-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R8seLQrtgkjFjHJb7P3iv2LM8eKJ3O9jsdmHlaJU+VOADLn85MJOEAtUfi/MG8hg w6OmVXMvGTvb3+/7voxarw== 0000935069-04-001806.txt : 20041108 0000935069-04-001806.hdr.sgml : 20041108 20041108153623 ACCESSION NUMBER: 0000935069-04-001806 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040831 FILED AS OF DATE: 20041108 DATE AS OF CHANGE: 20041108 EFFECTIVENESS DATE: 20041108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOENIX INVESTMENT TRUST 97 CENTRAL INDEX KEY: 0001045018 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-08343 FILM NUMBER: 041125680 BUSINESS ADDRESS: STREET 1: 101 MUNSON ST CITY: GREENFIELD STATE: MA ZIP: 01301 BUSINESS PHONE: 800 243-1574 MAIL ADDRESS: STREET 1: 56 PROSPECT STREET STREET 2: P.O. BOX 150480 CITY: HARTFORD STATE: CT ZIP: 06115-0480 N-CSR 1 g11757_invtrust.txt PHOENIX INVESTMENT TRUST N-CSR 2004 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, 2004 ---------------- Date of reporting period: August 31, 2004 ---------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. The Report to Shareholders is attached herewith. ANNUAL REPORT - -------------------------------------------------------------------------------- > AUGUST 31, 2004 Phoenix Small Cap Value Fund Phoenix-Oakhurst Value Equity Fund [GRAPHIC OMITTED] DO YOU WANT TO STOP RECEIVING FUND DOCUMENTS BY MAIL? GO TO PHOENIXINVESTMENTS.COM, LOG IN AND SIGN UP FOR E-DELIVERY [LOGO OMITTED] PHOENIX INVESTMENT PARTNERS, LTD. COMMITTED TO INVESTOR SUCCESS(SM) ------------------------------------------------------------------------ Mutual funds are not insured by the FDIC; are not deposits or other obligations of a bank and are not guaranteed by a bank; and are subject to investment risks, including possible loss of the principal invested. ------------------------------------------------------------------------ This report is not authorized for distribution to prospective investors in the Phoenix Investment Trust 97 unless preceded or accompanied by an effective Prospectus which includes information concerning the sales charge, each Fund's record and other pertinent information. MESSAGE FROM THE CHAIRMAN [GRAPHIC OMITTED] DEAR SHAREHOLDER: I encourage you to review the performance overview and outlook provided in this annual report for the Phoenix Investment Trust 97, which comprises the Phoenix Small Cap Value and Phoenix-Oakhurst Value Equity Funds, for the fiscal year ended August 31, 2004. The U.S. economy appears to have hit a soft patch in recent months with consumer spending and job growth easing. The markets are concerned about the inflationary impact of rising energy prices, as well as the likely drag on economic growth in the second half of the year. In an effort to subdue inflation, the Federal Reserve has increased short-term interest rates three times in 2004 and appears to be committed to raising rates at a measured pace in the future. As always, short-term performance changes should not distract you from your long-term financial plan. Now may be an opportune time for you to review your portfolio with your financial advisor to make sure that your asset allocation remains on target for you. Keep in mind that finding the best balance of performance and protection requires discipline and diversification. 1 Your Phoenix Fund investment may help in this effort. At this time, the mutual fund industry continues to undergo far-reaching regulatory reforms. The Phoenix Funds Board of Trustees takes these matters seriously and is implementing initiatives to ensure compliance with the letter and the spirit of all requirements. We are confident that the fund industry will emerge stronger and more focused on the interests of shareholders as a result. To learn more about investing and your Fund, including monthly portfolio updates, please visit PhoenixInvestments.com. Sincerely, /S/ Philip R. McLoughlin Philip R. McLoughlin Chairman, Phoenix Funds SEPTEMBER 30, 2004 1 DIVERSIFICATION DOES NOT GUARANTEE AGAINST A LOSS, AND THERE IS NO GUARANTEE THAT A DIVERSIFIED PORTFOLIO WILL OUTPERFORM A NON-DIVERSIFIED PORTFOLIO. The preceding information is the opinion of the Phoenix Funds Board of Trustees. There is no guarantee that market forecasts discussed will be realized. 1 TABLE OF CONTENTS Glossary ................................................................... 3 Phoenix Small Cap Value Fund ............................................... 4 Phoenix-Oakhurst Value Equity Fund ......................................... 17 Notes to Financial Statements .............................................. 28 GLOSSARY PRICE-TO-EARNINGS RATIO (MULTIPLE) A valuation measure calculated by dividing a stock's price by its current or projected earnings per share. The P/E ratio gives an idea of how much an investor is paying for current or future earnings power. REITS Real Estate Investment Trusts are typically publicly traded companies that own, develop and operate income-producing real estate such as apartments, office buildings, hotels, shopping centers and other commercial properties. RUSSELL 1000(R) VALUE INDEX A market capitalization-weighted index of value-oriented stocks of the 1,000 largest companies in the Russell Universe, which comprises the 3,000 largest U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The index performance does not reflect sales charges. RUSSELL 2000(R) VALUE INDEX A market capitalization-weighted index of value-oriented stocks of the smallest 2,000 companies in the Russell Universe, which comprises the 3,000 largest U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The index performance does not reflect sales charges. S&P 500(R) INDEX A market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The index performance does not reflect sales charges. THE INDEXES ARE UNMANAGED AND NOT AVAILABLE FOR DIRECT INVESTMENT; THEREFORE THEIR PERFORMANCE DOES NOT REFLECT THE EXPENSES ASSOCIATED WITH THE ACTIVE MANAGEMENT OF AN ACTUAL PORTFOLIO. 3 PHOENIX SMALL CAP VALUE FUND A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGEMENT TEAM LED BY CARLTON NEEL Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE? A: The Phoenix Small Cap Value Fund seeks long-term capital appreciation. There is no guarantee that the Fund will achieve its objective. Q: HOW DID THE FUND PERFORM OVER THE 12 MONTHS ENDED AUGUST 31, 2004? A: For the fiscal year ended August 31, 2004, the Fund's Class A shares returned 12.37%, Class B shares returned 11.57%, and Class C shares returned 11.57%. For the same period, the S&P 500(R) Index 1 returned 11.45% and the Fund's style-specific benchmark, the Russell 2000(R) Value Index, 1 returned 19.49%. All performance figures assume reinvestment of distributions and exclude the effect of sales charges. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown above. Q: LOOKING BACK OVER THE LAST 12 MONTHS, HOW WOULD YOU CHARACTERIZE THE MARKET ENVIRONMENT FOR INVESTORS? A: The 12 months ending August 31, 2004 can be divided into two periods with opposing characteristics: from September 2003 until late January 2004, value stocks struggled to keep up with growth names, while from February 2004 until August 2004, value stocks generally outperformed growth names. As the economic recovery took shape and it became increasingly evident that the Federal Reserve would raise interest rates, the market reacted by favoring companies that: 1) demonstrated earnings consistency, 2) traded at a relative discount (as measured by the price-to-earnings ratio) to their peers and the market as a whole, 3) had a cleaner balance sheet, which possibly included a lower debt load, resulting in less sensitivity to increased interest rates, or 4) paid a dividend. Also, the uncertainty of the war, the outcome of the upcoming presidential election and the sustainability of the economic recovery continued to encourage investors to favor a move to value stocks over growth. This trend helped the Fund as these stocks rose with the tide. Q: WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE DURING THE 12 MONTHS ENDED AUGUST 31, 2004? A: As noted earlier, the Fund underperformed its style-specific benchmark, the Russell 2000 Value Index for the 12-month period. New management appointed to the Fund as of October 31, 2003 has been working hard to improve the Fund's performance since assuming its new responsibilities. We gradually implemented a quantitatively-led approach to managing this portfolio through the first quarter of 2004. This is beginning to bear fruit, as the Fund's performance began to improve in early May 2004 and continued through the fiscal year-end as of August 31, 2004. A significant underweighting in REITs relative to the style benchmark hurt performance, and health care names also impacted performance adversely. The Fund benefited from its energy and bank holdings, and material stocks had a strong run late in 2003 and again, early this summer. Q: WHAT IS YOUR ECONOMIC AND MARKET OUTLOOK FOR THE NEXT SIX TO 12 MONTHS? A: Generally after a presidential election, regardless of which party wins, the market experiences a "relief rally" as that uncertainty is removed. However, with the ongoing concerns over a resolution to the war in Iraq, questions about the sustainability of 4 Phoenix Small Cap Value Fund (continued) the economic recovery and how much the Federal Reserve will raise interest rates, combined with valuations that still seem lofty relative to growth prospects, it is our belief that value stocks remain a better play in the equity markets than growth stocks. So while we are believers that in the near term, all stocks could do well, we also believe that by next year, as the markets digest a new session of Congress and analyze the investment climate, value stocks will be the more compelling investment. SEPTEMBER 2004 THE PRECEDING INFORMATION IS THE OPINION OF PORTFOLIO MANAGEMENT. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE IS NO GUARANTEE THAT MARKET FORECASTS WILL BE REALIZED. 1 FOR DEFINITIONS OF THE INDEXES CITED AND CERTAIN INVESTMENT TERMS USED IN THIS REPORT, SEE THE GLOSSARY ON PAGE 3. 5 Phoenix Small Cap Value Fund
- -------------------------------------------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS 1 PERIODS ENDING 8/31/04 - -------------------------------------------------------------------------------------------------------------------- INCEPTION INCEPTION 1 YEAR 5 YEARS TO 8/31/04 DATE -------- --------- ---------- ------------ Class A Shares at NAV 2 12.37% 11.09% 10.26% 11/20/97 Class A Shares at POP 3 5.91 9.78 9.30 11/20/97 Class B Shares at NAV 2 11.57 10.27 9.45 11/20/97 Class B Shares with CDSC 4 7.57 10.27 9.45 11/20/97 Class C Shares at NAV 2 11.57 10.27 9.45 11/20/97 Class C Shares with CDSC 4 11.57 10.27 9.45 11/20/97 S&P 500(R) Index 11.45 (2.05) 3.62 11/20/97 Russell 2000(R) Value Index 19.49 13.36 8.94 11/20/97
- -------------------------------------------------------------------------------- GROWTH OF $10,000 PERIODS ENDING 8/31 - -------------------------------------------------------------------------------- This Growth of $10,000 chart assumes an initial investment of $10,000 made on 11/20/97 (inception of the Fund) in Class A, Class B and Class C shares. The total return for Class A shares reflects the maximum sales charge of 5.75% on the initial investment. The total return for Class B shares reflects the CDSC charges which decline from 5% to 0% over a five year period. The total return for Class C shares reflects the CDSC charges which are 1% in the first year and 0% thereafter. Performance assumes dividends and capital gains are reinvested. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Phoenix Phoenix Phoenix Russell 2000 Small Cap Value Small Cap Value Small Cap Value Value S&P 500 Fund Class A 5 Fund Class B 5 Fund Class C 5 Index Index 11/20/97 9425 10000 10000 10000 10000 8/31/98 7668 8093 8091 8370 10097 8/31/99 10805 11320 11316 9549 14124 8/31/00 17951 18674 18669 10856 16438 8/31/01 15395 15894 15889 12815 12429 8/31/02 13698 14031 14027 12097 10192 8/31/03 16268 16540 16535 14962 11424 8/31/04 18280 18454 18449 17878 12732
- -------------------------------------------------------------------------------- SECTOR WEIGHTINGS 8/31/04 - -------------------------------------------------------------------------------- As a percentage of total investments [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Financials 30% Industrials 15 Consumer Discretionary 14 Energy 10 Information Technology 9 Materials 6 Health Care 5 Other 11 1 Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gains distributions. 2 "NAV" (Net Asset Value) total returns do not include the effect of any sales charge. 3 "POP" (Public Offering Price) total returns include the effect of the maximum front-end 5.75% sales charge. 4 CDSC (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC charges for B shares decline from 5% to 0% over a five year period. CDSC charges for Class C shares are 1% in the first year and 0% thereafter. 5 This chart includes application of initial sales charges on Class A shares and applicable CDSC charges for Class B and Class C shares since inception. For information regarding indexes, see the glossary on page 3. ALL RETURNS REPRESENT PAST PERFORMANCE WHICH IS NO GUARANTEE OF FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE SHOWN. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PLEASE VISIT PHOENIXINVESTMENTS.COM FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END. 6 Phoenix Small Cap Value Fund ABOUT YOUR FUND'S EXPENSES As a shareholder of the Small Cap Value Fund, you incur two types of costs: (1) transaction costs, including sales charges on purchases of Class A shares and contingent deferred sales charges on Class B and Class C shares; and (2) ongoing costs, including investment advisory fees; distribution and service fees; and other expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period. ACTUAL EXPENSES The first line of the accompanying tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the accompanying tables provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges or contingent deferred sales charges. Therefore, the second line of the accompanying tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Beginning Ending Expenses Paid Small Cap Value Fund Account Value Account Value During Class A March 1, 2004 August 31, 2004 Period* - ----------------------- ---------------- ----------------- --------------- Actual $1,000.00 $ 965.40 $6.92 Hypothetical (5% return before expenses) 1,000.00 1,018.01 7.13 * EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 1.40%, WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS A RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED AUGUST 31, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 12.37%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT AUGUST 31, 2004 OF $1,123.70. Beginning Ending Expenses Paid Small Cap Value Fund Account Value Account Value During Class B March 1, 2004 August 31, 2004 Period* - ----------------------- ---------------- ----------------- --------------- Actual $1,000.00 $ 961.60 $10.60 Hypothetical (5% return before expenses) 1,000.00 1,014.19 10.94 * EXPENSES ARE EQUAL TO THE FUND'S CLASS B ANNUALIZED EXPENSE RATIO OF 2.15%, WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS B RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED AUGUST 31, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 11.57%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT AUGUST 31, 2004 OF $1,115.70. Beginning Ending Expenses Paid Small Cap Value Fund Account Value Account Value During Class C March 1, 2004 August 31, 2004 Period* - ----------------------- ---------------- ----------------- --------------- Actual $1,000.00 $ 962.20 $10.60 Hypothetical (5% return before expenses) 1,000.00 1,014.19 10.94 * EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 2.15%, WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS C RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED AUGUST 31, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 11.57%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT AUGUST 31, 2004 OF $1,115.70. 7 Phoenix Small Cap Value Fund - -------------------------------------------------------------------------------- TEN LARGEST HOLDINGS AT AUGUST 31, 2004 (AS A PERCENTAGE OF NET ASSETS) - -------------------------------------------------------------------------------- 1. Harris Corp. 2.2% 6. Everest Re Group Ltd. 1.8% 2. Newfield Exploration Co. 2.1% 7. Doral Financial Corp. 1.8% 3. OM Group, Inc. 1.9% 8. CenterPoint Energy, Inc. 1.8% 4. Potlatch Corp. 1.9% 9. Beazer Homes USA, Inc. 1.8% 5. New Century Financial Corp. 1.8% 10. Chesapeake Energy Corp. 1.8% - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS AT AUGUST 31, 2004 SHARES VALUE ------- ------------ DOMESTIC COMMON STOCKS--97.3% AEROSPACE & DEFENSE--2.3% Aviall, Inc.(b) ....................................... 50,000 $ 1,000,000 Curtiss-Wright Corp. .................................. 9,300 508,245 DRS Technologies, Inc.(b) ............................. 50,800 1,848,104 Esterline Technologies Corp.(b) ....................... 29,800 945,554 Moog, Inc. Class A(b) ................................. 34,000 1,208,700 Sypris Solutions, Inc. ................................ 6,700 83,348 ------------ 5,593,951 ------------ APPAREL RETAIL--2.2% Charlotte Russe Holding, Inc.(b) ...................... 22,900 327,241 Charming Shoppes, Inc.(b) ............................. 30,200 207,172 Finish Line, Inc. (The) Class A ....................... 8,400 243,684 Men's Wearhouse, Inc. (The)(b) ........................ 80,300 2,248,400 Pacific Sunwear of California, Inc.(b) ................ 113,300 2,170,828 ------------ 5,197,325 ------------ APPAREL, ACCESSORIES & LUXURY GOODS--0.9% Kellwood Co. .......................................... 37,400 1,365,100 Phillips-Van Heusen Corp. ............................. 32,500 655,200 ------------ 2,020,300 ------------ APPLICATION SOFTWARE--0.7% MRO Software, Inc.(b) ................................. 30,600 290,394 Quest Software, Inc.(b) ............................... 57,300 579,876 SERENA Software, Inc.(b) .............................. 50,600 791,890 ------------ 1,662,160 ------------ AUTO PARTS & EQUIPMENT--0.1% Dura Automotive Systems, Inc. Class A(b) .............. 5,600 46,648 Shiloh Industries, Inc(b) ............................. 7,700 110,803 Stoneridge, Inc.(b) ................................... 7,500 111,375 ------------ 268,826 ------------ SHARES VALUE ------- ------------ AUTOMOBILE MANUFACTURERS--0.4% Monaco Coach Corp. .................................... 47,600 $ 1,022,924 BIOTECHNOLOGY--1.6% Gen-Probe, Inc.(b) .................................... 103,200 3,725,520 BROADCASTING & CABLE TV--0.5% Hearst-Argyle Television, Inc. ........................ 50,700 1,229,475 BUILDING PRODUCTS--1.3% Griffon Corp.(b) ...................................... 87,900 1,759,758 Lennox International, Inc. ............................ 25,300 411,378 NCI Building Systems, Inc.(b) ......................... 34,000 1,043,120 ------------ 3,214,256 ------------ CATALOG RETAIL--0.7% Insight Enterprises, Inc.(b) .......................... 107,500 1,720,000 COMMERCIAL PRINTING--0.1% Consolidated Graphics, Inc.(b) ........................ 3,600 147,060 COMMUNICATIONS EQUIPMENT--3.5% Audiovox Corp. Class A(b) ............................. 22,300 362,375 Black Box Corp. ....................................... 7,500 271,800 C-COR Corp.(b) ........................................ 39,900 313,614 Comtech Telecommunications Corp.(b) ................... 23,700 429,207 DIGI International, Inc.(b) ........................... 27,800 312,750 Harris Corp. .......................................... 107,500 5,177,200 SeaChange International, Inc.(b) ...................... 100,400 1,534,112 ------------ 8,401,058 ------------ CONSTRUCTION & ENGINEERING--0.6% Comfort Systems USA, Inc.(b) .......................... 21,800 146,060 URS Corp.(b) .......................................... 48,600 1,200,420 ------------ 1,346,480 ------------ CONSTRUCTION MATERIALS--0.1% Texas Industries, Inc. ................................ 3,200 140,160 8 See Notes to Financial Statements Phoenix Small Cap Value Fund SHARES VALUE ------- ------------ CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS--1.5% Terex Corp.(b) ........................................ 90,800 $ 3,280,604 Titan International, Inc. ............................. 29,800 290,550 ------------ 3,571,154 ------------ CONSUMER FINANCE--0.8% CompuCredit Corp.(b) .................................. 94,600 1,779,426 DATA PROCESSING & OUTSOURCED SERVICES--0.5% eFunds Corp.(b) ....................................... 76,200 1,131,570 DEPARTMENT STORES--1.5% Bon-Ton Stores, Inc. (The) ............................ 15,000 197,850 Neiman Marcus Group, Inc. (The) Class A ............... 63,800 3,394,160 ------------ 3,592,010 ------------ DIVERSIFIED COMMERCIAL SERVICES--2.1% Coinstar, Inc.(b) ..................................... 97,000 1,912,840 Exponent, Inc.(b) ..................................... 2,000 51,922 Healthcare Services Group, Inc. ....................... 7,300 129,940 Mobile Mini, Inc.(b) .................................. 21,700 591,325 NCO Group, Inc.(b) .................................... 44,000 1,124,640 TeleTech Holdings, Inc.(b) ............................ 82,300 678,152 United Rentals, Inc.(b) ............................... 36,500 536,185 ------------ 5,025,004 ------------ DRUG RETAIL--0.6% Longs Drug Stores Corp. ............................... 62,900 1,527,212 ELECTRIC UTILITIES--3.0% CenterPoint Energy, Inc. .............................. 389,000 4,255,660 WPS Resources Corp. ................................... 63,600 2,968,212 ------------ 7,223,872 ------------ ELECTRICAL COMPONENTS & EQUIPMENT--1.7% Acuity Brands, Inc. ................................... 87,200 2,006,472 Genlyte Group, Inc. (The)(b) .......................... 22,500 1,343,475 Penn Engineering & Manufacturing Corp. ................ 5,800 110,780 Thomas & Betts Corp.(b) ............................... 28,700 706,020 ------------ 4,166,747 ------------ ELECTRONIC EQUIPMENT MANUFACTURERS--1.0% Checkpoint Systems, Inc.(b) ........................... 29,700 448,470 Rofin-Sinar Technologies, Inc.(b) ..................... 68,800 1,933,280 ------------ 2,381,750 ------------ EMPLOYMENT SERVICES--0.1% Volt Information Sciences, Inc.(b) .................... 7,100 189,002 SHARES VALUE ------- ------------ ENVIRONMENTAL SERVICES--0.5% Waste Connections, Inc.(b) ............................ 40,000 $ 1,174,000 FOOD DISTRIBUTORS--0.5% Nash Finch Co. ........................................ 38,800 1,145,764 FOOD RETAIL--0.5% Ruddick Corp. ......................................... 12,200 232,654 Smart & Final, Inc.(b) ................................ 63,600 1,037,316 ------------ 1,269,970 ------------ GAS UTILITIES--0.7% UGI Corp. ............................................. 49,400 1,687,504 GENERAL MERCHANDISE STORES--0.4% ShopKo Stores, Inc.(b) ................................ 56,600 957,672 HEALTH CARE EQUIPMENT--1.1% Invacare Corp. ........................................ 51,700 2,288,759 Molecular Devices Corp.(b) ............................ 9,800 225,400 ------------ 2,514,159 ------------ HEALTH CARE FACILITIES--1.7% Genesis Healthcare(b) ................................. 19,600 609,364 LifePoint Hospitals, Inc.(b) .......................... 61,800 1,785,402 Province Healthcare Co.(b) ............................ 87,800 1,715,612 ------------ 4,110,378 ------------ HEALTH CARE SERVICES--0.1% Gentiva Health Services, Inc.(b) ...................... 1,500 23,220 Res-Care, Inc.(b) ..................................... 18,800 198,904 ------------ 222,124 ------------ HEALTH CARE SUPPLIES--0.4% West Pharmaceutical Services, Inc. .................... 23,400 935,766 HOME FURNISHINGS--0.1% Hooker Furniture Corp. ................................ 6,700 177,684 HOME IMPROVEMENT RETAIL--0.4% Building Material Holding Corp. ....................... 37,500 848,250 HOMEBUILDING--2.8% Beazer Homes USA, Inc. ................................ 43,400 4,238,010 Brookfield Homes Corp. ................................ 1,900 50,103 Meritage Corp.(b) ..................................... 33,200 2,218,092 Technical Olympic USA, Inc. ........................... 10,600 270,512 ------------ 6,776,717 ------------ INDUSTRIAL CONGLOMERATES--0.3% Tredegar Corp. ........................................ 44,800 775,936 See Notes to Financial Statements 9 Phoenix Small Cap Value Fund SHARES VALUE ------- ------------ INDUSTRIAL MACHINERY--3.2% Flowserve Corp.(b) .................................... 151,100 $ 3,466,234 Gardner Denver, Inc.(b) ............................... 17,000 471,410 Mueller Industries, Inc. .............................. 16,300 640,427 Reliance Steel & Aluminum Co. ......................... 74,700 2,833,371 Valmont Industries, Inc. .............................. 12,200 240,828 ------------ 7,652,270 ------------ INTEGRATED TELECOMMUNICATION SERVICES--0.0% CT Communications, Inc. ............................... 6,600 90,882 INTERNET SOFTWARE & SERVICES--0.0% PEC Solutions, Inc.(b) ................................ 7,000 73,710 IT CONSULTING & OTHER SERVICES--0.8% Keane, Inc.(b) ........................................ 49,600 699,360 Perot Systems Corp. Class A(b) ........................ 90,600 1,205,886 ------------ 1,905,246 ------------ LEISURE PRODUCTS--0.3% MarineMax, Inc.(b) .................................... 15,100 295,960 RC2 Corp.(b) .......................................... 13,900 439,379 ------------ 735,339 ------------ LIFE & HEALTH INSURANCE--0.3% UICI .................................................. 29,400 817,614 METAL & GLASS CONTAINERS--0.0% Myers Industries, Inc. ................................ 9,020 102,648 MULTI-UTILITIES & UNREGULATED POWER--1.4% Energen Corp. ......................................... 71,500 3,391,960 OFFICE SERVICES & SUPPLIES--0.8% IKON Office Solutions, Inc. ........................... 162,700 1,835,256 OIL & GAS DRILLING--0.9% Unit Corp.(b) ......................................... 70,100 2,201,140 OIL & GAS EQUIPMENT & SERVICES--1.8% Dril-Quip, Inc.(b) .................................... 13,400 265,856 Gulf Island Fabrication, Inc. ......................... 7,400 147,704 Maverick Tube Corp.(b) ................................ 50,000 1,481,000 Offshore Logistics, Inc.(b) ........................... 23,300 694,340 Oil States International, Inc.(b) ..................... 67,200 1,081,920 RPC, Inc. ............................................. 39,400 596,910 ------------ 4,267,730 ------------ OIL & GAS EXPLORATION & PRODUCTION--4.3% Chesapeake Energy Corp. ............................... 297,000 4,196,610 Magnum Hunter Resources, Inc.(b) ...................... 110,000 1,120,900 SHARES VALUE ------- ------------ OIL & GAS EXPLORATION & PRODUCTION--CONTINUED Newfield Exploration Co.(b) ........................... 90,500 $ 5,009,175 ------------ 10,326,685 ------------ OIL & GAS REFINING, MARKETING & TRANSPORTATION--2.9% General Maritime Corp.(b) ............................. 46,400 1,265,792 Giant Industries, Inc.(b) ............................. 31,900 711,370 OMI Corp. ............................................. 227,800 2,897,616 Overseas Shipholding Group, Inc. ...................... 31,700 1,363,100 Tesoro Petroleum Corp.(b) ............................. 31,300 741,184 ------------ 6,979,062 ------------ PACKAGED FOODS & MEATS--1.7% Chiquita Brands International, Inc.(b) ................ 87,400 1,646,616 Pilgrim's Pride Corp. ................................. 96,000 2,440,320 ------------ 4,086,936 ------------ PAPER PRODUCTS--2.3% Buckeye Technologies, Inc.(b) ......................... 8,000 85,360 Pope & Talbot, Inc. ................................... 54,200 998,906 Potlatch Corp. ........................................ 103,700 4,448,730 ------------ 5,532,996 ------------ PHARMACEUTICALS--0.5% aaiPharma, Inc.(b) .................................... 55,600 128,436 First Horizon Pharmaceutical Corp.(b) ................. 67,000 1,128,280 ------------ 1,256,716 ------------ PROPERTY & CASUALTY INSURANCE--6.0% FPIC Insurance Group, Inc.(b) ......................... 23,000 549,930 Infinity Property & Casualty Corp. .................... 9,700 265,974 LandAmerica Financial Group, Inc. ..................... 70,300 3,025,712 Mercury General Corp. ................................. 68,700 3,445,305 Navigators Group, Inc. (The)(b) ....................... 17,500 511,700 Philadelphia Consolidated Holding Co. ................. 4,000 213,040 Selective Insurance Group, Inc. ....................... 52,700 1,819,731 State Auto Financial Corp. ............................ 3,300 99,297 Stewart Information Services Corp. .................... 72,700 2,656,458 United Fire & Casualty Co. ............................ 1,600 96,960 Zenith National Insurance Corp. ....................... 38,600 1,668,292 ------------ 14,352,399 ------------ PUBLISHING & PRINTING--0.1% Pulitzer, Inc. ........................................ 5,200 253,240 REAL ESTATE MANAGEMENT & DEVELOPMENT--0.7% Jones Lang LaSalle, Inc.(b) ........................... 53,700 1,753,305 10 See Notes to Financial Statements Phoenix Small Cap Value Fund SHARES VALUE ------- ------------ REGIONAL BANKS--5.2% Capitol Bancorp Ltd. .................................. 3,300 $ 94,941 First Republic Bank ................................... 35,200 1,576,608 Greater Bay Bancorp ................................... 94,000 2,676,180 Irwin Financial Corp. ................................. 73,400 1,888,582 Provident Bankshares Corp. ............................ 54,900 1,738,683 Republic Bancorp, Inc. ................................ 33,300 489,843 South Financial Group, Inc. (The) ..................... 26,400 750,816 TCF Financial Corp. ................................... 40,300 2,563,483 Trustmark Corp. ....................................... 7,000 209,860 U.S.B. Holding Co., Inc. .............................. 20,400 449,004 ------------ 12,438,000 ------------ REINSURANCE--3.0% Arch Capital Group Ltd.(b) ............................ 46,100 1,687,260 Everest Re Group Ltd. ................................. 61,700 4,328,872 PXRE Group Ltd. ....................................... 44,300 1,029,532 ------------ 7,045,664 ------------ REITS--4.5% American Home Mortgage Investment Corp. ............... 56,200 1,529,764 Brandywine Realty Trust ............................... 79,700 2,359,120 CarrAmerica Realty Corp. .............................. 69,300 2,310,462 Friedman, Billings, Ramsey Group, Inc. Class A ........ 122,400 2,307,240 Kilroy Realty Corp. ................................... 43,100 1,631,335 Parkway Properties, Inc. .............................. 12,700 600,075 ------------ 10,737,996 ------------ RESTAURANTS--2.0% Dave & Buster's, Inc.(b) .............................. 3,800 59,660 Jack in the Box, Inc.(b) .............................. 103,100 2,911,544 Landry's Restaurants, Inc. ............................ 72,100 1,908,487 ------------ 4,879,691 ------------ SPECIALIZED FINANCE--0.3% GATX Corp. ............................................ 23,000 620,310 SPECIALTY CHEMICALS--2.3% NewMarket Corp.(b) .................................... 19,900 411,731 OM Group, Inc.(b) ..................................... 135,300 4,606,965 Schulman (A.), Inc. ................................... 28,700 575,722 ------------ 5,594,418 ------------ SPECIALTY STORES--0.9% Lithia Motors, Inc. Class A ........................... 75,100 1,595,875 Sonic Automotive, Inc. ................................ 30,500 634,400 ------------ 2,230,275 ------------ SHARES VALUE ------- ------------ STEEL--1.6% Commercial Metals Co. ................................. 41,200 $ 1,441,176 Gibraltar Steel Corp. ................................. 10,800 345,924 Steel Dynamics, Inc. .................................. 50,600 1,586,816 Steel Technologies, Inc. .............................. 16,500 331,485 ------------ 3,705,401 ------------ SYSTEMS SOFTWARE--1.6% Internet Security Systems, Inc.(b) .................... 237,100 3,411,869 Sybase, Inc.(b) ....................................... 33,300 443,889 ------------ 3,855,758 ------------ TECHNOLOGY DISTRIBUTORS--1.1% Anixter International, Inc.(b) ........................ 45,900 1,618,893 Brightpoint, Inc.(b) .................................. 60,000 795,000 SYNNEX Corp.(b) ....................................... 12,400 197,036 ------------ 2,610,929 ------------ THRIFTS & MORTGAGE FINANCE--7.7% BankAtlantic Bancorp, Inc. Class A .................... 57,100 1,011,241 Capital Crossing Bank(b) .............................. 12,600 294,210 Commercial Federal Corp. .............................. 75,200 2,050,704 Doral Financial Corp. ................................. 104,900 4,266,283 Flagstar Bancorp, Inc. ................................ 177,400 3,830,066 Hudson River Bancorp, Inc. ............................ 4,300 76,583 ITLA Capital Corp.(b) ................................. 2,500 106,050 New Century Financial Corp. ........................... 82,500 4,425,300 Saxon Capital, Inc.(b) ................................ 55,500 1,395,824 Sterling Financial Corp.(b) ........................... 29,400 974,904 ------------ 18,431,165 ------------ TIRES & RUBBER--0.5% Cooper Tire & Rubber Co. .............................. 54,400 1,231,616 TRADING COMPANIES & DISTRIBUTORS--0.7% Applied Industrial Technologies, Inc. ................. 15,500 463,140 Watsco, Inc. .......................................... 37,600 1,093,408 ------------ 1,556,548 ------------ TRUCKING--0.5% Overnite Corp. ........................................ 5,400 164,376 SCS Transportation, Inc. .............................. 8,000 148,480 Swift Transportation Co., Inc.(b) ..................... 37,200 676,296 U.S. Xpress Enterprises, Inc. Class A(b) .............. 6,600 109,758 ------------ 1,098,910 ------------ See Notes to Financial Statements 11 Phoenix Small Cap Value Fund SHARES VALUE ------- ------------ WIRELESS TELECOMMUNICATION SERVICES--0.1% Boston Communications Group, Inc.(b) .................. 21,600 $ 169,560 - ------------------------------------------------------------------------------- TOTAL DOMESTIC COMMON STOCKS (IDENTIFIED COST $211,934,065) 232,694,541 - ------------------------------------------------------------------------------- FOREIGN COMMON STOCKS(c)--1.8% REINSURANCE--0.7% Montpelier Re Holdings Ltd. (United States) ........... 51,200 1,765,888 THRIFTS & MORTGAGE FINANCE--1.1% R&G Financial Corp. Class B (United States) ........... 74,700 2,583,126 - ------------------------------------------------------------------------------- TOTAL FOREIGN COMMON STOCKS (IDENTIFIED COST $3,400,398) 4,349,014 - ------------------------------------------------------------------------------- WARRANTS--0.0% OTHER DIVERSIFIED FINANCIAL SERVICES--0.0% Imperial Credit Industries, Inc. Warrants (b)(d) ...... 2,429 0 - ------------------------------------------------------------------------------- TOTAL WARRANTS (IDENTIFIED COST $0) 0 - ------------------------------------------------------------------------------- STANDARD & POOR'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ------------ DOMESTIC CONVERTIBLE BONDS--0.0% AIRPORT SERVICES--0.0% TIMCO Aviation Services, Inc. Cv. 8%, 12/31/06(b) (d) ........................... BB $ 2 $ 0 - ----------------------------------------------------------------------------- TOTAL DOMESTIC CONVERTIBLE BONDS (IDENTIFIED COST $0) 0 - ----------------------------------------------------------------------------- TOTAL LONG TERM INVESTMENTS--99.1% (IDENTIFIED COST $215,334,463) 237,043,555 - ----------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS--2.4% COMMERCIAL PAPER--2.4% UBS Finance Delaware LLC 1.57%, 9/1/04 .................................... A-1+ 3,700 3,700,000 Verizon Network Funding Corp. 1.51%, 9/8/04 .................................... A-1+ 2,100 2,099,383 - ----------------------------------------------------------------------------- TOTAL SHORT-TERM OBLIGATIONS (IDENTIFIED COST $5,799,383) 5,799,383 - ----------------------------------------------------------------------------- TOTAL INVESTMENTS--101.5% (IDENTIFIED COST $221,133,846) 242,842,938(a) Other assets and liabilities, net--(1.5)% (3,580,358) ------------ NET ASSETS--100.0% $239,262,580 ============ (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $27,671,988 and gross depreciation of $6,837,378 for federal income tax purposes. At August 31, 2004, the aggregate cost of securities for federal income tax purposes was $222,008,328. (b) Non-income producing. (c) Foreign Common Stocks are determined based on the country in which the security is issued. The country of risk, noted parenthetically, is determined based on criteria described in Note 2G "Foreign security country determination" in the Notes to Financial Statements. (d) Illiquid. Security valued at fair value as determined in good faith by or under the direction of the Trustees. At August 31, 2004, these securities amounted to a value of $0 or 0.0% of net assets. 12 See Notes to Financial Statements Phoenix Small Cap Value Fund STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 2004 ASSETS Investment securities at value (Identified cost $221,133,846) $242,842,938 Cash 3,605 Receivables Investment securities sold 6,973,797 Dividends and interest 186,795 Fund shares sold 92,137 Prepaid expenses 18,920 ------------ Total assets 250,118,192 ------------ LIABILITIES Payables Investment securities purchased 9,896,726 Fund shares repurchased 460,193 Investment advisory fee 175,452 Distribution and service fees 122,932 Transfer agent fee 106,447 Financial agent fee 16,032 Trustees' fee 1,131 Accrued expenses 76,699 ------------ Total liabilities 10,855,612 ------------ NET ASSETS $239,262,580 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest $221,492,981 Accumulated net realized loss (3,939,493) Net unrealized appreciation 21,709,092 ------------ NET ASSETS $239,262,580 ============ CLASS A Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $124,164,992) 8,231,933 Net asset value per share $15.08 Offering price per share $15.08/(1-5.75%) $16.00 CLASS B Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $43,801,197) 3,068,788 Net asset value and offering price per share $14.27 CLASS C Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $71,296,391) 4,995,657 Net asset value and offering price per share $14.27 STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 2004 INVESTMENT INCOME Dividends $ 2,017,867 Interest 55,381 Foreign taxes withheld (5,827) ----------- Total investment income 2,067,421 ----------- EXPENSES Investment advisory fee 1,833,682 Service fees, Class A 245,397 Distribution and service fees, Class B 438,054 Distribution and service fees, Class C 617,784 Financial agent fee 161,070 Transfer agent 486,288 Printing 65,870 Custodian 37,476 Trustees 33,494 Professional 29,459 Registration 24,177 Miscellaneous 17,993 ----------- Total expenses 3,990,744 Less expenses reimbursed by investment adviser (346,185) Custodian fees paid indirectly (285) ----------- Net expenses 3,644,274 ----------- NET INVESTMENT LOSS (1,576,853) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investments 31,977,139 Net change in unrealized appreciation (depreciation) on investments (12,159,429) ----------- NET GAIN ON INVESTMENTS 19,817,710 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $18,240,857 =========== See Notes to Financial Statements 13 Phoenix Small Cap Value Fund STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended 8/31/04 8/31/03 ------------ ------------ FROM OPERATIONS Net investment income (loss) $ (1,576,853) $ (549,923) Net realized gain (loss) 31,977,139 (581,048) Net change in unrealized appreciation (depreciation) (12,159,429) 24,331,903 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 18,240,857 23,200,932 ------------ ------------ FROM SHARE TRANSACTIONS CLASS A Proceeds from sales of shares (1,143,420 and 1,907,326 shares, respectively) 17,037,857 21,435,568 Net asset value of shares issued from Phoenix Appreciation Fund Merger (4,064,701 and 0 shares, respectively) (See note 10) 62,404,841 -- Cost of shares repurchased (2,699,594 and 3,531,940 shares, respectively) (40,395,840) (37,879,871) ------------ ------------ Total 39,046,858 (16,444,303) ------------ ------------ CLASS B Proceeds from sales of shares (175,854 and 360,619 shares, respectively) 2,462,509 3,733,780 Net asset value of shares issued from Phoenix Appreciation Fund Merger (462,034 and 0 shares, respectively) (See note 10) 6,731,032 -- Cost of shares repurchased (750,989 and 900,192 shares, respectively) (10,596,886) (9,055,153) ------------ ------------ Total (1,403,345) (5,321,373) ------------ ------------ CLASS C Proceeds from sales of shares (301,430 and 588,971 shares, respectively) 4,226,723 6,011,638 Net asset value of shares issued from Phoenix Appreciation Fund Merger (1,970,027 and 0 shares, respectively) (See note 10) 28,697,143 -- Cost of shares repurchased (1,307,554 and 1,092,681 shares, respectively) (18,583,831) (10,996,219) ------------ ------------ Total 14,340,035 (4,984,581) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 51,983,548 (26,750,257) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS 70,224,405 (3,549,325) NET ASSETS Beginning of period 169,038,175 172,587,500 ------------ ------------ END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $0 AND $0, RESPECTIVELY] $239,262,580 $169,038,175 ============ ============
14 See Notes to Financial Statements Phoenix Small Cap Value Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A --------------------------------------------------------------------------- YEAR ENDED AUGUST 31 --------------------------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of period $13.42 $11.30 $12.72 $17.90 $11.41 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) (0.06) --(5) (0.01) (0.05) (0.08) Net realized and unrealized gain (loss) 1.72 2.12 (1.39) (2.34) 7.38 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 1.66 2.12 (1.40) (2.39) 7.30 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Distributions from net realized gains -- -- (0.02) (2.79) (0.81) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS -- -- (0.02) (2.79) (0.81) ------ ------ ------ ------ ------ Change in net asset value 1.66 2.12 (1.42) (5.18) 6.49 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $15.08 $13.42 $11.30 $12.72 $17.90 ====== ====== ====== ====== ====== Total return(2) 12.37 % 18.76% (11.02)% (14.24)% 66.15 % RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $124,165 $76,783 $83,005 $88,174 $79,254 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 1.40 %(3) 1.40%(3) 1.40 %(3) 1.40 %(3) 1.40 %(3) Gross operating expenses (4) 1.57 % 1.71% 1.64 % 1.58 % 1.67 % Net investment income (loss) (0.38)% 0.04% (0.11)% (0.39)% (0.45)% Portfolio turnover 150 % 241% 123 % 229 % 191 % CLASS B --------------------------------------------------------------------------- YEAR ENDED AUGUST 31 --------------------------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of period $12.79 $10.85 $12.31 $17.54 $11.27 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) (0.16) (0.08) (0.10) (0.16) (0.19) Net realized and unrealized gain (loss) 1.64 2.02 (1.34) (2.28) 7.27 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 1.48 1.94 (1.44) (2.44) 7.08 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Distributions from net realized gains -- -- (0.02) (2.79) (0.81) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS -- -- (0.02) (2.79) (0.81) ------ ------ ------ ------ ------ Change in net asset value 1.48 1.94 (1.46) (5.23) 6.27 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $14.27 $12.79 $10.85 $12.31 $17.54 ====== ====== ====== ====== ====== Total return(2) 11.57 % 17.88 % (11.72)% (14.89)% 64.97 % RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $43,801 $40,696 $40,382 $40,270 $26,625 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 2.15 %(3) 2.15 %(3) 2.15 %(3) 2.15 %(3) 2.15 %(3) Gross operating expenses (4) 2.33 % 2.46 % 2.39 % 2.33 % 2.42 % Net investment income (loss) (1.15)% (0.71)% (0.86)% (1.14)% (1.20)% Portfolio turnover 150 % 241 % 123 % 229 % 191 % (1) Computed using average shares outstanding. (2) Maximum sales charges are not reflected in total return calculation. (3) The ratio of net operating expenses to average net assets includes reimbursements or waivers and excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (4) The ratio of gross operating expenses to average net assets is prior to the reduction of any reimbursements, waivers, or expense offsets. (5) Amount is less than $0.01.
See Notes to Financial Statements 15 Phoenix Small Cap Value Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS C --------------------------------------------------------------------------- YEAR ENDED AUGUST 31 --------------------------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of period $12.79 $10.85 $12.31 $17.54 $11.27 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) (0.16) (0.08) (0.10) (0.16) (0.19) Net realized and unrealized gain (loss) 1.64 2.02 (1.34) (2.28) 7.27 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 1.48 1.94 (1.44) (2.44) 7.08 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Distributions from net realized gains -- -- (0.02) (2.79) (0.81) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS -- -- (0.02) (2.79) (0.81) ------ ------ ------ ------ ------ Change in net asset value 1.48 1.94 (1.46) (5.23) 6.27 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $14.27 $12.79 $10.85 $12.31 $17.54 ====== ====== ====== ====== ====== Total return(2) 11.57 % 17.88 % (11.72)% (14.89)% 64.97 % RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $71,296 $51,559 $49,201 $45,450 $28,046 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 2.15 %(3) 2.15 %(3) 2.15 %(3) 2.15 %(3) 2.15 %(3) Gross operating expenses (4) 2.32 % 2.46 % 2.39 % 2.33 % 2.42 % Net investment income (loss) (1.14)% (0.72)% (0.86)% (1.14)% (1.20)% Portfolio turnover 150 % 241 % 123 % 229 % 191 % (1) Computed using average shares outstanding. (2) Maximum sales charges are not reflected in total return calculation. (3) The ratio of net operating expenses to average net assets includes reimbursements or waivers and excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (4) The ratio of gross operating expenses to average net assets is prior to the reduction of any reimbursements, waivers, or expense offsets.
16 See Notes to Financial Statements PHOENIX-OAKHURST VALUE EQUITY FUND A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGEMENT TEAM LED BY DONG HAO ZHANG Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE? A: The Phoenix-Oakhurst Value Equity Fund seeks long-term capital appreciation with a secondary investment objective to seek current income. There is no guarantee that the Fund will achieve its objective. Q: HOW DID THE FUND PERFORM OVER THE 12 MONTHS ENDED AUGUST 31, 2004? A: For the fiscal year ended August 31, 2004, the Fund's Class A shares returned 6.71%, Class B shares returned 5.95%, and Class C shares returned 5.94%. For the same period, the S&P 500(R) Index 1 returned 11.45% and the Fund's style-specific benchmark, the Russell 1000(R) Value Index, 1 returned 17.52%. All performance figures assume reinvestment of distributions and exclude the effect of sales charges. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown above. Q: LOOKING BACK OVER THE LAST 12 MONTHS, HOW WOULD YOU CHARACTERIZE THE MARKET ENVIRONMENT FOR INVESTORS? A: For the 12 months ending August 31, 2004, the market environment was favorable due to significant earnings growth powered by a recovering economy and the continuation of a low interest rate environment. During this period, the market's main concerns were rising commodity prices and interest rates. In particular, the price of oil rose above $40 per barrel and at times approached $50 driven by strong demand in Asia and speculation among investors. As the economy continued its recovery, the Federal Reserve began to raise short-term interest rates to more normal levels. An interest rate increase generally has a negative effect on market valuation. In the end, modest valuation and strong earnings growth overcame these negative factors and produced excellent market returns for the year. Q: WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE DURING THE 12 MONTHS ENDED AUGUST 31, 2004? A: During the Fund's fiscal year, the Fund underperformed its benchmark, the Russell 1000 Value Index, largely because the Fund was overweighted in industries that didn't experience strong performance such as semiconductors and health care, and the Fund was underweighted in industries that performed well such as utilities and Real Estate Investment Trusts (REITs). In addition, certain stocks in the portfolio performed especially poorly during the fiscal year. In particular, technology holdings such as Vishay, AVX and National Semiconductor were caught in the general downdraft of technology stocks. Also, other stocks held, such as Omnicare and Marvel Enterprises, significantly revised their business prospects downward. Q: WHAT ARE YOU DOING TO ADDRESS THE FUND'S PERFORMANCE? A: We have not changed our investment philosophy which has been successful over the long term. We like to purchase stocks that are undervalued and, at the same time, showing early signs of business momentum. We tend to sell stocks that are fully valued or as business conditions change. We have modified our relative weightings in several industries to reflect our current views, and we continue to monitor the environment, performance and risk closely. 17 Phoenix-Oakhurst Value Equity Fund (continued) Q: WHAT IS YOUR ECONOMIC AND MARKET OUTLOOK FOR THE NEXT SIX TO 12 MONTHS? A: We feel the next 12 months will be characterized by an environment of continued gradual interest rate increases and modest economic growth. Corporate profits may experience slower growth. As long as inflation is under control, we believe the market will enter into a stable, but low return period. SEPTEMBER 2004 THE PRECEDING INFORMATION IS THE OPINION OF PORTFOLIO MANAGEMENT. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE IS NO GUARANTEE THAT MARKET FORECASTS WILL BE REALIZED. 1 FOR DEFINITIONS OF THE INDEXES CITED AND CERTAIN INVESTMENT TERMS USED IN THIS REPORT, SEE THE GLOSSARY ON PAGE 3. 18 Phoenix-Oakhurst Value Equity Fund
- -------------------------------------------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS 1 PERIODS ENDING 8/31/04 - -------------------------------------------------------------------------------------------------------------------- INCEPTION INCEPTION 1 YEAR 5 YEARS TO 8/31/04 DATE -------- --------- ---------- ------------ Class A Shares at NAV 2 6.71% 2.43% 4.77% 11/5/97 Class A Shares at POP 3 0.58 1.22 3.87 11/5/97 Class B Shares at NAV 2 5.95 1.65 3.98 11/5/97 Class B Shares with CDSC 4 1.95 1.65 3.98 11/5/97 Class C Shares at NAV 2 5.94 1.67 3.99 11/5/97 Class C Shares with CDSC 4 5.94 1.67 3.99 11/5/97 S&P 500(R) Index 11.45 (2.05) 3.88 11/5/97 Russell 1000(R) Value Index 17.52 3.25 6.13 11/5/97
- -------------------------------------------------------------------------------- GROWTH OF $10,000 PERIODS ENDING 8/31 - -------------------------------------------------------------------------------- This Growth of $10,000 chart assumes an initial investment of $10,000 made on 11/5/97 (inception of the Fund) in Class A, Class B and Class C shares. The total return for Class A shares reflects the maximum sales charge of 5.75% on the initial investment. The total return for Class B shares reflects the CDSC charges which decline from 5% to 0% over a five year period. The total return for Class C shares reflects the CDSC charges which are 1% in the first year and 0% thereafter. Performance assumes dividends and capital gains are reinvested. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Phoenix Phoenix Phoenix Oakhurst Value Oakhurst Value Oakhurst Value Russell 1000(R) Equity Fund Equity Fund Equity Fund Value S&P 500(R) Class A 5 Class B 5 Class C 5 Index Index 11/4/97 9425 10000 10000 10000 10000 8/31/98 8456 8908 8914 9831 10286 8/31/99 11491 12031 12027 12788 14388 8/31/00 14261 14808 14813 13320 16746 8/31/01 13305 13709 13715 13171 12662 8/31/02 11312 11575 11581 11441 10383 8/31/03 12140 12320 12330 12771 11638 8/31/04 12955 13053 13063 15008 12971
- -------------------------------------------------------------------------------- SECTOR WEIGHTINGS 8/31/04 - -------------------------------------------------------------------------------- As a percentage of total investments [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Financials 28% Industrials 18 Consumer Discretionary 12 Telecommunication Services 8 Energy 8 Health Care 7 Consumer Staples 6 Other 13 1 Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gains distributions. 2 "NAV" (Net Asset Value) total returns do not include the effect of any sales charge. 3 "POP" (Public Offering Price) total returns include the effect of the maximum front-end 5.75% sales charge. 4 CDSC (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC charges for B shares decline from 5% to 0% over a five year period. CDSC charges for Class C shares are 1% in the first year and 0% thereafter. 5 This chart includes application of initial sales charges on Class A shares and applicable CDSC charges for Class B and Class C shares since inception. For information regarding indexes, see the glossary on page 3. ALL RETURNS REPRESENT PAST PERFORMANCE WHICH IS NO GUARANTEE OF FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE SHOWN. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PLEASE VISIT PHOENIXINVESTMENTS.COM FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END. 19 Phoenix-Oakhurst Value Equity Fund ABOUT YOUR FUND'S EXPENSES As a shareholder of the Value Equity Fund, you incur two types of costs: (1) transaction costs, including sales charges on purchases of Class A shares and contingent deferred sales charges on Class B and Class C shares; and (2) ongoing costs, including investment advisory fees; distribution and service fees; and other expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period. ACTUAL EXPENSES The first line of the accompanying tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the accompanying tables provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges or contingent deferred sales charges. Therefore, the second line of the accompanying tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Beginning Ending Expenses Paid Value Equity Fund Account Value Account Value During Class A March 1, 2004 August 31, 2004 Period* - ----------------------- ---------------- ----------------- --------------- Actual $1,000.00 $ 958.60 $6.15 Hypothetical (5% return before expenses) 1,000.00 1,018.77 6.36 * EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 1.25%, WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS A RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED AUGUST 31, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 6.71%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT AUGUST 31, 2004 OF $1,067.10. Beginning Ending Expenses Paid Value Equity Fund Account Value Account Value During Class B March 1, 2004 August 31, 2004 Period* - ----------------------- ---------------- ----------------- --------------- Actual $1,000.00 $ 954.80 $ 9.83 Hypothetical (5% return before expenses) 1,000.00 1,014.96 10.18 * EXPENSES ARE EQUAL TO THE FUND'S CLASS B ANNUALIZED EXPENSE RATIO OF 2.00%, WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS B RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED AUGUST 31, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 5.95%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT AUGUST 31, 2004 OF $1,059.50. Beginning Ending Expenses Paid Value Equity Fund Account Value Account Value During Class C March 1, 2004 August 31, 2004 Period* - ----------------------- ---------------- ----------------- --------------- Actual $1,000.00 $ 954.80 $ 9.83 Hypothetical (5% return before expenses) 1,000.00 1,014.96 10.18 * EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 2.00%, WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS C RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED AUGUST 31, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 5.94%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT AUGUST 31, 2004 OF $1,059.50. 20 Phoenix-Oakhurst Value Equity Fund - -------------------------------------------------------------------------------- TEN LARGEST HOLDINGS AT AUGUST 31, 2004 (AS A PERCENTAGE OF NET ASSETS) - -------------------------------------------------------------------------------- 1. Bank of America Corp. 5.6% 6. J.P. Morgan Chase & Co. 3.7% 2. Exxon Mobil Corp. 4.4% 7. Wells Fargo & Co. 3.5% 3. General Electric Co. 4.0% 8. SBC Communications, Inc. 2.9% 4. Time Warner, Inc. 3.7% 9. Mellon Financial Corp. 2.5% 5. Verizon Communications, Inc. 3.7% 10. Merrill Lynch & Co., Inc. 2.4% - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS AT AUGUST 31, 2004 SHARES VALUE -------- ------------ DOMESTIC COMMON STOCKS--95.3% ADVERTISING--1.1% Harte-Hanks, Inc. .................................. 27,200 $ 674,832 AEROSPACE & DEFENSE--1.7% United Technologies Corp. .......................... 10,800 1,014,228 AIR FREIGHT & COURIERS--2.8% FedEx Corp. ........................................ 6,500 532,935 Ryder System, Inc. ................................. 25,400 1,112,774 ------------ 1,645,709 ------------ APPLICATION SOFTWARE--0.4% Intuit, Inc.(b) .................................... 4,900 207,221 ASSET MANAGEMENT & CUSTODY BANKS--3.8% Bank of New York Co., Inc. (The) ................... 25,600 762,880 Mellon Financial Corp. ............................. 51,800 1,494,948 ------------ 2,257,828 ------------ CASINOS & GAMING--1.2% Caesars Entertainment, Inc.(b) ..................... 47,900 740,055 COMPUTER STORAGE & PERIPHERALS--0.6% EMC Corp.(b) ....................................... 33,800 364,026 CONSTRUCTION & ENGINEERING--1.0% Jacobs Engineering Group, Inc.(b) .................. 14,500 567,095 CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS--1.5% Deere & Co. ........................................ 14,500 917,415 DATA PROCESSING & OUTSOURCED SERVICES--2.6% Fiserv, Inc.(b) .................................... 40,000 1,391,200 Hewitt Associates, Inc. Class A(b) ................. 6,600 174,306 ------------ 1,565,506 ------------ SHARES VALUE -------- ------------ DIVERSIFIED BANKS--10.6% Bank of America Corp. .............................. 74,016 $ 3,329,240 U.S. Bancorp ....................................... 28,300 834,850 Wells Fargo & Co. .................................. 35,800 2,103,250 ------------ 6,267,340 ------------ DIVERSIFIED CHEMICALS--1.2% Du Pont (E.I.) de Nemours & Co. .................... 17,000 718,420 DIVERSIFIED COMMERCIAL SERVICES--1.2% ARAMARK Corp. Class B .............................. 28,300 716,273 DRUG RETAIL--1.7% CVS Corp. .......................................... 24,500 980,000 ELECTRIC UTILITIES--1.3% Entergy Corp. ...................................... 12,800 771,840 EMPLOYMENT SERVICES--1.5% Manpower, Inc. ..................................... 12,700 536,321 Robert Half International, Inc. .................... 15,500 379,750 ------------ 916,071 ------------ FOOTWEAR--0.7% NIKE, Inc. Class B ................................. 5,800 436,798 HEALTH CARE DISTRIBUTORS--1.2% McKesson Corp. ..................................... 23,900 739,705 HEALTH CARE EQUIPMENT--3.2% DENTSPLY International, Inc. ....................... 13,900 708,205 Fisher Scientific International, Inc.(b) ........... 20,400 1,162,188 ------------ 1,870,393 ------------ HEALTH CARE FACILITIES--1.5% Manor Care, Inc. ................................... 29,200 895,564 HOTELS, RESORTS & CRUISE LINES--2.2% Marriott International, Inc. Class A ............... 27,400 1,300,130 See Notes to Financial Statements 21 Phoenix-Oakhurst Value Equity Fund SHARES VALUE -------- ------------ HOUSEHOLD PRODUCTS--2.6% Clorox Co. (The) ................................... 12,800 $ 676,352 Procter & Gamble Co. (The) ......................... 15,300 856,341 ------------ 1,532,693 ------------ INDUSTRIAL CONGLOMERATES--4.0% General Electric Co. ............................... 71,700 2,351,043 INDUSTRIAL GASES--0.4% Airgas, Inc. ....................................... 10,400 231,400 INSURANCE BROKERS--0.5% Willis Group Holdings Ltd. ......................... 8,800 307,736 INTEGRATED OIL & GAS--5.5% ChevronTexaco Corp. ................................ 6,500 633,750 Exxon Mobil Corp. .................................. 56,500 2,604,650 ------------ 3,238,400 ------------ INTEGRATED TELECOMMUNICATION SERVICES--7.6% CenturyTel, Inc. ................................... 18,900 608,391 SBC Communications, Inc. ........................... 67,500 1,740,825 Verizon Communications, Inc. ....................... 55,600 2,182,300 ------------ 4,531,516 ------------ INVESTMENT BANKING & BROKERAGE--5.1% Goldman Sachs Group, Inc. (The) .................... 5,300 475,145 Merrill Lynch & Co., Inc. .......................... 27,900 1,424,853 Morgan Stanley ..................................... 21,900 1,110,987 ------------ 3,010,985 ------------ LEISURE PRODUCTS--1.6% Brunswick Corp. .................................... 16,100 632,891 Marvel Enterprises, Inc.(b) ........................ 23,300 341,811 ------------ 974,702 ------------ LIFE & HEALTH INSURANCE--1.3% Prudential Financial, Inc. ......................... 16,300 752,734 MOVIES & ENTERTAINMENT--4.7% Time Warner, Inc.(b) ............................... 135,600 2,217,060 Walt Disney Co. (The) .............................. 26,600 597,170 ------------ 2,814,230 ------------ MULTI-UTILITIES & UNREGULATED POWER--1.6% Constellation Energy Group, Inc. ................... 15,600 641,160 MDU Resources Group, Inc. .......................... 12,100 306,977 ------------ 948,137 ------------ SHARES VALUE -------- ------------ OIL & GAS DRILLING--0.6% Patterson-UTI Energy, Inc. ......................... 21,600 $ 374,112 OIL & GAS EQUIPMENT & SERVICES--0.5% Baker Hughes, Inc. ................................. 7,500 294,975 OIL & GAS EXPLORATION & PRODUCTION--1.0% Anadarko Petroleum Corp. ........................... 10,000 592,200 OTHER DIVERSIFIED FINANCIAL SERVICES--4.7% Citigroup, Inc. .................................... 13,300 619,514 J.P. Morgan Chase & Co. ............................ 54,808 2,169,301 ------------ 2,788,815 ------------ PACKAGED FOODS & MEATS--2.1% Heinz (H.J.) Co. ................................... 16,200 614,142 Kellogg Co. ........................................ 15,200 638,096 ------------ 1,252,238 ------------ PHARMACEUTICALS--1.0% Wyeth .............................................. 16,400 599,748 PROPERTY & CASUALTY INSURANCE--0.9% St. Paul Travelers Cos., Inc. (The) ................ 14,692 509,665 RAILROADS--2.9% Norfolk Southern Corp. ............................. 44,400 1,260,960 Union Pacific Corp. ................................ 7,600 434,036 ------------ 1,694,996 ------------ RESTAURANTS--0.8% Yum! Brands, Inc. .................................. 12,500 496,375 SYSTEMS SOFTWARE--1.6% Microsoft Corp. .................................... 35,100 958,230 TRUCKING--1.3% Yellow Roadway Corp.(b) ............................ 18,400 755,136 - ---------------------------------------------------------------------------- TOTAL DOMESTIC COMMON STOCKS (IDENTIFIED COST $51,673,523) 56,576,515 - ---------------------------------------------------------------------------- 22 See Notes to Financial Statements Phoenix-Oakhurst Value Equity Fund SHARES VALUE -------- ------------ FOREIGN COMMON STOCKS(c)--0.9% PROPERTY & CASUALTY INSURANCE--0.9% ACE Ltd. (Bermuda) ................................. 14,600 $ 562,830 - ---------------------------------------------------------------------------- TOTAL FOREIGN COMMON STOCKS (IDENTIFIED COST $491,562) 562,830 - ---------------------------------------------------------------------------- EXCHANGE TRADED FUNDS--1.2% iShares Russell 1000 Value Index Fund .............. 11,800 708,354 - ---------------------------------------------------------------------------- TOTAL EXCHANGE TRADED FUNDS (IDENTIFIED COST $644,917) 708,354 - ---------------------------------------------------------------------------- TOTAL LONG TERM INVESTMENTS--97.4% (IDENTIFIED COST $52,810,002) 57,847,699 - ---------------------------------------------------------------------------- STANDARD & POOR'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- SHORT-TERM OBLIGATIONS--3.0% COMMERCIAL PAPER--3.0% UBS Finance Delaware LLC 1.57%, 9/1/04 .. A-1+ $1,785 $ 1,785,000 - ---------------------------------------------------------------------------- TOTAL SHORT-TERM OBLIGATIONS (IDENTIFIED COST $1,785,000) 1,785,000 - ---------------------------------------------------------------------------- TOTAL INVESTMENTS--100.4% (IDENTIFIED COST $54,595,002) 59,632,699(a) Other assets and liabilities, net--(0.4)% (260,040) ----------- NET ASSETS--100.0% $59,372,659 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $5,941,345 and gross depreciation of $1,200,834 for federal income tax purposes. At August 31, 2004, the aggregate cost of securities for federal income tax purposes was $54,892,188. (b) Non-income producing. (c) Foreign Common Stocks are determined based on the country in which the security is issued. The country of risk, noted parenthetically, is determined based on criteria described in Note 2G "Foreign security country determination" in the Notes to Financial Statements. See Notes to Financial Statements 23 Phoenix-Oakhurst Value Equity Fund STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 2004 ASSETS Investment securities at value (Identified cost $54,595,002) $ 59,632,699 Cash 417 Receivables Investment securities sold 223,357 Dividends and interest 73,943 Fund shares sold 17,661 Prepaid expenses 11,183 ------------ Total assets 59,959,260 ------------ LIABILITIES Payables Fund shares repurchased 291,471 Investment securities purchased 131,915 Investment advisory fee 48,269 Professional fees 34,925 Transfer agent fee 30,901 Distribution and service fees 29,278 Financial agent fee 6,020 Trustees' fee 1,131 Accrued expenses 12,691 ------------ Total liabilities 586,601 ------------ NET ASSETS $ 59,372,659 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest $ 73,275,886 Accumulated net realized loss (18,940,924) Net unrealized appreciation 5,037,697 ------------ NET ASSETS $ 59,372,659 ============ CLASS A Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $32,858,998) 2,726,082 Net asset value per share $12.05 Offering price per share $12.05/(1-5.75%) $12.79 CLASS B Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $13,247,233) 1,139,574 Net asset value and offering price per share $11.62 CLASS C Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $13,266,428) 1,140,488 Net asset value and offering price per share $11.63 STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 2004 INVESTMENT INCOME Dividends $ 1,018,462 Interest 15,437 Foreign taxes withheld (1,204) ----------- Total investment income 1,032,695 ----------- EXPENSES Investment advisory fee 483,009 Service fees, Class A 90,023 Distribution and service fees, Class B 148,053 Distribution and service fees, Class C 135,868 Financial agent fee 73,050 Transfer agent 163,789 Professional 35,074 Trustees 33,528 Printing 26,563 Custodian 18,531 Registration 17,253 Miscellaneous 13,467 ----------- Total expenses 1,238,208 Less expenses reimbursed by investment adviser (220,252) ----------- Net expenses 1,017,956 ----------- NET INVESTMENT INCOME 14,739 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities 6,012,009 Net change in unrealized appreciation (depreciation) on investments (1,758,372) ----------- NET GAIN ON INVESTMENTS 4,253,637 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,268,376 =========== 24 See Notes to Financial Statements Phoenix-Oakhurst Value Equity Fund STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended 8/31/04 8/31/03 ------------ ------------ FROM OPERATIONS Net investment income (loss) $ 14,739 $ 496,711 Net realized gain (loss) 6,012,009 (6,218,723) Net change in unrealized appreciation (depreciation) (1,758,372) 7,942,711 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,268,376 2,220,699 ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income, Class A (123,233) (283,597) Net investment income, Class B (30,551) (39,301) Net investment income, Class C (28,415) (42,475) ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (182,199) (365,373) ------------ ------------ FROM SHARE TRANSACTIONS CLASS A Proceeds from sales of shares (614,291 and 891,000 shares, respectively) 7,356,934 8,885,100 Net asset value of shares issued from reinvestment of distributions (10,049 and 24,886 shares, respectively) 118,886 267,903 Cost of shares repurchased (1,192,023 and 1,758,338 shares, respectively) (14,324,559) (17,230,551) ------------ ------------ Total (6,848,739) (8,077,548) ------------ ------------ CLASS B Proceeds from sales of shares (145,182 and 189,176 shares, respectively) 1,682,300 1,850,017 Net asset value of shares issued from reinvestment of distributions (2,377 and 2,789 shares, respectively) 27,241 29,746 Cost of shares repurchased (496,749 and 1,494,049 shares, respectively) (5,708,222) (14,264,891) ------------ ------------ Total (3,998,681) (12,385,128) ------------ ------------ CLASS C Proceeds from sales of shares (248,897 and 170,326 shares, respectively) 2,920,735 1,652,857 Net asset value of shares issued from reinvestment of distributions (2,239 and 3,218 shares, respectively) 25,685 34,338 Cost of shares repurchased (511,506 and 629,913 shares, respectively) (5,893,378) (6,096,181) ------------ ------------ Total (2,946,958) (4,408,986) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS (13,794,378) (24,871,662) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS (9,708,201) (23,016,336) NET ASSETS Beginning of period 69,080,860 92,097,196 ------------ ------------ END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $0 AND $181,756, RESPECTIVELY] $ 59,372,659 $ 69,080,860 ============ ============
See Notes to Financial Statements 25 Phoenix-Oakhurst Value Equity Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A --------------------------------------------------------------------------- YEAR ENDED AUGUST 31 --------------------------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.33 $10.64 $12.76 $15.03 $12.11 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) 0.04 0.11 0.08 0.08 0.03 Net realized and unrealized gain (loss) 0.72 0.66 (1.97) (0.93) 2.89 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.76 0.77 (1.89) (0.85) 2.92 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income (0.04) (0.08) (0.08) -- -- Distributions from net realized gains -- -- (0.15) (1.42) -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.04) (0.08) (0.23) (1.42) -- ------ ------ ------ ------ ------ Change in net asset value 0.72 0.69 (2.12) (2.27) 2.92 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $12.05 $11.33 $10.64 $12.76 $15.03 ====== ====== ====== ====== ====== Total return(2) 6.71% 7.31% (14.97)% (6.71)% 24.11% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $32,859 $37,310 $43,993 $58,260 $37,977 RATIO TO AVERAGE NET ASSETS OF: Net operating expense 1.25% 1.25%(3) 1.25 %(3) 1.25 %(3) 1.25%(3) Gross operating expenses (4) 1.59% 1.63% 1.49 % 1.38 % 1.47% Net investment income 0.35% 1.06% 0.64 % 0.53 % 0.20% Portfolio turnover 200% 349% 166 % 249 % 193% CLASS B --------------------------------------------------------------------------- YEAR ENDED AUGUST 31 --------------------------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of period $10.99 $10.35 $12.42 $14.77 $12.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) (0.05) 0.04 (0.01) (0.03) (0.08) Net realized and unrealized gain (loss) 0.70 0.63 (1.91) (0.90) 2.85 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.65 0.67 (1.92) (0.93) 2.77 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income (0.02) (0.03) -- -- -- Distributions from net realized gains -- -- (0.15) (1.42) -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.02) (0.03) (0.15) (1.42) -- ------ ------ ------ ------ ------ Change in net asset value 0.63 0.64 (2.07) (2.35) 2.77 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $11.62 $10.99 $10.35 $12.42 $14.77 ====== ====== ====== ====== ====== Total return(2) 5.95 % 6.44% (15.57)% (7.42)% 23.08 % RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $13,247 $16,363 $28,873 $36,669 $26,471 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 2.00 % 2.00%(3) 2.00 %(3) 2.00 %(3) 2.00 %(3) Gross operating expenses (4) 2.34 % 2.38% 2.24 % 2.13 % 2.22 % Net investment income (loss) (0.40)% 0.37% (0.11)% (0.22)% (0.57)% Portfolio turnover 200 % 349% 166 % 249 % 193 % (1) Computed using average shares outstanding. (2) Maximum sales charges are not reflected in total return calculation. (3) The ratio of net operating expenses to average net assets includes reimbursements or waivers and excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (4) The ratio of gross operating expenses to average net assets is prior to the reduction of any reimbursements, waivers, or expense offsets.
26 See Notes to Financial Statements Phoenix-Oakhurst Value Equity Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS C --------------------------------------------------------------------------- YEAR ENDED AUGUST 31 --------------------------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of period $11.00 $10.35 $12.43 $14.78 $12.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) (0.05) 0.03 (0.01) (0.03) (0.07) Net realized and unrealized gain (loss) 0.70 0.65 (1.92) (0.90) 2.85 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.65 0.68 (1.93) (0.93) 2.78 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income (0.02) (0.03) -- -- -- Distributions from net realized gains -- -- (0.15) (1.42) -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.02) (0.03) (0.15) (1.42) -- ------ ------ ------ ------ ------ Change in net asset value 0.63 0.65 (2.08) (2.35) 2.78 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $11.63 $11.00 $10.35 $12.43 $14.78 ====== ====== ====== ====== ====== Total return(2) 5.94 % 6.47% (15.56)% (7.41)% 23.17 % RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $13,266 $15,408 $19,231 $23,409 $12,590 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 2.00 % 2.00%(3) 2.00 %(3) 2.00 %(3) 2.00 %(3) Gross operating expenses (4) 2.34 % 2.38% 2.24 % 2.13 % 2.22 % Net investment income (loss) (0.40)% 0.31% (0.11)% (0.22)% (0.52)% Portfolio turnover 200 % 349% 166 % 249 % 193 % (1) Computed using average shares outstanding. (2) Maximum sales charges are not reflected in total return calculation. (3) The ratio of net operating expenses to average net assets includes reimbursements or waivers and excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. (4) The ratio of gross operating expenses to average net assets is prior to the reduction of any reimbursements, waivers, or expense offsets.
See Notes to Financial Statements 27 PHOENIX INVESTMENT TRUST 97 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2004 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 an open-end management investment company. Currently, two funds are offered for sale (each a "Fund"), Phoenix Small Cap Value Fund is diversified and seeks long-term capital appreciation. Phoenix-Oakhurst Value Equity Fund is diversified and its primary investment objective is to seek long-term capital appreciation and its secondary objective is to seek current income. 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. Each class of shares has identical voting, dividend, liquidation and other rights and the same terms and conditions, except that each class bears different distribution and/or service expenses and has exclusive voting rights with respect to its distribution plan. Income and expenses and realized and unrealized gains and losses of each Fund are borne pro rata by the holders of each class of shares. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, 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. As required some securities and assets are valued at fair value as determined in good faith by or under the direction of the Trustees. Certain foreign common stocks may be fair valued in cases where closing prices are not readily available or are deemed not reflective of readily available market prices. For example, significant events (such as movement in the U.S. securities market, or other regional and local developments) may occur between the time that foreign markets close (where the security is principally traded) and the time that the Fund calculates its net asset value (generally, the close of the NYSE) that may impact the value of securities traded in these foreign markets. In these cases, information from an external vendor may be utilized to adjust closing market prices of certain foreign common stocks to reflect their fair value. Because the frequency of significant events is not predictable, fair valuation of certain foreign common stocks may occur on a frequent basis. Short-term investments having a remaining maturity of 60 days or less are valued at amortized cost, which approximates market. B. SECURITY TRANSACTIONS AND RELATED INCOME: Security transactions are recorded on the trade date. Dividend income is recorded on the ex-dividend date, or in the case of certain foreign securities, as soon as the Fund is notified. Interest income is recorded on the accrual basis. Each Fund amortizes premiums and accretes discounts using the effective interest method. Realized gains and losses are determined on the identified cost basis. C. INCOME TAXES: Each Fund is treated as a separate taxable entity. It is the policy of each Fund in the Trust to comply with the requirements of Subchapter M of the Internal Revenue Code (the "Code") 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, operating losses and losses deferred due to wash sales. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to capital paid in on shares of beneficial interest. 28 PHOENIX INVESTMENT TRUST 97 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2004 (CONTINUED) 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 Funds do 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. F. EXPENSES: Expenses incurred 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. G. FOREIGN SECURITY COUNTRY DETERMINATION: A combination of the following criteria is used to assign the countries of risk listed in the schedules of investments: country of incorporation, actual building address, primary exchange on which security is traded and country in which the greatest percentage of company revenue is generated. 3. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS As compensation for its services to the Trust, Phoenix Investment Counsel, Inc. (the "Adviser"), an indirect wholly-owned subsidiary of The Phoenix Companies, Inc. ("PNX"), is entitled to a fee based upon the following annual rates as a percentage of the average daily net assets of each Fund: 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, 2004, 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% The Adviser will not seek to recapture any prior years' reimbursed or waived investment advisory fees. Effective January 27, 2004, Phoenix/Zweig Advisers LLC ("PZA") is the subadviser to the Small Cap Value Fund. For its services, PZA is paid a fee by the Adviser equal to 0.10% of the average daily net assets of this Fund up to $166 million and 0.40% in excess of $166 million. PZA is a wholly-owned subsidiary of PNX. As Distributor of the Trust's shares, Phoenix Equity Planning Corporation ("PEPCO"), an indirect wholly-owned subsidiary of PNX, has advised the Trust that it retained net selling commissions and deferred sales charges for the period ended August 31, 2004 as follows: Class A Class B Class C Net Selling Deferred Deferred Commissions Sales Charges Sales Charges ----------- ------------- ------------- Small Cap Value Fund ................ $9,090 $111,438 $4,882 Value Equity Fund ................... 6,168 69,410 1,017 In addition to these amounts, for the period September 1, 2003 to May 31, 2004, 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 ................ $5,190 Value Equity Fund ................... 4,567 W.S. Griffith Securities, Inc. no longer writes any business for the Funds. 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. PEPCO has advised the Trust of the following information for the period ended August 31, 2004: Distribution Distribution Distribution and/or and/or and/or Service Fees Service Fees Service Fees Paid to Paid to Retained by Unaffiliated W.S. Griffith Distributor Participants Securities, Inc.(1) --------------- ---------------- ---------------------- Small Cap Value Fund .... $524,112 $767,478 $9,645 Value Equity Fund ....... 166,117 197,870 9,957 (1) For the period ended May 31, 2004. Under certain circumstances, shares of certain Phoenix Funds may be exchanged for shares of the same class of certain other Phoenix Funds on the basis of the relative net asset values per share at the time of the exchange. On exchanges with share classes that carry a contingent deferred sales charge, the CDSC schedule of the original shares purchased continues to apply. As Financial Agent of the Trust, PEPCO receives a financial agent fee equal to the sum of (1) the documented cost to PEPCO to provide tax services and oversight of the performance of PFPC Inc. (subagent 29 PHOENIX INVESTMENT TRUST 97 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2004 (CONTINUED) to PEPCO), plus (2) the documented cost of fund accounting and related services provided by PFPC Inc. The fee schedule of PFPC Inc. ranges from 0.065% to 0.03% of the average daily net asset values of each Fund. Certain minimum fees may apply. For the period ended August 31, 2004, the Trust incurred PEPCO financial agent fees totaling $234,120. PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust Company serving as sub-transfer agent. For the period ended August 31, 2004, transfer agent fees were $650,077 as reported in the Statement of Operations, of which PEPCO retained the following: Transfer Agent Fee Retained ---------------- Small Cap Value Fund .......................................... $211,203 Value Equity Fund ............................................. 46,667 For the period ended August 31, 2004, the following Funds paid PXPSecurities Corp., an indirect, wholly-owned subsidiary of PNX, brokerage commissions in connection with portfolio transactions effected on behalf of the Funds as follows: Commissions Paid to PXP Securities Corp. --------------------- Small Cap Value Fund ................................... $21,032 Value Equity Fund ...................................... 27,794 4. PURCHASES AND SALES OF SECURITIES Purchases and sales of securities during the period ended August 31, 2004 (excluding U.S. Government and agency securities and short-term securities) were as follows: Purchases Sales ------------ ------------ Small Cap Value Fund ............................. $294,478,488 $333,348,438 Value Equity Fund ................................ 125,673,638 139,951,326 There were no purchases or sales of long-term U.S. Government and agency securities during the period ended August 31, 2004. 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. Certain funds may invest a high percentage of their assets in specific sectors of the market in their pursuit of a greater investment return. Fluctuations in these sectors of concentration may have a greater impact on a fund, positive or negative, than if a fund did not concentrate its investments in such sectors. High yield/high risk debt securities typically entail greater price volatility and/or principal and interest rate risk. There is a greater chance that an issuer will not be able to make principal and interest payments on time. Analysis of the creditworthiness of issuers of high yield securities may be complex, and as a result, it may be more difficult for the Adviser to accurately predict risk. 6. ILLIQUID SECURITIES Investments shall be considered illiquid if they cannot be disposed of in seven days in the ordinary course of business at the approximate amount at which such securities have been valued by the Fund. Additionally, the following information is also considered in determining illiquidity: the frequency of trades and quotes for the investment, whether the investment is listed for trading on a recognized domestic exchange and/or whether two or more brokers are willing to purchase or sell the security at a comparable price, the extent of market making activity in the investment and the nature of the market for investment. Illiquid securities are footnoted as such at the end of the Fund's Schedule of Investments where applicable. 7. 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 .................. $ -- $ 3,061,298 $ 3,061,298 Value Equity Fund ..................... 1,868,023 16,397,090 18,265,113 A 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. For the period ended August 31, 2004, the Small Cap Value Fund and the Value Equity Fund utilized losses deferred in prior years against current year capital gains of $30,026,402 and $4,728,989, respectively. Under the current tax law, foreign currency and capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. For the period ended August 31, 2004, the Trust deferred and recognized post-October capital losses as follows: Deferred Recognized ------------ -------------- Small Cap Value Fund $ -- $ -- Value Equity Fund 378,625 12,419 The components of distributable earnings on a tax basis (excluding unrealized appreciation (depreciation) which is disclosed in the Schedules of Investments) consist of undistributed ordinary income of $0 for the Small Cap Value Fund and $0 for the Value Equity Fund, and 30 PHOENIX INVESTMENT TRUST 97 NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2004 (CONTINUED) undistributed long-term capital gains of $0 for the Small Cap Value Fund and $0 for the Value Equity Fund. 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. 8. RECLASSIFICATION OF CAPITAL ACCOUNTS For financial reporting purposes, book basis capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Permanent reclassifications can arise primarily from differing treatments of certain income and gain transactions, nondeductible current year operating losses, expiring capital loss carryovers, and investments in passive foreign investment companies. The reclassifications have no impact on the net assets or net asset value of the Funds. For the period ended August 31, 2004 the Funds recorded reclassifications to increase (decrease) the accounts listed below: Capital Paid in on Shares of Accumulated Undistributed Beneficial Net Realized Net Investment Interest Gain (Loss) Income (Loss) ------------- -------------- ---------------- Small Cap Value Fund ............ $(1,475,984) $(100,869) $1,576,853 Value Equity Fund ............... (9,215) 23,511 (14,296) 9. OTHER Effective October 31, 2003, the Small Cap Value Fund changed its name from Phoenix-Hollister Small Cap Value Fund to Phoenix Small Cap Value Fund, and the Value Equity Fund changed its name from Phoenix-Hollister Value Equity Fund to Phoenix-Oakhurst Value Equity Fund. Also on this date, portfolio management for the Small Cap Value Fund was assigned to Carlton Neel and David Dickerson, and portfolio management for the Value Equity Fund was assigned to Steven L. Colton and Dong H. Zhang. Prior to this date, both Funds were managed by Christian C. Bertelsen and John LaForge, II. 10. MERGER On April 16, 2004, the Phoenix Small Cap Value Fund ("Small Cap") acquired all of the net assets of the Phoenix Appreciation Fund ("Appreciation") pursuant to an Agreement and Plan of Reorganization approved by the Appreciation shareholders on March 19, 2004. The acquisition was accomplished by a tax-free exchange of 4,064,701 Class A shares of Small Cap, 462,034 Class B shares of Small Cap and 1,970,027 Class C shares of Small Cap (valued at $62,404,841, $6,731,032, and $28,697,143, respectively) for 6,338,617 Class A shares of Appreciation, 723,453 Class B shares of Appreciation and 3,089,535 Class C shares of Appreciation outstanding on April 16, 2004. Appreciation's net assets on that date, $97,833,016, including $8,165,738 appreciation, were combined with those of Small Cap. The aggregate net assets of Small Cap immediately after the merger were $268,632,994. The shareholders of each Class of Appreciation received for each share owned approximately 0.64, 0.64 and 0.64 shares, respectively, for Class A, Class B and Class C shares of the same class of Small Cap. 11. PROXY VOTING PROCEDURES (UNAUDITED) The Adviser and subadviser vote proxies relating to portfolio securities in accordance with procedures that have been approved by the Trust's Board of Trustees. You may obtain a description of these procedures, along with information regarding how the Funds voted proxies during the most recent twelve-month period ended June 30, free of charge, by calling toll-free 800-243-1574. This information is also available through the Securities and Exchange Commission's website at http://www.sec.gov. 12. FORM N-Q INFORMATION (UNAUDITED) The Funds will be filing complete schedules of portfolio holdings with the Securities and Exchange Commission (the "SEC") for the first and third quarters of each fiscal year on Form N-Q. Each Fund's Form N-Q will be available on the SEC's website at http://www.sec.gov. Furthermore, each Fund's Form N-Q may be reviewed and copied at the SEC's Public Reference Room. Information on the operation of the SEC's Public Reference Room can be obtained at http://www.sec.gov/info/edgar/prrules.htm. This is a new filing requirement by the SEC. The initial Form N-Q filing for these Funds will be as of November 30, 2004 and will be available on the SEC's website on or about January 29, 2005. 31 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM [LOGO OMITTED] PRICEWATERHOUSECOOPERS (PWC) To the Board of Trustees of Phoenix Investment Trust 97 and Shareholders of Phoenix Small Cap Value Fund Phoenix-Oakhurst Value Equity Fund In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Phoenix Small Cap Value Fund (formerly Phoenix-Hollister Small Cap Value Fund) and Phoenix-Oakhurst Value Equity Fund (formerly Phoenix-Hollister Value Equity Fund) (constituting Phoenix Investment Trust 97, hereafter referred to as the "Trust") at August 31, 2004 and the results of their operations, the changes in their net assets and their 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. /S/ PricewaterhouseCoopers LLP Boston, Massachusetts October 8, 2004 32 FUND MANAGEMENT (UNAUDITED) 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 35 Chairman, Rittenhouse Advisors, LLC (consulting firm) since 2001. Rittenhouse Advisors, LLC 1997. Trustee/Director, Realty Foundation of New York (1972-present), Pace 101 Park Avenue University (Director/Trustee Emeritus) (1978-present), New York New York, NY 10178 Housing Partnership Development Corp. (Chairman) (1981-present), DOB: 8/2/29 (Director/Trustee) Greater New York Councils, Boy Scouts of America (1985-present), The Academy of Political Science (Vice Chairman) (1985-present), Urstadt Biddle Property Corp. (1989-present), The Harlem Youth Development Foundation, Chairman (1998-2002). Colgate University (Trustee Emeritus) (since 2004). Chairman/Director, 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-present), Union Pacific Corp. (1978-2002), BlackRock Freddie Mac Mortgage Securities Fund (Advisory Director) (1990-2000), Accuhealth (1994-2002). - ------------------------------------------------------------------------------------------------------------------------------------ Harry Dalzell-Payne Served since 35 Currently retired. The Flat, Elmore Court 1997. Elmore, GL0S, GL2 6NT U.K. DOB: 8/9/29 - ------------------------------------------------------------------------------------------------------------------------------------ S. Leland Dill Served since 24 Currently retired. Trustee, Scudder Investments (33 portfolios) 7721 Blue Heron Way 2004. (1986-present). Director, Coutts & Co. Trust Holdings Limited West Palm Beach, FL 33412 (1991-1999), Coutts & Co. Group (1994-1999) and Coutts & Co. DOB: 3/28/30 International (USA) (private banking) (1992-2000). - ------------------------------------------------------------------------------------------------------------------------------------ Francis E. Jeffries Served since 28 Director, The Empire District Electric Company (1984-present). 8477 Bay Colony Dr. #902 1997. Naples, FL 34108 DOB: 9/23/30 - ------------------------------------------------------------------------------------------------------------------------------------ Leroy Keith, Jr. Served since 25 Partner, Stonington Partners, Inc. (private equity fund) since 2001. Stonington Partners, Inc. 1997. Chairman (1995-2000) and Chief Executive Officer (1995-1998), Carson 736 Market Street, Ste. 1430 Products Company (cosmetics). Director/Trustee, Evergreen Funds (six Chattanooga, TN 37402 portfolios). DOB: 2/14/39 - ------------------------------------------------------------------------------------------------------------------------------------
33 FUND MANAGEMENT (UNAUDITED) (CONTINUED)
INDEPENDENT TRUSTEES - ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN FUND COMPLEX PRINCIPAL OCCUPATION(S) NAME, ADDRESS LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND AND DATE OF BIRTH TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE - ------------------------------------------------------------------------------------------------------------------------------------ Geraldine M. McNamara Served since 35 Managing Director, U.S. Trust Company of New York (private bank) U.S. Trust Company of 2001. (1982-present). New York 11 West 54th Street New York, NY 10019 DOB: 4/17/51 - ------------------------------------------------------------------------------------------------------------------------------------ Everett L. Morris Served since 35 Currently retired. Vice President, W.H. Reaves and Company 164 Laird Road 1997. (investment management) (1993-2003). Colts Neck, NJ 07722 DOB: 5/26/28 - ------------------------------------------------------------------------------------------------------------------------------------ Donald B. Romans Served since 24 President, Romans & Company (private investors and financial 39 S. Sheridan Road 2004. consultants) (1987-present). Trustee, Burnham Investors Trust Lake Forest, IL 60045 (5 portfolios) (1967-present). DOB: 4/22/31 - ------------------------------------------------------------------------------------------------------------------------------------ Richard E. Segerson Served since 25 Managing Director, Northway Management Company (1998-present). Northway Management Company LLC 1997. 164 Mason Street Greenwich, CT 06830 DOB: 2/16/46 - ------------------------------------------------------------------------------------------------------------------------------------ Lowell P. Weicker, Jr. Served since 25 Director, Medallion Financial New York (2003-present), Director, 200 Duke Street 1997. UST, Inc. (1995-2004), HPSC Inc. (1995-2004), Compuware Alexandria, VA 22314 (1996-present) and WWF, Inc. (2000-present). President, The Trust DOB: 5/16/31 for America's Health (non-profit) (2001-present). - ------------------------------------------------------------------------------------------------------------------------------------
34 FUND MANAGEMENT (UNAUDITED) (CONTINUED) INTERESTED TRUSTEES Each of the individuals listed below is an "interested person" of the Fund, as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended, and the rules and regulations thereunder.
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF NAME, ADDRESS, PORTFOLIOS IN DATE OF BIRTH FUND COMPLEX PRINCIPAL OCCUPATION(S) AND POSITION(S) WITH LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND TRUST TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE - ------------------------------------------------------------------------------------------------------------------------------------ *Marilyn E. LaMarche Served since 30 Limited Managing Director, Lazard Freres & Co. LLC (1983-present). Lazard Freres & Co. LLC 2002. Director, The Phoenix Companies, Inc. (2001-present) and Phoenix 30 Rockefeller Plaza, Life Insurance Company (1989-present). 59th Floor New York, NY 10020 DOB: 5/11/34 - ------------------------------------------------------------------------------------------------------------------------------------ **Philip R. McLoughlin Served since 71 Consultant, Phoenix Investment Partners, Ltd. (2002-2003). Director, DOB: 10/23/46 1997. PXRE Corporation (Delaware) (1985-present), World Trust Fund (1991-present). Chairman (1997-2002), Director (1995-2002), Vice Chairman and President Chairman (1995-1997) and Chief Executive Officer (1995-2002), Phoenix Investment Partners, Ltd. Consultant (2002-2003), Director and Executive Vice President (2000-2002), The Phoenix Companies, Inc., Director (1994-2002) and Executive Vice President, Investments (1987-2002), Phoenix Life Insurance Company. Director (1983-2002) and Chairman (1995-2002), Phoenix Investment Counsel, Inc. Director (1982-2002) and President (1982-2000), Phoenix Equity Planning Corporation. Chairman and President, Phoenix/Zweig Advisers LLC (2001-2002). Director (2001-2002) and President (April 2002-September 2002), Phoenix Investment Management Company. Director and Executive Vice President, Phoenix Life and Annuity Company (1996-2002). Director (1995-2000) and Executive Vice President and Chief Investment Officer (1994-2002), PHL Variable Insurance Company. Director, Phoenix National Trust Holding Company (2001-2002). Director (1985-2002), Vice President (1986-2002) and Executive Vice President (2002-2002), PM Holdings, Inc. Director, W.S. Griffith Associates, Inc. (1995-2002). Director (1992-2002) and President (1993-1994), W.S. Griffith Securities, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ ***James M. Oates Served since 30 Chairman, Hudson Castle Group, Inc. (formerly IBEX Capital Markets Northeast Partners 1997. Inc.) (financial services) (1997-present). Managing Director, Wydown 150 Federal Street Group (consulting firm) (1994-present). Director, Investors Suite 1000 Financial Service Corporation (1995-present), Investors Bank & Trust Boston, MA 02100 Corporation (1995-present), Plymouth Rubber Co. (1995-2003), Stifel DOB: 5/31/46 Financial (1996-present), Connecticut River Bancorp (1998-present), Connecticut River Bank (1999-present), Trust Company of New Hampshire (2002-present), 1Mind, Inc. (2000-2002) and 1Mind.com (2000-present). Director and Treasurer, Endowment for Health, Inc. (2000-present). Chairman, Emerson Investment Management, Inc. (2000-present). Member, Chief Executives Organization (1996-present). Vice Chairman, Massachusetts Housing Partnership (1994-1999). Director, Blue Cross and Blue Shield of New Hampshire (1994-1999), AIB Govett Funds (1991-2000) and Command Systems, Inc. (1998-2000). Director, Phoenix Investment Partners, Ltd. (1995-2001). - ------------------------------------------------------------------------------------------------------------------------------------ * 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 Phoenix Investment Partners, Ltd. and its affiliates. *** Mr. Oates is being treated as an Interested Trustee due to certain business and financial relationships and investments existing among Mr. Oates, Hudson Castle Group Inc. and The Phoenix Companies, Inc. and certain of its affiliates.
35 FUND MANAGEMENT (UNAUDITED) (CONTINUED)
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 - ------------------------------------------------------------------------------------------------------------------------------------ John F. Sharry Executive Vice President Executive Vice President, Phoenix Investment Partners, Ltd. DOB: 3/28/52 since 1998. (1998-present), President, Phoenix Equity Planning Corporation (2000-present). Executive Vice President, certain funds within the Phoenix Fund Complex (1998-present). - ------------------------------------------------------------------------------------------------------------------------------------ Francis G. Waltman Senior Vice President Vice President, Chief Administrative Officer (2003-present), Senior Vice DOB: 7/27/62 since May 2004. President, Chief Administrative Officer, Private Client Group (1999-2003), Vice President (1995-1999), Phoenix Investment Partners, Ltd. Senior Vice President, Phoenix Fund Complex (2004-present). - ------------------------------------------------------------------------------------------------------------------------------------ Nancy G. Curtiss Treasurer since 1997. Vice President, Fund Accounting (1994-2000), Treasurer (1996-2000), DOB: 11/24/52 Assistant Treasurer (2001-2003), Vice President, Operations (2003-present), Phoenix Equity Planning Corporation. Treasurer, certain funds within the Phoenix Fund Complex (1994-present). - ------------------------------------------------------------------------------------------------------------------------------------ Richard J. Wirth Secretary since 2002; Vice President and Insurance and Investment Products Counsel One American Row Chief Legal Officer (2002-present), Counsel (1993-2002), Phoenix Life Insurance Company. Hartford, CT 06102 since 2003. Secretary (2002-present), Chief Legal Officer (2003-present), certain DOB: 11/14/58 funds within the Phoenix Fund Complex. - ------------------------------------------------------------------------------------------------------------------------------------
36 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 S. Leland Dill Hartford, Connecticut 06115-0480 Francis E. Jeffries Leroy Keith, Jr. SUBADVISER Marilyn E. LaMarche Phoenix/Zweig Advisers LLC Philip R. McLoughlin 900 Third Avenue Geraldine M. McNamara New York, New York 10022 Everett L. Morris James M. Oates PRINCIPAL UNDERWRITER Donald B. Romans Phoenix Equity Planning Corporation Richard E. Segerson 56 Prospect Street Lowell P. Weicker, Jr. Hartford, Connecticut 06115-0480 OFFICERS CUSTODIAN Philip R. McLoughlin, Chairman and President State Street Bank and Trust Company John F. Sharry, Executive Vice President P.O. Box 5501 Francis G. Waltman, Senior Vice President Boston, Massachusetts 02206-5501 Nancy G. Curtiss, Treasurer Richard J. Wirth, Secretary and Chief Legal Officer TRANSFER AGENT Phoenix Equity Planning Corporation 56 Prospect Street Hartford, Connecticut 06115-0480 - --------------------------------------------------- IMPORTANT NOTICE TO SHAREHOLDERS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Securities and Exchange Commission has PricewaterhouseCoopers LLP modified mailing regulations for semiannual and 125 High Street annual shareholder fund reports to allow mutual Boston, Massachusetts 02110 fund companies to send a single copy of these reports to shareholders who share the same HOW TO CONTACT US mailing address. If you would like additional Mutual Fund Services 1-800-243-1574 copies, please call Mutual Fund Services at Advisor Consulting Group 1-800-243-4361 1-800-243-1574. Text Telephone 1-800-243-1926 - --------------------------------------------------- Web site PHOENIXINVESTMENTS.COM
(This page has been left blank intentionally.) (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 OMITTED] PHOENIX INVESTMENT PARTNERS, LTD. A MEMBER OF THE PHOENIX COMPANIES, INC. For more information about Phoenix mutual funds, please call your financial representative or contact us at 1-800-243-4361 or PHOENIXINVESTMENTS.COM. NOT INSURED BY FDIC/NCUA OR ANY FEDERAL GOVERNMENT AGENCY. NO BANK GUARANTEE. NOT A DEPOSIT. MAY LOSE VALUE. PXP 215 (10/04) ITEM 2. CODE OF ETHICS. (a) The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. (c) There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. (d) 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. 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. AUDIT FEES (a) The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $53,040 for 2003 and $53,040 for 2004. AUDIT-RELATED FEES (b) The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item are $0 for 2003 and $0 for 2004. TAX FEES (c) The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $9,500 for 2003 and $9,500 for 2004. "Tax Fees" are those primarily associated with review of the Trust's tax provision and qualification as a regulated investment company (RIC) in connection with audits of the Trust's financial statement, review of year-end distributions by the Fund to avoid excise tax for the Trust, periodic discussion with management on tax issues affecting the Trust, and reviewing and signing the Fund's federal income and excise tax returns. ALL OTHER FEES (d) The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 for 2003 and $0 for 2004. (e)(1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. The Phoenix Investment Trust 97 (the "Fund") Board has adopted policies and procedures with regard to the pre-approval of services provided by PwC. Audit, audit-related and tax compliance services provided to the Fund on an annual basis require specific pre-approval by the Board. As noted above, the Board must also approve other non-audit services provided to the Fund and those non-audit services provided to the Fund's Affiliated Service Providers that relate directly to the operations and financial reporting of the Fund. Certain of these non-audit services that the Board believes are a) consistent with the SEC's auditor independence rules and b) routine and recurring services that will not impair the independence of the independent auditors may be approved by the Board without consideration on a specific case-by-case basis ("general pre-approval"). The Audit Committee has determined that Mr. E. Virgil Conway, Chair of the Audit Committee, may provide pre-approval for such services that meet the above requirements in the event such approval is sought between regularly scheduled meetings. In the event that Mr. Conway determines that the full board should review the request, he has the opportunity to convene a meeting of the Funds Board. In any event, the Board is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. (e)(2) The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows: 2003 2004 (b) N/A N/A (c) 0% 100% (d) N/A N/A (f) The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was less than fifty percent. (g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $294,250 for 2003 and $381,928 for 2004. (h) The registrant's audit committee of the board of directors HAS considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS Not yet applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's 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 12. EXHIBITS. (a)(1) Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. (a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. (a)(3) Not applicable. (b) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) Phoenix Investment Trust 97 -------------------------------------------------------------------- By (Signature and Title)* /s/ Philip R. McLoughlin ------------------------------------------------------- Philip R. McLoughlin, Chairman (principal executive officer) Date November 8, 2004 ---------------------------------------------------------------------------- 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 8, 2004 ---------------------------------------------------------------------------- By (Signature and Title)* /s/ Nancy G. Curtiss ------------------------------------------------------- Nancy G. Curtiss, Treasurer (principal financial officer) Date November 8, 2004 ---------------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CODE ETH 2 g11757_ethics.txt CODE OF ETHICS EX-99.CODE ETH THE "CODE" - ---------- THE CODE OF ETHICS APPLIES TO THE PRINCIPAL EXECUTIVE, FINANCIAL AND ACCOUNTING OFFICERS OF THE PHOENIX COMPANIES, INC. ("PNX"). IT CONSTITUTES THE MAIN PART OF THE PHOENIX CODE OF CONDUCT, WHICH HAS APPLIED TO ALL EMPLOYEES OF PNX AND ITS SUBSIDIARIES FOR MANY YEARS. WE PLAN TO CONTINUE TO REVISE BOTH CODES FROM TIME TO TIME AS NEEDED TO KEEP THEM VIABLE, RELEVANT AND IN COMPLIANCE WITH ALL APPLICABLE LEGISLATIVE AND REGULATORY REQUIREMENTS. COMMITMENT TO SHAREHOLDERS - -------------------------- PHOENIX IS COMMITTED TO PROVIDING SHAREHOLDER VALUE. ONE WAY WE DO THIS IS BY OBSERVING THE HIGHEST STANDARDS OF LEGAL AND ETHICAL CONDUCT IN ALL OF OUR BUSINESS DEALINGS. CONFLICTS OF INTEREST Phoenix expects every employee, officer and director to maintain the highest moral and ethical standards and to avoid conflicts of interest in conducting business activities. A "conflict of interest" occurs when an individual's private interest interferes, or even appears to interfere, in any way with the interests of the corporation as a whole. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her work for the Company objectively and effectively. Conflicts of interest also arise when an employee, officer or director, or a member of his or her family, receives improper personal benefits as a result of his or her position in the Company. Employees requested to serve on the Board of Directors of another company by Phoenix owe a fiduciary duty to Phoenix as well as to the company on whose Board of Directors he or she serves. Where conflicts of interest arise between the interests of Phoenix and the other company, the employee should consult Phoenix's General Counsel for guidance. Moreover, no employee requested to serve on the Board of Directors of another company shall accept fees or other compensation for Board service. In the event the company for which an employee serves as a director requires directors to receive fees, any remuneration received by the employee shall be donated to a charitable organization. The Company will offset any tax consequences incurred by the employee. All conflicts of interest must be disclosed in writing to the Chief Compliance Officer. Employees, officers and directors are required to file a Conflict of Interest Statement annually. Any conflicts of interest that arise following completion of the Conflict of Interest Statement must be promptly reported to the Chief Compliance Officer in writing. CORPORATE OPPORTUNITIES Employees, officers and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. Consequently, employees, officers and directors are prohibited from engaging in the following activities: o Taking for themselves personal opportunities that are discovered through the use of corporate property, information or position; o Using Company property, information or position for personal gain; and o Competing with the Company. INSIDER TRADING AND PERSONAL TRADING Federal securities laws and Company policy prohibit the purchase or sale of securities while in possession of material non-public information and prohibit passing such information on to others. No employee, officer or director may buy or sell Phoenix securities if he or she has material non-public information. This restriction also applies to an employee's spouse, other adults living in the employee's household, and minor children. Employees and their family members also must avoid passing non-public information on to third parties. Information is "material" if a reasonable investor would probably consider the information important in deciding whether to buy, hold or sell securities of the company to which the information relates. Officers are subject to certain restrictions under New York Insurance Law governing ownership of Phoenix stock. Officers and their family members are prohibited from purchasing shares of Phoenix stock for a period of two years from the date of demutualization. All employees with a title of Vice President or higher, plus certain other employees whose positions place them in regular contact with non-public information, are subject to a further restriction as well. These employees may only buy or sell Phoenix securities during "window" periods. No employee, officer or director may buy or sell securities of another company with the knowledge that those securities are being considered for purchase or sale by Phoenix, any of its subsidiaries or any advisory accounts. In the case of any company in which Phoenix owns 10 percent or more of the outstanding equity, no employee (or family member) may make any personal investment without prior approval from the Law Department. Certain employees who are involved with the Company's investment adviser and broker-dealer operations may be required to secure preclearance of and/or report all personal securities transactions. In addition, Phoenix reserves the right to require duplicate confirmations, quarterly transaction reports and prior clearance for any personal securities transactions. If you have any question whether your position requires preclearance or reporting, you should contact the compliance officer for your business area (investment adviser or broker-dealer) or the Corporate Compliance Department. CONFIDENTIALITY Employees are required to maintain the confidentiality of information entrusted to them by the Company or its customers. Disclosure of confidential information is restricted to authorized persons or in situations in which disclosure is legally mandated. Confidential information includes all non-public information that may or may not be of use to competitors, or harmful to the Company or its customers if disclosed, including, but not limited to: internal operating procedures; investment strategies; sales data and customer lists; financial plans; projections; and reports. An employee's obligation to protect confidential information continues even after termination of his or her employment. PROTECTION AND USE OF COMPANY PROPERTY AND ASSETS Employees are given access to Company property to assist them in effectively carrying out their duties to the Company. Company property should only be used for legitimate purposes. All employees should protect the Company's property and ensure its efficient use. Theft, fraud, carelessness and waste have a direct impact on the Company's profitability. Examples of Company property include proprietary and non-public information, equipment, facilities, vehicles, funds and other assets. Improper use or abuse of Company property is prohibited. Expenses to be paid for by the Company, via reimbursement or direct payment, are limited to those expenses that are authorized and related to legitimate business activities. CORPORATE DISCLOSURES As a public company, Phoenix is required to publicly disclose certain information on a regular basis. This includes financial information and other material information about The Phoenix Companies, Inc. It is imperative that such information is disseminated in a consistent manner and in accordance with SEC disclosure requirements and Company policy. In order to ensure that information released is accurate and properly disseminated, only certain individuals are authorized to speak on behalf of the Company. Employees are prohibited from speaking with rating agencies, analysts, investors or the press without obtaining prior authorization from the President and Chief Executive Officer. Employees receiving any such inquiries should refer such individuals to the appropriate area for response: o Press and News Media - All inquiries must be referred to the Senior Vice President, Corporate Communications. o Rating Agencies - All inquiries must be referred to the Chief Financial Officer. o Securities Analysts and Investors - All inquiries must be referred to the Vice President, Investor Relations or the Chief Financial Officer. Employees are prohibited from disclosing any non-public information about the Company's financial performance or commenting on the Company's stock performance. ACCURACY AND RETENTION OF COMPANY RECORDS The integrity of Phoenix's records is vital to the Company's continued success. The altering, falsification or misuse of Company documents is strictly prohibited. Phoenix's business transactions must be accurately recorded on the Company's books and records in accordance with generally accepted accounting principles, any other required accounting basis and established Company policy. Financial information must fairly represent all relevant information. The retention and destruction of Company records shall be in accordance with established Company policies and applicable legal and regulatory requirements. COMMITMENT TO CLIENTS - --------------------- Phoenix upholds its commitment to our clients by conducting our business fairly and honestly, and maintaining the highest ethical standards in all dealings with customers. SAFEGUARDING CUSTOMER ASSETS Employees have an obligation to safeguard the assets of our customers at all times, and to protect them from all forms of misuse. Misappropriation of funds can include theft, fraud, embezzlement or unauthorized borrowing. Employees must not, under any circumstances, misappropriate funds, property or other assets, or assist another individual in doing so. ETHICAL MARKET CONDUCT The Company expects all who are involved in the sales and marketing of its products and services to abide by the following principles: o Conduct business according to high standards of honesty and fairness; o Provide competent and customer-focused sales and service; o Engage in active and fair competition; o Provide clear, honest and fair advertising and sales materials; o Handle customer complaints and disputes in an appropriate and timely manner; and o Monitor sales and service procedures to help ensure compliance with ethical market conduct. PRIVACY AND CONFIDENTIAL PERSONAL INFORMATION It is the responsibility of every employee to maintain the privacy of confidential personal information. Confidential personal information includes non-public financial and health information obtained from consumers and customers in connection with providing a financial product or service. Specific examples of confidential personal information include information concerning assets, income, businesses, estates, financial plans and health. The misuse of confidential personal information could subject Phoenix and its employees to civil liability or criminal penalties. Before releasing confidential information to anyone, employees must make certain that releasing it is permitted under Phoenix's policies or authorized in writing by the person to whom it relates. CUSTOMER COMPLAINTS The Company is committed to fairly and expeditiously handling all customer complaints. All complaints must be handled and reported in accordance with established corporate policies as well as procedures established for the applicable business unit or affiliate. Maintaining centralized records serves not only regulatory authorities with oversight of the Companies, but also provides Phoenix and its affiliates with information to consider areas where changes or improvements are needed. FRAUD The Company strongly supports all efforts to detect and prevent fraud. It believes that only through aggressive action to combat fraud can the Company continue to meet its fundamental obligations to its stockholders and customers. When there is reason to believe that Phoenix has been the target of fraud or attempted fraud, it will aggressively work with the appropriate law enforcement officials to seek prosecution and conviction of the responsible individual(s). Any employee who is aware of or suspects fraud must report it to the Corporate Audit Department immediately. INSURANCE ANTI-FRAUD PLAN In accordance with insurance regulatory requirements, Phoenix has a comprehensive insurance anti-fraud plan that is designed to: o Prevent insurance fraud, including: internal fraud involving the Company's officers, employees or agents, fraud resulting from misrepresentations on applications for insurance, and claims fraud; o Report insurance fraud to appropriate law enforcement and regulatory authorities; o Encourage cooperation in the prosecution of insurance fraud cases; and o Aggressively pursue recovery of all sums improperly paid by the Company as a result of fraud. COMMITMENT TO CORPORATE CITIZENSHIP - ----------------------------------- Phoenix is committed to being a responsible corporate citizen, which includes compliance with applicable laws and regulations of the jurisdictions in which we operate as well as engaging in fair competition in the marketplace. COMPLYING WITH LEGAL AND REGULATORY REQUIREMENTS The Company expects all employees to conduct business in accordance with all applicable laws and regulations. The laws and regulations related to the financial services industry are complex, thus placing a duty on each employee to take all reasonable steps to ensure his or her actions are in compliance. Compliance with the law does not comprise our entire ethical responsibility. Rather, it is a minimum standard for performance of our duties. ACCOUNTING, INTERNAL ACCOUNTING CONTROLS OR AUDITING MATTERS The Company treats complaints about accounting, internal accounting controls, or auditing matters seriously and expeditiously. Employees will be given the opportunity to submit confidential and anonymous complaints about accounting or auditing matters for review by representatives of Phoenix, and if appropriate, the Audit Committee of the Board of Directors. These complaints will be handled in a manner that protects the confidentiality and anonymity of the employee when so requested by the employee. No employee will be terminated or otherwise retaliated against for submitting a complaint under this procedure if the employee reasonably believes that the complaint involves a violation of federal securities or anti-fraud laws. FAIR DEALING Each employee must deal fairly with the Company's customers, suppliers, competitors and employees. No employee shall take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or other unfair-dealing practice. ANTITRUST Phoenix is committed to preserving a free and competitive marketplace and will not engage in any understandings or agreements with any competitor that could result in a restraint of trade. Employees must avoid engaging in any conduct that violates the antitrust laws, such as agreements with competitors regarding prices, terms of sale, division of markets and allocations of customers. Discussions with competitors related to market share, projected sales for any specific product or service, revenues and expenses, production schedules, unannounced products and services, pricing or marketing strategies are prohibited. The antitrust laws also apply to informal contacts with competitors, such as trade shows or meetings of professional organizations. Every employee has an obligation to avoid situations that could result in a violation of the antitrust laws. Any questions concerning the legality or appropriateness of specific acts should be directed to the Law Department. ANTI-MONEY LAUNDERING It is the responsibility of every employee to protect the Company from exploitation by individuals engaged in money laundering activities. Accordingly, each employee must undertake the following: o Become familiar with the anti-money laundering laws and their requirements as applied to the Company; and o Learn and fully comply with the Company's anti-money laundering policies and procedures. Failure to comply with applicable laws or the Company's policies may result in significant criminal and civil penalties to the Company as well as those individuals involved. Furthermore, association with any money laundering activity subjects both the Company and its employees to civil and criminal penalties. LOBBYING AND POLITICAL CONTRIBUTIONS Lobbying is generally defined as communicating with a public official, or a member of his or her staff, in the legislative or executive branch of government, for the purpose of influencing legislative or administrative action. Lobbying is highly regulated and lobbyists are required to be registered and to report their activities. No employee may engage in lobbying on behalf of Phoenix without prior permission of the Law Department. The giving of gifts to local public officials and members of their staff, whether in the form of meals, tickets to events or otherwise, is strictly regulated by most states and by the federal government. Employees must be careful to distinguish between personal and corporate political activities. Unless specifically requested by the Company to communicate on its behalf on a particular issue, you should identify communications with legislators as expressing your own personal beliefs and not those of Phoenix. The use of Phoenix stationery for any personal political communication is prohibited. Any employee wishing to be a candidate for elective office should consult with his or her supervisor and department head in advance. Questions regarding the Company's position on proposed legislation or regulation should be referred to Government Relations or the Law Department. FOREIGN CORRUPT PRACTICES ACT The Foreign Corrupt Practices Act prohibits the payment or authorization of the payment of any money, or the giving of value, directly or indirectly, to a foreign official for the purpose of: o Influencing any act or decision of the foreign official; or o Inducing the foreign official to use his influence to assist in obtaining business for or directing business to any person. A "foreign official" is any person acting in an official capacity on behalf of a foreign government, agency, department or instrumentality. Also included under the term "foreign official" are foreign political parties, officials of political parties and candidates for foreign political office. The Foreign Corrupt Practices Act applies to all officers, directors, employees and agents of the Company. Violation of the act can result in both fines and imprisonment. COPYRIGHTS, TRADEMARKS AND PATENTS Employees must avoid infringing upon the intellectual property rights of others. Intellectual property includes copyrights, trademarks, service marks, patents and trade secrets. Improper use includes copying, distributing or modifying third party copyrighted materials without permission. Infringement may result in criminal as well as civil liabilities for Phoenix and its employees. The Company has an agreement with the Copyright Clearance Center that gives a license to Phoenix employees to make photocopies of many publications for business purposes. Contact the Corporate Compliance Department with any questions about the types of copying that are covered by the agreement. COMMITMENT TO EMPLOYEES - ----------------------- PHOENIX'S EMPLOYEES ARE OUR MOST IMPORTANT ASSET AND WE ARE COMMITTED TO FOSTERING A WORK ENVIRONMENT IN WHICH EMPLOYEES HAVE THE OPPORTUNITY TO GROW, CONTRIBUTE AND PARTICIPATE FREE FROM DISCRIMINATION. EQUAL OPPORTUNITY Phoenix employs and promotes on the basis of merit and achievement without regard to age, race, gender, color, religion, national origin, ancestry, sexual orientation, marital status, or disability. This policy applies to every phase of the employment process and every aspect of the employment relationship: recruitment, hiring, training, promotions, transfers, terminations, benefits, compensation and participation in Company-sponsored educational, social and recreational programs. SEXUAL HARASSMENT Phoenix prohibits sexual harassment in the workplace. Sexual harassment includes unwelcome sexual advances, requests for sexual favors and other verbal, visual or physical conduct when: o Submission is made either explicitly or implicitly a term or condition of a person's employment; o Submission to or rejection of inappropriate conduct by an employee is used as the basis for employment decisions affecting the employee; or o The conduct has the purpose or effect of unreasonably interfering with an individual's work performance or creating an intimidating, hostile or offensive working environment. Sexual harassment also includes unwelcome sexual flirtations and advances; verbal abuse of a sexual nature; inappropriate touching; graphic or verbal comments about an individual's body; displaying in the workplace a sexually suggestive object or picture; and sexually explicit or offensive jokes. EMPLOYMENT OF RELATIVES The employment of relatives of any director or officer, or any employee working in the Human Resources Department, Corporate Audit Department or Corporate Compliance Department is prohibited. If a situation arises in which relatives are employed by the company and one or both of them later become officers or employees in the departments specified so as to be covered by this policy, a request for a waiver to continue employment of both individuals must be submitted to the Senior Vice President, Corporate Services. Under no circumstances will exceptions be granted for officers at the Vice President level and above, or directors. In addition, related non-officer employees are prohibited from working in the same department, reporting to the same supervisor or reporting to a relative. This policy applies to directors, officers and employees of all affiliated companies, including situations in which the employees may be employed by separate legal entities. This policy also applies to consultants and service providers. For the purposes of this policy, a relative is defined as a spouse, child, parent, sibling, step-parent, step-child, step-sibling, grandparent, grandchild, aunt, uncle, nephew, niece, first cousin and in-law. WORKPLACE SAFETY Phoenix is committed to maintaining a work environment that is safe and healthy for its employees and others. Questions concerning health and safety matters should be referred to your supervisor or Human Resources representative. All job-related injuries or illnesses should be reported immediately to your supervisor or Human Resources representative. Phoenix also does not tolerate acts of violence or threats of violence against employees or Company property. Possession of firearms or other weapons anywhere on Company property or while conducting Company business is prohibited. Any situation or concern involving violent behavior or the threat of violence should be immediately reported to Security or Human Resources. DRUGS AND ALCOHOL The sale, purchase, use, possession or transfer of narcotics or other legally controlled substances by employees while on Company premises or on Company business (other than use of prescription drugs in accordance with a physician's orders) is prohibited. Employees attending functions on behalf of the Company where alcohol is served are expected to use good judgment and avoid consuming excessive amounts of alcoholic beverages. VIOLENT CRIME CONTROL AND LAW ENFORCEMENT ACT OF 1994 Federal Law prohibits the employment of any person convicted of a felony involving dishonesty or breach of trust by an insurance company without the consent of the appropriate state insurance department. To assist the Company in fulfilling its responsibilities under this law, employees are required to disclose any felony conviction to the Company at the time of application for employment. Any employee who is subsequently convicted of a felony must report this fact to the Company immediately. EMPLOYEE OWNERSHIP OF PHOENIX STOCK Employees, officers and directors are subject to various requirements including federal securities laws, and New York Insurance law restrictions governing the ownership of Company stock. Please refer to the Insider Trading and Personal Trading section of this Code for more information. COMMITMENT TO ETHICS AND COMPLIANCE - ----------------------------------- A STRONG COMMITMENT TO BUSINESS ETHICS AND COMPLIANCE IS THE FOUNDATION OF A SUCCESSFUL ORGANIZATION. EVERY EMPLOYEE IS EXPECTED TO CARRY OUT THE COMPANY'S BUSINESS ACTIVITIES IN AN ETHICAL MANNER AND CONSISTENT WITH APPLICABLE LAWS, REGULATIONS, POLICIES AND GUIDELINES. ETHICAL DECISION MAKING Phoenix's success is dependent on each of us applying the highest ethical standards to whatever we do on behalf of the Company. Consider the following guidelines in making ethical decisions. o Is my action consistent with approved Company practices? o Is my action consistent with the Company's preeminent values? o Does my action give the appearance of impropriety? o Can I, in good conscience, defend my action to my supervisor, other employees or the general public? o Does my action meet my personal code of ethical behavior? o Does my action conform to the spirit of these guidelines? COMPLIANCE WITH LAWS AND REGULATIONS Phoenix values its corporate reputation for complying with all applicable laws and regulations in the conduct of its business. Every employee, officer and director shall comply with all applicable laws and regulations while acting on behalf of the Company. MONITORING CODE COMPLIANCE The Corporate Compliance and the Corporate Audit Departments are responsible for monitoring the compliance activities of all areas and ensuring that the Code is being followed. Compliance will be monitored by periodic audits where appropriate. OBTAINING GUIDANCE In any instance where you are uncertain of your obligations under the Code, you should seek guidance before taking any action. If you have a question concerning the Code or any of the Company's related policies or procedures, you should contact the Corporate Compliance Department or the Law Department. TOLL-FREE HELP LINE Phoenix maintains a confidential, 24-hour, toll-free telephone help line for the purpose of requesting assistance or reporting violations. Assistance is available during regular business hours. If you call outside of regular business hours, leave a confidential message and your call will be returned the following business day. Special security measures have been taken with this help line to ensure confidentiality. If you wish to remain anonymous, you may request a case identification number and refer to that number in subsequent phone calls. OBLIGATION TO REPORT Employees are obligated to report suspected violations of the Code to their department head, the Chief Compliance Officer or the Law Department. Failure to do so will result in disciplinary action, including potential termination of employment. WHISTLEBLOWER PROTECTION No retaliation or retribution of any kind will be taken against an employee who reports a suspected violation of the Code in good faith. INVESTIGATION All allegations of suspected violations will be promptly investigated and appropriate action will be taken. Investigations will be conducted in an objective, professional manner. The specifics of an investigation, including the identity of the individual reporting the information, will be kept confidential except as such disclosure is necessary to fully investigate the allegations, facilitate resolution and/or report the results to appropriate authorities. DISCLOSURE TO GOVERNMENT AUTHORITIES Certain actions and omissions prohibited by the Code may also violate criminal laws and may subject violators to criminal prosecution. The Law Department will review the results of investigations that indicate potential violations of criminal law and recommend to the appropriate senior officers whether disclosure to appropriate enforcement authorities is warranted. DISCIPLINARY ACTION FOR VIOLATIONS Failure to adhere to the Code as well as other Company policies and applicable laws may result in disciplinary action up to and including termination of employment. Situations in which disciplinary action may be appropriate include: o Authorization of or participation in activities that violate the law, the Code or other Company policies; o Retaliation, direct or indirect, or encouragement of others to retaliate against an employee who reports a suspected violation; o Failure to cooperate with an investigation of suspected violations, including interfering with or obstructing an investigation; and o Failure to report a violation of the law, the Code or other Company policies. EX-99.CERT 3 g11757_cert.txt SECTION 302 CERTIFICATION CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT I, Philip R. McLoughlin, certify that: 1. I have reviewed this report on Form N-CSR of Phoenix Investment Trust 97; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Omitted] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent 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; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 8, 2004 /s/ Philip R. McLoughlin ---------------------- -------------------------------------------- Philip R. McLoughlin, Chairman (principal executive officer) CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT I, Nancy G. Curtiss, certify that: 1. I have reviewed this report on Form N-CSR of Phoenix Investment Trust 97; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Omitted] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent 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; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 8, 2004 /s/ Nancy G. Curtiss ---------------------- --------------------------------------------- Nancy G. Curtiss, Treasurer (principal financial officer) EX-99.906 CERT 4 g11757_906cert.txt SECTION 906 CERTIFICATION CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 906 OF THE SARBANES-OXLEY ACT I, Philip R. McLoughlin, Chairman of Phoenix Investment Trust 97 (the "Registrant"), certify that: 1. The Form N-CSR of the Registrant (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: November 8, 2004 /s/ Philip R. McLoughlin ---------------------- --------------------------------------------- Philip R. McLoughlin, Chairman (principal executive officer) I, Nancy G. Curtiss, Treasurer of Phoenix Investment Trust 97 (the "Registrant"), certify that: 1. The Form N-CSR of the Registrant (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: November 8, 2004 /s/ Nancy G. Curtiss ---------------------- --------------------------------------------- Nancy G. Curtiss, Treasurer (principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----