MERRILL LYNCH
PHOENIX
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
January 31, 2000
<PAGE>
MERRILL LYNCH PHOENIX FUND, INC.
DEAR SHAREHOLDER
During November and December 1999, US equity markets temporarily shrugged off
inflationary concerns as technology shares continued to drive the market's
upward advance. Enthusiasm for technology shares reflected the exponential
growth of the Internet and the corresponding need for infrastructure expansion.
During the January quarter, investors also embraced smaller-capitalization
issues that reflected an attractive valuation relative to their growth
prospects. Volatility returned during the last month of the quarter as investors
once again focused on the strengthening economy and the prospects for tighter
monetary policy by the Federal Reserve Board. Despite the choppy market during
January, most major market indexes finished on the plus side for the January
quarter.
For the three months ended January 31, 2000, Merrill Lynch Phoenix Fund, Inc.'s
performance outpaced most domestic large-capitalization market indexes as the
Fund's total returns for Class A, Class B, Class C, and Class D Shares were
+17.05%, +16.75%, +16.72% and +17.05%, respectively, compared to a total return
of +2.61% for the unmanaged Standard & Poor's 500 Index. Favorable Fund
performance during the quarter reflected our higher-than-normal weighting in
technology. However, the strong gains attributable to our technology positions
were partially offset by our financial, environmental service, energy and
industrial holdings.
During the January quarter, the Fund's best-performing holdings included Walker
Interactive Systems, Inc. and Inprise Corporation, two small-capitalization
software development companies. Walker Interactive Systems' market advance
during the quarter was attributable to the company's makeover toward more
Internet centric applications, while Inprise's strong performance reflected the
market's infatuation with the Linux operating system and the company's software
development tool offerings. Other notable performers during the quarter included
our semiconductor positions, which continued to benefit from strong
communication-equipment end market demand.
Although our energy and environmental service positions dramatically
underperformed during the quarter, we remain optimistic regarding their
prospects. We expect both EOG Resources, Inc. and Burlington Resources Inc. to
benefit from tightening gas inventory levels. At current price levels, there
appears to be a disparity between current market valuations and industry's
improving fundamentals. Within environmental services, we believe Republic
Services, Inc.'s favorable organic growth, sound balance sheet and improving
free cash flows will eventually be rewarded. The company is benefiting from a
stable price environment as two of its larger competitors are working to improve
their financial results.
During the January quarter, we initiated positions in The Allstate Corporation
and Bank One Corporation owing to the sector's attractive valuation levels. We
also added Unisys Corporation, Harris Corporation, Halliburton Company, Hercules
Incorporated, Northrop Grumman Corporation, American Home Products Corporation
and Monsanto Company. We added to Unisys, a leading computer hardware and
service company, owing to the company's aggressive new management team, its
service growth opportunities and eventual abatement of Year 2000 lockdown
concerns. The Harris Corp. position was based on the company's exposure to the
communication sector and an attractive valuation resulting from its investment
portfolio. We established a position in Halliburton in view of the company's
improved exploratory and production budgets. We added Hercules Inc. during the
quarter because we expect the company to benefit from the continuing global
recovery and more aggressive action by the company's management to
1
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
reposition the company's assets and work down debt. Our Northrop Grumman Corp.
position reflects an improved defense budgetary outlook and the company's strong
cash generating capacity. Finally, investor concerns relating to two separate
pharmaceutical industry transactions involving American Home Products and
Monsanto allowed us to take positions in two companies with some of the most
attractive product pipelines in the industry.
On the sell side, we continued to prune our technology positions as we attempt
to maintain our current weightings. We also closed out our holdings in
Telefonaktiebolaget LM Ericsson Telephone Co. and WHX Corporation as Ericsson
met our price objective and WHX's turnaround failed to materialize.
In Conclusion
Although equity markets remain challenging, we believe the Fund remains well
positioned to benefit from the technology sector's market leadership, and we
continue to look for other attractive investment opportunities within the
energy, financial and cyclicals industries.
We thank you for your investment in Merrill Lynch Phoenix Fund, Inc., and we
look forward to serving your investment needs in the months and years ahead.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Robert J. Martorelli
Robert J. Martorelli
Senior Vice President and Portfolio Manager
March 3, 2000
2
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
PERFORMANCE DATA
About Fund Performance
Investors are able to purchase shares of the Fund through the Merrill Lynch
Select Pricing(SM) System, which offers four pricing alternatives:
o Class A Shares incur a maximum initial sales charge (front-end load) of
5.25% and bear no ongoing distribution or account maintenance fees. Class
A Shares are available only to eligible investors.
o Class B Shares are subject to a maximum contingent deferred sales charge
of 4% if redeemed during the first year, decreasing 1% each year
thereafter to 0% after the fourth year. In addition, Class B Shares are
subject to a distribution fee of 0.75% and an account maintenance fee of
0.25%. These shares automatically convert to Class D Shares after
approximately 8 years. (There is no initial sales charge for automatic
share conversions.)
o Class C Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. In addition, Class C Shares are subject to a 1%
contingent deferred sales charge if redeemed within one year of purchase.
o Class D Shares incur a maximum initial sales charge of 5.25% and an
account maintenance fee of 0.25% (but no distribution fee).
None of the past results shown should be considered a representation of future
performance. Figures shown in the "Recent Performance Results" and "Average
Annual Total Return" tables assume reinvestment of all dividends and capi tal
gains distributions at net asset value on the ex-dividend date. Investment
return and principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Dividends paid to
each class of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to each class,
which are deducted from the income available to be paid to shareholders.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class A Shares*
================================================================================
Year Ended 12/31/99 +48.83% +41.02%
- --------------------------------------------------------------------------------
Five Years Ended 12/31/99 +21.39 +20.09
- --------------------------------------------------------------------------------
Ten Years Ended 12/31/99 +15.96 +15.34
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%. (Prior to October 21, 1994, Class A Shares
were offered at a higher sales charge. Thus, actual returns would have
been lower than shown for the ten-year period.)
** Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
================================================================================
Class B Shares*
================================================================================
Year Ended 12/31/99 +47.29% +43.29%
- --------------------------------------------------------------------------------
Five Years Ended 12/31/99 +20.15 +20.15
- --------------------------------------------------------------------------------
Ten Years Ended 12/31/99 +14.78 +14.78
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after
4 years.
** Assuming payment of applicable contingent deferred sales charge.
================================================================================
% Return % Return
Without CDSC With CDSC**
================================================================================
Class C Shares*
================================================================================
Year Ended 12/31/99 +47.43% +46.43%
- --------------------------------------------------------------------------------
Five Years Ended 12/31/99 +20.15 +20.15
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 12/31/99 +17.59 +17.59
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
1 year.
** Assuming payment of applicable contingent deferred sales charge.
================================================================================
% Return Without % Return With
Sales Charge Sales Charge**
================================================================================
Class D Shares*
================================================================================
Year Ended 12/31/99 +48.41% +40.62%
- --------------------------------------------------------------------------------
Five Years Ended 12/31/99 +21.08 +19.78
- --------------------------------------------------------------------------------
Inception (10/21/94)
through 12/31/99 +18.51 +17.28
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
3
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
PERFORMANCE DATA (concluded)
Recent Performance Results
Ten Years/
3 Month 12 Month Since Inception
As of January 31, 2000 Total Return Total Return Total Return
================================================================================
ML Phoenix Fund, Inc. Class A Shares* +17.05% +40.18% +361.86%
- --------------------------------------------------------------------------------
ML Phoenix Fund, Inc. Class B Shares* +16.75 +38.76 +316.95
- --------------------------------------------------------------------------------
ML Phoenix Fund, Inc. Class C Shares* +16.72 +38.70 +127.92
- --------------------------------------------------------------------------------
ML Phoenix Fund, Inc. Class D Shares* +17.05 +39.90 +137.72
- --------------------------------------------------------------------------------
Standard & Poor's 500 Index** + 2.61 +10.35 +442.42/+231.52
================================================================================
* Investment results shown do not reflect sales charges; results would be
lower if a sales charge was included. Total investment returns are based
on changes in net asset values for the periods shown, and assume
reinvestment of all dividends and capital gains distributions at net asset
value on the ex-dividend date. The Fund's ten-year/since inception total
return periods are ten years for Class A & Class B Shares and from
10/21/94 for Class C & Class D Shares.
** An unmanaged broad-based index comprised of common stocks. Ten years/since
inception total return periods are ten years and from 10/21/94,
respectively.
PORTFOLIO INFORMATION
As of January 31, 2000
Percent of
Ten Largest Holdings Net Assets
Anacomp, Inc............................ 5.0%
IVAX Corporation........................ 4.8
Inprise Corporation..................... 4.4
National Semiconductor Corporation ..... 3.7
Columbia/HCA Healthcare Corporation .... 2.9
Burlington Resources Inc................ 2.9
Crown Cork & Seal Company, Inc.......... 2.7
LTX Corporation......................... 2.7
EOG Resources, Inc...................... 2.6
Mentor Graphics Corporation............. 2.4
Percent of
Five Largest Industries Net Assets
Energy Related.......................... 10.7%
Computer Software....................... 10.1
Semiconductors.......................... 8.4
Pharmaceuticals......................... 8.3
Industrial Services..................... 5.0
Percent of
Asset Mix Net Assets
Stocks.................................. 84.7%
Bonds................................... 7.2
Cash & Cash Equivalents................. 8.1
4
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Held/ Percent of
Industry Face Amount Investments Value Net Assets
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Discount to Assets
- -------------------------------------------------------------------------------------------------------------
Leisure & Entertainment 150,000 The Seagram Company Ltd. $ 8,709,375 1.6%
- -------------------------------------------------------------------------------------------------------------
Paper & Forest Products 201,000 Champion International Corporation 11,758,500 2.1
- -------------------------------------------------------------------------------------------------------------
Printing & Publishing 372,600 +Scitex Corporation Ltd. (Ordinary) 5,868,450 1.0
- -------------------------------------------------------------------------------------------------------------
Total Discount to Assets (Cost--$14,871,329) 26,336,325 4.7
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Earnings Turnaround
- -------------------------------------------------------------------------------------------------------------
Aerospace & Defense 400,000 Lockheed Martin Corporation 7,500,000 1.3
103,900 Northrop Grumman Corporation 5,220,975 0.9
- -------------------------------------------------------------------------------------------------------------
Banking & Financial 223,600 Bank One Corporation 6,666,075 1.2
- -------------------------------------------------------------------------------------------------------------
Computer Software 1,000,000 +Mentor Graphics Corporation 13,500,000 2.4
- -------------------------------------------------------------------------------------------------------------
Consumer Products 917,400 +The Topps Company, Inc. 7,855,237 1.4
- -------------------------------------------------------------------------------------------------------------
Diversified 250,000 Hillenbrand Industries, Inc. 8,500,000 1.5
- -------------------------------------------------------------------------------------------------------------
Electric Utility 400,000 Cinergy Corp. 9,950,000 1.8
- -------------------------------------------------------------------------------------------------------------
Energy Related 500,000 Burlington Resources Inc. 16,031,250 2.9
649,400 +EEX Corporation 2,354,075 0.4
900,000 EOG Resources, Inc. 14,287,500 2.6
250,000 Halliburton Company 9,000,000 1.6
400,000 Sunoco, Inc. 9,225,000 1.7
300,000 Unocal Corporation 8,587,500 1.5
- -------------------------------------------------------------------------------------------------------------
Industrial Services 1,567,600 +Anacomp, Inc. (d) 27,922,875 5.0
- -------------------------------------------------------------------------------------------------------------
Insurance 700,000 Ace Limited 12,381,250 2.2
250,000 The Allstate Corporation 5,796,875 1.0
- -------------------------------------------------------------------------------------------------------------
Leisure & Entertainment 900,000 +CST Entertainment, Inc. (a) 900 0.0
- -------------------------------------------------------------------------------------------------------------
Packaging 750,000 Crown Cork & Seal Company, Inc. 15,234,375 2.7
- -------------------------------------------------------------------------------------------------------------
Retail 800,000 +Borders Group, Inc. 11,000,000 2.0
- -------------------------------------------------------------------------------------------------------------
Semiconductor 400,000 +Integrated Device Technology, Inc. 11,375,000 2.0
500,000 +LTX Corporation 14,937,500 2.7
400,000 +National Semiconductor Corporation 21,000,000 3.7
- -------------------------------------------------------------------------------------------------------------
Steel 659,000 Birmingham Steel Corporation 2,594,813 0.5
- -------------------------------------------------------------------------------------------------------------
Total Earnings Turnaround (Cost--$209,026,727) 240,921,200 43.0
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Financial Restructuring
- -------------------------------------------------------------------------------------------------------------
Consumer Products 611,100 +United States Leather, Inc. 611,100 0.1
- -------------------------------------------------------------------------------------------------------------
Energy Related 1,981,437 Gulfport Energy Corporation--Litigation Trust
Certificates 20 0.0
- -------------------------------------------------------------------------------------------------------------
Financial Services 300,000 +Altiva Financial Corporation 609,375 0.1
- -------------------------------------------------------------------------------------------------------------
Home Builders 2,113,439 +New Millennium Homes, LLC (a) 5,283,598 1.0
$15,250,000 New Millennium Homes, LLC, Senior Notes,
13.50% due 9/03/2004 (c) 12,505,000 2.3
- -------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
SCHEDULE OF INVESTMENTS (continued)
<TABLE>
<CAPTION>
Shares Held/ Percent of
Industry Face Amount Investments Value Net Assets
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial Restructuring (concluded)
- ---------------------------------------------------------------------------------------------------------------
Industrial Equipment $ 5,000,000 Goss Graphic Systems, Inc., 2.818%
due 11/19/2005 $ 1,200,000 0.2%
Manufacturing 139,389 +Goss Holdings Inc. (Class B) 76,664 0.0
- ---------------------------------------------------------------------------------------------------------------
Supermarkets 1,400,000 +The Grand Union Company 7,962,500 1.4
- ---------------------------------------------------------------------------------------------------------------
Total Financial Restructuring (Cost--$49,977,788) 28,248,257 5.1
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
High Yield
- ---------------------------------------------------------------------------------------------------------------
Automotive $ 6,650,000 Safety Components International, Inc.,
Senior Subordinated Notes, 10.125% due 7/15/2007 1,330,000 0.2
- ---------------------------------------------------------------------------------------------------------------
Computer Services $ 3,000,000 Federal Data Corp., 10.125% due 8/01/2005 2,100,000 0.4
- ---------------------------------------------------------------------------------------------------------------
Consumer Products $12,260,000 Diamond Brands Operating, 10.125% due 4/15/2008 9,179,675 1.6
$42,475,000 Sunbeam Corporation, Senior Subordinated
Debentures, 8.062% due 3/25/2018 (a)(b) 6,955,281 1.2
- ---------------------------------------------------------------------------------------------------------------
Diversified $ 1,000,000 Burns, Philp & Co., Ltd., Convertible,
5.50% due 4/30/2004 498,750 0.1
- ---------------------------------------------------------------------------------------------------------------
Printing & Publishing $ 6,255,400 +San Jacinto Holdings, Inc., Senior
Subordinated Notes, 12% due 12/31/2002 2,189,390 0.4
- ---------------------------------------------------------------------------------------------------------------
Real Estate 23,000 Simon Property Group, Inc. 567,812 0.1
Investment Trust
- ---------------------------------------------------------------------------------------------------------------
Supermarkets $11,000,000 Jitney-Jungle Stores of America, Inc.,
Senior Notes, 12% due 3/01/2006 2,145,000 0.4
- ---------------------------------------------------------------------------------------------------------------
Transportation $10,019,000 +Trism Inc., Senior Subordinated Notes,
10.75% due 12/15/2000 2,103,990 0.4
- ---------------------------------------------------------------------------------------------------------------
Total High Yield (Cost--$50,571,100) 27,069,898 4.8
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Operational Restructuring
- ---------------------------------------------------------------------------------------------------------------
Chemicals 450,000 Hercules Incorporated 7,706,250 1.4
- ---------------------------------------------------------------------------------------------------------------
Computer & Peripherals 350,000 Compaq Computer Corporation 9,581,250 1.7
300,000 +Unisys Corporation 9,562,500 1.7
- ---------------------------------------------------------------------------------------------------------------
Computer Software 2,028,800 +Inprise Corporation 24,852,800 4.4
400,000 +Novell, Inc. 13,350,000 2.4
500,000 +Walker Interactive Systems, Inc. 4,718,750 0.9
- ---------------------------------------------------------------------------------------------------------------
Diversified 3,500,000 Pacific Dunlop Limited 4,373,936 0.8
- ---------------------------------------------------------------------------------------------------------------
Electrical Equipment 370,000 Thomas & Betts Corporation 11,261,875 2.0
- ---------------------------------------------------------------------------------------------------------------
Electronics 250,000 Harris Corporation 7,250,000 1.3
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
SCHEDULE OF INVESTMENTS (concluded)
<TABLE>
<CAPTION>
Percent of
Industry Shares Held Investments Value Net Assets
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operational Restructuring (concluded)
- --------------------------------------------------------------------------------------------------------------------
Environmental 1,000,000 +Republic Services, Inc. (Class A) $ 11,750,000 2.1%
1,679,300 +Safety-Kleen Corp. 10,180,756 1.8
- --------------------------------------------------------------------------------------------------------------------
Health Care 600,000 Columbia/HCA Healthcare Corporation 16,387,500 2.9
500,000 +Tenet Healthcare Corporation 11,375,000 2.0
- --------------------------------------------------------------------------------------------------------------------
Leisure & Entertainment 741,600 +Loews Cineplex Entertainment Corporation 3,522,600 0.6
- --------------------------------------------------------------------------------------------------------------------
Pharmaceuticals 231,100 American Home Products Corporation 10,876,144 2.0
800,000 +IVAX Corporation 26,600,000 4.8
239,700 Monsanto Company 8,464,406 1.5
- --------------------------------------------------------------------------------------------------------------------
Total Operational Restructuring (Cost--$154,830,523) 191,813,767 34.3
- --------------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$479,277,467) 514,389,447 91.9
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
Face
Amount Short-Term Securities
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial Paper* $ 7,818,000 General Motors Acceptance Corp., 5.81% due 2/01/2000 7,818,000 1.4
18,000,000 J.P. Morgan Securities Inc., 5.67% due 2/22/2000 17,940,465 3.2
5,000,000 Morgan Stanley, Dean Witter & Co., 5.66% due 2/18/2000 4,986,636 0.9
8,000,000 Paccar Financial Corp., 5.57% due 2/10/2000 7,988,860 1.4
10,000,000 Wal-Mart Stores, Inc., 5.65% due 2/24/2000 9,963,903 1.8
- --------------------------------------------------------------------------------------------------------------------
US Government Agency 5,000,000 Federal National Mortgage Association,
Obligations* 5.57% due 2/24/2000 4,982,207 0.9
- --------------------------------------------------------------------------------------------------------------------
Total Short-Term Securities (Cost--$53,680,071) 53,680,071 9.6
- --------------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$532,957,538) 568,069,518 101.5
Liabilities in Excess of Other Assets (8,276,166) (1.5)
------------ -----
Net Assets $559,793,352 100.0%
============ =====
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commercial Paper and certain US Government Agency Obligations are traded on
a discount basis; the interest rates shown reflect the discount rates paid
at the time of purchase by the Fund.
+ Non-income producing security.
(a) The security may be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933.
(b) Represents a zero coupon or step bond; the interest rate shown reflects the
effective yield at the time of purchase by the Fund.
(c) Represents a pay-in-kind security which may pay interest/ dividends in
additional face amount/shares.
(d) Investments in companies 5% or more of whose outstanding securities are held
by the Fund (such companies are defined as "Affiliated Companies" in Section
2(a)(3) of the Investment Company Act of 1940) are as follows:
- --------------------------------------------------------------------------------
Net Share Net Dividend
Industry Affiliate Activity Cost Income
- --------------------------------------------------------------------------------
Industrial Anacomp, Inc. -- -- +
Services
- --------------------------------------------------------------------------------
+ Non-income producing security.
See Notes to Financial Statements.
7
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of January 31, 2000
<TABLE>
<S> <C> <C>
Assets: Investments, at value (identified cost--$532,957,538) ............ $ 568,069,518
Cash ............................................................. 456
Receivables:
Interest ....................................................... $ 2,246,168
Securities sold ................................................ 963,067
Capital shares sold ............................................ 452,960
Dividends ...................................................... 379,500 4,041,695
-------------
Prepaid registration fees ........................................ 49,825
-------------
Total assets ..................................................... 572,161,494
-------------
- -------------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Securities purchased ........................................... 9,732,447
Capital shares redeemed ........................................ 1,553,098
Investment adviser ............................................. 485,837
Distributor .................................................... 212,690 11,984,072
-------------
Accrued expenses and other liabilities ........................... 384,070
-------------
Total liabilities ................................................ 12,368,142
-------------
- -------------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets ....................................................... $ 559,793,352
=============
- -------------------------------------------------------------------------------------------------------------------------
Net Assets Class A Shares of Common Stock, $.10 par value, 50,000,000 shares
Consist of: authorized ....................................................... $ 1,725,055
Class B Shares of Common Stock, $.10 par value, 100,000,000 shares
authorized ....................................................... 1,534,482
Class C Shares of Common Stock, $.10 par value, 50,000,000 shares
authorized ....................................................... 82,137
Class D Shares of Common Stock, $.10 par value, 100,000,000 shares
authorized ....................................................... 695,698
Paid-in capital in excess of par ................................. 456,231,343
Accumulated investment loss--net ................................. (33,514)
Undistributed realized capital gains on investments and foreign
currency transactions--net ....................................... 64,446,245
Unrealized appreciation on investments and foreign currency
transactions--net ................................................ 35,111,906
-------------
Net assets ....................................................... $ 559,793,352
=============
- -------------------------------------------------------------------------------------------------------------------------
Net Asset Value: Class A--Based on net assets of $243,456,267 and 17,250,545 shares
outstanding ...................................................... $ 14.11
=============
Class B--Based on net assets of $207,285,658 and 15,344,824 shares
outstanding ...................................................... $ 13.51
=============
Class C--Based on net assets of $10,960,455 and 821,371 shares
outstanding ...................................................... $ 13.34
=============
Class D--Based on net assets of $98,090,972 and 6,956,981 shares
outstanding ...................................................... $ 14.10
=============
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
FINANCIAL INFORMATION (continued)
Statement of Operations for the Six Months Ended January 31, 2000
<TABLE>
<S> <C> <C>
Investment Interest and discount earned ........................... $ 5,412,778
Income: Dividends (net of $36,694 foreign withholding tax) ..... 1,654,235
------------
Total income ........................................... 7,067,013
------------
- ----------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees ............................... $ 2,715,461
Account maintenance and distribution fees--Class B ..... 1,009,908
Transfer agent fees--Class A ........................... 188,362
Transfer agent fees--Class B ........................... 175,810
Account maintenance fees--Class D ...................... 113,414
Professional fees ...................................... 83,456
Transfer agent fees--Class D ........................... 70,216
Account maintenance and distribution fees--Class C ..... 46,636
Accounting services .................................... 44,807
Registration fees ...................................... 31,874
Directors' fees and expenses ........................... 20,925
Custodian fees ......................................... 17,757
Printing and shareholder reports ....................... 16,048
Transfer agent fees--Class C ........................... 8,690
Pricing fees ........................................... 1,094
Other .................................................. 10,316
------------
Total expenses ......................................... 4,554,774
------------
Investment income--net ................................. 2,512,239
------------
- ----------------------------------------------------------------------------------------------------------------
Realized & Realized gain (loss) from:
Unrealized Gain Investments--net ..................................... 73,394,450
(Loss) on Foreign currency transactions--net ................... (18,010) 73,376,440
Investments & ------------
Foreign Currency
Transactions--Net: Change in unrealized appreciation/depreciation on:
Investments--net ..................................... (2,488,744)
Foreign currency transactions--net ................... 253 (2,488,491)
------------ ------------
Net Increase in Net Assets Resulting from Operations ... $ 73,400,188
============
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
January 31, July 31,
Increase (Decrease) in Net Assets: 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations: Investment income--net .............................................. $ 2,512,239 $ 3,487,025
Realized gain on investments and foreign currency transactions--net . 73,376,440 47,007,899
Change in unrealized appreciation/depreciation on investments and
foreign currency transactions--net .................................. (2,488,491) 48,133,993
------------- -------------
Net increase in net assets resulting from operations ................ 73,400,188 98,628,917
------------- -------------
- -----------------------------------------------------------------------------------------------------------------------------
Dividends & Investment income--net:
Distributions to Class A ........................................................... (3,446,634) (2,622,198)
Shareholders: Class B ........................................................... (62,223) (284,461)
Class C ........................................................... (9,452) (8,042)
Class D ........................................................... (956,137) (680,597)
Realized gain on investments--net:
Class A ........................................................... (23,130,471) (38,989,784)
Class B ........................................................... (19,332,398) (40,328,457)
Class C ........................................................... (871,784) (1,585,995)
Class D ........................................................... (8,296,448) (12,759,045)
------------- -------------
Net decrease in net assets resulting from dividends and distributions
to shareholders ..................................................... (56,105,547) (97,258,579)
------------- -------------
- -----------------------------------------------------------------------------------------------------------------------------
Capital Share Net increase (decrease) in net assets derived from capital
Transactions: share transactions .................................................. 4,931,126 (134,210,880)
------------- -------------
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets: Total increase (decrease) in net assets ............................. 22,225,767 (132,840,542)
Beginning of period ................................................. 537,567,585 670,408,127
------------- -------------
End of period* ...................................................... $ 559,793,352 $ 537,567,585
============= =============
- -----------------------------------------------------------------------------------------------------------------------------
*Undistributed (accumulated) investment income (loss)--net ........... $ (33,514) $ 1,928,693
============= =============
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
FINANCIAL INFORMATION (continued)
Financial Highlights
<TABLE>
<CAPTION>
Class A+
--------------------------------------------------------------
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended For the Year Ended July 31,
January 31, ------------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ...... $ 13.71 $ 13.49 $ 15.32 $ 13.37 $ 13.44
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .................... .09 .13 .12 .10 .13
Realized and unrealized gain on investments
and foreign currency transactions--net .... 1.80 2.11 1.33 3.46 .51
--------- --------- --------- --------- ---------
Total from investment operations .......... 1.89 2.24 1.45 3.56 .64
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net .................. (.19) (.13) (.11) (.06) (.13)
Realized gain on investments--net ....... (1.30) (1.89) (3.17) (1.55) (.58)
--------- --------- --------- --------- ---------
Total dividends and distributions ......... (1.49) (2.02) (3.28) (1.61) (.71)
--------- --------- --------- --------- ---------
Net asset value, end of period ............ $ 14.11 $ 13.71 $ 13.49 $ 15.32 $ 13.37
========= ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ........ 14.82%++ 24.15% 10.98% 29.78% 4.78%
Return:** ========= ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses .................................. 1.23%* 1.27% 1.24% 1.26% 1.24%
Net Assets: ========= ========= ========= ========= =========
Investment income--net .................... 1.36%* 1.11% .83% .77% .92%
========= ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) .. $ 243,456 $ 245,712 $ 283,005 $ 301,936 $ 279,351
Data: ========= ========= ========= ========= =========
Portfolio turnover ........................ 42.95% 80.60% 81.20% 81.46% 87.66%
========= ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales
charges.
+ Based on average shares outstanding.
++ Aggregate total investment return.
See Notes to Financial Statements.
11
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class B+
--------------------------------------------------------------
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended For the Year Ended July 31,
January 31, ------------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ...... $ 13.06 $ 12.93 $ 14.82 $ 12.99 $ 13.12
Operating --------- --------- --------- --------- ---------
Performance: Investment income (loss)--net ............. .02 .01 (.03) (.03) (.01)
Realized and unrealized gain on investments
and foreign currency transactions--net .... 1.71 2.02 1.28 3.35 .50
--------- --------- --------- --------- ---------
Total from investment operations .......... 1.73 2.03 1.25 3.32 .49
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net .................. --++++ (.01) (.01) -- (.04)
Realized gain on investments--net ....... (1.28) (1.89) (3.13) (1.49) (.58)
--------- --------- --------- --------- ---------
Total dividends and distributions ......... (1.28) (1.90) (3.14) (1.49) (.62)
--------- --------- --------- --------- ---------
Net asset value, end of period ............ $ 13.51 $ 13.06 $ 12.93 $ 14.82 $ 12.99
========= ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ........ 14.22%++ 22.97% 9.84% 28.48% 3.67%
Return:** ========= ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses .................................. 2.25%* 2.30% 2.26% 2.29% 2.26%
Net Assets: ========= ========= ========= ========= =========
Investment income (loss)--net ............. .34%* .08% (.18%) (.26%) (.11%)
========= ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) .. $ 207,286 $ 199,132 $ 286,396 $ 337,022 $ 381,808
Data: ========= ========= ========= ========= =========
Portfolio turnover ........................ 42.95% 80.60% 81.20% 81.46% 87.66%
========= ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales
charges.
+ Based on average shares outstanding.
++ Aggregate total investment return.
++++ Amount is less than $.01 per share.
See Notes to Financial Statements.
12
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
FINANCIAL INFORMATION (continued)
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class C+
-------------------------------------------------------------
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended For the Year Ended July 31,
January 31, -----------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ...... $ 12.94 $ 12.83 $ 14.72 $ 12.92 $ 13.07
Operating --------- -------- -------- --------- ---------
Performance: Investment income (loss)--net ............. .02 .01 (.03) (.04) (.02)
Realized and unrealized gain on investments
and foreign currency transactions--net .... 1.69 2.00 1.29 3.33 .51
--------- -------- -------- --------- ---------
Total from investment operations .......... 1.71 2.01 1.26 3.29 .49
--------- -------- -------- --------- ---------
Less dividends and distributions:
Investment income--net .................. (.01) (.01) (.02) -- (.06)
Realized gain on investments--net ....... (1.30) (1.89) (3.13) (1.49) (.58)
--------- -------- -------- --------- ---------
Total dividends and distributions ......... (1.31) (1.90) (3.15) (1.49) (.64)
--------- -------- -------- --------- ---------
Net asset value, end of period ............ $ 13.34 $ 12.94 $ 12.83 $ 14.72 $ 12.92
========= ======== ======== ========= =========
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ........ 14.16%++ 22.95% 9.90% 28.39% 3.69%
Return:** ========= ======== ======== ========= =========
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses .................................. 2.26%* 2.31% 2.27% 2.30% 2.27%
Net Assets: ========= ======== ======== ========= =========
Investment income (loss)--net ............. .32%* .06% (.19%) (.27%) (.12%)
========= ======== ======== ========= =========
- ------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) .. $ 10,960 $ 8,245 $ 11,316 $ 14,448 $ 15,821
Data: ========= ======== ======== ========= =========
Portfolio turnover ........................ 42.95% 80.60% 81.20% 81.46% 87.66%
========= ======== ======== ========= =========
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales
charges.
+ Based on average shares outstanding.
++ Aggregate total investment return.
See Notes to Financial Statements.
13
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
FINANCIAL INFORMATION (concluded)
Financial Highlights (concluded)
<TABLE>
<CAPTION>
Class D+
--------------------------------------------------------------
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended For the Year Ended July 31,
January 31, ------------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ...... $ 13.67 $ 13.45 $ 15.29 $ 13.35 $ 13.43
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .................... .08 .10 .08 .07 .09
Realized and unrealized gain on investments
and foreign currency transactions--net .... 1.80 2.11 1.33 3.45 .51
--------- --------- --------- --------- ---------
Total from investment operations .......... 1.88 2.21 1.41 3.52 .60
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net .................. (.15) (.10) (.09) (.04) (.10)
Realized gain on investments--net ....... (1.30) (1.89) (3.16) (1.54) (.58)
--------- --------- --------- --------- ---------
Total dividends and distributions ......... (1.45) (1.99) (3.25) (1.58) (.68)
--------- --------- --------- --------- ---------
Net asset value, end of period ............ $ 14.10 $ 13.67 $ 13.45 $ 15.29 $ 13.35
========= ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on net asset value per share ........ 14.73%++ 23.87% 10.70% 29.44% 4.50%
Return:** ========= ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses .................................. 1.48%* 1.52% 1.51% 1.52% 1.48%
Net Assets: ========= ========= ========= ========= =========
Investment income--net .................... 1.10%* .88% .59% .54% .67%
========= ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) .. $ 98,091 $ 84,479 $ 89,691 $ 85,409 $ 48,873
Data: ========= ========= ========= ========= =========
Portfolio turnover ........................ 42.95% 80.60% 81.20% 81.46% 87.66%
========= ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales
charges.
+ Based on average shares outstanding.
++ Aggregate total investment return.
See Notes to Financial Statements.
14
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Phoenix Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
The Fund's financial statements are prepared in accordance with generally
accepted accounting principles, which may require the use of management accruals
and estimates. These unaudited financial statements reflect all adjustments,
which are, in the opinion of management, necessary to a fair statement of the
results for the interim period presented. All such adjustments are of a normal
recurring nature. The Fund offers four classes of shares under the Merrill Lynch
Select Pricing(SM) System. Shares of Class A and Class D are sold with a
front-end sales charge. Shares of Class B and Class C may be subject to a
contingent deferred sales charge. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that Class B, Class C and Class D Shares bear certain expenses related to the
account maintenance of such shares, and Class B and Class C Shares also bear
certain expenses related to the distribution of such shares. Each class has
exclusive voting rights with respect to matters relating to its account
maintenance and distribution expenditures. The following is a summary of
significant accounting policies followed by the Fund.
(a) Valuation of investments--Portfolio securities that are traded on stock
exchanges are valued at the last sale price on the exchange on which such
securities are traded, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available bid price. Securities
traded in the over-the-counter market are valued at the last available bid price
prior to the time of valuation. In cases where securities are traded on more
than one exchange, the securities are valued on the exchange designated by or
under the authority of the Board of Directors as the primary market. Securities
that are traded both in the over-the-counter market and on a stock exchange are
valued according to the broadest and most representative market. Options written
or purchased are valued at the last sale price in the case of exchange-traded
options. In the case of options traded in the over-the-counter market, valuation
is the last asked price (options written) or the last bid price (options
purchased). Short-term securities are valued at amortized cost, which
approximates market value. Other investments are stated at market value.
Securities and assets for which market value quotations are not available are
valued at their fair value as determined in good faith by or under the direction
of the Fund's Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various portfolio
strategies to seek to increase its return by hedging its portfolio against
adverse movements in the equity, debt and currency markets. Losses may arise due
to changes in the value of the contract or if the counterparty does not perform
under the contract.
o Options--The Fund is authorized to write covered call options. When the Fund
writes an option, an amount equal to the premium received by the Fund is
reflected as an asset and an equivalent liability. The amount of the liability
is subsequently marked to market to reflect the current market value of the
option written. When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or deducted from)
the basis of the security acquired or deducted from (or added to) the proceeds
of the security sold. When an option expires (or the Fund enters into a closing
transaction), the Fund realizes a gain or loss on the option to the extent of
the premiums received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized. Assets
and liabilities denominated in foreign currencies are valued at the exchange
rate at the end of the period. Foreign currency transactions are the result of
settling (realized) or valuing (unrealized) assets or liabilities expressed in
foreign currencies into US dollars. Realized and unrealized gains or losses from
investments include the effects of foreign exchange rates on investments.
(d) Income taxes--It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no Federal
income tax provision is required. Under the applicable foreign tax law, a
15
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
NOTES TO FINANCIAL STATEMENTS (continued)
withholding tax may be imposed on interest, dividends, and capital gains at
various rates.
(e) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Dividend income is recorded on the ex-dividend dates. Dividends from foreign
securities where the ex-dividend date may have passed are subse- quently
recorded when the Fund has determined the ex-dividend date. Interest income
(including amortization of discount) is recognized on the accrual basis.
Realized gains and losses on security transactions are determined on the
identified cost basis.
(f) Prepaid registration fees--Prepaid registration fees are charged to expense
as the related shares are issued.
(g) Dividends and distributions--Dividends and distributions paid by the Fund
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner. The Fund has also entered into a
Distribution Agreement and Distribution Plans with Merrill Lynch Funds
Distributor ("MLFD" or the "Distributor"), a division of Princeton Funds
Distributor, Inc. ("PFD"), which is a wholly-owned subsidiary of Merrill Lynch
Group, Inc.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee
based upon the average daily value of the Fund's net assets at the following
rates: 1.00% of average daily net assets not exceeding $500 million; .95% of
average daily net assets in excess of $500 million but not exceeding $1 billion;
and .90% of average daily net assets in excess of $1 billion.
Pursuant to the Distribution Plans adopted by the Fund in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the Distributor
ongoing account maintenance and distribution fees. The fees are accrued daily
and paid monthly at annual rates based upon the average daily net assets of the
shares as follows:
- --------------------------------------------------------------------------------
Account Distribution
Maintenance Fee Fee
- --------------------------------------------------------------------------------
Class B........................................ .25% .75%
Class C........................................ .25% .75%
Class D........................................ .25% --
- --------------------------------------------------------------------------------
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("MLPF&S"), a subsidiary of ML & Co., also provides account
maintenance and distribution services to the Fund. The ongoing account
maintenance fee compensates the Distributor and MLPF&S for providing account
maintenance services to Class B, Class C and Class D shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for providing
shareholder and distribution-related services to Class B and Class C
shareholders.
For the six months ended January 31, 2000, MLFD earned underwriting discounts
and MLPF&S earned dealer concessions on sales of the Fund's Class A and Class D
Shares as follows:
- -------------------------------------------------------------------------------
MLFD MLPF&S
- -------------------------------------------------------------------------------
Class A....................................... $ 405 $5,727
Class D....................................... $2,399 $39,234
- -------------------------------------------------------------------------------
For the six months ended January 31, 2000, MLPF&S received contingent deferred
sales charges of $35,255 and $1,705 relating to transactions in Class B and
Class C Shares, respectively. Furthermore, MLPF&S received contingent deferred
sales charges of $32 relating to transactions subject to front-end sales charge
waivers in Class D Shares.
In addition, MLPF&S received $62,677 in commissions on the execution of
portfolio security transactions for the Fund for the six months ended January
31, 2000.
16
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
During the six months ended January 31, 2000, the Fund paid Merrill Lynch
Security Pricing Service, an affiliate of MLPF&S, $53 for security price
quotations to compute the net asset value of the Fund.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of ML & Co., is
the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, FDS, PFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended January 31, 2000 were $209,414,796 and $251,860,972, respectively.
Net realized gains (losses) for the six months ended January 31, 2000 and net
unrealized gains (losses) as of January 31, 2000 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Gains (Losses)
- --------------------------------------------------------------------------------
Long-term investments .............. $73,394,464 $35,111,980
Short-term investments ............. (14) --
Foreign currency
transactions........................ (18,010) (74)
----------- -----------
Total............................... $73,376,440 $35,111,906
=========== ===========
- --------------------------------------------------------------------------------
As of January 31, 2000, net unrealized appreciation for Federal income tax
purposes aggregated $35,111,980, of which $138,692,791 related to appreciated
securities and $103,580,811 related to depreciated securities. At January 31,
2000, the aggregate cost of investments for Federal income tax purposes was
$532,957,538.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions
was $4,931,126 and $(134,210,880) for the six months ended January 31, 2000 and
for the year ended July 31, 1999, respectively.
Transactions in capital shares for each class were as follows:
- --------------------------------------------------------------------------------
Class A Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold........................ 1,058,569 $ 14,191,720
Shares issued to shareholders
in reinvestment of
dividends and distributions ....... 1,811,355 23,706,117
--------- ------------
Total issued....................... 2,869,924 37,897,837
Shares redeemed.................... (3,537,840) (46,534,002)
--------- ------------
Net decrease....................... (667,916) $ (8,636,165)
========= ============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold......................... 1,991,141 $ 22,834,139
Shares issued to shareholders
in reinvestment of
dividends and distributions ........ 4,055,374 37,136,760
--------- -------------
Total issued........................ 6,046,515 59,970,899
Shares redeemed..................... (9,113,859) (101,138,566)
--------- -------------
Net decrease........................ (3,067,344) $ (41,167,667)
========= =============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold......................... 1,650,511 $ 21,194,780
Shares issued to shareholders
in reinvestment of
dividends and distributions ........ 1,400,187 17,545,554
--------- -------------
Total issued........................ 3,050,698 38,740,334
Automatic conversion
of shares........................... (477,640) (6,072,716)
Shares redeemed..................... (2,479,665) (31,845,744)
--------- -------------
Net increase........................ 93,393 $ 821,874
========= =============
- --------------------------------------------------------------------------------
17
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
- --------------------------------------------------------------------------------
Class B Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold......................... 2,732,300 $ 29,745,514
Shares issued to shareholders
in reinvestment of
dividends and distributions ........ 4,200,711 37,000,685
--------- --------------
Total issued........................ 6,933,011 66,746,199
Automatic conversion
of shares........................... (1,093,775) (12,295,918)
Shares redeemed..................... (12,741,975) (136,568,503)
--------- --------------
Net decrease........................ (6,902,739) $ (82,118,222)
========= ==============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold......................... 257,078 $ 3,302,187
Shares issued to shareholders
in reinvestment of
dividends and distributions ........ 59,053 732,030
------- --------------
Total issued........................ 316,131 4,034,217
Shares redeemed..................... (132,122) (1,672,483)
------- --------------
Net increase........................ 184,009 $ 2,361,734
======= ==============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class C Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold......................... 121,024 $ 1,406,508
Shares issued to shareholders
in reinvestment of
dividends and distributions ........ 161,335 1,407,097
------- --------------
Total issued........................ 282,359 2,813,605
Shares redeemed..................... (527,192) (5,507,596)
------- --------------
Net decrease........................ (244,833) $ (2,693,991)
======= ==============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Six Months Dollar
Ended January 31, 2000 Shares Amount
- --------------------------------------------------------------------------------
Shares sold......................... 612,253 $ 8,353,940
Automatic conversion
of shares........................... 457,310 6,072,716
Shares issued to shareholders
in reinvestment of
dividends and distributions ........ 645,789 8,445,067
--------- --------------
Total issued........................ 1,715,352 22,871,723
Shares redeemed..................... (936,083) (12,488,040)
--------- --------------
Net increase........................ 779,269 $ 10,383,683
========= ==============
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class D Shares for the Year Dollar
Ended July 31, 1999 Shares Amount
- --------------------------------------------------------------------------------
Shares sold......................... 1,250,247 $ 13,543,025
Automatic conversion
of shares........................... 1,048,191 12,295,918
Shares issued to shareholders
in reinvestment of
dividends and distributions ........ 1,338,621 12,267,383
--------- --------------
Total issued........................ 3,637,059 38,106,326
Shares redeemed..................... (4,127,903) (46,337,326)
--------- --------------
Net decrease........................ (490,844) $ (8,231,000)
========= ==============
- --------------------------------------------------------------------------------
18
<PAGE>
Merrill Lynch Phoenix Fund, Inc. January 31, 2000
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Joe Grills, Director
Walter Mintz, Director
Robert S. Salomon Jr., Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Arthur Zeikel, Director
Robert C. Doll, Senior Vice President
Robert J. Martorelli, Senior Vice President and
Portfolio Manager
Donald C. Burke, Vice President and Treasurer
Barbara G. Fraser, Secretary
Custodian
The Chase Manhattan Bank, N.A.
Global Securities Services
4 Chase MetroTech Center, 18th Floor
Brooklyn, NY 11245
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
19
<PAGE>
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospectus. Past performance results shown in this report should not be
considered a representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Statements and other information
herein are as dated and are subject to change.
Merrill Lynch Phoenix Fund, Inc. is not related to Phoenix Home Life Mutual Life
Insurance Company or any of its subsidiaries or affiliates, including The
Phoenix Series Fund.
Merrill Lynch
Phoenix Fund, Inc.
Box 9011
Princeton, NJ
08543 #10263--1/00
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