N-CSR 1 g8358_invtrust.txt PHOENIX INVESTMENT TRUST 8/31/03 N-CSR 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 ----------------- Phoenix Investment Trust 97 -------------------------------------------------- (Exact name of registrant as specified in charter) 56 Prospect Street Hartford, CT 06115 -------------------------------------------------- (Address of principal executive offices) (Zip code) PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 -------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 302-791-3197 --------------- Date of fiscal year end: August 31, 2003 ------------------- Date of reporting period: August 31, 2003 ------------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. Annual Report AUGUST 31, 2003 Hollister Phoenix-Hollister Small Cap Value Fund Phoenix-Hollister Value Equity Fund Do you want to stop receiving fund documents by mail? Go to PhoenixInvestments.com, log in and sign up for E-Delivery [GRAPHIC OMITTED] PHOENIX INVESTMENT PARTNERS, LTD. COMMITTED TO INVESTOR SUCCESS SM MESSAGE FROM THE CHAIRMAN PHOTO OMITTED DEAR SHAREHOLDER: I hope you'll take time to review the activities and performance included in this annual report for the Phoenix Investment Trust 97. With this writing, we are witnessing new signs of life in the equity markets, and I am encouraged that we may be moving toward a more rewarding period. Now is an opportune time for you to review your investments with your financial advisor to be sure your portfolio is best positioned to achieve long-term success. Keep in mind that finding the best balance of performance and protection requires discipline and diversification. 1 Your investments in Phoenix-Hollister Small Cap Value Fund 2 and Phoenix-Hollister Value Equity Fund may help you in this effort. To learn more about your investments and investing, visit PhoenixInvestments.com. Sincerely, /S/ PHILIP R. MCLOUGHLIN Philip R. McLoughlin Chairman, Phoenix Funds AUGUST 31, 2003 1 DIVERSIFICATION DOES NOT GUARANTEE AGAINST A LOSS, AND THERE IS NO GUARANTEE THAT A DIVERSIFIED PORTFOLIO WILL OUTPERFORM A NON-DIVERSIFIED PORTFOLIO. 2 SMALL-CAP INVESTING INVOLVES ADDED RISKS INCLUDING GREATER PUBLIC VOLATILITY, LESS LIQUIDITY, AND INCREASED COMPETITIVE THREAT. -------------------------------------------------------------------------------- Mutual funds are not insured by the FDIC; are not deposits or other obligations of a bank and are not guaranteed by a bank; and are subject to investment risks, including possible loss of the principal invested. -------------------------------------------------------------------------------- 1 PHOENIX-HOLLISTER SMALL CAP VALUE FUND A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGEMENT TEAM Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE? A: The Phoenix-Hollister Small Cap Value Fund is designed for long-term investors seeking capital appreciation. Investors should note that the risks of investing in small-company stocks may include relatively low trading volumes, a greater degree of change in earnings, and greater short-term volatility. Q: HOW DID THE FUND PERFORM OVER THE PAST 12 MONTHS ENDED AUGUST 31, 2003? A: Reversing their preceding annual performances, all of the major stock indexes recorded a strong year for the 12 months ended August 31, 2003. The Fund also rebounded in this market environment. For the fiscal year ended August 31, 2003, Class A shares rose 18.76%, Class B shares rose 17.88%, and Class C shares were also up 17.88%. For the same period, the Russell 2000 Index 1 rose 29.08%, and the Russell 2000 Value Index 2 was up 23.68%. The broad-based S&P 500(R) Index 3 rose 12.09%. All performance figures assume reinvestment of distributions and exclude the effect of sales charges. Past performance is not a guarantee of future performance. Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING THIS 12-MONTH PERIOD? A: During the year under review, technology and more recently telecom sectors helped the Fund's performance. The Fund's underweight position in consumer durables and healthcare also added to performance. However, being overweight in energy and energy service strategies had a negative effect on the Fund's performance. Q: WHAT SPECIFIC STOCKS HELPED AND WHICH SPECIFIC STOCKS HURT PERFORMANCE FOR THIS PERIOD? A: Stocks that hurt the Fund's performance during this period included Boston Communications Group (effected by the loss of the Verizon contract) and Valassis Communications (effected by the loss of large coupon contract). Helping the Fund's performance were WMS Industries (gambling machine software) and Mastec (trench digger for buried cable and fiber optics). Q: WHAT IS YOUR CURRENT OUTLOOK FOR THE NEAR TERM? A: We feel that the roadmap for the next five to ten years will be similar to what was experienced between 1975-1982. We feel that the two-year tailwind of ever-lower interest rates is over. Investment approaches that rely on index fund, mega cap stocks, and buy-and-hold strategies will have difficulty outperforming. Contrarian ideas, short-term (12-18 months) rentals, and smaller size companies look appealing. We remain cautiously optimistic. SEPTEMBER 2003 THE PRECEDING INFORMATION IS THE OPINION OF FUND MANAGEMENT. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE IS NO GUARANTEE THAT MARKET FORECASTS DISCUSSED WILL BE REALIZED. 1 THE RUSSELL 2000 INDEX MEASURES THE TOTAL-RETURN PERFORMANCE OF THE 2,000 SMALLEST COMPANIES IN THE RUSSELL 3000 INDEX. 2 THE RUSSELL 2000 VALUE INDEX MEASURES THE TOTAL-RETURN PERFORMANCE OF THOSE RUSSELL 2000 COMPANIES WITH LOWER PRICE-TO-BOOK RATIOS AND LOWER FORECASTED GROWTH VALUES. 3 THE S&P 500(REGISTRATION MARK) INDEX MEASURES TOTAL-RETURN STOCK MARKET PERFORMANCE. THE INDEXES ARE UNMANAGED AND NOT AVAILABLE FOR DIRECT INVESTMENT. 2 Phoenix-Hollister Small Cap Value Fund -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS 1 PERIOD ENDING 8/31/03 -------------------------------------------------------------------------------- INCEPTION INCEPTION 1 YEAR 5 YEARS TO 8/31/03 DATE -------- -------- ---------- ------------ Class A Shares at NAV 2 18.76% 16.23% 9.91% 11/20/97 Class A Shares at POP 3 11.93 14.86 8.78 11/20/97 Class B Shares at NAV 2 17.88 15.37 9.09 11/20/97 Class B Shares with CDSC 4 13.88 15.37 9.09 11/20/97 Class C Shares at NAV 2 17.88 15.37 9.09 11/20/97 Class C Shares with CDSC 4 17.88 15.37 9.09 11/20/97 Russell 2000 Value Index 6 23.68 12.32 7.23 11/20/97 S&P 500(R) Index 7 12.09 2.50 2.33 11/20/97 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 C shares are 1% in the first year and 0% thereafter. 5 This chart illustrates POP returns on Class A shares and CDSC returns for Class B and Class C shares since inception. 6 The Russell 2000 Value Index measures the total return performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. The index's performance does not reflect sales charges. 7 The S&P 500(R) Index is a measure of stock market total return performance and is provided for general comparative purposes. The index's performance does not reflect sales charges. All returns represent past performance which may not be indicative of future performance. 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. -------------------------------------------------------------------------------- GROWTH OF $10,000 PERIODS ENDING 8/31 -------------------------------------------------------------------------------- [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC: PHOENIX HOLLISTER SMALL CAP VALUE CHART
-------------------------------------------------------------------------------- PHOENIX HOLLISTER SMALL CAP VALUE CHART -------------------------------------------------------------------------------- Phoenix-Hollister Phoenix-Hollister Phoenix-Hollister Russell 2000 Small Cap Value Small Cap Value Small Cap Value Value Stock S&P 500 Fund Class A 5 Fund Class B 5 Fund Class C 5 Index 6 Index 7 11/20/97 $9,425.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 8/31/98 7,668.16 8,093.43 8,091.01 8,369.65 10,096.90 8/31/99 10,804.60 11,319.80 11,316.40 9,548.56 14,123.60 8/31/00 17,951.50 18,674.30 18,668.70 10,856.40 16,438.30 8/31/01 15,395.40 15,893.80 15,889.00 12,815.00 12,428.70 8/31/02 13,698.20 14,031.40 14,027.20 12,097.40 10,191.70 8/31/03 16,268.10 16,540.20 16,535.30 14,961.80 11,424.10
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 gains are reinvested. SECTOR WEIGHTINGS 8/31 8/31/03 As a percentage of equity holdings [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC: PHOENIX HOLLISTER SMALL CAP PIE
Information Consumer Exchange Health Care Technology Discretionary Industrials Financials Energy Traded Funds Other 18% 17% 15% 14% 10% 9% 6% 11%
See Notes to Financial Statements 3 Phoenix-Hollister Small Cap Value Fund ------------------------------------------------------------------------------- TEN LARGEST HOLDINGS AT AUGUST 31, 2003 (AS A PERCENTAGE OF TOTAL NET ASSETS) ------------------------------------------------------------------------------- 1. Circuit City Stores, Inc. 3.4% 2. MasTec, Inc. 3.1% 3. LifePoint Hospitals, Inc. 2.9% 4. King Pharmaceuticals, Inc. 2.6% 5. Sirius Satellite Radio, Inc. 2.5% 6. Dycom Industries, Inc. 2.4% 7. Pharmaceutical Resources, Inc. 2.3% 8. Concurrent Computer Corp. 2.2% 9. iShares MSCI Japan Index Fund 2.1% 10. iShares MSCI Hong Kong Index Fund 2.0% INVESTMENTS AT AUGUST 31, 2003 SHARES VALUE --------- --------- COMMON STOCKS--86.3% AEROSPACE & DEFENSE--1.4% DRS Technologies, Inc.(b) .......................... 11,600 $ 301,600 EDO Corp. .......................................... 17,900 367,308 Herley Industries, Inc.(b) ......................... 88,500 1,747,875 ------------ 2,416,783 ------------ AIRLINES--1.3% Northwest Airlines Corp.(b) ........................ 243,300 2,182,401 APPAREL RETAIL--1.6% Ross Stores, Inc. .................................. 30,100 1,516,438 Talbots, Inc. (The) ................................ 34,700 1,272,449 ------------ 2,788,887 ------------ APPAREL, ACCESSORIES & LUXURY GOODS--0.9% Jones Apparel Group, Inc. .......................... 49,100 1,516,699 BIOTECHNOLOGY--4.1% Digene Corp.(b) .................................... 70,100 2,664,501 Exact Sciences Corp.(b) ............................ 141,600 2,384,544 Human Genome Sciences, Inc.(b) ..................... 91,700 1,305,808 Pharmacopeia, Inc.(b) .............................. 41,300 505,925 ------------ 6,860,778 ------------ SHARES VALUE --------- --------- BROADCASTING & CABLE TV--3.3% Charter Communications, Inc. Class A(b) ............ 323,100 1,453,950 Sirius Satellite Radio, Inc.(b) .................... 2,531,900 4,202,954 ------------ 5,656,904 ------------ CASINOS & GAMING--0.9% WMS Industries, Inc.(b) ............................ 62,200 1,489,690 COMMODITY CHEMICALS--0.6% Lyondell Chemical Co. .............................. 70,800 1,012,440 SHARES VALUE --------- --------- COMMUNICATIONS EQUIPMENT--6.4% ADC Telecommunications, Inc.(b) .................... 822,600 2,089,404 Advanced Fibre Communications, Inc.(b) ............. 42,000 977,340 COMMUNICATIONS EQUIPMENT--(CONTINUED) Avanex Corp.(b) .................................... 404,500 $ 1,921,375 Brocade Communications Systems, Inc.(b) ............ 262,700 1,481,628 Finisar Corp.(b) ................................... 227,700 489,555 Harris Corp. ....................................... 57,500 1,909,000 JDS Uniphase Corp.(b) .............................. 572,000 1,967,680 ------------ 10,835,982 ------------ COMPUTER & ELECTRONICS RETAIL--3.4% Circuit City Stores, Inc. .......................... 557,200 5,811,596 COMPUTER HARDWARE--2.8% Concurrent Computer Corp.(b) ....................... 1,042,000 3,657,420 Palm, Inc.(b) ...................................... 55,900 1,020,175 ------------ 4,677,595 ------------ COMPUTER STORAGE & PERIPHERALS--1.6% Hutchinson Technology, Inc.(b) ..................... 19,600 619,948 Western Digital Corp.(b) ........................... 179,200 2,059,008 ------------ 2,678,956 ------------ CONSTRUCTION & ENGINEERING--5.6% Dycom Industries, Inc.(b) .......................... 182,200 4,126,830 MasTec, Inc.(b) .................................... 549,400 5,263,252 ------------ 9,390,082 ------------ CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS--1.1% Terex Corp.(b) ..................................... 78,400 1,811,040 DATA PROCESSING & OUTSOURCED SERVICES--0.4% Euronet Worldwide, Inc.(b) ......................... 73,700 744,370 DIVERSIFIED CHEMICALS--0.9% Olin Corp. ......................................... 80,000 1,456,800 DIVERSIFIED COMMERCIAL SERVICES--2.1% Arbitron, Inc.(b) .................................. 30,400 1,124,192 Coinstar, Inc.(b) .................................. 153,500 2,353,155 ------------ 3,477,347 ------------ See Notes to Financial Statements 4 Phoenix-Hollister Small Cap Value Fund SHARES VALUE --------- ------------ DRUG RETAIL--1.7% Rite Aid Corp.(b) .............................. 552,600 $ 2,790,630 ELECTRIC UTILITIES--3.3% Black Hills Corp. .............................. 73,900 2,395,099 CMS Energy Corp. ............................... 156,900 1,046,523 IDACORP, Inc. .................................. 16,800 407,232 PNM Resources, Inc. ............................ 64,800 1,775,520 ------------ 5,624,374 ------------ FOOTWEAR--1.6% Skechers U.S.A., Inc. Class A(b) ............... 360,500 2,757,825 HEALTH CARE EQUIPMENT--1.1% Mentor Corp. ................................... 81,900 1,892,709 HEALTH CARE FACILITIES--4.1% LifePoint Hospitals, Inc.(b) ................... 171,600 4,943,796 Triad Hospitals, Inc.(b) ....................... 62,300 2,018,520 ------------ 6,962,316 ------------ HOUSEHOLD APPLIANCES--1.5% Stanley Works (The) ............................ 83,300 2,521,491 INTERNET SOFTWARE & SERVICES--1.8% Internet Security Systems, Inc.(b) ............. 210,200 2,625,398 Valueclick, Inc.(b) ............................ 40,200 371,850 ------------ 2,997,248 ------------ INVESTMENT BANKING & BROKERAGE--0.3% Edwards (A.G.), Inc. ........................... 15,700 565,200 IT CONSULTING & OTHER SERVICES--1.8% MPS Group, Inc.(b) ............................. 80,000 764,000 Sapient Corp.(b) ............................... 704,100 2,217,915 ------------ 2,981,915 ------------ LEISURE PRODUCTS--1.7% Hasbro, Inc. ................................... 12,900 238,650 Leapfrog Enterprises, Inc.(b) .................. 33,500 1,256,250 Oakley, Inc.(b) ................................ 125,800 1,369,962 ------------ 2,864,862 ------------ OIL & GAS DRILLING--1.9% Patterson-UTI Energy, Inc.(b) .................. 54,100 1,614,344 Rowan Cos., Inc.(b) ............................ 62,900 1,575,016 ------------ 3,189,360 ------------ OIL & GAS EQUIPMENT & SERVICES--1.8% Key Energy Services, Inc.(b) ................... 109,900 1,138,564 Maverick Tube Corp.(b) ......................... 33,400 567,466 National-Oilwell, Inc.(b) ...................... 64,900 1,270,742 ------------ 2,976,772 ------------ SHARES VALUE --------- ------------ OIL & GAS EXPLORATION & PRODUCTION--5.0% Chesapeake Energy Corp. ........................ 219,400 $ 2,378,296 Cross Timbers Royalty Trust .................... 465 10,382 Newfield Exploration Co.(b) .................... 24,400 958,676 Pioneer Natural Resources Co.(b) ............... 74,800 1,896,928 Quicksilver Resources, Inc.(b) ................. 51,000 1,262,250 Spinnaker Exploration Co.(b) ................... 31,600 702,152 XTO Energy, Inc. ............................... 62,800 1,318,172 ------------ 8,526,856 ------------ PHARMACEUTICALS--6.8% Atrix Laboratories, Inc.(b) .................... 22,500 679,500 ICN Pharmaceuticals, Inc. ...................... 28,800 504,000 King Pharmaceuticals, Inc.(b) .................. 308,600 4,335,830 Penwest Pharmaceuticals Co.(b) ................. 94,900 2,076,412 Pharmaceutical Resources, Inc.(b) .............. 69,300 3,876,642 ------------ 11,472,384 ------------ PROPERTY & CASUALTY INSURANCE--1.9% Mercury General Corp. .......................... 74,200 3,241,056 REGIONAL BANKS--2.1% First Charter Corp. ............................ 87,500 1,616,125 Seacoast Banking Corp. of Florida .............. 35,390 620,740 TCF Financial Corp. ............................ 12,200 561,078 Texas Regional Bancshares, Inc. ................ 22,000 741,400 ------------ 3,539,343 ------------ REINSURANCE--0.7% Scottish Annuity & Life Holdings Ltd. .......... 49,300 1,132,914 REITS--1.5% iStar Financial, Inc. .......................... 68,600 2,514,876 SEMICONDUCTORS--1.3% GlobespanVirata, Inc.(b) ....................... 283,400 2,156,674 SPECIALTY CHEMICALS--0.8% RPM International, Inc. ........................ 102,800 1,402,192 SYSTEMS SOFTWARE--0.8% Sybase, Inc.(b) ................................ 78,100 1,320,671 THRIFTS & MORTGAGE FINANCE--1.5% Accredited Home Lenders Holding Co.(b) ......... 23,400 376,506 W Holding Co., Inc. ............................ 123,600 2,180,304 ------------ 2,556,810 ------------ TRUCKING--2.9% Dollar Thrifty Automotive Group, Inc.(b) ...... 123,600 2,935,500 Yellow Corp.(b) ................................ 73,200 2,052,528 ------------ 4,988,028 ------------ -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (IDENTIFIED COST $121,914,955) 145,784,856 -------------------------------------------------------------------------------- See Notes to Financial Statements 5 Phoenix-Hollister Small Cap Value Fund SHARES VALUE --------- ------------ FOREIGN COMMON STOCKS--4.5% COMMUNICATIONS EQUIPMENT--0.2% Bookham Technology plc ADR (United Kingdom)(b) ............................. 306,500 $ 407,645 INSURANCE BROKERS--0.8% Platinum Underwriters Holdings Ltd. (Bermuda) ............................... 51,700 1,403,655 PHARMACEUTICALS--1.7% Shire Pharmaceuticals Group plc ADR (United Kingdom)(b) ..................... 121,800 2,831,850 REINSURANCE--1.8% Everest Re Group Ltd. (Barbados) ......... 24,800 1,817,840 Montpelier Re Holdings Ltd. (Bermuda)(b) . 39,500 1,211,070 ------------ 3,028,910 ------------ ----------------------------------------------------------------------------- TOTAL FOREIGN COMMON STOCKS (IDENTIFIED COST $7,076,135) 7,672,060 ----------------------------------------------------------------------------- EXCHANGE TRADED FUNDS--5.6% iShares MSCI Hong Kong Index Fund ........ 374,800 3,395,688 iShares MSCI Japan Index Fund(b) ......... 432,700 3,591,410 iShares MSCI Taiwan Index Fund(b) ........ 217,900 2,425,227 ----------------------------------------------------------------------------- TOTAL EXCHANGE TRADED FUNDS (IDENTIFIED COST $8,175,368) 9,412,325 ----------------------------------------------------------------------------- TOTAL LONG TERM INVESTMENTS--96.4% (IDENTIFIED COST $137,166,458) 162,869,241 ----------------------------------------------------------------------------- STANDARD & POOR'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ------------ SHORT-TERM OBLIGATIONS--4.1% FEDERAL AGENCY SECURITIES--1.0% FHLB 1.03%, 9/24/03 ...................... $1,645 $ 1,644,241 COMMERCIAL PAPER--3.1% UBS Finance Delware LLC 1.09%, 9/2/03 .... A-1+ 2,055 2,054,813 ABSC Capital Corp. 1.10%, 9/4/03 ......... A-1 1,275 1,274,805 ABSC Capital Corp. 1.08%, 9/25/03 ........ A-1 2,030 2,028,417 ------------ 5,358,035 ------------ ----------------------------------------------------------------------------- TOTAL SHORT-TERM OBLIGATIONS (IDENTIFIED COST $7,002,276) 7,002,276 ----------------------------------------------------------------------------- TOTAL INVESTMENTS--100.5% (IDENTIFIED COST $144,168,734) 169,871,517(a) Other assets and liabilities, net--(0.5)% (833,342) ------------ NET ASSETS--100.0% $169,038,175 ============ (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $24,976,931 and gross depreciation of $1,985,904 for federal income tax purposes. At August 31, 2003, the aggregate cost of securities for federal income tax purposes was $146,880,490. (b) Non-income producing. See Notes to Financial Statements 6 Phoenix-Hollister Small Cap Value Fund STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 2003 ASSETS Investment securities at value (Identified cost $144,168,734) $169,871,517 Receivables Investment securities sold 2,007,262 Fund shares sold 312,486 Dividends and interest 110,710 Receivable from adviser 45 Prepaid expenses 4,184 ------------ Total assets 172,306,204 ------------ LIABILITIES Cash overdraft 3,804 Payables Investment securities purchased 2,716,381 Fund shares repurchased 194,770 Transfer agent fee 94,154 Investment advisory fee 90,258 Distribution and service fees 90,153 Financial agent fee 12,119 Trustees' fee 2,276 Accrued expenses 64,114 ------------ Total liabilities 3,268,029 ------------ NET ASSETS $169,038,175 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest $179,151,155 Accumulated net realized loss (35,815,763) Net unrealized appreciation 25,702,783 -------------- NET ASSETS $169,038,175 ============== CLASS A Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $76,782,705) 5,723,406 Net asset value per share $13.42 Offering price per share $13.42/(1-5.75%) $14.24 CLASS B Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $40,696,246) 3,181,889 Net asset value and offering price per share $12.79 CLASS C Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $51,559,224) 4,031,754 Net asset value and offering price per share $12.79 STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 2003 INVESTMENT INCOME Dividends $ 2,113,493 Interest 61,042 Foreign taxes withheld (6,024) ------------ Total investment income 2,168,511 ------------ EXPENSES Investment advisory fee 1,358,782 Service fees, Class A 175,848 Distribution and service fees, Class B 355,780 Distribution and service fees, Class C 450,584 Financial agent fee 142,923 Transfer agent 509,877 Printing 57,518 Custodian 35,414 Professional 33,865 Trustees 29,296 Registration 24,732 Miscellaneous 20,210 ------------ Total expenses 3,194,829 Less expenses borne by investment adviser (474,776) Custodian fees paid indirectly (1,619) ------------ Net expenses 2,718,434 ------------ NET INVESTMENT LOSS (549,923) ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities (581,048) Net change in unrealized appreciation (depreciation) on investments 24,331,903 ------------ NET GAIN ON INVESTMENTS 23,750,855 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $23,200,932 ============ See Notes to Financial Statements 7 Phoenix-Hollister Small Cap Value Fund STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended 8/31/03 8/31/02 ------------ -------------- FROM OPERATIONS Net investment income (loss) $ (549,923) $ (893,570) Net realized gain (loss) (581,048) (11,568,534) Net change in unrealized appreciation (depreciation) 24,331,903 (10,238,352) ------------ -------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 23,200,932 (22,700,456) ------------ -------------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net realized short-term gains, Class A -- (140,168) Net realized short-term gains, Class B -- (67,777) Net realized short-term gains, Class C -- (76,536) ------------ -------------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS -- (284,481) ------------ -------------- FROM SHARE TRANSACTIONS CLASS A Proceeds from sales of shares (1,907,326 and 2,995,398 shares, respectively) 21,435,568 37,470,841 Net asset value of shares issued from reinvestment of distributions (0 and 10,054 shares, respectively) -- 125,986 Cost of shares repurchased (3,531,940 and 2,586,657 shares, respectively) (37,879,871) (31,993,060) ------------ -------------- Total (16,444,303) 5,603,767 ------------ -------------- CLASS B Proceeds from sales of shares (360,619 and 1,175,378 shares, respectively) 3,733,780 14,180,441 Net asset value of shares issued from reinvestment of distributions (0 and 5,750 shares, respectively) -- 69,074 Cost of shares repurchased (900,192 and 729,750 shares, respectively) (9,055,153) (8,619,889) ------------ -------------- Total (5,321,373) 5,629,626 ------------ -------------- CLASS C Proceeds from sales of shares (588,971 and 1,647,588 shares, respectively) 6,011,638 19,922,904 Net asset value of shares issued from reinvestment of distributions (0 and 5,923 shares, respectively) -- 71,602 Cost of shares repurchased (1,092,681 and 809,589 shares, respectively) (10,996,219) (9,549,583) ------------ -------------- Total (4,984,581) 10,444,923 ------------ -------------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS (26,750,257) 21,678,316 ------------ -------------- NET INCREASE (DECREASE) IN NET ASSETS (3,549,325) (1,306,621) NET ASSETS Beginning of period 172,587,500 173,894,121 ------------ -------------- END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $0 AND $0, RESPECTIVELY] $169,038,175 $172,587,500 ============ ==============
See Notes to Financial Statements 8 Phoenix-Hollister Small Cap Value Fund
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) CLASS A --------------------------------------------------------------- YEAR ENDED AUGUST 31, --------------------------------------------------------------- 2003 2002 2001 2000 1999 Net asset value, beginning of period $11.30 $12.72 $17.90 $11.41 $ 8.11 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) --(6) (0.01) (0.05) (0.08) 0.01 Net realized and unrealized gain (loss) 2.12 (1.39) (2.34) 7.38 3.31 ------- ------- ------- ------- ------- TOTAL FROM INVESTMENT OPERATIONS 2.12 (1.40) (2.39) 7.30 3.32 ------- ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income -- -- -- -- -- Distributions from net realized gains -- (0.02) (2.79) (0.81) (0.02) ------- ------- ------- ------- ------- TOTAL DISTRIBUTIONS -- (0.02) (2.79) (0.81) (0.02) ------- ------- ------- ------- ------- Change in net asset value 2.12 (1.42) (5.18) 6.49 3.30 ------- ------- ------- ------- ------- NET ASSET VALUE, END OF PERIOD $13.42 $11.30 $12.72 $17.90 $11.41 ======= ======= ======= ======= ======= Total return(2) 18.76% (11.02)% (14.24)% 66.15 % 40.90% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $76,783 $83,005 $88,174 $79,254 $26,926 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(3) 1.40%(5) 1.40 %(5) 1.40 %(5) 1.40 %(5) 1.40% Net investment income (loss) 0.04% (0.11)% (0.39)% (0.45)% 0.15% Portfolio turnover 241% 123 % 229 % 191 % 203%
CLASS B --------------------------------------------------------------- YEAR ENDED AUGUST 31, --------------------------------------------------------------- 2003 2002 2001 2000 1999 Net asset value, beginning of period $ 10.85 $ 12.31 $ 17.54 $11.27 $ 8.07 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) (0.08) (0.10) (0.16) (0.19) (0.06) Net realized and unrealized gain (loss) 2.02 (1.34) (2.28) 7.27 3.28 ------- ------- ------- ------- ------ TOTAL FROM INVESTMENT OPERATIONS 1.94 (1.44) (2.44) 7.08 3.22 ------- ------- ------- ------- ------ LESS DISTRIBUTIONS Dividends from net investment income -- -- -- -- -- Distributions from net realized gains -- (0.02) (2.79) (0.81) (0.02) ------- ------- ------- ------- ------ TOTAL DISTRIBUTIONS -- (0.02) (2.79) (0.81) (0.02) ------- ------- ------- ------- ------ Change in net asset value 1.94 (1.46) (5.23) 6.27 3.20 ------- ------- ------- ------- ------ NET ASSET VALUE, END OF PERIOD $12.79 $10.85 $12.31 $17.54 $11.27 ======= ======= ======= ======= ------ Total return(2) 17.88 % (11.72)% (14.89)% 64.97 % 39.86 % RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $40,696 $40,382 $40,270 $26,625 $9,494 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(4) 2.15 %(5) 2.15 %(5) 2.15 %(5) 2.15 %(5) 2.15 % Net investment income (loss) (0.71)% (0.86)% (1.14)% (1.20)% (0.60)% Portfolio turnover 241 % 123 % 229 % 191 % 203 %
(1) Computed using average shares outstanding. (2) Maximum sales charges are not reflected in the total return calculation. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.71%, 1.64%, 1.58%, 1.67% and 1.87% for the periods ended August 31, 2003, 2002, 2001, 2000 and 1999, respectively. (4) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 2.46%, 2.39%, 2.33%, 2.42% and 2.62% for the periods ended August 31, 2003, 2002, 2001, 2000 and 1999, respectively. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (6) Amount is less than $0.01. See Notes to Financial Statements 9 Phoenix-Hollister Small Cap Value Fund
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) CLASS C --------------------------------------------------------------- YEAR ENDED AUGUST 31, --------------------------------------------------------------- 2003 2002 2001 2000 1999 2003 2002 2001 2000 1999 Net asset value, beginning of period $10.85 $12.31 $17.54 $11.27 $ 8.07 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) (0.08) (0.10) (0.16) (0.19) (0.06) Net realized and unrealized gain (loss) 2.02 (1.34) (2.28) 7.27 3.28 ------- ------- ------- ------ ------ TOTAL FROM INVESTMENT OPERATIONS 1.94 (1.44) (2.44) 7.08 3.22 ------- ------- ------- ------ ------ LESS DISTRIBUTIONS Dividends from net investment income -- -- -- -- -- Distributions from net realized gains -- (0.02) (2.79) (0.81) (0.02) ------- ------- ------- ------ ------ TOTAL DISTRIBUTIONS -- (0.02) (2.79) (0.81) (0.02) ------- ------- ------- ------ ------ Change in net asset value 1.94 (1.46) (5.23) 6.27 3.20 ------- ------- ------- ------ ------ NET ASSET VALUE, END OF PERIOD $12.79 $10.85 $12.31 $17.54 $11.27 ======= ======= ======= ====== ------ Total return(2) 17.88 % (11.72)% (14.89)% 64.97 % 39.86 % RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $51,559 $49,201 $45,450 $28,046 $6,465 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(3) 2.15 %(4) 2.15 %(4) 2.15 %(4) 2.15 %(4) 2.15 % Net investment income (loss) (0.72)% (0.86)% (1.14)% (1.20)% (0.60)% Portfolio turnover 241 % 123 % 229 % 191 % 203 %
(1) Computed using average shares outstanding. (2) Maximum sales charges are not reflected in the total return calculation. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 2.46%, 2.39%, 2.33%, 2.42% and 2.62% for the periods ended August 31, 2003, 2002, 2001, 2000 and 1999, respectively. (4) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. See Notes to Financial Statements 10 PHOENIX-HOLLISTER VALUE EQUITY FUND A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGEMENT TEAM Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE? A: The Phoenix-Hollister Value Equity Fund is designed for long-term investors seeking capital appreciation by investing in a diversified portfolio of attractively valued stocks with the potential for price appreciation. Q: HOW DID THE FUND PERFORM OVER THE PAST 12 MONTHS ENDED AUGUST 31, 2003? A: For the fiscal year ended August 31, 2003, Class A shares rose 7.31%, Class B shares rose 6.44%, and Class C shares were up 6.47%. For the same period, the broad-based S&P 500(R) Index 1 rose 12.09% and the Russell 1000 Value Index 2 was up 11.63%. All performance figures assume reinvestment of distributions and exclude the effect of sales charges. Past performance is not a guarantee of future performance. Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING THIS 12-MONTH PERIOD? A: During the year under review, technology and more recently telecom sectors helped the Fund's performance. The Fund's underweight position in consumer durables and healthcare also added to performance. However, being overweight in energy and energy service strategies had a negative effect on the Fund's performance. Q: WHAT SPECIFIC STOCKS HELPED AND WHICH SPECIFIC STOCKS HURT PERFORMANCE FOR THIS PERIOD? A: Our best performing holdings (based on their weighting in the portfolio) were AT&T and Merrill Lynch. Our most disappointing holdings (based on their weighting in the portfolio) were UnumProvident and Schering-Plough. Q: WHAT IS YOUR CURRENT OUTLOOK FOR THE NEAR TERM? A: We feel that the roadmap for the next five to ten years will be similar to what was experienced between 1975-1982. We feel that the two-year tailwind of ever-lower interest rates is over. Investment approaches that rely on index fund, mega cap stocks, and buy-and-hold strategies will have difficulty outperforming. Contrarian ideas, short-term (12-18 months) rentals, and smaller size companies look appealing. We remain cautiously optimistic. SEPTEMBER 2003 THE PRECEDING INFORMATION IS THE OPINION OF FUND MANAGEMENT. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE IS NO GUARANTEE THAT MARKET FORECASTS DISCUSSED WILL BE REALIZED. 1 THE S&P 500(R) INDEX MEASURES TOTAL-RETURN STOCK MARKET PERFORMANCE. 2 THE RUSSELL 1000 VALUE INDEX MEASURES THE TOTAL-RETURN PERFORMANCE OF THOSE RUSSELL 1000 COMPANIES WITH LOWER PRICE-TO-BOOK RATIOS AND LOWER FORECASTED GROWTH VALUES. THE INDEXES ARE UNMANAGED AND NOT AVAILABLE FOR DIRECT INVESTMENT. 11 Phoenix-Hollister Value Equity Fund -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS 1 PERIOD ENDING 8/31/03 --------------------------------------------------------------------------------
INCEPTION INCEPTION 1 YEAR 5 YEARS TO 8/31/03 DATE -------- -------- ---------- ------------ Class A Shares at NAV 2 7.31% 7.50% 4.45% 11/5/97 Class A Shares at POP 3 1.14 6.23 3.39 11/5/97 Class B Shares at NAV 2 6.44 6.70 3.65 11/5/97 Class B Shares with CDSC 4 2.44 6.70 3.65 11/5/97 Class C Shares at NAV 2 6.47 6.70 3.67 11/5/97 Class C Shares with CDSC 4 6.47 6.70 3.67 11/5/97 Russell 1000 Value Index 6 11.63 5.37 4.30 11/5/97 S&P 500(R) Index 7 12.09 2.50 2.64 11/5/97
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 C shares are 1% in the first year and 0% thereafter. 5 This chart illustrates POP returns on Class A shares and CDSC returns for Class B and Class C shares since inception. 6 The Russell 1000 Value Index measures the total return performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The index's performance does not reflect sales charges. 7 The S&P 500(R) Index is a measure of stock market total return performance and is provided for general comparative purposes. The index's performance does not reflect sales charges. All returns represent past performance which may not be indicative of future performance. 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.
-------------------------------------------------------------------------------- GROWTH OF $10,000 PERIODS ENDING 8/31 -------------------------------------------------------------------------------- [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC: PHOENIX HOLLISTER VALUE EQUITY CHART Phoenix-Hollister Phoenix-Hollister Phoenix-Hollister Value Equity Value Equity Value Equity Russell 1000 S&P 500 Fund Class A 5 Fund Class B 5 Fund Class C 5 Value Index 6 Index 7 11/4/97 $9,425.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 8/31/98 8,455.82 8,907.98 8,914.38 9,831.19 10,286.26 8/31/99 11,490.70 12,030.50 12,026.70 12,788.44 14,388.39 8/31/00 14,261.30 14,807.60 14,812.90 13,319.69 16,746.49 8/31/01 13,304.50 13,708.90 13,714.70 13,170.79 12,661.69 8/31/02 11,312.50 11,574.60 11,581.20 11,440.82 10,382.76 8/31/03 12,139.80 12,320.30 12,330.00 12,771.16 11,638.26
This Growth of $10,000 chart assumes an initial investment of $10,000 made on 11/5/97 (inception of the Fund) in Class A, Class B and Class C shares. The total return for Class A shares reflects the maximum sales charge of 5.75% on the initial investment. The total return for Class B shares reflects the CDSC charges which decline from 5% to 0% over a five year period. The total return for Class C shares reflects the CDSC charges which are 1% in the first year and 0% thereafter. Performance assumes dividends and capital gains are reinvested. -------------------------------------------------------------------------------- SECTOR WEIGHTINGS 8/31/03 -------------------------------------------------------------------------------- As a percentage of equity holdings [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC: PHOENIX HOLLISTER VALUE EQUITY PIE Consumer Health Telecommunication Financials Discretionary Care Services Energy 25% 18% 15% 8% 8% Information Industrials Technology Other 8% 6% 12% See Notes to Financial Statements 12 Phoenix-Hollister Value Equity Fund -------------------------------------------------------------------------------- TEN LARGEST HOLDINGS AT AUGUST 31, 2003 (AS A PERCENTAGE OF TOTAL NET ASSETS) -------------------------------------------------------------------------------- 1. Interpublic Group of Cos., Inc. (The) 4.1% 2. AOL Time Warner, Inc. 3.8% 3. AT&T Corp. 3.7% 4. UnumProvident Corp. 3.3% 5. JDS Uniphase Corp. 3.2% 6. Sony Corp. 3.0% 7. Bank One Corp. 2.9% 8. Limited Brands 2.7% 9. HCA, Inc. 2.7% 10. PMI Group, Inc. (The) 2.6% INVESTMENTS AT AUGUST 31, 2003 SHARES VALUE ------- ------------ COMMON STOCKS--94.8% ADVERTISING--4.1% Interpublic Group of Cos., Inc. (The) ............. 184,700 $ 2,798,205 AEROSPACE & DEFENSE--2.6% Honeywell International, Inc. ..................... 28,300 820,417 Lockheed Martin Corp. ............................. 18,500 947,755 ------------ 1,768,172 ------------ ALUMINUM--1.0% Alcoa, Inc. ....................................... 24,100 688,296 APPAREL RETAIL--2.7% Limited Brands .................................... 110,300 1,870,688 ASSET MANAGEMENT & CUSTODY BANKS--0.9% Bank of New York Co., Inc. (The) .................. 20,600 606,052 BIOTECHNOLOGY--2.0% Gilead Sciences, Inc.(b) .......................... 20,300 1,354,010 BROADCASTING & CABLE TV--2.0% EchoStar Communications Corp. Class A(b) .......... 37,300 1,376,370 BUILDING PRODUCTS--0.5% American Standard Cos., Inc.(b) ................... 4,300 344,817 COMMUNICATIONS EQUIPMENT--3.2% JDS Uniphase Corp.(b) ............................. 642,000 2,208,480 COMPUTER & ELECTRONICS RETAIL--2.6% Circuit City Stores, Inc. ......................... 169,600 1,768,928 CONSUMER FINANCE--2.3% MBNA Corp. ........................................ 68,000 1,587,120 DIVERSIFIED BANKS--5.7% Bank of America Corp. ............................. 11,100 879,675 Bank One Corp. .................................... 50,600 1,997,182 FleetBoston Financial Corp. ....................... 13,000 384,670 U.S. Bancorp ...................................... 27,900 666,810 ------------ 3,928,337 ------------ SHARES VALUE ------- ------------ DIVERSIFIED CAPITAL MARKETS--1.2% J.P. Morgan Chase & Co. ........................... 24,800 $ 848,656 DIVERSIFIED CHEMICALS--1.4% Du Pont (E.I.) de Nemours & Co. ................... 21,300 952,962 DIVERSIFIED COMMERCIAL SERVICES--2.4% Cendant Corp.(b) .................................. 94,100 1,691,918 ELECTRIC UTILITIES--0.9% Consolidated Edison, Inc. ......................... 16,200 640,386 GAS UTILITIES--1.3% NiSource, Inc. .................................... 47,100 910,914 HEALTH CARE FACILITIES--4.5% HCA, Inc. ......................................... 49,200 1,869,108 Tenet Healthcare Corp.(b) ......................... 77,900 1,250,295 ------------ 3,119,403 ------------ HEALTH CARE SERVICES--2.6% Caremark Rx, Inc.(b) .............................. 33,000 829,290 IMS Health, Inc. .................................. 51,100 994,917 ------------ 1,824,207 ------------ HYPERMARKETS & SUPER CENTERS--2.3% Costco Wholesale Corp.(b) ......................... 50,100 1,607,709 INDUSTRIAL CONGLOMERATES--1.0% 3M Co. ............................................ 4,700 669,609 INDUSTRIAL MACHINERY--1.4% Illinois Tool Works, Inc. ......................... 13,700 990,373 INTEGRATED OIL & GAS--1.6% ConocoPhillips .................................... 19,700 1,100,048 INTEGRATED TELECOMMUNICATION SERVICES--6.0% AT&T Corp. ........................................ 113,300 2,526,590 Qwest Communications International, Inc.(b) ....... 366,200 1,629,590 ------------ 4,156,180 ------------ See Notes to Financial Statements 13 PhoenixHollister Value Equity Fund SHARES VALUE ------- ------------ INVESTMENT BANKING & BROKERAGE--2.1% Goldman Sachs Group, Inc. (The) .................. 4,600 $ 407,054 Merrill Lynch & Co., Inc. ........................ 19,500 1,048,710 ------------ 1,455,764 ------------ LIFE & HEALTH INSURANCE--5.6% AFLAC, Inc. ...................................... 50,600 1,619,706 UnumProvident Corp. .............................. 161,800 2,281,380 ------------ 3,901,086 ------------ MANAGED HEALTH CARE--1.4% CIGNA Corp. ...................................... 20,300 967,904 MOVIES & ENTERTAINMENT--3.8% AOL Time Warner, Inc.(b) ......................... 162,300 2,655,228 MULTI-UTILITIES & UNREGULATED POWER--0.9% El Paso Corp. .................................... 84,700 621,698 OIL & GAS EQUIPMENT & SERVICES--1.0% Halliburton Co. .................................. 29,000 701,220 OIL & GAS EXPLORATION & PRODUCTION--5.5% Anadarko Petroleum Corp. ......................... 26,900 1,170,150 Apache Corp. ..................................... 6,000 413,880 EOG Resources, Inc. .............................. 32,100 1,361,040 Noble Energy, Inc. ............................... 20,700 819,513 ------------ 3,764,583 ------------ OTHER DIVERSIFIED FINANCIAL SERVICES--0.7% Citigroup, Inc. .................................. 10,700 463,845 PACKAGED FOODS AND MEATS--1.1% Kraft Foods, Inc. Class A ........................ 25,600 760,320 PHARMACEUTICALS--4.1% King Pharmaceuticals, Inc.(b) .................... 111,000 1,559,550 Schering-Plough Corp. ............................ 83,100 1,262,289 ------------ 2,821,839 ------------ REGIONAL BANKS--2.5% KeyCorp .......................................... 63,700 1,734,551 REITS--1.7% Equity Office Properties Trust ................... 41,300 1,148,966 SEMICONDUCTORS--1.0% Micron Technology, Inc.(b) ....................... 49,600 712,256 SOFT DRINKS--2.2% Pepsi Bottling Group, Inc. (The) ................. 63,200 1,524,384 SHARES VALUE ------- ------------ THRIFTS & MORTGAGE FINANCE--2.6% PMI Group, Inc. (The) ............................ 50,000 $ 1,769,000 WIRELESS TELECOMMUNICATION SERVICES--2.4% Nextel Communications, Inc. Class A(b) ........... 86,100 1,660,008 ----------------------------------------------------------------------------- TOTAL COMMON STOCKS (IDENTIFIED COST $59,018,184) 65,474,492 ----------------------------------------------------------------------------- FOREIGN COMMON STOCKS--4.9% COMMUNICATIONS EQUIPMENT--1.9% Nokia Oyj ADR (Finland) .......................... 81,400 1,326,006 CONSUMER ELECTRONICS--3.0% Sony Corp. (Japan) ............................... 63,000 2,075,850 ----------------------------------------------------------------------------- TOTAL FOREIGN COMMON STOCKS (IDENTIFIED COST $3,062,095) 3,401,856 ----------------------------------------------------------------------------- TOTAL LONG TERM INVESTMENTS--99.7% (IDENTIFIED COST $62,080,279) 68,876,348 ----------------------------------------------------------------------------- STANDARD & POOR'S PAR RATING VALUE (Unaudited) (000) ----------- ----- SHORT-TERM OBLIGATIONS--0.5% COMMERCIAL PAPER--0.5% CXC LLC 1.10%, 9/2/03 ..................... A-1+ $355 354,990 ----------------------------------------------------------------------------- TOTAL SHORT-TERM OBLIGATIONS (IDENTIFIED COST $354,990) 354,990 ----------------------------------------------------------------------------- TOTAL INVESTMENTS--100.2% (IDENTIFIED COST $62,435,269) 69,231,338(a) Other assets and liabilities, net--(0.2)% (150,478) ------------ NET ASSETS--100.0% $69,080,860 ============ (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $5,765,261 and gross depreciation of $939,115 for federal income tax purposes. At August 31, 2003, the aggregate cost of securities for federal income tax purposes was $64,405,192. (b) Non-income producing. See Notes to Financial Statements 14 Phoenix-Hollister Value Equity Fund STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 2003 ASSETS Investment securities at value (Identified cost $62,435,269) $69,231,338 Cash 506 Receivables Dividends and interest 143,167 Fund shares sold 66,864 Prepaid expenses 1,709 ----------- Total assets 69,443,584 ----------- LIABILITIES Payables Fund shares repurchased 211,609 Transfer agent fee 37,302 Distribution and service fees 34,074 Professional fee 31,196 Investment advisory fee 14,334 Financial agent fee 6,824 Trustees' fee 2,276 Payable to adviser 152 Accrued expenses 24,957 ----------- Total liabilities 362,724 ----------- NET ASSETS $69,080,860 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest $87,079,479 Undistributed net investment income 181,756 Accumulated net realized loss (24,976,444) Net unrealized appreciation 6,796,069 ----------- NET ASSETS $69,080,860 =========== CLASS A Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $37,309,867) 3,293,765 Net asset value per share $11.33 Offering price per share $11.33/(1-5.75%) $12.02 CLASS B Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $16,363,350) 1,488,764 Net asset value and offering price per share $10.99 CLASS C Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $15,407,643) 1,400,858 Net asset value and offering price per share $11.00 STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 2003 INVESTMENT INCOME Dividends $1,589,070 Interest 32,860 Foreign taxes withheld (4,505) ---------- Total investment income 1,617,425 ---------- EXPENSES Investment advisory fee 521,890 Service fees, Class A 90,323 Distribution and service fees, Class B 175,212 Distribution and service fees, Class C 159,351 Financial agent fee 86,509 Transfer agent 195,733 Professional 37,748 Custodian 31,411 Trustees 29,296 Printing 26,332 Registration 16,307 Miscellaneous 14,879 ---------- Total expenses 1,384,991 Less expenses borne by investment adviser (264,229) Custodian fees paid indirectly (48) ---------- Net expenses 1,120,714 ---------- NET INVESTMENT INCOME 496,711 ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities (6,218,723) Net change in unrealized appreciation (depreciation) on investments 7,942,711 ---------- NET GAIN ON INVESTMENTS 1,723,988 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,220,699 ========== See Notes to Financial Statements 15 Phoenix-Hollister Value Equity Fund STATEMENT OF CHANGES IN NET ASSETS Year Ended Year Ended 8/31/03 8/31/02 ------------ ------------- FROM OPERATIONS Net investment income (loss) $ 496,711 $ 283,943 Net realized gain (loss) (6,218,723) (18,027,281) Net change in unrealized appreciation (depreciation) 7,942,711 137,398 ------------ ------------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,220,699 (17,605,940) ------------ ------------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income, Class A (283,597) (384,523) Net investment income, Class B (39,301) -- Net investment income, Class C (42,475) -- Net realized long-term gains, Class A -- (725,832) Net realized long-term gains, Class B -- (457,963) Net realized long-term gains, Class C -- (296,217) ------------ ------------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (365,373) (1,864,535) ------------ ------------- FROM SHARE TRANSACTIONS CLASS A Proceeds from sales of shares (891,000 and 1,198,840 shares, respectively) 8,885,100 14,107,742 Net asset value of shares issued from reinvestment of distributions (24,886 and 90,238 shares, respectively) 267,903 1,070,740 Cost of shares repurchased (1,758,338 and 1,719,723 shares, respectively) (17,230,551) (20,059,729) ------------ ------------- Total (8,077,548) (4,881,247) ------------ ------------- CLASS B Proceeds from sales of shares (189,176 and 442,182 shares, respectively) 1,850,017 5,058,231 Net asset value of shares issued from reinvestment of distributions (2,789 and 37,057 shares, respectively) 29,746 430,227 Cost of shares repurchased (1,494,049 and 640,922 shares, respectively) (14,264,891) (7,135,754) ------------ ------------- Total (12,385,128) (1,647,296) ------------ ------------- CLASS C Proceeds from sales of shares (170,326 and 370,401 shares, respectively) 1,652,857 4,248,848 Net asset value of shares issued from reinvestment of distributions (3,218 and 22,395 shares, respectively) 34,338 260,229 Cost of shares repurchased (629,913 and 419,189 shares, respectively) (6,096,181) (4,751,269) ------------ ------------- Total (4,408,986) (242,192) ------------ ------------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS (24,871,662) (6,770,735) ------------ ------------- NET INCREASE (DECREASE) IN NET ASSETS (23,016,336) (26,241,210) NET ASSETS Beginning of period 92,097,196 118,338,406 ------------ ------------- END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $181,756 AND $50,421, RESPECTIVELY] $ 69,080,860 $ 92,097,196 ============ ============= See Notes to Financial Statements 16 Phoenix-Hollister Value Equity Fund
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) CLASS A --------------------------------------------------------------------------- YEAR ENDED AUGUST 31, --------------------------------------------------------------------------- 2003 2002 2001 2000 1999 Net asset value, beginning of period $10.64 $12.76 $15.03 $12.11 $ 8.94 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) 0.11 0.08 0.08 0.03 0.02 Net realized and unrealized gain (loss) 0.66 (1.97) (0.93) 2.89 3.20 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.77 (1.89) (0.85) 2.92 3.22 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income (0.08) (0.08) -- -- (0.05) Distributions from net realized gains -- (0.15) (1.42) -- -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.08) (0.23) (1.42) -- (0.05) ------ ------ ------ ------ ------ Change in net asset value 0.69 (2.12) (2.27) 2.92 3.17 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $11.33 $10.64 $12.76 $15.03 $12.11 ====== ====== ====== ====== ====== Total return(2) 7.31% (14.97)% (6.71)% 24.11% 35.89% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $37,310 $43,993 $58,260 $37,977 $26,974 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(3) 1.25%(5) 1.25 %(5) 1.25 %(5) 1.25%(5) 1.25% Net investment income 1.06% 0.64 % 0.53 % 0.20% 0.14% Portfolio turnover 349% 166 % 249 % 193% 192%
CLASS B ----------------------------------------------------------------- YEAR ENDED AUGUST 31, ----------------------------------------------------------------- 2003 2002 2001 2000 1999 Net asset value, beginning of period $10.35 $12.42 $14.77 $12.00 $ 8.89 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) 0.04 (0.01) (0.03) (0.08) (0.07) Net realized and unrealized gain (loss) 0.63 (1.91) (0.90) 2.85 3.19 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.67 (1.92) (0.93) 2.77 3.12 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income (0.03) -- -- -- (0.01) Distributions from net realized gains -- (0.15) (1.42) -- -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.03) (0.15) (1.42) -- (0.01) ------ ------ ------ ------ ------ Change in net asset value 0.64 (2.07) (2.35) 2.77 3.11 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $10.99 $10.35 $12.42 $14.77 $12.00 ====== ====== ====== ====== ====== Total return(2) 6.44 % (15.57)% (7.42)% 23.08 % 35.05 % RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $16,363 $28,873 $36,669 $26,471 $24,709 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(4) 2.00%(5) 2.00 %(5) 2.00 %(5) 2.00 %(5) 2.00 % Net investment income (loss) 0.37 % (0.11)% (0.22)% (0.57)% (0.62)% Portfolio turnover 349 % 166 % 249 % 193 % 192 % (1) Computed using average shares outstanding. (2) Maximum sales charges are not reflected in the total return calculation. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.63%, 1.49%, 1.38%, 1.47% and 1.57% for the periods ended August 31, 2003, 2002, 2001, 2000 and 1999, respectively. (4) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 2.38%, 2.24%, 2.13%, 2.22% and 2.32% for the periods ended August 31, 2003, 2002, 2001, 2000 and 1999, respectively. (5) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements 17 Phoenix-Hollister Value Equity Fund
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD) CLASS C ---------------------------------------------------------------------- YEAR ENDED AUGUST 31, ---------------------------------------------------------------------- 2003 2002 2001 2000 1999 Net asset value, beginning of period $10.35 $12.43 $14.78 $12.00 $ 8.89 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) 0.03 (0.01) (0.03) (0.07) (0.07) Net realized and unrealized gain (loss) 0.65 (1.92) (0.90) 2.85 3.19 ------- ------- ------- ------- ------- TOTAL FROM INVESTMENT OPERATIONS 0.68 (1.93) (0.93) 2.78 3.12 ------- ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income (0.03) -- -- -- (0.01) Distributions from net realized gains -- (0.15) (1.42) -- -- ------- ------- ------- ------- ------- TOTAL DISTRIBUTIONS (0.03) (0.15) (1.42) -- (0.01) ------- ------- ------- ------- ------- Change in net asset value 0.65 (2.08) (2.35) 2.78 3.11 ------- ------- ------- ------- ------- NET ASSET VALUE, END OF PERIOD $11.00 $10.35 $12.43 $14.78 $12.00 ======= ------- ------- ------- ------- Total return(2) 6.47% (15.56)% (7.41)% 23.17 % 34.91 % RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $15,408 $19,231 $23,409 $12,590 $3,108 RATIO TO AVERAGE NET ASSETS OF: Operating expenses(3) 2.00%(4) 2.00 %(4) 2.00 %(4) 2.00 %(4) 2.00 % Net investment income (loss) 0.31% (0.11)% (0.22)% (0.52)% (0.60)% Portfolio turnover 349% 166 % 249 % 193 % 192 %
(1) Computed using average shares outstanding. (2) Maximum sales charges are not reflected in the total return calculation. (3) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 2.38%, 2.24%, 2.13%, 2.22% and 2.32% for the periods ended August 31, 2003, 2002, 2001, 2000 and 1999, respectively. (4) The ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. See Notes to Financial Statements 18 PHOENIX INVESTMENT TRUST 97 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2003 1. ORGANIZATION Phoenix Investment Trust 97 (the "Trust") is organized as a Delaware business trust and is registered under the Investment Company Act of 1940, as amended, as a diversified open-end management investment company whose shares are offered in two separate series, each a "Fund." Phoenix-Hollister Small Cap Value Fund seeks long-term capital appreciation. Phoenix-Hollister Value Equity Fund's primary investment objective is to seek long-term capital appreciation and its secondary objective is to seek current income. Each Fund offers Class A, Class B and Class C shares. Class A shares are sold with a front-end sales charge of up to 5.75%. 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. All classes of shares have identical voting, dividend, liquidation and other rights and the same terms and conditions, except that each class bears different distribution and/or service expenses and has exclusive voting rights with respect to its distribution plan. Income and expenses of each Fund are borne pro rata by the holders of all classes of shares, except that each class bears distribution and/or service expenses unique to that class. 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, liabilities, disclosure of contingent assets and liabilities, revenues and expenses. 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. Short-term investments having a remaining maturity of 60 days or less are valued at amortized cost which approximates market. All other securities and assets are valued at fair value as determined in good faith by or under the direction of the Trustees. B. SECURITY TRANSACTIONS AND RELATED INCOME: Security transactions are recorded on the trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date, or in the case of certain foreign securities, as soon as the Fund is notified. The Trust 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 (the "Code"), applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. In addition, each Fund intends to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code. Therefore, no provision for federal income taxes or excise taxes has been made. The Funds may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Funds will accrue such taxes and recoveries as applicable based upon current interpretations of the tax rules and regulations that exist in the markets in which they invest. D. DISTRIBUTIONS TO SHAREHOLDERS: Distributions are 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 and losses deferred due to wash sales. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. E. 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 separate that portion of the results of operations arising from changes in exchange rates and that portion arising from changes in the market prices of securities. 19 PHOENIX INVESTMENT TRUST 97 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2003 (CONTINUED) F. 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 fairly made. 3. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS As compensation for its services to the Trust, the Adviser, Phoenix Investment Counsel, Inc., 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 separate Fund: 1st $1-2 $2 + Fund $1 Billion Billion Billion ------ ---------- ------- ------- Small Cap Value Fund ............... 0.90% 0.85% 0.80% Value Equity Fund .................. 0.75% 0.70% 0.65% The Adviser has voluntarily agreed to assume total operating expenses of each Fund, excluding interest, taxes, brokerage fees, commissions and extraordinary expenses, until December 31, 2003, to the extent that such expenses exceed the following percentages of the average annual net asset values for each Fund: Class A Class B Class C Shares Shares Shares ---------- ---------- ---------- Small Cap Value Fund ............... 1.40% 2.15% 2.15% Value Equity Fund .................. 1.25% 2.00% 2.00% Phoenix Equity Planning Corporation ("PEPCO"), an indirect wholly-owned subsidiary of PNX, which serves as the national distributor of the Trust's shares has advised the Trust that it retained net selling commissions and deferred sales charges for the period ended August 31, 2003 is as follows: Class A Class B Class C Net Selling Deferred Deferred Commissions Sales Charges Sales Charges ---------- ------------- ------------- Small Cap Value Fund ............... $11,120 $101,912 $7,694 Value Equity Fund .................. 5,548 50,140 2,770 In addition to these amounts the following was paid to W.S. Griffith Securities, Inc., an indirect subsidiary of PNX, for Class A net selling commissions. Small Cap Value Fund ............... $5,674 Value Equity Fund .................. 8,256 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. The Distributor has advised the Trust that the total amount expensed for the period ended August 31, 2003 is as follows: Distribution Distribution Distribution and/or and/or and/or Service Fees Service Fees Service Fees Paid Out to Paid to Retained by Unaffiliated W.S. Griffith Distributor Participants Securities, Inc. ----------- ------------ ---------------- Small Cap Value Fund .... $420,509 $553,363 $8,340 Value Equity Fund ....... 178,965 236,951 8,970 As Financial Agent of the Trust, PEPCO receives a financial agent fee equal to the sum of (1) the documented cost of fund accounting and related services provided by PFPC Inc. (subagent to PEPCO) plus (2) the documented cost to PEPCO to provide tax services and oversight of the subagent's performance. For the period ended August 31, 2003 financial agent fees were $229,432 as reported in the Statement of Operations of which PEPCO received $38,744 per Fund. Effective January 1, 2003, the fee schedule of PFPC Inc. ranges from 0.065% to 0.03% of the average daily net asset values of all the Phoenix funds serviced by PFPC Inc. Prior to that date, the fee schedule ranged from 0.085% to 0.0125%. Certain minimum fees may apply. PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust Company as sub-transfer agent. For the period ended August 31, 2003 transfer agent fees were $705,610 as reported in the Statement of Operations, of which PEPCO retained the following: Transfer Agent Fee Retained -------------- Small Cap Value Fund ........................................... $201,025 Value Equity Fund .............................................. 60,096 For the period ended August 31, 2003 the following Funds paid PXPSecurities Corp., an indirect, wholly-owned subsidiary of PNX, brokerage commissions in connection with portfolio transactions effected on behalf of it as follows: Commissions Paid to PXP Securities Corp. ------------------- Small Cap Value Fund ........................................... $110,112 Value Equity Fund .............................................. 50,028 4. PURCHASES AND SALES OF SECURITIES Purchases and sales of securities during the period ended August 31, 2003 (excluding U.S. Government and agency securities and short-term securities) aggregated the following: Purchases Sales ------------ ------------ Small Cap Value Fund ...................... $356,671,003 $383,722,917 Value Equity Fund ......................... 236,269,144 255,191,728 20 PHOENIX INVESTMENT TRUST 97 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2003 (CONTINUED) There were no purchases or sales of long-term U.S. Government and agency securities during the period ended August 31, 2003. 5. 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. Each Fund may invest a high percentage of its assets in specific sectors of the market in its pursuit of a greater investment return. Fluctuations in these sectors of concentration may have a greater impact to the Fund, positive or negative, than if the Fund did not concentrate its investments in such sectors. 6. FEDERAL INCOME TAX INFORMATION The Funds have capital loss carryovers which may be used to offset future capital gains, as follows: Expiration Year ----------------------- 2010 2011 Total ----------- ----------- ----------- Small Cap Value Fund .................. $27,551,224 $ 5,536,476 $33,087,700 Value Equity Fund ..................... 6,597,012 16,409,509 23,006,521 The Fund may not realize the benefit of these losses to the extent it does not realize gains on investments prior to the expiration of the capital loss carryovers. Under the current tax law, capital and foreign currency losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. For the period ended August 31, 2003, the funds deferred and recognized post-October losses as follows: Deferred Recognized ------------ -------------- Small Cap Value Fund ..................... $-- $ 6,649,857 Value Equity Fund ........................ -- 11,500,928 The components of distributable earnings on a tax basis (excluding unrealized appreciation (depreciation) which are disclosed in the Schedule of Investments) consist of undistributed ordinary income of $0 for the Small Cap Value Fund and $181,756 for the Value Equity Fund, and undistributed long-term capital gains of $0 for both Funds. 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 Statement of Changes in Net Assets, if any, are reported as ordinary income for federal tax purposes. 7. RECLASSIFICATION OF CAPITAL ACCOUNTS For financial reporting purposes, book basis capital accounts are adjusted to reflect the tax character of permanent book/tax differences. For the period ended August 31, 2003, the Funds recorded the following permanent reclassifications which arose primarily from nondeductible current net operating losses and differing treatment of certain income and gain transactions. The reclassifications have no impact on the net assets or net asset value of the Funds. The following Funds recorded reclassifications to increase (decrease) the accounts listed below: Undistributed Accumulated Capital Paid In Net Investment Net Realized on Shares of Income (Loss) Gain (Loss) Beneficial Interest -------------- ------------ ------------------- Small Cap Value Fund ... $549,923 $62,701 $(612,624) Value Equity Fund ...... (3) 4 (1) -------------------------------------------------------------------------------- TAX INFORMATION NOTICE (UNAUDITED) For Federal income tax purposes, 100% of the current year net income earned dividends paid by Value Equity Fund will qualify for the dividends received deduction for corporate shareholders when paid. Effective for the calendar year 2003, qualified dividends will be taxed at a lower rate for individual shareholders. 100% of the ordinary income dividends distributed and applicable to qualifying dividends received after January 1, 2003 will qualify for the lower tax rate. The Fund plans to designate the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act. The actual percentage for the calendar year will be designated in the year-end tax statements. -------------------------------------------------------------------------------- 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, the Fund's record and other pertinent information. 21 REPORT OF INDEPENDENT AUDITORS [GRAPHIC OMITTED] PRICEWATERHOUSECOOPERS To the Board of Trustees and Shareholders of Phoenix Investment Trust 97: 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-Hollister Small Cap Value Fund and Phoenix-Hollister Value Equity Fund (constituting the Phoenix Investment Trust 97, hereafter referred to as the "Trust") at August 31, 2003, the results of each of their operations, the changes in each of their net assets and the financial highlights for the periods indicated, 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 auditing standards generally accepted in the United States of America, which 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, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. /S/ PRICEWATERHOUSECOOPERS LLP Boston, Massachusetts October 13, 2003 22 FUND MANAGEMENT Information pertaining to the Trustees and officers of the Trust is set forth below. The statement of additional information (SAI) includes additional information about the Trustees and is available without charge, upon request, by calling (800) 243-4361. The address of each individual, unless otherwise noted, is 56 Prospect Street, Hartford, CT 06115-0480. There is no stated term of office for Trustees of the Trust.
INDEPENDENT TRUSTEES --------------------------------------------------------------------------------------------------------------------- NUMBER OF PORTFOLIOS IN FUND COMPLEX PRINCIPAL OCCUPATION(S) NAME, ADDRESS LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND AND DATE OF BIRTH TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE --------------------------------------------------------------------------------------------------------------------- E. Virgil Conway Served since 1997. 35 Chairman, Rittenhouse Advisors, LLC Rittenhouse Advisors, LLC (consulting firm) since 2001. 101 Park Avenue Trustee/Director, Realty Foundation of New New York, NY 10178 York (1972-present), Pace University DOB: 8/2/29 (1978-present), New York Housing Partnership Development Corp. (Chairman) (1981-present), Greater New York Councils, Boy Scouts of America (1985-present), Academy of Political Science (Vice Chairman) (1985-present), Urstadt Biddle Property Corp. (1989-present), The Harlem Youth Development Foundation (1998-present). Chairman, Metropolitan Transportation Authority (1992-2001). Director, Trism, Inc. (1994-2001), Consolidated Edison Company of New York, Inc. (1970-2002), Atlantic Mutual Insurance Company (1974-2002), Centennial Insurance Company (1974-2002), Josiah Macy, Jr., Foundation (1975-2002), Union Pacific Corp. (1978-2002), Blackrock Freddie Mac Mortgage Securities Fund (Advisory Director) (1990-2002), Accuhealth (1994-2002). -------------------------------------------------------------------------------------------------------------------- Harry Dalzell-Payne Served since 1997. 35 Currently retired. The Flat, Elmore Court Elmore, GL05, GL2 3NT U.K. DOB: 8/9/29 -------------------------------------------------------------------------------------------------------------------- Francis E. Jeffries Served since 1997. 28 Director, The Empire District Electric 8477 Bay Colony Dr. #902 Company (1984-present). Director (1989-1997), Naples, FL 34108 Chairman of the Board (1993-1997), Phoenix DOB: 9/23/30 Investment Partners, Ltd. --------------------------------------------------------------------------------------------------------------------- Leroy Keith, Jr. Served since 1997. 25 Partner, Stonington Partners, Inc. (private Stonington Partners, Inc. equity fund) since 2001. Chairman (1995 to 736 Market Street, Ste. 1430 2000) and Chief Executive Officer Chattanooga, TN 37402 (1995-1998), Carson Products Company DOB: 2/14/39 (cosmetics). Director/Trustee, Evergreen Funds (six portfolios). --------------------------------------------------------------------------------------------------------------------- Geraldine M. McNamara Served since 2001. 35 Managing Director, United States Trust United States Trust Company of New York (private bank) Company of New York (1982-present). 114 West 47th Street New York, NY 10036 DOB: 4/17/51 --------------------------------------------------------------------------------------------------------------------- Everett L. Morris Served since 1997. 35 Currently retired, Vice President, W.H. W.H. Reaves and Company Reaves and Company (investment management) 10 Exchange Place (1993-2003). Jersey City, NJ 07302 DOB: 5/26/28 ---------------------------------------------------------------------------------------------------------------------
23 FUND MANAGEMENT (CONTINUED)
--------------------------------------------------------------------------------------------------------------------- NUMBER OF PORTFOLIOS IN FUND COMPLEX PRINCIPAL OCCUPATION(S) NAME, ADDRESS LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND AND DATE OF BIRTH TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE --------------------------------------------------------------------------------------------------------------------- Richard E. Segerson Served since 1997. 25 Managing Director, Northway Management Northway Management Company Company (1998-present). Managing Director, 164 Mason Street Mullin Associates (1993-1998). Greenwich, CT 06830 DOB: 2/16/46 --------------------------------------------------------------------------------------------------------------------- Lowell P. Weicker, Jr. Served since 1997. 25 Director, UST, Inc. (1995-present), HPSC Inc. 200 Duke Street (1995-present), Compuware (1996-present) and Alexandria, VA 22314 WWF, Inc. (2000-present). President, The DOB: 5/16/31 Trust for America's Health (non-profit) (2001-present). Director, Duty Free International, Inc. (1997-1998).
INTERESTED TRUSTEES Each of the individuals listed below is an "interested person" of the Trust, as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended, and the rules and regulations thereunder.
--------------------------------------------------------------------------------------------------------------------- NUMBER OF NAME, ADDRESS PORTFOLIOS IN DATE OF BIRTH FUND COMPLEX PRINCIPAL OCCUPATION(S) AND POSITION(S) LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND WITH TRUST TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE --------------------------------------------------------------------------------------------------------------------- *Marilyn E. LaMarche Served since 2002. 28 Limited Managing Director, Lazard Freres & Lazard Freres & Co. LLC Co. LLC (1983-present). Director, The Phoenix 30 Rockefeller Plaza, Companies, Inc. (2001-present) and Phoenix 59th Floor Life Insurance Company (1989-present). New York, NY 10020 DOB: 5/11/34 --------------------------------------------------------------------------------------------------------------------- **Philip R. McLoughlin Served since 1997. 45 Consultant, The Phoenix Companies, Inc. (2002-present). Director, PXRE Corporation Chairman and President (Delaware) (1985-present), World Trust Fund DOB: 10/23/46 (1991-present). Chairman (1997-2002), Director (1995-2002), Vice Chairman (1995-1997) and Chief Executive Officer (1995-2002), Phoenix Investment Partners, Ltd. Director, Executive Vice President and Chief Investment Officer, The Phoenix Companies, Inc. (2001-2002). Director (1994-2002) and Executive Vice President, Investments (1988-2002), Phoenix Life Insurance Company. Director (1983-2002) and Chairman (1995-2002), Phoenix Investment Counsel, Inc. Director (1984-2002) and President (1990-2000), Phoenix Equity Planning Corporation. Chairman and Chief Executive Officer, Phoenix/Zweig Advisers LLC (1999-2002). Director and President, Phoenix Investment Management Company (2001-2002). Director and Executive Vice President, Phoenix Life and Annuity Company (1996-2002). Director and Executive Vice President, PHL Variable Insurance Company (1995-2002). Director, Phoenix National Trust Company (1996-2002). Director and Vice President, PM Holdings, Inc. (1985-2002). Director, PHL Associates, Inc. (1995-2002). Director (1992-2002) and President (1992-1994), W.S. Griffith Securities, Inc. --------------------------------------------------------------------------------------------------------------------- * Ms. LaMarche is an "interested person," as defined in the Investment Company Act of 1940, by reason of her position as Director of The Phoenix Companies, Inc. and Phoenix Life Insurance Company. ** Mr. McLoughlin is an "interested person," as defined in the Investment Company Act of 1940, by reason of his relationship with The Phoenix Companies, Inc., and its affiliates.
24 FUND MANAGEMENT (CONTINUED)
--------------------------------------------------------------------------------------------------------------------- NUMBER OF NAME, ADDRESS PORTFOLIOS IN DATE OF BIRTH FUND COMPLEX PRINCIPAL OCCUPATION(S) AND POSITION(S) LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND WITH TRUST TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE --------------------------------------------------------------------------------------------------------------------- ***James M. Oates Served since 1997. 30 Chairman, Hudson Castle Group Inc. (formerly Hudson Castle Group Inc. IBEX Capital Markets Inc.) (financial c/o Northeast Investment services) (1997-present). Managing Director, Management, Inc. Wydown Group (consulting firm) 50 Congress Street, (1994-present). Director, Investors Financial Ste. 1000 Boston, MA 02109 Service Corporation (1995-present), Investors DOB: 5/31/46 Bank & Trust Corporation (1995-present), Plymouth Rubber Co. (1995-present), Stifel Financial (1996-present), Connecticut River Bancorp (1998-present), Connecticut River Bank (1998-present) and Trust Company of New Hampshire (2002-present). Director and Treasurer, Endowment for Health, Inc. (2000-present). Chairman, Emerson Investment Management, Inc. (2000-present). Investment Committee, New Hampshire Charitable Foundation (2001-present). Vice Chairman, Massachusetts Housing Partnership (1998-1999). Director, Blue Cross and Blue Shield of New Hampshire (1994-1999), AIB Govett Funds (1991-2000), Command Systems, Inc. (1998-2000), Phoenix Investment Partners, Ltd. (1995-2001) and 1Mind, Inc. (1999-2001). --------------------------------------------------------------------------------------------------------------------- *** Mr. Oates is being treated as an Interested Trustee due to certain relationships existing among Mr. Oates, Hudson Castle Group Inc. and The Phoenix Companies, Inc. and certain of its affiliates.
OFFICERS OF THE TRUST WHO ARE NOT TRUSTEES
POSITION(S) HELD WITH NAME, ADDRESS TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) AND DATE OF BIRTH TIME SERVED DURING PAST 5 YEARS --------------------------------------------------------------------------------------------------------------------- William R. Moyer Executive Vice President Executive Vice President and Chief Financial DOB: 8/16/44 since 1997. Officer (1999-present), Senior Vice President and Chief Financial Officer (1995-1999), Phoenix Investment Partners, Ltd. Director (1998-present), Senior Vice President, Finance (1990-present), Chief Financial Officer (1996-present), and Treasurer (1998-present), Phoenix Equity Planning Corporation. Director (1998-present), Senior Vice President (1990-present), Chief Financial Officer (1996-present) and Treasurer (1994-present), Phoenix Investment Counsel, Inc. Senior Vice President and Chief Financial Officer, Duff & Phelps Investment Management Co. (1996-present). Executive Vice President, Phoenix Fund Complex (1990-present). --------------------------------------------------------------------------------------------------------------------- John F. Sharry Executive Vice President President, Private Client Group DOB: 3/28/52 since 1998. (1999-present), Executive Vice President, Retail Division (1997-1999), Phoenix Investment Partners, Ltd. President, Private Client Group, Phoenix Equity Planning Corporation (2000-present). Executive Vice President, Phoenix Fund Complex (1998-present). --------------------------------------------------------------------------------------------------------------------- Robert S. Driessen Vice President since 1999. Vice President and Compliance Officer, One American Row Phoenix Investment Partners, Ltd. Hartford, CT 06102 (1999-present). Vice President and Compliance DOB: 10/12/47 Officer, Phoenix Investment Counsel, Inc. (1999-2003). Vice President (1999-present), Anti-Money Laundering Officer (2003-present) Phoenix Fund Complex. Compliance Officer (2000-present) and Associate Compliance Officer (1999), PXP Securities Corp. Vice President, Risk Management Liaison, Bank of America (1996-1999). Vice President, Securities Compliance, The Prudential Insurance Company of America (1993-1996). Branch Chief/Financial Analyst, Securities and Exchange Commission, Division of Investment Management (1972-1993). --------------------------------------------------------------------------------------------------------------------- Nancy G. Curtiss Treasurer since 1997. Vice President, Fund Accounting, Phoenix DOB: 11/24/52 Equity Planning Corporation (1994-present) Treasurer, Phoenix Fund Complex (1994-present). --------------------------------------------------------------------------------------------------------------------- Richard J. Wirth Secretary since 2002. Vice President and Insurance and Investment One American Row Products Counsel (2002-present), Counsel Hartford, CT 06102 (1993-2002), Phoenix Life Insurance Company. DOB: 11/14/58 Secretary (2002- present), Chief Legal Officer (2003-present) Phoenix Fund Complex. ---------------------------------------------------------------------------------------------------------------------
25
PHOENIX INVESTMENT TRUST 97 101 Munson Street Greenfield, Massachusetts 01301 TRUSTEES INVESTMENT ADVISER E. Virgil Conway Phoenix Investment Counsel, Inc. Harry Dalzell-Payne 56 Prospect Street Francis E. Jeffries Hartford, Connecticut 06115-0480 Leroy Keith, Jr. Marilyn E. LaMarche PRINCIPAL UNDERWRITER Philip R. McLoughlin Phoenix Equity Planning Corporation Geraldine M. McNamara 56 Prospect Street Everett L. Morris Hartford, Connecticut 06115-0480 James M. Oates Richard E. Segerson CUSTODIAN Lowell P. Weicker, Jr. State Street Bank and Trust Company P.O. Box 351 OFFICERS Boston, Massachusetts 02101 Philip R. McLoughlin, Chairman and President William R. Moyer, Executive Vice President TRANSFER AGENT John F. Sharry, Executive Vice President Phoenix Equity Planning Corporation Robert S. Driessen, Vice President 56 Prospect Street Nancy G. Curtiss, Treasurer Hartford, Connecticut 06115-0480 Richard J. Wirth, Secretary INDEPENDENT AUDITORS PricewaterhouseCoopers LLP 160 Federal Street Boston, Massachusetts 02110 HOW TO CONTACT US Mutual Fund Services 1-800-243-157 Advisor Consulting Group 1-800-243-436 Text Telephone 1-800-243-192 Web site PHOENIXINVESTMENTS.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 ---------------------------------------------
(This page has been left blank intentionally.) (This page has been left blank intentionally.) ---------------- PRESORTED STANDARD U.S. POSTAGE PAID Louisville, KY Permit No. 1051 ---------------- PHOENIX EQUITY PLANNING CORPORATION P.O. Box 150480 Hartford, CT 06115-0480 (LOGO) PHOENIX INVESTMENT PARTNERS, LTD. A MEMBER OF THE PHOENIX COMPANIES, INC. [GRAPHIC OMITTED] For more information about Phoenix mutual funds, please call your financial representative or contact us at 1-800-243-4361 or PHOENIXINVESTMENTS.COM. PXP 215 (10/03) 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. (b) 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 description. (c) The registrant has not granted any waivers, 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 this item's instructions. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a) As of the end of the period covered by the report, the Board of Trustees of the Fund has determined that E. Virgil Conway and Everett L. Morris 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 and Mr. Morris are "independent" trustees pursuant to paragraph (a) (2) of Item 3 to form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. [RESERVED] ITEM 9. 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 Exchange Act (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 last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 10. 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 Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. (b) Certifications pursuant to 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 -------------------------------------------------------------------------------- By (Signature and Title)* /s/PHILIP R. MCLOUGHLIN ------------------------------------------------------- Philip R. McLoughlin, Chairman (principal executive officer) Date November 4, 2003 ---------------------------------------------------------------------------- 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/PHILIP R. MCLOUGHLIN ------------------------------------------------------- Philip R. McLoughlin, Chairman (principal executive officer) Date November 4, 2003 ---------------------------------------------------------------------------- By (Signature and Title)*/s/NANCY G. CURTISS ------------------------------------------------------- Nancy G. Curtiss, Treasurer (principal financial officer) Date November 4, 2003 ---------------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature.