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 811-07643
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PHOENIX PHOLIOS (SM)
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(Exact name of registrant as specified in charter)
101 Munson Street
Greenfield, MA 01301
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(Address of principal executive offices) (Zip code)
Kevin J. Carr, Esq. John R. Flores, Esq.
Vice President, Chief Legal Officer, Vice President
Counsel and Secretary for Registrant Litigation/Employment Counsel
Phoenix Life Insurance Company Phoenix Life Insurance Company
One American Row One American Row
Hartford, CT 06102 Hartford, CT 06102
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(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 243-1574
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Date of fiscal year end: July 31
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Date of reporting period: July 31, 2005
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
JULY 31, 2005
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ANNUAL REPORT
PHOENIX WEALTH BUILDER PHOLIO(SM)
PHOENIX WEALTH GUARDIAN PHOLIO(SM)
[GRAPHIC OMITTED]
GET FUND DOCUMENTS
BY E-MAIL INSTEAD.
ELIGIBLE SHAREHOLDERS
MAY SIGN UP FOR E-DELIVERY
AT PHOENIXFUNDS.COM.
TRUST NAME: PHOENIX PHOLIOS(SM)
[GRAPHIC OMITTED] PHOENIXFUNDS(SM)
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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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This report is not authorized for distribution to prospective investors in
the Phoenix PHOLIOs(SM) unless preceded or accompanied by an effective
prospectus which includes information concerning the sales charge, each Fund's
record and other pertinent information.
MESSAGE FROM THE CHAIRMAN
DEAR SHAREHOLDER:
[PHOTO OMITTED]
I encourage you to review this annual report for the Phoenix Wealth
Builder PHOLIO(SM) and Phoenix Wealth Guardian PHOLIO(SM), for the fiscal year
ended July 31, 2005.(1)
At mid-calendar year, the United States economy was growing at a more
moderate pace than we experienced in 2004. Inflation concerns seemed to be
subsiding after peaking this spring, despite continued high energy prices. The
equity markets remained sluggish through the first half of 2005, giving back
some of the gains from last fall's post-presidential election rally. The Federal
Reserve (the "Fed") has continued to tighten interest rates and instituted its
tenth consecutive 25 basis point rate hike on August 9. As a result of the Fed's
efforts, the Treasury yield curve has flattened considerably over the past year,
with short rates rising while rates for longer dated maturities declined. The
combination of moderate economic growth and low inflation should provide a
favorable environment for both the equity and fixed income markets in the second
half of the year.
No matter what the market brings, short-term performance changes should
not distract you from your long-term financial plan. Now may be an opportune
time for you to review your portfolio with your financial advisor to make sure
that your asset allocation remains on target. Keep in mind that finding the best
balance of performance and protection requires discipline and
diversification.(2) Your Phoenix PHOLIOs(SM) allocation may help in this effort.
As an alternative to paper mail, if you would like to view your mutual
fund communications electronically, including account statements, prospectuses,
and annual and semiannual reports, sign up for our E-Delivery service. To
register, go online to PhoenixFunds.com, select the Individual Investors option,
and follow the E-Delivery instructions, or call Mutual Fund Services at
1-800-243-1574 and a customer service representative will be happy to assist
you.
Sincerely,
/s/ Philip R. McLoughlin
Philip R. McLoughlin
Chairman, Phoenix Funds
AUGUST 2005
(1) EFFECTIVE JULY 1, 2005, PHOENIX PARTNER SELECT WEALTH BUILDER FUND AND
PHOENIX PARTNER SELECT WEALTH GUARDIAN FUND WERE RENAMED PHOENIX WEALTH
BUILDER PHOLIO AND PHOENIX WEALTH GUARDIAN PHOLIO, RESPECTIVELY.
(2) DIVERSIFICATION DOES NOT GUARANTEE AGAINST A LOSS, AND THERE IS NO
GUARANTEE THAT A DIVERSIFIED PORTFOLIO WILL OUTPERFORM A NON-DIVERSIFIED
PORTFOLIO.
The preceding information is the opinion of the Chairman of the Phoenix Funds
Board of Trustees. There is no guarantee that market forecasts discussed will be
realized.
1
TABLE OF CONTENTS
Glossary ................................................................ 3
Phoenix Wealth Builder PHOLIO(SM) ....................................... 6
Phoenix Wealth Guardian PHOLIO(SM) ...................................... 15
Notes to Financial Statements ........................................... 24
Report of Independent Registered Public Accounting Firm ................. 27
Fund Management Tables .................................................. 28
2
GLOSSARY
BASIS POINT (BP)
One-hundredth of a percentage point (0.01%). Basis points are often used to
measure changes in or differences between yields on fixed income securities,
since these often change by very small amounts.
COMPOSITE INDEX FOR PHOENIX WEALTH BUILDER PHOLIO
A composite index consisting of 80% S&P 500(R) Index, a broad-based equity
index, and 20% Lehman Brothers Aggregate Bond Index, a broad-based fixed income
index.
COMPOSITE INDEX FOR PHOENIX WEALTH GUARDIAN PHOLIO
A composite index consisting of 60% S&P 500(R) Index, a broad-based equity
index, and 40% Lehman Brothers Aggregate Bond Index, a broad-based fixed income
index.
FEDERAL FUNDS RATE
The interest rate charged on overnight loans of reserves by one financial
institution to another in the United States. The federal funds rate is the most
sensitive indicator of the direction of interest rates since it is set daily by
the market.
FEDERAL RESERVE (THE "FED")
The central bank of the United States, responsible for controlling the money
supply, interest rates and credit with the goal of keeping the U.S. economy and
currency stable. Governed by a seven-member board, the system includes 12
regional Federal Reserve Banks, 25 branches and all national and state banks
that are part of the system.
FUND OF FUNDS
A mutual fund that invests in the shares of other open-end mutual funds
according to an established asset allocation model, resulting in a diversified
portfolio of asset classes and investment strategies appropriate for pursuit of
the overall investment objective.
INFLATION
Rise in the prices of goods and services resulting from increased spending
relative to the supply of goods on the market.
LEHMAN BROTHERS AGGREGATE BOND INDEX
Measures the U.S. investment grade fixed rate bond market. The index is
calculated on a total return basis.
REITS
Real estate investment trusts are typically publicly traded companies that own,
develop and operate income-producing real estate such as apartments, office
buildings, hotels, shopping centers and other commercial properties.
3
Glossary (continued)
S&P 500(R) INDEX
A half-float market capitalization-weighted index of 500 of the largest U.S.
companies. The index is calculated on a total return basis with dividends
reinvested.
YIELD CURVE
A line chart that shows interest rates at a specific point in time for
securities of equivalent quality but with different maturities. A "normal or
positive" yield curve indicates that short-term securities have a lower interest
rate than long-term securities; an "inverted or negative" yield curve indicates
short-term rates are exceeding long-term rates; and a "flat yield curve" means
short- and long-term rates are about the same.
4
COMPOSITION BY UNDERLYING FUND
AS A PERCENTAGE OF TOTAL INVESTMENTS
AS OF JULY 31, 2005
Wealth Builder PHOLIO(SM) Wealth Guardian PHOLIO(SM)
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Phoenix Bond Fund Class A ...................................... 7.3% 14.6%
Phoenix Growth & Income Fund Class A ........................... 20.2% 17.7%
Phoenix Institutional Bond Fund Class Y ........................ 7.3% 14.6%
Phoenix Market Neutral Fund Class A ............................ 4.9% 4.9%
Phoenix Multi-Sector Short Term Bond Fund Class A .............. 4.9% 9.8%
Phoenix Real Estate Securities Fund Class A .................... 10.9% 11.0%
Phoenix Rising Dividends Fund Class A .......................... 19.1% 17.1%
Phoenix Small-Mid Cap Fund Class A ............................. 25.4% 10.3%
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Total ................................................ 100.0% 100.0%
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5
PHOENIX WEALTH BUILDER PHOLIO(SM)
(FORMERLY PHOENIX PARTNER SELECT WEALTH BUILDER FUND)
A DISCUSSION WITH THE PHOLIO'S PORTFOLIO OVERLAY MANAGEMENT TEAM
Q: WHAT IS THE PHOLIO'S INVESTMENT OBJECTIVE?
A: The Phoenix Wealth Builder PHOLIO(SM) (Phoenix Life Investment Option) is an
asset allocation fund of funds with an investment objective of long-term capital
appreciation. There is no guarantee that the PHOLIO will achieve its objective.
Q: HOW DOES THE PHOLIO SEEK TO ACHIEVE ITS OBJECTIVE?
A: The Phoenix Wealth Builder PHOLIO seeks to achieve its objective by investing
in a diversified mix of mutual funds representing a number of asset classes and
investment styles, including alternative investments. The underlying mutual
funds are managed by independent investment managers, specializing in areas of
the equity and fixed income markets. The emphasis on diversification is intended
to moderate volatility by limiting the effect of one investment style. Under
normal conditions, the PHOLIO seeks to achieve a target asset allocation of
approximately 80% in equity mutual funds and 20% in bond mutual funds. The
PHOLIO's adviser determines the underlying mutual funds that it believes best
represents the selected asset allocation, monitors the PHOLIO's allocations, and
rebalances assets to maintain the targeted equity and bond allocations.
Management of each underlying mutual fund is responsible for deciding which
securities to purchase and sell for its respective fund.
Q: HOW DID THE PHOLIO PERFORM DURING THE 12 MONTHS ENDED JULY 31, 2005?
A: For the fiscal year ended July 31, 2005, the PHOLIO's Class A shares returned
11.76% and Class C shares returned 11.01%. For the same period, the S&P 500(R)
Index, a broad-based equity index, returned 14.04%; the Lehman Brothers
Aggregate Bond Index, a broad-based fixed income index, returned 4.79%; and the
PHOLIO's style-specific benchmark, a Composite Index consisting of 80% S&P
500(R) Index and 20% Lehman Brothers Aggregate Bond Index, returned 12.21%. All
performance figures assume reinvestment of distributions and exclude the effect
sales charges. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS AND CURRENT
PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE SHOWN ABOVE.
Q: WHAT FACTORS AFFECTED THE EQUITY MARKETS OVER THE REPORTING PERIOD?
A: During the PHOLIO's fiscal year, the stock market posted solid double-digit
returns. A strong U.S. economy and low interest rates helped fuel higher
corporate profits. While many market observers have been concerned about the
impact of higher oil prices for the last year, the economy continues to grow at
a healthy pace, employment gains have been consistent, and inflation has
increased modestly on an absolute basis. Market concerns about the 2004
presidential election proved to be unfounded. Investors' appetite for risk
appears to be on the increase as the market losses suffered during 2000-2002
fade from memory. Large-cap stocks, as represented by the S&P 500(R) Index, had
a total return of 14.04%. The largest gains for the market occurred in the
fourth quarter of 2004, and the second quarter of 2005.
During 2005, market returns have been flat to slightly positive. Higher
oil prices and recent terrorism in the United Kingdom weigh on the minds of
market participants as potential threats to economic growth. Attention continues
to be focused on the Federal Reserve, which has raised short-term interest
6
Phoenix Wealth Builder PHOLIO(SM) (continued)
rates a total of ten times in the past fifteen months, most recently on August
9, 2005. These rate increases have "flattened" the Treasury yield curve causing
three-month Treasury rates to be only about 1% lower than 10-year Treasury
rates. For the past year, investors have feared that rapidly rising rates could
threaten the economic expansion and reduce corporate profits. However, we
believe failure to increase rates could lead to much higher inflation. On the
positive side, we believe housing activity and housing prices remain very
strong, the Chinese have begun to let their currency appreciate relative to the
U.S. dollar, and the unemployment rate has declined to a four-year low.
Q: WHAT FACTORS AFFECTED THE BOND MARKET OVER THE REPORTING PERIOD?
A: During the PHOLIO's fiscal year, intermediate and long-term interest rate
levels remained surprisingly low in spite of sharply higher oil prices and
strong economic growth. The yield on the 10-year Treasury note fluctuated
between about 3.9% and 4.6% for the fiscal year, ending at 4.28% on July 31,
2005. The failure for long-term rates to increase has confounded many economists
and been referred to as a "conundrum" by the Federal Reserve chairman. Ten
interest rate increases by the Fed have sharply flattened the yield curve and
pushed the federal funds rate to 3.50% as of August 9, 2005. The future impact
of higher oil prices remains unclear--while higher energy costs are
inflationary, they also help restrain consumer spending and therefore could
reduce economic growth.
Given the strength in the economy during the fiscal year, credit sensitive
sectors of the bond market outperformed U.S. Treasuries for the last twelve
months. Investment grade corporate bonds benefited from stronger corporate
balance sheets and increasing profits. Investor demand for more yield in a low
rate environment also benefited the investment grade corporate bond sector. The
corporate bond market experienced some turbulence in the spring of 2005 due to
the downgrading of General Motors and Ford Motor Company bonds. High yield bonds
enjoyed another strong period of performance, posting double-digit total returns
for the fiscal year. These bonds were sharply punished during 2001 and 2002, but
have enjoyed a multi-year rebound as their higher yields attracted more demand.
Longer maturity bonds outperformed their shorter maturity counterparts due to
their higher yields.
Q: HOW DID THE PHOLIO PERFORM IN THE MARKET ENVIRONMENT OVER THE PAST 12 MONTHS?
A: The PHOLIO's performance reflected the positive returns for domestic equities
during the past twelve months. With approximately an 80% allocation to a
diversified group of equity mutual funds, the PHOLIO benefited from the
double-digit gains in most equity categories. The PHOLIO slightly underperformed
its style-specific benchmark due to its allocation to an underlying equity fund
(Phoenix Rising Dividends), which focuses on large capitalization stocks with
higher quality S&P ratings of A or better. As the past year's market environment
tended to reward companies with lower quality ratings, the Rising Dividends
Fund's performance was adversely impacted relative to the S&P 500(R), which, in
turn, slightly affected the performance of the PHOLIO.
As in the previous fiscal year, the PHOLIO particularly benefited from its
allocation to a real estate securities fund, which invests principally in REITS,
as REIT returns exceeded the returns of other domestic equity indices by a wide
margin. The exposure to alternative investments is an important strategy of the
PHOLIO to provide diversification, and potentially reduce overall portfolio
volatility. The
7
Phoenix Wealth Builder PHOLIO(SM) (continued)
PHOLIO's underlying bond funds matched their benchmarks.
Q: WHAT CHANGES, IF ANY, HAVE BEEN MADE TO THE PHOLIO'S ASSET ALLOCATION OVER
THE PAST 12 MONTHS AND WHY?
A: The PHOLIO did not have any changes to its asset allocation during the twelve
months ended July 31, 2005. However, early in the fiscal year beginning August
1, 2005, the PHOLIO's underlying mutual fund allocations were expanded to
include additional funds specializing in international equities, utility stocks,
high yield bonds, and both growth and value equity funds. Two underlying funds
were removed from the PHOLIO's allocation, and the allocations to several other
funds were modified.
The PHOLIO's adviser believes that the inclusion of the additional funds
and changes to the current funds will provide additional diversification, and
potentially reduce overall volatility. Details about the changes in fund
allocations were provided to shareholders in the Phoenix PHOLIOs prospectus
dated August 4, 2005.
As part of our investment philosophy, we do not believe in trying to time
the market. Our goal is to remain approximately 80% invested in equity mutual
funds and 20% in bond mutual funds. The PHOLIO's allocations are reviewed
regularly and systematic rebalancing is completed as needed to maintain our
goal.
Q: WHAT IS YOUR CURRENT OUTLOOK FOR THE PORTFOLIO?
A: Given our adherence to disciplined asset allocation and systematic
rebalancing, we do not attempt to project an outlook for the portfolio. However,
we do believe that over meaningful periods of time, the PHOLIO will provide
returns with considerably less volatility than the major equity benchmarks. A
diversified portfolio held for the long term is a sensible strategy, and
eliminates focusing on short-term market fears or suspected market
opportunities. With the recent addition of several new funds with proven
strategies, we believe that the diversification benefits of the PHOLIO should
increase.
AUGUST 2005
THE PRECEDING INFORMATION IS THE OPINION OF PORTFOLIO MANAGEMENT. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE IS NO GUARANTEE THAT
MARKET FORECASTS DISCUSSED WILL BE REALIZED.
8
Phoenix Wealth Builder PHOLIO(SM)
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TOTAL RETURNS(1) PERIODS ENDING 7/31/05
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INCEPTION INCEPTION
1 YEAR TO 7/31/05 DATE
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Class A Shares at NAV(2) 11.76% 10.85% 8/1/03
Class A Shares at POP(3) 5.34 7.61 8/1/03
Class C Shares at NAV(2) 11.01 10.05 8/1/03
Class C Shares with CDSC(4) 11.01 10.05 8/1/03
S&P 500(R) Index 14.04 14.23 8/1/03
Lehman Brothers Aggregate Bond Index 4.79 4.85 8/1/03
Composite Index for Phoenix Wealth Builder PHOLIO 12.21 12.38 8/1/03
ALL RETURNS REPRESENT PAST PERFORMANCE WHICH IS NO GUARANTEE OF FUTURE RESULTS.
CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE SHOWN. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. THE ABOVE TABLE AND GRAPH BELOW DO NOT REFLECT THE DEDUCTION OF TAXES THAT
A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF SHARES.
PLEASE VISIT PHOENIXFUNDS.COM FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT
MONTH-END.
(1) TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE AND THE
REINVESTMENT OF BOTH DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS.
(2) "NAV" (NET ASSET VALUE) TOTAL RETURNS DO NOT INCLUDE THE EFFECT OF ANY
SALES CHARGE.
(3) "POP" (PUBLIC OFFERING PRICE) TOTAL RETURNS INCLUDE THE EFFECT OF THE
MAXIMUM FRONT-END 5.75% SALES CHARGE.
(4) CDSC (CONTINGENT DEFERRED SALES CHARGE) IS APPLIED TO REDEMPTIONS OF
CERTAIN CLASSES OF SHARES THAT DO NOT HAVE A SALES CHARGE APPLIED AT THE
TIME OF PURCHASE. CDSC CHARGES FOR C SHARES ARE 1% IN THE FIRST YEAR AND
0% THEREAFTER.
(5) THIS CHART INCLUDES APPLICATION OF INITIAL SALES CHARGES ON CLASS A SHARES
AND APPLICABLE CDSC CHARGES FOR CLASS C SHARES SINCE INCEPTION.
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GROWTH OF $10,000 PERIODS ENDING 7/31
- --------------------------------------------------------------------------------
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
8/1/03 (inception of the Fund) in Class A and Class C shares. The total return
for Class A shares reflects the maximum sales charge of 5.75% on the initial
investment. The total return for Class C shares reflects the CDSC charges which
are 1% in the first year and 0% thereafter. Performance assumes dividends and
capital gains are reinvested.
[GRAPHIC OMITTED]
[EDGAR REPRESENTAION OF PLOT POINTS USED IN PRINTED GRAPHIC]
Composite Index
Phoenix Wealth Phoenix Wealth Lehman Brothers for Phoenix
Builder PHOLIO(SM) Builder PHOLIO(SM) S&P 500(R) Aggregate Bond Wealth Builder
Class A 5 Class C 5 Index Index PHOLIO(SM)
8/1/2003 $ 9,425 $10,000 $10,000 $10,000 $10,000
7/31/2004 $10,357 $10,903 $11,433 $10,489 $11,247
7/31/2005 $11,576 $12,104 $13,038 $10,992 $12,620
For information regarding the indexes, see the glossary on page 3.
9
Phoenix Wealth Builder PHOLIO(SM)
ABOUT YOUR FUND'S EXPENSES
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 Wealth Builder PHOLIO, you incur two types of costs: (1) transaction costs,
including sales charges on purchases of Class A shares and contingent deferred
sales charges on Class C shares; 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 could 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
Wealth Builder PHOLIO Account Value Account Value During
Class A January 31, 2005 July 31, 2005 Period*
- ----------------------- ---------------- ------------- -------------
Actual $ 1,000.00 $ 1,049.30 $ 2.03
Hypothetical (5% return
before expenses) 1,000.00 1,022.79 2.00
* EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF
0.40%, WHICH INCLUDES 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.
ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S
CLASS A RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN
THIS FORMAT, IT IS NOT THE CLASS' ACTUAL RETURN FOR THE YEAR ENDED JULY
31, 2005. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR WAS 11.76%.
AN INVESTMENT OF $1,000.00 AT JULY 31, 2004 WOULD HAVE YIELDED AN ACCOUNT
VALUE AT JULY 31, 2005, OF $1,117.60.
Beginning Ending Expenses Paid
Wealth Builder PHOLIO Account Value Account Value During
Class C January 31, 2005 July 31, 2005 Period*
- ----------------------- ---------------- ------------- -------------
Actual $ 1,000.00 $ 1,045.20 $ 5.83
Hypothetical (5% return
before expenses) 1,000.00 1,019.02 5.77
* EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF
1.15%, WHICH INCLUDES 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.
ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S
CLASS C RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN
THIS FORMAT, IT IS NOT THE CLASS' ACTUAL RETURN FOR THE YEAR ENDED JULY
31, 2005. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR WAS 11.01%.
AN INVESTMENT OF $1,000.00 AT JULY 31, 2004 WOULD HAVE YIELDED AN ACCOUNT
VALUE AT JULY 31, 2005, OF $1,110.10.
THE ANNUALIZED EXPENSE RATIOS NOTED ABOVE DO NOT REFLECT FEES AND EXPENSES
ASSOCIATED WITH THE UNDERLYING FUNDS. IF SUCH FEES AND EXPENSES HAD BEEN
INCLUDED, THE EXPENSES WOULD HAVE BEEN HIGHER.
YOU CAN FIND MORE INFORMATION ABOUT THE FUND'S EXPENSES IN THE FINANCIAL
STATEMENTS SECTION THAT FOLLOWS. FOR ADDITIONAL INFORMATION ON OPERATING
EXPENSES AND OTHER SHAREHOLDER COSTS, REFER TO THE PROSPECTUS.
10
Phoenix Wealth Builder PHOLIO(SM)
- --------------------------------------------------------------------------------
FUND INVESTMENT ALLOCATION 7/31/05
- --------------------------------------------------------------------------------
As a percentage of total investments
[GRAPHIC OMITTED]
Equity Funds 81%
Fixed Income Funds 19
SCHEDULE OF INVESTMENTS
JULY 31, 2005
SHARES VALUE
--------- -------------
MUTUAL FUNDS--100.3%
EQUITY FUNDS--80.7%
Phoenix Real Estate Securities Fund Class A(c) .. 509,494 $ 14,413,583
Phoenix Growth & Income Fund Class A(c) ......... 1,797,265 26,815,180
Phoenix Rising Dividends Fund Class A(c) ........ 1,620,614 25,313,994
Phoenix Small-Mid Cap Fund Class A(b)(c) ........ 1,641,326 33,630,763
Phoenix Market Neutral Fund Class A(b)(c) ....... 540,862 6,549,838
-------------
106,723,358
-------------
SHARES VALUE
--------- -------------
FIXED-INCOME FUNDS--19.6%
Phoenix Institutional Bond Fund Class Y(c) ...... 306,763 $ 9,678,360
Phoenix Multi-Sector Short Term Bond Fund
Class A(c) ................................... 1,374,508 6,515,169
Phoenix Bond Fund Class A(c) .................... 915,356 9,629,542
-------------
25,823,071
-------------
- -----------------------------------------------------------------------------
TOTAL MUTUAL FUNDS
(IDENTIFIED COST $120,633,339) 132,546,429
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS--100.3%
(IDENTIFIED COST $120,633,339) 132,546,429(a)
Other assets and liabilities, net--(0.3)% (330,564)
-------------
NET ASSETS--100.0% $ 132,215,865
=============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $12,187,107 and gross
depreciation of $343,704 for federal income tax purposes. At July 31,
2005, the aggregate cost of securities for federal income tax purposes was
$120,703,026.
(b) Non-income producing.
(c) Affiliated Fund.
See Notes to Financial Statements 11
Phoenix Wealth Builder PHOLIO(SM)
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2005
ASSETS
Investments at value (Identified cost $120,633,339) $ 132,546,429
Receivables
Investments sold 336,254
Fund shares sold 206,856
Receivable from adviser 31,681
Dividends 21,890
Prepaid expenses 29,827
Trustee retainer 6,040
--------------
Total assets 133,178,977
--------------
LIABILITIES
Cash overdraft 170,929
Payables
Fund shares repurchased 505,705
Investments purchased 154,463
Distribution and service fees 53,334
Transfer agent 27,096
Financial agent fee 3,824
Accrued expenses 47,761
--------------
Total liabilities 963,112
--------------
NET ASSETS $ 132,215,865
==============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 119,688,895
Undistributed net investment income 32,989
Accumulated net realized gain 580,891
Net unrealized appreciation 11,913,090
--------------
NET ASSETS $ 132,215,865
==============
CLASS A
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $47,934,487) 3,972,938
Net asset value per share $ 12.07
Offering price per share $12.07/(1-5.75%) $ 12.81
CLASS C
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $84,281,378) 7,013,071
Net asset value and offering price per share $ 12.02
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 2005
INVESTMENT INCOME
Income distributions received from affiliated funds $ 1,512,060
Interest 2,342
--------------
Total investment income 1,514,402
--------------
EXPENSES
Investment advisory fee 113,412
Distribution and service fees, Class C 552,437
Financial agent fee 66,987
Transfer agent 143,403
Registration 39,866
Trustees 38,447
Printing 35,080
Professional 29,629
Custodian 18,964
Miscellaneous 19,848
--------------
Total expenses 1,058,073
Less expenses reimbursed by investment adviser c (52,406)
--------------
Net expenses 1,005,667
--------------
NET INVESTMENT INCOME 508,735
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Capital gain distributions received from affiliated funds 668,786
Net realized loss on investments from affiliated funds (40,188)
Net change in unrealized appreciation (depreciation)
on investments from affiliated funds 10,711,389
--------------
NET GAIN ON INVESTMENTS FROM AFFILIATED FUNDS 11,339,987
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 11,848,722
==============
12 See Notes to Financial Statements
Phoenix Wealth Builder PHOLIO(SM)
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
July 31, 2005 July 31, 2004
------------- -------------
FROM OPERATIONS
Net investment income (loss) $ 508,735 $ 277,274
Net realized gain (loss) 628,598 43,962
Net change in unrealized appreciation (depreciation) 10,711,389 1,201,701
------------- -------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 11,848,722 1,522,937
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (336,203) (170,807)
Net investment income, Class C (207,961) (106,591)
Net realized long-term gains, Class A (8,003) --
Net realized long-term gains, Class C (15,124) --
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (567,291) (277,398)
------------- -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (1,824,326 and 2,952,698 shares, respectively) 20,856,522 31,761,461
Net asset value of shares issued from reinvestment of distributions
(21,465 and 8,770 shares, respectively) 252,054 96,271
Cost of shares repurchased (588,715 and 245,606 shares, respectively) (6,777,429) (2,684,948)
------------- -------------
Total 14,331,147 29,172,784
------------- -------------
CLASS C
Proceeds from sales of shares (2,678,348 and 5,572,339 shares, respectively) 30,646,588 59,681,667
Net asset value of shares issued from reinvestment of distributions
(5,584 and 2,134 shares, respectively) 65,720 22,942
Cost of shares repurchased (1,011,958 and 233,376 shares, respectively) (11,686,796) (2,545,157)
------------- -------------
Total 19,025,512 57,159,452
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 33,356,659 86,332,236
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS 44,638,090 87,577,775
NET ASSETS
Beginning of period 87,577,775 --
------------- -------------
END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$32,989 AND $21,653, RESPECTIVELY] $ 132,215,865 $ 87,577,775
============= =============
See Notes to Financial Statements 13
Phoenix Wealth Builder PHOLIO(SM)
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A
-------------------------------
YEAR ENDED JULY 31,
-------------------------------
2005 2004
Net asset value, beginning of period $ 10.89 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(3) 0.11 0.12
Capital gain distributions received from affiliated funds 0.07 0.01
Net realized and unrealized gain (loss) 1.10 0.86
------------- -------------
TOTAL FROM INVESTMENT OPERATIONS 1.28 0.99
------------- -------------
LESS DISTRIBUTIONS
Dividends from net investment income (0.10) (0.10)
Distributions from net realized gains --(4) --
------------- -------------
TOTAL DISTRIBUTIONS (0.10) (0.10)
------------- -------------
Change in net asset value 1.18 0.89
------------- -------------
NET ASSET VALUE, END OF PERIOD $ 12.07 $ 10.89
============= =============
Total return(1) 11.76% 9.89%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 47,934 $29,566
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.40% 0.40%
Gross operating expenses(2) 0.45% 0.77%
Net investment income 0.93% 1.11%
Portfolio turnover 4% 0%
CLASS C
-------------------------------
YEAR ENDED JULY 31,
-------------------------------
2005 2004
Net asset value, beginning of period $ 10.86 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(3) 0.02 0.04
Capital gain distributions received from affiliated funds 0.07 0.01
Net realized and unrealized gain (loss) 1.10 0.85
------------- -------------
TOTAL FROM INVESTMENT OPERATIONS 1.19 0.90
------------- -------------
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) (0.04)
Distributions from net realized gains --(4) --
------------- -------------
TOTAL DISTRIBUTIONS (0.03) (0.04)
------------- -------------
Change in net asset value 1.16 0.86
------------- -------------
NET ASSET VALUE, END OF PERIOD $ 12.02 $ 10.86
============= =============
Total return(1) 11.01% 9.03%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $ 84,281 $ 58,012
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 1.15% 1.15%
Gross operating expenses(2) 1.20% 1.47%
Net investment income 0.19% 0.34%
Portfolio turnover 4% 0%
(1) Sales charges are not reflected in the total return calculation.
(2) The Fund also will indirectly bear its prorated share of expenses of the
underlying funds. Such expenses are not included in the calculation of
this ratio.
(3) Computed using average shares outstanding.
(4) Amount is less than $0.01.
14 See Notes to Financial Statements
PHOENIX WEALTH GUARDIAN PHOLIO(SM)
(FORMERLY PHOENIX PARTNER SELECT WEALTH GUARDIAN FUND)
A DISCUSSION WITH THE PHOLIO'S PORTFOLIO OVERLAY MANAGEMENT TEAM
Q: WHAT IS THE PHOLIO'S INVESTMENT OBJECTIVE?
A: The Phoenix Wealth Guardian PHOLIO(SM)(Phoenix Life Investment Option) is an
asset allocation fund of funds with an investment objective of long-term capital
appreciation and current income. There is no guarantee that the PHOLIO will
achieve its objective.
Q: HOW DOES THE PHOLIO SEEK TO ACHIEVE ITS OBJECTIVE?
A: The Phoenix Wealth Guardian PHOLIO seeks to achieve its objective by
investing in a diversified mix of mutual funds representing a number of asset
classes and investment styles, including alternative investments. The underlying
mutual funds are managed by independent investment managers, specializing in
areas of the equity and fixed income markets. The PHOLIO's emphasis on
diversification is intended to moderate volatility by limiting the effect of one
investment style. Under normal conditions, the PHOLIO seeks to achieve a target
asset allocation of approximately 60% in equity mutual funds and 40% in bond
mutual funds. The PHOLIO's investment adviser determines the underlying mutual
funds that it believes best represents the selected asset allocation, monitors
the PHOLIO's allocations, and rebalances assets to maintain the targeted equity
and bond allocations. Management of each underlying mutual fund is responsible
for deciding which securities to purchase and sell for its respective fund.
Q: HOW DID THE PHOLIO PERFORM DURING THE 12 MONTHS ENDED JULY 31, 2005?
A: For the fiscal year ended July 31, 2005, the PHOLIO's Class A shares returned
9.74% and Class C shares returned 9.03%. For the same period, the S&P 500(R)
Index, a broad-based equity index, returned 14.04%; the Lehman Brothers
Aggregate Bond Index, a broad-based fixed income index, returned 4.79%; and the
PHOLIO's style-specific benchmark, a Composite Index consisting of 60% S&P
500(R) Index and 40% Lehman Brothers Aggregate Bond Index, returned 10.36%. All
performance figures assume reinvestment of distributions and exclude the effect
of sales charges. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS AND CURRENT
PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE SHOWN ABOVE.
Q: WHAT FACTORS AFFECTED THE EQUITY MARKETS OVER THE REPORTING PERIOD?
A: During the PHOLIO's fiscal year, the stock market posted solid double-digit
returns. A strong U.S. economy and low interest rates helped fuel higher
corporate profits. While many market observers have been concerned about the
impact of higher oil prices for the last year, the economy continues to grow at
a healthy pace, employment gains have been consistent, and inflation has
increased modestly on an absolute basis. Market concerns about the 2004
presidential election proved to be unfounded. Investors' appetite for risk
appears to be on the increase as the market losses suffered during 2000-2002
fade from memory. Large-cap stocks, as represented by the S&P 500(R) Index, had
a total return of 14.04%. The largest gains for the market occurred in the
fourth quarter of 2004, and the second quarter of 2005.
During 2005, market returns have been flat to slightly positive. Higher
oil prices and recent terrorism in the United Kingdom weigh on the minds of
market participants as potential threats to economic growth. Attention continues
to be focused on the
15
Phoenix Wealth Guardian PHOLIO(SM) (continued)
Federal Reserve, which has raised short-term interest rates a total of ten times
in the past fifteen months, most recently on August 9, 2005. These rate
increases have "flattened" the Treasury yield curve causing three-month Treasury
rates to be only about 1% lower than 10-year Treasury rates. For the past year,
investors have feared that rapidly rising rates could threaten the economic
expansion and reduce corporate profits. However, we believe failure to increase
rates could lead to much higher inflation. On the positive side, we believe
housing activity and housing prices remain very strong, the Chinese have begun
to let their currency appreciate relative to the U.S. dollar, and the
unemployment rate has declined to a four-year low.
Q: WHAT FACTORS AFFECTED THE BOND MARKET OVER THE REPORTING PERIOD?
A: During the PHOLIO's fiscal year, intermediate and long term interest rate
levels remained surprisingly low in spite of sharply higher oil prices and
strong economic growth. The yield on the 10-year Treasury note fluctuated
between about 3.9% and 4.6% for the fiscal year, ending at 4.28% on July 31,
2005. The failure of long term rates to increase has confounded many economists
and been referred to as a "conundrum" by the Federal Reserve chairman. Ten
interest rate increases by the Fed have sharply flattened the yield curve and
pushed the federal funds rate to 3.50% as of August 9, 2005. The future impact
of higher oil prices remains unclear--while higher energy costs are
inflationary, they also help restrain consumer spending and therefore could
reduce economic growth.
Given the strength in the economy during the fiscal year, credit sensitive
sectors of the bond market outperformed U.S. Treasuries for the last twelve
months. Investment grade corporate bonds benefited from stronger corporate
balance sheets and increasing profits. Investor demand for higher yields in a
low rate environment also benefited the investment grade corporate bond sector.
The corporate bond market experienced some turbulence in the spring of 2005 due
to the downgrading of General Motors and Ford Motor Company bonds. High yield
bonds enjoyed another strong period of performance, posting double-digit total
returns for the fiscal year. These bonds were sharply punished during 2001 and
2002, but have enjoyed a multi-year rebound as their higher yields attracted
more demand. Longer maturity bonds outperformed their shorter maturity
counterparts due to their higher yields.
Q: HOW DID THE PHOLIO PERFORM IN THE MARKET ENVIRONMENT OVER THE PAST 12 MONTHS?
A: The PHOLIO's performance reflected the double digit positive returns for
domestic equities during the past twelve months balanced with the lower returns
of the bond market. With an approximately 60% allocation to equity mutual funds,
the PHOLIO benefited from rising U.S. stock prices. The PHOLIO slightly
underperformed its style-specific benchmark due to its allocation to an
underlying equity fund (Phoenix Rising Dividends), which focuses on large
capitalization stocks with higher quality S&P ratings of A or better. As the
past year's market environment tended to reward companies with lower quality
ratings, the Rising Dividends Fund's performance was adversely impacted relative
to the S&P 500(R), which, in turn, slightly affected the performance of the
PHOLIO.
As in the previous fiscal year, the PHOLIO particularly benefited from its
allocation to a real estate securities fund, which invests principally in REITS,
as REIT returns exceeded the returns of other domestic equity indices by a wide
margin.
16
Phoenix Wealth Guardian PHOLIO(SM) (continued)
The exposure to alternative investments is an important strategy of the PHOLIO
to provide diversification, and potentially reduce overall portfolio volatility.
The PHOLIO's underlying bond funds matched their benchmarks.
Q: WHAT CHANGES, IF ANY, HAVE BEEN MADE TO THE PHOLIO'S ASSET ALLOCATION OVER
THE PAST 12 MONTHS AND WHY?
A: The PHOLIO did not have any changes to its asset allocation during the past
twelve months. However, early in the fiscal year beginning August 1, 2005, the
PHOLIO's underlying mutual fund allocations were expanded to include additional
funds specializing in international equities, utility stocks, high yield bonds,
and both growth and value equity funds. Two underlying funds were removed from
the PHOLIO's allocation, and the allocations to several other funds were
modified.
The PHOLIO's adviser believes that the inclusion of the additional funds
and changes to the current funds will provide additional diversification, and
potentially reduce overall volatility. Details about the changes in fund
allocations were provided to shareholders in the Phoenix PHOLIOs prospectus
dated August 4, 2005.
As part of our investment philosophy, we do not believe in trying to time
the market. Our goal is to remain approximately 60% invested in equity mutual
funds and 40% in bond mutual funds. The PHOLIO's allocations are reviewed
regularly and systematic rebalancing is completed as needed to maintain our
goal.
Q: WHAT IS YOUR CURRENT OUTLOOK FOR THE PORTFOLIO?
A: Given our adherence to disciplined asset allocation and systematic
rebalancing, we do not attempt to project an outlook for the portfolio. However,
we do believe that over meaningful periods of time, the PHOLIO will provide
returns with considerably less volatility than the major equity benchmarks. A
diversified portfolio held for the long term is a sensible strategy, and
eliminates focusing on short-term market fears or suspected market
opportunities. With the recent addition of several new funds with proven
strategies, we believe that the diversification benefits of the PHOLIO should
increase.
AUGUST 2005
THE PRECEDING INFORMATION IS THE OPINION OF PORTFOLIO MANAGEMENT. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE IS NO GUARANTEE THAT
MARKET FORECASTS DISCUSSED WILL BE REALIZED.
17
Phoenix Wealth Guardian PHOLIO(SM)
- --------------------------------------------------------------------------------
TOTAL RETURNS(1) PERIODS ENDING 7/31/05
- --------------------------------------------------------------------------------
INCEPTION INCEPTION
1 YEAR TO 7/31/05 DATE
------ ---------- ---------
Class A Shares at NAV(2) 9.74% 9.47% 8/1/03
Class A Shares at POP(3) 3.43 6.27 8/1/03
Class C Shares at NAV(2) 9.03 8.69 8/1/03
Class C Shares with CDSC(4) 9.03 8.69 8/1/03
S&P 500(R) Index 14.04 14.23 8/1/03
Lehman Brothers Aggregate Bond Index 4.79 4.85 8/1/03
Composite Index for Phoenix Wealth Guardian PHOLIO 10.36 10.51 8/1/03
ALL RETURNS REPRESENT PAST PERFORMANCE WHICH IS NO GUARANTEE OF FUTURE RESULTS.
CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE SHOWN. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. THE ABOVE TABLE AND GRAPH BELOW DO NOT REFLECT THE DEDUCTION OF TAXES THAT
A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF SHARES.
PLEASE VISIT PHOENIXFUNDS.COM FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT
MONTH-END.
(1) TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE AND THE
REINVESTMENT OF BOTH DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS.
(2) "NAV" (NET ASSET VALUE) TOTAL RETURNS DO NOT INCLUDE THE EFFECT OF ANY
SALES CHARGE.
(3) "POP" (PUBLIC OFFERING PRICE) TOTAL RETURNS INCLUDE THE EFFECT OF THE
MAXIMUM FRONT-END 5.75% SALES CHARGE.
(4) CDSC (CONTINGENT DEFERRED SALES CHARGE) IS APPLIED TO REDEMPTIONS OF
CERTAIN CLASSES OF SHARES THAT DO NOT HAVE A SALES CHARGE APPLIED AT THE
TIME OF PURCHASE. CDSC CHARGES FOR C SHARES ARE 1% IN THE FIRST YEAR AND
0% THEREAFTER.
(5) THIS CHART INCLUDES APPLICATION OF INITIAL SALES CHARGES ON CLASS A SHARES
AND APPLICABLE CDSC CHARGES FOR CLASS C SHARES SINCE INCEPTION.
- --------------------------------------------------------------------------------
GROWTH OF $10,000 PERIODS ENDING 7/31
- --------------------------------------------------------------------------------
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
8/1/03 (inception of the Fund) in Class A and Class C shares. The total return
for Class A shares reflects the maximum sales charge of 5.75% on the initial
investment. The total return for Class C shares reflects the CDSC charges which
are 1% in the first year and 0% thereafter. Performance assumes dividends and
capital gains are reinvested.
[GRAPHIC OMITTED]
[EDGAR REPRESENTAION OF PLOT POINTS USED IN PRINTED GRAPHIC]
Composite Index
Phoenix Wealth Phoenix Wealth Lehman Brothers for Phoenix
Guardian PHOLIO(SM) Guardian PHOLIO(SM) S&P 500(R) Aggregate Bond Wealth Guardian
Class A 5 Class C 5 Index Index PHOLIO(SM)
8/1/2003 $ 9,425 $10,000 $10,000 $10,000 $10,000
7/31/2004 $10,287 $10,829 $11,433 $10,489 $11,060
7/31/2005 $11,289 $11,808 $13,038 $10,992 $12,206
For information regarding the indexes, see the glossary on page 3.
18
Phoenix Wealth Guardian PHOLIO(SM)
ABOUT YOUR FUND'S EXPENSES
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 Wealth Guardian PHOLIO, you incur two types of costs: (1) transaction costs,
including sales charges on purchases of Class A shares and contingent deferred
sales charges on Class C shares; 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 could 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
Wealth Guardian PHOLIO Account Value Account Value During
Class A January 31, 2005 July 31, 2005 Period*
- ----------------------- ---------------- ------------- -------------
Actual $ 1,000.00 $ 1,041.10 $ 2.63
Hypothetical (5% return
before expenses) 1,000.00 1,022.19 2.61
* EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF
0.52%, WHICH INCLUDES 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.
ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S
CLASS A RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN
THIS FORMAT, IT IS NOT THE CLASS' ACTUAL RETURN FOR THE YEAR ENDED JULY
31, 2005. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR WAS 9.74%.
AN INVESTMENT OF $1,000.00 AT JULY 31, 2004 WOULD HAVE YIELDED AN ACCOUNT
VALUE AT JULY 31, 2005, OF $1,097.40
Beginning Ending Expenses Paid
Wealth Guardian PHOLIO Account Value Account Value During
Class C January 31, 2005 July 31, 2005 Period*
- ----------------------- ---------------- ------------- -------------
Actual $ 1,000.00 $ 1,037.60 $ 6.42
Hypothetical (5% return
before expenses) 1,000.00 1,018.42 6.38
* EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF
1.27%, WHICH INCLUDES 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.
ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S
CLASS C RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN
THIS FORMAT, IT IS NOT THE CLASS' ACTUAL RETURN FOR THE YEAR ENDED JULY
31, 2005. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR WAS 9.03%.
AN INVESTMENT OF $1,000.00 AT JULY 31, 2004 WOULD HAVE YIELDED AN ACCOUNT
VALUE AT JULY 31, 2005, OF $1,090.30.
THE ANNUALIZED EXPENSE RATIOS NOTED ABOVE DO NOT REFLECT FEES AND EXPENSES
ASSOCIATED WITH THE UNDERLYING FUNDS. IF SUCH FEES AND EXPENSES HAD BEEN
INCLUDED, THE EXPENSES WOULD HAVE BEEN HIGHER.
YOU CAN FIND MORE INFORMATION ABOUT THE FUND'S EXPENSES IN THE FINANCIAL
STATEMENTS SECTION THAT FOLLOWS. FOR ADDITIONAL INFORMATION ON OPERATING
EXPENSES AND OTHER SHAREHOLDER COSTS, REFER TO THE PROSPECTUS.
19
Phoenix Wealth Guardian PHOLIO(SM)
- --------------------------------------------------------------------------------
FUND INVESTMENT ALLOCATION 7/31/05
- --------------------------------------------------------------------------------
As a percentage of total investments
[GRAPHIC OMITTED]
Equity Funds 61%
Fixed Income Funds 39
SCHEDULE OF INVESTMENTS
JULY 31, 2005
SHARES VALUE
--------- -------------
MUTUAL FUNDS--100.2%
EQUITY FUNDS--61.1%
Phoenix Real Estate Securities Fund Class A(c) ... 236,213 $ 6,682,443
Phoenix Growth & Income Fund Class A(c) .......... 725,975 10,831,539
Phoenix Rising Dividends Fund Class A(c) ......... 668,040 10,434,787
Phoenix Small-Mid Cap Fund Class A(b)(c) ......... 306,724 6,284,770
Phoenix Market Neutral Fund Class A(b)(c) ........ 248,216 3,005,905
-------------
37,239,444
-------------
SHARES VALUE
--------- -------------
FIXED-INCOME FUNDS--39.1%
Phoenix Institutional Bond Fund Class Y(c) ....... 282,838 $ 8,923,566
Phoenix Multi-Sector Short Term Bond Fund
Class A(c) ....................................... 1,261,551 5,979,752
Phoenix Bond Fund Class A(c) .................... 846,471 8,904,877
-------------
23,808,195
-------------
- -----------------------------------------------------------------------------
TOTAL MUTUAL FUNDS
(IDENTIFIED COST $56,874,282) 61,047,639
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS--100.2%
(IDENTIFIED COST $56,874,282) 61,047,639(a)
Other assets and liabilities, net--(0.2)% (100,273)
-------------
NET ASSETS--100.0% $ 60,947,366
=============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $4,378,654 and gross
depreciation of $273,757 for federal income tax purposes. At July 31,
2005, the aggregate cost of securities for federal income tax purposes was
$56,942,742.
(b) Non-income producing.
(c) Affiliated Fund.
20 See Notes to Financial Statements
Phoenix Wealth Guardian PHOLIO(SM)
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2005
ASSETS
Investments at value
(Identified cost $56,874,282) $ 61,047,639
Cash 115,390
Receivables
Fund shares sold 214,931
Dividends 20,009
Receivable from adviser 15,310
Prepaid expenses 22,202
Trustee retainer 6,040
------------
Total assets 61,441,521
------------
LIABILITIES
Payables
Investments purchased 259,735
Fund shares repurchased 153,640
Distribution and service fees 25,464
Professional fees 25,066
Transfer agent 12,113
Financial agent fee 3,823
Accrued expenses 14,314
------------
Total liabilities 494,155
------------
NET ASSETS $ 60,947,366
============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 56,475,206
Undistributed net investment income 50,771
Accumulated net realized gain 248,032
Net unrealized appreciation 4,173,357
------------
NET ASSETS $ 60,947,366
============
CLASS A
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $20,695,739) 1,782,021
Net asset value per share $11.61
Offering price per share $11.61/(1-5.75%) $12.32
CLASS C
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $40,251,627) 3,470,939
Net asset value and offering price per share $11.60
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 2005
INVESTMENT INCOME
Income distributions received from affiliated funds $ 1,072,280
Interest 1,023
------------
Total investment income 1,073,303
------------
EXPENSES
Investment advisory fee 51,659
Distribution and service fees, Class C 268,828
Financial agent fee 66,987
Transfer agent 73,303
Trustees 38,447
Professional 29,628
Registration 28,025
Printing 18,144
Custodian 14,085
Miscellaneous 17,569
------------
Total expenses 606,675
Less expenses reimbursed by investment adviser (69,218)
------------
Net expenses 537,457
------------
NET INVESTMENT INCOME 535,846
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Capital gain distributions received from affiliated funds 321,438
Net realized loss on investments from affiliated funds (37,515)
Net change in unrealized appreciation (depreciation)
on investments from affiliated funds 3,601,562
------------
NET GAIN ON INVESTMENTS FROM AFFILIATED FUNDS 3,885,485
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,421,331
============
See Notes to Financial Statements 21
Phoenix Wealth Guardian PHOLIO(SM)
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
July 31, 2005 July 31, 2004
------------- -------------
FROM OPERATIONS
Net investment income (loss) $ 535,846 $ 311,187
Net realized gain (loss) 283,923 16,260
Net change in unrealized appreciation (depreciation) 3,601,562 571,795
------------- -------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,421,331 899,242
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (253,607) (111,767)
Net investment income, Class C (271,275) (199,661)
Net realized long-term gains, Class A (3,604) --
Net realized long-term gains, Class C (8,499) --
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (536,985) (311,428)
------------- -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (1,090,914 and 1,090,593 shares, respectively) 12,243,290 11,572,733
Net asset value of shares issued from reinvestment of distributions
(17,604 and 5,491 shares, respectively) 200,211 59,161
Cost of shares repurchased (274,678 and 147,903 shares, respectively) (3,092,213) (1,571,853)
------------- -------------
Total 9,351,288 10,060,041
------------- -------------
CLASS C
Proceeds from sales of shares (1,321,823 and 2,772,956 shares, respectively) 14,738,790 29,262,035
Net asset value of shares issued from reinvestment of distributions
(9,278 and 4,063 shares, respectively) 105,468 43,475
Cost of shares repurchased (505,099 and 132,082 shares, respectively) (5,669,378) (1,416,513)
------------- -------------
Total 9,174,880 27,888,997
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 18,526,168 37,949,038
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS 22,410,514 38,536,852
NET ASSETS
Beginning of period 38,536,852 --
------------- -------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME
OF $50,771 AND $17,981, RESPECTIVELY) $ 60,947,366 $ 38,536,852
============= =============
22 See Notes to Financial Statements
Phoenix Wealth Guardian PHOLIO(SM)
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A
-------------------
YEAR ENDED JULY 31,
-------------------
2005 2004
------- ---------
Net asset value, beginning of period $ 10.74 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.17 0.17
Capital gain distributions received from
affiliated funds 0.06 --(3)
Net realized and unrealized gain (loss) 0.81 0.74
------- ---------
TOTAL FROM INVESTMENT OPERATIONS 1.04 0.91
------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income (0.17) (0.17)
Distributions from net realized gains --(3) --
------- ---------
TOTAL DISTRIBUTIONS (0.17) (0.17)
------- ---------
Change in net asset value 0.87 0.74
------- ---------
NET ASSET VALUE, END OF PERIOD $ 11.61 $ 10.74
======= =========
Total return(1) 9.74% 9.15%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $20,696 $ 10,182
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.52% 0.52%
Gross operating expenses(2) 0.65% 1.35%
Net investment income 1.56% 1.92%
Portfolio turnover 5% 1%
CLASS C
-------------------
YEAR ENDED JULY 31,
-------------------
2005 2004
------- ---------
Net asset value, beginning of period $ 10.72 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.09 0.12
Capital gain distributions received from
affiliated funds 0.06 0.01
Net realized and unrealized gain (loss) 0.81 0.70
------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.96 0.83
------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income (0.08) (0.11)
Distributions from net realized gains --(3) --
------- ---------
TOTAL DISTRIBUTIONS (0.08) (0.11)
------- ---------
Change in net asset value 0.88 0.72
------- ---------
NET ASSET VALUE, END OF PERIOD $ 11.60 $ 10.72
======= =========
Total return(1) 9.03% 8.29%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $40,252 $ 28,355
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 1.27% 1.27%
Gross operating expenses(2) 1.40% 1.98%
Net investment income 0.80% 1.19%
Portfolio turnover 5% 1%
(1) Sales charges are not reflected in the total return calculation.
(2) The Fund also will indirectly bear its prorated share of expenses of the
underlying funds. Such expenses are not included in the calculation of
this ratio.
(3) Amount is less than $0.01.
See Notes to Financial Statements 23
PHOENIX PHOLIOS(SM)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2005
1. ORGANIZATION
Phoenix PHOLIOs(SM)(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.
At July 31, 2005, two Funds were offered for sale (each a "Fund"). The
Phoenix Wealth Builder PHOLIO(SM) ("Wealth Builder"), formerly Phoenix Partner
Select Wealth Builder Fund, is diversified and is a fund of funds that has an
investment objective of seeking long-term capital appreciation. The Phoenix
Wealth Guardian PHOLIO(SM) ("Wealth Guardian"), formerly Phoenix Partner Select
Wealth Guardian Fund, is diversified and is a fund of funds that has an
investment objective of long-term capital appreciation and current income.
Financial information for the underlying funds may be obtained at
www.PhoenixFunds.com.
Each Fund offers the following classes of shares for sale:
Class A Class C
Shares Shares
------- -------
Wealth Builder ............... X X
Wealth Guardian .............. X X
Class A shares are sold with a front-end sales charge of up to 5.75%.
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:
Investments in the underlying funds are valued at each fund's net asset
value determined as of the close of business of the New York Stock Exchange
(generally 4:00 pm eastern time).
As required, some investments may be valued at fair value as determined in
good faith by or under the direction of the Trustees.
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. Income and capital
gain distributions from the underlying funds, if any, are recorded on the
ex-dividend date. Realized gains and losses are determined on the identified
cost basis. Interest income is recorded on the accrual basis. Each Fund
amortizes premiums and accretes discounts using the effective interest method.
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") 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.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are declared and 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. 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.
24
PHOENIX PHOLIOS(SM)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2005 (CONTINUED)
3. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Trust, Phoenix Investment Counsel,
Inc, ("PIC") (the "Adviser"), an indirect, wholly-owned subsidiary of The
Phoenix Companies, Inc. ("PNX"), is entitled to a fee at an annual rate of 0.10%
of the average daily net assets of each Fund.
As a Fund of funds, however, each underlying mutual fund's adviser manages
the daily investments of the underlying mutual fund's portfolio and receives a
management fee for this service from the underlying funds.
The Adviser has contractually agreed to reimburse through November 30,
2005, each Fund's total operating expenses, (excluding interest, tax, and
extraordinary expenses) to the extent that such expenses exceed the following
percentages of average annual net assets:
Class A Class C
Shares Shares
------- -------
Wealth Builder .................. 0.40% 1.15%
Wealth Guardian ................. 0.52% 1.27%
The Adviser will not seek to recapture any prior years' reimbursed or
waived expenses.
As Distributor of the Funds' shares, Phoenix Equity Planning Corporation
("PEPCO") an indirect, wholly-owned subsidiary of PNX, has advised each Fund
that it retained net selling commissions and deferred sales charges for the
12-month period ("the period") ended July 31, 2005, as follows:
Class A Class C
Net Selling Deferred
Commissions Sales Charges
----------- -------------
Wealth Builder .................. $ 58,086 $ 26,745
Wealth Guardian ................. 33,721 12,704
In addition, each Fund pays PEPCO distribution and/or service fees at an
annual rate of 0.75% for Class C shares applied to the average daily net assets
of Class C. Shareholders in each Fund will indirectly bear the Fund's pro rata
share of the fees and expenses of the underlying funds in which each Fund
invests, including services fees of 0.25% incurred as a result of the Fund's
investment in Class A shares or Class Y shares of the underlying funds.
Under certain circumstances, shares of certain Phoenix Funds may be
exchanged for shares of the same class of certain other Phoenix Funds on the
basis of the relative net asset values per share at the time of the exchange. On
exchanges with share classes that carry a contingent deferred sales charge, the
CDSC schedule of the original shares purchased continues to apply.
As Financial Agent of the Trust, PEPCO receives a financial agent fee
equal to the sum of (1) the documented cost to PEPCO to provide tax services and
oversight of the performance of PFPC Inc. (subagent to PEPCO) plus (2) the
documented cost of fund accounting and related services provided by PFPC Inc.
The fee schedule of PFPC Inc. is $40,000 per year per fund. No minimum fees
apply. For the period ended July 31, 2005, the Trust incurred financial agent
fees totaling $133,974.
PEPCO serves as the Trust's Transfer Agent with State Street Bank and
Trust Company serving as sub-transfer agent. For the period ended July 31, 2005,
transfer agent fees were $216,706 as reported in the Statements of Operations,
of which PEPCO retained the following:
Transfer Agent
Fee Retained
--------------
Wealth Builder .............................. $ 21,280
Wealth Guardian ............................. --
4. PURCHASES AND SALES OF UNDERLYING FUNDS
Purchases and sales of underlying funds for the period ended July 31,
2005, were as follows:
Purchases Sales
------------ -----------
Wealth Builder .............. $ 38,809,789 $ 4,402,783
Wealth Guardian ............. 21,684,036 2,767,041
There were no purchases or sales of long-term U.S. Government and agency
securities.
5. OTHER
At July 31, 2005, each Fund had 2 omnibus shareholder accounts, comprised
of a group of individual shareholders, which individually amounted to more than
10% of the total shares outstanding. The omnibus shareholders are not affiliated
with PNX.
% of Shares
Outstanding
-----------
Wealth Builder ............................... 52.4%
Wealth Guardian .............................. 48.4%
The Funds do not invest in the underlying funds for the purpose of
exercising management or control; however, investments made by each Fund within
each of its principal investment strategies may represent a significant portion
of an underlying fund's net assets. At July 31, 2005, Wealth Builder was the
owner of record of approximately 18% of the total outstanding shares of Phoenix
Small-Mid Cap Fund, 17% of the total outstanding shares of Phoenix Rising
Dividends Fund and 14% of the total outstanding shares of Phoenix Bond Fund.
Wealth Guardian was the owner of record of approximately 13% of the total
outstanding shares of Phoenix Bond Fund.
25
PHOENIX PHOLIOS(SM)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2005 (CONTINUED)
6. 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. The Boston District Office of
the SEC recently completed a compliance examination of certain of the Company's
affiliates that are registered under the Investment Company Act of 1940 or the
Investment Advisers Act of 1940. Following the examination, the staff of the
Boston District Office issued a deficiency letter primarily focused on perceived
weaknesses in procedures for monitoring trading to prevent market timing
activity. 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. The Company has responded to the SEC with respect to
each comment in the letter. We do not believe that the outcome of this matter
will be material to these financial statements.
7. FEDERAL INCOME TAX INFORMATION
The components of distributable earnings on a tax basis (excluding
unrealized appreciation (depreciation) which is disclosed in the Schedules of
Investments) consist of undistributed ordinary income and undistributed
long-term capital gains as follows:
Undistributed
Undistributed Long-Term
Ordinary Income Capital Gains
--------------- -------------
Wealth Builder ............................... $ 62,488 $ 621,079
Wealth Guardian .............................. 67,648 299,615
The differences between the book and tax basis components of distributable
earnings relate principally to the timing of the recognition of income and gains
for federal income tax purposes. Short-term gains distributions reported in the
Statements of Changes in Net Assets, if any, are reported as ordinary income for
federal tax purposes.
8. RECLASSIFICATION OF CAPITAL ACCOUNTS
For financial reporting purposes, book basis capital accounts are adjusted
to reflect the tax character of permanent book/tax differences. Permanent
reclassifications can arise from differing treatment of certain income and gain
transactions, nondeductible current year net operating losses, expiring capital
loss carryovers and investments in passive foreign investment companies. The
reclassifications have no impact on the net assets or net asset value of the
Funds. As of July 31, 2005, the Funds recorded reclassifications to increase
(decrease) the accounts as listed below:
Undistributed Accumulated
Net Investment Net Realized
Income (Loss) Gain (Loss)
-------------- ------------
Wealth Builder ................................ $ 46,765 ($46,765)
Wealth Guardian ............................... 21,826 (21,826)
9. PROXY VOTING PROCEDURES (FORM N-PX) (UNAUDITED)
The Adviser votes 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.
10. FORM N-Q INFORMATION (UNAUDITED)
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.
- --------------------------------------------------------------------------------
TAX INFORMATION NOTICE (UNAUDITED)
Long-term capital gain dividends have been designated as follows:
Wealth Builder .............................................. $ 622,021
Wealth Guardian .............................................. 299,612
For the fiscal year ended July 31, 2005, for federal income tax purposes,
70.8% of the ordinary income dividends earned by Wealth Builder, and 29.2% of
the ordinary income dividends earned by Wealth Guardian qualify for the
dividends received deduction for corporate shareholders.
For the fiscal year ended July 31, 2005, Wealth Builder hereby designates
70.6%, and Wealth Guardian hereby designates 29.1%, or the maximum allowable of
each of its ordinary income dividends to qualify for the lower tax rate
applicable to individual shareholders. The actual percentage for the calendar
year will be designated in the year-end tax statements.
- --------------------------------------------------------------------------------
26
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PRICEWATERHOUSECOOPERS [GRAPHIC OMITTED]
To the Board of Trustees
Phoenix PHOLIOs(SM) and Shareholders of
Phoenix Wealth Builder PHOLIO(SM)
Phoenix Wealth Guardian PHOLIO(SM)
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Phoenix Wealth Builder PHOLIO(SM)
(formerly Phoenix Partner Select Wealth Builder Fund) and Phoenix Wealth
Guardian PHOLIO(SM) (formerly Phoenix Partner Select Wealth Guardian Fund)
(constituting Phoenix PHOLIOs(SM), hereafter referred to as the "Trust") at
July 31, 2005, the results of each of their operations for the year then ended
and the changes in each of their net assets and the financial highlights for
each of the two years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at July 31, 2005 by
correspondence with the transfer agent of the investee Funds, provide a
reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
September 16, 2005
27
FUND MANAGEMENT TABLES (UNAUDITED)
Information pertaining to the Trustees and officers of the Trust is set
forth below. The statement of additional information (SAI) includes additional
information about the Trustees and is available without charge, upon request, by
calling (800) 243-4361.
The address of each individual, unless otherwise noted, is 56 Prospect
Street, Hartford, CT 06115-0480. There is no stated term of office for Trustees
of the Trust.
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX PRINCIPAL OCCUPATION(S)
NAME, ADDRESS LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND
AND DATE OF BIRTH TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
E. Virgil Conway Served since 52 Chairman, Rittenhouse Advisors, LLC (consulting firm) since 2001.
Rittenhouse Advisors LLC 1996. Trustee/ Director, Realty Foundation of New York (1972-present), Josiah
101 Park Avenue Macy, Jr. Foundation (Honorary) (2004-present), Pace University
New York, NY 10178 (Director/Trustee Emeritus) (2003-present), Greater New York Councils,
DOB: 8/2/29 Boy Scouts of America (1985-present), The Academy of Political Science
(Vice Chairman) (1985-present), Urstadt Biddle Property Corp.
(1989-present), Trustee/Director, Phoenix Funds Complex (1983-present).
Colgate University (Trustee Emeritus) (since 2004). Director/Trustee,
The Harlem Youth Development Foundation, (Chairman) (1998-2002),
Metropolitan Transportation Authority (Chairman) (1992-2001), Trism,
Inc. (1994-2001), Consolidated Edison Company of New York, Inc.
(1970-2002), Atlantic Mutual Insurance Company (1974-2002), Centennial
Insurance Company (1974-2002), Union Pacific Corp. (1978-2002),
BlackRock Freddie Mac Mortgage Securities Fund (Advisory Director)
(1990-2000), Accuhealth (1994-2002), Pace University (1978-2003), New
York Housing Partnership Development Corp. (Chairman) (1981-2003),
Josiah Macy, Jr. Foundation (1975-2004).
- ------------------------------------------------------------------------------------------------------------------------------------
Harry Dalzell-Payne Served since 52 Retired. Trustee/Director, Phoenix Funds Complex (1983-present).
The Flat, Elmore Court 1996.
Elmore, GL0S, GL2 3NT
U.K.
DOB: 9/8/29
- ------------------------------------------------------------------------------------------------------------------------------------
S. Leland Dill Served since 50 Retired. Trustee, Phoenix Funds Family (1989-present). Trustee, Scudder
7721 Blue Heron Way 2004. Investments (55 portfolios) (1986-present). Director, Coutts & Co.
West Palm Beach, FL 33412 Trust Holdings Limited (1991-2000), Coutts & Co. Group (1991-2000) and
DOB: 3/28/30 Coutts & Co. International (USA) (private banking) (1991-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
Francis E. Jeffries Served since 52 Director, The Empire District Electric Company (1984-2004). Trustee
8477 Bay Colony Dr. #902 1996. /Director, Phoenix Funds Complex (1987-present).
Naples, FL 34108
DOB: 9/23/30
- ------------------------------------------------------------------------------------------------------------------------------------
Leroy Keith, Jr. Served since 50 Partner, Stonington Partners, Inc. (private equity fund) (2001-
Stonington Partners, Inc. 1996. present). Director/Trustee, Evergreen Funds (six portfolios). Trustee,
736 Market Street, Phoenix Funds Family (1980-present). Director, Divesapak (2002-
Ste. 1430 present). Obaji Medical Products Company (2002-present). Director,
Chattanooga, TN 37402 Lincoln Educational Services (2002-2004). Chairman, Carson Products
DOB: 2/14/39 Company (cosmetics) (1998 to 2000).
- ----------------------------------------------------------------------------------------------------------------------------------
28
FUND MANAGEMENT TABLES (UNAUDITED) (CONTINUED)
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX PRINCIPAL OCCUPATION(S)
NAME, ADDRESS LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND
AND DATE OF BIRTH TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
Geraldine M. McNamara Served since 52 Managing Director, U.S. Trust Company of New York (private bank) (1982-
U.S. Trust Company of 2001. present). Trustee/Director, Phoenix Funds Complex (2001-present).
New York
11 West 54th Street
New York, NY 10019
DOB: 4/17/51
- ------------------------------------------------------------------------------------------------------------------------------------
Everett L. Morris Served since 52 Retired. Trustee/Director, Phoenix Funds Complex (1991-present).
164 Laird Road 1996. Director, W.H. Reaves Utility Income Fund (2004-present). Vice
Colts Neck, NJ 07722 President, W.H. Reaves and Company (investment management) (1993-2003).
DOB: 5/26/28
- ------------------------------------------------------------------------------------------------------------------------------------
James M. Oates Served since 50 Chairman, Hudson Castle Group, Inc. (Formerly IBEX Capital Markets,
c/o Northeast Partners 1996. Inc.) (financial services) (1997-present). Trustee / Director Phoenix
150 Federal Street, Funds Family (1987-present). Managing Director Wydown Group (consulting
Suite 1000 firm) (1994-present). Director, Investors Financial Service Corporation
Boston, MA 02110 (1995-present), Investors Bank & Trust Corporation (1995-present),
DOB: 5/31/46 Stifel Financial (1996-present), Connecticut River Bancorp
(1998-present), Connecticut River Bank (1999-present), Trust Company of
New Hampshire (2002-present). Chairman, Emerson Investment Management,
Inc. (2000-present). Independent Chairman, John Hancock Trust (since
2005), Trustee, John Hancock Funds II and John Hancock Funds III (since
2005). Trustee, John Hancock Trust (2004-2005). Director/Trustee, AIB
Govett Funds (six portfolios) (1991-2000), and Command Systems, Inc.
(1998-2000), Phoenix Investment Partners, Ltd. (1995-2001), 1Mind, Inc.
(formerly 1Mind.com), (2000-2002), Plymouth Rubber Co. (1995- 2003).
Director and Treasurer, Endowment for Health, Inc. (2000-2004).
- ------------------------------------------------------------------------------------------------------------------------------------
Donald B. Romans Served since 50 Retired. President, Romans & Company (private investors and financial
39 S. Sheridan Road 2004. consultants) (1987-2003). Trustee/Director, Phoenix Funds Family
Lake Forest, IL 60045 (1996-present). Trustee, Burnham Investors Trust (5 portfolios)
DOB: 4/22/31 (1967-2003).
- ------------------------------------------------------------------------------------------------------------------------------------
Richard E. Segerson Served since 50 Managing Director, Northway Management Company (1998-present). Trustee/
Northway Management 1996. Director, Phoenix Funds Family (1983-present).
Company
164 Mason Street
Greenwich, CT 06830
DOB: 2/16/46
- ------------------------------------------------------------------------------------------------------------------------------------
Ferdinand L. J. Verdonck Served since 50 Director, Banco Urquijo (Chairman)(1998-present). Trustee, Phoenix Funds
Nederpolder, 7 2004. Family (2002-present). Director EASDAQ (Chairman)(2001-present), The JP
B-9000 Gent, Belgium Morgan Fleming Continental European Investment Trust (1998-present),
DOB: 7/30/42 Groupe SNEF(1998-present), Degussa Antwerpen N.V.(1998-present),
Santens N.V.(1999-present). Managing Director, Almanij N.V. (1992-2003).
Director, KBC Bank and Insurance Holding Company (Euronext) (1992-2003),
KBC Bank (1992-2003), KBC Insurance (1992-2003), Kredietbank, S.A.
Luxembourgeoise (1992-2003), Investco N.V. (1992-2003), Gevaert N.V.
(1992-2003), Fidea N.V. (1992-2003), Almafin N.V. (1992-2003), Centea
N.V. (1992-2003), Dutch Chamber of Commerce for Belgium and Luxemburg
(1995-2001), Phoenix Investment Partners, Ltd. (1995-2001).
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29
FUND MANAGEMENT TABLES (UNAUDITED) (CONTINUED)
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX PRINCIPAL OCCUPATION(S)
NAME, ADDRESS LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND
AND DATE OF BIRTH TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
Lowell P. Weicker, Jr. Served since 50 Director, Medallion Financial New York (2003-present), Compuware (1996-
7 Little Point Street 1996. present), WWE, Inc. (2000-present). President, The Trust for America's
Essex, CT 06426 Health (non-profit) (2001-present). Trustee/Director, Phoenix Funds
DOB: 5/16/31 Family (1995- present). Director, UST, Inc. (1995-2004), HPSC Inc.
(1995-2004).
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INTERESTED TRUSTEES
Each of the individuals listed below is an "interested person" of the
Trust, as defined in Section 2(a)(19) of the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX PRINCIPAL OCCUPATION(S)
NAME, ADDRESS LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND
AND DATE OF BIRTH TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
*Marilyn E. LaMarche Served since 50 Limited Managing Director, Lazard Freres & Co. LLC (1997-2005). Trustee/
Lazard Freres & Co. LLC 2002. Director, Phoenix Funds Family (2002-present). Director, The Phoenix
30 Rockefeller Plaza, Companies, Inc. (2001-2005) and Phoenix Life Insurance Company
59th Floor (1989-2005).
New York, NY 10020
DOB: 5/11/34
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**Philip R. McLoughlin Served since 74 Director, PXRE Corporation (Reinsurance) (1985-present), World Trust
200 Bridge Street 1996. Fund (1991-present). Management Consultant (2002-2004), Chairman
Chatham, MA 02633 (1997-2002), Chief Executive Officer (1995-2002), Director, Phoenix
DOB: 10/23/46 Chairman Investment Partners, Ltd. (1995-2002), Director and Executive Vice
President, The Phoenix Companies, Inc. (2000-2002). Director (1994-2002)
and Executive Vice President, Investments (1987-2002), Phoenix Life
Insurance Company. Director (1983- 2002) and Chairman (1995-2002),
Phoenix Investment Counsel, Inc. Director (1982-2002), Chairman
(2000-2002) and President (1990-2000), Phoenix Equity Planning
Corporation. Chairman and President, Phoenix/Zweig Advisers LLC
(2001-2002). Director (2001-2002) and President (April 2002-September
2002), Phoenix Investment Management Company. Director and Executive
Vice President, Phoenix Life and Annuity Company (1996-2002). Director
(1995- 2000) and Executive Vice President (1994-2002) and Chief
Investment Counsel (1994-2002), PHL Variable Insurance Company.
Director, Phoenix National Trust Holding Company (2001-2002). Director
(1985-2002) and Vice President (1986-2002) and Executive Vice President
(April 2002-September 2002), PM Holdings, Inc. Director, WS Griffith
Associates, Inc. (1995-2002). Director (1992-2002) and President
(1993-1994), WS Griffith Securities, Inc. Director/Trustee, Phoenix
Funds Complex (1989-present).
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* Ms. LaMarche is an "interested person" as defined in the 1940 Act, by
reason of her former position as Director of The Phoenix Companies, Inc.
and Phoenix Life Insurance Company.
** Mr. McLoughlin is an "interested person" as defined in the Investment
Company Act of 1940, by reason of his former relationship with Phoenix
Investment Partners, Ltd. and its affiliates.
30
FUND MANAGEMENT TABLES (UNAUDITED) (CONTINUED)
OFFICERS OF THE TRUST WHO ARE NOT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
POSITION(S) HELD WITH
NAME, ADDRESS AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S)
DATE OF BIRTH TIME SERVED DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
Daniel T. Geraci President since 2004. Executive Vice President, Asset Management, The Phoenix Companies, Inc.
DOB: 6/12/57 (wealth management) (since 2003). President and Chief Executive Officer,
Phoenix Investment Partners, Ltd. (since 2003). President, certain funds
within the Phoenix Fund Complex (2004-present). President and Chief
Executive Officer of North American investment operations, Pioneer
Investment Management USA, Inc. (2001-2003). President of Private Wealth
Management Group (2000-2001), and Executive Vice President of
Distribution and Marketing for U.S. institutional services business
(1998-2000) Fidelity Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
George R. Aylward Executive Vice President Senior Vice President and Chief Executive Officer, Asset Management, The
DOB: 8/17/64 since 2004. Phoenix Companies, Inc. (2004-present). Executive Vice President and Chief
Operating Officer, Phoenix Investment Partners, Ltd. (2004-present). Vice
President Phoenix Life Insurance Company (2002-2004). Vice President, The
Phoenix Companies, Inc. (2001-2004). Assistant Controller, Phoenix
Investment Partners, Ltd. (1996-2001). Executive Vice President, certain
funds within the Phoenix Funds Family (2004-present).
- ------------------------------------------------------------------------------------------------------------------------------------
Francis G. Waltman Senior Vice President Senior Vice President Product Development and Management, Phoenix Investment
DOB: 7/27/62 since 2004. Partners, Ltd. (2005-present), Senior Vice President and Chief
Administrative Officer Phoenix Investment Partners, Ltd., (2003-2004) Senior
Vice President and Chief Administrative Officer, Phoenix Equity Planning
Corporation (1999-2003), Senior Vice President, certain funds within the
Phoenix Fund Family (2004-present).
- ------------------------------------------------------------------------------------------------------------------------------------
Marc Baltuch Vice President and Chief Compliance Officer, Zweig-DiMenna Associates LLC (1989-present); Vice
900 Third Avenue Chief Compliance Officer President and Chief Compliance Officer, certain Funds within the Phoenix
New York, NY 10022 since 2004. Fund Complex (2004-present); Vice President, The Zweig Total Return Fund,
DOB: 9/23/45 Inc. (2004-present); Vice President, The Zweig Fund, Inc. (2004-present);
President and Director of Watermark Securities, Inc. (1991-present);
Assistant Secretary of Gotham Advisors Inc. (1990-present); Secretary,
Phoenix-Zweig Trust (1989- 2003); Secretary, Phoenix-Euclid Market Neutral
Fund (1999-2002).
- -----------------------------------------------------------------------------------------------------------------------------------
Nancy G. Curtiss Chief Financial Officer Assistant Treasurer (2001-present), Phoenix Equity Planning Corporation.
DOB: 11/24/52 and Treasurer since 1996. Vice President (2003-present), Phoenix Investment Partners, Ltd. Treasurer
or Assistant Treasurer, certain funds within the Phoenix Fund Complex
(1994-present). Vice President, Fund Accounting (1994-2000), Treasurer
(1996-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin J. Carr Vice President, Vice President and Counsel, Phoenix Life Insurance Company (May 2005-
One American Row Chief Legal Officer, present). Vice President, Counsel, Chief Legal Officer and Secretary of
Hartford, CT 06102 Counsel and certain funds within the Phoenix Fund Complex (May 2005-present). Compliance
DOB: 8/30/54 Secretary since 2005. Officer of Investments and Counsel, Travelers Life & Annuity Company
(January 2005-May 2005). Assistant General Counsel, The Hartford Financial
Services Group (1999-2005).
- ------------------------------------------------------------------------------------------------------------------------------------
31
PHOENIX PHOLIOS(SM)
101 Munson Street
Greenfield, MA 01301
TRUSTEES INVESTMENT ADVISER
E. Virgil Conway Phoenix Investment Counsel, Inc.
Harry Dalzell-Payne 56 Prospect Street
S. Leland Dill Hartford, CT 06115-0480
Francis E. Jeffries
Leroy Keith, Jr. PRINCIPAL UNDERWRITER
Marilyn E. LaMarche Phoenix Equity Planning Corporation
Philip R. McLoughlin, Chairman One American Row
Geraldine M. McNamara Hartford, CT 06102
Everett L. Morris
James M. Oates TRANSFER AGENT
Donald B. Romans Phoenix Equity Planning Corporation
Richard E. Segerson One American Row
Ferdinand L. J. Verdonck Hartford, CT 06102
Lowell P. Weicker, Jr.
CUSTODIAN
OFFICERS State Street Bank and Trust Company
Daniel T. Geraci, President P.O. Box 5501
George R. Aylward, Executive Vice President Boston, MA 02206-5501
Francis G. Waltman, Senior Vice President
Marc Baltuch, Vice President and Chief Compliance Officer INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Nancy G. Curtiss, Chief Financial Officer and Treasurer PricewaterhouseCoopers LLP
Kevin J. Carr, Vice President, Chief Legal Officer, Counsel and Secretary 125 High Street
Boston, MA 02110
- -------------------------------------------------------------------------
IMPORTANT NOTICE TO SHAREHOLDERS HOW TO CONTACT US
The Securities and Exchange Commission has modified mailing regulations Mutual Fund Services 1-800-243-1574
for semiannual and annual shareholder fund reports to allow mutual fund Advisor Consulting Group 1-800-243-4361
companies to send a single copy of these reports to shareholders who Telephone Orders 1-800-367-5877
share the same mailing address. If you would like additional copies, Text Telephone 1-800-243-1926
please call Mutual Fund Services at 1-800-243-1574. Web site PHOENIXFUNDS.COM
- -------------------------------------------------------------------------
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---------------
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.
PXP1802 9-05
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics described in Item 2(b) of the instructions for
completion of Form N-CSR.
(d) The registrant has not granted any waivers, during the period covered
by this report, including an implicit waiver, from a provision of the
code of ethics that applies to the registrant's principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third
party, that relates to one or more of the items set forth in paragraph
(b) of the instructions for completion of this Item.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's board of
directors has determined that E. Virgil Conway and Everett L. Morris are
qualified to serve as audit committee financial experts serving on its audit
committee and that they are "independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$33,040 for 2004 and $30,000 for 2005.
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the registrant's
financial statements and are not reported under paragraph (a) of this
Item are $0 for 2004 and $0 for 2005.
TAX FEES
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $9,400 for 2004 and $9,400
for 2005.
"Tax Fees" are those primarily associated with review of the Trust's
tax provision and qualification as a regulated investment company (RIC)
in connection with audits of the Trust's financial statement, review of
year-end distributions by the Fund to avoid excise tax for the Trust,
periodic discussion with management on tax issues affecting the Trust,
and reviewing and signing the Fund's federal income and excise tax
returns.
ALL OTHER FEES
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
for 2004 and $0 for 2005.
(e)(1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of
Regulation S-X.
The Phoenix Pholios(SM) (the "Fund") Board has adopted policies
and procedures with regard to the pre-approval of services
provided by PwC. Audit, audit-related and tax compliance services
provided to the Fund on an annual basis require specific
pre-approval by the Board. As noted above, the Board must also
approve other non-audit services provided to the Fund and those
non-audit services provided to the Fund's Affiliated Service
Providers that relate directly to the operations and financial
reporting of the Fund. Certain of these non-audit services that
the Board believes are a) consistent with the SEC's auditor
independence rules and b) routine and recurring services that will
not impair the independence of the independent auditors may be
approved by the Board without consideration on a specific
case-by-case basis ("general pre-approval").
The Audit Committee has determined that Mr. E. Virgil Conway,
Chair of the Audit Committee, may provide pre-approval for such
services that meet the above requirements in the event such
approval is sought between regularly scheduled meetings. In the
event that Mr. Conway determines that the full board should review
the request, he has the opportunity to convene a meeting of the
Funds Board. In any
event, the Board is informed of each service approved subject to
general pre-approval at the next regularly scheduled in-person
board meeting.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X
are as follows:
(b) Not applicable for 2004 and not applicable for 2005
(c) 100% for 2004 and 100% for 2005
(d) Not applicable for 2004 and not applicable for 2005
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was less than fifty percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $410,478 for 2004 and $1,716,374 for 2005.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At a Board of Trustees meeting held May 16, 2005, the Trustees approved a Policy
for the Consideration of Trustee Nominees as follows:
PHOENIX FUNDS
POLICY FOR THE CONSIDERATION OF TRUSTEE NOMINEES
The following Policy for the Consideration of Trustee Nominees (the
"Policy") shall be followed by the Governance and Nominating Committee (the
"Committee") of the Phoenix Funds (the "Trust") in filling vacancies on the
Board of Trustees or when Trustees are to be nominated for election by
shareholders.
MINIMUM NOMINEE QUALIFICATIONS
1. With respect to nominations for Trustees who are not interested persons
of the Trust as defined by Section 2(a)(19) of the Investment Company
Act of 1940 (the "1940 Act") ("Disinterested Trustees"), nominees shall
be independent of the Trust's investment advisers and other principal
service providers. The Committee shall also consider the effect of any
relationship beyond those delineated in the 1940 Act that might impair
independence, such as business, financial or family relationships with
the investment adviser or its affiliates.
2. Disinterested Trustee nominees must qualify for service on the Trust's
Audit Committees.
3. With respect to all Trustees, nominees must qualify under all
applicable laws and regulations.
4. The proposed nominee may not be within five years of the Trust's
retirement age for Trustees.
5. The Committees may also consider such other factors as they may
determine to be relevant.
OTHER QUALIFICATIONS
1. With respect to all proposed nominees, the Committee shall consider
whether the proposed nominee serves on boards of or is otherwise
affiliated with competing financial service organizations or their
related fund complexes or companies in which the Trust may invest.
2. The Committee shall consider whether the proposed nominee is able to
and intends to commit the time necessary for the performance of Trustee
duties.
3. The Committee shall consider the integrity and character of the
proposed nominee, and the proposed nominee's compatibility with the
current Trustees.
4. The Committee may require an interview with the proposed nominee.
NOMINEES RECOMMENDED BY SHAREHOLDERS
1. The Committee shall consider nominations for openings on the Board of
Trustees from shareholders who have individually held for at least one
full year five percent of the shares of a series of the Trust.
2. The Committee shall give candidates recommended by shareholders the
same consideration as any other candidate.
3. Shareholder recommendations should be sent to the attention of the
Committee in care of the Trust's Secretary and should include
biographical information, including business experience for the past
ten years and a description of the qualifications of the proposed
nominee, along with a statement from the proposed nominee that he or
she is willing to serve and meets the requirements to be a
Disinterested Trustee, if applicable.
PROCESS FOR IDENTIFYING AND EVALUATING TRUSTEE NOMINEES
1. When identifying and evaluating prospective nominees for openings on
the Board of Trustees, the Committee shall review all recommendations
in the same manner, including those received from shareholders.
2. The Committee shall first determine if the prospective nominee meets
the minimum qualifications set forth above. Those proposed nominees
meeting the minimum qualifications will then be considered by the
Committee with respect to the other qualifications listed above, and
any other qualifications deemed to be important by the Committee.
3. Those nominees selected by the Committee shall be recommended to the
Board of Trustees.
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-2(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-2(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 second fiscal quarter of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) Phoenix Pholios(SM)
--------------------------------------------------------------------
By (Signature and Title)* /s/ George R. Aylward
-------------------------------------------------------
George R. Aylward, Executive Vice President
(principal executive officer)
Date October 5, 2005
----------------------------------------------------------------------------
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 October 5, 2005
----------------------------------------------------------------------------
By (Signature and Title)* /s/ Nancy G. Curtiss
-------------------------------------------------------
Nancy G. Curtiss, Chief Financial Officer
and Treasurer
(principal financial officer)
Date October 5, 2005
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.