MERRILL LYNCH
PHOENIX
FUND, INC.
FUND LOGO
Quarterly Report
April 30, 1997
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.
<PAGE>
Merrill Lynch
Phoenix Fund, Inc.
Box 9011
Princeton, NJ
08543
Printed on post-consumer recycled paper
MERRILL LYNCH PHOENIX FUND, INC.
DEAR SHAREHOLDER
Stock and bond market turbulence increased during the three-month
period ended April 30, 1997. Mounting evidence of stronger-than-
expected economic growth suggested to investors that the Federal
Reserve Board (FRB) would make a preemptive strike to contain
inflationary pressures. These concerns were heightened by statements
made by FRB Chairman Alan Greenspan, and culminated in an increase
in the Federal Funds rate of 0.25% to 5.50% on March 25. As
investors became concerned that this might prove to be only the
first in a series of monetary policy tightening moves, interest
rates rose and stock and bond prices declined. Following the central
bank's action, investor sentiment fluctuated from negative to more
positive, depending upon whether the latest economic data releases
were perceived to suggest an overheating or moderating trend. Stock
prices were given a boost following a series of strong corporate
earnings reports and the likelihood that a capital gains tax cut
would be part of the Federal balanced budget agreement. Nonetheless,
clear-cut signs of continued low inflation and moderate economic
growth, as well as no further indications of monetary policy
tightening, are probably needed to bring stability to the financial
markets.
<PAGE>
On the international front, although the FRB's action triggered some
weakness in the US dollar, the US dollar subsequently continued its
strong advance relative to the yen and the Deutschemark, raising
concerns about the outlook for US trade. In early February, the
leading industrialized nations expressed apparent agreement that it
was time to seek a lower dollar and less volatility in the foreign
exchange markets. It remains to be seen whether these stated
intentions will be acted upon, or if the US dollar continues to rise
relative to other major currencies.
Portfolio Matters
For the three months ended April 30, 1997, Merrill Lynch Phoenix
Fund, Inc.'s Class A, Class B, Class C and Class D Shares had total
investment returns of -7.53%, -7.75%, -7.79% and -7.61%, respectively.
(Fund results do not include sales charges, and would be lower if sales
charges were included. Complete performance information, including
average annual total returns, can be found on pages 4--6 of this report
to shareholders.)
During the April quarter, the US equity market, as measured by the
Standard & Poor's 500 Composite Index, continued its erratic upward
move, primarily because of the advance of a small number of large-
capitalization growth stocks. As we have stated in past reports to
shareholders, in this type of environment, shares of many companies
that are not delivering "predictable" earnings growth trade at very
attractive valuation levels. We added four such companies
representing a variety of industries during the April quarter.
Birmingham Steel Corp. converts scrap steel primarily into concrete
reinforcing bars. The company, now under the guidance of a new
management team, has nearly completed a significant capital
expenditure program that will enable it to produce higher value-
added products more efficiently. We purchased Birmingham Steel
shares at what we view as a very attractive valuation, with the
price close to book value at a time when the company will soon begin
to generate significant free cash flows.
3Com Corp.'s share price has come under pressure recently because of
a competitive threat posed by Intel Corp. to the leading supplier of
networking products. In addition, there is tremendous uncertainty
regarding 3Com's merger with modem manufacturer US Robotics Corp.,
which is expected to close soon. We are very optimistic on the long-
term prospects for the networking business, and we believe that the
merger of these two companies will position them as a major force in
the industry, second only to cisco Systems, Inc. 3Com's share
valuation is very modest compared to others in its industry.
<PAGE>
The operations of ANTEC Corp., a provider of telecommunications
equipment, have been negatively impacted by a slowdown in spending
by its major cable customers. We view the slowdown as temporary,
since capital must eventually be spent by the cable companies to
remain competitive. With a good balance sheet, firming orders, heavy
insider accumulation of the stock, and a modest valuation relative
to its book value, we believe that ANTEC is an attractive new
investment for the Fund.
Finally, a sale by a large institutional investor enabled us to
acquire shares of Air New Zealand Ltd. at a distressed price. We
believe the company's recent opportunistic acquisition of Ansett
International Ltd., an Australian airline, will lead to a higher
earnings growth rate for Air New Zealand than would have been
possible previously.
During the April quarter, a number of larger Fund holdings posted
significant price declines despite demonstrating much-improved
fundamentals. For example, shares of Pharmaceutical Product Devel-
opment Inc., a leading pharmaceutical contract research
organization, declined approximately 35% during the quarter, even
though the company posted higher-than-expected earnings. Similarly,
the share price of U S West Media Group declined nearly 10% during
the quarter, despite double-digit cash flow growth and the sale of
its cellular operations. We remain confident that these fundamental
improvements eventually will be recognized by investors in general
and that these stocks will be accorded higher valuations.
However, some of our larger investments reported worse-than-expected
results during the quarter, indicating that the turnaround in their
operations will be more protracted than we originally expected.
Computervision Corp. has been a Fund holding since 1994. We were
attracted to the company's market-leading position in the CAD/CAM
software industry and its decision to focus its resources away from
the proprietary computer hardware business and concentrate on the
higher profit margin software market. Today the company's balance
sheet is much stronger, but Computervision is in the process of
transitioning away from the sale of products that require very large
purchase contracts toward lower-cost solutions for its customers
that would provide a more predictable revenue stream. We believe
that given the strong customer acceptance of Computervision's
product line, we should await the results of the corporate
repositioning before making any investment decisions.
<PAGE>
Novell Inc. is the leading provider of networking software, but its
market share is being eroded by industry giant Microsoft Corp. The
company recently hired the former chief technology officer of Sun
Microsystems, Inc., Dr. Eric Schmidt. Known as an Internet pioneer,
Dr. Schmidt's focus is to leverage Novell's dominant networking
market share into the development of new products that will play an
important role in the explosive growth of the Internet. The company
also has a highly liquid balance sheet. With these positive
fundamental factors, we are comfortable in maintaining the Fund's
position in Novell at depressed valuations.
On the sell side, we eliminated a number of stocks that had reached
our price objectives in a short period of time. We sold positions in
Beverly Enterprises, Inc., Alcatel Alsthom Compagnie d'Electricite
S.A. and Merisel Inc. bonds after their prices advanced significantly,
since we viewed the risk/return ratio unfavorable at higher prices.
We eliminated positions in Apple Computer, Inc. and The Limited, Inc.
since the companies were not taking the steps needed to improve
profitability. Finally, we sold longtime Fund investment Reliance
Group Holdings, Inc. since the stock's price surpassed our target,
and we became concerned that higher interest rates would negatively
impact the company's earnings.
In Conclusion
We believe that the quality of the companies represented in the
Fund's portfolio has never been better in terms of competitive
positions within their industries, balance sheet strength, and
managerial expertise. However, it will take time for these companies
to demonstrate to investors that their actions over the past several
years have successfully improved operations. In the current market
environment, investors are generally favoring relatively few stocks
and ignoring the underlying value of companies such as those in the
Fund's portfolio. We remain confident that once the Fund's holdings
demonstrate their earnings power their share prices will begin to
participate in a general stock market advance.
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 next report to shareholders.
Sincerely,
<PAGE>
(Arthur Zeikel)
Arthur Zeikel
President
(Robert J. Martorelli)
Robert J. Martorelli
Vice President and Portfolio Manager
May 23, 1997
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
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
PERFORMANCE DATA
<PAGE>
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. (There is no initial
sales charge for automatic share conversions.)
* 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. Figures shown in the "Average Annual Total
Return" tables as well as the total returns and cumulative total
returns in the "Performance Summary" tables assume reinvestment of
all dividends and capital 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.
<PAGE>
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
4/30/97 1/31/97 4/30/96 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Phoenix Fund, Inc. Class A Shares* $12.40 $13.41 $14.93 -11.54%(1) -7.53%
ML Phoenix Fund, Inc. Class B Shares* 12.03 13.04 14.55 -11.78(1) -7.75
ML Phoenix Fund, Inc. Class C Shares* 11.95 12.96 14.47 -11.85(1) -7.79
ML Phoenix Fund, Inc. Class D Shares* 12.39 13.41 14.92 -11.55(1) -7.61
Dow Jones Industrial Average** 7,008.99 6,813.09 5,569.08 +25.86 +2.88
Standard & Poor's 500 Index** 801.34 786.16 654.17 +22.50 +1.93
ML Phoenix Fund, Inc. Class A Shares--Total Return* - 5.93(2) -7.53
ML Phoenix Fund, Inc. Class B Shares--Total Return* - 6.89(3) -7.75
ML Phoenix Fund, Inc. Class C Shares--Total Return* - 6.93(3) -7.79
ML Phoenix Fund, Inc. Class D Shares--Total Return* - 6.15(4) -7.61
Dow Jones Industrial Average--Total Return** +28.60 +3.36
Standard & Poor's 500 Index--Total Return** +25.09 +2.38
<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 $0.794 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.819 per share ordinary
income dividends and $0.794 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.700 per share ordinary
income dividends and $0.794 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.789 per share ordinary
income dividends and $0.794 per share capital gains distributions.
</TABLE>
PERFORMANCE DATA (continued)
<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
1996 12.90 13.19 0.794 0.819 +15.81
1/1/97--4/30/97 13.19 12.40 -- -- - 5.99
------- ------
Total $12.600 Total $8.333
<PAGE>
Cumulative total return as of 4/30/97: +663.52%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures 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**
<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
1996 12.62 12.83 0.794 0.700 +14.49
1/1/97--4/30/97 12.83 12.03 -- -- - 6.24
------ ------
Total $5.365 Total $4.342
Cumulative total return as of 4/30/97: +132.34%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not reflect deduction of any sales charge; results
would be lower if sales charge was deducted.
</TABLE>
PERFORMANCE DATA (concluded)
<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
1996 12.55 12.75 0.794 0.700 +14.49
1/1/97--4/30/97 12.75 11.95 -- -- - 6.27
------ ------
Total $1.291 Total $1.326
<PAGE>
Cumulative total return as of 4/30/97: +19.96%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures 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
1996 12.91 13.18 0.794 0.789 +15.38
1/1/97--4/30/97 13.18 12.39 -- -- - 5.99
------ ------
Total $1.291 Total $1.477
Cumulative total return as of 4/30/97: +22.45%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures do not include sales charge; results would be lower if
sales charge was included.
</TABLE>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/97 + 6.83% + 1.22%
Five Years Ended 3/31/97 +11.94 +10.74
Ten Years Ended 3/31/97 +11.97 +11.37
<PAGE>
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/97 + 5.72% + 1.95%
Five Years Ended 3/31/97 +10.78 +10.78
Inception (10/21/88)
through 3/31/97 +10.91 +10.91
[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 3/31/97 +5.75% +4.81%
Inception (10/21/94)
through 3/31/97 +9.17 +9.17
[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 3/31/97 + 6.59% +1.00%
Inception (10/21/94)
through 3/31/97 +10.04 +7.64
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Percent of
Industry Shares Held Investments Cost Value Net Assets
Discount to Assets
<S> <C> <S> <C> <C> <C>
Computer Services 619,700 Scitex Corp. Ltd. $ 6,578,155 $ 4,260,438 0.7%
Conglomerates 250,000 Hanson PLC Sponsored (ADR)* 10,190,365 6,062,500 0.9
Energy Related 915,900 McDermott International, Inc. 16,866,840 16,944,150 2.6
Total Discount to Assets 33,635,360 27,267,088 4.2
Earning Turnarounds
Airlines 2,065,000 Mesa Air Group, Inc. 15,219,287 10,841,250 1.7
Cable 2,600,000 Century Communications Corp. 20,327,184 10,400,000 1.6
Computer Hardware 1,404,500 Tandem Computers, Inc. 15,484,512 18,082,938 2.8
Computer Software 1,100,000 Mentor Graphics Corporation 10,874,845 7,768,750 1.2
Computers & 154,400 Applied Magnetics Corp. 4,563,868 3,879,300 0.6
Peripherals
Consumer Products 2,500,000 The Topps Co., Inc. 14,435,385 9,687,500 1.5
Energy Related 700,000 Marine Drilling Co., Inc. 7,515,188 11,025,000 1.7
767,000 Total Petroleum (North
America) Ltd. 8,043,319 7,670,000 1.2
Health Care 600,000 Humana, Inc. 11,564,931 13,050,000 2.0
1,300,000 NeoRx Corp. 7,991,431 5,037,500 0.8
1,193,800 Perrigo Co. 12,307,962 14,027,150 2.1
Industrial Services 1,407,670 Anacomp, Inc. 9,137,200 17,243,957 2.6
Leisure & 900,000 CST Entertainment Imaging,
Entertainment Inc. 675,000 9,000 0.0
Networking 400,000 Bay Networks, Inc. 6,943,974 7,100,000 1.1
<PAGE>
Restaurants 965,519 Houlihan's Restaurant Group,
Inc. 3,468,750 6,034,494 0.9
Retail 4,170,000 CML Group, Inc. 23,882,945 8,861,250 1.3
450,000 Toys 'R' Us, Inc. 11,973,130 12,825,000 2.0
Semiconductor 2,400,000 Integrated Device Technology,
Inc. 26,028,366 28,200,000 4.3
Steel 700,000 Birmingham Steel Corp. 10,946,664 10,237,500 1.6
Telecommunications 600,000 DSC Communications Corp. 11,020,016 12,225,000 1.9
Telecommunications 901,000 ANTEC Corp. 7,426,565 7,883,750 1.2
Equipment
Total Earning Turnarounds 239,830,522 222,089,339 34.1
</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>
Retail 443,361 Zale Corp. Litigation Limited
Partnership Units $ 0 $ 0 0.0%
Textiles 305,706 The Bibb Co. 2,100,882 2,369,221 0.4
$ 9,000,000 JPS Textile Group Inc.,
Subordinated Debentures, 7%
due 5/15/2000 990,000 855,000 0.1
$13,740,000 JPS Textile Group Inc.,
Subordinated Notes, 10.25%
due 6/01/1999 7,964,870 9,480,600 1.5
Total Financial Restructuring 11,055,752 12,704,821 2.0
High Yield
Cable $ 690,154 Scott Cable, New 3rd Secured,
Pay-in-Kind Notes, 16% due
7/18/2001 281,100 200,145 0.0
$ 5,850,900 Scott Cable Trust Certificate,
Pay-in-Kind Notes, 15% due
3/18/2001 4,308,722 3,686,067 0.6
<PAGE>
Consumer Products $ 9,720,000 Specialty Foods Corp., Senior
Subordinated Notes, 11.25%
due 8/15/2003 7,837,800 8,650,800 1.3
$ 2,500,000 Town & Country Corporation,
Senior Subordinated Notes,
13% due 5/31/1998 2,125,000 1,512,500 0.2
$ 4,400,000 U.S. Leather Inc., Senior Notes,
10.25% due 7/31/2003 3,267,000 3,212,000 0.5
Energy $17,100,000 WRT Energy Corp., Senior Notes,
13.875% due 3/01/2002 13,955,500 7,695,000 1.2
Home Builders $20,500,000 Baldwin Homes, Series B, 10.375%
due 8/01/2003 8,541,125 8,405,000 1.3
Leisure & $10,000,000 Bally's Health & Tennis
Entertainment Corporation, Senior Subordinated
Notes, 13% due 1/15/2003 7,927,500 9,850,000 1.5
277,854 Live Entertainment Inc., 5%
Convertible Preferred (Series B) 1,302,441 2,622,247 0.4
$ 5,500,000 Live Entertainment Inc., Senior
Subordinated Notes, 12% due
3/23/1999 4,138,750 5,390,000 0.8
Printing & $ 6,255,400 San Jacinto Holdings Inc., Senior
Publishing Subordinated Notes, 12% due
12/31/2002 4,048,512 4,566,442 0.7
Supermarkets $10,000,000 Farm Fresh Inc., Senior Notes,
12.25% due 10/01/2000 8,067,500 8,675,000 1.4
Total High Yield 65,800,950 64,465,201 9.9
Operational Restructuring
Airlines 4,000,000 Air New Zealand Ltd. (Class B) 10,535,857 11,560,908 1.8
Cable 1,000,000 Tele-Communications, Inc. (Class A) 13,320,192 13,750,000 2.1
1,519,500 U S West Media Group 28,388,664 26,211,375 4.0
Computer Hardware 1,500,000 Amdahl Corp. 11,611,657 12,843,750 2.0
375,200 Digital Equipment Corp. 12,780,769 11,209,100 1.7
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Percent of
Industry Shares Held Investments Cost Value Net Assets
Operational Restructuring (concluded)
<S> <C> <S> <C> <C> <C>
Computer Software 2,253,800 Borland International, Inc. $ 29,053,803 $ 15,354,012 2.4%
1,510,000 CompuServe Corporation 15,824,906 13,778,750 2.1
4,313,000 Computervision Corp. 26,834,711 15,095,500 2.3
3,050,000 Novell Inc. 32,852,415 23,065,625 3.5
Energy Related 800,000 Oryx Energy Co. 11,302,367 16,000,000 2.5
Engineering 800,000 EMCOR Group, Inc. 6,875,703 11,400,000 1.8
Environmental 1,250,000 Laidlaw, Inc. (Non-Voting)
(Class B) (ADR)* 12,140,881 17,031,250 2.6
Health Care 1,100,000 Pharmaceutical Product Development
Inc. 15,382,019 17,600,000 2.7
2,308,900 Transitional Hospitals Corp. 21,200,806 23,089,000 3.6
Networking 300,000 3Com Corp. 9,040,630 8,700,000 1.3
Retail 800,000 Woolworth Corp. 8,795,232 17,200,000 2.6
Steel 1,550,900 WHX Corp. 14,306,876 8,917,675 1.4
Telecommunications 350,000 AT&T Corp. 13,443,713 11,725,000 1.8
Total Operational Restructuring 293,691,201 274,531,945 42.2
Total Investments 644,013,785 601,058,394 92.4
Face
Amount Short-Term Investments
Commercial Paper** $17,823,000 Corporate Asset Funding Co. Inc.,
5.55% due 6/13/1997 17,704,849 17,704,849 2.7
2,422,000 General Motors Acceptance Corp.,
5.68% due 5/01/1997 2,422,000 2,422,000 0.4
22,500,000 NYNEX Corp., 5.57% due 5/08/1997 22,475,631 22,475,631 3.4
Total Short-Term Investments 42,602,480 42,602,480 6.5
<PAGE>
Total Investments $686,616,265 643,660,874 98.9
============
Other Assets Less Liabilities 7,094,128 1.1
------------ ------
Net Assets $650,755,002 100.0%
============ ======
Net Asset Value: Class A---Based on net assets of $262,119,468
and 21,140,250 shares outstanding $ 12.40
============
Class B---Based on net assets of $308,940,306
and 25,691,218 shares outstanding $ 12.03
============
Class C---Based on net assets of $12,969,825
and 1,085,204 shares outstanding $ 11.95
============
Class D---Based on net assets of $66,725,403
and 5,387,257 shares outstanding $ 12.39
============
<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.
</TABLE>
PORTFOLIO INFORMATION
For the Quarter Ended April 30, 1997
Percent of
Ten Largest Holdings Net Assets
Integrated Device Technology, Inc. 4.3%
U S West Media Group 4.0
Transitional Hospitals Corp. 3.6
Novell Inc. 3.5
Tandem Computers, Inc. 2.8
Pharmaceutical Product Development Inc. 2.7
Anacomp, Inc. 2.6
Woolworth Corp. 2.6
Laidlaw, Inc. (Non-Voting) (Class B) (ADR). 2.6
McDermott International, Inc. 2.6
Percent of
Five Largest Industries Net Assets
<PAGE>
Computer Software 11.5%
Health Care 11.2
Cable 8.3
Energy Related 8.0
Computer Hardware 6.5
Percent of
Asset Mix Net Assets
Stocks 81.3%
Bonds 11.1
Cash & Cash Equivalents 7.6
Additions (Equity Investments)
3Com Corp.
ANTEC Corp.
Air New Zealand Ltd. (Class B)
Applied Magnetics Corp.
Birmingham Steel Corp.
*The Energy Group PLC
Deletions (Equity Investments)
Alcatel Alsthom Compagnie d'Electricite S.A. (ADR)
Apple Computer, Inc.
Beverly Enterprises, Inc.
Charming Shoppes, Inc.
*The Energy Group PLC
The Limited, Inc.
Mid Atlantic Medical Services, Inc.
Millennium Chemicals Inc.
National Patent Development Corp.
Reliance Group Holdings, Inc.
[FN]
*Added and deleted in the same quarter.
