MERRILL LYNCH
WORLD INCOME
FUND, INC.
FUND LOGO
Semi-Annual Report
June 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
MERRILL LYNCH WORLD INCOME FUND, INC.
Officers and
Directors
Arthur Zeikel, President and 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
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
<PAGE>
DEAR SHAREHOLDERS
During the three-month period ended
June 30, 1995, global bond markets
continued the rallies which began in
late 1994 and early 1995. Economic
activity continued to show signs of
weakness, especially in North America,
Japan and Australia. Not surprisingly,
these markets showed the largest
interest rate declines during the June
quarter. The main sources of weak-
ness in the United States were the
low demand in the auto and housing
sectors, plus the sharp reversal in the
trade balance with Mexico. While
Canadian interest rates largely fol-
lowed US interest rates, yields in
Australia benefited even more from a
credible domestic budget forecast
that predicted a surplus in the fiscal
year ending June 1996. In Europe,
growth has shifted downward, mainly
in the stronger currency countries,
while the peripheral European
economies of Italy, Spain and Sweden
continue to show solid to robust
growth. Despite surging inflation,
very positive developments in the
late-April regional elections allowed
Italy to turn in the second-best bond
market performance. Bond markets in
Spain and Sweden followed Italy's
lead, but lagged.
<PAGE>
The world's central banks remain
biased to support growth, as seen by
reductions in key Japanese interest
rates both in April and July, and the
US Federal Reserve Board's interest
rate cut on July 6, 1995. Although the
German Bundesbank has not nudged
interest rates lower since its March
30 cut, the stronger-currency coun-
tries in Europe were able to lower
interest rates. Meanwhile, the peri-
pheral European countries had to
raise interest rates to combat rising
inflation. Global inflationary pres-
sures have been reduced--but not
eliminated--by the recent slowing
in global growth.
As mentioned in our last shareholder's
report, US monetary policy has been
the main reason for the US dollar's
decline to new record lows. First, the
surprising devaluation of the Mexican
peso, along with the movement by
the Federal Reserve Board to a neutral
monetary policy, forced investors to
reprice the dollar to reflect this new
information, especially when set
against an expected Bundesbank's
interest rate increase. Since reaching
new record lows versus the Deutsche-
mark and yen in early spring, the US
dollar stabilized, showing a rise of
just over 1% relative to the Deutsche-
mark while falling just under 2%
relative to the yen. The Italian lire
recorded the best gain, reversing its
sharp decline as political risk was
greatly reduced, while the British
pound declined over 2% following
Prime Minister John Major's resigna-
tion as leader of the Tory party, and
therefore a potentially new head of
government. However, Major won the
July 4 party vote and remains Prime
Minister. The Australian dollar
recorded the largest decline of
3.3% as the current account deficit
widened to record levels.
<PAGE>
Global Strategy & Outlook
During the June quarter, we main-
tained the same exposure to US
high-yield and international securi-
ties that prevailed at March 31, 1995.
The high-yield market remains the
best performing global bond market
year-to-date outside of Japan, a
market we avoid because of its
extremely low yields. During the
June quarter, we reduced the Fund's
Italian exposure by 20% and used the
proceeds to establish a new position
in Sweden, in order to capitalize on
Italy's outperformance. We believe
that the Dollar bloc countries of
Canada, Australia and New Zealand,
which slightly underperformed the
US bond market thus far in 1995, will
face a few obstacles over the next few
months. In Canada, the likelihood of
a referendum on an independent
Quebec looms in the autumn, while
the odds of early fall elections in
Australia have risen.
The outlook for European interest
rates remains positive in the core
markets, but less so in the peripheral
markets of Italy, Spain and Sweden,
given accelerating inflation amidst
uncertain political backdrops and the
prospect for no further monetary
policy easing by the Bundesbank.
While the background for the main
European bond markets remains
positive, the higher-yielding cur-
rencies will naturally be supported,
especially in an environment where
the US dollar is stable to rising
relative to the German Deutschemark.
In an opposite environment, the
high-yielding European bond markets
are likely to be under pressure,
thereby a temporary shift to lower-
yielding markets would be warranted
until the pressures abate.
<PAGE>
The crisis of confidence in emerging
markets peaked in early March fol-
lowing investors' acceptance of both
the Mexican and Argentine inter-
nationally supported economic
stabilization plans. The significant
appreciation of emerging fixed-
income prices was sustained by
investors' perceptions the worst is
over for these two countries. However,
because of Mexico's deteriorating
economic climate, second-quarter
corporate financial reports are likely
to exhibit very poor results. In light of
these developments, we took profits
on the Fund's Mexican position and
modestly increased its exposure to
Argentina and Brazil, selecting the
strongest credit quality issuers.
The High-Yield Market
The positive trend in the financial
market continued during second
quarter 1995. Ten-year Treasury note
yields declined from 7.13% to 6.25%
over the three-month period ended
June 30, 1995. High-yield bonds yields
also dropped but the decline was
more muted. Heavy new-issue supply
was one factor affecting the market.
Fear that the economic slowdown
could deepen seems to have depressed
investor psychology toward eco-
nomically sensitive cyclicals like steel
and paper. This contributed to the lag
between US Treasury securities and
high-yield bonds. In July, the high-
yield market caught up as technical
conditions improved and investor
psychology improved.
The first six months of 1995 were
very good for fixed-income invest-
ments. Ten-year US Treasury notes
declined 1.5% in response to more
positive fixed-income fundamentals.
High-yield bonds lagged modestly
through June but appear to have
caught up by mid-July.
<PAGE>
We have been positive on the US fixed-
income market for most of 1995
because we believed that 1994's bear
market left US Government and high-
yield securities significantly under-
valued. At current price and yield
levels, we are less optimistic. The
markets afford fair value but are
vulnerable to a significant back-up
in yields if economic growth resumes
at a brisker level than is currently
expected. Consequently, we have
become more selective recently.
During the quarter ended June 30,
1995, we sold certain issues that
appeared expensive relative to
Treasury securities, such as Clark
Oil Co. and ADT Operations. We also
sold several issues that appeared to
be deteriorating on a credit basis,
including Liggett Group, Inc. and
Foodmaker, Inc.
At June 30, 1995, the Fund's alloca-
tion to the US corporate high-yield
market was 43%. An additional 5%
was allocated to US convertible
securities. Although these securities
are relatively low-yielding, they have
demonstrated excellent appreciation
thus far in 1995.
In Conclusion
We thank you for your continued
support of Merrill Lynch World
Income Fund, Inc., and we look
forward to reviewing our outlook
and strategy with you again in our
next report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Vincent T. Lathbury III)
Vincent T. Lathbury III
Vice President and Portfolio Manager
(Robert J. Parish)
Robert J. Parish
Vice President and Portfolio Manager
August 7, 1995
PROXY RESULTS
During the six-month period ended June 30, 1995, Merrill Lynch World
Income Fund, Inc. shareholders voted on the following proposals.
Proposals 1, 2 and 4 were approved at a special shareholders' meeting
on September 27, 1994. Proposal 3 was passed at a special share-
holders' meeting on January 31, 1995. The description of each
proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Kenneth S. Axelson 241,851,109 4,668,282
Herbert I. London 242,153,495 4,365,896
Robert R. Martin 241,951,017 4,568,374
Joseph L. May 242,128,715 4,390,676
Andre F. Perold 242,162,932 4,356,459
Arthur Zeikel 242,009,550 4,509,840
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To select Deloitte & Touche LLP as the Fund's independent auditors. 238,052,411 1,877,085 6,589,895
3. To approve certain changes to the Fund's fundamental investment restrictions. 127,273,709 4,755,608 9,161,865
4. To amend the Fund's articles of incorporation to implement the Merrill Lynch
Select Pricing SM System. 220,996,168 8,805,310 16,717,912
</TABLE>
<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 "Perform-
ance Summary" tables on pages 5 and 6. "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 pages 6 and 7.
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
June 30, 1995 and for Class C and Class D Shares for the since
inception and 3-month periods ended June 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>
Average Annual
Total Return++
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 6/30/95 + 8.42% +4.08%
Five Years Ended 6/30/95 + 9.36 +8.47
Inception (9/29/88) through 6/30/95 +10.23 +9.57
[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 6/30/95 +7.58% +3.60%
Inception (11/18/91) through 6/30/95 +6.10 +5.86
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
Aggregate
Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94) through 6/30/95 +6.07% +5.07%
<PAGE>
[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 6/30/95 +6.50% +2.24%
[FN]
*Maximum sales charge is 4%.
**Assuming maximum sales charge.
PERFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class A Shares++
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
9/29/88--12/31/88 $9.35 $9.68 -- $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--6/30/95 8.20 8.47 -- 0.346 + 7.80
------ ------
Total $0.049 Total $6.805
Cumulative total return as of 6/30/95: +93.08%**
<PAGE>
<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**
<S> <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--6/30/95 8.19 8.46 -- 0.315 + 7.41
------ ------
Total $0.047 Total $2.672
Cumulative total return as of 6/30/95: +23.88%**
<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>
<PAGE>
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 3 Month
6/30/95 3/31/95 6/30/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
Class A Shares* $8.47 $8.23 $8.52 -0.59% +2.92%
Class B Shares* 8.46 8.23 8.51 -0.59 +2.79
Class C Shares* 8.46 8.22 8.42 +0.48 +2.92
Class D Shares* 8.47 8.23 8.43 +0.47 +2.92
Class A Shares--Total Return* +8.42(1) +5.16(2)
Class B Shares--Total Return* +7.58(3) +4.83(4)
Class C Shares--Total Return* +6.07(5) +4.94(6)
Class D Shares--Total Return* +6.50(7) +5.09(8)
Class A Shares--Standardized 30-day Yield 8.48%
Class B Shares--Standardized 30-day Yield 8.05%
Class C Shares--Standardized 30-day Yield 7.95%
Class D Shares--Standardized 30-day Yield 8.24%
<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 $0.736 per share ordinary
income dividends.
(2)Percent change includes reinvestment of $0.182 per share ordinary
income dividends.
(3)Percent change includes reinvestment of $0.670 per share ordinary
income dividends.
(4)Percent change includes reinvestment of $0.166 per share ordinary
income dividends.
(5)Percent change includes reinvestment of $0.440 per share ordinary
income dividends.
(6)Percent change includes reinvestment of $0.164 per share ordinary
income dividends.
(7)Percent change includes reinvestment of $0.475 per share ordinary
income dividends.
(8)Percent change includes reinvestment of $0.177 per share ordinary
income dividends.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
Value Percent of
AFRICA Industries Face Amount Fixed-Income Investments Cost (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
South Foreign US$ 5,000,000 Republic of South Africa, 9.625%
Africa Government due 12/15/1999 $ 4,984,250 $ 5,187,500 0.3%
Obligations
Total Fixed-Income Investments in
South Africa 4,984,250 5,187,500 0.3
Total Investments in African Securities 4,984,250 5,187,500 0.3
LATIN AMERICA &
THE CARIBBEAN
Argentina Banking 3,000,000 Banco Rio de la Plata S.A., 8.75%
due 12/15/2003 2,332,500 2,205,000 0.1
Energy 4,000,000 ++Transportadora de Gas del Sur, 7.75%
due 12/23/1998 3,542,500 3,520,000 0.2
Foreign Republic of Argentina:
Government Lit 5,000,000,000 13.45% due 10/21/1997 3,089,063 2,918,704 0.2
Obligations 5,000,000 10.95% due 11/01/1999 4,912,500 4,825,000 0.3
3,000,000 8.375% due 12/20/2003 2,313,750 2,212,500 0.1
-------------- -------------- ------
10,315,313 9,956,204 0.6
Telecommuni- US$ 6,500,000 ++Telecom Argentina Stet--France Telecom
cations S.A., 8.375% due 10/18/2000 5,799,375 5,785,000 0.3
10,000,000 Telefonica de Argentina S.A., 11.875%
due 11/01/2004 9,800,800 9,650,000 0.6
-------------- -------------- ------
15,600,175 15,435,000 0.9
Total Fixed-Income Investments in Argentina 31,790,488 31,116,204 1.8
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
LATIN
AMERICA & THE
CARIBBEAN Value Percent of
(concluded)Industries Face Amount Fixed-Income Investments Cost (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
Brazil Banking US$ 3,000,000 ++Banco Safra, 9.75% due 6/19/1997 $ 3,000,000 $ 2,984,730 0.2%
5,000,000 ++United Banco Brazil, 10.25% due 6/12/1997 4,987,500 4,980,800 0.3
-------------- -------------- ------
7,987,500 7,965,530 0.5
Construction 5,000,000 ++Compania Brasileira de Projetos e Obras,
12.50% due 12/22/1997 4,975,000 4,825,000 0.3
Total Fixed-Income Investments in Brazil 12,962,500 12,790,530 0.8
Colombia Banking 5,000,000 Banco Ganadero S.A., 9.75% due 8/26/1999 4,992,340 4,993,750 0.3
Total Fixed-Income Investments in Colombia 4,992,340 4,993,750 0.3
Mexico Foreign 5,500,000 Nafinsa, 10.625% due 11/22/2001 5,929,375 4,785,000 0.3
Government Pound 10,000,000 United Mexican States, Government Bond,
Obligations Sterling 12.25% due 12/03/1998 17,422,207 14,871,175 0.9
-------------- -------------- ------
23,351,582 19,656,175 1.2
Industrial
Services US$ 2,000,000 Cemex, S.A., 10% due 11/05/1999 1,600,000 1,725,000 0.1
Total Fixed-Income Investments in Mexico 24,951,582 21,381,175 1.3
Trinidad Foreign Republic of Trinidad and Tobago:
& Tobago Government 3,000,000 11.50% due 11/20/1997 3,123,750 3,112,500 0.2
Obligations 4,000,000 ++9.75% due 11/03/2000 3,991,600 3,950,000 0.2
Total Fixed-Income Investments in
Trinidad & Tobago 7,115,350 7,062,500 0.4
Convertible Bonds
<PAGE>
Mexico Industrial 1,000,000 ++Cemex, S.A., 4.25% due 11/01/1997 1,000,000 750,000 0.1
Services
Total Investments in Mexican Convertible
Bonds 1,000,000 750,000 0.1
Total Investments in Latin American &
Caribbean Securities 82,812,260 78,094,159 4.7
NORTH
AMERICA Fixed-Income Investments
Canada Energy C$ 10,000,000 Gulf Canada Resources, Ltd.:
9% due 8/15/1999 9,158,438 9,950,000 0.6
6,000,000 9.25% due 1/15/2004 5,962,020 5,850,000 0.3
Total Fixed-Income Investments in Canada 15,120,458 15,800,000 0.9
United Air Delta Air Lines, Inc.:
States Transport US$ 16,182,112 9.375% due 9/11/2007 (b) 16,458,503 17,401,111 1.0
10,000,000 10.50% due 4/30/2016 10,287,500 11,617,900 0.7
7,100,000 United Air Pass-Through, 10.125%
due 3/22/2015 7,684,046 7,914,725 0.5
15,000,000 USAir Inc., 10.375% due 3/01/2013 15,000,000 14,250,000 0.9
-------------- -------------- ------
49,430,049 51,183,736 3.1
Broadcasting 10,000,000 Continental Cablevision, Inc., 9.50%
& Publishing due 8/01/2013 10,000,000 10,300,000 0.6
5,000,000 Heritage Media Corp., 11% due 6/15/2002 5,247,188 5,387,500 0.3
10,000,000 Videotron Group, Ltd. Co., 10.25%
due 10/15/2002 10,043,750 10,400,000 0.7
-------------- -------------- ------
25,290,938 26,087,500 1.6
Building 15,300,000 Pacific Lumber Co., 10.50% due 3/01/2003 15,462,750 14,037,750 0.9
Materials 11,035,000 USG Corp., 8.75% due 3/01/2017 9,717,469 10,428,075 0.6
-------------- -------------- ------
25,180,219 24,465,825 1.5
Capital Goods 10,000,000 Sequa Corp., 9.375% due 12/15/2003 9,915,000 9,350,000 0.6
Chemicals 33,860,000 GI Holdings, Inc., 11.38%* due 10/01/1998 23,637,453 22,686,200 1.4
10,000,000 Uniroyal Chemical Co., 9% due 9/01/2000 10,000,000 9,850,000 0.6
-------------- -------------- ------
33,637,453 32,536,200 2.0
<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 9,700,000 0.6
-------------- -------------- ------
30,435,750 30,400,000 1.9
Consumer 2,227,000 Liggett Group, Inc., 19.75% due 2/01/1999 2,227,000 2,087,813 0.1
Products 20,000,000 Revlon Consumer Products Corp.,
9.375% due 4/01/2001 17,628,044 19,300,000 1.2
-------------- -------------- ------
19,855,044 21,387,813 1.3
Containers 20,000,000 Owens-Illinois, Inc., 11% due 12/01/2003 21,906,563 21,950,000 1.3
Energy Maxus Energy Corp.:
6,500,000 9.875% due 10/15/2002 6,485,050 6,207,500 0.4
1,000,000 11.50% due 11/15/2015 1,051,250 980,000 0.0
5,000,000 Oleoducts Central S.A., 9.35% due 9/01/2005 5,000,000 4,987,500 0.3
15,000,000 Rowan Companies, Inc., 11.875%
due 12/01/2001 15,590,000 16,050,000 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 10,200,000 0.6
-------------- -------------- ------
53,125,550 52,675,000 3.2
Entertainment Marvel Holdings, Inc.:
1,125,000 9.125% due 2/15/1998 995,625 1,040,625 0.1
26,780,000 11.47%* due 4/15/1998 19,491,779 18,879,900 1.1
5,000,000 Spectravision Inc., 10.92%* due 10/01/2001 4,410,496 1,150,000 0.1
10,000,000 Trump Plaza Funding, Inc., 10.875%
due 6/15/2001 7,536,875 9,150,000 0.5
-------------- -------------- ------
32,434,775 30,220,525 1.8
Financial 2,000,000 Financira Energetica Nacional, 9%
Services due 11/08/1999 2,057,500 2,040,000 0.1
17,375,000 Lomas Mortgage USA, Inc., 10.25%
due 10/01/2002 17,387,500 11,467,500 0.7
10,000,000 Penn Financial Corp., 9.25% due 12/15/2003 10,000,000 9,700,000 0.6
10,000,000 Reliance Group Holdings, Inc., 9%
due 11/15/2000 10,000,000 9,825,000 0.6
-------------- -------------- ------
39,445,000 33,032,500 2.0
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
NORTH
AMERICA Value Percent of
(continued)Industries Face Amount Fixed-Income Investments Cost (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
United Food & US$ 10,000,000 Canandaigua Wine Inc., 8.75%
States Beverage due 12/15/2003 $ 10,000,000 $ 9,800,000 0.6%
(concluded) 10,000,000 Coca-Cola Bottling Co., 9% due 11/15/2003 10,005,000 9,850,000 0.6
20,000,000 Del Monte Corp., 10% due 5/01/2003 20,025,312 16,400,000 1.0
28,435,000 Grand Union Co., 12% due 9/01/2004 (e) 28,034,925 27,439,775 1.7
18,000,000 Penn Traffic Co., 9.625% due 4/15/2005 18,308,350 16,965,000 1.0
15,000,000 Pueblo Xtra International Inc., 9.50%
due 8/01/2003 15,111,875 13,800,000 0.8
10,000,000 Specialty Foods Corp., 10.25% due 8/15/2001 10,000,000 9,600,000 0.6
-------------- -------------- ------
111,485,462 103,854,775 6.3
Health 2,500,000 MEDIQ, Inc., 11.125% due 7/01/1999 2,500,000 2,325,000 0.1
Services
High 15,000,000 Computervision Corp., 10.875% due 8/15/1997 15,025,000 14,775,000 0.9
Technology
Home Del E. Webb Corp.:
Building 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 3,325,000 0.2
Kaufman & Broad Home, Inc.:
2,000,000 10.375% due 9/01/1999 2,020,000 2,025,000 0.1
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 7,899,375 0.5
-------------- -------------- ------
30,087,797 29,737,500 1.8
Hotels & 1,906,000 Goldriver Hotel & Casino Corp., 13.375%
Casinos due 8/31/1999 2,645,548 1,410,440 0.1
10,000,000 Greate Bay Properties, Inc., 10.875%
due 1/15/2004 9,996,250 8,500,000 0.5
15,000,000 Showboat, Inc., 9.25% due 5/01/2008 14,698,750 13,762,500 0.8
-------------- -------------- ------
27,340,548 23,672,940 1.4
Industrial 15,000,000 ADT Operations, 9.25% due 8/01/2003 15,073,188 15,487,500 1.0
Services
<PAGE>
Oil/Gas 7,000,000 Clark R & M Holdings, Inc., 10.43%*
Domestic due 2/15/2000 4,336,707 4,375,000 0.3
Paper 10,000,000 Container Corp. of America, 9.75%
due 4/01/2003 10,200,000 9,900,000 0.6
15,000,000 Fort Howard Corp., 9% due 2/01/2006 15,007,500 13,650,000 0.8
10,000,000 Riverwood International Corp., 11.25%
due 6/15/2002 10,385,750 10,900,000 0.7
Stone Container Corp.:
12,500,000 9.875% due 2/01/2001 11,667,085 12,390,625 0.7
7,500,000 10.75% due 10/01/2002 7,425,000 7,856,250 0.5
-------------- -------------- ------
54,685,335 54,696,875 3.3
Restaurants & Flagstar Corp.,
Food Services 2,000,000 10.875% due 12/01/2002 2,000,000 1,860,000 0.1
17,000,000 11.375% due 9/15/2003 16,640,000 13,345,000 0.8
-------------- -------------- ------
18,640,000 15,205,000 0.9
Retail Stores 10,000,000 Specialty Retailers, Inc., 10%
due 8/15/2000 10,112,500 9,300,000 0.6
Textiles 10,000,000 WestPoint Stevens Inc., 8.75% due
12/15/2001 10,093,750 9,850,000 0.6
Transport 10,000,000 Viking Star Shipping Co., 9.625%
Services due 7/15/2003 10,028,437 9,900,000 0.6
Utilities 9,848,000 Beaver Valley II Funding, 9% due 6/01/2017 7,262,900 8,272,320 0.5
4,000,000 CTC Mansfield Funding Corp., 11.125%
due 9/30/2016 4,301,250 4,071,760 0.3
Midland Cogeneration Venture
Limited Partnership:
9,070,566 ++10.33% due 7/23/2002 (b) 8,889,155 9,305,576 0.6
10,000,000 13.25% due 7/23/2006 11,183,750 10,102,900 0.6
9,100,000 Tucson Electric & Power Co., 10.732%
due 1/01/2013 8,713,250 8,775,949 0.5
-------------- -------------- ------
40,350,305 40,528,505 2.5
Total Fixed-Income Investments in the
United States 690,415,370 666,997,194 40.6
Face Amount Convertible Bonds
<PAGE>
Canada Metals & C$ 1,000,000 Inco Ltd., 5.75% due 7/01/2004 1,050,750 1,125,000 0.1
Mining
Total Investments in Canadian
Convertible Bonds 1,050,750 1,125,000 0.1
United Airlines US$ 3,000,000 AMR Corp., 6.125% due 11/01/2024*** 2,444,374 3,123,750 0.2
States
Broadcast/ 759,000 All American Communications, Inc., 6.50%
Radio & due 10/01/2003 683,100 717,255 0.0
Television
Building & 1,500,000 Toll Brothers Inc., 4.75% due 1/15/2004 1,500,000 1,335,000 0.1
Construction 1,000,000 US Home Corp., 4.875% due 11/01/2005 991,000 840,000 0.0
-------------- -------------- ------
2,491,000 2,175,000 0.1
Computers 2,500,000 Data General Corp., 7.75% due 6/01/2001 2,479,375 2,250,000 0.1
1,000,000 Storage Technology Corp., 8% due 5/31/2015 1,132,500 975,000 0.1
-------------- -------------- ------
3,611,875 3,225,000 0.2
Conglomerates 2,000,000 Polyphase Corp., 12% due 7/01/1999 2,000,000 1,720,000 0.1
Electrical 3,125,000 Rexel S.A., 7% due 8/01/2014 3,065,625 3,218,750 0.2
Equipment
Electronics 500,000 ++Zenith Electronics Corp., 8.50%
due 11/19/2000*** 505,750 483,750 0.0
Entertainment 4,500,000 Time Warner Inc., 7.99%* due 12/17/2012 1,456,852 1,501,875 0.1
Financial 2,253,000 Pacific Gulf Properties, Inc., 8.375%
Services due 2/15/2001 1,982,303 2,038,965 0.1
Food & 3,000,000 Boston Chicken Inc., 4.50% due 2/01/2004 3,000,000 2,775,000 0.2
Beverage 3,000,000 Farm Fresh, Inc., 7.50% due 3/01/2010 1,562,500 1,810,707 0.1
-------------- -------------- ------
4,562,500 4,585,707 0.3
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
NORTH
AMERICA Value Percent of
(concluded)Industries Face Amount Convertible Bonds Cost (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
United Healthcare US$ 700,000 ++Pharmaceutical Marketing Services,
States Inc., 6.25% due 2/01/2003*** $ 536,700 $ 483,000 0.0%
(concluded)
Home 1,000,000 ++Engle Homes, Inc., 7% due 3/01/2003 885,380 860,000 0.1
Building
Industrial 500,000 Mascotech, Inc., 4.50% due 12/15/2003 500,000 361,875 0.0
Services 140,000 Recognition Equipment International, Inc.,
7.25% due 4/15/2011 103,600 115,150 0.0
2,080,000 Wainoco Oil Corp., 7.75% due 6/01/2014 1,880,352 1,856,400 0.1
-------------- -------------- ------
2,483,952 2,333,425 0.1
Insurance 500,000 Alexander & Alexander Services Inc., 11%
due 4/15/2007 508,750 510,000 0.0
Machine-- 1,500,000 Cooper Industries, Inc., 7.05% due
Diversified 1/01/2015 1,475,000 1,556,250 0.1
Machinery-- 2,000,000 Albany International Corp., 5.25% due
Paper 3/15/2002 1,832,679 1,930,000 0.1
Mining 2,000,000 Coeur d'Alene Mines Corp., 6.375%
due 1/31/2004*** 1,916,550 1,820,000 0.1
Oil-- 3,000,000 USX Corp., 7% due 6/15/2017 2,530,525 2,745,000 0.2
Domestic
Pharmaceuticals 2,600,000 Bindley Western Industries, Inc., 6.50%
due 10/01/2002 2,563,000 2,593,500 0.2
2,000,000 IVAX Corp., 6.50% due 11/15/2001 1,897,500 1,950,000 0.1
-------------- -------------- ------
4,460,500 4,543,500 0.3
Publishing/ 1,350,000 Graphic Industries, Inc., 7% due 5/15/2006 1,184,625 1,161,000 0.1
Printing
Retail 825,000 Baker (J.) Inc., 7% due 6/01/2002 824,527 750,750 0.0
1,000,000 Michaels Stores, Inc., 4.75% due 1/15/2003 1,016,000 925,000 0.1
-------------- -------------- ------
1,840,527 1,675,750 0.1
<PAGE>
Telecommuni- 3,315,000 Intelcom Group Inc., 7% due 10/30/1998 (a) 3,276,281 2,221,911 0.2
cations 285,000 M/A Communications Inc., 9.25% due
5/15/2006 285,000 286,425 0.0
-------------- -------------- ------
3,561,281 2,508,336 0.2
Textiles 375,000 Fieldcrest Cannon, Inc., 6% due 3/15/2012 285,000 290,625 0.0
2,400,000 Interface, Inc., 8% due 9/15/2013*** 2,349,463 2,304,000 0.2
-------------- -------------- ------
2,634,463 2,594,625 0.2
Transportation 2,500,000 UAL Corp., 6.375% due 2/01/2025*** 2,244,360 2,518,750 0.1
1,000,000 Varlen Corp., 6.50% due 6/01/2003 987,500 1,050,000 0.1
-------------- -------------- ------
3,231,860 3,568,750 0.2
Total Investments in United States
Convertible Bonds 51,886,171 51,079,688 3.1
Shares Convertible Preferred Stocks,
Held Common Stocks and Warrants
United Airlines 52,500 Delta Air Lines Inc., $3.50 (Series C),
States Conv. Pfd.*** 2,756,900 3,071,250 0.2
Banking & 48,300 Rochester Community Savings Bank, $1.75
Finance (Series B) 1,387,224 1,515,412 0.1
36,300 Southern National Corp., Pfd. $1.6875 1,158,678 1,288,650 0.1
55,200 Union Planters Corp., Pfd. $2.00 1,949,405 1,890,600 0.1
-------------- -------------- ------
4,495,307 4,694,662 0.3
Environmental 3,520,000 ++Allied Waste Industries, Inc.,
$90 Conv. Pfd.*** 3,520,401 5,297,600 0.3
Food & 346,500 RJR Nabisco, Inc., Pfd. $.60 (Series C) 2,250,782 2,122,312 0.1
Beverage
Forest Products 44,800 James River Corp. of Virginia 1,969,537 2,004,800 0.2
& Paper 15,000 James River Corp. of Virginia, $3.375
(Series K) Conv. Pfd. 668,330 671,250 0.0
-------------- -------------- ------
2,637,867 2,676,050 0.2
<PAGE>
High 91,053 Anacomp, Inc. (Warrants) (c) 120,000 34,145 0.0
Technology
Hotels & 75,000 Goldriver Hotel & Casino Corp.
Casinos Liquidating Trust 75,000 53,437 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 72,000 0.0
-------------- -------------- ------
297,738 155,437 0.0
Industrial 20,000 Mascotech, Inc., Pfd. $1.20 312,460 285,000 0.0
Services 10,000 UGI Corp. (Warrants) (c) 43,750 1,500 0.0
-------------- -------------- ------
356,210 286,500 0.0
Insurance 36,200 Kemper Corp. 1,674,974 1,800,950 0.1
1,500 Westbridge Capital Corp., Pfd. 1,500,000 1,275,000 0.1
-------------- -------------- ------
3,174,974 3,075,950 0.2
Oil & Gas 113,600 Gerrity Oil & Gas Corp., Pfd. $1.50 1,882,785 1,320,600 0.1
43,000 Snyder Oil Corp., Pfd. $1.50 (Series A) 906,023 849,250 0.1
20,000 Western Gas Resources, Inc., Pfd. $2.62 1,000,000 700,000 0.0
10,000 Williams Companies, Inc. (The) 572,500 620,000 0.0
-------------- -------------- ------
4,361,308 3,489,850 0.2
Total Investments in United States
Convertible Preferred Stocks,
Common Stocks & Warrants 23,971,487 24,903,756 1.5
Total Investments in North American
Securities 782,444,236 759,905,638 46.2
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in US dollars)
<CAPTION>
PACIFIC Face Value Percent of
BASIN Industries Amount Fixed-Income Investments Cost (Note 1a) Net Assets
<S> <S> <S> <C> <S> <C> <C> <C>
Australia Foreign Australian Government Bonds:
Government A$ 74,600,000 12% due 11/15/2001 $ 60,153,723 $ 60,977,567 3.7%
Obligations-- 28,000,000 9.50% due 8/15/2003 20,638,131 20,334,242 1.2
Regional & 21,500,000 Queensland Treasury Corp., Global Notes,
Agency 8% due 5/14/2003 16,111,077 14,219,402 0.9
Total Fixed-Income Investments in
Australia 96,902,931 95,531,211 5.8
New Foreign NZ$ 35,300,000 New Zealand Government Bonds, 10%
Zealand Government due 7/15/1997 24,545,606 24,365,281 1.5
Obligations
Total Fixed-Income Investments in
New Zealand 24,545,606 24,365,281 1.5
Philip- Industrial US$ 3,000,000 ++San Miguel Corp., 9% due 4/27/2000 2,981,000 3,075,000 0.2
pines
Total Fixed-Income Investments
in the Philippines 2,981,000 3,075,000 0.2
Total Investments in Pacific Basin
Securities 124,429,537 122,971,492 7.5
<PAGE>
WESTERN
EUROPE
Denmark Foreign Dkr 208,500,000 Denmark Kingdom, 9% due 11/15/2000 37,315,108 40,007,893 2.4
Government
Obligations
Total Fixed-Income Investments in Denmark 37,315,108 40,007,893 2.4
Germany Consumer US$ 10,000,000 Tarkett International, 9% due 3/01/2002 10,000,000 9,950,000 0.6
Products
Total Fixed-Income Investments in Germany 10,000,000 9,950,000 0.6
Italy Foreign Buoni Poliennali del Tesoro
Government (Italian Government Bonds):
Obligations Lit 55,000,000,000 12% due 9/18/1998 36,600,703 33,652,200 2.0
70,400,000,000 9% due 10/01/1998 42,566,872 39,894,768 2.4
118,000,000,000 8.50% due 1/01/1999 68,257,247 65,224,572 4.0
Total Fixed-Income Investments in Italy 147,424,822 138,771,540 8.4
Portugal Supra- Esc 750,000,000 European Banking Investment Trust, 15.50%
national due 7/12/1995 6,389,454 5,135,089 0.3
Entities
Total Fixed-Income Investments in Portugal 6,389,454 5,135,089 0.3
Spain Foreign Government of Spain:
Government Pta 8,085,000,000 11.45% due 8/30/1998 64,545,464 66,635,349 4.1
Obligations 8,242,000,000 10.25% due 11/30/1998 62,495,835 65,650,268 4.0
1,524,000,000 12.25% due 3/25/2000 12,076,223 12,802,103 0.8
Total Fixed-Income Investments in Spain 139,117,522 145,087,720 8.9
Sweden Foreign Sek 198,000,000 Government of Sweden, 11% due 1/21/1999 27,319,021 27,481,696 1.7
Government
Obligations
Total Fixed-Income Investments in Sweden 27,319,021 27,481,696 1.7
<PAGE>
United Foreign Pound 63,700,000 United Kingdom Gilt, 9% due 3/03/2000 101,744,036 104,417,617 6.4
Kingdom Government Sterling
Obligations
Total Fixed-Income Investments in the
United Kingdom 101,744,036 104,417,617 6.4
Convertible Bonds
United Conglomerates 1,250,000 Hanson Trust PLC, 9.50% due 1/31/2006 2,074,884 2,022,917 0.1
Kingdom
Total Investments in United Kingdom
Convertible Bonds 2,074,884 2,022,917 0.1
Total Investments in
Western European Securities 471,384,847 472,874,472 28.8
SHORT-TERM Face
SECURITIES Amount Issue
United Commercial US$ 20,000,000 AIG Funding, Inc., 5.95% due 7/06/1995 19,990,083 19,990,083 1.2
States Paper** 15,000,000 Ciesco L.P., 5.95% due 7/12/1995 14,977,688 14,977,688 0.9
42,155,000 General Electric Capital Corp., 6.20%
due 7/03/1995 42,155,000 42,155,000 2.6
20,000,000 Matterhorn Capital Corp., 5.93% due
7/25/1995 19,927,522 19,927,522 1.2
10,000,000 Riverwoods Funding Corp., 5.96% due
7/19/1995 9,973,511 9,973,511 0.6
-------------- -------------- ------
107,023,804 107,023,804 6.5
US Government Federal National Mortgage Association:
& Agency 30,000,000 5.87% due 7/11/1995 29,960,867 29,960,867 1.8
Obligations** 15,000,000 5.81% due 8/03/1995 14,924,954 14,924,954 1.0
3,700,000 US Treasury Bills, 5.60% due 9/07/1995 (f) 3,662,013 3,662,608 0.2
-------------- -------------- ------
48,547,834 48,548,429 3.0
Total Investments in Short-Term Securities 155,571,638 155,572,233 9.5
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in US dollars)
<CAPTION>
OPTIONS Number of Contracts/ Premiums Value Percent of
PURCHASED Face Amount Issue Paid (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Currency Call 24,000,000 German Deutschemark/Italian Lira, expiring
Options Purchased July 1995 at DM/LIT 1205 $ 224,461 $ 29,496 0.0%
Currency Put 9,378,200 Australian Dollar, expiring July 1995
Options at A$.7214 64,613 174,435 0.0
Purchased 25,197,401 New Zealand Dollar, expiring August 1995
at NZ$.6595 128,507 163,783 0.0
-------------- -------------- ------
193,120 338,218 0.0
Total Options Purchased 417,581 367,714 0.0
Total Investments 1,622,044,349 1,594,973,208 97.0
OPTIONS Premiums
WRITTEN Received
Currency Call 9,516,000 Australian Dollar, expiring July 1995
Options Written at A$.732 (64,614) (4,758) 0.0
95,000,000 German Deutschemark/Italian Lira, expiring
September 1995 at DM/LIT 1145 (503,788) (707,560) 0.0
25,923,330 New Zealand Dollar, expiring August 1995
at NZ$.6785 (128,580) (90,732) 0.0
-------------- -------------- ------
(696,982) (803,050) 0.0
Currency Put 24,000,000 German Deutschemark/Italian Lira,
Options Written expiring July 1995 at DM/LIT 1158 (224,460) (39,912) 0.0
95,000,000 German Deutschemark/Italian Lira,
expiring September 1995 at DM/LIT 1251 (829,365) (789,925) (0.1)
-------------- -------------- ------
(1,053,825) (829,837) (0.1)
Total Options Written (1,750,807) (1,632,887) (0.1)
Total Investments, Net of Options Written $1,620,293,542 1,593,340,321 96.9
==============
Variation Margin on Financial Contracts++++ 611,360 0.0
Short Sales (Proceeds--$6,461,136)*** (6,804,286) (0.4)
Unrealized Appreciation on Forward Foreign Exchange Contracts++++++ 1,981,651 0.1
<PAGE>
Other Assets Less Liabilities 54,896,711 3.4
-------------- ------
Net Assets $1,644,025,757 100.0%
============== ======
<FN>
*Represents a zero coupon or step bond; the interest rate shown is the
effective yield at the time of purchase.
**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 June 30, 1995 are as follows:
<CAPTION>
Value
Shares Issue (Note 1i)
<C> <S> <C>
27,800 AMR Corp. $(2,071,100)
48,570 Allied Waste Industries, Inc. (346,061)
33,000 Coeur d'Alene Mines Corp. (573,375)
25,000 Delta Air Lines Inc. (1,837,500)
71,600 Interface, Inc. (895,000)
26,200 Pharmaceutical Marketing Services, Inc. (242,350)
4,000 UAL Corp. (560,500)
38,400 Zenith Electronics Corp. (278,400)
Total (Proceeds--$6,461,136) $(6,804,286)
===========
<FN>
++Restricted securities as to resale. The value of the Fund's investment in
restricted securities was approximately $46,300,000, representing 2.8%
of net assets.
<CAPTION>
Acquisition Value
Issue Date Cost (Note 1a)
<S> <C> <C> <C>
Allied Waste Industries, Inc.,
$90 Conv. Pfd. 9/23/1993 $ 3,520,401 $ 5,297,600
Banco Safra, 9.75% due 6/19/1997 6/08/1995 3,000,000 2,984,730
Cemex, S.A., 4.25% due 11/01/1997 9/28/1994 1,000,000 750,000
Compania Brasileira de Projetos e
Obras, 12.50% due 12/22/1997 12/14/1994 4,975,000 4,825,000
Engle Homes, Inc., 7% due 3/01/2003 6/29/1994-
7/08/1994 885,380 860,000
Midland Cogeneration Venture Limited
Partnership, 10.33% due 7/23/2002 7/13/1994 8,889,155 9,305,576
<PAGE>
Pharmaceutical Marketing Services,
Inc., 6.25% due 2/01/2003 10/02/1994 536,700 483,000
Republic of Trinidad and Tobago, 9.75%
due 11/03/2000 10/15/1994 3,991,600 3,950,000
San Miguel Corp., 9% due 4/27/2000 9/26/1994-
9/30/1994 2,981,000 3,075,000
Telecom Argentina Stet--France Telecom
S.A., 8.375% due 10/18/2000 10/04/1994 5,799,375 5,785,000
Transportadora de Gas del Sur, 7.75%
due 12/23/1998 1/28/1994 3,542,500 3,520,000
United Banco Brazil, 10.25%
due 6/12/1997 5/24/1995- 4,987,500 4,980,800
5/25/1995
Zenith Electronics Corp., 8.50%
due 11/19/2000 10/26/1994 505,750 483,750
Total $44,614,361 $46,300,456
=========== ===========
++++Financial futures contracts sold as of June 30, 1995 were as follows:
<CAPTION>
Number of Expiration Value
Contracts Issue Exchange Date (Note 1c)
<C> <S> <S> <S> <C>
225 Australian
Government
Bond SFE September 1995 $(18,811,332)
377 Italian BPT LIFFE September 1995 (45,170,868)
Total Futures Contracts Sold
(Total Contract Price--$65,741,590) $(63,982,200)
============
The market value of pledged securities is $3,662,608.
++++++Forward foreign exchange contracts as of June 30, 1995 are as follows:
<CAPTION>
Unrealized
Appreciation
Expiration (Depreciation)
Date (Note 1c)
<PAGE>
Foreign Currency Purchased
<S> <C> <S> <C>
A$ 35,713,500 July 1995 $ (236,352)
DM 308,375,023 July 1995 3,754,170
DM 18,885,354 August 1995 96,300
Lit 37,437,120,000 July 1995 9,783
Total (US$ Commitment--$281,311,512) $ 3,623,901
-----------
Foreign Currency Sold
<S> <C> <S> <C>
A$ 86,029,950 July 1995 $ 743,987
Dkr 41,226,000 July 1995 (65,184)
DM 156,439,886 July 1995 (1,478,649)
Esp 12,803,119,444 July 1995 (271,474)
Lit 75,251,233,751 July 1995 (567,469)
Sek 98,964,920 August 1995 (3,461)
Total (US$ Commitment--$345,214,552) $(1,642,250)
-----------
Total Unrealized Appreciation on Forward
Foreign Exchange Contracts--Net $ 1,981,651
===========
(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.
(e)Non-income producing security.
(f)Securities held as collateral in connection with open financial
futures contracts.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of June 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,621,626,768) (Note 1a) $1,594,605,494
Options purchased, at value (cost--$417,581) (Notes 1a & 1c) 367,714
Cash 2,940,258
Foreign cash (Note 1d) 1,575,336
Unrealized appreciation on forward foreign exchange contracts (Note 1c) 1,981,651
Receivables:
Interest $ 46,720,120
Securities sold 29,493,394
Short sales (Note 1i) 6,461,136
Options written (Note 1a & 1c) 1,333,153
Capital shares sold 656,702
Variation margin (Note 1c) 611,360
Dividends 101,706 85,377,571
------------
Prepaid registration fees and other assets (Note 1g) 114,536
--------------
Total assets 1,686,962,560
--------------
Liabilities: Common stocks sold short, at market value (proceeds--$6,461,136) (Note 1i) 6,804,286
Options written, at value (cost--$1,750,807) (Notes 1a & 1c) 1,632,887
Payables:
Securities purchased 25,673,034
Capital shares redeemed 2,974,050
Dividends to shareholders (Note 1h) 2,118,653
Options purchased (Note 1a & 1c) 1,257,020
Distributor (Note 2) 899,022
Investment adviser (Note 2) 872,594
Forward foreign exchange contracts (Note 1c) 257,079 34,051,452
------------
Accrued expenses and other liabilities 448,178
--------------
Total liabilities 42,936,803
--------------
Net Assets: Net assets $1,644,025,757
==============
Net Assets Class A Shares of Common Stock, $0.10 par value, 1,000,000,000 shares authorized $ 3,401,252
Consist of: Class B Shares of Common Stock, $0.10 par value, 1,000,000,000 shares authorized 15,948,817
Class C Shares of Common Stock, $0.10 par value, 1,000,000,000 shares authorized 48,624
Class D Shares of Common Stock, $0.10 par value, 1,000,000,000 shares authorized 31,423
Paid-in capital in excess of par 1,767,063,505
Accumulated realized capital losses on investments and foreign currency transactions--
net (Note 6) (119,507,790)
Unrealized depreciation on investments and foreign currency transactions--net (22,960,074)
--------------
Net assets $1,644,025,757
==============
<PAGE>
Net Asset Class A--Based on net assets of $287,944,795 and 34,012,520 shares outstanding $ 8.47
Value: ==============
Class B--Based on net assets of $1,349,309,411 and 159,488,173 shares outstanding $ 8.46
==============
Class C--Based on net assets of $4,111,243 and 486,238 shares outstanding $ 8.46
==============
Class D--Based on net assets of $2,660,308 and 314,229 shares outstanding $ 8.47
==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended June 30, 1995
<S> <S> <C> <C>
Investment Interest and discount earned (net of $985,590 withholding tax) $ 79,306,670
Income Dividends 829,241
(Notes 1e & -------------
1f): Total income 80,135,911
-------------
Expenses: Account maintenance and distribution fees--Class B (Note 2) $ 5,223,628
Investment advisory fees (Note 2) 5,071,312
Transfer agent fees--Class B (Note 2) 874,363
Custodian fees 300,058
Printing and shareholder reports 176,504
Transfer agent fees--Class A (Note 2) 154,898
Accounting services (Note 2) 88,252
Professional fees 70,602
Registration fees (Note 1g) 52,951
Directors' fees and expenses 17,651
Short sale of dividends (Note 1i) 13,052
Account maintenance and distribution fees--Class C (Note 2) 10,475
Pricing fees 5,295
Account maintenance fees--Class D (Note 2) 2,391
Transfer agent fees--Class C (Note 2) 2,269
Transfer agent fees--Class D (Note 2) 1,021
Other 21,181
------------
Total expenses 12,085,903
-------------
Investment income--net 68,050,008
-------------
<PAGE>
Realized & Realized loss from:
Unrealized Investments--net (29,273,579)
Gain (Loss) Foreign currency transactions--net (26,405,856) (55,679,435)
on Invest- ------------
ments & Change in unrealized depreciation on:
Foreign Investments--net 101,832,488
Currency Foreign currency transactions--net 7,793,605 109,626,093
Trans- ------------ -------------
actions--Net Net realized and unrealized gain on investments and foreign currency transactions 53,946,658
(Notes 1c, -------------
1d, 1f & 3): Net Increase in Net Assets Resulting from Operations $ 121,996,666
=============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: June 30, 1995 Dec. 31, 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 68,050,008 $ 167,081,662
Realized loss on investments and foreign currency transactions--net (55,679,435) (107,581,837)
Change in unrealized depreciation on investments and foreign currency
transactions--net 109,626,093 (173,922,162)
-------------- --------------
Net increase (decrease) in net assets resulting from operations 121,996,666 (114,422,337)
-------------- --------------
Dividends & Investment income--net:
Distributions Class A (12,723,894) (19,926,079)
to Share- Class B (55,142,854) (84,931,858)
holders Class C (102,547) (4,853)
(Note 1h): Class D (80,713) (6,907)
Return of capital:
Class A -- (11,820,707)
Class B -- (50,383,950)
Class C -- (2,879)
Class D -- (4,097)
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (68,050,008) (167,081,330)
-------------- --------------
<PAGE>
Capital Share Net decrease in net assets derived from capital share transactions (214,223,235) (487,938,280)
Transactions -------------- --------------
(Note 4):
Net Assets: Total decrease in net assets (160,276,577) (769,441,947)
Beginning of period 1,804,302,334 2,573,744,281
-------------- --------------
End of period $1,644,025,757 $1,804,302,334
============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
The following per share data and ratios For the Six For the Four
have been derived from information Months Months
provided in the financial statements. Ended For the Year Ended Ended For the Year Ended
June 30, December 31, Dec. 31, August 31,
Increase (Decrease) in Net Asset Value: 1995 1994++++ 1993 1992 1992 1991
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 8.20 $ 9.28 $ 8.85 $ 9.34 $ 9.07 $ 9.48
Operating -------- -------- -------- -------- -------- --------
Performance: Investment income--net .35 .72 .75 .29 .99 1.12
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net .27 (1.09) .46 (.41) .40 (.16)
-------- -------- -------- -------- -------- --------
Total from investment operations .62 (.37) 1.21 (.12) 1.39 .96
-------- -------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.35) (.45) (.58) (.35) (1.12) (1.37)
Realized gain on investments--net -- -- (.03) (.02) -- --
Return of capital--net -- (.26) (.17) -- -- --
-------- -------- -------- -------- -------- --------
Total dividends and distributions (.35) (.71) (.78) (.37) (1.12) (1.37)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 8.47 $ 8.20 $ 9.28 $ 8.85 $ 9.34 $ 9.07
======== ======== ======== ======== ======== ========
<PAGE>
Total Based on net asset value per share 7.80%+++ (4.05%) 14.12% (1.26%)+++ 16.09% 11.50%
Investment ======== ======== ======== ======== ======== ========
Return:**
Ratios to Expenses .79%* .77% .78% .76%* .88% .85%
Average ======== ======== ======== ======== ======== ========
Net Assets: Investment income--net 8.69%* 8.17% 8.22% 8.09%* 11.16% 12.38%
======== ======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $287,945 $311,181 $467,625 $455,672 $526,631 $292,709
Data: ======== ======== ======== ======== ======== ========
Portfolio turnover 50.21% 115.95% 182.88% 68.42% 76.18% 63.83%
======== ======== ======== ======== ======== ========
<CAPTION>
Class B
The following per share data and ratios For the Six For the Four For the
have been derived from information Months Months Period
provided in the financial statements. Ended For the Year Ended Ended Nov. 18, 1991++
June 30, December 31, Dec. 31, to Aug. 31,
Increase (Decrease) in Net Asset Value: 1995 1994++++ 1993 1992 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 8.19 $ 9.28 $ 8.85 $ 9.33 $ 9.26
Operating ---------- ---------- ---------- ---------- ----------
Performance: Investment income--net .32 .65 .70 .27 .77
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .27 (1.10) .44 (.40) --
---------- ---------- ---------- ---------- ----------
Total from investment operations .59 (.45) 1.14 (.13) .77
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income--net (.32) (.40) (.53) (.33) (.70)
Realized gain on investments--net -- -- (.03) (.02) --
Return of capital--net -- (.24) (.15) -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions (.32) (.64) (.71) (.35) (.70)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 8.46 $ 8.19 $ 9.28 $ 8.85 $ 9.33
========== ========== ========== ========== ==========
<PAGE>
Total Based on net asset value per share 7.41%+++ (4.90%) 13.27% (1.42%)+++ 8.61%+++
Investment ========== ========== ========== ========== ==========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees .81%* .79% .80% .78%* .88%*
Net Assets: ========== ========== ========== ========== ==========
Expenses 1.56%* 1.54% 1.55% 1.53%* 1.63%*
========== ========== ========== ========== ==========
Investment income--net 7.92%* 7.41% 7.42% 7.08%* 8.02%*
========== ========== ========== ========== ==========
Supplemental Net assets, end of period (in thousands) $1,349,310 $1,490,507 $2,106,120 $1,582,270 $1,514,406
Data: ========== ========== ========== ========== ==========
Portfolio turnover 50.21% 115.95% 182.88% 68.42% 76.18%
========== ========== ========== ========== ==========
<FN>
++Commencement of Operations.
++++Based on average shares outstanding during the period.
+++Aggregate total investment return.
*Annualized.
**Total investment returns exclude the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<CAPTION>
Class C Class D
For the For the
The following per share data and ratios For the Period For the Period
have been derived from information Six Months Oct. 21, Six Months Oct. 21,
provided in the financial statements. Ended 1994++ to Ended 1994++ to
June 30, Dec. 31, June 30, Dec. 31,
Increase (Decrease) in Net Asset Value: 1995 1994++++ 1995 1994++++
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 8.19 $ 8.42 $ 8.20 $ 8.43
Operating -------- -------- -------- --------
Performance: Investment income--net .31 .10 .34 .11
Realized and unrealized gain (loss) on investments
<PAGE> and foreign currency transactions--net .27 (.20) .27 (.20)
-------- -------- -------- --------
Total from investment operations .58 (.10) .61 (.09)
-------- -------- -------- --------
Less dividends:
Investment income--net (.31) (.08) (.34) (.09)
Return of capital--net -- (.05) -- (.05)
-------- -------- -------- --------
Total dividends (.31) (.13) (.34) (.14)
-------- -------- -------- --------
Net asset value, end of period $ 8.46 $ 8.19 $ 8.47 $ 8.20
======== ======== ======== ========
Total Based on net asset value per share 7.36%+++ (1.20%)+++ 7.67%+++ (1.09%)+++
Investment ======== ======== ======== ========
Return:**
Ratios to Expenses, excluding account maintenance and
Average distribution fees .86%* .84%* .79%* .79%*
Net Assets: ======== ======== ======== ========
Expenses 1.66%* 1.64%* 1.04%* 1.04%*
======== ======== ======== ========
Investment income--net 7.83%* 8.00%* 8.44%* 8.60%*
======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 4,111 $ 1,204 $ 2,660 $ 1,410
Data: ======== ======== ======== ========
Portfolio turnover 50.21% 115.95% 50.21% 115.95%
======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
+++Aggregate total investment return.
++Commencement of Operations.
++++Based on average shares outstanding during the period.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch World Income Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified,
open-end management investment company. These unaudited
financial statements reflect all adjustments which are, in the opinion
of management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal
recurring nature. The Fund offers four classes of shares under
the Merrill Lynch Select Pricing SM System. Shares of Class A and
Class D are sold with a front-end sales charge. Shares of Class B
and Class C may be subject to a contingent deferred sales charge.
All classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that
Class B, Class C and Class D Shares bear certain expenses related to
the account maintenance of such shares, and Class B and Class C
Shares also bear certain expenses related to the distribution of such
shares. Each class has exclusive voting rights with respect to
matters relating to its account maintenance and distribution
expenditures. The following is a summary of significant accounting
policies followed by the Fund.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business on
the day the securities are being valued or, lacking any sales, at the
last available bid price. Securities traded in the over-the-counter
market are valued at the last available bid price prior to the time
of valuation. In cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated by
or under the authority of the Board of Directors as the primary
market. Securities which are traded both in the over-the-counter
market and on a stock exchange are valued according to the
broadest and most representative market. Options written are
valued at the last sale price in the case of exchange-traded options
or, in the case of options traded in the over-the-counter market, the
last asked price. Options purchased are valued at the last sale price
in the case of exchange-traded options or, in the case of options
traded in the over-the-counter market, the last bid price. Short-term
securities are valued at amortized cost, which approximates market
value. Other investments, including futures contracts and related
options, are stated at market value. Securities and assets for which
market quotations are not available are valued at fair value as
determined in good faith by or under the direction of the Fund's
Board of Directors.
<PAGE>
(b) Repurchase agreements--The Fund invests in US Government
securities pursuant to repurchase agreements with a member bank
of the Federal Reserve System or a primary dealer in US Government
securities. Under such agreements, the bank or primary dealer
agrees to repurchase the security at a mutually agreed upon time
and price. The Fund takes possession of the underlying securities,
marks to market such securities and, if necessary, receives additional
securities daily to ensure that the contract is fully collateralized.
(c) Derivative financial instruments--The Fund may engage in
various portfolio strategies to seek to increase its return by hedging
its portfolio against adverse movements in the equity, debt and
currency markets. Losses may arise due to changes in the value of the
contract or if the counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at a
specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When
the contract is closed, the Fund records a realized gain or loss
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.
* Foreign currency options and futures--The Fund may also purchase
or sell listed or over-the-counter foreign currency options, foreign
currency futures and related options on foreign currency futures as a
short or long hedge against possible variations in foreign exchange
rates. Such transactions may be effected with respect to hedges on
non-US dollar denominated securities owned by the Fund, sold by
the Fund but not yet delivered, or committed or anticipated to be
purchased by the Fund.
NOTES TO FINANCIAL STATEMENTS (continued)
* Forward foreign exchange contracts--The Fund is authorized to
enter into forward foreign exchange contracts as a hedge against
either specific transactions or portfolio positions. Such contracts
are not entered on the Fund's records. However, the effect on oper-
ations is recorded from the date the Fund enters into such contracts.
Premium or discount is amortized over the life of the contracts.
<PAGE>
* Options--The Fund is authorized to write covered call options
and purchase put options. When the Fund writes an option, an
amount equal to the premium received by the Fund is reflected as
an asset and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value
of the option written. When a security is purchased or sold through
an exercise of an option, the related premium paid (or received) is
added to (or deducted from) the basis of the security acquired or
deducted from (or added to) the proceeds of the security sold. When
an option expires (or the Fund enters into a closing transaction),
the Fund realizes a gain or loss on the option to the extent of the
premiums received or paid (or gain or loss to the extent the cost
of the closing transaction exceeds the premium paid or received.
Written and purchased options are non-income producing investments.
(d) Foreign currency transactions--Transactions denominated in
foreign currencies are recorded at the exchange rate prevailing
when recognized. Assets and liabilities denominated in foreign
currencies are valued at the exchange rate at the end of the period.
Foreign currency transactions are the result of settling (realized) or
valuing (unrealized) assets or liabilities expressed in foreign cur-
rencies into US dollars. Realized and unrealized gains or losses from
investments include the effects of foreign exchange rates on
investments.
(e) Income taxes--It is the Fund's policy to comply with the require-
ments of the Internal Revenue Code applicable to regulated invest-
ment companies and to distribute all of its taxable income to its
shareholders. Therefore, no Federal income tax provision is required.
Under the applicable foreign tax law, a withholding tax may be
imposed on interest, dividends, and capital gains at various rates.
(f) Security transactions and investment income--Security trans-
actions are recorded on the dates the transactions are entered into
(the trade dates). Interest income (including amortization of dis-
count) is recognized on the accrual basis. Realized gains and losses
on security transactions are determined on the identified cost basis.
(g) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(h) Dividends and distributions--Dividends from net investment
income, excluding transaction gains/losses, are declared daily and
paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates. A portion of the net investment income paid by
the Fund during the fiscal year ended December 31, 1994 is
characterized as a return of capital.
<PAGE>
(i) Short sales--When the Fund engages in a short sale, an amount
equal to the proceeds received by the Fund is reflected as an asset
and equivalent liability. The amount of the liability is subsequently
marked to market to reflect the market value of the short sale. The
Fund maintains a segregated account of securities as collateral for
the short sales. The Fund is exposed to market risk based on the
amount, if any, that the market value of the stock exceeds the
market value of the securities in the segregated account.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Fund Asset Management, L.P. ("FAM"). The general partner of FAM
is Princeton Services, Inc. ("PSI"), an indirect wholly-owned subsid-
iary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the limited
partner. The Fund has also entered into a Distribution Agreement
and Distribution Plans with Merrill Lynch Funds Distributor, Inc.
("MLFD" or "Distributor"), a wholly-owned subsidiary of Merrill
Lynch Group, Inc.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee of 0.60%, on an annual basis,
of the average daily value of the Fund's net assets. Certain of the
states in which the shares of the Fund are qualified for sale impose
limitations on the expenses of the Fund. The most restrictive
annual expense limitation requires that the Investment Adviser
reimburse the Fund to the extent the Fund's expenses (excluding
interest rates, distribution fees, brokerage fees and commissions,
and extraordinary items) exceed 2.5% of the Fund's first $30 million
of average daily net assets, 2.0% of the Fund's next $70 million of
average daily net assets, and 1.5% of the average daily net assets in
excess thereof. No fee payment will be made to FAM during any
fiscal year which will cause such expenses to exceed the most
restrictive expense limitation at the time of such payment.
Pursuant to the distribution plans ("the Distribution Plans") adopted
by the Fund in accordance with Rule 12b-1 under the Investment
Company Act of 1940, the Fund pays the Distributor ongoing account
maintenance and distribution fees. The fees are accrued daily and
paid monthly at annual rates based upon the average daily net
assets of the shares as follows:
Account Maintenance Fee Distribution Fee
Class B 0.25% 0.50%
Class C 0.25% 0.55%
Class D 0.25% --
<PAGE>
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to the
Fund. The ongoing account maintenance fee compensates the Distri-
butor and MLPF&S for providing account maintenance services to
Class B, Class C and Class D shareholders. The ongoing distribution
fee compensates the Distributor and MLPF&S for providing share-
holder and distribution-related services to Class B and Class C
shareholders.
For the six months ended June 30, 1995, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the
Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $1,969 $21,767
Class D $1,592 $15,504
MLPF&S received contingent deferred sales charges of $2,485,458
relating to transactions in Class B Shares, $105 relating to
transactions in Class C Shares and $36,260 in commissions on the
execution of portfolio security transactions for the Fund for the
six months ended June 30, 1995.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLPF&S, MLFD, FAM, PSI, MLFDS, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended June 30, 1995 were $769,897,489 and
$1,070,617,459, respectively.
Net realized and unrealized gains (losses) as of June 30, 1995
were as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Investments:
Long-term $ (25,838,160) $ (27,021,869)
Short-term -- 595
Short sales 3,264,360 (343,150)
Financial futures contracts (6,699,779) 1,759,390
-------------- -------------
Total investments (29,273,579) (25,605,034)
-------------- -------------
<PAGE>
Currency transactions:
Options purchased (2,254,566) (49,867)
Options written 133,036 117,920
Foreign currency transactions 3,819,885 595,256
Forward foreign exchange
contracts (28,104,211) 1,981,651
-------------- -------------
Total currency transactions (26,405,856) 2,644,960
-------------- -------------
Total $ (55,679,435) $ (22,960,074)
============== =============
Transactions in call options written for the six months ended
June 30, 1995 were as follows:
Nominal Value
Covered by Premiums
Call Options Written Written Options Received
Outstanding call options written,
beginning of year $ 206,195,000 $ 611,894
Options written 265,439,330 1,244,951
Options closed (100,195,000) (435,894)
Options expired (241,000,000) (723,969)
-------------- -------------
Outstanding call options written,
end of period $ 130,439,330 $ 696,982
============== =============
Transactions in put options written for the six months ended
June 30, 1995 were as follows:
Nominal Value
Covered by Premiums
Put Options Written Written Options Received
Outstanding put options written,
beginning of year -- --
Options written $ 214,000,000 $ 1,754,388
Options closed (95,000,000) (700,563)
-------------- -------------
Outstanding put options written,
end of period $ 119,000,000 $ 1,053,825
============== =============
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
As of June 30, 1995, net unrealized depreciation for Federal income
tax purposes aggregated $27,021,274, of which $30,370,038 related
to appreciated securities and $57,391,312 related to depreciated
securities. The aggregate cost of investments at June 30, 1995 for
Federal income tax purposes was $1,621,626,768.
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $(214,223,235) and $(487,938,280) for the six months ended
June 30, 1995 and the year ended December 31, 1994.
Transactions in shares of capital for each class were as follows:
Class A Shares for the Six Months Dollar
Ended June 30, 1995 Shares Amount
Shares sold 1,234,116 $ 10,369,645
Shares issued to shareholders in
reinvestment of dividends 455,283 3,781,063
------------ -------------
Total issued 1,689,399 14,150,708
Shares redeemed (5,638,300) (46,718,745)
------------ -------------
Net decrease (3,948,901) $ (32,568,037)
============ =============
Class A Shares for the
Year Ended Dollar
December 31, 1994 Shares Amount
Shares sold 2,498,395 $ 22,105,372
Shares issued to shareholders in
reinvestment of dividends &
distributions 1,047,864 9,035,061
------------ -------------
Total issued 3,546,259 31,140,433
Shares redeemed (15,962,356) (138,247,016)
------------ -------------
Net decrease (12,416,097) $(107,106,583)
============ =============
<PAGE>
Class B Shares for the Six Months Dollar
Ended June 30, 1995 Shares Amount
Shares sold 4,273,777 $ 35,479,276
Shares issued to shareholders in
reinvestment of dividends 2,882,575 23,916,833
------------ -------------
Total issued 7,156,352 59,396,109
Automatic conversion of shares (5,982) (49,553)
Shares redeemed (29,611,298) (245,001,674)
------------ -------------
Net decrease (22,460,928) $(185,655,118)
============ =============
Class B Shares for the
Year Ended Dollar
December 31, 1994 Shares Amount
Shares sold 22,383,630 $ 198,076,750
Shares issued to shareholders in
reinvestment of dividends &
distributions 7,257,720 62,563,579
------------ -------------
Total issued 29,641,350 260,640,329
Automatic conversion of shares (10,524) (87,484)
Shares redeemed (74,723,963) (644,026,143)
------------ -------------
Net decrease (45,093,137) $(383,473,298)
============ =============
Class C Shares for the Six Months Dollar
Ended June 30, 1995 Shares Amount
Shares sold 392,300 $ 3,257,479
Shares issued to shareholders in
reinvestment of dividends 8,482 70,593
------------ -------------
Total issued 400,782 3,328,072
Shares redeemed (61,665) (516,541)
------------ -------------
Net increase 339,117 $ 2,811,531
============ =============
<PAGE>
Class C Shares for the Period
October 21, 1994++ to Dollar
December 31, 1994 Shares Amount
Shares sold 149,131 $ 1,233,348
Shares issued to shareholders in
reinvestment of dividends &
distributions 710 5,824
------------ -------------
Total issued 149,841 1,239,172
Shares redeemed (2,720) (22,392)
------------ -------------
Net increase 147,121 $ 1,216,780
============ =============
[FN]
++Commencement of Operations.
Class D Shares for the Six Months Dollar
Ended June 30, 1995 Shares Amount
Shares sold 213,674 $ 1,779,277
Shares issued to shareholders in
reinvestment of dividends 6,072 50,547
Automatic conversion of shares 5,980 49,553
------------ -------------
Total issued 225,726 1,879,377
Shares redeemed (83,449) (690,988)
------------ -------------
Net increase 142,277 $ 1,188,389
============ =============
Class D Shares for the Period
October 21, 1994++ to Dollar
December 31, 1994 Shares Amount
Shares sold 177,383 $ 1,470,555
Shares issued to shareholders in
reinvestment of dividends &
distributions 827 6,792
Automatic conversion of shares 10,511 87,484
------------ -------------
Total issued 188,721 1,564,831
Shares redeemed (16,769) (140,010)
------------ -------------
Net increase 171,952 $ 1,424,821
============ =============
[FN]
++Commencement of Operations.
<PAGE>
5. Commitments:
At June 30, 1995, the Fund entered into foreign exchange contracts
under which it had agreed to buy and sell various foreign currencies
with values of approximately $27,588,000 and $28,113,000,
respectively.
6. Capital Loss Carryforward:
At December 31, 1994, the Fund had a net capital loss carryforward
of approximately $53,153,000, all of which expires in 2002.
This amount will be available to offset like amounts of any future
taxable gains.
