<PAGE>
BEA Income Fund, Inc.
153 East 53rd Street
New York, NY 10022
---------------------------------------------
OFFICERS AND DIRECTORS
William W. Priest, Jr. Richard J. Lindquist
CHAIRMAN OF THE BOARD PRESIDENT AND CHIEF
Prof. Enrique R. Arzac INVESTMENT OFFICER
DIRECTOR Suzanne E. Moran
Lawrence J. Fox INVESTMENT OFFICER
DIRECTOR Hal Liebes
James S. Pasman, Jr. SENIOR VICE PRESIDENT
DIRECTOR Michael A. Pignataro
SECRETARY
--------------------------------------------------------
INVESTMENT ADVISER
Credit Suisse Asset Management
153 East 53rd Street
New York, New York 10022
Phone 1-800-293-1232
--------------------------------------------------------
ADMINISTRATOR
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
--------------------------------------------------------
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
--------------------------------------------------------
SHAREHOLDER SERVICING AGENT
BankBoston N.A.
P.O. Box 1865
Mailstop 45-02-62
Boston, Massachusetts 02105-1865
Phone 1-800-730-6001
--------------------------------------------------------
LEGAL COUNSEL
Willkie Farr & Gallagher
787 7th Avenue
New York, New York 10019
--------------------------------------------------------
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
--------------------------------------------------------
INCREASE YOUR FUND HOLDINGS THROUGH DIVIDEND REINVESTMENT AND DIRECT CASH
PURCHASES
The Fund offers the opportunity for all shareholders to participate in the
Fund's Dividend Reinvestment and Cash Purchase Plan (the "Plan"). Under the
Plan, participating shareholders receive, in lieu of cash dividends, common
stock of the Fund. In addition, participants in the Plan have the option of
making voluntary cash payments of $100 to $3,000 (per investment period), plus
any dividends received in cash, to the Plan Agent to purchase Fund shares in the
open market. A description of the Plan and additional information concerning
terms and conditions, and any applicable charges relating to the Plan, is
included at the back of this report.
--------------------------------------------------------
BEA Income Fund, Inc.
---------------------------------------------
FIRST QUARTER REPORT
March 31, 1999
<PAGE>
BEA INCOME FUND, INC.
- ----------
Dear Shareholders: April 27, 1999
We are writing to report on the activities of the BEA Income Fund, Inc. ("the
Fund") for the quarter ended March 31, 1999 and to discuss our investment
strategy.
At March 31, 1999, the Fund's net asset value ("NAV") was $7.64, compared to
an NAV of $7.77 at December 31, 1998. The Fund's total return (based on NAV and
assuming reinvestment of dividends of $0.18 per share) for the period was 0.7%.
At March 31, 1999, $226.3 million was invested in high yield debt
securities; $16.7 million in investment-grade debt securities; and $17.4 million
in equity securities. The investment-grade component consisted of short- and
intermediate-term mortgages, asset-backed securities and corporate bonds of
intermediate maturity. Of the debt securities, the largest concentration (49.3%)
was invested in B-rated issues.
THE MARKET: MORE COMFORTABLE WITH RISK
The revival in prices of "spread product"--debt securities whose market
valuation is driven by the difference, known as the "spread," between their
yields and those of U.S. Treasury debt--that began in the fourth quarter of
1998, continued into the first quarter of 1999. Investor sentiment became much
calmer, as the fear of risk that had hurt most spread product categories in
mid-1998 subsided.
Several factors combined to create an environment in which riskier fixed
income sectors like high yield returned to favor:
- - The U.S. economy proved stronger than many people expected. This, in turn,
reduced the likelihood of further cuts in U.S. interest rates after the
Federal Reserve eased by 75 basis points in the fourth quarter, which meant
that Treasuries would probably not rally. Spread product thus did not have to
compete with Treasuries for investor attention as much as it did earlier in
1998.
- - Brazil devalued its currency in mid-January in a move that many considered
one of the last potential pieces of truly bad news that could come from the
emerging world. With the devaluation out of the way, a more aggressive
approach from Brazilian policy makers and little "contagion"-type effect on
other emerging markets, a significant source of anxiety for financial markets
worldwide declined.
- - Liquidity was ample, fueled by a remarkable 70+ interest-rate reductions
globally since the beginning of the fourth quarter and the completion of the
fairly orderly sale of huge fixed income positions by battered hedge funds.
- - There were indications that Japan was beginning to act in an increasingly
market-friendly way to stimulate its depressed economy. While the economy
itself remained mired in recession, investor perception about Japan became
notably more positive.
The generalized improvement in spread product was disproportionately
beneficial for high yield. As represented by the Salomon Smith Barney High-Yield
Market Index (SSBHYMI), high yield was the top-performing sector in the U.S.
fixed income universe. SSBHYMI's 1.5% quarterly return, moreover, was
substantially better than that of the -0.5% generated by the Lehman Brothers
Aggregate Bond Index, a standard proxy for U.S. investment-grade instruments.
Market-specific factors also contributed to high yield's strength.
Increasing investor appetite was reflected in higher cash flows into high yield
mutual funds, as well as heavy demand for collateralized bond obligations backed
by high yield instruments. New issuance of $30.1 billion was nearly 40% lower
than the $49.7 billion level recorded in the first quarter of 1998, which helped
to tighten the market's supply/demand profile.
PERFORMANCE: EFFECTIVE SECTOR ALLOCATION
The Fund's performance during the quarter benefited from effective sector
allocation on several different levels:
INDUSTRIES. Among industries, our three largest exposures remained in
telecommunications, cable/media and gaming. The Fund's performance benefited in
two ways: not only did all three perform much better than the market, but we
significantly overweighted them (relative to the market) as well.
We also underweighted health care and energy, which were two of the market's
three worst-performing sectors during the quarter.
ZEROS VS. CASH-PAY. Through our substantial overweighting in telecommunications,
the portfolio was more highly exposed than the market to deferred-interest
instruments such as zero-coupon bonds. Zeros outperformed traditional cash-pay
instruments during the quarter by nearly a five-to-one margin.
2
<PAGE>
CREDIT RATINGS. On the credit spectrum, the Fund's single biggest concentration
was in B-rated securities, which outperformed the overall market.
OUTLOOK: OPTIMISTIC
Our near-term outlook for the high yield market is optimistic. We expect
sentiment and price appreciation to be supported by the ongoing strength of the
economy; minimal inflation; the likelihood that interest rates will stay at
current levels; and signs of improvement in economically sensitive industries.
Yield spreads relative to comparable-maturity U.S. Treasury bonds--which have
steadily fallen since peaking in mid-1998--should continue to narrow, which
should push bond prices higher.
We see two main areas for potential concern at the moment. The first of
these is the market's persistently high level of volatility. The other is the
rising vulnerability of the U.S. equity market (to which activity in high yield
is closely correlated), whose share valuations are becoming increasingly
stretched. Although we do not expect the Federal Reserve to raise interest
rates, we would not be surprised if Fed Chairman Alan Greenspan made comments
designed to dampen buying activity in U.S. financial markets. If he did so, bond
prices would likely fall to some degree.
The essential strategy with which we have managed the Fund for some time
remains intact. We are keeping the portfolio most heavily weighted in
telecommunications, cable/media and gaming, whose positive industry and company
fundamentals are unchanged. Although we continue to avoid overweight positions
in economically sensitive industries in which fundamentals have been lackluster
for some time, we may selectively increase exposure if prospects keep improving.
As developments occur that we believe would be of interest to you, we will
keep you informed. Meanwhile, if you have any questions about your portfolio or
the capital markets generally, please feel free to call upon us at any time.
We appreciate your interest in the Fund and would be pleased to respond to
your questions or comments. Any questions regarding net asset value,
performance, dividends, portfolio management or allocations should be directed
to Credit Suisse Asset Management at (800) 293-1232. All other inquiries
regarding account information or requests for a prospectus or other reports
should be directed to the Fund's Shareholder Servicing Agent at (800) 730-6001.
Sincerely yours,
/s/ Richard J. Lindquist
Richard J. Lindquist
PRESIDENT AND CHIEF INVESTMENT OFFICER*
/s/ William W. Priest, Jr.
William W. Priest, Jr.
CHAIRMAN OF THE BOARD*
FROM CREDIT SUISSE ASSET MANAGEMENT:
I. Effective January 12, 1999, the Fund's investment adviser, BEA
Associates, changed its name to Credit Suisse Asset Management ("CSAM"). In
making the announcement, the firm said that it expected the new name to enhance
its recognition as a global asset manager. CSAM is the investment division of
Credit Suisse Group, one of the world's largest financial organizations, with
$600 billion in assets under management.
II. Effective May 11, 1999, the BEA Income Fund, Inc. announced that
following approval by shareholders at their Annual Shareholders' Meeting held on
May 10, 1999, the Fund has changed its name to Credit Suisse Asset Management
Income Fund, Inc.
* Richard J. Lindquist, who is a Managing Director of Credit Suisse Asset
Management ("CSAM"), formerly known as BEA Associates, is primarily responsible
for management of the Fund's assets. He has served in such capacity since
November 21, 1996. Prior to that date, he served as Vice President to the Fund,
a position he assumed on August 15, 1989. Mr. Lindquist joined CSAM on May 1,
1995 as a result of CSAM's acquisition of CS First Boston Investment Management
Corporation ("CSFBIM"). Prior to joining CSAM and beginning in July, 1989, he
held various offices at CSFBIM. Mr. Lindquist is also President and Chief
Investment Officer of BEA Strategic Global Income Fund, Inc.
* William W. Priest, Jr., who is a Managing Director and Chief Executive
Officer-Americas of Credit Suisse Asset Management ("CSAM"), formerly known as
BEA Associates joined CSAM in 1972. Mr. Priest is Director and Chairman of the
Board of BEA Strategic Global Income Fund, Inc.; The Brazilian Equity Fund,
Inc.; The Chile Fund, Inc.; The Emerging Markets Infrastructure Fund, Inc.; The
Emerging Markets Telecommunications Fund, Inc.; The First Israel Fund, Inc.; The
Indonesia Fund, Inc.; The Latin America Equity Fund, Inc.; The Latin America
Investment Fund, Inc.; and The Portugal Fund, Inc.
3
<PAGE>
PORTFOLIO OF INVESTMENTS
- ---------
MARCH 31, 1999
<TABLE>
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
DOMESTIC SECURITIES (97.2%)
- -------------------------------------------------------------------------------------
- -----------------
CORPORATE OBLIGATIONS (85.4%)
- -------------------------------------------------------------------------------------
- -----------------
AEROSPACE/DEFENSE (1.2%)
Canadian Airlines Corp.
Sr. Notes
12.25%, 8/1/06 Caa2 $ 1,950 $ 1,087,125
Collins & Aikman Products,
Corp.
Sr. Sub. Notes
11.50%, 4/15/06 B3 550 572,000
Decrane Aircraft Holdings
Sr. Sub Notes
12.00%, 9/30/08 Caa1 800 808,000
Globalstar, L.P. / Globalstar
Capital Corp.:
Sr. Notes
11.25%, 6/15/04 Caa1 500 311,250
11.50%, 6/1/05 B3 200 126,000
(1) Sabreliner Corp.
Sr. Notes
11.00%, 6/15/08 B3 200 187,250
Wyman-Gordon Co.
Sr. Notes
8.00%, 12/15/07 Ba2 150 147,375
------------
GROUP TOTAL 3,239,000
------------
- -------------------------------------------------------------------------------------
- -----------------
AUTOMOTIVE (2.6%)
Aetna Industries, Inc.
Sr. Notes
11.875%, 10/1/06 B3 600 613,500
Autotote Corp.
Series B
10.875%, 8/1/04 B2 750 772,500
(1) Breed Technologies
Sr. Sub. Notes
9.25%, 4/15/08 Caa1 400 160,000
Cambridge Industries, Inc.
Series B,
Gtd. Sr. Sub. Notes
10.25%, 7/15/07 B3 500 418,750
Hayes Wheels, Inc. Series B,
Gtd. Sr. Notes
9.125%, 7/15/07 B2 500 523,750
MCII Holdings Corp.
Sr. Secured Discount Notes
12.00%, 11/15/02 N/R 1,950 1,716,000
Oxford Automotive, Inc.
Gtd. Sr. Sub. Notes:
10.125%, 6/15/07 Caa1 1,025 1,066,000
(1) 10.125%, 6/15/07 Caa1 500 517,500
Safety Components
International, Inc. Series B,
Gtd. Sr. Sub. Notes
10.125%, 7/15/07 B3 500 498,125
Stanadyne Automotive Series B,
Gtd. Sr. Sub. Notes
10.25%, 12/15/07 Caa1 400 401,000
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
Walbro Corp. Series B,
Gtd. Sr. Sub. Notes
10.125%, 12/15/07 B2 $ 300 $ 303,000
------------
GROUP TOTAL 6,990,125
------------
- -------------------------------------------------------------------------------------
- -----------------
BROADCASTING (5.8%)
(2) Australis Holdings Pty., Ltd.
Yankee Sr. Secured
Discount Notes
0.00%, 11/1/02 N/R 3,950 39,500
(2)(3) Australis Media, Ltd.:
15.75%, 5/15/03 C 37 185
Yankee Units
15.75%, 5/15/03 C 2,375 11,875
(3) Capstar Broadcasting Partners,
Inc.
Sr. Discount Notes
0.00%, 2/1/09 N/R 2,000 1,690,000
(1) Chancellor Media Corp.
Sr. Sub. Notes
9.00%, 10/1/08 Ba3 500 536,250
Cumulus Media, Inc.
Sr. Sub. Notes
10.375%, 7/1/08 B3 800 862,000
Digital Television Services,
L.L.C./DTS Capital, Inc.
Gtd. Sr. Sub. Notes
12.50%, 8/1/07 B3 750 832,500
(3) EchoStar Communications Corp.
Gtd. Sr. Discount Notes
9.375%, 2/1/09 B2 2,000 2,070,000
Granite Broadcasting Corp.:
Series A, Sr. Sub. Notes
9.375%, 12/1/05 B3 300 294,375
Sr. Sub. Notes
8.875%, 5/15/08 B3 900 904,500
Pegasus Media &
Communications, Inc.
Series B, Notes
12.50%, 7/1/05 B2 250 275,000
SFX Broadcasting, Inc. Series
B,
Sr. Sub. Notes
10.75%, 5/15/06 B3 427 478,774
Sinclair Broadcast Group,
Inc.:
Gtd. Sr. Sub. Notes
8.75%, 12/15/07 B2 350 357,000
Sub. Notes
10.00%, 9/30/05 B2 900 954,000
Spanish Broadcasting System,
Inc.
Sr. Notes
12.50%, 6/15/02 B3 500 561,875
Time Warner Telecom, L.L.C.
Sr. Notes
9.75%, 7/15/08 B2 500 535,000
Turner Broadcasting Systems,
Inc.
Sr. Notes
7.40%, 2/1/04 Ba1 820 858,343
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
(3) United International Holdings,
Inc.
Series B, Sr. Discount Notes
0.00%, 2/15/08 B3 $ 1,700 $ 1,156,000
Univision Network Holding,
L.P.
Sub. Notes
Zero Coupon, 12/17/02 N/R 1,500 1,807,500
Young Broadcasting, Inc.:
Series B,
Gtd. Sr. Sub. Notes
9.00%, 1/15/06 B2 300 307,500
Series B,
Sr. Sub. Notes
8.75%, 6/15/07 B2 865 890,950
------------
GROUP TOTAL 15,423,127
------------
- -------------------------------------------------------------------------------------
- -----------------
BUSINESS SERVICES (0.3%)
(1) General Binding Corp.
Gtd. Sr. Sub. Notes
9.375%, 6/1/08 B2 250 254,375
(1) Iron Mountain, Inc.
Sr. Sub. Notes
8.75%, 9/30/09 B3 200 206,000
Skandinaviska Enskilda Banken
AB
Perpetual Sub. Notes
7.50%, 3/29/49 N/R 250 243,350
(1) Supercanal Holdings S.A.
Sr. Notes
11.50%, 5/15/05 B3 500 216,250
------------
GROUP TOTAL 919,975
------------
- -------------------------------------------------------------------------------------
- -----------------
CABLE (9.4%)
Avalon Cable Holdings, Inc.
Units
Zero Coupon, 12/1/08 Caa1 300 192,375
CSC Holdings, Inc.:
Sr. Sub. Notes
9.875%, 5/15/06 B1 400 435,000
Sr. Sub. Debentures
9.875%, 2/15/13 B1 850 940,313
Series B,
Sr. Sub. Debentures
8.125% 8/15/09 Ba2 350 376,103
Centrury Communications Corp.:
Sr. Notes
9.75%, 2/15/02 Ba3 500 525,000
8.75%, 10/1/07 Ba3 400 417,000
(1) Classic Cable, Inc.
9.875%, 8/1/08 B3 700 742,000
Comcast Corp.:
Sr. Sub. Notes
9.375%, 5/15/05 Ba3 180 192,150
9.125%, 10/15/06 Ba3 750 808,973
(1)(3) DIVA Systems Corp.
Units
0.00%, 3/1/08 N/R 2,775 846,375
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
(3) Diamond Cable Communications
plc
Yankee Discount Notes
0.00%, 12/15/05 Caa1 $ 1,500 $ 1,305,000
(1) Falcon Holdings Group,
L.P./Falcon Funding Corp.:
Sr. Debentures
8.375%, 4/15/10 B2 500 502,500
(3) Sr. Discount Debentures
0.00%, 4/15/10 B2 1,500 1,044,375
Helicon Group, L.P.
Series B, Sr. Secured Notes
11.00%, 11/1/03 B1 800 836,000
InterMedia Capital Partners
IV, L.P./InterMedia Partners
Capital Corp.
Sr. Notes
11.25%, 8/1/06 B2 650 739,375
(3) International CableTelevision:
Series A, Sr. Notes
0.00%, 4/15/05 B3 1,000 945,000
Series B, Sr. Notes
0.00%, 2/1/06 B3 1,050 913,500
James Cable Partners L.P.
Series B, Sr. Notes
10.75%, 8/15/04 N/R 1,550 1,658,500
Jones Intercable, Inc.
Sr. Notes
7.625%, 4/15/08 Ba2 1,150 1,213,250
(1) Lenfest Communications, Inc.:
Sr. Sub. Notes
8.375% 11/1/05 Ba3 500 530,000
Sr. Notes
10.50%, 6/15/06 B2 900 1,057,500
8.25%, 2/15/08 B2 200 210,250
NTL, Inc.:
Series B, Sr. Notes
10.00%, 2/15/07 B3 500 530,000
(1)(3) Sr. Notes
0.00%, 10/1/08 B3 1,500 1,023,750
(1) Sr. Sub. Notes
11.50%, 10/1/08 B3 600 676,500
Northland Cable Television
Sr. Sub. Notes
10.25%, 11/15/07 N/R 500 530,000
Olympus Communications,
L.P./Olympus Capital Corp.
Series B, Sr. Notes
10.625%, 11/15/06 B1 1,000 1,091,250
OpTel, Inc.:
Series B, Sr. Notes
13.00%, 2/15/05 B3 500 490,000
11.50%, 7/1/08 B3 850 765,000
(3) Renaissance Media Group
Sr. Discount Notes
0.00%, 4/15/08 B3 1,000 697,500
Rogers Cablesystems, Ltd.
10.00%, 12/1/07 Ba3 450 505,125
Tele-Communications, Inc.
Series C, Medium Term Notes
6.34%, 2/1/02 Ba1 220 223,911
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
(3) Telewest Communications plc
Yankee Sr. Sub. Discount
Debentures
0.00%, 10/1/07 B1 $ 2,100 $ 1,848,000
------------
GROUP TOTAL 24,811,575
------------
- -------------------------------------------------------------------------------------
- -----------------
CHEMICALS (1.4%)
Applied Extrusion Technologies
Series B, Sr. Notes
11.50%, 4/1/02 B2 1,500 1,530,000
Huntsman Polymers Corp.
Sr. Notes
11.75%, 12/1/04 B1 1,000 1,088,750
NL Industries, Inc.
Sr. Secured Notes
11.75%, 10/15/03 B1 250 267,812
(3) Sterling Chemical Holdings,
Inc.
Sr. Secured Discount Notes
0.00%, 8/15/08 Caa1 1,000 425,000
Texas Petrochemical Corp.
Series B, Sr. Sub. Notes
11.125%, 7/1/06 N/R 350 345,625
------------
GROUP TOTAL 3,657,187
------------
- -------------------------------------------------------------------------------------
- -----------------
CONSTRUCTION & BUILDING MATERIALS (1.2%)
AFC Enterprises
Sr. Sub. Notes
10.25%, 5/15/07 N/R 400 425,000
American Architectural
Products Corp.
Gtd. Sr. Notes
11.75%, 12/01/07 Caa1 1,150 917,125
Collins & Aikman Floor
Coverings, Inc.
Series B, Sr. Sub. Notes
10.00%, 1/15/07 B3 1,000 1,062,500
International Utility
Structures, Inc.
Sr. Sub. Notes
10.75%, 2/1/08 Caa1 500 508,750
(3) Waxman Industries, Inc.
Series B, Sr. Secured
Deferred Notes
0.00%, 6/1/04 Caa1 600 315,000
------------
GROUP TOTAL 3,228,375
------------
- -------------------------------------------------------------------------------------
- -----------------
CONSUMER PRODUCTS & SERVICES (2.4%)
(3) Coinstar, Inc.
Sr. Discount Notes
0.00%, 10/1/06 Caa1 1,700 1,510,875
Doskil Manufacturing Co., Inc.
Gtd. Sr. Sub. Notes
10.125%, 9/15/07 B3 500 475,000
Fort James Corp.
Notes
6.234%, 3/15/01 Baa3 155 154,715
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
Holmes Products Corp.
Gtd. Sr. Sub. Notes
9.875%, 11/15/07 B3 $ 800 $ 771,000
(1) Indesco International, Inc.
Gtd. Sr. Sub. Notes
9.75%, 4/15/08 B3 600 496,500
Jordan Industries, Inc.
Series B, Sr. Notes
10.375%, 8/1/07 B3 1,150 1,144,250
Packaged Ice, Inc.
Gtd. Sr. Notes
9.75%, 2/1/05 B3 100 102,250
Playtex Products, Inc.
Series B, Gtd. Sr. Notes
8.875%, 7/15/04 B1 225 232,875
Revlon Consumer Products
Sr. Sub. Notes
8.625%, 2/1/08 B3 700 651,000
Sealy Mattress Co.
Gtd. Sr. Sub. Notes
9.875%, 12/15/07 B3 200 198,500
(2)(4) Town & Country Corp.
Sr. Sub. Notes
13.00%, 5/31/98 N/R 878 0
(1) United Rentals, Inc.
Sr. Sub. Notes
9.25%, 1/15/09 B1 750 763,125
------------
GROUP TOTAL 6,500,090
------------
- -------------------------------------------------------------------------------------
- -----------------
ELECTRONICS (1.0%)
Details, Inc.
Series B, Sr. Sub Notes
10.00%, 11/15/05 B3 500 488,125
Unisys Corp.:
Series B, Sr. Notes
12.00%, 4/15/03 B1 1,000 1,102,500
Sr. Notes
11.75% 10/15/04 B1 225 254,812
7.875%, 4/1/08 B1 250 262,500
Viasystems, Inc.:
Sr. Sub. Notes
9.75%, 6/1/07 B3 300 282,375
Series B, Sr. Sub. Notes
9.75%, 6/1/07 B3 150 143,250
------------
GROUP TOTAL 2,533,562
------------
- -------------------------------------------------------------------------------------
- -----------------
ENERGY (3.9%)
Abraxas Petroleum Corp.
Series B, Sr. Notes
11.50%, 11/1/04 B2 1,550 926,125
Belden & Blake Energy Co.
Series B, Gtd. Sr. Sub. Notes
9.875%, 6/15/07 B3 200 116,000
Bellwether Exploration Co.
Gtd. Sr. Sub. Notes
10.875%, 4/1/07 B3 1,250 1,270,313
(1) Canadian Forest Oil, Ltd.
Gtd. Sr. Sub. Notes
8.75%, 9/15/07 B2 450 433,125
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
Cliffs Drilling Co.
Series D,
Gtd. Sr. Notes
10.25%, 5/15/03 B1 $ 1,100 $ 1,056,000
(1) Cogentrix Energy, Inc.
Sr. Notes
8.75%, 10/15/08 Ba1 1,000 1,047,500
Continental Resources
Gtd. Sr. Notes
10.25%, 8/1/08 B3 250 191,250
First Wave Marine, Inc.
Gtd. Sr. Notes
11.00%, 2/1/08 B3 1,000 942,500
(1) Giant Industries, Inc.
Gtd. Sr. Sub. Notes
9.00%, 9/1/07 B2 500 466,875
(1) Gothic Production Corp.
Gtd. Sr. Secured Notes
11.125%, 5/1/05 B3 250 192,500
H.S. Resources, Inc.:
Sr. Sub. Notes
9.875%, 12/1/03 B2 500 501,250
Gtd. Sr. Sub Notes
9.25%, 11/15/06 B2 600 588,000
(1) Key Energy Service Units
14.00%, 1/15/09 Caa1 1,250 1,162,500
Parker Drilling Co.
Series D, Gtd. Sr. Notes
9.75%, 11/15/06 B1 300 247,500
Plains Resources, Inc.
Series B, Gtd. Sr. Sub. Notes
10.25%, 3/15/06 B2 375 370,781
(1) Southwest Royalties, Inc.
Series B, Gtd. Sr. Notes
10.50%, 10/15/04 B3 500 220,000
TransAmerican Energy
Series B, Sr. Secured Notes
11.50%, 6/15/02 B3 450 112,500
(1) Valero Energy Bonds
6.75%, 12/15/02 Baa3 185 183,366
Wiser Oil Co.
Gtd. Sr. Sub. Notes
9.50%, 5/15/07 B2 450 288,000
------------
GROUP TOTAL 10,316,085
------------
- -------------------------------------------------------------------------------------
- -----------------
ENTERTAINMENT (3.4%)
American Skiing Co.
Series B, Sr. Sub. Notes
12.00%, 7/15/06 B3 425 383,562
(1) Bally Total Fitness Holding
Corp.
Series B, Sr. Sub. Notes
9.875%, 10/15/07 B3 350 346,500
Booth Creek Ski Holdings, Inc.
Series B, Sr. Sub. Notes
12.50%, 3/15/07 Caa1 1,000 955,000
Cinemark U.S.A., Inc.
Series D, Sr. Sub. Notes
9.625%, 8/1/08 B2 250 259,375
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
Genmar Holdings, Inc.
Series A, Sr. Sub. Notes
13.50%, 7/15/01 Caa2 $ 500 $ 500,000
(1) Hollywood Theaters, Inc.
Gtd. Sr. Sub. Notes
10.625% 8/1/07 B3 400 239,500
ICON Health & Fitness, Inc.
Series B, Sr. Sub. Notes
13.00%, 7/15/02 B3 500 314,375
(3) IHF Holdings, Inc.
Series B, Sr. Sec. Discount
Notes
Zero Coupon, 11/15/04 Caa2 1,450 262,813
Lowes Cineplex
Sr. Sub. Notes
8.875%, 8/1/08 B3 900 897,750
(1) Outboard Marine Corp.
Gtd. Sr. Notes
10.75%, 6/1/08 B3 500 409,375
(1) Premier Cruises, Ltd.
Gtd. Sr. Notes
11.00%, 3/15/08 B3 900 222,750
(1) Production Resource Group,
L.L.C./PRG Finance Group
Gtd. Sr. Sub. Notes
11.50%, 1/15/08 Caa2 750 748,125
Regal Cinemas, Inc.
Sr. Sub. Notes
9.50%, 6/1/08 B3 1,050 1,072,312
Silver Cinemas, Inc.
Sr. Sub. Notes
10.50%, 4/15/05 Caa1 1,900 1,270,625
Time Warner, Inc.:
Debentures
7.48%, 1/15/08 Ba1 175 187,688
9.125%, 1/15/13 Ba1 95 116,079
6.85%, 1/15/26 Ba1 720 733,248
------------
GROUP TOTAL 8,919,077
------------
- -------------------------------------------------------------------------------------
- -----------------
FINANCIAL SERVICES (2.0%)
AT&T Capital Corp.
Series 4, Medium Term Notes:
6.92%, 4/29/99 Baa3 600 600,720
6.47%, 12/3/99 Baa3 60 60,370
Associates Corp. of North
America
Sr. Debentures
5.96%, 5/15/37 Aa3 350 354,900
Banque Paribas NY
6.95%, 7/22/13 A3 60 60,057
BellSouth Capital Funding
Corp.
Debentures
6.04%, 11/15/26 Aa1 500 505,140
Citicorp
Series F, Sub. Notes
6.375%, 11/15/08 A1 280 278,006
DVI, Inc.
Sr. Notes
9.875%, 2/1/04 B1 500 486,250
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
Ford Motor Credit Co.
Sr. Notes
5.80%, 1/12/09 A1 $ 190 $ 182,516
Lehman Brothers Holdings Corp
Notes
6.625%, 4/1/04 Baa1 120 120,000
Long Island Savings Bank
F.S.B.
Notes
7.00%, 6/13/02 Baa3 770 786,686
National Westminster Bank
Debentures
9.375%, 11/15/03 Aa3 95 107,904
(1) Prudential Insurance Co.
Sr. Notes
6.375%, 7/23/06 A2 100 100,316
(3) PTC International Finance B.V.
Gtd. Sr. Sub. Notes
0.00%, 7/1/07 B3 350 253,750
(2) Westfed Holdings
Sr. Debentures
15.50%, 9/15/99 N/R 1,750 1,435,000
------------
GROUP TOTAL 5,331,615
------------
- -------------------------------------------------------------------------------------
- -----------------
FOOD & BEVERAGES (1.8%)
AmeriServ Food Distribution,
Inc.
Gtd. Sr. Notes
8.875%, 10/15/06 B1 500 420,625
Archibald Candy Corp.
Gtd. Sr. Secured Notes
10.25%, 7/1/04 B2 1,000 1,027,500
(1) Eagle Family Foods
Series B,
Gtd. Sr. Notes
8.75%, 1/15/08 B3 450 423,562
(1) Fleming Companies, Inc.
Sr. Sub. Notes
10.50%, 12/1/04 B3 700 658,875
Hollinger International
Publishing
Gtd. Sr. Notes
9.25%, 3/15/07 B1 1,000 1,042,500
International Home Foods, Inc.
Gtd. Sr. Sub. Notes
10.375%, 11/1/06 B2 1,000 1,083,750
------------
GROUP TOTAL 4,656,812
------------
- -------------------------------------------------------------------------------------
- -----------------
HEALTH CARE (1.7%)
(1) ICN Pharmaceutical
Sr. Notes
8.75%, 11/15/08 Ba3 500 503,750
Integrated Health Services,
Inc.:
Series A,
Sr. Sub. Notes
10.25%, 4/30/06 B2 400 284,000
Sr. Sub. Notes
9.25%, 1/15/08 B2 100 64,000
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
Meditrust
Conv. Debentures
7.50%, 3/1/01 Baa3 $ 2,000 $ 1,950,000
Merck & Co.
Series B, Medium Term Notes
5.76%, 5/3/37 Aaa 500 509,325
(1) Oxford Health Plans
Sr. Notes
11.00%, 5/15/05 Caa1 590 591,475
Paracelsus Healthcare
Sr. Sub. Notes
10.00%, 8/15/06 B3 750 532,500
Vencor Operating, Inc.
Gtd. Sr. Sub. Notes
9.875%, 5/1/05 B3 150 27,750
------------
GROUP TOTAL 4,462,800
------------
- -------------------------------------------------------------------------------------
- -----------------
INDUSTRIAL GOODS & MATERIALS (4.6%)
AMTROL Acquisition, Inc.
Sr. Sub. Notes
10.625%, 12/31/06 B3 400 388,500
APCOA, Inc.
Gtd. Sr. Notes
9.25%, 3/15/08 Caa1 430 401,513
Atlantis Group, Inc.
Sr. Notes
11.00%, 2/15/03 B2 585 590,850
CLARK Material Handling Co.
Gtd. Sr. Notes
10.75%, 11/15/06 B1 550 569,250
Delco Remy
International, Inc.
Gtd. Sr. Sub. Notes
10.625%, 8/1/06 B2 600 638,250
(1) Diamond Triumph
Sr. Notes
9.25%, 4/1/08 B2 500 502,500
(1) Golden Ocean Group, Ltd.
Gtd. Sr. Notes
10.00%, 8/31/01 B3 1,548 321,210
(1) Hayes Lemmerz
International, Inc.
Gtd. Sr. Notes
8.25%, 12/15/08 B2 750 753,750
Haynes International, Inc.
Sr. Notes
11.625%, 9/1/04 B3 500 390,000
International Knife & Saw,
Inc.
Sr. Sub. Notes
11.375%, 11/15/06 B3 750 768,750
MVE, Inc.
Sr. Secured Debentures
12.50%, 2/15/02 B3 850 909,500
Motors & Gears, Inc.
Series D, Sr. Notes
10.75%, 11/15/06 B3 1,500 1,539,375
Neenah Corp.
Series B, Sr. Sub. Notes
5.00%, 5/1/07 B3 500 523,750
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
(1) PSINET, Inc.
Sr. Notes
11.50%, 11/1/08 B3 $ 1,000 $ 1,120,000
(1) Park-Ohio Industries, Inc.
Sr. Sub. Notes
9.25%, 12/1/07 B2 400 409,500
SRI Receivables Purchase Co.,
Inc.
Series B, Notes
12.50%, 12/15/00 N/R 1,500 1,545,000
Seagate Technology, Inc.
Sr. Debentures
7.45%, 3/1/37 Baa3 120 116,084
(1)(3) Thermadyne Holdings Corp.
Sr. Discount Notes
0.00%, 6/1/08 Caa1 975 476,531
(1) Thermadyne Mfg., L.L.C./
Thermadyne Capital Corp.
Gtd. Sr. Sub. Notes
9.875%, 6/1/08 B3 300 281,250
------------
GROUP TOTAL 12,245,563
------------
- -------------------------------------------------------------------------------------
- -----------------
METALS & MINING (3.7%)
AK Steel Corp.
Gtd. Sr. Notes
10.75%, 4/1/04 Ba2 1,200 1,254,000
Algoma Steel, Inc.
Yankee First Mortgage Notes
12.375%, 7/15/05 B1 1,000 970,000
(1) Bayou Steel Corp.
First Mortgage Notes
9.50%, 5/15/08 B1 500 491,250
Gulf States Steel, Inc.
First Mortgage Notes
13.50%, 4/15/03 B1 1,050 252,000
Kaiser Aluminum & Chemical
Corp.
Series D, Sr. Notes
10.875%, 10/15/06 B1 675 690,188
(1) Lodestar Holdings, Inc.
Sr. Notes
11.50%, 5/15/05 Caa2 800 682,000
(1) Metallurg, Inc.
Series B,
Gtd. Sr. Notes
11.00%, 12/1/07 B3 750 695,625
(1) National Steel Corp.
First Mortgage Bonds
9.875%, 3/1/09 Ba3 750 770,625
Republic Engineered Steel,
Inc.
First Mortgage Bonds
9.875%, 12/15/01 Caa1 1,135 1,142,094
Sheffield Steel Corp.
Series B, First Mortgage
Bonds
11.50%, 12/1/05 Caa2 750 696,562
WCI Steel, Inc.
Series B,
Sr. Secured Notes
10.00%, 12/1/04 B2 925 945,812
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
Weirton Steel Corp.
Sr. Notes
11.375%, 7/1/04 B2 $ 500 $ 480,000
Wheeling-Pittsburg Corp.
Sr. Notes
9.25%, 11/15/07 B2 750 738,750
------------
GROUP TOTAL 9,808,906
------------
- -------------------------------------------------------------------------------------
- -----------------
PACKAGING/CONTAINERS (1.5%)
AEP Industries, Inc.
Sr. Sub. Notes
9.875%, 11/15/07 B2 250 257,500
BPC Holding Corp.
Series B,
Sr. Secured Notes
12.50%, 6/15/06 Caa3 900 936,000
Container Corp. of America
Gtd. Sr. Notes
9.75%, 4/1/03 B1 500 526,250
(3) Crown Packaging Enterprises
Ltd.
Yankee Sr. Secured Discount
Notes
0.00%, 8/1/06 Ca1 2,450 36,750
Four M Corp.
Series B,
Gtd. Sr. Secured Notes
12.00%, 6/1/06 B3 150 114,000
Gaylord Container Corp.
Series B, Sr. Notes
9.75%, 6/15/07 B3 700 675,500
Radnor Holdings, Inc.
Series B,
Gtd. Sr. Notes
10.00%, 12/1/03 B2 250 257,500
Riverwood International Corp.
Gtd. Sr. Notes
10.875%, 4/1/08 Caa1 600 579,000
(1) Stone Container Finance Co.
Yankee Gtd. Sr. Notes
11.50%, 8/15/06 B2 530 576,375
------------
GROUP TOTAL 3,958,875
------------
- -------------------------------------------------------------------------------------
- -----------------
PAPER & FOREST PRODUCTS (2.1%)
(1) Ainsworth Lumber Co., Ltd.
Yankee Sr. Secured Notes
12.50%, 7/15/07 B3 1,900 2,014,000
Color Spot Nurseries
Sr. Sub. Notes
10.50%, 12/15/07 Caa1 1,000 547,500
Crown Paper Co.
Sr. Sub. Notes
11.00%, 9/1/05 B3 550 470,250
Malette, Inc.
Yankee Sr. Secured Debentures
12.25%, 7/15/04 Ba3 555 592,463
QUNO Corp.
Yankee Sr. Notes
9.125%, 5/15/05 Baa3 315 336,842
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
Repap New Brunswick, Inc.
Sr. Secured Debentures
10.625%, 4/15/05 B3 $ 700 $ 581,000
SD Warren Co.
Series B, Sr. Sub. Notes
12.00%, 12/15/04 B1 1,000 1,083,750
------------
GROUP TOTAL 5,625,805
------------
- -------------------------------------------------------------------------------------
- -----------------
PUBLISHING & INFORMATION SERVICES (3.2%)
(1) American Lawyer Media
Holdings, Inc.
Gtd. Sr. Notes
9.75%, 12/15/07 B1 450 466,875
Ampex Corp.
Series B, Sr. Notes
12.00%, 3/15/03 N/R 750 780,000
Belo (A.H.) Corp.
Sr. Notes
6.875%, 6/1/02 Baa2 250 255,938
(3) InterAct Systems, Inc.
Sr. Discount Notes
0.00%, 8/1/03 N/R 950 342,000
Lamar Advertising Co.
Gtd. Sr. Sub. Notes
9.625%, 12/1/06 B1 250 270,625
Level 3 Communications, Inc.:
Sr. Notes
9.125%, 5/1/08 B3 1,350 1,353,375
(1)(3) 0.00%, 12/1/08 B3 2,000 1,257,500
(3) Liberty Group Publishing, Inc.
Sr. Discount Debentures
0.00%, 2/1/09 Caa1 600 323,250
(1) Mentus Media Corp.
Units
12.00%, 2/1/03 N/R 1,508 1,470,300
Printpack, Inc.
Series B, Sr. Sub. Notes
10.625%, 8/15/06 Caa1 300 277,125
Tri-State Outdoor Media
Sr. Notes
11.00%, 5/15/08 N/R 850 886,125
(1) TV Guide, Inc.
Sr. Sub. Notes
8.125%, 3/1/09 Ba3 700 710,500
------------
GROUP TOTAL 8,393,613
------------
- -------------------------------------------------------------------------------------
- -----------------
REAL ESTATE (0.0%)
EOP Operating, L.P.
Sr. Notes
6.375%, 2/15/03 Baa1 65 63,619
------------
- -------------------------------------------------------------------------------------
- -----------------
RESTAURANTS, HOTELS & GAMING (6.7%)
American Restaurant Group,
Inc.
Gtd. Sr. Secured Notes
11.50%, 2/15/03 B3 750 675,937
(1) Bluegreen Corp.
Gtd. Sr. Secured Notes
10.50%, 4/1/08 B3 1,000 877,500
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
(1) Boyd Gaming Corp.
Sr. Sub. Notes
9.50%, 7/15/07 B1 $ 150 $ 153,750
CapStar Hotel Co.
Sr. Sub. Notes
8.75%, 8/15/07 B1 375 356,719
Casino America, Inc.
Gtd. Sr. Notes
12.50%, 8/1/03 B1 1,250 1,426,563
Casino Magic of Louisiana,
Corp.
Series B, Gtd. First Mortgage
Notes
13.00%, 8/15/03 B3 1,300 1,456,000
(4) Colorado Gaming &
Entertainment Co.
Gtd. Sr. Notes
12.00%, 6/1/03 N/R 1,480 1,593,248
Empress River Casino Finance
Corp.
Gtd. Sr. Notes
10.75%, 4/1/02 Ba3 500 526,875
Friendly Ice Cream Corp.
Gtd. Sr. Notes
10.50%, 12/1/07 B1 800 742,000
HMH Properties
Series B,
Gtd. Sr. Notes
7.875%, 8/1/08 Ba2 500 480,000
(1) Hard Rock Hotel, Inc.
Sr. Sub. Notes
9.25%, 4/1/05 B3 1,400 1,361,500
(1) Hollywood Park, Inc.
Series B,
Gtd. Sr. Sub. Notes
9.50%, 8/1/07 B2 675 691,875
Horseshoe Gaming L.L.C.:
Series B, Gtd. Sr. Notes
12.75%, 9/30/00 B1 750 795,000
Series B, Sr. Sub. Notes
9.375%, 6/15/07 B3 1,350 1,383,750
Majestic Star Casino, L.L.C.
Sr. Exchange Secured Notes
12.75%, 5/15/03 B2 200 217,500
Mohegan Tribal Gaming
Authority Series B,
Sr. Secured Notes
8.125%, 1/1/06 Ba1 900 919,125
Prime Hospitality Corp.
Secured First Mortgage Notes
9.25%, 1/15/06 Ba2 850 879,750
Red Roof Inns, Inc.
Sr. Exchange Notes
9.625%, 12/15/03 B2 700 708,750
(1) Romacorp Inc.
Sr. Notes
12.00%, 7/1/06 B3 750 731,250
Sante Fe Hotel, Inc.
Gtd. First Mortgage Notes
11.00%, 12/15/00 Caa2 354 343,380
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
Station Casinos
Sr. Sub. Notes
9.75%, 4/15/07 B2 $ 1,400 $ 1,480,500
------------
GROUP TOTAL 17,800,972
------------
- -------------------------------------------------------------------------------------
- -----------------
RETAIL (4.8%)
(1)(3) Advance Holdings Corp.
Series B,
Sr. Discount Debentures
0.00%, 4/15/09 Caa2 1,500 920,625
(1) Advance Stores Co.
Gtd. Sr. Sub. Notes
10.25%, 4/15/08 Caa1 2,000 2,035,000
(1) County Seat Stores, Inc.
Units
12.75%, 11/1/04 N/R 1,100 385,000
Dairy Mart Convenience Stores,
Inc.
Sr. Sub. Notes
10.25%, 3/15/04 B3 275 257,813
Finlay Enterprises, Inc.
Sr. Debentures
9.00%, 5/1/08 B2 400 375,000
Finlay Fine Jewelry Corp.
Gtd. Sr. Notes
8.375%, 5/1/08 Ba3 1,200 1,167,000
Golden Sky, Inc.
Sr. Discount Notes
0.00%, 3/1/07 Caa1 250 145,312
Jitney-Jungle Stores of
America, Inc.:
Gtd. Sr. Notes
12.00%, 3/1/06 B2 750 832,500
Gtd. Sr. Sub. Notes
10.375%, 9/15/07 B3 300 304,500
K Mart Corp.
Debentures
7.75%, 10/1/12 Ba2 1,175 1,211,719
(3) Mrs. Fields Holding Co.
Units
0.00%, 12/1/05 Caa2 1,750 975,625
Mrs. Fields Original Cookies,
Inc.:
Gtd. Sr. Notes
10.125%, 12/1/04 N/R 1,800 1,730,250
(1) 10.125%, 12/1/04 B2 250 240,312
Pantry, Inc.
Sr. Sub. Notes
10.25%, 10/15/07 B3 550 577,500
Pathmark Stores, Inc.
Sr. Sub. Notes
9.625%, 5/1/03 Caa1 850 871,250
(1) Simmons Co.
Sr. Sub. Notes
10.25%, 3/15/09 B3 650 671,125
------------
GROUP TOTAL 12,700,531
------------
- -------------------------------------------------------------------------------------
- -----------------
TELECOMMUNICATIONS (17.7%)
Adelphia Communications Corp.
8.375%, 2/1/08 B3 800 817,000
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
(3) COLT Telecom Group plc
Yankee Units
0.00%, 12/15/06 B1 $ 400 $ 352,000
Century Communications, Inc.
Series B
Zero Coupon, 1/15/08 Ba3 650 302,250
(1) Charter Communications
Holdings
Sr. Discount Notes
0.00%, 4/1/11 B3 1,600 1,032,000
Sr. Notes
8.625%, 4/1/09 B2 1,500 1,539,375
(3) Clearnet Communications, Inc.
Sr. Discount Notes
0.00%, 12/15/05 B3 1,050 962,062
(1) Coaxial Communications, Inc.
Gtd. Sr. Notes
10.00%, 8/15/06 B3 750 798,750
Comcast Cellular Holdings
Series B, Sr. Notes
9.50%, 5/1/07 Ba3 700 801,500
(1) Concentric Network Corp.
Units
12.75%, 12/15/07 N/R 750 855,000
(1)(3) DTI Holdings, Inc.
Units
0.00%, 3/1/08 N/R 1,850 508,750
(1) Dobson/Sygnet Communications
Co.
Sr. Notes
12.25%, 12/15/08 N/R 1,300 1,394,250
(1)(3) Dolphin Telecom plc
Sr. Discount Notes
0.00%, 6/1/08 Caa1 500 252,500
(3) E. Spire Communications, Inc.
Sr. Discount Notes
0.00%, 11/1/05 N/R 2,950 2,006,000
(3) Econophone, Inc.
Sr. Notes
0.00%, 2/15/08 N/R 1,600 880,000
(1) Exodus Communications, Inc.
Sr. Notes
11.25%, 7/1/08 N/R 700 770,000
(1)(3) Focal Communications Corp.
Sr. Discount Notes
0.00%, 2/15/08 N/R 1,400 784,000
(3) GST USA, Inc.
Gtd. Sr. Discount Notes
0.00%, 12/15/05 N/R 1,800 1,320,750
(1) Global Crossing Holdings, Ltd.
Gtd. Sr. Notes
9.625%, 5/15/08 N/R 1,150 1,280,813
Globalstar, L.P. / Globalstar
Capital Corp.
Sr. Notes
10.75%, 11/1/04 B3 1,000 630,000
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
Globix Corp.
Sr. Notes
13.00%, 5/1/05 N/R $ 1,000 $ 965,000
(3) Hyperion Telecommunications,
Inc.
Series B,
Sr. Discount Notes
0.00%, 4/15/03 B3 450 371,250
(3) ICG Holdings, Inc.
Gtd. Sr. Exchange
Discount Notes:
(1) 0.00%, 9/15/05 N/R 650 575,250
0.00%, 5/1/06 N/R 600 490,500
Gtd. Sr. Discount Notes
0.00%, 3/15/07 N/R 1,750 1,277,500
(1)(3) ICG Services, Inc.
Sr. Discount Notes:
0.00%, 2/15/08 N/R 500 305,625
0.00%, 5/1/08 N/R 1,350 806,625
ITC DeltaCom, Inc.
Sr. Notes
11.00%, 6/1/07 B2 259 285,224
Intermedia Communications,
Inc.
Sr. Notes
8.875%, 11/1/07 B2 200 203,500
Iridium, L.L.C. / Iridium
Capital Corp.
Series B, Sr. Notes
10.875%, 7/15/05 B3 500 190,000
11.25%, 7/15/05 B3 100 38,000
14.00%, 7/15/05 B3 500 225,000
Jacor Communications, Inc.
Gtd. Sr. Sub. Notes
8.00%, 2/15/10 B2 250 266,875
Jordan Telecommunications
Products, Inc.:
Series B, Sr. Notes
9.875%, 8/1/07 N/R 270 265,275
(3) Series B,
Sr. Discount Notes
0.00%, 8/1/07 B3 425 346,375
Logix Communications
Enterprises
Sr. Notes
12.25%, 6/15/08 N/R 1,000 920,000
(3) McCaw International, Ltd.
Sr. Discount Notes
0.00%, 4/15/07 Caa1 1,000 590,000
McLeod USA, Inc.:
Sr. Notes
9.25%, 7/15/07 B2 400 418,000
(1) 9.50%, 11/1/08 B2 1,000 1,087,500
(3) Sr. Discount Notes
0.00%, 3/1/07 B2 800 642,000
(1)(3) MetroNet Communications Corp.:
Sr. Discount Notes
0.00%, 11/1/07 B 1,100 886,875
0.00%, 6/15/08 B3 1,000 773,750
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
(3) Microcell Telecommunications,
Inc.
Series B, Yankee
Sr. Discount Notes
0.00%, 6/1/06 B3 $ 270 $ 220,050
NEXTLINK Communications, Inc.:
(3) 0.00%, 4/15/08 B3 1,700 1,088,000
(3) 10.75%, 11/15/08 B3 500 536,250
Sr. Notes
12.50%, 4/15/06 B3 350 385,437
(1)(3) Nextel Communications, Inc.
Sr. Discount Notes
0.00%, 2/15/08 B2 1,700 1,190,000
Orion Network Systems, Inc.
Gtd. Sr. Notes
11.25%, 1/15/07 B2 500 445,000
PLD Telekom, Inc.
Gtd. Sr. Notes
14.00%, 6/1/04 N/R 1,610 885,500
(3) Pagemart Nationwide, Inc.
Sr. Discount Notes
0.00%, 2/1/05 B3 1,750 1,467,813
(1) Petersburg Long Distance, Inc.
Conv. Sub. Notes
9.00%, 6/1/06 N/R 230 103,500
Price Communications
Corp./Price Communications
Cellular Holdings, Inc.
Sr. Discount Notes
11.25%, 8/15/08 Caa1 743 705,523
(3) Qwest Communications
International, Inc.
Sr. Discount Notes
0.00%, 10/15/07 B2 1,100 873,125
(3) RCN Corp. Series B,
Sr. Discount Notes
0.00%, 2/15/08 B3 900 572,625
RSL Communications plc:
Gtd. Sr. Notes
9.125%, 3/1/08 B3 250 248,750
(1) Sr. Notes
10.50%, 11/15/08 B3 250 266,250
(1)(3) Rhythms Netconnections
Units
0.00%, 5/15/08 N/R 1,500 825,000
Rogers Cablesystems, Ltd.
Series B,
Yankee Sr. Secured 2nd
Priority Notes
10.00%, 3/15/05 Ba3 250 281,875
Rogers Cantel, Inc.
Yankee Sr. Secured Debentures
9.375%, 6/1/08 Ba3 350 383,250
Sprint Spectrum, L.P./
Sprint Spectrum Finance Corp.
Sr. Notes
11.00%, 8/15/06 B2 1,500 1,757,115
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
Star Choice Communications,
Inc.
Sr. Notes
13.00%, 12/15/05 N/R $ 500 $ 511,875
(1) Startec Global Communications
Corp.
Units
12.00%, 5/15/08 N/R 750 665,625
TCI Satellite Entertainment,
Inc.:
(3) Sr. Discount Notes
0.00%, 2/15/07 Caa3 200 116,500
Sr. Sub. Notes
10.875%, 2/15/07 Caa3 700 539,000
Talton Holdings, Inc.
Gtd. Sr. Notes
11.00%, 6/30/07 B2 250 224,375
Teligent, Inc.
Sr. Notes
11.50%, 12/1/07 Caa1 750 712,500
(3) USN Communications, Inc.
Units
0.00%, 8/15/04 Caa1 8 0
(1) Viatel, Inc.
Sr. Notes
11.25%, 4/15/08 Caa1 850 877,625
Western Wireless Corp.
Sr. Sub. Notes
10.50%, 2/1/07 B3 350 382,375
(3) Winstar Communications, Inc.
Sr. Discount Notes
0.00%, 10/15/05 Caa1 1,600 1,140,000
WorldCom, Inc.
Sr. Notes
8.875%, 1/15/06 Baa2 160 172,330
------------
GROUP TOTAL 46,794,392
------------
- -------------------------------------------------------------------------------------
- -----------------
TEXTILES/APPAREL (1.3%)
(1) Iron Age Corp.
Sr. Sub. Notes
9.875%, 5/1/08 B3 250 188,437
Maxim Group, Inc.
Series B,
Gtd. Sr. Sub. Notes
9.25%, 10/15/07 B2 700 692,125
(1) Phillips-Van-Heusen Corp.
Sr. Sub. Notes
9.50%, 5/1/08 B1 800 796,000
Pillowtex Corp.
Gtd. Sr. Sub. Notes
10.00%, 11/15/06 B2 500 522,500
Tropical Sportswear
International
Series A,
Gtd. Sr. Notes
11.00%, 6/15/08 B3 600 628,500
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
William Carter Co.
Series A, Sr. Sub. Notes
10.375%, 12/1/06 B3 $ 500 $ 537,500
------------
GROUP TOTAL 3,365,062
------------
- -------------------------------------------------------------------------------------
- -----------------
TRANSPORTATION (1.2%)
AirTran Airlines, Inc.
Sr. Notes
10.50%, 4/15/01 N/R 1,000 868,750
(1) Hermes Europe Railtel B.V.
Sr. Notes
11.50%, 8/15/07 B3 1,000 1,100,000
Norfolk Southern Corp.
Notes
7.05%, 5/1/37 Baa1 200 207,400
Pegasus Shipping (Hellas),
Ltd.
Series A, First Preferred
Ship Mortgage Notes
11.875%, 11/15/04 B3 300 210,000
(1) Trans World Airlines, Inc.
Sr. Notes
11.375%, 3/1/06 Caa1 1,500 791,250
------------
GROUP TOTAL 3,177,400
------------
- -------------------------------------------------------------------------------------
- -----------------
WASTE MANAGEMENT (0.5%)
(1) Waste Systems International,
Inc.
Sub. Notes
7.00%, 5/13/05 N/R 1,500 1,395,000
------------
- -------------------------------------------------------------------------------------
- -----------------
TOTAL CORPORATE OBLIGATIONS
(Cost $241,945,904) 226,319,143
------------
- -------------------------------------------------------------------------------------
- -----------------
MUNICIPAL SECURITIES (0.5%)
- -------------------------------------------------------------------------------------
- -----------------
New Jersey Economic
Development Authority
Series B, Revenue Bonds
Zero Coupon, 2/15/03
(Cost $1,242,266) Aaa 1,605 1,279,988
------------
- -------------------------------------------------------------------------------------
- -----------------
GOVERNMENT & AGENCY SECURITIES (2.6%)
- -------------------------------------------------------------------------------------
- -----------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (1.8%)
30YR TBA
6.00%, 3/1/29 Aaa 4,140 4,030,000
STRIPS,
Series H, Class 2
11.50%, 5/1/09 Aaa 637 699,376
------------
GROUP TOTAL 4,729,376
------------
- -------------------------------------------------------------------------------------
- -----------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (0.1%)
Various Pools:
10.50%, 9/15/15 Aaa $ 45 $ 49,240
10.50%, 9/15/15 Aaa 19 20,822
10.50%, 12/15/15 Aaa 5 4,965
10.50%, 3/15/16 Aaa 26 28,563
10.50%, 8/15/16 Aaa 35 37,915
------------
GROUP TOTAL 141,505
------------
- -------------------------------------------------------------------------------------
- -----------------
UNITED STATES TREASURY BOND (0.0%)
8.00%, 11/15/21 Aaa 20 25,131
------------
- -------------------------------------------------------------------------------------
- -----------------
UNITED STATES TREASURY NOTE (0.7%)
6.25%, 2/15/07 Aaa 260 273,608
6.25%, 6/30/02 Aaa 15 15,478
7.25%, 5/15/04 Aaa 710 773,126
STRIPS
Series S
0.00%, 5/15/17 Aaa 780 262,540
TIPS
3.625%, 1/15/08 Aaa 635 620,313
3.875%, 1/15/09 Aaa 30 29,916
------------
GROUP TOTAL 1,974,981
------------
- -------------------------------------------------------------------------------------
- -----------------
TOTAL GOVERNMENT & AGENCY SECURITIES
(Cost $6,895,696) 6,870,993
------------
- -------------------------------------------------------------------------------------
- -----------------
COLLATERALIZED MORTGAGE OBLIGATIONS (0.6%)
- -------------------------------------------------------------------------------------
- -----------------
Asset Securitization Corp.:
Series 1996-MD6,
Class A6, 7.11%, 11/13/26 Baa2 420 392,437
BankBoston Mortgage Inc.
6.375%, 4/15/08 A2 45 44,849
Commercial Mortgage Asset
Trust
Series 1999, Class A3
6.64%, 9/17/10 Aaa 80 80,700
GMAC Commercial
Mortgage Securities, Inc.
6.853%, 9/15/06 Aaa 80 82,450
Kidder Peabody Acceptance
Corp.
Series 1994-C1,
Class C1 B 6.85%, 2/1/06 N/R 910 918,531
------------
- -------------------------------------------------------------------------------------
- -----------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $1,552,044) 1,518,967
------------
- -------------------------------------------------------------------------------------
- -----------------
ASSET BACKED OBLIGATIONS (1.6%)
- -------------------------------------------------------------------------------------
- -----------------
(1) Constellation Finance, L.L.C.
Series 1997-1, Class 1
9.80%, 12/15/02 N/R 250 240,000
Contimortgage Home
Equity Loan Trust
7.22%, 1/15/28 Aaa 125 126,601
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------------
- -----------------
Series 1998-1, Class A5
6.43%, 4/15/16 Aaa $ 425 $ 429,458
Green Tree Financial Corp.
Manufactured Housing
Installment Sale Contracts
Series 1993-4, Class B1
7.20%, 1/15/19 Baa3 1,849 1,822,283
Green Tree Recreational,
Equipment & Consumer Trust,
Consumer Products & Equipment
Retail Installment Sale
Contracts
Series 1997-C, Class A-1,
6.49%, 2/15/18 N/R 638 637,366
New Century Home
Equity Loan Trust
6.73%, 7/25/22 Aaa 100 100,438
Peco Energy Transition Trust:
Series 1999-A, Class A6
6.05%, 3/1/09 Aaa 90 89,151
Series 1999-A, Class A7
6.13%, 3/1/09 Aaa 95 94,330
Southern Pacific Secured
Assets Corp.
Series 1998-1, Class A2,
6.27%, 2/25/18 Aaa 550 555,044
UCFC Home Equity Loan,:
Series 1996-B1, Class A7,
8.20%, 9/15/27 Aaa 110 115,569
Series 1998-A, Class A7,
6.87%, 7/15/29 Aaa 50 49,484
------------
- -------------------------------------------------------------------------------------
- -----------------
TOTAL ASSET BACKED OBLIGATIONS
(Cost $4,156,974) 4,259,724
------------
- -------------------------------------------------------------------------------------
- -----------------
</TABLE>
<TABLE>
<CAPTION>
Shares/
Units
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------
- -----------------
COMMON STOCKS (1.1%)
- ---------------------------------------------------------------------------------------------
- -----------------
CABLE (0.0%)
(5) OpTel, Inc. 500 5
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
CONSUMER PRODUCTS & SERVICES (0.1%)
(5) Coinstar, Inc. 11,887 190,192
(5) Crown Packaging Enterprises, Ltd. 253,746 2,537
-------------
GROUP TOTAL 192,729
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
FINANCIAL SERVICES (0.0%)
(5)(6) Westfed Holdings, Inc. Class B
(acquired 9/20/88, $127) 12,670 0
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
FOOD & BEVERAGES (0.8%)
(5)(6) Dr. Pepper Bottling Holdings, Inc.
Class A (acquired 2/25/97, cost $1,181,250) 75,000 2,170,313
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Shares/
Units Value
- ---------------------------------------------------------------------------------------------
<C> <S> <C> <C>
- -----------------
(5) Specialty Foods Corp. 30,000 $ 1,500
-------------
GROUP TOTAL 2,171,813
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
INDUSTRIAL GOODS & MATERIALS (0.1%)
(5)(6)(7) CIC I Acquisition Corp.
(acquired 10/18/89, cost $1,076,715) 2,944 200,192
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
METALS & MINING (0.0%)
(5) Sheffield Steel Corp. 6,250 25,000
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
PAPER & FOREST PRODUCTS (0.1%)
(5) Mail-Well, Inc. 14,204 189,979
(1)(5) Mail-Well, Inc. 7,102 94,989
-------------
GROUP TOTAL 284,968
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
RESTAURANTS, HOTELS & GAMING (0.0%)
Capital Gaming International, Inc. 5,687 284
(5) Elsinore Corp. 86,539 32,452
(5) Isle Of Capri Casinos, Inc. 14,947 67,262
(5) Motels of America, Inc. 500 9,000
-------------
GROUP TOTAL 108,998
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
RETAIL (0.0%)
(5)(6) Jewel Recovery, L.P.
(acquired 7/30/93, cost $0) 49,559 0
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
TELECOMMUNICATIONS (0.0%)
(5) Intermedia Communications, Inc. 2,424 64,537
(5) Nextel Communications, Inc. Class A 310 11,354
(5) Pagemart Nationwide, Inc. 7,000 47,250
-------------
GROUP TOTAL 123,141
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
TOTAL COMMON STOCKS
(Cost $3,029,263) 3,106,846
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
PREFERRED STOCKS (4.5%)
- ---------------------------------------------------------------------------------------------
- -----------------
AEROSPACE/DEFENSE (0.4%)
(5) GPA Group plc
7% Second Preference Cum. Conv. 2,125,000 1,062,500
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
BROADCASTING (1.5%)
(1)(5) Benedek Communications Corp.
11.50% Sr. Exchangeable 150 142,500
(5) Pegasus Communications Corp.
12.75% Cum. Exchangeable, Series A 0 54,090
Pegasus Communications Corp.
Units 250 286,250
(1)(5) Source Media, Inc.
13.50% Units 64,932 1,266,174
(5) Spanish Broadcasting System, Inc.
14.25%, Cum. Exchangeable 19,668 2,104,476
-------------
GROUP TOTAL 3,853,490
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
<CAPTION>
Shares/
Units Value
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------
- -----------------
CABLE (0.3%)
Adelphia Communications Corp. 13% Cum.
Exchangeable, Series B 5,000 $ 572,500
(5) DIVA Systems Corp.
Series D 56,913 284,565
(5) NTL, Inc.
13% Exchangeable, Series B 1 610
-------------
GROUP TOTAL 857,675
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
CONSUMER PRODUCTS & SERVICES (0.0%)
Renaissance Cosmetics, Inc.
14% Cumulative 2 0
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
FINANCIAL SERVICES (0.2%)
Lehman Brothers Holdings: 5.67% 1,850 80,475
5.94%, Series C 1,300 59,800
Olympic Financial, Ltd.
Units
11.50%, 3/15/07 475 370,500
(7) Westfed Holdings, Inc.
Class A (acquired 9/20/88-6/18/93, cost
$3,611,992) 42,759 42,759
-------------
GROUP TOTAL 553,534
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
METALS & MINING (0.1%)
(1) International Utility Structures, Inc.:
13% Units 150 140,625
13% Units 8 718
-------------
GROUP TOTAL 141,343
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
MISCELLANEOUS (0.0%)
(5) TCR Holdings Corp.:
Series B 790 48
Series C (non-voting) 434 24
Series D (non-voting) 1,145 61
Series E (non-voting) 2,370 149
-------------
GROUP TOTAL 282
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
PAPER & FOREST PRODUCTS (0.4%)
(5) SD Warren Co.
14% Cum. Exchangeable, Series B 21,459 1,148,056
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
PUBLISHING & INFORMATION SERVICES (0.2%)
Primedia, Inc.
10% Cum. Exchangeable, Series D 5,000 517,500
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
RESTAURANTS, HOTELS & GAMING (0.2%)
(5) AmeriKing, Inc.
13%, Cum. Exchangeable 19,360 484,000
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
TELECOMMUNICATIONS (1.2%)
(5) Intermedia Communications, Inc.: 13.50%
Exchangeable, Series B 3,175 309,989
7% Jr. Convertible, Series E 44,000 880,000
(5) NEXTLINK Communications, Inc.
14% Cum. Exchangeable 12,510 638,010
(5) Nextel Communications, Inc.
13% Exchangeable, Series D 964 964,355
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Shares/
Units Value
- ---------------------------------------------------------------------------------------------
<C> <S> <C> <C>
- -----------------
(1) Rural Cellular Corp.
11.375% Sr. Exchangeable 279 $ 275,027
(5) Viatel, Inc.
Series A 432 69,057
-------------
GROUP TOTAL 3,136,438
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
TOTAL PREFERRED STOCKS
(Cost $13,983,188) 11,754,818
-------------
RIGHTS (0.0%)
- ---------------------------------------------------------------------------------------------
- -----------------
(5) Terex Corp.
expiring 5/15/02 (cost $0) 6,000 84,000
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
WARRANTS (0.9%)
- ---------------------------------------------------------------------------------------------
- -----------------
(5) Advanced Radio Telecommunications Corp.
expiring 2/15/07 13,500 124,875
(5) American Telecasting, Inc.
expiring 6/23/99 525 0
(5) Ampex Corp.
expiring 3/15/03 25,500 38,250
(5) Australis Holdings Pty. Ltd.
expiring 10/30/01 2,250 23
(5) Bell Technology, Inc.
expiring 5/1/05 1,000 10
(5) CHC Helicopter Corp.
expiring 12/15/00 6,000 18,000
(5)(7) CHI Energy, Inc.:
expiring 12/31/03 5,400 12,965
Series B,
expiring 11/8/03 7,578 18,195
Series C,
expiring 11/8/05 4,919 11,811
(2)(5) Capital Gaming International, Inc.
expiring 2/1/99 17 0
(5) Concentric Network Corp.
expiring 12/15/07 750 225,000
(5) County Seat Stores, Inc.
expiring 10/15/98 1,520 15
(5) Crown Packaging Holdings, Ltd.
expiring 11/1/03 2,000 1,000
(5) DIVA Systems Corp.:
expiring 3/1/08 8,325 83
expiring 5/15/06 1,925 13,475
(5) DTI Holdings, Inc.
expiring 3/1/08 9,250 9,250
(5) Dairy Mart Convenience Stores, Inc.
expiring 12/1/01 11,665 2,916
(5) E. Spire Communications, Inc.
expiring 11/1/05 2,000 220,000
(5) Golden Ocean Group, Ltd.
expiring 8/31/01 1,032 258
(5) Great American Cookie Co.
expiring 1/15/01 225 0
(5) Hemmeter Enterprises, Inc.
expiring 12/15/99 9,000 0
(5) IHF Capital, Inc.
expiring 11/14/99 500 5
(5) IntelCom Group, Inc.
expiring 9/1/05 2,145 36,465
<CAPTION>
Shares/
Units Value
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------
- -----------------
(5) Interact Systems, Inc.
expiring 8/1/03 750 $ 0
(5) Isle of Capri Casinos, Inc.
expiring 5/3/01 2,646 26
(5) Loral Orion Network Systems, Inc.
expiring 1/31/07 500 5,500
(5) McCaw International, Ltd.
expiring 4/15/07 1,000 2,500
(5) Mentus Media Corp.
expiring 2/1/08 3,984 40
(5) Microcell Telecommunications
expiring 6/1/06 1,600 26,832
(5) NEXTLINK Communications, Inc.
expiring 2/1/09 9,500 0
(5) Nextel Communications, Inc.
expiring 4/25/99 750 9,000
(5) PLD Telekom, Inc.
expiring 6/01/06 1,610 0
(5) Price Communications Corp.
expiring 8/1/07 3,956 39,560
(5) Rhythms Netconnections
expiring 5/15/08 6,000 240,000
(5) SD Warren Co.
expiring 12/15/06 12,000 60,000
(5) Source Media, Inc.
expiring 11/1/07 30,731 253,533
(5) Spanish Broadcasting System, Inc.:
expiring 6/30/99 1,500 735,000
(1) expiring 6/30/99 1,500 307,500
(5) Star Choice Communications, Inc.
expiring 12/5/05 11,580 20,335
(5) Startec Global Communications Corp.
expiring 5/15/08 750 750
(5) United International Holdings
expiring 11/15/99 2,950 2,950
(5) Wright Medical Technology
expiring 6/30/03 618 6
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
TOTAL WARRANTS
(Cost $1,776,569) 2,436,128
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
TOTAL DOMESTIC SECURITIES
(Cost $274,581,904) 257,630,607
-------------
- ---------------------------------------------------------------------------------------------
- -----------------
</TABLE>
<TABLE>
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000)
<C> <S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
- -----------------
FOREIGN SECURITIES (1.1%)
- ----------------------------------------------------------------------------------------------
- -----------------
CORPORATE OBLIGATIONS (0.9%)
- ----------------------------------------------------------------------------------------------
- -----------------
FINLAND (0.1%)
(8) Okobank Perpetual
Medium Term Notes
5.739%, 9/29/49 A3 USD 140 133,700
------------
- ----------------------------------------------------------------------------------------------
- -----------------
FRANCE (0.1%)
(8) Credit Lyonnais Paris
6.563%, 9/19/49 Baa2 USD 210 195,300
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
- -----------------
L'Auxiliare du Credit
Foncier de France
Gtd. Sub. Notes
5.00%, 10/22/02 Baa3 USD 150 $ 144,000
------------
GROUP TOTAL 339,300
------------
- ----------------------------------------------------------------------------------------------
- -----------------
JAPAN (0.2%)
(8) Fuji Bank (Cayman), Ltd.:
Perpetual Gtd. Notes 7.30%,
3/29/49 Baa2 USD 370 286,750
Perpetual Sub. Notes 6.55%,
8/29/49 Baa1 USD 430 333,250
------------
GROUP TOTAL 620,000
------------
- ----------------------------------------------------------------------------------------------
- -----------------
NETHERLANDS (0.1%)
CompleTelecom
Europe N.V. Units 0.00%, 2/15/09 Caa2 USD 650 338,000
------------
- ----------------------------------------------------------------------------------------------
- -----------------
SWEDEN (0.4%)
(8) ForeningsSparrbanken AB
Perpetual Jr. Sub. Medium Term
Notes 6.438%, 12/29/49 Baa2 USD 500 490,000
Skandinaviska Enskilda Banken AB
Perpetual Sub. Notes 6.625%,
3/29/49 Baa1 USD 400 397,480
------------
GROUP TOTAL 887,480
------------
- ----------------------------------------------------------------------------------------------
- -----------------
TOTAL CORPORATE OBLIGATIONS
(Cost $2,166,002) 2,318,480
------------
- ----------------------------------------------------------------------------------------------
- -----------------
GOVERNMENT OBLIGATIONS (0.2%)
COLOMBIA (0.1%)
(8) Republic of Colombia
12.243%, 8/13/05 Baa3 USD 170 155,550
------------
- ----------------------------------------------------------------------------------------------
- -----------------
POLAND (0.1%)
Republic of Poland
Past Due Interest Bonds
5.00%, 10/27/14 Baa3 USD 320 295,200
------------
- ----------------------------------------------------------------------------------------------
- -----------------
TOTAL GOVERNMENT OBLIGATIONS
(Cost $454,399) 450,750
------------
<CAPTION>
Moody's Face
Ratings Amount
(Unaudited) (000) Value
<C> <S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
- -----------------
TOTAL FOREIGN SECURITIES
(Cost $2,620,401) $ 2,769,230
------------
- ----------------------------------------------------------------------------------------------
- -----------------
TOTAL INVESTMENTS (98.3%)
(Cost $277,202,305) 260,399,837
------------
- ----------------------------------------------------------------------------------------------
- -----------------
ASSETS IN EXCESS OF OTHER LIABILITIES (1.7%)
4,614,421
------------
- ----------------------------------------------------------------------------------------------
- -----------------
NET ASSETS (100%)
Applicable to 34,698,020 issued and outstanding .001 par value
shares (authorized 100,000,000 shares) $265,014,258
------------
------------
- ----------------------------------------------------------------------------------------------
- -----------------
</TABLE>
N/R--Not Rated.
STRIPS--Separate Trading of Registered Interest and Principal Securities.
TIPS--Treasury Inflation Protected Securities.
TBA--Security is subject to delayed delivery.
(1) 144A Security. Certain conditions for public sale may exist.
(2) Defaulted security.
(3) Step Bond--Coupon rate is low or zero for an initial period and then
increases to a higher coupon rate thereafter. Maturity date disclosed is
the ultimate maturity.
(4) Payment in kind bond. Market value includes accrued interest.
(5) Non-income producing security.
(6) Restricted as to private and public resale. Total cost of restricted
securities at March 31, 1999 aggregated 2,258,092. Total market value of
restricted securities owned at March 31, 1999 was 2,370,505 or 0.9% of net
assets.
(7) Securities for which market quotations are not readily available are valued
at fair value as determined in good faith by the Board of Directors.
(8) Floating Rate--The interest rate changes on these instruments based upon a
designated base rate. The rates shown are those in effect at March 31,
1999.
17
<PAGE>
DESCRIPTION OF DIVIDEND REINVESTMENT
AND CASH PURCHASE PLAN
- ---------
Pursuant to the BEA Income Fund, Inc.'s (the "Fund") Dividend Reinvestment and
Cash Purchase Plan (the "Plan"), shareholders may elect to have all dividends
and distributions, net of any applicable U.S. withholding tax, automatically
reinvested in additional shares of the Fund by Boston Equiserve, as the plan
agent (the "Plan Agent"). Shareholders who do not make this election will
receive all dividends and distributions in cash, net of any applicable U.S.
withholding tax, paid in dollars by check mailed directly to the shareholder by
the Plan Agent, as dividend-paying agent. Shareholders who wish to have
dividends and distributions automatically reinvested should notify the Plan
Agent for the Fund, at Bank Boston, N.A., Boston EquiServe, c/o Dividend
Reinvestment Department, P.O. Box 9041, Boston, MA 02205-9041. A shareholder
whose shares are held by a broker or nominee that does not provide a dividend
reinvestment program may be required to have his shares registered in his own
name to participate in the Plan. Investors who own shares of the Fund's common
stock registered in street name should contact the broker or nominee for details
concerning participation in the Plan.
Certain distributions of cash attributable to (a) some of the dividends and
interest amounts paid to the Fund and (b) certain capital gains earned by the
Fund that are derived from securities of certain foreign issuers are subject to
taxes payable by the Fund at the time amounts are remitted. Such taxes, if any,
will be borne by the Fund and allocated to all shareholders in proportion to
their interests in the Fund.
The Plan Agent serves as agent for the shareholders in administering the
Plan. If the Board of Directors of the Fund declares an income dividend or a
capital gains distribution payable either in the Fund's common stock or in cash,
as shareholders may have elected, nonparticipants in the Plan will receive cash
and participants in the Plan will receive the equivalent in shares of the Fund
valued at the lower of market price or net asset value as determined at the time
of purchase (generally on the payable date of the dividend) as set forth below.
Whenever market price is equal to or exceeds net asset value at the time shares
are valued for the purpose of determining the number of shares equivalent to the
cash dividend or distribution, participants will be issued shares of the Fund at
a price equal to net asset value but not less than 95% of the then current
market price of the Fund shares. The Fund will not issue shares under the Plan
below net asset value. If net asset value determined as at the time of purchase
exceeds the market price of Fund shares at such time, or if the Fund should
declare a dividend or other distribution payable only in cash (i.e., if the
Board of Directors should preclude reinvestment at net asset value), the Agent
will, as agent for the participants, endeavor to buy Fund shares in the open
market, on the New York Stock Exchange or elsewhere, on behalf of all
participants, and will allocate to you your pro rata portion based on the
average price paid (including brokerage commissions) for all shares purchased.
Shares acquired on behalf of participants in the open market will be purchased
at the prevailing market price. Fractions of a share allocated to you will be
computed to four decimal places. If, before the Agent has completed its
purchases, the market price exceeds the net asset value of a Fund share, the
average per share purchase price paid by the Agent may exceed the net asset
value of the Fund's shares, resulting in the acquisition of fewer shares than if
the dividend or distribution had been paid in shares issued by the Fund.
For all purposes of the Plan: (a) the market price of the Fund's common
stock on a dividend payment date shall be the last sale price on the New York
Stock Exchange on that date, or, if there is no such sale, then the mean between
the closing bid and asked quotations for such stock, and (b) net asset value per
share of the Fund's common stock on a particular date shall be as determined by
or on behalf of the Fund.
Participants in the Plan have the option of making additional cash payments
to the Plan Agent, monthly, in any amount from $100 to $3,000, for investment in
the Fund's common stock. Shareholders should be aware that cash contributions
will be used to purchase shares of the Fund in the open market regardless of
whether such shares are selling above, at or below the net asset value of the
Fund. As a result, shareholders may be purchasing shares at a market price that
reflects a premium to the Fund's net asset value.
Cash contributions should be in the form of a check or money order and made
payable in U.S. dollars and directed to BankBoston, N.A., c/o Boston EquiServe,
P.O. Box 9041, Boston, MA 02205-9041. Deliveries to any other address do not
constitute valid delivery.
A detachable form for use in making voluntary cash payments will be attached
to each Dividend Reinvestment Plan statement you receive. The same amount of
money need not be sent each month and there is no obligation to make an optional
cash payment each month.
Payments received by the Agent will be used to purchase stock under the
Plan. Prior to such purchase of stock by the Agent, no interest will be paid on
such funds sent to the Agent. Therefore, voluntary cash payments should be sent
to reach the Agent shortly (but at least five business days) before the dividend
payment date. Voluntary cash payments received after the five business day
deadline will be invested by the Agent on the next succeeding dividend payment
date. Dividend payment dates are expected to be the 15th (or next business day)
of each month.
You may obtain a refund of any voluntary cash payment if a request for such
a refund is received in writing by the Agent not less than 48 hours before the
next succeeding dividend payment.
There is no charge to participants for reinvesting dividends or capital
gains distributions. The Agent's fees for the handling of reinvestment of
dividends and distributions will be paid by the Fund. There will be no brokerage
charges with respect to shares issued directly by the Fund as a result of
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dividends or capital gains distributions payable either in shares or in cash.
However, each participant will pay a pro rata share of brokerage commissions
incurred with respect to the Agent's open market purchases in connection with
the reinvestment of dividends, capital gains distributions, or voluntary cash
payments.
Brokerage charges for purchasing small amounts of stock for individual
accounts through the Plan are expected to be less than the usual brokerage
charges for such transactions because the Agent will be purchasing stock for all
participants in blocks and pro rating the lower commissions thus attainable.
The receipt of dividends and distributions in stock under the Plan will not
relieve participants of any income tax (including withholding tax) that may be
payable on such dividends and distributions.
While the Fund presently intends to continue the Plan indefinitely,
experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to amend or terminate the Plan as applied to any
voluntary cash payments made and any dividend or distribution paid subsequent to
notice of the change sent to all shareholders of the Fund at least 30 days
before the record date for such dividend or distribution. The Plan also may be
amended or terminated by the Agent by at least 30 days' written notice to all
shareholders of the Fund.
Any notices, questions or other correspondence regarding the Plan should be
addressed to Bank Boston, N.A., Boston EquiServe c/o The BEA Income Fund, P.O.
Box 8040, Boston, MA 02266-8040, or you may call (800) 730-6001.
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