<PAGE>
BEA Strategic Global Income Fund, Inc.
153 East 53rd Street
New York, NY 10022
- ---------------------------------------------
OFFICERS AND DIRECTORS
<TABLE>
<S> <C>
William W. Priest, Jr. Suzanne E. Moran
CHAIRMAN OF THE BOARD INVESTMENT OFFICER
Prof. Enrique R. Arzac Hal Liebes
DIRECTOR SENIOR VICE PRESIDENT
Lawrence J. Fox Michael A. Pignataro
DIRECTOR SECRETARY
James S. Pasman, Jr. Wendy S. Setnicka
DIRECTOR VICE PRESIDENT
Richard J. Lindquist AND ASSISTANT SECRETARY
PRESIDENT AND CHIEF INVESTMENT Paul P. Stamler
OFFICER TREASURER
Gregg M. Diliberto Paul Roselli
INVESTMENT OFFICER ASSISTANT TREASURER
</TABLE>
- --------------------------------------------------------
INVESTMENT ADVISER
BEA Associates
153 East 53rd Street
New York, New York 10022
Phone 1-800-293-1232
- --------------------------------------------------------
ADMINISTRATOR
Chase Global Funds Services Company
73 Tremont Street
Boston, Massachusetts 02108
- --------------------------------------------------------
CUSTODIAN
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, New York 11245
- --------------------------------------------------------
SHAREHOLDER SERVICING AGENT
The Chase Manhattan Bank
4 New York Plaza
New York, New York 10004
Phone 1-800-428-8890
- --------------------------------------------------------
LEGAL COUNSEL
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
- --------------------------------------------------------
INDEPENDENT ACCOUNTANTS
Price Waterhouse 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 $1,000 (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 Strategic Global Income Fund, Inc.
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
June 30, 1997
<PAGE>
BEA STRATEGIC GLOBAL INCOME FUND, INC.
- ----------
Dear Shareholders: August 11, 1997
We are pleased to report on the activities of the BEA Strategic Global Income
Fund, Inc. ("the Fund") for the six-months ended June 30, 1997.
At June 30, 1997, the Fund's net asset value ("NAV") was $10.59, compared to
an NAV of $10.37 at December 31, 1996. As a result, the Fund's total return for
the period (based on NAV and assuming reinvestment of dividends of $0.4575 per
share) was 7.18%. The Fund's total return for the quarter ended June 30, 1997
was 5.15% (based on NAV and assuming reinvestment of dividends of $0.2025 per
share).
THE MARKET
Performance of fixed income markets during the second quarter was broadly
positive. Prices of most debt subcategories, which had fallen in March over
concern about a hike in interest rates, erased March's losses and rose even
higher.
The market's turnaround is attributable to two factors. First, the Federal
Reserve chose not to raise interest rates at its Open Market Committee meetings
in May and July. Second, government data increasingly suggested an absence of
inflationary pressures on the economy.
Both the investment-grade and high yield debt sectors generated strong
returns in the quarter. The Lehman Brothers Aggregate Bond Index rose 3.7%,
reflecting good performance from investment-grade subcategories. High-grade
corporate bonds and mortgage-backed securities were most notable in this regard.
High yield generated the best returns of any U.S. debt sector both for the
quarter and the year to date, with the yield spreads between high yield and
Treasury instruments narrowing to record lows. The Salomon Brothers High-Yield
Market Index returned 4.5% and 6.0% in the quarter and six months, respectively,
versus the 3.7% and 3.1% gains posted by the Lehman Aggregate index during the
same periods.
The vitality of the high yield market is reflected by several meaningful
indicators:
- - MUTUAL FUND INFLOWS. According to Chase Securities, individuals poured $5.1
billion of net new cash into high yield mutual funds during the quarter, up
from $4.2 billion in the first quarter and $3.9 billion in the second quarter
of 1996. The year-to-date total of $9.3 billion is 45.3% higher than the $6.4
billion taken in during 1996's first six months.
- - NEW ISSUES. The decline in interest rates during the quarter made terms more
attractive both for new issues and refinancings of outstanding paper. Chase
Securities calculates total new supply at $33.9 billion, compared to $25.8
billion in the first quarter and $22.8 in last year's second quarter. The
$59.7 billion in year-to-date new issuance is a six-month record and not far
from the $73.6 billion recorded in all of 1996.
- - YIELDS. Lower market yields mean that prices are strengthening. The average
market-weighted new-issue offer yield in June was 9.73%, down from 9.97% in
May and 10.62% for 1996 as a whole. The average yield for the overall high
yield market dropped to 9.21%, versus 9.39% on July 1, 1996.
- - MARKET SIZE. The size of the high yield market at June 30 was estimated by
Chase Securities at $388 billion, the highest such level ever.
Non-U.S. bond markets enjoyed positive performance in the second quarter.
Developed nations bounced back from heavy selling pressure early in the year and
rallied in response to Fed inactivity on interest rates and the appreciation of
the yen against the dollar. As represented by the unhedged J.P. Morgan Global
Government Bond Index (GBI), developed-nation bond markets gained 2.9%.
A combination of factors fueled even stronger results among emerging debt
markets. These include the benign global interest-rate environment; improving
sovereign and corporate fundamentals; and the actual or prospective repurchase
of outstanding Brady bonds. J.P. Morgan's Emerging Markets Bond Index (EMBI)
returned 10.1%.
Performance by emerging debt markets also exceeded that of developed markets
on a year-to-date basis. EMBI returned 11.5% during the period, versus a decline
of 1.1% for GBI.
PORTFOLIO REVIEW
We attribute the Fund's outperformance of the broad high yield market both
in the quarter and year to date principally to its international holdings. As we
discussed in our last report, we intend to reallocate this part of the
2
<PAGE>
portfolio from high-grade securities of developed nations to an exclusive focus
on emerging market debt and currency instruments. This process is nearly
complete.
As of June 30, most of the portfolio's emerging markets component consisted
of Eastern European and Latin American government debt. The largest such
concentrations were in Russia, Poland, Mexico and Brazil. The Fund also
benefited from our deliberate avoidance of exposure to several currencies (E.G.,
the Filipino peso and Thai baht) that have been buffeted by heavy volatility in
recent weeks. Late in the quarter, we further reduced exposure to individual
emerging market currencies by investing in a multicurrency basket issued by
Deutsche Morgan Grenfell Inc.
Holdings in the domestic investment-grade sector consisted of asset and
mortgage-backed securities. As we reconfigure the portfolio to include only
below-investment-grade instruments, we will liquidate these positions by selling
on an opportunistic basis.
OUTLOOK
HIGH YIELD. In light of the Fed's decision to leave interest rates
unchanged, we view the fundamental environment for high yield securities as
remaining positive through the second half of 1997. Technical factors, however,
may present some danger. These include the potential for excess supply in the
market from new issues and refinancings; and the surge of the equity market,
which creates additional downside risk for issuers whose earnings do not meet
expectations. We are monitoring market conditions accordingly.
The longer-term outlook remains bright. As long as interest rates and the
threat of inflation continue to be relatively low, investors should have ample
liquidity and will seek out the highest yields available in the marketplace. Two
other auspicious factors that we have previously noted are worthy of
reiteration. These are the need for greater diversification of retirement plan
assets as cash inflows rise, and the increasing comfort level of many
institutional investors with below-investment-grade fixed income in their asset
mixes.
INTERNATIONAL. Among emerging markets, most Latin nations are strongly
focused on achieving fiscal balance and maintaining stable monetary policies.
Many Asian economies are hurting both from the region's slowdown in export
growth and widespread currency instability. Much of Eastern Europe (E.G.,
Poland, Russia, Bulgaria, Hungary) is making progress in transitioning to a
market-based economy. Against this backdrop, we see healthy prospects for global
debt.
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 BEA Associates 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) 428-8890.
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*
*Richard J. Lindquist, who is a member of the Management Committee and is an
Executive Director of BEA Associates, is primarily responsible for management of
the Fund's assets. He has served in such capacity since November 21, 1996. Prior
to November 21, 1996, he served as Vice President to the Fund, a position he
assumed on August 15, 1989. Mr. Lindquist joined BEA Associates on May 1, 1995
as a result of BEA's acquisition of CS First Boston Investment Management
Corporation ("CSFBIM"). Prior to joining BEA Associates, Mr. Lindquist served
various offices at CSFBIM beginning in July, 1989. Mr. Lindquist is also
President and Chief Investments Officer of BEA Income Fund, Inc.
William W. Priest, Jr. who is Chairman of the Management Committee and holds
the offices of Executive Director and Chief Executive Officer of BEA Associates,
joined BEA Associates in 1972. Mr. Priest is Director and President of The
Indonesia Fund, Inc. and Director and Chairman of the Board of BEA 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 Latin America Equity Fund, Inc., The
Latin America Investment Fund, Inc. and The Portugal Fund, Inc., all of which
are managed by BEA Associates.
3
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED)
- ---------
JUNE 30, 1997
<TABLE>
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- -----------------
DOMESTIC INCOME SECURITIES (82.5%)
- --------------------------------------------------------------------------------------------
- -----------------
CORPORATE OBLIGATIONS (64.2%)
- --------------------------------------------------------------------------------------------
- -----------------
BROADCASTING (4.7%)
(8) Australis Media Ltd.
Yankee Units
0.00%, 5/15/03 Caa $ 225 $ 162,110
(3) Azteca Holdings, S.A. de C.V.
Sr. Secured Notes
11.00%, 6/15/02 B2 300 303,000
(8) Benedek Communications Corp.
Sr. Sub. Discount Notes
0.00%, 5/15/06 B3 250 153,125
(3)(8) Capstar Broadcasting
Partners, Inc.
Sr. Discount Notes
0.00%, 2/1/09 N/R 500 322,500
(8) EchoStar Communications
Corp.
Gtd. Sr. Discount Notes
0.00%, 6/1/04 B2 550 465,438
Pegasus Media & Communications, Inc.
Series B, Notes
12.50%, 7/1/05 B3 250 275,625
Sinclair Broadcast Group
Sr. Sub. Notes
10.00%, 9/30/05 B2 300 309,000
Spanish Broadcasting System, Inc.
Sr. Notes
12.50%, 6/15/02 B2 250 276,875
United International Holdings
Sr. Secured Discount Notes
Zero Coupon, 11/15/99 B3 1,000 770,000
Univision Network
Holding L.P.
Sub. Notes
Zero Coupon, 12/17/02 N/R 573 521,498
Young Broadcasting, Inc.:
(3) Sr. Sub Debentures
8.75%, 6/15/07 B2 450 436,500
Series B, Gtd. Sr. Sub. Notes
9.00%, 1/15/06 B2 200 200,000
-----------
GROUP TOTAL 4,195,671
-----------
- --------------------------------------------------------------------------------------------
- -----------------
CABLE (5.7%)
(8) Australis Holdings Pty. Ltd.
Yankee Sr. Secured
Discount Notes
0.00%, 11/1/02 B2 250 135,900
Cablevision System Corp.
Sr. Sub. Debentures
9.875%, 2/15/13 B2 250 263,750
Charter Communications Southeast L.P.
Series B, Sr. Notes
11.25%, 3/15/06 B3 250 270,000
Comcast Corp.
Sr. Sub. Notes
9.125%, 10/15/06 B1 250 261,250
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- -----------------
(8) Comcast UK Cable
Partners Ltd.
Yankee Sr. Debentures
0.00%, 11/15/07 B2 $ 500 $ 375,000
(3)(8) DIVA Systems Corp.
Units
0.00%, 5/15/06 N/R 900 540,000
(4) Falcon Holding Group L.P.
Sr. Sub. Notes
11.00%, 9/15/03 N/R 441 443,036
Helicon Group L.P.
Series B, Sr. Secured Notes
11.00%, 11/1/03 B1 650 658,938
Lenfest Communications, Inc.
Sr. Sub. Notes
10.50%, 6/15/06 B2 500 545,000
(8) Marcus Cable Co.
Sr. Discount Notes
0.00%, 12/15/05 Caa 350 278,250
NTL, Inc.:
(8) Series B, Sr. Deferred Coupon Notes
0.00%, 2/1/06 B3 500 347,500
Series B, Sr. Notes
10.00%, 2/15/07 B3 250 256,250
(3) OpTel, Inc.
Units
13.00%, 2/15/05 B3 250 243,750
Rifkin Acquisitions Partners L.P.
Sr. Sub. Notes
11.125%, 1/15/06 B3 250 265,625
(8) Telewest Communications plc
Yankee Sr. Sub. Discount Debentures
0.00%, 10/1/07 B1 250 181,250
-----------
GROUP TOTAL 5,065,499
-----------
- --------------------------------------------------------------------------------------------
- -----------------
CHEMICALS (2.9%)
Harris Chemical N.A.
Sr. Secured Debentures
10.25%, 7/15/01 B2 300 312,000
Consorcio G Grupo Dina S.A./ MCII Holdings
(U.S.A.), Inc.
Sr. Secured Notes
Zero Coupon, 11/15/02 N/R 400 345,500
ISP Holdings Inc.
Series B, Sr. Notes
9.75%, 2/15/02 Ba3 283 301,749
NL Industries Inc.:
Sr. Secured Debentures
11.75%, 10/15/03 B1 150 162,750
(8) Sr. Secured Discount Debentures
0.00%, 10/15/05 B2 250 233,750
Rexene Corp.
Sr. Notes
11.75%, 12/1/04 B1 400 460,500
Texas Petrochemicals Corp.
Series B, Sr. Sub. Notes
11.125%, 7/1/06 B3 200 215,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
- -----------------
UCC Investor's Holdings, Inc.
Sr. Sub. Notes
11.00%, 5/1/03 B3 $ 500 $ 537,500
-----------
GROUP TOTAL 2,569,249
-----------
- --------------------------------------------------------------------------------------------
- -----------------
CONSTRUCTION & BUILDING MATERIALS (0.3%)
Presley Companies
Sr. Notes
12.50%, 7/1/01 B3 250 250,000
-----------
- --------------------------------------------------------------------------------------------
- -----------------
CONSUMER PRODUCTS & SERVICES (2.9%)
(3)(8) Coinstar Inc.
Sr. Discount Notes
0.00%, 10/1/06 N/R 600 456,750
(6) Jordan Industries, Inc.
Sr. Notes
10.375%, 8/1/03 B3 500 530,000
Renaissance Cosmetics, Inc.
Sr. Notes
11.75%, 2/15/04 B3 250 261,875
Revlon Consumer
Products, Inc.
Series B, Sr. Sub. Notes
10.50%, 2/15/03 N/R 250 266,250
(3) Revlon Worldwide (Parent) Corp.
Sr. Secured Discount Notes
Zero Coupon, 3/15/01 B3 300 203,250
Signature Brands USA Inc.
Units
13.00%, 8/15/02 B3 500 540,000
(4) Town & Country Corp.
Sr. Sub. Notes
13.00%, 5/31/98 Ca 616 375,801
-----------
GROUP TOTAL 2,633,926
-----------
- --------------------------------------------------------------------------------------------
- -----------------
ELECTRONICS (1.7%)
Advanced Micro Devices, Inc.
Sr. Secured Notes
11.00%, 8/1/03 Ba1 250 280,625
(6) Unisys Corp.
Sr. Notes
11.75%, 10/15/04 B1 500 546,250
(3) Verio Inc.
Units
13.50%, 6/15/04 N/R 400 402,000
(3) Viasystems Inc.
Sr. Sub. Notes
9.75%, 6/1/07 B3 250 256,250
-----------
GROUP TOTAL 1,485,125
-----------
- --------------------------------------------------------------------------------------------
- -----------------
ENERGY (4.1%)
(3) Belden & Blake Energy Co.
Gtd. Sr. Sub. Notes
9.875%, 6/15/07 N/R 250 250,000
Bellwether Exploration Co.
Gtd. Sr. Sub. Notes
10.875%, 4/1/07 B3 350 375,375
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- -----------------
Dawson Production Services, Inc.
Gtd. Sr. Notes
9.375%, 2/1/07 B1 $ 250 $ 256,250
Dual Drilling Co.
Gtd. Sr. Sub. Notes
9.875%, 1/15/04 B1 250 266,562
(3) Energy Corp. of America
Sr. Sub. Notes
9.50%, 5/15/07 B2 250 250,000
Falcon Drilling Co., Inc.
Series B, Sr. Notes
9.75%, 1/15/01 Ba3 375 390,000
Forcenergy Inc.
Series B, Sr. Sub. Notes
8.50%, 2/15/07 N/R 250 245,000
Gulf Canada Resources Ltd.
Yankee Sr. Sub. Debentures
9.25%, 1/15/04 Ba2 450 473,625
H.S. Resources, Inc.
Gtd. Sr. Sub. Notes
9.25%, 11/15/06 B2 250 251,250
Maxus Energy Corp.:
Notes
9.375%, 11/1/03 B1 100 107,500
Series B, Notes
9.375%, 11/1/03 B1 250 268,125
(8) Mesa Operating Co.
Gtd. Sr. Sub. Discount Notes
0.00%, 7/1/06 Ba2 250 193,125
(3) Panda Global Energy Co.
Yankee Sr. Secured Notes
12.50%, 4/15/04 N/R 250 242,813
(3)(8) TransAmerican Energy
Sr. Secured Discount Notes
0.00%, 6/15/02 N/R 150 108,750
-----------
GROUP TOTAL 3,678,375
-----------
- --------------------------------------------------------------------------------------------
- -----------------
ENTERTAINMENT (2.0%)
American Skiing Co.
Series B, Sr. Sub. Notes
12.00%, 7/15/06 B3 200 211,000
(3) Booth Creek Ski Holdings, Inc.
Sr. Notes
12.50%, 3/15/07 Caa 250 258,125
(3) Cinemark USA Inc.
Series C, Sr. Sub. Notes
9.625%, 8/1/08 B2 250 255,625
Genmar Holdings, Inc.
Series A, Sr. Sub. Notes
13.50%, 7/15/01 Caa 500 486,875
(2) Marvel III Holdings, Inc.
Series B, Sr. Secured Debentures
9.125%, 2/15/98 C 700 82,250
PTI Holdings, Inc.
Sub. Notes
Zero Coupon, 12/17/02 N/R 507 461,293
-----------
GROUP TOTAL 1,755,168
-----------
- --------------------------------------------------------------------------------------------
- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
- -----------------
FINANCIAL SERVICES (0.5%)
American Banknote Corp.
Series B, Sr. Notes
11.625%, 8/1/02 B2 $ 250 $ 253,750
(2) Westfed Holdings
Sr. Debentures
15.50%, 9/15/99 N/R 250 177,500
-----------
GROUP TOTAL 431,250
-----------
- --------------------------------------------------------------------------------------------
- -----------------
FOOD & BEVERAGES (0.3%)
(3) Archibald Candy Corp.
Gtd. Sr. Secured Notes
10.25%, 7/1/04 B2 250 253,750
-----------
- --------------------------------------------------------------------------------------------
- -----------------
HEALTH CARE (0.6%)
Regency Health Services, Inc.
Gtd. Sr. Sub. Notes
9.875%, 10/15/02 B2 300 307,500
(3) UROHEALTH Systems Inc.
Units
12.50%, 4/1/04 B3 250 244,375
-----------
GROUP TOTAL 551,875
-----------
- --------------------------------------------------------------------------------------------
- -----------------
INDUSTRIAL GOODS & MATERIALS (4.4%)
Atlantis Group, Inc.
Sr. Notes
11.00%, 2/15/03 B2 250 260,000
CSK Auto Inc.
Series A, Gtd. Sr. Sub. Notes
11.00%, 11/1/06 N/R 400 418,000
(3) Delco Remy International, Inc.
Gtd. Sr. Sub. Notes
10.625%, 8/1/06 B2 250 266,875
Exide Corp.
Sr. Notes
10.75%, 12/15/02 B1 190 199,975
Haynes International, Inc.
Sr. Notes
11.625%, 9/1/04 B3 250 270,312
(8) IHF Holdings Inc.
Series B, Sr. Sub.
Discount Notes
0.00%, 11/15/04 Caa 250 206,250
MVE Inc.
Sr. Secured Debentures
12.50%, 2/15/02 B3 500 513,125
SRI Receivables Purchase Co., Inc.
Series B, Notes
12.50%, 12/15/00 N/R 500 520,000
Specialty Equipment
Companies, Inc.
Sr. Sub. Notes
11.375%, 12/1/03 B3 700 763,000
Terex Corp.
Series B, Sr. Secured Notes
13.25%, 5/15/02 Caa 500 561,250
-----------
GROUP TOTAL 3,978,787
-----------
- --------------------------------------------------------------------------------------------
- -----------------
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- -----------------
METALS & MINING (3.3%)
Algoma Steel, Inc.
Yankee First Mortgage Notes
12.375%, 7/15/05 B1 $ 500 $ 552,500
Armco, Inc.
Sr. Notes
11.375%, 10/15/99 B2 250 257,500
Bayou Steel Corp.
First Mortgage Notes
10.25%, 3/1/01 B2 250 248,125
Gulf States Steel, Inc.
First Mortgage Notes
13.50%, 4/15/03 B1 250 251,875
NS Group Inc.
Gtd. Sr. Secured Debentures
13.50%, 7/15/03 B3 250 281,875
Republic Engineered
Steel, Inc.
First Mortgage Bonds
9.875%, 12/15/01 Caa 350 323,750
Sheffield Steel Corp.
First Mortgage Notes
12.00%, 11/1/01 Caa 500 486,875
WCI Steel Inc.
Series B, Sr. Secured Notes
10.00%, 12/1/04 B2 250 259,375
Weirton Steel Corp.
Sr. Notes
11.375%, 7/1/04 B2 300 321,000
-----------
GROUP TOTAL 2,982,875
-----------
- --------------------------------------------------------------------------------------------
- -----------------
PACKAGING/CONTAINERS (3.3%)
(3) BWAY Corp.
Gtd. Sr. Sub. Notes
10.25%, 4/15/07 B2 150 160,875
Container Corp. of America
Gtd. Sr. Notes
9.75%, 4/1/03 B1 250 262,500
(8) Crown Packaging
Enterprises Ltd.
Sr. Secured Discount Notes
0.00%, 8/1/06 Ca 775 186,000
Four M Corp.
Series B, Sr. Secured Notes
12.00%, 6/1/06 B3 350 360,500
Gaylord Container Corp.:
(3) Sr. Notes
9.75%, 6/15/07 B3 250 250,000
Sr. Sub. Discount Debentures
12.75%, 5/15/05 Caa 250 273,750
(8) Ivex Holdings Corp.
Series B, Sr. Discount Debentures
0.00%, 3/15/05 Caa 1,250 981,250
Plastic Containers Inc.
Series B, Sr. Secured Notes
10.00%, 12/15/06 B1 250 260,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
- -----------------
(3) Stone Container Finance Co.
Yankee Gtd. Sr. Notes
11.50%, 8/15/06 B2 $ 250 $ 260,937
-----------
GROUP TOTAL 2,995,812
-----------
- --------------------------------------------------------------------------------------------
- -----------------
PAPER & FOREST PRODUCTS (1.9%)
Fort Howard Corp.
Sub. Notes
10.00%, 3/15/03 Ba2 500 538,750
(3) Indah Kiat Fin Mauritius
Gtd. Sr. Notes
10.00%, 7/1/07 N/R 250 249,687
Mail-Well Corp.
Sr. Sub. Notes
10.50%, 2/15/04 B2 500 527,500
Malette, Inc.
Yankee Sr. Secured Debentures
12.25%, 7/15/04 Ba3 150 168,000
Repap Wisconsin, Inc.
Sr. Secured Debentures
9.875%, 5/1/06 B2 250 252,500
-----------
GROUP TOTAL 1,736,437
-----------
- --------------------------------------------------------------------------------------------
- -----------------
PUBLISHING & INFORMATION SERVICES (0.2%)
(8) InterAct Systems, Inc.
Units
0.00%, 8/1/03 N/R 400 183,000
-----------
- --------------------------------------------------------------------------------------------
- -----------------
RESTAURANTS, HOTELS & GAMING (5.1%)
Boomtown, Inc.
First Mortgage Notes
11.50%, 11/1/03 B1 500 540,000
Casino America, Inc.
Gtd. Sr. Notes
12.50%, 8/1/03 B1 250 260,000
(3) Casino Magic of
Louisiana, Corp.
First Mortgage Notes
13.00%, 8/15/03 B3 600 529,500
(4) Colorado Gaming & Entertainment, Co.
Gtd. Sr. Notes
12.00%, 6/1/03 N/R 443 442,550
(2) Elsinore Corp.
First Mortgage Notes
12.50%, 10/1/00 N/R 100 52,000
G.B. Property Funding Corp.
Gtd. First Mortgage Notes
10.875%, 1/15/04 B3 450 400,500
HMC Acquisition Properties
Series B, Gtd. Sr. Notes
9.00%, 12/15/07 Ba3 450 461,250
Horseshoe Gaming L.L.C.:
Series B, Gtd. Sr. Notes
12.75%, 9/30/00 B1 375 413,438
(3) Sr. Sub. Notes
9.375%, 6/15/07 B3 500 503,125
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- -----------------
Mohegan Tribal
Gaming Authority
Series B, Sr. Secured Notes
13.50%, 11/15/02 Ba1 $ 200 $ 262,750
Prime Hospitality Corp.
Secured First
Mortgage Notes
9.25%, 1/15/06 Ba2 250 259,375
Trump Atlantic City
Associates
Secured First
Mortgage Notes
11.25%, 5/1/06 B1 250 244,375
(3) Waterford Gaming L.L.C./ Waterford Gaming
Finance Corp.
Sr. Notes
12.75%, 11/15/03 N/R 200 221,750
-----------
GROUP TOTAL 4,590,613
-----------
- --------------------------------------------------------------------------------------------
- -----------------
RETAIL (4.6%)
(2) Barry's Jewelers, Inc.
Sr. Secured Notes
11.00%, 12/22/00 Caa 600 390,750
(6) Brylane L.P.
Gtd. Sr. Sub. Notes
10.00%, 9/1/03 B1 500 535,000
(2) County Seat Stores, Inc.
Sr. Sub. Notes
12.00%, 10/1/02 Ca 500 230,000
Dairy Mart Convenience
Stores, Inc.
Sr. Sub. Notes
10.25%, 3/15/04 B3 301 299,495
Farm Fresh, Inc.:
Sr. Notes
12.25%, 10/1/00 Caa 300 253,500
Series A, Sr. Notes
12.25%, 10/1/00 Caa 150 130,125
Great American Cookie Co.
Series B, Sr. Secured Debentures
10.875%, 1/15/01 B3 500 505,000
Hills Stores Co.
Gtd. Sr. Notes
12.50%, 7/1/03 B2 350 272,125
Jitney-Jungle Stores of
America, Inc.
Gtd. Sr. Notes
12.00%, 3/1/06 B2 250 277,500
K Mart Corp.
Debentures
7.75%, 10/1/12 Ba3 200 183,000
Parisian, Inc.
Sr. Sub. Notes
9.875%, 7/15/03 B1 250 262,500
Pathmark Stores, Inc.
Sr. Sub. Notes
9.625%, 5/1/03 B3 500 488,750
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
- -----------------
(3) Shoppers Food Warehouse Corp.
Gtd. Sr. Secured Notes
9.75%, 6/15/04 B1 $ 250 $ 250,625
-----------
GROUP TOTAL 4,078,370
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TELECOMMUNICATIONS (13.3%)
Advanced Radio Telecommunications Corp.
Units
14.00%, 2/15/07 Caa 250 253,750
(8) American Communications Services, Inc.
Sr. Discount Notes
0.00%, 11/1/05 N/R 1,000 585,000
Brooks Fiber Properties, Inc.
(8) Sr. Discount Notes:
0.00%, 3/1/06 N/R 450 306,000
0.00%, 11/1/06 N/R 500 325,000
(3) Sr. Notes
10.00%, 6/1/07 N/R 250 254,375
Cellular Communications International, Inc.
Units
Zero Coupon, 8/15/00 B3 700 519,750
(8) Dial Call Communications
Sr. Discount Notes
0.00%, 4/15/04 B3 700 580,125
(8) Diamond Cable Communications plc
Yankee Discount Notes
0.00%, 12/15/05 B3 800 554,000
(3)(8) GST Telecommunications, Inc.
Conv. Sr. Sub.
Discount Notes
0.00%, 12/15/05 N/R 100 62,000
(8) GST USA, Inc.
Gtd. Sr. Discount Notes
0.00%, 12/15/05 N/R 800 486,000
(3) Geotek Communications, Inc.
Conv. Sr. Sub. Notes
12.00%, 12/15/01 Caa 350 332,500
(8) ICG Holdings, Inc.:
Gtd. Sr. Discount Notes
0.00%, 9/15/05 N/R 350 255,500
(3) Sr. Discount Notes
0.00%, 3/15/07 N/R 1,000 600,000
InterMedia Capital
Partners IV L.P./InterMedia
Partners IV
Capital Corp.
Sr. Notes
11.25%, 8/1/06 B2 250 270,000
Intermedia Communications, Inc.
Series B, Sr. Notes
13.50%, 6/1/05 B2 300 366,750
(8) MFS Communications Co., Inc.
Sr. Discount Notes
0.00%, 1/15/04 Ba3 350 325,780
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- -----------------
(3)(8) McCaw International Ltd.
Units
0.00%, 4/15/07 N/R $ 750 $ 375,000
NEXTLINK Communications, Inc.
Sr. Notes
12.50%, 4/15/06 N/R 100 106,500
(8) Nextel Communications, Inc.
Sr. Discount Notes
0.00%, 8/15/04 B3 500 382,500
Orion Network Systems, Inc.
Units
11.25%, 1/15/07 B2 250 260,000
(8) Pagemart Nationwide, Inc.
Sr. Discount Notes
0.00%, 2/1/05 N/R 750 566,250
(3) Petersburg Long Distance Inc.:
Conv. Sub. Notes
9.00%, 6/1/06 N/R 80 81,600
(8) Units
0.00%, 6/1/04 N/R 560 483,000
(8) PriCellular Wireless Corp.
Discount Notes
0.00%, 10/1/03 B3 450 414,000
Sprint Spectrum L.P./Sprint Spectrum Finance
Corp.
Sr. Notes
11.00%, 8/15/06 B2 450 500,625
(3) TCI Satellite Entertainment, Inc.:
(8) Sr. Sub. Discount Notes
0.00%, 2/15/07 B3 150 88,500
Sr. Sub. Notes
10.875%, 2/15/07 B3 300 301,500
(3) Talton Holdings Inc.
Gtd. Sr. Notes
11.00%, 6/30/07 B2 250 253,125
Teleport Communications Group, Inc.:
(8) Sr. Discount Notes
0.00%, 7/1/07 B1 550 396,688
Sr. Notes
9.875%, 7/1/06 B1 250 266,250
(3) UNIFI Communications, Inc.
Units
14.00%, 3/1/04 N/R 250 248,750
(8) Videotron Holdings plc
Yankee Discount Notes
0.00%, 8/15/05 Baa3 1,000 835,000
Western Wireless Corp.
Sr. Sub. Notes
10.50%, 2/1/07 B3 250 260,000
-----------
GROUP TOTAL 11,895,818
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TEXTILES/APPAREL (1.2%)
Collins & Aikman Products
Sr. Sub. Notes
11.50%, 4/15/06 B3 250 281,250
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
- -----------------
Polysindo International Finance
Co. B.V.
Yankee Gtd. Secured Notes
11.375%, 6/15/06 Ba2 $ 750 $ 825,000
-----------
1,106,250
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TRANSPORTATION (0.9%)
CHC Helicopter Corp.
Yankee Sr. Sub. Notes
11.50%, 7/15/02 B3 250 258,750
USAir, Inc.
Gtd. Sr. Notes
10.00%, 7/1/03 B3 500 512,500
-----------
GROUP TOTAL 771,250
-----------
- --------------------------------------------------------------------------------------------
- -----------------
WASTE MANAGEMENT (0.3%)
(3) Allied Waste Industries, Inc.
Sr. Sub. Notes
10.25%, 12/1/06 N/R 250 270,000
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TOTAL CORPORATE OBLIGATIONS
(Cost $56,695,357) 57,459,100
-----------
- --------------------------------------------------------------------------------------------
- -----------------
GOVERNMENT & AGENCY SECURITIES (1.7%)
- --------------------------------------------------------------------------------------------
- -----------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (0.7%)
15-Year TBA
6.50%, 6/1/12 Aaa 650 637,403
-----------
- --------------------------------------------------------------------------------------------
- -----------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (0.6%)
Various Pools
11/1/25-12/1/25 Aaa 521 511,375
-----------
- --------------------------------------------------------------------------------------------
- -----------------
UNITED STATES DEPARTMENT OF VETERANS AFFAIRS (0.4%)
Vendee Mortgage Trust
REMIC, Series 1995-2B, Class 2D
7.50%, 10/15/17 N/R 350 354,046
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TOTAL GOVERNMENT & AGENCY SECURITIES
(Cost $1,510,597) 1,502,824
-----------
- --------------------------------------------------------------------------------------------
- -----------------
COLLATERALIZED MORTGAGE OBLIGATIONS (1.2%)
- --------------------------------------------------------------------------------------------
- -----------------
Asset Securitization Corp.:
Series 1995-MD4, Class A1
7.10%, 8/13/29 N/R 191 192,798
Series 1996-MD6, Class A6
7.10%, 11/13/26 Baa2 230 231,581
Drexel, Burnham & Lambert
Trust REMIC-PAC, Series S, Class 2
9.00%, 8/1/18 Aaa 657 656,753
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- -----------------
Kidder Peabody Acceptance Corp.
Series 1993-M3, Class A
6.50%, 11/25/25 Aaa $ 16 $ 15,945
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $1,120,672) 1,097,077
-----------
- --------------------------------------------------------------------------------------------
- -----------------
ASSET BACKED OBLIGATIONS (4.8%)
- --------------------------------------------------------------------------------------------
- -----------------
Green Tree Financial Corp. Manufactured
Housing
Installment Sale Contracts:
Series 1993-4, Class B1
7.20%, 1/15/19 Baa3 1,043 1,045,274
Series 1995-4, Class A3
6.30%, 7/15/25 Aaa 1,650 1,646,386
Series 1995-6, Class A3
6.65%, 9/15/26 Aaa 410 411,919
Merrill Lynch Home Equity Acceptance Trust,
Series 1994-A, Class A-2
6.44%, 7/17/22 A3 991 990,808
Nationscredit Grantor Trust,
Boat Retail Installment Sale Contracts,
Series 1996-1, Class A
5.85%, 9/15/11 Aaa 187 183,113
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TOTAL ASSET BACKED OBLIGATIONS
(Cost $4,266,289) 4,277,500
-----------
- --------------------------------------------------------------------------------------------
- -----------------
<CAPTION>
Shares/
Units
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- -----------------
COMMON STOCKS (2.3%)
- --------------------------------------------------------------------------------------------
- -----------------
BROADCASTING (0.0%)
(1) Pegasus Communications Corp. 1,128 12,549
-----------
- --------------------------------------------------------------------------------------------
- -----------------
CONSUMER PRODUCTS & SERVICES (0.0%)
(1)(5) Applause Enterprises, Inc.
(acquired 11/8/91,
cost $72,200) 1,900 5,700
-----------
- --------------------------------------------------------------------------------------------
- -----------------
FINANCIAL SERVICES (0.0%)
(1)(5)(7) Westfed Holdings Inc.
Class B (acquired 9/20/88, cost $100) 4,223 0
-----------
- --------------------------------------------------------------------------------------------
- -----------------
FOOD & BEVERAGES (1.1%)
(1)(5) Dr. Pepper Bottling Holdings, Inc.
Class A (acquired 10/21/88, cost $49,500) 55,000 1,017,500
(1)(3) Specialty Foods Corp. 22,500 5,625
-----------
GROUP TOTAL 1,023,125
-----------
- --------------------------------------------------------------------------------------------
- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
Shares/ Value
Units (Note A-1)
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- -----------------
INDUSTRIAL GOODS & MATERIALS (0.2%)
(1)(5)(7) CIC I Acquisition Corp. (acquired 10/18/89,
cost $1,076,700) 2,944 $ 200,192
-----------
- --------------------------------------------------------------------------------------------
- -----------------
PACKAGING/CONTAINERS (0.0%)
(1) Crown Packaging Enterprises Ltd. 100,750 1,007
-----------
- --------------------------------------------------------------------------------------------
- -----------------
PAPER & FOREST PRODUCTS (0.2%)
(1)(3) Mail-Well, Inc. 5,326 151,791
-----------
- --------------------------------------------------------------------------------------------
- -----------------
RESTAURANTS, HOTELS & GAMING (0.8%)
(1) Casino America Inc. 4,982 10,896
(1) Colorado Gaming & Entertainment, Co. 8,822 26,466
(1) Motels of America, Inc. 250 12,500
(1) Vail Resorts Inc. 24,100 610,019
-----------
GROUP TOTAL 659,881
-----------
- --------------------------------------------------------------------------------------------
- -----------------
RETAIL (0.0%)
(1)(5) Jewel Recovery L.P.
(acquired 7/30/93, cost $0) 33,040 0
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TELECOMMUNICATIONS (0.0%)
(1) Pagemart Nationwide, Inc. 3,500 26,250
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TOTAL COMMON STOCKS
(Cost $1,677,384) 2,080,495
-----------
- --------------------------------------------------------------------------------------------
- -----------------
PREFERRED STOCKS (3.4%)
- --------------------------------------------------------------------------------------------
- -----------------
AEROSPACE/DEFENSE (0.4%)
(1) GPA Group plc
7% Second Preference Cum. Conv. 650,000 334,750
-----------
- --------------------------------------------------------------------------------------------
- -----------------
BROADCASTING (0.5%)
(3) Granite Broadcasting Corp.
12.75% Cumulative Exchangeable 10 10,125
(1)(3) Spanish Broadcasting System, Inc.
14.25% Cumulative Exchangeable 5,000 465,000
-----------
GROUP TOTAL 475,125
-----------
- --------------------------------------------------------------------------------------------
- -----------------
CABLE (0.3%)
(1)(3) NTL, Inc.
13% Exchangeable 258 270,900
-----------
- --------------------------------------------------------------------------------------------
- -----------------
CONSUMER PRODUCTS & SERVICES (0.2%)
(1) Renaissance Cosmetics, Inc.
14.00% Cumulative 221 194,480
-----------
- --------------------------------------------------------------------------------------------
- -----------------
ENERGY (0.0%)
(1)(7) Consolidated Hydro, Inc.
13.50% Series H, Conv. 1,500 15,000
-----------
- --------------------------------------------------------------------------------------------
- -----------------
<CAPTION>
Shares/ Value
Units (Note A-1)
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- -----------------
FINANCIAL SERVICES (0.0%)
(1)(5)(7) WestFed Holdings, Inc.
Class A
(acquired 9/20/88-6/18/93,
cost $1,203,500) 14,246 $ 14,246
-----------
- --------------------------------------------------------------------------------------------
- -----------------
PAPER & FOREST PRODUCTS (0.6%)
(1) SD Warren Co.
14% Cumulative Exchangeable, Series B 13,000 559,000
-----------
- --------------------------------------------------------------------------------------------
- -----------------
PUBLISHING & INFORMATION SERVICES (0.4%)
K-III Communications Corp.
10% Cumulative Exchangeable, Series D 3,500 343,000
-----------
- --------------------------------------------------------------------------------------------
- -----------------
RESTAURANTS, HOTELS & GAMING (0.6%)
(1) AmeriKing Inc.
13% Cumulative Exchangeable 5,000 140,000
(1) Lady Luck Gaming Corp.
Series A 10,000 350,000
-----------
GROUP TOTAL 490,000
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TELECOMMUNICATIONS (0.4%)
(1) NEXTLINK Communications, Inc.
14% Cumulative Exchangeable 6,212 329,236
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TOTAL PREFERRED STOCKS
(Cost $4,530,149) 3,025,737
-----------
- --------------------------------------------------------------------------------------------
- -----------------
RIGHTS (0.0%)
- --------------------------------------------------------------------------------------------
- -----------------
(1) Mexico Value Recovery Rights expiring 6/30/03 3,076,000 0
(1) Terex Corp.
expiring 5/15/02 2,000 30,000
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TOTAL RIGHTS
(Cost $4,019) 30,000
-----------
- --------------------------------------------------------------------------------------------
- -----------------
WARRANTS (0.5%)
- --------------------------------------------------------------------------------------------
- -----------------
(1) America Communications Services, Inc.
expiring 11/1/05 1,000 50,000
(1) American Telecasting, Inc.
expiring 6/23/99 350 175
(1) Australis Holdings Pty Ltd.
expiring 10/1/00 250 378
(1) Australis Media Ltd.
expiring 5/15/00 225 0
(1)(3) Boomtown, Inc.
expiring 11/1/98 500 5
(1) CHC Helicopter Corp.
expiring 12/15/00 2,000 2,250
(1) Casino America, Inc.
expiring 5/3/01 882 772
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
Shares/ Value
Units (Note A-1)
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- -----------------
(1) Coinstar Inc.
expiring 12/6/99 600 $ 0
(1)(7) Consolidated Hydro, Inc.
expiring 12/31/03 2,700 0
(1) County Seat Stores, Inc.
expiring 10/15/98 500 5
(1) Crown Packaging Holdings, Ltd.
expiring 11/1/03 1,000 125
(1) Dairy Mart Convenience Stores, Inc.
expiring 5/13/98 4,172 8,344
(1) Elsinore Corp.
expiring 10/8/98 5,329 0
(1) Great American Cookie Co.
expiring 1/30/00 90 900
(1) Hemmeter Enterprises, Inc.
expiring 12/15/99 3,000 0
(1) In-Flight Phone Corp.
expiring 8/31/02 500 0
(1) IntelCom Group, Inc.
expiring 9/1/05 1,155 15,592
(1) InterAct Systems, Inc.
expiring 8/1/03 400 0
(1) Intermedia Communications, Inc.
expiring 6/1/00 300 12,000
(1) NEXTLINK Communications, Inc.
expiring 2/1/09 6,000 60
(1) Nextel Communications, Inc.
expiring 4/25/99 500 5
(1) Purity Supreme
expiring 8/1/97 1,733 0
(1) Renaissance Cosmetics, Inc.:
(3) expiring 4/3/01 1,000 50,000
expiring 8/31/06 200 20,000
(1) SD Warren Co.
expiring 12/15/06 8,000 40,000
(1) Sheffield Steel Corp.
expiring 11/1/01 2,500 7,500
(1) Signature Brands Ltd.
expiring 8/15/02 500 0
(1) Spanish Broadcasting Systems
expiring 6/29/99 1,000 170,000
(1) United International Holdings
expiring 11/15/99 600 3,000
(1) Wright Medical Technology
expiring 6/30/03 206 20,588
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TOTAL WARRANTS
(Cost $166,820) 401,699
-----------
- --------------------------------------------------------------------------------------------
- -----------------
</TABLE>
<TABLE>
<CAPTION>
Face
Moody's Amount
Ratings (000)
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- -----------------
SHORT-TERM INVESTMENTS (4.4%)
- --------------------------------------------------------------------------------------------
- -----------------
Federal Home Loan Bank Discount Note
Zero Coupon, 7/1/97
(Cost $3,914,000) N/R $ 3,914 3,914,000
-----------
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- -----------------
TOTAL DOMESTIC SECURITIES
(Cost $73,885,287) $73,788,432
-----------
- --------------------------------------------------------------------------------------------
- -----------------
FOREIGN SECURITIES (23.3%)
- --------------------------------------------------------------------------------------------
- -----------------
STRUCTURED INVESTMENTS (NOTE A-9) (4.2%)
- --------------------------------------------------------------------------------------------
- -----------------
Deutsche Morgan Grenfell Inc.
Emerging Market Currency
Basket Structured Notes
Zero Coupon, 10/2/97 N/R $ 2,600 2,494,051
Ministry of Finance of the
Russian Federation,
GKO Structured Notes
Zero Coupon, 7/16/97 N/R USD 1,250 1,243,036
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TOTAL STRUCTURED INVESTMENTS
(cost $3,737,087) 3,737,087
-----------
- --------------------------------------------------------------------------------------------
- -----------------
GOVERNMENT OBLIGATIONS (19.1%)
- --------------------------------------------------------------------------------------------
- -----------------
ARGENTINA
(9) Republic of Argentina:
BOCON PRE4 Notes
5.695%, 9/1/02 B1 USD 1,000 1,178,500
Debentures
6.75%, 3/31/05 B1 USD 1,455 1,366,798
-----------
2,545,298
-----------
- --------------------------------------------------------------------------------------------
- -----------------
BRAZIL
(9) Federal Republic of Brazil
Eligible Interest Bonds
6.875%, 4/15/06 B1 USD 1,733 1,598,231
-----------
- --------------------------------------------------------------------------------------------
- -----------------
BULGARIA
(9) Republic of Bulgaria
Interest Arrears Bonds, Series PDI
6.563%, 7/28/11 B3 USD 1,775 1,282,438
-----------
- --------------------------------------------------------------------------------------------
- -----------------
MEXICO
United Mexican States:
Certificado de Tesoreria
Zero Coupon, 4/2/98 N/R MXP 765 823,482
(9) Discount Bonds, Series B
6.836%, 12/31/19 Ba2 USD 2,000 1,860,000
-----------
2,683,482
-----------
- --------------------------------------------------------------------------------------------
- -----------------
PANAMA
(8) Republic of Panama
Interest Reduction Bonds
3.50%, 7/17/14 Ba1 USD 2,000 1,535,000
-----------
- --------------------------------------------------------------------------------------------
- -----------------
POLAND
(9) Republic of Poland
6.938%, 10/27/24 Baa3 USD 1,800 1,761,750
-----------
- --------------------------------------------------------------------------------------------
- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
- -----------------
RUSSIA
Bank of Foreign Economic Affairs of the USSR
(Vnesheconombank)
(When Issued):
12.00%, 12/31/16 N/R USD 2,000 $ 1,490,000
13.00%, 1/15/21 N/R USD 2,000 1,280,000
-----------
2,770,000
-----------
- --------------------------------------------------------------------------------------------
- -----------------
SPAIN
Kingdom of Spain
Debentures
10.10%, 2/28/01 Aa2 ESP 47,000 369,263
-----------
- --------------------------------------------------------------------------------------------
- -----------------
SUPRANATIONAL
International Bank for Reconstruction &
Development
Japanese Yen Global Bonds
5.25%, 3/20/02 Aaa JPY 90,000 909,999
-----------
- --------------------------------------------------------------------------------------------
- -----------------
SWEDEN
Kingdom of Sweden
Debentures
11.00%, 1/21/99 Aa1 SEK 2,500 353,068
-----------
- --------------------------------------------------------------------------------------------
- -----------------
VENEZUELA
(9) Republic of Venezuela
Front Loaded Interest Reduction Bonds,
Series B
6.75%, 3/31/07 Ba2 USD 1,429 1,328,570
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TOTAL GOVERNMENT OBLIGATIONS
(Cost $16,868,318) 17,137,099
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TOTAL FOREIGN SECURITIES
(Cost $20,605,405) 20,874,186
-----------
- --------------------------------------------------------------------------------------------
- -----------------
TOTAL INVESTMENTS (105.8%)
(Cost $94,490,692) 94,662,618
-----------
- --------------------------------------------------------------------------------------------
- -----------------
<CAPTION>
Value
(Note A-1)
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- -----------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (-5.8%)
$(5,147,938)
-----------
- --------------------------------------------------------------------------------------------
- -----------------
NET ASSETS (100%)
Applicable to 8,454,140 issued and outstanding $.001 par value shares
(authorized 100,000,000 shares) $89,514,680
-----------
-----------
- --------------------------------------------------------------------------------------------
- -----------------
JPY--Japanese Yen.
MXP--Mexican Peso.
ESP--Spanish Peseta.
SEK--Swedish Krona.
USD--United States Dollar.
N/R--Not Rated.
PAC--Planned Amortization Class.
REMIC--Real Estate Mortgage Investment Conduit.
TBA--To Be Announced. Security is subject to delayed delivery.
(1) Non-income producing security.
(2) Defaulted security.
(3) 144A Security. Certain conditions for public sale may exist.
(4) Payment in kind bond. Market value includes accrued interest.
(5) Restricted as to private and public resale. Total cost of restricted securities at
June 30, 1997 aggregated $2,402,000. Total market value of restricted securities owned
at June 30, 1997 was $1,237,638 or 1.4% of net assets.
(6) All or a portion of this security was pledged as collateral for delayed delivery
securities.
(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) 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.
(9) Floating Rate--The interest rate changes on these instruments based upon a designated
base rate. The rates shown are those in effect at June 30, 1997.
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES June 30,
1997
(Unaudited)
<S> <C>
- ------------------------------------------------------------------------------------------
ASSETS:
Investments at Value
(Cost $94,490,692) (Note A-1).......................................... $94,662,618
Receivables:
Interest (Note A-6)................................................... 1,474,634
Investments Sold...................................................... 769,295
Other Assets............................................................ 33,671
- ------------------------------------------------------------------------------------------
Total Assets........................................................ 96,940,218
- ------------------------------------------------------------------------------------------
LIABILITIES:
Due to Custodian Bank................................................... 827,329
Payables:
Investments Purchased................................................. 6,321,216
Investment Advisory Fees (Note B)..................................... 109,517
Shareholders' Reports................................................. 65,101
Professional Fees..................................................... 42,414
Shareholder Servicing Fees............................................ 32,899
Custodian Fees........................................................ 12,842
Administrative Fees (Note C).......................................... 10,805
Unrealized Loss on Forward Foreign Currency Exchange Contracts (Note A
and E)............................................................... 694
Other Liabilities....................................................... 2,721
- ------------------------------------------------------------------------------------------
Total Liabilities................................................... 7,425,538
- ------------------------------------------------------------------------------------------
NET ASSETS.................................................................. $89,514,680
------------
------------
NET ASSETS CONSIST OF:
Capital Shares at $.001 Par Value....................................... $ 8,454
Capital Paid in Excess of Par Value..................................... 89,457,023
Undistributed Net Investment Income..................................... 125,415
Accumulated Net Realized Loss........................................... (251,475)
Unrealized Appreciation on Investments and Foreign Currency
Translations........................................................... 175,263
------------
NET ASSETS APPLICABLE TO 8,454,140 ISSUED AND OUTSTANDING SHARES (AUTHORIZED
100,000,000 SHARES)....................................................... $89,514,680
------------
------------
NET ASSET VALUE PER SHARE................................................... $ 10.59
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS Six Months
Ended
June 30,
1997
(Unaudited)
<S> <C>
- ------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest (Note A-6) (Net of foreign taxes withheld of $3,273)........... $4,116,319
Dividends (Note A-6).................................................... 114,250
- ------------------------------------------------------------------------------------------
Total Income.......................................................... 4,230,569
- ------------------------------------------------------------------------------------------
EXPENSES:
Investment Advisory Fees (Note B)....................................... 217,403
Administrative Fees (Note C)............................................ 69,080
Shareholders' Reports................................................... 44,937
Shareholder Servicing Fees.............................................. 41,852
Professional Fees....................................................... 37,234
Custodian Fees.......................................................... 31,707
Directors' Fees and Expenses............................................ 18,862
Other................................................................... 31,759
- ------------------------------------------------------------------------------------------
Total Expenses........................................................ 492,834
- ------------------------------------------------------------------------------------------
Expense offset (Note A-6)............................................... (13,430)
- ------------------------------------------------------------------------------------------
Net Expenses........................................................ 479,404
- ------------------------------------------------------------------------------------------
Net Investment Income............................................... 3,751,165
- ------------------------------------------------------------------------------------------
NET REALIZED GAIN:
Investments............................................................. 140,522
Foreign Currency........................................................ 990,096
- ------------------------------------------------------------------------------------------
Total Net Realized Gain............................................. 1,130,618
- ------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION:
Investments............................................................. 757,155
Foreign Currency Translations........................................... 87,244
- ------------------------------------------------------------------------------------------
Total Change in Unrealized Appreciation/Depreciation................ 844,399
- ------------------------------------------------------------------------------------------
Net Realized Gain and Change in Unrealized Appreciation/Depreciation........ 1,975,017
- ------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations........................ $5,726,182
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
<S> <C> <C>
Six Months Ended
June 30, 1997 Year Ended
(Unaudited) December 31, 1996
- -------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net Investment Income....................................................... $ 3,751,165 $ 7,713,862
Net Realized Gain on Investments and Foreign Currency....................... 1,130,618 1,182,696
Change in Unrealized Appreciation/Depreciation on Investments and Foreign
Currency................................................................... 844,399 989,307
- -------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ 5,726,182 9,885,865
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income....................................................... (3,867,770) (6,847,859)
- -------------------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets.............................................. 1,858,412 3,038,006
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period......................................................... 87,656,268 84,618,262
- -------------------------------------------------------------------------------------------------------------------------
End of Period (Including undistributed net investment income of $125,415 and
$242,020, respectively).................................................... $89,514,680 $87,656,268
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Six Months
Ended Year Ended December 31,
June 30, 1997 -----------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE: (Unaudited) 1996 1995Section 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE BEGINNING OF
PERIOD........................... $ 10.37 $ 10.01 $ 9.26 $ 10.45 $ 9.80 $ 9.62
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net Investment Income.......... 0.44 0.91 0.95 0.95 1.04 1.22
Net Realized and Unrealized
Gain (Loss) on Investments.... 0.24 0.26 0.61 (1.33) 0.66 0.01
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Activities.................. 0.68 1.17 1.56 (0.38) 1.70 1.23
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net Investment Income.......... (0.46) (0.81) (0.76) (0.62) (1.04) (1.05)
In Excess of Net Investment
Income........................ -- -- -- -- (0.01) --
Return of Capital.............. -- -- (0.05) (0.19) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions.......... (0.46) (0.81) (0.81) (0.81) (1.05) (1.05)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD..... $ 10.59 $ 10.37 $ 10.01 $ 9.26 $ 10.45 $ 9.80
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE MARKET VALUE, END OF
PERIOD........................... $ 9.69 $ 9.00 $ 8.88 $ 8.25 $ 9.50 $ 9.50
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN:
Net Asset Value (1)............ 7.18%# 13.27% 17.57% (3.80)% 18.29% 13.28%
Market Value................... 12.97%# 11.03% 18.16% (4.72)% 10.94% 3.50%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA:
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period
(Thousands)...................... $89,515 $87,656 $84,618 $78,252 $88,319 $82,450
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net
Assets Including Expense
Offsets.......................... 1.10%* 1.11% 1.12% 0.99% 1.06% 1.01%
Ratio of Expenses to Average Net
Assets........................... 1.13%* 1.11% -- -- -- --
Ratio of Net Investment Income to
Average Net Assets............... 8.63%* 8.99% 9.80% 9.66% 10.28% 12.34%
Portfolio Turnover Rate............ 50.4%# 65.1% 54.5% 83.1% 128.5% 107.7%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Section BEA Associates replaced CS First Boston Investment Management as the
Fund's investment adviser effective June 13, 1995.
* Annualized
# Not Annualized
(1) Total investment return based on per share net asset value reflects the
effects of changes in net asset value on the performance of the Fund during
each period, and assumes dividends and capital gains distributions, if any,
were reinvested. These percentages are not an indication of the performance
of a shareholder's investment in the Fund based on market value due to
differences between the market price of the stock and the net asset value of
the Fund.
Note: Current period permanent book-tax differences, if any, are not included
in the calculation of net investment income per share.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- ------------
BEA Strategic Global Income Fund, Inc. (the "Fund"), was incorporated on January
27, 1988 and is registered as a diversified, closed-end investment company under
the Investment Company Act of 1940. The Fund's investment objective is to seek
high current income through investments primarily in debt securities.
A. The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. Generally accepted
accounting principles may require management to make estimates and assumptions
that affect the amounts and disclosures in the financial statements. Actual
reported results could differ from those estimates.
1. SECURITY VALUATION: Market values for fixed income securities are valued at
the latest quoted bid price in the over-the-counter market. However, fixed
income securities may be valued on the basis of prices provided by a pricing
service which are based primarily on institutional size trading in similar
groups of securities. Other securities listed on an exchange are valued at
the latest quoted sales prices on the day of valuation or if there was no
sale on such day, the last bid price quoted on such day. Quotations of
foreign security prices denominated in a foreign currency are converted to
U.S. dollars at the current exchange rate on valuation date. Securities
purchased with remaining maturities of 60 days or less are valued at
amortized cost, if it approximates market value. Securities for which market
quotations are not readily available (including investments which are subject
to limitations as to their sale) are valued at fair value as determined in
good faith by the Board of Directors. Such securities have a value of
$229,438 (or 0.26% of net assets) at June 30, 1997. In determining fair
value, consideration is given to cost, operating and other financial data.
The Fund may invest up to 10% of its total assets in securities which are not
readily marketable, including those which are restricted as to disposition
under securities law ("restricted securities"). These securities are valued
pursuant to the valuation procedures noted above.
2. FEDERAL INCOME TAXES: It is the Fund's intention to continue to qualify as a
regulated investment company and distribute all of its taxable income to
shareholders. Accordingly, no provision for Federal income taxes is required
in the financial statements.
3. REPURCHASE AGREEMENTS: In connection with transactions in repurchase
agreements, a bank as custodian for the Fund takes possession of the
underlying securities, the value of which exceeds the principal amount of the
repurchase transaction, including accrued interest. To the extent that any
repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to determine the adequacy of the
collateral. In the event of default on the obligation to repurchase, the Fund
has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation. In the event of default or bankruptcy by the
other party to the agreement, realization and/or retention of the collateral
and proceeds may be subject to legal proceedings.
4. FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the bid price of such currencies against U.S. dollars last quoted
by a major bank as follows:
- investments, other assets and liabilities at the prevailing rates of
exchange on the valuation date;
- investment transactions and investment income at the prevailing rates of
exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the period, the Fund does not isolate
that portion of the results of operations arising as a result of changes in
the foreign exchange rates from the fluctuations arising from changes in the
market prices of the securities held at period end. Similarly the fund does
not isolate the effect of changes in foreign exchange rates from the
fluctuations arising from changes in the market prices of securities sold
during the period. Accordingly, realized and unrealized foreign currency
gains (losses) are included in the reported net realized and unrealized gains
(losses) on investment transactions and balances.
Net realized gains/losses on foreign currency transactions represent net
foreign exchange gains/losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains or losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of investment income and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar equivalent
amounts actually received or paid. Net currency gains (losses) from valuing
foreign currency denominated assets and liabilities at period end exchange
rates are included in unrealized depreciation of investments and foreign
currency.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. dollar denominated
transactions as a result of, among other factors, the level of governmental
supervision and regulation of foreign securities markets and the possibility
of political or economic instability.
5. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: The Fund may enter into forward
foreign currency exchange contracts to protect securities and related
receivables and
15
<PAGE>
payables against changes in future foreign exchange rates. A forward currency
contract is an agreement between two parties to buy or sell currency at a set
price on a future date. The market value of the contract will fluctuate with
changes in currency exchange rates. The contract is marked-to-market daily
using the forward rate and the change in market value is recorded by the Fund
as unrealized gain or loss. The Fund recognizes realized gain or loss when
the contract is closed equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
Risks may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in the value of a foreign currency relative to the
U.S. dollar.
6. SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
accounted for on the date the securities are purchased or sold. Costs used in
determining realized gains and losses on the sale of investment securities
are those of specific securities sold. Interest income is recognized on the
accrual basis. Discounts on securities purchased are amortized according to
the effective yield method over their respective lives. Discount or premium
on mortgage backed securities is recognized upon receipt of principal
payments on the underlying mortgage pools. Dividend income is recorded on the
ex-dividend date.
Custodian fees for the Fund have been increased to include expense offsets
for custodian balance credits.
7. DELAYED DELIVERY COMMITMENTS: The Fund may purchase or sell securities on a
when-issued or forward commitment basis. Payment and delivery may take place
a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered and
paid for are fixed at the time the transaction is negotiated.
8. DIVIDENDS AND DISTRIBUTIONS: The Fund pays dividends of net investment income
monthly and makes distributions at least annually of any net capital gains in
excess of applicable capital losses, including capital loss carryforward.
Dividends and distributions are recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with U.S. Federal Income Tax regulations which may differ from
generally accepted accounting principles.
9. STRUCTURED INVESTMENTS: The Fund may invest in structured investments whose
values are linked either directly or inversely to changes in foreign
currencies, interest rates, commodities, indices, or other underlying
instruments. The Fund uses these securities to increase or decrease its
exposure to different underlying instruments and to gain exposure to markets
that might be difficult to invest in through conventional securities.
Structured investments may be more volatile than their underlying
instruments, but any loss is limited to the amount of the original
investment.
B. BEA Associates (the "Adviser") provides investment advisory services to the
Fund under the terms of an Advisory Agreement. Under the Advisory Agreement, the
Adviser is paid a fee, computed weekly and payable quarterly at an annual rate
of .50% of average weekly net assets.
C. The Chase Manhattan Bank ("Chase"), through its affiliate Chase Global Funds
Services Company ("CGFSC" or the "Administrator"), provides administrative
services to the Fund under the terms of an Administration Agreement. Under the
Agreement, the Administrator is paid a fee, computed weekly and payable monthly,
at an annual rate of .15% of the Fund's first $100 million of average weekly net
assets, .10% of the Fund's next $300 million of average weekly net assets and
.05% of the Fund's average weekly net assets in excess of $400 million.
Chase provides custodial services to the Fund. Under the Custody Agreement,
Chase is paid a fee, computed weekly and payable monthly, at an annual rate of
.03% of the Fund's first $50 million of average weekly net assets, .02% of the
Fund's next $50 million of average weekly net assets and .01% of the Fund's
average weekly net assets in excess of $100 million.
Chase provides transfer agent services to the Fund. Under the Transfer Agent
Agreement, Chase is paid a fee based on the number of accounts in the Fund per
year. In addition, the Fund is charged certain out-of-pocket expenses by Chase.
D. During the six months ended June 30, 1997, the Fund made purchases of
$28,977,356 and sales of $33,640,232 of investment securities other than U.S.
Government securities and short term investments. During the six months ended
June 30, 1997, purchases and sales of U.S. Government securities were
$12,831,794 and $20,852,631, respectively. At June 30, 1997, the cost of
investments for Federal income tax purposes was $94,490,692. Accordingly, net
unrealized appreciation for Federal income tax purposes aggregated $171,926, of
which $5,479,449 related to appreciated securities and $5,307,523 related to
depreciated securities.
At December 31, 1996, the Fund had a capital loss carryforward of $1,046,571
available to offset future capital gains of which $90,877, $743,988 and $211,706
will expire on December 31, 2000, 2002 and 2003, respectively.
16
<PAGE>
E. At June 30, 1997 under the terms of the forward foreign currency exchange
contracts, the Fund is obligated to deliver currency in exchange for U.S.
dollars as indicated in the following table:
<TABLE>
<CAPTION>
NET UNREALIZED
CURRENCY TO IN EXCHANGE SETTLEMENT APPRECIATION/
DELIVER FOR DATE VALUE (DEPRECIATION)
- ----------------- ------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
ESP 52,500,000 $ 358,558 09/16/97 $ 357,015 $ 1,543
JPY 105,200,000 928,484 09/16/97 929,036 (552)
SEK 2,800,000 361,663 09/16/97 363,348 (1,685)
------------ ------------- ----------- --------------
160,500,000 $1,648,705 $1,649,399 $ (694)
------------ ------------- ----------- --------------
------------ ------------- ----------- --------------
</TABLE>
F. At June 30, 1997, 81.35% of the Fund's net assets comprised high-yield fixed
income securities. The financial condition of the issuers of the securities and
general economic conditions may affect the issuers' ability to make payments of
income and principal, as well as the market value of the securities. Such
investments may also be less liquid and more volatile than investments in higher
rated fixed income securities.
At June 30, 1997, 2.74% of the Fund's net assets comprised foreign currency
denominated fixed income securities. Changes in currency exchange rates will
affect the value and net investment income from such securities.
G. The Fund's Board of Directors has approved a share repurchase program
authorizing the Fund from time to time to make open-market purchases on the New
York Stock Exchange of up to 10 percent of the Fund's shares outstanding as of
December 11, 1990. There were no repurchases of shares during the six months
ended June 30, 1997.
17
<PAGE>
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS
SIX MONTHS ENDED
----------------------------------------------------------------------------
MARCH 31, 1997 JUNE 30, 1997
----------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income............. $ 2,214 $ 0.26 $ 2,016 $ 0.24
Net Investment Income......... 1,977 0.23 1,774 0.21
Net Realized Gain (Loss) and
Change in Unrealized
Appreciation/Depreciation on
Investments and Foreign
Currency..................... (491) (0.05) 2,466 0.29
Net Increase in Net Assets
Resulting from
Operations................... 1,486 0.18 4,240 0.50
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
MARCH 31, 1996 JUNE 30, 1996 1996 1996
----------------- ------------------ ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income............. $ 2,085 $ 0.24 $ 2,212 $ 0.26 $ 353 $ 0.03 $ 4,105 $ 0.48
Net Investment Income......... 1,872 0.22 1,966 0.23 114 0.01 3,759 0.45
Net Realized Gain (Loss) and
Change in Unrealized
Appreciation/Depreciation on
Investments and Foreign
Currency..................... 774 0.09 (363) (0.04) 1,299 0.37 508 (0.16)
Net Increase in Net Assets
Resulting from
Operations................... 2,646 0.31 1,603 0.19 1,413 0.38 4,267 0.29
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
MARCH 31, 1995 JUNE 30, 1995 1995 1995
----------------- ------------------ ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income............. $ 2,178 $ 0.26 $ 2,430 $ 0.29 $ 2,225 $ 0.26 $ 2,119 $ 0.25
Net Investment Income......... 1,946 0.23 2,224 0.26 1,975 0.24 1,887 0.22
Net Realized Gain (Loss) and
Change in Unrealized
Appreciation/Depreciation on
Investments and Foreign
Currency..................... 2,020 0.24 1,437 0.17 877 0.09 848 0.11
Net Increase in Net Assets
Resulting from
Operations................... 3,966 0.47 3,661 0.43 2,852 0.33 2,735 0.33
</TABLE>
SUPPLEMENTAL PROXY INFORMATION (UNAUDITED)
The Annual Meeting of the Stockholders of the BEA Strategic Global Income Fund,
Inc. was held on Monday, May 12, 1997 at the offices of Willkie, Farr &
Gallagher, One Citicorp Center, 153 East 53rd Street, New York City. The
following is a summary of each proposal presented and the total number of shares
voted:
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
PROPOSAL FAVOR OF AGAINST ABSTAINED
- ------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1. To elect the following four Directors:
Messrs. Enrique R. Arzac, Lawrence J. Fox,
James S. Pasman, Jr. and William W. Priest,
Jr. 5,812,901 60,816 --
2. To ratify the selection of Price Waterhouse
LLP as independent public accountants of Fund
until the next annual meeting. 5,761,099 29,404 83,234
3. To approve an amendment to the Fund's
Articles of Incorporation to change the name
of the Fund. 5,697,451 72,701 103,565
</TABLE>
18
<PAGE>
DESCRIPTION OF DIVIDEND REINVESTMENT
AND CASH PURCHASE PLAN
- ---------
Pursuant to the BEA Strategic Global 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 U.S. withholding tax, automatically
reinvested in additional shares of the Fund by The Chase Manhattan Bank, 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 do not wish to have
dividends and distributions automatically reinvested should notify the Plan
Agent for the Fund, at Dividend Reinvestment Department -- Retail, 4 New York
Plaza, New York, NY 10004. 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 $1,000, 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 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 The Chase Manhattan Bank, Dividend
Reinvestment Department -- Retail, 4 New York Plaza, New York, NY 10004.
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 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
19
<PAGE>
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 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 The Chase Manhattan Bank, Customer Service Department, 4 New York
Plaza, New York, NY 10004. Be sure to include a reference to BEA Strategic
Global Income Fund, Inc. or you may call (800) 428-8890.
20
