PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
MARKET AND PORTFOLIO REVIEW
Fund Description
Phoenix Multi-Sector Fixed Income Fund invests in a wide variety of
fixed-income securities. These securities may include U.S. treasury, agency,
corporate and yankee bonds, as well as mortgage-backed and asset-backed
securities. The Fund emphasizes the most undervalued sectors of the market
and de-emphasizes the most overvalued sectors.
Investment Environment
Over the six-month reporting period ended April 30, 1995, the investment
climate has improved dramatically. After a disappointing 1994--a year which
saw the Federal Reserve Board repeatedly hike short- term interest rates to
slow the economy and ward off inflation--both stocks and bonds made an
exceptionally strong recovery in the first four months of 1995.
Many investors appear optimistic that the Fed has applied the right amount of
pressure on the economy, without serious disruption to the business cycle.
Whether the Fed has successfully achieved a so-called "soft landing" remains
to be seen. Nevertheless, moderating economic growth and relatively subdued
inflation over the early months of 1995 have helped create a very positive
investment environment.
In the fixed-income market, the yield curve (which measures the difference
between short- and long-term interest rates) flattened significantly in
response to the Fed's aggressive policy and evidence of controlled inflation.
As a result, all sectors of the domestic market have produced positive
returns thus far in 1995. Emerging debt markets were hit hard, however, by
fallout from the devaluation of the Mexican peso last December. A number of
unrelated debt markets, including Argentina, Brazil and Poland, suffered
sharp losses over the early months of this six-month reporting period.*
Portfolio Review
For the six months ended April 30, 1995, the Fund's Class A shares provided a
total return of 2.94% and Class B shares returned 2.54%. According to the
Lehman Brothers Aggregate Bond Index, an unmanaged, commonly used measure of
bond market performance, the market returned 7.01% over the same period. All
of these returns assume reinvestment of any distributions but exclude the
effect of sales charges.
The Fund's underperformance is due primarily to the portfolio's overweighting
in the emerging markets sector. Other factors which hurt performance were the
weak performance of holdings in 30-year non-agency residential
mortgage-backed securities and limited exposure to investment-grade corporate
bonds, which were stronger performers this period. Positive contributors to
the portfolio were holdings in tax-exempt bonds as well as in commercial
mortgage-backed securities.
Outlook
Our outlook for the bond market remains positive. In the months ahead, we
expect to de-emphasize treasury securities in favor of other sectors of the
fixed-income market. We have increased our exposure to commercial non-agency
mortgage-backed securities as positive market technicals have resulted in
attractive valuations. We are still overweighting the high- yield yankee
sector, with a focus on Brazil, Poland and Argentina since we believe that
these countries continue to have improving economic fundamentals and a
longer-term positive outlook. Lastly, we have decreased our exposure to
lower-rated, 30-year, non-agency residential mortgage-backed securities
since it appears the higher-rated, 15-year securities offer a better
total-return potential in the months ahead.
*Foreign investing involves special risks, such as currency fluctuation, less
public disclosure as well as economic and political risks.
1
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
INVESTMENTS AT APRIL 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--15.0%
U.S. Treasury Bonds--11.2%
U.S. Treasury Bonds
7.50%, '05 AAA $ 10,500 $ 10,824,828
U.S. Treasury Bonds
7.625%, '25 AAA 22,000 22,763,092
33,587,920
U.S. Treasury Notes--1.6%
U.S. Treasury Notes
7.25%, '98 AAA 3,500 3,548,125
U.S. Treasury Notes
7.125%, '00 AAA 1,250 1,262,500
4,810,625
Federal Agency Securities--0.1%
Student Loan Marketing Assn.
11.75%, '95 A 500 325,000
Agency Mortgage-Backed--2.1%
FHLMC 9%, '04 AAA 302 307,112
FHLMC 7.50%, '18 AAA 1,000 1,004,289
FHLMC 8.75%, '20 AAA 847 864,890
FNMA 7%, '07 AAA 284 266,276
FNMA 8.70%, '16 AAA 1,334 1,370,368
FNMA 6.65%,'17 AAA 1,000 950,459
FNMA 6.50%, '18 AAA 1,000 943,839
FNMA 7%, '21 AAA 550 508,260
6,215,493
TOTAL U.S. GOVERNMENT SECURITIES
(Identified cost $45,004,140) 44,939,038
NON-CONVERTIBLE BONDS--42.1%
Aerospace & Defense--0.1%
McDonnell Douglas Corp. 9.45%, '96 BBB 150 155,063
Airlines--1.1%
GPA Delaware, Inc.
8.75%, '98 CCC+ 4,000 3,180,000
Asset-Backed Securities--0.0%
World Omni Leasing 92-1 A 5.80%,
'97 AAA 75 74,861
Chemical--Specialty--1.2%
Borden Chemical & Plastics 9.50%,
'05 BB 3,600 3,600,000
Entertainment, Leisure & Gaming--1.4%
Turner Broadcasting
8.375%, '13 BB 5,000 4,312,500
Hospital Management & Services--1.5%
National Medical Enterprises
9.625%, '02 B 4,250 4,398,750
Insurance--1.0%
Middletown Trust 11.75%, '10 A+ 1,600 1,808,187
Penn Central Corp. 10.625%, '00 BBB- 1,000 1,064,830
2,873,017
Non-Agency Mortgage-Backed Securities--29.8%
Chase Mortgage Finance Corp. 92-2,
B2 8.02%, '22 (b) NR 947 915,972
Chase Mortgage Finance Corp. 93-L,
2M 7%, '24 Aa (d) 2,466 2,174,483
Chase Mortgage Finance Corp.
93-D2, 2M 8%, '25 Aa (d) 982 936,920
Citicorp 94-2, B1 6%, '09 Baa (d) 2,755 2,355,881
DLJ Mortgage Acceptance 92-M10, B
10%, '02 BBB (d) 6,750 7,038,984
DLJ Mortgage Acceptance 93-M12, B1
8.80%, '03 BBB (d) 1,000 984,375
DLJ Mortgage Acceptance 94-M11, B1
8.1%, '04 Baa (d) 5,000 4,700,000
FDIC REMIC 94-C1, 2D 8.70%, '25 A (d) 7,000 7,030,625
Green Tree Acceptance, Inc. 8%,
'18 Baa (d) 5,000 4,712,500
Kearny Street Class C 7.70%, '01 BBB 450 450,070
Kidder Peabody Acceptance Corp.
94-C1,B 6.85%, '06 AA 2,000 1,899,375
Kidder Peabody Acceptance Corp.
93-M3,D 6.5%,'25 Baa (d) 2,147 1,902,108
Prudential Home Mortgage 93H,B2
144A 6.759%, '08 (c) NR 8,540 7,707,101
Prudential Home Mortgage 92-22, B1
8.50% '22 (b) A (d) 491 475,977
Prudential Home Mortgage 93-L,3B2
144A 6.641%, '23 (c) NR 3,270 2,921,030
Prudential Home Mortgage 94-32,M
8.25%, '24 Aa (d) 2,955 2,889,843
Residential Funding Corp. 93-S20,
M1 7% '08 AA 616 583,702
Residential Funding Corp. 93-S29,
M3 7%, '08 BBB (d) 625 563,701
Residential Funding Corp. 93-S3, M
7.50%, '23 AA 957 889,730
Resolution Trust Corp. 93-N3, CL3
7.80%, '03 NR 2,750 2,684,688
Resolution Trust Corp. 92-C7, A1C
7.90%, '23 Aa (d) 3,148 3,134,456
Resolution Trust Corp. 92-C3,B
9.05%, '23 AA 3,979 4,050,698
See Notes to Financial Statements
2
<PAGE>
Non-Agency Mortgage-Backed (Continued)
Resolution Trust Corp. 93-C3, A4
6.55%, '24 Aaa (d) $ 2,923 $ 2,824,352
Resolution Trust Corp. 94-C2,D 8%,
'25 BBB 5,458 5,149,259
Resolution Trust Corp. 94-C1, A2C
7.45%, '26 AAA 5,000 4,945,313
Resolution Trust Corp. 94-C1,D 8%,
'26 BBB 5,873 5,535,376
Resolution Trust Corp. 95-1, C2
7.50%, '28 BBB 4,600 4,463,369
Ryland Mortgage Security Corp. III
92-A,1A 8.33%, '30 A- 434 420,727
SASC 95-Cl B 7.375%, '24 AA 5,344 5,040,060
89,380,675
Paper, Packaging & Forest Products--1.0%
SD Warren Co. 144A 12%, '04 (c) B+ 2,750 2,980,313
Publishing, Broadcasting, Printing & Cable--3.0%
Century Communications 9.50%, '05 BB- 4,000 3,905,000
News America Holdings 8.50%, '25 BBB- 5,000 5,150,000
9,055,000
Retail--Food--0.6%
Rini Rego Supermarkets, Inc.
9.75%, '01 NR 2,000 1,845,000
Retail--Food Service--0.0%
ARA Services, Inc. 10.625%, '00 BBB- 54 59,063
Utility--Electric--1.4%
California Energy Co.
(0%, '97) 10.25%, '04 BB- 5,000 3,900,000
Rural Electric Cooperative 9.73%,
'17 AAA 140 150,620
4,050,620
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $130,393,057) 125,964,862
FOREIGN NON-CONVERTIBLE BONDS--13.7%
Argentina--4.5%
Banco de Galicia Yankee Notes 9%,
'03 BB- 4,000 2,720,000
Banco Rio de la Plata Deb. Euro
8.50%, '98 BB- 8,000 6,920,000
Telefonica de Argentina 144A Euro
8.375%, '00 (c) NR 4,730 3,878,600
13,518,600
Canada--2.7%
Repap New Brunswick Yankee
10.675%, '05 B+ 2,000 2,037,500
Videotron Ltd. Sr Sub Notes
10.25%, '02 BB+ 6,000 6,105,000
8,142,500
Chile--1.4%
CSAV 144A 7.375%, '03 (c) BBB 5,000 4,250,000
Columbia--1.6%
Centragas Yankee 144A 10.65%, '10
(c) BBB- 5,000 4,831,250
Mexico--2.2%
Grupa IRSA Guaranteed Med Term
Euro 8.375%, '98 NR 5,000 3,750,000
MCTTR Toll Revenue 144A 11%, '02
(c) NR 4,861 2,819,639
6,569,639
Philippines--1.3%
National Power Corp. Philippines
Notes 144A 7.625%, '00 (c) BB- 4,250 3,740,000
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $48,417,487) 41,051,989
FOREIGN GOVERNMENT SECURITIES--17.7%
Argentina--4.3%
Republic of Argentina Par L-GP
(5%, 3/96) 6%, '23 BB- 29,500 12,944,600
Brazil--6.0%
Republic of Brazil Discount Series
ZL Euro 7.25%, '24 NR 6,000 3,292,800
Republic of Brazil Par YL4 (4.25%,
4/96) 6%, '24 NR 22,000 8,800,000
Republic Brazil Par YL3 Euro
(4.25%, 4/96) 6%, '24 NR 14,750 5,900,000
17,992,800
Canada--2.9%
Canadian Government 6.50%, '96 Aa (d) 12,000(e) 8,721,034
Ecuador--0.6%
Republic of Ecuador PDI 20yr Euro
7.25%, '15 NR 6,000 1,815,000
Poland--3.9%
Poland Definitive Discount 144A
7.125%, '24 (c) NR 5,000 3,481,500
Poland Discount Global Euro
7.125%, '24 NR 12,000 8,355,600
11,837,100
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $55,270,664) 53,310,534
See Notes to Financial Statements
3
<PAGE>
MUNICIPAL BONDS--6.7%
California--0.9%
Los Angeles County Series B 5.25%,
'23 AAA $ 3,000 $ 2,633,220
Florida--1.2%
Palm Beach Waste Revenue Project B
10.50%, '11 NR 3,750 3,567,562
Michigan--0.0%
Brighton School District 0%, '18 AAA 600 145,134
New York--0.6%
New York State TWY Auth. Series B
5%, '14 AAA 2,000 1,766,900
Pennsylvania--3.3%
Pennsylvania Economic Development
10.375%, '12 NR 6,100 6,086,275
Pennsylvania Financial Development
6.75%, '07 NR 4,050 3,931,335
10,017,610
Virginia--0.7%
Pittsylvania County Series B
7.65%, '10 NR 1,900 1,973,359
TOTAL MUNICIPAL BONDS
(Identified cost $19,903,884) 20,103,785
SHARES
PREFERRED STOCKS--1.7%
Paper & Forest Products--0.6%
SD Warren Co. Pfd Unit 144A PIK
(c) B+ 55,000 1,794,375
Telecommunications Equipment--1.1%
Panamsat Corp. Pfd. 12.75%, '05 B- 3,250 3,255,281
TOTAL PREFERRED STOCKS
(Identified cost $4,625,000) 5,049,656
TOTAL LONG-TERM INVESTMENTS
(Identified cost $303,614,232) 290,419,864
PAR
VALUE
(000)
SHORT-TERM OBLIGATIONS--2.0%
Commercial Paper--2.0%
Anheuser-Busch Cos., Inc. 5.90%,
5-01-95 A-1+ $ 5,970 $ 5,970,000
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $5,970,000) 5,970,000
TOTAL INVESTMENTS--98.9%
(Identified cost $309,584,232) 296,389,864(a)
Cash & receivables, less liabilities--1.1% 3,371,540
NET ASSETS--100.0% $299,761,404
</TABLE>
(a)Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $4,679,529 and gross
depreciation of $17,873,897 for income tax purposes. At April 30, 1995 the
aggregate cost of securities for federal income tax purposes approximates
book cost. At October 31, 1994, the Fund had capital loss carryforwards
aggregating $2,412,776 available to offset future gains and expiring in 2002.
(b)Private Placement--see Note 4.
(c)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 April 30, 1995,
these securities amounted to a value of $38,403,808 or 12.8% of net assets.
(d)As rated by Moody's, Fitch and/or Duff & Phelp's.
(e)Foreign denominated.
See Notes to Financial Statements
4
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment securities at value
(Identified cost $309,584,232) $296,389,864
Cash 364,740
Receivables
Investment securities sold 1,866,638
Fund shares sold 311,383
Dividends and interest 7,397,129
Total assets 306,329,754
Liabilities
Payables
Investment securities purchased 5,479,605
Fund shares repurchased 466,461
Dividends declared 255,071
Investment advisory fee 134,408
Distribution fee 147,775
Transfer agent fee 45,115
Financial agent fee 7,349
Trustees' fee 4,800
Accrued expenses 27,766
Total liabilities 6,568,350
Net Assets $299,761,404
Net Assets Consist of:
Capital paid in on shares of capital stock $338,014,530
Distributions in excess of net investment income (296,645)
Accumulated net realized losses (24,842,243)
Net unrealized depreciation (13,114,238)
Net Assets $299,761,404
Class A
Shares of capital stock outstanding,
$.10 par value, unlimited authorization
(Net Assets $157,817,199) 13,366,273
Net asset value per share $11.81
Offering price per share
$11.81/(1-4.75%) $12.40
Class B
Shares of capital stock outstanding,
$.10 par value, unlimited authorization
(Net Assets $141,944,205) 12,035,083
Net asset value and offering price per share $11.79
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Interest $ 14,087,230
Dividends 48,125
Total investment income 14,135,355
Expenses
Investment advisory fee 832,627
Distribution fee--Class A 199,259
Distribution fee--Class B 716,830
Financial agent fee 45,416
Transfer agent 212,646
Registration 69,186
Custodian 45,410
Professional 21,659
Trustees 9,380
Printing 7,653
Miscellaneous 11,528
Total expenses 2,171,594
Net investment income 11,963,761
Net Realized and Unrealized Gain (Loss) on Investments
Net realized loss on securities (22,185,811)
Net realized gain on foreign currency transactions 95,605
Net unrealized appreciation on investments 17,743,899
Net loss on investments (4,346,307)
Net increase in net assets resulting from operations $ 7,617,454
See Notes to Financial Statements
</TABLE>
5
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year
April 30, 1995 Ended
(Unaudited) October 31, 1994
<S> <C> <C>
From Operations
Net investment income $ 11,963,761 $ 25,370,776
Net realized losses (22,090,206) (5,532,420)
Net unrealized appreciation
(depreciation) 17,743,899 (38,043,414)
Increase (decrease) in net assets
resulting from operations 7,617,454 (18,205,058)
From Distributions to Shareholders
Net investment income--Class A (6,524,841) (13,195,319)
Net investment income--Class B (5,303,175 (10,189,264)
Distributions in excess of net
investment income--Class A -- (485,962)
Distributions in excess of net
investment income--Class B -- (375,245)
Net realized gains--Class A -- (7,782,144)
Net realized gains--Class B -- (8,561,575)
Tax return of capital--Class A -- (1,459,607)
Tax return of capital--Class B -- (1,127,064)
Decrease in net assets from
distributions to shareholders (11,828,016) (43,176,180)
From Share Transactions
Class A
Proceeds from sales of shares (885,073
and 2,789,734 shares, respectively) 10,315,285 35,833,253
Net asset value of shares issued from
reinvestment of distributions
(344,221
and 1,081,009 shares, respectively) 3,988,310 14,009,219
Net asset value of capital shares
issued from the acquisition of
Phoenix High Quality Bond Fund (0 and
5,096,998 shares, respectively) -- 68,182,547
Cost of shares repurchased (2,345,481
and 7,002,815 shares, respectively) (27,237,216) (90,267,185)
Total (12,933,621) 27,757,834
Class B
Proceeds from sales of shares (447,210
and 1,988,539 shares, respectively) 5,228,820 25,554,081
Net asset value of shares issued from
reinvestment of distributions
(163,416
and 616,141 shares, respectively) 1,890,728 8,008,250
Cost of shares repurchased (1,707,115
and 3,168,080 shares, respectively) (19,808,622) (40,267,577)
Total (12,689,074) (6,705,246)
(Decrease) increase in net assets from
share transactions (25,622,695) 21,052,588
Net decrease in net assets (29,833,257) (40,328,650)
Net Assets
Beginning of period 329,594,661 369,923,311
End of period (including distributions
in excess of net investment
income of ($296,645) and ($432,390),
respectively) $299,761,404 $329,594,661
See Notes to Financial Statements
</TABLE>
6
<PAGE>
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
From
Six Months Inception
Ended 12/18/89
April 30, 1995 Year Ended October 31, to
(Unaudited) 1994 1993 1992 1991 10/31/90
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $11.94 $14.13 $13.29 $12.81 $11.11 $11.91
Income from investment operations
Net investment income 0.48 0.76 1.14 1.24 1.22(2) 1.01(2)
Net realized and unrealized
(loss) gain (0.14) (1.35) 1.08 0.50 1.71 (0.78)
Total from investment
operations 0.34 (0.59) 2.22 1.74 2.93 0.23
Less distributions
Dividends from net investment
income (0.47) (0.77) (1.19) (1.21) (1.23) (1.03)
Dividends in excess of net
investment income -- (0.05) (0.02) -- -- --
Dividends from net realized
gains -- (0.63) (0.17) (0.05) -- --
Tax return of capital -- (0.15) -- -- -- --
Total distributions (0.47) (1.60) (1.38) (1.26) (1.23) (1.03)
Change in net asset value (0.13) (2.19) 0.84 0.48 1.70 (0.80)
Net asset value, end of period $11.81 $11.94 $14.13 $13.29 $12.81 $11.11
Total return( (1) 2.94%(4) -4.57% 17.55% 14.11% 27.56% 1.85%(4)
Ratios/supplemental data:
Net assets, end of period
(thousands) $157,817 $172,966 $176,859 $141,627 $68,139 $8,667
Ratio to average net assets of:
Operating expenses 1.07%(3) 1.13% 1.29% 1.48% 1.50% 1.20%(3)
Net investment income 8.26%(3) 7.05% 8.27% 9.42% 10.13% 9.59%(3)
Portfolio turnover 171%(3) 123% 207% 116% 180% 2%(3)
</TABLE>
<TABLE>
<CAPTION>
Class B
Six Months From
Ended Inception
April 30, 1995 Year Ended October 31, 1/3/92 to
(Unaudited) 1994 1993 10/31/92
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $11.93 $14.10 $13.25 $13.02
Income from investment operations
Net investment income 0.43 0.68 1.04 0.94
Net realized and unrealized
(loss) gain (0.14) (1.36) 1.08 0.21
Total from investment
operations 0.29 (0.68) 2.12 1.15
Less distributions
Dividends from net investment
income (0.43) (0.67) (1.08) (0.92)
Dividends in excess of net
investment income -- (0.05) (0.02) --
Dividends from net realized
gains -- (0.63) (0.17) --
Tax return of capital -- (0.14) -- --
Total distributions (0.43) (1.49) (1.27) (0.92)
Change in net asset value (0.14) (2.17) 0.85 0.23
Net asset value, end of period $11.79 $11.93 $14.10 $13.25
Total return(1) 2.54%(4) -5.21% 16.78% 8.81%(4)
Ratios/supplemental data:
Net assets, end of period
(thousands) $141,944 $156,629 $193,064 $82,522
Ratio to average net assets of:
Operating expenses 1.82%(3) 1.78% 1.99% 2.18%(3)
Net investment income 7.37%(3) 6.46% 7.36% 8.47%(3)
Portfolio turnover 171%(3) 123% 207% 116%
</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 and $0.38, respectively.
(3)Annualized
(4)Not annualized
See Notes to Financial Statements
7
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Phoenix Multi-Sector Fixed Income Fund, Inc. (the "Fund") is organized as a
Maryland corporation and is registered under the Investment Company Act of
1940, as amended, as a diversified open-end management investment company.
The Fund offers both Class A and Class B shares. Class A shares are sold with
a front- end sales charge of up to 4.75%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on
the period of time the shares are held. Both 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 both 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. These
policies are in conformity with generally accepted accounting principles.
A. Security valuation:
Securities listed or traded on a national securities exchange are valued at
the last sale price, or if there had been no sale of the security on that
day, at the mean between the last bid and asked prices. Securities traded in
the over-the-counter market are valued at the mean between the last bid and
asked prices; and if no active market exists, at the bid price. Short-term
investments having a remaining maturity of less than sixty days 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 Directors.
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. Dividend income is recorded on the
ex-dividend date or, in the case of certain foreign securities, as soon as
the Fund is notified. 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, partnerships, 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 date
of settlement. 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.
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 wholly-owned
subsidiary of Phoenix Home Life Mutual Insurance Company ("PHL"), is entitled
to a fee at an annual rate of 0.55% for the first $1 billion of the average
daily net assets of the Fund.
As Distributor of the Fund's shares, Phoenix Equity Planning Corp. ("PEPCO"),
an indirect wholly-owned subsidiary of PHL, has advised the Fund that it
received selling commissions of $18,193 for Class A shares and deferred sales
charges of $444,190 for Class B shares for the six months ended April 30,
1995. In addition, the Fund pays PEPCO a distribution fee at an annual rate
of 0.25% for Class A shares and 1.00% for Class B shares of the average daily
net assets of the Fund. The Distribu-
8
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
tion 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 six months ended April 30, 1995, $578,659 was earned by the
Distributor and $337,430 was earned by unaffiliated participants.
As Financial Agent of the Fund, PEPCO receives a fee at an annual rate of
0.03% of the average daily net assets of the Fund for bookkeeping,
administration and pricing services. PEPCO serves as the Fund's Transfer
Agent with State Street Bank and Trust Company as sub-transfer agent. For the
six months ended April 30, 1995, transfer agent fees were $212,646 of which
PEPCO retained $105,285 which is net of the fees paid to State Street.
At April 30, 1995, PHL and affiliates held 9,614 Class A shares and 10 Class
B shares of the Fund with a combined value of $113,575.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities, excluding short-term securities, for the
six months ended April 30, 1995, aggregated $255,275,443 and $282,091,161,
including $114,337,965 and $104,157,737, of U.S. Government securities,
respectively.
4. PRIVATE PLACEMENTS
At April 30, 1995, the Fund held the following securities which were private
placements and represented 0.5% (at market value) of the net assets of the
Fund:
<TABLE>
<CAPTION>
Acquisition
Security Date Cost
<S> <C> <C>
Chase Mortgage Finance Corp. 92-2,
B-2 8.02%, '22 9/30/92 $944,617
Prudential Home Mortgage 92-22, B1
8.50%, '22 7/14/92 473,444
</TABLE>
The Fund will bear any costs, including those involved in registration under
the Securities Act of 1933, in connection with the disposition of such
securities.
5. MERGERS
On November 12, 1993, the Fund acquired all the net assets of the Phoenix
High Quality Bond Fund Series (the "Phoenix Fund"), a series of the Phoenix
Series Fund, pursuant to an Agreement and Plan of Reorganization approved by
fund shareholders on October 28, 1993. The acquisition was accomplished by a
tax-free exchange of 5,096,998 shares of the Fund (valued at $68,182,547) for
6,840,641 Phoenix Fund shares outstanding on November 12, 1993.
This report is authorized for use by other than shareholders only when
accompanied or preceded by the delivery of a current prospectus showing the
sales charge and other material information.
9
<PAGE>
PHOENIX MULTI-SECTOR FIXED
INCOME FUND, INC.
101 Munson Street
Greenfield, Massachusetts 01301
Directors
C. Duane Blinn
Robert Chesek
E. Virgil Conway
Harry Dalzell-Payne
Leroy Keith, Jr.
Philip R. McLoughlin
James M. Oates
Philip R. Reynolds
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
Officers
Philip R. McLoughlin, President
Martin J. Gavin, Executive Vice President
David L. Albrycht, Vice President
James M. Dolan, Vice President
Michael E. Haylon, 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
One American Row
Hartford, Connecticut 06115-2520
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
Legal Counsel
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005-1208
<PAGE>
THIS PAGE LEFT BLANK INTENTIONALLY
<PAGE>
Phoenix Funds
Phoenix Multi-Sector
Fixed Income Fund, Inc.
Semi-Annual Report
April 30, 1995
[artwork of dollar bills]
[Phoenix logo] Phoenix Investments
Phoenix Multi-Sector Fixed Income Fund, Inc.
P.O. Box 2200
Enfield, CT 06083-2200
[Phoenix logo] Phoenix Investments
PEP741 (6/95)
Bulk Rate Mail
U.S. Postage
PAID
Springfield, MA
Permit No. 444
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000855889
<NAME> PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
<SERIES>
<NUMBER> 1
<NAME> CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-START> NOV-01-1994
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 309,584
<INVESTMENTS-AT-VALUE> 296,390
<RECEIVABLES> 9,575
<ASSETS-OTHER> 365
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 306,330
<PAYABLE-FOR-SECURITIES> 5,480
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,088
<TOTAL-LIABILITIES> 6,568
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 338,014
<SHARES-COMMON-STOCK> 13,366
<SHARES-COMMON-PRIOR> 14,482
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (297)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (24,842)
<ACCUM-APPREC-OR-DEPREC> (13,114)
<NET-ASSETS> 299,761
<DIVIDEND-INCOME> 48
<INTEREST-INCOME> 14,087
<OTHER-INCOME> 0
<EXPENSES-NET> (2,171)
<NET-INVESTMENT-INCOME> 11,964
<REALIZED-GAINS-CURRENT> (22,090)
<APPREC-INCREASE-CURRENT> 17,744
<NET-CHANGE-FROM-OPS> 7,618
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6,525)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 885
<NUMBER-OF-SHARES-REDEEMED> (2,345)
<SHARES-REINVESTED> 344
<NET-CHANGE-IN-ASSETS> (11,841)
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 432
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 833
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,171
<AVERAGE-NET-ASSETS> 307,761
<PER-SHARE-NAV-BEGIN> 11.94
<PER-SHARE-NII> 0.48
<PER-SHARE-GAIN-APPREC> (0.14)
<PER-SHARE-DIVIDEND> (0.47)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.81
<EXPENSE-RATIO> 1.07
<AVG-DEBT-OUTSTANDING> 0
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000855889
<NAME> PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
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<NUMBER> 2
<NAME> CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-START> NOV-01-1994
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 309,584
<INVESTMENTS-AT-VALUE> 296,390
<RECEIVABLES> 9,575
<ASSETS-OTHER> 365
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 306,330
<PAYABLE-FOR-SECURITIES> 5,480
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,088
<TOTAL-LIABILITIES> 6,568
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 338,014
<SHARES-COMMON-STOCK> 12,035
<SHARES-COMMON-PRIOR> 13,132
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (297)
<ACCUMULATED-NET-GAINS> 0
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<ACCUM-APPREC-OR-DEPREC> (13,114)
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<DIVIDEND-INCOME> 48
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<NET-INVESTMENT-INCOME> 11,964
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<NET-CHANGE-FROM-OPS> 7,618
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5,303)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 447
<NUMBER-OF-SHARES-REDEEMED> (1,707)
<SHARES-REINVESTED> 163
<NET-CHANGE-IN-ASSETS> (10,375)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2,752)
<OVERDISTRIB-NII-PRIOR> 432
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 833
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,171
<AVERAGE-NET-ASSETS> 307,761
<PER-SHARE-NAV-BEGIN> 11.93
<PER-SHARE-NII> 0.43
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<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.79
<EXPENSE-RATIO> 1.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
