-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TItO+z6XTPdg45INAUaeuSEahYB8OUZPZ4PB9/YlNwO5sFKXUNtuwatZXvLiiybi siHW4qVN1/rCj8FxQE2shw== 0000912057-00-010135.txt : 20000308 0000912057-00-010135.hdr.sgml : 20000308 ACCESSION NUMBER: 0000912057-00-010135 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000307 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CSAM INCOME FUND CENTRAL INDEX KEY: 0000810766 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 232451535 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05012 FILM NUMBER: 562301 BUSINESS ADDRESS: STREET 1: 153 EAST 53RD ST STREET 2: 8TH FL CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 6175578742 MAIL ADDRESS: STREET 1: 73 TREMONT ST STREET 2: 8TH FL CITY: BOSTON STATE: MA ZIP: 02108 FORMER COMPANY: FORMER CONFORMED NAME: BEA INCOME FUND INC DATE OF NAME CHANGE: 19950828 FORMER COMPANY: FORMER CONFORMED NAME: CS FIRST BOSTON INCOME FUND INC DATE OF NAME CHANGE: 19950420 FORMER COMPANY: FORMER CONFORMED NAME: FIRST BOSTON INCOME FUND INC DATE OF NAME CHANGE: 19920703 N-30D 1 N-30D Credit Suisse Asset Management Income Fund, Inc. 153 East 53rd Street New York, NY 10022 --------------------------------------------- OFFICERS AND DIRECTORS William W. Priest, Jr. Suzanne E. Moran CHAIRMAN OF THE BOARD INVESTMENT OFFICER Prof. Enrique R. Arzac Hal Liebes DIRECTOR SENIOR VICE PRESIDENT Lawrence J. Fox Michael A. Pignataro DIRECTOR CHIEF FINANCIAL OFFICER, VICE PRESIDENT AND James S. Pasman, Jr. SECRETARY DIRECTOR Robert M. Rizza Richard J. Lindquist VICE PRESIDENT AND PRESIDENT AND CHIEF TREASURER INVESTMENT OFFICER
-------------------------------------------------------- INVESTMENT ADVISER Credit Suisse Asset Management, LLC 153 East 53rd Street New York, New York 10022 Phone 1-800-293-1232 -------------------------------------------------------- ADMINISTRATOR AND CUSTODIAN Brown Brothers Harriman & Co. 40 Water Street Boston, Massachusetts 02109 -------------------------------------------------------- SHAREHOLDER SERVICING AGENT BankBoston N.A. P.O. Box 1865 Mailstop 45-02-62 Boston, Massachusetts 02105-1865 Phone 1-800-730-6001 -------------------------------------------------------- LEGAL COUNSEL Willkie Farr & Gallagher 787 7th Avenue New York, New York 10019 -------------------------------------------------------- INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP 2400 Eleven Penn Center Philadelphia, Pennsylvania 19103 -------------------------------------------------------- -------------------------------------------------------- Credit Suisse Asset Management Income Fund, Inc. --------------------------------------------- ANNUAL REPORT December 31, 1999 CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC. FOURTH QUARTER REPORT - 12/31/99 - ---------- Dear Shareholders: January 25, 2000 We are writing to report on the activities of Credit Suisse Asset Management Income Fund, Inc. ("the Fund") for the quarter ended December 31, 1999 and to discuss our investment strategy. At December 31, 1999, the Fund's net asset value ("NAV") was $7.34, compared to an NAV of $7.28 at September 30, 1999. The Fund's total return (based on NAV and assuming reinvestment of dividends of $0.18 per share) for the period was 3.8%. For 1999 as a whole, the Fund returned 4.5%. At December 31, 1999, $201.4 million was invested in high yield debt securities; $22.4 million in investment-grade debt securities; $24.5 million in equity securities; and the balance of $0.9 million in cash equivalents. The investment-grade component consisted of short- and intermediate-term mortgages, asset-backed securities and corporate bonds of intermediate maturity. Of the debt securities, the largest concentration (55.7%) was invested in B-rated issues. THE MARKET: REBOUNDING Sentiment and performance in the high yield market rebounded nicely in the fourth quarter from their weakness in the third quarter. As measured by the Salomon Smith Barney High-Yield Market Index, the broad high yield market rose 1.7% after falling by the same amount in the third quarter. On a big-picture level, two factors helped to set a generally positive tone. The first was changing perceptions about higher U.S. inflation which, in turn, would likely compel the Federal Reserve to raise interest rates. While high yield participants had previously joined investors in most other financial markets in expressing great concern about increasing inflation and rates, they took a more optimistic approach this time around. The consensus high yield perspective was simply more hopeful and reflected confidence--whether based on careful analysis, wishful thinking or both--that strong economic growth would benefit high yield issuers more in terms of increasing revenues and cash flow than it would hurt them via rising rates due to inflation. When the Fed raised rates by 25 basis points on November 16, therefore, the market didn't fall apart. If anything, the Fed's indications that it would postpone any further rate hikes until after the new year served to boost confidence even more. The second big-picture factor was receding fears of Y2K-related technology dangers, which had been a growing part of investor consciousness as the year progressed. Such fears began to dissipate around mid-November, though, thus flashing a figurative green light to investors in relatively risky assets like equities and high yield. Ironically, the lower trading volumes in late December resulting from Y2K-based precautions helped to magnify price swings on the upside for selected instruments. Other factors more specific to high yield also contributed to the quarter's gains. Perhaps the most notable was the global rally in securities of telecommunications companies. While this attracted much more publicity in the equity markets, it also had a meaningfully favorable impact on high yield, as telecom was (and is) the most heavily weighted industry sector in most broad high yield indices and its performance was among the quarter's strongest. Another was the fact that net flows into high yield mutual funds turned positive in November after being negative for the three prior months. Fund flows were negative in December, but we consider this as generalized among taxable fixed income markets and not strictly directed at high yield. PERFORMANCE: EFFECTIVE SECTOR ALLOCATION The Fund meaningfully outperformed the broad high yield market during the quarter primarily due to our ongoing overweight allocations to three key sectors: - TELECOMMUNICATIONS. While the high yield telecom sector outperformed the overall high yield market on the back of equities' strength and an active environment for industry consolidation, our choices within the sector helped the Fund's telecom holdings to do even better. More specifically, we emphasized wireless companies, which excelled, and avoided paging companies, which underperformed; and we favored deferred-interest issues, which decisively outperformed traditional cash-paying securities. - CABLE/MEDIA. We have long overweighted cable and media companies in the belief that they would benefit from enduring trends of consolidation and improving operating results. Both such trends were very much in evidence not simply in the quarter, but throughout the entire year. - GAMING. Our comments about cable/media also apply to the gaming business. In addition, we shifted our holdings away from companies with significant operations in the gaming centers of Las Vegas and Atlantic City, where industry conditions were somewhat problematic, and toward those with facilities in more favorable environments elsewhere. OUTLOOK: EXTERNAL CONDITIONS SUGGEST A CAUTIOUS STANCE We continue to see current fundamentals for the broad high yield market as quite good, based on these and other factors: - The U.S. economy is strong and should stay that way, which is traditionally favorable for high yield issuers. - Liquidity has begun to return to the market from a number of sources: dealers with more risk capital available for trading and inventory now that 1999 is over; individuals and institutions returning from the sidelines with fresh cash and a renewed appetite for buying; and issuers eager to tap the market as the prospect of higher interest rates raises the cost of new debt. - The Y2K phenomenon has mostly come and gone, and in its wake should leave valuations at more attractive levels. 2 - Investor tolerance for risk tends to increase at the beginning of a calendar year. Nonetheless, we expect overall high yield activity to be most responsive to external conditions, particularly the outlook for U.S. interest rates. As we write, the yield on the bellwether 30-year Treasury bond has risen above 6.70% for the first time since the third quarter of 1997, and trading in the futures market suggests that investors expect the Federal Reserve to raise rates by at least another 25-50 basis points in the next few months. We are inclined to agree with the latter assessment. Our sense is that the obsessive "Fed-watching" behavior that we used to describe the market in the second and third quarters will reassume a dominant psychological role throughout the fixed income universe. Investors are unlikely to think and act beyond a month-to-month perspective until the interest-rate environment becomes clearer. We do not anticipate this occurring before the middle of the year or so. The bottom line: we believe that a cautious stance is most appropriate for the time being, and expect high yield to outperform investment-grade sectors based on its higher absolute yields and relatively better prospects during periods of strong macroeconomic growth. The essential strategy with which we have managed the Fund for some time remains intact. We are keeping the portfolio most heavily weighted in telecommunications, cable/media and gaming, whose positive industry and company fundamentals are unchanged. We are also selectively adding to positions in economically sensitive industries such as paper and energy, whose underlying fundamentals are beginning to show genuine signs of improvement, and will continue to do so if this trend continues. As developments occur that we believe would be of interest to you, we will keep you informed. Meanwhile, if you have any questions about your portfolio or the capital markets generally, please feel free to call upon us at any time. We appreciate your interest in the Fund and would be pleased to respond to your questions or comments. Any questions regarding net asset value, performance, dividends, portfolio management or allocations should be directed to Credit Suisse Asset Management, LLC at (800) 293-1232. All other inquiries regarding account information or requests for a prospectus or other reports should be directed to the Fund's Shareholder Servicing Agent at (800) 730-6001. Sincerely yours, /s/ Richard J. Lindquist Richard J. Lindquist PRESIDENT AND CHIEF INVESTMENT OFFICER* /s/ William W. Priest, Jr. William W. Priest, Jr. CHAIRMAN OF THE BOARD** FROM CREDIT SUISSE ASSET MANAGEMENT, LLC: I. Effective January 12, 1999, the Fund's investment adviser, BEA Associates, changed its name to Credit Suisse Asset Management, LLC ("CSAM"). In making the announcement, the firm said that it expected the new name to enhance its recognition as a global asset manager. CSAM is the investment division of Credit Suisse Group, one of the world's largest financial organizations, with $600 billion in assets under management. II. Effective May 11, 1999, the BEA Income Fund, Inc. announced that, following approval by shareholders at their Annual Shareholders' Meeting held on May 10, 1999, the Fund had changed its name to Credit Suisse Asset Management Income Fund, Inc. The Fund's ticker symbol on the New York Stock Exchange changed to "CIK" from "FBF" accordingly. III. Effective September 7, 1999, shareholders whose shares are registered in their name are automatically eligible to participate in a dividend reinvestment program known as the InvestLink Program (the "Program"). The Program can be of value to shareholders in maintaining their proportional ownership interest in the Fund in an easy and convenient way. A shareholder whose shares are held in the name of a broker/dealer or nominee should contact the Fund's Transfer Agent for details about participating in the Program. The Program also provides for additional share purchases. The Program is described on pages 26 through 27 of the report. * Richard J. Lindquist, who is a Managing Director of Credit Suisse Asset Management, LLC ("CSAM"), is primarily responsible for management of the Fund's assets. He has served in such capacity since November 21, 1996. Prior to that date, he served as Vice President to the Fund, a position he assumed on August 15, 1989. Mr. Lindquist joined CSAM on May 1, 1995 as a result of CSAM's acquisition of CS First Boston Investment Management Corporation ("CSFBIM"). Prior to joining CSAM and beginning in July, 1989, he held various offices at CSFBIM. Mr. Lindquist also is President and Chief Investment Officer of Credit Suisse Asset Management Strategic Global Income Fund, Inc. ** William W. Priest, Jr., who is a Managing Director and Chief Executive Officer-Americas of Credit Suisse Asset Management, LLC ("CSAM"), joined CSAM in 1972. Mr. Priest is a Director and Chairman of other investment companies advised by CSAM. 3 CREDIT SUISSE ASSET MANAGEMENT INCOME FUND, INC. TOP TEN HOLDINGS (UNAUDITED)
(as a % of net assets as of 12/31/99) - --------------------------------------------------------------------- 1. Spanish Broadcasting System, Inc., Class B.......................... 1.68% 2. Price Communications Corp.......... 0.97% 3. Ainsworth Lumber Co., Ltd., Yankee Sr. Secured Notes, 12.50%, 7/15/07.......................... 0.82% 4. UnitedGlobalCom, Inc., Class A..... 0.74% 5. Dr. Pepper Bottling Holdings, Inc. Class A.......................... 0.74% 6. Univision Network Holding L.P. Sub. Notes 7.00%, 12/17/02............ 0.71% 7. Capstar Broadcasting Partners, Inc. Sr. Discount Notes 0.00%, 2/1/09........................... 0.70% 8. Coinstar, Inc., Sr. Discount Notes 13/00%, 10/1/06.................. 0.70% 9. Advance Stores Co., Gtd. Sr. Sub. Notes 10.25%, 4/15/08............ 0.68% 10. Telewest Communications plc Yankee Sr. Sub. Discount Deb. 0.00%, 10/1/07.......................... 0.68%
CREDIT QUALITY BREAKDOWN (UNAUDITED)
(as a % of total investments as of 12/31/99) - ------------------------------------------------------ AAA/Aaa.................................. 2.9% AA/Aa.................................... 0.1 A/A...................................... 1.3 BBB/Baa.................................. 4.8 BB/Ba.................................... 6.0 B/B...................................... 50.0 CCC/Caa.................................. 11.4 NR....................................... 13.3 -------- Subtotal............................... 89.8 Equities and Other....................... 10.2 -------- Total.................................. 100.0% ========
4 PORTFOLIO OF INVESTMENTS - --------- DECEMBER 31, 1999
Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) - --------------------------------------------------------------------------------------- DOMESTIC SECURITIES (96.2%) - --------------------------------------------------------------------------------------- - ----------------- CORPORATE OBLIGATIONS (82.8%) - --------------------------------------------------------------------------------------- - ----------------- AEROSPACE/DEFENSE (0.7%) (1) Decrane Aircraft Holdings Series B, Gtd. 12.00%, 9/30/08 Caa1 $ 800 $ 736,000 Lockheed Martin Corp.: Notes 7.95%, 12/1/05 Baa3 345 340,256 8.20%, 12/1/09 Baa3 125 124,375 Raytheon Co. Notes 6.45%, 08/15/02 Baa2 400 389,124 United Technologies Corp. Notes 6.625%, 11/15/04 A2 195 190,856 ------------ GROUP TOTAL 1,780,611 ------------ - --------------------------------------------------------------------------------------- - ----------------- AUTOMOTIVE (3.1%) Aetna Industries, Inc. Sr. Notes 11.875%, 10/1/06 B3 600 582,000 Autotote Corp. Series B, 10.875%, 8/1/04 B2 750 768,750 (2) Breed Technologies, Inc. Gtd. Sr. Sub. Notes 9.25%, 4/15/08 Caa3 400 10,000 Cambridge Industries, Inc. Series B, Gtd. Sr. Sub. Notes 10.25%, 7/15/07 B3 500 203,750 Collins & Aikman Products, Corp. Sr. Sub. Notes 11.50%, 4/15/06 B3 700 686,000 DaimlerChrysler NA Holdings, Corp. Gtd. 7.20%, 9/1/09 A1 260 255,382 Delco Remy International, Inc. Gtd. Sr. Sub. Notes 10.625%, 8/1/06 B2 600 621,000 Hayes Lemmerz International, Inc.: Series B, Gtd. Sr. Notes 9.125%, 7/15/07 B2 500 488,750 8.25%, 12/15/08 B2 750 682,500 (1) Holley Performance Products Sr. Notes 12.25%, 9/15/07 B2 500 476,250 (1) Lear Corp. Sr. Notes 7.96%, 5/15/05 Ba1 65 62,319
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Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) Meritor Automotive, Inc. Notes 6.80%, 2/15/09 Baa2 $ 165 $ 149,119 Motor Coach Industries International, Inc. Gtd. 11.25%, 5/1/09 B2 1,000 1,022,500 Oxford Automotive, Inc. Gtd. Sr. Sub. Notes 10.125%, 6/15/07 Caa1 1,375 1,295,938 Safety Components International, Inc. Series B, Gtd. Sr. Sub. Notes 10.125%, 7/15/07 B3 500 308,750 Stanadyne Automotive Series B, Gtd. Sr. Sub. Notes 10.25%, 12/15/07 Caa1 400 331,000 ------------ GROUP TOTAL 7,944,008 ------------ - --------------------------------------------------------------------------------------- - ----------------- BROADCASTING (4.5%) (2)(3) Australis Holdings Pty. Ltd. Yankee Sr. Secured Discount Notes 0.00%, 11/1/02 N/R 3,950 39,500 (2)(3) Australis Media Ltd. Yankee Units 15.75%, 5/15/03 C 2,412 12,060 (3) Capstar Broadcasting Partners, Inc. Sr. Discount Notes 0.00%, 2/1/09 N/R 2,000 1,787,500 (1) Chancellor Media Corp. Sr. Sub. Notes 9.00%, 10/1/08 B1 500 520,000 Cumulus Media, Inc. Sr. Sub. Notes 10.375%, 7/1/08 B3 800 830,000 EchoStar Communications Corp. Sr. Notes 9.375%, 2/1/09 B2 750 751,875 Granite Broadcasting Corp.: Series A, Sr. Sub. Notes 9.375%, 12/1/05 B3 300 300,750 8.875%, 5/15/08 B3 900 859,500 Pegasus Media & Communications, Inc. Series B, Notes 12.50%, 7/1/05 B2 250 268,125 Salem Communications Corp. Series B, Gtd. 9.50%, 10/01/07 B3 500 503,750
The accompanying notes are an integral part of the financial statements. 5
Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) - --------------------------------------------------------------------------------------- Sinclair Broadcast Group, Inc.: Sr. Sub. Notes 10.00%, 9/30/05 B2 $ 900 $ 895,500 Gtd. Sr. Sub. Notes 8.75%, 12/15/07 B2 350 323,750 Time Warner Telecom, L.L.C. Sr. Notes 9.75%, 7/15/08 B2 500 512,500 Turner Broadcasting Systems, Inc. Sr. Notes 7.40%, 2/1/04 Ba1 65 64,562 (3) United International Holdings, Inc. Series B, Sr. Discount Notes 0.00%, 2/15/08 B3 1,450 917,125 Univision Network Holding L.P. Sub. Notes 7.00%, 12/17/02 N/R 1,500 1,815,000 Young Broadcasting, Inc.: Series B, Gtd. Sr. Sub. Notes 9.00%, 1/15/06 B2 300 290,250 Sr. Sub. Notes 8.75%, 6/15/07 B2 865 828,238 ------------ GROUP TOTAL 11,519,985 ------------ - --------------------------------------------------------------------------------------- - ----------------- BUSINESS SERVICES (0.4%) Comdisco Inc Medium Term Notes 7.23%, 8/16/01 Baa1 130 129,186 Sr. Notes 7.25%, 9/1/02 Baa1 230 226,837 General Binding Corp. Gtd. Sr. Sub. Notes 9.375%, 6/1/08 B2 250 111,875 Iron Mountain, Inc. Sr. Sub. Notes 8.75%, 9/30/09 B3 450 434,250 ------------ GROUP TOTAL 902,148 ------------ - --------------------------------------------------------------------------------------- - ----------------- CABLE (9.6%) Adelphia Communications Corp. Series B, Sr. Notes 8.375%, 2/1/08 B3 800 744,000 (3) Avalon Cable Holdings, Inc. Sr. Discount Notes 0.00%, 12/1/08 Caa1 300 196,875 CSC Holdings, Inc.: Sr. Sub. Notes 9.875%, 5/15/06 B1 400 422,000 Series B, Sr. Sub. Debentures 8.125%, 8/15/09 Ba2 350 343,868 9.875%, 2/15/13 B1 850 896,750
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Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) Century Communications Corp.: Series B, 0.00%, 1/15/08 Ba3 $ 650 $ 279,500 Sr. Notes 9.75%, 2/15/02 Ba3 500 500,000 8.75%, 10/1/07 Ba3 400 381,000 Charter Communications Holdings: Sr. Notes 8.625%, 4/1/09 B2 1,000 925,000 (3) Sr. Discount Notes 0.00%, 4/1/11 B2 1,000 588,750 Classic Cable, Inc. Series B, Gtd. 9.375%, 8/1/09 B3 400 393,000 Coaxial Communications, Inc. Gtd. Notes 10.00%, 8/15/06 B3 900 884,250 Comcast Corp.: Sr. Sub. Notes 9.375%, 5/15/05 Ba3 180 189,225 9.125%, 10/15/06 Ba3 750 763,762 (3) Diamond Cable Communications plc Yankee Discount Notes 0.00%, 12/15/05 Caa1 1,500 1,417,500 (3) DIVA Systems Corp. Series B, Sr. Discount Notes 0.00%, 3/1/08 N/R 2,775 926,850 Falcon Holdings Group, L.P./Falcon Funding Corp.: Sr. Debentures 8.375%, 4/15/10 B2 500 503,750 (3) Sr. Discount Debentures 0.00%, 4/15/10 B2 1,500 1,119,375 International Cable Television, Inc.: Series A, Sr. Notes 12.75%, 4/15/05 B3 1,000 1,000,000 (3) Series B, 0.00%, 2/1/06 B3 1,050 945,000 James Cable Partners L.P. Series B, Sr. Notes 10.75%, 8/15/04 N/R 1,550 1,573,250 Jones Intercable, Inc. Sr. Notes 7.625%, 4/15/08 Ba2 1,150 1,101,389 Lenfest Communications Inc.: Sr. Notes 8.375%, 11/1/05 Ba3 500 508,965 10.50%, 6/15/06 B2 900 990,000 8.25%, 2/15/08 B2 200 201,750
The accompanying notes are an integral part of the financial statements. 6
Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) - --------------------------------------------------------------------------------------- NTL Communications Corp.: Series B, Sr. Notes 10.00%, 2/15/07 B3 $ 500 $ 515,000 (3) 0.00%, 10/1/08 B3 1,500 1,050,000 11.50%, 10/1/08 B3 600 648,000 Northland Cable Television Sr. Sub. Notes 10.25%, 11/15/07 N/R 500 502,500 Olympus Communications, L.P./ Olympus Capital Corp. Series B, Sr. Notes 10.625%, 11/15/06 B1 1,000 1,081,250 (3) Renaissance Media Group Sr. Discount Notes 0.00%, 4/15/08 B3 1,000 708,750 Rogers Cablesystems Ltd. Gtd. 10.00%, 12/1/07 Ba3 450 478,125 (3) Telewest Communications plc Yankee Sr. Sub. Discount Debentures 0.00%, 10/1/07 B1 1,850 1,725,125 ------------ GROUP TOTAL 24,504,559 ------------ - --------------------------------------------------------------------------------------- - ----------------- CHEMICALS (1.7%) Applied Extrusion Technologies Series B, Sr. Notes 11.50%, 4/1/02 B2 1,500 1,522,500 Huntsman Corp. Sr. Sub. Notes 9.50%, 7/1/07 B2 400 381,000 Huntsman Polymers Corp. Sr. Notes 11.75%, 12/1/04 B1 900 945,000 Lyondell Chemical Co. Series B, Secured Notes 9.875%, 5/1/07 Ba3 500 517,500 NL Industries, Inc. Sr. Secured Notes 11.75%, 10/15/03 B1 250 258,750 (3) Sterling Chemical Holdings, Inc. Sr. Secured Discount Notes 0.00%, 8/15/08 Caa1 1,000 260,000 Sterling Chemicals, Inc. Sr. Sub. Notes 11.75%, 8/15/06 B3 334 249,665 Texas Petrochemical Corp. Corp. Series B, Sr. Sub. Notes 11.125%, 7/1/06 N/R 350 303,625 ------------ GROUP TOTAL 4,438,040 ------------ - --------------------------------------------------------------------------------------- - -----------------
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Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) CONSTRUCTION & BUILDING MATERIALS (1.3%) AFC Enterprises Sr. Sub. Notes 10.25%, 5/15/07 N/R $ 400 $ 403,000 American Architectural Products Corp. Gtd. Sr. Notes 11.75%, 12/01/07 Caa1 1,150 330,625 (1) Building One Services Sr. Sub. Notes 10.50%, 5/1/09 B2 500 480,000 Collins & Aikman Floor Coverings, Inc. Series B, Sr. Sub. Notes 10.00%, 1/15/07 B3 1,000 987,500 International Utility Structures, Inc. Yankee Sr. Sub. Notes 10.75%, 2/1/08 Caa1 500 416,250 MMI Products, Inc. Series B, Sr. Sub. Notes 11.25%, 4/15/07 B2 250 258,750 Uniforet, Inc. Yankee Gtd. 11.125%, 10/15/06 B3 250 156,875 Waxman Industries, Inc. Series B, Sr. Notes 12.75%, 6/1/04 Caa1 600 300,000 ------------ GROUP TOTAL 3,333,000 ------------ - --------------------------------------------------------------------------------------- - ----------------- CONSUMER PRODUCTS & SERVICES (2.3%) Coinstar, Inc. Sr. Discount Notes 13.00%, 10/1/06 Caa1 1,700 1,778,625 Doskocil Manufacturing Co., Inc. Gtd. Sr. Sub. Notes 10.125%, 9/15/07 B3 500 163,750 Drypers Corp. Series B, Sr. Notes 10.25%, 6/15/07 Caa1 250 203,750 Fort James Corp. Sr. Notes 6.234%, 3/15/01 Baa3 155 153,394 Holmes Products Corp. Gtd. Sr. Sub. Notes 9.875%, 11/15/07 B3 800 598,000 Indesco International, Inc. Gtd. Sr. Sub. Notes 9.75%, 4/15/08 B3 600 268,500 Jordan Industries, Inc. Series B, Sr. Notes 10.375%, 8/1/07 B3 1,150 1,147,125 Packaged Ice, Inc. Gtd. Sr. Notes 9.75%, 2/1/05 B3 100 91,250 Playtex Products, Inc. Series B, Gtd. Sr. Notes 8.875%, 7/15/04 B1 225 225,000
The accompanying notes are an integral part of the financial statements. 7
Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) - --------------------------------------------------------------------------------------- Revlon Consumer Products Sr. Sub. Notes 8.625%, 2/1/08 B3 $ 700 $ 343,000 (1) Scotts Co. Sr. Sub. Notes 8.625%, 1/15/09 B2 300 293,250 Sealy Mattress Co. Gtd. Sr. Sub. Notes 9.875%, 12/15/07 B3 200 197,500 United Rentals, Inc. Sr. Sub. Notes 9.25%, 1/15/09 B1 500 480,000 ------------ GROUP TOTAL 5,943,144 ------------ - --------------------------------------------------------------------------------------- - ----------------- ELECTRONICS (1.0%) (1) Condor Systems, Inc. Gtd. Sr. Sub. Notes 11.875%, 5/1/09 B3 400 303,000 Details, Inc. Series B, Sr. Sub. Notes 10.00%, 11/15/05 B3 500 461,250 Unisys Corp.: Series B, Sr. Notes 12.00%, 4/15/03 B1 1,000 1,065,000 Sr. Notes 11.75%, 10/15/04 B1 225 247,500 7.875%, 4/1/08 B1 250 241,875 Viasystems, Inc.: Sr. Sub. Notes 9.75%, 6/1/07 B3 300 164,250 Series B, Sr. Sub. Notes 9.75%, 6/1/07 B3 150 82,125 ------------ GROUP TOTAL 2,565,000 ------------ - --------------------------------------------------------------------------------------- - ----------------- ENERGY (4.8%) Abraxas Petroleum Corp. Series D, Sr. Notes 11.50%, 11/1/04 B2 1,085 737,800 Bellwether Exporation Co. Gtd. Sr. Sub. Notes 10.875%, 4/1/07 B3 1,250 1,146,875 Canadian Forest Oil Ltd. Gtd. Sr. Sub. Notes 8.75%, 9/15/07 B2 450 429,750 Cliffs Drilling Co. Series D, Gtd. Sr. Notes 10.25%, 5/15/03 B1 1,100 1,124,750 Cogentrix Energy, Inc. Gtd. Unsecured Notes 8.75%, 10/15/08 Ba1 1,000 1,006,250 Conoco, Inc. Sr. Notes 6.35%, 4/15/09 A3 405 375,131 Continental Resources Gtd. Sr. Notes 10.25%, 8/1/08 B3 250 218,125
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Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) Contour Energy Co. Gtd. 14.00%, 4/15/03 B3 $ 551 $ 534,470 Edison International, Inc. Notes 6.875%, 09/15/04 A2 250 244,063 First Wave Marine, Inc. Gtd. Sr. Notes 11.00%, 2/1/08 B3 1,000 703,750 Frontier Oil Corp. Sr. Notes 11.75%, 11/15/09 B2 800 786,000 Giant Industries, Inc. Gtd. Sr. Sub. Notes 9.00%, 9/1/07 B2 500 460,000 Gothic Production Corp. Series B, Gtd. Sr. Secured Notes 11.125%, 5/1/05 B3 250 211,875 H.S. Resources, Inc.: Gtd. Sr. Sub. Notes 9.25%, 11/15/06 B2 600 595,500 Sr. Sub. Notes 9.875%, 12/1/03 B2 500 504,375 Key Energy Services, Inc. Sr. Sub. Notes 14.00%, 1/15/09 B3 1,250 1,364,062 Korea Electric Power Yankee Unsecured Debentures 7.00%, 2/1/07 Baa3 240 222,439 Parker Drilling Co. Series D, Gtd. Sr. Notes 9.75%, 11/15/06 B1 300 290,250 Plains Resources, Inc. Series B, Gtd. Sr. Sub. Notes 10.25%, 3/15/06 B2 375 365,625 Southwest Royalties, Inc. Series B, Gtd. Sr. Notes 10.50%, 10/15/04 B3 500 275,000 (1) Valero Energy Bonds 6.75%, 12/15/02 Baa3 185 180,295 Wiser Oil Co. Gtd. Sr. Sub. Notes 9.50%, 5/15/07 B2 450 347,625 ------------ GROUP TOTAL 12,124,010 ------------ - --------------------------------------------------------------------------------------- - ----------------- ENTERTAINMENT (2.3%) American Skiing Co. Series B, Sr. Sub. Notes 12.00%, 7/15/06 B3 425 383,563 Bally Total Fitness Holdings Series D, Sr. Sub. Notes 9.875%, 10/15/07 B3 350 338,625 Booth Creek Ski Holdings, Inc. Series B, Sr. Sub. Notes 12.50%, 3/15/07 Caa1 1,000 717,500
The accompanying notes are an integral part of the financial statements. 8
Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) - --------------------------------------------------------------------------------------- Cinemark U.S.A., Inc. Series D, Sr. Sub. Notes 9.625%, 8/1/08 B2 $ 250 $ 230,625 Loews Cineplex Sr. Sub. Notes 8.875%, 8/1/08 B3 900 796,500 Outboard Marine Corp. Series B, Gtd. Sr. Notes 10.75%, 6/1/08 B3 500 363,750 (1)(2) Premier Cruises, Ltd. Gtd. Sr. Notes 11.00%, 3/15/08 B3 900 45,000 Production Resource Group, L.L.C./PRG Finance Group Gtd. Sr. Sub. Notes 11.50%, 1/15/08 Caa2 750 667,500 Regal Cinemas, Inc. Sr. Sub. Notes 9.50%, 6/1/08 Caa1 1,050 798,000 Silver Cinemas, Inc. Sr. Sub. Notes 10.50%, 4/15/05 Caa1 1,900 788,500 Time Warner, Inc.: Notes 8.11%, 8/15/06 Baa3 60 61,350 Debentures 7.48%, 1/15/08 Ba1 170 167,663 6.85%, 1/15/26 Ba1 370 364,646 ------------ GROUP TOTAL 5,723,222 ------------ - --------------------------------------------------------------------------------------- - ----------------- FINANCIAL SERVICES (2.0%) Allstate Corp. Sr. Notes 7.20%, 12/1/09 A1 120 116,400 Bear Stearns Co., Inc. Notes 7.625%, 12/7/09 A2 370 363,062 Capital One Bank Sr. Notes 6.57%, 1/27/03 Baa2 290 281,300 Citicorp Series F, Sub. Notes 6.375%, 11/15/08 A1 140 129,417 Conseco, Inc.: Notes 7.875%, 12/15/00 Baa3 170 169,949 6.40%, 2/10/03 Baa3 155 148,413 9.00%, 10/15/06 Baa3 125 128,281 (1) ERAC USA Finance Co. Notes 7.95%, 12/15/09 Baa2 290 285,650 Finova Capital Corp.: Notes 6.55%, 11/15/02 Baa1 155 151,706 7.25%, 11/8/04 Baa1 135 133,481 Ford Motor Credit Co. Notes 7.375%, 10/28/09 A1 455 449,199 Gatx Capital Corp. Notes 7.75%, 12/1/06 Baa2 250 245,625
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Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) Goldman Sachs Group, Inc. Medium Term Notes 7.35%, 10/1/09 A1 $ 440 $ 429,000 Lehman Brothers Holdings Notes 6.625%, 4/1/04 Baa1 135 130,106 Long Island Savings Bank F.S.B. Notes 7.00%, 6/13/02 Baa3 770 756,094 (1) Potomac Capital Investment Corp. Notes 7.55%, 11/19/01 Baa1 150 148,875 (1) Prudential Insurance Co. Sr. Notes 6.375%, 7/23/06 A2 200 186,796 Sanwa Finance Aruba AEC Bank Gtd. 8.35%, 7/15/09 Baa1 200 201,250 Sumitomo Bank Notes 8.50%, 6/15/09 Baa1 100 101,125 (1) US West Cap Funding, Inc. Gtd. 6.875%, 8/15/01 Baa1 270 268,988 (2) Westfed Holdings Sr. Debentures 15.50%, 9/15/99 N/R 1,750 332,500 ------------ GROUP TOTAL 5,157,217 ------------ - --------------------------------------------------------------------------------------- - ----------------- FOOD & BEVERAGES (1.9%) AmeriServ Food Distribution, Inc. Gtd. Sr. Notes 8.875%, 10/15/06 B1 500 275,000 Archibald Candy Corp. Gtd. Sr. Secured Notes 10.25%, 7/1/04 B2 1,000 970,000 Eagle Family Foods Series B, Gtd. Sr. Notes 8.75%, 1/15/08 B3 450 342,000 Fleming Companies, Inc. Sr. Sub. Notes 10.50%, 12/1/04 B3 700 647,500 International Home Foods, Inc. Gtd. Sr. Sub. Notes 10.375%, 11/1/06 B2 1,000 1,037,500 Kroger Co.: Notes 7.25%, 6/1/09 Baa3 260 248,625 Sr. Notes 7.625%, 9/15/06 Baa3 400 391,500
The accompanying notes are an integral part of the financial statements. 9
Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) - --------------------------------------------------------------------------------------- (1) Premier International Foods, plc Sr. Notes 12.00%, 9/1/09 B3 $ 1,000 $ 997,500 ------------ GROUP TOTAL 4,909,625 ------------ - --------------------------------------------------------------------------------------- - ----------------- HEALTH CARE (1.3%) (1) ICN Pharmaceutical Sr. Notes 8.75%, 11/15/08 Ba3 500 463,125 (1) Icon Health & Fitness, Inc. Gtd. 12.00%, 9/27/05 N/R 222 122,100 Meditrust Conv. Debentures 7.50%, 3/1/01 Baa3 2,000 1,660,000 Oxford Health Plans Sr. Notes 11.00%, 5/15/05 Caa1 590 572,300 Paracelsus Healthcare Sr. Sub. Notes 10.00%, 8/15/06 B3 750 435,000 ------------ GROUP TOTAL 3,252,525 ------------ - --------------------------------------------------------------------------------------- - ----------------- INDUSTRIAL GOODS & MATERIALS (2.4%) AMTROL Acquisition, Inc. Sr. Sub. Notes 10.625%, 12/31/06 B3 400 393,500 APCOA, Inc. Gtd. Sr. Notes 9.25%, 3/15/08 Caa1 430 304,225 Atlantis Group, Inc. Sr. Notes 11.00%, 2/15/03 B2 585 590,850 CLARK Material Handling Co. Gtd. Sr. Notes 10.75%, 11/15/06 B1 550 174,625 (1) Diamond Triumph Sr. Notes 9.25%, 4/1/08 B2 500 353,750 Elgar Holdings, Corp. Gtd. 9.875%, 2/1/08 B2 200 130,500 Haynes International, Inc. Sr. Notes 11.625%, 9/1/04 B3 500 415,000 International Knife & Saw, Inc. Sr. Sub. Notes 11.375%, 11/15/06 B3 750 574,688 K N Energy, Inc. Notes 6.30%, 3/1/01 Baa2 270 267,192 Motors & Gears, Inc. Series D, Sr. Notes 10.75%, 11/15/06 B3 1,400 1,342,250 Neenah Corp. Series B, Sr. Sub. Notes 11.125%, 5/1/07 B3 250 231,875
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Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) Park-Ohio Industries, Inc. Sr. Sub. Notes 9.25%, 12/1/07 B2 $ 400 $ 384,000 Seagate Technology, Inc. Sr. Debentures 7.45%, 3/1/37 Baa3 120 111,600 (3) Thermadyne Manufacturing, L.L.C./ Thermadyne Capital Corp. Gtd. Sr. Sub. Notes 0.00%, 6/1/08 B3 975 470,438 Thermadyne Holdings Corp. Sr. Discount Notes 9.875%, 6/1/08 Caa1 300 257,625 ------------ GROUP TOTAL 6,002,118 ------------ - --------------------------------------------------------------------------------------- - ----------------- METALS & MINING (2.9%) Algoma Steel, Inc. Yankee First Mortgage Notes 12.375%, 7/15/05 B1 1,000 937,500 Bayou Steel Corp. First Mortgage Notes 9.50%, 5/15/08 B1 500 466,250 GS Technologies Operations Gtd. Sr. Notes 12.00%, 9/1/04 B2 525 292,688 (2) Gulf States Steel, Inc. First Mortgage Notes 13.50%, 4/15/03 B1 1,050 105,000 Kaiser Aluminum & Chemical Corp. Series D, Sr. Notes 10.875%, 10/15/06 B1 675 682,593 Lodestar Holdings, Inc. Sr. Notes 11.50%, 5/15/05 Caa2 800 406,000 Metallurg, Inc. Series B, First Mortgage Gtd. Sr. Notes 11.00%, 12/1/07 B3 950 876,375 National Steel Corp. Series D, First Mortgage Bonds 9.875%, 3/1/09 Ba3 750 768,750 Sheffield Steel Corp. Series B, First Mortgage Bonds 11.50%, 12/1/05 Caa2 750 622,500 WCI Steel, Inc. Series B, Sr. Secured Notes 10.00%, 12/1/04 B2 925 950,437 Weirton Steel Corp. Sr. Notes 11.375%, 7/1/04 B2 500 482,500
The accompanying notes are an integral part of the financial statements. 10
Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) - --------------------------------------------------------------------------------------- Wheeling-Pittsburg Corp. Sr. Notes 9.25%, 11/15/07 B2 $ 750 $ 705,000 ------------ GROUP TOTAL 7,295,593 ------------ - --------------------------------------------------------------------------------------- - ----------------- PACKAGING/CONTAINERS (1.4%) AEP Industries, Inc. Sr. Sub. Notes 9.875%, 11/15/07 B2 250 241,875 BPC Holding Corp. Series B, Sr. Secured Notes 12.50%, 6/15/06 Caa3 959 942,218 Container Corp. of America Gtd. Sr. Notes 9.75%, 4/1/03 B1 500 510,000 Crown Cork & Seal Co., Inc. Notes 7.125%, 9/1/02 Baa2 210 206,587 (3) Crown Packaging Enterprises Ltd. Yankee Sr. Secured Discount Notes 0.00%, 8/1/06 Ca1 2,450 1,225 Gaylord Container Corp. Series B, Sr. Notes 9.75%, 6/15/07 B3 700 658,000 Radnor Holdings, Inc. Series B, Gtd. Sr. Notes 10.00%, 12/1/03 B2 500 500,000 Stone Container Finance Co. Yankee Gtd. Sr. Notes 11.50%, 8/15/06 B2 530 563,788 ------------ GROUP TOTAL 3,623,693 ------------ - --------------------------------------------------------------------------------------- - ----------------- PAPER & FOREST PRODUCTS (2.7%) Ainsworth Lumber Co., Ltd. Yankee Sr. Secured Notes 12.50%, 7/15/07 B3 1,900 2,090,000 Color Spot Nurseries Sr. Sub. Notes 10.50%, 12/15/07 Caa1 1,000 725,000 Crown Paper Co. Sr. Sub. Notes 11.00%, 9/1/05 B3 550 335,500 QUNO Corp. Yankee Sr. Notes 9.125%, 5/15/05 Baa3 315 330,596 Repap New Brunswick, Inc. Sr. Secured Debentures 10.625%, 4/15/05 B3 800 744,000 Riverwood International Corp. Gtd. Sr. Notes 10.875%, 4/1/08 Caa1 600 588,000
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Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) SD Warren Co.: Series B, Sr. Sub. Notes 12.00%, 12/15/04 B1 $ 1,000 $ 1,042,500 Debentures 14.00%, 12/15/06 N/R 995 1,138,844 ------------ GROUP TOTAL 6,994,440 ------------ - --------------------------------------------------------------------------------------- - ----------------- PUBLISHING & INFORMATION SERVICES (2.4%) American Lawyer Media Holdings, Inc. Gtd. Sr. Notes 9.75%, 12/15/07 B1 450 444,375 Ampex Corp. Series B, Sr. Notes 12.00%, 3/15/03 N/R 750 753,750 Belo (A.H.) Corp. Sr. Notes 6.875%, 6/1/02 Baa2 250 245,938 (3) Earthwatch, Inc. Units 0.00%, 7/15/07 N/R 900 618,750 Hollinger International Publishing Gtd. Sr. Notes 9.25%, 3/15/07 Ba3 1,000 985,000 (1) InterAct Systems, Inc. Sr. Discount Notes 14.00%, 8/1/03 N/R 950 264,812 Lamar Advertising Co. Gtd. Sr. Sub. Notes 9.625%, 12/1/06 B1 250 257,500 (3) Liberty Group Publishing, Inc. Sr. Discount Debentures 0.00%, 2/1/09 Caa1 600 300,000 Mentus Media Corp. Units 12.00%, 2/1/03 N/R 1,598 495,380 Printpack, Inc. Series B, Sr. Sub. Notes 10.625%, 8/15/06 Caa1 300 289,500 TV Guide, Inc. Sr. Sub. Notes 8.125%, 3/1/09 Ba3 500 500,000 Tri-State Outdoor Media Sr. Notes 11.00%, 5/15/08 N/R 1,023 1,012,770 ------------ GROUP TOTAL 6,167,775 ------------ - --------------------------------------------------------------------------------------- - ----------------- REAL ESTATE (0.0%) EOP Operating, L.P. Sr. Notes 6.375%, 2/15/03 Baa1 65 62,238 - --------------------------------------------------------------------------------------- - ----------------- RESTAURANTS, HOTELS & GAMING (6.7%) American Restaurant Group, Inc. Gtd. Sr. Secured Notes 11.50%, 2/15/03 B3 750 600,000 AmeriKing, Inc. Sr. Notes 10.75%, 12/1/06 B3 250 231,875
The accompanying notes are an integral part of the financial statements. 11
Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) - --------------------------------------------------------------------------------------- Ameristar Casinos Series B, Gtd. 10.50%, 8/1/04 B3 $ 600 $ 604,500 Aztar Corp Sr. Sub. Notes 8.875%, 5/15/07 B1 500 483,750 Bluegreen Corp. Gtd. Sr. Secured Notes 10.50%, 4/1/08 B3 1,000 873,750 Boyd Gaming Corp. Sr. Sub. Notes 9.50%, 7/15/07 B1 150 148,500 CapStar Hotel Co. Sr. Sub. Notes 8.75%, 8/15/07 B1 375 346,875 Casino Magic of Louisiana Corp. Series B, Gtd. First Mortgage Notes 13.00%, 8/15/03 B3 1,300 1,465,750 Colorado Gaming & Entertainment Co. Gtd. Sr. Notes 12.00%, 6/1/03 N/R 1,480 1,180,595 (2) Fitzgeralds Gaming Corp. Series B, Gtd. Sr. Notes 12.25%, 12/15/04 Caa3 500 272,500 Friendly Ice Cream Corp. Gtd. Sr. Notes 10.50%, 12/1/07 B1 800 686,000 HMH Properties Series B, Gtd. Sr. Notes 7.875%, 8/1/08 Ba2 500 445,000 Hard Rock Hotel, Inc. Sr. Sub. Notes 9.25%, 4/1/05 B3 1,400 1,036,000 Hollywood Park, Inc. Series B, Gtd. Sr. Sub. Notes 9.50%, 8/1/07 B2 675 675,000 Horseshoe Gaming Holdings: Series B, Sr. Sub. Notes 9.375%, 6/15/07 B3 1,000 1,000,000 8.625%, 5/15/09 B2 750 723,750 Intrawest Corp. Sr. Notes 9.75%, 8/15/08 B1 250 245,625 Isle of Capri Casinos, Inc. Sr. Sub. Notes 8.75%, 4/15/09 B3 450 415,125 Lodgian Financing Corp. Sr. Sub. Notes 12.25%, 7/15/09 B3 500 495,000 (1) Majestic Star Casino, L.L.C. Secured Notes 10.875%, 7/1/06 B2 500 480,000
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Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) Mohegan Tribal Gaming Authority Sr. Notes 8.125%, 1/1/06 Ba1 $ 900 $ 882,000 Park Place Entertainment Corp. Sr. Notes 8.50%, 11/15/06 Baa3 115 113,562 Prime Hospitality Corp. Secured First Mortgage Notes 9.25%, 1/15/06 Ba2 850 847,875 Romacorp, Inc. Sr. Notes 12.00%, 7/1/06 B3 750 680,625 Sante Fe Hotel, Inc. Gtd. First Mortgage Notes 11.00%, 12/15/00 Caa2 704 689,920 Station Casinos Sr. Sub. Notes 9.75%, 4/15/07 B2 1,400 1,414,000 ------------ GROUP TOTAL 17,037,577 ------------ - --------------------------------------------------------------------------------------- - ----------------- RETAIL (3.7%) (3) Advance Holdings Corp. Series B, Sr. Discount Debentures 0.00%, 4/15/09 Caa2 1,500 778,125 Advance Stores Co. Gtd. Sr. Sub. Notes 10.25%, 4/15/08 Caa1 2,000 1,735,000 Dairy Mart Convenience Stores, Inc. Sr. Sub. Notes 10.25%, 3/15/04 B3 275 226,188 Finlay Enterprises, Inc. Sr. Debentures 9.00%, 5/1/08 B2 400 352,500 Finlay Fine Jewelry Corp. Gtd. Sr. Notes 8.375%, 5/1/08 Ba3 1,050 971,250 Jitney-Jungle Stores of America, Inc. Gtd. Sr. Sub. Notes 10.375%, 9/15/07 B3 300 6,000 Jo-Ann Stores, Inc. Sr. Sub. Notes 10.375%, 5/1/07 B2 250 244,375 K Mart Corp. Debentures 7.75%, 10/1/12 Ba2 1,175 1,064,844 (3) Mrs. Fields Holding Co. Units 0.00%, 12/1/05 Caa2 1,750 980,000 Mrs. Fields Original Cookies, Inc.: Gtd. Sr. Notes 10.125%, 12/1/04 N/R 1,400 1,139,250 (1) 10.125%, 12/1/04 B2 250 203,437 Pantry, Inc. Sr. Sub. Notes 10.25%, 10/15/07 B3 550 539,000
The accompanying notes are an integral part of the financial statements. 12
Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) - --------------------------------------------------------------------------------------- Pathmark Stores, Inc. Sr. Sub. Notes 9.625%, 5/1/03 Caa1 $ 1,100 $ 814,000 Saks, Inc.: Gtd. 7.00%, 7/15/04 Baa3 90 84,825 8.25%, 11/15/08 Baa3 80 78,200 Wal-Mart Stores, Inc. Sr. Notes 6.875%, 8/10/09 Aa2 165 160,659 ------------ GROUP TOTAL 9,377,653 ------------ - --------------------------------------------------------------------------------------- - ----------------- TELECOMMUNICATIONS (20.1%) (3) COLT Telecom Group plc Yankee Units 0.00%, 12/15/06 B1 400 352,000 (3) Call-Net Enterprises, Inc. Sr. Discount Notes 0.00%, 5/15/09 B2 500 244,375 (3) Clearnet Communications, Inc. Yankee Sr. Discount Notes 0.00%, 12/15/05 B3 1,050 1,029,000 Concentric Network Corp. Units 12.75%, 12/15/07 N/R 750 793,125 (3) DTI Holdings, Inc. Units 0.00%, 3/1/08 N/R 1,850 666,000 Dobson/Sygnet Communications, Co. Sr. Notes 12.25%, 12/15/08 N/R 1,300 1,439,750 (3) Dolphin Telecom plc: Sr. Discount Notes 0.00%, 6/1/08 Caa1 750 343,125 Series B, Yankee Sr. Discount Notes 14.00%, 5/15/09 Caa1 700 328,125 (3) e.spire Communications, Inc. Sr. Discount Notes 0.00%, 11/1/05 N/R 2,700 1,350,000 Exodus Communications, Inc. Sr. Notes 11.25%, 7/1/08 N/R 550 570,625 (3) Focal Communications Corp. Sr. Discount Notes 0.00%, 2/15/08 N/R 1,400 868,000 (3) GST USA, Inc. Gtd. Sr. Discount Notes 0.00%, 12/15/05 N/R 1,800 1,320,750 Global Crossing Holdings, Ltd. Gtd. Sr. Notes 9.625%, 5/15/08 N/R 1,150 1,147,125
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Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) Globalstar, L.P. / Globalstar Capital Corp.: Sr. Notes 10.75%, 11/1/04 B3 $ 1,000 $ 652,500 11.25%, 6/15/04 Caa1 200 133,000 11.50%, 6/1/05 B3 500 336,250 Globix Corp. Sr. Notes 13.00%, 5/1/05 N/R 1,000 1,010,000 (3) Golden Sky DBS, Inc. Series B, Sr. Discount Notes 0.00%, 3/1/07 Caa1 250 152,188 (3) Hyperion Telecommunications, Inc. Series B, Sr. Discount Notes 0.00%, 4/15/03 B3 450 400,500 (3) ICG Holdings, Inc.: Gtd. Sr. Discount Notes 0.00%, 9/15/05 B3 650 562,250 0.00%, 5/1/06 B3 600 453,000 0.00%, 3/15/07 B3 1,750 1,141,875 (3) ICG Services, Inc.: Sr. Discount Notes 0.00%, 2/15/08 N/R 500 262,500 0.00%, 5/1/08 N/R 1,350 681,750 ITC DeltaCom, Inc. Sr. Notes 11.00%, 6/1/07 B2 259 271,950 IXC Communications, Inc. Sr. Sub. Notes 9.00%, 4/15/08 B1 500 505,000 Intermedia Communications, Inc. Sr. Notes 8.875%, 11/1/07 B2 200 188,000 Jordan Telecommunications Products, Inc.: Series B, Sr. Notes 9.875%, 8/1/07 N/R 270 290,925 (3) Sr. Discount Notes 0.00%, 8/1/07 B3 425 449,438 KMC Telecom Holdings, Inc. Sr. Notes 13.50%, 5/15/09 Caa2 500 492,500 (3) Knology Holdings, Inc. Sr. Discount Notes 0.00%, 10/15/07 N/R 1,000 658,750 Level 3 Communications, Inc.: Sr. Notes 9.125%, 5/1/08 B3 1,150 1,086,750 (3) Sr. Discount Notes 0.00%, 12/1/08 B3 1,000 603,750 Logix Communications Enterprises Sr. Notes 12.25%, 6/15/08 N/R 1,000 797,500
The accompanying notes are an integral part of the financial statements. 13
Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) - --------------------------------------------------------------------------------------- MCI Worldcom, Inc. Sr. Unsecured Notes 6.50%, 4/15/10 Baa2 $ 125 $ 115,938 (3) McLeod USA, Inc.: Sr. Discount Notes 0.00%, 3/1/07 B2 800 648,000 Sr. Notes 9.25%, 7/15/07 B2 400 401,000 9.50%, 11/1/08 B2 1,000 1,012,500 Metromedia International Group Series B, Sr. Discount Notes 10.50%, 9/30/07 N/R 2,635 1,238,259 MetroNet Communications Corp.: Sr. Discount Notes 10.75%, 11/1/07 B 1,100 907,500 (3) 0.00%, 6/15/08 B3 1,000 786,250 Microcell Telecommunications, Inc. Series B, Yankee Sr. Discount Notes 14.00%, 6/1/06 B3 470 413,600 (3) Millicom International Cellular Yankee Sr. Sub. Discount Notes 0.00%, 6/1/06 Caa1 850 698,062 (3) NEXTLINK Communications, Inc.: Sr. Discount Notes 0.00%, 4/15/08 B3 1,700 1,079,500 Sr. Notes 12.50%, 4/15/06 B3 350 378,000 10.75%, 11/15/08 B3 500 515,000 (3) Nextel Communications, Inc. Sr. Discount Notes 0.00%, 2/15/08 B2 1,700 1,194,250 Orange plc Sr. Notes 9.00%, 6/1/09 B3 100 106,000 Orbital Imaging Corp. Series B, Sr. Notes 11.625%, 3/1/05 N/R 500 326,250 Orion Network Systems, Inc. Gtd. Sr. Notes 11.25%, 1/15/07 B2 500 375,000 PSINET, Inc. Sr. Notes 11.50%, 11/1/08 B3 1,050 1,102,500 (3) PTC International Finance B.V. Gtd. Sr. Sub. Notes 0.00%, 7/1/07 B3 350 232,313 (3) Pagemart Nationwide, Inc. Sr. Discount Notes 0.00%, 2/1/05 B3 1,750 1,520,312 (1) Pegasus Communications Corp. Sr. Sub. Notes 12.50%, 8/1/07 N/R 750 808,125
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Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) (3) Qwest Communications International, Inc. Sr. Discount Notes 0.00%, 10/15/07 B2 $ 1,100 $ 892,375 (3) RCN Corp.: Series B, Sr. Discount Notes 0.00%, 2/15/08 B3 900 592,875 Sr. Notes 10.125%, 1/15/10 B3 500 498,750 RSL Communications plc: Yankee Gtd. Sr. Notes 9.125%, 3/1/08 B3 200 179,000 10.50%, 11/15/08 B3 250 239,375 9.875, 11/15/09 B2 1,100 992,750 Rhythms Netconnections, Inc.: Sr. Notes 12.75%, 4/15/09 B3 250 241,875 Units 13.00%, 5/15/08 N/R 1,500 810,000 Rogers Cablesystems Ltd. Series B, Yankee Sr. Secured 2nd Priority Notes 10.00%, 3/15/05 Ba3 250 267,500 Rogers Cantel, Inc. Yankee Sr. Secured Debentures 9.375%, 6/1/08 Ba3 350 364,000 Sprint Capital Corp. Medium Term Notes 6.875%, 11/15/01 Baa1 300 297,375 Sprint Spectrum L.P. / Sprint Spectrum Finance Corp. Sr. Notes 11.00%, 8/15/06 B2 1,500 1,659,240 Star Choice Communications, Inc. Yankee Sr. Notes 13.00%, 12/15/05 N/R 500 503,125 Startec Global Communications Corp. Units 12.00%, 5/15/08 N/R 750 635,625 Telesystem International Wireless Series B, Sr. Discount Notes 13.25%, 6/30/07 Caa1 500 304,375 Teligent, Inc. Sr. Notes 11.50%, 12/1/07 Caa1 750 731,250 (1)(3) Tritel PCS, Inc. Sr. Discount Notes 0.00%, 5/15/09 B3 500 316,875 (3) Triton PCS, Inc. Gtd. 0.00%, 5/1/08 B3 800 567,000 (1)(3) US Unwired, Inc. Sr. Discount Notes 0.00%, 11/1/09 Caa1 700 415,625
The accompanying notes are an integral part of the financial statements. 14
Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) - --------------------------------------------------------------------------------------- (1) US West Communications, Inc. Bonds 7.20%, 11/1/04 A2 $ 110 $ 108,900 Viatel, Inc.: Sr. Notes 11.25%, 4/15/08 Caa1 850 847,875 (1) 11.50%, 3/15/09 B3 1,098 1,097,605 Western Wireless Corp. Sr. Sub. Notes 10.50%, 2/1/07 B3 350 365,750 Williams Communications Group, Inc. Sr. Notes 10.875%, 10/1/09 B2 500 523,750 (3) Winstar Communications, Inc. Sr. Discount Notes 0.00%, 10/15/05 Caa1 1,600 1,552,000 (1) Worldwide Fiber, Inc. Sr. Notes 12.00%, 8/1/09 B3 800 832,000 ------------ GROUP TOTAL 51,277,605 ------------ - --------------------------------------------------------------------------------------- - ----------------- TEXTILES/APPAREL (1.3%) Iron Age Corp. Sr. Sub. Notes 9.875%, 5/1/08 B3 250 184,688 Maxim Group, Inc. Series B, Gtd. Sr. Sub. Notes 9.25%, 10/15/07 B2 700 558,250 Phillips-Van-Heusen Corp. Sr. Sub. Notes 9.50%, 5/1/08 B1 800 746,000 Pillowtex Corp. Gtd. Sr. Sub. Notes 10.00%, 11/15/06 B2 500 215,000 Simmons Co. Series B, Sr. Sub. Notes 10.25%, 3/15/09 B3 650 628,875 Tropical Sportswear International Series A, Gtd. Sr. Notes 11.00%, 6/15/08 B3 600 576,000 William Carter Co. Series A, Sr. Sub. Notes 10.375%, 12/1/06 B3 500 436,875 ------------ GROUP TOTAL 3,345,688 ------------ - --------------------------------------------------------------------------------------- - ----------------- TRANSPORTATION (1.8%) AirTran Airlines, Inc. Sr. Notes 10.50%, 4/15/01 N/R 1,000 967,500 Canadian Airlines Corp. Sr. Notes 12.25%, 8/1/06 Caa2 1,950 1,106,625
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Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) Golden Ocean Group, Ltd. Gtd. Sr. Notes 10.00%, 8/31/01 B3 $ 1,148 $ 63,140 Hermes Europe Railtel B.V. Sr. Notes 11.50%, 8/15/07 B3 1,000 1,030,000 Norfolk Southern Corp.: Bonds 7.70%, 5/15/17 Baa1 75 73,500 Series A, Medium Term Notes 7.40%, 9/15/06 Baa1 40 39,500 Pegasus Shipping (Hellas), Ltd. Series A, First Preferred Ship Mortgage Notes 11.875%, 11/15/04 B3 300 92,250 Sea Containers, Ltd. Yankee Sr. Notes 10.75%, 10/15/06 Ba3 500 496,250 Trans World Airlines, Inc. Sr. Notes 11.375%, 3/1/06 Caa1 1,500 626,250 ------------ GROUP TOTAL 4,495,015 ------------ - --------------------------------------------------------------------------------------- - ----------------- WASTE MANAGEMENT (0.5%) (1) Waste Systems International, Inc. Sub. Notes 7.00%, 5/13/05 N/R 1,500 1,245,000 ------------ - --------------------------------------------------------------------------------------- - ----------------- TOTAL CORPORATE OBLIGATIONS (Cost $242,464,419) 211,021,489 ------------ - --------------------------------------------------------------------------------------- GOVERNMENT & AGENCY SECURITIES (1.3%) - --------------------------------------------------------------------------------------- - ----------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION (1.0%) 6.00%, 7/1/29 Aaa 768 702,837 6.00%, 7/1/29 Aaa 316 288,748 6.50%, 7/1/29 Aaa 632 595,149 FGLMC, Gold Pool #C00835 6.50%, 7/1/29 Aaa 663 624,637 STRIPS, Series H, Class 2 11.50%, 5/1/09 Aaa 520 572,267 ------------ GROUP TOTAL 2,783,638 ------------ - --------------------------------------------------------------------------------------- - ----------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (0.1%) Various Pools: 10.50%, 9/15/15 Aaa 33 36,282 10.50%, 9/15/15 Aaa 19 20,311 10.50%, 12/15/15 Aaa 3 3,384 10.50%, 3/15/16 Aaa 26 27,883 10.50%, 8/15/16 Aaa 34 36,837 ------------ GROUP TOTAL 124,697 ------------
The accompanying notes are an integral part of the financial statements. 15
Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) - --------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------- - ----------------- UNITED STATES TREASURY NOTES (0.2%) TIPS 3.875%, 4/15/29 Aaa $ 405 $ 378,132 ------------ - --------------------------------------------------------------------------------------- - ----------------- TOTAL GOVERNMENT & AGENCY SECURITIES (Cost $3,267,345) 3,286,467 ------------ - --------------------------------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS (0.7%) Commercial Mortgage Asset Trust Series 1999, Class A3 6.64%, 1/17/32 Aaa 310 291,594 GMAC Commercial Mortgage Securities, Inc.: 6.853%, 9/15/06 Aaa 80 78,375 6.945%, 9/15/33 Aaa 550 524,285 Heller Financial Commercial Mortgage Series 1999-PH1, Class A2 6.847%, 5/15/31 Aaa 385 368,156 Morgan Stanley Capital I Series 1998-XL1, Class A3 6.48%, 6/3/30 N/R 360 338,513 Nomura Asset Securities Corp. Series 1998-D6, Class A1B6 6.59%, 3/17/28 Aaa 310 292,756 ------------ - --------------------------------------------------------------------------------------- - ----------------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $2,021,129) 1,893,679 ------------ - --------------------------------------------------------------------------------------- - ----------------- ASSET BACKED OBLIGATIONS (1.7%) Chase Credit Card Master Trust Series 1999-3, Class A 6.66%, 1/15/07 Aaa 420 414,881 (1) Constellation Finance, L.L.C. Series 1997-1, Class 1 9.80%, 12/14/02 N/R 250 232,500 Contimortgage Home Equity Loan Trust 7.22%, 1/15/28 Aaa 125 122,734 Green Tree Financial Corp. Manufactured Housing Installment Sale Contracts: Series 1993-4, Class B1 7.20%, 1/15/19 Baa3 1,424 1,363,342 Green Tree Recreational, Equipment & Consumer Trust, Consumer Products & Equipment Retail Installment Sale Contracts Series 1997-C, Class A-1, 6.49%, 2/15/18 N/R 445 439,064
- ---------------------------------------------------------------------------------------
Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) MBNA Master Credit Card Trust: Series 1999-G, Class A 6.35%, 12/15/06 Aaa $ 130 $ 126,588 Series 1997-I, Class A 6.55%, 1/15/07 Aaa 160 157,000 Peco Energy Transition Trust: Series 1999-A, Class A6 6.05%, 3/1/09 Aaa 90 84,712 Series 1999-A, Class A7 6.13%, 3/1/09 Aaa 335 309,875 Prudential Securities Secured Financing Corp. Series 1999-C2, Class A2, 7.193%, 4/15/09 Aaa 385 377,420 Residential Asset Securities Corp. Series 1999-KS3, Class AI2 7.075%, 9/25/20 Aaa 125 124,355 Standard Credit Card Master Trust Series 1994-2, Class A 7.25%, 4/7/08 Aaa 420 415,405 UCFC Home Equity Loan: Series 1996-B1, Class A7 8.20%, 9/15/27 Aaa 110 109,089 Series 1998-A, Class A7, 6.87% 7/15/29 Aaa 50 45,422 ------------ - --------------------------------------------------------------------------------------- - ----------------- TOTAL ASSET BACKED OBLIGATIONS (Cost $4,366,932) 4,322,387 ------------ - ---------------------------------------------------------------------------------------
Shares/ Units - -------------------------------------------------------------------------- - ----------------- COMMON STOCKS (5.4%) - -------------------------------------------------------------------------- - ----------------- BROADCASTING (0.8%) (4) UnitedGlobalCom, Inc., Class A 26,756 1,889,642 ------------ - -------------------------------------------------------------------------- - ----------------- CABLE (0.0%) (1)(4) OpTel, Inc. 1,000 10 ------------ - -------------------------------------------------------------------------- - ----------------- CONSUMER PRODUCTS & SERVICES (0.2%) (4) Coinstar, Inc. 11,887 166,418 (4) Concentric Network Corp. 9,510 293,027 (4) Crown Packaging Enterprises, Ltd. 253,746 2,537 ------------ GROUP TOTAL 461,982 ------------ - -------------------------------------------------------------------------- - ----------------- ENERGY (0.0%) (4) Abraxas Petroleum Corp. 92,408 86,633 ------------ - -------------------------------------------------------------------------- - ----------------- ENTERTAINMENT (0.1%) Premier Holdings, Ltd. 66,653 174,964 ------------
The accompanying notes are an integral part of the financial statements. 16
Shares/ Value Units (Note A-1) - -------------------------------------------------------------------------- - -------------------------------------------------------------------------- - ----------------- FINANCIAL SERVICES (0.0%) (4)(5) Westfed Holdings, Inc. Class B (acquired 9/20/88, cost $383) 12,670 $ 0 ------------ - -------------------------------------------------------------------------- - ----------------- FOOD & BEVERAGES (0.7%) (4)(5) Dr. Pepper Bottling Holdings, Inc. Class A (acquired 2/25/97, cost $1,181,250) 75,000 1,875,000 (1)(4) Specialty Foods Corp. 30,000 1,500 ------------ GROUP TOTAL 1,876,500 ------------ - -------------------------------------------------------------------------- - ----------------- INDUSTRIAL GOODS & MATERIALS (0.1%) (4)(5)(6) CIC I Acquisition Corp. (acquired 10/18/89, cost $1,076,715) 2,944 273,056 ------------ - -------------------------------------------------------------------------- - ----------------- METALS & MINING (0.0%) (4) Sheffield Steel Corp. 6,250 12,500 ------------ - -------------------------------------------------------------------------- - ----------------- PAPER & FOREST PRODUCTS (0.1%) (1)(4)(6) Mail-Well, Inc. 21,306 287,631 ------------ - -------------------------------------------------------------------------- - ----------------- RESTAURANTS, HOTELS & GAMING (0.1%) (4) Elsinore Corp. 86,538 32,452 (4) Isle of Capri Casinos, Inc. 20,634 197,398 (1)(4) Motels of America, Inc. 500 9,000 ------------ GROUP TOTAL 238,850 ------------ - -------------------------------------------------------------------------- - ----------------- TELECOMMUNICATIONS (3.3%) (4) Advanced Radio Telecom Corp. 18,211 437,064 (1)(4) CompleTel Holdings, LLC Class B 6,500 6,500 (4) e. spire Communications Inc 28,337 164,709 (4) Globix Corp. 7,040 422,400 (4) ICG Communications, Inc. 2,145 40,219 (4) Intermedia Communications, Inc. 6,217 241,297 (4) Loral Space & Communications 302 7,342 (4) Microcell Telecommunications, Class B 3,436 112,958 (4) Nextel Communications, Inc. Class A 310 31,969 (4) Price Communications Corp. 88,727 2,467,719 (1)(4) Spanish Broadcasting System, Inc. Class B 107,100 4,284,000 (4) Viatel, Inc. 3,424 183,612 ------------ GROUP TOTAL 8,399,789 ------------ - -------------------------------------------------------------------------- - ----------------- TOTAL COMMON STOCKS (Cost $4,479,212) 13,701,557 ------------ - -------------------------------------------------------------------------- - ----------------- PREFERRED STOCKS (3.5%) - -------------------------------------------------------------------------- - ----------------- AEROSPACE/DEFENSE (0.4%) GPA Group plc 7% Second Preferred Cum. Conv. 2,125,000 1,094,375 ------------ - -------------------------------------------------------------------------- - ----------------- Shares/ Value Units (Note A-1) - -------------------------------------------------------------------------- BROADCASTING (0.3%) Benedek Communications Corp. 11.50% Sr. Exchangeable 150 $ 130,500 (4) Pegasus Communications Corp. 12.75% Cum. Exchangeable, Series A 84 88,200 Pegasus Communications Corp. Units 250 278,000 (4) Source Media, Inc. 13.50% Units 71,728 322,776 ------------ GROUP TOTAL 819,476 ------------ - -------------------------------------------------------------------------- - ----------------- CABLE (0.4%) Adelphia Communications Corp. 13% Cum. Exchangeable, Series B 5,000 555,000 (4) DIVA Systems Corp. Series D 56,913 455,304 (4) NTL, Inc. 13% Exchangeable, Series B 1 611 ------------ GROUP TOTAL 1,010,915 ------------ - -------------------------------------------------------------------------- - ----------------- FINANCIAL SERVICES (0.3%) (1) Deutsche Bank Capital Funding Tr I 7.872% Non-cumulated 120,000 112,438 Lehman Brothers Holdings: 5.67% 1,100 43,450 5% Convertible, Series B 2,700 75,600 5.94% Series C 1,300 53,300 Olympic Financial, Ltd. Units 11.50%, 3/15/07 475,000 484,500 (6) Westfed Holdings, Inc. Class A (acquired 9/20/88-6/18/93, cost $3,611,992) 42,759 42,759 ------------ GROUP TOTAL 812,047 ------------ - -------------------------------------------------------------------------- - ----------------- METALS & MINING (0.1%) (1) International Utility Structures, Inc.: 13% Units 150 140,625 14% Units 28 2,296 ------------ GROUP TOTAL 142,921 ------------ - -------------------------------------------------------------------------- - ----------------- PUBLISHING & INFORMATION SERVICES (0.2%) Primedia, Inc. 10% Cum. Exchangeable, Series D 5,000 512,500 ------------ - -------------------------------------------------------------------------- - ----------------- RESTAURANTS, HOTELS & GAMING (0.2%) AmeriKing, Inc. 13% Cum. Exchangeable 21,308 468,776 ------------ - -------------------------------------------------------------------------- - ----------------- TELECOMMUNICATIONS (1.6%) e. spire Communications, Inc. 12.75% 318 63,600 Intermedia Communications, Inc.: 13.50% Exchangeable, Series B 349 342,020 (1) 7% Jr. Convertible, Series E 44,000 1,485,000 (4) NEXTLINK Communications, Inc. 14% Cum. Exchangeable 13,869 776,664
The accompanying notes are an integral part of the financial statements. 17
Shares/ Value Units (Note A-1) - -------------------------------------------------------------------------- Nextel Communications, Inc. 13% Exchangeable, Series D 1,060 $ 1,097,100 Rural Cellular Corp. 11.375% Sr. Exchangeable 293 301,057 ------------ GROUP TOTAL 4,065,441 ------------ - -------------------------------------------------------------------------- - ----------------- TOTAL PREFERRED STOCKS (Cost $12,304,488) 8,926,451 ------------ - -------------------------------------------------------------------------- - ----------------- RIGHTS (0.2%) Abraxas Petroleum Corp. expiring 12/21/00 92,408 924 (4)(5) Primestar, Inc. Share Appreciation Right expiring 5/10/00 6,562 327,601 (4) Terex Corp. expiring 5/15/02 6,000 84,000 - -------------------------------------------------------------------------- - ----------------- TOTAL RIGHTS (Cost $0) 412,525 ------------ - -------------------------------------------------------------------------- - ----------------- WARRANTS (0.6%) - -------------------------------------------------------------------------- (4) Ampex Corp. expiring 3/15/03 26,000 82,880 (1)(4) Australis Holdings Pty. Ltd. expiring 10/30/01 2,250 23 (4) CHC Helicopter Corp. expiring 12/15/00 6,000 6,000 (4) CHI Energy, Inc.: Series B, expiring 11/8/03 7,578 18,195 Series C, expiring 11/8/05 4,919 11,810 (4) Crown Packaging Holdings, Ltd. expiring 11/1/03 2,000 160 (4) Dairy Mart Convenience Stores, Inc. expiring 12/1/01 11,665 4,098 (4) Decrane Aircraft Holdings expiring 9/30/08 800 0 (1)(4) DIVA Systems Corp. expiring 5/15/06 1,925 699,930 expiring 3/1/08 8,325 99,900 (1)(4) DTI Holdings, Inc. expiring 3/1/08 9,250 93 (4) Golden Ocean Group, Ltd. expiring 8/31/01 1,032 0 (4) HF Holdings, Inc. expiring 09/27/09 9,752 97,520 (1)(4) InterAct Systems, Inc. expiring 8/1/03 750 0 (4) Isle of Capri Casinos, Inc. expiring 5/3/01 2,646 26 (1)(4) Key Energy Services expiring 1/15/09 1,250 31,250 (4) McCaw International Ltd. expiring 4/15/07 1,000 2,500 (1)(4) Mentus Media Corp. expiring 2/1/08 3,757 38 (4) PLD Telekom, Inc. expiring 6/1/06 1,610 64,400 (4) Source Media, Inc. expiring 11/1/07 30,731 307,313 (1)(4) Star Choice Communications, Inc. expiring 12/5/05 11,580 $ 46,134 Shares/ Value Units (Note A-1) - -------------------------------------------------------------------------- (4) Startec Global Communications Corp. expiring 5/15/08 750 750 (4) USN Communications, Inc. expiring 8/15/04 7,600 0 (4) Wright Medical Technology expiring 6/30/03 618 6 - -------------------------------------------------------------------------- - ----------------- TOTAL WARRANTS (Cost $3,065,685) 1,473,026 ------------ - -------------------------------------------------------------------------- - ----------------- TOTAL DOMESTIC SECURITIES (Cost $271,969,210) 245,037,581 ------------ - --------------------------------------------------------------------------
Moody's Face Ratings Amount (Unaudited) (000) - ----------------------------------------------------------------------------- - ----------------- FOREIGN SECURITIES (1.3%) - ----------------------------------------------------------------------------- - ----------------- CORPORATE OBLIGATIONS (1.3%) - ----------------------------------------------------------------------------- - ----------------- FINLAND (0.1%) (7) Okobank Perpetual Medium Term Notes 5.739%, 3/29/49 A3 USD $140 133,000 ------------ - ----------------------------------------------------------------------------- - ----------------- FRANCE (0.1%) (7) Credit Lyonnais Paris 6.563%, 9/19/49 Baa2 USD 210 197,400 ------------ - ----------------------------------------------------------------------------- - ----------------- ISRAEL (0.1%) (1) Israel Electric Corp., Ltd. Notes 8.25%, 10/15/09 A3 USD 250 250,000 ------------ - ----------------------------------------------------------------------------- - ----------------- NETHERLANDS (0.5%) (3) CompleTel Europe N.V. Yankee Gtd. 0.00%, 2/15/09 Caa2 USD 650 364,000 (1) United Pan Europe N.V. Sr. Notes 10.875%, 8/1/09 B2 USD 850 863,813 ------------ GROUP TOTAL 1,227,813 ------------ - ----------------------------------------------------------------------------- - ----------------- POLAND (0.2%) (1) PTC International Finance II SA Gtd. 11.25%, 12/1/09 B2 USD 500 488,126 ------------ - ----------------------------------------------------------------------------- - ----------------- SWEDEN (0.3%) (7) ForeningsSparbanken AB Perpetual Jr. Sub. Medium Term Notes 6.438%, 12/29/49 Baa2 USD 500 495,000
The accompanying notes are an integral part of the financial statements. 18
Moody's Face Ratings Amount Value (Unaudited) (000) (Note A-1) - ----------------------------------------------------------------------------- Skandinaviska Enskilda Banken AB Perpetual Sub. Notes 6.625%, 3/29/49 Baa1 USD $400 $ 392,848 ------------ GROUP TOTAL 887,848 ------------ - ----------------------------------------------------------------------------- - ----------------- TOTAL CORPORATE OBLIGATIONS (Cost $3,191,376) 3,184,187 ------------ - ----------------------------------------------------------------------------- - ----------------- GOVERNMENT OBLIGATIONS (0.0%) - ----------------------------------------------------------------------------- - ----------------- ARGENTINA (0.0%) Republic of Argentina Series B, Gtd. Zero Coupon, 4/15/01 (Cost $112,707) Ba3 USD 125 110,938 ------------ - ----------------------------------------------------------------------------- - ----------------- TOTAL FOREIGN SECURITIES (Cost $3,304,083) 3,295,125 ------------ - ----------------------------------------------------------------------------- - ----------------- TIME DEPOSITS (0.3%) (Cost $848,000) 848,000 ------------ - ----------------------------------------------------------------------------- - ----------------- TOTAL INVESTMENTS (97.8%) (Cost $276,121,293) 249,180,706 ------------ - ----------------------------------------------------------------------------- - ----------------- OTHER ASSETS IN EXCESS OF LIABILITIES (2.2%) 5,676,249 ------------ - ----------------------------------------------------------------------------- - ----------------- NET ASSETS (100%) Applicable to 34,708,369 issued and outstanding $.001 par value shares (authorized 100,000,000 shares) $254,856,955 ============ =============================================================================
N/R--Not Rated. STRIPS--Separate Trading of Registered Interest and Principal Securities. TIPS--Treasury Inflation Protected Securities. (1) 144A Security. Certain conditions for public sale may exist. (2) Defaulted security. (3) Step Bond--Coupon rate is low or zero for an initial period and then increases to a higher coupon rate thereafter. Maturity date disclosed is the ultimate maturity. (4) Non-income producing security. (5) Restricted as to private and public resale. Total cost of restricted securities at December 31, 1999 aggregated $2,258,348. Total market value of restricted securities owned at December 31, 1999 was $2,475,657 or 0.97% of net assets. (6) Securities for which market quotations are not readily available are valued at fair value as determined in good faith by the Board of Directors. (7) Floating Rate--The interest rate changes on these instruments based upon a designated base rate. The rates shown are those in effect at December 31, 1999. The accompanying notes are an integral part of the financial statements. 19
STATEMENT OF ASSETS AND LIABILITIES December 31, 1999 - ----------------------------------------------------------- ASSETS: Investments at Value (Cost $276,121,293) (Note A-1).... $249,180,706 Receivables: Interest Receivable (Note A-4).... 6,116,054 Receivable for Investments Sold... 40,249 Other Assets...................... 5,447 - ----------------------------------------------------------- Total Assets.................... 255,342,456 - ----------------------------------------------------------- LIABILITIES: Investment Advisory Fees (Note B)............................... 316,619 Professional Fees................. 56,858 Shareholders' Reports............. 32,202 Administrative Fees (Note C)...... 30,576 Directors' Fees................... 8,897 Due to Custodian Bank............. 5,784 Other Liabilities................. 34,565 - ----------------------------------------------------------- Total Liabilities............... 485,501 - ----------------------------------------------------------- NET ASSETS.............................. $254,856,955 ================== NET ASSETS CONSIST OF: Capital Shares at $.001 Par Value... $ 34,708 Capital Paid in Excess of Par Value.............................. 292,824,686 Undistributed Net Investment Income............................. 2,296,006 Accumulated Net Realized Loss....... (13,357,858) Unrealized Depreciation on Investments........................ (26,940,587) ------------------ NET ASSETS APPLICABLE TO 34,708,369 ISSUED AND OUTSTANDING SHARES (AUTHORIZED 100,000,000 SHARES)....... $254,856,955 ================== NET ASSET VALUE PER SHARE............... $ 7.34 ===========================================================
STATEMENT OF OPERATIONS Year Ended December 31, 1999 - --------------------------------------------------- INVESTMENT INCOME: Interest (Note A-4)......... $27,773,879 Dividends (Note A-4)........ 181,344 - --------------------------------------------------- Total Income.............. 27,955,223 - --------------------------------------------------- EXPENSES: Investment Advisory Fees (Note B)................... 1,304,143 Administrative Fees (Note C)......................... 203,030 Shareholders' Reports....... 136,869 Shareholder Servicing Fees....................... 97,691 Professional Fees........... 88,190 Custodian Fees.............. 80,692 Directors' Fees and Expenses................... 44,847 Other....................... 85,004 - --------------------------------------------------- Total Expenses............ 2,040,466 - --------------------------------------------------- Net Investment Income..... 25,914,757 - --------------------------------------------------- NET REALIZED LOSS ON INVESTMENTS................... (5,299,393) - --------------------------------------------------- CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS................... (10,358,673) - --------------------------------------------------- Net Realized Loss and Change in Unrealized Appreciation (Depreciation)................ (15,658,066) - --------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..... $10,256,691 ===================================================
The accompanying notes are an integral part of the financial statements. 20
STATEMENT OF CHANGES IN NET ASSETS Year Ended Year Ended December 31, 1999 December 31, 1998 - --------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net Investment Income................................... $ 25,914,757 $ 24,431,443 Net Realized Gain (Loss) on Investments................. (5,299,393) 1,562,674 Change in Unrealized Appreciation (Depreciation) on Investments............................................ (10,358,673) (24,197,476) - --------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ 10,256,691 1,796,641 - --------------------------------------------------------------------------------------------------- DISTRIBUTIONS: Net Investment Income................................... (24,985,674) (24,942,259) - --------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS: Common Stock Issued through Reinvestment of Distributions (10,356 and 86,170 shares, respectively).......................................... 78,652 694,164 - --------------------------------------------------------------------------------------------------- Total Decrease in Net Assets.......................... (14,650,331) (22,451,454) - --------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of Year....................................... 269,507,286 291,958,740 - --------------------------------------------------------------------------------------------------- End of Year (Including undistributed net investment income of $2,296,006 and $140,573, respectively)....... $254,856,955 $269,507,286 ===================================================================================================
FINANCIAL HIGHLIGHTS Year Ended December 31, -------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: 1999 1998 1997 1996 1995 SECTION - --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF YEAR..................... $ 7.77 $ 8.44 $ 8.12 $ 8.63 $ 8.05 - --------------------------------------------------------------------------------------------------------------------------------- Offering Costs......................................... -- -- -- (0.02) -- - --------------------------------------------------------------------------------------------------------------------------------- Investment Activities: Net Investment Income.............................. 0.75 0.71 0.69 0.75 0.86 Net Realized and Unrealized Gain (Loss) on Investments....................................... (0.46) (0.66) 0.39 0.18 0.48 - --------------------------------------------------------------------------------------------------------------------------------- Total from Investment Activities................. 0.29 0.05 1.08 0.93 1.34 - --------------------------------------------------------------------------------------------------------------------------------- Distributions: Net Investment Income.............................. (0.72) (0.72) (0.76) (0.90) (0.76) - --------------------------------------------------------------------------------------------------------------------------------- Decrease in Net Asset Value due to Shares Issued through Rights Offering............................... -- -- -- (0.52) -- - --------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF YEAR........................... $ 7.34 $ 7.77 $ 8.44 $ 8.12 $ 8.63 ================================================================================================================================= PER SHARE MARKET VALUE, END OF YEAR.................... $ 6.06 $ 7.56 $ 8.75 $ 7.63 $ 7.88 ================================================================================================================================= TOTAL INVESTMENT RETURN: Net Asset Value (1)................................ 4.50% 0.47% 14.03% 10.59%* 17.41% Market Value....................................... (11.32)% (5.68)% 25.90% 10.05%* 24.34% ================================================================================================================================= RATIOS AND SUPPLEMENTAL DATA: ================================================================================================================================= Net Assets, End of Year (Thousands).................... $254,857 $269,507 $291,959 $280,634 $210,441 - --------------------------------------------------------------------------------------------------------------------------------- Ratio of Expenses to Average Net Assets Including Expense Offsets....................................... 0.78% 0.81% 0.84% 0.94% 0.92% Ratio of Expenses to Average Net Assets................ 0.78% 0.81% 0.84% 0.95% -- Ratio of Net Investment Income to Average Net Assets... 9.90% 8.59% 8.47% 9.23% 10.22% Portfolio Turnover Rate................................ 43.5% 84.7% 97.7% 81.0% 44.1% - ---------------------------------------------------------------------------------------------------------------------------------
Section Credit Suisse Asset Management LLC, formerly known as BEA Associates replaced CS First Boston Investment management as the Fund's investment adviser effective June 13, 1995. * Adjusted for Rights Offering. (1) Total investment return based on per share net asset value reflects the effects of change in net asset value on the performance of the Fund during each period, and assumes dividends and capital gains distributions, if any, were reinvested. These percentages are not an indication of the performance of a shareholder's investment in the Fund based on market value, due to differences between the market price of the stock and the net asset value of the Fund. Note: Current period permanent book-tax differences, if any, are not included in the calculation of net investment income per share.
The accompanying notes are an integral part of the financial statements. 21 NOTES TO FINANCIAL STATEMENTS - ------------ Credit Suisse Asset Management Income Fund, Inc., formerly known as BEA Income Fund, Inc. (the "Fund"), was incorporated on February 11, 1987 and is registered as a diversified, closed-end investment company under the Investment Company Act of 1940. The Fund's investment objective is to seek current income through investments primarily in debt securities. A. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. Generally accepted accounting principles may require management to make estimates and assumptions that affect the amounts and disclosures in the financial statements. Actual reported results could differ from those estimates. 1. SECURITY VALUATION: Market values for fixed income securities are valued at the latest quoted bid price in the over-the-counter market. However, fixed income securities may be valued on the basis of prices provided by a pricing service which are based primarily on institutional size trading in similar groups of securities. Other securities listed on an exchange are valued at the latest quoted sales prices on the day of valuation or if there was no sale on such day, the last bid price quoted on such day. Securities purchased with remaining maturities of 60 days or less are valued at amortized cost, if it approximates market value. Securities for which market quotations are not readily available (including restricted investments which are subject to limitations as to their sale) are valued at fair value as determined in good faith by the Board of Directors. Such securities have a value of $259,519 (or 0.10% of net assets) at December 31, 1999. In determining fair value, consideration is given to cost, operating and other financial data. The Fund may invest up to 10% of its total assets in securities which are not readily marketable, including those which are restricted as to disposition under securities law ("restricted securities") (excludes 144A securities). These securities are valued pursuant to the valuation procedures noted above. 2. FEDERAL INCOME TAXES: It is the Fund's intention to continue to qualify as a regulated investment company and distribute all of its taxable income to shareholders. Accordingly, no provision for Federal income taxes is required in the financial statements. 3. REPURCHASE AGREEMENTS: In connection with transactions in repurchase agreements, a bank as custodian for the Fund takes possession of the underlying securities, the value of which exceeds the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine the adequacy of the collateral. In the event of default on the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral or proceeds may be subject to legal proceedings. 4. SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Security transactions are accounted for on the date the securities are purchased or sold. Costs used in determining realized gains and losses on the sale of investment securities are those of specific securities sold. Interest income is recognized on the accrual basis. Discounts on securities purchased are amortized according to the effective yield method over their respective lives. Discount or premium on mortgage backed securities is recognized upon receipt of principal payments on the underlying mortgage pools. Dividend income is recorded on the ex-dividend date. 5. DELAYED DELIVERY COMMITMENTS: The Fund may purchase or sell securities on a when-issued or forward commitment basis. Payment and delivery may take place a month or more after the date of the transaction. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. 6. DIVIDENDS AND DISTRIBUTIONS: The Fund pays dividends of net investment income monthly and makes distributions at least annually of any net capital gains in excess of applicable capital losses, including capital loss carryforward. Dividends and distributions are recorded on the ex-dividend date. Income distributions and capital gains distributions are determined in accordance with U.S. Federal Income Tax regulations which may differ from generally accepted accounting principles. These differences are principally due to timing of the recognition of defaulted bond interest. Permanent book and tax differences relating to shareholder distributions may result in reclassifications to undistributed net investment income (loss), undistributed net realized gain (loss) and paid in capital. B. Credit Suisse Asset Management, LLC formerly known as BEA Associates (the "Adviser") provides investment advisory services to the Fund under the terms of an Advisory Agreement. Under the Advisory Agreement, the Adviser is paid a fee, computed weekly and payable quarterly at an annual rate of .50 % of average weekly net assets. C. Effective March 1, 1999, Brown Brothers Harriman & Co. ("BBH&Co."), replaced Chase Manhattan Bank as the Fund's Administrator and Custodian. 22 BBH&Co. provides services to the fund. Under the Administration and Custody Agreements, BBH&Co. is paid a fee based on average net assets. Effective January 25, 1999, BankBoston N.A. replaced Chase Manhattan Bank as the Fund's Transfer Agent. BankBoston provides transfer agent services to the fund. Under the Transfer Agent Agreement, BankBoston is paid a fee based on the number of accounts in the Fund per year. In addition, the Fund is charged certain out-of-pocket expenses by BankBoston. D. Purchases and sales of investment securities (excluding short-term investments and U.S. government securities) aggregated $62,725,985 and $68,545,698, respectively, for the year ended December 31, 1999. Purchases and sales of U.S. government and government agency securities aggregated $48,462,436 and $49,777,024, respectively, for the year ended December 31, 1999. At December 31, 1999, the cost of investments for Federal income tax purposes was $276,126,301. Accordingly, net unrealized depreciation for Federal income tax purposes aggregated $26,945,595 of which $18,633,692 related to appreciated securities and $45,579,287 related to depreciated securities. At December 31, 1999 the Fund had a capital loss carryforward of $12,297,212 available to offset future capital gains of which $3,830,007, $2,261,380 and $6,205,825 will expire on December 31, 2000, 2003 and 2007, respectively. Net capital losses incurred after October 31, and within the taxable year are deemed to arise on the first business day of the Fund's next taxable year. For the period from November 1, 1999 to December 31, 1999 the Fund incurred and elected to defer until January 1, 2000 for U.S. Federal income tax purposes net losses of approximately $1,055,638. E. At December 31, 1999, 79.0% of the Fund's net assets comprised high yield fixed income securities. The financial condition of the issuers of the securities and general economic conditions may affect the issuers' ability to make payments of income and principal, as well as the market value of the securities. Such investments may also be less liquid and more volatile than investments in higher rated fixed income securities. At December 31, 1999, 1.3% of the Fund's net assets comprised foreign currency denominated fixed income securities. Changes in currency exchange rates will affect the value and net investment income from such securities. F. The Fund's Board of Directors has approved a share repurchase program authorizing the Fund from time to time to make open-market purchases on the New York Stock Exchange of up to 10 percent of the Fund's shares outstanding as of December 11, 1990. There were no repurchases of shares during the year ended December 31, 1999. G. The Fund issued to its shareholders of record as of the close of business on September 27, 1996 transferable Rights to subscribe for up to an aggregate of 10,160,570 shares of Common Stock of the Fund at a rate of one share of Common Stock for three Rights held at the subscription price of $7.15 per share. During October 1996, the Fund issued a total of 10,160,570 shares of Common Stock on exercise of such Rights. Rights' offering costs of $550,000 were charged directly against the proceeds of the Offering. H. The Fund, together with other Funds advised by CSAM, LLC have established a $250 million committed, unsecured, line of credit facility ("Credit Facility") with Deutsche Bank, AG as administrative agent, State Street Bank and Trust Company as operations agent, Bank of Nova Scotia as syndication agent and certain other lenders, for temporary or emergency purposes. Under the terms of the Credit Facility, the Funds with access to the Credit Facility pay an aggregate commitment fee at a rate of .075% per annum on the average daily balance of the Credit Facility that is undisbursed and uncanceled during the preceding quarter, allocated among the participating Funds in such manner as is determined by the governing Boards of the various Funds. In addition, the participating Funds will pay interest on borrowing at the Federal Funds rate plus .50%. At December 31, 1999, there were no loans outstanding for the Fund. During the year ended December 31, 1999 there were no borrowings on this line of credit. 23 REPORT OF INDEPENDENT ACCOUNTANTS - ---------- To the Shareholders and Board of Directors of Credit Suisse Asset Management Income Fund, Inc. In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Credit Suisse Asset Management Income Fund, Inc. (the "Fund") at December 31, 1999, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of the securities at December 31, 1999 by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP 2400 Eleven Penn Center Philadelphia, Pennsylvania February 21, 2000 24 SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS THREE MONTHS ENDED ---------------------------------------------------------------------------------------------- MARCH 31, 1999 JUNE 30, 1999 SEPTEMBER 30, 1999 DECEMBER 31, 1999 -------------------- -------------------- ----------------------- ---------------------- Investment Income................ $ 6,573 $ 0.19 $ 6,817 $ 0.20 $ 6,931 $ 0.20 $ 7,634 $ 0.22 Net Investment Income............ 6,085 0.18 6,359 0.18 6,420 0.18 7,051 0.21 Net Realized Gain (Loss) and Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency........................ (2,250) (0.07) (5,495) (0.16) (9,201) (0.26) 1,288 0.03 Net Increase (Decrease) in Net Assets Resulting from Operations...................... 3,835 0.11 864 0.02 (2,781) (0.08) 8,339 0.24 MARCH 31, 1998 JUNE 30, 1998 SEPTEMBER 30, 1998 DECEMBER 31, 1998 -------------------- -------------------- ----------------------- ---------------------- Investment Income................ $ 6,624 $ 0.19 $ 6,580 $ 0.19 $ 6,687 $ 0.19 $ 6,846 $ 0.20 Net Investment Income............ 6,017 0.18 5,973 0.17 6,126 0.18 6,315 0.18 Net Realized Gain (Loss) and Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency........................ 3,082 0.09 (3,392) (0.10) (18,973) (0.55) (3,351) (0.10) Net Increase (Decrease) in Net Assets Resulting from Operations...................... 9,099 0.27 2,581 0.07 (11,680) (0.34) 1,797 0.05
SUPPLEMENTAL PROXY INFORMATION The Annual Meeting of the Stockholders of the Credit Suisse Asset Management Income Fund, Inc. was held on Monday, May 10, 1999 at the offices of Willkie Farr & Gallagher, 787 7th Avenue, New York City. The following is a summary of each proposal presented and the total number of shares voted:
VOTES IN VOTES VOTES PROPOSAL FAVOR OF AGAINST ABSTAINED - -------- ---------- --------- --------- 1. To elect the following four Directors: Enrique R. Arzac 28,855,681 475,833 -- Lawrence J. Fox 28,951,380 380,134 -- James S. Pasman, Jr. 28,886,113 445,401 -- William W. Priest, Jr. 28,905,317 426,197 -- 2. To ratify the selection of PricewaterhouseCoopers LLP as independent public accountants of the Fund until the next annual meeting. 28,817,109 208,216 306,190 3. To approve an amendment to the Fund's Articles of Incorporation to change the name of the Fund to Credit Suisse Asset Management Income Fund, Inc. 27,723,983 1,063,041 544,490
25 DESCRIPTION OF INVESTLINK-SM- PROGRAM - --------- The InvestLink-SM- Program is sponsored and administered by BankBoston, N.A., not by Credit Suisse Asset Management Income Fund, Inc., (the "Fund"). BankBoston, N.A., will act as program administrator (the "Program Administrator") of the InvestLink-SM- Program (the "Program"). The purpose of the Program is to provide interested investors with a simple and convenient way to invest funds and reinvest dividends in shares of the Fund's common stock ("Shares") at prevailing prices, with reduced brokerage commissions and fees. An interested investor may join the Program at any time. Purchases of Shares with funds from a participant's cash payment or automatic account deduction will begin on the next day on which funds are invested. If a participant selects the dividend reinvestment option, automatic investment of dividends generally will begin with the next dividend payable after the Program Administrator receives his enrollment form. Once in the Program, a person will remain a participant until he terminates his participation or sells all Shares held in his Program account, or his account is terminated by the Program Administrator. A participant may change his investment options at any time by requesting a new enrollment form and returning it to the Program Administrator. A participant will be assessed certain charges in connection with his participation in the Program. First-time investors will be subject to an initial service charge which will be deducted from their initial cash deposit. All optional cash deposit investments will be subject to a service charge. Sales processed through the Program will have a service fee deducted from the net proceeds, after brokerage commissions. In addition to the transaction charges outlined above, participants will be assessed per share processing fees (which include brokerage commissions.) Participants will not be charged any fee for reinvesting dividends. The number of Shares to be purchased for a participant depends on the amount of his dividends, cash payments or bank account or payroll deductions, less applicable fees and commissions, and the purchase price of the Shares. The Program Administrator uses dividends and funds of participants to purchase Shares of the Fund's common stock in the open market. Such purchases will be made by participating brokers as agent for the participants using normal cash settlement practices. All Shares purchased through the Program will be allocated to participants as of the settlement date, which is usually three business days from the purchase date. In all cases, transaction processing will occur within 30 days of the receipt of funds, except where temporary curtailment or suspension of purchases is necessary to comply with applicable provisions of the Federal Securities laws or when unusual market conditions make prudent investment impracticable. In the event the Program Administrator is unable to purchase Shares within 30 days of the receipt of funds, such funds will be returned to the participants. The average price of all Shares purchased by the Program Administrator with all funds received during the time period from two business days preceding any investment date up to the second business day preceding the next investment date shall be the price per share allocable to a participant in connection with the Shares purchased for his account with his funds or dividends received by the Program Administrator during such time period. The average price of all Shares sold by the Program Administrator pursuant to sell orders received during such time period shall be the price per share allocable to a participant in connection with the Shares sold for his account pursuant to his sell orders received by the Program Administrator during such time period. BankBoston, N.A., as Program Administrator administers the Program for participants, keeps records, sends statements of account to participants and performs other duties relating to the Program. Each participant in the Program will receive a statement of his account following each purchase of Shares. The statements will also show the amount of dividends credited to such participant's account (if applicable), as well as fees paid by the participant. In addition, each participant will receive copies of the Fund's annual and semi-annual reports to shareholders, proxy statements and, if applicable, dividend income information for tax reporting purposes. If the Fund is paying dividends on the Shares, a participant will receive dividends through the Program for all Shares held on the dividend record date on the basis of full and fractional Shares held in his account, and for all other Shares of the Fund registered in his name. The Program Administrator will send checks to the participants for the amounts of their dividends that are not to be automatically reinvested at no cost to the participants. Shares of the Fund purchased under the Program will be registered in the name of the accounts of the respective participants. Unless requested, the Fund will not issue to participants certificates for Shares of the Fund purchased under the Program. The Program Administrator will hold the Shares in book-entry form until a Program participant chooses to withdraw his Shares or terminate his participation in the Program. The number of Shares purchased for a participant's account under the Program will be shown on his statement of account. This feature protects against loss, theft or destruction of stock certificates. A participant may withdraw all or a portion of the Shares from his Program account by notifying the Program Administrator. After receipt of a participant's request, the Program Administrator will issue to such participant certificates for the whole Shares of the Fund so withdrawn or, if requested by the participant, sell the Shares for him and send him the proceeds, less applicable brokerage commissions, fees, and transfer taxes, if any. If a participant withdraws all full and fractional Shares in his Program account, his participation in the Program will be terminated by the Program Administrator. In no case will certificates for fractional Shares be issued. The Program Administrator will convert any fractional Shares held by a participant at the time of his withdrawal to cash. Participation in any rights offering, dividend distribution or stock split will be based upon both the Shares of the Fund registered in participants' names and the Shares (including fractional Shares) credited to participants' Program accounts. 26 Any stock dividend or Shares resulting from stock splits with respect to Shares of the Fund, both full and fractional, which participants hold in their Program accounts and with respect to all Shares registered in their names will be automatically credited to their accounts. All Shares of the Fund (including any fractional share) credited to his account under the Program will be voted as the participant directs. The participants will be sent the proxy materials for the annual meetings of shareholders. When a participant returns an executed proxy, all of such shares will be voted as indicated. A participant may also elect to vote his Shares in person at the Shareholders' meeting. A participant will receive tax information annually for his personal records and to help him prepare his U.S. federal income tax return. The automatic reinvestment of dividends does not relieve him of any income tax which may be payable on dividends. For further information as to tax consequences of participation in the Program, participants should consult with their own tax advisors. The Program Administrator in administering the Program will not be liable for any act done in good faith or for any good faith omission to act. However, the Program Administrator will be liable for loss or damage due to error caused by its negligence, bad faith or willful misconduct. Shares held in custody by the Program Administrator are not subject to protection under the Securities Investors Protection Act of 1970. The participant should recognize that neither the Fund nor the Program Administrator can provide any assurance of a profit or protection against loss on any Shares purchased under the program. A participant's investment in Shares held in his Program account is no different than his investment in directly held Shares in this regard. The participant bears the risk of loss and the benefits of gain from market price changes with respect to all his Shares. Neither the Fund nor the Program Administrator can guarantee that Shares purchased under the Program will, at any particular time, be worth more or less than their purchase price. Each participant must make an independent investment decision based on his own judgement and research. While the Program Administrator hopes to continue the Program indefinitely, the Program Administrator reserves the right to suspend or terminate the Program at any time. It also reserves the right to make modifications to the Program. Participants will be notified of any such suspension, termination or modification in accordance with the terms and conditions of the Program. The Program Administrator also reserves the right to terminate any participant's participation in the Program at any time. Any question of interpretation arising under the Program will be determined in good faith by the Program Administrator and any such good faith determination will be final. Any interested investor may participate in the Program. To participate in the Program, an investor who is not already a registered owner of the Shares must make an initial investment of at least $250.00. All other cash payments or bank account deductions must be at least $100.00, up to a maximum of $100,000.00 annually. An interested investor may join the Program by reading the Program description, completing and signing the enrollment form and returning it to the Program Administrator. The enrollment form and information relating to the Program (including terms and conditions) may be obtained by calling the Program Administrator at one of the following telephone numbers: First Time Investors--(888) 697-8026. Current Shareholders--(800) 730-6001. All correspondence regarding the Program should be directed to: BankBoston, N.A., InvestLink Program, P.O. Box 8040, Boston, MA 02266-8040. 27 RECENT DEVELOPMENTS (UNAUDITED) - ------------ Recently, the Securities and Exchange Commission (the "SEC") amended Rule 14a-4(c) under the Securities Exchange Act of 1934, as amended (the "1934 Act") which governs the Fund's use of discretionary proxy voting authority with respect to shareholder proposals that are not being included in the Fund's proxy solicitation material pursuant to Rule 14a-8 of the 1934 Act. In light of these amendments, the Fund's Board of Directors reviewed the By-laws of the Fund and made the following material changes: 1) the percentage of ownership needed for stockholders to request a special meeting has been increased from 25% to a majority of the outstanding capital stock of the Fund entitled to vote at such meeting; 2) the advance notice requirements applicable to stockholder proposals at annual meetings and for nominations by stockholders for election to the Board of Directors have been revised to reflect changes in Rule 14a-4(c); 3) the Board's ultimate authority concerning reimbursement of expenses in soliciting proxies for the election of Directors has been clarified; and 4) the power to amend the By-laws is reserved to the Board of Directors. The Fund's By-laws are on file with the SEC and are accessible through the SEC web site (www.sec.gov) or may be obtained from the Secretary of the Fund upon request. 28 4946-AR-99 -----END PRIVACY-ENHANCED MESSAGE-----