[FRONT COVER]
OCTOBER 31, 1996
Phoenix Multi-Sector
Fixed Income Fund, Inc.
Annual Report
[LOGOTYPE] PHOENIX
DUFF & PHELPS
PHOENIX
ANNUAL REPORT
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[THIS PAGE INTENTIONALLY LEFT BLANK]
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PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
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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. This intermediate-term bond fund emphasizes the most undervalued
sectors of the market and de-emphasizes the most overvalued sectors.
Investment Environment
Shifting market opinion over the direction of the U.S. economy was
responsible for much of the volatility in interest rates during this latest
twelve-month reporting period. During December and January, the Federal
Reserve cut the Fed Funds Rate in an effort to stimulate what was believed to
be a sluggish economy. Although it was widely anticipated that the Fed would
have to lower rates again, a surprisingly strong February employment report
provided conflicting evidence about the economy's condition. As more
information became available, it became evident that the economy had grown
robustly over the first half of 1996. During this period, interest rates were
pushed higher as the financial markets had to consider the threat of future
inflation.
By late summer, the consensus view on Wall Street shifted once again as
signs of more moderate economic growth became increasingly more apparent and
concerns over inflation declined. These signs of a slower economy allowed
interest rates to fall for the remainder of the reporting period. In total,
the yield on the bell weather 30-year Treasury bond ranged from as low as
5.95% to high as 7.19% over the last twelve months. Despite all these market
gyrations, the "long bond" finished the reporting period at 6.64%--only 35
basis points higher than where it started one year ago.
Portfolio Review
Despite a challenging bond market environment, the Fund posted outstanding
results over this latest reporting cycle. For the twelve-month period ended
October 31, 1996, the Fund's class A shares provided a total return of 13.75%
and class B shares returned 12.84%. These results compare very favorably with
the Lehman Brothers Aggregate Bond Index return of 5.85% over the same
period. All of these returns assume reinvestment of any distributions, but
exclude the effect of sales charges.
The Fund's strong performance over the latest reporting period can be
attributed primarily to its holdings in the emerging markets and corporate
high-yield sectors as well as its commercial and non-agency residential
mortgage- backed exposure. Although often overlooked by many bond investors,
our focus on taxable municipal securities also enhanced the Fund's overall
results. As of October 31, 1996, the Fund had an average credit quality of
"BBB" and its average duration was 4.96 years.
Outlook
As we move closer to year-end, we are pleased to see that much of the
pessimism that has afflicted the bond market during 1996 appears to have
subsided. Although concerns over inflation are still present, the latest
economic data suggests that we could see a slower economy going forward. If
this outlook is correct, it will be a welcome relief for the fixed-income
market.
Looking ahead, we have not made any drastic modifications to the Fund's
sector strategy. As a result of an improving real estate market and growing
institutional investor demand, we still favor commercial mortgage-backed
securities relative to investment-grade corporates. Non-agency residential
mortgage-backed securities also look attractive versus agency mortgage-backed
securities, as they offer a significant yield advantage. We continue to
maintain our exposure to the taxable municipal sector as well as Treasuries.
Lastly, despite the extended rally in the emerging markets sector, we are
finding attractive valuations in countries like Mexico, Argentina, Peru and
Venezuela. As always, we will continue to overweight undervalued sectors of
the bond market as our primary means of adding value relative to our
benchmark, the Lehman Brothers Aggregate Bond Index.
1
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Phoenix Multi-Sector Fixed Income Fund, Inc.
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[GRAPHIC]
[LINE CHART]
Phoenix Lehman
Multi-Sector Brothers
Fixed Income - Aggregate
Class A Bond Index*
12/18/89 9525 10000
10/31/90 9704 10503
10/31/91 12378 12164
10/31/92 14125 13359
10/31/93 16605 14946
10/31/94 15845 14397
10/31/95 18036 16650
10/31/96 20516 17624
[/LINE CHART]
Average Annual Total Returns for Periods Ending 10/31/96
<TABLE>
<CAPTION>
From From
Inception Inception
12/18/89 to 1/3/92 to
1 Year 5 Years 10/31/96 10/31/96
---------------------------- -------- --------- ------------- -----------
<S> <C> <C> <C> <C>
Class A with 4.75% sales
charge 8.31% 9.56% 11.01% --
---------------------------- ------- -------- ----------- ---------
Class A at net asset value 13.75% 10.63% 11.79% --
---------------------------- ------- -------- ----------- ---------
Class B with CDSC 8.84% -- -- 8.98%
---------------------------- ------- -------- ----------- ---------
Class B at net asset value 12.84% -- -- 9.28%
---------------------------- ------- -------- ----------- ---------
Lehman Brothers Aggregate
Bond Index* 5.85% 7.70% 8.64%** 7.11%***
---------------------------- ------- -------- ----------- ---------
</TABLE>
This chart assumes an initial gross investment of $10,000 made on December
18, 1989 for Class A shares. The total return for Class A shares reflects the
maximum sales charge of 4.75% on the initial investment and assumes
reinvestment of dividends and capital gains. Class B shares performance will
be greater or less than that shown based on differences in inception dates,
fees and sales charges. The total return (since inception 1/3/92) for Class B
shares reflects 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). Investment return and
net asset value will fluctuate so that your shares, when redeemed, may be
worth more or less than the original cost. Returns indicate past performance
which is not predictive of future performance.
Foreign investing involves special risks, such as currency fluctuations, less
public disclosure as well as economic and political risks.
*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
sale charges.
**Index information from 12/31/89 to 10/31/96.
***Index information from 12/31/91 to 10/31/96.
2
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Phoenix Multi-Sector Fixed Income Fund, Inc.
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INVESTMENTS AT OCTOBER 31, 1996
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- --------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--13.2%
U.S. Treasury Bonds--4.1%
U.S. Treasury Bonds
6.50%, '06 (g) AAA $ 3,450 $ 3,485,573
U.S. Treasury Bonds WI
6.50%, '26 (f) AAA 2,000 2,006,000
U.S. Treasury Bonds
6.75%, '26 AAA 7,250 7,328,445
-----------
12,820,018
-----------
U.S. Treasury Notes--7.7%
U.S. Treasury Notes
5.875%, '98 AAA 4,000 4,011,244
U.S. Treasury Notes WI 5.875%, '99 (f) AAA 4,750 4,748,100
U.S. Treasury Notes
6.25%, '01 AAA 14,125 14,224,299
U.S. Treasury Notes
5.75%, '03 AAA 1,000 974,720
-----------
23,958,363
-----------
Agency Mortgage-Backed Securities--1.4%
FHLMC 9%, '04 AAA 28 27,711
FHLMC 7.50%, '18 AAA 338 340,265
FHLMC 8.75%, '20 AAA 399 407,412
FNMA 7%, '07 AAA 254 249,579
FNMA 8.70%, '16 AAA 794 819,895
FNMA 6.65%, '17 AAA 1,000 994,569
FNMA 6.50%, '18 AAA 1,000 989,469
FNMA 7%, '21 AAA 550 539,632
-----------
4,368,532
-----------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $40,733,511) 41,146,913
-----------
NON-CONVERTIBLE BONDS--49.4%
Asset-Backed Securities--7.1%
Airplanes Pass Through Trust 1D 10.875%, '19 BB 4,780 5,186,300
Green Tree Financial Corp. 93-2, B 8%, '18 Baa(c) 5,000 5,165,625
Green Tree Financial Corp. 94-1, B2 7.85%, '19
(g) Baa(c) 2,000 2,028,125
Green Tree Financial Corp. 96-3, B1 7.70%, '27 BBB+ 2,600 2,630,469
Green Tree Financial Corp. 7.85%, '27 AA- 5,000 5,121,875
National Car Rental 96-1, A2 144A 6.80%, '00
(b) A(c) 2,000 2,011,875
-----------
22,144,269
-----------
Chemical--0.8%
ISP Holdings, Inc. 144A 9%, '03 (b) B+ $ 2,500 $ 2,518,750
-----------
Containers--0.7%
US Can Corp. 144A 10.125%, '06 (b) B 2,000 2,065,000
-----------
Hospital Management & Services--0.9%
Tenet Healthcare Corp. 9.625%, '02 BB 2,500 2,743,750
-----------
Insurance--1.9%
Middletown Trust Notes Series C, PIK interest
capitalization, 11.75%, '10 (e) A+ 1,600 6,071,360
-----------
Non-Agency Mortgage-Backed Securities--29.5%
Bear Stearns Mortgage Sec., Inc. 95-1, 1B3
144A 6.4812%, '10 (b) NR 664 553,672
DLJ Mortgage Acceptance 94-M11, B1 8.10%,
'04 (g) Baa(c) 5,000 5,057,812
Equitable Life 174 C1 144A 7.52%, '09 (b) A(c) 1,000 1,020,312
Equitable Life 174 D1 144A 7.77%, '09 (b)(g) Baa(c) 4,000 4,077,500
FDIC REMIC 94-C1, 2D 8.70%, '25 (g) A(c) 7,000 7,293,125
Fund America Structured Trust 96-1, A 144A 0%,
'26 (b) Baa(c) 3,000 2,163,750
General Electric 96-8, 2A5 7.50%, '26 AAA 3,666 3,607,372
Kidder Peabody Acceptance Corp. 93-M3, D
6.50%, '25 Baa(c) 2,147 2,028,915
Merrill Lynch Mortgage, Inc. 95-C2, C 7.79%,
'21 A(c) 1,237 1,265,504
Morgan Stanley Capital I 96-WF1, C 144A 6.59%,
'06 (b) A(c) 3,350 3,214,953
Norwest Asset Securities Corp. 96-3, B2 7.25%,
'26 BBB(c) 2,185 2,077,515
Norwest Asset Securities Corp. 96-3, B1 7.25%,
'26 A(c) 3,499 3,403,826
Prudential Home Mortgage 93H, B2 144A 6.759%,
'08 (b) Aa(c) 3,000 2,936,699
See Notes to Financial Statements
3
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PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
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STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- --------------
Non-Agency Mortgage-Backed Securities--continued
Prudential Home Mortgage 93-H, B4 144A 6.759%,
'08 (b) Baa(c) $4,907 $ 4,686,246
Prudential Home Mortgage 93-L, 3B2 144A
6.641%, '23 (b) NR 4,770 4,641,806
Prudential Home Mortgage 95-F, B1 144A 6.625%,
'24 (b) Ba(c) 1,237 975,364
Residential Asset Securitization Trust
96-A8, C2 8%, '26 AAA 5,000 5,084,375
Residential Funding Mortgage 93-S29, M3 7%,
'08 BBB(c) 578 552,944
Resolution Trust Corp. 92-C8, D 8.835%, '23 BBB- 4,367 4,515,837
Resolution Trust Corp. 92-C3, B 9.05%, '23 AA 3,309 3,396,243
Resolution Trust Corp. 93-C3, A4 6.55%, '24
(g) Aaa(c) 793 791,360
Resolution Trust Corp. 94-C2, D 8%, '25 BBB 5,234 5,338,201
Resolution Trust Corp. 94-C1, D 8%, '26 BBB 6,773 6,827,939
Resolution Trust Corp. 95-C2, C 7%, '27 A(c) 2,849 2,776,408
Resolution Trust Corp. 95-1, C2 7.50%, '28 BBB 3,416 3,405,670
Ryland Mortgage Security Corp. III 92-A, 1A
8.33%, '30 A- 384 383,802
Structured Asset Securities Corp. 93-C1, B
6.60%, '24 A+ 5,000 4,728,437
Structured Asset Securities Corp. 95-C1, B
7.375%, '24 AA 5,344 5,367,380
-----------
92,172,967
-----------
Oil & Gas--0.3%
Forcenergy, Inc. 9.50%, '06 B 1,000 1,013,750
-----------
Oil Service & Equipment--1.5%
Noble Drilling Corp. 9.125%, '06 BB+ 4,450 4,705,875
-----------
Paper & Forest Products--1.6%
Buckeye Cellulose Corp. 8.50%, '05 BB- 5,000 4,912,500
-----------
Publishing, Broadcasting, Printing
& Cable--1.3%
Poland Communications, Inc. 144A 9.875%, '03
(b) BB- 4,000 4,000,000
-----------
Retail--Food--0.6%
Rini Rego Supermarkets, Inc. 9.75%, '01 NR 2,000 1,867,500
-----------
Retail--Food Service--0.0%
ARA Services, Inc. 10.625%, '00 BBB- $ 54 $ 59,805
-----------
Telecommunications Equipment--1.5%
Sprint Spectrum L.P. 11%, '06 B+ 4,800 4,872,000
-----------
Utility--Electric--1.7%
California Energy Co. 0%, '04 (e)(g) BB 5,000 5,150,000
Rural Electric Cooperative 9.73%, '17 AAA 140 151,278
-----------
5,301,278
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $150,033,964) 154,448,804
-----------
FOREIGN NON-CONVERTIBLE BONDS--7.3%
Canada--1.0%
Gulf Canada Resources Ltd. 8.35%, '06 BB+ 3,000 3,089,910
-----------
Chile--2.0%
CSAV 144A 7.375%, '03 (b) BBB 5,000 4,775,000
Petropower Funding 144A 7.36%, '14 (b) BBB 1,450 1,391,246
-----------
6,166,246
-----------
Colombia--0.8%
Centragas Yankee 144A 10.65%, '10 (b) BBB- 2,413 2,582,093
-----------
Indonesia--0.9%
Asia Pulp & Paper Co. Yankee 11.75%, '05 BB 2,750 2,856,562
-----------
Mexico--2.6%
Aerovias De Mexico S.A. 9.75%, '00 NR 2,000 1,890,000
Aerovias Mexico Euro RG 9.75%, '00 NR 500 472,500
Coca-Cola Femsa 8.95%, '06 BB+ 500 502,187
Grupo Televisa S.A. 0%,
'08 (e) Ba(c) 8,375 5,171,563
-----------
8,036,250
-----------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $22,333,633) 22,731,061
-----------
FOREIGN GOVERNMENT SECURITIES--21.0%
Algeria--0.6%
Algeria Tranch A Loans 6.625%-7.3125%, '06 (e) NR 2,380 1,689,800
-----------
Argentina--4.2%
Republic of Argentina Bocon Pro1 M1, PIK
interest capitalization, 3.515%, '07 (e) NR 3,500 3,018,750
See Notes to Financial Statements
4
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PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
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STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------ --------- --------------
Argentina--continued
Republic of Argentina Bearer FRB 6.625%,
'05 (e) BB- $12,250 $ 10,106,250
-----------
13,125,000
-----------
Brazil--4.9%
Republic of Brazil C Bond, PIK interest
capitalization, 8%, '14 (e) B+ 11,014 7,645,746
Republic of Brazil DCB-L Euro 6.563%, '12 (e) B+ 10,700 7,683,937
-----------
15,329,683
-----------
Colombia--0.6%
Republic of Colombia Yankee 7.25%, '04 BBB- 2,000 1,890,000
-----------
Mexico--1.5%
United Mexican States 144A 7.688%, '01 (b)(e) Baa(c) 3,500 3,501,050
United Mexican States Global Bond 11.50%,
'26 BB 1,250 1,248,438
-----------
4,749,488
-----------
Morocco--1.0%
Morocco R&C Agreement Series A 6.438%,
'09 (e) NR 4,000 3,175,000
-----------
Panama--1.5%
Panama PDI 144A, PIK interest capitalization,
6.75%, '16 (b)(e) NR 6,250 4,648,437
-----------
Peru--2.0%
Peru Citibank Non- Performing Loans (d) NR 2,500 2,887,500
Peru FLIRB WI 3.25%, '49 (e)(f) NR 1,500 828,750
Peru Non-Citibank Non- Performing Loans (d) NR 1,250 1,443,750
Peru PDI WI 4%, '49 (e)(f) NR 2,000 1,207,500
-----------
6,367,500
-----------
Poland--1.2%
Poland Discount Euro 6.50%, '24 (e) BBB- 4,000 3,827,500
-----------
Venezuela--3.5%
Banco Central Venezuela NMB B-NP 6.625%,
'05 (e) Ba(c) 4,750 3,897,969
Banco Central Venezuela NMB B-P 6.625%,
'05 (e) Ba(c) 1,500 1,230,937
Venezuela--continued
Republic of Venezuela DCB Euro 6.625%, '07 (e) Ba(c) $ 2,000 $ 1,643,750
Republic of Venezuela Series A NMB 6.75%, '05
(e) Ba(c) 5,000 4,103,125
-----------
10,875,781
-----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $63,140,644) 65,678,189
-----------
MUNICIPAL BONDS--8.6%
California--1.8%
Fresno Pension Obligation 7.80%, '14 AAA 1,500 1,570,410
Orange County California Pension, A Taxable
7.67%, '09 (g) AAA 3,750 3,927,413
-----------
5,497,823
-----------
Florida--2.7%
Dade County Florida Ed. Facs. Authority 5.75%,
'20 AAA 990 1,000,662
Palm Beach Waste Revenue Project B Taxable
10.50%, '11 NR 3,750 3,790,237
University Miami Exchange Revenue A 7.65%, '20 AAA 3,510 3,517,547
-----------
8,308,446
-----------
Pennsylvania--3.2%
Pennsylvania Economic Development 9.50%, '12 NR 6,200 5,996,454
Pennsylvania Financial Development 6.75%, '07 NR 4,050 4,151,169
-----------
10,147,623
-----------
Virginia--0.9%
Newport News, Va. Taxable Series B 7.05%, '25 AA- 1,000 951,610
Pittsylvania County Series B 7.65%, '10 NR 1,900 2,033,551
-----------
2,985,161
-----------
TOTAL MUNICIPAL BONDS
(Identified cost $26,259,260) 26,939,053
-----------
FOREIGN CONVERTIBLE BONDS--0.2%
Mexico--0.2%
Empresas ICA Sociedad Euro Cv. 5%, '04 B(c) 750 513,750
-----------
TOTAL FOREIGN CONVERTIBLE BONDS
(Identified cost $512,652) 513,750
-----------
TOTAL LONG-TERM INVESTMENTS--99.7%
(Identified cost $303,013,664) 311,457,770
-----------
</TABLE>
See Notes to Financial Statements
5
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PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
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<TABLE>
<CAPTION>
PAR
VALUE
(000) VALUE
-------- -------------
<S> <C> <C>
SHORT-TERM OBLIGATIONS--0.6%
Federal Agency Securities--0.6%
Federal Home Loan
Mortgage Corp. 5.175%,
11-19-96 $1,875 $ 1,870,148
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $1,870,148) 1,870,148
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
----------------
<S> <C>
TOTAL INVESTMENTS--100.3%
(Identified cost $304,883,812) $313,327,918(a)
Cash and receivables, less liabilities--(0.3%) (794,716)
---------------
NET ASSETS--100.0% $312,533,202
===============
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $10,227,346 and gross
depreciation of $1,957,564 for income tax purposes. At October 31, 1996,
the aggregate cost of securities for federal income tax purposes was
$305,058,136. At October 31, 1996, the Fund had capital loss carryforwards
aggregating $8,579,546 available to offset future gains and expiring in
2003.
(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,
1996, these securities amounted to a value of $51,763,753 or 16.6% of net
assets.
(c) As rated by Moody's, Fitch, or Duff & Phelp's.
(d) Non-income producing.
(e) Variable or step coupon bond; interest rate shown reflects the rate
currently in effect.
(f) When issued.
(g) Segregated as collateral.
See Notes to Financial Statements
6
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Phoenix Multi-Sector Fixed Income Fund, Inc.
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STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Assets
Investment securities at value
(Identified cost $304,883,812) $313,327,918
Cash 1,602,999
Receivables
Investment securities sold 19,810,261
Fund shares sold 793,048
Interest 3,562,560
-----------
Total assets 339,096,786
-----------
Liabilities
Payables
Investment securities purchased 25,171,115
Fund shares repurchased 496,480
Income distribution payable 378,796
Distribution fee 156,512
Investment advisory fee 145,254
Transfer agent fee 80,837
Directors' fee 9,966
Financial agent fee 7,923
Accrued expenses 116,701
-----------
Total liabilities 26,563,584
-----------
Net Assets $312,533,202
===========
Net Assets Consist of:
Capital paid in on shares of capital stock $313,164,748
Distributions in excess of net investment income (316,094)
Accumulated net realized loss (8,759,558)
Net unrealized appreciation 8,444,106
-----------
Net Assets $312,533,202
===========
Class A
Shares of capital stock outstanding,
$0.10 par value, 250,000,000 shares authorized
(Net Assets $169,663,820) 12,788,178
Net asset value per share $13.27
Offering price per share
$13.27/(1-4.75%) $13.93
Class B
Shares of capital stock outstanding,
$0.10 par value, 250,000,000 shares authorized
(Net Assets $142,869,382) 10,783,035
Net asset value and offering price per share $13.25
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Investment Income
Interest $26,612,919
------------
Total investment income 26,612,919
------------
Expenses
Investment advisory fee 1,696,487
Distribution fee--Class A 417,446
Distribution fee--Class B 1,414,739
Financial agent fee 92,536
Transfer agent 478,443
Custodian 73,162
Printing 65,227
Professional 58,565
Registration 39,836
Directors 20,237
Miscellaneous 11,729
------------
Total expenses 4,368,407
------------
Net investment income 22,244,512
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 10,341,278
Net change in unrealized appreciation (depreciation)
on investments 5,985,981
------------
Net gain on investments 16,327,259
------------
Net increase in net assets resulting from operations $38,571,771
============
</TABLE>
See Notes to Financial Statements
7
<PAGE>
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Phoenix Multi-Sector Fixed Income Fund, Inc.
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STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1996 October 31, 1995
---------------- -----------------
<S> <C> <C>
From Operations
Net investment income $ 22,244,512 $23,759,674
Net realized gain (loss) 10,341,278 (17,445,818)
Net change in unrealized appreciation
(depreciation) 5,985,981 31,680,763
----------- -----------
Increase in net assets resulting from operations 38,571,771 37,994,619
----------- -----------
From Distributions to Shareholders
Net investment income--Class A (12,387,209) (12,901,571)
Net investment income--Class B (9,458,214) (10,373,226)
----------- -----------
Decrease in net assets resulting from
distributions to shareholders (21,845,423) (23,274,797)
----------- -----------
From Share Transactions
Class A
Proceeds from sales of shares (5,502,177 and
2,352,653 shares, respectively) 70,788,640 28,484,405
Net asset value of shares issued from
reinvestment of distributions (587,270 and
654,268 shares, respectively) 7,517,879 7,837,803
Cost of shares repurchased (6,751,478 and
4,039,172 shares, respectively) (86,500,171) (48,234,621)
----------- -----------
Total (8,193,652) (11,912,413)
----------- -----------
Class B
Proceeds from sales of shares (1,249,907 and
887,773 shares, respectively) 16,054,776 10,692,887
Net asset value of shares issued from
reinvestment of distributions (275,807 and
308,741 shares, respectively) 3,526,914 3,693,059
Cost of shares repurchased (2,226,264 and
2,844,501 shares, respectively) (28,475,995) (33,893,205)
----------- -----------
Total (8,894,305) (19,507,259)
----------- -----------
Decrease in net assets from share transactions (17,087,957) (31,419,672)
----------- -----------
Net decrease in net assets (361,609) (16,699,850)
Net Assets
Beginning of period 312,894,811 329,594,661
----------- -----------
End of period (including distributions in excess
of net investment income of ($316,094) and
($186,415), respectively) $312,533,202 $312,894,811
=========== ===========
</TABLE>
See Notes to Financial Statements
8
<PAGE>
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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,
1996 1995 1994 1993 1992
----------- ------------- ---------------------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.56 $11.94 $14.13 $13.29 $12.81
Income from investment operations
Net investment income 0.94 0.96 0.76 1.14 1.24
Net realized and unrealized gain (loss) 0.72 0.61 (1.35) 1.08 0.50
------- ------- ------- ------- -------
Total from investment operations 1.66 1.57 (0.59) 2.22 1.74
------- ------- ------- ------- -------
Less distributions
Dividends from net investment income (0.95) (0.95) (0.77) (1.19) (1.21)
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) (0.95) (1.60) (1.38) (1.26)
------- ------- ------- ------- -------
Change in net asset value 0.71 0.62 (2.19) 0.84 0.48
------- ------- ------- ------- -------
Net asset value, end of period $13.27 $12.56 $11.94 $14.13 $13.29
======= ======= ======= ======= =======
Total return(1) 13.75% 13.83% -4.57% 17.55% 14.11%
Ratios/supplemental data:
Net assets, end of period (thousands) $169,664 $168,875 $172,966 $176,859 $141,627
Ratio to average net assets of:
Operating expenses 1.07% 1.10% 1.13% 1.29% 1.48%
Net investment income 7.56% 8.10% 7.05% 8.27% 9.42%
Portfolio turnover 255% 201% 123% 207% 116%
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------------------------
From
Inception
Year Ended October 31, 1/3/92 to
1996 1995 1994 1993 10/31/92
----------- ---------------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.54 $11.93 $14.10 $13.25 $13.02
Income from investment operations
Net investment income 0.85 0.86 0.68 1.04 0.94
Net realized and unrealized gain (loss) 0.71 0.61 (1.36) 1.08 0.21
------- ------- ------- ------- -------
Total from investment operations 1.56 1.47 (0.68) 2.12 1.15
------- ------- ------- ------- -------
Less distributions
Dividends from net investment income (0.85) (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 (0.85) (0.86) (1.49) (1.27) (0.92)
------- ------- ------- ------- -------
Change in net asset value 0.71 0.61 (2.17) 0.85 0.23
------- ------- ------- ------- -------
Net asset value, end of period $13.25 $12.54 $11.93 $14.10 $13.25
======= ======= ======= ======= =======
Total return(1) 12.84% 12.96% -5.21% 16.78% 8.81%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $142,869 $144,020 $156,629 $193,064 $82,522
Ratio to average net assets of:
Operating expenses 1.82% 1.85% 1.78% 1.99% 2.18%(3)
Net investment income 6.80% 7.30% 6.46% 7.36% 8.47%(3)
Portfolio turnover 255% 201% 123% 207% 116%
</TABLE>
(1)Maximum sales charges are not reflected in the total return calculation.
(2)Not annualized
(3)Annualized
See Notes to Financial Statements
9
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
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's investment objective is to maximize current income consistent with
the preservation of capital by investing in fixed income securities. 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. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts 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 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. 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 and 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.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
As compensation for its services to the Fund, the Investment Adviser,
National Securities and Research Corporation, an indirect majority-owned
subsidiary of Phoenix Home Life Mutual 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 majority-owned subsidiary of PHL, has advised the Fund
that it retained net selling commissions of $47,017 for Class A shares and
deferred sales charges of
10
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996 (Continued)
$435,426 for Class B shares for the year ended October 31, 1996. 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 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, 1996, $1,144,260
was earned by the Distributor and $687,925 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, 1996, transfer agent fees were $478,443 of which PEPCO
retained $192,608 which is net of the fees paid to State Street.
At October 31, 1996, PHL and affiliates held 10,753 Class A shares and 12
Class B shares of the Fund with a combined value of $142,843.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities, excluding short-term securities, for the
year ended October 31, 1996, aggregated $763,020,581 and $769,133,714,
including $362,845,390 and $375,218,219, of U.S. Government and agency
securities, respectively.
4. 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, 1996,
the Fund has decreased undistributed net investment income by $528,768,
decreased accumulated net realized loss by $826,396 and decreased capital
paid in on shares of capital stock by $297,628.
5. CAPITAL LOSS CARRYOVERS
For the year ended October 31, 1996, the Fund was able to utilize losses
deferred in the prior year against current year capital gains in the amount
of $10,737,669.
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.
11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGOTYPE] PRICE WATERHOUSE LLP [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, 1996, 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, 1996 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 13, 1996
12
<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
Francis E. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Calvin J. Pedersen
Philip R. Reynolds
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
Officers
Philip R. McLoughlin, President
Michael E. Haylon, Executive Vice President
David R. Pepin, Executive Vice President
David L. Albrycht, 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
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc. [POSTAGE
P.O. Box 2200 PERMIT]
Enfield, CT 06083-2200 Bulk Rate Mail
U.S. Postage
PAID
Springfield, MA
Permit No. 444
[LOGOTYPE] PHOENIX
DUFF & PHELPS
[DALBAR LOGO]
PDP 660 (12/96)
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