<PAGE>
ENHANCED RESERVES FUND
ANNUAL REPORT
DECEMBER 31, 1995
[LOGO] DUFF & PHELPS
MUTUAL FUNDS
<PAGE>
DUFF & PHELPS
[LOGO] MUTUAL FUNDS
LETTER FROM THE CHAIRMAN
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Dear Shareholder:
Enclosed is your copy of the Duff & Phelps Enhanced Reserves Fund Annual
Report for the period ended December 31, 1995. We would like to thank you
for your participation within the Fund. Given the direction of interest
rates throughout 1995, our strategy had tremendous success compared to other
short-term investment strategies. We have been extremely pleased with our
results since the inception of the Fund and continue to feel that the means
are in place for continued value to our clients.
Since the inception of the Fund on June 27, 1994, the fixed income
market has been extremely volatile and short term interest rates have risen
dramatically. The Federal Reserve's Fed Fund's target rate was 4.25% and it
currently stands at 5.50% after reaching a high of 6.00%. Despite the
significant rally experienced in the market in 1995, we have yet to return to
the low level of short-term interest rates experienced in 1993. However, our
strategy has demonstrated its ability to provide value over money market
alternatives. The vindication of this strategy has been critically important
to existing clients as well as efforts to garner more assets within this
investment option. The Fund's past performance information and general market
outlook can be found in the Manager's Fund Update section.
Our strategy is somewhat unique and we want to emphasize its
characteristics. The Fund's goals are to increase current income while
preserving capital. The Fund is an active short-term investment option that
uses sector rotation, yield curve strategies, duration, and issue selection
to structure a portfolio to try to outperform the one year Treasury Bill or
money market alternatives. This Fund does have market risk since it does not
prescribe to the regulatory demands of a stable dollar money market fund. The
Enhanced Reserves Fund is a total return portfolio that has the flexibility
to be extremely defensive to protect capital while interest rates are adverse
yet provides excess returns during periods of stable or falling interest
rates.
Duff & Phelps has been serving a wide variety of clientele with proven
investment strategies for over 60 years. Effective November 1, 1995, the
firm merged with Phoenix Securities Group in order to expand our overall
investment and marketing capabilities in this dynamic business environment.
The combined entity has over $35 billion in discretionary assets under
management. Our long history of research and conservative investment
philosophy will be enhanced given this new corporate entity.
We look to 1996 with great excitement. Our Enhanced Reserves Fund has
performed extremely well compared with passive approaches while offering a
tremendous risk/reward alternative for cash management investors. This unique
attribute should help our investment and marketing team to grow this product
within the marketplace. We value your participation as a shareholder. Please
feel free to contact your sales representative or Duff & Phelps Mutual Funds
at 1-800-500-DUFF (3833) if you have any questions about our Fund.
Sincerely,
/s/ Calvin J. Pedersen
- -----------------------------
Calvin J. Pedersen
Chairman
1
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DUFF & PHELPS
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MANAGER'S FUND UPDATE
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The Duff & Phelps Enhanced Reserves Fund seeks to provide a high level
of current income consistent with a preservation of capital. The Fund is
structured to provide our clients with a higher yield than is typically
associated with a dollar stable money market fund, and with less volatility
than generated from an intermediate-term or long-term bond fund. The
risk/reward characteristics for this strategy are extremely compelling.
[CHART]
The fixed income market had a tremendous year in 1995. The level of
interest rates across the entire maturity spectrum fell as inflation
expectations and economic growth fell below their respective targeted levels
outlined by the Federal Reserve. The benign inflation picture caused the Fed
to eliminate their aggressive tightenings that drove the Fed Fund rate during
1994 from 3.00% to 5.50%. With an additional 50 basis point increase in the
Fed Fund rate in early 1995 to 6.00%, the Federal Reserve was attempting to
engineer a "soft landing" of the economy. Signs of economic slowdown quickly
appeared in consumer related areas, such as housing, retail sales, and
consumer confidence statistics. Furthermore, the demand for U.S. securities
intensified. The additional yield and potential currency appreciation in the
U.S. market attracted significant inflows of capital. Lastly, the budget
deficit debates in Washington added substantial fuel to the rallying market.
The anticipated fiscal drag to the economy and the long-term ramification to
Treasury issuance provided the market further impetus for interest rates to
decline. Before the year had ended, the Fed had reversed its tightening moves
by a total of 50 basis points back to the beginning of the year level of
5.50%.
[CHART]
Even though the Fed Fund's rate was unchanged year over
year, the fixed income market experienced tremendous returns in 1995. Our
performance benefited from the significant decline in interest rates. For the
year, we were competitive relative to the one year Treasury Bill and money
market alternatives. Money market investors did not participate in the rally of
1995. The Fund used several extension trades and yield curve strategies to add
value. Under normal market conditions, the fund maintains a 65% weighting in
corporate bonds and U.S. securities. After structuring the portfolio somewhat
defensively for the majority of the first half of the year, we shifted our
strategy to improve the total return opportunities of the Fund. We decreased
our money market holdings to extend duration and to achieve higher yields. The
Fund also used asset-backed securities as a relative value
2
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DUFF & PHELPS
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MANAGER'S FUND UPDATE
- ------------------------------------------------------------------------------
alternative to corporate exposure. Given the volatile nature of the market,
we were able to extend duration strategically during periods of weakness. We
were also able to apply a barbell yield curve strategy for the majority of
the second half of the year which also benefited our performance.
Short-term interest rates were already pricing in the direction of Fed
action by the fourth quarter of the year. For example, the three and six
month Treasury bills traded below the Fed Funds target rate for the entire
quarter. Therefore, the Fed needs to validate the market in order to avoid
significant price erosion. However, the Fed's reluctancy to ease monetary
policy aggressively should restrict significant economic growth in the near
term. We believe that weaker economic growth data will lead to continual Fed
easings. We will maintain a duration in excess of the market and will begin
moving to a more bullet structure. Spread products, such as corporates,
asset-backed securities, and a small allocation to mortgages will be
emphasized.
[CHART]
[CHART]
[CHART]
3
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DUFF & PHELPS
[LOGO] MUTUAL FUNDS
MANAGEMENT OF THE FUND
- ------------------------------------------------------------------------------
CALVIN J. PEDERSEN - Chairman and Trustee. Mr. Pedersen is Director and
President of Phoenix Duff & Phelps Corporation, Chairman of the Board of
Directors of Duff & Phelps Investment Management Co., President and Chief
Executive Officer of Duff & Phelps Utilities Income Inc., Duff & Phelps
Utility and Corporate Bond Trust Inc. and Duff & Phelps Utilities Tax-Free
Income Inc. Because of his affiliation with Duff & Phelps, Mr. Pedersen is
considered an "interested" Trustee of the Trust.
E. VIRGIL CONWAY - Trustee. Mr Conway is the Chairman of the Metropolitan
Transit Authority. Mr. Conway is a Director of Duff & Phelps Utility and
Corporate Bond Trust, Inc., Duff & Phelps Utilities Tax-Free Income Inc.,
Phoenix Asset Reserve, Phoenix California Tax-Exempt Bonds, Inc., Phoenix
Multi-Sector Fixed Income Fund, Inc. and Phoenix Total Return Fund, Inc. Mr.
Conway is also a Trustee of Phoenix Income and Growth Fund, Phoenix Strategic
Equity Series Fund, Phoenix Worldwide Opportunities Fund, The Phoenix Edge
Series Fund, Phoenix Multi-Portfolio Fund and Phoenix Series Fund.
WILLIAM W. CRAWFORD - Trustee. Mr. Crawford was formerly President and Chief
Operating Officer of Hilliard, Lyons, Inc. Mr. Crawford is a Director of Duff
& Phelps Utility and Corporate Bond Trust Inc. and Duff & Phelps Utilities
Tax-Free Income Inc.
WILLIAM N. GEORGESON - Trustee. Mr. Georgeson was formerly Vice President of
Nuveen Advisory Corporation, an investment adviser. Mr. Georgeson also is a
Director of Duff & Phelps Utilities Tax-Free Income Inc. and Duff & Phelps
Utility and Corporate Bond Trust Inc.
EVERETT L. MORRIS - Trustee. Mr. Morris is Vice President of W. H. Reaves
and Company. Mr. Morris also is a Director of Duff & Phelps Utility and
Corporate Bond Trust Inc. and Duff & Phelps Utilities Tax-Free Income Inc.
Prior to March 1993, Mr. Morris was a Director of Public Service Enterprise
Group Inc. and President and Chief Operating Officer of Enterprise
Diversified Holdings Inc. Prior to January 1992, Mr. Morris was Senior
Executive Vice President and Chief Financial Officer of Public Service
Electric and Gas Company. Prior to 1991, Mr. Morris was a Director of First
Fidelity Bank, N.A., N.J.
RICHARD A. PAVIA - Trustee. Mr. Pavia is currently a Director of Speer
Financial, Inc., a company specializing in public finance. Mr. Pavia retired
as Chairman and Chief Executive Officer of Speer Financial Inc. in 1994. Mr.
Pavia also is a Director of Duff & Phelps Utility and Corporate Bond Trust
lnc. and Duff & Phelps Utilities Tax-Free Income Inc.
ROBERT J. MOORE - Executive Vice President and Chief Investment Officer. Mr.
Moore is Executive Vice President of Duff & Phelps Investment Management Co.,
Duff & Phelps Utility and Corporate Bond Trust lnc. and Duff & Phelps
Utilities Tax-Free Income Inc. Prior to joining Duff & Phelps, Mr. Moore was
a Principal and Portfolio Manager with Harris Investment Management and was a
lead portfolio manager with Ford Motor Company.
MARVIN FLEWELLEN - Senior Vice President and Portfolio Manager. Mr.
Flewellen is a Senior Vice President of Duff & Phelps Investment Management
Co. Prior to joining Duff & Phelps, Mr. Flewellen was a Second Vice President
and Portfolio Manager with Northern Trust Bank.
MARK A. POUGNET - Treasurer. Mr. Pougnet is Chief Financial Officer of ALPS
Mutual Funds Services, Inc. and Treasurer for the First Funds and Westcore
Funds. Prior to joining ALPS, Mr. Pougnet was Executive Director of
Syndication Accounting for Paramount Pictures-Television Group.
THOMAS N. STEENBURG - Secretary. Mr. Steenburg is Vice President, Counsel
and Secretary of Phoenix Duff & Phelps Corporation; Secretary, Phoenix
Investment Counsel, Inc., Phoenix Equity Planning Corporation, National
Securities & Research Corporation; Secretary, Duff & Phelps Utility and
Corporate Bond Trust Inc. and Duff & Phelps Utilities Tax-Free Income Inc.
4
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DUFF & PHELPS
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MANAGEMENT OF THE FUND
- ------------------------------------------------------------------------------
MARY JO METZ - Assistant Secretary and Assistant Treasurer. Ms. Metz is
Assistant Vice President of Duff & Phelps Investment Management Co. and
Treasurer and Assistant Secretary of Duff & Phelps Utilities Tax-Free Income
Inc. and Duff & Phelps Utility and Corporate Bond Trust Inc.
DUFF & PHELPS OFFICERS AND TRUSTEES
Calvin J. Pedersen
CHAIRMAN, PRESIDENT, CHIEF EXECUTIVE OFFICER AND TRUSTEE
E. Virgil Conway
TRUSTEE
William W.Crawford
TRUSTEE
William N. Georgeson
TRUSTEE
Everett L. Morris
TRUSTEE
Richard A. Pavia
TRUSTEE
Robert Moore
EXECUTIVE VICE PRESIDENT AND CHIEF INVESTMENT OFFICER
Marvin Flewellen
SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER
Mark A. Pougnet
TREASURER
Thomas N. Steenburg
SECRETARY
Mary Jo Metz
ASSISTANT SECRETARY AND ASSISTANT TREASURER
5
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DUFF & PHELPS
[LOGO] MUTUAL FUNDS
FOR YOUR INFORMATION
- ------------------------------------------------------------------------------
INVESTMENT ADVISOR
Duff & Phelps Investment Management Co.
55 East Monroe Street
Chicago, Illinois 60603
DISTRIBUTOR/ADMINISTRATOR AND
TRANSFER AGENT
ALPS Mutual Funds Services, Inc.
370 17th Street, Suite 2700
Denver, Colorado 80202
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT AUDITORS
Deloitte & Touche LLP
555 17th Street, Suite 3600
Denver, Colorado 80202
CUSTODIAN AND SUB-TRANSFER AGENT
State Street Bank & Trust Company
P.O. Box 1713
Boston, Massachusetts 02015
Dealer Services Information
1-800-500-DUFF (3833)
This report is submitted for the general information of the shareholders of
the Trust. It is not authorized for distribution to prospective investors
unless accompanied or preceded by the effective prospectus for the Fund,
which contains information concerning the investment policies and expenses of
the portfolio as well as other pertinent information.
6
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DUFF & PHELPS
[LOGO] MUTUAL FUNDS
ACCOUNT SERVICES
- ------------------------------------------------------------------------------
EASY ACCESS TO YOUR FUNDS
WIRE TRANSFER - Shares of the Enhanced Reserves Fund may be purchased or
redeemed by the bank wire services.
LATE DAY INVESTING - You may place trades up until 4:00 p.m. Eastern Time,
giving you as much of the day as possible to invest your assets.
AUTOMATIC REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS - The
automatic reinvestment of dividends and capital gains distributions keeps all
your assets working for you. You may also choose to receive distributions in
cash.
FREE TELEPHONE REDEMPTION SERVICES - Access to your investment as needed
through telephone redemptions. Call 1-800-500-DUFF (3833).
DUFF & PHELPS MUTUAL FUNDS INVESTOR SERVICE CENTER
You have access to information and resources related to your investment
through our toll-free phone number. Call to access your current balance,
place trades, or find the most recent yield, dividend, or Net Asset Value
information. Our specially trained, registered Service Representatives are
available from 9:00 a.m. to 8:00 p.m. Eastern Time every business day. The
number is 1-800-500-DUFF (3833).
REPORTS RECEIVED
CONFIRMATION OF ALL TRANSACTIONS - You will receive account statements
reflecting the transactions in your account within five days of the
transaction taking place.
MONTHLY STATEMENTS - Whether there is activity in the account or the account
has no activity, you will receive a statement on the account holdings monthly.
YEAR-END TAX REPORTING - At the end of each year each account will receive an
individualized report which shows the tax status of the dividends and any
capital gain distributions paid to the account during the year. These
reports can help calculate taxes due on shares sold by reporting average cost.
7
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DUFF & PHELPS
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BOND RATINGS
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The quality of bonds can, to some degree, be determined from the ratings of
the most prominent rating services: Moody's, Standard & Poor's and Duff &
Phelps. These ratings are used by government and industry regulatory
agencies, the investing public, and portfolio managers as a guide to the
relative security and value of each bond. The ratings are not used as an
absolute factor in determining the strength of the pledge securing a
particular issue. Many non-rated issues are sound investments. The rating
symbols of two of these services are shown in the box.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Long-Term Securities Short-Term Securities
-------------------- ---------------------
Moody's Duff & Phelps Credit Moody's Duff & Phelps Credit
Investors Service Rating Company Investors Service Rating Company
----------------- -------------- ----------------- --------------
<S> <C> <C> <C> <C>
Prime N/A N/A P1 D1+
Excellent Aaa AAA N/A D1
Good Aa AA N/A D1-
Average A A P2 D2
Fair Baa BBB N/A N/A
Poor Ba BB P3 D3
Marginal B B N/A N/A
Speculative Caa CCC N/A N/A
- -----------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
DUFF & PHELPS
[LOGO] MUTUAL FUNDS
INDEPENDENT AUDITORS' REPORT
- ------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of Duff & Phelps Enhanced Reserves
Fund:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments of Duff & Phelps Enhanced Reserves
Fund as of December 31, 1995, the related statements of operations for the
year ended December 31, 1995 and changes in net assets for the year ended
December 31, 1995 and the period ended December 31, 1994, and the financial
highlights for the period June 27, 1994 (commencement of operations) to
December 31, 1995. These financial statements and financial highlights 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 in accordance with generally accepted auditing
standards. Those standards 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.
Our procedures included confirmation of securities owned at December 31, 1995
by correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Duff & Phelps
Enhanced Reserves Fund at December 31, 1995, and the results of its
operations, the changes in its net assets, and the financial highlights for
each of the respective stated periods, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
January 19, 1996
9
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THIS PAGE INTENTIONALLY
LEFT BLANK
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10
<PAGE>
DUFF & PHELPS
[LOGO] MUTUAL FUNDS
- ------------------------------------------------------------------------------
ENHANCED RESERVES FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $134,385,292)- see accompanying statement $135,533,181
Cash 1,621
Interest receivable 1,653,447
Deferred organizational costs, net of accumulated amortization 164,853
Other 4,836
- ----------------------------------------------------------------------------------------
Total Assets 137,357,938
- ----------------------------------------------------------------------------------------
LIABILITIES
Payables:
Dividends 707,144
Duff & Phelps Investment Management Co. 235,102
Other 35,459
- ----------------------------------------------------------------------------------------
Total Liabilities 977,705
- ----------------------------------------------------------------------------------------
NET ASSETS $136,380,233
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS - NOTE 1
Paid-in capital $134,937,709
Undistributed net investment income 532
Accumulated net realized gain from investment transactions 294,103
Net unrealized appreciation 1,147,889
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
NET ASSETS $136,380,233
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Shares of beneficial interest outstanding 13,529,224
- ----------------------------------------------------------------------------------------
Net asset value and redemption price per share $10.08
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
11
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DUFF & PHELPS
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ENHANCED RESERVES FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
FACE AMOUNT MARKET VALUE BOND RATING+
- ----------- ------------ ------------
<S> <C> <C> <C>
CORPORATE BONDS 55.04%
Asset-Backed 25.10%
- ---------------------------------------------------------------------------------------------------------
$4,486,508 Chase Manhattan Grantor, 1995-A, ABS
6.00%, 09/17/01 $ 4,520,242 AAA
5,000,000 First Chicago Master Trust II, Ser. 93-F A,
6.30%, 02/15/00 (1) 5,023,195 AAA
2,910,501 Ford Grantor Trust 95-A, ABS
5.90%, 05/15/00 2,927,670 AAA
4,000,000 Fremont Small Business Administration,
Ser. 93a, ABS, 6.408%, 03/16/98 (1) 4,006,876 AAA
1,800,000 Fremont Small Business Administration,
Ser. 93b, ABS, 6.438%, 10/15/99 (1) 1,805,506 AAA
556,399 GreenTree Financial, Ser. 94-6A1,
6.35%, 1/15/20 558,079 AAA
2,708,519 GreenTree Financial, Ser. 95-A1,
7.00%, 4/15/20 2,731,804 AAA
2,500,000 MBNA Master Credit Card Trust 94-B A, ABS
5.49%, 01/15/02 (1) 2,508,648 AAA
2,500,000 MBNA Master Trust, Ser. 94-D-A,
5.86%, 03/15/00 (1) 2,500,000 AAA
4,000,000 Standard Credit Card Master Trust,
Ser. 95-4A1, 5.975%, 02/15/00 (1) 4,001,076 AAA
3,566,383 Western Financial, Ser. 95-2 A-1,
7.10%, 07/01/00 3,647,978 AAA
-----------
34,231,074
-----------
Chemicals 1.13%
- ---------------------------------------------------------------------------------------------------------
1,500,000 DuPont Corp,
8.45%, 10/15/96 1,535,989 AA-
-----------
Financial 25.80%
- ---------------------------------------------------------------------------------------------------------
3,675,000 AT&T Capital Corporation,
7.96%, 12/27/96 3,761,664 A
5,000,000 Associates Corp N.A.
6.625%, 05/15/98 5,121,080 AA-
1,000,000 Citicorp MTN Sr Notes,
9.90%, 03/14/96 1,009,115 A+
5,000,000 CIT Group Holdings
5.70%, 12/15/98 5,005,315 AA-
5,714,000 Commercial Credit Co.
8.00%, 09/01/96 5,807,390 A+
6,300,000 General Electric Capital Corp.
5.80%, 10/09/98 (1) 6,310,477 AAA
4,500,000 General Motors Acceptance Corp,
7.50%, 11/04/97 4,647,807 A-
3,500,000 Lehman Brothers Holdings,
9.750%, 04/01/96 3,532,424 A
-----------
35,195,272
-----------
</TABLE>
12
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DUFF 7 PHELPS
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ENHANCED RESERVES FUND
STATEMENT OF INVESTMENTS
DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
FACE AMOUNT MARKET VALUE BOND RATING+
- ----------- ------------ ------------
<S> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
Food, Beverage & Tobacco 3.01%
- ---------------------------------------------------------------------------------------------------------
$4,000,000 Phillip Morris Co.,
8.75%, 12/01/96 $ 4,109,852 A
-----------
TOTAL CORPORATE BONDS
(Cost $74,549,122) 75,072,187
-----------
U.S. GOVERNMENT AGENCIES 8.86%
- ---------------------------------------------------------------------------------------------------------
1,957,876 Federal National Mortgage Assn, #104878,
ARM, 7.83%, 03/01/20 (1) 2,013,553 AAA
10,000,000 Federal Home Loan Mortgage, 15 Year Gold
6.50%, 1/1/11 10,068,750 AAA
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(Cost $12,017,902) 12,082,303
-----------
U.S. GOVERNMENT TREASURIES 20.80%
U.S. Treasury Notes 20.80%
- ---------------------------------------------------------------------------------------------------------
7,000,000 7.50%, 01/31/97 7,170,625 AAA
5,000,000 5.875%, 07/31/97 5,053,125 AAA
5,000,000 7.25%, 02/15/98 5,200,000 AAA
5,000,000 6.75%, 04/30/00 5,264,055 AAA
5,000,000 7.50%, 02/15/05 5,676,555 AAA
-----------
TOTAL U.S. GOVERNMENT TREASURIES
(Cost $27,803,937) 28,364,360
-----------
COMMERCIAL PAPER 12.51%
Finance 12.51%
- ---------------------------------------------------------------------------------------------------------
5,000,000 American Express Credit Corp, CP
5.703%, 2/08/96 5,016,633 D1
5,000,000 John Deere Capital Corp
5.691%, 01/18/96 5,004,742 D1
7,000,000 Norwest Financial CP
5.752%, 01/25/96 7,036,909 D1
-----------
TOTAL COMMERCIAL PAPER
(Cost $17,058,284) 17,058,284
-----------
REPURCHASE AGREEMENTS 2.17%
- ---------------------------------------------------------------------------------------------------------
2,955,000 State Street Repo. 4.25%, 1/02/96
Collateral: $2,700,000 U.S. Treasury Note
7.50%, 05/15/02 @ 111.703 2,956,047 AAA
-----------
TOTAL REPURCHASE AGREEMENTS
(Cost $2,956,047) 2,956,047
-----------
</TABLE>
13
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DUFF 7 PHELPS
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ENHANCED RESERVES
FUNDSTATEMENT OF INVESTMENTS
DECEMBER 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
MARKET VALUE
------------
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $134,385,292) 99.38% $135,533,181
OTHER ASSETS IN EXCESS OF LIABILITIES 0.62% 847,052
-------------------------
NET ASSETS 100.00% $136,380,233
-------------------------
-------------------------
</TABLE>
(1) Variable rate security. Reported rate is the effective rate on
December 31, 1995
+ Unaudited.
See Notes to Financial Statements.
14
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ENHANCED RESERVES FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $7,693,000
- ------------------------------------------------------------------------------
EXPENSES
Investment advisory fee 183,854
Administrative services (Note 3) 183,854
Legal 31,804
Amortization of organization costs 47,100
Insurance 6,227
Registration 28,945
Trustee fees 26,384
Printing 3,024
- ------------------------------------------------------------------------------
Total Expenses 511,192
- ------------------------------------------------------------------------------
Expenses waived by investment advisor (83,733)
- ------------------------------------------------------------------------------
NET EXPENSES 427,459
- ------------------------------------------------------------------------------
NET INVESTMENT INCOME 7,265,541
- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investment transactions 586,169
- ------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of period (261,542)
End of period 1,147,889
- ------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 1,409,431
- ------------------------------------------------------------------------------
Net realized and unrealized gain on investments 1,995,600
- ------------------------------------------------------------------------------
Net increase in net assets resulting from operations $9,261,141
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
15
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DUFF & PHELPS
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- ------------------------------------------------------------------------------
ENHANCED RESERVES FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994 (1)
----------------- ---------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment income $ 7,265,541 $ 1,334,485
Net realized gain (loss) on investments 586,169 (75,459)
Net change in unrealized appreciation (depreciation) 1,409,431 (261,542)
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 9,261,141 997,484
- ---------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (7,264,990) (1,334,504)
Distributions to shareholders from net realized
gain on investments (216,607) 0
- ---------------------------------------------------------------------------------------------
Change in net assets derived from investment
activities 1,779,544 (337,020)
- ---------------------------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS
Proceeds from sale of shares 347,741,556 85,182,744
Net asset value of shares issued to shareholders
from reinvestment of dividends 7,095,970 955,111
- ---------------------------------------------------------------------------------------------
354,837,526 86,137,855
Cost of shares redeemed (304,797,452) (1,340,220)
- ---------------------------------------------------------------------------------------------
Change in net assets from beneficial interest
transactions 50,040,074 84,797,635
- ---------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 51,819,618 84,460,615
NET ASSETS:
Beginning of period 84,560,615 100,000(2)
- ---------------------------------------------------------------------------------------------
End of period (including (over)/undistributed net
investment income of $532 and $(19), respectively) $ 136,380,233 $84,560,615
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced on June 27, 1994.
(2) Initial Capitalization.
See Notes to Financial Statements.
16
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ENHANCED RESERVES FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT THE PERIODS INDICATED:
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994 (1)
----------------- ---------------------
<S> <C> <C>
Net asset value - beginning of period $9.94 $10.00
- ---------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.60 .26
Net realized and unrealized gain (loss) on
investments 0.16 (.06)
- ---------------------------------------------------------------------------------------------
Total income from investment operations 0.76 .20
- ---------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.60) (.26)
Distributions from net realized gain on investments (0.02) -
- ---------------------------------------------------------------------------------------------
Total dividends and distributions to shareholders (0.62) (.26)
- ---------------------------------------------------------------------------------------------
Net asset value - end of period $10.08 $9.94
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
Total return 7.80% 4.02%(2)
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $136,380 $84,561
- ---------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.35% .34%(2)
- ---------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 5.93% 5.24%(2)
- ---------------------------------------------------------------------------------------------
Ratio of expenses to average net assets without fee
waivers 0.42% .42%(2)
- ---------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets
without fee waivers 5.86% 5.17%(2)
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate (3) 190.37% 134.29%(2)
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced on June 27, 1994.
(2) Annualized.
(3) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with maturity date of one year or less at the time of
acquisition) for the period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the year ended
December 31, 1995 were $246,328,050 and $170,785,915, respectively.
See Notes to Financial Statements.
17
<PAGE>
DUFF & PHELPS
[LOGO] MUTUAL FUNDS
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Duff & Phelps Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as a diversified open-end management
investment company. The Duff & Phelps Enhanced Reserves Fund (the "Fund"),
represents a separate class of shares of beneficial interest of the Trust,
which is organized as a Massachusetts business trust.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATION: Securities of the Fund are valued at 4:00 p.m.
(EST) on each trading day. The Fund's investments are valued at the
last sales price of the day or where market quotations are not readily
available, a fair market value is determined in good faith by or under
the direction of the Board of Trustees. Short-term securities having a
remaining maturity of 60 days or less are valued at amortized cost which
approximates market value.
FEDERAL INCOME TAXES: It is the Fund's policy to comply with provisions
of the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to shareholders. Therefore,
no Federal Income Tax provision is required.
REPURCHASE AGREEMENTS: The Funds' custodian takes possession of the
collateral pledged for investments in repurchase agreements. The
underlying collateral is valued daily on a mark-to-market basis to ensure
that value, including accrued interest, is at least 100% of the repurchase
price. In the event of default on the obligation to repurchase, the Funds
have the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. Under certain circumstances, in the event
of default by or bankruptcy of the other party to the agreement,
realization and/or retention of the collateral may be subject to legal
proceedings.
ORGANIZATION COSTS: The Fund has deferred certain organizational costs.
Such costs are being amortized over a 60 month period from the commencement
of operations. In the event that all or part of the Investment Advisor's
initial investment in shares of the Fund is withdrawn during the
amortization period, the redemption proceeds will be reduced by the
proportionate amount of the unamortized organization costs represented by
the ratio that the number of shares redeemed bears to the number of
initial shares outstanding at the time of each redemption.
OTHER: Investment transactions are accounted for on the date the
investments are purchased or sold (trade date). Dividends from net
investment income are declared daily and paid monthly. Distributions of
net realized gains, if any, are declared at least once a year. Realized
gains and losses from investment transactions are reported on an identified
cost basis which is the same basis the Fund uses for Federal Income Tax
purposes.
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 and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
18
<PAGE>
DUFF & PHELPS
[LOGO] MUTUAL FUNDS
- ------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
On December 31, 1995, there was an unlimited number of no par value shares
of beneficial interest authorized. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
FOR THE YEAR FOR THE PERIOD
ENDED DECEMBER 31, 1995 ENDED DECEMBER 31, 1994
----------------------- -----------------------
<S> <C> <C>
Shares Sold 34,673,071 8,535,400
- ------------------------------------------------------------------------------
Shares Reinvested 708,262 95,683
- ------------------------------------------------------------------------------
Total 35,381,333 8,631,083
- ------------------------------------------------------------------------------
Shares Redeemed 30,358,450 134,742
- ------------------------------------------------------------------------------
Net Increase 5,022,883 8,496,341
- ------------------------------------------------------------------------------
</TABLE>
3. INVESTMENT ADVISORY FEES, ADMINISTRATION FEES AND OTHER RELATED PARTY
TRANSACTIONS
On November 1, 1995, Duff & Phelps Corporation and Phoenix Securities
Group, Inc. an indirect wholly-owned subsidiary of Phoenix Home Life
Mutual Insurance Company, merged. Upon completion of that merger, Duff &
Phelps Corporation was renamed Phoenix Duff & Phelps. At the completion
of the merger, the Fund entered into a new investment advisory agreement
with Duff & Phelps Investment Management Co., a wholly-owned subsidiary of
Phoenix Duff & Phelps. This agreement has been approved by the Fund's
Board of Directors and shareholders and contains terms and conditions
similar to the prior agreement.
Pursuant to its advisory agreement with the Fund, the Investment Advisor
is entitled to an advisory fee, computed daily and payable monthly at an
annual rate of .15 percent of the average net assets. Duff & Phelps
voluntarily waived a portion of its advisory fee for the year ended
December 31, 1995.
ALPS Mutual Funds Services, Inc. ("ALPS") serves as the Fund's
administrator. ALPS is entitled to receive a fee from the Fund for its
administrative services computed daily and payable monthly, at an annual
rate of .15 percent of average daily net assets on the first $1 billion,
.125 percent on the next $500 million and .10 percent on assets in excess
of $1.5 billion. ALPS services as administrator include: fund accounting,
daily pricing, licensing and registration, shareholder servicing, transfer
agency, fund ratings and training.
4. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
AS OF DECEMBER 31, 1995:
Gross Appreciation (excess of value over cost) 1,150,638
Gross Depreciation (excess of cost over value) (2,749)
----------------------------------------------------------------
Net unrealized appreciation 1,147,889
----------------------------------------------------------------
----------------------------------------------------------------
19
<PAGE>
[LOGO] DUFF & PHELPS
MUTUAL FUNDS
370 SEVENTEENTH STREET
SUITE 2700
DENVER, COLORADO 80202
FOR ADDITIONAL INFORMATION, CALL
1-800-500-DUFF (3833)
INVESTMENTS IN THE FUND ARE NOT INSURED BY THE FDIC,
THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY
AND INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL AMOUNT INVESTED. DUFF & PHELPS INVESTMENT MANAGEMENT
CO. PROVIDES INVESTMENT ADVISORY SERVICES FOR DUFF & PHELPS
MUTUAL FUNDS.
DUFF & PHELPS MUTUAL FUNDS ARE SPONSORED AND DISTRIBUTED BY
ALPS MUTURAL FUNDS SERVICES, INC. MEMBER NASD.
DUFF & PHELPS INVESTMENT MANAGEMENT CO. IS NOT AFFILIATED WITH
ALPS MUTUAL FUNDS SERVICES, INC.
ALPS MUTUAL FUNDS SERVICES
SPONSOR AND DISTRIBUTOR
