UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21371
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Phoenix Adviser Trust
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(Exact name of registrant as specified in charter)
101 Munson Street
Greenfield, MA 01301
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(Address of principal executive offices) (Zip code)
Kevin J. Carr, Esq. John R. Flores, Esq.
Vice President, Chief Legal Officer, Vice President
Counsel and Secretary for Registrant Litigation/Employment Counsel
Phoenix Life Insurance Company Phoenix Life Insurance Company
One American Row One American Row
Hartford, CT 06102 Hartford, CT 06102
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(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 243-1574
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Date of fiscal year end: February 28
-----------
Date of reporting period: August 31, 2005
---------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
AUGUST 31, 2005
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SEMIANNUAL REPORT
o PHOENIX FOCUSED VALUE FUND
FORMERLY JANUS ADVISER: FOCUSED VALUE FUND
o PHOENIX FOREIGN OPPORTUNITIES FUND
FORMERLY JANUS ADVISER: INTERNATIONAL EQUITY FUND
[GRAPHIC OMITTED]
Get Fund documents
by e-mail instead.
Eligible shareholders
may sign up for E-Delivery
at PhoenixFunds.com
TRUST NAME: PHOENIX ADVISER TRUST
[GRAPHIC OMITTED] PHOENIXFUNDS(SM)
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Mutual funds are not insured by the FDIC; are not deposits or other
obligations of a bank and are not guaranteed by a bank; and are
subject to investment risks, including possible loss of the principal
invested.
----------------------------------------------------------------------
This report is not authorized for distribution to prospective investors in
the Phoenix Adviser Trust unless preceded or accompanied by an effective
prospectus which includes information concerning the sales charge, each Fund's
record and other pertinent information.
MESSAGE FROM THE CHAIRMAN
DEAR SHAREHOLDER:
I encourage you to review this semiannual report for the Phoenix
Focused Value Fund and Phoenix Foreign Opportunities Fund for the six
months ended August 31, 2005.
As of late summer, the United States economy was growing at a more
moderate pace than we experienced in 2004. Inflation concerns seemed to be
subsiding after peaking this spring, despite continued high energy prices.
The equity markets remained sluggish through the first half of 2005, giving
back some of the gains from last fall's post-presidential election rally.
The Federal Reserve (the "Fed") continued to tighten interest rates and
instituted its tenth consecutive 25 basis point rate hike on August 9. As a
result of the Fed's efforts, the Treasury yield curve has flattened
considerably over the past year, with short rates rising while rates for
longer dated maturities declined. The combination of moderate economic
growth and low inflation should provide a favorable environment for both
the equity and fixed income markets in the second half of the year.
No matter what the market brings, short-term performance changes
should not distract you from your long-term financial plan. Now may be an
opportune time for you to review your portfolio with your financial advisor
to make sure that your asset allocation remains on target. Keep in mind
that finding the best balance of performance and protection requires
discipline and diversification.(1) Your Phoenix mutual fund allocation may
help in this effort.
As an alternative to paper mail, if you would like to view your
mutual fund communications electronically, including account statements,
prospectuses, and annual and semiannual reports, sign up for our E-Delivery
service. To register, go online to PhoenixFunds.com, select the Individual
Investors option, and follow the E-Delivery instructions, or call Mutual
Fund Services at 1-800-243-1574 and a customer service representative will
be happy to assist you.
Sincerely,
/s/ Philip R. McLoughlin
- ------------------------
Philip R. McLoughlin
Chairman, Phoenix Funds
SEPTEMBER 2005
(1) DIVERSIFICATION DOES NOT GUARANTEE AGAINST A LOSS, AND THERE IS NO
GUARANTEE THAT A DIVERSIFIED PORTFOLIO WILL OUTPERFORM A NON-DIVERSIFIED
PORTFOLIO.
The preceding information is the opinion of the Chairman of the Phoenix
Funds Board of Trustees. There is no guarantee that market forecasts
discussed will be realized.
1
TABLE OF CONTENTS
Glossary .................................................................. 3
Phoenix Focused Value Fund ................................................ 4
Phoenix Foreign Opportunities Fund ........................................ 10
Notes to Financial Statements ............................................. 17
Board of Trustees' Consideration of Investment Advisory and
Subadvisory Agreements ................................................. 22
Results of Shareholder Meeting ............................................ 24
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PROXY VOTING INFORMATION (FORM N-PX)
The Adviser and subadviser vote proxies relating to portfolio securities in
accordance with procedures that have been approved by the Trust's Board of
Trustees. You may obtain a description of these procedures, along with
information regarding how the Funds voted proxies during the most recent
12-month period ended June 30, 2005, free of charge, by calling toll-free
1-800-243-1574. This information is also available through the Securities and
Exchange Commission's website at http://www.sec.gov.
FORM N-Q INFORMATION
The Trust files a complete schedule of portfolio holdings with the Securities
and Exchange Commission (the "SEC") for the first and third quarters of each
fiscal year on Form N-Q. Form N-Q is available on the SEC's website at
http://www.sec.gov. Form N-Q may be reviewed and copied at the SEC's Public
Reference Room. Information on the operation of the SEC's Public Reference Room
can be obtained by calling toll-free 1-800-SEC-0330.
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2
GLOSSARY
ADR (AMERICAN DEPOSITARY RECEIPT)
Represents shares of foreign companies traded in U.S. dollars on U.S. exchanges
that are held by a bank or a trust. Foreign companies use ADRs in order to make
it easier for Americans to buy their shares.
BASIS POINT (BP)
One-hundredth of a percentage point (0.01%). Basis points are often used to
measure changes in or differences between yields on fixed income
securities, since these often change by very small amounts.
FEDERAL RESERVE (THE "FED")
The central bank of the United States, responsible for controlling the
money supply, interest rates and credit with the goal of keeping the U.S.
economy and currency stable. Governed by a seven-member board, the system
includes 12 regional Federal Reserve Banks, 25 branches and all national
and state banks that are part of the system.
INFLATION
Rise in the prices of goods and services resulting from increased spending
relative to the supply of goods on the market.
NEW YORK SHARES (GUILDER SHARES)
Shares representing Dutch companies that are not permitted to trade outside
of national borders.
SPONSORED ADR
An ADR which is issued with the cooperation of the company whose stock will
underlie the ADR. These shares carry all the rights of the common share
such as voting rights. ADRs must be sponsored to be able to trade on the
NYSE.
YIELD CURVE
A line chart that shows interest rates at a specific point in time for
securities of equivalent quality but with different maturities. A "normal
or positive" yield curve indicates that short-term securities have a lower
interest rate than long-term securities; an "inverted or negative" yield
curve indicates short-term rates are exceeding long-term rates; and a "flat
yield curve" means short- and long-term rates are about the same.
3
PHOENIX FOCUSED VALUE FUND
ABOUT YOUR FUND'S EXPENSES (UNAUDITED)
We believe it is important for you to understand the impact of costs on
your investment. All mutual funds have operating expenses. As a shareholder
of the Focused Value Fund, you incur two types of costs: (1) transaction
costs, including sales charges on purchases of Class A shares and
contingent deferred sales charges on Class C shares; and (2) ongoing costs,
including investment advisory fees; distribution and service fees; and
other expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds. These
examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire six-month period.
ACTUAL EXPENSES
The first line of the accompanying tables provides information about
actual account values and actual expenses. You may use the information in
this line, together with the amount you invested, to estimate the expenses
that you paid over the period. Simply divide your account value by $1,000
(for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the first line under the heading
entitled "Expenses Paid During Period" to estimate the expenses you paid on
your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the accompanying tables provides information about
hypothetical account values and hypothetical expenses based on the Fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not your Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information
to compare the ongoing costs of investing in your Fund and other funds. To
do so, compare these 5% hypothetical examples with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the accompanying tables are meant
to highlight your ongoing costs only and do not reflect any transactional
costs, such as sales charges or contingent deferred sales charges.
Therefore, the second line of the accompanying tables is useful in
comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds. In addition, if these transactional
costs were included, your costs would have been higher. The calculations
assume no shares were bought or sold during the period. Your actual costs
may have been higher or lower, depending on the amount of your investment
and the timing of any purchases or redemptions.
Beginning Ending Expenses Paid
Focused Value Fund Account Value Account Value During
Class A February 28, 2005 August 31, 2005 Period*
- ----------------------- ---------------- -------------- -------------
Actual $1,000.00 $ 981.50 $5.74
Hypothetical (5% return
before expenses) 1,000.00 1,019.34 5.87
*EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF
1.15%, WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE,
MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE
NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 365 TO
REFLECT THE ONE-HALF YEAR PERIOD.
Beginning Ending Expenses Paid
Focused Value Fund Account Value Account Value During
Class C February 28, 2005 August 31, 2005 Period*
- ----------------------- ---------------- -------------- -------------
Actual $1,000.00 $ 977.00 $9.47
Hypothetical (5% return
before expenses) 1,000.00 1,015.51 9.70
*EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF
1.90%, WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE,
MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE
NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 365 TO
REFLECT THE ONE-HALF YEAR PERIOD.
YOU CAN FIND MORE INFORMATION ABOUT THE FUNDS EXPENSES IN THE FINANCIAL
STATEMENTS SECTION THAT FOLLOWS. FOR ADDITIONAL INFORMATION ON OPERATING
EXPENSES AND OTHER SHAREHOLDER COSTS, REFER TO THE PROSPECTUS.
4
Phoenix Focused Value Fund
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SECTOR WEIGHTINGS (UNAUDITED) 8/31/05
- --------------------------------------------------------------------------------
As a percentage of total investments
[CHART OMITTED - EDGAR REPRESENTATION OF DATA FOLLOWS]
Financials 51%
Consumer Discretionary 17
Consumer Staples 12
Health Care 5
Other 15
SCHEDULE OF INVESTMENTS
AUGUST 31, 2005
(UNAUDITED)
SHARES VALUE
-------- -----------
DOMESTIC COMMON STOCKS--75.2%
APPAREL RETAIL--3.5%
TJX Cos., Inc. (The) .............................. 110,300 $ 2,306,373
APPAREL, ACCESSORIES & LUXURY GOODS--2.3%
Liz Claiborne, Inc. ............................... 36,700 1,505,801
ASSET MANAGEMENT & CUSTODY BANKS--2.8%
State Street Corp. ................................ 38,100 1,841,373
BROADCASTING & CABLE TV--3.5%
Entercom Communications Corp.(b) .................. 34,500 1,154,025
Saga Communications, Inc. Class A(b) .............. 80,325 1,166,319
------------
2,320,344
------------
CASINOS & GAMING--1.1%
International Game Technology ..................... 25,200 698,544
CONSUMER FINANCE--1.8%
American Express Co. .............................. 21,800 1,204,232
DIVERSIFIED BANKS--3.9%
Wells Fargo & Co. ................................. 42,800 2,551,736
HEALTH CARE FACILITIES--4.7%
HCA, Inc. ......................................... 21,300 1,050,090
Health Management Associates, Inc. Class A ........ 57,300 1,393,536
Universal Health Services, Inc. Class B ........... 12,850 656,763
------------
3,100,389
------------
HOME FURNISHINGS--2.4%
Mohawk Industries, Inc.(b) ........................ 18,850 1,609,413
SHARES VALUE
-------- -----------
HYPERMARKETS & SUPER CENTERS--2.2%
Wal-Mart Stores, Inc. ............................. 33,000 $ 1,483,680
MOTORCYCLE MANUFACTURERS--2.2%
Harley-Davidson, Inc. ............................. 29,700 1,463,022
MULTI-LINE INSURANCE--4.9%
American International Group, Inc. ................ 54,800 3,244,160
PACKAGED FOODS & MEATS--1.6%
General Mills, Inc. ............................... 23,000 1,060,760
PROPERTY & CASUALTY INSURANCE--20.3%
Berkshire Hathaway, Inc.(b) ....................... 137 11,391,550
Chubb Corp. (The) ................................. 1,900 165,224
Cincinnati Financial Corp. ........................ 35,092 1,438,070
Markel Corp.(b) ................................... 570 185,108
Old Republic International Corp. .................. 10,737 270,250
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13,450,202
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REGIONAL BANKS--5.4%
Fifth Third Bancorp ............................... 87,000 3,602,670
SOFT DRINKS--0.4%
Coca-Cola Co. (The) ............................... 6,300 277,200
THRIFTS & MORTGAGE FINANCE--12.2%
Fannie Mae ........................................ 49,974 2,550,673
Freddie Mac ....................................... 63,700 3,846,206
Golden West Financial Corp. ....................... 27,900 1,701,621
------------
8,098,500
------------
- -----------------------------------------------------------------------------
TOTAL DOMESTIC COMMON STOCKS
(IDENTIFIED COST $47,051,064) 49,818,399
- -----------------------------------------------------------------------------
See Notes to Financial Statements
5
Phoenix Focused Value Fund
SHARES VALUE
-------- -----------
FOREIGN COMMON STOCKS(c)--10.3%
DISTILLERS & VINTNERS--3.8%
Diageo plc Sponsored ADR (United Kingdom) ......... 44,100 $ 2,545,011
PACKAGED FOODS & MEATS--4.1%
Cadbury Schweppes plc Sponsored ADR
(United Kingdom) .................................. 8,400 334,992
Nestle S.A. Sponsored ADR (Switzerland) ........... 33,700 2,356,550
------------
2,691,542
------------
SPECIALTY STORES--2.4%
Signet Group plc ADR (United Kingdom) ............. 79,200 1,573,704
- -----------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $6,395,850) 6,810,257
- -----------------------------------------------------------------------------
TOTAL LONG TERM INVESTMENTS--85.5%
(IDENTIFIED COST $53,446,914) 56,628,656
- -----------------------------------------------------------------------------
PAR VALUE
(000)
--------
SHORT-TERM INVESTMENTS--14.5%
COMMERCIAL PAPER--14.5%
Govco, Inc. 3.55%, 9/1/05 ......................... $ 1,650 1,650,000
Honeywell International, Inc. 3.47%, 9/2/05 ....... 1,695 1,694,837
Sysco Corp. 3.52%, 9/8/05 ......................... 1,770 1,768,788
Danske Corp. 3.53%, 9/12/05 ....................... 1,000 998,921
Old Line Funding Corp. 3.56%, 9/27/05 ............. 2,100 2,094,601
Ranger Funding Co. LLC 3.55%, 9/27/05 ............. 1,380 1,376,462
- -----------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $9,583,609) 9,583,609
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS--100.0%
(IDENTIFIED COST $63,030,523) 66,212,265(a)
Other assets and liabilities, net--0.0% 8,385
------------
NET ASSETS--100.0% $ 66,220,650
============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $5,102,478 and gross
depreciation of $1,920,736 for federal income tax purposes. At August 31,
2005, the aggregate cost of securities for federal income tax purposes was
$63,030,523.
(b) Non-income producing.
(c) Foreign common stocks are determined based on the country in which the
security is issued. The country of risk is determined based on criteria
described in Note 2G "Foreign security country determination" in the Notes
to Financial Statements.
See Notes to Financial Statements
6
Phoenix Focused Value Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2005
(UNAUDITED)
ASSETS
Investment securities at value
(Identified cost $63,030,523) $66,212,265
Receivables
Investment securities sold 887,495
Dividends and interest 54,250
Fund shares sold 20,260
Prepaid expenses 1,676
-----------
Total assets 67,175,946
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LIABILITIES
Cash overdraft 165,986
Payables
Investment securities purchased 513,448
Fund shares repurchased 181,145
Investment advisory fee 22,858
Distribution and service fees 16,746
Transfer agent fee 16,316
Financial agent fee 6,078
Trustees' fee 806
Accrued expenses 31,913
-----------
Total liabilities 955,296
-----------
NET ASSETS $66,220,650
===========
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $59,940,866
Undistributed net investment income 106,613
Accumulated net realized gain 2,991,429
Net unrealized appreciation 3,181,742
-----------
NET ASSETS $66,220,650
===========
CLASS A
Shares of beneficial interest outstanding, $0.001 par value,
unlimited authorization (Net Assets $62,469,445) 3,232,069
Net asset value per share $19.33
Offering price per share $19.33/(1-5.75%) $20.51
CLASS C
Shares of beneficial interest outstanding, $0.001 par value,
unlimited authorization (Net Assets $3,751,205) 199,961
Net asset value and offering price per share $18.76
STATEMENT OF OPERATIONS
SIX MONTHS AUGUST 31, 2005
(UNAUDITED)
INVESTMENT INCOME
Dividends $ 512,169
Interest 144,843
Foreign taxes withheld (9,587)
-----------
Total investment income 647,425
-----------
EXPENSES
Investment advisory fee 329,914
Service fees, Class A 36,517
Distribution and service fees, Class C 18,037
Distribution and service fees, Investor Class 49,613
Distribution and service fees, Class I 2,852
Financial agent fee 14,301
Administration fee 29,992
Trustees 39,142
Transfer agent 37,253
Printing 34,922
Professional 23,828
Custodian 20,225
Registration 12,674
Miscellaneous 8,135
-----------
Total expenses 657,405
Less expenses reimbursed by investment adviser (191,151)
-----------
Net expenses 466,254
-----------
NET INVESTMENT INCOME 181,171
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on investments 2,957,539
Net change in unrealized appreciation (depreciation)
on investments (4,688,655)
-----------
NET LOSS ON INVESTMENTS (1,731,116)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(1,549,945)
===========
See Notes to Financial Statements
7
Phoenix Focused Value Fund
STATEMENT OF CHANGES IN NET ASSETS
Six Months
Ended
August 31, 2005 Year Ended
(Unaudited) February 28, 2005
--------------- -----------------
FROM OPERATIONS
Net investment income (loss) $ 181,171 $ 61,654
Net realized gain (loss) 2,957,539 6,273,086
Net change in unrealized appreciation (depreciation) (4,688,655) (4,344,567)
Payment by affiliate (Note 3) -- 585
------------ ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (1,549,945) 1,990,758
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (9,174) --
Net investment income, Class C (3,745) --
Net investment income, Investor Class (117,053) --
Net investment income, Class I (6,240) --
Net realized long-term gains, Class A (232,762) (544,740)
Net realized long-term gains, Class C (180,721) (279,447)
Net realized long-term gains, Investor Class (3,003,384) (7,871,175)
Net realized long-term gains, Class I (181,221) (539,295)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (3,734,300) (9,234,657)
FROM SHARE TRANSACTIONS ------------ ------------
CLASS A
Proceeds from sales of shares (32,611 and 101,198 shares, respectively) 647,715 2,192,726
Net asset value of shares issued from reinvestment of distributions
(12,025 and 24,980 shares, respectively) 235,578 520,067
Proceeds from shares issued in connection with reclassification from
Investor Class shares (2,994,554 and 0 shares, respectively) (See Note 9) 59,058,124 --
Proceeds from shares issued in connection with reclassification from
Class I shares (180,929 and 0 shares, respectively) (See Note 9) 3,568,308 --
Cost of shares repurchased (234,874 and 44,413 shares, respectively) (4,631,083) (941,410)
------------ ------------
Total 58,878,642 1,771,383
------------ ------------
CLASS C
Proceeds from sales of shares (20,683 and 80,521 shares, respectively) 400,123 1,653,395
Net asset value of shares issued from reinvestment of
distributions (9,411 and 13,098 shares, respectively) 179,381 267,204
Cost of shares repurchased (3,925 and 1,601 shares, respectively) (76,812) (32,119)
------------ ------------
Total 502,692 1,888,480
------------ ------------
INVESTOR CLASS
Proceeds from sales of shares (104,213 and 855,396 shares, respectively) 2,119,477 18,185,566
Net asset value of shares issued from reinvestment
of distributions (156,298 and 371,642 shares, respectively) 3,050,945 7,716,353
Value of shares liquidated in connection with reclassification to
Class A shares (3,005,502 and 0 shares, respectively) (See Note 9) (59,058,124) --
Cost of shares repurchased (680,869 and 893,222 shares, respectively) (13,656,695) (18,910,696)
------------ ------------
Total (67,544,397) 6,991,223
------------ ------------
CLASS I
Proceeds from sales of shares (1,207 and 4,089 shares, respectively) 24,188 88,692
Net asset value of shares issued from reinvestment of distributions
(9,048 and 23,197 shares, respectively) 176,169 480,968
Value of shares liquidated in connection with reclassification to
Class A shares (182,057 and 0 shares, respectively) (See Note 9) (3,568,308) --
Cost of shares repurchased (19,186 and 93,596 shares, respectively) (382,874) (1,989,941)
------------ ------------
Total (3,750,825) (1,420,281)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS (11,913,888) 9,230,805
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS (17,198,133) 1,986,906
NET ASSETS
Beginning of period 83,418,783 81,431,877
------------ ------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$106,613 AND $61,654, RESPECTIVELY) $ 66,220,650 $ 83,418,783
============ ============
See Notes to Financial Statements
8
Phoenix Focused Value Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A
----------------------------------------------------
SIX MONTHS FOR THE PERIOD
ENDED YEAR ENDED JANUARY 1, 2004 TO
AUGUST 31, 2005 FEBRUARY 28, FEBRUARY 29,
(UNAUDITED) 2005 2004
Net asset value, beginning of period $20.74 $22.69 $21.82
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.03(6) 0.03 --(2)
Net realized and unrealized gain (loss) (0.40) 0.48 0.87
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.37) 0.51 0.87
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.04) -- --
Distributions from net realized gains (1.00) (2.46) --
------ ------ ------
TOTAL DISTRIBUTIONS (1.04) (2.46) --
------ ------ ------
Change in net asset value (1.41) (1.95) 0.87
------ ------ ------
NET ASSET VALUE, END OF PERIOD $19.33 $20.74 $22.69
====== ====== ======
Total return(1) (1.85)%(5) 2.45% 3.99 %(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $62,469 $5,120 $3,746
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.15 %(4) 1.15% 1.15 %(4)
Gross operating expenses 1.52 %(4) 1.85% 1.96 %(4)
Net investment income (loss) 0.27 %(4) 0.18% (0.33)%(4)
Portfolio turnover 18 %(5) 40% 55 %(4)
CLASS A
--------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------
2003 2002 2001 2000
Net asset value, beginning of period $18.64 $19.86 $19.29 $14.27
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.03 (0.09) (0.12) 0.02
Net realized and unrealized gain (loss) 4.47 (0.33) 0.71 5.00
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 4.50 (0.42) 0.59 5.02
------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- (0.02) --
Distributions from net realized gains (1.32) (0.80) -- --
------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.32) (0.80) (0.02) --
------ ------ ------ ------
Change in net asset value 3.18 (1.22) 0.57 5.02
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $21.82 $18.64 $19.86 $19.29
====== ====== ====== ======
Total return(1) 24.54 % (2.20)% 3.06 % 35.18%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $3,752 $112,302 $86,157 $137,238
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 2.11 % 1.72 % 1.75 %(3) 1.75%
Gross operating expenses 2.11 % 1.74 % 1.75 %(3) 1.75%
Net investment income (loss) (0.88)% (0.63)% (0.43)% 0.23%
Portfolio turnover 21 % 76 % 66 % 104%
CLASS C
---------------------------------------------------------------------------------------
SIX MONTHS FOR THE PERIOD FROM INCEPTION
ENDED YEAR ENDED JANUARY 1, 2004 TO YEAR ENDED OCTOBER 9, TO
AUGUST 31, 2005 FEBRUARY 28, FEBRUARY 29, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 2005 2004 2003 2002
Net asset value, beginning of period $20.23 $22.35 $21.52 $18.60 $17.49
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.02)(6) (0.04) --(2) (0.07) (0.06)
Net realized and unrealized gain (loss) (0.43) 0.38 0.83 4.31 1.97
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.45) 0.34 0.83 4.24 1.91
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Distributions from net investment income (0.02) -- -- -- --
Distributions from net realized gains (1.00) (2.46) -- (1.32) (0.80)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.02) (2.46) -- (1.32) (0.80)
------ ------ ------ ------ ------
Change in net asset value (1.47) (2.12) 0.83 2.92 1.11
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $18.76 $20.23 $22.35 $21.52 $18.60
====== ====== ====== ====== ======
Total return(1) (2.30)%(5) 1.68 % 3.86 %(5) 23.18 % 10.82 %(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $3,751 $3,516 $1,827 $1,344 $355
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.90 %(4) 1.90 % 1.90 %(4) 3.16 % 2.72 %(4)
Gross operating expenses 2.43 %(4) 2.59 % 2.72 %(4) 3.16 % 2.74 %(4)
Net investment income (loss) (0.18)%(4) (0.57)% (1.05)%(4) (1.81)% (1.63)%(4)
Portfolio turnover 18 %(5) 40 % 55 %(4) 21 % 76 %(4)
<FN>
(1) Sales charges are not reflected in total return calculation.
(2) Amount is less than $0.01.
(3) Expense ratio increased by 0.29% as a result of a change in accounting principle related to the recording of redemption fees.
Prior year numbers have not been restated to reflect this change.
(4) Annualized.
(5) Not Annualized.
(6) Computed using average shares outstanding.
</FN>
See Notes to Financial Statements
9
PHOENIX FOREIGN OPPORTUNITIES FUND
ABOUT YOUR FUND'S EXPENSES (UNAUDITED)
We believe it is important for you to understand the impact of costs on
your investment. All mutual funds have operating expenses. As a shareholder
of the Foreign Opportunities Fund, you incur two types of costs: (1)
transaction costs, including sales charges on purchases of Class A shares
and contingent deferred sales charges on Class C shares; and (2) ongoing
costs, including investment advisory fees; distribution and service fees;
and other expenses. These examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds. These
examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire six-month period.
ACTUAL EXPENSES
The first line of the accompanying tables provides information about
actual account values and actual expenses. You may use the information in
this line, together with the amount you invested, to estimate the expenses
that you paid over the period. Simply divide your account value by $1,000
(for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the first line under the heading
entitled "Expenses Paid During Period" to estimate the expenses you paid on
your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the accompanying tables provides information about
hypothetical account values and hypothetical expenses based on the Fund's
actual expense ratio and an assumed rate of return of 5% per year before
expenses, which is not your Fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information
to compare the ongoing costs of investing in your Fund and other funds. To
do so, compare these 5% hypothetical examples with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the accompanying tables are meant
to highlight your ongoing costs only and do not reflect any transactional
costs, such as sales charges or contingent deferred sales charges.
Therefore, the second line of the accompanying tables is useful in
comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds. In addition, if these transactional
costs were included, your costs would have been higher. The calculations
assume no shares were bought or sold during the period. Your actual costs
may have been higher or lower, depending on the amount of your investment
and the timing of any purchases or redemptions.
Beginning Ending Expenses Paid
Foreign Opportunities Fund Account Value Account Value During
Class A February 28, 2005 August 31, 2005 Period*
- ----------------------- ---------------- -------------- -------------
Actual $1,000.00 $1,036.20 $6.42
Hypothetical (5% return
before expenses) 1,000.00 1,018.82 6.38
*EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF
1.25%, WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE,
MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE
NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 365 TO
REFLECT THE ONE-HALF YEAR PERIOD.
Beginning Ending Expenses Paid
Foreign Opportunities Fund Account Value Account Value During
Class C February 28, 2005 August 31, 2005 Period*
- ----------------------- ---------------- -------------- -------------
Actual $1,000.00 $1,032.80 $10.25
Hypothetical (5% return
before expenses) 1,000.00 1,015.00 10.21
*EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF
2.00%, WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE,
MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE
NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 365 TO
REFLECT THE ONE-HALF YEAR PERIOD.
YOU CAN FIND MORE INFORMATION ABOUT THE FUNDS EXPENSES IN THE FINANCIAL
STATEMENTS SECTION THAT FOLLOWS. FOR ADDITIONAL INFORMATION ON OPERATING
EXPENSES AND OTHER SHAREHOLDER COSTS, REFER TO THE PROSPECTUS.
10
Phoenix Foreign Opportunities Fund
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS (UNAUDITED) 8/31/05
- --------------------------------------------------------------------------------
As a percentage of total investments
[CHART OMITTED - EDGAR REPRESENTATION OF DATA FOLLOWS]
United Kingdom 30%
Switzerland 11
Australia 10
Spain 9
India 7
Japan 7
South Korea 6
Other 20
SCHEDULE OF INVESTMENTS
AUGUST 31, 2005
(UNAUDITED)
SHARES VALUE
-------- -----------
FOREIGN COMMON STOCKS(b)--97.5%
AUSTRALIA--9.6%
Macquarie Airports (Airport Services) ............. 543,174 $ 1,313,975
Macquarie Bank Ltd. (Investment Banking
& Brokerage) ...................................... 69,300 3,321,132
TABCORP Holdings Ltd. (Casinos & Gaming) .......... 97,339 1,216,183
Westfield Group (Real Estate Management &
Development) ...................................... 165,521 2,187,668
Woolworths Ltd. (Food Retail) ..................... 131,710 1,623,675
------------
9,662,633
------------
BELGIUM--2.0%
Colruyt SA (Food Retail) .......................... 15,000 1,997,938
BRAZIL--2.9%
Banco Itau Holding Financeira S.A. (Regional Banks) 6,333 1,319,263
Souza Cruz S.A. (Tobacco) ......................... 139,000 1,587,561
------------
2,906,824
------------
CHINA--1.9%
Espirit Holdings Ltd. (Apparel Retail) ............ 264,500 1,959,218
FRANCE--1.3%
M6 Metropole Television (Broadcasting & Cable TV) . 47,700 1,302,096
GERMANY--1.2%
Puma AG Rudolf Dassler Sport (Apparel,
Accessories & Luxury Goods) ....................... 4,600 1,249,152
HONG KONG--0.6%
Li & Fung Ltd. (Trading Companies & Distributors) . 293,000 597,374
SHARES VALUE
-------- -----------
INDIA--7.3%
HDFC Bank Ltd. ADR (Diversified Banks) ............ 52,500 $ 2,514,225
Infosys Technologies Ltd (IT Consulting &
Other Services) ................................... 70,800 3,832,315
ITC Ltd. Sponsored GDR (Tobacco) .................. 26,600 1,042,720
------------
7,389,260
------------
IRELAND--4.7%
Anglo Irish Bank Corp. (Regional Banks) ........... 350,054 4,739,270
JAPAN--6.5%
Daito Trust Construction Co. Ltd. (Homebuilding) .. 35,900 1,503,841
Millea Holdings, Inc. (Property & Casualty Insurance) 170 2,496,418
Toyota Motor Corp. (Automobile Manufacturers) ..... 63,000 2,580,629
------------
6,580,888
------------
MEXICO--0.5%
Grupo Modelo, S.A. de C.V. (Brewers) .............. 143,700 465,639
SINGAPORE--0.9%
Singapore Airport Terminal Servises Ltd.
(Airport Services) ................................ 666,900 906,148
SOUTH AFRICA--2.3%
Remgro Ltd. (Industrial Conglomerates) ............ 138,000 2,290,870
SOUTH KOREA--6.3%
Amorepacific Corp. (Personal Products) ............ 5,548 1,493,311
KT&G Corp. (Tobacco) .............................. 40,500 1,793,212
Lotte Chilsung Beverage Co. Ltd. (Soft Drinks) .... 1,533 1,363,608
S1 Corp. (Specialized Consumer Services) .......... 39,690 1,758,922
------------
6,409,053
------------
See Notes to Financial Statements
11
Phoenix Foreign Opportunities Fund
SHARES VALUE
-------- -----------
SPAIN--8.8%
Enagas (Oil & Gas Storage & Transportation) ....... 278,200 $ 4,832,566
Red Electrica de Espana (Electric Utilities) ...... 150,800 4,075,589
------------
8,908,155
------------
SWITZERLAND--11.0%
Kuhene & Nagel International AG (Marine) .......... 9,357 2,061,971
Lindt & Spruengli AG (Packaged Foods & Meats) ..... 1,052 1,717,358
Nestle S.A. Registered Shares (Packaged Foods &
Meats) ............................................ 9,950 2,797,197
Novartis AG ADR (Pharmaceuticals) ................. 25,000 1,218,750
Roche Holding AG (Pharmaceuticals) ................ 12,100 1,678,918
UBS AG (Diversified Capital Markets) .............. 19,400 1,591,224
------------
11,065,418
------------
UNITED KINGDOM--29.7%
Barrat Developments plc (Homebuilding) ............ 145,176 1,851,966
British American Tobacco plc (Tobacco) ............ 205,020 4,136,194
Cadbury Schweppes plc (Packaged Foods & Meats) .... 255,334 2,528,227
Diageo plc (Distillers & Vintners) ................ 177,860 2,548,736
Imperial Tobacco Group plc (Tobacco) .............. 63,592 1,768,858
Johnston Press plc (Publishing & Printing) ........ 154,600 1,426,884
Kensington Group plc (Consumer Finance) ........... 202,200 2,331,131
Northern Rock plc (Regional Banks) ................ 213,358 3,121,814
Reckitt Benckiser plc (Personal Products) ......... 53,845 1,671,082
Royal Bank of Scotland Group plc (Diversified Banks) 87,595 2,568,018
Signet Group plc (Specialty Stores) ............... 782,246 1,540,950
Tesco plc (Food Retail) ........................... 751,494 4,429,401
------------
29,923,261
------------
- --------------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $87,544,013) 98,353,197
- --------------------------------------------------------------------------------
TOTAL LONG TERM INVESTMENTS--97.7%
(IDENTIFIED COST $87,544,013) 98,353,197
- --------------------------------------------------------------------------------
PAR
VALUE
(000) VALUE
------- -----------
SHORT-TERM INVESTMENTS--2.4%
COMMERCIAL PAPER--2.4%
Govco, Inc. 3.55%, 9/1/05 ......................... $ 775 $ 775,000
Old Line Funding Corp. 3.52%, 9/15/05 ............. 1,665 1,662,721
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $2,437,721) 2,437,721
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--99.9%
(IDENTIFIED COST $89,981,734) ..................... 100,790,918(a)
Other assets and liabilities, net--0.1% ........... 95,371
------------
NET ASSETS--100.0% ................................ $100,886,289
============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $11,664,271 and gross
depreciation of $1,235,679 for federal income tax purposes. At August 31,
2005, the aggregate cost of securities for federal income tax purposes was
$90,362,326.
(b) Foreign common stocks are determined based on the country in which the
security is issued. The country of risk is determined based on criteria
described in Note 2G "Foreign security country determination" in the Notes
to Financial Statements.
See Notes to Financial Statements
12
Phoenix Foreign Opportunities Fund
INDUSTRY DIVERSIFICATION
AS A PERCENTAGE OF TOTAL VALUE OF
TOTAL LONG-TERM INVESTMENTS
(UNAUDITED)
Airport Services 2.3%
Apparel Retail 2.0
Apparel, Accessories & Luxury Goods 1.3
Automobile Manufacturers 2.6
Brewers 0.5
Broadcasting & Cable TV 1.3
Casinos & Gaming 1.2
Consumer Finance 2.4
Distillers & Vintners 2.6
Diversified Banks 5.2
Diversified Capital Markets 1.6
Electric Utilities 4.1
Food Retail 8.2
Homebuilding 3.4
IT Consulting & Other Services 3.9
Industrial Conglomerates 2.3
Investment Banking & Brokerage 3.4
Marine 2.1
Oil & Gas Storage & Transportation 4.9
Packaged Foods & Meats 7.2
Personal Products 3.2
Pharmaceuticals 2.9
Property & Casualty Insurance 2.5
Publishing & Printing 1.5
Real Estate Management & Development 2.2
Regional Banks 9.3
Soft Drinks 1.4
Specialized Consumer Services 1.8
Specialty Stores 1.6
Tobacco 10.5
Trading Companies & Distributors 0.6
-----
100.0%
=====
See Notes to Financial Statements
13
Phoenix Foreign Opportunities Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2005
(UNAUDITED)
ASSETS
Investment securities at value
(Identified cost $89,981,734) $ 100,790,918
Cash 85,196
Receivables
Investment securities sold 385,603
Fund shares sold 180,965
Dividends and interest 137,968
Tax reclaims 33,238
Prepaid expenses 2,060
-------------
Total assets 101,615,948
-------------
LIABILITIES
Payables
Investment securities purchased 479,128
Fund shares repurchased 102,754
Investment advisory fee 39,781
Transfer agent fee 32,666
Distribution and service fees 21,371
Financial agent fee 6,799
Trustees' fee 806
Accrued expenses 46,354
-------------
Total liabilities 729,659
-------------
NET ASSETS $ 100,886,289
=============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $88,397,772
Undistributed net investment income 442,791
Accumulated net realized gain 1,282,918
Net unrealized appreciation 10,762,808
-------------
NET ASSETS $ 100,886,289
=============
CLASS A
Shares of beneficial interest outstanding, $0.001 par
value, unlimited authorization (Net Assets $100,106,143) 5,125,496
Net asset value per share $19.53
Offering price per share $19.53/(1-5.75%) $20.72
CLASS C
Shares of beneficial interest outstanding, $0.001 par
value, unlimited authorization (Net Assets $780,146) 39,908
Net asset value and offering price per share $19.55
STATEMENT OF OPERATIONS
SIX MONTHS AUGUST 31, 2005
(UNAUDITED)
INVESTMENT INCOME
Dividend income $1,777,628
Interest income 40,738
Foreign taxes withheld (104,208)
----------
Total investment income 1,714,158
----------
EXPENSES
Investment advisory fee 454,404
Service fees, Class A 46,981
Distribution and service fees, Class C 972
Distribution and service fees, Investor Class 54,775
Distribution and service fees, Class I 821
Financial agent fee 15,999
Administration fee 30,205
Trustees 78,383
Transfer agent 67,189
Custodian 49,654
Printing 35,741
Professional 28,885
Registration 18,150
Miscellaneous 18,497
----------
Total expenses 900,656
Less expenses reimbursed by investment adviser (264,370)
----------
Net expenses 636,286
----------
NET INVESTMENT INCOME 1,077,872
----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on investments 7,477,886
Net realized gain on foreign currency transactions 89,363
Net change in unrealized appreciation (depreciation) on
investments (6,148,577)
Net change in unrealized appreciation (depreciation) on foreign
currency transactions and translation 3,784
----------
NET GAIN ON INVESTMENTS 1,422,456
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,500,328
==========
See Notes to Financial Statements
14
Phoenix Foreign Opportunities Fund
STATEMENT OF CHANGES IN NET ASSETS
Six Months
Ended
August 31, 2005 Year Ended
(Unaudited) February 28, 2005
------------ -----------------
FROM OPERATIONS
Net investment income (loss) $ 1,077,872 $ 532,485
Net realized gain (loss) 7,567,249 1,863,934
Net change in unrealized appreciation (depreciation) (6,144,793) 9,967,918
Payment by affiliate (Note 3) -- 1,210
------------ ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,500,328 12,365,547
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (12,896) (20,102)
Net investment income, Class C (334) (25)
Net investment income, Investor Class (399,218) (492,034)
Net investment income, Class I (7,243) (8,996)
Net realized long-term gains, Class A (14,154) (25,027)
Net realized long-term gains, Class C (372) (196)
Net realized long-term gains, Investor Class (442,517) (485,450)
Net realized long-term gains, Class I (8,447) (20,225)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (885,181) (1,052,055)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (984,445 and 64,348 shares, respectively) 19,040,688 1,108,625
Net asset value of shares issued from reinvestment
of distributions (1,033 and 2,386 shares, respectively) 18,970 39,123
Proceeds from shares issued in connection with reclassification from
Investor Class shares (4,306,343 and 0 shares, respectively) (See Note 9) 80,965,935 --
Proceeds from shares issued in connection with reclassification from
Class I shares (91,555 and 0 shares, respectively) (See Note 9) 1,721,837 --
Cost of shares repurchased (400,534 and 19,929 shares, respectively) (7,612,522) (313,107)
------------ ------------
Total 94,134,908 834,641
------------ ------------
CLASS C
Proceeds from sales of shares (40,439 and 1,288 shares, respectively) 772,073 23,726
Net asset value of shares issued from reinvestment of distributions
(0 and 14 shares, respectively) -- 221
Cost of shares repurchased (2,576 and 0 shares, respectively) (49,089) --
------------ ------------
Total 722,984 23,947
------------ ------------
INVESTOR CLASS
Proceeds from sales of shares (799,723 and 3,677,731 shares, respectively) 15,039,510 64,149,020
Net asset value of shares issued from reinvestment of distributions
(45,107 and 57,665 shares, respectively) 826,824 965,723
Value of shares liquidated in connection with reclassification to
Class A shares (4,313,582 and 0 shares, respectively) (See Note 9) (80,965,935) --
Cost of shares repurchased (1,493,484 and 579,763 shares, respectively) (27,521,385) (9,417,774)
------------ ------------
Total (92,620,986) 55,696,969
------------ ------------
CLASS I
Proceeds from sales of shares (4,363 and 22,212 shares, respectively) 82,848 381,947
Net asset value of shares issued from reinvestment of distributions
(558 and 1,191 shares, respectively) 10,228 19,127
Value of shares liquidated in connection with reclassification to
Class A shares (91,733 and 0 shares, respectively) (See Note 9) (1,721,837) --
Cost of shares repurchased (970 and 19,968 shares, respectively) (17,920) (309,761)
------------ ------------
Total (1,646,681) 91,313
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 590,225 56,646,870
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 2,205,372 67,960,362
NET ASSETS
Beginning of period 98,680,917 30,720,555
------------ ------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME AND DISTRIBUTIONS
IN EXCESS OF NET INVESTMENT INCOME OF $442,791 AND $(215,390), RESPECTIVELY) $100,886,289 $ 98,680,917
============ ============
See Notes to Financial Statements
15
Phoenix Foreign Opportunities Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A
-----------------------------------------------------------------------------------------
SIX MONTHS FOR THE PERIOD
ENDED YEAR ENDED JANUARY 1, TO YEAR ENDED DECEMBER 31,
AUGUST 31, 2005 FEBRUARY 28, FEBRUARY 29, ----------------------------------------------
(UNAUDITED) 2005 2004 2003 2002 2001 2000
Net asset value, beginning of period $19.02 $15.47 $14.84 $11.86 $12.88 $18.86 $28.01
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.21(7) 0.16 (0.03) 0.12 0.03 (0.10) (0.03)
Net realized and unrealized
gain (loss) 0.47 3.81 0.66 3.39 (1.05) (5.41) (5.30)
------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.68 3.97 0.63 3.51 (1.02) (5.51) (5.33)
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS AND OTHER
Dividends from net investment income (0.08) (0.16) -- (0.06) -- (0.12) (0.08)
Distributions from net realized gains (0.09) (0.26) -- (0.43) -- (0.35) (3.74)
Tax return of capital -- -- -- (0.06) -- -- --
Payment by affiliate -- --(3) -- 0.02 -- -- --
------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.17) (0.42) -- (0.53) -- (0.47) (3.82)
------ ------ ------ ------ ------ ------ ------
Change in net asset value 0.51 3.55 0.63 2.98 (1.02) (5.98) (9.15)
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $19.53 $19.02 $15.47 $14.84 $11.86 $12.88 $18.86
====== ====== ====== ====== ====== ====== ======
Total return(1) 3.62%(6) 26.15%(4) 4.25 %(6) 30.07% (7.92)% (29.22)% (18.70)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $100,106 $2,714 $1,482 $1,473 $29,026 $44,356 $133,233
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.25%(5) 1.25%(1) 1.25 %(5) 2.87% 2.44% 1.88 %(2) 1.38 %
Gross operating expenses 1.70%(5) 2.10% 2.63 %(5) 3.21% 2.44% 1.89 %(2) 1.39 %
Net investment income (loss) 2.14%(5) 1.50% (0.18)%(5) 0.11% 0.18% (0.38)% (0.15)%
Portfolio turnover 32%(6) 32% 41 %(5) 65% 98% 92 % 69 %
CLASS C
--------------------------------------------------------------------------------------
SIX MONTHS FOR THE PERIOD FROM INCEPTION
ENDED YEAR ENDED JANUARY 1, TO OCTOBER 13, 2003
AUGUST 31, 2005 FEBRUARY 28, FEBRUARY 29, TO DECEMBER 31,
(UNAUDITED) 2005 2004 2003
Net asset value, beginning of period $19.11 $15.55 $14.95 $13.91
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.15(7) 0.01 (0.06) 0.11
Net realized and unrealized gain (loss) 0.46 3.84 0.66 1.34
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.61 3.85 0.60 1.45
------ ------ ------ ------
LESS DISTRIBUTIONS AND OTHER
Dividends from net investment income (0.08) (0.03) -- --
Distributions from net realized gains (0.09) (0.26) -- (0.43)
Payment by affiliate -- --(3) -- 0.02
------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.17) (0.29) -- (0.41)
------ ------ ------ ------
Change in net asset value 0.44 3.56 0.60 1.04
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $19.55 $19.11 $15.55 $14.95
====== ====== ====== ======
Total return(1) 3.28%(6) 25.21%(4) 4.01 %(6) 10.71 %(6)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $780 $39 $12 $11
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 2.00%(5) 2.00% 2.00 %(5) 1.92 %(5)
Gross operating expenses 2.54%(5) 2.86% 3.38 %(5) 5.85 %(5)
Net investment income (loss) 1.50%(5) 0.76% (1.05)%(5) (0.14)%(5)
Portfolio turnover 32%(6) 32% 41 %(5) 65 %(5)
<FN>
(1) Sales charges are not reflected in total return calculation.
(2) Expense ratio increased by 0.13% as a result of a change in accounting principle related to the recording of redemption fees.
Prior year numbers have not been restated to reflect this change.
(3) Amount is less than $0.01.
(4) During the fiscal year ended February 28, 2005, the fund's former adviser or an affiliate fully reimbursed the fund for a loss
on a transaction resulting from certain trading, pricing and/or shareholder activity errors, which otherwise would have reduced
total return by less than 0.01%.
(5) Annualized.
(6) Not annualized.
(7) Computed using average shares outstanding.
</FN>
See Notes to Financial Statements
16
PHOENIX ADVISER TRUST
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2005 (UNAUDITED)
1. ORGANIZATION
Phoenix Adviser Trust (the "Trust") is organized as a Delaware statutory
trust and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company.
Currently, two funds are offered for sale (each a "Fund"). Phoenix
Focused Value Fund is non-diversified and seeks long-term capital
appreciation. Phoenix Foreign Opportunities Fund is diversified and its
primary investment objective is to seek long-term capital appreciation.
The Funds offer the following classes of shares for sale:
Class A Class C
------- -------
Focused Value Fund ................... X X
Foreign Opportunities Fund ........... X X
Class A shares are sold with a front-end sales charge of up to 5.75%.
Class C shares are sold with a 1% contingent deferred sales charge if
redeemed within one year of purchase.
Each class of shares has identical voting, dividend, liquidation and
other rights and the same terms and conditions, except that each class
bears different distribution and/or service expenses and has exclusive
voting rights with respect to its distribution plan. Income and expenses
and realized and unrealized gains and losses of each Fund are borne pro
rata by the holders of each class of shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
consistently followed by the Trust in the preparation of its financial
statements. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amount of increases and decreases in net assets from operations during the
reporting period. Actual results could differ from those estimates.
A. SECURITY VALUATION:
Equity securities are valued at the official closing price (typically
last sale) on the exchange on which the securities are primarily traded, or
if no closing price is available, at the last bid price.
Debt securities are valued on the basis of broker quotations or
valuations provided by a pricing service, which utilizes information with
respect to recent sales, market transactions in comparable securities,
quotations from dealers, and various relationships between securities in
determining value.
As required, some securities and assets may be valued at fair value as
determined in good faith by or under the direction of the Trustees.
Certain foreign common stocks may be fair valued in cases where closing
prices are not readily available or are deemed not reflective of readily
available market prices. For example, significant events (such as movement
in the U.S. securities market, or other regional and local developments)
may occur between the time that foreign markets close (where the security
is principally traded) and the time that the Fund calculates its net asset
value (generally, the close of the NYSE) that may impact the value of
securities traded in these foreign markets. In these cases, information
from an external vendor may be utilized to adjust closing market prices of
certain foreign common stocks to reflect their fair value. Because the
frequency of significant events is not predictable, fair valuation of
certain foreign common stocks may occur on a frequent basis. On August 31,
2005, the Foreign Opportunities Fund utilized fair value pricing for its
foreign common stocks.
Short-term investments having a remaining maturity of 60 days or less
are valued at amortized cost, which approximates market.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date, or in the case of certain foreign
securities, as soon as the Fund is notified. Interest income is recorded on
the accrual basis. Each Fund amortizes premiums and accretes discounts
using the effective interest method. Realized gains and losses are
determined on the identified cost basis.
C. INCOME TAXES:
Each Fund is treated as a separate taxable entity. It is the policy of
each Fund in the Trust to comply with the requirements of the Internal
Revenue Code and to distribute substantially all of its taxable income to
its shareholders. Therefore, no provision for federal income taxes or
excise taxes has been made.
The Trust may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be
recoverable. Each Fund will accrue such taxes and recoveries as applicable
based upon current interpretations of the tax rules and regulations that
exist in the markets in which they invest.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are declared and recorded by each Fund on the ex-dividend
date. Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from accounting principles
generally accepted in the United States of America. These differences may
include the treatment of non-taxable dividends, market premium and
discount, non-deductible expenses, expiring capital loss carryovers,
foreign currency gain or loss, gain or loss on futures contracts,
partnerships, operating losses and losses deferred due to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to capital paid in on shares
of beneficial interest.
17
PHOENIX ADVISER TRUST
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2005 (UNAUDITED) (CONTINUED)
E. EXPENSES:
Expenses incurred by the Trust with respect to more than one Fund are
allocated in proportion to the net assets of each Fund, except where
allocation of direct expense to each Fund or an alternative allocation
method can be more appropriately made.
F. FOREIGN CURRENCY TRANSLATION:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting
period. Cost of investments is translated at the currency exchange rate
effective at the trade date. The gain or loss resulting from a change in
currency exchange rates between the trade and settlement date of a
portfolio transaction is treated as a gain or loss on foreign currency.
Likewise, the gain or loss resulting from a change in currency exchange
rates between the date income is accrued and paid is treated as a gain or
loss on foreign currency. The Trust does not isolate that portion of the
results of operations arising from changes in exchange rates and that
portion arising from changes in the market prices of securities.
G. FOREIGN SECURITY COUNTRY DETERMINATION:
A combination of the following criteria is used to assign the countries
of risk listed in the schedules of investments: country of incorporation,
actual building address, primary exchange on which the security is traded
and country in which the greatest percentage of company revenue is
generated.
H. FORWARD CURRENCY CONTRACTS:
Each Fund may enter into forward currency contracts in conjunction with
the planned purchase or sale of foreign denominated securities in order to
hedge the U.S. dollar cost or proceeds. Forward currency contracts involve,
to varying degrees, elements of market risk in excess of the amount
recognized in the Statement of Assets and Liabilities. Risks arise from the
possible movements in foreign exchange rates or if the counterparty does
not perform under the contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from
the date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts are traded directly between currency
traders and their customers. The contract is marked-to-market daily and the
change in market value is recorded by each Fund as an unrealized gain or
loss. When the contract is closed or offset with the same counterparty, the
Fund records a realized gain or loss equal to the change in the value of
the contract when it was opened and the value at the time it was closed or
offset.
At August 31, 2005, the Funds had no forward currency contracts
outstanding.
I. REPURCHASE AGREEMENT:
A repurchase agreement is a transaction where a Fund acquires a security
for cash and obtains a simultaneous commitment from the seller to
repurchase the security at an agreed upon price and date. Each Fund,
through its custodian, takes possession of securities collateralizing the
repurchase agreement. The collateral is marked-to-market daily to ensure
that the market value of the underlying assets remains sufficient to
protect the Fund in the event of default by the seller. If the seller
defaults and the value of the collateral declines, or if the seller enters
insolvency proceedings, realization of collateral may be delayed or
limited.
J. INDEMNIFICATIONS:
Under the Funds' organizational documents, its trustees and officers are
indemnified against certain liabilities arising out of the performance of
their duties to the Funds. In addition, the Funds enter into contracts that
contain a variety of indemnifications. The Funds' maximum exposure under
these arrangements is unknown. However, the Funds have not had prior claims
or losses pursuant to these contracts and expect the risk of loss to be
remote.
3. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, the Adviser, Phoenix
Investment Counsel, Inc., ("PIC") (the "Adviser"), an indirect wholly-owned
subsidiary of The Phoenix Companies, Inc. ("PNX"), is entitled to a fee
based upon the following annual rates as a percentage of the average daily
net assets of each fund:
Focused Value Fund(1) .............................. 0.75%
Foreign Opportunities Fund(1) ...................... 0.85%
Effective June 20, 2005, PIC became Adviser to the Phoenix Focused Value
Fund and Phoenix Foreign Opportunities Fund (formerly, the Focused Value
Fund and International Equity Fund, each a "Janus Fund" and collectively,
the "Janus Funds").
(1) Prior to June 20, 2005 the adviser to the Janus Funds was Janus Capital
("Janus"). For its services to the Focused Value Fund, Janus' fees ranged
from 0.96% to 0.75% based on the Funds average daily net assets. Janus
contractually agreed to cap total operating expenses excluding
administration fees, distribution and service fees, brokerage
commissions, interest, taxes and extraordinary expenses at 0.90% of the
average daily net assets of the fund.
For its services to the International Equity Fund, Janus fees
ranged from 0.99% to 0.75% based on the average daily net assets. Janus
contractually agreed to cap total operating expenses excluding
administration fees, distribution and service fees, brokerage
commissions, interest, taxes and extraordinary expenses at 1.00% of the
average daily net assets of the fund.
18
PHOENIX ADVISER TRUST
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2005 (UNAUDITED) (CONTINUED)
PIC has contractually agreed to cap each Fund's operating expenses until
March 31, 2006, to the extent that such expenses exceed the following
percentages of average annual net assets:
Class A Class C
------- -------
Focused Value Fund ............... 1.15% 1.90%
Foreign Opportunities Fund ....... 1.25% 2.00%
PIC has contractually agreed to cap each Fund's operating expenses from
April 1, 2006 through June 30, 2008, to the extent that such expenses
exceed the following percentages of average annual net assets:
Class A Class C
------- -------
Focused Value Fund ............... 1.25% 2.00%
Foreign Opportunities Fund ....... 1.35% 2.10%
The Adviser will not seek to recapture any reimbursed expenses or waived
investment advisory fees as part of this agreement.
Effective June 20, 2005, under a sub-advisory agreement with PIC,
Vontobel Asset Management, Inc., ("Vontobel") is the subadviser to the
Funds. For its services, Vontobel is paid by the Adviser a fee based on the
following schedule:
Over
$0 - 50 million $50 million
--------------- -----------
Focused Value Fund (1) ........... 0.70% 0.375%
Foreign Opportunities Fund (1) ... 0.80% 0.425%
(1) Prior to June 20, 2005, under a sub-advisory agreement with Janus,
Vontobel was the subadviser to the Janus Funds. Janus paid Vontobel a
subadviser fee ranging from 0.215% to 0.74% for the Focused Value Fund and
0.215% to 0.408% for the International Equity Fund based on the value of
each Janus Fund's respective average daily net assets.
As Distributor of each Fund's shares, Phoenix Equity Planning
Corporation ("PEPCO"), an indirect wholly-owned subsidiary of PNX, has
advised the Trust that it retained net selling commissions and deferred
sales charges for period of June 21 to August 31, 2005, as follows:
Class A Class C
Net Selling Deferred
Commissions Sales Charges
----------- -------------
Focused Value Fund ............... $ 626 $ --
Foreign Opportunities Fund ....... 2,150 700
For the period of March 29 through June 20, 2005, Janus Capital waived
all contingent deferred sales charges ("CDSC") pending the effective date
of the new advisory and subadvisory agreements. Prior to the waiver, the
CDSC fees paid for the period of March 1, to March 28, 2005 was $0.
In addition, each fund pays PEPCO distribution and/or service fees at an
annual rate of 0.25% for Class A shares and 1.00% for Class C shares
applied to the average daily net assets of each respective class.
Under certain circumstances, shares of certain Phoenix Funds may be
exchanged for shares of the same class of certain other Phoenix Funds on
the basis of the relative net asset values per share at the time of the
exchange. On exchanges with share classes that carry a contingent deferred
sales charge, the CDSC schedule of the original shares purchased continues
to apply.
As financial agent of the Trust, PEPCO receives a financial agent fee
equal to the sum of (1) the documented cost to PEPCO to provide tax
services and oversight of the performance of PFPC Inc. (subagent to PEPCO)
plus (2) the documented cost of fund accounting and related services
provided by PFPC Inc. The fee schedule of PFPC Inc. ranges from 0.06% to
0.03% of the average daily net assets of each Fund. Certain minimum fees
may apply. For the period of June 21, 2005 to August 31, 2005, the Trust
incurred financial agent fees totaling $30,300.
For the period of March 1, 2005 to June 20, 2005, Janus Services LLC
("Janus Services"), a wholly-owned subsidiary of Janus Capital acted as the
Administrator to the Janus Funds and received fees of $60,197 from the
funds ranging from 0.10% to 0.25% of the daily net assets of the Janus
Funds.
PEPCO serves as the Trust's transfer agent with State Street Bank and
Trust Company serving as sub-transfer agent. For the period ended August
31, 2005, transfer agent fees were $104,442 as reported in the Statements
of Operations, of which PEPCO retained the following:
Transfer Agent
Fee Retained
From June 21 to
August 31, 2005
----------------
Focused Value Fund ...................... $10,554
Foreign Opportunities Fund .............. 18,837
Prior to June 21, 2005, Janus Services served as the Trust's transfer
agent and was paid $11,094 by Focused Value Fund and $19,574 by the
International Equity Fund for the period of March 1, 2005 through June 20,
2005. These fees are included in the transfer agent expenses as reported in
the Statements of Operations.
During the fiscal year ended February 28, 2005, Janus Services
reimbursed the Focused Value Fund -- Investor Shares $585 and International
Equity Fund -- Investor Shares $1,210, as a result of dilutions caused by
incorrectly processed shareholder activity.
At August 31, 2005, PNX and its affiliates and the retirement plans of
PNX and its affiliates held 533,327 Class A shares of the Phoenix Foreign
Opportunities Fund with an aggregate net asset value of $10,399,877.
19
PHOENIX ADVISER TRUST
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2005 (UNAUDITED) (CONTINUED)
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities during the period ended August 31,
2005 (excluding U.S. Government and agency securities, forward currency
contracts and short-term securities) were as follows:
Purchases Sales
----------- ----------
Focused Value Fund ............... $11,702,639 20,419,227
Foreign Opportunities Fund ....... 33,017,456 30,715,969
There were no purchases or sales of long-term U.S. Government and agency
securities for the period ended August 31, 2005.
5. 10% SHAREHOLDERS
As of August 31, 2005, the Funds have single shareholder and/or omnibus
shareholder accounts (which are comprised of a group of individual
shareholders), which individually amounted to more than 10% of the total
shares outstanding.
Number of % of Shares
Accounts Outstanding
-------------- -----------
Focused Value Fund* .............. 2 36.3%
Foreign Opportunities Fund ....... 1 23.7
* For the Focused Value Fund one account representing 11.6% of the
shares outstanding is held by Bank Vontobel Holding AG an affiliate of
Vontobel Holding AG, which wholly owns Vontobal Asset Management, Inc. the
subadvisor to the funds.
6. CREDIT RISK AND ASSET CONCENTRATIONS
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such
investments may be volatile. The consequences of political, social or
economic changes in these markets may have disruptive effects on the market
prices of these investments and the income they generate, as well as a
Fund's ability to repatriate such amounts.
Certain Funds may invest a high percentage of their assets in specific
sectors of the market in their pursuit of a greater investment return.
Fluctuations in these sectors of concentration may have a greater impact on
a Fund, positive or negative, than if a Fund did not concentrate its
investments in such sectors.
At August 31, 2005, The Focused Value Fund held $33,992,873 in
investments of financial institutions, including $11,391,550 issued by
Berkshire Hathaway, comprising 51% and 17% of the total net assets of the
Fund, respectively. The Foreign Opportunities Fund held $29,923,261 in
investments with the foreign country determination of the United Kingdom
comprising 30% of the total net assets of the Fund.
7. REGULATORY EXAMS
Federal and state regulatory authorities from time to time make inquiries and
conduct examinations regarding compliance by The Phoenix Companies, Inc. and its
subsidiaries (collectively "the Company") with securities and other laws and
regulations affecting their registered products. The Boston District Office of
the SEC recently completed a compliance examination of certain of the Company's
affiliates that are registered under the Investment Company Act of 1940 or the
Investment Advisers Act of 1940. Following the examination, the staff of the
Boston District Office issued a deficiency letter primarily focused on perceived
weaknesses in procedures for monitoring trading to prevent market timing
activity. The staff requested the Company to conduct an analysis as to whether
shareholders, policyholders and contract holders who invested in the funds that
may have been affected by undetected market timing activity had suffered harm
and to advise the staff whether the Company believes reimbursement is necessary
or appropriate under the circumstances. Market timing is an investment technique
involving frequent short-term trading of mutual fund shares that is designed to
exploit market movements or inefficiencies in the way mutual fund companies
price their shares. A third party was retained to assist the Company in
preparing the analysis. The Company has responded to the SEC with respect to
each comment in the letter. We do not believe that the outcome of this matter
will be material to these financial statements.
8. FEDERAL INCOME TAX INFORMATION
The Funds have capital loss carryovers, which may be used to offset
future capital gains as follows:
Expiration Year
----------------------------------------
2009 2010 Total
----------- ----------- ----------
Focused Value Fund ............... $ -- $ -- $ --
Foreign Opportunities Fund(1) .... 5,196,610 1,299,153 6,495,763
Utilization of this capital loss carryover is subject to annual
limitations.
The Trust may not realize the benefit of these losses to the extent it
does not realize gains on investments prior to the expiration of the
capital loss carryovers.
9. FUND INTEGRATION
At a meeting held on March 24, 2005, the Board of Trustees (the "Janus
Board") of the Focused Value Fund and the International Equity Fund (each a
"Janus Fund" and collectively, the "Janus Funds"), each a series of Janus
Adviser Trust (the "Janus Trust") voted to approve a transaction (the
"Transaction") whereby the Janus Trust and Janus Funds would be integrated
into the Phoenix Investment Partners, Ltd., family of mutual funds (the
"Phoenix Funds").
In connection with the Transaction, at a special meeting held on May 17,
2005, shareholders of the Janus Funds approved a new investment advisory
agreement with PIC and the continuation of Vontobel as subadviser, pursuant
to a new investment subadvisory agreement between PIC and Vontobel. Also,
in connection with the Transaction, shareholders approved the
reconstitution of the Janus Board with a new slate of trustees comprised of
fourteen trustees of the Phoenix Funds.
20
PHOENIX ADVISER TRUST
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2005 (UNAUDITED) (CONTINUED)
The Transaction was completed on June 20, 2005 and the names of Focused
Value Fund and International Equity Fund changed to Phoenix Focused Value
Fund and Phoenix Foreign Opportunities Fund, respectively. Additionally,
the Janus Adviser trust was renamed the Phoenix Adviser Trust.
Pursuant to the Transaction, on June 20, 2005, Janus Fund shareholders
who held Class A and Class C shares remained in the same class of shares of
either the Phoenix Focused Value Fund or the Phoenix Foreign Opportunities
Fund, as applicable. Janus Fund shareholders who held Investor shares or
Class I shares had those shares converted to Class A shares of either the
Phoenix Focused Value Fund or the Phoenix Foreign Opportunities Fund, as
applicable. Janus Fund shareholders who held Investor shares or Class I
shares that were converted to Class A shares may continue, as long as such
shares are held, to purchase Class A shares without any sales charges.
Upon completion of the Transaction, PIC and Vontobel agreed that PIC
will not, subject to certain exceptions, terminate the new sub-advisory
agreement for a period of three years following the closing of the
Transaction. PIC may terminate the new sub-advisory agreement pursuant to
the following circumstances: (1) entry of an order against Vontobel that
bars Vontobel from serving as in investment adviser: (2) the initiation of
an enforcement proceeding against Vontobel that is grounded upon an alleged
violation of law and/or applicable regulation and appears likely to limit
Vontobel's ability to fulfill its duties under the new sub-advisory
agreement; (3) bankruptcy or insolvency of Vontobel; (4) poor investment
performance; or (5) significant portfolio management personnel changes. If
PIC terminated the new subadvisory agreement for any other reason, PIC
would be liable to Vontobel in the amount of $1.75 million for each Fund.
Furthermore, Vontobel has reserved the right to require PIC to submit
and recommend to the Phoenix Funds' Board of Trustees a proposal jointly
crafted by Vontobel and PIC to reorganize the funds into one or more
investment companies or funds that will utilize the services of Vontobel as
sole adviser or subadviser if PIC fails to gather additional assets for
Vontobel in the associated time periods:
12 months after the closing ........... $100 million
24 months after the closing ........... $200 million
36 months after the closing ........... $300 million
Provided, however, that the asset targets listed above shall be reduced
by twenty-five percent (25%) for any period in which one or both Fund's
three-year performance is in the bottom half of its peer group, and fifty
percent (50%) for any period in which one or both Funds' three-year
performance is in the bottom quartile of its peer group.
21
BOARD OF TRUSTEES' CONSIDERATION OF INVESTMENT ADVISORY AND SUBADVISORY
AGREEMENTS FOR PHOENIX ADVISER TRUST (F/K/A/ JANUS ADVISER) (THE "FUNDS")
AUGUST 31, 2005 (UNAUDITED)
The Board of Trustees is responsible for determining whether to approve
the Investment Advisory and Subadvisory Agreements for the funds. In
approving each agreement, the Trustees primarily considered with respect to
each fund, Focused Value Fund (n/k/a Phoenix Focused Value Fund) and
International Equity Fund (n/k/a Phoenix Foreign Opportunities Fund) (the
"Funds"), the nature and quality of the services provided under the
respective agreement and the overall fairness of each agreement. The Board
of Janus Adviser, which was the predecessor Board of Phoenix Adviser Trust,
reviewed the various considerations in connection with the approval of the
new investment advisory and subadvisory agreements. On May 17, 2005
shareholders of Janus Adviser trust approved the new Investment Advisory
Agreement between the Trust and Phoenix Investment Counsel, Inc. ("PIC")
and also approved a new Subadvisory Agreement between PIC and Vontobel
Asset Management, Inc. ("Vontobel"), the Funds' then and now, current
subadviser.
INVESTMENT ADVISORY AGREEMENTS
The Trustees met on three occasions with senior officers of Janus
Capital Management LLC ("JCM"), PIC and Vontobel to discuss the proposed
change of advisers and to consider the qualifications of PIC and Vontobel.
In addition, they received from each of those parties and reviewed
substantial written information as requested by them. Throughout that
process the Disinterested Trustees were represented and advised by their
own independent legal counsel. In the course of their deliberations and
evaluation of materials, the Trustees considered, among other things, the
following factors: (a) the investment objective and strategy of each Fund;
(b) PIC, its current personnel (including particularly those personnel with
the responsibilities for providing investment oversight and administrative
services of the Funds), and its financial condition, resources and
investment and compliance oversight process; (c) the terms of the current
advisory agreements with JCM and the terms of the new advisory agreement
with PIC, including the standard of care and termination provisions; (d)
the scope and quality of the services that PIC was expected to provide to
the Funds; (e) the structure and rate of advisory fees that would be
payable to PIC by the respective Funds, the proposed expense limitations,
the structure and rate of advisory fees payable to other advisers by
comparable funds, the structure and rate of advisory fees charged by PIC to
other clients and possible alternative fee structures; (f) the pro forma
estimated total expense ratio of each Fund and of comparable funds managed
by other advisers; (g) compensation expected to be payable by the Funds to
PIC and its affiliates for other services; (h) the pro forma estimated
profitability to PIC and its affiliates of their relationships with the
Funds; (i) PIC's compliance record; (j) the competitive market for mutual
funds in different distribution channels; and (k) the financial condition
of affiliates of PIC over a three-year period ended December 31, 2004.
After consideration of the factors and information referred to above,
the Trustees reached several conclusions. They concluded that the proposed
nature and extent of PIC's services to the Funds was appropriate and
consistent with the terms of the New Advisory Agreement. They also
concluded that PIC appeared to be well suited to become the investment
adviser and manager of the Funds. In reaching their conclusions, the
Trustees considered the factors described above as well as the following:
o PIC's considerable experience serving as a manager of mana-gers for the
Phoenix funds, whose portfolios are managed by subadvisers;
o The considerable experience of PIC and its affiliates in providing the
Phoenix funds general administrative services, including the preparation
of regulatory filings, services to fund shareholders, distribution
services and management of the relationships of those funds and PIC with
third party service providers;
o The quality of PIC's services to the Phoenix funds, which appears to be
consistent with or superior to quality norms in the mutual fund industry;
o The stated intention of PIC to actively promote the sale of shares of the
Funds;
o The sufficiency of PIC's personnel and their education and experience;
o The soundness of PIC's financial condition and PIC's relationship to a
much larger financial services enterprise with very substantial financial
resources; and
o The proposed conversion of Class I Shares and Investor Shares of each Fund
outstanding at the time that PIC became the investment adviser to the
Funds into Class A Shares of the Funds that bear a lower rate of expenses
and the right of holders of those shares to purchase additional Class A
Shares without a sales load.
The Trustees concluded that the estimated overall expense ratio of each
surviving class of shares of each Fund, taking into account the expense
limitations agreed to by PIC, was comparable to or more favorable than the
expense ratios of its peers and that the fees that each Fund would pay to
PIC are reasonable in relation to the nature and quality of the services to
be provided, taking into account the fees charged by other advisers for
managing comparable mutual funds with similar strategies and the fees PIC
charges to other clients.
The Trustees concluded that, other than the services to be provided by
PIC and its affiliates and the fees to be paid by the Funds therefor, the
Funds and PIC may potentially benefit from their relationship with each
other in other ways. They also concluded that success of the Funds could
attract other business to PIC or other Phoenix funds and that the success
of PIC could enhance PIC's ability to serve the Funds.
22
BOARD OF TRUSTEES' CONSIDERATION OF INVESTMENT ADVISORY AND SUBADVISORY
AGREEMENTS FOR PHOENIX ADVISER TRUST
AUGUST 31, 2005 (UNAUDITED) (CONTINUED)
SUBADVISORY AGREEMENT
Since the commencement of operations of the Trust, the Trustees have met
at least quarterly with senior officers of Vontobel. In addition, as noted
above, on three separate occasions they met with senior officers of
Vontobel and others to consider the proposed change of investment advisers
and the proposed continued engagement of Vontobel to manage the portfolios
of the Funds. In addition, they received and reviewed from Vontobel
substantial written information as requested by them. Throughout that
process the Disinterested Trustees were represented and advised by their
own independent legal counsel. In the course of their deliberations and
evaluation of materials, the Trustees considered, among other things, the
following factors: (a) the investment objective and strategy of each Fund;
(b) Vontobel, its current personnel (including particularly those personnel
with responsibilities for providing investment and compliance services to
the Funds), and its financial condition, resources and investment process;
(c) the terms of the current subadvisory agreements with Vontobel and the
terms of the proposed new subadvisory agreement with Vontobel, including
the standard of care and termination provisions; (d) the scope and quality
of the services that Vontobel has provided and will continue to provide to
the Funds; (e) the structure and rate of advisory fees payable to Vontobel
by the respective Funds, the structure and rate of investment management
fees charged by Vontobel to other clients and possible alternative fee
structures; (f) the estimated total expense ratio of each Fund and of
comparable funds managed by other advisers; (g) the methodology used by
Vontobel in determining the compensation payable to portfolio managers and
the competition for investment management talent; (h) Vontobel's agreement
to discontinue the use of the Funds' portfolio brokerage transactions to
obtain third party research through brokers; (i) Vontobel's compliance
record; and (j) the competitive market for mutual funds in different
distribution channels.
After consideration of the information referred to above, the Trustees
reached several conclusions. They concluded that the nature and extent of
Vontobel's services to the Funds was appropriate and consistent with the
terms of the new subadvisory agreement. They also concluded that the
quality of Vontobel's services to the Funds had been very good. In reaching
their conclusions, the Trustees considered the factors described above as
well as the following:
o Because Vontobel's principal responsibility is management of the Fund's
investment portfolios, the investment performance achieved by Vontobel is
an important indicator of the quality of services provided;
o The quality of Vontobel's services to the Funds has been consistent with
or superior to quality norms in the mutual fund industry;
o Vontobel has sufficient personnel, with the appropriate education and
experience, to serve the Funds effectively, and has demonstrated its
ability to attract and retain well qualified personnel; and
o Vontobel's financial condition is sound, and Vontobel is part of a much
larger financial services enterprise with very substantial financial
resources.
The Trustees concluded that the fees that PIC will pay to Vontobel under
the new subadvisory agreement are reasonable in relation to the nature and
quality of the services to be provided, taking into account the fees
charged by other advisers for managing comparable mutual funds with similar
strategies and the fees Vontobel charges to other clients.
EACH INVESTMENT ADVISORY AND SUBADVISORY
AGREEMENT
The Trustees concluded that, other than the services to be provided by
Vontobel to the Funds pursuant to the proposed agreements and the fees to
be paid by PIC therefor, the Funds and Vontobel may potentially benefit
from their relationship with each other in other ways. They concluded that
Vontobel would benefit from the receipt of proprietary research products
and services to be acquired through commissions paid on portfolio
transactions of the Funds and that the Funds would benefit from Vontobel's
receipt of those products and services as well as research products and
services acquired through commissions paid by other clients of Vontobel.
They also concluded that success of the Funds could attract other business
to Vontobel or its other funds and that the success of Vontobel could
enhance Vontobel's ability to serve the Funds.
23
RESULTS OF SHAREHOLDER MEETING
MAY 17, 2005
A Special Meeting of Shareholders of The Phoenix-Janus Adviser Funds was held
on May 17, 2005, to approve the following matters:
1. To elect fourteen Trustees to the Board of Trustees.
2. Approve new Investment Advisory Agreement between the Trust and Phoenix
Investment Counsel ("PIC")
3. Approve new Subadvisory Agreements between PIC and Vontobel Asset
management.
4. Permit Phoenix Investment Counsel, Inc. to hire and replace Subadvisers
or to modify Subadvisory Agreements without Shareholder approval.
NUMBER OF VOTES:
1. Election of Trustees
International Equity
Focused Value (n/k/a Foreign Opportunities)
--------------------------- -----------------------------
For Withheld For Withheld
---------- --------- ---------- ---------
E. Virgil Conway 42,029,212 1,935,792 49,026,618 5,460,156
Harry Dalzell-Payne 42,036,480 1,928,524 49,956,228 5,530,546
S. Leland Dill 42,036,480 1,928,524 48,971,210 5,515,564
Francis E. Jeffries 42,036,480 1,928,524 48,971,210 5,515,564
Leroy Keith, Jr. 42,076,986 1,888,018 49,024,526 5,462,248
Marilyn E. LaMarche 42,048,390 1,916,614 48,966,018 5,520,756
Philip R. McLoughlin 42,088,462 1,876,542 49,031,748 5,455,025
Geraldine M. McNamara 42,092,473 1,872,531 48,983,908 5,502,866
Everett L. Morris 42,034,132 1,930,871 48,971,210 5,515,564
James M. Oates 42,081,194 1,883,810 49,050,828 5,435,945
Donald B. Romans 42,036,480 1,928,524 48,971,210 5,515,564
Richard E. Segerson 42,102,719 1,862,285 49,036,240 5,450,533
Ferdinand L. J. Verdonck 42,086,114 1,878,889 48,889,630 5,597,144
Lowell P. Weicker, Jr. 42,032,415 1,932,589 49,017,211 5,469,563
International Equity
Focused Value (n/k/a Foreign Opportunities)
--------------------------------- ---------------------------------
For Against Abstain For Against Abstain
---------- --------- --------- ---------- ---------- ---------
2. New Investment Advisory Agreement 41,347,768 1,451,541 1,165,635 47,311,489 5,334,618 1,840,647
3. Subadvisory Agreements with Vontobel 41,180,599 1,566,191 1,218,153 47,077,302 5,346,839 2,062,613
4. Allow PIC to replace or modify
subadvisory agreements 29,610,029 5,005,210 1,127,530 37,382,371 12,631,526 2,040,904
24
PHOENIX ADVISER TRUST
101 Munson Street
Greenfield, MA 01301
TRUSTEES
E. Virgil Conway
Harry Dalzell-Payne
S. Leland Dill
Francis E. Jeffries
Leroy Keith, Jr.
Marilyn E. LaMarche
Philip R. McLoughlin, Chairman
Geraldine M. McNamara
Everett L. Morris
James M. Oates
Donald B. Romans
Richard E. Segerson
Ferdinand L. J. Verdonck
Lowell P. Weicker, Jr.
OFFICERS
Daniel T. Geraci, President
George R. Aylward, Executive Vice President
Francis G. Waltman, Senior Vice President
Marc Baltuch, Vice President and Chief Compliance Officer
Nancy G. Curtiss, Chief Financial Officer and Treasurer
Kevin J. Carr, Vice President, Counsel, Secretary and Chief Legal Officer
INVESTMENT ADVISER
Phoenix Investment Counsel, Inc.
56 Prospect Street
Hartford, CT 06115-0480
PRINCIPAL UNDERWRITER
Phoenix Equity Planning Corporation
One American Row
Hartford, CT 06102
TRANSFER AGENT
Phoenix Equity Planning Corporation
One American Row
Hartford, CT 06102
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
HOW TO CONTACT US
Mutual Fund Services 1-800-243-1574
Advisor Consulting Group 1-800-243-4361
Telephone Orders 1-800-367-5877
Text Telephone 1-800-243-1926
Web site PHOENIXFUNDS.COM
- --------------------------------------------------------------------------------
IMPORTANT NOTICE TO SHAREHOLDERS
The Securities and Exchange Commission has modified mailing regulations for
semiannual and annual shareholder fund reports to allow mutual fund
companies to send a single copy of these reports to shareholders who share
the same mailing address. If you would like additional copies, please call
Mutual Fund Services at 1-800-243-1574.
- --------------------------------------------------------------------------------
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(This page has been left blank intentionally.)
(This page has been left blank intentionally.)
---------------
PRESORTED
STANDARD
U.S. POSTAGE
PAID
Louisville, KY
Permit No. 1051
---------------
[GRAPHIC OMITTED] PHOENIXFUNDS(SM)
PHOENIX EQUITY PLANNING CORPORATION
P.O. Box 150480
Hartford, CT 06115-0480
For more information about Phoenix mutual funds, please call your financial
representative, contact us at 1-800-243-1574 or visit PHOENIXFUNDS.COM.
NOT INSURED BY FDIC/NCUSIF OR ANY FEDERAL GOVERNMENT AGENCY.
NO BANK GUARANTEE. NOT A DEPOSIT. MAY LOSE VALUE.
PXP4298 10-05
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At a Board of Trustees meeting held May 16, 2005, the Trustees approved a Policy
for the Consideration of Trustee Nominees as follows:
PHOENIX FUNDS
POLICY FOR THE CONSIDERATION OF TRUSTEE NOMINEES
------------------------------------------------
The following Policy for the Consideration of Trustee Nominees (the
"Policy") shall be followed by the Governance and Nominating Committee (the
"Committee") of the Phoenix Funds (the "Trust") in filling vacancies on the
Board of Trustees or when Trustees are to be nominated for election by
shareholders.
MINIMUM NOMINEE QUALIFICATIONS
- ------------------------------
1. With respect to nominations for Trustees who are not interested persons
of the Trust as defined by Section 2(a)(19) of the Investment Company
Act of 1940 (the "1940 Act") ("Disinterested Trustees"), nominees shall
be independent of the Trust's investment advisers and other principal
service providers. The Committee shall also consider the effect of any
relationship beyond those delineated in the 1940 Act that might impair
independence, such as business, financial or family relationships with
the investment adviser or its affiliates.
2. Disinterested Trustee nominees must qualify for service on the Trust's
Audit Committees.
3. With respect to all Trustees, nominees must qualify under all
applicable laws and regulations.
4. The proposed nominee may not be within five years of the Trust's
retirement age for Trustees.
5. The Committees may also consider such other factors as they may
determine to be relevant.
OTHER QUALIFICATIONS
- --------------------
1. With respect to all proposed nominees, the Committee shall consider
whether the proposed nominee serves on boards of or is otherwise
affiliated with competing financial service organizations or their
related fund complexes or companies in which the Trust may invest.
2. The Committee shall consider whether the proposed nominee is able to
and intends to commit the time necessary for the performance of Trustee
duties.
3. The Committee shall consider the integrity and character of the
proposed nominee, and the proposed nominee's compatibility with the
current Trustees.
4. The Committee may require an interview with the proposed nominee.
NOMINEES RECOMMENDED BY SHAREHOLDERS
- ------------------------------------
1. The Committee shall consider nominations for openings on the Board of
Trustees from shareholders who have individually held for at least one
full year five percent of the shares of a series of the Trust.
2. The Committee shall give candidates recommended by shareholders the
same consideration as any other candidate.
3. Shareholder recommendations should be sent to the attention of the
Committee in care of the Trust's Secretary and should include
biographical information, including business experience for the past
ten years and a description of the qualifications of the proposed
nominee, along with a statement from the proposed nominee that he or
she is willing to serve and meets the requirements to be a
Disinterested Trustee, if applicable.
PROCESS FOR IDENTIFYING AND EVALUATING TRUSTEE NOMINEES
- -------------------------------------------------------
1. When identifying and evaluating prospective nominees for openings on
the Board of Trustees, the Committee shall review all recommendations
in the same manner, including those received from shareholders.
2. The Committee shall first determine if the prospective nominee meets
the minimum qualifications set forth above. Those proposed nominees
meeting the minimum qualifications will then be considered by the
Committee with respect to the other
qualifications listed above, and any other qualifications deemed to be
important by the Committee.
3. Those nominees selected by the Committee shall be recommended to the
Board of Trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) In connection with the integration of the registrant into the Phoenix
Investment Partners, Ltd. ("Phoenix") complex of mutual funds, the
registrant transitioned from the previous internal control environment
to the Phoenix internal control environment. As a result of this
change, the registrant retained certain new service providers, and
there were certain changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting. The notes to the financial statements
contain more information about this transaction.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) Phoenix Adviser Trust
-------------------------------------------------------------------
By (Signature and Title)* /s/ George R. Aylward
-------------------------------------------------------
George R. Aylward, Executive Vice President
(principal executive officer)
Date November 1, 2005
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ George R. Aylward
-------------------------------------------------------
George R. Aylward, Executive Vice President
(principal executive officer)
Date November 1, 2005
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Nancy G. Curtiss
-------------------------------------------------------
Nancy G. Curtiss,
Chief Financial Officer and Treasurer
(principal financial officer)
Date October 20, 2005
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.