Page 1 of 31


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION


                             Washington, D.C. 20549

                                 --------------

                                    FORM 10-K

__X__  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
       EXCHANGE ACT OF 1934 (FEE REQUIRED)


For the fiscal year ended December 31, 1996       Commission File Number 0-19063

                            PHOENIX INCOME FUND, L.P.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

          California                                      68-0204588
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

2401 Kerner Boulevard, San Rafael, California                 94901-5527
--------------------------------------------------------------------------------
(Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code:     (415) 485-4500
                                                        --------------

Securities registered pursuant to Section 12(b) of the Act:  NONE

Securities registered pursuant to Section 12(g) of the Act: Units of Limited
                                                            Partnership Interest

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ______

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                               Yes __X__ No _____

As of December 31, 1996,  170,316  Units of Limited  Partnership  interest  were
outstanding.  No  market  exists  for the  Units  of  Partnership  interest  and
therefore there exists no aggregate market value at December 31, 1996.

                    DOCUMENTS INCORPORATED BY REFERENCE: NONE



<PAGE>


                                                                    Page 2 of 31



                            PHOENIX INCOME FUND, L.P.

                          1996 FORM 10-K ANNUAL REPORT


                                TABLE OF CONTENTS


                                                                          Page

                                     PART I

Item 1.    Business......................................................   3
Item 2.    Properties....................................................   4
Item 3.    Legal Proceedings.............................................   4
Item 4.    Submission of Matters to a Vote of Security Holders...........   5


                                     PART II

Item 5.    Market for the Registrant's Securities and Related Security
           Holder Matters................................................   5
Item 6.    Selected Financial Data.......................................   5
Item 7.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations.....................................   6
Item 8.    Financial Statements and Supplementary Data...................   9
Item 9.    Disagreements on Accounting and Financial Disclosure Matters..  27


                                    PART III

Item 10.   Directors and Executive Officers of the Registrant............  27
Item 11.   Executive Compensation........................................  28
Item 12.   Security Ownership of Certain Beneficial Owners and Management  28
Item 13.   Certain Relationships and Related Transactions................  29


                                     PART IV

Item 14.   Exhibits, Financial Statement Schedules and Reports on 
           Form 8-K......................................................  29


Signatures...............................................................  30



<PAGE>


                                                                    Page 3 of 31


                                     PART I

Item 1.    Business.

General Development of Business.

        Phoenix  Income  Fund,  L.P.,  a  California  limited  partnership  (the
"Partnership"),  was  organized  on  November  17,  1989.  The  Partnership  was
registered with the Securities and Exchange Commission with an effective date of
January 18, 1991 and shall continue to operate until its termination date unless
dissolved  sooner  due to the sale of  substantially  all of the  assets  of the
Partnership or a vote of the Limited Partners. The Partnership will terminate on
December 31, 2006.  The General  Partner is a  California  limited  partnership,
Phoenix  Leasing  Associates LP, the general partner of which is Phoenix Leasing
Associates,  Inc., a Nevada corporation ("PLA") and a wholly-owned subsidiary of
Phoenix Leasing Incorporated ("PLI"). The General Partner or its affiliates also
is or has been a general partner in several other limited partnerships formed to
invest in capital equipment and other assets.

        The initial public offering was for 300,000 units of limited partnership
interest  at a price of $250 per unit.  The  Partnership  completed  its  public
offering  on July 28,  1992.  The  Partnership  sold  175,285  units for a total
capitalization  of $43,821,250.  Of the proceeds  received through the offering,
the Partnership has incurred $6,017,000 in organizational and offering expenses.

        From the initial formation of the Partnership through December 31, 1996,
the total  investments in equipment leases and financing  transactions  (loans),
including  the  Partnership's  pro-rata  interest in  investments  made by joint
ventures,  approximate $90,518,000. The average initial firm term of contractual
payments from equipment subject to lease was 42 months,  and the average initial
net monthly  payment rate as a percentage  of the  original  purchase  price was
2.74%.  The average initial firm term of contractual  payments from loans was 67
months.

Narrative Description of Business.

        The  Partnership's  principal  objective  is to produce cash flow to the
investors on a  continuing  basis over the life of the  Partnership.  To achieve
this  objective,  the  Partnership  will  invest  in  various  types of  capital
equipment and other assets to provide  leasing or financing of the same to third
parties, including Fortune 1000 companies and their subsidiaries,  middle-market
companies,  emerging growth companies, cable television operators and others, on
either  a  long-term  or  short-term  basis.  The  types of  equipment  that the
Partnership  will  invest  in will  include,  but is not  limited  to,  computer
peripherals, terminal systems, small computer systems, communications equipment,
IBM mainframes,  IBM-software compatible mainframes, office systems, CAE/CAD/CAM
equipment,  telecommunications  equipment,  cable television equipment,  medical
equipment, production and manufacturing equipment and software products.

        In addition  to  acquiring  equipment  for lease to third  parties,  the
Partnership,  either directly or through the investment in joint  ventures,  has
provided  limited  financing  to  certain  emerging  growth   companies,   cable
television  operators,  manufacturers  and their  lessees with respect to assets
leased  directly  by  such  manufacturers  to  third  parties.  The  Partnership
maintains a security  interest in the assets financed and in the receivables due
under any lease or rental  agreement  relating  to such  assets.  Such  security
interests  constitute a lien on the equipment and will give the  Partnership the
right, upon default, to obtain possession of the assets.

        The Partnership has acquired  significant amounts of equipment or assets
and has provided  financing  with the net offering  proceeds.  In addition,  the
Partnership also acquired equipment through the use of debt financing,  however,
the  ratio  of the  outstanding  debt  to net  capital  contributions  less  any
investment in Leveraged Joint Ventures at the end of the Partnership's  offering
period,  and thereafter,  will not exceed one to one. The cash flow generated by
such investments in equipment leases or financing transactions has been and will
be used to provide  for debt  service,  to  provide  cash  distributions  to the
Partners and the  remainder  will be  reinvested  in capital  equipment or other
assets.

        The  Partnership has acquired and intends to acquire and lease equipment
pursuant to either  "Operating"  leases or "Financing"  leases.  At December 31,
1996, approximately 93% of the equipment owned by the Partnership was classified
as Financing  leases.  The  Partnership has also provided and intends to provide
financing  secured by assets in the form of notes  receivable.  Operating leases
are generally  short-term  leases under which the lessor will receive  aggregate
rental  payments  in an  amount  that is less  than  the  purchase  price of the
equipment.  Financing  leases are  generally  for a longer  term under which the
noncancellable  rental  payments due during the initial term of the lease are at
least  sufficient to recover the purchase price of the equipment.  A significant
portion of the net offering  proceeds to the  Partnership  has been  invested in
capital equipment subject to Operating leases.

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                                                                    Page 4 of 31


        Operating leases represent a greater risk along with a greater potential
return to the  Partnership  than do  Financing  leases.  In order to recover its
investment in equipment  leased pursuant to an Operating  lease, the Partnership
will, upon  termination of such lease,  either have to obtain a renewal from the
original  lessee,  find a new  lessee  or sell  the  equipment.  The  terms  for
Operating leases are for a shorter duration than Financing leases. Consequently,
the revenues  derived from the initial  term of Operating  leases are  generally
greater than those of Full Payout  leases.  Due to  technological,  competitive,
market and economic  factors,  it is  anticipated  that renewals or remarkets of
leases may be at a lower rental rate than that of the initial  lease  terms.  In
spite of the remarketing  risks associated with investments in Operating leases,
the General Partner believes there are profitable  opportunities  resulting from
such investments.

        Competition.   The   General   Partner   intends  to   concentrate   the
Partnership's  activities in the equipment  leasing and financing  industry,  an
area in which the General  Partner has  developed  an  expertise.  The  computer
equipment leasing industry is extremely  competitive.  The Partnership  competes
with many well established  companies  having  substantially  greater  financial
resources.  Competitive  factors include pricing,  technological  innovation and
methods  of  financing  (including  use  of  various  short-term  and  long-term
financing plans, as well as the outright purchase of equipment).  Generally, the
impact of these factors to the Partnership would be the realization of increased
equipment  remarketing and storage costs,  as well as lower  residuals  received
from the sale or remarketing of such equipment.

Other.

        A brief  description of the type of assets in which the  Partnership has
invested as of December 31, 1996, together with information  concerning the uses
of assets is set forth in Item 2.


Item 2.    Properties.

        The  Partnership  is  engaged in the  equipment  leasing  and  financing
industry and as such,  does not own or operate any  principal  plants,  mines or
real property. The primary assets held by the Partnership are its investments in
leases and loans.

        As of  December  31,  1996,  the  Partnership  owns  equipment  and  has
outstanding  loans to borrowers with an aggregate  original cost of $37,028,000.
The  equipment  and loans have been made to  customers  located  throughout  the
United States.  The following  table  summarizes the type of equipment  owned or
financed by the Partnership,  including its pro rata interest in joint ventures,
at December 31, 1996.

                                                                 Percentage of
      Asset Types                          Purchase Price(1)     Total Assets
      -----------                          -----------------     -------------
                                        (Amounts in Thousands)

Computer Peripherals                           $ 11,531               31%
Capital Equipment Leased to Emerging
 Growth Companies                                10,390               28
Furniture and Fixtures                            5,218               14
Small Computer Systems                            4,946               13
Financing of Emerging Growth Companies            1,550                4
Financing to Businesses                           1,421                4
Telecommunications                                1,341                4
Miscellaneous                                       631                2
                                               --------              ---

TOTAL                                          $ 37,028              100%
                                               ========              ===

(1) These amounts include the Partnership's pro rata interest in equipment joint
    ventures  of  $3,417,000,  financing  joint  ventures of  $290,000,  cost of
    equipment  on  financing   leases  of  $14,089,000   and  original  cost  of
    outstanding loans of $2,681,000 at December 31, 1996.


Item 3.    Legal Proceedings.

        The  Registrant  is not a party to any pending legal  proceedings  which
would have a material adverse impact on its financial position.



<PAGE>


                                                                    Page 5 of 31


                                     PART II


Item 4.    Submission of Matters to a Vote of Security Holders.

        No matters  were  submitted to a vote of Limited  Partners,  through the
solicitation of proxies or otherwise, during the year covered by this report.


Item 5.    Market for the Registrant's Securities and Related Security Holder
           Matters.

        (a)The  Registrant's  limited  partnership  interests  are not  publicly
           traded.  There is no market for the Registrant's  limited partnership
           interests and it is unlikely that any will develop.

        (b)Approximate number of equity security investments:

                                                   Number of Unit Holders
                     Title of Class                as of December 31, 1996
           ----------------------------------      -----------------------

           Limited Partners                                 3,854


Item 6.    Selected Financial Data.

                                 1996      1995      1994       1993      1992
                               -------   --------  --------   --------  -------
                              (Amounts in Thousands Except for Per Unit Amounts)


Total Income                   $  3,932  $  5,974  $ 11,664   $ 17,422  $ 14,809

Net Income (Loss)                 1,652     1,076    (1,808)     1,562     1,465

Total Assets                     11,338    16,712    28,746     48,673    64,601

Long-Term Debt Obligations         --        --         417      7,402    18,718

Distributions to Partners         6,691     6,402     6,307      6,030     4,665

Net Income (Loss) per Limited
  Partnership Unit                 7.64      2.54    (10.35)      7.24      7.75

Distributions per Limited
  Partnership Unit                37.22     35.48     34.65      32.90     28.16


        The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this report.



<PAGE>


                                                                    Page 6 of 31


Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations.


Results of Operations

        Phoenix  Income Fund,  L.P.,  (the  Partnership)  reported net income of
$1,652,000 during the year ended December 31, 1996, as compared to net income of
$1,076,000 during 1995 and a net loss of $1,808,000 during 1994. The improvement
in earnings for both 1996 and 1995 is attributable to a decrease in depreciation
expense that exceeded the decrease in rental income.

        Total revenues  decreased by $2,042,000  and $5,690,000  during 1996 and
1995,  respectively,  as compared to the same period in the previous  year.  The
decrease in total  revenues is due  primarily to decreases in rental  income and
earned income from financing  leases.  Rental income decreased by $1,622,000 and
$4,444,000  and earned income from  financing  leases  decreased by $444,000 and
$728,000 during 1996 and 1995,  respectively,  as compared to the same period in
the  previous  year.  The  decrease  in rental  income  and earned  income  from
financing leases is attributable to a decrease in the amount of equipment owned.
At December 31, 1996, the Partnership owned equipment with an aggregate original
cost of $30.6  million,  as compared to the $38.3 million of equipment  owned at
December 31, 1995 and $49.2 million at December 31, 1994.

        Partially  offsetting  the  decline in rental  income for the year ended
December  31, 1996,  compared to 1995,  is a gain on the sale of  securities  of
$128,000, in which the Partnership received proceeds of $128,000.  This gain was
due to the  exercise and sale of stock  warrants  held by the  Partnership.  The
Partnership  has been granted  stock  warrants as part of its lease or financing
agreements the emerging growth companies.

        The small increase in interest  income from notes  receivable of $34,000
during  1996,  as  compared to 1995,  is due to the payoff of a  defaulted  note
receivable to a cable television system operator.  The increased interest income
from the  payoff of this note is due to the  Partnership  having  suspended  the
accrual of interest income on such defaulted notes and the Partnership  applying
the payoff first,  towards the net carrying  value of the note,  with the excess
being recognized as interest income.

        In contrast, interest income from notes receivable decreased by $577,000
during 1995,  as compared to 1994.  The decrease in 1995 was  attributable  to a
decrease in the outstanding  notes  receivable  being held by the Partnership in
1995. In addition,  interest income from notes  receivable was higher than usual
during  1994 as a result of several  payoffs  from  defaulted  cable  television
system  operators in which the payoff  exceeded the net carrying  value of their
note.

        Total expenses of the Partnership decreased by $2,618,000 and $8,574,000
during 1996 and 1995, respectively,  compared to the same period in the previous
year.  Depreciation  expense  constituted the largest decrease in total expenses
during  1996  and  1995.   Depreciation  expense  decreased  by  $1,993,000  and
$6,306,000 during 1996 and 1995,  respectively,  as compared to the same periods
in the previous year. The decrease in  depreciation  expense is primarily due to
the decrease in the amount of equipment owned by the Partnership, as well as, an
increasing portion of the equipment portfolio having been fully depreciated.

        The decrease in depreciation  expense  experienced during the year ended
December 31, 1995,  compared to 1994,  was also due to a reduction in the amount
of additional  depreciation  booked during 1995.  During 1995,  the  Partnership
recognized additional  depreciation expense of $316,000,  compared to $1,315,000
in 1994.

        The Partnership  incurred  interest  expense of $137,000 during 1995, as
compared to $711,000  during 1994. The decline in interest  expense for the year
ended  December  31,  1995,  compared  to 1994,  was due to the  decrease in the
outstanding notes payable as the Partnership made its scheduled monthly payments
of principal and interest.  At December 31, 1995, the Partnership's  outstanding
debt was paid off in full.

        Inflation  affects the  Partnership  in relation to the current  cost of
equipment  placed on lease and the residual  values  realized when the equipment
comes  off-lease and is sold.  During the last several years  inflation has been
low, thereby having very little impact upon the investments of the Partnership.

Liquidity and Capital Resources

        The Partnership's primary source of liquidity comes from its contractual
obligations  with a  diversified  group of lessees and borrowers for fixed lease
terms at  fixed payment amounts. As the initial lease terms of the Partnership's


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                                                                    Page 7 of 31


short term operating  leases expire,  the Partnership  will re-lease or sell the
equipment.  The future liquidity of the Partnership will depend upon the General
Partner's success in collecting its contractually  owed amounts from lessees and
borrowers as well as re-leasing and selling the Partnership's equipment when the
lease terms expire.

        The  Partnership  reported net cash  generated by equipment  leasing and
financing  activities  during 1996 of $7,418,000,  as compared to $9,358,000 and
$20,908,000 during 1995 and 1994. The decline in net cash generated from leasing
and  financing  activities  for the year  ended  December  31,  1996 and 1995 as
compared to the same period in the previous year, is  attributable to a decrease
in rental income from  operating  leases and principal  payments from  financing
leases, as previously discussed in the Results of Operations.

        An additional  factor  contributing to the decline in net cash generated
is the  reduction in the amount of proceeds  received from the sale of equipment
for the year ended  December 31, 1996 and 1995 as compared to the same period in
the previous year.  The  Partnership  sold equipment with an aggregate  original
cost of $8,129,000 for the year ended December 31, 1996, compared to $12,294,000
and $29,313,000 for 1995 and 1994,  respectively.  As a result,  the Partnership
received proceeds from the sale of equipment of $340,000 during 1996 as compared
to $1,016,000 and $4,165,000 during 1995 and 1994, respectively.

        The Partnership received  distributions from joint ventures of $389,000,
$512,000 and  $4,844,000  for the year ended  December 31, 1996,  1995 and 1994,
respectively.  The distribution  from joint ventures  received for both 1996 and
1995 represent the distribution of excess cash available from the  Partnership's
investment in two joint  ventures.  During 1994, a joint  venture  received cash
from the  issuance  of leased  backed  certificates.  These  proceeds  were then
distributed to the Partnership during 1994.

        The Partnership  anticipates  reinvesting a portion of the revenues from
the assets owned by the  Partnership  in new leasing and financing  transactions
over the life of the Partnership. During 1996, the Partnership invested $427,000
in equipment  leases,  compared to $1,385,000 and $5,450,000 in equipment leases
and $332,000 and $1,418,000 in investments in notes  receivable  during 1995 and
1994, respectively.

        During 1995,  the cash  generated  was largely used for the repayment of
debt  and  for  the  payment  of  cash   distributions  to  the  partners.   The
Partnership's  outstanding  debt was paid off in full in 1995. Cash generated in
1996 was used to pay cash  distributions,  make  reinvestments in new leases and
pay operational expenses of the Partnership.

        As of December 31, 1996, the Partnership  owned equipment being held for
lease with an original cost of $3,438,000  and a net book value of $135,000,  as
compared to equipment  with an original cost of $3,295,000  and $7,421,000 and a
net  book  value of  $287,000  and  $972,000  at  December  31,  1995 and  1994,
respectively.  The  General  Partner  is  actively  engaged,  on  behalf  of the
Partnership,  in remarketing and selling the  Partnership's off lease equipment.
Until new  lessees  or buyers of  equipment  can be found,  the  equipment  will
continue to generate  depreciation  expense  without  any  corresponding  rental
income.  The  effect of this will be a  reduction  of the  Partnership  earnings
during this remarketing period.

        The  cash  distributed  to  partners  was  $6,691,000,   $6,402,000  and
$6,307,000  during 1996,  1995 and 1994,  respectively.  In accordance  with the
Partnership  Agreement,  the limited  partners  are  entitled to 95% of the cash
available  for  distribution  and the  General  Partner is  entitled to 5%. As a
result, the limited partners received  $6,356,000,  $6,082,000 and $5,991,000 in
cash distributions during 1996, 1995 and 1994, respectively. The cumulative cash
distributions  to limited  partners at  December  31,  1996 is  $29,315,000,  as
compared  to  $22,959,000  and  $16,877,000  at  December  31,  1995  and  1994,
respectively.  The General  Partner  received  cash  distributions  of $335,000,
$320,000 and $316,000 for its share of the cash distribution for the years ended
December 31, 1996,  1995 and 1994,  respectively.  The  Partnership  anticipates
making  distributions  during 1997 at approximately the same rate as the current
distributions made during 1996.

        The cash to be  generated  from  leasing  and  financing  operations  is
anticipated to be sufficient to meet the  Partnership's  continuing  operational
expenses and to provide cash distributions to the Partners.

        Forward-looking  statements in this report are made pursuant to the safe
harbor  provisions  of the  Private  Securities  Litigation  Reform Act of 1995.
Actual  results could differ from those  anticipated  by some of the  statements
made above. Limited Partners are cautioned that such forward-looking  statements
involve risks and uncertainties including without limitation the following:  (i)
the  Partnership's  plans are subject to change at any time at the discretion of
the General Partner of the Partnership,  (ii) future technological  developments
in the industry in which the Partnership operates, (iii) competitive pressure on
pricing or services, (iv) substantial  customer defaults or  cancellations,  (v)

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                                                                    Page 8 of 31


changes  in  business  conditions  and the  general  economy,  (vi)  changes  in
government regulations affecting the Partnership's core businesses and (vii) the
ability of the Partnership to sell its remaining assets.



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                                                                    Page 9 of 31





















               Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                               PHOENIX INCOME FUND, L.P.

                             YEAR ENDED DECEMBER 31, 1996



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                                                                   Page 10 of 31














                         REPORT OF INDEPENDENT AUDITORS
                         ------------------------------


The Partners
Phoenix Income Fund, L.P.

We have  audited  the  financial  statements  of Phoenix  Income  Fund,  L.P. (a
California  limited  partnership)  listed in the accompanying index to financial
statements  (Item  14(a)).  Our audits also  included  the  financial  statement
schedule listed in the Index at Item 14(a).  These financial  statements and the
schedule  are  the   responsibility   of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these  financial  statements and the
schedule 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  and schedule are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  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,  the financial  statements  listed in the accompanying  index to
financial statements (Item 14(a)) present fairly, in all material respects,  the
financial  position of Phoenix Income Fund,  L.P. at December 31, 1996 and 1995,
and the results of its operations and its cash flows for each of the three years
in the period ended  December 31, 1996, in conformity  with  generally  accepted
accounting  principles.  Also, in our opinion,  the related financial  statement
schedule, when considered in relation to the basic financial statements taken as
a whole,  presents  fairly in all material  respects the  information  set forth
therein.


                                                             ERNST & YOUNG LLP

San Francisco, California
  January 20, 1997



<PAGE>


                                                                   Page 11 of 31


                            PHOENIX INCOME FUND, L.P.
                                 BALANCE SHEETS
                 (Amounts in Thousands Except for Unit Amounts)

                                                          December 31,
                                                        1996       1995
                                                      --------   --------
ASSETS

Cash and cash equivalents                             $  3,323   $  2,364

Accounts receivable (net of allowance for
  losses on accounts receivable of $125
  and $147 at December 31, 1996 and 1995,
  respectively)                                            125        219

Notes receivable (net of allowance for losses
  on notes receivable of $216 and $230 at
  December 31, 1996 and 1995)                            1,042      1,850

Equipment on operating leases and held for
  lease (net of accumulated depreciation of
  $12,008 and $15,279 at December 31, 1996 and
  1995, respectively)                                      378      1,407

Net investment in financing leases (net of
  allowance for early terminations of $68 and
  $436 at December 31, 1996 and 1995, respectively)      5,039      8,980

Investment in joint ventures                             1,047      1,103

Capitalized acquisition fees (net of accumulated
  amortization of $3,346 and $3,084 at December 31,
  1996 and 1995, respectively)                             261        505

Other assets                                               123        284
                                                      --------   --------

    Total Assets                                      $ 11,338   $ 16,712
                                                      ========   ========


LIABILITIES AND PARTNERS' CAPITAL

Liabilities:

  Accounts payable and accrued expenses               $    684   $    868
                                                      --------   --------

    Total Liabilities                                      684        868
                                                      --------   --------

Partners' Capital:

  General Partner                                           (1)       (14)

  Limited Partners, 300,000 units authorized,
    175,285 units issued and 170,316 and 171,073
    units outstanding at December 31, 1996 and
    1995, respectively                                  10,618     15,727

  Unrealized gains on available-for-sale securitites        37        131
                                                      --------   --------

    Total Partners' Capital                             10,654     15,844
                                                      --------   --------

    Total Liabilities and Partners' Capital           $ 11,338   $ 16,712
                                                      ========   ========

                 The accompanying notes are an integral part of
                                these statements.

<PAGE>


                                                                   Page 12 of 31


                            PHOENIX INCOME FUND, L.P.
                            STATEMENTS OF OPERATIONS
               (Amounts in Thousands Except for Per Unit Amounts)

                                               For the Years Ended December 31,
                                                    1996      1995      1994
                                                 --------  --------  --------
INCOME

  Rental income                                  $  2,139  $  3,761  $  8,205

  Earned income, financing leases                     954     1,398     2,126

  Interest income, notes receivable                   304       270       847

  Equity in earnings from joint ventures              236       311       205

  Gain on sale of securities                          128      --        --

  Other income                                        171       234       281
                                                 --------  --------  --------

    Total Income                                    3,932     5,974    11,664
                                                 --------  --------  --------


EXPENSES

  Depreciation                                      1,045     3,038     9,344

  Amortization of acquisition fees                    262       400     1,200

  Lease related operating expenses                    131       259       366

  Management fees to General Partner                  299       419       911

  Reimbursed administrative costs to
    General Partner                                   278       322       342

  Interest expense                                   --         137       711

  Provision for losses on receivables                 128       138       365

  General and administrative expenses                 137       185       233
                                                 --------  --------  --------

    Total Expenses                                  2,280     4,898    13,472
                                                 --------  --------  --------


NET INCOME (LOSS)                                $  1,652  $ 1,076   $ (1,808)
                                                 ========  ========  ========

NET INCOME (LOSS) PER LIMITED
  PARTNERSHIP UNIT                               $  7.64   $  2.54   $ (10.35)
                                                 ========  ========  ========

ALLOCATION OF NET INCOME (LOSS):

  General Partner                                $    348  $   640   $    (18)

  Limited Partners                                  1,304      436     (1,790)
                                                 --------  --------  --------

                                                 $  1,652  $ 1,076   $ (1,808)
                                                 ========  ========  ========

                 The accompanying notes are an integral part of
                                these statements.

<PAGE>


                                                                   Page 13 of 31


                            PHOENIX INCOME FUND, L.P.
                         STATEMENTS OF PARTNERS' CAPITAL
                 (Amounts in Thousands Except for Unit Amounts)

                                   General                    Unrealized
                                  Partner's  Limited Partners'  Gains    Total
                                   Amount   Units       Amount (Losses)  Amount
                                  --------- ------------------ --------  ------

Balance, December 31, 1993          $     0  173,709  $ 29,520  $ -    $ 29,520

Redemptions of capital                  -     (1,640)     (251)   -        (251)

Distributions to partners ($34.65
  per limited partnership unit)        (316)     -      (5,991)   -      (6,307)

Net loss                                (18)     -      (1,790)   -      (1,808)
                                    -------  -------  --------- -----  --------

Balance, December 31, 1994             (334) 172,069    21,488    -      21,154

Redemptions of capital                  -       (996)     (115)   -        (115)

Distributions to partners ($35.48
  per limited partnership unit)        (320)     -      (6,082)   -      (6,402)

Change for the year in unrealized
  gain on available-for-sale
  securities                             -       -         -      131       131

Net income                              640      -         436    -       1,076
                                    -------  -------  --------  -----  --------

Balance, December 31, 1995              (14) 171,073    15,727    131    15,844

Redemptions of capital                  -       (757)      (57)   -         (57)

Distributions to partners ($37.22
  per limited partnership unit)        (335)     -      (6,356)   -      (6,691)

Change for the year in unrealized
  gain on available-for-sale
  securities                            -        -         -      (94)      (94)

Net income                              348      -       1,304    -       1,652
                                    -------  -------  --------  -----  --------

Balance, December 31, 1996          $    (1) 170,316  $ 10,618  $  37  $ 10,654
                                    =======  =======  ========  =====  ========

                 The accompanying notes are an integral part of
                                these statements.

<PAGE>


                                                                   Page 14 of 31


                            PHOENIX INCOME FUND, L.P.
                            STATEMENTS OF CASH FLOWS
                             (Amounts in Thousands)

                                                For the Years Ended December 31,
                                                   1996      1995      1994
                                                 --------  --------  --------
Operating Activities:
  Net income (loss)                              $  1,652  $  1,076  $ (1,808)
  Adjustments to reconcile net income (loss) to
    net cash provided by operating activities:
      Depreciation                                  1,045     3,038     9,344
      Amortization of acquisition fees                262       400     1,200
      Loss (gain) on sale of equipment                (64)      142       127
      Equity in earnings from joint ventures         (236)     (311)     (205)
      Gain on sale of securities                     (128)     --        --
      Provision for early termination,
       financing leases                               113       138       272
      Provision for (recovery of) losses on
       notes receivable                               (14)     --          35
      Provision for losses on accounts receivable      29      --          58
      Decrease in accounts receivable                  65       133       847
      Increase (decrease) in accounts payable
        and accrued expenses                         (120)     (791)      292
      Decrease in other assets                         67       136       208
                                                 --------  --------  --------

  Net cash provided by operating activities         2,671     3,961    10,370
                                                 --------  --------  --------

Investing Activities:
  Principal payments, financing leases              3,987     4,839     6,297
  Principal payments, notes receivable                760       558     4,241
  Proceeds from sale of equipment                     340     1,016     4,165
  Distributions from joint ventures                   389       512     4,844
  Proceeds from sale of securities                    128      --        --
  Purchase of equipment                               (24)     --        --
  Investment in financing leases                     (427)   (1,385)   (5,450)
  Investment in notes receivable                     --        (332)   (1,418)
  Investment in joint ventures                        (35)     --        (290)
  Payment of acquisition fees                         (82)      (39)     (273)
                                                 --------  --------  --------

  Net cash provided by investing activities         5,036     5,169    12,116
                                                 --------  --------  --------

Financing Activities:
  Payments of principal, notes payable               --      (5,961)  (11,855)
  Distributions to partners                        (6,691)   (6,402)   (6,307)
  Redemptions of capital                              (57)     (115)     (251)
                                                 --------  --------  --------

  Net cash used by financing activities            (6,748)  (12,478)  (18,413)
                                                 --------  --------  --------

Increase (decrease) in cash and cash equivalents      959    (3,348)    4,073

Cash and cash equivalents, beginning of period      2,364     5,712     1,639
                                                 --------  --------  --------

Cash and cash equivalents, end of period         $  3,323  $  2,364  $  5,712
                                                 ========  ========  ========

Supplemental Cash Flow Information:
  Cash paid for interest expense                 $   --    $    149  $    699

                 The accompanying notes are an integral part of
                                these statements.

<PAGE>


                                                                   Page 15 of 31


                            PHOENIX INCOME FUND, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1996


Note 1.    Organization and Partnership Matters.

        Phoenix Income Fund, L.P. (the "Partnership") was formed as a California
limited  partnership on November 17, 1989. The  Partnership's  primary  business
objectives are to invest in computer,  computer-related  and other equipment and
assets of various types and to lease or finance such equipment to third parties.
In addition to acquiring  equipment for lease to third parties,  the Partnership
may also  provide  financing  to cable  television  operators,  emerging  growth
companies, and certain manufacturers and their lessees with respect to equipment
leased directly by such  manufacturers.  The Partnership met minimum  investment
requirements on February 21, 1991. The Partnership  termination date is December
31, 2006.

        The  Partnership  has  also  made  investments  in joint  ventures  with
affiliated  partnerships  managed  by the  General  Partner  for the  purpose of
reducing the risks of financing or acquiring certain capital equipment leased to
third parties (see Note 6).

        For  financial  reporting  purposes,  as  more  fully  described  in the
Partnership  Agreement,  net income shall be allocated as follows: (a) first, to
Phoenix  Leasing  Associates  LP  (the  "General  Partner")  to  the  extent  of
cumulative  distributions to the General Partner,  (b) second, 1% to the General
Partner to the extent of cumulative syndication expenses and Partnership losses,
and (c) the balance, if any, to the Limited Partners.  Losses shall be allocated
1% to the General Partner and 99% to the Limited Partners.  Syndication expenses
shall be allocated 1% to the General Partner and 99% to the Limited Partners.

        The General Partner is entitled to receive 5% of all cash  distributions
until the Limited  Partners have recovered their initial  capital  contributions
plus a cumulative return of 10% per annum, calculated quarterly. Thereafter, the
General Partner will receive 15% of all cash distributions.

        In the event the General  Partner  has a deficit  balance in its capital
account  at the  time  of  partnership  liquidation,  it  will  be  required  to
contribute the amount of such deficit to the Partnership.

        As compensation for management services,  the General Partner receives a
fee  payable  quarterly,  in  an  amount  equal  to  3.5%,  subject  to  certain
limitations, of the Partnership's gross revenues for the quarter from which such
payment is being made,  which revenues  shall  include,  but are not limited to,
rental  receipts,  maintenance  fees,  proceeds  from the sale of equipment  and
interest income.

        The General  Partner  will be  compensated  for  services  performed  in
connection  with the  analysis  of  assets  available  to the  Partnership,  the
selection  of such  assets  and the  acquisition  thereof,  including  obtaining
lessees for the equipment,  negotiating and concluding  master lease  agreements
with certain lessees. As compensation for such acquisition services, the General
Partner will receive a fee equal to 4%, subject to certain  limitations,  of (a)
the purchase price of equipment acquired by the Partnership, or equipment leased
to  customers  by  manufacturers,  the  financing  for which is  provided by the
Partnership,  or (b) financing  provided to businesses such as cable  operators,
emerging growth companies, or other businesses, payable upon such acquisition or
financing,  as the case may be.  Acquisition fees are amortized over the life of
the assets principally on a straight-line basis.

        A schedule of compensation  paid and  distributions  made to the General
Partner for the years ended December 31 follows:

                                         1996         1995        1994
                                        ------      -------     -------
                                             (Amounts in Thousands)
      Management fees                   $  299      $   419     $   911
      Acquisition fees                      18           67         275
      Cash distributions                   335          320         316
                                        ------      -------     -------

                                        $  652      $   806     $ 1,502
                                        ======      =======     =======



<PAGE>


                                                                   Page 16 of 31


Note 2.    Summary of Significant Accounting Policies.

      Leasing Operations.  The Partnership's  leasing operations consist of both
financing and operating  leases.  The financing  method of accounting for leases
records as  unearned  income at the  inception  of the lease,  the excess of net
rentals  receivable  and estimated  residual value at the end of the lease term,
over the cost of equipment leased. Unearned income is credited to income monthly
over the term of the lease on a declining basis to provide an approximate  level
rate of return on the unrecovered  cost of the investment.  Initial direct costs
of  consummating  new  leases  are  capitalized  and  included  in the  cost  of
equipment.  The  Partnership  reviews its  estimates of residual  value at least
annually.  If a decline in value has occurred which is other than  temporary,  a
reduction in the investment is recognized currently.

      Under the operating method of accounting for leases,  the leased equipment
is  recorded  as an asset  at cost and  depreciated.  The  Partnership's  leased
equipment is depreciated primarily using an accelerated depreciation method over
the estimated useful life of six years, except for equipment leased under vendor
agreements,  which is  depreciated on a  straight-line  basis over the estimated
useful life, ranging up to six years.

      The Partnership's  policy is to review  periodically the expected economic
life of its rental equipment in order to determine the probability of recovering
its  undepreciated  cost. Such reviews address,  among other things,  recent and
anticipated   technological   developments   affecting  computer  equipment  and
competitive factors within the computer marketplace. Although remarketing rental
rates  are  expected  to  decline  in the  future  with  respect  to some of the
Partnership's  rental  equipment,  such rentals are expected to exceed projected
expenses and  depreciation.  Where reviews of the equipment  portfolio  indicate
that rentals plus  anticipated  sales  proceeds will not exceed  expenses in any
future period,  the Partnership will revise its depreciation  policy and provide
for  additional  depreciation  as  appropriate.  As a  result  of such  periodic
reviews,  the  Partnership  provided  for  additional  depreciation  expense  of
$83,000,  $316,000 and $1,315,000 ($.49, $1.84 and $7.60 per limited partnership
unit) for the years ended December 31, 1996, 1995 and 1994, respectively.

      Rental income for the year is  determined on the basis of rental  payments
due for the period under the terms of the lease. Maintenance,  repairs and minor
renewals of the leased equipment are charged to expense.

      Investment in Joint Ventures.  Investments in net assets of the equipment,
financing and foreclosed cable systems joint ventures reflect the  Partnership's
equity  basis in the  ventures.  Under  the  equity  method of  accounting,  the
original  investment  is  recorded  at  cost  and is  adjusted  periodically  to
recognize the Partnership's  share of earnings,  losses,  cash contributions and
cash distributions after the date of acquisition.

      Investment  in   Available-for-Sale   Securities.   The   Partnership  has
investments  in  stock  warrants  in  public  companies.   The  Partnership  has
classified its investments in stock warrants as available-for-sale in accordance
with FASB  Statement No. 115,  "Accounting  for Certain  Investments in Debt and
Equity  Securities."  Available-for-sale  securities  are  stated at their  fair
market value, with unrealized gains and losses reported as a separate  component
of partners' capital. The stock warrants held by the Partnership were granted by
certain lessees or borrowers as additional compensation for leasing or financing
equipment.  At the date of grant,  such warrants were determined to have no fair
market value and were recorded at their historical cost of $0.

       Notes  Receivable.   Notes  receivable  generally  are  stated  at  their
outstanding unpaid principal balances, which includes accrued interest. Interest
income is accrued on the unpaid principal balance.

      Impaired Notes Receivable.  Generally,  notes receivable are classified as
impaired  and the accrual of interest  on such notes are  discontinued  when the
contractual  payment of  principal  or  interest  has become 90 days past due or
management has serious doubts about further  collectibility  of the  contractual
payments,  even  though  the  loan  may  currently  be  performing.  When a note
receivable is classified as impaired,  income  recognition is discontinued.  Any
payments  received  subsequent  to the  placement of the note  receivable  on to
impaired  status  will  generally  be  applied  towards  the  reduction  of  the
outstanding  note  receivable  balance,  which may  include  previously  accrued
interest as well as principal.  Once the principal and accrued  interest balance
has been reduced to zero,  the  remaining  payments  will be applied to interest
income.  Generally,  notes  receivable  are restored to accrual  status when the
obligation is brought current,  has performed in accordance with the contractual
terms for a  reasonable  period of time and the ultimate  collectibility  of the
total contractual principal and interest is no longer in doubt.

      Allowance  for Losses.  An  allowance  for losses is  established  through
provisions for losses charged  against  income.  Notes  receivable  deemed to be
uncollectible  are charged  against the  allowance  for losses,  and  subsequent
recoveries, if any, are credited to the allowance.

<PAGE>


                                                                   Page 17 of 31


      Use of Estimates.  The  preparation of financial  statements in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that affect the amounts  reported in the  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

      Reclassification. Certain 1995 and 1994 amounts  have been reclassified to
conform to the 1996 presentation.

      Cash and Cash Equivalents.  Cash and cash equivalents  include deposits at
banks,  investments  in money market funds and other  highly  liquid  short-term
investments  with  original  maturities  of less than 90 days.  The  Partnership
places its cash deposits in temporary cash investments with credit worthy,  high
quality  financial  institutions.  The  concentration  of such cash deposits and
temporary  cash  investments  is not deemed to create a significant  risk to the
Partnership.

      Non Cash  Investing  Activities.  During the year ended December 31, 1996,
the Partnership, along with other affiliated partnerships managed by the General
Partner,  obtained title to a cable television  company that had been pledged as
collateral for a non-performing note. As a result, the Partnership  reclassified
$62,000 to Investment in Joint Ventures on the balance sheet.

      During the year ended December 31, 1996 and 1995, the Partnership recorded
an unrealized  loss on  available-for-sale securities which has been included in
Other Assets of $94,000 and a gain of $131,000, respectively.

      Credit and Collateral. The Partnership's activities have been concentrated
in the  equipment  leasing  and  financing  industry.  A  credit  evaluation  is
performed  by the  General  Partner  for all  leases  and loans  made,  with the
collateral  requirements  determined on a case-by-case  basis. The Partnership's
loans are  generally  secured by the  equipment or assets  financed and, in some
cases,  other  collateral  of  the  borrower.  In  the  event  of  default,  the
Partnership  has the right to foreclose upon the collateral  used to secure such
loans.


Note 3.    Accounts receivable.

      Accounts receivable consist of the following at December 31:

                                                            1996      1995
                                                           ------    ------
                                                        (Amounts in Thousands)

        Lease payments                                     $  183    $  266
        Property taxes                                         39        70
        Interest                                               12        16
        General Partner and affiliates                       --           8
        Other                                                  16         6
                                                           ------    ------

                                                              250       366

        Less: allowance for losses on accounts receivable    (125)     (147)
                                                           ------    ------

           Total                                           $  125    $  219
                                                           ======    ======


Note 4.    Notes Receivable.

        Notes receivable consist of the following at December 31:

                                                             1996      1995
                                                           ------    ------
                                                        (Amounts in Thousands)
        Notes receivable from emerging growth companies
         with stated interest ranging from 9% to 19% per
         annum, receivable in installments ranging from
         36 to 49 months, collateralized by a security
         interest in the equipment financed.               $  612    $  925

        Notes receivable from other businesses with
         stated interest ranging from 15% to 16% per
         annum, receivable in installments ranging from
         48 to 72 months, collateralized by the equipment
         financed.                                            646       928



     <PAGE>


                                                                   Page 18 of 31


        Notes receivable from cable television system
         operators with interest ranging from 14% to 21%
         per annum, receivable in installments ranging
         from 55 to 67 months, collateralized by a
         security interest in the cable system assets.
         These notes have a graduated repayment schedule
         with a payment of the original principal and
         deferred interest due at the end.                   --         227
                                                           ------    ------

                                                            1,258     2,080

        Less:  allowance for losses on notes receivable      (216)     (230)
                                                           ------    ------

         Total                                             $1,042    $1,850
                                                           ======    ======

        The Partnerships'  notes receivable to cable television system operators
provide  a pay rate in an  amount  that is  usually  less  than the  contractual
interest rate. The difference between the pay rate and the contractual  interest
rate is added to the principal and therefore deferred until the maturity date of
the note.  Upon  maturity  of the note,  the  original  principal  and  deferred
interest is due and payable in full. Although the contractual interest rates may
be  higher,  the  amount  of  interest  being  recognized  on the  Partnership's
outstanding  notes  receivable  to cable  television  system  operators is being
limited  to  the  amount  of  the  payments  received,   thereby  deferring  the
recognition of a portion of the deferred interest until the loan is paid off.

        At December 31, 1996, no note was considered to be impaired. The average
recorded  investment in impaired  loans during the year ended  December 31, 1996
was  approximately  $117,000.  The  Partnership  recognized  $65,000 of interest
income on impaired notes receivable during the year ended December 31, 1996.

        At  December  31,  1995,  the  recorded  investment  in  notes  that are
considered  to be impaired was  $228,000.  Included in this amount is $62,000 of
impaired  notes for which the  related  allowance  for  losses was  $14,000  and
$166,000  of  impaired  notes for  which  there was no  allowance.  The  average
recorded  investment in impaired  loans during the year ended  December 31, 1995
was approximately $214,000.

        On February 14, 1996, the  Partnership  foreclosed  upon a nonperforming
outstanding  note  receivable  to  a  cable  television  operator  to  whom  the
Partnership,  along with other  affiliated  partnerships  managed by the General
Partner,  had extended  credit.  The  Partnership's  net carrying value for this
outstanding  note  receivable  was  $62,000,  for which the  Partnership  had an
allowance for losses on notes of $14,000.  Because the estimated market value of
the cable system at the  foreclosure  date  exceeded the  carrying  value,  this
allowance of $14,000 was reversed and recognized as income during the year ended
December 31, 1996. This cable television  system was subsequently sold on August
30, 1996.

        On November  15, 1996,  the  Partnership  received a  settlement  on its
remaining note  receivable  from a cable  television  system  operator which was
considered to be impaired.  The Partnership received a recovery of $214,000 as a
settlement  which was applied first to the $152,000  outstanding note receivable
balance and the balance of $62,000 was recognized as interest  income from notes
receivable during the year ended December 31, 1996.

        The activity in the allowance for losses on notes receivable  during the
years ended December 31, is as follows:

                                                            1996      1995
                                                           ------    ------
                                                        (Amounts in Thousands)

        Beginning balance                                  $  230    $  230
           Write downs                                        (14)     --
                                                           ------    ------
        Ending balance                                     $  216    $  230
                                                           ======    ======


Note 5.    Equipment on Operating Leases and Investment in Financing Leases.

        Equipment on lease consists primarily of computer  peripheral  equipment
and other capital equipment.

        The  Partnership's  operating  leases  are for  initial  lease  terms of
approximately 24 to 48 months.  During the remaining terms of existing operating
leases  the  Partnership  will not  recover  all of the  undepreciated  cost and
related expenses of its rental equipment,  and therefore must remarket a portion
of its equipment in future years.
<PAGE>

                                                                   Page 19 of 31


        The  Partnership  has  entered  into  direct  lease   arrangements  with
businesses  in  different  industries,  located  throughout  the United  States.
Generally,  it is the  responsibility  of the lessee to provide  maintenance  on
leased  equipment.  The General Partner  administers the equipment  portfolio of
leases acquired through the direct leasing program.  Administration includes the
collection of rents from the lessees and remarketing of the equipment.

        The net  investment  in financing  leases  consists of the  following at
December 31:

                                                             1996      1995
                                                           --------  --------
                                                         (Amounts in Thousands)

        Minimum lease payments to be received              $  5,903  $ 11,004
        Estimated residual value of leased equipment
         (unguaranteed)                                        --         140
        Less: unearned income                                  (796)   (1,728)
              allowance for early termination                   (68)     (436)
                                                           --------  --------

        Net investment in financing leases                 $  5,039  $  8,980
                                                           ========  ========

        Minimum rentals to be received on noncancellable operating and financing
leases for the years ended December 31 are as follows:

                                                           Operating  Financing
                                                           ---------  ---------
                                                          (Amounts in Thousands)

        1997 ........................................      $    818  $  3,378
        1998 ........................................           349     1,682
        1999 ........................................           319       554
        2000 ........................................           144       289
        2001 ........................................          --        --
        Thereafter ..................................          --        --
                                                           --------  --------

        Totals.......................................      $  1,630  $  5,903
                                                           ========  ========

        The net book value of equipment  held for lease at December 31, 1996 and
1995 amounted to $135,000 and $287,000, respectively.


Note 6.    Investment in Joint Ventures.

Equipment Joint Venture

        On August 1, 1994, the Partnership entered into an agreement, along with
two other affiliated partnerships, to contribute certain leased assets and notes
receivable  (the Assets) to Phoenix  Acceptance  Limited  Liability  Company,  a
Delaware  limited  liability  company  (the "Joint  Venture")  in exchange for a
22.55% equity interest in the Joint Venture.  The interest received in the Joint
Venture  was  accounted  for  at  the  historical   cost  basis  of  the  Assets
transferred.  The Partnership has accounted for its net investment in this Joint
Venture using the equity method of  accounting.  The Joint Venture was organized
to hold title to the assets and subsequently transfer such assets to a trust for
the purpose of the trust  issuing two classes of lease  backed  certificates  to
third parties in exchange for cash proceeds.  The transaction  between the Joint
Venture and the trust has been  accounted  for as a financing  arrangement.  The
Joint Venture retains a residual interest in the assets transferred  through the
ownership of a third class of subordinated trust certificates.  The lease backed
certificates  are  recourse  only  to  the  assets  used  to  collateralize  the
obligation.

        The net carrying value of the Assets  contributed by the  Partnership to
the Joint Venture was approximately $5.6 million and the total carrying value of
all of the  assets  contributed  by all three  partnerships  approximated  $24.7
million. The net proceeds from the issuance of the lease backed certificates are
being distributed back to the partnerships who contributed to the Joint Venture.
On August 5, 1994, the Joint Venture received  proceeds from the issuance of the
7.1% Class A lease backed certificates in the principal amount of $18.5 million.
On August 12, 1994, the Joint Venture received proceeds from the issuance of the
8.25% Class B lease backed certificates in the principal amount of $5.3 million.
The lease backed certificates were paid in full in November 1996.

        The  Manager of the Joint Venture is Phoenix Leasing  Incorporated.  The
manager is responsible  for the daily  management of the operations of the Joint
Venture. Phoenix Leasing Incorporated also acts as Servicer and Administrator to


<PAGE>


                                                                   Page 20 of 31


the  trust.  As  Servicer,  Phoenix  Leasing  Incorporated  is  responsible  for
servicing,  managing and  administering  the Assets,  as well as  enforcing  and
making collections on the Assets.

        The equipment  joint venture  owned by the  Partnership,  along with its
percentage ownership is as follows:

                                                                 Percentage
           Joint Venture                                         Ownership
           -------------                                         ---------

           Phoenix Acceptance Limited Liability Company            22.55%
<TABLE>
        An analysis of the Partnership's  investment  account in equipment joint
venture is as follows:
<CAPTION>
                      Net Investment                                                 Net Investment
                       at Beginning                     Equity in       Equity in        at End
Date                    of Period      Contributions    Earnings      Distributions     of Period
----                  --------------   -------------    ---------     -------------  --------------
                                                (Amounts in Thousands)
<S>                       <C>             <C>            <C>             <C>             <C>
Year Ended
  December 31, 1994       $    0          $5,653         $ 205           $ 4,844         $ 1,014
                          ======          ======         =====           =======         =======

Year Ended
  December 31, 1995       $1,014          $    0         $ 267           $   448         $   833
                          ======          ======         =====           =======         =======

Year Ended
  December 31, 1996       $  833          $   35         $ 197           $   242         $   823
                          ======          ======         =====           =======         =======
</TABLE>
        The aggregate financial information of the equipment joint venture as of
December 31 is presented as follows:

                                  BALANCE SHEET

                                     ASSETS
                                                             December 31,
                                                            1996      1995
                                                           -------   -------
                                                         (Amounts in Thousands)

        Cash and cash equivalents                          $   490   $ 1,384
        Net investment in financing leases                   2,930     8,816
        Accounts receivable                                     59        14
        Equipment on operating leases                          155       347
        Other assets                                           368     1,018
                                                           -------   -------

           Total Assets                                    $ 4,002   $11,579
                                                           =======   =======

                        LIABILITIES AND PARTNERS' CAPITAL

        Accounts payable                                   $   382   $   761
        Lease backed certificates                             --       7,150
        Partners' capital                                    3,620     3,668
                                                           -------   -------

           Total Liabilities and Partners' Capital         $ 4,002   $11,579
                                                           =======   =======



<PAGE>


                                                                   Page 21 of 31


                             STATEMENT OF OPERATIONS

                                     INCOME

                                               For the Years Ended December 31,
                                                   1996      1995      1994
                                                 -------   -------   -------
                                                    (Amounts in Thousands)
        Earned income, financing leases          $   855   $ 1,924   $ 1,515
        Rental income                                536       196      --
        Gain on sale of equipment                    453       465        26
        Other income                                 181       361       239
                                                 -------   -------   -------

           Total Income                            2,025     2,946     1,780
                                                 -------   -------   -------

                                    EXPENSES

        Depreciation                                 261       104         4
        Lease related operating expenses              21         8         3
        Management fee to the General Partner        284       283       192
        Interest expense                             221       924       633
        Other expenses                               362       442        40
                                                 -------   -------   -------

           Total Expenses                          1,149     1,761       872
                                                 -------   -------   -------

           Net Income                            $   876   $ 1,185   $   908
                                                 =======   =======   =======

        As of December 31, 1996 and 1995, the Partnership's pro rata interest in
the equipment joint  venture's net book value of off-lease  equipment was $1,000
and $6,000, respectively.

        The General Partner earns a management fee of 3.5% of the  Partnership's
respective interest in the gross receipts of the Joint Venture. A management fee
of $743,000  based on cash  distributed to the venturers was paid to the General
Partner in 1994. Such fees have been capitalized and are fully  amortized.  Cash
proceeds  subject to a management fee at the joint venture level are not subject
to management fees at the Partnership level.

Financing Joint Venture

        The  Partnership  owns a limited or general  partnership  interest  in a
financing  joint venture.  These  investments are accounted for using the equity
method of accounting.  The other partners of the venture are entities  organized
and managed by the General Partner.

        The financing  joint venture  owned by the  Partnership,  along with its
percentage ownership is as follows:

                                                          Percentage
           Joint Venture                                  Ownership
           -------------                                  ---------

           Phoenix Joint Venture 1994-2                      25%
<TABLE>
        An analysis of the Partnership's  investment  account in financing joint
venture is as follows:
<CAPTION>
                      Net Investment                                                 Net Investment
                       at Beginning                     Equity in       Equity in        at End
Date                     of Period     Contributions    Earnings      Distributions     of Period
----                  --------------   -------------    ---------     -------------  --------------
                                             (Amounts in Thousands)
<S>                       <C>              <C>            <C>             <C>             <C>
Year Ended
  December 31, 1994       $   0            $290           $   0           $   0           $ 290
                          =====            ====           =====           =====           =====

Year Ended
  December 31, 1995       $ 290            $  0           $  44           $  64           $ 270
                          =====            ====           =====           =====           =====

Year Ended
  December 31, 1996       $ 270            $  0           $  39           $  86           $ 223
                          =====            ====           =====           =====           =====
</TABLE>

<PAGE>


                                                                   Page 22 of 31


        The aggregate financial information of the financing joint venture as of
December 31 is presented as follows:

                                  BALANCE SHEET

                                     ASSETS
                                                              December 31,
                                                             1996      1995
                                                           -------   -------
                                                         (Amounts in Thousands)

        Cash and cash equivalents                          $   155   $   271
        Accounts receivable                                     14        11
        Notes receivable, net                                  823       977
        Other assets                                            31        37
                                                           -------   -------

           Total Assets                                    $ 1,023   $ 1,296
                                                           =======   =======

                        LIABILITIES AND PARTNERS' CAPITAL

        Accounts payable                                   $   130   $   215
        Partners' capital                                      893     1,081
                                                           -------   -------

           Total Liabilities and Partners' Capital         $ 1,023   $ 1,296
                                                           =======   =======

                             STATEMENT OF OPERATIONS

                                     INCOME

                                               For the Years Ended December 31,
                                                    1996      1995      1994
                                                 -------   -------   -------
                                                    (Amounts in Thousands)

        Interest income                          $   158   $   187   $     2
        Other income                                   4         2      --
                                                 -------   -------   -------

           Total Income                              162       189         2
                                                 -------   -------   -------

                                    EXPENSES

        Management fees to the General Partner         6         7      --
        Other expenses                              --           6         1
                                                 -------   -------   -------

           Total Expenses                              6        13         1
                                                 -------   -------   -------

           Net Income                            $   156   $   176   $     1
                                                 =======   =======   =======

        The General Partner earns a management fee of 3.5% of the  Partnership's
respective  interest in gross payments received for the financing joint venture.
Revenues  subject to a management fee at the joint venture level are not subject
to management fees at the Partnership level.

Foreclosed Cable Systems Joint Venture

        The  Partnership  owns an interest in a foreclosed  cable  systems joint
venture,  along with other  partnerships  managed by the General Partner and its
affiliates. The Partnership foreclosed upon certain assets of a cable television
operator  to whom the  Partnership,  along  with other  affiliated  partnerships
managed by the General Partner,  had extended credit.  The  partnerships'  notes
receivables   and  assets  were   exchanged   for   interests   (their   capital
contribution), on a pro rata basis, in a newly formed joint venture owned by the
partnerships and managed by the General  Partner.  Title to the cable television
system is held by the joint venture.  These  investments are accounted for using
the equity method of accounting.



<PAGE>


                                                                   Page 23 of 31


        The joint venture owned by the  Partnership,  along with its  percentage
ownership is as follows:

                                                            Weighted
        Joint Venture                                  Percentage Interest
        -------------                                  -------------------

   Phoenix Grassroots Cable System, LLC (1)                   .67%

(1) Cable system sold during 1996

<TABLE>
   An analysis of the  Partnership's net investment in a foreclosed cable system
joint venture is as follows:
<CAPTION>
                      Net Investment                                               Net Investment
                       at Beginning                    Equity in                      at End
Date                    of Period      Contributions    Earnings   Distributions     of Period
----                  --------------   -------------   ---------   -------------   --------------
                                                (Amounts in Thousands)
<S>                        <C>             <C>          <C>             <C>             <C>
Year Ended
  December 31, 1996        $  0            $62          $  0           $ 61             $  1
                           ====            ===          ====           ====             ====
</TABLE>
        The aggregate financial information of the foreclosed cable system joint
venture as of December 31 and for the years then ended is presented as follows:

                                 BALANCE SHEETS

                                     ASSETS
                                                              December 31,
                                                             1996      1995
                                                           -------   -------
                                                        (Amounts in Thousands)

        Cash and cash equivalents                          $   115   $  --
                                                           -------   -------

           Total Assets                                    $   115   $  --
                                                           =======   =======

                        LIABILITIES AND PARTNERS' CAPITAL

        Accounts payable                                   $    26   $  --
        Partners' capital                                       89      --
                                                           -------   -------

           Total Liabilities and Partners' Capital         $   115   $  --
                                                           =======   =======

                            STATEMENTS OF OPERATIONS

                                     INCOME

                                               For the Years Ended December 31,
                                                   1996      1995      1994
                                                 -------   -------   -------
                                                    (Amounts in Thousands)

        Subscriber revenue                       $ 1,529   $  --     $  --
        Gain on sale of cable system                 162      --        --
        Other income                                  26      --        --
                                                 -------   -------   -------

           Total Income                            1,717      --        --
                                                 -------   -------   -------



<PAGE>


                                                                   Page 24 of 31


                                    EXPENSES

        Depreciation and amortization                482      --        --
        Program services                             480      --        --
        General and administrative expense           359      --        --
        Management fees to an affiliate of
          the General Partner                        381      --        --
        Provision for losses on accounts
          receivable                                  15      --        --
                                                 -------   -------   -------

           Total Expenses                          1,717      --        --
                                                 -------   -------   -------

           Net Income                            $  --     $  --     $  --
                                                 =======   =======   =======

        Phoenix  Cable  Management  Inc.  (PCMI),  an  affiliate  of the General
Partner,  provides  day  to day  management  services  in  connection  with  the
operation of the  foreclosed  cable system joint venture.  The foreclosed  cable
system  joint  venture  will pay a  management  fee  equal to four and  one-half
percent of the System's  monthly  gross  revenues for these  services.  Revenues
subject to a management  fee at the joint  venture  level will not be subject to
management fees at the Partnership level.


Note 7.    Accounts Payable and Accrued Expenses.

        Accounts  payable  and  accrued  expenses  consist of the  following  at
December 31:

                                                             1996      1995
                                                           -------   -------
                                                         (Amounts in Thousands)

        General Partner and affiliates                     $    47   $   196
        Equipment lease operations                             361       395
        Security deposits                                      229       238
        Other                                                   47        39
                                                           -------   -------

           Total                                           $   684   $   868
                                                           =======   =======


Note 8.    Income Taxes.

        Federal  and state  income  tax  regulations  provide  that taxes on the
income  or loss of the  Partnership  are  reportable  by the  partners  in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.

        The net  differences  between the tax basis and the reported  amounts of
the Partnership's assets and liabilities are as follows at December 31:

                              Reported Amounts     Tax Basis    Net Difference
                              ----------------     ---------    --------------
                                            (Amounts in Thousands)

1996
----
        Assets                    $ 11,338         $ 12,712         $(1,374)
        Liabilities                    684              354             330

1995
----
        Assets                    $ 16,712         $ 20,245         $(3,533)
        Liabilities                    868              428             440




<PAGE>


                                                                   Page 25 of 31


Note 9.    Related Entities.

        The General Partner is a California limited partnership, Phoenix Leasing
Associates LP, the general partner of which is Phoenix Leasing Associates, Inc.,
a  Nevada   corporation  and  a  wholly-owned   subsidiary  of  Phoenix  Leasing
Incorporated.  Phoenix Leasing  Incorporated is or has been a general partner in
other limited  partnerships  formed to make investments in capital equipment and
to engage in the leasing and financing business.


Note 10.   Reimbursed Costs to the General Partner and Affiliates.

        The General Partner and affiliates  incur certain  administrative  costs
such  as  data   processing,   investor   and   lessee   communications,   lease
administration,  accounting,  equipment storage and equipment  remarketing,  for
which it is  reimbursed  by the  Partnership.  These  expenses  incurred  by the
General  Partner and  affiliates are to be reimbursed at the lower of the actual
costs or an amount equal to 90% of the fair market value for such services.

        The  reimbursed   administrative  costs  to  the  General  Partner  were
$278,000,  $322,000 and $342,000 for the years ended December 31, 1996, 1995 and
1994, respectively. The equipment storage, remarketing and data processing costs
reimbursed to the General Partner during the years ended December 31, 1996, 1995
and 1994 were $87,000, $262,000 and $346,000, respectively.

        In  addition,  the  General  Partner  receives a  management  fee and an
acquisition fee (see Note 1).


Note 11.   Net Income (Loss) and Distributions per Limited Partnership Unit.

        Net income (loss) and  distributions  per limited  partnership unit were
based on the limited partners' share of net income (loss) and distributions, and
the weighted average number of units outstanding of 170,766, 171,421 and 172,925
for the years ended December 31, 1996, 1995 and 1994, respectively. For purposes
of  allocating  income  (loss)  and  distributions  to each  individual  limited
partner,  the Partnership  allocates net income (loss) and  distributions  based
upon each respective limited partner's net capital contributions.


Note 12.   Fair Value of Financial Instruments.

        The  following  methods and  assumptions  were used to estimate the fair
value of each class of financial  instrument which it is practicable to estimate
that value.

Cash and Cash Equivalents
The carrying amount of cash and cash equivalents approximates fair value because
of the short maturity of these instruments.

Notes Receivable
The fair  value of notes  receivable  is  estimated  based on the  lesser of the
discounted  expected  future cash flows using the current rates at which similar
loans would be made to borrowers with similar credit  ratings,  or the estimated
fair value of the underlying collateral.

Securities, Available-for-Sale
The fair values of  investments in  available-for-sale  securities are estimated
based on quoted market prices.

        The estimated fair values of the Partnership's financial instruments are
as follows at December 31:



<PAGE>


                                                                   Page 26 of 31


                                                    Carrying
                                                     Amount      Fair Value
                                                    --------     ----------
                                                    (Amounts in Thousands)
1996
----
        Assets
           Cash and cash equivalents                 $ 3,323       $ 3,323
           Securities, available-for-sale                 37            37
           Notes receivable                            1,042         1,287

1995
----
        Assets
           Cash and cash equivalents                 $ 2,364       $ 2,364
           Securities, available-for-sale                131           131
           Notes receivable                            1,850         2,199


Note 13.   Subsequent Events.

        In January 1997, cash  distributions of $85,000 and $1,610,000 were made
to the General and Limited Partners, respectively.


<PAGE>


                                                                   Page 27 of 31


Item 9.    Disagreements on Accounting and Financial Disclosure Matters.

        None.


                                    PART III

Item 10.   Directors and Executive Officers of the Registrant.

        The registrant is a limited partnership and, therefore, has no executive
officers or directors.  The General Partner of the Registrant is Phoenix Leasing
Associates LP, a California limited  partnership,  the Corporate General Partner
of which is  Phoenix  Leasing  Associates,  Inc.,  a  Nevada  corporation  and a
wholly-owned   subsidiary  of  Phoenix   Leasing   Incorporated,   a  California
corporation  (PLI).  The  directors and  executive  officers of Phoenix  Leasing
Associates, Inc. (PLA) are as follows:

        GUS  CONSTANTIN,  age 59,  is  President  and a  Director  of  PLA.  Mr.
Constantin received a B.S. degree in Engineering from the University of Michigan
and a Master's Degree in Management Science from Columbia University.  From 1969
to 1972,  he  served  as  Director,  Computer  and  Technical  Equipment  of DCL
Incorporated  (formerly  Diebold Computer Leasing  Incorporated),  a corporation
formerly  listed on the  American  Stock  Exchange,  and as Vice  President  and
General  Manager of DCL Capital  Corporation,  a wholly-owned  subsidiary of DCL
Incorporated.  Mr.  Constantin  was actively  engaged in marketing  manufacturer
leasing  programs  to  computer  and  medical  equipment  manufacturers  and  in
directing DCL Incorporated's IBM System/370 marketing activities. Prior to 1969,
Mr.  Constantin was employed by IBM as a data  processing  systems  engineer for
four years.  Mr.  Constantin  is an  individual  general  partner in four active
partnerships and is an NASD registered principal.  Mr. Constantin is the founder
of PLI and the beneficial  owner of all of the common stock of Phoenix  American
Incorporated.

        PARITOSH K. CHOKSI,  age 43, is Senior Vice  President,  Chief Financial
Officer,  Treasurer and a Director of PLA. He has been associated with PLI since
1977.  Mr. Choksi  oversees the finance,  accounting,  information  services and
systems  development  departments of the General  Partner and its Affiliates and
oversees the structuring,  planning and monitoring of the partnerships sponsored
by the General Partner and its Affiliates.  Mr. Choksi graduated from the Indian
Institute of Technology, Bombay, India with a degree in Engineering. He holds an
M.B.A. degree from the University of California, Berkeley.

        GARY W.  MARTINEZ,  age 46, is Senior Vice  President  and a Director of
PLA. He has been associated with PLI since 1976. He manages the Asset Management
Department,  which is responsible for lease and loan portfolio management.  This
includes credit analysis,  contract terms, documentation and funding; remittance
application,  change processing and maintenance of customer  accounts;  customer
service, invoicing,  collection,  settlements and litigation;  negotiating lease
renewals,  extensions,  sales and buyouts; and management information reporting.
From 1973 to 1976, Mr.  Martinez was a Loan Officer with Crocker  National Bank,
San  Francisco.  Prior to 1973,  he was an Area Manager with  Pennsylvania  Life
Insurance  Company.  Mr. Martinez is a graduate of California State  University,
Chico.

        BRYANT J. TONG, age 42, is Senior Vice President,  Financial  Operations
of PLA. He has been with PLI since 1982.  Mr. Tong is  responsible  for investor
services and overall company  financial  operations.  He is also responsible for
the technical and  administrative  operations of the cash management,  corporate
accounting,  partnership accounting,  accounting systems,  internal controls and
tax  departments,  in addition to Securities  and Exchange  Commission and other
regulatory  agency  reporting.  Prior to his association  with PLI, Mr. Tong was
Controller-Partnership  Accounting with the Robert A. McNeil Corporation for two
years and was an auditor with Ernst & Whinney  (succeeded by Ernst & Young) from
1977 through 1980.  Mr. Tong holds a B.S. in Accounting  from the  University of
California, Berkeley, and is a Certified Public Accountant.


<PAGE>


                                                                   Page 28 of 31


        Neither the General  Partner  nor any  Executive  Officer of the General
Partner has any family relationship with the others.

        Phoenix  Leasing  Incorporated  or  its  affiliates  and  the  executive
officers of the General  Partner  serve in a similar  capacity to the  following
affiliated limited partnerships:

           Phoenix Leasing American Business Fund, L.P.
           Phoenix Leasing Cash Distribution Fund V, L.P
           Phoenix High Tech/High Yield Fund
           Phoenix Leasing Cash Distribution Fund IV
           Phoenix Leasing Cash Distribution Fund III
           Phoenix Leasing Cash Distribution Fund II
           Phoenix Leasing Income Fund VII
           Phoenix Leasing Income Fund VI
           Phoenix Leasing Growth Fund 1982 and
           Phoenix Leasing Income Fund 1977


Item 11.   Executive Compensation.
<TABLE>
        Set forth is the information relating to all direct remuneration paid or accrued by the Registrant
during the last year to the General Partner.

        (A)                 (B)                             (C)                              (D)
<CAPTION>
                                                      Cash and cash-                    Aggregate of
Name of Individual      Capacities in                 equivalent forms                  contingent forms
or persons in group     which served                  of remuneration                   of remuneration
-------------------     -------------   ----------------------------------------------  ----------------
                                                   (C1)                 (C2)
                                                                  Securities or property
                                       Salaries, fees, directors' insurance benefits or
                                       fees, commissions, and     reimbursement, personal
                                       bonuses                    benefits
                                       -------------------------  -----------------------
                                                       (Amounts in Thousands)
<S>                     <C>                    <C>                       <C>                  <C>
Phoenix Leasing
  Associates LP         General Partner        $317(1)                   $0                   $0
                                                ===                       =                    =
</TABLE>
(1)  consists of management and acquisition fees.


                                     PART IV

Item 12.   Security Ownership of Certain Beneficial Owners and Management.

        (a)No  person  owns of  record,  or is  known by the  Registrant  to own
           beneficially,   more  than  five  percent  of  any  class  of  voting
           securities of the Registrant.

        (b)The General Partner of the Registrant  owns the equity  securities of
           the Registrant set forth in the following table:



<PAGE>


                                                                   Page 29 of 31


             (1)                         (2)                           (3)
        Title of Class         Amount Beneficially Owned        Percent of Class
        --------------         -------------------------        ----------------

    General Partner Interest   Represents a 5% interest in             100%
                               the Registrant's profits and  
                               distributions, until the Limited
                               Partners have recovered their
                               capital contributions plus a
                               cumulative return of 12% per
                               annum, compounded quarterly, on
                               the unrecovered portion thereof.
                               Thereafter, the General Partner
                               will receive 15% interest in the
                               Registrant's profits and
                               distributions.

    Limited Partner Interest   12 units                                  -


Item 13.   Certain Relationships and Related Transactions.

        None.


Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

                                                                      Page No.
                                                                      --------
(a)     1. Financial Statements:

           Balance Sheets as of December 31, 1996 and 1995                11
           Statements of Operations for the Years Ended December
            31, 1996, 1995 and 1994                                       12
           Statements of Partners' Capital for the Years Ended
            December 31, 1996, 1995 and 1994                              13
           Statements of Cash Flows for the Years Ended December
            31, 1996, 1995 and 1994                                       14
           Notes to Financial Statements                               15-26

        2. Financial Statement Schedule:

           Schedule II - Valuation and Qualifying Accounts and Reserves   31

        All other schedules are omitted because they are not applicable,  or not
required,  or because the  required  information  is  included in the  financial
statements or notes thereto.

(b)     Reports on Form 8-K:

        No reports on Form 8-K were filed for the  quarter  ended  December  31,
1996.

(c)     Exhibits

        21.  Additional Exhibits

             a) Balance Sheets of Phoenix Leasing Associates, LP     E21 1-4
                Balance Sheets of Phoenix Leasing Associates, Inc.   E21 5-8

        27.  Financial Data Schedule

<PAGE>


                                                                   Page 30 of 31


                                   SIGNATURES

        Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                     PHOENIX INCOME FUND, L.P.
                                     a California limited partnership
                                              (Registrant)

                                     By: PHOENIX LEASING ASSOCIATES LP,
                                         a California limited partnership,
                                         General Partner

                                         By: PHOENIX LEASING ASSOCIATES, INC.,
                                             a Nevada corporation,
                                             general partner



        Date:  March 25, 1997        By: /S/  GUS CONSTANTIN
               -------------             -------------------------
                                         Gus Constantin, President


        Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.

         Signature                     Title                         Date
         ---------                     -----                         ----


/S/ GUS CONSTANTIN      President and a Director                 March 25, 1997
----------------------  of Phoenix Leasing Associates, Inc.      --------------
(Gus Constantin)


/S/ PARITOSH K. CHOKSI  Chief Financial Officer,                 March 25, 1997
----------------------  Senior Vice President                    --------------
(Paritosh K. Choksi)    Treasurer and Director of
                        Phoenix Leasing Associates, Inc.


/S/ BRYANT J. TONG      Senior Vice President,                   March 25, 1997
----------------------  Financial Operations of                  --------------
(Bryant J. Tong)        Phoenix Leasing Associates, Inc.
                                      


/S/ GARY W. MARTINEZ    Senior Vice President and a Director of  March 25, 1997
----------------------  Phoenix Leasing Associates, Inc.         --------------
(Gary W. Martinez)                    


/S/ MICHAEL K. ULYATT   Partnership Controller                   March 25, 1997
----------------------  of Phoenix Leasing Incorporated          --------------
(Michael K. Ulyatt)     (Parent Company)



<PAGE>
<TABLE>

                                                                                               Page 31 of 31


                                               PHOENIX INCOME FUND, L.P.
  
                                                      SCHEDULE II
                                                (Amounts in Thousands)



SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES


<CAPTION>
           COLUMN A                COLUMN B         COLUMN C        COLUMN D          COLUMN E         COLUMN F
        Classification            Balance at       Charged to      Charged to        Deductions       Balance at
                                 Beginning of       Expense          Revenue                            End of
                                    Period                                                              Period
------------------------------  --------------- ----------------  -------------  ------------------ --------------

<C>                                  <C>             <C>              <C>              <C>              <C>           
Year ended December 31, 1994
  Allowance for losses on accounts
    receivable                       $  137          $ 58             $  0             $   19           $  176
  Allowance for losses on notes
    receivable                          195            35                0                  0              230
  Allowance for early termination,
    financing leases                    596           272                0                177              691
                                     ------          ----             ----             ------           ------

    Totals                           $  928          $365             $  0             $  196           $1,097
                                     ======          ====             ====             ======           ======


Year ended December 31, 1995
  Allowance for losses on accounts
    receivable                       $  176          $  0             $  0             $   29           $  147
  Allowance for losses on notes
    receivable                          230             0                0                  0              230
  Allowance for early termination,
    financing leases                    691           138                0                393              436
                                     ------          ----             ----             ------           ------

    Totals                           $1,097          $138             $  0             $  422           $  813
                                     ======          ====             ====             ======           ======


Year ended December 31, 1996
  Allowance for losses on accounts
    receivable                       $  147          $ 29             $  0             $   51           $  125
  Allowance for losses on notes
    receivable                          230             0               14                  0              216
  Allowance for early termination,
    financing leases                    436           113                0                481               68
                                     ------          ----             ----             ------           ------

    Totals                           $  813          $142             $ 14             $  532           $  409
                                     ======          ====             ====             ======           ======
</TABLE>