-----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, PbusFEms10OXrAll2gx6zUprgek9Ly+Y7b0JePaqEJHg3nFyPbrF6apaQVF4UKrs lxev3qum5nvjILOQA3zYMw== 0000935069-06-001376.txt : 20060508 0000935069-06-001376.hdr.sgml : 20060508 20060508111058 ACCESSION NUMBER: 0000935069-06-001376 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060228 FILED AS OF DATE: 20060508 DATE AS OF CHANGE: 20060508 EFFECTIVENESS DATE: 20060508 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-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-08343 FILM NUMBER: 06815244 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 0001045018 S000001382 PHOENIX SMALL CAP VALUE FUND C000003689 CLASS A PDSAX C000003690 CLASS B PDSBX C000003691 CLASS C PDSCX 0001045018 S000001383 PHOENIX VALUE EQUITY FUND C000003692 CLASS A PVEAX C000003693 CLASS B PVEBX C000003694 CLASS C PVECX N-CSRS 1 g20994investtrust97_sar06.txt PHOENIX INVESTMENT TRUST 97 SAR 2006 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) 101 Munson Street Greenfield, MA 01301 -------------------------------------------------- (Address of principal executive offices) (Zip code) Kevin J. Carr, Esq. Vice President, Chief Legal Officer, John H. Beers, Esq. Counsel and Secretary for Registrant Vice President and Secretary Phoenix Life Insurance Company Phoenix Life Insurance Company One American Row One American Row Hartford, CT 06103-2899 Hartford, CT 06103-2899 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (800) 243-1574 -------------- Date of fiscal year end: August 31 --------- Date of reporting period: February 28, 2006 ----------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. The Report to Shareholders is attached herewith. FEBRUARY 28, 2006 SEMIANNUAL REPORT o PHOENIX SMALL-CAP VALUE FUND o PHOENIX VALUE EQUITY FUND [GRAPHIC OMITTED] Get Fund documents by e-mail instead. Eligible shareholders may sign up for E-Delivery at PhoenixFunds.com. TRUST NAME: PHOENIX INVESTMENT TRUST 97 [GRAPHIC OMITTED] PHOENIXFUNDS(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. A MESSAGE FROM THE PRESIDENT DEAR PHOENIXFUNDS SHAREHOLDER: This semiannual report addresses the performance of your Phoenix mutual fund for the six months ended February 28, 2006. It provides detailed information about your fund's performance, portfolio holdings and transactions for the period. At Phoenix, our focus is on investment performance and serving the best interests of our shareholders. We believe that mutual funds are among the most effective vehicles for individual investors to gain access to a variety of financial markets and for building diversified portfolios. I am especially proud of how we have expanded our fund family over the last year to offer access to even more money managers. Today, the PhoenixFunds draw from the vast expertise of 16 different management teams--seven Phoenix affiliates and nine outside subadvisers chosen for their complementary investment capabilities. These fund teams operate independently, conducting their research, identifying opportunities in the markets they know best, and applying their disciplined strategies to the portfolios they manage. We are confident in their ability to navigate their funds through whatever market and economic changes lie ahead. When it comes to financial decisions, we recommend working with an experienced financial advisor. If you haven't reviewed or rebalanced your portfolio lately, this may be a good time to meet with your advisor and make sure that your investments are still aligned with your financial goals. Thank you for choosing PhoenixFunds to be part of your financial plan. Sincerely yours, /s/ Daniel T. Geraci Daniel T. Geraci President, PhoenixFunds MARCH 2006 1 TABLE OF CONTENTS Glossary........................................................................................................... 3 Phoenix Small-Cap Value Fund....................................................................................... 4 Phoenix Value Equity Fund.......................................................................................... 15 Notes to Financial Statements...................................................................................... 23 Board of Trustees' Consideration of Investment Advisory and Subadvisory Agreements ................................ 27 Results of Shareholder Meeting..................................................................................... 29
- -------------------------------------------------------------------------------- PROXY VOTING INFORMATION (FORM N-PX) The Adviser and subadvisers vote proxies relating to portfolio securities in accordance with procedures that have been approved by the Trust's Board of Trustees. You may obtain a description of these procedures, along with information regarding how the Funds voted proxies during the most recent 12-month period ended June 30, 2005, free of charge, by calling toll-free 1-800-243-1574. This information is also available through the Securities and Exchange Commission's website at http://www.sec.gov. FORM N-Q INFORMATION The Trust files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the "SEC") for the first and third quarters of each fiscal year on Form N-Q. Form N-Q is available on the SEC's website at http://www.sec.gov. Form N-Q may be reviewed and copied at the SEC's Public Reference Room. Information on the operation of the SEC's Public Reference Room can be obtained by calling toll-free 1-800-SEC-0330. - -------------------------------------------------------------------------------- 2 GLOSSARY REITS (REAL ESTATE INVESTMENT TRUSTS) Real estate investment trusts are typically publicly traded companies that own, develop and operate income producing real estate such as apartments, office buildings, hotels, shopping centers and other commercial properties. 3 PHOENIX SMALL-CAP VALUE FUND ABOUT YOUR FUND'S EXPENSES (UNAUDITED) We believe it is important for you to understand the impact of costs on your investment. All mutual funds have operating expenses. As a shareholder of the Small-Cap Value Fund, you incur two types of costs: (1) transaction costs, including sales charges and contingent deferred sales charges, if applicable; and (2) ongoing costs, including investment advisory fees; distribution and service fees; and other expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period. ACTUAL EXPENSES The first line of the accompanying tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the accompanying tables provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges or contingent deferred sales charges. Therefore, the second line of the accompanying tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions. Beginning Ending Expenses Paid Small-Cap Value Fund Account Value Account Value During Class A August 31, 2005 February 28, 2006 Period* - -------------------- --------------- ----------------- ------------- Actual $1,000.00 $1,076.60 $7.21 Hypothetical (5% return before expenses) 1,000.00 1,017.77 7.03 *EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 1.40%, WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 365 TO REFLECT THE ONE-HALF YEAR PERIOD. Beginning Ending Expenses Paid Small-Cap Value Fund Account Value Account Value During Class B August 31, 2005 February 28, 2006 Period* - -------------------- --------------- ----------------- ------------- Actual $1,000.00 $1,073.30 $11.05 Hypothetical (5% return before expenses) 1,000.00 1,014.00 10.79 *EXPENSES ARE EQUAL TO THE FUND'S CLASS B ANNUALIZED EXPENSE RATIO OF 2.15%, WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 365 TO REFLECT THE ONE-HALF YEAR PERIOD. Beginning Ending Expenses Paid Small-Cap Value Fund Account Value Account Value During Class C August 31, 2005 February 28, 2006 Period* - -------------------- --------------- ----------------- ------------- Actual $1,000.00 $1,073.30 $11.05 Hypothetical (5% return before expenses) 1,000.00 1,014.00 10.79 *EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 2.15%, WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 365 TO REFLECT THE ONE-HALF YEAR PERIOD. YOU CAN FIND MORE INFORMATION ABOUT THE FUNDS EXPENSES IN THE FINANCIAL STATEMENTS SECTION THAT FOLLOWS. FOR ADDITIONAL INFORMATION ON OPERATING EXPENSES AND OTHER SHAREHOLDER COSTS REFER TO THE PROSPECTUS. 4 Phoenix Small-Cap Value Fund - -------------------------------------------------------------------------------- SECTOR WEIGHTINGS (UNAUDITED) 2/28/06 - -------------------------------------------------------------------------------- As a percentage of total investments [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAHPIC AS FOLLOWS: Financials 25% Industrials 18 Consumer Discretionary 18 Informatin Technology 15 Materials 8 Energy 5 Consumer Staples 3 Other 8 SCHEDULE OF INVESTMENTS FEBRUARY 28, 2006 (UNAUDITED) SHARES VALUE ------- ------------ DOMESTIC COMMON STOCKS--98.1% AEROSPACE & DEFENSE--3.3% AAR Corp.(b)(e) ............................. 52,000 $ 1,316,120 Armor Holdings, Inc.(b)(e) .................. 39,600 2,325,708 DRS Technologies, Inc.(e) ................... 50,800 2,680,716 Esterline Technologies Corp.(b)(e) .......... 31,300 1,303,332 Triumph Group, Inc.(b)(e) ................... 20,900 874,665 ------------ 8,500,541 ------------ AIRLINES--1.5% ExpressJet Holdings, Inc.(b) ................ 100,500 755,760 Mesa Air Group, Inc.(b)(e) .................. 70,500 805,110 Republic Airways Holdings, Inc.(b)(e) ....... 65,100 912,702 SkyWest, Inc.(e) ............................ 48,700 1,410,839 ------------ 3,884,411 ------------ ALTERNATIVE CARRIERS--0.1% Premiere Global Services, Inc.(b) ........... 26,900 220,849 ALUMINUM--0.3% Century Aluminum Co.(b)(e) .................. 22,500 800,775 APPAREL RETAIL--4.9% Charming Shoppes, Inc.(b)(e) ................ 140,000 1,874,600 Finish Line, Inc. (The) Class A ............. 63,700 1,066,338 Men's Wearhouse, Inc. (The)(b) .............. 86,550 2,710,746 Pacific Sunwear of California, Inc.(b)(e) ... 79,500 1,892,895 Payless ShoeSource, Inc.(b)(e) .............. 102,600 2,431,620 Shoe Carnival, Inc.(b) ...................... 38,300 860,601 SHARES VALUE ------- ------------ APPAREL RETAIL--CONTINUED Stage Stores, Inc.(e) ....................... 29,900 $ 871,884 Stein Mart, Inc. ............................ 43,000 717,240 ------------ 12,425,924 ------------ APPAREL, ACCESSORIES & LUXURY GOODS--1.7% Hartmarx Corp.(b)(e) ........................ 88,400 766,428 Oxford Industries, Inc.(e) .................. 24,700 1,130,766 Phillips-Van Heusen Corp. ................... 47,300 1,679,150 UniFirst Corp. .............................. 21,100 707,061 ------------ 4,283,405 ------------ APPLICATION SOFTWARE--1.1% EPIQ Systems, Inc.(b)(e) .................... 19,600 430,612 Lawson Software, Inc.(b)(e) ................. 134,300 1,067,685 Quest Software, Inc.(b)(e) .................. 50,000 728,500 SERENA Software, Inc.(b)(e) ................. 19,100 456,490 ------------ 2,683,287 ------------ AUTO PARTS & EQUIPMENT--1.1% Aftermarket Technology Corp.(b) ............. 48,700 1,056,790 ArvinMeritor, Inc. .......................... 89,800 1,503,252 Shiloh Industries, Inc.(b) .................. 21,700 353,710 ------------ 2,913,752 ------------ AUTOMOTIVE RETAIL--1.1% Lithia Motors, Inc. Class A(e) .............. 37,700 1,207,908 Sonic Automotive, Inc.(e) ................... 60,000 1,589,400 ------------ 2,797,308 ------------ See Notes to Financial Statements 5 Phoenix Small-Cap Value Fund SHARES VALUE ------- ------------ BIOTECHNOLOGY--0.1% Albany Molecular Research, Inc.(b)(e) ....... 30,800 $ 310,772 BUILDING PRODUCTS--1.9% Apogee Enterprises, Inc.(e) ................. 33,200 574,028 ElkCorp.(e) ................................. 20,500 740,050 Universal Forest Products, Inc.(e) .......... 13,500 834,705 USG Corp.(b)(e) ............................. 33,000 2,787,840 ------------ 4,936,623 ------------ COMMERCIAL PRINTING--0.7% Consolidated Graphics, Inc.(b)(e) ........... 18,600 949,902 Ennis, Inc.(e) .............................. 40,700 802,604 ------------ 1,752,506 ------------ COMMODITY CHEMICALS--0.2% Westlake Chemical Corp.(e) .................. 13,900 477,048 COMMUNICATIONS EQUIPMENT--3.5% Black Box Corp.(e) .......................... 20,200 965,156 CommScope, Inc.(b)(e) ....................... 63,100 1,513,769 Comtech Telecommunications Corp.(b)(e) ...... 69,750 2,185,267 EFJ, Inc.(b)(e) ............................. 69,600 807,360 Harris Corp. ................................ 68,000 3,106,240 NETGEAR, Inc.(b)(e) ......................... 17,400 298,584 ------------ 8,876,376 ------------ COMPUTER HARDWARE--0.0% Intergraph Corp.(b)(e) ...................... 2,900 105,154 COMPUTER STORAGE & PERIPHERALS--1.6% Advanced Digital Information Corp.(b) ....... 26,400 228,624 Hutchinson Technology, Inc.(b)(e) ........... 26,600 731,766 Komag, Inc.(b)(e) ........................... 68,300 3,199,172 ------------ 4,159,562 ------------ CONSTRUCTION & ENGINEERING--1.0% Comfort Systems USA, Inc. ................... 68,400 751,716 EMCOR Group, Inc.(b) ........................ 31,000 1,351,290 Michael Baker Corp.(b)(e) ................... 20,500 566,825 ------------ 2,669,831 ------------ CONSTRUCTION MATERIALS--0.3% U.S. Concrete, Inc.(b)(e) ................... 63,100 790,643 CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS--1.2% Accuride Corp.(b) ........................... 49,100 555,812 Commercial Vehicle Group, Inc.(b)(e) ........ 47,700 872,910 Terex Corp.(b) .............................. 9,400 744,010 Titan International, Inc. ................... 50,700 879,138 ------------ 3,051,870 ------------ SHARES VALUE ------- ------------ CONSUMER FINANCE--1.8% Cash America International, Inc. ............ 68,600 $ 1,838,480 Collegiate Funding Services LLC(b) .......... 10,900 217,946 CompuCredit Corp.(b)(e) ..................... 28,000 1,058,400 EZCORP, Inc. Class A(b) ..................... 68,300 1,477,329 ------------ 4,592,155 ------------ DEPARTMENT STORES--0.3% Dillard's, Inc. Class A(e) .................. 28,900 712,963 DISTRIBUTORS--0.7% Building Materials Holding Corp.(e) ........ 27,600 1,857,480 DIVERSIFIED BANKS--0.1% Intervest Bancshares Corp.(b) ............... 10,000 314,600 DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES--0.7% Geo Group, Inc. (The)(b)(e) ................. 33,500 757,100 Sirva, Inc.(b) .............................. 142,600 1,140,800 ------------ 1,897,900 ------------ DRUG RETAIL--0.5% Longs Drug Stores Corp.(e) .................. 34,000 1,304,580 ELECTRIC UTILITIES--0.2% Otter Tail Corp. ............................ 14,100 439,215 ELECTRICAL COMPONENTS & EQUIPMENT--2.5% Genlyte Group, Inc. (The)(b) ................ 32,800 2,029,664 LSI Industries, Inc.(e) ..................... 45,900 713,286 Regal-Beloit Corp.(e) ....................... 36,400 1,464,736 Smith (A.O.) Corp. .......................... 46,100 2,134,430 ------------ 6,342,116 ------------ ELECTRONIC EQUIPMENT MANUFACTURERS--2.0% Aeroflex, Inc.(b)(e) ........................ 81,400 1,058,200 CalAmp Corp.(b) ............................. 98,800 992,940 Planar Systems, Inc.(b) ..................... 28,900 449,106 Rofin-Sinar Technologies, Inc.(b) ........... 50,600 2,665,608 ------------ 5,165,854 ------------ ELECTRONIC MANUFACTURING SERVICES--1.6% Mercury Computer Systems, Inc.(b)(e) ........ 34,500 594,780 Plexus Corp.(b)(e) .......................... 47,900 1,607,524 TTM Technologies, Inc.(b)(e) ................ 81,600 1,053,456 Zygo Corp.(b)(e) ............................ 43,200 742,608 ------------ 3,998,368 ------------ See Notes to Financial Statements 6 Phoenix Small-Cap Value Fund SHARES VALUE ------- ------------ FERTILIZERS & AGRICULTURAL CHEMICALS--0.5% CF Industries Holdings, Inc.(e) ............. 45,600 $ 803,472 Terra Industries, Inc.(b)(e) ................ 56,200 398,458 ------------ 1,201,930 ------------ FOOD DISTRIBUTORS--0.2% Spartan Stores, Inc. ........................ 41,800 492,822 FOOD RETAIL--0.6% Casey's General Stores, Inc. ................ 39,100 1,025,593 Smart & Final, Inc.(b) ...................... 25,800 389,580 ------------ 1,415,173 ------------ FOOTWEAR--0.6% Brown Shoe Co., Inc.(e) ..................... 17,500 834,750 Skechers U.S.A., Inc. Class A(b) ............ 37,300 790,760 ------------ 1,625,510 ------------ GAS UTILITIES--1.1% Laclede Group, Inc. (The)(e) ................ 32,400 1,091,556 South Jersey Industries, Inc. ............... 9,800 280,280 UGI Corp. ................................... 58,800 1,320,060 ------------ 2,691,896 ------------ HEALTH CARE EQUIPMENT--0.4% Cantel Medical Corp.(b) ..................... 21,100 361,232 Greatbatch, Inc.(b) ......................... 32,700 722,997 ------------ 1,084,229 ------------ HEALTH CARE SERVICES--0.7% Res-Care, Inc.(b) ........................... 53,100 971,199 SFBC International, Inc.(b)(e) .............. 39,400 929,840 ------------ 1,901,039 ------------ HOMEBUILDING--2.7% Beazer Homes USA, Inc.(e) ................... 37,100 2,353,995 Meritage Homes Corp.(b) ..................... 14,200 831,126 Orleans Homebuilders, Inc.(e) ............... 33,200 648,728 Technical Olympic USA, Inc.(e) .............. 53,450 1,132,071 WCI Communities, Inc.(b)(e) ................. 27,800 701,672 William Lyon Homes, Inc.(b)(e) .............. 13,900 1,182,890 ------------ 6,850,482 ------------ HOMEFURNISHING RETAIL--1.0% Furniture Brands International, Inc.(e) ..... 33,400 825,648 La-Z-Boy, Inc. .............................. 48,500 773,575 Rent-A-Center, Inc.(b) ...................... 41,300 963,942 Stanley Furniture Co., Inc. ................. 2,800 71,400 ------------ 2,634,565 ------------ SHARES VALUE ------- ------------ HOTELS, RESORTS & CRUISE LINES--0.7% Bluegreen Corp.(b) .......................... 96,300 $ 1,528,281 Sunterra Corp.(b)(e) ........................ 9,000 135,135 ------------ 1,663,416 ------------ HOUSEHOLD PRODUCTS--0.4% Spectrum Brands, Inc.(b)(e) ................. 51,500 982,105 HOUSEWARES & SPECIALTIES--0.1% Lifetime Brands, Inc.(e) .................... 8,500 191,930 HUMAN RESOURCES & EMPLOYMENT SERVICES--0.6% Kforce, Inc.(b)(e) .......................... 59,900 725,389 Spherion Corp.(b)(e) ........................ 65,000 648,700 Volt Information Sciences, Inc.(b) .......... 9,200 220,156 ------------ 1,594,245 ------------ INDUSTRIAL MACHINERY--1.9% Albany International Corp.(e) ............... 37,900 1,408,743 Barnes Group, Inc.(e) ....................... 30,000 1,151,400 Gardner Denver, Inc.(b) ..................... 25,000 1,534,000 Tennant Co. ................................. 13,800 644,460 ------------ 4,738,603 ------------ INTEGRATED TELECOMMUNICATION SERVICES--0.6% Consolidated Communications Holdings, Inc. .. 34,400 489,856 CT Communications, Inc.(e) .................. 39,100 517,684 Talk America Holdings, Inc.(b)(e) ........... 51,400 438,442 ------------ 1,445,982 ------------ INTERNET RETAIL--0.5% Priceline.com, Inc.(b) ...................... 47,500 1,166,125 INTERNET SOFTWARE & SERVICES--1.1% InfoSpace, Inc.(b)(e) ....................... 60,600 1,462,581 United Online, Inc.(e) ...................... 100,600 1,208,206 ------------ 2,670,787 ------------ INVESTMENT BANKING & BROKERAGE--0.3% Knight Capital Group, Inc.(b)(e) ............ 64,500 812,055 IT CONSULTING & OTHER SERVICES--0.4% MPS Group, Inc.(b) .......................... 59,900 906,886 LEISURE PRODUCTS--0.8% JAKKS Pacific, Inc.(b)(e) ................... 60,800 1,509,056 Steinway Musical Instruments, Inc.(b)(e) .... 16,100 530,495 ------------ 2,039,551 ------------ See Notes to Financial Statements 7 Phoenix Small-Cap Value Fund SHARES VALUE ------- ------------ LIFE & HEALTH INSURANCE--1.3% Delphi Financial Group, Inc. Class A(e) ..... 14,500 $ 755,160 FBL Financial Group Inc., Class A ........... 23,300 797,326 UICI(e) ..................................... 45,000 1,651,050 ------------ 3,203,536 ------------ MANAGED HEALTH CARE--0.4% Molina Healthcare, Inc.(b)(e) ............... 34,200 971,622 METAL & GLASS CONTAINERS--0.4% Greif, Inc. Class A(e) ...................... 17,300 1,001,843 MULTI-LINE INSURANCE--0.4% Horace Mann Educators Corp. ................. 51,100 953,015 MULTI-UTILITIES & UNREGULATED POWER--0.5% WPS Resources Corp.(e) ...................... 22,000 1,156,100 OIL & GAS EQUIPMENT & SERVICES--1.6% Maverick Tube Corp.(b)(e) ................... 19,700 916,641 Oil States International, Inc.(b)(e) ........ 67,200 2,320,416 Veritas DGC, Inc.(b)(e) ..................... 19,800 834,174 ------------ 4,071,231 ------------ OIL & GAS EXPLORATION & PRODUCTION--2.1% Chesapeake Energy Corp.(e) .................. 71,900 2,134,711 Cimarex Energy Co. .......................... 51,900 2,214,054 Harvest Natural Resources, Inc.(b)(e) ....... 106,500 959,565 ------------ 5,308,330 ------------ OIL & GAS REFINING, MARKETING & TRANSPORTATION--1.5% Giant Industries, Inc.(b) ................... 13,700 797,340 Tesoro Corp. ................................ 49,000 2,960,090 ------------ 3,757,430 ------------ OIL & GAS STORAGE & TRANSPORTATION--0.3% OMI Corp.(e) ................................ 38,900 680,750 PACKAGED FOODS & MEATS--1.5% Chiquita Brands International, Inc.(e) ...... 38,100 656,082 Pilgrim's Pride Corp.(e) .................... 96,000 2,213,760 Seaboard Corp.(e) ........................... 600 896,400 ------------ 3,766,242 ------------ PAPER PACKAGING--0.2% Rock-Tenn Co. Class A(e) .................... 37,300 489,376 PAPER PRODUCTS--0.1% Buckeye Technologies, Inc.(b)(e) ............ 37,300 328,613 PHARMACEUTICALS--1.2% Alpharma, Inc. Class A(e) ................... 97,000 2,934,250 SHARES VALUE ------- ------------ PHARMACEUTICALS--CONTINUED Bradley Pharmaceuticals, Inc.(b)(e) ........ 18,200 $ 214,760 ------------ 3,149,010 ------------ PROPERTY & CASUALTY INSURANCE--8.8% 21st Century Insurance Group(e) ............. 45,900 743,580 Alfa Corp. .................................. 6,300 101,304 CNA Surety Corp.(b) ......................... 4,800 83,424 Commerce Group, Inc. (The) .................. 14,400 777,744 Donegal Group, Inc. Class A ................. 6,600 161,370 EMC Insurance Group, Inc. ................... 16,400 402,128 FPIC Insurance Group, Inc.(b)(e) ............ 19,000 667,660 Harleysville Group, Inc. .................... 26,800 705,644 LandAmerica Financial Group, Inc.(e) ........ 21,000 1,400,700 Mercury General Corp.(e) .................... 52,400 2,929,160 Navigators Group, Inc. (The)(b) ............. 14,600 684,740 Ohio Casualty Corp. ......................... 51,900 1,588,659 ProAssurance Corp.(b)(e) .................... 31,600 1,620,764 RLI Corp. ................................... 13,900 732,808 Safety Insurance Group, Inc.(e) ............. 20,000 864,600 SeaBright Insurance Holdings, Inc.(b) ....... 49,800 828,174 Selective Insurance Group, Inc.(e) .......... 52,700 2,857,394 State Auto Financial Corp. .................. 35,300 1,150,074 Stewart Information Services Corp.(e) ....... 31,400 1,474,230 Zenith National Insurance Corp.(e) .......... 49,049 2,526,023 ------------ 22,300,180 ------------ PUBLISHING & PRINTING--0.4% Scholastic Corp.(b)(e) ...................... 35,000 1,029,700 REAL ESTATE MANAGEMENT & DEVELOPMENT--1.4% Jones Lang LaSalle, Inc.(e) ................. 53,700 3,634,416 REGIONAL BANKS--3.0% BancFirst Corp. ............................. 2,600 219,960 Boston Private Financial Holdings, Inc.(e) .. 15,800 483,638 Capitol Bancorp Ltd. ........................ 21,200 918,808 City Holding Co. ............................ 7,600 276,716 Columbia Banking System, Inc. ............... 9,100 305,123 First BanCorp.(e) ........................... 80,700 1,021,662 First Community Bancorp, Inc.(e) ............ 11,000 656,920 First State Bancorp.(e) ..................... 32,500 839,150 Greater Bay Bancorp ......................... 4,700 126,430 Santander BanCorp.(e) ....................... 6,100 145,729 Southwest Bancorp, Inc. ..................... 34,300 750,827 Taylor Capital Group, Inc.(e) ............... 9,300 351,075 TCF Financial Corp.(e) ...................... 56,500 1,432,840 ------------ 7,528,878 ------------ REINSURANCE--1.4% Arch Capital Group Ltd.(b) .................. 46,100 2,607,416 Scottish Re Group Ltd.(e) ................... 41,500 1,037,500 ------------ 3,644,916 ------------ See Notes to Financial Statements 8 Phoenix Small-Cap Value Fund SHARES VALUE ------- ------------ REITS--2.2% Anthracite Capital, Inc. .................... 23,300 $ 249,776 Arbor Realty Trust, Inc. .................... 23,000 605,130 Ashford Hospitality Trust, Inc.(e) .......... 55,700 695,693 Boykin Lodging Co.(b) ....................... 56,900 727,182 Commercial Net Lease Realty, Inc. ........... 1,500 34,125 Equity Inns, Inc.(e) ........................ 23,600 365,328 Fieldstone Investment Corp. ................. 11,700 138,528 Highland Hospitality Corp.(e) ............... 49,400 608,608 Innkeepers USA Trust(e) ..................... 51,800 908,054 PS Business Parks, Inc. ..................... 10,700 569,133 Redwood Trust, Inc. ......................... 17,100 708,966 ------------ 5,610,523 ------------ RESTAURANTS--0.6% Jack in the Box, Inc.(b)(e) ................. 8,800 352,000 Luby's, Inc.(b)(e) .......................... 78,900 1,176,399 ------------ 1,528,399 ------------ SEMICONDUCTOR EQUIPMENT--0.3% Cohu, Inc.(e) ............................... 39,800 840,576 SEMICONDUCTORS--0.9% IXYS Corp.(b)(e) ............................ 89,100 953,370 OmniVision Technologies, Inc.(b) ............ 54,800 1,397,400 ------------ 2,350,770 ------------ SPECIALIZED CONSUMER SERVICES--0.3% Alderwoods Group, Inc.(b) ................... 44,700 763,476 SPECIALTY CHEMICALS--1.3% Fuller (H.B.) Co. ........................... 48,100 1,952,860 NewMarket Corp.(b) .......................... 22,600 779,022 Schulman (A.), Inc. ......................... 29,600 693,528 ------------ 3,425,410 ------------ SPECIALTY STORES--0.4% Sports Authority, Inc. (The)(b) ............. 27,000 987,930 STEEL--4.6% Commercial Metals Co. ....................... 66,000 2,989,140 Olympic Steel, Inc.(e) ...................... 26,900 709,084 Quanex Corp. ................................ 17,600 1,092,432 Reliance Steel & Aluminum Co.(e) ............ 44,000 3,625,160 Schnitzer Steel Industries, Inc. Class A(e) . 25,300 786,830 Steel Dynamics, Inc.(e) ..................... 22,200 1,021,200 Worthington Industries, Inc.(e) ............. 75,600 1,481,760 ------------ 11,705,606 ------------ SHARES VALUE ------- ------------ SYSTEMS SOFTWARE--1.8% Internet Security Systems, Inc.(b)(e) ....... 115,600 $ 2,694,636 SSA Global Technologies, Inc.(b)(e) ........ 29,900 500,526 Sybase, Inc.(b) ............................. 70,000 1,493,100 ------------ 4,688,262 ------------ TECHNOLOGY DISTRIBUTORS--0.8% Agilysys, Inc. .............................. 30,800 440,132 Anixter International, Inc. ................. 24,800 1,134,600 Global Imaging Systems, Inc.(b) ............. 9,700 350,170 ------------ 1,924,902 ------------ THRIFTS & MORTGAGE FINANCE--4.3% Accredited Home Lenders Holding Co.(b)(e) ... 35,300 1,881,843 Anchor BanCorp Wisconsin, Inc.(e) ........... 12,600 383,670 Corus Bankshares, Inc.(e) ................... 19,600 1,176,980 Downey Financial Corp.(e) ................... 22,700 1,442,585 Federal Agricultural Mortgage Corp. Class C . 32,000 955,520 First Financial Holdings, Inc.(e) ........... 14,800 478,336 FirstFed Financial Corp.(b)(e) .............. 29,700 1,782,297 Franklin Bank Corp.(b)(e) ................... 7,500 127,950 ITLA Capital Corp.(b) ....................... 2,600 120,328 Ocwen Financial Corp.(b)(e) ................. 64,300 631,426 TierOne Corp. ............................... 37,500 1,237,500 W Holding Co., Inc.(e) ...................... 103,900 835,356 ------------ 11,053,791 ------------ TRADING COMPANIES & DISTRIBUTORS--0.6% Bluelinx Holdings, Inc.(e) .................. 58,400 927,392 Rush Enterprises, Inc. Class A(b)(e) ........ 30,600 566,100 ------------ 1,493,492 ------------ TRUCKING--2.3% AMERCO(b)(e) ................................ 15,800 1,403,672 Arkansas Best Corp.(e) ...................... 32,600 1,354,856 SCS Transportation, Inc.(b)(e) .............. 35,900 970,377 Swift Transportation Co., Inc.(b)(e) ........ 39,300 936,912 USA Truck, Inc.(b)(e) ....................... 6,000 176,580 Werner Enterprises, Inc. .................... 58,000 1,126,940 ------------ 5,969,337 ------------ - ------------------------------------------------------------------------- TOTAL DOMESTIC COMMON STOCKS (IDENTIFIED COST $193,808,871) 249,692,861 - ------------------------------------------------------------------------- See Notes to Financial Statements 9 Phoenix Small-Cap Value Fund SHARES VALUE ------- ------------ FOREIGN COMMON STOCKS(c)--0.3% PROPERTY & CASUALTY INSURANCE--0.0% United America Indemnity Ltd. (United States)(b) 2,700 $ 61,425 THRIFTS & MORTGAGE FINANCE--0.3% R-G Financial Corp. Class B (United States)(e) . 61,000 719,190 - ------------------------------------------------------------------------- TOTAL FOREIGN COMMON STOCKS (IDENTIFIED COST $837,007) 780,615 - ------------------------------------------------------------------------- WARRANTS--0.0% OTHER DIVERSIFIED FINANCIAL SERVICES--0.0% Imperial Credit Industries, Inc. Strike $2.15, 1/31/08(b)(d) .................... 2,429 0 - ------------------------------------------------------------------------- TOTAL WARRANTS (IDENTIFIED COST $0) 0 - ------------------------------------------------------------------------- TOTAL LONG TERM INVESTMENTS--98.4% (IDENTIFIED COST $194,645,878) 250,473,476 - ------------------------------------------------------------------------- SHARES VALUE ---------- ------------ SHORT-TERM INVESTMENTS--21.5% MONEY MARKET MUTUAL FUNDS--19.6% State Street Navigator Prime Plus (4.54% seven day effective yield)(g) ........ 49,929,580 $ 49,929,580 PAR VALUE (000) ---------- FEDERAL AGENCY SECURITIES(f)--0.9% FHLB 4.39%, 3/2/06 .......................... $2,250 2,249,726 COMMERCIAL PAPER(f)--1.0% UBS Finance Delaware LLC 4.55%, 3/1/06 ...... 2,555 2,555,000 - ------------------------------------------------------------------------- TOTAL SHORT-TERM INVESTMENTS (IDENTIFIED COST $54,734,306) 54,734,306 - ------------------------------------------------------------------------- TOTAL INVESTMENTS--119.9% (IDENTIFIED COST $249,380,184) 305,207,782(a) Other assets and liabilities, net--(19.9)% (50,608,060) ------------ NET ASSETS--100.0% $254,599,722 ============ (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $58,058,484 and gross depreciation of $2,784,705 for federal income tax purposes. At February 28, 2006, the aggregate cost of securities for federal income tax purposes was $249,934,003. (b) Non-income producing. (c) Common stock is considered to be foreign if the security is issued in a foreign country. The country of risk, noted parenthetically, is determined based on criteria described in Note 2G "Foreign security country determination" in the Notes to Financial Statements. (d) Illiquid. Security valued at fair value as determined in good faith by or under the direction of the Trustees. At February 28, 2006, this security amounted to a value of $0 or 0% of net assets. (e) All or a portion of security is on loan. (f) The rate shown is the discount rate. (g) Represents security purchased with cash collateral received for securities on loan. See Notes to Financial Statements 10 Phoenix Small-Cap Value Fund STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 2006 (UNAUDITED) ASSETS Investment securities at value including $48,735,713 of securities on loan (Identified cost $249,380,184) $305,207,782 Cash 607,464 Receivables Investment securities sold 169,632 Dividends 108,290 Fund shares sold 75,976 Prepaid expenses 32,692 ------------ Total assets 306,201,836 ------------ LIABILITIES Payables Investment securities purchased 773,526 Fund shares repurchased 410,105 Upon return of securities loaned 49,929,580 Investment advisory fee 227,328 Distribution and service fees 110,932 Transfer agent fee 86,852 Financial agent fee 14,245 Trustees' fee 84 Other accrued expenses 49,462 ------------ Total liabilities 51,602,114 ------------ NET ASSETS $254,599,722 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest $180,616,873 Accumulated net investment loss (787,326) Accumulated net realized gain 18,942,577 Net unrealized appreciation 55,827,598 ------------ NET ASSETS $254,599,722 ============ CLASS A Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $147,898,322) 7,841,157 Net asset value per share $18.86 Offering price per share $18.86/(1-5.75%) $20.01 CLASS B Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $38,376,838) 2,190,499 Net asset value and offering price per share $17.52 CLASS C Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $68,324,562) 3,900,036 Net asset value and offering price per share $17.52 STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 2006 (UNAUDITED) INVESTMENT INCOME Dividends $ 1,260,458 Interest 74,876 Security lending 33,409 Foreign taxes withheld (2,311) ----------- Total investment income 1,366,432 ----------- EXPENSES Investment advisory fee 1,127,003 Service fees, Class A 179,509 Distribution and service fees, Class B 196,949 Distribution and service fees, Class C 337,241 Financial agent fee 85,793 Transfer agent 210,176 Custodian 26,240 Printing 25,052 Professional 23,183 Registration 20,026 Trustees 10,746 Miscellaneous 11,771 ----------- Total expenses 2,253,689 Less expenses reimbursed by investment adviser (97,061) Custodian fees paid indirectly (2,870) ----------- Net expenses 2,153,758 ----------- NET INVESTMENT INCOME (LOSS) (787,326) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 25,923,448 Net change in unrealized appreciation (depreciation) on investments (6,871,305) ----------- NET GAIN (LOSS) ON INVESTMENTS 19,052,143 ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $18,264,817 =========== See Notes to Financial Statements 11 Phoenix Small-Cap Value Fund STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended February 28, 2006 Year Ended (Unaudited) August 31, 2005 ----------------- --------------- FROM OPERATIONS Net investment income (loss) $ (787,326) $ (1,308,333) Net realized gain (loss) 25,923,448 23,665,069 Net change in unrealized appreciation (depreciation) (6,871,305) 40,989,811 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 18,264,817 63,346,547 ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net realized short-term gains, Class A (356,021) -- Net realized short-term gains, Class B (103,790) -- Net realized short-term gains, Class C (177,417) -- Net realized long-term gains, Class A (13,874,632) -- Net realized long-term gains, Class B (4,045,853) -- Net realized long-term gains, Class C (6,915,602) -- ------------ ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (25,473,315) -- ------------ ------------ FROM SHARE TRANSACTIONS CLASS A Proceeds from sales of shares (325,293 and 1,517,141 shares, respectively) 6,131,394 26,966,994 Net asset value of shares issued from reinvestment of distributions (729,357 and 0 shares, respectively) 12,953,386 -- Cost of shares repurchased (779,501 and 2,183,066 shares, respectively) (14,861,658) (38,281,398) ------------ ------------ Total 4,223,122 (11,314,404) ------------ ------------ CLASS B Proceeds from sales of shares (56,478 and 113,665 shares, respectively) 978,627 1,904,955 Net asset value of shares issued from reinvestment of distributions (201,217 and 0 shares, respectively) 3,323,862 -- Cost of shares repurchased (371,133 and 878,516 shares, respectively) (6,594,329) (14,704,416) ------------ ------------ Total (2,291,840) (12,799,461) ------------ ------------ CLASS C Proceeds from sales of shares (86,616 and 88,988 shares, respectively) 1,482,025 1,485,601 Net asset value of shares issued from reinvestment of distributions (357,394 and 0 shares, respectively) 5,904,151 -- Cost of shares repurchased (374,395 and 1,254,224 shares, respectively) (6,679,446) (20,810,655) ------------ ------------ Total 706,730 (19,325,054) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 2,638,012 (43,438,919) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS (4,570,486) 19,907,628 NET ASSETS Beginning of period 259,170,208 239,262,580 ------------ ------------ END OF PERIOD (INCLUDING ACCUMULATED NET INVESTMENT LOSS AND UNDISTRIBUTED NET INVESTMENT INCOME OF ($787,326) AND $0, RESPECTIVELY) $254,599,722 $259,170,208 ============ ============
See Notes to Financial Statements 12 Phoenix Small-Cap Value Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A ----------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED AUGUST 31 FEBRUARY 28, 2006 ---------------------------------------------------------- (UNAUDITED) 2005 2004 2003 2002 2001 Net asset value, beginning of period $19.45 $15.08 $13.42 $11.30 $12.72 $17.90 INCOME FROM INVESTMENT OPERATIONS Net investment (loss)(1) (0.03) (0.03) (0.06) --(3) (0.01) (0.05) Net realized and unrealized gain (loss) 1.40 4.40 1.72 2.12 (1.39) (2.34) ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 1.37 4.37 1.66 2.12 (1.40) (2.39) ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Distributions from net realized gains (1.96) -- -- -- (0.02) (2.79) ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (1.96) -- -- -- (0.02) (2.79) ------ ------ ------ ------ ------ ------ Change in net asset value (0.59) 4.37 1.66 2.12 (1.42) (5.18) ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $18.86 $19.45 $15.08 $13.42 $11.30 $12.72 ====== ====== ====== ====== ====== ====== Total return(2) 7.66 %(4) 28.98 % 12.37 % 18.76% (11.02)% (14.24)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $147,898 $147,132 $124,165 $76,783 $83,005 $88,174 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 1.40 %(5) 1.40 % 1.40 % 1.40% 1.40 % 1.40 % Gross operating expenses 1.48 %(5) 1.56 % 1.57 % 1.71% 1.64 % 1.58 % Net investment income (loss) (0.31)%(5) (0.17)% (0.38)% 0.04% (0.11)% (0.39)% Portfolio turnover 61 %(4) 102 % 150 % 241% 123 % 229 % CLASS B ----------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED AUGUST 31 FEBRUARY 28, 2006 ---------------------------------------------------------- (UNAUDITED) 2005 2004 2003 2002 2001 Net asset value, beginning of period $18.26 $14.27 $12.79 $10.85 $12.31 $17.54 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) (0.09) (0.15) (0.16) (0.08) (0.10) (0.16) Net realized and unrealized gain (loss) 1.31 4.14 1.64 2.02 (1.34) (2.28) ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 1.22 3.99 1.48 1.94 (1.44) (2.44) ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Distributions from net realized gains (1.96) -- -- -- (0.02) (2.79) ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (1.96) -- -- -- (0.02) (2.79) ------ ------ ------ ------ ------ ------ Change in net asset value (0.74) 3.99 1.48 1.94 (1.46) (5.23) ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $17.52 $18.26 $14.27 $12.79 $10.85 $12.31 ====== ====== ====== ====== ====== ====== Total return(2) 7.33 %(4) 27.96 % 11.57 % 17.88 % (11.72)% (14.89)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $38,377 $42,081 $43,801 $40,696 $40,382 $40,270 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 2.15 %(5) 2.15 % 2.15 % 2.15 % 2.15 % 2.15 % Gross operating expenses 2.23 %(5) 2.31 % 2.33 % 2.46 % 2.39 % 2.33 % Net investment income (loss) (1.06)%(5) (0.91)% (1.15)% (0.71)% (0.86)% (1.14)% Portfolio turnover 61 %(4) 102 % 150 % 241 % 123 % 229 % (1) Computed using average shares outstanding. (2) Sales charges are not reflected in total return calculation. (3) Amount is less than $0.01. (4) Not annualized. (5) Annualized.
See Notes to Financial Statements 13 Phoenix Small-Cap Value Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS C ----------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED AUGUST 31 FEBRUARY 28, 2006 ---------------------------------------------------------- (UNAUDITED) 2005 2004 2003 2002 2001 Net asset value, beginning of period $18.26 $14.27 $12.79 $10.85 $12.31 $17.54 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) (0.09) (0.15) (0.16) (0.08) (0.10) (0.16) Net realized and unrealized gain (loss) 1.31 4.14 1.64 2.02 (1.34) (2.28) ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 1.22 3.99 1.48 1.94 (1.44) (2.44) ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Distributions from net realized gains (1.96) -- -- -- (0.02) (2.79) ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (1.96) -- -- -- (0.02) (2.79) ------ ------ ------ ------ ------ ------ Change in net asset value (0.74) 3.99 1.48 1.94 (1.46) (5.23) ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $17.52 $18.26 $14.27 $12.79 $10.85 $12.31 ====== ====== ====== ====== ====== ====== Total return(2) 7.33 %(3) 27.96 % 11.57 % 17.88 % (11.72)% (14.89)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $68,325 $69,957 $71,296 $51,559 $49,201 $45,450 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 2.15 %(4) 2.15 % 2.15 % 2.15 % 2.15 % 2.15 % Gross operating expenses 2.23 %(4) 2.31 % 2.32 % 2.46 % 2.39 % 2.33 % Net investment income (loss) (1.06)%(4) (0.91)% (1.14)% (0.72)% (0.86)% (1.14)% Portfolio turnover 61 %(3) 102 % 150 % 241 % 123 % 229 % (1) Computed using average shares outstanding. (2) Sales charges are not reflected in total return calculation. (3) Not annualized. (4) Annualized.
See Notes to Financial Statements 14 PHOENIX VALUE EQUITY FUND ABOUT YOUR FUND'S EXPENSES (UNAUDITED) We believe it is important for you to understand the impact of costs on your investment. All mutual funds have operating expenses. As a shareholder of the Value Equity Fund, you incur two types of costs: (1) transaction costs, including sales charges and contingent deferred sales charges, if applicable; and (2) ongoing costs, including investment advisory fees; distribution and service fees; and other expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period. ACTUAL EXPENSES The first line of the accompanying tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the accompanying tables provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges or contingent deferred sales charges. Therefore, the second line of the accompanying tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions. Beginning Ending Expenses Paid Value Equity Fund Account Value Account Value During Class A August 31, 2005 February 28, 2006 Period* - ------------------ --------------- ----------------- ------------- Actual $1,000.00 $1,079.20 $6.62 Hypothetical (5% return before expenses) 1,000.00 1,018.35 6.44 *EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 1.28%, WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 365 TO REFLECT THE ONE-HALF YEAR PERIOD. Beginning Ending Expenses Paid Value Equity Fund Account Value Account Value During Class B August 31, 2005 February 28, 2006 Period* - ------------------ --------------- ----------------- ------------- Actual $1,000.00 $1,075.20 $10.45 Hypothetical (5% return before expenses) 1,000.00 1,014.60 10.19 *EXPENSES ARE EQUAL TO THE FUND'S CLASS B ANNUALIZED EXPENSE RATIO OF 2.03%, WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 365 TO REFLECT THE ONE-HALF YEAR PERIOD. Beginning Ending Expenses Paid Value Equity Fund Account Value Account Value During Class C August 31, 2005 February 28, 2006 Period* - ------------------ --------------- ----------------- ------------- Actual $1,000.00 $1,075.10 $10.46 Hypothetical (5% return before expenses) 1,000.00 1,014.60 10.19 *EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 2.03%, WHICH IS NET OF WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 365 TO REFLECT THE ONE-HALF YEAR PERIOD. YOU CAN FIND MORE INFORMATION ABOUT THE FUNDS EXPENSES IN THE FINANCIAL STATEMENTS SECTION THAT FOLLOWS. FOR ADDITIONAL INFORMATION ON OPERATING EXPENSES AND OTHER SHAREHOLDER COSTS REFER TO THE PROSPECTUS. See Notes to Financial Statements 15 Phoenix Value Equity Fund - -------------------------------------------------------------------------------- SECTOR WEIGHTINGS (UNAUDITED) 2/28/06 - -------------------------------------------------------------------------------- As a percentage of total investments [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Financials 35% Energy 17 Industrials 10 Materials 8 Consumer Discretionary 8 Utilities 6 Telecommunication Services 6 Other 10 SCHEDULE OF INVESTMENTS FEBRUARY 28, 2006 (UNAUDITED) SHARES VALUE ------- ------------ DOMESTIC COMMON STOCKS--97.6% AEROSPACE & DEFENSE--4.9% General Dynamics Corp. ...................... 7,500 $ 924,525 Lockheed Martin Corp. ....................... 7,200 524,664 Northrop Grumman Corp. ...................... 14,300 916,630 ------------ 2,365,819 ------------ AGRICULTURAL PRODUCTS--0.2% Archer-Daniels-Midland Co. .................. 3,300 104,676 APPAREL RETAIL--0.8% Abercrombie & Fitch Co. Class A ............. 5,400 363,528 ASSET MANAGEMENT & CUSTODY BANKS--2.3% Franklin Resources, Inc. .................... 10,600 1,088,408 BIOTECHNOLOGY--0.4% United Therapeutics Corp.(b) ................ 2,800 172,592 BUILDING PRODUCTS--0.1% USG Corp.(b) ................................ 900 76,032 COMMUNICATIONS EQUIPMENT--2.1% Cisco Systems, Inc.(b) ...................... 49,800 1,007,952 COMPUTER & ELECTRONICS RETAIL--0.2% GameStop Corp. Class A(b) ................... 2,800 112,084 CONSTRUCTION, FARM MACHINERY & HEAVY TRUCKS--1.6% PACCAR, Inc. ................................ 11,200 782,544 DEPARTMENT STORES--0.1% Dillard's, Inc. Class A ..................... 1,900 46,873 SHARES VALUE ------- ------------ DISTRIBUTORS--0.7% Building Materials Holding Corp. ............ 4,800 $ 323,040 DIVERSIFIED BANKS--1.9% Bank of America Corp. ....................... 1 9 Wells Fargo & Co. ........................... 14,100 905,220 ------------ 905,229 ------------ DIVERSIFIED CHEMICALS--0.7% Ashland, Inc. ............................... 4,900 319,823 DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES--0.6% PHH Corp.(b) ................................ 9,900 283,041 DIVERSIFIED METALS & MINING--3.0% Phelps Dodge Corp. .......................... 10,400 1,435,200 ELECTRIC UTILITIES--2.7% FirstEnergy Corp. ........................... 25,800 1,317,864 FOREST PRODUCTS--0.5% Louisiana-Pacific Corp. ..................... 7,800 221,754 HEALTH CARE DISTRIBUTORS--1.5% AmerisourceBergen Corp. ..................... 15,300 703,647 HOME IMPROVEMENT RETAIL--3.1% Home Depot, Inc. (The) ...................... 34,700 1,462,605 HOMEBUILDING--0.2% William Lyon Homes, Inc.(b) ................. 1,000 85,100 See Notes to Financial Statements 16 Phoenix Value Equity Fund SHARES VALUE ------- ------------ INDEPENDENT POWER PRODUCERS & ENERGY TRADERS--3.6% Duke Energy Corp. ........................... 33,900 $ 962,760 TXU Corp. ................................... 14,400 754,416 ------------ 1,717,176 ------------ INTEGRATED OIL & GAS--12.1% Amerada Hess Corp. .......................... 6,900 954,339 Chevron Corp. ............................... 5,400 304,992 ConocoPhillips .............................. 34,400 2,097,024 Exxon Mobil Corp. ........................... 27,800 1,650,486 Marathon Oil Corp. .......................... 10,100 713,060 Occidental Petroleum Corp. .................. 600 54,924 ------------ 5,774,825 ------------ INTEGRATED TELECOMMUNICATION SERVICES--6.1% AT&T, Inc. .................................. 69,900 1,928,541 BellSouth Corp. ............................. 7,900 249,482 Verizon Communications, Inc. ................ 22,000 741,400 ------------ 2,919,423 ------------ INTERNET SOFTWARE & SERVICES--0.3% EarthLink, Inc.(b) .......................... 13,400 132,928 INVESTMENT BANKING & BROKERAGE--3.8% Bear Stearns Cos., Inc. (The) ............... 11,300 1,519,172 Merrill Lynch & Co., Inc. ................... 3,800 293,398 ------------ 1,812,570 ------------ LEISURE PRODUCTS--0.1% JAKKS Pacific, Inc.(b) ...................... 2,600 64,532 LIFE & HEALTH INSURANCE--6.9% MetLife, Inc. ............................... 31,900 1,598,828 Prudential Financial, Inc. .................. 15,000 1,155,600 Torchmark Corp. ............................. 10,400 568,568 ------------ 3,322,996 ------------ MANAGED HEALTH CARE--0.5% CIGNA Corp. ................................. 1,800 220,950 MOTORCYCLE MANUFACTURERS--1.2% Harley-Davidson, Inc. ....................... 10,700 561,857 MULTI-LINE INSURANCE--4.6% American International Group, Inc. .......... 5,100 338,436 Genworth Financial, Inc. Class A ............ 9,400 299,108 Hartford Financial Services Group, Inc. (The) 18,800 1,548,744 ------------ 2,186,288 ------------ SHARES VALUE ------- ------------ OIL & GAS EXPLORATION & PRODUCTION--2.9% Anadarko Petroleum Corp. .................... 400 $ 39,664 Devon Energy Corp. .......................... 22,800 1,336,764 ------------ 1,376,428 ------------ OIL & GAS REFINING, MARKETING & TRANSPORTATION--2.3% Valero Energy Corp. ......................... 20,600 1,108,074 PACKAGED FOODS & MEATS--0.4% Pilgrim's Pride Corp. ....................... 7,700 177,562 PHARMACEUTICALS--0.9% Alpharma, Inc. Class A ...................... 6,200 187,550 King Pharmaceuticals, Inc.(b) ............... 14,100 229,125 ------------ 416,675 ------------ PROPERTY & CASUALTY INSURANCE--5.6% Berkley (W.R.) Corp. ........................ 1,300 75,257 Chubb Corp. (The) ........................... 16,800 1,608,600 CNA Financial Corp.(b) ...................... 3,500 108,220 Fidelity National Financial, Inc. ........... 8,900 336,064 Fidelity National Title Group, Inc. Class A . 2,520 59,724 St. Paul Travelers Cos., Inc. (The) ......... 11,992 515,416 ------------ 2,703,281 ------------ RAILROADS--1.7% Norfolk Southern Corp. ...................... 16,300 834,234 REGIONAL BANKS--5.9% KeyCorp ..................................... 37,500 1,397,625 PNC Financial Services Group, Inc. (The) .... 7,500 527,625 SunTrust Banks, Inc. ........................ 12,600 911,862 ------------ 2,837,112 ------------ REITS--1.6% GMH Communities Trust ....................... 45,900 762,858 SEMICONDUCTOR EQUIPMENT--0.1% Lam Research Corp.(b) ....................... 1,100 47,410 SEMICONDUCTORS--1.1% Micron Technology, Inc.(b) .................. 33,600 521,136 SOFT DRINKS--1.9% PepsiCo, Inc. ............................... 15,300 904,383 STEEL--4.2% Nucor Corp. ................................. 23,200 1,996,360 See Notes to Financial Statements 17 Phoenix Value Equity Fund SHARES VALUE ------- ------------ THRIFTS & MORTGAGE FINANCE--1.5% PMI Group, Inc. (The) ....................... 1,700 $ 73,610 Radian Group, Inc. .......................... 11,600 658,300 ------------ 731,910 ------------ TRUCKING--0.7% Hunt (J.B.) Transport Services, Inc. ........ 13,400 317,044 - ------------------------------------------------------------------------- TOTAL DOMESTIC COMMON STOCKS (IDENTIFIED COST $43,316,429) 46,625,823 - ------------------------------------------------------------------------- FOREIGN COMMON STOCKS(c)--1.4% AUTO PARTS & EQUIPMENT--1.4% Autoliv, Inc. (Sweden) ...................... 12,700 680,085 - ------------------------------------------------------------------------- TOTAL FOREIGN COMMON STOCKS (IDENTIFIED COST $559,003) 680,085 - ------------------------------------------------------------------------- TOTAL INVESTMENTS--99.0% (IDENTIFIED COST $43,875,432) 47,305,908(a) Other assets and liabilities, net--1.0% 475,106 ------------ NET ASSETS--100.0% $47,781,014 ============ (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $4,312,122 and gross depreciation of $915,460 for federal income tax purposes. At February 28, 2006, the aggregate cost of securities for federal income tax purposes was $43,909,246. (b) Non-income producing. (c) Common stock is considered to be foreign if the security is issued in a foreign country. The country of risk, noted parenthetically, is determined based on criteria described in Note 2G "Foreign security country determination" in the Notes to Financial Statements. See Notes to Financial Statements 18 Phoenix Value Equity Fund STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 2006 (UNAUDITED) ASSETS Investment securities at value (Identified cost $43,875,432) $47,305,908 Receivables Investment securities sold 3,606,382 Dividends 157,060 Fund shares sold 7,369 Prepaid expenses 22,881 ----------- Total assets 51,099,600 ----------- LIABILITIES Cash overdraft 59,857 Payables Investment securities purchased 3,054,364 Fund shares repurchased 70,152 Investment advisory fee 48,947 Transfer agent fee 22,877 Distribution and service fees 20,595 Financial agent fee 5,726 Trustees' fee 84 Other accrued expenses 35,984 ----------- Total liabilities 3,318,586 ----------- NET ASSETS $47,781,014 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest $51,556,797 Undistributed net investment income 312,546 Accumulated net realized loss (7,518,805) Net unrealized appreciation 3,430,476 ----------- NET ASSETS $47,781,014 =========== CLASS A Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $28,113,544) 1,933,452 Net asset value per share $14.54 Offering price per share $14.54/(1-5.75%) $15.43 CLASS B Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $10,444,220) 748,130 Net asset value and offering price per share $13.96 CLASS C Shares of beneficial interest outstanding, no par value, unlimited authorization (Net Assets $9,223,250) 660,234 Net asset value and offering price per share $13.97 STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 2006 (UNAUDITED) INVESTMENT INCOME Dividends $ 692,485 Interest 11,105 ----------- Total investment income 703,590 ----------- EXPENSES Investment advisory fee 179,871 Service fees, Class A 34,583 Distribution and service fees, Class B 54,903 Distribution and service fees, Class C 46,595 Financial agent fee 30,635 Transfer agent 53,372 Professional 16,842 Registration 15,944 Printing 11,885 Trustees 10,746 Custodian 8,236 Miscellaneous 5,773 ----------- Total expenses 469,385 Less expenses reimbursed by investment adviser (82,910) Custodian fees paid indirectly (2,773) ----------- Net expenses 383,702 ----------- NET INVESTMENT INCOME (LOSS) 319,888 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments 7,002,612 Net change in unrealized appreciation (depreciation) on investments (3,749,145) ----------- NET GAIN (LOSS) ON INVESTMENTS 3,253,467 ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 3,573,355 =========== See Notes to Financial Statements 19 Phoenix Value Equity Fund STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended February 28, 2006 Year Ended (Unaudited) August 31, 2005 ----------------- --------------- FROM OPERATIONS Net investment income (loss) $ 319,888 $ 291,463 Net realized gain (loss) 7,002,612 4,401,246 Net change in unrealized appreciation (depreciation) (3,749,145) 2,141,924 ----------- ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 3,573,355 6,834,633 ----------- ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income, Class A (239,885) -- Net investment income, Class B (21,604) -- Net investment income, Class C (19,055) -- ----------- ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (280,544) -- ----------- ------------ FROM SHARE TRANSACTIONS CLASS A Proceeds from sales of shares (147,044 and 274,618 shares, respectively) 2,057,807 3,623,573 Net asset value of shares issued from reinvestment of distributions (16,173 and 0 shares, respectively) 224,477 -- Cost of shares repurchased (319,462 and 911,003 shares, respectively) (4,457,445) (12,004,860) ----------- ------------ Total (2,175,161) (8,381,287) ----------- ------------ CLASS B Proceeds from sales of shares (30,241 and 97,568 shares, respectively) 403,617 1,235,635 Net asset value of shares issued from reinvestment of distributions (1,292 and 0 shares, respectively) 17,248 -- Cost of shares repurchased (214,666 and 305,879 shares, respectively) (2,847,345) (3,883,593) ----------- ------------ Total (2,426,480) (2,647,958) ----------- ------------ CLASS C Proceeds from sales of shares (7,347 and 49,854 shares, respectively) 98,179 637,616 Net asset value of shares issued from reinvestment of distributions (1,150 and 0 shares, respectively) 15,351 -- Cost of shares repurchased (80,776 and 457,829 shares, respectively) (1,086,471) (5,752,878) ----------- ------------ Total (972,941) (5,115,262) ----------- ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS (5,574,582) (16,144,507) ----------- ------------ NET INCREASE (DECREASE) IN NET ASSETS (2,281,771) (9,309,874) NET ASSETS Beginning of period 50,062,785 59,372,659 ----------- ------------ END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $312,546 AND $273,202, RESPECTIVELY) $47,781,014 $ 50,062,785 =========== ============
See Notes to Financial Statements 20 Phoenix Value Equity Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A ----------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED AUGUST 31 FEBRUARY 28, 2006 ---------------------------------------------------------- (UNAUDITED) 2005 2004 2003 2002 2001 Net asset value, beginning of period $13.59 $12.05 $11.33 $10.64 $12.76 $15.03 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) 0.11 0.11 0.04 0.11 0.08 0.08 Net realized and unrealized gain (loss) 0.96 1.43 0.72 0.66 (1.97) (0.93) ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 1.07 1.54 0.76 0.77 (1.89) (0.85) ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income (0.12) -- (0.04) (0.08) (0.08) -- Distributions from net realized gains -- -- -- -- (0.15) (1.42) ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.12) -- (0.04) (0.08) (0.23) (1.42) ------ ------ ------ ------ ------ ------ Change in net asset value 0.95 1.54 0.72 0.69 (2.12) (2.27) ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $14.54 $13.59 $12.05 $11.33 $10.64 $12.76 ====== ====== ====== ====== ====== ====== Total return(2) 7.92%(3) 12.78% 6.71% 7.31% (14.97)% (6.71)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $28,114 $28,407 $32,859 $37,310 $43,993 $58,260 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 1.28%(4) 1.25% 1.25% 1.25% 1.25 % 1.25 % Gross operating expenses 1.63%(4) 1.71% 1.59% 1.63% 1.49 % 1.38 % Net investment income (loss) 1.65%(4) 0.84% 0.35% 1.06% 0.64 % 0.53 % Portfolio turnover 124%(3) 69% 200% 349% 166 % 249 % CLASS B ----------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED AUGUST 31 FEBRUARY 28, 2006 ---------------------------------------------------------- (UNAUDITED) 2005 2004 2003 2002 2001 Net asset value, beginning of period $13.01 $11.62 $10.99 $10.35 $12.42 $14.77 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) 0.06 0.01 (0.05) 0.04 (0.01) (0.03) Net realized and unrealized gain (loss) 0.92 1.38 0.70 0.63 (1.91) (0.90) ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.98 1.39 0.65 0.67 (1.92) (0.93) ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income (0.03) -- (0.02) (0.03) -- -- Distributions from net realized gains -- -- -- -- (0.15) (1.42) ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.03) -- (0.02) (0.03) (0.15) (1.42) ------ ------ ------ ------ ------ ------ Change in net asset value 0.95 1.39 0.63 0.64 (2.07) (2.35) ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $13.96 $13.01 $11.62 $10.99 $10.35 $12.42 ====== ====== ====== ====== ====== ====== Total return(2) 7.52%(3) 11.96% 5.95 % 6.44% (15.57)% (7.42)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $10,444 $12,118 $13,247 $16,363 $28,873 $36,669 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 2.03%(4) 2.00% 2.00 % 2.00% 2.00 % 2.00 % Gross operating expenses 2.38%(4) 2.46% 2.34 % 2.38% 2.24 % 2.13 % Net investment income (loss) 0.90%(4) 0.09% (0.40)% 0.37% (0.11)% (0.22)% Portfolio turnover 124%(3) 69% 200 % 349% 166 % 249 % (1) Computed using average shares outstanding. (2) Sales charges are not reflected in total return calculation. (3) Not annualized. (4) Annualized.
See Notes to Financial Statements 21 Phoenix Value Equity Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS C ----------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED AUGUST 31 FEBRUARY 28, 2006 ---------------------------------------------------------- (UNAUDITED) 2005 2004 2003 2002 2001 Net asset value, beginning of period $13.02 $11.63 $11.00 $10.35 $12.43 $14.78 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) 0.06 0.01 (0.05) 0.03 (0.01) (0.03) Net realized and unrealized gain (loss) 0.92 1.38 0.70 0.65 (1.92) (0.90) ------ ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.98 1.39 0.65 0.68 (1.93) (0.93) ------ ------ ------ ------ ------ ------ LESS DISTRIBUTIONS Dividends from net investment income (0.03) -- (0.02) (0.03) -- -- Distributions from net realized gains -- -- -- -- (0.15) (1.42) ------ ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.03) -- (0.02) (0.03) (0.15) (1.42) ------ ------ ------ ------ ------ ------ Change in net asset value 0.95 1.39 0.63 0.65 (2.08) (2.35) ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $13.97 $13.02 $11.63 $11.00 $10.35 $12.43 ====== ====== ====== ====== ====== ====== Total return(2) 7.51%(3) 11.95% 5.94 % 6.47% (15.56)% (7.41)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $9,223 $9,538 $13,266 $15,408 $19,231 $23,409 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 2.03%(4) 2.00% 2.00 % 2.00% 2.00 % 2.00 % Gross operating expenses 2.38%(4) 2.46% 2.34 % 2.38% 2.24 % 2.13 % Net investment income (loss) 0.90%(4) 0.09% (0.40)% 0.31% (0.11)% (0.22)% Portfolio turnover 124%(3) 69% 200 % 349% 166 % 249 % (1) Computed using average shares outstanding. (2) Sales charges are not reflected in total return calculation. (3) Not annualized. (4) Annualized.
See Notes to Financial Statements 22 PHOENIX INVESTMENT TRUST 97 NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2006 (UNAUDITED) 1. ORGANIZATION Phoenix Investment Trust 97 (the "Trust") is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. Currently, two funds are offered for sale (each a "Fund"). The Phoenix Small-Cap Value Fund ("Small-Cap Value Fund") is diversified and seeks long-term capital appreciation. The Phoenix Value Equity Fund ("Value Equity Fund") is diversified and has a primary investment objective to seek long-term capital appreciation. The Fund has a secondary investment objective to seek current income. The Funds offer the following classes of shares for sale: Class A Class B Class C ------- ------- ------- Small-Cap Value Fund.............. X X X Value Equity Fund................. X X X Class A shares are sold with a front-end sales charge of up to 5.75%. Generally, Class A shares are not subject to any charges by the Fund when redeemed; however, effective January 11, 2006, a 1% contingent deferred sales charge may be imposed on certain redemptions within one year on purchases on which a finder's fee has been paid. Class B shares are sold with a contingent deferred sales charge which declines from 5% to zero depending on the period of time the shares are held. Class C shares are sold with a 1% contingent deferred sales charge if redeemed within one year of purchase. Each class of shares has identical voting, dividend, liquidation and other rights and the same terms and conditions, except that each class bears different distribution and/or service expenses and has exclusive voting rights with respect to its distribution plan. Income and expenses and realized and unrealized gains and losses of each Fund are borne pro rata by the holders of each class of shares. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. A. SECURITY VALUATION: Equity securities are valued at the official closing price (typically last sale) on the exchange on which the securities are primarily traded, or if no closing price is available, at the last bid price. Debt securities are valued on the basis of broker quotations or valuations provided by a pricing service, which utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities in determining value. As required, some securities and assets may be valued at fair value as determined in good faith by or under the direction of the Trustees. Certain foreign common stocks may be fair valued in cases where closing prices are not readily available or are deemed not reflective of readily available market prices. For example, significant events (such as movement in the U.S. securities market, or other regional and local developments) may occur between the time that foreign markets close (where the security is principally traded) and the time that the Fund calculates its net asset value (generally, the close of the NYSE) that may impact the value of securities traded in these foreign markets. In these cases, information from an external vendor may be utilized to adjust closing market prices of certain foreign common stocks to reflect their fair value. Because the frequency of significant events is not predictable, fair valuation of certain foreign common stocks may occur on a frequent basis. Short-term investments having a remaining maturity of 60 days or less are valued at amortized cost, which approximates market. B. SECURITY TRANSACTIONS AND RELATED INCOME: Security transactions are recorded on the trade date. Dividend income is recorded on the ex-dividend date, or in the case of certain foreign securities, as soon as the Fund is notified. Interest income is recorded on the accrual basis. Each Fund amortizes premiums and accretes discounts using the effective interest method. Realized gains and losses are determined on the identified cost basis. C. INCOME TAXES: Each Fund is treated as a separate taxable entity. It is the policy of each Fund in the Trust to comply with the requirements of the Internal Revenue Code and to distribute substantially all of its taxable income to its shareholders. Therefore, no provision for federal income taxes or excise taxes has been made. The Trust may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Each Fund will accrue such taxes and recoveries as applicable based upon current interpretations of the tax rules and regulations that exist in the markets in which they invest. 23 PHOENIX INVESTMENT TRUST 97 NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2006 (UNAUDITED) (CONTINUED) D. DISTRIBUTIONS TO SHAREHOLDERS: Distributions are recorded by each Fund on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences may include the treatment of non-taxable dividends, market premium and discount, non-deductible expenses, expiring capital loss carryovers, foreign currency gain or loss, gain or loss on futures contracts, partnerships, operating losses and losses deferred due to wash sales. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to capital paid in on shares of beneficial interest. E. EXPENSES: Expenses incurred by the Trust with respect to more than one Fund are allocated in proportion to the net assets of each Fund, except where allocation of direct expense to each Fund or an alternative allocation method can be more appropriately made. F. FOREIGN CURRENCY TRANSLATION: Foreign securities and other assets and liabilities are valued using the foreign currency exchange rate effective at the end of the reporting period. Cost of investments is translated at the currency exchange rate effective at the trade date. The gain or loss resulting from a change in currency exchange rates between the trade and settlement date of a portfolio transaction is treated as a gain or loss on foreign currency. Likewise, the gain or loss resulting from a change in currency exchange rates between the date income is accrued and paid is treated as a gain or loss on foreign currency. The Trust does not isolate that portion of the results of operations arising from either changes in exchange rates or in the market prices of securities. G. FOREIGN SECURITY COUNTRY DETERMINATION: A combination of the following criteria is used to assign the countries of risk listed in the schedules of investments: country of incorporation, actual building address, primary exchange on which the security is traded and country in which the greatest percentage of company revenue is generated. H. REIT INVESTMENTS: Dividend income is recorded using management's estimate of the income included in distributions received from the REIT investments. Distributions received in excess of this estimated amount are recorded as a reduction of the cost of investments or reclassified to capital gains. The actual amounts of income, return of capital, and capital gains are only determined by each REIT after its fiscal year-end, and may differ from the estimated amounts. I. SECURITIES LENDING: The Funds may loan securities to qualified brokers through an agreement with State Street Bank (the "Custodian") and the Fund. Under the terms of the agreement, the Fund receives collateral with a market value not less than 100% of the market value of loaned securities. Collateral is adjusted daily in connection with changes in the market value of securities on loan. Collateral consists of cash, securities issued or guaranteed by the U.S. Government or its agencies and the sovereign debt of foreign countries. Cash collateral has been invested in short-term money market funds. Dividends earned on the collateral and premiums paid by the borrower are recorded as income by the Fund net of fees and rebates charged by the Custodian for its services in connection with this securities lending program. Lending portfolio securities involves a risk of delay in the recovery of the loaned securities or in the foreclosure on collateral. 3. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS As compensation for its services to the Trust, the Adviser ("the Adviser"), Phoenix Investment Counsel, Inc. ("PIC") an indirect wholly-owned subsidiary of The Phoenix Companies, Inc. ("PNX") is entitled to a fee based upon the following annual rates as a percentage of the average daily net assets of each Fund: 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% For the period of September 1, 2005 to October 1, 2005, Engemann Asset Management ("EAM") an indirect wholly-owned subsidiary of the Phoenix Companies, Inc. ("PNX") was the Adviser to the Value Equity Fund. For its services to the trust EAM was compensated based upon the following annual rates as a percentage of the average daily net assets of the fund: 1st $1-2 $2 + Fund $1 Billion Billion Billion - ---- ---------- ------- ------- Value Equity Fund................. 0.75% 0.70% 0.65% The Adviser has contractually agreed to limit total fund operating expenses of each Fund (excluding interest, taxes and extraordinary expenses) until December 31, 2006, to the extent that such expenses do not 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................. 1.35% 2.10% 2.10% 24 PHOENIX INVESTMENT TRUST 97 NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2006 (UNAUDITED) (CONTINUED) The Adviser will not seek to recapture any operating expenses reimbursed under this agreement. Phoenix/Zweig Advisers LLC ("PZA") is the subadviser to the Small-Cap Value Fund. For its services, PZA is paid a fee by PIC 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. Acadian Asset Management, Inc. ("Acadian") is the subadviser to the Value Equity Fund. For its services, Acadian is paid a fee by PIC equal to 0.375% of the average daily net assets of this Fund up to $1 billion, 0.350% for average daily net assets over $1 billion to $2 billion and 0.325% for average daily net assets over $2 billion. As Distributor of each Fund'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 six-month period (the "period") ended February 28, 2006, as follows: Class A Class B Class C Net Selling Deferred Deferred Commissions Sales Charges Sales Charges ----------- ------------- ------------- Small-Cap Value Fund....... $4,046 $20,471 $305 Value Equity Fund ......... 1,171 17,418 81 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. 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 oversight of the performance of PFPC Inc. (subagent to PEPCO), plus (2) the documented cost of fund accounting, tax services and related services provided by PFPC Inc. For the period ended February 28, 2006, the Trust incurred financial agent fees totaling $116,428. PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust Company serving as sub-transfer agent. For the period ended February 28, 2006, transfer agent fees were $263,548 as reported in the Statements of Operations, of which PEPCO retained the following: Transfer Agent Fee Retained -------------- Small-Cap Value Fund......................................... $91,410 Value Equity Fund............................................ 8,796 At February 28, 2006, PNX and its affiliates, the retirement plans of PNX and its affiliates, and Phoenix-affiliated funds held 389,505 Class A shares of the Phoenix Small-Cap Value Fund with an aggregate net asset value of $7,346,064. 4. PURCHASES AND SALES OF SECURITIES Purchases and sales of securities during the period ended February 28, 2006 (excluding U.S. Government and agency securities and short-term securities) were as follows: Purchases Sales ------------ ------------ Small-Cap Value Fund.................... $153,798,251 $175,508,325 Value Equity Fund....................... 59,714,931 63,899,530 There were no purchases or sales of long-term U.S. Government and agency securities during the period ended February 28, 2006. 5. CREDIT RISK AND ASSET CONCENTRATIONS In countries with limited or developing markets, investments may present greater risks than in more developed markets and the prices of such investments may be volatile. The consequences of political, social or economic changes in these markets may have disruptive effects on the market prices of these investments and the income they generate, as well as a Fund's ability to repatriate such amounts. Each Fund may invest a high percentage of 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 the Fund, positive or negative, than if the Fund did not concentrate its investments in such sectors. At February 28, 2006, the Small-Cap Value Fund and the Value Equity Fund held $64,428,680 and $16,350,652, respectively, in investments issued by Financial Institutions, comprising 25% and 34% of the total net assets of each fund. 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 each Fund's Schedule of Investments where applicable. 25 PHOENIX INVESTMENT TRUST 97 NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2006 (UNAUDITED) (CONTINUED) 7. INDEMNIFICATIONS Under the Funds' organizational documents, its trustees and officers are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, the Funds enter into contracts that contain a variety of indemnifications. The Funds' maximum exposure under these arrangements is unknown. However, the Funds have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote. 8. REGULATORY EXAMS Federal and state regulatory authorities from time to time make inquiries and conduct examinations regarding compliance by The Phoenix Companies, Inc. and its subsidiaries (collectively "the Company") with securities and other laws and regulations affecting their registered products. During 2004 and 2005, the Boston District Office of the Securities and Exchange Commission ("SEC") conducted an examination of the Company's investment company and investment adviser affiliates. Following the examination, the staff of the Boston District Office issued a deficiency letter noting perceived weaknesses in procedures for monitoring trading to prevent market timing activity prior to 2004. The staff requested the Company to conduct an analysis as to whether shareholders, policyholders and contract holders who invested in the funds that may have been affected by undetected market timing activity had suffered harm and to advise the staff whether the Company believes reimbursement is necessary or appropriate under the circumstances. Market timing is an investment technique involving frequent short-term trading of mutual fund shares that is designed to exploit market movements or inefficiencies in the way mutual fund companies price their shares. A third party was retained to assist the Company in preparing the analysis. In 2005, based on the third party analysis, the Company notified the staff at the SEC Boston District Office that reimbursements were not appropriate under the circumstances. The Company does not believe that the outcome of this matter will be material to these financial statements. 9. FEDERAL INCOME TAX INFORMATION The Funds have capital loss carryovers which may be used to offset future capital gains, as follows: Expiration Year ----------------------------- 2011 Total ----------- ----------- Value Equity Fund........................ $14,293,280 $14,293,280 The Trust may not realize the benefit of these losses to the extent the Fund does not realize gains on investments prior to the expiration of the capital loss carryovers. 26 BOARD OF TRUSTEES' CONSIDERATION OF INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS FOR PHOENIX SMALL-CAP VALUE FUND (THE "FUND") FEBRUARY 28, 2006 (UNAUDITED) The Board of Trustees is responsible for determining whether to approve the Fund's investment advisory and subadvisory agreements. At a meeting held on November 4th, 2005, the Board, including a majority of the independent Trustees, approved the investment advisory agreement (the "Advisory Agreement") between Phoenix Investment Counsel, Inc. ("PIC") and the Fund and the investment subadvisory agreement (the "Subadvisory Agreement") between PIC and Phoenix/Zweig Advisers LLC (the "Subadvisor"). Pursuant to the Advisory Agreement between PIC and the Fund, PIC provides advisory services to the Fund. Pursuant to the Subadvisory Agreement between PIC and the Subadvisor, the Subadvisor provides the day to day investment management for the Fund. During the review process, the Board received assistance and advice from, and met separately with, independent legal counsel. In approving each agreement, the Board, including a majority of the independent Trustees, determined that the fee structure was fair and reasonable and that approval of each agreement was in the best interests of the Fund and its shareholders. While attention was given to all information furnished, the following discusses the primary factors relevant to the Board's decision. ADVISORY AGREEMENT CONSIDERATIONS NATURE, EXTENT AND QUALITY OF SERVICES. The Board concluded that the nature, extent and quality of the overall services provided by PIC and its affiliates to the Fund and its shareholders was reasonable. The Board's conclusion was based, in part, upon services provided to the Fund such as quarterly reports provided by PIC comparing the performance of the Fund with a peer group and benchmark, reports provided by PIC showing that the investment policies and restrictions for the Fund were followed and reports provided by PIC covering matters such as the compliance of investment personnel and other access persons with PIC's and the Fund's code of ethics, the adherence to fair value pricing procedures established by the Board, the monitoring of portfolio compliance, information on illiquid securities and derivatives, brokerage commissions and presentations regarding the economic environment and general investment outlook. The Board noted that PIC was responsible for the general oversight of the investment programs of the Fund and the monitoring of the Fund's Subadvisor's investment performance and its compliance with applicable laws, regulations, policies and procedures. In this regard, the Board considered the detailed performance review process of the investment oversight committee. With respect to compliance monitoring, the Board noted that PIC required quarterly compliance certifications from the Subadvisor and conducted compliance due diligence visits at the Subadvisor. The Board also considered the experience of PIC having acted as an investment adviser to mutual funds for over 70 years and its current experience in acting as an investment adviser to over 50 mutual funds and several institutional clients. The Board also noted the extent of benefits that are provided Fund shareholders from being part of the Phoenix family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds and the right to combine holdings in other funds to obtain a reduced sales charge. The Board also considered the transfer agent and shareholder services that are provided to Fund shareholders by an affiliate of PIC, noting continuing improvements by management in the scope and quality of services and favorable reports on such service conducted by third parties. INVESTMENT PERFORMANCE. The Board placed significant emphasis on the investment performance of the Fund in view of its importance to shareholders. While consideration was given to performance reports and discussions at Board meetings throughout the year, particular attention in assessing such performance was given to a report for the Fund prepared by Lipper Financial Services ("Lipper") furnished for the contract renewal process. The Lipper report showed the investment performance of the Fund's Class A shares for the 1, 3 and 5 year periods ended September 30, 2005 and the year-to-date period ended September 30, 2005. The Board reviewed the investment performance of the Fund, along with comparative performance information of a peer group of funds and a relevant market index. The Board noted and was satisfied that, although the Fund had trailed its benchmark for the 3 and 5 year periods, the Fund outperformed the benchmark for the more recent 1 year and year-to-date periods. The Board noted that the Lipper peer group ranking of the Fund appeared to be improving as well. PROFITABILITY. The Board also considered the level of profits realized by PIC and its affiliates in connection with the operation of the Fund. In this regard, the Board reviewed the Fund profitability analysis that addressed the overall profitability of PIC for its management of the Phoenix retail fund family, as well as its profits and that of its affiliates, for managing the Fund. Specific attention was given to the methodology followed in allocating costs to the Fund, it being recognized that allocation methodologies are inherently subjective and various allocation methodologies may each be reasonable while producing different results. In this regard, the Board noted that the allocation appeared reasonable. The Board also noted the voluntary reimbursements provided to the Fund. The Board concluded that the profitability to PIC from the Fund was reasonable. 27 BOARD OF TRUSTEES' CONSIDERATION OF INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS FOR PHOENIX SMALL-CAP VALUE FUND (THE "FUND") FEBRUARY 28, 2006 (UNAUDITED) (CONTINUED) MANAGEMENT FEE AND TOTAL EXPENSES. The Board also placed significant emphasis on the review of expenses of the Fund. Consideration was given to a comparative analysis of the management fees and total expense ratios of the Fund compared with those of a group of other funds selected by Lipper as its appropriate Lipper expense group under the Lipper report. The Board noted that the total expenses of the Fund were approximately equal to the average total expenses for comparable funds and that, although the contractual management fee was slightly higher than the median for the peer group, when fee waivers were factored in, the management fee was less than the median. The Board was satisfied with the management fee and total expenses of the Fund in comparison to its expense group as shown in the Lipper report and concluded that such fee and expenses were reasonable. ECONOMIES OF SCALE. The Board noted that the management fee included breakpoints based on the amount of assets under management. The Board also noted that it was likely that PIC and the Fund would achieve certain economies of scale as the assets grew covering certain fixed costs. The Board concluded that shareholders would have an opportunity to benefit from these economies of scale. SUBADVISORY AGREEMENT CONSIDERATIONS NATURE, EXTENT AND QUALITY OF SERVICES. The Board concluded that the nature, extent and quality of the overall services that are provided by the Subadvisor to the Fund and its shareholders was reasonable. The Board's opinion was based, in part, upon the extensive experience of the Subadvisor and the portfolio managers. In this regard, the Board noted that each member of the portfolio management team had over 10 years of experience in the investment management business. Turning to compensation, the Board noted that a primary factor in the Subadvisor's determination of the amount of bonus compensation to portfolio managers was the relative investment performance of the funds that they managed which would align their interests with those of the Fund's shareholders. The Board also considered and was satisfied with the adequacy of the Subadvisor's compliance program. INVESTMENT PERFORMANCE. The Board placed significant emphasis on the investment performance of the Fund in view of its importance to shareholders. While consideration was given to performance reports and discussions at Board meetings throughout the year, particular attention in assessing such performance was given to a report for the Fund prepared by Lipper. The Lipper report showed the investment performance of the Fund's Class A shares for the 1, 3 and 5 year periods ended September 30, 2005 and the year-to-date period ended September 30, 2005. The Board reviewed the investment performance of the Fund, along with comparative performance information of a peer group of funds and a relevant market index. The Board noted and was satisfied that, although the Fund had trailed its benchmark for the 3 and 5 year periods, the Fund outperformed the benchmark for the more recent 1 year and year-to-date periods. The Board noted that the Lipper peer group ranking of the Fund appeared to be improving as well. PROFITABILITY. The Board did not separately review profitability information for the Subadvisor noting that the subadvisory fee is paid by PIC and not by the Fund so that Fund shareholders would not be directly impacted. SUBADVISORY FEE. The Board did not receive comparative fee information of subadvisory fees but noted that the subadvisory fee is paid by PIC and not by the Fund so that Fund shareholders would not be directly impacted. ECONOMIES OF SCALE. The Board also considered the existence of any economies of scale and whether those economies would be passed along to the Fund's shareholders but noted that any economies would most likely be generated at the fund level and not necessarily at the subadvisor level. 28 MATTERS SUBMITTED TO A VOTE OF SHAREHOLDERS RESULTS OF SHAREHOLDER MEETING SEPTEMBER 16, 2005 (UNAUDITED) At a Special meeting of Shareholders of Phoenix Value Equity Fund (the "Fund") held on September 16, 2005, Shareholders voted on the following proposals: 1. To approve a new Investment Advisory Agreement between the Fund and Phoenix Investment Counsel, Inc. ("PIC") 2. To approve a Subadvisory Agreement between PIC and Acadian Asset Management, Inc. 3. To permit PIC to hire and replace subadvisers or to modify subadvisory agreements without shareholder approval. NUMBER OF ELIGIBLE UNITS VOTED:
FOR AGAINST ABSTAIN BROKER NON-VOTES --- ------- ------- ---------------- 1. Approve a new Investment Advisory Agreement... 2,454,699.849 21,103.061 145,234.379 n/a 2. Approve a new Subadvisory Agreement........... 2,430,004.176 22,409.282 168,623.831 n/a 3. Permission for PIC to hire and replace subadvisers or to modify subadvisory Agreements without shareholder approval....... 1,242,785.088 66,384.568 174,669.633 1,137,198.000
29 (This page has been left blank intentionally.) (This page has been left blank intentionally.) (This page has been left blank intentionally.) (This page has been left blank intentionally.) (This page has been left blank intentionally.) (This page has been left blank intentionally.) PHOENIX INVESTMENT TRUST 97 101 Munson Street Greenfield, MA 01301 TRUSTEES E. Virgil Conway Harry Dalzell-Payne S. Leland Dill(1) Francis E. Jeffries Leroy Keith, Jr. Marilyn E. LaMarche Philip R. McLoughlin, Chairman Geraldine M. McNamara Everett L. Morris(2) James M. Oates Donald B. Romans(1) Richard E. Segerson OFFICERS Daniel T. Geraci, President George R. Aylward, Executive Vice President Francis G. Waltman, Senior Vice President Marc Baltuch, Vice President and Chief Compliance Officer Nancy G. Curtiss, Chief Financial Officer and Treasurer Kevin J. Carr, Vice President, Chief Legal Officer, Counsel and Secretary (1) Pursuant to the Trust's retirement policy, Messrs. Dill and Romans will retire from the Board of Trustees effective April 29, 2006. (2) Pursuant to the Trust's retirement policy, Mr. Morris will retire from the Board of Trustees immediately following its May 2006 meeting. INVESTMENT ADVISER Phoenix Investment Counsel, Inc. 56 Prospect Street Hartford, CT 06115-0480 PRINCIPAL UNDERWRITER Phoenix Equity Planning Corporation One American Row Hartford, CT 06103-2899 TRANSFER AGENT Phoenix Equity Planning Corporation One American Row Hartford, CT 06103-2899 CUSTODIAN State Street Bank and Trust Company P.O. Box 5501 Boston, MA 02206-5501 HOW TO CONTACT US Mutual Fund Services 1-800-243-1574 Advisor Consulting Group 1-800-243-4361 Telephone Orders 1-800-367-5877 Text Telephone 1-800-243-1926 Web site PHOENIXFUNDS.COM - -------------------------------------------------------------------------------- IMPORTANT NOTICE TO SHAREHOLDERS The Securities and Exchange Commission has modified mailing regulations for semiannual and annual shareholder fund reports to allow mutual fund companies to send a single copy of these reports to shareholders who share the same mailing address. If you would like additional copies, please call Mutual Fund Services at 1-800-243-1574. - -------------------------------------------------------------------------------- --------------- PRESORTED STANDARD U.S. POSTAGE PAID Louisville, KY Permit No. 1051 --------------- [GRAPHIC OMITTED] PHOENIXFUNDS(SM) PHOENIX EQUITY PLANNING CORPORATION P.O. Box 150480 Hartford, CT 06115-0480 For more information about Phoenix mutual funds, please call your financial representative, contact us at 1-800-243-1574 or visit PhoenixFunds.com. NOT INSURED BY FDIC/NCUSIF OR ANY FEDERAL GOVERNMENT AGENCY. NO BANK GUARANTEE. NOT A DEPOSIT. MAY LOSE VALUE. PXP214 BPD25789 4-06 ITEM 2. CODE OF ETHICS. Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant's board of trustees, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Not applicable. (a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. (a)(3) Not applicable. (b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) Phoenix Investment Trust 97 ------------------------------------------------------------------- By (Signature and Title)* /s/ George R. Aylward ------------------------------------------------------- George R. Aylward, Executive Vice President (principal executive officer) Date May 5, 2006 ---------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ George R. Aylward ------------------------------------------------------- George R. Aylward, Executive Vice President (principal executive officer) Date May 5, 2006 ---------------------------------------------------------------------------- By (Signature and Title)* /s/ Nancy G. Curtiss ------------------------------------------------------- Nancy G. Curtiss, Chief Financial Officer and Treasurer (principal financial officer) Date May 4, 2006 ---------------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature. EX-99.CERT 2 g20994_cert.txt CERTIFICATION 302 CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT I, George R. Aylward, 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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (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 second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; 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: May 5, 2006 /s/ George R. Aylward --------------------- ------------------------------------------- George R. Aylward, Executive Vice President (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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (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 second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; 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: May 4, 2006 /s/ Nancy G. Curtiss ------------------------ ----------------------------------------- Nancy G. Curtiss, Chief Financial Officer and Treasurer (principal financial officer) EX-99.906CERT 3 g20994_cert906.txt CERTIFICATION 906 CERTIFICATION PURSUANT TO RULE 30A-2(B) UNDER THE 1940 ACT AND SECTION 906 OF THE SARBANES-OXLEY ACT I, George R. Aylward, Executive Vice President of Phoenix Investment Trust 97 (the "Registrant"), certify that: 1. The Form N-CSR of the Registrant containing the financial statements (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: May 5, 2006 /s/ George R. Aylward ---------------------------- ------------------------------------------- George R. Aylward, Executive Vice President (principal executive officer) I, Nancy G. Curtiss, Chief Financial Officer and Treasurer of Phoenix Investment Trust 97 (the "Registrant"), certify that: 1. The Form N-CSR of the Registrant containing the financial statements (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: May 4, 2006 /s/ Nancy G. Curtiss ------------------------ ----------------------------------------- Nancy G. Curtiss, Chief Financial Officer and Treasurer (principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----