<PAGE>
BALANCED FUND
PAINEWEBBER
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN/1/
-------------------------------- -----------------------------
12 MONTHS 6 MONTHS
02/28/97 08/31/96 02/29/96 ENDED 02/28/97 ENDED 02/28/97
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $10.92 $ 10.27 $10.85 13.31% 13.27%
- ------------------------------------------------------------------------------
Class B Shares 11.09 10.42 11.00 12.41 12.74
- ------------------------------------------------------------------------------
Class C Shares 10.95 10.29 10.88 12.44 12.88
- ------------------------------------------------------------------------------
Performance Summary Class A Shares
<CAPTION>
NET ASSET VALUE
------------------ CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/1/91-
12/31/91 $10.09 $ 11.02 -- $0.2293 11.53%
- ------------------------------------------------------------------------------
1992 11.02 11.24 -- 0.3414 5.18
- ------------------------------------------------------------------------------
1993 11.24 11.94 $0.7771 0.2510 15.63
- ------------------------------------------------------------------------------
1994 11.94 9.32 1.2011 0.2311 (9.88)
- ------------------------------------------------------------------------------
1995 9.32 10.41 0.7468 0.3100 23.16
- ------------------------------------------------------------------------------
1996 10.41 10.61 1.0303 0.2516 14.74
- ------------------------------------------------------------------------------
01/01/97-
02/28/97 10.61 10.92 -- -- 2.92
- ------------------------------------------------------------------------------
Totals: $3.7553 $1.6144
- ------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/28/97 : 77.76%
- ------------------------------------------------------------------------------
Performance Summary Class B Shares
<CAPTION>
NET ASSET VALUE
------------------ CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/12/86-
12/31/86 $10.00 $ 9.76 -- -- (2.40)%
- ------------------------------------------------------------------------------
1987 9.76 9.27 $0.1687 $0.4407 1.21
- ------------------------------------------------------------------------------
1988 9.27 9.79 -- 0.5225 11.34
- ------------------------------------------------------------------------------
1989 9.79 10.03 0.1286 0.6768 10.84
- ------------------------------------------------------------------------------
1990 10.03 9.60 0.0021 0.6200 1.94
- ------------------------------------------------------------------------------
1991 9.60 11.01 -- 0.3478 18.52
- ------------------------------------------------------------------------------
1992 11.01 11.28 -- 0.2146 4.46
- ------------------------------------------------------------------------------
1993 11.28 12.02 0.7771 0.1173 14.66
- ------------------------------------------------------------------------------
1994 12.02 9.43 1.2011 0.1189 (10.51)
- ------------------------------------------------------------------------------
1995 9.43 10.57 0.7468 0.2049 22.27
- ------------------------------------------------------------------------------
1996 10.57 10.79 1.0303 0.1632 13.81
- ------------------------------------------------------------------------------
01/01/97-
02/28/97 10.79 11.09 -- -- 2.78
- ------------------------------------------------------------------------------
Totals: $4.0547 $3.4267
- ------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/28/97 : 131.53%
- ------------------------------------------------------------------------------
Performance Summary Class C Shares
<CAPTION>
NET ASSET VALUE
------------------ CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/02/92-
12/31/92 $10.86 $ 11.25 -- $0.1619 5.08%
- ------------------------------------------------------------------------------
1993 11.25 11.94 $0.7771 0.1728 14.79
- ------------------------------------------------------------------------------
1994 11.94 9.35 1.2011 0.1313 (10.48)
- ------------------------------------------------------------------------------
1995 9.35 10.45 0.7468 0.2188 22.15
- ------------------------------------------------------------------------------
1996 10.45 10.65 1.0303 0.1708 13.86
- ------------------------------------------------------------------------------
01/01/97-
02/28/97 10.65 10.95 -- -- 2.82
- ------------------------------------------------------------------------------
Totals: $3.7553 $0.8556
- ------------------------------------------------------------------------------
</TABLE>
CUMULATIVE TOTAL RETURN AS OF 02/28/97 : 54.41%
- --------------------------------------------------------------------------------
/1/ Figures assume reinvestment of all dividends and other distributions at net
asset value on the payable dates and do not include sales charges; results
for each class would be lower if sales charges were included.
The data above represents past performance of the Fund's shares, which is no
guarantee of future results. The principal value of an investment in the Fund
will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
5
<PAGE>
BALANCED FUND
PAINEWEBBER
PERFORMANCE RESULTS (CONCLUDED)
Average Annual Total Return
<TABLE>
<CAPTION>
% RETURN AFTER
% RETURN WITHOUT DEDUCTING
DEDUCTING MAXIMUM MAXIMUM SALES
SALES CHARGE CHARGE
------------------------ ---------------------
CLASS A* B** C*** A* B** C***
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Twelve Months Ended 03/31/97 11.64% 10.78% 10.79% 6.59% 5.78% 9.79%
- -------------------------------------------------------------------------------
Five Years Ended 03/31/97 9.74% 8.93% N/A 8.73% 8.65% N/A
- -------------------------------------------------------------------------------
Ten Years Ended 03/31/97 N/A 8.27% N/A N/A 8.27% N/A
- -------------------------------------------------------------------------------
Commencement of Operations
Through 03/31/97+ 10.09% 8.25% 9.04% 9.20% 8.25% 9.04%
- -------------------------------------------------------------------------------
</TABLE>
* Maximum sales charge for Class A shares is 4.5% of the public offering price.
Class A shares bear ongoing 12b-1 services fees.
** Maximum contingent deferred sales charge for Class B shares is 5% and is
reduced to 0% after six years. Class B shares bear ongoing 12b-1
distribution and service fees.
*** Maximum contingent deferred sales charges for Class C is 1% and is reduced
to 0% after 1 year. Class C shares bear ongoing 12b-1 distribution and
service fees.
+ Commencement of operations was July 1, 1991, December 12, 1986 and July 2,
1992 for Class A, Class B and Class C shares, respectively. The principal
value of an investment in the Fund will fluctuate, so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
The data above represents past performance of the Fund's shares, which is no
guarantee of future results. The principal value of an investment in the Fund
will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
6
<PAGE>
BALANCED FUND
PAINEWEBBER
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - 56.07%
Agriculture, Food & Beverage - 0.80%
7,300 Phillip Morris Companies Incorporated.................. $ 986,412
15,000 RJR Nabisco Holdings Corporation....................... 549,375
------------
1,535,787
------------
Airlines - 0.58%
9,000 UAL Corporation*....................................... 510,750
30,000 USAir Group, Incorporated*............................. 592,500
------------
1,103,250
------------
Apparel, Retail - 0.54%
25,000 TJX Companies, Incorporated............................ 1,043,750
------------
Apparel, Textiles - 0.64%
20,000 Nine West Group, Incorporated*......................... 940,000
8,200 Westpoint Stevens Incorporated*........................ 282,900
------------
1,222,900
------------
Banks - 5.69%
15,000 Bank of Boston Corporation............................. 1,130,625
15,000 BankAmerica Corporation................................ 1,706,250
30,000 Barnett Banks Incorporated(1).......................... 1,387,500
10,000 Citicorp............................................... 1,167,500
12,000 First Union Corporation................................ 1,053,000
15,000 Greenpoint Financial Corporation....................... 900,000
13,000 NationsBank Corporation................................ 778,375
20,000 Southern National Corporation.......................... 777,500
20,000 The Chase Manhattan Corporation........................ 2,002,500
------------
10,903,250
------------
Chemicals - 3.05%
25,000 Allied-Signal, Incorporated............................ 1,806,250
11,000 Dow Chemical Company................................... 891,000
13,000 DuPont (E.I.) de Nemours & Company..................... 1,394,250
25,000 IMC Global Incorporated................................ 871,875
22,000 Olin Corporation....................................... 880,000
------------
5,843,375
------------
Computer Hardware - 2.92%
25,000 Cisco Systems, Incorporated*........................... 1,390,625
20,000 Compaq Computer Corporation*........................... 1,585,000
3,750 Dell Computer Corporation*............................. 266,719
5,000 International Business Machines........................ 718,750
15,000 Seagate Technology, Incorporated*...................... 708,750
30,000 Sun Microsystems Incorporated*......................... 926,250
------------
5,596,094
------------
Computer Software - 1.23%
29,000 Cadence Design Systems Incorporated*................... 1,069,375
19,926 Sterling Commerce Incorporated*........................ 577,854
25,000 Sterling Software Incorporated*........................ 715,625
------------
2,362,854
------------
</TABLE>
7
<PAGE>
BALANCED FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
Construction, Real Property - 1.59%
16,000 Chelsea GCA Realty Incorporated........................ $ 546,000
16,000 Equity Residential Properties Trust.................... 724,000
20,000 Oakwood Homes Corporation.............................. 395,000
8,500 Spieker Properties Incorporated........................ 309,187
10,500 Starwood Lodging Corporation........................... 410,812
22,500 Wellsford Residential Property......................... 658,125
------------
3,043,124
------------
Defense/Aerospace - 4.23%
16,000 General Dynamics Corporation........................... 1,076,000
30,000 ITT Industries Incorporated............................ 780,000
12,000 Lockheed Martin Corporation............................ 1,062,000
28,000 Loral Space Communications Corporation*................ 451,500
25,350 McDonnell Douglas Corporation.......................... 1,609,725
15,000 Precision Castparts Corporation........................ 735,000
19,000 Raytheon Company....................................... 895,375
20,000 United Technologies Corporation........................ 1,505,000
------------
8,114,600
------------
Diversified Retail - 1.27%
37,500 Dayton Hudson Corporation.............................. 1,575,000
25,000 Federated Department Stores, Incorporated*............. 868,750
------------
2,443,750
------------
Drugs & Medicine - 2.73%
13,000 Bergen Brunswig Corporation............................ 417,625
6,000 Bristol-Myers Squibb Company........................... 783,000
15,000 Cardinal Health Incorporated........................... 922,500
12,800 Pfizer, Incorporated................................... 1,172,800
15,000 Schering-Plough Corporation............................ 1,149,375
18,000 Watson Pharmaceuticals, Incorporated*.................. 785,250
------------
5,230,550
------------
Electric Utilities - 0.38%
40,000 Public Service Company of New Mexico................... 735,000
------------
Energy Reserves & Production - 1.03%
10,000 Mobil Corporation...................................... 1,227,500
7,500 Texaco, Incorporated................................... 741,562
------------
1,969,062
------------
Financial Services - 2.38%
20,000 American Express Company............................... 1,307,500
31,600 Dean Witter, Discover & Company........................ 1,212,650
15,000 Household International, Incorporated.................. 1,453,125
5,500 Student Loan Marketing Association..................... 582,312
------------
4,555,587
------------
Forest Products, Paper - 1.05%
15,000 Champion Enterprises Incorporated*..................... 290,625
20,000 International Paper Company............................ 835,000
50,800 Shorewood Packaging Corporation*....................... 889,000
------------
2,014,625
------------
</TABLE>
8
<PAGE>
BALANCED FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
Food Retail - 0.60%
24,000 Safeway Incorporated*(1)............................... $ 1,155,000
------------
Gas Utility - 0.38%
12,500 Columbia Gas System, Incorporated...................... 734,375
------------
Heavy Machinery - 0.56%
13,750 Caterpillar, Incorporated.............................. 1,077,656
------------
Hotels - 0.79%
39,000 Hilton Hotels Corporation.............................. 979,875
10,000 Marriott International, Incorporated................... 530,000
------------
1,509,875
------------
Household Products - 0.23%
28,000 Viad Corporation*...................................... 448,000
------------
Leisure - 0.35%
15,000 Philips Electronics N.V................................ 675,000
------------
Life Insurance - 3.97%
15,000 Chubb Corporation...................................... 879,375
9,000 CIGNA Corporation...................................... 1,375,875
15,000 Equitable of Iowa Companies............................ 796,875
30,000 Reliastar Financial Corporation........................ 1,860,000
20,000 SunAmerica Incorporated................................ 917,500
33,333 Travelers Group Incorporated........................... 1,787,482
------------
7,617,107
------------
Manufacturing-General - 2.55%
67,500 ADT Limited*........................................... 1,468,125
22,500 Crane Company.......................................... 734,062
35,000 Ingersoll Rand Company................................. 1,662,500
13,800 Lucasvarity Plc*....................................... 451,950
15,000 Stanley Works.......................................... 573,750
------------
4,890,387
------------
Manufacturing-High Technology - 1.51%
9,000 Johnson Controls, Incorporated......................... 758,250
22,500 KLA Instruments Corporation*........................... 937,969
14,000 SCI Systems Incorporated*.............................. 749,000
15,000 Waters Corporation*.................................... 451,875
------------
2,897,094
------------
Medical Products - 1.20%
8,000 Johnson & Johnson...................................... 461,000
67,500 Tenet Healthcare Corporation*.......................... 1,830,937
------------
2,291,937
------------
Medical Providers - 1.27%
20,000 HEALTHSOUTH Corporation*............................... 805,000
50,000 Humana Incorporated*................................... 981,250
15,000 Lincare Holdings Incorporated*......................... 646,875
------------
2,433,125
------------
</TABLE>
9
<PAGE>
BALANCED FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - (CONCLUDED)
Mining & Metals - 0.78%
9,000 Phelps Dodge Corporation............................... $ 643,500
25,000 Freeport-McMoran Copper & Gold, Incorporated........... 850,000
------------
1,493,500
------------
Motor Vehicles & Parts - 1.25%
20,000 Borg Warner Automotive Incorporated.................... 790,000
25,600 Breed Technologies Incorporated........................ 560,000
7,500 Echlin, Incorporated................................... 259,687
20,000 Lear Corporation*...................................... 780,000
------------
2,389,687
------------
Oil Refining - 2.15%
20,000 Coastal Corporation.................................... 910,000
40,000 Repsol S.A., ADR....................................... 1,520,000
30,000 Tejas Gas Corporation*................................. 1,312,500
10,000 Unocal Corporation..................................... 386,250
------------
4,128,750
------------
Oil Services - 2.85%
12,000 Camco International Incorporated....................... 463,500
15,000 Diamond Offshore Drilling Incorporated*................ 885,000
18,000 Ensco International Incorporated*...................... 780,750
19,000 Global Marine Incorporated*............................ 353,875
25,000 Halliburton Company.................................... 1,615,625
50,000 Nabors Industries Incorporated*........................ 768,750
25,000 Reading & Bates Corporation*........................... 606,250
------------
5,473,750
------------
Other Insurance - 3.32%
25,000 ACE Limited............................................ 1,625,000
20,000 Allstate Corporation................................... 1,267,500
6,300 Ambac Incorporated..................................... 420,525
11,000 American International Group Incorporated.............. 1,331,000
30,000 Everest Reinsurance Holdings Incorporated.............. 945,000
10,500 ITT Hartford Group, Incorporated....................... 787,500
------------
6,376,525
------------
Publishing - 0.46%
20,000 New York Times Company, Class A........................ 890,000
------------
Semiconductor - 0.83%
17,500 Applied Materials, Incorporated*....................... 885,938
5,000 Intel Corporation...................................... 709,375
------------
1,595,313
------------
Specialty Retail - 0.91%
42,656 Dollar General Corporation............................. 1,210,364
8,900 Waban Incorporated*.................................... 254,762
15,000 Zale Corporation*...................................... 277,500
------------
1,742,626
------------
Total Common Stocks (cost - $86,751,370).......................... 107,537,265
------------
</TABLE>
10
<PAGE>
BALANCED FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
PREFERRED STOCKS - 3.28%
Banks - 0.59%
20,000 BCP International Limited.............................. $ 1,135,000
------------
Financial Services - 0.48%
15,000 Devon Financing Trust+................................. 928,125
------------
Life Insurance - 0.77%
35,000 SunAmerica Incorporated................................ 1,474,375
------------
Mining & Metals - 0.33%
13,000 Timet Capital Trust I+................................. 624,000
------------
Other Insurance - 0.43%
15,000 Frontier Financing Trust............................... 832,500
------------
Precious Metals - 0.36%
36,000 Coer d' Alene Mines Corporation........................ 697,500
------------
Thrift - 0.32%
11,500 Tosco Financing Trust+................................. 613,813
------------
Total Preferred Stocks (cost - $5,802,500)........................ 6,305,313
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
--------- ------------------- --------------
<C> <S> <C> <C> <C>
CORPORATE BONDS - 9.73%
Agriculture, Food & Beverage -
0.66%
Philip Morris Companies
$ 1,275 Incorporated........... 01/15/27 7.750% 1,258,171
------------
Banks - 0.68%
1,370 ABN Amro Bank........... 12/01/26 7.300 1,294,188
------------
Cable - 0.72%
Continental Cablevision
1,300 Incorporated........... 05/15/06 8.300 1,376,896
------------
Electric Utilities - 0.98%
Texas Utilities Electric
1,880 Capital................ 01/30/37 8.175 1,885,289
------------
Financial Services - 2.86%
Bear Stearns Companies
1,300 Incorporated........... 03/01/07 7.000 1,275,806
1,600 Ford Motor Credit Co.... 01/25/01 5.750 1,549,901
Lehman Brothers Holdings
1,100 Incorporated........... 09/15/03 7.125 1,098,326
Santander Finance
1,610 Issuances.............. 07/15/05 6.800 1,570,682
------------
5,494,715
------------
Life Insurance - 0.36%
Equitable Life Assurance
700 Society, USA+.......... 12/01/05 6.950 686,711
------------
Media - 0.65%
News America Holdings
1,245 Incorporated........... 10/17/96 8.250 1,251,638
------------
Oil Services - 0.70%
Occidental Petroleum
Corporation Medium Term
1,300 Note................... 09/15/04 8.500 1,343,186
------------
</TABLE>
11
<PAGE>
BALANCED FUND
PAINEWEBBER
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------------------- --------------- ------------
<C> <S> <C> <C> <C>
CORPORATE BONDS - (CONTINUED)
Other Insurance - 2.12%
American Re
$ 1,200 Corporation+........... 12/15/26 7.450% $ 1,181,459
Berkley W R Capital
1,670 Trust+................. 12/15/45 8.197 1,630,022
1,300 Loews Corporation....... 12/15/06 6.750 1,252,731
------------
4,064,212
------------
Total Corporate Bonds (cost -
$18,712,702)...................... 18,655,006
------------
CONVERTIBLE BONDS - 0.52%
Specialty Retail - 0.52%
Home Depot Incorporated
1,000 (cost - $1,000,000).... 10/01/01 3.250 1,000,000
------------
MORTGAGE BACKED SECURITIES - 10.77%
Collateralized Mortgage
Obligations - 2.49%
308 CS First Boston Mortgage
Securities Corporation,
Series 1995-WF1, Class
A1..................... 12/21/27 6.452 302,202
347 DLJ Mortgage Acceptance
Corp. Series 1996-CF2,
Class A1A+............. 11/12/21 6.860 345,767
653 FDIC REMIC Trust, Series
1996-C1, Class 1A...... 05/25/26 6.750 649,158
670 FNMA REMIC, Series 1996-
M3, Class A1........... 03/15/21 7.385 679,983
852 FNMA REMIC, Series 1996-
M4, Class A............ 03/17/17 7.750 865,018
678 FNMA REMIC, Series 1996-
M6, Class E............ 09/17/19 7.750 690,757
597 GMAC Commercial Mortgage
Security, Series 1996-
C1 Class A2A........... 9/15/03 6.790 590,821
658 Merrill Lynch Mortgage
Investments
Incorporated, Series
1996-C1, Class A1...... 04/25/28 7.150 656,308
------------
Total Collateralized Mortgage Obli-
gations -- (cost - $4,806,906).... 4,780,014
------------
Federal National Mortgage
Association - 5.72%
1,880 FNMA.................... 01/01/26 to 02/01/26 7.500 1,882,576
3,700 FNMA.................... 09/20/06 to 11/13/06 6.950 to 7.930 3,698,054
5,435 FNMA TBA ARM............ TBA 6.071 5,390,841
------------
Total Federal National Mortgage As-
sociation (cost - $10,996,795).... 10,971,471
------------
Government National Mortgage
Association - 2.55%
4,644 GNMA (cost -
$4,895,553)........... 11/15/17 8.500 4,897,134
------------
Total Mortgage Backed Securities
(cost - $20,696,254).............. 20,648,619
------------
U.S. GOVERNMENT OBLIGATIONS -
12.08%
8,319 U.S. Treasury Bonds..... 08/15/13 to 02/15/26 6.000 to 12.000 7,947,041
14,813 U.S. Treasury Notes..... 10/31/98 to 02/15/05 5.875 to 7.750 15,226,122
------------
Total U.S. Government Obligations
(cost - $23,249,226).............. 23,173,163
------------
</TABLE>
12
<PAGE>
BALANCED FUND
PAINEWEBBER
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- ------------------- -------------- ------------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENTS - 10.08%
$ 8,000 Repurchase agreement
dated 02/28/97 with
CitiBank Securities,
Inc., collateralized
by $7,360,000 U.S.
Treasury Bills,
7.875%, due 02/15/21;
proceeds: $8,003,567.. 03/03/97 5.350% $ 8,000,000
8,000 Repurchase agreement
dated 02/28/97 with
Daiwa Securities
America, Inc.
collateralized by
$5,623,000 U.S.
Treasury Bills,
11.250%, due 02/15/15;
proceeds: $8,003,567.. 03/03/97 5.350 8,000,000
3,337 Repurchase agreement
dated 02/28/97 with
State Street Bank &
Trust Company,
collateralized by
$3,130,000 U.S.
Treasury Bills,
7.875%, due 11/15/07;
proceeds $3,338,477... 03/03/97 5.310 3,337,000
------------
Total Repurchase Agreements
(cost - $19,337,000)............. 19,337,000
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
(000)
---------
<C> <S> <C>
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED - 1.01%
8 Prime Portfolio....................................... 7,712
18 Liquid Assets Portfolio............................... 17,960
1,902 TempFund Portfolio.................................... 1,902,028
------------
Total Investments of Cash Collateral for Securities Loaned
(cost - $1,927,700)............................................. 1,927,700
------------
Total Investments (cost - $177,476,752) - 103.54%................ 198,584,066
Liabilities in excess of other assets - (3.54%).................. (6,787,294)
------------
Net Assets - 100.00%............................................. $191,796,772
============
</TABLE>
- -------
* Non-Income Producing Security
+ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
ADR - American Depository Receipts
ARM - Adjustable Rate Mortgage--The interest rate shown is the current rate at
February 28, 1997.
TBA - (To Be Assigned) Securities are purchased on a forward commitment basis
with an approximate (generally +/-1.0%) principal amount and generally
stated maturity date. The actual principal amount and maturity date will be
determined upon settlement when the specific mortgage pools are assigned.
REMIC - Real Estate Mortgage Investment Conduit
(1) A portion of the security was on loan at February 28, 1997
See accompanying notes to financial statements
13
<PAGE>
BALANCED FUND
PAINEWEBBER
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<S> <C>
Assets
Investments in securities, at value (cost -- $177,476,752)........ $198,584,066
Receivable for investments sold................................... 3,856,136
Dividends and interest receivable................................. 926,275
Receivable for fund shares sold................................... 59,548
Other assets...................................................... 76,660
------------
Total assets...................................................... 203,502,685
------------
Liabilities
Payable for investments purchased................................. 9,379,940
Collateral for securities loaned.................................. 1,927,700
Payable for fund shares repurchased............................... 173,927
Payable to affiliates............................................. 171,086
Accrued expenses and other liabilities............................ 53,260
------------
Total liabilities................................................. 11,705,913
------------
Net Assets
Capital stock -- $0.001 par value................................. 161,837,042
Undistributed net investment income............................... 525,809
Accumulated net realized gains from investments................... 8,326,607
Net unrealized appreciation of investments........................ 21,107,314
------------
Net assets........................................................ $191,796,772
============
Class A:
Net assets........................................................ $162,482,185
------------
Shares outstanding................................................ 14,881,142
------------
Net asset and redemption value per share.......................... $10.92
======
Maximum offering price per share (net asset value plus sales
charge of 4.50% of offering price)............................... $11.43
======
Class B:
Net assets........................................................ $ 21,717,094
------------
Shares outstanding................................................ 1,957,426
------------
Net asset value and offering price per share...................... $11.09
======
Class C:
Net assets........................................................ $ 7,597,493
------------
Shares outstanding................................................ 694,130
------------
Net asset value and offering price per share...................... $10.95
======
</TABLE>
See accompanying notes to financial statements
14
<PAGE>
BALANCED FUND
PAINEWEBBER
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest........................................................... $ 2,463,271
Dividends.......................................................... 934,454
-----------
3,397,725
-----------
Expenses:
Investment advisory and administration fees........................ 715,405
Service Fees--Class A.............................................. 201,772
Service and distribution Fees--Class B............................. 109,904
Service and distribution Fees--Class C............................. 36,886
Transfer agency and service fees................................... 90,133
Reports and notices to shareholders................................ 88,636
State registration................................................. 84,525
Legal and audit.................................................... 68,803
Custody and accounting............................................. 57,872
Directors fees and expenses........................................ 7,875
Other expenses..................................................... 30,700
-----------
1,492,511
-----------
Net investment income.............................................. 1,905,214
-----------
Realized and unrealized gains from investment transactions:
Net realized gains from investment transactions.................... 9,703,363
Net change in unrealized appreciation/depreciation of investments.. 12,205,663
-----------
Net realized and unrealized gains from investment transactions..... 21,909,026
-----------
Net increase in net assets resulting from operations............... $23,814,240
===========
</TABLE>
See accompanying notes to financial statements
15
<PAGE>
BALANCED FUND
PAINEWEBBER
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED
--------------------------
FEBRUARY 28,
1997 AUGUST 31,
(UNAUDITED) 1996
------------ ------------
<S> <C> <C>
From operations:
Net investment income.............................. $ 1,905,214 $ 2,038,956
Net realized gains from investment transactions.... 9,703,363 8,010,343
Net change in unrealized appreciation/depreciation
of investments.................................... 12,205,663 (10,090,626)
------------ ------------
Net increase (decrease) in net assets from
operations........................................ 23,814,240 (41,327)
------------ ------------
Dividends and Distributions to shareholders from:
Net investment income--Class A..................... (2,196,088) (1,533,387)
Net investment income--Class B..................... (191,134) (139,866)
Net investment income--Class C..................... (70,274) (43,823)
Net realized gains from investment transactions--
Class A........................................... (7,951,554) (7,372,463)
Net realized gains from investment transactions--
Class B........................................... (1,065,950) (1,038,147)
Net realized gains from investment transactions--
Class C........................................... (367,562) (319,876)
------------ ------------
(11,842,562) (10,447,562)
------------ ------------
From capital stock transactions:
Net proceeds from sale of shares................... 1,776,060 2,049,022
Cost of shares repurchased......................... (19,672,651) (20,078,399)
Proceeds from dividends reinvested................. 10,911,368 9,622,813
------------ ------------
Net decrease in net assets from capital stock
transactions...................................... (6,985,223) (8,406,564)
------------ ------------
Net increase (decrease) in net assets.............. 4,986,455 (18,895,453)
------------ ------------
Net Assets:
Beginning of period................................ 186,810,317 205,705,770
------------ ------------
End of period (including undistributed net
investment income of
$525,809 and $1,078,091, respectively)............ $191,796,772 $186,810,317
============ ============
</TABLE>
See accompanying notes to financial statements
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
PAINEWEBBER
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Master Series, Inc. ("Master Series") is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended, as an open-end, diversified management investment company which
currently offers two series of shares: PaineWebber Balanced Fund (the "Fund")
and PaineWebber Money Market Fund. The financial statements for PaineWebber
Money Market Fund are not included herein. At a meeting on November 29, 1995
the Board of Directors elected to change the Fund's fiscal year end from
February 28 to August 31.
Currently the Fund offers Class A, Class B, Class C and Class Y shares (no
Class Y shares were outstanding during the period). Each class represents
interests in the same assets of the Fund, and the classes are identical except
for differences in their sales charge structures, ongoing service and
distribution charges and transfer agency expenses. In addition, Class B shares
and all corresponding reinvested dividend shares automatically convert to Class
A shares approximately six years after issuance. All classes of shares have
equal rights as to voting privileges, except that each class has exclusive
voting rights with respect to its service and/or distribution plan.
The preparation of financial statements in accordance with generally accepted
accounting principles requires Fund management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The following is
a summary of significant accounting policies:
Valuation of Investments -- Securities which are listed on stock exchanges are
valued at the last sale price on the day the securities are being valued or,
lacking any sales on such day, at the last available bid price. In cases where
securities are traded on more than one exchange, the securities are valued on
the exchange designated by Mitchell Hutchins Asset Management Inc. ("Mitchell
Hutchins"), a wholly owned subsidiary of PaineWebber Incorporated
("PaineWebber") and investment adviser, administrator and distributor of Master
Series, as the primary market. Securities traded in the over-the-counter
("OTC") market and listed on the Nasdaq Stock Market ("Nasdaq") are valued at
the last available sale price, or last bid price available if no sale occurs,
on Nasdaq prior to the time of valuation. Where market quotations are readily
available, debt securities are valued thereon, provided such quotations
adequately reflect the fair value of the securities in the judgment of Mitchell
Hutchins. When market quotations are not readily available, securities are
valued based upon appraisals derived from information concerning those
securities or similar securities received from recognized dealers in those
securities. All other securities are valued at fair value as determined in good
faith by a management committee under the direction of Master Series' Board of
Directors. The amortized cost method of valuation is used to value short-term
debt
17
<PAGE>
PAINEWEBBER
instruments with sixty days or less remaining to maturity, unless the Board of
Directors determines that this does not represent fair value.
Repurchase Agreements -- The Fund's custodian takes possession of the
securities that are to be repurchased. These securities are valued daily on a
mark-to-market basis to ensure that the value, including accrued interest, is
at least equal to the repurchase price. In the event that a counterparty
defaults on its obligation to repurchase, the Fund has the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral may be subject
to legal proceedings. The Fund occasionally participates in joint repurchase
agreement transactions with other funds managed by Mitchell Hutchins.
Investment Transactions and Investment Income -- Investment transactions are
recorded on trade date. Realized gains and losses from investment transactions
are calculated using the identified cost method. Interest income is recorded on
an accrual basis and dividend income is recorded on the ex-dividend date.
Discounts are accreted and premiums are amortized as adjustments to interest
income and the identified cost of investments.
Income, expenses (excluding class-specific expenses) and realized/unrealized
gains/losses are allocated proportionately to each class of shares based upon
the relative net asset value of outstanding shares (or the value of dividend-
eligible shares, as appropriate) of each class at the beginning of the day
(after adjusting for current capital share activity of the respective classes).
Class-specific expenses are charged directly to the applicable class of shares.
Dividends and Distributions -- Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassifications.
CONCENTRATION OF RISK
The ability of the issuers of the debt securities held by the Fund to meet
their obligations may be affected by economic and political developments
particular to a specific industry, country or region.
INVESTMENT ADVISER AND ADMINISTRATOR
The Board of Directors of Master Series has approved an Investment Advisory and
Administration Contract ("Advisory Contract") with Mitchell Hutchins, under
which
18
<PAGE>
PAINEWEBBER
Mitchell Hutchins serves as investment adviser and administrator of the Fund.
In accordance with the Advisory Contract, Mitchell Hutchins receives
compensation from the Fund, computed daily and paid monthly, in accordance with
the following schedule:
<TABLE>
<CAPTION>
Annual
Average Daily Net Assets Rate
------------------------ ------
<S> <C>
Up to $500 million...................................................... 0.750%
In excess of $500 million up to $1.0 billion............................ 0.725
In excess of $1.0 billion up to $1.5 billion............................ 0.700
In excess of $1.5 billion up to $2.0 billion............................ 0.675
Over $2.0 billion....................................................... 0.650
</TABLE>
At February 28, 1997, the Fund owed Mitchell Hutchins $111,760 in investment
advisory and administration fees. For the six months ended February 28, 1997,
the Fund paid brokerage commissions to PaineWebber in the amount of $8,964 for
transactions executed on behalf of the Fund.
DISTRIBUTION PLANS
Mitchell Hutchins is the distributor of the Fund's shares and has appointed
PaineWebber as the exclusive dealer for the sale of those shares. Under
separate plans of service and/or distribution pertaining to the Class A, Class
B and Class C shares, the Fund pays Mitchell Hutchins monthly service fees at
an annual rate of 0.25% of the average daily net assets of Class A, Class B and
Class C shares, and monthly distribution fees at an annual rate of 0.75% of the
average daily net assets of the Class B and Class C shares. At February 28,
1997, the Fund owed Mitchell Hutchins $54,382 in service and distribution fees.
Mitchell Hutchins also receives the proceeds of the initial sales charges paid
by the shareholders upon the purchase of Class A shares and the contingent
deferred sales charges paid by the shareholders upon certain redemptions of
Class A, Class B and Class C shares. Mitchell Hutchins has informed the Fund
that for the six months ended February 28, 1997, it earned $42,548 in sales
charges.
SECURITY LENDING
The Fund may lend up to 33 1/3% of its total assets to qualified institutions.
The loans are secured at all times by cash or U.S. government securities in an
amount at least equal to the market value of the securities loaned, plus
accrued interest, determined on a daily basis and adjusted accordingly. The
Fund will regain record ownership of loaned securities to exercise certain
beneficial rights, however, the Fund may bear the risk of delay in recovery of,
or even loss of rights in, the securities loaned should the borrower fail
financially. The Fund receives compensation, which is included in interest
income, for lending its securities from interest earned on the cash or U.S.
19
<PAGE>
PAINEWEBBER
government securities held as collateral, net of fee rebates paid to the
borrower plus reasonable administrative and custody fees. The Fund's lending
agent is PaineWebber, who received no compensation from the Fund in that
capacity for the six months ended February 28, 1997.
As of February 28, 1997, the Fund's custodian held cash and cash equivalents
having an aggregate value of $1,927,700 as collateral for portfolio securities
loaned having a market value of $1,839,625.
TRANSFER AGENCY SERVICE FEES
The Fund pays PaineWebber an annual fee of $4.00 per active PaineWebber
shareholder account for certain services not provided by the Funds' transfer
agent. For these services for the six months ended February 28, 1997,
PaineWebber earned $30,568 in service fees from the Fund. At February 28, 1997,
the Fund owed PaineWebber $4,944 for shareholder service fees.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at February 28,
1997, was substantially the same as the cost of securities for financial
statement purposes.
At February 28, 1997, the components of net unrealized appreciation of
investments were as follows:
<TABLE>
<S> <C>
Gross appreciation (investments having an excess of value
over cost)........................................................ $23,037,458
Gross depreciation (investments having an excess of cost
over value)....................................................... (1,930,144)
-----------
Net unrealized appreciation of investments......................... $21,107,314
===========
</TABLE>
For the six months ended February 28, 1997, total aggregate purchases and sales
of portfolio securities, excluding short-term securities, were as follows:
<TABLE>
<S> <C>
Purchases.......................................................... $209,808,692
Sales.............................................................. $224,199,160
</TABLE>
FEDERAL TAX STATUS
The Fund intends to distribute substantially all of its taxable income and to
comply with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for federal income
taxes is required. In addition, by distributing during each calendar year
substantially all of its net investment income, capital gains and certain other
amounts, if any, the Fund intends not to be subject to a federal excise tax.
20
<PAGE>
PAINEWEBBER
CAPITAL STOCK
There are 10 billion shares of $0.001 par value common stock authorized for
Master Series, of which 3 billion is allocated to Balanced Fund. Transactions
in shares of common stock were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------------ --------------------- ------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ -------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED
FEBRUARY 28, 1997:
Shares sold............. 57,815 $ 623,044 74,993 $ 830,213 29,535 $ 322,803
Shares repurchased...... (1,512,071) (16,496,220) (236,942) (2,620,179) (50,769) (556,252)
Dividends reinvested.... 876,212 9,366,710 105,090 1,143,384 37,397 401,274
Shares converted from
Class B to Class A..... 128,169 1,366,127 (126,296) (1,366,127) -- --
---------- ------------ -------- ----------- ------- ---------
Net increase (decrease). (449,875) $ (5,140,339) (183,155) $(2,012,709) 16,163 $ 167,825
========== ============ ======== =========== ======= =========
SIX MONTHS ENDED AUGUST
31, 1996:
Shares sold............. 56,574 $ 604,881 89,994 $ 961,478 45,033 $ 482,663
Shares repurchased...... (1,544,512) (16,273,895) (269,075) (2,886,820) (85,653) (917,684)
Dividends reinvested.... 799,422 8,218,331 102,843 1,076,033 31,826 328,449
Shares converted from
Class B to Class A..... 205,793 2,216,806 (203,043) (2,216,806) -- --
---------- ------------ -------- ----------- ------- ---------
Net decrease............ (482,723) $ (5,233,877) (279,281) $(3,066,115) (8,794) $(106,572)
========== ============ ======== =========== ======= =========
</TABLE>
21
<PAGE>
BALANCED FUND
PAINEWEBBER
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT
EACH PERIOD IS PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------------------
FOR THE FOR THE
SIX FOR THE PERIOD
MONTHS SIX FOR THE JULY 1,
ENDED MONTHS YEAR FOR THE YEARS ENDED 1991+
FEBRUARY 28, ENDED ENDED FEBRUARY 28, THROUGH
1997 AUGUST 31, FEBRUARY 29, ------------------------------ FEBRUARY 29,
(UNAUDITED) 1996 1996 1995 1994 1993 1992
------------ ---------- ------------ -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period................. $ 10.27 $ 10.85 $ 9.80 $ 12.04 $ 11.54 $ 11.01 $10.09
-------- -------- -------- -------- -------- -------- ------
Net investment income... 0.13++ 0.12++ 0.27++ 0.26 0.22 0.33 0.19
Net realized and
unrealized gains
(losses) from
investments............ 1.22 (0.12) 1.84 (1.07) 1.31 0.54 0.96
-------- -------- -------- -------- -------- -------- ------
Net increase (decrease)
from investment
operations............. 1.35 0.00 2.11 (0.81) 1.53 0.87 1.15
-------- -------- -------- -------- -------- -------- ------
Dividends from net
investment income...... (0.15) (0.10) (0.31) (0.23) (0.25) (0.34) (0.23)
Distributions from net
realized gains from
investment
transactions........... (0.55) (0.48) (0.75) (1.20) (0.78) -- --
-------- -------- -------- -------- -------- -------- ------
Total dividends and
distributions.......... (0.70) (0.58) (1.06) (1.43) (1.03) (0.34) (0.23)
-------- -------- -------- -------- -------- -------- ------
Net asset value, end of
period................. $ 10.92 $ 10.27 $ 10.85 $ 9.80 $ 12.04 $ 11.54 $11.01
======== ======== ======== ======== ======== ======== ======
Total investment
return(1).............. 13.27 % 0.03 % 22.08 % (6.02)% 13.57 % 8.09 % 11.43 %
======== ======== ======== ======== ======== ======== ======
Ratios/Supplemental
Data:
Net assets, end of
period (000's)......... $162,482 $157,525 $171,609 $174,761 $216,492 $154,594 $ 916
Expenses to average net
assets................. 1.44 %* 1.34 %* 1.29 % 1.26 % 1.21 % 1.18 % 1.30 %*
Net investment income to
average net asset...... 2.11 %* 2.19 %* 2.55 % 2.41 % 1.74 % 2.52 % 3.43 %*
Portfolio turnover...... 117 % 103 % 188 % 107 % 69 % 33 % 84 %
Average commission rate
paid(2)................ $ 0.0598 $ 0.0600 -- -- -- -- --
</TABLE>
- -------------
* Annualized
+ Commencement of issuance of shares
++ Calculated using the monthly average shares outstanding for the period
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of the period, reinvestment of all dividends and other
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include sales charges; results for each class would be lower if sales
charges were included. Total investment returns for periods of less than
one year have been annualized.
(2) Effective for fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose the average commission rate paid per share of
common stock investments purchased or sold.
22
<PAGE>
<TABLE>
<CAPTION>
CLASS B
- -----------------------------------------------------------------------------------
FOR THE
SIX FOR THE
MONTHS SIX
ENDED MONTHS FOR THE FOR THE YEARS ENDED FOR THE YEAR
FEBRUARY 28, ENDED YEAR ENDED FEBRUARY 28, ENDED
1997 AUGUST 31, FEBRUARY 29, ---------------------------- FEBRUARY 29,
(UNAUDITED) 1996 1996 1995 1994 1993 1992
- ------------ ---------- ------------ ------- ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 10.42 $ 11.00 $ 9.90 $ 12.10 $ 11.56 $ 10.99 $ 10.21
------- ------- ------- ------- ------- -------- --------
0.09++ 0.08++ 0.19++ 0.44 0.26 0.30 0.35
1.23 (0.11) 1.86 (1.32) 1.18 0.48 0.78
------- ------- ------- ------- ------- -------- --------
1.32 (0.03) 2.05 (0.88) 1.44 0.78 1.13
------- ------- ------- ------- ------- -------- --------
(0.10) (0.07) (0.20) (0.12) (0.12) (0.21) (0.35)
(0.55) (0.48) (0.75) (1.20) (0.78) -- --
------- ------- ------- ------- ------- -------- --------
(0.65) (0.55) (0.95) (1.32) (0.90) (0.21) (0.35)
------- ------- ------- ------- ------- -------- --------
$ 11.09 $ 10.42 $ 11.00 $ 9.90 $ 12.10 $ 11.56 $ 10.99
======= ======= ======= ======= ======= ======== ========
12.74 % (0.30)% 21.20 % (6.68)% 12.62 % 7.25 % 11.24 %
======= ======= ======= ======= ======= ======== ========
$21,717 $22,307 $26,627 $37,104 $83,178 $160,115 $346,290
2.21 %* 2.09 %* 2.05 % 1.98 % 2.05 % 1.98 % 2.02 %
1.34 %* 1.43 %* 1.81 % 1.60 % 1.00 % 2.02 % 3.25 %
117 % 103 % 188 % 107 % 69 % 33 % 84 %
$0.0598 $0.0600 -- -- -- -- --
</TABLE>
23
<PAGE>
BALANCED FUND
PAINEWEBBER
FINANCIAL HIGHLIGHTS (CONCLUDED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT
EACH PERIOD IS PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------------
FOR THE
PERIOD
FOR THE SIX FOR THE JULY 2,
FOR THE SIX MONTHS FOR THE YEARS ENDED 1992+
MONTHS ENDED ENDED YEAR ENDED FEBRUARY 28, THROUGH
FEBRUARY 28, AUGUST 31, FEBRUARY 29, ---------------- FEBRUARY 28,
1997 1996 1996 1995 1994 1993
------------ ----------- ------------ ------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 10.29 $ 10.88 $ 9.82 $12.03 $ 11.54 $10.86
------- ------- ------ ------ ------- ------
Net investment income... 0.09++ 0.08++ 0.19++ 0.19 0.14 0.13
Net realized and
unrealized gains
(losses) from
investments............ 1.22 (0.12) 1.84 (1.07) 1.30 0.71
------- ------- ------ ------ ------- ------
Net increase (decrease)
from investment
operations............. 1.31 (0.04) 2.03 (0.88) 1.44 0.84
------- ------- ------ ------ ------- ------
Dividends from net
investment income...... (0.10) (0.07) (0.22) (0.13) (0.17) (0.16)
Distributions from net
realized gains from
investment
transactions........... (0.55) (0.48) (0.75) (1.20) (0.78) --
------- ------- ------ ------ ------- ------
Total dividends and
distributions.......... (0.65) (0.55) (0.97) (1.33) (0.95) (0.16)
------- ------- ------ ------ ------- ------
Net asset value, end of
period................. $ 10.95 $ 10.29 $10.88 $ 9.82 $ 12.03 $11.54
======= ======= ====== ====== ======= ======
Total investment
return(1).............. 12.88% (0.38)% 21.12 % (6.69)% 12.75 % 7.78 %
======= ======= ====== ====== ======= ======
Ratios/Supplemental
Data:
Net assets, end of
period (000's)......... $ 7,598 $ 6,979 $7,469 $8,525 $12,916 $7,058
Expenses to average net
assets................. 2.19 %* 2.09 %* 2.08 % 2.01 % 1.96 % 1.95 %*
Net investment income to
average net asset...... 1.36 %* 1.44 %* 1.77 % 1.62 % 0.97 % 1.91 %*
Portfolio turnover...... 117 % 103 % 188 % 107 % 69 % 33 %
Average commission rate
paid per share(2)...... $0.0598 $0.0600 -- -- -- --
</TABLE>
- -------------
* Annualized
+ Commencement of issuance of shares
++ Calculated using the monthly average shares outstanding for the period
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of the period, reinvestment of all dividends and other
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported. The figures do not
include sales charges; results for each class would be lower if sales
charges were included. Total investment returns for periods of less than
one year have been annualized.
(2) Effective for fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose the average commission rate paid per share of
common stock investments purchased or sold.
24
<PAGE>
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25
<PAGE>
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26
