It's both ..
http://compendium.ddo.com/wiki/Spell:Phantasmal_Killer
Spell: Phantasmal Killer
Creates a phantasmal image of the most fearsome creature imaginable by forming the fears of the enemy's subconscious mind into something that its conscious mind can visualize. Enemies must make Will save to disbelieve the spell and then a Fortitude save or die from fear. A successful Fortitude save still results in 3d6 damage.