MERRILL LYNCH
PHOENIX
FUND, INC.
FUND LOGO
Quarterly Report
April 30, 1995
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.
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
<PAGE>
MERRILL LYNCH PHOENIX FUND, INC.
DEAR SHAREHOLDER
Increasing signs of slowing economic growth led to higher US stock
and bond prices during the April quarter. Although gross domestic
product was reported to have increased at a revised 5.1% rate during
the final quarter of 1994, recent declines in other indicators such
as new home sales and durable goods orders have led investors to
anticipate that the economy is losing enough momentum to keep
inflation under control and preclude further significant monetary
policy tightening by the Federal Reserve Board. A further indication
of a slowing economy was the reported decline in the Index of
Leading Economic Indicators for March.
As US stock and bond markets have risen, the value of the US dollar
has reached new lows relative to the yen and the Deutschemark.
Persistent trade deficits and exports of capital from the United
States have kept the US currency in a decade-long decline relative
to the Japanese and German currencies. Over the longer term, since
the United States has the highest productivity among industrialized
nations and among the lowest labor costs, demand for US dollar-
denominated assets may improve. However, a reduction of the still-
widening US trade deficit may be necessary before the US dollar
appreciates substantially relative to the yen and the Deutschemark.
The first months of 1995 were very positive for the US stock and
bond markets. Continued signs of a moderating expansion and well-
contained inflationary pressures would provide further assurance
that the peak in interest rates is behind us, creating a stronger
foundation for higher stock and bond prices. On the other hand,
indications of reaccelerating growth and further significant
monetary policy tightening by the Federal Reserve Board would be a
decided negative for the US financial markets.
Portfolio Matters
During the three-month period ended April 30, 1995, investor
interest continued to focus on large-capitalization multinational
companies and technology stocks, areas in which Merrill Lynch
Phoenix Fund, Inc. has few investments. Nevertheless, performance
for issues in the Fund's investment universe, and of the Fund
itself, improved during the period. The primary reason for the
Fund's better relative performance compared to the January quarter
was share price rebounds for existing holdings in which we had
increased investments when their valuations had been exceptionally
low.
<PAGE>
We continued to increase exposure in existing holdings during the
April quarter. For example, we increased the Fund's investment in
Unilab Corp., a leader in laboratory testing services in the
healthcare sector, at historically low valuations. At the time of
our additional purchases, the low valuations did not reflect the
double-digit revenue gains or the materially higher operating
profits that the company was achieving. Although Unilab's share
price subsequently rose, we believe there is further upside
potential given its improving fundamentals within a sector that is
emerging from a very difficult period.
We also added significantly to our position in National Education
Corp. when it was deleted from the Standard & Poor's 500 Index (S&P
500). When a stock is removed from the Index its price usually
declines, as S&P 500 Index portfolios are forced to sell their
investments in that stock. Although we have not been satisfied with
National Education's performance, we believe there is significant
asset value within the company's portfolio of businesses, which
include educational publishing and correspondence schools.
Finally, we also increased our investment in Reliance Group
Holdings, Inc. The company's weak performance in its title insurance
operations, which are sensitive to changes in the housing market, is
temporarily overshadowing the five consecutive quarters of
outstanding earnings results achieved by its property/casualty
business. We expect much higher valuations for Reliance's shares
when its title operations improve as the housing market recovers.
Many industries have been benefiting from the improved economic
environment, as reflected in their higher share prices. Our new
additions continued to focus on two industries that have not yet
experienced similar improvements, retailing and cable television.
Woolworth Corp. is one of the world's largest retail store chains,
operating under the names Woolworth, Kinney Shoes and Foot Locker.
After a number of years of underperformance, a well-regarded new
management team is in place in an effort to turn the company around.
We consider Foot Locker, which is more than five times the size of
its nearest competitor, an excellent franchise that has been
mismanaged in the past. Woolworth's German subsidiary, which also
has underperformed recently, will benefit from lower interest rates
and an improving economy there.
In the cable television area, Cox Communications Inc. was recently
spun off from Times Mirror Corp. As is the case for many of its
competitors, results have been negatively affected by greater rate
regulation. Another drag on its share price has been the threat of
increased competition from the regional Bell operating companies. We
believe that Cox Communications' highly concentrated fiber-optic
network will enable the company to provide its customers with a
greater number of services and to thrive in a more competitive
environment.
<PAGE>
In the high-yield debt sector, we believe that the purchase of
Caesar's World by ITT Corp. established a new valuation barometer
for casino companies. In our estimation, the most attractive values
in the industry can now be found in the debt of Atlantic City-based
casinos, not the public equity markets. For this reason, during the
April quarter we added the bonds of Trump Plaza Funding Inc. and
Trump Castle Funding Inc. With the competitive threat to Atlantic
City casinos diminishing, we believed that these high-yielding bonds
represented an attractive investment opportunity.
During the April quarter, we took profits in our investments in
Cognos Inc., Terra Industries Inc. and General Motors Corp. In
addition, our long-term investment in Leaseway Transportation Corp.
was finally rewarded. We initiated an investment in this company
while it was in bankruptcy. During the quarter, Leaseway received a
$20/share tender offer from Penske Truck Leasing Company. We sold
our Leaseway investment in the open market at a substantial profit.
We have received a number of inquiries from shareholders regarding
our investment in Anacomp Inc. common stock following the company's
announcement that it would not meet a debt amortization payment in
April. While this has obviously been one of our most disappointing
investments, we believe that continued investment in Anacomp is
warranted, given its dominant worldwide market share in
micrographics and magnetics and relatively stable cash flow. We will
continue to monitor the restructuring of this company very closely
and adjust our investment posture accordingly.
In Conclusion
We expect that the share price performance of large-capitalization
growth stocks and the smaller-capitalization issues of the Fund's
investment universe will continue to diverge until there is greater
confidence in the US economy. We continue to view our investments
from a long-term perspective, since patience and persistence are key
within the Fund's investment universe. We cannot predict precisely
when a positive shift in the investment outlook will occur.
Therefore, the Fund's positions in deeply undervalued issues often
must be established long before such turnarounds take place.
We thank you for your continued 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.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Robert J. Martorelli)
Robert J. Martorelli
Vice President and Portfolio Manager
May 23, 1995
PERFORMANCE DATA
About Fund Performance
Since October 21, 1994, investors have been able to purchase shares
of the Fund through the Merrill Lynch Select Pricing SM System,
which offers four pricing alternatives:
* 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.
* 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 8 years.
* 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.
* Class D Shares incur a maximum initial sales charge of 5.25% and
an account maintenance fee of 0.25% (but no distribution fee).
Performance data for the Fund's Class A and Class B Shares are
presented in the "Performance Summary," "Recent Performance Results"
and "Average Annual Total Return" tables below and on pages 4 and 5.
Data for Class C and Class D Shares are also presented in the
"Recent Performance Results" and "Aggregate Total Return" tables
below and on page 5.
<PAGE>
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for Class A and Class B
Shares for the 12-month and 3-month periods ended April 30, 1995 and
for Class C and Class D Shares for the since inception and 3-month
periods ended April 30, 1995. All data in this table assume
imposition of the actual total expenses incurred by each class of
shares during the relevant period.
None of the past results shown should 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. 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 3/31/95 + 2.03% - 3.33%
Five Years Ended 3/31/95 +12.52 +11.31
Ten Years Ended 3/31/95 +14.47 +13.85
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/95 + 1.06% - 2.54%
Five Years Ended 3/31/95 +11.37 +11.37
Inception (10/21/88)
through 3/31/95 +10.59 +10.59
[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>
Aggregate Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94)
through 3/31/95 -1.24% -2.19%
[FN]
*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*
Inception (10/21/94)
through 3/31/95 -0.84% -6.05%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
PERFORMANCE DATA (continued)
<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
1994 13.45 11.15 0.729 0.777 - 6.48
1/1/95--4/30/95 11.15 12.13 -- -- + 8.79
------- ------
Total $11.623 Total $6.986
Cumulative total return as of 4/30/95: +526.07%**
<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
1994 13.24 10.95 0.729 0.657 - 7.40
1/1/95--4/30/95 10.95 11.87 -- -- + 8.40
------ ------
Total $4.388 Total $3.210
Cumulative total return as of 4/30/95: +94.41%**
<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>
PERFORMANCE DATA (concluded)
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
4/30/95 1/31/95 4/30/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
ML Phoenix Fund, Inc. Class A Shares* $12.13 $11.23 $13.18 - 2.25%(1) + 8.01%
ML Phoenix Fund, Inc. Class B Shares* 11.87 11.01 12.93 - 2.39(1) + 7.81
ML Phoenix Fund, Inc. Class C Shares* 11.83 10.98 12.31 - 1.09(2) + 7.74
ML Phoenix Fund, Inc. Class D Shares* 12.13 11.23 12.57 - 0.74(2) + 8.01
Dow Jones Industrial Average** 4,321.27 3,843.86 3,681.69 +17.37 +12.42
Standard & Poor's 500 Index** 514.71 470.42 450.91 +14.15 + 9.41
ML Phoenix Fund, Inc. Class A Shares--Total Return* + 3.83(3) + 8.01
ML Phoenix Fund, Inc. Class B Shares--Total Return* + 2.79(4) + 7.81
ML Phoenix Fund, Inc. Class C Shares--Total Return* + 0.46(5) + 7.74
ML Phoenix Fund, Inc. Class D Shares--Total Return* + 0.90(6) + 8.01
Dow Jones Industrial Average--Total Return** +20.70 +13.16
Standard & Poor's 500 Index--Total Return** +17.37 +10.08
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
**An unmanaged broad-based index comprised of common stocks. Total
investment returns for unmanaged indexes are based on estimates.
++Investment results shown for Class C and Class D Shares are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.729 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.314 per share capital
gains distributions.
(3)Percent change includes reinvestment of $0.777 per share ordinary
income dividends and $0.729 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.657 per share ordinary
income dividends and $0.729 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.172 per share ordinary
income dividends and $0.314 per share capital gains distributions.
(6)Percent change includes reinvestment of $0.186 per share ordinary
income dividends and $0.314 per share capital gains distributions.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Face Amount/ Percent of
Industry Shares Held Investments Cost Value Net Assets
Discount to Assets
<S> <C> <S> <C> <C> <C>
Cable 490,000 Comcast Corporation--Special (Class A) $ 8,000,590 $ 7,656,250 1.1%
Day-Care Centers 715,000 Kinder-Care Learning Centers, Inc. 8,803,000 9,563,125 1.4
Diversified 1,200,000 ADT Ltd. (ADR)* 9,331,647 14,250,000 2.1
Total Discount to Assets 26,135,237 31,469,375 4.6
Earnings Turnarounds
Airlines 1,940,000 Mesa Airlines, Inc. 13,534,383 11,640,000 1.7
Apparel & Textile 657,600 Burlington Industries, Inc. 7,635,000 7,233,600 1.1
Auto & Truck 300,000 Federal--Mogul Corp. 5,328,016 5,400,000 0.8
Banking & Financial 1,300,000 California Federal Bank, FSB 13,852,635 15,925,000 2.4
500,000 Countrywide Credit Industries, Inc. 6,970,565 9,187,500 1.4
120,000 Glendale Federal Bank, 8.75% Non-
Cumulative Preferred Stock (Series B) 3,000,000 4,080,000 0.6
Communications 1,200,000 Century Communications Corp. 9,587,016 11,100,000 1.7
Consumer Products 43,900 Tambrands, Inc. 1,613,572 1,827,338 0.3
1,240,000 The Topps Co., Inc. 8,723,701 7,595,000 1.1
Energy Related 450,000 Nowsco Well Service Ltd. 4,224,445 4,964,330 0.7
Environmental 1,800,000 Allwaste Inc. 9,307,953 10,800,000 1.6
930,000 Matrix Service Co. 8,370,557 3,836,250 0.6
499,000 Rollins Environmental Services, Inc. 2,541,202 2,307,875 0.3
780,000 TETRA Technologies, Inc. 5,423,782 10,237,500 1.5
<PAGE>
Health Care 58,081 Applied Immune Sciences, Inc. 791,354 268,625 0.0
685,000 The Liposome Company Inc. 3,996,246 6,165,000 0.9
825,000 NeoRx Corp. 5,468,365 4,279,688 0.6
Home Builders 1,500,000 NVR, Inc. 10,593,082 10,125,000 1.5
53,828 NVR, Inc. (Warrants)(a) 235,498 53,828 0.0
Leisure & 1,625,000 CST Entertainment Imaging, Inc. 3,593,312 1,675,781 0.3
Entertainment
Manufacturing 879,400 Lamson & Sessions Co. 4,853,150 5,606,175 0.8
Oil & Gas 431,300 Ranchmen's Resources Ltd. 1,913,889 1,823,913 0.3
Oil Services 239,025 Computalog Ltd. 1,962,718 1,516,210 0.2
653,000 Weatherford International, Inc. 4,942,750 7,183,000 1.1
Paper & Packaging 415,000 Gaylord Container Corp. (Warrants)(a) 852,971 3,760,938 0.6
Precision 350,600 Esterline Technology Corp. 3,311,665 5,916,375 0.9
Instruments
Printing & 1,898,000 National Education Corp. 9,433,581 6,880,250 1.0
Publishing
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Amount/ Percent of
Industry Shares Held Investments Cost Value Net Assets
Earnings Turnarounds (concluded)
<S> <C> <S> <C> <C> <C>
Restaurants 965,519 Houlihan's Restaurant Group, Inc. (b) $ 3,468,750 $ 8,206,912 1.2%
Retail 1,250,000 CML Group, Inc. 11,348,897 9,062,500 1.3
700,000 The Limited, Inc. 12,846,702 14,962,500 2.2
261,215 National Convenience Stores Inc. 4,217,295 2,710,106 0.4
90,000 National Convenience Stores Inc.
(Warrants)(a) 342,873 101,250 0.0
1,700,000 Service Merchandise Company, Inc. 9,111,700 8,287,500 1.2
Ship Building 159,900 Bremer, Vulkan, Verbund AG 8,738,823 9,279,446 1.4
Utilities 500,000 Niagara Mohawk Power Corporation 6,325,008 6,937,500 1.0
Total Earnings Turnarounds 208,461,456 220,936,890 32.7
Financial Restructuring
Aerospace & 2,360,000 Ladish Co., Inc. 2,864,038 590,000 0.1
Industrial Products
Airlines $18,475,000 Continental Airlines Holdings, Inc.,
Secured Equipment Trust Certificates,
12.125% due 4/15/1996 2,060,516 2,401,750 0.4
15,358 Continental Airlines, Inc. (Class A
Shares) 514,688 249,567 0.0
95,000 Continental Airlines, Inc. (Class B
Shares) 1,347,876 1,567,500 0.2
Banking & Financial 145,000 First City Bancorp., Convertible
Preferred Stock (Series B) 6,014,931 4,785,000 0.7
<PAGE>
Chemicals 360,000 Specialty Chemical Resources, Inc. 3,579,642 1,417,500 0.2
Computers & 1,700,000 Concurrent Computer Corp. 4,489,000 1,487,500 0.2
Peripherals
Consumer Products $ 6,700,000 Polly Peck International Finance N.V.,
Convertible Preferred Shares, 7.25%
due 1/04/2005 402,000 435,500 0.1
Energy 65,947 Great Bay Power Corp. (d) 2,215,547 527,576 0.1
Engineering 431,136 EMCOR Group, Inc. (c) 2,211,518 2,640,708 0.4
Leisure & 3,600,000 TMM, Inc. 3,276,000 2,812,500 0.4
Entertainment
Real Estate $14,450,000 Olympia & York Maiden Lane Finance
Corp., Secured Notes, 10.375% due
12/31/1995 7,642,674 7,947,500 1.2
625,000 Resurgence Properties Inc. 5,468,750 4,843,750 0.7
Retail 1,190,420 Lamonts Apparel, Inc. 3,222,815 372,006 0.1
443,361 Zale Corp. Litigation Limited
Partnership Units 0 0 0.0
Telecommunications 50,000 Telemundo Group, Inc. (Class A) 368,750 475,000 0.1
159,998 Telemundo Group, Inc. (Class B) 1,533,041 1,519,981 0.2
Transportation $ 5,500,000 Evergreen International Aviation,
Senior Notes, 13.50% due 8/15/2002 2,420,000 2,915,000 0.4
Total Financial Restructuring 49,631,786 36,988,338 5.5
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Amount/ Percent of
Industry Shares Held Investments Cost Value Net Assets
High Yield
<S> <C> <S> <C> <C> <C>
Energy $ 7,000,000 WRT Energy Corp., 13.875% due
3/01/2002 $ 7,000,000 $ 7,070,000 1.1%
Engineering $ 4,741,100 EMCOR Group, Inc., A Notes, 7.00%
due 12/15/1997 (c) 4,561,100 4,361,812 0.7
$ 1,707,500 EMCOR Group, Inc., C Notes, 11.00%
due 12/15/2001 (c) 1,707,500 1,212,325 0.2
$ 1,309,100 Sellco Corp., 12.00% due 12/15/2004 (c) 170,170 144,001 0.0
Home Builders $ 4,100,000 Baldwin Homes, 10.375% due 8/01/2003 2,624,000 2,572,750 0.4
$ 6,000,000 MDC Holdings, Inc., Senior Notes,
11.125% due 12/15/2003 5,020,000 5,100,000 0.8
Leisure & $ 7,500,000 Bally's Health & Tennis Corporation,
Entertainment Senior Subordinated Notes, 13.00%
due 1/15/2003 5,906,875 6,206,250 0.9
900,000 CST Entertainment Imaging, Inc.--
Restricted Stock 675,000 675,000 0.1
$12,000,000 Genmar Holdings, Inc., Senior Subor-
dinated Notes, 13.50% due 7/15/2001 12,000,000 12,120,000 1.8
$ 6,377,000 Riviera Holdings Corp., First Mortgage
Bonds, 11.00% due 12/31/2002 5,123,833 5,930,610 0.9
$ 2,000,000 Trump Castle Funding Inc., 11.75% due
11/15/2003 1,216,379 1,240,000 0.2
$ 3,000,000 Trump Plaza Funding Inc., 10.875% due
6/15/2001 2,394,990 2,475,000 0.4
$ 8,907,000 U.S. Trails, Inc., Secured Notes,
12.00% due 7/15/1998 6,305,947 5,255,130 0.8
Real Estate $ 3,300,000 Granite Development Partners L.P.,
Senior Notes (Series B), 10.83%
due 11/15/2003 2,986,500 3,003,000 0.4
<PAGE>
Telecommunications $ 5,910,000 Scott Cable, Subordinated Debentures,
12.25% due 4/15/2001 4,626,300 4,033,575 0.6
$ 4,522,400 Telemundo Group, Inc., Senior Notes,
10.25% due 12/30/2001 3,997,801 3,945,794 0.6
Transportation $ 7,500,000 Tiphook Finance Corp., Unsecured
Guaranteed Notes, 10.75% due 11/01/2002 5,787,500 6,000,000 0.9
Total High Yield 72,103,895 71,345,247 10.8
Operational Restructuring
Apparel & Textile 717,000 Texfi Industries, Inc. 3,857,425 2,240,625 0.3
Banking & Financial 575,000 Student Loan Marketing Association 23,523,777 23,287,500 3.5
Cable 582,600 Cox Communications Inc. (Class A) 9,507,707 8,884,650 1.3
Communications 161,007 Storage Technology Corporation (e) 6,098,025 3,340,895 0.5
Computer Software & 1,125,000 Borland International, Inc. 11,001,840 10,828,125 1.6
Services 1,700,000 Computervision Corporation 5,268,560 9,350,000 1.4
$ 2,000,000 Computervision Corporation, Senior
Subordinated Notes, 11.375% due
8/15/1999 1,380,000 1,910,000 0.3
Computers & 300,000 Amdahl Corp. 3,227,430 3,562,500 0.5
Peripherals 900,000 Unisys Corp. 9,317,815 9,225,000 1.4
400,000 Western Digital Corp. 5,469,623 6,400,000 1.0
Consumer Services 358,000 National Auto Credit, Inc. 3,802,525 3,803,750 0.6
Diversified 1,350,000 National Patent Development Corp. 4,945,938 2,953,125 0.4
540,500 TPI Enterprises, Inc. 3,042,032 3,378,125 0.5
Electronics 4,813,587 Automated Security (Holdings) PLC (ADR)* 16,190,133 9,025,476 1.3
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face Amount/ Percent of
Industry Shares Held Investments Cost Value Net Assets
Operational Restructuring (concluded)
<S> <C> <S> <C> <C> <C>
Environmental 713,500 Laidlaw, Inc. (Non-Voting) (Class B)(ADR)* $ 4,125,158 $ 6,421,500 1.0%
Food & Beverage 6,801,200 Goodman Fielder Wattie, Ltd. 7,119,755 5,934,183 0.9
Health Care 1,451,400 Applied Bioscience International Inc. 7,490,220 7,982,700 1.2
135,000 Community Psychiatric Centers, Inc. 1,376,127 1,788,750 0.3
$ 5,850,000 ICN Pharmaceuticals, Inc., Convertible
Subordinated Notes, 8.50% due
11/15/1999 5,850,000 5,733,000 0.9
2,675,000 Unilab Corp. 12,158,552 13,709,375 2.0
Industrial Services 3,100,000 Anacomp, Inc. 11,515,759 2,906,250 0.4
60,337 Anacomp, Inc. (Warrants)(a) 131,233 22,626 0.0
Insurance 2,725,000 Reliance Group Holdings, Inc. 17,747,740 14,987,500 2.2
750,000 Southwestern Life Corporation 4,073,196 703,125 0.1
Metals & Mining 15,625 Freeport-McMoRan Copper & Gold, Inc. 338,594 326,172 0.1
550,000 Freeport-McMoRan, Inc. 9,075,808 9,693,750 1.4
Oil & Gas 950,000 USX Corp.--Marathon Group 16,580,900 17,812,500 2.7
Retail 200,000 Fingerhut Companies, Inc. 2,984,692 2,325,000 0.3
583,700 Kmart Corp. 8,891,303 8,098,837 1.2
1,000,000 Price/Costco, Inc. 14,896,053 14,500,000 2.2
400,000 Woolworth Corp. 6,402,125 6,400,000 1.0
Total Operational Restructuring 237,390,045 217,535,039 32.5
Total Investments 593,722,419 578,274,889 86.1
<PAGE>
<CAPTION>
Face Amount Short-Term Investments
<S> <C> <S> <C> <C> <C>
Commercial Paper** $32,543,000 General Electric Capital Corp.,
5.93% due 5/01/1995 32,532,279 32,532,279 4.8
10,000,000 Hewlett-Packard Company, 5.95%
due 5/02/1995 9,995,042 9,995,042 1.5
15,000,000 PHH Corp., 5.98% due 5/11/1995 14,970,100 14,970,100 2.2
15,000,000 SmithKline Beecham PLC, 5.98% due
5/08/1995 14,977,575 14,977,575 2.2
Total Short-Term Investments 72,474,996 72,474,996 10.7
Total Investments $666,197,415 650,749,885 96.8
============
Other Assets Less Liabilities 21,629,746 3.2
------------ ------
Net Assets $672,379,631 100.0%
============ ======
Net Asset Class A--Based on net assets of $259,614,512
Value: and 21,407,656 shares outstanding $ 12.13
============
Class B--Based on net assets of $375,129,563 and
31,609,819 shares outstanding $ 11.87
============
Class C--Based on net assets of $8,412,040 and
711,360 shares outstanding $ 11.83
============
Class D--Based on net assets of $29,223,516 and
2,410,171 shares outstanding $ 12.13
============
<FN>
*American Depositary Receipts (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)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.
(b)Formerly Gilbert/Robinson Restaurants, Inc.
(c)Received in exchange for JWP Inc., 9.10% due 3/06/2002, JWP Inc.,
9.95% due 11/15/2004, and JWP Inc., 10.25% due 12/01/1998.
(d)Received in exchange for EUA Power Corp., Series B, 17.50% due
5/15/1993 and EUA Power Corp., Series C, 17.50% due 11/5/1992.
(e)Shares of Network Systems Corp. were exchanged for Storage
Technology Corp. (1:3.82 split).
</TABLE>
<PAGE>
PORTFOLIO INFORMATION
For the Quarter Ended April 30, 1995
Percent of
Ten Largest Holdings Net Assets
Student Loan Marketing Association 3.5%
USX Corp.--Marathon Group 2.7
California Federal Bank, FSB 2.4
Reliance Group Holdings, Inc. 2.2
The Limited, Inc. 2.2
Price/Costco, Inc. 2.2
ADT Ltd. (ADR) 2.1
Unilab Corp. 2.0
Genmar Holdings, Inc., Senior Subordinated
Notes, 13.50% due 7/15/2001 1.8
Mesa Airlines, Inc. 1.7
Five Largest Industries
Retail 9.8%
Banking & Financial 8.6
Health Care 5.9
Leisure & Entertainment 5.8
Environmental 5.0
Asset Mix
Stocks 72.1%
Bonds 14.0
Cash & Cash Equivalents 13.9
Additions
Stocks
Amdahl Corp.
CST Entertainment Imaging, Inc.--Restricted Stock
Cox Communications, Inc. (Class A)
Nowsco Well Service Ltd.
TMM, Inc.
Telemundo Group, Inc. (Class A)
Western Digital Corp.
Woolworth Corp.
<PAGE>
Bonds
Baldwin Homes, 10.375% due 8/01/2003
Trump Castle Funding Inc., 11.75% due 11/15/2003
Trump Plaza Funding Inc., 10.875% due 6/15/2001
WRT Energy Corp., 13.875% due 3/01/2002
Deletions
Stocks
Argyll Group PLC
Cognos, Inc.
First City Bancorp., Non-Convertible Preferred
Stock (Series A)
General Motors Corp.
Handy & Harman
Leaseway Transportation Corp.
NaTec Resources, Inc.
National Patent Development Corp. (Warrants)
Terra Industries, Inc.
WMX Technologies, Inc.
Bonds
Envirodyne Industries, Inc., Senior Notes, 10.25%
due 12/01/2001
Maryland Cable Corp., Senior Subordinated
Debentures, 15.375% due 11/15/1998
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
<PAGE>
Custodian
The Chase Manhattan Bank, N.A.
Global Securities Services
4 Chase MetroTech Center, 18th floor
Brooklyn, NY 11245
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
