Phoenix Investment Partners
|
| Annual Report
|
| August 31, 2000
|
|--- Hollister
> Phoenix-Hollister
Small Cap Value Fund
> Phoenix-Hollister
Value Equity Fund
[LOGO] PHOENIX
INVESTMENT PARTNERS
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IFC (blank)
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Message from the President
Dear Shareholder:
[PHOTO OMITTED]
We are pleased to provide this annual report for the Phoenix-Hollister
Small Cap Value Fund and the Phoenix-Hollister Value Equity Fund for the 12
months ended August 31, 2000. On the following pages, Chris Bertelsen, your
Fund's portfolio manager, reviews events in the equity markets that affected
performance over the last year and discusses investment strategy. We hope you
find his comments informative.
Since it is impossible to predict what investment style will be in favor
next quarter or next year, the need to be properly diversified has, perhaps,
never been more important. The goal of equity diversification is to capture the
overall returns of equities while moderating volatility, or wide swings in
performance results.
A diversified portfolio can offer protection in a volatile market by
spreading investment risk across a broad spectrum of investment styles and asset
classes. Less overlap or redundancy in a portfolio should translate into lower
volatility and greater opportunity to participate in the gains of whatever style
is currently in favor.
We recognize that it is important to measure results by investors' success
in reaching their personal financial goals within the context of their risk
tolerance and investment horizon. We believe that the Phoenix-Hollister Small
Cap Value Fund and the Phoenix-Hollister Value Equity Fund offer investors a
complementary investment style that results in a well-diversified portfolio.
Your financial advisor can show you the benefits of asset allocation and help
you determine what types of investments best fit your financial plan.
If you have any questions, please call your financial advisor or contact
us at 1-800-243-4361 or www.phoenixinvestments.com. Information about your
account is available at our Web site or through our automated account
information line at 1-800-243-1574.
Sincerely,
/s/ Philip R. McLoughlin
Philip R. McLoughlin
August 31, 2000
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Mutual funds are not insured by the FDIC; are not deposits or other obligations
of a bank and are not guaranteed by a bank; and are subject to investment risks,
including possible loss of the principal invested.
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1
<PAGE>
Phoenix-Hollister Small Cap Value Fund
A Discussion with the Fund's Portfolio Manager, Chris Bertelsen
Q: What is the Fund's investment objective?
A: The Fund seeks long-term capital appreciation. Investors should note that the
risks of investing in small-company stocks may include relatively low trading
volumes, a greater degree of change in earnings and greater short-term
volatility.
Q: How did the Fund perform over the last 12 months?
A: For the fiscal year ended August 31, 2000, the Fund had exceptionally strong
results. Class A shares earned 66.15%, outperforming the 13.70% return for its
benchmark, the Russell 2000 Value Index.(1) Class B shares returned 64.97%, and
Class C shares were up 64.97% for the 12 months. Returns cited were achieved in
rapidly rising markets and from strong performance of several stocks in the
capital goods and health-care sectors and may not be achieved in the future. All
performance figures assume reinvestment of distributions and exclude the effect
of sales charges.
Q: How would you characterize the market environment over this reporting period?
A: The past 12 months have been a period of exceptional volatility in the equity
markets. Weekly volatility has only been exceeded by the day-to-day volatility
experienced by all sectors of the market, not just technology, although this
area of the market has captured most of the headline-making news.
Three macro events contributed to this volatile roller coaster
ride--Federal Reserve policy, OPEC's actions and the wide divergence in
performance of the "old" and the "new economy" stocks.
In addition, the love/hate relationship investors have shown first for
growth, then for value, has also been unprecedented and another example of the
market's volatility. The month of April marked the beginning of investors' new
love affair with value-oriented stocks and the end of their romance with high
P/E growth stocks. This trend abruptly reversed itself in June, but by August
31, the end of the Fund's fiscal year, the S&P 500/Barra Value Index was ahead
of its growth-oriented counterpart, the S&P 500/Barra Growth Index.(2)
Q: How did you structure the portfolio in this environment?
A: As opportunities presented themselves, we took advantage. For example, we are
encouraged by the politically charged climate that is embracing the rebuilding
of America's defense establishments. The portfolio holds companies like L-3
Communications Holding Company, Aliant Techsystems and Litton Industries, which
we believe will benefit from this trend.
Small oil-service companies seem to have overcome Wall Street's skepticism
and achieved a level of acceptance as energy price increases intensified
investors' appetites for smaller energy companies, such as Vintage Petroleum
Inc. and Gulf Island Fabrication. We are anticipating that a 25-year
(1) The Russell 2000 Value Index is an unmanaged, commonly used measure of
small-capitalization, value-oriented stock total-return performance.
(2) The S&P 500/Barra Value Index is an unmanaged, commonly used measure of
value-oriented stock total-return performance, and the S&P 500/Barra
Growth Index is an unmanaged, commonly used measure of growth-oriented
stock total-return performance.
The indices are not available for direct investment.
2
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Phoenix-Hollister Small Cap Value Fund (continued)
oversupply of energy is now reaching equilibrium, and unless world demand
decreases, energy and electric power will become a dearer commodity.
This quarter was also notable for the Fed's consistent and successive
interest rate hikes. While many financial stocks have been depressed by Fed
action, we steadfastly remain long-term holders in this growing market sector.
We believe that history may repeat itself by producing a rally within the
financial sector similar to what resulted after five Federal Reserve upward rate
adjustments in 1994. Of course, past performance is not a guarantee of future
results. Recent Fed policy has created tremendous value in this sector,
preparing the way, in our opinion, for long-term outperformance. Companies like
Bank United, Cullen Frost and Annuity and Life Re Holdings currently trade at
extremely attractive multiples.
The politically charged topic of health care has led to several buying
opportunities for value investors, such as ourselves. Trigon Healthcare is one
of our success stories, and we have taken positions in Humana and Triad
Hospitals, also depressed health-care issues.
Q: What is your near-term outlook?
A: We believe that the Fed's work will be completed by the end of the year,
inflation will be contained (with the one exception of oil prices) and market
leadership in areas like finance, defense and even technology will return.
While we cannot fully anticipate the future opportunities that will result
from an "event," we are always on the lookout, ready to take full advantage. One
such event that may occur is an attack by both Republicans and Democrats against
drug pricing, which would depress values in the drug sector and present us with
buying opportunities.
On another note, the Frank Russell Company, creator of indices like the
Russell 2000 Index and the Russell 1000 Index, recently completed its annual
rebalancing of a total of 21 U.S. stock indices. Interestingly, of the 624
companies added to the Russell 3000 Index,(3) more than one-third were based in
California. Nationwide, 42% of the companies added were listed as technology
firms and 19% were included in the health-care sector. Furthermore, 320 initial
public offerings joined the Russell 3000 Index, up from only 179 in 1999. Stocks
removed from the list (based on their declining market capitalizations)
represented the consumer cyclical sector and financial services sectors
primarily, demonstrating the marked shift in the market to the so-called "new
economy" stocks.
We continue to look for those "old economy" stocks that are the
gatekeepers for the "new economy." We prefer those companies that can show real
earnings and strong cash flow. Our investment discipline seeks out well-managed,
small companies with strong internal growth prospects that have not yet been
discovered or are "misunderstood" within their industry. We believe that
investors will be much less forgiving towards those firms that fail to show
positive earnings, which will result, we expect, in the market dramatically
discounting the expected profitability of many of these "new economy" stocks.
August 31, 2000
(3) The Russell 2000 Index is an unmanaged, commonly used measure of
small-capitalization stock total-return performance. The Russell 1000
Index is an unmanaged, commonly used measure of large-capitalization stock
total-return performance. The Russell 3000 Index, a combination of the
Russell 2000 and Russell 1000 indices, is an unmanaged, commonly used
measure of broad stock market total-return performance. The index is not
available for direct investment.
3
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Phoenix-Hollister Small Cap Value Fund
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Average Annual Total Returns(1) PERIODS ENDING 8/31/00
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INCEPTION INCEPTION
1 Year TO 8/31/00 DATE
------- ---------- --------
Class A Shares at NAV(2) 66.15% 26.07% 11/20/97
Class A Shares at POP(3) 56.59 23.42 11/20/97
Class B Shares at NAV(2) 64.97 25.18 11/20/97
Class B Shares at CDSC(4) 60.97 24.46 11/20/97
Class C Shares at NAV(2) 64.97 25.17 11/20/97
Class C Shares at CDSC(4) 64.97 25.17 11/20/97
Russell 2000 Value Index(6) 13.70 3.00 11/20/97
(1) Total returns are historical and include changes in share price and the
reinvestment of both dividends and capital gains distributions.
(2) "NAV" (Net Asset Value) total returns do not include the effect of any
sales charge.
(3) "POP" (Public Offering Price) total returns include the effect of the
maximum front-end 5.75% sales charge.
(4) CDSC (contingent deferred sales charge) is applied to redemptions of
certain classes of shares that do not have a sales charge applied at the
time of purchase. CDSC charges for B shares decline from 5% to 0% over a
five year period. CDSC charges for C shares are 1% in the first year and
0% thereafter.
(5) This chart illustrates POP returns on Class A shares and CDSC returns for
Class B and Class C shares since inception.
(6) The Russell 2000 Value Index is a measure of small-capitalization,
value-oriented stock total return performance. The index's performance
does not reflect sales charges.
All returns represent past performance which may not be indicative of
future performance. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
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Growth of $10,000 PERIODS ENDING 8/31
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[LINE GRAPH OMITTED]
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
11/20/97 (inception of the Fund) in Class A, Class B and Class C shares .The
total return for Class A shares reflects the maximum sales charge of 5.75% on
the initial investment. The total return for Class B shares reflects the CDSC
charges which decline from 5% to 0% over a five year period. The total return
for Class C shares reflects the CDSC charges which are 1% in the first year and
0% thereafter. Performance assumes dividends and capital gains are reinvested.
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Sector Weightings 8/31/00
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As a percentage of equity holdings
[The following information was represented as a pie chart.]
o Financials 22%
o Capital Goods 18
o Technology 14
o Energy 13
o Health-Care 10
o Consumer Cyclicals 9
o Consumer Staples 6
o Other 8
4
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Phoenix-Hollister Small Cap Value Fund
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Ten Largest Holdings at August 31, 2000 (as a percentage of net assets)
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1. L-3 Communications Holdings, Inc. 2.9%
Communications systems producer
2. Shaw Group, Inc.(The) 2.8%
Fabricator of piping systems
3. Valassis Communications, Inc. 2.7%
Publisher of sales promotion materials
4. Boston Communications Group,Inc 2.6%
Provides support services to wireless
telephone carriers
5. Brooktrout, Inc. 2.5%
Computer hardware and software manufacturer
6. Trigon Healthcare, Inc. 2.4%
Virginia-based managed health-care services provider
7. Cal Dive International, Inc. 2.4%
A subsea oil and gas development contractor
8. AMEX Financial Select Sector 2.3%
Depository Receipts
Long-Term Unit Investment Trust
9. Terex Corp. 2.3%
Heavy equipment and truck manufacturer
10. Charles River Laboratories International, Inc. 2.3%
Involved in biotechnology research and support services
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INVESTMENTS AT AUGUST 31, 2000
SHARES VALUE
-------- -----------
COMMON STOCKS -- 81.0%
Aerospace/Defense -- 2.1%
Alliant Techsystems, Inc.(b) ......................... 36,000 $ 2,774,250
Auto Parts & Equipment -- 0.4%
Tower Automotive, Inc.(b) ............................ 50,000 568,750
Banks (Regional) -- 1.9%
Cullen/Frost Bankers, Inc. ........................... 84,000 2,604,000
Biotechnology -- 2.3%
Charles River Laboratories International, Inc.(b) .... 113,400 3,111,412
Chemicals (Specialty) -- 0.6%
Fuller (H.B.) Co. .................................... 25,000 857,812
Communications Equipment -- 7.3%
Brooktrout, Inc.(b) .................................. 100,000 3,400,000
L-3 Communications Holdings, Inc.(b) ................. 65,000 3,843,125
Spectrasite Holdings, Inc.(b) ........................ 110,000 2,578,125
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9,821,250
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Computers (Peripherals) -- 3.5%
Dot Hill Systems Corp.(b) ............................ 240,000 2,130,000
Quantum Corp. - DLT & Storage Systems.(b) ............ 185,000 2,509,062
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4,639,062
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Computers (Software & Services) -- 1.5%
Titan Corp. (The)(b) ................................. 80,000 1,970,000
Construction (Cement & Aggregates) -- 1.3%
Texas Industries, Inc. ............................... 50,000 1,706,250
Electric Companies -- 0.6%
El Paso Electric Co.(b) .............................. 60,000 806,250
Electrical Equipment -- 8.4%
Advanced Lighting Technologies, Inc.(b) .............. 145,300 2,324,800
Artesyn Technologies, Inc.(b) ........................ 56,000 2,327,500
Black Box Corp.(b) ................................... 40,000 2,380,000
C&D Technologies, Inc. ............................... 35,000 1,933,750
Littelfuse, Inc.(b) .................................. 63,000 2,287,687
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11,253,737
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Electronics (Instrumentation) -- 1.7%
Methode Electronics, Inc. Class A .................... 38,000 2,284,750
Engineering & Construction -- 1.6%
MasTec, Inc.(b) ...................................... 58,400 2,102,400
Financial (Diversified) -- 1.4%
CompuCredit Corp.(b) ................................. 47,000 1,862,375
Gaming, Lottery & Pari-mutuel Companies -- 0.5%
Sun International Hotels Ltd.(b) ..................... 28,000 609,000
Health Care (Hospital Management) -- 2.0%
Triad Hospitals, Inc.(b) ............................. 92,000 2,656,500
See Notes to Financial Statements
5
<PAGE>
Phoenix-Hollister Small Cap Value Fund
SHARES VALUE
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Health Care (Managed Care) -- 4.6%
Humana, Inc.(b) ..................................... 350,000 $ 2,996,875
Trigon Healthcare, Inc.(b) .......................... 62,000 3,200,750
----------
6,197,625
----------
Health Care (Medical Products & Supplies) -- 3.3%
Cooper Companies, Inc. (The) ........................ 60,000 1,972,500
Laser Vision Centers, Inc.(b) ....................... 400,000 2,462,500
----------
4,435,000
----------
Homebuilding -- 3.2%
Horton (D.R.), Inc. ................................ 110,000 2,158,750
Lennar Corp. ........................................ 77,000 2,127,125
----------
4,285,875
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Household Furnishings & Appliances -- 1.3%
U.S. Industries, Inc. ............................... 140,000 1,785,000
Insurance (Property-Casualty) -- 3.4%
Commerce Group, Inc. (The) .......................... 40,000 1,040,000
Horace Mann Educators Corp. ......................... 50,000 762,500
Radian Group, Inc. .................................. 38,000 2,360,750
Selective Insurance Group, Inc. ..................... 20,000 358,750
----------
4,522,000
----------
Iron & Steel -- 2.1%
Lone Star Technologies, Inc (b) ..................... 30,000 1,507,500
Maverick Tube Corp.(b) .............................. 45,000 1,262,812
----------
2,770,312
----------
Machinery (Diversified) -- 2.3%
Terex Corp.(b) ...................................... 170,000 3,113,125
Metal Fabricators -- 2.8%
Shaw Group, Inc. (The) (b) .......................... 67,000 3,731,063
Oil & Gas (Drilling & Equipment) -- 7.3%
Cal Dive International, Inc.(b) ..................... 55,000 3,162,500
Gulf Island Fabrication, Inc.(b) .................... 160,000 2,960,000
Parker Drilling Co.(b) .............................. 250,000 1,796,875
Santa Fe International Corp. ........................ 47,000 1,847,688
----------
9,767,063
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Oil & Gas (Exploration & Production) -- 3.4%
Bellwether Exploration Co.(b) ....................... 130,000 1,035,938
Pogo Producing Co. .................................. 50,000 1,343,750
Vintage Petroleum, Inc. ............................. 105,000 2,205,000
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4,584,688
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REITS -- 0.5%
Health Care REIT, Inc. .............................. 40,000 722,500
Restaurants -- 1.2%
CBRL Group, Inc. (b) ................................ 130,000 1,568,125
Retail (Home Shopping) -- 1.8%
ValueVision International, Inc.(b) .................. 83,200 2,438,800
Retail (Specialty-Apparel) -- 0.8%
Men's Wearhouse, Inc. (The)(b) ...................... 26,000 793,000
Pacific Sunwear of California, Inc.(b) .............. 25,000 332,813
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1,125,813
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Services (Commercial & Consumer) -- 0.6%
Wackenhut Corp. (The) Class A(b) .................... 55,000 780,313
Specialty Printing -- 2.7%
Valassis Communications, Inc.(b) .................... 125,000 3,609,375
Telecommunications (Cellular/Wireless) -- 2.6%
Boston Communications Group, Inc.(b) ................ 240,000 3,450,000
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Total Common Stocks
(Identified cost $94,414,242) 108,514,475
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FOREIGN COMMON STOCKS -- 6.9%
Insurance (Life/Health) -- 3.9%
Annuity and Life Re (Holdings) Ltd. (Bermuda) ....... 100,000 2,625,000
London Pacific Group Ltd. ADR (United Kingdom) ..... 130,000 2,624,375
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5,249,375
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Insurance (Property-Casualty) -- 1.5%
RenaissanceRe Holdings Ltd. (Bermuda) ............... 40,000 1,915,000
Oil & Gas (Drilling & Equipment) -- 1.5%
Precision Drilling Corp. (Canada)(b) ................ 60,000 2,040,000
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Total Foreign Common Stocks
(Identified cost $8,231,972) 9,204,375
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See Notes to Financial Statements
6
<PAGE>
Phoenix-Hollister Small Cap Value Fund
SHARES VALUE
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UNIT INVESTMENT TRUSTS -- 8.8%
AMEX Financial Select Sector Depository Receipts .... 110,000 $ 3,131,563
Diamonds Trust, Series I(b) ......................... 27,500 3,093,750
Nasdaq - 100 Shares ................................. 15,000 1,526,484
S&P 400 Mid-Cap Depository Receipts ................. 20,000 1,997,500
S&P 500 Depository Receipts ......................... 8,000 1,219,000
Utilities Select Sector Index ....................... 30,000 865,781
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Total Unit Investments Trusts
(Identified cost $11,179,656) 11,834,078
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Total Long-Term Investments -- 96.7%
(Identified cost $113,825,870) 129,552,928
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STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
----------- -----
SHORT-TERM OBLIGATIONS -- 3.3%
Commercial Paper -- 3.3%
Lexington Parker Capital Co. 6.65%, 9/5/00 ...... A-1 $4,070 4,066,993
Ciesco, L.P. 6.50%, 9/6/00 ...................... A-1+ 335 334,697
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Total Short-Term Obligations
(Identified cost $4,401,690) 4,401,690
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TOTAL INVESTMENTS -- 100.0%
(Identified cost $118,227,560) 133,954,618(a)
Cash and receivables, less liabilities--(0.0%) (30,639)
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NET ASSETS-100% $ 133,923,979
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(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $20,551,909 and gross
depreciation of $5,608,811 for federal income tax purposes. At August 31,
2000, the aggregate cost of securities for federal income tax purposes was
$119,011,520.
(b) Non-income producing
See Notes to Financial Statements
7
<PAGE>
Phoenix-Hollister Small Cap Value Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2000
Assets
Investment securities at value
(Identified cost $118,227,560) $133,954,618
Cash 4,182
Receivables
Investment securities sold 2,056,870
Fund shares sold 1,542,606
Dividends and interest 37,743
Prepaid expenses 280
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Total assets 137,596,299
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Liabilities
Payables
Investment securities purchased 3,398,151
Fund shares repurchased 42,089
Distribution fee 57,626
Investment advisory fee 41,372
Transfer agent fee 24,864
Financial agent fee 10,442
Trustees' fee 8,342
Accrued expenses 89,434
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Total liabilities 3,672,320
------------
Net Assets $133,923,979
============
Net Assets Consist of:
Capital paid in on shares of beneficial interest $ 97,587,799
Accumulated net realized gain 20,609,122
Net unrealized appreciation 15,727,058
------------
Net Assets $133,923,979
============
Class A
Shares of beneficial interest outstanding, $1 par value
unlimited authorization (Net Assets $79,253,552) 4,427,230
Net asset value per share $ 17.90
Offering price per share $17.90/(1-5.75%) $ 18.99
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $26,624,877) 1,518,039
Net asset value and offering price per share $ 17.54
Class C
Shares of beneficial interest outstanding, $1 par value
unlimited authorization (Net Assets $28,045,550) 1,599,308
Net asset value and offering price per share $ 17.54
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31,2000
Investment Income
Dividends $ 520,500
Interest 216,216
------------
Total investment income 736,716
------------
Expenses
Investment advisory fee 740,022
Distribution fee, Class A 124,117
Distribution fee, Class B 167,693
Distribution fee, Class C 158,084
Financial agent fee 107,489
Transfer agent 148,335
Printing 43,932
Registration 42,910
Professional 28,755
Trustees 24,644
Custodian 23,390
Miscellaneous 12,747
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Total expenses 1,622,118
Less expenses borne by investment adviser (222,171)
Custodian fees paid indirectly (4,468)
------------
Net expenses 1,395,479
------------
Net investment loss (658,763)
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 24,693,450
Net change in unrealized appreciation (depreciation) on
investments 12,266,168
------------
Net gain on investments 36,959,618
------------
Net increase in net assets resulting from operations $ 36,300,855
============
See Notes to Financial Statements
8
<PAGE>
Phoenix-Hollister Small Cap Value Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
8/31/00 8/31/99
------------- ------------
<S> <C> <C>
From Operations
Net investment income (loss) $ (658,763) $ (52,755)
Net realized gain (loss) 24,693,450 192,893
Net change in unrealized appreciation (depreciation) 12,266,168 10,201,578
------------- ------------
Increase (decrease) in net assets resulting from operations 36,300,855 10,341,716
------------- ------------
From Distributions to Shareholders
Net realized gains, Class A (2,234,451) (29,557)
Net realized gains, Class B (731,921) (11,989)
Net realized gains, Class C (554,210) (5,756)
------------- ------------
Decrease in net assets from distributions to shareholders (3,520,582) (47,302)
------------- ------------
From Share Transactions
Class A
Proceeds from sales of shares (2,837,654 and 1,080,990 shares, respectively) 44,871,985 11,142,835
Net asset value of shares issued from reinvestment of distributions
(146,701 and 2,728 shares, respectively) 2,021,532 27,226
Cost of shares repurchased (917,508 and 513,966 shares, respectively) (14,822,045) (5,211,308)
------------- ------------
Total 32,071,472 5,958,753
------------- ------------
Class B
Proceeds from sales of shares (807,290 and 328,886 shares, respectively) 12,658,205 3,326,336
Net asset value of shares issued from reinvestment of distributions
(51,822 and 1,052 shares, respectively) 703,223 10,468
Cost of shares repurchased (183,720 and 221,287 shares, respectively) (2,842,406) (2,235,715)
------------- ------------
Total 10,519,022 1,101,089
------------- ------------
Class C
Proceeds from sales of shares (1,055,119 and 338,260 shares, respectively) 16,211,920 3,417,996
Net asset value of shares issued from reinvestment of distributions
(38,106 and 397shares, respectively) 517,092 3,935
Cost of shares repurchased (67,758 and 108,144 shares, respectively) (1,061,504) (1,092,574)
------------- ------------
Total 15,667,508 2,329,357
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Class M
Cost of shares repurchased (0 and 10,849 shares, respectively) -- (95,668)
------------- ------------
Total -- (95,668)
------------- ------------
Increase (decrease) in net assets from share transactions 58,258,002 9,293,531
------------- ------------
Net increase (decrease) in net assets 91,038,275 19,587,945
Net Assets
Beginning of period 42,885,704 23,297,759
------------- ------------
End of period [including undistributed net investment income
of $0 and $0, respectively] $ 133,923,979 $ 42,885,704
============= ============
</TABLE>
See Notes to Financial Statements
9
<PAGE>
Phoenix-Hollister Small Cap Value Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------
From
Year Ended August 31 Inception
---------------------------- 11/20/97 to
2000 1999 8/31/98
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.41 $ 8.11 $ 10.00
Income from investment operations
Net investment income (loss)(1) (0.08) 0.01 (0.01)
Net realized and unrealized gain (loss) 7.38 3.31 (1.85)
---------- ---------- ----------
Total from investment operations 7.30 3.32 (1.86)
---------- ---------- ----------
Less distributions
Dividends from net realized gains (0.81) (0.02) --
In excess of net investment income -- -- (0.03)
---------- ---------- ----------
Total distributions (0.81) (0.02) (0.03)
---------- ---------- ----------
Change in net asset value 6.49 3.30 (1.89)
---------- ---------- ----------
Net asset value, end of period $ 17.90 $ 11.41 $ 8.11
========== ========== ==========
Total return(2) 66.15% 40.90% (18.64)%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 79,254 $ 26,926 $ 14,519
Ratio to average net assets of:
Operating expenses(3) 1.40%(7) 1.40% 1.40%(6)
Net investment income (loss) (0.45)% 0.15% (0.14)%(6)
Portfolio turnover 191% 203% 105%(5)
<CAPTION>
CLASS B
-------------------------------------------
From
Year Ended August 31 Inception
---------------------------- 11/20/97 to
2000 1999 8/31/98
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.27 $ 8.07 $ 10.00
Income from investment operations
Net investment income (loss)(1) (0.19) (0.06) (0.08)
Net realized and unrealized gain (loss) 7.27 3.28 (1.82)
---------- ---------- ----------
Total from investment operations 7.08 3.22 (1.90)
---------- ---------- ----------
Less distributions
Dividends from net realized gains (0.81) (0.02) --
In excess of net investment income -- -- (0.03)
---------- ---------- ----------
Total distributions (0.81) (0.02) (0.03)
---------- ---------- ----------
Change in net asset value 6.27 3.20 (1.93)
---------- ---------- ----------
Net asset value, end of period $ 17.54 $ 11.27 $ 8.07
========== ========== ==========
Total return(2) 64.97% 39.86% (19.07)%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 26,625 $ 9,494 $ 5,922
Ratio to average net assets of:
Operating expenses(4) 2.15%(7) 2.15% 2.15%(6)
Net investment income (loss) (1.20)% (0.60)% (1.01)%(6)
Portfolio turnover 191% 203% 105%(5)
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.67%,
1.87% and 3.12% for the periods ended August 31, 2000, 1999 and 1998,
respectively.
(4) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.42%,
2.62% and 3.87% for the periods ended August 31, 2000, 1999 and 1998,
respectively.
(5) Not annualized.
(6) Annualized.
(7) For the year ended August 31, 2000, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
See Notes to Financial Statements
10
<PAGE>
Phoenix-Hollister Small Cap Value Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
CLASS C
----------------------------------------
From
Year Ended August 31 Inception
-------------------------- 11/20/97 to
2000 1999 8/31/98
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.27 $ 8.07 $ 10.00
Income from investment operations
Net investment income (loss)(1) (0.19) (0.06) (0.08)
Net realized and unrealized gain (loss) 7.27 3.28 (1.82)
---------- ---------- ----------
Total from investment operations 7.08 3.22 (1.90)
---------- ---------- ----------
Less distributions
Dividends from net realized gains (0.81) (0.02) --
In excess of net investment income -- -- (0.03)
---------- ---------- ----------
Total distributions (0.81) (0.02) (0.03)
---------- ---------- ----------
Change in net asset value 6.27 3.20 (1.93)
---------- ---------- ----------
Net asset value, end of period $ 17.54 $ 11.27 $ 8.07
========== ========== ==========
Total return(2) 64.97% 39.86% (19.09)%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 28,046 $ 6,465 $ 2,770
Ratio to average net assets of:
Operating expenses(3) 2.15%(6) 2.15% 2.15 %(5)
Net investment income (loss) (1.20)% (0.60)% (0.98)%(5)
Portfolio turnover 191% 203% 105%(4)
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.42%,
2.62% and 3.87% for the periods ended August 31, 2000, 1999 and 1998,
respectively.
(4) Not annualized.
(5) Annualized.
(6) For the year ended August 31, 2000, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
See Notes to Financial Statements
11
<PAGE>
Phoenix-Hollister Value Equity Fund
A Discussion with the Fund's Portfolio Manager, Chris Bertelsen
Q: What is the Fund's investment objective?
A: The Fund's primary investment objective is long-term capital appreciation.
The Fund has a secondary investment objective to seek current income.
Q: How did the Fund perform over the last 12 months?
A: For the fiscal year ended August 31, 2000, Class A shares earned 24.11%,
beating both the 16.39% return for the S&P 500 Index(1) and the average 9.66%
return for a peer universe of large-capitalization value funds, according to
Lipper, Inc. Class B shares returned 23.08%, and Class C shares were up 23.17%
for the 12 months. All performance figures assume reinvestment of distributions
and exclude the effect of sales charges.
Q: How is the portfolio positioned to take advantage of current market
conditions?
A: As opportunities presented themselves, we took advantage. For example, a
politically charged climate began embracing the rebuilding of America's defense
establishments. The portfolio holds companies like General Dynamics, United
Technologies, and Northrop Grumman, which we believe will benefit from this
trend.(2)
In another trend, mid- and large-capitalization alternative energy and
utility companies seem to have overcome Wall Street's skepticism of 1999 and
achieved a level of acceptance as demand outstripped supply. Investors'
appetites for large companies, such as Entergy, Reliant Energy, Duke Power and
Coastal have bolstered the Fund's performance nicely. We are anticipating that a
25-year oversupply of energy is now reaching equilibrium, and unless world
demand decreases, energy and electric power will become a dearer commodity.
Q: What is your outlook?
A: For 2001, we believe that history may repeat itself by producing a rally
within the financial sector similar to what resulted after five Federal Reserve
upward rate adjustments in 1994. Recent Fed policy has created tremendous value
in this sector, preparing the way, in our opinion, for long-term outperformance.
Companies like Chase Manhattan, Citigroup and American International Group
currently trade at very attractive multiples.
We also see the politically charged topics of health care and defense
leading to more buying opportunities for value investors, such as ourselves.
Watson Pharmaceuticals is one of our success stories in 2000, and we have taken
positions in select pharmaceutical and defense companies.
We believe the future for value investors looks bright in 2001 as
investors begin to rethink the extreme valuations of the last three years and
begin re-focusing on fundamentals. The compounded returns of value style
investing have historically been very close to those of growth styles. After a
three-year absence from the scene, we think value will vault to the forefront
once again, but, of course, past performance is not a guarantee of future
results.
August 31, 2000
(1) The S&P 500 Index is an unmanaged, commonly used benchmark of broad stock
market total-return performance.
(2) Portfolios are actively managed and securities held are subject to change.
12
<PAGE>
Phoenix-Hollister Value Equity Fund
--------------------------------------------------------------------------------
Average Annual Total Returns(1) PERIODS ENDING 8/31/00
--------------------------------------------------------------------------------
INCEPTION INCEPTION
1 Year TO 8/31/00 DATE
------- ---------- ---------
Class A Shares at NAV(2) 24.11% 15.79% 11/5/97
Class A Shares at POP(3) 16.98 13.39 11/5/97
Class B Shares at NAV(2) 23.08 14.91 11/5/97
Class B Shares at CDSC(4) 19.08 14.08 11/5/97
Class C Shares at NAV(2) 23.17 14.92 11/5/97
Class C Shares at CDSC(4) 23.17 14.92 11/5/97
S&P 500 Index(6) 16.39 20.12 11/5/97
(1) Total returns are historical and include changes in share price and the
reinvestment of both dividends and capital gains distributions.
(2) "NAV" (Net Asset Value) total returns do not include the effect of any
sales charge.
(3) "POP" (Public Offering Price) total returns include the effect of the
maximum front-end 5.75% sales charge.
(4) CDSC (contingent deferred sales charge) is applied to redemptions of
certain classes of shares that do not have a sales charge applied at the
time of purchase. CDSC charges for B shares decline from 5% to 0% over a
five year period. CDSC charges for C shares are 1% in the first year and
0% thereafter.
(5) This chart illustrates POP returns on Class A shares and CDSC returns for
Class B and Class C shares since inception.
(6) The S&P 500 Index is a measure of stock market total return performance.
The index's performance does not reflect sales charges.
All returns represent past performance which may not be indicative of
future performance. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
--------------------------------------------------------------------------------
Growth of $10,000 PERIODS ENDING 8/31
--------------------------------------------------------------------------------
[LINE GRAPH OMITTED]
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
11/5/97 (inception of the Fund) in Class A, Class B and Class C shares .The
total return for Class A shares reflects the maximum sales charge of 5.75% on
the initial investment. The total return for Class B shares reflects the CDSC
charges which decline from 5% to 0% over a five year period. The total return
for Class C shares reflects the CDSC charges which are 1% in the first year and
0% thereafter. Performance assumes dividends and capital gains are reinvested.
--------------------------------------------------------------------------------
Sector Weightings 8/31/00
--------------------------------------------------------------------------------
As a percentage of equity holdings
[The following information was represented as a pie chart.]
o Financials 27%
o Capital Goods 20
o Technology 13
o Energy 9
o Utilities 9
o Consumer Staples 8
o Health-Care 6
o Other 8
13
<PAGE>
Phoenix-Hollister Value Equity Fund
--------------------------------------------------------------------------------
Ten Largest Holdings at August 31, 2000 (as a percentage of net assets)
--------------------------------------------------------------------------------
1. Citigroup, Inc. 3.9%
Diversified financial services holding company
2. American International Group, Inc. 3.6%
International insurance and financial services provider
3. Tyco International Ltd.. 3.6%
Diversified industrial services company
4. Bank of New York Co., Inc.(The) 3.5%
Provider of commercial banking services
5. Chase Manhattan Corp.(The) 3.3%
Domestic and international financial services provider
6. General Dynamics Corp. 3.3%
Primary focus is business aviation and information systems
7. Cabletron Systems, Inc. 3.2%
Manufactures computer interconnecting equipment
8. Alcatel ADR 3.1%
Communications, transportation and energy
infrastructure supplier
9. Baker Hughes, Inc. 3.1%
Involved in oil, gas and mining equipment services
10. Watson Pharmaceuticals, Inc. 3.0%
Manufacturer of patent medicines
--------------------------------------------------------------------------------
INVESTMENTS AT AUGUST 31, 2000
SHARES VALUE
------ ----------
COMMON STOCKS -- 88.9%
Aerospace/Defense -- 5.7%
General Dynamics Corp. .......................... 40,000 $2,517,500
Lockheed Martin Corp. ........................... 44,000 1,248,500
Northrop Grumman Corp. .......................... 8,000 622,500
----------
4,388,500
----------
Aluminum -- 1.5%
Alcoa, Inc. ..................................... 36,000 1,197,000
Auto Parts & Equipment -- 2.1%
Delphi Automotive Systems Corp. ................. 100,000 1,643,750
Banks (Major Regional) -- 3.5%
Bank of New York Co., Inc. (The) ................ 51,000 2,674,312
Banks (Money Center) -- 5.5%
Chase Manhattan Corp. (The) ..................... 45,500 2,542,312
Morgan (J.P.) & Co., Inc. ....................... 10,000 1,671,875
----------
4,214,187
----------
Beverages (Alcoholic) -- 2.5%
Anheuser-Busch Cos., Inc. ....................... 24,000 1,891,500
Computers (Networking) -- 3.2%
Cabletron Systems, Inc.(b) ...................... 65,000 2,433,437
Computers (Software & Services) -- 0.4%
Computer Associates International, Inc. ......... 11,000 349,250
Electric Companies -- 6.1%
Duke Energy Corp. ............................... 20,500 1,533,656
Entergy Corp. ................................... 41,500 1,263,156
Reliant Energy, Inc. ............................ 44,000 1,633,500
Southern Co. (The) .............................. 9,000 269,437
----------
4,699,749
----------
Electrical Equipment -- 2.0%
Solectron Corp.(b) .............................. 34,000 1,540,625
Electronics (Defense) -- 1.6%
Litton Industries, Inc.(b) ...................... 22,000 1,216,875
Electronics (Instrumentation) -- 1.9%
Agilent Technologies, Inc.(b) ................... 24,000 1,447,500
Engineering & Construction -- 1.6%
MasTec, Inc.(b) ................................. 34,200 1,231,200
Financial (Diversified) -- 6.5%
American Express Co. ............................ 9,000 532,125
Citigroup, Inc. ................................. 52,000 3,035,500
USA Education, Inc. ............................. 37,000 1,449,938
----------
5,017,563
----------
Health Care (Diversified) -- 0.3%
Abbott Laboratories ............................. 5,000 218,750
Health Care (Generic and Other) -- 3.0%
Watson Pharmaceuticals, Inc.(b) ................. 37,900 2,337,956
See Notes to Financial Statements
14
<PAGE>
Phoenix-Hollister Value Equity Fund
SHARES VALUE
------ -----------
Health Care (Hospital Management) -- 2.4%
Tenet Healthcare Corp.(b) .......................... 60,000 $ 1,860,000
Insurance (Life/Health) -- 4.7%
American General Corp. ............................. 28,000 2,038,750
MetLife, Inc.(b) ................................... 65,000 1,580,313
----------
3,619,063
----------
Insurance (Multi-Line) -- 5.7%
American International Group, Inc. ................. 30,750 2,740,594
CIGNA Corp. ........................................ 17,000 1,653,250
----------
4,393,844
----------
Insurance (Property-Casualty) -- 1.0%
Allstate Corp. (The) ............................... 26,000 755,625
Manufacturing (Diversified) -- 7.2%
Honeywell International, Inc. ...................... 28,000 1,079,750
Minnesota Mining and Manufacturing Co. ............. 23,000 2,139,000
United Technologies Corp. .......................... 37,000 2,310,188
----------
5,528,938
----------
Natural Gas -- 2.7%
Coastal Corp. (The) ................................ 30,000 2,066,250
Oil & Gas (Drilling & Equipment) -- 4.0%
Baker Hughes, Inc. ................................. 66,000 2,413,125
Diamond Offshore Drilling, Inc. .................... 15,000 672,188
----------
3,085,313
----------
Oil & Gas (Exploration & Production) -- 1.5%
Unocal Corp. ....................................... 35,000 1,168,125
Oil (International Integrated) -- 2.3%
Texaco, Inc. ....................................... 35,000 1,802,500
Publishing (Newspapers) -- 2.3%
Knight-Ridder, Inc. ................................ 33,000 1,802,625
Retail (General Merchandise) -- 1.0%
Wal-Mart Stores, Inc. .............................. 16,000 759,000
Services (Data Processing) -- 2.2%
First Data Corp. ................................... 36,000 1,716,750
Telecommunications (Long Distance) -- 1.6%
WorldCom, Inc.(b) .................................. 33,000 1,204,500
Tobacco -- 2.9%
Philip Morris Cos., Inc. ........................... 75,000 2,221,875
--------------------------------------------------------------------------------
Total Common Stocks
(Identified cost $58,489,442) 68,486,562
--------------------------------------------------------------------------------
FOREIGN COMMON STOCKS -- 9.9%
Communications Equipment -- 3.1%
Alcatel ADR (France) .............................. 29,200 2,419,950
Foods -- 2.2%
Unilever NV NY Registered Shares (Netherlands) ..... 35,000 1,653,750
Manufacturing (Diversified) -- 3.6%
Tyco International Ltd. (Bermuda) .................. 48,000 2,736,000
Oil (Domestic Integrated) -- 1.0%
Royal Dutch Petroleum Co. NY Registered
Shares (Netherlands) ............................... 13,000 795,438
--------------------------------------------------------------------------------
Total Foreign Common Stocks
(Identified cost $4,915,343) 7,605,138
--------------------------------------------------------------------------------
Total Long-Term Investments -- 98.8%
(Identified cost $63,404,785) 76,091,700
--------------------------------------------------------------------------------
See Notes to Financial Statements
15
<PAGE>
Phoenix-Hollister Value Equity Fund
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
----------- ----- -----------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS -- 1.2%
Commercial Paper -- 1.2%
Asset Securitization Corp. 6.65%, 9/1/00 A-1+ $910 $ 910,000
---------------------------------------------------------------------------------
Total Short-Term Obligations
(Identified cost $910,000) 910,000
---------------------------------------------------------------------------------
TOTAL INVESTMENTS--100.0%
(Identified cost $64,314,785) 77,001,700(a)
Cash and receivables, less liabilities--0.0% 35,297
-----------
NET ASSETS--100.0% $77,036,997
===========
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $13,694,775 and gross
depreciation of $1,484,848 for federal income tax purposes. At August 31,
2000, the aggregate cost of securites for federal income tax purposes was
$64,791,773.
(b) Non-income producing.
See Notes to Financial Statements
16
<PAGE>
Phoenix-Hollister Value Equity Fund
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2000
Assets
Investment securities at value
(Identified cost $64,314,785) $77,001,700
Cash 1,327
Receivables
Investment securities sold 1,823,168
Fund shares sold 210,602
Dividends and interest 128,112
Prepaid expenses 311
-----------
Total assets 79,165,220
-----------
Liabilities
Payables
Investment securities purchased 1,935,608
Fund shares repurchased 31,381
Distribution fee 39,877
Investment advisory fee 34,409
Transfer agent fee 13,368
Trustees' fee 8,342
Financial agent fee 7,959
Accrued expenses 57,279
-----------
Total liabilities 2,128,223
-----------
Net Assets $77,036,997
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $59,143,058
Accumulated net realized gain 5,207,024
Net unrealized appreciation 12,686,915
-----------
Net Assets $77,036,997
===========
Class A
Shares of beneficial interest outstanding, $1 par value
unlimited authorization (Net Assets $37,976,548) 2,526,958
Net asset value per share $ 15.03
Offering price per share $15.03/(1-5.75%) $ 15.95
Class B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $26,470,632) 1,792,056
Net asset value and offering price per share $ 14.77
Class C
Shares of beneficial interest outstanding, $1 par value
unlimited authorization (Net Assets $12,589,817) 851,795
Net asset value and offering price per share $ 14.78
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31,2000
Investment Income
Dividends $ 879,601
Interest 102,621
Foreign taxes withheld (8,398)
------------
Total investment income 973,824
------------
Expenses
Investment advisory fee 505,588
Distribution fee, Class A 79,556
Distribution fee, Class B 263,876
Distribution fee, Class C 92,017
Financial agent fee 96,074
Transfer agent 75,680
Registration 37,274
Professional 30,580
Trustees 24,643
Printing 21,771
Custodian 17,157
Miscellaneous 12,166
------------
Total expenses 1,256,382
Less expenses borne by investment adviser (145,011)
Custodian fees paid indirectly (1,805)
------------
Net expenses 1,109,566
------------
Net investment loss (135,742)
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 5,835,561
Net change in unrealized appreciation (depreciation) on
investments 8,592,230
------------
Net gain on investments 14,427,791
------------
Net increase in net assets resulting from operations $ 14,292,049
============
See Notes to Financial Statements
17
<PAGE>
Phoenix-Hollister Value Equity Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
8/31/00 8/31/99
------------ ------------
<S> <C> <C>
From Operations
Net investment income (loss) $ (135,742) $ (68,591)
Net realized gain (loss) 5,835,561 87,678
Net change in unrealized appreciation (depreciation) 8,592,230 8,940,662
------------ ------------
Increase (decrease) in net assets resulting from operations 14,292,049 8,959,749
------------ ------------
From Distributions to Shareholders
Net investment income, Class A -- (61,486)
Net investment income, Class B -- (2,136)
Net investment income, Class C -- (982)
In excess of net investment income, Class A -- (49,116)
In excess of net investment income, Class B -- (1,706)
In excess of net investment income, Class C -- (784)
------------ ------------
Decrease in net assets from distributions to shareholders -- (116,210)
------------ ------------
From Share Transactions
Class A
Proceeds from sales of shares (606,640 and 511,993 shares, respectively) 8,320,634 6,168,646
Net asset value of shares issued from reinvestment of distributions
(0 and 9,487 shares, respectively) -- 110,073
Cost of shares repurchased (306,420 and 504,840 shares, respectively) (4,139,619) (6,064,609)
------------ ------------
Total 4,181,015 214,110
------------ ------------
Class B
Proceeds from sales of shares (206,446 and 1,603,387 shares, respectively) 2,814,451 20,006,209
Net asset value of shares issued from reinvestment of distributions
(0 and 298 shares, respectively) -- 3,446
Cost of shares repurchased (474,334 and 138,841 shares, respectively) (6,583,909) (1,652,638)
------------ ------------
Total (3,769,458) 18,357,017
------------ ------------
Class C
Proceeds from sales of shares (688,069 and 87,709 shares, respectively) 8,849,914 985,203
Net asset value of shares issued from reinvestment of distributions
(0 and 122 shares, respectively) -- 1,405
Cost of shares repurchased (95,182 and 54,302 shares, respectively) (1,307,763) (656,192)
------------ ------------
Total 7,542,151 330,416
------------ ------------
Class M
Cost of shares repurchased (0 and 10,024 shares, respectively) -- (105,146)
------------ ------------
Total -- (105,146)
------------ ------------
Increase (decrease) in net assets from share transactions 7,953,708 18,796,397
------------ ------------
Net increase (decrease) in net assets 22,245,757 27,639,936
Net Assets
Beginning of period 54,791,240 27,151,304
------------ ------------
End of period [including undistributed net investment income of
$0 and $0, respectively] $ 77,036,997 $ 54,791,240
============ ============
</TABLE>
See Notes to Financial Statements
18
<PAGE>
Phoenix-Hollister Value Equity Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------
From
Year Ended August 31 Inception
---------------------------- 11/5/97 to
2000 1999 8/31/98
<S> <C> <C> <C>
Net asset value, beginning of period $ 12.11 $ 8.94 $ 10.00
Income from investment operations
Net investment income (loss)(1) 0.03 0.02 0.03
Net realized and unrealized gain (loss) 2.89 3.20 (1.07)
---------- ---------- ----------
Total from investment operations 2.92 3.22 (1.04)
---------- ---------- ----------
Less distributions
Dividends from net investment income -- (0.03) (0.01)
In excess of net investment income -- (0.02) (0.01)
---------- ---------- ----------
Total distributions -- (0.05) (0.02)
---------- ---------- ----------
Change in net asset value 2.92 3.17 (1.06)
---------- ---------- ----------
Net asset value, end of period $ 15.03 $ 12.11 $ 8.94
========== ========== ==========
Total return(2) 24.11% 35.89% (10.28)%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 37,977 $ 26,974 $ 19,766
Ratio to average net assets of:
Operating expenses(3) 1.25%(7) 1.25% 1.25%(6)
Net investment income (loss) 0.20% 0.14% 0.31%(6)
Portfolio turnover 193% 192% 59%(5)
<CAPTION>
CLASS B
-------------------------------------------
From
Year Ended August 31 Inception
---------------------------- 11/5/97 to
2000 1999 8/31/98
<S> <C> <C> <C>
Net asset value, beginning of period $ 12.00 $ 8.89 $ 10.00
Income from investment operations
Net investment income (loss)(1) (0.08) (0.07) (0.04)
Net realized and unrealized gain (loss) 2.85 3.19 (1.05)
---------- ---------- ----------
Total from investment operations 2.77 3.12 (1.09)
---------- ---------- ----------
Less distributions
Dividends from net investment income -- (0.01) (0.01)
In excess of net investment income -- -- (0.01)
---------- ---------- ----------
Total distributions -- (0.01) (0.02)
---------- ---------- ----------
Change in net asset value 2.77 3.11 (1.11)
---------- ---------- ----------
Net asset value, end of period $ 14.77 $ 12.00 $ 8.89
========== ========== ==========
Total return(2) 23.08% 35.05% (10.92)%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 26,471 $ 24,709 $ 5,291
Ratio to average net assets of:
Operating expenses(4) 2.00%(7) 2.00% 2.00 %(6)
Net investment income (loss) (0.57)% (0.62)% (0.45)%(6)
Portfolio turnover 193% 192% 59%(5)
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.47%,
1.57% and 2.96% for the periods ended August 31, 2000, 1999 and 1998,
respectively.
(4) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.22%,
2.32% and 3.71% for the periods ended August 31, 2000, 1999 and 1998,
respectively.
(5) Not annualized.
(6) Annualized.
(7) For the year ended August 31, 2000, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
See Notes to Financial Statements
19
<PAGE>
Phoenix-Hollister Value Equity Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
CLASS C
-------------------------------------------
From
Year Ended August 31 Inception
---------------------------- 11/20/97 to
2000 1999 8/31/98
<S> <C> <C> <C>
Net asset value, beginning of period $ 12.00 $ 8.89 $ 10.00
Income from investment operations
Net investment income (loss)(1) (0.07) (0.07) (0.04)
Net realized and unrealized gain (loss) 2.85 3.19 (1.05)
---------- ---------- ----------
Total from investment operations 2.78 3.12 (1.09)
---------- ---------- ----------
Less distributions
Dividends from net realized gains -- (0.01) (0.01)
In excess of net investment income -- -- (0.01)
---------- ---------- ----------
Total distributions -- (0.01) (0.02)
---------- ---------- ----------
Change in net asset value 2.78 3.11 (1.11)
---------- ---------- ----------
Net asset value, end of period $ 14.78 $ 12.00 $ 8.89
========== ========== ==========
Total return(2) 23.17% 34.91% (10.86)%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 12,590 $ 3,108 $ 2,005
Ratio to average net assets of:
Operating expenses(3) 2.00%(6) 2.00% 2.00%(5)
Net investment income (loss) (0.52)% (0.60)% (0.45)%(5)
Portfolio turnover 193% 192% 59%(4)
</TABLE>
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.22%,
2.32% and 3.71% for the periods ended August 31, 2000, 1999 and 1998,
respectively.
(4) Not annualized.
(5) Annualized.
(6) For the year ended August 31, 2000, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian
fees; if expense offsets were included, the ratio would not significantly
differ.
See Notes to Financial Statements
20
<PAGE>
Phoenix Investment Trust 97
Notes to Financial Statements
August 31, 2000
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix Investment Trust 97 (the "Trust") is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as a diversified, open-end management investment company
whose shares are offered in two separate Series, each a "Fund". Each Fund has
distinct investment objectives.
Phoenix-Hollister Small Cap Value Fund seeks long-term capital
appreciation. Phoenix-Hollister Value Equity Fund's primary Investment objective
is to seek long-term capital appreciation and its secondary objective is to seek
current income by investing in a diversified portfolio of common stocks.
Each Fund offers Class A, Class B, and Class C shares. Class M shares have
been closed. Effective April 3, 2000 Class A shares are sold with the front-end
sales charge of up to 5.75%. Prior to that date, the maximum sales charge was
4.75%. Class B shares are sold with a contingent deferred sales charge which
declines from 5% to zero depending on the period of time the shares are held.
Class C shares are sold with a 1% contingent deferred sales charge if redeemed
within one year of purchase. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. Income and expenses of each Fund
are borne pro rata by the holders of all classes of shares, except that each
class bears distribution expenses unique to that class.
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 requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. Actual results could differ from those estimates.
A. Security valuation:
Equity securities are valued at the last sale price, or if there had been
no sale that day, at the last bid price. Short-term investments having a
remaining maturity of 60 days or less are valued at amortized cost which
approximates market. All other securities and assets are valued at fair value as
determined in good faith by or under the direction of the Trustees.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date or, in the case of certain foreign securities, as soon as the Fund is
notified. Realized gains and losses are determined on the identified cost basis.
C. Income taxes:
Each Fund is treated as a separate taxable entity. It is the policy of
each Fund in the Trust to comply with the requirements of the Internal Revenue
Code (the "Code"), applicable to regulated investment companies, and to
distribute all of its taxable income to its shareholders. In addition, each Fund
intends to distribute an amount sufficient to avoid imposition of any excise tax
under Section 4982 of the Code. Therefore, no provision for federal income taxes
or excise taxes has been made.
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 generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, foreign
currency gain/loss, partnerships, operating losses and losses deferred due to
wash sales and excise tax regulations. Permanent book and tax basis differences
relating to shareholder distributions will result in reclassifications to paid
in capital.
E. Foreign currency translation:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange rates
between the trade and settlement dates of a portfolio transaction is treated as
a gain or loss on foreign currency. Likewise, the gain or loss resulting from a
change in currency exchange rates between the date income is accrued and paid is
treated as a gain or loss on foreign currency. The Trust does not separate that
portion of the results of operations arising from changes in exchange rates and
that portion arising from changes in the market prices of securities.
F. Forward currency contracts:
Each Fund may enter into forward currency contracts in conjunction with
the planned purchase or sale of foreign denominated securities in order to hedge
the U.S. dollar cost or proceeds. Forward currency contracts involve, to varying
degrees, elements of market risk in excess of the amount recognized in the
statement of assets and liabilities. Risks arise from the possible movements in
foreign exchange rates or if the counterparty does not perform under the
contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts are traded
21
<PAGE>
Phoenix Investment Trust 97
Notes to Financial Statements
August 31, 2000 (Continued)
directly between currency traders and their customers. The contract is
marked-to-market daily and the change in market value is recorded by each Fund
as an unrealized gain (or loss). When the contract is closed or offset with the
same counterparty, the Fund records a realized gain (or loss) equal to the
change in the value of the contract when it was opened and the value at the time
it was closed or offset.
G. Options:
Each Fund may write covered options or purchase options contracts for the
purpose of hedging against changes in the market value of the underlying
securities or foreign currencies.
Each Fund will realize a gain or loss upon the expiration or closing of
the option transaction. Gains and losses on written options are reported
separately in the Statement of Operations. When a written option is exercised,
the proceeds on sales or amounts paid are adjusted by the amount of premium
recieved. Options written are reported as a liability in the Statement of Assets
and Liabilities and subsequently marked-to-market to reflect the current value
of the option. The risk associated with written options is that the change in
value of options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the value of
the underlying instruments, or if a liquid secondary, market does not exist for
the contracts.
Each Fund may purchase options which are included in the Funds' Schedule
of Investments and subsequently marked-to-market to reflect the current value of
the option. When a purchased option is exercised, the cost of the security is
adjusted by the amount of premium paid. The risk associated with purchased
options is limited to the premium paid.
H. Expenses:
Expenses incurred by the Trust with respect to more than one Fund are
allocated in proportion to the net assets of each Fund, except where allocation
of direct expense to each Fund or an alternative allocation method can be more
fairly made.
I. Repurchase agreements:
A repurchase agreement is a transaction where a Fund acquires a security
for cash and obtains a simultaneous commitment from the seller to repurchase the
security at an agreed upon price and date. Each Fund, through its custodian,
takes possession of securities collateralizing the repurchase agreement. The
collateral is marked-to-market daily to ensure that the market value of the
underlying assets remains sufficient to protect the Fund in the event of default
by the seller. If the seller defaults and the value of the collateral declines,
or, if the seller enters insolvency proceedings, realization of collateral may
be delayed or limited.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, the Adviser, Phoenix
Investment Counsel, Inc., an indirect majority-owned subsidiary of Phoenix Home
Life Mutual Insurance Company ("PHL"), is entitled to a fee based upon the
following annual rates as a percentage of the average daily net assets of each
separate Fund:
1st $1 $1-2 $2+
Fund Billion Billion Billion
---- ------- ------- -------
Small Cap Value Fund .............. 0.90% 0.85% 0.80%
Value Equity Fund ................. 0.75% 0.70% 0.65%
The Adviser has voluntarily agreed to assume total operating expenses of
each Fund excluding interest, taxes, brokerage fees, commissions and
extraordinary expenses, until August 31, 2001, to the extent that such expenses
exceed the following percentages of the average annual net asset values for each
Fund:
Class A Class B Class C
Shares Shares Shares
------- ------- -------
Small Cap Value Fund .............. 1.40% 2.15% 2.15%
Value Equity Fund ................. 1.25% 2.00% 2.00%
As Distributor of the Trust's shares, Phoenix Equity Planning Corp.
("PEPCO"), an indirect majority-owned subsidiary of PHL, has advised the Trust
that it retained net selling commissions of $35,803 for Class A shares, and
deferred sales charges of $34,344 for Class B shares and $5,050 for Class C
shares for the year ended August 31, 2000. In addition, each Fund pays PEPCO a
distribution fee 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
the Fund. The Distributor has advised the Trust that of the total amount
expensed for the year ended August 31, 2000, $607,618 was retained by the
Distributor, $265,998 was paid to unaffiliated participants, and $11,727 was
paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent of each Fund, PEPCO receives a financial agent fee
equal to the sum of (1) the documented cost of fund accounting and related
services provided by PFPC Inc. (subagent to PEPCO), plus (2) the documented cost
to PEPCO to provide financial reporting, tax services and oversight of
subagent's performance. For the year ended August 31, 2000, financial agent fees
were $203,563, of which PEPCO received $82,360. The current fee schedule of PFPC
Inc. ranges from 0.085% to 0.0125% of the average daily net asset values of each
Fund. Certain minimum fees and fee waivers may apply.
PEPCO serves as the Trust's Transfer Agent with State Street Bank and
Trust Company as sub-transfer agent. For the year ended August 31, 2000,
transfer agent fees were $224,015 of which PEPCO retained $36,206 which is net
of the fees paid to State Street.
22
<PAGE>
Phoenix Investment Trust 97
Notes to Financial Statements
August 31, 2000 (Continued)
At August 31, 2000, PHL and its affiliates held shares of the Trust which
aggregated the following:
Aggregate Net
Shares Asset Value
--------- -------------
Value Equity Fund, Class A ............. 1,161,425 $17,456,218
Value Equity Fund, Class B ............. 988,497 14,600,101
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended August 31, 2000
(excluding U.S. Government and agency securities, and short-term securities)
aggregated the following:
Purchases Shares
------------ ------------
Small Cap Value Fund ............... $202,588,994 $151,628,027
Value Equity Fund .................. 137,559,475 126,431,405
There were no purchases or sales of long-term U.S. Government and agency
securities during the year ended August 31, 2000.
4. CREDIT RISK
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.
5. CAPITAL LOSS CARRYOVERS
For the year ended August 31, 2000, the Value Equity Fund utilized a
capital loss carryover of $403,905.
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the following fiscal year.
For the year ended August 31, 2000, the Small Cap Value Fund utilized prior year
capital losses deferred of $1,016,451.
6. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Trust has recorded
several reclassifications in the capital accounts. These reclassifications have
no impact on the net asset value of the Fund and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of August 31, 2000,
each Fund recorded the following reclassifications to increase (decrease) the
accounts listed below:
Capital paid
Undistributed Accumulated in on shares
net investment net realized of beneficial
income gain(loss) interest
-------------- ------------ -------------
Small Cap Value Fund $658,763 $(658,763) --
Value Equity Fund 135,742 (135,742) --
This report is not authorized for distribution to prospective investors in
the Phoenix Investment Trust 97 unless preceded or accompanied by an effective
Prospectus which includes information concerning the sales charge, the Fund's
record and other pertinent information.
23
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
PRICEWATERHOUSECOOPERS [LOGO]
To the Trustees and Shareholders of
Phoenix Investment Trust 97:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for bond ratings), and the
related statements of operations and of changes in net assets, and the financial
highlights present fairly, in all material respects, the financial position of
the Phoenix-Hollister Small Cap Value Fund and the Phoenix-Hollister Value
Equity Fund (constituting the Phoenix Investment Trust 97, hereinafter referred
to as the "Trust") at August 31, 2000, the results of each of their operations,
the changes in each of their net assets and the financial highlights for the
periods indicated, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at August
31, 2000 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
October 12, 2000
24
<PAGE>
RESULTS OF SHAREHOLDER MEETING (Unaudited)
A special meeting of Shareholders of Phoenix Investment Trust 97 was held on May
16, 2000 to approve the following matters:
1. Approve a new Rule 12b-1 Distribution Plan for Class B Shares
2. Approve a new Rule 12b-1 Distribution Plan for Class C Shares
On the record date for these meetings, the shares outstanding and percentage of
the shares outstanding and entitled to vote that were present by proxy were as
follows:
<TABLE>
<CAPTION>
Class of Shares Shares outstanding Percentage present by proxy
--------------- ------------------ ---------------------------
<S> <C> <C>
Phoenix-Hollister Small Cap Value Fund Class B 1,140,933 50.65%
Phoenix-Hollister Small Cap Value Fund Class C 1,128,322 50.11%
Phoenix-Hollister Value Equity Fund Class B 1,980,814 73.66%
Phoenix-Hollister Value Equity Fund Class C 794,183 54.68%
</TABLE>
NUMBER OF VOTES
<TABLE>
<CAPTION>
For Against Abstain
--------- ------- -------
<S> <C> <C> <C>
1. Approve a new Rule 12b-1 Distribution Plan for Class B Shares
Phoenix-Hollister Small Cap Value Fund Class B 499,278 26,551 52,009
Phoenix-Hollister Value Equity Fund Class B 1,442,619 2,676 13,745
2. Approve a new Rule 12b-1 Distribution Plan for Class C Shares
Phoenix-Hollister Small Cap Value Fund Class C 520,939 23,766 20,739
Phoenix-Hollister Value Equity Fund Class C 389,575 18,042 26,635
</TABLE>
25
<PAGE>
Phoenix Investment Trust 97
101 Munson Street
Greenfield, Massachusetts 01301
Trustees
Robert Chesek
E. Virgil Conway
Harry Dalzell-Payne
Francis F. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
Officers
Philip R. McLoughlin, President
Michael E. Haylon, Executive Vice President
John F. Sharry, Executive Vice President
Christian C. Bertelsen, Vice President
Robert S. Driessen, Vice President
William R. Moyer, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Clerk and Secretary
Nancy J. Engberg, Assistant Clerk and Assistant Secretary
Investment Adviser
Phoenix Investment Counsel, Inc.
56 Prospect Street
Hartford, Connecticut 06115-0480
Principal Underwriter
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
Independent Accountants
PricewaterhouseCoopers LLP
160 Federal Street
Boston, Massachusetts 02110
How to Contact Us
The Fund Connection 1-800-243-1574
Customer Service 1-800-243-1574
Investment Strategy Hotline 1-800-243-4361 (option 2)
Marketing Department 1-800-243-4361 (option 3)
Text Telephone 1-800-243-1926
www.phoenixinvestments.com
26
<PAGE>
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<PAGE>
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<PAGE>
IBC (blank)
<PAGE>
Phoenix Equity Planning Corporation
PO Box 2200
Enfield CT 06083-2200
[LOGO] PHOENIX
INVESTMENT PARTNERS
For more information about
Phoenix mutual funds, please call
your financial representative or
contact us at 1-800-243-4361 or
www.phoenixinvestments.com
PXP 215 (10/00)
<PAGE>
Phoenix Equity Planning Corporation
PO Box 2200 ------------------
Enfield CT 06083-2200 Presorted Standard
US POSTAGE
PAID
LOUISVILLE KY
PERMIT 1051
------------------
[LOGO] PHOENIX
INVESTMENT PARTNERS
For more information about
Phoenix mutual funds, please call
your financial representative or
contact us at 1-800-243-4361 or
www.phoenixinvestments.com
PXP 215 (10/00)
