MERRILL LYNCH
WORLD INCOME
FUND, INC.
FUND LOGO
Quarterly Report
September 30, 1995
This report is not authorized for use as an offer of sale
or a solicitation of an offer to buy shares of the Fund
unless accompanied or preceded by the Fund's current
prospectus. Past performance results shown in this report
should not be considered a representation of future
performance. Investment return and principal value
of shares will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost.
<PAGE>
Merrill Lynch
World Income
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Officers and
Directors
Arthur Zeikel, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Terry K. Glenn, Executive Vice President
N. John Hewitt, Senior Vice President
Donald C. Burke, Vice President
Vincent T. Lathbury III, Vice President
Robert J. Parish, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
<PAGE>
Custodian
State Street Bank & Trust Company
P.O. Box 351
Boston, Massachusetts 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
DEAR SHAREHOLDERS
Economic momentum continues to
slow in the major economies except
for the United States, where growth
has stabilized. Leading economic
indicators for the Group of Seven
countries continue to trend lower, the
growth rate for industrial production
is falling, and the unemployment
rate is inching higher. The current US
business cycle is characterized by the
strongest investment performance
and the weakest trend in consumer
spending for any upturn in the post-
war era. The Japanese economy
slipped back into recession and debt
deflation is a major threat. Consump-
tion is being undermined by rising
unemployment and declining income,
while the rise in excess capacity
will mitigate any incentive to expand
production. The government has
undertaken a massive reflation effort
via injections of liquidity and yen
depreciation.
European economic conditions were
far different than those existing in
Japan, but growth continued to slow.
Germany's capital and exports sectors
both slowed sharply, while consumer
demand appeared unlikely to be an
offsetting factor. France lagged behind
Germany; Italian growth turned slug-
gish following a period of monetary
tightening; excess inventory led to
lower-than-expected growth in the
United Kingdom.
<PAGE>
In Canada, October 30, 1995 was set
as the date for Quebec's referendum
on separation. Possible sharp weak-
ness in the financial markets was
averted with the narrow rejection of
the referendum.
In Australia, slower growth allowed
monetary policy to remain constant
and inflation to possibly stop its
recent drift upwards. Finally, the con-
tinued appreciation and stability of
emerging markets' fixed-income
prices during the second quarter were
sustained by investors' acceptance
of both the regional economic and
political scene set against a stable
US bond market.
During the three months ended
September 30, 1995, ten-year yields
rose in the Dollar bloc countries of
the United States, Canada, and Aus-
tralia, remained unchanged in Japan,
and fell in Europe. The US bond mar-
ket backed up sharply in July following
the release of stronger-than-expected
June activity data but regained all of
its losses after softer-than-expected
data was published in August. In-
creased sensitivity to growth data
will likely characterize the market for
a few more months.
In Europe, the Bundesbank set a posi-
tive tone for all markets by cutting
interest rates upon returning from
its summer recess. Weak activity and
money supply data along with con-
tinued easing of inflation allowed the
Bundesbank to ease monetary policy
without jeopardizing credibility. With
this background, the higher-yielding
European markets substantially out-
performed Germany. The US dollar
surged against the yen following an
August 2, 1995 deregulation pack-
age designed to strongly encourage
increased foreign investments and
massive US dollar buying by the
Bank of Japan. However, the falling of
the yen coupled with the Bundes-
bank's monetary easing and interven-
tion pushed the Deutschemark down.
<PAGE>
The US dollar retraced one-half of its
gain versus the Deutschemark on
September 20, 1995 and September
21, 1995 following Bundesbank com-
ments suggesting that the European
Monetary Union (EMU) debate may
need to be reopened. Not surprisingly,
these comments were made soon
after a somewhat disappointing
French budget.
Global Strategy & Outlook
During the three months ended
September 30, 1995, we maintained
our exposure to US high-yield and
convertible securities markets at
roughly 50% of net assets, while
maintaining the European exposure
near 30%. In the Dollar bloc markets,
we initiated a new 2% position in
New Zealand, while in Europe we sold
our positions in Denmark and Italy
to buy positions in Sweden and Spain.
The outlook for European interest
rates remains positive given the
Bundesbank's move to an easing mode
and signs of inflation stabilization
in the weak currency countries
of Italy, Spain and Sweden. However,
given the relative outperformance
of these higher-yielding bond markets,
along with recent comments about
the appropriate speed of the EMU, the
outlook dimmed for these weak countries.
Canada remained volatile before the
October 30, 1995 referendum, while the
main risk in Australia appeared to be the
pace of rising inflation, especially
regarding wages. In the emerging
markets we chose to maintain our
modest Mexican exposure despite the
severe recession signaled by the
10.5% decline in growth during the
second quarter. Argentina recently
negotiated a new agreement with the
International Monetary Fund and suc-
cessfully launched two new signifi-
cant bond issues. With this positive
background, we used uncertainty sur-
rounding resignation rumors of
Finance Minister Cavallo to add to
the Fund's core positions. In addition,
we added new positions in the bonds
of the government of Turkey and
India's Reliance Industries.
<PAGE>
From a currency perspective, the
US dollar's inability to move above
major barriers given the clear shift in
Japanese and German policy is some-
what disconcerting. It now appears
appreciation beyond the highs
reached in mid-September will likely
require renewed monetary tighten-
ing by the Federal Reserve Board,
especially given the renewed doubts
about EMU.
High-Yield Market
The high-yield market produced a
total return of +2.92% during third
quarter 1995 as measured by the
unmanaged Merrill Lynch High Yield
Master Index, and had a total return
of +16.64% for the year ended
September 30, 1995. While returns
were attractive, third quarter invest-
ment performance reflected a marked
deceleration. The major decline in
intermediate-term and long-term
interest rates which occurred during
the first half of 1995 appears to have
ended.
Amidst signs of a firming economy,
cyclical issues outperformed defen-
sive issues during the quarter ended
September 30, 1995 for the first time
in 1995. Another sign that reflects
increased comfort with the economy--
the yield spread between BB-rated
issues and B-rated issues--narrowed
modestly after widening approxi-
mately 65 basis points in the first half
of 1995. New-issue volume was extra-
ordinarily high, totaling $13.6 billion
during the September quarter com-
pared to less than $6 billion during the
same quarter in 1994. Net of redemp-
tions, upgrades to investment grade,
tenders and maturing issues, high-
yield supply increased $16 billion for
the nine months ended September
30, 1995. This brought the total size
of the high-yield universe to approxi-
mately $285 billion. Investors con-
tinued to avoid highly speculative
offerings. This forced two prospective
large issuers seeking to finance global
satellite telephone systems to with-
draw their offerings.
<PAGE>
The internal dynamics of the high-
yield market may surprise investors
accustomed to the relatively homo-
geneous investment performance of
industries within the high-grade
market. Prices of high-yield bonds
fluctuated widely as buyers and sellers
changed perceptions of credit quality.
Valuations were reflected in bond
prices. For example, the industry
groups with the highest total return
for the nine months ended Septem-
ber 30, 1995 were: airlines, 23.9%;
gaming, 19.8%; housing, 18.4%; and
utilities, 18.0%. The worst performers
during the period were: retail, 3%;
food/tobacco, 8.3%; metals/minerals,
12.3%; and financial, 12.8%.
Our outlook for the high-yield market
is positive. For the remainder of the
year, we anticipate a stable interest
rate environment. Yield spreads seem
likely to remain relatively unchanged.
In Conclusion
We appreciate your ongoing invest-
ment in Merrill Lynch World Income
Fund, Inc., and we look forward to
reviewing our outlook and strategy
with you again in our upcoming
annual report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent T. Lathbury III)
Vincent T. Lathbury III
Vice President and Portfolio Manager
(Robert J. Parish)
Robert J. Parish
Vice President and Portfolio Manager
November 1, 1995
<PAGE>
PERFORMANCE DATA
About Fund
Performance
Since October 21, 1994, investors have been able to purchase
shares of the Fund through the Merrill Lynch Select Pricing SM
System, which offers four pricing alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 4% and bear no ongoing distribution or account mainte-
nance fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred
sales charge of 4% if redeemed during the first year, decreasing
1% each year thereafter to 0% after the fourth year. In addition,
Class B Shares are subject to a distribution fee of 0.50% and an
account maintenance fee of 0.25%. These shares automatically
convert to Class D Shares after approximately 10 years.
* Class C Shares are subject to a distribution fee of 0.55% and an
account maintenance fee of 0.25%. In addition, Class C Shares
are subject to a 1% contingent deferred sales charge if redeemed
within one year of purchase.
* Class D Shares incur a maximum initial sales charge of 4% and
an account maintenance fee of 0.25% (but no distribution fee).
Performance data for the Fund's Class A and Class B Shares
are presented in the "Average Annual Total Return" and
"Performance Summary" tables below and on page 5. "Aggregate
Total Return" tables for Class C and Class D Shares are also
presented on page 5. Data for all of the Fund's shares are
presented in the "Recent Performance Results" table on page 6.
The "Recent Performance Results" table shows investment
results before the deduction of any sales charges for Class A and
Class B Shares for the 12-month and 3-month periods ended
September 30, 1995 and for Class C and Class D Shares for the
since inception and 3-month periods ended September 30, 1995.
All data in this table assume imposition of the actual total
expenses incurred by each class of shares during the relevant
period.
None of the past results shown should be considered a represen-
tation of future performance. Investment return and principal
value of shares will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost. Dividends
paid to each class of shares will vary because of the different
levels of account maintenance, distribution and transfer agency
fees applicable to each class, which are deducted from the
income available to be paid to shareholders.
<PAGE>
<TABLE>
Performance
Summary--
Class A Shares++
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
9/29/88--12/31/88 $9.35 $9.68 $0.001 $0.280 + 6.53%
1989 9.68 9.13 0.002 1.159 + 6.32
1990 9.13 8.53 -- 1.463 + 9.46
1991 8.53 9.30 -- 1.106 +21.99
1992 9.30 8.85 0.019 0.990 + 6.15
1993 8.85 9.28 0.028 0.750 +14.12
1994 9.28 8.20 -- 0.711 - 4.05
1/1/95--9/30/95 8.20 8.56 -- 0.524 +11.23
------ ------
Total $0.050 Total $6.983
Cumulative total return as of 9/30/95: +99.23%**
<FN>
++Performance results for per share net asset value of Class A Shares prior to
November 18, 1991 are for the period when the Fund was closed-end.
*Figures may include short-term capital gains distributions and return of
capital distribution, if any.
**Figures assume reinvestment of all dividends and capital gains distributions
at net asset value on the payable date, and do not include sales charge;
results would be lower if sales charge was included.
</TABLE>
<TABLE>
Performance
Summary--
Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
11/18/91--12/31/91 $9.26 $9.30 -- $0.112 + 1.64%
1992 9.30 8.85 $0.019 0.919 + 5.34
1993 8.85 9.28 0.028 0.681 +13.27
1994 9.28 8.19 -- 0.645 - 4.90
1/1/95--9/30/95 8.19 8.55 -- 0.477 +10.62
------ ------
Total $0.047 Total $2.834
Cumulative total return as of 9/30/95: +27.58%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions and return of
capital distribution, if any.
**Figures assume reinvestment of all dividends and capital gains distributions
at net asset value on the payable date, and do not reflect deduction of any
sales charge; results would be lower if sales charge was deducted.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares++*
Year Ended 9/30/95 +10.66% +6.23%
Five Years Ended 9/30/95 + 9.72 +8.83
Inception (9/29/88) through 9/30/95 +10.35 +9.71
[FN]
++Performance results for per share net asset value of Class A Shares prior to
November 18, 1991 are for the period when the Fund was closed-end.
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 9/30/95 +9.82% +5.82%
Inception (11/18/91) through 9/30/95 +6.50 +6.30
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0% after
4 years.
**Assuming payment of applicable contingent deferred sales charge.
<PAGE>
Aggregate
Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94) through 9/30/95 +9.22% +8.22%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0% after
1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (10/21/94) through 9/30/95 +9.83% +5.43%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
PERFORMANCE DATA (concluded)
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
9/30/95 6/30/95 9/30/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $8.56 $8.47 $8.43 + 1.54% +1.06%
Class B Shares* 8.55 8.46 8.42 + 1.54 +1.06
Class C Shares* 8.55 8.46 8.42 + 1.54 +1.06
Class D Shares* 8.56 8.47 8.43 + 1.54 +1.06
Class A Shares--Total Return* +10.66(1) +3.18(2)
Class B Shares--Total Return* + 9.82(3) +2.99(4)
Class C Shares--Total Return* + 9.22(5) +2.97(6)
Class D Shares--Total Return* + 9.83(7) +3.12(8)
Class A Shares--Standardized 30-day Yield 8.22%
Class B Shares--Standardized 30-day Yield 7.79%
Class C Shares--Standardized 30-day Yield 7.70%
Class D Shares--Standardized 30-day Yield 7.97%
<PAGE>
<FN>
*Investment results shown do not reflect sales charges; results shown would be
lower if a sales charge was included.
++Investment results shown for Class C and Class D Shares are since inception
(10/21/94).
(1)Percent change includes reinvestment of $0.721 per share ordinary income
dividends.
(2)Percent change includes reinvestment of $0.178 per share ordinary income
dividends.
(3)Percent change includes reinvestment of $0.656 per share ordinary income
dividends.
(4)Percent change includes reinvestment of $0.161 per share ordinary income
dividends.
(5)Percent change includes reinvestment of $0.600 per share ordinary income
dividends.
(6)Percent change includes reinvestment of $0.159 per share ordinary income
dividends.
(7)Percent change includes reinvestment of $0.648 per share ordinary income
dividends.
(8)Percent change includes reinvestment of $0.172 per share ordinary income
dividends.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Percent of
AFRICA Industries Face Amount Fixed-Income Investments Cost Value Net Assets
<S> <S> <S><C> <S> <C> <C> <C>
South Foreign Government US$ 5,000,000 Republic of South Africa, 9.625% due
Africa Obligations 12/15/1999 $ 4,984,250 $ 5,256,250 0.3%
Total Fixed-Income Investments in
South Africa 4,984,250 5,256,250 0.3
Total Investments in African Securities 4,984,250 5,256,250 0.3
<PAGE>
LATIN
AMERICA
& THE
CARIBBEAN
Argentina Energy US$ 4,000,000 Transportadora de Gas del Sur, 7.75%
due 12/23/1998 3,542,500 3,600,000 0.2
Telecommunications 3,000,000 Telecom Argentina Stet--France Telecom
S.A., 8.375% due 10/18/2000 2,697,500 2,670,000 0.2
10,000,000 Telefonica de Argentina S.A., 11.875%
due 11/01/2004 9,800,800 9,975,000 0.6
-------------- -------------- ------
12,498,300 12,645,000 0.8
Total Fixed-Income Investments in
Argentina 16,040,800 16,245,000 1.0
Brazil Banking US$ 3,000,000 Banco Safra, 9.75% due 6/19/1997 3,000,000 2,985,000 0.2
5,000,000 Uniao de Bancos Brasileiros, 10.25%
due 6/12/1997 4,987,500 4,981,250 0.3
-------------- -------------- ------
7,987,500 7,966,250 0.5
Construction 5,000,000 Compania Brasileira de Projetos e
Obras, 12.50% due 12/22/1997 4,975,000 4,962,500 0.3
Total Fixed-Income Investments
in Brazil 12,962,500 12,928,750 0.8
Colombia Banking US$ 5,000,000 Banco Ganadero S.A., 9.75% due 8/26/1999 4,992,340 5,087,500 0.3
5,000,000 Financira Energetica Nacional, 9% due
11/08/1999 5,140,000 5,118,750 0.3
Total Fixed-Income Investments
in Colombia 10,132,340 10,206,250 0.6
Mexico Foreign US$ 5,000,000 Nafinsa, 10.625% due 11/22/2001 5,376,875 4,793,750 0.3
Government Pound 10,000,000 United Mexican States, Government Bond,
Obligations Sterling 12.25% due 12/03/1998 17,422,208 15,884,025 1.0
-------------- -------------- ------
22,799,083 20,677,775 1.3
Industrial US$ 2,000,000 Cemex, S.A., 10% due 11/05/1999 1,600,000 1,895,000 0.2
Services
Total Fixed-Income Investments
in Mexico 24,399,083 22,572,775 1.5
Trinidad Foreign Republic of Trinidad and Tobago:
& Tobago Government US$ 3,000,000 11.50% due 11/20/1997 3,123,750 3,157,500 0.2
Obligations 7,000,000 9.75% due 11/03/2000 6,987,850 7,140,000 0.5
Total Fixed-Income Investments in
Trinidad & Tobago 10,111,600 10,297,500 0.7
Total Investments in Latin American &
Caribbean Securities 73,646,323 72,250,275 4.6
<PAGE>
NORTH
AMERICA
Canada Energy US$10,000,000 Gulf Canada Resources, Ltd., 9% due
8/15/1999 9,158,438 10,150,000 0.7
Total Fixed-Income Investments in Canada 9,158,438 10,150,000 0.7
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
NORTH
AMERICA Percent of
(continued)Industries Face Amount Fixed-Income Investments Cost Value Net Assets
<S> <S> <S><C> <S> <C> <C> <C>
United Air Transport US$10,000,000 Delta Air Lines, Inc., 10.50% due
States 4/30/2016 $ 10,287,500 $ 11,880,500 0.8%
7,100,000 United Air Pass-Through, 10.125% due
3/22/2015 7,684,046 8,098,686 0.5
15,000,000 USAir Inc., 10.375% due 3/01/2013 15,000,000 14,025,000 0.9
-------------- -------------- ------
32,971,546 34,004,186 2.2
Broadcasting & 10,000,000 Continental Cablevision, Inc., 9.50%
Publishing due 8/01/2013 10,000,000 10,350,000 0.6
10,000,000 Videotron Group, Ltd. Co., 10.25% due
10/15/2002 10,043,750 10,400,000 0.7
-------------- -------------- ------
20,043,750 20,750,000 1.3
Building Materials 15,300,000 Pacific Lumber Co., 10.50% due
3/01/2003 15,462,750 14,535,000 0.9
11,035,000 USG Corp., 8.75% due 3/01/2017 9,717,469 10,814,300 0.7
-------------- -------------- ------
25,180,219 25,349,300 1.6
Capital Goods 10,000,000 Sequa Corp., 9.375% due 12/15/2003 9,915,000 9,200,000 0.6
Chemicals 33,860,000 GI Holdings, Inc., 11.38%* due
10/01/1998 24,296,669 24,548,500 1.6
10,000,000 Uniroyal Chemical Co., 9% due
9/01/2000 10,000,000 9,700,000 0.6
-------------- -------------- ------
34,296,669 34,248,500 2.2
<PAGE>
Conglomerates 20,000,000 Coltec Industries Inc., 10.25% due
4/01/2002 20,387,500 20,700,000 1.3
10,000,000 Sherritt Gordon, Ltd., 9.75%
due 4/01/2003 10,048,250 10,200,000 0.7
-------------- -------------- ------
30,435,750 30,900,000 2.0
Consumer Products 15,000,000 Revlon Consumer Products Corp.,
9.375% due 4/01/2001 13,229,039 14,850,000 0.9
Containers 20,000,000 Owens-Illinois, Inc., 11% due
12/01/2003 21,906,562 21,975,000 1.4
Energy 7,000,000 Clark R & M Holdings, Inc., 10.43%*
due 2/15/2000 4,449,224 4,462,500 0.3
6,500,000 Maxus Energy Corp., 9.875% due
10/15/2002 6,485,050 6,467,500 0.4
5,000,000 Oleoducts Central S.A., 9.35% due
9/01/2005 5,000,000 5,000,000 0.3
15,000,000 Rowan Companies, Inc., 11.875% due
12/01/2001 15,590,000 16,237,500 1.0
15,000,000 Seagull Energy Corp., 8.625% due
8/01/2005 15,000,000 14,250,000 0.9
10,000,000 TransTexas Gas Corp., 11.50% due
6/15/2002 9,999,250 10,475,000 0.7
-------------- -------------- ------
56,523,524 56,892,500 3.6
Entertainment Marvel Holdings, Inc.:
1,125,000 9.125% due 2/15/1998 995,625 1,046,250 0.1
26,780,000 11.47%* due 4/15/1998 20,035,039 19,281,600 1.2
5,000,000 Spectravision Inc., 10.92%* due
10/01/2001 4,410,496 1,700,000 0.1
-------------- -------------- ------
25,441,160 22,027,850 1.4
Financial Services 17,375,000 Lomas Mortgage USA, Inc., 10.25% due
10/01/2002 17,387,500 12,162,500 0.8
10,000,000 Penn Financial Corp., 9.25%
due 12/15/2003 10,000,000 10,050,000 0.7
10,000,000 Reliance Group Holdings, Inc., 9%
due 11/15/2000 10,000,000 9,950,000 0.6
-------------- -------------- ------
37,387,500 32,162,500 2.1
<PAGE>
Food & Beverage 10,000,000 Canandaigua Wine Inc., 8.75% due
12/15/2003 10,000,000 9,900,000 0.6
10,000,000 Coca-Cola Bottling Co., 9% due
11/15/2003 10,005,000 9,900,000 0.6
20,000,000 Del Monte Corp., 10% due 5/01/2003 20,025,313 16,800,000 1.1
20,435,000 Grand Union Co., 12% due 9/01/2004 20,294,925 19,617,600 1.3
15,000,000 Penn Traffic Co., 9.625% due 4/15/2005 15,334,540 12,150,000 0.8
15,000,000 Pueblo Xtra International Inc., 9.50%
due 8/01/2003 15,111,875 14,250,000 0.9
10,000,000 Specialty Foods Corp., 10.25% due
8/15/2001 10,000,000 9,525,000 0.6
-------------- -------------- ------
100,771,653 92,142,600 5.9
Health Services 2,500,000 MEDIQ, Inc., 11.125% due 7/01/1999 2,500,000 2,337,500 0.2
High Technology 15,000,000 Computervision Corp., 10.875% due
8/15/1997 15,025,000 15,637,500 1.0
Home Building Del E. Webb Corp.:
9,250,000 10.875% due 3/31/2000 9,376,875 9,481,250 0.6
3,500,000 9.75% due 3/01/2003 3,472,455 3,430,000 0.2
Kaufman & Broad Home, Inc.:
2,000,000 10.375% due 9/01/1999 2,020,000 2,025,000 0.2
5,250,000 9.375% due 5/01/2003 5,217,187 5,026,875 0.3
Ryland Group, Inc.:
2,000,000 10.50% due 7/15/2002 2,010,030 1,980,000 0.1
8,250,000 9.625% due 6/01/2004 7,991,250 7,961,250 0.5
-------------- -------------- ------
30,087,797 29,904,375 1.9
Hotels & Casinos 1,906,000 Goldriver Hotel & Casino Corp., 13.375%
due 8/31/1999 2,645,548 1,391,380 0.1
10,000,000 Greate Bay Properties, Inc., 10.875%
due 1/15/2004 9,996,250 8,425,000 0.5
15,000,000 Showboat, Inc., 9.25% due 5/01/2008 14,698,750 14,175,000 0.9
10,000,000 Trump Plaza Funding, Inc., 10.875% due
6/15/2001 7,536,875 9,162,500 0.6
-------------- -------------- ------
34,877,423 33,153,880 2.1
Industrial Services 10,000,000 ADT Operations, 9.25% due 8/01/2003 10,066,078 10,425,000 0.7
Paper 10,000,000 Container Corp. of America, 9.75% due
4/01/2003 10,200,000 10,050,000 0.6
15,000,000 Fort Howard Corp., 9% due 2/01/2006 15,007,500 14,100,000 0.9
10,000,000 Riverwood International Corp., 11.25%
due 6/15/2002 10,385,750 10,725,000 0.7
Stone Container Corp.:
12,500,000 9.875% due 2/01/2001 11,667,085 12,343,750 0.8
7,500,000 10.75% due 10/01/2002 7,425,000 7,781,250 0.5
-------------- -------------- ------
54,685,335 55,000,000 3.5
<PAGE>
Restaurants & 15,000,000 Flagstar Corp., 11.375% due 9/15/2003 14,640,000 11,587,500 0.7
Food Services
Textiles 10,000,000 WestPoint Stevens Inc., 8.75% due
12/15/2001 10,093,750 9,925,000 0.6
Transport Services 10,000,000 Viking Star Shipping Co., 9.625% due
7/15/2003 10,028,437 10,150,000 0.7
Utilities 9,848,000 Beaver Valley II Funding, 9% due
6/01/2017 7,262,900 8,125,486 0.5
4,000,000 CTC Mansfield Funding Corp., 11.125%
due 9/30/2016 4,301,250 4,106,960 0.3
Midland Cogeneration Venture
Limited Partnership:
8,681,888 10.33% due 7/23/2002 (b) 8,508,250 9,043,297 0.6
10,000,000 13.25% due 7/23/2006 11,183,750 10,300,000 0.6
9,100,000 Tucson Electric & Power Co., 10.732%
due 1/01/2013 8,713,250 8,841,833 0.6
-------------- -------------- ------
39,969,400 40,417,576 2.6
Total Fixed-Income Investments in the
United States 630,075,592 613,040,767 39.2
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
NORTH
AMERICA Percent of
(continued)Industries Face Amount Convertible Bonds Cost Value Net Assets
<S> <S> <S><C> <S> <C> <C> <C>
Canada Metals & Mining US$ 500,000 Inco Ltd., 5.75% due 7/01/2004 $ 525,375 $ 657,500 0.0%
Total Investments in Canadian
Convertible Bonds 525,375 657,500 0.0
United Airlines US$ 3,000,000 AMR Corp., 6.125% due 11/01/2024*** 2,445,656 3,048,750 0.2
States
Building & 1,500,000 Toll Brothers Inc., 4.75% due 1/15/2004 1,500,000 1,503,750 0.1
Construction 1,000,000 US Home Corp., 4.875% due 11/01/2005 991,000 850,000 0.1
2,491,000 2,353,750 0.2
Computers 2,500,000 Data General Corp., 7.75% due 6/01/2001 2,479,375 2,262,500 0.1
1,000,000 Storage Technology Corp., 8% due
5/31/2015 1,132,500 982,500 0.1
-------------- -------------- ------
3,611,875 3,245,000 0.2
<PAGE>
Conglomerates 2,000,000 Polyphase Corp., 12% due 7/01/1999 2,000,000 1,665,000 0.1
Electronics 1,500,000 Thermaquest Corp., 5% due 8/15/2000 1,500,000 1,552,500 0.1
1,500,000 Thermo Optik Corp., 5% due 10/15/2000 1,500,000 1,500,000 0.1
Zenith Electronics Corp.:
1,500,000 8.50% due 11/19/2000 1,589,500 1,552,500 0.1
650,000 8.50% due 1/18/2001 669,844 666,250 0.0
-------------- -------------- ------
5,259,344 5,271,250 0.3
Entertainment 4,500,000 Time Warner Inc., 7.99%* due 12/17/2012 1,480,546 1,524,375 0.1
Financial Services 1,720,000 Pacific Gulf Properties, Inc., 8.375%
due 2/15/2001 1,513,262 1,634,000 0.1
Food & Beverage 3,000,000 Boston Chicken Inc., 4.50% due
2/01/2004 3,000,000 3,000,000 0.2
Health Services 765,000 MEDIQ, Inc., 7.50% due 7/15/2003 654,662 673,200 0.0
Healthcare 700,000 Pharmaceutical Marketing Services,
Inc., 6.25% due 2/01/2003*** 536,700 533,750 0.0
Industrial Services 500,000 Mascotech, Inc., 4.50% due 12/15/2003 500,000 378,125 0.0
140,000 Recognition Equipment International,
Inc., 7.25% due 4/15/2011 103,600 119,000 0.0
2,080,000 Wainoco Oil Corp., 7.75% due 6/01/2014 1,880,352 1,684,800 0.1
-------------- -------------- ------
2,483,952 2,181,925 0.1
Insurance 1,000,000 Alexander & Alexander Services Inc.,
11% due 4/15/2007 1,024,250 1,020,000 0.1
500,000 American Travelers Corp., 6.50% due
10/01/2025 500,000 516,250 0.0
-------------- -------------- ------
1,524,250 1,536,250 0.1
Machine--Diversified 1,500,000 Cooper Industries, Inc., 7.05% due
1/01/2015 1,474,999 1,507,500 0.1
Machinery--Paper 750,000 Albany International Corp., 5.25% due
3/15/2002 689,095 720,000 0.1
Mining 2,000,000 Coeur d'Alene Mines Corp., 6.375% due
1/31/2004*** 1,916,550 1,940,000 0.1
Oil--Domestic 2,750,000 USX Corp., 7% due 6/15/2017 2,321,650 2,619,375 0.2
Paper 800,000 Sappi Ltd., 7.50% due 8/01/2002 800,000 832,000 0.1
<PAGE>
Pharmaceuticals 2,600,000 Bindley Western Industries, Inc.,
6.50% due 10/01/2002 2,563,000 2,808,000 0.2
2,000,000 IVAX Corp., 6.50% due 11/15/2001 1,897,500 2,160,000 0.1
1,000,000 Sandoz Capital, 2% due 10/06/2002 811,700 811,700 0.1
-------------- -------------- ------
5,272,200 5,779,700 0.4
Publishing/Printing 2,150,000 Graphic Industries, Inc., 7% due
5/15/2006 1,899,375 1,956,500 0.1
Retail 500,000 Baby Superstores Inc., 4.875% due
10/01/2000 500,000 500,000 0.0
825,000 Baker (J.) Inc., 7% due 6/01/2002 824,527 680,625 0.0
800,000 Federated Department Stores, Inc.,
5% due 10/01/2003 800,000 812,000 0.1
1,000,000 Michaels Stores, Inc., 4.75% due
1/15/2003 1,016,000 905,000 0.1
-------------- -------------- ------
3,140,527 2,897,625 0.2
Telecommunications 3,315,000 Intelcom Group Inc., 7% due
10/30/1998 (a) 3,276,281 2,983,500 0.2
Textiles 375,000 Fieldcrest Cannon, Inc., 6% due
3/15/2012 285,000 315,000 0.0
Transportation 212,000 Alaska Air Group Inc., 7.75% due
6/15/2010 193,450 190,800 0.0
2,500,000 UAL Corp., 6.375% due 2/01/2025*** 2,244,992 2,737,500 0.2
550,000 Varlen Corp., 6.50% due 6/01/2003 544,250 627,000 0.0
-------------- -------------- ------
2,982,692 3,555,300 0.2
Total Investments in United States
Convertible Bonds 51,059,616 51,773,750 3.3
Shares Convertible Preferred Stocks,
Held Common Stocks & Warrents
United Airlines 52,500 Delta Air Lines Inc., $3.50
States (Series C), Conv. Pfd.*** 2,756,900 2,979,375 0.2
Banking & Finance 38,300 Rochester Community Savings Bank, $1.75
(Series B) 1,100,014 1,455,400 0.1
26,300 Southern National Corp., Pfd. $1.6875 843,178 1,022,413 0.1
50,200 Union Planters Corp., Pfd. $2.00 1,775,655 1,876,225 0.1
-------------- -------------- ------
3,718,847 4,354,038 0.3
<PAGE>
Electronics 117,554 Rexel S.A. 1,104,267 1,190,234 0.1
Entertainment 30,000 Time Warner Financial 930,000 975,000 0.1
Environmental 35,200 Allied Waste Industries, Inc., $90 Conv.
Pfd.*** 3,520,401 6,054,400 0.4
Food & Beverage 346,500 RJR Nabisco, Inc., Pfd. $.60 (Series C) 2,250,782 2,338,875 0.1
Forest Products & 44,800 James River Corp. of Virginia 1,969,537 2,240,000 0.1
Paper 15,000 James River Corp. of Virginia, $3.375
(Series K), Conv. Pfd. 668,330 742,500 0.1
-------------- -------------- ------
2,637,867 2,982,500 0.2
High Technology 91,053 Anacomp, Inc. (Warrants) (c) 120,000 11,382 0.0
Hotels & Casinos 75,000 Goldriver Hotel & Casino Corp.,
Liquidating Trust 75,000 53,438 0.0
30,000 Goldriver Hotel & Casino Corp.
(Series B) (d) 219,738 30,000 0.0
6,000 Trump Taj Mahal Funding, Inc. (Class A) 3,000 75,000 0.0
-------------- -------------- ------
297,738 158,438 0.0
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
NORTH
AMERICA Shares Convertible, Preferred Stocks, Percent of
(concluded)Industries Held Common Stocks & Warrants Cost Value Net Assets
<S> <S> <S><C> <S> <C> <C> <C>
United Industrial Services 20,000 Mascotech, Inc., Pfd. $1.20 $ 312,460 $ 265,000 0.0%
States 10,000 UGI Corp. (Warrants) (c) 43,750 1,500 0.0
(concluded) -------------- -------------- ------
356,210 266,500 0.0
Insurance 36,200 Kemper Corp. 1,674,974 1,837,150 0.1
1,500 Westbridge Capital Corp., Pfd. 1,500,000 1,320,000 0.1
3,174,974 3,157,150 0.2
Oil & Gas 43,000 Snyder Oil Corp., Pfd. $1.50 (Series A) 906,023 854,625 0.1
20,000 Western Gas Resources, Inc., Pfd. $2.62 1,000,000 730,000 0.0
10,000 Williams Companies, Inc. (The),
Pfd. $3.50 572,500 687,500 0.0
-------------- -------------- ------
2,478,523 2,272,125 0.1
<PAGE>
Total Investments in United States
Convertible Preferred Stocks,
Common Stocks & Warrants 23,346,509 26,740,017 1.7
Total Investments in North American
Securities 719,305,530 707,480,784 45.2
PACIFIC Face
BASIN Amount Fixed-Income Investments
Australia Foreign Australian Government Bonds:
Government A$ 91,700,000 12% due 11/15/2001 75,422,902 81,521,881 5.2
Obligations 48,000,000 9.50% due 8/15/2003 36,936,368 38,344,102 2.4
Total Fixed-Income Investments in
Australia 112,359,270 119,865,983 7.6
India Chemicals US$ 8,000,000 Reliance Industries, Ltd., 8.125% due
9/27/2005 7,986,400 7,980,000 0.5
Total Fixed-Income Investments in
India 7,986,400 7,980,000 0.5
New Foreign New Zealand Government Bonds:
Zealand Government NZ$ 18,000,000 10% due 7/15/1997 12,516,173 12,149,883 0.8
Obligations 17,500,000 10% due 3/15/2002 13,178,318 12,684,578 0.8
Total Fixed-Income Investments in
New Zealand 25,694,491 24,834,461 1.6
Philip- Industrial US$ 3,000,000 San Miguel Corp., 9% due 4/27/2000 2,981,000 3,093,750 0.2
pines Telecom- 6,000,000 Philippine Long Distance Telephone Co.,
munications 9.875% due 8/01/2005 5,999,220 6,142,500 0.4
Total Fixed-Income Investments in the
Philippines 8,980,220 9,236,250 0.6
Total Investments in Pacific Basin
Securities 155,020,381 161,916,694 10.3
<PAGE>
WESTERN
EUROPE
Denmark Foreign Dkr 69,500,000 Denmark Kingdom, 9% due 11/15/2000 12,698,059 13,431,573 0.9
Government
Obligations
Total Fixed-Income Investments in
Denmark 12,698,059 13,431,573 0.9
Germany Consumer US$ 10,000,000 Tarkett International, 9% due 3/01/2002 10,000,000 10,150,000 0.7
Products
Total Fixed-Income Investments in
Germany 10,000,000 10,150,000 0.7
Italy Foreign Buoni Poliennali del Tesoro
Government (Italian Government Bonds):
Obligations Lit 31,000,000,000 12% due 9/18/1998 20,392,969 19,302,974 1.2
130,000,000,000 10.50% due 4/01/2000 79,720,992 78,418,835 5.0
24,000,000,000 10.50% due 9/01/2005 14,034,939 13,974,721 0.9
Total Fixed-Income Investments
in Italy 114,148,900 111,696,530 7.1
Spain Foreign Government of Spain:
Government Pta 7,000,000,000 11.45% due 8/30/1998 59,468,472 58,097,281 3.7
Obligations 11,799,000,000 12.25% due 3/25/2000 97,729,726 100,648,640 6.4
Total Fixed-Income Investments in
Spain 157,198,198 158,745,921 10.1
Sweden Foreign Sek 400,000,000 Government of Sweden, 11% due 1/21/1999 56,905,064 60,682,890 3.9
Government
Obligations
Total Fixed-Income Investments in
Sweden 56,905,064 60,682,890 3.9
Turkey Foreign US$ 5,000,000 Republic of Turkey, 8.75% due 10/05/1998 4,987,050 4,956,250 0.3
Government
Obligations
Total Fixed-Income Investments in
Turkey 4,987,050 4,956,250 0.3
<PAGE>
United Communications US$ 20,000,000 Telewest Communications PLC,
Kingdom 10.98%* due 10/01/2007 11,715,600 11,715,600 0.8
Foreign United Kingdom Gilt:
Government Pound 23,700,000 9% due 3/03/2000 38,077,818 39,471,210 2.5
Obligations Sterling 40,000,000 9.75% due 8/27/2002 68,002,466 69,087,606 4.4
-------------- -------------- ------
106,080,284 108,558,816 6.9
Industrial US$ 3,000,000 Videotron Holdings PLC, 11.27%* due
8/15/2005 1,741,036 1,740,000 0.1
Total Fixed-Income Investments in the
United Kingdom 119,536,920 122,014,416 7.8
Total Investments in
Western European Securities 475,474,191 481,677,580 30.8
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
Face Percent of
Amount Short-Term Securities Cost Value Net Assets
<S> <S> <S><C> <S> <C> <C> <C>
United Commercial Paper** US$32,579,000 General Electric Capital Corp., 6.45%
States due 10/02/1995 $ 32,579,000 $ 32,579,000 2.1%
US Government & 47,000,000 Federal Home Loan Mortgage Corp., 5.63%
Agency Obligations** due 10/06/1995 46,970,599 46,970,599 3.0
40,000,000 Federal National Mortgage Association,
5.62% due 10/24/1995 39,862,622 39,862,622 2.6
700,000 US Treasury Bills, 5.32% due 12/14/1995 692,449 692,300 0.0
-------------- -------------- ------
87,525,670 87,525,521 5.6
Total Investments in Short-
Term Securities 120,104,670 120,104,521 7.7
Total Investments 1,543,395,345 1,543,567,354 98.6
<PAGE>
OPTIONS Number of Contracts/ Premiums
WRITTEN Face Amount Issue Received
Currency Call 14,726,400 Australian Dollar, expiring November 1995
Options Written at A$.767 (122,229) (91,304) 0.0
30,680,000 Australian Dollar, expiring December 1995
at A$.767 (371,228) (254,644) 0.0
50,000,000 German Deutschemark/Italian Lira,
expiring December 1995 at DM/LIT 1130 (410,866) (972,900) (0.1)
99,000,000 German Deutschemark/Italian Lira,
expiring December 1995 at DM/LIT 1145 (670,838) (1,665,510) (0.1)
-------------- -------------- ------
(1,575,161) (2,984,358) (0.2)
Currency Put 149,000,000 German Deutschemark/Italian Lira,
Options Written expiring December 1995 at DM/LIT 1085 (997,654) (623,320) 0.0
Total Options Written (2,572,815) (3,607,678) (0.2)
Total Investments, Net of Options Written $1,540,822,530 1,539,959,676 98.4
==============
Short Sales (Proceeds--$7,191,900)*** (7,894,899) (0.5)
Unrealized Depreciation on Forward Foreign Exchange Contracts--Net++ (2,958,354) (0.2)
Other Assets Less Liabilities 36,509,904 2.3
-------------- ------
Net Assets $1,565,616,327 100.0%
============== ======
Net Asset Value: Class A--Based on net assets of $277,356,761 and 32,415,858 shares
outstanding $ 8.56
==============
Class B--Based on net assets of $1,280,113,737 and 149,709,620 shares
outstanding $ 8.55
==============
Class C--Based on net assets of $4,629,285 and 541,750 shares
outstanding $ 8.55
==============
Class D--Based on net assets of $3,516,544 and 410,990 shares
outstanding $ 8.56
==============
<FN>
*Represents a zero coupon or step bond; the interest rate shown is the
effective yield at the time of purchase by the Fund.
**Commercial Paper and certain US Government & Agency Obligations
are traded on a discount basis; the interest rates shown are the discount
rates paid at the time of purchase by the Fund.
***Covered Short Sales entered into as of September 30, 1995 are as follows:
<PAGE>
Shares Issue Value
27,800 AMR Corp. $(2,005,075)
193,570 Allied Waste Industries, Inc. (1,621,149)
38,000 Coeur d'Alene Mines Corp. (764,750)
29,000 Delta Air Lines, Inc. (2,008,250)
26,200 Pharmaceutical Marketing Services, Inc. (301,300)
7,000 UAL Corp. (1,194,375)
Total (Proceeds--$7,191,900) $(7,894,899)
===========
++Forward foreign exchange contracts as of September 30, 1995 are as follows:
Unrealized
Expiration Appreciation
Date (Depreciation)
Foreign Currency Purchased
A$ 38,200,000 October 1995 $ 39,431
Chf 22,986,000 October 1995 (83,441)
Total (US$ Commitment--$48,800,996) $ (44,010)
===========
Foreign Currency Sold
A$ 50,316,450 October 1995 $ (154,220)
Chf 63,204,800 October 1995 235,267
DM 131,832,120 October 1995 (351,424)
Esp 2,864,733,750 October 1995 (652,548)
Pound Sterling 9,695,559 October 1995 (318,674)
Lit 48,525,600,000 October 1995 (9,245)
Sek 238,713,707 October 1995 (1,663,500)
Total (US$ Commitment--$285,084,589) $(2,914,344)
-----------
Total Unrealized Depreciation on Forward
Foreign Exchange Contracts--Net $(2,958,354)
===========
<PAGE>
<FN>
(a)Represents a pay-in-kind security which may pay interest/dividends
in additional face/shares.
(b)Subject to principal paydowns as a result of prepayments or refinancings
of the underlying mortgage instruments. As a result, the average life may
be substantially less than the original maturity.
(c)Warrants entitle the Fund to purchase a predetermined number of shares
of Common Stock. The purchase price and number of shares are subject
to adjustment under certain conditions until the expiration date.
(d)Each share of Series B stock contains a right which entitles the holder
to purchase a predetermined number of shares of Preferred Stock.
</TABLE>
