIX DUFF&PHELPS LOGO]
PDP 092 (2/98)
<PAGE>
[PHOENIX DUFF & PHELPS LOGO]
PHOENIX DUFF & PHELPS
INSTITUTIONAL MUTUAL FUNDS
Real Estate Equity Securities Portfolio
Annual Report
December 31, 1997
<PAGE>
INSTITUTIONAL REAL ESTATE EQUITY SECURITIES PORTFOLIO
INVESTOR PROFILE
This Portfolio is designed for investors seeking investment in a
diversified portfolio of real estate investment trusts ("REITs") and real estate
operating companies ("REOCs"). The Portfolio's objective is to emphasize
appreciation and current yield equally.
INVESTMENT ADVISER'S REPORT
Since its inception in May, 1997, the Institutional Real Estate Portfolio
Class X shares provided a total return of 23.70% and Class Y shares returned
23.55%, outperforming the NAREIT Equity Total Return Index return for the same
period of 22.81%. All performance figures assume reinvestment of dividends and
are net of fees.
Growth in FFO (the REIT substitute for earnings) was very strong and
exceeded analysts expectations with average REIT FFO growth of 13%. Throughout
the year, REITs experienced less volatility during market swings than the S&P
500 even though $23 billion in REIT equity offerings were brought to market,
more than 1996 and 1995 combined. Nevertheless, REITs have outperformed the S&P
Index on a total return basis in five of the last seven years.
Our investment strategy begins with identifying preferred property types
and markets, based on fundamental analysis of the economic, demographic and real
estate trends, which are then used to form a portfolio framework. We then
identify companies with significant exposure to those preferred markets and
which are trading at attractive levels. Our 1997 returns were enhanced from
overweightings in the hotel and office sectors, the top performing sectors for
two years. The results from luxury, full-service, urban hotels indicated
increased demand, relatively little new supply, increasing occupancy and rising
room rates. Office REITs had similar positive results with a record number of
acquisitions, increasing occupancy and rising rental rates. The Portfolio
benefited from an underweighting in the apartment and retail sectors. Concerns
about overbuilding in apartments and weak sales growth and a generally
over-stored condition substantiated our views.
OUTLOOK
Our outlook for REITs remains very positive, for several reasons. First,
real estate and REITs continue to exhibit strong fundamentals. Demand and supply
are in equilibrium in most markets and the pace of new development is modest.
REITs have access to competitively cheap cost of capital, and leverage remains
modest with a group average of approximately 35%. In a number of markets,
occupancy continues to rise and rents are escalating.
Second, it appears as if the growth for REITs in 1998 will keep pace with
the broader market. REIT analysts are predicting REIT growth of 10-12% in 1998,
which when combined with yields of 5-6% equate to total return projections of
15-18%. REITs began 1997 trading at a multiple of 11.5 times current FFO and
ended the year at approximately the same multiple. The S&P 500 Index ended 1997
at 20 times current earnings, or 1.7 times the REIT FFO multiple of 11.5 times
versus a historical average of less than 1.5 times the REIT FFO multiple,
implying the S&P 500 Index is relatively expensive.
Third, REITs are beginning to substantiate the view that they are
defensive investments due to their high current yields and the relative high
certainty of revenues derived from contractual rents on portfolios of properties
within the U.S. The broader market continues to address the impact of economic
and currency weakness in Southeast Asia, Korea and Japan. Investors should
continue to view REITs as an attractive "safe harbor" option.
Finally, we believe there are themes that we can continue to exploit in
1998. We anticipate a great deal of merger activity and expect REITs will
continue to look outside the industry to rationalize the ownership of real
estate in a tax efficient structure with modest leverage.
1
<PAGE>
Institutional Real Estate Equity Securities Portfolio
- --------------------------------------------------------------------------------
[Tabular representation of line chart]
Real Estate Real Estate NAREIT Equity Total
Portfolio Class X Portfolio Class Y Return Index*
5/1/97 $250,000 $250,000 $250,000
12/31/97 $309,248 $308,884 $307,030
Total Returns for the Period Ending 12/31/97
From Inception
5/1/97 to
12/31/97
- ---------------------------------------------------------
Class X 23.70%
- ---------------------------------------------------------
Class Y 23.55%
- ---------------------------------------------------------
NAREIT Equity Total Return Index* 22.81%
- ---------------------------------------------------------
This chart assumes an initial gross investment of $250,000 made on 5/1/97
(inception of the Fund) for Class X and Class Y shares. The total returns for
Class X and Class Y shares assume reinvestment of dividends and capital gains.
Returns indicate past performance, which is not predictive of future
performance. Investment return and net asset value will fluctuate, so that your
shares, when redeemed, may be worth more or less than original cost.
* The NAREIT Equity Total Return Index is a market-weighted total return of all
tax-qualified REITs listed on the New York Stock Exchange, American Stock
Exchange and the NASDAQ National Market System.
2
<PAGE>
Institutional Real Estate Equity Securities Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------------ ---------------
<S> <C> <C> <C>
COMMON STOCKS 75.3%
REAL ESTATE INVESTMENT TRUSTS 74.9%
COMMERCIAL 23.3%
Office/Industrial 23.3%
Arden Realty Group, Inc. 15,500 $ 476,625
Boston Properties, Inc. 3,300 109,106
CenterPoint Properties Corp. 13,400 470,675
First Industrial Realty Trust, Inc. 18,500 668,313
Great Lakes REIT, Inc. 20,000 388,750
Highwoods Properties, Inc. 18,900 702,844
Reckson Associates Realty Corp. 21,000 532,875
Weeks Corp. 16,300 521,600
---------------
3,870,788
---------------
DIVERSIFIED 9.9%
Colonial Properties Trust 6,300 189,787
Crescent Real Estate Equities Co. 22,900 901,688
Vornado Realty Trust 12,000 563,250
---------------
1,654,725
---------------
HEALTH CARE 3.4%
Nationwide Health Properties, Inc. 22,200 566,100
---------------
HOTELS 14.0%
Patriot American Hospitality, Inc. 29,300 844,206
Starwood Lodging Trust combined certificate 18,500 1,070,688
Sunstone Hotel Investors, Inc. 23,600 407,100
---------------
2,321,994
---------------
NET LEASE 3.5%
TriNet Corporate Realty Trust, Inc. 15,100 584,181
---------------
RESIDENTIAL 11.1%
Apartments 11.1%
Bay Apartment Communities, Inc. 13,700 534,300
Equity Residential Properties Trust 13,700 692,706
Essex Property Trust, Inc. 17,700 619,500
---------------
1,846,506
---------------
RETAIL 9.7%
Community/Neighborhood 2.8%
Developers Diversified Realty Corp. 12,000 459,000
---------------
Factory Outlet 1.6%
Chelsea GCA Realty, Inc. 7,200 274,950
---------------
Regional Malls 5.3%
Macerich Company (The) 14,800 421,800
Urban Shopping Centers, Inc. 13,300 463,837
---------------
885,637
---------------
TOTAL RETAIL 1,619,587
---------------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Identified cost $10,381,920) 12,463,881
---------------
REAL ESTATE OPERATING COMPANIES 0.4%
Diversified 0.4%
Crescent Operating, Inc. (b) 2,500 61,250
---------------
TOTAL REAL ESTATE OPERATING COMPANIES
(Identified cost $43,125) 61,250
---------------
TOTAL COMMON STOCKS
(Identified cost $10,425,045) 12,525,131
---------------
</TABLE>
See Notes to Financial Statements 3
<PAGE>
Institutional Real Estate Equity Securities Portfolio
- --------------------------------------------------------------------------------
INVESTMENTS AT DECEMBER 31, 1997 (Continued)
<TABLE>
<CAPTION>
PAR
VALUE
(000) VALUE
------------ ---------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS 18.7%
State Street Bank and Trust Co. repurchase agreement,
5.15%, dated 12/31/97 due 1/2/98, repurchase price
$3,117,892, collateralized by U.S. Treasury Note 6.25%,
7/31/98, market value $3,261,871 $3,117 $ 3,117,000
---------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $3,117,000) 3,117,000
---------------
TOTAL INVESTMENTS 94.0%
(Identified cost $13,542,045) 15,642,131 (a)
Cash and receivables, less liabilities 6.0% 1,003,664
---------------
NET ASSETS 100.0% $ 16,645,795
===============
</TABLE>
(a) Federal income tax information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $2,106,438 and gross
depreciation of $6,352 for federal income tax purposes. At December 31,
1997, the aggregate cost of securities for federal income tax purposes was
$13,542,045.
(b) Non-income producing
4 See Notes to Financial Statements
<PAGE>
Institutional Real Estate Equity Securities Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value (Identified cost $10,425,045) $12,525,131
Repurchase agreement (Identified cost $3,117,000) 3,117,000
Cash 82
Receivables
Fund shares sold 981,201
Dividends and interest 50,050
Receivable from adviser 14,414
Prepaid expenses 21,207
----------------
Total assets 16,709,085
----------------
Liabilities
Payables
Financial agent fee 6,964
Transfer agent fee 3,335
Administration fee 1,668
Trustees' fee 1,122
Distribution fee 26
Accrued expenses 50,175
----------------
Total liabilities 63,290
----------------
Net Assets $16,645,795
================
Net Assets Consist of:
Capital paid in on shares of beneficial interest $14,496,250
Undistributed net investment income 44,752
Accumulated net realized gain 4,707
Net unrealized appreciation 2,100,086
----------------
Net Assets $16,645,795
================
Class X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $15,790,802) 1,319,995
Net asset value and offering price per share $11.96
Class Y
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $854,993) 71,483
Net asset value and offering price per share $11.96
</TABLE>
See Notes to Financial Statements 5
<PAGE>
Institutional Real Estate Equity Securities Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FROM INCEPTION MAY 1, 1997
TO DECEMBER 31, 1997
Investment Income
Dividends $418,975
Interest 12,830
----------------
Total investment income 431,805
----------------
Expenses
Investment advisory fee 38,173
Distribution fee - Class Y 188
Financial agent fee 55,041
Administration fee 11,440
Registration 68,003
Transfer agent 26,048
Professional 16,787
Trustees 7,301
Printing 5,289
Custodian 1,772
Miscellaneous 4,773
----------------
Total expenses 234,815
Less expenses borne by investment adviser (165,748)
----------------
Net expenses 69,067
----------------
Net investment income 362,738
----------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 46,037
Net change in unrealized appreciation (depreciation) on
investments 2,100,086
----------------
Net gain on investments 2,146,123
----------------
Net increase in net assets resulting from operations $2,508,861
================
6 See Notes to Financial Statements
<PAGE>
Institutional Real Estate Equity Securities Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
From Inception
May 1, 1997 to
Dec. 31, 1997
----------------
From Operations
Net investment income $ 362,738
Net realized gain 46,037
Net change in unrealized appreciation (depreciation) 2,100,086
----------------
Increase in net assets resulting from operations 2,508,861
----------------
From Distributions to Shareholders
Net investment income - Class X (356,617)
Net investment income - Class Y (3,409)
Net realized gains - Class X (40,923)
Net realized gains - Class Y (407)
----------------
Decrease in net assets from distributions
to shareholders (401,356)
----------------
From Share Transactions
Class X
Proceeds from sales of shares (1,285,529 shares) 13,305,591
Net asset value of shares issued from reinvestment of
distributions (34,466 shares) 397,538
Cost of shares repurchased (0 shares) -
----------------
Total 13,703,129
----------------
Class Y
Proceeds from sales of shares (71,152 shares) 831,346
Net asset value of shares issued from reinvestment of
distributions (331 shares) 3,815
Cost of shares repurchased (0 shares) -
----------------
Total 835,161
----------------
Increase in net assets from share transactions 14,538,290
----------------
Net increase in net assets 16,645,795
Net Assets
Beginning of period 0
----------------
End of period (including undistributed net investment
income of $44,752) $16,645,795
================
See Notes to Financial Statements 7
<PAGE>
Institutional Real Estate Equity Securities Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class X Class Y
------------ ------------
From Inception From Inception
5/1/97 to 5/1/97 to
12/31/97 12/31/97
------------ ------------
<S> <C> <C>
Net asset value, beginning of period $10.00 $10.00
Income from investment operations (5)
Net investment income 0.39(1) 0.34(1)
Net realized and unrealized gain 1.96 2.00
------------ ------------
Total from investment operations 2.35 2.34
------------ ------------
Less distributions
Dividends from net investment income (0.35) (0.34)
Dividends from net realized gains (0.04) (0.04)
------------ ------------
Total distributions (0.39) (0.38)
------------ ------------
Change in net asset value 1.96 1.96
------------ ------------
Net asset value, end of period $11.96 $11.96
============ ============
Total return 23.70%(3) 23.55%(3)
Ratios/supplemental data:
Net assets, end of period (thousands) $15,791 $855
Ratio to average net assets of:
Operating expenses 0.90%(2) 1.15%(2)
Net investment income (5) 4.75%(2) 4.51%(2)
Portfolio turnover 4%(3) 4%(3)
Average commission rate paid $0.0500 (4) $0.0500 (4)
</TABLE>
(1) Includes reimbursement of operating expenses by investment adviser of $0.16
and $0.16, respectively.
(2) Annualized.
(3) Not annualized.
(4) A fund is required to disclose its average commission rate per share for
securities trades on which commissions are charged. This rate generally
does not reflect mark-ups, mark-downs or spreads on shares traded on a
principal basis.
(5) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
8 See Notes to Financial Statements
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
REAL ESTATE EQUITY SECURITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
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 an open-end management investment company. Seven
Portfolios are presently offered for sale: Balanced Portfolio, Managed Bond
Portfolio, Growth Stock Portfolio, Money Market Portfolio, U.S. Government
Securities Portfolio, Enhanced Reserves Portfolio and Real Estate Equity
Securities Portfolio. This report covers only the Real Estate Equity Securities
Portfolio (the "Portfolio"). The Portfolio's investment objective is capital
appreciation and income with approximately equal emphasis through investing,
under normal circumstances, primarily in marketable securities of
publicly-traded real estate investment trusts (REITS) and companies that invest
in, operate, develop and/or manage real estate located in the United States.
The 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 the 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 Portfolio 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 amount 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 has been
no sale that day, at the last bid price. Short-term investments having a
remaining maturity of 60 days or less are valued at amortized cost which
approximates market.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. The Portfolio does not amortize premiums but does accrete discounts using
the effective interest method. Realized gains or losses are determined on the
identified cost basis.
C. Income taxes:
The Portfolio is treated as a separate taxable entity. It is the policy of
the Portfolio to comply with the requirements of the Internal Revenue Code (the
"Code"), applicable to regulated investment companies, and to distribute all of
its taxable income to its shareholders. In addition, the 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 the 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, 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. 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.
9
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL MUTUAL FUNDS
REAL ESTATE EQUITY SECURITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 (Continued)
F. Repurchase agreements:
A repurchase agreement is a transaction where a Portfolio acquires a
security for cash and obtains a simultaneous commitment from the seller to
repurchase the security at an agreed upon price and date. The Portfolio, through
its custodian, takes possession of securities collateralizing the repurchase
agreement. The collateral is marked to market daily to ensure that the market
value of the underlying assets remains sufficient to protect the Portfolio in
the event of default by the seller. If the seller defaults and the value of the
collateral declines or, if the seller enters insolvency proceedings, realization
of collateral may be delayed or limited.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
The investment adviser for the Portfolio is Phoenix Realty Securities,
Inc. ("PRS"), an indirect, wholly-owned subsidiary of Phoenix Home Life Mutual
Insurance Company ("PHL"). As compensation for its services, PRS is entitled to
a fee based on an annual rate of 0.50% of the average daily net assets of the
Portfolio. The Adviser has agreed to reimburse the Portfolio to the extent that
total expenses exceed 0.90% and 1.15% of the average daily net assets of Class X
and Class Y, respectively.
Duff & Phelps Investment Management Co. ("DPIM") serves as administrator
for the Portfolio, and as such, facilitates and provides administrative
services. DPIM is a subsidiary of Phoenix Duff & Phelps Corporation, which is an
indirect, majority-owned subsidiary of PHL. As compensation, under an
Administration Agreement, DPIM receives a fee at the annual rate of 0.15% of the
average daily net assets of the Portfolio.
Phoenix Equity Planning Corporation ("PEPCO"), an indirect, majority-owned
subsidiary of PHL, serves as the national distributor of the Fund's shares. The
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.
As Financial Agent to the Portfolio, PEPCO receives a fee for bookkeeping
and pricing services at an annual rate of 0.05% of average daily net assets up
to $100 million, 0.04% of average daily net assets from $100 million through
$300 million, 0.03% of average daily net assets from $300 million through $500
million and 0.015% of average daily net assets greater than $500 million; a
minimum fee may apply.
PEPCO serves as the Portfolio's Transfer Agent with State Street Bank and
Trust Company as sub-transfer agent. For the period ended December 31, 1997,
transfer agent fees were $26,048 which were all paid to State Street.
As of December 31, 1997, PHL owned 498,529 Class X shares with a value of
$5,962,409 and 10,169 Class Y shares with a value of $121,621. The PHL Employee
Defined Benefit Pension Plan owned 533,215 Class X shares with a value of
$6,377,252.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the period ended December 31,
1997, were $10,815,095 and $383,094, respectively. There were no purchases or
sales of U.S. Government and agency securities.
4. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Portfolio has recorded
several reclassifications in the capital accounts. These reclassifications have
no impact on the net asset value of the Portfolio 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, 1997,
the Portfolio increased undistributed net investment income and decreased
capital paid in on shares of common stock by $42,040.
10
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[Price Waterhouse LLP]
To the Trustees and Shareholders of
Phoenix Duff & Phelps Institutional Real Estate Equity Securities Portfolio
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, 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 Phoenix Duff & Phelps Institutional
Real Estate Equity Securities Portfolio (the "Fund") at December 31, 1997, the
results of its operations, the changes in its net assets and the financial
highlights for the period 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 audit. We conducted our audit 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 audit, which included
confirmation of securities at December 31, 1997 by correspondence with the
custodian, provides a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Boston, Massachusetts
February 19, 1998
11
<PAGE>
PHOENIX DUFF & PHELPS INSTITUTIONAL REAL ESTATE EQUITY SECURITIES PORTFOLIO
101 Munson Street
Greenfield, Massachusetts 01301
<TABLE>
<S> <C>
Trustees Investment Adviser
C. Duane Blinn Phoenix Realty Securities, Inc.
Robert Chesek 38 Prospect Street
E. Virgil Conway Hartford, Connecticut 06115-0479
William W. Crawford
Harry Dalzell-Payne Principal Underwriter
William N. Georgeson Phoenix Equity Planning Corporation
Francis E. Jeffries 100 Bright Meadow Boulevard
Leroy Keith, Jr. P. O. Box 2200
Philip R. McLoughlin Enfield, Connecticut 06083-2200
Eileen A. Moran
Everett L. Morris Custodian
James M. Oates State Street Bank and Trust Company
Richard A. Pavia P. O. Box 351
Calvin J. Pedersen Boston, Massachusetts 02101
Philip R. Reynolds
Herbert Roth, Jr. Transfer Agent
Richard E. Segerson Phoenix Equity Planning Corporation
Lowell P. Weicker, Jr. 100 Bright Meadow Boulevard
P. O. Box 2200
Officers Enfield, Connecticut 06083-2200
Philip R. McLoughlin, President
Michael E. Haylon, Executive Vice President Independent Accountants
William J. Newman, Senior Vice President Price Waterhouse LLP
James D. Wehr, Senior Vice President 160 Federal Street
Marvin E. Flewellen, Vice President Boston, Massachusetts 02110
John D. Kattar, Vice President
William E. Keen, III, Vice President/Assistant Secretary
Christopher J. Kelleher, Vice President
William R. Moyer, Vice President
Scott C. Noble, Vice President
Barbara Rubin, Vice President
Leonard J. Saltiel, Vice President
Julie L. Sapia, Vice President
Michael Schatt, Vice President
Dorothy J. Skaret, Vice President
Pierre G. Trinque, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary
</TABLE>
This report is not authorized for distribution to prospective investors in
the Phoenix Duff & Phelps Institutional Real Estate Equity Securities Portfolio
unless preceded or accompanied by an effective Prospectus which includes
information concerning the Portfolio's record and other pertinent information.
12
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<DIVIDEND-INCOME> 882
<INTEREST-INCOME> 270
<OTHER-INCOME> 0
<EXPENSES-NET> (654)
<NET-INVESTMENT-INCOME> 498
<REALIZED-GAINS-CURRENT> 27923
<APPREC-INCREASE-CURRENT> (8684)
<NET-CHANGE-FROM-OPS> 19737
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (475)
<DISTRIBUTIONS-OF-GAINS> (27451)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 187
<NUMBER-OF-SHARES-REDEEMED> (1382)
<SHARES-REINVESTED> 761
<NET-CHANGE-IN-ASSETS> (38389)
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<NAME> PDP INSTITUTIONAL U.S. GOVERNMENT SECURITIES PORTFOLIO CL X
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<PER-SHARE-GAIN-APPREC> 2.00
<PER-SHARE-DIVIDEND> (0.34)
<PER-SHARE-DISTRIBUTIONS> (0.04)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.96
<EXPENSE-RATIO> 1.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
