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 01301-9668
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(Address of principal executive offices) (Zip code)
Kevin J. Carr, Esq.
Vice President, Chief Legal Officer, John H. Beers, Esq.
Counsel and Secretary for Registrant Vice President and Counsel
Phoenix Life Insurance Company Phoenix Life Insurance Company
One American Row One American Row
Hartford, CT 06103-2899 Hartford, CT 06103-2899
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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, 2006
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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, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
JULY 31, 2006
ANNUAL REPORT
PHOENIX ASSET ALLOCATION PHOLIOS
- PHOENIX WEALTH ACCUMULATOR PHOLIO
- PHOENIX WEALTH BUILDER PHOLIO
- PHOENIX WEALTH GUARDIAN PHOLIO
- PHOENIX WEALTH PRESERVER PHOLIO
- PHOENIX CONSERVATIVE INCOME PHOLIO
PHOENIX DIVERSIFYING PHOLIOS
- PHOENIX DIVERSIFIER PHOLIO
- PHOENIX INTERNATIONAL PHOLIO
TRUST NAME: PHOENIX PHOLIOS (SM) (GRAPHIC OMITTED)
(GRAPHIC OMITTED)
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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.
A MESSAGE FROM THE PRESIDENT
DEAR PHOENIXFUNDS SHAREHOLDER:
(GRAPHIC OMITTED)
The enclosed annual report addresses the performance of your Phoenix
mutual fund for the fiscal year ended July 31, 2006. The report also provides a
commentary from your fund's management team on how the fund performed, the
investment strategies used, and how the fund's results compared to the broader
market.
At Phoenix, our focus is on investment performance and serving the best
interests of our shareholders. We believe that mutual funds are among the most
effective vehicles for individual investors to gain access to a variety of
financial markets and for building diversified portfolios.
I am especially proud of how we have expanded our fund family over the
last year to offer access to even more money managers. Today, the PhoenixFunds
draw from the vast expertise of 16 different management teams -- six Phoenix
affiliates and 10 outside subadvisers chosen for their complementary investment
capabilities.
These fund teams operate independently, conducting their research,
identifying opportunities in the markets they know best, and applying their
disciplined strategies to the portfolios they manage. We are confident in their
ability to navigate their funds through whatever market and economic changes lie
ahead.
When it comes to financial decisions, we recommend working with an
experienced financial advisor. If you haven't reviewed or rebalanced your
portfolio lately, this may be a good time to meet with your advisor and make
sure that your investments are still aligned with your financial goals.
Thank you for choosing PhoenixFunds to be part of your financial plan.
Sincerely yours,
/s/Daniel T. Geraci
Daniel T. Geraci
President, PhoenixFunds
AUGUST 2006
1
TABLE OF CONTENTS
Glossary................................................................. 3
Fund Composition Table................................................... 5
Phoenix Wealth Accumulator PHOLIO ....................................... 6
Phoenix Wealth Builder PHOLIO ........................................... 14
Phoenix Wealth Guardian PHOLIO .......................................... 22
Phoenix Wealth Preserver PHOLIO ......................................... 30
Phoenix Conservative Income PHOLIO ...................................... 38
Phoenix Diversifier PHOLIO .............................................. 46
Phoenix International PHOLIO ............................................ 54
Notes to Financial Statements............................................ 62
Report of Independent Registered Public Accounting Firm.................. 67
Fund Management Tables................................................... 68
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PROXY VOTING INFORMATION (FORM N-PX)
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,
2006, free of charge, by calling toll-free 1-800-243-1574. This information is
also available through the Securities and Exchange Commission's website at
http://www.sec.gov.
FORM N-Q INFORMATION
The Trust files a complete schedule of portfolio holdings with the Securities
and Exchange Commission (the "SEC") for the first and third quarters of each
fiscal year on Form N-Q. Form N-Q is available on the SEC's website at
http://www.sec.gov. Form N-Q may be reviewed and copied at the SEC's Public
Reference Room. Information on the operation of the SEC's Public Reference Room
can be obtained by calling toll-free 1-800-SEC-0330.
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2
GLOSSARY
CONSERVATIVE INCOME PHOLIO COMPOSITE INDEX
A composite index consisting of 80% Lehman Brothers Aggregate Bond Index and 20%
S&P 500(R) Index.
DOW JONES-AIG COMMODITY INDEX
The Dow Jones-AIG Commodity Index is a broadly diversified index that tracks
commodity futures.
DOW JONES WILSHIRE REAL ESTATE SECURITIES INDEX
The Dow Jones Wilshire Real Estate Securities Index (Full Cap) is a market
capitalization-weighted index that measures publicly traded real estate
securities such as Real Estate Investment Trusts and Real Estate Operating
Companies. The index is calculated on a total return basis with dividends
reinvested.
EXCHANGE TRADED FUNDS
Portfolios of stocks or bonds that track a specific market 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.
GROSS DOMESTIC PRODUCT (GDP)
An important measure of the United States' economic performance, GDP is the
total market value of all final goods and services produced in the U.S. during
any quarter or year.
INFLATION
Rise in the prices of goods and services resulting from increased spending
relative to the supply of goods on the market.
ISHARES
Represents shares of an open-end Exchange Traded Fund.
LEHMAN BROTHERS AGGREGATE BOND INDEX
The Lehman Brothers Aggregate Bond Index measures the U.S. investment grade
fixed rate bond market. The index is calculated on a total return basis.
3
Glossary (continued)
MSCI EAFE(R) INDEX
The MSCI EAFE(R) Index is a free float-adjusted market capitalization index that
measures developed foreign market equity performance, excluding the U.S. and
Canada. The index is calculated on a total return basis with gross dividends
reinvested.
NASDAQ COMPOSITE(R) INDEX
The NASDAQ Composite(R) Index is a market capitalization-weighted index of all
issues listed in the NASDAQ (National Association Of Securities Dealers
Automated Quotation System) Stock Market, except for closed-end funds,
convertible debentures, exchange traded funds, preferred stocks, rights,
warrants, units and other derivative securities. The index is calculated on a
total return basis with dividends reinvested.
REIT (REAL ESTATE INVESTMENT TRUST)
A publicly traded company that owns, develops and operates income-producing real
estate such as apartments, office buildings, hotels, shopping centers and other
commercial properties.
RUSSELL 2000(R) INDEX
The Russell 2000(R) Index is a market capitalization-weighted index of the 2,000
smallest companies in the Russell Universe, which comprises the 3,000 largest
U.S. companies. The index is calculated on a total return basis with dividends
reinvested.
S&P 500(R) INDEX
The S&P 500 Index is a free-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.
WEALTH BUILDER PHOLIO COMPOSITE INDEX
A composite index consisting of 80% S&P 500(R) Index and 20% Lehman Brothers
Aggregate Bond Index.
WEALTH GUARDIAN PHOLIO COMPOSITE INDEX
A composite index consisting of 60% S&P 500 Index and 40% Lehman Brothers
Aggregate Bond Index.
WEALTH PRESERVER PHOLIO COMPOSITE INDEX
A composite index consisting of 60% Lehman Brothers Aggregate Bond Index and 40%
S&P 500 Index.
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.
INDEXES ARE UNMANAGED AND NOT AVAILABLE FOR DIRECT INVESTMENT; THEREFORE THEIR
PERFORMANCE DOES NOT REFLECT THE EXPENSES ASSOCIATED WITH ACTIVE MANAGEMENT OF
AN ACTUAL PORTFOLIO.
4
COMPOSITION BY UNDERLYING FUND*
AS A PERCENTAGE OF TOTAL INVESTMENTS
AS OF JULY 31, 2006
Wealth Wealth Wealth Wealth Conservative
Accumulator Builder Guardian Preserver Income Diversifier
PHOLIO PHOLIO PHOLIO PHOLIO PHOLIO PHOLIO
--------------------------------------------------------------------------
iShares Deutsche Bank Liquid Commodity Index Fund... 0% 0% 0% 0% 0% 15%
iShares Goldman Sachs Natural Resources Index Fund.. 0% 0% 0% 0% 0% 10%
iShares MSCI Japan Index Fund....................... 0% 0% 0% 0% 0% 0%
Phoenix Bond Fund Class A.......................... 0% 8% 16% 24% 32% 0%
Phoenix Dynamic Growth Fund Class A................ 5% 4% 3% 0% 0% 0%
Phoenix Emerging Markets Bond Fund Class A.......... 0% 0% 0% 0% 0% 0%
Phoenix Foreign Opportunities Fund Class A.......... 9% 7% 4% 3% 0% 0%
Phoenix Fundamental Growth Fund Class A............ 14% 11% 9% 7% 4% 0%
Phoenix Global Utilities Fund Class A............... 4% 4% 2% 1% 1% 25%
Phoenix Growth & Income Fund Class A................ 15% 10% 8% 7% 3% 0%
Phoenix High Yield Securities Fund Class A.......... 0% 2% 4% 6% 8% 0%
Phoenix Institutional Bond Fund Class Y............. 0% 8% 16% 25% 32% 0%
Phoenix International Strategies Fund Class A....... 12% 11% 8% 5% 4% 0%
Phoenix Market Neutral Fund Class A................. 7% 6% 6% 3% 3% 25%
Phoenix Mid-Cap Value Fund Class A.................. 5% 4% 3% 0% 0% 0%
Phoenix Multi-Sector Short Term Bond Fund Class A... 0% 2% 4% 6% 8% 0%
Phoenix Real Estate Securities Fund Class A......... 4% 4% 2% 1% 1% 25%
Phoenix Small-Cap Growth Fund Class A............... 5% 4% 3% 2% 0% 0%
Phoenix Small-Cap Value Fund Class A................ 5% 4% 3% 2% 0% 0%
Phoenix Total Value Fund Class A.................... 15% 11% 9% 8% 4% 0%
------ ------ ------ ------ ------ ------
Total.......................................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ====== ====== ======
COMPOSITION BY UNDERLYING FUND*
AS A PERCENTAGE OF TOTAL INVESTMENTS
AS OF JULY 31, 2006
International
PHOLIO
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iShares Deutsche Bank Liquid Commodity Index Fund... 0%
iShares Goldman Sachs Natural Resources Index Fund.. 0%
iShares MSCI Japan Index Fund....................... 4%
Phoenix Bond Fund Class A.......................... 0%
Phoenix Dynamic Growth Fund Class A................ 0%
Phoenix Emerging Markets Bond Fund Class A.......... 5%
Phoenix Foreign Opportunities Fund Class A.......... 31%
Phoenix Fundamental Growth Fund Class A............ 0%
Phoenix Global Utilities Fund Class A............... 10%
Phoenix Growth & Income Fund Class A................ 0%
Phoenix High Yield Securities Fund Class A.......... 0%
Phoenix Institutional Bond Fund Class Y............. 0%
Phoenix International Strategies Fund Class A....... 50%
Phoenix Market Neutral Fund Class A................. 0%
Phoenix Mid-Cap Value Fund Class A.................. 0%
Phoenix Multi-Sector Short Term Bond Fund Class A... 0%
Phoenix Real Estate Securities Fund Class A......... 0%
Phoenix Small-Cap Growth Fund Class A............... 0%
Phoenix Small-Cap Value Fund Class A................ 0%
Phoenix Total Value Fund Class A.................... 0%
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Total.......................................... 100.0%
======
* Table represents each PHOLIO's holdings in the underlying funds as a
percentage of total investments. Financial information and investment
strategies for the underlying affiliated funds may be obtained at
www.PhoenixFunds.com.
5
PHOENIX WEALTH ACCUMULATOR PHOLIO
A DISCUSSION WITH THE FUND'S OVERSIGHT MANAGER, CHRISTOPHER WILKOS, CFA
Q: HOW DID THE PHOENIX WEALTH ACCUMULATOR PHOLIO PERFORM FOR ITS FISCAL YEAR
ENDED JULY 31, 2006?
A: As the PHOLIO's inception date was August 4, 2005, it did not achieve a full
year of performance as of July 31, 2006. However, for the period of August 4,
2005 through July 31, 2006, the PHOLIO's Class A shares returned 7.82% and Class
C shares returned 6.97%. For the same period, the S&P 500(R) Index, a
broad-based equity index, returned 5.22%. 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. HOW DID THE MARKETS PERFORM DURING THE FUND'S FISCAL YEAR?
A: During the Fund's fiscal year, the Federal Reserve (the "Fed") continued its
measured process of increasing short-term interest rates. The Fed has raised
rates a total of 17 times since beginning monetary tightening over two years
ago, increasing the federal funds rate from 1% to 5.25%. The Fed continues to
apply vigilance in dampening any potential inflationary pressures that may be
building in the economy. Leadership at the Fed changed early in 2006, with long
time chairman Alan Greenspan entering retirement and Ben Bernanke assuming the
lead role. Market participants continue to evaluate Bernanke's skill and
credibility in managing the Fed. Several of his comments caused market
volatility during the spring.
In the meantime, corporate profits in the U.S. continue to climb, and
economic growth continues to be solid. After some weakening in the fourth
quarter of 2005 caused primarily by the impact of hurricanes, the U.S. economy
came roaring back in the first quarter of 2006, posting GDP growth of 5.6%. That
growth moderated in the second quarter of 2006, falling to 2.5%. Most economists
estimate that growth will continue at a moderate pace for the remainder of 2006.
In a period of rising short-term interest rates, slowing growth and high
energy prices, U.S. equities produced modest gains during the Fund's fiscal
year. Large-cap stocks, as represented by the S&P 500(R) Index, had a total
return of 5.38%. Small-cap stocks fared slightly worse, with the Russell 2000(R)
Index returning 4.24%. Value stocks outperformed growth stocks in all
capitalization categories. Most of the equity market gains occurred prior to May
2006, when the market experienced a sharp decline fueled by inflation fears.
The big winners in the past year were REIT stocks and utility stocks. REIT
stocks, as measured by the Dow Jones Wilshire Real Estate Securities Index,
advanced over 17%, continuing their multi-year record of dominating U.S. equity
returns. Utility stocks rose by almost 9%. On the negative side, the
technology-laden NASDAQ Composite(R) Index declined by 3.48%.
International markets also provided superior returns as evidenced by the
24.51% return of the MSCI EAFE(R) Index. After substantial gains, emerging
equity markets saw a sharp correction in the second quarter but still returned
over 28% during the fiscal year.
Given increasing interest rates and low credit spreads, the U.S. bond
market barely broke even, posting a return of 1.45% as measured by the Lehman
Brothers Aggregate Bond Index. The
6
Phoenix Wealth Accumulator PHOLIO (continued)
above-mentioned actions of the Fed helped to drive all interest rates higher and
create a nearly flat Treasury yield curve. As of July 31, three-month maturity
U.S. Treasury bills actually yielded more than 10-year maturity Treasury notes.
Higher yields negatively impacted all bond returns, although riskier high yield
bonds posted returns of nearly 4% for the year.
Finally, the story of the past year was the emergence of commodities as a
viable investment alternative. With soaring energy and metal prices and
continued demand from emerging economies such as China, commodities proved to be
a superior investment with a return of over 16% as measured by the Dow Jones-AIG
Commodity Index.
Q. WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR?
A: The Fund benefited from 100% exposure to equities, as equity markets
generally outperformed fixed income markets over the fiscal year. In particular,
the Fund's allocation to international equities provided substantial returns as
foreign equity markets soared by over 24%. With a 20% weighting composed of the
Phoenix Foreign Opportunities and Phoenix International Strategies mutual funds,
the portfolio benefited from the substantial performance of non-U.S. stocks
compared to U.S. markets.
The Fund's allocation to a real estate securities fund also provided
superior returns. REIT indices outperformed large cap indices by a wide margin
in the past year, and the performance of the Phoenix Real Estate Securities Fund
was excellent. Also enhancing returns was an allocation to the Phoenix Total
Value Fund, which invests in large cap value stocks. Since large cap value
stocks outperformed the S&P 500, the 15% allocation to the large cap value fund
contributed to the Fund's relative performance.
Small positive contributions were made by allocations to small and mid cap
value funds and a global utilities stock fund.
The Fund's performance was negatively impacted by its allocation to a
market neutral mutual fund. The Phoenix Market Neutral Fund underperformed its
benchmark and the S&P 500. Also hurting performance were allocations to two
growth mutual funds, one specializing in large cap stocks and the other
specializing in mid cap stocks. Since value stocks outperformed their growth
counterparts, it was not unexpected to see these growth funds hurt performance
in the last year.
Finally, the Fund's allocation to a core large cap growth and income fund
produced returns that about equaled the benchmark return.
AUGUST 2006
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.
7
Phoenix Wealth Accumulator PHOLIO
AVERAGE ANNUAL TOTAL RETURNS(1) PERIOD ENDING 7/31/06
INCEPTION INCEPTION
TO 7/31/06 DATE
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Class A Shares at NAV(2) 7.82% 8/4/05
Class A Shares at POP(3) 1.62 8/4/05
Class C Shares at NAV(2) 6.97 8/4/05
Class C Shares with CDSC(4) 5.97 8/4/05
S&P 500(R) Index 5.22 8/4/05
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.
GROWTH OF $10,000 PERIOD ENDING 7/31
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
8/4/05 (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 includes applicable CDSC charges
since inception. Performance assumes dividends and capital gain distributions
are reinvested.
(GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Phoenix Wealth Phoenix Wealth
Accumulator Accumulator
PHOLIO(SM) PHOLIO(SM) S&P 500(R)
Class A Class C Index
-------------- --------------- ----------
8/4/05 $ 9,425 $10,000 $10,000
7/31/06 10,162 10,597 10,522
For information regarding the index, see the glossary on page 3.
8
Phoenix Wealth Accumulator PHOLIO
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 Accumulator PHOLIO, you incur two types of costs: (1) transaction costs,
including sales charges and contingent deferred sales charges, if applicable;
and (2) ongoing costs, including investment advisory fees; distribution and
service fees; and other expenses. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire six-month period.
ACTUAL EXPENSES
The first line of the accompanying tables provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the accompanying tables provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not your Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your Fund and other funds. To do so, compare these
5% hypothetical examples with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the accompanying tables are meant to
highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges or contingent deferred sales charges. Therefore, the
second line of the accompanying tables is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs could have been higher. These 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.
Wealth Beginning Ending Expenses Paid
Accumulator PHOLIO Account Value Account Value During
Class A January 31, 2006 July 31, 2006 Period*
- ---------------------- --------------------- ----------------- --------------
Actual $1,000.00 $1,001.90 $0.05
Hypothetical (5% return
before expenses) 1,000.00 1,024.75 0.05
*EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 0.01%,
WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(181) 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 PERIOD ENDED JULY 31, 2006. THE
CLASS' ACTUAL RETURN AT NAV SINCE INCEPTION WAS 7.82%. AN INVESTMENT OF
$1,000.00 AT AUGUST 4, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE AT JULY 31,
2006, OF $1,078.20.
Wealth Beginning Ending Expenses Paid
Accumulator PHOLIO Account Value Account Value During
Class C January 31, 2006 July 31, 2006 Period*
- -------------------- ------------------ ----------------- ---------------
Actual $1,000.00 $ 998.10 $3.77
Hypothetical (5% return
before expenses) 1,000.00 1,020.98 3.82
*EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 0.76%,
WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(181) 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 PERIOD ENDED JULY 31, 2006. THE
CLASS' ACTUAL RETURN AT NAV SINCE INCEPTION WAS 6.97%. AN INVESTMENT OF
$1,000.00 AT AUGUST 4, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE AT JULY 31,
2006, OF $1,069.70.
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.
9
Phoenix Wealth Accumulator PHOLIO
Fund Investment Allocation 7/31/06
As a percentage of total investments
(GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Domestic Equity Funds 73%
Foreign Equity Funds 25
Other 2
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SHARES VALUE
------- --------
MUTUAL FUNDS--100.1%
DOMESTIC EQUITY FUNDS(c)--75.0%
Phoenix Dynamic Growth Fund Class A(b) ..... 25,759 $ 258,363
Phoenix Fundamental Growth Fund Class A(b) 78,404 794,232
Phoenix Growth & Income Fund Class A. ...... 54,086 839,953
Phoenix Market Neutral Fund Class A(b) ..... 35,269 401,719
Phoenix Mid-Cap Value Fund Class A.......... 13,341 290,706
Phoenix Real Estate Securities Fund Class A 6,980 227,885
Phoenix Small-Cap Growth Fund Class A(b) ... 8,185 251,435
Phoenix Small-Cap Value Fund Class A. ...... 14,781 272,419
Phoenix Total Value Fund Class A............ 78,095 852,800
----------
4,189,512
----------
FOREIGN EQUITY FUNDS(c)--25.1%
Phoenix Foreign Opportunities Fund Class A.. 21,599 480,156
Phoenix Global Utilities Fund Class A ...... 21,533 235,352
Phoenix International Strategies Fund Class A 54,758 686,670
----------
1,402,178
----------
VALUE
----------
- -----------------------------------------------------------------------
TOTAL MUTUAL FUNDS
(IDENTIFIED COST $5,512,388) $5,591,690
- -----------------------------------------------------------------------
TOTAL LONG TERM INVESTMENTS--100.1%
(IDENTIFIED COST $5,512,388) 5,591,690
- -----------------------------------------------------------------------
SHORT-TERM INVESTMENTS--2.1%
PAR VALUE
(000)
---------
COMMERCIAL PAPER(d)--2.1%
UBS Finance Delaware LLC 5.28%, 8/1/06 $115 115,000
- -----------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $115,000) 115,000
- -----------------------------------------------------------------------
TOTAL INVESTMENTS--102.2%
(IDENTIFIED COST $5,627,388) 5,706,690(a)
Other assets and liabilities, net--(2.2)% (120,240)
----------
NET ASSETS--100.0% $5,586,450
==========
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $145,163 and gross
depreciation of $80,894 for federal income tax purposes. At July 31, 2006,
the aggregate cost of securities for federal income tax purposes was
$5,642,421.
(b) Non-income producing.
(c) Affiliated Fund.
(d) The rate shown is the discount rate.
See Notes to Financial Statements
10
Phoenix Wealth Accumulator PHOLIO
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2006
ASSETS
Investment securities at value (Identified cost $5,627,388) $5,706,690
Cash 3,826
Receivables
Receivable from adviser 3,664
Fund shares sold 912
Trustee retainer 179
Prepaid expenses 17,577
----------
Total assets 5,732,848
----------
LIABILITIES
Payables
Investment securities purchased 122,633
Fund shares repurchased 1,208
Professional fee 11,512
Transfer agent fee 4,353
Distribution and service fees 1,420
Financial agent fee 382
Other accrued expenses 4,890
----------
Total liabilities 146,398
----------
NET ASSETS $5,586,450
==========
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $5,493,358
Undistributed net investment income 4,289
Accumulated net realized gain 9,501
Net unrealized appreciation 79,302
----------
NET ASSETS $5,586,450
==========
CLASS A
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $3,207,784) 299,028
Net asset value per share $10.73
Offering price per share $10.73/(1-5.75%) $11.38
CLASS C
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $2,378,666) 222,758
Net asset value and offering price per share $10.68
STATEMENT OF OPERATIONS
FROM INCEPTION AUGUST 4, 2005 TO
JULY 31, 2006
INVESTMENT INCOME
Income distributions received from affiliated funds $ 17,566
Interest 1,671
--------
Total investment income 19,237
--------
EXPENSES
Investment advisory fee 2,659
Distribution and service fees, Class C 7,140
Financial agent fee 63,158
Transfer agent 37,430
Registration 31,126
Trustees 22,973
Professional 16,194
Custodian 11,991
Printing 5,453
Miscellaneous 7,963
--------
Total expenses 206,087
Less expenses reimbursed by investment adviser (195,345)
Custodian fees paid indirectly (1,236)
--------
Net expenses 9,506
--------
NET INVESTMENT INCOME (LOSS) 9,731
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments from affiliated funds (14,869)
Capital gain distributions received from affiliated funds 27,062
Net change in unrealized appreciation (depreciation)
on investments from affiliated funds 79,302
--------
NET GAIN (LOSS) ON INVESTMENTS FROM AFFILIATED FUNDS 91,495
--------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $101,226
========
See Notes to Financial Statements
11
Phoenix Wealth Accumulator PHOLIO
STATEMENT OF CHANGES IN NET ASSETS
From Inception
August 4, 2005 to
July 31, 2006
-----------------
FROM OPERATIONS
Net investment income (loss) $ 9,731
Net realized gain (loss) 12,193
Net change in unrealized appreciation (depreciation) 79,302
----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 101,226
----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (6,985)
Net investment income, Class C (1,149)
----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (8,134)
----------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (324,331 shares) 3,409,647
Net asset value of shares issued from reinvestment of distributions (421 shares) 4,371
Cost of shares repurchased (25,724 shares) (273,919)
----------
Total 3,140,099
----------
CLASS C
Proceeds from sales of shares (230,141 shares) 2,430,767
Net asset value of shares issued from reinvestment of distributions (41 shares) 428
Cost of shares repurchased (7,424 shares) (77,936)
----------
Total 2,353,259
----------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 5,493,358
----------
NET INCREASE (DECREASE) IN NET ASSETS 5,586,450
NET ASSETS
Beginning of period --
----------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $4,289) $5,586,450
==========
See Notes to Financial Statements
12
Phoenix Wealth Accumulator PHOLIO
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A
------------------
FROM INCEPTION
AUGUST 4, 2005 TO
JULY 31, 2006
------------------
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(3) 0.07
Capital gain distributions received from affiliated funds(3) 0.11
Net realized and unrealized gain (loss) 0.60
------
TOTAL FROM INVESTMENT OPERATIONS 0.78
------
LESS DISTRIBUTIONS
Dividends from net investment income (0.05)
------
TOTAL DISTRIBUTIONS (0.05)
------
Change in net asset value 0.73
------
NET ASSET VALUE, END OF PERIOD $10.73
======
Total return(1) 7.82%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $3,208
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.09%(4)(6)
Gross operating expenses(2) 7.43%(6)
Net investment income (loss) 0.63%(6)
Portfolio turnover 13%(5)
CLASS C
-----------------
FROM INCEPTION
AUGUST 4, 2005 TO
JULY 31, 2006
-----------------
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(3) (0.01)
Capital gain distributions received from affiliated funds(3) 0.10
Net realized and unrealized gain (loss) 0.61
------
TOTAL FROM INVESTMENT OPERATIONS 0.70
------
LESS DISTRIBUTIONS
Dividends from net investment income (0.02)
------
TOTAL DISTRIBUTIONS (0.02)
------
Change in net asset value 0.68
------
NET ASSET VALUE, END OF PERIOD $10.68
======
Total return(1) 6.97 %(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $2,379
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.83 %(4)(6)
Gross operating expenses(2) 8.19 %(6)
Net investment income (loss) (0.12)%(6)
Portfolio turnover 13 %(5)
(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) Represents blended net expense ratio. See Note 3 in the Notes to Financial
Statements.
(5) Not annualized.
(6) Annualized.
See Notes to Financial Statements
13
PHOENIX WEALTH BUILDER PHOLIO
A DISCUSSION WITH THE FUND'S OVERSIGHT MANAGER, CHRISTOPHER WILKOS, CFA
Q: HOW DID THE PHOENIX WEALTH BUILDER PHOLIO PERFORM FOR ITS FISCAL YEAR ENDED
JULY 31, 2006?
A: For the fiscal year ended July 31, 2006, the PHOLIO's Class A shares returned
5.76% and Class C shares returned 4.99%. For the same period, the S&P 500(R)
Index, a broad-based equity index, returned 5.38%; the Lehman Brothers Aggregate
Bond Index, a broad-based fixed income index, returned 1.46%; and the Wealth
Builder PHOLIO Composite Index (80% S&P 500(R) Index and 20% Lehman Brothers
Aggregate Bond Index), the PHOLIO's style-specific benchmark, returned 4.62%.
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: HOW DID THE MARKETS PERFORM DURING THE FUND'S FISCAL YEAR?
A: During the Fund's fiscal year, the Federal Reserve (the "Fed") continued its
measured process of increasing short-term interest rates. The Fed has raised
rates a total of 17 times since beginning monetary tightening over two years
ago, increasing the federal funds rate from 1% to 5.25%. The Fed continues to
apply vigilance in dampening any potential inflationary pressures that may be
building in the economy. Leadership at the Fed changed early in 2006, with long
time chairman Alan Greenspan entering retirement and Ben Bernanke assuming the
lead role. Market participants continue to evaluate Bernanke's skill and
credibility in managing the Fed. Several of his comments caused market
volatility during the spring.
In the meantime, corporate profits in the U.S. continue to climb, and
economic growth continues to be solid. After some weakening in the fourth
quarter of 2005 caused primarily by the impact of hurricanes, the U.S. economy
came roaring back in the first quarter of 2006, posting GDP growth of 5.6%. That
growth moderated in the second quarter of 2006, falling to 2.5%. Most economists
estimate that growth will continue at a moderate pace for the remainder of 2006.
In a period of rising short-term interest rates, slowing growth and high
energy prices, U.S. equities produced modest gains during the Fund's fiscal
year. Large-cap stocks, as represented by the S&P 500(R) Index, had a total
return of 5.38%. Small-cap stocks fared slightly worse, with the Russell 2000(R)
Index returning 4.24%. Value stocks outperformed growth stocks in all
capitalization categories. Most of the equity market gains occurred prior to May
2006, when the market experienced a sharp decline fueled by inflation fears.
The big winners in the past year were REIT stocks and utility stocks. REIT
stocks, as measured by the Dow Jones Wilshire Real Estate Securities Index,
advanced over 17%, continuing their multi-year record of dominating U.S. equity
returns. Utility stocks rose by almost 9%. On the negative side, the
technology-laden NASDAQ Composite(R) Index declined by 3.48%.
International markets also provided superior returns as evidenced by the
24.51% return of the MSCI EAFE(R) Index. After substantial gains, emerging
equity markets saw a sharp correction in the second quarter but still returned
over 28% during the fiscal year.
14
Phoenix Wealth Builder PHOLIO (continued)
Given increasing interest rates and low credit spreads, the U.S. bond
market barely broke even, posting a return of 1.45% as measured by the Lehman
Brothers Aggregate Bond Index. The above-mentioned actions of the Fed helped to
drive all interest rates higher and create a nearly flat Treasury yield curve.
As of July 31, three-month maturity U.S. Treasury bills actually yielded more
than 10-year maturity Treasury notes. Higher yields negatively impacted all bond
returns, although riskier high yield bonds posted returns of nearly 4% for the
year.
Finally, the story of the past year was the emergence of commodities as a
viable investment alternative. With soaring energy and metal prices and
continued demand from emerging economies such as China, commodities proved to be
a superior investment with a return of over 16% as measured by the Dow Jones-AIG
Commodity Index.
Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR?
A: The Phoenix Wealth Builder PHOLIO was reconstituted in August 2005 with 10
new underlying funds to provide enhanced diversification. The Fund benefited
from its substantial exposure to equities, as equity markets generally
outperformed fixed income markets over the fiscal year. In particular, the
Fund's allocation to international equities provided substantial returns as
foreign equity markets soared by over 24%. With a 16% weighting to international
equities composed of the Phoenix Foreign Opportunities and Phoenix International
Strategies mutual funds, the portfolio benefited from the substantial
performance of non-U.S. stocks compared to U.S. markets.
The portfolio's allocation to a real estate securities fund also provided
superior returns. REIT indices outperformed large cap indices by a wide margin
in the past year, and the performance of the Phoenix Real Estate Securities Fund
was excellent. Also enhancing returns was an allocation to the Phoenix Total
Value Fund, which invests in large cap value stocks. Since large cap value
stocks outperformed the S&P 500, the allocation to large cap value contributed
to the Fund's performance.
Small positive contributions were made by allocations to small and mid cap
value funds and a global utilities stock fund.
The Fund's performance was negatively impacted by its allocation to a
market neutral mutual fund. The Phoenix Market Neutral Fund underperformed its
benchmark and the S&P 500. Also hurting performance were allocations to two
growth mutual funds, one specializing in large cap stocks and the other
specializing in mid cap stocks. Since value stocks outperformed their growth
counterparts, it was not unexpected to see these growth funds hurt performance
in the last year.
Finally, the Fund's allocation to a core large cap growth and income fund
produced returns that about equaled the benchmark return.
AUGUST 2006
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.
15
Phoenix Wealth Builder PHOLIO
AVERAGE ANNUAL TOTAL RETURNS(1) PERIODS ENDING 7/31/06
INCEPTION INCEPTION
1 YEAR TO 7/31/06 DATE
-------- ------------ -----------
Class A Shares at NAV(2) 5.76% 9.11% 8/1/03
Class A Shares at POP(3) (0.32) 6.98 8/1/03
Class C Shares at NAV(2) 4.99 8.32 8/1/03
Class C Shares with CDSC(4) 4.99 8.32 8/1/03
S&P 500(R) Index 5.38 11.17 8/1/03
Lehman Brothers Aggregate Bond Index 1.46 3.70 8/1/03
Wealth Builder PHOLIO(SM) Composite Index 4.62 9.71 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.
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 includes applicable CDSC charges
since inception. Performance assumes dividends and capital gain distributions
are reinvested.
(GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Phoenix Wealth Phoenix Wealth Lehman Brothers Wealth Builder
Builder PHOLIO(SM) Builder PHOLIO(SM) S&P 500(R) Aggregate Bond PHOLIO(SM) Composite
Class A Class C Index Index Index
------------------ ------------------ ---------- --------------- --------------------
8/1/03 $ 9,425 $10,000 $10,000 $10,000 $10,000
7/30/04 10,357 10,903 11,433 10,489 11,247
7/29/05 11,576 12,104 13,038 10,992 12,620
7/31/06 12,243 12,709 13,740 11,152 13,203
For information regarding the indexes, see the glossary on page 3.
16
Phoenix Wealth Builder PHOLIO
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 and contingent deferred sales charges, if applicable;
and (2) ongoing costs, including investment advisory fees; distribution and
service fees; and other expenses. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire six-month period.
ACTUAL EXPENSES
The first line of the accompanying tables provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the accompanying tables provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not your Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your Fund and other funds. To do so, compare these
5% hypothetical examples with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the accompanying tables are meant to
highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges or contingent deferred sales charges. Therefore, the
second line of the accompanying tables is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs 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.
Wealth Beginning Ending Expenses Paid
Builder PHOLIO Account Value Account Value During
Class A January 31, 2006 July 31, 2006 Period*
- --------------------- ------------------- ----------------- --------------
Actual $1,000.00 $1,004.20 $0.05
Hypothetical (5% return
before expenses) 1,000.00 1,024.75 0.05
*EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 0.01%,
WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(181) 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, 2006. THE CLASS'
ACTUAL RETURN AT NAV FOR THE FISCAL YEAR WAS 5.76%. AN INVESTMENT OF $1,000.00
AT JULY 31, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE AT JULY 31, 2006, OF
$1,057.60.
Wealth Beginning Ending Expenses Paid
Builder PHOLIO Account Value Account Value During
Class C January 31, 2006 July 31, 2006 Period*
- --------------------- ------------------- ----------------- --------------
Actual $1,000.00 $1,000.50 $3.77
Hypothetical (5% return
before expenses) 1,000.00 1,020.98 3.82
*EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 0.76%,
WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(181) 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, 2006. THE CLASS'
ACTUAL RETURN AT NAV FOR THE FISCAL YEAR WAS 4.99%. AN INVESTMENT OF $1,000.00
AT JULY 31, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE AT JULY 31, 2006, OF
$1,049.90.
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.
17
Phoenix Wealth Builder PHOLIO
Fund Investment Allocation 7/31/06
As a percentage of total investments
(GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Domestic Equity Funds 59%
Foreign Equity Funds 22
Domestic Fixed Income Funds 19
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SHARES VALUE
--------- ------------
MUTUAL FUNDS--100.1%
DOMESTIC EQUITY FUNDS(c)--59.1%
Phoenix Dynamic Growth Fund Class A(b) ...... 478,481 $ 4,799,162
Phoenix Fundamental Growth Fund Class A(b) .. 1,322,683 13,398,781
Phoenix Growth & Income Fund Class A. ....... 904,215 14,042,461
Phoenix Market Neutral Fund Class A(b) ...... 721,144 8,213,828
Phoenix Mid-Cap Value Fund Class A .......... 235,202 5,125,063
Phoenix Real Estate Securities Fund Class A . 159,766 5,216,374
Phoenix Small-Cap Growth Fund Class A(b) .... 151,701 4,660,255
Phoenix Small-Cap Value Fund Class A ........ 271,577 5,005,171
Phoenix Total Value Fund Class A ............ 1,333,784 14,564,917
------------
75,026,012
------------
FOREIGN EQUITY FUNDS(c)--21.6%
Phoenix Foreign Opportunities Fund Class A .. 381,510 8,480,960
Phoenix Global Utilities Fund Class A ....... 476,947 5,213,033
Phoenix International Strategies Fund Class A 1,088,918 13,655,036
------------
27,349,029
------------
SHARES VALUE
--------- ------------
DOMESTIC FIXED INCOME FUNDS(c)--19.4%
Phoenix Bond Fund Class A ................... 972,095 $ 9,818,162
Phoenix High Yield Securities Fund Class A .. 255,980 2,506,045
Phoenix Institutional Bond Fund Class Y ..... 322,971 9,844,157
Phoenix Multi-Sector Short Term Bond
Fund Class A ................................ 529,867 2,479,779
------------
24,648,143
------------
- --------------------------------------------------------------------------------
TOTAL MUTUAL FUNDS
(IDENTIFIED COST $118,213,480) 127,023,184
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS--100.1%
(IDENTIFIED COST $118,213,480) 127,023,184(a)
Other assets and liabilities, net--(0.1)% (99,451)
------------
NET ASSETS--100.0% $126,923,733
============
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $9,747,451 and gross
depreciation of $1,155,732 for federal income tax purposes. At July 31,
2006, the aggregate cost of securities for federal income tax purposes was
$118,431,465.
(b) Non-income producing.
(c) Affiliated Fund.
See Notes to Financial Statements
18
Phoenix Wealth Builder PHOLIO
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2006
ASSETS
Investment securities at value (Identified cost $118,213,480) $127,023,184
Receivables
Investment securities sold 996,122
Fund shares sold 159,736
Receivable from adviser 46,651
Dividends 9,470
Trustee retainer 756
Prepaid expenses 28,818
------------
Total assets 128,264,737
------------
LIABILITIES
Cash overdraft 231,665
Payables
Fund shares repurchased 983,425
Distribution and service fees 47,985
Transfer agent fee 29,543
Financial agent fee 9,197
Other accrued expenses 39,189
------------
Total liabilities 1,341,004
------------
NET ASSETS $126,923,733
============
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $116,231,145
Undistributed net investment income 86,452
Accumulated net realized gain 1,796,432
Net unrealized appreciation 8,809,704
------------
NET ASSETS $126,923,733
============
CLASS A
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $51,755,264) 4,354,578
Net asset value per share $11.89
Offering price per share $11.89/(1-5.75%) $12.62
CLASS C
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $75,168,469) 6,350,796
Net asset value and offering price per share $11.84
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 2006
INVESTMENT INCOME
Income distributions received from affiliated funds $ 1,879,741
Interest 10,560
-----------
Total investment income 1,890,301
-----------
EXPENSES
Investment advisory fee 130,641
Distribution and service fees, Class C 603,909
Financial agent fee 78,229
Transfer agent 166,584
Printing 72,542
Registration 42,985
Trustees 32,371
Professional 25,260
Custodian 14,163
Miscellaneous 19,207
-----------
Total expenses 1,185,891
Less expenses reimbursed by investment adviser (309,525)
Custodian fees paid indirectly (117)
-----------
Net expenses 876,249
-----------
NET INVESTMENT INCOME (LOSS) 1,014,052
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments from affiliated funds 7,511,822
Capital gain distributions received from affiliated funds 1,355,501
Net change in unrealized appreciation (depreciation) on
investments from affiliated funds (3,103,386)
-----------
NET GAIN (LOSS) ON INVESTMENTS FROM AFFILIATED FUNDS 5,763,937
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 6,777,989
===========
See Notes to Financial Statements
19
Phoenix Wealth Builder PHOLIO
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
July 31, 2006 July 31, 2005
---------------- --------------
FROM OPERATIONS
Net investment income (loss) $ 1,014,052 $ 508,735
Net realized gain (loss) 8,867,323 628,598
Net change in unrealized appreciation (depreciation) (3,103,386) 10,711,389
------------- -------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 6,777,989 11,848,722
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (659,079) (336,203)
Net investment income, Class C (448,891) (207,961)
Net realized short-term gains, Class A (458,875) --
Net realized short-term gains, Class C (764,786) --
Net realized long-term gains, Class A (2,355,289) (8,003)
Net realized long-term gains, Class C (3,925,451) (15,124)
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (8,612,371) (567,291)
------------- -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (1,375,701 and 1,824,326 shares, respectively) 16,432,872 20,856,522
Net asset value of shares issued from reinvestment of distributions
(212,039 and 21,465 shares, respectively) 2,460,025 252,054
Cost of shares repurchased (1,206,100 and 588,715 shares, respectively) (14,395,918) (6,777,429)
------------- -------------
Total 4,496,979 14,331,147
------------- -------------
CLASS C
Proceeds from sales of shares (1,233,328 and 2,678,348 shares, respectively) 14,581,264 30,646,588
Net asset value of shares issued from reinvestment of distributions
(163,141 and 5,584 shares, respectively) 1,884,371 65,720
Cost of shares repurchased (2,058,744 and 1,011,958 shares, respectively) (24,420,364) (11,686,796)
------------- -------------
Total (7,954,729) 19,025,512
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS (3,457,750) 33,356,659
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS (5,292,132) 44,638,090
NET ASSETS
Beginning of period 132,215,865 87,577,775
------------- -------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$86,452 AND $32,989, RESPECTIVELY) $ 126,923,733 $ 132,215,865
============= =============
See Notes to Financial Statements
20
Phoenix Wealth Builder PHOLIO
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A
-----------------------------------------
YEAR ENDED JULY 31
-----------------------------------------
2006 2005 2004
Net asset value, beginning of period $12.07 $10.89 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(3) 0.15 0.11 0.12
Capital gain distributions received from affiliated funds(3) 0.12 0.07 0.01
Net realized and unrealized gain (loss) 0.40 1.10 0.86
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.67 1.28 0.99
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.16) (0.10) (0.10)
Distributions from net realized gains (0.69) --(5) --
------ ------ ------
TOTAL DISTRIBUTIONS (0.85) (0.10) (0.10)
------ ------ ------
Change in net asset value (0.18) 1.18 0.89
------ ------ ------
NET ASSET VALUE, END OF PERIOD $11.89 $12.07 $10.89
====== ====== ======
Total return(1) 5.76% 11.76% 9.89%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $51,755 $47,934 $29,566
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.20%(4) 0.40% 0.40%
Gross operating expenses(2) 0.45% 0.45% 0.77%
Net investment income 1.25% 0.93% 1.11%
Portfolio turnover 74% 4% 0%
CLASS C
-----------------------------------------
YEAR ENDED JULY 31
-----------------------------------------
2006 2005 2004
Net asset value, beginning of period $12.02 $10.86 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(3) 0.06 0.02 0.04
Capital gain distributions received from affiliated funds(3) 0.12 0.07 0.01
Net realized and unrealized gain (loss) 0.40 1.10 0.85
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.58 1.19 0.90
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.07) (0.03) (0.04)
Distributions from net realized gains (0.69) --(5) --
------ ------ ------
TOTAL DISTRIBUTIONS (0.76) (0.03) (0.04)
------ ------ ------
Change in net asset value (0.18) 1.16 0.86
------ ------ ------
NET ASSET VALUE, END OF PERIOD $11.84 $12.02 $10.86
====== ====== ======
Total return(1) 4.99% 11.01% 9.03%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $75,168 $84,281 $58,012
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.96%(4) 1.15% 1.15%
Gross operating expenses(2) 1.19% 1.20% 1.47%
Net investment income 0.48% 0.19% 0.34%
Portfolio turnover 74% 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) Represents blended net expense ratio. See Note 3 in the Notes to Financial
Statements.
(5) Amount is less than $0.01.
See Notes to Financial Statements
21
PHOENIX WEALTH GUARDIAN PHOLIO
A DISCUSSION WITH THE FUND'S OVERSIGHT MANAGER, CHRISTOPHER WILKOS, CFA
Q: HOW DID THE PHOENIX WEALTH GUARDIAN PHOLIO PERFORM FOR ITS FISCAL YEAR ENDED
JULY 31, 2006?
A: For the fiscal year ended July 31, 2006, the PHOLIO's Class A shares returned
4.43% and Class C shares returned 3.63%. For the same period, the S&P 500(R)
Index, a broad-based equity index, returned 5.38%, the Lehman Brothers Aggregate
Bond Index, a broad-based fixed income index, returned 1.46%; and the Wealth
Guardian PHOLIO Composite Index (60% S&P 500(R) Index and 40% Lehman Brothers
Aggregate Index), the PHOLIO's style-specific benchmark, returned 3.85%. 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: HOW DID THE MARKETS PERFORM DURING THE FUND'S FISCAL YEAR?
A: During the Fund's fiscal year, the Federal Reserve (the "Fed") continued its
measured process of increasing short-term interest rates. The Fed has raised
rates a total of 17 times since beginning monetary tightening over two years
ago, increasing the federal funds rate from 1% to 5.25%. The Fed continues to
apply vigilance in dampening any potential inflationary pressures that may be
building in the economy. Leadership at the Fed changed early in 2006, with long
time chairman Alan Greenspan entering retirement and Ben Bernanke assuming the
lead role. Market participants continue to evaluate Bernanke's skill and
credibility in managing the Fed. Several of his comments caused market
volatility during the spring.
In the meantime, corporate profits in the U.S. continue to climb, and
economic growth continues to be solid. After some weakening in the fourth
quarter of 2005 caused primarily by the impact of hurricanes, the U.S. economy
came roaring back in the first quarter of 2006, posting GDP growth of 5.6%. That
growth moderated in the second quarter of 2006, falling to 2.5%. Most economists
estimate that growth will continue at a moderate pace for the remainder of 2006.
In a period of rising short-term interest rates, slowing growth and high
energy prices, U.S. equities produced modest gains during the Fund's fiscal
year. Large-cap stocks, as represented by the S&P 500(R) Index, had a total
return of 5.38%. Small-cap stocks fared slightly worse, with the Russell 2000(R)
Index returning 4.24%. Value stocks outperformed growth stocks in all
capitalization categories. Most of the equity market gains occurred prior to May
2006, when the market experienced a sharp decline fueled by inflation fears.
The big winners in the past year were REIT stocks and utility stocks. REIT
stocks, as measured by the Dow Jones Wilshire Real Estate Securities Index,
advanced over 17%, continuing their multi-year record of dominating U.S. equity
returns. Utility stocks rose by almost 9%. On the negative side, the
technology-laden NASDAQ Composite(R) Index declined by 3.48%.
International markets also provided superior returns as evidenced by the
24.51% return of the MSCI EAFE(R) Index. After substantial gains, emerging
equity markets saw a sharp correction in the second quarter but still returned
over 28% during the fiscal year.
22
Phoenix Wealth Guardian PHOLIO (continued)
Given increasing interest rates and low credit spreads, the U.S. bond
market barely broke even, posting a return of 1.45% as measured by the Lehman
Brothers Aggregate Bond Index. The above-mentioned actions of the Fed helped to
drive all interest rates higher and create a nearly flat Treasury yield curve.
As of July 31, three-month maturity U.S. Treasury bills actually yielded more
than 10-year maturity Treasury notes. Higher yields negatively impacted all bond
returns, although riskier high yield bonds posted returns of nearly 4% for the
year.
Finally, the story of the past year was the emergence of commodities as a
viable investment alternative. With soaring energy and metal prices and
continued demand from emerging economies such as China, commodities proved to be
a superior investment with a return of over 16% as measured by the Dow Jones-AIG
Commodity Index.
Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR?
A: The Phoenix Wealth Guardian PHOLIO was reconstituted in August 2005 with 10
new underlying funds to provide enhanced diversification. The Fund benefited
from its majority exposure to equities, as equity markets generally outperformed
fixed income markets over the fiscal year. In particular, the Fund's allocation
to international equities provided substantial returns as foreign equity markets
soared by over 24%. With a weighting to international equities composed of the
Phoenix Foreign Opportunities and Phoenix International Strategies mutual funds,
the portfolio benefited from the substantial performance of non-U.S. stocks
compared to U.S. markets.
The portfolio's allocation to a real estate securities fund also provided
superior returns. REIT indices outperformed large cap indices by a wide margin
in the past year, and the performance of the Phoenix Real Estate Securities Fund
was excellent. Also enhancing returns was an allocation to the Phoenix Total
Value Fund, which invests in large cap value stocks. Since large cap value
stocks outperformed the S&P 500, the allocation to large cap value contributed
to the Fund's performance.
Small positive contributions were made by allocations to a mid cap value
fund and a global utilities stock fund.
The Fund's performance was negatively impacted by its allocation to a
market neutral mutual fund. The Phoenix Market Neutral Fund underperformed both
its benchmark and the S&P 500. The Phoenix Market Neutral Fund allocation was
small in the overall portfolio. Also hurting performance were allocations to
three growth mutual funds, one specializing in large cap stocks and two
specializing in mid-cap stocks. Since value stocks outperformed their growth
counterparts, it was not unexpected to see these growth funds hurt the
performance of the portfolio during the last year.
Finally, the Fund's allocation to a core large cap growth and income fund
produced returns that about equaled the benchmark return.
AUGUST 2006
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.
23
Phoenix Wealth Guardian PHOLIO
AVERAGE ANNUAL TOTAL RETURNS(1) PERIODS ENDING 7/31/06
INCEPTION INCEPTION
1 YEAR TO 7/31/06 DATE
-------- ------------ -----------
Class A Shares at NAV(2) 4.43% 7.75% 8/1/03
Class A Shares at POP(3) (1.57) 5.64 8/1/03
Class C Shares at NAV(2) 3.63 6.96 8/1/03
Class C Shares with CDSC(4) 3.63 6.96 8/1/03
S&P 500(R) Index 5.38 11.17 8/1/03
Lehman Brothers Aggregate Bond Index 1.46 3.70 8/1/03
Wealth Guardian PHOLIO(SM)
Composite Index 3.85 8.22 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.
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 includes applicable CDSC charges
since inception. Performance assumes dividends and capital gain distributions
are reinvested.
(GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Phoenix Phoenix
Wealth Guardian Wealth Guardian Lehman Brothers Wealth Guardian
PHOLIO(SM) PHOLIO(SM) S&P 500(R) Aggregate Bond PHOLIO(SM)
Class A Class C Index Index Composite Index
--------------- ---------------- ---------- --------------- ---------------
8/1/03 $ 9,425 $10,000 $10,000 $10,000 $10,000
7/30/04 10,287 10,829 11,433 10,489 11,060
7/29/05 11,289 11,808 13,038 10,992 12,206
7/31/06 11,789 12,237 13,740 11,152 12,676
For information regarding the indexes, see the glossary on page 3.
See Notes to Financial Statements
24
Phoenix Wealth Guardian PHOLIO
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 and contingent deferred sales charges, if applicable;
and (2) ongoing costs, including investment advisory fees; distribution and
service fees; and other expenses. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire six-month period.
ACTUAL EXPENSES
The first line of the accompanying tables provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the accompanying tables provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not your Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your Fund and other funds. To do so, compare these
5% hypothetical examples with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the accompanying tables are meant to
highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges or contingent deferred sales charges. Therefore, the
second line of the accompanying tables is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs 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, 2006 July 31, 2006 Period*
- --------------------- ------------------- --------------- --------------
Actual $1,000.00 $1,001.60 $0.08
Hypothetical (5% return
before expenses) 1,000.00 1,024.71 0.09
*EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 0.02%,
WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(181) 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, 2006. THE CLASS'
ACTUAL RETURN AT NAV FOR THE FISCAL YEAR WAS 4.43%. AN INVESTMENT OF $1,000.00
AT JULY 31, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE AT JULY 31, 2006, OF
$1,044.30.
Beginning Ending Expenses Paid
Wealth Guardian PHOLIO Account Value Account Value During
Class C January 31, 2006 July 31, 2006 Period*
- --------------------- ------------------- --------------- --------------
Actual $1,000.00 $ 997.80 $3.81
Hypothetical (5% return
before expenses) 1,000.00 1,020.94 3.86
*EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 0.77%,
WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(181) 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, 2006. THE CLASS'
ACTUAL RETURN AT NAV FOR THE FISCAL YEAR WAS 3.63%. AN INVESTMENT OF $1,000.00
AT JULY 31, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE AT JULY 31, 2006, OF
$1,036.30.
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.
25
Phoenix Wealth Guardian PHOLIO
Fund Investment Allocation 7/31/06
As a percentage of total investments
(GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Domestic Equity Funds 46%
Domestic Fixed Income Funds 39
Foreign Equity Funds 15
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SHARES VALUE
--------- ---------
MUTUAL FUNDS--99.3%
DOMESTIC EQUITY FUNDS(c)--45.8%
Phoenix Dynamic Growth Fund Class A(b) ........... 170,858 $ 1,713,707
Phoenix Fundamental Growth Fund Class A(b) ....... 503,988 5,105,402
Phoenix Growth & Income Fund Class A ............. 298,558 4,636,608
Phoenix Market Neutral Fund Class A(b) ........... 291,505 3,320,240
Phoenix Mid-Cap Value Fund Class A ............... 82,542 1,798,581
Phoenix Real Estate Securities Fund Class A ...... 39,175 1,279,076
Phoenix Small-Cap Growth Fund Class A(b) ......... 53,111 1,631,584
Phoenix Small-Cap Value Fund Class A ............. 95,722 1,764,151
Phoenix Total Value Fund Class A ................. 507,750 5,544,628
-----------
26,793,977
-----------
FOREIGN EQUITY FUNDS(c)--14.5%
Phoenix Foreign Opportunities Fund Class A ....... 112,243 2,495,158
Phoenix Global Utilities Fund Class A ............ 110,107 1,203,467
Phoenix International Strategies Fund Class A .... 383,517 4,809,299
-----------
8,507,924
-----------
DOMESTIC FIXED INCOME FUNDS(c)--39.0%
Phoenix Bond Fund Class A ........................ 901,392 9,104,063
Phoenix High Yield Securities Fund Class A ....... 234,657 2,297,290
Phoenix Institutional Bond Fund Class Y .......... 299,474 9,127,969
SHARES VALUE
--------- ---------
DOMESTIC FIXED INCOME FUNDS--CONTINUED
Phoenix Multi-Sector Short Term Bond Fund Class A 492,160 $ 2,303,308
-----------
22,832,630
-----------
- ---------------------------------------------------------------------------
TOTAL MUTUAL FUNDS
(IDENTIFIED COST $55,797,950) 58,134,531
- ---------------------------------------------------------------------------
TOTAL LONG TERM INVESTMENTS--99.3%
(IDENTIFIED COST $55,797,950) 58,134,531
- ---------------------------------------------------------------------------
PAR VALUE
(000)
----------
SHORT-TERM INVESTMENTS--0.6%
COMMERCIAL PAPER(d)--0.6%
Clipper Receivables Co. LLC 5.29%, 8/1/06 $375 375,000
- ---------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $375,000) 375,000
- ---------------------------------------------------------------------------
TOTAL INVESTMENTS--99.9%
(IDENTIFIED COST $56,172,950) 58,509,531(a)
Other assets and liabilities, net--0.1% 35,146
-----------
NET ASSETS--100.0% $58,544,677
===========
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $3,059,287 and gross
depreciation of $918,502 for federal income tax purposes. At July 31, 2006,
the aggregate cost of securities for federal income tax purposes was
$56,368,746.
(b) Non-income producing.
(c) Affiliated Fund.
(d) The rate shown is the discount rate.
See Notes to Financial Statements
26
Phoenix Wealth Guardian PHOLIO
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2006
ASSETS
Investment securities at value (Identified cost $56,172,950) $58,509,531
Cash 1,990
Receivables
Fund shares sold 142,682
Receivable from adviser 21,846
Dividends 8,729
Trustee retainer 654
Prepaid expenses 19,851
-----------
Total assets 58,705,283
-----------
LIABILITIES
Payables
Fund shares repurchased 91,589
Professional fee 23,269
Distribution and service fees 21,405
Transfer agent fee 10,995
Financial agent fee 4,124
Other accrued expenses 9,224
-----------
Total liabilities 160,606
-----------
NET ASSETS $58,544,677
===========
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $55,567,435
Undistributed net investment income 72,816
Accumulated net realized gain 567,845
Net unrealized appreciation 2,336,581
-----------
NET ASSETS $58,544,677
===========
CLASS A
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $24,768,264) 2,189,178
Net asset value per share $11.31
Offering price per share $11.31/(1-5.75%) $12.00
CLASS C
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $33,776,413) 2,989,131
Net asset value and offering price per share $11.30
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 2006
INVESTMENT INCOME
Income distributions received from affiliated funds $ 1,286,798
Interest 7,184
-----------
Total investment income 1,293,982
-----------
EXPENSES
Investment advisory fee 60,508
Distribution and service fees, Class C 279,857
Financial agent fee 71,597
Transfer agent 68,084
Registration 34,308
Trustees 30,139
Printing 25,989
Professional 25,167
Custodian 12,956
Miscellaneous 12,884
-----------
Total expenses 621,489
Less expenses reimbursed by investment adviser (175,306)
Custodian fees paid indirectly (191)
-----------
Net expenses 445,992
-----------
NET INVESTMENT INCOME (LOSS) 847,990
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments from affiliated funds 2,902,699
Capital gain distributions received from affiliated funds 534,279
Net change in unrealized appreciation (depreciation) on
investments from affiliated funds (1,836,776)
-----------
NET GAIN (LOSS) ON INVESTMENTS FROM AFFILIATED FUNDS 1,600,202
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 2,448,192
===========
See Notes to Financial Statements
27
Phoenix Wealth Guardian PHOLIO
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
July 31, 2006 July 31, 2005
--------------- --------------
FROM OPERATIONS
Net investment income (loss) $ 847,990 $ 535,846
Net realized gain (loss) 3,436,978 283,923
Net change in unrealized appreciation (depreciation) (1,836,776) 3,601,562
----------- -----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,448,192 4,421,331
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (478,246) (253,607)
Net investment income, Class C (447,365) (271,275)
Net realized short-term gains, Class A (213,263) --
Net realized short-term gains, Class C (339,237) --
Net realized long-term gains, Class A (951,481) (3,604)
Net realized long-term gains, Class C (1,513,518) (8,499)
----------- -----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (3,943,110) (536,985)
----------- -----------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (856,254 and 1,090,914 shares, respectively) 9,783,645 12,243,290
Net asset value of shares issued from reinvestment of distributions
(113,730 and 17,604 shares, respectively) 1,268,792 200,211
Cost of shares repurchased (562,827 and 274,678 shares, respectively) (6,422,350) (3,092,213)
----------- -----------
Total 4,630,087 9,351,288
----------- -----------
CLASS C
Proceeds from sales of shares (480,977 and 1,321,823 shares, respectively) 5,476,904 14,738,790
Net asset value of shares issued from reinvestment of distributions
(64,763 and 9,278 shares, respectively) 721,732 105,468
Cost of shares repurchased (1,027,548 and 505,099 shares, respectively) (11,736,494) (5,669,378)
----------- -----------
Total (5,537,858) 9,174,880
----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS (907,771) 18,526,168
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS (2,402,689) 22,410,514
NET ASSETS
Beginning of period 60,947,366 $38,536,852
----------- -----------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$72,816 AND $50,771, RESPECTIVELY) $58,544,677 $60,947,366
=========== ===========
See Notes to Financial Statements
28
Phoenix Wealth Guardian PHOLIO
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A
-----------------------------------------
YEAR ENDED JULY 31
-----------------------------------------
2006 2005 2004
Net asset value, beginning of period $11.61 $10.74 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.22(3) 0.17 0.17
Capital gain distributions received from affiliated funds 0.10(3) 0.06 --(5)
Net realized and unrealized gain (loss) 0.18 0.81 0.74
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.50 1.04 0.91
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.23) (0.17) (0.17)
Distributions from net realized gains (0.57) --(5) --
------ ------ ------
TOTAL DISTRIBUTIONS (0.80) (0.17) (0.17)
------ ------ ------
Change in net asset value (0.30) 0.87 0.74
------ ------ ------
NET ASSET VALUE, END OF PERIOD $11.31 $11.61 $10.74
====== ====== ======
Total return(1) 4.43% 9.74% 9.15%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $24,768 $20,696 $10,182
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.26%(4) 0.52% 0.52%
Gross operating expenses(2) 0.56% 0.65% 1.35%
Net investment income 1.92% 1.56% 1.92%
Portfolio turnover 67% 5% 1%
CLASS C
-----------------------------------------
YEAR ENDED JULY 31
-----------------------------------------
2006 2005 2004
Net asset value, beginning of period $11.60 $ 10.72 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.12(3) 0.09 0.12
Capital gain distributions received from affiliated funds 0.10(3) 0.06 0.01
Net realized and unrealized gain (loss) 0.19 0.81 0.70
------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.41 0.96 0.83
------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.14) (0.08) (0.11)
Distributions from net realized gains (0.57) --(5) --
------ ------ ------
TOTAL DISTRIBUTIONS (0.71) (0.08) (0.11)
------ ------ ------
Change in net asset value (0.30) 0.88 0.72
------ ------ ------
NET ASSET VALUE, END OF PERIOD $11.30 $11.60 $10.72
====== ====== ======
Total return(1) 3.63% 9.03% 8.29%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $33,776 $40,252 $28,355
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 1.03%(4) 1.27% 1.27%
Gross operating expenses(2) 1.31% 1.40% 1.98%
Net investment income 1.08% 0.80% 1.19%
Portfolio turnover 67% 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) Computed using average shares outstanding.
(4) Represents blended net expense ratio. See Note 3 in the Notes to Financial
Statements.
(5) Amount is less than $0.01.
See Notes to Financial Statements
29
PHOENIX WEALTH PRESERVER PHOLIO
A DISCUSSION WITH THE FUND'S OVERSIGHT MANAGER, CHRISTOPHER WILKOS, CFA
Q: HOW DID THE PHOENIX WEALTH PRESERVER PHOLIO PERFORM FOR ITS FISCAL YEAR ENDED
JULY 31, 2006?
A: As the PHOLIO's inception date was August 4, 2005, it did not achieve a full
year of performance as of July 31, 2006. However, for the period of August 4,
2005 through July 31, 2006, the PHOLIO's Class A shares returned 4.37% and Class
C shares returned 3.65%. For the same period, the S&P 500(R) Index, a
broad-based equity index, returned 5.22%, the Lehman Brothers Aggregate Bond
Index, a broad-based fixed income index, returned 1.57%; and the Wealth
Preserver PHOLIO Composite Index (60% Lehman Brothers Aggregate Index and 40%
S&P 500(R) Index), the PHOLIO's style-specific benchmark, returned 3.07%. 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: HOW DID THE MARKETS PERFORM DURING THE FUND'S FISCAL YEAR?
A: During the Fund's fiscal year, the Federal Reserve (the "Fed") continued its
measured process of increasing short-term interest rates. The Fed has raised
rates a total of 17 times since beginning monetary tightening over two years
ago, increasing the federal funds rate from 1% to 5.25%. The Fed continues to
apply vigilance in dampening any potential inflationary pressures that may be
building in the economy. Leadership at the Fed changed early in 2006, with long
time chairman Alan Greenspan entering retirement and Ben Bernanke assuming the
lead role. Market participants continue to evaluate Bernanke's skill and
credibility in managing the Fed. Several of his comments caused market
volatility during the spring.
In the meantime, corporate profits in the U.S. continue to climb, and
economic growth continues to be solid. After some weakening in the fourth
quarter of 2005 caused primarily by the impact of hurricanes, the U.S. economy
came roaring back in the first quarter of 2006, posting GDP growth of 5.6%. That
growth moderated in the second quarter of 2006, falling to 2.5%. Most economists
estimate that growth will continue at a moderate pace for the remainder of 2006.
In a period of rising short-term interest rates, slowing growth and high
energy prices, U.S. equities produced modest gains during the Fund's fiscal
year. Large-cap stocks, as represented by the S&P 500(R) Index, had a total
return of 5.38%. Small-cap stocks fared slightly worse, with the Russell 2000(R)
Index returning 4.24%. Value stocks outperformed growth stocks in all
capitalization categories. Most of the equity market gains occurred prior to May
2006, when the market experienced a sharp decline fueled by inflation fears.
The big winners in the past year were REIT stocks and utility stocks. REIT
stocks, as measured by the Dow Jones Wilshire Real Estate Securities Index,
advanced over 17%, continuing their multi-year record of dominating U.S. equity
returns. Utility stocks rose by almost 9%. On the negative side, the
technology-laden NASDAQ Composite(R) Index declined by 3.48%.
International markets also provided superior returns as evidenced by the
24.51% return of the MSCI EAFE(R) Index. After substantial gains, emerging
equity markets saw a sharp correction in the second quarter but still returned
over 28% during the fiscal year.
30
Phoenix Wealth Preserver PHOLIO (continued)
Given increasing interest rates and low credit spreads, the U.S. bond
market barely broke even, posting a return of 1.45% as measured by the Lehman
Brothers Aggregate Bond Index. The above-mentioned actions of the Fed helped to
drive all interest rates higher and create a nearly flat Treasury yield curve.
As of July 31, three-month maturity U.S. Treasury bills actually yielded more
than 10-year maturity Treasury notes. Higher yields negatively impacted all bond
returns, although riskier high yield bonds posted returns of nearly 4% for the
year.
Finally, the story of the past year was the emergence of commodities as a
viable investment alternative. With soaring energy and metal prices and
continued demand from emerging economies such as China, commodities proved to be
a superior investment with a return of over 16% as measured by the Dow Jones-AIG
Commodity Index.
Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR?
A: The Fund benefited from its exposure to equities, as equity markets generally
outperformed fixed income markets over the fiscal year. In particular, the
Fund's allocation to international equities provided substantial returns as
foreign equity markets soared by over 24%. With a weighting to international
equities composed of the Phoenix Foreign Opportunities and Phoenix International
Strategies mutual funds, the portfolio benefited from the substantial
performance of non-U.S. stocks compared to U.S. markets.
The portfolio's allocation to a real estate securities fund also provided
superior returns. REIT indices outperformed large cap indices by a wide margin
in the past year, and the performance of the Phoenix Real Estate Securities Fund
was excellent. Also enhancing returns was an allocation to the Phoenix Total
Value Fund, which invests in large cap value stocks. Since large cap value
stocks outperformed the S&P 500, the allocation to large cap value contributed
to the Fund's performance.
All of the portfolio's allocations to fixed income funds benefited
performance during the fiscal year. In particular, the Fund's allocation to a
high yield securities fund enhanced performance as high yield bonds outperformed
the aggregate U.S. bond market. The portfolio's two largest fixed income fund
allocations beat their benchmarks.
Small positive contributions were made by allocations to a small cap value
fund and a global utilities stock fund.
The Fund's performance was negatively impacted by its allocation to a
market neutral mutual fund. The Phoenix Market Neutral Fund underperformed both
its benchmark and the S&P 500. The Phoenix Market Neutral Fund allocation was
small in the overall portfolio. Also hurting performance were allocations to two
growth mutual funds, one specializing in large cap stocks, and the other
specializing in small cap stocks. Since value stocks outperformed their growth
counterparts, it was not unexpected to see these growth funds hurt the
performance of the portfolio during the last year.
Finally, the Fund's allocation to a core large cap growth and income fund
produced returns that about equaled the benchmark return.
AUGUST 2006
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.
31
Phoenix Wealth Preserver PHOLIO
AVERAGE ANNUAL TOTAL RETURNS(1) PERIOD ENDING 7/31/06
INCEPTION INCEPTION
TO 7/31/06 DATE
------------ -----------
Class A Shares at NAV(2) 4.37% 8/4/05
Class A Shares at POP(3) (1.63) 8/4/05
Class C Shares at NAV(2) 3.65 8/4/05
Class C Shares with CDSC(4) 2.65 8/4/05
S&P 500(R) Index 5.22 8/4/05
Lehman Brothers Aggregate Bond Index 1.57 8/4/05
Wealth Preserver PHOLIO(SM) Composite Index 3.07 8/4/05
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.
GROWTH OF $10,000 PERIOD ENDING 7/31
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
8/4/05 (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 includes applicable CDSC charges
since inception. Performance assumes dividends and capital gain distributions
are reinvested.
(GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Phoenix Phoenix
Wealth Preserver Wealth Preserver Lehman Brothers Wealth Preserver
PHOLIO(SM) PHOLIO(SM) S&P 500(R) Aggregate Bond PHOLIO(SM)
Class A Class C Index Index Composite Index
---------------- ---------------- ---------- --------------- ----------------
8/4/05 $9,425 $10,000 $10,000 $10,000 $10,000
7/31/06 9,837 10,265 10,522 10,157 10,307
For information regarding the indexes, see the glossary on page 3.
32
Phoenix Wealth Preserver PHOLIO
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 Preserver PHOLIO, you incur two types of costs: (1) transaction costs,
including sales charges and contingent deferred sales charges, if applicable;
and (2) ongoing costs, including investment advisory fees; distribution and
service fees; and other expenses. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire six-month period.
ACTUAL EXPENSES
The first line of the accompanying tables provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the accompanying tables provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not your Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your Fund and other funds. To do so, compare these
5% hypothetical examples with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the accompanying tables are meant to
highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges or contingent deferred sales charges. Therefore, the
second line of the accompanying tables is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs could have been higher. These 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.
Wealth Beginning Ending Expenses Paid
Preserver PHOLIO Account Value Account Value During
Class A January 31, 2006 July 31, 2006 Period*
- --------------------- ------------------- --------------- --------------
Actual $1,000.00 $1,003.80 $0.05
Hypothetical (5% return
before expenses) 1,000.00 1,024.75 0.05
*EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 0.01%,
WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(181) 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 PERIOD ENDED JULY 31, 2006. THE
CLASS' ACTUAL RETURN AT NAV SINCE INCEPTION WAS 4.37%. AN INVESTMENT OF
$1,000.00 AT AUGUST 4, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE AT JULY 31,
2006, OF $1,043.70.
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.
Wealth Beginning Ending Expenses Paid
Preserver PHOLIO Account Value Account Value During
Class C January 31, 2006 July 31, 2006 Period*
- --------------------- ------------------- --------------- --------------
Actual $1,000.00 $1,000.90 $3.77
Hypothetical (5% return
before expenses) 1,000.00 1,020.98 3.82
*EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 0.76%,
WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(181) 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 PERIOD ENDED JULY 31, 2006. THE
CLASS' ACTUAL RETURN AT NAV SINCE INCEPTION WAS 3.65%. AN INVESTMENT OF
$1,000.00 AT AUGUST 4, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE AT JULY 31,
2006, OF $1,036.50
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.
33
Phoenix Wealth Preserver PHOLIO
Fund Investment Allocation 7/31/06
As a percentage of total investments
(GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Domestic Fixed Income Funds 61%
Domestic Equity Funds 30
Foreign Equity Funds 9
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SHARES VALUE
------------ ----------
MUTUAL FUNDS--99.4%
DOMESTIC EQUITY FUNDS(c)--29.9%
Phoenix Fundamental Growth Fund Class A(b) .... 10,351 $ 104,854
Phoenix Growth & Income Fund Class A. ......... 6,234 96,822
Phoenix Market Neutral Fund Class A(b) ........ 3,467 39,486
Phoenix Real Estate Securities Fund Class A ... 470 15,335
Phoenix Small-Cap Growth Fund Class A(b) ...... 817 25,092
Phoenix Small-Cap Value Fund Class A. ......... 1,478 27,233
Phoenix Total Value Fund Class A............... 10,377 113,317
----------
422,139
----------
FOREIGN EQUITY FUNDS(c)--8.9%
Phoenix Foreign Opportunities Fund Class A .... 1,914 42,538
Phoenix Global Utilities Fund Class A ......... 1,330 14,534
Phoenix International Strategies Fund Class A . 5,424 68,011
----------
125,083
----------
SHARES VALUE
------------ ----------
DOMESTIC FIXED INCOME FUNDS(c)--60.6%
Phoenix Bond Fund Class A............ 33,152 $ 334,837
Phoenix High Yield Securities Fund Class A 8,388 82,118
Phoenix Institutional Bond Fund Class Y 11,690 356,302
Phoenix Multi-Sector Short Term Bond
Fund Class A 17,388 81,377
----------
854,634
----------
- ---------------------------------------------------------------------------
TOTAL MUTUAL FUNDS
(IDENTIFIED COST $1,397,176) 1,401,856
- ---------------------------------------------------------------------------
TOTAL INVESTMENTS--99.4%
(IDENTIFIED COST $1,397,176) 1,401,856(a)
Other assets and liabilities, net--0.6% 9,120
----------
NET ASSETS--100.0% $1,410,976
==========
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $18,506 and gross
depreciation of $17,452 for federal income tax purposes. At July 31, 2006,
the aggregate cost of securities for federal income tax purposes was
$1,400,802.
(b) Non-income producing.
(c) Affiliated Fund.
See Notes to Financial Statements
34
Phoenix Wealth Preserver PHOLIO
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2006
ASSETS
Investment securities at value (Identified cost $1,397,176) $1,401,856
Receivables
Investment securities sold 15,420
Dividends 308
Trustee retainer 162
Prepaid expenses 17,047
----------
Total assets 1,434,793
----------
LIABILITIES
Cash overdraft 5,951
Payables
Professional fee 11,503
Transfer agent fee 3,771
Investment advisory fee 1,308
Distribution and service fees 161
Financial agent fee 99
Other accrued expenses 1,024
----------
Total liabilities 23,817
----------
NET ASSETS $1,410,976
==========
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $1,402,074
Undistributed net investment income 2,587
Accumulated net realized gain 1,635
Net unrealized appreciation 4,680
----------
NET ASSETS $1,410,976
==========
CLASS A
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $1,154,716) 113,400
Net asset value per share $10.18
Offering price per share $10.18/(1-5.75%) $10.80
CLASS C
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $256,260) 25,175
Net asset value and offering price per share $10.18
STATEMENT OF OPERATIONS
FROM INCEPTION AUGUST 4, 2005
TO JULY 31, 2006
INVESTMENT INCOME
Income distributions received from affiliated funds $ 27,565
Interest 450
---------
Total investment income 28,015
---------
EXPENSES
Investment advisory fee 825
Distribution and service fees, Class C 1,197
Financial agent fee 62,794
Transfer agent 35,811
Registration 30,708
Trustees 22,872
Professional 16,177
Custodian 6,358
Printing 2,667
Miscellaneous 7,881
---------
Total expenses 187,290
Less expenses reimbursed by investment adviser (184,367)
Custodian fees paid indirectly (717)
---------
Net expenses 2,206
---------
NET INVESTMENT INCOME (LOSS) 25,809
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments from affiliated funds (2,478)
Capital gain distributions received from affiliated funds 5,742
Net change in unrealized appreciation (depreciation)
on investments from affiliated funds 4,680
---------
NET GAIN (LOSS) ON INVESTMENTS FROM AFFILIATED FUNDS 7,944
---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 33,753
=========
See Notes to Financial Statements
35
Phoenix Wealth Preserver PHOLIO
STATEMENT OF CHANGES IN NET ASSETS
From Inception
August 4, 2005 to
July 31, 2006
------------------
FROM OPERATIONS
Net investment income (loss) $ 25,809
Net realized gain (loss) 3,264
Net change in unrealized appreciation (depreciation) 4,680
----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 33,753
----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (21,705)
Net investment income, Class C (3,146)
----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (24,851)
----------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (115,220 shares) 1,166,457
Net asset value of shares issued from reinvestment of distributions (2,156 shares) 21,622
Cost of shares repurchased (3,976 shares) (40,847)
----------
Total 1,147,232
----------
CLASS C
Proceeds from sales of shares (25,024 shares) 253,364
Net asset value of shares issued from reinvestment of distributions (304 shares) 3,050
Cost of shares repurchased (153 shares) (1,572)
----------
Total 254,842
----------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 1,402,074
----------
NET INCREASE (DECREASE) IN NET ASSETS 1,410,976
NET ASSETSS
Beginning of period --
----------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $2,587) $1,410,976
==========
See Notes to Financial Statements
36
Phoenix Wealth Preserver PHOLIO
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A
------------------
FROM INCEPTION
AUGUST 4, 2005 TO
JULY 31, 2006
------------------
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(3) 0.34
Capital gain distributions received from affiliated funds(3) 0.07
Net realized and unrealized gain (loss) 0.02
------
TOTAL FROM INVESTMENT OPERATIONS 0.43
------
LESS DISTRIBUTIONS
Dividends from net investment income (0.25)
------
TOTAL DISTRIBUTIONS (0.25)
------
Change in net asset value 0.18
------
NET ASSET VALUE, END OF PERIOD $10.18
======
Total return(1) 4.37%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $1,155
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.12%(4)(6)
Gross operating expenses(2) 21.29%(6)
Net investment income (loss) 3.35%(6)
Portfolio turnover 28%(5)
CLASS C
------------------
FROM INCEPTION
AUGUST 4, 2005 TO
JULY 31, 2006
------------------
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(3) 0.22
Capital gain distributions received from affiliated funds(3) 0.05
Net realized and unrealized gain (loss) 0.09
------
TOTAL FROM INVESTMENT OPERATIONS 0.36
------
LESS DISTRIBUTIONS
Dividends from net investment income (0.18)
------
TOTAL DISTRIBUTIONS (0.18)
------
Change in net asset value 0.18
------
NET ASSET VALUE, END OF PERIOD $10.18
======
Total return(1) 3.65%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $256
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.89%(4)(6)
Gross operating expenses(2) 28.13%(6)
Net investment income (loss) 2.19%(6)
Portfolio turnover 28%(5)
(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) Represents blended net expense ratio. See Note 3 in the Notes to Financial
Statements.
(5) Not annualized.
(6) Annualized.
See Notes to Financial Statements
37
PHOENIX CONSERVATIVE INCOME PHOLIO
A DISCUSSION WITH THE FUND'S OVERSIGHT MANAGER, CHRISTOPHER WILKOS, CFA
Q: HOW DID THE PHOENIX CONSERVATIVE INCOME PHOLIO PERFORM FOR ITS FISCAL YEAR
ENDED JULY 31, 2006?
A: As the PHOLIO's inception date was August 4, 2005, it did not achieve a full
year of performance as of July 31, 2006. However, for the period of August 4,
2005 through July 31, 2006, the PHOLIO's Class A shares returned 2.98% and
Class C shares returned 2.24%. For the same period, the S&P 500(R) Index, a
broad-based equity index, returned 5.22%; the Lehman Brothers Aggregate Bond
Index, a broad-based fixed income index, returned 1.57%; and the Conservative
Income PHOLIO Composite Index (80% Lehman Brothers Aggregate Bond Index and 20%
S&P 500(R) Index), the PHOLIO's style-specific benchmark, returned 2.32%. 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: HOW DID THE MARKETS PERFORM DURING THE FUND'S FISCAL YEAR?
A: During the Fund's fiscal year, the Federal Reserve (the "Fed") continued its
measured process of increasing short-term interest rates. The Fed has raised
rates a total of 17 times since beginning monetary tightening over two years
ago, increasing the federal funds rate from 1% to 5.25%. The Fed continues to
apply vigilance in dampening any potential inflationary pressures that may be
building in the economy. Leadership at the Fed changed early in 2006, with long
time chairman Alan Greenspan entering retirement and Ben Bernanke assuming the
lead role. Market participants continue to evaluate Bernanke's skill and
credibility in managing the Fed. Several of his comments caused market
volatility during the spring.
In the meantime, corporate profits in the U.S. continue to climb, and
economic growth continues to be solid. After some weakening in the fourth
quarter of 2005 caused primarily by the impact of hurricanes, the U.S. economy
came roaring back in the first quarter of 2006, posting GDP growth of 5.6%. That
growth moderated in the second quarter of 2006, falling to 2.5%. Most economists
estimate that growth will continue at a moderate pace for the remainder of 2006.
In a period of rising short-term interest rates, slowing growth and high
energy prices, U.S. equities produced modest gains during the Fund's fiscal
year. Large-cap stocks, as represented by the S&P 500(R) Index, had a total
return of 5.38%. Small-cap stocks fared slightly worse, with the Russell 2000(R)
Index returning 4.24%. Value stocks outperformed growth stocks in all
capitalization categories. Most of the equity market gains occurred prior to May
2006, when the market experienced a sharp decline fueled by inflation fears.
The big winners in the past year were REIT stocks and utility stocks. REIT
stocks, as measured by the Dow Jones Wilshire Real Estate Securities Index,
advanced over 17%, continuing their multi-year record of dominating U.S. equity
returns. Utility stocks rose by almost 9%. On the negative side, the
technology-laden NASDAQ Composite(R) Index declined by 3.48%.
International markets also provided superior returns as evidenced by the
24.51% return of the MSCI EAFE(R) Index. After substantial gains, emerging
equity markets saw a sharp correction in the second quarter but still returned
over 28% during the fiscal year.
38
Phoenix Conservative Income PHOLIO (continued)
Given increasing interest rates and low credit spreads, the U.S. bond
market barely broke even, posting a return of 1.45% as measured by the Lehman
Brothers Aggregate Bond Index. The above-mentioned actions of the Fed helped to
drive all interest rates higher and create a nearly flat Treasury yield curve.
As of July 31, three-month maturity U.S. Treasury bills actually yielded more
than 10-year maturity Treasury notes. Higher yields negatively impacted all bond
returns, although riskier high yield bonds posted returns of nearly 4% for the
year.
Finally, the story of the past year was the emergence of commodities
as a viable investment alternative. With soaring energy and metal prices and
continued demand from emerging economies such as China, commodities proved to be
a superior investment with a return of over 16% as measured by the Dow Jones-AIG
Commodity Index.
Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR?
A: The Fund's performance was largely driven by its majority allocation to fixed
income funds. Bond market returns were modest during the Fund's fiscal year, and
bond market returns generally were lower than equity market returns. The Fund's
core bond fund allocations outperformed their benchmarks modestly, contributing
to overall returns. The Fund's high yield bond fund allocation contributed
positively as high yield bonds outperformed the general bond market in the past
year. Lastly, the Fund's allocation to a multi-sector short-term bond fund beat
its benchmark.
Even with a small allocation to equities, the Fund's performance benefited
from its allocations to three equity funds. In particular, the Fund's allocation
to international equities provided substantial returns as foreign equity markets
soared by over 24%. Even with a small weighting to international equities, your
PHOLIO benefited from the substantial performance of non-U.S. stocks compared to
U.S. markets.
Your PHOLIO's allocation to a real estate securities fund also provided
superior returns. REIT indices outperformed large cap indices by a wide margin
in the past year, and the performance of the Phoenix Real Estate Securities Fund
was excellent. Also enhancing returns was an allocation to the Phoenix Total
Value Fund, which invests in large cap value stocks. Since large cap value
stocks outperformed the S&P 500, the allocation to large cap value contributed
to the Fund's performance.
The Fund's performance was negatively impacted by its allocation to a
market neutral mutual fund, which underperformed its benchmark and the S&P 500.
The Phoenix Market Neutral Fund allocation was small in the overall portfolio.
Also hurting performance was an allocation to a large cap growth mutual fund.
Since value stocks outperformed their growth counterparts, it was not unexpected
to see this growth fund hurt the performance of your PHOLIO during the last
year.
AUGUST 2006
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.
39
Phoenix Conservative Income PHOLIO
AVERAGE ANNUAL TOTAL RETURNS(1) PERIOD ENDING 7/31/06
INCEPTION INCEPTION
TO 7/31/06 DATE
---------- ----------
Class A Shares at NAV(2) 2.98% 8/4/05
Class A Shares at POP(3) (2.94) 8/4/05
Class C Shares at NAV(2) 2.24 8/4/05
Class C Shares with CDSC(4) 1.24 8/4/05
S&P 500(R) Index 5.22 8/4/05
Lehman Brothers Aggregate Bond Index 1.57 8/4/05
Conservative Income PHOLIO(SM) Composite Index 2.32 8/4/05
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.
GROWTH OF $10,000 PERIOD ENDING 7/31
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
8/4/05 (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 includes applicable CDSC charges
since inception. Performance assumes dividends and capital gain distributions
are reinvested.
(GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Phoenix Phoenix Lehman
Conservative Conservative Brothers Conservative
Income Income Aggregate Income
PHOLIO(SM) PHOLIO(SM) S&P 500(R) Bond PHOLIO(SM)
Class A Class C Index Index Composite Index
------------ ------------- ---------- ---------- ---------------
8/4/05 $9,425 $10,000 $10,000 $10,000 $10,000
7/31/06 9,706 10,124 10,522 10,157 10,232
For information regarding the indexes, see the glossary on page 3.
See Notes to Financial Statements
40
Phoenix Conservative Income PHOLIO
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
Conservative Income PHOLIO, you incur two types of costs: (1) transaction costs,
including sales charges and contingent deferred sales charges, if applicable;
and (2) ongoing costs, including investment advisory fees; distribution and
service fees; and other expenses. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire six-month period.
ACTUAL EXPENSES
The first line of the accompanying tables provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the accompanying tables provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not your Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your Fund and other funds. To do so, compare these
5% hypothetical examples with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the accompanying tables are meant to
highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges or contingent deferred sales charges. Therefore, the
second line of the accompanying tables is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs could have been higher. These 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.
Conservative Beginning Ending Expenses Paid
Income PHOLIO Account Value Account Value During
Class A January 31, 2006 July 31, 2006 Period*
--------------- ------------------ --------------- ---------------
Actual $1,000.00 $1,009.00 $0.01
Hypothetical (5% return
before expenses) 1,000.00 1,024.79 0.01
*EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 0.00%,
WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(181) 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 PERIOD ENDED JULY 31, 2006. THE
CLASS' ACTUAL RETURN AT NAV SINCE INCEPTION WAS 2.98%. AN INVESTMENT OF
$1,000.00 AT AUGUST 4, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE AT JULY 31,
2006, OF $1,029.80.
Conservative Beginning Ending Expenses Paid
Income PHOLIO Account Value Account Value During
Class C January 31, 2006 July 31, 2006 Period*
- --------------------------------------------------------------------------------
Actual $1,000.00 $1,005.80 $3.78
Hypothetical (5% return
before expenses) 1,000.00 1,020.98 3.82
*EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 0.76%,
WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(181) 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 PERIOD ENDED JULY 31, 2006. THE
CLASS' ACTUAL RETURN AT NAV SINCE INCEPTION WAS 2.24%. AN INVESTMENT OF
$1,000.00 AT AUGUST 4, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE AT JULY 31,
2006, OF $1,022.40.
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.
41
Phoenix Conservative Income PHOLIO
Fund Investment Allocation 7/31/06
As a percentage of total investments
(GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Domestic Fixed Income Funds 80%
Domestic Equity Funds 15
Foreign Equity Funds 5
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SHARES VALUE
-------- ---------
MUTUAL FUNDS--84.8%
DOMESTIC EQUITY FUNDS(c)--12.7%
Phoenix Fundamental Growth Fund Class A(b) .......... 3,076 $ 31,160
Phoenix Growth & Income Fund Class A ................ 1,577 24,499
Phoenix Market Neutral Fund Class A(b) .............. 2,071 23,583
Phoenix Real Estate Securities Fund Class A ......... 273 8,920
Phoenix Total Value Fund Class A..................... 3,032 33,113
--------
121,275
--------
FOREIGN EQUITY FUNDS(c)--4.3%
Phoenix Global Utilities Fund Class A ............... 779 8,510
Phoenix International Strategies Fund Class A ....... 2,556 32,052
--------
40,562
--------
SHARES VALUE
-------- ---------
DOMESTIC FIXED INCOME FUNDS(c)--67.8%
Phoenix Bond Fund Class A ........................... 25,482 $ 257,367
Phoenix High Yield Securities Fund Class A .......... 6,602 64,631
Phoenix Institutional Bond Fund Class Y ............. 8,501 259,097
Phoenix Multi-Sector Short Term Bond
Fund Class A ..................................... 13,697 64,102
--------
645,197
--------
- -------------------------------------------------------------------------------
TOTAL MUTUAL FUNDS
(IDENTIFIED COST $805,359) 807,034
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS--84.8%
(IDENTIFIED COST $805,359) 807,034(a)
Other assets and liabilities, net--15.2% 145,117
--------
NET ASSETS--100.0% $952,151
========
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $5,462 and gross
depreciation of $10,726 for federal income tax purposes. At July 31, 2006,
the aggregate cost of securities for federal income tax purposes was
$812,298.
(b) Non-income producing.
(c) Affiliated Fund.
See Notes to Financial Statements
42
Phoenix Conservative Income PHOLIO
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2006
ASSETS
Investment securities at value (Identified cost $805,359) $ 807,034
Cash 78,810
Receivables
Fund shares sold 131,488
Dividends 246
Trustee retainer 158
Prepaid expenses 17,002
----------
Total assets 1,034,738
----------
LIABILITIES
Payables
Investment securities purchased 66,310
Professional fee 11,502
Transfer agent fee 3,699
Distribution and service fees 152
Investment advisory fee 116
Financial agent fee 51
Other accrued expenses 757
----------
Total liabilities 82,587
----------
NET ASSETS $ 952,151
==========
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 953,987
Undistributed net investment income 1,899
Accumulated net realized loss (5,410)
Net unrealized appreciation 1,675
----------
NET ASSETS $ 952,151
==========
CLASS A
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $617,932) 61,974
Net asset value per share $ 9.97
Offering price per share $9.97/(1-5.75%) $10.58
CLASS C
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $334,219) 33,544
Net asset value and offering price per share $ 9.96
STATEMENT OF OPERATIONS
FROM INCEPTION AUGUST 4, 2005
TO JULY 31, 2006
INVESTMENT INCOME
Income distributions received from affiliated funds $ 16,793
Interest 724
---------
Total investment income 17,517
---------
EXPENSES
Investment advisory fee 406
Distribution and service fees, Class C 1,060
Financial agent fee 62,730
Transfer agent 35,443
Registration 30,668
Trustees 22,853
Professional 16,175
Custodian 5,348
Printing 2,247
Miscellaneous 7,863
---------
Total expenses 184,793
Less expenses reimbursed by investment adviser (182,888)
Custodian fees paid indirectly (364)
---------
Net expenses 1,541
---------
NET INVESTMENT INCOME (LOSS) 15,976
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments from affiliated funds (5,984)
Capital gain distributions received from affiliated funds 1,270
Net change in unrealized appreciation (depreciation) on
investments from affiliated funds 1,675
---------
NET GAIN (LOSS) ON INVESTMENTS FROM AFFILIATED FUNDS (3,039)
---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 12,937
=========
See Notes to Financial Statements
43
Phoenix Conservative Income PHOLIO
STATEMENT OF CHANGES IN NET ASSETS
From Inception
August 4, 2005 to
July 31, 2006
-------------------
FROM OPERATIONS
Net investment income (loss) $ 15,976
Net realized gain (loss) (4,714)
Net change in unrealized appreciation (depreciation) 1,675
---------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 12,937
---------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (10,076)
Net investment income, Class C (4,697)
---------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (14,773)
---------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (104,984 shares) 1,053,364
Net asset value of shares issued from reinvestment of distributions (939 shares) 9,222
Cost of shares repurchased (43,949 shares) (442,773)
---------
Total 619,813
---------
CLASS C
Proceeds from sales of shares (33,692 shares) 335,644
Net asset value of shares issued from reinvestment of distributions (369 shares) 3,645
Cost of shares repurchased (517 shares) (5,115)
---------
Total 334,174
---------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 953,987
---------
NET INCREASE (DECREASE) IN NET ASSETS 952,151
---------
NET ASSETS
Beginning of period --
---------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $1,899) $ 952,151
=========
See Notes to Financial Statements
44
Phoenix Conservative Income PHOLIO
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A
--------------------
FROM INCEPTION
AUGUST 4, 2005 TO
JULY 31, 2006
--------------------
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(3) 0.42
Capital gain distributions received from affiliated funds(3) 0.02
Net realized and unrealized gain (loss) (0.15)
------
TOTAL FROM INVESTMENT OPERATIONS 0.29
------
LESS DISTRIBUTIONS
Dividends from net investment income (0.32)
------
TOTAL DISTRIBUTIONS (0.32)
------
Change in net asset value (0.03)
------
NET ASSET VALUE, END OF PERIOD $ 9.97
======
Total return(1) 2.98%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $618
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.09%(4)(6)
Gross operating expenses(2) 39.40%(6)
Net investment income (loss) 4.25%(6)
Portfolio turnover 169%(5)
CLASS C
---------------------
FROM INCEPTION
AUGUST 4, 2005 TO
JULY 31, 2006
---------------------
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(3) 0.33
Capital gain distributions received from affiliated funds(3) 0.04
Net realized and unrealized gain (loss) (0.15)
------
TOTAL FROM INVESTMENT OPERATIONS 0.22
------
LESS DISTRIBUTIONS
Dividends from net investment income (0.26)
------
TOTAL DISTRIBUTIONS (0.26)
------
Change in net asset value (0.04)
------
NET ASSET VALUE, END OF PERIOD $ 9.96
------
Total return(1) 2.24%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $334
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.92%(4)(6)
Gross operating expenses(2) 56.70%(6)
Net investment income (loss) 3.34%(6)
Portfolio turnover 169%(5)
(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) Represents blended net expense ratio. See Note 3 in the Notes to Financial
Statements.
(5) Not annualized.
(6) Annualized.
See Notes to Financial Statements
45
PHOENIX DIVERSIFIER PHOLIO
A DISCUSSION WITH THE FUND'S OVERSIGHT MANAGER, CHRISTOPHER WILKOS, CFA
Q: HOW DID THE PHOENIX DIVERSIFIER PHOLIO PERFORM FOR ITS FISCAL YEAR ENDED JULY
31, 2006?
A: As the PHOLIO's inception date was November 30, 2005, it did not achieve a
full year of performance as of July 31, 2006. However, for the period of
November 30, 2005 through July 31, 2006, the PHOLIO's Class A shares returned
6.72% and Class C shares returned 6.16%. For the same period, the S&P 500(R)
Index, a broad-based equity index, returned 3.36%. 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: HOW DID THE MARKETS PERFORM DURING THE FUND'S FISCAL YEAR?
A: During the Fund's fiscal year, the Federal Reserve (the "Fed") continued its
measured process of increasing short-term interest rates. The Fed has raised
rates a total of 17 times since beginning monetary tightening over two years
ago, increasing the federal funds rate from 1% to 5.25%. The Fed continues to
apply vigilance in dampening any potential inflationary pressures that may be
building in the economy. Leadership at the Fed changed early in 2006, with long
time chairman Alan Greenspan entering retirement and Ben Bernanke assuming the
lead role. Market participants continue to evaluate Bernanke's skill and
credibility in managing the Fed. Several of his comments caused market
volatility during the spring.
In the meantime, corporate profits in the U.S. continue to climb, and
economic growth continues to be solid. After some weakening in the fourth
quarter of 2005 caused primarily by the impact of hurricanes, the U.S. economy
came roaring back in the first quarter of 2006, posting GDP growth of 5.6%. That
growth moderated in the second quarter of 2006, falling to 2.5%. Most economists
estimate that growth will continue at a moderate pace for the remainder of 2006.
In a period of rising short-term interest rates, slowing growth and high
energy prices, U.S. equities produced modest gains during the Fund's fiscal
year. Large-cap stocks, as represented by the S&P 500(R) Index, had a total
return of 5.38%. Small-cap stocks fared slightly worse, with the Russell 2000(R)
Index returning 4.24%. Value stocks outperformed growth stocks in all
capitalization categories. Most of the equity market gains occurred prior to May
2006, when the market experienced a sharp decline fueled by inflation fears.
The big winners in the past year were REIT stocks and utility stocks. REIT
stocks, as measured by the Dow Jones Wilshire Real Estate Securities Index,
advanced over 17%, continuing their multi-year record of dominating U.S. equity
returns. Utility stocks rose by almost 9%. On the negative side, the
technology-laden NASDAQ Composite(R) Index declined by 3.48%.
International markets also provided superior returns as evidenced by the
24.51% return of the MSCI EAFE(R) Index. After substantial gains, emerging
equity markets saw a sharp correction in the second quarter but still returned
over 28% during the fiscal year.
Given increasing interest rates and low credit spreads, the U.S. bond
market barely broke even,
46
Phoenix Diversifier PHOLIO (continued)
posting a return of 1.45% as measured by the Lehman Brothers Aggregate Bond
Index. The above-mentioned actions of the Fed helped to drive all interest rates
higher and create a nearly flat Treasury yield curve. As of July 31, three-month
maturity U.S. Treasury bills actually yielded more than 10-year maturity
Treasury notes. Higher yields negatively impacted all bond returns, although
riskier high yield bonds posted returns of nearly 4% for the year.
Finally, the story of the past year was the emergence of commodities
as a viable investment alternative. With soaring energy and metal prices and
continued demand from emerging economies such as China, commodities proved to be
a superior investment with a return of over 16% as measured by the Dow Jones-AIG
Commodity Index.
Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR?
A: Your Fund was launched on November 30, 2005. The Fund has allocations to
mutual funds and exchange traded funds that invest in different alternative
investment markets. During the fiscal year, the Fund's performance benefited
from the superior return performance of these alternative markets compared to
the Fund's benchmark of the S&P 500 Index. The leading contributor to returns
was an allocation to the Phoenix Real Estate Securities Fund, which invests in
REITs, one of the top performing sectors of the equity market over the past
year. This fund, and the REIT market, have had several years of very strong
performance relative to the U.S. equity market. With a significant allocation to
the REIT fund, your Fund's performance was significantly boosted.
The Fund also benefited from an allocation to a mutual fund that invests
in global utility stocks. Utility stocks and foreign stocks significantly
outperformed the U.S. equity market and this Fund's performance reflected that
outperformance. Your Fund's returns were enhanced by a significant allocation to
The Phoenix Global Utilities Fund.
The Fund's performance was negatively impacted by its allocation to a
market neutral mutual fund. The Phoenix Market Neutral Fund underperformed both
its benchmark and the S&P 500. The Phoenix Market Neutral Fund is a type of
hedge fund that seeks to generate returns by owning superior stocks, and
"shorting" or short selling stocks that are expected to underperform the market.
In addition to investing in the above noted mutual funds, the Diversifier
PHOLIO added the Deutsche Bank Commodity Tracking Index ETF and the Goldman
Sachs Natural Resources Index Fund on July 1 for enhanced diversification.
AUGUST 2006
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.
47
Phoenix Diversifier PHOLIO
AVERAGE ANNUAL TOTAL RETURNS(1) PERIOD ENDING 7/31/06
INCEPTION INCEPTION
TO 7/31/06 DATE
------------ -----------
Class A Shares at NAV(2) 6.72% 11/30/05
Class A Shares at POP(3) 0.59 11/30/05
Class C Shares at NAV(2) 6.16 11/30/05
Class C Shares with CDSC(4) 5.16 11/30/05
S&P 500(R) Index 3.36 11/30/05
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.
GROWTH OF $10,000 PERIOD ENDING 7/31
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
11/30/05 (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 includes applicable CDSC charges
since inception. Performance assumes dividends and capital gain distributions
are reinvested.
(GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Phoenix Phoenix
Diversifier Diversifier
PHOLIO(SM) PHOLIO(SM) S&P 500(R)
Class A Class C Index
----------- ----------- ----------
11/30/05 $ 9,425 $10,000 $10,000
7/31/06 10,059 10,516 10,336
For information regarding the index, see the glossary on page 3.
48
Phoenix Diversifier PHOLIO
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
Diversifier PHOLIO, you incur two types of costs: (1) transaction costs,
including sales charges and contingent deferred sales charges, if applicable;
and (2) ongoing costs, including investment advisory fees; distribution and
service fees; and other expenses. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire six-month period.
ACTUAL EXPENSES
The first line of the accompanying tables provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the accompanying tables provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not your Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your Fund and other funds. To do so, compare these
5% hypothetical examples with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the accompanying tables are meant to
highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges or contingent deferred sales charges. Therefore, the
second line of the accompanying tables is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs could have been higher. These 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.
Diversifier Beginning Ending Expenses Paid
PHOLIO Account Value Account Value During
Class A January 31, 2006 July 31, 2006 Period*
- -------------------------------------------------------------------------------
Actual $1,000.00 $1,045.20 $1.01
Hypothetical (5% return
before expenses) 1,000.00 1,023.80 1.00
*EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 0.20%,
WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(181) 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 PERIOD ENDED JULY 31, 2006. THE
CLASS' ACTUAL RETURN AT NAV SINCE INCEPTION WAS 6.72%. AN INVESTMENT OF
$1,000.00 AT NOVEMBER 30, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE AT JULY 31,
2006, OF $1,067.20.
Diversifier Beginning Ending Expenses Paid
PHOLIO Account Value Account Value During
Class C January 31, 2006 July 31, 2006 Period*
- ---------------- ------------------ --------------- ---------------
Actual $1,000.00 $1,041.30 $4.81
Hypothetical (5% return
before expenses) 1,000.00 1,020.03 4.77
*EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 0.95%,
WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(181) 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 PERIOD ENDED JULY 31, 2006. THE
CLASS' ACTUAL RETURN AT NAV SINCE INCEPTION WAS 6.16%. AN INVESTMENT OF
$1,000.00 AT NOVEMBER 30, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE AT JULY 31,
2006, OF $1,061.60.
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.
49
Phoenix Diversifier PHOLIO
Fund Investment Allocation 7/31/06
As a percentage of total investments
(GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS
USED IN PRINTED GRAPHIC
Domestic Equity Funds 47%
Foreign Equity Funds 24
Exchange Traded Funds 23
Other 6
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SHARES VALUE
-------- --------
MUTUAL FUNDS--69.9%
DOMESTIC EQUITY FUNDS(c)--46.4%
Phoenix Market Neutral Fund Class A(b) ............... 36,506 $ 415,802
Phoenix Real Estate Securities Fund Class A .......... 13,023 425,199
---------
841,001
---------
FOREIGN EQUITY FUND(c)--23.5%
Phoenix Global Utilities Fund Class A ................ 39,008 426,355
- -----------------------------------------------------------------------------
TOTAL MUTUAL FUNDS
(IDENTIFIED COST $1,232,035) 1,267,356
- -----------------------------------------------------------------------------
EXCHANGE TRADED FUNDS--23.2%
iShares Deutsche Bank Liquid Commodity Index Fund(b) 9,820 253,957
iShares Goldman Sachs Natural Resources Index Fund ... 1,630 165,779
- -----------------------------------------------------------------------------
TOTAL EXCHANGE TRADED FUNDS
(IDENTIFIED COST $405,892) 419,736
- -----------------------------------------------------------------------------
TOTAL LONG TERM INVESTMENTS--93.1%
(IDENTIFIED COST $1,637,927) 1,687,092
- -----------------------------------------------------------------------------
PAR VALUE
(000) VALUE
--------- ---------
SHORT-TERM INVESTMENTS--6.6%
COMMERCIAL PAPER(d)--6.6%
UBS Finance Delaware LLC 5.28%, 8/1/06 ............... $120 $ 120,000
- -----------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $120,000) 120,000
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS--99.7%
(IDENTIFIED COST $1,757,927) 1,807,092(a)
Other assets and liabilities, net--0.3% 5,585
----------
NET ASSETS--100.0% $1,812,677
==========
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $44,090 and gross
depreciation of $0 for federal income tax purposes. At July 31, 2006, the
aggregate cost of securities for federal income tax purposes was $1,763,002.
(b) Non-income producing.
(c) Affiliated Fund.
(d) The rate shown is the discount rate.
See Notes to Financial Statements
50
Phoenix Diversifier PHOLIO
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2006
ASSETS
Investment securities at value
(Identified cost $1,757,927) $1,807,092
Cash 22,510
Receivables
Fund shares sold 292,964
Receivable from adviser 11,340
Trustee retainer 160
Prepaid expenses 16,367
----------
Total assets 2,150,433
----------
LIABILITIES
Payables
Investment securities purchased 321,387
Fund shares repurchased 250
Transfer agent fee 3,531
Distribution and service fees 187
Financial agent fee 85
Other accrued expenses 12,316
----------
Total liabilities 337,756
----------
NET ASSETS $1,812,677
==========
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $1,764,801
Undistributed net investment income 2,049
Accumulated net realized loss (3,338)
Net unrealized appreciation 49,165
----------
NET ASSETS $1,812,677
==========
CLASS A
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $1,231,293) 115,859
Net asset value per share $10.63
Offering price per share $10.63/(1-5.75%) $11.28
CLASS C
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $581,384) 54,950
NET ASSET VALUE AND OFFERING PRICE PER SHARE $10.58
STATEMENT OF OPERATIONS
FROM INCEPTION NOVEMBER 30, 2005
TO JULY 31, 2006
INVESTMENT INCOME
Income distributions received from affiliated funds $ 3,770
Interest 414
---------
Total investment income 4,184
---------
EXPENSES
Investment advisory fee 317
Distribution and service fees, Class C 783
Financial agent fee 37,781
Transfer agent 22,292
Registration 19,862
Professional 14,899
Trustees 13,118
Printing 1,787
Custodian 1,265
Miscellaneous 4,527
---------
Total expenses 116,631
Less expenses reimbursed by investment adviser (114,586)
Custodian fees paid indirectly (628)
---------
Net expenses 1,417
---------
NET INVESTMENT INCOME (LOSS) 2,767
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss)
on investments from affiliated funds (4,418)
Capital gain distributions received from affiliated funds 1,110
Net change in unrealized appreciation (depreciation)
on investments from affiliated funds 49,165
---------
NET GAIN (LOSS) ON INVESTMENTS FROM AFFILIATED FUNDS 45,857
---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 48,624
=========
See Notes to Financial Statements
51
Phoenix Diversifier PHOLIO
STATEMENT OF CHANGES IN NET ASSETS
From Inception
November 30, 2005 to
July 31, 2006
----------------------
FROM OPERATIONS
Net investment income (loss) $ 2,767
Net realized gain (loss) (3,308)
Net change in unrealized appreciation (depreciation) 49,165
----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 48,624
----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (408)
Net investment income, Class C (340)
----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (748)
----------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (117,420 shares) 1,212,084
Net asset value of shares issued from reinvestment of distributions (41 shares) 408
Cost of shares repurchased (1,602 shares) (16,455)
----------
Total 1,196,037
----------
CLASS C
Proceeds from sales of shares (54,916 shares) 568,424
Net asset value of shares issued from reinvestment of distributions (34 shares) 340
Cost of shares repurchased (0 shares) --
----------
Total 568,764
----------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 1,764,801
----------
NET INCREASE (DECREASE) IN NET ASSETS 1,812,677
NET ASSETS
Beginning of period --
----------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $2,049) $1,812,677
==========
See Notes to Financial Statements
52
Phoenix Diversifier PHOLIO
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A
---------------------
FROM INCEPTION
NOVEMBER 30, 2005 TO
JULY 31, 2006
---------------------
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(3) 0.08
Capital gain distributions received from affiliated funds(3) 0.02
Net realized and unrealized gain (loss) 0.57
------
TOTAL FROM INVESTMENT OPERATIONS 0.67
------
LESS DISTRIBUTIONS
Dividends from net investment income (0.04)
------
TOTAL DISTRIBUTIONS (0.04)
------
Change in net asset value 0.63
------
NET ASSET VALUE, END OF PERIOD $10.63
======
Total return(1) 6.72%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $1,231
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.20%(5)
Gross operating expenses(2) 31.52%(5)
Net investment income (loss) 1.11%(5)
Portfolio turnover 81%(4)
CLASS C
---------------------
FROM INCEPTION
NOVEMBER 30, 2005 TO
JULY 31, 2006
---------------------
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(3) 0.03
Capital gain distributions received from affiliated funds(3) 0.04
Net realized and unrealized gain (loss) 0.54
------
TOTAL FROM INVESTMENT OPERATIONS 0.61
------
LESS DISTRIBUTIONS
Dividends from net investment income (0.03)
------
TOTAL DISTRIBUTIONS (0.03)
------
Change in net asset value 0.58
------
NET ASSET VALUE, END OF PERIOD $10.58
======
Total return(1) 6.16%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $581
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.95%(5)
Gross operating expenses(2) 46.88%(5)
Net investment income (loss) 0.38%(5)
Portfolio turnover 81%(4)
(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) Not annualized.
(5) Annualized.
See Notes to Financial Statements
53
PHOENIX INTERNATIONAL PHOLIO
A DISCUSSION WITH THE FUND'S OVERSIGHT MANAGER, CHRISTOPHER WILKOS, CFA
Q: HOW DID THE PHOENIX INTERNATIONAL PHOLIO PERFORM FOR ITS FISCAL YEAR ENDED
JULY 31, 2006?
A: As the PHOLIO's inception date was November 30, 2005, it did not achieve a
full year of performance as of July 31, 2006. However, for the period of
November 30, 2005 through July 31, 2006, the PHOLIO's Class A shares returned
11.63% and Class C shares returned 11.16%. For the same period, the S&P 500(R)
Index, a broad-based equity index, returned 3.36% and MSCI EAFE(R), the PHOLIO's
style-specific benchmark, returned 16.81%. 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: HOW DID THE MARKETS PERFORM DURING THE FUND'S FISCAL YEAR?
A: During the Fund's fiscal year, the Federal Reserve (the "Fed") continued its
measured process of increasing short-term interest rates. The Fed has raised
rates a total of 17 times since beginning monetary tightening over two years
ago, increasing the federal funds rate from 1% to 5.25%. The Fed continues to
apply vigilance in dampening any potential inflationary pressures that may be
building in the economy. Leadership at the Fed changed early in 2006, with long
time chairman Alan Greenspan entering retirement and Ben Bernanke assuming the
lead role. Market participants continue to evaluate Bernanke's skill and
credibility in managing the Fed. Several of his comments caused market
volatility during the spring.
In the meantime, corporate profits in the U.S. continue to climb, and
economic growth continues to be solid. After some weakening in the fourth
quarter of 2005 caused primarily by the impact of hurricanes, the U.S. economy
came roaring back in the first quarter of 2006, posting GDP growth of 5.6%. That
growth moderated in the second quarter of 2006, falling to 2.5%. Most economists
estimate that growth will continue at a moderate pace for the remainder of 2006.
In a period of rising short-term interest rates, slowing growth and high
energy prices, U.S. equities produced modest gains during the Fund's fiscal
year. Large-cap stocks, as represented by the S&P 500(R) Index, had a total
return of 5.38%. Small-cap stocks fared slightly worse, with the Russell 2000(R)
Index returning 4.24%. Value stocks outperformed growth stocks in all
capitalization categories. Most of the equity market gains occurred prior to May
2006, when the market experienced a sharp decline fueled by inflation fears.
The big winners in the past year were REIT stocks and utility stocks. REIT
stocks, as measured by the Dow Jones Wilshire Real Estate Securities Index,
advanced over 17%, continuing their multi-year record of dominating U.S. equity
returns. Utility stocks rose by almost 9%. On the negative side, the
technology-laden NASDAQ Composite(R) Index declined by 3.48%.
54
Phoenix International PHOLIO (continued)
International markets also provided superior returns as evidenced by the
24.51% return of the MSCI EAFE(R) Index. After substantial gains, emerging
equity markets saw a sharp correction in the second quarter but still returned
over 28% during the fiscal year.
Given increasing interest rates and low credit spreads, the U.S. bond
market barely broke even, posting a return of 1.45% as measured by the Lehman
Brothers Aggregate Bond Index. The above-mentioned actions of the Fed helped to
drive all interest rates higher and create a nearly flat Treasury yield curve.
As of July 31, three-month maturity U.S. Treasury bills actually yielded more
than 10-year maturity Treasury notes. Higher yields negatively impacted all bond
returns, although riskier high yield bonds posted returns of nearly 4% for the
year.
Finally, the story of the past year was the emergence of commodities as a
viable investment alternative. With soaring energy and metal prices and
continued demand from emerging economies such as China, commodities proved to be
a superior investment with a return of over 16% as measured by the Dow Jones-AIG
Commodity Index.
Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE DURING ITS FISCAL YEAR?
A: Your Fund was launched on November 30, 2005. The Fund has allocations to
mutual funds and exchange traded funds that invest in international stock and
bond markets. During the abbreviated fiscal year, the Fund's performance
benefited from the superior return performance of international markets compared
to the U.S. stock market. Foreign equity markets, as measured by the MSCI EAFE
Index, were up over 16% from the Fund's inception through July 31, 2006. While
your Fund's return trailed the MSCI EAFE index, it was superior to most U.S.
equity alternatives. The portfolio also experienced slight underperformance due
to a higher cash position in the Fund's first month of existence as new
positions were being added to the portfolio. The cash position underperformed
the rallying MSCI EAFE index.
The Fund was also hurt by small allocations to a global utilities fund and
an emerging market bond fund. These funds underperformed the MSCI EAFE Index.
However, over the long term, we expect these diversifying funds to be beneficial
to the overall Fund's return.
In addition to investing in the above noted mutual funds, the
International PHOLIO added an allocation to the ishares MSCI Japan Index Fund in
June for enhanced diversification.
AUGUST 2006
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.
55
Phoenix International PHOLIO
AVERAGE ANNUAL TOTAL RETURNS(1) PERIOD ENDING 7/31/06
INCEPTION INCEPTION
TO 7/31/06 DATE
------------ -----------
Class A Shares at NAV(2) 11.63% 11/30/05
Class A Shares at POP(3) 5.21 11/30/05
Class C Shares at NAV(2) 11.16 11/30/05
Class C Shares with CDSC(4) 10.16 11/30/05
S&P 500(R) Index 3.36 11/30/05
MSCI EAFE(R) Index 16.81 11/30/05
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.
GROWTH OF $10,000 PERIOD ENDING 7/31
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
11/30/05 (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 includes applicable CDSC charges
since inception. Performance assumes dividends and capital gain distributions
are reinvested.
(GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Phoenix Phoenix
International International
PHOLIO(SM) PHOLIO(SM) S&P 500(R) MSCI EAFE(R)
Class A Class C Index Index
------------- ------------- ---------- ------------
11/30/05 $ 9,425 $10,000 $10,000 $10,000
7/31/06 10,521 11,016 10,336 11,681
For information regarding the indexes, see the glossary on page 3.
56
Phoenix International PHOLIO
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
International PHOLIO, you incur two types of costs: (1) transaction costs,
including sales charges and contingent deferred sales charges, if applicable;
and (2) ongoing costs, including investment advisory fees; distribution and
service fees; and other expenses. These examples are intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of
the period and held for the entire six-month period.
ACTUAL EXPENSES
The first line of the accompanying tables provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the accompanying tables provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not your Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your Fund and other funds. To do so, compare these
5% hypothetical examples with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the accompanying tables are meant to
highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges or contingent deferred sales charges. Therefore, the
second line of the accompanying tables is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs could have been higher. These 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.
International Beginning Ending Expenses Paid
PHOLIO Account Value Account Value During
Class A January 31, 2006 July 31, 2006 Period*
- ---------------- ------------------ --------------- --------------
Actual $1,000.00 $1,050.30 $1.02
Hypothetical (5% return
before expenses) 1,000.00 1,023.80 1.00
*EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 0.20%,
WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(181) 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 PERIOD ENDED JULY 31, 2006. THE
CLASS' ACTUAL RETURN AT NAV SINCE INCEPTION WAS 11.63%. AN INVESTMENT OF
$1,000.00 AT NOVEMBER 30, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE AT JULY 31,
2006, OF $1,116.30.
International Beginning Ending Expenses Paid
PHOLIO Account Value Account Value During
Class C January 31, 2006 July 31, 2006 Period*
- ---------------- ------------------ --------------- --------------
Actual $1,000.00 $1,047.50 $4.82
Hypothetical (5% return
before expenses) 1,000.00 1,020.03 4.77
*EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 0.95%,
WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, IF APPLICABLE, MULTIPLIED
BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS
(181) 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 PERIOD ENDED JULY 31, 2006. THE
CLASS' ACTUAL RETURN AT NAV SINCE INCEPTION WAS 11.16%. AN INVESTMENT OF
$1,000.00 AT NOVEMBER 30, 2005 WOULD HAVE YIELDED AN ACCOUNT VALUE AT JULY 31,
2006, OF $1,111.60.
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.
57
Phoenix International PHOLIO
Fund Investment Allocation 7/31/06
As a percentage of total investments
(GRAPHIC OMITTED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Foreign Equity Funds 91%
Foreign Fixed Income Funds 5
Foreign Index Funds 4
SCHEDULE OF INVESTMENTS JULY 31, 2006
SHARES VALUE
---------- ----------
MUTUAL FUNDS--90.8%
FOREIGN EQUITY FUNDS(b)--86.5%
Phoenix Foreign Opportunities Fund Class A ............. 6,504 $144,579
Phoenix Global Utilities Fund Class A .................. 4,106 44,884
Phoenix International Strategies Fund Class A .......... 18,662 234,027
--------
423,490
--------
FOREIGN FIXED INCOME FUND(b)--4.3%
Phoenix Emerging Markets Bond Fund Class A ............. 2,467 21,170
- ----------------------------------------------------------------------------
TOTAL MUTUAL FUNDS
(IDENTIFIED COST $424,118) 444,660
- ----------------------------------------------------------------------------
SHARES VALUE
---------- ----------
EXCHANGE TRADED FUNDS--4.3%
iShares MSCI Japan Index Fund .......................... 1,560 $ 21,107
- ----------------------------------------------------------------------------
TOTAL EXCHANGE TRADED FUNDS
(IDENTIFIED COST $20,030) 21,107
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS--95.1%
(IDENTIFIED COST $444,148) 465,767(a)
Other assets and liabilities, net--4.9% 24,084
--------
NET ASSETS--100.0% $489,851
========
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $21,262 and gross
depreciation of $111 for federal income tax purposes. At July 31, 2006, the
aggregate cost of securities for federal income tax purposes was $444,616.
(b) Affiliated Fund.
See Notes to Financial Statements
58
Phoenix International PHOLIO
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2006
ASSETS
Investment securities at value (Identified cost $444,148) $465,767
Cash 12,310
Receivables
Receivable from adviser 11,131
Trustee retainer 158
Prepaid expenses 16,362
--------
Total assets 505,728
--------
LIABILITIES
Payables
Professional fee 11,501
Transfer agent fee 3,644
Distribution and service fees 101
Financial agent fee 34
Other accrued expenses 597
--------
Total liabilities 15,877
--------
NET ASSETS $489,851
========
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $461,590
Undistributed net investment income 2,368
Accumulated net realized gain 4,274
Net unrealized appreciation 21,619
--------
NET ASSETS $489,851
========
CLASS A
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $327,705) 29,625
Net asset value per share $11.06
Offering price per share $11.06/(1-5.75%) $11.73
CLASS C
Shares of beneficial interest outstanding, no par value,
unlimited authorization (Net Assets $162,146) 14,719
Net asset value and offering price per share $11.02
STATEMENT OF OPERATIONS
FROM INCEPTION NOVEMBER 30, 2005
TO JULY 31, 2006
INVESTMENT INCOME
Income distributions received from affiliated funds $ 4,532
Interest 174
---------
Total investment income 4,706
---------
EXPENSES
Investment advisory fee 226
Distribution and service fees, Class C 602
Financial agent fee 37,725
Transfer agent 22,405
Registration 19,809
Professional 14,897
Trustees 13,116
Printing 1,673
Custodian 1,478
Miscellaneous 4,410
---------
Total expenses 116,341
Less expenses reimbursed by investment adviser (114,873)
Custodian fees paid indirectly (415)
---------
Net expenses 1,053
---------
NET INVESTMENT INCOME (LOSS) 3,653
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments from affiliated funds (200)
Capital gain distributions received from affiliated funds 5,217
Net change in unrealized appreciation (depreciation) on
investments from affiliated funds 21,619
---------
NET GAIN (LOSS) ON INVESTMENTS FROM AFFILIATED FUNDS 26,636
---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 30,289
=========
See Notes to Financial Statements
59
Phoenix International PHOLIO
STATEMENT OF CHANGES IN NET ASSETS
From Inception
November 30, 2005 to
July 31, 2006
----------------------
FROM OPERATIONS
Net investment income (loss) $ 3,653
Net realized gain (loss) 5,017
Net change in unrealized appreciation (depreciation) 21,619
--------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 30,289
--------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (1,148)
Net investment income, Class C (880)
--------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (2,028)
--------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (30,512 shares) 321,549
Net asset value of shares issued from reinvestment of distributions (113 shares) 1,148
Cost of shares repurchased (1,000 shares) (11,346)
--------
Total 311,351
--------
CLASS C
Proceeds from sales of shares (14,632 shares) 149,359
Net asset value of shares issued from reinvestment of distributions (87 shares) 880
Cost of shares repurchased (0 shares) --
--------
Total 150,239
--------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 461,590
--------
NET INCREASE (DECREASE) IN NET ASSETS 489,851
NET ASSETS
Beginning of period --
--------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $2,368) $489,851
========
See Notes to Financial Statements
60
Phoenix International PHOLIO
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A
--------------------
FROM INCEPTION
NOVEMBER 30, 2005 TO
JULY 31, 2006
--------------------
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(3) 0.13
Capital gain distributions received from affiliated funds(3) 0.15
Net realized and unrealized gain (loss) 0.87
------
TOTAL FROM INVESTMENT OPERATIONS 1.15
------
LESS DISTRIBUTIONS
Dividends from net investment income (0.09)
------
TOTAL DISTRIBUTIONS (0.09)
------
Change in net asset value 1.06
------
NET ASSET VALUE, END OF PERIOD $11.06
======
Total return(1) 11.63%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $328
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.20%(5)
Gross operating expenses(2) 48.46%(5)
Net investment income (loss) 1.81%(5)
Portfolio turnover 13%(4)
CLASS C
--------------------
FROM INCEPTION
NOVEMBER 30, 2005 TO
JULY 31, 2006
--------------------
Net asset value, beginning of period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss)(3) 0.09
Capital gain distributions received from affiliated funds(3) 0.18
Net realized and unrealized gain (loss) 0.84
------
TOTAL FROM INVESTMENT OPERATIONS 1.11
------
LESS DISTRIBUTIONS
Dividends from net investment income (0.09)
------
TOTAL DISTRIBUTIONS (0.09)
------
Change in net asset value 1.02
------
NET ASSET VALUE, END OF PERIOD $11.02
======
Total return(1) 11.16%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $162
RATIO TO AVERAGE NET ASSETS OF:
Net operating expenses(2) 0.95%(5)
Gross operating expenses(2) 56.56%(5)
Net investment income (loss) 1.27%(5)
Portfolio turnover 13%(4)
(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) Not annualized.
(5) Annualized.
See Notes to Financial Statements
61
PHOENIX PHOLIOS SM
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2006
1. ORGANIZATION
Phoenix PHOLIOsSM (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.
Each PHOLIO is a fund of funds. Currently seven funds are offered for sale
(each a "Fund"). The Phoenix Wealth Accumulator PHOLIO ("Wealth Accumulator
PHOLIO") is diversified and has an investment objective of seeking long-term
capital appreciation. The Phoenix Wealth Builder PHOLIO ("Wealth Builder
PHOLIO") is diversified and has an investment objective of seeking long-term
capital appreciation. The Phoenix Wealth Guardian PHOLIO ("Wealth Guardian
PHOLIO") is diversified and has an investment objective of long-term capital
appreciation and current income. The Phoenix Wealth Preserver PHOLIO ("Wealth
Preserver PHOLIO") is diversified and has an investment objective of seeking
long-term capital appreciation and current income. The Phoenix Conservative
Income PHOLIO ("Conservative Income PHOLIO") is diversified and has an
investment objective of seeking current income and capital preservation. The
Phoenix Diversifier PHOLIO ("Diversifier PHOLIO") is diversified and has an
investment objective of long-term capital appreciation. The Phoenix
International PHOLIO ("International PHOLIO") is diversified and has an
investment objective of long-term capital appreciation.
The Funds offer the following classes of shares for sale:
Class A Class C
--------- ---------
Wealth Accumulator PHOLIO........... X X
Wealth Builder PHOLIO............... X X
Wealth Guardian PHOLIO.............. X X
Wealth Preserver PHOLIO............. X X
Conservative Income PHOLIO.......... X X
Diversifier PHOLIO.................. X X
International PHOLIO................ X X
Class A shares are sold with a front-end sales charge of up to 5.75%,
Generally, Class A Shares are not subject to any charges by the funds when
redeemed; however, a 1% contingent deferred sales charge may be imposed on
certain redemptions within one year on purchases on which a finder's fee has
been paid. Class 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
4:00pm eastern time).
As required, some securities and assets may be valued at fair value as
determined in good faith by or under the direction of the Trustees.
Short-term investments having a remaining maturity of 60 days or less are
valued at amortized cost, which approximates market.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date, or in the case of certain foreign securities,
as soon as the Fund is notified. Interest income is recorded on the accrual
basis. Each Fund amortizes premiums and accretes discounts using the effective
interest method. Realized gains and losses are determined on the identified cost
basis.
C. INCOME TAXES:
Each Fund is treated as a separate taxable entity. It is the policy of each
Fund in the Trust to comply with the requirements of the Internal Revenue Code
and to distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes or excise taxes has been made.
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes." This
standard defines the threshold for recognizing the benefits of tax-return
positions in the financial statements as "more-likely-than-not" to be sustained
by the taxing authority and requires measurement of a tax position meeting the
more-likely-than-not-criterion, based on the largest benefit that is more than
50 percent likely to be realized. FIN 48 is effective as of the beginning of the
first fiscal year beginning after December 15, 2006 (January 1, 2007 for
calendar-year companies), with early application permitted if no interim
financial statements have been issued. At adoption, companies must adjust their
financial statements to reflect only those tax positions that are more
likely-than-not to be sustained as of the adoption date. As of July 31, 2006,
the Funds have not completed their evaluation of the impact that will result
from adopting FIN 48.
62
PHOENIX PHOLIOS(SM)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2006 (CONTINUED)
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Fund on the ex-dividend date. Income
and capital gain distributions are determined in accordance with income tax
regulations which may differ from accounting principles generally accepted in
the United States of America. These differences may include the treatment of
non-taxable dividends, market premium and discount, non-deductible expenses,
expiring capital loss carryovers, foreign currency gain or loss, gain or loss on
futures contracts, partnerships, operating losses and losses deferred due to
wash sales. Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to capital paid in on shares of
beneficial interest.
E. EXPENSES:
Expenses incurred by the Trust with respect to more than one Fund are
allocated in proportion to the net assets of each Fund, except where allocation
of direct expense to each Fund or an alternative allocation method can be more
appropriately made. In addition to the Net Annual Operating Expenses that the
Funds bear directly, the shareholders indirectly bear the Fund's pro-rata
expenses of the underlying mutual funds in which each Fund invests.
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.
Effective February 7, 2006, the Adviser has contractually agreed to limit
each Fund's total operating expenses (excluding interest, taxes, and
extraordinary expenses) through November 30, 2007, so that each Fund's expenses
do not exceed the following percentages of average annual net assets:
Class A Class C
Shares Shares
----------- ----------
Wealth Accumulator PHOLIO........... 0.00% 0.75%
Wealth Builder PHOLIO............... 0.00% 0.75%
Wealth Guardian PHOLIO.............. 0.00% 0.75%
Wealth Preserver PHOLIO............. 0.00% 0.75%
Conservative Income PHOLIO.......... 0.00% 0.75%
For the period of August 1, 2005 through February 6, 2006 for the Wealth
Builder and Wealth Guardian PHOLIOs and for the period August 4, 2005 (inception
of the Funds) through February 6, 2006 for the Wealth Accumulator, Wealth
Preserver, and Conservative Income PHOLIOs, the Adviser had contractually agreed
to limit the Funds' total operating expenses, (excluding interest, taxes, and
extraordinary expenses) so that each Fund's expenses did not exceed the
following percentages of average annual net assets:
Class A Shares Class C Shares
---------------- ----------------
Wealth Accumulator PHOLIO........... 0.40% 1.15%
Wealth Builder PHOLIO............... 0.40% 1.15%
Wealth Guardian PHOLIO.............. 0.52% 1.27%
Wealth Preserver PHOLIO............. 0.40% 1.15%
Conservative Income PHOLIO.......... 0.40% 1.15%
In addition, for the period of November 30, 2005 (inception of the Funds)
through November 30, 2006, the total operating expenses (excluding interest,
taxes, and extraordinary expenses) are limited to 0.20% for Class A shares and
0.95% for Class C shares for the Diversifier PHOLIO and the International
PHOLIO.
The Adviser will not seek to recapture any reimbursed expenses under these
arrangements.
As distributor of each Fund's shares, Phoenix Equity Planning Corporation
("PEPCO") an indirect, wholly-owned subsidiary of PNX, has advised the Funds
that it retained net selling commissions and deferred sales charges for the
fiscal year (the "period") ended July 31, 2006, as follows:
Class A Class C
Net Selling Deferred
Commissions Sales Charges
--------------- ---------------
Wealth Accumulator PHOLIO........... $ 4,098 $ 250
Wealth Builder PHOLIO............... 49,777 29,499
Wealth Guardian PHOLIO.............. 23,907 4,258
Wealth Preserver PHOLIO............. 1,766 4,898
Conservative Income PHOLIO.......... 975 1
Diversifier PHOLIO.................. 523 --
International PHOLIO................ 253 --
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. To avoid duplication of distribution and/or service fees, each class
of shares of the funds has reduced the distribution and/or service fees by the
amount of the underlying affiliated mutual funds' Class A and Class Y
distribution and/or service fees.
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.
63
PHOENIX PHOLIOS(SM)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2006 (CONTINUED)
Effective July 1, 2006 PEPCO serves as the administrator to the Trust. For
its services, PEPCO receives an administration fee at an annual rate of 0.09% of
the first $5 billion, 0.08% on the next $10 billion and 0.07% over $15 billion
of the average net assets across all non-money market Phoenix Funds within the
Phoenix Funds Complex.
For the period of September 1, 2005 through June 30, 2006, PEPCO served as
financial agent to the Trust. PEPCO received a financial agent fee equal to the
sum of (1) the documented cost to PEPCO to provide oversight of the performance
of PFPC Inc. (subagent to PEPCO), plus (2) the documented cost of fund
accounting, tax services and related services provided by PFPC Inc. For the
period ended August 31, 2006, the Trust incurred administration and/or financial
agent fees totaling $414,014.
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, 2006,
transfer agent fees were $388,049 as reported in the Statements of Operations,
of which PEPCO retained the following:
Wealth Accumulator PHOLIO........... $ --
Wealth Builder PHOLIO............... 32,883
Wealth Guardian PHOLIO.............. --
Wealth Preserver PHOLIO............. --
Conservative Income PHOLIO.......... --
Diversifier PHOLIO.................. --
International PHOLIO................ --
At July 31, 2006, PNX and its affiliates and the retirement plans of PNX and
its affiliates, held shares which aggregated the following:
Aggregate Net
Shares Asset Value
-------- ---------------
Wealth Accumulator PHOLIO
Class A.......................... 5,282 $ 56,676
Class C.......................... 10,016 106,971
Wealth Preserver PHOLIO
Class A.......................... 10,252 104,365
Class C.......................... 10,182 103,653
Conservative Income PHOLIO
Class A.......................... 10,329 102,980
Class C.......................... 10,265 102,239
Diversifier PHOLIO
Class A.......................... 10,040 106,725
Class C.......................... 10,034 106,160
International PHOLIO
Class A.......................... 10,093 111,629
Class C.......................... 10,087 111,159
4. PURCHASES AND SALES OF UNDERLYING FUNDS
Purchases and sales of underlying funds for the period ended July 31, 2006,
were as follows:
Purchases Sales
----------- ------------
Wealth Accumulator PHOLIO........... $ 5,871,275 $ 344,017
Wealth Builder PHOLIO............... 97,127,620 107,059,304
Wealth Guardian PHOLIO.............. 40,583,892 44,562,924
Wealth Preserver PHOLIO............. 1,629,212 229,331
Conservative Income PHOLIO.......... 1,470,843 659,284
Diversifier PHOLIO.................. 2,055,902 413,557
International PHOLIO................ 486,189 41,841
There were no purchases or sales of long-term U.S. Government and agency
securities.
5. 10% SHAREHOLDERS
As of July 31, 2006, certain Funds had individual shareholder accounts and/or
omnibus shareholder accounts (which are comprised of a group of individual
shareholders), which individually amounted to more than 10% of the total shares
outstanding of the fund as detailed below.
% Shares Number of
Outstanding Accounts
------------- ------------
Wealth Accumulator PHOLIO........... 34% 2
Wealth Builder PHOLIO............... 46 2
Wealth Guardian PHOLIO.............. 38 1
Wealth Preserver PHOLIO............. -- --
Conservative Income PHOLIO.......... 35 3
Diversifier PHOLIO.................. 16 1
International PHOLIO................ 46 2
Six of the shareholder accounts are affiliated with PNX.
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, 2006, the Funds were the owner of
record of the following approximatepercentages of the total outstanding shares
of the underlying funds as detailed below:
Wealth Wealth
Builder Guardian
PHOLIO PHOLIO
---------- -----------
Phoenix High Yield Securities Fund
Class A............................ 10% --%
Phoenix Dynamic Growth Fund
Class A ........................... 46 16
Phoenix Fundamental Growth Fund
Class A............................ 53 20
Phoenix Global Utilities Fund
Class A............................ 32 --
Phoenix International Strategies Fund
Class A............................ 16 --
Phoenix Total Value Fund
Class A............................ 51 20
64
PHOENIX PHOLIOS(SM)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2006 (CONTINUED)
The investments of the other Funds do not represent greater than 10% of the
underlying funds' total outstanding shares.
6. INDEMNIFICATIONS
Under the Funds' organizational documents, their 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.
7. REGULATORY EXAMS
Federal and state regulatory authorities from time to time make inquiries and
conduct examinations regarding compliance by The Phoenix Companies, Inc. and its
subsidiaries (collectively "the Company") with securities and other laws and
regulations affecting their registered products. During 2004 and 2005, the
Boston District Office of the Securities and Exchange Commission ("SEC")
conducted an examination of the Company's investment company and investment
adviser affiliates. Following the examination, the staff of the Boston District
Office issued a deficiency letter noting perceived weaknesses in procedures for
monitoring trading to prevent market timing activity prior to 2004. The staff
requested the Company to conduct an analysis as to whether shareholders,
policyholders and contract holders who invested in the funds that may have been
affected by undetected market timing activity had suffered harm and to advise
the staff whether the Company believes reimbursement is necessary or appropriate
under the circumstances. Market timing is an investment technique involving
frequent short-term trading of mutual fund shares that is designed to exploit
market movements or inefficiencies in the way mutual fund companies price their
shares. A third party was retained to assist the Company in preparing the
analysis. In 2005, based on the third party analysis the Company notified the
staff at the SEC Boston District Office that reimbursements were not appropriate
under the circumstances. The Company does not believe that the outcome of this
matter will be material to these financial statements.
8. EXEMPTIVE ORDER
On June 5, 2006, the SEC issued an order under Section 12(d) (1) (J) of the
Investment Company Act ("1940 Act") granting and exemption from Sections 12(d)
(1) (A) and (B) of the 1940 Act and under Sections 6(c) and 17(b) of the 1940
Act granting an exemption from Section 17(a) of the 1940 Act, which permits the
Trust to invest in other affiliated and unaffiliated funds, including exchange
traded funds.
9. 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 Accumulator PHOLIO........... $ 4,453 $ 24,370
Wealth Builder PHOLIO............... 526,061 1,574,808
Wealth Guardian PHOLIO.............. 346,462 489,995
Wealth Preserver PHOLIO............. 3,735 4,113
Conservative Income PHOLIO.......... 2,854 574
Diversifier PHOLIO.................. 2,706 1,080
International PHOLIO................ 2,636 4,474
The differences between the book and tax basis components of distributable
earnings relate principally to the timing of recognition of income and gains for
federal income tax purposes. Short-term gain distributions reported in the
Statements of Changes in Net Assets, if any, are reported as ordinary income for
federal tax purposes.
10. 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. For the year ended July 31, 2006, the following Funds recorded
reclassifications to increase (decrease) the accounts as listed below:
Capital Paid
in on Shares Accumulated Undistributed
of Beneficial Net Realized Net Investment
Interest Gain (Loss) Income (Loss)
--------------- -------------- --------------
Wealth Accumulator PHOLIO ...... $-- $ (2,692) $ 2,692
Wealth Builder PHOLIO ......... -- (147,381) 147,381
Wealth Guardian PHOLIO ......... -- (99,666) 99,666
Wealth Preserver PHOLIO ........ -- (1,629) 1,629
Conservative Income PHOLIO ..... -- (696) 696
Diversifier PHOLIO ............. -- (30) 30
International PHOLIO ........... -- (743) 743
65
PHOENIX PHOLIOS(SM)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2006 (CONTINUED)
- --------------------------------------------------------------------------------
TAX INFORMATION
(UNAUDITED)
For the fiscal year ended July 31, 2006, for federal income tax purposes,
the percentages of the ordinary income dividends earned by the funds qualify
for the dividends received deduction for corporate shareholders as detailed
below:
Wealth Accumulator PHOLIO........ 57.0%
Wealth Builder PHOLIO............ 11.5
Wealth Guardian PHOLIO........... 5.3
Wealth Preserver PHOLIO.......... 2.8
Conservative Income PHOLIO....... 1.1
Diversifier PHOLIO............... 63.8
International PHOLIO............. 16.7
For the fiscal year ended July 31, 2006, the funds hereby designate the
below percentages, or the maximum amount allowable, of its ordinary income
dividends to qualify for the lower tax rates applicable to individual
shareholders:
Wealth Accumulator PHOLIO......... 100.0%
Wealth Builder PHOLIO............ 25.5
Wealth Guardian PHOLIO........... 12.6
Wealth Preserver PHOLIO.......... 6.8
Conservative Income PHOLIO....... 0.0
Diversifier PHOLIO............... 79.0
International PHOLIO............. 89.4
The actual percentage for the calendar year will be designated in the
year-end tax statements.
For the fiscal year ended July 31, 2006, the funds designated long-term
capital gains dividends as follows:
Wealth Accumulator PHOLIO......... $ 24,370
Wealth Builder PHOLIO............ 7,234,469
Wealth Guardian PHOLIO........... 2,655,382
Wealth Preserver PHOLIO........... 4,113
Conservative Income PHOLIO........ 574
Diversifier PHOLIO................ 1,080
International PHOLIO............. 4,474
- --------------------------------------------------------------------------------
66
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(GRAPHIC OMITTED)
PricewaterhouseCoopers
To the Board of Trustees of
Phoenix PHOLIOs and Shareholders of
Phoenix Wealth Accumulator PHOLIO
Phoenix Wealth Builder PHOLIO
Phoenix Wealth Guardian PHOLIO
Phoenix Wealth Preserver PHOLIO
Phoenix Conservative Income PHOLIO
Phoenix Diversifier PHOLIO and
Phoenix International PHOLIO
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 Accumulator PHOLIO,
Phoenix Wealth Builder PHOLIO, Phoenix Wealth Guardian PHOLIO, Phoenix Wealth
Preserver PHOLIO, Phoenix Conservative Income PHOLIO, Phoenix Diversifier PHOLIO
and Phoenix International PHOLIO (constituting Phoenix PHOLIOs, hereafter
referred to as the "Trust"), at July 31, 2006, the results of each of their
operations, the changes in each of their net assets and their financial
highlights for each of the periods indicated, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at July 31, 2006 by
correspondence with the transfer agent of the investee funds and the custodian,
provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Boston, Massachusetts
September 21, 2006
67
FUND MANAGEMENT TABLES (UNAUDITED)
Information pertaining to the Trustees and officers of the Trust as of July
31, 2006, 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 1993. 71 Chairman, Rittenhouse Advisors, LLC (consulting firm)
Rittenhouse Advisors, LLC (2001-present); Trustee/Director, Phoenix Funds Complex
101 Park Avenue (1983-present); Trustee/Director, Realty Foundation of New
New York, NY 10178 York (1972-present); Josiah Macy, Jr. Foundation (Honorary)
DOB: 8/2/29 (2004-present); Pace University (Director/Trustee Emeritus)
(2003-present), Greater New York Councils, Boy Scouts of
America (1985-present); The Academy of Political Science
(Vice Chairman) (1985-present), Urstadt Biddle Property
Corp. (1989-present), Colgate University (Trustee Emeritus)
(2004-present), 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 1993. 71 Retired.Trustee/Director, Phoenix Funds Complex (1983-present).
The Flat, Elmore Court
Elmore, GLOS, GL2 3NT
U.K.
DOB: 9/8/29
- -----------------------------------------------------------------------------------------------------------------------------------
Francis E. Jeffries Served since 1995. 72 Director, The Empire District Electric Company (1984-2004);
8477 Bay Colony Dr. #902 Trustee/Director, Phoenix Funds Complex (1987-present).
Naples, FL 34108
DOB: 9/23/30
- -----------------------------------------------------------------------------------------------------------------------------------
Leroy Keith, Jr. Served since 1993. 69 Partner, Stonington Partners, Inc. (private equity fund)
Stonington Partners, Inc. (2001-present); Director/Trustee; Evergreen Funds (six
736 Market Street, Ste. 1430 portfolios)(1989-present). Trustee, Phoenix Funds Family
Chattanooga, TN 37402 (1980-present); Director, Diversapak (2002-present); Obaji
DOB: 2/14/39 Medical Products Company (2002-present); Director, Lincoln
Educational Services (2002-2004); Chairman, Carson Products
Company (cosmetics) (1998-2000).
- -----------------------------------------------------------------------------------------------------------------------------------
68
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 2001. 71 Retired. Trustee/Director, Phoenix Funds Complex (2001-present).
40 East 88th Street Managing Director, U.S. Trust Company of New York (private
New York, NY 10128 bank) (1982-2006).
DOB: 4/17/51
- -----------------------------------------------------------------------------------------------------------------------------------
James M. Oates(1) Served since 1993. 69 Chairman, Hudson Castle Group, Inc. (formerly IBEX Capital
c/o Northeast Partners Markets, Inc.) (financial services) (1997-present);
150 Federal Street, Trustee/Director, Phoenix Funds Family (1987-present);
Suite 1000 Managing Director, Wydown Group (consulting firm)
Boston, MA 02110 (1994-present); Director, Investors Financial Service
DOB: 5/31/46 Corporation (1995-present); Investors Bank & Trust
Corporation (1995-present), 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); 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).
- -----------------------------------------------------------------------------------------------------------------------------------
Richard E. Segerson Served since 1993. 69 Managing Director, Northway Management Company (1998-present).
73 Briggs Way Trustee/Director, Phoenix Funds Family (1983-present).
Chatham, MA 02633
DOB: 2/16/46
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Mr. Oates is a Director and Chairman of the Board and a shareholder of Hudson Castle Group, Inc. (formerly IBEX Capital Markets,
Inc.) ("Hudson"), a privately owned financial services firm. Phoenix Investment Partners, Ltd., an affiliate of the adviser,
owns approximately 1% of the common stock of Hudson and Phoenix Life Insurance Company also an affiliate, owns approximately 8%
of Hudson's common stock.
</FN>
69
FUND MANAGEMENT TABLES (UNAUDITED) (CONTINUED)
Each of the individuals listed below is an "interested person" of the Fund,
as defined in Section 2(a)(19) of the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
- -----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
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(2) Served since 2002. 69 Limited Managing Director, Lazard Freres & Co. LLC (1997-
Lazard Freres & Co. LLC present). Trustee/Director, Phoenix Funds Family (2002-
30 Rockefeller Plaza, present). Director, The Phoenix Companies, Inc. (2001-2005)
59th Floor and Phoenix Life Insurance Company (1989-2005).
New York, NY 10020
DOB: 5/11/34
- -----------------------------------------------------------------------------------------------------------------------------------
Philip R. McLoughlin(3) Served since 1993. 97 Director, PXRE Corporation (Reinsurance) (1985-present); World
200 Bridge Street Trust Fund (1991-present), Director/Trustee, Phoenix Funds
Chatham, MA 02633 Complex (1989-present); Management Consultant (2002-2004),
DOB: 10/23/46 Chairman Chairman (1997-2002), Chief Executive Officer (1995-2002) and
Director (1995-2002), Phoenix Investment Partners, Ltd.;
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),
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), Vice President (1986-2002) and Executive Vice
President (April 2002-September 2002), PM Holdings, Inc.;
Director, WS Griffith Associates, Inc. (1995-2002); Director,
WS Griffith Securities, Inc. (1992-2002).
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(2) Ms. LaMarche is an "interested person," as defined in the Investment Company Act of 1940, by reason of her former position as
Director of The Phoenix Companies, Inc. and Phoenix Life Insurance Company.
(3) 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.
</FN>
FUND MANAGEMENT TABLES (UNAUDITED) (CONTINUED)
OFFICERS OF THE FUND 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
DOB: 6/12/57 Companies, Inc. (2003-present); Director, Chairman, President
and Chief Executive Officer, Phoenix Investment Partners, Ltd.
(2003-present); President, Phoenix Equity Planning Corporation
(2005-present); President, DPCM Holding, Inc. (2005-present);
President, Capital West Asset Management, LLC (2005-present);
Director and President, Phoenix Investment Counsel, Inc.
(2003-present); Director, Pasadena Capital Corporation
(2003-present); President, Euclid Advisers, LLC
(2003-present); Director and Chairman, PXP Institutional
Markets Group, Ltd. (2003-present); Director and President,
Rutherford Financial Corporation (2003-present); Director,
DPCM Holding, Inc. (2003-present); President, Phoenix Zweig
Advisers, LLC (2003-present); Director and Chairman, Phoenix
Equity Planning Corporation (2003-present); Director and
Chairman, Duff & Phelps Investment Management Company
(2003-present); Director, Capital West Asset Management, LLC
(2003-present); Chief Executive Officer and President, The
Zweig Fund, Inc. and The Zweig Total Return Fund, Inc.
(2004-present); President, the Phoenix Funds Family
(2004-present); Chief Sales and Marketing Officer, Phoenix
Equity Planning Corporation (2003-2005); President and Chief
Executive Officer of North American investment operations,
Pioneer Investment Management USA, Inc. (2001-2003); President
of Private Wealth Management Group & Fidelity Brokerage
Company, Fidelity Investments (1996-2001).
- --------------------------------------------------------------------------------------------------------------------------------
George R. Aylward Executive Vice President Senior Vice President and Chief Operating Officer, Asset
DOB: 8/17/64 since 2004. Management, The 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). Vice President,
Finance, Phoenix Investment Partners, Ltd. (2001-2002).
Assistant Controller, Phoenix Investment Partners, Ltd.
(1996-2001). Executive Vice President, certain funds within
the Phoenix Funds Family (2004-present).
- --------------------------------------------------------------------------------------------------------------------------------
Nancy G. Curtiss Senior Vice President Assistant Treasurer (2001-present), Vice President, Fund
DOB: 11/24/52 since 2006. Accounting (1994-2000), Phoenix Equity Planning Corporation.
Vice President, Phoenix Investment Partners, Ltd.
(2003-present). Senior Vice President, the Phoenix Funds
Family (since 2006). Vice President, The Phoenix Edge Series
Fund (1994-present), Treasurer, The Zweig Fund Inc. and the
Zweig Total Return Fund Inc. (2003-present). Chief Financial
Officer (2005-2006) and Treasurer (1994-2006), or Assistant
Treasurer (2005-2006), certain funds within the Phoenix Fund
Complex.
- --------------------------------------------------------------------------------------------------------------------------------
Francis G. Waltman Senior Vice President Senior Vice President, Asset Management Product Development,
DOB: 7/27/62 since 2004. The Phoenix Companies, Inc. (since 2006); Senior Vice
President, Asset Management Product Development, Phoenix
Investment 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).
- --------------------------------------------------------------------------------------------------------------------------------
71
FUND MANAGEMENT TABLES (UNAUDITED) (CONTINUED)
OFFICERS OF THE FUND 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
- --------------------------------------------------------------------------------------------------------------------------------
Marc Baltuch Vice President and Chief Compliance Officer, Zweig-DiMenna Associates LLC
c/o Zweig-DiMenna Chief Compliance Officer (1989-present); Vice President and Chief Compliance Officer,
Associates, LLC since 2004. certain Funds within the Phoenix Fund Complex (2004-present);
900 Third Avenue Vice President, The Zweig Total Return Fund, Inc. (2004-
New York, NY 10022 present); Vice President, The Zweig Fund, Inc. (2004-present);
DOB: 9/23/45 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).
- --------------------------------------------------------------------------------------------------------------------------------
W. Patrick Bradley Chief Financial Officer and Second Vice President, Fund Administration, Phoenix Equity
DOB: 3/2/72 Treasurer since 2006. Planning Corporation (2004-present). Chief Financial Officer
and Treasurer (2006-present) or Chief Financial Officer and
Treasurer (2005-present), certain funds within the Phoenix
Fund Family. Vice President, Chief Financial Officer,
Treasurer and Principal Accounting Officer, The Phoenix Edge
Series Fund (since 2006). Assistant Treasurer, certain funds
within the Phoenix Fund Complex (2004-2006). Senior Manager
(2002-2004), Manager (2000-2002), Audit, Deloitte & Touche,
LLP.
- --------------------------------------------------------------------------------------------------------------------------------
Kevin J. Carr Vice President, Chief Legal Vice President and Counsel, Phoenix Life Insurance Company
One American Row Officer, Counsel (May 2005-present). Vice President, Counsel, Chief Legal
Hartford, CT 06102 and Secretary since 2005. Officer and Secretary of certain funds within the Phoenix Fund
DOB: 8/30/54 Complex (May 2005-present). Compliance Officer of Investments
and Counsel, Travelers Life & Annuity Company (January
2005-May 2005). Assistant General Counsel, The Hartford
Financial Services Group (1999-2005).
- --------------------------------------------------------------------------------------------------------------------------------
PHOENIX PHOLIOs(SM)
101 Munson Street
Greenfield, MA 01301-9668
TRUSTEES
E. Virgil Conway
Harry Dalzell-Payne
Francis E. Jeffries
Leroy Keith, Jr.
Marilyn E. LaMarche
Philip R. McLoughlin, Chairman
Geraldine M. McNamara
James M. Oates
Richard E. Segerson
OFFICERS
Daniel T. Geraci, President
George R. Aylward, Executive Vice President
Nancy G. Curtiss, Senior Vice President
Francis G. Waltman, Senior Vice President
Marc Baltuch, Vice President and Chief
Compliance Officer
W. Patrick Bradley, Chief Financial Officer and
Treasurer
Kevin J. Carr, Vice President, Chief Legal Officer,
Counsel and Secretary
INVESTMENT ADVISER
Phoenix Investment Counsel, Inc.
56 Prospect Street
Hartford, CT 06115-0480
PRINCIPAL UNDERWRITER
Phoenix Equity Planning Corporation
One American Row
Hartford, CT 06103-2899
TRANSFER AGENT
Phoenix Equity Planning Corporation
One American Row
Hartford, CT 06103-2899
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 5501
Boston, MA 02206-5501
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
125 High Street
Boston, MA 02110-1707
HOW TO CONTACT US
Mutual Fund Services 1-800-243-1574
Advisor Consulting Group 1-800-243-4361
Telephone Orders 1-800-367-5877
Text Telephone 1-800-243-1926
Web site PHOENIXFUNDS.COM
- --------------------------------------------------------------------------------
IMPORTANT NOTICE TO SHAREHOLDERS
The Securities and Exchange Commission has modified mailing regulations for
semiannual and annual shareholder fund reports to allow mutual fund companies to
send a single copy of these reports to shareholders who share the same mailing
address. If you would like additional copies, please call Mutual Fund Services
at 1-800-243-1574.
- --------------------------------------------------------------------------------
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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 9-06
BPD27157
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.
(a)(1) The Registrant's Board of Trustees has determined that the Registrant
has an "audit committee financial expert" serving on its Audit
Committee.
(a)(2) E. Virgil Conway has been determined by the Registrant to possess the
technical attributes identified in Instruction 2(b) of Item 3 to Form
N-CSR to qualify as an "audit committee financial expert." Mr. Conway
is an "independent" trustee pursuant to paragraph (a)(2) of Item 3 to
Form N-CSR.
(a)(3) Not applicable.
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
$67,500 for 2006 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 2006 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 $21,900 for 2006 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 2006 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 2006 and not applicable for 2005
(c) 100% for 2006 and 100% for 2005
(d) Not applicable for 2006 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 $877,027 for 2006 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.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of trustees, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) 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)
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By (Signature and Title)* /s/ George R. Aylward
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George R. Aylward, Executive Vice President
(principal executive officer)
Date October 6, 2006
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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 6, 2006
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By (Signature and Title)* /s/ W. Patrick Bradley
------------------------------------------------------
W. Patrick Bradley, Chief Financial Officer
and Treasurer
(principal financial officer)
Date October 6, 2006
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* Print the name and title of each signing officer under his or her signature.