<PAGE>
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Z E N I X
INCOME
FUND INC.
---
The fund name is printed in the upper left-hand corner.
A picture of the New York Stock Exchange building is shown on
half the cover diagonally. A circle showing the "Z" and "X"
from the fund name is run together and is centered.
QUARTERLY REPORT
JUNE 30, 1995
<PAGE>
- ----------------------------
- --------------------------
ZENIX INCOME FUND INC.
June 30, 1995
DEAR
SHAREHOLDER: We are pleased to provide the first quarter report and
portfolio of investments for the Zenix Income Fund
Inc. for the period ended June 30, 1995. Over the past
three months the Fund paid dividends totaling $0.186
per share. The table below shows annualized
distribution rates based on the Fund's June 30, 1995
net asset value per share and its New York Stock
Exchange closing price.
ANNUALIZED DISTRIBUTION RATE
$6.03 (NAV) 12.33%
$6.50 (NYSE) 11.44%
Effective June 1, 1995, the Fund reduced its monthly dividend
rate from $0.063 to $0.060 per share, reflecting its more
defensive portfolio structure of higher cash reserves and
stronger credit quality than in the prior three month period. We
believe that in what appears to be a deteriorating economic
environment, a more conservative portfolio strategy is warranted
until economic conditions stabilize later this year.
The Fund generated a positive total return of 5.93% for the
past three months and 14.03% for the past six months. The Fund's
three month performance compares favorably to the 6.01% average
total return for all closed-end high yield funds as reported by
Lipper Analytical Services, a major mutual fund performance
tracking organization. The Fund's three month performance was
clearly enhanced not only by the continued decline in interest
rates in the second quarter of 1995, but also its leveraged
structure. The Fund's six month performance, which was well
above the closed-end high yield mutual fund average of 12.14%,
was positively impacted by a combination of factors with the
major one being the significant decline in interest rates so far
in 1995. Most significantly, Zenix's leveraged structure, in
addition to being supportive of an above-average dividend yield,
amplified the advance in the Fund's net asset value over the
past six months.
<PAGE>
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Shown below is a table of relevant statistics regarding
leverage, market prices, net asset values and dividend payments
over the past twelve months.
FINANCIAL DATA PER SHARE OF COMMON STOCK
(UNAUDITED)
INTEREST
RATE ON INTEREST
SENIOR MON- RATE ON
NYSE NET DIVIDEND EY MARKET PNC BANK
RECORD CLOSING ASSET DIVIDEND REINVESTED NOTES DUE CREDIT
DATE PAY DATE PRICE* VALUE* PAID PRICE 1995 FACILITY
- -------- -------- ------- ----- ------- -------- --------- ---------
7/22/94 7/29/94 $7.375 $6.34 $.0680 $7.01 4.380% --
8/24/94 8/31/94 7.250 6.11 .0690 6.89 4.450 --
9/23/94 9/30/94 6.875 6.05 .0690 6.53 4.649 --
10/24/94 10/31/94 6.875 5.96 .0690 6.53 5.049 --
11/22/94 11/30/94 6.625 5.81 .0690 6.29 5.600 --
12/22/94 12/30/94 6.250 5.62 .1256 5.94 5.989 --
1/24/95 1/31/95 6.250 5.58 .0690 5.94 5.799 --
2/21/95 2/28/95 6.250 5.78 .0630 5.94 5.990 --
3/24/95 3/31/95 6.625 5.87 .0630 6.29 5.874 --
4/21/95 4/28/95 6.625 5.96 .0630 6.29 6.150 --
5/23/95 5/31/95 6.875 6.10 .0630 6.53 -- 6.463
6/23/95 6/30/95 6.625 6.03 .0600 6.29 -- 6.463
The reinvestment price is the greater of 98% of the net asset value ("NAV") per
share or 95% of the current market price on valuation date if shares are issued.
If the market price is lower than NAV, shares are purchased in the market.
*As of Record Date.
2
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MARKET AND ECONOMIC OVERVIEW
Economic growth continued to erode in the second quarter of
1995 with the slowdown in consumption expenditures intensifying.
The retail sector of the economy appeared even softer, with
little pricing power on the part of most retail chains. Even the
automobile industry, which was very strong in 1994, has
encountered weaker sales trends in 1995. As mentioned in our
last quarterly report to shareholders, individuals financed a
large portion of their purchases with debt throughout 1994. As a
result, individuals' debt levels are back to high levels. This
is probably acting as a drag on consumption expenditures and
could continue to hamper consumption trends for the rest of 1995
as consumer debt levels are brought down to more manageable
percentages. The industrial side of the economy which has
benefited from strong overseas demand also appears to be
moderating based upon recent economic statistics on industrial
production. In response to the weak first half economic results,
the Federal Reserve modestly reduced short-term interest rates
in early July, signaling their intention to prevent the economy
from falling into a recession. In summary, while we would not
expect a recession given the Federal Reserve's change in
monetary policy, we believe an economic slowdown will present
more of a challenge to corporate profitability, especially in
those sectors of the economy that depend on the consumer.
NEW CREDIT FACILITY
On May 18, 1995, Zenix Income Fund obtained a new $30 million
credit facility from PNC Bank, N.A., effectively replacing the
$25.8 million money market notes which matured on May 18th. The
new revolving line will provide the Zenix Income Fund with much
greater borrowing flexibility to take advantage of changing
market conditions without costing the Fund significantly greater
interest expense as well as reduce the uncertainty inherent in a
monthly auction. We believe the Zenix Income Fund will be much
better served by this more flexible borrowing arrangement.
3
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PORTFOLIO STRATEGY
Given the pervasive slowdown in economic momentum which
appeared to intensify in the second quarter of 1995, we have
moved to a more cautious posture by raising cash reserves and
upgrading overall credit quality in the portfolio. Beginning in
the month of May, the high yield market, especially the middle
tier B/B rated issues, began to significantly lag the rally in
the Treasury market. We have shifted our industry orientation
away from the more vulnerable sectors of the economy and have
increased our exposure to the traditionally more defensive
sectors including telecommunications, cable TV and media, to
name a few. As we stated earlier, the reduction in the Fund's
dividend is a result of this more defensive portfolio posture.
Any additional easing of monetary policy by the Federal Reserve
would probably go a long way towards restoring investor
confidence in the high yield market. We would expect to be
reinvesting our small cash reserves back into the market over
the next three months as investment opportunities develop.
We appreciate your past support and look forward to continue
to provide attractive investment results over the second half of
1995. Should you have any questions about your investment in the
Fund, please call The Shareholder Services Group, Inc. at (800)
331-1710.
SINCERELY,
Heath B. McLendon John C. Bianchi, CFA
Chairman of the Board Vice President and
and Investment Officer Investment Officer
August 20, 1995
4
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------------------------
<PAGE>
Portfolio of Investments
June 30, 1995 (Unaudited)
---------------------------------------------------------
Face Value
Value (Note 1)
- ------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--94.2%
- ---------------------------------------
BROADCASTING-TV, CABLE AND RADIO--10.8%
$2,075,000 Bell CableMedia PLC, Sr. Discount Note, Step up
Bond, Zero coupon due 07/15/2004................ $ 1,372,094
3,000,000 Cablevision Systems Corporation, Sr. Sub. Deb.,
9.875% due 02/15/2013........................... 3,187,500
3,125,000 Continental Cablevision Inc., Sr. Sub. Deb.,
11.000% due 06/01/2007.......................... 3,476,563
Marcus Cable Company:
2,000,000 11.875% due 10/01/2005.......................... 1,930,000
2,500,000 11.875% due 08/01/2004.......................... 1,587,500
Rogers Cablesystems Ltd.:
CAD 800,000 Sr. Deb., 9.650% due 01/15/2014................. 497,980
525,000 Sr. Secured 2nd Priority Deb., 10.125% due
09/01/2012...................................... 529,594
1,625,000 Rogers Communications Inc., Sr. Deb., 10.875%
due 04/15/2004.................................. 1,667,656
$500,000 Young Broadcasting Inc., Sr. Sub. Notes, 11.750%
due 11/15/2004.................................. $ 546,875
------------
14,795,762
------------
HOTEL/GAMING--9.2%
Aztar Corporation, Sr. Sub. Notes:
1,000,000 11.000% due 10/01/2002.......................... 1,000,000
1,500,000 13.750% due 10/01/2004.......................... 1,695,000
2,500,000 Bally's Grand Inc., First Mortgage Note, 10.375%
due 12/15/2003.................................. 2,465,625
1,750,000 Boyd Gaming Corporation, Sr. Sub. Note, Series
B, 10.750% due 09/01/2003....................... 1,798,125
2,275,000 GNF Corporation, First Mortgage Bond, 10.625%
due 04/01/2003.................................. 1,919,531
1,275,000 Station Casinos Inc., Sr. Sub. Notes, 9.625% due
06/01/2003...................................... 1,174,594
See Notes to Portfolio of Investments.
5
<PAGE>
Portfolio of Investments (Continued)
June 30, 1995 (Unaudited)
---------------------------------------------------------
FACE VALUE
VALUE (NOTE 1)
- -------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--(CONTINUED)
- ---------------------------------------
HOTEL/GAMING--(CONTINUED)
$3,115,235 Trump Taj Mahal Funding, Unit Building 1
Management, Deb., (Payment-in-kind), 11.350% due
11/15/1999...................................... $ 2,507,764
------------
12,560,639
------------
PAPER/FOREST PRODUCTS/PRINTING--8.9%
Domtar Inc.,
1,000,000 Sr. Notes, 11.750% due 03/15/1999............... 1,105,000
Indah Kiat International Financing Company,
B.V., Sr. Secured Notes:
1,100,000 11.375% due 06/15/1999.......................... 1,122,000
2,600,000 11.875% due 06/15/2002.......................... 2,652,000
Repap New Brunswick Inc.:
750,000 1st Priority Sr. Secured Notes, 10.625% due
06/15/2002...................................... 753,750
2,250,000 2nd Priority Sr. Secured Notes, 10.625% due
06/15/2002...................................... 2,283,750
1,645,000 Repap Wisconsin Inc., 2nd Priority Sr. Secured
Notes, 9.875% due 05/01/2006.................... 1,601,819
$1,440,000 Riverwood International Corporation, Sr. Sub.
Note, Series 2, 11.250% due 06/15/2002.......... $ 1,573,200
1,025,000 S.D. Warren Company, Sr. Sub. Note, 12.000% due
12/15/2004**.................................... 1,107,000
------------
12,198,519
------------
METALS/MINING--7.8%
2,150,000 Algoma Steel Inc. 12.375% due 07/15/2005........ 1,938,312
1,000,000 Armco Inc., Sr. Note, 11.375% due 10/15/1999.... 1,025,000
2,575,000 Kaiser Aluminum & Chemical Corporation, Sr. Sub.
Note, 12.750% due 02/01/2003.................... 2,768,125
1,000,000 Republic Engineered Steels Manufacturing, First
Mortgage Note, 9.875% due 12/15/2001............ 908,750
2,500,000 Russell Metals Inc., Sr. Note, 10.250% due
06/15/2000...................................... 2,390,625
See Notes to Portfolio of Investments.
6
<PAGE>
Portfolio of Investments (Continued)
June 30, 1995 (Unaudited)
---------------------------------------------------------
FACE VALUE
VALUE (NOTE 1)
- -------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--(CONTINUED)
- ---------------------------------------
METALS/MINING--(CONTINUED)
$1,500,000 UCAR Global, Sr. Secured Note, 12.000% due
01/15/2005**.................................... $ 1,610,625
------------
10,641,437
------------
GROCERY/CONVENIENCE STORES--6.4%
925,000 Farm Fresh Inc., Sr. Note, Series A, 12.250% due
10/01/2000...................................... 869,500
2,000,000 P & C Food Markets, Inc., Sr. Note, 11.500% due
10/15/2001...................................... 2,122,500
Pathmark Stores, Inc., Sub. Note:
2,275,000 11.625% due 06/15/2002.......................... 2,411,500
1,000,000 12.625% due 06/15/2002.......................... 1,085,000
2,275,000 Ralphs Grocery Company, Sr. Sub. Note, 11.000%
due 06/15/2005.................................. 2,212,438
------------
8,700,938
------------
PACKAGING/CONTAINERS--5.5%
2,750,000 Container Corporation of America, Sr. Note,
11.250% due 05/01/2004.......................... 2,901,250
$3,300,000 Gaylord Container Corporation, Sr. Note, 11.500%
due 05/15/2001.................................. $ 3,510,375
1,000,000 Stone Container Corporation, Sr. Note, 12.625%
due 07/15/1998.................................. 1,085,000
------------
7,496,625
------------
BUILDING/CONSTRUCTION--4.8%
2,150,000 American Standard Inc., Sr. Deb., 11.375% due
05/15/2004...................................... 2,367,688
1,550,000 Greystone Homes Inc., Sr. Note, 10.750% due
03/01/2004...................................... 1,373,688
1,300,000 Hovnainan K. Enterprises Inc., Sub. Note,
11.250% due 04/15/2002.......................... 1,165,125
450,000 Miles Homes Services Unit, Sr. Note, 12.000% due
04/01/2001...................................... 360,563
1,325,000 US Home Corporation, Sr. Note, 9.750% due
06/15/2003...................................... 1,296,844
------------
6,563,908
------------
See Notes to Portfolio of Investments.
7
<PAGE>
Portfolio of Investments (Continued)
June 30, 1995 (Unaudited)
---------------------------------------------------------
FACE VALUE
VALUE (NOTE 1)
- -------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--(CONTINUED)
- ---------------------------------------
CHEMICALS--4.4%
$3,825,000 NL Industries Inc., Sr. Secured Note, 11.750%
due 10/15/2003.................................. $ 4,016,250
2,000,000 Terra Industries Inc., Sr. Note, 10.500% due
06/15/2005...................................... 2,050,000
------------
6,066,250
------------
LEISURE/AMUSEMENT/MOTION PICTURES--3.6%
2,550,000 Coleman Holdings, Inc., Note, Zero coupon due
05/27/1998...................................... 1,874,250
1,575,000 Gillett Holdings Inc., Sr. Sub. Note, 12.250%
due 06/30/2002.................................. 1,647,844
1,550,000 Remington Arms, Inc., Sr. Sub. Note, 10.000% due
12/01/2003**.................................... 1,435,688
------------
4,957,782
------------
HEALTH CARE/DRUGS/HOSPITAL SUPPLIES--3.0%
900,000 Charter Medical Corporation, Sr. Sub Note,
11.250% due 04/15/2004.......................... 959,625
$2,850,000 Ornda Healthcorp, Sr. Sub. Note, 12.250% due
05/15/2002...................................... $ 3,159,938
------------
4,119,563
------------
OIL/NATURAL GAS--3.0%
1,150,000 Giant Industries Inc., Sr. Sub Notes, 9.750% due
11/15/2003...................................... 1,109,750
2,000,000 Global Marine, Secured Notes, 12.750% due
12/15/1999...................................... 2,205,000
675,000 Santa Fe Energy Resources Inc., Sr. Sub. Deb.,
11.000% due 05/15/2004.......................... 719,719
------------
4,034,469
------------
AUTOMOBILE/AUTO PARTS/TRUCK MANUFACTURING--2.8%
650,000 Fairfield Manufacturing Inc., Sr. Sub Note,
11.375% due 07/01/2001.......................... 619,937
850,000 Harvard Industries, Inc., Sr. Note, 12.000% due
07/15/2004...................................... 867,000
1,000,000 SPX Corporation, Sr. Sub. Note, 11.750% due
06/01/2002...................................... 1,061,250
See Notes to Portfolio of Investments.
8
<PAGE>
Portfolio of Investments (Continued)
June 30, 1995 (Unaudited)
---------------------------------------------------------
FACE VALUE
VALUE (NOTE 1)
- -------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--(CONTINUED)
- ---------------------------------------
AUTOMOBILE/AUTO PARTS/TRUCK MANUFACTURING--(CONTINUED)
$1,175,000 Truck Components Inc., Sr. Note, Series A,
12.250% due 06/30/2001.......................... $ 1,280,750
------------
3,828,937
------------
TOBACCO--2.7%
3,700,000 Consolidated Cigar, Sr. Sub. Note, 10.500% due
03/01/2003...................................... 3,649,125
------------
PERSONAL CARE PRODUCTS/COSMETICS--2.3%
3,130,000 Revlon Consumer Products Corporation, Sr. Sub.
Note, 10.500% due 02/15/2003.................... 3,094,787
------------
TRANSPORTATION--2.2%
2,805,000 Sea Containers Limited, Sr. Sub. Deb., 12.500%
due 12/01/2004.................................. 3,071,475
------------
CONSUMER DURABLE GOODS/HOME FURNISHINGS--2.1%
5,825,000 International Semi-Tech, Sr. Note, Step up Bond,
Zero coupon to 08/15/2000, 11.500% due
08/15/2003...................................... 2,927,062
------------
TELEPHONE/COMMUNICATIONS--2.0%
$3,600,000 Nextel Communication Inc., Sr. Discount Notes,
Step up Bond, Zero coupon to 02/15/1999, 9.750%
due 08/15/2004.................................. $ 1,795,500
1,550,000 Pagemart Inc., Sr. Discount Note, Zero coupon
due 11/01/2003.................................. 990,062
------------
2,785,562
------------
INSURANCE COMPANIES--1.9%
2,250,000 Bankers Life Holding Corporation, Sr. Sub.
Notes, Series B, 13.000% due 11/01/2002......... 2,612,813
------------
TEXTILES/APPAREL--1.9%
1,350,000 CMI Industries, Sr. Sub. Note, 9.500% due
10/01/2003...................................... 1,242,000
650,000 Dan River Inc., Sr. Sub. Note, 10.125% due
12/15/2003...................................... 648,375
675,000 Hartmarx Corporation, Sr. Sub. Note, 10.875% due
01/15/2002...................................... 666,562
------------
2,556,937
------------
See Notes to Portfolio of Investments.
9
<PAGE>
Portfolio of Investments (Continued)
June 30, 1995 (Unaudited)
---------------------------------------------------------
FACE VALUE
VALUE (NOTE 1)
- -------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--(CONTINUED)
- ---------------------------------------
RETAIL--1.8%
$1,450,000 Barnes & Noble Inc., Sr. Sub. Note, 11.875% due
01/15/2003...................................... $ 1,600,438
1,025,000 Wickes Lumber Company, Sr. Sub. Note, 11.625%
due 12/15/2003.................................. 890,469
------------
2,490,907
------------
PUBLISHING--1.8%
1,850,000 Marvel Holdings, Inc., Sr. Secured Note, Series
B, Zero coupon due 04/15/1998................... 1,299,625
AUD 1,950,000 News America Holdings, Inc., Deb., 8.625% due
02/07/2014...................................... 1,129,558
------------
2,429,183
------------
ELECTRONICS/COMPUTERS--1.4%
3,150,000 Bell & Howell Holdings Company, Series A, Sr.
Discount Note, Step up Bond, Zero coupon to
03/01/2000, 11.500% due 03/01/2005.............. 1,846,688
------------
AEROSPACE AND DEFENSE--0.5%
$650,000 Tracor, Inc., Sr. Sub Note, 10.875% due
08/15/2001...................................... $ 668,687
------------
OTHER--3.4%
1,500,000 Day International Group, 11.125% due
06/01/2005...................................... 1,507,500
3,000,000 Interlake Corporation, 12.125% due 06/01/2005... 3,060,000
------------
4,567,500
------------
TOTAL CORPORATE BONDS AND NOTES (Cost
$127,756,781)................................... 128,665,555
- -------------------------------------------------------------------------------
SHARES
PREFERRED STOCKS--2.1%
- -------------------------------------------------------------------------------
38,147 Foxmeyer Health Corporation, Preferred, Series
A, (Payment-in-kind), Exchangable, 4.200%....... 1,387,596
7,000 Geneva Steel Company, Preferred, Series B,
(Payment-in-kind), Exchangable, 14.000%......... 665,000
See Notes to Portfolio of Investments.
10
<PAGE>
Portfolio of Investments (Continued)
June 30, 1995 (Unaudited)
---------------------------------------------------------
VALUE
SHARES (NOTE 1)
- ------------------------------------------------------------------------------
PREFERRED STOCKS--(CONTINUED)
- ---------------------------------------
8,636 K-III Communications Corporation,
Preferred, Series B, (Payment-in-kind),
Exchangable, 11.625%.................... $ 837,670
-------------
TOTAL PREFERRED STOCKS (Cost
$2,856,995)............................. 2,890,266
-------------
WARRANTS--0.0%
5,400 Miles Homes Inc., Expire 04/01/1997+.... 2,700
7,130 Pagemart Inc., Expire 12/31/2003+....... 32,085
-------------
TOTAL WARRANTS
(Cost $0)............................... 34,785
-------------
- ------------------------------------------------------------------------
FACE
VALUE
- ------------------------------------------------------------------------
COMMERCIAL PAPER--5.5%
- ------------------------------------------------------------------------
(Cost $7,492,000)
- ------------------------------------------------------------------------
$7,492,000 General Electric Capital Corporation,
5.750% due 07/30/1995................... $ 7,492,000
-------------
TOTAL INVESTMENTS
(Cost $138,105,776*).................................. 101.8 % 139,082,606
OTHER ASSETS AND
LIABILITIES (Net)..................................... (1.8 ) (2,502,544)
------ ------------
NET ASSETS............................................ 100.0 % $136,580,062
------ ------------
------ ------------
REDEMPTION VALUE OF 7.00% CUMULATIVE PREFERRED STOCK
(including accumulated undeclared dividends)................... $30,087,500
------------
------------
NET ASSETS AVAILABLE FOR COMMON SHARES......................... $106,492,562
------------
------------
COMMON STOCK OUTSTANDING....................................... 13,803,962
------------
------------
NET ASSET VALUE PER SHARE OF COMMON STOCK...................... $7.71
------------
------------
- ------------
* Aggregate cost for Federal tax purposes.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration to qualified institutional buyers.
+ Non-Income producing security.
CAD Canadian dollars
AUD Australian dollars
See Notes to Portfolio of Investments.
11
<PAGE>
Notes to Portfolio of Investments
June 30, 1995 (Unaudited)
---------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Zenix Income Fund Inc. (the "Fund") is a diversified closed-end management
investment company organized as a Maryland corporation and is registered with
the Securities and Exchange Commission under the Investment Company Act of 1940,
as amended. The Fund commenced operations on April 27, 1988. The policies
described below are followed consistently by the Fund in the preparation of its
financial statements in conformity with generally accepted accounting
principles.
PORTFOLIO VALUATION: The net asset value of the Fund's Common Stock is
determined by The Boston Company Advisors, Inc. ("Boston Advisors") no less
frequently than the close of business on the Fund's last business day of each
week (generally Friday). It is determined by dividing the value of the net
assets available to Common Stock by the total number of shares of Common
Stock outstanding. For the purpose of determining the net asset value per
share of the Common Stock, the value of the Fund's net assets shall be deemed
to equal the value of the Fund's assets less (i) the Fund's liabilities
(including the outstanding principal amount and accrued interest on the PNC
Bank credit facility), (ii) the aggregate liquidation value (i.e., $1,000 per
outstanding share) of the 7.000% Cumulative Redeemable Preferred Stock
("7.000% Cumulative Preferred Stock"), and (iii) the aggregate and unpaid
dividends on the outstanding Cumulative Preferred Stock issue. Portfolio
securities that are actively traded in the over-the-counter market, including
listed securities for which the primary market is believed to be
over-the-counter, are valued at the mean between the most recently quoted bid
and asked prices provided by the principal market makers. Any security for
which the primary market is an exchange is valued at the last sale price on
such exchange on the day of valuation or, if there was no sale on such day,
at the last bid price quoted on such day. Securities and assets for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of Directors
of the Fund, including reference to valuations of other securities which are
considered comparable in quality,
12
<PAGE>
Notes to Portfolio of Investments (Continued)
June 30, 1995 (Unaudited)
---------------------------------------------------------
interest rate and maturity. Short-term investments which mature in less than
60 days are valued at amortized cost, unless this method is determined by the
Board of Directors not to represent fair value.
PAYMENT-IN-KIND BONDS: The Fund may invest in payment-in-kind ("PIK")
bonds. PIK bonds pay interest in cash or through the issuance of additional
bonds. PIK bonds are recorded at fair value on the ex-dividend date. PIK
bonds carry a risk in that unlike bonds which pay interest throughout the
period to maturity, the Fund will realize no cash until the cash payment
dates unless a portion of such securities is sold. If the issuer of a PIK
bond defaults, the Fund may obtain no return at all on its investment. Income
is recorded as earned on the accrual basis.
Quarterly Results of Operations
- ---------------------------------------------------------
<TABLE>
<CAPTION>
NET INCREASE/
NET REALIZED (DECREASE)
AND UNREALIZED IN NET ASSETS
INVESTMENT NET INVESTMENT GAIN/(LOSS) FROM
INCOME INCOME ON INVESTMENTS OPERATIONS
---------------- ---------------- -------------------- --------------------
PER PER PER PER
QUARTER ENDED: TOTAL SHARE* TOTAL SHARE* TOTAL SHARE* TOTAL SHARE*
- -------------------- ---------- ----- ---------- ----- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
June 30, 1993....... $3,786,446 $0.30 $3,149,795 $0.25 $ 2,613,982 $ 0.21 $ 5,763,777 $ 0.46
September 30,
1993............... 3,745,471 0.29 3,200,066 0.25 (276,601) (0.02) 2,293,465 0.23
December 31, 1993... 3,631,803 0.28 3,014,890 0.24 2,056,085 0.16 5,070,975 0.40
March 31, 1994...... 4,075,066 0.31 3,603,680 0.28 (6,283,635) (0.48) (2,679,955) (0.20)
June 30, 1994....... 3,739,209 0.29 3,111,466 0.24 (3,899,320) (0.29) (787,854) (0.06)
September 30,
1994............... 3,771,958 0.28 3,215,851 0.24 (5,662,951) (0.42) (2,447,100) (0.17)
December 31, 1994... 3,833,137 0.28 3,133,437 0.23 (4,508,973) (0.33) (1,375,536) (0.10)
March 31, 1995...... 3,651,680 0.27 2,926,309 0.22 3,514,541 0.26 6,440,850 0.48
June 30, 1995....... 3,390,611 0.25 2,647,561 0.19 (1,041,316) (0.07) 1,606,245 0.12
- ------------
<FN>
<F1>
* Per share of Common Stock.
</FN>
</TABLE>
13
<PAGE>
DIRECTORS
Charles F. Barber
Allan J. Bloostein
Martin Brody
Dwight B. Crane
Robert A. Frankel
Heath B. McLendon
OFFICERS
Heath B. McLendon
CHAIRMAN OF THE BOARD
AND INVESTMENT OFFICER
Jessica Bibliowicz
PRESIDENT
Lewis E. Daidone
SENIOR VICE PRESIDENT
AND TREASURER
John C. Bianchi
VICE PRESIDENT AND
INVESTMENT OFFICER
Kenneth A. Egan
INVESTMENT OFFICER
Christina T. Sydor
SECRETARY
This report is sent to the shareholders of the
ZENIX INCOME FUND INC.
for their information. It is not a Prospectus,
circular or representation intended for use in the
purchase or sale of shares of the Fund or of any
securities mentioned in the report.
