MERRILL LYNCH
PHOENIX
FUND, INC.
FUND LOGO
Quarterly Report
April 30, 1996
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
MERRILL LYNCH PHOENIX FUND, INC.
DEAR SHAREHOLDER
Investor perceptions regarding the US economy changed over the
course of the April quarter. In February, it appeared that the US
economy was losing momentum. Lackluster retail sales, increases in
initial unemployment claims (along with weak job and income growth),
and evidence of slowing in the manufacturing sector all suggested
that the rate of economic growth was decelerating, with some
forecasters even suggesting the possibility of an imminent
recession.
However, the consensus outlook for the rate of future economic
growth changed dramatically with the report of stronger-than-
expected employment data for February and March. As a result,
investors began to anticipate renewed economic growth. Long-term
interest rates rose, and the Federal Reserve Board left monetary
policy on hold. Adding to investor concerns was the report that the
Knight Ridder-Commodity Research Bureau Index was near an eight-year
high, largely because of an increase in agricultural prices as well
as an upward spike in the price of crude oil.
Investors are likely to continue to focus on the probable direction
of economic activity and Federal Reserve Board monetary policy in
the weeks ahead. At this time, inflationary pressures do not seem to
be building and the capital spending, housing and consumption
sectors are still relatively weak, which suggest that the economy is
not on the verge of overheating. Nevertheless, it is likely that any
further indication of stronger economic activity in the weeks ahead
may add to investor concerns that accelerating economic activity
could lead to higher inflation and interest rates.
Portfolio Matters
As investor concerns of an imminent recession lessened, Merrill
Lynch Phoenix Fund, Inc.'s deeply undervalued investments in
cyclically oriented companies benefited. As a result, the Fund
experienced strong gains for the quarter, with Class A, Class B,
Class C and Class D Shares registering total returns of +16.64%,
+16.40%, +16.41% and +16.56%, respectively. (Fund results do not
reflect sales charges, and would be lower if sales charges were
included. Complete performance information, including average annual
total returns, can be found on pages 3--5 of this report to
shareholders.)
In 1995, the best-performing stock market sector was technology.
However, once a slowdown in personal computer sales became evident,
technology share prices were sold down to recession-like valuations.
Since we are optimistic about the long-term pros-pects for this
sector, we committed a significant amount of net assets to
technology issues during the quarter. Fortunately, we made these
investments early in the quarter so that the Fund's performance was
enhanced by the rebound in technology prices that took place late in
the period. Our technology investments ranged from increasing
weightings in existing holdings such as Borland International, Inc.
and Computervision Corporation, to new investments in VLSI
Technology, Inc., Tektronix, Inc., and Cyrix Corp.
The shares of VLSI Technology, Inc., a semiconductor manufacturer,
came under pressure during the quarter as earnings suffered from a
slowdown in its Apple Computer business. We purchased the stock at a
price close to book value and at a historically low price/revenues
ratio. We believe that the company will successfully transition out
of its commodity chipset business and into products that serve the
high-growth communications and encryption markets.
Tektronix, Inc. manufactures a wide range of electronic equipment
and color printers. Recent quar-terly earnings disappointments
caused by a parts shortage, along with a slowdown in its measurement
business, forced the stock price to decline 50%. Over the past four
years, the company has successfully positioned itself into a number
of high-growth areas, such as color printing and video systems. We
believe that once the short-term parts problems are corrected,
investors can once again focus on the company's successful
transformation and will accord it a higher price/earnings multiple
and stock price.
Cyrix Corp., a manufacturer of microprocessors, had been a
successful investment for the Fund in the past. We decided to invest
in the company once again, since the recent precipitous decline in
its share price was inconsistent with the prospects for the
company's new Intel-compatible microprocessor, which we believe is
close to volume production and performs better than its Intel
counterpart.
In previous reports to shareholders, we mentioned that the shares of
telecommunications equipment stocks were being negatively impacted
by slower customer demand. We believe that the telecommunications
industry will experience dramatic growth over the next five years.
Therefore, we took advantage of the short-term share price weakness
to add DSC Communications Corp. to the portfolio. DSC Communications
manufactures a broad range of products for the long-distance and
local telephone markets. Product development problems caused a 60%
decline in its stock price since late 1995. Once the company's near-
term problems are resolved, we believe that its share price will
benefit as investors recognize that DSC Communications' broad
product line and customer base provide it with a very strong
competitive position in one of the fastest-growing industries in the
world.
In a related investment, the Fund also added the shares of U S West
Media Group, a spin-off from U S West, Inc. While the company's
recent acquisition of Continental Cablevision will create near-term
losses, we believe that U S West Media Group will possess the most
updated cable system in the industry, and thus will be one of the
first cable companies to provide local telephone service, cable
modems and video on demand.
We continued to eliminate smaller positions from the Fund such as
Computalog Ltd., Esterline Technology Corp. and Ladish Co., Inc.,
and expect that this process will be ongoing for several more
quarters. Additionally, we decided to sell some larger holdings at
smaller-than-expected profits, such as Corning Inc. and Federal-
Mogul Corp., when it became apparent that their businesses were not
improving as quickly as we had originally forecast.
In Conclusion
The Fund's strong performance during the April quar-ter did not
occur because of any company-specific fundamental changes. The sharp
appreciation of some of the Fund's largest holdings back to the
levels at which we judged them to be attractive investments--such as
Amdahl Corp., Woolworth Corp. and Tandem Computers, Inc.--
demonstrates how difficult it is to time exactly when a rebound will
occur for deeply undervalued shares. Therefore, we believe that it
is necessary for us, as well as our shareholders, to maintain our
long-term investment focus.
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
(Robert J. Martorelli)
Robert J. Martorelli
Vice President and Portfolio Manager
May 21, 1996
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:
* 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 approximately 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).
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 3/31/96 +19.82% +13.53%
Five Years Ended 3/31/96 +15.15 +13.92
Ten Years Ended 3/31/96 +12.89 +12.29
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/96 +18.51% +14.51%
Five Years Ended 3/31/96 +13.97 +13.97
Inception (10/21/88)
through 3/31/96 +11.62 +11.62
[FN]
*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 3/31/96 +18.61% +17.61%
Inception (10/21/94)
through 3/31/96 +11.58 +11.58
[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*
Year Ended 3/31/96 +19.50% +13.23%
Inception (10/21/94)
through 3/31/96 +12.47 + 8.35
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
PERFORMANCE DATA (continued)
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
4/30/96 1/31/96 4/30/95 % Change% Change
<S> <C> <C> <C> <C> <C>
ML Phoenix Fund, Inc. Class A Shares* $14.93 $12.80 $12.13 +24.72%(1)+16.64%
ML Phoenix Fund, Inc. Class B Shares* 14.55 12.50 11.87 +24.24(1) +16.40
ML Phoenix Fund, Inc. Class C Shares* 14.47 12.43 11.83 +23.99(1) +16.41
ML Phoenix Fund, Inc. Class D Shares* 14.92 12.80 12.13 +24.64(1) +16.56
Dow Jones Industrial Average** 5,569.08 5,395.30 4,321.27 +28.88 + 3.22
Standard & Poor's 500 Index** 654.17 636.02 514.71 +27.09 + 2.85
ML Phoenix Fund, Inc. Class A Shares--Total Return* +29.64(2) +16.64
ML Phoenix Fund, Inc. Class B Shares--Total Return* +28.35(3) +16.40
ML Phoenix Fund, Inc. Class C Shares--Total Return* +28.31(4) +16.41
ML Phoenix Fund, Inc. Class D Shares--Total Return* +29.31(5) +16.56
Dow Jones Industrial Average--Total Return** +32.03 + 3.78
Standard & Poor's 500 Index--Total Return** +30.16 + 3.39
<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.
(1)Percent change includes reinvestment of $0.183 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.528 per share ordinary
income dividends and $0.183 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.432 per share ordinary
income dividends and $0.183 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.454 per share ordinary
income dividends and $0.183 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.502 per share ordinary
income dividends and $0.183 per share capital gains distributions.
</TABLE>
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <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
1995 11.15 12.90 0.183 0.528 +21.86
1/1/96--4/30/96 12.90 14.93 -- -- +15.74
------- ------
Total $11.806 Total $7.514
Cumulative total return as of 4/30/96: +711.66%**
<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>
PERFORMANCE DATA (concluded)
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <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
1995 10.95 12.62 0.183 0.432 +20.68
1/1/96--4/30/96 12.62 14.55 -- -- +15.29
------ ------
Total $4.571 Total $3.642
Cumulative total return as of 4/30/96: +149.52%**
<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>
Performance Summary--Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $12.31 $10.91 $0.314 $0.172 - 7.35%
1995 10.91 12.55 0.183 0.454 +20.67
1/1/96--4/30/96 12.55 14.47 -- -- +15.30
------ ------
Total $0.497 Total $0.626
Cumulative total return as of 4/30/96: +28.90%**
<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>
Performance Summary--Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $12.57 $11.16 $0.314 $0.186 - 7.17%
1995 11.16 12.91 0.183 0.502 +21.61
1/1/96--4/30/96 12.91 14.92 -- -- +15.57
------ ------
Total $0.497 Total $0.688
Cumulative total return as of 4/30/96: +30.47%**
<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>
SCHEDULE OF INVESTMENTS
<CAPTION>
Percent of
Industry Shares Held Investments Cost Value Net Assets
Discount to Assets
<S> <C> <S> <C> <C> <C>
Day-Care Centers 700,000 Kinder-Care Learning Centers, Inc. $ 8,607,500 $ 9,975,000 1.2%
Total Discount to Assets 8,607,500 9,975,000 1.2
Earning Turnarounds
Airlines 1,365,000 Mesa Airlines, Inc. 9,508,207 16,721,250 2.1
Banking & Financial 1,106,200 Dime Bancorp, Inc. 12,100,272 13,550,950 1.7
703,000 Roosevelt Financial Group Inc. 11,872,343 13,444,875 1.6
Cable 1,811,800 Century Communications Corp. 14,937,732 17,438,575 2.1
Computer Hardware 357,800 Quantum Corp. 6,891,257 7,603,250 0.9
2,500,000 Tandem Computers, Inc. 30,810,214 31,875,000 3.9
Computer 150,000 Read-Rite Corp. 3,037,500 3,112,500 0.4
Peripherals
Consumer Products 1,500,000 The Topps Co., Inc. 10,330,067 8,625,000 1.1
478,100 Tyco Toys, Inc. 2,235,118 2,689,313 0.3
Diversified 500,000 Specialty Equipment Companies Inc. 4,937,500 7,437,500 0.9
Energy Related 300,000 Apache Corp. 7,968,000 8,700,000 1.1
1,250,000 Marine Drilling Co., Inc. 10,456,250 12,343,750 1.5
867,000 Total Petroleum (North America) Ltd. 9,146,819 10,620,750 1.3
Environmental 930,000 Matrix Service Co. 8,370,557 6,277,500 0.8
900,000 TETRA Technologies, Inc. 6,881,282 17,662,500 2.2
Health Care 1,099,200 NeoRx Corp. 7,288,167 7,831,800 1.0
Home Builders 839,000 NVR, Inc. 4,764,596 8,494,875 1.0
53,828 NVR, Inc. (Warrants)(a) 235,498 74,014 0.0
Leisure & 2,525,000 CST Entertainment Imaging, Inc. 4,268,312 1,104,688 0.1
Entertainment
Oil Services 400,000 Rowan Companies, Inc. 2,820,000 5,900,000 0.7
Precision 200,000 Tektronix, Inc. 6,713,974 7,925,000 1.0
Instruments
Restaurants 965,519 Houlihan's Restaurant Group, Inc. 3,468,750 4,948,285 0.6
Retail 3,235,200 CML Group, Inc. 20,427,800 14,558,400 1.8
2,100,000 Service Merchandise Company, Inc. 11,450,805 9,975,000 1.2
Semiconductor 500,000 Cyrix Corp. 13,036,253 15,312,500 1.9
Industry 500,000 Teradyne, Inc. 8,753,000 10,250,000 1.3
700,000 VLSI Technology, Inc. 9,150,351 12,162,500 1.5
Telecommunications 400,000 DSC Communications Corp. 10,568,748 12,500,000 1.5
Telecommunications 500,000 Tekelec Inc. 4,695,003 7,000,000 0.9
Equipment
Total Earning Turnarounds 257,124,375 296,139,775 36.4
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Amount/ Percent of
Industry Shares Held Investments Cost Value Net Assets
Financial Restructuring
<S> <C> <S> <C> <C> <C>
Chemicals 360,000 Specialty Chemical Resources, Inc. $ 3,579,642 $ 652,500 0.1%
Consumer Products $ 6,700,000 Polly Peck International Finance N.V.,
Convertible Preferred Shares, 7.25%
due 1/04/2005 241,200 368,500 0.1
Energy Related 57,000 Great Bay Power Corp. 1,111,626 441,750 0.1
Engineering 599,598 EMCOR Group, Inc. 3,989,838 8,469,322 1.0
Financial $ 500,000 Southeast Banking Corp., Convertible
Subordinated Notes, 6.50% due 3/15/1999 250,000 250,000 0.0
Industrial Services $24,500,000 Anacomp, Inc., Senior Subordinated Notes,
15.00% due 11/01/2000 17,565,312 24,561,250 3.0
Leisure & 3,600,000 TMM, Inc. 3,276,000 540,000 0.1
Entertainment
Real Estate $14,826,000 Olympia & York Maiden Lane Finance Corp.,
Secured Notes, 10.375% due 12/31/1995 6,626,202 6,968,220 0.9
625,000 Resurgence Properties Inc. 5,468,750 5,156,250 0.6
Retail 10 Signet Group PLC, Series C (Variable Term
Preferred Shares) 995,000 995,000 0.1
19 Signet Group PLC, Series D (Variable Term
Preferred Shares) 1,890,500 1,890,500 0.2
443,361 Zale Corp. Litigation Limited Partnership Shares 0 0 0.0
Textiles $ 2,000,000 The Bibb Company, Senior Subordinated Notes,
13.875% due 8/01/1999 745,000 690,000 0.1
$ 2,000,000 The Bibb Company, Senior Subordinated Notes,
14.00% due 10/01/1999 798,750 770,000 0.1
Total Financial Restructuring 46,537,820 51,753,292 6.4
High Yield
Cable $ 5,910,000 Scott Cable, Subordinated Debentures,
12.25% due 4/15/2001 4,626,300 3,427,800 0.4
Energy $17,100,000 WRT Energy Corp., Senior Notes, 13.875%
due 3/01/2002 13,955,500 5,985,000 0.8
Home Builders $23,000,000 Baldwin Homes, 10.375% due 8/01/2003 10,881,750 5,980,000 0.8
Leisure & $11,500,000 Bally's Health & Tennis Corporation,
Entertainment Senior Subordinated Notes, 13.00% due
1/15/2003 9,219,375 10,062,500 1.2
$11,000,000 Genmar Holdings, Inc., Senior Subordinated
Notes, 13.50% due 7/15/2001 11,000,000 9,240,000 1.1
377,854 Live Entertainment Inc., 5.00% Convertible
Preferred (Series B) 1,872,880 3,117,296 0.4
$ 7,500,000 Live Entertainment Inc., Senior
Subordinated Notes, 12.00% due 3/23/1999 5,643,750 6,375,000 0.8
$ 7,605,000 U.S. Trails Inc., Secured Notes, 12.00% due
7/15/1998 5,346,125 5,475,600 0.7
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Face Amount/ Percent of
Industry Shares Held Investments Cost Value Net Assets
High Yield (concluded)
<S> <C> <S> <C> <C> <C>
Printing & $ 6,555,400 San Jacinto Holdings Inc., Senior
Publishing Subordinated Notes, 12.00% due
12/31/2002 (b) $ 4,242,673 $ 5,244,320 0.6%
Real Estate $ 5,150,000 Granite Development Partners L.P., Senior
Notes (Series B), 10.83% due 11/15/2003 4,475,750 4,712,250 0.6
Textiles $14,000,000 JPS Textile Group Inc., Subordinated
Notes, 10.25% due 6/01/1999 7,794,736 7,700,000 0.9
Total High Yield 79,058,839 67,319,766 8.3
Operational Restructuring
Apparel & Textile 648,000 Texfi Industries, Inc. 3,418,237 1,701,000 0.2
Cable 725,000 Cox Communications, Inc. (Class A) 12,227,083 14,862,500 1.8
600,000 U S West Media Group 11,510,130 11,700,000 1.4
Computer Hardware 2,718,100 Amdahl Corp. 22,936,436 34,655,775 4.3
570,000 Storage Technology Corp. 14,070,047 17,527,500 2.2
Computer Software 1,200,000 Borland International, Inc. 15,660,848 19,500,000 2.4
1,708,700 Computervision Corporation 8,846,807 20,717,987 2.5
700,000 Novell Inc. 9,011,116 10,150,000 1.2
Diversified 1,100,000 ADT Limited (ADR)* 8,476,646 18,700,000 2.3
407,500 National Patent Development Corp. 5,552,754 4,125,937 0.5
Electronics 5,500,000 Automated Security (Holdings) PLC (ADR)* 16,686,097 4,468,750 0.5
Energy Related 1,000,000 Oryx Energy Co. 12,925,893 16,000,000 2.0
Environmental 2,554,000 Allwaste Inc. 13,246,956 11,173,750 1.4
Health Care 2,169,700 Applied Bioscience International Corp. 11,518,644 19,256,087 2.4
2,459,400 Community Psychiatric Centers, Inc. 23,729,578 22,749,450 2.8
3,450,000 Unilab Corp. 15,588,391 6,468,750 0.8
Insurance 1,500,000 Reliance Group Holdings, Inc. 8,377,115 12,000,000 1.5
Printing & 89,600 National Education Corp. 260,960 1,332,800 0.2
Publishing
Retail 622,330 The Limited, Inc. 10,848,107 12,913,347 1.6
800,000 Price/Costco, Inc. 11,602,818 15,100,000 1.9
1,800,000 Woolworth Corp. 23,270,679 34,425,000 4.2
Steel 600,000 WHX Corp. 6,858,763 6,900,000 0.8
Total Operational Restructuring 266,624,105 316,428,633 38.9
Total Investments 657,952,639 741,616,466 91.2
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Percent of
Face Amount Short-Term Investments Cost Value Net Assets
<S> <S> <C> <C> <C>
Commercial Paper** $35,000,000 Falcon Asset Securization Corp.,
5.30% due 5/23/1996 $ 34,886,639 $ 34,886,639 4.3%
14,907,000 General Electric Capital Corp.,
5.35% due 5/01/1996 14,907,000 14,907,000 1.8
10,000,000 International Securitization Corp.,
5.30% due 5/29/1996 9,958,778 9,958,778 1.2
20,000,000 Siemens AG, Corp., 5.27% due 6/06/1996 19,894,600 19,894,600 2.5
Total Commercial Paper 79,647,017 79,647,017 9.8
Total Short-Term Investments 79,647,017 79,647,017 9.8
Total Investments $737,599,656 821,263,483 101.0
------------
Liabilities in Excess of Other Assets (8,254,143) (1.0)
------------ ------
Net Assets $813,009,340 100.0%
============ ======
Net AssetClass A--Based on net assets of $312,350,640 and 20,917,486
Value: shares outstanding $ 14.93
============
Class B--Based on net assets of $431,909,608 and 29,687,389
shares outstanding $ 14.55
============
Class C--Based on net assets of $16,761,573 and 1,158,395
shares outstanding $ 14.47
============
Class D--Based on net assets of $51,987,519 and 3,484,093
shares outstanding $ 14.92
============
<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)On March 12, 1996, San Jacinto Holdings, Inc., Senior
Subordinated Notes, 8.00% due 12/31/2000 were exchanged for San
Jacinto Holdings, Inc., Senior Subordinated Notes, 12.00% due
12/31/2002 and San Jacinto Holdings, Inc.--Common Stock.
</TABLE>
PORTFOLIO INFORMATION
For the Quarter Ended April 30, 1996
Percent of
Ten Largest Holdings Net Assets
Amdahl Corp. 4.3%
Woolworth Corp. 4.2
Tandem Computers, Inc. 3.9
Anacomp, Inc., Senior Subordinated
Notes, 15.00% due 11/01/2000 3.0
Community Psychiatric Centers, Inc. 2.8
Computervision Corporation 2.5
Borland International, Inc. 2.4
Applied Bioscience International
Corp. 2.4
ADT Limited (ADR) 2.3
TETRA Technologies, Inc. 2.2
Percent of
Five Largest Industries Net Assets
Computer Hardware 11.3%
Retail 11.0
Health Care 7.0
Computer Software 6.1
Energy Related 6.0
Percent of
Asset Mix Net Assets
Stocks 79.1%
Bonds 12.1
Cash & Cash Equivalents 8.8*
[FN]
*Net of liabilities in excess of other assets.
Additions (Equity Investments)
Cyrix Corp.
DSC Communications Corp.
Marine Drilling Co., Inc.
Quantum Corp.
Read-Rite Corp.
*San Jacinto Holdings, Inc.
Signet Group PLC, Series C (Variable Term
Preferred Shares)
Signet Group PLC, Series D (Variable Term
Preferred Shares)
Tektronix, Inc.
Teradyne, Inc.
U S West Media Group
VLSI Technology, Inc.
Deletions (Equity Investments)
The Allen Group, Inc.
California Federal Bank, FSB
California Federal Bank, FSB Goodwill Certificates
Comcast Corporation--Special (Class A)
Computalog Ltd.
Corning Inc.
Esterline Technology Corp.
Federal--Mogul Corp.
Integrated Device Technology, Inc.
Ladish Co., Inc.
Lamson & Sessions Co.
Nowsco Well Service Ltd.
*San Jacinto Holdings, Inc.
Student Loan Marketing Association
TPI Enterprises, Inc.
[FN]
*Added and deleted in the same quarter.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Joe Grills, Director
Walter Mintz, Director
Robert S. Salomon Jr., Director
Melvin R. Seiden, Director
Stephen B. Swensrud, 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
The Chase Manhattan Bank, N.A.
Global Securities Services
4 Chase MetroTech Center, 18th Floor
Brooklyn, New York 11245
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
