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, 2007
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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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[LOGO OMITTED]
PHOENIX
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ANNUAL REPORT
Phoenix Quality Small-Cap Fund
Phoenix Small-Cap Sustainable Growth Fund
Phoenix Small-Cap Value Fund
WOULDN'T YOU RATHER
HAVE THIS DOCUMENT
E-MAILED TO YOU?
TRUST NAME: ELIGIBLE SHAREHOLDERS CAN
PHOENIX INVESTMENT | | SIGN UP FOR E-DELIVERY AT
TRUST 97 | August 31, 2007 | PHOENIXFUNDS.COM
.................................................................................
NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE
TABLE OF CONTENTS
Message from the President ................................................. 1
Glossary ................................................................... 2
Disclosure of Fund Expenses ................................................ 3
Phoenix Quality Small-Cap Fund ............................................. 4
Phoenix Small-Cap Sustainable Growth Fund .................................. 12
Phoenix Small-Cap Value Fund ............................................... 20
Notes to Financial Statements .............................................. 31
Report of Independent Registered Public Accounting Firm .................... 36
Fund Management Tables ..................................................... 37
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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, 2007, 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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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.
MESSAGE FROM THE PRESIDENT
DEAR PHOENIX FUNDS SHAREHOLDER:
We are pleased to provide this report for the fiscal year ended August 31,
2007. It includes valuable information about your Phoenix mutual fund(s)--such
as performance- and fee-related data and information about each fund's portfolio
holdings and transactions for the reporting period. The report also provides
commentary from your fund's management team with respect to the fund's
performance, its investment strategies, and how the fund performed against the
broader market.
At Phoenix, we are committed to helping investors succeed over the long
term and we strive to provide investors with choice. The Phoenix family of funds
offers a wide array of investment options to help make diversification easy. Our
multi-manager, multi-style approach gives you access to a complete suite of
investment products, including numerous equity, fixed income and money market
funds.
We are proud to offer this diversified portfolio of funds managed by more
than a dozen accomplished independent investment managers--many of whom were
previously only available to large institutional investors. Their investment
expertise allows us to offer a variety of styles, including growth, value and
core products, along with asset allocation funds and alternative investments.
Phoenix is also committed to providing you best-in-class service. Whether
you need to check your account value or transfer funds, our customer service
team stands ready to provide superior, dependable assistance to help you make
informed decisions.
Because we offer such an extensive selection of investment options, it's
important that you consult an experienced financial professional for help
reviewing or rebalancing your portfolio on a regular basis. A regular "checkup"
can be an excellent way to help ensure that your investments are aligned with
your financial goals.
As president of Phoenix Investment Partners, Ltd., I would like to thank
you for entrusting your assets with us. It's our privilege to serve you.
Sincerely,
/s/ George R. Aylward
George R. Aylward
President, PhoenixFunds
SEPTEMBER 2007
1
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.
REIT (REAL ESTATE INVESTMENT TRUST)
A publicly traded company that owns, develops and operates 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 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.
2
PHOENIX INVESTMENT TRUST 97
DISCLOSURE OF FUND'S EXPENSES (UNAUDITED)
(FOR THE SIX-MONTH PERIOD OF MARCH 1, 2007 TO
AUGUST 31, 2007)
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 in a
Phoenix Investment Trust 97 fund, you incur two types of costs: (1) transaction
costs, including sales charges on purchases of Class A shares and contingent
deferred sales charges on Class C shares, if applicable; and (2) ongoing costs,
including investment advisory fees; distribution and service fees; and other
expenses. Class I shares are sold without a sales charge and do not incur
distribution and service fees. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in one of the Investment
Trust 97 funds 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. The
following table illustrates your Fund's costs in two ways.
ACTUAL EXPENSES
The first section of the accompanying tables provides information about
actual account values and actual expenses. You may use the information in this
section, 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 section 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 section 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 section 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.
EXPENSE TABLE
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Beginning Ending Expenses
Account Account Annualized Paid
Value Value Expense During
March 1, 2007 August 31, 2007 Ratio Period*
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QUALITY SMALL-CAP FUND
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ACTUAL
Class I .......... $1,000.00 $1,016.40 1.15% $ 5.84
Class A .......... 1,000.00 1,015.60 1.40 7.11
Class C .......... 1,000.00 1,011.30 2.16 10.95
HYPOTHETICAL (5% RETURN BEFORE EXPENSES)
Class I .......... 1,000.00 1,019.34 1.15 5.87
Class A .......... 1,000.00 1,018.06 1.40 7.15
Class C .......... 1,000.00 1,014.18 2.16 11.03
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SMALL-CAP SUSTAINABLE GROWTH FUND
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ACTUAL
Class I .......... $1,000.00 $1,003.90 1.15% $ 5.81
Class A .......... 1,000.00 1,002.90 1.40 7.07
Class C .......... 1,000.00 999.00 2.14 10.78
HYPOTHETICAL (5% RETURN BEFORE EXPENSES)
Class I .......... 1,000.00 1,019.34 1.15 5.87
Class A .......... 1,000.00 1,018.06 1.40 7.15
Class C .......... 1,000.00 1,014.28 2.14 10.92
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SMALL-CAP VALUE FUND
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ACTUAL
Class A .......... $1,000.00 $ 934.60 1.41% $ 6.88
Class B .......... 1,000.00 931.20 2.16 10.51
Class C .......... 1,000.00 931.20 2.16 10.51
HYPOTHETICAL (5% RETURN BEFORE EXPENSES)
Class A .......... 1,000.00 1,018.01 1.41 7.20
Class B .......... 1,000.00 1,014.18 2.16 11.03
Class C .......... 1,000.00 1,014.18 2.16 11.03
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* EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO, WHICH IS NET OF
WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED BY THE
AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(184) EXPENSES WERE ACCRUED IN THE MOST RECENT FISCAL HALF-YEAR, THEN
DIVIDED BY 365 TO REFLECT THE ONE-HALF YEAR PERIOD.
YOU CAN FIND OUT MORE INFORMATION ABOUT THE FUNDS' EXPENSES IN THE
FINANCIAL STATEMENTS SECTION THAT FOLLOWS. FOR ADDITIONAL INFORMATION ON
OPERATING EXPENSES AND OTHER SHAREHOLDER COSTS REFER TO THE PROSPECTUS.
3
PHOENIX QUALITY SMALL-CAP FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGERS, SANDI GLEASON, CFA AND
ROBERT SCHWARZKOPF, CFA
For the Fund's fiscal year ended August 31, 2007,
o Class I shares returned 17.74%;
o Class A shares returned 17.51%;
o Class C shares returned 16.61%;
o the S&P 500(R) Index, a broad-based equity index, returned 15.13%;
o the Russell 2000(R) Value Index, the Fund's style-specific index, returned
6.64%.
HOW DID THE EQUITY MARKETS PERFORM DURING THE FUND'S FISCAL YEAR?
o Strong economic growth accompanied by accommodative credit markets set the
stage for a steadily advancing stock market for most of the past year.
However, at the beginning of July economic and credit risks emerged in the
form of home price declines and sub-prime mortgage delinquencies. As these
risks translated into reduced consumer spending and price declines in
mortgage-backed securities, the earnings outlook for corporate America
clouded and credit became more expensive overall.
o Stock prices subsequently experienced a modest pullback as investors
weighed potential consumer weakness against a strong industrial economy and
recalculated stock prices based on moderated expectations for earnings
growth and a higher cost of capital.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR?
o Lower quality stocks led the market early in the reporting period buoyed by
accommodative credit markets. Although this represented a headwind to our
high-quality investment methodology, the Fund outperformed the Russell
2000(R) Value benchmark over this period. As the economic and credit risks
discussed above emerged, the more durable income structures and less credit
dependent nature of high-quality companies allowed the Fund to continue its
strong relative performance.
o At the close of the reporting period, the Fund remained well diversified
with no major stake in any economic sector. The Fund remains invested in
demonstrably higher quality businesses than the Russell 2000(R) Value
benchmark, with earnings growing faster and more dependably than the
benchmark, and purchased at discount values to the benchmark. We believe
the Fund's quality, growth, and value metrics will allow us to produce
strong investment returns with less risk.
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.
SEPTEMBER 2007
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.
SMALL-CAP INVESTING INCLUDES THE RISKS OF GREATER PRICE VOLATILITY, LESS
LIQUIDITY AND INCREASED COMPETITIVE THREAT.
INVESTING IN FUNDS THAT HOLD A LIMITED NUMBER OF SECURITIES INVOLVES RISK THAT
THEY WILL BE IMPACTED BY EACH SECURITY'S PERFORMANCE MORE THAN FUNDS WITH A
LARGER NUMBER OF HOLDINGS.
FOR DEFINITIONS OF INDEXES CITED IN THIS REPORT, SEE THE GLOSSARY ON PAGE 2.
4
Phoenix Quality Small-Cap Fund
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AVERAGE ANNUAL TOTAL RETURNS (1) PERIODS ENDING 8/31/07
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INCEPTION INCEPTION
1 YEAR TO 8/31/07 DATE
---------- ------------ -----------
Class I Shares at NAV 17.74% 15.50% 6/28/06
Class A Shares at NAV(2) 17.51 15.21 6/28/06
Class A Shares at POP(3),(4) 10.76 9.55 6/28/06
Class C Shares at NAV(2) 16.61 14.36 6/28/06
Class C Shares with CDSC(4) 16.61 14.36 6/28/06
S&P 500(R) Index 15.13 17.54 6/28/06
Russell 2000(R) Value Index 6.64 11.57 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 CERTAIN REDEMPTIONS OF CLASS A SHARES AND ALL REDEMPTIONS OF
CLASS C SHARES ARE 1% IN THE FIRST YEAR AND 0% THEREAFTER.
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GROWTH OF $10,000 PERIODS ENDING 8/31
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This Growth of $10,000 chart assumes an initial investment of $10,000 made on
6/28/06 (inception of the Fund) in Class I, Class A 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 C shares reflects the CDSC
charges which are 1% in the first year and 0% thereafter. Class I shares are
sold without a sales charge. Performance assumes dividends and capital gain
distributions are reinvested.
[CHART OMITTED - EDGAR REPRESENTATION OF DATA FOLLOWS]
Phoenix Phoenix Phoenix
Quality Quality Quality Russell
Small-Cap Small-Cap Small-Cap 2000(R)
Fund Fund Fund Value S&P 500(R)
Class A Class C Class I Index Index
--------- --------- --------- ------- ----------
6/28/06 $ 9,425 $10,000 $10,000 $10,000 $10,000
8/06 9,472 10,040 10,060 10,666 10,502
8/07 11,131 11,708 11,845 11,374 12,091
For information regarding the indexes, see the glossary on page 2.
5
Phoenix Quality Small-Cap Fund
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SECTOR WEIGHTINGS 8/31/07
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As a percentage of total investments
[PIE CHART OMITTED - EDGAR REPRESENTATION OF DATA FOLLOWS]
Financials 28%
Industrials 20
Consumer Discretionary 13
Energy 10
Health Care 9
Consumer Staples 7
Information Technology 6
Other (includes short-term investments) 7
SCHEDULE OF INVESTMENTS
AUGUST 31, 2007
SHARES VALUE
------ -----------
DOMESTIC COMMON STOCKS--92.5%
APPAREL, ACCESSORIES & LUXURY GOODS--3.5%
Cherokee, Inc. .............................. 19,000 $ 722,000
ASSET MANAGEMENT & CUSTODY BANKS--9.4%
Ares Capital Corp. .......................... 58,700 963,854
MCG Capital Corp. ........................... 66,800 969,936
-----------
1,933,790
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DATA PROCESSING & OUTSOURCED SERVICES--4.5%
Syntel, Inc. ................................ 26,700 923,019
DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES--4.5%
McGrath RentCorp ............................ 29,150 933,675
ENVIRONMENTAL & FACILITIES SERVICES--1.3%
ABM Industries, Inc. ........................ 11,300 264,194
HEALTH CARE DISTRIBUTORS--3.6%
Owens & Minor, Inc. ......................... 18,400 734,160
HEALTH CARE EQUIPMENT--1.7%
Young Innovations, Inc. ..................... 12,800 351,104
HEALTH CARE SERVICES--3.4%
Landauer, Inc. .............................. 13,700 694,453
HOME FURNISHINGS--4.3%
Tempur-Pedic International, Inc. ............ 30,900 893,010
HOUSEHOLD PRODUCTS--3.1%
WD-40 Co. ................................... 18,600 646,722
SHARES VALUE
------ -----------
INDUSTRIAL MACHINERY--9.4%
CLARCOR, Inc. ............................... 23,500 $ 909,920
Lincoln Electric Holdings, Inc. ............. 14,100 1,014,354
-----------
1,924,274
-----------
INSURANCE BROKERS--4.6%
National Financial Partners Corp. ........... 19,400 948,466
INTERNET SOFTWARE & SERVICES--1.8%
Computer Services, Inc. ..................... 9,300 367,350
OIL & GAS REFINING & MARKETING--4.8%
World Fuel Services Corp. ................... 25,600 986,880
OIL & GAS STORAGE & TRANSPORTATION--4.7%
Crosstex Energy, Inc. ....................... 29,300 962,212
PERSONAL PRODUCTS--3.5%
Chattem, Inc.(b) ............................ 11,700 722,007
REGIONAL BANKS--4.5%
Cathay General Bancorp ...................... 28,300 920,033
SPECIALIZED CONSUMER SERVICES--4.5%
Matthews International Corp. Class A ........ 21,200 914,568
SPECIALIZED FINANCE--2.2%
Financial Federal Corp. ..................... 15,100 460,701
SPECIALIZED REITS--4.1%
Entertainment Properties Trust .............. 17,500 837,200
SPECIALTY CHEMICALS--2.4%
Balchem Corp. ............................... 23,600 484,744
See Notes to Financial Statements
6
Phoenix Quality Small-Cap Fund
SHARES VALUE
------ -----------
THRIFTS & MORTGAGE FINANCE--2.4%
Corus Bankshares, Inc. ...................... 37,100 $ 495,656
TRUCKING--4.3%
Landstar System, Inc. ....................... 20,600 886,006
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TOTAL DOMESTIC COMMON STOCKS
(IDENTIFIED COST $18,803,994) 19,006,224
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EXCHANGE TRADED FUNDS--2.1%
iShares Russell 2000 Value Index Fund 5,650 433,242
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TOTAL EXCHANGE TRADED FUNDS
(IDENTIFIED COST $465,437) 433,242
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TOTAL LONG TERM INVESTMENTS--94.6%
(IDENTIFIED COST $19,269,431) 19,439,466
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PAR VALUE
(000)
---------
SHORT-TERM INVESTMENTS--2.5%
REPURCHASE AGREEMENTS--2.5%
State Street Bank and Trust Co.
repurchase agreement 1.40% dated 8/31/07,
due 9/4/07 repurchase price $513,080,
collateralized by U.S. Treasury Note 4.25%,
8/15/15 market value $527,295. .................... $513 $ 513,000
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TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $513,000) 513,000
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TOTAL INVESTMENTS--97.1%
(IDENTIFIED COST $19,782,431) 19,952,466(a)
Other assets and liabilities, net--2.9% 599,001
-----------
NET ASSETS--100.0% $20,551,467
===========
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $1,031,639 and gross
depreciation of $861,683 for federal income tax purposes. At August 31,
2007, the aggregate cost of securities for federal income tax purposes was
$19,782,510.
(b) Non-income producing.
See Notes to Financial Statements
7
Phoenix Quality Small-Cap Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2007
ASSETS
Investment securities at value (Identified cost $19,782,431) $19,952,466
Cash 239
Receivables
Fund shares sold 577,365
Dividends and interest 48,074
Prepaid expenses 16,413
Other assets 58
-----------
Total assets 20,594,615
-----------
LIABILITIES
Payables
Professional fee 33,280
Distribution and service fees 2,711
Investment advisory fee 1,482
Administration fee 1,141
Transfer agent fee 1,043
Trustees' fee 98
Trustee deferred compensation plan 58
Other accrued expenses 3,335
-----------
Total liabilities 43,148
-----------
NET ASSETS $20,551,467
===========
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $20,154,630
Undistributed net investment income 131,653
Accumulated net realized gain 95,149
Net unrealized appreciation 170,035
-----------
NET ASSETS $20,551,467
===========
CLASS I
Net asset value (net assets/shares outstanding)
and offering and redemption price per share $11.76
Shares of beneficial interest outstanding, no
par value, unlimited authorization 909,092
Net Assets $10,691,018
CLASS A
Net asset value per share (net assets/shares outstanding) $11.74
Maximum offering price per share $11.74/(1-5.75%) $12.46
Shares of beneficial interest outstanding, no par value,
unlimited authorization 724,596
Net Assets $ 8,506,402
CLASS C
Net asset value (net assets/shares outstanding) and
offering price per share $11.68
Shares of beneficial interest outstanding, no par value,
unlimited authorization 115,911
Net Assets $ 1,354,047
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2007
INVESTMENT INCOME
Dividends $229,845
Interest 11,509
--------
Total investment income 241,354
--------
EXPENSES
Investment advisory fee 68,863
Service fees, Class A 5,803
Distribution and service fees, Class C 4,923
Administration fee 6,198
Registration 57,744
Professional 31,363
Transfer agent 6,271
Custodian 4,745
Printing 3,400
Trustees 609
Miscellaneous 1,597
--------
Total expenses 191,516
Less expenses reimbursed by investment adviser (91,883)
Custodian fees paid indirectly (543)
--------
Net expenses 99,090
--------
NET INVESTMENT INCOME (LOSS) 142,264
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments 101,796
Net change in unrealized appreciation (depreciation) on investments 160,351
--------
NET GAIN (LOSS) ON INVESTMENTS 262,147
--------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $404,411
========
See Notes to Financial Statements
8
Phoenix Quality Small-Cap Fund
STATEMENT OF CHANGES IN NET ASSETS
From Inception
Year Ended June 28, 2006 to
August 31, 2007 August 31, 2006
--------------- ----------------
FROM OPERATIONS
Net investment income (loss) $ 142,264 $ 4,248
Net realized gain (loss) 101,796 (1,016)
Net change in unrealized appreciation
(depreciation) 160,351 9,684
----------- ----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 404,411 12,916
----------- ----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class I (13,706) --
Net investment income, Class A (1,052) --
Net investment income, Class C (101) --
Net realized short-term gains, Class I (4,797) --
Net realized short-term gains, Class A (480) --
Net realized short-term gains, Class C (354) --
----------- ----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS
TO SHAREHOLDERS (20,490) --
----------- ----------
FROM SHARE TRANSACTIONS
CLASS I
Proceeds from shares sold (854,876 and
106,382 shares, respectively) 9,902,993 1,057,881
Net asset value of shares issued from
reinvestment of distributions
(1,446 and 0 shares, respectively) 16,217 --
Cost of shares repurchased (53,612 and
0 shares, respectively) (620,640) --
----------- ----------
Total 9,298,570 1,057,881
----------- ----------
CLASS A
Proceeds from shares sold (730,339 and 10,000
shares, respectively) 8,552,859 100,000
Net asset value of shares issued from
reinvestment of distributions (99 and
0 shares, respectively) 1,116 --
Cost of shares repurchased (15,842 and
0 shares, respectively) (184,609) --
----------- ----------
Total 8,369,366 100,000
----------- ----------
CLASS C
Proceeds from shares sold (104,840 and
13,780 shares, respectively) 1,222,708 138,000
Net asset value of shares issued from
reinvestment of distributions (36 and
0 shares, respectively) 402 --
Cost of shares repurchased (2,745 and
0 shares, respectively) (32,297) --
----------- ----------
Total 1,190,813 138,000
----------- ----------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 18,858,749 1,295,881
----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS 19,242,670 1,308,797
NET ASSETS
Beginning of period 1,308,797 --
----------- ----------
END OF PERIOD (INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME OF $131,653 AND
$4,248, RESPECTIVELY) $20,551,467 $1,308,797
=========== ==========
See Notes to Financial Statements
9
Phoenix Quality Small-Cap Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
Class I
---------------------------------------
FROM INCEPTION
YEAR ENDED JUNE 28, 2006
AUGUST 31, 2007 TO AUGUST 31, 2006
----------------- ------------------
Net asset value, beginning of period $10.06 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) 0.21 0.07
Net realized and unrealized gain (loss) 1.57 (0.01)
------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.78 0.06
------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.06) --
Distributions from net realized gains (0.02) --
------ ------
TOTAL DISTRIBUTIONS (0.08) --
------ ------
Change in net asset value 1.70 0.06
------ ------
NET ASSET VALUE, END OF PERIOD $11.76 $10.06
====== ======
Total return 17.74% 0.60%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $10,691 $1,070
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.15% 1.15%(3)
Gross operating expenses 2.54% 21.32%(3)
Net investment income (loss) 1.82% 3.85%(3)
Portfolio turnover 17% 7%(4)
Class A
---------------------------------------
FROM INCEPTION
YEAR ENDED JUNE 28, 2006
AUGUST 31, 2007 TO AUGUST 31, 2006
----------------- ------------------
Net asset value, beginning of period $10.05 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) 0.25 0.03
Net realized and unrealized gain (loss) 1.51 0.02
------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.76 0.05
------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) --
Distributions from net realized gains (0.02) --
------ ------
TOTAL DISTRIBUTIONS (0.07) --
------ ------
Change in net asset value 1.69 0.05
------ ------
NET ASSET VALUE, END OF PERIOD $11.74 $10.05
====== ======
Total return(2) 17.51% 0.50%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $8,506 $101
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.40% 1.40%(3)
Gross operating expenses 2.19% 26.39%(3)
Net investment income (loss) 2.14% 1.82%(3)
Portfolio turnover 17% 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
10
Phoenix Quality Small-Cap Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
Class C
---------------------------------------
FROM INCEPTION
YEAR ENDED JUNE 28, 2006
AUGUST 31, 2007 TO AUGUST 31, 2006
----------------- ------------------
Net asset value, beginning of period $10.04 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) 0.10 0.02
Net realized and unrealized gain (loss) 1.57 0.02
------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.67 0.04
------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.01) --
Distributions from net realized gains (0.02) --
------ ------
TOTAL DISTRIBUTIONS (0.03) --
------ ------
Change in net asset value 1.64 0.04
------ ------
NET ASSET VALUE, END OF PERIOD $11.68 $10.04
====== ======
Total return(2) 16.61% 0.40%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $1,354 $138
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 2.16% 2.15%(3)
Gross operating expenses 3.45% 25.96%(3)
Net investment income (loss) 0.89% 1.38%(3)
Portfolio turnover 17% 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
11
PHOENIX SMALL-CAP SUSTAINABLE GROWTH FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGERS, SANDI GLEASON, CFA AND
ROBERT SCHWARZKOPF, CFA
For the Fund's fiscal year ended August 31, 2007,
o Class I shares returned 5.92%;
o Class A shares returned 5.62%;
o Class C shares returned 4.81%;
o the S&P 500(R) Index, a broad-based equity index, returned 15.13%;
o the Russell 2000(R) Growth Index, the Fund's style-specific index,
returned 16.36%.
HOW DID THE EQUITY MARKETS PERFORM DURING THE FUND'S FISCAL YEAR?
o Strong economic growth accompanied by accommodative credit markets set
the stage for a steadily advancing stock market for most of the past
year. However, at the beginning of July economic and credit risks
emerged in the form of home price declines and sub-prime mortgage
delinquencies. As these risks translated into reduced consumer spending
and price declines in mortgage-backed securities, the earnings outlook
for corporate America clouded and credit became more expensive overall.
o Stock prices subsequently experienced a modest pullback as investors
weighed potential consumer weakness against a strong industrial economy
and recalculated stock prices based on moderated expectations for
earnings growth and a higher cost of capital.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR?
o Lower quality stocks led the market early in the reporting period buoyed
by accommodative credit markets. This represented a headwind to our
high-quality investment methodology. The Fund trailed the Russell
2000(R) Growth benchmark over this period.
o As the economic and credit risks discussed above emerged, the more
durable income structures and less credit dependent nature of
high-quality companies allowed the Fund to gain ground in relative
performance. However, this outperformance was not enough to close the
gap from the previous period when low-quality stocks led the market.
o At the close of the reporting period, the Fund remained well diversified
with no major stake in any sector. The Fund remains invested in
demonstrably higher quality businesses than the Russell 2000(R) Growth
benchmark, with earnings growing faster and more dependably than the
benchmark, and purchased at discount values to the benchmark. We believe
the Fund's quality, growth, and value metrics will allow us to produce
strong investment returns with less risk.
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.
SEPTEMBER 2007
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. SMALL-CAP INVESTING INCLUDES THE RISKS OF
GREATER PRICE VOLATILITY, LESS LIQUIDITY AND INCREASED COMPETITIVE THREAT.
INVESTING IN FUNDS THAT HOLD A LIMITED NUMBER OF SECURITIES INVOLVES RISK THAT
THEY WILL BE IMPACTED BY EACH SECURITY'S PERFORMANCE MORE THAN FUNDS WITH A
LARGER NUMBER OF HOLDINGS.
FOR DEFINITIONS OF INDEXES CITED IN THIS REPORT, SEE THE GLOSSARY ON PAGE 2.
12
Phoenix Small-Cap Sustainable Growth Fund
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(1) PERIOD ENDING 8/31/07
- --------------------------------------------------------------------------------
INCEPTION INCEPTION
1 YEAR TO 8/31/07 DATE
---------- ------------ -----------
Class I Shares at NAV 5.92% 3.14% 6/28/06
Class A Shares at NAV(2) 5.62 2.89 6/28/06
Class A Shares at POP(3) (0.46) (2.17) 6/28/06
Class C Shares at NAV(2) 4.81 2.12 6/28/06
Class C Shares with CDSC(4) 4.81 2.12 6/28/06
S&P 500(R) Index 15.13 17.54 6/28/06
Russell 2000(R) Growth Index 16.36 16.75 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 CERTAIN REDEMPTIONS OF CLASS A SHARES AND ALL REDEMPTIONS OF
CLASS C SHARES ARE 1% IN THE FIRST YEAR AND 0% THEREAFTER.
- --------------------------------------------------------------------------------
GROWTH OF $10,000 PERIODS ENDING 8/31/07
- --------------------------------------------------------------------------------
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
6/28/06 (inception of the Fund) in Class I, Class A 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 C shares reflects the CDSC
charges which are 1% in the first year and 0% thereafter. Class I shares are
sold without a sales charge. Performance assumes dividends and capital gain
distributions are reinvested.
[CHART OMITTED - EDGAR REPRESENTATION OF DATA FOLLOWS]
Phoenix Phoenix Phoenix
Small-Cap Small-Cap Small-Cap
Sustainable Sustainable Sustainable Russell
Fund Fund Fund 2000(R) S&P 500(R)
Class I Class A Class C Growth Index Index
----------- ----------- ----------- ------------ ----------
6/28/06 $10,000 $9,425 $10,000 $10,000 $10,000
8/31/06 9,790 9,227 9,780 10,310 10,502
8/31/07 10,370 9,745 10,250 11,997 12,091
For information regarding the indexes, see the glossary on page 2.
13
Phoenix Small-Cap Sustainable Growth Fund
As a percentage of total investments
- --------------------------------------------------------------------------------
SECTOR WEIGHTINGS 8/31/07
- --------------------------------------------------------------------------------
As a percentage of total investments
[PIE CHART OMITTED - EDGAR REPRESENTATION OF DATA FOLLOWS]
Information Technology 33%
Consumer Discretionary 20
Health Care 13
Industrials 13
Energy 10
Financials 8
Other (includes short-term investments) 3
SCHEDULE OF INVESTMENTS
AUGUST 31, 2007
SHARES VALUE
------ -----------
DOMESTIC COMMON STOCKS--94.6%
AEROSPACE & DEFENSE--1.8%
HEICO Corp. Class A ......................... 8,300 $ 303,282
AIR FREIGHT & LOGISTICS--3.6%
Pacer International, Inc. ................... 27,350 591,307
APPLICATION SOFTWARE--2.9%
FactSet Research Systems, Inc. .............. 7,900 473,447
CASINOS & GAMING--2.6%
Shuffle Master, Inc.(b) ..................... 29,100 431,553
CONSUMER FINANCE--5.2%
World Acceptance Corp.(b) ................... 27,900 865,179
EDUCATION SERVICES--8.7%
Bright Horizons Family Solutions, Inc.(b) ... 18,950 751,746
Strayer Education, Inc. ..................... 4,400 702,152
-----------
1,453,898
-----------
ELECTRICAL COMPONENTS & EQUIPMENT--3.0%
Franklin Electric Co., Inc. ................. 12,000 495,360
ELECTRONIC EQUIPMENT MANUFACTURERS--10.4%
Daktronics, Inc. ............................ 29,700 816,750
Measurement Specialties, Inc.(b) ............ 37,700 909,701
-----------
1,726,451
-----------
HEALTH CARE EQUIPMENT--7.8%
ABAXIS, Inc.(b) ............................. 41,700 810,648
Thermage, Inc.(b) ........................... 63,000 488,880
-----------
1,299,528
-----------
SHARES VALUE
------ -----------
HOMEFURNISHING RETAIL--5.0%
Aaron Rents, Inc. ........................... 32,150 $ 822,719
IT CONSULTING & OTHER SERVICES--4.8%
SI International, Inc.(b) ................... 25,750 793,615
LIFE SCIENCES TOOLS & SERVICES--2.7%
Techne Corp.(b) ............................. 7,200 453,672
OIL & GAS EQUIPMENT & SERVICES--9.4%
CARBO Ceramics, Inc. ........................ 17,100 800,280
Tesco Corp.(b) .............................. 28,000 765,800
-----------
1,566,080
-----------
PHARMACEUTICALS--5.1%
KV Pharmaceutical Co. Class A(b) ............ 30,900 844,497
RESTAURANTS--3.3%
Cheesecake Factory, Inc. (The)(b) ........... 21,700 540,981
SEMICONDUCTOR EQUIPMENT--4.9%
Cabot Microelectronics Corp.(b) ............. 19,700 821,884
SEMICONDUCTORS--4.8%
Power Integrations, Inc.(b) ................. 28,700 803,313
TECHNOLOGY DISTRIBUTORS--4.3%
ScanSource, Inc.(b) ......................... 26,050 721,585
TRADING COMPANIES & DISTRIBUTORS--4.3%
NuCo2, Inc.(b) .............................. 27,250 716,403
- -----------------------------------------------------------------------------
TOTAL DOMESTIC COMMON STOCKS
(IDENTIFIED COST $15,388,320) 15,724,754
- -----------------------------------------------------------------------------
TOTAL LONG TERM INVESTMENTS--94.6%
(IDENTIFIED COST $15,388,320) 15,724,754
- -----------------------------------------------------------------------------
See Notes to Financial Statements
14
Phoenix Small-Cap Sustainable Growth Fund
PAR VALUE
(000) VALUE
------ -----------
SHORT-TERM INVESTMENTS--2.7%
REPURCHASE AGREEMENTS--2.7%
State Street Bank and Trust Co.
repurchase agreement 1.40%
dated 8/31/07, due 9/4/07
repurchase price $444,069,
collateralized by U.S.
Treasury Note 4.25%, 8/15/15
market value $453,375 ....................... $ 444 $ 444,000
- -----------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $444,000) 444,000
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS--97.2%
(IDENTIFIED COST $15,832,320) 16,168,754(a)
Other assets and liabilities, net--2.8% 458,195
-----------
NET ASSETS--100.0% $16,626,949
===========
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $1,105,150 and gross
depreciation of $769,148 for federal income tax purposes. At August 31,
2007, the aggregate cost of securities for federal income tax purposes was
$15,832,752.
(b) Non-income producing.
See Notes to Financial Statements
15
Phoenix Small-Cap Sustainable Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2007
ASSETS
Investment securities at value
(Identified cost $15,832,320) $16,168,754
Cash 494
Receivables
Investment securities sold 466,447
Fund shares sold 31,994
Dividends and interest 2,822
Prepaid expenses 16,403
Other assets 58
-----------
Total assets 16,686,972
-----------
LIABILITIES
Payables
Fund shares repurchased 18,775
Professional fee 33,282
Distribution and service fees 2,318
Transfer agent fee 1,228
Administration fee 1,130
Investment advisory fee 87
Trustees' fee 65
Trustee deferred compensation plan 58
Other accrued expenses 3,080
-----------
Total liabilities 60,023
-----------
NET ASSETS $16,626,949
===========
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $16,376,770
Accumulated net realized loss (86,255)
Net unrealized appreciation 336,434
-----------
NET ASSETS $16,626,949
===========
CLASS I
Net asset value (net assets/shares outstanding)
and offering and redemption price per share $10.37
Shares of beneficial interest outstanding, no par value,
unlimited authorization 601,034
Net Assets $ 6,231,111
CLASS A
Net asset value per share (net assets/shares outstanding) $10.34
Maximum offering price per share $10.34/(1-5.75%) $10.97
Shares of beneficial interest outstanding, no par
value, unlimited authorization 988,786
Net Assets $10,221,893
CLASS C
Net asset value (net assets/shares outstanding) and
offering price per share $10.25
Shares of beneficial interest outstanding, no par value,
unlimited authorization 16,972
Net Assets $ 173,945
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2007
INVESTMENT INCOME
Dividends $ 22,337
Interest 6,482
--------
Total investment income 28,819
--------
EXPENSES
Investment advisory fee 63,194
Service fees, Class A 8,622
Distribution and service fees, Class C 1,411
Administration fee 5,840
Registration 57,740
Professional 30,054
Transfer agent 6,793
Custodian 3,689
Printing 2,926
Trustees 575
Miscellaneous 1,573
--------
Total expenses 182,417
Less expenses reimbursed by investment adviser (90,366)
Custodian fees paid indirectly (965)
--------
Net expenses 91,086
--------
NET INVESTMENT INCOME (LOSS) (62,267)
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments (83,735)
Net change in unrealized appreciation (depreciation)
on investments 326,093
--------
NET GAIN (LOSS) ON INVESTMENTS 242,358
--------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $180,091
========
See Notes to Financial Statements
16
Phoenix Small-Cap Sustainable Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
From Inception
Year Ended June 28, 2006 to
August 31, 2007 August 31, 2006
--------------- ----------------
FROM OPERATIONS
Net investment income (loss) $ (62,267) $ (934)
Net realized gain (loss) (83,735) (2,520)
Net change in unrealized appreciation
(depreciation) 326,093 10,341
----------- ----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 180,091 6,887
----------- ----------
FROM SHARE TRANSACTIONS
CLASS I
Proceeds from shares sold (544,204 and
91,748 shares, respectively) 5,577,886 886,900
Cost of shares repurchased (34,916 and
2 shares, respectively) (362,070) (19)
----------- ----------
Total 5,215,816 886,881
----------- ----------
CLASS A
Proceeds from shares sold (1,023,106 and
10,227 shares, respectively) 10,526,646 102,135
Cost of shares repurchased (44,547 and
0 shares, respectively) (462,781) --
----------- ----------
Total 10,063,865 102,135
----------- ----------
CLASS C
Proceeds from shares sold (6,979 and
10,000 shares, respectively) 71,344 100,000
Cost of shares repurchased (7 and
0 shares, respectively) (70) --
----------- ----------
Total 71,274 100,000
----------- ----------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS 15,350,955 1,089,016
----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS 15,531,046 1,095,903
NET ASSETS
Beginning of period 1,095,903 --
----------- ----------
END OF PERIOD (INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME OF $0 AND
$0, RESPECTIVELY) $16,626,949 $1,095,903
=========== ==========
See Notes to Financial Statements
17
Phoenix Small-Cap Sustainable Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS I
----------------------------------------
FROM INCEPTION
YEAR ENDED JUNE 28, 2006
AUGUST 31, 2007 TO AUGUST 31, 2006
----------------- -------------------
Net asset value, beginning of period $ 9.79 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.08) (0.01)
Net realized and unrealized gain (loss) 0.66 (0.20)
------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.58 (0.21)
------ ------
Change in net asset value 0.58 (0.21)
------ ------
NET ASSET VALUE, END OF PERIOD $10.37 $ 9.79
====== ======
Total return 5.92 % (2.10)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $6,231 $898
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.16 % 1.15 %(3)
Gross operating expenses 2.94 % 23.99 %(3)
Net investment income (loss) (0.77)% (0.61)%(3)
Portfolio turnover 26 % 4 %(4)
CLASS A
----------------------------------------
FROM INCEPTION
YEAR ENDED JUNE 28, 2006
AUGUST 31, 2007 TO AUGUST 31, 2006
----------------- -------------------
Net asset value, beginning of period $ 9.79 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.10) (0.01)
Net realized and unrealized gain (loss) 0.65 (0.20)
------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.55 (0.21)
------ ------
Change in net asset value 0.55 (0.21)
------ ------
NET ASSET VALUE, END OF PERIOD $10.34 $ 9.79
====== ======
Total return(2) 5.62 % (2.10)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $10,222 $100
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.40 % 1.40 %(3)
Gross operating expenses 2.16 % 28.32 %(3)
Net investment income (loss) (0.96)% (0.87)%(3)
Portfolio turnover 26 % 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
18
Phoenix Small-Cap Sustainable Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS C
----------------------------------------
FROM INCEPTION
YEAR ENDED JUNE 28, 2006
AUGUST 31, 2007 TO AUGUST 31, 2006
----------------- -------------------
Net asset value, beginning of period $ 9.77 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.18) (0.03)
Net realized and unrealized gain (loss) 0.66 (0.20)
------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.48 (0.23)
------ ------
Change in net asset value 0.48 (0.23)
------ ------
NET ASSET VALUE, END OF PERIOD $10.25 $ 9.77
====== ======
Total return(2) 4.81 % (2.20)%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $174 $98
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 2.15 % 2.15 %(3)
Gross operating expenses 4.31 % 29.09 %(3)
Net investment income (loss) (1.78)% (1.61)%(3)
Portfolio turnover 26 % 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
19
PHOENIX SMALL-CAP VALUE FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGERS, CARLTON NEEL AND DAVID
DICKERSON
For the Fund's fiscal year ended August 31, 2007,
o Class A shares returned 0.97%;
o Class B shares returned 0.26%;
o Class C shares returned 0.26%;
o the S&P 500(R) Index, a broad-based equity index, returned 15.13%;
o the Russell 2000(R) Value Index, the Fund's style-specific benchmark,
returned 6.64%.
HOW DID THE EQUITY MARKETS PERFORM DURING THE FUND'S FISCAL YEAR?
o Overall, stocks performed well over the course of the year.
o Equity investors in the U.S., however, experienced dramatic losses in
the mid-summer of 2007, on concerns over the magnitude of the effects
that the sub-prime mortgage losses were having on the housing market.
Generally, larger capitalization equities outperformed their small-cap
counterparts.
Growth stocks outperformed value issues.
o In response to liquidity concerns in bank lending and commercial paper,
the Federal Reserve (Fed) cut the discount rate by 50 basis points in
August, causing speculation that the federal funds rate would be cut at
the Fed's September 18 meeting.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR?
o Hampering the Fund's performance for the 12-month period ended August 31
were:
its focus on value-oriented stocks; and
its quantitative model process, as stock selection suffered during the
U.S. equity market's summer sell-off.
o Contributing to the Fund's progress during the fiscal year were:
sector selection, as the Fund was overweight the energy, materials and
technology sectors--all of which outperformed the Russell 2000(R) Value
Index; and
the Fund's relatively low exposure to the financials sector, as those
securities declined during the year.
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.
SEPTEMBER 2007
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.
SMALL-CAP INVESTING INCLUDES THE RISKS OF GREATER PRICE VOLATILITY, LESS
LIQUIDITY AND INCREASED COMPETITIVE THREAT.
CONVERTIBLE SECURITIES MAY BE SUBJECT TO REDEMPTION AT THE OPTION OF THE ISSUER.
IF A SECURITY IS CALLED FOR REDEMPTION, THE FUND MAY HAVE TO REDEEM THE
SECURITY, CONVERT IT INTO COMMON STOCK OR SELL IT TO A THIRD PARTY AT A PRICE
AND TIME THAT IS NOT BENEFICIAL FOR THE FUND.
FOR DEFINITIONS OF INDEXES CITED IN THIS REPORT, SEE THE GLOSSARY ON PAGE 2.
20
Phoenix Small-Cap Value Fund
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(1) PERIOD ENDING 8/31/07
- --------------------------------------------------------------------------------
INCEPTION INCEPTION
1 YEAR 5 YEARS TO 8/31/07 DATE
-------- --------- ------------ -----------
Class A Shares at NAV(2) 0.97% 12.85% 10.52% 11/20/97
Class A Shares at POP(3) (4.83) 11.52 9.85 11/20/97
Class B Shares at NAV(2) 0.26 12.03 9.71 11/20/97
Class B Shares with CDSC(4) (3.07) 12.03 9.71 11/20/97
Class C Shares at NAV(2) 0.26 12.03 9.71 11/20/97
Class C Shares with CDSC(4) 0.26 12.03 9.71 11/20/97
S&P 500(R) Index 15.13 12.00 6.17 11/20/97
Russell 2000(R) Value Index 6.64 16.85 10.41 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 CERTAIN REDEMPTIONS OF CLASS A SHARES AND ALL
REDEMPTIONS OF CLASS C SHARES ARE 1% IN THE FIRST YEAR AND 0% THEREAFTER.
- --------------------------------------------------------------------------------
GROWTH OF $10,000 PERIOD 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.
[CHART OMITTED - EDGAR REPRESENTATION OF DATA FOLLOWS]
Phoenix Phoenix Phoenix
Small-Cap Small-Cap Small-Cap Russell S&P
Value Fund Value Fund Value Fund 2000(R) 500(R)
Class A Class B Class C Value 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 17,952 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 24,693 24,686 24,709 15,602
8/31/07 25,075 24,757 24,749 26,350 17,964
For information regarding the indexes, see the glossary on page 2.
21
Phoenix Small-Cap Value Fund
- --------------------------------------------------------------------------------
SECTOR WEIGHTINGS 8/31/07
- --------------------------------------------------------------------------------
As a percentage of total investments
[PIE CHART OMITTED - EDGAR REPRESENTATION OF DATA FOLLOWS]
Industrials 18%
Information Technology 17
Energy 11
Financials 7
Materials 7
Health Care 5
Consumer Discretionary 4
Other (includes short-term investments) 31
SCHEDULE OF INVESTMENTS
AUGUST 31, 2007
SHARES VALUE
-------- ------------
DOMESTIC COMMON STOCKS--93.9%
AEROSPACE & DEFENSE--5.7%
Ceradyne, Inc.(b)(e) ........................ 2,800 $ 202,384
Cubic Corp.(e) .............................. 40,000 1,581,200
Ducommun, Inc.(b) ........................... 40,000 1,154,800
DynCorp International, Inc.(b)(e) ........... 44,600 960,684
Esterline Technologies Corp.(b) ............. 51,100 2,580,039
Stanley, Inc.(b) ............................ 10,600 229,596
Teledyne Technologies, Inc.(b) .............. 39,600 1,976,436
Triumph Group, Inc.(e) ...................... 14,000 1,024,940
------------
9,710,079
------------
AIR FREIGHT & LOGISTICS--0.3%
Atlas Air Worldwide Holdings, Inc.(b)(e) .... 9,300 471,882
AIRLINES--1.9%
AirTran Holdings, Inc.(b)(e) ................ 194,000 2,038,940
ExpressJet Holdings, Inc.(b)(e) ............. 42,724 186,277
Republic Airways Holdings, Inc.(b) .......... 54,000 1,028,160
------------
3,253,377
------------
AIRPORT SERVICES--0.2%
Macquarie Infrastructure Co. LLC(e) ......... 6,800 275,060
ALTERNATIVE CARRIERS--0.0%
Premiere Global Services, Inc.(b) ........... 6,300 82,404
ALUMINUM--1.1%
Century Aluminum Co.(b)(e) .................. 37,800 1,859,004
APPAREL RETAIL--0.4%
Collective Brands, Inc.(b) .................. 29,100 687,633
SHARES VALUE
-------- ------------
APPLICATION SOFTWARE--0.1%
NetScout Systems, Inc.(b) ................... 22,200 $ 206,460
AUTO PARTS & EQUIPMENT--0.4%
Modine Manufacturing Co.(e) ................. 21,000 589,050
Stoneridge, Inc.(b) ......................... 3,800 39,672
------------
628,722
------------
AUTOMOTIVE RETAIL--0.2%
CSK Auto Corp.(b)(e) ........................ 22,062 291,660
BUILDING PRODUCTS--0.1%
Apogee Enterprises, Inc. .................... 5,000 125,850
CASINOS & GAMING--0.1%
Churchill Downs, Inc. ....................... 3,200 159,552
COAL & CONSUMABLE FUELS--1.2%
Massey Energy Co. ........................... 53,000 1,099,750
USEC, Inc.(b) ............................... 73,000 977,470
------------
2,077,220
------------
COMMERCIAL PRINTING--0.9%
Consolidated Graphics, Inc.(b) .............. 22,500 1,491,300
COMMODITY CHEMICALS--1.2%
Koppers Holdings, Inc. ...................... 40,000 1,469,200
Spartech Corp. .............................. 27,000 584,820
------------
2,054,020
------------
COMMUNICATIONS EQUIPMENT--6.7%
ADC Telecommunications, Inc.(b) ............. 128,000 2,342,400
Arris Group, Inc.(b) ........................ 164,000 2,489,520
Comtech Telecommunications Corp.(b)(e) ...... 47,900 2,038,624
Dycom Industries, Inc.(b) ................... 60,000 1,771,800
See Notes to Financial Statements
22
Phoenix Small-Cap Value Fund
SHARES VALUE
-------- ------------
COMMUNICATIONS EQUIPMENT--CONTINUED
Harris Corp. ................................ 45,500 $ 2,767,765
Symmetricom, Inc.(b)(e) ..................... 16,000 79,840
------------
11,489,949
------------
COMPUTER STORAGE & PERIPHERALS--0.3%
Brocade Communications Systems, Inc.(b) ..... 83,000 581,000
CONSTRUCTION & ENGINEERING--1.2%
EMCOR Group, Inc.(b) ........................ 64,400 2,018,940
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS--2.4%
Cascade Corp.(e) ............................ 5,000 368,050
Federal Signal Corp. ........................ 45,600 697,680
Miller Industries, Inc.(b) .................. 2,000 36,620
NACCO Industries, Inc. Class A(e) ........... 7,400 876,678
Titan International, Inc. ................... 72,000 2,086,560
------------
4,065,588
------------
CONSTRUCTION MATERIALS--0.5%
Headwaters, Inc.(b)(e) ...................... 49,000 809,480
DATA PROCESSING & OUTSOURCED SERVICES--0.1%
InfoUSA, Inc. ............................... 13,200 133,848
DIVERSIFIED CHEMICALS--1.6%
Olin Corp. .................................. 125,000 2,680,000
DIVERSIFIED METALS & MINING--0.8%
AMCOL International Corp.(e) ................ 41,000 1,320,610
DIVERSIFIED REITs--0.1%
Investors Real Estate Trust ................. 17,000 177,650
DRUG RETAIL--1.0%
Longs Drug Stores Corp. ..................... 34,000 1,792,820
ELECTRIC UTILITIES--1.1%
Otter Tail Corp.(e) ......................... 8,900 324,850
Westar Energy, Inc.(e) ...................... 68,100 1,654,149
------------
1,978,999
------------
ELECTRICAL COMPONENTS & EQUIPMENT--0.7%
Smith (A.O.) Corp.(e) ....................... 24,600 1,185,720
ELECTRONIC EQUIPMENT MANUFACTURERS--1.5%
Measurement Specialties, Inc.(b) ............ 25,000 603,250
Technitrol, Inc. ............................ 72,000 1,980,000
------------
2,583,250
------------
ELECTRONIC MANUFACTURING SERVICES--2.1%
Plexus Corp.(b) ............................. 81,000 1,925,370
TTM Technologies, Inc.(b)(e) ................ 126,600 1,478,688
Zygo Corp.(b) ............................... 12,000 154,200
------------
3,558,258
------------
SHARES VALUE
-------- ------------
FERTILIZERS & AGRICULTURAL CHEMICALS--1.2%
CF Industries Holdings, Inc. ................ 32,000 $ 2,026,560
FOOD DISTRIBUTORS--0.4%
Spartan Stores, Inc.(e) ..................... 25,400 646,176
FOOD RETAIL--0.5%
Casey's General Stores, Inc. ................ 20,100 570,036
Weis Markets, Inc. .......................... 5,800 249,284
------------
819,320
------------
GAS UTILITIES--2.0%
Nicor, Inc.(e) .............................. 21,100 876,916
Piedmont Natural Gas Co.(e) ................. 55,000 1,452,000
WGL Holdings, Inc.(e) ....................... 33,100 1,088,659
------------
3,417,575
------------
HEALTH CARE DISTRIBUTORS--0.1%
Owens & Minor, Inc. ......................... 2,500 99,750
HEALTH CARE EQUIPMENT--1.0%
CONMED Corp.(b)(e) .......................... 6,800 197,540
Greatbatch, Inc.(b)(e) ...................... 21,100 633,000
Invacare Corp.(e) ........................... 17,400 403,158
STERIS Corp. ................................ 14,700 412,629
------------
1,646,327
------------
HEALTH CARE FACILITIES--1.5%
AmSurg Corp.(b)(e) .......................... 25,000 589,750
Emeritus Corp.(b)(e) ........................ 61,479 1,669,155
Medcath Corp.(b) ............................ 12,900 378,615
------------
2,637,520
------------
HEALTH CARE SERVICES--1.0%
Amedisys, Inc.(b)(e) ........................ 16,600 627,148
Apria Healthcare Group, Inc.(b)(e) .......... 19,500 519,285
Res-Care, Inc.(b) ........................... 28,200 601,224
------------
1,747,657
------------
HEALTH CARE SUPPLIES--0.2%
Haemonetics Corp.(b) ........................ 5,600 277,984
HOME FURNISHINGS--0.2%
Sealy Corp.(e) .............................. 26,100 398,286
HOMEFURNISHING RETAIL--0.4%
Rent-A-Center, Inc.(b)(e) ................... 32,600 626,572
HOTELS, RESORTS & CRUISE LINES--0.2%
Interstate Hotels & Resorts, Inc.(b) ........ 88,900 346,710
HOUSEHOLD PRODUCTS--0.2%
WD-40 Co.(e) ................................ 9,700 337,269
See Notes to Financial Statements
23
Phoenix Small-Cap Value Fund
SHARES VALUE
-------- ------------
HOUSEWARES & SPECIALTIES--1.0%
CSS Industries, Inc.(e) ..................... 8,700 $ 334,602
Tupperware Brands Corp. ..................... 47,000 1,447,130
------------
1,781,732
------------
HUMAN RESOURCES & EMPLOYMENT SERVICES--0.7%
Kelly Services, Inc. Class A(e) ............. 20,300 461,216
Kforce, Inc.(b) ............................. 30,200 459,644
Spherion Corp.(b) ........................... 34,200 302,328
------------
1,223,188
------------
INDUSTRIAL CONGLOMERATES--0.4%
Tredegar Corp. .............................. 37,100 648,508
INDUSTRIAL MACHINERY--5.8%
Actuant Corp. Class A(e) .................... 12,000 731,880
Barnes Group, Inc.(e) ....................... 44,400 1,396,824
CIRCOR International, Inc.(e) ............... 14,000 592,060
Columbus McKinnon Corp.(b) .................. 78,800 2,140,996
EnPro Industries, Inc.(b)(e) ................ 35,800 1,496,082
Gardner Denver, Inc.(b) ..................... 5,500 219,505
Kadant, Inc.(b) ............................. 36,900 1,051,650
Lydall, Inc.(b) ............................. 50,100 524,046
Robbins & Myers, Inc. ....................... 32,200 1,744,596
------------
9,897,639
------------
INTEGRATED TELECOMMUNICATION SERVICES--0.1%
Consolidated Communications Holdings, Inc. .. 11,300 209,954
INTERNET RETAIL--0.7%
FTD Group, Inc.(e) .......................... 70,273 1,248,751
INTERNET SOFTWARE & SERVICES--1.0%
United Online, Inc.(e) ...................... 95,000 1,365,150
Vignette Corp.(b) ........................... 14,600 284,846
------------
1,649,996
------------
INVESTMENT BANKING & BROKERAGE--0.0%
Cowen Group, Inc.(b)(e) ..................... 4,000 51,120
IT CONSULTING & OTHER SERVICES--0.7%
CIBER, Inc.(b) .............................. 18,800 149,084
SYKES Enterprises, Inc.(b) .................. 60,600 999,294
------------
1,148,378
------------
LEISURE PRODUCTS--0.1%
Callaway Golf Co. ........................... 8,700 141,984
LIFE SCIENCES TOOLS & SERVICES--0.2%
Bio-Rad Laboratories, Inc. Class A(b) ....... 4,800 404,736
MANAGED HEALTH CARE--0.8%
AMERIGROUP Corp.(b) ......................... 41,800 1,323,806
SHARES VALUE
-------- ------------
MARINE--0.6%
Horizon Lines, Inc. Class A(e) .............. 36,000 $ 1,015,560
METAL & GLASS CONTAINERS--0.2%
Silgan Holdings, Inc. ....................... 8,600 439,374
MORTGAGE REITs--0.1%
BRT Realty Trust(e) ......................... 5,000 105,850
MULTI-LINE INSURANCE--0.7%
Horace Mann Educators Corp. ................. 59,400 1,148,796
MULTI-UTILITIES--0.1%
CH Energy Group, Inc.(e) .................... 5,000 236,350
OFFICE REITs--1.0%
Lexington Realty Trust ...................... 79,400 1,641,992
OFFICE SERVICES & SUPPLIES--0.9%
Brady Corp. Class A ......................... 19,400 755,242
Mine Safety Appliances Co.(e) ............... 17,900 857,768
------------
1,613,010
------------
OIL & GAS DRILLING--1.2%
Parker Drilling Co.(b)(e) ................... 181,000 1,409,990
Union Drilling, Inc.(b)(e) .................. 44,200 636,480
------------
2,046,470
------------
OIL & GAS EQUIPMENT & SERVICES--6.1%
Allis-Chalmers Energy, Inc.(b)(e) ........... 24,100 480,072
Basic Energy Service, Inc.(b)(e) ............ 58,000 1,198,860
Complete Production Services(b)(e) .......... 113,000 2,508,600
Dawson Geophysical Co.(b)(e) ................ 19,000 1,289,340
Gulf Island Fabrication, Inc.(e) ............ 39,400 1,401,852
Gulfmark Offshore, Inc.(b)(e) ............... 29,000 1,329,650
Hornbeck Offshore Services, Inc.(b)(e) ...... 26,000 991,900
Oil States International, Inc.(b)(e) ........ 16,000 675,200
T-3 Energy Services Inc(b) .................. 19,400 600,042
------------
10,475,516
------------
OIL & GAS EXPLORATION & PRODUCTION--4.4%
Bois d'Arc Energy, Inc.(b)(e) ............... 85,000 1,526,600
Callon Petroleum Co.(b)(e) .................. 21,000 254,730
Chesapeake Energy Corp.(e) .................. 45,000 1,451,700
Comstock Resources, Inc.(b) ................. 35,000 963,550
Encore Acquisition Co.(b) ................... 40,000 1,111,600
Mariner Energy, Inc.(b)(e) .................. 49,000 1,027,530
Stone Energy Corp.(b) ....................... 12,000 395,400
Swift Energy Co.(b) ......................... 22,000 818,840
------------
7,549,950
------------
OIL & GAS REFINING & MARKETING--0.7%
Tesoro Corp. ................................ 24,000 1,183,920
See Notes to Financial Statements
24
Phoenix Small-Cap Value Fund
SHARES VALUE
-------- ------------
PACKAGED FOODS & MEATS--1.1%
Flowers Foods, Inc. ......................... 73,000 $ 1,506,721
J & J Snack Foods Corp. ..................... 2,300 86,365
Lance, Inc. ................................. 15,400 383,614
------------
1,976,700
------------
PAPER PACKAGING--0.0%
Rock-Tenn Co. Class A ....................... 2,700 78,273
PAPER PRODUCTS--0.2%
Buckeye Technologies, Inc.(b) ............... 24,200 376,794
PERSONAL PRODUCTS--1.0%
Arden (Elizabeth), Inc.(b)(e) ............... 68,000 1,672,800
PHARMACEUTICALS--1.8%
Salix Pharmaceuticals Ltd.(b)(e) ............ 101,800 1,172,736
Sciele Pharma, Inc.(b)(e) ................... 81,000 1,869,480
------------
3,042,216
------------
PROPERTY & CASUALTY INSURANCE--3.9%
Baldwin & Lyons, Inc. Class B ............... 1,500 41,100
CNA Surety Corp.(b) ......................... 3,000 53,880
Commerce Group, Inc. (The)(e) ............... 48,600 1,549,368
Harleysville Group, Inc. .................... 26,500 854,890
Meadowbrook Insurance Group, Inc.(b) ........ 102,300 903,309
Midland Co. (The)(e) ........................ 3,500 191,695
Navigators Group, Inc. (The)(b) ............. 24,600 1,333,320
Nymagic, Inc.(e) ............................ 9,100 273,546
ProCentury Corp. ............................ 14,400 204,192
RLI Corp.(e) ................................ 3,400 204,510
SeaBright Insurance Holdings, Inc.(b) ....... 39,000 671,970
State Auto Financial Corp.(e) ............... 6,400 191,488
United Fire & Casualty Co.(e) ............... 5,700 216,543
------------
6,689,811
------------
PUBLISHING--0.8%
Belo Corp. Class A .......................... 64,000 1,103,360
Voyager Learning Co.(b) ..................... 27,000 210,600
------------
1,313,960
------------
REGIONAL BANKS--1.0%
FNB Corp.(e) ................................ 45,800 777,684
Texas Capital Banshares, Inc.(b)(e) ......... 36,000 785,520
Vineyard National Bancorp(e) ................ 12,950 237,891
------------
1,801,095
------------
RESTAURANTS--0.2%
CEC Entertainment, Inc.(b) .................. 6,700 205,690
Landry's Restaurants, Inc.(e) ............... 5,000 143,350
------------
349,040
------------
SHARES VALUE
-------- ------------
SEMICONDUCTOR EQUIPMENT--4.5%
Advanced Energy Industries, Inc.(b) ......... 61,600 $ 999,768
Cymer, Inc.(b)(e) ........................... 55,000 2,180,200
Mattson Technology, Inc.(b) ................. 42,100 443,313
MKS Instruments, Inc.(b) .................... 92,700 2,043,108
Varian Semiconductor Equipment Associates, Inc.(b) 38,100 2,119,503
------------
7,785,892
------------
SEMICONDUCTORS--2.7%
Integrated Silicon Solution, Inc.(b) ........ 19,000 117,800
Pericom Semiconductor Corp.(b) .............. 21,600 248,832
RF Micro Devices, Inc.(b)(e) ................ 318,200 1,893,290
Skyworks Solutions, Inc.(b) ................. 281,500 2,221,035
Techwell, Inc.(b)(e) ........................ 19,300 197,053
------------
4,678,010
------------
SPECIALIZED FINANCE--0.3%
Asta Funding, Inc.(e) ....................... 12,100 445,522
SPECIALIZED REITs--0.1%
Hersha Hospitality Trust .................... 13,300 145,369
SPECIALTY CHEMICALS--0.7%
Fuller (H.B.) Co. ........................... 34,500 928,395
Schulman (A.), Inc. ......................... 3,000 64,620
Stepan Co.(e) ............................... 4,600 138,092
------------
1,131,107
------------
SPECIALTY STORES--0.2%
Books-A-Million, Inc.(e) .................... 23,000 306,360
STEEL--1.8%
Metal Management, Inc. ...................... 47,000 2,204,770
NN, Inc. .................................... 33,000 338,910
Quanex Corp.(e) ............................. 7,400 320,494
Ryerson, Inc.(e) ............................ 6,400 213,376
------------
3,077,550
------------
SYSTEMS SOFTWARE--0.8%
Sybase, Inc.(b) ............................. 62,400 1,438,320
TECHNOLOGY DISTRIBUTORS--0.6%
Insight Enterprises, Inc.(b) ................ 31,400 744,808
PC Connection, Inc.(b)(e) ................... 16,600 213,476
------------
958,284
------------
THRIFTS & MORTGAGE FINANCE--0.1%
Corus Bankshares, Inc.(e) ................... 11,800 157,648
TOBACCO--0.1%
Universal Corp.(e) .......................... 4,500 221,085
See Notes to Financial Statements
25
Phoenix Small-Cap Value Fund
SHARES VALUE
-------- ------------
TRADING COMPANIES & DISTRIBUTORS--0.2%
TAL International Group, Inc.(e) ............ 14,000 $ 351,120
WATER UTILITIES--0.2%
California Water Service Group .............. 10,100 391,173
WIRELESS TELECOMMUNICATION SERVICES--1.3%
Syniverse Holdings, Inc.(b) ................. 58,200 822,366
USA Mobility, Inc.(b)(e) .................... 72,700 1,341,315
------------
2,163,681
------------
- -----------------------------------------------------------------------------
TOTAL DOMESTIC COMMON STOCKS
(IDENTIFIED COST $153,268,192) 160,516,431
- -----------------------------------------------------------------------------
FOREIGN COMMON STOCKS(c)--1.3%
PROPERTY & CASUALTY INSURANCE--0.4%
United America Indemnity Ltd. Class A
(United States)(b) .......................... 28,500 616,740
REINSURANCE--0.9%
Arch Capital Group Ltd. (United States)(b) .. 21,200 1,522,796
- -----------------------------------------------------------------------------
TOTAL FOREIGN COMMON STOCKS
(IDENTIFIED COST $1,448,887) 2,139,536
- -----------------------------------------------------------------------------
EXCHANGE TRADED FUNDS--0.6%
iShares Dow Jones US Regional Banks
Index Fund .................................. 21,000 980,070
------------
TOTAL EXCHANGE TRADED FUNDS
(IDENTIFIED COST $996,723) .................. 980,070
------------
DOMESTIC 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 DOMESTIC WARRANTS
(IDENTIFIED COST $0) 0
- -----------------------------------------------------------------------------
TOTAL LONG TERM INVESTMENTS--95.8%
(IDENTIFIED COST $155,713,802) 163,636,037
- -----------------------------------------------------------------------------
SHARES VALUE
-------- ------------
SHORT-TERM INVESTMENTS--28.7%
MONEY MARKET MUTUAL FUNDS--24.1%
State Street Navigator Prime Plus
(5.37% seven-day effective yield)(f) ........ 41,144,385 $ 41,144,385
PAR VALUE
(000)
---------
COMMERCIAL PAPER(g)--4.6%
Eaton Corp. 5.25%, 9/5/07 ................... $3,395 3,393,019
Kimberly-Clark Corp. 5.15%, 9/4/07 .......... 2,435 2,433,955
Kimberly-Clark Corp. 5.20%, 9/12/07 ......... 2,150 2,146,584
------------
7,973,558
------------
- -----------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $49,117,943) 49,117,943
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS--124.5%
(IDENTIFIED COST $204,831,745) 212,753,980(a)
Other assets and liabilities, net--(24.5)% (41,904,693)
------------
NET ASSETS--100.0% $ $170,849,287
============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $12,971,691 and gross
depreciation of $7,636,575 for federal income tax purposes. At August 31,
2007, the aggregate cost of securities for federal income tax purposes was
$207,418,864.
(b) Non-income producing.
(c) A security 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, 2007, this security
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
26
Phoenix Small-Cap Value Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2007
ASSETS
Investment securities at value, including $40,787,650 of
securities on loan (Identified cost $204,831,745) $212,753,980
Receivables
Dividends 184,590
Investment securities sold 141,578
Fund shares sold 9,784
Prepaid expenses 14,085
Other assets 46,609
------------
Total assets 213,150,626
------------
LIABILITIES
Cash overdraft 137,862
Payables
Fund shares repurchased 643,577
Upon return of securities loaned 41,144,385
Investment advisory fee 115,365
Distribution and service fees 79,619
Transfer agent fee 60,048
Trustee deferred compensation plan 46,609
Administration fee 14,542
Trustees' fee 233
Other accrued expenses 59,099
------------
Total liabilities 42,301,339
------------
NET ASSETS $170,849,287
============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $134,435,101
Accumulated net investment loss (6,482)
Accumulated net realized gain 28,498,433
Net unrealized appreciation 7,922,235
------------
NET ASSETS $170,849,287
============
CLASS A
Net asset value per share (net assets/shares outstanding) $15.72
Maximum offering price per share $15.72/(1-5.75%) $16.68
Shares of beneficial interest outstanding, no par value,
unlimited authorization 6,608,508
Net Assets $103,874,581
CLASS B
Net asset value (net assets/shares outstanding) and
offering price per share $14.22
Shares of beneficial interest outstanding, no par value,
unlimited authorization 1,375,025
Net Assets $ 19,552,331
CLASS C
Net asset value (net assets/shares outstanding) and
offering price per share $14.22
Shares of beneficial interest outstanding, no par value,
unlimited authorization 3,335,752
Net Assets $ 47,422,375
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2007
INVESTMENT INCOME
Dividends $2,938,119
Security lending 224,822
Interest 143,561
Foreign taxes withheld (4,043)
----------
Total investment income 3,302,459
----------
EXPENSES
Investment advisory fee 1,948,897
Service fees, Class A 327,541
Distribution and service fees, Class B 267,347
Distribution and service fees, Class C 587,931
Administration fee 174,006
Transfer agent 403,227
Printing 128,758
Registration 44,523
Custodian 43,418
Professional 37,663
Trustees 20,301
Miscellaneous 30,955
----------
Total expenses 4,014,567
----------
Less expenses reimbursed by investment adviser (276,663)
Custodian fees paid indirectly (2,361)
----------
Net expenses 3,735,543
----------
NET INVESTMENT INCOME (LOSS) (433,084)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments 34,134,230
Net change in unrealized appreciation (depreciation)
on investments (27,724,971)
----------
NET GAIN (LOSS) ON INVESTMENTS 6,409,259
----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $5,976,175
==========
See Notes to Financial Statements
27
Phoenix Small-Cap Value Fund
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
August 31, 2007 August 31, 2006
--------------- ----------------
FROM OPERATIONS
Net investment income (loss) $ (433,084) $ (1,489,163)
Net realized gain (loss) 34,134,230 41,254,936
Net change in unrealized appreciation
(depreciation) (27,724,971) (27,051,697)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 5,976,175 12,714,076
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized short-term gains, Class A (3,132,486) (359,993)
Net realized short-term gains, Class B (713,267) (104,808)
Net realized short-term gains, Class C (1,512,245) (179,271)
Net realized long-term gains, Class A (18,655,440) (13,870,660)
Net realized long-term gains, Class B (4,247,838) (4,044,831)
Net realized long-term gains, Class C (9,006,258) (6,913,765)
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS
TO SHAREHOLDERS (37,267,534) (25,473,328)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from shares sold (391,124 and
729,714 shares, respectively) 6,900,046 13,949,274
Net asset value of shares issued from
reinvestment of distributions
(1,174,484 and 729,358 shares,
respectively) 19,860,555 12,953,387
Cost of shares repurchased (2,297,077
and 1,685,103 shares, respectively) (40,481,265) (31,925,844)
------------ ------------
Total (13,720,664) (5,023,183)
------------ ------------
CLASS B
Proceeds from shares sold (75,690 and
102,263 shares, respectively) 1,206,674 1,787,328
Net asset value of shares issued from
reinvestment of distributions
(266,214 and 201,216 shares,
respectively) 4,094,367 3,323,848
Cost of shares repurchased (757,092 and
817,203 shares, respectively) (12,239,579) (14,486,211)
------------ ------------
Total (6,938,538) (9,375,035)
------------ ------------
CLASS C
Proceeds from shares sold (108,344 and
125,986 shares, respectively) 1,698,390 2,183,523
Net asset value of shares issued from
reinvestment of distribution
(572,898 and 357,395 shares,
respectively) 8,811,167 5,904,168
Cost of shares repurchased (969,606 and
689,686 shares, respectively) (15,590,777) (12,219,361)
------------ ------------
Total (5,081,220) (4,131,670)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS (25,740,422) (18,529,888)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS (57,031,781) (31,289,140)
NET ASSETS
Beginning of period 227,881,068 259,170,208
------------ ------------
END OF PERIOD (INCLUDING ACCUMULATED
NET INVESTMENT LOSS AND UNDISTRIBUTED
NET INVESTMENT INCOME OF $(6,482) AND
$0, RESPECTIVELY) $170,849,287 $227,881,068
============ ============
See Notes to Financial Statements
28
Phoenix Small-Cap Value Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A
-------------------------------------------------------
ENDED AUGUST 31
-------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $18.45 $19.45 $15.08 $13.42 $11.30
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) 0.02 (0.05) (0.03) (0.06) --(3)
Net realized and unrealized gain (loss) 0.38 1.01 4.40 1.72 2.12
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.40 0.96 4.37 1.66 2.12
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Distributions from net realized gains (3.13) (1.96) -- -- --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (3.13) (1.96) -- -- --
------ ------ ------ ------ ------
Change in net asset value (2.73) (1.00) 4.37 1.66 2.12
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $15.72 $18.45 $19.45 $15.08 $13.42
====== ====== ====== ====== ======
Total return(2) 0.97% 5.32 % 28.98 % 12.37 % 18.76%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $103,875 $135,436 $147,132 $124,165 $76,783
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 1.43% 1.40 % 1.40 % 1.40 % 1.40%
Gross operating expenses 1.56% 1.50 % 1.56 % 1.57 % 1.71%
Net investment income (loss) 0.10% (0.28)% (0.17)% (0.38)% 0.04%
Portfolio turnover 205% 121 % 102 % 150 % 241%
CLASS B
-------------------------------------------------------
ENDED AUGUST 31
-------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $17.07 $18.26 $14.27 $12.79 $10.85
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.11) (0.18) (0.15) (0.16) (0.08)
Net realized and unrealized gain (loss) 0.39 0.95 4.14 1.64 2.02
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.28 0.77 3.99 1.48 1.94
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Distributions from net realized gains (3.13) (1.96) -- -- --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (3.13) (1.96) -- -- --
------ ------ ------ ------ ------
Change in net asset value (2.85) (1.19) 3.99 1.48 1.94
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.22 $17.07 $18.26 $14.27 $12.79
====== ====== ====== ====== ======
Total return(2) 0.26 % 4.57 % 27.96 % 11.57 % 17.88 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $19,552 $30,567 $42,081 $43,801 $40,696
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 2.18 % 2.15 % 2.15 % 2.15 % 2.15 %
Gross operating expenses 2.31 % 2.25 % 2.31 % 2.33 % 2.46 %
Net investment income (loss) (0.66)% (1.04)% (0.91)% (1.15)% (0.71)%
Portfolio turnover 205 % 121 % 102 % 150 % 241 %
<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
29
Phoenix Small-Cap Value Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS C
-------------------------------------------------------
ENDED AUGUST 31
-------------------------------------------------------
2007 2006 2005 2004 2003
Net asset value, beginning of period $17.07 $18.26 $14.27 $12.79 $10.85
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(1) (0.11) (0.18) (0.15) (0.16) (0.08)
Net realized and unrealized gain (loss) 0.39 0.95 4.14 1.64 2.02
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.28 0.77 3.99 1.48 1.94
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Distributions from net realized gains (3.13) (1.96) -- -- --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (3.13) (1.96) -- -- --
------ ------ ------ ------ ------
Change in net asset value (2.85) (1.19) 3.99 1.48 1.94
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.22 $17.07 $18.26 $14.27 $12.79
====== ====== ====== ====== ======
Total return(2) 0.26 % 4.57 % 27.96 % 11.57 % 17.88 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $47,422 $61,878 $69,957 $71,296 $51,559
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses 2.18 % 2.15 % 2.15 % 2.15 % 2.15 %
Gross operating expenses 2.31 % 2.25 % 2.31 % 2.32 % 2.46 %
Net investment income (loss) (0.65)% (1.03)% (0.91)% (1.14)% (0.72)%
Portfolio turnover 205 % 121 % 102 % 150 % 241 %
<FN>
(1) Computed using average shares outstanding.
(2) Sales charges are not reflected in total return calculation.
</FN>
See Notes to Financial Statements
30
PHOENIX INVESTMENT TRUST 97
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2007
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, three Funds are offered for sale (each a "Fund"). The Phoenix
Quality Small-Cap Fund ("Quality Small-Cap Fund"), the Phoenix Small-Cap
Sustainable Growth Fund ("Small-Cap Sustainable Growth Fund") and the Phoenix
Small-Cap Value Fund ("Small-Cap Value Fund") are each diversified and each has
an investment objective of long-term capital appreciation.
The Funds offer the following classes of shares for sale:
Class I 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
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.a 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 I 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 other 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.
In September 2006, Statement of Financial Accounting Standards No. 157,
"Fair Value Measurements" ("SFAS 157"), was issued and is effective for fiscal
years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Funds' financial statement disclosures.
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.
31
PHOENIX INVESTMENT TRUST 97
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2007 (CONTINUED)
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 it invests.
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 for the Funds' fiscal year
beginning September 1, 2007. 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. The evaluation by Management of the impact
that may result from adopting FIN 48 is in progress.
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:
The Funds may loan securities to qualified brokers through an agreement with
State Street Bank and Trust Company (the "Custodian"). Under the terms of
agreement, the Fund is required to maintain 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, sovereign debt of foreign countries and/or
irrevocable letters of credit issued by banks. Cash collateral is invested in a
short-term money market fund. Dividends earned on the collateral and premiums
paid by the broker are recorded as income by the Fund net of fees and rebates
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.
As of August 31, 2007, the Small-Cap Value Fund had securities on loan with
a market value of $40,787,650 and held non-cash collateral of $267,157 and cash
collateral of $41,144,385.
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.
J. REPURCHASE AGREEMENTS:
A repurchase agreement is a transaction where a Fund acquires a security for
cash and obtains a simultaneous commitment from the seller to repurchase the
security at an agreed upon price and date. Each Fund, through its custodian,
takes possession of securities collateralizing the repurchase agreement. The
collateral is marked-to-market daily to ensure that the market value of the
underlying assets remains sufficient to protect the Fund in the event of default
by the seller. If the seller defaults and the value of the collateral declines,
or if the seller enters insolvency proceedings, realization of collateral may be
delayed or limited.
32
PHOENIX INVESTMENT TRUST 97
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2007 (CONTINUED)
3. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
Phoenix Investment Counsel, Inc. ("PIC") (the "Adviser") is the Adviser to
each Fund of the Trust. As compensation for its services to each Fund of the
Trust. PIC, 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%
First $1+ Billion - $2+
$1 Billion $2 Billion Billion
------------- -------------- ----------
Small-Cap Value Fund ......... 0.90% 0.85% 0.80%
The Adviser has contractually agreed to limit total fund operating expenses,
(excluding interest, taxes and extraordinary expenses), through December 31,
2007, 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 I
---------- ---------- ----------
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%
Effective August 23, 2007, the Adviser may recapture operating expenses
waived or reimbursed under this arrangement, within three fiscal years following
the end of the fiscal year in which such waiver or reimbursement occurred. Each
Fund must pay its ordinary operating expenses before the Adviser is entitled to
any reimbursement and must remain in compliance with applicable expense
limitations. All or a portion of the following Adviser reimbursed expenses may
be recaptured by the fiscal year ended 2010:
Quality Small-Cap ............ $8,581
Small-Cap Sustainable ........ 7,935
Small-Cap Value .............. --
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.
Euclid Advisors LLC ("Euclid"), an indirect wholly-owned subsidiary of PNX,
is the subadviser to the Small-Cap Value Fund.
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, 2007, as follows:
Class A Class B Class C
Net Selling Deferred Deferred
Commissions Sales Charges Sales Charges
----------- -------------- --------------
Quality Small-Cap Fund ....... $1,079 $ -- $ 1
Small-Cap Sustainable
Growth Fund .............. 794 -- 1
Small-Cap Value Fund ......... 4,012 21,225 963
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 I 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.
PEPCO serves as the Administrator to the Trust. For its services, which
includes financial agent 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
funds in the Phoenix Funds and The Phoenix Edge Series Fund.
For the fiscal year ended August 31, 2007, the Trust incurred administration
fees totaling $186,044.
PEPCO serves as the Trust's transfer agent with Boston Financial Data
Services, Inc. serving as sub-transfer agent. For the fiscal year ended August
31, 2007, transfer agent fees were $416,291 as reported in the Statements of
Operations.
At August 31, 2007, PNX and its affiliates, and Phoenix affiliated Funds
held shares which aggregated the following:
Aggregate
Net Asset
Shares Value
------------ ------------
Quality Small-Cap Fund
- --Class I ................... 10,072 $ 118,447
- --Class A ................... 332,423 3,902,646
- --Class C ................... 10,024 117,080
Small-Cap Sustainable
Growth Fund
- --Class I ................... 10,000 103,700
- --Class A ................... 376,160 3,889,494
- --Class C ................... 10,000 102,500
Small-Cap Value Fund
- --Class A ................... 229,653 3,610,145
Until March 1, 2007, the Trust provided a deferred compensation plan to its
trustees who were not officers of PNX. Under the deferred compensation plan,
trustees were able to defer all or a portion of their
33
PHOENIX INVESTMENT TRUST 97
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2007 (CONTINUED)
compensation. Amounts deferred were retained by the Fund, and to the extent
permitted by the 1940 Act, as amended, could have been invested in the shares of
those funds selected by the trustees. Investments in such funds are included in
"Other assets" on the Statements of Assets and Liabilities at August 31, 2007.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding U.S. Government and agency
securities and short-term securities) during the fiscal year ended August 31,
2007, were as follows:
Purchases Sales
------------------ -----------------
Quality Small-Cap Fund ............. $ 19,627,297 $ 1,223,054
Small-Cap Sustainable Growth Fund .. 16,151,289 1,696,668
Small-Cap Value Fund ............... 435,462,170 501,987,055
There were no purchases or sales of long-term U.S. Government and agency
securities.
5. 10% SHAREHOLDERS
As of August 31, 2007, certain Funds had individual shareholder accounts
and/or omnibus shareholder accounts (which are comprised of a group of
individual shareholders), which amounted to more than 10% of the total shares
outstanding of the fund as detailed below.
% Shares Number of
Outstanding Accounts
------------------ -----------------
Quality Small-Cap Fund ............. 12% 1
Small-Cap Sustainable Growth Fund .. 15 1
The shareholder accounts are affiliated with PNX.
6. CREDIT RISK AND ASSET CONCENTRATIONS
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a Fund's ability to
repatriate such amounts.
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.
At August 31, 2007, the Quality Small-Cap Fund held investments issued by
various companies in the financials sector comprising 27% 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 32%
of the total net assets of the Fund.
7. 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.
8. 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 SEC Boston
District Office issued a deficiency letter noting perceived weaknesses in
procedures for monitoring trading to prevent market timing activity prior to
2004. The staff requested the Company to conduct an analysis as to whether
shareholders, policyholders and contract holders who invested in the funds that
may have been affected by undetected market timing activity had suffered harm
and to advise the staff whether the Company believes reimbursement is necessary
or appropriate under the circumstances. Market timing is an investment technique
involving frequent short-term trading of mutual fund shares that is designed to
exploit market movements or inefficiencies in the way mutual fund companies
price their shares. A third party was retained to assist the Company in
preparing the analysis. In 2005, based on the third party analysis the Company
notified the staff at the SEC Boston District Office that reimbursements were
not appropriate under the circumstances.
In February 2005, the NASD notified PNX that it was asserting violations of
trade reporting rules by a subsidiary. PNX responded to the NASD allegations in
May 2005. Thereafter, in January 2007, the NASD notified PNX that the matter is
being referred for potential violations and possible action. On May 3, 2007, the
NASD accepted a letter of acceptance, waiver and consent submitted by the PXP
subsidiary to resolve this matter. Without admitting or denying the NASD's
findings, in accordance with the terms of the letter the PXP subsidiary agreed
to a censure, to pay a fine of $8,000 and to revise its supervisory procedures.
The Company does not believe that the outcome of these matters will be
material to these financial statements.
34
PHOENIX INVESTMENT TRUST 97
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2007 (CONTINUED)
9. 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 arrangements.
10. FEDERAL INCOME TAX INFORMATION
The Funds have capital loss carryovers, which may be used to offset future
capital gains, as follows:
Expiration Year
---------------------
2014 Total
------ -------
Quality Small-Cap Fund ......... $ -- $ --
Small-Cap Sustainable
Growth Fund ................. 1,859 1,859
Small-Cap Value Fund ............ -- --
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, 2007, the Funds utilized losses deferred in
prior years against current year capital gains as follows:
Quality Small-Cap Fund .......... $937
Small-Cap Sustainable
Growth Fund ................ 661
Small-Cap Value Fund ............ --
Under current tax law, foreign currency and capital losses realized after
October 31 may be deferred and treated as occurring on the first day of the
following fiscal year. As of August 31, 2007, the Funds deferred and recognized
post-October losses as follows:
Capital Loss Capital Loss
Deferred Recognized
----------------- ---------------
Small-Cap Sustainable
Growth Fund ................... $83,964 $ --
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 ............. $214,979 $ 11,902
Small-Cap Sustainable Growth Fund .. -- --
Small-Cap Value Fund ............... 478,417 30,607,135
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, 2007, 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 ............. (62,267) -- 62,267
Small-Cap Value Fund ......... 726,550 (1,153,152) 426,602
12. MERGER
Effective July 13, 2007, the Phoenix Value Equity Fund, formerly a series of
Phoenix Investment Trust 97, was merged with and into the Phoenix Value
Opportunities Fund, a series of Phoenix Equity Trust. The Phoenix Value Equity
Fund has ceased to exist and is no longer available for sale.
- --------------------------------------------------------------------------------
TAX INFORMATION NOTICE (UNAUDITED)
For the fiscal year ended August 31, 2007, for federal income tax purposes,
93% and 58% of the ordinary income dividends earned by the Quality Small-Cap
Fund and Small-Cap Value Fund, respectively, qualify for the dividends-received
deduction for corporate shareholders.
For the fiscal year ended August 31, 2007, the Quality Small-Cap Fund and
Small-Cap Value Fund, respectively, hereby designate 93% and 57%, 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, 2007, the Quality Small-Cap Fund and
the Small-Cap Value Fund designated $12,526 and $33,973,561, respectively, as
long-term capital gain dividends.
- --------------------------------------------------------------------------------
35
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
[LOGO 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 and
Phoenix Small-Cap Value 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 and Phoenix Small-Cap Value Fund
(constituting Phoenix Investment Trust 97, hereafter referred to as the "Trust")
at August 31, 2007, 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, 2007 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
- -------------------------------
Boston, Massachusetts
October 16, 2007
36
FUND MANAGEMENT TABLES (UNAUDITED)
Information pertaining to the Trustees and officers of the Trust as of
August 31, 2007, 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 YEAR OF BIRTH TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
E. Virgil Conway Served since1997. 56 Chairman, Rittenhouse Advisors, LLC (consulting
YOB: 1929 firm) (2001-present). Trustee/Director, Phoenix
Funds Family (1983-present), Director, Urstadt
Biddle Property Corp. (1989-present), Consolidated
Edison Company of New York, Inc. (1970-2002),
Union Pacific Corp. (1978-2002), Accuhealth, Inc.
(1994-2002).
- ------------------------------------------------------------------------------------------------------------------------------------
Harry Dalzell-Payne Served since 1997. 56 Retired. Trustee/Director, Phoenix Funds Family
YOB: 1929 (1983-present).
- ------------------------------------------------------------------------------------------------------------------------------------
Francis E. Jeffries Served since 1997. 59 Director, The Empire District Electric Company
YOB: 1930 (1984-2004). Trustee/Director, Phoenix Funds
Complex (1987-present).
- ------------------------------------------------------------------------------------------------------------------------------------
Leroy Keith, Jr. Served since 1997. 56 Managing Director, Almanac Capital Management
YOB: 1939 (commodities business) (since 2007).
Director/Trustee, Evergreen Funds (93 portfolios)
(1989-present). Trustee, Phoenix Funds Family
(1980-present). Director, Lincoln Educational
Services Corp. (2002-2004). Partner, Stonington
Partners, Inc. (private equity firm) (2001-2007).
- ------------------------------------------------------------------------------------------------------------------------------------
Geraldine M. McNamara Served since 2001. 58 Retired. Trustee/Director, Phoenix Funds Complex
YOB: 1951 (2001-present). Managing Director, U.S. Trust
Company of New York (private bank) (1982-2006).
- ------------------------------------------------------------------------------------------------------------------------------------
James M. Oates Served since 1997. 56 Trustee/Director, Phoenix Funds Family
YOB: 1946 (1987-present). Managing Director, Wydown Group
(consulting firm) (1994-present). Director,
Investors Bank & Trust Corporation (1995-present),
Stifel Financial (1996-present). Independent
Chairman (2005-present) and Trustee
(2004-present), John Hancock Trust (93
portfolios). Trustee, John Hancock Funds II (74
portfolios) (2005-present). Director/Trustee,
Plymouth Rubber Co. (1995-2003). Chairman, Hudson
Castle Group, Inc. (Formerly IBEX Capital Markets,
Inc.) (financial services) (1997-2006). Trustee,
John Hancock Funds III (8 portfolios) (2005-2006).
- ------------------------------------------------------------------------------------------------------------------------------------
Richard E. Segerson Served since 1997. 56 Managing Director, Northway Management Company
YOB: 1946 (1998-present). Trustee/Director, Phoenix Funds
Family (1983-present).
- ------------------------------------------------------------------------------------------------------------------------------------
Ferdinand L.J. Verdonck Served since 2006. 56 Chairman, Amsterdam Molecular Therapeutics N.V.
YOB: 1942 (biotechnology) (since 2007). Director, The JP
Morgan European Investment Trust (1998-present),
Galapagos N.V. (biotechnology) (2005-present).
Trustee, Phoenix Funds Family (2004-present).
Director, EASDAQ (Chairman) (2001-present), Groupe
SNEF (electrical and electronic installation)
(1998-present). Managing Director, Almanij N.V.
(financial holding company) (1992-2003). Director,
KBC Bank and Insurance Holding Company
(1992-2003), KBC Bank (1992-2003), KBC Insurance
(1992-2003), Kredietbank S.A. Luxembourgeoise
(1992-2003), Investco N.V. (private equity
company) (1992-2003), Gevaert N.V. (industrial
holding company) (1992-2003), Fidea N.V.
(insurance company) (1992-2003), Almafin N.V.
(real estate investment company) (1992-2003),
Centea N.V. (savings bank) (1992-2003), Degussa
Antwerpen N.V. (1998-2004), Santens N.V.
(textiles) (1999-2004), Dictaphone Corp.
(2002-2006), Banco Urquijo (Chairman) (1998-2006).
- ------------------------------------------------------------------------------------------------------------------------------------
37
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 YEAR OF BIRTH TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
George R. Aylward(1) Served since 2004. 56 Senior Executive Vice President and President,
YOB: 1964 Asset Management (since 2007), Senior Vice
President and Chief Operating Officer, Asset
Management (2004-2007), Vice President
(2001-2004), The Phoenix Companies, Inc. Director
and President (2006-present), Chief Operating
Officer (2004-present), Executive Vice President
(2004-2006), Vice President, Finance, (2001-2002),
Phoenix Investment Partners, Ltd. Various senior
officer and directorship positions with Phoenix
affiliates. President (2006-present), Executive
Vice President (2004-2006), the Phoenix Funds
Family. Chairman, President and Chief Executive
Officer, The Zweig Fund Inc. and The Zweig Total
Return Fund Inc. (2006-present).
- ------------------------------------------------------------------------------------------------------------------------------------
Marilyn E. LaMarche(2) Served since 2002. 56 Limited Managing Director, Lazard Freres & Co. LLC
YOB: 1934 (1997-present). Trustee/Director, Phoenix Funds
Family (2002-present). Director, The Phoenix
Companies, Inc. (2001-2005).
- ------------------------------------------------------------------------------------------------------------------------------------
Philip R. McLoughlin(3) Served since 1997. 76 Partner, Cross Pond Partners, LLC (2006-Present).
YOB: 1946 Director, PXRE Corporation (Reinsurance)
Chairman (1985-present), World Trust Fund (1991-present).
Director/Trustee, Phoenix Funds Complex
(1989-present). Management Consultant (2002-2004),
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 (1983-2002) and Chairman
(1995-2002), Phoenix Investment Counsel, Inc.
Director (1982-2002) and Chairman (2000-2002),
Phoenix Equity Planning Corporation. Chairman and
President, Phoenix/Zweig Advisers LLC (2001-2002).
Executive Vice President (1994-2002) and Chief
Investment Counsel (1994-2002), PHL Variable
Insurance Company.
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Mr. Aylward is an "interested person," as defined in the Investment Company
Act of 1940, by reason of his position with Phoenix Investment Partners,
Ltd. and its affiliates.
(2) Ms. LaMarche is an "interested person," as defined in the Investment Company
Act of 1940, by reason of her former position as a Director of The Phoenix
Companies, Inc.
(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>
38
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)
YEAR OF BIRTH TIME SERVED DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
Nancy G. Curtiss Senior Vice President Assistant Treasurer (2001-present), Vice
YOB: 1952 since 2006. President, Fund 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
YOB: 1962 since 2004. Development, The Phoenix Companies, Inc.
(2006-present). Senior Vice President, Asset
Management Product Development (2005-present),
Senior Vice President and Chief Administrative
Officer (2003-2004), Phoenix Investment Partners,
Ltd. Director and President (2006-present), Senior
Vice President and Chief Administrative Officer
(1999-2003), Phoenix Equity Planning Corporation.
Senior Vice President, Phoenix Investment Counsel,
Inc. (2006-present). Director, Duff & Phelps
Investment Management Company (2006-present).
Senior Vice President, the Phoenix Funds Family
(2004-present).
- ------------------------------------------------------------------------------------------------------------------------------------
Marc Baltuch Vice President and Chief Chief Compliance Officer, Zweig-DiMenna Associates
c/o Zweig-DiMenna Compliance Officer LLC (1989-present). Vice President and Chief
Associates, LLC since 2004. Compliance Officer, certain Funds within the
900 Third Avenue Phoenix Funds Complex (2004-present). Vice
New York, NY 10022 President, The Zweig Total Return Fund, Inc.
YOB: 1945 (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 Vice President, Fund Administration, Phoenix
YOB: 1972 and Treasurer since 2006. Investment Partners, Ltd. (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
(2006-present). 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
One American Row Officer, Counsel and Company (2005- present). Vice President, Counsel,
Hartford, CT 06102 Secretary since 2005. Chief Legal Officer and Secretary, the Phoenix
YOB: 1954 Funds Family (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).
- ------------------------------------------------------------------------------------------------------------------------------------
39
PHOENIX INVESTMENT TRUST 97 INVESTMENT ADVISER
101 Munson Street Phoenix Investment Counsel, Inc.
Greenfield, MA 01301-9668 56 Prospect Street
Hartford, CT 06115-0480
TRUSTEES PRINCIPAL UNDERWRITER
George R. Aylward Phoenix Equity Planning Corporation
E. Virgil Conway One American Row
Harry Dalzell-Payne Hartford, CT 06103-2899
Francis E. Jeffries
Leroy Keith, Jr. TRANSFER AGENT
Marilyn E. LaMarche Phoenix Equity Planning Corporation
Philip R. McLoughlin, Chairman One American Row
Geraldine M. McNamara Hartford, CT 06103-2899
James M. Oates
Richard E. Segerson CUSTODIAN
Ferdinand L.J. Verdonck State Street Bank and Trust Company
P.O. Box 5501
OFFICERS Boston, MA 02206-5501
George R. Aylward, President
Nancy G. Curtiss, Senior Vice President INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Francis G. Waltman, Senior Vice President PricewaterhouseCoopers LLP
Marc Baltuch, Vice President and Chief 125 High Street
Compliance Officer Boston, MA 02110-1707
W. Patrick Bradley, Chief Financial Officer
and Treasurer HOW TO CONTACT US
Kevin J. Carr, Vice President, Counsel, Mutual Fund Services 1-800-243-1574
Secretary and Chief Legal Officer Advisor Consulting Group 1-800-243-4361
Telephone Orders 1-800-367-5877
TextTelephone 1-800-243-1926
Website 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.
- --------------------------------------------------------------------------------
[BLANK PAGE]
[LOGO OMITTED] -----------------
PHOENIX PRESORTED
STANDARD
Phoenix Equity Planning Corporation U.S. POSTAGE
P.O. Box 150480 PAID
Hartford, CT 06115-0480 Lancaster, PA
Permit No. 1793
-----------------
For more information about Phoenix mutual funds, please call
your financial representative, contact us at 1-800-243-1574
or visit PHOENIXFUNDS.COM.
PXP215 10-07
BPD32908
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
(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 $50,000 for 2007 and
$75,000 for 2006.
AUDIT-RELATED FEES
(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 $3,000 for 2007 and $0 for 2006. This represents fees for the review of
the registrants semi-annual report.
TAX FEES
(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 $12,900 for 2007 and $17,200
for 2006.
"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
(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 2007 and $0 in 2006.
(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 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 2007 and not applicable for 2006.
(c) 100% for 2007 and 100% for 2006.
(d) Not applicable for 2007 and not applicable for 2006.
(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 $779,328 for 2007 and $944,027 for 2006.
(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 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) 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, President
(principal executive officer)
Date November 8, 2007
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ George R. Aylward
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George R. Aylward, President
(principal executive officer)
Date November 8, 2007
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By (Signature and Title)* /s/ W. Patrick Bradley
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W. Patrick Bradley, Chief Financial Officer
and Treasurer
(principal financial officer)
Date November 8, 2007
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* Print the name and title of each signing officer under his or her signature.