-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Q4I9jCHOHepREZECTE5tQIXAjsBe2Uk7fTcGXCjdCkFOEavL1anlm/EtTivFg7Kv xDhCQAZ3J5rkLbkp+a7ixA== 0000950109-95-003543.txt : 19950901 0000950109-95-003543.hdr.sgml : 19950901 ACCESSION NUMBER: 0000950109-95-003543 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950830 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEA INCOME FUND INC 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: 1940 Act SEC FILE NUMBER: 811-05012 FILM NUMBER: 95569096 BUSINESS ADDRESS: STREET 1: 73 TREMONT ST STREET 2: 8TH FL CITY: BOSTON STATE: MA ZIP: 02108 BUSINESS PHONE: 6175578000 MAIL ADDRESS: STREET 1: 73 TREMONT ST STREET 2: 8TH FL CITY: BOSTON STATE: MA ZIP: 02108 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 FORMER COMPANY: FORMER CONFORMED NAME: FIRST BOSTON QUALITY INCOME FUND INC DATE OF NAME CHANGE: 19870329 N-30D 1 SEMI ANNUAL REPORT BEA INCOME FUND, INC. 153 EAST 53RD STREET NEW YORK, NY 10022 ================================================================================ OFFICERS AND DIRECTORS Daniel H. Sigg Michael A. Pignataro Chairman and Chief Vice President Executive Officer Richard J. Lindquist Robert Moore Vice President President and Chief Investment Officer Hal Liebes Secretary Prof. Enrique R. Arzac Director Harvey M. Rosen Treasurer Lawrence J. Fox Director Paul P. Stamler Assistant Treasurer James S. Pasman, Jr. Director John M. Corcoran Assistant Treasurer ================================================================================ INVESTMENT ADVISER BEA Associates 153 East 53rd Street New York, NY 10022 - -------------------------------------------------------------------------------- ADMINISTRATOR United States Trust Company of New York 73 Tremont Street Boston, Massachusetts 02108 - -------------------------------------------------------------------------------- CUSTODIAN United States Trust Company of New York 770 Broadway New York, New York 10003 - -------------------------------------------------------------------------------- SHAREHOLDER SERVICING AGENT United States Trust Company of New York 770 Broadway New York, New York 10003 Phone 1-800-428-8890 - -------------------------------------------------------------------------------- LEGAL COUNSEL Willkie Farr & Gallagher 153 East 53rd Street New York, NY 10022 - -------------------------------------------------------------------------------- INDEPENDENT ACCOUNTANTS Price Waterhouse LLP 160 Federal Street Boston, Massachusetts 02110 ================================================================================ INCREASE YOUR FUND HOLDINGS THROUGH DIVIDEND REINVESTMENT AND DIRECT CASH PURCHASES The Fund offers the opportunity for all shareholders to participate in the Fund's Dividend Reinvestment and Cash Purchase Plan (the "Plan"). Under the Plan, participating shareholders receive, in lieu of cash dividends, common stock of the Fund. In addition, participants in the Plan have the option of making voluntary cash payments of $100 to $3,000 (per investment period), plus any dividends received in cash, to the Plan Agent to purchase Fund shares in the open market. A brochure further describing the Plan and additional information concerning terms and conditions, and any applicable charges relating to the Plan, can be obtained from the Plan's agent at (800) 428-8890. IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII BEA INCOME FUND, INC. IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII SEMI-ANNUAL REPORT JUNE 30, 1995 BEA Income Fund, Inc. - ------- To Our Shareholders: During the second quarter of 1995, the U.S. Treasury market's 6.24% return exceeded its first quarter 1995 return by 1.58%, making it the highest positive quarterly return since the third quarter of 1992. For the quarter as a whole, yields on 2-year Treasuries declined by 99 basis points, from 6.78% to 5.79%, while yields on 30-year Treasuries dropped 81 basis points, from 7.43% to 6.62%. The BEA Income Fund earned a net total return of 5.26% during the second quarter based on net asset value and reinvestment of dividends. As a result of the greater drop in short-term yields, the yield curve steepened by 18 basis points during the quarter due to the differential in the decline in yield of the 2-year note versus the 30-year bond. The continuation during the second quarter of the rally begun in March can be attributed to the atmosphere surrounding the U.S. capital markets, which continued to be permeated by the belief that the U.S. economy is slowing down and is headed for a "soft landing", with all eyes still focused on what, if any, actions the Federal Reserve would take. As a result, the fixed income market continued to perform well during the quarter with yields dropping to a 14-month low in May and remaining at these levels through June. Again, key to this overall positive environment was evidence of an economic slowdown and continued moderate inflation as measured by the marginal increase in the Producer Price Index coupled with the volume of central bank buying of Treasury securities which occurred in February and March. June was the most volatile of the three months that comprised the quarter, with larger-than- expected price movements following data releases that were out of sync with market expectations. Specifically, the benchmark 30-year Treasury bond jumped 2 points following the report of a 17-month high in the number of Americans who filed for initial unemployment benefits, only to be offset later in the month by a larger-than-expected gain in durable goods orders and a surge of 19.9% in new homes sales. This activity underscores the extreme sensitivity of the market given the mixed messages, i.e., declines in the index of leading indicators while specific indicator-type data (a rebound in U.S. factory orders for big ticket goods, rising consumer confidence, rise in home sales, steady employment) point to economic strength. Finally, the much anticipated move by the Federal Reserve occurred on Thursday, July 6th with a 25 basis point drop in the Fed Funds rate to 5.75%, the first such drop in nearly three years. The bond market immediately rallied with market consensus supporting a series of further Fed easing moves as evidenced by the fact that a 50 basis point drop had already been priced into the market. On Friday morning, however, questions arose as to whether the Fed's action was premature when a higher-than-expected new jobs number was released, raising speculation that the Fed would not ease again soon. These fears were short-lived as other data were released later in the day suggesting that the economy would not mend without the Fed's help. The U.S. High Yield market posted strong positive performance for the quarter as yield-seeking new cash buyers continued to enter the market, interest rates continued to trend lower and positive news releases permeated the market. The Salomon Brother High Yield Market Index posted a 6.15% return for the quarter and 12.24% year-to-date (returns are unannualized). Airlines, pharmaceuticals and telecommunications sectors posted the largest gains. Within the high grade sector of the Fund, we continue to maintain a duration neutral stance relative to appropriate benchmarks and emphasize mortgage- and asset-backed securities and select BBB-rated issues. Sectorwise, we will continue to focus on high yield investments. It is still our intention to maintain a relatively high allocation to the high yield market in 1 anticipation of improving fundamental and technical conditions. We expect the high yield market to continue to track the directional movements of the debt and equity markets, albeit, with less volatility for the market as a whole near-term than it has experienced in 1994. We do expect the market to continue to be volatile on an individual credit basis as bonds react to news releases. We expect July and August to continue to experience a slowdown from the levels in May and June of the new issue calendar. In addition, the new issue calendar is not expected to reprice certain sectors of the high yield market as it did in June. Our long-term outlook continues to be positive for the credit fundamentals of many high yield issuers. Our strategy continues to be focused on opportunistically investing in companies that we believe offer operating performance improvement and deleveraging potential over the longer-term. Finally, the changes we discussed in our last letter as a result of the transfer of the CS First Boston Investment Management business to its affiliate, BEA Associates, were approved. As a result, among other things, the Fund will now be known as BEA Income Fund, Inc. (symbol FBF) and a new advisory agreement was executed with BEA Associates. In addition, the following management changes were effected: Daniel H. Sigg was elected as Chairman and Chief Executive Officer, Robert Moore, became the Fund's President and Chief Investment Officer, and Joseph Huber's resignation as Chairman was accepted. We thank you for your interest in the Fund and would be pleased to respond to your questions or comments. Respectfully, Robert J. Moore President and Chief Investment Officer August 11, 1995 2 PORTFOLIO OF INVESTMENTS (UNAUDITED) - ------- June 30, 1995
Face Value Moody's Amount (000) Ratings (000) (Note A-1) - --------------------------------------------------------------------------- - ------------ CORPORATE OBLIGATIONS (82.3%) - --------------------------------------------------------------------------- - ------------ COMMUNICATIONS (12.6%) Adelphia Communications Series B, Sr. Notes (/4/) 9.50%, 2/15/04 B3 $ 548 $ 451 12.50%, 5/15/02 B3 650 647 (/8/) American Telecasting, Inc. Sr. Discount Notes 0.00%, 6/15/04 Caa 1,500 885 (/8/) Australias Media Ltd. Sr. Sub. Disc. Notes 0.00%, 5/15/03 B3 650 341 Cablevision Industry Corp. Sr. Sub. Notes 9.25%, 4/1/08 B1 975 1,009 Cablevision System Corp. Sr. Sub. Notes 9.875%, 2/15/13 B3 500 522 Chancellor Broadcasting Co. Gtd. Sr. Sub. Notes 12.50%, 10/1/04 B3 1,000 1,035 Citicasters, Inc., Series B Sr. Sub. Notes 9.75%, 2/15/04 N/R 1,500 1,496 Continental Cablevision, Inc. Sr. Sub. Notes 9.50%, 8/1/13 Ba2 850 875 11.00%, 6/1/07 B1 1,650 1,832 (/8/) Dial Call Communications Sr. Discount Notes 0.00%, 4/15/04 Caa 750 360 (/4/) Falcon Holdings Group L.P. Sr. Sub. Notes 11.00%, 9/15/03 N/R 1,263 1,175 General Media, Inc., Series B Sr. Notes 10.625%, 12/31/00 B2 625 494 (/3/)(/6/) Granite Broadcasting Corp. Sr. Sub. Notes 10.375%, 5/15/05 B3 300 301 (/8/) Helicon Group Sr. Secured Notes 9.00%, 11/1/03 Caa 2,000 1,820 Heritage Media Sr. Sub. Notes 11.00%, 10/1/02 B2 1,500 1,590 (/8/) Imax Corp., Series B Sr. Notes 7.00%, 3/1/01 B1 1,000 912 Jones Intercable, Inc. Sr. Sub. Notes 11.50%, 7/15/04 B1 1,000 1,105 (/8/) MFS Communications Sr. Notes 0.00%, 1/15/04 B2 $ 900 $ 626 Mobile Telecommunications Technologies Corp. Sr. Sub. Notes 13.50%, 12/15/02 B2 500 536 (/8/) Nextel Communications Sr. Notes 0.00%, 9/1/03 B3 1,500 840 0.00%, 8/15/04 B3 800 384 (/6/)(/8/) Pagemart, Inc. Sr. Disc. Notes 0.00%, 2/1/05 N/R 2,000 1,220 (/3/)(/6/) Rogers Cablesystems of America, Series A Sr. Notes 10.00%, 3/15/05 Ba3 300 309 Scott Cable Communications, Inc. Sub. Debentures 12.25%, 4/15/01 B3 500 350 (/2/)(/6/) Simmons Cable Sr. Sub. Notes 15.747%, 4/30/96 N/R 750 390 (/8/) Spanish Broadcasting Systems Sr. Notes 7.50%, 6/15/02 B3 1,500 1,413 Summit Communications Sr. Sub. Notes 10.50%, 4/15/05 B3 500 545 United International Holdings Sr. Sec. Debentures Zero Coupon, 1/15/99 B3 2,950 1,785 Univision Network Holding Sub. Notes Zero Coupon, 12/17/02 N/R 1,500 900 -------- GROUP TOTAL 26,148 -------- - --------------------------------------------------------------------------- - ------------ CONSUMER PRODUCTS (5.1%) Doskocil Cos, Sr. Sub. Notes 9.75%, 7/15/00 B2 250 241 Fort Howard Corp. Sub. Notes 10.00%, 3/15/03 B2 1,250 1,231 Jordan Industries Sr. Notes 10.375%, 8/1/03 B3 1,200 1,107 Mail-Well Envelope Sr. Sub. Notes 10.50%, 2/15/04 B3 1,500 1,335
The accompanying notes are an integral part of the financial statements. 3
Face Value Moody's Amount (000) Ratings (000) (Note A-1) - ------------------------------------------------------------------------- - ------------ (/8/) Mail-Well Holdings Sr. Notes 0.00%, 2/15/06 Caa $ 500 $ 215 Marvel III Holdings, Inc. Series B, Sr. Secured Notes 9.125%, 2/15/98 Caa 1,100 1,018 Pilgrim's Pride Corp. Sr. Sub. Notes 10.875%, 8/1/03 B3 1,000 942 (/3/)(/6/) Renaissance Cosmetics Sr. Notes 13.75%, 8/15/01 N/R 1,500 1,470 Revlon Consumer Products, Inc. Sr. Sub. Notes 10.50%, 2/15/03 B3 1,450 1,421 Seven Up/RC Bottling Co. Sr. Secured Notes 11.50%, 8/1/99 Caa 500 440 (/8/) Specialty Foods Acquisition Corp., Series B Sr. Secured Notes 0.00%, 8/15/05 Ca 2,000 1,040 ------ GROUP TOTAL 10,460 ------ - ------------------------------------------------------------------------- - ------------ FINANCE (7.4%) American Express Zero Coupon, 12/12/00 N/R 5,000 3,497 Comcast Corp. Sr. Sub. Notes 9.375%, 5/15/05 B1 300 302 GMAC Medium Term Notes 5.95%, 12/14/98 A3 4,000 3,924 (/3/) Goldman Sachs & Co. Medium Term Notes 6.20%, 2/15/01 A1 3,000 2,910 GPA Holland Medium Term Notes (/3/) 8.50%, 3/3/97 N/R 550 500 (/3/) 8.625%, 1/15/99 Caa 750 574 (/3/) 9.12%, 2/24/99 Caa 250 193 Tiphook Finance Corp. Gtd. Notes 8.00%, 3/15/00 Caa 697 558 Western National Corp. Sr. Notes 7.125%, 2/15/04 Baa1 3,000 2,971 ------ GROUP TOTAL 15,429 ------ - ------------------------------------------------------------------------- - ------------ INDUSTRIAL (13.9%) Adience, Inc. Sr. Secured Notes 11.00%, 6/15/02 N/R 2,000 1,500 (/6/) Alpine Group , Inc. Sr. Secured Notes 13.50%, 12/22/95 N/R 1,000 1,000 AK Steel Corp. Sr. Sub. Notes 10.75%, 4/1/04 Ba3 950 1,000
Face Value Moody's Amount (000) Ratings (000) (Note A-1) - ------------------------------------------------------------------------ - ------------ Arcadian Partners L.P., Series B, Sr. Notes 10.75%, 5/1/05 B2 $ 900 $ 907 Armco, Inc. Sr. Notes 11.375%, 10/15/99 B2 815 831 Bayou Steel Corp. First Mortgage Notes 10.25%, 3/1/01 B2 500 465 Berg Electronics Sr. Sub. Notes 11.375%, 5/1/03 B3 1,000 1,050 Boise Cascade Co. Notes 9.85%, 6/15/02 Baa3 3,000 3,360 Chatwins Group, Inc. Sr. Notes 13.00%, 5/1/03 B2 1,000 820 Container Corp. of America Sr. Notes 9.75%, 4/1/03 B2 500 495 Doman Industries Ltd. Gtd. Sr. Notes 8.75%, 3/15/04 Ba3 650 618 Easco Corp. Series B, Sr. Notes 10.00%, 3/15/01 B1 500 498 Geneva Steel Co. Sr. Notes 9.50%, 1/15/04 B1 250 179 Genmar Holdings, Series A Sr. Sub. Notes 13.50%, 7/15/01 B3 500 490 Grupo Industrial Durango Yankee Notes 12.00%, 7/15/01 B1 250 188 (/3/) Hanson America, Inc. Conv. Debentures 2.39%, 3/1/01 A3 2,000 1,598 (/8/) Harris Chemical Sr. Secured Notes 0.00%, 7/15/01 B2 1,425 1,293 Sr. Sub. Notes 10.75%, 10/15/03 B3 1,000 940 Huntsman Corp. First Mortgage Notes 11.00%, 4/15/04 B1 750 819 (/8/) Indspec Chemical Sr. Sub. Notes 0.00%, 12/1/03 B3 1,496 942 Malette, Inc. Sr. Secured Notes 12.25%, 7/15/04 Ba3 1,750 1,938 NL Industries Sr. Secured Debentures 11.75%, 10/15/03 B1 500 521 Repap Wisconsin, Inc. Sr. Notes 9.875%, 5/1/06 B3 400 386
The accompanying notes are an integral part of the financial statements. 4
Face Value Moody's Amount (000) Ratings (000) (Note A-1) - ----------------------------------------------------------------------- - ------------ Trans Resources, Inc. Sr. Sub. Notes 11.875%, 7/1/02 B2 $ 500 $ 454 UCC Investor's Holdings, Inc. Sr. Sub. Notes 11.00%, 5/1/03 B3 1,500 1,532 Uniroyal Technology Corp. Sr. Notes 11.75%, 6/1/03 B2 500 445 USX Corp. Notes 9.625%, 8/15/03 Baa3 3,000 3,350 WCI Steel, Inc., Series B Sr. Notes 10.50%, 3/1/02 B1 600 585 WHX Corp. Sr. Notes 9.375%, 11/15/03 B1 500 455 ------ GROUP TOTAL 28,659 ------ - ----------------------------------------------------------------------- - ------------ MANUFACTURING (13.7%) (/8/) American Standard Cos. Sr. Sub. Notes 0.00%, 6/1/05 B1 2,100 1,596 Associated Materials, Inc. Sr. Sub. Notes 11.50%, 8/15/03 B3 500 455 Atlantis Group, Inc. Sr. Notes 11.00%, 2/15/03 B2 1,740 1,714 (/8/) Building Materials Corp. Series B, Notes 0.00%, 7/1/04 B1 1,300 774 Consoltex Group, Inc. Sr. Sub. Notes 11.00%, 10/1/03 B2 1,000 915 (/3/)(/8/) Crown Packaging Holdings Sr. Sub. Notes 0.00%, 11/1/03 Caa 2,550 1,148 Domtar, Inc. Yankee Debentures 11.25%, 9/15/17 Ba1 1,500 1,601 (/8/) Exide Corp. Sr. Sub. Notes 0.00%, 12/15/04 B2 1,000 715 Gaylord Container Corp. Sr. Notes 11.50%, 5/15/01 B3 1,700 1,802 (/8/) Sr. Sub. Notes 0.00%, 5/15/05 Caa 1,000 980 G.I. Holdings, Inc., Series B Sr. Notes Zero Coupon, 10/1/98 Ba3 1,000 670 Interlake Corp. Sr. Sub. Notes 12.125%, 3/1/02 B3 1,000 987
Face Value Moody's Amount (000) Ratings (000) (Note A-1) - -------------------------------------------------------------------------- - ------------ Ithaca Industries, Inc. Sr. Sub. Notes 11.125%, 12/15/02 B2 $ 900 $ 855 Ivex Holdings Corp. Sr. Sub. Notes 12.50%, 12/15/02 B3 500 538 (/8/) 0.00%, 3/15/05 Caa 1,500 810 Mafco, Inc. Sr. Sub. Notes 11.875%, 11/15/02 B3 550 548 MVE Inc., Sr. Notes 12.50%, 2/15/02 B3 650 670 Plastic Specialties & Technology Sr. Secured Notes 11.25%, 12/1/03 B3 500 457 Rexene Corp. Sr. Notes 11.75%, 12/1/04 B1 500 535 Riverwood International Corp. Sr. Sub. Notes 10.375%, 6/30/04 B1 500 550 (/5/)(/6/)(/7/) Rotor Tool Sr. Sub. Notes (acquired 1/26/93, cost $169,200) 12.375%, 4/1/97 N/R 940 564 Sheffield Steel Corp. First Mortgage Notes 12.00%, 11/1/01 N/R 1,250 1,187 (/8/) Silgan Holdings, Inc. Sr. Disc. Notes 0.00%, 12/15/02 B3 1,000 915 Specialty Equipment Co., Inc. Sr. Sub. Notes 11.375%, 12/1/03 B3 1,500 1,541 Stone Container Corp. Sr. Notes 9.875%, 2/1/01 B1 1,250 1,239 Synthetic Industries, Inc. Sr. Sub. Notes 12.75%, 12/1/02 B3 1,450 1,465 Tracor, Inc. Sr. Sub. Notes 10.875%, 8/15/01 B2 500 515 USG Corp., Series B Sr. Sec. Debentures 9.25%, 9/15/01 B1 500 512 U.S. Leather, Inc. Sr. Notes 10.25%, 7/31/03 B2 1,750 1,514 Westpoint Stevens, Inc. Sr. Sub. Notes 9.375%, 12/15/05 B3 500 481 ------ GROUP TOTAL 28,253 ------
The accompanying notes are an integral part of the financial statements. 5
Face Value Moody's Amount (000) Ratings (000) (Note A-1) - ------------------------------------------------------------------------- - ------------ OIL, GAS & ELECTRIC (4.0%) Energy Ventures Sr. Notes 10.25%, 3/15/04 B1 $ 500 $ 511 Forest Oil, Inc. Sr. Sub. Notes 11.25%, 9/1/03 B3 500 460 Giant Industries Sr. Sub. Notes 9.75%, 11/15/03 B2 500 470 Gulf Canada Resources Sr. Sub. Notes 9.25%, 1/15/04 Ba3 900 882 H.S. Resources Sr. Sub. Notes 9.875%, 12/1/03 B1 500 485 Mesa Capital Corp. Secured Notes 12.75%, 6/30/98 Caa 1,725 1,561 Oryx Energy Co. Notes 9.75%, 9/15/98 Ba3 1,000 1,005 Petroleum Heat & Power Sr. Sub. Debentures 12.25%, 2/1/05 B2 200 214 Southeastern Public Service Co. Sr. Sub. Notes 11.875%, 2/1/98 Caa 628 646 Tesoro Petroleum Corp. 13.00%, 12/1/00 B2 1,000 1,010 Wilrig Sr. Sub. Debentures 11.25%, 3/15/04 B2 1,000 1,030 ----- GROUP TOTAL 8,274 ----- - ------------------------------------------------------------------------- - ------------ RETAIL TRADE (5.9%) Big V Supermarkets, Inc. Sr. Sub. Notes 11.00%, 2/15/04 B3 1,675 1,407 Brylane Capital Corp. Sr. Sub. Notes 10.00%, 9/1/03 B2 500 465 County Seat Stores Sr. Sub. Notes 12.00%, 10/1/01 B3 1,520 1,512 Dairy Mart Conveniences Stores, Inc. Sr. Sub. Notes 10.25%, 3/15/04 B3 1,750 1,426 Duane Reade Corp. Sr. Notes 12.00%, 9/15/02 B3 1,500 1,331 Farm Fresh, Inc. Sr. Notes 12.25%, 10/1/00 B2 1,360 1,278 Finlay Fine Jewelry Sr. Notes 10.625%, 5/1/03 B1 500 478
Face Value Moody's Amount (000) Ratings (000) (Note A-1) - -------------------------------------------------------------------------- - ------------ Great American Cookie Series B Sr. Sec. Debentures 10.875%, 1/15/01 B3 $1,250 $1,084 Hill Stores Sr. Notes 10.25%, 9/30/03 Ba3 1,250 1,238 Pathmark Stores, Inc. (/8/) Jr. Sub. Notes 0.00%, 11/1/03 B3 1,450 870 Sr. Sub. Notes 9.625%, 5/1/03 B2 250 244 (/4/) Town & Country Corp. Sr. Sub. Notes 13.00%, 5/31/98 B3 878 351 Waban, Inc. Sr. Sub. Notes 11.00%, 5/15/04 Ba3 500 490 ------ GROUP TOTAL 12,174 ------ - -------------------------------------------------------------------------- - ------------ SERVICES (17.2%) (/2/) Acme Holdings, Inc. Sr. Sub. Notes 11.75%, 6/1/00 Ca 1,000 500 Allied Waste Industries Sr. Sub. Notes 12.00%, 2/1/04 B3 400 404 American Restaurant Group, Inc. Sr. Secured Notes 12.00%, 9/15/98 B2 1,500 1,290 Bally's Casino Holdings, Inc. Sr. Discount Notes Zero Coupon, 6/15/98 B3 1,500 1,028 Bally's Health & Tennis Sr. Sub. Notes 13.00%, 1/15/03 B3 1,000 870 Boomtown, Inc. First Mortgage Notes 11.50%, 11/1/03 B1 500 457 (/5/)(/6/) Capital Gaming International Zero Coupon, 8/1/95 (acquired 7/20/94, cost $900) N/R 1 0 Casino America Corp. First Mortgage Notes 11.50%, 11/15/01 B1 1,000 1,000 CCP Insurance Inc. 10.50%, 12/15/04 Ba1 3,000 3,041 Charter Medical Corp. Sr. Sub. Notes 11.25%, 4/15/04 B2 250 266 Cinemark USA, Inc. Sr. Sub. Notes 12.00%, 6/1/02 B1 500 538 Comdata Network, Inc. Sr. Sub. Notes 13.25%, 12/15/02 B3 1,000 1,125 Community Health Systems Sr. Sub. Notes 10.25%, 11/30/03 B2 500 525
The accompanying notes are an integral part of the financial statements. 6
Face Value Moody's Amount (000) Ratings (000) (Note A-1) - ------------------------------------------------------------------------- - ------------ Continental Medical Systems, Inc. Sr. Sub. Notes 10.375%, 4/1/03 B2 $1,200 $1,224 10.875%, 8/15/02 B2 1,400 1,470 Elsinore Corp. First Mortgage Notes 12.50%, 10/1/00 N/R 1,500 750 G.B. Property Funding First Mortgage Notes 10.875%, 1/15/04 B2 1,100 935 (/4/) General Medical Sub. Notes 12.125%, 8/15/05 B3 1,780 1,940 Gillett Holdings, Inc. Sr. Sub. Notes 12.25%, 6/30/02 N/R 1,000 1,048 GNF Corp., Series B First Mortgage Notes 10.625%, 4/1/03 B2 1,200 1,002 Grand Casinos, Inc., Series B First Mortgage Notes 12.50%, 2/1/00 Ba3 1,000 1,080 (/4/)(/6/) Hemmeter Enterprises, Inc. Sr. Notes 12.00%, 12/15/00 N/R 841 336 Hollywood Casino Corp., Series B, Sr. Secured Notes 14.00%, 4/1/98 N/R 1,000 1,099 (/3/) Icon Health & Fitness, Inc. Series B, Sr. Sub. Notes 13.00%, 7/15/02 B3 500 505 Kloster Cruise Ltd. Sr. Notes 13.00%, 5/1/03 B2 1,250 978 Meditrust Convertible Debentures 7.50%, 3/1/01 Baa3 3,000 2,955 Motels of America, Inc. Sr. Sub. Notes 12.00%, 4/15/04 B3 500 500 Ornda Health Corp. Sr. Sub. Notes 12.25%, 5/15/02 B2 1,000 1,108 Red Roof Inns, Inc. Sr. Notes 9.625%, 12/15/03 B3 900 891 Resorts International Hotel Casino, Inc. Mortgage Notes 11.00%, 9/15/03 N/R 975 858 Sea Containers Sr. Sub. Notes 12.50%, 12/1/04 B1 500 545 Solon Automated Sr. Notes 12.75%, 7/15/01 B1 1,000 985 Station Casinos, Inc. Sr. Sub Notes 9.625%, 6/1/03 B2 450 420
Face Value Moody's Amount (000) Ratings (000) (Note A-1) - -------------------------------------------------------------------------- - ------------ Trump Plaza Funding, Inc. First Mortgage Notes 10.875%, 6/15/01 B3 $ 850 $ 778 (/4/)(/1//0/) Trump Taj Mahal Funding Sr. Debentures 11.35%, 11/15/99 Caa 1,804 1,430 U.S. Banknote Corp., Series B Sr. Sub. Notes 11.625%, 8/1/02 B2 750 615 Wright Medical Technology Series B, Sr. Notes 10.75%, 7/1/00 B3 1,000 1,005 ------- GROUP TOTAL 35,501 ------- - -------------------------------------------------------------------------- - ------------ TRANSPORTATION (2.5%) Americold Corp., Series B First Mortgage Notes 11.50%, 3/1/05 Caa 225 217 CHC Helicopter Sr. Sub. Notes 11.50%, 7/15/02 B3 750 622 Ferrovie dello Stato Notes 9.125%, 7/6/09 N/R 3,000 3,465 USAir, Inc. Sr. Notes 10.00%, 7/1/03 B3 1,000 850 ------- GROUP TOTAL 5,154 ------- - -------------------------------------------------------------------------- - ------------ TOTAL CORPORATE OBLIGATIONS (Cost $174,091,054) 170,052 ------- - -------------------------------------------------------------------------- - ------------ GOVERNMENT & AGENCY SECURITIES (4.0%) - -------------------------------------------------------------------------- - ------------ COLLATERALIZED MORTGAGE OBLIGATIONS (3.6%) Federal Home Loan Mortgage Corporation REMIC-PAC 32-C 9.50%, 3/15/20 Aaa 1,000 1,111 ------- - -------------------------------------------------------------------------- - ------------ Federal National Mortgage Association REMIC Series 89-23D 10.20%, 9/25/18 Aaa 4,348 4,712 Strip Series H-2 11.50%, 5/1/09 Aaa 1,477 1,612 ------- GROUP TOTAL 6,324 ------- - -------------------------------------------------------------------------- - ------------ GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (0.2%) Various Pools: 10.50%, 9/15/15-8/15/16 Aaa 364 401 ------- - -------------------------------------------------------------------------- - ------------ U.S. TREASURY BOND (0.2%) 7.125%, 2/15/23 Aaa 290 306 ------- - -------------------------------------------------------------------------- - ------------ TOTAL GOVERNMENT & AGENCY SECURITIES (Cost $7,924,334) 8,142 ------- - -------------------------------------------------------------------------- - ------------
The accompanying notes are an integral part of the financial statements. 7
Face Value Moody's Amount (000) Ratings (000) (Note A-1) - ------------------------------------------------------------------------------ - ------------ COLLATERALIZED SECURITIES (4.2%) - ------------------------------------------------------------------------------ - ------------ COLLATERALIZED MORTGAGE OBLIGATIONS (4.2%) Drexel, Burnham, & Lambert Trust REMIC-PAC Series S-2 9.00%, 8/1/18 Aaa $8,146 $8,732 ------ - ------------------------------------------------------------------------------ - ------------ TOTAL COLLATERALIZED SECURITIES (Cost $8,686,100) 8,732 ------ - ------------------------------------------------------------------------------ - ------------ ASSET BACKED OBLIGATIONS (3.8%) - ------------------------------------------------------------------------------ - ------------ Green Tree Financial Corp. Series 1993-4, Class B1 7.20%, 1/15/19 Baa3 2,000 1,950 Household Affinity Credit Card Master Trust I Series 93-B, Class B 4.95%, 3/15/99 A2 2,500 2,451 (/9/) Merrill Lynch Home Equity Acceptance Trust Series 1994-A, Class A2 (/9/) 6.875%, 7/17/22 A3 2,434 2,439 (/3/) Resolution Trust Co. Series 1994-N1A, Class 2 6.00%, 1/15/04 Baa2 1,000 999 - ------------------------------------------------------------------------------ - ------------ TOTAL ASSET BACKED OBLIGATIONS (Cost $7,776,465) 7,839 ------ - ------------------------------------------------------------------------------ - ------------ Shares - ------------------------------------------------------------------------------ - ------------ COMMON STOCKS (0.6%) - ------------------------------------------------------------------------------ - ------------ COMMUNICATIONS (0.0%) Pagemart, Inc. 7,000 0 ------ - ------------------------------------------------------------------------------ - ------------ CONSUMER PRODUCTS (0.5%) (/1/)(/5/)(/6/) Applause Enterprises, Inc. (acquired 11/8/91, cost $144,400) 3,800 13 Grand Union Co. 18,063 262 (/1/)(/6/) Mail-Well, Inc. 2,500 0 (/1/) Specialty Foods, Inc. 30,000 60 (/1/)(/5/)(/6/) TLC Beatrice Enterprises, Inc. (acquired 11/19/91-11/26/91 cost $1,018,800) 25,000 750 ------ GROUP TOTAL 1,085 ------ - ------------------------------------------------------------------------------ - ------------ FINANCE (0.0%) Capital Holding Corp. 6,667 6 (/1/)(/5/)(/6/)(/7/) Westfed Holdings, Inc., Series B (acquired 9/20/88, cost $400) 12,670 0 ------ GROUP TOTAL 6 ------ - ------------------------------------------------------------------------------ - ------------ MANUFACTURING (0.1%) (/5/)(/6/)(/7/) CIC Acquisition Corp. (acquired 10/18/89, cost $1,076,700) 2,944 200 (/1/) Polyvision Corp. 3,701 12 ------ GROUP TOTAL 212 ------ - ------------------------------------------------------------------------------ - ------------ RETAIL TRADE (0.0%) (/1/)(/5/) Jewel Recovery L.P. (acquired 7/30/93, cost $0) 49,559 0 ------ - ------------------------------------------------------------------------------ - ------------ SERVICES (0.0%) (/1/)(/5/)(/6/) Lady Luck Gaming Corp. (acquired 2/15/94-2/18/94, cost $144,500) 11,040 $ 4 (/3/) Motels of America, Inc. 500 38 ------ GROUP TOTAL 42 ------ - ------------------------------------------------------------------------------ - ------------ TOTAL COMMON STOCKS (Cost $2,922,785) 1,345 ------ - ------------------------------------------------------------------------------ - ------------ PREFERRED STOCKS (1.0%) - ------------------------------------------------------------------------------ - ------------ COMMUNICATIONS (0.2%) (/3/) SD Warren Co. 12,000 336 ------ - ------------------------------------------------------------------------------ - ------------ FINANCE (0.0%) (/1/)(/5/)(/6/)(/7/) Westfed Holdings, Inc., Class A (acquired 9/20/88-6/18/93, cost $3,612,000) 42,759 0 ------ - ------------------------------------------------------------------------------ - ------------ MANUFACTURING (0.0%) Alpine Group, Inc. 1,659 75 ------ - ------------------------------------------------------------------------------ - ------------ OIL, GAS & ELECTRIC (0.8%) (/1/) Consolidated Hydro, Inc., Class H 3,000 1,635 ------ - ------------------------------------------------------------------------------ - ------------ TOTAL PREFERRED STOCKS (Cost $5,423,973) 2,046 ------ - ------------------------------------------------------------------------------ - ------------ WARRANTS (0.3%) - ------------------------------------------------------------------------------ - ------------ (/1/) American Telecasting, Inc., expiring 6/23/99 7,500 19 (/1/)(/3/) Boomtown, Inc., expiring 11/1/98 500 0 (/1/)(/3/)(/6/) Capital Gaming International, expiring 2/1/99 5,687 1 (/1/) Casino America Corp., expiring 11/15/96 3,263 0 (/1/) Casino Magic Corp., expiring 10/14/96 9,000 0 (/1/) Chatwins Group, Inc., expiring 5/3/03 1,000 0 (/1/) CHC Helicopter, expiring 12/15/00 6,000 6 (/1/) Consolidated Hydro, Inc., expiring 12/31/03 5,400 27 (/1/) County Seat Stores, expiring 10/15/98 1,520 3 (/1/)(/6/) Crown Packaging Holdings, expiring 11/1/03 2,000 44 (/1/) Dial Call Communications, expiring 4/25/99 750 1 (/1/)(/3/) Elsinore Corp., expiring 10/8/98 79,941 0 General Media, (/1/) expiring 12/22/00 500 5 (/1/) expiring 12/31/00 625 6 (/1/)(/3/) Great American Cookie, expiring 1/30/00 225 0 (/1/) Hemmeter, expiring 12/15/99 9,000 0 (/1/)(/3/) Icon Health Fitness, Inc., expiring 11/14/99 500 0
The accompanying notes are an integral part of the financial statements. 8
Value (000) Shares (Note A-1) - ------------------------------------------------------------------------- - ------------ (/1/) MVE Inc., expiring 2/15/02 1,415 $ 0 (/1/) Presidential Riverboat Casinos, expiring 9/23/96 6,000 0 (/1/)(/3/) Purity Supreme, expiring 8/1/97 5,198 0 (/1/)(/3/) Renaissance Cosmetics, expiring 4/3/01 3,000 53 (/1/) SD Warren Co., expiring 12/15/06 12,000 72 (/1/) Sheffield Steel Corp., expiring 11/01/01 6,250 38 (/1/) Spanish Broadcasting System, expiring 6/29/99 1,500 270 (/1/) Uniroyal Technology Corp., expiring 6/1/03 5,000 10 (/1/) United International Holdings, expiring 11/15/99 2,950 0 (/1/)(/3/) Wright Medical Technology, expiring 6/30/03 618 102 - ------------------------------------------------------------------------- - ------------ TOTAL WARRANTS (Cost $420,096) 657 -------- - ------------------------------------------------------------------------- - ------------ Face Moody's Amount Ratings (000) - ------------------------------------------------------------------------- - ------------ UNITS (2.0%) - ------------------------------------------------------------------------- - ------------ CORPORATE OBLIGATIONS (2.0%) (/3/)(/6/)(/8/) Commodore Media, Inc. 7.50%, 5/1/03 N/R $ 300 265 (/3/)(/6/) Gulf States Steel 13.50%, 4/15/03 B1 400 387 (/3/)(/6/)(/8/) In-Flight Phone Corp. 0.00%, 5/15/02 Caa 1,000 590 Petro PSC Properties/Petro Finance 12.50%, 6/1/02 B3 500 523 Santa Fe Hotel, Inc. 11.00%, 12/15/00 B2 400 376 (/3/)(/6/) Terex Corp. 13.75%, 5/15/02 Caa 1,500 1,335 (/3/)(/9/) Thermoscan, Inc. 13.50%, 8/15/01 N/R 500 550 - ------------------------------------------------------------------------- - ------------ TOTAL UNITS (Cost $3,547,504) 4,026 -------- - ------------------------------------------------------------------------- - ------------ TOTAL INVESTMENTS (98.2%) (Cost $210,792,311) 202,839 -------- - ------------------------------------------------------------------------- - ------------ OTHER ASSETS IN EXCESS OF LIABILITES (1.8%) 3,821 -------- - ------------------------------------------------------------------------- - ------------ NET ASSETS (100%) Applicable to 24,385,367 issued and outstanding $.001 par value shares (authorized 100,000,000 shares) $206,660 -------- - ------------------------------------------------------------------------- - ------------
N/R--Not Rated. PAC--Planned Amortization Class. REMIC--Real Estate Mortgage Investment Conduit. (/1/) Non-income producing security. (/2/) Defaulted security. (/3/) 144A Security. Certain conditions for public sale may exist. (/4/) Payment in kind bond. Market value includes accrued interest. (/5/) Restricted as to private and public resale. Total cost of restricted securities at June 30, 1995 aggregated $6,166,900. Total market value of restricted securities owned at June 30, 1995 was $1,531,000 or 0.7% of net assets. (/6/) Private Placement. (/7/) Securities for which market quotations are not readily available are valued at fair value as determined in good faith by the Board of Directors. (/8/) Step Bond--Coupon rate is low or zero for an intial period and then increases to a higher coupon rate thereafter. (/9/) Floating Rate--The interest rate changes on these instruments based upon a designated base rate. The rates shown are those in effect at June 30, 1995. (/10/ 9.375% of 11.35% represents amount paid in cash, the remainder is payment in kind. The accompanying notes are an integral part of the financial statements. 9 STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995 (Unaudited) (000) - ------------------------------------------------------------------------------- ASSETS: Investments at Value (Cost $210,792) (Note A-1)........................................ $202,839 Receivables: Interest (Note A-4)................................................ 4,663 Investments Sold................................................... 1,146 Other Assets....................................................... 48 - ------------------------------------------------------------------------------- Total Assets...................................................... 208,696 - ------------------------------------------------------------------------------- LIABILITIES: Payables: Dividends.......................................................... 1,463 Investment Advisory Fees (Note B).................................. 257 Bank Overdraft..................................................... 181 Shareholder Servicing Fees......................................... 37 Administrative Fees (Note C)....................................... 22 Custodian Fees..................................................... 13 Other Liabilities.................................................. 63 - ------------------------------------------------------------------------------- Total Liabilities................................................. 2,036 - ------------------------------------------------------------------------------- NET ASSETS.......................................................... $206,660 ======== NET ASSETS CONSIST OF: Paid in Capital.................................................... $225,000 Undistributed Net Investment Income................................ 2,410 Accumulated Net Realized Loss...................................... (12,797) Unrealized Depreciation on Investments............................. (7,953) -------- NET ASSETS APPLICABLE TO 24,385,367 ISSUED AND OUTSTANDING $.001 PAR VALUE SHARES (AUTHORIZED 100,000,000 SHARES)....................... $206,660 ======== NET ASSET VALUE PER SHARE........................................... $ 8.47 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1995 (Unaudited) (000) - ---------------------------------------------------------------------------------- INVESTMENT INCOME: Interest (Note A-4)..................................................... $11,438 - ---------------------------------------------------------------------------------- EXPENSES: Investment Advisory Fees (Note B)....................................... 501 Administrative Fees (Note C)............................................ 129 Shareholder Servicing Fees.............................................. 86 Shareholders' Reports................................................... 54 Professional Fees....................................................... 28 Custodian Fees.......................................................... 24 Directors' Fees and Expenses............................................ 19 Other Expenses.......................................................... 46 - ---------------------------------------------------------------------------------- Total Expenses......................................................... 887 - ---------------------------------------------------------------------------------- Net Investment Income................................................. 10,551 - ---------------------------------------------------------------------------------- Net Realized Loss on Investments......................................... (905) Change in Unrealized Appreciation/ Depreciation on Investments........... 11,852 - ---------------------------------------------------------------------------------- Net Realized Loss and Change in Unrealized Appreciation/Depreciation..... 10,947 - ---------------------------------------------------------------------------------- Net Increase in Net Assets Resulting from Operations..................... $21,498 - ---------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 10 STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended June 30, 1995 Year Ended (Unaudited) December 31, 1994 (000) (000) - --------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net Investment Income..................... $ 10,551 $ 20,163 Net Realized Gain (Loss) on Investments... (905) 950 Net Change in Unrealized Appreciation/Depreciation on Investments. 11,852 (26,532) - --------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................. 21,498 (5,419) - --------------------------------------------------------------------------------- DISTRIBUTIONS: Net Investment Income..................... (11,217) (17,557) - --------------------------------------------------------------------------------- Total Net Increase (Decrease) in Net Assets.................................. 10,281 (22,976) - --------------------------------------------------------------------------------- NET ASSETS: Beginning of Period....................... 196,379 219,355 - --------------------------------------------------------------------------------- End of Period (Including undistributed net investment income of $2,410 and $3,076 respectively)............................ $206,660 $196,379 - --------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Six Months Ended Year Ended December 31, PER SHARE OPERATING June 30, 1995 ------------------------------------------------ PERFORMANCE: (Unaudited) 1994 1993 1992 1991 1990 - -------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD.... $ 8.05 $ 9.00 $ 8.42 $ 8.28 $ 7.25 $ 8.32 - -------------------------------------------------------------------------------------------- Investment Activities: Net Investment Income.. 0.43 0.83 0.91 0.89 0.89 0.87 Net Realized and Unrealized Gain (Loss) on Investments........ 0.45 (1.06) 0.57 0.08 1.04 (1.04) - -------------------------------------------------------------------------------------------- Total from Investment Activities............. 0.88 (0.23) 1.48 0.97 1.93 (0.17) - -------------------------------------------------------------------------------------------- Distributions: Net Investment Income.. (0.46) (0.72) (0.90) (0.83) (0.90) (0.90) - -------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD................. $ 8.47 $ 8.05 $ 9.00 $ 8.42 $ 8.28 $ 7.25 - -------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------- PER SHARE MARKET VALUE, END OF PERIOD.......... $ 7.63 $ 7.00 $ 8.50 $ 8.38 $ 8.38 $ 6.38 - -------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------- TOTAL INVESTMENT RETURN: Net Asset Value (1).... 11.26%# (2.67)% 18.47% 11.95% 27.71% (2.06)% Market Value........... 14.89%# (9.48)% 12.46% 12.09% 50.81% (6.12)% - -------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------- RATIOS SUPPLEMENTAL DATA: - -------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------- Net Assets, End of Period (Thousands)..... $206,660 $196,379 $219,355 $203,846 $199,857 $175,390 - -------------------------------------------------------------------------------------------- Ratio of Expenses to Average Net Assets..... 0.89%* 0.83% 0.88% 0.86% 0.87% 0.89% Ratio of Net Investment Income to Average Net Assets................. 10.53%* 9.75% 10.34% 10.38% 11.12% 11.26% Portfolio Turnover Rate. 27.32% 70.6% 117.5% 115.2% 53.3% 61.4% - --------------------------------------------------------------------------------------------
* Annualized # Not Annualized (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. The accompanying notes are an integral part of the financial statements. 11 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) BEA Income Fund, Inc. (the "Fund"), formerly CS First Boston Income Fund, Inc., was incorporated on February 11, 1987 and is registered as a diversified, closed-end investment company under the Investment Company Act of 1940. A.The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. 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 the 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 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 $764,000 (or 0.37% of net assets) at June 30, 1995. 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"). 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. Paid in capital, undistributed net investment income and accumulated net realized loss have been adjusted for prior period permanent book-tax differences. 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. 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. Dividends and distributions are recorded on the ex-dividend date. Income distributions and capital gain distributions are determined in accordance with U.S. Federal Income Tax regulations which may differ from generally accepted accounting principles. B. Effective June 13, 1995, 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. Prior to June 13, 1995, CS First Boston Investment Management Corporation provided investment advisory services to the Fund under substantially the same terms, conditions and fees as stated above. C. United States Trust Company of New York ("U.S. Trust"), through its wholly owned subsidiary, Mutual Funds Service Company, provides administrative services to the Fund under an Administration Agreement. Under the Agreement, the Administrator is paid a fee, computed weekly and payable monthly at an annual rate of .15% of the Fund's first $100 million average weekly net assets, .10% of the Fund's next $300 million average weekly net assets and .05% of the Fund's average weekly net assets in excess of $400 million. U.S. Trust also provides custodial and transfer agent services. Under the Custody Agreement, U.S. Trust is paid a fee, computed weekly and payable monthly at an annual rate of .03% of the Fund's first $50 million of average weekly net assets .02% of the Fund's next $50 million of average weekly net assets and .01% of the Fund's average weekly net assets in excess of $100 12 million. Under the Transfer Agent Agreement, U.S. Trust is paid a fee based on the number of accounts in the Fund per year. D.During the six months ended June 30, 1995, the Fund made purchases of $48,997,242 and sales of $51,533,564 of investment securities other than U.S. Government securities and short term investments. During the six months ended June 30, 1995, purchases and sales of U.S. Government securities were $7,741,379 and $2,995,704, respectively. At June 30, 1995, the cost of investments for Federal income tax purposes was $210,792,311. Accordingly, net unrealized depreciation for Federal income tax purposes aggregated $7,953,133, of which $5,744,819 related to appreciated securities and $13,697,952 related to depreciated securities. During the year ended December 31, 1994 the Fund utilized capital loss carryover for federal income tax purposes of $2,360,326. At December 31, 1994 the Fund had a capital loss carryforward of approximately $10,473,000 available to offset future capital gains of which $1,139,000, $4,585,000, $883,000 and $3,866,000 will expire on December 31, 1997, 1998, 1999 and 2000, respectively. Net capital losses incurred after October 31 and within the taxable year are deemed to arise on the first business day of a portfolio's next taxable year. The Fund incurred and elected to defer, net capital losses of approximately $1,419,600 for the year ended December 31, 1994. E.At June 30, 1995, 69.1% 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. F.The Fund's Board of Directors has approved a share repurchase program authorizing the Fund from time to time to make open-market purchases on the New York Stock Exchange of up to 10 percent of the Fund's shares outstanding as of December 11, 1990. There were no repurchases of shares during the six months ended June 30, 1995. G.Summary of quarterly results of operations:
AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS THREE MONTHS ENDED ------------------------------------------------------------------ MARCH 31, 1995 JUNE 30, 1995 --------------- --------------- Investment Income........ $ 5,429 $ 0.22 $ 6,009 $ 0.25 Net Investment Income.... 4,969 0.20 5,582 0.23 Net Realized Loss and Change in Unrealized Appreciation/Depreciation on Investments.......... 5,992 0.25 4,955 0.20 Net Increase in Net Assets Resulting from Operations.............. 10,961 0.45 10,537 0.43 SEPTEMBER 30, DECEMBER 31, MARCH 31, 1994 JUNE 30, 1994 1994 1994 --------------- --------------- --------------- --------------- Investment Income........ $ 5,427 $ 0.22 $ 5,532 $ 0.23 $ 5,512 $ 0.23 $ 5,412 $ 0.22 Net Investment Income.... 4,954 0.20 5,093 0.21 5,105 0.21 5,011 0.21 Net Realized Gain (Loss) and Change in Unrealized Appreciation/Depreciation on Investments.......... (6,727) (0.28) (7,923) (0.32) (6,059) (0.25) (4,873) (0.21) Net Increase (Decrease) in Net Assets Resulting from Operations......... (1,773) (0.08) (2,830) (0.11) (954) (0.04) 138 0.00 SEPTEMBER 30, DECEMBER 31, MARCH 31, 1993 JUNE 30, 1993 1993 1993 --------------- --------------- --------------- --------------- Investment Income........ $ 6,262 $ 0.18 $ 6,030 $ 0.25 $ 5,372 $ 0.29 $ 6,291 $ 0.26 Net Investment Income.... 5,782 0.16 5,558 0.23 4,907 0.27 5,833 0.25 Net Realized Gain (Loss) and Change in Unrealized Appreciation/Depreciation on Investments.......... 8,465 0.35 3,817 0.16 (2,806) (0.11) 4,308 0.17 Net Increase in Net Assets Resulting from Operations.............. 14,247 0.51 9,375 0.39 2,101 0.16 10,141 0.42
H.Supplemental Proxy Information The Annual Meeting of the Stockholders of the BEA Income Fund, Inc. was held on Tuesday June 13, 1995 at the offices of BEA Associates, One Citicorp Center, 153 East 53rd Street, New York City. The following is a summary of each proposal presented and the total number of shares voted:
VOTES IN VOTES VOTES VOTES PROPOSAL FAVOR OF AGAINST WITHHELD ABSTAINED - -------- ---------- ------- --------- --------- 1. To elect the following four Directors: Messrs. Daniel H. Sigg, Enrique R. Arzac, Lawrence J. Fox and James S. Pasman Jr. 21,698,444 -- 1,739,413 -- 2. To ratify the selection of Price Waterhouse LLP as independent public accountants of the Fund until the next annual meeting. 21,665,717 180,630 -- 295,073 3. To approve or disapprove a new Investment Advisory Agreement between the Fund and BEA Associates containing substantially the same terms and conditions and fees as the Fund's previous investment agreement with CS First Boston Investment Management Corporation. 21,053,829 488,643 -- 598,948 4. To approve or disapprove an amendment to the Articles of Incorporation of the Fund to change its name to "BEA Income Fund, Inc." from "CS First Boston Income Fund, Inc." 20,776,084 723,375 -- 641,961
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