MERRILL
LYNCH
PHOENIX
FUND, INC.
Quarterly Report April 30, 1994
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 per-
formance. Investment return and principal value of shares
will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
Merrill Lynch Phoenix Fund, Inc. is not related to Phoenix
Home Life Mutual Life Insurance Company or any of its sub-
sidiaries or affiliates, including The Phoenix Series Fund.
Merrill Lynch
Phoenix Fund, Inc.
Box 9011
Princeton, N.J.
08543
MERRILL LYNCH PHOENIX FUND, INC.
<PAGE>
DEAR SHAREHOLDER
Inflationary expectations and investor sentiment changed for the
worse during the April quarter. Following stronger-than-expected
economic results through year-end 1993, the Federal Reserve Board
broke with tradition on February 4, 1994 and publicly announced a
modest 25 basis point (0.25%) increase in short-term interest rates.
At the March 22, 1994 meeting of the Federal Open Market Committee,
the Federal Reserve Board again raised the Federal Funds rate by 25
basis points, followed by another 25 basis point increase on April 18,
1994.
Rather than view the Federal Reserve Board's first tightening move
as a preemptive strike against inflation, fixed-income investors
focused on Chairman Greenspan's implicit promise of further tighten-
ing should the rate of inflation accelerate, and bond prices declined
sharply. The setback in the bond market was also reflected in greater
stock market volatility. While the second and third increases in the
Federal Funds rate were less of a surprise, investors remained con-
cerned that interest rates would trend upward sharply as the central
bank aggressively attempted to contain the inflationary pressures of
an improving economy. At the same time, highly leveraged investors
were forced to liquidate positions in the face of declining stock and
bond prices. Investor confidence was not restored with the announce-
ment of the surprisingly slow 2.6% gross domestic product growth rate
for the first calendar quarter of 1994. Instead, investors focused on
the higher-than-expected (but still moderate) broad inflation meas-
ures and became concerned that business activity was beginning to
stagnate as inflationary pressures were increasing.
The volatility in the US capital markets was mirrored in internation-
al markets during the period. Political and economic developments,
along with concerns of heightened global inflationary pressures, led
to a sell-off in most capital markets, especially the emerging mar-
kets that had appreciated strongly in 1993.
Portfolio Matters
For some months, Merrill Lynch Phoenix Fund, Inc. has been expanding
its investments in several key areas which offer exceptional long-
term investment opportunities, such as environmental and financial
companies. The recent stock market turbulence has created opportun-
ities for the Fund to expand its investments in these areas.
<PAGE>
Although once perceived as a growth industry, environmental compan-
ies have become less profitable because of the recent recession and
greater recycling efforts. We believe that an economic recovery
greatly improves prospects for companies in the environmental in-
dustry. In addition, many companies have shifted their focus away
from costly expansion to optimizing returns on capital expenditures
made over the past ten years. In other words, these companies are
now working to enhance cash flows through more efficient operations.
This new strategy is best exemplified in our largest new ad-
dition to the portfolio, WMX Technologies, Inc.
WMX Technologies is the world's largest waste collection and dis-
posal company. In the past, WMX Technologies was regarded as a pre-
mier growth company and accorded a high price/earnings multiple.
However, economic sluggishness and industry-wide overcapacity neg-
atively impacted the company's growth rate, and its stock price has
reached a five-year low. In contrast to the consensus view, we be-
lieve that waste disposal is a growing business over the longer term,
and WMX Technologies' worldwide franchise is better positioned
than most to benefit from this growth. We believe management's goal
of higher returns on equity will result in stronger earnings growth
and ultimately a higher share price.
In the financial sector, we find that the financial strengths of
many companies are improving, and their shares are selling at very
low valuations. The potential for a continuing consolidation adds
to the investment merits of the sector. For example, during the
April quarter Margaretten Financial Corp., a Fund holding, announced
that it was considering acquisition proposals from several com-
panies. A new financial sector investment for the Fund is the
common stock of California Federal Bank (CalFed). This Los Angeles-
based savings and loan association has recently completed a dram-
atic financial restructuring that has transformed CalFed into a
well-capitalized thrift with $14 billion in assets. We are positive
on California's longer-term prospects, and with a strong Southern
California franchise we expect CalFed to participate in the state's
recovery.
Consumer spending patterns have been disrupted with the harsh weather
this past winter and the recent California earthquake. As a result,
we were able to purchase shares of two retailers--The Limited, Inc.
and Kmart Corp.--at very attractive prices.
<PAGE>
The Limited is one of the world's largest specialty retailing com-
panies. Several of its subsidiaries-- such as Express, Bath and Body
Works and Victoria's Secret--are among the most successful retailing
concepts today. When sales of the company's flagship Limited division
started to stagnate, its shares declined to valuations which we viewed
as very attractive. Although management and merchandise changes are
required in the troubled division to improve profitability, The Lim-
ited continues to invest in a number of retailing concepts with very
high growth potential. If the company is able to achieve satisfactory
profitability in all of its divisions, we believe that the appre-
ciation potential of its shares is significant.
Kmart Corp. is the second-largest retailer in the world, surpassed
only by Wal-Mart Stores, Inc. When researching the two companies, we
were impressed by their dramatic differences. Wal-Mart has signifi-
cantly higher returns on sales, equity and total capital. Should
Kmart's management be successful in narrowing this gap slightly, we
believe its shares could appreciate substantially. In the meantime,
Kmart management has concentrated on improving the company's balance
sheet, upgrading its store base and developing its very attractive
specialty businesses. We believe the company is reaching a turning
point and that its recent restructuring efforts may soon translate
into higher earnings.
During the April quarter we sold several of our very successful in-
vestments, such as the common stock of Thyssen AG and International
Business Machines Corp. Both of these holdings had reached our pre-
determined price targets much sooner than we had expected. However,
continuing disappointment for The Interlake Corp. led us to elim-
inate our holding in this company at a loss.
In Conclusion
Despite recent declines, the US stock market remains near its all-
time high. Nevertheless, we continue to find new investment oppor-
tunities in industries and individual companies whose future earn-
ings potential is not reflected in current share valuations. There-
fore, the portfolio's 11% cash position at April quarter-end is not
high by the Fund's historic standards. We plan to continue to utilize
periods of near-term volatility to expand investments in those areas
where we discern attractive long-term values.
Thank you for your investment in Merrill Lynch Phoenix Fund, Inc.,
and we look forward to reviewing our outlook and strategy with you
again in our upcoming annual report to shareholders.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Robert J. Martorelli)
Robert J. Martorelli
Vice President and Portfolio Manager
May 23, 1994
PERFORMANCE DATA
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of Class A
and Class B Shares will fluctuate so that shares, when redeemed, may
be worth more or less than their original cost.
<TABLE>
Recent Performance Results*
<CAPTION>
12 Month 3 Month
4/30/94 1/31/94 4/30/93 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Phoenix Fund Inc. Class A Shares $ 13.18 $ 14.00 $ 13.03 + 7.59%(1) -5.86%
ML Phoenix Fund Inc. Class B Shares 12.93 13.77 12.79 + 7.66(1) -6.10(2)
Dow Jones Industrial Average** 3,681.69 3,978.36 3,427.55 + 7.41 -7.46
Standard & Poor's 500 Index** 450.91 481.61 440.19 + 2.44 -6.37
ML Phoenix Fund, Inc. Class A Shares--Total Return +14.27(2) -5.86
ML Phoenix Fund, Inc. Class B Shares--Total Return +13.09(3) -6.10
Dow Jones Industrial Average--Total Return** +10.39 -6.85
Standard & Poor's 500 Index--Total Return** + 5.28 -5.76
<FN>
*Investment results shown for the 3-month and 12-month periods are
before the deduction of any sales charge.
**An unmanaged broad-based index comprised of common stocks. Total
investment returns for unmanaged indexes are based on estimates.
(1) Percent change includes reinvestment of $0.820 per share capital
gains distributions.
(2) Percent change includes reinvestment of $0.826 per share ordinary
income dividends and $0.820 per share capital gains distributions.
(3) Percent change includes reinvestment of $0.661 per share ordinary
income dividends and $0.820 per share capital gains distributions.
</TABLE>
<PAGE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/94 +14.36% + 6.93%
Five Years Ended 3/31/94 +13.63 +12.11
Ten Years Ended 3/31/94 +16.07 +15.30
[FN]
*Maximum sales charge is 6.5%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/94 +13.18% + 9.18%
Five Years Ended 3/31/94 +12.45 +12.45
Inception (10/21/88)
through 3/31/94 +12.44 +12.44
[FN]
*Maximum contingent deferred sales charge is 4% and is
reduced to 0% after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
11/1/82--12/31/82 $ 9.35 $ 9.60 -- -- + 2.67%
1983 9.60 11.69 $ 0.470 $0.370 + 31.05
1984 11.69 10.65 1.520 0.620 + 9.93
1985 10.65 12.00 0.980 0.710 + 30.28
1986 12.00 12.39 1.010 0.610 + 16.92
1987 12.39 10.50 1.551 0.676 + 0.95
1988 10.50 11.78 1.790 0.329 + 33.18
1989 11.78 12.49 0.428 0.508 + 13.87
1990 12.49 8.08 1.623 0.396 - 20.66
1991 8.08 9.90 0.645 0.494 + 37.01
1992 9.90 11.73 0.057 0.670 + 26.69
1993 11.73 13.45 0.820 0.826 + 29.54
1/1/94--4/30/94 13.45 13.18 -- -- - 2.01
------- ------
Total $10.894 Total $6.209
Cumulative total return as of 4/30/94: +503.01%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and
do not include sales charge; results would be lower if sales
charge was included.
</TABLE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/88--12/31/88 $11.96 $11.77 $0.086 $0.144 + 0.35%
1989 11.77 12.45 0.428 0.409 +12.78
1990 12.45 8.06 1.623 0.271 -21.54
1991 8.06 9.83 0.645 0.429 +35.66
1992 9.83 11.55 0.057 0.639 +25.37
1993 11.55 13.24 0.820 0.661 +28.23
1/1/94--4/30/94 13.24 12.93 -- -- - 2.34
------ ------
Total $3.659 Total $2.553
Cumulative total return as of 4/30/94: +89.14%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and
do not reflect deduction of any sales charge; results would be
lower if sales charge was deducted.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Face Amount/ Percent of
Industries Investments Cost Value Net Assets
Discount to Assets
<S> <C> <S> <C> <C> <C>
Agriculture 950,000 Terra Industries, Inc. $ 3,332,396 $ 7,006,250 1.2%
Cement 5,150 Lone Star Industries, Inc.++ 527,232 79,825 0.0
26,251 Lone Star Industries, Inc. (Warrants) (c)++ 249,385 183,757 0.0
Diversified 1,299,200 ADT Ltd. 11,351,840 12,342,400 2.2
Metal 400,000 Handy & Harman 5,546,990 5,650,000 1.0
Fabricating
Oil & Gas 464,700 Gerrity Oil & Gas Corp. 5,780,086 3,543,337 0.6
320,000 Nahama & Weagant Energy Co. 1,446,250 560,000 0.1
Oil Services 106,400 Cliffs Drilling Co. 1,330,000 1,356,600 0.2
Total Discount to Assets 29,564,179 30,722,169 5.3
Earnings Turnarounds
Banking 484,600 Margaretten Financial Corp. 6,580,406 9,692,000 1.7
& Financial
Communications 650,000 Century Communications Corp. 5,077,853 4,793,750 0.8
<PAGE>
Consumer 900,000 The Topps Co., Inc. 6,497,352 5,962,500 1.0
Products
Consumer 210,641 Servam Corp. (Class B) 579,263 210,641 0.0
Services
Diversified 400,000 UNC Inc. 1,357,374 4,000,000 0.7
Electronics 200,000 National Semiconductor Corp. 674,031 4,125,000 0.7
Environmental 700,000 Allwaste Inc. 3,483,210 3,675,000 0.6
1,000,000 Attwoods PLC (ADR)* 10,911,404 9,375,000 1.6
520,000 Matrix Service Co. 5,513,685 5,070,000 0.9
1,381,000 NaTec Resources, Inc. 3,151,756 1,208,375 0.2
1,200,000 Rollins Environmental Services, Inc. 6,345,977 5,400,000 0.9
800,000 TETRA Technologies, Inc. 5,576,282 6,500,000 1.1
450,000 WMX Technologies, Inc. 11,138,452 11,756,250 2.1
Health Care 105,000 ALZA Corporation--Class A Shares 2,288,801 2,651,250 0.5
88,081 Applied Immune Sciences, Inc. 1,200,104 748,689 0.1
128,000 Beverly Enterprises, Inc. 685,492 1,696,000 0.3
103,000 Gilead Sciences Inc. 1,399,404 901,250 0.2
600,000 The Liposome Company Inc. 3,876,249 3,300,000 0.6
825,000 NeoRx Corp. 5,468,365 3,093,750 0.5
Leisure & 150,000 Brunswick Corp. 1,917,100 3,468,750 0.6
Entertainment 1,625,000 CST Entertainment Imaging, Inc. 3,593,312 2,335,937 0.4
Manufacturing 700,000 Lamson & Sessions Co. 3,894,330 4,637,500 0.8
Office 400,000 Moore Corp. Ltd. (ADR)* 6,922,763 7,300,000 1.3
Equipment
& Supplies
Oil & Gas 272,000 Coho Energy, Inc. 2,917,873 1,088,000 0.2
341,300 Ranchmen's Resources Ltd. 1,402,869 1,575,516 0.3
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Amount/ Percent of
Industries Shares Held Investments Cost Value Net Assets
Earnings Turnarounds (concluded)
<S> <C> <S> <C> <C> <C>
Oil Services 956,100 Computalog, Ltd. $ 1,962,718 $ 1,661,579 0.3%
400,000 Rowan Companies, Inc. 2,820,000 2,900,000 0.5
906,900 Weatherford International, Inc. 4,140,444 9,749,175 1.7
Paper & 300,000 Scott Paper Co. 10,347,824 12,862,500 2.3
Packaging
Precision 350,600 Esterline Technology Corp. 3,311,665 2,629,500 0.5
Instruments
Printing & 1,114,500 National Education Corp. 6,510,790 5,851,125 1.0
Publishing
Retail 1,300,000 Argyll Group PLC 4,786,416 4,539,697 0.8
440,000 Charming Shoppes, Inc. 5,814,373 4,565,000 0.8
435,000 Grossman's, Inc. 1,679,185 1,576,875 0.3
400,000 The Limited, Inc. 7,315,203 7,700,000 1.4
Ship Building 150,000 Bremer, Vulkan, Verbund AG 8,184,351 9,049,774 1.6
Total Earnings Turnarounds 159,326,676 167,650,383 29.3
Financial Restructuring
Aerospace & 2,360,000 Ladish Co., Inc. 2,864,038 1,888,000 0.3
Industrial
Products
<PAGE>
Airlines $19,425,000 Continental Airlines Holdings, Inc., 12.125%
Secured Equipment Trust Certificates
due 4/15/1996 3,273,292 2,913,750 0.5
15,358 Continental Airlines, Inc.--Class A Shares 514,688 278,364 0.1
300,000 Continental Airlines, Inc.--Class B Shares 6,461,371 5,137,500 0.9
Apparel 725,000 Burlington Industries, Inc. 10,540,838 11,056,250 1.9
& Textile
Banking & 795,400 California Federal Bank, FSB 8,308,407 8,252,275 1.4
Financial 500,000 City National Corp. 3,473,356 5,000,000 0.9
24,000 First City Bancorp., Non Convertible Preferred
Stock--Series A 3,203,500 3,276,000 0.6
50,650 First City Bancorp., Non Convertible Preferred
Stock--Series B 2,388,606 2,355,225 0.4
120,000 Glendale Federal Bank, 8.75% Non-Cumulative
Preferred Stock (Series E) 3,000,000 2,640,000 0.5
135,917 Glendale Federal Bank FSB (Warrants) (c) 0 237,855 0.0
590,000 Peoples Heritage Financial Group, Inc. 4,924,480 6,932,500 1.2
Chemicals $ 4,406,000 Rexene Products Corp., 10.00% New Increasing
Rate Second Priority Notes due 11/15/1996
(a) (b) 2,386,850 3,833,220 0.7
360,000 Specialty Chemical Resources, Inc. 3,579,642 1,530,000 0.2
Computers & 1,350,000 Concurrent Computer Corp. 4,051,500 2,278,125 0.4
Peripherals
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Amount/ Percent of
Industries Shares Held Investments Cost Value Net Assets
Financial Restructuring (concluded)
<S> <C> <S> <C> <C> <C>
Consumer-- 6,700,000 Polly Peck International Finance N.V.,
Products Convertible Preferred Shares, 7.25%
due 1/04/2005 $ 3,082,000 $ 3,048,500 0.5%
Day-Care 500,000 Kinder-Care Learning Centers, Inc. 6,163,000 6,500,000 1.1
Centers
Energy 2,425 EUA Contingent Interest Certificates 2,425 24 0.0
EUA Power:
$ 3,165,000 Series B, 17.50% due 5/15/1993 801,325 395,625 0.1
$ 3,613,700 Series C, 17.50% due 11/15/1992 1,346,117 451,712 0.1
Home Builders 900,000 NVR, Inc. 6,974,304 6,750,000 1.2
53,828 NVR, Inc. (Warrants) (c) 235,498 154,755 0.0
Insurance $ 5,395,200 Memphis Health, Education & Housing, Executive
Life Insurance Company, Municipal Guaranteed
Investment Certificates, 8.68% due 9/15/1996 4,049,961 3,749,664 0.7
$ 452,778 Southeast Texas Housing Finance Corp.,
Executive Life Insurance Company, Municipal
Guaranteed Investment Certificates, 8.60%
due 9/01/1996 339,332 315,813 0.1
Paper & 202,043 Gaylord Container Corp. 546,004 984,960 0.2
Packaging 719,109 Gaylord Container Corp. (Warrants) (c) 1,538,308 2,696,659 0.5
Real Estate $11,300,000 Olympia & York Maiden Lane Finance Corp.,
10.375% Secured Notes due 12/31/1995 7,517,375 7,571,000 1.3
625,000 Resurgence Properties Inc.++++ 5,468,750 5,312,500 0.9
$ 9,250,000 Trizec Corp., Ltd., 10.25% Bonds due
6/22/1999 4,608,443 5,894,280 1.0
<PAGE>
Restaurants 915,519 Gilbert/Robinson Restaurants, Inc. 3,051,250 10,070,709 1.8
Retail 1,190,420 Lamonts Apparel, Inc. 3,222,815 2,083,235 0.4
261,215 National Convenience Stores Inc. 4,217,295 3,395,795 0.6
90,000 National Convenience Stores Inc. (Warrants)
(c) 342,873 315,000 0.1
595,683 Zale Corp. 5,654,286 5,361,147 0.9
425,683 Zale Corp. Litigation Limited Partnership
Units 0 0 0.0
Telecommuni- $ 7,000,000 Maryland Cable Corp., 15.375% Senior Sub-
cations ordinated Debentures due 11/15/1998 3,745,000 3,710,000 0.6
$ 7,470,000 Telemundo Group, Inc., 0.00% Senior Notes
due 8/15/1992 6,587,025 7,918,200 1.4
Transportation $ 2,200,000 Greyhound Lines, Inc., 8.50% Convertible
Subordinated Debentures due 3/31/2007 2,200,000 2,288,000 0.4
842,285 Leaseway Transportation Corp. 5,510,808 9,896,849 1.7
Total Financial Restructuring 136,174,762 146,473,491 25.6
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Amount/ Percent of
Industries Shares Held Investments Cost Value Net Assets
High Yield
<S> <C> <S> <C> <C> <C>
Leisure & $ 9,500,000 U.S. Trails, Inc., 12.00% Secured Notes
Entertainment due 7/15/1998 $ 6,780,000 $ 7,552,500 1.3%
Paper & $ 4,833,000 Stone Southwest Forest, Inc., 12.125%
Packaging Senior Subordinated Debentures due 9/15/2001 4,905,495 4,869,247 0.9
Transportation $ 1,000,000 Tiphook Finance Corp. Unsecured Guaranteed
Notes, 10.75% due 11/01/2002 795,000 790,000 0.1
Total High Yield 12,480,495 13,211,747 2.3
Operational Restructuring
Apparel & 717,000 Texfi Industries, Inc. 3,857,425 2,330,250 0.4
Textile
Auto & Truck 200,000 General Motors Corp. 7,413,250 11,350,000 2.0
Banking & 300,000 Student Loan Marketing Association 13,748,440 11,775,000 2.1
Financial
Communications 750,000 Network Systems Corp. 7,715,373 5,250,000 0.9
Computer 300,000 Borland International, Inc. 4,033,140 3,637,500 0.6
Software 652,500 Cognos, Inc. 4,342,130 7,503,750 1.3
& Services $ 4,000,000 Computervision Corp., 11.375% Senior
Subordinated Notes due 8/15/1999 2,847,500 3,640,000 0.6
$10,500,000 DR Holdings, 15.50% Senior Subordinated
Debentures due 1/30/2002 1,785,000 1,522,500 0.3
<PAGE>
Computers & 1,000,000 Unisys Corp. 11,713,689 10,875,000 1.9
Peripherals 101,600 Western Digital Corp. 513,080 1,600,200 0.3
Diversified 1,350,000 National Patent Development Corp. 4,945,938 4,387,500 0.8
2,174 National Patent Development Corp.
(Warrants) (c) 166,420 135,875 0.0
540,500 TPI Enterprises, Inc. 3,042,032 4,188,875 0.7
Electronics 2,332,000 Automated Security (Holdings) PLC (ADR)* 8,665,474 7,579,000 1.3
Environmental 1,700,000 Laidlaw, Inc. (Non-Voting) (Class B) (ADR)* 10,421,992 10,837,500 1.9
Food & 6,000,000 Goodman Fielder Wattie, Ltd. 6,688,386 6,504,384 1.1
Beverage
Health Care 1,123,500 Applied Bioscience International Inc. 5,799,824 7,864,500 1.4
975,000 Unilab Corp. 5,328,989 5,240,625 0.9
Industrial 2,780,400 Anacomp, Inc. 10,872,043 11,121,600 2.0
Services 60,337 Anacomp, Inc. (Warrants) (c) 131,233 143,300 0.0
Insurance 1,626,300 Reliance Group Holdings, Inc. 11,670,340 9,351,225 1.6
Metals & 200,000 Alumax, Inc. 4,394,903 4,775,000 0.8
Mining
Oil & Gas 525,000 USX Corp.--Marathon Group 9,243,736 8,859,375 1.6
Retail 400,000 Kmart Corp. 7,110,880 6,600,000 1.2
400,000 U.S. Shoe Corp. 3,823,132 7,200,000 1.3
Total Operational Restructuring 150,274,349 154,272,959 27.0
Total Investments 487,820,461 512,330,749 89.5
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Percent of
Face Amount Short-Term Investments Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Commercial $10,000,000 Ciesco L.P., 3.60% due 5/17/1994 $ 9,983,000 $ 9,983,000 1.7%
Paper** 10,000,000 Federal Home Loan Mortgage Corp., 3.56%
due 5/02/1994 9,998,022 9,998,022 1.8
22,679,000 General Electric Capital Corp., 3.53%
due 5/02/1994 22,674,552 22,674,552 4.0
20,000,000 USL Capital Corp., 3.85% due 6/02/1994 19,929,417 19,929,417 3.5
Total Short-Term Investments 62,584,991 62,584,991 11.0
Total Investments $550,405,452 574,915,740 100.5
============
Liabilities in Excess of Other Assets (2,620,651) (0.5)
------------ ------
Net Assets $572,295,089 100.0%
============ ======
Net Asset
Value: Class A--Based on net assets of $244,018,717 and 18,515,602
shares outstanding $ 13.18
============
Class B--Based on net assets of $328,276,372 and 25,384,337
shares outstanding $ 12.93
============
<FN>
*American Depositary Receipt (ADR).
**Commercial Paper is traded on a discount basis; the interest rates
shown are the discount rates paid at the time of purchase by the Fund.
(a) Interest rate as of April 30, 1994.
(b) Represents a pay-in-kind security which may pay interest in additional
face amount/shares.
(c) Warrants entitle the Fund to purchase a predetermined number of shares
of common stock. The purchase price and number of shares are subject to
adjustment under certain conditions until the expiration date.
++On April 18, 1994, 158,700 shares of Lone Star Industries, Inc. Common
Stock were converted into 5,150 shares of Lone Star Industries, Inc.
Common Stock and 26,251 shares of Lone Star Industries, Inc. Warrants.
++++On April 20, 1994, Liberte Investors, 10.50% Subordinated Notes due
6/01/1993 were converted into Resurgence Properties Inc. Common Stock.
</TABLE>
<PAGE>
PORTFOLIO INFORMATION
For the Quarter Ended April 30, 1994
Percent of
Ten Largest Holdings Net Assets
Scott Paper Co. 2.3%
ADT Ltd. 2.2
Student Loan Marketing Association 2.1
WMX Technologies, Inc. 2.1
General Motors Corp. 2.0
Anacomp, Inc. 1.9
Burlington Industries, Inc. 1.9
Unisys Corp. 1.9
Laidlaw, Inc. (Non-Voting) (Class B) (ADR) 1.9
Gilbert/Robinson Restaurants, Inc. 1.8
Five Largest Industries
Environmental 9.3%
Banking & Financial 8.8
Retail 7.8
Health Care 4.5
Diversified 4.4
Asset Mix
Stocks 79.3%
Bonds 10.2
Cash & Cash Equivalents 10.5
<PAGE>
Additions
Stocks
ALZA Corporation--Class A Shares
Argyll Group PLC
Borland International, Inc.
California Federal Bank, FSB
*Darling-Delaware Co., Inc.
First City Bancorp., Non-Convertible Preferred Stock--Series A
First City Bancorp., Non-Convertible Preferred Stock--Series B
Kmart Corp.
The Limited, Inc.
The Liposome Company, Inc.
Lone Star Industries, Inc. (Warrants)
Resurgence Properties, Inc.
Rowan Companies, Inc.
WMX Technologies, Inc.
Bonds
*Darling-Delaware Co., Inc., 1st Priority Senior Subordinated
Notes due 6/30/2000
DR Holdings, 15.50% Senior Subordinated Debentures
due 1/30/2002
Olympia & York Maiden Lane Finance Corp., 10.375% Secured
Notes due 12/31/1995
Polly Peck International Finance N.V., Convertible Preferred
Shares, 7.25% due 1/04/2005
Stone Southwest Forest, Inc., 12.125% Senior
Subordinated Notes due 9/15/2001
Tiphook Finance Corp. Unsecured Guaranteed Notes, 10.75%
due 11/01/2002
Deletions
Stocks
*Darling-Delaware Co., Inc.
Figgie International, Inc.
Glendale Federal Bank FSB
The Immune Response Corp.
The Interlake Corp.
International Business Machines Corp.
Lamonts Apparel, Inc., Series A Convertible Preferred
Safeway Inc.
Thyssen AG
<PAGE>
Bonds
*Darling-Delaware Co., Inc., 1st Priority Senior Subordinated
Notes due 6/30/2000
Darling-Delaware Co., Inc., 14.00% Senior Subordinated
due 3/15/1999
Liberte Investors, 10.50% Subordinated Notes due 6/01/1993
Plastic Specialties and Technologies, Inc., 11.25% Senior
Secured Notes due 12/01/2003
[FN]
*Added and deleted in the
same quarter.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Joe Grills, Director
Walter Mintz, Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Harry Woolf, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Donald C. Burke, Vice President
Robert J. Martorelli, Vice President
and Portfolio Manager
Gerald M. Richard, Treasurer
Robert Harris, Secretary
Custodian
National Westminster Bank NJ
10 Exchange Place
Jersey City, New Jersey 07302
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
