PaineWebber [Logo]
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MONEY MARKET
FUND
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SEMIANNUAL REPORT
AUGUST 31, 1997
<PAGE>
SEMIANNUAL REPORT
October 15, 1997
Dear Shareholder,
We are pleased to present the semiannual report for PaineWebber Money Market
Fund for the six months ended August 31, 1997.
GENERAL MARKET OVERVIEW
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The Federal Reserve Board's decision to raise short-term interest rates to
5.5% in March resulted in virtually every bond sector posting a negative total
return during the first three months of 1997. The high yield sector was the
exception, as gains in January and February more than offset the softness
following the Fed move. Then, on April 28, 1997, the report of the Employment
Cost Index--considered the most comprehensive wage-inflation indicator, and
critical to Fed policy--indicated a very positive inflation picture. This
information, plus optimism over an agreed upon framework by President Clinton
and the Republicans to balance the budget by 2002, turned market sentiment
bullish. Bonds rallied strongly, sending the yield on the long bond from 7.1% on
March 31, 1997 to 6.8% on June 30, 1997. July continued to provide good news for
fixed income investors as additional favorable inflation data prompted the yield
on the long bond to drop even further. By August's end, all fixed income sectors
contributed positively to overall debt market performance; again, however, the
high yield sector outperformed others as investors' willingness to accept higher
credit risk produced higher returns.
PORTFOLIO REVIEW
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PERFORMANCE
The Fund's current yields for Class A, B and C shares for the seven-day
period ended August 31, 1997 were 4.25%, 3.76% and 3.72%, respectively.
PORTFOLIO HIGHLIGHTS--During the semiannual period, the Fund's weighted average
maturity was maintained at approximately 56 days, five to 10 days longer than
the IBC Financial Data average for similar money market funds. This was done in
response to economic data indicating low inflation with slight economic growth.
Additionally, we took advantage of the market's substantial volatility by
purchasing securities at higher yields when rates backed up (that is, when rates
rose).
1
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OUTLOOK
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Near-term, we plan to keep the Fund's average weighted maturity around its
present level. Going forward, every significant economic number released will be
closely scrutinized. Inflation is always a concern and, as such, will be
carefully monitored. Investment decisions for the Fund will continue to be
dominated by credit, quality and liquidity. Although we are interested in
maintaining higher yields, we will not do so by sacrificing the Fund's emphasis
on security, quality and liquidity.
Our ultimate objective in managing your investments is to help you successfully
meet your financial goals. We thank you for your continued support and welcome
any comments or questions you may have.
Sincerely,
/s/Margo N. Alexander /s/Dennis L. McCauley
- --------------------- ---------------------
MARGO N. ALEXANDER DENNIS L. MCCAULEY
President, Managing Director and
Mitchell Hutchins Asset Management Inc. Chief Investment Officer--
Fixed Income,
Mitchell Hutchins Asset Management Inc.
/s/Susan P. Ryan
- ---------------------
SUSAN P. RYAN
Senior Vice President,
Mitchell Hutchins Asset Management Inc.
This letter is intended to assist shareholders in understanding how the Fund
performed during the semiannual period ended August 31, 1997 and reflects our
views at the time we are writing this report. Of course, these views may change
in response to changing circumstances. We encourage you to consult your
investment executive regarding your personal investment program.
2
<PAGE>
PAINEWEBBER MONEY MARKET FUND
STATEMENT OF NET ASSETS AUGUST 31, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
-------- -------------------- --------------- ----------
U.S. GOVERNMENT AGENCY OBLIGATIONS--9.87%
<S> <C> <C> <C>
$1,650 Federal Home Loan Bank ..................................... 10/16/97 to 07/08/98 5.625 to 5.900% $1,650,400
1,000 Federal National Mortgage Association ...................... 02/18/98 5.500 998,606
1,000 Federal National Mortgage Association ...................... 09/02/97 5.440* 1,000,000
----------
Total U.S. Government Agency Obligations (cost--$3,649,006) ............ 3,649,006
----------
BANK NOTES--2.71%
DOMESTIC--2.71%
1,000 LaSalle National Bank (cost--$1,000,000) ................... 04/13/98 6.230 1,000,000
----------
CERTIFICATES OF DEPOSIT--10.42%
DOMESTIC--2.71%
1,000 Morgan Guaranty Trust Company .............................. 03/19/98 5.910 999,791
----------
YANKEE--7.71%
600 ABN AMRO Bank N.V. ......................................... 12/04/97 5.500 599,970
1,500 Commerzbank AG ............................................. 09/05/97 5.560 1,500,002
750 Societe Generale ........................................... 01/06/98 5.720 749,875
----------
2,849,847
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Total Certificates of Deposit (cost--$3,849,638) ....................... 3,849,638
----------
COMMERCIAL [email protected]%
ASSET-BACKED--9.55%
534 Enterprise Funding Corporation ............................. 09/12/97 5.510 533,101
1,500 Falcon Asset Securitization Corporation .................... 09/18/97 5.520 1,496,090
1,500 Triple-A One Funding Corporation ........................... 09/08/97 5.520 1,498,390
----------
3,527,581
----------
AUTO & TRUCK--8.88%
1,800 Daimler-Benz North America Corporation ..................... 10/23/97 5.500 1,785,700
1,500 General Motors Acceptance Corporation ...................... 09/16/97 5.530 1,496,544
----------
3,282,244
----------
BANKING--14.27%
1,500 BBL North America Incorporated ............................. 10/08/97 5.500 1,491,459
2,000 San Paolo U.S. Financial Company ........................... 09/11/97 5.520 1,996,933
1,800 Unifunding ................................................. 10/21/97 5.510 1,786,225
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5,274,617
----------
BROKER-DEALER--2.27%
850 Merrill Lynch & Company, Incorporated ...................... 12/09/97 5.520 837,097
----------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
-------- -------------------- --------------- ----------
COMMERCIAL PAPER (CONCLUDED)
<S> <C> <C> <C>
DRUGS, HEALTH CARE--4.42%
$1,638 American Home Products ..................................... 09/23/97 5.500% $1,632,494
----------
FINANCE-AIRCRAFT--4.05%
1,500 International Lease Financing .............................. 09/08/97 5.500 1,498,396
----------
FINANCE-CONDUIT--4.05%
1,500 Compagnie Bancaire USA Funding Corporation ................. 09/19/97 5.590 1,495,807
----------
FINANCE-SUBSIDIARY--7.50%
1,500 Creditanstalt Finance Incorporated ......................... 09/12/97 5.510 1,497,475
1,275 National Australia Funding (Delaware)
Incorporated ............................................. 09/08/97 5.500 1,273,636
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2,771,111
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FOOD, BEVERAGE & TOBACCO--2.70%
1,000 Grand Metropolitan Capital Corporation ..................... 09/11/97 5.530 998,464
----------
MISCELLANEOUS--2.28%
850 Beta Finance Incorporated .................................. 11/06/97 5.510 841,414
----------
Total Commercial Paper (cost--$22,159,225) ............................. 22,159,225
----------
SHORT-TERM CORPORATE OBLIGATIONS--17.06%
BROKER-DEALER--2.17%
800 Bear Stearns Companies Incorporated ........................ 09/02/97 5.590 to 5.680* 800,000
----------
FINANCE-CONSUMER--5.41%
2,000 Household Finance Corporation .............................. 10/15/97 6.250 2,000,966
----------
FINANCE-DIVERSIFIED--2.03%
750 Associates Corporation of North America .................... 02/01/98 6.125 749,749
----------
FOOD, BEVERAGE & TOBACCO--1.36%
500 Philip Morris Companies, Incorporated ...................... 12/01/97 9.250 504,276
----------
INSURANCE--3.38%
1,250 USAA Capital Corporation ................................... 11/17/97 5.730 1,249,240
----------
MISCELLANEOUS--2.71%
1,000 Beta Finance Incorporated .................................. 09/02/97 5.540* 1,000,000
----------
Total Short-Term Corporate Obligations (cost--$6,304,231) .............. 6,304,231
----------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
-------- -------------------- --------------- ----------
<S> <C> <C> <C>
REPURCHASE AGREEMENT--0.66%
$245 Repurchase Agreement dated 08/29/97 with
State Street Bank and Trust Company,
collateralized by $244,322 U.S. Treasury Notes
5.750% due 09/30/97; proceeds: $245,136
(cost--$245,000) ......................................... 09/02/97 5.000% $ 245,000
-----------
Total Investments (cost--$37,207,100 which approximates cost
for federal income tax purposes)--100.69% ............................ 37,207,100
Liabilities in excess of other assets--(0.69%) ......................... (253,231)
-----------
Net Assets (applicable to 13,496,361, 18,754,221 and
4,714,569 shares of Class A, Class B, and Class C, respectively,
each equivalent to $1.00 per share)--100% ............................ $36,953,869
===========
</TABLE>
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* Variable rate securities-maturity date reflects earlier of reset date or
maturity date. The interest rates shown are the current rates as of August
31, 1997, and reset periodically.
@ Interest rates shown are discount rates at date of purchase.
Weighted average maturity 56 days
See accompanying notes to financial statements
5
<PAGE>
PAINEWEBBER MONEY MARKET FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS
ENDED
AUGUST 31, 1997
(UNAUDITED)
------------------
INVESTMENT INCOME:
Interest ..................................................... $ 1,246,799
-----------
EXPENSES:
Investment advisory and administration ....................... 110,266
Service fees--Class A ........................................ 20,791
Service and distribution fees--Class B ....................... 80,964
Service and distribution fees--Class C ....................... 22,061
State registration fees ...................................... 34,531
Legal and audit .............................................. 29,244
Transfer agency and service fees ............................. 27,108
Reports and notices to shareholders .......................... 23,944
Directors' fees .............................................. 6,125
Custody and accounting ....................................... 2,190
Other expenses ............................................... 2,225
-----------
359,449
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NET INVESTMENT INCOME ........................................ 887,350
NET REALIZED LOSSES FROM INVESTMENT TRANSACTIONS ............. (265)
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ......... $ 887,085
===========
See accompanying notes to financial statements
6
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
AUGUST 31, 1997 ENDED
(UNAUDITED) FEBRUARY 28, 1997
------------ ------------
FROM OPERATIONS:
<S> <C> <C>
Net investment income ............................................... $ 887,350 $ 1,613,777
Net realized gains (losses) from investment transactions ............ (265) 7,764
------------ ------------
Net increase in net assets resulting from operations ................ 887,085 1,621,541
------------ ------------
Dividends to shareholders from:
Net investment income--Class A ...................................... (361,450) (631,332)
Net investment income--Class B ...................................... (414,496) (804,674)
Net investment income--Class C ...................................... (111,404) (177,771)
------------ ------------
(887,350) (1,613,777)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS 1,253,814 (20,388,584)
------------ ------------
Net increase (decrease) in net assets ............................... 1,253,549 (20,380,820)
NET ASSETS:
Beginning of period ................................................. 35,700,320 56,081,140
------------ ------------
End of period ....................................................... $ 36,953,869 $ 35,700,320
============ ============
</TABLE>
See accompanying notes to financial statements
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Master Series, Inc. ("Master Series") was incorporated in
Maryland on October 29, 1985 and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as an open-end,
diversified series investment company which currently offers two series of
shares: PaineWebber Money Market Fund ("Fund") and PaineWebber Balanced Fund.
The financial statements for PaineWebber Balanced Fund are not included herein.
The Fund offers Class A, Class B and Class C shares. Each class represents
interests in the same assets of the Fund and the classes are identical except
for differences in their sales charge structure, ongoing service and
distribution charges and certain transfer agency expenses. In addition, Class B
shares automatically convert to Class A shares approximately six years after
initial issuance. All classes of shares have equal voting privileges, except
that each class has exclusive voting rights with respect to its service and/or
distribution plan. All classes of shares may be obtained only through an
exchange of shares of the corresponding class of other PaineWebber mutual funds.
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 AND ACCOUNTING FOR INVESTMENTS--Investments are valued at amortized
cost which approximates market value. Investment transactions are recorded on
the trade date. Realized gains and losses from investment transactions are
calculated using the identified cost method. Interest income is recorded on an
accrual basis. Premiums are amortized and discounts are accreted as adjustments
to interest income and the identified cost of investments.
REPURCHASE AGREEMENTS--The Fund's custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is 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 of default of the 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 may participate in
joint repurchase agreement transactions with other funds managed by Mitchell
Hutchins Asset Management Inc. ("Mitchell Hutchins"), a wholly owned asset
management subsidiary of PaineWebber and investment adviser and administrator of
the Fund.
NET INVESTMENT INCOME AND INVESTMENT TRANSACTIONS--Income and expenses
(excluding class-specific expenses) are allocated proportionately to each class
of shares based upon the relative net asset value of dividend-eligible shares of
each class at the beginning of the day (after adjusting for current capital
share activity of the respective classes). Realized gains and losses are
allocated proportionately to each class of shares based upon the relative value
of shares outstanding 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. 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
reclassification.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
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 developments, including those
particular to a specific industry 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 Mitchell Hutchins serves as investment adviser and administrator of the
Fund. In accordance with the Advisory Contract, the Fund pays Mitchell Hutchins
an investment advisory and administration fee, which is accrued daily and paid
monthly, at the annual rate of 0.50% of the Fund's average daily net assets. At
August 31, 1997, the Fund owed Mitchell Hutchins $16,702 for investment advisory
and administration fees.
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 the
annual rate of 0.25% of the average daily net assets of each class of shares and
monthly distribution fees at an annual rate of 0.50% of the average daily net
assets of Class B and Class C shares. At August 31, 1997 the Fund owed Mitchell
Hutchins $19,166 in service and distribution fees.
Mitchell Hutchins also receives the proceeds of the contingent deferred sales
charges paid upon certain redemptions of Class A, Class B and Class C shares.
Mitchell Hutchins has informed the Fund that for the six months ended August 31,
1997, it earned $41,177 in sales charges.
TRANSFER AGENCY SERVICE FEES
Prior to August 1, 1997, the Fund paid PaineWebber an annual fee of $4.00 per
active PaineWebber shareholder account, plus certain out-of-pocket expenses, for
certain services not provided by the Fund's transfer agent. For these services
for the period ended July 31, 1997, PaineWebber earned $5,548 in service fees.
Subsequent to August 1, 1997, PaineWebber provides transfer agency related
services to the Fund pursuant to a delegation of authority from PFPC, Inc., the
Fund's transfer agent, and was compensated $1,796 for the month of August for
these services by PFPC, Inc., not the Fund.
OTHER LIABILITIES
At August 31, 1997, the amounts payable for Fund shares repurchased and
dividends payable aggregated $362,760 and $100,898, respectively.
CAPITAL STOCK
There are 10 billion shares of $0.001 par value common stock authorized for
Master Series, of which 1 billion were allocated to the Fund. Transactions in
shares of common stock, at $1.00 per share, were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
-------------------------- ------------------------- -------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED ENDED ENDED ENDED ENDED ENDED
AUGUST 31, FEBRUARY 28, AUGUST 31, FEBRUARY 28, AUGUST 31, FEBRUARY 28
1997 1997 1997 1997 1997 1997
----------- ------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 44,579,087 125,631,344 28,124,231 19,555,704 77,933,210 76,050,153
Shares repurchased (44,857,891) (139,742,746) (26,422,318) (26,762,760) (78,795,488) (76,435,118)
Shares converted from Class B to Class A 1,667,431 1,679,739 (1,667,431) (1,679,739) -- --
Dividends reinvested 300,804 503,194 321,081 678,507 71,098 133,138
----------- ------------ ----------- ----------- ----------- ------------
Net increase (decrease) in shares outstanding 1,689,431 (11,928,469) 355,563 (8,208,288) (791,180) (251,827)
=========== ============ =========== =========== =========== ===========
</TABLE>
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
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 federal excise tax.
At February 28, 1997, the Fund had capital loss carryforwards of $11,016
available as a reduction, to the extent provided in the regulations, of future
net realized gains, which will expire between February 28, 1999 and February 28,
2003. To the extent that such losses are used to offset future capital gains, it
is probable that the gains so offset will not be distributed.
10
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PAINEWEBBER MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD IS
PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------
FOR THE
SIX MONTHS FOR THE YEARS ENDED
ENDED -------------------------------------------------------------
AUGUST 31, FEBRUARY 28,
1997 FEBRUARY 28, FEBRUARY 29, ---------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Net investment income ................................ 0.022 0.040 0.046 0.037 0.016 0.022
Dividends from net investment income ................. (0.022) (0.040) (0.046) (0.037) (0.016) (0.022)
------- ------- ------- ------- ------- -------
Net asset value, end of period ....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
Total investment return(1) ........................... 2.19% 4.11% 4.69% 3.95% 1.64% 2.25%
======= ======= ======= ======= ======= =======
Ratios/Supplemental data:
Net assets, end of period (000's) .................... $13,497 $11,808 $23,735 $21,042 $14,204 $11,716
EXPENSES TO AVERAGE NET ASSETS ....................... 1.31%* 1.42% 1.31% 1.06% 1.72% 1.74%
Net investment income to average net assets .......... 4.35%* 4.09% 4.68% 3.85% 1.70% 2.18%
</TABLE>
- ----------
* Annualized
+ Commencement of issuance of shares
(1) Total investment return is calculated assuming a $1,000 investment in Fund
shares on the first day of each period reported, 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 return for periods of less
than one year has not been annualized.
12
<PAGE>
PAINEWEBBER MONEY MARKET FUND
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------------------------
FOR THE
SIX MONTHS FOR THE YEARS ENDED
ENDED -------------------------------------------------------------
AUGUST 31, FEBRUARY 28,
1997 FEBRUARY 28, FEBRUARY 29, ---------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Net investment income ................................ 0.019 0.035 0.041 0.032 0.011 0.016
Dividends from net investment income ................. (0.019) (0.035) (0.041) (0.032) (0.011) (0.016)
------- ------- ------- ------- ------- -------
Net asset value, end of period ....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
Total investment return(1) ........................... 1.93% 3.60% 4.18% 3.41% 1.12% 1.73%
======= ======= ======= ======= ======= =======
Ratios/Supplemental data:
Net assets, end of period (000's) .................... $18,745 $18,389 $26,592 $39,123 $ 9,819 $15,280
EXPENSES TO AVERAGE NET ASSETS ....................... 1.81%* 1.90% 1.79% 1.55% 2.25% 2.28%
Net investment income to average net assets .......... 3.84%* 3.55% 4.17% 3.46% 1.16% 1.69%
</TABLE>
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------------------------------------
FOR THE
SIX MONTHS FOR THE YEARS ENDED FOR THE PERIOD
ENDED ------------------------------------------------ JULY 14, 1992+
AUGUST 31, FEBRUARY 28, TO
1997 FEBRUARY 28, FEBRUARY 29, -------------------- FEBRUARY 28
(UNAUDITED) 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Net investment income .............................. 0.019 0.034 0.041 0.033 0.012 0.009
Dividends from net investment income ............... (0.019) (0.034) (0.041) (0.033) (0.012) (0.009)
------- ------- ------- ------- ------- -------
Net asset value, end of period ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
Total investment return(1) ......................... 1.90% 3.50% 4.14% 3.44% 1.19% 0.81%
======= ======= ======= ======= ======= =======
Ratios/Supplemental data:
Net assets, end of period (000's) .................. $ 4,712 $ 5,504 $ 5,754 $16,137 $ 9,430 $ 2,220
EXPENSES TO AVERAGE NET ASSETS ..................... 1.88%* 1.99% 1.79% 1.55% 2.14% 2.14%*
Net investment income to average net assets ........ 3.79%* 3.47% 4.27% 3.35% 1.36% 1.67%*
</TABLE>
13
<PAGE>
DIRECTORS
E. Garrett Bewkes, Jr.
CHAIRMAN Mary C. Farrell
Meyer Feldberg
Margo N. Alexander George W. Gowen
Richard Q. Armstrong Frederic V. Malek
Richard R. Burt Carl W. Schafer
PRINCIPAL OFFICERS
Margo N. Alexander Paul H. Schubert
PRESIDENT VICE PRESIDENT AND TREASURER
Victoria E. Schonfeld Dennis McCauley
VICE PRESIDENT VICE PRESIDENT
Dianne E. O'Donnell Susan P. Ryan
VICE PRESIDENT AND SECRETARY VICE PRESIDENT
INVESTMENT ADVISER
ADMINISTRATOR AND DISTRIBUTOR
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
THE FINANCIAL INFORMATION INCLUDED HEREIN IS TAKEN FROM THE RECORDS OF THE FUND
WITHOUT EXAMINATION BY INDEPENDENT AUDITORS WHO DO NOT EXPRESS AN OPINION
THEREON.
THIS REPORT IS NOT TO BE USED IN CONNECTION WITH THE OFFERING OF SHARES OF THE
FUND UNLESS ACCOMPANIED OR PRECEDED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
PaineWebber [Logo]
(C)1997 PaineWebber Incorporated
Member SIPC
