[COVER PAGE]
October 31, 1997
PHOENIX
FUNDS
ANNUAL REPORT
o PHOENIX MULTI-SECTOR
FIXED INCOME FUND, INC.
[LOGO] PHOENIX
DUFF & PHELPS
<PAGE>
Chairman's Message
Dear Fellow Shareholder,
We're pleased to provide this report for Phoenix Multi-Sector Fixed Income
Fund for the fiscal year ended October 31, 1997. This has been a remarkable
time for the financial markets, particularly in terms of market volatility.
During market extremes, your most important asset may be your financial
adviser. Managing your investments in changing markets can be challenging, and
your financial adviser knows some time-tested strategies that can help.
Rebalancing your portfolio is one strategy to reduce risk. As the stock
market has moved higher, your equity investments may have increased in value so
that now they represent a higher percentage of your total portfolio than you
originally intended. Your financial adviser may recommend a shift in asset
allocation to bring your portfolio back in line with your investment goals and
risk tolerance.
Diversifying your portfolio can smooth the effects of volatility.
Spreading your investments across a broad mix of securities, such as stocks and
bonds, reduces risk. You can also diversify by investment style. For example,
you may choose to balance an investment in growth stocks with a fund that
focuses on value-oriented stocks.
Dollar-cost averaging takes advantage of market fluctuations. In a
systematic savings plan, you'll buy fewer shares when prices are high and more
when prices fall. Periodic investments don't ensure a profit, however, and you
should consider your ability to continually make purchases.
On behalf of Phoenix Funds, I want to thank you for investing with us and
assure you that we will continue to work hard to help you meet your investment
needs.
Sincerely,
/s/ Philip R. McLoughlin
Philip R. McLoughlin
President and Chairman
Phoenix Funds
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
INVESTOR PROFILE
Phoenix Multi-Sector Fixed Income Fund is designed for moderately
risk-averse investors seeking to maximize current income consistent with
preservation of capital.
INVESTMENT ADVISER'S REPORT
Phoenix Multi-Sector Fixed Income Fund continued to provide investors with
above-average returns. For the 12 months ended October 31, 1997, Class A shares
returned 9.22% and Class B shares earned 8.42% compared with a return of 8.89%
for the Lehman Brothers Aggregate Index. All performance figures assume
reinvestment of dividends and exclude the effect of sales charges.
The Fund's overweighting in non-traditional sectors, such as non-Agency
mortgage-backed securities and taxable municipals, contributed positively to
performance. Our exposure to emerging-market sovereign debt held back
performance slightly during the final month of the fiscal year as emerging
markets around the world traded down in sympathy as Southeast Asia's currency
problems continued to unfold. The Fund's holdings are well-diversified by
country, and we believe the long-term outlook for this sector remains positive.
OUTLOOK
Given our outlook for moderate growth and benign inflation in the U.S., we
will emphasize higher-rated credits within the domestic high-yield universe as
we move into the later stages of the economic cycle. We will continue to take
advantage of undervalued credits, focusing on oil and gas exploration and
production companies, given the improving fundamentals in this sector.
We also believe the emerging-market sector continues to offer attractive
opportunities for long-term appreciation. Our focus is on identifying emerging
countries that are experiencing the types of improvements in their
infrastructure associated with a better standard of living.
We will continue to maintain a duration that is neutral to our benchmark.
As of October 31, the Fund's duration was 5.3 years.
1
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
- --------------------------------------------------------------------------------
[tabular representation of line chart data]
Phoenix Multi-Sector Lehman Brothers Aggregate
Fixed Income-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 18035 16650
10/31/96 20515 17624
10/31/97 22405 19191**
[end of line chart]
<TABLE>
<CAPTION>
Average Annual Total Returns for Periods Ending 10/31/97
From From From
Inception Inception Inception
10/14/97 to 12/18/89 to 1/3/92 to
1 Year 5 Years 10/31/97 10/31/97 10/31/97
---------- --------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Class A with 4.75% sales charge 4.04% 8.61% -- 10.78% --
Class A at net asset value 9.22% 9.67% -- 11.46% --
Class B with CDSC 4.42% 8.87% -- -- 9.13%
Class B at net asset value 8.42% 8.87%a -- -- 9.13%
Class C with CDSC -- -- -5.95% -- --
Class C at net asset value -- -- -5.00% -- --
Class M with 3.50% sales charge -- -- -8.29% -- --
Class M at net asset value -- -- -4.97% -- --
Lehman Brothers Aggregate Bond Index* 8.89% 7.51% -- 8.67%** 7.42%***
</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 fluctuation, 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 sales charges.
**Index information from 12/31/89 to 10/31/97.
***Index information from 12/31/91 to 10/31/97.
2
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
- --------------------------------------------------------------------------------
INVESTMENTS AT OCTOBER 31, 1997
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- ------------------
<S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES--6.1%
U.S. Treasury Bonds--2.7%
U.S. Treasury Bonds
6.375%, 8/15/27 ............... AAA $ 750 $ 773,203
U.S. Treasury Bonds WI
6.125%, 11/15/27 (f) ......... AAA 8,500 8,494,050
------------
9,267,253
------------
U.S. Treasury Notes--3.3%
U.S. Treasury Notes 6.125%,
8/15/07 ..................... AAA 11,100 11,346,276
------------
Agency Mortgage-Backed Securities--0.1%
FHLMC 7.50%, 8/15/18 ............ AAA 48 48,217
FHLMC 8.75%, 3/15/20 ............ AAA 211 212,967
------------
261,184
------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(Identified cost $20,822,272) ........................ 20,874,713
------------
NON-CONVERTIBLE BONDS--50.5%
Asset-Backed Securities--5.6%
BankAmerica Manufacturing
Housing Contract 97-1,
B1 6.94%, 6/10/21 ............ Baa(c) 2,095 2,125,770
BankBoston RV Asset
Backed Trust 97-1 B
6.98%, 11/15/17 ............... BBB 2,900 2,945,313
Continental Airlines 144A
7.522%, 6/30/01 (b) ......... BB 4,000 4,020,480
Green Tree Financial Corp.
93-2, B 8%, 7/15/18 (g) ...... A(c) 5,000 5,334,375
Green Tree Financial Corp.
94-1, B2 7.85%,
4/15/19 (g) .................. A(c) 2,000 2,083,125
Team Fleet Financing Corp.
96-1, B 144A 7.10%,
12/15/02 (b) .................. BBB 3,000 3,001,875
------------
19,510,938
------------
Automobiles--0.6%
Titan Tire Loan Participation
7%, 2/11/00 .................. NR 2,000 1,920,000
------------
Banks--0.9%
Citicorp Capital I 7.933%,
2/15/27 ..................... A- 3,000 3,152,580
------------
Communications Equipment--0.2%
Hermes Europe Railtel B.V. 144A
11.50%, 8/15/07 (b) ......... B 500 542,500
------------
Consumer Finance--0.9%
ITT Publimedia 144A
9.375%, 9/15/07 (b) ......... B- 3,000 3,067,500
------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- ------------------
<S> <C> <C> <C>
Electric Companies--0.0%
Rural Electric Cooperative
9.73%, 12/15/17 ............... AAA $ 140 $ 147,314
------------
Industrial--0.8%
Polymer Group, Inc. 9%,
7/1/07 ........................ B 2,750 2,784,375
------------
Insurance--1.9%
Middletown Trust Notes
Series C, PIK interest
capitalization, Euro
11.75%, 7/15/10 (e) ......... A+ 1,600 6,666,080(1)
--------------
Leasing/Rental--0.2%
Williams Scotsman, Inc.
144A 9.875%,
6/1/07 (b) .................. B- 825 847,688
--------------
Leisure Time (Products)--1.0%
Autotote Corp. 144A
10.875%, 8/1/04 (b) ......... B+ 2,000 2,070,000
Mashantucket Pequot 144A
6.91%, 9/1/12 (b) ............ AAA 1,300 1,322,815
--------------
3,392,815
--------------
Miscellaneous--1.1%
Interamericas
Communication Corp. Unit
144A 14%, 10/27/07
(b) (k) ..................... NR 3,930 3,969,300
--------------
Non-Agency Mortgage-Backed Securities--31.6%
Bear Stearns Mortgage
Securities, Inc. 95-1,
1B3 144A 6.481%,
5/25/10 (b) .................. NR 623 584,128
Bear Stearns Mortgage
Securities, Inc. 95-1,
2B3 144A 7.40%,
7/25/10 (b) .................. NR 215 210,056
CS First Boston Mortgage
Securities 144A 97-1R,
1M4 7.364%,
2/28/22 (b) .................. Baa(c) 6,113 5,998,240
Chase Mortgage Finance
Corp. 94-1, B2 144A
6.613%, 3/28/25 (b) ......... A+(c) 3,236 3,198,141
Criimi Mae Trust I 96-C1,
A2 144A 7.56%,
6/30/33 (b) (g) ............... BBB 5,125 5,267,539
DLJMA 97-CF2, B2 144A
7.14%, 9/15/08 (b) ............ BBB- 3,900 3,907,312
Equitable Life 174, C1 144A
7.52%, 5/15/06 (b) ............ A(c) 1,000 1,063,750
</TABLE>
See Notes to Financial Statements
3
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- --------------
<S> <C> <C> <C>
Non-Agency Mortgage-Backed Securities--continued
Equitable Life 174, D1 144A
7.77%, 5/15/06 (b) (g) ...... Baa(c) $ 4,000 $ 4,280,000
FDIC REMIC Trust 94-C1,
2D 8.70%, 9/25/25 (g) ......... A(c) 5,000 5,171,875
FDIC REMIC Trust 96-C1,
1D 7.25%, 5/25/26 ............ Baa(c) 3,350 3,396,586
FFCA Secured Lending
Corp. 144A 97-1, B1
7.74%, 6/18/13 (b) ............ Aa(c) 750 792,422
FFCA Secured Lending
Corp. 144A 97-1, C1
7.93%, 9/18/14 (b) ............ A(c) 1,150 1,219,000
First Chicago/Lennar Trust
97-CHL1, D 144A 8.11%,
5/29/08 (b) .................. BB(c) 4,000 4,017,500
Fund America Structured
Trust 96-1, A 144A 0%,
10/25/30 (b) .................. Baa(c) 3,235 2,532,612
G.E. Capital Mortgage
Services, Inc. 97-1, A14
7.50%, 3/25/27 (g) ............ AAA 4,850 4,986,406
General Electric Mortgage
Services, Inc. 96-8, 2A5
7.50%, 5/25/26 (g) ............ AAA 3,632 3,756,051
Morgan Stanley Capital I
96-WF1, C 144A 6.59%,
10/16/06 (b) .................. A(c) 3,550 3,567,750
Norwest Asset Securities
Corp. 96-3, B1 7.25%,
9/25/26 ..................... A(c) 2,166 2,193,357
Norwest Asset Securities
Corp. 96-3, B2 7.25%,
9/25/26 ..................... BBB(c) 3,319 3,393,236
Prudential Home Mortgage
Securities 93-H, B4 144A
6.759%, 9/28/08 (b) ......... Baa(c) 4,609 4,574,356
Prudential Home Mortgage
Securities 96-A, B1
7.958%, 5/28/26 ............... NR 3,125 2,941,406
Prudential Home Mortgage
Securities 93L, 3B2 144A
6.641%, 12/25/23 (b) ......... NR 4,770 4,725,281
Resolution Trust Corp.
92-C3, B 9.05%, 8/25/23 ...... AA 2,675 2,715,259
Resolution Trust Corp.
92-C8, D 8.835%,
12/25/23 ..................... BBB- 4,101 4,159,655
Resolution Trust Corp. 95-1,
C2 7.50%, 10/25/28 ............ BBB 2,581 2,613,973
Resolution Trust Corp. 95-2,
C1 7.45%, 5/25/29 ............ Baa(c) 2,686 2,732,809
Resolution Trust Corp.
95-C2, C 7%, 5/25/27 ......... A(c) 2,687 2,717,275
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- --------------
<S> <C> <C> <C>
Non-Agency Mortgage-Backed Securities--continued
Ryland Mortgage Securities
Corp. III 92-A, 1A 8.27%,
3/29/30 ..................... A- $ 350 $ 355,001
Structured Asset Securities
Corp. 93-C1, B 6.60%,
10/25/24 (g) .................. A+ 5,000 4,912,904
Structured Asset Securities
Corp. 95-C1, D 7.375%,
9/25/24 (g) .................. BBB 5,110 5,167,487
Structured Asset Securities
Corp. 95-C4, D 7%,
6/25/26 (g) .................. BBB 5,450 5,452,555
Structured Asset Securities
Corp. 96-C3, C 144A
7.375%, 6/25/30 (b) (g) ...... BBB 3,500 3,544,844
Wilshire Funding Corp.
97-WFC1, M3 7.25%,
8/25/27 ..................... Baa(c) 3,529 3,384,209
------------
109,532,975
------------
Oil--1.3%
Lomak Petroleum, Inc.
8.75%, 1/15/07 ............... B 4,550 4,584,125
------------
Publishing, Broadcasting, Printing & Cable--4.4%
Century Communications
8.75%, 10/1/07 ............... BB- 2,000 1,990,000
Comcast Cellular 144A
9.50%, 5/1/07 (b) ............ BB+ 1,650 1,707,750
Fox Kids Worldwide 144A
0%, 11/1/07 (b) (e) ......... B 8,250 4,681,875
Fox/Liberty Networks
LLC 144A 8.875%,
8/15/07 (b) .................. B 3,000 3,007,500
Fox/Liberty Networks LLC
144A 0%, 8/15/07 (b) ......... B 2,500 1,587,500
Hollinger International
Publishing, Inc. 9.25%,
3/15/07 ..................... BB- 2,125 2,188,750
------------
15,163,375
------------
Retail (Food Chains)--0.0%
ARA Services, Inc.
10.625%, 8/1/00 ............... BBB- 54 58,590
------------
TOTAL NON-CONVERTIBLE BONDS
(Identified cost $170,791,731) .......................... 175,340,155
------------
FOREIGN GOVERNMENT SECURITIES--22.4%
Algeria--1.4%
Algeria Tranch A Loans
6.688%, 3/4/00 (e) ............ NR 3,273 2,618,182
Algeria Tranch 1 Unaffected
Loans 7.375%,
3/4/00 (e) .................. NR 2,727 2,181,818
------------
4,800,000
------------
</TABLE>
See Notes to Financial Statements
4
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- ------------------- --------------
<S> <C> <C> <C>
Argentina--1.6%
Republic of Argentina 144A
11.75%, 2/12/07 (b) ............ BBB- $ 3,000(m) $ 2,482,500
Republic of Argentina RegS
11.75%, 2/12/07 ............... BBB- 3,750(m) 3,103,125
------------
5,585,625
------------
Brazil--1.4%
Republic of Brazil C Bond,
PIK interest capitalization,
8%, 4/15/14 (e) ............... BB- 3,649 2,562,724
Republic of Brazil EI-L Euro
6.875%, 4/15/06 (e) ............ BB- 2,940 2,337,300
------------
4,900,024
------------
Bulgaria--2.2%
Bulgaria FLIRB Series A
Bearer Euro 2.25%,
7/28/12 (e) .................. B(c) 8,500 4,659,020
Republic of Bulgaria IAB
PDI Euro 6.563%,
7/28/11 (e) .................. B(c) 4,750 3,135,000
------------
7,794,020
------------
Colombia--2.4%
Republic of Colombia
7.625%, 2/15/07 ............... BBB- 3,400 3,193,416
Republic of Colombia Global
Bond 8.375%, 2/15/27 ......... Baa(c) 3,500 3,190,250
Republic of Colombia
Yankee 7.25%, 2/23/04 ......... BBB- 2,000 1,895,000
------------
8,278,666
------------
Ecuador--1.2%
Ecuador Bearer PDI Euro,
PIK interest capitalization,
6.688%, 2/27/15 (e) ............ NR 6,343 3,747,835
Ecuador Registered PDI,
PIK interest capitalization,
6.688%, 2/27/15 (e) ............ NR 547 323,089
------------
4,070,924
------------
Ivory Coast--0.5%
Ivory Coast FLIRB WI (f) ......... NR 1,500 476,250
Ivory Coast Non-Performing
Loans (d) ..................... NR 2,500 1,025,000
Ivory Coast PDI WI (f) ......... NR 750 286,875
------------
1,788,125
------------
Macedonia--0.4%
Macedonia C Bond, PIK
interest capitalization,
6.884%, 7/2/12 (e) ............ NR 2,000 1,230,000
------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- ------------------- --------------
<S> <C> <C> <C>
Mexico--1.8%
United Mexican States
Global Bond 11.375%,
9/15/16 ........................ BB $ 6,000 $ 6,300,000
------------
Peru--0.6%
Peru FLIRB 144A 3.25%,
3/7/17 (b) (e) ............... NR 1,750 875,000
Peru PDI 144A 4%,
3/7/17 (b) (e) ............... NR 1,980 1,118,700
------------
1,993,700
------------
Poland--2.5%
Poland Discount Euro
6.688%, 10/27/24 (e) ......... BBB- 1,000 940,000
Poland PDI Bearer 5%,
10/27/14 (e) .................. BBB- 3,000 2,463,750
Poland Treasury Bill 0%,
10/21/98 ..................... NR 12,570(h) 2,938,112
Poland Treasury Bill 0%,
10/7/98 ........................ NR 10,470(h) 2,458,422
------------
8,800,284
------------
Russia--3.7%
Russia Principal Loans WI
6.719%, 12/15/20 (f) ......... NR 13,300 7,847,000
Russian Federation OFZ Linked
Notes 18.29%, 9/3/99 (e) ...... NR 14,346,000(i) 2,269,523
Vnesheconombank Loans
Yankee (d) ..................... NR 3,000 2,668,125
------------
12,784,648
------------
South Africa--0.9%
Republic of South Africa
13%, 8/31/10 .................. BBB+ 16,460(j) 3,098,755
------------
Venezuela--1.8%
Republic of Venezuela
9.25%, 9/15/27 ............... B+ 6,000 5,040,000
Republic of Venezuela
DCB Euro 6.75%,
12/18/07 (e) .................. B+ 1,500 1,312,500
------------
6,352,500
------------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $85,329,296) ..................................... 77,777,271
------------
FOREIGN NON-CONVERTIBLE BONDS--8.4%
Argentina--1.2%
CEI Citicorp 144A 11.25%,
2/14/07 (b) .................. NR 1,500(m) 1,215,000
Perez Companc SA 8.125%,
7/15/07 ........................ BBB- 3,000 2,861,250
------------
4,076,250
------------
Bermuda--0.3%
AES China Generating Co.
Yankee 10.125%,
12/15/06 ..................... BB- 870 874,350
------------
</TABLE>
See Notes to Financial Statements
5
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- -------------
<S> <C> <C> <C>
Brazil--0.9%
Localiza Rent a Car 144A
10.25%, 10/1/05 (b) ......... B(c) $ 2,000 $ 1,800,000
Paging Network Do Brasil
144A 13.50%, 6/6/05 (b) .... NR 1,000 950,000
Tevecap SA RegS 12.625%,
11/26/04 ..................... B 250 255,000
------------
3,005,000
------------
Chile--1.8%
Compania Sud Amer Vapore
144A 7.375%,
12/8/03 (b) .................. BBB 5,000 4,943,750
Petropower I Funding
Trust 144A 7.36%,
2/15/14 (b) .................. BBB 1,450 1,433,296
------------
6,377,046
------------
China--0.4%
Greater Beijing 144A
9.50%, 6/15/07 (b) (k) ...... BB 1,700 1,547,000
------------
Ecuador--0.6%
Consorcio Ecuatoriano TE
RegS 14%, 5/1/02 ............ NR 2,150 2,171,500
------------
Germany--0.4%
Kablemedia Holding 0%,
8/1/06 (e) .................. B- 2,000 1,415,000
------------
Mexico--2.0%
Banco Nacional de Mexico
144A 7.57%, 12/31/00 (b) ..... NR 4,400 4,413,640
TFM SA de C.V., 0%,
6/15/09 (e) .................. B+ 4,000 2,480,000
------------
6,893,640
------------
Netherlands--0.6%
Netia Holdings 144A 0%,
11/1/07 (b) (e) ............ NR 3,500 2,108,750
------------
Venezuela--0.2%
Petrozuata Finance, Inc.
144A 8.22% 4/1/17 (b) ...... BBB- 650 670,898
------------
TOTAL FOREIGN NON-CONVERTIBLE BONDS
(Identified cost $30,247,928) ........................ 29,139,434
------------
MUNICIPAL BONDS--4.6%
California--0.8%
Fresno Pension Obligation
Taxable 7.80%, 6/1/14 ...... AAA 500 552,380
Orange County Pension A
Taxable 7.67%, 9/1/09 ...... AAA 2,000 2,166,620
------------
2,719,000
------------
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- -------------
<S> <C> <C> <C>
Colorado--0.8%
Denver City and County
School District Taxable
6.76%, 12/15/07 ............ AAA $ 2,875 $ 2,933,765
------------
Florida--1.1%
Palm Beach Waste Revenue
Project B Taxable
10.50%, 1/1/11 (d) ......... NR 3,750 1,852,763
University of Miami
Exchangeable Revenue
Series A Taxable 7.65%,
4/1/20 (g) .................. AAA 1,965 2,040,435
------------
3,893,198
------------
Illinois--0.9%
Illinois Educational
Facilities Authority
Revenue Loyola
University Series A
Taxable 7.84%, 7/1/24 (g) .... AAA 3,000 3,168,690
------------
Pennsylvania--0.7%
Pennsylvania Economic
Development 9.50%,
1/1/12 ..................... NR 3,500 2,310,000
------------
Virginia--0.3%
Newport News Taxable
Series B 7.05%, 1/15/25 .... AA- 1,000 997,450
------------
TOTAL MUNICIPAL BONDS
(Identified cost $18,314,027) ............................ 16,022,103
------------
CONVERTIBLE BONDS--1.5%
Oil & Gas (Drilling & Equipment)--1.5%
Loews Corp. Cv. 3.125%,
9/15/07 ..................... A+ 4,600 5,238,250
------------
TOTAL CONVERTIBLE BONDS
(Identified cost $4,600,000) ............................... 5,238,250
------------
FOREIGN CONVERTIBLE BONDS--3.4%
Canada--0.5%
Petersburg Long Cv. 144A
9%, 6/1/06 (b) ............... NR 1,267 1,580,583
------------
Mexico--1.1%
Empresas ICA Sociedad
Euro Cv. 5%, 3/15/04 ......... BB- 1,500 1,158,750
Consorcio Grupo Dina Cv.
8%, 8/8/04 .................. NR 3,000 2,670,000
------------
3,828,750
------------
Russia--1.8%
Lukinter Finance BV Cv.
RegS 3.50%, 5/6/02 ......... BB- 4,875 6,337,500
------------
TOTAL FOREIGN CONVERTIBLE BONDS
(Identified cost $12,050,542) ............................ 11,746,833
------------
</TABLE>
See Notes to Financial Statements
6
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
-------- -------
<S> <C> <C>
PREFERRED STOCKS--4.8%
Publishing--1.4%
American Radio Systems
Pfd. PIK 11.375% ................. 39,480 $ 4,698,171
------------
REITS--3.4%
Home Ownership Funding 2, Step-down
Pfd. 144A 13.338% (b) ............. 12,000 11,896,140
------------
TOTAL PREFERRED STOCKS
(Identified cost $15,594,279) ..... 16,594,311
------------
NUMBER
OF
CONTRACTS
---------
OPTIONS--0.0%
Brazil CDB Call Option 12/17/97
$80.75 (Par Subject to Call
$1,500,000) ..................... 1.5 0
Bulgaria IAB Call Option 1/12/98
$78.50 (Par Subject to Call
$3,000,000) ..................... 3 0
Peru PDI Call Option 1/12/98 $66
(Par Subject to Call $3,000,000).. 3 303
Russia Principal Call Option 12/23/97
$72.625 (Par Subject to Call
$3,000,000) ..................... 3 6,600
Venezuela DCB Call Option 12/8/97
$91.00 (Par Subject to Call
$2,000,000) ...................... 2 0
------------
6,903
------------
TOTAL OPTIONS
(Identified cost $472,350) ........ 6,903
------------
TOTAL LONG-TERM INVESTMENTS--101.7%
(Identified cost $358,222,425) .... 352,739,973
------------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
------------- --------- --------------------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--2.2%
Commercial Paper--2.2%
Associates Corp. of North
America 5.73%,
11/3/97 ............... A-1+ $ 7,680 $ 7,677,555
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $7,677,555) .................. 7,677,555
--------------
TOTAL INVESTMENTS--103.9%
(Identified cost $365,899,980) ............... 360,417,528(a)
Cash and receivables, less liabilities--(3.9%) (13,533,855)
--------------
NET ASSETS--100.0% .............................. $ 346,883,673
==============
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $8,422,980 and gross
depreciation of $14,949,198 for income tax purposes. At October 31, 1997,
the aggregate cost of securities for federal income tax purposes was
$366,943,746.
(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,
1997, these securities amounted to a value of $116,344,971 or 33.5% 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) All or a portion segregated as collateral.
(h) Par value represents Polish Zloty.
(i) Par value represents Russian Rubles.
(j) Par value represents South African Rand.
(k) Rights/Warrants incorporated as a unit.
(l) Security valued at fair value as determined in good faith by or under the
direction of the Directors.
(m) Par value represents Argentine Pesos.
See Notes to Financial Statements
7
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
Assets
Investment securities at value
(Identified cost $365,899,980) $360,417,528
Receivables
Investment securities sold 73,655,017
Fund shares sold 777,050
Interest 5,237,820
------------
Total assets 440,087,415
------------
Liabilities
Payables
Custodian 1,276,237
Investment securities purchased 90,777,526
Income distribution payable 332,330
Fund shares repurchased 307,533
Distribution fee 178,916
Investment advisory fee 167,781
Transfer agent fee 69,496
Financial agent fee 14,620
Directors' fee 4,676
Accrued expenses 74,627
------------
Total liabilities 93,203,742
------------
Net Assets $346,883,673
============
Net Assets Consist of:
Capital paid in on shares of common stock $342,137,630
Undistributed net investment income 971,287
Accumulated net realized gain 9,257,208
Net unrealized depreciation (5,482,452)
------------
Net Assets $346,883,673
============
Shares of Class A common stock outstanding,
$0.10 par value, 125,000,000 shares authorized
(Net Assets $191,485,737) 14,180,654
Net asset value per share $ 13.50
Offering price per share $13.50/(1-4.75%) $ 14.17
Shares of Class B common stock outstanding,
$0.10 par value, 125,000,000 shares authorized
(Net Assets $154,989,345) 11,494,320
Net asset value and offering price per share $ 13.48
Shares of Class C common stock outstanding,
$0.10 par value, 125,000,000 shares authorized
(Net Assets $284,165) 21,074
Net asset value and offering price per share $ 13.48
Shares of Class M common stock outstanding,
$0.10 par value, 125,000,000 shares authorized
(Net Assets $124,426) 9,229
Net asset value per share $ 13.48
Offering price per share $13.48/(1-3.50%) $ 13.97
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
Investment Income
Interest $ 27,132,922
Dividends 994,968
------------
Total investment income 28,127,890
------------
Expenses
Investment advisory fee 1,860,360
Distribution fee--Class A 463,149
Distribution fee--Class B 1,529,736
Distribution fee--Class C 92
Distribution fee--Class M 25
Financial agent fee 145,836
Transfer agent 422,714
Printing 78,258
Custodian 64,164
Professional 54,318
Registration 36,600
Directors 22,262
Miscellaneous 21,794
------------
Total expenses 4,699,308
Custodian fees paid indirectly (31,110)
------------
Net expenses 4,668,198
------------
Net investment income 23,459,692
------------
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on securities 18,297,311
Net realized loss on foreign currency (31,189)
Net change in unrealized appreciation (depreciation)
on investments (13,926,558)
------------
Net gain on investments 4,339,564
------------
Net increase in net assets resulting from
operations $ 27,799,256
============
</TABLE>
See Notes to Financial Statements
8
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------ -----------------
<S> <C> <C>
From Operations
Net investment income $ 23,459,692 $ 22,244,512
Net realized gain 18,266,122 10,341,278
Net change in unrealized appreciation (depreciation) (13,926,558) 5,985,981
------------- -------------
Increase in net assets resulting from operations 27,799,256 38,571,771
------------- -------------
From Distributions to Shareholders
Net investment income--Class A (13,142,727) (12,387,209)
Net investment income--Class B (9,715,503) (9,458,214)
Net investment income--Class C (518) --
Net investment income--Class M (361) --
------------- -------------
Decrease in net assets resulting from distributions to shareholders (22,859,109) (21,845,423)
------------- -------------
From Share Transactions
Class A
Proceeds from sales of shares (4,562,676 and 5,502,177 shares, respectively) 62,841,128 70,788,640
Net asset value of shares issued from reinvestment of distributions (619,297 and
587,270 shares, respectively) 8,494,539 7,517,879
Cost of shares repurchased (3,789,497 and 6,751,478 shares, respectively) (52,071,617) (86,500,171)
------------- -------------
Total 19,264,050 (8,193,652)
------------- -------------
Class B
Proceeds from sales of shares (2,633,503 and 1,249,907 shares, respectively) 36,085,338 16,054,776
Net asset value of shares issued from reinvestment of distributions (284,957 and
275,807 shares, respectively) 3,902,825 3,526,914
Cost of shares repurchased (2,207,175 and 2,226,264 shares, respectively) (30,270,502) (28,475,995)
------------- -------------
Total 9,717,661 (8,894,305)
------------- -------------
Class C
Proceeds from sales of shares (21,052 and 0 shares, respectively) 297,100 --
Net asset value of shares issued from reinvestment of distributions (22 and 0
shares, respectively) 303 --
Cost of shares repurchased (0 and 0 shares, respectively) -- --
------------- -------------
Total 297,403 --
------------- -------------
Class M
Proceeds from sales of shares (9,212 and 0 shares, respectively) 130,970 --
Net asset value of shares issued from reinvestment of distributions (17 and 0
shares, respectively) 240 --
Cost of shares repurchased (0 and 0 shares, respectively) -- --
------------- -------------
Total 131,210 --
------------- -------------
Increase (decrease) in net assets from share transactions 29,410,324 (17,087,957)
------------- -------------
Net increase (decrease) in net assets 34,350,471 (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 $971,287 and
($316,094), respectively) $ 346,883,673 $ 312,533,202
============= =============
</TABLE>
See Notes to Financial Statements
9
<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,
1997 1996 1995 1994 1993
----------------- ------------ -------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.27 $ 12.56 $ 11.94 $ 14.13 $ 13.29
Income from investment operations
Net investment income 1.03 0.94 0.96 0.76 1.14
Net realized and unrealized gain (loss) 0.18 0.72 0.61 (1.35) 1.08
---------- -------- ---------- -------- --------
Total from investment operations 1.21 1.66 1.57 (0.59) 2.22
---------- -------- ---------- -------- --------
Less distributions
Dividends from net investment income (0.98) (0.95) (0.95) (0.77) (1.19)
Dividends from net realized gains -- -- -- (0.63) (0.17)
In excess of net investment income -- -- -- (0.05) (0.02)
Tax return of capital -- -- -- (0.15) --
---------- -------- ---------- -------- --------
Total distributions (0.98) (0.95) (0.95) (1.60) (1.38)
---------- -------- ---------- -------- --------
Change in net asset value 0.23 0.71 0.62 (2.19) 0.84
---------- -------- ---------- -------- --------
Net asset value, end of period $13.50 $ 13.27 $ 12.56 $ 11.94 $ 14.13
========== ======== ========== ======== ========
Total return(1) 9.22% 13.75% 13.83% (4.57)% 17.55%
Ratios/supplemental data:
Net assets, end of period (thousands) $191,486 $169,664 $ 168,875 $172,966 $176,859
Ratio to average net assets of:
Operating expenses 1.04%(2) 1.07% 1.10% 1.13% 1.29%
Net investment income 7.28% 7.56% 8.10% 7.05% 8.27%
Portfolio turnover 295% 255% 201% 123% 207%
</TABLE>
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------------------------
Year Ended October 31,
1997 1996 1995 1994 1993
----------------- ------------ ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.25 $ 12.54 $ 11.93 $ 14.10 $ 13.25
Income from investment operations
Net investment income 0.92 0.85 0.86 0.68 1.04
Net realized and unrealized gain (loss) 0.18 0.71 0.61 (1.36) 1.08
---------- -------- -------- -------- --------
Total from investment operations 1.10 1.56 1.47 (0.68) 2.12
---------- -------- -------- -------- --------
Less distributions
Dividends from net investment income (0.87) (0.85) (0.86) (0.67) (1.08)
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 (0.87) (0.85) (0.86) (1.49) (1.27)
---------- -------- -------- -------- --------
Change in net asset value 0.23 0.71 0.61 (2.17) 0.85
---------- -------- -------- -------- --------
Net asset value, end of period $13.48 $ 13.25 $ 12.54 $ 11.93 $ 14.10
========== ======== ======== ======== ========
Total return(1) 8.42% 12.84% 12.96% (5.21)% 16.78%
Ratios/supplemental data:
Net assets, end of period (thousands) $154,989 $142,869 $144,020 $156,629 $193,064
Ratio to average net assets of:
Operating expenses 1.79%(2) 1.82% 1.85% 1.78% 1.99%
Net investment income 6.52% 6.80% 7.30% 6.46% 7.36%
Portfolio turnover 295% 255% 201% 123% 207%
</TABLE>
(1)Maximum sales charges are not reflected in the total return calculation.
(2)For the year ended October 31, 1997, the ratio of operating expenses to
average net assets excludes the effect of expense offsets for custodian fees;
if expense offsets were included, the ratio would not significantly differ.
See Notes to Financial Statements
10
<PAGE>
Phoenix Multi-Sector Fixed Income Fund, Inc.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
Class C Class M
------------------- -------------------
From Inception From Inception
10/14/97 to 10/14/97 to
10/31/97 10/31/97
------------------- -------------------
<S> <C> <C>
Net asset value, beginning of period $14.22 $ 14.22
Income from investment operations
Net investment income 0.04 0.04
Net realized and unrealized gain (loss) (0.74) (0.73)
---------- ---------
Total from investment operations (0.70) (0.69)
---------- ---------
Less distributions
Dividends from net investment income (0.04) (0.05)
Dividends from net realized gains -- --
---------- ---------
Total distributions (0.04) (0.05)
---------- ---------
Change in net asset value (0.74) (0.74)
---------- ---------
Net asset value, end of period $13.48 $13.48
========== =========
Total return(1) (5.00)%(2) (4.97)%(2)
Ratios/supplemental data:
Net assets, end of period (thousands) $284 $124
Ratio to average net assets of:
Operating expenses 1.62%(3) 1.27%(3)
Net investment income 4.75%(3) 6.19%(3)
Portfolio turnover 295% 295%
</TABLE>
(1)Maximum sales charges are not reflected in the total return calculation.
(2)Not annualized
(3)Annualized
See Notes to Financial Statements
11
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
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 Class A, Class B, Class C and Class M 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. Class C shares are sold with a 1%
contingent deferred sales charge if redeemed within one year of purchase. Class
M shares are sold with a front-end sales charge of up to 3.50%. All classes of
shares have identical voting, dividend, liquidation and other rights and the
same terms and conditions, except that each class bears different distribution
expenses and has exclusive voting rights with respect to its distribution plan.
Income and expenses of the Fund are borne pro rata by the holders of all
classes of shares, except that each class bears distribution expenses unique to
that class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported 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
12
<PAGE>
PHOENIX MULTI-SECTOR FIXED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997 (Continued)
$81,888 for Class A shares and $170 for Class M shares, and deferred sales
charges of $399,917 for Class B shares for the year ended October 31, 1997. In
addition, the Fund pays PEPCO a distribution fee at an annual rate of 0.25% for
Class A shares, 1.00% for Class B shares, 1.00% for Class C shares and 0.50%
for Class M 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, 1997, $1,338,075 was earned by
the Distributor, $595,248 was paid to unaffiliated participants, and $59,679
was paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent of the Fund, PEPCO received a fee for bookkeeping,
administration, and pricing services 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 year ended October 31, 1997,
transfer agent fees were $422,714 of which PEPCO retained $203,729 which is net
of the fees paid to State Street.
At October 31, 1997, PHL and affiliates held 158,158 Class A shares and 12
Class B shares of the Fund with a combined value of $2,135,301.
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities, excluding short-term securities and
options, for the year ended October 31, 1997, aggregated $1,020,576,558 and
$988,216,733, including $265,375,186 and $280,185,681, of U.S. Government and
agency securities, respectively.
4. 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.
5. 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 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. For loans which the Fund is a participant, the Fund may not sell
it's participation in the loan without the lender's prior consent. 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 responsible for the repayment of the debt may be
unable, or unwilling to pay the principal and interest when due.
6. CAPITAL LOSS CARRYFORWARDS
For the year ended October 31, 1997, the Fund was able to utilize losses
deferred in the prior year against current year capital gains in the amount of
$8,579,546.
7. RECLASSIFICATION OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Fund has recorded
several reclassifications in the capital accounts. These reclassifications have
no impact on the net asset value of the Fund and are designed generally to
present undistributed income and realized gains on a tax basis which is
considered to be more informative to the shareholder. As of October 31, 1997,
the Fund increased undistributed net investment income by $686,798, decreased
accumulated net realized gain by $249,356 and decreased capital paid in on
shares of common stock by $437,442.
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.
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGOTYPE] Price Waterhouse LLP [LOGO]
To the Trustees 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, 1997,
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, 1997 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 12, 1997
14
<PAGE>
RESULTS OF SHAREHOLDER MEETING (Unaudited)
A special meeting in lieu of the Annual Meeting of shareholders of the Phoenix
Multi-Sector Fixed Income Fund, Inc. was held on July 10, 1997 to approve
proposals one and two; and on July 16, 1997 a separate meeting to approve
proposal three was held.
1. Fix the number of directors at fourteen and elect such number as detailed
below.
2. Ratify selection of Price Waterhouse LLP, independent accountants, as
auditors for the fiscal year ending October 31, 1997.
3. Approve a restatement of the Fund's investment restrictions to increase the
limit for investment in high yield- high risk securities from 35% to 50%
of assets.
On the record date for this meeting, there were 24,826,880 shares outstanding
and 50.69% and 51.58%, respectively, of the shares outstanding and entitled to
vote were present by proxy.
<TABLE>
<CAPTION>
NUMBER OF VOTES:
<S> <C> <C>
1. Election of Directors For Withheld
---------- ---------
C. Duann Blinn 12,400,372 183,916
Robert Chesek 12,412,096 172,192
E. Virgil Conway 12,393,811 190,477
Harry Dalzell-Payne 12,394,733 189,555
Francis E. Jeffries 12,390,897 193,391
Leroy Keith, Jr. 12,412,133 172,155
Philip R. McLoughlin 12,408,450 175,838
Everett L. Morris 12,388,105 196,183
James M. Oates 12,412,133 172,155
Calvin J. Pedersen 12,406,155 178,133
Philip R. Reynolds 12,394,535 189,753
Herbert Roth, Jr. 12,396,529 187,759
Richard E. Segerson 12,411,680 172,608
Lowell P. Weicker, Jr. 12,368,168 216,120
For Against Abstain
---------- --------- ---------
2. Price Waterhouse LLP 12,145,210 97,360 341,718
3. Investment Restrictions 8,722,580 1,561,482 2,522,588*
</TABLE>
* Includes 1,854,900 shares delivered not voted.
<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
James D. Wehr, Senior Vice President
David L. Albrycht, Vice President
William E. Keen, III, Vice President
William R. Moyer, Vice President
Leonard J. Saltiel, Vice President
Nancy G. Curtiss, Treasurer
G. Jeffrey Bohne, Secretary
Investment Adviser
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
Independent Accountants
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[BACK COVER]
-------------------
Phoenix Funds BULK RATE MAIL
PO Box 2200 U.S. POSTAGE
Enfield CT 06083-2200 PAID
SPRINGFIELD, MA
PERMIT NO. 444
-------------------
[LOGO] PHOENIX
DUFF & PHELPS
PDP 660 (12/97)
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</TABLE>
