[FRONT COVER]
October 31, 1997
PHOENIX
FUNDS
ANNUAL REPORT
o PHOENIX MULTI-SECTOR SHORT
TERM BOND FUND
[LOGO] PHOENIX
DUFF & PHELPS
<PAGE>
Chairman's Message
Dear Fellow Shareholder,
We're pleased to provide this report for Phoenix Multi-Sector Short Term
Bond Fund for the fiscal year ended October 31, 1997. This has been a
remarkable time for the financial markets, particularly in terms of market
volatility.
During market extremes, your most important asset may be your financial
adviser. Managing your investments in changing markets can be challenging, and
your financial adviser knows some time-tested strategies that can help.
Rebalancing your portfolio is one strategy to reduce risk. As the stock
market has moved higher, your equity investments may have increased in value so
that now they represent a higher percentage of your total portfolio than you
originally intended. Your financial adviser may recommend a shift in asset
allocation to bring your portfolio back in line with your investment goals and
risk tolerance.
Diversifying your portfolio can smooth the effects of volatility.
Spreading your investments across a broad mix of securities, such as stocks and
bonds, reduces risk. You can also diversify by investment style. For example,
you may choose to balance an investment in growth stocks with a fund that
focuses on value-oriented stocks.
Dollar-cost averaging takes advantage of market fluctuations. In a
systematic savings plan, you'll buy fewer shares when prices are high and more
when prices fall. Periodic investments don't ensure a profit, however, and you
should consider your ability to continually make purchases.
On behalf of Phoenix Funds, I want to thank you for investing with us and
assure you that we will continue to work hard to help you meet your investment
needs.
Sincerely,
/s/ Philip R. McLoughlin
Philip R. McLoughlin
President and Chairman
Phoenix Funds
<PAGE>
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
INVESTOR PROFILE
Phoenix Multi-Sector Short Term Bond Fund is designed for moderately
risk-averse investors seeking current income consistent with preservation of
capital.
INVESTMENT ADVISER'S REPORT
Phoenix Multi-Sector Short Term Bond Fund continued to provide investors
with above-average returns. For the fiscal year ended October 31, 1997, Class A
shares returned 10.08% and Class B shares earned 9.51% compared with a return
of 7.23% for the Merrill Lynch Medium Quality Corporate Short-Term Bond Index.
All performance figures assume reinvestment of dividends and exclude the effect
of sales charges.
The Fund's very strong performance over the last year was the result of
our emphasis on less traditional sectors of the fixed-income market. Our
overweighting in domestic high-yield corporate debt issues and non-Agency
mortgage-backed securities, rather than more conventional Agency
mortgage-backed issues, proved to be rewarding as these less efficient sectors
continued to produce strong results. The Fund's exposure to emerging markets
was concentrated in corporate debt holdings, which did not experience the large
losses sparked by currency troubles in Southeast Asia.
OUTLOOK
We believe non-traditional sectors continue to offer the potential for
above-average appreciation. A multi-sector strategy considers a broad market
that includes non-traditional fixed-income sectors. Our research efforts focus
on identifying undervalued sectors to take advantage of market inefficiencies.
We will continue to maintain a duration that is neutral to our benchmark.
As of October 31, the Fund's duration was 2.6 years.
1
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
- --------------------------------------------------------------------------------
[tabular representation of line chart]
Merrill Lynch
Medium Quality
Phoenix Multi-Sector Phoenix Multi-Sector Corporate Short-Term
Short Term--Class A Short Term--Class B Bond Index*
7/6/92 9775 10000 10000
10/31/92 9819 10007 10281
10/31/93 10653 10810 11049
10/31/94 10695 10806 11263
10/31/95 11794 11855 12332
10/31/96 13081 13083 13159
10/31/97 14399 14329 14111***
[end of line chart]
<TABLE>
<CAPTION>
Average Annual Total Returns for Periods Ending 10/31/97
From Inception From Inception
10/1/97 to 7/6/92 to
1 Year 5 Years 10/31/97 10/31/97
---------- --------- ---------------- ---------------
<S> <C> <C> <C> <C>
Class A with 2.25% sales charge 7.67% 7.47% -- 7.09%
Class A at net asset value 10.08% 7.96% -- 7.54%
Class B with CDSC 8.02% 7.45% -- 6.99%
Class B at net asset value 9.51% 7.45% -- 6.99%
Class C at net asset value -- -- -1.30% --
Merrill Lynch Medium Quality Corporate
Short-Term Bond Index* 7.23% 6.54% 0.69%** 6.66%***
</TABLE>
This chart assumes an initial gross investment of $10,000 made on July 6, 1992
(inception of the Fund).
Total returns for Class A shares reflect the maximum sales charge of 2.25% on
the initial investment and assume reinvestment of dividends and capital gains.
Class B shares reflect the 2% contingent deferred sales charge (CDSC), which is
applicable on all shares redeemed during the 1st year after purchase and 1.5%
for all shares redeemed during the 2nd year after purchase (scaled down to
1%-3rd year and 0% thereafter). Investment return and net asset value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than the original cost. Returns indicate past performance, which is not
predictive of future performance.
Foreign investing involves special risks, such as currency fluctuation, less
public disclosure as well as economic and political risks.
*The Merrill Lynch Medium Quality Corporate Short-Term Bond Index is an
unmanaged but commonly used index that tracks the returns of corporate issues
rated between BBB and A by Standard & Poor's, with maturities from 1 to 3
years. The index's performance does not reflect sales charges.
**Index information from 9/30/97 to 10/31/97.
***Index information from 6/30/92 to 10/31/97.
2
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1997
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- -------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--15.0%
U.S. Treasury Notes--14.4%
U.S. Treasury Notes WI
5.75%, 11/15/00 (g) ......... Aaa $5,140 $ 5,150,280
U.S. Treasury Notes 6.125%,
8/15/07 (f) .................. Aaa 500 510,938
-----------
5,661,218
-----------
Agency Non Mortgage-Backed Securities--0.6%
Overseas Private Investment
6.58%, 12/15/01 ............ NR 250 253,550
-----------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $5,895,660) ........................ 5,914,768
-----------
NON-CONVERTIBLE BONDS--51.2%
Airlines--0.4%
AMR Corp. Notes 7.75%,
12/1/97 ..................... Baa 155 155,217
-----------
Asset-Backed Securities--11.3%
AESOP Funding II LLC 144A
97-1, A2 6.40%, 10/20/03
(b) (f) ..................... Aaa 500 503,594
Banc One Auto Trust 95-A,
Class CTFS 7.25%,
10/15/01 (f) ............... A 500 503,285
Case Equipment Loan Trust
6.45%, 9/15/02 (f) ......... A 500 504,062
Continental Airlines 144A
7.522%, 6/30/01 (b) ......... Ba 400 402,048
Countrywide Funding Corp.
93-12, B3 6.625%, 2/25/24 ... Baa 81 81,072
First Sierra Receivables 96-2,
A 6.29%, 11/10/04 ............ Aaa 250 250,713
Fleetwood Credit Corp. 96-A,
B 6.95%, 10/17/11 (f) ...... A 194 195,652
Ford Credit Auto Owner Trust
96-B, 6.55%, 2/15/02 (f) ... A 250 252,500
Green Tree Financial Corp.
96-1, A2 5.85%, 3/15/27 (f) Aaa 500 496,875
NationsBank Auto Owner Trust
96-A, B2 6.875%, 5/15/03 ... A 500 508,915
Premier Auto Trust 97-3, B
6.52%, 1/6/03 ............... A 250 252,734
Team Fleet Financing Corp.
96-1, B 144A 7.10%,
12/15/02 (b) (f) ............ BBB(c) 500 500,312
-----------
4,451,762
-----------
Automobiles--1.2%
Titan Tire Loan Participation
7%, 2/11/00 .................. NR 500 480,000
-----------
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- -------- ------------
<S> <C> <C> <C>
Banks--2.9%
Banponce Financial Corp.
5.48%, 10/26/98 ............ A $ 375 $ 373,094
NationsBank Capital Trust III
6.308%, 1/15/27 (d) ......... A 300 295,135
Wachovia Capital Trust II
6.258%, 1/15/27 (d) (f) ...... Aa 500 489,971
-----------
1,158,200
-----------
Building & Materials--1.4%
Neenah Corp. Series B
11.125%, 5/1/07 ............ B 500 540,000
-----------
Consumer Finance--1.3%
ITT Publimedia 144A 9.375%,
9/15/07 (b) (f) ............ B 500 511,250
-----------
Electric Companies--0.2%
Coso Funding Corp. Notes
144A 7.99%, 12/31/97 (b) ... Baa 65 65,195
-----------
Health Care (Hospital Management)--1.0%
Tenet Healthcare Corp. Sr.
Note 9.625%, 9/1/02 ......... Ba 375 411,563
-----------
Industrial--0.7%
Polymer Group, Inc. 9%,
7/1/07 ..................... B 250 253,125
-----------
Leasing/Rental--0.6%
Williams Scotsman, Inc. 144A
9.875%, 6/1/07 (b) ......... B-(c) 225 231,188
-----------
Metals Mining--0.6%
USX Corp. Sr. Notes 6.375%,
7/15/98 (f) .................. Baa 250 250,498
-----------
Non-Agency Mortgage-Backed Securities--23.5%
Bear Stearns Mortgage
Securities, Inc. 95-1, 2B3
144A 7.40%, 7/25/10 (b) ...... NR 289 282,335
Criimi Mae Trust I 96-C1, A2
144A 7.56%, 6/30/33 (b) ...... BBB(c) 400 411,125
EQCC Home Equity Loan
Trust 96-4, A4 6.47%,
8/15/10 ..................... Aaa 530 535,077
G.E. Capital Mortgage
Services, Inc. 94-26, B2
7.03%, 7/25/09 ............... Baa 259 260,488
Kidder Peabody Acceptance
Corp. 94-C2, D 7.18%,
10/1/05 ..................... BBB(c) 350 366,516
Merrill Lynch Mortgage, Inc.
95-C2, C 7.83%, 6/15/21 ...... A 286 295,966
Oregon Commercial Mortgage,
Inc. 95-1, B 144A 7.35%,
6/25/23 (b) (f) ............ AA(c) 500 506,953
</TABLE>
See Notes to Financial Statements
3
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- -------- ------------
<S> <C> <C> <C>
Non-Agency Mortgage-Backed Securities--continued
PNC Mortgage Securities Corp.
97-6, 1A 6.49%, 10/25/26 ... Aaa $ 488 $ 490,093
Prudential Home Mortgage
Securities 93L, 3B2 144A
6.641%, 12/25/23 (b) ...... NR 250 247,656
Prudential Home Mortgage
Securities 96-A, B1
7.958%, 5/28/26 ............ NR 500 470,625
Residential Asset
Securitization Trust 96-A8,
A1 8%, 12/25/26 ............ AAA(c) 364 371,560
Residential Funding Mortgage
Securities, Inc. I 93-S29,
M3 7%, 8/25/08 ............ NR 543 546,949
Residential Funding Mortgage
Securities, Inc. I 96-S8, A4
6.75%, 3/25/11 ............ AAA(c) 94 94,841
Resolution Trust Corp. 92-C3,
B 9.05%, 8/25/23 ............ AA(c) 139 141,543
Resolution Trust Corp. 92-CHF,
B 7.15%, 12/25/20 ......... AA(c) 346 344,441
Resolution Trust Corp. 93-C1,
B 8.75%, 5/25/24 ............ Aa 400 400,098
Resolution Trust Corp. 93-C2,
B 7.75%, 3/25/25 ............ AA(c) 500 501,883
Resolution Trust Corp. 94-C1,
C 8%, 6/25/26 ............... A(c) 500 517,812
Resolution Trust Corp. 95-1,
C2 7.50%, 10/25/28 ......... A 232 234,964
Resolution Trust Corp. 95-2,
B2 7.009%, 5/25/29 ......... Baa 230 231,667
Resolution Trust Corp. 95-2,
C1 7.45%, 5/25/29 ......... Baa 351 356,857
Resolution Trust Corp. 95-2,
M1 7.15%, 5/25/29 ......... Aa 800 814,114
Structured Asset Securities
Corp. 95-C1, D 7.375%,
9/25/24 ..................... BBB(c) 500 505,625
Structured Asset Securities
Corp. 96-C3, C 144A
7.375%, 6/25/30 (b) ......... BBB(c) 350 354,484
-----------
9,283,672
-----------
Oil--2.2%
Benton Oil & Gas Co. 144A
9.375%, 11/1/07 (b) ......... B 500 503,750
Lomak Petroleum, Inc. 8.75%,
1/15/07 (f) ............... B 375 377,812
-----------
881,562
-----------
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- -------- ------------
<S> <C> <C> <C>
Oil Service & Equipment--0.7%
Noble Drilling Corp. 9.125%,
7/1/06 (f) .................. Baa $ 250 $ 271,563
-----------
Publishing, Broadcasting, Printing & Cable--3.2%
Century Communications
8.75%, 10/1/07 ............ Ba 500 497,500
Comcast Cellular 144A 9.50%,
5/1/07 (b) .................. Ba 250 258,750
Tele-Communications, Inc.
7.375%, 2/15/00 (f) ......... BBB-(c) 500 509,485
-----------
1,265,735
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $19,858,886) ......................... 20,210,530
-----------
FOREIGN GOVERNMENT SECURITIES--10.4%
Algeria--0.5%
Algeria Tranch A Loans
6.688%, 3/4/00 ............ NR 136 109,091
Algeria Tranch 1 Unaffected
Loans 7.375%, 3/4/00 ...... NR 114 90,909
-----------
200,000
-----------
Argentina--2.6%
Republic of Argentina Bearer
FRB 6.688%, 3/31/05 (d) ... Ba 1,152 1,010,880
-----------
Brazil--0.9%
Republic of Brazil DCB-L
Euro 6.75%, 4/15/12 (d) ... BB-(c) 525 362,250
-----------
Bulgaria--0.6%
Republic of Bulgaria IAB PDI
Euro 6.688%, 7/28/11 (d) ... B 350 231,000
-----------
Ecuador--0.8%
Ecuador Bearer PDI Euro, PIK
interest capitalization,
6.688%, 2/27/15 (d) ......... B 547 323,089
-----------
Peru--0.4%
Peru PDI 144A 4%, 3/7/17
(b) (d) ..................... NR 250 141,250
-----------
Poland--2.4%
Poland Discount Euro 6.688%,
10/27/24 (d) ............... Baa 1,000 940,000
-----------
Russia--1.1%
Vnesheconombank Loans
Yankee (e) .................. NR 500 444,688
-----------
Venezuela--1.1%
Republic of Venezuela DCB
Euro 6.75%, 12/18/07 (d) ... Ba 500 437,500
-----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $4,389,595) ............................ 4,090,657
-----------
</TABLE>
See Notes to Financial Statements
4
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- ------- ------------
<S> <C> <C> <C>
FOREIGN NON-CONVERTIBLE BONDS--9.0%
Bermuda--0.6%
AES China Generating Co.
Yankee 10.125%, 12/15/06 ..... Ba $250 $ 251,250
-----------
Brazil--1.2%
Arisco Prod Alimenticios 144A
10.75%, 5/22/05 (b) ......... NR 250 231,250
Tevecap SA RegS 12.625%,
11/26/04 ..................... B 250 255,000
-----------
486,250
-----------
Colombia--1.2%
Financiera Energ Nacional
EMTN Euro 9%, 11/8/99 ...... BBB-(c) 450 455,625
-----------
Ecuador--0.9%
Consorcio Ecuatoriano TE
RegS 14%, 5/1/02 ............ NR 350 353,500
-----------
Mexico--5.1%
Altos Hornos de Mexico 144A
11.375%, 4/30/02 (b) ......... NR 600 612,000
Banco Nacional de Mexico
144A 7.57%, 12/31/00 (b) .... NR 500 501,550
Empresas ICA Sociedad
11.875%, 5/30/01 ............ B 250 271,250
Grupo Elektra SA de C.V.
12.75%, 5/15/01 ............ B(c) 250 272,910
Vicap SA 10.25%, 5/15/02 ...... Ba 350 357,000
-----------
2,014,710
-----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $3,663,262) ........................ 3,561,335
-----------
MUNICIPAL BONDS--5.4%
Chicago O'Hare Taxable
Revenue 6.47%, 1/1/00 (f) ... Aaa 150 151,239
Mississippi Taxable Series T
7.50%, 11/1/00 ............... Aa 855 887,011
New York State Dormitory
Authority Revenues, Taxable
6.45%, 10/1/99 (f) ......... Baa 400 402,880
Orange County Pension
Taxable Series A 6.16%,
9/1/98 (f) .................. Aaa 500 502,130
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- ------- ------------
<S> <C> <C> <C>
University of Miami
Exchangeable Revenue,
Series A Taxable 5.95%,
4/1/98 (f) .................. Aaa $185 $ 185,100
-----------
TOTAL MUNICIPAL BONDS
(Identified cost $2,117,058) ............................ 2,128,360
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
-------
<S> <C> <C>
PREFERRED STOCKS--1.9%
REITS--1.9%
Home Ownership Funding 2, Step-down
Pfd.
144A 13.338% (b) ............... 750 743,509
----------
TOTAL PREFERRED STOCKS
(Identified cost $724,277) .................... 743,509
----------
TOTAL LONG-TERM INVESTMENTS--92.9%
(Identified cost $36,648,738) ................. 36,649,159
----------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000)
------------- --------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--16.0%
Commercial Paper--7.6%
Coca-Cola Co. 5.50%,
11/17/97 ............... A-1+ $1,500 1,496,333
Emerson Electric Co. 5.50%,
11/17/97 ............... A-1+ 1,500 1,496,333
-------------
2,992,666
-------------
Federal Agency Securities--8.4%
FHLMC 5.65%, 11/3/97 .................. 3,310 3,308,961
-------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $6,301,627) ..................... 6,301,627
-------------
TOTAL INVESTMENTS--108.9%
(Identified cost $42,950,365) .................. 42,950,786(a)
Cash and receivables, less liabilities--(8.9%) ... (3,501,283)
-------------
NET ASSETS--100.0% .............................. $ 39,449,503
=============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $418,336 and gross
depreciation of $507,145 for income tax purposes. At October 31, 1997, the
aggregate cost of securities for federal income tax purposes was
$43,039,595.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
1997, these securities amounted to a value of $7,008,199 or 17.8% of net
assets.
(c) As rated by Standard & Poor's, Fitch or Duff & Phelps.
(d) Variable or step coupon security; interest rate shown reflects the rate
currently in effect.
(e) Non-income producing.
(f) All or a portion segregated as collateral.
(g) When issued.
See Notes to Financial Statements
5
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $42,950,365) $42,950,786
Cash 671,678
Receivables
Interest 461,590
Investment securities sold 5,802,715
Receivable from adviser 3,195
Fund shares sold 413,490
-----------
Total assets 50,303,454
-----------
Liabilities
Payables
Investment securities purchased 10,684,377
Fund shares repurchased 52,087
Income distribution payable 37,203
Distribution fee 12,237
Financial agent fee 7,951
Transfer agent fee 6,853
Trustees' fee 3,497
Accrued expenses 49,746
-----------
Total liabilities 10,853,951
-----------
Net Assets $39,449,503
===========
Net Assets Consist of:
Capital paid in on shares of beneficial interest $38,625,459
Undistributed net investment income 12,416
Accumulated net realized gain 811,207
Net unrealized appreciation 421
-----------
Net Assets $39,449,503
===========
Shares of Class A common stock outstanding,
$0.01 par value, unlimited authorization
(Net Assets $28,556,789) 5,646,378
Net asset value per share $ 5.06
Offering price per share $5.06/(1-2.25%) $ 5.18
Shares of Class B common stock outstanding,
$0.01 par value, unlimited authorization
(Net Assets $10,317,863) 2,038,316
Net asset value and offering price per share $ 5.06
Shares of Class C common stock outstanding,
$0.01 par value, unlimited authorization
(Net Assets $574,851) 113,529
Net asset value and offering price per share $ 5.06
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
Investment Income
Interest $2,133,514
Dividends 48,467
----------
Total investment income 2,181,981
----------
Expenses
Investment advisory fee 159,118
Distribution fee--Class A 51,494
Distribution fee--Class B 62,254
Distribution fee--Class C 162
Financial agent fee 70,205
Registration 53,243
Transfer agent 51,887
Printing 41,009
Professional 37,788
Custodian 19,084
Trustees 15,262
Amortization of deferred organization expense 11,897
Miscellaneous 10,453
----------
Total expenses 583,856
Less expense borne by investment adviser (252,968)
----------
Net expenses 330,888
----------
Net investment income 1,851,093
----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 863,600
Net change in unrealized appreciation (depreciation) on
investments (213,559)
----------
Net gain on investments 650,041
----------
Net increase in net assets resulting from
operations $2,501,134
==========
</TABLE>
See Notes to Financial Statements
6
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------ -----------------
<S> <C> <C>
From Operations
Net investment income $ 1,851,093 $ 1,057,251
Net realized gain 863,600 475,148
Net change in unrealized appreciation (depreciation) (213,559) 68,949
------------- ------------
Increase in net assets resulting from operations 2,501,134 1,601,348
------------- ------------
From Distributions to Shareholders
Net investment income--Class A (1,358,917) (737,150)
Net investment income--Class B (500,332) (311,273)
Net investment income--Class C (2,174) --
------------- ------------
Decrease in net assets resulting from distributions to shareholders (1,861,423) (1,048,423)
------------- ------------
From Share Transactions
Class A
Proceeds from sales of shares (5,033,530 and 1,883,600 shares, respectively) 25,379,012 9,085,891
Net asset value of shares issued from reinvestment of distributions
(229,749 and 119,182 shares, respectively) 1,158,643 573,651
Cost of shares repurchased (2,409,066 and 1,171,859 shares, respectively) (12,117,223) (5,645,597)
------------- ------------
Total 14,420,432 4,013,945
------------- ------------
Class B
Proceeds from sales of shares (1,104,864 and 439,768 shares, respectively) 5,561,801 2,129,724
Net asset value of shares issued from reinvestment of distributions
(69,536 and 42,139 shares, respectively) 350,687 202,745
Cost of shares repurchased (346,945 and 253,126 shares, respectively) (1,753,224) (1,216,818)
------------- ------------
Total 4,159,264 1,115,651
------------- ------------
Class C
Proceeds from sales of shares (113,197 and 0 shares, respectively) 583,290 --
Net asset value of shares issued from reinvestment of distributions
(334 and 0 shares, respectively) 1,698 --
Cost of shares repurchased (2 and 0 shares, respectively) (10) --
------------- ------------
Total 584,978 --
------------- ------------
Increase in net assets from share transactions 19,164,674 5,129,596
------------- ------------
Net increase in net assets 19,804,385 5,682,521
Net Assets
Beginning of period 19,645,118 13,962,597
------------- ------------
End of period (including undistributed net investment income and
distributions in excess of net investment income of $12,416 and
($16,157), respectively) $ 39,449,503 $ 19,645,118
============= ============
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------------
Year Ended October 31,
1997 1996 1995 1994 1993
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.91 $ 4.74 $ 4.61 $ 4.91 $ 4.83
Income from investment operations
Net investment income 0.34(2) 0.33(2) 0.33(2) 0.29(2) 0.32(2)
Net realized and unrealized gain (loss) 0.14 0.17 0.13 (0.26) 0.08
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.48 0.50 0.46 0.03 0.40
---------- ---------- ---------- ---------- ----------
Less distributions
Dividends from net investment income (0.33) (0.33) (0.33) (0.29) (0.32)
Dividends from net realized gains -- -- -- (0.03) --
Tax return of capital -- -- -- (0.01) --
---------- ---------- ---------- ---------- ----------
Total distributions (0.33) (0.33) (0.33) (0.33) (0.32)
---------- ---------- ---------- ---------- ----------
Change in net asset value 0.15 0.17 0.13 (0.30) 0.08
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 5.06 $ 4.91 $ 4.74 $ 4.61 $ 4.91
========== ========== ========== ========== ==========
Total return(1) 10.08% 10.91% 10.27% 0.40% 8.49%
Ratios/supplemental data:
Net assets, end of period (thousands) $ 28,557 $ 13,702 $ 9,303 $ 9,371 $ 6,829
Ratio to average net assets of:
Operating expenses 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment income 6.54% 6.88% 7.07% 5.99% 6.39%
Portfolio turnover 246% 232% 344% 121% 128%
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------------------------------------------------
Year Ended October 31,
1997 1996 1995 1994 1993
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 4.91 $ 4.74 $ 4.61 $ 4.91 $ 4.83
Income from investment operations
Net investment income 0.31(3) 0.31(3) 0.30(3) 0.27(3) 0.30(3)
Net realized and unrealized gain (loss) 0.15 0.17 0.13 (0.26) 0.08
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.46 0.48 0.43 0.01 0.38
---------- ---------- ---------- ---------- ----------
Less distributions
Dividends from net investment income (0.31) (0.31) (0.30) (0.27) (0.30)
Dividends from net realized gains -- -- -- (0.03) --
Tax return of capital -- -- -- (0.01) --
---------- ---------- ---------- ---------- ----------
Total distributions (0.31) (0.31) (0.30) (0.31) (0.30)
---------- ---------- ---------- ---------- ----------
Change in net asset value 0.15 0.17 0.13 (0.30) 0.08
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 5.06 $ 4.91 $ 4.74 $ 4.61 $ 4.91
========== ========== ========== ========== ==========
Total return(1) 9.51% 10.36% 9.71% (0.03)% 8.02%
Ratios/supplemental data:
Net assets, end of period (thousands) $ 10,318 $ 5,943 $ 4,659 $ 6,418 $ 3,968
Ratio to average net assets of:
Operating expenses 1.50% 1.50% 1.50% 1.45% 1.45%
Net investment income 6.05% 6.38% 6.59% 5.74% 5.79%
Portfolio turnover 246% 232% 344% 121% 128%
</TABLE>
(1) Maximum sales charges are not included in total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of
$0.04, $0.06, $0.08, $0.08 and $0.09, respectively.
(3) Includes reimbursement of operating expenses by investment adviser of
$0.04, $0.06, $0.08, $0.08 and $0.09, respectively.
See Notes to Financial Statements
8
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class C
------------------
From
Inception
10/1/97 to
10/31/97
------------------
<S> <C>
Net asset value, beginning of period $5.15
Income from investment operations
Net investment income 0.03 (2)
Net realized and unrealized gain (loss) (0.09)
-----------
Total from investment operations (0.06)
-----------
Less distributions
Dividends from net investment income (0.03)
Dividends from net realized gains --
Tax return of capital --
-----------
Total distributions (0.03)
-----------
Change in net asset value (0.09)
-----------
Net asset value, end of period $5.06
===========
Total return(1) (1.30)%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $575
Ratio to average net assets of:
Operating expenses 1.25%(3)
Net investment income 5.51%(3)
Portfolio turnover 246%
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of
$0.04.
(3) Annualized
(4) Not annualized
See Notes to Financial Statements
9
<PAGE>
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Multi-Sector Short Term Bond Fund (the "Fund") is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as a diversified open-end management investment company.
The Fund's investment objective is to provide high current income relative to
short-term alternatives, while attempting to limit fluctuations in the net
asset value of Fund shares resulting from movements in interest rates. The Fund
offers Class A, Class B and Class C shares. Class A shares are sold with a
front-end sales charge of up to 2.25%. Class B shares are sold with a
contingent deferred sales charge which declines from 2% to zero depending on
the period of time the shares are held. Class C shares are sold with no sales
charge. All classes of shares have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except that each class bears
different distribution expenses and has exclusive voting rights with respect to
its distribution plan. Income and expenses of the Fund are borne pro rata by
the holders of all classes of shares, except that each class bears distribution
expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amount of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
A. Security valuation:
Debt securities are valued on the basis of broker quotations or valuations
provided by a pricing service which utilizes information with respect to recent
sales, market transactions in comparable securities, quotations from dealers,
and various relationships between securities in determining value. Short-term
investments having a remaining maturity of 60 days or less are valued at
amortized cost which approximates market. All other securities and assets are
valued at their fair value as determined in good faith by or under the
direction of the Trustees.
B. Security transactions and related income:
Security transactions are recorded on the trade date. Interest income is
recorded on the accrual basis. Discounts and premiums are amortized to income
using the effective interest method. Realized gains and losses are determined
on the identified cost basis.
C. Income taxes:
It is the policy of the Fund to comply with the requirements of the
Internal Revenue Code (the "Code") applicable to regulated investment companies
and to distribute substantially all of its taxable income to its shareholders.
In addition, the Fund intends to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Code. Therefore, no
provision for federal income taxes or excise taxes has been made.
D. Distributions to shareholders:
Distributions to shareholders are declared and recorded daily. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of expiring capital loss carryforwards,
foreign currency gain/loss, and losses deferred due to wash sales and excise
tax regulations. Permanent book and tax basis differences relating to
shareholder distributions will result in reclassifications to paid in capital.
E. Foreign currency translation:
Foreign securities, other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at
the trade date. The gain or loss resulting from a change in currency exchange
rates between the trade and settlement dates of a portfolio transaction is
treated as a gain or loss on foreign currency. Likewise, the gain or loss
resulting from a change in currency exchange rates between the date income is
accrued and paid is treated as a gain or loss on foreign currency. The Fund
does not separate that portion of the results of operations arising from
changes in exchange rates and that portion arising from changes in the market
prices of securities.
F. Organization expense:
In 1992 the Fund incurred organizational expenses in the amount of
$82,967. The Fund has deferred these expenses and has amortized such expenses
on a straight line basis over five years from the date of commencement of
operations.
G. When-issued and delayed delivery transactions:
The Fund may engage in when-issued or delayed delivery transactions. The
Fund records when-issued securities on the trade date and maintains collateral
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis begin earning interest on the settlement date.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Fund, the Investment Adviser,
National Securities and Research Corporation, an indirect majority-owned
subsidiary of Phoenix Home Life Mutual
10
<PAGE>
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997 (Continued)
Insurance Company ("PHL"), is entitled to a fee at an annual rate of 0.55% of
the average daily net assets of the Fund. The Adviser has agreed to assume
expenses of the Fund in excess of 1.00%, 1.50% and 1.25% of the average
aggregate daily net asset value of Class A, Class B and Class C shares,
respectively. For the year ended October 31, 1997, the Adviser has reimbursed
the Fund $252,968 for such expenses.
As Distributor of the Fund's shares, Phoenix Equity Planning Corp.
("PEPCO"), an indirect majority-owned subsidiary of PHL, has advised the Fund
that it retained net selling commissions of $8,311 for Class A shares and
deferred sales charges of $11,452 for Class B shares for the year ended October
31, 1997. In addition, the Fund pays PEPCO a distribution fee at an annual rate
of 0.25% for Class A shares, 0.75% for Class B shares and 0.50% for Class C
shares of the average daily net assets of the Fund. The Distribution Plan for
Class A shares provides for fees to be paid up to a maximum on an annual basis
of 0.30%; the Distributor has voluntarily agreed to limit the fee to 0.25%. The
Distributor has advised the Fund that of the total amount expensed for the year
ended October 31, 1997, $65,002 was earned by the Distributor, $36,364 was paid
to unaffiliated participants, and $12,544 was paid to W.S. Griffith, an
indirect subsidiary of PHL.
As Financial Agent of the Fund, PEPCO received a fee for bookkeeping,
administration, and pricing services at an annual rate of 0.03% of the average
daily net assets of the Fund through December 31, 1996, and starting on January
1, 1997, at an annual rate of 0.05% of average daily net assets up to $100
million, 0.04% of average daily net assets of $100 million to $300 million,
0.03% of average daily net assets of $300 million through $500 million, and
0.015% of average daily net assets greater than $500 million; a minimum fee may
apply. PEPCO serves as the Fund's Transfer Agent with State Street Bank and
Trust as sub-transfer agent. For the year ended October 31, 1997, transfer
agent fees were $51,887 of which PEPCO retained $901 which is net of the fees
paid to State Street.
At October 31, 1997, PHL and affiliates held 28,048 Class A shares of the
Fund with a value of $141,922.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities, excluding short-term securities, for
the year ended October 31, 1997, aggregated $86,025,460 and $68,718,211,
including $32,077,074 and $26,195,390, respectively, of U.S. Government and
agency securities.
4. CREDIT RISK
In countries with limited or developing markets, investments may present
greater risk than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a fund's ability to
repatriate such amounts.
5. LOAN AGREEMENTS
The Fund may invest in direct debt instruments which are interests in
amounts owned by a corporate, governmental, or other borrower to lenders or
lending syndicates. The Fund's investments in loans may be in the form of
participations in loans or assignments of all or a portion of loans from third
parties. A loan is often administered by a bank or other financial institution
(the lender) that acts as agent for all holders. The agent administers the
terms of the loan, as specified in the loan agreement. When investing in a loan
participation, the Fund has the right to receive payments of principal,
interest and any fees to which it is entitled only from the lender selling the
loan agreement and only upon receipt by the lender of payments from the
borrower. The Fund generally has no right to enforce compliance with the terms
of the loan agreement with the borrower. As a result, the Fund may be subject
to the credit risk of both the borrower and the lender that is selling the loan
agreement. For loans which the Fund is a participant, the Fund may not sell
it's participation in the loan without the lender's prior consent. When the
Fund purchases assignments from lenders it acquires direct rights against the
borrower of the loan. Direct indebtedness of emerging countries involves a risk
that the government entities responsible for the repayment of the debt may be
unable, or unwilling to pay the principal and interest when due.
6. CAPITAL LOSS CARRYFORWARDS
For the year ended October 31, 1997, the Fund was able to utilize losses
deferred in the prior year against current year capital gains in the amount of
$36,672.
7. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Fund has recorded
several reclassifications in the capital accounts. These reclassifications have
no impact on the net asset value of the Fund and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of October 31, 1997,
the Fund increased undistributed net investment income by $38,903, decreased
accumulated net realized gain by $10,924 and decreased capital paid in on
shares of capital stock by $27,979.
This report is not authorized for distribution to prospective investors in the
Phoenix Multi-Sector Short Term Bond Fund unless preceded or accompanied by an
effective prospectus which includes information concerning the sales charge,
Fund's record and other pertinent information.
11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGOTYPE] Price Waterhouse LLP
To the Trustees and Shareholders of
Phoenix Multi-Sector Short Term Bond Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments (except for bond ratings), and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Phoenix Multi-Sector Short Term Bond Fund (the "Fund") at October 31, 1997, and
the results of its operations, the changes in its net assets and the financial
highlights for each of the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund'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 generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at October 31, 1997 by
correspondence with the custodian and brokers, and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Boston, Massachusetts
December 12, 1997
12
<PAGE>
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
101 Munson Street
Greenfield, Massachusetts 01301
Trustees
C. Duane Blinn
Robert Chesek
E. Virgil Conway
Harry Dalzell-Payne
Francis E. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Calvin J. Pedersen
Philip R. Reynolds
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
Officers
Philip R. McLoughlin, President
Michael E. Haylon, Executive Vice President
David R. Pepin, Executive Vice President
James D. Wehr, Senior Vice President
David L. Albrycht, Vice President
William E. Keen, III, Vice President
William R. Moyer, Vice President
Leonard J. Saltiel, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary
Investment Adviser
National Securities & Research Corporation
56 Prospect Street
Hartford, Connecticut 06115-0480
Principal Underwriter
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
Transfer Agent
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
<PAGE>
[BACK COVER]
-------------------
Phoenix Funds BULK RATE MAIL
PO Box 2200 U.S. POSTAGE
Enfield CT 06083-2200 PAID
SPRINGFIELD, MA
PERMIT NO. 444
-------------------
[LOGO] PHOENIX
DUFF & PHELPS
PDP 681 (12/97)
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<NAME> PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
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<NAME> PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
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