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 twelve-month reporting period ended October
31, 1995, the fixed-income investment environment has improved dramatically.
A favorable combination of slowing economic growth and moderate inflation has
translated into a strong bond market rally. This rally could be extended if
Congress passes significant deficit reduction legislation. Also, the recent
strength of the U.S. dollar is a positive factor for continued moderate
inflation.
Portfolio Review: For the twelve-month period ended October 31, 1995, the
Fund's Class A shares provided a total return of 13.83% and Class B shares
returned 12.96%. This compares with the market's return of 15.65%, as
measured by the Lehman Brothers Aggregate Bond Index. All of these returns
assume reinvestment of any distributions but exclude the effect of sales
charges.
The Fund's relative underperformance was due to an overweighting in emerging
debt markets and municipal bonds. Limited exposure to investment-grade
corporates also held performance back. Positive contributors to the portfolio
were holdings in commercial mortgage-backed securities and high-yield
corporate bonds.
Outlook: Our outlook for the bond market remains positive. In the months
ahead, we expect to de-emphasize U.S. treasury securities in favor of more
attractive market sectors. Currently, we have increased exposure to
commercial mortgage-backed securities as positive market technicals have
resulted in attractive valuations. We also continue to overweight the yankee
bond sector. Our focus is on Argentinean, Brazilian and Polish Brady bonds,
given the improving political and economic momentum in these countries.
Lastly, we have decreased exposure to non-dollar securities since we believe
U.S. dollar-denominated securities represent better relative value.
[line chart]
Phoenix Lehman Brothers
Multi-Sector Fixed Income--Class A Aggregate Bond Index*
12/15/89 9525 10000
10/31/90 9704 10631
10/31/91 12378 12312
10/31/92 14125 13522
10/31/93 16605 15127
10/31/94 15846 14617
10/31/95 17173 16905
Average Annual Total Returns for Periods Ending 10/31/95
From
Inception From
12/18/89 Inception
1 5 to 1/3/92 to
Year Years 10/31/95 10/31/95
- ------------------------------------------------------------------------
Class A with 4.75% sales
charge 8.38% 12.08% 10.55% --
- ------------------------------------------------------------------------
Class A at net asset
value 13.83% 13.17% 11.46% --
- ------------------------------------------------------------------------
Class B with CDSC 7.96% -- -- 7.97%
- ------------------------------------------------------------------------
Class B at net asset
value 12.96% -- -- 8.37%
- ------------------------------------------------------------------------
Lehman Brothers
Aggregate Bond Index* 15.65% 9.65% 9.35% 8.64%
- ------------------------------------------------------------------------
This chart assumes an initial investment of $10,000 made on December 18, 1989
for Class A shares. Total returns for Class A shares reflect the maximum
sales charge of 4.75% on the initial investment and assume reinvestment of
dividends and capital gains. Class B share performance will be greater or
less than that shown based on differences in inception dates, fees and sales
charges. Class B shares reflect the 5% contingent deferred sales charge
(CDSC), which is applicable on all shares redeemed during the 1st year after
purchase and 4% for all shares redeemed during the 2nd year after purchase
(scaled down to 3%-3rd year, 2%-4th and 5th year and 0% thereafter). The
investment return and principal value of the investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less at
redemption than at purchase price. Returns indicate past performance which is
not predictive of future performance.
* The Lehman Brothers Aggregate Bond Index is an unmanaged but commonly used
measure of bond performance. It is a combination of several Lehman Brothers
Fixed Income indexes. The index's performance does not include sales charges.
** 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 OCTOBER 31, 1995
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------ -------------
U.S. GOVERNMENT SECURITIES--17.1%
U.S. Treasury Bonds--1.1%
U.S. Treasury Bonds
6.50%, '05 AAA $ 1,000 $ 1,035,936
U.S. Treasury Bonds
6.875%, '25 AAA 2,250 2,414,925
-----------
3,450,861
-----------
U.S. Treasury Notes--5.7%
U.S. Treasury Notes
5.63%, '97 AAA 5,000 5,003,125
U.S. Treasury Notes
5.875%, '98 AAA 11,500 11,550,025
U.S. Treasury Notes
5.75%, '00 AAA 1,250 1,247,656
-----------
17,800,806
-----------
Agency Mortgage-Backed Securities--10.3%
FHLMC 9%, '04 AAA 212 214,683
FHLMC 7.50%, '18 AAA 827 832,968
FHLMC 8.75%, '20 AAA 707 721,054
FNMA 8.70%, '16 AAA 1,168 1,204,581
FNMA 6.65%, '17 AAA 1,000 996,909
FNMA 6.50%, '18 AAA 1,000 990,599
FNMA 7%, '07-'23 AAA 6,861 6,815,781
GNMA TBA 6.50%, '05 AAA 2,000 1,943,750
GNMA 9%, '05-'25 AAA 15,249 16,015,246
GNMA TBA 9%, '05 AAA 2,500 2,628,125
-----------
32,363,696
-----------
TOTAL U.S. GOVERNMENT SECURITIES
(Identified cost $53,512,909) 53,615,363
-----------
NON-CONVERTIBLE BONDS--39.6%
Aerospace & Defense--0.0%
McDonnell Douglas Corp.
9.45%, '96 NR 150 155,046
-----------
Airlines--1.1%
GPA Delaware, Inc.
8.75%, '98 CCC 4,000 3,580,000
-----------
Chemical--Specialty--1.6%
Borden Chemical & Plastics
9.50%, '05 BB+ 5,000 5,150,000
-----------
Hospital Management & Services--1.6%
Tenet Healthcare Corp.
9.625%, '02 B+ 4,500 4,860,000
-----------
Insurance--0.6%
Middletown Trust 11.75%, '10 A+ 1,600 1,962,430
-----------
Non-Agency Mortgage-Backed Securities--31.2%
Chase Mortgage Finance Corp.
92-2, B2 8.02%,
'22 (b) AA((d)) $ 4,675 $ 4,797,358
Citicorp Mortgage Securities
91-9, B 9%, '21 AAA 1,600 1,640,500
DLJ Mortgage Acceptance
94-M11, B1 8.10%, '04 Baa((d)) 5,000 5,023,437
FDIC REMIC 94-C1, 2D 8.70%,
'25 A((d)) 7,000 7,435,313
Green Tree Financial Corp.
93-2, B 8%, '18 Baa((d)) 5,000 5,125,000
Kidder Peabody Acceptance
Corp. 94-C1, B 6.85%, '06 AA 2,000 1,996,250
Kidder Peabody Acceptance
Corp. 93-6, B4 144A
7.7841%, '23 (c) BBB 4,242 4,089,084
Kidder Peabody Acceptance
Corp. 93-M3, D 6.50%, '25 Baa((d)) 2,147 2,013,483
Merrill Lynch Mortgage, Inc.
95-C2, C 7.79%, '21 AAA 1,000 1,018,594
Prudential Home Mortgage
93H, B2 144A 6.759%, '08
(c) NR 8,342 8,133,761
Prudential Home Mortgage
93-L, 3B2 144A 6.641%, '23
(c) NR 3,270 3,090,150
Prudential Home Mortgage
94-32, M 8.25%, '24 NR 2,943 3,027,170
Residential Funding Corp.
93-S29, M3 7% '08 BBB((d)) 610 585,355
Resolution Trust Corp.
93-N3, 144A 7.80%,
'03 (c) Ba((d)) 2,292 2,291,667
Resolution Trust Corp.
92-C7, A1C 7.90%, '23 Aa((d)) 1,966 1,973,790
Resolution Trust Corp.
92-C3, B 9.05%, '23 AA 3,938 4,046,558
Resolution Trust Corp.
93-C3, A4 6.55%, '24 Aaa((d)) 1,828 1,826,000
Resolution Trust Corp.
94-C2, C 8%, '25 A 3,400 3,496,686
Resolution Trust Corp.
94-C2, D 8%, '25 BBB 5,388 5,430,033
Resolution Trust Corp.
94-C1, A2C 7.45%, '26 AAA 5,000 5,082,812
Resolution Trust Corp.
94-C1, D 8%, '26 BBB 5,755 5,766,636
Resolution Trust Corp. 95-1,
C2 7.50%, '28 BBB 4,232 4,194,054
See Notes to Financial Statements
2
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------ -------------
Non-Agency Mortgage-Backed Securities (Continued)
Ryland Mortgage Security
Corp. III 92-A, 1A 8.33%,
'30 A- $ 416 $ 417,733
SASC 95-C1, B 7.375%, '24 AAA 5,344 5,362,370
SASC 93-C1, B 6.60%, '24 A+ 5,000 4,644,039
White Hall Partners 95-C1, B
7.43%, '25 A((d)) 5,000 5,059,375
-----------
97,567,208
-----------
Retail--Food--0.6%
Rini Rego Supermarkets, Inc.
9.75%, '01 NR 2,000 1,812,500
-----------
Retail--Food Service--0.0%
ARA Services, Inc. 10.625%,
'00 BB 54 61,425
-----------
Telecommunications Equipment--1.4%
Paging Network 10.125%, '07 B 2,000 2,130,000
Panamsat L.P. 9.75%, '00 BB- 2,000 2,115,000
-----------
4,245,000
-----------
Utility--Electric--1.5%
California Energy Co.
0%, '04 (f) BB- 5,000 4,512,500
Rural Electric Cooperative
9.73%, '17 AAA 140 156,355
-----------
4,668,855
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $122,350,036) 124,062,464
-----------
FOREIGN NON-CONVERTIBLE BONDS--9.1%
Argentina--1.6%
Banco de Galicia Yankee 9%,
'03 BB- 4,000 3,040,000
Banco Rio de la Plata 144A
8.50%, '98 (c) B((d)) 2,000 1,885,000
-----------
4,925,000
-----------
Chile--1.5%
CSAV 144A 7.375%, '03 (c) BBB 5,000 4,875,000
-----------
Columbia--1.7%
Centragas Yankee 144A
10.65%, '10 (c) BBB- 5,000 5,287,500
-----------
Mexico--2.3%
Grupa IRSA Guaranteed Med
Term Euro 8.375%, '98 NR 5,000 4,400,000
MCTTR Toll Revenue 144A 11%,
'02 (c) NR 4,771 2,743,374
-----------
7,143,374
-----------
Singapore--2.0%
Asia Pulp & Paper Co. Yankee
11.75%, '05 BB $ 6,000 $ 6,135,000
-----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $31,353,436) 28,365,874
-----------
FOREIGN GOVERNMENT SECURITIES--15.0%
Argentina--3.5%
Republic of Argentina
Discount L-GL Euro 6.8175%,
'23 (f) BB- 9,000 5,079,375
Republic of Argentina FRB
6.875%, '05 (f) BB- 6,500 3,871,563
Republic of Argentina Par
L-GP 5%, '23 (f) BB- 4,000 1,912,500
-----------
10,863,438
-----------
Brazil--5.9%
Republic of Brazil Discount
Series Z-L Euro 6.8125%,
'24 (f) NR 23,500 14,011,875
Republic of Brazil Par Z-L
Euro 4.25%, '24 (f) NR 9,000 4,370,625
-----------
18,382,500
-----------
Bulgaria--0.9%
Republic of Bulgaria IAB
6.75%, '11 (f) NR 4,000 1,770,000
Bulgaria FLIRB-A Br 2%, '12
(f) NR 4,000 1,120,000
-----------
2,890,000
-----------
Ecuador--0.6%
Republic of Ecuador PDI 20yr
Euro, Interest
Capitalization, 6.8125%,
'15 (f) NR 6,129 2,032,104
-----------
Mexico--1.1%
United Mexican Discount B
Euro 7.1875%, '19 (e)(f) BB 5,000 3,343,750
-----------
Poland--3.0%
Poland Global Reg Par Euro
2.75%, '24 (f) NR 7,750 3,429,375
Poland Discount Euro 6.875%,
'24 (f) NR 2,000 1,532,500
Poland PDI B 3.75%, '14 (f) NR 7,000 4,506,250
-----------
9,468,125
-----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $46,511,052) 46,979,917
-----------
See Notes to Financial Statements
3
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ ------ -------------
MUNICIPAL BONDS--13.1%
Alabama--0.2%
Alabama Agriculture/
Mechanical Univ. 5.50%, '20 AAA $ 810 $ 787,530
-----------
California--3.6%
Long Beach Pension 7.09%,
'09 AAA 3,500 3,502,905
Los Angeles County Series B
Rev. 5.25%, '23 AAA 3,000 2,797,170
Stanford University
Hospital, 5.25%, '20 AAA 3,385 3,140,840
University of California
Series C 5%, '23 AAA 2,000 1,792,880
-----------
11,233,795
-----------
Colorado--0.6%
Denver Airport Rev. Series A
5.60%, '20 AAA 2,000 1,947,540
-----------
Florida--1.3%
Palm Beach Waste Revenue
Project B 10.50%, '11 NR 3,750 3,991,162
-----------
Massachusetts--1.2%
Massachusetts Bay Transit
Gen. Series B 5.375%, '25 AAA 4,000 3,778,240
-----------
Michigan--0.1%
Brighton School District 0%,
'18 AAA 600 163,998
-----------
New York--1.5%
Beth Israel Medical Center,
Taxable 7.58%, '15 AAA 4,750 4,745,487
-----------
Pennsylvania--3.4%
Pennsylvania Economic
Development 10.375%, '12 NR 6,200 6,505,722
Pennsylvania Financial
Development 6.75%, '07 NR 4,050 4,086,815
-----------
10,592,537
-----------
South Carolina--0.5%
South Carolina Public
Service Rev. Series C 5%,
'18 AAA $1,700 $ 1,537,157
-----------
Virginia--0.7%
Pittsylvania County Series B
7.65%, '10 NR 1,900 2,095,263
-----------
TOTAL MUNICIPAL BONDS
(Identified cost $39,346,268) 40,872,709
-----------
TOTAL LONG-TERM INVESTMENTS--93.9%
(Identified cost $293,073,701) 293,896,327
-----------
SHORT-TERM OBLIGATIONS--6.4%
Commercial Paper--6.4%
Philip Morris Companies,
Inc. 5.69%, 11-8-95 A-1 4,600 4,594,911
Bellsouth Telecommunica-
tions, Inc. 5.65%, 11-9-95 A-1+ 6,897 6,888,340
Albertson's, Inc., 5.70%,
11-10-95 A-1 3,200 3,195,440
TDK USA, Inc. 5.73%,
11-20-95 A-1+ 3,960 3,948,024
E.I. Du Pont de Nemours
5.69%, 12-4-95 A-1+ 1,295 1,288,246
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $19,914,961) 19,914,961
-----------
TOTAL INVESTMENTS--100.3%
(Identified cost $312,988,662) 313,811,288(a)
Cash & receivables, less liabilities--(0.3%) (916,477)
-----------
NET ASSETS--100.0% $312,894,811
===========
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $10,177,062 and gross
depreciation of $9,476,018 for income tax purposes. At October 31, 1995
the aggregate cost of securities for federal income tax purposes was
$313,110,244. At October 31, 1995, the Fund had capital loss
carryforwards aggregating $19,797,495 available to offset future gains
and expiring as follows: $2,412,682 in 2002 and $17,384,813 in 2003.
(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 October 31,
1995, these securities amounted to a value of $32,395,536 or 10.4% of net
assets.
(d) As rated by Moody's, Fitch and/or Duff & Phelp's.
(e) Mexico Value Recovery Euro Rights attached.
(f) Variable or step coupon bond; interest rate shown reflects the rate
currently in effect.
See Notes to Financial Statements
4
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
Assets
Investment securities at value
(Identified cost $312,988,662) $313,811,288
Cash 6,944
Receivables
Investment securities sold 7,443,452
Fund shares sold 366,426
Interest 7,571,638
-----------
Total assets 329,199,748
-----------
Liabilities
Payables
Investment securities purchased 15,165,758
Fund shares repurchased 320,313
Income distribution payable 369,067
Investment advisory fee 146,287
Distribution fee 158,289
Financial agent fee 7,997
Transfer agent fee 59,421
Directors' fee 7,048
Accrued expenses 70,757
-----------
Total liabilities 16,304,937
-----------
Net Assets $312,894,811
===========
Net Assets Consist of:
Capital paid in on shares of capital stock $332,185,832
Distributions in excess of net investment
income (186,415)
Accumulated net realized losses (19,927,232)
Net unrealized appreciation 822,626
-----------
Net Assets $312,894,811
===========
Class A
Shares of capital stock outstanding,
$0.10 par value, 250,000,000 shares
authorized (Net Assets $168,875,147) 13,450,209
Net asset value per share $12.56
Offering price per share
$12.56/(1-4.75%) $13.19
Class B
Shares of capital stock outstanding,
$0.10 par value, 250,000,000 shares
authorized (Net Assets $144,019,664) 11,483,585
Net asset value and offering price per share $12.54
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1995
Investment Income
Interest $ 28,119,243
Dividends 97,934
-----------
Total investment income 28,217,177
-----------
Expenses
Investment advisory fee 1,692,191
Distribution fee--Class A 407,197
Distribution fee--Class B 1,447,921
Financial agent fee 92,301
Transfer agent 517,823
Registration 93,433
Custodian 84,207
Professional 48,294
Printing 30,356
Directors 24,383
Miscellaneous 19,397
-----------
Total expenses 4,457,503
-----------
Net investment income 23,759,674
-----------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized loss on securities (17,389,741)
Net realized loss on foreign currency
transactions (56,077)
Net unrealized appreciation on investments 31,680,763
-----------
Net gain on investments 14,234,945
-----------
Net increase in net assets resulting from
operations $ 37,994,619
===========
See Notes to Financial Statements
5
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
October 31, 1995 October 31, 1994
----------------- -------------------
<S> <C> <C>
From Operations
Net investment income $ 23,759,674 $ 25,370,776
Net realized loss (17,445,818) (5,532,420)
Net unrealized appreciation (depreciation) 31,680,763 (38,043,414)
--------------- -----------------
Increase (decrease) in net assets resulting from operations 37,994,619 (18,205,058)
--------------- -----------------
From Distributions to Shareholders
Net investment income--Class A (12,901,571) (13,195,319)
Net investment income--Class B (10,373,226) (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 resulting from distributions to
shareholders (23,274,797) (43,176,180)
--------------- -----------------
From Share Transactions
Class A
Proceeds from sales of shares (2,352,653 and 2,789,734 shares,
respectively) 28,484,405 35,833,253
Net asset value of shares issued from reinvestment of
distributions (654,268 and 1,081,009 shares, respectively) 7,837,803 14,009,219
Net asset value of shares issued in connection with the
acquisition of Phoenix High Quality Bond Fund (0 and
5,096,998 shares, respectively) -- 68,182,547
Cost of shares repurchased (4,039,172 and 7,002,815 shares,
respectively) (48,234,621) (90,267,185)
--------------- -----------------
Total (11,912,413) 27,757,834
--------------- -----------------
Class B
Proceeds from sales of shares (887,773 and 1,988,539 shares,
respectively) 10,692,887 25,554,081
Net asset value of shares issued from reinvestment of
distributions (308,741 and 616,141 shares, respectively) 3,693,059 8,008,250
Cost of shares repurchased (2,844,501 and 3,168,080 shares,
respectively) (33,893,205) (40,267,577)
--------------- -----------------
Total (19,507,259) (6,705,246)
--------------- -----------------
(Decrease) increase in net assets from share transactions (31,419,672) 21,052,588
--------------- -----------------
Net decrease in net assets (16,699,850) (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 ($186,415) and ($432,390), respectively) $312,894,811 $329,594,661
=============== =================
</TABLE>
See Notes to Financial Statements
6
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------
Year Ended October 31,
1995 1994 1993 1992 1991
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.94 $14.13 $13.29 $12.81 $11.11
Income from investment operations
Net investment income 0.96 0.76 1.14 1.24 1.22((2))
Net realized and unrealized gain (loss) 0.61 (1.35) 1.08 0.50 1.71
------- ------- ------- ------- ---------
Total from investment operations 1.57 (0.59) 2.22 1.74 2.93
------- ------- ------- ------- ---------
Less distributions
Dividends from net investment income (0.95) (0.77) (1.19) (1.21) (1.23)
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 (0.95) (1.60) (1.38) (1.26) (1.23)
------- ------- ------- ------- ---------
Change in net asset value 0.62 (2.19) 0.84 0.48 1.70
------- ------- ------- ------- ---------
Net asset value, end of period $12.56 $11.94 $14.13 $13.29 $12.81
======= ======= ======= ======= =========
Total return((1)) 13.83% -4.57% 17.55% 14.11% 27.56%
Ratios/supplemental data:
Net assets, end of period (thousands) $168,875 $172,966 $176,859 $141,627 $68,139
Ratio to average net assets of:
Operating expenses 1.10% 1.13% 1.29% 1.48% 1.50%
Net investment income 8.10% 7.05% 8.27% 9.42% 10.13%
Portfolio turnover 201% 123% 207% 116% 180%
</TABLE>
<TABLE>
<CAPTION>
Class B
------------------------------------------------
From
Inception
Year Ended October 31, 1/3/92 to
1995 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 0.86 0.68 1.04 0.94
Net realized and unrealized gain (loss) 0.61 (1.36) 1.08 0.21
------- ------- ------- -------
Total from investment operations 1.47 (0.68) 2.12 1.15
------- ------- ------- -------
Less distributions
Dividends from net investment income (0.86) (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 (0.86) (1.49) (1.27) (0.92)
------- ------- ------- -------
Change in net asset value 0.61 (2.17) 0.85 0.23
------- ------- ------- -------
Net asset value, end of period $12.54 $11.93 $14.10 $13.25
======= ======= ======= =======
Total return((1)) 12.96% -5.21% 16.78% 8.81%((4))
Ratios/supplemental data:
Net assets, end of period (thousands) $144,020 $156,629 $193,064 $82,522
Ratio to average net assets of:
Operating expenses 1.85% 1.78% 1.99% 2.18%((3))
Net investment income 7.30% 6.46% 7.36% 8.47%((3))
Portfolio turnover 201% 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.
((3))Annualized
((4))Not annualized
See Notes to Financial Statements
7
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
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 $37,770 for Class A shares and
deferred sales charges of $773,318 for Class B shares for the year ended
October 31, 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 Distribution Plan
8
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 (Continued)
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, 1995, $1,216,002 was earned by the Distributor
and $639,116 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
year ended October 31, 1995, transfer agent fees were $517,823 of which PEPCO
retained $203,646 which is net of the fees paid to State Street.
At October 31, 1995, PHL and affiliates held 9,988 Class A shares and 11
Class B shares of the Fund with a combined value of $125,580.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities, excluding short-term securities, for the
year ended October 31, 1995, aggregated $590,467,437 and $633,345,404,
including $313,024,367 and $302,455,798, of U.S. Government securities,
respectively.
4. PRIVATE PLACEMENTS
At October 31, 1995, the Fund held the following securities which were
private placements and represented 1.5% (at market value) of the net assets
of the Fund:
Acquisition
Security Date Cost
- --------------------------------- --------- ----------
Chase Mortgage Finance Corp.
92-2, B-2 8.02%, '22 11/13/93 $4,693,620
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. RECLASS 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, 1995,
the Fund has decreased undistributed net investment income by $238,902,
increased accumulated net realized gains by $270,623 and decreased capital
paid in on shares of beneficial interest by $31,721.
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>
REPORT OF INDEPENDENT ACCOUNTANTS
[graphic]Price Waterhouse LLP [PW logo]
To the Board of Directors and Shareholders of
Phoenix Multi-Sector Fixed Income Fund, Inc.
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 Fixed Income Fund, Inc. (the "Fund") at
October 31, 1995, 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, 1995 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 18, 1995
10
<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
Michael E. Haylon, Executive Vice President
David L. Albrycht, Vice President
James M. Dolan, 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
Legal Counsel
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005-1208
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
11
<PAGE>
[cover]
Phoenix Funds
Phoenix Multi-Sector
Fixed Income Fund, Inc.
Annual Report
October 31, 1995
[photo of money]
[logo-Phoenix Duff & Phelps]
Phoenix Multi-Sector Fixed Income Fund, Inc.
P.O. Box 2200
Enfield, CT 06083-2200
[logo-Phoenix Duff & Phelps]
PDP 660 (12/95)
[indicia]
Bulk Rate Mail
U.S. Postage
PAID
Springfield, MA
Permit No. 444
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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