[COVER PAGE]
April 30, 1997
PHOENIX FUNDS
SEMIANNUAL REPORT
Phoenix Multi-Sector
Fixed Income Fund, Inc.
[LOGO] PHOENIX
DUFF & PHELPS
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
INVESTOR PROFILE
Phoenix Multi-Sector Fixed Income Fund is designed for moderately
risk-averse investors seeking maximum current income consistent with
preservation of capital.
INVESTMENT ADVISER'S REPORT
For the six months ended April 30, 1997, Phoenix Multi-Sector Fixed Income
Fund outperformed its benchmark, the Lehman Brothers Aggregate Bond Index*.
Class A shares provided a total return of 5.12% and Class B shares returned
4.75% compared to 1.70% for the benchmark over the same period. All performance
figures assume reinvestment of dividends and exclude the effect of sales
charges.
Interest rate volatility has become more pronounced over the last few months,
with the trend clearly being upward. Long-term rates have risen in response to
the stronger-than-expected economic growth in recent months.
Bond market returns have varied significantly by sector. Currently,
traditional bond sectors appear overvalued, while less traditional sectors offer
the best value. Fund performance benefited from our focus on identifying sectors
we consider inefficiently priced at recent levels.
As spreads tightened, we replaced our corporate high-yield holdings with
emerging-market debt instruments. Very attractive valuation levels exist in
Argentina, Brazil and Russia. The Fund's second largest weighting is in
commercial mortgages. Positive real estate market fundamentals and a growing
institutional investor base have created good values in this sector relative to
other areas of the market.
As of April 30, the portfolio had an expected duration of 4.87 years and an
average credit quality of "BBB."
OUTLOOK
Looking to the next six months, the wide dispersion among sector returns that
was evident in 1996 and early 1997 is likely to continue. Sector selection
remains critical, in our opinion. We expect to maintain the portfolio's
overweighted positions in the emerging markets and commercial mortgage sectors
because of their above-average return potential.
Our emphasis in the emerging-markets area is on countries that are reforming
their political systems towards democracy from socialism and moving their
economies toward capitalism from central planning. Argentina, Brazil and Russia
continue to have very attractive valuations.
High current yields on commercial mortgage-backed securities coupled with
limited supply, the prospect for upgrades of selected deals and a growing
investor base support their continued attractiveness. We will continue to focus
on investment-grade issues with multiple-property collateral to take advantage
of near-term opportunities.
*The Lehman Brothers Aggregate Bond Index is composed of securities from the
Lehman Government/Corporate Index, Mortgage-Backed Securities Index and
Asset-Backed Securities Index. The Index's performance does not reflect sales
charges.
1
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
INVESTMENTS AT APRIL 30, 1997
(Unaudited)
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
------------ --------- ---------------
U.S. GOVERNMENT AND AGENCY SECURITIES--6.3%
U.S. Treasury Bonds--0.4%
U.S. Treasury Bonds 6.625%, '27 ........ AAA $1,250 $ 1,196,713
--------------
U.S. Treasury Notes--1.3%
U.S. Treasury Notes WI 6.375%, '00 (f) AAA 1,000 997,920
U.S. Treasury Notes 6.625%, '02 ........ AAA 1,500 1,503,750
U.S. Treasury Inflation Index Notes
3.375%, '07 (e) ...................... AAA 2,000 1,981,114
--------------
4,482,784
--------------
Agency Mortgage-Backed Securities--4.6%
FHLMC 7.50%, '18 ....................... AAA 203 204,300
FHLMC 8.75%, '20 ....................... AAA 319 324,036
FNMA 8.70%, '16 ....................... AAA 675 691,797
FNMA 6.65%, '17 ....................... AAA 1,000 990,142
FNMA 6.50%, '18 ....................... AAA 1,000 981,150
FNMA 7%, '07-'21 ....................... AAA 804 780,576
GNMA 6.50%, '26 ....................... AAA 3,015 2,835,999
GNMA 8%, '26-'27 ....................... AAA 8,491 8,610,845
--------------
15,418,845
--------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $20,905,602) ............................... 21,098,342
--------------
NON-CONVERTIBLE BONDS--44.5%
Asset-Backed Securities--6.1%
Airplanes Pass Through Trust 1D
10.875%, '19 ......................... BB 4,780 5,284,577
Green Tree Financial Corp. 93-2, B 8%,
'18 (g) .............................. Baa(c) 5,000 5,085,937
Green Tree Financial Corp. 94-1, B2
7.85%, '19 (g) ...................... Baa(c) 2,000 1,981,875
Green Tree Financial Corp. 96-8, M1
7.85%, '27 (g) ...................... AA- 5,000 5,043,750
Team Fleet Financing Corp. 96-1, B
144A 7.10%, '02 (b) .................. BBB 3,000 2,947,500
--------------
20,343,639
--------------
Auto & Truck Parts--1.0%
Titan Wheel International, Inc. 8.75%,
'07 ................................. BB- 3,350 3,358,375
--------------
Building & Materials--0.2%
Neenah Corp. 144A 11.125%, '07 (b) ..... B-(c) 550 569,250
--------------
Insurance--1.9%
Middletown Trust Notes Series C, PIK
interest capitalization, 11.75%,
'10 (e) .............................. A+ 1,600 6,334,560
--------------
Non-Agency Mortgage-Backed Securities--30.3%
Bear Stearns Mortgage Securities, Inc.
95-1, 1B3 144A 6.481%, '10 (b) ....... NR 644 545,375
Bear Stearns Mortgage Securities, Inc.
95-1, 2B3 144A 7.40%, '10 (b) ........ NR 222 198,684
Chase Mortgage Finance Corp. 94-1, B2
144A 6.613%, '25 (b) ................ A+(c) 3,269 3,061,777
Citicorp Mortgage Securities, Inc.
96-1, M 7.50%, '26 ................... AA(c) 3,990 3,870,495
Criimi Mae Trust I 96-C1, A2 144A
7.56%, '33 (b) ...................... BBB 5,125 5,027,305
Equitable Life 174 C1 144A 7.52%, '06
(b) ................................. A(c) 1,000 1,008,750
Equitable Life 174 D1 144A 7.77%, '06
(b) (g) .............................. Baa(c) 4,000 4,050,625
FDIC REMIC 94-C1, 2D 8.70%, '25 (g) ... A(c) 5,000 5,298,438
FDIC REMIC 96-C1, 1D 7.25%, '26 ........ Baa(c) 3,500 3,401,563
First Chicago/Lennar Trust 1
Commercial Mortgage 97-CHL1, D 144A
8.11%, '08 (b) ...................... BB(c) 4,000 3,772,500
Fund America Structured Trust 96-1, A
144A 0%, '30 (b) ..................... Baa(c) 3,000 2,251,875
G.E. Capital Mortgage Services, Inc.
97-1, A14 7.50%, '27 ................ AAA 5,000 4,923,438
G.E. Capital Mortgage Services, Inc.
96-8, 2A5 7.50%, '26 ................ AAA 3,649 3,601,297
Lehman Structured Securities Corp.
96-1, E1 7.995%, '26 ................ BBB(c) 2,914 2,948,428
Morgan Stanley Capital I 96-WF1, C
144A 6.59%, '06 (b) .................. A(c) 3,350 3,152,141
Mortgage Capital Funding, Inc. 96-MC2,
D 7.257%, '06 ........................ Baa(c) 3,900 3,786,047
Norwest Asset Securities Corp. 96-3,
B1 7.25%, '26 ........................ A(c) 3,483 3,320,024
Norwest Asset Securities Corp. 96-3,
B2 7.25%, '26 ........................ BBB(c) 2,176 2,058,792
Prudential Home Mortgage Securities
93-H, B4 144A 6.759%, '08 (b) ........ Baa(c) 4,780 4,561,906
See Notes to Financial Statements
2
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
------------ --------- ---------------
Non-Agency Mortgage-Backed Securities--continued
Prudential Home Mortgage Securities
93-L, 3B2 144A 6.641%, '23 (b) ....... NR $ 4,770 $ 4,622,428
Resolution Trust Corp. 92-C3, B 9.05%,
'23 ................................. AA 2,985 3,048,302
Resolution Trust Corp. 92-C8, D
8.835%, '23 ......................... BB- 4,219 4,325,913
Resolution Trust Corp. 93-C3, A4
6.55%, '24 ........................... Aaa(c) 410 408,721
Resolution Trust Corp. 95-1, C2 7.50%,
'28 ................................. BBB 3,035 3,026,371
Resolution Trust Corp. 95-2, C1 7.45%,
'29 ................................. Baa(c) 2,943 2,923,894
Resolution Trust Corp. 95-C2, C 7%,
'27 ................................. A(c) 2,763 2,679,897
Ryland Mortgage Security Corp. III
92-A, 1A 8.33%, '30 .................. A- 367 364,213
Structured Asset Securities Corp.
93-C1, B 6.60%, '24 .................. A+ 5,000 4,778,518
Structured Asset Securities Corp.
95-C1, D 7.375%, '24 ................ BBB 5,260 5,189,319
Structured Asset Securities Corp.
95-C4, D 7%, '26 ..................... BBB 5,600 5,383,000
Structured Asset Securities Corp.
96-C3, C 144A 7.375%, '30 (b) ........ BBB 3,500 3,467,188
--------------
101,057,224
--------------
Oil--1.3%
Lomak Petroleum, Inc. 8.75%, '07 ...... B 4,550 4,345,250
--------------
Paper & Forest Products--1.5%
Buckeye Cellulose Corp. 8.50%, '05 (g).. BB- 5,000 4,900,000
--------------
Publishing, Broadcasting, Printing & Cable--0.6%
Hollinger International Publishing
9.25%, '07 ........................... BB- 2,125 2,114,375
--------------
Retail-Food Service--0.0%
ARA Services, Inc. 10.625%, '00 ........ BBB- 54 58,995
--------------
Utility-Electric--1.6%
California Energy Co. 10.25%, '04 (g)... BB+ 5,000 5,312,500
Rural Electric Cooperative 9.73%, '17... AAA 140 148,992
--------------
5,461,492
--------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $147,927,947) ............................... 148,543,160
--------------
FOREIGN GOVERNMENT SECURITIES--26.7%
Algeria--0.6%
Algeria Tranche A Loans 7.25%, '00 (e).. NR 1,195 941,420
Algeria Tranche 1 Unaffected Loans
6.563%, '06 (e) ...................... NR 1,434 1,129,705
--------------
2,071,125
--------------
Argentina--7.7%
Republic of Argentina Global Bond
11.375%, '17 ......................... BB 1,000 1,062,250
Republic of Argentina 144A 11.75%, '07
(b) ................................. BBB- 7,000 7,367,500
Republic of Argentina Bearer FRB
6.75%, '05 (e) ....................... BB 1,407 1,292,222
Republic of Argentina Bocon Pro1 M1,
PIK interest capitalization, 3.238%,
'07 (e) .............................. BBB- 19,391 14,505,562
Republic of Argentina Registered
11.75%, '07 ......................... BBB- 1,500 1,578,750
--------------
25,806,284
--------------
Brazil--4.4%
Republic of Brazil FLIRB L-BR 4.50%,
'09 (e) .............................. B(c) 500 375,000
Republic of Brazil C Bond, PIK
interest capitalization, 8%, '14 (e).. BB- 6,164 4,671,859
Republic of Brazil DCB-L Euro 6.938%,
'12 (e) .............................. BB- 12,000 9,570,000
--------------
14,616,859
--------------
Bulgaria--1.0%
Bulgaria FLIRB-A Bearer Euro 2.25%,
'12 (e) .............................. B(c) 3,000 1,436,250
Republic of Bulgaria IAB PDI Euro
6.563%, '11 (e) ...................... B(c) 3,000 1,889,063
--------------
3,325,313
--------------
Colombia--1.3%
Republic of Colombia Yankee 7.25%, '04 . BBB- 2,000 1,882,500
Republic of Colombia 7.625%, '07 ...... Baa(c) 2,500 2,331,250
--------------
4,213,750
--------------
Croatia--0.6%
Croatia Series B 6.50%,
'06 (e) .............................. BBB- 1,928 1,889,028
--------------
Dominican Republic--0.3%
Stripped Dominican Republic 6.375%,
'98 (e) .............................. NR 1,500 941,100
--------------
See Notes to Financial Statements
3
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
------------ --------- ---------------
Ecuador--0.5%
Ecuador Bearer PDI Euro, PIK interest
capitalization, 6.438%, '15 (e) ..... NR $ 2,422 $ 1,461,782
Ecuador Registered PDI, PIK interest
capitalization, 6.438%, '15 (e) ..... NR 538 324,840
--------------
1,786,622
--------------
Ivory Coast--0.5%
Ivory Coast Non-Performing Loans (d) ... NR 4,000 1,550,000
--------------
Mexico--2.7%
Mexican Cetes 0%, '97 (h) .............. A 14,298 1,583,186
United Mexican States Global Bond
11.375%, '16 ......................... BB 7,110 7,505,494
--------------
9,088,680
--------------
Morocco--0.5%
Morocco R&C Agreement Series A 6.375%,
'09 (e) .............................. NR 1,700 1,496,000
--------------
Peru--0.7%
Peru FLIRB 144A 3.25%, '17 (b) (e) ..... NR 2,250 1,220,625
Peru PDI 144A 4%, '17
(b) (e) .............................. NR 1,980 1,188,000
--------------
2,408,625
--------------
Poland--1.5%
Poland Discount Euro 6.938%, '24 (e) ... BBB- 2,000 1,945,000
Poland Global Registered RSTA 3.25%,
'24 (e) .............................. BBB- 5,250 3,195,938
--------------
5,140,938
--------------
Russia--1.2%
CS First Boston GKO LinkNote 144A 0%,
'98 (b) (i) ......................... NR 30,271 4,040,688
--------------
Venezuela--3.2%
Republic of Venezuela DCB Euro 6.50%,
'07 (e) .............................. Ba(c) 11,250 9,935,156
Republic of Venezuela- FLIRB A 6.75%,
'07 (e) .............................. Ba(c) 952 855,357
--------------
10,790,513
--------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $87,861,189) ............................... 89,165,525
--------------
FOREIGN NON-CONVERTIBLE BONDS--8.5%
Brazil--0.5%
Tevecap SA 144A 12.625%, '04 (b) ...... B 1,650 1,668,563
--------------
Chile--1.9%
CSAV 144A 7.375%, '03 (b) .............. BBB 5,000 4,837,500
Petropower I Funding Trust 144A 7.36%,
'14 (b) .............................. BBB 1,450 1,362,058
--------------
6,199,558
--------------
China--0.7%
AES China Generating Co. Yankee
10.125%, '06 ......................... BB- 2,300 2,409,250
--------------
Colombia--0.8%
Centragas Yankee 144A 10.65%, '10 (b)... BBB- 2,413 2,618,290
--------------
Ecuador--0.4%
Consorcio Ecuatoriano TE 144A 14%, '02
(b) ................................. NR 1,200 1,215,000
--------------
Indonesia--1.4%
Asia Pulp & Paper Co. Yankee 144A 12%,
'04 (b) (e) .......................... B+ 4,900 4,606,000
--------------
Mexico--0.7%
Banco Nacional de Mexico 144A 7.57%,
'00 (b) .............................. NR 2,275 2,238,386
--------------
Russia--2.1%
Vnescheconombank Loans Yankee (d) ..... NR 8,650 7,028,125
--------------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $27,928,726) ................................ 27,983,172
--------------
FOREIGN CONVERTIBLE BONDS--0.7%
Mexico--0.7%
Empresas ICA Sociedad Cv. 5%, '04 ...... BB- 3,000 2,242,500
--------------
TOTAL FOREIGN CONVERTIBLE BONDS
(Identified cost $2,395,037) .................................. 2,242,500
--------------
MUNICIPAL BONDS--6.1%
California--0.8%
Fresno Pension Obligation 7.80%, '14 ... AAA 500 511,835
Orange County Pension A Taxable 7.67%,
'09 (g) .............................. AAA 2,000 2,034,740
--------------
2,546,575
--------------
See Notes to Financial Statements
4
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
STANDARD PAR
& POOR'S VALUE
RATING (000) VALUE
------------ --------- ---------------
Florida--1.6%
Palm Beach Waste Revenue Project B
Taxable 10.50%, '11 .................. NR $ 3,750 $ 3,493,537
University of Miami Exchange Revenue A
Taxable 7.65%, '20 (g) ............... AAA 1,965 1,927,370
--------------
5,420,907
--------------
Pennsylvania--2.9%
Pennsylvania Economic Development
6.75%, '07 ........................... NR 4,050 4,144,608
Pennsylvania Economic Development
9.50%, '12 ........................... NR 6,200 5,549,372
--------------
9,693,980
--------------
Virginia--0.8%
Newport News Taxable Series B 7.05%,
'25 ................................. AA- 1,000 907,930
Pittsylvania County Series B 7.65%,
'10 ................................. NR 1,800 1,931,382
--------------
2,839,312
--------------
TOTAL MUNICIPAL BONDS
(Identified cost $20,781,903) ................................ 20,500,774
--------------
SHARES VALUE
------- --------------
PREFERRED STOCKS--6.1%
Publishing, Broadcasting, Printing & Cable--1.1%
American Radio Systems Pfd.
PIK 144A 11.375% (b) .......... 38,389 $ 3,771,695
--------------
REITS--5.0%
Marquette Real Estate Fund
Step-down Pfd. 144A 13.701%
(b) ........................... 5,000 4,918,800
Home Ownership Funding 2
Step-down Pfd. 144A 13.338%
(b) ........................... 12,000 11,759,712
--------------
16,678,512
--------------
TOTAL PREFERRED STOCKS
(Identified cost $20,782,475) ........... 20,450,207
--------------
TOTAL LONG-TERM INVESTMENTS--98.9%
(Identified cost $328,582,879) ........... 329,983,680
--------------
STANDARD PAR
& POOR'S VALUE
RATING (000)
--------- -------
SHORT-TERM OBLIGATIONS--0.5%
Commercial Paper--0.5%
AT&T Corp. 5.52%,
5-1-97 ............. A-1+ $ 1,815 1,815,000
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $1,815,000) ............ 1,815,000
--------------
TOTAL INVESTMENTS--99.4%
(Identified cost $330,397,879) .......... 331,798,680(a)
Cash and receivables, less
liabilities--0.6% .................... 2,122,077
--------------
NET ASSETS--100.0% ...................... $333,920,757
==============
(a)Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $5,807,035 and gross
depreciation of $4,406,234 for income tax purposes. At April 30, 1997, the
aggregate cost of securities for federal income tax purposes was
$330,397,879.
(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 April 30,
1997, these securities amounted to a value of $92,050,121 or 27.6% of net
assets.
(c)As rated by Moody's, Fitch, or Duff & Phelps.
(d)Non-income producing.
(e)Variable or step coupon security; interest rate shown reflects the rate
currently in effect.
(f)When issued.
(g)Segregated as collateral.
(h)Par value represents Mexican Pesos.
(i)Par value represents Russian Rubles.
See Notes to Financial Statements
5
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
(Unaudited)
Assets
Investment securities at value
(Identified cost $330,397,879) $331,798,680
Receivables
Investment securities sold 21,603,167
Fund shares sold 1,020,592
Interest and dividends 3,702,395
--------------
Total assets 358,124,834
--------------
Liabilities
Payables
Custodian 61,459
Investment securities purchased 22,690,944
Fund shares repurchased 584,930
Income distribution payable 394,505
Distribution fee 158,642
Investment advisory fee 148,453
Transfer agent fee 56,813
Financial agent fee 12,371
Directors' fee 4,253
Accrued expenses 91,707
--------------
Total liabilities 24,204,077
--------------
Net Assets $333,920,757
==============
Net Assets Consist of:
Capital paid in on shares of common stock $330,074,879
Undistributed net investment income 117,637
Accumulated net realized gain 2,327,440
Net unrealized appreciation 1,400,801
--------------
Net Assets $333,920,757
==============
Class A
Shares of common stock outstanding,
$0.10 par value, 250,000,000 shares authorized
(Net Assets $183,408,033) 13,619,121
Net asset value per share $13.47
Offering price per share
$13.47/(1-4.75%) $14.14
Class B
Shares of common stock outstanding,
$0.10 par value, 250,000,000 shares authorized
(Net Assets $150,512,724) 11,193,735
Net asset value and offering price per share $13.45
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997
(Unaudited)
Investment Income
Interest $13,351,226
Dividends 226,948
------------
Total investment income 13,578,174
------------
Expenses
Investment advisory fee 889,647
Distribution fee--Class A 220,184
Distribution fee--Class B 736,805
Financial agent fee 65,622
Transfer agent 208,496
Professional 25,938
Printing 22,012
Registration 20,124
Custodian 17,854
Directors 11,354
Miscellaneous 7,423
------------
Total expenses 2,225,459
------------
Net investment income 11,352,715
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 11,097,730
Net realized loss on foreign currency transactions (10,732)
Net change in unrealized appreciation (depreciation)
on investments (7,043,305)
------------
Net gain on investments 4,043,693
------------
Net increase in net assets resulting from operations $15,396,408
============
See Notes to Financial Statements
6
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
April 30, 1997 Year Ended
(Unaudited) October 31, 1996
---------------- ----------------
<S> <C> <C>
From Operations
Net investment income $ 11,352,715 $ 22,244,512
Net realized gain 11,086,998 10,341,278
Net change in unrealized appreciation (depreciation) (7,043,305) 5,985,981
-------------- --------------
Increase in net assets resulting from operations 15,396,408 38,571,771
-------------- --------------
From Distributions to Shareholders
Net investment income--Class A (6,231,272) (12,387,209)
Net investment income--Class B (4,687,712) (9,458,214)
-------------- --------------
Decrease in net assets resulting from distributions to shareholders (10,918,984) (21,845,423)
-------------- --------------
From Share Transactions
Class A
Proceeds from sales of shares (2,204,044 and 5,502,177 shares,
respectively) 29,915,441 70,788,640
Net asset value of shares issued from reinvestment of distributions
(293,548 and 587,270 shares, respectively) 3,969,891 7,517,879
Cost of shares repurchased (1,666,649 and 6,751,478 shares,
respectively) (22,511,629) (86,500,171)
-------------- --------------
Total 11,373,703 (8,193,652)
-------------- --------------
Class B
Proceeds from sales of shares (1,271,479 and 1,249,907 shares,
respectively) 17,138,237 16,054,776
Net asset value of shares issued from reinvestment of distributions
(135,967 and 275,807 shares, respectively) 1,836,077 3,526,914
Cost of shares repurchased (996,746 and 2,226,264 shares,
respectively) (13,437,886) (28,475,995)
-------------- --------------
Total 5,536,428 (8,894,305)
-------------- --------------
Increase (decrease) in net assets from share transactions 16,910,131 (17,087,957)
-------------- --------------
Net increase (decrease) in net assets 21,387,555 (361,609)
Net Assets
Beginning of period 312,533,202 312,894,811
-------------- --------------
End of period (including undistributed net investment income and
distributions in excess of net investment income of $117,637 and
($316,094), respectively) $333,920,757 $312,533,202
============== ==============
</TABLE>
See Notes to Financial Statements
7
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------
Six Months
Ended
4/30/97 Year Ended October 31,
(Unaudited) 1996 1995 1994 1993 1992
----------- ---------------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $13.27 $12.56 $11.94 $14.13 $13.29 $12.81
Income from investment operations
Net investment income 0.49 0.94 0.96 0.76 1.14 1.24
Net realized and unrealized gain
(loss) 0.18 0.72 0.61 (1.35) 1.08 0.50
--------- -------- ---------- --------- -------- ---------
Total from investment
operations 0.67 1.66 1.57 (0.59) 2.22 1.74
--------- -------- ---------- --------- -------- ---------
Less distributions
Dividends from net investment
income (0.47) (0.95) (0.95) (0.77) (1.19) (1.21)
Dividends from net realized
gains -- -- -- (0.63) (0.17) (0.05)
In excess of net investment
income -- -- -- (0.05) (0.02) --
Tax return of capital -- -- -- (0.15) -- --
--------- -------- ---------- --------- -------- ---------
Total distributions (0.47) (0.95) (0.95) (1.60) (1.38) (1.26)
--------- -------- ---------- --------- -------- ---------
Change in net asset value 0.20 0.71 0.62 (2.19) 0.84 0.48
--------- -------- ---------- --------- -------- ---------
Net asset value, end of period $13.47 $13.27 $12.56 $11.94 $14.13 $13.29
========= ======== ========== ========= ======== =========
Total return(1) 5.12%(2) 13.75% 13.83% (4.57)% 17.55% 14.11%
Ratios/supplemental data:
Net assets, end of period
(thousands) $183,408 $169,664 $168,875 $172,966 $176,859 $141,627
Ratio to average net assets of:
Operating expenses 1.03%(3) 1.07% 1.10% 1.13% 1.29% 1.48%
Net investment income 7.36%(3) 7.56% 8.10% 7.05% 8.27% 9.42%
Portfolio turnover 142%(2) 255% 201% 123% 207% 116%
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------------------------------------
Year Ended October 31,
Six Months From
Ended Inception
4/30/97 1/3/92 to
(Unaudited) 1996 1995 1994 1993 10/31/92
----------- ---------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $13.25 $12.54 $11.93 $14.10 $13.25 $13.02
Income from investment operations
Net investment income 0.44 0.85 0.86 0.68 1.04 0.94
Net realized and unrealized gain
(loss) 0.19 0.71 0.61 (1.36) 1.08 0.21
--------- --------- --------- --------- --------- ---------
Total from investment
operations 0.63 1.56 1.47 (0.68) 2.12 1.15
--------- --------- --------- --------- --------- ---------
Less distributions
Dividends from net investment
income (0.43) (0.85) (0.86) (0.67) (1.08) (0.92)
Dividends from net realized
gains -- -- -- (0.63) (0.17) --
In excess of net investment
income -- -- -- (0.05) (0.02) --
Tax return of capital -- -- -- (0.14) -- --
--------- --------- --------- --------- --------- ---------
Total distributions (0.43) (0.85) (0.86) (1.49) (1.27) (0.92)
--------- --------- --------- --------- --------- ---------
Change in net asset value 0.20 0.71 0.61 (2.17) 0.85 0.23
--------- --------- --------- --------- --------- ---------
Net asset value, end of period $13.45 $13.25 $12.54 $11.93 $14.10 $13.25
========= ========= ========= ========= ========= =========
Total return(1) 4.75%(2) 12.84% 12.96% (5.21)% 16.78% 8.81%(2)
Ratios/supplemental data:
Net assets, end of period
(thousands) $150,513 $142,869 $144,020 $156,629 $193,064 $82,522
Ratio to average net assets of:
Operating expenses 1.78%(3) 1.82% 1.85% 1.78% 1.99% 2.18%(3)
Net investment income 6.61%(3) 6.80% 7.30% 6.46% 7.36% 8.47%(3)
Portfolio turnover 142%(2) 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
8
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (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'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. 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.
G. Credit risk:
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a fund's ability to
repatriate such amounts.
H. Loan agreements:
The Fund may invest in direct debt instruments which are interests in
amounts owned by a corporate, governmental, or other borrower to lenders or
lending syndicates. The Fund's investments
9
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (Unaudited) (Continued)
in loans may be in the form of participations in loans or assignments of all or
a portion of loans from third parties. A loan is often administered by a bank or
other financial institution (the lender) that acts as agent for all holders. The
agent administers the terms of the loan, as specified in the loan agreement.
When investing in a loan participation, the Fund has the right to receive
payments of principal, interest and any fees to which it is entitled only from
the lender selling the loan agreement and only upon receipt by the lender of
payments from the borrower. The Fund generally has no right to enforce
compliance with the terms of the loan agreement with the borrower. As a result,
the Fund may be subject to the credit risk of both the borrower and the lender
that is selling the loan agreement. When the Fund purchases assignments from
lenders it acquires direct rights against the borrower on the loan. Direct
indebtedness of emerging countries involves a risk that the government entities
reponsible for the repayment of the debt may be unable, or unwilling to pay the
principal and interest when due.
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 $39,465 for Class A shares and deferred
sales charges of $233,387 for Class B shares for the six months ended April 30,
1997. 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 six months ended April 30, 1997,
$628,540 was earned by the distributor and $328,449 was earned by unaffiliated
participants.
As Financial Agent of the Fund, PEPCO received a fee for bookkeeping,
administration, and pricing services at an annual rate of 0.03% of the average
daily net assets of the Fund through December 31, 1996, and starting on January
1, 1997, at an annual rate of 0.05% of average daily net assets up to $100
million, 0.04% of average daily net assets of $100 million to $300 million,
0.03% of average daily net assets of $300 million through $500 million, and
0.015% of average daily net assets greater than $500 million; a minimum fee may
apply. PEPCO serves as the Fund's Transfer Agent with State Street Bank and
Trust Company as sub-transfer agent. For the six months ended April 30, 1997,
transfer agent fees were $208,496 of which PEPCO retained $100,652 which is net
of the fees paid to State Street.
At April 30, 1997, PHL and affiliates held 11,135 Class A shares and 12 Class
B shares of the Fund with a combined value of $150,151.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities, excluding short-term securities and
options, for the six months ended April 30, 1997, aggregated $473,028,758 and
$460,285,577, including $97,244,422 and $117,237,050, of U.S. Government and
agency securities, respectively.
4. CAPITAL LOSS CARRYFORWARDS
At October 31, 1996, the Fund had capital loss carryforwards aggregating
$8,579,546 available to offset future gains and expiring in 2003.
This report is not authorized for distribution to prospective investors in the
Phoenix Multi-Sector Fixed Income Fund, Inc. unless preceded or accompanied by
an effective Prospectus which includes information concerning the sales charge,
Fund's record and other pertinent information.
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
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 E. Keen, III, Vice President
William R. Moyer, Vice President
Leonard J. Saltiel, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary
Investment Adviser
National Securities & Research Corporation
56 Prospect Street
Hartford, Connecticut 06115-0480
Principal Underwriter
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
Transfer Agent
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, Massachusetts 02101
<PAGE>
[BACK COVER]
Phoenix Multi-Sector Fixed Income Fund, Inc.
PO Box 2200
Enfield CT 06083-2200
[LOGO] PHOENIX
DUFF & PHELPS
PDP 741 (6/97)
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