<PAGE>
Credit Suisse Asset Management Strategic Global Income Fund, Inc.
466 Lexington Avenue
New York, NY 10017
---------------------------------------------
OFFICERS AND DIRECTORS
<TABLE>
<S> <C>
William W. Priest, Jr. Gregg M. Diliberto
CHAIRMAN OF THE BOARD INVESTMENT OFFICER
Prof. Enrique R. Arzac Suzanne E. Moran
DIRECTOR INVESTMENT OFFICER
Lawrence J. Fox Hal Liebes
DIRECTOR SENIOR VICE PRESIDENT
James S. Pasman, Jr. Michael A. Pignataro
DIRECTOR CHIEF FINANCIAL OFFICER, VICE
Richard J. Lindquist PRESIDENT AND SECRETARY
PRESIDENT AND CHIEF INVESTMENT Maxine C. Evertz
OFFICER ASSISTANT SECRETARY
Robert M. Rizza
VICE PRESIDENT AND TREASURER
John L. Hogan
ASSISTANT TREASURER
</TABLE>
--------------------------------------------------------
INVESTMENT ADVISER
Credit Suisse Asset Management, LLC
466 Lexington Avenue
New York, New York 10017
Phone 1-800-293-1232
--------------------------------------------------------
ADMINISTRATOR AND 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
2400 Eleven Penn Center
Philadelphia, Pennsylvania 19103
--------------------------------------------------------
---------------------------------------------------------------------------
Credit Suisse Asset Management
Strategic Global Income Fund, Inc.
---------------------------------------------------------------------------
SEMI-ANNUAL REPORT
June 30, 2000
<PAGE>
CREDIT SUISSE ASSET MANAGEMENT STRATEGIC GLOBAL INCOME FUND, INC.
SECOND QUARTER REPORT - 6/30/00
----------
Dear Shareholders: July 24, 2000
We are writing to report on the activities of Credit Suisse Asset Management
Strategic Global Income Fund, Inc. ("the Fund") for the quarter ended June 30,
2000 and to discuss our investment strategy.
On June 30, 2000, the Fund's net asset value ("NAV") was $7.92 compared to
an NAV of $8.26 at March 31, 2000. The Fund's total return (based on NAV and
assuming reinvestment of dividends of $0.29 per share) for the period was -0.2%.
For the first six months of 2000, the Fund returned 1.4%.
At June 30, 2000, $56.8 million was invested in high yield debt securities;
$22.1 million in emerging-market debt securities; $11.1 million in equity
securities; and the balance of $3.5 million in cash equivalents. Of the debt
securities, the largest concentration (66.2%) was invested in B-rated issues.
THE MARKET: RATE WORRIES
The overall investment climate remained poor during much of the second
quarter against intensified concerns of accelerated monetary tightening, ongoing
turbulence in equity markets and deteriorating liquidity. Fears surrounding the
Federal Reserve's aggressiveness in slowing the U.S. economy maintained pressure
across most fixed income markets.
High yield and emerging markets sharply underperformed during April and May,
when selling was especially pronounced among lower-rated debt. In June, however,
signs of a moderating U.S. economy prompted a rebound in fixed income
instruments. Increasingly, global worries over a series of further U.S.
interest-rate hikes (such as the half-point increase in mid-May), eased. June,
for example, marked the first month of positive cash inflows into the high yield
sector in 2000.
Additional factors impacted high yield during the quarter. In April and May,
heightened worries of event risk among industries plagued by languishing equity
valuations restrained high yield bonds, along with little new issuance and
broker/dealers' low inventories. These conditions began dissipating when
interest-rate fears started to diminish and equity markets recovered some lost
ground.
Among emerging markets, volatility remained moderate, reflecting country
fundamentals, reduced market leverage and ongoing concern surrounding the Latin
American political calendar--particularly Mexico's presidential election. Russia
continued to outperform other fixed income markets, benefiting from rising oil
prices, a recovery in foreign exchange reserves and signs of economic recovery.
For the quarter as a whole, high yield bonds, as measured by the Salomon
Smith Barney High Yield Market Index (SSBHYMI), rose 1.2%. Emerging debt
markets, as represented by J.P. Morgan's Emerging Markets Bond Index Plus,
increased 0.4%.
PERFORMANCE: HURT BY SECTOR ALLOCATION
PERFORMANCE: The Fund's return lagged during the second quarter primarily
due to results in the high yield portion. Although the equity-oriented component
of our high yield position helped returns in the first quarter, it resulted in
much of the underperformance of the overall portfolio in the second. This was
attributable to the NASDAQ sell-off among mostly telecom and cable-related
stocks (including warrants and restricted shares).
Small holdings in some of the better-performing sectors such as energy,
lodging and interest-rate-sensitive industries (including utilities, banks and
homebuilders) also detracted somewhat from performance. Our continued emphasis
on gaming and our relatively low weighting in metals/mining and non-banking
financial issues, however, were positive contributors.
The Fund's emerging debt portion fared better, given our earlier defensive
posturing emphasizing short duration and highly liquid securities. Our decision
to re-establish a position in Russian sovereign debt, both to take advantage of
positive developments within the country and to capitalize on an attractive debt
exchange offer, further benefited our returns in the emerging sector.
OUTLOOK: CAUTIOUS NEAR TERM, SOMEWHAT OPTIMISTIC FURTHER OUT
Looking ahead, we remain cautious on low grade debt over the short term,
though our outlook is more positive over the intermediate and long term.
HIGH YIELD. While negative sentiment began to reverse in early June,
reducing some of the quarter's broader deterioration, we are not yet convinced
of the rebound's longevity. Sentiment regarding Fed monetary policy is still
driving fund flows into and out of the high yield market, and continues to
heavily affect related factors, like stock-market trading activity and dealers'
bond inventories. We believe that summer may prove to be a testing period for
financial markets, as upcoming economic releases better reflect the
effectiveness of earlier efforts by the Fed to slow the economy.
2
<PAGE>
Over a longer time frame, we are more optimistic. In our view, high yield
valuations remain attractive on an historical and relative basis, and are likely
to attract investors increasingly disenchanted with the lower-return/higher-risk
prospects for equities in the months ahead.
The overall approach with which we have managed the Fund holds firm. Our
focus remains on marginally reducing positions that entail relatively high
downside risk due to company--or sector-specific factors. We are maintaining our
overweights in telecommunications, cable/media and gaming, whose industry and
company fundamentals remain strong. Furthermore, we are also avoiding
interest-rate-sensitive sectors such as homebuilders and textiles, and other
industries with rising cost structures and low pricing power.
INTERNATIONAL. In that emerging debt markets remain vulnerable to a number
of indirect risks, such as a vigilant Fed, volatile U.S. equities and Latin
American politics, our near-term outlook is still cautious. However, the degree
of our concern has declined in light of recent events, which resulted in a
better-balanced U.S. economy and more normalized global financial markets.
We are also gaining increasing confidence in the fundamental outlook for
major emerging economies, as policy leaders in Mexico, Argentina, Brazil and
even Russia demonstrate increased commitment to fiscal conservatism, stable
money and sustainable growth. Moreover, volatility within emerging debt markets
remains much lower than the historical average. The negative factors that
plagued the market in the 1990s, such as leveraged hedge funds and contagion,
have virtually disappeared.
From a strategic perspective, we anticipate taking a larger position in
emerging debt over the medium term, once we believe valuations have become more
attractive.
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, requests for the latest financial information 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 **
* Richard J. Lindquist, who is a Managing Director of Credit Suisse Asset
Management , LLC ("CSAM"), 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 also is President and Chief Investment Officer of Credit
Suisse Asset Management Strategic Global Income Fund, Inc.
** William W. Priest, Jr., who is a Managing Director and Chairman-Americas
of Credit Suisse Asset Management, LLC ("CSAM"), joined CSAM in 1972.
Mr. Priest is Director and Chairman of other investment companies advised by
CSAM.
3
<PAGE>
CSAM STRATEGIC GLOBAL INCOME FUND
JUNE 30, 2000
TOP TEN HOLDINGS (UNAUDITED)
<TABLE>
<CAPTION>
(as a % of net assets as of 6/30/00)
<C> <S> <C>
-----------------------------------------------------------------------------------
1. Federal Republic of Brazil, Capitalization Bonds 8.00%,
4/15/14................................................... 2.1%
2. Republic of Argentina, Debentures 6.188%, 3/31/05........... 1.9%
3. Argentina Bocon PRO1 Notes 5.82%, 4/1/07.................... 1.6%
4. Dr. Pepper Bottling Holdings, Inc. Class A.................. 1.2%
5. Vnesheconombank Bank, Floating Rate, 12/15/15............... 1.1%
6. Republic of Brazil Government Gtd. Notes 7.00%, 4/15/12..... 1.1%
7. Vnesheconombank Bank, Floating Rate, 12/15/20............... 1.0%
8. Republic of Bulgaria Floating Rate Notes 2.50%, 7/28/12..... 0.9%
9. Russian Principal Loan, 3.249%, 12/15/20.................... 0.9%
10. United States Treasury Notes, 7.25%, 5/15/04................ 0.8%
</TABLE>
CREDIT QUALITY BREAKDOWN (UNAUDITED)
<TABLE>
<CAPTION>
(as a % of total investments as of 6/30/00)
<S> <C>
------------------------------------------------------------------------------
AAA/Aaa..................................................... 1.1%
A/A......................................................... 0.2
BBB/Baa..................................................... 2.4
BB/Ba....................................................... 6.2
B/B......................................................... 57.6
CCC/Caa..................................................... 6.4
N/R......................................................... 14.3
----------------
Subtotal.................................................. 88.2
Equities and Other.......................................... 11.8
----------------
Total..................................................... 100.0%
================
</TABLE>
4
<PAGE>
PORTFOLIO OF INVESTMENTS (UNAUDITED)
---------
JUNE 30, 2000
<TABLE>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
DOMESTIC SECURITIES (70.7%)
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (61.5%)
--------------------------------------------------------------------------------------------
-----------------
AEROSPACE/DEFENSE (0.2%)
Sequa Corp.
Sr. Notes
9.00%, 8/1/09 Ba2 $ 250 $ 240,000
------------
--------------------------------------------------------------------------------------------
-----------------
AUTOMOTIVE (1.3%)
Cambridge Industries, Inc.
Sr. Sub. Notes
10.25%, 7/15/07 B3 250 62,500
Collins & Aikman
Products Corp.
Sr. Sub. Notes
11.50%, 4/15/06 B3 250 246,250
Delco Remy
International, Inc.
Gtd. Sr. Sub. Notes
10.625%, 8/1/06 B2 250 248,125
Hayes Lemmerz
International, Inc.
Series B,
Gtd. Sr. Sub. Notes
8.25%, 12/15/08 B2 250 210,000
Motor Coach Industries
International, Inc.
Gtd.
11.25%, 5/1/09 B2 250 212,812
Oxford Automotive, Inc.
Gtd. Sr. Sub. Notes
10.125%, 6/15/07 Caa1 250 217,500
------------
GROUP TOTAL 1,197,187
------------
--------------------------------------------------------------------------------------------
-----------------
BROADCASTING (5.2%)
AMFM, Inc.
Gtd.
9.00%, 10/1/08 B1 250 257,500
(1) Acme Television LLC/
ACME Financial Corp.
Gtd. Sr. Discount Notes
0.00%, 9/30/04 B3 500 477,500
(1)(2) Australis Holdings Pty. Ltd.
Yankee Sr. Secured
Discount Notes
0.00%, 11/1/02 N/R 650 65
(2) Australis Media Ltd.
Yankee Units
15.75%, 5/15/03 C 729 3,645
Capstar Broadcasting Partners,
Inc.:
Sr. Sub. Notes
9.25%, 7/1/07 B2 200 199,500
(1) Sr. Discount Notes
0.00%, 2/1/09 B2 500 458,750
Citadel Broadcasting Co.
Gtd.
9.25%, 11/15/08 B3 250 242,500
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
EchoStar
Communications Corp.
Gtd. Sr. Discount Notes
9.375%, 2/1/09 B2 $ 250 $ 240,000
Granite Broadcasting, Inc.
Sr. Sub. Notes
8.875%, 5/15/08 B3 250 211,250
Pegasus Media &
Communications, Inc.
Series B, Notes
12.50%, 7/1/05 B2 250 266,250
Salem Communications
Series B, Gtd.
9.50%, 10/1/07 B3 250 234,375
Sinclair Broadcast
Group, Inc.:
Sr. Sub. Notes
10.00%, 9/30/05 B2 300 282,000
8.75%, 12/15/07 B2 250 218,750
Susquehanna Media Co.
Sr. Sub. Notes
8.50%, 5/15/09 B1 150 142,500
Time Warner
Telecom LLC
Sr. Notes
9.75%, 7/15/08 B2 250 242,500
(1) United International
Holdings, Inc.
Series B,
Sr. Discount Notes
0.00%, 2/15/08 B3 500 335,000
Univision Network
Holding L.P.
Sub. Notes
7.00%, 12/17/02 N/R 573 759,324
Young Broadcasting, Inc.
Series B,
Gtd. Sr. Sub. Notes
8.75%, 6/15/07 B2 450 411,750
------------
GROUP TOTAL 4,983,159
------------
--------------------------------------------------------------------------------------------
-----------------
BUSINESS SERVICES (0.4%)
General Binding Corp.
Gtd. Sr. Sub. Notes
9.375%, 6/1/08 B2 250 162,500
Iron Mountain, Inc.
Sr. Notes
8.75%, 9/30/09 B3 250 230,000
------------
GROUP TOTAL 392,500
------------
--------------------------------------------------------------------------------------------
-----------------
CABLE (6.8%)
Alliance Atlantis
Communications Corp.
Sr. Sub. Notes
13.00%, 12/15/09 B2 500 512,500
Adelphia Communications
Sr. Notes
8.375%, 2/1/08 B1 200 176,750
CSC Holdings, Inc.
Sr. Sub. Debentures
9.875%, 2/15/13 B1 250 256,563
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Century Communications
Corp.
Sr. Notes
8.75%, 10/1/07 Ba3 $ 250 $ 225,000
Charter Communications
Holdings:
Sr. Notes
8.625%, 4/1/09 B2 250 219,687
(3) 10.25%, 1/15/10 B2 300 290,250
(1) Discount Notes
0.00%, 4/1/11 B3 300 170,250
Classic Cable, Inc.
Gtd.
Sr. Sub. Notes
9.375%, 8/1/09 B3 250 218,125
Coaxial Communications, Inc.
Gtd. Sr. Notes
10.00%, 8/15/06 B3 250 236,875
Comcast Corp.
Sr. Sub. Notes
9.125%, 10/15/06 B2 250 261,720
(1) Comcast UK Cable
Partners, Ltd.
Yankee Sr. Debentures
0.00%, 11/15/07 B2 500 473,750
(1) DIVA Systems Corp.
Series B,
Sr. Discount Notes
0.00%, 3/1/08 N/R 810 429,300
(1) Diamond Cable
Communications plc
Yankee Discount Notes
0.00%, 12/15/05 Caa1 300 285,000
International
CableTelevision
Sr. Notes
0.00%, 2/1/06 B3 500 460,000
James Cable Partners L.P.
Series B, Sr. Notes
10.75%, 8/15/04 N/R 250 240,000
Lenfest Communications, Inc.
Sr. Sub. Notes
10.50%, 6/15/06 B2 350 386,750
Mediacom LLC/Capital Corp.
Sr. Notes
7.875%, 2/15/11 B2 250 218,750
NTL Communications Corp.
Series B, Sr. Notes
(1) 0.00%, 10/1/08 B3 250 163,750
NTL, Inc.
Series B, Sr. Notes
10.00%, 2/15/07 B3 250 236,250
Northland Cable
Television
Gtd.
10.25%, 11/15/07 B3 250 207,500
Olympus Communications
L.P./ Capital Corp.
Series B, Sr. Notes
10.625%, 11/15/06 B1 250 247,500
Rogers Cablesystems, Ltd.
Yankee Gtd.
10.00%, 12/1/07 Ba3 250 255,625
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
(1) Telewest Communications plc
Yankee Sr. Sub.
Discount Debentures
0.00%, 10/1/07 B1 $ 250 $ 238,125
------------
GROUP TOTAL 6,410,020
------------
--------------------------------------------------------------------------------------------
-----------------
CHEMICALS (1.3%)
(3) Huntsman, Inc.
Sr. Sub. Notes
9.50%, 7/1/07 B2 250 227,500
Huntsman Polymers Corp.
Sr. Notes
11.75%, 12/1/04 B1 250 253,750
Lyondell Chemical Co.
Series B, Secured Notes
9.875%, 5/1/07 Ba3 250 246,875
NL Industries, Inc.
Sr. Secured Notes
11.75%, 10/15/03 B1 150 153,000
Philipp Brothers
Chemicals, Inc.
Gtd.
9.875%, 6/1/08 B3 150 106,500
Texas Petrochemical Corp.
Series B,
Sr. Sub. Notes
11.125%, 7/1/06 N/R 250 212,500
------------
GROUP TOTAL 1,200,125
------------
--------------------------------------------------------------------------------------------
-----------------
CONSTRUCTION & BUILDING MATERIALS (0.8%)
American Architectural
Products Corp.
Gtd. Sr. Notes
11.75%, 12/1/07 Caa1 250 42,500
Brand Scaffold Services
Sr. Notes
10.25%, 2/15/08 B3 150 131,625
Collins & Aikman
Floor Coverings
Series B,
Sr. Sub. Notes
10.00%, 1/15/07 B3 250 243,750
International Utility
Structures, Inc.
Yankee Sr. Sub. Notes
10.75%, 2/1/08 Caa1 150 123,000
Presley Companies
Sr. Notes
12.50%, 7/1/01 Caa3 250 229,375
------------
GROUP TOTAL 770,250
------------
--------------------------------------------------------------------------------------------
-----------------
CONSUMER PRODUCTS & SERVICES (1.7%)
Coinstar, Inc.
Sr. Discount Notes
13.00%, 10/1/06 Caa1 350 360,500
Drypers Corp.
Series B, Sr. Notes
10.25%, 6/15/07 Caa1 150 96,750
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Holmes Products Corp.
Gtd. Sr. Sub. Notes
9.875%, 11/15/07 B3 $ 200 $ 140,000
Jordan Industries, Inc.
Series B, Sr. Notes
10.375%, 8/1/07 B3 225 205,875
(1) Knology Holdings, Inc.
Sr. Discount Notes
0.00%, 10/15/07 N/R 250 135,000
Playtex Products, Inc.
Series B, Gtd. Sr. Notes
8.875%, 7/15/04 B1 200 193,000
(3) Scotts Co.
Sr. Sub. Notes
8.625%, 1/15/09 B2 250 240,000
United Rentals, Inc.
Sr. Sub. Notes
9.25%, 1/15/09 B1 250 225,000
------------
GROUP TOTAL 1,596,125
------------
--------------------------------------------------------------------------------------------
-----------------
ELECTRONICS (1.3%)
(4) Aavid Thermal
Technologies, Inc.
Units
12.75%, 2/1/07 B2 150 141,000
Details, Inc.
Series B, Sr. Sub. Notes
10.00%, 11/15/05 B3 250 235,000
Metromedia Fiber
Network, Inc.
Series B, Sr. Notes
10.00%, 11/15/08 B2 250 246,250
Numatics, Inc.
Series B, Gtd.
9.625%, 4/1/08 B3 200 160,000
Unisys Corp.
Sr. Notes
11.75%, 10/15/04 B1 100 106,000
Viasystems, Inc.
Sr. Sub. Notes
9.75%, 6/1/07 B3 250 216,250
Zilog, Inc.
Series B, Gtd.
Sr. Notes
9.50%, 3/1/05 B2 150 126,000
------------
GROUP TOTAL 1,230,500
------------
--------------------------------------------------------------------------------------------
-----------------
ENERGY (3.8%)
AES Corp.
Sr. Notes
9.50%, 6/1/09 Ba1 250 245,000
Bellwether Exploration Co.
Gtd. Sr. Sub. Notes
10.875%, 4/1/07 B3 250 224,063
(3) CMS Energy/ Atlantic
Methanol
Secured Notes
10.875%, 12/15/00 B1 250 246,875
Canadian Forest Oil, Ltd.
Sr. Sub. Notes
8.75%, 9/15/07 B2 250 235,000
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Cliffs Drilling Co.
Series D, Gtd. Sr. Notes
10.25%, 5/15/03 B1 $ 250 $ 250,625
Continental Resources, Inc.
Gtd. Sr. Notes
10.25%, 8/1/08 B3 150 133,875
Contour Energy Co.
Gtd.
14.00%, 4/15/03 B3 258 264,450
Energy Corp. of America
Series A, Sr. Sub. Notes
9.50%, 5/15/07 B2 250 168,750
Frontier Oil Corp.:
Series A, Sr. Notes
9.125%, 2/15/06 B2 200 177,000
11.75%, 11/15/09 B2 250 250,000
H.S. Resources, Inc.
Gtd. Sr. Sub. Notes
9.25%, 11/15/06 B2 250 245,000
Key Energy Services
Sr. Sub. Notes
14.00%, 1/15/09 B3 250 281,250
Nuevo Energy Co.
Series B, Sr. Sub. Notes
9.50%, 6/1/08 B1 150 148,125
Ocean Energy, Inc.
Series B, Gtd.
8.375%, 7/1/08 Ba3 150 145,500
Parker Drilling Co.
Series D, Gtd.
9.75%, 11/15/06 B1 250 241,875
Safelite Glass Corp.
Series B, Sr. Sub. Notes
9.875%, 12/15/06 Ca 500 4,375
Southwest Royalties, Inc.
Series B, Gtd. Sr. Notes
10.50%, 10/15/04 B3 250 160,000
Wiser Oil Co.
Gtd. Sr. Sub. Notes
9.50%, 5/15/07 B2 250 197,500
------------
GROUP TOTAL 3,619,263
------------
--------------------------------------------------------------------------------------------
-----------------
ENTERTAINMENT (1.9%)
Ackerley Group, Inc.
Series B, Sr. Sub. Notes
9.00%, 1/15/09 B2 250 229,375
American Skiing Co.
Series B, Sr. Sub. Notes
12.00%, 7/15/06 B3 200 168,000
Bally Total Fitness
Holdings, Corp.
Series D, Sr. Sub. Notes
9.875%, 10/15/07 B3 150 137,250
Booth Creek Ski
Holdings, Inc.
Series B, Sr. Notes
12.50%, 3/15/07 Caa1 250 180,000
Cinemark U.S.A., Inc.
Series D, Sr. Sub. Notes
9.625%, 8/1/08 B3 200 104,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
PTI Holdings, Inc.
Sub. Notes
7.00%, 12/17/02 N/R $ 507 $ 671,662
(2)(3) Premier Cruises, Ltd.
Sr. Notes
11.00%, 3/15/08 B3 250 7,500
Premier Parks, Inc.
Sr. Notes
9.75%, 6/15/07 B3 150 144,938
Production Resource
Group, LLC/PRG
Finance Group
Gtd. Sr. Sub. Notes
11.50%, 1/15/08 Caa2 250 51,250
Regal Cinemas, Inc.:
Sr. Sub. Notes
9.50%, 6/1/08 Caa1 50 12,000
8.875%, 12/15/10 Caa1 250 60,000
------------
GROUP TOTAL 1,765,975
------------
--------------------------------------------------------------------------------------------
-----------------
FINANCIAL SERVICES (0.8%)
(3) Madison River
Capital/Finance
Sr. Notes
13.25%, 3/10/10 Caa1 250 225,000
Sovereign Bancorp
Sr. Notes
10.50%, 11/15/06 Ba3 250 246,875
(2) Westfed Holdings
Sr. Debentures
15.50%, 9/15/99 N/R 250 75,000
(3)(4) Windsor Woodmont
Black/Hawk
Units
13.00%, 3/15/05 N/R 200 200,500
------------
GROUP TOTAL 747,375
------------
--------------------------------------------------------------------------------------------
-----------------
FOOD & BEVERAGES (1.4%)
Archibald Candy Corp.
Gtd. Sr. Secured Notes
10.25%, 7/1/04 B2 250 181,250
Aurora Foods, Inc.
Series B, Sr. Sub. Notes
9.875%, 2/15/07 Caa1 250 145,000
Carrols Corp.
Gtd.
9.50%, 12/1/08 B2 150 125,250
Fleming Companies, Inc.
Sr. Sub. Notes
10.50%, 12/1/04 B3 200 180,500
(3) Premier International
Foods plc
Sr. Notes
12.00%, 9/1/09 B3 400 358,000
Stater Brothers Holdings, Inc.
Sr. Notes
10.75%, 8/15/06 B2 250 220,000
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Vlasic Foods International,
Inc.
Series B, Sr. Sub. Notes
10.25%, 7/1/09 B2 $ 150 $ 52,500
------------
GROUP TOTAL 1,262,500
------------
--------------------------------------------------------------------------------------------
-----------------
HEALTH CARE (0.6%)
(3) ICN Pharmaceutical
Sr. Notes
8.75%, 11/15/08 Ba3 250 246,250
Insight Health Services Corp.
Gtd. Sr. Sub. Notes
9.625%, 6/15/08 B3 200 180,000
(3)(4) Unilab Finance Corp.
Sr. Sub. Notes
12.75%, 10/1/09 B3 150 154,500
------------
GROUP TOTAL 580,750
------------
--------------------------------------------------------------------------------------------
-----------------
INDUSTRIAL GOODS & MATERIALS (1.9%)
AAF-McQuay, Inc.
Sr. Notes
8.875%, 2/15/03 B3 150 129,000
Applied Extrusion
Technologies Corp.
Sr. Notes
11.50%, 4/1/02 B2 250 251,875
Atlantis Group, Inc.
Sr. Notes
11.00%, 2/15/03 B2 250 249,063
(4) Equinix, Inc.
Units
13.00%, 12/1/07 N/R 200 206,000
GSI Group, Inc.
Gtd.
10.25%, 11/1/07 B2 150 108,000
Hayes International, Inc.
Sr. Notes
11.625%, 9/1/04 B3 250 175,000
(3)(4) Holley Performance Products
Sr. Notes
12.25%, 9/15/07 B2 250 180,000
Jackson Products, Inc.
Series B, Gtd.
9.50%, 4/15/05 B3 100 90,000
MGM Grand, Inc.
Sr. Sub. Notes
9.75%, 6/1/07 Ba2 200 203,500
Park-Ohio Industries, Inc.
Sr. Sub. Notes
9.25%, 12/1/07 B2 200 176,000
------------
GROUP TOTAL 1,768,438
------------
--------------------------------------------------------------------------------------------
-----------------
MEDICAL (0.2%)
Triad Hospitals Holdings
Series B, Gtd.
11.00%, 5/15/09 B3 200 204,500
------------
--------------------------------------------------------------------------------------------
-----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
METALS & MINING (1.8%)
AK Steel Corp.
Sr. Notes
9.125%, 12/15/06 Ba2 $ 250 $ 240,000
Algoma Steel, Inc.
Yankee First
Mortgage Notes
12.375%, 7/15/05 B1 250 217,500
GS Technologies Operating Co.
Sr. Notes
12.00%, 9/1/04 Caa1 150 52,688
(2) Gulf States Steel, Inc.
First Mortgage Notes
13.50%, 4/15/03 B1 250 21,250
Metallurg, Inc.
Series B, Gtd. Sr. Notes
11.00%, 12/1/07 B3 250 197,500
National Steel Corp.
Series D,
First Mortgage Bonds
9.875%, 3/1/09 Ba3 250 208,750
Sheffield Steel Corp.
Series B,
First Mortgage Bonds
11.50%, 12/1/05 Caa2 250 175,000
WCI Steel, Inc.
Series B, Sr. Secured Notes
10.00%, 12/1/04 B2 250 236,875
Weirton Steel Corp.
Sr. Notes
11.375%, 7/1/04 B2 200 196,000
Wheeling-Pittsburg Corp.
Sr. Notes
9.25%, 11/15/07 B2 250 192,500
------------
GROUP TOTAL 1,738,063
------------
--------------------------------------------------------------------------------------------
-----------------
PACKAGING/CONTAINERS (2.0%)
AEP Industries, Inc.
Sr. Sub. Notes
9.875%, 11/15/07 B2 400 354,000
Amtrol, Inc.
Sr. Sub. Notes
10.625%, 12/31/06 B3 200 179,000
BWAY Corp.
Gtd. Sr. Sub. Notes
10.25%, 4/15/07 B2 150 142,125
(3)(4) Berry Plastics Corp.
Sr. Sub. Notes.
11.00%, 7/15/07 B3 150 131,625
Container Corp. of America
Gtd. Sr. Notes
9.75%, 4/1/03 B1 250 248,750
(1) Crown Packaging
Enterprises, Ltd.
Yankee Sr. Secured
Discount Notes
0.00%, 8/1/06 Ca1 925 93
Gaylord Container Corp.
Series B, Sr. Notes
9.75%, 6/15/07 B3 250 195,000
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Radnor Holdings, Inc.
Series B, Gtd. Sr. Notes
10.00%, 12/1/03 B2 $ 400 $ 358,000
(3) Stone Container
Finance Co.
Yankee Gtd. Sr. Notes
11.50%, 8/15/06 B2 250 258,750
------------
GROUP TOTAL 1,867,343
------------
--------------------------------------------------------------------------------------------
-----------------
PAPER & FOREST PRODUCTS (1.8%)
Ainsworth Lumber Co., Ltd.
Yankee Sr. Secured Notes
12.50%, 7/15/07 B3 250 248,125
Color Spot Nurseries
Sr. Sub. Notes
10.50%, 12/15/07 Caa1 200 142,000
(2) Crown Paper Co.
Sr. Sub. Notes
11.00%, 9/1/05 B3 250 72,188
Doman Industries Ltd.
Yankee Gtd.
12.00%, 7/1/04 B3 150 150,000
Repap New Brunswick, Inc.
Yankee Sr. Notes
10.625%, 4/15/05 Caa1 200 176,000
Riverwood International
Corp.
Gtd. Sr. Notes
10.875%, 4/1/08 Caa1 250 217,500
SD Warren Co.
Debentures
14.00%, 12/15/06 N/R 603 665,817
------------
GROUP TOTAL 1,671,630
------------
--------------------------------------------------------------------------------------------
-----------------
PUBLISHING & INFORMATION SERVICES (2.1%)
American Lawyer Media
Series B, Gtd.
9.75%, 12/15/07 B1 150 136,875
(3)(4) American Media Operation
Sr. Sub. Notes
10.25%, 5/1/09 B2 250 245,000
Ampex Corp.
Series B, Sr. Notes
12.00%, 3/15/03 N/R 250 187,500
(1) Earthwatch, Inc.
Units
0.00%, 7/15/07 N/R 250 162,500
Hollinger International
Publishing
Gtd.
9.25%, 3/15/07 Ba3 150 147,750
(3) InterAct Systems, Inc.
Sr. Discount Notes
14.00%, 8/1/03 N/R 214 72,760
(4) Liberty Group Operating
Gtd.
9.375%, 2/1/08 B3 100 82,000
(1) Liberty Group
Publishing, Inc.
Sr. Discount Debentures
0.00%, 2/1/09 Caa1 300 147,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Mentus Media Corp.
Units
12.00%, 2/1/03 N/R $ 438 $ 219,000
TV Guide, Inc.
Sr. Sub. Notes
8.125%, 3/1/09 Ba3 350 349,125
Tri-State Outdoor Media
Group, Inc.
Sr. Notes
11.00%, 5/15/08 N/R 300 276,000
------------
GROUP TOTAL 2,025,510
------------
--------------------------------------------------------------------------------------------
-----------------
REAL ESTATE (0.1%)
Bluegreen Corp.
Series B, Gtd.
Sr. Secured Notes
10.50%, 4/1/08 B3 200 124,000
------------
--------------------------------------------------------------------------------------------
-----------------
RESTAURANTS, HOTELS & GAMING (5.4%)
American Restaurant Group,
Inc.
Series B, Gtd. Sr. Secured
Notes
11.50%, 2/15/03 B3 250 192,500
Ameristar Casinos, Inc.
Series B, Gtd. Notes
10.50%, 8/1/04 B3 250 251,250
Argosy Gaming Co.
Gtd.
10.75%, 6/1/09 B3 100 103,375
Autotote Corp.
Series B, Gtd.
10.875%, 8/1/04 B2 200 208,000
Aztar Corp.
Sr. Sub. Notes
8.875%, 5/15/07 B1 250 235,625
Boyd Gaming Corp.
Sr. Sub. Notes
9.50%, 7/15/07 B1 250 240,000
Casino Magic of Louisiana
Corp.
Series B, Gtd. First
Mortgage Notes
13.00%, 8/15/03 B3 300 321,750
Coast Hotels &
Casinos, Inc.
Gtd.
9.50%, 4/1/09 B3 150 142,500
Colorado Gaming &
Entertainment Co.
Gtd. Sr. Notes
12.00%, 6/1/03 N/R 0 3
(2) Fitzgeralds Gaming Corp.
Series B, Gtd. Sr.
Notes
12.25%, 12/15/04 Caa3 200 110,000
Friendly Ice Cream Corp.
Gtd. Sr. Notes
10.50%, 12/1/07 B1 250 200,625
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
HMH Properties
Gtd. Sr. Secured Notes
7.875%, 8/1/08 Ba2 $ 250 $ 224,375
Hard Rock Hotel, Inc.
Sr. Sub. Notes
9.25%, 4/1/05 B3 400 367,000
Hollywood Park, Inc.
Sr. Sub. Notes
9.50%, 8/1/07 B2 200 199,000
Horseshoe Gaming
Holdings:
Series B, Sr. Sub. Notes
9.375%, 6/15/07 B2 300 294,000
8.625%, 5/15/09 B2 250 235,625
Isle of Capri Casinos, Inc.
Sr. Sub. Notes
8.75%, 4/15/09 B3 250 231,250
(5) Jazz Casino Co. LLC
Sr. Sub. Notes
5.987%, 11/15/09 N/R 154 19,311
Majestic Star
Casino LLC
Secured Notes
10.875%, 7/1/06 B2 250 247,500
Mandalay Resort Group
Sr. Sub. Notes
9.25%, 12/1/05 Ba2 150 144,750
Mohegan Tribal Gaming
Authority
Series B, Sr. Secured Notes
8.125%, 1/1/06 Ba1 200 190,000
(3) Park Place Entertainment
Corp.
Sr. Sub. Notes
7.875%, 12/15/05 Ba2 250 235,000
Prime Hospitality Corp.
Secured First Mortgage
Notes
9.25%, 1/15/06 Ba2 250 246,250
Romacorp, Inc.
Sr. Notes
12.00%, 7/1/06 B3 250 162,500
Sante Fe Hotel, Inc.
First Mortgage Notes
11.00%, 12/15/00 Caa2 150 147,750
Station Casinos, Inc.
Sr. Sub. Notes
9.75%, 4/15/07 B1 215 214,463
------------
GROUP TOTAL 5,164,402
------------
--------------------------------------------------------------------------------------------
-----------------
RETAIL (2.0%)
(1) Advance Holdings Corp.
Sr. Discount Debentures
0.00%, 4/15/09 Caa2 350 147,000
Advance Stores Co., Inc.
Gtd. Sr. Sub. Notes
10.25%, 4/15/08 Caa1 250 206,250
(3) Buhrmann US, Inc.
Sr. Sub. Notes
12.25%, 11/1/09 B2 250 262,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Dairy Mart Convenience
Stores, Inc.
Sr. Sub. Notes
10.25%, 3/15/04 B3 $ 251 $ 183,230
Flooring America, Inc.
Series B, Gtd.
9.25%, 10/15/07 Caa1 185 105,393
(2) Jitney-Jungle Stores
of America, Inc.
Gtd. Sr. Sub. Notes
10.375%, 9/15/07 B3 250 4,375
K Mart Corp.
Debentures
7.75%, 10/1/12 Ba2 200 178,644
(1) Mrs. Fields Holding Co.
Sr. Discount Notes
0.00%, 12/1/05 Caa2 500 215,000
Pantry, Inc.
Sr. Sub. Notes
10.25%, 10/15/07 B3 200 190,500
Pathmark Stores, Inc.
Sr. Sub. Notes
9.625%, 5/1/03 Caa1 250 177,500
Simmons Co.
Sr. Sub. Notes
10.25%, 3/15/09 B3 250 221,875
------------
GROUP TOTAL 1,892,267
------------
--------------------------------------------------------------------------------------------
-----------------
TELECOMMUNICATIONS (15.1%)
AMSC Acquisition Co., Inc.
Series B, Gtd Sr. Notes
12.25%, 4/1/08 N/R 150 117,000
(1) Alamosa PCS
Holdings, Inc.
Gtd.
0.00%, 2/15/10 Caa1 200 104,000
(4) Caprock Communications
Sr. Notes
11.50%, 5/1/09 B3 150 135,000
Carrier1 International SA
Sr. Notes
13.25%, 2/15/09 B3 300 270,000
(1) Clearnet Communications,
Inc.
Yankee
Sr. Discount Notes
0.00%, 12/15/05 B3 250 255,937
(3) Colo.Com
Units
13.875%, 3/15/10 N/R 200 215,000
Concentric Network Corp.
Sr. Notes
12.75%, 12/15/07 N/R 250 263,750
(1) DTI Holdings, Inc.
Units
0.00%, 3/1/08 N/R 300 126,375
Dobson/Sygnet
Communications, Co.
Sr. Notes
12.25%, 12/15/08 N/R 250 266,250
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Dolphin Telecom plc:
(1) Sr. Discount Notes
0.00%, 6/01/08 Caa1 $ 250 $ 78,750
Series B, Yankee
Sr. Discount Notes
14.00%, 5/15/09 Caa1 300 99,000
(1) e. spire Communications, Inc.
Sr. Discount Notes
0.00%, 11/1/05 N/R 750 348,750
(3) Energis, plc
Sr. Unsub. Notes
9.75%, 6/15/09 B1 100 98,000
Exodus Communications, Inc.
Sr. Notes
11.25%, 7/1/08 N/R 50 49,500
(1) Focal Communications Corp.
Sr. Discount Notes
0.00%, 2/15/08 N/R 400 270,000
(1) GST USA, Inc.
Gtd. Sr. Discount Notes
0.00%, 12/15/05 N/R 600 204,000
Global Crossing
Holdings, Ltd.
Gtd. Sr. Notes
9.625%, 5/15/08 N/R 250 243,750
Globalstar L.P./Globalstar
Capital Corp.
Sr. Notes
10.75%, 11/1/04 B3 300 84,000
(1) ICG Holdings, Inc.:
Gtd. Sr. Discount Notes
0.00%, 9/15/05 B3 350 338,625
0.00%, 5/1/06 B3 255 211,012
0.00%, 3/15/07 B3 750 517,500
(1) ICG Services, Inc.
Gtd. Sr. Discount Notes
0.00%, 5/1/08 N/R 250 130,000
(3)(4) Insight Midwest/
Insight Capital
Sr. Notes
9.75%, 10/1/09 B1 250 245,000
Intermedia Communications,
Inc.:
(1) Series B, Sr. Discount Notes
0.00%, 7/15/07 B2 300 234,000
Sr. Notes
8.875%, 11/1/07 B2 150 140,250
Level 3 Communications,
Inc.:
Sr. Notes
9.125%, 5/1/08 B3 275 246,813
(1) Discount Notes
0.00%, 12/1/08 B3 300 182,250
McLeod USA, Inc.:
(1) Discount Notes
0.00%, 3/1/07 B2 100 82,500
Sr. Notes
9.25%, 7/15/07 B2 200 192,500
Metromedia
International Group, Inc.
Series B,
Sr. Discount Notes
10.50%, 9/30/07 N/R 916 430,699
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
MetroNet
Communications Corp.:
Sr. Discount Notes
10.75%, 11/1/07 B $ 350 $ 307,562
(1) 0.00%, 6/15/08 B3 250 203,125
Microcell
Telecommunications, Inc.
Series B,
Yankee Sr. Discount Notes
14.00%, 6/1/06 B3 300 276,000
(1) Millicom International
Cellular
Yankee Sr. Sub.
Discount Notes
0.00%, 6/1/06 Caa1 300 255,000
NEXTLINK
Communications, Inc.:
Series A, Sr. Notes
12.50%, 4/15/06 B3 100 105,500
10.75%, 11/15/08 B3 250 246,250
(3)(4) 10.50%,12/1/09 B2 250 243,750
(1) Nextel Communications, Inc.
Sr. Discount Notes
0.00%, 2/15/08 B2 900 663,750
Orion Network
Systems, Inc.
Gtd. Sr. Notes
11.25%, 1/15/07 B2 250 151,250
Pagemart Nationwide, Inc.
Sr. Discount Notes
12.50%, 2/1/05 B3 750 718,125
PSINet, Inc.
Series B, Sr. Notes
10.00%, 2/15/05 B3 250 230,000
(3) Pegasus Communications
Corp.
Sr. Sub. Notes
12.50%, 8/1/07 N/R 250 262,500
Premier Graphics, Inc.
Gtd.
11.50%, 12/1/05 B1 500 125,000
(1) Qwest Communications
International, Inc.:
Sr. Discount Notes
0.00%, 10/15/07 B2 250 210,000
Series B,
0.00%, 2/1/08 Ba1 250 197,188
(1) RCN Corp.:
Sr. Discount Notes
0.00%, 10/15/07 B3 150 93,750
Series B,
0.00%, 2/15/08 B3 300 171,000
RSL Communications plc
Yankee Gtd. Sr. Notes
9.125%, 3/1/08 B3 250 160,000
Rhythms Netconnections, Inc.
Units
13.50%, 5/15/08 N/R 250 100,000
Sprint Spectrum
L.P./Sprint
Spectrum Finance Corp.
Sr. Notes
11.00%, 8/15/06 B2 450 492,359
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Star Choice
Communications, Inc.
Yankee Sr. Notes
13.00%, 12/15/05 N/R $ 200 $ 205,250
Startec Global
Communications Corp.
Units
12.00%, 5/15/08 N/R 350 280,000
T/SF Communications Corp.
Series B,
Gtd. Sr. Sub. Notes
10.375%, 11/1/07 B3 200 186,000
Teligent, Inc.
Sr. Notes
11.50%, 12/1/07 Caa1 300 237,000
(1) Triton PCS, Inc.
Gtd.
0.00%, 5/1/08 B3 300 217,500
(1)(3) US Unwired, Inc.
Sr. Discount Notes
0.00%, 11/1/09 Caa1 400 217,000
Verio, Inc.
Units
13.50%, 6/15/04 B3 400 453,000
(3) Viatel, Inc.
Sr. Notes
11.50%, 3/15/09 B3 343 260,680
(3) Voicestream Wireless
Sr. Notes
10.375%, 11/15/09 B2 100 103,500
WebLink Wireless, Inc.
Sr. Discount Notes
11.25%, 2/1/08 N/R 300 129,000
Western Wireless Corp.
Sr. Sub. Notes
10.50%, 2/1/07 B3 250 255,000
Williams Communications
Group, Inc.
Sr. Notes
10.875%, 10/1/09 B2 250 244,375
(3) Worldwide Fiber, Inc.
Sr. Notes
12.00%, 8/1/09 B3 150 141,750
------------
GROUP TOTAL 14,322,375
------------
--------------------------------------------------------------------------------------------
-----------------
TRANSPORTATION (1.6%)
AirTran Airlines, Inc.
Yankee Sr. Notes
10.50%, 4/15/01 N/R 500 475,000
Allied Holdings
Series B, Gtd.
8.625%, 10/1/07 B1 250 221,563
(2) Canadian Airlines Corp.
Yankee Sr. Notes
12.25%, 8/1/06 Caa2 300 42,000
Cenargo International plc
First Priority Ship
Mortgage Notes
9.75%, 6/15/08 Ba3 100 79,000
First Wave Marine, Inc.
Sr. Notes
11.00%, 2/1/08 B3 100 59,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
(2) Golden Ocean Group, Ltd.
Gtd. Sr. Notes
10.00%, 8/31/01 B3 $ 263 $ 39,450
Sea Containers Ltd.
Yankee Sr. Notes
10.75%, 10/15/06 Ba3 200 150,000
(1) TFM Sa De CV
0.00%, 6/15/09 N/R 385 263,725
Trans World Airlines, Inc.
Sr. Notes
11.375%, 3/1/06 Caa1 250 97,500
Ultrapetrol (Bahamas) Ltd.
First Mortgage Notes
10.50%, 4/1/08 B1 150 123,000
------------
GROUP TOTAL 1,550,238
------------
--------------------------------------------------------------------------------------------
-----------------
TOTAL CORPORATE OBLIGATIONS
(Cost $67,538,801) 58,324,495
------------
--------------------------------------------------------------------------------------------
-----------------
GOVERNMENT & AGENCY SECURITIES (1.0%)
--------------------------------------------------------------------------------------------
-----------------
UNITED STATES TREASURY BONDS (0.2%)
8.00%, 11/15/21 Aaa 85 102,757
5.25%, 11/15/28 Aaa 115 101,829
------------
GROUP TOTAL 204,586
------------
--------------------------------------------------------------------------------------------
-----------------
UNITED STATES TREASURY NOTES (0.8%)
7.25%, 5/15/04 Aaa 760 783,872
------------
--------------------------------------------------------------------------------------------
-----------------
TOTAL GOVERNMENT & AGENCY SECURITIES
(Cost $985,686) 988,458
------------
--------------------------------------------------------------------------------------------
-----------------
ASSET BACKED OBLIGATIONS (0.2%)
--------------------------------------------------------------------------------------------
-----------------
Merrill Lynch Home Equity
Acceptance Trust
Series 1994-A, Class A-2
6.47%, 7/17/22 A3 212 207,452
--------------------------------------------------------------------------------------------
-----------------
TOTAL ASSET BACKED OBLIGATIONS
(Cost $212,432) 207,452
------------
--------------------------------------------------------------------------------------------
----------------- Shares/
Units
--------------------------------------------------------------------------------------------
-----------------
COMMON STOCKS (4.6%)
--------------------------------------------------------------------------------------------
-----------------
BROADCASTING (1.1%)
(3)(6) Spanish Broadcasting
System, Inc.
Class B 35,700 776,475
(6) UnitedGlobalCom, Inc. Class A 5,442 254,413
------------
GROUP TOTAL 1,030,888
------------
--------------------------------------------------------------------------------------------
-----------------
Shares/ Value
Units (Note A-1)
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
CABLE (0.0%)
(6) OpTel, Inc. 500 $ 5
------------
--------------------------------------------------------------------------------------------
-----------------
CONSUMER PRODUCTS & SERVICES (0.0%)
(6) Coinstar, Inc. 4,196 42,222
(6) Crown Packaging Enterprises,
Ltd. 100,848 1,008
(6) Grant Prideco, Inc. 15 675
------------
GROUP TOTAL 43,905
------------
--------------------------------------------------------------------------------------------
-----------------
ENERGY (0.0%)
(6) Weatherford International,
Inc. 27 1,075
------------
--------------------------------------------------------------------------------------------
-----------------
ENTERTAINMENT (0.0%)
(6) Premier Cruises, Ltd. 18,515 48,601
------------
--------------------------------------------------------------------------------------------
-----------------
FINANCIAL SERVICES (0.0%)
(6)(7) Westfed Holdings, Inc.
Class B (acquired 9/20/88,
cost $127) 4,223 0
------------
--------------------------------------------------------------------------------------------
-----------------
FOOD & BEVERAGES (1.2%)
(6)(7) Dr. Pepper Bottling
Holdings, Inc.
Class A (acquired 10/21/88,
cost $40,500) 45,000 1,125,000
(6) Specialty Foods Corp. 22,500 225
------------
GROUP TOTAL 1,125,225
------------
--------------------------------------------------------------------------------------------
-----------------
METALS & MINING (0.0%)
(6) Sheffield Steel Corp. 2,500 3,750
------------
--------------------------------------------------------------------------------------------
-----------------
PAPER & FOREST PRODUCTS (0.1%)
(3)(6) Mail-Well, Inc. 10,652 91,874
------------
--------------------------------------------------------------------------------------------
-----------------
RESTAURANTS, HOTELS & GAMING (0.1%)
(6) Elsinore Corp. 6,177 7,335
(6) Isle of Capri Casinos, Inc. 4,982 67,568
(3)(6) Motels of America, Inc. 250 4,000
------------
GROUP TOTAL 78,903
------------
--------------------------------------------------------------------------------------------
-----------------
TELECOMMUNICATIONS (2.1%)
(6) Advanced Radio Telecom Corp. 5,058 73,973
(3)(6) CompleTel Holdings, LLC
Class B Shares 2,500 122,500
(6) e. spire Communications, Inc. 14,168 95,634
(6) Globix Corp. 3,520 103,180
(6) ICG Communications, Inc. 1,155 25,482
(6) Intermedia Communications,
Inc. 3,748 111,503
(6) Loral Space & Communications,
Co. 151 1,047
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
<TABLE>
Shares/ Value
Units (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
(6) Nextlink Communications, Inc.,
Class A 4,079 $ 154,747
(6) Price Communications Corp. 25,821 608,407
(6) Verio, Inc. 11,266 625,087
------------
GROUP TOTAL 1,921,560
------------
--------------------------------------------------------------------------------------------
-----------------
TOTAL COMMON STOCKS
(Cost $633,918) 4,345,786
------------
--------------------------------------------------------------------------------------------
-----------------
PREFERRED STOCKS (2.4%)
--------------------------------------------------------------------------------------------
-----------------
AEROSPACE/DEFENSE (0.3%)
(6) GPA Group plc
7% Second Preferred
Cum. Conv. 650,000 312,000
------------
--------------------------------------------------------------------------------------------
-----------------
BROADCASTING (0.0%)
(5)(6) Granite Broadcasting Corp.
12.75% Cum. Exchangeable 11 9,460
(6) Source Media, Inc. 5,399 24,296
------------
GROUP TOTAL 33,756
------------
--------------------------------------------------------------------------------------------
-----------------
CABLE (0.3%)
Adelphia Communications Corp.
13% Cum. Exchangeable, Series B 2,500 251,250
NTL, Inc.
13% Exchangeable, Series B 1 1,000
------------
GROUP TOTAL 252,250
------------
--------------------------------------------------------------------------------------------
-----------------
FINANCIAL SERVICES (0.0%)
(6)(8) Westfed Holdings, Inc. Class A
(aquired 9/20/88-6/18/93,
cost 1,203,486) 14,246 14,246
------------
--------------------------------------------------------------------------------------------
-----------------
PUBLISHING & INFORMATION SERVICES (0.4%)
(6) Interact Electronic Marketing
14% Conv. Preferred 400 80,000
Primedia, Inc.
10% Cum. Exchangeable,
Series D 3,500 336,000
------------
GROUP TOTAL 416,000
------------
--------------------------------------------------------------------------------------------
-----------------
RESTAURANTS, HOTELS & GAMING (0.1%)
AmeriKing, Inc.
13% Cum. Exchangeable 7,567 60,536
------------
--------------------------------------------------------------------------------------------
-----------------
TELECOMMUNICATIONS (1.3%)
Intermedia Communications,
Inc.
7% Jr. Convertible, Series E 15,000 384,375
Shares/ Value
Units (Note A-1)
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
NEXTLINK
Communications, Inc.
14% Cum. Exchangeable 9,382 $ 483,173
Nextel Communications, Inc.
13% Exchangeable,
Series D 349 373,430
------------
GROUP TOTAL 1,240,978
------------
--------------------------------------------------------------------------------------------
-----------------
TOTAL PREFERRED STOCKS
(Cost $3,465,286) 2,329,766
------------
--------------------------------------------------------------------------------------------
-----------------
RIGHTS (0.0%)
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
(6) Terex Corp.
expiring 5/15/02 2,000 28,000
--------------------------------------------------------------------------------------------
-----------------
TOTAL RIGHTS
(Cost $0) 28,000
------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
WARRANTS (1.0%)
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
(6) Aavid Thermal Technologies,
Inc.
expiring 2/1/07 150 1,500
(3)(6) Ampex Corp.
expiring 3/15/03 8,500 85
(6) Australis Holdings Pty. Ltd.
expiring 10/30/01 250 3
(6) Australis Media Ltd.
expiring 5/15/03 225 2
(3)(6) Carrier1 International SA
expiring 2/19/09 300 120,000
(6) CHC Helicopter Corp.
expiring 12/15/00 2,000 2,000
(6)(8) CHI Energy, Inc.:
Series B, expiring 11/8/03 3,790 9,100
Series C, expiring 11/8/05 2,459 5,904
(6) Crown Packaging Enterprises,
Ltd.
expiring 11/1/03 1,000 10
(6) DIVA Systems Corp.:
(3) expiring 5/15/06 900 630,000
expiring 3/1/08 2,430 43,740
(3)(6) DTI Holdings, Inc.
expiring 3/1/08 1,500 15
(6) Dairy Mart Convenience Stores,
Inc.
expiring 12/1/01 4,172 1,460
(6) Equinix Inc.
expiring 12/1/07 200 2,000
(6) Golden Ocean Group, Ltd.
expiring 8/31/01 342 0
(6) HF Holdings, Inc.
expiring 9/27/09 1,578 15,780
(6) InterAct Systems, Inc.
expiring 8/1/03 400 0
(6) Interact Electronic Marketing
expiring 12/31/09 400 4
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
<TABLE>
Shares/ Value
Units (Note A-1)
---------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
---------------------------------------------------------------------------------------
(6) Isle of Capri Casinos, Inc.
expiring 5/3/01 882 $ 9
(6) Key Energy Services
expiring 1/15/09 250 15,000
(6) McCaw International Ltd.
expiring 4/15/07 750 1,875
(6) Mentus Media Corp.
expiring 2/1/08 974 10
(6) Mrs. Fields Holding, Co.
expiring 12/1/05 500 5,000
(6) PLD Telekom, Inc.
expiring 6/1/06 560 19,600
(6) Source Media, Inc.
expiring 11/1/07 2,235 6,481
(6) Star Choice
Communications, Inc.
expiring 12/5/05 4,632 28,187
(6) Startec Global Communications
expiring 5/15/08 350 122
(6) USN Communications, Inc.
expiring 8/15/04 3,050 0
(6) Waste Systems International,
Inc.
expiring 3/2/04 5,250 2,625
(6) Wright Medical Technology
expiring 6/30/03 206 0
--------------------------------------------------------------------------------------------
-----------------
TOTAL WARRANTS
(Cost $1,081,798) 910,512
------------
--------------------------------------------------------------------------------------------
-----------------
TOTAL DOMESTIC SECURITIES
(Cost $73,917,921) 67,134,469
------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Face
Moody's Amount
Ratings (000)
<C> <S> <C> <C> <C>
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FOREIGN SECURITIES (24.2%)
--------------------------------------------------------------------------------------------
-----------------
CORPORATE OBLIGATIONS (3.8%)
--------------------------------------------------------------------------------------------
-----------------
ARGENTINA (0.8%)
CIA Internacional
Telecommunicacoes
Sr. Notes
10.375%, 8/1/04 N/R ARP 245 210,087
(3)(4) Hidroelectrica
Piedra del Aguila
S.A.:
Collateral Trust
8.25%, 6/30/09 N/R USD $521 325,391
8.00%, 12/31/09 N/R USD 291 190,947
------------
GROUP TOTAL 726,425
------------
--------------------------------------------------------------------------------------------
-----------------
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
----------------------------------------------------------------------------
<C> <S> <C> <C> <C>
----------------------------------------------------------------------------
BELGIUM (0.3%)
Hermes Europe
Railtel B.V.
Yankee Sr. Notes
10.375%, 1/15/09 B3 USD $ 300 $ 244,500
------------
--------------------------------------------------------------------------------------------
-----------------
CANADA (0.0%)
(1) GT Group Telecom
Units
0.00%, 2/1/10 Caa1 USD 100 55,500
------------
--------------------------------------------------------------------------------------------
-----------------
KOREA (0.5%)
(3)(4) Cho Hung Bank
Sub. Notes
11.50%, 4/1/10 B1 USD 505 486,063
------------
--------------------------------------------------------------------------------------------
-----------------
MEXICO (0.7%)
Banco National De
Commercio
7.25%, 2/2/04 Ba2 USD 625 592,188
Nuevo Grupo
Iusacell SA
Sr. Notes
14.25%, 12/1/06 B1 USD 115 120,175
------------
GROUP TOTAL 712,363
------------
--------------------------------------------------------------------------------------------
-----------------
NETHERLANDS (0.6%)
(1) CompleTel Europe
N.V.
Yankee Gtd.
0.00%, 2/15/09 Caa1 USD 250 125,000
(3) KPNQwest N.V.
Sr. Notes
8.125%, 6/1/09 N/R USD 150 141,000
(3) United Pan-Europe
Communications N.V.
Sr. Notes
10.875%, 8/1/09 B2 USD 300 261,000
------------
GROUP TOTAL 527,000
------------
--------------------------------------------------------------------------------------------
-----------------
POLAND (0.4%)
(3) PTC International
Finance II SA
Gtd.
11.25%, 12/1/09 B2 USD 360 360,370
------------
--------------------------------------------------------------------------------------------
-----------------
SLOVAKIA (0.5%)
(3)(4) Slovak Wireless
Finance Co.
Gtd.
11.25%, 3/30/07 B2 USD 515 500,401
------------
--------------------------------------------------------------------------------------------
-----------------
TOTAL CORPORATE OBLIGATIONS
(Cost $3,667,289) 3,612,622
------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
<TABLE>
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
----------------------------------------------------------------------------
<C> <S> <C> <C> <C>
----------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS (20.4%)
--------------------------------------------------------------------------------------------
-----------------
ARGENTINA (5.5%)
Bocon PRO1 Notes
5.82%, 4/1/07 Baa3 USD $2,334 $ 1,505,986
Republic of
Argentina:
Notes
11.00%, 12/4/05 B3 USD 750 703,125
Series BGL5
11.375%, 1/30/17 Ba3 USD 560 501,480
Unsubordinated
11.75%, 4/07/09 B1 USD 790 734,700
Debentures
6.188%, 3/31/05 B1 USD 1,944 1,773,900
------------
GROUP TOTAL 5,219,191
------------
--------------------------------------------------------------------------------------------
-----------------
BRAZIL (5.5%)
Federal Republic of
Brazil:
Series RG
(9) 7.00%, 4/15/09 B2 USD 330 275,550
Debentures
Series EI-L
(9) 6.9375%, 4/15/06 B1 USD 116 106,006
(9) 7.00%, 4/15/12 B1 USD 500 366,250
Bearer
10.125%, 5/15/27 B1 USD 910 714,350
Global Bonds
11.625%, 4/15/04 B2 USD 720 726,120
Foreign Government
Gtd.
7.00%, 4/15/12 B2 USD 1,380 1,014,300
Capitalization
Bonds
8.00%, 4/15/14 B2 USD 2,808 2,028,502
------------
GROUP TOTAL 5,231,078
------------
--------------------------------------------------------------------------------------------
-----------------
BULGARIA (1.6%)
(9) Republic of
Bulgaria:
Floating Rate Notes
2.50%, 7/28/12 B2 USD 1,210 887,838
Front Loaded
Interest
Reduction Bonds,
Series A
5.875%, 7/28/24 B2 USD 400 316,000
Debentures
Series PDI,
6.50%, 7/28/11 B2 USD 405 320,456
------------
GROUP TOTAL 1,524,294
------------
--------------------------------------------------------------------------------------------
-----------------
CROATIA (0.8%)
(9) Republic of Croatia
Series B, Bonds
7.0625%, 7/31/06 Baa3 USD 803 755,274
------------
--------------------------------------------------------------------------------------------
-----------------
MEXICO (0.5%)
United Mexican
States
10.375%, 2/17/09 N/R USD 460 474,950
------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
<CAPTION>
Face
Moody's Amount Value
Ratings (000) (Note A-1)
----------------------------------------------------------------------------
<C> <S> <C> <C> <C>
----------------------------------------------------------------------------
MOROCCO (0.3%)
(9) Republic of Morocco
6.8825%, 1/1/09 N/R USD $ 261 $ 233,595
------------
--------------------------------------------------------------------------------------------
-----------------
NETHERLANDS (0.1%)
Netia Holdings, B.V.
Gtd.
13.75%, 6/15/10 B2 120 116,175
------------
--------------------------------------------------------------------------------------------
-----------------
PERU (0.6%)
Republic of Peru:
Front Loaded
Interest
Reduction
Series 20 year
4.00%, 3/7/17 N/R USD 495 298,238
Past Due Interest
(PDI)
Series 20 Year
4.00%, 3/7/17 N/R USD 390 260,325
------------
GROUP TOTAL 558,563
------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
RUSSIA (5.2%)
(3)(4) City of St.
Petersburg
Bonds
9.50%, 6/18/02 Caa1 USD 750 633,000
Russia Federation:
Registered Series
8.75%, 7/24/05 B3 USD 300 232,500
10.00%, 6/26/07 B3 USD 400 308,000
11.00%, 7/24/18 B3 USD 570 426,075
Russian Registered
Bonds
12.75%, 6/24/28 B3 USD 520 447,850
Russian Principal
Loan
3.249%, 12/15/20 B3 USD 2,840 869,750
(9) Vnesheconombank
Bank
6.90625%, 12/15/15 N/R USD 3,404 1,038,220
Series 24 year
6.8925%, 12/15/20 N/R USD 3,152 965,300
------------
GROUP TOTAL 4,920,695
------------
--------------------------------------------------------------------------------------------
-----------------
TURKEY (0.1%)
Republic of Turkey
Bonds
11.875%, 11/5/04 B1 USD 80 83,160
------------
--------------------------------------------------------------------------------------------
-----------------
VENEZUELA (0.2%)
Republic of
Venezuela:
Series DL Unsecured
Bonds
9.25%, 9/15/27 Ba2 USD 345 227,183
------------
--------------------------------------------------------------------------------------------
-----------------
TOTAL GOVERNMENT OBLIGATIONS
(Cost $17,642,053) 19,344,158
------------
--------------------------------------------------------------------------------------------
-----------------
TOTAL FOREIGN SECURITIES
(Cost $21,309,342) 22,956,780
------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
Value
(Note A-1)
--------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
-----------------
TIME DEPOSITS (3.6%)
(Cost $3,405,000) $ 3,405,000
------------
--------------------------------------------------------------------------------------------
-----------------
TOTAL INVESTMENTS (98.5%)
(Cost $98,632,263) 93,496,249
------------
--------------------------------------------------------------------------------------------
-----------------
OTHER ASSETS IN EXCESS OF
LIABILITIES (1.5%)
1,405,640
------------
--------------------------------------------------------------------------------------------
-----------------
NET ASSETS (100%)
Applicable to 11,976,699 issued and outstanding $.001 par
value shares (authorized 100,000,000 shares)
$ 94,901,889
============
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
N/R--Not Rated
ARP--Argentine Peso
(1) 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.
(2) Defaulted Security.
(3) 144A Security. Certain conditions for public sale may exist.
(4) Private Placement.
(5) Payment in kind bond. Market value includes accrued interest.
(6) Non-income producing security.
(7) Restricted as to private and public resale. Total cost of restricted securities at June
30, 2000 aggregated $40,627. Total market value of restricted securities owned at June 30,
2000 was $1,125,000 or 1.19% of Net Assets.
(8) Securities for which market quotations are not readily available are valued at fair value
as determined in good faith by the Board of Directors.
(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, 2000.
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(unaudited)
<S> <C>
---------------------------------------------------------------------------------------------------
ASSETS:
Investments at Value
(Cost $98,632,263) (Note A-1)............................................. $ 93,496,249
Receivables:
Dividend and Interest (Note A-6).......................................... 2,445,932
Investments Sold............................................................ 188,433
Unrealized Appreciation on Forward Foreign Currency Exchange Contracts (Note
A-5)...................................................................... 6,287
Other Assets................................................................ 62,494
---------------------------------------------------------------------------------------------------
Total Assets............................................................ 96,199,395
---------------------------------------------------------------------------------------------------
LIABILITIES:
Distributions Payable................................................... 868,309
Investments Purchased................................................... 194,188
Investment Advisory Fees (Note B)....................................... 118,980
Professional Fees....................................................... 37,692
Transfer Agent Fees..................................................... 19,863
Shareholders' Reports................................................... 14,167
Administrative Fees (Note C)............................................ 13,632
Custodian Fees.......................................................... 12,058
Due to Custodian Bank................................................... 10,250
Directors' Fees......................................................... 1,930
Other Liabilities....................................................... 6,437
---------------------------------------------------------------------------------------------------
Total Liabilities..................................................... 1,297,506
---------------------------------------------------------------------------------------------------
NET ASSETS...................................................................... $ 94,901,889
=================
NET ASSETS CONSIST OF:
Capital Shares at $.001 Par Value........................................... $ 11,977
Capital Paid in Excess of Par Value......................................... 110,690,040
Accumulated Net Investment Loss............................................. (928,411)
Accumulated Net Realized Loss............................................... (9,742,560)
Unrealized Depreciation on Investments and Foreign Currency Translations.... (5,129,157)
---------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO 11,976,699 ISSUED AND OUTSTANDING SHARES (AUTHORIZED
100,000,000 SHARES)........................................................... $ 94,901,889
=================
NET ASSET VALUE PER SHARE....................................................... $ 7.92
===================================================================================================
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six Months Ended
June 30, 2000
(unaudited)
<S> <C>
---------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest (Note A-6) (Net of foreign taxes withheld of $55,803).............. $ 4,914,900
Dividends (Note A-6)........................................................ 99,545
---------------------------------------------------------------------------------------------------
Total Income.............................................................. 5,014,445
---------------------------------------------------------------------------------------------------
EXPENSES:
Investment Advisory Fees (Note B)........................................... 243,636
Shareholders' Reports....................................................... 59,249
Professional Fees........................................................... 45,350
Administrative Fees (Note C)................................................ 43,736
Custodian Fees.............................................................. 39,849
Shareholder Servicing Fees.................................................. 24,617
Directors' Fees and Expenses................................................ 19,598
Other....................................................................... 8,322
---------------------------------------------------------------------------------------------------
Total Expenses............................................................ 484,357
---------------------------------------------------------------------------------------------------
Net Investment Income................................................... 4,530,088
---------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS):
Investments................................................................. (450,675)
Foreign Currency............................................................ 1,341
---------------------------------------------------------------------------------------------------
Total Net Realized Loss................................................... (449,334)
---------------------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION/
DEPRECIATION:.................................................................
Investments............................................................... (3,642,692)
Foreign Currency Translations............................................. 5,338
---------------------------------------------------------------------------------------------------
Total Change in Unrealized Appreciation/Depreciation.................... (3,637,354)
---------------------------------------------------------------------------------------------------
Net Realized Loss and Change in Unrealized Appreciation (Depreciation).......... (4,086,688)
---------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ $ 443,400
===================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
<S> <C> <C>
Six Months Ended
June 30, 2000 Year Ended
(Unaudited) December 31, 1999
---------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net Investment Income....................................................... $ 4,530,088 $ 8,395,746
Net Realized Loss on Investments............................................ (449,334) (2,034,504)
Change in Unrealized Appreciation (Depreciation) on Investments............. (3,637,354) 3,536,816
---------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ 443,400 9,898,058
---------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS:
Net Investment Income....................................................... (6,856,660) (8,309,716)
---------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Common Stocks Issued through Rights Offering (3,522,559 shares)............. -- 21,657,541
Offering Costs.............................................................. -- (441,000)
---------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Capital Share Transactions...... -- 21,216,541
---------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets................................. (6,413,260) 22,804,883
---------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period......................................................... 101,315,149 78,510,266
---------------------------------------------------------------------------------------------------------------------
End of Period (Including undistributed (accumulated) net investment income
(loss) of ($928,411) and $1,398,161, respectively)......................... $ 94,901,889 $101,315,149
=====================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Six Months Ended Year Ended December 31,
June 30, 2000 --------------------------------------------------------
PER SHARE OPERATING PERFORMANCE: (unaudited) 1999 1998 1997 1996 1995 Section
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD.............. $ 8.46 $ 9.29 $ 10.79 $ 10.37 $ 10.01 $ 9.26
------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
Net Investment Income......................... 0.38 0.89 0.94 0.89 0.91 0.95
Net Realized and Unrealized Gain (Loss) on
Investments.................................. (0.35) 0.42 (1.49) 0.41 0.26 0.61
------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities............ 0.03 1.31 (0.55) 1.30 1.17 1.56
------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net Investment Income......................... (0.57) (0.92) (0.95) (0.88) (0.81) (0.76)
Return of Capital............................. -- -- -- -- -- (0.05)
------------------------------------------------------------------------------------------------------------------------------
Total Distributions......................... (0.57) (0.92) (0.95) (0.88) (0.81) (0.81)
------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Asset Value due to Shares Issued
through Rights Offering.......................... -- (1.18) -- -- -- --
Offering Costs.................................... -- (0.04) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD.................... $ 7.92 $ 8.46 $ 9.29 $ 10.79 $ 10.37 $ 10.01
==============================================================================================================================
PER SHARE MARKET VALUE, END OF PERIOD............. $ 7.19 $ 6.63 $ 8.63 $ 10.06 $ 9.00 $ 8.88
==============================================================================================================================
TOTAL INVESMENT RETURN:
Net Asset Value (1)........................... 1.35% 1.89% (5.13)% 13.82% 13.27% 17.57%
Market Value.................................. 15.28% (14.03)%* (5.56)% 22.34% 11.03% 18.16%
==============================================================================================================================
RATIOS AND SUPPLEMENTAL DATA:
==============================================================================================================================
Net Assets, End of Period (Thousands)............. $94,902 $101,315 $78,510 $91,914 $87,656 $84,618
------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets Including
Expense Offsets.................................. 0.99% 1.09% 1.17% 1.08% 1.11% 1.12%
Ratio of Expenses to Average Net Assets........... 0.99% 1.09% 1.17% 1.10% 1.11% --
Ratio of Net Investment Income to Average Net
Assets........................................... 9.30% 10.35% 9.17% 8.43% 8.99% 9.80%
Portfolio Turnover Rate........................... 19.2% 41.2% 107.8% 119.1% 65.1% 54.5%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Section Credit Suisse Asset Management, LLC formerly known as BEA Associates
replaced CS First Boston Investment Management as the Fund's
investment adviser effective June 13, 1995.
* Adjusted for Rights Offering.
(1) Total investment return based on per share net asset value reflects
the effects of change 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.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
------------
Credit Suisse Asset Management Strategic Global Income Fund, Inc., formerly
known as 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 $32,894
(or 0.04% of net assets) at June 30, 2000. 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") (excludes 144A 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;
- investments, 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.
20
<PAGE>
5. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: The Fund may enter into forward
foreign currency exchange contracts to protect securities and related
receivables and 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.
The Fund had the following outstanding forward foreign currency exchange
contract at June 30, 2000.
<TABLE>
<CAPTION>
FORWARD FOREIGN VALUE AT
CURRENCY EXCHANGE SETTLEMENT SETTLEMENT CURRENT UNREALIZED
CONTRACTS DATE DATE VALUE APPRECIATION
----------------- ---------- ---------- -------- ------------
<S> <C> <C> <C> <C>
Sale Contract:
Euro 9/22/00 $728,517 $722,230 $6,287
</TABLE>
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.
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. These differences are principally
due to the timing of the recognition of defaulted bond interest and to
differing book and tax treatment for foreign currency transactions.
Permanent book and tax differences relating to shareholder distributions may
result in reclassifications to undistributed net investment income (loss),
undistributed realized gain (loss) and paid in capital.
B. Credit Suisse Asset Management, LLC, formerly known as 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. Brown Brothers Harriman & Co. ("BBH&Co."), provides administrative and
custodial services to the Fund. Under the Administration and Custody Agreements,
BBH&Co. is paid a fee based on average net assets.
BankBoston N.A. (BankBoston) provides transfer agent services to the Fund. Under
the Transfer Agent Agreement, BankBoston 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 BankBoston.
D. Purchases and sales of investment securities (excluding short-term
investments and U.S. government securities) aggregated $16,900,614 and
$21,736,948, respectively, for the six months ended June 30, 2000. Purchases and
sales of U.S. government and government agency securities aggregated $1,061,857
and $345,337, respectively, for the six months ended June 30, 2000.
At June 30, 2000, the cost of investments for Federal income tax purposes was
$95,227,263. Accordingly, net unrealized depreciation for Federal income tax
purposes aggregated $5,129,157 of which $8,441,815 related to appreciated
securities and $13,570,972 related to depreciated securities.
At June 30, 2000, the Fund had a capital loss carryforward of $9,081,642
available to offset future capital gains of which $90,877, $743,988, $211,706,
$4,354, $4,724,203 and $3,306,514 will expire on December 31, 2000, 2002, 2003,
2005, 2006 and 2007, respectively.
E. At June 30, 2000, 83.3% 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, 2000, 24.2% 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.
21
<PAGE>
F. 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, 2000.
G. The Fund issued to its shareholders of record as of the close of business on
September 27, 1999 transferable Rights to subscribe for up to an aggregate of
3,522,559 shares of Common Stock of the Fund at a rate of one share of Common
Stock for three Rights held at the subscription price of $6.38 per share. During
October 1999, the Fund issued a total of 3,522,559 shares of Common Stock on
exercise of such Rights. Rights' offering costs of $441,000 were charged
directly against the proceeds of the Offering.
H. The Fund, together with other Funds advised by CSAM, LLC have established a
$350 million committed, unsecured, line of credit facility ("Credit Facility")
with Deutsche Bank, AG as administrative agent, State Street Bank and Trust
Company as operations agent, Bank of Nova Scotia as syndication agent and
certain other lenders, for temporary or emergency purposes. Under the terms of
the Credit Facility, the Funds with access to the Credit Facility pay an
aggregate commitment fee at a rate of .075% per annum on the entire amount of
the Credit Facility, which is allocated among the participating Funds in such
manner as is determined by the governing Boards of the various Funds. In
addition, the participating Funds will pay interest on borrowing at the Federal
Funds rate plus .50%. At June 30, 2000, there were no loans outstanding for the
Fund. During the six months ended June 30, 2000 there were no borrowings on this
line of credit.
22
<PAGE>
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS
THREE MONTHS ENDED
------------------------------------------------------------------------------------------------
MARCH 31, 2000 JUNE 30, 2000
-------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income.............. $ 2,523 $ 0.21 $ 2,491 $ 0.21
Net Investment Income.......... 2,279 0.19 2,251 0.19
Net Realized Gain (Loss) and
Change in Unrealized
Appreciation (Depreciation) on
Investments and Foreign
Currency...................... (1,242) (0.11) (2,844) (0.24)
Net Increase (Decrease) in Net
Assets Resulting from
Operations.................... 1,037 0.08 (593) (0.05)
<CAPTION>
MARCH 31, 1999 JUNE 30, 1999 SEPTEMBER 30, 1999 DECEMBER 31, 1999
-------------------- --------------------- ------------------------ ----------------------
Investment Income. $ 2,057 $ 0.24 $ 2,005 $ 0.24 $ 2,094 $ 0.25 $ 3,123 $ 0.26
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Investment Income.......... 1,841 0.22 1,805 0.21 1,866 0.22 2,884 0.24
Net Realized Gain (Loss) and
Change in Unrealized
Appreciation (Depreciation) on
Investments and Foreign
Currency...................... 204 0.03 281 0.03 (2,702) (0.32) 3,719 0.68
Net Increase (Decrease) in Net
Assets Resulting from
Operations.................... 2,045 0.25 2,086 0.24 (836) (0.10) 6,603 0.92
</TABLE>
SUPPLEMENTAL PROXY INFORMATION
The Annual Meeting of the Stockholders of the Credit Suisse Asset Management
Strategic Global Income Fund, Inc. was held on Tuesday, June 6, 2000 at the
offices of Credit Suisse Asset Management, LLC 466 Lexington Avenue, New York
City. The following is a summary of each proposal presented and the total number
of shares voted:
<TABLE>
<CAPTION>
VOTES
PROPOSAL VOTES FOR WITHHELD
-------- --------- --------
<S> <C> <C> <C>
1. To elect the following four Directors:
Enrique R. Arzac 4,028,806 134,212
Lawrence J. Fox 4,031,090 131,928
James S. Pasman, Jr. 4,026,464 136,554
William W. Priest, Jr. 4,030,090 132,928
Phillip Goldstein 3,760,549 59,971
Glenn Goodstein 3,755,248 65,272
Andrew Dakos 3,754,848 65,672
Gerald Hellerman 3,754,848 65,672
As Messrs. Arzac, Fox, Pasman and Priest received a plurality of the
votes cast, they were elected as directors of the Fund.
</TABLE>
<TABLE>
<CAPTION>
VOTES VOTES
PROPOSAL VOTES FOR AGAINST ABSTAINED
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
2. At the Meeting, the ratification of the selection of
PricewaterhouseCoopers LLP as the Fund's independent public
accountants for the fiscal year ending December 31, 2000 was
approved by the following vote: 5,820,893 878,626 1,284,020
</TABLE>
23
<PAGE>
DESCRIPTION OF INVESTLINK-SM- PROGRAM
---------
The InvestLink-SM- Program is sponsored and administered by BankBoston, N.A.,
not by Credit Suisse Asset Management Strategic Global Income Fund, Inc., (the
"Fund"). BankBoston, N.A., will act as program administrator (the "Program
Administrator") of the InvestLink-SM- Program (the "Program"). The purpose of
the Program is to provide interested investors with a simple and convenient way
to invest funds and reinvest dividends in shares of the Fund's common stock
("Shares") at prevailing prices, with reduced brokerage commissions and fees.
An interested investor may join the Program at any time. Purchases of Shares
with funds from a participant's cash payment or automatic account deduction will
begin on the next day on which funds are invested. If a participant selects the
dividend reinvestment option, automatic investment of dividends generally will
begin with the next dividend payable after the Program Administrator receives
his enrollment form. Once in the Program, a person will remain a participant
until he terminates his participation or sells all Shares held in his Program
account, or his account is terminated by the Program Administrator. A
participant may change his investment options at any time by requesting a new
enrollment form and returning it to the Program Administrator.
A participant will be assessed certain charges in connection with his
participation in the Program. First-time investors will be subject to an initial
service charge which will be deducted from their initial cash deposit. All
optional cash deposit investments will be subject to a service charge. Sales
processed through the Program will have a service fee deducted from the net
proceeds, after brokerage commissions. In addition to the transaction charges
outlined above, participants will be assessed per share processing fees (which
include brokerage commissions.) Participants will not be charged any fee for
reinvesting dividends.
The number of Shares to be purchased for a participant depends on the amount
of his dividends, cash payments or bank account or payroll deductions, less
applicable fees and commissions, and the purchase price of the Shares. The
Program Administrator uses dividends and funds of participants to purchase
Shares of the Fund's common stock in the open market. Such purchases will be
made by participating brokers as agent for the participants using normal cash
settlement practices. All Shares purchased through the Program will be allocated
to participants as of the settlement date, which is usually three business days
from the purchase date. In all cases, transaction processing will occur within
30 days of the receipt of funds, except where temporary curtailment or
suspension of purchases is necessary to comply with applicable provisions of the
Federal Securities laws or when unusual market conditions make prudent
investment impracticable. In the event the Program Administrator is unable to
purchase Shares within 30 days of the receipt of funds, such funds will be
returned to the participants.
The average price of all Shares purchased by the Program Administrator with
all funds received during the time period from two business days preceding any
investment date up to the second business day preceding the next investment date
shall be the price per share allocable to a participant in connection with the
Shares purchased for his account with his funds or dividends received by the
Program Administrator during such time period. The average price of all Shares
sold by the Program Administrator pursuant to sell orders received during such
time period shall be the price per share allocable to a participant in
connection with the Shares sold for his account pursuant to his sell orders
received by the Program Administrator during such time period.
BankBoston, N.A., as Program Administrator administers the Program for
participants, keeps records, sends statements of account to participants and
performs other duties relating to the Program. Each participant in the Program
will receive a statement of his account following each purchase of Shares. The
statements will also show the amount of dividends credited to such participant's
account (if applicable), as well as fees paid by the participant. In addition,
each participant will receive copies of the Fund's annual and semi-annual
reports to shareholders, proxy statements and, if applicable, dividend income
information for tax reporting purposes.
If the Fund is paying dividends on the Shares, a participant will receive
dividends through the Program for all Shares held on the dividend record date on
the basis of full and fractional Shares held in his account, and for all other
Shares of the Fund registered in his name. The Program Administrator will send
checks to the participants for the amounts of their dividends that are not to be
automatically reinvested at no cost to the participants.
Shares of the Fund purchased under the Program will be registered in the
name of the accounts of the respective participants. Unless requested, the Fund
will not issue to participants certificates for Shares of the Fund purchased
under the Program. The Program Administrator will hold the Shares in book-entry
form until a Program participant chooses to withdraw his Shares or terminate his
participation in the Program. The number of Shares purchased for a participant's
account under the Program will be shown on his statement of account. This
feature protects against loss, theft or destruction of stock certificates.
A participant may withdraw all or a portion of the Shares from his Program
account by notifying the Program Administrator. After receipt of a participant's
request, the Program Administrator will issue to such participant certificates
for the whole Shares of the Fund so withdrawn or, if requested by the
participant, sell the Shares for him and send him the proceeds, less applicable
brokerage commissions, fees, and transfer taxes, if any. If a participant
withdraws all full and fractional Shares in his Program account, his
participation in the Program will be terminated by the Program Administrator. In
no case will certificates for fractional Shares be issued. The Program
Administrator will convert any fractional Shares held by a participant at the
time of his withdrawal to cash.
Participation in any rights offering, dividend distribution or stock split
will be based upon both the Shares of the Fund registered in participants' names
and the Shares (including
24
<PAGE>
fractional Shares) credited to participants' Program accounts. Any stock
dividend or Shares resulting from stock splits with respect to Shares of the
Fund, both full and fractional, which participants hold in their Program
accounts and with respect to all Shares registered in their names will be
automatically credited to their accounts.
All Shares of the Fund (including any fractional share) credited to his
account under the Program will be voted as the participant directs. The
participants will be sent the proxy materials for the annual meetings of
shareholders. When a participant returns an executed proxy, all of such shares
will be voted as indicated. A participant may also elect to vote his Shares in
person at the Shareholders' meeting.
A participant will receive tax information annually for his personal records
and to help him prepare his U.S. federal income tax return. The automatic
reinvestment of dividends does not relieve him of any income tax which may be
payable on dividends. For further information as to tax consequences of
participation in the Program, participants should consult with their own tax
advisors.
The Program Administrator in administering the Program will not be liable
for any act done in good faith or for any good faith omission to act. However,
the Program Administrator will be liable for loss or damage due to error caused
by its negligence, bad faith or willful misconduct. Shares held in custody by
the Program Administrator are not subject to protection under the Securities
Investors Protection Act of 1970.
The participant should recognize that neither the Fund nor the Program
Administrator can provide any assurance of a profit or protection against loss
on any Shares purchased under the Program. A participant's investment in Shares
held in his Program account is no different than his investment in directly held
Shares in this regard. The participant bears the risk of loss and the benefits
of gain from market price changes with respect to all his Shares. Neither the
Fund nor the Program Administrator can guarantee that Shares purchased under the
Program will, at any particular time, be worth more or less than their purchase
price. Each participant must make an independent investment decision based on
his own judgement and research.
While the Program Administrator hopes to continue the Program indefinitely,
the Program Administrator reserves the right to suspend or terminate the Program
at any time. It also reserves the right to make modifications to the Program.
Participants will be notified of any such suspension, termination or
modification in accordance with the terms and conditions of the Program. The
Program Administrator also reserves the right to terminate any participant's
participation in the Program at any time. Any question of interpretation arising
under the Program will be determined in good faith by the Program Administrator
and any such good faith determination will be final.
Any interested investor may participate in the Program. To participate in
the Program, an investor who is not already a registered owner of the Shares
must make an initial investment of at least $250.00. All other cash payments or
bank account deductions must be at least $100.00, up to a maximum of $100,000.00
annually. An interested investor may join the Program by reading the Program
description, completing and signing the enrollment form and returning it to the
Program Administrator. The enrollment form and information relating to the
Program (including terms and conditions) may be obtained by calling the Program
Administrator at one of the following telephone numbers: First Time Investors--
(800) 523-8506. Current Shareholders--(800) 730-6001. All correspondence
regarding the Program should be directed to: BankBoston, N.A., InvestLink
Program, P.O. Box 8040, Boston, MA 02266-8040.
------------------------------------------------------
*InvestLink is a service mark of Boston EquiServe Limited Partnership
25
<PAGE>
4947-SAR-00
