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 811-08343
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Phoenix Investment Trust 97
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(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: August 31
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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.
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AUGUST 31, 2006
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ANNUAL REPORT
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[GRAPHIC OMITTED] PHOENIX QUALITY SMALL-CAP FUND
[GRAPHIC OMITTED] PHOENIX SMALL-CAP SUSTAINABLE GROWTH FUND
[GRAPHIC OMITTED] PHOENIX SMALL-CAP VALUE FUND
[GRAPHIC OMITTED] PHOENIX VALUE EQUITY FUND
TRUST NAME:
PHOENIX INVESTMENT TRUST 97
[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 Investment Trust 97 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:
[PHOTO OMITTED]
The enclosed annual report addresses the performance of your Phoenix
mutual fund for the fiscal year ended August 31, 2006. The report also provides
a commentary from your fund's management team on how the fund performed, the
investment strategies used, and how the fund's results compared to the broader
market.
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 Quality Small-Cap Fund............................................ 4
Phoenix Small-Cap Sustainable Growth Fund................................. 14
Phoenix Small-Cap Value Fund.............................................. 24
Phoenix Value Equity Fund................................................. 37
Notes to Financial Statements............................................. 47
Report of Independent Registered Public Accounting Firm................... 53
Board of Trustees' Consideration of Investment Advisory and
Subadvisory Agreements.................................................. 54
Fund Management Tables.................................................... 56
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PROXY VOTING INFORMATION (FORM N-PX)
The Adviser and subadvisers 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
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.
REITS (REAL ESTATE INVESTMENT TRUSTS)
Real estate investment trusts are typically publicly traded companies that own,
develop and operate income producing real estate such as apartments, office
buildings, hotels, shopping centers and other commercial properties.
RUSSELL 2000(R) GROWTH INDEX
The Russell 2000(R) Growth Index is a market capitalization-weighted index of
growth-oriented stocks of the smallest 2,000 companies in the Russell Universe,
which comprises the 3,000 largest U.S. companies. The index is calculated on a
total return basis with dividends reinvested.
RUSSELL 1000(R) VALUE INDEX
The Russell 1000(R) Value Index is a market capitalization-weighted index of
value-oriented stocks of the 1,000 largest companies in the Russell Universe,
which comprises the 3,000 largest U.S. companies. The index is calculated on a
total return basis with dividends reinvested.
RUSSELL 2000(R) VALUE INDEX
The Russell 2000(R) Value Index is a market capitalization-weighted index of
value-oriented stocks of the smallest 2,000 companies in the Russell Universe,
which comprises the 3,000 largest U.S. companies. The index is calculated on a
total return basis with dividends reinvested.
S&P 500(R) INDEX
The S&P 500(R) Index is a free-float market capitalization-weighted index of 500
of the largest U.S. companies. The index is calculated on a total return basis
with dividends reinvested.
INDEXES ARE UNMANAGED AND NOT AVAILABLE FOR DIRECT INVESTMENT; THEREFORE THEIR
PERFORMANCE DOES NOT REFLECT THE EXPENSES ASSOCIATED WITH THE ACTIVE MANAGEMENT
OF AN ACTUAL PORTFOLIO.
3
PHOENIX QUALITY SMALL-CAP FUND
A DISCUSSION WITH THE FUND'S MANAGEMENT TEAM OF SANDI GLEASON, CFA AND
ROBERT SCHWARZKOPF, CFA
Q: HOW DID THE PHOENIX QUALITY SMALL-CAP FUND PERFORM FOR ITS FISCAL YEAR ENDED
AUGUST 31, 2006?
A: From the Phoenix Quality Small-Cap Fund's inception date of June 28, 2006,
through August 31, 2006, the Fund's Class A shares returned 0.50%, Class C
shares returned 0.40% and Class X shares returned 0.60%. For the same period,
the S&P 500(R) Index, a broad-based equity index, returned 5.02%, and the
Russell 2000(R) Value Index, the Fund's style-specific index appropriate for
comparison, returned 6.66%. All performance figures assume reinvestment of
distributions and exclude the effect of sales charges. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN
THE PERFORMANCE SHOWN ABOVE.
Q: HOW DID THE EQUITY MARKETS PERFORM DURING THE FUND'S FISCAL YEAR?
A: Throughout the Phoenix Quality Small-Cap Fund's brief fiscal year, the equity
markets were quite volatile. The day after the Fund's inception date, the
Federal Reserve (the "Fed") signaled an upcoming pause in short-term interest
rate hikes after 17 consecutive rate increases. Consequently, stock prices
rallied sharply. In July, the stock market produced flat to negative returns, as
investors sought high-quality companies to alleviate the effects of inflation
risk, soaring energy prices and slowing corporate earnings growth. After two
years of interest rate increases, the Fed left rates unchanged in August,
spurring positive returns in the equity markets and a recovery for low-quality
stocks.
For the Fund's fiscal year, the best-performing sectors included health
care and utilities. In a slowing economy, health care, which is a classic
defensive sector, performed strongly, while record-high temperatures across the
country in July stimulated public utility demand to all-time record levels.
Conversely, transportation and consumer discretionary were among the
worst-performing sectors, as consumers struggled with higher energy prices.
Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR?
A: As is typical during short periods of performance, the Phoenix Quality
Small-Cap Fund's underperformance was amplified by short-term events in the
stock market. First, the Russell 2000 Value Index gained over three percent on
the same day we made purchases for the Fund, which increased our cost basis.
Secondly, low-quality stocks prevailed during the Fund's fiscal year, negatively
impacting our high-quality focus. Namely, our overweight position in stocks
ranked by S&P as "A-" and above reduced our relative performance, as the Russell
2000 Value's overweight position in stocks ranked "B" to "D" by S&P
outperformed. In addition, our overweight position in companies with high return
on equity hampered our relative performance, as companies with little to no
return on equity were the clear winners.
SEPTEMBER 2006
THE PRECEDING INFORMATION IS THE OPINION OF PORTFOLIO MANAGEMENT. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE IS NO GUARANTEE THAT
MARKET FORECASTS WILL BE REALIZED.
FOR DEFINITIONS OF THE INDEXES CITED AND CERTAIN INVESTMENT TERMS USED IN THIS
REPORT, SEE THE GLOSSARY ON PAGE 3.
4
Phoenix Quality Small-Cap Fund
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AVERAGE ANNUAL TOTAL RETURNS 1 PERIOD ENDING 8/31/06
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INCEPTION INCEPTION
TO 8/31/06 DATE
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Class X Shares at NAV 0.60% 6/28/06
Class A Shares at NAV 2 0.50 6/28/06
Class A Shares at POP 3 (5.28) 6/28/06
Class C Shares at NAV 2 0.40 6/28/06
Class C Shares with CDSC 4 (0.60) 6/28/06
S&P 500(R) Index 5.02 6/28/06
Russell 2000(R) Value Index 6.66 6/28/06
ALL RETURNS REPRESENT PAST PERFORMANCE WHICH IS NO GUARANTEE OF FUTURE RESULTS.
CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE SHOWN. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. THE ABOVE TABLE DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER
WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. PLEASE VISIT
PHOENIXFUNDS.COM FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END.
1 TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE AND THE
REINVESTMENT OF BOTH DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS.
2 "NAV" (NET ASSET VALUE) TOTAL RETURNS DO NOT INCLUDE THE EFFECT OF ANY SALES
CHARGE.
3 "POP" (PUBLIC OFFERING PRICE) TOTAL RETURNS INCLUDE THE EFFECT OF THE MAXIMUM
FRONT-END 5.75% SALES CHARGE.
4 CDSC (CONTINGENT DEFERRED SALES CHARGE) IS APPLIED TO REDEMPTIONS OF CLASS C
SHARES THAT DO NOT HAVE A SALES CHARGE APPLIED AT THE TIME OF PURCHASE. CDSC
CHARGES FOR C SHARES ARE 1% IN THE FIRST YEAR AND 0% THEREAFTER.
For information regarding the indexes, see the glossary on page 3.
5
PHOENIX QUALITY SMALL-CAP FUND
ABOUT YOUR FUND'S EXPENSES
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
Quality Small-Cap 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. The first two lines of these examples are based on an
investment of $1,000 invested on inception date and held to August 31, 2006. The
third lines of these examples are based on an investment of $1,000 invested on
February 28, 2006 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 since inception of the fund. 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
(since inception date)
The first hypothetical example 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 fund to
August 31, 2006.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
(for entire six-month period)
The second hypothetical example 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 February 28, 2006, to
August 31, 2006. You may use the information in this hypothetical examples 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.
Therefore, this hypothetical example 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. If you have incurred transactional costs, your
costs could 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.
Quality Beginning Ending Expenses Paid
Small-Cap Fund Account Value Account Value During
Class X June 28, 2006 August 31, 2006 Period*
- ------------------------ ------------- --------------- -------------
Actual $1,000.00 $1,006.00 $2.02
Hypothetical (5% return
before expenses, since
inception) 1,000.00 1,006.78 2.02
Beginning
Account Value
February 28, 2006
-----------------
Hypothetical (5% return
before expenses,
six-month period) $1,000.00 1,019.43 5.87
* EXPENSES ARE EQUAL TO THE FUND'S CLASS X ANNUALIZED EXPENSE RATIO OF 1.15%
WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE. FOR THE
ACTUAL AND HYPOTHETICAL EXAMPLE FROM INCEPTION DATE, THE EXPENSE RATIO IS
MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE
NUMBER OF DAYS (64) EXPENSES WERE 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 PERIOD FROM
INCEPTION, MULTIPLIED BY THE NUMBER OF DAYS (184) IN THE MOST RECENT FISCAL
HALF YEAR, THEN DIVIDED BY 365 TO REFLECT THE ONE HALF YEAR PERIOD.
6
Phoenix Quality Small-Cap Fund
ABOUT YOUR FUND'S EXPENSES (con't.)
Quality Beginning Ending Expenses Paid
Small-Cap Fund Account Value Account Value During
Class A June 28, 2006 August 31, 2006 Period*
- ------------------------ ------------- --------------- -------------
Actual $1,000.00 $1,005.00 $2.46
Hypothetical (5% return
before expenses, since
inception) 1,000.00 1,006.34 2.46
Beginning
Account Value
February 28, 2006
-----------------
Hypothetical (5% return
before expenses,
six-month period) $1,000.00 1,018.17 7.13
* EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 1.40%
WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE. FOR THE
ACTUAL AND HYPOTHETICAL EXAMPLE FROM INCEPTION DATE, THE EXPENSE RATIO IS
MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE
NUMBER OF DAYS (64) EXPENSES WERE 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 PERIOD FROM
INCEPTION, MULTIPLIED BY THE NUMBER OF DAYS (184) IN THE MOST RECENT FISCAL
HALF YEAR, THEN DIVIDED BY 365 TO REFLECT THE ONE HALF YEAR PERIOD.
Quality Beginning Ending Expenses Paid
Small-Cap Fund Account Value Account Value During
Class C June 28, 2006 August 31, 2006 Period*
- ------------------------ ------------- --------------- -------------
Actual $1,000.00 $1,004.00 $3.78
Hypothetical (5% return
before expenses, since
inception) 1,000.00 1,005.01 3.79
Beginning
Account Value
February 28, 2006
-----------------
Hypothetical (5% return
before expenses,
six-month period) $1,000.00 1,014.32 10.98
* EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 2.15%
WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE. FOR THE
ACTUAL AND HYPOTHETICAL EXAMPLE FROM INCEPTION DATE, THE EXPENSE RATIO IS
MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE
NUMBER OF DAYS (64) EXPENSES WERE 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 PERIOD FROM
INCEPTION, MULTIPLIED BY THE NUMBER OF DAYS (184) 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.
7
Phoenix Quality Small-Cap Fund
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SECTOR WEIGHTINGS 8/31/06
- --------------------------------------------------------------------------------
As a percentage of total investments
[CHART OMITTED - EDGAR REPRESENTATION OF DATA FOLLOWS]
Financials 25%
Industrials 22
Information Technology 14
Consumer Discretionary 13
Energy 9
Health Care 6
Materials 3
Other 8
SCHEDULE OF INVESTMENTS
AUGUST 31, 2006
SHARES VALUE
------ ----------
DOMESTIC COMMON STOCKS--87.5%
APPAREL, ACCESSORIES & LUXURY GOODS--3.5%
Cherokee, Inc. ....................................... 1,250 $ 46,025
APPLICATION SOFTWARE--2.6%
Reynolds & Reynolds Co. (The) Class A ................ 880 33,757
ASSET MANAGEMENT & CUSTODY BANKS--8.5%
American Capital Strategies Ltd. ..................... 1,500 58,095
MCG Capital Corp. .................................... 3,345 53,654
----------
111,749
----------
COMMUNICATIONS EQUIPMENT--4.4%
Inter-Tel, Inc. ...................................... 2,632 58,009
DATA PROCESSING & OUTSOURCED SERVICES--3.9%
Syntel, Inc. ......................................... 2,355 51,598
DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES--3.6%
McGrath RentCorp ..................................... 2,055 46,854
ENVIRONMENTAL & FACILITIES SERVICES--4.5%
ABM Industries, Inc. ................................. 3,265 58,737
HEALTH CARE EQUIPMENT--2.3%
Young Innovations, Inc. .............................. 830 30,146
HEALTH CARE SERVICES--3.1%
Landauer, Inc. ....................................... 850 40,732
HOME FURNISHINGS--4.3%
Tempur-Pedic International, Inc.(b) .................. 3,530 56,657
SHARES VALUE
------ ----------
INDUSTRIAL MACHINERY--8.5%
CLARCOR, Inc. ........................................ 1,940 $ 58,103
Lincoln Electric Holdings, Inc. ...................... 960 52,829
----------
110,932
----------
INSURANCE BROKERS--4.0%
National Financial Partners Corp. .................... 1,410 51,916
INTERNET SOFTWARE & SERVICES--2.3%
Computer Service, Inc. ............................... 985 29,550
OIL & GAS REFINING & MARKETING--4.6%
World Fuel Services Corp. ............................ 1,675 60,367
OIL & GAS STORAGE & TRANSPORTATION--4.2%
Crosstex Energy, Inc. ................................ 595 54,859
REGIONAL BANKS--4.6%
Cathay General Bancorp ............................... 1,615 60,223
SPECIALIZED CONSUMER SERVICES--4.5%
Matthews International Corp. Class A ................. 1,650 58,740
SPECIALIZED REIT'S--4.4%
Entertainment Properties Trust ....................... 1,140 56,840
SPECIALTY CHEMICALS--2.9%
Balchem Corp. ........................................ 1,925 38,327
THRIFTS & MORTGAGE FINANCE--2.3%
Washington Federal, Inc. ............................. 1,360 30,219
See Notes to Financial Statements
8
Phoenix Quality Small-Cap Fund
SHARES VALUE
------ ----------
TRUCKING--4.5%
Landstar System, Inc. ................................ 1,390 $ 59,353
- --------------------------------------------------------------------------------
TOTAL DOMESTIC COMMON STOCKS
(IDENTIFIED COST $1,135,906) 1,145,590
- --------------------------------------------------------------------------------
TOTAL LONG TERM INVESTMENTS--87.5%
(IDENTIFIED COST $1,135,906) 1,145,590
- --------------------------------------------------------------------------------
PAR VALUE
(000)
---------
SHORT-TERM INVESTMENTS--8.3%
REPURCHASE AGREEMENTS--8.3%
State Street Bank and Trust Co. repurchase
agreement 1.50% dated 8/31/06,
due 9/1/06 repurchase price $108,005,
collateralized by U.S. Treasury Bond
6.25%, 8/15/23 market value $114,616 ................. $108 108,000
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $108,000) 108,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--95.8%
(IDENTIFIED COST $1,243,906) 1,253,590(a)
Other assets and liabilities, net--4.2% 55,207
----------
NET ASSETS--100.0% $1,308,797
==========
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $41,212 and gross
depreciation of $31,607 for federal income tax purposes. At August 31, 2006,
the aggregate cost of securities for federal income tax purposes was
$1,243,985.
(b) Non-income producing.
See Notes to Financial Statements
9
Phoenix Quality Small-Cap Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2006
ASSETS
Investment securities at value
(Identified cost $1,243,906) $1,253,590
Cash 603
Receivables
Receivable from adviser 14,766
Fund shares sold 10,000
Dividends and interest 5,198
Prepaid expenses 43,127
----------
Total assets 1,327,284
----------
LIABILITIES
Payables
Professional fee 16,501
Custodian fee 1,603
Distribution and service fees 138
Transfer agent fee 81
Administration fee 33
Trustees' fee 5
Other accrued expenses 126
----------
Total liabilities 18,487
----------
NET ASSETS $1,308,797
==========
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $1,295,881
Undistributed net investment income 4,248
Accumulated net realized loss (1,016)
Net unrealized appreciation 9,684
----------
NET ASSETS $1,308,797
==========
CLASS X
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $1,069,924) 106,382
Net asset value and offering price per share $10.06
CLASS A
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $100,524) 10,000
Net asset value per share $10.05
Offering price per share $10.05 /(1-5.75%) $10.66
CLASS C
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $138,349) 13,780
Net asset value and offering price per share $10.04
STATEMENT OF OPERATIONS
FROM INCEPTION JUNE 28, 2006 TO
AUGUST 31, 2006
INVESTMENT INCOME
Dividends $ 5,722
Interest 307
--------
Total investment income 6,029
--------
EXPENSES
Investment advisory fee 1,196
Service fees, Class A 44
Distribution and service fees, Class C 209
Administration fee 87
Professional 18,351
Transfer agent 4,599
Registration 2,765
Custodian 1,918
Printing 123
Trustees 5
Miscellaneous 1,079
--------
Total expenses 30,376
Less expenses reimbursed by investment adviser (28,418)
Custodian fees paid indirectly (177)
--------
Net expenses 1,781
--------
NET INVESTMENT INCOME (LOSS) 4,248
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments (1,016)
Net change in unrealized appreciation (depreciation)
on investments 9,684
--------
NET GAIN (LOSS) ON INVESTMENTS 8,668
--------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 12,916
========
See Notes to Financial Statements
10
Phoenix Quality Small-Cap Fund
STATEMENT OF CHANGES IN NET ASSETS
From Inception
June 28, 2006 to
August 31, 2006
----------------
FROM OPERATIONS
Net investment income (loss) $ 4,248
Net realized gain (loss) (1,016)
Net change in unrealized appreciation (depreciation) 9,684
----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 12,916
----------
FROM SHARE TRANSACTIONS
CLASS X
Proceeds from sales of shares (106,382 shares) 1,057,881
----------
Total 1,057,881
----------
CLASS A
Proceeds from sales of shares (10,000 shares) 100,000
----------
Total 100,000
----------
CLASS C
Proceeds from sales of shares (13,780 shares) 138,000
----------
Total 138,000
----------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 1,295,881
----------
NET INCREASE (DECREASE) IN NET ASSETS 1,308,797
NET ASSETS
Beginning of period --
----------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $4,248) $1,308,797
==========
See Notes to Financial Statements
11
Phoenix Quality Small-Cap Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS X
------------------
FROM INCEPTION
JUNE 28, 2006
TO AUGUST 31, 2006
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) 0.07
Net realized and unrealized gain (loss) (0.01)
------
TOTAL FROM INVESTMENT OPERATIONS 0.06
------
Change in net asset value 0.06
------
NET ASSET VALUE, END OF PERIOD $10.06
======
Total return 0.60%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $1,070
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.15%(3)
Gross operating expenses 21.32%(3)
Net investment income (loss) 3.85%(3)
Portfolio turnover 7%(4)
CLASS A
------------------
FROM INCEPTION
JUNE 28, 2006
TO AUGUST 31, 2006
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) 0.03
Net realized and unrealized gain (loss) 0.02
------
TOTAL FROM INVESTMENT OPERATIONS 0.05
------
Change in net asset value 0.05
------
NET ASSET VALUE, END OF PERIOD $10.05
======
Total return(2) 0.50%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $101
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.40%(3)
Gross operating expenses 26,39%(3)
Net investment income (loss) 1.82%(3)
Portfolio turnover 7%(4)
(1) Computed using average shares outstanding.
(2) Sales charges are not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
See Notes to Financial Statements
12
Phoenix Quality Small-Cap Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS C
------------------
FROM INCEPTION
JUNE 28, 2006
TO AUGUST 31, 2006
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) 0.02
Net realized and unrealized gain (loss) 0.02
------
TOTAL FROM INVESTMENT OPERATIONS 0.04
------
Change in net asset value 0.04
------
NET ASSET VALUE, END OF PERIOD $10.04
======
Total return(2) 0.40%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $138
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 2.15%(3)
Gross operating expenses 25.96%(3)
Net investment income (loss) 1.38%(3)
Portfolio turnover 7%(4)
(1) Computed using average shares outstanding.
(2) Sales charges are not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
See Notes to Financial Statements
13
PHOENIX SMALL-CAP SUSTAINABLE GROWTH FUND
A DISCUSSION WITH THE FUND'S MANAGEMENT TEAM OF SANDI GLEASON, CFA AND
ROBERT SCHWARZKOPF, CFA
Q: HOW DID THE PHOENIX SMALL-CAP SUSTAINABLE GROWTH FUND PERFORM FOR ITS FISCAL
YEAR ENDED AUGUST 31, 2006?
A: From the Phoenix Small-Cap Sustainable Growth Fund's inception date of June
28, 2006, through August 31, 2006, the Fund's Class A shares returned -2.10%,
Class C shares returned -2.20% and Class X shares returned -2.10%. For the same
period, the S&P 500(R) Index, a broad-based equity index, returned 5.02%, and
the Russell 2000(R) Growth Index, the Fund's style-specific index appropriate
for comparison, returned 3.10%. All performance figures assume reinvestment of
distributions and exclude the effect of sales charges. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN
THE PERFORMANCE SHOWN ABOVE.
Q: HOW DID THE EQUITY MARKETS PERFORM DURING THE FUND'S FISCAL YEAR?
A: Throughout the Phoenix Small-Cap Sustainable Growth Fund's brief fiscal year,
the equity markets were extremely volatile. The day after the Fund's inception,
the Federal Reserve (the "Fed") signaled an upcoming pause in short-term
interest rate hikes after 17 consecutive rate increases, rallying stock prices
sharply. In July, the stock market produced flat to negative returns, as
investors sought high-quality companies as a refuge from inflation risk, soaring
energy prices and slowing corporate earnings growth. After two years of interest
rate increases, the Fed left rates unchanged in August, spurring positive
returns in the equity markets and a recovery for low-quality stocks.
For the Fund's fiscal year, the best-performing sectors were health care
and utilities. In a slowing economy, health care -- a classic defensive sector
- -- performed strongly, while record-high temperatures across the country in July
sent public utility demand to all-time record levels. By contrast,
transportation and consumer discretionary were among the worst-performing
sectors, as consumers contended with higher energy prices.
Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR?
A: As is typical during short periods of performance, the Phoenix Small-Cap
Sustainable Growth Fund's underperformance was exacerbated by short-term events
in the stock market. First, the Russell 2000 Growth Index gained over three
percent on the day we made purchases for the Fund, which raised our cost basis.
Secondly, low-quality stocks prevailed during the Fund's fiscal year, which
detracted from the Fund's performance, due to our high-quality focus.
Specifically, our overweight position in stocks ranked by the S&P 500 Index as
"A-" and above reduced our relative performance, as the Russell 2000 Growth's
overweight position in stocks ranked "B" to "D" by S&P outperformed. Similarly,
our overweight positions in companies with little to no debt and high return on
equity hurt the Fund's relative performance, as highly indebted and unprofitable
companies outperformed.
SEPTEMBER 2006
THE PRECEDING INFORMATION IS THE OPINION OF PORTFOLIO MANAGEMENT. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE IS NO GUARANTEE THAT
MARKET FORECASTS WILL BE REALIZED.
FOR DEFINITIONS OF THE INDEXES CITED AND CERTAIN INVESTMENT TERMS USED IN THIS
REPORT, SEE THE GLOSSARY ON PAGE 3.
14
Phoenix Small-Cap Sustainable Growth Fund
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS 1 PERIOD ENDING 8/31/06
- --------------------------------------------------------------------------------
INCEPTION INCEPTION
TO 8/31/06 DATE
---------- ---------
Class X Shares at NAV (2.10) 6/28/06
Class A Shares at NAV 2 (2.10) 6/28/06
Class A Shares at POP 3 (7.73) 6/28/06
Class C Shares at NAV 2 (2.20) 6/28/06
Class C Shares with CDSC 4 (3.18) 6/28/06
S&P 500(R) Index 5.02 6/28/06
Russell 2000(R) Growth Index 3.10 6/28/06
ALL RETURNS REPRESENT PAST PERFORMANCE WHICH IS NO GUARANTEE OF FUTURE RESULTS.
CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE SHOWN. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. THE ABOVE TABLE DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER
WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. PLEASE VISIT
PHOENIXFUNDS.COM FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END.
1 TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE AND THE
REINVESTMENT OF BOTH DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS.
2 "NAV" (NET ASSET VALUE) TOTAL RETURNS DO NOT INCLUDE THE EFFECT OF ANY SALES
CHARGE.
3 "POP" (PUBLIC OFFERING PRICE) TOTAL RETURNS INCLUDE THE EFFECT OF THE
MAXIMUM FRONT-END 5.75% SALES CHARGE.
(4) CDSC (CONTINGENT DEFERRED SALES CHARGE) IS APPLIED TO REDEMPTIONS OF CLASS C
SHARES THAT DO NOT HAVE A SALES CHARGE APPLIED AT THE TIME OF PURCHASE. CDSC
CHARGES FOR C SHARES ARE 1% IN THE FIRST YEAR AND 0% THEREAFTER.
For information regarding the indexes, see the glossary on page 3.
15
PHOENIX SMALL-CAP SUSTAINABLE GROWTH FUND
ABOUT YOUR FUND'S EXPENSES
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
Small-Cap Sustainable Growth 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. The first two lines of these examples
are based on an investment of $1,000 invested on inception date and held to
August 31, 2006. The third lines of these examples are based on an investment of
$1,000 invested on February 28, 2006 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 since inception of the fund. 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
(since inception date)
The first hypothetical example 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 fund to
August 31, 2006.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
(for entire six-month period)
The second hypothetical example 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 February 28, 2006, to
August 31, 2006. You may use the information in this hypothetical examples 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.
Therefore, this hypothetical example 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. If you have incurred transactional costs, your
costs could 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.
Small-Cap Beginning Ending Expenses Paid
Sustainable Fund Account Value Account Value During
Class X June 28, 2006 August 31, 2006 Period*
- ------------------------ ------------- --------------- -------------
Actual $1,000.00 $ 979.00 $2.00
Hypothetical (5% return
before expenses, since
inception) 1,000.00 1,006.78 2.02
Beginning
Account Value
February 28, 2006
-----------------
Hypothetical (5% return
before expenses,
six-month period) $1,000.00 1,019.43 5.87
* EXPENSES ARE EQUAL TO THE FUND'S CLASS X ANNUALIZED EXPENSE RATIO OF 1.15%
WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE. FOR THE
ACTUAL AND HYPOTHETICAL EXAMPLE FROM INCEPTION DATE, THE EXPENSE RATIO IS
MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE
NUMBER OF DAYS (64) EXPENSES WERE 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 PERIOD FROM
INCEPTION, MULTIPLIED BY THE NUMBER OF DAYS (184) IN THE MOST RECENT FISCAL
HALF YEAR, THEN DIVIDED BY 365 TO REFLECT THE ONE HALF YEAR PERIOD.
16
Phoenix Small-Cap Sustainable Growth Fund
ABOUT YOUR FUND'S EXPENSES (con't.)
Small-Cap Beginning Ending Expenses Paid
Sustainable Fund Account Value Account Value During
Class A June 28, 2006 August 31, 2006 Period*
- ------------------------ ------------- --------------- -------------
Actual $1,000.00 $ 979.00 $ 2.42
Hypothetical (5% return
before expenses, since
inception) 1,000.00 1,006.34 2.46
Beginning
Account Value
February 28, 2006
-----------------
Hypothetical (5% return
before expenses,
six-month period) $1,000.00 1,018.17 7.13
* EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 1.40%
WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE. FOR THE
ACTUAL AND HYPOTHETICAL EXAMPLE FROM INCEPTION DATE, THE EXPENSE RATIO IS
MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE
NUMBER OF DAYS (64) EXPENSES WERE 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 PERIOD FROM
INCEPTION, MULTIPLIED BY THE NUMBER OF DAYS (184) IN THE MOST RECENT FISCAL
HALF YEAR, THEN DIVIDED BY 365 TO REFLECT THE ONE HALF YEAR PERIOD.
Small-Cap Beginning Ending Expenses Paid
Sustainable Fund Account Value Account Value During
Class C June 28, 2006 August 31, 2006 Period*
- ------------------------ ------------- --------------- -------------
Actual $1,000.00 $ 978.00 $ 3.72
Hypothetical (5% return
before expenses, since
inception) 1,000.00 1,005.01 3.79
Beginning
Account Value
February 28, 2006
-----------------
Hypothetical (5% return
before expenses,
six-month period) $1,000.00 1,014.32 10.98
* EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 2.15%
WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE. FOR THE
ACTUAL AND HYPOTHETICAL EXAMPLE FROM INCEPTION DATE, THE EXPENSE RATIO IS
MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE
NUMBER OF DAYS (64) EXPENSES WERE 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 PERIOD FROM
INCEPTION, MULTIPLIED BY THE NUMBER OF DAYS (184) 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.
17
Phoenix Small-Cap Sustainable Growth Fund
- --------------------------------------------------------------------------------
SECTOR WEIGHTINGS 8/31/06
- --------------------------------------------------------------------------------
As a percentage of total investments
[CHART OMITTED - EDGAR REPRESENTATION OF DATA FOLLOWS]
Information Technology 33%
Consumer Discretionary 20
Health Care 18
Industrials 13
Financials 12
Energy 4
SCHEDULE OF INVESTMENTS
AUGUST 31, 2006
SHARES VALUE
------ ----------
DOMESTIC COMMON STOCKS--93.8%
AEROSPACE & DEFENSE--1.2%
HEICO Corp. Class A .................................. 475 $ 12,863
AIR FREIGHT & LOGISTICS--4.4%
Pacer International, Inc. ............................ 1,770 48,728
APPLICATION SOFTWARE--8.1%
FactSet Research Systems, Inc. ....................... 1,120 49,392
Kronos, Inc.(b) ...................................... 1,300 39,676
----------
89,068
----------
CASINOS & GAMING--3.9%
Shuffle Master, Inc.(b) .............................. 1,525 42,441
CONSUMER FINANCE--4.4%
World Acceptance Corp.(b) ............................ 1,215 48,563
EDUCATION SERVICES--6.0%
Bright Horizons Family Solutions, Inc.(b) ............ 1,035 41,296
Strayer Education, Inc. .............................. 230 24,242
----------
65,538
----------
ELECTRICAL COMPONENTS & EQUIPMENT--3.6%
Franklin Electric Co., Inc. .......................... 820 39,532
ELECTRONIC EQUIPMENT MANUFACTURERS--6.7%
Daktronics, Inc. ..................................... 1,380 28,801
Measurement Specialties, Inc.(b) ..................... 2,200 44,308
----------
73,109
----------
SHARES VALUE
------ ----------
HEALTH CARE EQUIPMENT--8.7%
ABAXIS, Inc.(b) ...................................... 2,045 $ 49,121
Kensey Nash Corp.(b) ................................. 1,705 46,171
----------
95,292
----------
HEALTH CARE FACILITIES--3.9%
Odyssey HealthCare, Inc.(b) .......................... 2,640 42,346
HOMEFURNISHING RETAIL--4.6%
Aaron Rents, Inc. .................................... 2,165 50,683
IT CONSULTING & OTHER SERVICES--4.3%
SI International, Inc.(b) ............................ 1,645 47,524
LIFE SCIENCES TOOLS & SERVICES--2.9%
Techne Corp.(b) ...................................... 615 31,303
OIL & GAS EQUIPMENT & SERVICES--4.2%
CARBO Ceramics, Inc. ................................. 1,140 45,532
PHARMACEUTICALS--3.9%
KV Pharmaceutical Co. Class A(b) ..................... 1,935 43,209
REGIONAL BANKS--4.1%
Wintrust Financial Corp. ............................. 895 45,027
RESTAURANTS--4.3%
Cheesecake Factory, Inc. (The)(b) .................... 1,880 46,793
SEMICONDUCTOR EQUIPMENT--3.6%
Cabot Microelectronics Corp.(b) ...................... 1,270 39,929
SEMICONDUCTORS--3.9%
Power Integrations, Inc.(b) .......................... 2,340 43,056
See Notes to Financial Statements
18
Phoenix Small-Cap Sustainable Growth Fund
SHARES VALUE
------ ----------
TECHNOLOGY DISTRIBUTORS--4.2%
ScanSource, Inc.(b) .................................. 1,470 $ 45,629
TRADING COMPANIES & DISTRIBUTORS--2.9%
NuCo2, Inc.(b) ....................................... 1,160 31,610
- --------------------------------------------------------------------------------
TOTAL DOMESTIC COMMON STOCKS
(IDENTIFIED COST $1,017,434) 1,027,775
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--93.8%
(IDENTIFIED COST $1,017,434) 1,027,775(a)
Other assets and liabilities, net--6.2% 68,128
----------
NET ASSETS--100.0% $1,095,903
==========
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $41,537 and gross
depreciation of $31,196 for federal income tax purposes. At August 31, 2006,
the aggregate cost of securities for federal income tax purposes was
$1,017,434.
(b) Non-income producing.
See Notes to Financial Statements
19
Phoenix Small-Cap Sustainable Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2006
ASSETS
Investment securities at value
(Identified cost $1,017,434) $1,027,775
Cash 28,350
Receivables
Receivable from adviser 14,911
Dividends 155
Prepaid expenses 43,127
----------
Total assets 1,114,318
----------
LIABILITIES
Payables
Professional fee 16,501
Custodian fee 1,585
Distribution and service fees 102
Transfer agent fee 80
Administration fee 33
Trustees' fee 5
Other accrued expenses 109
----------
Total liabilities 18,415
----------
NET ASSETS $1,095,903
==========
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $1,088,082
Accumulated net realized loss (2,520)
Net unrealized appreciation 10,341
----------
NET ASSETS $1,095,903
==========
CLASS X
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $898,062) 91,746
Net asset value and offering price per share $ 9.79
CLASS A
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $100,094) 10,227
Net asset value per share $ 9.79
Offering price per share $9.79 /(1-5.75%) $10.39
CLASS C
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $97,747) 10,000
Net asset value and offering price per share $ 9.77
STATEMENT OF OPERATIONS
FROM INCEPTION JUNE 28, 2006 TO
AUGUST 31, 2006
INVESTMENT INCOME
Dividends $ 421
Interest 218
--------
Total investment income 639
--------
EXPENSES
Investment advisory fee 1,066
Service fees, Class A 43
Distribution and service fees, Class C 169
Administration fee 86
Professional 18,351
Transfer agent 4,598
Registration 2,766
Custodian 1,937
Printing 106
Trustees 5
Miscellaneous 1,079
--------
Total expenses 30,206
Less expenses reimbursed by investment adviser (28,437)
Custodian fees paid indirectly (196)
--------
Net expenses 1,573
--------
NET INVESTMENT INCOME (LOSS) (934)
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments (2,520)
Net change in unrealized appreciation (depreciation)
on investments 10,341
--------
NET GAIN (LOSS) ON INVESTMENTS 7,821
--------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 6,887
========
See Notes to Financial Statements
20
Phoenix Small-Cap Sustainable Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
From Inception
June 28, 2006 to
August 31, 2006
----------------
FROM OPERATIONS
Net investment income (loss) $ (934)
Net realized gain (loss) (2,520)
Net change in unrealized appreciation (depreciation) 10,341
----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 6,887
----------
FROM SHARE TRANSACTIONS
CLASS X
Proceeds from sales of shares (91,748 shares) 886,900
Cost of shares repurchased (2 shares) (19)
----------
Total 886,881
----------
CLASS A
Proceeds from sales of shares (10,227 shares) 102,135
----------
Total 102,135
----------
CLASS C
Proceeds from sales of shares (10,000 shares) 100,000
----------
Total 100,000
----------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 1,089,016
----------
NET INCREASE (DECREASE) IN NET ASSETS 1,095,903
NET ASSETS
Beginning of period --
----------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $0) $1,095,903
==========
See Notes to Financial Statements
21
Phoenix Small-Cap Sustainable Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS X
------------------
FROM INCEPTION
JUNE 28, 2006
TO AUGUST 31, 2006
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.01)
Net realized and unrealized gain (loss) (0.20)
------
TOTAL FROM INVESTMENT OPERATIONS (0.21)
------
Change in net asset value (0.21)
------
NET ASSET VALUE, END OF PERIOD $ 9.79
======
Total return (2.10)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $898
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.15 %(3)
Gross operating expenses 23.99 %(3)
Net investment income (loss) (0.61)%(3)
Portfolio turnover 4 %(4)
CLASS A
------------------
FROM INCEPTION
JUNE 28, 2006
TO AUGUST 31, 2006
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.01)
Net realized and unrealized gain (loss) (0.20)
------
TOTAL FROM INVESTMENT OPERATIONS (0.21)
------
Change in net asset value (0.21)
------
NET ASSET VALUE, END OF PERIOD $ 9.79
======
Total return(2) (2.10)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $100
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.40 %(3)
Gross operating expenses 28.32 %(3)
Net investment income (loss) (0.87)%(3)
Portfolio turnover 4 %(4)
(1) Computed using average shares outstanding.
(2) Sales charges are not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
See Notes to Financial Statements
22
Phoenix Small-Cap Sustainable Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS C
------------------
FROM INCEPTION
JUNE 28, 2006
TO AUGUST 31, 2006
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.03)
Net realized and unrealized gain (loss) (0.20)
-------
TOTAL FROM INVESTMENT OPERATIONS (0.23)
-------
Change in net asset value (0.23)
-------
NET ASSET VALUE, END OF PERIOD $ 9.77
======
Total return(2) (2.20)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $98
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 2.15 %(3)
Gross operating expenses 29.09 %(3)
Net investment income (loss) (1.61)%(3)
Portfolio turnover 4 %(4)
(1) Computed using average shares outstanding.
(2) Sales charges are not reflected in total return calculation.
(3) Annualized.
(4) Not annualized.
See Notes to Financial Statements
23
PHOENIX SMALL-CAP VALUE FUND
A DISCUSSION WITH THE FUND'S MANAGEMENT TEAM OF CARLTON NEEL AND DAVID DICKERSON
Q: HOW DID THE PHOENIX SMALL-CAP VALUE FUND PERFORM FOR ITS FISCAL YEAR ENDED
AUGUST 31, 2006?
A: For the fiscal year ended August 31, 2006, the Fund's Class A shares returned
5.32%, Class B shares returned 4.57%, and Class C shares returned 4.57%. For the
same period, the S&P 500(R) Index, a broad-based equity index, returned 8.88%
and the Russell 2000(R) Value Index, the Fund's style-specific benchmark,
returned 12.72%. All performance figures assume reinvestment of distributions
and exclude the effect of sales charges. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE
PERFORMANCE SHOWN ABOVE.
Q: HOW DID THE EQUITY MARKETS PERFORM DURING THE FUND'S FISCAL YEAR?
A: Over the course of the last year (September 1, 2005, to August 31, 2006), the
equity markets have been generally solid. Returns have ranged from the high
single digits for the S&P 500 Index, to nearly 13% for the Russell 2000(R) Small
Cap Value Index. Smaller-capitalization stocks outperformed large-cap stocks for
most of the period, with the recent summer stretch being the exception, as
larger stocks began to catch up.
During the mid-October 2005 to mid-May 2006 timeframe, stocks of all sizes
enjoyed a very good run. In what seemed like a never-ending stretch, value
stocks once again outperformed growth stocks for the 12-month period. The
underpinnings of the rally developed from the market perception that the Federal
Reserve could be approaching the end of its several-year tightening cycle, which
has taken the federal funds rate from 1.00% to 5.25%. However, higher energy
costs and concerns about inflation began to creep back into investors' minds in
mid-May, and the market, especially in the small-cap space, sold off for most of
the summer. Toward the end of the Fund's fiscal year, the market regained its
footing, seemingly poised for a rally into the new fiscal year.
Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR?
A: The Fund kept pace with the Russell 2000 Value Index for most of the fiscal
year ended August 31, 2006. Between early September 2005 and mid-May 2006, the
Fund enjoyed very favorable performance results, largely due to its increased
exposure to energy stocks and strong stock selection. However, since value
stocks have rallied sharply versus their growth counterparts over the course of
the last several years, our models have begun to shift into buying stocks with
better growth prospects. Since we only select stocks that are in the Russell
2000 Value Index (and a few other names that exhibit value characteristics), we
are still solidly a value fund, but the models are finding more opportunity in
issuers that have somewhat higher growth prospects. Consequently, this has hurt
the Fund's recent performance, as over the summer we gave up nearly 700 basis
points (7%) of performance relative to the Russell 2000 Value Index.
SEPTEMBER 2006
THE PRECEDING INFORMATION IS THE OPINION OF PORTFOLIO MANAGEMENT. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE IS NO GUARANTEE THAT
MARKET FORECASTS WILL BE REALIZED.
FOR DEFINITIONS OF THE INDEXES CITED AND CERTAIN INVESTMENT TERMS USED IN THIS
REPORT, SEE THE GLOSSARY ON PAGE 3.
24
Phoenix Small-Cap Value Fund
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS 1 PERIODS ENDING 8/31/06
- --------------------------------------------------------------------------------
INCEPTION INCEPTION
1 YEAR 5 YEARS TO 8/31/06 DATE
------ ------- ---------- ---------
Class A Shares at NAV 2 5.32% 10.03% 11.66% 11/20/97
Class A Shares at POP 3 (0.73) 8.74 10.91 11/20/97
Class B Shares at NAV 2 4.57 9.21 10.84 11/20/97
Class B Shares with CDSC 4 0.83 9.21 10.84 11/20/97
Class C Shares at NAV 2 4.57 9.21 10.84 11/20/97
Class C Shares with CDSC 4 4.57 9.21 10.84 11/20/97
S&P 500(R) Index 8.88 4.65 5.19 11/20/97
Russell 2000(R) Value Index 12.72 14.03 10.85 11/20/97
ALL RETURNS REPRESENT PAST PERFORMANCE WHICH IS NO GUARANTEE OF FUTURE RESULTS.
CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE SHOWN. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. THE ABOVE TABLE AND GRAPH BELOW DO NOT REFLECT THE DEDUCTION OF TAXES THAT
A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
PLEASE VISIT PHOENIXFUNDS.COM FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT
MONTH-END.
1 TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE AND THE
REINVESTMENT OF BOTH DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS.
2 "NAV" (NET ASSET VALUE) TOTAL RETURNS DO NOT INCLUDE THE EFFECT OF ANY SALES
CHARGE.
3 "POP" (PUBLIC OFFERING PRICE) TOTAL RETURNS INCLUDE THE EFFECT OF THE MAXIMUM
FRONT-END 5.75% SALES CHARGE.
4 CDSC (CONTINGENT DEFERRED SALES CHARGE) IS APPLIED TO REDEMPTIONS OF CERTAIN
CLASSES OF SHARES THAT DO NOT HAVE A SALES CHARGE APPLIED AT THE TIME OF
PURCHASE. CDSC CHARGES FOR B SHARES DECLINE FROM 5% TO 0% OVER A FIVE YEAR
PERIOD. CDSC CHARGES FOR CLASS C SHARES ARE 1% IN THE FIRST YEAR AND 0%
THEREAFTER.
- --------------------------------------------------------------------------------
GROWTH OF $10,000 PERIODS ENDING 8/31
- --------------------------------------------------------------------------------
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
11/20/97 (inception of the Fund) in Class A, Class B and Class C shares. The
total return for Class A shares reflects the maximum sales charge of 5.75% on
the initial investment. The total return for Class B shares reflects the CDSC
charges which decline from 5% to 0% over a five year period. The total return
for Class C shares reflects the CDSC charges which are 1% in the first year and
0% thereafter. Performance assumes dividends and capital gain distributions are
reinvested.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS:
Phoenix Phoenix Phoenix
Small Cap Small Cap Small Cap Russell
Value Fund Value Fund Value Fund 2000(R) Value S&P 500(R)
Class A Class B Class C Index Index
----------- ----------- ---------- ---------- ----------
11/20/97 $ 9,425 $10,000 $10,000 $10,000 $10,000
8/31/98 7,668 8,093 8,091 8,370 10,097
8/31/99 10,805 11,320 11,316 9,549 14,124
8/31/00 17,951 18,674 18,669 10,856 16,438
8/31/01 15,395 15,894 15,889 12,815 12,429
8/30/02 13,698 14,031 14,027 12,097 10,192
8/29/03 16,268 16,540 16,535 14,962 11,424
8/31/04 18,280 18,454 18,449 17,878 12,732
8/31/05 23,578 23,614 23,607 21,921 14,329
8/31/06 24,833 24,603 24,686 24,709 15,602
For information regarding the indexes, see the glossary on page 3.
25
Phoenix Small-Cap Value Fund
ABOUT YOUR FUND'S EXPENSES
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
Small-Cap 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 B and 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
Small-Cap Value Fund Account Value Account Value During
Class A February 28, 2006 August 31, 2006 Period*
- --------------------- ----------------- ---------------- -------------
Actual $1,000.00 $ 978.30 $6.98
Hypothetical (5% return
before expenses) 1,000.00 1,018.15 7.15
*EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 1.40%,
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.
ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS A
RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT,
IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED AUGUST 31, 2006.
THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 5.32%. AN
INVESTMENT OF $1,000.00 AT AUGUST 31, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE
AT AUGUST 31, 2006 OF $1,053.20.
Beginning Ending Expenses Paid
Small-Cap Value Fund Account Value Account Value During
Class B February 28, 2006 August 31, 2006 Period*
- --------------------- ----------------- ---------------- -------------
Actual $1,000.00 $ 974.30 $10.69
Hypothetical (5% return
before expenses) 1,000.00 1,014.33 10.97
*EXPENSES ARE EQUAL TO THE FUND'S CLASS B ANNUALIZED EXPENSE RATIO OF 2.15%,
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
(184) EXPENSES WERE ACCRUED IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED
BY 365 TO REFLECT THE ONE-HALF YEAR PERIOD.
ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS B
RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT,
IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED AUGUST 31, 2006.
THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 4.57%. AN
INVESTMENT OF $1,000.00 AT AUGUST 31, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE
AT AUGUST 31, 2006 OF $1,045.70.
Beginning Ending Expenses Paid
Small-Cap Value Fund Account Value Account Value During
Class C February 28, 2006 August 31, 2006 Period*
- --------------------- ----------------- ---------------- -------------
Actual $1,000.00 $ 974.30 $10.69
Hypothetical (5% return
before expenses) 1,000.00 1,014.33 10.97
*EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 2.15%,
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
(184) EXPENSES WERE ACCRUED IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED
BY 365 TO REFLECT THE ONE-HALF YEAR PERIOD.
ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS C
RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT,
IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED AUGUST 31, 2006.
THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 4.57%. AN
INVESTMENT OF $1,000.00 AT AUGUST 31, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE
AT AUGUST 31, 2006 OF $1,045.70.
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.
26
Phoenix Small-Cap Value Fund
- --------------------------------------------------------------------------------
SECTOR WEIGHTINGS 8/31/06
- --------------------------------------------------------------------------------
As a percentage of total investments
[CHART OMITTED - EDGAR REPRESENTATION OF DATA FOLLOWS]
Financials 27%
Information Technology 16
Industrials 16
Consumer Discretionary 11
Materials 8
Energy 8
Health Care 3
Other 11
SCHEDULE OF INVESTMENTS
AUGUST 31, 2006
SHARES VALUE
-------- ------------
DOMESTIC COMMON STOCKS--97.4%
AEROSPACE & DEFENSE--1.9%
Armor Holdings, Inc.(b) ........................... 39,600 $ 2,093,652
DRS Technologies, Inc. ............................ 24,100 997,017
Triumph Group, Inc. ............................... 27,200 1,195,712
------------
4,286,381
------------
AIRLINES--1.0%
ExpressJet Holdings, Inc.(b)(e) ................... 152,100 1,063,179
Republic Airways Holdings, Inc.(b) ................ 42,000 669,480
SkyWest, Inc.(e) .................................. 20,700 500,319
------------
2,232,978
------------
APPAREL RETAIL--2.3%
Charming Shoppes, Inc.(b) ......................... 22,700 298,732
Men's Wearhouse, Inc. (The) ....................... 71,000 2,516,950
Payless ShoeSource, Inc.(b) ....................... 50,000 1,173,000
Shoe Carnival, Inc.(b) ............................ 38,300 875,538
Stein Mart, Inc. .................................. 14,800 175,972
United Retail Group, Inc.(b) ...................... 9,500 145,540
------------
5,185,732
------------
APPAREL, ACCESSORIES & LUXURY GOODS--1.3%
Kellwood Co. ...................................... 49,600 1,359,536
Perry Ellis International, Inc.(b) ................ 22,700 611,992
Phillips-Van Heusen Corp. ......................... 28,900 1,116,696
------------
3,088,224
------------
SHARES VALUE
-------- ------------
ASSET MANAGEMENT & CUSTODY BANKS--0.1%
MCG Capital Corp.(e) .............................. 21,400 $ 343,256
AUTO PARTS & EQUIPMENT--0.9%
Aftermarket Technology Corp.(b) ................... 37,300 752,714
ArvinMeritor, Inc.(e) ............................. 89,800 1,333,530
------------
2,086,244
------------
AUTOMOTIVE RETAIL--0.8%
Asbury Automotive Group, Inc. ..................... 23,600 483,564
CSK Auto Corp.(b) ................................. 10,000 114,700
Group 1 Automotive, Inc. .......................... 26,600 1,204,980
------------
1,803,244
------------
BUILDING PRODUCTS--1.4%
American Woodmark Corp.(e) ........................ 37,300 1,176,069
PW Eagle, Inc.(e) ................................. 34,100 1,189,067
Universal Forest Products, Inc.(e) ................ 16,800 819,168
------------
3,184,304
------------
COMMERCIAL PRINTING--1.0%
Consolidated Graphics, Inc.(b) .................... 18,600 1,156,548
Ennis, Inc. ....................................... 50,200 1,036,630
------------
2,193,178
------------
COMMODITY CHEMICALS--1.6%
Georgia Gulf Corp. ................................ 56,300 1,494,202
Spartech Corp. .................................... 54,000 1,216,620
Westlake Chemical Corp. ........................... 34,300 1,027,628
------------
3,738,450
------------
See Notes to Financial Statements
27
Phoenix Small-Cap Value Fund
SHARES VALUE
-------- ------------
COMMUNICATIONS EQUIPMENT--4.0%
Avocent Corp.(b) .................................. 24,500 $ 740,635
CommScope, Inc.(b) ................................ 63,100 1,843,151
Comtech Telecommunications Corp.(b)(e) ............ 44,850 1,467,940
Harris Corp. ...................................... 51,900 2,279,448
Polycom, Inc.(b) .................................. 58,100 1,382,199
UTStarcom, Inc.(b) ................................ 172,600 1,417,046
Waestell Technologies, Inc. Class A(b) ............ 8,300 22,742
------------
9,153,161
------------
COMPUTER STORAGE & PERIPHERALS--1.2%
Komag, Inc.(b)(e) ................................. 68,300 2,456,068
SimpleTech, Inc.(b) ............................... 25,400 178,562
------------
2,634,630
------------
CONSTRUCTION & ENGINEERING--0.8%
EMCOR Group, Inc.(b) .............................. 31,000 1,718,640
Michael Baker Corp.(b) ............................ 2,900 63,800
------------
1,782,440
------------
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS--0.4%
Commercial Vehicle Group, Inc.(b)(e) .............. 41,700 818,154
CONSUMER FINANCE--1.8%
Cash America International, Inc. .................. 68,600 2,529,282
EZCORP, Inc. Class A(b) ........................... 40,100 1,574,727
------------
4,104,009
------------
DEPARTMENT STORES--0.6%
Dillard's, Inc. Class A ........................... 40,800 1,272,144
DIVERSIFIED BANKS--0.2%
Intervest Bancshares Corp.(b) ..................... 12,900 542,058
DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES--1.4%
CBIZ, Inc.(b) ..................................... 129,700 1,011,660
Cornell Cos., Inc.(b) ............................. 16,200 285,768
CRA International, Inc.(b)(e) ..................... 8,200 368,918
Geo Group, Inc. (The)(b) .......................... 33,500 1,496,445
------------
3,162,791
------------
DIVERSIFIED REIT'S--0.8%
Spirit Finance Corp. .............................. 115,200 1,307,520
Winthrop Realty Trust ............................. 80,200 503,656
------------
1,811,176
------------
DRUG RETAIL--0.7%
Longs Drug Stores Corp. ........................... 34,000 1,544,620
SHARES VALUE
-------- ------------
ELECTRIC UTILITIES--0.8%
Cleco Corp. ....................................... 60,000 $ 1,497,600
Otter Tail Corp. .................................. 12,000 361,800
------------
1,859,400
------------
ELECTRICAL COMPONENTS & EQUIPMENT--3.2%
Genlyte Group, Inc. (The)(b) ...................... 32,800 2,149,384
LSI Industries, Inc. .............................. 18,000 329,940
Regal-Beloit Corp. ................................ 36,400 1,571,024
Smith (A.O.) Corp. ................................ 46,100 1,849,071
Superior Essex, Inc.(b) ........................... 37,300 1,331,983
------------
7,231,402
------------
ELECTRONIC EQUIPMENT MANUFACTURERS--1.2%
Aeroflex, Inc.(b)(e) .............................. 28,300 294,886
Newport Corp.(b) .................................. 22,800 401,964
Planar Systems, Inc.(b) ........................... 46,900 461,027
Technitrol, Inc. .................................. 55,400 1,568,374
------------
2,726,251
------------
ELECTRONIC MANUFACTURING SERVICES--2.4%
Benchmark Electronics, Inc.(b) .................... 39,000 972,660
CTS Corp. ......................................... 48,100 707,070
Merix Corp.(b)(e) ................................. 81,400 987,382
Plexus Corp.(b)(e) ................................ 47,900 949,378
TTM Technologies, Inc.(b) ......................... 81,600 1,049,376
Zygo Corp.(b) ..................................... 68,700 914,397
------------
5,580,263
------------
ENVIRONMENTAL & FACILITIES SERVICES--0.3%
Central Parking Corp. ............................. 38,200 635,648
FOOD DISTRIBUTORS--0.2%
Spartan Stores, Inc.(e) ........................... 25,700 463,371
FOOD RETAIL--0.4%
Casey's General Stores, Inc. ...................... 43,700 1,033,068
FOOTWEAR--0.8%
Brown Shoe Co., Inc. .............................. 10,450 333,878
Skechers U.S.A., Inc. Class A(b)(e) ............... 70,600 1,598,384
------------
1,932,262
------------
GAS UTILITIES--0.7%
Laclede Group, Inc. (The) ......................... 2,600 84,734
Nicor, Inc.(e) .................................... 34,000 1,484,440
------------
1,569,174
------------
See Notes to Financial Statements
28
Phoenix Small-Cap Value Fund
SHARES VALUE
-------- ------------
HEALTH CARE EQUIPMENT--0.6%
Cantel Medical Corp.(b)(e) ........................ 50,000 $ 706,500
Greatbatch, Inc.(b)(e) ............................ 30,400 743,584
------------
1,450,084
------------
HEALTH CARE FACILITIES--0.1%
LifePoint Hospitals, Inc.(b) ...................... 4,400 149,820
HEALTH CARE SERVICES--0.5%
Res-Care, Inc.(b) ................................. 53,100 1,064,655
HOME FURNISHINGS--0.7%
Furniture Brands International, Inc.(e) ........... 64,400 1,233,260
Hooker Furniture Corp.(e) ......................... 20,200 298,556
------------
1,531,816
------------
HOMEBUILDING--0.1%
Orleans Homebuilders, Inc.(e) ..................... 19,100 233,402
HOMEFURNISHING RETAIL--0.5%
Rent-A-Center, Inc.(b) ............................ 41,300 1,119,230
HOTELS, RESORTS & CRUISE LINES--0.9%
Bluegreen Corp.(b)(e) ............................. 28,200 322,890
Interstate Hotels & Resorts, Inc.(b) .............. 107,500 1,116,925
Sunterra Corp.(b) ................................. 42,600 526,110
------------
1,965,925
------------
HOUSEWARES & SPECIALTIES--0.2%
Lifetime Brands, Inc.(e) .......................... 20,800 415,168
HUMAN RESOURCES & EMPLOYMENT SERVICES--1.0%
Kforce, Inc.(b) ................................... 69,600 856,776
Volt Information Sciences, Inc.(b) ................ 32,900 1,402,856
------------
2,259,632
------------
INDUSTRIAL MACHINERY--1.7%
Columbus McKinnon Corp.(b) ........................ 13,600 251,464
EnPro Industries, Inc.(b) ......................... 19,300 606,792
Gardner Denver, Inc.(b) ........................... 50,000 1,798,500
Tennant Co. ....................................... 46,700 1,263,702
------------
3,920,458
------------
INTEGRATED TELECOMMUNICATION SERVICES--0.4%
CT Communications, Inc. ........................... 43,500 1,002,240
INTERNET RETAIL--0.3%
FTD Group, Inc.(b) ................................ 47,200 748,120
INTERNET SOFTWARE & SERVICES--2.0%
EarthLink, Inc.(b) ................................ 156,200 1,148,070
RealNetworks, Inc.(b)(e) .......................... 147,600 1,628,028
SHARES VALUE
-------- ------------
INTERNET SOFTWARE & SERVICES--CONTINUED
SonicWALL, Inc.(b) ................................ 111,700 $ 1,146,042
United Online, Inc. ............................... 48,800 559,736
------------
4,481,876
------------
INVESTMENT BANKING & BROKERAGE--0.5%
Knight Capital Group, Inc. Class A(b) ............ 70,900 1,237,914
IT CONSULTING & OTHER SERVICES--2.0%
Keane, Inc.(b) .................................... 87,400 1,352,952
MPS Group, Inc.(b) ................................ 108,300 1,522,698
Perot Systems Corp. Class A(b) .................... 70,400 1,010,944
SYKES Enterprises, Inc.(b) ........................ 29,000 583,190
------------
4,469,784
------------
LEISURE PRODUCTS--0.3%
JAKKS Pacific, Inc.(b)(e) ......................... 47,800 781,052
LIFE & HEALTH INSURANCE--0.5%
FBL Financial Group Inc., Class A ................. 31,300 1,037,908
MANAGED HEALTH CARE--1.2%
HealthSpring, Inc.(b) ............................. 77,300 1,539,043
Molina Healthcare, Inc.(b) ........................ 34,200 1,266,768
------------
2,805,811
------------
MARINE--0.1%
Genco Shipping & Trading Ltd. ..................... 9,600 210,528
METAL & GLASS CONTAINERS--0.7%
Greif, Inc. Class A ............................... 17,300 1,225,705
Myers Industries, Inc. ............................ 25,800 423,894
------------
1,649,599
------------
MORTGAGE REIT'S--1.8%
American Home Mortgage Investment Corp. ........... 41,900 1,328,230
Anthracite Capital, Inc. .......................... 87,600 1,125,660
Arbor Realty Trust, Inc. .......................... 7,400 186,110
Capital Trust, Inc. Class A(e) .................... 28,300 1,110,775
NorthStar Realty Finance Corp. .................... 21,300 255,387
------------
4,006,162
------------
MULTI-LINE INSURANCE--0.5%
Horace Mann Educators Corp. ....................... 64,200 1,178,712
MULTI-SECTOR HOLDINGS--0.1%
Compass Diversified Trust ......................... 9,400 138,274
MULTI-UTILITIES--0.6%
Avista Corp.(e) ................................... 59,000 1,430,160
See Notes to Financial Statements
29
Phoenix Small-Cap Value Fund
SHARES VALUE
-------- ------------
OFFICE SERVICES & SUPPLIES--0.4%
United Stationers, Inc.(b) ........................ 20,100 $ 921,183
OIL & GAS DRILLING--0.6%
Parker Drilling Co.(b) ............................ 200,100 1,420,710
OIL & GAS EQUIPMENT & SERVICES--2.6%
Hornbeck Offshore Services, Inc.(b) ............... 40,300 1,354,483
Maverick Tube Corp.(b)(e) ......................... 19,700 1,266,119
Newpark Resources, Inc.(b)(e) ..................... 35,000 193,900
Oil States International, Inc.(b)(e) .............. 45,000 1,438,200
SEACOR Holdings, Inc.(b)(e) ....................... 19,900 1,731,897
------------
5,984,599
------------
OIL & GAS EXPLORATION & PRODUCTION--1.6%
Chesapeake Energy Corp.(e) ........................ 71,900 2,269,883
Swift Energy Co.(b) ............................... 29,800 1,304,048
------------
3,573,931
------------
OIL & GAS REFINING & MARKETING--1.6%
Giant Industries, Inc.(b) ......................... 13,700 1,119,290
Tesoro Corp. ...................................... 39,000 2,519,790
------------
3,639,080
------------
OIL & GAS STORAGE & TRANSPORTATION--1.6%
General Maritime Corp. ............................ 34,000 1,277,040
OMI Corp.(e) ...................................... 63,400 1,427,768
Overseas Shipholding Group, Inc. .................. 16,000 1,067,200
------------
3,772,008
------------
PACKAGED FOODS & MEATS--0.0%
Premium Standard Farms, Inc. ...................... 3,800 64,296
PAPER PACKAGING--0.6%
Rock-Tenn Co. Class A ............................. 70,000 1,352,400
PHARMACEUTICALS--0.7%
Bradley Pharmaceuticals, Inc.(b) .................. 30,100 445,781
Sciele Pharma, Inc.(b) ............................ 66,100 1,156,750
------------
1,602,531
------------
PROPERTY & CASUALTY INSURANCE--8.4%
21st Century Insurance Group(e) ................... 72,300 1,086,669
Affirmative Insurance Holdings, Inc. .............. 14,900 220,073
Argonaut Group, Inc.(b) ........................... 33,300 1,023,975
CNA Surety Corp.(b) ............................... 21,700 431,830
Commerce Group, Inc. (The) ........................ 28,800 857,952
EMC Insurance Group, Inc.(e) ...................... 33,500 981,885
FPIC Insurance Group, Inc.(b)(e) .................. 25,800 1,063,992
Harleysville Group, Inc. .......................... 30,900 1,112,091
SHARES VALUE
-------- ------------
PROPERTY & CASUALTY INSURANCE--CONTINUED
LandAmerica Financial Group, Inc.(e) .............. 21,000 $ 1,328,040
Meadowbrook Insurance Group, Inc.(b) .............. 151,400 1,565,476
Navigators Group, Inc. (The)(b) ................... 21,700 999,936
ProAssurance Corp.(b)(e) .......................... 31,600 1,589,480
Safety Insurance Group, Inc. ...................... 23,600 1,213,512
SeaBright Insurance Holdings, Inc.(b) ............ 53,200 673,512
Selective Insurance Group, Inc.(e) ................ 52,700 2,741,454
State Auto Financial Corp. ........................ 14,900 466,966
Zenith National Insurance Corp. ................... 49,049 1,854,052
------------
19,210,895
------------
REAL ESTATE MANAGEMENT & DEVELOPMENT--0.9%
Jones Lang LaSalle, Inc.(e) ....................... 23,800 1,981,588
REGIONAL BANKS--3.0%
1st Source Corp. .................................. 5,940 177,903
Ameris Bancorp .................................... 2,300 60,444
Bank of Granite Corp. ............................. 9,800 213,248
City Holding Co. .................................. 3,400 133,892
Community Trust Bancorp, Inc. ..................... 17,200 660,824
Financial Institutions, Inc. ...................... 3,300 82,434
First BanCorp(e) .................................. 80,700 741,633
Greater Bay Bancorp ............................... 44,200 1,258,374
Integra Bank Corp. ................................ 4,000 103,280
R-G Financial Corp. Class B ....................... 80,700 581,040
Southwest Bancorp, Inc.(e) ........................ 36,600 971,730
Sterling Financial Corp. .......................... 15,100 338,089
TCF Financial Corp.(e) ............................ 56,500 1,472,955
------------
6,795,846
------------
RESTAURANTS--0.9%
Jack in the Box, Inc.(b) .......................... 36,700 1,760,866
Steak n Shake Co. (The)(b) ........................ 13,000 208,910
------------
1,969,776
------------
RETAIL REIT'S--0.2%
Kite Realty Group Trust ........................... 35,000 570,150
SEMICONDUCTOR EQUIPMENT--1.1%
Advanced Energy Industries, Inc.(b) ............... 82,800 1,189,836
MKS Instruments, Inc.(b) .......................... 58,500 1,222,065
------------
2,411,901
------------
SEMICONDUCTORS--1.7%
IXYS Corp.(b)(e) .................................. 49,800 437,244
OmniVision Technologies, Inc.(b) .................. 86,200 1,430,920
Pericom Semiconductor Corp.(b) .................... 8,900 82,770
Semtech Corp.(b) .................................. 18,800 245,716
See Notes to Financial Statements
30
Phoenix Small-Cap Value Fund
SHARES VALUE
-------- ------------
SEMICONDUCTORS--CONTINUED
Standard Microsystems Corp.(b) .................... 42,100 $ 1,181,747
Zoran Corp.(b) .................................... 34,600 616,572
------------
3,994,969
------------
SPECIALIZED CONSUMER SERVICES--0.4%
Escala Group, Inc.(b)(e) .......................... 137,200 916,496
SPECIALIZED REIT'S--3.4%
Ashford Hospitality Trust, Inc. ................... 105,400 1,261,638
Entertainment Properties Trust .................... 25,700 1,281,402
FelCor Lodging Trust, Inc. ........................ 70,000 1,501,500
Highland Hospitality Corp. ........................ 103,100 1,419,687
Sunstone Hotel Investors, Inc. .................... 46,900 1,402,310
Winston Hotels, Inc. .............................. 74,100 882,531
------------
7,749,068
------------
SPECIALTY CHEMICALS--2.4%
Albemarle Corp.(e) ................................ 35,400 1,943,460
Fuller (H.B.) Co. ................................. 96,200 1,849,926
OM Group, Inc.(b) ................................. 32,500 1,300,000
PolyOne Corp.(b) .................................. 39,200 339,864
------------
5,433,250
------------
SPECIALTY STORES--0.3%
Books-A-Million, Inc.(e) .......................... 38,700 617,265
STEEL--3.3%
Commercial Metals Co. ............................. 75,000 1,619,250
Gibraltar Industries, Inc. ........................ 29,600 716,320
Olympic Steel, Inc. ............................... 44,600 1,233,190
Reliance Steel & Aluminum Co. ..................... 56,000 1,835,120
Ryerson, Inc.(e) .................................. 35,000 741,300
Steel Dynamics, Inc.(e) ........................... 22,200 1,171,938
Worthington Industries, Inc. ...................... 17,000 324,870
------------
7,641,988
------------
SYSTEMS SOFTWARE--0.7%
Sybase, Inc.(b)(e) ................................ 70,000 1,614,900
TECHNOLOGY DISTRIBUTORS--1.2%
Anixter International, Inc.(e) .................... 24,800 1,351,352
Global Imaging Systems, Inc.(b)(e) ................ 5,000 109,650
Nu Horizons Electronics Corp.(b) .................. 13,800 193,200
SYNNEX Corp.(b) ................................... 50,000 1,111,500
------------
2,765,702
------------
THRIFTS & MORTGAGE FINANCE--5.2%
BankUnited Financial Corp. Class A ................ 44,500 1,146,765
Corus Bankshares, Inc.(e) ......................... 70,300 1,533,243
SHARES VALUE
-------- ------------
THRIFTS & MORTGAGE FINANCE--CONTINUED
Delta Financial Corp. ............................. 42,400 $ 381,176
Downey Financial Corp.(e) ......................... 22,700 1,393,553
Federal Agricultural Mortgage Corp. Class C ....... 14,900 417,945
First Financial Holdings, Inc. .................... 17,600 607,904
First Place Financial Corp. ....................... 4,300 101,179
FirstFed Financial Corp.(b)(e) .................... 29,700 1,510,542
ITLA Capital Corp.(e) ............................. 8,400 440,580
Ocwen Financial Corp.(b)(e) ....................... 109,000 1,607,750
TierOne Corp. ..................................... 37,500 1,279,125
Triad Guaranty, Inc.(b) ........................... 23,700 1,191,399
United Community Financial Corp. .................. 13,600 172,856
------------
11,784,017
------------
TRADING COMPANIES & DISTRIBUTORS--1.1%
BlueLinx Holdings, Inc.(e) ........................ 8,800 93,016
Rush Enterprises, Inc. Class A(b)(e) .............. 55,200 966,000
United Rentals, Inc.(b) ........................... 63,600 1,377,576
------------
2,436,592
------------
TRUCKING--2.0%
Arkansas Best Corp. ............................... 32,600 1,439,290
Saia, Inc.(b) ..................................... 35,500 1,091,625
Swift Transportation Co., Inc.(b) ................. 44,900 1,041,231
U.S. Xpress Enterprises, Inc. Class A(b) .......... 46,500 968,595
------------
4,540,741
------------
- --------------------------------------------------------------------------------
TOTAL DOMESTIC COMMON STOCKS
(IDENTIFIED COST $187,303,211) 222,052,225
- --------------------------------------------------------------------------------
FOREIGN COMMON STOCKS(c)--1.4%
PROPERTY & CASUALTY INSURANCE--0.2%
United America Indemnity Ltd. Class A
(United States)(b) ................................ 23,000 494,040
REINSURANCE--1.2%
Arch Capital Group Ltd. (United States)(b) ........ 46,100 2,747,560
- --------------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $2,343,408) 3,241,600
- --------------------------------------------------------------------------------
WARRANTS--0.0%
OTHER DIVERSIFIED FINANCIAL SERVICES--0.0%
Imperial Credit Industries, Inc. Strike
Price $2.15, Exp. 1/31/08(b)(d) ................... 2,429 0
- --------------------------------------------------------------------------------
TOTAL WARRANTS
(IDENTIFIED COST $0) 0
- --------------------------------------------------------------------------------
TOTAL LONG TERM INVESTMENTS--98.8%
(IDENTIFIED COST $189,646,619) 225,293,825
- --------------------------------------------------------------------------------
See Notes to Financial Statements
31
Phoenix Small-Cap Value Fund
SHARES VALUE
----------- ------------
SHORT-TERM INVESTMENTS--8.3%
MONEY MARKET MUTUAL FUNDS--6.9%
State Street Navigator Prime Plus
(5.28% seven day effective yield)(f) ............ 15,592,656 $ 15,592,656
PAR VALUE
(000)
-----------
COMMERCIAL PAPER(g)--1.4%
CAFCO LLC 5.26%, 9/1/06 ......................... $3,200 3,200,000
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $18,792,656) 18,792,656
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--107.1%
(IDENTIFIED COST $208,439,275) 244,086,481(a)
Other assets and liabilities, net--(7.1)% (16,205,413)
------------
NET ASSETS--100.0% $227,881,068
============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $40,492,096 and gross
depreciation of $5,232,133 for federal income tax purposes. At August 31,
2006, the aggregate cost of securities for federal income tax purposes was
$208,826,518.
(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) Illiquid. Security valued at fair value as determined in good faith by or
under the direction of the Trustees. At August 31, 2006, these securities
amounted to a value of $0 or 0% of net assets.
(e) All or a portion of security is on loan.
(f) Represents security purchased with cash collateral received for securities
on loan.
(g) The rate shown is the discount rate.
See Notes to Financial Statements
32
Phoenix Small-Cap Value Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2006
ASSETS
Investment securities at value,
including $15,198,510 of securities on loan
(Identified cost $208,439,275) $244,086,481
Cash 89,332
Receivables
Dividends 119,067
Fund shares sold 39,829
Prepaid expenses 27,708
------------
Total assets 244,362,417
------------
LIABILITIES
Payables
Fund shares repurchased 381,766
Investment securities purchased 85,026
Upon return of securities loaned 15,592,656
Investment advisory fee 150,104
Distribution and service fees 107,208
Transfer agent fee 77,677
Administration fee 16,731
Trustees' fee 534
Other accrued expenses 69,647
------------
Total liabilities 16,481,349
------------
NET ASSETS $227,881,068
============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $159,448,973
Accumulated net realized gain 32,784,889
Net unrealized appreciation 35,647,206
------------
NET ASSETS $227,881,068
============
CLASS A
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $135,435,581) 7,339,977
Net asset value per share $18.45
Offering price per share $18.45 /(1-5.75%) $19.58
CLASS B
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $30,567,448) 1,790,213
Net asset value and offering price per share $17.07
CLASS C
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $61,878,039) 3,624,116
Net asset value and offering price per share $17.07
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2006
INVESTMENT INCOME
Dividends $ 2,527,949
Interest 145,873
Security lending 119,069
Foreign taxes withheld (4,981)
------------
Total investment income 2,787,910
------------
EXPENSES
Investment advisory fee 2,245,943
Service fees, Class A 362,745
Distribution and service fees, Class B 373,281
Distribution and service fees, Class C 671,232
Financial agent fee 144,616
Administration fee 33,462
Transfer agent 431,048
Printing 75,825
Registration 42,292
Custodian 41,763
Professional 41,450
Trustees 28,255
Miscellaneous 31,861
------------
Total expenses 4,523,773
Less expenses reimbursed by investment adviser (241,554)
Custodian fees paid indirectly (5,146)
------------
Net expenses 4,277,073
------------
NET INVESTMENT INCOME (LOSS) (1,489,163)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments 41,254,936
Net change in unrealized appreciation (depreciation)
on investments (27,051,697)
------------
NET GAIN (LOSS) ON INVESTMENTS 14,203,239
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 12,714,076
============
See Notes to Financial Statements
33
Phoenix Small-Cap Value Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
August 31, 2006 August 31, 2005
--------------- ---------------
FROM OPERATIONS
Net investment income (loss) $ (1,489,163) $ (1,308,333)
Net realized gain (loss) 41,254,936 23,665,069
Net change in unrealized appreciation (depreciation) (27,051,697) 40,989,811
------------ ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 12,714,076 63,346,547
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized short-term gains, Class A (359,993) --
Net realized short-term gains, Class B (104,808) --
Net realized short-term gains, Class C (179,271) --
Net realized long-term gains, Class A (13,870,660) --
Net realized long-term gains, Class B (4,044,831) --
Net realized long-term gains, Class C (6,913,765) --
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (25,473,328) --
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (729,714 and 1,517,141 shares, respectively) 13,949,274 26,966,994
Net asset value of shares issued from reinvestment of distributions (729,358 and 0 shares,
respectively) 12,953,387 --
Cost of shares repurchased (1,685,103 and 2,183,066 shares, respectively) (31,925,844) (38,281,398)
------------ ------------
Total (5,023,183) (11,314,404)
------------ ------------
CLASS B
Proceeds from sales of shares (102,263 and 113,665 shares, respectively) 1,787,328 1,904,955
Net asset value of shares issued from reinvestment of distributions (201,216 and 0 shares,
respectively) 3,323,848 --
Cost of shares repurchased (817,203 and 878,516 shares, respectively) (14,486,211) (14,704,416)
------------ ------------
Total (9,375,035) (12,799,461)
------------ ------------
CLASS C
Proceeds from sales of shares (125,986 and 88,988 shares, respectively) 2,183,523 1,485,601
Net asset value of shares issued from reinvestment of distributions (357,395 and 0 shares,
respectively) 5,904,168 --
Cost of shares repurchased (689,686 and 1,254,224 shares, respectively) (12,219,361) (20,810,655)
------------ ------------
Total (4,131,670) (19,325,054)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS (18,529,888) (43,438,919)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS (31,289,140) 19,907,628
NET ASSETS
Beginning of period 259,170,208 239,262,580
------------ ------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $0 AND $0, RESPECTIVELY) $227,881,068 $259,170,208
============ ============
See Notes to Financial Statements
34
Phoenix Small-Cap Value Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A
----------------------------------------------------------
YEAR ENDED AUGUST 31
----------------------------------------------------------
2006 2005 2004 2003 2002
Net asset value, beginning of period $19.45 $15.08 $13.42 $11.30 $12.72
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.05) (0.03) (0.06) --(3) (0.01)
Net realized and unrealized gain (loss) 1.01 4.40 1.72 2.12 (1.39)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.96 4.37 1.66 2.12 (1.40)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Distributions from net realized gains (1.96) -- -- -- (0.02)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.96) -- -- -- (0.02)
------ ------ ------ ------ ------
Change in net asset value (1.00) 4.37 1.66 2.12 (1.42)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $18.45 $19.45 $15.08 $13.42 $11.30
====== ====== ====== ====== ======
Total return(2) 5.32 % 28.98 % 12.37 % 18.76% (11.02)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $135,436 $147,132 $124,165 $76,783 $83,005
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.40 % 1.40 % 1.40 % 1.40% 1.40 %
Gross operating expenses 1.50 % 1.56 % 1.57 % 1.71% 1.64 %
Net investment income (loss) (0.28)% (0.17)% (0.38)% 0.04% (0.11)%
Portfolio turnover 121 % 102 % 150 % 241% 123 %
CLASS B
----------------------------------------------------------
YEAR ENDED AUGUST 31
----------------------------------------------------------
2006 2005 2004 2003 2002
Net asset value, beginning of period $18.26 $14.27 $12.79 $10.85 $12.31
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.18) (0.15) (0.16) (0.08) (0.10)
Net realized and unrealized gain (loss) 0.95 4.14 1.64 2.02 (1.34)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.77 3.99 1.48 1.94 (1.44)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Distributions from net realized gains (1.96) -- -- -- (0.02)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.96) -- -- -- (0.02)
------ ------ ------ ------ ------
Change in net asset value (1.19) 3.99 1.48 1.94 (1.46)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $17.07 $18.26 $14.27 $12.79 $10.85
====== ====== ====== ====== ======
Total return(2) 4.57 % 27.96 % 11.57 % 17.88 % (11.72)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $30,567 $42,081 $43,801 $40,696 $40,382
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 2.15 % 2.15 % 2.15 % 2.15 % 2.15 %
Gross operating expenses 2.25 % 2.31 % 2.33 % 2.46 % 2.39 %
Net investment income (loss) (1.04)% (0.91)% (1.15)% (0.71)% (0.86)%
Portfolio turnover 121 % 102 % 150 % 241 % 123 %
<FN>
(1) Computed using average shares outstanding.
(2) Sales charges are not reflected in total return calculation.
(3) Amount is less than $0.01.
</FN>
See Notes to Financial Statements
35
Phoenix Small-Cap Value Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS C
----------------------------------------------------------
YEAR ENDED AUGUST 31
----------------------------------------------------------
2006 2005 2004 2003 2002
Net asset value, beginning of period $18.26 $14.27 $12.79 $10.85 $12.31
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.18) (0.15) (0.16) (0.08) (0.10)
Net realized and unrealized gain (loss) 0.95 4.14 1.64 2.02 (1.34)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.77 3.99 1.48 1.94 (1.44)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Distributions from net realized gains (1.96) -- -- -- (0.02)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.96) -- -- -- (0.02)
------ ------ ------ ------ ------
Change in net asset value (1.19) 3.99 1.48 1.94 (1.46)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $17.07 $18.26 $14.27 $12.79 $10.85
====== ====== ====== ====== ======
Total return(2) 4.57 % 27.96 % 11.57 % 17.88 % (11.72)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $61,878 $69,957 $71,296 $51,559 $49,201
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 2.15 % 2.15 % 2.15 % 2.15 % 2.15 %
Gross operating expenses 2.25 % 2.31 % 2.32 % 2.46 % 2.39 %
Net investment income (loss) (1.03)% (0.91)% (1.14)% (0.72)% (0.86)%
Portfolio turnover 121 % 102 % 150 % 241 % 123 %
<FN>
(1) Computed using average shares outstanding.
(2) Sales charges are not reflected in total return calculation.
</FN>
See Notes to Financial Statements
36
PHOENIX VALUE EQUITY FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGEMENT TEAM
Q: HOW DID THE PHOENIX VALUE EQUITY FUND PERFORM FOR ITS FISCAL ENDED AUGUST 31,
2006?
A: For the fiscal year ended August 31, 2006, the Fund's Class A shares returned
13.79%, Class B shares returned 12.91%, and Class C shares returned 12.90%. For
the same period, the S&P 500(R) Index, a broad-based equity index, returned
8.88% and the Russell 1000(R) Value Index, the Fund's style-specific benchmark,
returned 13.96%. All performance figures assume reinvestment of distributions
and exclude the effect of sales charges. PAST PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE
PERFORMANCE SHOWN ABOVE.
Q: HOW DID THE EQUITY MARKETS PERFORM DURING THE FUND'S FISCAL YEAR?
A: Value stocks in the U.S. equity market, as measured by the Russell 1000 Value
Index, delivered solid absolute returns over the period, rising approximately
14.0%. This compares with a return of only 8.9% for the broad, large cap U.S.
market as measured by the S&P 500. Value stocks and smaller stocks generally
performed better than the broad market as the United States continued to
experience positive economic growth. This continues a value rally that has
dominated many equity markets since the collapse of the growth stock tech bubble
at the beginning of this decade. In the year ending August 31, 2006,
telecommunications and technology, along with materials and consumer staples,
were among the stronger sectors of the U.S. market. Banking stocks also
performed well over the period as consumer lending activity remained robust.
Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR?
A: Acadian began managing the Fund on September 30, 2005, and from that time to
the end of the reporting period, it trailed the benchmark index by a small
margin. Overall, stock selection was slightly positive, however, sector
allocations were negative on average, particularly an overweighting in consumer
durables.
The Fund lost value from its positioning in finance, energy, technology
and healthcare stocks. This was mainly because the portfolio had underweighted
positions in some strong companies that helped drive the benchmark index return,
such as Merck, Proctor and Gamble, Exxon, J.P. Morgan and Citigroup.
The Fund saw significant value added from its positions in materials
stocks, which were overweighted. Steel and mining company holdings such as
Phelps Dodge and Nucor were helped by strong commodities prices, while
construction materials companies like USG gained support from a still-solid U.S.
housing market. The Fund's holdings in telecommunications, service and banking
also outperformed the benchmark index in these sectors.
SEPTEMBER 2006
THE PRECEDING INFORMATION IS THE OPINION OF PORTFOLIO MANAGEMENT. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE IS NO GUARANTEE THAT
MARKET FORECASTS WILL BE REALIZED.
FOR DEFINITIONS OF THE INDEXES CITED AND CERTAIN INVESTMENT TERMS USED IN THIS
REPORT, SEE THE GLOSSARY ON PAGE 3.
37
Phoenix Value Equity Fund
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS 1 PERIODS ENDING 8/31/06
- --------------------------------------------------------------------------------
INCEPTION INCEPTION
1 YEAR 5 YEARS TO 8/31/06 DATE
------ ------- ----------- ---------
Class A Shares at NAV 2 13.79% 4.56% 6.64% 11/5/97
Class A Shares at POP 3 7.24 3.33 5.93 11/5/97
Class B Shares at NAV 2 12.91 3.78 5.84 11/5/97
Class B Shares with CDSC 4 8.91 3.78 5.84 11/5/97
Class C Shares at NAV 2 12.90 3.78 5.85 11/5/97
Class C Shares with CDSC 4 12.90 3.78 5.85 11/5/97
S&P 500(R) Index 8.88 4.65 5.39 11/5/97
Russell 1000(R) Value Index 13.96 8.70 8.16 11/5/97
ALL RETURNS REPRESENT PAST PERFORMANCE WHICH IS NO GUARANTEE OF FUTURE RESULTS.
CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE SHOWN. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. THE ABOVE TABLE AND GRAPH BELOW DO NOT REFLECT THE DEDUCTION OF TAXES THAT
A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
PLEASE VISIT PHOENIXFUNDS.COM FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT
MONTH-END.
1 TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE AND THE
REINVESTMENT OF BOTH DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS.
2 "NAV" (NET ASSET VALUE) TOTAL RETURNS DO NOT INCLUDE THE EFFECT OF ANY SALES
CHARGE.
3 "POP" (PUBLIC OFFERING PRICE) TOTAL RETURNS INCLUDE THE EFFECT OF THE MAXIMUM
FRONT-END 5.75% SALES CHARGE.
4 CDSC (CONTINGENT DEFERRED SALES CHARGE) IS APPLIED TO REDEMPTIONS OF CERTAIN
CLASSES OF SHARES THAT DO NOT HAVE A SALES CHARGE APPLIED AT THE TIME OF
PURCHASE. CDSC CHARGES FOR B SHARES DECLINE FROM 5% TO 0% OVER A FIVE YEAR
PERIOD. CDSC CHARGES FOR CLASS C SHARES ARE 1% IN THE FIRST YEAR AND 0%
THEREAFTER.
- --------------------------------------------------------------------------------
GROWTH OF $10,000 PERIODS ENDING 8/31
- --------------------------------------------------------------------------------
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
11/5/97 (inception of the Fund) in Class A, Class B and Class C shares. The
total return for Class A shares reflects the maximum sales charge of 5.75% on
the initial investment. The total return for Class B shares reflects the CDSC
charges which decline from 5% to 0% over a five year period. The total return
for Class C shares reflects the CDSC charges which are 1% in the first year and
0% thereafter. Performance assumes dividends and capital gain distributions are
reinvested.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS:
Phoenix Phoenix Phoenix
Value Equity Value Equity Value Equity
Fund Fund Fund Russell 1000(R) S&P 500(R)
Class A Class B Class C Value Index Index
------------ ------------ ------------ ------------ --------
11/5/97 $ 9,425 $10,000 $10,000 $10,000 $10,000
8/31/98 8,456 8,908 8,914 9,831 10,286
8/31/99 11,491 12,031 12,027 12,788 14,388
8/31/00 14,261 14,808 14,813 13,320 16,746
8/31/01 13,305 13,709 13,715 13,171 12,662
8/30/02 11,312 11,575 11,581 11,441 10,383
8/29/03 12,140 12,320 12,330 12,771 11,638
8/31/04 12,955 13,053 13,063 15,008 12,971
8/31/05 14,610 14,615 14,624 17,538 14,598
8/31/06 16,624 16,501 16,511 19,986 15,895
For information regarding the indexes, see the glossary on page 3.
38
Phoenix Value Equity Fund
ABOUT YOUR FUND'S EXPENSES
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
Value Equity 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 B and 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
Value Equity Fund Account Value Account Value During
Class A February 28, 2006 August 31, 2006 Period*
- ------------------ ----------------- --------------- -------------
Actual $1,000.00 $1,054.30 $6.99
Hypothetical (5% return
before expenses) 1,000.00 1,018.41 6.89
*EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 1.35%,
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.
ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS A
RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT,
IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED AUGUST 31, 2006.
THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 13.79%. AN
INVESTMENT OF $1,000.00 AT AUGUST 31, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE
AT AUGUST 31, 2006 OF $1,137,93.
Beginning Ending Expenses Paid
Value Equity Fund Account Value Account Value During
Class B February 28, 2006 August 31, 2006 Period*
- ------------------ ----------------- --------------- -------------
Actual $1,000.00 $1,050.10 $10.85
Hypothetical (5% return
before expenses) 1,000.00 1,014.58 10.72
*EXPENSES ARE EQUAL TO THE FUND'S CLASS B ANNUALIZED EXPENSE RATIO OF 2.10%,
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.
ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS B
RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT,
IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED AUGUST 31, 2006.
THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 12.91%. AN
INVESTMENT OF $1,000.00 AT AUGUST 31, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE
AT AUGUST 31, 2006 OF $1,129.10.
Beginning Ending Expenses Paid
Value Equity Fund Account Value Account Value During
Class C February 28, 2006 August 31, 2006 Period*
- ------------------ ----------------- --------------- -------------
Actual $1,000.00 $1,050.10 $10.85
Hypothetical (5% return
before expenses) 1,000.00 1,014.58 10.72
*EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 2.10%,
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.
ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS C
RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT,
IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED AUGUST 31, 2006.
THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 12.90%. AN
INVESTMENT OF $1,000.00 AT AUGUST 31, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE
AT AUGUST 31, 2006 OF $1,129.00.
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.
39
Phoenix Value Equity Fund
- --------------------------------------------------------------------------------
SECTOR WEIGHTINGS 8/31/06
- --------------------------------------------------------------------------------
As a percentage of total investments
[CHART OMITTED - EDGAR REPRESENTATION OF DATA FOLLOWS]
Financials 33%
Energy 17
Telecommunication Services 10
Industrials 9
Health Care 8
Materials 8
Information Technology 4
Other 11
SCHEDULE OF INVESTMENTS
AUGUST 31, 2006
SHARES VALUE
-------- -----------
DOMESTIC COMMON STOCKS--98.4%
AEROSPACE & DEFENSE--0.6%
Northrop Grumman Corp. ............................ 3,900 $ 260,559
AIRLINES--0.5%
Alaska Air Group, Inc.(b) ......................... 3,900 147,693
Continental Airlines, Inc. Class B(b) ............ 4,400 110,396
-----------
258,089
-----------
BIOTECHNOLOGY--3.0%
Amgen, Inc.(b) .................................... 20,400 1,385,772
Biogen Idec, Inc.(b) .............................. 200 8,828
-----------
1,394,600
-----------
BROADCASTING & CABLE TV--2.0%
DIRECTV Group, Inc. (The)(b) ...................... 50,800 954,532
BUILDING PRODUCTS--0.0%
American Woodmark Corp. ........................... 400 12,612
COMPUTER STORAGE & PERIPHERALS--2.0%
Lexmark International, Inc. Class A(b) ............ 16,400 919,548
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS--6.1%
Caterpillar, Inc. ................................. 14,600 968,710
Cummins, Inc. ..................................... 7,400 849,668
FreightCar America, Inc. .......................... 1,700 98,940
PACCAR, Inc. ...................................... 16,800 918,456
-----------
2,835,774
-----------
SHARES VALUE
-------- -----------
DEPARTMENT STORES--0.1%
Dillard's, Inc. Class A ........................... 1,900 $ 59,242
DIVERSIFIED CHEMICALS--1.0%
Ashland, Inc. ..................................... 7,300 460,922
DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES--0.2%
PHH Corp.(b) ...................................... 4,100 102,951
DIVERSIFIED METALS & MINING--4.1%
Freeport-McMoRan Copper & Gold, Inc.
Class B (Indonesia) ............................... 2,800 162,988
Phelps Dodge Corp. ................................ 19,400 1,736,300
-----------
1,899,288
-----------
ELECTRIC UTILITIES--3.3%
FirstEnergy Corp. ................................. 27,100 1,546,326
FOOTWEAR--0.9%
Nike, Inc. Class B ................................ 5,200 419,952
HEALTH CARE DISTRIBUTORS--3.0%
AmerisourceBergen Corp. ........................... 31,300 1,382,208
INDUSTRIAL MACHINERY--0.1%
Timken Co. (The) .................................. 1,100 35,244
INTEGRATED OIL & GAS--16.0%
Chevron Corp. ..................................... 11,200 721,280
ConocoPhillips .................................... 34,400 2,181,992
Exxon Mobil Corp. ................................. 28,200 1,908,294
Hess Corp. ........................................ 24,400 1,117,032
Marathon Oil Corp. ................................ 18,700 1,561,450
-----------
7,490,048
-----------
See Notes to Financial Statements
40
Phoenix Value Equity Fund
SHARES VALUE
-------- -----------
INTEGRATED TELECOMMUNICATION SERVICES--10.1%
AT&T, Inc. ........................................ 81,700 $ 2,543,321
Embarq Corp.(b) ................................... 22,000 1,037,300
Qwest Communications International, Inc.(b) ....... 130,300 1,147,943
-----------
4,728,564
-----------
INVESTMENT BANKING & BROKERAGE--4.6%
Bear Stearns Cos., Inc. (The) ..................... 1,800 234,630
Morgan Stanley .................................... 29,000 1,907,910
-----------
2,142,540
-----------
LEISURE PRODUCTS--0.1%
JAKKS Pacific, Inc.(b) ............................ 2,600 42,484
LIFE & HEALTH INSURANCE--4.0%
MetLife, Inc. ..................................... 31,900 1,755,457
Nationwide Financial Services, Inc. Class A ....... 2,000 96,820
-----------
1,852,277
-----------
MANAGED HEALTH CARE--0.2%
CIGNA Corp. ....................................... 700 79,149
MULTI-LINE INSURANCE--6.3%
American International Group, Inc. ................ 1,100 70,202
Assurant, Inc. .................................... 8,000 411,600
Genworth Financial, Inc. Class A .................. 43,900 1,511,477
Hartford Financial Services Group, Inc. (The) ..... 11,100 953,046
-----------
2,946,325
-----------
MULTI-UTILITIES--0.1%
OGE Energy Corp. .................................. 700 26,068
OIL & GAS REFINING & MARKETING--1.1%
Valero Energy Corp. ............................... 8,600 493,640
OTHER DIVERSIFIED FINANCIAL SERVICES--2.5%
Bank of America Corp. ............................. 2,000 102,940
JPMorgan Chase & Co. .............................. 23,800 1,086,708
-----------
1,189,648
-----------
PHARMACEUTICALS--1.9%
Abbott Laboratories ............................... 10,000 487,000
Alpharma, Inc. Class A ............................ 6,200 129,828
King Pharmaceuticals, Inc.(b) ..................... 16,600 269,252
-----------
886,080
-----------
PROPERTY & CASUALTY INSURANCE--7.4%
Allstate Corp. (The) .............................. 10,100 585,194
Berkley (W.R.) Corp. .............................. 9,000 315,000
SHARES VALUE
-------- -----------
PROPERTY & CASUALTY INSURANCE--CONTINUED
Chubb Corp. (The) ................................. 33,600 $ 1,685,376
CNA Financial Corp.(b) ............................ 3,500 121,345
St. Paul Travelers Cos., Inc. (The) ............... 16,792 737,169
-----------
3,444,084
-----------
RAILROADS--1.4%
Burlington Northern Santa Fe Corp. ................ 3,900 261,105
CSX Corp. ......................................... 7,800 235,716
Union Pacific Corp. ............................... 1,700 136,595
-----------
633,416
-----------
REGIONAL BANKS--5.0%
KeyCorp ........................................... 21,600 794,664
SunTrust Banks, Inc. .............................. 20,200 1,543,280
-----------
2,337,944
-----------
SEMICONDUCTOR EQUIPMENT--0.2%
Lam Research Corp.(b) ............................. 2,700 115,533
SEMICONDUCTORS--2.0%
Texas Instruments, Inc. ........................... 29,400 958,146
SOFT DRINKS--1.1%
PepsiCo, Inc. ..................................... 7,900 515,712
SPECIALIZED CONSUMER SERVICES--0.1%
Jackson Hewitt Tax Service, Inc. .................. 1,200 37,920
STEEL--2.8%
Nucor Corp. ....................................... 20,000 977,400
Reliance Steel & Aluminum Co. ..................... 3,800 124,526
United States Steel Corp. ......................... 3,500 203,595
-----------
1,305,521
-----------
THRIFTS & MORTGAGE FINANCE--2.4%
Corus Bankshares, Inc. ............................ 2,200 47,982
MGIC Investment Corp. ............................. 3,400 196,758
Radian Group, Inc. ................................ 14,800 886,224
-----------
1,130,964
-----------
TOBACCO--2.2%
Loews Corp. - Carolina Group ...................... 1,900 108,794
Reynolds American, Inc. ........................... 14,000 910,980
-----------
1,019,774
-----------
- --------------------------------------------------------------------------------
TOTAL DOMESTIC COMMON STOCKS
(IDENTIFIED COST $42,459,022) 45,917,684
- --------------------------------------------------------------------------------
See Notes to Financial Statements
41
Phoenix Value Equity Fund
SHARES VALUE
-------- -----------
FOREIGN COMMON STOCKS(c)--0.6%
REINSURANCE--0.6%
Arch Capital Group Ltd. (United States)(b) ........ 2,608 $ 155,437
PartnerRe Ltd. (United States) .................... 1,825 117,347
- --------------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $270,835) 272,784
- --------------------------------------------------------------------------------
TOTAL LONG TERM INVESTMENTS--99.0%
(IDENTIFIED COST $42,729,857) 46,190,468
- --------------------------------------------------------------------------------
PAR VALUE
(000)
---------
SHORT-TERM INVESTMENTS--1.1%
COMMERCIAL PAPER(d)--1.1%
CAFCO LLC 5.26%, 9/1/06 .......................... $ 515 515,000
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $515,000) 515,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--100.1%
(IDENTIFIED COST $43,244,857) 46,705,468(a)
Other assets and liabilities, net--(0.1)% (31,693)
-----------
NET ASSETS--100.0% $46,673,775
===========
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $3,892,875 and gross
depreciation of $477,837 for federal income tax purposes. At August 31,
2006, the aggregate cost of securities for federal income tax purposes was
$43,290,430.
(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
42
Phoenix Value Equity Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2006
ASSETS
Investment securities at value
(Identified cost $43,244,857) $46,705,468
Cash 556
Receivables
Dividends 96,339
Fund shares sold 37,641
Trustee retainer 27
Prepaid expenses 10,501
-----------
Total assets 46,850,532
-----------
LIABILITIES
Payables
Fund shares repurchased 63,199
Professional fee 27,843
Transfer agent fee 21,751
Distribution and service fees 21,307
Investment advisory fee 22,761
Printing fee 14,533
Administration fee 3,246
Other accrued expenses 2,117
-----------
Total liabilities 176,757
-----------
NET ASSETS $46,673,775
===========
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $48,095,334
Undistributed net investment income 390,970
Accumulated net realized loss (5,273,140)
Net unrealized appreciation 3,460,611
-----------
NET ASSETS $46,673,775
===========
CLASS A
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $28,822,628) 1,880,638
Net asset value per share $15.33
Offering price per share $15.33 /(1-5.75%) $16.27
CLASS B
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $8,818,118) 601,583
Net asset value and offering price per share $14.66
CLASS C
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $9,033,029) 615,817
Net asset value and offering price per share $14.67
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2006
INVESTMENT INCOME
Dividends $ 1,148,472
Interest 21,174
----------
Total investment income 1,169,646
----------
EXPENSES
Investment advisory fee 356,646
Service fees, Class A 70,362
Distribution and service fees, Class B 102,073
Distribution and service fees, Class C 92,008
Financial agent fee 46,926
Administration fee 6,492
Transfer agent 113,169
Registration 34,620
Professional 34,532
Printing 25,687
Trustees 20,842
Custodian 14,582
Miscellaneous 11,621
----------
Total expenses 929,560
Less expenses reimbursed by investment adviser (155,121)
Custodian fees paid indirectly (3,105)
----------
Net expenses 771,334
----------
NET INVESTMENT INCOME (LOSS) 398,312
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments 9,248,277
Net change in unrealized appreciation (depreciation)
on investments (3,719,010)
----------
NET GAIN (LOSS) ON INVESTMENTS 5,529,267
----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 5,927,579
===========
See Notes to Financial Statements
43
Phoenix Value Equity Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
August 31, 2006 August 31, 2005
--------------- ---------------
FROM OPERATIONS
Net investment income (loss) $ 398,312 $ 291,463
Net realized gain (loss) 9,248,277 4,401,246
Net change in unrealized appreciation (depreciation) (3,719,010) 2,141,924
----------- ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,927,579 6,834,633
----------- ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (239,885) --
Net investment income, Class B (21,604) --
Net investment income, Class C (19,055) --
----------- ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (280,544) --
----------- ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (425,199 and 274,618 shares, respectively) 6,198,379 3,623,573
Net asset value of shares issued from reinvestment of distributions
(16,173 and 0 shares, respectively) 224,475 --
Cost of shares repurchased (650,431 and 911,003 shares, respectively) (9,344,863) (12,004,860)
----------- ------------
Total (2,922,009) (8,381,287)
----------- ------------
CLASS B
Proceeds from sales of shares (65,334 and 97,568 shares, respectively) 904,211 1,235,635
Net asset value of shares issued from reinvestment of distributions
(1,292 and 0 shares, respectively) 17,247 --
Cost of shares repurchased (396,306 and 305,879 shares, respectively) (5,432,355) (3,883,593)
----------- ------------
Total (4,510,897) (2,647,958)
----------- ------------
CLASS C
Proceeds from sales of shares (40,114 and 49,854 shares, respectively) 570,512 637,616
Net asset value of shares issued from reinvestment of distributions
(1,150 and 0 shares, respectively) 15,351 --
Cost of shares repurchased (157,960 and 457,829 shares, respectively) (2,189,002) (5,752,878)
----------- ------------
Total (1,603,139) (5,115,262)
----------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS (9,036,045) (16,144,507)
----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS (3,389,010) (9,309,874)
NET ASSETS
Beginning of period 50,062,785 59,372,659
----------- ------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME
OF $390,970 AND $273,202, RESPECTIVELY) $46,673,775 $ 50,062,785
=========== ============
See Notes to Financial Statements
44
Phoenix Value Equity Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A
----------------------------------------------------------
YEAR ENDED AUGUST 31
----------------------------------------------------------
2006 2005 2004 2003 2002
Net asset value, beginning of period $13.59 $12.05 $11.33 $10.64 $12.76
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) 0.16 0.11 0.04 0.11 0.08
Net realized and unrealized gain (loss) 1.70 1.43 0.72 0.66 (1.97)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.86 1.54 0.76 0.77 (1.89)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.12) -- (0.04) (0.08) (0.08)
Distributions from net realized gains -- -- -- -- (0.15)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.12) -- (0.04) (0.08) (0.23)
------ ------ ------ ------ ------
Change in net asset value 1.74 1.54 0.72 0.69 (2.12)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $15.33 $13.59 $12.05 $11.33 $10.64
====== ====== ====== ====== ======
Total return(2) 13.79% 12.78% 6.71% 7.31% (14.97)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $28,823 $28,407 $32,859 $37,310 $43,993
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.32%(3) 1.25% 1.25% 1.25% 1.25 %
Gross operating expenses 1.64% 1.71% 1.59% 1.63% 1.49 %
Net investment income (loss) 1.13% 0.84% 0.35% 1.06% 0.64 %
Portfolio turnover 214% 69% 200% 349% 166 %
CLASS B
----------------------------------------------------------
YEAR ENDED AUGUST 31
----------------------------------------------------------
2006 2005 2004 2003 2002
Net asset value, beginning of period $13.01 $11.62 $10.99 $10.35 $12.42
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) 0.06 0.01 (0.05) 0.04 (0.01)
Net realized and unrealized gain (loss) 1.62 1.38 0.70 0.63 (1.91)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.68 1.39 0.65 0.67 (1.92)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) -- (0.02) (0.03) --
Distributions from net realized gains -- -- -- -- (0.15)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.03) -- (0.02) (0.03) (0.15)
------ ------ ------ ------ ------
Change in net asset value 1.65 1.39 0.63 0.64 (2.07)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.66 $13.01 $11.62 $10.99 $10.35
====== ====== ====== ====== ======
Total return(2) 12.91% 11.96% 5.95 % 6.44% (15.57)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $8,818 $12,118 $13,247 $16,363 $28,873
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 2.06%(3) 2.00% 2.00 % 2.00% 2.00 %
Gross operating expenses 2.39% 2.46% 2.34 % 2.38% 2.24 %
Net investment income (loss) 0.42% 0.09% (0.40)% 0.37% (0.11)%
Portfolio turnover 214% 69% 200 % 349% 166 %
<FN>
(1) Computed using average shares outstanding.
(2) Sales charges are not reflected in total return calculation.
(3) Represents blended net expense ratio. See Note 3 in the Notes to Financial Statements.
</FN>
See Notes to Financial Statements
45
Phoenix Value Equity Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS C
----------------------------------------------------------
YEAR ENDED AUGUST 31
----------------------------------------------------------
2006 2005 2004 2003 2002
Net asset value, beginning of period $13.02 $11.63 $11.00 $10.35 $12.43
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) 0.05 0.01 (0.05) 0.03 (0.01)
Net realized and unrealized gain (loss) 1.63 1.38 0.70 0.65 (1.92)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.68 1.39 0.65 0.68 (1.93)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) -- (0.02) (0.03) --
Distributions from net realized gains -- -- -- -- (0.15)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.03) -- (0.02) (0.03) (0.15)
------ ------ ------ ------ ------
Change in net asset value 1.65 1.39 0.63 0.65 (2.08)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.67 $13.02 $11.63 $11.00 $10.35
====== ====== ====== ====== ======
Total return(2) 12.90% 11.95% 5.94 % 6.47% (15.56)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $9,033 $9,538 $13,266 $15,408 $19,231
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 2.07%(3) 2.00% 2.00 % 2.00% 2.00 %
Gross operating expenses 2.39% 2.46% 2.34 % 2.38% 2.24 %
Net investment income (loss) 0.39% 0.09% (0.40)% 0.31% (0.11)%
Portfolio turnover 214% 69% 200 % 349% 166 %
<FN>
(1) Computed using average shares outstanding.
(2) Sales charges are not reflected in total return calculation.
(3) Represents blended net expense ratio. See Note 3 in the Notes to Financial Statements.
</FN>
See Notes to Financial Statements
46
PHOENIX INVESTMENT TRUST 97
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2006
1. ORGANIZATION
Phoenix Investment Trust 97 (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, four Funds are offered for sale (each a "Fund"). The Phoenix
Quality Small-Cap Fund ("Quality Small-Cap Fund") is diversified and seeks long
term capital appreciation. The Phoenix Small-Cap Sustainable Growth Fund
("Small-Cap Sustainable Growth Fund") is diversified and seeks long-term capital
appreciation. The Phoenix Small-Cap Value Fund ("Small-Cap Value Fund") is
diversified and seeks long-term capital appreciation. The Phoenix Value Equity
Fund ("Value Equity Fund") is diversified and its primary investment objective
is to seek long-term capital appreciation and its secondary objective is to seek
current income.
The Funds offer the following classes of shares for sale:
Class X Class A Class B Class C
------- ------- ------- -------
Quality Small-Cap Fund ............. X X -- X
Small-Cap Sustainable Growth Fund .. X X -- X
Small-Cap Value Fund ............... -- X X X
Value Equity 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 B shares are sold with a contingent deferred sales charge,
which declines from 5% to zero depending on the period of time the shares are
held. 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.
47
PHOENIX INVESTMENT TRUST 97
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2006 (CONTINUED)
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
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. SECURITIES LENDING:
Certain Funds may loan securities to qualified brokers through an agreement
with State Street Bank and Trust (the "Custodian"). Under the terms of the
agreement, the Funds receives collateral with a market value not less than 100%
of the market value of loaned securities. Collateral is adjusted daily in
connection with changes in the market value of securities on loan. Collateral
may consist of cash, securities issued or guaranteed by the U.S. Government or
its agencies and the sovereign debt of foreign countries. Cash collateral has
been invested in a short-term money market fund. Dividends earned on the
collateral and premiums paid by the borrower are recorded as income by the Fund
net of fees charged by the Custodian for its services in connection with this
securities lending program. Lending portfolio securities involves a risk of
delay in the recovery of the loaned securities or in the foreclosure on
collateral.
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, 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:
First $400 Million - $1 +
$400 Million $1 Billion Billion
------------ --------------- -------
Quality Small-Cap Fund ...... 0.90% 0.85% 0.80%
Small-Cap Sustainable
Growth Fund ............... 0.90% 0.85% 0.80%
48
PHOENIX INVESTMENT TRUST 97
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2006 (CONTINUED)
First $1-2 $2 +
$1 Billion Billion Billion
---------- ------- -------
Small-Cap Value Fund ........ 0.90% 0.85% 0.80%
Value Equity Fund ........... 0.75% 0.70% 0.65%
The Adviser has contractually agreed to limit total fund operating expenses,
(excluding interest, taxes, and extraordinary expenses), through December 31,
2007 for the Quality Small-Cap and Small-Cap Sustainable Growth Funds and
through August 31, 2007 for the Small-Cap Value and Value Equity Funds, so that
such expenses do not exceed the following percentages of the average annual net
asset values for the Funds:
Class A Class C Class X
------- ------- -------
Quality Small-Cap Fund ...... 1.40% 2.15% 1.15%
Small-Cap Sustainable
Growth Fund .............. 1.40% 2.15% 1.15%
Class A Class B Class C
------- ------- -------
Small-Cap Value Fund ........ 1.40% 2.15% 2.15%
Value Equity Fund ........... 1.35% 2.10% 2.10%
For the period of January 1, 2005 through December 31, 2005, the Value Equity
Fund's expense limits were 1.25% for Class A, 2.00% for Class B and Class C.
The Adviser will not seek to recapture any reimbursed expenses under these
agreements.
Kayne Anderson Rudnick Investment Management, LLC ("Kayne") an indirect
wholly-owned subsidiary of PNX is the subadviser to the Quality Small-Cap and
Small-Cap Sustainable Growth Funds. For its services PIC pays Kayne a fee based
upon the following annual rates as a percentage of the daily net assets of each
Fund.
First $400 Million - $1 +
$400 Million $1 Billion Billion
------------ --------------- -------
Quality Small-Cap Fund ...... 0.45% 0.425% 0.40%
Small-Cap Sustainable
Growth Fund ............... 0.45% 0.425% 0.40%
Phoenix/Zweig Advisers LLC ("PZA"), an indirect wholly-owned subsidiary of
PNX, is the subadviser to the Small-Cap Value Fund. For its services, PIC pays
PZA a fee based on the daily net assets of this Fund as follows:
First Excess of
$166 Million $166 Million
------------ ------------
Small-Cap Value Fund ........ 0.10% 0.40%
Effective September 30, 2005, Acadian Asset Management, Inc. ("Acadian")
became the subadviser to the Value Equity Fund. For its services, PIC pays
Acadian a fee based on the average daily net assets of this Fund as follows:
First $1-2 $2 +
$1 Billion Billion Billion
---------- ------- -------
Value Equity Fund ........... 0.375% 0.350% 0.325%
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 fiscal
year (the "period") ended August 31, 2006, as follows:
Class A Class B Class C
Net Selling Deferred Deferred
Commissions Sales Charges Sales Charges
----------- ------------- -------------
Quality Small-Cap Fund $ -- $ -- $ --
Small-Cap Sustainable
Growth Fund -- -- --
Small-Cap Value Fund 8,575 40,201 619
Value Equity Fund 3,661 30,218 388
In addition, each Fund pays PEPCO distribution and/or service fees at an
annual rate of 0.25% for Class A shares, 1.00% for Class B 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 Family. 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 Family.
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 $231,669.
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 $553,414 as reported in the Statements of
Operations, of which PEPCO retained the following:
49
PHOENIX INVESTMENT TRUST 97
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2006 (CONTINUED)
Transfer
Agent
Retained
--------
Quality Small-Cap Fund......................... $ 33
Small-Cap Sustainable Growth Fund.............. 32
Small-Cap Value Fund........................... 171,686
Value Equity Fund.............................. 20,601
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
------- ---------
Quality Small-Cap Fund
- --Class X............................ 10,000 $ 100,600
- --Class A............................ 10,000 100,524
- --Class C............................ 10,000 100,398
Small-Cap Sustainable Growth Fund
- --Class X............................ 10,000 97,886
- --Class A............................ 10,000 97,872
- --Class C............................ 10,000 97,747
Small-Cap Value Fund
- --Class A............................ 379,254 6,997,236
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding U.S. Government and agency
securities and short-term securities) during the period ended August 31, 2006,
were as follows:
Purchases Sales
------------ ------------
Quality Small-Cap Fund............ $ 1,183,731 $ 46,809
Small-Cap Sustainable Growth Fund. 1,040,414 20,461
Small-Cap Value Fund.............. 299,712,733 339,937,168
Value Equity Fund................. 101,079,770 105,837,037
There were no purchases or sales of long-term U.S. Government and agency
securities.
5. 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 Quality Small-Cap Fund, Small-Cap Value Fund and the
Value Equity Fund held investments issued by various companies in the Financial
sector comprising 24%, 29% and 33%, respectively, of the total net assets of the
Funds. The Small-Cap Sustainable Growth Fund held investments issued by various
companies in the Information Technology sector, comprising 31% of the total net
assets of the Fund.
6. ILLIQUID SECURITIES
Investments shall be considered illiquid if they cannot be disposed of within
seven days in the ordinary course of business at the approximate amount at which
such securities have been valued by the Fund. Additionally, the following
information is also considered in determining liquidity: the frequency of trades
and quotes for the investment, whether the investment is listed for trading on a
recognized domestic exchange and/or whether two or more brokers are willing to
purchase or sell the security at a comparable price, the extent of market making
activity in the investment and the nature of the market for investment. Illiquid
securities are noted as such at the end of each Fund's Schedule of Investments
where applicable.
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
50
PHOENIX INVESTMENT TRUST 97
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2006 (CONTINUED)
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.
9. 10% SHAREHOLDERS
As of August 31, 2006, certain 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
----------- --------
Quality Small-Cap Fund ........ 40% 3
Small-Cap Sustainable
Growth Fund ................. 29 2
The shareholders are not affiliated with PNX.
10. FEDERAL INCOME TAX INFORMATION
The Funds have capital loss carryovers, which may be used to offset future
capital gains, as follows:
Expiration Year
-----------------------------------------
2011 2014 Total
---------- ------ ----------
Quality Small-Cap Fund ...... $ -- $ 937 $ 937
Small-Cap Sustainable
Growth Fund ................ -- 2,520 2,520
Small-Cap Value Fund ......... -- -- --
Value Equity Fund ............ 5,227,567 -- 5,227,567
The Funds may not realize the benefit of these losses to the extent each Fund
does not realize gains on investments prior to the expiration of the capital
loss carryovers.
For the period ended August 31, 2006, the Funds utilized losses deferred in
prior years against current year capital gains as follows:
Quality Small-Cap Fund ....... $ --
Small-Cap Sustainable
Growth Fund ................ --
Small-Cap Value Fund ......... --
Value Equity Fund ............ 9,065,713
The components of distributable earnings on a tax basis (excluding unrealized
appreciation (depreciation) which is disclosed in the Schedules of Investments),
consist of undistributed ordinary income and undistributed long-term capital
gains as follows:
Undistributed Undistributed
Ordinary Long-Term
Income Capital Gains
------------- -------------
Quality Small-Cap Fund $ 4,248 $ --
Small-Cap Sustainable
Growth Fund -- --
Small-Cap Value Fund 3,995,368 29,176,764
Value Equity Fund 390,970 --
The differences between the book and tax basis components of distributable
earnings relate principally to the timing of recognition of income and gains for
federal income tax purposes. Short-term gain distributions reported in the
Statements of Changes in Net Assets, if any, are reported as ordinary income for
federal tax purposes.
11. RECLASSIFICATION OF CAPITAL ACCOUNTS
For financial reporting purposes, book basis capital accounts are adjusted to
reflect the tax character of permanent book/tax differences. Permanent
reclassifications can arise from differing treatment of certain income and gain
transactions, nondeductible current year net operating losses, expiring capital
loss carryovers and investments in passive foreign investment companies. The
reclassifications have no impact on the net assets or net asset value of the
Funds. For the year ended August 31, 2006, the following Funds recorded
reclassifications to increase (decrease) the accounts as listed below:
Capital Paid
in on
Shares of Accumulated Undistributed
Beneficial Net Realized Net Investment
Interest Gain (Loss) Income (Loss)
------------ ------------ --------------
Quality Small-Cap Fund .... $ -- $ -- $ --
Small-Cap Sustainable
Growth Fund ............. (934) -- 934
Small-Cap Value Fund ...... -- (1,489,163) 1,489,163
Value Equity Fund ......... -- -- --
51
PHOENIX INVESTMENT TRUST 97
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2006 (CONTINUED)
12. SUBSEQUENT EVENT
Effective September 1, 2006, Euclid Advisors LLC is the subadviser to the
Small-Cap Value Fund, replacing PZA. The Fund's investment objectives, principal
investment strategies, portfolio managers, subadvisory fees and principal risks
will remain the same, unless otherwise noted.
- --------------------------------------------------------------------------------
TAX INFORMATION NOTICE (UNAUDITED)
For the fiscal year ended August 31, 2006, for federal income tax purposes,
100%, 54%, and 100% of the ordinary income dividends earned by the Quality
Small-Cap Fund, Small-Cap Value Fund and Value Equity Fund, respectively,
qualify for the dividends received deduction for corporate shareholders.
For the fiscal year ended August 31, 2006, the Quality Small-Cap Fund,
Small-Cap Value Fund and Value Equity Fund, respectively, hereby designate 100%,
52%, and 100%, or the maximum amount allowable, of its ordinary income dividends
to qualify for the lower tax rates applicable to individual shareholders. The
actual percentage for the calendar year will be designated in the year-end tax
statements.
For the fiscal year ended August 31, 2006, the Small-Cap Value Fund
designated $35,460,734 as long-term capital gain dividends.
- --------------------------------------------------------------------------------
52
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PRICEWATERHOUSECOOPERS [GRAPHIC OMITTED]
To the Board of Trustees of
Phoenix Investment Trust 97 and Shareholders of
Phoenix Quality Small-Cap Fund
Phoenix Small-Cap Sustainable Growth Fund
Phoenix Small-Cap Value Fund and
Phoenix Value Equity Fund
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Phoenix Quality Small-Cap Fund,
Phoenix Small-Cap Sustainable Growth Fund, Phoenix Small-Cap Value Fund and
Phoenix Value Equity Fund (constituting Phoenix Investment Trust 97, hereafter
referred to as the "Trust") at August 31, 2006, the results of each of their
operations for the year then ended, the changes in each of their net assets for
each of the two years in the period then ended and the financial highlights for
each of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 2006 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
October 17, 2006
53
BOARD OF TRUSTEES' CONSIDERATION OF INVESTMENT ADVISORY AND SUBADVISORY
AGREEMENTS FOR PHOENIX QUALITY SMALL-CAP FUND AND PHOENIX SMALL-CAP SUSTAINABLE
GROWTH FUND (EACH, THE "FUND")
AUGUST 31, 2006 (UNAUDITED)
The Board of Trustees is responsible for determining whether to approve the
Fund's investment advisory and subadvisory agreements. At a meeting held on May
17-18, 2006, the Board, including a majority of the independent Trustees,
approved the investment advisory agreement (the "Advisory Agreement") between
Phoenix Investment Counsel, Inc. ("PIC") and the Fund and the investment
subadvisory agreement (the "Subadvisory Agreement") between PIC and Kayne
Anderson Rudnick Investment Management, LLC (the "Subadvisor").
During the review process, the Board received assistance and advice from, and
met separately with, independent legal counsel. In approving each agreement, the
Board, including a majority of the independent Trustees, determined that the fee
structure was fair and reasonable and that approval of each agreement was in the
best interests of the Fund and its shareholders. While attention was given to
all information furnished, the following discusses the primary factors relevant
to the Board's decision.
ADVISORY AGREEMENT
Pursuant to the Advisory Agreement between PIC and the Fund, PIC provides
advisory services to the Fund. PIC is an indirect wholly-owned subsidiary of
Phoenix Investment Partners, Ltd. In evaluating the Advisory Agreement, the
Board considered a variety of information relating to the Fund and PIC. PIC
personnel provided details focusing on the nature, extent and quality of
services provided by PIC, cost of services and profitability to PIC, comparative
fees and expenses, the possible economies of scale that might be realized due to
the Fund's growth and whether fee levels were likely to reflect such economies
of scale for the benefit of investors, among other things.
NATURE, EXTENT AND QUALITY OF SERVICES. The Board concluded that the nature,
extent and quality of the overall services that would be provided by PIC and its
affiliates to the Fund and its shareholders was reasonable. The Board's
conclusion was based, in part, upon services provided to funds currently advised
by PIC such as quarterly reports provided by PIC comparing the performance of
each fund advised by it with a peer group and benchmark, reports provided by PIC
showing that the investment policies and restrictions for each fund were
followed and reports provided by PIC covering matters such as the compliance of
investment personnel and other access persons with PIC's and each fund's code of
ethics, the adherence to fair value pricing procedures established by the Board,
the monitoring of portfolio compliance, information on illiquid securities and
derivatives, brokerage commissions and presentations regarding the economic
environment and general investment outlook. The Board noted that PIC would be
responsible for the general oversight of the investment programs of the Fund and
the monitoring of the Fund's Subadvisor's investment performance and its
compliance with applicable laws, regulations, policies and procedures. In this
regard, the Board considered the past experience of PIC and its representatives
in supervising other subadvisers. With respect to performance monitoring, the
Board noted that PIC will utilize the same investment committee review process
that it used for other PIC managed funds. With respect to compliance monitoring,
the Board noted that PIC intended to utilize a similar process that it used to
monitor other PIC managed funds by requiring quarterly compliance certifications
from the Subadvisor and by conducting compliance due diligence visits at the
Subadvisor. The Board also considered the experience of PIC having acted as an
investment adviser to mutual funds for over 70 years and its current experience
in acting as an investment adviser to approximately 70 mutual funds and several
institutional clients. The Board also noted the extent of benefits that would be
provided Fund shareholders from being part of the Phoenix family of funds,
including the right to exchange investments between the same class of funds
without a sales charge, the ability to reinvest Fund dividends into other funds
and the right to combine holdings in other funds to obtain a reduced sales
charge. The Board also considered the transfer agent and shareholder services
that would be provided to Fund shareholders by an affiliate of PIC, noting
continuing improvements by management in the scope and quality of services and
favorable reports on such service conducted by third parties.
INVESTMENT PERFORMANCE. Because the Fund had not commenced operations, the
Board could not evaluate prior investment performance for the Fund. However the
Board did review prior performance of similarly managed accounts managed by the
Fund's Subadviser as described below under the "Subadvisory Agreement".
PROFITABILITY. The Board also considered the level of profits to be realized
by PIC and its affiliates in connection with the operation of the Fund. With
respect to the cost of services and profits to be realized by PIC, the Board
noted that, although Fund total expenses were expected to be above competitive
levels during the Fund's startup period, management had voluntarily agreed to
waive fees or reimburse expenses so that Class A share expenses would not exceed
1.40%, Class C share expenses would not exceed 2.15% and Class X shares expenses
would not exceed 1.15%. The Board noted that, due to the reimbursements proposed
and the cost to PIC of paying the Subadvisor a fee equal to 50% of the
management fee at each breakpoint, the cost to PIC would be greater than
management fee revenues received during the startup phase of the Fund. The Board
therefore concluded that the profitability to PIC from the Fund was not
excessive.
MANAGEMENT FEE AND TOTAL EXPENSES. The Board also considered the management
fee for the Fund as well as the Fund's projected total expenses. With respect to
the proposed management fee, the Board noted that the fee would be 0.90% for the
first $400 Million of assets under management, 0.85% between the range of $400
Million through $1 Billion and 0.80% for assets over $1 Billion. After being
provided
54
BOARD OF TRUSTEES' CONSIDERATION OF INVESTMENT ADVISORY AND SUBADVISORY
AGREEMENTS FOR PHOENIX QUALITY SMALL-CAP FUND AND PHOENIX SMALL-CAP SUSTAINABLE
GROWTH FUND (EACH, THE "FUND")
AUGUST 31, 2006 (UNAUDITED) (CONTINUED)
with information from management which compared the Fund's proposed fee with a
group of competing funds with similar investment strategies, the Board noted
that, the management fee was at the category median and that, after fee waivers
provided by PIC the projected total expenses of the Fund would be 1.40% for
Class A shares, 2.15% for Class C shares and 1.15% for Class X shares. The Board
then concluded that the management fee and the projected total expenses for the
Fund were reasonable.
ECONOMIES OF SCALE. The Board noted that it was likely that PIC and the Fund
would achieve certain economies of scale as the assets grew due to breakpoints
in the fee. The Board concluded that shareholders would have an opportunity to
benefit from these economies of scale.
SUBADVISORY AGREEMENT
Pursuant to the Subadvisory Agreement between PIC and the Subadvisor, the
Subadvisor will provide the day to day investment management for the Fund. In
evaluating the Subadvisory Agreement, the Board considered a variety of
information relating to the Fund and the Subadvisor. In this regard, the Board
considered the nature, extent and quality of services provided by the
Subadvisor, subadvisory fees and the investment performance of similarly managed
funds or accounts, among other things.
NATURE, EXTENT AND QUALITY OF SERVICES. The Board concluded that the nature,
extent and quality of the overall services that would be provided by the
Subadvisor to the Fund and its shareholders was reasonable. The Board's opinion
was based, in part, upon the extensive experience of the Subadvisor. In this
regard, the Board noted that the Subadvisor had over 20 years of experience as
an investment adviser. In this regard, the Board considered the significant
experience of the co-portfolio managers noting that one portfolio manager was
also the Managing Director of small cap equity investments for the Subadvisor
and had over 25 years of investment experience while the other manager had over
11 years of experience in the investment management business. The Board also
noted that the senior management team of the firm had an average of 16 years
experience. The Board also noted the extensive experience of analysts, traders
and other support personnel that worked with the portfolio managers. The Board
was also satisfied with the quality of the investment process discussed by a
member of the Subadvisor at the Board meeting. The Board also considered the
adequacy of the Subadvisor's compliance program.
INVESTMENT PERFORMANCE. Because the Fund had not commenced operations, the
Board could not evaluate prior investment performance for the Fund. However the
Board did review prior performance of a composite of accounts managed by the
Subadvisor in a similar strategy to the Fund.
PROFITABILITY. The Board noted and was satisfied with the Subadvisor's
representation that no Subadvisor profitability information was available due to
the fact that the relationship had not yet commenced.
SUBADVISORY FEE. The Board also considered the subadvisory fee paid to the
Subadvisor. The Board noted that the subadvisory fee would be 50% of the
management fee or 0.45% for the first $400 Million of assets under management,
0.425% for assets between $400 Million through $1 Billion and 0.40% for over $1
Billion. After being provided with information from management which compared
the Fund's proposed subadvisory fee with a group of competing funds with similar
investment strategies, the Board noted that the subadvisory fee was below the
group average of 52% of advisory fees and below the group median of 51% of
advisory fees. The Board also noted that the subadvisory fee would be paid by
PIC and not by the Fund so that Fund shareholders would not be directly
impacted.
ECONOMIES OF SCALE. The Board also considered the existence of any economies
of scale and whether those economies would be passed along to the Fund's
shareholders but noted that any economies would most likely be generated at the
fund level and not necessarily at the subadvisor level.
55
FUND MANAGEMENT TABLES (UNAUDITED)
Information pertaining to the Trustees and officers of the Trust as of August
31, 2006, is set forth below. The statement of additional information (SAI)
includes additional information about the Trustees and is available without
charge, upon request, by calling (800) 243-4361.
The address of each individual, unless otherwise noted, is 56 Prospect
Street, Hartford, CT 06115-0480. There is no stated term of office for Trustees
of the Trust.
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX PRINCIPAL OCCUPATION(S)
NAME, ADDRESS LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND
AND DATE OF BIRTH TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
E. Virgil Conway Served since 71 Chairman, Rittenhouse Advisors, LLC (consulting firm)
Rittenhouse Advisors, LLC 1997. (2001-present); Trustee/Director, Phoenix Funds Complex
101 Park Avenue (1983-present); Trustee/Director, Realty Foundation of New York
New York, NY 10178 (1972-present); Josiah Macy, Jr. Foundation (Honorary)
DOB: 8/2/29 (2004-present); Pace University (Director/Trustee Emeritus)
(2003-present), Greater New York Councils, Boy Scouts of
America (1985-present); The Academy of Political Science (Vice
Chairman) (1985-present), Urstadt Biddle Property Corp.
(1989-present), Colgate University (Trustee Emeritus)
(2004-present), Director/Trustee, The Harlem Youth Development
Foundation (Chairman) (1998-2002); Metropolitan Transportation
Authority (Chairman) (1992-2001), Trism, Inc. (1994-2001);
Consolidated Edison Company of New York, Inc. (1970-2002),
Atlantic Mutual Insurance Company (1974-2002), Centennial
Insurance Company (1974-2002), Union Pacific Corp. (1978-2002),
BlackRock Freddie Mac Mortgage Securities Fund (Advisory
Director) (1990-2000), Accuhealth (1994-2002), Pace University
(1978-2003), New York Housing Partnership Development Corp.
(Chairman) (1981-2003), Josiah Macy, Jr. Foundation
(1975-2004).
- ------------------------------------------------------------------------------------------------------------------------------------
Harry Dalzell-Payne Served since 71 Retired. Trustee/Director, Phoenix Funds Complex
The Flat, Elmore Court 1997. (1983-present).
Elmore, GLOS, GL2 3NT
U.K.
DOB: 9/8/29
- ------------------------------------------------------------------------------------------------------------------------------------
Francis E. Jeffries Served since 72 Director, The Empire District Electric Company (1984-2004);
8477 Bay Colony Dr. #902 1997. Trustee/Director, Phoenix Funds Complex (1987-present).
Naples, FL 34108
DOB: 9/23/30
- ------------------------------------------------------------------------------------------------------------------------------------
Leroy Keith, Jr. Served since 69 Partner, Stonington Partners, Inc. (private equity fund)
Stonington Partners, Inc. 1997. (2001-present); Director/Trustee; Evergreen Funds (six
736 Market Street, Ste. 1430 portfolios)(1989-present). Trustee, Phoenix Funds Family
Chattanooga, TN 37402 (1980-present); Director, Diversapak (2002-present); Obaji
DOB: 2/14/39 Medical Products Company (2002-present); Director, Lincoln
Educational Services (2002-2004); Chairman, Carson Products
Company (cosmetics) (1998-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
56
FUND MANAGEMENT TABLES (UNAUDITED) (CONTINUED)
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX PRINCIPAL OCCUPATION(S)
NAME, ADDRESS LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND
AND DATE OF BIRTH TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
Geraldine M. McNamara Served since 71 Retired. Trustee/Director, Phoenix Funds Complex
40 East 88th Street 2001. (2001-present). Managing Director, U.S. Trust Company of New
New York, NY 10128 York (private bank) (1982-2006).
DOB: 4/17/51
- ------------------------------------------------------------------------------------------------------------------------------------
James M. Oates(1) Served since 69 Chairman, Hudson Castle Group, Inc. (formerly IBEX Capital
c/o Northeast Partners 1997. Markets, Inc.) (financial services) (1997-present);
150 Federal Street, Trustee/Director, Phoenix Funds Family (1987-present); Managing
Suite 1000 Director, Wydown Group (consulting firm) (1994-present);
Boston, MA 02110 Director, Investors Financial Service Corporation
DOB: 5/31/46 (1995-present); Investors Bank & Trust Corporation
(1995-present), Stifel Financial (1996-present), Connecticut
River Bancorp (1998-present), Connecticut River Bank
(1999-present), Trust Company of New Hampshire (2002-present);
Chairman, Emerson Investment Management, Inc. (2000-present);
Independent Chairman, John Hancock Trust (since 2005); Trustee,
John Hancock Funds II and John Hancock Funds III (since 2005);
Trustee, John Hancock Trust (2004-2005); Director/Trustee, AIB
Govett Funds (six portfolios) (1991-2000); Command Systems,
Inc. (1998-2000); Phoenix Investment Partners, Ltd.
(1995-2001); 1Mind, Inc. (formerly 1Mind.com) (2000-2002);
Plymouth Rubber Co. (1995-2003); Director and Treasurer,
Endowment for Health, Inc. (2000-2004).
- ------------------------------------------------------------------------------------------------------------------------------------
Richard E. Segerson Served since 69 Managing Director, Northway Management Company (1998-present).
73 Briggs Way 1997. Trustee/Director, Phoenix Funds Family (1983-present).
Chatham, MA 02633
DOB: 2/16/46
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Mr. Oates is a Director and Chairman of the Board and a shareholder of Hudson Castle Group, Inc. (formerly IBEX Capital Markets,
Inc.) ("Hudson"), a privately owned financial services firm. Phoenix Investment Partners, Ltd., an affiliate of the adviser,
owns approximately 1% of the common stock of Hudson and Phoenix Life Insurance Company also an affiliate, owns approximately 8%
of Hudson's common stock.
</FN>
57
FUND MANAGEMENT TABLES (UNAUDITED) (CONTINUED)
INTERESTED TRUSTEES
Each of the individuals listed below is an "interested person" of the Fund,
as defined in Section 2(a)(19) of the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX PRINCIPAL OCCUPATION(S)
NAME, ADDRESS LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND
AND DATE OF BIRTH TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
Marilyn E. LaMarche(2) Served since 69 Limited Managing Director, Lazard Freres & Co. LLC
Lazard Freres & Co. LLC 2002. (1997-present). Trustee/Director, Phoenix Funds Family
30 Rockefeller Plaza, (2002-present). Director, The Phoenix Companies, Inc.
59th Floor (2001-2005) and Phoenix Life Insurance Company (1989-2005).
New York, NY 10020
DOB: 5/11/34
- ------------------------------------------------------------------------------------------------------------------------------------
Philip R. McLoughlin(3) Served since 97 Director, PXRE Corporation (Reinsurance) (1985-present); World
200 Bridge Street 1997. Trust Fund (1991-present), Director/Trustee, Phoenix Funds
Chatham, MA 02633 Complex (1989-present); Management Consultant (2002-2004),
DOB: 10/23/46 Chairman Chairman (1997-2002), Chief Executive Officer (1995-2002) and
Director (1995-2002), Phoenix Investment Partners, Ltd.;
Director and Executive Vice President, The Phoenix Companies,
Inc. (2000-2002); Director (1994-2002) and Executive Vice
President, Investments (1987-2002), Phoenix Life Insurance
Company; Director (1983-2002) and Chairman (1995-2002), Phoenix
Investment Counsel, Inc.; Director (1982-2002), Chairman
(2000-2002) and President (1990-2000), Phoenix Equity Planning
Corporation; Chairman and President, Phoenix/Zweig Advisers LLC
(2001-2002); Director (2001-2002) and President (April
2002-September 2002), Phoenix Investment Management Company;
Director and Executive Vice President, Phoenix Life and Annuity
Company (1996-2002); Director (1995-2000), Executive Vice
President (1994-2002), and Chief Investment Counsel
(1994-2002), PHL Variable Insurance Company; Director, Phoenix
National Trust Holding Company (2001-2002); Director
(1985-2002), Vice President (1986-2002) and Executive Vice
President (April 2002-September 2002), PM Holdings, Inc.;
Director, WS Griffith Associates, Inc. (1995-2002); Director,
WS Griffith Securities, Inc. (1992-2002).
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(2) Ms. LaMarche is an "interested person," as defined in the Investment Company Act of 1940, by reason of her former position as
Director of The Phoenix Companies, Inc. and Phoenix Life Insurance Company.
(3) Mr. McLoughlin is an "interested person," as defined in the Investment Company Act of 1940, by reason of his former
relationship with Phoenix Investment Partners, Ltd. and its affiliates.
</FN>
58
FUND MANAGEMENT TABLES (UNAUDITED) (CONTINUED)
OFFICERS OF THE FUND WHO ARE NOT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
POSITION(S) HELD WITH
NAME, ADDRESS AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S)
DATE OF BIRTH TIME SERVED DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel T. Geraci President since 2004. Executive Vice President, Asset Management, The Phoenix
DOB: 6/12/57 Companies, Inc. (2003-present); Director, Chairman, President
and Chief Executive Officer, Phoenix Investment Partners, Ltd.
(2003-present); President, Phoenix Equity Planning Corporation
(2005-present); President, DPCM Holding, Inc. (2005-present);
President, Capital West Asset Management, LLC (2005-present);
Director and President, Phoenix Investment Counsel, Inc.
(2003-present); Director, Pasadena Capital Corporation
(2003-present); President, Euclid Advisers, LLC
(2003-present); Director and Chairman, PXP Institutional
Markets Group, Ltd. (2003-present); Director and President,
Rutherford Financial Corporation (2003-present); Director,
DPCM Holding, Inc. (2003-present); President, Phoenix/Zweig
Advisers, LLC (2003-present); Director and Chairman, Phoenix
Equity Planning Corporation (2003-present); Director and
Chairman, Duff & Phelps Investment Management Company
(2003-present); Director, Capital West Asset Management, LLC
(2003-present); Chief Executive Officer and President, The
Zweig Fund, Inc. and The Zweig Total Return Fund, Inc.
(2004-present); President, the Phoenix Funds Family
(2004-present); Chief Sales and Marketing Officer, Phoenix
Equity Planning Corporation (2003-2005); President and Chief
Executive Officer of North American investment operations,
Pioneer Investment Management USA, Inc. (2001-2003); President
of Private Wealth Management Group & Fidelity Brokerage
Company, Fidelity Investments (1996-2001).
- ------------------------------------------------------------------------------------------------------------------------------------
George R. Aylward Executive Vice President Senior Vice President and Chief Operating Officer, Asset
DOB: 8/17/64 since 2004. Management, The Phoenix Companies, Inc. (2004-present).
Executive Vice President and Chief Operating Officer, Phoenix
Investment Partners, Ltd. (2004-present). Vice President,
Phoenix Life Insurance Company (2002-2004). Vice President,
The Phoenix Companies, Inc. (2001-2004). Vice President,
Finance, Phoenix Investment Partners, Ltd. (2001-2002).
Assistant Controller, Phoenix Investment Partners, Ltd.
(1996-2001). Executive Vice President, certain funds within
the Phoenix Funds Family (2004-present).
- ------------------------------------------------------------------------------------------------------------------------------------
Nancy G. Curtiss Senior Vice President Assistant Treasurer (2001-present), Vice President, Fund
DOB: 11/24/52 since 2006. Accounting (1994-2000), Phoenix Equity Planning Corporation.
Vice President, Phoenix Investment Partners, Ltd.
(2003-present). Senior Vice President, the Phoenix Funds
Family (since 2006). Vice President, The Phoenix Edge Series
Fund (1994-present), Treasurer, The Zweig Fund Inc. and the
Zweig Total Return Fund Inc. (2003-present). Chief Financial
Officer (2005-2006) and Treasurer (1994-2006), or Assistant
Treasurer (2005-2006), certain funds within the Phoenix Fund
Complex.
- ------------------------------------------------------------------------------------------------------------------------------------
Francis G. Waltman Senior Vice President Senior Vice President, Asset Management Product Development,
DOB: 7/27/62 since 2004. The Phoenix Companies, Inc. (since 2006); Senior Vice
President, Asset Management Product Development, Phoenix
Investment Partners, Ltd. (2005-present), Senior Vice
President and Chief Administrative Officer, Phoenix Investment
Partners, Ltd., (2003-2004). Senior Vice President and Chief
Administrative Officer, Phoenix Equity Planning Corporation
(1999-2003), Senior Vice President, certain funds within the
Phoenix Fund Family (2004-present).
- ------------------------------------------------------------------------------------------------------------------------------------
59
FUND MANAGEMENT TABLES (UNAUDITED) (CONTINUED)
OFFICERS OF THE FUND WHO ARE NOT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
POSITION(S) HELD WITH
NAME, ADDRESS AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S)
DATE OF BIRTH TIME SERVED DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
Marc Baltuch Vice President and Chief Compliance Officer, Zweig-DiMenna Associates LLC
c/o Zweig-DiMenna Associates, LLC Chief Compliance Officer (1989-present); Vice President and Chief Compliance Officer,
900 Third Avenue since 2004. certain Funds within the Phoenix Fund Complex (2004-present);
New York, NY 10022 Vice President, The Zweig Total Return Fund, Inc.
DOB: 9/23/45 (2004-present); Vice President, The Zweig Fund, Inc.
(2004-present); President and Director of Watermark
Securities, Inc. (1991-present); Assistant Secretary of Gotham
Advisors Inc. (1990-present); Secretary, Phoenix-Zweig Trust
(1989-2003); Secretary, Phoenix-Euclid Market Neutral Fund
(1999-2002).
- ------------------------------------------------------------------------------------------------------------------------------------
W. Patrick Bradley Chief Financial Officer and Second Vice President, Fund Administration, Phoenix Equity
DOB: 3/2/72 Treasurer since 2006. Planning Corporation (2004-present). Chief Financial Officer
and Treasurer (2006-present) or Chief Financial Officer and
Treasurer (2005-present), certain funds within the Phoenix
Fund Family. Vice President, Chief Financial Officer,
Treasurer and Principal Accounting Officer, The Phoenix Edge
Series Fund (since 2006). Assistant Treasurer, certain funds
within the Phoenix Fund Complex (2004-2006). Senior Manager
(2002-2004), Manager (2000-2002), Audit, Deloitte & Touche,
LLP.
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin J. Carr Vice President, Chief Legal Vice President and Counsel, Phoenix Life Insurance Company
One American Row Officer, Counsel and (2005-present). Vice President, Counsel, Chief Legal Officer
Hartford, CT 06102 Secretary since 2005. and Secretary of certain funds within the Phoenix Fund Complex
DOB: 8/30/54 (2005-present). Compliance Officer of Investments and Counsel,
Travelers Life & Annuity Company (January 2005-May 2005).
Assistant General Counsel, The Hartford Financial Services
Group (1999-2005).
- ------------------------------------------------------------------------------------------------------------------------------------
60
PHOENIX INVESTMENT TRUST 97
101 Munson Street
Greenfield, MA 01301-9668
TRUSTEES
E. Virgil Conway
Harry Dalzell-Payne
Francis E. Jeffries
Leroy Keith, Jr.
Marilyn E. LaMarche
Philip R. McLoughlin, Chairman
Geraldine M. McNamara
James M. Oates
Richard E. Segerson
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, Chief Legal Officer, Counsel and Secretary
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
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
125 High Street
Boston, MA 02110-1707
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
---------------
[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.
PXP215 10-06
BPD27502
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this report,
to a provision of the code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code
of ethics described in Item 2(b) of the instructions for completion of
Form N-CSR.
(d) The registrant has not granted any waivers, during the period covered by
this report, including an implicit waiver, from a provision of the code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party, that
relates to one or more of the items set forth in paragraph (b) of the
instructions for completion of this Item.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The Registrant's Board of Trustees has determined that the Registrant
has an "audit committee financial expert" serving on its Audit
Committee.
(a)(2) E. Virgil Conway has been determined by the Registrant to possess the
technical attributes identified in Instruction 2(b) of Item 3 to Form
N-CSR to qualify as an "audit committee financial expert." Mr. Conway is
an "independent" trustee pursuant to paragraph (a)(2) of Item 3 to Form
N-CSR.
(a)(3) Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees
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(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the audit
of the registrant's annual financial statements or services
that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years
are $75,000 for 2006 and $50,000 for 2005.
Audit-Related Fees
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(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0 for 2006 and $0 for 2005.
Tax Fees
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(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $17,200 for 2006 and $9,500
for 2005.
"Tax Fees" are those primarily associated with review of the Trust's tax
provision and qualification as a regulated investment company (RIC) in
connection with audits of the Trust's financial statement, review of
year-end distributions by the Fund to avoid excise tax for the Trust,
periodic discussion with management on tax issues affecting the Trust,
and reviewing and signing the Fund's federal income and excise tax
returns.
All Other Fees
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(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
for 2006 and $0 for 2005.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
The Phoenix Investment Trust 97 (the "Fund") Board has adopted policies
and procedures with regard to the pre-approval of services provided by
PwC. Audit, audit-related and tax compliance services provided to the
Fund on an annual basis require specific pre-approval by the Board. As
noted above, the Board must also approve other non-audit services
provided to the Fund and those non-audit services provided to the Fund's
Affiliated Service Providers that relate directly to the operations and
financial reporting of the Fund. Certain of these non-audit services
that the Board believes are a) consistent with the SEC's auditor
independence rules and b) routine and recurring services that will not
impair the independence of the independent auditors may be approved by
the Board without consideration on a specific case-by-case basis
("general pre-approval").
The Audit Committee has determined that Mr. E. Virgil Conway, Chair of
the Audit Committee, may provide pre-approval for such services that
meet the above requirements in the event such approval is sought between
regularly scheduled meetings. In the event that Mr. Conway determines
that the full board should review the request, he has the opportunity to
convene a meeting of the Funds Board. In any event, the Board is
informed of each service approved subject to general pre-approval at the
next regularly scheduled in-person board meeting.
(e)(2) The percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) Not applicable for 2006 and not applicable for 2005
(c) 100% for 2006 and 100% for 2005
(d) Not applicable for 2006 and not applicable for 2005.
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees was
less than fifty percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $944,027 for 2006 and $1,780,924 for 2005.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
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) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(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 Investment Trust 97
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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
---------------------------------------------------
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
---------------------------------------------------
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.