<PAGE>
Phoenix Investment Partners
OCTOBER 31, 1998
ANNUAL REPORT
Phoenix Multi-Sector Short
Term Bond Fund
[LOGO] PHOENIX
INVESTMENT PARTNERS
<PAGE>
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.
<PAGE>
MESSAGE FROM THE PRESIDENT
DEAR SHAREHOLDER:
[PHOTO]
The 12 months ended October 31, 1998 were a particularly difficult time for
funds that invest in credit-sensitive sectors. Risk aversion, after Russia's
debt moratorium, drove the bond market. Despite the Fund's neutral duration, its
exposure to more credit-sensitive areas overwhelmed interest rate movements.
During periods of market extremes, we believe that by remaining true to our
discipline of focusing on the most undervalued sectors, we will continue to add
value for our shareholders over the long term. We believe that our disciplined
approach and past experience in investing during difficult markets will lead us
to the most attractive long-term opportunities. Of course, past performance is
no guarantee of future results.
On the following page, your Fund manager reviews the market environment during
this reporting period and offers his outlook for the next six months. We hope
you find his comments informative. If you have any questions, please contact
your financial advisor or call us toll-free at 1-800-243-1574.
Sincerely,
/s/ Philip R. McLoughlin
Philip R. McLoughlin
December 8, 1998
1
<PAGE>
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGER, DAVID L. ALBRYCHT, CFA
Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
A: The Fund is appropriate for investors seeking high current income from a
broadly diversified short-term bond fund. Investors should note that foreign
investments pose added risks, such as currency fluctuation, less public
disclosure, and political and economic uncertainty, and that high-yielding
fixed-income securities generally are subject to greater market fluctuations and
risk of loss of income and principal than are investments in lower-yielding
fixed-income securities.
Q: HOW HAS THE FUND PERFORMED OVER THE LAST FISCAL YEAR?
A: For the 12 months ended October 31, 1998, Class A shares returned 0.85%,
Class B shares returned 0.12% and Class C shares returned 0.59% compared with a
return of 7.14% for the Merrill Lynch Medium Quality Corporate Index.(1) All
performance figures assume reinvestment of distributions and exclude the effect
of sales charges.
Q: WHAT FACTORS AFFECTED PERFORMANCE?
A: Despite the Fund's short duration, our exposure to more credit-sensitive
sectors overwhelmed interest rate movements. During 1998, the world financial
markets have been experiencing a global "flight to quality" that has been driven
by the financial crises in Asia and Russia. U.S. Treasuries have been the sole
benefactor, while the biggest losers have been higher-yielding sectors, such as
emerging-markets and domestic high-yield, two of our largest portfolio
positions.
Q: WHAT IS YOUR CURRENT STRATEGY?
A: The two biggest risks in fixed-income investing are interest rate risk and
credit risk. Our investment approach does not try to anticipate the direction of
interest rates. Instead, we seek to add value by identifying undervalued sectors
of the bond market. This contrarian approach is one that requires discipline and
conviction, but has served us well in the past. Of course, past performance is
no guarantee of future results.
We will continue to follow our value-oriented investment approach,
overweighting those sectors where we find the best values. Despite recent
weakness, our long-term outlook remains constructive. We feel the market has
overreacted to global events, resulting in extraordinary values for long-term
investors. We will continue to maintain a well-diversified portfolio (investing
across 12 market sectors), with exposure to more credit-sensitive sectors, which
we perceive to be considerably undervalued.
Q: WHAT IS YOUR OUTLOOK?
A: It is important at times like this to keep a long-term perspective as extreme
market moves like the one we are currently experiencing generally reverse
themselves over time. We have seen a number of market events like this over the
last decade. Two that most resemble the current situation were the "junk" bond
panic of 1990-91 and the Mexican peso devaluation in 1994-95. Although both of
these events triggered dips in the market, long-term investors were rewarded for
their patience and conviction. Of course, past performance is no guarantee of
future performance, and there can be no assurance that there will be a similar
turnaround in emerging markets.
NOVEMBER 12, 1998
(1) THE MERRILL LYNCH MEDIUM QUALITY CORPORATE INDEX IS AN UNMANAGED, COMMONLY
USED MEASURE OF TOTAL RETURN PERFORMANCE OF CORPORATE BONDS WITH MATURITIES
OF 1-2.99 YEARS AND MEDIUM QUALITY RATINGS. THE INDEX IS NOT AVAILABLE FOR
DIRECT INVESTMENT.
2
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
AVERAGE ANNUAL TOTAL RETURNS(1) PERIODS ENDING 10/31/98
<TABLE>
<CAPTION>
INCEPTION INCEPTION
1 YEAR 5 YEARS TO 10/31/98 DATES
------ ------- ----------- ---------
<S> <C> <C> <C> <C>
Class A Shares at NAV(2) 0.85% 6.39% 6.46% 7/6/92
Class A Shares at POP(3) (1.48) 5.92 6.08 7/6/92
Class B Shares at NAV(2) 0.12 5.83 5.88 7/6/92
Class B Shares with CDSC(4) (1.24) 5.83 5.88 7/6/92
Class C Shares at NAV(2) 0.59 -- (0.66) 10/1/97
Merrill Lynch Medium Quality
Corporate Short-Term Bond Index 7.14 6.47 Note 5 Note 5
</TABLE>
(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 2.25% sales charge.
(4) CDSC (contingent deferred sales charge) is applied to redemptions of
certain classes of shares that do not have a sales charge applied at the
time of purchase. CDSC charges for B shares decline from 2% to 0% over a
three year period.
(5) Index performance is 6.74% for Class A and Class B (since 6/30/92) and
7.24% for Class C (since 9/30/97), respectively.
(6) This chart illustrates POP returns on Class A Shares and CDSC returns on
Class B Shares.
(7) The Merrill Lynch Medium Quality Corporate Short-Term Bond Index is an
unmanaged, commonly used measure of total return performance of corporate
bonds with maturities of 1-2.99 years and medium quality ratings. The index's
performance does not reflect sales charges.
All returns represent past performance which may not be indicative of future
performance. The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more
or less than their original cost.
GROWTH OF $10,000 PERIODS ENDING 10/31
<TABLE>
<CAPTION>
Phoenix Phoenix Merrill Lynch
Multi-Sector Multi-Sector Medium Quality
Short Term Bond Short Term Bond Corporate Short-Term
Class B(6) Class A(6) Bond Index(7)
--------------- --------------- --------------------
<S> <C> <C> <C>
7/6/92 $10,000.00 $9,775.00 $10,000.00
10/30/92 $10,006.68 $9,818.76 $10,281.00
10/29/93 $10,809.55 $10,652.79 $11,049.00
10/31/94 $10,806.02 $10,694.96 $11,263.00
10/31/95 $11,854.78 $11,793.63 $12,332.00
10/31/96 $13,084.25 $13,082.00 $13,159.00
10/31/97 $14,330.22 $14,400.24 $14,110.00
10/30/98 $14,348.10 $14,523.10 $15,118.00
</TABLE>
This Growth of $10,000 chart assumes an initial investment of $10,000 made on
7/6/92 in Class A shares and reflects the maximum sales charge of 2.25% on
the initial investment. Performance assumes dividends and capital gains are
reinvested. The performance of other share classes will be greater or less
than that shown based on differences in inception dates, fees and sales
charges.
SECTOR WEIGHTINGS 10/31/98
As a percentage of bond holdings
<TABLE>
<S> <C>
Foreign Government 25%
Corporate 23
Non-Agency Mortgage 21
Asset-Backed 11
Foreign Corporate 9
Municipal 6
U.S. Government 4
Agency Mortgage-Backed 1
</TABLE>
3
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
TEN LARGEST FIXED INCOME HOLDINGS AT OCTOBER 31, 1998 (AS A PERCENTAGE OF TOTAL
NET ASSETS)
<TABLE>
<C> <S> <C>
1. U.S. Government Securities 3.7%
U.S. TREASURY NOTES
2. Poland PDI 3.4%
FOREIGN GOVERNMENT SECURITY
3. Republic of Argentina 3.2%
FOREIGN GOVERNMENT SECURITY
4. Merrill Lynch Mortgage Investors, Inc. 2.6%
NON-AGENCY MORTGAGE-BACKED SECURITY
5. Republic of Korea 1.8%
FOREIGN GOVERNMENT SECURITY
6. Prudential Securities Secured Financing Corp. 1.7%
NON-AGENCY MORTGAGE-BACKED SECURITY
7. Republic of Panama 1.7%
FOREIGN GOVERNMENT SECURITY
8. Copelco Capital Funding Corp. 1.7%
ASSET-BACKED SECURITY
9. ContiMortgage Home Equity Loan Trust 1.7%
NON-AGENCY MORTGAGE-BACKED SECURITY
10. Republic of Bulgaria 1.7%
FOREIGN GOVERNMENT SECURITY
</TABLE>
INVESTMENTS AT OCTOBER 31, 1998
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--3.7%
U.S. TREASURY NOTES--3.7%
U.S. Treasury Notes 5.625%, 5/15/01..... Aaa $ 750 $ 774,887
U.S. Treasury Notes 5.25%, 8/15/03(g)... Aaa 1,250 1,303,842
-------------
2,078,729
-------------
- --------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES
(IDENTIFIED COST $2,084,948) 2,078,729
- --------------------------------------------------------------------------------------
AGENCY MORTGAGE-BACKED SECURITIES--1.4%
GNMA Pool #447976 6.50%, 6/15/28........ Aaa 795 803,552
- --------------------------------------------------------------------------------------
TOTAL AGENCY MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $790,377) 803,552
- --------------------------------------------------------------------------------------
MUNICIPAL BONDS--5.5%
CALIFORNIA--0.8%
San Diego County Pension Taxable Series
A 6.24%, 8/15/02........................ Aaa 400 415,000
ILLINOIS--1.7%
Chicago O'Hare Taxable Revenue 6.47%,
1/1/00.................................. Aaa 150 152,625
Chicago Tax Increment Taxable 6.25%,
6/1/02.................................. Aaa 750 776,250
-------------
928,875
-------------
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
MASSACHUSETTS--0.7%
Massachusetts State Port Authority
Revenue Series C Taxable 6.05%, 7/1/02.. Aa $ 400 $ 411,500
MISSISSIPPI--1.6%
Mississippi State Taxable Series T
7.50%, 11/1/00.......................... Aa 855 897,750
NEW YORK--0.7%
New York State Dormitory Authority
Revenue, Taxable 6.45%, 10/1/99......... Baa 400 405,384
- --------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS
(IDENTIFIED COST $2,974,657) 3,058,509
- --------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--11.1%
AESOP Funding II LLC 97-1, A2 144A
6.40%, 10/20/03(b)...................... Aaa 500 519,844
Capita Equipment Receivables Trust 97-1,
B 6.45%, 8/15/02........................ Aa 250 255,547
Case Equipment Loan Trust 95-B, CTFS
6.45%, 9/15/02.......................... Aaa 500 503,125
Continental Airlines Series 972D 7.522%,
6/30/01................................. Ba 308 310,018
Copelco Capital Funding Corp. 98-A, A3
5.78%, 8/15/01.......................... AAA(c) 950 958,312
First U.S.A. 98-1, C 6.50%, 1/18/06..... NR 750 766,172
</TABLE>
4 See Notes to Financial Statements
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
Fleetwood Credit Corp. 96-A, B 6.95%,
10/17/11................................ A $ 230 $ 233,824
Ford Credit Auto Owner Trust 96-B, CTFS
6.55%, 2/15/02.......................... A 250 253,594
Green Tree Financial Corp. 96-1, A2
5.85%, 3/15/27.......................... Aaa 500 502,969
MBNA Master Credit Card Trust 98-C, C
144A 6.35%, 11/15/05(b)................. NR 525 532,875
NationsBank Auto Owner Trust 96-A, B2
6.875%, 5/15/03......................... A 500 516,987
Premier Auto Trust 97-3, B 6.52%,
1/6/03.................................. A 250 257,753
Team Fleet Financing Corp. 96-1, B 144A
7.10%, 12/15/02(b)...................... BBB(c) 500 496,094
Team Fleet Financing Corp. 98-2A, C 144A
6.53%, 7/25/02(b)....................... BBB(c) 150 150,094
- --------------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(IDENTIFIED COST $6,150,071) 6,257,208
- --------------------------------------------------------------------------------------
CORPORATE BONDS--22.7%
AEROSPACE/DEFENSE--1.4%
BE Aerospace 144A 9.50%,
11/1/08(b)(h)........................... B 250 257,500
Raytheon Co. 5.95%, 3/15/01............. Baa 500 506,250
-------------
763,750
-------------
AUTO PARTS & EQUIPMENT--0.9%
Collins & Aikman Products 11.50%,
4/15/06................................. B 500 517,500
AUTOMOBILES--0.9%
Titan Tire 7%, 2/11/00.................. NR 500 480,000
BANKS (MAJOR REGIONAL)--0.5%
First Union Institutional Capital I
8.04%, 12/1/26.......................... A 250 264,687
BROADCASTING (TELEVISION, RADIO & CABLE)--1.8%
Century Communications 8.75%, 10/1/07... Ba 500 525,000
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
BROADCASTING (TELEVISION, RADIO & CABLE)--CONTINUED
Tele-Communications, Inc. 7.375%,
2/15/00................................. Baa $ 500 $ 515,625
-------------
1,040,625
-------------
COMPUTERS (SOFTWARE & SERVICES)--0.6%
Computer Associates International Series
B 6.375%, 4/15/05....................... Baa 320 317,600
CONSUMER FINANCE--0.9%
Ford Motor Credit 6%, 1/14/03........... A 500 512,500
ELECTRIC COMPANIES--0.9%
Niagara Mohawk Power 7.375%, 7/1/03..... Ba 500 516,250
GAMING, LOTTERY & PARIMUTUEL COMPANIES--2.1%
Horseshoe Gaming LLC Series B 12.75%,
9/30/00................................. B 475 503,500
Majestic Star Casino LLC 12.75%,
5/15/03................................. B 250 257,500
Station Casinos, Inc. 10.125%,
3/15/06................................. B 400 398,000
-------------
1,159,000
-------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--0.8%
Schein Pharmaceutical, Inc. 8.467%,
12/15/04(d)............................. B 510 433,500
INVESTMENT BANKING/BROKERAGE--0.9%
Merrill Lynch & Co., Inc. 6%, 7/15/05... Aa 500 495,625
MANUFACTURING (DIVERSIFIED)--1.3%
Polymer Group, Inc. 9%, 7/1/07.......... B 250 234,375
Tyco International Group SA 6.125%,
6/15/01................................. Baa 500 508,750
-------------
743,125
-------------
MANUFACTURING (SPECIALIZED)--0.8%
Indesco International, Inc. 9.75%,
4/15/08................................. B 500 461,875
METALS MINING--1.2%
AK Steel Corp. 10.75%, 4/1/04........... Ba 600 625,500
NSM Steel, Inc. 144A 12%, 2/1/06(b)..... Caa 100 27,000
-------------
652,500
-------------
OIL & GAS (DRILLING & EQUIPMENT)--0.5%
Noble Drilling Corp. 9.125%, 7/1/06..... Baa 250 255,000
</TABLE>
See Notes to Financial Statements 5
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION)--1.2%
Benton Oil & Gas Co. 9.375%, 11/1/07.... B $ 500 $ 350,000
Lomak Petroleum, Inc. 8.75%, 1/15/07.... B 375 337,969
-------------
687,969
-------------
PERSONAL CARE--0.6%
Bally Total Fitness Holding Corp. Series
B 9.875%, 10/15/07...................... B 350 322,000
PUBLISHING--0.9%
News America, Inc. 6.625%, 1/9/08....... Baa 500 495,625
RETAIL (FOOD CHAINS)--0.9%
Meyer (Fred), Inc. 7.45%, 3/1/08........ Ba 500 525,000
RETAIL (GENERAL MERCHANDISE)--0.9%
Wal-Mart Stores, Inc. 5.85%, 6/1/00..... Aa 500 508,125
SERVICES (COMMERCIAL & CONSUMER)--0.8%
Anthony Crane Rentals 144A 10.375%,
8/1/08(b)............................... B 250 232,187
Williams Scotsman, Inc. 9.875%, 6/1/07.. B 225 226,688
-------------
458,875
-------------
TELECOMMUNICATIONS (LONG DISTANCE)--0.4%
RCN Corp. Series B 0%, 2/15/08(d)....... B 500 240,000
TELEPHONE--1.5%
Cox Communcations, Inc. 6.15%,
8/1/03(d)............................... Baa 375 383,438
Global Crossing Holding Ltd. 144A
9.625%, 5/15/08(b)...................... NR 500 490,000
-------------
873,438
-------------
- --------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $13,005,308) 12,724,569
- --------------------------------------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED
SECURITIES--19.7%
BTC Mortgage Investors Trust 97-S1, D
144A 6.95%, 12/31/09(b)................. BBB(c) 750 750,000
Bear Stearns Mortgage Securities, Inc.
95-1, 1B3 144A 6.471%, 5/25/10(b)....... NR 580 563,607
Bear Stearns Mortgage Securities, Inc.
95-1, 2B3 144A 7.40%, 7/25/10(b)........ NR 464 466,082
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
CS First Boston Mortgage Securities
Corp. 98-C1, A1B 6.48%, 5/17/08......... Aaa $ 500 $ 507,344
ContiMortgage Home Equity Loan Trust
98-1, B 7.86%, 4/15/29.................. Baa 952 957,950
Criimi Mae Trust I 96-C1, A2 144A 7.56%,
6/30/33(b).............................. BBB(c) 400 398,000
EQCC Home Equity Loan Trust 96-4, A4
6.47%, 8/15/10.......................... Aaa 530 542,984
G.E. Capital Mortgage Services, Inc.
94-26, B2 6.951%, 7/25/09............... Baa 242 246,096
IMPAC CMB Trust 98-2, M3 7.25%,
4/25/28................................. A(c) 904 918,648
Merrill Lynch Mortgage Investors, Inc.
95-C3, A2 6.822%, 12/26/25.............. AAA(c) 1,400 1,452,500
PNC Mortgage Securities Corp. 97-6, A1
6.49%, 10/25/26......................... Aaa 283 283,622
Prudential Home Mortgage Securities
93-L, 3B2 144A 6.641%, 12/25/23(b)...... NR 250 245,937
Prudential Securities Secured Financing
Corp. 98-C1, A1A1 6.105%, 11/15/02...... Aaa 968 974,336
Residential Asset Securitization Trust
96-A8, A1 8%, 12/25/26.................. AAA(c) 108 108,614
Residential Funding Mortgage Securities,
Inc. I 93-S29, M3 7%, 8/25/08........... AA(c) 509 520,989
Residential Funding Mortgage Securities,
Inc. I 96-S8, A4 6.75%, 3/25/11......... AAA(c) 89 89,089
Resolution Trust Corp. 92-C3, B 9.05%,
8/25/23................................. AA(c) 108 105,244
Resolution Trust Corp. 93-C2, B 7.75%,
3/25/25................................. AA(c) 99 98,519
Resolution Trust Corp. 94-C1, C 8%,
6/25/26................................. A(c) 500 503,750
Structured Asset Securities Corp. 95-C1,
D 7.375%, 9/25/24....................... BBB(c) 500 499,219
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
Triangle Funding Ltd. 98-2A, 3 144A
7.163%, 10/15/04(b)..................... BBB(c) $ 800 $ 801,375
- --------------------------------------------------------------------------------------
TOTAL NON-AGENCY MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $10,885,080) 11,033,905
- --------------------------------------------------------------------------------------
FOREIGN GOVERNMENT SECURITIES--24.1%
ARGENTINA--4.0%
Republic of Argentina 8.75%, 7/10/02.... Ba 250 197,441
Republic of Argentina 11%, 10/9/06...... Ba 250 249,375
Republic of Argentina Bearer FRB 6.188%,
3/31/05(d).............................. Ba 2,186 1,816,697
-------------
2,263,513
-------------
BRAZIL--1.1%
Republic of Brazil 6.125%, 4/15/06...... B 984 638,985
BULGARIA--3.0%
Republic of Bulgaria IAB PDI Euro
6.688%, 7/28/11(d)...................... B 1,100 738,375
Republic of Bulgaria FLIRB Series A
Bearer Euro 2.50%, 7/28/12(d)........... B 1,700 943,500
-------------
1,681,875
-------------
CROATIA--1.1%
Croatia Series B 6.563%, 7/31/06(d)..... Baa 452 370,959
Croatia Series A 6.563%, 7/31/10(d)..... Baa 300 234,000
-------------
604,959
-------------
ECUADOR--1.5%
Ecuador Bearer PDI Euro, PIK interest
capitalization, 6.625% 2/27/15(d)....... B 1,867 814,579
KOREA--2.4%
Republic of Korea 0%, 4/26/99........... NR 455,000(e) 325,975
Republic of Korea 8.75%, 4/15/03........ Ba 1,050 1,010,625
-------------
1,336,600
-------------
MEXICO--1.3%
United Mexican States Global Bond
11.375%, 9/15/16........................ Ba 250 250,625
United Mexican States Global Bond
11.50%, 5/15/26......................... Ba 470 484,100
-------------
734,725
-------------
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
PANAMA--2.1%
Panama PDI Euro 6.6875%, 7/17/16(d)..... Baa $ 264 $ 195,442
Republic of Panama Reg S 7.875%,
2/13/02................................. Baa 1,000 965,000
Republic of Panama 8.875%, 9/30/27...... Ba 35 32,288
-------------
1,192,730
-------------
PERU--0.6%
Peru PDI 144A 4%, 3/7/17(b)(d).......... BB(c) 250 143,750
Peru PDI 4%, 3/7/17(d).................. BB(c) 300 172,500
-------------
316,250
-------------
POLAND--5.9%
Poland Discount Euro 6.78%,
10/27/24(d)............................. Baa 500 498,750
Poland PDI Bearer 5%, 10/27/14(d)....... Baa 2,125 1,935,078
Poland Treasury Bill 0%, 1/13/99........ NR 2,150(f) 605,454
Poland Treasury Bill 0%, 2/17/99........ NR 1,040(f) 287,744
-------------
3,327,026
-------------
SOUTH AFRICA--0.3%
Republic of South Africa 8.50%,
6/23/17................................. Baa 200 137,750
VENEZUELA--0.8%
Venezuela FLIRB Series B 6.125%,
3/31/07(d).............................. B 810 455,463
- --------------------------------------------------------------------------------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(IDENTIFIED COST $13,893,509) 13,504,455
- --------------------------------------------------------------------------------------
FOREIGN CORPORATE BONDS--9.0%
ARGENTINA--2.1%
Cia Transporte Energia 144A 8.625%,
4/1/03(b)............................... BBB(c) 500 447,500
Telefonica De Argentina 144A 9.125%,
5/7/08(b)............................... Ba 250 221,250
Transportadora de Gas del Sur 10.25%,
4/25/01................................. Ba 500 490,000
-------------
1,158,750
-------------
BERMUDA--0.1%
AES China Generating Co. Yankee 10.125%,
12/15/06................................ Ba 140 79,100
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
<TABLE>
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
BRAZIL--0.5%
Arisco Produtos Alimenticios 144A
10.75%, 5/22/05(b)...................... NR $ 250 $ 140,000
Globo Communicacoes Co. 144A 10.625%,
12/5/08(b).............................. B 250 135,937
-------------
275,937
-------------
COLOMBIA--1.3%
Financiera Energ Nacional EMTN Euro 9%,
11/8/99................................. BBB(c) 750 742,500
JAPAN--0.2%
IBJ Preferred Capital Co. LLC 144A
8.79%, 12/29/49(b)(d)................... Baa 125 100,179
MEXICO--2.7%
Altos Hornos de Mexico Series A 11.375%,
4/30/02................................. B 600 294,000
Banco Nacional de Mexico 144A 7.57%,
12/31/00(b)............................. NR 500 498,203
Empresas ICA Sociedad 144A 11.875%,
5/30/01(b).............................. B 250 248,750
Grupo Elektra SA de C.V. 12.75%,
5/15/01................................. B(c) 250 201,250
Vicap SA 10.25%, 5/15/02................ Ba 350 283,500
-------------
1,525,703
-------------
TURKEY--0.3%
Kazkommertsbank International 144A
11.25%, 5/8/01(b)....................... B 400 190,000
<CAPTION>
MOODY'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ----------- -------------
<S> <C> <C> <C>
UNITED KINGDOM--0.9%
Bridas Corp 12.50%, 11/15/99............ Ba $ 500 $ 507,500
VENEZUELA--0.9%
PDVSA Finance Ltd. 98-1, 144A 6.45%,
2/15/04(b).............................. A 500 482,075
- --------------------------------------------------------------------------------------
TOTAL FOREIGN CORPORATE BONDS
(IDENTIFIED COST $6,116,071) 5,061,744
- --------------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS--97.2%
(IDENTIFIED COST $55,900,021)
54,522,671
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR's
RATING
(Unaudited)
------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--1.4%
COMMERCIAL PAPER--1.4%
Anheuser-Busch Companies, Inc. 5.55%,
11/2/98................................. A-1+ 780 779,880
- --------------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(IDENTIFIED COST $779,880) 779,880
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TOTAL INVESTMENTS--98.6%
(IDENTIFIED COST $56,679,901) 55,302,551(a)
Cash and receivables, less liabilities--1.4% 798,988
-------------
NET ASSETS--100.0% $ 56,101,539
-------------
-------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $785,345 and gross
depreciation of $2,472,999 for federal income tax purposes. At October 31,
1998, the aggregate cost of securities for federal income tax purposes was
$56,990,205.
(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,
1998, these securities amounted to a value of $8,538,239 or 15.2% 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) Par value represents South Korean Won.
(f) Par value represents Polish Zloty.
(g) All or a portion segregated as collateral.
(h) When issued.
8 See Notes to Financial Statements
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $56,679,901) $ 55,302,551
Cash 10,301
Receivables
Investment securities sold 2,454,874
Interest and dividends 816,165
Fund shares sold 611,787
Receivable from adviser 37,967
--------------
Total assets 59,233,645
--------------
LIABILITIES
Payables
Investment securities purchased 2,830,411
Fund shares repurchased 102,788
Income distribution payable 56,103
Distribution fee 18,937
Transfer agent fee 16,016
Financial agent fee 5,604
Trustees' fee 3,600
Accrued expenses 98,647
--------------
Total liabilities 3,132,106
--------------
NET ASSETS $ 56,101,539
--------------
--------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 59,732,229
Undistributed net investment income 96,898
Accumulated net realized loss (2,350,238)
Net unrealized depreciation (1,377,350)
--------------
NET ASSETS $ 56,101,539
--------------
--------------
CLASS A
Shares of beneficial interest outstanding, $0.01 par value,
unlimited authorization (Net Assets $33,211,892) 7,127,624
Net asset value per share $4.66
Offering price per share $4.66/(1-2.25%) $4.77
CLASS B
Shares of beneficial interest outstanding, $0.01 par value,
unlimited authorization (Net Assets $12,224,821) 2,629,626
Net asset value and offering price per share $4.65
CLASS C
Shares of beneficial interest outstanding, $0.01 par value,
unlimited authorization (Net Assets $10,664,826) 2,289,972
Net asset value and offering price per share $4.66
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 3,835,291
Dividends 55,170
--------------
Total investment income 3,890,461
--------------
EXPENSES
Investment advisory fee 270,259
Distribution fee, Class A 76,534
Distribution fee, Class B 87,785
Distribution fee, Class C 34,099
Financial agent fee 83,489
Transfer agent 77,808
Registration 67,365
Professional 43,714
Printing 37,969
Custodian 28,289
Trustees 17,519
Miscellaneous 12,313
--------------
Total expenses 837,143
Less expenses borne by investment adviser (270,586)
--------------
Net expenses 566,557
--------------
NET INVESTMENT INCOME 3,323,904
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (2,200,430)
Net realized loss on foreign currency transactions (6,844)
Net change in unrealized appreciation (depreciation) on
investments (1,377,771)
--------------
NET LOSS ON INVESTMENTS (3,585,045)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ (261,141)
--------------
--------------
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Phoenix Multi-Sector Short Term Bond Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
10/31/98 10/31/97
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 3,323,904 $ 1,851,093
Net realized gain (loss) (2,207,274) 863,600
Net change in unrealized appreciation
(depreciation) (1,377,771) (213,559)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (261,141) 2,501,134
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, Class A (2,076,744) (1,358,917)
Net investment income, Class B (750,987) (500,332)
Net investment income, Class C (439,980) (2,174)
Net realized gains, Class A (623,397) --
Net realized gains, Class B (231,491) --
Net realized gains, Class C (40,577) --
------------ ------------
DECREASE IN NET ASSETS RESULTING FROM
DISTRIBUTIONS TO SHAREHOLDERS (4,163,176) (1,861,423)
------------ ------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares
(6,014,412 and 5,033,530 shares,
respectively) 29,551,389 25,379,012
Net asset value of shares issued from
reinvestment of distributions
(481,339 and 229,749 shares,
respectively) 2,357,562 1,158,643
Cost of shares repurchased (5,014,505
and 2,409,066 shares, respectively) (24,593,058) (12,117,223)
------------ ------------
Total 7,315,893 14,420,432
------------ ------------
CLASS B
Proceeds from sales of shares
(1,098,057 and 1,104,864 shares,
respectively) 5,370,293 5,561,801
Net asset value of shares issued from
reinvestment of distributions
(150,247 and 69,536 shares,
respectively) 735,674 350,687
Cost of shares repurchased (656,994
and 346,945 shares, respectively) (3,148,967) (1,753,224)
------------ ------------
Total 2,957,000 4,159,264
------------ ------------
CLASS C
Proceeds from sales of shares
(3,178,002 and 113,197 shares,
respectively) 15,654,043 583,290
Net asset value of shares issued from
reinvestment of distributions
(90,036 and 334 shares,
respectively) 436,654 1,698
Cost of shares repurchased (1,091,595
and 2 shares, respectively) (5,287,237) (10)
------------ ------------
Total 10,803,460 584,978
------------ ------------
INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS 21,076,353 19,164,674
------------ ------------
NET INCREASE IN NET ASSETS 16,652,036 19,804,385
NET ASSETS
Beginning of period 39,449,503 19,645,118
------------ ------------
END OF PERIOD [INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME OF
$96,898 AND $12,416, RESPECTIVELY] $ 56,101,539 $ 39,449,503
------------ ------------
------------ ------------
</TABLE>
10 See Notes to Financial Statements
<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
------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 5.06 $ 4.91 $ 4.74 $ 4.61 $ 4.91
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.34(2) 0.34(2) 0.33(2) 0.33(2) 0.29(2)
Net realized and unrealized gain
(loss) (0.29) 0.14 0.17 0.13 (0.26)
----- ----- ----- ----- -----
TOTAL FROM INVESTMENT
OPERATIONS 0.05 0.48 0.50 0.46 0.03
----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment
income (0.34) (0.33) (0.33) (0.33) (0.29)
Dividends from net realized gains (0.11) -- -- -- (0.03)
Tax return of capital -- -- -- -- (0.01)
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (0.45) (0.33) (0.33) (0.33) (0.33)
----- ----- ----- ----- -----
CHANGE IN NET ASSET VALUE (0.40) 0.15 0.17 0.13 (0.30)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 4.66 $ 5.06 $ 4.91 $ 4.74 $ 4.61
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Total return(1) 0.85% 10.08% 10.91% 10.27% 0.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $33,212 $28,557 $13,702 $9,303 $9,371
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment income 6.90% 6.54% 6.88% 7.07% 5.99%
Portfolio turnover 126% 246% 232% 344% 121%
</TABLE>
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------------------------ ------------------------------
YEAR ENDED OCTOBER 31 YEAR FROM INCEPTION
------------------------------------------------------------------ ENDED 10/1/97 TO
1998 1997 1996 1995 1994 10/31/98 10/31/97
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 5.06 $ 4.91 $ 4.74 $ 4.61 $ 4.91 $ 5.06 $ 5.15
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.31(2) 0.31(2) 0.31(2) 0.30(2) 0.27(2) 0.34(3) 0.03(3)
Net realized and
unrealized gain (loss) (0.29) 0.15 0.17 0.13 (0.26) (0.30) (0.09)
----- ----- ----- ----- ----- ----- -----
TOTAL FROM
INVESTMENT
OPERATIONS 0.02 0.46 0.48 0.43 0.01 0.04 (0.06)
----- ----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net
investment income (0.32) (0.31) (0.31) (0.30) (0.27) (0.33) (0.03)
Dividends from net
realized gains (0.11) -- -- -- (0.03) (0.11) --
Tax return of capital -- -- -- -- (0.01) -- --
----- ----- ----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (0.43) (0.31) (0.31) (0.30) (0.31) (0.44) (0.03)
----- ----- ----- ----- ----- ----- -----
CHANGE IN NET ASSET VALUE (0.41) 0.15 0.17 0.13 (0.30) (0.40) (0.09)
----- ----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD $ 4.65 $ 5.06 $ 4.91 $ 4.74 $ 4.61 $ 4.66 $ 5.06
----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- -----
Total return(1) 0.12% 9.51% 10.36% 9.71% (0.03)% 0.59% (1.30)%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $12,225 $10,318 $5,943 $4,659 $6,418 $10,665 $575
RATIO TO AVERAGE NET
ASSETS OF:
Operating expenses 1.50% 1.50% 1.50% 1.50% 1.45% 1.25% 1.25%(4)
Net investment income 6.44% 6.05% 6.38% 6.59% 5.74% 6.70% 5.51%(4)
Portfolio turnover 126% 246% 232% 344% 121% 126% 246%
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of
$0.03, $0.04, $0.06, $0.08 and $0.08, respectively for Class A and B.
(3) Includes reimbursement of operating expenses by investment adviser of $0.03
and $0.04, respectively.
(4) Annualized
(5) Not annualized
See Notes to Financial Statements 11
<PAGE>
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998
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. 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.
12
<PAGE>
PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998 (CONTINUED)
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
Effective June 1, 1998, National Securities and Research Corporation assigned
its investment advisory agreement to Phoenix Investment Counsel, Inc. ("PIC"),
both an indirect majority-owned subsidiary of Phoenix Home Life Mutual Insurance
Company ("PHL"). PIC 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, 1998, the Adviser has reimbursed the Fund $270,586 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 $6,286 for Class A shares and deferred sales
charges of $15,602 for Class B shares for the year ended October 31, 1998. 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, 1998, $82,753 was earned by the Distributor, $98,625 was paid to
unaffiliated participants, and $17,040 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 through May 31, 1998, 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 applied. Effective June 1, 1998 PEPCO
receives a financial agent fee equal to the sum of (1) the documented cost of
fund accounting and related services provided by PFPC Inc. (subagent to PEPCO),
plus (2) the documented cost to PEPCO to provide financial reporting, tax
services and oversight of subagent's performance. The current fee schedule of
PFPC Inc. ranges from 0.085% to 0.0125% of the average daily net asset values of
the Fund. Certain minimum fees and fee waivers 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, 1998, transfer agent fees
were $77,808 of which PEPCO retained $2,342 which is net of the fees paid to
State Street.
At October 31, 1998, PHL and affiliates held 30,711 Class A shares and 21,302
Class C shares of the Fund with a combined value of $242,381.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities, excluding short-term securities, for the
year ended October 31, 1998, aggregated $82,322,459 and $59,791,594, including
$22,036,705 and $25,721,480, 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. CAPITAL LOSS CARRYFORWARDS
At October 31, 1998, the Fund had a capital loss carryover of $2,039,934,
expiring in 2006, which may be used to offset future capital gains.
6. 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, 1998, the Fund increased
undistributed net investment income by $28,289, decreased accumulated net
realized gain by $58,706, and increased capital paid in on shares of capital
stock by $30,417.
TAX INFORMATION NOTICE (UNAUDITED)
LONG-TERM CAPITAL GAINS
The Fund hereby designates $89,590, including $39,092 of 28% rate-gain
distributions, as a long-term capital gain dividend for purposes of the dividend
paid deduction on its federal income tax return.
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.
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[PRICEWATERHOUSECOOPERS LOGO]
To the Trustees and Shareholders of
Phoenix Multi-Sector Short Term Bond Fund
In our opinion, the accompanying statements 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, 1998, 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 Funds' 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, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
December 17, 1998
14
<PAGE>
PHOENIX MULTI-SECTOR
SHORT TERM BOND FUND
101 Munson Street
Greenfield, Massachusetts 01301
TRUSTEES
Robert Chesek
E. Virgil Conway
Harry Daizell-Payne
Francis E. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Calvin J. Pedersen
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
OFFICERS
Philip R. McLoughlin, President
Michael E. Haylon, Executive Vice President
John F. Sharry, Executive Vice President
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
Phoenix Investment Counsel, Inc.
56 Prospect Street
Hartford, CT 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
PricewaterhouseCoopers LLP
160 Federal Street
Boston, Massachusetts 02110
HOW TO CONTACT US
The Fund Connection 1-800-243-1574
Customer Service 1-800-243-1574 (option 0)
Investment Strategy Hotline 1-800-243-4361 (option 2)
Marketing Department 1-800-243-4361 (option 3)
Text Telephone 1-800-243-1926
Internet access:
WWW.PHOENIXINVESTMENTS.COM
<PAGE>
-----------------
PHOENIX EQUITY PLANNING CORPORATION BULK RATE MAIL
PO Box 2200 U.S. POSTAGE
Enfield CT 06083-2200 PAID
SPRINGFIELD, MA
PERMIT NO. 444
-----------------
[LOGO] PHOENIX
INVESTMENT PARTNERS
PXP 681 (12/98)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000884122
<NAME> PHOENIX MULTI-SECTOR SHORT TERM BOND FUND
<SERIES>
<NUMBER> 001
<NAME> CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 56680
<INVESTMENTS-AT-VALUE> 55303
<RECEIVABLES> 3921
<ASSETS-OTHER> 10
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 59234
<PAYABLE-FOR-SECURITIES> 2830
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 302
<TOTAL-LIABILITIES> 3132
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 59732
<SHARES-COMMON-STOCK> 7128
<SHARES-COMMON-PRIOR> 5646
<ACCUMULATED-NII-CURRENT> 97
<OVERDISTRIBUTION-NII> 0
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