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
-----------------------------------------------------
(Exact name of registrant as specified in charter)
101 Munson Street
Greenfield, MA 01301-9668
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(Address of principal executive offices) (Zip code)
Kevin J. Carr, Esq.
Vice President, Chief Legal Officer, John H. Beers, Esq.
Counsel and Secretary for Registrant Vice President and Counsel
Phoenix Life Insurance Company Phoenix Life Insurance Company
One American Row One American Row
HartforD, CT 06103-2899 Hartford, CT 06103-2899
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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, 2006
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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, 100 F Street, NE,
Washington, DC 20549. 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, 2006
SEMIANNUAL REPORT
o PHOENIX FOCUSED VALUE FUND
o PHOENIX FOREIGN OPPORTUNITIES FUND
TRUST NAME: PHOENIX ADVISER TRUST
[GRAPHIC OMITTED] PHOENIXFUNDS(SM)
[GRAPHIC OMITTED]
WOULDN'T YOU RATHER
HAVE THIS DOCUMENT
E-MAILED TO YOU?
Eligible shareholders can sign up for E-Delivery
at PhoenixFunds.com
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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.
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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.
A MESSAGE FROM THE PRESIDENT
DEAR PHOENIXFUNDS SHAREHOLDER:
This semiannual report addresses the performance of your Phoenix mutual
fund for the six months ended August 31, 2006. It provides detailed information
about your fund's performance, portfolio holdings and transactions for the
period.
At Phoenix, our focus is on investment performance and serving the best
interests of our shareholders. We believe that mutual funds are among the most
effective vehicles for individual investors to gain access to a variety of
financial markets and for building diversified portfolios.
I am especially proud of how we have expanded our fund family over the
last year to offer access to even more money managers. Today, the PhoenixFunds
draw from the vast expertise of 16 different management teams--six Phoenix
affiliates and 10 outside subadvisers chosen for their complementary investment
capabilities.
These fund teams operate independently, conducting their research,
identifying opportunities in the markets they know best, and applying their
disciplined strategies to the portfolios they manage. We are confident in their
ability to navigate their funds through whatever market and economic changes lie
ahead.
When it comes to financial decisions, we recommend working with an
experienced financial advisor. If you haven't reviewed or rebalanced your
portfolio lately, this may be a good time to meet with your advisor and make
sure that your investments are still aligned with your financial goals.
Thank you for choosing PhoenixFunds to be part of your financial plan.
Sincerely yours,
/s/ Daniel T. Geraci
- -------------------------
Daniel T. Geraci
President, PhoenixFunds
SEPTEMBER 2006
1
TABLE OF CONTENTS
Glossary ..................................................... 3
Phoenix Focused Value Fund ................................... 4
Phoenix Foreign Opportunities Fund ........................... 10
Notes to Financial Statements ................................ 18
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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, 2006, 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.
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.
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, if applicable; 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, 2006 August 31, 2006 Period*
- --------------------- ----------------- --------------- -------------
Actual $1,000.00 $1,046.00 $6.35
Hypothetical (5% return
before expenses) 1,000.00 1,019.02 6.28
*EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 1.23%,
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
(184) EXPENSES WERE ACCRUED 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, 2006 August 31, 2006 Period*
- --------------------- ----------------- --------------- -------------
Actual $1,000.00 $1,042.10 $10.29
Hypothetical (5% return
before expenses) 1,000.00 1,015.10 10.20
*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
(184) EXPENSES WERE ACCRUED 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 FUND'S 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
SECTOR WEIGHTINGS (UNAUDITED) 8/31/06
As a percentage of total investments
[CHART OMITTED - EDGAR REPRESENTATION OF DATA FOLLOWS]
Financials 42%
Consumer Staples 21
Consumer Discretionary 18
Health Care 4
Other 15
SCHEDULE OF INVESTMENTS
AUGUST 31, 2006
(UNAUDITED)
SHARES VALUE
--------- ----------
DOMESTIC COMMON STOCKS--73.6%
APPAREL RETAIL--2.4%
TJX Cos., Inc. (The) ............... 48,600 $1,300,050
APPAREL, ACCESSORIES & LUXURY GOODS--2.1%
Liz Claiborne, Inc. ................ 31,200 1,165,944
BROADCASTING & CABLE TV--3.1%
Entercom Communications Corp. ...... 36,100 917,301
Saga Communications, Inc.
Class A(b) ....................... 99,675 793,413
----------
1,710,714
----------
DIVERSIFIED BANKS--4.3%
Wells Fargo & Co. .................. 68,600 2,383,850
HOME FURNISHINGS--2.2%
Mohawk Industries, Inc.(b) ......... 17,330 1,228,350
HOUSEHOLD PRODUCTS--1.4%
Procter & Gamble Co. (The) ......... 12,545 776,536
HYPERMARKETS & SUPER CENTERS--3.0%
Wal-Mart Stores, Inc. 36,600 1,636,752
MULTI-LINE INSURANCE--5.8%
American International Group, Inc. . 50,400 3,216,528
OTHER DIVERSIFIED FINANCIAL SERVICES--1.5%
Bank of America Corp. .............. 15,500 797,785
PACKAGED FOODS & MEATS--2.1%
General Mills, Inc. ................ 21,800 1,182,214
SHARES VALUE
--------- ----------
PHARMACEUTICALS--4.5%
Johnson & Johnson .................. 29,300 $1,894,538
Pfizer, Inc. ....................... 20,200 556,712
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2,451,250
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PROPERTY & CASUALTY INSURANCE--13.0%
Berkshire Hathaway, Inc.
Class A(b) 68 6,534,596
Cincinnati Financial Corp. ......... 12,992 606,207
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7,140,803
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PUBLISHING & PRINTING--2.5%
Gannett Co., Inc. .................. 24,200 1,375,770
REGIONAL BANKS--3.5%
Fifth Third Bancorp ................ 48,400 1,904,056
SOFT DRINKS--2.5%
Coca-Cola Co. (The) ................ 30,800 1,380,148
SPECIALIZED CONSUMER SERVICES--1.7%
Block (H&R), Inc. .................. 45,400 954,762
SPECIALTY STORES--2.6%
Tiffany & Co. ...................... 45,060 1,423,896
THRIFTS & MORTGAGE FINANCE--13.7%
Fannie Mae ......................... 31,374 1,651,841
Freddie Mac ........................ 70,600 4,490,160
Golden West Financial Corp. ........ 18,900 1,426,761
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7,568,762
----------
See Notes to Financial Statements
5
Phoenix Focused Value Fund
SHARES VALUE
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TOBACCO--1.7%
Altria Group, Inc. 11,400 $ 952,242
- ---------------------------------------------------------
TOTAL DOMESTIC COMMON STOCKS
(IDENTIFIED COST $36,524,268) 40,550,412
- ---------------------------------------------------------
FOREIGN COMMON STOCKS(c)--11.3%
DISTILLERS & VINTNERS--2.3%
Diageo plc Sponsored ADR
(United Kingdom) ................. 17,900 1,279,850
PACKAGED FOODS & MEATS--7.6%
Cadbury Schweppes plc Sponsored ADR
(United Kingdom) ................. 46,300 1,980,251
Nestle S.A. Sponsored ADR
(Switzerland) .................... 25,950 2,227,044
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4,207,295
----------
SPECIALTY STORES--1.4%
Signet Group plc Sponsored ADR
(United Kingdom) 36,900 748,332
- ---------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $5,132,915) 6,235,477
- ---------------------------------------------------------
TOTAL LONG TERM INVESTMENTS--84.9%
(IDENTIFIED COST $41,657,183) 46,785,889
- ---------------------------------------------------------
PAR VALUE
(000)
---------
SHORT-TERM INVESTMENTS--14.5%
COMMERCIAL PAPER(d)--14.5%
Lockhart Funding LLC 5.25%, 9/1/06 . $2,135 2,135,000
Du Pont (E.I.) de Nemours & Co.
5.20%, 9/6/06 .................... 2,000 1,998,556
Cargill, Inc. 5.22%, 9/8/06 ........ 2,465 2,462,498
Old Line Funding Corp.
5.25%, 9/13/06 ................... 1,365 1,362,611
- ---------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $7,958,665) 7,958,665
- ---------------------------------------------------------
TOTAL INVESTMENTS--99.4%
(IDENTIFIED COST $49,615,848) 54,744,554(a)
Other assets and liabilities, net--0.6% 333,833
------------
NET ASSETS--100.0% $ 55,078,387
============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $6,541,712 and gross
depreciation of $1,565,080 for federal income tax purposes. At August 31,
2006, the aggregate cost of securities for federal income tax purposes was
$49,767,922.
(b) Non-income producing.
(c) A common stock is considered to be foreign if the security is issued in a
foreign country. The country of risk, noted parenthetically, is determined
based on criteria described in Note 2G "Foreign security country
determination" in the Notes to Financial Statements.
(d) The rate shown is the discount rate.
See Notes to Financial Statements
6
Phoenix Focused Value Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2006
(UNAUDITED)
ASSETS
Investment securities at value
(Identified cost $49,615,848) $ 54,744,554
Cash 1,149
Receivables
Fund shares sold 390,385
Dividends 62,205
Prepaid expenses 14,195
-------------
Total assets 55,212,488
-------------
LIABILITIES
Payables
Fund shares repurchased 32,127
Investment securities purchased 25,373
Investment advisory fee 23,318
Transfer agent fee 16,361
Professional fee 14,932
Distribution and service fees 13,590
Administration fee 3,793
Other accrued expenses 4,607
-------------
Total liabilities 134,101
-------------
NET ASSET $ 55,078,387
=============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial
interest $ 48,519,194
Undistributed net investment income 172,405
Accumulated net realized gain 1,258,082
Net unrealized appreciation 5,128,706
-------------
NET ASSETS $ 55,078,387
=============
CLASS A
Shares of beneficial interest outstanding,
$0.001 par value, unlimited authorization
(Net Assets $51,875,045) 2,667,050
Net asset value per share $19.45
Offering price per share $19.45/(1-5.75%) $20.64
CLASS C
Shares of beneficial interest outstanding,
$0.001 par value, unlimited authorization
(Net Assets $3,203,342) 169,883
Net asset value and offering price per share $18.86
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 2006
(UNAUDITED)
INVESTMENT INCOME
Dividends $ 524,760
Interest 156,930
Foreign taxes withheld (7,783)
----------
Total investment income 673,907
----------
EXPENSES
Investment advisory fee 211,038
Service fees, Class A 66,171
Distribution and service fees, Class C 16,700
Financial agent fee 19,306
Administration fee 6,492
Transfer agent 47,907
Professional 18,017
Registration 15,878
Printing 10,909
Trustees 10,409
Custodian 5,584
Miscellaneous 6,609
----------
Total expenses 435,020
Less expenses reimbursed by investment
adviser (75,664)
Custodian fees paid indirectly (155)
----------
Net expenses 359,201
----------
NET INVESTMENT INCOME (LOSS) 314,706
----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) on investments 1,363,981
Net change in unrealized appreciation
(depreciation) on investments 733,008
----------
NET GAIN (LOSS) ON INVESTMENTS 2,096,989
----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $2,411,695
==========
See Notes to Financial Statements
7
Phoenix Focused Value Fund
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
August 31, 2006 Year Ended
(Unaudited) February 28, 2006
--------------- ------------------
FROM OPERATIONS
Net investment income (loss) $ 314,706 $ 410,168
Net realized gain (loss) 1,363,981 3,642,690
Net change in unrealized appreciation (depreciation) 733,008 (3,474,699)
----------- -----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,411,695 578,159
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (141,052) (344,668)
Net investment income, Class C (1,249) (3,861)
Net investment income, Investor Class -- (117,053)
Net investment income, Class I -- (6,240)
Net realized short-term gains, Class A (230,565) (299,802)
Net realized short-term gains, Class C (15,165) (20,711)
Net realized long-term gains, Class A (637,445) (2,611,498)
Net realized long-term gains, Class C (41,926) (338,851)
Net realized long-term gains, Investor Class -- (3,003,384)
Net realized long-term gains, Class I -- (181,221)
----------- -----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (1,067,402) (6,927,289)
----------- -----------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (85,316 and 153,804 shares, respectively) 1,623,633 2,953,908
Net asset value of shares issued from reinvestment of distributions
(53,414 and 167,817 shares, respectively) 982,300 3,161,352
Proceeds from shares issued in connection with reclassification from Investor
Class Shares (0 and 2,994,554 shares, respectively) (See Note 10) -- 59,058,124
Proceeds from shares issued in connection with reclassification from Class I
Shares (0 and 180,929 shares, respectively) (See Note 10) -- 3,568,308
Cost of shares repurchased (439,468 and 776,140 shares, respectively) (8,306,286) (15,023,305)
----------- -----------
Total (5,700,353) 53,718,387
----------- -----------
CLASS C
Proceeds from sales of shares (3,178 and 32,657 shares, respectively) 58,476 624,826
Net asset value of shares issued from reinvestment of distributions
(3,267 and 19,183 shares, respectively) 58,340 357,909
Cost of shares repurchased (36,373 and 25,821 shares, respectively) (671,478) (486,444)
----------- -----------
Total (554,662) 496,291
----------- -----------
INVESTOR CLASS
Proceeds from sales of shares (0 and 104,213 shares, respectively) -- 2,119,477
Net asset value of shares issued from reinvestment of distributions
(0 and 156,298 shares, respectively) -- 3,050,945
Cost of shares repurchased (0 and 680,869 shares, respectively) -- (13,656,695)
Value of shares liquidated in connection with reclassification
to Class A Shares (0 and 3,005,502 shares, respectively) (See Note 10) -- (59,058,124)
----------- -----------
Total -- (67,544,397)
----------- -----------
CLASS I
Proceeds from sales of shares (0 and 1,207 shares, respectively) -- 24,188
Net asset value of shares issued from reinvestment of distributions (0 and
9,048 shares, respectively) -- 176,169
Cost of shares repurchased (0 and 19,186 shares, respectively) -- (382,874)
Value of shares liquidated in connection with reclassification to Class A
Shares (0 and 182,057 shares, respectively) (See Note 10) -- (3,568,308)
----------- -----------
Total -- (3,750,825)
----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS (6,255,015) (17,080,544)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS (4,910,722) (23,429,674)
NET ASSETS
Beginning of period 59,989,109 83,418,783
----------- -----------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $172,405
AND $0, RESPECTIVELY) $55,078,387 $59,989,109
=========== ===========
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 FEBRUARY 28, JANUARY 1, 2004 TO YEAR ENDED DECEMBER 31,
AUGUST 31, 2006 ---------------------- FEBRUARY 29, ------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002 2001
Net asset value, beginning of period $18.97 $20.74 $22.69 $21.82 $18.64 $19.86 $19.29
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.11(6) 0.12(6) 0.03 --(2) 0.03 (0.09) (0.12)
Net realized and unrealized gain (loss) 0.74 0.19 0.48 0.87 4.47 (0.33) 0.71
------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.85 0.31 0.51 0.87 4.50 (0.42) 0.59
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.15) -- -- -- -- (0.02)
Distributions from net realized gains (0.32) (1.93) (2.46) -- (1.32) (0.80) --
------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.37) (2.08) (2.46) -- (1.32) (0.80) (0.02)
------ ------ ------ ------ ------ ------ ------
Payment by affiliate(7) -- -- --(2) -- -- -- --
------ ------ ------ ------ ------ ------ ------
Change in net asset value 0.48 (1.77) (1.95) 0.87 3.18 (1.22) 0.57
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $19.45 $18.97 $20.74 $22.69 $21.82 $18.64 $19.86
====== ====== ====== ====== ====== ====== ======
Total return(1) 4.60%(5) 1.65% 2.45% 3.99 %(5) 24.54 % (2.20)% 3.06 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $51,875 $56,307 $5,120 $3,746 $3,752 $112,302 $86,157
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.23%(4) 1.15% 1.15% 1.15 %(4) 2.11 % 1.72 % 1.75 %(3)
Gross operating expenses 1.50%(4) 1.50% 1.85% 1.96 %(4) 2.11 % 1.74 % 1.75 %(3)
Net investment income (loss) 1.16%(4) 0.61% 0.18% (0.33)%(4) (0.88)% (0.63)% (0.43)%
Portfolio turnover 20%(5) 34% 40% 55 %(4) 21 % 76 % 66 %
CLASS C
--------------------------------------------------------------------------------------------
SIX MONTHS FOR THE PERIOD YEAR ENDED FROM INCEPTION
ENDED YEAR ENDED FEBRUARY 28, JANUARY 1, 2004 TO DECEMBER 31, OCTOBER 9 TO
AUGUST 31, 2006 ---------------------- FEBRUARY 29, ----------- DECEMBER 31,
(UNAUDITED) 2006 2005 2004 2003 2002
Net asset value, beginning of period $18.43 $20.23 $22.35 $21.52 $18.60 $17.49
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.04(6) (0.01)(6) (0.04) --(2) (0.07) (0.06)
Net realized and unrealized gain (loss) 0.72 0.16 0.38 0.83 4.31 1.97
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.76 0.15 0.34 0.83 4.24 1.91
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.01) (0.02) -- -- -- --
Distributions from net realized gains (0.32) (1.93) (2.46) -- (1.32) (0.80)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.33) (1.95) (2.46) -- (1.32) (0.80)
------ ------ ------ ------ ------ ------
Payment by affiliate(7) -- -- --(2) -- -- --
------ ------ ------ ------ ------ ------
Change in net asset value 0.43 (1.80) (2.12) 0.83 2.92 1.11
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $18.86 $18.43 $20.23 $22.35 $21.52 $18.60
====== ====== ====== ====== ====== ======
Total return(1) 4.21%(5) 0.86 % 1.68 % 3.86 %(5) 23.18 % 10.82 %(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $3,203 $3,682 $3,516 $1,827 $1,344 $355
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 2.00%(4) 1.90 % 1.90 % 1.90 %(4) 3.16 % 2.72 %(4)
Gross operating expenses 2.25%(4) 2.34 % 2.59 % 2.72 %(4) 3.16 % 2.74 %(4)
Net investment income (loss) 0.39%(4) (0.07)% (0.57)% (1.05)%(4) (1.81)% (1.63)%(4)
Portfolio turnover 20%(5) 34 % 40 % 55 %(4) 21 % 76 %(4)
(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.
(4) Annualized.
(5) Not Annualized.
(6) Computed using average shares outstanding.
(7) Payment by affiliate. See Note 3 in the Notes to Financial Statements.
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, if applicable; and (2) ongoing costs, including
investment advisory fees; distribution and service fees; and other expenses.
Class X shares are sold without a sales charge and do not incur distribution or
service fees. 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
(for the entire six-month period)
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.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
(since inception date for Class X only)
The third line of the accompanying tables for Class X 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. This example is based on the period
from inception of the class to August 31, 2006.
Beginning Ending Expenses Paid
Foreign Opportunities Fund Account Value Account Value During
Class A February 28, 2006 August 31, 2006 Period*
- --------------------------- ----------------- --------------- -------------
Actual $1,000.00 $1,087.40 $7.05
Hypothetical (5% return
before expenses) 1,000.00 1,018.46 6.84
*EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 1.34%,
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
(184) EXPENSES WERE ACCRUED 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, 2006 August 31, 2006 Period*
- --------------------------- ----------------- --------------- -------------
Actual $1,000.00 $1,083.50 $11.00
Hypothetical (5% return
before expenses) 1,000.00 1,014.61 10.69
*EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 2.09%,
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
(184) EXPENSES WERE ACCRUED 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 X May 15, 2006 August 31, 2006 Period*
- --------------------------- ----------------- --------------- -------------
Actual $1,000.00 $1,036.20 $3.28
Hypothetical (5% return
before expenses
since inception) 1,000.00 1,011.45 3.25
Beginning
Account Value
February 28, 2006
-----------------
Hypothetical (5% return
before expenses
six-month period) $1,000.00 1,019.68 5.62
*EXPENSES ARE EQUAL TO THE FUND'S CLASS X ANNUALIZED EXPENSE RATIO OF 1.10%,
WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE. FOR THE
ACTUAL AND HYPOTHETICAL EXAMPLE, THE EXPENSE RATIO IS MULTIPLIED BY THE AVERAGE
ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS (108) EXPENSES
ACCRUED SINCE INCEPTION, THEN DIVIDED BY 365 TO REFLECT THE PERIOD SINCE
INCEPTION.
FOR THE HYPOTHETICAL EXAMPLE FOR THE ENTIRE SIX-MONTH PERIOD, THE EXPENSE RATIO
IS MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE SIX-MONTH PERIOD,
MULTIPLIED BY THE NUMBER OF DAYS (184) EXPENSES WERE ACCRUED 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 FUND'S 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) 8/31/06
As a percentage of total investments
[CHART OMITTED - EDGAR REPRESENTATION OF DATA FOLLOWS]
United Kingdom 23%
Spain 12
Switzerland 12
United States 7
Australia 6
Japan 6
Ireland 5
Other 29
SCHEDULE OF INVESTMENTS
AUGUST 31, 2006
(UNAUDITED)
SHARES VALUE
--------- -------------
FOREIGN COMMON STOCKS(c)--96.2%
AUSTRALIA--6.4%
Aristocrat Leisure Ltd. (Casinos & Gaming) ... 335,500 $ 3,355,615
Australia and New Zealand Banking Group Ltd.
(Diversified Banks) .......................... 145,900 3,035,499
Westfield Group (Real Estate Management &
Development) ................................. 342,411 4,776,332
Woolworths Ltd. (Food Retail) ................ 283,139 4,474,848
-------------
15,642,294
-------------
BELGIUM--2.7%
Colruyt SA (Food Retail) ..................... 17,400 2,958,145
InBev N.V. (Brewers) ......................... 71,800 3,728,210
-------------
6,686,355
-------------
BRAZIL--2.7%
Banco Itau Holding Financieira SA Sponsored ADR
(Diversified Banks) .......................... 115,600 3,518,864
Souza Cruz SA (Tobacco) ...................... 179,300 2,968,820
-------------
6,487,684
-------------
FRANCE--2.9%
M6-Metropole Television SA (Broadcasting &
Cable TV) .................................... 91,000 2,845,826
Total SA (Integrated Oil & Gas) .............. 44,300 2,990,981
Total SA Sponsored ADR (Integrated Oil & Gas) 19,914 1,342,801
-------------
7,179,608
-------------
SHARES VALUE
--------- -------------
INDIA--2.5%
HDFC Bank Ltd. (Diversified Banks) ........... 52,600 $ 963,099
HDFC Bank Ltd. ADR (Diversified Banks) ....... 92,100 5,238,648
-------------
6,201,747
-------------
IRELAND--5.5%
Allied Irish Banks plc (Diversified Banks) ... 112,275 2,927,162
Anglo Irish Bank Corp. plc
(Diversified Banks) .......................... 631,735 10,440,563
-------------
13,367,725
-------------
ITALY--1.5%
ENI S.p.A. (Integrated Oil & Gas) ............ 122,500 3,750,881
JAPAN--6.3%
Daito Trust Construction Co. Ltd.
(Homebuilding) ............................... 70,400 3,658,077
Millea Holdings, Inc. (Property &
Casualty Insurance) .......................... 351 6,458,197
Toyota Motor Corp. (Automobile Manufacturers) 96,000 5,209,081
-------------
15,325,355
-------------
MEXICO--3.9%
America Movil S.A. de C.V. ADR Series L
(Wireless Telecommunication Services) ........ 75,200 2,805,712
America Telecom S.A. de C.V. A1 (Wireless
Telecommunication Services)(b) ............... 124,300 847,426
Grupo Modelo, S.A. de C.V. Series C
(Brewers) .................................... 1,380,100 5,814,834
-------------
9,467,972
-------------
See Notes to Financial Statements
11
Phoenix Foreign Opportunities Fund
SHARES VALUE
--------- -------------
NETHERLANDS--2.8%
Aalberts Industries N.V. (Industrial
Conglomerates) ............................... 39,046 $ 3,221,527
TNT N.V. (Air Freight & Logistics) ........... 97,700 3,673,685
-------------
6,895,212
-------------
NORWAY--1.5%
Orkla ASA (Industrial Conglomerates) ......... 74,100 3,633,502
SOUTH AFRICA--1.7%
Remgro Ltd. (Industrial Conglomerates) ....... 210,623 4,181,808
SOUTH KOREA--4.6%
Amorepacific Corp (Personal Products)(b) ..... 2,637 1,146,641
Kangwon Land, Inc. (Casinos & Gaming) ........ 161,800 3,063,310
KT&G Corp. (Tobacco) ......................... 47,200 2,769,250
Lotte Confectionary Co. Ltd.
(Packaged Foods & Meats) ..................... 1,139 1,430,118
S1 Corp. (Specialized Consumer Services) ..... 71,490 2,918,946
-------------
11,328,265
-------------
SPAIN--11.9%
Banco Bilbao Vizcaya Argentaria S.A.
(Diversified Banks) .......................... 361,410 8,260,271
Enagas S.A. (Gas Utilities) .................. 487,338 11,107,223
Red Electrica de Espana
(Electric Utilities) ......................... 247,800 9,565,324
-------------
28,932,818
-------------
SWITZERLAND--12.1%
Kuehne & Nagel International AG (Marine) ..... 87,446 6,148,963
Lindt & Spruengli AG
(Packaged Foods & Meats) ..................... 497 1,082,147
Nestle S.A. Registered Shares (Packaged
Foods & Meats) ............................... 18,150 6,241,205
Novartis AG ADR (Pharmaceuticals) ............ 65,876 3,762,837
Roche Holding AG Registered Shares
(Pharmaceuticals) ............................ 50,000 9,217,208
UBS AG (Diversified Capital Markets) ......... 52,800 2,987,789
-------------
29,440,149
-------------
TAIWAN--1.4%
Taiwan Semiconductor Manufacturing Co. Ltd.
Sponsored ADR (Semiconductors) ............... 353,743 3,293,347
SHARES VALUE
--------- -------------
UNITED KINGDOM--23.6%
Barrat Developments plc (Homebuilding) ....... 96,176 $ 1,819,323
British American Tobacco plc (Tobacco) ....... 388,779 10,659,592
Cadbury Schweppes plc (Packaged Foods & Meats) 354,571 3,773,899
Diageo plc (Distillers & Vintners) ........... 412,475 7,343,186
HSBC Holdings plc (Diversified Banks) ........ 234,585 4,259,012
Imperial Tobacco Group plc (Tobacco) ......... 234,215 8,071,766
Reckitt Benckiser plc (Household Products) ... 84,737 3,517,251
Royal Bank of Scotland Group plc
(Diversified Banks) .......................... 136,034 4,615,627
Tesco plc (Food Retail) ...................... 1,864,816 13,394,933
-------------
57,454,589
-------------
UNITED STATES--2.2%
News Corp. Class B (Movies & Entertainment) 264,000 5,238,639
- ---------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $192,302,999) 234,507,950
- ---------------------------------------------------------------------------
WARRANTS--0.3%
DIVERSIFIED BANKS--0.3%
HDFC Bank Ltd. Class A Strike Price .00001 Indian
Rupees, Exp. 6/28/10 (Diversified Banks)(b) .. 45,720 837,042
- ---------------------------------------------------------------------------
TOTAL WARRANTS
(IDENTIFIED COST $715,682) 837,042
- ---------------------------------------------------------------------------
TOTAL LONG TERM INVESTMENTS--96.5%
(IDENTIFIED COST $193,018,681) 235,344,992
- ---------------------------------------------------------------------------
PAR VALUE
(000)
---------
SHORT-TERM INVESTMENTS--5.9%
COMMERCIAL PAPER(d)--5.9%
George Street Finance LLC 5.26%, 9/1/06 ...... $ 2,022 2,022,000
Lockhart Funding LLC 5.25%, 9/1/06 ........... 5,000 5,000,000
Du Pont (E.I.) de Nemours & Co.
5.20%, 9/6/06 ................................ 7,285 7,279,738
- ---------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $14,301,738) 14,301,738
- ---------------------------------------------------------------------------
TOTAL INVESTMENTS--102.4%
(IDENTIFIED COST $207,320,419) 249,646,730(a)
Other assets and liabilities, net--(2.4)% (5,915,809)
-------------
NET ASSETS--100.0% $ 243,730,921
=============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $41,449,737 and gross
depreciation of $261,270 for federal income tax purposes. At August 31,
2006, the aggregate cost of securities for federal income tax purposes was
$208,458,263.
(b) Non-income producing.
(c) A common stock is considered to be foreign if the security is issued in a
foreign country. The country of risk, noted in the header, is determined
based on criteria described in Note 2G "Foreign security country
determination" in the Notes to Financial Statements.
(d) The rate shown is the discount rate.
See Notes to Financial Statements
12
Phoenix Foreign Opportunities Fund
INDUSTRY DIVERSIFICATION
AS A PERCENTAGE OF TOTAL VALUE OF
TOTAL LONG-TERM INVESTMENTS
(UNAUDITED)
Air Freight & Logistics 1.6%
Automobile Manufacturers 2.2
Brewers 4.1
Broadcasting & Cable TV 1.2
Casinos & Gaming 2.7
Distillers & Vintners 3.1
Diversified Banks 18.7
Diversified Capital Markets 1.3
Electric Utilities 4.1
Food Retail 8.9
Gas Utilities 4.7
Homebuilding 2.3
Household Products 1.5
Industrial Conglomerates 4.7
Integrated Oil & Gas 3.4
Marine 2.6
Movies & Entertainment 2.2
Packaged Foods & Meats 5.3
Personal Products 0.5
Pharmaceuticals 5.5
Property & Casualty Insurance 2.8
Real Estate Management & Development 2.0
Semiconductors 1.4
Specialized Consumer Services 1.2
Tobacco 10.4
Wireless Telecommunication Services 1.6
-----
100.0%
=====
See Notes to Financial Statements
13
Phoenix Foreign Opportunities Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2006
(UNAUDITED)
ASSETS
Investment securities at value
(Identified cost $207,320,419) $ 249,646,730
Cash 719,161
Receivables
Fund shares sold 835,850
Dividends 566,189
Tax reclaims 128,435
Investment securities sold 53,373
Unrealized appreciation on forward
currency contracts 896,352
Prepaid expenses 44,252
-------------
Total assets 252,890,342
-------------
LIABILITIES
Payables
Investment securities purchased 7,788,009
Fund shares repurchased 138,360
Investment advisory fee 167,273
Transfer agent fee 47,335
Distribution and service fees 48,527
Administration fee 15,183
Foreign capital gain taxes 1,566
Trustees' fee 291
Other accrued expenses 61,465
Unrealized depreciation on forward
currency contracts 891,412
-------------
Total liabilities 9,159,421
-------------
NET ASSETS $ 243,730,921
=============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial
interest $ 188,959,150
Undistributed net investment income 772,125
Accumulated net realized gain 11,627,438
Net unrealized appreciation 42,372,208
-------------
NET ASSETS $243,730,921
=============
CLASS A
Shares of beneficial interest outstanding,
$0.001 par value, unlimited authorization
(Net Assets $177,749,936) 7,736,169
Net asset value per share $22.98
Offering price per share $22.98/(1-5.75%) $24.38
CLASS C
Shares of beneficial interest outstanding,
$0.001 par value, unlimited authorization
(Net Assets $12,820,697) 560,846
Net asset value and offering price per share $22.86
CLASS X
Shares of beneficial interest outstanding,
$0.001 par value, unlimited authorization
(Net Assets $53,160,288) 2,313,220
Net asset value and offering price per share $22.98
STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 2006
(UNAUDITED)
INVESTMENT INCOME
Dividends $ 3,074,834
Interest 198,369
Foreign taxes withheld (257,483)
-------------
Total investment income 3,015,720
-------------
EXPENSES
Investment advisory fee 797,293
Service fees, Class A 188,187
Distribution and service fees, Class C 47,480
Financial agent fee 36,379
Administration fees 37,164
Transfer agent 118,794
Custodian 62,618
Printing 27,839
Registration 23,935
Trustees 19,791
Professional 16,514
Miscellaneous 3,930
-------------
Total expenses 1,379,924
Less expenses reimbursed by investment
adviser (122,108)
Custodian fees paid indirectly (2,380)
-------------
Net expenses 1,255,436
-------------
NET INVESTMENT INCOME (LOSS) 1,760,284
-------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) on investments 18,478,697
Net realized gain (loss) on foreign
currency transactions (1,281,533)
Net change in unrealized appreciation
(depreciation) on investments (2,070,646)
Net change in unrealized appreciation
(depreciation) on foreign currency
transactions and translation (100,877)
-------------
NET GAIN (LOSS) ON INVESTMENTS 15,025,641
-------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 16,785,925
=============
See Notes to Financial Statements
14
Phoenix Foreign Opportunities Fund
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
August 31, 2006 Year Ended
(Unaudited) February 28, 2006
--------------- -----------------
FROM OPERATIONS
Net investment income (loss) $ 1,760,284 $ 1,294,045
Net realized gain (loss) 17,197,164 10,027,567
Net change in unrealized appreciation (depreciation) (2,171,523) 9,995,840
------------ ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 16,785,925 21,317,452
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (476,059) (871,892)
Net investment income, Class C (21,324) (25,564)
Net investment income, Class X (167,677) --
Net investment income, Investor Class -- (399,218)
Net investment income, Class I -- (7,243)
Net realized short-term gains, Class A (800,360) (207,392)
Net realized short-term gains, Class C (56,216) (4,051)
Net realized short-term gains, Class X (249,367) --
Net realized short-term gains, Investor Class -- --
Net realized short-term gains, Class I -- --
Net realized long-term gains, Class A (1,021,149) (6,508,637)
Net realized long-term gains, Class C (71,724) (188,273)
Net realized long-term gains, Class X (318,157) --
Net realized long-term gains, Investor Class -- (442,517)
Net realized long-term gains, Class I -- (8,447)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (3,182,033) (8,663,234)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (2,019,827 and 2,318,218 shares, respectively) 44,591,319 46,486,488
Net asset value of shares issued from reinvestment of distributions
(107,124 and 360,787 shares, respectively) 2,236,753 7,217,681
Proceeds from shares issued in conjunction with Plan of Reorganization
(574,941 and 0 shares, respectively) (See Note 10) 12,673,037 --
Proceeds from shares issued in connection with reclassification from Investor
Class Shares (0 and 4,306,343 shares, respectively) (See Note 10) -- 80,965,935
Proceeds from shares issued in connection with reclassification from Class I
Shares (0 and 91,955 shares, respectively) (See Note 10) -- 1,721,837
Cost of shares repurchased (973,397 and 1,211,883 shares, respectively) (21,432,589) (24,121,399)
------------ ------------
Total 38,068,520 112,270,542
------------ ------------
CLASS C
Proceeds from sales of shares (231,924 and 285,073 shares, respectively) 5,081,956 5,795,380
Net asset value of shares issued from reinvestment of
distributions (6,867 and 4,622 shares, respectively) 142,840 92,407
Proceeds from shares issued in conjunction with Plan of Reorganization
(66,354 and 0 shares, respectively) (See Note 10) 1,457,044 --
Cost of shares repurchased (25,404 and 10,635 shares, respectively) (551,409) (215,081)
------------ ------------
Total 6,130,431 5,672,706
------------ ------------
CLASS X
Proceeds from sales of shares (266,750 and 0 shares, respectively) 5,799,341 --
Net asset value of shares issued from reinvestment of distributions
(20,403 and 0 shares, respectively) 425,804 --
Proceeds from shares issued in conjunction with Plan of Reorganization
(2,113,337 and 0 shares, respectively) (See Note 10) 46,590,175 --
Cost of shares repurchased (87,270 and 0 shares, respectively) (1,897,958) --
------------ ------------
Total 50,917,362 --
------------ ------------
INVESTOR CLASS
Proceeds from sales of shares (0 and 799,723 shares, respectively) -- 15,039,510
Net asset value of shares issued from reinvestment of distributions
(0 and 45,107 shares, respectively) -- 826,824
Cost of shares repurchased (0 and 1,493,484 shares, respectively) -- (27,521,385)
Value of shares liquidated in connection with reclassification
to Class A Shares (0 and 4,313,582 shares, respectively)(See Note 10) -- (80,965,935)
------------ ------------
Total -- (92,620,986)
------------ ------------
CLASS I
Proceeds from sales of shares (0 and 4,363 shares, respectively) -- 82,848
Net asset value of shares issued from reinvestment of distributions
(0 and 558 shares, respectively) -- 10,228
Cost of shares repurchased (0 and 970 shares, respectively) -- (17,920)
Value of shares liquidated in connection with reclassification to
Class A Shares (0 and 91,733 shares, respectively) (See Note 10) -- (1,721,837)
------------ ------------
Total -- (1,646,681)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 95,116,313 23,675,581
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 108,720,205 36,329,799
NET ASSETS
Beginning of period 135,010,716 98,680,917
------------ ------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME AND
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME OF $772,125
AND $(323,099), RESPECTIVELY) $243,730,921 $135,010,716
============ ============
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 FEBRUARY 28, JANUARY 1, 2004 TO YEAR ENDED DECEMBER 31,
AUGUST 31, 2006 ---------------------- FEBRUARY 29, ------------------------------
(UNAUDITED) 2006 2005 2004 2003 2002 2001
Net asset value, beginning of period $21.47 $19.02 $15.47 $14.84 $11.86 $12.88 $18.86
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.22(7) 0.17(7) 0.16 (0.03) 0.12 0.03 (0.10)
Net realized and unrealized gain (loss) 1.62 3.85 3.81 0.66 3.39 (1.05) (5.41)
------ ------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.84 4.02 3.97 0.63 3.51 (1.02) (5.51)
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.07) (0.22) (0.16) -- (0.06) -- (0.12)
Distributions from net realized gains (0.26) (1.35) (0.26) -- (0.43) -- (0.35)
Tax return of capital -- -- -- -- (0.06) -- --
------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.33) (1.57) (0.42) -- (0.55) -- (0.47)
------ ------ ------ ------ ------ ------ ------
Payment by affiliate(4) -- -- --(3) -- 0.02 -- --
------ ------ ------ ------ ------ ------ ------
Change in net asset value 1.51 2.45 3.55 0.63 2.98 (1.02) (5.98)
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $22.98 $21.47 $19.02 $15.47 $14.84 $11.86 $12.88
====== ====== ====== ====== ====== ====== ======
Total return(1) 8.74%(6) 21.82% 26.15%(4) 4.25%(6) 30.07% (7.92)% (29.22)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $177,753 $128,991 $2,714 $1,482 $1,473 $29,026 $44,356
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.34%(5) 1.25% 1.25% 1.25%(5) 2.87% 2.44 % 1.88 %(2)
Gross operating expenses 1.47%(5) 1.62% 2.10% 2.63%(5) 3.21% 2.44 % 1.89 %(2)
Net investment income (loss) 2.03%(5) 0.85% 1.50% 0.18%(5) 0.11% 0.18 % (0.38)%
Portfolio turnover 49%(6) 52% 32% 41%(5) 65% 98 % 92 %
CLASS C
----------------------------------------------------------------------------------------
SIX MONTHS FOR THE PERIOD FROM INCEPTION
ENDED YEAR ENDED FEBRUARY 28, JANUARY 1, 2004 TO OCTOBER 10, 2003 TO
AUGUST 31, 2006 ---------------------- FEBRUARY 29, DECEMBER 31,
(UNAUDITED) 2006 2005 2004 2003
Net asset value, beginning of period $21.41 $19.11 $15.55 $14.95 $13.91
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.13(7) (0.06)(7) 0.01 (0.06) 0.11
Net realized and unrealized gain (loss) 1.62 3.92 3.84 0.66 1.34
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.75 3.86 3.85 0.60 1.45
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.04) (0.21) (0.03) -- --
Distributions from net realized gains (0.26) (1.35) (0.26) -- (0.43)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.30) (1.56) (0.29) -- (0.43)
------ ------ ------ ------ ------
Payment by affiliate(4) -- -- --(3) -- 0.02
------ ------ ------ ------ ------
Change in net asset value 1.45 2.30 3.56 0.60 1.04
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $22.86 $21.41 $19.11 $15.55 $14.95
====== ====== ====== ====== ======
Total return(1) 8.35%(6) 20.96 % 25.21%(4) 4.01 %(6) 10.71 %(6)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $12,821 $6,019 $39 $12 $11
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 2.09%(5) 2.00 % 2.00% 2.00 %(5) 1.92 %(5)
Gross operating expenses 2.23%(5) 2.35 % 2.86%(5) 3.38%(5) 5.85%(5)
Net investment income (loss) 1.14%(5) (0.29)% 0.76% (1.05)%(5) (0.14)%(5)
Portfolio turnover 49%(6) 52 % 32% 41 %(5) 65 %(5)
(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.
(3) Amount is less than $0.01.
(4) Payment by affiliate. See Note 3 in the Notes to Financial Statements.
(5) Annualized.
(6) Not annualized.
(7) Computed using average shares outstanding.
See Notes to Financial Statements
16
Phoenix Foreign Opportunities Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS X
--------------------
FROM INCEPTION
MAY 15, 2006 TO
AUGUST 31, 2006
(UNAUDITED)
Net asset value, beginning of period $22.54
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) 0.09
Net realized and unrealized gain (loss) 0.69
------
TOTAL FROM INVESTMENT OPERATIONS 0.78
------
LESS DISTRIBUTIONS
Dividends from net investment income (0.08)
Distributions from net realized gains (0.26)
------
TOTAL DISTRIBUTIONS (0.34)
------
Change in net asset value 0.44
------
NET ASSET VALUE, END OF PERIOD $22.98
======
Total return 3.62%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $53,157
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.10%(2)
Gross operating expenses 1.22%(2)
Net investment income (loss) 1.35%(2)
Portfolio turnover 49%(3)
(1) Computed using average shares outstanding.
(2) Annualized.
(3) Not annualized.
See Notes to Financial Statements
17
PHOENIX ADVISER TRUST
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2006 (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"). The Phoenix
Focused Value Fund ("Focused Value Fund") is non-diversified and seeks long-term
capital appreciation. The Phoenix Foreign Opportunities Fund ("Foreign
Opportunities Fund") is diversified and seeks long-term capital appreciation.
Each Fund offers the following classes of shares for sale:
Class A Class C Class X
-------------- ------------ ------------
Focused Value Fund ............ X X --
Foreign Opportunities Fund .... X X X
Class A shares are sold with a front-end sales charge of up to 5.75%.
Generally, Class A shares are not subject to any charges by the funds when
redeemed; however, a 1% contingent deferred sales charge may be imposed on
certain redemptions within one year on purchases on which a finder's fee has
been paid. Class C shares are sold with a 1% contingent deferred sales charge if
redeemed within one year of purchase. Class X shares are sold without a sales
charge.
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, and 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.
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.
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes." This
standard defines the threshold for recognizing the benefits of tax-return
positions in the financial statements as "more-likely-than-not" to be sustained
by the taxing authority and requires measurement of a tax position meeting the
more-likely-than-not criterion, based on the largest benefit that is more than
50 percent likely to be realized. FIN 48 is effective as of the beginning of the
first fiscal year beginning after December 15, 2006 (January 1, 2007 for
18
PHOENIX ADVISER TRUST
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2006 (UNAUDITED) (CONTINUED)
calendar-year companies); with early application permitted if no interim
financial statements have been issued. At adoption, companies must adjust their
financial statements to reflect only those tax positions that are more
likely-than-not to be sustained as of the adoption date. As of August 31, 2006,
the Funds have not completed their evaluation of the impact that will result
from adopting FIN 48.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are 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.
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 either changes in exchange
rates or 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, 2006, the Foreign
Opportunities Fund had entered into forward currency contracts as follows:
Net
Unrealized
Contract In Exchange Settlement Appreciation
to Sell for Date Value (Depreciation)
- ------------------ ----------------- --------- ----------- --------------
CHF 13,810,000 USD 11,528,605 12/11/06 $11,336,668 $191,937
JPY 465,400,000 USD 4,210,812 12/11/06 4,020,786 190,026
EUR 11,915,000 USD 15,426,113 12/11/06 15,354,188 71,925
JPY 424,800,000 USD 3,713,027 2/28/07 3,709,443 3,584
ZAR 28,650,320 USD 3,818,542 5/29/07 3,448,653 369,889
KOR 3,792,000,000 USD 4,034,043 6/11/07 3,976,969 57,074
KOR 1,658,000,000 USD 1,750,792 6/11/07 1,738,875 11,917
AUD 1,800,000 USD 1,351,890 12/11/06 1,371,413 (19,523)
AUD 7,500,000 USD 5,667,225 12/11/06 5,714,222 (46,997)
AUD 4,900,000 USD 3,625,902 12/11/06 3,733,292 (107,390)
GBP 7,200,000 USD 13,294,189 12/12/06 13,727,184 (432,995)
EUR 6,400,000 USD 8,251,072 2/28/07 8,278,588 (27,516)
CHF 6,470,000 USD 5,322,737 2/28/07 5,350,911 (28,174)
MXP 28,719,145 USD 2,485,000 6/1/07 2,590,424 (105,424)
MXP 29,805,300 USD 2,565,000 6/1/07 2,688,393 (123,393)
--------
$ 4,940
========
AUD Australian Dollar KOR South Korean Won
CHF Swiss Francs MXP Mexican Peso
EUR Euro USD United States Dollar
GBP Pound Sterling ZAR South African Rand
JPY Japanese Yen
19
PHOENIX ADVISER TRUST
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2006 (UNAUDITED) (CONTINUED)
I. REIT INVESTMENTS:
Dividend income is recorded using management's estimate of the income
included in distributions received from the REIT investments. Distributions
received in excess of this estimated amount are recorded as a reduction of the
cost of investments or reclassified to capital gains. The actual amounts of
income, return of capital, and capital gains are only determined by each REIT
after its fiscal year-end, and may differ from the estimated amounts.
3. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, 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 ................................ 0.75%
Foreign Opportunities Fund ........................ 0.85%
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
rates as a percentage of the average daily net assets of each Fund:
First Over
$50 million $50 million
--------------- ---------------
Focused Value Fund ................. 0.70% 0.375%
Foreign Opportunities Fund ......... 0.80% 0.425%
Effective April 1, 2006, the Adviser has contractually agreed to limit total
fund operating expenses, (excluding interest, taxes, and extraordinary
expenses), through June 30, 2008, so that such expenses do not exceed the
following percentages of the average annual net asset values of each Fund:
Class A Class C Class X
-------------- ------------ ------------
Focused Value Fund ............ 1.25% 2.00% --
Foreign Opportunities Fund .... 1.35% 2.10% 1.10%
For the period June 20, 2005 through March 31, 2006, the Adviser had
contractually agreed to limit operating expenses as follows:
Class A Class C
-------------- ------------
Focused Value Fund ............ 1.15% 1.90%
Foreign Opportunities Fund .... 1.25% 2.00%
The Adviser will not seek to recapture any reimbursed expenses under this
agreement.
As distributor of each Fund's shares, Phoenix Equity Planning Corporation
("PEPCO") an indirect wholly-owned subsidiary of PNX, has advised the Funds that
it retained net selling commissions and deferred sales charges for the
six-months (the "period") ended August 31, 2006, as follows:
Class A Class C
Net Selling Deferred
Commissions Sales Charges
------------ -------------
Focused Value Fund ............ $ 176 $ 261
Foreign Opportunities Fund .... 24,821 5,276
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. Class X shares do not pay
distribution and/or service fees.
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.
Effective July 1, 2006, PEPCO serves as the Administrator to the Trust. For
its services, PEPCO receives an administration fee at an annual rate of 0.09% of
the first $5 billion, 0.08% on the next $10 billion and 0.07% over $15 billion
of the average net assets across all non-money market Phoenix Funds within the
Phoenix Funds Complex. For the money market Funds, the fee is 0.035% of the
average net assets across all Phoenix money market Funds within the Phoenix
Funds Complex.
Until June 30, 2006, PEPCO served as Financial Agent to the Trust. PEPCO
received a financial agent fee equal to the sum of (1) the documented cost to
PEPCO to provide oversight of the performance of PFPC Inc. (subagent to PEPCO),
plus (2) the documented cost of fund accounting, tax services and related
services provided by PFPC Inc. For the period ended August 31, 2006, the Trust
incurred administration and/or financial agent fees totaling $99,341.
PEPCO serves as the Trust's transfer agent with Boston Financial Data
Services, Inc. serving as sub transfer agent. For the period ended August 31,
2006, transfer agent fees were $166,701 as reported in the Statements of
Operations, of which PEPCO retained the following:
Transfer
Agent
Retained
-----------
Focused Value Fund ......................... $16,150
Foreign Opportunities Fund ................. 42,699
20
PHOENIX ADVISER TRUST
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2006 (UNAUDITED) (CONTINUED)
At August 31, 2006, PNX and its affiliates, the retirement plans of PNX and
its affiliates, and Phoenix affiliated Funds held shares, which aggregated the
following:
Aggregate
Net Asset
Shares Value
------------ --------------
Foreign Opportunities Fund
Class A ....................... 515,606 $11,848,626
Class C ....................... 2,689 61,471
Class X ....................... 689 15,833
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. The effect of this activity would have reduced total
return by less than 0.01% for the Foreign Opportunities Fund and had no impact
on the Focused Value Fund.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding U.S. Government and agency
securities, short-term securities and forward currency contracts) during the
period ended August 31, 2006, were as follows:
Purchases Sales
------------ --------------
Focused Value Fund ............... $ 9,926,066 $12,936,446
Foreign Opportunities Fund ....... 116,560,013 86,892,164
There were no purchases or sales of long-term U.S. Government and agency
securities.
5. 10% SHAREHOLDERS
As of August 31, 2006, the Funds had individual shareholder accounts 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 of the fund as detailed below:
% of Shares Number of
Outstanding Accounts
-------------- ----------
Focused Value Fund ............... 39% 2
Foreign Opportunities Fund ....... 21 1
The shareholders are not affiliated with PNX.
6. CREDIT RISK AND ASSET CONCENTRATIONS
The 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.
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.
At August 31, 2006, the Focused Value Fund held securities issued by various
companies in the financial sector comprising 42% of the 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. During 2004 and 2005, the
Boston District Office of the Securities and Exchange Commission ("SEC")
conducted an examination of the Company's investment company and investment
adviser affiliates. Following the examination, the staff of the Boston District
Office issued a deficiency letter noting perceived weaknesses in procedures for
monitoring trading to prevent market timing activity prior to 2004. 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. In 2005, based on the third party analysis the Company notified the
staff at the SEC Boston District Office that reimbursements were not appropriate
under the circumstances. The Company does not believe that the outcome of this
matter will be material to these financial statements.
8. INDEMNIFICATIONS
Under the Funds' organizational documents, their 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.
21
PHOENIX ADVISER TRUST
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2006 (UNAUDITED) (CONTINUED)
9. FEDERAL INCOME TAX INFORMATION
The Funds have capital loss carryovers, which may be used to offset future
capital gains:
Expiration Year
------------------------------------------
2009 2010 Total
---------- ----------- ------------
Foreign Opportunities Fund(1) .... $3,897,457 $1,299,153 $5,196,610
(1)Utilization of this capital loss carryover is subject to annual
limitations.
The Fund may not realize the benefit of these losses to the extent the Fund
does not realize gains on investments prior to the expiration of the capital
loss carryovers.
10. MERGER AND FUND INTEGRATION
On May 22, 2006, the Foreign Opportunities Fund acquired all of the net
assets of the Phoenix Overseas Fund ("Overseas Fund") of the Phoenix Asset Trust
pursuant to an Agreement and Plan of Reorganization approved by the Overseas
Fund's Board of Trustees on February 16, 2006. The acquisition was accomplished
by a tax-free exchange of 2,113,337 Class X shares, 574,941 Class A shares, and
66,354 Class C shares of the Foreign Opportunities Fund outstanding on May 19,
2006 (valued at $46,590,175, $12,673,037 and $1,457,044, respectively) for
3,026,931 Class X shares, 788,867 Class A shares, 38,630 Class B shares and
95,679 Class C shares of the Overseas Fund outstanding on May 19, 2006. The
Overseas Fund had net assets on that date of $60,720,256 including $17,640,290
of net appreciation, which were combined with those of the Foreign Opportunities
Fund. The aggregate net assets of Foreign Opportunities Fund immediately after
the merger were $208,971,708. The shareholders of each Class of the Overseas
Fund received for each share owned approximately 0.70, 0.69 and 0.69 shares,
respectively, for Class X, Class A, and Class C shares of the same class of the
Foreign Opportunities Fund. At the time of the merger all Class B shares of the
Overseas Fund were converted to Class A shares. As a result each Class B
shareholder of Overseas Fund received 0.69 of Class A shares of the Foreign
Opportunities Fund.
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.
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 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.
22
PHOENIX ADVISER TRUST
101 Munson Street
Greenfield, MA 01301-9688
TRUSTEES
E. Virgil Conway
Harry Dalzell-Payne
Daniel T. Geraci
Francis E. Jeffries
Leroy Keith, Jr.
Marilyn E. LaMarche
Philip R. McLoughlin, Chairman
Geraldine M. McNamara
James M. Oates
Richard E. Segerson
Ferdinand L. J. Verdonck
OFFICERS
Daniel T. Geraci, President
George R. Aylward, Executive Vice President
Nancy G. Curtiss, Senior Vice President
Francis G. Waltman, Senior Vice President
Marc Baltuch, Vice President and Chief Compliance Officer
W. Patrick Bradley, 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 06103-2899
TRANSFER AGENT
Phoenix Equity Planning Corporation
One American Row
Hartford, CT 06103-2899
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 5501
Boston, MA 02206-5501
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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PRESORTED
STANDARD
U.S. POSTAGE
PAID
Louisville, KY
Permit No. 1051
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[LOGO 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 10-06
BPD27504
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.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of trustees, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
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) There were no 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 registrant's 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.
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
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By (Signature and Title)* /s/ George R. Aylward
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George R. Aylward, Executive Vice President
(principal executive officer)
Date November 7, 2006
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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
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George R. Aylward, Executive Vice President
(principal executive officer)
Date November 7, 2006
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By (Signature and Title)* /s/ W. Patrick Bradley
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W. Patrick Bradley, Chief Financial Officer
and Treasurer
(principal financial officer)
Date November 7, 2006
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* Print the name and title of each signing officer under his or her signature.