<PAGE>
---------------------------------
The Brinson Funds
Brinson U.S. Balanced Fund
Brinson U.S. Equity Fund
Brinson U.S. Large Capitalization Equity Fund
Brinson U.S. Large Capitalization Growth Fund
Brinson U.S. Small Capitalization Growth Fund
Brinson U.S. Bond Fund
Brinson High Yield Fund
Semi-Annual Report
December 31, 1999
[BRINSON LOGO APPEARS HERE]
Institutional Asset Management
---------------------------------
<PAGE>
Trustees and Officers
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[BRINSON LOGO]
Trustees
Walter E. Auch
Frank K. Reilly, CFA
Edward M. Roob
Officers
Frank K. Reilly, CFA Carolyn M. Burke, CPA
Chairman of the Board Secretary and Treasurer
E. Thomas McFarlan David E. Floyd, CPA
President Assistant Secretary
Thomas J. Digenan, CFA, CPA Mark F. Kemper
Vice President Assistant Secretary
Debra L. Nichols
Vice President
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1
<PAGE>
The Funds' Advisor - Brinson Partners, Inc.
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Since the founding of our organization nearly twenty years ago, we have focused
our collective energy on two goals: creating meaningful value-added investment
performance; and providing our clients with individualized client relationships
of the highest quality.
Now, in 2000, more than 1,200 employees located in 11 countries around the world
continue to deliver investment strategies that meet our clients' needs. With an
unrelenting focus on our goals, we have grown into one of the world's premier
investment management organizations, and a recognized leader in our industry. In
North America, we make our investment capabilities available to institutions and
individual investors through the Brinson Family of Funds. The Brinson Funds are
diversified, institutionally priced mutual funds that provide investors
convenient access to our global investment expertise and capabilities.
Within a framework of integrated capital markets, we select portfolio
investments by focusing on long-term investment fundamentals. Investment
performance for our clients is maximized within and across asset classes through
a comprehensive understanding of global investment markets and their
interrelationships. We apply a systematic, disciplined approach to valuing
investments and combine the seasoned judgement of our global investment teams to
construct optimal portfolios-balancing considerations for both risk and return.
Brinson Partners, Inc. is a member of UBS Asset Management, the institutional
asset management division of UBS AG.
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2
<PAGE>
Table of Contents
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[BRINSON LOGO]
Shareholder Letter................................... 4
U.S. Economic and Market Highlights.................. 5
U.S. Balanced Fund................................... 6
Schedule of Investments......................... 10
Financial Statements............................ 13
Financial Highlights............................ 16
U.S. Equity Fund..................................... 18
Schedule of Investments......................... 22
Financial Statements............................ 24
Financial Highlights............................ 27
U.S. Large Capitalization Equity Fund................ 29
Schedule of Investments......................... 33
Financial Statements............................ 34
Financial Highlights............................ 37
U.S. Large Capitalization Growth Fund................ 39
Schedule of Investments......................... 43
Financial Statements............................ 44
Financial Highlights............................ 47
U.S. Small Capitalization Growth Fund................ 49
Schedule of Investments......................... 53
Financial Statements............................ 55
Financial Highlights............................ 58
U.S. Bond Fund....................................... 60
Schedule of Investments......................... 64
Financial Statements............................ 67
Financial Highlights............................ 70
High Yield Fund...................................... 72
Schedule of Investments......................... 76
Financial Statements............................ 79
Financial Highlights............................ 82
The Brinson Funds-Notes to Financial Statements...... 84
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3
<PAGE>
Shareholder Letter
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[BRINSON LOGO]
January 27, 2000
Dear Shareholder:
We are pleased to present the semi-annual report for The Brinson Funds for the
six months ended December 31, 1999. This report provides a discussion on the
current U.S. Economic outlook. We will also provide our current portfolio
strategies and performance updates for each of our seven Domestic Mutual Funds.
The decade of the 1990s ended with a particularly challenging year. We continued
to apply our proven value-based investment process across all of our portfolios,
but our investment results varied substantially. In some areas, such as fixed
income, our performance was excellent relative to both the market and our peers.
In other areas, most notably multi-asset and equity portfolios, results were
disappointing.
Throughout 1999, our asset allocation strategies continued to focus on reducing
exposure to the risks presented by equity prices that have been driven far above
even optimistic estimates of underlying value. While the risk hedge in balanced
portfolios had little net effect on performance through most of the year, the
surge in equity prices late in the year hampered the returns relative to the
benchmarks.
The broad array of our equity portfolios, with the exception of the growth
portfolios, significantly lagged their benchmarks in 1999. Some degree of
underperformance was unavoidable as the U.S. market was increasingly driven by
momentum, which in turn focused more tightly on narrow technology and e-commerce
stocks. In such a market, the fundamental price/value discrepancies that are the
core of our investment process are effectively ignored in the market. In
addition, our stock selection was uncharacteristically weak and a meaningful
source of the underperformance of our U.S. and Global Equity portfolios.
In fixed income our U.S. Bond and High Yield portfolios outpaced the market and
ranked highly in their respective universes of active managers. However, outside
the U.S., our Global Bond portfolio generally underperformed, due almost
entirely to strength in both the Japanese bond market and the yen, where we are
underweighted.
Our fundamental assessments across markets have been both accurate and
perceptive, but momentum rather than the reality of fundamental value has
continued to drive equity markets, particularly in the U.S. We have seen this
phenomenon historically and it has always proven to be a sign of danger, that
ultimately ends badly for the market in general and the momentum players in
particular. Over time, these styles ebb and flow but momentum driven approaches
have no lasting link to underlying fundamentals and always fail to deliver when
viewed over meaningful horizons. It is these concerns which underlie our current
asset allocation and equity portfolio strategies.
2000 will be a challenging year, but we are confident that remaining true to our
investment disciplines will in the long run accrue to our shareholders' benefit.
As always, we welcome your thoughts and comments, and appreciate your continued
trust and the confidence you have placed in The Brinson Funds.
Sincerely,
/s/ Gary P. Brinson
Gary P. Brinson
Chairman and Chief Investment Officer
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4
<PAGE>
U.S. Economic and Market Highlights
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[BRINSON LOGO]
U.S. economic statistics continue to surprise financial markets. In the fourth
quarter of 1999, real GDP rose a larger-than-expected 5.8%. Stronger consumer
spending, inventory building and exports were the main contributors. Business
investment was the only major component recording a slowdown, but most of that
decline reflects a pre-Y2K pause in computer equipment installation. The
strength in consumer spending was broad-based, with big-ticket purchases of
autos and home furnishings registering the largest increases. For the year 1999
as a whole, GDP growth came in at 4.0 percent, almost the same as in 1998.
Economic releases are apt to surpass market expectations in the first half of
the year, and barring unexpected strong action by the Federal Reserve, real
growth would remain strong in 2000.
Tight labor market conditions are producing gradually rising wage pressures, in
line with our expectations. Employment costs released for the fourth quarter
registered a bigger-than-expected surge of 1.1 percent, the strongest since
1991. The fourth-quarter acceleration in employment costs primarily reflects
faster growth in benefits. This has been the area of our concern, as generally
slowing benefit expenses have been a major force in the moderate growth of labor
costs in the 1990s.
Inflation moved up in 1999, with consumer prices rising 2.7 percent. The rise
primarily reflects higher energy prices, and the most recent surge in oil prices
suggests that short-term inflation risks have increased. Core inflation, which
tended to move sideways around 2 percent in 1999, is assumed to move higher in
2000, stimulated by rising unit labor costs.
- --------------------------------------------------------------------------------
U.S. Environment
- --------------------------------------------------------------------------------
Major Markets
One Year Ended December 31, 1999
Total Return
U.S. Cash Equivalents 4.44
U.S. Bonds -0.84
U.S. Equities 23.82
Salomon U.S. Treasury Benchmark Returns
One Year Ended December 31, 1999
Maturity (Years) Total Return
1 4.26
2 1.94
5 -2.54
10 -8.41
30 -14.89
Top Ten Industry Returns Relative to S&P 500
One Year Ended December 31, 1999
Wireless 146.83
Semiconductors 79.84
Media 38.07
Heavy Electrical Eqp 34.94
Electronic Equipment 34.94
Computer Software 30.34
Oil Services 18.83
Energy Reserves 13.02
Securities & Asset. Mgmt 11.97
Telephone 10.47
Bottom Ten Industry Returns Relative to S&P 500
One Year Ended December 31, 1999
Thrifts -23.15
Restaurants -23.48
Defense & Aerospace -23.62
Construction & Real Prop -24.42
Motor Vehicles & Parts -24.82
Food & Beverage -25.12
Environment Services -27.54
Apparel & Textiles -31.82
Medical Services -37.07
Tobacco -50.91
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5
<PAGE>
U.S. Balanced Fund
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[BRINSON LOGO]
The Brinson U.S. Balanced Fund Class I has produced an annualized return of
10.09% since its inception on December 31, 1994, while the return of the U.S.
Balanced Mutual Fund Index was 20.14% over this time period. Importantly
however, the U.S. Balanced Fund's performance was achieved with an annualized
volatility over the life of the Fund of 5.80%, or approximately 40% less than
the benchmark's annualized volatility of 9.63%. In 1999, the Brinson U.S.
Balanced Fund Class I returned -6.95% which was substantially below the
benchmark return of 14.66%. The underperformance in 1999 was due primarily to
the equity underweight, the bond overweight, and adverse market conditions which
negatively impacted our fundamental value-based equity investment style.
The strength of the U.S. equity market continued to be driven in part by the
success of a small number of the largest capitalization companies, with
technology stocks being shown particular favor. Our significant underweight in
technology growth stocks, combined with a tilt away from the largest members of
the index and overweight in value shares, contributed to a large
underperformance of the U.S. equity portion of the U.S. Balanced Fund. In the
U.S. bond market, our moderately long duration strategy had a negative impact on
performance as yields increased during 1999 while the overweight and security
selection in corporate issues had significantly positive impacts on performance.
The allocation to U.S. Treasury Inflation Protected Securities (TIPS) hurt the
Fund's performance while the allocation to lower-credit issues helped the Fund's
performance.
The sustained rapid advance of the overall U.S. equity market has, in our
assessment, resulted in a pronounced level of overpricing and, therefore, an
expected return that is absolutely unattractive and fails to compensate
adequately for the risks inherent in equity investment. Bonds are now offering
yields above our estimates of longer-term equilibrium levels. This is
particularly true in the case of TIPS, where the uncertainties associated with
future inflation do not introduce a risk element into the assessment of value.
The Fund's strategy, therefore, remains significantly overweight bonds and
underweight equities. A substantial portion of the bond allocation is currently
held in TIPS.
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6
<PAGE>
U.S. Balanced Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Total Return
<TABLE>
<CAPTION>
6 months 1 year 3 years 12/31/94*
ended ended ended to
12/31/99 12/31/99 12/31/99 12/31/99
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brinson U.S. Balanced Fund Class I -7.83% -6.95% 5.01% 10.09%
- ------------------------------------------------------------------------------------------------------
U.S. Balanced Mutual Fund Index** 7.03 14.66 18.95 20.14
- ------------------------------------------------------------------------------------------------------
Salomon Smith Barney Broad Investment Grade
(BIG) Bond Index 0.55 -0.84 5.72 7.74
- ------------------------------------------------------------------------------------------------------
Wilshire 5000 Index 10.45 23.56 26.04 27.06
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Performance inception date of the Brinson U.S. Balanced Fund Class I.
** An un-managed index compiled by the Advisor, constructed as follows: 65%
Wilshire 5000 Index and 35% Salomon Smith Barney BIG Bond Index.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson U.S.
Balanced Fund Class I, the U.S. Balanced Mutual Fund Index, the Salomon Smith
Barney BIG Bond Index and the Wilshire 5000 Index if you had invested $1,000,000
on December 31, 1994, and had reinvested all your income dividends and capital
gain distributions through December 31, 1999. No adjustment has been made for
any income taxes payable by shareholders on income dividends and capital gain
distributions. Past performance is no guarantee of future results. Share price
and return will vary with market conditions; investors may realize a gain or
loss upon redemption.
Brinson U.S. Balanced Fund Class I vs. U.S. Balanced Mutual Fund Index, Salomon
Smith Barney BIG Bond Index and Wilshire 5000 Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Label A B C D
- -------------------------------------------------------------------------------------------------------------------------
Brinson U.S. U.S. Balanced Salomon Smith
Balanced Fund Mutual Fund Barney BIG
Label Class I Index Wilshire 5000 Index Bond Index
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 12/31/94 1,000,000 1,000,000 1,000,000 1,000,000
- -------------------------------------------------------------------------------------------------------------------------
2 1/31/95 1,019,000 1,020,459 1,021,610 1,020,700
- -------------------------------------------------------------------------------------------------------------------------
3 2/28/95 1,050,000 1,054,246 1,062,301 1,044,584
- -------------------------------------------------------------------------------------------------------------------------
4 3/31/95 1,064,000 1,074,390 1,090,303 1,050,643
- -------------------------------------------------------------------------------------------------------------------------
5 4/30/95 1,080,000 1,096,416 1,117,397 1,065,037
- -------------------------------------------------------------------------------------------------------------------------
6 5/31/95 1,120,000 1,133,880 1,155,243 1,107,319
- -------------------------------------------------------------------------------------------------------------------------
7 6/30/95 1,139,086 1,160,041 1,192,095 1,115,070
- -------------------------------------------------------------------------------------------------------------------------
8 7/31/95 1,154,301 1,190,257 1,241,150 1,112,840
- -------------------------------------------------------------------------------------------------------------------------
9 8/31/95 1,170,530 1,202,592 1,253,251 1,125,637
- -------------------------------------------------------------------------------------------------------------------------
10 9/30/95 1,192,845 1,236,361 1,301,050 1,136,219
- -------------------------------------------------------------------------------------------------------------------------
11 10/31/95 1,199,945 1,234,092 1,287,988 1,151,444
- -------------------------------------------------------------------------------------------------------------------------
12 11/30/95 1,236,461 1,274,817 1,342,560 1,169,406
- -------------------------------------------------------------------------------------------------------------------------
13 12/31/95 1,254,813 1,294,523 1,364,511 1,185,544
- -------------------------------------------------------------------------------------------------------------------------
14 1/31/96 1,278,797 1,320,146 1,401,066 1,193,606
- -------------------------------------------------------------------------------------------------------------------------
15 2/29/96 1,273,346 1,327,345 1,425,571 1,173,434
- -------------------------------------------------------------------------------------------------------------------------
16 3/31/96 1,276,616 1,333,439 1,441,166 1,164,985
- -------------------------------------------------------------------------------------------------------------------------
17 4/30/96 1,279,887 1,351,402 1,476,778 1,156,364
- -------------------------------------------------------------------------------------------------------------------------
18 5/31/96 1,284,248 1,375,182 1,517,153 1,155,786
- -------------------------------------------------------------------------------------------------------------------------
19 6/30/96 1,293,124 1,374,034 1,504,667 1,170,696
- -------------------------------------------------------------------------------------------------------------------------
20 7/31/96 1,273,247 1,327,149 1,423,490 1,173,857
- -------------------------------------------------------------------------------------------------------------------------
21 8/31/96 1,287,603 1,354,048 1,469,027 1,172,096
- -------------------------------------------------------------------------------------------------------------------------
22 9/30/96 1,324,045 1,409,152 1,547,238 1,192,490
- -------------------------------------------------------------------------------------------------------------------------
23 10/31/96 1,354,965 1,433,054 1,568,869 1,219,321
- -------------------------------------------------------------------------------------------------------------------------
24 11/30/96 1,405,762 1,503,041 1,672,806 1,239,440
- -------------------------------------------------------------------------------------------------------------------------
25 12/31/96 1,396,859 1,487,401 1,653,954 1,228,533
- -------------------------------------------------------------------------------------------------------------------------
26 1/31/97 1,414,616 1,541,133 1,742,490 1,233,201
- -------------------------------------------------------------------------------------------------------------------------
27 2/28/97 1,419,351 1,541,265 1,741,688 1,234,558
- -------------------------------------------------------------------------------------------------------------------------
28 3/31/97 1,394,492 1,491,506 1,664,653 1,222,089
- -------------------------------------------------------------------------------------------------------------------------
29 4/30/97 1,418,167 1,541,250 1,737,249 1,239,565
- -------------------------------------------------------------------------------------------------------------------------
30 5/31/97 1,459,599 1,617,300 1,860,333 1,251,217
- -------------------------------------------------------------------------------------------------------------------------
31 6/30/97 1,493,510 1,672,330 1,945,797 1,266,106
- -------------------------------------------------------------------------------------------------------------------------
32 7/31/97 1,555,541 1,771,761 2,095,390 1,300,418
- -------------------------------------------------------------------------------------------------------------------------
33 8/31/97 1,530,490 1,723,138 2,016,624 1,289,234
- -------------------------------------------------------------------------------------------------------------------------
34 9/30/97 1,563,891 1,798,097 2,135,625 1,308,186
- -------------------------------------------------------------------------------------------------------------------------
35 10/31/97 1,548,383 1,768,165 2,064,487 1,326,893
- -------------------------------------------------------------------------------------------------------------------------
36 11/30/97 1,559,120 1,808,702 2,132,078 1,333,129
- -------------------------------------------------------------------------------------------------------------------------
37 12/31/97 1,581,464 1,836,885 2,171,479 1,346,727
- -------------------------------------------------------------------------------------------------------------------------
38 1/31/98 1,597,411 1,851,662 2,183,270 1,364,100
- -------------------------------------------------------------------------------------------------------------------------
39 2/28/98 1,638,609 1,938,829 2,342,213 1,363,145
- -------------------------------------------------------------------------------------------------------------------------
40 3/31/98 1,670,504 2,004,551 2,459,440 1,368,461
- -------------------------------------------------------------------------------------------------------------------------
41 4/30/98 1,666,517 2,023,665 2,488,634 1,375,577
- -------------------------------------------------------------------------------------------------------------------------
42 5/31/98 1,670,504 1,995,462 2,422,411 1,388,783
- -------------------------------------------------------------------------------------------------------------------------
43 6/30/98 1,675,623 2,046,664 2,507,341 1,400,171
- -------------------------------------------------------------------------------------------------------------------------
44 7/31/98 1,661,933 2,019,021 2,452,405 1,403,111
- -------------------------------------------------------------------------------------------------------------------------
45 8/31/98 1,614,019 1,825,458 2,070,492 1,424,579
- -------------------------------------------------------------------------------------------------------------------------
46 9/30/98 1,672,885 1,918,042 2,205,737 1,458,199
- -------------------------------------------------------------------------------------------------------------------------
47 10/31/98 1,705,740 2,007,777 2,369,843 1,451,637
- -------------------------------------------------------------------------------------------------------------------------
48 11/30/98 1,726,275 2,093,822 2,519,072 1,459,621
- -------------------------------------------------------------------------------------------------------------------------
49 12/31/98 1,738,302 2,183,183 2,680,268 1,464,146
- -------------------------------------------------------------------------------------------------------------------------
50 1/31/99 1,734,600 2,241,002 2,778,795 1,474,981
- -------------------------------------------------------------------------------------------------------------------------
51 2/28/99 1,693,873 2,174,472 2,678,063 1,449,168
- -------------------------------------------------------------------------------------------------------------------------
52 3/31/99 1,712,385 2,233,354 2,781,410 1,457,429
- -------------------------------------------------------------------------------------------------------------------------
53 4/30/99 1,762,368 2,305,512 2,914,723 1,462,238
- -------------------------------------------------------------------------------------------------------------------------
54 5/31/99 1,753,112 2,265,285 2,850,919 1,448,786
- -------------------------------------------------------------------------------------------------------------------------
55 6/30/99 1,755,023 2,338,817 2,998,512 1,443,860
- -------------------------------------------------------------------------------------------------------------------------
56 7/31/99 1,728,828 2,286,804 2,902,379 1,438,084
- -------------------------------------------------------------------------------------------------------------------------
57 8/31/99 1,702,634 2,272,390 2,875,329 1,437,078
- -------------------------------------------------------------------------------------------------------------------------
58 9/30/99 1,665,214 2,243,339 2,800,197 1,454,323
- -------------------------------------------------------------------------------------------------------------------------
59 10/31/99 1,646,503 2,338,427 2,978,275 1,458,686
- -------------------------------------------------------------------------------------------------------------------------
60 11/30/99 1,646,503 2,389,249 3,078,018 1,458,540
- -------------------------------------------------------------------------------------------------------------------------
61 12/31/99 1,617,539 2,503,324 3,311,735 1,451,830
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
7
<PAGE>
[LOGO OF BRINSON]
U.S. Balanced Fund
- -------------------------------------------------------------------------------
Total Return
6 months 1 year 6/30/97*
ended ended to
12/31/99 12/31/99 12/31/99
- --------------------------------------------------------------------------------
Brinson U.S. Balanced Fund Class N -7.92% -7.43% 2.96%
- --------------------------------------------------------------------------------
U.S. Balanced Mutual Fund Index** 7.03 14.66 17.51
- --------------------------------------------------------------------------------
Salomon Smith Barney Broad Investment Grade
(BIG) Bond Index 0.55 -0.84 5.63
- --------------------------------------------------------------------------------
Wilshire 5000 Index 10.45 23.56 23.70
- --------------------------------------------------------------------------------
* Inception date of the Brinson U.S. Balanced Fund Class N.
** An un-managed index compiled by the Advisor, constructed as follows: 65%
Wilshire 5000 Index and 35% Salomon Smith Barney BIG Bond Index.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson U.S.
Balanced Fund Class N, the U.S. Balanced Mutual Fund Index, the Salomon Smith
Barney BIG Bond Index and the Wilshire 5000 Index if you had invested $1,000,000
on June 30, 1997, and had reinvested all your income dividends and capital gain
distributions through December 31, 1999. No adjustment has been made for any
income taxes payable by shareholders on income dividends and capital gain
distributions. Past performance is no guarantee of future results. Share price
and return will vary with market conditions; investors may realize a gain or
loss upon redemption.
Brinson U.S. Balanced Fund Class N vs. U.S. Balanced Mutual Fund Index,
Salomon Smith Barney BIG Bond Index and Wilshire 5000 Index
Wealth Value with Dividends Reinvested
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Label A B C D
- -----------------------------------------------------------------------------------------------------------------------------------
Label Brinson U.S. U.S. Balanced Mutual Wilshire Salomon Smith
Balanced Fund Class N Fund Index 5000 Index Big Bond Index
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 6/30/97 $1,000,000 $1,000,000 $1,000,000 $1,000,000
2 7/31/97 $1,041,534 $1,059,457 $1,076,880 $1,027,100
3 8/31/97 $1,023,962 $1,030,382 $1,036,400 $1,018,267
4 9/30/97 $1,046,326 $1,075,205 $1,097,558 $1,033,235
5 10/31/97 $1,035,144 $1,057,307 $1,060,998 $1,048,011
6 11/30/97 $1,042,332 $1,081,546 $1,095,735 $1,052,936
7 12/31/97 $1,057,159 $1,098,399 $1,115,985 $1,063,676
8 1/31/98 $1,067,820 $1,107,235 $1,122,044 $1,077,398
9 2/28/98 $1,095,359 $1,159,358 $1,203,729 $1,076,644
10 3/31/98 $1,117,569 $1,198,658 $1,263,976 $1,080,842
11 4/30/98 $1,114,903 $1,210,087 $1,278,979 $1,086,463
12 5/31/98 $1,117,569 $1,193,223 $1,244,946 $1,096,893
13 6/30/98 $1,121,533 $1,223,840 $1,288,593 $1,105,887
14 7/31/98 $1,112,392 $1,207,310 $1,260,360 $1,108,210
15 8/31/98 $1,080,401 $1,091,566 $1,064,084 $1,125,165
16 9/30/98 $1,118,791 $1,146,928 $1,133,590 $1,151,719
17 10/31/98 $1,140,728 $1,200,587 $1,217,930 $1,146,537
18 11/30/98 $1,154,438 $1,252,039 $1,294,623 $1,152,843
19 12/31/98 $1,162,059 $1,305,474 $1,337,466 $1,156,416
20 1/31/99 $1,159,592 $1,340,048 $1,428,101 $1,164,974
21 2/28/99 $1,128,752 $1,300,265 $1,376,333 $1,144,587
22 3/31/99 $1,139,854 $1,335,474 $1,429,445 $1,151,111
23 4/30/99 $1,173,162 $1,378,623 $1,497,958 $1,154,910
24 5/31/99 $1,168,227 $1,354,568 $1,465,168 $1,144,284
25 6/30/99 $1,168,251 $1,398,538 $1,541,020 $1,140,394
26 7/31/99 $1,152,060 $1,367,436 $1,491,615 $1,135,832
27 8/31/99 $1,133,378 $1,358,817 $1,477,713 $1,135,037
28 9/30/99 $1,108,468 $1,341,445 $1,439,100 $1,148,658
29 10/31/99 $1,096,014 $1,398,305 $1,530,620 $1,152,104
30 11/30/99 $1,096,014 $1,428,695 $1,581,880 $1,151,988
31 12/31/99 $1,075,751 $1,496,908 $1,701,994 $1,146,689
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Fund returns are net of all fees and costs, while the index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
8
<PAGE>
U.S. Balanced Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
U.S. EQUITIES
Energy............................................... 0.31%
Capital Investment
Capital Goods...................................... 2.70
Technology......................................... 9.04
------
11.74
Basic Industries
Chemicals........................................... 1.36
Housing/Paper....................................... 4.52
Metals.............................................. 2.08
------
7.96
Consumer
Non-Durables........................................ 1.06
Retail/Apparel...................................... 2.98
Autos/Durables...................................... 1.86
Health: Drugs....................................... 3.04
Health: Non-Drugs................................... 2.69
------
11.63
Financial
Banks............................................... 4.73
Non-Banks........................................... 2.68
------
7.41
Utilities
Electric............................................ 3.63
Telephone........................................... 1.87
------
5.50
Transportation........................................ 4.29%
Services/Misc......................................... 3.13
------
Total U.S. Equities............................. 51.97*
U.S. BONDS
Corporate Bonds
Asset-Backed........................................ 3.39
Consumer............................................ 0.83
Industrial Components............................... 0.65
Health Drugs........................................ 0.29
Services/Miscellaneous.............................. 1.35
Telecommunications.................................. 2.16
Utilities........................................... 0.56
------
Total U.S. Corporate Bonds...................... 9.23
International Dollar Bonds............................ 2.29
Corporate Mortgage-Backed Securities.................. 1.88
U.S. Government Agencies.............................. 2.47
U.S. Gov't. Mortgage-Backed Securities................ 8.66
U.S. Government Obligations........................... 21.19
------
Total U.S. Bonds................................ 45.72*
SHORT-TERM INVESTMENTS................................ 3.58*
------
TOTAL INVESTMENTS............................... 101.27
LIABILITIES, LESS CASH AND
OTHER ASSETS,................................... (1.27)
------
NET ASSETS............................................ 100.00%
======
- --------------------------------------------------------------------------------
*The Fund held a long position in U.S. Treasury futures on December 31, 1999
which increased U.S. bond exposure from 45.72% to 72.72%. The Fund also held a
short position in stock index futures which reduced U.S. Equity exposure from
51.97% to 24.45%. These two adjustments result in a net increase in the Fund's
exposure to Short-Term Investments from 3.58% to 4.10%.
Asset Allocation
As of December 31, 1999 (Unaudited)
Current
Benchmark Strategy
- --------------------------------------------------------------------------------
U.S. Equities 65% 25%
U.S. Bonds 35 75
-----------------------------------------------------------------------------
100% 100%
Top Ten U.S. Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- -----------------------------------------------------------
1. FDX Corp. 2.02%
2. Electronic Data Systems Corp. 1.93
3. Burlington Northern Santa Fe Corp. 1.61
4. General Instrument Corp. 1.41
5. CIGNA Corp. 1.29
6. Compuware Corp. 1.18
7. Allergan, Inc. 1.18
8. Compaq Computer Corp. 1.12
9. Nextel Communications, Inc. 1.10
10. First Data Corp. 1.08
- -----------------------------------------------------------
================================================================================
9
<PAGE>
U.S. Balanced Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
-------- -------
U.S. Equities -- 51.97%
Advanced Micro Devices, Inc. (b)........... 9,600 $ 277,800
Allergan, Inc.............................. 8,000 398,000
Alza Corp. (b)............................. 3,900 135,038
American Standard Companies., Inc. (b)..... 4,600 211,025
AmSouth Bancorp............................ 5,380 103,901
Aon Corp................................... 5,150 206,000
Armstrong World Industries, Inc............ 1,200 40,050
Baxter International, Inc.................. 4,900 307,781
Burlington Northern Santa Fe Corp.......... 22,400 543,200
Central & South West Corp.................. 12,200 244,000
Champion Enterprises, Inc. (b)............. 3,900 33,394
Champion International Corp................ 1,400 86,713
Chase Manhattan Corp....................... 3,900 302,981
CIGNA Corp................................. 5,400 435,037
Circuit City Stores-Circuit City Group..... 3,700 166,731
CMS Energy Corp............................ 4,100 127,869
CommScope, Inc. (b)........................ 1,666 67,161
Compaq Computer Corp....................... 13,900 376,169
Computer Sciences Corp. (b)................ 3,100 293,337
Compuware Corp. (b)........................ 10,700 398,575
Consolidated Stores Corp. (b).............. 5,500 89,375
Corning, Inc............................... 1,500 193,406
Covance, Inc. (b).......................... 2,875 31,086
Delhaize America, Inc...................... 2,766 56,184
Dial Corp.................................. 3,000 72,938
Dominion Resources, Inc.................... 6,200 243,350
Eastman Chemical Co........................ 2,500 119,219
Electronic Data Systems Corp............... 9,700 649,294
Eli Lilly and Co........................... 2,100 139,650
Emerson Electric Co........................ 5,600 321,300
Entergy Corp............................... 5,800 149,350
FDX Corp. (b).............................. 16,600 679,562
Federal-Mogul Corp......................... 6,200 124,775
Federated Department Stores, Inc. (b)...... 1,600 80,900
First Data Corp............................ 7,358 362,841
Fleet Boston Financial Corp................ 8,505 296,080
Fleetwood Enterprises, Inc................. 2,900 59,813
Fort James Corp............................ 7,800 213,525
Gateway, Inc. (b).......................... 2,000 144,125
GATX Corp.................................. 1,800 60,750
General Instrument Corp.................... 5,600 476,000
Genzyme Corp. (b).......................... 3,000 135,000
GreenPoint Financial Corp.................. 8,600 204,787
Hibernia Corp., Class A.................... 6,500 69,063
Household International, Inc............... 7,300 271,925
Illinois Tool Works, Inc................... 5,100 344,569
IMC Global, Inc............................ 9,600 157,200
Johnson Controls, Inc...................... 2,600 147,875
Kimberly-Clark Corp........................ 4,900 319,725
Kroger Co. (b)............................. 3,700 69,838
Lafarge Corp............................... 3,600 99,450
Lear Corp. (b)............................. 5,400 172,800
Lexmark International Group, Inc. (b)...... 1,000 90,500
Lincoln National Corp...................... 2,200 88,000
Lockheed Martin Corp....................... 8,042 175,919
Lyondell Chemical Co....................... 6,500 82,875
Martin Marietta Materials, Inc............. 2,636 108,076
Masco Corp................................. 14,000 355,250
Mattel, Inc................................ 14,200 186,375
Mead Corp.................................. 2,900 125,969
Monsanto Co................................ 4,700 167,437
National Service Industries, Inc........... 2,200 64,900
New York Times Co.......................... 3,900 191,587
Newell Rubbermaid, Inc..................... 9,100 263,900
Nextel Communications, Inc. (b)............ 3,600 371,250
Norfolk Southern Corp...................... 8,000 164,000
Owens-Illinois, Inc. (b)................... 2,100 52,631
Peco Energy Co............................. 4,000 139,000
Pentair, Inc............................... 3,000 115,500
Philip Morris Companies, Inc............... 7,100 164,631
PNC Bank Corp.............................. 3,700 164,650
Praxair, Inc............................... 2,000 100,625
Raytheon Co., Class B...................... 8,400 223,125
Reliaster Financial Corp................... 2,200 86,213
SBC Communications, Inc.................... 5,300 258,375
Southdown, Inc............................. 3,116 160,863
St. Jude Medical, Inc. (b)................. 6,300 193,331
Torchmark Corp............................. 3,000 87,188
Tyson Foods, Inc., Class A................. 7,400 120,250
U.S. Bancorp............................... 5,759 137,136
Ultramar Diamond Shamrock Corp............. 4,590 104,136
Unisys Corp. (b)........................... 3,600 114,975
United Healthcare Corp..................... 4,500 239,062
USG Corp................................... 2,100 98,963
Viad Corp.................................. 4,400 122,650
W.W. Grainger, Inc......................... 2,700 129,094
Watson Pharmaceutical Co. (b).............. 5,200 186,225
Wells Fargo and Co......................... 7,800 315,412
Westvaco Corp.............................. 3,600 117,450
Xerox Corp................................. 11,000 249,562
York International Corp.................... 3,400 93,288
-----------
Total U.S. Equities (Cost $17,329,472)..... 17,520,890
-----------
Face
Amount
--------
Bonds -- 45.72%
U.S. Corporate Bonds -- 9.23%
Archer Daniels 6.950%, due 12/15/69........ $ 250,000 218,716
Electronic Data System
7.125%, due 10/15/09..................... 125,000 121,845
MBNA Global Capital Securities, FRN
5.795%, due 02/01/27..................... 215,000 176,630
Noram Energy Corp. 6.375%, due 11/01/03 200,000 190,227
PanAmSat Corp. 6.000%, due 01/15/03........ 335,000 311,771
Peco Energy Transition Trust
6.130%, due 03/01/09..................... 215,000 197,830
PP&L Transition Bond Company LLC
7.050%, due 06/25/09..................... 200,000 199,680
Rite Aid Corp., 144A, 6.125%, due 12/15/08 140,000 95,200
Sprint Capital Corp. 6.875%, due 11/15/28 200,000 177,914
TCI Communications, Inc.
8.750%, due 08/01/15..................... 220,000 240,105
Time Warner 7.570%, due 02/01/24........... 290,000 278,953
UCFC Home Equity Loan 97-C, Class A8,
FRN 5.069%, due 09/15/27................. 568,857 569,517
U.S.A. Waste Services 6.500%, due 12/15/02 360,000 332,706
-----------
3,111,094
-----------
================================================================================
10
<PAGE>
U.S. Balanced Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Face
Amount Value
-------- -------
International Dollar Bonds -- 2.29%
Abbey National PLC, Resettable Perpetual
Preferred 6.700%, due 06/29/49.............. $ 250,000 $ 226,341
Credit Suisse-London, 144A, Resettable
Perpetual Preferred 7.900%, due 05/01/07 270,000 256,894
Empresa Nacional de Electricidad S.A.
8.125%, due 02/01/69........................ 200,000 162,000
Ras Laffan Liquified Natural Gas Co., Ltd.,
144A, 8.294%, due 03/15/14.................. 135,000 126,801
-----------
772,036
-----------
Corporate Mortgage-Backed
Securities -- 1.88%
Heller Financial Commercial Mortgage Assets,
Series 99-PH1, Class A1
6.500%, due 05/15/61........................ 178,117 172,271
LB Commercial Conduit Mortgage Trust,
Series 99-C1, Class A1,
6.410%, due 10/15/30........................ 88,171 84,951
Residential Asset Securitization Trust 97-A10,
Class A1, 7.250%, due 12/25/27.............. 344,335 343,426
Residential Asset Securitization Trust 97-A11,
Class A2, 7.000%, due 01/25/28.............. 34,869 34,772
-----------
635,420
-----------
U.S. Government Mortgage-Backed
Securities -- 8.66%
Federal Home Loan Mortgage Corp. Gold
8.000%, due 05/01/23........................ 326,964 330,799
9.000%, due 03/01/24........................ 151,892 159,020
Federal Home Loan Mortgage Corp.
9.000%, due 01/01/29........................ 139,320 144,936
Federal National Mortgage Assoc.,
Series 97-72, Class EG,
0.000%, due 09/25/22........................ 202,300 175,284
Federal National Mortgage Association
7.500%, due 07/01/10........................ 247,773 249,814
7.600%, due 06/17/19........................ 278,827 280,271
7.500%, due 12/01/27........................ 215,656 213,397
FNCI, 8.000%, due 02/01/13.................... 276,984 282,581
Government National Mortgage Association
8.000%, due 08/15/22........................ 455,988 463,037
7.000%, due 12/15/23........................ 128,624 125,326
7.500%, due 06/15/24........................ 500,000 494,531
-----------
2,918,996
-----------
U.S. Government Agencies -- 2.47%
Jordan Aid, 8.750%, due 09/01/19.............. 775,765 834,165
-----------
U.S. Government Obligations -- 21.19%
U.S. Treasury Bond 8.000%, due 11/15/21....... 495,000 561,515
U.S. Treasury Inflation Indexed Note
3.625%, due 04/15/28........................ 2,440,000 2,267,719
3.875%, due 04/15/29........................ 4,400,000 4,204,816
U.S. Treasury Note 5.625%, due 05/15/08....... 115,000 108,172
-----------
7,142,222
-----------
Total U.S. Bonds (Cost $16,140,158)........... 15,413,933
-----------
Short-Term Investments -- 3.58%
U.S. Treasury Bills -- 2.07%
U.S. Treasury Bill, due 02/03/00.............. 700,000 696,968
-----------
Investment Companies -- 1.51%................. Shares
---------
Brinson Supplementary Trust U.S. Cash
Management Prime Fund....................... 507,697 507,697
-----------
Total Short-Term Investments
(Cost $1,204,748)........................... 1,204,665
-----------
Total Investments
(Cost $34,674,378) -- 101.27% (a)........... 34,139,488
Liabilities, less cash and
other assets -- (1.27%)..................... (429,267)
-----------
Net Assets -- 100%............................ $33,710,221
===========
See accompanying notes to schedule of investments.
- --------------------------------------------------------------------------------
11
<PAGE>
U.S. Balanced Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $34,674,378; and net
unrealized depreciation consisted of:
Gross unrealized appreciation.................. $ 2,514,223
Gross unrealized depreciation.................. (3,049,113)
------------
Net unrealized depreciation............... $ (534,890)
============
(b) Non-income producing security
FRN: Floating rate note-- The rate disclosed is that in effect at December
31, 1999.
144A: 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 buyers. At December 31, 1999, the
value of these securities amounted to $478,895 or 1.42% of net assets.
Resettable Perpetual Preferred: A bond with either no maturity date or a
maturity date that is so far in the future that the bond will pay
interest indefinitely. The issuer generally returns the right to call
such a bond.
FUTURES CONTRACTS
The U.S. Balanced Fund had the following open futures contracts as of December
31, 1999:
<TABLE>
<CAPTION>
Expiration Cost/ Current Unrealized
Date Proceeds Value Loss
---------- -------- ------- ----------
<S> <C> <C> <C> <C>
U.S. Interest Rate Futures Buy Contracts
5 Year U.S. Treasury Notes, 69 contracts............ March 2000 $6,832,561 $6,764,156 $ (68,405)
10 Year U.S. Treasury Notes, 13 contracts........... March 2000 1,268,302 1,246,172 (22,130)
30 Year U.S. Treasury Bonds, 12 contracts........... March 2000 1,118,459 1,091,250 (27,209)
Index Futures Sale Contracts
Standard & Poor's 500, 25 contracts................. March 2000 9,000,450 9,276,250 (275,800)
----------
Total......................................... $ (393,544)
==========
</TABLE>
The aggregate market value of investments pledged to cover margin requirements
for the open futures positions at December 31, 1999 was $696,968.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
12
<PAGE>
U.S. Balanced Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $34,166,681).................................. $33,631,791
Affiliated issuers (Cost $507,697)....................................... 507,697
Cash........................................................................ 392
Receivables:
Investment securities sold............................................... 2,892
Dividends................................................................ 25,956
Interest................................................................. 165,142
Other assets................................................................ 215
-----------
TOTAL ASSETS........................................................... 34,334,085
-----------
LIABILITIES:
Payables:
Investment securities purchased.......................................... 502,266
Investment advisory fees................................................. 15,445
Variation margin......................................................... 53,015
Accrued expenses......................................................... 53,138
-----------
TOTAL LIABILITIES...................................................... 623,864
-----------
NET ASSETS.................................................................. $33,710,221
===========
NET ASSETS CONSIST OF:
Paid in capital............................................................ $35,219,429
Accumulated undistributed net investment income............................ 3,059
Distributions in excess of net realized gain............................... (583,833)
Net unrealized depreciation................................................ (928,434)
-----------
NET ASSETS............................................................. $33,710,221
===========
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share
(Based on net assets of $32,262,816 and 3,841,353 shares
issued and outstanding)................................................. $ 8.40
===========
Brinson Class N:
Net asset value, offering price and redemption price per share
(Based on net assets of $1,075 and 128 shares issued and
outstanding)............................................................ $ 8.40
===========
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share
(Based on net assets of $1,446,330 and 173,243 shares issued and
outstanding)............................................................ $ 8.35
===========
</TABLE>
See accompanying notes to financial statements.
================================================================================
13
<PAGE>
U.S. Balanced Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest........................................................ $ 582,877
Dividends....................................................... 133,281
-----------
TOTAL INCOME.................................................. 716,158
-----------
EXPENSES:
Advisory........................................................ 131,459
Professional.................................................... 18,552
Registration.................................................... 17,892
Distribution.................................................... 4,148
Printing........................................................ 4,114
Other........................................................... 7,576
-----------
TOTAL EXPENSES................................................ 183,741
Expenses deferred by Advisor.................................. (28,977)
Earnings credits.............................................. (7)
-----------
NET EXPENSES.................................................. 154,757
-----------
NET INVESTMENT INCOME......................................... 561,401
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments..................................................... 406,080
Futures contracts............................................... (775,642)
-----------
Net realized loss............................................. (369,562)
-----------
Change in net unrealized appreciation or depreciation on:
Investments..................................................... (3,394,694)
Futures contracts............................................... 142,826
-----------
Change in net unrealized appreciation or depreciation......... (3,251,868)
-----------
Net realized and unrealized loss................................. (3,621,430)
-----------
Net decrease in net assets resulting from operations............. $(3,060,029)
===========
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
14
<PAGE>
U.S. Balanced Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year
December 31, 1999 Ended
(Unaudited) June 30, 1999
--------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income................................................... $ 561,401 $ 1,558,422
Net realized gain (loss)................................................ (369,562) 4,257,213
Change in net unrealized appreciation or depreciation................... (3,251,868) (5,162,345)
--------------- -------------
Net increase (decrease) in net assets resulting from operations......... (3,060,029) 653,290
--------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income:
Brinson Class I....................................................... (729,082) (2,554,055)
Brinson Class N....................................................... (23) (68)
UBS Investment Funds Class............................................ (29,460) (123,921)
Distributions in excess of net realized gain:
Brinson Class I....................................................... (225,248) (9,074,452)
Brinson Class N....................................................... (7) (243)
UBS Investment Funds Class............................................ (10,418) (483,100)
--------------- -------------
Total distributions to shareholders....................................... (994,238) (12,235,839)
--------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................. 5,675,756 14,184,340
Shares issued on reinvestment of distributions.......................... 970,972 12,036,064
Shares redeemed......................................................... (8,275,334) (57,681,932)
--------------- -------------
Net decrease in net assets resulting from capital share transactions.... (1,628,606) (31,461,528)
--------------- -------------
TOTAL DECREASE IN NET ASSETS....................................... (5,682,873) (43,044,077)
--------------- -------------
NET ASSETS:
Beginning of period..................................................... 39,393,094 82,437,171
--------------- -------------
End of period (including accumulated undistributed net investment
income of $3,059 and $200,223, respectively)........................... $ 33,710,221 $ 39,393,094
=============== =============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
U.S. Balanced Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended Year Ended June 30, December 30, 1994*
December 31, 1999 ------------------------------------------------- Through
Brinson Class I (Unaudited) 1999 1998 1997 1996 June 30, 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 9.38 $ 12.24 $ 12.53 $ 11.71 $ 11.23 $ 10.00
----------- --------- --------- --------- --------- ----------
Income (loss) from investment
operations:
Net investment income............... 0.14 0.34** 0.49** 0.47 0.44 0.23
Net realized and unrealized
gain (loss)...................... (0.87) 0.18 0.93 1.29 1.04 1.16
----------- --------- --------- --------- --------- ----------
Total income (loss) from
investment operations........... (0.73) 0.52 1.42 1.76 1.48 1.39
----------- --------- --------- --------- --------- ----------
Less distributions:
Distributions from net
investment income.................. (0.19) (0.73) (0.77) (0.40) (0.43) (0.16)
Distributions from net
realized gain...................... (0.06) (2.65) (0.94) (0.54) (0.57) --
----------- --------- --------- --------- --------- ----------
Total distributions.............. (0.25) (3.38) (1.71) (0.94) (1.00) (0.16)
----------- --------- --------- --------- --------- ----------
Net asset value, end of period.......... $ 8.40 $ 9.38 $ 12.24 $ 12.53 $ 11.71 $ 11.23
=========== ========= ========= ========= ========= ==========
Total return (non-annualized)........... (7.83)% 4.74% 12.19% 15.50% 13.52% 13.91%
Ratios/Supplemental data:
Net assets, end of period
(in 000s)............................ $ 32,263 $ 37,603 $ 80,556 $ 282,860 $ 227,829 $ 157,724
Ratio of expenses to average
net assets:
Before expense reimbursement
and earnings credits................ 0.95%*** 0.96% 0.81% 0.88% 1.01% 1.06%***
After expense reimbursement
and earnings credits................ 0.80%*** 0.80% 0.80% 0.80% 0.80% 0.80%***
Ratio of net investment income
to average net assets:
Before expense reimbursement
and earnings credits................ 2.85%*** 3.00% 3.88% 3.78% 3.76% 4.36%***
After expense reimbursement
and earnings credits................ 3.00%*** 3.16% 3.89% 3.86% 3.97% 4.63%***
Portfolio turnover rate............... 42% 113% 194% 329% 240% 196%
</TABLE>
* Commencement of investment operations
** The net investment income per share data was determined by using average
shares outstanding throughout the period
*** Annualized
See accompanying notes to financial statements.
================================================================================
16
<PAGE>
U.S. Balanced Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended Year Year
December 31, 1999 Ended Ended
Brinson Class N (Unaudited) June 30, 1999 June 30, 1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $ 9.38 $ 12.27 $ 12.53
------- ------- --------
Income (loss) from investment operations:
Net investment income................................... 0.13 0.29* 0.47*
Net realized and unrealized gain (loss)................. (0.87) 0.18 0.94
------- ------- --------
Total income (loss) from investment operations...... (0.74) 0.47 1.41
------- ------- --------
Less distributions:
Distributions from net investment income................ (0.18) (0.71) (0.73)
Distributions from net realized gain.................... (0.06) (2.65) (0.94)
------- ------- --------
Total distributions................................. (0.24) (3.36) (1.67)
======= ======= ========
Net asset value, end of period.............................. $ 8.40 $ 9.38 $ 12.27
Total return (non-annualized)............................... (7.92)% 4.17% 12.15%
Ratios/Supplemental data:
Net assets, end of period (in 000s)....................... $ 1 $ 1 $ 1
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits....... 1.20%** 1.21% 1.06%
After expense reimbursement and earnings credits........ 1.05%** 1.05% 1.05%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits....... 2.60%** 2.75% 3.63%
After expense reimbursement and earnings credits........ 2.75%** 2.91% 3.64%
Portfolio turnover rate................................... 42% 113% 194%
</TABLE>
* The net investment income per share data was determined by using average
shares outstanding throughout the period
** Annualized
See accompanying notes to financial statements.
================================================================================
17
<PAGE>
U.S. Equity Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Since its inception on February 28, 1994, the Brinson U.S. Equity Fund Class I
has provided an annualized return of 16.71%, compared to the 22.60% return of
its benchmark, the Wilshire 5000 Equity Index. The annualized volatility of the
Fund has been 14.29% since its inception, only slightly above the 14.13%
volatility for the benchmark. In 1999, the Fund's total return of -4.05% trailed
the 23.56% return for its benchmark. While these results are disappointing, we
feel that the Fund is now well positioned as we move into the year 2000. Recent
events and stratification of the U.S. market make our current investment
strategies very appealing and our conviction remains higher than ever.
Market exposure (average beta of .96) detracted modestly from Fund relative
performance in the very strong equity environment that characterized 1999.
Factor positions detracted from performance for the full year. The most
significant negatives were the underexposure to stocks ranked high in relative
strength and size and low in earnings/price, as a relatively narrow segment of
the largest capitalization stocks, especially in the technology sector,
continued to dominate market performance. Fundamentally driven investment styles
tend to perform poorly in such narrow momentum-driven market environments. The
Fund has minimal exposure to these largest stocks based upon our analysis, which
indicates they are meaningfully overextended.
Industry weightings also detracted from active returns during 1999. The
underweight to the technology software and hardware sectors had the largest
negative effect on performance. Investors have been willing to pay significant
premiums for recent strong relative revenue growth and to extrapolate perceived
earnings growth far into the future--in spite of rising interest rates which
usually dampen high-multiple issues. We believe there is a low probability that
such high implied earnings and profitability levels can be achieved, much less
sustained, in a competitive economy. Our overweight in economically sensitive
construction and transportation stocks also detracted from performance due to
concerns over higher energy costs and fears that higher interest rates would
pressure building activity. The pick-up in the global industrial economy helps a
number of more economically sensitive sectors that have been in recession-like
conditions for much of the past two years. Our exposure in the construction area
is oriented toward non-residential infrastructure and basic building materials,
and is not dependent upon higher residential construction spending.
Stock selection had the largest negative impact on active returns for the full
year. Among large capitalization issues, the best performers were Corning, First
Data and Computer Sciences, while the most detrimental to performance were our
weightings in Xerox, Lockheed Martin, FDX Corp and Raytheon. Given the shift
toward momentum-based styles, investors had little tolerance for shortfalls in
quarterly earnings and severely punished such disappointments. In the
intermediate capitalization segment of the Fund, the most positive contributors
were General Instruments, Circuit City and Allergan, while the weakest were
Advanced Micro Devices, Fort James and Federal Mogul.
================================================================================
18
<PAGE>
[BRINSON LOGO]
Total Return
<TABLE>
<CAPTION>
6 months 1 year 3 years 5 years 2/28/94*
ended ended ended ended to
12/31/99 12/31/99 12/31/99 12/31/99 12/31/99
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brinson U.S. Equity Fund Class I -13.13% -4.05% 12.39% 20.17% 16.71%
- ----------------------------------------------------------------------------------------------------------
Wilshire 5000 Equity Index 10.45 23.56 26.04 27.06 22.60
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Performance inception date of the Brinson U.S. Equity Fund Class I.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson U.S.
Equity Fund Class I and the Wilshire 5000 Equity Index if you had invested
$1,000,000 on February 28, 1994, and had reinvested all your income dividends
and capital gain distributions through December 31, 1999. No adjustment has been
made for any income taxes payable by shareholders on income dividends and
capital gain distributions. Past performance is no guarantee of future results.
Share price and return will vary with market conditions; investors may realize a
gain or loss upon redemption.
Brinson U.S. Equity Fund Class I
vs. Wilshire 5000 Equity Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Label A B
- -----------------------------------------------------------------------
Label Brinson U.S. Equity Fund Wilshire 5000 Equity Index
Class 1
- -----------------------------------------------------------------------
<S> <C> <C>
1 2/28/94 1,000,000 1,000,000
2 3/31/94 942,943 954,720
3 4/30/94 964,965 963,876
4 5/31/94 984,985 973,322
5 6/30/94 970,003 947,285
6 7/31/94 992,118 975,401
7 8/31/94 1,055,444 1,018,484
8 9/30/94 1,019,258 998,766
9 10/31/94 1,014,232 1,015,076
10 11/30/94 979,050 977,904
11 12/31/94 983,676 991,086
12 1/31/95 1,004,021 1,012,504
13 2/28/95 1,049,797 1,052,832
14 3/31/95 1,076,245 1,080,584
15 4/30/95 1,099,642 1,107,437
16 5/31/95 1,140,332 1,144,946
17 6/30/95 1,178,023 1,181,470
18 7/31/95 1,219,913 1,230,087
19 8/31/95 1,242,391 1,242,080
20 9/30/95 1,289,389 1,289,453
21 10/31/95 1,285,302 1,276,507
22 11/30/95 1,358,865 1,330,593
23 12/31/95 1,382,877 1,352,348
24 1/31/96 1,439,578 1,388,577
25 2/29/96 1,462,678 1,412,864
26 3/31/96 1,489,979 1,428,320
27 4/30/96 1,518,329 1,463,614
28 5/31/96 1,542,480 1,503,629
29 6/30/96 1,538,200 1,491,254
30 7/31/96 1,464,400 1,410,801
31 8/31/96 1,520,277 1,455,933
32 9/30/96 1,588,806 1,533,447
33 10/31/96 1,622,543 1,554,884
34 11/30/96 1,735,351 1,657,895
35 12/31/96 1,737,594 1,639,211
36 1/31/97 1,800,717 1,726,958
37 2/28/97 1,811,046 1,726,163
38 3/31/97 1,751,366 1,649,815
39 4/30/97 1,805,308 1,721,764
40 5/31/97 1,937,291 1,843,751
41 6/30/97 2,028,487 1,928,453
42 7/31/97 2,183,729 2,076,712
43 8/31/97 2,098,633 1,998,648
44 9/30/97 2,192,928 2,116,589
45 10/31/97 2,076,785 2,046,085
46 11/30/97 2,118,182 2,113,074
47 12/31/97 2,167,878 2,152,123
48 1/31/98 2,182,676 2,163,809
49 2/28/98 2,372,581 2,231,335
50 3/31/98 2,509,461 2,437,518
51 4/30/98 2,484,798 2,466,451
52 5/31/98 2,449,037 2,400,819
53 6/30/98 2,464,186 2,848,991
54 7/31/98 2,402,303 2,430,545
55 8/31/98 2,059,471 2,052,036
56 9/30/98 2,209,228 2,186,075
57 10/31/98 2,337,550 2,348,719
58 11/30/98 2,476,563 2,496,618
59 12/31/98 2,570,544 2,656,377
60 1/31/99 2,553,433 2,754,025
61 2/28/99 2,459,983 2,654,192
62 3/31/99 2,540,271 2,756,617
63 4/30/99 2,769,291 2,888,742
64 5/31/99 2,735,069 2,825,507
65 6/30/99 2,839,189 2,971,784
66 7/31/99 2,720,229 2,876,508
67 8/31/99 2,625,060 2,849,699
68 9/30/99 2,434,723 2,775,237
69 10/31/99 2,436,045 2,951,728
70 11/30/99 2,450,585 3,050,581
71 12/31/99 2,463,489 3,282,215
</TABLE>
Fund returns are net of all fees and costs, while the Index
returns are based solely on market returns without deduction for
fees or transaction costs for rebalancing.
================================================================================
19
<PAGE>
U.S. Equity Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Total Return
<TABLE>
<CAPTION>
6 months 1 year 6/30/97*
ended ended to
12/31/99 12/31/99 12/31/99
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Brinson U.S. Equity Fund Class N -13.20% -4.22% 7.77%
- ---------------------------------------------------------------------
Wilshire 5000 Equity Index 10.45 23.56 23.70
- ---------------------------------------------------------------------
</TABLE>
*Inception date of the Brinson U.S. Equity Fund Class N.
Total return includes reinvestment of all capital gain and income
distributions.
All total returns in excess of 1 year are average annualized
returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson U.S.
Equity Fund Class N and the Wilshire 5000 Equity Index if you had invested
$1,000,000 on June 30, 1997, and had reinvested all your income dividends and
capital gain distributions through December 31, 1999. No adjustment has been
made for any income taxes payable by shareholders on income dividends and
capital gain distributions. Past performance is no guarantee of future results.
Share price and return will vary with market conditions; investors may realize a
gain or loss upon redemption.
Brinson U.S. Equity Fund Class N
vs. Wilshire 5000 Equity Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Label A B
- ------------------------------------------------------------------------
Label Brinson U.S Equity Fund Wilshire 5000 Equity Index
Class N
- ------------------------------------------------------------------------
<S> <C> <C> <C>
1 6/30/97 1,000,000 1,000,000
2 7/31/97 1,076,531 1,076,880
3 8/31/97 1,034,580 1,036,400
4 9/30/97 1,080,499 1,097,558
5 10/31/97 1,023,243 1,060,998
6 11/30/97 1,043,084 1,095,735
7 12/31/97 1,067,291 1,115,985
8 1/31/98 1,074,557 1,122,044
9 2/28/98 1,168,071 1,203,729
10 3/31/98 1,234,245 1,263,976
11 4/30/98 1,222,103 1,278,979
12 5/31/98 1,203,890 1,244,946
13 6/30/98 1,210,968 1,288,593
14 7/31/98 1,179,902 1,260,360
15 8/31/98 1,011,779 1,064,084
16 9/30/98 1,083,049 1,133,590
17 10/31/98 1,165,282 1,217,930
18 11/30/98 1,214,013 1,294,623
19 12/31/98 1,259,349 1,377,466
20 1/31/99 1,250,932 1,428,101
21 2/28/99 1,204,961 1,376,333
22 3/31/99 1,243,810 1,429,445
23 4/30/99 1,355,824 1,497,958
24 5/31/99 1,338,342 1,465,168
25 6/30/99 1,389,546 1,541,020
26 7/31/99 1,331,080 1,491,615
27 8/31/99 1,284,307 1,477,713
28 9/30/99 1,190,761 1,439,100
29 10/31/99 1,191,411 1,530,620
30 11/30/99 1,198,557 1,581,880
31 12/31/99 1,206,153 1,701,994
</TABLE>
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
20
<PAGE>
U.S. Equity Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
U.S. EQUITIES
Energy........................................................ 0.57%
Capital Investment
Capital Goods......................................... 5.02
Technology............................................ 16.51
------
21.53
Basic Industries
Chemicals............................................. 2.50
Housing/Paper......................................... 8.31
Metals................................................ 3.80
------
14.61
Consumer
Non-Durables.......................................... 2.06
Retail/Apparel........................................ 5.53
Autos/Durables........................................ 3.63
Health: Drugs......................................... 5.60
Health: Non-Drugs..................................... 5.00
------
21.82
Financial
Banks................................................. 8.67%
Non-Banks............................................. 4.93
------
13.60
Utilities
Electric.............................................. 7.07
Telephone............................................. 3.42
------
10.49
Transportation................................................ 7.85
Services/Misc................................................. 5.73
------
Total U.S. Equities........................... 96.20*
SHORT-TERM INVESTMENTS........................................ 3.52*
------
TOTAL INVESTMENTS............................. 99.72
CASH AND OTHER ASSETS,
LESS LIABILITIES.............................................. 0.28
------
NET ASSETS.................................................... 100.00%
======
- --------------------------------------------------------------------------------
*The Fund held a long position in stock index futures which increased U.S.
Equity exposure from 96.20% to 99.66%. This adjustment results in a net
decrease in the Fund's exposure to Short-Term Investments from 3.52% to 0.06%.
Top Ten U.S. Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- ------------------------------------------------------------
1. FDX Corp. 3.66%
2. Electronic Data Systems Corp. 3.54
3. Burlington Northern Santa Fe Corp. 2.97
4. General Instrument Corp. 2.59
5. CIGNA Corp. 2.39
6. Allergan, Inc. 2.18
7. Compuware Corp. 2.17
8. Compaq Computer Corp. 2.05
9 Nextel Communications, Inc., Class A 2.03
10. First Data Corp. 1.97
- ------------------------------------------------------------
================================================================================
21
<PAGE>
U.S. Equity Fund - Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
--------- ------------
<S> <C> <C>
U.S. Equities - 96.20%
Advanced Micro Devices, Inc. (b)....................................... 259,900 $ 7,520,856
Allergan, Inc.......................................................... 221,400 11,014,650
Alza Corp. (b)......................................................... 105,800 3,663,325
American Standard Companies., Inc. (b)................................. 126,800 5,816,950
AmSouth Bancorp........................................................ 148,209 2,862,286
Aon Corp............................................................... 140,350 5,614,000
Armstrong World Industries, Inc........................................ 33,500 1,118,063
Baxter International, Inc.............................................. 135,100 8,485,969
Burlington Northern Santa Fe Corp...................................... 616,900 14,959,825
Central & South West Corp.............................................. 335,000 6,700,000
Champion Enterprises, Inc. (b)......................................... 108,100 925,606
Champion International Corp............................................ 38,300 2,372,206
Chase Manhattan Corp................................................... 106,700 8,289,256
CIGNA Corp............................................................. 149,650 12,056,178
Circuit City Stores-Circuit City Group................................. 101,700 4,582,856
CMS Energy Corp........................................................ 113,750 3,547,578
CommScope, Inc. (b).................................................... 44,899 1,809,991
Compaq Computer Corp................................................... 382,500 10,351,406
Computer Sciences Corp. (b)............................................ 84,400 7,986,350
Compuware Corp. (b).................................................... 294,500 10,970,125
Consolidated Stores Corp. (b).......................................... 151,900 2,468,375
Corning, Inc........................................................... 40,700 5,247,756
Covance, Inc. (b)...................................................... 107,550 1,162,884
Delhaize America, Inc.................................................. 77,232 1,568,775
Dial Corp.............................................................. 87,200 2,120,050
Dominion Resources, Inc................................................ 169,400 6,648,950
Eastman Chemical Co.................................................... 67,950 3,240,366
Electronic Data Systems Corp........................................... 266,900 17,865,619
Eli Lilly and Co....................................................... 57,700 3,837,050
Emerson Electric Co.................................................... 153,700 8,818,537
Entergy Corp........................................................... 236,500 6,089,875
FDX Corp. (b).......................................................... 451,600 18,487,375
Federal-Mogul Corp..................................................... 171,300 3,447,413
Federated Department Stores, Inc. (b).................................. 44,300 2,239,919
First Data Corp........................................................ 201,430 9,933,017
Fleet Boston Financial Corp............................................ 233,955 8,144,558
Fleetwood Enterprises, Inc............................................. 78,700 1,623,188
Fort James Corp........................................................ 213,600 5,847,300
Gateway Inc. (b)....................................................... 53,300 3,840,931
GATX Corp.............................................................. 49,400 1,667,250
General Instrument Corp................................................ 153,450 13,043,250
Genzyme Corp. (b)...................................................... 81,450 3,665,250
GreenPoint Financial Corp.............................................. 236,900 5,641,181
Hibernia Corp.......................................................... 179,250 1,904,531
Household International, Inc........................................... 199,600 7,435,100
Illinois Tool Works, Inc............................................... 139,300 9,411,456
IMC Global, Inc........................................................ 262,800 4,303,350
Johnson Controls, Inc.................................................. 79,000 4,493,125
Kimberly-Clark Corp.................................................... 135,750 8,857,687
Kroger Co. (b)......................................................... 102,200 1,929,025
Lafarge Corp........................................................... 98,400 2,718,300
Lear Corp. (b)......................................................... 151,350 4,843,200
Lexmark International Group, Inc. (b).................................. 30,500 2,760,250
Lincoln National Corp.................................................. 60,300 2,412,000
Lockheed Martin Corp................................................... 237,352 5,192,075
Lyondell Chemical Co................................................... 177,250 2,259,938
Martin Marietta Materials, Inc......................................... 73,707 3,021,987
Masco Corp............................................................. 384,600 9,759,225
Mattel, Inc............................................................ 387,600 5,087,250
Mead Corp.............................................................. 79,000 3,431,563
Monsanto Co............................................................ 129,400 4,609,875
National Service Industries, Inc....................................... 60,600 1,787,700
New York Times Co...................................................... 107,200 5,266,200
Newell Rubbermaid, Inc................................................. 250,700 7,270,300
Nextel Communications, Inc., Class A (b)............................... 99,350 10,245,469
Norfolk Southern Corp.................................................. 218,500 4,479,250
Owens-Illinois, Inc. (b)............................................... 67,900 1,701,744
Peco Energy Co......................................................... 111,000 3,857,250
Pentair, Inc........................................................... 83,800 3,226,300
Philip Morris Companies, Inc........................................... 195,550 4,534,316
PNC Bank Corp.......................................................... 100,400 4,467,800
Praxair, Inc........................................................... 55,600 2,797,375
Raytheon Co., Class B.................................................. 229,650 6,100,078
Reliaster Financial Corp............................................... 60,600 2,374,763
SBC Communications, Inc................................................ 143,500 6,995,625
Southdown, Inc......................................................... 85,140 4,395,352
St. Jude Medical, Inc. (b)............................................. 174,500 5,354,969
Torchmark Corp......................................................... 82,600 2,400,563
Tyson Foods, Inc....................................................... 229,250 3,725,312
U.S. Bancorp........................................................... 158,141 3,765,733
Ultramar Diamond Shamrock Corp......................................... 127,018 2,881,721
Unisys Corp. (b)....................................................... 99,500 3,177,781
United Healthcare Corp................................................. 123,300 6,550,312
USG Corp............................................................... 56,500 2,662,563
Viad Corp.............................................................. 121,150 3,377,056
W.W. Grainger, Inc..................................................... 80,400 3,844,125
Watson Pharmaceutical Co. (b).......................................... 143,400 5,135,512
Wells Fargo and Co..................................................... 215,200 8,702,150
Westvaco Corp.......................................................... 100,200 3,269,025
Xerox Corp............................................................. 297,300 6,744,994
York International Corp................................................ 92,600 2,540,713
------------
Total U.S. Equities (Cost $439,940,416)................................ 485,358,333
------------
Short-Term Investments - 3.52%
Investment Companies - 3.52%
Brinson Supplementary Trust U.S. Cash Management
Prime Fund (Cost $17,738,488).......................................... 17,738,488 17,738,488
------------
Total Investments
(Cost $457,678,904) - 99.72% (a)....................................... 503,096,821
Cash and other assets, less liabilities - 0.28%........................ 1,405,055
------------
Net Assets - 100%...................................................... $504,501,876
============
</TABLE>
See accompanying notes to schedule of investments.
===============================================================================
22
<PAGE>
U.S. Equity Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $457,678,904; and net
unrealized appreciation consisted of:
Gross unrealized appreciation.................. $ 97,065,747
Gross unrealized depreciation.................. (51,647,830)
--------------
Net unrealized appreciation................ $ 45,417,917
==============
(b) Non-income producing security.
FUTURES CONTRACTS
The U.S. Equity Fund had the following open futures contracts as of December 31,
1999:
<TABLE>
<CAPTION>
Expiration Current Unrealized
Date Cost Value Gain
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Index Futures Buy Contracts
Standard & Poor's 500, 47 contracts............ March 2000 $17,310,345 $17,439,350 $ 129,005
===========
</TABLE>
The segregated cash pledged to cover margin requirements for the open futures
positions at December 31, 1999 was $956,250.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
23
<PAGE>
U.S. Equity Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $439,940,416)............................................ $ 485,358,333
Affiliated issuers (Cost $17,738,488)............................................... 17,738,488
Cash.................................................................................. 915,483
Receivables:
Dividends........................................................................... 948,360
Interest............................................................................ 8,302
Variation margin.................................................................... 39,950
Other assets.......................................................................... 7,343
----------------
TOTAL ASSETS...................................................................... 505,016,259
----------------
LIABILITIES:
Payables:
Investment securities purchased..................................................... 203,681
Investment advisory fees............................................................ 310,702
----------------
TOTAL LIABILITIES................................................................. 514,383
----------------
NET ASSETS.............................................................................. $ 504,501,876
================
NET ASSETS CONSIST OF:
Paid in capital....................................................................... $ 447,548,416
Accumulated undistributed net investment income....................................... 2,575,151
Accumulated net realized gain......................................................... 8,831,387
Net unrealized appreciation........................................................... 45,546,922
----------------
NET ASSETS........................................................................ $ 504,501,876
================
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share (Based on net
assets of $445,593,097 and 26,487,668 shares issued and outstanding)............... $ 16.82
================
Brinson Class N:
Net asset value, offering price and redemption price per share (Based on net
assets of $8,136,405 and 485,875 shares issued and outstanding).................... $ 16.75
================
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share (Based on net
assets of $50,772,374 and 3,032,044 shares issued and outstanding)................. $ 16.75
================
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
24
<PAGE>
U.S. Equity Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends..................................................... $ 4,864,406
Interest...................................................... 489,563
-----------------
TOTAL INCOME.............................................. 5,353,969
-----------------
EXPENSES:
Advisory...................................................... 2,275,632
Distribution.................................................. 167,143
Administration................................................ 29,871
Other......................................................... 302,235
-----------------
TOTAL EXPENSES............................................ 2,774,881
Earnings credits.......................................... (528)
NET EXPENSES.............................................. 2,774,353
-----------------
NET INVESTMENT INCOME..................................... 2,579,616
-----------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on:
Investments................................................. 16,528,414
Futures contracts........................................... 1,121,164
-----------------
Net realized gain......................................... 17,649,578
-----------------
Change in net unrealized appreciation or depreciation on:
Investments................................................. (123,031,905)
Futures contracts........................................... 129,005
-----------------
Change in net unrealized appreciation or depreciation..... (122,902,900)
-----------------
Net realized and unrealized loss.............................. (105,253,322)
-----------------
Net decrease in net assets resulting from operations.......... $ (102,673,706)
=================
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
25
<PAGE>
U.S. Equity Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year
December 31, 1999 Ended
(Unaudited) June 30, 1999
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................................ $ 2,579,616 $ 5,562,471
Net realized gain................................................................ 17,649,578 53,949,031
Change in net unrealized appreciation or depreciation............................ (122,902,900) 51,667,938
----------------- -----------------
Net increase (decrease) in net assets resulting from operations.................. (102,673,706) 111,179,440
----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income:
Brinson Class I................................................................ (1,354,936) (5,223,351)
Brinson Class N................................................................ (12,687) (28,171)
UBS Investment Funds Class..................................................... -- (190,578)
Distributions from net realized gain:
Brinson Class I................................................................ (46,078,258) (36,404,562)
Brinson Class N................................................................ (773,650) (234,496)
UBS Investment Funds Class..................................................... (5,191,383) (3,937,537)
----------------- -----------------
Total distributions to shareholders.............................................. (53,410,914) (46,018,695)
----------------- -----------------
CAPITAL SHARE TRANSACTIONS:
Shares sold...................................................................... 70,513,579 283,730,686
Shares issued in connection with the acquisition of the UBS Value Equity Fund.... -- 23,269,419
Shares issued on reinvestment of distributions................................... 48,416,091 42,645,369
Shares redeemed.................................................................. (248,393,696) (285,854,547)
----------------- -----------------
Net increase (decrease) in net assets resulting from capital share transactions.. (129,464,026) 63,790,927
----------------- -----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................................... (285,548,646) 128,951,672
----------------- -----------------
NET ASSETS:
Beginning of period.............................................................. 790,050,522 661,098,850
----------------- -----------------
End of period (including accumulated undistributed net investment income of
$2,575,151 and $1,363,158, respectively)......................................... $ 504,501,876 $ 790,050,522
================= =================
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
26
<PAGE>
U.S. Equity Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Year Ended June 30,
-----------------------------------------------------
Brinson Class I (Unaudited) 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period................ $ 21.48 $ 19.91 $ 17.64 $ 14.59 $ 11.53 $ 9.65
-------- -------- -------- -------- -------- -------
Income (loss) from investment operations:
Net investment income......................... 0.06* 0.17* 0.19 0.15 0.17 0.16
Net realized and unrealized gain (loss)....... (2.90) 2.67 3.39 4.27 3.31 1.89
-------- -------- -------- -------- -------- -------
Total income (loss) from investment
operations............................ (2.84) 2.84 3.58 4.42 3.48 2.05
-------- -------- -------- -------- -------- -------
Less distributions:
Distributions from net investment income...... (0.05) (0.15) (0.18) (0.14) (0.17) (0.14)
Distributions from net realized gain.......... (1.77) (1.12) (1.13) (1.23) (0.25) (0.03)
-------- -------- -------- -------- -------- -------
Total distributions....................... (1.82) (1.27) (1.31) (1.37) (0.42) (0.17)
-------- -------- -------- -------- -------- -------
Net asset value, end of period...................... $ 16.82 $ 21.48 $ 19.91 $ 17.64 $ 14.59 $ 11.53
======== ======== ======== ======== ======== =======
Total return (non-annualized)....................... (13.13)% 15.22% 21.48% 31.87% 30.57% 21.45%
Ratios/Supplemental data:
Net assets, end of period (in 000s)............. $445,593 $713,321 $605,768 $337,949 $126,342 $42,573
Ratio of expenses to average net assets:
Before expense reimbursement
and earnings credits........................ 0.80%** 0.80% 0.80% 0.89% 1.14% 1.70%
After expense reimbursement and earnings
credits..................................... N/A N/A N/A 0.80% 0.80% 0.80%
Ratio of net investment income to average net
assets:
Before expense reimbursement
and earnings credits........................ 0.84%** 0.82% 1.12% 1.06% 1.13% 1.09%
After expense reimbursement and earnings
credits..................................... N/A N/A N/A 1.15% 1.47% 1.99%
Portfolio turnover rate......................... 26% 48% 42% 43% 36% 33%
</TABLE>
* The net investment income per share data was determined by using average
shares outstanding throughout the period
** Annualized
N/A = Not Applicable
See accompanying notes to financial statements.
================================================================================
27
<PAGE>
U.S. Equity Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Year Ended Year Ended
Brinson Class N (Unaudited) June 30, 1999 June 30, 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period............................... $ 21.39 $ 19.88 $ 17.64
------- -------- --------
Income from investment operations:
Net investment income........................................... 0.06* 0.08* 0.15
Net realized and unrealized gain (loss)......................... (2.90) 2.67 3.37
------- -------- --------
Total income (loss) from investment operations................ (2.84) 2.75 3.52
------- -------- --------
Less distributions:...............................................
Distributions from net investment income........................ (0.03) (0.12) (0.15)
Distributions from net realized gain............................ (1.77) (1.12) (1.13)
------- -------- --------
Total distributions........................................... (1.80) (1.24) (1.28)
------- -------- --------
Net asset value, end of period..................................... $ 16.75 $ 21.39 $ 19.88
======= ======== ========
Total return (non-annualized)...................................... (13.20)% 14.75% 21.10%
Ratios/Supplemental data:
Net assets, end of period (in 000s)............................... $ 8,136 $ 7,563 $ 268
Ratio of gross expenses to average net assets..................... 1.05%** 1.05% 1.05%
Ratio of net investment income to average net assets.............. 0.59%** 0.57% 0.87%
Portfolio turnover rate........................................... 26% 48% 42%
</TABLE>
* The net investment income per share data was determined by using average
shares outstanding throughout the period
** Annualized
See accompanying notes to financial statements.
================================================================================
28
<PAGE>
U.S. Large Capitalization Equity Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Since its inception on April 30, 1998, the Brinson U.S. Large Capitalization
Equity Fund Class I has provided an annualized return of -3.53% compared to the
19.85% return of its benchmark, the S&P 500 Equity Index. Results for the one-
year period were also disappointing, with the Fund returning -11.05% versus the
benchmark return of 21.04%. While these results are well below our expectations,
we feel the Fund is very well positioned to take advantage of the current market
environment--which has seen many sectors and market segments driven to extreme
levels of over-and under-valuation.
For 1999, market exposure detracted very modestly from active returns,
consistent with a slightly below market beta and very strong returns. Results
suffered from a meaningful underweight in the high momentum, high price/earnings
and large capitalization stocks. Our Fund has minimal exposure to such stocks
based upon our valuation analysis, which indicates they are meaningfully
overvalued. Industry exposures also detracted from active returns, with negative
contributions from the relative underweights in semiconductors and computer
software and overweights in railroads and tobacco. These negative returns were
only partially offset by positive contributions from our underweights in food
and beverages, drugs and specialty retail and overweights in information
services.
Stock selection had the largest negative impact on active returns for the full
year. The strongest contributors were Corning, First Data and Computer Sciences
while the biggest detractors were Xerox, Lockheed Martin, FDX Corp., and
Raytheon. Given the momentum orientation of the current market environment,
companies that reported any disappointment in expected earnings were heavily
penalized.
A relatively narrow segment of the largest capitalization stocks, especially in
the technology sector, continued to dominate market performance. Technology,
with a return of 79% for the year, had the best return of any sector and its
heavy weighting in the S&P 500 Index (30% at year-end) resulted in contributing
about 67% of the Index's year-to-date return. We believe investors have been too
willing to pay significant premiums for the perception of strong top-line growth
and to assume strong relative earnings growth far into the future. We remain
convinced that there are greater relative values away from such issues, which
are dominated by momentum investors. Specifically, the Fund's most important
factor exposures, as we enter 2000, include underweights in size, momentum and
growth and overweights in the traditional value measures of earnings/price,
book/price and yield. From an industry standpoint, the Fund is underweight in
technology hardware, retail, drugs and energy and overweight in transportation,
banks, information services and electric utilities.
================================================================================
29
<PAGE>
U.S. Large Capitalization Equity Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Total Return
<TABLE>
<CAPTION>
6 months 1 year 4/30/98*
ended ended to
12/31/99 12/31/99 12/31/99
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Brinson U.S. Large Capitalization Equity Fund Class I -17.67% -11.05% -3.53%
- -------------------------------------------------------------------------------------------------
S&P 500 Equity Index 7.71 21.04 19.85
- -------------------------------------------------------------------------------------------------
</TABLE>
* Performance inception date of the Brinson U.S. Large Capitalization Equity
Fund Class I.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson U.S.
Large Capitalization Equity Fund Class I and the S&P 500 Equity Index if you had
invested $1,000,000 on April 30, 1998, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
Brinson U.S. Large Capitalization Equity Fund Class I vs. S&P 500 Equity Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Label A B
- ------------------------------------------------------------------------------------
Brinson U.S. Large
Capitalization Equity Fund
Label Class I S&P 500 Equity Index
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 4/30/98 1,000,000 1,000,000
- ------------------------------------------------------------------------------------
2 5/31/98 983,723 982,810
- ------------------------------------------------------------------------------------
3 6/30/98 998,652 1,022,732
- ------------------------------------------------------------------------------------
4 7/31/98 980,310 1,011,840
- ------------------------------------------------------------------------------------
5 8/31/98 850,893 865,548
- ------------------------------------------------------------------------------------
6 9/30/98 917,130 920,995
- ------------------------------------------------------------------------------------
7 10/31/98 984,386 995,909
- ------------------------------------------------------------------------------------
8 11/30/98 1,026,166 1,056,263
- ------------------------------------------------------------------------------------
9 12/31/98 1,058,703 1,117,132
- ------------------------------------------------------------------------------------
10 1/31/99 1,065,884 1,163,846
- ------------------------------------------------------------------------------------
11 2/28/99 1,032,030 1,127,676
- ------------------------------------------------------------------------------------
12 3/31/99 1,057,677 1,172,792
- ------------------------------------------------------------------------------------
13 4/30/99 1,147,954 1,218,210
- ------------------------------------------------------------------------------------
14 5/31/99 1,114,100 1,189,443
- ------------------------------------------------------------------------------------
15 6/30/99 1,143,860 1,255,453
- ------------------------------------------------------------------------------------
16 7/31/99 1,092,473 1,216,261
- ------------------------------------------------------------------------------------
17 8/31/99 1,060,614 1,210,248
- ------------------------------------------------------------------------------------
18 9/30/99 968,118 1,177,075
- ------------------------------------------------------------------------------------
19 10/31/99 965,035 1,251,560
- ------------------------------------------------------------------------------------
20 11/30/99 955,786 1,277,004
- ------------------------------------------------------------------------------------
21 12/31/99 941,729 1,352,229
- ------------------------------------------------------------------------------------
</TABLE>
4/30/98 = $1,000,000 Data through 12/31/99
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
30
<PAGE>
U.S. Large Capitalization Equity Fund
- -------------------------------------------------------------------------------
[BRINSON LOGO]
Total Return
<TABLE>
<CAPTION>
6 months 1 year 4/30/98*
ended ended to
12/31/99 12/31/99 12/31/99
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Brinson U.S. Large Capitalization Equity Fund Class N -17.67% -11.12% -3.74%
- ----------------------------------------------------------------------------------------------------------------------
S&P 500 Equity Index 7.71 21.04 19.85
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Performance inception date of the Brinson U.S. Large Capitalization Equity
Fund Class N.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson U.S.
Large Capitalization Equity Fund Class N and the S&P 500 Equity Index if you had
invested $1,000,000 on April 30, 1998, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
Brinson U.S. Large Capitalization Equity Fund Class N
vs. S&P 500 Equity Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Label A B
- ---------------------------------------------------------------------------------------------------------
Label Brinson U.S. Large Capitalization Equity S&P Equity Index
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 4/30/98 1,000,000 1,000,000
- ---------------------------------------------------------------------------------------------------------
2 5/31/98 983,723 982,810
- ---------------------------------------------------------------------------------------------------------
3 6/30/98 996,297 1,022,732
- ---------------------------------------------------------------------------------------------------------
4 7/31/98 977,960 1,011,840
- ---------------------------------------------------------------------------------------------------------
5 8/31/98 848,584 865,548
- ---------------------------------------------------------------------------------------------------------
6 9/30/98 914,800 920,995
- ---------------------------------------------------------------------------------------------------------
7 10/31/98 981,016 995,909
- ---------------------------------------------------------------------------------------------------------
8 11/30/98 1,023,802 1,056,263
- ---------------------------------------------------------------------------------------------------------
9 12/31/98 1,055,758 1,117,132
- ---------------------------------------------------------------------------------------------------------
10 1/31/99 1,062,927 1,163,846
- ---------------------------------------------------------------------------------------------------------
11 2/28/99 1,029,134 1,127,676
- ---------------------------------------------------------------------------------------------------------
12 3/31/99 1,054,734 1,172,792
- ---------------------------------------------------------------------------------------------------------
13 4/30/99 1,143,824 1,218,210
- ---------------------------------------------------------------------------------------------------------
14 5/31/99 1,110,031 1,189,443
- ---------------------------------------------------------------------------------------------------------
15 6/30/99 1,139,728 1,255,453
- ---------------------------------------------------------------------------------------------------------
16 7/31/99 1,088,527 1,216,261
- ---------------------------------------------------------------------------------------------------------
17 8/31/99 1,056,782 1,210,248
- ---------------------------------------------------------------------------------------------------------
18 9/30/99 964,621 1,177,075
- ---------------------------------------------------------------------------------------------------------
19 10/31/99 960,525 1,251,560
- ---------------------------------------------------------------------------------------------------------
20 11/30/99 951,309 1,277,004
- ---------------------------------------------------------------------------------------------------------
21 12/31/99 938,355 1,352,229
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
31
<PAGE>
U.S. Large Capitalization Equity Fund
[BRINSON LOGO]
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- -------------------------------------------------------------------------------
U.S. EQUITIES
Capital Investment
Capital Goods....................................... 5.33%
Technology.......................................... 19.11
------
24.44
Basic Industries
Chemicals........................................... 0.93
Housing/Paper....................................... 2.94
Metals.............................................. 6.35
------
10.22
Consumer
Non-Durables........................................ 1.50
Retail/Apparel...................................... 5.61
Health: Drugs....................................... 2.80
Health: Non-Drugs................................... 5.20
------
15.11
Financial
Banks............................................... 11.04%
Non-Banks........................................... 5.85
------
16.89
Utilities
Electric............................................ 8.76
Telephone........................................... 2.32
------
11.08
Transportation.............................................. 12.54
Services/Miscellaneous...................................... 5.76
------
Total U.S. Equities......................... 96.04*
SHORT-TERM INVESTMENTS...................................... 3.43*
------
TOTAL INVESTMENTS........................... 99.47
CASH AND OTHER ASSETS,
LESS LIABILITIES.................................... 0.53
------
NET ASSETS.................................................. 100.00%
======
- --------------------------------------------------------------------------------
* The Fund held a long position in stock index futures which increased U.S.
Equity exposure from 96.04% to 99.79%. This adjustment results in a net decrease
in the Fund's exposure to Short-Term Investments from 3.43% to -0.32%
Top 10 U.S. Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- -------------------------------------------------
1. FDX Corp. 6.12%
2. Electronic Data Systems Corp. 5.91
3. Burlington Northern Santa Fe Corp. 4.95
4. CIGNA Corp. 3.99
5. Compuware Corp. 3.63
6. Compaq Computer Corp. 3.42
7. First Data Corp. 3.29
8. Masco Corp. 3.23
9. Illinois Tool Works, Inc. 3.12
10. Kimberly-Clark Corp. 2.93
- -------------------------------------------------
================================================================================
32
<PAGE>
U.S. Large Capitalization Equity Fund - Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
--------- -----------
U.S. Equities - 96.04%
Aon Corp........................................ 13,750 $ 550,000
Baxter International, Inc....................... 13,200 829,125
Burlington Northern Santa Fe Corp............... 60,500 1,467,125
Central & South West Corp....................... 32,800 656,000
Chase Manhattan Corp............................ 10,500 815,719
CIGNA Corp...................................... 14,700 1,184,269
Compaq Computer Corp............................ 37,500 1,014,844
Computer Sciences Corp. (b)..................... 8,300 785,388
Compuware Corp. (b)............................. 28,900 1,076,525
Corning, Inc.................................... 4,000 515,750
Covance, Inc. (b)............................... 6,500 70,281
Dominion Resources, Inc......................... 16,600 651,550
Electronic Data Systems Corp.................... 26,200 1,753,762
Eli Lilly and Co................................ 5,700 379,050
Emerson Electric Co............................. 15,100 866,363
Entergy Corp.................................... 16,400 422,300
FDX Corp. (b)................................... 44,300 1,813,531
First Data Corp................................. 19,800 976,387
Fleet Boston Financial Corp..................... 22,985 800,165
Gateway, Inc. (b)............................... 5,200 374,725
Household International, Inc.................... 19,600 730,100
Illinois Tool Works, Inc........................ 13,700 925,606
Kimberly-Clark Corp............................. 13,300 867,825
Kroger Co. (b).................................. 10,000 188,750
Lexmark International Group, Inc. (b)........... 2,900 262,450
Lockheed Martin Corp............................ 21,400 468,125
Masco Corp...................................... 37,700 956,637
Mattel, Inc..................................... 38,000 498,750
Monsanto Co..................................... 12,700 452,438
Newell Rubbermaid, Inc.......................... 24,600 $ 713,400
Norfolk Southern Corp........................... 21,400 438,700
Philip Morris Companies, Inc.................... 19,200 445,200
PNC Bank Corp................................... 9,800 436,100
Praxair, Inc.................................... 5,500 276,719
Raytheon Co., Class B........................... 22,500 597,656
SBC Communications, Inc......................... 14,100 687,375
U.S. Bancorp.................................... 15,500 369,094
United Healthcare Corp.......................... 12,100 642,813
Wells Fargo and Co.............................. 21,100 853,231
Xerox Corp...................................... 29,200 662,475
-----------
Total U.S. Equities (Cost $31,220,080).......... 28,476,303
-----------
Short Term Investments - 3.43%
Investment Companies - 3.43%
Brinson Supplementary Trust U.S. Cash
Management Prime Fund
(Cost $1,018,306)............................. 1,018,306 1,018,306
-----------
Total Investments
(Cost $32,238,386) - 99.47% (a)............... 29,494,609
Cash and other assets,
less liabilities - 0.53%...................... 156,596
-----------
Net Assets - 100%............................... $29,651,205
===========
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $32,238,386; and net
unrealized depreciation consisted of:
Gross unrealized appreciation................... $ 1,215,839
Gross unrealized depreciation................... (3,959,616)
-----------
Net unrealized depreciation................ $(2,743,777)
===========
(b) Non-income producing security
FUTURES CONTRACTS
The U.S. Large Capitalization Equity Fund had the following open futures
contracts as of December 31, 1999:
<TABLE>
<CAPTION>
Expiration Current Unrealized
Date Cost Value Gain
---------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Index Futures Buy Contracts
Standard & Poor's 500, 3 contracts............... March 2000 $1,108,514 $1,113,150 $ 4,636
=======
</TABLE>
The segregated cash pledged to cover margin requirements for the open futures
positions at December 31, 1999 was $93,750.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
33
<PAGE>
U. S. Large Capitalization Equity Fund - Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $31,220,080).................... $ 28,476,303
Affiliated issuers (Cost $1,018,306)....................... 1,018,306
Cash......................................................... 106,990
Receivables:
Dividends.................................................. 52,604
Interest................................................... 752
Variation margin........................................... 2,843
Other assets................................................. 19,431
------------
TOTAL ASSETS............................................. 29,677,229
------------
LIABILITIES:
Payables:
Investment advisory fees.................................... 6,834
Accrued expenses............................................ 19,190
------------
TOTAL LIABILITIES........................................ 26,024
------------
NET ASSETS.................................................... $ 29,651,205
============
NET ASSETS CONSIST OF:
Paid in capital.............................................. $ 34,129,717
Accumulated undistributed net investment income.............. 16,008
Distributions in excess of net realized gain................. (1,755,379)
Net unrealized depreciation.................................. (2,739,141)
------------
NET ASSETS............................................... $ 29,651,205
============
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption
price per share (Based on net assets of
$29,011,865 and 3,569,134 shares issued and outstanding).. $ 8.13
============
Brinson Class N:
Net asset value, offering price and redemption
price per share (Based on net assets of
$562,411 and 68,872 shares issued and outstanding)........ $ 8.17
============
UBS Investment Funds Class:
Net asset value, offering price and redemption
price per share (Based on net assets of
$76,929 and 9,516 shares issued and outstanding)........... $ 8.08
============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
34
<PAGE>
U. S. Large Capitalization Equity Fund Financial Statements
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
INVESTMENT INCOME:
Dividends.................................................... $ 201,610
Interest..................................................... 31,884
-----------
TOTAL INCOME.......................................... 233,494
-----------
EXPENSES:
Advisory..................................................... 85,880
Registration................................................. 25,734
Professional................................................. 19,450
Printing..................................................... 8,030
Distribution................................................. 2,932
Other........................................................ 5,285
-----------
TOTAl EXPENSES........................................ 147,311
Expenses deferred by Advisor.......................... (46,252)
Earnings credits...................................... (15)
-----------
NET EXPENSES.......................................... 101,044
-----------
NET INVESTMENT INCOME................................. 132,450
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on:
Investments................................................ 89,048
Futures contracts.......................................... 71,238
-----------
Net realized gain..................................... 160,286
-----------
Change in net unrealized appreciation or depreciation on:
Investments................................................ (4,939,653)
Futures contracts.......................................... 4,636
-----------
Change in net unrealized appreciation or depreciation. (4,935,017)
-----------
Net realized and unrealized loss............................... (4,774,731)
-----------
Net decrease in net assets resulting from operations........... $(4,642,281)
===========
See accompanying notes to financial statements.
================================================================================
35
<PAGE>
U.S. Large Capitalization Equity Fund Financial Statements
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year
December 31, 1999 Ended
(Unaudited) June 30, 1999
----------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 132,450 $ 185,687
Net realized gain.......................................................... 160,286 339,283
Change in net unrealized appreciation or depreciation...................... (4,935,017) 2,374,562
---------------- -------------
Net increase (decrease) in net assets resulting from operations............ (4,642,281) 2,899,532
---------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income:
Brinson Class I......................................................... (193,937) (87,626)
Brinson Class N......................................................... (3,265) (69,880)
UBS Investment Funds Class.............................................. (496) (12)
Distributions in excess of net realized gain:
Brinson Class I......................................................... (2,112,125) -
Brinson Class N......................................................... (67,253) -
UBS Investment Funds Class.............................................. (6,269) -
---------------- -------------
Total distributions to shareholders........................................ (2,383,345) (157,518)
---------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold................................................................ 17,125,025 24,853,429
Shares issued on reinvestment of distributions............................. 1,897,089 147,324
Shares redeemed............................................................ (8,774,987) (17,500,436)
---------------- -------------
Net increase in net assets resulting from capital share transactions....... 10,247,127 7,500,317
---------------- -------------
TOTAL INCREASE IN NET ASSETS......................................... 3,221,501 10,242,331
---------------- -------------
NET ASSETS:
Beginning of period........................................................ 26,429,704 16,187,373
---------------- -------------
End of period (including accumulated undistributed net investment
income of $16,008 and $81,256, respectively).............................. $29,651,205 $26,429,704
================ =============
</TABLE>
See accompanying notes to financial statements.
===============================================================================
36
<PAGE>
U.S. Large Capitalization Equity Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended Year April 6, 1998*
December 31, 1999 Ended Through
Brinson Class I (Unaudited) June 30, 1999 June 30, 1998
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period........................... $ 11.13 $ 9.80 $ 10.00
-------- -------- -------
Income (loss) from investment operations:
Net investment income...................................... 0.05** 0.11** 0.02
Net realized and unrealized gain (loss).................... (2.01) 1.31 (0.20)
-------- -------- -------
Total income (loss) from investment operations........... (1.96) 1.42 (0.18)
-------- -------- -------
Less distributions:
Distributions from net investment income................... (0.09) (0.09) (0.02)
Distributions from and in excess of net realized gain...... (0.95) -- --
-------- -------- -------
Total distributions...................................... (1.04) (0.09) (0.02)
-------- -------- -------
Net asset value, end of period................................. $ 8.13 $ 11.13 $ 9.80
======== ======== =======
Total return (non-annualized).................................. (17.67)% 14.54% (1.83)%
Ratios/Supplemental data:
Net assets, end of period (in 000s).......................... $ 29,012 $ 22,668 $ 154
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits.......... 1.18%*** 1.29% 1.59%***
After expense reimbursement and earnings credits........... 0.80%*** 0.80% 0.80%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits.......... 0.72%*** 0.57% 0.52%***
After expense reimbursement and earnings credits........... 1.10%*** 1.06% 1.31%***
Portfolio turnover rate...................................... 84% 88% 12%
</TABLE>
* Commencement of investment operations
** The net investment income per share data was determined by using average
shares outstanding throughout the period
*** Annualized
See accompanying notes to financial statements
================================================================================
37
<PAGE>
U.S. Large Capitalization Equity Fund -- Financial Highlights
- -------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended Year April 6, 1998*
December 31, 1999 Ended Through
Brinson Class N (Unaudited) June 30, 1999 June 30, 1998
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period............................... $ 11.13 $ 9.78 $ 10.00
--------- -------- ---------
Income (loss) from investment operations:
Net investment income.......................................... 0.05** 0.09** 0.02
Net realized and unrealized gain (loss)........................ (2.01) 1.31 (0.23)
--------- -------- ---------
Total income (loss) from investment operations............. (1.96) 1.40 (0.21)
--------- -------- ---------
Less distributions:
Distributions from net investment income....................... (0.05) (0.05) (0.01)
Distributions from net realized gain........................... (0.95) -- --
--------- -------- ---------
Total distributions........................................ (1.00) (0.05) (0.01)
--------- -------- ---------
Net asset value, end of period..................................... $ 8.17 $ 11.13 $ 9.78
========= ======== =========
Total return (non-annualized)...................................... (17.67)% 14.40% (2.02)%
Ratios/Supplemental data:
Net assets, end of period (in 000s).............................. $ 562 $ 3,756 $ 16,033
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits.............. 1.43%*** 1.54% 1.84%***
After expense reimbursement and earnings credits............... 1.05%*** 1.05% 1.05%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits.............. 0.47%*** 0.32% 0.27%***
After expense reimbursement and earnings credits............... 0.85%*** 0.81% 1.06%***
Portfolio turnover rate.......................................... 84% 88% 12%
</TABLE>
* Commencement of investment operations
** The net investment income per share data was determined by using average
shares outstanding throughout the period
*** Annualized
See accompanying notes to financial statements.
===============================================================================
38
<PAGE>
U.S. Large Capitalization Growth Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Since its performance inception on October 31, 1997, the Brinson U.S. Large
Capitalization Growth Fund Class I has returned 28.53%, compared to a return of
36.00% for the Russell 1000 Growth Index and a return of 26.23% for the S&P 500
Equity Index. The volatility for the Fund was 20.12% compared to 19.72% for the
Russell 1000 and 17.18% for the S&P 500. In 1999, the Fund returned 32.73% while
the Russell 1000 returned 33.16% and the S&P 500 returned 21.04%.
Just as last year, 1999 was a very good year to be a growth manager (the S&P 500
lagged the Russell Growth by 12%). The underlying forces, however, were quite
different. The three key growth sectors in the U.S. stock market are technology,
healthcare and consumer staples (over 70% of the benchmark). In 1999, only
technology drove these positive returns, while in 1998 healthcare helped, and in
1997 consumer staples also aided returns. Indeed, by the end of the year
technology comprised 45% of the benchmark and nearly 30% of the S&P 500,
representing dramatic increases from just a few years ago. Another important
trend in 1999 was the sharp increase in performance in smaller growth stocks in
the second half of the year. This was mainly due to the broadening of the
technology trend and the dramatic surge in Internet related issues.
Just as the slowdown in global growth had hurt the major consumer franchise
companies such as Coca Cola in 1997, major healthcare companies lagged badly in
1999 under the threat of politically controlled drug prices. What had been one
of the best areas in 1998 became one of the worst in 1999. Ironically, smaller
healthcare companies, particularly in biotechnology, performed almost as well as
smaller technology companies in the latter part of the year.
Our performance in 1999 benefited from stock selection, was hurt slightly by our
sector weights, and was hurt more importantly by underweighting the price
momentum factor in the market. Within the three major growth sectors, our stock
selection was quite positive. The negative sector effect was mainly a result of
overweighting financial stocks and modestly underweighting technology for most
of the year.
A major challenge facing growth investors in the year 2000 is the extreme
performance of the technology sector at the expense of other areas. This is
particularly true after the dramatic gains in the last quarter of the year. We
have used this opportunity to take profits in many issues and reduce our sector
concentration to a below-average, though still meaningful level. We are having
difficulty finding companies whose fundamental prospects are as attractive as
our technology holdings, but we cannot ignore the excessive enthusiasm for this
area. This reduction has funded new investments in attractive retail and
consumer staple companies.
================================================================================
39
<PAGE>
U.S. Large Capitalization Growth Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Total Return
<TABLE>
<CAPTION>
6 months 1 year 10/31/97*
ended ended to
12/31/99 12/31/99 12/31/99
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Brinson U.S. Large Capitalization Growth Fund Class I 12.98% 32.73% 28.53%
- -------------------------------------------------------------------------------------------------------------------
S&P 500 Equity Index 7.71 21.04 26.23
- -------------------------------------------------------------------------------------------------------------------
Russell 1000 Growth Index** 20.56 33.16 36.00
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Performance inception date of the Brinson U.S. Large Capitalization Growth
Fund Class I.
** The Advisor has chosen to change the Fund's benchmark index from the S&P
500 Equity Index to the Russell 1000 Growth Index due to the Advisor's
determination that the Russell 1000 Growth Index more closely reflects the
Fund's investment strategies.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the
Brinson U.S. Large Capitalization Growth Fund Class I, the S&P 500 Equity Index
and the Russell 1000 Growth Index if you had invested $1,000,000 on
October 31, 1997, and had reinvested all your income dividends and capital gain
distributions through December 31, 1999. No adjustment has been made for any
income taxes payable by shareholders on income dividends and capital gain
distributions. Past performance is no guarantee of future results. Share price
and return will vary with market conditions; investors may realize a gain or
loss upon redemption.
Brinson U.S. Large Capitalization Growth Fund Class I
vs. S&P 500 Equity Index and Russell 1000 Growth Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Label A B C
- ---------------------------------------------------------------------------------------------------------------------------------
Brinson U.S. Large Capitalization S&P Equity Index Russell 1000 Growth
Label Growth of Class I Index
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 10/31/97 1,000,000 1,000,000 1,000,000
- ---------------------------------------------------------------------------------------------------------------------------------
2 11/30/97 1,018,495 1,046,290 1,042,475
- ---------------------------------------------------------------------------------------------------------------------------------
3 12/31/97 1,039,140 1,064,255 1,054,153
- ---------------------------------------------------------------------------------------------------------------------------------
4 1/31/98 1,031,495 1,076,025 1,085,675
- ---------------------------------------------------------------------------------------------------------------------------------
5 2/28/98 1,091,715 1,153,628 1,167,341
- ---------------------------------------------------------------------------------------------------------------------------------
6 3/31/98 1,134,655 1,212,706 1,213,876
- ---------------------------------------------------------------------------------------------------------------------------------
7 4/30/98 1,156,858 1,224,906 1,230,674
- ---------------------------------------------------------------------------------------------------------------------------------
8 5/31/98 1,131,408 1,203,849 1,195,753
- ---------------------------------------------------------------------------------------------------------------------------------
9 6/30/98 1,175,605 1,252,750 1,268,988
- ---------------------------------------------------------------------------------------------------------------------------------
10 7/31/98 1,171,311 1,239,408 1,260,588
- ---------------------------------------------------------------------------------------------------------------------------------
11 8/31/98 973,788 1,060,214 1,071,404
- ---------------------------------------------------------------------------------------------------------------------------------
12 9/30/98 1,026,697 1,128,132 1,153,706
- ---------------------------------------------------------------------------------------------------------------------------------
13 10/31/98 1,129,126 1,219,892 1,246,431
- ---------------------------------------------------------------------------------------------------------------------------------
14 11/30/98 1,210,713 1,293,822 1,341,241
- ---------------------------------------------------------------------------------------------------------------------------------
15 12/31/98 1,297,885 1,368,381 1,462,181
- ---------------------------------------------------------------------------------------------------------------------------------
16 1/31/99 1,380,099 1,425,601 1,548,037
- ---------------------------------------------------------------------------------------------------------------------------------
17 2/28/99 1,319,808 1,381,297 1,477,318
- ---------------------------------------------------------------------------------------------------------------------------------
18 3/31/99 1,384,483 1,436,559 1,555,122
- ---------------------------------------------------------------------------------------------------------------------------------
19 4/30/99 1,436,004 1,492,192 1,557,111
- ---------------------------------------------------------------------------------------------------------------------------------
20 5/31/99 1,418,465 1,456,988 1,509,257
- ---------------------------------------------------------------------------------------------------------------------------------
21 6/30/99 1,524,795 1,537,847 1,614,973
- ---------------------------------------------------------------------------------------------------------------------------------
22 7/31/99 1,462,313 1,489,805 1,563,646
- ---------------------------------------------------------------------------------------------------------------------------------
23 8/31/99 1,461,216 1,482,439 1,589,196
- ---------------------------------------------------------------------------------------------------------------------------------
24 9/30/99 1,411,888 1,441,805 1,555,811
- ---------------------------------------------------------------------------------------------------------------------------------
25 10/31/99 1,489,717 1,533,043 1,673,303
- ---------------------------------------------------------------------------------------------------------------------------------
26 11/30/99 1,565,354 1,564,209 1,763,584
- ---------------------------------------------------------------------------------------------------------------------------------
27 12/31/99 1,722,699 1,656,352 1,947,010
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
balancing.
================================================================================
40
<PAGE>
U.S. Large Capitalization Growth Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Total Return
<TABLE>
<CAPTION>
6 months 12/31/98*
ended to
12/31/99 12/31/99
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Brinson U.S. Large Capitalization Growth Fund Class N 12.79% 32.22%
- ----------------------------------------------------------------------------------------------------
S&P 500 Equity Index 7.71 21.04
- ----------------------------------------------------------------------------------------------------
Russell 1000 Growth Index** 20.56 33.16
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Inception date of the Brinson U.S. Large Capitalization Growth Fund Class N.
** The Advisor has chosen to change the Fund's benchmark index from the S&P 500
Equity Index to the Russell 1000 Growth Index due to the Advisor's
determination that the Russell 1000 Growth Index more closely reflects the
Fund's investment strategies.
Total return includes reinvestment of all capital gain and income distributions.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson U.S.
Large Capitalization Growth Fund Class N, the S&P 500 Equity Index and the
Russell 1000 Growth Index if you had invested $1,000,000 on December 31, 1998,
and had reinvested all your income dividends and capital gain distributions
through December 31, 1999. No adjustment has been made for any income taxes
payable by shareholders on income dividends and capital gain distributions. Past
performance is no guarantee of future results. Share price and return will vary
with market conditions; investors may realize a gain or loss upon redemption.
Brinson U.S. Large Capitalization Growth Fund Class N
vs. S&P 500 Equity Index and Russell 1000 Growth Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Label A B C
- ---------------------------------------------------------------------------------------------------------------------
Brinson U.S. Large
Capitalization
Growth Fund
Label Class N S&P 500 Equity Index Russell 1000 Growth Index
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 12/31/98 $1,000,000 $1,000,000 $1,000,000
- ---------------------------------------------------------------------------------------------------------------------
2 1/31/99 $1,062,500 $1,041,816 $1,058,718
- ---------------------------------------------------------------------------------------------------------------------
3 2/28/99 $1,016,047 $1,009,439 $1,010,353
- ---------------------------------------------------------------------------------------------------------------------
4 3/31/99 $1,065,034 $1,049,824 $1,063,564
- ---------------------------------------------------------------------------------------------------------------------
5 4/30/99 $1,104,730 $1,090,480 $1,064,924
- ---------------------------------------------------------------------------------------------------------------------
6 5/31/99 $1,091,216 $1,064,753 $1,032,196
- ---------------------------------------------------------------------------------------------------------------------
7 6/30/99 $1,172,297 $1,123,844 $1,104,496
- ---------------------------------------------------------------------------------------------------------------------
8 7/31/99 $1,124,155 $1,088,736 $1,069,393
- ---------------------------------------------------------------------------------------------------------------------
9 8/31/99 $1,123,311 $1,083,352 $1,084,867
- ---------------------------------------------------------------------------------------------------------------------
10 9/30/99 $1,084,459 $1,053,658 $1,064,035
- ---------------------------------------------------------------------------------------------------------------------
11 10/31/99 $1,144,426 $1,120,333 $1,144,388
- ---------------------------------------------------------------------------------------------------------------------
12 11/30/99 $1,202,703 $1,143,110 $1,206,133
- ---------------------------------------------------------------------------------------------------------------------
13 12/31/99 $1,322,210 $1,210,447 $1,331,580
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
41
<PAGE>
U.S. Large Capitalization Growth Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
U.S. EQUITIES
Energy.......................................................... 2.45%
Capital Investment
Technology.................................................... 19.79
Electric Components........................................... 9.35
------
29.14
Basic Industries
Housing/Paper................................................. 1.54
Consumer
Non-Durables.................................................. 1.94
Retail/Apparel................................................ 11.11
Autos/Durables................................................ 0.77
Health: Drugs................................................. 9.56
Health: Non-Drugs............................................. 5.43
------
28.81
Financial
Non-Banks..................................................... 8.20%
Utilities
Telephone..................................................... 16.09
Services/Miscellaneous.......................................... 7.03
------
Total U.S. Equities................................... 93.26*
------
SHORT-TERM INVESTMENTS.......................................... 5.09*
------
TOTAL INVESTMENTS..................................... 98.35
CASH AND OTHER ASSETS,
LESS LIABILITIES.............................................. 1.65
------
NET ASSETS...................................................... 100.00%
======
- --------------------------------------------------------------------------------
The Fund held a long position in stock index futures which increased U.S. Equity
exposure from 93.26% to 100.10%. This adjustment results in a net decrease in
the Fund's exposure to Short-Term Investments from 5.09% to -1.75%.
Top 10 U.S. Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- ---------------------------------------------
1. Oracle Corp. 4.08%
2. QUALCOMM, Inc. 3.90
3. Sun Microsystems, Inc. 3.85
4. Microsoft, Inc. 3.66
5. General Electric Co. 3.42
6. Texas Instruments, Inc. 2.86
7. Wal-Mart Stores, Inc. 2.80
8. America On-Line, Inc. 2.64
9. Immunex Corp. 2.52
10. Dayton Hudson Corp. 2.44
- ---------------------------------------------
================================================================================
42
<PAGE>
U.S. Large Capitalization Growth Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
------ --------
U.S. Equities - 93.26%
3 Com Corp. (b)................................ 2,900 $ 136,300
AFLAC, Inc..................................... 3,900 184,031
America On-Line, Inc. (b)...................... 3,800 286,663
American Express Co............................ 1,300 216,125
American International Group, Inc.............. 1,925 208,141
AT&T Corp...................................... 4,250 215,688
AT&T Corp.-Liberty Media Group, Inc. (b)....... 4,056 230,178
Avon Products, Inc............................. 2,000 66,000
Bell Atlantic Corp............................. 1,300 80,031
BMC Software, Inc. (b)......................... 1,500 119,906
Boeing Co...................................... 2,000 83,125
Boston Scientific Corp. (b).................... 5,400 118,125
Bristol-Myers Squibb Co........................ 2,400 154,050
CBS Corp. (b).................................. 3,000 191,813
Cisco Systems, Inc. (b)........................ 2,400 257,100
Citigroup, Inc................................. 2,800 155,575
Dayton Hudson Corp............................. 3,600 264,375
Electronic Data Systems Corp................... 1,900 127,181
Federal Home Loan Association Co............... 3,400 160,013
Gap, Inc....................................... 3,300 151,800
General Electric Co............................ 2,400 371,400
Halliburton Co................................. 2,100 84,525
Immunex Corp. (b).............................. 2,500 273,281
Intel Corp..................................... 1,900 156,394
International Business Machines Corp........... 2,300 248,400
Johnson & Johnson Co........................... 2,300 214,188
Lowe's Companies, Inc.......................... 2,800 167,300
Lucent Technologies, Inc....................... 2,500 187,031
MCI WorldCom, Inc. (b)......................... 3,600 191,025
Merck & Co., Inc............................... 3,300 221,306
Merrill Lynch & Co............................. 1,800 150,300
Microsoft, Inc. (b)............................ 3,400 396,950
Motorola, Inc.................................. 1,200 176,700
Nike, Inc...................................... 2,000 99,125
Nortel Networks, Inc........................... 2,500 252,500
Oracle Corp. (b)............................... 3,950 442,647
Pepsi Bottling Group, Inc...................... 6,100 101,031
Pfizer, Inc.................................... 6,400 207,600
Philip Morris Companies, Inc................... 4,700 108,981
Proctor & Gamble Co............................ 1,300 142,431
QUALCOMM, Inc. (b)............................. 2,400 423,000
Quintiles Transnational Corp. (b).............. 3,900 72,881
Safeway, Inc. (b).............................. 5,000 177,813
SBC Communications, Inc........................ 3,400 165,750
Schering Plough Corp........................... 4,300 181,406
Schlumberger Ltd............................... 2,900 163,125
Sun Microsystems, Inc. (b)..................... 5,400 418,162
Texas Instruments, Inc......................... 3,200 310,000
Time Warner, Inc............................... 1,500 108,656
Transocean Offshore, Inc....................... 562 18,932
Tyco International Co.......................... 2,100 81,638
Wal-Mart Stores, Inc........................... 4,400 304,150
Walt Disney Co................................. 3,200 93,600
-----------
Total Equities (Cost $8,120,194)............... 10,118,448
-----------
Face
Amount
------
Short-Term Investments -- 5.09%
Investment Companies -- 5.09%
Vista U.S. Government Money Market
Fund (Cost $551,964) (b)...................... $ 551,964 551,964
-----------
Total Investments
(Cost $8,672,158) -- 98.35% (a)............... 10,670,412
Cash and other assets,
less liabilities -- 1.65%..................... 178,608
-----------
Net Assets -- 100%.............................. $10,849,020
===========
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $8,672,158; and net
unrealized appreciation consisted of:
Gross unrealized appreciation.............. $ 2,347,701
Gross unrealized depreciation.............. (349,447)
-----------
Net unrealized appreciation........... $ 1,998,254
===========
(b) Non-income producing security.
FUTURES CONTRACTS
The U.S. Large Capitalization Growth Fund had the following open futures
contracts as of December 31, 1999:
<TABLE>
<CAPTION>
Expiration Current Unrealized
Date Cost Value Gain
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Index Futures Buy Contracts
Standard & Poor's 500, 2 contracts............. March 2000 731,314 742,100 $10,786
=======
</TABLE>
The segregated cash pledged to cover margin requirements for the open futures
positions at December 31, 1999 was $18,750.
See accompanying notes to financial statements.
================================================================================
43
<PAGE>
U.S. Large Capitalization Growth Fund -- Financial Statements
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $8,672,158)....................................................... $ 10,670,412
Cash........................................................................................... 218,400
Receivables:
Due from Advisor............................................................................. 2,780
Dividends.................................................................................... 6,891
Interest..................................................................................... 3,678
Variation margin............................................................................. 1,768
--------------
TOTAL ASSETS.............................................................................. 10,903,929
--------------
LIABILITIES:
Payables:
Accrued expenses............................................................................. 54,909
--------------
TOTAL LIABILITIES......................................................................... 54,909
--------------
NET ASSETS..................................................................................... $ 10,849,020
==============
NET ASSETS CONSIST OF:
Paid in capital.............................................................................. $ 8,496,445
Accumulated undistributed net investment loss................................................ (19,874)
Accumulated net realized gain................................................................ 363,409
Net unrealized appreciation.................................................................. 2,009,040
--------------
NET ASSETS................................................................................ $ 10,849,020
==============
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share (Based on net assets of
$3,767,216 and 256,482 shares issued and outstanding)....................................... $ 14.69
==============
Brinson Class N:
Net asset value, offering price and redemption price per share (Based on net assets of
$1,317 and 90 shares issued and outstanding)................................................. $ 14.63
==============
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share (Based on net assets of
$7,080,487 and 486,374 shares issued and outstanding)........................................ $ 14.56
==============
</TABLE>
See accompanying notes to financial statements.
================================================================================
44
<PAGE>
U.S. Large Capitalization Growth Fund -- Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<S> <C>
INVESTMENT INCOME:
Dividends........................................................................ $ 34,407
Interest......................................................................... 5,952
--------------
TOTAL INCOME.................................................................. 40,359
--------------
EXPENSES:
Advisory......................................................................... 31,958
Distribution..................................................................... 23,378
Professional..................................................................... 22,114
Registration..................................................................... 15,506
Custodian........................................................................ 6,627
Other............................................................................ 23,423
--------------
TOTAL EXPENSES................................................................ 123,006
Expenses deferred and reimbursed by Advisor................................... (56,260)
Earnings credits.............................................................. (6,513)
--------------
NET EXPENSES.................................................................. 60,233
--------------
NET INVESTMENT LOSS........................................................... (19,874)
--------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on:
Investments...................................................................... 353,419
Futures Contracts................................................................ 27,940
--------------
Net realized gain............................................................. 381,359
--------------
Change in net unrealized appreciation or depreciation on:
Investments...................................................................... 946,091
Futures Contracts................................................................ 10,786
--------------
Change in net unrealized appreciation or depreciation......................... 956,877
--------------
Net realized and unrealized gain................................................... 1,338,236
--------------
Net increase in net assets resulting from operations............................... $ 1,318,362
==============
</TABLE>
See accompanying notes to financial statements.
================================================================================
45
<PAGE>
U.S. Large Capitalization Growth Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Six Months Ended*
(Unaudited) June 30, 1999
------------------ -----------------
<S> <C> <C>
OPERATIONS:
Net investment loss............................................................... $ (19,874) $ (123)
Net realized gain................................................................. 381,359 408,525
Change in net unrealized appreciation or depreciation............................. 956,877 463,877
--------------- ------------
Net increase in net assets resulting from operations.............................. 1,318,362 872,279
--------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gain:
Brinson Class I................................................................... (226,909) --
Brinson Class N................................................................... (80) --
UBS Investment Funds Class........................................................ (376,172) --
--------------- ------------
Total distributions to shareholders................................................. (603,161) --
--------------- ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold........................................................................ 4,243,090 5,233,678
Shares issued on reinvestment of distributions..................................... 593,637 --
Shares redeemed.................................................................... (2,787,807) (2,169,846)
--------------- ------------
Net increase in net assets resulting from capital share transactions............... 2,048,920 3,063,832
--------------- ------------
TOTAL INCREASE IN NET ASSETS................................................... 2,764,121 3,936,111
--------------- ------------
NET ASSETS:
Beginning of period................................................................ 8,084,899 4,148,788
--------------- ------------
End of period (including accumulated undistributed net investment
income of $(19,874) and $0, respectively)......................................... $ 10,849,020 $ 8,084,899
=============== ============
</TABLE>
* Reflects the Fund's change in fiscal year end from December 31 to June 30
See accompanying notes to financial statements.
================================================================================
46
<PAGE>
U.S. Large Capitalization Growth Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended Six Months October 14, 1997/1/
December 31, 1999 Ended/2/ Year Ended Through
Brinson Class I (Unaudited) June 30, 1999 December 31, 1998/3/ December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 13.91 $ 11.84 $ 9.92 $ 10.00
--------- --------- -------- ---------
Income (loss) from investment operations:
Net investment income.......................... 0.02/4/ 0.02 0.06 0.02
Net realized and unrealized gain (loss)........ 1.71 2.05 2.38 (0.08)
--------- --------- -------- ---------
Total income (loss) from investment
operations................................. 1.73 2.07 2.44 (0.06)
--------- --------- -------- ---------
Less distributions:
Distributions from net investment income....... -- -- (0.06) (0.02)
Distributions from net realized gain........... (0.95) -- (0.46) --
--------- --------- -------- ---------
Total distributions.......................... (0.95) -- (0.52) (0.02)
--------- --------- -------- ---------
Net asset value, end of period.................... $ 14.69 $ 13.91 $ 11.84 $ 9.92
========= ========= ======== =========
Total return (non-annualized)..................... 12.98% 17.48% 24.90% (0.55)%
Ratios/Supplemental Data:
Net assets, end of period (in 000s).............. $ 3,767 $ 2,947 $ 4,147 $ 4,137
Ratio of expenses to average net assets:
Before expense reimbursement and
earnings credits............................. 2.17%/5/ 2.38%/5/ 2.76% 8.54%/5/
After expense reimbursement and
earnings credits............................. 0.80%/5/ 0.80%/5/ 0.99% 1.00%/5/
Ratio of net investment income (loss)
to average net assets:
Before expense reimbursement and
earnings credits............................. (1.29)%/5/ (1.26)%/5/ (1.40)% (6.19)%/5/
After expense reimbursement and
earnings credits............................. 0.08%/5/ 0.32%/5/ 0.37% 1.35%/5/
Portfolio turnover rate........................... 46% 51% N/A N/A
</TABLE>
/1/ Commencement of investment operations
/2/ Reflects the Fund's change in fiscal year end from December 31 to June 30
/3/ Reflects 10 for 1 share split effective December 9, 1998
/4/ The net investment income per share data was determined by using average
shares outstanding throughout the period
/5/ Annualized
N/A = Information is not available for periods prior to reorganization, as
described in notes to financial statements
See accompanying notes to financial statements.
================================================================================
47
<PAGE>
U.S. Large Capitalization Growth Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Period Ended
Brinson Class N (Unaudited) June 30, 1999*
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period......................................... $ 13.88 $ 11.84
--------- ---------
Income from investment operations:
Net investment loss....................................................... (0.01)** (0.01)
Net realized and unrealized gain.......................................... 1.71 2.05
--------- ---------
Total income from investment operations................................. 1.70 2.04
--------- ---------
Less distributions:
Distributions from net realized gain...................................... (0.95) --
--------- ---------
Total distributions..................................................... (0.95) --
--------- ---------
Net asset value, end of period............................................... $ 14.63 $ 13.88
========= =========
Total return (non-annualized)................................................ 12.79% 17.23%
Ratios/Supplemental Data:
Net assets, end of period (in 000s)......................................... $ 1 $ 1
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits......................... 2.42%*** 2.63%***
After expense reimbursement and earnings credits.......................... 1.05%*** 1.05%***
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement and earnings credits......................... (1.54)%*** (1.51)%***
After expense reimbursement and earnings credits.......................... (0.17)%*** 0.07%***
Portfolio turnover rate..................................................... 46% 51%
</TABLE>
* Commencement of Brinson Class N was December 31, 1998
** The net investment income per share data was determined by using average
shares outstanding throughout the period
*** Annualized
See accompanying notes to financial statements.
================================================================================
48
<PAGE>
U.S. Small Capitalization Growth Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
The Brinson U.S. Small Capitalization Growth Fund Class I appreciated 41.70% in
1999, significantly outpacing the 21.26% return of the Russell 2000 Index, a
commonly cited index of small capitalization (small cap) U.S. stocks. Since the
Fund's inception on September 30, 1997, it has produced an annualized return of
10.33% versus its benchmark's return of 6.08%. The Fund's outperformance
relative to the Russell 2000 in 1999 may be attributed to several factors.
First, a supportive economic environment and a sizzling technology sector
generated renewed interest in small cap growth stocks. Stock selection was also
a strong positive in 1999, particularly in the consumer cyclical and technology
sectors. Industry selection was a modest positive, mostly due to an overweight
of technology stocks and an underweight in basic materials and financials.
Finally, the Fund benefited from participation in a number of well-received
initial public offerings, mostly in the Internet arena.
Stocks that helped performance in 1999 included Peregrine Systems, Mercury
Interactive, Dendrite International, Cost Plus Warehouse, TMP Worldwide, DII
Group, and Zebra Technologies. Most of these equities were beneficiaries of last
year's technology rally. Stocks that detracted from relative performance
included Halo Industries, Pediatrix Medical, Sunrise Assisted Living,
Brightpoint Cellular, and Kellstrom. In general, most of these underperformers
suffered earnings shortfalls due to disappointing top-line growth. As a result,
we focused more research in 1999 on eliminating companies from the Fund that
were likely to report decelerating future sales growth.
As we consider the outlook for small cap stocks, it is heartening to note these
stocks outperformed their large cap brethren last year for the first time in six
years--albeit not by a wide margin. After trailing badly earlier in 1999, the
Russell 2000 nosed out the S&P 500 by a mere 22 basis points at year-end. It is
too early to tell whether recent strength signals the beginning of a new small
cap rally, but conditions are ripe for such a move. Relative valuations for
small cap stocks remain compelling by virtually any measure. The forward-looking
Price/Earnings (P/E) multiple for the Russell 2000 currently weighs in at 19.3
times earnings, while investors are paying an expensive 25.2 times earnings for
the S&P 500. A look at other valuation ratios leads to similar conclusions.
Although large cap stocks have enjoyed superior earnings growth and asset
utilization in the past year, small cap stocks are expected to grow more quickly
in the year ahead. For example, the IBES analyst consensus report forecasts that
small cap earnings will grow 24% in the year ahead versus 21% for the S&P 500.
Extending our time horizon, Russell 2000 profits are projected to rise 21%
annually over the next three to five years, while S&P 500 earnings are
forecasted to grow 17% a year. Given these solid growth prospects, we remain
bullish on the outlook for small cap stocks over the next several years.
================================================================================
49
<PAGE>
U.S. Small Capitalization Growth Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Total Return
<TABLE>
<CAPTION>
6 months 1 year 9/30/97*
ended ended to
12/31/99 12/31/99 12/31/99
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Brinson U.S. Small Capitalization Growth Fund Class I 35.84% 41.70% 10.33%
- ---------------------------------------------------------------------------------------------
Russell 2000 Index 10.96 21.26 6.08
- ---------------------------------------------------------------------------------------------
</TABLE>
* Inception date of the Brinson U.S. Small Capitalization Growth Fund Class I.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year represent average annualized returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson U.S.
Small Capitalization Growth Fund Class I and the Russell 2000 Index if you had
invested $1,000,000 on September 30, 1997, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
Brinson U.S. Small Capitalization Growth Fund Class I
vs. Russell 2000 Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Label A B
- -----------------------------------------------------------------------------------------
Brinson U.S. Small Capitalization
Label Growth Fund Class I Russell 2000 Index
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 9/30/97 1,000,000 1,000,000
- -----------------------------------------------------------------------------------------
2 10/31/97 953,600 956,071
- -----------------------------------------------------------------------------------------
3 11/30/97 936,600 949,887
- -----------------------------------------------------------------------------------------
4 12/31/97 943,800 996,513
- -----------------------------------------------------------------------------------------
5 1/31/98 932,700 951,260
- -----------------------------------------------------------------------------------------
6 2/28/98 1,007,600 1,021,599
- -----------------------------------------------------------------------------------------
7 3/31/98 1,049,900 1,063,732
- -----------------------------------------------------------------------------------------
8 4/30/98 1,047,200 1,069,618
- -----------------------------------------------------------------------------------------
9 5/31/98 990,700 1,012,012
- -----------------------------------------------------------------------------------------
10 6/30/98 971,100 1,014,141
- -----------------------------------------------------------------------------------------
11 7/31/98 887,800 932,042
- -----------------------------------------------------------------------------------------
12 8/31/98 700,200 751,059
- -----------------------------------------------------------------------------------------
13 9/30/98 739,372 809,835
- -----------------------------------------------------------------------------------------
14 10/31/98 788,803 842,863
- -----------------------------------------------------------------------------------------
15 11/30/98 807,515 887,022
- -----------------------------------------------------------------------------------------
16 12/31/98 880,562 941,913
- -----------------------------------------------------------------------------------------
17 1/31/99 881,563 954,430
- -----------------------------------------------------------------------------------------
18 2/28/99 807,515 877,126
- -----------------------------------------------------------------------------------------
19 3/31/99 825,527 890,820
- -----------------------------------------------------------------------------------------
20 4/30/99 823,526 970,644
- -----------------------------------------------------------------------------------------
21 5/31/99 859,549 984,822
- -----------------------------------------------------------------------------------------
22 6/30/99 918,586 1,029,355
- -----------------------------------------------------------------------------------------
23 7/31/99 926,591 1,001,110
- -----------------------------------------------------------------------------------------
24 8/31/99 906,579 964,060
- -----------------------------------------------------------------------------------------
25 9/30/99 938,599 964,271
- -----------------------------------------------------------------------------------------
26 10/31/99 974,622 968,176
- -----------------------------------------------------------------------------------------
27 11/30/99 1,127,720 1,025,986
- -----------------------------------------------------------------------------------------
28 12/31/99 1,247,796 1,142,127
- -----------------------------------------------------------------------------------------
</TABLE>
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
50
<PAGE>
U.S. Small Capitalization Growth Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Total Return
<TABLE>
<CAPTION>
6 months 12/31/98*
ended to
12/31/99 12/31/99
- -------------------------------------------------------------------------------------
<S> <C> <C>
Brinson U.S. Small Capitalization Growth Fund Class N 35.59% 41.14%
- -------------------------------------------------------------------------------------
Russell 2000 Index 10.96 21.26
- -------------------------------------------------------------------------------------
</TABLE>
* Inception date of the Brinson U.S. Small Capitalization Growth Fund Class N.
Total return includes reinvestment of all capital gain and income distributions.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson U.S.
Small Capitalization Growth Fund Class N and the Russell 2000 Index if you had
invested $1,000,000 on December 31, 1998, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
Brinson U.S. Small Capitalization Growth Fund Class N
vs. Russell 2000 Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Label A B
- -----------------------------------------------------------------------------------------
Brinson U.S. Small Capitalization
Label Growth Fund Class N Russell 2000 Index
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 12/31/98 1,000,000 1,000,000
- -----------------------------------------------------------------------------------------
2 1/31/99 1,000,000 1,013,289
- -----------------------------------------------------------------------------------------
3 2/28/99 915,909 932,218
- -----------------------------------------------------------------------------------------
4 3/31/99 935,227 945,756
- -----------------------------------------------------------------------------------------
5 4/30/99 932,955 1,030,503
- -----------------------------------------------------------------------------------------
6 5/31/99 973,864 1,045,555
- -----------------------------------------------------------------------------------------
7 6/30/99 1,040,909 1,092,835
- -----------------------------------------------------------------------------------------
8 7/31/99 1,050,000 1,062,848
- -----------------------------------------------------------------------------------------
9 8/31/99 1,027,273 1,023,513
- -----------------------------------------------------------------------------------------
10 9/30/99 1,062,500 1,023,737
- -----------------------------------------------------------------------------------------
11 10/31/99 1,102,273 1,027,883
- -----------------------------------------------------------------------------------------
12 11/30/99 1,276,136 1,089,257
- -----------------------------------------------------------------------------------------
13 12/31/99 1,411,364 1,212,561
- -----------------------------------------------------------------------------------------
</TABLE>
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
51
<PAGE>
U.S. Small Capitalization Growth Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- ---------------------------------------------------------------------
U.S. EQUITIES
Energy..................................................... 1.52%
Capital Investment
Technology................................................. 14.83
Electrical Components...................................... 6.51
------
21.34
Basic Industries
Housing/Paper.............................................. 1.52
Consumer
Non-Durables............................................... 2.56
Retail/Apparel............................................. 11.84
Autos/Durables............................................. 9.87
Health: Drugs.............................................. 2.84
Health: Non-Drugs.......................................... 8.77
------
35.88
Financial
Banks...................................................... 5.63%
Non-Banks.................................................. 6.08
------
11.71
Utilities
Telephone.................................................. 3.11
Transportation............................................... 4.82
Services/Miscellaneous....................................... 14.36
------
Total U.S. Equities..................................... 94.26
SHORT-TERM INVESTMENTS....................................... 5.89
------
TOTAL INVESTMENTS....................................... 100.15
LIABILITIES, LESS CASH AND
OTHER ASSETS............................................ (0.15)
------
NET ASSETS................................................... 100.00%
======
Top 10 U.S. Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- ---------------------------------------------------------------------
1. Zebra Technologies Corp., Class A 2.08%
2. DII Group, Inc. 2.04
3. QRS Corp. 1.99
4. Mercury Interactive Corp. 1.96
5. Peregrine Systems, Inc. 1.92
6. Dendrite International, Inc. 1.90
7. Expeditors International of Washington, Inc. 1.90
8. U.S. Trust Corp. 1.83
9. Patterson Dental Co. 1.78
10. Helix Technology Corp. 1.77
- ---------------------------------------------------------------------
================================================================================
52
<PAGE>
U.S. Small Capitalization Growth Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
-------- ---------
U.S. Equities -- 94.26%
ACT Manufacturing, Inc. (b)................... 8,300 $ 311,250
Agency.com, Inc. (b).......................... 2,100 107,100
Anixer International, Inc. (b)................ 18,700 385,687
AnnTaylor Stores Corp. (b).................... 11,500 396,031
AVT Corp. (b)................................. 17,400 817,800
C & D Technologies, Inc....................... 10,071 428,017
C-Bridge Internet Solutions, Inc. (b)......... 850 41,331
Cacheflow, Inc. (b)........................... 2,100 274,444
Calico Commerce, Inc. (b)..................... 2,200 116,600
Casey's General Stores, Inc................... 10,800 112,725
Celestial Seasonings, Inc. (b)................ 27,500 511,758
Charles River Associates, Inc. (b)............ 17,900 599,650
Children's Place Retail Stores, Inc. (b)...... 23,300 382,994
Cobalt Networks, Inc. (b)..................... 900 97,538
Cost Plus, Inc. (b)........................... 19,550 696,469
Credence Systems Corp. (b).................... 8,600 743,900
CTS Corp...................................... 4,000 301,500
Cytyc Corp. (b)............................... 9,900 604,519
Data Return Corp. (b)......................... 2,100 112,350
Datascope Corp................................ 11,800 472,000
Deltathree.com, Inc. (b)...................... 2,100 54,075
Dendrite International, Inc. (b).............. 26,550 899,381
Digex, Inc. (b)............................... 3,000 206,250
DII Group, Inc. (b)........................... 13,600 965,175
Elantec Semiconductor, Inc. (b)............... 20,400 673,200
Elcor Corp.................................... 22,550 679,319
Emmis Communications Corp. (b)................ 4,800 598,275
Ethan Allen Interiors, Inc.................... 12,850 412,003
Expeditors International of Washington, Inc... 20,500 898,156
Forward Air Corp. (b)......................... 16,749 726,488
Graco, Inc.................................... 16,700 599,112
Greater Bay Bancorp........................... 10,000 428,750
Haverty Furniture Cos., Inc................... 17,100 215,887
Helix Technology Corp......................... 18,700 837,994
Hooper Holmes, Inc............................ 24,400 628,300
Ibasis, Inc. (b).............................. 2,100 60,375
Inamed Corp. (b).............................. 15,500 680,062
Insight Communications (b).................... 5,000 148,125
Insight Enterprises, Inc. (b)................. 17,800 723,125
Insituform Technologies, Inc. (b)............. 25,400 717,550
Investors Financial Services Corp............. 18,200 837,200
Jack in the Box, Inc. (b)..................... 26,500 548,219
Jakks Pacific, Inc. (b)....................... 21,000 392,437
Jore Corp. (b)................................ 8,300 64,844
Kana Communications, Inc. (b)................. 800 164,000
Kenneth Cole Productions, Inc. (b)............ 15,900 727,425
Kent Electronics Corp. (b).................... 25,300 575,575
King Pharmaceuticals, Inc. (b)................ 14,100 790,481
Kronos, Inc. (b).............................. 3,400 $ 204,000
Manitowoc Co., Inc............................ 7,400 251,600
McAfee.com, Corp. (b)......................... 2,100 94,500
Meade Instruments Corp. (b)................... 9,600 273,600
Mediaplex, Inc. (b)........................... 5,200 326,300
MedQuist, Inc. (b)............................ 13,900 358,794
Mercury Computer Systems, Inc. (b)............ 15,000 525,000
Mercury Interactive Corp. (b)................. 8,600 928,262
Metasolv Software, Inc. (b)................... 2,100 171,675
NetRatings, Inc. (b).......................... 2,100 101,063
Netzee, Inc. (b).............................. 17,800 295,925
North Fork Bancorporation, Inc................ 33,500 586,250
Ondisplay, Inc. (b)........................... 650 59,069
Optio Software, Inc. (b)...................... 4,200 98,700
Pacific Sunwear of California, Inc. (b)....... 19,550 629,266
Patterson Dental Co. (b)...................... 19,700 839,712
Patterson Energy, Inc. (b).................... 30,500 396,500
Peoples Heritage Financial Group, Inc......... 30,700 462,419
Peregrine Systems, Inc. (b)................... 10,800 909,225
Protective Life Corp.......................... 25,500 811,219
QRS Corp. (b)................................. 8,950 939,750
Quest Diagnostics, Inc. (b)................... 18,700 571,519
ResMed, Inc. (b).............................. 14,900 622,075
Retek, Inc. (b)............................... 1,600 120,400
Richmond County Financial Corp................ 17,641 318,641
Roper Industries, Inc......................... 15,500 586,094
Rudolph Technologies, Inc. (b)................ 5,200 174,200
Sciquest.com, Inc. (b)........................ 2,100 166,950
Shaw Group, Inc. (b).......................... 27,200 688,500
SonicWall, Inc. (b)........................... 2,100 84,525
Spanish Broadcasting System (b)............... 15,500 623,875
Stone Energy Corp. (b)........................ 9,000 320,625
Swift Transportation Co., Inc. (b)............ 37,200 655,650
Sykes Enterprises, Inc. (b)................... 18,200 798,525
Syntel, Inc. (b).............................. 8,200 132,738
TMP Worldwide, Inc. (b)....................... 5,200 738,400
Tollgrade Communications, Inc. (b)............ 6,200 213,900
Tower Automotive, Inc. (b).................... 21,000 324,187
Tritel, Inc. (b).............................. 2,100 66,544
Triton PCS Holdings, Inc. (b)................. 8,300 377,650
U.S. Foodservice (b).......................... 41,600 696,800
U.S. Trust Corp............................... 10,800 866,025
Vintage Petroleum, Inc........................ 33,100 399,269
Viropharma, Inc. (b).......................... 15,000 555,000
Waters Corp. (b).............................. 14,300 757,900
Whitehall Jewellers, Inc. (b)................. 18,500 682,187
XPedior, Inc. (b)............................. 850 24,438
Zebra Technologies Corp., Class A (b)......... 16,800 982,800
----------
Total U.S. Equities (Cost $33,705,445)........ 44,577,692
----------
================================================================================
53
<PAGE>
U.S. Small Capitalization Growth Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
--------- -----------
Short-Term Investments -- 5.89%
Investment Companies -- 5.89%
Brinson Supplementary Trust U.S.
Cash Management Prime Fund
(Cost $2,787,103)...................... 2,787,103 $ 2,787,103
------------
Total Investments
(Cost $36,492,548) -- 100.15% (a)...... 47,364,795
Liabilities, less cash and other
assets -- (0.15%)...................... (71,000)
------------
Net Assets -- 100%....................... $ 47,293,795
============
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $36,492,548; and net
unrealized appreciation consisted of:
Gross unrealized appreciation.......... $12,798,752
Gross unrealized depreciation.......... (1,926,505)
-----------
Net unrealized appreciation........ $10,872,247
===========
(b) Non-income producing security.
See accompanying notes to financial statements.
================================================================================
54
<PAGE>
U.S. Small Capitalization Growth Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $33,705,445)........................................................... $44,577,692
Affiliated issuers (Cost $2,787,103).............................................................. 2,787,103
Cash................................................................................................ 440
Receivables:
Dividends......................................................................................... 1,792
Interest.......................................................................................... 12,421
-----------
TOTAL ASSETS.................................................................................... 47,379,448
-----------
LIABILITIES:
Payables:
Investment advisory fees.......................................................................... 32,064
Accrued expenses.................................................................................. 53,589
-----------
TOTAL LIABILITIES............................................................................... 85,653
-----------
NET ASSETS............................................................................................ $47,293,795
===========
NET ASSETS CONSIST OF:
Paid in capital..................................................................................... $34,855,447
Accumulated undistributed net investment loss....................................................... (114,496)
Accumulated net realized gain....................................................................... 1,680,597
Net unrealized appreciation......................................................................... 10,872,247
-----------
NET ASSETS...................................................................................... $47,293,795
===========
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share (Based on net assets of
$45,914,693 and 3,681,767 shares issued and outstanding)........................................ $ 12.47
===========
Brinson Class N:
Net asset value, offering price and redemption price per share (Based on net assets of
$1,416 and 114 shares issued and outstanding)..................................................... $ 12.42
===========
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share (Based on net assets of
$1,377,686 and 111,403 shares issued and outstanding)............................................. $ 12.37
===========
</TABLE>
See accompanying notes to financial statements.
================================================================================
55
<PAGE>
U.S. Small Capitalization Growth Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends.............................................................................. $ 57,827
Interest............................................................................... 59,483
--------------
TOTAL INCOME....................................................................... 117,310
--------------
EXPENSES:
Advisory............................................................................... 197,692
Professional........................................................................... 19,281
Registration........................................................................... 17,849
Distribution........................................................................... 3,123
Other.................................................................................. 31,367
--------------
TOTAL EXPENSES..................................................................... 269,312
Expenses deferred by Advisor....................................................... (37,437)
Earnings credits................................................................... (69)
--------------
NET EXPENSES....................................................................... 231,806
--------------
NET INVESTMENT LOSS................................................................ (114,496)
--------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on investments....................................................... 5,935,595
Change in net unrealized appreciation or depreciation on investments................... 6,732,379
--------------
Net realized and unrealized gain....................................................... 12,667,974
--------------
Net increase in net assets resulting from operations................................... $ 12,553,478
==============
</TABLE>
See accompanying notes to financial statements.
================================================================================
56
<PAGE>
U.S. Small Capitalization Growth Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Six Months Ended*
(Unaudited) June 30, 1999
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (114,496) $ (68,177)
Net realized gain (loss) 5,935,595 (633,451)
Change in net unrealized appreciation or depreciation 6,732,379 1,970,811
------------ ------------
Net increase in net assets resulting from operations 12,553,478 1,269,183
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 14,546,659 23,560,273
Shares issued on reinvestment of distributions -- --
Shares redeemed (15,658,308) (11,586,801)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (1,111,649) 11,973,472
------------ ------------
TOTAL INCREASE IN NET ASSETS 11,441,829 13,242,655
------------ ------------
NET ASSETS:
Beginning of period 35,851,966 22,609,311
------------ ------------
End of period (including accumulated undistributed net investment loss
of $(114,496) and $0, respectively) $ 47,293,795 $ 35,851,966
============ ============
</TABLE>
* Reflects the Fund's change in fiscal year end from December 31 to June 30
See accompanying notes to financial statements.
================================================================================
57
<PAGE>
U.S. Small Capitalization Growth Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended Six Months Year September 30, 1997/1/
December 31, 1999 Ended/2/ Ended Through
Brinson Class I (Unaudited) June 30, 1999 December 31, 1998/3/ December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.......... $ 9.18 $ 8.80 $ 9.44 $ 10.00
------------ ------------ ------------ -------------
Income (loss) from investment operations:
Net investment loss....................... (0.01)/4/ (0.02) (0.02) --
Net realized and unrealized gain (loss)... 3.30 0.40 (0.57) (0.56)
------------ ------------ ------------ -------------
Total income (loss) from
investment operations.................. 3.29 0.38 (0.59) (0.56)
------------ ------------ ------------ -------------
Less distributions:
Distributions from net realized gain...... -- -- (0.05) --
------------ ------------ ------------ -------------
Total distributions..................... -- -- (0.05) --
------------ ------------ ------------ -------------
Net asset value, end of period................ $ 12.47 $ 9.18 $ 8.80 $ 9.44
============ ============ ============ =============
Total return (non-annualized)................. 35.84% 4.32% (6.70)% (5.62)%
Ratios/Supplemental data:
Net assets, end of period (in 000s)......... $ 45,915 $ 35,211 $ 22,607 $ 11,954
Ratio of expenses to average net assets:
Before expense reimbursement
and earnings credits.................... 1.34%/5/ 1.32%/5/ 1.69% 3.63%/5/
After expense reimbursement
and earnings credits.................... 1.15%/5/ 1.15%/5/ 1.20% 1.20%/5/
Ratio of net investment income (loss) to
average net assets:
Before expense reimbursement and
earnings credits........................ (0.75)%/5/ (0.62)%/5/ (0.76)% (2.53)%/5/
After expense reimbursement and
earnings credits........................ (0.56)%/5/ (0.45)%/5/ (0.27)% (0.10)%/5/
Portfolio turnover rate..................... 69% 71% N/A N/A
</TABLE>
/1/ Commencement of investment operations
/2/ Reflects the Fund's change in fiscal year end from December 31 to June 30
/3/ Reflects 10 for 1 share split effective December 9, 1998
/4/ The net investment income per share data was determined by using average
shares outstanding throughout the period
/5/ Annualized
N/A = Information is not available for periods prior to reorganization, as
described in notes to financial statements
See accompanying notes to financial statements.
================================================================================
58
<PAGE>
U.S. Small Capitalization Growth Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Period Ended
Brinson Class N (Unaudited) June 30, 1999*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period...................................... $ 9.16 $ 8.80
------------ ------------
Income from investment operations:
Net investment loss................................................... (0.04)** (0.04)
Net realized and unrealized gain...................................... 3.30 0.40
------------ ------------
Total income from investment operations............................. 3.26 0.36
------------ ------------
Net asset value, end of period............................................ $ 12.42 $ 9.16
============ ============
Total return (non-annualized)............................................. 35.59% 4.09%
Ratios/Supplemental data:
Net assets, end of period (in 000s)..................................... $ 1 $ 1
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits..................... 1.59%*** 1.57%***
After expense reimbursement and earnings credits...................... 1.40%*** 1.40%***
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement and earnings credits..................... (1.00)%*** (0.87)%***
After expense reimbursement and earnings credits...................... (0.81)%*** (0.70)%***
Portfolio turnover rate................................................. 69% 71%
</TABLE>
* Commencement of Brinson Class N was December 31, 1998
** The net investment income per share data was determined by using average
shares outstanding throughout the period
*** Annualized
See accompanying notes to financial statements.
================================================================================
59
<PAGE>
U.S. Bond Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Since its inception on August 31, 1995, the Brinson U.S. Bond Fund Class I has
returned 5.94%, while its benchmark, the Salomon Smith Barney Broad Investment
Grade (BIG) Bond Index has returned 6.05%. Over the same period, the Fund's
annualized volatility or risk of 3.87% was comparable to the benchmark
volatility of 3.42%. In calendar year 1999 the Fund posted a return of -1.04%
compared to the benchmark's return of -0.84%. The overall U.S. bond market's
returns for the year were very disappointing in absolute term's -- the worst for
bonds since 1994, and was one of the rare occasions when broad market benchmarks
produced negative returns.
A combination of strong economic growth (unusual this late in the cycle), rising
inflation pressures and monetary policy tightening by the Federal Reserve (the
Fed) conspired to push yields up steadily. Yields on benchmark 30-year
treasuries rose by nearly 150 basis points from their January lows to finish at
6.5%. This put them up 180 basis points from the record lows set in the fall of
1998. Shorter-term notes saw even greater increases as the yield curve
flattened. The Fed raised official rates three times, undoing all three of the
25 basis point cuts taken in 1998, leaving the federal funds rate at 5.5%. This
demand in the marketplace for higher yields pushed bond prices substantially
lower.
While U.S. Treasuries suffered, spread (i.e., corporate, mortgage) sectors did
not fare as badly. After the virtually unprecedented widening seen during 1998's
global market crisis, spreads narrowed this year, although not quite enough to
retrace all of the 1998 sell-off. The tightening in spreads produced strong
relative performance for corporates and mortgages, which outperformed equivalent
duration U.S. Treasuries by 174 and 112 basis points, respectively.
Our overweights to corporate bonds, particularly within the BBB-rated and Yankee
sectors, helped Fund returns. Issue selection within both corporates and
mortgages was also a source of added value. These positives were offset by our
duration strategy, as we maintained a posture slightly longer than benchmarks
for most of the year. Yield curve strategy was also slightly positive, with our
barbell strategy benefiting from a flattening in the yield curve.
================================================================================
60
<PAGE>
U.S. Bond Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Total Return
<TABLE>
<CAPTION>
6 months 1 year 3 years 8/31/95*
ended ended ended to
12/31/99 12/31/99 12/31/99 12/31/99
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brinson U.S. Bond Fund Class I 0.36% -1.04% 5.55% 5.94%
- -----------------------------------------------------------------------------------------------------------
Salomon Smith Barney Broad Investment Grade (BIG) Bond Index 0.55 -0.84 5.72 6.05
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Inception date of the Brinson U.S. Bond Fund Class I.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson U.S.
Bond Fund Class I and the Salomon Smith Barney BIG Bond Index if you had
invested $1,000,000 on August 31, 1995, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
Brinson U.S. Bond Fund Class I
vs. Salomon Smith Barney BIG Bond Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Label A B
- --------------------------------------------------------------------------------
Brinson U.S. Bond Salomon Smith Barney
Label Fund Class I BIG Bond Index
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1 8/31/95 1,000,000 1,000,000
2 9/30/95 1,009,000 1,009,400
3 10/31/95 1,024,000 1,022,926
4 11/30/95 1,040,000 1,038,884
5 12/31/95 1,054,932 1,053,220
6 1/31/96 1,061,071 1,060,382
7 2/29/96 1,038,561 1,042,462
8 3/31/96 1,031,398 1,034,956
9 4/30/96 1,023,213 1,027,297
10 5/31/96 1,020,143 1,026,784
11 6/30/96 1,035,997 1,040,029
12 7/31/96 1,039,127 1,042,837
13 8/31/96 1,032,867 1,041,273
14 9/30/96 1,054,776 1,059,391
15 10/31/96 1,081,902 1,083,227
16 11/30/96 1,109,028 1,101,101
17 12/31/96 1,092,169 1,091,411
18 1/31/97 1,094,338 1,095,558
19 2/28/97 1,096,507 1,096,763
20 3/31/97 1,081,323 1,085,686
21 4/30/97 1,098,676 1,101,211
22 5/31/97 1,109,522 1,111,563
23 6/30/97 1,123,558 1,124,790
24 7/31/97 1,158,669 1,155,272
25 8/31/97 1,148,794 1,145,337
26 9/30/97 1,164,156 1,162,173
27 10/31/97 1,180,614 1,178,792
28 11/30/97 1,183,906 1,184,333
29 12/31/97 1,197,458 1,196,413
30 1/31/98 1,211,341 1,211,847
31 2/28/98 1,211,341 1,210,998
32 3/31/98 1,214,812 1,215,721
33 4/30/98 1,220,597 1,222,043
34 5/31/98 1,232,167 1,233,775
35 6/30/98 1,242,614 1,243,892
36 7/31/98 1,243,789 1,246,504
37 8/31/98 1,264,930 1,265,575
38 9/30/98 1,287,245 1,295,443
39 10/31/98 1,282,547 1,289,613
40 11/30/98 1,291,943 1,296,706
41 12/31/98 1,297,674 1,300,726
42 1/31/99 1,308,672 1,310,351
43 2/28/99 1,286,677 1,287,420
44 3/31/99 1,295,231 1,294,759
45 4/30/99 1,298,896 1,299,031
46 5/31/99 1,285,455 1,287,080
47 6/30/99 1,279,528 1,282,704
48 7/31/99 1,273,304 1,277,573
49 8/31/99 1,269,570 1,276,679
50 9/30/99 1,285,751 1,291,999
51 10/31/99 1,286,996 1,295,875
52 11/30/99 1,289,485 1,295,746
53 12/31/99 1,284,169 1,289,785
- --------------------------------------------------------------------------------
</TABLE>
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
61
<PAGE>
[LOGO OF BRINSON]
U.S. Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Total Return
6 months 1 year 6/30/97*
ended ended to
12/31/99 12/31/99 12/31/99
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Brinson U.S. Bond Fund Class N 0.14% -1.45% 5.24%
- -----------------------------------------------------------------------------------------------
Salomon Smith Barney Broad Investment Grade (BIG) Bond Index 0.55 -0.84 5.63
- -----------------------------------------------------------------------------------------------
</TABLE>
* Inception date of the Brinson U.S. Bond Fund Class N.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson U.S.
Bond Fund Class N and the Salomon Smith Barney BIG Bond Index if you had
invested $1,000,000 on June 30, 1997, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
Brinson U.S. Bond Fund Class N
vs. Salomon Smith Barney BIG Bond Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Label A B
- --------------------------------------------------------------------------------
Label Brinson U.S. Bond Salomon Smith Barney
Fund Class N BIG Bond Index
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1 6/30/97 1,000,000 1,000,000
2 7/31/97 1,031,250 1,027,100
3 8/31/97 1,021,484 1,018,267
4 9/30/97 1,035,156 1,033,235
5 10/31/97 1,049,805 1,048,011
6 11/30/97 1,052,734 1,052,936
7 12/31/97 1,065,178 1,063,676
8 1/31/98 1,077,516 1,077,398
9 2/28/98 1,076,488 1,076,644
10 3/31/98 1,079,573 1,080,842
11 4/30/98 1,084,714 1,086,463
12 5/31/99 1,094,995 1,096,893
13 6/30/98 1,103,029 1,105,887
14 7/31/98 1,104,072 1,108,210
15 8/31/98 1,121,795 1,125,165
16 9/30/98 1,141,604 1,151,719
17 10/31/98 1,140,561 1,146,537
18 11/30/98 1,148,902 1,152,843
19 12/31/98 1,153,031 1,156,416
20 1/31/99 1,162,774 1,164,974
21 2/28/99 1,142,204 1,144,587
22 3/31/99 1,149,783 1,151,111
23 4/30/99 1,153,031 1,154,910
24 5/31/99 1,140,039 1,144,284
25 6/30/99 1,134,778 1,140,394
26 7/31/99 1,128,168 1,135,832
27 8/31/99 1,125,964 1,135,037
28 9/30/99 1,139,185 1,148,658
29 10/31/99 1,139,185 1,152,104
30 11/30/99 1,141,388 1,151,988
31 12/31/99 1,136,367 1,146,689
- --------------------------------------------------------------------------------
</TABLE>
6/30/97 = $1,000,000 Data through 12/31/99
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
- --------------------------------------------------------------------------------
62
<PAGE>
[LOGO OF BRINSON]
U.S. Bond Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<S> <C>
U.S. BONDS
Corporate Bonds
Asset-Backed......................................... 10.13%
Consumer............................................. 1.65
Energy............................................... 1.11
Financial Services................................... 5.32
Food & House Products................................ 0.61
Health............................................... 2.09
Industrial Components................................ 0.12
Publishing........................................... 0.41
Services/Miscellaneous............................... 3.23
Telecommunications................................... 2.46
Utilities............................................ 0.51
------
Total U.S. Corporate Bonds..................... 27.64
International Dollar Bonds............................. 9.95
Corporate Mortgage-Backed Securities................... 19.87
U.S. Government Agencies............................... 2.64
U.S. Gov't Mortgage-Backed Securities.................. 27.87
U.S. Government Obligations............................ 10.79
------
Total U.S. Bonds............................... 98.76
------
SHORT-TERM INVESTMENTS................................. 0.32
------
TOTAL INVESTMENTS.............................. 99.08
CASH AND OTHER ASSETS, LESS LIABILITIES................ 0.92
------
NET ASSETS............................................. 100.00%
======
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
63
<PAGE>
U.S. Bond Fund -- Schedule of Investments
<TABLE>
<CAPTION>
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Face
Amount Value
----------- ------------
<S> <C> <C>
Bonds -- 98.76%
U.S. Corporate Bonds -- 27.64%
Cendant Corp., 7.750%, due 12/01/03........ $ 1,060,000 $ 1,058,440
Centaur Funding Corp., 144A (b),
0.000%, due 04/21/20...................... 1,355 207,965
9.080%, due 04/21/20...................... 715 730,194
Ches Pot Tel MD,
8.000%, due 10/15/29...................... 87,000 88,319
Chrysler Financial Corp.,
7.400%, due 08/01/69...................... 100,000 92,321
Countrywide Funding Corp. FRN,
5.420%, due 12/01/03...................... 250,000 232,065
Farmers Exchange Capital, 144A,
7.050%, due 07/15/28...................... 1,090,000 925,441
Fidelity Investments, 144A,
7.570%, due 06/15/29...................... 1,250,000 1,201,834
First Bank Corporate Card Master Trust,
97-1, Class A,
6.400%, due 02/15/03...................... 980,000 970,406
Ford Motor Credit Co.,
6.700%, due 07/16/04...................... 310,000 303,248
GE Capital Mortgage Services, Inc.,
97-HE4 A76.735%, due 12/25/28............. 410,000 400,652
General Motors Acceptance Corp.,
9.625%, due 12/15/01...................... 294,000 307,423
Green Tree Financial Corp.,
6.160%, due 02/01/31...................... 1,000,000 947,460
Green Tree Financial Corp., Series 94-5,
Class A5,
8.300%, due 11/15/19...................... 320,000 327,552
Illinois Power Special Purpose Trust, 98-1,
5.650%, due 12/25/10...................... 1,565,000 1,411,927
Kroger Co., 8.000%, due 09/15/29........... 500,000 488,245
Lilly Del Mar, 144A, 0.000%, due 08/01/29.. 1,000,000 995,182
MBNA Global Capital Securities FRN,
0.000%, due 02/01/27...................... 90,000 73,938
Monsanto Co., 144A,
6.600%, due 12/01/28...................... 1,250,000 1,074,251
News America Holdings,
7.750%, due 12/01/45...................... 358,000 326,417
Northern States Power,
6.875%, due 08/01/09...................... 925,000 888,811
PanAmSat Corp.,
6.000%, due 01/15/03...................... 375,000 348,997
6.375%, due 01/15/08...................... 500,000 423,820
Peco Energy Transition Trust,
6.130%, due 03/01/09...................... 1,135,000 1,044,359
PP&L Transition Bond Company LLC,
6.960%, due 12/26/07...................... 200,000 199,394
7.050%, due 06/25/09...................... 1,390,000 1,387,776
Premier Auto Trust, Series 96-4A, Class A4,
6.400%, due 10/06/01...................... 180,716 180,843
Rite Aid Corp., 144A,
6.125%, due 12/15/08...................... 890,000 605,200
Salomon, Inc., 6.750%, due 02/15/03........ $ 300,000 $ 294,980
Service Corp., International,
6.000%, due 12/15/05...................... 750,000 557,393
Sears Credit Account Master Trust,
Series 99-3, Class A,
6.450%, due 11/15/09...................... 1,200,000 1,169,640
Tele-Communications, Inc.,
9.800%, due 02/01/12...................... 950,000 1,109,684
Texas Utilities, 5.940%, due 10/15/11...... 420,000 412,590
Time Warner, Inc., 7.570%, due 02/01/24.... 340,000 327,048
U.S.A. Waste Services,
6.500%, due 12/15/02...................... 400,000 369,674
Westinghouse Electric,
8.625%, due 08/01/12...................... 575,000 606,102
UCFC Home Equity Loan, Series 97-C,
Class A8, FRN,
due 09/15/27.............................. 85,441 85,540
----------
22,175,131
----------
Corporate Mortgage-Backed
Securities -- 19.87%
ABN Amro Mortgage Corp., Series 99-2 IA2,
6.300%, due 04/25/29...................... 2,100,000 1,998,360
ABN Amro Mortgage Corp.,
Series 99-3, Class A2,
6.300%, due 05/25/29...................... 1,000,000 950,750
Chase Mortgage Finance Corp.,
Series 93-J1, Class 1A5,
6.625%, due 08/25/09...................... 58,831 56,160
Chemical Mortgage Securities Inc.,
Series 93-1, Class A5,
7.450%, due 02/25/23...................... 159,954 159,756
Citicorp Mortgage Securities, Inc.,
Series 94-9, Class A8,
5.750%, due 06/25/09...................... 1,100,910 1,016,657
Heller Financial Commercial Mortgage
Assets, Series 99-PH1 A1,
6.500%, due 05/15/61...................... 1,203,494 1,163,995
LB Commercial Conduit Mortgage Trust,
Series 99-C1 A1,
6.410%, due 08/15/07...................... 690,672 665,449
Nomura Asset Securities Corp.,
7.120%, due 04/13/36...................... 1,200,000 1,174,452
Norwest Asset Securities Corp.,
Series 98-25, Class A5,
6.000%, due 12/25/28...................... 2,400,000 2,253,384
PNC Mortgage Securities Corp.,
Series 94-3, Class A8,
7.500%, due 07/25/24...................... 215,000 206,185
Prudential Home Mortgage Securities,
Series 93-43, Class A9,
6.750%, due 10/25/23...................... 268,294 257,903
</TABLE>
- --------------------------------------------------------------------------------
64
<PAGE>
U.S. Bond Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Value
----------- ------------
<S> <C> <C>
Prudential Home Mortgage Securities,
Series 94-3, Class A10, 97-HE4 A7
6.500%, due 02/25/24...................... $ 170,000 $ 162,591
Residential Accredit Loans, Inc.,
Series 96-QS4, Class Al10,
7.900%, due 08/25/26...................... 275,000 274,409
Residential Accredit Loans, Inc.,
Series 98-QS4, Class AI5,
7.000%, due 03/25/28...................... 2,850,000 2,686,495
Residential Asset Securitization Trust,
Series 97-A10, Class A1,
7.250%, due 12/25/27...................... 391,024 389,992
Residential Funding Mortgage,
Series 95-S6, Class A7,
7.500%, due 11/25/25...................... 949,408 930,790
Structured Asset Securities Corp.,
Series 98-RF1, Class A, 144A,
7.900%, due 10/15/28...................... 473,810 477,216
Structured Asset Securities Corp.,
Series 98-RF1, Class A,
8.712%, due 03/15/27...................... 388,513 400,290
Structured Asset Securities Corp.,
Series 98-RF2,
8.582%, due 07/15/27...................... 137,457 141,237
Thrift Financial Corp.,
11.250%, due 01/01/16..................... 29,379 30,263
Vendee Mortgage Trust, Series 92-1,
Class 2Z,
7.750%, due 05/15/22...................... 553,329 550,087
----------
15,946,421
----------
International Dollar Bonds -- 9.95%
Abbey National PLC, 6.700%, Resettable
Perpetual Preferred,
6.700%, due 06/29/49...................... 1,075,000 973,264
Banco Santiago S.A.,
7.000%, due 07/18/07...................... 380,000 340,945
Credit Suisse-London, 144A,
Resettable Perpetual Preferred,
7.900%, due 05/01/07...................... 1,100,000 1,046,604
Empresa Nacional de Electricidad S.A.,
7.875%, due 02/01/27...................... 594,000 516,298
Interamer Development Bank,
6.800%, due 10/15/25...................... 100,000 93,077
Korea Development Bank,
7.125%, due 09/17/01...................... 500,000 496,120
Pemex Finance Ltd., 2A-B1, 144A,
8.450%, due 02/15/07...................... 940,000 913,304
Petroliam Nasional Berhad, 144A,
7.625%, due 10/15/26...................... 430,000 378,616
Ras Laffan Liquified Natural Gas
Co., Ltd., 144A,
8.294%, due 03/15/14...................... $ 450,000 $ 422,672
Royal Bank of Scotland, Resettable
Perpetual Preferred,
7.375%, due 04/29/49...................... 585,000 557,858
Southern Investments UK,
6.800%, due 12/01/06...................... 1,345,000 1,259,134
Tyco International Group, S.A.,
5.875%, due 11/01/04...................... 595,000 550,797
7.000%, due 06/15/28...................... 500,000 432,445
-----------
7,981,134
-----------
U.S. Government Mortgage-Backed
Securities -- 27.87%
Fannie Mae, 6.375%, due 06/15/09........... 220,000 209,642
Fannie Mae Whole Loan,
Series 95-W3, Class A,
9.000%, due 04/25/25...................... 115,854 119,655
Federal Home Loan Mortgage Corp.,
7.000%, due 10/15/13...................... 492,125 468,587
7.238%, due 05/01/26...................... 12,320 12,366
Federal Home Loan Mortgage Corp. Gold,
8.000%, due 11/01/22...................... 86,371 87,384
9.000%, due 03/01/24...................... 65,048 68,101
Federal National Mortgage Assoc.
Series 97-72, Class EG
0.000%, due 09/25/22...................... 264,180 228,900
Federal National Mortgage Association,
5.625%, due 03/15/01...................... 4,080,000 4,040,885
8.000%, due 08/01/08...................... 543,163 554,309
8.000%, due 12/18/11...................... 100,000 101,979
6.500%, due 03/01/19...................... 476,937 455,624
8.500%, due 07/01/22...................... 9,358 9,691
9.500%, due 08/01/22...................... 60,755 64,219
7.500%, due 12/01/23...................... 476,031 471,045
7.000%, due 12/01/24...................... 2,580,594 2,495,816
7.500%, due 01/01/28...................... 262,040 259,501
6.000%, due 03/01/28...................... 653,272 598,442
6.500%, due 06/01/28...................... 707,837 668,508
6.000%, due 08/01/28...................... 1,428,573 1,307,889
6.500%, due 09/01/28...................... 233,641 220,659
6.500%, due 02/01/29...................... 497,942 469,466
7.000%, due 03/01/29...................... 45,445 43,984
Federal National Mortgage Association Strips,
8.000%, due 08/01/23...................... 294,086 90,397
0.000%, due 02/01/28...................... 223,882 145,290
FNCI, 8.000%, due 02/01/13................. 169,684 173,113
Freddie Mac, 5.750%, due 06/15/01.......... 1,000,000 990,028
</TABLE>
- --------------------------------------------------------------------------------
65
<PAGE>
U.S. Bond Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
-------- -------
<S> <C> <C>
Government National Mortgage Association,
10.000%, due 09/15/00........................... 804 $ 838
10.000%, due 05/15/01........................... 1,105 1,152
9.000%, due 11/15/04............................ 7,096 7,294
9.000%, due 11/15/04............................ 2,859 2,939
8.000%, due 08/15/22............................ 41,039 41,673
7.500%, due 12/15/22............................ 207,917 207,069
7.500%, due 12/15/23............................ 862,804 858,581
7.500%, due 01/15/24............................ 57,259 56,934
6.500%, due 10/15/24............................ 7,016,059 6,671,397
7.500%, due 06/15/25............................ 72,430 72,057
7.000%, due 07/15/25............................ 84,595 82,395
-----------
22,357,809
-----------
U.S. Government Agencies -- 2.64%
Aid-Israel, Series 10-Z,
0.000%, due 02/15/03............................ 805,000 656,316
Jordan Aid, 8.750%, due 09/01/19.................. 1,357,58 1,459,788
-----------
2,116,104
-----------
U.S. Government Obligations -- 10.79%
U.S. Treasury Bond,
8.750%, due 05/15/17............................ $ 460,000 549,125
8.000%, due 11/15/21............................ 3,320,000 3,766,125
U.S. Treasury Inflation Indexed Note,
3.625%, due 04/15/28............................ 1,770,000 1,645,025
U.S. Treasury Note,
5.750%, due 08/15/03............................ 205,000 200,708
7.000%, due 07/15/06............................ 2,440,000 2,499,475
-----------
8,660,458
-----------
Total Bonds (Cost $82,704,874).................... 79,237,057
-----------
Short-Term Investments -- 0.32%
Investment Companies -- 0.32%
Brinson Supplementary Trust U.S. Cash
Management Prime Fund
(Cost $259,361)................................. 259,361 259,361
-----------
Total Investments
(Cost $82,964,235) -- 99.08% (a)................ 79,496,418
Cash and other assets,
less liabilities -- 0.92%....................... 736,231
-----------
Net Assets -- 100%................................ $80,232,649
===========
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $82,964,235; and net
unrealized depreciation consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation............... $ 281,821
Gross unrealized depreciation............... (3,749,638)
Net unrealized depreciation................. $ (3,467,817)
</TABLE>
(b) Non-income producing security.
FRN: Floating rate note -- The rate disclosed is that in effect at December 31,
1999.
144A: 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 buyers. At December 31, 1999, the
value of these securities amounted to $8,978,479 or 11.19% of net assets.
See accompanying notes to financial statement.
- --------------------------------------------------------------------------------
66
<PAGE>
U.S. Bond Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $82,704,874).................................................... $79,237,057
Affiliated issuers (Cost $259,361)......................................................... 259,361
Receivables:
Investment securities sold................................................................. 152
Interest................................................................................... 856,363
Other assets................................................................................. 1,842
-----------
TOTAL ASSETS........................................................................... 80,354,775
-----------
LIABILITIES:
Payables:
Investment advisory fees................................................................... 32,925
Due to custodian bank...................................................................... 86,328
Accrued expenses........................................................................... 2,873
-----------
TOTAL LIABILITIES...................................................................... 122,126
-----------
NET ASSETS..................................................................................... $80,232,649
===========
NET ASSETS CONSIST OF:
Paid in capital.............................................................................. $86,614,032
Distributions in excess of net investment income............................................. (183,624)
Accumulated net realized loss................................................................ (2,729,942)
Net unrealized depreciation.................................................................. (3,467,817)
-----------
NET ASSETS............................................................................. $80,232,649
===========
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share (Based on net assets of
$74,460,691 and 7,628,122 shares issued and outstanding)................................. $ 9.76
===========
Brinson Class N:
Net asset value, offering price and redemption price per share (Based on net assets of
$1,133 and 116 shares issued and outstanding)............................................ $ 9.77
===========
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share (Based on net assets of
$5,770,825 and 594,049 shares issued and outstanding).................................... $ 9.71
===========
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
67
<PAGE>
U.S. Bond Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends...................................................... $ 46,708
Interest....................................................... 3,685,825
-----------
TOTAL INCOME.......................................... 3,732,533
-----------
EXPENSES:
Advisory....................................................... 283,873
Registration................................................... 20,800
Professional................................................... 20,529
Distribution................................................... 14,465
Other.......................................................... 20,526
-----------
TOTAL EXPENSES........................................ 360,193
Expenses deferred by Advisor.......................... (2,293)
Earnings credits...................................... (1,659)
-----------
NET EXPENSES.......................................... 356,241
-----------
NET INVESTMENT INCOME................................. 3,376,292
-----------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss.............................................. (1,678,187)
Change in net unrealized appreciation or depreciation.......... (964,402)
-----------
Net realized and unrealized loss............................... (2,642,589)
-----------
Net increase in net assets resulting from operations........... $ 733,703
===========
</TABLE>
See accompanying notes to financial statements.
================================================================================
68
<PAGE>
U.S. Bond Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year
December 31, 1999 Ended
(Unaudited) June 30, 1999
----------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................................... $ 3,376,292 $ 4,517,147
Net realized loss................................................................... (1,678,187) (338,906)
Change in net unrealized appreciation or depreciation............................... (964,402) (3,036,340)
------------ -------------
Net increase in net assets resulting from operations................................ 733,703 1,141,901
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions in excess of net investment income.................................... (4,521,037) (3,812,376)
Distributions from net realized gain................................................ -- (55,782)
Distributions in excess of net realized gain........................................ -- (1,051,755)
------------ -------------
Total distributions to shareholders*................................................ (4,521,037) (4,919,913)
------------ -------------
Capital share transactions:
Shares sold......................................................................... 51,018,071 156,386,946
Shares issued in connection with the acquisition of UBS Bond Fund................... -- 15,177,263
Shares issued on reinvestment of distributions...................................... 4,378,710 4,271,987
Shares redeemed..................................................................... (69,422,381) (115,331,025)
------------ -------------
Net increase (decrease) in net assets resulting from capital share transactions..... (14,025,600) 60,505,171
------------ -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................. (17,812,934) 56,727,159
------------ -------------
NET assets:
Beginning of period................................................................. 98,045,583 41,318,424
------------ -------------
End of period (including undistributed net investment income of $(183,624) and
$961,121, respectively)............................................................. $ 80,232,649 $ 98,045,583
============ =============
*DISTRIBUTIONS BY CLASS:
Distributions from net investment income:
Brinson Class I............................................................. (4,175,208) (3,583,162)
Brinson Class N............................................................. (61) (46)
UBS Investment Funds Class.................................................. (345,768) (229,168)
Distributions from and in excess of net realized gain:
Brinson Class I............................................................. -- (1,038,553)
Brinson Class N............................................................. -- (16)
UBS Investment Funds Class.................................................. -- (68,968)
------------ -------------
Total distributions to shareholders................................................. (4,521,037) (4,919,913)
------------ -------------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
69
<PAGE>
U.S. Bond Fund -- Financial Statements
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended August 31, 1995*
December 31, 1999 Year Ended June 30, Through
----------------------------------
Brinson Class I (Unaudited) 1999 1998 1997 June 30, 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 10.28 $ 10.58 $ 10.24 $ 9.93 $ 10.00
------- ------- ------- ------- -------
Income from investment operations:
Net investment income................................ 0.31** 0.58** 0.53 0.51** 0.50
Net realized and unrealized gain (loss).............. (0.27) (0.26) 0.53 0.32 (0.14)
------- ------- ------- ------- -------
Total income from investment operations...... 0.04 0.32 1.06 0.83 0.36
------- ------- ------- ------- -------
Less distributions:
Distributions from net investment income............. (0.56) (0.47) (0.58) (0.52) (0.40)
Distributions in excess of net realized gain......... -- (0.15) (0.14) -- (0.03)
------- ------- ------- ------- -------
Total distributions.......................... (0.56) (0.62) (0.72) (0.52) (0.43)
------- ------- ------- ------- -------
Net asset value, end of period........................... $ 9.76 $ 10.28 $ 10.58 $ 10.24 $ 9.93
======= ======= ======= ======= =======
Total return (non-annualized)............................ 0.36% 2.97% 10.60% 8.45% 3.60%
Ratios/Supplemental data:
Net assets, end of period (in 000s).................... $74,461 $92,030 $38,874 $22,421 $ 9,047
Ratio of expenses to average net assets:
Before expense reimbursement and
earnings credits................................... 0.61%*** 0.61% 0.84% 1.65% 3.63%***
After expense reimbursement and
earnings credits................................... 0.60%*** 0.60% 0.60% 0.60% 0.60%***
Ratio of net investment income to average
net assets:
Before expense reimbursement and
earnings credits................................... 5.94%*** 5.42% 5.61% 5.14% 3.00%***
After expense reimbursement and
earnings credits................................... 5.95%*** 5.43% 5.85% 6.19% 6.03%***
Portfolio turnover rate................................ 103% 260% 198% 410% 363%
</TABLE>
* Commencement of investment operations
** The net investment income per share data was determined by using average
shares outstanding throughout the period
*** Annualized
See accompanying notes to financial statements.
================================================================================
70
<PAGE>
U.S. Bond Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout the period presented.
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Year Ended Year Ended
Brinson Class N (Unaudited) June 30, 1999 June 30, 1998
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period.............................. $ 10.30 $ 10.58 $ 10.24
------- ------- -------
Income from investment operations:
Net investment income......................................... 0.29* 0.57* 0.61
Net realized and unrealized gain (loss)....................... (0.27) (0.26) 0.42
------- ------- -------
Total income from investment operations............... 0.02 0.31 1.03
Less distributions:
Distributions from net investment income...................... (0.55) (0.44) (0.55)
Distributions from net realized gain.......................... -- (0.15) (0.14)
------- ------- -------
Total distributions................................... (0.55) (0.59) (0.69)
------- ------- -------
Net asset value, end of period.................................... $ 9.77 $ 10.30 $ 10.58
======= ======= =======
Total return (non-annualized)..................................... 0.14% 2.88% 10.30%
Ratios/Supplemental data:
Net assets, end of period (in 000s)............................. $ 1 $ 1 $ 1
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits............. 0.86%** 0.86% 1.09%
After expense reimbursement and earnings credits.............. 0.85%** 0.85% 0.85%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits............. 5.69%** 5.17% 5.36%
After expense reimbursement and earnings credits.............. 5.70%** 5.18% 5.60%
Portfolio turnover rate......................................... 103% 260% 198%
</TABLE>
* The net investment income per share data was determined by using average
shares outstanding throughout the period
** Annualized
See accompanying notes to financial statements.
================================================================================
71
<PAGE>
High Yield Fund
- -------------------------------------------------------------------------------
[BRINSON LOGO]
The Brinson High Yield Fund Class I has earned an annualized return of 6.66%
since its inception on September 30, 1997, versus 3.48% for its benchmark, the
Merrill Lynch High Yield Master Index. This performance was achieved with an
annualized volatility of 6.32% versus 5.03% for the benchmark. The Fund's total
return for 1999 was 4.85% versus 1.57% for the benchmark. This strong
performance for the year was due mainly to credit and sector selection
decisions.
Due to continued strength in the U.S. economy, spreads (over U.S. Treasuries) in
the high yield market tightened from 555 basis points at 1998 year-end to 453
basis points at 1999 year-end. However, an increase in the general level of U.S.
interest rates raised the benchmark's yield-to-worst from 10.20% to 10.97% over
the same one-year period. As the year progressed, the market became increasingly
intolerant of poor financial results. Often when companies reported bad news
their bond prices dropped by more than 15%. Conversely, when companies reported
good news, their bond prices showed only modest gains.
In September, default rates stood at 3.26% versus 1.32% a year earlier. As
participants focused on higher default rates, the market's shrinking liquidity
was exacerbated by the perception of potential business disruptions resulting
from Y2K. In December, evidence suggested that the default rate had peaked and
that Y2K concerns had been addressed. Liquidity improved and demand for new bond
issuance increased. This firmed up the market, leading to solid performance in
the fourth quarter.
As in 1998, industry weightings helped to enhance returns. The Fund benefited
from underweights in healthcare, textile and entertainment/film, which
significantly underperformed the market, and from overweights in cable,
broadcasting and publishing/printing, which performed well. Fund performance was
hurt somewhat by an underweight in cyclicals, which significantly outperformed
the broader market in 1999.
================================================================================
72
<PAGE>
High Yield Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Total Return
6 months 1 year 9/30/97*
ended ended to
12/31/99 12/31/99 12/31/99
- ----------------------------------------------------------------------------
Brinson High Yield Fund Class I 1.89% 4.85% 6.66%
- ----------------------------------------------------------------------------
Merrill Lynch High Yield Master Index -0.18 1.57 3.48
- ----------------------------------------------------------------------------
* Inception date of the Brinson High Yield Fund Class I.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson High
Yield Fund Class I and the Merrill Lynch High Yield Master Index if you had
invested $1,000,000 on September 30, 1997, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
Brinson High Yield Fund Class I
vs. Merrill Lynch High Yield Master Index
Wealth Value with Dividends Reinvested
- ------------------------------------------------------------------------------
Label A B
- ------------------------------------------------------------------------------
Merrill Lynch High
Label Date Brinson High Yield Fund Class I Yield Master Index
- ------------------------------------------------------------------------------
1 9/30/97 1,000,000 1,000,000
2 10/31/97 995,405 1,006,640
3 11/30/97 1,005,534 1,016,173
4 12/31/97 1,023,434 1,025,816
5 1/31/98 1,047,259 1,041,091
6 2/28/98 1,054,152 1,045,391
7 3/31/98 1,066,777 1,054,402
8 4/30/98 1,068,387 1,059,410
9 5/31/98 1,070,928 1,066,784
10 6/30/98 1,081,780 1,072,064
11 7/31/98 1,098,343 1,078,175
12 8/31/98 1,042,275 1,031,652
13 9/30/98 1,057,065 1,033,715
14 10/31/98 1,049,791 1,016,742
15 11/30/98 1,109,624 1,063,035
16 12/31/98 1,102,713 1,063,388
17 1/31/99 1,129,231 1,073,905
18 2/28/99 1,134,755 1,065,711
19 3/31/99 1,146,909 1,074,897
20 4/30/99 1,163,483 1,091,709
21 5/31/99 1,140,280 1,084,132
22 6/30/99 1,134,755 1,082,094
23 7/31/99 1,133,616 1,083,685
24 8/31/99 1,127,919 1,082,685
25 9/30/99 1,124,501 1,068,566
26 10/31/99 1,124,501 1,062,315
27 11/30/99 1,147,288 1,074,468
28 12/31/99 1,156,238 1,080,109
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
73
<PAGE>
High Yield Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Total Return
6 Months 12/31/98*
ended to
12/31/99 12/31/99
- ------------------------------------------------------------------
Brinson High Yield Fund Class N 1.77% 4.53%
- ------------------------------------------------------------------
Merrill Lynch High Yield Master Index -0.18 1.57
- ------------------------------------------------------------------
* Inception date of the Brinson High Yield Fund Class N.
Total return includes reinvestment of all capital gain and income distributions.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson High
Yield Fund Class N and the Merrill Lynch High Yield Master Index if you had
invested $1,000,000 on December 31, 1998, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
Brinson High Yield Fund Class N
vs. Merrill Lynch High Yield Master Index
Wealth Value with Dividends Reinvested
- --------------------------------------------------------------------------
Label A B
- --------------------------------------------------------------------------
Merrill Lynch High
Label Date Brinson High Yield Fund Class N Yield Master Index
- --------------------------------------------------------------------------
1 12/31/98 1,000,000 1,000,000
- --------------------------------------------------------------------------
2 1/31 99 1,024,048 1,009,890
- --------------------------------------------------------------------------
3 2/28/99 1,028,056 1,002,184
- --------------------------------------------------------------------------
4 3/31/99 1,039,078 1,010,823
- --------------------------------------------------------------------------
5 4/30/99 1,054,108 1,026,633
- --------------------------------------------------------------------------
6 5/31/99 1,032,064 1,019,508
- --------------------------------------------------------------------------
7 6/30/99 1,027,054 1,017,591
- --------------------------------------------------------------------------
8 7/31/99 1,026,022 1,019,087
- --------------------------------------------------------------------------
9 8/31/99 1,020,861 1,008,743
- --------------------------------------------------------------------------
10 9/30/99 1,016,732 1,004,870
- --------------------------------------------------------------------------
11 10/31/99 1,016,732 998,991
- --------------------------------------------------------------------------
12 11/30/99 1,037,376 1,010,420
- --------------------------------------------------------------------------
13 12/31/99 1,045,278 1,015,724
- --------------------------------------------------------------------------
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
===============================================================================
74
<PAGE>
High Yield Fund
- --------------------------------------------------------------------------------
[BRINSON LOGO]
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
U.S. BONDS
Corporate Bonds
Aerospace & Military............................... 0.69%
Auto............................................... 1.24
Chemicals.......................................... 4.39
Construction....................................... 4.64
Consumer........................................... 3.21
Electronics and Electric Components................ 0.55
Energy............................................. 2.33
Financial Services................................. 1.34
Food & House Products.............................. 5.07
Health............................................. 3.06
Publishing......................................... 2.25
Radio Broadcasting................................. 3.14
Real Estate........................................ 0.83
Recreation......................................... 8.46
Retail............................................. 5.23
Services/Miscellaneous............................. 17.51
Telecommunications................................. 14.29%
Television Broadcasting............................ 14.88
------
Total U.S. Corporate Bonds................... 93.11
International Dollar Bonds............................ 2.39
------
Total U.S. Bonds............................... 95.50
Warrants.............................................. 0.02
------
SHORT-TERM INVESTMENTS................................ 2.57
------
TOTAL INVESTMENTS.............................. 98.09
CASH AND OTHER ASSETS,
LESS LIABILITIES.................................... 1.91
------
NET ASSETS............................................ 100.00%
======
Top Ten U.S. Bond Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- -------------------------------------------------
1. Exodus Communications, Inc. 1.83%
2. Lyondell Chemical Co. 1.59
3. Paxson Communications Corp. 1.57
4. Dobson Sygnet Communications, Inc. 1.56
5. Microcell Telecommunications, Inc. 1.55
6. Group Maintenance America Corp. 1.50
7. Waterford Gaming 1.48
8. PSINet, Inc. 1.48
9. Verio, Inc. 1.46
10. Paxson Communications Corp. 1.44
- -------------------------------------------------
================================================================================
75
<PAGE>
High Yield Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Value
----------- -----------
<S> <C> <C>
U.S. Bonds - 95.50%
U.S. Corporate Bonds - 93.11%
Ackerley Group, Inc., Series B,
9.000%, due 01/15/09............................... $ 675,000 $ 658,125
Adelphia Communications Corp.,
9.375%, due 11/15/09............................... 500,000 490,000
Allbritton Communications Co., Series B,
8.875%, due 02/01/08............................... 550,000 528,000
American Mobile Satellite Corp.,
12.250%, due 04/01/08............................... 250,000 195,313
Avalon Cable Holdings,
9.375%, due 12/01/08............................... 600,000 606,000
Bally Total Fitness Corp., Series B,
9.875%, due 10/15/07............................... 500,000 485,000
Big City Radio, Inc., (c)
0.000%, due 03/15/05............................... 1,100,000 709,500
Budget Group, Inc.,
9.125%, due 04/01/06............................... 500,000 465,000
Building Materials Corp.,
7.750%, due 07/15/05............................... 650,000 591,500
Capstar Broadcasting Partners, Inc., (d)
0.000%, due 02/01/09............................... 500,000 445,000
Carmike Cinemas, Inc.,
9.375%, due 02/01/09............................... 750,000 650,625
CB Richard Ellis Services, Inc.,
8.875%, due 06/01/06............................... 525,000 467,250
Centennial Cellular,
10.750%, due 12/15/08............................... 500,000 535,000
Century Communications Corp.,
0.000%, due 01/15/08............................... 425,000 186,469
8.375%, due 11/15/17............................... 300,000 265,500
Collins & Alkman Corp.,
11.500%, due 04/15/06............................... 700,000 691,250
CSC Holdings, Inc.,
7.625%, due 07/15/18............................... 600,000 558,000
Cumulus Media, Inc.,
10.375%, due 07/01/08............................... 590,000 613,600
Dan River, Inc., Snr-Sub-Nts,
10.125%, due 12/15/03............................... 500,000 500,000
Dobson Sygnet Communications, Inc.,
12.250%, due 12/15/08............................... 800,000 880,000
Eagle Family Foods, Series B,
8.750%, due 01/15/08............................... 750,000 577,500
Exodus Communications, Inc.,
11.250%, due 07/01/08............................... 1,000,000 1,032,500
Falcon Holding Group, Series B, (e)
0.000%, due 04/15/10............................... 150,000 112,313
Fedders North America,
9.375%, due 08/15/07............................... 500,000 490,000
Federal-Mogul Corp.,
7.500%, due 01/15/09............................... 250,000 222,691
Fox/Liberty Networks, Step, (f)
0.000%, due 08/15/07............................... $ 500,000 $ 402,500
Global Imaging Systems, Inc.,
10.750%, due 02/15/07............................... 325,000 312,000
Golden Sky DBS, Inc., (g)
0.000%, due 03/01/07............................... 375,000 228,281
Gothic Production Corp.,
11.125%, due 05/01/05 Series B...................... 500,000 425,000
Granite Broadcasting Corp.,
10.375%, due 05/15/05............................... 400,000 408,000
Group Maintenance America Corp.,
9.750%, due 01/15/09............................... 850,000 843,625
Harvey Casinos Resorts,
10.625%, due 06/01/06............................... 300,000 309,750
Hollinger International Publishing Corp.,
9.250%, due 02/01/06............................... 750,000 742,500
ICN Pharmaceuticals, Inc.,
9.250%, due 08/15/05............................... 400,000 394,000
Integrated Electrical Services, Inc.,
9.375%, due 02/01/09............................... 750,000 735,937
Interep National Radio Sales, Series B,
10.000%, due 07/01/08............................... 650,000 622,375
Iron Mountain, Inc.,
10.125%, due 10/01/06............................... 200,000 203,500
8.750%, due 09/30/09............................... 500,000 476,250
Isle of Capri Casinos, Inc.,
8.750%, due 04/15/09............................... 500,000 460,000
ISP Holdings Inc., Series B,
9.000%, due 10/15/03............................... 630,000 614,250
J.H. Heafner Co., 10.000%, due 05/15/08.............. 525,000 475,125
Level 3 Communications, Inc., (h)
0.000%, due 12/01/08............................... 850,000 514,250
Liberty Group Operating,
9.375%, due 02/01/08............................... 850,000 756,500
LIN Holdings Corp., Step, (i)
0.000%, due 03/01/08............................... 1,000,000 673,750
Loral Space & Communications Ltd.,
9.500%, due 01/15/06............................... 200,000 180,000
Lyondell Chemical Co., Series B,
9.875%, due 05/01/07............................... 880,000 897,600
Mail Well Corp., 8.750%, due 12/15/08................ 500,000 475,000
Merrill Corp., 12.000%, due 05/01/09................. 325,000 318,500
Metromedia Fiber Network,
10.000%, due 12/15/09............................... 600,000 615,000
Mohegan Tribal Gaming Authority,
8.750%, due 01/01/09............................... 600,000 591,000
MTS, Inc., 9.375%, due 05/01/05...................... 750,000 375,000
NationsRent, Inc., 10.375%, due 12/15/08............. 675,000 664,875
NBTY, Inc., Series B,
8.625%, due 09/15/07............................... 440,000 407,000
</TABLE>
- --------------------------------------------------------------------------------
76
<PAGE>
High Yield Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Value
----------- -----------
<S> <C> <C>
New World Pasta Co.,
9.250%, due 02/15/09................................ $ 545,000 $ 490,500
Newpark Resources, Inc., Series B,
8.625%, due 12/15/07................................ 700,000 651,000
Nextel Communications, Inc., 144A,
9.375%, due 11/15/09................................ 305,000 298,900
Nextel Communications, Inc., Step, (j)
0.000%, due 09/15/07................................ 800,000 596,000
Nextlink Communications, 144A,
0.000%, due 12/01/09 (k)............................ 712,000 414,740
10.500%, due 12/01/09................................ 175,000 177,625
Nortex, Inc., 9.875%, due 03/01/04.................... 450,000 443,250
NTL Communications Corp.,
Series B, Step, (l)
0.000%, due 10/01/08................................ 900,000 636,750
Packaging Corp. of America,
9.625%, due 04/01/09................................ 220,000 224,675
Paxson Communications Corp.,
11.625%, due 10/01/02................................ 850,000 884,000
Paxson Communications Corp. (b),
0.000%, due 10/31/06................................ 797 812,818
Pegasus Communication Corp., Class B,
144A, 12.500%, due 08/01/07......................... 550,000 599,500
Pegasus Communications Corp., Class B,
9.625%, due 10/15/05................................ 750,000 757,500
9.750%, due 12/01/06................................ 150,000 151,500
Perry Ellis International, Inc.,
12.250%, due 04/01/03................................ 650,000 645,937
Phoenix Color, Inc.,
10.375%, due 02/01/09................................ 600,000 576,000
Pilgrim's Pride Corp., Snr-Sub-Nts,
10.875%, due 08/01/03................................ 561,000 566,610
Pillowtex Corp., 10.000%, due 11/15/06................ 125,000 57,500
Plains Resources, Inc., 10.250%,
due 03/15/06 Series B................................. 300,000 291,000
Premier Parks, Inc., Step, (m)
0.000%, due 04/01/08................................ 1,100,000 759,000
Protection One Alarm, Inc.,
7.375%, due 08/15/05................................ 365,000 290,175
PSINet, Inc.,
10.500%, due 12/01/06................................ 150,000 151,125
PSINet, Inc.,
11.500%, due 11/01/08................................ 800,000 836,000
Qwest Communications International, Inc., (n)
0.000%, due 10/15/07................................ 500,000 405,000
R. H. Donnelly, Inc., 9.125%, due 06/01/08............ 750,000 735,000
Range Resources Corp.,
8.750%, due 01/15/07................................ 650,000 596,375
Rayovac Corp., Series B,
10.250%, due 11/01/06................................ 600,000 612,000
RCN Corp., Step, (o)
0.000%, due 10/15/07................................ 450,000 316,125
Revlon Consumer Products,
8.125%, due 02/01/06................................ $ 400,000 $ 294,000
8.625%, due 02/01/08................................ 220,000 110,000
Scotts Co., 144A, 8.625%, due 01/15/09................ 500,000 485,000
Sequa Corp., 9.000%, due 08/01/09..................... 400,000 387,000
Simmons Co., 10.250%, due 03/15/09.................... 700,000 662,375
Sinclair Broadcast Group,
10.000%, due 09/30/05................................ 250,000 247,500
8.750%, due 12/15/07................................ 425,000 392,063
Sleepmaster Corp., 144A,
11.000%, due 05/15/09................................ 500,000 508,750
Speedway Motorsports, Inc.,
8.500%, due 08/15/07................................ 700,000 679,000
T/SF Communications Corp., Series B,
10.375%, due 11/01/07................................ 550,000 528,000
Telecorp PCS, Inc., (p)
0.000%, due 04/15/09................................ 700,000 441,000
TeleWest Communications PLC, 144A, (q)
0.000%, due 04/15/09................................ 500,000 315,000
Trans-Resources, Inc., Series B, (r)
0.000%, due 03/15/08................................ 650,000 325,000
Tritel PCS, Inc., 144A, (s)
0.000%, due 05/15/09................................ 200,000 126,500
Triton PCS, Inc., (t)
0.000%, due 05/01/08................................ 1,125,000 795,937
Twin Labs, Inc., 10.250%, due 05/15/06................ 500,000 517,500
U.S. Unwired, Inc., 144A, (u)
0.000%, due 11/01/09................................ 800,000 468,000
United Industries Corp.,
9.875%, due 04/01/09................................ 700,000 638,750
United Rentals, Inc., Series B,
9.500%, due 06/01/08................................ 625,000 610,937
9.250%, due 01/15/09................................ 370,000 355,200
Verio, Inc., 13.500%, due 06/15/04.................... 750,000 823,125
Voicestream Wire, 144A,
10.375%, due 11/15/09................................ 225,000 231,750
Waterford Gaming, 144A, 9.500%,
due 03/15/10.......................................... 850,000 837,250
Williams Communications Group, Inc.,
10.875%, due 10/01/09................................ 635,000 663,575
-----------
52,497,521
-----------
International Dollar Bonds - 2.39%
Imax, Corp., 7.875%, due 12/01/05..................... 500,000 472,500
Microcell Telecommunications, Inc.,
Series B, 0.000%, due 06/01/06...................... 990,000 873,675
-----------
1,346,175
-----------
Total U.S. Bonds (Cost $56,267,269)................... 53,843,696
-----------
</TABLE>
- --------------------------------------------------------------------------------
77
<PAGE>
High Yield Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Warrants Value
----------- -----------
<S> <C> <C>
Warrants - 0.02%
American Mobile Satellite Corp., 144A,
Warrants (Cost $11,250) (b)........................ 250 $ 10,000
-----------
Shares
-----------
Short-Term Investments - 2.57%
Investment Companies - 2.57%
Brinson Supplementary Trust U.S. Cash
Management Prime Fund
(Cost $1,449,925).................................. 1,449,925 1,449,925
-----------
Total Investments
(Cost $57,728,444) - 98.09% (a).................... 55,303,621
Cash and other assets,
less liabilities - 1.91%........................... 1,078,599
-----------
Net Assets - 100%.................................... $56,382,220
===========
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $57,728,444; and net
unrealized depreciation consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation....... $ 438,489
Gross unrealized depreciation....... (2,863,312)
-----------
Net unrealized depreciation......... $(2,424,823)
===========
</TABLE>
(b) Non-income producing security.
(c) Interest rate 0.000% until 03/15/01, then 11.125% to maturity
(d) Interest rate 0.000% until 02/01/02, then 12.750% to maturity
(e) Interest rate 0.000% until 04/15/03, then 9.285% to maturity
(f) Interest rate 0.000% until 08/15/02, then 9.750% to maturity
(g) Interest rate 0.000% until 03/01/04, then 13.500% to maturity
(h) Interest rate 0.000% until 12/01/03, then 10.500% to maturity
(i) Interest rate 0.000% until 03/01/03, then 10.000% to maturity
(j) Interest rate 0.000% until 09/15/02, then 10.650% to maturity
(k) Interest rate 0.000% until 12/01/04, then 12.125% to maturity
(l) Interest rate 0.000% until 10/01/03, then 12.375% to maturity
(m) Interest rate 0.000% until 04/01/03, then 10.000% to maturity
(n) Interest rate 0.000% until 10/15/02, then 9.470% to maturity
(o) Interest rate 0.000% until 10/15/02, then 11.125% to maturity
(p) Interest rate 0.000% until 04/15/04, then 11.625% to maturity
(q) Interest rate 0.000% until 04/15/04, then 9.250% to maturity
(r) Interest rate 0.000% until 03/15/03, then 12.000% to maturity
(s) Interest rate 0.000% until 05/15/04, then 12.750% to maturity
(t) Interest rate 0.000% until 05/01/03, then 11.000% to maturity
(u) Interest rate 0.000% until 11/01/04, then 13.375% to maturity
144A: 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 buyers. At December 31, 1999, the
value of these securities amounted to $4,473,015 or 7.93% of net assets.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
78
<PAGE>
High Yield Fund -- Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999 (Unaudited)
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $56,278,519)............................................ $ 53,853,696
Affiliated issuers (Cost $1,449,925)............................................... 1,449,925
Receivables:
Investment securities sold......................................................... 308,735
Interest........................................................................... 1,153,641
-------------
TOTAL ASSETS.................................................................... 56,765,997
=============
LIABILITIES:
Payables:
Investment advisory fees........................................................... 25,035
Due to custodian bank.............................................................. 308,042
Accrued expenses................................................................... 50,700
-------------
TOTAL LIABILITIES............................................................... 383,777
-------------
NET ASSETS............................................................................. $ 56,382,220
=============
NET ASSETS CONSIST OF:
Paid in capital...................................................................... $ 59,825,015
Accumulated undistributed net investment income...................................... 558,849
Distributions in excess of net realized gain......................................... (1,576,821)
Net unrealized depreciation.......................................................... (2,424,823)
-------------
NET ASSETS............................................................................. $ 56,382,220
=============
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share
(Based on net assets of $53,461,003 and 5,563,579 shares issued and outstanding). $ 9.61
=============
Brinson Class N:
Net asset value, offering price and redemption price per share
(Based on net assets of $1,046 and 109 shares issued and outstanding)............ $ 9.60
=============
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share
(Based on net assets of $2,920,171 and 304,104 shares issued and outstanding).... $ 9.60
=============
</TABLE>
See accompanying notes to financial statements.
================================================================================
79
<PAGE>
High Yield Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
INVESTMENT INCOME:
Interest...................................................... $ 3,208,339
------------
TOTAL INCOME................................................ 3,208,339
------------
EXPENSES:
Advisory...................................................... 192,673
Distribution.................................................. 26,035
Professional.................................................. 20,107
Registration.................................................. 15,506
Other......................................................... 39,774
------------
TOTAL EXPENSES.............................................. 294,095
Expenses deferred by Advisor................................ (40,895)
Earnings credits............................................ (1,756)
------------
NET EXPENSES................................................ 251,444
------------
NET INVESTMENT INCOME....................................... 2,956,895
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss on investments.............................. (1,508,313)
Change in net unrealized appreciation or depreciation......... (280,354)
------------
Net realized and unrealized loss.............................. (1,788,667)
------------
Net increase in net assets resulting from operations.......... $ 1,168,228
============
See accompanying notes to financial statements.
================================================================================
80
<PAGE>
High Yield Fund -- Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended
December 31, 1999 Six Months Ended*
(Unaudited) June 30, 1999
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................................ $ 2,956,895 $ 2,487,185
Net realized gain (loss)......................................................... (1,508,313) 420,129
Change in net unrealized appreciation or depreciation............................ (280,354) (1,916,114)
------------- -------------
Net increase in net assets resulting from operations............................. 1,168,228 991,200
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income:
Brinson Class I.................................................................. (2,747,919) (1,845,754)
Brinson Class N................................................................ (48) (30)
UBS Investment Funds Class..................................................... (261,823) (167,575)
Distributions from and in excess of net realized gain:
Brinson Class I.................................................................. (384,243) --
Brinson Class N................................................................ (7) --
UBS Investment Funds Class..................................................... (40,374) --
------------- -------------
Total distributions to shareholders.............................................. (3,434,414) (2,013,359)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold...................................................................... 7,261,164 52,695,849
Shares issued on reinvestment of distributions................................... 3,052,216 1,797,826
Shares redeemed.................................................................. (18,002,121) (22,036,291)
------------- -------------
Net increase (decrease) in net assets resulting from capital share transactions.. (7,688,741) 32,457,384
------------- -------------
TOTAL INCREASE (Decrease) IN NET ASSETS........................................ (9,954,927) 31,435,225
------------- -------------
NET ASSETS:
Beginning of period................................................................ 66,337,147 34,901,922
------------- -------------
End of period (including accumulated undistributed net investment
income of $558,849 and $611,744, respectively)..................................... $ 56,382,220 $ 66,337,147
============= =============
</TABLE>
*Reflects the Fund's change in fiscal year end from December 31 to June 30
See accompanying notes to financial statements.
================================================================================
81
<PAGE>
High Yield Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended Six Months September 30, 1997/1/
December 31, Ended/2/ Year Ended through
1999 June 30, December 31, December 31,
Brinson Class I (Unaudited) 1999 1998/3/ 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................... $ 9.96 $ 9.98 $ 10.05 $ 10.00
--------- --------- --------- ---------
Income from investment operations:
Net investment income..................................... 0.46/4/ 0.44/4/ 7.30 0.18
Net realized and unrealized gain (loss)................... (0.27) (0.15) 0.02 0.05
--------- --------- --------- ---------
Total income from investment operations................. 0.19 0.29 7.32 0.23
--------- --------- --------- ---------
Less distributions:
Distributions from net investment income.................. (0.47) (0.31) (7.33) (0.18)
Distributions from and in excess of net realized gain..... (0.07) -- (0.06) --
--------- --------- --------- ---------
Total distributions..................................... (0.54) (0.31) (7.39) (0.18)
--------- --------- --------- ---------
Net asset value, end of period................................. $ 9.61 $ 9.96 $ 9.98 $ 10.05
========= ========= ========= =========
Total return (non-annualized).................................. 1.89% 2.91% 7.75% 2.34%
Ratios/Supplemental Data:
Net assets, end of period (in 000s).......................... $ 53,461 $ 60,044 $ 34,900 $ 7,861
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits......... 0.83%/5/ 0.83%/5/ 1.59% 4.98%/5/
After expense reimbursement and earnings credits.......... 0.70%/5/ 0.70%/5/ 0.89% 0.90%/5/
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits............ 9.14%/5/ 8.54%/5/ 7.38% 3.15%/5/
After expense reimbursement and earnings credits.......... 9.27%/5/ 8.67%/5/ 8.08% 7.23%/5/
Portfolio turnover rate...................................... 29% 77% N/A N/A
</TABLE>
/1/ Commencement of investment operations
/2/ Reflects the Fund's change in fiscal year end from December 31 to June 30
/3/ Reflects 10 for 1 share split effective December 9, 1998
/4/ The net investment income per share data was determined by using average
shares outstanding throughout the period
/5/ Annualized
N/A = Information is not available for periods prior to reorganization, as
described in notes to financial statements
See accompanying notes to financial statements.
================================================================================
82
<PAGE>
High Yield Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Period Ended
Brinson Class N (Unaudited) June 30, 1999*
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period.................. $ 9.95 $ 9.98
--------- ---------
Income from investment operations:
Net investment income............................. 0.45** 0.42**
Net realized and unrealized loss.................. (0.27) (0.15)
--------- ---------
Total income from investment operations......... 0.18 0.27
--------- ---------
Less distributions:
Distributions from net investment income.......... (0.46) (0.30)
Distributions from net realized gain.............. (0.07) --
--------- ---------
Total distributions............................. (0.53) (0.30)
--------- ---------
Net asset value, end of period........................ $ 9.60 $ 9.95
========= =========
Total return (non-annualized)......................... 1.77% 2.71%
Ratios/Supplemental Data:
Net assets, end of period (in 000s)................. $ 1 $ 1
Ratio of expenses to average net assets:
Before expense reimbursement and
earnings credits................................. 1.08%*** 1.08%***
After expense reimbursement and
earnings credits................................. 0.95%*** 0.95%***
Ratio of net investment income to average net assets:
Before expense reimbursement and
earnings credits................................. 8.89%*** 8.29%***
After expense reimbursement and
earnings credits................................. 9.02%*** 8.42%***
Portfolio turnover rate............................. 29% 77%
</TABLE>
* Commencement of Brinson Class N was December 31, 1998
** The net investment income per share data was determined by using average
shares outstanding throughout the period
*** Annualized
See accompanying notes to financial statements.
================================================================================
83
<PAGE>
The Brinson Funds -- Notes To Financial Statements
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Brinson Funds (the "Trust") is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended, as a series
company. The Trust currently offers shares of eleven series: Global Fund, Global
Equity Fund, Global Bond Fund, U.S. Balanced Fund, U.S. Equity Fund, U.S. Large
Capitalization Equity Fund, U.S. Large Capitalization Growth Fund, U.S. Small
Capitalization Growth Fund, U.S. Bond Fund, High Yield Fund and Global (Ex-U.S.)
Equity Fund (each a "Fund' and collectively, the "Funds"). Each Fund has three
classes of shares outstanding, Brinson Class I, Brinson Class N and UBS
Investment Funds Class. There are an unlimited number of shares of each class
with par value of $0.001 authorized. Each share represents an identical interest
in the investments of the Funds and has the same rights. The financial
highlights of the UBS Investment Funds Class are presented separately.
Prior to December 19, 1998, the U.S. Large Capitalization Growth Fund (formerly,
UBS Large Cap Growth Fund), U.S. Small Capitalization Growth Fund (formerly, UBS
Small Cap Fund), High Yield Fund (formerly, UBS High Yield Bond Fund), UBS Value
Equity Fund and UBS Bond Fund sought to achieve their investment objectives by
investing substantially all of their investable assets in a corresponding
portfolio of UBS Investor Portfolios Trust (each a "Portfolio" and collectively,
the "Portfolios"), an open-end management investment company that had the same
investment objective. On October 20, 1998, the Board of Directors approved a
tax-free plan of reorganization (the "Reorganization").
Pursuant to the Reorganization, the net assets of the UBS Large Cap Growth Fund,
UBS Small Cap Fund and UBS High Yield Bond Fund were withdrawn from their
corresponding Portfolio and thereafter each began to operate, under its new
name, as a separate Fund in the Trust. In addition, the net assets of the UBS
Value Equity Fund and UBS Bond Fund were withdrawn from their corresponding
Portfolio and acquired by the U.S. Equity Fund and U.S. Bond Fund, respectively,
in a tax-free exchange solely for Brinson Class I shares of each Fund. The UBS
Value Equity Fund and UBS Bond Fund were then dissolved. Shares issued in
exchange, net asset value and corresponding net unrealized appreciation at
December 18, 1998, were as follows:
Net
Net Unrealized
Fund Shares Asset Value Appreciation
- ---- ------ ----------- ------------
UBS Value Equity Fund.............. 1,233,797 $23,269,419 $774,047
UBS Bond Fund...................... 1,429,121 15,177,263 27,192
The aggregate net assets of the U.S. Equity Fund and U.S. Bond Fund immediately
before the mergers were $729,679,727 and $80,523,890, respectively.
The following is a summary of significant accounting policies consistently
followed by the U.S. Balanced Fund, U.S. Equity Fund, U.S. Large Capitalization
Equity Fund, U.S. Large Capitalization Growth Fund, U.S. Small Capitalization
Growth Fund, U.S. Bond Fund and High Yield Fund in the preparation of their
financial statements.
A. Investment Valuation: Securities for which market quotations are readily
available are valued at the last available sales price on the exchange or market
on which they are principally traded, or lacking any sales, at the last
available bid price on the exchange or market on which such securities are
principally traded. Equity securities traded over-the-counter are valued at the
most recent bid price. Securities for which the most recent bid price or market
quotations are not readily available, including restricted securities which are
subject to limitations on their sale, are valued at fair value as determined in
good faith by or under the direction of the Trust's Board of Trustees.
Investments in affiliated investment companies are valued each day based on the
closing net asset value of the respective fund. Debt securities are valued at
the most recent bid price by using market quotations or independent pricing
services. Futures contracts are valued at the settlement price established each
day on the exchange on which they are traded. Short-term obligations with a
maturity of 60 days or less are valued at amortized cost, which approximates
market value.
B. Investment Transactions: Investment transactions are accounted for on a
trade date basis. Gains and losses on securities sold are determined on an
identified cost basis.
C. Investment Income: Interest income, which includes the amortization of
premiums and discounts, is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date.
================================================================================
84
<PAGE>
The Brinson Funds -- Notes To Financial Statements
- --------------------------------------------------------------------------------
D. Federal Income Taxes: It is the policy of the Funds to comply with all
requirements of the Internal Revenue Code (the "Code") applicable to regulated
investment companies and to distribute substantially all of their taxable income
to their shareholders. The Funds have met the requirements of the Code
applicable to regulated investment companies for the six months ended December
31, 1999, therefore, no federal income tax provision was required.
E. Distributions to Shareholders: It is the policy of the Funds to distribute
their respective net investment income on a semi-annual basis and net capital
gains, if any, annually. Distributions to shareholders are recorded on the ex-
dividend date. Income and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Differences in dividends per share between the classes
are due to distribution expenses.
F. Income and Expense Allocations: All income earned and expenses incurred by
each Fund will be borne on a pro rata basis by each of the classes, except that
the Brinson Class I will not incur any of the distribution expenses of the
Brinson Class N nor the UBS Investment Funds Class.
G. Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results may differ from those
estimates.
H. Earnings Credits: The Funds have entered into an agreement with their
custodian whereby interest earned on uninvested cash balances was used to offset
a portion of the Fund's expenses. This amount is reflected in the statement of
operations.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Brinson Partners, Inc. (the "Advisor"), a registered investment advisor,
provides the Funds with investment management services. As compensation for
these services, each Fund pays the Advisor a monthly fee based on each Fund's
respective average daily net assets. The Advisor has agreed to waive its fees
and reimburse each Fund to the extent that total annualized operating expenses
exceed a specified percentage of each Fund's respective average daily net
assets. Investment advisory fees and other transactions for the six months ended
December 31, 1999, were as follows:
<TABLE>
<CAPTION>
UBS Investment
Advisory Brinson Class I Brinson Class N Funds Class Advisory Fees
Fund Fee Expense Cap Expense Cap Expense Cap Fees Deferred
- ---- -------- --------------- --------------- -------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
U.S. Balanced Fund............................ 0.70% 0.80% 1.05% 1.30% $ 131,459 $28,977
U.S. Equity Fund.............................. 0.70 0.80 1.05 1.32 2,275,632 --
U.S. Large Capitalization Equity Fund......... 0.70 0.80 1.05 1.32 85,880 46,252
U.S. Large Capitalization Growth Fund......... 0.70 0.80 1.05 1.57 31,958 56,260
U.S. Small Capitalization Growth Fund......... 1.00 1.15 1.40 1.92 197,692 37,437
U.S. Bond Fund................................ 0.50 0.60 0.85 1.07 283,873 2,293
High Yield Fund............................... 0.60 0.70 0.95 1.55 192,673 40,895
</TABLE>
Certain officers of the Funds are also officers of the Advisor. All officers
serve without direct compensation from the Funds. Trustees' fees paid to
unaffiliated trustees for the six months ended December 31, 1999 were as
follows:
U.S. Balanced Fund.................................................... $2,244
U.S. Equity Fund...................................................... 9,914
U.S. Large Capitalization Equity Fund................................. 2,244
U.S. Large Capitalization Growth Fund................................. 1,834
U.S. Small Capitalization Growth Fund................................. 1,919
U.S. Bond Fund........................................................ 2,186
High Yield Fund....................................................... 2,181
The following Funds invest in shares of the Brinson Supplementary Trust U.S.
Cash Management Prime Fund ("Supplementary Trust"). The Supplementary Trust is
managed by the Advisor. The Supplementary Trust is offered as a cash management
option to mutual funds and other accounts managed by the Advisor. The
Supplementary Trust charges no management fees. Distributions received from the
================================================================================
85
<PAGE>
The Brinson Funds -- Notes To Financial Statements
- --------------------------------------------------------------------------------
Supplementary Trust are reflected as interest income on the statement of
operations. Amounts relating to those investments for the six months ended
December 31, 1999, were as follows:
<TABLE>
<CAPTION>
% of
Sales Interest Net
Fund Purchases Proceeds Income Value Assets
- ---- --------- ---------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
U.S. Balanced Fund......................... $ 11,136,330 $ 10,864,712 $ 26,452 $ 507,697 1.51%
U.S. Equity Fund........................... 157,878,579 177,825,076 489,563 17,738,488 3.52
U.S. Large Capitalization Equity Fund...... 33,397,905 33,912,604 31,884 1,018,306 3.43
U.S. Large Capitalization Growth Fund...... -- -- -- -- --
U.S. Small Capitalization Growth Fund...... 18,471,553 17,818,667 59,423 2,787,103 5.89
U.S. Bond Fund............................. 54,290,733 59,535,749 216,321 259,361 0.32
High Yield Fund............................ 22,196,646 22,992,870 82,908 1,449,925 2.57
</TABLE>
3. INVESTMENT TRANSACTIONS
Investment transactions for the six months ended December 31, 1999, excluding
short-term investments, were as follows:
<TABLE>
<CAPTION>
Proceeds
Fund Purchases From Sales
- ---- ----------- ------------
<S> <C> <C>
U.S. Balanced Fund......................... $ 14,920,499 $ 16,406,156
U.S. Equity Fund........................... 164,908,312 352,962,708
U.S. Large Capitalization Equity Fund...... 28,374,811 19,896,891
U.S. Large Capitalization Growth Fund...... 5,102,225 3,978,343
U.S. Small Capitalization Growth Fund...... 25,658,441 26,524,897
U.S. Bond Fund............................. 104,061,479 112,194,288
High Yield Fund............................ 17,141,344 25,158,957
</TABLE>
4. FUTURES CONTRACTS
The Funds may purchase or sell exchange-traded futures contracts, which are
contracts that obligate the Funds to make or take delivery of a financial
instrument or the cash value of a securities index at a specified future date at
a specified price. The Funds enter into such contracts to hedge a portion of
their portfolio. Risks of entering into futures contracts include the
possibility that there may be an illiquid market or that a change in the value
of the contract may not correlate with changes in the value of the underlying
securities. Upon entering into a futures contract, the Funds are required to
deposit either cash or securities (initial margin). Subsequent payments
(variation margin) are made or received by the Funds, generally on a daily
basis. The variation margin payments are equal to the daily changes in the
contract value and are recorded as unrealized gains or losses. The Funds
recognize a realized gain or loss when the contract is closed or expires. The
statement of operations reflects net realized and net unrealized gains and
losses on these contracts.
5. DISTRIBUTION PLANS
The Trust has adopted distribution plans (the "Plans") pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, for the Brinson Class N
and the UBS Investment Funds Class. Each Plan governs payments made for the
expenses incurred in the promotion and distribution of the Brinson Class N and
the UBS Investment Funds Class. Annual fees under the Brinson Class N Plan shall
not exceed 0.25% of the average daily net assets of the Brinson Class N of each
of the Funds. Annual fees under the UBS Investment Funds Plan, which include a
0.25% service fee, total 0.50%, 0.52%, 0.52%, 0.77%, 0.77%, 0.47%, and 0.85% of
the average daily net assets of the UBS Investment Funds Class of the U.S.
Balanced Fund, U.S. Equity Fund, U.S. Large Capitalization Equity Fund, U.S.
Large Capitalization Growth Fund, U.S. Small Capitalization Growth Fund, U.S.
Bond Fund and High Yield Fund, respectively.
6. LINE OF CREDIT
The Trust has entered into an agreement with Chase Manhattan Bank to provide a
364 day $100 million committed line of credit to the Funds. Borrowings will be
made for temporary purposes. Interest on amounts borrowed is calculated based on
the Federal Funds rate plus 0.50%. The Funds pay an annual commitment fee of
0.08% of the average daily unutilized balance of the line of credit. During the
six months ended December 31, 1999, the Funds had no borrowings under the
agreement.
================================================================================
86
<PAGE>
The Brinson Funds -- Notes To Financial Statements
- --------------------------------------------------------------------------------
7. CAPITAL TRANSACTIONS
Capital stock transactions were as follows:
<TABLE>
<CAPTION>
U.S. Balanced Fund
---------------------------------------------------------
Six Months Ended
December 31, 1999 Year Ended
(Unaudited) June 30, 1999
--------------------------- ---------------------------
Shares Value Shares Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I................... 616,573 $ 5,599,982 1,174,303 $ 12,704,822
Brinson Class N................... - - 1,652 15,306
UBS Investment Funds Class........ 8,273 75,774 135,474 1,464,212
------------ ------------ ------------ ------------
Total Sales.................... 624,846 $ 5,675,756 1,311,429 $ 14,184,340
============ ============ ============ ============
Dividend Reinvestment:
Brinson Class I................... 109,872 $ 936,112 1,235,079 $ 11,512,192
Brinson Class N................... 4 30 33 311
UBS Investment Funds Class........ 4,112 34,830 56,474 523,561
------------ ------------ ------------ ------------
Total Dividend Reinvestment.... 113,988 $ 970,972 1,291,586 $ 12,036,064
============ ============ ============ ============
Redemptions:
Brinson Class I................... 895,496 $ 8,000,958 4,977,791 $ 56,107,946
Brinson Class N................... 11 96 1,641 15,210
UBS Investment Funds Class........ 31,085 274,280 154,266 1,558,776
------------ ------------ ------------ ------------
Total Redemptions.............. 926,592 $ 8,275,334 5,133,698 $ 57,681,932
============ ============ ============ ============
<CAPTION>
U.S. Equity Fund
---------------------------------------------------------
Six Months Ended
December 31, 1999 Year Ended
(Unaudited) June 30, 1999
--------------------------- ---------------------------
Shares Value Shares Value
------------ ------------ ------------ ------------
<S>.................................... <C> <C> <C> <C>
Sales:
Brinson Class I................... 3,518,151 $ 65,942,440 14,157,093* $272,587,287
Brinson Class N................... 208,641 3,860,847 417,980 8,022,220
UBS Investment Funds Class........ 34,158 710,292 1,317,474 26,390,598
------------ ------------ ------------ ------------
Total Sales.................... 3,760,950 $ 70,513,579 15,892,547 $307,000,105
============ ============ ============ ============
Dividend Reinvestment:
Brinson Class I................... 2,790,780 $ 46,438,462 2,164,601 $ 40,726,871
Brinson Class N................... 2,356 39,033 12,904 239,980
UBS Investment Funds Class........ 116,996 1,938,596 89,839 1,678,518
------------ ------------ ------------ ------------
Total Dividend Reinvestment.... 2,910,132 $ 48,416,091 2,267,344 $ 42,645,369
============ ============ ============ ============
Redemptions:
Brinson Class I................... 13,026,509 $240,364,538 13,543,224 $265,910,621
Brinson Class N................... 78,672 1,434,023 90,831 1,768,705
UBS Investment Funds Class........ 353,070 6,595,135 950,265 18,175,221
------------ ------------ ------------ ------------
Total Redemptions.............. 13,458,251 $248,393,696 14,584,320 $285,854,547
============ ============ ============ ============
</TABLE>
*Includes shares issued in connection with the acquisition of the UBS Value
Equity Fund.
- --------------------------------------------------------------------------------
87
<PAGE>
The Brinson Funds -- Notes To Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Large Capitalization Equity Fund
------------------------------------------------------------------
Six Months Ended
December 31, 1999 Year Ended
(Unaudited) June 30, 1999
--------------------------- ------------------------------
Shares Value Shares Value
------------- ------------ --------------- -------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I................................... 2,008,094 $ 17,027,675 2,384,176 $ 24,164,112
Brinson Class N................................... 622 20,926 61,091 684,700
UBS Investment Funds Class........................ 8,148 76,424 427 4,617
------------- ------------ --------------- -------------
Total Sales..................................... 2,016,864 $ 17,125,025 2,445,694 $ 24,853,429
============ ============ =============== =============
Dividend Reinvestment:
Brinson Class I................................... 223,565 $ 1,819,816 7,506 $ 77,433
Brinson Class N................................... 8,631 70,518 7,094 69,880
UBS Investment Funds Class........................ 836 6,755 1 11
------------- ------------ --------------- -------------
Total Dividend Reinvestment..................... 233,032 $ 1,897,089 14,601 $ 147,324
============= ============ =============== =============
Redemptions:
Brinson Class I................................... 699,059 $ 6,228,716 370,824 $ 3,862,037
Brinson Class N................................... 277,962 2,546,271 1,369,240 13,638,399
UBS Investment Funds Class........................ -- -- -- --
------------- ------------ --------------- -------------
Total Redemptions............................... 977,021 $ 8,774,987 1,740,064 $ 17,500,436
============= ============ =============== =============
</TABLE>
<TABLE>
<CAPTION>
U.S. Large Capitalization Growth Fund
------------------------------------------------------------------
Six Months Ended
December 31, 1999 Six Months Ended*
(Unaudited) June 30, 1999
--------------------------- ------------------------------
Shares Value Shares Value
------------- ------------ --------------- -------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I................................... 89,568 $ 1,215,511 35,111 $ 451,776
Brinson Class N................................... -- -- -- --
UBS Investment Funds Class........................ 223,049 3,027,579 372,727 4,781,902
------------- ------------ --------------- -------------
Total Sales..................................... 312,617 $ 4,243,090 407,838 $ 5,233,678
============ ============ =============== =============
Dividend Reinvestment:
Brinson Class I................................... 15,996 $ 217,385 -- --
Brinson Class N................................... 6 80 -- --
UBS Investment Funds Class........................ 27,906 376,172 -- --
------------- ------------ --------------- -------------
Total Dividend Reinvestment..................... 43,908 $ 593,637 -- $ --
============= ============ =============== =============
Redemptions:
Brinson Class I................................... 60,955 $ 851,942 173,449 $ 2,143,629
Brinson Class N................................... -- -- -- --
UBS Investment Funds Class........................ 135,539 1,935,865 1,853 26,217
------------- ------------ --------------- -------------
Total Redemptions............................... 196,494 $ 2,787,807 175,302 $ 2,169,846
============= ============ =============== =============
</TABLE>
*Reflects the Fund's change in fiscal year end from December 31 to June 30
- --------------------------------------------------------------------------------
88
<PAGE>
The Brinson Funds -- Notes To Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Small Capitalization Growth Fund
---------------------------------------------------------------
Six Months Ended
December 31, 1999 Six Months Ended*
(Unaudited) June 30, 1999
------------------------------ -----------------------------
Shares Value Shares Value
------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I............................................ 1,361,057 $ 14,001,883 2,641,837 $ 22,702,120
Brinson Class N............................................ -- -- -- --
UBS Investment Funds Class................................. 51,364 544,776 99,579 858,153
------------- -------------- ------------- -------------
Total Sales.............................................. 1,412,421 $ 14,546,659 2,741,416 $ 23,560,273
============= ============== ============= =============
Redemptions:
Brinson Class I............................................ 1,515,520 $ 15,555,524 1,375,470 $ 11,346,801
Brinson Class N............................................ -- -- -- --
UBS Investment Funds Class................................. 9,951 102,784 29,703 240,000
------------- -------------- ------------- -------------
Total Redemptions........................................ 1,525,471 $ 15,658,308 1,405,173 $ 11,586,801
============= ============== ============= =============
</TABLE>
*Reflects the Fund's change in fiscal year end from December 31 to June 30
<TABLE>
<CAPTION>
U.S. Bond Fund
---------------------------------------------------------------
Six Months Ended
December 31, 1999 Year Ended
(Unaudited) June 30, 1999
------------------------------ -----------------------------
Shares Value Shares Value
------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I............................................ 4,864,653 $49,803,731 15,463,879** $165,316,122
Brinson Class N............................................ -- -- 2,379 25,964
UBS Investment Funds Class................................. 118,531 1,214,340 582,475 6,222,123
------------- -------------- ------------- -------------
Total Sales.............................................. 4,983,184 $51,018,071 16,048,733 $171,564,209
============= ============== ============= ============
Dividend Reinvestment:
Brinson Class I............................................ 414,708 $ 4,089,021 386,462 $ 4,042,561
Brinson Class N............................................ 6 61 6 62
UBS Investment Funds Class................................. 29,524 289,628 22,041 229,364
------------- -------------- ------------- -------------
Total Dividend Reinvestment.............................. 444,238 $ 4,378,710 408,509 $ 4,271,987
============= ============== ============= =============
Redemptions:
Brinson Class I............................................ 6,607,127 $68,012,603 10,568,875 $112,692,202
Brinson Class N............................................ -- -- 2,379 25,905
UBS Investment Funds Class................................. 141,723 1,409,778 248,522 2,612,918
------------- -------------- ------------- -------------
Total Redemptions........................................ 6,748,850 $69,422,381 10,819,776 $115,331,025
============= ============== ============= ============
</TABLE>
**Includes shares issued in connection with the acquisition of the UBS Bond
Fund.
- --------------------------------------------------------------------------------
89
<PAGE>
The Brinson Fund -- Notes To Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
High Yield Fund
-------------------------------------------------------------
Six Months Ended
December 31, 1999 Six Months Ended*
(Unaudited) June 30, 1999
--------------- ------------- ------------ -------------
Shares Value Shares Value
--------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I.............................................. 704,855 $ 6,981,404 4,509,034 $ 46,327,741
Brinson Class N.............................................. -- -- -- --
UBS Investment Funds Class................................... 28,339 279,760 620,093 6,368,108
--------------- ------------- ------------ -------------
Total Sales................................................ 733,194 $ 7,261,164 5,129,127 $ 52,695,849
=============== ============= ============ =============
Dividend Reinvestment:
Brinson Class I.............................................. 291,880 $ 2,802,047 166,520 $ 1,658,538
Brinson Class N.............................................. 6 54 3 30
UBS Investment Funds Class................................... 26,054 250,115 13,996 139,258
--------------- ------------- ------------ -------------
Total Dividend Reinvestment................................ 317,940 $ 3,052,216 180,519 $ 1,797,826
=============== ============= ============ =============
Redemptions:
Brinson Class I.............................................. 1,462,323 $ 14,308,185 2,144,630 $ 22,018,291
Brinson Class N.............................................. -- -- -- --
UBS Investment Funds Class................................... 382,724 3,693,936 1,754 18,000
--------------- ------------- ------------ -------------
Total Redemptions.......................................... 1,845,047 $ 18,002,121 2,146,384 $ 22,036,291
=============== ============= ============ =============
</TABLE>
*Reflects the Fund's change in fiscal year end from December 31 to June 30
- --------------------------------------------------------------------------------
90
<PAGE>
Distributed by:
Funds Distributor, Inc.
60 State Street
Boston, MA 02109
This report is submitted for the general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors in the
Funds unless preceded or accompanied by an effective Prospectus which includes
details regarding the Funds' objectives, policies, expenses and other
information.
- --------------------------------------------------------------------------------
<PAGE>
[BRINSON The Brinson Funds
LOGO ---------------------------------------------------------------------
APPEARS Australia . Bahrain . Brazil . China . France . Germany . Japan
HERE] Singapore . Switzerland . United Kingdom . United States
209 South LaSalle Street . Chicago, Illinois 60604-1295 . Tel: (800) 448-2430
<PAGE>
The Brinson Funds
-----------------
Brinson Global Fund
Brinson Global Equity Fund
Brinson Global Bond Fund
Semi-Annual Report
December 31, 1999
[Logo Brinson]
Institutional Asset Management
------------------------------
<PAGE>
Trustees and Officers
[Logo Brinson]
Trustees
Walter E. Auch
Frank K. Reilly, CFA
Edward M. Roob
Officers
Frank K. Reilly, CFA
Chairman of the Board
E. Thomas McFarlan
President
Thomas J. Digenan, CFA, CPA
Vice President
Debra L. Nichols
Vice President
Carolyn M. Burke, CPA
Secretary and Treasurer
David E. Floyd, CPA
Assistant Secretary
Mark F. Kemper
Assistant Secretary
1
<PAGE>
The Funds' Advisor -- Brinson Partners, Inc.
[Brinson Logo]
Since the founding of our organization nearly twenty years ago, we have focused
our collective energy on two goals: creating meaningful value-added investment
performance; and providing our clients with individualized client relationships
of the highest quality.
Now, in 2000, more than 1,200 employees located in 11 countries around the world
continue to deliver investment strategies that meet our clients' needs. With an
unrelenting focus on our goals, we have grown into one of the world's premier
investment management organizations, and a recognized leader in our industry. In
North America, we make our investment capabilities available to institutions and
individual investors through the Brinson Family of Funds. The Brinson Funds are
no-load, institutionally priced mutual funds that provide investors convenient
access to our global investment expertise and capabilities.
Within a framework of integrated capital markets, we select portfolio
investments by focusing on long-term investment fundamentals. Investment
performance for our clients is maximized within and across asset classes through
a comprehensive understanding of global investment markets and their
interrelationships. We apply a systematic, disciplined approach to valuing
investments and combine the seasoned judgement of our global investment teams to
construct optimal portfolios--balancing considerations for both risk and return.
Brinson Partners, Inc. is a member of UBS Asset Management, the institutional
asset management division of UBS AG.
2
<PAGE>
Table of Contents
[BRINSON LOGO]
<TABLE>
<CAPTION>
<S> <C>
Shareholder Letter......................................... 4
Global Economic and Market Highlights...................... 5
Global Fund................................................ 6
Schedule of Investments................................ 11
Financial Statements................................... 18
Financial Highlights................................... 22
Global Equity Fund......................................... 24
Schedule of Investments................................ 29
Financial Statements................................... 32
Financial Highlights................................... 35
Global Bond Fund........................................... 37
Schedule of Investments................................ 41
Financial Statements................................... 44
Financial Highlights................................... 47
The Brinson Funds--Notes to Financial Statements........... 49
</TABLE>
3
<PAGE>
Shareholder Letter
[Logo Brinson]
January 27, 2000
Dear Shareholder:
We are pleased to present the semi-annual report for The Brinson Funds for the
six-month period ending December 31, 1999. This report will provide a discussion
on the current U.S. and International Economic outlook. We will also provide our
current portfolio strategies and performance updates for our three Global Mutual
Funds.
The decade of the 1990s ended with a particularly challenging year. We continued
to apply our proven value-based investment process across all of our portfolios,
but our investment results varied substantially. In some areas, such as fixed
income, our performance was excellent relative to both the market and our peers.
In other areas, most notably multi-asset and equity portfolios, results were
disappointing.
Throughout 1999, our asset allocation strategies continued to focus on reducing
exposure to the risks presented by equity prices that have been driven far above
even optimistic estimates of underlying value. While the risk hedge in balanced
portfolios had little net effect on performance through most of the year, the
surge in equity prices late in the year hampered the returns relative to the
benchmarks.
The broad array of our equity portfolios, with the exception of the growth
portfolios, significantly lagged their benchmarks in 1999. Some degree of
underperformance was unavoidable as the U.S. market was increasingly driven by
momentum, which in turn focused more tightly on narrow technology and e-commerce
stocks. In such a market, the fundamental price/value discrepancies that are the
core of our investment process are effectively ignored in the market. In
addition, our stock selection was uncharacteristically weak and a meaningful
source of the underperformance of our U.S. and Global Equity portfolios.
In fixed income our U.S. Bond and High Yield portfolios outpaced the market and
ranked highly in their respective universes of active managers. However, outside
the U.S., our Global Bond portfolio generally underperformed, due almost
entirely to strength in both the Japanese bond market and the yen, where we are
underweighted.
Our fundamental assessments across markets have been both accurate and
perceptive, but momentum rather than the reality of fundamental value has
continued to drive equity markets, particularly in the U.S. We have seen this
phenomenon historically and it has always proven to be a sign of danger, that
ultimately ends badly for the market in general and the momentum players in
particular. Over time, these styles ebb and flow but momentum driven approaches
have no lasting link to underlying fundamentals and always fail to deliver when
viewed over meaningful horizons. It is these concerns which underlie our current
asset allocation and equity portfolio strategies.
2000 will be a challenging year, but we are confident that remaining true to our
investment disciplines will in the long run accrue to our shareholders' benefit.
As always, we welcome your thoughts and comments, and appreciate your continued
trust and the confidence you have placed in The Brinson Funds.
Sincerely,
/s/ Gary P. Brinson
Gary P. Brinson
Chairman and Chief Investment Officer
Brinson Partners, Inc.
4
<PAGE>
Global Economic and Market Highlights
[Logo Brinson]
As the negative effects of the Asian crisis gradually wane and domestic demand
continues to remain robust, the expansion in Euroland gains speed. In late
December 1999, the German government announced cuts in corporate and personal
tax rates, and initiated cross-party talks about reforms of the country's
burdened pension system. So far, however, neither the ruling coalition parties
nor the opposition has managed to communicate its position in the pension debate
in a transparent way, as the political system is being absorbed by allegations
of funding fraud against the Christian democrats. As in the United States, pan-
European inflation has accelerated in the wake of surging energy prices, whereas
inflation excluding food and energy has moved sideways. While headline inflation
figures will be heavily impacted by energy prices, core inflation is unlikely to
accelerate much, given economy-wide over-capacities and disinflationary forces
arising from continued deregulation of utility and telecom sectors.
In Japan, real GDP declined in the third quarter of 1999, largely as a result of
a phasing out of public spending programs, weak private capital expenditures and
stagnating consumer spending. A sustainable recovery will hinge on healthy gains
in private demand. Should the trend in economic growth continue to be
disappointing, the government may adopt additional stimulative fiscal measures.
The Bank of Japan has sterilized, and will probably continue to sterilize,
expansionary foreign exchange market operations. Hopes that meaningful
quantitative easing steps are around the corner remain premature.
<TABLE>
<CAPTION>
Global Environment
6 months 1 year 3 years 5 years 8/31/92*
Major Markets ended ended ended ended to
Total Return in U.S. Dollars 12/31/99 12/31/99 12/31/99 12/31/99 12/31/99
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Equity 10.45% 23.56% 26.04% 27.06% 20.80%
Global (Ex-U.S.) Equities (currency unhedged) 22.45 27.77 15.67 13.12 13.19
Global (Ex-U.S.) Equities (currency hedged) 19.89 36.98 21.89 18.43 16.24
U.S. Bonds 0.55 -0.84 5.72 7.74 6.37
Global (Ex-U.S.) Bonds (currency unhedged) 4.44 -5.09 2.29 5.90 6.00
Global (Ex-U.S.) Bonds (currency hedged) 1.66 2.88 8.42 10.94 9.23
U.S. Cash Equivalents 2.79 5.31 5.58 5.69 5.06
- ------------------------------------------------------------------------------------------------------------
6 months 1 year 3 years 5 years 8/31/92*
Major Currencies ended ended ended ended to
Percent Change Relative to U.S. Dollars 12/31/99 12/31/99 12/31/99 12/31/99 12/31/99
- ------------------------------------------------------------------------------------------------------------
Yen 18.26% 10.20% 4.28% -0.51% 2.57%
Pound 2.25 -3.13 -1.98 0.60 -2.78
Euro** -2.80 -14.64 -7.56 -4.28 -4.85
Canadian Dollar 1.98 5.84 -1.89 -0.68 -2.60
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* Inception date of the Brinson Global Fund Class I
** Deutschemark prior to 1/1/99
All total returns in excess of 1 year are average annualized returns.
5
<PAGE>
Global Fund
[Brinson Logo]
Since its inception on August 31, 1992, the Brinson Global Fund Class I has
provided an annualized return of 9.51% versus the 14.07% return of its index,
the Global Securities Markets Mutual Fund Index (Unhedged). The annualized
volatility of the Fund over this period was 6.55%, almost 25% less than the
8.52% volatility of the benchmark. The Fund's 1999 return of 1.49% fell
substantially short of the benchmark return of 16.85%. While these results are
disappointing, we remain committed to our long-term value-oriented investment
philosophy.
Security selection in U.S. equity and Japanese equity markets contributed
negatively to the added value while issue selection in U.S. bonds made a
positive contribution. The large underweight in developed equity markets and the
corresponding overweight in nominal and real bond markets detracted
significantly from the Fund's added value as equity markets enjoyed another
stellar year.
It was a difficult year for developed bond markets with the notable exception of
the Japanese market. Yields rose and most returns were negative when the
currency effects were removed. The slightly long duration positions maintained
in most developed bond markets hurt the Fund's relative performance as did the
significant underweight and short duration strategy in Japanese bonds and the
allocation to U.S. Treasury Inflation Protected Securities (TIPS). The
overweighting in emerging debt, as well as the active management within this
category, made a positive contribution. Emerging and developed equity markets
performed very strongly as inflation remained in check while industry
consolidation and restructuring reached record levels. Technology and
telecommunications shares provided exceptional returns, pushing their valuations
significantly higher from already lofty levels.
The yen strengthened during the year, which detracted from the Global Fund's
performance, as did the euro's weakness. On the positive side, the relative
strength of the Australian dollar, and our decision to overweight that currency,
added value to the Fund.
Going into 2000, the Global Fund remains significantly underweight in the
developed equity markets with an offsetting overweight in bond markets. The
gains in developed equity markets have led to a very high level of overpricing,
making bond markets increasingly attractive on a relative basis. The Fund is
also maintaining a large underweight in the yen as this currency has again
become significantly overvalued in the world markets--particularly compared with
continental European currencies. Along with the yen underweight, the strategy
includes sterling and U.S. dollar underweights counterbalanced by overweights in
the euro, Australian dollar and the Swedish krona.
6
<PAGE>
Global Fund
[BRINSON LOGO]
<TABLE>
<CAPTION>
Total Return
6 months 1 year 3 years 5 years 8/31/92*
ended ended ended ended to
12/31/99 12/31/99 12/31/99 12/31/99 12/31/99
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brinson Global Fund Class I -1.19% 1.49% 6.86% 11.56% 9.51%
- ---------------------------------------------------------------------------------------------------
GSMI Mutual Fund Index** 10.41 16.85 15.86 17.03 14.07
- ---------------------------------------------------------------------------------------------------
MSCI World Equity (Free) Index 15.25 25.12 21.81 20.09 17.22
- ---------------------------------------------------------------------------------------------------
Salomon Smith Barney World Gov't. Bond Index 3.13 -4.26 3.43 6.42 6.06
- ---------------------------------------------------------------------------------------------------
</TABLE>
* Inception date of the Brinson Global Fund Class I.
** An unmanaged index compiled by the Advisor, constructed as follows: 40%
Wilshire 5000 Index; 22% MSCI World ex USA (Free) Index; 21% Salomon Smith
Barney BIG Bond Index; 9% Salomon Non-U.S. Government Bond Index (unhedged);
2% JP Morgan EMBI+; 3% MSCI Emerging Markets Free Index; and 3% Merrill
Lynch High Yield Master Index.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson Global
Fund Class I, the GSMI Mutual Fund Index, the MSCI World Equity (Free) Index and
the Salomon Smith Barney World Government Bond Index if you had invested
$1,000,000 on August 31, 1992, and had reinvested all your income dividends and
capital gain distributions through December 31, 1999. No adjustment has been
made for any income taxes payable by shareholders on income dividends and
capital gain distributions. Past performance is no guarantee of future results.
Share price and return will vary with market conditions; investors may realize
a gain or loss upon redemption.
Brinson Global Fund Class I vs. GSMI Mutual Fund Index,
MSCI World Equity (Free) Index and Salomon Smith Barney World Gov't. Bond Index
Wealth Value with Dividends Reinvested
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Brinson Global Fund GSMI Mutual Fund MSCI World Equity Salomon Smith Barney
Class I Index (Free) Index World Gov't. Bond Index
------------------- ---------------- ----------------- -----------------------
<S> <C> <C> <C> <C>
12/31/92 $1,032,925 $1,030,790 $990,218 $972,746
12/31/93 $1,148,054 $1,179,801 $1,216,971 $1,101,932
12/31/94 $1,126,372 $1,196,582 $1,283,697 $1,127,585
12/31/95 $1,398,239 $1,500,615 $1,557,008 $1,342,275
12/31/96 $1,595,424 $1,688,579 $1,773,715 $1,391,033
12/31/97 $1,770,868 $1,930,073 $2,056,062 $1,394,399
12/31/98 $1,918,264 $2,247,617 $2,562,162 $1,607,603
12/31/99 $1,946,875 $2,626,332 $3,205,905 $1,539,087
</TABLE>
8/31/92 = $1,000,000 Data through 12/31/99
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
7
<PAGE>
Global Fund
[BRINSON LOGO]
Total Return
<TABLE>
<CAPTION>
6 months 1 year 6/30/97*
ended ended to
12/31/99 12/31/99 12/31/99
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Brinson Global Fund Class N -1.33% 1.18% 4.34%
- ----------------------------------------------------------------------------
GSMI Mutual Fund Index** 10.41 16.85 14.58
- ----------------------------------------------------------------------------
MSCI World Equity (Free) Index 15.25 25.12 19.61
- ----------------------------------------------------------------------------
Salomon Smith Barney World Gov't. Bond Index 3.13 -4.26 4.65
- ----------------------------------------------------------------------------
</TABLE>
* Inception date of the Brinson Global Fund Class N.
** An unmanaged index compiled by the Advisor, constructed as follows: 40%
Wilshire 5000 Index; 22% MSCI World ex USA (Free) Index; 21% Salomon Smith
Barney BIG Bond Index; 9% Salomon Non-U.S. Government Bond Index (unhedged);
2% JP Morgan EMBI+; 3% MSCI Emerging Markets Free Index; and 3% Merrill
Lynch High Yield Master Index.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson Global
Fund Class N, the GSMI Mutual Fund Index, the MSCI World Equity (Free) Index and
the Salomon Smith Barney World Government Bond Index if you had invested
$1,000,000 on June 30, 1997, and had reinvested all your income dividends and
capital gain distributions through December 31, 1999. No adjustment has been
made for any income taxes payable by shareholders on income dividends and
capital gain distributions. Past performance is no guarantee of future results.
Share price and return will vary with market conditions; investors may realize a
gain or loss upon redemption.
Brinson Global Fund Class N vs. GSMI Mutual Fund Index,
MSCI World Equity (Free) Index and Salomon Smith Barney World Gov't. Bond Index
Wealth Value with Dividends Reinvested
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Brinson Global Fund MSCI World Equity Salomon Smith Barney
Class N GSMI Mutual Fund Index (Free) Index World Govt. Bond Index
------------------- ---------------------- ----------------- ----------------------
<S> <C> <C> <C> <C>
12/31/97 $1,017,857 $1,032,657 $1,003,556 $1,014,920
6/30/98 $1,079,019 $1,137,610 $1,171,793 $1,043,156
12/31/98 $1,099,252 $1,202,555 $1,250,581 $1,170,101
6/30/99 $1,127,275 $1,272,722 $1,357,727 $1,086,238
12/31/99 $1,112,241 $1,405,180 $1,564,789 $1,120,231
</TABLE>
6/30/97 = $1,000,000 Data through 12/31/99
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
8
<PAGE>
Global Fund
[BRINSON LOGO]
Asset Allocation
As of December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Current
Benchmark Strategy
- -------------------------------------------------
<S> <C> <C>
U.S. Equities 40.0% 19.9%
Global (Ex-U.S.) Equities 22.0 17.1
Emerging Markets Equities 3.0 3.0
Dollar Bonds 21.0 41.0
High Yield Bonds 3.0 3.0
Global (Ex-U.S.) Bonds 9.0 11.0
Emerging Markets Debt 2.0 5.0
Cash Equivalents 0.0 0.0
- -------------------------------------------------
100.0% 100.0%
</TABLE>
Top Ten U.S. Equity Holdings
As of December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Percent of
Net Assets
- -------------------------------------------------
<S> <C>
1. FDX Corp. 1.18%
2. Electronic Data Systems Corp. 1.13
3. Burlington Northern Santa Fe Corp. 0.94
4. General Instrument Corp. 0.82
5. CIGNA Corp. 0.76
6. Allergan, Inc. 0.69
7. Compuware Corp. 0.69
8. Compaq Computer Corp. 0.65
9. Nextel Communications, Inc. 0.65
10. First Data Corp. 0.63
- -------------------------------------------------
</TABLE>
Currency Allocation
As of December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Current
Benchmark Strategy
- -------------------------------------------------
<S> <C> <C>
U.S. 66.0% 62.5%
Japan 9.4 1.4
U.K. 4.8 0.0
Euro 11.7 18.5
Other Europe 2.5 6.5
Canada 1.3 1.3
Emerging Markets 3.0 3.0
Asia (Ex-Japan) 0.7 0.2
Australia/New Zealand 0.6 6.6
- -------------------------------------------------
100.0% 100.0%
</TABLE>
Top Ten Global (Ex-U.S.) Equity Holdings
As of December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Percent of
Net Assets
- -----------------------------------------------------
<S> <C>
1. Fujitsu 0.56%
2. Sony Corp. 0.56
3. Nippon Telegraph & Telephone Corp. 0.48
4. Fanuc 0.34
5. Toyota Motor Corp. 0.32
6. Orix Corp. 0.30
7. Secom Co., Ltd. 0.26
8. NTT Mobile Communications Network, Inc. 0.24
9. Canon, Inc. 0.24
10. NEC Corp. 0.23
- -----------------------------------------------------
</TABLE>
9
<PAGE>
Global Fund
[BRINSON LOGO]
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
<TABLE>
<S> <C>
U.S. EQUITIES
Energy..................................... 0.18%
Capital Investment
Capital Goods............................ 1.22
Technology............................... 4.77
------
5.99
Basic Industries
Chemicals................................ 1.27
Housing/Paper............................ 2.80
Metals................................... 1.40
------
5.47
Consumer
Non-Durables............................. 0.63
Retail/Apparel........................... 1.75
Autos/Durables........................... 1.00
Health: Drugs............................ 1.78
Health: Non-Drugs........................ 1.57
------
6.73
Financial
Banks.................................... 2.22
Non-Banks................................ 2.40
------
4.62
Utilities
Electric................................. 2.12
Telephone................................ 1.09
------
3.21
Transportation............................. 2.50
Services/Misc.............................. 1.91
Post Venture............................... 2.32
------
Total U.S. Equities.................... 32.93*
GLOBAL (EX-U.S.) EQUITIES
Aerospace & Military....................... 0.08
Airlines................................... 0.04
Appliances & Households.................... 0.85
Autos/Durables............................. 0.61
Banking.................................... 1.64
Beverages & Tobacco........................ 0.37
Broadcasting & Publishing.................. 0.44
Building Materials......................... 0.09
Business & Public Service.................. 0.76
Chemicals.................................. 0.39
Construction............................... 0.09
Data Processing............................ 0.80
Electric Components........................ 0.91
Electronics................................ 1.13
Energy..................................... 0.50
Financial Services......................... 1.06
Food & House Products...................... 0.42
Forest Products............................ 0.13
Health: Drugs.............................. 0.91
Industrial Components...................... 0.32
Insurance.................................. 0.63
Leisure & Tourism.......................... 0.02
Machinery & Engineering.................... 0.04
Merchandising.............................. 0.51
Metals--Steel.............................. 0.11
Multi-Industry............................. 0.13
Non-Ferrous Metals......................... 0.17
Real Estate................................ 0.18
Recreation................................. 0.20
Telecommunications......................... 1.86
Transportation............................. 0.39
Utilities.................................. 0.51
Wholesale & International Trade............ 0.06
------
Total Global (Ex-U.S.) Equities........ 16.35
EMERGING MARKETS EQUITIES.................. 5.49
------
TOTAL EQUITIES............................. 54.77
U.S. BONDS
Corporate Bonds
Airlines................................. 0.05
Asset-Backed............................. 0.53
Autos/Durables........................... 0.18
Consumer................................. 0.14
Financial Services....................... 0.64
Health................................... 0.18
Services/Miscellaneous................... 0.47
Telecommunications....................... 0.21
Utilities................................ 0.18
------
2.58
International Dollar Bonds................. 1.68
Corporate Mortgage-Backed Securities....... 2.03
U.S. Government Mortgage-Backed Securities. 2.49
U.S. Government Obligations................ 15.29
------
Total U.S. Bonds...................... 24.07*
HIGH YIELD BONDS........................... 2.55
GLOBAL (EX-U.S.) BONDS
Foreign Financial Bonds.................... 0.78
Foreign Government Bonds................... 8.41
------
Total Global (Ex-U.S.) Bonds.......... 9.19
EMERGING MARKETS BONDS..................... 7.19
SHORT-TERM INVESTMENTS..................... 20.60*
------
TOTAL INVESTMENTS..................... 118.37
LIABILITIES, LESS CASH AND
OTHER ASSETS............................. (18.37)
------
NET ASSETS............................ 100.00%
======
</TABLE>
* The Fund held a long position in U.S. Treasury futures on December 31, 1999
which increased U.S. Bond exposure from 24.07% to 39.23%. The Fund held a
short position in stock index futures on December 31, 1999 which reduced U.S.
Equity exposure from 32.93% to 19.70%. These adjustments result in a net
decrease in the Fund's exposure to Short-Term Investments from 20.60% to
18.67%.
10
<PAGE>
Global Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
-------- -----------
<S> <C> <C>
Equities -- 54.77%
U.S. Equities -- 32.93%
Advanced Micro Devices, Inc. (b).................. 54,600 $ 1,579,987
Allergan, Inc. (b)................................ 46,600 2,318,350
Alza Corp. (b).................................... 22,200 768,675
American Standard Cos., Inc. (b).................. 26,600 1,220,275
AmSouth Bancorp................................... 31,087 600,368
Aon Corp.......................................... 29,447 1,177,880
Armstrong World Industries, Inc................... 7,000 233,625
Baxter International, Inc......................... 28,400 1,783,875
Brinson Post-Venture Fund (b)..................... 397,192 7,740,955
Burlington Northern Santa Fe Corp................. 129,600 3,142,800
Central & South West Corp......................... 70,300 1,406,000
Centaur Funding Corp., 144A....................... 750 765,938
Centaur Funding Corp., 144A....................... 1,430 219,476
Champion Enterprises, Inc. (b).................... 22,800 195,225
Champion International Corp....................... 8,000 495,500
Chase Manhattan Corp.............................. 22,400 1,740,200
CIGNA Corp........................................ 31,400 2,529,662
Circuit City Stores-Circuit City Group............ 21,300 959,831
CMS Energy Corp................................... 23,900 745,381
CommScope, Inc. (b)............................... 9,733 392,362
Compaq Computer Corp.............................. 80,300 2,173,119
Computer Sciences Corp. (b)....................... 17,700 1,674,862
Compuware Corp.................................... 61,800 2,302,050
Consolidated Stores Corp. (b)..................... 31,900 518,375
Corning, Inc...................................... 8,600 1,108,863
Covance, Inc. (b)................................. 17,572 189,997
Delhaize America, Inc............................. 16,167 328,392
Dial Corp......................................... 18,000 437,625
Dominion Resources, Inc........................... 35,600 1,397,300
Eastman Chemical Co............................... 14,300 681,931
Electronic Data Systems Corp...................... 56,100 3,755,194
Eli Lilly and Co.................................. 12,100 804,650
Emerson Electric Co............................... 32,300 1,853,212
Entergy Corp...................................... 34,000 875,500
FDX Corp. (b)..................................... 95,800 3,921,812
Federal-Mogul Corp................................ 36,000 724,500
Federated Department Stores, Inc.................. 9,300 470,231
First Data Corp................................... 42,330 2,087,398
Fleet Boston Financial Corp....................... 49,115 1,709,816
Fleetwood Enterprises, Inc........................ 16,500 340,313
Fort James Corp................................... 44,800 1,226,400
Gateway, Inc...................................... 11,300 814,306
GATX Corp......................................... 10,400 351,000
General Instrument Corp. (b)...................... 32,000 2,720,000
Genzyme Corp. (b)................................. 17,100 769,500
GreenPoint Financial Corp......................... 49,700 1,183,481
Hibernia Corp..................................... 37,700 400,563
Household International, Inc...................... 41,900 1,560,775
Illinois Tool Works, Inc.......................... 29,200 1,972,825
IMC Global, Inc................................... 55,200 903,900
Johnson Controls, Inc............................. 15,200 864,500
Kimberly-Clark Corp............................... 28,500 1,859,625
Kroger Co......................................... 21,500 405,813
Lafarge Corp...................................... 20,700 571,838
Lear Corp. (b).................................... 31,000 992,000
Lexmark International Group, Inc.................. 6,200 561,100
Lincoln National Corp............................. 12,700 508,000
Lockheed Martin Corp.............................. 45,846 1,002,881
Lyondell Chemical Co.............................. 37,300 475,575
Martin Marietta Materials, Inc.................... 15,484 634,844
Masco Corp........................................ 80,800 2,050,300
Mattel, Inc....................................... 81,400 1,068,375
Mead Corp......................................... 16,600 721,063
Monsanto Co....................................... 27,200 969,000
National Service Industries, Inc.................. 12,700 374,650
New York Times Co................................. 22,500 1,105,313
Newell Rubbermaid, Inc............................ 52,600 1,525,400
Nextel Communications, Inc. (b)................... 20,900 2,155,312
Norfolk Southern Corp............................. 45,900 940,950
Owens-Illinois, Inc............................... 12,000 300,750
Peco Energy Co.................................... 23,300 809,675
Pentair, Inc...................................... 17,596 677,446
Philip Morris Companies, Inc...................... 41,100 953,006
PNC Bank Corp..................................... 21,100 938,950
Praxair, Inc...................................... 11,700 588,656
Raytheon Co., Class B............................. 48,300 1,282,969
Reliaster Financial Corp.......................... 12,700 497,681
SBC Communications, Inc........................... 30,400 1,482,000
Southdown, Inc.................................... 17,836 920,784
St. Jude Medical, Inc. (b)........................ 36,600 1,123,162
Torchmark Corp.................................... 17,300 502,781
Tyson Foods, Inc.................................. 44,698 726,343
U.S. Bancorp...................................... 33,180 790,099
Ultramar Diamond Shamrock Corp.................... 26,702 605,802
Unisys Corp....................................... 20,900 667,494
United Healthcare Corp............................ 25,900 1,375,937
USG Corp.......................................... 11,900 560,788
Viad Corp......................................... 25,400 708,025
W.W. Grainger, Inc................................ 15,700 750,656
Watson Pharmaceutical Co.......................... 30,100 1,077,956
Wells Fargo and Co................................ 45,200 1,827,775
Westvaco Corp..................................... 21,000 685,125
Xerox Corp........................................ 62,900 1,427,044
York International Corp........................... 19,500 535,031
-----------
Total U.S. Equities............................... 109,876,729
-----------
Global (Ex-U.S.) Equities -- 16.35%
Australia -- 0.69%
Amcor Ltd......................................... 9,420 43,977
Amp Ltd........................................... 10,300 113,439
Boral Ltd......................................... 30,000 46,331
Brambles Industries Ltd........................... 2,670 73,599
Broken Hill Proprietary Co., Ltd.................. 15,310 200,387
CSR Ltd........................................... 26,070 63,123
Lend Lease Corp., Ltd............................. 8,732 121,941
National Australia Bank Ltd....................... 16,727 255,045
News Corp., Ltd................................... 27,389 265,086
News Corp., Ltd., Preferred....................... 10,036 85,707
Qantas Airways Ltd................................ 12,937 32,171
QBE Insurance Group Ltd........................... 18,241 84,752
Rio Tinto Ltd..................................... 6,845 146,569
Santos Ltd........................................ 21,990 59,720
Telstra Corp. Ltd................................. 65,000 352,198
Westpac Banking Corp., Ltd........................ 31,528 216,779
WMC Ltd........................................... 9,740 53,540
Woolworth's Ltd................................... 22,660 77,702
-----------
2,292,066
-----------
</TABLE>
<PAGE>
Global Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
---------- ----------
<S> <C> <C>
Austria -- 0.02%
Austria Tabakwerke AG................................. 1,400 $ 67,361
----------
Belgium -- 0.12%
Electrabel S.A........................................ 370 120,538
Fortis B.............................................. 8,027 288,216
----------
408,754
----------
Canada -- 0.30%
Agrium, Inc........................................... 7,140 55,101
Alcan Aluminum Ltd.................................... 2,420 99,048
Bank of Montreal...................................... 1,520 51,634
Canadian National Railway Co.......................... 2,920 76,858
Canadian Pacific Ltd.................................. 4,473 95,698
Hudson's Bay Co....................................... 6,410 75,968
Imasco, Ltd........................................... 2,390 65,790
Imperial Oil Ltd...................................... 2,110 45,070
Magna International, Inc., Class A.................... 1,360 57,631
Newbridge Networks Corp. (b).......................... 3,560 79,844
Nova Chemicals Corp................................... 2,704 52,634
Potash Corporation of Saskatchewan, Inc............... 860 40,887
Royal Bank of Canada.................................. 2,370 103,697
Shaw Communications, Inc., Class B.................... 1,980 65,009
TransCanada Pipelines Ltd............................. 1,890 16,278
Westcoast Energy, Inc................................. 1,350 21,534
----------
1,002,681
----------
Denmark -- 0.06%
Tele Danmark A/S...................................... 2,620 193,737
----------
Finland -- 0.37%
Merita Ltd., Class A.................................. 36,330 213,040
Nokia Oyj............................................. 3,060 552,119
Sampo Insurance Co., Ltd., Series A................... 6,000 208,699
UPM-Kymmene Corp...................................... 6,270 251,401
----------
1,225,259
----------
France -- 1.11%
Air France (b)........................................ 6,260 119,225
Air Liquide........................................... 1,645 274,054
Alcatel Alsthom....................................... 820 187,408
Axa................................................... 840 116,534
Banque Nationale de Paris............................. 4,889 448,905
Carrefour S.A......................................... 910 167,020
Cie de Saint Gobain................................... 1,037 194,072
CSF Thomson (b)....................................... 6,300 207,072
France Telecom S.A.................................... 4,240 558,046
Groupe Danone......................................... 740 173,575
Michelin, Class B..................................... 1,879 73,457
Rhone-Poulenc, Class A................................ 3,864 223,487
Schneider S.A......................................... 1,860 145,334
Societe Generale...................................... 1,155 267,444
Total Fina S.A., Class B (b).......................... 2,952 392,077
Vivendi............................................... 1,790 160,858
----------
3,708,568
----------
Germany -- 0.90%
Allianz AG............................................ 780 260,753
Bayer AG.............................................. 8,080 382,290
Bayerische Motoren Werke AG........................... 4,250 129,722
Continental AG........................................ 4,850 96,989
DaimlerChrysler AG (b)................................ 2,606 203,494
Deutsche Bank AG...................................... 2,940 247,109
Deutsche Telekom AG................................... 3,760 263,265
Dresdner Bank AG...................................... 2,870 155,064
Mannesmann AG......................................... 1,380 332,547
SAP AG................................................ 270 132,076
Siemens AG............................................ 4,250 541,043
Veba AG............................................... 5,039 244,977
----------
2,989,329
----------
Hong Kong -- 0.02%
Henderson Land Development Co., Ltd................... 12,000 77,031
----------
Italy -- 0.34%
Assicurazioni Generali................................ 4,800 157,817
Beni Stabili Spa...................................... 24,511 8,599
ENI Spa............................................... 19,000 103,989
ENI Spa ADR........................................... 3,070 169,234
La Rinascente Spa..................................... 12,740 81,348
San Paolo-imi Spa..................................... 13,511 182,700
Telecom Italia Mobile Spa............................. 22,000 244,565
Telecom Italia Spa.................................... 12,000 168,402
----------
1,116,654
----------
Japan -- 8.32%
Acom Co., Ltd......................................... 3,900 381,408
Asahi Bank Ltd........................................ 39,000 240,047
Bank of Tokyo-Mitsubushi Ltd.......................... 40,000 556,494
Benesse Corp.......................................... 1,300 312,442
Bridgestone Corp...................................... 13,000 285,770
Canon, Inc............................................ 20,000 793,317
Dai Nippon Printing Co., Ltd.......................... 14,000 222,949
Dai-Ichi Kangyo Bank.................................. 24,000 223,926
Daiichi Pharmaceutical Co., Ltd....................... 10,000 129,842
Daikin Industries Ltd................................. 11,000 149,382
Denso Corp............................................ 11,000 262,225
East Japan Railway Co................................. 70 376,826
Fanuc................................................. 8,900 1,131,249
Fuji Bank Ltd......................................... 18,000 174,627
Fujitsu............................................... 41,000 1,866,641
Honda Motor Co........................................ 17,000 631,137
Hoya Corp............................................. 5,000 393,239
Ito Yokado Co., Ltd................................... 4,000 433,784
Kamigumi Co., Ltd..................................... 30,000 126,032
Kao Corp.............................................. 13,000 370,231
Kirin Brewery Co., Ltd................................ 27,000 283,572
Kokuyo................................................ 6,000 79,722
Kuraray Co., Ltd...................................... 25,000 252,797
Matsushita Electric Industrial Co..................... 25,000 691,222
Mitsubishi Corp....................................... 25,000 192,712
Mitsubishi Estate Co., Ltd............................ 40,000 389,624
Murata Manufacturing Co., Inc......................... 1,000 234,478
NEC Corp.............................................. 32,000 761,272
NGK Insulators........................................ 25,000 185,384
Nintendo Corp., Ltd................................... 4,000 663,573
Nippon Steel Co....................................... 163,000 380,607
Nippon Telegraph & Telephone Corp..................... 93 1,590,054
Nissin Food Products Co............................... 7,000 164,477
</TABLE>
12
<PAGE>
Global Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
---------- -----------
<S> <C> <C>
Nomura Securities Co., Ltd........................... 41,000 $ 739,045
NTT Mobile Communications............................ 21 806,311
Obayashi Corp........................................ 34,000 160,442
Orix Corp............................................ 4,500 1,012,066
Osaka Gas Co......................................... 92,000 221,113
Rohm Co.............................................. 1,000 410,337
Sankyo Co., Ltd...................................... 18,000 369,303
Santen Pharmaceutical Co., Ltd....................... 8,000 131,698
Secom Co., Ltd....................................... 8,000 879,293
Sekisui House Ltd.................................... 16,000 141,468
Seven-Eleven Japan Co., Ltd.......................... 3,000 474,818
Softbank Corp........................................ 700 668,849
Sony Corp............................................ 6,300 1,864,980
Sumitomo Bank........................................ 28,000 382,707
Sumitomo Chemical Co................................. 53,000 248,547
Sumitomo Electric Industries......................... 10,000 115,383
Takeda Chemical Industries........................... 15,000 740,071
Takefuji Corp........................................ 1,900 237,419
TDK Corp............................................. 5,000 689,268
Tokio Marine & Fire Insurance Co..................... 22,000 256,851
Tokyo Electric Power................................. 9,700 259,665
Tokyo Electron Ltd................................... 3,000 410,337
Toyota Motor Corp.................................... 22,000 1,063,944
Yamato Transport Co., Ltd............................ 14,000 541,644
-----------
27,756,621
-----------
Netherlands -- 0.55%
ABN AMRO Holdings NV................................. 7,029 174,737
Elsevier NV.......................................... 18,470 219,579
ING Groep NV......................................... 8,536 512,873
Koninklijke KPN NV................................... 4,364 423,885
Royal Dutch Petroleum Co............................. 3,590 218,975
TNT Post Group NV.................................... 4,600 131,183
Unilever NV.......................................... 2,523 138,693
-----------
1,819,925
-----------
New Zealand -- 0.06%
Auckland International Airport Ltd................... 17,350 26,239
Carter Holt Harvey Ltd............................... 26,940 35,123
Lion Nathan Ltd...................................... 20,220 46,924
Telecom Corp. of New Zealand Ltd..................... 17,910 84,061
-----------
192,347
-----------
Norway -- 0.03%
Norske Skogindustrier ASA............................ 2,050 106,617
-----------
Portugal -- 0.08%
DP Electricidade de Portugal S.A..................... 7,600 132,023
Portugal Telecom..................................... 13,400 146,276
-----------
278,299
-----------
Singapore -- 0.14%
Singapore Press Holdings Ltd......................... 8,820 191,118
United Overseas Bank................................. 30,116 265,729
-----------
456,847
-----------
Spain -- 0.41%
Banco Popular S.A.................................... 3,627 235,411
Banco Santander Central Hispano, S.A................. 19,346 217,970
Endesa S.A........................................... 6,245 123,384
Tabacalera S.A....................................... 32,997 469,680
Telefonica S.A....................................... 13,223 328,716
-----------
1,375,161
-----------
Sweden -- 0.36%
Electrolux AB, B Shares.............................. 11,690 292,832
Ericsson, B Shares................................... 8,240 527,599
Investor AB, B Shares................................ 11,100 155,917
Nordbanken Holding AB................................ 14,590 85,392
Swedish Match AB..................................... 42,080 146,292
-----------
1,208,032
-----------
Switzerland -- 0.43%
Adecco S.A........................................... 207 160,355
Nestle S.A. (Reg.)................................... 165 300,684
Novartis AG (Reg.)................................... 254 370,995
Roche Holding AG (Gen.).............................. 32 377,835
Swisscom AG (Reg.)................................... 588 236,566
-----------
1,446,435
-----------
United Kingdom -- 2.04%
Allied Zurich PLC (b)................................ 13,052 153,458
AstraZeneca PLC...................................... 4,002 165,637
Barclays PLC......................................... 6,050 173,760
BP Amoco PLC......................................... 46,946 471,003
British Aerospace PLC................................ 11,302 74,684
British Airways PLC.................................. 17,000 110,692
British Telecommunications PLC....................... 20,000 487,703
Charter PLC.......................................... 27,676 118,205
Diageo PLC........................................... 27,209 218,388
FKI PLC.............................................. 67,040 259,317
Glaxo Wellcome PLC................................... 13,260 373,997
Greenalls Group PLC.................................. 17,358 82,529
House of Fraser PLC.................................. 30,780 37,702
HSBC Holdings PLC.................................... 13,000 180,817
Lloyds TSB Group PLC................................. 32,969 411,541
Marconi PLC.......................................... 26,360 465,419
Marks & Spencer PLC.................................. 32,060 152,301
National Power PLC................................... 33,500 193,562
Nycomed Amersham PLC................................. 22,844 141,933
Peninsular & Oriental Steam Navigation Co............ 7,540 125,533
Powergen PLC......................................... 18,000 129,098
Prudential Corp. PLC................................. 16,540 325,223
Reckitt & Colman PLC................................. 10,000 93,560
Reed International PLC............................... 28,010 209,242
Rio Tinto Ltd........................................ 11,190 269,623
RJB Mining PLC....................................... 26,590 13,714
Royal & Sun Alliance Insurance Group PLC............. 17,884 135,904
Scottish & Southern Energy PLC....................... 27,880 222,088
Tesco PLC............................................ 70,190 212,959
Thames Water PLC..................................... 8,997 111,944
Trinity Mirror PLC................................... 16,315 173,810
Unilever PLC......................................... 20,000 146,827
United News & Media PLC.............................. 19,490 247,842
Yorkshire Water PLC.................................. 22,080 124,553
-----------
6,814,568
-----------
Total Global (Ex-U.S.) Equities...................... 54,536,292
-----------
Emerging Markets Equities -- 5.49%
Brinson Emerging Markets Equity Fund (b)............. 1,580,129 18,326,811
-----------
Total Equities (Cost $169,721,051)................... 182,739,832
-----------
</TABLE>
13
<PAGE>
Global Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Face
Amount Value
---------- -----------
<S> <C> <C>
Bonds -- 43.00%
U.S. Bonds -- 24.07%
U.S. Corporate Bonds -- 2.58%
Avon Products, Inc., 6.900%, due 11/15/04....... $ 150,000 $ 146,710
Bell Atlantic Corp., 8.000%, due 10/15/29....... 78,000 79,183
Bombardier Capital, Inc., MTN, 7.300%,
due 12/15/02.................................. 565,000 558,974
Cendant Corp., 7.750%, due 12/01/03............. 640,000 639,058
Daimlerchrysler NA Hldg, 7.200%,
due 09/01/09.................................. 600,000 589,084
First Bank Corporate Card Master Trust, 97-1,
Class A, 6.400%, due 02/15/03................. 1,055,000 1,044,672
GATX Capital Corp., Series F, MTN, 6.923%,
due 04/25/01.................................. 1,000,000 1,000,118
Monsanto Co., 144A, 6.600%, due 12/01/28........ 545,000 468,374
Newcourt Credit Group 144A, 6.875%,
due 02/16/05.................................. 600,000 592,080
Noram Energy Corp., 6.375%, due 11/01/03........ 615,000 584,948
PanAmSat Corp., 6.000%, due 01/15/03............ 225,000 209,398
PanAmSat Corp., 6.375%, due 01/15/08............ 500,000 423,820
Service Corp., International, 6.000%,
due 12/15/05.................................. 500,000 371,595
TIme Warner, Inc., 6.625%, due 05/15/29......... 550,000 468,097
UCFC Home Equity Loan 97-C, Class A8,
FRN, 0.000%, due 09/15/27..................... 724,000 724,840
US Airways, Inc., 8.360%, due 07/20/20.......... 160,000 155,006
Waste Management, Inc., 6.875%,
due 05/15/09.................................. 640,000 541,069
-----------
8,597,026
-----------
Corporate Mortgage-
Backed Securities -- 2.03%
Asset Securitization Corp., 96-D, Class A1B,
7.210%, due 10/13/26.......................... 1,000,000 990,780
Norwest Asset Securities Corp., 96-2, Class A9,
7.000%, due 09/25/11.......................... 435,000 421,106
Prudential Home Mortgage Securities, 94-3,
Class A10, 6.500%, due 02/25/24............... 730,000 698,186
Residential Asset Securitization Trust,
7.500%, due 07/25/11.......................... 666,645 668,172
Residential Asset Securitization Trust, 97-A11,
Class A2, 7.000%, due 01/25/28................ 22,416 22,354
Residential Asset Securitization Trust, 97-A7,
Class A1, 7.250%, due 12/25/27................ 1,080,000 1,036,325
Residential Asset Securitization Trust, 97-A7,
Class A1, 7.500%, due 09/25/27................ 182,332 182,135
Structured Asset Securities Corp., 98-RF1,
Class A, 8.712%, due 03/15/27................. 1,006,602 1,037,114
Thrift Financial Corp., 11.250%, due 01/01/16... 51,564 53,115
Vendee Mortgage Trust, 98-2, Class 1G,
6.750%, due 06/15/28.......................... 1,760,000 1,624,621
-----------
6,733,908
-----------
International Dollar Bonds -- 1.68%
Banco Santiago S.A., 7.000%, due 07/18/07....... 650,000 583,195
Banque Centrale de Tunisie, 8.250%,
due 09/19/27.................................. 785,000 638,794
Ras Laffan Liquified Natural Gas Co., Ltd.,
144A, 8.294%, due 03/15/14.................... 1,000,000 939,270
Tyco International Corp., 144A, 6.821%,
due 03/05/01.................................. 3,500,000 3,499,346
-----------
5,660,605
-----------
U.S. Government Mortgage-
Backed Securities -- 2.49%
Fannie Mae Whole Loan, Series 95-W3,
Class A, 9.000%, due 04/25/25................. 18,814 19,431
Federal Home Loan Mortgage Corp.,
7.238%, due 05/01/26.......................... 102,664 103,052
Federal Home Loan Mortgage Corp. Gold
8.000%, due 11/01/22.......................... 65,126 65,890
8.000%, due 05/01/23.......................... 682,266 690,269
9.000%, due 03/01/24.......................... 463,466 485,216
Federal National Mortgage Association
6.375%, due 06/15/09.......................... 2,380,000 2,267,942
6.500%, due 03/01/19.......................... 279,418 266,932
8.500%, due 07/01/22.......................... 280,887 290,894
7.000%, due 10/01/28.......................... 936,705 905,932
7.000%, due 03/01/29.......................... 259,036 250,708
Federal National Mortgage Association Strips
8.000%, due 08/01/23.......................... 1,250,698 384,444
0.000%, due 02/01/28.......................... 950,639 616,926
FNCI, 8.000%, due 02/01/13...................... 499,070 509,155
Freddie Mac Series 194 Class PO, 0.000%,
due 04/01/28.................................. 710,398 439,332
Government National Mortgage Association
10.000%, due 09/15/00......................... 912 951
10.000%, due 05/15/01......................... 1,255 1,309
9.000%, due 11/15/04.......................... 11,291 11,606
8.000%, due 08/15/22.......................... 274,129 278,367
8.000%, due 11/15/22.......................... 204,231 207,477
7.000%, due 06/15/27.......................... 513,887 496,597
-----------
8,292,430
-----------
U.S. Government Obligations -- 15.29%
U.S. Treasury Bond
8.000%, due 11/15/21.......................... 435,000 493,453
8.750%, due 05/15/17.......................... 300,000 358,125
U.S. Treasury Inflation Indexed Note
3.625%, due 04/15/28.......................... 33,965,000 31,566,833
3.875%, due 04/15/29.......................... 18,530,000 17,708,009
U.S. Treasury Note
6.625%, due 05/15/07.......................... 400,000 401,625
6.625%, due 07/31/01.......................... 500,000 503,282
-----------
51,031,327
-----------
Total U.S. Bonds................................ 80,315,296
-----------
Shares
----------
High Yield Bonds -- 2.55%
Brinson High Yield Fund (b)..................... 617,548 8,501,106
-----------
Face
Amount
----------
Global (Ex-U.S.) Bonds -- 9.19%
Australia -- 0.68%
Queensland Treasury Corp. Global Notes
6.500%, due 06/14/05.....................AUD 2,600,000 1,664,856
8.000%, due 09/14/07........................ 900,000 618,466
-----------
2,283,322
-----------
</TABLE>
14
<PAGE>
Global Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Face
Amount Value
---------- -----------
<S> <C> <C>
Canada -- 0.95%
Government of Canada
7.000%, due 12/01/06......................CAD 1,290,000 $ 924,324
6.000%, due 06/01/08......................... 700,000 478,816
4.250%, due 12/01/21......................... 2,200,000 1,767,215
-----------
3,170,355
-----------
Denmark -- 0.82%
Depfa Pfandbrief Bank,
5.750%, due 03/04/09......................EUR 850,000 863,113
Kingdom of Denmark
7.000%, due 11/10/24......................DKK 2,350,000 351,974
7.000%, due 12/15/04......................... 5,480,000 791,546
9.000%, due 11/15/00......................... 3,800,000 532,299
8.000%, due 03/15/06......................... 1,200,000 182,673
-----------
2,721,605
-----------
France -- 1.22%
Government of France (OAT)
9.500%, due 01/25/01......................EUR 1,500,000 1,575,465
4.000%, due 10/25/09......................... 725,000 647,198
8.500%, due 12/26/12......................... 1,199,999 1,525,725
5.500%, due 04/25/29......................... 330,000 309,620
-----------
4,058,008
-----------
Germany -- 0.90%
Deutscheland Republic Series 96,
6.250%, due 04/26/06......................... 125,000 133,106
Bundesrepublik Deutscheland
8.375%, due 05/21/01......................... 1,535,000 1,625,459
6.250%, due 01/04/24......................... 750,000 779,989
DePfa Deutsche Pfandbriefbank AG,
4.750%, due 03/20/03......................... 480,000 479,803
-----------
3,018,357
-----------
Italy -- 0.38%
Buoni Poliennali Del Tes,
5.000%, due 05/01/08......................... 740,000 721,374
Republic of Italy (BTP),
12.000%, due 09/01/02........................ 470,000 541,795
-----------
1,263,169
-----------
Japan -- 1.18%
Government of Japan
3.000%, due 09/20/05......................JPY 90,000,000 970,264
4.600%, due 09/20/04......................... 260,000,000 2,970,313
-----------
3,940,577
-----------
Netherlands -- 0.75%
Government of Netherlands
3.000%, due 02/15/02......................EUR 1,330,000 1,297,190
5.500%, due 01/15/28......................... 360,000 336,324
7.500%, due 04/15/10......................... 550,000 634,842
7.750%, due 03/01/05......................... 200,000 224,838
-----------
2,493,194
-----------
Spain -- 0.60%
Government of Spain
6.150%, due 01/31/13......................... 400,001 415,083
3.250%, due 01/31/05......................... 1,720,000 1,577,484
-----------
1,992,567
-----------
Sweden -- 0.90%
Government of Sweden
6.750%, due 05/05/14......................SEK 8,800,000 1,108,105
10.250%, due 05/05/03........................ 14,000,000 1,881,598
-----------
2,989,703
-----------
United Kingdom -- 0.82%
Halifax PLC, Series EMTN, 8.750%,
due 07/10/06..............................GBP 720,000 1,257,385
U.K. Treasury,
5.750%, due 12/07/09......................... 600,000 987,332
7.250%, due 12/07/07......................... 270,000 474,761
-----------
2,719,478
-----------
Total Global (Ex-U.S.) Bonds................... 30,650,335
-----------
Shares
----------
Emerging Markets Bonds -- 7.19%
Brinson Emerging Markets Debt Fund (b)......... 1,039,012 23,996,711
-----------
Total Bonds (Cost $138,116,867)................ 143,463,448
-----------
Short-Term Investments -- 20.60%
Investment Companies -- 3.60%
Brinson Supplementary Trust U.S. Cash
Management Prime Fund........................ 12,006,635 12,006,635
----------
Face
Amount
-----------
U.S. Corporate Bonds -- 11.11%
Centex Corp., Series A, MTN
6.684%, due 06/30/00......................... $5,000,000 5,000,000
Conagra, Inc., 144A
6.320%, due 06/12/00......................... 1,300,000 1,299,350
Enron Corp. 6.634%, due 03/30/00............... 5,000,000 5,000,000
GATX Capital Corp. 6.500%, due 11/01/00........ 1,500,000 1,506,478
General Motors Corporate Notes
9.375%, due 04/01/00......................... 2,000,000 2,019,442
Hertz Corp. 6.625%, due 07/15/00............... 2,500,000 2,512,990
Kroger Co. 7.063%, due 10/01/00................ 5,000,000 4,999,757
NorAm Energy Corp.
7.500%, due 08/01/00......................... 2,000,000 2,013,165
Raytheon Co. 6.300%, due 08/15/00.............. 3,000,000 3,015,108
Safeway, Inc. 5.750%, due 11/15/00............. 4,000,000 3,981,669
Supevalue Stores, Inc., Series A, MTN
6.500%, due 10/06/00......................... 2,000,000 2,004,250
Union Pacific Corp., Series E, MTN
9.680%, due 04/12/00......................... 1,200,000 1,211,397
Vastar Resources, Inc.
6.000%, due 04/20/00......................... 2,500,000 2,503,213
-----------
37,066,819
-----------
U.S. Government Obligations -- 1.12%
U.S. Treasury Bill, 0.00%, due 02/03/00........ 3,765,000 3,748,694
-----------
Commercial Paper -- 4.77%
Arrow Electronics, Inc.
5.500%, due 01/03/00......................... 2,300,000 2,299,297
Dynegy, Inc. 5.500%, due 01/03/00.............. 4,574,000 4,572,603
FMC Corp. 5.750%, due 01/03/00................. 5,000,000 4,998,403
Safeway, Inc. 5.500%, due 01/03/00............. 4,044,000 4,042,764
-----------
15,913,067
-----------
</TABLE>
15
<PAGE>
Global Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Face
Amount Value
---------- ------------
<S> <C> <C>
Total Short-Term Investments
(Cost $73,082,365)........................... $ 68,735,215
------------
Total Investments
(Cost $380,920,283) -- 118.37% (a)........... 394,938,495
Liabilities, less cash and
other assets -- (18.37%)..................... (61,291,344)
------------
Net Assets -- 100%............................. $333,647,151
============
</TABLE>
See accompanying notes to schedule of investments.
16
<PAGE>
Global Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $380,920,283; and net
unrealized appreciation consisted of:
Gross unrealized appreciation............................... $ 35,127,094
Gross unrealized depreciation............................... (21,108,882)
------------
Net unrealized appreciation............................... $ 14,018,212
============
(b) Non-income producing security.
FRN: Floating Rate Note -- The rate disclosed is that in effect at December
31, 1999.
TBA: Security is subject to delayed delivery.
144A: 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 buyers. At December 31, 1999, the
value of these securities amounted to $4,231,891 or 1.27% of net assets.
Resettable Perpetual Preferred: A bond with either no maturity date or a
maturity date that is so far in the future that the bond will pay
interest indefinitely. The issuer generally retains the right to call
such a bond.
FORWARD FOREIGN CURRENCY CONTRACTS
The Global Fund had the following open forward foreign currency contracts as of
December 31, 1999:
<TABLE>
<CAPTION>
Settlement Local Current Unrealized
Date Currency Value Gain/(Loss)
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Forward Foreign Currency Buy Contracts
Australian Dollar..................................... 02/08/00 33,300,000 $21,803,182 $ 48,316
British Pound......................................... 02/08/00 11,550,000 18,615,821 (219,353)
Canadian Dollar....................................... 02/08/00 4,600,000 3,172,414 50,108
Danish Krone.......................................... 02/08/00 18,000,000 2,430,984 (181,157)
Euro.................................................. 02/08/00 40,000,000 40,213,534 (2,899,481)
Japanese Yen.......................................... 02/08/00 578,000,000 5,682,558 90,963
Swedish Krona......................................... 02/08/00 112,800,000 13,239,903 (695,100)
Swiss Franc........................................... 02/08/00 5,500,000 3,451,673 (310,940)
Forward Foreign Currency Sale Contracts
Australian Dollar..................................... 02/08/00 6,700,000 4,386,826 (113,968)
British Pound......................................... 02/08/00 17,200,000 27,722,362 202,368
Canadian Dollar....................................... 02/08/00 4,600,000 3,172,414 (111,461)
Danish Krone.......................................... 02/08/00 30,000,000 4,051,640 308,826
Euro.................................................. 02/08/00 8,250,000 8,294,041 497,671
Japanese Yen.......................................... 02/08/00 3,277,000,000 32,217,550 (1,851,820)
Swedish Krona......................................... 02/08/00 17,500,000 2,054,063 86,741
------------
Total.............................................. $ (5,098,287)
=============
</TABLE>
FUTURES CONTRACTS
The Brinson Global Fund had the following open futures contracts as of December
31, 1999:
<TABLE>
<CAPTION>
Expiration Cost/ Current Unrealized
Date Proceeds Value Loss
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
U.S. Interest Rate Futures Buy Contracts
5 Year U.S. Treasury Notes, 385 contracts............. March 2000 $38,111,273 $37,742,031 $ (369,242)
10 Year U.S. Treasury Notes, 74 contracts............. March 2000 7,212,627 7,093,593 (119,034)
30 Year U.S. Treasury Notes, 63 contracts............. March 2000 5,872,691 5,729,062 (143,629)
Index Future Sale Contracts
S&P 500 Index, 119 contracts.......................... March 2000 42,843,542 44,154,950 (1,311,408)
-----------
Total............................................. $(1,943,313)
===========
</TABLE>
The market value of investments pledged to cover margin requirements for the
open futures positions at December 31, 1999 was $3,748,694.
See accompanying notes to financial statements.
17
<PAGE>
Global Fund -- Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<TABLE>
ASSETS:
<S> <C>
Investments, at value:
Unaffiliated issuers (Cost $319,565,037)..................... $324,366,271
Affiliated issuers (Cost $61,355,246)........................ 70,572,224
Foreign currency, at value (Cost $152,313)..................... 151,741
Receivables:
Investment securities sold................................... 251,690
Dividends.................................................... 257,093
Interest..................................................... 1,604,830
------------
TOTAL ASSETS............................................... $397,203,849
------------
LIABILITIES:
Payables:
Securities loaned............................................ 57,479,350
Investment advisory fees..................................... 228,226
Due to custodian bank........................................ 279,049
Variation margin............................................. 277,007
Accrued expenses............................................. 194,779
Net unrealized depreciation on forward foreign
currency contracts........................................... 5,098,287
------------
TOTAL LIABILITIES.......................................... 63,556,698
------------
NET ASSETS....................................................... $333,647,151
============
NET ASSETS CONSIST OF:
Paid in capital................................................ $324,670,999
Accumulated distribution in excess of net investment income.... (411,874)
Accumulated net realized gain.................................. 2,448,747
Net unrealized appreciation.................................... 6,939,279
------------
NET ASSETS..................................................... $333,647,151
============
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per
share (Based on net assets of $318,094,279 and 28,489,881
shares issued and outstanding)............................. $ 11.17
============
Brinson Class N:
Net asset value, offering price and redemption price per
share (Based on net assets of $1,331,490 and 119,546
shares issued and outstanding)............................. $ 11.14
============
UBS Investment Funds Class:
Net asset value, offering price and redemption price per
share (Based on net assets of $14,221,382 and 1,279,339
shares issued and outstanding)............................. $ 11.12
============
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
Global Fund -- Financial Statements
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest (net of $4,739 for foreign taxes withheld;
including securities lending income of $155,319)............. $ 4,674,023
Dividends (net of $28,430 for foreign taxes withheld).......... 1,427,928
------------
TOTAL INCOME............................................... 6,101,951
------------
EXPENSES:
Advisory....................................................... 1,641,535
Administration................................................. 143,881
Professional................................................... 77,412
Printing....................................................... 66,934
Distribution................................................... 66,831
Custodian...................................................... 48,131
Other.......................................................... 52,368
------------
TOTAL EXPENSES............................................. 2,097,092
Earnings credits........................................... (1,963)
------------
NET EXPENSES............................................... 2,095,129
------------
NET INVESTMENT INCOME...................................... 4,006,822
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments.................................................. 10,602,009
Futures contracts............................................ (3,838,627)
Foreign currency transactions................................ 144,805
------------
Net realized gain.......................................... 6,908,187
------------
Change in net unrealized appreciation or depreciation on:
Investments and foreign currency............................. (11,930,745)
Futures contracts............................................ 697,060
Forward contracts............................................ (6,506,307)
Translation of other assets and liabilities denominated
in foreign currency........................................ 16,926
------------
Change in net unrealized appreciation or depreciation........ (17,723,066)
------------
Net realized and unrealized loss............................. (10,814,879)
------------
Net decrease in net assets resulting from operations........... $ (6,808,057)
============
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
Global Fund -- Financial Statements
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net decrease in net assets resulting from operations.......... $ (6,808,057)
Adjustments to reconcile net decrease in net assets resulting
from operations to net cash used for operating activities:
Net realized and unrealized loss on investments............. 10,814,879
Decrease in receivable for investment securities sold....... 8,642,091
Decrease in dividends and interest receivable............... 1,372,338
Decrease in payable for securities purchased................ (25,213,162)
Decrease in payable for investment advisory fee............. (93,085)
Increase in payable to Fund custodian....................... 279,049
Decrease in accrued expenses................................ (10,753)
Decrease in variation margin................................ (248,118)
Net amortization of premium................................. 385,052
-------------
Net cash used for operating activities.................... (10,879,766)
-------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Purchases of investments...................................... (321,094,569)
Proceeds from sales of investments............................ 524,162,878
Net realized loss on futures contracts........................ (3,838,627)
Net realized gain on foreign currency transactions............ 144,805
Change in net unrealized appreciation or depreciation on
futures contracts........................................... 697,060
Change in net unrealized appreciation or depreciation on
other assets and liabilities................................ 16,926
Net decrease in foreign currency.............................. 2,223,501
-------------
Net cash provided by investing activities................. 202,311,974
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net capital shares transactions............................... (151,332,750)
Net decrease from securities lending.......................... (39,994,824)
Dividends and capital gain distributions paid................. (1,895,987)
-------------
Net cash used for financing activities.................... (193,223,561)
-------------
Net decrease in cash............................................ (1,791,353)
CASH AT BEGINNING OF PERIOD..................................... 1,791,353
-------------
CASH AT END OF PERIOD........................................... $ --
=============
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
Global Fund -- Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Year Ended
(Unaudited) June 30, 1999
---------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................... $ 4,006,822 $ 12,109,444
Net realized gain................................................... 6,908,187 44,693,620
Change in net unrealized appreciation or depreciation............... (17,723,066) (37,993,047)
------------- -------------
Net increase (decrease) in net assets resulting from operations..... (6,808,057) 18,810,017
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income............................ (4,006,822) (12,109,444)
Distributions in excess of net investment income.................... (1,164,990) (6,197,274)
Distributions from net realized gain................................ (15,248,821) (33,009,121)
------------- -------------
Total distributions to shareholders*................................ (20,420,633) (51,315,839)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................... 155,204,510 410,521,495
Shares issued on reinvestment of distributions...................... 18,524,646 47,914,179
Shares redeemed..................................................... (305,569,570) (632,556,320)
------------- -------------
Net decrease in net assets resulting from capital
share transactions................................................ (131,840,414) (174,120,646)
------------- -------------
TOTAL DECREASE IN NET ASSETS...................................... (159,069,104) (206,626,468)
------------- -------------
NET ASSETS:
Beginning of period................................................. 492,716,255 699,342,723
------------- -------------
End of period (including undistributed net investment income of
$(411,874) and $753,116, respectively)............................ $ 333,647,151 $ 492,716,255
============= =============
*DISTRIBUTIONS BY CLASS:
Distributions from and in excess of net investment income:
Brinson Class I..................................................... $ (4,971,880) $(17,500,696)
Brinson Class N..................................................... (18,730) (753,377)
UBS Investment Funds Class.......................................... (181,202) (52,645)
Distributions from net realized gain:
Brinson Class I..................................................... (14,468,448) (31,201,392)
Brinson Class N..................................................... (59,854) (1,710,286)
UBS Investment Funds Class.......................................... (720,519) (97,443)
------------- ------------
Total distributions to shareholders................................... $ (20,420,633) $(51,315,839)
============= ============
</TABLE>
See accompanying notes to financial statements.
21
<PAGE>
Global Fund -- Financial Highlights
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended Year Ended June 30,
December 31, 1999 --------------------------------------------------------------
Brinson Class I (Unaudited) 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......... $ 12.02 $ 12.77 $ 13.13 $ 12.22 $ 11.35 $ 10.43
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income..................... 0.12* 0.30 0.37 0.38 0.44 0.43
Net realized and unrealized gain (loss)... (0.27) 0.25 0.62 1.79 1.37 0.86
-------- -------- -------- -------- -------- --------
Total income (loss) from
investment operations................ (0.15) 0.55 0.99 2.17 1.81 1.29
-------- -------- -------- -------- -------- --------
Less distributions:
Distributions from and in excess of net
investment income....................... (0.18) (0.46) (0.65) (0.61) (0.62) (0.27)
Distributions from and in excess of net
realized gains.......................... (0.52) (0.84) (0.70) (0.65) (0.32) (0.10)
-------- -------- -------- -------- -------- --------
Total distributions.................. (0.70) (1.30) (1.35) (1.26) (0.94) (0.37)
-------- -------- -------- -------- -------- --------
Net asset value, end of period................ $ 11.17 $ 12.02 $ 12.77 $ 13.13 $ 12.22 $ 11.35
======== ======== ======== ======== ======== ========
Total return (non-annualized)................. (1.19)% 4.76% 8.28% 18.79% 16.38% 12.57%
Ratios/Supplemental data:
Net assets, end of period (in 000s)......... $318,094 $469,080 $667,745 $586,667 $457,933 $365,678
Ratio of gross expenses to average
net assets................................ 0.99%** 0.96% 0.94% 0.99% 1.04% 1.09%
Ratio of net investment income to average
net assets................................ 1.98%** 2.23% 2.70% 3.03% 3.69% 4.27%
Portfolio turnover rate..................... 36% 105% 88% 150% 142% 238%
</TABLE>
* The net investment income per share data was determined by using average
shares outstanding throughout the period
** Annualized
See accompanying notes to financial statements.
22
<PAGE>
Global Fund -- Financial Highlights
The table below sets forth financial data for one share of capital stock
outstanding throughout the period presented.
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Year Ended Year Ended
Brinson Class N (Unaudited) June 30, 1999 June 30, 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period.................................... $11.99 $12.75 $13.13
------ ------ ------
Income (loss) from investment operations:
Net investment income............................................... 0.10* 0.27 0.63
Net realized and unrealized gain (loss)............................. (0.27) 0.25 0.32
------ ------ ------
Total income (loss) from investment operations................... (0.17) 0.52 0.95
------ ------ ------
Less distributions:
Distributions from and in excess of net investment income........... (0.16) (0.44) (0.63)
Distributions from net realized gain................................ (0.52) (0.84) (0.70)
------ ------ ------
Total distributions.............................................. (0.68) (1.28) (1.33)
------ ------ ------
Net asset value, end of period.......................................... $11.14 $11.99 $12.75
====== ====== ======
Total return (non-annualized)........................................... (1.33)% 4.47% 7.90%
Ratios/Supplemental data:
Net assets, end of period (in 000s)................................... $1,331 $1,576 $1,163
Ratio of gross expenses to average net assets......................... 1.23%** 1.21% 1.19%
Ratio of net investment income to average net assets.................. 1.73%** 1.98% 2.45%
Portfolio turnover rate............................................... 36% 105% 88%
</TABLE>
* The net investment income per share data was determined by using average
shares outstanding throughout the period
** Annualized
See accompanying notes to financial statements.
23
<PAGE>
Global Equity Fund
[INSERT BRINSON LOGO]
The Brinson Global Equity Fund Class I has provided an annualized return of
11.94% since its inception on January 31, 1994. Over the same period, the
annualized return of the benchmark, the MSCI World Equity (Free) Index, was
16.52%. The Fund's performance was achieved with a volatility of 10.76%,
somewhat less risk than its benchmark's volatility of 12.64%. For the full year
the Fund increased 12.87%, lagging the index's unhedged return of 25.12%. Most
regions experienced strong performance in dollar-hedged terms, led by Asia
(Ex-Japan) and Japan and followed by Europe (Ex-U.K.). We gained from our mid-
year decision to increase Japan to neutral and then to an overweight. European
market allocation also added value, as did the underweight to North America. The
overweights to the U.K. and Australia and underweight of Asia (Ex-Japan)
detracted. Our currency management also reduced returns, due to the yen's
strength and euro's weakness.
Global returns in the latter part of the year were largely fueled by investor
enthusiasm for technology and telecommunications stocks, especially those with
an Internet connection. By year-end, growth stocks had significantly overtaken
value stocks on a global basis. In our view, many of these stocks have been bid
up to levels that far exceed underlying value. Thus, the U.S. portion of the
Fund is positioned in industries and stocks that enjoy less lofty valuations and
offer greater upside potential.
The Pacific (Ex-Japan) region has begun to rebound from last year's currency and
banking crises. Japan has shown tentative signs of an economic revival, fueled
by government spending packages and extremely low interest rates. There are also
encouraging signs of restructuring, as well as consolidation in the banking and
financial sectors, easing the fears of a financial meltdown that has weighed
down investor sentiment for much of the decade.
Our strategies position us to take advantage of current valuation discrepancies.
Our largest underweight is to North America and largest overweight to Japan,
while Europe and the U.K. are neutral. Our currency strategy, unsuccessful this
year, maintains an underweight to the expensive yen and pound sterling, with
overweights in the very cheap Euro and the Australian dollar. We are overweight
industrials and materials, where values are most compelling. Our most important
underweights are in those sectors that have risen significantly: information
technology, energy and telecommunications services.
24
<PAGE>
Global Equity Fund
[BRINSON LOGO]
<TABLE>
<CAPTION>
Total Return
- ----------------------------------------------------------------------------------------------------------------------
6 months 1 year 3 years 5 years 1/31/94*
ended ended ended ended to
12/31/99 12/31/99 12/31/99 12/31/99 12/31/99
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brinson Global Equity Fund Class I 5.41% 12.87% 12.53% 15.29% 11.94%
- ----------------------------------------------------------------------------------------------------------------------
MSCI World Equity (Free) Index 15.25 25.12 21.81 20.09 16.52
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
*Performance inception date of the Brinson Global Equity Fund Class I.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
- --------------------------------------------------------------------------------
This chart shows the growth in the value of an investment in the Brinson Global
Equity Fund Class I and the MSCI World Equity (Free) Index if you had invested
$1,000,000 on January 31, 1994, and had reinvested all your income dividends and
capital gain distributions through December 31, 1999. No adjustment has been
made for any income taxes payable by shareholders on income dividends and
capital gain distributions. Past performance is no guarantee of future results.
Share price and return will vary with market conditions; investors may realize a
gain or loss upon redemption.
Brinson Global Equity Fund Class I
vs. MSCI World Equity (Free) Index
Wealth Value with Dividends Reinvested
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Brinson Global Equity MSCI World Equity
--------------------- -----------------
<S> <C> <C>
12/31/94........ $ 956,520 $ 989,551
12/31/95........ 1,166,324 1,200,236
12/31/96........ 1,367,688 1,367,286
12/31/97........ 1,514,304 1,584,937
12/31/98........ 1,726,828 1,975,069
12/31/99........ 1,949,056 2,471,305
</TABLE>
1/31/94 = $1,000,000 Data through 12/31/99
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
25
<PAGE>
Global Equity Fund
[BRINSON FUND]
<TABLE>
<CAPTION>
Total Return
- -------------------------------------------------------------------------------
6 months 1 year 6/30/97*
ended ended to
12/31/99 12/31/99 12/31/99
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Brinson Global Equity Fund Class N 5.29% 12.59% 9.51%
- -------------------------------------------------------------------------------
MSCI World Equity (Free) Index 15.25 25.12 19.61
- -------------------------------------------------------------------------------
</TABLE>
*Inception date of the Brinson Global Equity Fund Class N.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
- -------------------------------------------------------------------------------
This chart shows the growth in the value of an investment in the Brinson Global
Equity Fund Class N and the MSCI World Equity (Free) Index if you had invested
$1,000,000 on June 30, 1997, and had reinvested all your income dividends and
capital gain distributions through December 31, 1999. No adjustment has been
made for any income taxes payable by shareholders on income dividends and
capital gain distributions. Past performance is no guarantee of future results.
Share price and return will vary with market conditions; investors may realize
a gain or loss upon redemption.
Brinson Global Equity Fund Class N
vs. MSCI World Equity (Free) Index
Wealth Value with Dividends Reinvested
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Brinson Global Equity MSCI World Equity
Fund Class N (Free) Index
<S> <C> <C>
12/31/97.......... $ 981,339 $1,003,556
6/30/98.......... 1,085,985 1,171,793
12/31/98.......... 1,115,067 1,250,581
6/30/99.......... 1,192,373 1,357,727
12/31/99.......... 1,255,095 1,564,789
</TABLE>
6/30/97 = $1,000,000 Data through 12/31/99
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
26
<PAGE>
Global Equity Fund
[BRINSON LOGO]
Market Allocation
As of December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Current
Benchmark Strategy
- ----------------------------------------------
<S> <C> <C>
U.S. 49.0% 38.0%
Australia 1.2 3.8
Austria 0.1 0.0
Belgium 0.4 0.7
Canada 2.1 1.2
Denmark 0.4 0.3
Finland 1.5 1.9
France 5.0 5.8
Germany 5.1 4.1
Hong Kong 1.1 0.2
Ireland 0.2 0.0
Italy 2.1 1.4
Japan 13.4 23.1
Netherlands 2.6 2.0
New Zealand 0.1 0.0
Norway 0.2 0.0
Portugual 0.2 0.2
Singapore 0.5 0.7
Spain 1.3 2.6
Sweden 1.3 2.6
Switzerland 2.8 1.9
United Kingdom 9.4 9.5
Cash Reserves 0.0 0.0
- --------------------------------------------
100.0% 100.0%
</TABLE>
Top Ten U.S. Equity Holdings
As of December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Percent of
Net Assets
- ------------------------------------------------------
<S> <C>
1. New York Times Co. 1.79%
2. CIGNA Corp. 1.75
3. First Data Corp. 1.54
4. FDX Corp. 1.41
5. General Instrument Corp. 1.37
6. Compuware Corp. 1.34
7. Burlington Northern Santa Fe Group 1.29
8. St. Jude Medical, Inc. 1.10
9. Electronic Data Systems Corp. 1.07
10. Allergan, Inc. 0.99
- ------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Currency Allocation
As of December 31, 1999 (Unaudited)
Current
Benchmark Strategy
- ------------------------------------------------
<S> <C> <C>
U.S. 49.0% 46.1%
Australia 1.2 7.3
Canada 2.1 2.1
Denmark 0.4 0.4
Euro 18.5 28.5
Hong Kong 1.1 0.0
Japan 13.4 5.4
New Zealand 0.1 0.0
Norway 0.2 0.2
Singapore 0.5 0.5
Sweden 1.3 5.3
Switzerland 2.8 2.8
United Kingdom 9.4 1.4
- ------------------------------------------------
100.0% 100.0%
</TABLE>
<TABLE>
<CAPTION>
Top Ten Global (Ex-U.S.) Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- ------------------------------------------------
<S> <C>
1. Sony Corp. 2.39%
2. Fujitsu 1.54
3. Banque Nationale de Paris 1.53
4. Seven-Eleven Japan Co., Ltd. 1.33
5. TDK Corp. 1.33
6. Nippon Telegraph & Telephone Corp. 1.24
7. Bayer AG 1.22
8. Orix Corp. 1.16
9. Murata Manufacturing Co., Ltd. 1.13
10. Siemens AG 1.09
- ------------------------------------------------
</TABLE>
27
<PAGE>
Global Equity Fund
[BRINSON LOGO]
Industry Diversification
<TABLE>
<CAPTION>
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- ---------------------------------------------
<S> <C>
U.S. EQUITIES
Capital Investment
Capital Goods....................... 1.81%
Technology.......................... 6.37
------
8.18
Basic Industries
Chemicals........................... 0.80
Housing/Paper....................... 3.04
Metals.............................. 1.39
------
5.23
Consumer
Non-Durables........................ 0.84
Retail/Apparel...................... 1.22
Autos/Durables...................... 1.45
Health: Drugs....................... 2.83
Health: Non-Drugs................... 2.25
------
8.59
Financial
Banks............................... 2.58
Non-Banks........................... 2.52
------
5.10
Utilities
Electric............................ 2.87
Telephone........................... 1.62
------
4.49
Transportation........................ 2.70
Services/Misc......................... 3.97
------
Total U.S. Equities............... 38.26*
GLOBAL (EX-U.S.) EQUITIES
Aerospace & Military.................. 0.36%
Airlines.............................. 0.43
Appliances & Households............... 2.91
Autos/Durables........................ 1.07
Banking............................... 7.41
Beverages and Tobacco................. 1.32
Broadcasting & Publishing............. 2.88
Building Materials.................... 0.23
Business & Public Service............. 3.45
Chemicals............................. 2.20
Data Processing....................... 2.40
Electric Components................... 2.78
Electronics........................... 5.26
Energy................................ 0.86
Financial Services.................... 3.31
Food & House Products................. 1.80
Forest Products....................... 0.99
Health & Personal Care................ 3.33
Industrial Components................. 0.61
Insurance............................. 1.40
Merchandising......................... 2.11
Multi-Industry........................ 0.28
Non-Ferrous Metals.................... 0.30
Real Estate........................... 0.88
Recreation............................ 0.98
Telecommunications.................... 6.16
Transportation........................ 1.64
Utilities............................. 2.53
------
Total Global (Ex-U.S.) Equities... 59.88
SHORT-TERM INVESTMENTS................ 0.49*
------
TOTAL INVESTMENTS................. 98.63
CASH AND OTHER ASSETS,
LESS LIABILITIES..................... 1.37
------
NET ASSETS........................ 100.00%
======
- ---------------------------------------------
</TABLE>
*The Fund held a long position in stock index futures on December 31, 1999 which
increased U.S. Equity exposure from 38.26% to 39.15%. This adjustment resulted
in a net decrease in the Fund's exposure to Short-Term Investments from 0.49% to
(0.40)%.
28
<PAGE>
Global Equity Fund--Schedule of Investments
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
------ -----------
<S> <C> <C>
Equities--98.14%
U.S. Equities--38.26%
Advanced Micro Devices, Inc. (b)............ 9,000 $ 260,438
Allergan, Inc. (b).......................... 16,600 825,850
Alza Corp. (b).............................. 6,800 235,450
American Standard Cos., Inc. (b)............ 9,100 417,463
Baxter International, Inc................... 9,500 596,719
Burlington Northern Santa Fe Corp........... 44,300 1,074,275
Central & South West Corp................... 31,600 632,000
Champion International Corp................. 7,600 470,725
CIGNA Corp.................................. 18,000 1,450,125
Compaq Computer Corp........................ 27,300 738,806
Computer Sciences Corp. (b)................. 8,500 804,312
Compuware Corp.............................. 29,800 1,110,050
Corning, Inc................................ 4,400 567,325
Delhaize America, Inc....................... 33 670
Dial Corp................................... 15,100 367,119
Dominion Resources, Inc..................... 12,800 502,400
Electronic Data Systems Corp................ 13,300 890,269
Eli Lilly and Co............................ 3,500 232,750
Emerson Electric Co......................... 12,600 722,925
FDX Corp. (b)............................... 28,500 1,166,719
Federal-Mogul Corp.......................... 16,900 340,113
Federated Department Stores, Inc............ 4,500 227,531
First Data Corp............................. 26,004 1,282,322
Fleet Boston Financial Corp................. 16,829 585,860
Fort James Corp............................. 15,300 418,838
Gateway, Inc................................ 5,400 389,138
General Instrument Corp. (b)................ 13,400 1,139,000
Genzyme Corp. (b)........................... 3,600 162,000
GreenPoint Financial Corp................... 14,200 338,138
Household International, Inc................ 14,300 532,675
Illinois Tool Works, Inc.................... 10,600 716,162
Kimberly-Clark Corp......................... 12,500 815,625
Lafarge Corp................................ 4,800 132,600
Lear Corp. (b).............................. 10,600 339,200
Lexmark International Group, Inc............ 2,900 262,450
Lincoln National Corp....................... 6,200 248,000
Lockheed Martin Corp........................ 12,902 282,231
Masco Corp.................................. 17,300 438,987
Mattel, Inc................................. 19,200 252,000
Monsanto Co................................. 12,100 431,063
New York Times Co........................... 30,200 1,483,575
Newell Rubbermaid, Inc...................... 9,100 263,900
Nextel Communications, Inc. (b)............. 5,700 587,812
Peco Energy Co.............................. 15,110 525,072
Pentair, Inc................................ 4,700 180,950
Philip Morris Companies, Inc................ 14,100 326,944
PNC Bank Corp............................... 7,200 320,400
Praxair, Inc................................ 8,100 407,531
Raytheon Co., Class B....................... 17,900 475,469
Reliaster Financial Corp.................... 4,000 156,750
SBC Communications, Inc..................... 15,700 765,375
Southdown, Inc.............................. 5,176 267,211
St. Jude Medical, Inc. (b).................. 29,700 911,419
Torchmark Corp.............................. 8,200 238,313
U.S. Bancorp................................ 11,363 270,581
Unisys Corp................................. 6,700 213,981
United Healthcare Corp...................... 3,700 196,563
W.W. Grainger, Inc.......................... 11,000 525,937
Watson Pharmaceutical Co.................... 17,400 623,137
Wells Fargo and Co.......................... 15,500 626,781
-----------
Total U.S. Equities......................... 31,768,024
-----------
Global (Ex-U.S.) Equities--59.88%
Australia--3.46%
Broken Hill Proprietary Co., Ltd............ 32,150 420,800
Lend Lease Corp., Ltd....................... 12,394 173,081
National Australia Bank Ltd................. 40,875 623,241
News Corp., Ltd............................. 69,640 674,015
QBE Insurance Group Ltd..................... 28,778 133,709
Rio Tinto Ltd............................... 11,763 251,876
Westpac Banking Corp., Ltd.................. 70,045 481,613
Woolworth's Ltd............................. 32,600 111,787
-----------
2,870,122
-----------
Belgium--0.71%
Electrabel S.A.............................. 1,170 381,161
Fortis B.................................... 5,752 206,530
-----------
587,691
-----------
Canada--1.30%
Agrium, Inc................................. 6,200 47,847
Canadian National Railway Co................ 9,000 236,891
Newbridge Networks Corp. (b)................ 16,900 379,036
Potash Corporation of Saskatchewan, Inc..... 3,000 142,631
Shaw Communications, Inc., Class B.......... 8,400 275,794
-----------
1,082,199
-----------
Denmark--0.30%
Tele Danmark A/S............................ 3,400 251,414
-----------
Finland--1.81%
Nokia Oyj................................... 2,500 451,078
Sampo Insurance Co., Ltd., Series A......... 6,500 226,090
UPM-Kymmene Corp............................ 20,600 825,974
-----------
1,503,142
-----------
France--5.28%
Accor S.A.
Air Liquide................................. 1,478 246,232
Alcatel Alsthom............................. 420 95,989
Banque Nationale de Paris................... 13,792 1,266,374
Carrefour S.A............................... 1,360 249,613
Cie de Saint Gobain......................... 1,026 192,013
CSF Thomson (b)............................. 9,095 298,940
France Telecom S.A.......................... 5,480 721,248
Groupe Danone............................... 1,110 260,362
Michelin, Class B........................... 2,741 107,155
Rhone-Poulenc, Class A...................... 7,110 411,230
Total Fina S.A., Class B (b)................ 2,209 293,394
Vivendi..................................... 2,719 244,342
-----------
4,386,892
-----------
Germany--3.89%
Bayer AG.................................... 21,390 1,012,027
Continental AG.............................. 19,950 398,956
DaimlerChrysler AG (b)...................... 2,325 181,552
Mannesmann AG............................... 1,450 349,415
</TABLE>
29
<PAGE>
GLOBAL EQUITY FUND--SCHEDULE OF INVESTMENTS
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
------ -----------
<S> <C> <C>
Siemens AG.................................. 7,120 $ 906,406
Veba AG..................................... 7,910 384,554
-----------
3,232,910
-----------
Hong Kong--0.19%
Henderson Land Development Co., Ltd......... 25,000 160,481
-----------
Italy--1.12%
San Paolo-imi Spa........................... 17,811 240,846
Telecom Italia Mobile Spa................... 42,800 475,789
Telecom Italia Spa.......................... 15,000 210,503
-----------
927,138
-----------
Japan--23.94%
Acom Co., Ltd............................... 4,500 440,086
Bank of Tokyo-Mitsubushi Ltd................ 36,000 500,845
Benesse Corp................................ 2,400 576,816
Canon, Inc.................................. 18,000 713,986
Dai-Ichi Kangyo Bank........................ 47,000 438,523
East Japan Railway Co....................... 51 274,545
Fanuc....................................... 7,000 889,747
Fujitsu..................................... 28,000 1,274,779
Honda Motor Co.............................. 19,000 705,388
Hoya Corp................................... 4,000 314,591
Kao Corp.................................... 17,000 484,148
Mitsubishi Estate Co., Ltd.................. 41,000 399,365
Murata Manufacturing Co., Inc............... 4,000 937,912
NEC Corp.................................... 35,000 832,641
Nintendo Corp., Ltd......................... 4,900 812,877
Nippon Telegraph & Telephone Corp........... 60 1,025,841
Nomura Securities Co., Ltd.................. 37,000 666,944
NTT Mobile Communications................... 10 383,958
Orix Corporation............................ 4,300 967,085
Santen Pharmaceutical Co., Ltd.............. 14,000 230,472
Secom Co., Ltd.............................. 6,000 659,470
Seven-Eleven Japan Co., Ltd................. 7,000 1,107,909
Softbank Corp............................... 400 382,199
Sony Corp................................... 6,700 1,983,391
Sumitomo Chemical Co........................ 80,000 375,165
Takeda Chemical Industries.................. 15,000 740,071
TDK Corp.................................... 8,000 1,102,828
Yamato Transport Co., Ltd................... 17,000 657,711
-----------
19,879,293
-----------
Netherlands--1.85%
ING Groep NV................................ 11,220 674,138
Koninklijke KPN NV.......................... 5,313 516,063
TNT Post Group NV........................... 12,000 342,218
-----------
1,532,419
-----------
Portugal--0.22%
EDP Electricidade de Portugal S.A........... 10,400 180,664
-----------
Singapore--0.72%
Singapore Press Holdings Ltd................ 16,046 347,695
United Overseas Bank........................ 28,512 251,577
-----------
599,272
-----------
Spain--2.49%
Banco Popular S.A........................... 8,673 562,922
Banco Santander Central Hispano, S.A........ 29,081 327,653
Endesa S.A.................................. 9,397 185,659
Tabacalera S.A.............................. 35,268 502,005
Telefonica S.A.............................. 19,674 489,094
-----------
2,067,333
-----------
Sweden--2.31%
Electrolux AB, B Shares..................... 17,250 432,108
Ericsson, B Shares.......................... 7,490 479,578
Investor AB, B Shares....................... 16,510 231,909
Nordbanken Holding AB....................... 94,570 553,494
Swedish Match AB............................ 62,670 217,874
-----------
1,914,963
-----------
Switzerland--1.82%
Adecco S.A.................................. 852 660,011
Nestle S.A. (Reg.).......................... 175 318,907
Novartis AG (Reg.).......................... 249 363,692
Roche Holding AG (Gen.)..................... 14 165,303
-----------
1,507,913
-----------
United Kingdom--8.47%
Allied Zurich PLC (b)....................... 13,975 164,310
AstraZeneca PLC............................. 4,639 192,002
British Airways PLC......................... 55,000 358,121
British Telecommunications PLC.............. 24,000 585,243
Diageo PLC.................................. 46,630 374,267
FKI PLC..................................... 98,405 380,640
Glaxo Wellcome PLC.......................... 9,620 271,331
HSBC Holdings PLC........................... 29,000 403,362
Lloyds TSB Group PLC........................ 40,220 502,053
National Power PLC.......................... 54,500 314,900
Nycomed Amersham PLC........................ 63,000 391,427
Peninsular & Oriental Steam Navigation Co... 11,475 191,047
Powergen PLC................................ 33,000 236,679
Prudential Corp. PLC........................ 22,000 432,582
Reckitt & Colman PLC........................ 14,000 130,984
Reed International PLC...................... 73,000 545,329
Scottish & Southern Energy PLC.............. 52,650 419,403
Tesco PLC................................... 93,250 282,924
Trinity Mirror PLC.......................... 17,175 182,972
Unilever PLC................................ 41,000 300,994
United News & Media PLC..................... 29,000 368,775
-----------
7,029,345
-----------
Total Global (Ex-U.S.) Equities............. 49,713,191
-----------
Total Equities (Cost $65,016,878)........... 81,481,215
-----------
</TABLE>
30
<PAGE>
Global Equity Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
-------- ------------
<S> <C> <C>
Short-Term Investments -- 0.49%
Investment Companies -- 0.49%
Brinson Supplementary Trust U.S. Cash
Management Prime Fund
(Cost $411,539)....................... 411,539 $ 411,539
------------
Total Investments
(Cost $65,428,417) -- 98.63% (a)...... 81,892,754
Cash and other assets,
less liabilities -- 1.37%............. 1,134,027
------------
Net Assets -- 100%...................... $ 83,026,781
============
</TABLE>
<TABLE>
<CAPTION>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $65,428,417; and net unrealized appreciation consisted of:
<S> <C>
Gross unrealized appreciation............................................................................ $ 20,104,252
Gross unrealized depreciation............................................................................ (3,639,915)
------------
Net unrealized appreciation......................................................................... $ 16,464,337
============
</TABLE>
(b) Non-income producing security.
(c) Denominated in U.S. dollars
FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
The Global Equity Fund had the following open forward foreign currency contracts as of December 31, 1999:
Settlement Local Current Unrealized
Date Currency Value Gain/(Loss)
---------- -------------- ---------- -----------
<S> <C> <C> <C> <C>
Forward Foreign Currency Buy Contracts
British Pound............................... 06/02/00 4,250,000 6,847,880 (46,945)
Japanese Yen................................ 06/02/00 1,290,000,000 12,922,930 94,245
Forward Foreign Currency Sale Contracts
Australian Dollar........................... 06/02/00 5,200,000 3,407,311 92,050
British Pound............................... 06/02/00 700,000 1,127,886 (1,802)
Canadian Dollar............................. 06/02/00 800,000 553,235 7,979
Euro........................................ 06/02/00 5,800,000 5,880,564 (29,007)
Swedish Krona............................... 06/02/00 24,200,000 2,860,950 (9,921)
Swiss Franc................................. 06/02/00 1,200,000 763,174 (5,318)
--------
Total.................................. $101,281
========
</TABLE>
<TABLE>
<CAPTION>
FUTURES CONTRACTS
The Brinson Global Equity Fund had the following open futures contracts as of December 31, 1999:
Expiration Current Unrealized
Date Cost Value Gain
---------- -------- -------- ----------
<S> <C> <C> <C> <C>
Index Futures Buy Contracts
S&P 500 Index, 2 contracts.................................... March 2000 $714,839 $742,100 $27,261
The market value of investments pledged to cover margin requirements for the open futures positions at December 31, 1999 was
$75,000.
</TABLE>
See accompanying notes to financial statements.
31
<PAGE>
Global Equity Fund -- Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value:
Unaffiliated issuers (Cost $65,016,878)....................... $81,481,215
Affiliated issuers (Cost $411,539)............................ 411,539
Foreign currency, at value (Cost $972,985)...................... 970,107
Cash............................................................ 75,727
Receivables:
Dividends..................................................... 99,356
Interest...................................................... 3,394
Variation margin.............................................. 1,340
Net unrealized appreciation on forward foreign
currency contracts............................................ 101,281
-----------
TOTAL ASSETS................................................ 83,143,959
-----------
LIABILITIES:
Payables:
Investment advisory fees...................................... 49,888
Accrued expenses.............................................. 67,290
-----------
TOTAL LIABILITIES........................................... 117,178
-----------
NET ASSETS........................................................ $83,026,781
===========
NET ASSETS CONSIST OF:
Paid in capital................................................. $65,630,618
Accumulated undistributed net investment income................. 8,384
Accumulated net realized gain................................... 799,117
Net unrealized appreciation..................................... 16,588,662
-----------
NET ASSETS.................................................. $83,026,781
===========
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption
price per share (Based on net assets of $40,734,080
and 3,182,445 shares issued and outstanding)................ $ 12.80
===========
Brinson Class N:
Net asset value, offering price and redemption price
per share (Based on net assets of $231,676 and
18,131 shares issued and outstanding)....................... $ 12.78
===========
UBS Investment Funds Class:
Net asset value, offering price and redemption price per
share (Based on net assets of $42,061,025 and 3,291,032
shares issued and outstanding).............................. $ 12.78
===========
</TABLE>
See accompanying notes to financial statements.
32
<PAGE>
Global Equity Fund -- Financial Statements
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<S> <C>
INVESTMENT INCOME:
Dividends (net of $23,473 for foreign taxes withheld)................................ $ 571,589
Interest............................................................................. 25,947
------------
TOTAL INCOME..................................................................... 597,536
------------
EXPENSES:
Advisory............................................................................. 335,604
Distribution......................................................................... 161,840
Printing............................................................................. 37,929
Professional......................................................................... 17,780
Other................................................................................ 49,361
------------
TOTAL EXPENSES................................................................... 602,514
------------
Expenses deferred by Advisor..................................................... (18,447)
Earnings credits................................................................. (1,001)
------------
NET EXPENSES..................................................................... 583,066
------------
NET INVESTMENT INCOME............................................................ 14,470
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments........................................................................ 5,365,679
Futures contracts.................................................................. 28,781
Foreign currency transactions...................................................... (1,663,061)
------------
Net realized gain................................................................ 3,731,399
------------
Change in net unrealized appreciation or depreciation on:
Investments and foreign currency................................................... 230,903
Futures contracts.................................................................. 27,261
Forward contracts.................................................................. (29,467)
Translation of other assets and liabilities denominated in foreign currency........ 1,575
------------
Change in net unrealized appreciation or depreciation............................ 230,272
------------
Net realized and unrealized gain..................................................... 3,961,671
------------
Net increase in net assets resulting from operations................................. $ 3,976,141
============
</TABLE>
See accompanying notes to financial statements.
33
<PAGE>
Global Equity Fund -- Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year
December 31, 1999 Ended
(Unaudited) June 30, 1999
----------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 14,470 $ 497,109
Net realized gain...................................................................... 3,731,399 5,596,677
Change in net unrealized appreciation or depreciation.................................. 230,272 1,132,303
----------------- -------------
Net increase in net assets resulting from operations................................... 3,976,141 7,226,089
----------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income:
Brinson Class I...................................................................... (229,745) (384,423)
Brinson Class N...................................................................... (985) (2,181)
UBS Investment Funds Class........................................................... (77,667) (219,326)
Distributions from net realized gain:
Brinson Class I...................................................................... (3,607,591) (352,100)
Brinson Class N...................................................................... (19,859) (2,950)
UBS Investment Funds Class........................................................... (3,756,305) (713,059)
----------------- -------------
Total distributions to shareholders.................................................. (7,692,152) (1,674,039)
----------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................................ 7,577,518 34,808,631
Shares issued on reinvestment of distributions......................................... 6,445,851 1,462,446
Shares redeemed........................................................................ (13,648,784) (37,326,928)
----------------- -------------
Net increase (decrease) in net assets resulting from capital share transactions........ 374,585 (1,055,851)
----------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................................ (3,341,426) 4,496,199
----------------- -------------
NET ASSETS:
Beginning of period.................................................................... 86,368,207 81,872,008
----------------- -------------
End of period (including accumulated undistributed net investment income of
$8,384 and $302,311, respectively)................................................... $ 83,026,781 $ 86,368,207
================= =============
</TABLE>
See accompanying notes to financial statements.
34
<PAGE>
Global Equity Fund -- Financial Highlights
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended Year Ended June 30,
December 31, 1999 ---------------------------------------------------
Brinson Class I (Unaudited) 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period................. $ 13.42 $ 12.54 $ 12.76 $ 11.57 $ 9.93 $ 9.49
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income............................ 0.03* 0.14* 0.22 0.16 0.18 0.18
Net realized and unrealized gain................. 0.64 1.09 0.78 2.14 2.29 0.39
------- ------- ------- ------- ------- -------
Total income from investment
operations................................... 0.67 1.23 1.00 2.30 2.47 0.57
------- ------- ------- ------- ------- -------
Less distributions:
Distributions from net investment
income......................................... (0.08) (0.17) (0.17) (0.12) (0.14) (0.04)
Distributions from and in excess of net
realized gain.................................. (1.21) (0.18) (1.05) (0.99) (0.69) (0.09)
------- ------- ------- ------- ------- -------
Total distributions............................ (1.29) (0.35) (1.22) (1.11) (0.83) (0.13)
------- ------- ------- ------- ------- -------
Net asset value, end of period....................... $ 12.80 $ 13.42 $ 12.54 $ 12.76 $ 11.57 $ 9.93
======= ======= ======= ======= ======= =======
Total return (non-annualized)........................ 5.41% 10.14% 8.99% 21.26% 25.66% 6.06%
Ratios/Supplemental data:
Net assets, end of period (in 000s)................ $40,734 $42,106 $22,724 $48,054 $27,126 $20,706
Ratio of expenses to average net assets:
Before expense reimbursement and
earnings credits............................... 1.05%** 1.05% 1.02% 1.25% 1.77% 2.06%
After expense reimbursement and
earnings credits............................... 1.00%** 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income to
average net assets:
Before expense reimbursement and
earnings credits............................... 0.37%** 1.05% 1.29% 1.35% 0.57% 0.71%
After expense reimbursement and
earnings credits............................... 0.42%** 1.10% 1.31% 1.60% 1.34% 1.77%
Portfolio turnover rate............................ 57% 86% 46% 32% 74% 36%
* The net investment income per share data was determined by using average shares outstanding throughout the period
** Annualized
</TABLE>
See accompanying notes to financial statements.
35
<PAGE>
Global Equity Fund -- Financial Highlights
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Year Ended Year Ended
Brinson Class N (Unaudited) June 30, 1999 June 30, 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period...................................... $13.40 $12.53 $12.76
------ ------ ------
Income from investment operations:
Net investment income................................................. 0.01 0.10* 0.13
Net realized and unrealized gain...................................... 0.64 1.09 0.82
------ ------ ------
Total income from investment operations............................. 0.65 1.19 0.95
------ ------ ------
Less distributions:
Distributions from net investment income.............................. (0.06) (0.14) (0.13)
Distributions from net realized gain.................................. (1.21) (0.18) (1.05)
------ ------ ------
Total distributions................................................. (1.27) (0.32) (1.18)
------ ------ ------
Net asset value, end of period............................................ $12.78 $13.40 $12.53
====== ====== ======
Total return (non-annualized)............................................. 5.29% 9.80% 8.60%
Ratios/Supplemental data:
Net assets, end of period (in 000s)..................................... $ 232 $ 220 $ 1
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits..................... 1.30%** 1.30% 1.27%
After expense reimbursement and earnings credits...................... 1.25%** 1.25% 1.25%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits..................... 0.12%** 0.80% 1.04%
After expense reimbursement and earnings credits...................... 0.17%** 0.85% 1.06%
Portfolio turnover rate................................................. 57% 86% 46%
* The net investment income per share data was determined by using average shares outstanding throughout the period
** Annualized
</TABLE>
See accompanying notes to financial statements.
36
<PAGE>
Global Bond Fund
[BRINSON LOGO]
Since its performance inception on July 31, 1993, the Brinson Global Bond Fund
Class I has recorded an annualized return of 5.45%, versus the 6.02% return of
its benchmark, the Salomon Smith Barney World Government Bond Index. This
performance record was achieved with significantly less risk or volatility than
the benchmark; 4.69% versus 5.64%, respectively. In calendar year 1999 the Fund
posted a decline of 6.27% compared to the benchmark's decline of 4.26%.
1999 proved to be the worst year for global government bonds since 1994. Yields
rose (and prices therefore fell) in every major market, apart from Japan, by up
to 200 basis points. The main factor behind this development was the growing
momentum of world economic growth, led by the continuing strength of economic
activity in the U.S. As well as encouraging investors to look for higher real
returns, this also gave rise to fears (which were ultimately fulfilled) that
central banks would raise official rates to counter rising inflation risks. The
weakness in government bonds was accentuated by the unwinding of last year's
move to low-risk investments in the aftermath of the Russian default.
The main reason for the relative underperformance of the Fund was market
allocation strategy, specifically a large underweight to the Japanese market.
Despite very low nominal yields, Japanese government bond prices were supported
by the Bank of Japan's "zero interest rate" policy, an attempt to stimulate the
lackluster domestic economy and limit the strength of the yen. In currencies,
underweights to the yen and the pound sterling also hurt performance. However,
active bond management helped, with positions in inflation-linked bonds in
Canada and good relative performance from non-government bonds in the U.S.
component of the Fund.
37
<PAGE>
Global Bond Fund
<TABLE>
<CAPTION>
Total Return
6 months 1 year 3 years 5 years 7/31/93*
ended ended ended ended to
12/31/99 12/31/99 12/31/99 12/31/99 12/31/99
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brinson Global Bond Fund Class I 0.10% -6.27% 2.18% 7.00% 5.45%
- -----------------------------------------------------------------------------------------------
Salomon Smith Barney World Gov't Bond Index 3.13 -4.26 3.43 .42 6.02
- -----------------------------------------------------------------------------------------------
</TABLE>
*Performance inception date of the Brinson Global Bond Fund Class I.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson Global
Bond Fund Class I and the Salomon Smith Barney World Government Bond Index if
you had invested $1,000,000 on July 31, 1993, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
Brinson Global Bond Fund Class I
vs. Salomon Smith Barney World Gov't Bond Index
Wealth Value with Dividends Reinvested
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Brinson Global Salomon Smith
Bond Fund Barney World
Class I Gov't Bond Index
<S> <C> <C>
12/31/93 $1,038,591 $1,041,929
12/31/94 $1,002,396 $1,066,185
12/31/95 $1,206,119 $1,269,184
12/31/96 $1,318,299 $1,315,287
12/31/97 $1,339,835 $1,318,469
12/31/98 $1,500,412 $1,520,063
12/31/99 $1,406,271 $1,455,279
</TABLE>
7/31/93 = $1,000,000 Data through 12/31/99
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
38
<PAGE>
Global Bond Fund
[LOGO OF BRINSON]
Total Return
6 months 1 year 6/30/97*
ended ended to
12/31/99 12/31/99 12/31/99
- --------------------------------------------------------------------------------
Brinson Global Bond Fund Class N 0.00% -6.58% 2.09%
- --------------------------------------------------------------------------------
Salomon Smith Barney World Gov't Bond Index 3.13 -4.26 4.65
- --------------------------------------------------------------------------------
*Inception date of the Brinson Global Bond Fund Class N.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $1,000,000
This chart shows the growth in the value of an investment in the Brinson Global
Bond Fund Class N and the Salomon Smith Barney World Government Bond Index if
you had invested $1,000,000 on June 30, 1997, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
Brinson Global Bond Fund Class N
vs. Salomon Smith Barney World Gov't Bond Index
Wealth Value with Dividends Reinvested
[Performance Graph]
Salomon Smith
Brinson Global Barney World Gov't
Bond Fund Class N Bond Index
- ------------------------------------------------------------------------
12/31/97 $1,008,216 $1,014,920
6/30/98 $1,023,719 $1,043,156
12/31/98 $1,127,443 $1,170,101
6/30/99 $1,053,324 $1,086,238
12/31/99 $1,053,273 $1,120,231
6/30/97 = $1,000,000 Data through 12/31/99
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
39
<PAGE>
Global Bond Fund
BRINSON LOGO
Asset Allocation
As of December 31, 1999 (Unaudited)
Current
Benchmark Strategy
- ----------------------------------------------------------
U.S. 27.1% 33.1%
Australia 0.6 5.1
Austria 0.9 0.0
Belgium 2.4 0.0
Canada 2.9 5.0
Denmark 1.2 4.2
Finland 0.7 0.0
France 7.5 9.2
Germany 7.9 5.7
Ireland 0.3 0.0
Italy 8.1 2.8
Japan 26.6 7.6
Netherlands 2.6 5.6
Portugal 0.4 0.0
Spain 3.3 4.4
Sweden 1.3 6.8
Switzerland 0.4 0.0
TIPS 0.0 1.8
U.K. 5.8 5.8
Euro 0.0 2.9
- ----------------------------------------------------------
100.0% 100.0%
Currency Allocation
As of December 31, 1999 (Unaudited)
Current
Benchmark Strategy
- ----------------------------------------------------------
U.S. 27.1% 23.1%
Australia 0.6 6.6
Canada 2.9 2.9
Denmark 1.2 1.2
Euro 34.0 41.9
Japan 26.6 18.6
Sweden 1.3 5.3
Switzerland 0.4 0.4
U.K. 5.9 0.0
- ----------------------------------------------------------
100.0% 100.0%
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- ----------------------------------------------------------
U.S. BONDS
Corporate Bonds
Airlines.................................. 0.84%
Asset-Backed.............................. 2.51
Consumer.................................. 1.10
Financial Services........................ 1.44
Food and Housing Products................. 0.31
Publishing................................ 0.65
Services/Miscellaneous.................... 0.95
Utilities................................. 0.09
------
7.89
------
International Dollar Bonds................ 4.01
Corporate Mortgage-Backed Securities...... 8.12
U.S. Government Agencies.................. 1.12
U.S. Gov't Mortgage-Backed Securities..... 5.70
U.S. Government Obligations............... 5.48
------
24.43
------
Total U.S. Bonds.................. 32.32
------
GLOBAL (EX-U.S.) BONDS
Foreign Financial Bonds........................ 7.21
Foreign Government Bonds....................... 56.20
------
Total Global (Ex-U.S.) Bonds...... 63.41
SHORT-TERM INVESTMENTS......................... 0.58
------
TOTAL INVESTMENTS................. 96.31
------
CASH AND OTHER ASSETS,
LESS LIABILITIES.......................... 3.69
------
NET ASSETS........................ 100.00%
======
40
<PAGE>
Global Bond Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Face
Amount Value
-------- ----------
<S> <C> <C>
Bonds -- 95.73%
U.S. Bonds -- 32.32%
U.S. Corporate Bonds -- 7.89%
Cendant Corp., 7.750%, due 12/01/03.................. $500,000 $ 499,264
Centaur Funding Corp., 144A,
0.000%, due 01/01/80............................... 1,021 398,288
Centaur Funding Corp., 144A,
9.080%, due 01/01/80............................... 153 115,110
Chase Manhattan Auto Owner Trust,
Series 96-C, Class A4,
6.150%, due 03/15/02............................... 125,000 124,798
Comed Transitional Funding Trust,
Series 98-1, Class A7,
5.740%, due 12/25/10............................... 370,000 333,614
Continental Airlines, Inc.,
Series 99-2, 7.056%, due 09/15/09.................. 710,000 675,750
Countrywide Capital, Inc.,
8.000%, due 12/15/26............................... 250,000 224,977
Fidelity Investments,
7.570%, due 06/15/29............................... 450,000 432,660
First Bank Corporate Card Master Trust,
97-1, Class A, 6.400%, due 02/15/03................ 240,000 237,650
Lilly Del Mar, 144A,
7.17%, due 08/01/29................................ 350,000 348,314
News America Holdings,
7.750%, due 12/01/45............................... 575,000 524,273
Noram Energy Corp.,
6.375%, due 11/01/03............................... 75,000 71,335
Peco Energy Transition Trust,
6.130%, due 03/01/09............................... 540,000 496,876
Premier Auto Trust, Series 96-3,
Class A4, 6.750%, due 11/06/00..................... 163,308 163,434
Safeway Inc, 7.250%, due 09/15/04.................... 250,000 248,528
The Money Store, Series 98-B, Class AF2,
6.115%, due 05/15/10............................... 4,089 4,089
Time Warner Cos., Inc.,
7.570%, due 02/01/24............................... 560,000 538,668
UCFC Home Equity Loan,
Series 97-C, Class A8,
FRN, 5.6375%, due 09/15/27......................... 78,696 78,787
USA Waste Services,
7.000%, due 10/01/04............................... 300,000 270,446
Vanderbilt Mortgage Finance, 98-B,
Class 1A2, 6.120%, due 05/07/09.................... 600,000 593,694
----------
6,380,555
----------
Corporate Mortgage-Backed
Securities -- 8.12%
ABN Amro Mortgage Corp., Series 99-2 IA2,
6.300%, due 04/25/29............................... 345,000 328,302
Bear Stearns Mortgage Securities, Inc., 96-7,
Class A4, 6.000%, due 01/28/09..................... 200,000 191,924
First Union Lehman Brothers, 97-C2,
Class A2, 6.600%, due 05/18/07..................... 240,000 230,009
GE Capital Mortgage Services, Inc., 93-7F,
Class FA3, 6.500%, due 09/25/08.................... 145,184 144,352
Heller Financial Commercial Mortgage
Assets, Series 99-PH1 A1,
6.500%, due 05/15/61............................... 399,560 386,446
LB Commercial Conduit Mortgage
Trust, Series 99-C1 A1,
6.410%, due 08/15/07............................... 548,619 528,583
Norwest Asset Securities Corp.,
Series 98-25, Class A5,
6.000%, due 12/25/28............................... 965,000 906,048
PNC Mortgage Securities Corp.,
Series 94-3, Class A8,
7.500%, due 07/25/24............................... 190,000 182,210
Prudential Home Mortgage Securities
Series 96-7, Class A4,
6.750%, due 06/25/11............................... 150,000 143,793
Series 93-43, Class A9,
6.750%, due 10/25/23............................... 201,221 193,428
Residential Accredit Loans, Inc.
Series 98-QS4, Class AI5, 7.000%,
due 03/25/28....................................... 625,000 623,656
Series 96-QS4, Class Al10,
7.900%, due 08/25/26............................... 400,000 377,052
Residential Asset Securitization Trust
Series 97-A11, Class A2,
7.000%, due 01/25/28............................... 32,378 32,288
Series 97-A11, Class A6,
7.000%, due 01/25/28............................... 430,000 405,339
Series 98-A1, Class A1,
7.000%, due 03/25/28............................... 72,972 72,562
Series 97-A7, Class A1,
7.250%, due 12/25/27............................... 335,000 321,453
Series 97-A7, Class A1,
7.500%, due 09/25/27............................... 56,102 56,041
Structured Asset Securities Corp.
Series 98-RF2, 144A,
8.582%, due 07/15/27............................... 315,780 324,464
Series 98-RF1, Class A,
8.712%, due 03/15/27............................... 208,384 214,701
Structured Mortgage Asset Residential
Trust, Series 96-5C, Class CI,
7.150%, due 03/25/23............................... 925,000 904,363
----------
6,567,014
----------
International Dollar Bonds -- 4.01%
National Australia Bank, FRN,
6.40%, due 12/10/07................................ 640,000 623,858
Petroleos de Venezuela S.A.,
8.750%, due 02/15/04............................... 500,000 488,159
Banco Santiago S.A.,
7.000%, due 07/18/07............................... 400,000 358,889
Empresa National Electric,
7.875%, due 10/01/69............................... 500,000 385,159
Korea Development Bank,
7.125%, due 09/17/01............................... 300,000 297,672
Banque Centrale de Tunisie,
8.250%, due 09/19/27............................... 400,000 325,500
Credit Suisse-London, 144A, 7.900%,
Resettable Perpetual Preferred,
7.900%, due 05/01/07............................... 500,000 475,729
Royal Bank of Scotland, Resettable
Perpetual Preferred,
7.375%, due 04/29/49............................... 300,000 286,081
----------
3,241,047
----------
</TABLE>
41
<PAGE>
Global Bond Fund--Schedule of Investments
December 31, 1999 (Unaudited)
Face
Amount Value
------------- -----------
U.S. Gov't Mortgage-Backed Securities--5.70%
Fannie Mae Whole Loan,
Series 95-W3, Class A,
9.000%, due 04/25/25........... $ 8,912 $ 9,204
Federal Home Loan Mortgage Corp.
7.000%, due 10/15/13........... 68,215 64,952
7.238%, due 05/01/26........... 17,453 17,519
Federal Home Loan Mortgage Corp. Gold
8.000%, due 05/01/23........... 42,505 43,004
9.000%, due 03/01/24........... 116,158 121,609
Federal National Mortgage Association
6.000%, due 01/01/29........... 155,793 142,632
6.500%, due 03/01/19........... 120,439 115,057
6.500%, due 02/01/29........... 593,700 559,748
7.000%, due 12/01/24........... 402,571 389,346
7.000%, due 03/01/29........... 27,267 26,390
7.500%, due 07/01/10........... 762,377 768,657
7.500%, due 12/01/23........... 317,354 314,030
7.500%, due 05/18/25........... 250,000 246,780
7.500%, due 12/01/27........... 638,881 632,189
7.890%, due 04/01/26........... 175,960 178,991
8.000%, due 03/01/11........... 68,243 69,622
8.500%, due 07/01/22........... 7,930 8,213
Federal National Mortgage Association Strips,
0.000%, due 02/01/28........... 141,218 91,645
8.000%, due 08/01/23........... 185,330 56,967
FNCI, 8.000%, due 02/01/13....... 72,365 73,827
Government National Mortgage Association,
7.000%, due 08/15/24........... 352,905 343,816
7.000%, due 07/15/25........... 49,590 48,300
7.500%, due 08/15/23........... 60,521 60,204
7.500%, due 12/15/23........... 94,179 93,718
7.500%, due 01/15/24........... 65,741 65,368
-----------
4,541,788
-----------
U.S. Government Agencies--1.12%
Jordan Aid, 8.750%, due 09/01/19. 452,530 486,597
Tennesse Valley Authority,
6.375%, due 06/15/05........... 500,000 481,834
-----------
968,431
-----------
U.S. Government Obligations--5.48%
U.S. Treasury Bond,
8.000%, due 11/15/21........... 1,985,000 2,251,734
8.750%, due 05/15/17........... 300,000 358,125
U.S. Treasury Inflation Indexed Note,
3.625%, due 04/15/28........... 570,000 529,754
U.S. Treasury Note
5.625%, due 05/15/08........... 640,000 602,000
5.750%, due 08/15/03........... 700,000 685,344
-----------
4,426,957
-----------
Total U.S. Bonds................. 26,125,792
-----------
Global (Ex-U.S.) Bonds--63.41%
Australia-5.19%
International Bank for Recon & Dev
5.500%, due 05/14/03...........AUD 1,800,000 1,131,331
Queensland Treasury Corp.-
Global Note
6.500%, due 06/14/05........... 1,130,000 723,572
8.000%, due 09/14/07........... 3,400,000 2,338,654
-----------
4,193,557
-----------
Canada--6.85%
Government of Canada
4.250%, due 12/01/21...........CAD 3,730,000 2,996,234
6.000%, due 06/01/08........... 2,030,000 1,378,316
Province of Ontario,
7.500%, due 01/19/06........... 1,600,000 1,161,056
-----------
5,535,606
-----------
Denmark--6.66%
City of Copenhagen,
6.250%, due 03/15/01...........DKK 2,400,000 329,368
Depfa Pfandbrief Bank,
5.750%, due 03/04/09...........EUR 2,250,000 2,284,710
Great Belt, 7.000%, due 09/02/03.DKK 3,650,000 515,097
Kingdom of Denmark
7.000%, due 11/15/07........... 1,400,000 206,067
7.000%, due 11/10/24........... 4,800,000 718,927
8.000%, due 11/15/01........... 9,300,000 1,326,531
-----------
5,380,700
-----------
France--7.74%
Government of France (BTAN),
7.750%, due 04/12/00...........EUR 609,796 618,470
Government of France (OAT)
4.000%, due 10/25/09........... 200,000 178,537
6.000%, due 10/25/25........... 400,000 403,364
7.500%, due 04/25/05........... 902,368 1,005,385
7.500%, due 04/25/05........... 1,097,632 1,222,942
8.500%, due 04/25/23........... 1,350,000 1,786,540
9.500%, due 01/25/01........... 990,000 1,039,807
-----------
6,255,045
-----------
Germany--6.09%
Bundesrepublik Deutschland,
5.250%, due 02/21/01........... 390,000 396,838
5.625%, due 01/04/28........... 380,000 362,817
6.250%, due 04/26/06........... 1,850,000 1,969,963
International Bank of Recon & Dev,
7.125%, due 04/12/05........... 2,019,603 2,196,114
-----------
4,925,732
-----------
Italy--2.07%
Republic of Italy (BTP),
7.750%, due 11/01/06........... 930,000 1,053,475
9.000%, due 10/01/03........... 550,001 617,477
-----------
1,670,952
-----------
Japan--7.28%
Government of Japan
3.000%, due 09/20/05...........JPY 110,000,000 1,175,712
4.600%, due 09/20/04........... 415,000,000 4,712,564
-----------
5,888,276
-----------
42
<PAGE>
GLOBAL BOND FUND--SCHEDULE OF INVESTMENTS
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Face
Amount Value
<S> <C> <C>
-------------------------
Netherlands--5.70%
LKB Baden-Wuerttemberg Finance,
6.500%, due 09/15/08............EUR 818,067 $ 861,807
Netherlands Government
3.000%, due 02/15/02............... 2,650,000 2,584,627
5.500%, due 01/15/28............... 1,050,000 980,945
7.500%, due 04/15/10............... 160,000 184,681
-----------
4,612,060
Spain--3.90% -----------
Bonos Y Oblig Del Estado,
3.250%, due 01/31/05............... 1,400,000 1,283,999
Government of Spain,
7.350%, due 03/31/07............... 1,670,000 1,871,762
-----------
3,155,761
-----------
Sweden--6.32%
Government of Sweden
6.000%, due 02/09/05............SEK 3,500,000 419,113
6.750%, due 05/05/14............... 12,400,000 1,561,420
10.250%, due 05/05/03.............. 23,300,000 3,131,517
-----------
5,112,050
-----------
United Kingdom--5.61%
Abbey National Treasury Service,
6.500%, due 03/05/04............GBP 450,000 712,141
British Gas PLC,
8.125%, due 03/31/03............... 195,000 320,537
UK Treasury
7.250%, due 12/07/07............... 820,000 1,441,866
5.750%, due 12/07/09............... 1,250,000 2,056,942
-----------
4,531,486
-----------
Total Global (Ex-U.S.) Bonds.......... 51,261,225
-----------
Total Bonds (Cost $82,090,416)........ 77,387,017
-----------
Shares
Short-Term Investments--0.58% --------
Investment Companies--0.58%
Brinson Supplementary Trust U.S.
Cash Management Prime Fund.........
(Cost $469,060).................... 469,060 $ 469,060
-----------
Total Investments
(Cost $82,559,476)--96.31%........ 77,856,077
Cash and other assets,
less liabilities--3.69%........... 2,986,424
-----------
Net Assets--100%...................... $80,842,501
===========
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $82,559,476; and net
unrealized depreciation consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation.................... $ 331,039
Gross unrealized depreciation.................... (5,034,438)
-----------
Net unrealized depreciation................. $(4,703,399)
</TABLE> ===========
(b) Non-income producing security.
FRN: Floating Rate Note
TBA: Security is subject to delayed delivery.
144A: 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. At December 31,
1999, the value of these securities amounted to $2,094,881 or 2.59% of net
assets.
Resettable Perpetual Preferred: A bond with either no maturity date or a
maturity date that is so far in the future that the bond will pay
interest indefinitely. The issuer generally retains the right to call such
a bond.
FORWARD FOREIGN CURRENCY CONTRACTS
The Global Bond Fund had the following open forward foreign currency contracts
as of December 31, 1999:
<TABLE>
<S> <C> <C> <C> <C>
Expiration Local Current Unrealized
Date Currency Value Gain/(Loss)
---------- ---------- ----------- ------------
Forward Foreign Currency Buy Contracts
British Pound......... 03/01/00 5,650,000 $ 9,106,441 $ (57,066)
Canadian Dollar....... 03/01/00 4,700,000 510,169 (86,143)
Danish Kroner......... 03/01/00 19,500,000 2,637,430 152,269
Euro.................. 03/01/00 3,200,000 3,222,298 108,261
Japanese Yen.......... 03/01/00 650,000,000 7,249,634 (62,649)
Swedish Krona......... 03/01/00 12,000,000 1,410,533 51,099
Forward Foreign Currency Sale Contracts
Australian Dollar..... 03/01/00 2,200,000 1,440,724 23,329
British Pound......... 03/01/00 2,850,000 4,593,514 (16,514)
Euro.................. 03/01/00 13,10,000 13,191,284 (769,386)
Japanese Yen.......... 03/01/00 1,620,000,000 28,187,534 1,021,604
----------
Total............. $ 364,804
==========
</TABLE>
See accompanying notes to financial statements.
43
<PAGE>
Global Bond Fund -- Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value:
Unaffiliated issuers (Cost $82,090,416)..................... $ 77,387,017
Affiliated issuers (Cost $469,060).......................... 469,060
Cash.......................................................... 931
Foreign currency, at value (Cost $893,716).................... 887,157
Receivables:
Investment securities sold.................................. 14,677
Interest.................................................... 1,786,202
Net unrealized appreciation on forward foreign currency
contracts................................................... 364,804
------------
TOTAL ASSETS.............................................. 80,909,848
------------
LIABILITIES:
Payables:
Investment advisory fees.................................... 44,481
Accrued expenses............................................ 22,866
------------
TOTAL LIABILITIES......................................... 67,347
------------
NET ASSETS...................................................... $ 80,842,501
============
NET ASSETS CONSIST OF:
Paid in capital............................................... $ 88,899,967
Accumulated undistributed net investment income............... 1,916,511
Accumulated net realized loss................................. (5,588,837)
Net unrealized depreciation................................... (4,385,140)
------------
NET ASSETS................................................ $ 80,842,501
============
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price
per share (Based on net assets of $77,217,107 and
8,533,100 shares issued and outstanding).................. $ 9.05
============
Brinson Class N:
Net asset value, offering price and redemption price
per share (Based on net assets of $1,162 and 127
shares issued and outstanding)............................ $ 9.15
============
UBS Investment Funds Class:
Net asset value, offering price and redemption price
per share (Based on net assets of $3,624,232 and
401,023 shares issued and outstanding).................... $ 9.04
============
</TABLE>
See accompanying notes to financial statements.
44
<PAGE>
Global Bond Fund -- Financial Statements
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest (net of $32,604 for foreign taxes withheld)............ $ 2,338,848
Dividends....................................................... 25,477
-----------
TOTAL INCOME................................................ 2,364,325
-----------
EXPENSES:
Advisory........................................................ 339,912
Registration.................................................... 39,560
Professional.................................................... 25,362
Distribution.................................................... 11,340
Other........................................................... 42,182
-----------
TOTAL OPERATING EXPENSES.................................... 458,356
Expenses deferred by Advisor................................ (38,065)
Earnings credits............................................ (63)
-----------
NET OPERATING EXPENSES...................................... 420,228
Interest Expense............................................ 27,240
-----------
NET INVESTMENT INCOME....................................... 1,916,857
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss on:
Investments................................................... (1,315,340)
Foreign currency transactions................................. (2,284,183)
-----------
Net realized loss........................................... (3,599,523)
-----------
Change in net unrealized appreciation or depreciation on:
Investments and foreign currency.............................. 298,082
Forward contracts............................................. 1,689,713
Translation of other assets and liabilities denominated
in foreign currency......................................... 7,206
-----------
Change in net unrealized appreciation or depreciation....... 1,995,001
-----------
Net realized and unrealized loss................................ (1,604,522)
-----------
Net increase in net assets resulting from operations............ $ 312,335
===========
</TABLE>
See accompanying notes to financial statements.
45
<PAGE>
Global Bond Fund -- Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year
December 31, 1999 Ended
(Unaudited) June 30, 1999
----------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income....................................................... $ 1,916,857 $ 5,139,936
Net realized gain (loss).................................................... (3,599,523) 1,499,627
Change in net unrealized appreciation or depreciation....................... 1,995,001 (6,052,418)
------------ -------------
Net increase in net assets resulting from operations........................ 312,335 587,145
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income:
Brinson Class I........................................................... (1,118,349) (5,705,972)
Brinson Class N........................................................... -- (13,166)
UBS Investment Funds Class................................................ (43,991) (180,397)
Distributions from net realized gain:
Brinson Class I........................................................... (82,557) (925,451)
Brinson Class N........................................................... (1) (811)
UBS Investment Funds Class................................................ (4,026) (35,005)
------------ -------------
Total distributions to shareholders......................................... (1,248,924) (6,860,802)
------------ -------------
Capital share transactions:
Shares sold................................................................. 10,208,441 115,882,090
Shares issued on reinvestment of distributions.............................. 1,080,310 4,872,310
Shares redeemed............................................................. (27,855,393) (111,795,220)
------------ -------------
Net increase (decrease) in net assets resulting from capital
share transactions........................................................ (16,566,642) 8,959,180
------------ -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS................................. (17,503,231) 2,685,523
------------ -------------
NET assets:
Beginning of period......................................................... 98,345,732 95,660,209
------------ -------------
End of period (including accumulated undistributed net investment income
of $1,916,511 and $1,161,994, respectively)............................... $ 80,842,501 $ 98,345,732
------------ -------------
</TABLE>
See accompanying notes to financial statements.
46
<PAGE>
Global Bond Fund -- Financial Highlights
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended Year Ended June 30,
December 31, 1999 -------------------------------------------------
Brinson Class I (Unaudited) 1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period................... $ 9.18 $ 9.41 $ 9.64 $ 10.04 $ 10.39 $ 9.55
------- ------- ------- ------- -------- --------
Income from investment operations:
Net investment income.............................. 0.20* 0.39* 0.43* 0.67 0.84 0.50
Net realized and unrealized
gain (loss)....................................... (0.19) (0.07) (0.18) 0.08 0.31 0.58
------- ------- ------- ------- -------- --------
Total income from investment
operations..................................... 0.01 0.32 0.25 0.75 1.15 1.08
------- ------- ------- ------- -------- --------
Less distributions:
Distributions from and in excess of
net investment income............................. (0.13) (0.47) (0.31) (0.96) (1.40) (0.24)
Distributions from net realized gain................ (0.01) (0.08) (0.17) (0.19) (0.10) --
------- ------- ------- ------- -------- --------
Total distributions.............................. (0.14) (0.55) (0.48) (1.15) (1.50) (0.24)
------- ------- ------- ------- -------- --------
Net asset value, end of period......................... $ 9.05 $ 9.18 $ 9.41 $ 9.64 $ 10.04 $ 10.39
======= ======= ======= ======= ======== ========
Total return (non-annualized).......................... 0.10% 3.13% 2.69% 7.71% 11.50% 11.34%
Ratios/Supplemental data:
Net assets, end of period (in 000s).................. $77,217 $92,832 $91,274 $54,157 $41,066 $51,863
Ratio of expenses to average net assets:
Before expense reimbursement and
earnings credits.................................. 1.04%** 0.90% 0.96% 1.32% 1.65% 1.43%
After expense reimbursement, and
earnings credits***............................... 0.96%** N/A 0.90% 0.90% 0.90% 0.90%
Ratio of net investment income to
average net assets:
Before expense reimbursement and
earnings credits.................................. 4.16%** 4.05% 4.47% 4.90% 4.98% 5.53%
After expense reimbursement and
earnings credits.................................. 4.24%** N/A 4.53% 5.32% 5.73% 6.06%
Portfolio turnover rate............................. 35% 138% 151% 235% 184% 199%
</TABLE>
* The net investment income per share data was determined by using
average shares outstanding throughout the year
** Annualized
*** The ratio of net operating expenses to average net assets for the six
months ended December 31, 1999, was 0.90%.
N/A = Not Applicable
See accompanying notes to financial statements.
47
<PAGE>
Global Bond Fund -- Financial Highlights
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Year Ended Year Ended
Brinson Class N (Unaudited) June 30, 1999 June 30, 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period................................... $ 9.16 $ 9.40 $ 9.64
------ ------ ------
Income from investment operations:
Net investment income.............................................. 0.19* 0.37* 0.42*
Net realized and unrealized loss................................... (0.19) (0.07) (0.20)
------ ------ ------
Total income from investment operations.......................... -- 0.30 0.22
------ ------ ------
Less distributions:
Distributions from and in excess of net investment income.......... -- (0.46) (0.29)
Distributions from net realized gain............................... (0.01) (0.08) (0.17)
------ ------ ------
Total distributions.............................................. (0.01) (0.54) (0.46)
------ ------ ------
Net asset value, end of period......................................... $ 9.15 $ 9.16 $ 9.40
====== ====== ======
Total return (non-annualized).......................................... 0.00% 2.89% 2.37%
Ratios/Supplemental Data:
Net assets, end of period (in 000s).................................. $ 1 $1,085 $ 9
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits.................. 1.29%** 1.15% 1.21%
After expense reimbursement and earnings credits***.............. 1.21%** N/A 1.15%
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits................. 3.91%** 3.80% 4.22%
After expense reimbursement and earnings credits.................. 3.99%** N/A 4.28%
Portfolio turnover rate.............................................. 35% 138% 151%
</TABLE>
* The net investment income per share data was determined by using
average shares outstanding throughout the year
** Annualized
*** The ratio of net operating expenses to average net assets for the
six months ended December 31, 1999, was 1.15%.
N/A = Not Applicable
See accompanying notes to financial statements.
48
<PAGE>
The Brinson Funds -- Notes To Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
The Brinson Funds (the "Trust") is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended, as a series
company. The Trust currently offers shares of eleven series: Global Fund, Global
Equity Fund, Global Bond Fund, U.S. Balanced Fund, U.S. Equity Fund, U.S. Large
Capitalization Equity Fund, U.S. Large Capitalization Growth Fund, U.S. Small
Capitalization Growth Fund, U.S. Bond Fund, High Yield Fund and Global (Ex-U.S.)
Equity Fund (each a "Fund" and collectively, the "Funds"). Each Fund has three
classes of shares outstanding, Brinson Class I, Brinson Class N and UBS
Investment Funds Class. There are an unlimited number of shares of each class
with par value of $0.001 authorized. Each share represents an identical interest
in the investments of the Funds and has the same rights. The financial
highlights of the UBS Investment Funds Class are presented separately. The
following is a summary of significant accounting policies consistently followed
by the Global Fund, Global Equity Fund and Global Bond Fund in the preparation
of their financial statements.
A. Investment Valuation: Securities for which market quotations are readily
available are valued at the last available sales price on the exchange or
market on which they are principally traded, or lacking any sales, at the last
available bid price on the exchange or market on which such securities are
principally traded. U.S. equity securities traded over-the-counter are priced at
the most recent bid price. Securities for which market quotations are not
readily available, including restricted securities which are subject to
limitations on their sale, are valued at fair value as determined in good faith
by or under the direction of the Trust's Board of Trustees. Investments in
affiliated investment companies are valued each day based on the closing net
asset value of the respective fund. Debt securities are valued at the most
recent bid price by using market quotations or independent pricing services.
Futures contracts are valued at the settlement price established each day on
the exchange on which they are traded. Forward foreign currency contracts are
valued daily using quoted forward exchange rates. Short-term obligations with a
maturity of 60 days or less are valued at amortized cost, which approximates
market value.
B. Foreign Currency Translation: Investment securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollars
using the WM/Reuters closing spot rates as of 4:00 p.m. London time. Purchases
and sales of portfolio securities, commitments under forward foreign currency
contracts and income receipts are translated at the prevailing exchange rate of
the date of each transaction. Realized and unrealized foreign exchange gains or
losses on investments are included as a component of net realized and unrealized
gain or loss on investments in the statement of operations.
C. Investment Transactions: Investment transactions are accounted for on a
trade date basis. Gains and losses on securities sold are determined on an
identified cost basis.
D. Investment Income: Interest income, which includes the amortization of
premiums and discounts, is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date, except that certain dividends from foreign
securities are recorded as the information becomes available.
E. Federal Income Taxes: It is the policy of the Funds to comply with all
requirements of the Internal Revenue Code (the "Code") applicable to regulated
investment companies and to distribute substantially all of their taxable income
to their shareholders. The Funds have met the requirements of the Code
applicable to regulated investment companies for the six months ended December
31, 1999, therefore, no federal income tax provision was required.
F. Distributions to Shareholders: It is the policy of the Funds to distribute
their respective net investment income on a semi-annual basis and net capital
gains, if any, annually. Distributions to shareholders are recorded on the ex-
dividend date. Income and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments for foreign currency transactions. Differences in dividends per
share between the classes are due to distribution expenses.
G. Income and Expense Allocation: All income earned and expenses incurred by
each Fund will be borne on a pro rata basis by each of the classes, except that
the Brinson Class I will not incur any of the distribution expenses of the
Brinson Class N nor the UBS Investment Funds Class.
49
<PAGE>
The Brinson Funds -- Notes To Financial Statements
H. Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results may differ from those
estimates.
I. Earnings Credits: The Funds have entered into an arrangement with their
custodian whereby interest earned on uninvested cash balances was used to offset
a portion of the Fund's expenses. This amount is reflected in the statement of
operations.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Brinson Partners, Inc. (the "Advisor"), a registered investment advisor,
provides the Funds with investment management services. As compensation for
these services, each Fund pays the Advisor a monthly fee based on each Fund's
respective average daily net assets. The Advisor has agreed to waive its fees
and reimburse each Fund to the extent that total annualized operating expenses
exceed a specified percentage of each Fund's respective average daily net
assets. Investment advisory fees for the six months ended December 31, 1999,
were as follows:
<TABLE>
<CAPTION>
UBS Investment
Advisory Brinson Class I Brinson Class N Funds Class Advisory Fees
Fee Expense Cap Expense Cap Expense Cap Fees Deferred
-------- --------------- --------------- -------------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Global Fund............... 0.80% 1.10% 1.35% 1.75% $1,641,535 $ --
Global Equity Fund........ 0.80 1.00 1.25 1.76 335,604 18,447
Global Bond Fund.......... 0.75 0.90 1.15 1.39 339,912 38,065
</TABLE>
Certain officers of the Funds are also officers and directors of the Advisor.
All officers serve without direct compensation from the Funds. Trustees' fees
paid to unaffiliated trustees for the six months ended December 31, 1999 were
$4,268, $2,230 and $2,208 for the Global Fund, Global Equity Fund and Global
Bond Fund, respectively.
The Global Fund invests in shares of certain affiliated investment companies
also sponsored by the Advisor. These investments represented 21.15% of the
Fund's total net assets at December 31, 1999. Activity for the six months ended
December 31, 1999 was as follows:
<TABLE>
<CAPTION>
Net Change in
Sales Realized Net Unrealized Interest
Affiliates Purchases Proceeds Gain/(Loss) Gain/(Loss) Income Value
- ---------- ------------ ------------ ------------- -------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Brinson Post-Venture Fund................. $ -- $ -- $ -- $ 80,510 $ -- $ 7,740,955
Brinson High Yield Fund................... -- 6,000,000 1,029,066 (749,294) -- 8,501,106
Brinson Emerging Markets Equity Fund...... -- 2,728,450 (620,659) 4,132,636 -- 18,326,811
Brinson Emerging Markets Debt Fund........ -- 4,000,000 769,030 2,514,137 -- 23,996,711
Brinson Supplementary Trust U.S. Cash
Management Prime Fund................... 214,667,924 234,755,971 -- -- 300,209 12,006,635
</TABLE>
The Global Equity Fund and Global Bond Fund also invest in shares of the Brinson
Supplementary Trust U.S. Cash Management Prime Fund ("Supplementary Trust"). The
Supplementary Trust is managed by the Advisor and is offered as a cash
management option to mutual funds and other accounts managed by the Advisor. The
Supplementary Trust charges no management fees. Distributions received from the
Supplementary Trust are reflected as interest income in the statement of
operations. Amounts relating to those investments at the six months ended
December 31, 1999 were as follows:
<TABLE>
<CAPTION>
% of
Sales Interest Net
Affiliates Purchases Proceeds Income Value Assets
- ---------- ---------- ----------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Global Equity Fund........... $15,177,471 $15,788,120 $24,988 $411,539 0.49%
Global Bond Fund............. 20,533,527 26,203,701 45,065 469,060 0.58
</TABLE>
50
<PAGE>
The Brinson Funds--Notes To Financial Statements
3. INVESTMENT TRANSACTIONS
Investment transactions for the six months ended December 31, 1999, excluding
short-term investments, were as follows:
<TABLE>
<CAPTION>
Proceeds
Purchases From Sales
------------ ------------
<S> <C> <C>
Global Fund................................. $142,746,662 $283,169,079
Global Equity Fund.......................... 47,047,973 56,616,119
Global Bond Fund............................ 31,227,121 62,903,677
</TABLE>
4. FORWARD FOREIGN CURRENCY CONTRACTS
The Funds may engage in portfolio hedging with respect to changes in currency
exchange rates by entering into forward foreign currency contracts to purchase
or sell currencies. Forward foreign currency contracts are also used to achieve
currency allocation strategies. A forward foreign currency contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. Risks associated with such contracts include movement
in the value of the foreign currency relative to the U.S. dollar and the
ability of the counterparty to perform. The unrealized gain, if any, represents
the credit risk to each Fund on a forward foreign currency contract.
Fluctuations in the value of forward foreign currency contracts are recorded
daily as net unrealized gains or losses. The Funds realize a gain or loss upon
settlement of the contracts. The statement of operations reflects net realized
and net unrealized gains and losses on these contracts. The counterparty to all
forward foreign currency contracts at and for the six months ended December 31,
1999, was an affiliate of the Funds' custodian.
5. FUTURES CONTRACTS
The Funds may purchase or sell exchange-traded futures contracts, which are
contracts that obligate the Funds to make or take delivery of a financial
instrument or the cash value of a securities index at a specified future date at
a specified price. The Funds enter into such contracts to hedge a portion of
their portfolio. Risks of entering into futures contracts include the
possibility that there may be an illiquid market or that a change in the value
of the contract may not correlate with changes in the value of the underlying
securities. Upon entering into a futures contract, the Funds are required to
deposit either cash or securities (initial margin). Subsequent payments
(variation margin) are made or received by the Funds, generally on a daily
basis. The variation margin payments are equal to the daily changes in the
contract value and are recorded as net unrealized gains or losses. The Funds
recognize a realized gain or loss when the contract is closed or expires. The
statement of operations reflects net realized and net unrealized gains and
losses on these contracts.
6. SECURITY LENDING
The Global Fund loaned securities to certain brokers, with the Fund's custodian
acting as the Fund's lending agent. The Fund earned negotiated lenders' fees,
which are included in interest income in the statement of operations. Securities
loaned are recorded at the amount of cash collateral received. The Fund monitors
the market value of securities loaned on a daily basis and initially requires
collateral against the loaned securities in an amount at least equal to 102% of
the value of domestic securities loaned and 105% of the value of non-U.S.
securities loaned. The cash collateral received is invested in interest-bearing
securities and is included in the schedule of investments. The value of loaned
securities and related collateral outstanding at December 31, 1999 were as
follows:
Value of Loaned Cash Collateral
Securities Received
--------------- ---------------
Global Fund................................. $56,204,165 $57,479,350
=========== ===========
7. DISTRIBUTION PLANS
The Trust has adopted distribution plans (the "Plans") pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, for the Brinson Class N
and the UBS Investment Funds Class. Each Plan governs payments made for the
expenses incurred in the promotion and distribution of the Brinson Class N and
the UBS Investment Funds Class. Annual fees under the Brinson Class N Plan shall
not exceed 0.25% of the average daily net assets of the Brinson Class N of each
of the Funds. Annual fees under the UBS Investment Funds Plan, which include a
0.25% service fee, total 0.65%, 0.76% and 0.49% of the average daily net assets
of the UBS Investment Funds Class of the Global Fund, Global Equity Fund and
Global Bond Fund, respectively.
8. LINE OF CREDIT
The Trust has entered into an agreement with Chase Manhattan Bank to provide a
364-day $100 million committed line of credit to the Funds. Borrowings will be
made for temporary purposes. Interest on amounts borrowed is calculated based on
the Federal Funds Rate
51
<PAGE>
The Brinson Funds -- Notes to Financial Statements
plus 0.50%. The Funds pay an annual commitment fee of 0.08% of the average daily
unutilized balance of the line of credit. During the six months ended December
31, 1999, the Global Fund and Global Bond Fund had total borrowings of
$9,500,000 and $31,000,000 outstanding for two days and six days under the
agreement, respectively. The Global Equity Fund had no borrowings under the
agreement.
9. CAPITAL TRANSACTIONS
Capital stock transactions were as follows:
<TABLE>
<CAPTION>
Global Fund
------------------------------------------------------------------
Six Months Ended Year Ended
December 31, 1999 June 30, 1999
--------------------------- ----------------------------
Shares Value Shares Value
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I...................... 13,313,712 $154,829,980 33,634,272 $404,497,836
Brinson Class N...................... 5,699 67,133 31,878 401,372
UBS Investment Funds Class........... 26,354 307,397 469,115 5,622,287
---------- ------------ ---------- ------------
Total Sales.................. 13,345,765 $155,204,510 34,135,265 $410,521,495
========== ============ ========== ============
Dividend Reinvestment:
Brinson Class I...................... 1,590,665 $ 17,592,753 3,914,936 $ 45,438,730
Brinson Class N...................... 6,165 68,059 12,826 148,599
UBS Investment Funds Class........... 78,388 863,834 201,293 2,326,850
---------- ------------ ---------- ------------
Total Dividend Reinvestment.. 1,675,218 $ 18,524,646 4,129,055 $ 47,914,179
========== ============ ========== ============
Redemptions:
Brinson Class I...................... 25,452,650 $297,617,004 50,809,625 $617,784,220
Brinson Class N...................... 23,828 280,466 4,388 53,226
UBS Investment Funds Class........... 670,655 7,672,100 1,220,493 14,718,874
---------- ------------ ---------- ------------
Total Redemptions............ 26,147,133 $305,569,570 52,034,506 $632,556,320
========== ============ ========== ============
Global Equity Fund
------------------------------------------------------------------
Six Months Ended Year Ended
December 31, 1999 June 30, 1999
--------------------------- ----------------------------
Shares Value Shares Value
---------- ------------ ---------- ------------
Sales:
Brinson Class I...................... 415,195 $ 5,374,301 2,413,314 $ 30,206,170
Brinson Class N...................... -- -- 15,911 200,000
UBS Investment Funds Class........... 169,249 2,203,217 352,164 4,402,461
---------- ------------ ---------- ------------
Total Sales.................. 584,444 $ 7,577,518 2,781,389 $ 34,808,631
========== ============ ========== ============
Dividend Reinvestment:
Brinson Class I...................... 257,009 $ 3,143,195 54,126 $ 661,376
Brinson Class N...................... 1,707 20,844 426 5,130
UBS Investment Funds Class........... 268,571 3,281,812 66,261 795,940
---------- ------------ ---------- ------------
Total Dividend Reinvestment.. 527,287 $ 6,445,851 120,813 $ 1,462,446
========== ============ ========== ============
Redemptions:
Brinson Class I...................... 626,264 $ 8,104,601 1,142,595 $ 14,484,716
Brinson Class N...................... -- -- -- --
UBS Investment Funds Class........... 432,319 5,544,183 1,860,700 22,842,212
---------- ------------ ---------- ------------
Total Redemptions............ 1,058,583 $ 13,648,784 3,003,295 $ 37,326,928
========== ============ ========== ============
</TABLE>
52
<PAGE>
The Brinson Funds -- Notes To Financial Statements
<TABLE>
<CAPTION>
Global Bond Fund
---------------------------------------------------
Six Months Ended Year Ended
December 31, 1999 June 30, 1999
---------------------- -------------------------
Shares Value Shares Value
--------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I............................................................ 1,096,853 $10,137,515 11,338,295 $110,539,879
Brinson Class N............................................................ 129 1,195 117,021 1,120,104
UBS Investment Funds Class................................................. 7,546 69,731 432,357 4,222,107
--------- ----------- ---------- ------------
Total Sales........................................................ 1,104,528 $10,208,441 11,887,673 $115,882,090
========= =========== ========== ============
Dividend Reinvestment:
Brinson Class I............................................................ 113,380 $ 1,041,959 484,490 $ 4,679,150
Brinson Class N............................................................ -- 1 579 5,581
UBS Investment Funds Class................................................. 4,178 38,350 19,366 187,579
--------- ----------- ---------- ------------
Total Dividend Reinvestment........................................ 117,558 $ 1,080,310 504,435 $ 4,872,310
========= =========== ========== ============
Redemptions:
Brinson Class I............................................................ 2,795,101 $25,880,953 11,403,020 $107,591,860
Brinson Class N............................................................ 118,466 1,105,323 90 871
UBS Investment Funds Class................................................. 94,125 869,117 434,492 4,202,489
--------- ----------- ---------- ------------
Total Redemptions.................................................. 3,007,692 $27,855,393 11,837,602 $111,795,220
========= =========== ========== ============
</TABLE>
53
<PAGE>
Distributed by:
Funds Distributor, Inc.
60 State Street
Boston, MA 02109
This report is submitted for the general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors in the
Funds unless preceded or accompanied by an effective Prospectus which includes
details regarding the Funds' objectives, policies, expenses and other
information.
<PAGE>
[Logo Brinson]
The Brinson Funds
- -------------------------------------------------------------------------------
Australia * Bahrain * Brazil * China * France * Germany * Japan * Singapore
Switzerland * United Kingdom * United States
209 South LaSalle Street * Chicago, Illinois 60604-1295 * Tel: (800) 448-2430
<PAGE>
-------------------
THE BRINSON FUNDS
BRINSON GLOBAL (EX-U.S.) EQUITY FUND
SEMI-ANNUAL REPORT
DECEMBER 31, 1999
[GRAPHIC]
INSTITUTIONAL ASSET MANAGEMENT
---------------------------
<PAGE>
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[GRAPHIC]
Trustees
Walter E. Auch
Frank K. Reilly, CFA
Edward M. Roob
Officers
Frank K. Reilly, CFA Carolyn M. Burke, CPA
Chairman of the Board Secretary and Treasurer
E. Thomas McFarlan David E. Floyd, CPA
President Assistant Secretary
Thomas J. Digenan, CFA, CPA Mark F. Kemper
Vice President Assistant Secretary
Debra L. Nichols
Vice President
- --------------------------------------------------------------------------------
1
<PAGE>
- --------------------------------------------------------------------------------
THE FUND'S ADVISOR -- BRINSON PARTNERS, INC.
- --------------------------------------------------------------------------------
[GRAPHIC]
- --------------------------------------------------------------------------------
Since the founding of our organization nearly twenty years ago, we have focused
our collective energy on two goals: creating meaningful value-added investment
performance; and providing our clients with individualized client relationships
of the highest quality.
Now, in 2000, more than 1,200 employees located in 11 countries around the world
continue to deliver investment strategies that meet our clients' needs. With an
unrelenting focus on our goals, we have grown into one of the world's premier
investment management organizations, and a recognized leader in our industry. In
North America, we make our investment capabilities available to institutions and
individual investors through the Brinson Family of Funds. The Brinson Funds are
no-load, institutionally priced mutual funds that provide investors convenient
access to our global investment expertise and capabilities.
Within a framework of integrated capital markets, we select portfolio
investments by focusing on long-term investment fundamentals. Investment
performance for our clients is maximized within and across asset classes through
a comprehensive understanding of global investment markets and their
interrelationships. We apply a systematic, disciplined approach to valuing
investments and combine the seasoned judgement of our global investment teams to
construct optimal portfolios--balancing considerations for both risk and return.
Brinson Partners, Inc. is a member of the UBS Asset Management, the
institutional asset management division of UBS AG.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[GRAPHIC]
Shareholder Letter ...................................................... 4
Global Economic and Market Highlights ................................... 5
Global (Ex-U.S.) Equity Fund ............................................ 6
Schedule of Investments ................................................. 10
Financial Statements .................................................... 14
Financial Highlights .................................................... 17
Notes to Financial Statements ........................................... 19
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER LETTER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[GRAPHIC]
January 27, 2000
Dear Shareholder:
We are pleased to present the semi-annual report for The Brinson Funds for the
six-month period ending December 31, 1999. This report will provide a discussion
on the current U.S. and International Economic outlook. We will also provide our
current portfolio strategies and performance updates for our international
mutual fund.
The decade of the 1990s ended with a particularly challenging year. We continued
to apply our proven value-based investment process across all of our
portfolios, but our investment results varied substantially. In some areas, such
as fixed income, our performance was excellent relative to both the market and
our peers. In other areas, most notably multi-asset and equity portfolios,
results were disappointing.
Throughout 1999, our asset allocation strategies continued to focus on reducing
exposure to the risks presented by equity prices that have been driven far above
even optimistic estimates of underlying value. While the risk hedge in balanced
portfolios had little net effect on performance through most of the year, the
surge in equity prices late in the year hampered the returns relative to the
benchmarks.
The broad array of our equity portfolios, with the exception of the growth
portfolios, significantly lagged their benchmarks in 1999. Some degree of
underperformance was unavoidable as the U.S. market was increasingly driven by
momentum, which in turn focused more tightly on narrow technology and e-commerce
stocks. In such a market, the fundamental price/value discrepancies that are the
core of our investment process are effectively ignored in the market. In
addition, our stock selection was uncharacteristically weak and a meaningful
source of the underperformance of our U.S. and Global Equity portfolios.
In fixed income our U.S. Bond and High Yield portfolios outpaced the market and
ranked highly in their respective universes of active managers. However, outside
the U.S., our Global Bond portfolio generally underperformed, due almost
entirely to strength in both the Japanese bond market and the yen, where we are
underweighted.
Our fundamental assessments across markets have been both accurate and
perceptive, but momentum rather than the reality of fundamental value has
continued to drive equity markets, particularly in the U.S. We have seen this
phenomenon historically and it has always proven to be a sign of danger, that
ultimately ends badly for the market in general and the momentum players in
particular. Over time, these styles ebb and flow but momentum driven approaches
have no lasting link to underlying fundamentals and always fail to deliver when
viewed over meaningful horizons. It is these concerns which underlie our current
asset allocation and equity portfolio strategies.
2000 will be a challenging year, but we are confident that remaining true to our
investment disciplines will in the long run accrue to our shareholders' benefit.
As always, we welcome your thoughts and comments, and appreciate your continued
trust and the confidence you have placed in The Brinson Funds.
Sincerely,
/s/ Gary P. Brinson
Gary P. Brinson
Chairman and Chief Investment Officer
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL ECONOMIC AND MARKET HIGHLIGHTS
- --------------------------------------------------------------------------------
[GRAPHIC]
- --------------------------------------------------------------------------------
As the negative effects of the Asian crisis gradually wane and domestic demand
continues to remain robust, the expansion in Euroland gains speed. In late
December 1999, the German government announced cuts in corporate and personal
tax rates, and initiated cross-party talks about reforms of the country's
burdened pension system. So far, however, neither the ruling coalition parties
nor the opposition has managed to communicate its position in the pension debate
in a transparent way, as the political system is being absorbed by allegations
of funding fraud against the Christian democrats. As in the United States, pan-
European inflation has accelerated in the wake of surging energy prices, whereas
inflation excluding food and energy has moved sideways. While headline inflation
figures will be heavily impacted by energy prices, core inflation is unlikely to
accelerate much, given economy-wide over-capacities and disinflationary forces
arising from continued deregulation of utility and telecom sectors.
In Japan, real GDP declined in the third quarter of 1999, largely as a result of
a phasing out of public spending programs, weak private capital expenditures and
stagnating consumer spending. A sustainable recovery will hinge on healthy gains
in private demand. Should the trend in economic growth continue to be
disappointing, the government may adopt additional stimulative fiscal measures.
The Bank of Japan has sterilized, and will probably continue to sterilize,
expansionary foreign exchange market operations. Hopes that meaningful
quantitative easing steps are around the corner remain premature.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Global (Ex-U.S.) Equity Environment
- --------------------------------------------------------------------------------------------------------
6 months 1 year 3 years 5 years 8/31/93*
Major Markets ended ended ended ended to
Total Return in U.S.Dollar Hedged Terms 12/31/99 12/31/99 12/31/99 12/31/99 12/31/99
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MSCI World Ex USA (Free) Index 19.89% 36.98% 21.89% 18.43% 14.34%
Europe Ex U.K. 28.38 40.04 37.84 30.50 23.60
U.K. 7.16 15.34 18.33 18.38 14.62
Canada 27.60 45.99 21.46 21.63 18.20
Japan 16.37 54.31 10.18 7.88 5.56
Asia Ex Japan 20.68 61.12 -1.29 6.05 7.44
- --------------------------------------------------------------------------------------------------------
<CAPTION>
6 months 1 year 3 years 5 years 8/31/93*
Major Currencies ended ended ended ended to
Percent Change Relative to U.S.Dollars 12/31/99 12/31/99 12/31/99 12/31/99 12/31/99
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Yen 18.26% 10.20% 4.28% -0.51% 0.36%
Pound 2.25 -3.13 -1.98 0.60 1.27
Euro** -2.80 -14.64 -7.56 -4.28 -2.32
Canadian Dollar 1.98 5.84 -1.89 -0.68 -1.47
- --------------------------------------------------------------------------------------------------------
</TABLE>
*Performance inception date of the Brinson Global (Ex-U.S.) Equity Fund Class I
**Deutschemark prior to 1/1/99
All total returns in excess of 1 year are average annualized total returns
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND
- --------------------------------------------------------------------------------
[GRAPHIC]
- --------------------------------------------------------------------------------
The Brinson Global (Ex-U.S.) Equity Fund Class I has provided an annualized
return of 10.01% since its inception on August 31, 1993. Over the same
period, its benchmark, the MSCI World Ex USA (Free) Index, has produced a return
of 11.28%. The Fund's performance was achieved with a volatility or risk of
12.64%, considerably below the 14.26% volatility of the benchmark. For the full
year period, the Fund increased 19.16%, lagging the index's unhedged return of
27.77%. Most regions experienced strong performance in dollar-hedged terms, led
by Asia (Ex-Japan), Japan and Europe (Ex-U.K.). The Fund benefited from our mid-
year decision to increase Japan to neutral and then to an overweight, as well as
from European market allocation. However, returns were hurt by the overweight to
Australia and underweight to Asia (Ex-Japan). Currency management reduced
returns, due to the underweight of the yen and overweight of the Euro, but
holding an overweight position in the strong-performing Australian dollar helped
the Fund's performance.
Earlier in the year, traditional value stocks, encompassing such sectors as
transportation, materials, basic industry and other economically sensitive
areas, regained favor in Europe. At that time, our overweight in these sectors
gave a lift to relative performance. By mid-year, however, investor sentiment
changed sharply, as investors began to shun value stocks in order to flock to
large capitalization, growth and momentum industries and stocks. Following in
the footsteps of the U.S. market, investors in Japan, Southeast Asia, Australia,
Europe and the U.K. rushed to stocks engaged in information technology,
telecommunications and Internet-related businesses. By year-end, stocks with a
growth tilt had significantly overtaken value on a global basis. In our view,
many of these stocks have risen to levels that far exceed underlying value.
Consequently, stock selection in our U.K. and European portfolios, which are
underweight these securities, was hurt. These portfolios are positioned in
industries and stocks that command more reasonable valuations and, in our view,
offer greater upside potential.
The Pacific (Ex-Japan) region has begun to rebound from last year's currency and
banking crises. Japan has exhibited tentative signs of an economic
revival, fueled by government spending packages and extremely low interest
rates. Consolidation in the banking and financial sectors is easing fears of a
financial meltdown, while encouraging signs of restructuring in other businesses
have begun to surface. Our Japanese stock holdings are geared toward companies
that are actively restructuring.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[GRAPHIC]
- --------------------------------------------------------------------------------
Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 months 1 year 3 years 5 years 8/31/93*
ended ended ended ended to
12/31/99 12/31/99 12/31/99 12/31/99 12/31/99
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brinson Global (Ex-U.S.) Equity Fund Class I 16.29% 19.16% 12.96% 13.42% 10.01%
- -----------------------------------------------------------------------------------------------------
MSCI World Ex USA (Free) Index 22.45 27.77 15.67 13.12 11.28
- -----------------------------------------------------------------------------------------------------
</TABLE>
* Performance inception date of the Brinson Global (Ex-U.S.) Equity Fund
Class I
Performance is net of withholding taxes on dividends.
Total return includes reinvestment of all capital gain and income
distributions.
All total returns in excess of 1 year are average annualized returns
- --------------------------------------------------------------------------------
Illustration of an Assumed Investment of $1,000,000
- --------------------------------------------------------------------------------
This chart shows the growth in the value of an investment in the Brinson Global
(Ex-U.S.) Equity Fund Class I and the MSCI World Ex USA (Free) Index if you had
invested $1,000,000 on August 31, 1993, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
Brinson Global (Ex-U.S.) Equity Fund Class I
vs. MSCI World Ex USA (Free) Index
Wealth Value with Dividends Reinvested
[GRAPH]
[PLOT POINTS TO COME]
8/31/93 = $1,000,000 Data through 12/31/99
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[GRAPHIC]
- --------------------------------------------------------------------------------
Total Return
- --------------------------------------------------------------------------------
6 months 1 year 6/30/97*
ended ended to
12/31/99 12/31/99 12/31/99
- --------------------------------------------------------------------------------
Brinson Global (Ex-U.S.) Equity Fund Class N 16.11% 18.90% 9.44%
- --------------------------------------------------------------------------------
MSCI World Ex USA (Free) Index 22.45 27.77 14.13
- --------------------------------------------------------------------------------
* Inception date of the Brinson Global (Ex-U.S.) Equity Fund Class N
Performance is net of withholding taxes on dividends.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
- --------------------------------------------------------------------------------
Illustration of an Assumed Investment of $1,000,000
- --------------------------------------------------------------------------------
This chart shows the growth in the value of an investment in the Brinson Global
(Ex-U.S.) Equity Fund Class N and the MSCI World Ex USA (Free) Index if you had
invested $1,000,000 on June 30, 1997, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
Brinson Global (Ex-U.S.) Equity Fund Class N
vs. MSCI World Ex USA (Free) Index
Wealth Value with Dividends Reinvested
[GRAPH]
[PLOT POINTS TO COME]
6/30/97 = $1,000,000 Data through 12/31/99
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND
- --------------------------------------------------------------------------------
[GRAPHIC]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Industry Diversification
- --------------------------------------------------------------------------------
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITIES
Aerospace & Military ............................................ 0.70%
Airlines ........................................................ 0.65
Appliances & Households ......................................... 3.81
Autos/Durables .................................................. 2.89
Banking ......................................................... 11.30
Beverages & Tobacco ............................................. 2.24
Broadcasting & Publishing ....................................... 3.55
Building Materials .............................................. 0.72
Business & Public Service ....................................... 5.05
Chemicals ....................................................... 2.84
Construction .................................................... 0.36
Data Processing ................................................. 2.96
Electric Components ............................................. 4.12
Electronics ..................................................... 7.16
Energy .......................................................... 3.94
Financial Services .............................................. 4.10
Food & House Products ........................................... 2.95
Forest Products ................................................. 1.13
Health & Personal Care .......................................... 5.95
Industrial Components ........................................... 1.64
Insurance ....................................................... 5.19
Leisure & Tourism ............................................... 0.24
Machinery & Engineering ......................................... 0.22
Merchandising ................................................... 3.10
Metals--Steel ................................................... 0.42
Multi-Industry .................................................. 1.05
Non-Ferrous Metals .............................................. 1.24
Real Estate ..................................................... 0.91
Recreation ...................................................... 0.82
Telecommunications .............................................. 13.61
Transportation .................................................. 1.51
Utilities ....................................................... 3.85
Wholesale & International Trade ................................. 0.22
------
Total Global (Ex-U.S.) Equities ................................. 100.44
CONVERTIBLE BONDS ............................................... 0.03
SHORT-TERM INVESTMENTS .......................................... 0.52
------
TOTAL INVESTMENTS ............................................... 100.99
LIABILITIES, LESS CASH AND OTHER ASSETS ......................... (0.99)
------
NET ASSETS ...................................................... 100.00%
======
- --------------------------------------------------------------------------------
Market and Currency Strategy
- --------------------------------------------------------------------------------
As of December 31, 1999 (Unaudited)
Fund Benchmark
--------------------- ---------------------
Market Currency Market Currency
Strategy Strategy Strategy Strategy
- ----------------------------------------------------------------------------
Australia 4.19% 8.19% 2.35% 2.35
Austria 0.11 0.00 0.21 0.00
Belgium 1.12 0.00 0.86 0.00
Canada 2.57 4.17 4.17 4.17
Denmark 0.46 0.75 0.75 0.75
Euro 0.00 44.52 0.00 36.29
Finland 3.35 0.00 2.85 0.00
France 9.89 0.00 9.83 0.00
Germany 9.27 0.00 10.04 0.00
Hong Kong 0.54 0.00 2.24 2.24
Ireland 0.00 0.00 0.40 0.00
Italy 3.13 0.00 4.05 0.00
Japan 31.29 18.29 26.29 26.29
Netherlands 4.61 0.00 5.02 0.00
New Zealand 0.31 0.31 0.15 0.15
Norway 0.00 0.36 0.36 0.36
Portugal 0.68 0.00 0.44 0.00
Singapore 0.92 1.02 1.02 1.02
Spain 3.09 0.00 2.59 0.00
Sweden 3.28 6.58 2.57 2.57
Switzerland 3.94 5.45 5.45 5.45
U.K. 17.25 10.36 18.36 18.36
- ----------------------------------------------------------------------------
100.00% 100.00% 100.00% 100.00%
- --------------------------------------------------------------------------------
Top Ten Global (Ex-U.S.) Equity Holdings
- --------------------------------------------------------------------------------
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- ---------------------------------------------------------------------
1. Sony Corp. 2.16%
2. Fujitsu 2.09
3. Nippon Telegraph & Telephone Corp. 1.95
4. Siemens AG 1.66
5. France Telecom S.A. 1.50
6. Nokia Oyj 1.48
7. Ericsson, B Shares 1.42
8. ING Groep NV 1.38
9. Fanuc 1.36
10. British Telecommunications PLC 1.26
- ---------------------------------------------------------------------
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND -- SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
-------- -------
Global (Ex-U.S.) Equities -- 100.44%
Australia -- 4.16%
Amcor Ltd. ..................................... 89,740 $ 418,950
Amp Ltd. ....................................... 100,900 1,111,265
Boral Ltd. ..................................... 285,000 440,149
Brambles Industries Ltd. ....................... 26,140 720,555
Broken Hill Proprietary Co., Ltd. .............. 145,720 1,907,275
CSR Ltd. ....................................... 252,190 610,622
Lend Lease Corp., Ltd. ......................... 84,196 1,175,786
National Australia Bank Ltd. ................... 161,648 2,464,727
News Corp., Ltd. ............................... 261,488 2,530,827
News Corp., Ltd., Preferred .................... 96,879 827,337
Qantas Airways Ltd. ............................ 124,238 308,945
QBE Insurance Group Ltd. ....................... 174,980 812,998
Rio Tinto Ltd. ................................. 67,260 1,440,211
Santos Ltd. .................................... 208,461 566,129
Telstra Corp., Ltd. ............................ 631,110 3,419,621
Westpac Banking Corp., Ltd. .................... 303,941 2,089,828
WMC Ltd. ....................................... 85,970 472,573
Woolworth's Ltd. ............................... 218,560 749,453
------------
22,067,251
------------
Austria -- 0.11%
Austria Tabakwerke AG .......................... 11,600 558,134
------------
Belgium -- 1.15%
Electrabel S.A. ................................ 5,310 1,729,885
Fortis (B) ..................................... 114,367 4,106,440
KBC Bancassurance Holding ...................... 4,410 236,500
------------
6,072,825
------------
Canada -- 1.92%
Agrium, Inc. ................................... 71,280 550,083
Alcan Aluminum Ltd. ............................ 24,040 983,929
Bank of Montreal ............................... 14,710 499,692
Canadian National Railway Co. .................. 32,880 865,442
Canadian Pacific Ltd. .......................... 44,214 945,941
Corus Entertainment Inc. ....................... 8,326 169,239
Hudson's Bay Co. ............................... 64,320 762,285
Imasco Ltd. .................................... 23,900 657,896
Imperial Oil Ltd. .............................. 21,460 458,389
Magna International, Inc., Class A ............. 14,060 595,804
Newbridge Networks Corp. (b) ................... 31,510 706,712
NOVA Chemicals Corp. ........................... 27,121 527,919
Potash Corporation of Saskatchewan, Inc. ....... 8,860 421,236
Royal Bank of Canada ........................... 23,420 1,024,716
Shaw Communications, Inc., Class B ............. 19,980 655,996
TransCanada Pipelines Ltd. ..................... 18,876 162,578
Westcoast Energy, Inc. ......................... 13,220 210,875
------------
10,198,732
------------
Denmark -- 0.48%
Tele Danmark A/S ............................... 34,710 2,566,644
------------
Finland -- 3.16%
Merita Ltd., Class A ........................... 350,334 2,054,364
Nokia Oyj ...................................... 43,489 7,846,774
Sampo Insurance Co., Ltd., Series A ............ 94,154 3,274,971
UPM-Kymmene Corp. .............................. 89,016 3,569,170
------------
16,745,279
------------
France -- 9.72%
Air France (b) ................................... 89,252 1,699,851
Air Liquide ...................................... 23,423 3,902,229
Alcatel .......................................... 10,160 2,322,030
Axa .............................................. 13,200 1,831,257
Banque Nationale de Paris ........................ 69,648 6,395,041
Carrefour S.A. ................................... 13,001 2,386,186
Cie de Saint Gobain .............................. 14,848 2,778,763
CSF Thomson ...................................... 89,814 2,952,056
France Telecom S.A. .............................. 60,419 7,952,020
Groupe Danone .................................... 10,572 2,479,775
Michelin, Class B ................................ 26,793 1,047,430
Rhone-Poulenc, Class A ........................... 55,005 3,181,392
Schneider S.A. ................................... 26,479 2,068,983
Societe Generale ................................. 16,407 3,799,097
Total Fina S.A., Class B ......................... 33,219 4,412,062
Vivendi .......................................... 25,445 2,286,609
------------
51,494,781
------------
Germany -- 9.09%
Allianz AG ....................................... 12,638 4,224,870
Bayer AG ......................................... 127,756 6,044,530
Bayerische Motoren Werke AG ...................... 60,350 1,842,060
Continental AG ................................... 84,370 1,687,214
DaimlerChrysler AG ............................... 43,183 3,372,015
Deutsche Bank AG ................................. 47,611 4,011,292
Deutsche Telekom AG .............................. 60,380 4,227,647
Dresdner Bank AG ................................. 46,450 2,509,653
Mannesmann AG .................................... 22,330 5,380,993
SAP AG ........................................... 3,680 1,800,142
Siemens AG ....................................... 68,910 8,772,536
Veba AG .......................................... 86,078 4,184,785
Volkswagen AG .................................... 1,800 101,041
------------
48,158,778
------------
Hong Kong -- 0.20%
Henderson Land Development Co., Ltd. ............. 165,000 1,059,175
------------
Italy -- 3.00%
Assicurazioni Generali ........................... 72,446 2,381,922
Beni Stabili Spa ................................. 222,610 78,100
ENI Spa .......................................... 589,000 3,223,645
ENI Spa ADR ...................................... 10,650 587,081
La Rinascente Spa ................................ 198,140 1,265,176
San Paolo-imi, Spa ............................... 194,610 2,631,578
Telecom Italia Mobile Spa ........................ 312,000 3,468,369
Telecom Italia Spa ............................... 161,000 2,259,400
------------
15,895,271
------------
Japan -- 32.62%
Acom Co., Ltd. ................................... 27,200 2,660,075
Asahi Bank Ltd. .................................. 231,000 1,421,816
Bank of Tokyo-Mitsubushi Ltd. .................... 238,000 3,311,143
Benesse Corporation .............................. 8,700 2,090,958
Bridgestone Corp. ................................ 74,000 1,626,691
Canon, Inc. ...................................... 117,000 4,640,907
Dai Nippon Printing Co., Ltd. .................... 81,000 1,289,922
Dai-Ichi Kangyo Bank Ltd. ........................ 141,000 1,315,568
Daiichi Pharmaceutical Co., Ltd. ................. 70,000 908,896
Daikin Industries Ltd. ........................... 86,000 1,167,896
Denso Corp. ...................................... 64,000 1,525,671
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND -- SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
-------- -------
Japan -- continued
East Japan Railway Co. ........................... 413 $ 2,223,272
Fanuc ............................................ 56,700 7,206,946
Fuji Bank Ltd. ................................... 109,000 1,057,467
Fujitsu .......................................... 243,000 11,063,260
Honda Motor Co. .................................. 102,000 3,786,820
Hoya Corp. ....................................... 32,000 2,516,731
Ito Yokado Co., Ltd. ............................. 25,000 2,711,152
Kamigumi Co. Ltd. ................................ 213,000 894,827
Kaneka Corp. ..................................... 21,000 268,155
Kao Corp. ........................................ 88,000 2,506,180
Kirin Brewery Co., Ltd. .......................... 157,000 1,648,918
Kokuyo ........................................... 44,000 584,632
Kuraray Co., Ltd. ................................ 168,000 1,698,793
Matsushita Electric Industrial Co. ............... 165,000 4,562,063
Mitsubishi Corp. ................................. 150,000 1,156,270
Mitsubishi Estate Co., Ltd. ...................... 262,000 2,552,040
Murata Manufacturing Co., Inc. ................... 13,000 3,048,215
NEC Corp. ........................................ 204,000 4,853,109
NGK Insulators ................................... 150,000 1,112,305
Nintendo Corp., Ltd. ............................. 26,300 4,362,992
Nippon Steel Co. ................................. 963,000 2,248,615
Nippon Telegraph & Telephone Corp. ............... 603 10,309,706
Nissin Food Products Co. ......................... 46,300 1,087,895
Nomura Securities Co., Ltd. ...................... 242,000 4,362,171
NTT Mobile Communications ........................ 121 4,645,889
Obayashi Corp. ................................... 230,000 1,085,340
Orix Corporation ................................. 26,500 5,959,943
Osaka Gas Co. .................................... 632,000 1,518,949
Rohm Co. ......................................... 6,000 2,462,019
Sankyo Co., Ltd. ................................. 104,000 2,133,750
Santen Pharmaceutical Co., Ltd. .................. 54,000 888,965
Secom Co., Ltd. .................................. 51,000 5,605,491
Sekisui House Ltd. ............................... 96,000 848,811
Seven-Eleven Japan Co., Ltd. ..................... 19,000 3,007,181
Softbank Corp. ................................... 3,900 3,726,442
Sony Corp. ....................................... 38,700 11,456,304
Sumitomo Bank .................................... 165,000 2,255,239
Sumitomo Chemical Co. ............................ 351,000 1,646,036
Sumitomo Electric Industries ..................... 96,000 1,107,674
Taiheiyo Cement Corp. ............................ 600 1,143
Takeda Chemical Industries ....................... 86,000 4,243,076
Takefuji Corp. ................................... 11,300 1,412,017
TDK Corp. ........................................ 30,000 4,135,607
Tokio Marine & Fire Insurance Co. ................ 128,000 1,494,407
Tokyo Electric Power ............................. 57,200 1,531,220
Tokyo Electron Ltd. .............................. 18,000 2,462,019
Toyota Motor Corp. ............................... 128,000 6,190,220
Yamato Transport Co., Ltd. ....................... 85,000 3,288,555
-------------
172,888,374
-------------
Netherlands -- 4.89%
ABN AMRO Holdings NV ............................. 100,579 2,500,335
Elsevier NV ...................................... 263,090 3,127,723
ING Groep NV ..................................... 121,722 7,313,496
Koninklijke KPN NV ............................... 61,722 5,995,190
Royal Dutch Petroleum Co. ........................ 51,220 3,124,204
TNT Post Group NV ................................ 66,040 1,883,339
Unilever NV ...................................... 35,903 1,973,637
------------
25,917,924
------------
New Zealand -- 0.36%
Auckland International Airport Ltd. ................ 150,310 227,321
Carter Holt Harvey Ltd. ............................ 239,240 311,908
Fletcher Challenge Paper ........................... 343,600 240,111
Lion Nathan Ltd. ................................... 175,270 406,744
Telecom Corp. of New Zealand Ltd. .................. 156,290 733,545
------------
1,919,629
------------
Norway -- 0.27%
Norske Skogindustrier ASA .......................... 27,490 1,429,704
------------
Portugal -- 0.67%
EDP Electricidade de Portugal S.A .................. 96,837 1,682,206
Portugal Telecom ................................... 170,300 1,859,010
------------
3,541,216
------------
Singapore -- 0.93%
Singapore Press Holdings Ltd. ...................... 129,975 2,816,385
United Overseas Bank Ltd. (Frgn.) .................. 236,360 2,085,529
------------
4,901,914
------------
Spain -- 3.17%
Banco Popular Espanol S.A .......................... 51,692 3,355,075
Banco Santander Central Hispano, S.A. .............. 275,710 3,106,405
Endesa S.A. ........................................ 88,995 1,758,294
Tabacalera S.A. .................................... 273,008 3,886,001
Telefonica S.A. (b) ................................ 188,477 4,685,428
------------
16,791,203
------------
Sweden -- 3.26%
Electrolux AB, B Shares ............................ 166,670 4,175,041
Ericsson, B Shares ................................. 117,490 7,522,771
Investor AB, B Shares .............................. 158,130 2,221,187
Nordbanken Holding AB .............................. 207,940 1,217,020
Swedish Match AB ................................... 617,820 2,147,870
------------
17,283,889
------------
Switzerland -- 3.90%
Adecco S.A. ........................................ 2,957 2,290,673
Nestle S.A. (Reg.) ................................. 2,345 4,273,358
Novartis AG (Reg.) ................................. 3,624 5,293,254
Roche Holding AG (Gen.) ............................ 460 5,431,374
Swisscom AG (Reg.) ................................. 8,386 3,373,889
------------
20,662,548
------------
United Kingdom -- 17.38%
Allied Zurich PLC .................................. 173,348 2,038,123
AstraZeneca Group PLC .............................. 55,422 2,293,842
Barclays PLC ....................................... 87,244 2,505,702
BP Amoco PLC ....................................... 635,108 6,371,962
British Aerospace PLC .............................. 111,502 736,805
British Airways PLC ................................ 224,518 1,461,904
British Telecommunications PLC ..................... 273,287 6,664,140
Charter PLC ........................................ 406,151 1,734,681
Diageo PLC ......................................... 400,290 3,212,849
FKI PLC ............................................ 989,328 3,826,817
Glaxo Wellcome PLC ................................. 179,998 5,076,822
Greenalls Group PLC ................................ 261,946 1,245,432
House of Fraser PLC ................................ 496,141 607,722
HSBC Holdings PLC .................................. 170,000 2,364,536
Lloyds TSB Group PLC ............................... 453,067 5,655,488
Marconi PLC ........................................ 260,038 4,591,297
Marks & Spencer PLC ................................ 431,185 2,048,348
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND -- SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
-------- ------------
United Kingdom -- continued
National Power PLC ................................. 464,673 $ 2,684,867
Nycomed Amersham PLC ............................... 329,161 2,045,121
Peninsular & Oriental Steam Navigation Co. ......... 98,277 1,636,208
Powergen PLC ....................................... 270,798 1,942,190
Prudential Corp. PLC ............................... 224,436 4,413,047
Reckitt & Colman PLC ............................... 146,450 1,370,181
Reed International PLC ............................. 379,419 2,834,360
Rio Tinto Ltd. ..................................... 152,015 3,662,805
RJB Mining PLC ..................................... 398,768 205,663
Royal & Sun Alliance Insurance Group PLC ........... 238,659 1,813,618
Scottish & Southern Energy PLC ..................... 376,917 3,002,469
Tesco PLC .......................................... 947,770 2,875,571
Thames Water PLC ................................... 128,560 1,599,592
Trinity Mirror PLC ................................. 212,105 2,259,636
Unilever PLC ....................................... 265,759 1,951,024
United News & Media PLC ............................ 281,079 3,574,305
Yorkshire Water PLC ................................ 316,361 1,784,585
------------
92,091,712
------------
Total Global (Ex-U.S.) Equities
(Cost $381,218,232) .............................. 532,244,983
------------
Face
Amount
--------
Convertible Bonds -- 0.03%
Australia -- 0.03%
Burns, Philp Treasury,
7.50%, due 08/14/03 ...........................AUD 1,228,664 160,808
Burns, Philp & Co., Ltd., Warrants (b) ............. 1,228,664 --
------------
Total Convertible Bonds (Cost $147,071) ............ 160,808
------------
Shares Value
---------- ------------
Short-Term Investments -- 0.52%
Investment Companies -- 0.52%
Brinson Supplementary Trust U.S. Cash
Management Prime Fund
(Cost $2,771,329) ................................ 2,771,329 $ 2,771,329
------------
Total Investments
(Cost $384,136,632) -- 100.99% (a) ............... 535,177,120
Liabilities, less cash and
other assets -- (0.99%) .......................... (5,250,763)
------------
Net Assets-- 100% .................................. $529,926,357
============
See accompanying notes to schedule of investments.
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND -- SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $384,136,632; and net
unrealized appreciation consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation .......................................................................... $ 168,110,291
Gross unrealized depreciation .......................................................................... (17,069,803)
-------------
Net unrealized appreciation ........................................................................ $ 151,040,488
=============
</TABLE>
(b) Non-income producing security
FORWARD FOREIGN CURRENCY CONTRACTS
The Global (Ex-U.S.) Equity Fund had the following open forward foreign currency
contracts as of December 31, 1999:
<TABLE>
<CAPTION>
Settlement Local Current Unrealized
Date Currency Value Gain/(Loss)
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Forward Foreign Currency Buy Contracts
Australian Dollar .......................................... 02/17/00 31,200,000 $20,430,748 $ 139,239
British Pound .............................................. 02/17/00 11,000,000 17,729,353 (360,513)
Canadian Dollar ............................................ 02/17/00 11,400,000 7,863,696 140,584
European Union ............................................. 02/17/00 66,800,000 67,201,867 (3,525,088)
Japanese Yen ............................................... 02/17/00 670,000,000 6,596,631 204,600
Swedish Krona .............................................. 02/17/00 142,600,000 16,748,255 (741,167)
Swiss Franc ................................................ 02/17/00 12,100,000 7,601,648 (513,130)
Forward Foreign Currency Sale Contracts
British Pound .............................................. 02/17/00 32,900,000 53,026,884 7,564
European Union ............................................. 02/17/00 21,100,000 21,226,937 1,321,718
Japanese Yen ............................................... 02/17/00 6,640,000,000 65,375,565 (4,361,020)
Swedish Krona .............................................. 02/17/00 22,600,000 2,654,352 97,718
-----------
Total ................................................. $(7,589,495)
===========
</TABLE>
FUTURES CONTRACTS
The Global (Ex-U.S.) Equity Fund had the following open futures contracts as of
December 31, 1999:
<TABLE>
<CAPTION>
Expiration Current Unrealized
Date Cost Value Gain
------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
Index Futures Buy Contracts
CAC 40 10 Euro Index, 53 Contracts................. March 2000 $3,077,992 $3,192,720 $ 114,728
FTSE 100 Index, 27 Contracts....................... March 2000 1,849,400 1,883,790 34,390
---------
$ 149,118
=========
</TABLE>
The aggregate market value of investments pledged to cover margin requirements
for the open futures positions at December 31, 1999 was $160,808.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND -- FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31,1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $381,365,303) ............................................................ $532,405,791
Affiliated issuers (Cost $2,771,329) ................................................................ 2,771,329
Foreign currency, at value (Cost $1,738,121) .......................................................... 1,737,556
Receivables:
Investment securities sold .......................................................................... 12,859,880
Dividends ........................................................................................... 508,371
Interest ............................................................................................ 61,567
Variation margin ...................................................................................... 325,534
------------
TOTAL ASSETS .................................................................................... 550,670,028
------------
LIABILITIES:
Payables:
Due to custodian bank ............................................................................... 12,540,000
Investment advisory fees ............................................................................ 347,426
Accrued expenses .................................................................................... 266,750
Net unrealized depreciation on forward foreign currency contracts ..................................... 7,589,495
------------
TOTAL LIABILITIES ............................................................................... 20,743,671
------------
NET ASSETS ............................................................................................. $529,926,357
============
NET ASSETS CONSIST OF:
Paid in capital ....................................................................................... $378,247,079
Accumulated undistributed net investment income ....................................................... 801,068
Accumulated net realized gain ......................................................................... 7,267,983
Net unrealized appreciation ........................................................................... 143,610,227
------------
NET ASSETS ...................................................................................... $529,926,357
============
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share (Based on net assets of
$522,620,905 and 37,007,803 shares issued and outstanding) ........................................ $ 14.12
============
Brinson Class N:
Net asset value, offering price and redemption price per share (Based on net assets of
$1,258 and 89 shares issued and outstanding) ...................................................... $ 14.13
============
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share (Based on net assets of
$7,304,194 and 523,037 shares issued and outstanding) ............................................. $ 13.96
============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND -- FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $232,250 for foreign taxes withheld) ................................................. $ 2,962,580
Interest (including securities lending income of $42,550) .............................................. 325,478
-----------
TOTAL INCOME ...................................................................................... 3,288,058
-----------
EXPENSES:
Advisory ............................................................................................... 1,997,182
Administrative ......................................................................................... 187,236
Custodian .............................................................................................. 137,485
Distribution ........................................................................................... 28,818
Other .................................................................................................. 140,059
-----------
TOTAL EXPENSES .................................................................................... 2,490,780
Earnings credits .................................................................................. (3,421)
-----------
NET EXPENSES ...................................................................................... 2,487,359
-----------
NET INVESTMENT INCOME ............................................................................. 800,699
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments ............................................................................................ 13,306,773
Futures contracts ...................................................................................... 117,870
Foreign currency transactions .......................................................................... (1,622,233)
-----------
Net realized gain ................................................................................. 11,802,410
-----------
Change in net unrealized appreciation or depreciation on:
Investments and foreign currency ....................................................................... 73,363,341
Forward contracts ...................................................................................... (7,108,205)
Futures contracts ...................................................................................... 149,118
Translation of other assets and liabilities denominated in foreign currency ............................ 44,141
-----------
Change in net unrealized appreciation or depreciation ............................................. 66,448,395
-----------
Net realized and unrealized gain ....................................................................... 78,250,805
-----------
Net increase in net assets resulting from operations ................................................... $ 79,051,504
============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND -- FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended Year
December 31, 1999 Ended
(Unaudited) June 30, 1999
------------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income ................................................................... $ 800,699 $ 6,208,221
Net realized gain (loss) ................................................................ 11,802,410 (1,916,922)
Change in net unrealized appreciation or depreciation ................................... 66,448,395 19,559,006
------------- -------------
Net increase in net assets resulting from operations .................................. 79,051,504 23,850,305
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income:
Brinson Class I ...................................................................... (2,727,974) (4,564,403)
Brinson Class N ...................................................................... -- (121)
UBS Investment Funds Class ........................................................... (9,831) (23,356)
Distributions from net realized gain:
Brinson Class I ...................................................................... (5,283,152) (4,498,729)
Brinson Class N ...................................................................... (13) (126)
UBS Investment Funds Class ........................................................... (74,353) (52,439)
------------- -------------
Total distributions to shareholders ..................................................... (8,095,323) (9,139,174)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold ............................................................................. 366,304,838 842,598,303
Shares issued in connection with acquisition of UBS International Equity Fund ........... -- 21,515,034
Shares issued on reinvestment of distributions .......................................... 7,789,808 8,583,385
Shares redeemed ......................................................................... (412,201,341) (834,980,130)
------------- -------------
Net increase (decrease) in net assets resulting from capital share transactions ......... (38,106,695) 37,716,592
------------- -------------
TOTAL INCREASE IN NET ASSETS ............................................................ 32,849,486 52,427,723
------------- -------------
NET ASSETS:
Beginning of period ..................................................................... 497,076,871 444,649,148
------------- -------------
End of period (including accumulated undistributed net investment income of
$801,068 and $2,738,174, respectively) ............................................... $ 529,926,357 $ 497,076,871
============= =============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND -- FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended Year Ended June 30,
December 31, 1999 --------------------------------------------------------------------
Brinson Class I (Unaudited) 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....... $ 12.34 $ 12.15 $ 12.59 $ 11.17 $ 9.68 $ 9.69
-------- -------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment income ................. 0.04* 0.16 0.18 0.18 0.18 0.15
Net realized and unrealized gain
(loss) ............................... 1.95 0.27 0.30 1.97 2.05 (0.16)
-------- -------- -------- -------- -------- --------
Total income (loss) from investment
operations ...................... 1.99 0.43 0.48 2.15 2.23 (0.01)
-------- -------- -------- -------- -------- --------
Less distributions:
Distributions from investment income .. (0.07) (0.12) (0.18) (0.17) (0.18) --
Distributions from net realized gain .. (0.14) (0.12) (0.74) (0.56) (0.56) --
-------- -------- -------- -------- -------- --------
Total distributions ................ (0.21) (0.24) (0.92) (0.73) (0.74) --
-------- -------- -------- -------- -------- --------
Net asset value, end of period ............. $ 14.12 $ 12.34 $ 12.15 $ 12.59 $ 11.17 $ 9.68
======== ======== ======== ======== ======== ========
Total return (non-annualized) .............. 16.29% 3.65% 4.78% 20.27% 23.64% (0.10)%
Ratios/Supplemental data:
Net assets, end of period (in 000s) ...... $522,621 $490,322 $439,329 $420,855 $212,366 $148,319
Ratio of expenses to average net assets:
Before expense reimbursement and
earnings credits ................... 0.98%** 0.99% 1.00% 1.00% 1.20% 1.23%
After expense reimbursement and
earnings credits ................... N/A N/A N/A N/A 1.00% 1.00%
Ratio of net investment income to average
net assets:
Before expense reimbursement and
earnings credits ................... 0.33%** 1.35% 1.52% 1.83% 1.67% 1.93%
After expense reimbursement and
earnings credits ................... N/A N/A N/A N/A 1.87% 2.16%
Portfolio turnover rate .................. 32% 74% 49% 25% 20% 14%
</TABLE>
* The net investment income per share data was determined by using average
shares outstanding throughout the period
** Annualized
N/A = Not Applicable
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND -- FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended Year Year
December 31, 1999 Ended Ended
Brinson Class N (Unaudited) June 30, 1999 June 30,1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period .................................... $12.30 $12.14 $12.59
------ ------ ------
Income from investment operations:
Net investment income ................................................ 0.02* 0.12 0.16
Net realized and unrealized gain ..................................... 1.95 0.27 0.29
------ ------ ------
Total income from investment operations ........................... 1.97 0.39 0.45
------ ------ ------
Less distributions:
Distributions from net investment income ............................. -- (0.11) (0.16)
Distributions from net realized gain ................................. (0.14) (0.12) (0.74)
------ ------ ------
Total distributions ............................................... (0.14) (0.23) (0.90)
------ ------ ------
Net asset value, end of period .......................................... $14.13 $12.30 $12.14
====== ====== ======
Total return (non-annualized) ........................................... 16.11% 3.30% 4.51%
Ratios/Supplemental data:
Net assets, end of period (in 000s) ................................... $ 1 $ 15 $ 11
Ratio of gross expenses to average net assets ......................... 1.23%** 1.24% 1.25%
Ratio of net investment income to average net assets .................. 0.08%** 1.10% 1.27%
Portfolio turnover rate ............................................... 32% 74% 49%
</TABLE>
* The net investment income per share data was determined by using average
shares outstanding throughout the period
**Annualized
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND-- NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Brinson Funds (the "Trust") is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended, as a series
company. The Trust currently offers shares of eleven series: Global Fund, Global
Equity Fund, Global Bond Fund, U.S. Balanced Fund, U.S. Equity Fund, U.S. Large
Capitalization Equity Fund, U.S. Large Capitalization Growth Fund, U.S. Small
Capitalization Growth Fund, U.S. Bond Fund, High Yield Fund and Global (Ex-U.S.)
Equity Fund (each a "Fund" and collectively, the "Funds"). Each Fund has three
classes of shares outstanding, Brinson Class I, Brinson Class N and UBS
Investment Funds Class. There are an unlimited number of shares of each class
with par value of $0.001 authorized. Each share represents an identical interest
in the investments of the Funds and has the same rights. The financial
highlights of the UBS Investment Funds Class are presented separately.
On December 19, 1998, the Global (Ex-U.S.) Equity Fund (the "Fund") acquired all
the net assets of the UBS International Equity Fund pursuant to a plan of
reorganization approved by shareholders on December 11, 1998. The acquisition
was accomplished by a tax-free exchange of 1,827,955 Brinson Class I shares of
the Global (Ex-U.S.) Equity Fund for the shares of UBS International Equity Fund
outstanding on December 18, 1998. The net assets of the UBS International Equity
Fund, including $38,003 of net unrealized appreciation, were combined with those
of the Fund. The aggregate net assets of the Global (Ex-U.S.) Equity Fund and
the UBS International Equity Fund immediately before the merger were
$463,315,718 and $21,515,034, respectively.
The following is a summary of significant accounting policies consistently
followed by the Global (Ex-U.S.) Equity Fund in the preparation of its financial
statements.
A. Investment Valuation: Securities for which market quotations are readily
available are valued at the last available sales price on the exchange or market
on which they are principally traded, or lacking any sales, at the last
available bid price on the exchange or market on which such securities are
principally traded. Securities for which market quotations are not readily
available, including restricted securities which are subject to limitations on
their sale, are valued at fair value as determined in good faith by or under the
direction of the Trust's Board of Trustees. Investments in affiliated investment
companies are valued each day based on the closing net asset value of the
respective fund. Debt securities are valued at the most recent bid price by
using market quotations or independent pricing services. Futures contracts are
valued at the settlement price established each day on the exchange on which
they are traded. Forward foreign currency contracts are valued daily using
quoted forward exchange rates. Short-term obligations with a maturity of 60 days
or less are valued at amortized cost, which approximates market value.
B. Foreign Currency Translation: Investment securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollars
using the WM/Reuters closing spot rates as of 4:00 p.m. London time. Purchases
and sales of portfolio securities, commitments under forward foreign currency
contracts and income receipts are translated at the prevailing exchange rate on
the date of each transaction. Realized and unrealized foreign exchange gains or
losses on investments are included as a component of net realized and unrealized
gain or loss on investments in the statement of operations.
C. Investment Transactions: Investment transactions are accounted for on a
trade date basis. Gains and losses on securities sold are determined on an
identified cost basis.
D. Investment Income: Interest income, which includes the amortization of
premiums and discounts, is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date, except that certain dividends from foreign
securities are recorded as the information becomes available.
E. Federal Income Taxes: It is the policy of the Fund to comply with all
requirements of the Internal Revenue Code (the "Code") applicable to regulated
investment companies and to distribute substantially all of its taxable income
to its shareholders. The Fund has met the requirements of the Code applicable to
regulated investment companies for the six months ended December
31, 1999, therefore, no federal income tax provision was required.
F. Distributions to Shareholders: It is the policy of the Fund to
distribute its net investment income on a semi-annual basis and net capital
gains, if any, annually. Distributions to shareholders are recorded on the
ex-dividend date. Income and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing tax
treatments for foreign currency transactions. Differences in dividends per share
between the classes are due to distribution expenses.
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND -- NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
G. Income and Expense Allocation: All income earned and expenses incurred
by the Fund will be borne on a pro rata basis by each of the classes, except
that the Brinson Class I will not incur any of the distribution expenses of the
Brinson Class N nor the UBS Investment Funds Class.
H. Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results may differ from those
estimates.
I. Earnings Credits: The Funds have entered into an arrangement with their
custodian whereby interest earned on uninvested cash balances was used to offset
a portion of the Fund's expenses. This amount is reflected in the statement of
operations.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Brinson Partners, Inc. (the "Advisor"), a registered investment advisor,
provides the Fund with investment management services. As compensation for these
services, the Fund pays the Advisor a monthly fee based on the Fund's average
daily net assets. The Advisor has agreed to waive its fees and reimburse the
Fund to the extent total annualized expenses exceed a specified percentage of
the Fund's average daily net assets. The expense cap is 1.00%, 1.25% and 1.84%
of the average daily net assets of the Brinson Class I, Brinson Class N and UBS
Investment Funds Class, respectively. Investment advisory fees for the six
months ended December 31, 1999, were as follows:
Advisory Advisory
Fee Fees
---------- ----------
Global (Ex-U.S.) Equity Fund ........................... 0.80% $1,997,182
Certain officers of the Fund are also officers of the Advisor. All officers
serve without direct compensation from the Fund. Trustees' fees paid to
unaffiliated trustees for the six months ended December 31, 1999 were $4,078.
The Fund invests in shares of the Brinson Supplementary Trust U.S. Cash
Management Prime Fund ("Supplementary Trust"). The Supplementary Trust is
managed by the Advisor. The Supplementary Trust is offered as a cash management
option to mutual funds and other accounts managed by the Advisor. The
Supplementary Trust charges no management fees. Distributions received from the
Supplementary Trust are reflected as interest income on the statement of
operations. Amounts relating to those investments at December 31, 1999 were as
follows:
<TABLE>
<CAPTION>
% of
Sales Interest Net
Purchases Proceeds Income Value Assets
------------ ------------ -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Global (Ex-U.S.) Equity Fund .......... $312,583,848 $314,113,357 $279,916 $2,771,329 0.52%
</TABLE>
3. INVESTMENT TRANSACTIONS
Investment transactions for the six months ended December 31, 1999, excluding
short-term investments, were as follows:
Proceeds
Purchases From Sales
------------ ------------
Global (Ex-U.S.) Equity Fund .................... $159,076,213 $189,257,631
4. FORWARD FOREIGN CURRENCY CONTRACTS
The Fund engages in portfolio hedging with respect to changes in currency
exchange rates by entering into forward foreign currency contracts to purchase
or sell currencies. Forward foreign currency contracts are also used to achieve
currency allocation strategies. A forward foreign currency contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. Risks associated with such contracts include movement
in the value of the foreign currency relative to the U.S. dollar and the ability
of the counterparty to perform. The unrealized gain, if any, represents the
credit risk to the Fund on a forward foreign currency contract. Fluctuations in
the value of forward foreign currency contracts are recorded daily as net
unrealized gains or losses. The Fund realizes a gain or loss upon settlement of
the contracts. The statement of operations reflects net realized and net
unrealized gains and losses on these contracts. The counterparty to all forward
foreign currency contracts at and for the six months ended December 31, 1999,
was an affiliate of the Fund's custodian.
5. FUTURES CONTRACTS
The Fund may purchase or sell exchange-traded futures contracts, which are
contracts that obligate the Fund to make or take delivery of a financial
instrument or the cash value of a securities index at a specified future date at
a specified price. The Fund enters into such contracts
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL (EX-U.S.) EQUITY FUND-- NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
to hedge a portion of its portfolio. Risks of entering into futures contracts
include the possibility that there may be an illiquid market or that a change in
the value of the contract may not correlate with changes in the value of the
underlying securities. Upon entering into a futures contract, the Fund is
required to deposit either cash or securities (initial margin). Subsequent
payments (variation margin) are made or received by the Fund, generally on a
daily basis. The variation margin payments are equal to the daily changes in the
contract value and are recorded as unrealized gains or losses. The Fund
recognizes a realized gain or loss when the contract is closed or expires. The
statement of operations reflects net realized and net unrealized gains and
losses on these contracts.
6. SECURITY LENDING
The Fund loaned securities to certain brokers with the Fund's custodian acting
as the Fund's lending agent. The Fund earned negotiated lenders' fees, which are
included in interest income in the statement of operations. The Fund receives
securities, which are not reflected in the statement of assets and liabilities,
as collateral against the loaned securities. The Fund monitors the market value
of securities loaned on a daily basis and initially requires collateral against
the loaned securities in an amount at least equal to 105% of the value of global
(ex-U.S.) securities loaned. The value of loaned securities and related
collateral at December 31, 1999 was $2,606,682 and $3,193,500, respectively.
7. DISTRIBUTION PLANS
The Trust has adopted distribution plans (the "Plans") pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, for the Brinson Class N
and the UBS Investment Funds Class. Each Plan governs payments made for the
expenses incurred in the promotion and distribution of the Brinson Class N and
the UBS Investment Funds Class. Annual fees under the Brinson Class N Plan shall
not exceed 0.25% of the daily net assets of the Brinson Class N. Annual fees
under the UBS Investment Funds Plan, which include a 0.25% service fee, shall
not exceed 0.84% of the average daily net assets of the UBS Investment Funds
Class.
8. LINE OF CREDIT
The Trust has entered into an agreement with Chase Manhattan Bank to provide a
364 day $100 million committed line of credit to the Funds. Borrowings will be
made for temporary purposes. Interest on amounts borrowed is based on the
Federal Funds rate plus 0.50% per year. The Funds pay a commitment fee of 0.08%
per year of the average daily unutilized balance of the line of credit. During
the six months ended December 31, 1999, the Global (Ex-U.S.) Equity Fund had
borrowings of $19,700,000 outstanding for 1 day under the agreement.
9. CAPITAL TRANSACTIONS
Capital stock transactions were as follows:
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Year Ended
(Unaudited) June 30, 1999
-------------------------- -----------------------------
Shares Value Shares Value
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I ............................................. 28,442,308 $365,506,747 72,650,740* $857,199,838
Brinson Class N ............................................. 30 373 365 4,263
UBS Investment Funds Class .................................. 63,305 797,718 587,229 6,909,236
---------- ------------ ------------ ------------
Total Sales ............................................... 28,505,643 $366,304,838 73,238,334 $864,113,337
========== ============ ============ ============
Dividend Reinvestment:
Brinson Class I ............................................. 575,659 $ 7,708,071 726,832 $ 8,514,975
Brinson Class N ............................................. 1 13 21 247
UBS Investment Funds Class .................................. 6,168 81,724 5,917 68,163
---------- ------------ ------------ ------------
Total Dividend Reinvestment ............................... 581,828 $ 7,789,808 732,770 $ 8,583,385
========== ============ ============ ============
Redemptions:
Brinson Class I ............................................. 31,747,436 $410,927,152 69,803,887 $829,422,705
Brinson Class N ............................................. 1,174 14,890 41 487
UBS Investment Funds Class .................................. 98,658 1,259,299 481,376 5,556,938
---------- ------------ ------------ ------------
Total Redemptions ......................................... 31,847,268 $412,201,341 70,285,304 $834,980,130
========== ============ ============ ============
</TABLE>
* Includes shares issued in connection with acquisition of UBS International
Equity Fund.
- --------------------------------------------------------------------------------
21
<PAGE>
Distributed by:
Funds Distributor, Inc.
60 State Street
Boston, MA 02109
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective Prospectus which includes details
regarding the Fund's objectives, policies, expenses and other information.
- --------------------------------------------------------------------------------
<PAGE>
THE BRINSON FUNDS
- --------------------------------------------------------------------------------
AUSTRALIA . BAHRAIN . BRAZIL . CHINA . FRANCE . GERMANY . JAPAN . SINGAPORE
SWITZERLAND . UNITED KINGDOM . UNITED STATES
[GRAPHIC]
209 South LaSalle Street . Chicago, Illinois 60604-1295 . Tel:(800) 448-2430
<PAGE>
[UBS LOGO APPEARS HERE]
Investment Funds
U.S. Balanced Fund
U.S. Equity Fund
U.S. Large Capitalization Equity Fund
U.S. Large Capitalization Growth Fund
U.S. Small Capitalization Growth Fund
U.S. Bond Fund
High Yield Fund
Semi-Annual Report
December 31, 1999
<PAGE>
Trustees and Officers
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Trustees
Walter E. Auch
Frank K. Reilly, CFA
Edward M. Roob
Officers
Frank K. Reilly, CFA
Chairman of the Board
E. Thomas McFarlan
President
Thomas J. Digenan, CFA, CPA
Vice President
Debra L. Nichols
Vice President
Carolyn M. Burke, CPA
Secretary and Treasurer
David E. Floyd, CPA
Assistant Secretary
Mark F. Kemper
Assistant Secretary
================================================================================
1
<PAGE>
The Funds' Advisor -- Brinson Partners, Inc.
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Since the founding of our organization nearly twenty years ago, we have focused
our collective energy on two goals: creating meaningful value-added investment
performance; and providing our clients with individualized client relationships
of the highest quality.
Now, in 2000, more than 1,200 employees located in 11 countries around the world
continue to deliver investment strategies that meet our clients' needs. With an
unrelenting focus on our goals, we have grown into one of the world's premier
investment management organizations, and a recognized leader in our industry. In
North America, we make our investment capabilities available to institutions and
individual investors through the Brinson Family of Funds. The Brinson Funds are
institutionally priced mutual funds that provide investors convenient access to
our global investment expertise and capabilities.
Within a framework of integrated capital markets, we select portfolio
investments by focusing on long-term investment fundamentals. Investment
performance for our clients is maximized within and across asset classes through
a comprehensive understanding of global investment markets and their
interrelationships. We apply a systematic, disciplined approach to valuing
investments and combine the seasoned judgement of our global investment teams to
construct optimal portfolios-balancing considerations for both risk and return.
Brinson Partners, Inc. is a member of UBS Asset Management, the institutional
asset management division of UBS AG.
================================================================================
2
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
<TABLE>
<S> <C>
Shareholder Letter.......................................................... 4
U.S. Economic and Market Highlights......................................... 5
U.S. Balanced Fund.......................................................... 6
Schedule of Investments................................................ 9
Financial Statements................................................... 12
Financial Highlights................................................... 15
U.S. Equity Fund............................................................ 16
Schedule of Investments................................................ 19
Financial Statements................................................... 21
Financial Highlights................................................... 24
U.S. Large Capitalization Equity Fund....................................... 25
Schedule of Investments................................................ 28
Financial Statements................................................... 29
Financial Highlights................................................... 32
U.S. Large Capitalization Growth Fund....................................... 33
Schedule of Investments................................................ 36
Financial Statements................................................... 37
Financial Highlights................................................... 40
U.S. Small Capitalization Growth Fund....................................... 41
Schedule of Investments................................................ 44
Financial Statements................................................... 46
Financial Highlights................................................... 49
U.S. Bond Fund.............................................................. 50
Schedule of Investments................................................ 53
Financial Statements................................................... 56
Financial Highlights................................................... 59
High Yield Fund............................................................. 60
Schedule of Investments................................................ 63
Financial Statements................................................... 66
Financial Highlights................................................... 69
The UBS Investment Funds--Notes to Financial Statements..................... 70
</TABLE>
================================================================================
3
<PAGE>
Shareholder Letter
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
January 27, 2000
Dear Shareholder:
We are pleased to present the semi-annual report for the UBS Investment Funds
for the six months ended December 31, 1999. This report provides a discussion on
the current U.S. Economic outlook. We will also provide our current portfolio
strategies and performance updates for each of our seven Domestic Mutual Funds.
The decade of the 1990s ended with a particularly challenging year. We continued
to apply our proven value-based investment process across all of our portfolios,
but our investment results varied substantially. In some areas, such as fixed
income, our performance was excellent relative to both the market and our peers.
In other areas, most notably multi-asset and equity portfolios, results were
disappointing.
Throughout 1999, our asset allocation strategies continued to focus on reducing
exposure to the risks presented by equity prices that have been driven far above
even optimistic estimates of underlying value. While the risk hedge in balanced
portfolios had little net effect on performance through most of the year, the
surge in equity prices late in the year hampered the returns relative to the
benchmarks.
The broad array of our equity portfolios, with the exception of the growth
portfolios, significantly lagged their benchmarks in 1999. Some degree of
underperformance was unavoidable as the U.S. market was increasingly driven by
momentum, which in turn focused more tightly on narrow technology and e-commerce
stocks. In such a market, the fundamental price/value discrepancies that are the
core of our investment process are effectively ignored in the market. In
addition, our stock selection was uncharacteristically weak and a meaningful
source of the underperformance of our U.S. and Global Equity portfolios.
In fixed income our U.S. Bond and High Yield portfolios outpaced the market and
ranked highly in their respective universes of active managers. However, outside
the U.S., our Global Bond portfolio generally underperformed, due almost
entirely to strength in both the Japanese bond market and the yen, where we are
underweighted.
Our fundamental assessments across markets have been both accurate and
perceptive, but momentum rather than the reality of fundamental value has
continued to drive equity markets, particularly in the U.S. We have seen this
phenomenon historically and it has always proven to be a sign of danger, that
ultimately ends badly for the market in general and the momentum players in
particular. Over time, these styles ebb and flow but momentum driven approaches
have no lasting link to underlying fundamentals and always fail to deliver when
viewed over meaningful horizons. It is these concerns which underlie our current
asset allocation and equity portfolio strategies.
2000 will be a challenging year, but we are confident that remaining true to our
investment disciplines will in the long run accrue to our shareholders' benefit.
As always, we welcome your thoughts and comments, and appreciate your continued
trust and the confidence you have placed in the UBS Investment Funds.
Sincerely,
/s/ Hanspeter A. Walder /s/ Raymond Simon
Hanspeter A. Walder Raymond Simon
Executive Director Managing Director
Private Banking Private Banking
================================================================================
4
<PAGE>
U.S. Economic and Market Highlights
________________________________________________________________________________
[LOGO] UBS
Investment
Funds
U.S. economic statistics continue to surprise financial markets. In the fourth
quarter of 1999, real GDP rose a larger-than-expected 5.8%. Stronger consumer
spending, inventory building and exports were the main contributors. Business
investment was the only major component recording a slowdown, but most of that
decline reflects a pre-Y2K pause in computer equipment installation. The
strength in consumer spending was broad-based, with big-ticket purchases of
autos and home furnishings registering the largest increases. For the year 1999
as a whole, GDP growth came in at 4.0 percent, almost the same as in 1998.
Economic releases are apt to surpass market expectations in the first half of
the year, and barring unexpected strong action by the Federal Reserve, real
growth would remain strong in 2000.
Tight labor market conditions are producing gradually rising wage pressures, in
line with our expectations. Employment costs released for the fourth quarter
registered a bigger-than-expected surge of 1.1 percent, the strongest since
1991. The fourth-quarter acceleration in employment costs primarily reflects
faster growth in benefits. This has been the area of our concern, as generally
slowing benefit expenses have been a major force in the moderate growth of labor
costs in the 1990s.
Inflation moved up in 1999, with consumer prices rising 2.7 percent. The rise
primarily reflects higher energy prices, and the most recent surge in oil prices
suggests that short-term inflation risks have increased. Core inflation, which
tended to move sideways around 2 percent in 1999, is assumed to move higher in
2000, stimulated by rising unit labor costs.
U.S. Environment
Major Markets
One Year Ended December 31, 1999
Total Return
U.S. Cash
Equivalents 4.44
U.S.
Bonds -0.84
U.S.
Equities 23.82
Salomon U.S. Treasury Benchmark Returns
One Year Ended December 31, 1999
Maturity (Years) Total Return
1 4.26
2 1.94
3 -2.54
10 -8.41
30 -14.89
Top Ten Industry Returns Relative to S&P 500
One Year Ended December 31, 1999
Wireless Telecom 146.83
Semiconductors 79.84
Media 38.07
Heavy Electrical Eqp 34.94
Electronic Equipment 34.94
Computer Software 30.34
Oil Services 18.83
Energy Reserves 13.02
Securities & Asset Mgmt. 11.97
Telephone 10.47
Bottom Ten Industry Returns Relative to S&P 500
One Year Ended December 31, 1999
Thrifts -23.15
Restaurants -23.48
Defense & Aerospace -23.62
Construction & Real Prop -24.42
Food & Beverages -25.12
Environmental Services -27.54
Apparel & Textiles -31-82
Medical Services -37.07
Tobacco -50.91
================================================================================
5
<PAGE>
U.S. Balanced Fund
________________________________________________________________________________
[LOGO]
The UBS Investment Fund - U.S. Balanced has produced an annualized return of
7.43% since its inception on July 31, 1995, while the return of the U.S.
Balanced Mutual Fund Index was 18.33% over this time period. Importantly
however, the U.S. Balanced Fund's performance was achieved with an annualized
volatility over the life of the Fund of 5.84%, or approximately 40% less than
the benchmarks annualized volatility of 10.15%. In 1999, the UBS Investment
Fund - U.S. Balanced returned -7.44% which was substantially below the benchmark
return of 14.66%. The underperformance in 1999 was due primarily to the equity
underweight, the bond overweight, and adverse market conditions which negatively
impacted our fundamental value-based equity investment style.
The strength of the U.S. equity market continued to be driven in part by the
success of a small number of the largest capitalization companies, with
technology stocks being shown particular favor. Our significant underweight in
technology growth stocks, combined with a tilt away from the largest members of
the index and overweight in value shares, contributed to a large
underperformance of the U.S. equity portion of the U.S. Balanced Fund. In the
U.S. bond market, our moderately long duration strategy had a negative impact on
performance as yields increased during 1999 while the overweight and security
selection in corporate issues had significantly positive impacts on performance.
The allocation to U.S. Treasury Inflation Protected Securities (TIPS) hurt the
Fund's performance while the allocation to lower-credit issues helped the Fund's
performance.
The sustained rapid advance of the overall U.S. equity market has, in our
assessment, resulted in a pronounced level of overpricing and, therefore, an
expected return that is absolutely unattractive and fails to compensate
adequately for the risks inherent in equity investment. Bonds are now offering
yields above our estimates of longer-term equilibrium levels. This is
particularly true in the case of TIPS, where the uncertainties associated with
future inflation do not introduce a risk element into the assessment of value.
The Fund's strategy, therefore, remains significantly overweight bonds and
underweight equities. A substantial portion of the bond allocation is currently
held in TIPS.
================================================================================
6
<PAGE>
- ------------------------------------------------------------
Label A B C D
- ------------------------------------------------------------
49 7/31/99 14,706 19,213 23,385 12,923
- ------------------------------------------------------------
50 8/31/99 14,482 19,092 23,167 12,914
- ------------------------------------------------------------
51 9/30/99 14,162 18,848 22,561 13,069
- ------------------------------------------------------------
52 10/31/99 13,985 19,646 23,996 13,108
- ------------------------------------------------------------
53 11/30/99 13,985 20,073 24,800 13,106
- ------------------------------------------------------------
54 12/31/99 13,726 21,032 26,683 13,046
- ------------------------------------------------------------
<PAGE>
U.S. Balanced Fund
- --------------------------------------------------------------------------------
[LOGO]UBS
Investment Funds
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
U.S. Equities
Energy....................................... 0.31%
Capital Investment
Capital Goods.............................. 2.70
Technology................................. 9.04
------
11.74
Basic Industries
Chemicals.................................. 1.36
Housing/Paper.............................. 4.52
Metals..................................... 2.08
------
7.96
Consumer
Non-Durables............................... 1.06
Retail/Apparel............................. 2.98
Autos/Durables............................. 1.86
Health: Drugs.............................. 3.04
Health: Non-Drugs.......................... 2.69
------
11.63
Financial
Banks...................................... 4.73
Non-Banks.................................. 2.68
------
7.41
Utilities
Electric................................... 3.63
Telephone.................................. 1.87
------
5.50
Transportation............................... 4.29%
Services/Misc................................ 3.13
------
Total U.S. Equities.................... 51.97*
U.S. BONDS
Corporate Bonds
Asset-Backed............................... 3.39
Consumer................................... 0.83
Industrial Components...................... 0.65
Health Drugs............................... 0.29
Services/Miscellaneous..................... 1.35
Telecommunications......................... 2.16
Utilities.................................. 0.56
------
Total U.S. Corporate Bonds............. 9.23
International Dollar Bonds................... 2.29
Corporate Mortgage-Backed Securities......... 1.88
U.S. Government Agencies..................... 2.47
U.S. Gov't. Mortgage-Backed Securities....... 8.66
U.S. Government Obligations.................. 21.19
------
Total U.S. Bonds....................... 45.72*
SHORT-TERM INVESTMENTS....................... 3.58*
------
TOTAL INVESTMENTS...................... 101.27
LIABILITIES, LESS CASH AND
OTHER ASSETS,.......................... (1.27)
------
NET ASSETS................................... 100.00%
======
- --------------------------------------------------------------------------------
*The Fund held a long position in U.S. Treasury futures on December 31, 1999
which increased U.S. bond exposure from 45.72% to 72.72%. The Fund also held a
short position in stock index futures which reduced U.S. Equity exposure from
51.97% to 24.45%. These two adjustments result in a net increase in the Fund's
exposure to Short-Term Investments from 3.58% to 4.10%.
Asset Allocation
As of December 31, 1999 (Unaudited)
Current
Benchmark Strategy
- ------------------------------------------
U.S. Equities 65% 25%
U.S. Bonds 35 75
- ------------------------------------------
100% 100%
Top Ten U.S. Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- ------------------------------------------------
1. FDX Corp. 2.02%
2. Electronic Data Systems Corp. 1.93
3. Burlington Northern Santa Fe Corp. 1.61
4. General Instrument Corp. 1.41
5. CIGNA Corp. 1.29
6. Compuware Corp. 1.18
7. Allergan, Inc. 1.18
8. Compaq Computer Corp. 1.12
9. Nextel Communications, Inc. 1.10
10. First Data Corp. 1.08
- ------------------------------------------------
===============================================================================
8
<PAGE>
U.S. Balanced Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
--------- -----------
<S> <C> <C>
U.S. Equities -- 51.97%
Advanced Micro Devices, Inc. (b).................. 9,600 $ 277,800
Allergan, Inc..................................... 8,000 398,000
Alza Corp. (b).................................... 3,900 135,038
American Standard Companies., Inc. (b)............ 4,600 211,025
AmSouth Bancorp................................... 5,380 103,901
Aon Corp.......................................... 5,150 206,000
Armstrong World Industries, Inc................... 1,200 40,050
Baxter International, Inc......................... 4,900 307,781
Burlington Northern Santa Fe Corp................. 22,400 543,200
Central & South West Corp......................... 12,200 244,000
Champion Enterprises, Inc. (b).................... 3,900 33,394
Champion International Corp....................... 1,400 86,713
Chase Manhattan Corp.............................. 3,900 302,981
CIGNA Corp........................................ 5,400 435,037
Circuit City Stores-Circuit City Group............ 3,700 166,731
CMS Energy Corp................................... 4,100 127,869
CommScope, Inc. (b)............................... 1,666 67,161
Compaq Computer Corp.............................. 13,900 376,169
Computer Sciences Corp. (b)....................... 3,100 293,337
Compuware Corp. (b)............................... 10,700 398,575
Consolidated Stores Corp. (b)..................... 5,500 89,375
Corning, Inc...................................... 1,500 193,406
Covance, Inc. (b)................................. 2,875 31,086
Delhaize America, Inc............................. 2,766 56,184
Dial Corp......................................... 3,000 72,938
Dominion Resources, Inc........................... 6,200 243,350
Eastman Chemical Co............................... 2,500 119,219
Electronic Data Systems Corp...................... 9,700 649,294
Eli Lilly and Co.................................. 2,100 139,650
Emerson Electric Co............................... 5,600 321,300
Entergy Corp...................................... 5,800 149,350
FDX Corp. (b)..................................... 16,600 679,562
Federal-Mogul Corp................................ 6,200 124,775
Federated Department Stores, Inc. (b)............. 1,600 80,900
First Data Corp................................... 7,358 362,841
Fleet Boston Financial Corp....................... 8,505 296,080
Fleetwood Enterprises, Inc........................ 2,900 59,813
Fort James Corp................................... 7,800 213,525
Gateway, Inc. (b)................................. 2,000 144,125
GATX Corp......................................... 1,800 60,750
General Instrument Corp........................... 5,600 476,000
Genzyme Corp. (b)................................. 3,000 135,000
GreenPoint Financial Corp......................... 8,600 204,787
Hibernia Corp., Class A........................... 6,500 69,063
Household International, Inc...................... 7,300 271,925
Illinois Tool Works, Inc.......................... 5,100 344,569
IMC Global, Inc................................... 9,600 157,200
Johnson Controls, Inc............................. 2,600 147,875
Kimberly-Clark Corp............................... 4,900 319,725
Kroger Co. (b).................................... 3,700 69,838
Lafarge Corp...................................... 3,600 99,450
Lear Corp. (b).................................... 5,400 172,800
Lexmark International Group, Inc. (b)............. 1,000 90,500
Lincoln National Corp............................. 2,200 88,000
Lockheed Martin Corp.............................. 8,042 175,919
Lyondell Chemical Co.............................. 6,500 82,875
Martin Marietta Materials, Inc.................... 2,636 108,076
Masco Corp........................................ 14,000 355,250
Mattel, Inc....................................... 14,200 $ 186,375
Mead Corp......................................... 2,900 125,969
Monsanto Co....................................... 4,700 167,437
National Service Industries, Inc.................. 2,200 64,900
New York Times Co................................. 3,900 191,587
Newell Rubbermaid, Inc............................ 9,100 263,900
Nextel Communications, Inc. (b)................... 3,600 371,250
Norfolk Southern Corp............................. 8,000 164,000
Owens-Illinois, Inc. (b).......................... 2,100 52,631
Peco Energy Co.................................... 4,000 139,000
Pentair, Inc...................................... 3,000 115,500
Philip Morris Companies, Inc...................... 7,100 164,631
PNC Bank Corp..................................... 3,700 164,650
Praxair, Inc...................................... 2,000 100,625
Raytheon Co., Class B............................. 8,400 223,125
Reliaster Financial Corp.......................... 2,200 86,213
SBC Communications, Inc........................... 5,300 258,375
Southdown, Inc.................................... 3,116 160,863
St. Jude Medical, Inc. (b)........................ 6,300 193,331
Torchmark Corp.................................... 3,000 87,188
Tyson Foods, Inc., Class A........................ 7,400 120,250
U.S. Bancorp...................................... 5,759 137,136
Ultramar Diamond Shamrock Corp.................... 4,590 104,136
Unisys Corp. (b).................................. 3,600 114,975
United Healthcare Corp............................ 4,500 239,062
USG Corp.......................................... 2,100 98,963
Viad Corp......................................... 4,400 122,650
W.W. Grainger, Inc................................ 2,700 129,094
Watson Pharmaceutical Co. (b)..................... 5,200 186,225
Wells Fargo and Co................................ 7,800 315,412
Westvaco Corp..................................... 3,600 117,450
Xerox Corp........................................ 11,000 249,562
York International Corp........................... 3,400 93,288
----------
Total U.S. Equities (Cost $17,329,472)............ 17,520,890
----------
<CAPTION>
Face
Amount
---------
<S> <C> <C>
Bonds -- 45.72%
U.S. Corporate Bonds -- 9.23%
Archer Daniels 6.950%, due 12/15/69............... $ 250,000 218,716
Electronic Data System
7.125%, due 10/15/09............................ 125,000 121,845
MBNA Global Capital Securities, FRN
5.795%, due 02/01/27............................ 215,000 176,630
Noram Energy Corp. 6.375%, due 11/01/03........... 200,000 190,227
PanAmSat Corp. 6.000%, due 01/15/03............... 335,000 311,771
Peco Energy Transition Trust
6.130%, due 03/01/09............................ 215,000 197,830
PP&L Transition Bond Company LLC
7.050%, due 06/25/09............................ 200,000 199,680
Rite Aid Corp., 144A, 6.125%, due 12/15/08........ 140,000 95,200
Sprint Capital Corp. 6.875%, due 11/15/28......... 200,000 177,914
TCI Communications, Inc.
8.750%, due 08/01/15............................ 220,000 240,105
Time Warner 7.570%, due 02/01/24.................. 290,000 278,953
UCFC Home Equity Loan 97-C, Class A8,
FRN 5.069%, due 09/15/27........................ 568,857 569,517
U.S.A. Waste Services 6.500%, due 12/15/02........ 360,000 332,706
----------
3,111,094
----------
</TABLE>
===============================================================================
9
<PAGE>
U.S. Balanced Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- -------------------------------------------------------------------------------
Face
Amount Value
---------- ------------
International Dollar Bonds -- 2.29%
Abbey National PLC, Resettable Perpetual
Preferred 6.700%, due 06/29/49................... $ 250,000 $ 226,341
Credit Suisse-London, 144A, Resettable
Perpetual Preferred 7.900%, due 05/01/07 270,000 256,894
Empresa Nacional de Electricidad S.A
8.125%, due 02/01/69............................. 200,000 162,000
Ras Laffan Liquified Natural Gas Co., Ltd.,
144A, 8.294%, due 03/15/14....................... 135,000 126,801
------------
772,036
------------
Corporate Mortgage-Backed
Securities -- 1.88%
Heller Financial Commercial Mortgage Assets,
Series 99-PH1, Class A1
6.500%, due 05/15/61............................. 178,117 172,271
LB Commercial Conduit Mortgage Trust,
Series 99-C1, Class A1,
6.410%, due 10/15/30............................. 88,171 84,951
Residential Asset Securitization Trust 97-A10,
Class A1, 7.250%, due 12/25/27................... 344,335 343,426
Residential Asset Securitization Trust 97-A11,
Class A2, 7.000%, due 01/25/28................... 34,869 34,772
------------
635,420
------------
U.S. Government Mortgage-Backed
Securities -- 8.66%
Federal Home Loan Mortgage Corp. Gold
8.000%, due 05/01/23............................. 326,964 330,799
9.000%, due 03/01/24............................. 151,892 159,020
Federal Home Loan Mortgage Corp....................
9.000%, due 01/01/29............................. 139,320 144,936
Federal National Mortgage Assoc.,
Series 97-72, Class EG,
0.000%, due 09/25/22............................. 202,300 175,284
Federal National Mortgage Association..............
7.500%, due 07/01/10............................. 247,773 249,814
7.500%, due 12/01/27............................. 215,656 213,397
7.600%, due 06/17/19............................. 278,827 280,271
FNCI, 8.000%, due 02/01/13......................... 276,984 282,581
Government National Mortgage Association
7.000%, due 12/15/23............................. 128,624 125,326
7.500%, due 06/15/24............................. 500,000 494,531
8.000%, due 08/15/22............................. 455,988 463,037
------------
2,918,996
------------
U.S. Government Agencies -- 2.47%
Jordan Aid, 8.750%, due 09/01/19................... 775,765 834,165
------------
U.S. Government Obligations -- 21.19%
U.S. Treasury Bond 8.000%, due 11/15/21 $ 495,000 $ 561,515
U.S. Treasury Inflation Indexed Note
3.625%, due 04/15/28............................. 2,440,000 2,267,719
3.875%, due 04/15/29............................. 4,400,000 4,204,816
U.S. Treasury Note 5.625%, due 05/15/08............ 115,000 108,172
------------
7,142,222
------------
Total U.S. Bonds (Cost $16,140,158)................ 15,413,933
------------
Short-Term Investments -- 3.58%
U.S. Treasury Bills -- 2.07%
U.S. Treasury Bill, due 02/03/00................... 700,000 696,968
------------
Investment Companies -- 1.51% Shares
----------
Brinson Supplementary Trust U.S. Cash
Management Prime Fund.............................. 507,697 507,697
------------
Total Short-Term Investments
(Cost $1,204,748)................................ 1,204,665
------------
Total Investments
(Cost $34,674,378) -- 101.27% (a)................ 34,139,488
Liabilities, less cash and
other assets -- (1.27%).......................... (429,267)
------------
Net Assets -- 100%................................. $ 33,710,221
============
See accompanying notes to schedule of investments.
================================================================================
10
<PAGE>
U.S. Balanced Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $34,674,378; and net
unrealized depreciation consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation............................................................. $ 2,514,223
Gross unrealized depreciation............................................................. (3,049,113)
------------
Net unrealized depreciation.......................................................... $ (534,890)
============
</TABLE>
(b) Non-income producing security
FRN: Floating rate note--The rate disclosed is that in effect at December 31,
1999.
144A: 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 buyers. At December 31, 1999, the
value of these securities amounted to $478,895 or 1.42% of net assets.
Resettable Perpetual Preferred: A bond with either no maturity date or a
maturity date that is so far in the future that the bond will pay interest
indefinitely.
The issuer generally returns the right to call such a bond.
FUTURES CONTRACTS
The U.S. Balanced Fund had the following open futures contracts as of December
31, 1999:
<TABLE>
<CAPTION>
Expiration Cost/ Current Unrealized
Date Proceeds Value Loss
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
U.S. Interest Rate Futures Buy Contracts
5 Year U.S. Treasury Notes, 69 contracts........... March 2000 $ 6,832,561 $ 6,764,156 $ (68,405)
10 Year U.S. Treasury Notes, 13 contracts.......... March 2000 1,268,302 1,246,172 (22,130)
30 Year U.S. Treasury Bonds, 12 contracts.......... March 2000 1,118,459 1,091,250 (27,209)
Index Futures Sale Contracts
Standard & Poor's 500, 25 contracts................ March 2000 9,000,450 9,276,250 (275,800)
----------
Total......................................... $ (393,544)
==========
</TABLE>
The aggregate market value of investments pledged to cover margin requirements
for the open futures positions at December 31, 1999 was $696,968.
See accompanying notes to financial statements.
================================================================================
11
<PAGE>
U.S. Balanced Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $34,166,681)................................................. $ 33,631,791
Affiliated issuers (Cost $507,697)...................................................... 507,697
Cash....................................................................................... 392
Receivables:
Investment securities sold.............................................................. 2,892
Dividends............................................................................... 25,956
Interest................................................................................ 165,142
Other assets............................................................................... 215
------------
TOTAL ASSETS......................................................................... 34,334,085
------------
LIABILITIES:
Payables:
Investment securities purchased......................................................... 502,266
Investment advisory fees................................................................ 15,445
Variation margin........................................................................ 53,015
Accrued expenses........................................................................ 53,138
------------
TOTAL LIABILITIES.................................................................... 623,864
------------
NET ASSETS................................................................................. $ 33,710,221
------------
NET ASSETS CONSIST OF:
Paid in capital.......................................................................... $ 35,219,429
Accumulated undistributed net investment income.......................................... 3,059
Distributions in excess of net realized gain............................................. (583,833)
Net unrealized depreciation.............................................................. (928,434)
------------
NET ASSETS........................................................................... $ 33,710,221
============
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per
share (Based on net assets of $32,262,816 and 3,841,353
shares issued and outstanding).......................................................... $ 8.40
============
Brinson Class N:
Net asset value, offering price and redemption price per
share (Based on net assets of $1,075 and 128 shares
issued and outstanding)................................................................. $ 8.40
============
UBS Investment Funds Class:
Net asset value, offering price and redemption price per
share (Based on net assets of $1,446,330 and 173,243
shares issued and outstanding).......................................................... $ 8.35
============
</TABLE>
See accompanying notes to financial statements.
================================================================================
12
<PAGE>
U.S. Balanced Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest................................................................................... $ 582,877
Dividends.................................................................................. 133,281
------------
TOTAL INCOME......................................................................... 716,158
------------
EXPENSES:
Advisory................................................................................... 131,459
Professional............................................................................... 18,552
Registration............................................................................... 17,892
Distribution............................................................................... 4,148
Printing................................................................................... 4,114
Other...................................................................................... 7,576
------------
TOTAL EXPENSES....................................................................... 183,741
Expenses deferred by Advisor......................................................... (28,977)
Earnings credits..................................................................... (7)
------------
NET EXPENSES......................................................................... 154,757
------------
NET INVESTMENT INCOME................................................................ 561,401
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments.............................................................................. 406,080
Futures contracts........................................................................ (775,642)
------------
Net realized loss.................................................................... (369,562)
------------
Change in net unrealized appreciation or depreciation on:
Investments................................................................................ (3,394,694)
Futures contracts.......................................................................... 142,826
------------
Change in net unrealized appreciation or depreciation................................ (3,251,868)
------------
Net realized and unrealized loss............................................................. (3,621,430)
------------
Net decrease in net assets resulting from operations......................................... $ (3,060,029)
============
</TABLE>
See accompanying notes to financial statements.
================================================================================
13
<PAGE>
U.S. Balanced Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year
December 31, 1999 Ended
(Unaudited) June 30, 1999
----------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income.............................................................. $ 561,401 $ 1,558,422
Net realized gain (loss)........................................................... (369,562) 4,257,213
Change in net unrealized appreciation or depreciation.............................. (3,251,868) (5,162,345)
------------ ------------
Net increase (decrease) in net assets resulting from operations.................... (3,060,029) 653,290
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income:
Brinson Class I.................................................................. (729,082) (2,554,055)
Brinson Class N.................................................................. (23) (68)
UBS Investment Funds Class....................................................... (29,460) (123,921)
Distributions in excess of net realized gain:
Brinson Class I.................................................................. (225,248) (9,074,452)
Brinson Class N.................................................................. (7) (243)
UBS Investment Funds Class....................................................... (10,418) (483,100)
------------ ------------
Total distributions to shareholders.................................................. (994,238) (12,235,839)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold........................................................................ 5,675,756 14,184,340
Shares issued on reinvestment of distributions..................................... 970,972 12,036,064
Shares redeemed.................................................................... (8,275,334) (57,681,932)
------------ ------------
Net decrease in net assets resulting from capital share transactions............... (1,628,606) (31,461,528)
------------ ------------
TOTAL DECREASE IN NET ASSETS................................................. (5,682,873) (43,044,077)
------------ ------------
NET ASSETS:
Beginning of period................................................................ 39,393,094 82,437,171
------------ ------------
End of period (including accumulated undistributed net investment
income of $3,059 and $200,223, respectively)..................................... $ 33,710,221 $ 39,393,094
============ ============
</TABLE>
See accompanying notes to financial statements.
================================================================================
14
<PAGE>
U.S. Balanced Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended August 31, 1995*
December 31, 1999 Year Ended June 30, Through
----------------------------------------
UBS Investment Funds Class (Unaudited) 1999 1998 1997 June 30, 1996
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............ $ 9.32 $ 12.19 $ 12.46 $ 11.67 $ 11.38
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income....................... 0.13** 0.27** 0.42** 0.38 0.42
Net realized and unrealized gain (loss)..... (0.87) 0.18 0.95 1.31 0.86
------- ------- ------- ------- -------
Total income (loss) from
investment operations................ (0.74) 0.45 1.37 1.69 1.28
------- ------- ------- ------- -------
Less distributions:
Distributions from net investment income.... (0.17) (0.67) (0.70) (0.36) (0.42)
Distributions from net realized gain........ (0.06) (2.65) (0.94) (0.54) (0.57)
------- ------- ------- ------- -------
Total distributions.................... (0.23) (3.32) (1.64) (0.90) (0.99)
------- ------- ------- ------- -------
Net asset value, end of period.................. $ 8.35 $ 9.32 $ 12.19 $ 12.46 $ 11.67
======= ======= ======= ======= =======
Total return (non-annualized)................... (7.44)% 4.13% 11.79% 14.99% 11.54%
Ratios/Supplemental data:
Net assets, end of period (in 000s)........... $ 1,446 $ 1,789 $ 1,880 $ 1,649 $ 779
Ratio of expenses to average net assets:
Before expense reimbursement
and earnings credits..................... 1.45%*** 1.46% 1.31% 1.38% 1.51%***
After expense reimbursement
and earnings credits..................... 1.30%*** 1.30% 1.30% 1.30% 1.30%***
Ratio of net investment income
to average net assets:
Before expense reimbursement
and earnings credits..................... 2.35%*** 2.50% 3.38% 3.28% 3.26%***
After expense reimbursement
and earnings credits..................... 2.50%*** 2.66% 3.39% 3.36% 3.47%***
Portfolio turnover rate....................... 42% 113% 194% 329% 240%
</TABLE>
* Commencement of UBS Investment Funds Class
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized
See accompanying notes to financial statements.
================================================================================
15
<PAGE>
U.S. Equity Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Since its inception on July 31, 1995, the UBS Investment Fund - U.S. Equity has
provided an annualized return of 16.71%, compared to the 24.88% return of its
benchmark, the Wilshire 5000 Equity Index. The annualized volatility of the Fund
has been 15.30% since its inception, below the 15.33% volatility for the
benchmark. In 1999, the Fund's total return of -4.51% trailed the 23.56% return
for its benchmark. While these results are disappointing, we feel that the Fund
is now well positioned as we move into the year 2000. Recent events and
stratification of the U.S. market make our current investment strategies very
appealing and our conviction remains higher than ever.
Market exposure (average beta of .96) detracted modestly from Fund relative
performance in the very strong equity environment that characterized 1999.
Factor positions detracted from performance for the full year. The most
significant negatives were the underexposure to stocks ranked high in relative
strength and size and low in earnings/price, as a relatively narrow segment of
the largest capitalization stocks, especially in the technology sector,
continued to dominate market performance. Fundamentally driven investment styles
tend to perform poorly in such narrow momentum-driven market environments. The
Fund has minimal exposure to these largest stocks based upon our analysis, which
indicates they are meaningfully overextended.
Industry weightings also detracted from active returns during 1999. The
underweight to the technology software and hardware sectors had the largest
negative effect on performance. Investors have been willing to pay significant
premiums for recent strong relative revenue growth and to extrapolate perceived
earnings growth far into the future-in spite of rising interest rates which
usually dampen high-multiple issues. We believe there is a low probability that
such high implied earnings and profitability levels can be achieved, much less
sustained, in a competitive economy. Our overweight in economically sensitive
construction and transportation stocks also detracted from performance due to
concerns over higher energy costs and fears that higher interest rates would
pressure building activity. The pick-up in the global industrial economy helps a
number of more economically sensitive sectors that have been in recession-like
conditions for much of the past two years. Our exposure in the construction area
is oriented toward non-residential infrastructure and basic building materials,
and is not dependent upon higher residential construction spending.
Stock selection had the largest negative impact on active returns for the full
year. Among large capitalization issues, the best performers were Corning, First
Data and Computer Sciences, while the most detrimental to performance were our
weightings in Xerox, Lockheed Martin, FDX Corp and Raytheon. Given the shift
toward momentum-based styles, investors had little tolerance for shortfalls in
quarterly earnings and severely punished such disappointments. In the
intermediate capitalization segment of the Fund, the most positive contributors
were General Instruments, Circuit City and Allergan, while the weakest were
Advanced Micro Devices, Fort James and Federal Mogul.
================================================================================
16
<PAGE>
U.S. Equity Fund
- --------------------------------------------------------------------------------
[LOGO]UBS
Investment Funds
Total Return
<TABLE>
<CAPTION>
6 months 1 year 3 years 7/31/95*
ended ended ended to
12/31/99 12/31/99 12/31/99 12/31/99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UBS Investment Fund -- U.S. Equity -13.34% -4.51% 11.83% 16.71%
- --------------------------------------------------------------------------------
Wilshire 5000 Equity Index 10.45 23.56 26.04 24.88
- --------------------------------------------------------------------------------
</TABLE>
* Performance inception date of the UBS Investment Fund -- U.S. Equity.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $10,000
This chart shows the growth in the value of an investment in the UBS Investment
Fund -- U.S. Equity and the Wilshire 5000 Equity Index if you had invested
$10,000 on July 31, 1995, and had reinvested all your income dividends and
capital gain distributions through December 31, 1999. No adjustment has been
made for any income taxes payable by shareholders on income dividends and
capital gain distributions. Past performance is no guarantee of future results.
Share price and return will vary with market conditions; investors may realize a
gain or loss upon redemption.
UBS Investment Fund -- U.S. Equity
vs. Wilshire 5000 Equity Index
Wealth Value with Dividends Reinvested
Label Label A B
- --------------------------------------------------------------------------------
UBS Investment Fund -- U.S. Equity Wilshire 5000 Equity Index
- --------------------------------------------------------------------------------
1 7/31/95 10,000 10,000
- --------------------------------------------------------------------------------
2 8/31/95 10,184 10,098
- --------------------------------------------------------------------------------
3 9/30/95 10,570 10,483
- --------------------------------------------------------------------------------
4 10/31/95 10,528 10,377
- --------------------------------------------------------------------------------
5 11/30/95 11,122 10,817
- --------------------------------------------------------------------------------
6 12/31/95 11,335 10,994
- --------------------------------------------------------------------------------
7 1/31/96 11,790 11,288
- --------------------------------------------------------------------------------
8 2/28/96 11,971 11,486
- --------------------------------------------------------------------------------
9 3/31/96 12,194 11,612
- --------------------------------------------------------------------------------
10 4/30/96 12,418 11,898
- --------------------------------------------------------------------------------
11 5/31/96 12,615 12,224
- --------------------------------------------------------------------------------
12 6/30/96 12,570 12,123
- --------------------------------------------------------------------------------
13 7/31/96 11,958 11,469
- --------------------------------------------------------------------------------
14 8/31/96 12,415 11,836
- --------------------------------------------------------------------------------
15 9/30/96 12,966 12,466
- --------------------------------------------------------------------------------
16 10/31/96 13,242 12,640
- --------------------------------------------------------------------------------
17 11/30/96 14,156 13,478
- --------------------------------------------------------------------------------
18 12/31/96 14,157 13,326
- --------------------------------------------------------------------------------
19 1/31/97 14,663 14,039
- --------------------------------------------------------------------------------
20 2/28/97 14,757 14,033
- --------------------------------------------------------------------------------
21 3/31/97 14,260 13,412
- --------------------------------------------------------------------------------
22 4/30/97 14,691 13,997
- --------------------------------------------------------------------------------
23 5/31/97 15,759 14,989
- --------------------------------------------------------------------------------
24 6/30/97 16,499 15,677
- --------------------------------------------------------------------------------
25 7/31/97 17,756 16,883
- --------------------------------------------------------------------------------
26 8/31/97 17,053 16,248
- --------------------------------------------------------------------------------
27 9/30/97 17,812 17,207
- --------------------------------------------------------------------------------
28 10/31/97 16,865 16,634
- --------------------------------------------------------------------------------
29 11/30/97 17,193 17,178
- --------------------------------------------------------------------------------
30 12/31/97 17,587 17,496
- --------------------------------------------------------------------------------
31 1/31/98 17,697 17,591
- --------------------------------------------------------------------------------
32 2/28/98 19,232 18,871
- --------------------------------------------------------------------------------
33 3/31/98 20,326 19,816
- --------------------------------------------------------------------------------
34 4/30/98 20,115 20,051
- --------------------------------------------------------------------------------
35 5/31/98 19,814 19,517
- --------------------------------------------------------------------------------
36 6/30/98 19,931 20,202
- --------------------------------------------------------------------------------
37 7/31/98 19,418 19,759
- --------------------------------------------------------------------------------
38 8/31/98 16,644 16,682
- --------------------------------------------------------------------------------
39 9/30/98 17,840 17,772
- --------------------------------------------------------------------------------
40 10/31/98 19,187 19,094
- --------------------------------------------------------------------------------
41 11/30/98 19,991 20,296
- --------------------------------------------------------------------------------
42 12/31/98 20,737 21,595
- --------------------------------------------------------------------------------
43 1/31/99 20,587 22,389
- --------------------------------------------------------------------------------
44 2/28/99 19,831 21,577
- --------------------------------------------------------------------------------
45 3/31/99 20,470 22,410
- --------------------------------------------------------------------------------
46 4/30/99 22,303 23,484
- --------------------------------------------------------------------------------
47 5/31/99 22,005 22,970
- --------------------------------------------------------------------------------
48 6/30/99 22,847 24,159
- --------------------------------------------------------------------------------
49 7/31/99 21,875 23,385
- --------------------------------------------------------------------------------
50 8/31/99 21,106 23,167
- --------------------------------------------------------------------------------
51 9/30/99 19,557 22,561
- --------------------------------------------------------------------------------
52 10/31/99 19,568 23,996
- --------------------------------------------------------------------------------
53 11/30/99 19,675 24,800
- --------------------------------------------------------------------------------
54 12/31/99 19,790 26,683
- --------------------------------------------------------------------------------
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
17
<PAGE>
U.S. Equity Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
U.S. EQUITIES
Energy...................................... 0.57%
Capital Investment
Capital Goods............................. 5.02
Technology................................ 16.51
-------
21.53
Basic Industries
Chemicals................................. 2.50
Housing/Paper............................. 8.31
Metals.................................... 3.80
-------
14.61
Consumer
Non-Durables.............................. 2.06
Retail/Apparel............................ 5.53
Autos/Durables............................ 3.63
Health: Drugs............................. 5.60
Health: Non-Drugs......................... 5.00
-------
21.82
Financial
Banks..................................... 8.67%
Non-Banks................................. 4.93
-------
13.60
Utilities
Electric.................................. 7.07
Telephone................................. 3.42
-------
10.49
Transportation.............................. 7.85
Services/Misc............................... 5.73
-------
Total U.S. Equities.................... 96.20*
SHORT-TERM INVESTMENTS...................... 3.52*
-------
TOTAL INVESTMENTS...................... 99.72
CASH AND OTHER ASSETS,
LESS LIABILITIES............................ 0.28
-------
NET ASSETS.................................. 100.00%
=======
- --------------------------------------------------------------------------------
*The Fund held a long position in stock index futures which increased U.S.
Equity exposure from 96.20% to 99.66%. This adjustment results in a net decrease
in the Fund's exposure to Short-Term Investments from 3.52% to 0.06%.
Top Ten U.S. Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- --------------------------------------------------------------
1. FDX Corp. 3.66%
2. Electronic Data Systems Corp. 3.54
3. Burlington Northern Santa Fe Corp. 2.97
4. General Instrument Corp. 2.59
5. CIGNA Corp. 2.39
6. Allergan, Inc. 2.18
7. Compuware Corp. 2.17
8. Compaq Computer Corp. 2.05
9. Nextel Communications, Inc., Class A 2.03
10. First Data Corp. 1.97
- --------------------------------------------------------------
================================================================================
18
<PAGE>
U.S. Equity Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
---------- ------------
<S> <C> <C>
U.S. Equities -- 96.20%
Advanced Micro Devices, Inc. (b)...................... 259,900 $ 7,520,856
Allergan, Inc......................................... 221,400 11,014,650
Alza Corp. (b)........................................ 105,800 3,663,325
American Standard Companies., Inc. (b)................ 126,800 5,816,950
AmSouth Bancorp....................................... 148,209 2,862,286
Aon Corp.............................................. 140,350 5,614,000
Armstrong World Industries, Inc....................... 33,500 1,118,063
Baxter International, Inc............................. 135,100 8,485,969
Burlington Northern Santa Fe Corp..................... 616,900 14,959,825
Central & South West Corp............................. 335,000 6,700,000
Champion Enterprises, Inc. (b)........................ 108,100 925,606
Champion International Corp........................... 38,300 2,372,206
Chase Manhattan Corp.................................. 106,700 8,289,256
CIGNA Corp............................................ 149,650 12,056,178
Circuit City Stores-Circuit City Group................ 101,700 4,582,856
CMS Energy Corp....................................... 113,750 3,547,578
CommScope, Inc. (b)................................... 44,899 1,809,991
Compaq Computer Corp.................................. 382,500 10,351,406
Computer Sciences Corp. (b)........................... 84,400 7,986,350
Compuware Corp. (b)................................... 294,500 10,970,125
Consolidated Stores Corp. (b)......................... 151,900 2,468,375
Corning, Inc.......................................... 40,700 5,247,756
Covance, Inc. (b)..................................... 107,550 1,162,884
Delhaize America, Inc................................. 77,232 1,568,775
Dial Corp............................................. 87,200 2,120,050
Dominion Resources, Inc............................... 169,400 6,648,950
Eastman Chemical Co................................... 67,950 3,240,366
Electronic Data Systems Corp.......................... 266,900 17,865,619
Eli Lilly and Co...................................... 57,700 3,837,050
Emerson Electric Co................................... 153,700 8,818,537
Entergy Corp.......................................... 236,500 6,089,875
FDX Corp. (b)......................................... 451,600 18,487,375
Federal-Mogul Corp.................................... 171,300 3,447,413
Federated Department Stores, Inc. (b)................. 44,300 2,239,919
First Data Corp....................................... 201,430 9,933,017
Fleet Boston Financial Corp........................... 233,955 8,144,558
Fleetwood Enterprises, Inc............................ 78,700 1,623,188
Fort James Corp....................................... 213,600 5,847,300
Gateway Inc. (b)...................................... 53,300 3,840,931
GATX Corp............................................. 49,400 1,667,250
General Instrument Corp............................... 153,450 13,043,250
Genzyme Corp. (b)..................................... 81,450 3,665,250
GreenPoint Financial Corp............................. 236,900 5,641,181
Hibernia Corp......................................... 179,250 1,904,531
Household International, Inc.......................... 199,600 7,435,100
Illinois Tool Works, Inc.............................. 139,300 9,411,456
IMC Global, Inc....................................... 262,800 4,303,350
Johnson Controls, Inc................................. 79,000 4,493,125
Kimberly-Clark Corp................................... 135,750 8,857,687
Kroger Co. (b)........................................ 102,200 1,929,025
Lafarge Corp.......................................... 98,400 2,718,300
Lear Corp. (b)........................................ 151,350 4,843,200
Lexmark International Group, Inc. (b)................. 30,500 2,760,250
Lincoln National Corp................................. 60,300 2,412,000
Lockheed Martin Corp.................................. 237,352 5,192,075
Lyondell Chemical Co.................................. 177,250 2,259,938
Martin Marietta Materials, Inc........................ 73,707 3,021,987
Masco Corp............................................ 384,600 9,759,225
Mattel, Inc........................................... 387,600 5,087,250
Mead Corp............................................. 79,000 3,431,563
Monsanto Co........................................... 129,400 4,609,875
National Service Industries, Inc...................... 60,600 1,787,700
New York Times Co..................................... 107,200 5,266,200
Newell Rubbermaid, Inc................................ 250,700 7,270,300
Nextel Communications, Inc., Class A (b).............. 99,350 10,245,469
Norfolk Southern Corp................................. 218,500 4,479,250
Owens-Illinois, Inc. (b).............................. 67,900 1,701,744
Peco Energy Co........................................ 111,000 3,857,250
Pentair, Inc.......................................... 83,800 3,226,300
Philip Morris Companies, Inc.......................... 195,550 4,534,316
PNC Bank Corp......................................... 100,400 4,467,800
Praxair, Inc.......................................... 55,600 2,797,375
Raytheon Co., Class B................................. 229,650 6,100,078
Reliaster Financial Corp.............................. 60,600 2,374,763
SBC Communications, Inc............................... 143,500 6,995,625
Southdown, Inc........................................ 85,140 4,395,352
St. Jude Medical, Inc. (b)............................ 174,500 5,354,969
Torchmark Corp........................................ 82,600 2,400,563
Tyson Foods, Inc...................................... 229,250 3,725,312
U.S. Bancorp.......................................... 158,141 3,765,733
Ultramar Diamond Shamrock Corp........................ 127,018 2,881,721
Unisys Corp. (b)...................................... 99,500 3,177,781
United Healthcare Corp................................ 123,300 6,550,312
USG Corp.............................................. 56,500 2,662,563
Viad Corp............................................. 121,150 3,377,056
W.W. Grainger, Inc.................................... 80,400 3,844,125
Watson Pharmaceutical Co. (b)......................... 143,400 5,135,512
Wells Fargo and Co.................................... 215,200 8,702,150
Westvaco Corp......................................... 100,200 3,269,025
Xerox Corp............................................ 297,300 6,744,994
York International Corp............................... 92,600 2,540,713
------------
Total U.S. Equities (Cost $439,940,416)............... 485,358,333
------------
Short-Term Investments -- 3.52%
Investment Companies -- 3.52%
Brinson Supplementary Trust U.S.
Cash Management
Prime Fund (Cost $17,738,488)....................... 17,738,488 17,738,488
------------
Total Investments
(Cost $457,678,904) -- 99.72% (a)................... 503,096,821
Cash and other assets, less liabilities -- 0.28%...... 1,405,055
------------
Net Assets -- 100%.................................... $504,501,876
============
</TABLE>
See accompanying notes to schedule of investments.
================================================================================
19
<PAGE>
U.S. Equity Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $457,678,904; and net
unrealized appreciation consisted of:
Gross unrealized appreciation............... $ 97,065,747
Gross unrealized depreciation............... (51,647,830)
-------------
Net unrealized appreciation............ $ 45,417,917
=============
(b) Non-income producing security.
FUTURES CONTRACTS
The U.S. Equity Fund had the following open futures contracts as of December 31,
1999:
<TABLE>
<CAPTION>
Expiration Current Unrealized
Date Cost Value Gain
---------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Index Futures Buy Contracts
Standard & Poor's 500, 47 contracts....... March 2000 $17,310,345 $17,439,350 $129,005
========
</TABLE>
The segregated cash pledged to cover margin requirements for the open futures
positions at December 31, 1999 was $956,250. 20
See accompanying notes to financial statements.
================================================================================
20
<PAGE>
U.S. Equity Fund -- Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $439,940,416)........................................ $ 485,358,333
Affiliated issuers (Cost $17,738,488).......................................... 17,738,488
Cash.............................................................................. 915,483
Receivables:
Dividends....................................................................... 948,360
Interest........................................................................ 8,302
Variation margin................................................................ 39,950
Other assets...................................................................... 7,343
----------------
TOTAL ASSETS.................................................................. 505,016,259
----------------
LIABILITIES:
Payables:
Investment securities purchased................................................. 203,681
Investment advisory fees........................................................ 310,702
----------------
TOTAL LIABILITIES............................................................. 514,383
----------------
NET ASSETS......................................................................... $ 504,501,876
================
NET ASSETS CONSIST OF:
Paid in capital................................................................... $ 447,548,416
Accumulated undistributed net investment income................................... 2,575,151
Accumulated net realized gain..................................................... 8,831,387
Net unrealized appreciation....................................................... 45,546,922
----------------
NET ASSETS.................................................................... $ 504,501,876
================
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share (Based on
net assets of $445,593,097 and 26,487,668 shares issued and outstanding)....... $ 16.82
================
Brinson Class N:
Net asset value, offering price and redemption price per share (Based on
net assets of $8,136,405 and 485,875 shares issued and outstanding)............ $ 16.75
================
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share (Based on
net assets of $50,772,374 and 3,032,044 shares issued and outstanding)......... $ 16.75
================
</TABLE>
See accompanying notes to financial statements.
================================================================================
21
<PAGE>
U.S. Equity Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
INVESTMENT INCOME:
Dividends..................................................... $ 4,864,406
Interest...................................................... 489,563
-------------
TOTAL INCOME............................................ 5,353,969
-------------
EXPENSES:
Advisory...................................................... 2,275,632
Distribution.................................................. 167,143
Administration................................................ 29,871
Other......................................................... 302,235
-------------
TOTAL EXPENSES.......................................... 2,774,881
Earnings credits........................................ (528)
NET EXPENSES............................................ 2,774,353
-------------
NET INVESTMENT INCOME................................... 2,579,616
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on:
Investments.................................................. 16,528,414
Futures contracts............................................ 1,121,164
-------------
Net realized gain....................................... 17,649,578
-------------
Change in net unrealized appreciation or depreciation on:
Investments.................................................. (123,031,905)
Futures contracts............................................ 129,005
-------------
Change in net unrealized appreciation or depreciation... (122,902,900)
-------------
Net realized and unrealized loss.............................. (105,253,322)
-------------
Net decrease in net assets resulting from operations.......... $(102,673,706)
=============
See accompanying notes to financial statements
================================================================================
22
<PAGE>
U.S. Equity Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSET
<TABLE>
<CAPTION>
Six Months Ended Year
December 31, 1999 Ended
(Unaudited) June 30, 1999
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income........................................................... $ 2,579,616 $ 5,562,471
Net realized gain............................................................... 17,649,578 53,949,031
Change in net unrealized appreciation or depreciation........................... (122,902,900) 51,667,938
----------------- -----------------
Net increase (decrease) in net assets resulting from operations................. (102,673,706) 111,179,440
----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income:
Brinson Class I............................................................... (1,354,936) (5,223,351)
Brinson Class N............................................................... (12,687) (28,171)
UBS Investment Funds Class.................................................... -- (190,578)
Distributions from net realized gain:
Brinson Class I............................................................... (46,078,258) (36,404,562)
Brinson Class N............................................................... (773,650) (234,496)
UBS Investment Funds Class.................................................... (5,191,383) (3,937,537)
----------------- -----------------
Total distributions to shareholders............................................. (53,410,914) (46,018,695)
----------------- -----------------
CAPITAL SHARE TRANSACTIONS:
Shares sold..................................................................... 70,513,579 283,730,686
Shares issued in connection with the acquisition of the UBS Value Equity Fund... -- 23,269,419
Shares issued on reinvestment of distributions.................................. 48,416,091 42,645,369
Shares redeemed................................................................. (248,393,696) (285,854,547)
----------------- -----------------
Net increase (decrease) in net assets resulting from capital share transactions. (129,464,026) 63,790,927
----------------- -----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................... (285,548,646) 128,951,672
----------------- -----------------
NET ASSETS:
Beginning of period............................................................. 790,050,522 661,098,850
----------------- -----------------
End of period (including accumulated undistributed net investment income of
$2,575,151 and $1,363,158, respectively)........................................ $ 504,501,876 $ 790,050,522
================= =================
</TABLE>
See accompanying notes to financial statements.
================================================================================
23
<PAGE>
U.S. Equity Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended August 31, 1995*
December 31, 1999 Year Ended June 30, Through
---------------------------------
UBS Investment Funds Class (Unaudited) 1999 1998 1997 June 30, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period....................... $ 21.39 $ 19.83 $ 17.59 $ 14.58 $ 11.94
--------- --------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income.................................... 0.08** 0.06** 0.09 0.11 0.10
Net realized and unrealized gain (loss).................. (2.90) 2.67 3.38 4.22 2.92
--------- --------- --------- --------- ---------
Total income (loss) from
investment operations................................. (2.82) 2.73 3.47 4.33 3.02
--------- --------- --------- --------- ---------
Less distributions:
Distributions from net investment income................ (0.05) (0.05) (0.10) (0.09) (0.13)
Distributions from net realized gain.................... (1.77) (1.12) (1.13) (1.23) (0.25)
--------- --------- --------- --------- ---------
Total distributions................................... (1.82) (1.17) (1.23) (1.32) (0.38)
--------- --------- --------- --------- ---------
Net asset value, end of period............................. $ 16.75 $ 21.39 $ 19.83 $ 17.59 $ 14.58
========= ========= ========= ========= =========
Total return (non-annualized).............................. (4.51)% 14.63% 20.80% 31.28% 25.70%
Ratios/Supplemental data:
Net assets, end of period (in 000s)..................... $ 50,772 $ 69,167 $ 55,063 $ 35,039 $ 5,387
Ratio of expenses to average net assets:
Before expense reimbursement
and earnings credits............................... 1.32%*** 1.32% 1.32% 1.41% 1.66%***
After expense reimbursement
and earnings credits.............................. N/A N/A N/A 1.32% 1.32%***
Ratio of net investment income to average net assets:
Before expense reimbursement
and earnings credits.............................. 0.32%*** 0.30% 0.60% 0.54% 0.61%***
After expense reimbursement
and earnings credits.............................. N/A N/A N/A 0.63% 0.95%***
Portfolio turnover rate................................. 26% 48% 42% 43% 36%
</TABLE>
* Commencement of UBS Investment Funds Class
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized
N/A = Not Applicable
See accompanying notes to financial statements.
================================================================================
24
<PAGE>
U.S. Large Capitalization Equity Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Since its inception on April 30, 1998, the UBS Investment Fund -- U.S. Large
Capitalization Equity has provided an annualized return of -4.06% compared to
the 19.85% return of its benchmark, the S&P 500 Equity Index. Results for the
one-year period were also disappointing, with the Fund returning -11.39% versus
the benchmark return of 21.04%. While these results are well below our
expectations, we feel the Fund is very well positioned to take advantage of the
current market environment--which has seen many sectors and market segments
driven to extreme levels of over- and under-valuation.
For 1999, market exposure detracted very modestly from active returns,
consistent with a slightly below market beta and very strong returns. Results
suffered from a meaningful underweight in the high momentum, high price/earnings
and large capitalization stocks. Our Fund has minimal exposure to such stocks
based upon our valuation analysis, which indicates they are meaningfully
overvalued. Industry exposures also detracted from active returns, with negative
contributions from the relative underweights in semiconductors and computer
software and overweights in railroads and tobacco. These negative returns were
only partially offset by positive contributions from our underweights in food
and beverages, drugs and specialty retail and overweights in information
services.
Stock selection had the largest negative impact on active returns for the full
year. The strongest contributors were Corning, First Data and Computer Sciences
while the biggest detractors were Xerox, Lockheed Martin, FDX Corp., and
Raytheon. Given the momentum orientation of the current market environment,
companies that reported any disappointment in expected earnings were heavily
penalized.
A relatively narrow segment of the largest capitalization stocks, especially in
the technology sector, continued to dominate market performance. Technology,
with a return of 79% for the year, had the best return of any sector and its
heavy weighting in the S&P 500 Index (30% at year-end) resulted in contributing
about 67% of the Index's year-to-date return. We believe investors have been too
willing to pay significant premiums for the perception of strong top-line growth
and to assume strong relative earnings growth far into the future. We remain
convinced that there are greater relative values away from such issues, which
are dominated by momentum investors. Specifically, the Fund's most important
factor exposures, as we enter 2000, include underweights in size, momentum and
growth and overweights in the traditional value measures of earnings/ price,
book/price and yield. From an industry standpoint, the Fund is underweight in
technology hardware, retail, drugs and energy and overweight in transportation,
banks, information services and electric utilities.
================================================================================
25
<PAGE>
U.S. Large Capitalization Equity Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Total Return
<TABLE>
<CAPTION>
6 months 1 year 4/30/98*
ended ended to
12/31/99 12/31/99 12/31/99
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UBS Investment Fund -- U.S. Large Capitalization Equity -17.78% -11.39% -4.06%
- ---------------------------------------------------------------------------------------------------
S&P 500 Equity Index 7.71 21.04 19.85
- ---------------------------------------------------------------------------------------------------
</TABLE>
* Performance inception date of the UBS Investment Fund -- U.S. Large
Capitalization Equity.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $10,000
This chart shows the growth in the value of an investment in the UBS Investment
Fund -- U.S. Large Capitalization Equity and the S&P 500 Equity Index if you had
invested $10,000 on April 30, 1998, and had reinvested all your income dividends
and capital gain distributions through December 31, 1999. No adjustment has been
made for any income taxes payable by shareholders on income dividends and
capital gain distributions. Past performance is no guarantee of future results.
Share price and return will vary with market conditions; investors may realize a
gain or loss upon redemption.
UBS Investment Fund -- U.S. Large Capitalization Equity
vs. S&P 500 Equity Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Label A B
- -----------------------------------------------------------------------------------
UBS Investment Fund
Label U.S. Large Cap Equity S&P 500 Index
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
1 4/30/98 10,000 10,000
- -----------------------------------------------------------------------------------
2 5/98 9,827 9,828
- -----------------------------------------------------------------------------------
3 6/98 9,968 10,227
- -----------------------------------------------------------------------------------
4 7/98 9,774 10,118
- -----------------------------------------------------------------------------------
5 8/98 8,481 8,655
- -----------------------------------------------------------------------------------
6 9/98 9,133 9,210
- -----------------------------------------------------------------------------------
7 10/98 9,795 9,959
- -----------------------------------------------------------------------------------
8 11/98 10,212 10,563
- -----------------------------------------------------------------------------------
9 12/98 10,529 11,171
- -----------------------------------------------------------------------------------
10 1/99 10,601 11,638
- -----------------------------------------------------------------------------------
11 2/99 10,263 11,277
- -----------------------------------------------------------------------------------
12 3/99 10,509 11,728
- -----------------------------------------------------------------------------------
13 4/99 11,400 12,182
- -----------------------------------------------------------------------------------
14 5/99 11,062 11,894
- -----------------------------------------------------------------------------------
15 6/99 11,349 12,555
- -----------------------------------------------------------------------------------
16 7/99 10,836 12,163
- -----------------------------------------------------------------------------------
17 8/99 10,518 12,102
- -----------------------------------------------------------------------------------
18 9/99 9,596 11,771
- -----------------------------------------------------------------------------------
19 10/99 9,565 12,516
- -----------------------------------------------------------------------------------
20 11/99 9,473 12,770
- -----------------------------------------------------------------------------------
21 12/99 9,331 12,522
- -----------------------------------------------------------------------------------
</TABLE>
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
26
<PAGE>
U.S. Large Capitalization Equity Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- -------------------------------------------------------------------
U.S. EQUITIES
Capital Investment
Capital Goods......................................... 5.33%
Technology............................................ 19.11
-------
24.44
Basic Industries
Chemicals............................................. 0.93
Housing/Paper......................................... 2.94
Metals................................................ 6.35
-------
10.22
Consumer
Non-Durables.......................................... 1.50
Retail/Apparel........................................ 5.61
Health: Drugs......................................... 2.80
Health: Non-Drugs..................................... 5.20
-------
15.11
Financial
Banks................................................. 11.04%
Non-Banks............................................. 5.85
-------
16.89
Utilities
Electric.............................................. 8.76
Telephone............................................. 2.32
-------
11.08
Transportation.......................................... 12.54
Services/Miscellaneous.................................. 5.76
-------
Total U.S. Equities................................ 96.04*
SHORT-TERM INVESTMENTS.................................. 3.43*
-------
TOTAL INVESTMENTS.................................. 99.47
CASH AND OTHER ASSETS,
LESS LIABILITIES................................... 0.53
-------
NET ASSETS.............................................. 100.00%
=======
- --------------------------------------------------------------------------------
* The Fund held a long position in stock index futures which increased U.S.
Equity exposure from 96.04% to 99.79%. This adjustment results in a net decrease
in the Fund's exposure to Short-Term Investments from 3.43% to -0.32%
Top 10 U.S. Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- ------------------------------------------------------------------
1. FDX Corp. 6.12%
2. Electronic Data Systems Corp. 5.91
3. Burlington Northern Santa Fe Corp. 4.95
4. CIGNA Corp. 3.99
5. Compuware Corp. 3.63
6. Compaq Computer Corp. 3.42
7. First Data Corp. 3.29
8. Masco Corp. 3.23
9. Illinois Tool Works, Inc. 3.12
10. Kimberly-Clark Corp. 2.93
- ------------------------------------------------------------------
================================================================================
27
<PAGE>
U.S. Large Capitalization Equity Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
------------ ------------
U.S. Equities -- 96.04%
Aon Corp...................................... 13,750 $ 550,000
Baxter International, Inc..................... 13,200 829,125
Burlington Northern Santa Fe Corp............. 60,500 1,467,125
Central & South West Corp..................... 32,800 656,000
Chase Manhattan Corp.......................... 10,500 815,719
CIGNA Corp.................................... 14,700 1,184,269
Compaq Computer Corp.......................... 37,500 1,014,844
Computer Sciences Corp. (b)................... 8,300 785,388
Compuware Corp. (b)........................... 28,900 1,076,525
Corning, Inc.................................. 4,000 515,750
Covance, Inc. (b)............................. 6,500 70,281
Dominion Resources, Inc....................... 16,600 651,550
Electronic Data Systems Corp.................. 26,200 1,753,762
Eli Lilly and Co.............................. 5,700 379,050
Emerson Electric Co........................... 15,100 866,363
Entergy Corp.................................. 16,400 422,300
FDX Corp. (b)................................. 44,300 1,813,531
First Data Corp............................... 19,800 976,387
Fleet Boston Financial Corp................... 22,985 800,165
Gateway, Inc. (b)............................. 5,200 374,725
Household International, Inc.................. 19,600 730,100
Illinois Tool Works, Inc...................... 13,700 925,606
Kimberly-Clark Corp........................... 13,300 867,825
Kroger Co. (b)................................ 10,000 188,750
Lexmark International Group, Inc. (b)......... 2,900 262,450
Lockheed Martin Corp.......................... 21,400 468,125
Masco Corp.................................... 37,700 956,637
Mattel, Inc................................... 38,000 498,750
Monsanto Co................................... 12,700 452,438
Newell Rubbermaid, Inc........................ 24,600 713,400
Norfolk Southern Corp......................... 21,400 438,700
Philip Morris Companies, Inc.................. 19,200 445,200
PNC Bank Corp................................. 9,800 436,100
Praxair, Inc.................................. 5,500 276,719
Raytheon Co., Class B......................... 22,500 597,656
SBC Communications, Inc....................... 14,100 687,375
U.S. Bancorp.................................. 15,500 369,094
United Healthcare Corp........................ 12,100 642,813
Wells Fargo and Co............................ 21,100 853,231
Xerox Corp.................................... 29,200 662,475
------------
Total U.S. Equities (Cost $31,220,080)........ 28,476,303
------------
Short Term Investments -- 3.43%
Investment Companies -- 3.43%
Brinson Supplementary Trust U.S. Cash
Management Prime Fund (Cost $1,018,306)..... 1,018,306 1,018,306
------------
Total Investments
(Cost $32,238,386) -- 99.47% (a)............ 29,494,609
Cash and other assets,
less liabilities -- 0.53%................... 156,596
------------
Net Assets -- 100%............................ $ 29,651,205
============
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $32,238,386; and net
unrealized depreciation consisted of:
Gross unrealized appreciation............. $ 1,215,839
Gross unrealized depreciation............. (3,959,616)
--------------
Net unrealized depreciation........... $ (2,743,777)
==============
(b) Non-income producing security
FUTURES CONTRACTS
The U.S. Large Capitalization Equity Fund had the following open futures
contracts as of December 31, 1999:
<TABLE>
<CAPTION>
Expiration Current Unrealized
Date Cost Value Gain
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Index Futures Buy Contracts
Standard & Poor's 500, 3 contracts........ March 2000 $1,108,514 $1,113,150 $ 4,636
===========
</TABLE>
The segregated cash pledged to cover margin requirements for the open futures
positions at December 31, 1999 was $93,750.
See accompanying notes to financial statements.
================================================================================
28
<PAGE>
U. S. Large Capitalization Equity Fund--Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $31,220,080)........................................................... $ 28,476,303
Affiliated issuers (Cost $1,018,306).............................................................. 1,018,306
Cash............................................................................................... 106,990
Receivables:
Dividends......................................................................................... 52,604
Interest.......................................................................................... 752
Variation margin.................................................................................. 2,843
Other assets....................................................................................... 19,431
-------------
TOTAL ASSETS.................................................................................. 29,677,229
-------------
LIABILITIES:
Payables:
Investment advisory fees.......................................................................... 6,834
Accrued expenses.................................................................................. 19,190
-------------
TOTAL LIABILITIES............................................................................. 26,024
-------------
NET ASSETS.......................................................................................... $ 29,651,205
=============
NET ASSETS CONSIST OF:
Paid in capital.................................................................................... $ 34,129,717
Accumulated undistributed net investment income.................................................... 16,008
Distributions in excess of net realized gain....................................................... (1,755,379)
Net unrealized depreciation........................................................................ (2,739,141)
-------------
NET ASSETS.................................................................................... $ 29,651,205
=============
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share (Based on net assets of
$29,011,865 and 3,569,134 shares issued and outstanding)........................................ $ 8.13
=============
Brinson Class N:
Net asset value, offering price and redemption price per share (Based on net assets of
$562,411 and 68,872 shares issued and outstanding).............................................. $ 8.17
=============
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share (Based on net assets of
$76,929 and 9,516 shares issued and outstanding)................................................ $ 8.08
=============
</TABLE>
See accompanying notes to financial statements.
================================================================================
29
<PAGE>
U. S. Large Capitalization Equity Fund--Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends............................................................................ $ 201,610
Interest............................................................................. 31,884
-----------
TOTAL INCOME................................................................... 233,494
-----------
EXPENSES:
Advisory............................................................................. 85,880
Registration......................................................................... 25,734
Professional......................................................................... 19,450
Printing............................................................................. 8,030
Distribution......................................................................... 2,932
Other................................................................................ 5,285
-----------
TOTAL EXPENSES................................................................. 147,311
Expenses deferred by Advisor................................................... (46,252)
Earnings credits............................................................... (15)
-----------
NET EXPENSES................................................................... 101,044
-----------
NET INVESTMENT INCOME.......................................................... 132,450
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on:
Investments......................................................................... 89,048
Futures contracts................................................................... 71,238
-----------
Net realized gain.............................................................. 160,286
-----------
Change in net unrealized appreciation or depreciation on:
Investments........................................................................ (4,939,653)
Futures contracts.............................................................. 4,636
-----------
Change in net unrealized appreciation or depreciation.......................... (4,935,017)
-----------
Net realized and unrealized loss...................................................... (4,774,731)
-----------
Net decrease in net assets resulting from operations.................................. $(4,642,281)
===========
</TABLE>
See accompanying notes to financial statements.
================================================================================
30
<PAGE>
U. S. Large Capitalization Equity Fund--Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year
December 31, 1999 Ended
(Unaudited) June 30, 1999
----------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income......................................................... $ 132,450 $ 185,687
Net realized gain............................................................. 160,286 339,283
Change in net unrealized appreciation or depreciation......................... (4,935,017) 2,374,562
----------- ------------
Net increase (decrease) in net assets resulting from operations............... (4,642,281) 2,899,532
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income:
Brinson Class I............................................................. (193,937) (87,626)
Brinson Class N............................................................. (3,265) (69,880)
UBS Investment Funds Class.................................................. (496) (12)
Distributions in excess of net realized gain:
Brinson Class I............................................................. (2,112,125) --
Brinson Class N............................................................. (67,253) --
UBS Investment Funds Class.................................................. (6,269) --
----------- ------------
Total distributions to shareholders........................................... (2,383,345) (157,518)
----------- ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold................................................................... 17,125,025 24,853,429
Shares issued on reinvestment of distributions................................ 1,897,089 147,324
Shares redeemed............................................................... (8,774,987) (17,500,436)
----------- ------------
Net increase in net assets resulting from capital share transactions.......... 10,247,127 7,500,317
----------- ------------
TOTAL INCREASE IN NET ASSETS............................................ 3,221,501 10,242,331
----------- ------------
NET ASSETS:
Beginning of period........................................................... 26,429,704 16,187,373
----------- ------------
End of period (including accumulated undistributed net investment
income of $16,008 and $81,256, respectively)................................. $29,651,205 $ 26,429,704
=========== ============
</TABLE>
See accompanying notes to financial statements.
================================================================================
31
<PAGE>
U. S. Large Capitalization Equity Fund--Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended Year April 6, 1998*
December 31, 1999 Ended Through
UBS Investment Funds Class (Unaudited) June 30, 1999 June 30, 1998
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period............................ $ 11.07 $ 9.79 $ 10.00
------- ------- -------
Income (loss) from investment operations:
Net investment income........................................ 0.05** 0.04** 0.02
Net realized and unrealized gain (loss)...................... (2.01) 1.31 (0.22)
------- ------- -------
Total income (loss) from investment operations............ (1.96) 1.35 (0.20)
------- ------- -------
Less distributions:
Distributions from net investment income..................... (0.08) (0.07) (0.01)
Distributions from and in excess of net realized gain........ (0.95) -- --
------- ------- -------
Total distributions....................................... (1.03) (0.07) (0.01)
------- ------- -------
Net asset value, end of period.................................. $ 8.08 $ 11.07 $ 9.79
======= ======= =======
Total return (non-annualized)................................... (11.39)% 13.86% (2.06)%
Ratios/Supplemental data:
Net assets, end of period (in 000s).......................... $ 77 $ 6 $ 1
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits........... 1.70%*** 1.81% 2.11%***
After expense reimbursement and earnings credits............ 1.32%*** 1.32% 1.32%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits........... 0.20%*** 0.05% 0.00%***
After expense reimbursement and earnings credits............ 0.58%*** 0.54% 0.79%***
Portfolio turnover rate....................................... 84% 88% 12%
</TABLE>
*Commencement of investment operations
**The net investment income per share data was determined using average shares
outstanding throughout the period.
***Annualized
See accompanying notes to financial statements.
================================================================================
32
<PAGE>
U.S. Large Capitalization Growth Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Since its performance inception on December 31, 1998, the UBS Investment
Fund -U.S. Large Capitalization Growth has returned 31.63%, compared to a return
of 33.16% for the Russell 1000 Growth Index and a return of 21.04% for the S&P
500 Equity Index. The volatility for the Fund was 16.58% compared to 16.97% for
the Russell 1000 and 12.94% for the S&P 500.
Just as last year, 1999 was a very good year to be a growth manager (the S&P 500
lagged the Russell Growth by 12%). The underlying forces, however, were quite
different. The three key growth sectors in the U.S. stock market are technology,
healthcare and consumer staples (over 70% of the benchmark). In 1999, only
technology drove these positive returns, while in 1998 healthcare helped, and in
1997 consumer staples also aided returns. Indeed, by the end of the year
technology comprised 45% of the benchmark and nearly 30% of the S&P 500,
representing dramatic increases from just a few years ago. Another important
trend in 1999 was the sharp increase in performance in smaller growth stocks in
the second half of the year. This was mainly due to the broadening of the
technology trend and the dramatic surge in Internet related issues.
Just as the slowdown in global growth had hurt the major consumer franchise
companies such as Coca Cola in 1997, major healthcare companies lagged badly in
1999 under the threat of politically controlled drug prices. What had been one
of the best areas in 1998 became one of the worst in 1999. Ironically, smaller
healthcare companies, particularly in biotechnology, performed almost as well as
smaller technology companies in the latter part of the year.
Our performance in 1999 benefited from stock selection, was hurt slightly by our
sector weights, and was hurt more importantly by underweighting the price
momentum factor in the market. Within the three major growth sectors, our stock
selection was quite positive. The negative sector effect was mainly a result of
overweighting financial stocks and modestly underweighting technology for most
of the year.
A major challenge facing growth investors in the year 2000 is the extreme
performance of the technology sector at the expense of other areas. This is
particularly true after the dramatic gains in the last quarter of the year. We
have used this opportunity to take profits in many issues and reduce our sector
concentration to a below-average, though still meaningful level. We are having
difficulty finding companies whose fundamental prospects are as attractive as
our technology holdings, but we cannot ignore the excessive enthusiasm for this
area. This reduction has funded new investments in attractive retail and
consumer staple companies.
================================================================================
33
<PAGE>
U.S. Large Capitalization Growth Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Total Return
<TABLE>
<CAPTION>
6 months 12/31/98*
ended to
12/31/99 12/31/99
- --------------------------------------------------------------------------------
<S> <C> <C>
UBS Investment Fund -- U.S. Large Capitalization Growth 12.61% 31.63%
- --------------------------------------------------------------------------------
S&P 500 Equity Index 7.71 21.04
- --------------------------------------------------------------------------------
Russell 1000 Growth Index** 20.56 33.16
- --------------------------------------------------------------------------------
</TABLE>
* Performance inception date of the UBS Investment Fund -- U.S. Large
Capitalization Growth.
** The Advisor has chosen to change the Fund's benchmark index from the S&P
500 Equity Index to the Russell 1000 Growth Index due to the Advisor's
determination that the Russell 1000 Growth Index more closely reflects the
Fund's investment strategies.
Total return includes reinvestment of all capital gain and income distributions.
Illustration of an Assumed Investment of $10,000
This chart shows the growth in the value of an investment in the UBS Investment
Fund -- U.S. Large Capitalization Growth, the S&P 500 Equity Index and the
Russell 1000 Growth Index if you had invested $10,000 on December 31, 1998, and
had reinvested all your income dividends and capital gain distributions through
December 31, 1999.
No adjustment has been made for any income taxes payable by shareholders on
income dividends and capital gain distributions. Past performance is no
guarantee of future results. Share price and return will vary with market
conditions; investors may realize a gain or loss upon redemption.
UBS Investment Fund -- U.S. Large Capitalization Growth
vs. S&P 500 Equity Index and Russell 1000 Growth Index
Wealth Value with Dividends Reinvested
U.S. Large Capitalization Growth S&P 500 Index Russell 1000
- -------------------------------------------------------------------------------
12/31/98 10,000 10,000 10,000
- -------------------------------------------------------------------------------
1/31/99 10,617 10,418 10,587
- -------------------------------------------------------------------------------
2/28/99 10,152 10,094 10,104
- -------------------------------------------------------------------------------
3/31/99 10,633 10,498 10,636
- -------------------------------------------------------------------------------
4/30/99 11,030 10,905 10,649
- -------------------------------------------------------------------------------
5/31/99 10,887 10,647 10,322
- -------------------------------------------------------------------------------
6/30/99 11,698 11,238 11,045
- -------------------------------------------------------------------------------
7/31/99 11,208 10,887 10,694
- -------------------------------------------------------------------------------
8/31/99 11,191 10,834 10,869
- -------------------------------------------------------------------------------
9/30/99 10,811 10,537 10,640
- -------------------------------------------------------------------------------
10/31/99 11,394 11,203 11,000
- -------------------------------------------------------------------------------
11/31/99 11,968 11,431 12,061
- -------------------------------------------------------------------------------
12/31/99 13,163 12,104 13,316
- -------------------------------------------------------------------------------
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
34
<PAGE>
U.S. Large Capitalization Growth Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Industry Diversification
<TABLE>
<CAPTION>
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<S> <C>
U.S. EQUITIES
Energy............................ 2.45%
Capital Investment
Technology...................... 19.79
Electric Components............. 9.35
------
29.14
Basic Industries
Housing/Paper................... 1.54
Consumer
Non-Durables.................... 1.94
Retail/Apparel.................. 11.11
Autos/Durables.................. 0.77
Health: Drugs................... 9.56
Health: Non-Drugs............... 5.43
------
28.81
Financial
Non-Banks....................... 8.20%
Utilities
Telephone....................... 16.09
Services/Miscellaneous............ 7.03
------
Total U.S. Equities...... 93.26*
------
SHORT-TERM INVESTMENTS............ 5.09*
------
TOTAL INVESTMENTS........... 98.35
CASH AND OTHER ASSETS,
LESS LIABILITIES................ 1.65
------
NET ASSETS........................ 100.00%
======
</TABLE>
- --------------------------------------------------------------------------------
The Fund held a long position in stock index futures which increased U.S. Equity
exposure from 93.26% to 100.10%. This adjustment results in a net decrease in
the Fund's exposure to Short-Term Investments from 5.09% to -1.75%.
Top 10 U.S. Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- -----------------------------------------------
1. Oracle Corp. 4.08%
2. QUALCOMM, Inc. 3.90
3. Sun Microsystems, Inc. 3.85
4. Microsoft, Inc. 3.66
5. General Electric Co. 3.42
6. Texas Instruments, Inc. 2.86
7. Wal-Mart Stores, Inc. 2.80
8. America On-Line, Inc. 2.64
9. Immunex Corp. 2.52
10. Dayton Hudson Corp. 2.44
- -----------------------------------------------
================================================================================
35
<PAGE>
U.S. Large Capitalization Growth Fund--Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
-------- -----------
U.S. Equities -- 93.26%
3 Com Corp. (b)........................................... 2,900 $ 136,300
AFLAC, Inc................................................ 3,900 184,031
America On-Line, Inc. (b)................................. 3,800 286,663
American Express Co....................................... 1,300 216,125
American International Group, Inc......................... 1,925 208,141
AT&T Corp................................................. 4,250 215,688
AT&T Corp.--Liberty Media Group, Inc. (b)................. 4,056 230,178
Avon Products, Inc........................................ 2,000 66,000
Bell Atlantic Corp........................................ 1,300 80,031
BMC Software, Inc. (b).................................... 1,500 119,906
Boeing Co................................................. 2,000 83,125
Boston Scientific Corp. (b)............................... 5,400 118,125
Bristol-Myers Squibb Co................................... 2,400 154,050
CBS Corp. (b)............................................. 3,000 191,813
Cisco Systems, Inc. (b)................................... 2,400 257,100
Citigroup, Inc............................................ 2,800 155,575
Dayton Hudson Corp........................................ 3,600 264,375
Electronic Data Systems Corp.............................. 1,900 127,181
Federal Home Loan Association Co.......................... 3,400 160,013
Gap, Inc.................................................. 3,300 151,800
General Electric Co....................................... 2,400 371,400
Halliburton Co............................................ 2,100 84,525
Immunex Corp. (b)......................................... 2,500 273,281
Intel Corp................................................ 1,900 156,394
International Business Machines Corp...................... 2,300 248,400
Johnson & Johnson Co...................................... 2,300 214,188
Lowe's Companies, Inc..................................... 2,800 167,300
Lucent Technologies, Inc.................................. 2,500 187,031
MCI WorldCom, Inc. (b).................................... 3,600 191,025
Merck & Co., Inc.......................................... 3,300 221,306
Merrill Lynch & Co........................................ 1,800 150,300
Microsoft, Inc. (b)....................................... 3,400 396,950
Motorola, Inc............................................. 1,200 176,700
Nike, Inc................................................. 2,000 99,125
Nortel Networks, Inc...................................... 2,500 252,500
Oracle Corp. (b).......................................... 3,950 442,647
Pepsi Bottling Group, Inc................................. 6,100 101,031
Pfizer, Inc............................................... 6,400 207,600
Philip Morris Companies, Inc.............................. 4,700 108,981
Proctor & Gamble Co....................................... 1,300 142,431
QUALCOMM, Inc. (b)........................................ 2,400 423,000
Quintiles Transnational Corp. (b)......................... 3,900 72,881
Safeway, Inc. (b)......................................... 5,000 177,813
SBC Communications, Inc................................... 3,400 165,750
Schering Plough Corp...................................... 4,300 181,406
Schlumberger Ltd.......................................... 2,900 163,125
Sun Microsystems, Inc. (b)................................ 5,400 418,162
Texas Instruments, Inc.................................... 3,200 310,000
Time Warner, Inc.......................................... 1,500 108,656
Transocean Offshore, Inc.................................. 562 18,932
Tyco International Co..................................... 2,100 81,638
Wal-Mart Stores, Inc...................................... 4,400 304,150
Walt Disney Co............................................ 3,200 93,600
-----------
Total Equities (Cost $8,120,194).......................... 10,118,448
-----------
Face
Amount
---------
Short-Term Investments -- 5.09%
Investment Companies -- 5.09%
Vista U.S. Government Money Market
Fund (Cost $551,964) (b)............................... $ 551,964 551,964
-----------
Total Investments
(Cost $8,672,158) -- 98.35% (a)........................ 10,670,412
Cash and other assets,
less liabilities -- 1.65%.............................. 178,608
-----------
Net Assets -- 100%..................................... $10,849,020
===========
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $8,672,158; and net
unrealized appreciation consisted of:
Gross unrealized appreciation........................ $ 2,347,701
Gross unrealized depreciation........................ (349,447)
------------
Net unrealized appreciation...................... $ 1,998,254
============
(b) Non-income producing security.
FUTURES CONTRACTS
The U.S. Large Capitalization Growth Fund had the following open futures
contracts as of December 31, 1999:
Expiration Current Unrealized
Date Cost Value Gain
---------- -------- ------- ----------
Index Futures Buy Contracts
Standard & Poor's 500, 2 contracts.... March 2000 731,314 742,100 $10,786
=======
The segregated cash pledged to cover margin requirements for the open futures
positions at December 31, 1999 was $18,750.
See accompanying notes to financial statements.
================================================================================
36
<PAGE>
U.S. Large Capitalization Growth Fund -- Financial Statements
- ------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $8,672,158)...................................................... $ 10,670,412
Cash............................................................................................ 218,400
Receivables:
Due from Advisor............................................................................ 2,780
Dividends................................................................................... 6,891
Interest.................................................................................... 3,678
Variation margin............................................................................ 1,768
-------------
TOTAL ASSETS.............................................................................. 10,903,929
-------------
LIABILITIES:
Payables:
Accrued expenses............................................................................ 54,909
-------------
TOTAL LIABILITIES......................................................................... 54,909
-------------
NET ASSETS...................................................................................... $ 10,849,020
=============
NET ASSETS CONSIST OF:
Paid in capital............................................................................. $ 8,496,445
Accumulated undistributed net investment loss............................................... (19,874)
Accumulated net realized gain............................................................... 363,409
Net unrealized appreciation................................................................. 2,009,040
-------------
NET ASSETS................................................................................ $ 10,849,020
=============
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share (Based on net assets of
$3,767,216 and 256,482 shares issued and outstanding)..................................... $ 14.69
=============
Brinson Class N:
Net asset value, offering price and redemption price per share (Based on net assets of
$1,317 and 90 shares issued and outstanding).............................................. $ 14.63
=============
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share (Based on net assets of
$7,080,487 and 486,374 shares issued and outstanding)..................................... $ 14.56
=============
</TABLE>
See accompanying notes to financial statements.
================================================================================
37
<PAGE>
U. S. Large Capitialization Growth Fund - Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends..................................................................................... $ 34,407
Interest...................................................................................... 5,952
--------------
TOTAL INCOME................................................................................ 40,359
--------------
EXPENSES:
Advisory...................................................................................... 31,958
Distribution.................................................................................. 23,378
Professional.................................................................................. 22,114
Registration.................................................................................. 15,506
Custodian..................................................................................... 6,627
Other......................................................................................... 23,423
--------------
TOTAL EXPENSES.............................................................................. 123,006
Expenses deferred and reimbursed by Advisor................................................. (56,260)
Earnings credits............................................................................ (6,513)
--------------
NET EXPENSES................................................................................ 60,233
--------------
NET INVESTMENT LOSS......................................................................... (19,874)
--------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on:
Investments................................................................................... 353,419
Futures Contracts............................................................................. 27,940
--------------
Net realized gain........................................................................... 381,359
--------------
Change in net unrealized appreciation or depreciation on:
Investments................................................................................... 946,091
Futures Contracts............................................................................. 10,786
--------------
Change in net unrealized appreciation or depreciation....................................... 956,877
--------------
Net realized and unrealized gain.................................................................. 1,338,236
--------------
Net increase in net assets resulting from operations.............................................. $ 1,318,362
==============
</TABLE>
See accompanying notes to financial statements.
================================================================================
38
<PAGE>
U.S. Large Capitalization Growth Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Six Months Ended*
(Unaudited) June 30, 1999
----------------- ------------------
<S> <C> <C>
OPERATIONS:
Net investment loss............................................................ $ (19,874) $ (123)
Net realized gain.............................................................. 381,359 408,525
Change in net unrealized appreciation or depreciation.......................... 956,877 463,877
--------------- ------------
Net increase in net assets resulting from operations........................... 1,318,362 872,279
--------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gain:
Brinson Class I.............................................................. (226,909) -
Brinson Class N.............................................................. (80) -
UBS Investment Funds Class................................................... (376,172) -
--------------- ------------
Total distributions to shareholders............................................ (603,161) -
--------------- ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold.................................................................... 4,243,090 5,233,678
Shares issued on reinvestment of distributions................................. 593,637 -
Shares redeemed................................................................ (2,787,807) (2,169,846)
--------------- ------------
Net increase in net assets resulting from capital share transactions........... 2,048,920 3,063,832
--------------- ------------
TOTAL INCREASE IN NET ASSETS............................................... 2,764,121 3,936,111
--------------- ------------
NET ASSETS:
Beginning of period............................................................ 8,084,899 4,148,788
--------------- ------------
End of period (including accumulated undistributed net investment
income of $(19,874) and $0, respectively).................................... $ 10,849,020 $ 8,084,899
=============== ============
</TABLE>
* Reflects the Fund's change in fiscal year end from December 31 to June 30
See accompanying notes to financial statements.
================================================================================
39
<PAGE>
U. S. Large Capitialization Growth Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Period Ended
UBS Investment Funds Class (Unaudited) June 30, 1999*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period................................................ $ 13.85 $ 11.84
-------- --------
Income from investment operations:
Net investment loss............................................................. (0.05)** (0.04)
Net realized and unrealized gain................................................ 1.71 2.05
-------- --------
Total income from investment operations....................................... 1.66 2.01
-------- --------
Less distributions:
Distributions from net realized gain............................................ (0.95) -
-------- --------
Total distributions........................................................... (0.95) -
-------- --------
Net asset value, end of period...................................................... $ 14.56 $ 13.85
======== ========
Total return (non-annualized)....................................................... 31.63% 16.98%
Ratios/Supplemental data:
Net assets, end of period (in 000s)............................................... $ 7,080 $ 5,136
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits............................... 2.94%*** 3.15%***
After expense reimbursement and earnings credits................................ 1.57%*** 1.57%***
Ratio of net investment loss to average net assets:
Before expense reimbursement and earnings credits............................... (2.06)%*** (2.03)%***
After expense reimbursement and earnings credits................................ (0.69)%*** (0.45)%***
Portfolio turnover rate........................................................... 46% 51%
</TABLE>
* Commencement of UBS Investment Funds Class was December 31, 1998.
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized
See accompanying notes to financial statements.
================================================================================
40
<PAGE>
U.S. Small Capitalization Growth Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
The UBS Investment Fund - U.S. Small Capitalization Growth appreciated 40.57%
since its performance inception on December 31, 1998, significantly outpacing
the 21.26% return of the Russell 2000 Index, a commonly cited index of small
capitalization (small cap) U.S. stocks. The Fund's outperformance relative to
the Russell 2000 in 1999 may be attributed to several factors. First, a
supportive economic environment and a sizzling technology sector generated
renewed interest in small cap growth stocks. Stock selection was also a strong
positive in 1999, particularly in the consumer cyclical and technology sectors.
Industry selection was a modest positive, mostly due to an overweight of
technology stocks and an underweight in basic materials and financials. Finally,
the Fund benefited from participation in a number of well-received initial
public offerings, mostly in the Internet arena.
Stocks that helped performance in 1999 included Peregrine Systems, Mercury
Interactive, Dendrite International, Cost Plus Warehouse, TMP Worldwide, DII
Group, and Zebra Technologies. Most of these equities were beneficiaries of last
year's technology rally. Stocks that detracted from relative performance
included Halo Industries, Pediatrix Medical, Sunrise Assisted Living,
Brightpoint Cellular, and Kellstrom. In general, most of these underperformers
suffered earnings shortfalls due to disappointing top-line growth. As a result,
we focused more research in 1999 on eliminating companies from the Fund that
were likely to report decelerating future sales growth.
As we consider the outlook for small cap stocks, it is heartening to note these
stocks outperformed their large cap brethren last year for the first time in six
years - albeit not by a wide margin. After trailing badly earlier in 1999, the
Russell 2000 nosed out the S&P 500 by a mere 22 basis points at year-end. It is
too early to tell whether recent strength signals the beginning of a new small
cap rally, but conditions are ripe for such a move. Relative valuations for
small cap stocks remain compelling by virtually any measure. The forward-looking
Price/Earnings (P/E) multiple for the Russell 2000 currently weighs in at 19.3
times earnings, while investors are paying an expensive 25.2 times earnings for
the S&P 500. A look at other valuation ratios leads to similar conclusions.
Although large cap stocks have enjoyed superior earnings growth and asset
utilization in the past year, small cap stocks are expected to grow more quickly
in the year ahead. For example, the IBES analyst consensus report forecasts that
small cap earnings will grow 24% in the year ahead versus 21% for the S&P 500.
Extending our time horizon, Russell 2000 profits are projected to rise 21%
annually over the next three to five years, while S&P 500 earnings are
forecasted to grow 17% a year. Given these solid growth prospects, we remain
bullish on the outlook for small cap stocks over the next several years.
================================================================================
41
<PAGE>
U.S. Small Capitalization Growth Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Total Return
6 months 12/31/98*
ended to
12/31/99 12/31/99
- --------------------------------------------------------------------------------
UBS Investment Fund - U.S. Small Capitalization Growth 35.34% 40.57%
- --------------------------------------------------------------------------------
Russell 2000 Index 10.96 21.26
- --------------------------------------------------------------------------------
* Inception date of the UBS Investment Fund - U.S. Small Capitalization Growth.
Total return includes reinvestment of all capital gain and income distributions.
Illustration of an Assumed Investment of $10,000
This chart shows the growth in the value of an investment in the UBS Investment
Fund - U.S. Small Capitalization Growth and the Russell 2000 Index if you had
invested $10,000 on December 31, 1998, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
UBS Investment Fund - U.S. Small Capitalization Growth
vs. Russell 2000 Index
Wealth Value with Dividends Reinvested
- -------------------------------------------------------------------------------
Label A B
- -------------------------------------------------------------------------------
Label Brinson U.S. Small Capitalization Growth Russell 2000 Index
- -------------------------------------------------------------------------------
1 12/31/98 10,000 10,000
2 1/31/99 9,989 10,133
3 2/28/99 9,148 9,312
4 3/31/99 9,352 9,458
5 4/30/99 9,318 10,305
6 5/31/99 9,727 10,456
7 6/30/99 10,386 10,928
8 7/31/99 10,477 10,628
9 8/31/99 10,239 10,235
10 9/30/99 10,591 10,237
11 10/31/99 10,989 10,279
12 11/30/99 12,716 10,893
13 12/31/99 14,057 12,126
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
42
<PAGE>
U.S. Small Capitalization Growth Fund
- --------------------------------------------------------------------------------
[Logo]UBS
Investment Funds
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
U.S. EQUITIES
Energy................................................... 1.52%
Capital Investment
Technology............................................... 14.83
Electrical Components.................................... 6.51
--------
21.34
Basic Industries
Housing/Paper............................................ 1.52
Consumer
Non-Durables............................................. 2.56
Retail/Apparel........................................... 11.84
Autos/Durables........................................... 9.87
Health: Drugs............................................ 2.84
Health: Non-Drugs........................................ 8.77
--------
35.88
Financial
Banks.................................................... 5.63%
Non-Banks................................................ 6.08
--------
11.71
Utilities
Telephone................................................ 3.11
Transportation........................................... 4.82
Services/Miscellaneous................................... 14.36
--------
Total U.S. Equities...................................... 94.26
SHORT-TERM INVESTMENTS................................... 5.89
--------
TOTAL INVESTMENTS........................................ 100.15
LIABILITIES, LESS CASH AND
OTHER ASSETS............................................. (0.15)
--------
NET ASSETS............................................... 100.00%
========
- --------------------------------------------------------------------------------
Top 10 U.S. Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- --------------------------------------------------------------------------------
1. Zebra Technologies Corp., Class A 2.08%
2. DII Group, Inc. 2.04
3. QRS Corp. 1.99
4. Mercury Interactive Corp. 1.96
5. Peregrine Systems, Inc. 1.92
6. Dendrite International, Inc. 1.90
7. Expeditors International of Washington, Inc. 1.90
8. U.S. Trust Corp. 1.83
9. Patterson Dental Co. 1.78
10. Helix Technology Corp. 1.77
- --------------------------------------------------------------------------------
================================================================================
43
<PAGE>
U.S. Small Capitalization Growth Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
------- ----------
U.S. Equities -- 94.26%
ACT Manufacturing, Inc. (b).............................. 8,300 $ 311,250
Agency.com, Inc. (b)..................................... 2,100 107,100
Anixer International, Inc. (b)........................... 18,700 385,687
AnnTaylor Stores Corp. (b)............................... 11,500 396,031
AVT Corp. (b)............................................ 17,400 817,800
C & D Technologies, Inc.................................. 10,071 428,017
C-Bridge Internet Solutions, Inc. (b).................... 850 41,331
Cacheflow, Inc. (b)...................................... 2,100 274,444
Calico Commerce, Inc. (b)................................ 2,200 116,600
CaseyOs General Stores, Inc.............................. 10,800 112,725
Celestial Seasonings, Inc. (b)........................... 27,500 511,758
Charles River Associates, Inc. (b)....................... 17,900 599,650
ChildrenOs Place Retail Stores, Inc. (b)................. 23,300 382,994
Cobalt Networks, Inc. (b)................................ 900 97,538
Cost Plus, Inc. (b)...................................... 19,550 696,469
Credence Systems Corp. (b)............................... 8,600 743,900
CTS Corp................................................. 4,000 301,500
Cytyc Corp. (b).......................................... 9,900 604,519
Data Return Corp. (b).................................... 2,100 112,350
Datascope Corp........................................... 11,800 472,000
Deltathree.com, Inc. (b)................................. 2,100 54,075
Dendrite International, Inc. (b)......................... 26,550 899,381
Digex, Inc. (b).......................................... 3,000 206,250
DII Group, Inc. (b)...................................... 13,600 965,175
Elantec Semiconductor, Inc. (b).......................... 20,400 673,200
Elcor Corp............................................... 22,550 679,319
Emmis Communications Corp. (b)........................... 4,800 598,275
Ethan Allen Interiors, Inc............................... 12,850 412,003
Expeditors International of Washington, Inc.............. 20,500 898,156
Forward Air Corp. (b).................................... 16,749 726,488
Graco, Inc............................................... 16,700 599,112
Greater Bay Bancorp...................................... 10,000 428,750
Haverty Furniture Cos., Inc.............................. 17,100 215,887
Helix Technology Corp.................................... 18,700 837,994
Hooper Holmes, Inc....................................... 24,400 628,300
Ibasis, Inc. (b)......................................... 2,100 60,375
Inamed Corp. (b)......................................... 15,500 680,062
Insight Communications (b)............................... 5,000 148,125
Insight Enterprises, Inc. (b)............................ 17,800 723,125
Insituform Technologies, Inc. (b)........................ 25,400 717,550
Investors Financial Services Corp........................ 18,200 837,200
Jack in the Box, Inc. (b)................................ 26,500 548,219
Jakks Pacific, Inc. (b).................................. 21,000 392,437
Jore Corp. (b)........................................... 8,300 64,844
Kana Communications, Inc. (b)............................ 800 164,000
Kenneth Cole Productions, Inc. (b)....................... 15,900 727,425
Kent Electronics Corp. (b)............................... 25,300 575,575
King Pharmaceuticals, Inc. (b)........................... 14,100 790,481
Kronos, Inc. (b)......................................... 3,400 204,000
Manitowoc Co., Inc....................................... 7,400 251,600
McAfee.com, Corp. (b).................................... 2,100 94,500
Meade Instruments Corp. (b).............................. 9,600 273,600
Mediaplex, Inc. (b)...................................... 5,200 326,300
MedQuist, Inc. (b)....................................... 13,900 358,794
Mercury Computer Systems, Inc. (b)....................... 15,000 525,000
Mercury Interactive Corp. (b)............................ 8,600 928,262
Metasolv Software, Inc. (b).............................. 2,100 171,675
NetRatings, Inc. (b)..................................... 2,100 101,063
Netzee, Inc. (b)......................................... 17,800 295,925
North Fork Bancorporation, Inc........................... 33,500 586,250
Ondisplay, Inc. (b)...................................... 650 59,069
Optio Software, Inc. (b)................................. 4,200 98,700
Pacific Sunwear of California, Inc. (b).................. 19,550 629,266
Patterson Dental Co. (b)................................. 19,700 839,712
Patterson Energy, Inc. (b)............................... 30,500 396,500
Peoples Heritage Financial Group, Inc.................... 30,700 462,419
Peregrine Systems, Inc. (b).............................. 10,800 909,225
Protective Life Corp..................................... 25,500 811,219
QRS Corp. (b)............................................ 8,950 939,750
Quest Diagnostics, Inc. (b).............................. 18,700 571,519
ResMed, Inc. (b)......................................... 14,900 622,075
Retek, Inc. (b).......................................... 1,600 120,400
Richmond County Financial Corp........................... 17,641 318,641
Roper Industries, Inc.................................... 15,500 586,094
Rudolph Technologies, Inc. (b)........................... 5,200 174,200
Sciquest.com, Inc. (b)................................... 2,100 166,950
Shaw Group, Inc. (b)..................................... 27,200 688,500
SonicWall, Inc. (b)...................................... 2,100 84,525
Spanish Broadcasting System (b).......................... 15,500 623,875
Stone Energy Corp. (b)................................... 9,000 320,625
Swift Transportation Co., Inc. (b)....................... 37,200 655,650
Sykes Enterprises, Inc. (b).............................. 18,200 798,525
Syntel, Inc. (b)......................................... 8,200 132,738
TMP Worldwide, Inc. (b).................................. 5,200 738,400
Tollgrade Communications, Inc. (b)....................... 6,200 213,900
Tower Automotive, Inc. (b)............................... 21,000 324,187
Tritel, Inc. (b)......................................... 2,100 66,544
Triton PCS Holdings, Inc. (b)............................ 8,300 377,650
U.S. Foodservice (b)..................................... 41,600 696,800
U.S. Trust Corp.......................................... 10,800 866,025
Vintage Petroleum, Inc................................... 33,100 399,269
Viropharma, Inc. (b)..................................... 15,000 555,000
Waters Corp. (b)......................................... 14,300 757,900
Whitehall Jewellers, Inc. (b)............................ 18,500 682,187
XPedior, Inc. (b)........................................ 850 24,438
Zebra Technologies Corp., Class A (b).................... 16,800 982,800
-----------
Total U.S. Equities (Cost $33,705,445)................... 44,577,692
-----------
================================================================================
44
<PAGE>
U.S. Small Capitalization Growth Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
Shares Value
---------- -----------
Short Term Investments -- 5.89%
Investment Companies -- 5.89%
Brinson Supplementary Trust U.S.
Cash Management Prime Fund
(Cost $2,787,103)....................... 2,787,103 $ 2,787,103
-----------
Total Investments
(Cost $36,492,548) -- 100.15% (a)....... 47,364,795
Liabilities, less cash and other
assets -- (0.15%)....................... (71,000)
-----------
Net Assets -- 100%........................ $47,293,795
===========
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $36,492,548; and net
unrealized appreciation consisted of:
Gross unrealized appreciation..................... $12,798,752
Gross unrealized depreciation..................... (1,926,505)
-----------
Net unrealized appreciation.................... $10,872,247
===========
(b) Non-income producing security.
See accompanying notes to financial statements.
================================================================================
45
<PAGE>
U.S. Small Capitalization Growth Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $33,705,445)..................................................... $44,577,692
Affiliated issuers (Cost $2,787,103)........................................................ 2,787,103
Cash.......................................................................................... 440
Receivables:
Dividends................................................................................... 1,792
Interest.................................................................................... 12,421
-----------
TOTAL ASSETS............................................................................. 47,379,448
-----------
LIABILITIES:
Payables:
Investment advisory fees.................................................................... 32,064
Accrued expenses............................................................................ 53,589
-----------
TOTAL LIABILITIES........................................................................ 85,653
-----------
NET ASSETS...................................................................................... $47,293,795
===========
NET ASSETS CONSIST OF:
Paid in capital............................................................................... $34,855,447
Accumulated undistributed net investment loss................................................. (114,496)
Accumulated net realized gain................................................................. 1,680,597
Net unrealized appreciation................................................................... 10,872,247
-----------
NET ASSETS............................................................................... $47,293,795
===========
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share
(Based on net assets of $45,914,693 and 3,681,767 shares issued and outstanding)............. $ 12.47
===========
Brinson Class N:
Net asset value, offering price and redemption price per share (Based on net
assets of $1,416 and 114 shares issued and outstanding)...................................... $ 12.42
===========
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share (Based on net
assets of $1,377,686 and 111,403 shares issued and outstanding).............................. $ 12.37
===========
</TABLE>
See accompanying notes to financial statements.
================================================================================
46
<PAGE>
U.S. Small Capitalization Growth Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends.......................................................................... $ 57,827
Interest........................................................................... 59,483
--------------
TOTAL INCOME................................................................... 117,310
--------------
EXPENSES:
Advisory........................................................................... 197,692
Professional....................................................................... 19,281
Registration....................................................................... 17,849
Distribution....................................................................... 3,123
Other.............................................................................. 31,367
--------------
TOTAL EXPENSES................................................................. 269,312
Expenses deferred by Advisor................................................... (37,437)
Earnings credits............................................................... (69)
--------------
NET EXPENSES................................................................... 231,806
--------------
NET INVESTMENT LOSS............................................................ (114,496)
--------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on investments................................................... 5,935,595
Change in net unrealized appreciation or depreciation on investments............... 6,732,379
--------------
Net realized and unrealized gain................................................... 12,667,974
--------------
Net increase in net assets resulting from operations............................... $ 12,553,478
==============
</TABLE>
See accompanying notes to financial statements.
================================================================================
47
<PAGE>
U.S. Small Capitalization Growth Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Six Months Ended*
(Unaudited) June 30, 1999
----------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment loss................................................................ $ (114,496) $ (68,177)
Net realized gain (loss)........................................................... 5,935,595 (633,451)
Change in net unrealized appreciation or depreciation.............................. 6,732,379 1,970,811
------------- -------------
Net increase in net assets resulting from operations............................... 12,553,478 1,269,183
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold........................................................................ 14,546,659 23,560,273
Shares issued on reinvestment of distributions..................................... -- --
Shares redeemed.................................................................... (15,658,308) (11,586,801)
------------- -------------
Net increase (decrease) in net assets resulting from capital share transactions.... (1,111,649) 11,973,472
------------- -------------
TOTAL INCREASE IN NET ASSETS.................................................... 11,441,829 13,242,655
------------- -------------
NET ASSETS:
Beginning of period................................................................ 35,851,966 22,609,311
------------- -------------
End of period (including accumulated undistributed net investment loss
of $(114,496) and $0, respectively).............................................. $ 47,293,795 $ 35,851,966
============= =============
</TABLE>
*Reflects the Fund's change in fiscal year end from December 31 to June 30
See accompanying notes to financial statements.
================================================================================
48
<PAGE>
U.S. Small Capitalization Growth Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Six Months Ended
UBS Investment Funds Class (Unaudited) June 30, 1999*
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period........................... $ 9.14 $ 8.80
------------ ------------
Income from investment operations:
Net investment loss....................................... (0.07)** (0.06)
Net realized and unrealized gain.......................... 3.30 0.40
------------ ------------
Total income from investment operations................ 3.23 0.34
------------ ------------
Net asset value, end of period................................. $ 12.37 $ 9.14
============ ============
Total return (non-annualized).................................. 40.57% 3.86%
Ratios/Supplemental data:
Net assets, end of period (in 000s).......................... $ 1,378 $ 640
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits......... 2.11%*** 2.09%***
After expense reimbursement and earnings credits.......... 1.92%*** 1.92%***
Ratio of net investment loss to average net assets:
Before expense reimbursement and earnings credits......... (1.52%)*** (1.39%)***
After expense reimbursement and earnings credits.......... (1.33%)*** (1.22%)***
Portfolio turnover rate..................................... 69% 71%
</TABLE>
* Commencement of UBS Investment Funds Class was December 31, 1998
** The net investment income per share data was determined by using average
shares outstanding throughout the period
*** Annualized
See accompanying notes to financial statements.
================================================================================
49
<PAGE>
U.S. Bond Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Since its inception on August 31, 1995, the UBS Investment Fund -- U.S. Bond has
returned 5.41%, while its benchmark, the Salomon Smith Barney Broad Investment
Grade (BIG) Bond Index has returned 6.05%. Over the same period, the Fund's
annualized volatility or risk of 3.90% was comparable to the benchmark
volatility of 3.42%. In calendar year 1999 the Fund posted a return of -1.55%
compared to the benchmark's return of -0.84%. The overall U.S. bond market's
returns for the year were very disappointing in absolute terms -- the worst for
bonds since 1994, and was one of the rare occasions when broad market benchmarks
produced negative returns.
A combination of strong economic growth (unusual this late in the cycle), rising
inflation pressures and monetary policy tightening by the Federal Reserve (the
Fed) conspired to push yields up steadily. Yields on benchmark 30-year
treasuries rose by nearly 150 basis points from their January lows to finish at
6.5%. This put them up 180 basis points from the record lows set in the fall of
1998. Shorter-term notes saw even greater increases as the yield curve
flattened. The Fed raised official rates three times, undoing all three of the
25 basis point cuts taken in 1998, leaving the federal funds rate at 5.5%. This
demand in the marketplace for higher yields pushed bond prices substantially
lower.
While U.S. Treasuries suffered, spread (i.e., corporate, mortgage) sectors did
not fare as badly. After the virtually unprecedented widening seen during 1998's
global market crisis, spreads narrowed this year, although not quite enough to
retrace all of the 1998 sell-off. The tightening in spreads produced strong
relative performance for corporates and mortgages, which outperformed equivalent
duration U.S. Treasuries by 174 and 112 basis points, respectively.
Our overweights to corporate bonds, particularly within the BBB-rated and Yankee
sectors, helped Fund returns. Issue selection within both corporates and
mortgages was also a source of added value. These positives were offset by our
duration strategy, as we maintained a posture slightly longer than benchmarks
for most of the year. Yield curve strategy was also slightly positive, with our
barbell strategy benefiting from a flattening in the yield curve.
================================================================================
50
<PAGE>
U.S. Bond Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Total Return
<TABLE>
<CAPTION>
6 months 1 year 3 years 8/31/95*
ended ended ended to
12/31/99 12/31/99 12/31/99 12/31/99
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UBS Investment Fund -- U.S. Bond 0.14% -1.55% 4.99% 5.41%
- ------------------------------------------------------------------------------------------------------------
Salomon Smith Barney Broad Investment Grade (BIG) Bond Index 0.55 -0.84 5.72 6.05
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* Inception date of the UBS Investment Fund -- U.S. Bond.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $10,000
This chart shows the growth in the value of an investment in the UBS Investment
Fund -- U.S. Bond and the Salomon Smith Barney BIG Bond Index if you had
invested $10,000 on August 31, 1995, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
UBS Investment Fund -- U.S. Bond
vs. Salomon Smith Barney BIG Bond Index
Wealth Value with Dividends Reinvested
- -----------------------------------------------------
Label A B
- -----------------------------------------------------
Label Brinson Index
- -----------------------------------------------------
1 8/31/95 10,000 10,000
- -----------------------------------------------------
2 10,080 10,094
- -----------------------------------------------------
3 10,230 10,229
- -----------------------------------------------------
4 10,390 10,389
- -----------------------------------------------------
5 12/31/95 10,529 10,532
- -----------------------------------------------------
6 10,591 10,604
- -----------------------------------------------------
7 10,366 10,425
- -----------------------------------------------------
8 10,284 10,350
- -----------------------------------------------------
9 10,202 10,273
- -----------------------------------------------------
10 10,161 10,268
- -----------------------------------------------------
11 6/30/96 10,324 10,400
- -----------------------------------------------------
12 10,345 10,428
- -----------------------------------------------------
13 10,283 10,413
- -----------------------------------------------------
14 10,491 10,594
- -----------------------------------------------------
15 10,762 10,832
- -----------------------------------------------------
16 11,032 11,011
- -----------------------------------------------------
17 12/31/96 10,861 10,914
- -----------------------------------------------------
18 10,871 10,956
- -----------------------------------------------------
19 10,893 10,968
- -----------------------------------------------------
20 10,731 10,857
- -----------------------------------------------------
21 10,893 11,012
- -----------------------------------------------------
22 11,001 11,116
- -----------------------------------------------------
23 6/30/97 11,141 11,248
- -----------------------------------------------------
24 11,479 11,553
- -----------------------------------------------------
25 11,370 11,453
- -----------------------------------------------------
26 11,522 11,622
- -----------------------------------------------------
27 11,675 11,788
- -----------------------------------------------------
28 11,708 11,843
- -----------------------------------------------------
29 12/31/97 11,844 11,964
- -----------------------------------------------------
30 11,981 12,118
- -----------------------------------------------------
31 11,970 12,110
- -----------------------------------------------------
32 12,004 12,157
- -----------------------------------------------------
33 12,050 12,220
- -----------------------------------------------------
34 12,165 12,338
- -----------------------------------------------------
35 6/30/98 12,252 12,439
- -----------------------------------------------------
36 12,264 12,465
- -----------------------------------------------------
37 12,461 12,656
- -----------------------------------------------------
38 12,682 12,954
- -----------------------------------------------------
39 12,636 12,896
- -----------------------------------------------------
40 12,717 12,967
- -----------------------------------------------------
41 12/31/98 12,767 13,007
- -----------------------------------------------------
42 12,876 13,104
- -----------------------------------------------------
43 12,647 12,874
- -----------------------------------------------------
44 12,731 12,948
- -----------------------------------------------------
45 12,755 12,990
- -----------------------------------------------------
46 12,623 12,871
- -----------------------------------------------------
47 6/30/99 12,552 12,827
- -----------------------------------------------------
48 12,490 12,776
- -----------------------------------------------------
49 12,453 12,767
- -----------------------------------------------------
50 12,613 12,920
- -----------------------------------------------------
51 12,613 12,959
- -----------------------------------------------------
52 12,625 12,957
- -----------------------------------------------------
53 12/31/99 12,569 12,898
- -----------------------------------------------------
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
51
<PAGE>
U.S. Bond Fund
- --------------------------------------------------------------------------------
[LOGO]UBS
Investment Funds
Industry Diversification
Funds
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
U.S. BONDS
Corporate Bonds
Asset-Backed................................................ 10.13%
Consumer.................................................... 1.65
Energy...................................................... 1.11
Financial Services.......................................... 5.32
Food & House Products....................................... 0.61
Health...................................................... 2.09
Industrial Components....................................... 0.12
Publishing.................................................. 0.41
Services/Miscellaneous...................................... 3.23
Telecommunications.......................................... 2.46
Utilities................................................... 0.51
-------
Total U.S. Corporate Bonds............................... 27.64
International Dollar Bonds..................................... 9.95
Corporate Mortgage-Backed Securities........................... 19.87
U.S. Government Agencies....................................... 2.64
U.S. Gov't Mortgage-Backed Securities.......................... 27.87
U.S. Government Obligations.................................... 10.79
-------
Total U.S. Bonds......................................... 98.76
-------
SHORT-TERM INVESTMENTS......................................... 0.32
-------
TOTAL INVESTMENTS........................................ 99.08
CASH AND OTHER ASSETS, LESS LIABILITIES........................ 0.92
-------
NET ASSETS..................................................... 100.00%
=======
- --------------------------------------------------------------------------------
================================================================================
52
<PAGE>
U.S. Bond Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Face
Amount Value
------------ -----------
Bonds -- 98.76%
U.S. Corporate Bonds -- 27.64%
Cendant Corp., 7.750%, due 12/01/03................ $ 1,060,000 $ 1,058,440
Centaur Funding Corp., 144A (b),
0.000%, due 04/21/20............................. 1,355 207,965
9.080%, due 04/21/20............................. 715 730,194
Ches Pot Tel MD,
8.000%, due 10/15/29............................. 87,000 88,319
Chrysler Financial Corp.,
7.400%, due 08/01/69............................. 100,000 92,321
Countrywide Funding Corp. FRN,
5.420%, due 12/01/03............................. 250,000 232,065
Farmers Exchange Capital, 144A,
7.050%, due 07/15/28............................. 1,090,000 925,441
Fidelity Investments, 144A,
7.570%, due 06/15/29............................. 1,250,000 1,201,834
First Bank Corporate Card Master Trust,
97-1, Class A,
6.400%, due 02/15/03............................. 980,000 970,406
Ford Motor Credit Co.,
6.700%, due 07/16/04............................. 310,000 303,248
GE Capital Mortgage Services, Inc.,
97-HE4 A76.735%, due 12/25/28.................... 410,000 400,652
General Motors Acceptance Corp.,
9.625%, due 12/15/01............................. 294,000 307,423
Green Tree Financial Corp.,
6.160%, due 02/01/31............................. 1,000,000 947,460
Green Tree Financial Corp., Series 94-5,
Class A5,
8.300%, due 11/15/19............................. 320,000 327,552
Illinois Power Special Purpose Trust, 98-1,
5.650%, due 12/25/10............................. 1,565,000 1,411,927
Kroger Co., 8.000%, due 09/15/29................... 500,000 488,245
Lilly Del Mar, 144A, 0.000%, due 08/01/29.......... 1,000,000 995,182
MBNA Global Capital Securities FRN,
0.000%, due 02/01/27............................. 90,000 73,938
Monsanto Co., 144A,
6.600%, due 12/01/28............................. 1,250,000 1,074,251
News America Holdings,
7.750%, due 12/01/45............................. 358,000 326,417
Northern States Power,
6.875%, due 08/01/09............................. 925,000 888,811
PanAmSat Corp.,
6.000%, due 01/15/03............................. 375,000 348,997
6.375%, due 01/15/08............................. 500,000 423,820
Peco Energy Transition Trust,
6.130%, due 03/01/09............................. 1,135,000 1,044,359
PP&L Transition Bond Company LLC,
6.960%, due 12/26/07............................. 200,000 199,394
7.050%, due 06/25/09............................. 1,390,000 1,387,776
Premier Auto Trust, Series 96-4A, Class A4,
6.400%, due 10/06/01............................. 180,716 180,843
Rite Aid Corp., 144A,
6.125%, due 12/15/08............................. 890,000 605,200
Face
Amount Value
------------ -----------
Salomon, Inc., 6.750%, due 02/15/03................ $ 300,000 $ 294,980
Service Corp., International,
6.000%, due 12/15/05............................. 750,000 557,393
Sears Credit Account Master Trust,
Series 99-3, Class A,
6.450%, due 11/15/09............................. 1,200,000 1,169,640
Tele-Communications, Inc.,
9.800%, due 02/01/12............................. 950,000 1,109,684
Texas Utilities, 5.940%, due 10/15/11.............. 420,000 412,590
Time Warner, Inc., 7.570%, due 02/01/24............ 340,000 327,048
U.S.A. Waste Services,
6.500%, due 12/15/02............................. 400,000 369,674
Westinghouse Electric,
8.625%, due 08/01/12............................. 575,000 606,102
UCFC Home Equity Loan, Series 97-C,
Class A8, FRN,
due 09/15/27..................................... 85,441 85,540
-----------
22,175,131
-----------
Corporate Mortgage-Backed
Securities -- 19.87%
ABN Amro Mortgage Corp., Series 99-2 IA2,
6.300%, due 04/25/29............................. 2,100,000 1,998,360
ABN Amro Mortgage Corp.,
Series 99-3, Class A2,
6.300%, due 05/25/29............................. 1,000,000 950,750
Chase Mortgage Finance Corp.,
Series 93-J1, Class 1A5,
6.625%, due 08/25/09............................. 58,831 56,160
Chemical Mortgage Securities Inc.,
Series 93-1, Class A5,
7.450%, due 02/25/23............................. 159,954 159,756
Citicorp Mortgage Securities, Inc.,
Series 94-9, Class A8,
5.750%, due 06/25/09............................. 1,100,910 1,016,657
Heller Financial Commercial Mortgage
Assets, Series 99-PH1 A1,
6.500%, due 05/15/61............................. 1,203,494 1,163,995
LB Commercial Conduit Mortgage Trust,
Series 99-C1 A1,
6.410%, due 08/15/07............................. 690,672 665,449
Nomura Asset Securities Corp.,
7.120%, due 04/13/36............................. 1,200,000 1,174,452
Norwest Asset Securities Corp.,
Series 98-25, Class A5,
6.000%, due 12/25/28............................. 2,400,000 2,253,384
PNC Mortgage Securities Corp.,
Series 94-3, Class A8,
7.500%, due 07/25/24............................. 215,000 206,185
Prudential Home Mortgage Securities,
Series 93-43, Class A9,
6.750%, due 10/25/23............................. 268,294 257,903
================================================================================
53
<PAGE>
U.S. Bond Fund -- Schedule of Investments
December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
Face
Amount Value
------------ -----------
Prudential Home Mortgage Securities,
Series 94-3, Class A10, 97-HE4 A7
6.500%, due 02/25/24..................... $ 170,000 $ 162,591
Residential Accredit Loans, Inc.,
Series 96-QS4, Class Al10,
7.900%, due 08/25/26..................... 275,000 274,409
Residential Accredit Loans, Inc.,
Series 98-QS4, Class AI5,
7.000%, due 03/25/28..................... 2,850,000 2,686,495
Residential Asset Securitization Trust,
Series 97-A10, Class A1,
7.250%, due 12/25/27..................... 391,024 389,992
Residential Funding Mortgage,
Series 95-S6, Class A7,
7.500%, due 11/25/25..................... 949,408 930,790
Structured Asset Securities Corp.,
Series 98-RF1, Class A, 144A,
7.900%, due 10/15/28..................... 473,810 477,216
Structured Asset Securities Corp.,
Series 98-RF1, Class A,
8.712%, due 03/15/27..................... 388,513 400,290
Structured Asset Securities Corp.,
Series 98-RF2,
8.582%, due 07/15/27..................... 137,457 141,237
Thrift Financial Corp.,
11.250%, due 01/01/16.................... 29,379 30,263
Vendee Mortgage Trust, Series 92-1,
Class 2Z,
7.750%, due 05/15/22...................... 553,329 550,087
----------
15,946,421
----------
International Dollar Bonds -- 9.95%
Abbey National PLC, 6.700%, Resettable
Perpetual Preferred,
6.700%, due 06/29/49..................... 1,075,000 973,264
Banco Santiago S.A.,
7.000%, due 07/18/07..................... 380,000 340,945
Credit Suisse-London, 144A,
Resettable Perpetual Preferred,
7.900%, due 05/01/07..................... 1,100,000 1,046,604
Empresa Nacional de Electricidad S.A.,
7.875%, due 02/01/27..................... 594,000 516,298
Interamer Development Bank,
6.800%, due 10/15/25..................... 100,000 93,077
Korea Development Bank,
7.125%, due 09/17/01..................... 500,000 496,120
Pemex Finance Ltd., 2A-B1, 144A,
8.450%, due 02/15/07..................... 940,000 913,304
Petroliam Nasional Berhad, 144A,
7.625%, due 10/15/26..................... 430,000 378,616
Ras Laffan Liquified Natural Gas
Co., Ltd., 144A,
8.294%, due 03/15/14..................... $ 450,000 $ 422,672
Royal Bank of Scotland, Resettable
Perpetual Preferred,
7.375%, due 04/29/49..................... 585,000 557,858
Southern Investments UK,
6.800%, due 12/01/06..................... 1,345,000 1,259,134
Tyco International Group, S.A.,
5.875%, due 11/01/04..................... 595,000 550,797
7.000%, due 06/15/28..................... 500,000 432,445
----------
7,981,134
----------
U.S. Government Mortgage-Backed
Securities -- 27.87%
Fannie Mae, 6.375%, due 06/15/09........... 220,000 209,642
Fannie Mae Whole Loan,
Series 95-W3, Class A,
9.000%, due 04/25/25..................... 115,854 119,655
Federal Home Loan Mortgage Corp.,
7.000%, due 10/15/13..................... 492,125 468,587
7.238%, due 05/01/26..................... 12,320 12,366
Federal Home Loan Mortgage Corp. Gold,
8.000%, due 11/01/22..................... 86,371 87,384
9.000%, due 03/01/24..................... 65,048 68,101
Federal National Mortgage Assoc.
Series 97-72, Class EG
0.000%, due 09/25/22....................... 264,180 228,900
Federal National Mortgage Association,
5.625%, due 03/15/01....................... 4,080,000 4,040,885
8.000%, due 08/01/08....................... 543,163 554,309
8.000%, due 12/18/11....................... 100,000 101,979
6.500%, due 03/01/19....................... 476,937 455,624
8.500%, due 07/01/22....................... 9,358 9,691
9.500%, due 08/01/22....................... 60,755 64,219
7.500%, due 12/01/23....................... 476,031 471,045
7.000%, due 12/01/24....................... 2,580,594 2,495,816
7.500%, due 01/01/28....................... 262,040 259,501
6.000%, due 03/01/28....................... 653,272 598,442
6.500%, due 06/01/28....................... 707,837 668,508
6.000%, due 08/01/28....................... 1,428,573 1,307,889
6.500%, due 09/01/28....................... 233,641 220,659
6.500%, due 02/01/29....................... 497,942 469,466
7.000%, due 03/01/29....................... 45,445 43,984
Federal National Mortgage Association Strips,
8.000%, due 08/01/23....................... 294,086 90,397
0.000%, due 02/01/28....................... 223,882 145,290
FNCI, 8.000%, due 02/01/13................. 169,684 173,113
Freddie Mac, 5.750%, due 06/15/01.......... 1,000,000 990,028
- -------------------------------------------------------------------------------
54
<PAGE>
U.S. Bond Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Value
-------- -----------
Government National Mortgage Association,
10.000%, due 09/15/00.................. 804 $ 838
10.000%, due 05/15/01.................. 1,105 1,152
9.000%, due 11/15/04................... 7,096 7,294
9.000%, due 11/15/04................... 2,859 2,939
8.000%, due 08/15/22................... 41,039 41,673
7.500%, due 12/15/22................... 207,917 207,069
7.500%, due 12/15/23................... 862,804 858,581
7.500%, due 01/15/24................... 57,259 56,934
6.500%, due 10/15/24................... 7,016,059 6,671,397
7.500%, due 06/15/25................... 72,430 72,057
7.000%, due 07/15/25................... 84,595 82,395
-----------
22,357,809
-----------
U.S. Government Agencies -- 2.64%
Aid-Israel, Series 10-Z,
0.000%, due 02/15/03................... 805,000 656,316
Jordan Aid, 8.750%, due 09/01/19......... 1,357,589 1,459,788
-----------
2,116,104
-----------
U.S. Government Obligations -- 10.79%
U.S. Treasury Bond,
8.750%, due 05/15/17.................. $ 460,000 549,125
8.000%, due 11/15/21.................. 3,320,000 3,766,125
U.S. Treasury Inflation Indexed Note,
3.625%, due 04/15/28.................. 1,770,000 1,645,025
U.S. Treasury Note,
5.750%, due 08/15/03.................. 205,000 200,708
7.000%, due 07/15/06.................. 2,440,000 2,499,475
-----------
8,660,458
-----------
Total Bonds (Cost $82,704,874).......... 79,237,057
-----------
Short-Term Investments -- 0.32%
Investment Companies -- 0.32%
Brinson Supplementary Trust U.S. Cash
Management Prime Fund
(Cost $259,361)....................... 259,361 259,361
-----------
Total Investments
(Cost $82,964,235) -- 99.08% (a)...... 79,496,418
Cash and other assets,
less liabilities -- 0.92%............. 736,231
-----------
Net Assets -- 100%...................... $80,232,649
===========
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $82,964,235; and net
unrealized depreciation consisted of:
Gross unrealized appreciation.... $ 281,821
Gross unrealized depreciation.... (3,749,638)
-----------
Net unrealized depreciation...... $(3,467,817)
===========
(b) Non-income producing security.
FRN: Floating rate note -- The rate disclosed is that in effect at December 31,
1999.
144A: 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 buyers. At December 31, 1999, the
value of these securities amounted to $8,978,479 or 11.19% of net assets.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
55
<PAGE>
U.S. Bond Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $82,704,874)....................................................... $ 79,237,057
Affiliated issuers (Cost $259,361)............................................................ 259,361
Receivables:
Investment securities sold.................................................................... 152
Interest...................................................................................... 856,363
Other assets.................................................................................... 1,842
----------------
TOTAL ASSETS.............................................................................. 80,354,775
----------------
LIABILITIES:
Payables:
Investment advisory fees...................................................................... 32,925
Due to custodian bank......................................................................... 86,328
Accrued expenses.............................................................................. 2,873
----------------
TOTAL LIABILITIES......................................................................... 122,126
----------------
NET ASSETS....................................................................................... $ 80,232,649
================
NET ASSETS CONSIST OF:
Paid in capital............................................................................... $ 86,614,032
Distributions in excess of net investment income.............................................. (183,624)
Accumulated net realized loss................................................................. (2,729,942)
Net unrealized depreciation................................................................... (3,467,817)
----------------
NET ASSETS................................................................................ $ 80,232,649
================
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share (Based on net assets of
$74,460,691 and 7,628,122 shares issued and outstanding).................................. $ 9.76
================
Brinson Class N:
Net asset value, offering price and redemption price per share (Based on net assets of
$1,133 and 116 shares issued and outstanding)............................................. $ 9.77
================
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share (Based on net assets of
$5,770,825 and 594,049 shares issued and outstanding)..................................... $ 9.71
================
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
56
<PAGE>
U.S. Bond Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends.................................................... $ 46,708
Interest..................................................... 3,685,825
--------------
TOTAL INCOME............................................. 3,732,533
--------------
EXPENSES:
Advisory..................................................... 283,873
Registration................................................. 20,800
Professional................................................. 20,529
Distribution................................................. 14,465
Other........................................................ 20,526
--------------
TOTAL EXPENSES........................................... 360,193
Expenses deferred by Advisor............................. (2,293)
Earnings credits......................................... (1,659)
--------------
NET EXPENSES............................................. 356,241
--------------
NET INVESTMENT INCOME.................................... 3,376,292
--------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss............................................ (1,678,187)
Change in net unrealized appreciation or depreciation........ (964,402)
--------------
Net realized and unrealized loss............................. (2,642,589)
--------------
Net increase in net assets resulting from operations......... $ 733,703
==============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
57
<PAGE>
U.S. Bond Fund -- Financial Statements
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended Year
December 31, 1999 Ended
(Unaudited) June 30, 1999
--------------- ----------------
OPERATIONS:
<S> <C> <C>
Net investment income.................................................................. $ 3,376,292 $ 4,517,147
Net realized loss...................................................................... (1,678,187) (338,906)
Change in net unrealized appreciation or depreciation.................................. (964,402) (3,036,340)
--------------- ----------------
Net increase in net assets resulting from operations................................... 733,703 1,141,901
--------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions in excess of net investment income....................................... (4,521,037) (3,812,376)
Distributions from net realized gain................................................... -- (55,782)
Distributions in excess of net realized gain........................................... -- (1,051,755)
--------------- ----------------
Total distributions to shareholders*................................................... (4,521,037) (4,919,913)
--------------- ----------------
CAPITAL SHARE TRANSACTIONS:
Shares sold............................................................................ 51,018,071 156,386,946
Shares issued in connection with the acquisition of UBS Bond Fund...................... -- 15,177,263
Shares issued on reinvestment of distributions......................................... 4,378,710 4,271,987
Shares redeemed........................................................................ (69,422,381) (115,331,025)
--------------- ----------------
Net increase (decrease) in net assets resulting from capital share transactions........ (14,025,600) 60,505,171
--------------- ----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................................ (17,812,934) 56,727,159
--------------- ----------------
NET ASSETS:
Beginning of period.................................................................... 98,045,583 41,318,424
--------------- ----------------
End of period (including undistributed net investment income
of $(183,624) and $961,121, respectively).............................................. $ 80,232,649 $ 98,045,583
=============== ================
*DISTRIBUTIONS BY CLASS:
Distributions from net investment income:
Brinson Class I...................................................................... (4,175,208) (3,583,162)
Brinson Class N...................................................................... (61) (46)
UBS Investment Funds Class........................................................... (345,768) (229,168)
Distributions from and in excess of net realized gain:
Brinson Class I...................................................................... -- (1,038,553)
Brinson Class N...................................................................... -- (16)
UBS Investment Funds Class........................................................... -- (68,968)
--------------- ----------------
Total distributions to shareholders.................................................... (4,521,037) (4,919,913)
--------------- ----------------
See accompanying notes to financial statements.
===================================================================================================================================
</TABLE>
58
<PAGE>
U.S. Bond Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended August 31, 1995*
December 31, 1999 Year Ended June 30, Through
-----------------------------------
UBS Investment Funds Class (Unaudited) 1999 1998 1997 June 30, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................ $ 10.23 $ 10.54 $ 10.22 $ 9.92 $ 10.00
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income............................ 0.29** 0.52** 0.50 0.46** 0.46
Net realized and unrealized gain (loss).......... (0.27) (0.26) 0.49 0.32 (0.13)
--------- --------- --------- --------- ---------
Total income from investment operations..... 0.02 0.26 0.99 0.78 0.33
--------- --------- --------- --------- ---------
Less distributions:
Distributions from net investment income......... (0.54) (0.42) (0.53) (0.48) (0.38)
Distributions in excess of net realized gain..... -- (0.15) (0.14) -- (0.03)
--------- --------- --------- --------- ---------
Total distributions......................... (0.54) (0.57) (0.67) (0.48) (0.41)
--------- --------- --------- --------- ---------
Net asset value, end of period...................... $ 9.71 $ 10.23 $ 10.54 $ 10.22 $ 9.92
========= ========= ========= ========= =========
Total return (non-annualized)....................... (1.55)% 2.45% 9.97% 7.91% 3.24%
Ratios/Supplemental data:
Net assets, end of period (in 000s)................ $ 5,771 $ 6,015 $ 2,444 $ 1,399 $ 636
Ratio of expenses to average net assets:
Before expense reimbursement
and earnings credits........................... 1.08%*** 1.08% 1.31% 2.12% 4.10%***
After expense reimbursement
and earnings credits........................... 1.07%*** 1.07% 1.07% 1.07% 1.07%***
Ratio of net investment income to average
net assets:
Before expense reimbursement
and earnings credits........................... 5.47%*** 4.95% 5.14% 4.67% 2.53%***
After expense reimbursement
and earnings credits........................... 5.48%*** 4.96% 5.38% 5.72% 5.56%***
Portfolio turnover rate............................. 103% 260% 198% 410% 363%
</TABLE>
* Commencement of investment operations
** The net investment income per share data was determined by using average
shares outstanding throughout the period.
*** Annualized
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
59
<PAGE>
High Yield Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
The UBS Investment Fund -D High Yield has earned an annualized return of 4.09%
since its inception on December 31, 1998, versus 1.57% for its benchmark, the
Merrill Lynch High Yield Master Index. This performance was achieved with an
annualized volatility of 4.30% versus 2.98% for the benchmark. This strong
performance was due mainly to credit and sector selection decisions.
Due to continued strength in the U.S. economy, spreads (over U.S. Treasuries) in
the high yield market tightened from 555 basis points at 1998 year-end to 453
basis points at 1999 year-end. However, an increase in the general level of U.S.
interest rates raised the benchmark's yield-to-worst from 10.20% to 10.97% over
the same one-year period. As the year progressed, the market became increasingly
intolerant of poor financial results. Often when companies reported bad news
their bond prices dropped by more than 15%. Conversely, when companies reported
good news, their bond prices showed only modest gains.
In September, default rates stood at 3.26% versus 1.32% a year earlier. As
participants focused on higher default rates, the market's shrinking liquidity
was exacerbated by the perception of potential business disruptions resulting
from Y2K. In December, evidence suggested that the default rate had peaked and
that Y2K concerns had been addressed. Liquidity improved and demand for new bond
issuance increased. This firmed up the market, leading to solid performance in
the fourth quarter.
As in 1998, industry weightings helped to enhance returns. The Fund benefited
from underweights in healthcare, textile and entertainment/film, which
significantly underperformed the market, and from overweights in cable,
broadcasting and publishing/printing, which performed well. Fund performance was
hurt somewhat by an underweight in cyclicals, which significantly outperformed
the broader market in 1999.
- --------------------------------------------------------------------------------
60
<PAGE>
High Yield Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Total Return
6 months 12/31/98*
ended to
12/31/99 12/31/99
- -----------------------------------------------------------
UBS Investment Fund - High Yield 1.45% 4.09%
- -----------------------------------------------------------
Merrill Lynch High Yield Master Index -0.18 1.57
- -----------------------------------------------------------
* Inception date of the UBS Investment Fund - High Yield.
Total return includes reinvestment of all capital gain and
income distributions.
Illustration of an Assumed Investment of $10,000
This chart shows the growth in the value of an investment in
the UBS Investment Fund -D High Yield and the Merrill Lynch
High Yield Master Index if you had invested $10,000 on
December 31, 1998, and had reinvested all your income
dividends and capital gain distributions through December
31, 1999. No adjustment has been made for any income taxes
payable by shareholders on income dividends and capital gain
distributions. Past performance is no guarantee of future
results. Share price and return will vary with market
conditions; investors may realize a gain or loss upon
redemption.
UBS Investment Fund - High Yield
vs. Merrill Lynch High Yield Master Index
Wealth Value with Dividends Reinvested
- -----------------------------------------------------------
Date UBS Investment Fund - Merrill Lynch High Yield
High Yield Master Index
- -----------------------------------------------------------
12/31/98 10,000 10,000
- -----------------------------------------------------------
1/31/99 10,240 10,099
- -----------------------------------------------------------
2/28/99 10,281 10,022
- -----------------------------------------------------------
3/31/99 10,391 10,108
- -----------------------------------------------------------
4/30/99 10,541 10,266
- -----------------------------------------------------------
5/31/99 10,311 10,195
- -----------------------------------------------------------
6/30/99 10,261 10,176
- -----------------------------------------------------------
7/31/99 10,240 10,191
- -----------------------------------------------------------
8/31/99 10,188 10,087
- -----------------------------------------------------------
9/30/99 10,147 10,049
- -----------------------------------------------------------
10/31/99 10,137 9,990
- -----------------------------------------------------------
11/31/99 10,343 10,104
- -----------------------------------------------------------
12/31/99 10,409 10,157
- -----------------------------------------------------------
Fund returns are net of all fees and costs, while the Index
returns are based solely on market returns without deduction
for fees or transaction costs for rebalancing.
- --------------------------------------------------------------------------------
61
<PAGE>
High Yield Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- -----------------------------------------------------------------
U.S. BONDS
Corporate Bonds
Aerospace & Military 0.69%
Auto 1.24
Chemicals 4.39
Construction 4.64
Consumer 3.21
Electronics and Electric Components 0.55
Energy 2.33
Financial Services 1.34
Food & House Products 5.07
Health 3.06
Publishing 2.25
Radio Broadcasting 3.14
Real Estate 0.83
Recreation 8.46
Retail 5.23
Services/Miscellaneous 17.51
Telecommunications 14.29%
Television Broadcasting 14.88
------
Total U.S. Corporate Bonds 93.11
International Dollar Bonds 2.39
------
Total U.S. Bonds 95.50
Warrants 0.02
------
SHORT-TERM INVESTMENTS 2.57
------
TOTAL INVESTMENTS 98.09
CASH AND OTHER ASSETS,
LESS LIABILITIES 1.91
------
NET ASSETS 100.00%
======
- -----------------------------------------------------------------
Top Ten U.S. Bond Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- -----------------------------------------------------------------
1. Exodus Communications, Inc. 1.83%
2. Lyondell Chemical Co. 1.59
3. Paxson Communications Corp. 1.57
4. Dobson Sygnet Communications, Inc. 1.56
5. Microcell Telecommunications, Inc. 1.55
6. Group Maintenance America Corp. 1.50
7. Waterford Gaming 1.48
8. PSINet, Inc. 1.48
9. Verio, Inc. 1.46
10. Paxson Communications Corp. 1.44
- -----------------------------------------------------------------
================================================================================
62
<PAGE>
High Yield Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Face
Amount Value
---------- -------
U.S. Bonds -- 95.50%
U.S. Corporate Bonds -- 93.11%
Ackerley Group, Inc., Series B,
9.000%, due 01/15/09........................ $ 675,000 $ 658,125
Adelphia Communications Corp.,
9.375%, due 11/15/09........................ 500,000 490,000
Allbritton Communications Co., Series B,
8.875%, due 02/01/08........................ 550,000 528,000
American Mobile Satellite Corp.,
12.250%, due 04/01/08....................... 250,000 195,313
Avalon Cable Holdings,
9.375%, due 12/01/08........................ 600,000 606,000
Bally Total Fitness Corp., Series B,
9.875%, due 10/15/07........................ 500,000 485,000
Big City Radio, Inc., (c)
0.000%, due 03/15/05........................ 1,100,000 709,500
Budget Group, Inc.,
9.125%, due 04/01/06........................ 500,000 465,000
Building Materials Corp.,
7.750%, due 07/15/05........................ 650,000 591,500
Capstar Broadcasting Partners, Inc., (d)
0.000%, due 02/01/09........................ 500,000 445,000
Carmike Cinemas, Inc.,
9.375%, due 02/01/09........................ 750,000 650,625
CB Richard Ellis Services, Inc.,
8.875%, due 06/01/06........................ 525,000 467,250
Centennial Cellular,
10.750%, due 12/15/08....................... 500,000 535,000
Century Communications Corp.,
0.000%, due 01/15/08........................ 425,000 186,469
8.375%, due 11/15/17........................ 300,000 265,500
Collins & Alkman Corp.,
11.500%, due 04/15/06....................... 700,000 691,250
CSC Holdings, Inc.,
7.625%, due 07/15/18........................ 600,000 558,000
Cumulus Media, Inc.,
10.375%, due 07/01/08....................... 590,000 613,600
Dan River, Inc., Snr-Sub-Nts,
10.125%, due 12/15/03....................... 500,000 500,000
Dobson Sygnet Communications, Inc.,
12.250%, due 12/15/08....................... 800,000 880,000
Eagle Family Foods, Series B,
8.750%, due 01/15/08........................ 750,000 577,500
Exodus Communications, Inc.,
11.250%, due 07/01/08....................... 1,000,000 1,032,500
Falcon Holding Group, Series B, (e)
0.000%, due 04/15/10........................ 150,000 112,313
Fedders North America,
9.375%, due 08/15/07........................ 500,000 490,000
Federal-Mogul Corp.,
7.500%, due 01/15/09........................ 250,000 222,691
Fox/Liberty Networks, Step, (f)
0.000%, due 08/15/07........................ $ 500,000 $ 402,500
Global Imaging Systems, Inc.,
10.750%, due 02/15/07....................... 325,000 312,000
Golden Sky DBS, Inc., (g)
0.000%, due 03/01/07........................ 375,000 228,281
Gothic Production Corp.,
11.125%, due 05/01/05 Series B.............. 500,000 425,000
Granite Broadcasting Corp.,
10.375%, due 05/15/05....................... 400,000 408,000
Group Maintenance America Corp.,
9.750%, due 01/15/09........................ 850,000 843,625
Harvey Casinos Resorts,
10.625%, due 06/01/06....................... 300,000 309,750
Hollinger International Publishing Corp.,
9.250%, due 02/01/06........................ 750,000 742,500
ICN Pharmaceuticals, Inc.,
9.250%, due 08/15/05........................ 400,000 394,000
Integrated Electrical Services, Inc.,
9.375%, due 02/01/09........................ 750,000 735,937
Interep National Radio Sales, Series B,
10.000%, due 07/01/08....................... 650,000 622,375
Iron Mountain, Inc.,
10.125%, due 10/01/06....................... 200,000 203,500
8.750%, due 09/30/09........................ 500,000 476,250
Isle of Capri Casinos, Inc.,
8.750%, due 04/15/09........................ 500,000 460,000
ISP Holdings Inc., Series B,
9.000%, due 10/15/03........................ 630,000 614,250
J.H. Heafner Co., 10.000%, due 05/15/08....... 525,000 475,125
Level 3 Communications, Inc., (h)
0.000%, due 12/01/08........................ 850,000 514,250
Liberty Group Operating,
9.375%, due 02/01/08........................ 850,000 756,500
LIN Holdings Corp., Step, (i)
0.000%, due 03/01/08........................ 1,000,000 673,750
Loral Space & Communications Ltd.,
9.500%, due 01/15/06........................ 200,000 180,000
Lyondell Chemical Co., Series B,
9.875%, due 05/01/07........................ 880,000 897,600
Mail Well Corp., 8.750%, due 12/15/08......... 500,000 475,000
Merrill Corp., 12.000%, due 05/01/09.......... 325,000 318,500
Metromedia Fiber Network,
10.000%, due 12/15/09....................... 600,000 615,000
Mohegan Tribal Gaming Authority,
8.750%, due 01/01/09........................ 600,000 591,000
MTS, Inc., 9.375%, due 05/01/05............... 750,000 375,000
NationsRent, Inc., 10.375%, due 12/15/08...... 675,000 664,875
NBTY, Inc., Series B,
8.625%, due 09/15/07........................ 440,000 407,000
================================================================================
63
<PAGE>
High Yield Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Face
Amount Value
---------- ----------
New World Pasta Co.,
9.250%, due 02/15/09............................ $ 545,000 $ 490,500
Newpark Resources, Inc., Series B,
8.625%, due 12/15/07............................ 700,000 651,000
Nextel Communications, Inc., 144A,
9.375%, due 11/15/09............................ 305,000 298,900
Nextel Communications, Inc., Step, (j)
0.000%, due 09/15/07............................ 800,000 596,000
Nextlink Communications, 144A,
0.000%, due 12/01/09 (k)........................ 712,000 414,740
10.500%, due 12/01/09........................... 175,000 177,625
Nortex, Inc., 9.875%, due 03/01/04............... 450,000 443,250
NTL Communications Corp., Series B,
Step, (1)
0.000%, due 10/01/08............................ 900,000 636,750
Packaging Corp. of America,
9.625%, due 04/01/09............................ 220,000 224,675
Paxson Communications Corp.,
11.625%, due 10/01/02........................... 850,000 884,000
Paxson Communications Corp. (b),
0.000%, due 10/31/06............................ 797 812,818
Pegasus Communication Corp., Class B,
144A, 12.500%, due 08/01/07..................... 550,000 599,500
Pegasus Communications Corp., Class B,
9.625%, due 10/15/05............................ 750,000 757,500
9.750%, due 12/01/06............................ 150,000 151,500
Perry Ellis International, Inc.,
12.250%, due 04/01/03........................... 650,000 645,937
Phoenix Color, Inc.,
10.375%, due 02/01/09........................... 600,000 576,000
Pilgrim's Pride Corp., Snr-Sub-Nts,
10.875%, due 08/01/03........................... 561,000 566,610
Pillowtex Corp., 10.000%, due 11/15/06........... 125,000 57,500
Plains Resources, Inc., 10.250%,
due 03/15/06 Series B........................... 300,000 291,000
Premier Parks, Inc., Step, (m)
0.000%, due 04/01/08............................ 1,100,000 759,000
Protection One Alarm, Inc.,
7.375%, due 08/15/05............................ 365,000 290,175
PSINet, Inc.,
10.500%, due 12/01/06........................... 150,000 151,125
PSINet, Inc., 11.500%, due 11/01/08.............. 800,000 836,000
Qwest Communications International, Inc., (n)
0.000%, due 10/15/07............................ 500,000 405,000
R. H. Donnelly, Inc., 9.125%, due 06/01/08....... 750,000 735,000
Range Resources Corp.,
8.750%, due 01/15/07............................ 650,000 596,375
Rayovac Corp., Series B,
10.250%, due 11/01/06........................... 600,000 612,000
RCN Corp., Step, (o)
0.000%, due 10/15/07............................ 450,000 316,125
Revlon Consumer Products,
8.125%, due 02/01/06............................ $ 400,000 $ 294,000
8.625%, due 02/01/08............................ 220,000 110,000
Scotts Co., 144A, 8.625%, due 01/15/09........... 500,000 485,000
Sequa Corp., 9.000%, due 08/01/09................ 400,000 387,000
Simmons Co., 10.250%, due 03/15/09............... 700,000 662,375
Sinclair Broadcast Group,
10.000%, due 09/30/05........................... 250,000 247,500
8.750%, due 12/15/07............................ 425,000 392,063
Sleepmaster Corp., 144A,
11.000%, due 05/15/09........................... 500,000 508,750
Speedway Motorsports, Inc.,
8.500%, due 08/15/07............................ 700,000 679,000
T/SF Communications Corp., Series B,
10.375%, due 11/01/07........................... 550,000 528,000
Telecorp PCS, Inc., (p)
0.000%, due 04/15/09............................ 700,000 441,000
TeleWest Communications PLC, 144A, (q)
0.000%, due 04/15/09............................ 500,000 315,000
Trans-Resources, Inc., Series B, (r)
0.000%, due 03/15/08............................ 650,000 325,000
Tritel PCS, Inc., 144A, (s)
0.000%, due 05/15/09............................ 200,000 126,500
Triton PCS, Inc., (t)
0.000%, due 05/01/08............................ 1,125,000 795,937
Twin Labs, Inc., 10.250%, due 05/15/06........... 500,000 517,500
U.S. Unwired, Inc., 144A, (u)
0.000%, due 11/01/09............................ 800,000 468,000
United Industries Corp.,
9.875%, due 04/01/09............................ 700,000 638,750
United Rentals, Inc., Series B,
9.500%, due 06/01/08............................ 625,000 610,937
9.250%, due 01/15/09............................ 370,000 355,200
Verio, Inc., 13.500%, due 06/15/04............... 750,000 823,125
Voicestream Wire, 144A,
10.375%, due 11/15/09........................... 225,000 231,750
Waterford Gaming, 144A, 9.500%,
due 03/15/10.................................... 850,000 837,250
Williams Communications Group, Inc.,
10.875%, due 10/01/09........................... 635,000 663,575
----------
52,497,521
----------
International Dollar Bonds -- 2.39%
Imax, Corp., 7.875%, due 12/01/05................ 500,000 472,500
Microcell Telecommunications, Inc.,
Series B, 0.000%, due 06/01/06................. 990,000 873,675
----------
1,346,175
----------
Total U.S. Bonds (Cost $56,267,269).............. 53,843,696
----------
================================================================================
64
<PAGE>
High Yield Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Warrants Value
---------- ------------
Warrants -- 0.02%
American Mobile Satellite Corp., 144A,
Warrants (Cost $11,250) (b).................. 250 $ 10,000
------------
Shares
----------
Short-Term Investments -- 2.57%
Investment Companies -- 2.57%
Brinson Supplementary Trust U.S. Cash
Management Prime Fund
(Cost $1,449,925)........................... 1,449,925 1,449,925
------------
Total Investments
(Cost $57,728,444) -- 98.09% (a)............ 55,303,621
Cash and other assets,
less liabilities -- 1.91%................... 1,078,599
------------
Net Assets -- 100%........................... $ 56,382,220
============
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $57,728,444; and net
unrealized depreciation consisted of:
Gross unrealized appreciation $ 438,489
Gross unrealized depreciation (2,863,312)
---------------
Net unrealized depreciation $ (2,424,823)
===============
(b) Non-income producing security.
(c) Interest rate 0.000% until 03/15/01, then 11.125% to maturity
(d) Interest rate 0.000% until 02/01/02, then 12.750% to maturity
(e) Interest rate 0.000% until 04/15/03, then 9.285% to maturity
(f) Interest rate 0.000% until 08/15/02, then 9.750% to maturity
(g) Interest rate 0.000% until 03/01/04, then 13.500% to maturity
(h) Interest rate 0.000% until 12/01/03, then 10.500% to maturity
(i) Interest rate 0.000% until 03/01/03, then 10.000% to maturity
(j) Interest rate 0.000% until 09/15/02, then 10.650% to maturity
(k) Interest rate 0.000% until 12/01/04, then 12.125% to maturity
(l) Interest rate 0.000% until 10/01/03, then 12.375% to maturity
(m) Interest rate 0.000% until 04/01/03, then 10.000% to maturity
(n) Interest rate 0.000% until 10/15/02, then 9.470% to maturity
(o) Interest rate 0.000% until 10/15/02, then 11.125% to maturity
(p) Interest rate 0.000% until 04/15/04, then 11.625% to maturity
(q) Interest rate 0.000% until 04/15/04, then 9.250% to maturity
(r) Interest rate 0.000% until 03/15/03, then 12.000% to maturity
(s) Interest rate 0.000% until 05/15/04, then 12.750% to maturity
(t) Interest rate 0.000% until 05/01/03, then 11.000% to maturity
(u) Interest rate 0.000% until 11/01/04, then 13.375% to maturity
144A: 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 buyers. At December 31, 1999, the
value of these securities amounted to $4,473,015 or 7.93% of net assets.
See accompanying notes to financial statements.
================================================================================
65
<PAGE>
High Yield Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $56,278,519)............................................. $53,853,696
Affiliated issuers (Cost $1,449,925)................................................ 1,449,925
Receivables:
Investment securities sold.......................................................... 308,735
Interest............................................................................ 1,153,641
-----------
TOTAL ASSETS..................................................................... 56,765,997
-----------
LIABILITIES:
Payables:
Investment advisory fees............................................................ 25,035
Due to custodian bank............................................................... 308,042
Accrued expenses.................................................................... 50,700
-----------
TOTAL LIABILITIES................................................................ 383,777
-----------
NET ASSETS............................................................................... $56,382,220
===========
NET ASSETS CONSIST OF:
Paid in capital........................................................................ $59,825,015
Accumulated undistributed net investment income........................................ 558,849
Distributions in excess of net realized gain........................................... (1,576,821)
Net unrealized depreciation............................................................ (2,424,823)
-----------
NET ASSETS............................................................................... $56,382,220
===========
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share (Based on net assets of
$53,461,003 and 5,563,579 shares issued and outstanding)............................. $ 9.61
===========
Brinson Class N:
Net asset value, offering price and redemption price per share (Based on net assets of
$1,046 and 109 shares issued and outstanding)......................................... $ 9.60
===========
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share (Based on net assets of
$2,920,171 and 304,104 shares issued and outstanding)................................. $ 9.60
===========
</TABLE>
See accompanying notes to financial statements.
================================================================================
66
<PAGE>
High Yield Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest........................................................................ $ 3,208,339
-----------
TOTAL INCOME................................................................. 3,208,339
-----------
EXPENSES:
Advisory........................................................................ 192,673
Distribution.................................................................... 26,035
Professional.................................................................... 20,107
Registration.................................................................... 15,506
Other........................................................................... 39,774
-----------
TOTAL EXPENSES............................................................... 294,095
Expenses deferred by Advisor................................................. (40,895)
Earnings credits............................................................. (1,756)
-----------
NET EXPENSES................................................................. 251,444
-----------
NET INVESTMENT INCOME........................................................ 2,956,895
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss on investments................................................ (1,508,313)
Change in net unrealized appreciation or depreciation........................... (280,354)
-----------
Net realized and unrealized loss................................................ (1,788,667)
-----------
Net increase in net assets resulting from operations............................ $ 1,168,228
===========
</TABLE>
================================================================================
67
<PAGE>
High Yield Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Six Months Ended*
(Unaudited) June 30, 1999
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................................... $ 2,956,895 $ 2,487,185
Net realized gain (loss)............................................................ (1,508,313) 420,129
Change in net unrealized appreciation or depreciation............................... (280,354) (1,916,114)
------------ -------------
Net increase in net assets resulting from operations................................ 1,168,228 991,200
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income:
Brinson Class I................................................................... (2,747,919) (1,845,754)
Brinson Class N................................................................... (48) (30)
UBS Investment Funds Class........................................................ (261,823) (167,575)
Distributions from and in excess of net realized gain:
Brinson Class I................................................................... (384,243) --
Brinson Class N................................................................... (7) --
UBS Investment Funds Class........................................................ (40,374) --
------------ -------------
Total distributions to shareholders................................................. (3,434,414) (2,013,359)
------------ -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold......................................................................... 7,261,164 52,695,849
Shares issued on reinvestment of distributions...................................... 3,052,216 1,797,826
Shares redeemed..................................................................... (18,002,121) (22,036,291)
------------ -------------
Net increase (decrease) in net assets resulting from capital share transactions..... (7,688,741) 32,457,384
------------ -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS....................................... (9,954,927) 31,435,225
------------ -------------
NET ASSETS:
Beginning of period................................................................. 66,337,147 34,901,922
------------ -------------
End of period (including accumulated undistributed net investment
income of $558,849 and $611,744, respectively)..................................... $ 56,382,220 $ 66,337,147
============ =============
</TABLE>
* Reflects the Fund's change in fiscal year end from December 31 to June 30
See accompanying notes to financial statements.
================================================================================
68
<PAGE>
High Yield Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Six Months Ended
UBS Investment Funds Class (Unaudited) June 30, 1999*
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period............................................ $ 9.95 $ 9.98
------- -------
Income from investment operations:
Net investment income....................................................... 0.42** 0.41**
Net realized and unrealized loss............................................ (0.27) (0.15)
------- -------
Total income from investment operations................................. 0.15 0.26
------- -------
Less distributions:
Distribution from net investment income..................................... (0.43) (0.29)
Distributions from and in excess of net realized gain....................... (0.07) --
------- -------
Total distributions..................................................... (0.50) (0.29)
------- -------
Net asset value, end of period.................................................. $ 9.60 $ 9.95
======= =======
Total return (non-annualized)................................................... 4.09% 2.61%
Ratios/Supplemental Data:
Net assets, end of period (in 000s)........................................... $ 2,920 $ 6,292
Ratio of expenses to average net assets:
Before expense reimbursement and earnings credits........................... 1.68%*** 1.68%***
After expense reimbursement and earnings credits............................ 1.55%*** 1.55%***
Ratio of net investment income to average net assets:
Before expense reimbursement and earnings credits........................... 8.29%*** 7.69%***
After expense reimbursement and earnings credits............................ 8.42%*** 7.82%***
Portfolio turnover rate....................................................... 29% 77%
</TABLE>
* Commencement of UBS Investment Funds Class was December 31, 1998
** The net investment income per share data was determined by using average
shares outstanding throughout the period
*** Annualized
See accompanying notes to financial statements.
================================================================================
69
<PAGE>
UBS Investment Funds N Notes To Financial Statements
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Brinson Funds (the "Trust") is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended, as a series
company. The Trust currently offers shares of eleven series: Global Fund, Global
Equity Fund, Global Bond Fund, U.S. Balanced Fund, U.S. Equity Fund, U.S. Large
Capitalization Equity Fund, U.S. Large Capitalization Growth Fund, U.S. Small
Capitalization Growth Fund, U.S. Bond Fund, High Yield Fund and Global (Ex-U.S.)
Equity Fund (each a "Fund" and collectively, the "Funds"). Each Fund has three
classes of shares outstanding, Brinson Class I, Brinson Class N and UBS
Investment Funds Class. There are an unlimited number of shares of each class
with par value of $0.001 authorized. Each share represents an identical interest
in the investments of the Funds and has the same rights. The financial
highlights of the UBS Investment Funds Class are presented separately.
Prior to December 19, 1998, the U.S. Large Capitalization Growth Fund (formerly,
UBS Large Cap Growth Fund), U.S. Small Capitalization Growth Fund (formerly, UBS
Small Cap Fund), High Yield Fund (formerly, UBS High Yield Bond Fund), UBS Value
Equity Fund and UBS Bond Fund sought to achieve their investment objectives by
investing substantially all of their investable assets in a corresponding
portfolio of UBS Investor Portfolios Trust (each a "Portfolio" and collectively,
the "Portfolios"), an open-end management investment company that had the same
investment objective. On October 20, 1998, the Board of Directors approved a
tax-free plan of reorganization (the "Reorganization").
Pursuant to the Reorganization, the net assets of the UBS Large Cap Growth Fund,
UBS Small Cap Fund and UBS High Yield Bond Fund were withdrawn from their
corresponding Portfolio and thereafter each began to operate, under its new
name, as a separate Fund in the Trust. In addition, the net assets of the UBS
Value Equity Fund and UBS Bond Fund were withdrawn from their corresponding
Portfolio and acquired by the U.S. Equity Fund and U.S. Bond Fund, respectively,
in a tax-free exchange solely for Brinson Class I shares of each Fund. The UBS
Value Equity Fund and UBS Bond Fund were then dissolved. Shares issued in
exchange, net asset value and corresponding net unrealized appreciation at
December 18, 1998, were as follows:
Net
Net Unrealized
Fund Shares Asset Value Appreciation
- ---- ------ ----------- ------------
UBS Value Equity Fund............ 1,233,797 $23,269,419 $774,047
UBS Bond Fund.................... 1,429,121 15,177,263 27,192
The aggregate net assets of the U.S. Equity Fund and U.S. Bond Fund immediately
before the mergers were $729,679,727 and $80,523,890, respectively.
The following is a summary of significant accounting policies consistently
followed by the U.S. Balanced Fund, U.S. Equity Fund, U.S. Large Capitalization
Equity Fund, U.S. Large Capitalization Growth Fund, U.S. Small Capitalization
Growth Fund, U.S. Bond Fund and High Yield Fund in the preparation of their
financial statements.
A. Investment Valuation: Securities for which market quotations are readily
available are valued at the last available sales price on the exchange or market
on which they are principally traded, or lacking any sales, at the last
available bid price on the exchange or market on which such securities are
principally traded. Equity securities traded over-the-counter are valued at the
most recent bid price. Securities for which the most recent bid price or market
quotations are not readily available, including restricted securities which are
subject to limitations on their sale, are valued at fair value as determined in
good faith by or under the direction of the Trust's Board of Trustees.
Investments in affiliated investment companies are valued each day based on the
closing net asset value of the respective fund. Debt securities are valued at
the most recent bid price by using market quotations or independent pricing
services. Futures contracts are valued at the settlement price established each
day on the exchange on which they are traded. Short-term obligations with a
maturity of 60 days or less are valued at amortized cost, which approximates
market value.
B. Investment Transactions: Investment transactions are accounted for on a
trade date basis. Gains and losses on securities sold are determined on an
identified cost basis.
- --------------------------------------------------------------------------------
70
<PAGE>
UBS Investment Funds N Notes To Financial Statements
- --------------------------------------------------------------------------------
C. Investment Income: Interest income, which includes the amortization of
premiums and discounts, is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date.
D. Federal Income Taxes: It is the policy of the Funds to comply with all
requirements of the Internal Revenue Code (the "Code") applicable to regulated
investment companies and to distribute substantially all of their taxable income
to their shareholders. The Funds have met the requirements of the Code
applicable to regulated investment companies for the six months ended December
31, 1999, therefore, no federal income tax provision was required.
E. Distributions to Shareholders: It is the policy of the Funds to distribute
their respective net investment income on a semi-annual basis and net capital
gains, if any, annually. Distributions to shareholders are recorded on the ex-
dividend date. Income and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Differences in dividends per share between the classes
are due to distribution expenses. F. Income and Expense Allocations: All income
earned and expenses incurred by each Fund will be borne on a pro rata basis by
each of the classes, except that the Brinson Class I will not incur any of the
distribution expenses of the Brinson Class N nor the UBS Investment Funds Class.
G. Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results may differ from those
estimates.
H. Earnings Credits: The Fund's have entered into an agreement with their
custodian whereby interest earned on uninvested cash balances was used to offset
a portion of the Fund's expenses. This amount is reflected in the statement of
operations.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Brinson Partners, Inc. (the "Advisor"), a registered investment advisor,
provides the Funds with investment management services. As compensation for
these services, each Fund pays the Advisor a monthly fee based on each Fund's
respective average daily net assets. The Advisor has agreed to waive its fees
and reimburse each Fund to the extent that total annualized operating expenses
exceed a specified percentage of each Fund's respective average daily net
assets. Investment advisory fees and other transactions for the six months ended
December 31, 1999, were as follows:
<TABLE>
<CAPTION>
UBS Investment
Advisory Brinson Class I Brinson Class N Funds Class Advisory Fees
Fund Fee Expense Cap Expense Cap Expense Cap Fees Deferred
- ---- -------- --------------- --------------- -------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
U.S. Balanced Fund......................... 0.70% 0.80% 1.05% 1.30% $ 131,459 $ 28,977
U.S. Equity Fund........................... 0.70 0.80 1.05 1.32 2,275,632 --
U.S. Large Capitalization Equity Fund...... 0.70 0.80 1.05 1.32 85,880 46,252
U.S. Large Capitalization Growth Fund...... 0.70 0.80 1.05 1.57 31,958 56,260
U.S. Small Capitalization Growth Fund...... 1.00 1.15 1.40 1.92 197,692 37,437
U.S. Bond Fund............................. 0.50 0.60 0.85 1.07 283,873 2,293
High Yield Fund............................ 0.60 0.70 0.95 1.55 192,673 40,895
</TABLE>
Certain officers of the Funds are also officers of the Advisor. All officers
serve without direct compensation from the Funds. Trustees' fees paid to
unaffiliated trustees for the six months ended December 31, 1999 were as
follows:
U.S. Balanced Fund................................................. $2,244
U.S. Equity Fund................................................... 9,914
U.S. Large Capitalization Equity Fund.............................. 2,244
U.S. Large Capitalization Growth Fund.............................. 1,834
U.S. Small Capitalization Growth Fund.............................. 1,919
U.S. Bond Fund..................................................... 2,186
High Yield Fund.................................................... 2,181
- --------------------------------------------------------------------------------
71
<PAGE>
UBS INVESTMENT FUNDS NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following Funds invest in shares of the Brinson Supplementary Trust U.S.
Cash Management Prime Fund (OSupplementary TrustO). The Supplementary Trust is
managed by the Advisor. The Supplementary Trust is offered as a cash management
option to mutual funds and other accounts managed by the Advisor. The
Supplementary Trust charges no management fees. Distributions received from the
Supplementary Trust are reflected as interest income on the statement of
operations. Amounts relating to those investments for the six months ended
December 31, 1999, were as follows:
<TABLE>
<CAPTION> % of
Sales Interest Net
Fund Purchases Proceeds Income Value Assets
- ---- ------------ ------------ ----------- ------------ --------
<S> <C> <C> <C> <C> <C>
U.S. Balanced Fund................................ $ 11,136,330 $ 10,864,712 $ 26,452 $ 507,697 1.51%
U.S. Equity Fund.................................. 157,878,579 177,825,076 489,563 17,738,488 3.52
U.S. Large Capitalization Equity Fund............. 33,397,905 33,912,604 31,884 1,018,306 3.43
U.S. Large Capitalization Growth Fund............. -- -- -- -- --
U.S. Small Capitalization Growth Fund............. 18,471,553 17,818,667 59,423 2,787,103 5.89
U.S. Bond Fund.................................... 54,290,733 59,535,749 216,321 259,361 0.32
High Yield Fund................................... 22,196,646 22,992,870 82,908 1,449,925 2.57
</TABLE>
3. INVESTMENT TRANSACTIONS
Investment transactions for the six months ended December 31, 1999, excluding
short-term investments, were as follows:
<TABLE>
<CAPTION>
Proceeds
Fund Purchases From Sales
- ----- ------------- ------------
<S> <C> <C>
U.S. Balanced Fund.................................................................. $ 14,920,499 $ 16,406,156
U.S. Equity Fund.................................................................... 164,908,312 352,962,708
U.S. Large Capitalization Equity Fund............................................... 28,374,811 19,896,891
U.S. Large Capitalization Growth Fund............................................... 5,102,225 3,978,343
U.S. Small Capitalization Growth Fund............................................... 25,658,441 26,524,897
U.S. Bond Fund...................................................................... 104,061,479 112,194,288
High Yield Fund..................................................................... 17,141,344 25,158,957
</TABLE>
4. FUTURES CONTRACTS
The Funds may purchase or sell exchange-traded futures contracts, that obligate
the Funds to make or take delivery of a financial instrument or the cash value
of a securities index at a specified future date at a specified price. The Funds
enter into such contracts to hedge a portion of their portfolio. Risks of
entering into futures contracts include the possibility that there may be an
illiquid market or that a change in the value of the contract may not correlate
with changes in the value of the underlying securities. Upon entering into a
futures contract, the Funds are required to deposit either cash or securities
(initial margin). Subsequent payments (variation margin) are made or received by
the Funds, generally on a daily basis. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
or losses. The Funds recognize a realized gain or loss when the contract is
closed or expires. The statement of operations reflects net realized and net
unrealized gains and losses on these contracts.
5. DISTRIBUTION PLANS
The Trust has adopted distribution plans (the "Plans") pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, for the Brinson Class N
and the UBS Investment Funds Class. Each Plan governs payments made for the
expenses incurred in the promotion and distribution of the Brinson Class N and
the UBS Investment Funds Class. Annual fees under the Brinson Class N Plan shall
not exceed 0.25% of the average daily net assets of the Brinson Class N of each
of the Funds. Annual fees under the UBS Investment Funds Plan, which include a
0.25% service fee, total 0.50%, 0.52%, 0.52%, 0.77%, 0.77%, 0.47%, and 0.85% of
the average daily net assets of the UBS Investment Funds Class of the U.S.
Balanced Fund, U.S. Equity Fund, U.S. Large Capitalization Equity Fund, U.S.
Large Capitalization Growth Fund, U.S. Small Capitalization Growth Fund, U.S.
Bond Fund and High Yield Fund, respectively.
6. LINE OF CREDIT
The Trust has entered into an agreement with Chase Manhattan Bank to provide a
364 day $100 million committed line of credit to the Funds. Borrowings will be
made for temporary purposes. Interest on amounts borrowed is calculated based on
the Federal Funds rate plus 0.50%. The Funds pay an annual commitment fee of
0.08% of the average daily unutilized balance of the line of credit. During the
six months ended December 31, 1999, the Funds had no borrowings under the
agreement.
================================================================================
72
<PAGE>
UBS Investment Funds Notes To Financial Statements
- --------------------------------------------------------------------------------
7. CAPITAL TRANSACTIONS
Capital stock transactions were as follows:
<TABLE>
<CAPTION>
U.S. Balanced Fund
-------------------------------------------------------------------------
Six Months Ended
December 31, 1999 Year Ended
(Unaudited) June 30, 1999
-------------------------------- ---------------------------------
Shares Value Shares Value
------------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I..................................... 616,573 $ 5,599,982 1,174,303 $ 12,704,822
Brinson Class N..................................... - - 1,652 15,306
UBS Investment Funds Class.......................... 8,273 75,774 135,474 1,464,212
---------- ------------ ---------- -------------
Total Sales...................................... 624,846 $ 5,675,756 1,311,429 $ 14,184,340
========== ============ ========== =============
Dividend Reinvestment:
Brinson Class I..................................... 109,872 $ 936,112 1,235,079 $ 11,512,192
Brinson Class N..................................... 4 30 33 311
UBS Investment Funds Class.......................... 4,112 34,830 56,474 523,561
---------- ------------ ---------- -------------
Total Dividend Reinvestment...................... 113,988 $ 970,972 1,291,586 $ 12,036,064
========== ============ ========== =============
Redemptions:
Brinson Class I..................................... 895,496 $ 8,000,958 4,977,791 $ 56,107,946
Brinson Class N..................................... 11 96 1,641 15,210
UBS Investment Funds Class.......................... 31,085 274,280 154,266 1,558,776
---------- ------------ ---------- -------------
Total Redemptions................................ 926,592 $ 8,275,334 5,133,698 $ 57,681,932
========== ============ ========== =============
</TABLE>
<TABLE>
<CAPTION>
U.S. Equity Fund
-------------------------------------------------------------------------
Six Months Ended
December 31, 1999 Year Ended
(Unaudited) June 30, 1999
-------------------------------- ---------------------------------
Shares Value Shares Value
------------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I..................................... 3,518,151 $ 65,942,440 14,157,093* $ 272,587,287
Brinson Class N..................................... 208,641 3,860,847 417,980 8,022,220
UBS Investment Funds Class.......................... 34,158 710,292 1,317,474 26,390,598
---------- ------------ ---------- -------------
Total Sales...................................... 3,760,950 $ 70,513,579 15,892,547 $ 307,000,105
========== ============ ========== =============
Dividend Reinvestment:
Brinson Class I..................................... 2,790,780 $ 46,438,462 2,164,601 $ 40,726,871
Brinson Class N..................................... 2,356 39,033 12,904 239,980
UBS Investment Funds Class.......................... 116,996 1,938,596 89,839 1,678,518
---------- ------------ ---------- -------------
Total Dividend Reinvestment...................... 2,910,132 $ 48,416,091 2,267,344 $ 42,645,369
========== ============ ========== =============
Redemptions:
Brinson Class I..................................... 13,026,509 $240,364,538 13,543,224 $ 265,910,621
Brinson Class N..................................... 78,672 1,434,023 90,831 1,768,705
UBS Investment Funds Class.......................... 353,070 6,595,135 950,265 18,175,221
---------- ------------ ---------- -------------
Total Redemptions................................ 13,458,251 $248,393,696 14,584,320 $ 285,854,547
========== ============ ========== =============
</TABLE>
*Includes shares issued in connection with the acquisition of the UBS Value
Equity Fund.
================================================================================
73
<PAGE>
UBS Investment Funds N Notes To Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Large Capitalization Equity Fund
-------------------------------------------------------
Six Months Ended
December 31, 1999 Year Ended
(Unaudited) June 30, 1999
-------------------------- --------------------------
Shares Value Shares Value
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I..................................... 2,008,094 $ 17,027,675 2,384,176 $ 24,164,112
Brinson Class N..................................... 622 20,926 61,091 684,700
UBS Investment Funds Class.......................... 8,148 76,424 427 4,617
----------- ------------ ----------- ------------
Total Sales...................................... 2,016,864 $ 17,125,025 2,445,694 $ 24,853,429
=========== ============ =========== ============
Dividend Reinvestment:
Brinson Class I..................................... 223,565 $ 1,819,816 7,506 $ 77,433
Brinson Class N..................................... 8,631 70,518 7,094 69,880
UBS Investment Funds Class.......................... 836 6,755 1 11
----------- ------------ ----------- ------------
Total Dividend Reinvestment...................... 233,032 $ 1,897,089 14,601 $ 147,324
=========== ============ =========== ============
Redemptions:
Brinson Class I..................................... 699,059 $ 6,228,716 370,824 $ 3,862,037
Brinson Class N..................................... 277,962 2,546,271 1,369,240 13,638,399
UBS Investment Funds Class.......................... -- -- -- --
----------- ------------ ----------- ------------
Total Redemptions................................ 977,021 $ 8,774,987 1,740,064 $ 17,500,436
=========== ============ =========== ============
<CAPTION>
U.S. Large Capitalization Equity Fund
-------------------------------------------------------
Six Months Ended
December 31, 1999 Six Months Ended*
(Unaudited) June 30, 1999
-------------------------- --------------------------
Shares Value Shares Value
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I..................................... 89,568 $ 1,215,511 35,111 $ 451,776
Brinson Class N..................................... -- -- -- --
UBS Investment Funds Class.......................... 223,049 3,027,579 372,727 4,781,902
----------- ------------ ----------- ------------
Total Sales...................................... 312,617 $ 4,243,090 407,838 $ 5,233,678
=========== ============ =========== ============
Dividend Reinvestment:
Brinson Class I..................................... 15,996 $ 217,385 -- --
Brinson Class N..................................... 6 80 -- --
UBS Investment Funds Class.......................... 27,906 376,172 -- --
----------- ------------ ----------- ------------
Total Dividend Reinvestment...................... 43,908 $ 593,637 -- $ --
=========== ============ =========== ============
Redemptions:
Brinson Class I..................................... 60,955 $ 851,942 173,449 $ 2,143,629
Brinson Class....................................... -- -- -- --
UBS Investment Funds Class.......................... 135,539 1,935,865 1,853 26,217
----------- ------------ ----------- ------------
Total Redemptions................................ 196,494 $ 2,787,807 175,302 $ 2,169,846
=========== ============ =========== ============
</TABLE>
*Reflects the Fund's change in fiscal year end from December 31 to June 30
================================================================================
74
<PAGE>
UBS Investments Funds -- Notes To Finance Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Small Capitalization Growth Fund
---------------------------------------------------
Six Months Ended
December 31, 1999 Six Months Ended*
(Unaudited) June 30, 1999
------------------------ ------------------------
Shares Value Shares Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I................................................. 1,361,057 $14,001,883 2,641,837 $22,702,120
Brinson Class N................................................. -- -- -- --
UBS Investment Funds Class...................................... 51,364 544,776 99,579 858,153
----------- ----------- ----------- -----------
Total Sales.................................................. 1,412,421 $14,546,659 2,741,416 $23,560,273
=========== =========== =========== ===========
Redemptions:
Brinson Class I................................................. 1,515,520 $15,555,524 1,375,470 $11,346,801
Brinson Class N................................................. -- -- -- --
UBS Investment Funds Class...................................... 9,951 102,784 29,703 240,000
----------- ----------- ----------- -----------
Total Redemptions........................................... 1,525,471 $15,658,308 1,405,173 $11,586,801
=========== =========== =========== ===========
</TABLE>
*Reflects the Fund's change in fiscal year end from December 31 to June 30
<TABLE>
<CAPTION>
U.S. Bond Fund
-----------------------------------------------------
Six Months Ended
December 31, 1999 Year Ended
(Unaudited) June 30, 1999
-----------------------------------------------------
Shares Value Shares Value
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I................................................. 4,864,653 $49,803,731 15,463,879** $165,316,122
Brinson Class N................................................. -- -- 2,379 25,964
UBS Investment Funds Class...................................... 118,531 1,214,340 582,475 6,222,123
----------- ----------- ----------- ------------
Total Sales................................................. 4,983,184 $51,018,071 16,048,733 $171,564,209
=========== =========== =========== ============
Dividend Reinvestment:
Brinson Class I................................................. 414,708 $ 4,089,021 386,462 $ 4,042,561
Brinson Class N................................................. 6 61 6 62
UBS Investment Funds Class...................................... 29,524 289,628 22,041 229,364
----------- ----------- ----------- ------------
Total Dividend Reinvestment................................. 444,238 $ 4,378,710 408,509 $ 4,271,987
=========== =========== =========== ============
Redemptions:
Brinson Class I................................................. 6,607,127 $ 68,012,603 10,568,875 $112,692,202
Brinson Class N................................................. -- -- 2,379 25,905
UBS Investment Funds Class...................................... 141,723 1,409,778 248,522 2,612,918
----------- ----------- ----------- ------------
Total Redemptions........................................... 6,748,850 $69,422,381 10,819,776 $115,331,025
=========== =========== =========== ============
</TABLE>
**Includes shares issued in connection with the acquisition of the UBS Bond
Fund.
================================================================================
75
<PAGE>
CBS Investments Funds -- Notes to Finance Statements
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
High Yield Fund
---------------------------------------------------
Six Months Ended
December 31, 1999 Six Months Ended*
(Unaudited) June 30, 1999
------------------------ ------------------------
Shares Value Shares Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I.......................................... 704,855 $ 6,981,404 4,509,034 $46,327,741
Brinson Class N.......................................... -- -- -- --
UBS Investment Funds Class............................... 28,339 279,760 620,093 6,368,108
----------- ----------- ----------- -----------
Total Sales.......................................... 733,194 $ 7,261,164 5,129,127 $52,695,849
=========== =========== =========== ===========
Dividend Reinvestment:
Brinson Class I.......................................... 291,880 $ 2,802,047 166,520 $ 1,658,538
Brinson Class N.......................................... 6 54 3 30
UBS Investment Funds Class............................... 26,054 250,115 13,996 139,258
----------- ----------- ----------- -----------
Total Dividend Reinvestment.......................... 317,940 $ 3,052,216 180,519 $ 1,797,826
=========== =========== =========== ===========
Redemptions:
Brinson Class I.......................................... 1,462,323 $14,308,185 2,144,630 $22,018,291
Brinson Class N.......................................... -- -- -- --
UBS Investment Funds Class............................... 382,724 3,693,936 1,754 18,000
----------- ----------- ----------- -----------
Total Redemptions.................................... 1,845,047 $18,002,121 2,146,384 $22,036,291
=========== =========== =========== ===========
</TABLE>
*Reflects the Fund's change in fiscal year end from December 31 to June 30
================================================================================
76
<PAGE>
Distributed by:
Funds Distributor, Inc.
60 State Street
Boston, MA 02109
This report is submitted for the general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors in the
Funds unless preceded or accompanied by an effective Prospectus which includes
details regarding the Funds' objectives, policies, expenses and other
information.
- --------------------------------------------------------------------------------
<PAGE>
[UBS LOGO APPEARS HERE]
Investment Funds
P.O. Box 2798, Boston, Massachusetts 02208-2798. Tel: (800) 794-7753
<PAGE>
[UBS LOGO APPEARS HERE]
Global Fund
Global Equity Fund
Global Bond Fund
Semi-Annual Report
December 31, 1999
<PAGE>
Trustees and Officers
[LOGO]
- --------------------------------------------------------------------------------
Trustees
Walter E. Auch
Frank K. Reilly, CFA
Edward M. Roob
Officers
Frank K. Reilly, CFA Carolyn M. Burke, CPA
Chairman of the Board Secretary and Treasurer
E. Thomas McFarlan David E. Floyd, CPA
President Assistant Secretary
Thomas J. Digenan, CFA, CPA Mark F. Kemper
Vice President Assistant Secretary
Debra L. Nichols
Vice President
================================================================================
1
<PAGE>
The Funds' Advisor -- Brinson Partners, Inc.
[LOGO]
- --------------------------------------------------------------------------------
Since the founding of our organization nearly twenty years ago, we have focused
our collective energy on two goals: creating meaningful value-added investment
performance; and providing our clients with individualized client relationships
of the highest quality.
Now, in 2000, more than 1,200 employees located in 11 countries around the world
continue to deliver investment strategies that meet our clients' needs. With an
unrelenting focus on our goals, we have grown into one of the world's premier
investment management organizations, and a recognized leader in our industry.
In North America, we make our investment capabilities available to institutions
and individual investors through the Brinson Family of Funds. The Brinson Funds
are no-load, institutionally priced mutual funds that provide investors
convenient access to our global investment expertise and capabilities.
Within a framework of integrated capital markets, we select portfolio
investments by focusing on long-term investment fundamentals. Investment
performance for our clients is maximized within and across asset classes through
a comprehensive understanding of global investment markets and their
interrelationships. We apply a systematic, disciplined approach to valuing
investments and combine the seasoned judgement of our global investment teams to
construct optimal portfolios--balancing considerations for both risk and return.
Brinson Partners, Inc. is a member of UBS Asset Management, the institutional
asset management division of UBS AG.
================================================================================
2
<PAGE>
Table of Contents
[LOGO]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Shareholder Letter............................................ 4
Global Economic and Market Highlights......................... 5
Global Fund................................................... 6
Schedule of Investments.................................... 10
Financial Statements....................................... 17
Financial Highlights....................................... 21
Global Equity Fund............................................ 22
Schedule of Investments.................................... 26
Financial Statements....................................... 29
Financial Highlights....................................... 32
Global Bond Fund.............................................. 33
Schedule of Investments.................................... 36
Financial Statements....................................... 39
Financial Highlights....................................... 42
The UBS Investment Funds--Notes to Financial Statements....... 43
</TABLE>
================================================================================
3
<PAGE>
Shareholder Letter
[LOGO]
- --------------------------------------------------------------------------------
January 27, 2000
Dear Shareholder:
We are pleased to present the semi-annual report for the UBS Investment Funds
for the six-month period ending December 31, 1999. This report will provide a
discussion on the current U.S. and International Economic outlook. We will also
provide our current portfolio strategies and performance updates for our three
Global Mutual Funds.
The decade of the 1990s ended with a particularly challenging year. We continued
to apply our proven value-based investment process across all of our portfolios,
but our investment results varied substantially. In some areas, such as fixed
income, our performance was excellent relative to both the market and our peers.
In other areas, most notably multi-asset and equity portfolios, results were
disappointing.
Throughout 1999, our asset allocation strategies continued to focus on reducing
exposure to the risks presented by equity prices that have been driven far above
even optimistic estimates of underlying value. While the risk hedge in balanced
portfolios had little net effect on performance through most of the year, the
surge in equity prices late in the year hampered the returns relative to the
benchmarks.
The broad array of our equity portfolios, with the exception of the growth
portfolios, significantly lagged their benchmarks in 1999. Some degree of
underperformance was unavoidable as the U.S. market was increasingly driven by
momentum, which in turn focused more tightly on narrow technology and e-commerce
stocks. In such a market, the fundamental price/value discrepancies that are the
core of our investment process are effectively ignored in the market. In
addition, our stock selection was uncharacteristically weak and a meaningful
source of the underperformance of our U.S. and Global Equity portfolios.
In fixed income our U.S. Bond and High Yield portfolios outpaced the market and
ranked highly in their respective universes of active managers. However, outside
the U.S., our Global Bond portfolio generally underperformed, due almost
entirely to strength in both the Japanese bond market and the yen, where we are
underweighted.
Our fundamental assessments across markets have been both accurate and
perceptive, but momentum rather than the reality of fundamental value has
continued to drive equity markets, particularly in the U.S. We have seen this
phenomenon historically and it has always proven to be a sign of danger, that
ultimately ends badly for the market in general and the momentum players in
particular. Over time, these styles ebb and flow but momentum driven approaches
have no lasting link to underlying fundamentals and always fail to deliver when
viewed over meaningful horizons. It is these concerns which underlie our current
asset allocation and equity portfolio strategies.
2000 will be a challenging year, but we are confident that remaining true to our
investment disciplines will in the long run accrue to our shareholders' benefit.
As always, we welcome your thoughts and comments, and appreciate your continued
trust and the confidence you have placed in the UBS Investment Funds.
Sincerely,
/s/ Hanspeter A. Walder /s/ Raymond Simon
Hanspeter A. Walder Raymond Simon
Executive Director Managing Director
Private Banking Private Banking
================================================================================
4
<PAGE>
Global Economic and Market Highlights
- --------------------------------------------------------------------------------
[LOGO]UBS
Investment Funds
As the negative effects of the Asian crisis gradually wane and domestic demand
continues to remain robust, the expansion in Euroland gains speed. In late
December 1999, the German government announced cuts in corporate and personal
tax rates, and initiated cross-party talks about reforms of the country's
burdened pension system. So far, however, neither the ruling coalition parties
nor the opposition has managed to communicate its position in the pension debate
in a transparent way, as the political system is being absorbed by allegations
of funding fraud against the Christian democrats. As in the United States, pan-
European inflation has accelerated in the wake of surging energy prices, whereas
inflation excluding food and energy has moved sideways. While headline inflation
figures will be heavily impacted by energy prices, core inflation is unlikely to
accelerate much, given economy-wide over-capacities and disinflationary forces
arising from continued deregulation of utility and telecom sectors.
In Japan, real GDP declined in the third quarter of 1999, largely as a result of
a phasing out of public spending programs, weak private capital expenditures and
stagnating consumer spending. A sustainable recovery will hinge on healthy gains
in private demand. Should the trend in economic growth continue to be
disappointing, the government may adopt additional stimulative fiscal measures.
The Bank of Japan has sterilized, and will probably continue to sterilize,
expansionary foreign exchange market operations. Hopes that meaningful
quantitative easing steps are around the corner remain premature.
Global Environment
<TABLE>
<CAPTION>
6 months 1 year 3 years 7/31/95*
Major Markets ended ended ended to
Total Return in U.S. Dollars 12/31/99 12/31/99 12/31/99 12/31/99
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Equity 10.45% 23.56% 26.04% 24.88%
Global (Ex-U.S.) Equities (currency unhedged) 22.45 27.77 15.67 12.68
Global (Ex-U.S.) Equities (currency hedged) 19.89 36.98 21.89 20.82
U.S. Bonds 0.55 -0.84 5.72 6.21
Global (Ex-U.S.) Bonds (currency unhedged) 4.44 -5.09 2.29 2.26
Global (Ex-U.S.) Bonds (currency hedged) 1.66 2.88 8.42 9.89
U.S. Cash Equivalents 2.79 5.31 5.58 5.62
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
6 months 1 year 3 years 7/31/95*
Major Currencies ended ended ended to
Percent Change Relative to U.S. Dollars 12/31/99 12/31/99 12/31/99 12/31/99
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Yen 18.26% 10.20% 4.28% -3.35%
Pound 2.25 -3.13 -1.98 0.16
Euro** -2.80 -14.64 -7.56 -7.09
Canadian Dollar 1.98 5.84 -1.89 -1.74
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Inception date of the UBS Investment Fund - Global
** Deutschemark prior to 1/1/99
All total returns in excess of 1 year are average annualized returns.
================================================================================
5
<PAGE>
Global Fund
- --------------------------------------------------------------------------------
[LOGO]UBS
Investment Funds
Since its inception on July 31, 1995, the UBS Investment Fund - Global has
provided an annualized return of 9.18% versus the 15.18% return of its index,
the Global Securities Markets Mutual Fund Index (Unhedged). The annualized
volatility of the Fund over this period was 7.56%, almost 25% less than the
9.81% volatility of the benchmark. The Fund's 1999 return of 0.83% fell
substantially short of the benchmark return of 16.85%. While these results are
disappointing, we remain committed to our long-term value-oriented investment
philosophy.
Security selection in U.S. equity and Japanese equity markets contributed
negatively to the added value while issue selection in U.S. bonds made a
positive contribution. The large underweight in developed equity markets and the
corresponding overweight in nominal and real bond markets detracted
significantly from the Fund's added value as equity markets enjoyed another
stellar year.
It was a difficult year for developed bond markets with the notable exception of
the Japanese market. Yields rose and most returns were negative when the
currency effects were removed. The slightly long duration positions maintained
in most developed bond markets hurt the Fund's relative performance as did the
significant underweight and short duration strategy in Japanese bonds and the
allocation to U.S. Treasury Inflation Protected Securities (TIPS). The
overweighting in emerging debt, as well as the active management within this
category, made a positive contribution. Emerging and developed equity markets
performed very strongly as inflation remained in check while industry
consolidation and restructuring reached record levels. Technology and
telecommunications shares provided exceptional returns, pushing their valuations
significantly higher from already lofty levels.
The yen strengthened during the year, which detracted from the Global Fund's
performance, as did the euro's weakness. On the positive side, the relative
strength of the Australian dollar, and our decision to overweight that currency,
added value to the Fund.
Going into 2000, the Global Fund remains significantly underweight in the
developed equity markets with an offsetting overweight in bond markets. The
gains in developed equity markets have led to a very high level of overpricing,
making bond markets increasingly attractive on a relative basis. The Fund is
also maintaining a large underweight in the yen as this currency has again
become significantly overvalued in the world markets--particularly compared with
continental European currencies. Along with the yen underweight, the strategy
includes sterling and U.S. dollar underweights counterbalanced by overweights in
the euro, Australian dollar and the Swedish krona.
================================================================================
6
<PAGE>
Global Fund
- --------------------------------------------------------------------------------
[LOGO]UBS
Investment Funds
Total Return
<TABLE>
<CAPTION>
6 months 1 year 3 years 7/31/95*
ended ended ended to
12/31/99 12/31/99 12/31/99 12/31/99
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UBS Investment Fund - Global -1.44% 0.83% 6.13% 9.18%
- ------------------------------------------------------------------------------------------------------------------------------
GSMI Mutual Fund Index** 10.41 16.85 15.86 15.18
- ------------------------------------------------------------------------------------------------------------------------------
Salomon Smith Barney World Gov't. Bond Index 3.13 -4.26 3.43 3.52
- ------------------------------------------------------------------------------------------------------------------------------
MSCI World Equity (Free) Index 15.25 25.12 21.81 19.22
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Inception date of the UBS Investment Fund - Global
** An unmanaged index compiled by the Advisor, constructed as follows: 40%
Wilshire 5000 Index; 22% MSCI World ex USA (Free) Index; 21% Salomon Smith
Barney BIG Bond Index; 9% Salomon Non-U.S. Government Bond Index (unhedged);
2% JP Morgan EMBI+; 3% MSCI Emerging Markets Free Index; and 3% Merrill Lynch
High Yield Master Index.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $10,000
This chart shows the growth in the value of an investment in the UBS Investment
Fund - Global, the GSMI Mutual Fund Index, the Salomon Smith Barney World
Government Bond Index and the MSCI World Equity (Free) Index if you had invested
$10,000 on July 31, 1995, and had reinvested all your income dividends and
capital gain distributions through December 31, 1999. No adjustment has been
made for any income taxes payable by shareholders on income dividends and
capital gain distributions. Past performance is no guarantee of future results.
Share price and return will vary with market conditions; investors may realize a
gain or loss upon redemption.
UBS Investment Fund - Global vs. GSMI Mutual Fund Index,
Salomon Smith Barney World Gov't. Bond Index and MSCI World Equity (Free) Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Label A B C D
- ------------------------------------------------------------------------------------------------------------------
Label Date Brinson Global Fund GSMI Mutual Fund MSCI World Equi??? Solomon Smith B????
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Jul 31, 95 $10,000 $10,000 $10,000 $10,000
- ------------------------------------------------------------------------------------------------------------------
2 Aug 31, 95 $10,129 $ 9,965 $ 9,777 $ 9,656
- ------------------------------------------------------------------------------------------------------------------
3 Sep 30, 95 $10,293 $10,232 $10,066 $ 9,871
- ------------------------------------------------------------------------------------------------------------------
4 Oct 31, 95 $10,362 $10,167 $ 9,909 $ 9,944
- ------------------------------------------------------------------------------------------------------------------
5 Nov 30, 95 $10,655 $10,472 $10,255 $10,057
- ------------------------------------------------------------------------------------------------------------------
6 Dec 31, 95 $10,861 $10,665 $10,556 $10,162
- ------------------------------------------------------------------------------------------------------------------
7 Jan 31, 96 $11,063 $10,839 $10,753 $10,037
- ------------------------------------------------------------------------------------------------------------------
8 Feb 29, 96 $11,008 $10,870 $10,818 $ 9,986
- ------------------------------------------------------------------------------------------------------------------
9 Mar 31, 96 $11,091 $10,963 $10,998 $ 9,972
- ------------------------------------------------------------------------------------------------------------------
10 Apr 30, 96 $11,229 $11,152 $11,256 $ 9,932
- ------------------------------------------------------------------------------------------------------------------
11 May 31, 96 $11,266 $11,234 $11,265 $ 9,934
- ------------------------------------------------------------------------------------------------------------------
12 Jun 30, 96 $11,324 $11,257 $11,325 $10,013
- ------------------------------------------------------------------------------------------------------------------
13 Jul 31, 96 $11,157 $10,961 $10,925 $10,205
- ------------------------------------------------------------------------------------------------------------------
14 Aug 31, 96 $11,334 $11,138 $11,054 $10,245
- ------------------------------------------------------------------------------------------------------------------
15 Sep 30, 96 $11,687 $11,505 $11,488 $10,287
- ------------------------------------------------------------------------------------------------------------------
16 Oct 31, 96 $11,873 $11,620 $11,567 $10,479
- ------------------------------------------------------------------------------------------------------------------
17 Nov 30, 96 $12,329 $12,109 $12,219 $10,617
- ------------------------------------------------------------------------------------------------------------------
18 Dec 31, 96 $12,332 $12,001 $12,025 $10,531
- ------------------------------------------------------------------------------------------------------------------
19 Jan 31, 97 $12,475 $12,177 $12,172 $10,250
- ------------------------------------------------------------------------------------------------------------------
20 Feb 28, 97 $12,567 $12,234 $12,311 $10,173
- ------------------------------------------------------------------------------------------------------------------
21 Mar 31, 97 $12,373 $11,965 $12,064 $10,096
- ------------------------------------------------------------------------------------------------------------------
22 Apr 30, 97 $12,506 $12,207 $12,460 $10,007
- ------------------------------------------------------------------------------------------------------------------
23 May 31, 97 $13,008 $12,824 $13,231 $10,279
- ------------------------------------------------------------------------------------------------------------------
24 Jun 30, 97 $13,377 $13,283 $13,889 $10,402
- ------------------------------------------------------------------------------------------------------------------
25 Jul 31, 97 $13,797 $13,812 $14,531 $10,321
- ------------------------------------------------------------------------------------------------------------------
26 Aug 31, 97 $13,428 $13,306 $13,547 $10,314
- ------------------------------------------------------------------------------------------------------------------
27 Sep 30, 97 $13,838 $13,882 $14,284 $10,534
- ------------------------------------------------------------------------------------------------------------------
28 Oct 31, 97 $13,428 $13,434 $13,534 $10,753
- ------------------------------------------------------------------------------------------------------------------
29 Nov 30, 97 $13,449 $13,554 $13,771 $10,589
- ------------------------------------------------------------------------------------------------------------------
30 Dec 31, 97 $13,589 $13,717 $13,939 $10,557
- ------------------------------------------------------------------------------------------------------------------
31 Jan 31, 98 $13,735 $13,902 $14,330 $10,659
- ------------------------------------------------------------------------------------------------------------------
32 Feb 28, 98 $14,230 $14,575 $15,299 $10,746
- ------------------------------------------------------------------------------------------------------------------
33 Mar 31, 98 $14,556 $14,988 $15,943 $10,639
- ------------------------------------------------------------------------------------------------------------------
34 Apr 30, 98 $14,568 $15,135 $16,099 $10,810
- ------------------------------------------------------------------------------------------------------------------
35 May 31, 98 $14,478 $14,922 $15,904 $10,834
- ------------------------------------------------------------------------------------------------------------------
36 Jun 30, 98 $14,394 $15,111 $16,276 $10,851
- ------------------------------------------------------------------------------------------------------------------
37 Jul 31, 98 $14,349 $15,032 $16,251 $10,865
- ------------------------------------------------------------------------------------------------------------------
38 Aug 31, 98 $13,193 $13,512 $14,085 $11,160
- ------------------------------------------------------------------------------------------------------------------
39 Sep 30, 98 $13,601 $13,978 $14,335 $11,754
- ------------------------------------------------------------------------------------------------------------------
40 Oct 31, 98 $14,088 $14,813 $15,634 $12,102
- ------------------------------------------------------------------------------------------------------------------
41 Nov 30, 98 $14,473 $15,418 $16,565 $11,931
- ------------------------------------------------------------------------------------------------------------------
42 Dec 31, 98 $14,622 $15,974 $17,370 $12,171
- ------------------------------------------------------------------------------------------------------------------
43 Jan 31, 99 $14,647 $16,196 $17,752 $12,059
- ------------------------------------------------------------------------------------------------------------------
44 Feb 28, 99 $14,274 $15,766 $17,280 $11,672
- ------------------------------------------------------------------------------------------------------------------
45 Mar 31, 99 $14,498 $16,264 $17,997 $11,701
- ------------------------------------------------------------------------------------------------------------------
46 Apr 30, 99 $15,083 $16,830 $18,709 $11,697
- ------------------------------------------------------------------------------------------------------------------
47 May 31, 99 $14,796 $16,404 $18,020 $11,500
- ------------------------------------------------------------------------------------------------------------------
48 Jun 30, 99 $14,958 $16,906 $18,858 $11,299
- ------------------------------------------------------------------------------------------------------------------
49 Jul 31, 99 $14,921 $16,815 $18,802 $11,576
- ------------------------------------------------------------------------------------------------------------------
50 Aug 31, 99 $14,683 $16,769 $18,767 $11,629
- ------------------------------------------------------------------------------------------------------------------
51 Sep 30, 99 $14,458 $16,698 $18,591 $11,810
- ------------------------------------------------------------------------------------------------------------------
52 Oct 31, 99 $14,433 $17,294 $19,556 $11,804
- ------------------------------------------------------------------------------------------------------------------
53 Nov 30, 99 $14,483 $17,699 $20,106 $11,680
- ------------------------------------------------------------------------------------------------------------------
54 Dec 31, 99 $14,743 $18,666 $21,734 $11,652
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
7
<PAGE>
GLOBAL FUND
- -------------------------------------------------------------------------------
[LOGO]
Asset Allocation
As of December 31, 1999 (Unaudited)
Current
Benchmark Strategy
- -----------------------------------------------------------
U.S. Equities 40.0% 19.9%
Global (Ex-U.S.) Equities 22.0 17.1
Emerging Markets Equities 3.0 3.0
Dollar Bonds 21.0 41.0
High Yield Bonds 3.0 3.0
Global (Ex-U.S.) Bonds 9.0 11.0
Emerging Markets Debt 2.0 5.0
Cash Equivalents 0.0 0.0
- -----------------------------------------------------------
100.0% 100.0%
Top Ten U.S. Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- -----------------------------------------------------------
1. FDX Corp. 1.18%
2. Electronic Data Systems Corp. 1.13
3. Burlington Northern Santa Fe Corp. 0.94
4. General Instrument Corp. 0.82
5. CIGNA Corp. 0.76
6. Allergan, Inc. 0.69
7. Compuware Corp. 0.69
8. Compaq Computer Corp. 0.65
9. Nextel Communications, Inc. 0.65
10. First Data Corp. 0.63
- -----------------------------------------------------------
Currency Allocation
As of December 31, 1999 (Unaudited)
Current
Benchmark Strategy
- -----------------------------------------------------------
U.S. 66.0% 62.5%
Japan 9.4 1.4
U.K. 4.8 0.0
Euro 11.7 18.5
Other Europe 2.5 6.5
Canada 1.3 1.3
Emerging Markets 3.0 3.0
Asia (Ex-Japan) 0.7 0.2
Australia/New Zealand 0.6 6.6
- -----------------------------------------------------------
100.0% 100.0%
Top Ten Global (Ex-U.S.) Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- -----------------------------------------------------------
1. Fujitsu 0.56%
2. Sony Corp. 0.56
3. Nippon Telegraph & Telephone Corp. 0.48
4. Fanuc 0.34
5. Toyota Motor Corp. 0.32
6. Orix Corp. 0.30
7. Secom Co., Ltd. 0.26
8. NTT Mobile Communications Network, Inc. 0.24
9. Canon, Inc. 0.24
10. NEC Corp. 0.23
- -----------------------------------------------------------
===============================================================================
8
<PAGE>
Global Fund
- --------------------------------------------------------------------------------
[LOGO]
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- -------------------------------------------------------------
U.S. EQUITIES
Energy....................................... 0.18%
Capital Investment
Capital Goods............................... 1.22
Technology.................................. 4.77
------
5.99
Basic Industries
Chemicals................................... 1.27
Housing/Paper............................... 2.80
Metals...................................... 1.40
------
5.47
Consumer
Non-Durables................................ 0.63
Retail/Apparel.............................. 1.75
Autos/Durables.............................. 1.00
Health: Drugs............................... 1.78
Health: Non-Drugs........................... 1.57
------
6.73
Financial
Banks....................................... 2.22
Non-Banks................................... 2.40
------
4.62
Utilities
Electric.................................... 2.12
Telephone................................... 1.09
------
3.21
Transportation............................... 2.50
Services/Misc................................ 1.91
Post Venture................................. 2.32
------
Total U.S. Equities...................... 32.93*
GLOBAL (EX-U.S.) EQUITIES
Aerospace & Military......................... 0.08
Airlines..................................... 0.04
Appliances & Households...................... 0.85
Autos/Durables............................... 0.61
Banking...................................... 1.64
Beverages & Tobacco.......................... 0.37
Broadcasting & Publishing.................... 0.44
Building Materials........................... 0.09
Business & Public Service.................... 0.76
Chemicals.................................... 0.39
Construction................................. 0.09
Data Processing.............................. 0.80
Electric Components.......................... 0.91
Electronics.................................. 1.13
Energy....................................... 0.50
Financial Services........................... 1.06
Food & House Products........................ 0.42
Forest Products.............................. 0.13
Health: Drugs................................ 0.91
Industrial Components........................ 0.32
Insurance.................................... 0.63%
Leisure & Tourism............................ 0.02
Machinery & Engineering...................... 0.04
Merchandising................................ 0.51
Metals--Steel................................ 0.11
Multi-Industry............................... 0.13
Non-Ferrous Metals........................... 0.17
Real Estate.................................. 0.18
Recreation................................... 0.20
Telecommunications........................... 1.86
Transportation............................... 0.39
Utilities.................................... 0.51
Wholesale & International Trade.............. 0.06
------
Total Global (Ex-U.S.) Equities.......... 16.35
EMERGING MARKETS EQUITIES.................... 5.49
------
TOTAL EQUITIES............................... 54.77
U.S. BONDS
Corporate Bonds
Airlines.................................... 0.05
Asset-Backed................................ 0.53
Autos/Durables.............................. 0.18
Consumer.................................... 0.14
Financial Services.......................... 0.64
Health...................................... 0.18
Services/Miscellaneous...................... 0.47
Telecommunications.......................... 0.21
Utilities................................... 0.18
------
2.58
International Dollar Bonds................... 1.68
Corporate Mortgage-Backed Securities......... 2.03
U.S. Government Mortgage-Backed Securities... 2.49
U.S. Government Obligations.................. 15.29
------
Total U.S. Bonds......................... 24.07*
HIGH YIELD BONDS............................. 2.55
GLOBAL (EX-U.S.) BONDS
Foreign Financial Bonds...................... 0.78
Foreign Government Bonds..................... 8.41
------
Total Global (Ex-U.S.) Bonds............. 9.19
EMERGING MARKETS BONDS....................... 7.19
SHORT-TERM INVESTMENTS....................... 20.60*
------
TOTAL INVESTMENTS........................ 118.37
LIABILITIES, LESS CASH AND
OTHER ASSETS................................ (18.37)
------
NET ASSETS............................... 100.00%
======
- --------------------------------------------------------------------------------
* The Fund held a long position in U.S. Treasury futures on December 31, 1999
which increased U.S. Bond exposure from 24.07% to 39.23%.
The Fund held a short position in stock index futures on December 31, 1999
which reduced U.S. Equity exposure from 32.93% to 19.70%.
These adjustments result in a net decrease in the Fund's exposure to Short-
Term Investments from 20.60% to 18.67%.
================================================================================
9
<PAGE>
Global Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
-------- ------------
<S> <C> <C>
Equities -- 54.77%
U.S. Equities -- 32.93%
Advanced Micro Devices, Inc. (b).................... 54,600 $ 1,579,987
Allergan, Inc. (b).................................. 46,600 2,318,350
Alza Corp. (b)...................................... 22,200 768,675
American Standard Cos., Inc. (b).................... 26,600 1,220,275
AmSouth Bancorp..................................... 31,087 600,368
Aon Corp............................................ 29,447 1,177,880
Armstrong World Industries, Inc..................... 7,000 233,625
Baxter International, Inc........................... 28,400 1,783,875
Brinson Post-Venture Fund (b)....................... 397,192 7,740,955
Burlington Northern Santa Fe Corp................... 129,600 3,142,800
Central & South West Corp........................... 70,300 1,406,000
Centaur Funding Corp., 144A......................... 750 765,938
Centaur Funding Corp., 144A......................... 1,430 219,476
Champion Enterprises, Inc. (b)...................... 22,800 195,225
Champion International Corp......................... 8,000 495,500
Chase Manhattan Corp................................ 22,400 1,740,200
CIGNA Corp.......................................... 31,400 2,529,662
Circuit City Stores-Circuit City Group.............. 21,300 959,831
CMS Energy Corp..................................... 23,900 745,381
CommScope, Inc. (b)................................. 9,733 392,362
Compaq Computer Corp................................ 80,300 2,173,119
Computer Sciences Corp. (b)......................... 17,700 1,674,862
Compuware Corp...................................... 61,800 2,302,050
Consolidated Stores Corp. (b)....................... 31,900 518,375
Corning, Inc........................................ 8,600 1,108,863
Covance, Inc. (b)................................... 17,572 189,997
Delhaize America, Inc............................... 16,167 328,392
Dial Corp........................................... 18,000 437,625
Dominion Resources, Inc............................. 35,600 1,397,300
Eastman Chemical Co................................. 14,300 681,931
Electronic Data Systems Corp........................ 56,100 3,755,194
Eli Lilly and Co.................................... 12,100 804,650
Emerson Electric Co................................. 32,300 1,853,212
Entergy Corp........................................ 34,000 875,500
FDX Corp. (b)....................................... 95,800 3,921,812
Federal-Mogul Corp.................................. 36,000 724,500
Federated Department Stores, Inc.................... 9,300 470,231
First Data Corp..................................... 42,330 2,087,398
Fleet Boston Financial Corp......................... 49,115 1,709,816
Fleetwood Enterprises, Inc.......................... 16,500 340,313
Fort James Corp..................................... 44,800 1,226,400
Gateway, Inc........................................ 11,300 814,306
GATX Corp........................................... 10,400 351,000
General Instrument Corp. (b)........................ 32,000 2,720,000
Genzyme Corp. (b)................................... 17,100 769,500
GreenPoint Financial Corp........................... 49,700 1,183,481
Hibernia Corp....................................... 37,700 400,563
Household International, Inc........................ 41,900 1,560,775
Illinois Tool Works, Inc............................ 29,200 1,972,825
IMC Global, Inc..................................... 55,200 903,900
Johnson Controls, Inc............................... 15,200 864,500
Kimberly-Clark Corp................................. 28,500 1,859,625
Kroger Co........................................... 21,500 405,813
Lafarge Corp........................................ 20,700 571,838
Lear Corp. (b)...................................... 31,000 992,000
Lexmark International Group, Inc.................... 6,200 561,100
Lincoln National Corp............................... 12,700 508,000
Lockheed Martin Corp................................ 45,846 $ 1,002,881
Lyondell Chemical Co................................ 37,300 475,575
Martin Marietta Materials, Inc...................... 15,484 634,844
Masco Corp.......................................... 80,800 2,050,300
Mattel, Inc......................................... 81,400 1,068,375
Mead Corp........................................... 16,600 721,063
Monsanto Co......................................... 27,200 969,000
National Service Industries, Inc.................... 12,700 374,650
New York Times Co................................... 22,500 1,105,313
Newell Rubbermaid, Inc.............................. 52,600 1,525,400
Nextel Communications, Inc. (b)..................... 20,900 2,155,312
Norfolk Southern Corp............................... 45,900 940,950
Owens-Illinois, Inc................................. 12,000 300,750
Peco Energy Co...................................... 23,300 809,675
Pentair, Inc........................................ 17,596 677,446
Philip Morris Companies, Inc........................ 41,100 953,006
PNC Bank Corp....................................... 21,100 938,950
Praxair, Inc........................................ 11,700 588,656
Raytheon Co., Class B............................... 48,300 1,282,969
Reliaster Financial Corp............................ 12,700 497,681
SBC Communications, Inc............................. 30,400 1,482,000
Southdown, Inc...................................... 17,836 920,784
St. Jude Medical, Inc. (b).......................... 36,600 1,123,162
Torchmark Corp...................................... 17,300 502,781
Tyson Foods, Inc.................................... 44,698 726,343
U.S. Bancorp........................................ 33,180 790,099
Ultramar Diamond Shamrock Corp...................... 26,702 605,802
Unisys Corp......................................... 20,900 667,494
United Healthcare Corp.............................. 25,900 1,375,937
USG Corp............................................ 11,900 560,788
Viad Corp........................................... 25,400 708,025
W.W. Grainger, Inc.................................. 15,700 750,656
Watson Pharmaceutical Co............................ 30,100 1,077,956
Wells Fargo and Co.................................. 45,200 1,827,775
Westvaco Corp....................................... 21,000 685,125
Xerox Corp.......................................... 62,900 1,427,044
York International Corp............................. 19,500 535,031
------------
Total U.S. Equities................................. 109,876,729
------------
Global (Ex-U.S.) Equities -- 16.35%
Australia -- 0.69%
Amcor Ltd........................................... 9,420 43,977
Amp Ltd............................................. 10,300 113,439
Boral Ltd........................................... 30,000 46,331
Brambles Industries Ltd............................. 2,670 73,599
Broken Hill Proprietary Co., Ltd.................... 15,310 200,387
CSR Ltd............................................. 26,070 63,123
Lend Lease Corp., Ltd............................... 8,732 121,941
National Australia Bank Ltd......................... 16,727 255,045
News Corp., Ltd..................................... 27,389 265,086
News Corp., Ltd., Preferred......................... 10,036 85,707
Qantas Airways Ltd.................................. 12,937 32,171
QBE Insurance Group Ltd............................. 18,241 84,752
Rio Tinto Ltd....................................... 6,845 146,569
Santos Ltd.......................................... 21,990 59,720
Telstra Corp. Ltd................................... 65,000 352,198
Westpac Banking Corp., Ltd.......................... 31,528 216,779
WMC Ltd............................................. 9,740 53,540
Woolworth's Ltd..................................... 22,660 77,702
------------
2,292,066
------------
</TABLE>
- --------------------------------------------------------------------------------
10
<PAGE>
Global Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
------- ------------
<S> <C> <C>
Austria -- 0.02%
Austria Tabakwerke AG.................................. 1,400 $ 67,361
------------
Belgium -- 0.12%
Electrabel S.A......................................... 370 120,538
Fortis B............................................... 8,027 288,216
------------
408,754
------------
Canada -- 0.30%
Agrium, Inc............................................ 7,140 55,101
Alcan Aluminum Ltd..................................... 2,420 99,048
Bank of Montreal....................................... 1,520 51,634
Canadian National Railway Co........................... 2,920 76,858
Canadian Pacific Ltd................................... 4,473 95,698
Hudson's Bay Co........................................ 6,410 75,968
Imasco, Ltd............................................ 2,390 65,790
Imperial Oil Ltd....................................... 2,110 45,070
Magna International, Inc., Class A..................... 1,360 57,631
Newbridge Networks Corp. (b)........................... 3,560 79,844
Nova Chemicals Corp.................................... 2,704 52,634
Potash Corporation of Saskatchewan, Inc................ 860 40,887
Royal Bank of Canada................................... 2,370 103,697
Shaw Communications, Inc., Class B..................... 1,980 65,009
TransCanada Pipelines Ltd.............................. 1,890 16,278
Westcoast Energy, Inc.................................. 1,350 21,534
------------
1,002,681
------------
Denmark -- 0.06%
Tele Danmark A/S....................................... 2,620 193,737
------------
Finland -- 0.37%
Merita Ltd., Class A................................... 36,330 213,040
Nokia Oyj.............................................. 3,060 552,119
Sampo Insurance Co., Ltd., Series A.................... 6,000 208,699
UPM-Kymmene Corp....................................... 6,270 251,401
------------
1,225,259
------------
France -- 1.11%
Air France (b)......................................... 6,260 119,225
Air Liquide............................................ 1,645 274,054
Alcatel Alsthom........................................ 820 187,408
Axa.................................................... 840 116,534
Banque Nationale de Paris.............................. 4,889 448,905
Carrefour S.A.......................................... 910 167,020
Cie de Saint Gobain.................................... 1,037 194,072
CSF Thomson (b)........................................ 6,300 207,072
France Telecom S.A..................................... 4,240 558,046
Groupe Danone.......................................... 740 173,575
Michelin, Class B...................................... 1,879 73,457
Rhone-Poulenc, Class A................................. 3,864 223,487
Schneider S.A.......................................... 1,860 145,334
Societe Generale....................................... 1,155 267,444
Total Fina S.A., Class B (b)........................... 2,952 392,077
Vivendi................................................ 1,790 160,858
------------
3,708,568
------------
Germany -- 0.90%
Allianz AG............................................. 780 260,753
Bayer AG............................................... 8,080 382,290
Bayerische Motoren Werke AG............................ 4,250 129,722
Continental AG......................................... 4,850 $ 96,989
DaimlerChrysler AG (b)................................. 2,606 203,494
Deutsche Bank AG....................................... 2,940 247,109
Deutsche Telekom AG.................................... 3,760 263,265
Dresdner Bank AG....................................... 2,870 155,064
Mannesmann AG.......................................... 1,380 332,547
SAP AG................................................. 270 132,076
Siemens AG............................................. 4,250 541,043
Veba AG................................................ 5,039 244,977
------------
2,989,329
------------
Hong Kong -- 0.02%
Henderson Land Development Co., Ltd.................... 12,000 77,031
------------
Italy -- 0.34%
Assicurazioni Generali................................. 4,800 157,817
Beni Stabili Spa....................................... 24,511 8,599
ENI Spa................................................ 19,000 103,989
ENI Spa ADR............................................ 3,070 169,234
La Rinascente Spa...................................... 12,740 81,348
San Paolo-imi Spa...................................... 13,511 182,700
Telecom Italia Mobile Spa.............................. 22,000 244,565
Telecom Italia Spa..................................... 12,000 168,402
------------
1,116,654
------------
Japan -- 8.32%
Acom Co., Ltd.......................................... 3,900 381,408
Asahi Bank Ltd......................................... 39,000 240,047
Bank of Tokyo-Mitsubushi Ltd........................... 40,000 556,494
Benesse Corp........................................... 1,300 312,442
Bridgestone Corp....................................... 13,000 285,770
Canon, Inc............................................. 20,000 793,317
Dai Nippon Printing Co., Ltd........................... 14,000 222,949
Dai-Ichi Kangyo Bank................................... 24,000 223,926
Daiichi Pharmaceutical Co., Ltd........................ 10,000 129,842
Daikin Industries Ltd.................................. 11,000 149,382
Denso Corp............................................. 11,000 262,225
East Japan Railway Co.................................. 70 376,826
Fanuc.................................................. 8,900 1,131,249
Fuji Bank Ltd.......................................... 18,000 174,627
Fujitsu................................................ 41,000 1,866,641
Honda Motor Co......................................... 17,000 631,137
Hoya Corp.............................................. 5,000 393,239
Ito Yokado Co., Ltd.................................... 4,000 433,784
Kamigumi Co., Ltd...................................... 30,000 126,032
Kao Corp............................................... 13,000 370,231
Kirin Brewery Co., Ltd................................. 27,000 283,572
Kokuyo................................................. 6,000 79,722
Kuraray Co., Ltd....................................... 25,000 252,797
Matsushita Electric Industrial Co...................... 25,000 691,222
Mitsubishi Corp........................................ 25,000 192,712
Mitsubishi Estate Co., Ltd............................. 40,000 389,624
Murata Manufacturing Co., Inc.......................... 1,000 234,478
NEC Corp............................................... 32,000 761,272
NGK Insulators......................................... 25,000 185,384
Nintendo Corp., Ltd.................................... 4,000 663,573
Nippon Steel Co........................................ 163,000 380,607
Nippon Telegraph & Telephone Corp...................... 93 1,590,054
Nissin Food Products Co................................ 7,000 164,477
</TABLE>
- --------------------------------------------------------------------------------
11
<PAGE>
Global Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
___________________________________________________________________________
<TABLE>
<CAPTION>
Shares Value
--------- ------------
<S> <C> <C>
Nomura Securities Co., Ltd..................... 41,000 $ 739,045
NTT Mobile Communications...................... 21 806,311
Obayashi Corp.................................. 34,000 160,442
Orix Corp...................................... 4,500 1,012,066
Osaka Gas Co................................... 92,000 221,113
Rohm Co........................................ 1,000 410,337
Sankyo Co., Ltd................................ 18,000 369,303
Santen Pharmaceutical Co., Ltd................. 8,000 131,698
Secom Co., Ltd................................. 8,000 879,293
Sekisui House Ltd.............................. 16,000 141,468
Seven-Eleven Japan Co., Ltd.................... 3,000 474,818
Softbank Corp.................................. 700 668,849
Sony Corp...................................... 6,300 1,864,980
Sumitomo Bank.................................. 28,000 382,707
Sumitomo Chemical Co........................... 53,000 248,547
Sumitomo Electric Industries................... 10,000 115,383
Takeda Chemical Industries..................... 15,000 740,071
Takefuji Corp.................................. 1,900 237,419
TDK Corp....................................... 5,000 689,268
Tokio Marine & Fire Insurance Co............... 22,000 256,851
Tokyo Electric Power........................... 9,700 259,665
Tokyo Electron Ltd............................. 3,000 410,337
Toyota Motor Corp.............................. 22,000 1,063,944
Yamato Transport Co., Ltd...................... 14,000 541,644
------------
27,756,621
------------
Netherlands -- 0.55%
ABN AMRO Holdings NV........................... 7,029 174,737
Elsevier NV.................................... 18,470 219,579
ING Groep NV................................... 8,536 512,873
Koninklijke KPN NV............................. 4,364 423,885
Royal Dutch Petroleum Co....................... 3,590 218,975
TNT Post Group NV.............................. 4,600 131,183
Unilever NV.................................... 2,523 138,693
------------
1,819,925
------------
New Zealand -- 0.06%
Auckland International Airport Ltd............. 17,350 26,239
Carter Holt Harvey Ltd......................... 26,940 35,123
Lion Nathan Ltd................................ 20,220 46,924
Telecom Corp. of New Zealand Ltd............... 17,910 84,061
------------
192,347
------------
Norway -- 0.03%
Norske Skogindustrier ASA...................... 2,050 106,617
------------
Portugal -- 0.08%
DP Electricidade de Portugal S.A............... 7,600 132,023
Portugal Telecom............................... 13,400 146,276
------------
278,299
------------
Singapore -- 0.14%
Singapore Press Holdings Ltd................... 8,820 191,118
United Overseas Bank........................... 30,116 265,729
------------
456,847
------------
Spain -- 0.41%
Banco Popular S.A.............................. 3,627 235,411
Banco Santander Central Hispano, S.A........... 19,346 217,970
Endesa S.A..................................... 6,245 123,384
Tabacalera S.A................................. 32,997 469,680
Telefonica S.A................................. 13,223 328,716
------------
1,375,161
------------
Sweden -- 0.36%
Electrolux AB, B Shares........................ 11,690 $ 292,832
Ericsson, B Shares............................. 8,240 527,599
Investor AB, B Shares.......................... 11,100 155,917
Nordbanken Holding AB.......................... 14,590 85,392
Swedish Match AB............................... 42,080 146,292
------------
1,208,032
------------
Switzerland -- 0.43%
Adecco S.A..................................... 207 160,355
Nestle S.A. (Reg.)............................. 165 300,684
Novartis AG (Reg.)............................. 254 370,995
Roche Holding AG (Gen.)........................ 32 377,835
Swisscom AG (Reg.)............................. 588 236,566
------------
1,446,435
------------
United Kingdom -- 2.04%
Allied Zurich PLC (b).......................... 13,052 153,458
AstraZeneca PLC................................ 4,002 165,637
Barclays PLC................................... 6,050 173,760
BP Amoco PLC................................... 46,946 471,003
British Aerospace PLC.......................... 11,302 74,684
British Airways PLC............................ 17,000 110,692
British Telecommunications PLC................. 20,000 487,703
Charter PLC.................................... 27,676 118,205
Diageo PLC..................................... 27,209 218,388
FKI PLC........................................ 67,040 259,317
Glaxo Wellcome PLC............................. 13,260 373,997
Greenalls Group PLC............................ 17,358 82,529
House of Fraser PLC............................ 30,780 37,702
HSBC Holdings PLC.............................. 13,000 180,817
Lloyds TSB Group PLC........................... 32,969 411,541
Marconi PLC.................................... 26,360 465,419
Marks & Spencer PLC............................ 32,060 152,301
National Power PLC............................. 33,500 193,562
Nycomed Amersham PLC........................... 22,844 141,933
Peninsular & Oriental Steam Navigation Co...... 7,540 125,533
Powergen PLC................................... 18,000 129,098
Prudential Corp. PLC........................... 16,540 325,223
Reckitt & Colman PLC........................... 10,000 93,560
Reed International PLC......................... 28,010 209,242
Rio Tinto Ltd.................................. 11,190 269,623
RJB Mining PLC................................. 26,590 13,714
Royal & Sun Alliance Insurance Group PLC....... 17,884 135,904
Scottish & Southern Energy PLC................. 27,880 222,088
Tesco PLC...................................... 70,190 212,959
Thames Water PLC............................... 8,997 111,944
Trinity Mirror PLC............................. 16,315 173,810
Unilever PLC................................... 20,000 146,827
United News & Media PLC........................ 19,490 247,842
Yorkshire Water PLC............................ 22,080 124,553
------------
6,814,568
------------
Total Global (Ex-U.S.) Equities................ 54,536,292
------------
Emerging Markets Equities -- 5.49%
Brinson Emerging Markets Equity Fund (b)....... 1,580,129 18,326,811
------------
Total Equities (Cost $169,721,051)............. 182,739,832
------------
</TABLE>
12
<PAGE>
Global Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Value
----------- -----------
<S> <C> <C>
Bonds -- 43.00%
U.S. Bonds -- 24.07%
U.S. Corporate Bonds -- 2.58%
Avon Products, Inc., 6.900%, due 11/15/04..................... $ 150,000 $ 146,710
Bell Atlantic Corp., 8.000%, due 10/15/29..................... 78,000 79,183
Bombardier Capital, Inc., MTN, 7.300%,
due 12/15/02................................................ 565,000 558,974
Cendant Corp., 7.750%, due 12/01/03........................... 640,000 639,058
Daimlerchrysler NA Hldg, 7.200%,
due 09/01/09................................................ 600,000 589,084
First Bank Corporate Card Master Trust, 97-1,
Class A, 6.400%, due 02/15/03............................... 1,055,000 1,044,672
GATX Capital Corp., Series F, MTN, 6.923%,
due 04/25/01................................................ 1,000,000 1,000,118
Monsanto Co., 144A, 6.600%, due 12/01/28...................... 545,000 468,374
Newcourt Credit Group 144A, 6.875%,
due 02/16/05................................................ 600,000 592,080
Noram Energy Corp., 6.375%, due 11/01/03...................... 615,000 584,948
PanAmSat Corp., 6.000%, due 01/15/03.......................... 225,000 209,398
PanAmSat Corp., 6.375%, due 01/15/08.......................... 500,000 423,820
Service Corp., International, 6.000%,
due 12/15/05................................................ 500,000 371,595
TIme Warner, Inc., 6.625%, due 05/15/29....................... 550,000 468,097
UCFC Home Equity Loan 97-C, Class A8,
FRN, 0.000%, due 09/15/27................................... 724,000 724,840
US Airways, Inc., 8.360%, due 07/20/20........................ 160,000 155,006
Waste Management, Inc., 6.875%,
due 05/15/09................................................ 640,000 541,069
-----------
8,597,026
-----------
Corporate Mortgage-
Backed Securities -- 2.03%
Asset Securitization Corp., 96-D, Class A1B,
7.210%, due 10/13/26........................................ 1,000,000 990,780
Norwest Asset Securities Corp., 96-2, Class A9,
7.000%, due 09/25/11........................................ 435,000 421,106
Prudential Home Mortgage Securities, 94-3,
Class A10, 6.500%, due 02/25/24............................. 730,000 698,186
Residential Asset Securitization Trust,
7.500%, due 07/25/11........................................ 666,645 668,172
Residential Asset Securitization Trust, 97-A11,
Class A2, 7.000%, due 01/25/28.............................. 22,416 22,354
Residential Asset Securitization Trust, 97-A7,
Class A1, 7.250%, due 12/25/27.............................. 1,080,000 1,036,325
Residential Asset Securitization Trust, 97-A7,
Class A1, 7.500%, due 09/25/27.............................. 182,332 182,135
Structured Asset Securities Corp., 98-RF1,
Class A, 8.712%, due 03/15/27............................... 1,006,602 1,037,114
Thrift Financial Corp., 11.250%, due 01/01/16................. 51,564 53,115
Vendee Mortgage Trust, 98-2, Class 1G,
6.750%, due 06/15/28........................................ 1,760,000 1,624,621
-----------
6,733,908
-----------
International Dollar Bonds -- 1.68%
Banco Santiago S.A., 7.000%, due 07/18/07..................... 650,000 583,195
Banque Centrale de Tunisie, 8.250%,
due 09/19/27................................................ 785,000 638,794
Ras Laffan Liquified Natural Gas Co., Ltd.,
144A, 8.294%, due 03/15/14 ,................................ 1,000,000 939,270
Tyco International Corp., 144A, 6.821%,
due 03/05/01................................................ 3,500,000 3,499,346
-----------
5,660,605
-----------
U.S. Government Mortgage-
Backed Securities -- 2.49%
Fannie Mae Whole Loan, Series 95-W3,
Class A, 9.000%, due 04/25/25............................... $ 18,814 $ 19,431
Federal Home Loan Mortgage Corp.,
7.238%, due 05/01/26........................................ 102,664 103,052
Federal Home Loan Mortgage Corp. Gold
8.000%, due 11/01/22........................................ 65,126 65,890
8.000%, due 05/01/23........................................ 682,266 690,269
9.000%, due 03/01/24........................................ 463,466 485,216
Federal National Mortgage Association
6.375%, due 06/15/09........................................ 2,380,000 2,267,942
6.500%, due 03/01/19........................................ 279,418 266,932
8.500%, due 07/01/22........................................ 280,887 290,894
7.000%, due 10/01/28........................................ 936,705 905,932
7.000%, due 03/01/29........................................ 259,036 250,708
Federal National Mortgage Association Strips
8.000%, due 08/01/23........................................ 1,250,698 384,444
0.000%, due 02/01/28........................................ 950,639 616,926
FNCI, 8.000%, due 02/01/13.................................... 499,070 509,155
Freddie Mac Series 194 Class PO, 0.000%,
due 04/01/28................................................ 710,398 439,332
Government National Mortgage Association
10.000%, due 09/15/00....................................... 912 951
10.000%, due 05/15/01....................................... 1,255 1,309
9.000%, due 11/15/04........................................ 11,291 11,606
8.000%, due 08/15/22........................................ 274,129 278,367
8.000%, due 11/15/22........................................ 204,231 207,477
7.000%, due 06/15/27........................................ 513,887 496,597
-----------
8,292,430
-----------
U.S. Government Obligations -- 15.29%
U.S. Treasury Bond
8.750%, due 05/15/17........................................ 300,000 358,125
8.000%, due 11/15/21........................................ 435,000 493,453
U.S. Treasury Inflation Indexed Note
3.625%, due 04/15/28........................................ 33,965,000 31,566,833
3.875%, due 04/15/29........................................ 18,530,000 17,708,009
U.S. Treasury Note
6.625%, due 07/31/01........................................ 500,000 503,282
6.625%, due 05/15/07........................................ 400,000 401,625
-----------
51,031,327
-----------
Total U.S. Bonds.............................................. 80,315,296
-----------
<CAPTION>
Shares
-----------
<S> <C> <C>
High Yield Bonds -- 2.55%
Brinson High Yield Fund (b)................................... 617,548 8,501,106
-----------
<CAPTION>
Face
Amount
-----------
<S> <C> <C>
Global (Ex-U.S.) Bonds -- 9.19%
Australia -- 0.68%
Queensland Treasury Corp. Global Notes
6.500%, due 06/14/05.....................................AUD 2,600,000 1,664,856
8.000%, due 09/14/07........................................ 900,000 618,466
-----------
2,283,322
-----------
</TABLE>
================================================================================
13
<PAGE>
Global Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Value
----------- ------------
<C> <C>
Canada -- 0.95%
Government of Canada
7.000%, due 12/01/06.......................CAD 1,290,000 $ 924,324
6.000%, due 06/01/08.......................... 700,000 478,816
4.250%, due 12/01/21.......................... 2,200,000 1,767,215
------------
3,170,355
------------
Denmark -- 0.82%
Depfa Pfandbrief Bank,
5.750%, due 03/04/09.......................EUR 850,000 863,113
Kingdom of Denmark
7.000%, due 11/10/24.......................DKK 2,350,000 351,974
7.000%, due 12/15/04.......................... 5,480,000 791,546
9.000%, due 11/15/00.......................... 3,800,000 532,299
8.000%, due 03/15/06.......................... 1,200,000 182,673
------------
2,721,605
------------
France -- 1.22%
Government of France (OAT)
9.500%, due 01/25/01.......................EUR 1,500,000 1,575,465
4.000%, due 10/25/09.......................... 725,000 647,198
8.500%, due 12/26/12.......................... 1,199,999 1,525,725
5.500%, due 04/25/29.......................... 330,000 309,620
------------
4,058,008
------------
Germany -- 0.90%
Deutscheland Republic Series 96,
6.250%, due 04/26/06.......................... 125,000 133,106
Bundesrepublik Deutscheland
8.375%, due 05/21/01.......................... 1,535,000 1,625,459
6.250%, due 01/04/24.......................... 750,000 779,989
DePfa Deutsche Pfandbriefbank AG,
4.750%, due 03/20/03.......................... 480,000 479,803
------------
3,018,357
------------
Italy -- 0.38%
Buoni Poliennali Del Tes,
5.000%, due 05/01/08.......................... 740,000 721,374
Republic of Italy (BTP),
12.000%, due 09/01/02......................... 470,000 541,795
------------
1,263,169
------------
Japan -- 1.18%
Government of Japan
3.000%, due 09/20/05.......................JPY 90,000,000 970,264
4.600%, due 09/20/04.......................... 260,000,000 2,970,313
------------
3,940,577
------------
Netherlands -- 0.75%
Government of Netherlands
3.000%, due 02/15/02.......................EUR 1,330,000 1,297,190
5.500%, due 01/15/28.......................... 360,000 336,324
7.500%, due 04/15/10.......................... 550,000 634,842
7.750%, due 03/01/05.......................... 200,000 224,838
------------
2,493,194
------------
Spain -- 0.60%
Government of Spain
6.150%, due 01/31/13.......................... 400,001 415,083
3.250%, due 01/31/05.......................... 1,720,000 1,577,484
------------
1,992,567
------------
Sweden -- 0.90%
Government of Sweden
6.750%, due 05/05/14.......................SEK 8,800,000 $ 1,108,105
10.250%, due 05/05/03......................... 14,000,000 1,881,598
------------
2,989,703
------------
United Kingdom -- 0.82%
Halifax PLC, Series EMTN, 8.750%,
due 07/10/06...............................GBP 720,000 1,257,385
U.K. Treasury,
5.750%, due 12/07/09.......................... 600,000 987,332
7.250%, due 12/07/07.......................... 270,000 474,761
------------
2,719,478
------------
Total Global (Ex-U.S.) Bonds................... 30,650,335
------------
<CAPTION>
Shares
-----------
<S>............................................ <C> <C>
Emerging Markets Bonds -- 7.19%
Brinson Emerging Markets Debt Fund (b)......... 1,039,012 23,996,711
------------
Total Bonds (Cost $138,116,867)................ 143,463,448
------------
Short-Term Investments -- 20.60%
Investment Companies -- 3.60%
Brinson Supplementary Trust U.S. Cash
Management Prime Fund......................... 12,006,635 12,006,635
------------
<CAPTION>
Face
Amount
-----------
<S>............................................ <C> <C>
U.S. Corporate Bonds -- 11.11%
Centex Corp., Series A, MTN
6.684%, due 06/30/00.......................... $ 5,000,000 5,000,000
Conagra, Inc., 144A
6.320%, due 06/12/00.......................... 1,300,000 1,299,350
Enron Corp. 6.634%, due 03/30/00............... 5,000,000 5,000,000
GATX Capital Corp. 6.500%, due 11/01/00........ 1,500,000 1,506,478
General Motors Corporate Notes
9.375%, due 04/01/00.......................... 2,000,000 2,019,442
Hertz Corp. 6.625%, due 07/15/00............... 2,500,000 2,512,990
Kroger Co. 7.063%, due 10/01/00................ 5,000,000 4,999,757
NorAm Energy Corp.
7.500%, due 08/01/00.......................... 2,000,000 2,013,165
Raytheon Co. 6.300%, due 08/15/00.............. 3,000,000 3,015,108
Safeway, Inc. 5.750%, due 11/15/00............. 4,000,000 3,981,669
Supevalue Stores, Inc., Series A, MTN
6.500%, due 10/06/00.......................... 2,000,000 2,004,250
Union Pacific Corp., Series E, MTN
9.680%, due 04/12/00.......................... 1,200,000 1,211,397
Vastar Resources, Inc.
6.000%, due 04/20/00.......................... 2,500,000 2,503,213
------------
37,066,819
------------
U.S. Government Obligations -- 1.12%
U.S. Treasury Bill, 0.00%, due 02/03/00........ 3,765,000 3,748,694
------------
Commercial Paper -- 4.77%
Arrow Electronics, Inc.
5.500%, due 01/03/00.......................... 2,300,000 2,299,297
Dynegy, Inc. 5.500%, due 01/03/00.............. 4,574,000 4,572,603
FMC Corp. 5.750%, due 01/03/00................. 5,000,000 4,998,403
Safeway, Inc. 5.500%, due 01/03/00............. 4,044,000 4,042,764
------------
15,913,067
------------
</TABLE>
================================================================================
14
<PAGE>
Global Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Value
------ -------------
<S> <C> <C>
Total Short-Term Investments
(Cost $73,082,365)...................... $ 68,735,215
-------------
Total Investments
(Cost $380,920,283) -- 118.37% (a)...... 394,938,495
Liabilities, less cash and
other assets -- (18.37%)............... (61,291,344)
-------------
Net Assets -- 100%....................... $ 333,647,151
=============
</TABLE>
See accompanying notes to schedule of investments.
================================================================================
15
<PAGE>
Global Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $380,920,283; and net
unrealized appreciation consisted of:
Gross unrealized appreciation................... $ 35,127,094
Gross unrealized depreciation................... (21,108,882)
------------
Net unrealized appreciation................. $ 14,018,212
============
(b) Non-income producing security.
FRN: Floating Rate Note -- The rate disclosed is that in effect at December 31,
1999.
TBA: Security is subject to delayed delivery.
144A: 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 buyers. At December 31, 1999, the
value of these securities amounted to $4,231,891 or 1.27% of net assets.
Resettable Perpetual Preferred: A bond with either no maturity date or a
maturity date that is so far in the future that the bond will pay interest
indefinitely. The issuer generally retains the right to call such a bond.
FORWARD FOREIGN CURRENCY CONTRACTS
The Global Fund had the following open forward foreign currency contracts as of
December 31, 1999:
<TABLE>
<CAPTION>
Settlement Local Current Unrealized
Date Currency Value Gain/(Loss)
---------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Forward Foreign Currency Buy Contracts
Australian Dollar................................ 02/08/00 33,300,000 $21,803,182 $ 48,316
British Pound.................................... 02/08/00 11,550,000 18,615,821 (219,353)
Canadian Dollar.................................. 02/08/00 4,600,000 3,172,414 50,108
Danish Krone..................................... 02/08/00 18,000,000 2,430,984 (181,157)
Euro............................................. 02/08/00 40,000,000 40,213,534 (2,899,481)
Japanese Yen..................................... 02/08/00 578,000,000 5,682,558 90,963
Swedish Krona.................................... 02/08/00 112,800,000 13,239,903 (695,100)
Swiss Franc...................................... 02/08/00 5,500,000 3,451,673 (310,940)
Forward Foreign Currency Sale Contracts
Australian Dollar................................ 02/08/00 6,700,000 4,386,826 (113,968)
British Pound.................................... 02/08/00 17,200,000 27,722,362 202,368
Canadian Dollar.................................. 02/08/00 4,600,000 3,172,414 (111,461)
Danish Krone..................................... 02/08/00 30,000,000 4,051,640 308,826
Euro............................................. 02/08/00 8,250,000 8,294,041 497,671
Japanese Yen..................................... 02/08/00 3,277,000,000 32,217,550 (1,851,820)
Swedish Krona.................................... 02/08/00 17,500,000 2,054,063 86,741
-----------
Total........................................ $(5,098,287)
===========
</TABLE>
FUTURES CONTRACTS
The Brinson Global Fund had the following open futures contracts as of December
31, 1999:
<TABLE>
<CAPTION>
Expiration Cost/ Current Unrealized
Date Proceeds Value Loss
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Interest Rate Futures Buy Contracts
5 Year U.S. Treasury Notes, 385 contracts............ March 2000 $38,111,273 $37,742,031 $ (369,242)
10 Year U.S. Treasury Notes, 74 contracts............ March 2000 7,212,627 7,093,593 (119,034)
30 Year U.S. Treasury Notes, 63 contracts............ March 2000 5,872,691 5,729,062 (143,629)
Index Future Sale Contracts
S&P 500 Index, 119 contracts......................... March 2000 42,843,542 44,154,950 (1,311,408)
-----------
Total............................................ $(1,943,313)
===========
</TABLE>
The market value of investments pledged to cover margin requirements for the
open futures positions at December 31, 1999 was $3,748,694.
See accompanying notes to financial statements.
================================================================================
16
<PAGE>
Global Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value:
Unaffiliated issuers (Cost $319,565,037).................................................................. $324,366,271
Affiliated issuers (Cost $61,355,246)..................................................................... 70,572,224
Foreign currency, at value (Cost $152,313)................................................................. 151,741
Receivables:
Investment securities sold................................................................................ 251,690
Dividends................................................................................................. 257,093
Interest.................................................................................................. 1,604,830
------------
TOTAL ASSETS...................................................................................... $397,203,849
------------
LIABILITIES:
Payables:
Securities loaned......................................................................................... 57,479,350
Investment advisory fees.................................................................................. 228,226
Due to custodian bank..................................................................................... 279,049
Variation margin.......................................................................................... 277,007
Accrued expenses.......................................................................................... 194,779
Net unrealized depreciation on forward foreign currency contracts.......................................... 5,098,287
------------
TOTAL LIABILITIES................................................................................. 63,556,698
------------
NET ASSETS.................................................................................................. $333,647,151
============
NET ASSETS CONSIST OF:
Paid in capital............................................................................................ $324,670,999
Accumulated distribution in excess of net investment income................................................ (411,874)
Accumulated net realized gain.............................................................................. 2,448,747
Net unrealized appreciation................................................................................ 6,939,279
------------
NET ASSETS................................................................................................. $333,647,151
============
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share (Based on net assets of
$318,094,279 and 28,489,881 shares issued and outstanding)............................................. $ 11.17
============
Brinson Class N:
Net asset value, offering price and redemption price per share (Based on net assets of
$1,331,490 and 119,546 shares issued and outstanding).................................................. $ 11.14
============
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share (Based on net assets of
$14,221,382 and 1,279,339 shares issued and outstanding)............................................... $ 11.12
============
</TABLE>
See accompanying notes to financial statements.
================================================================================
17
<PAGE>
Global Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest (net of $4,739 for foreign taxes withheld; including securities lending income of $155,319)... $ 4,674,023
Dividends (net of $28,430 for foreign taxes withheld).................................................. 1,427,928
------------
TOTAL INCOME....................................................................................... 6,101,951
------------
EXPENSES:
Advisory............................................................................................... 1,641,535
Administration......................................................................................... 143,881
Professional........................................................................................... 77,412
Printing............................................................................................... 66,934
Distribution........................................................................................... 66,831
Custodian.............................................................................................. 48,131
Other.................................................................................................. 52,368
------------
TOTAL EXPENSES..................................................................................... 2,097,092
Earnings credits................................................................................... (1,963)
------------
NET EXPENSES....................................................................................... 2,095,129
------------
NET INVESTMENT INCOME.............................................................................. 4,006,822
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments........................................................................................... 10,602,009
Futures contracts..................................................................................... (3,838,627)
Foreign currency transactions......................................................................... 144,805
------------
Net realized gain.................................................................................. 6,908,187
------------
Change in net unrealized appreciation or depreciation on:
Investments and foreign currency...................................................................... (11,930,745)
Futures contracts..................................................................................... 697,060
Forward contracts..................................................................................... (6,506,307)
Translation of other assets and liabilities denominated in foreign currency........................... 16,926
------------
Change in net unrealized appreciation or depreciation................................................. (17,723,066)
------------
Net realized and unrealized loss...................................................................... (10,814,879)
------------
Net decrease in net assets resulting from operations................................................... $ (6,808,057)
============
</TABLE>
See accompanying notes to financial statements.
================================================================================
18
<PAGE>
Global Fund -- Schedule of Investments
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999(Unaudited)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net decrease in net assets resulting from operations............................................. $ (6,808,057)
Adjustments to reconcile net decrease in net assets resulting from
operations to net cash used for operating activities:
Net realized and unrealized loss on investments................................................. 10,814,879
Decrease in receivable for investment securities sold........................................... 8,642,091
Decrease in dividends and interest receivable................................................... 1,372,338
Decrease in payable for securities purchased.................................................... (25,213,162)
Decrease in payable for investment advisory fee................................................. (93,085)
Increase in payable to Fund custodian........................................................... 279,049
Decrease in accrued expenses.................................................................... (10,753)
Decrease in variation margin.................................................................... (248,118)
Net amortization of premium..................................................................... 385,052
-------------
Net cash used for operating activities......................................................... (10,879,766)
-------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Purchases of investments......................................................................... (321,094,569)
Proceeds from sales of investments............................................................... 524,162,878
Net realized loss on futures contracts........................................................... (3,838,627)
Net realized gain on foreign currency transactions............................................... 144,805
Change in net unrealized appreciation or depreciation on futures contracts....................... 697,060
Change in net unrealized appreciation or depreciation on other assets and liabilities............ 16,926
Net decrease in foreign currency................................................................. 2,223,501
-------------
Net cash provided by investing activities...................................................... 202,311,974
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net capital shares transactions.................................................................. (151,332,750)
Net decrease from securities lending............................................................. (39,994,824)
Dividends and capital gain distributions paid.................................................... (1,895,987)
-------------
Net cash used for financing activities......................................................... (193,223,561)
-------------
Net decrease in cash............................................................................. (1,791,353)
CASH AT BEGINNING OF PERIOD....................................................................... 1,791,353
-------------
CASH AT END OF PERIOD............................................................................. $ --
=============
</TABLE>
See accompanying notes to financial statements.
================================================================================
19
<PAGE>
Global Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Year Ended
(Unaudited) June 30, 1999
----------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................................ $ 4,006,822 $ 12,109,444
Net realized gain................................................................ 6,908,187 44,693,620
Change in net unrealized appreciation or depreciation............................ (17,723,066) (37,993,047)
------------- -------------
Net increase (decrease) in net assets resulting from operations.................. (6,808,057) 18,810,017
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income......................................... (4,006,822) (12,109,444)
Distributions in excess of net investment income................................. (1,164,990) (6,197,274)
Distributions from net realized gain............................................. (15,248,821) (33,009,121)
------------- -------------
Total distributions to shareholders*............................................. (20,420,633) (51,315,839)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold...................................................................... 155,204,510 410,521,495
Shares issued on reinvestment of distributions................................... 18,524,646 47,914,179
Shares redeemed.................................................................. (305,569,570) (632,556,320)
------------- -------------
Net decrease in net assets resulting from capital share transactions............. (131,840,414) (174,120,646)
------------- -------------
TOTAL DECREASE IN NET ASSETS.................................................. (159,069,104) (206,626,468)
------------- -------------
NET ASSETS:
Beginning of period.............................................................. 492,716,255 699,342,723
------------- -------------
End of period (including undistributed net investment income of
$(411,874) and $753,116, respectively).......................................... $ 333,647,151 $ 492,716,255
============= =============
*DISTRIBUTIONS BY CLASS:
Distributions from and in excess of net investment income:
Brinson Class I.................................................................. $ (4,971,880) $ (17,500,696)
Brinson Class N.................................................................. (18,730) (753,377)
UBS Investment Funds Class....................................................... (181,202) (52,645)
Distributions from net realized gain:
Brinson Class I.................................................................. (14,468,448) (31,201,392)
Brinson Class N.................................................................. (59,854) (1,710,286)
UBSInvestment Funds Class........................................................ (720,519) (97,443)
------------- -------------
Total distributions to shareholders............................................... $ (20,420,633) $ (51,315,839)
============= =============
</TABLE>
See accompanying notes to financial statements.
================================================================================
20
<PAGE>
Global Fund -- Financial Highlights
- -------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended July 31, 1995*
December 31, 1999 Year Ended June 30, Through
------------------------------
UBS Investment Funds Class (Unaudited) 1999 1998 1997 June 30, 1996
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 11.95 $ 12.71 $ 13.05 $ 12.18 $ 11.60
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income.................................. 0.09** 0.20 0.30 0.34 0.39
Net realized and unrealized gain (loss)................ (0.27) 0.25 0.61 1.75 1.10
------- ------- ------- ------- -------
Total income (loss) from
investment operations.............................. (0.18) 0.45 0.91 2.09 1.49
------- ------- ------- ------- -------
Less distributions:
Distributions from and in excess of net
investment income..................................... (0.13) (0.37) (0.55) (0.57) (0.59)
Distributions from net realized gain................... (0.52) (0.84) (0.70) (0.65) (0.32)
------- ------- ------- ------- -------
Total distributions.................................. (0.65) (1.21) (1.25) (1.22) (0.91)
------- ------- ------- ------- -------
Net asset value, end of period............................ $ 11.12 $ 11.95 $ 12.71 $ 13.05 $ 12.18
======= ======= ======= ======= =======
Total return (non-annualized)............................. (1.44)% 3.92% 7.60% 18.13% 13.24%
Ratios/Supplemental data:
Net assets, end of period (in 000s)...................... $14,221 $22,060 $30,436 $26,303 $14,030
Ratio of gross expenses to average
net assets............................................. 1.64%*** 1.61% 1.59% 1.64% 1.69%***
Ratio of net investment income to average
net assets............................................. 1.33%*** 1.58% 2.05% 2.38% 3.04%***
Portfolio turnover rate.................................. 36% 105% 88% 150% 142%
</TABLE>
* Commencement of UBS Investment Funds Class
** The net investment income per share data was determined by using average
shares outstanding throughout the period
*** Annualized
See accompanying notes to financial statements.
================================================================================
21
<PAGE>
Global Equity Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
The UBS Investment Fund - Global Equity has provided an annualized return of
13.94% since its inception on July 31, 1995. Over the same period, the
annualized return of the benchmark, the MSCI World Equity (Free) Index, was
19.22%. The Fund's performance was achieved with a volatility of 11.37%,
somewhat less risk than its benchmark's volatility of 13.52%. For the full year
the Fund increased 12.02%, lagging the index's unhedged return of 25.12%. Most
regions experienced strong performance in dollar-hedged terms, led by Asia (Ex-
Japan) and Japan and followed by Europe (Ex-U.K.). We gained from our mid-year
decision to increase Japan to neutral and then to an overweight. European market
allocation also added value, as did the underweight to North America. The
overweights to the U.K. and Australia and underweight of Asia (Ex-Japan)
detracted. Our currency management also reduced returns, due to the yen's
strength and euro's weakness.
Global returns in the latter part of the year were largely fueled by investor
enthusiasm for technology and telecommunications stocks, especially those with
an Internet connection. By year-end, growth stocks had significantly overtaken
value stocks on a global basis. In our view, many of these stocks have been bid
up to levels that far exceed underlying value. Thus, the U.S. portion of the
Fund is positioned in industries and stocks that enjoy less lofty valuations and
offer greater upside potential.
The Pacific (Ex-Japan) region has begun to rebound from last year's currency and
banking crises. Japan has shown tentative signs of an economic revival, fueled
by government spending packages and extremely low interest rates. There are also
encouraging signs of restructuring, as well as consolidation in the banking and
financial sectors, easing the fears of a financial meltdown that has weighed
down investor sentiment for much of the decade.
Our strategies position us to take advantage of current valuation discrepancies.
Our largest underweight is to North America and largest overweight to Japan,
while Europe and the U.K. are neutral. Our currency strategy, unsuccessful this
year, maintains an underweight to the expensive yen and pound sterling, with
overweights in the very cheap Euro and the Australian dollar. We are overweight
industrials and materials, where values are most compelling. Our most important
underweights are in those sectors that have risen significantly: information
technology, energy and telecommunications services.
================================================================================
22
<PAGE>
Global Equity Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Total Return
<TABLE>
<CAPTION>
6 months 1 year 3 years 7/31/95*
ended ended ended to
12/31/99 12/31/99 12/31/99 12/31/99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UBS Investment Fund - Global Equity 5.00% 12.02% 11.68% 13.94%
- --------------------------------------------------------------------------------
MSCI World Equity (Free) Index 15.25 25.12 21.81 19.22
- --------------------------------------------------------------------------------
</TABLE>
*Performance inception date of the UBS Investment Fund - Global Equity.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $10,000
This chart shows the growth in the value of an investment in the UBS Investment
Fund - Global Equity and the MSCI World Equity (Free) Index if you had invested
$10,000 on July 31, 1995, and had reinvested all your income dividends and
capital gain distributions through December 31, 1999. No adjustment has been
made for any income taxes payable by shareholders on income dividends and
capital gain distributions. Past performance is no guarantee of future results.
Share price and return will vary with market conditions; investors may realize a
gain or loss upon redemption.
UBS Investment Fund - Global Equity
vs. MSCI World Equity (Free) Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
Brinson Global Equity MSCI World Equity
- ----------------------------------------------------
<S> <C> <C>
7/31/95 $10,000 $10,000
- ----------------------------------------------------
8/31/95 $10,155 $ 9,777
- ----------------------------------------------------
9/30/95 $10,329 $10,066
- ----------------------------------------------------
10/31/95 $10,300 $ 9,909
- ----------------------------------------------------
11/30/95 $10,667 $10,255
- ----------------------------------------------------
12/31/95 $10,993 $10,556
- ----------------------------------------------------
1/31/96 $11,312 $10,753
- ----------------------------------------------------
2/29/96 $11,354 $10,818
- ----------------------------------------------------
3/31/96 $11,539 $10,998
- ----------------------------------------------------
4/30/96 $11,858 $11,256
- ----------------------------------------------------
5/31/96 $11,889 $11,265
- ----------------------------------------------------
6/30/96 $11,925 $11,325
- ----------------------------------------------------
7/31/96 $11,544 $10,925
- ----------------------------------------------------
8/31/96 $11,739 $11,054
- ----------------------------------------------------
9/30/96 $12,110 $11,488
- ----------------------------------------------------
10/31/96 $12,152 $11,567
- ----------------------------------------------------
11/30/96 $12,760 $12,219
- ----------------------------------------------------
12/31/96 $12,787 $12,025
- ----------------------------------------------------
1/31/97 $12,899 $12,172
- ----------------------------------------------------
2/28/97 $13,067 $12,311
- ----------------------------------------------------
3/31/97 $13,011 $12,064
- ----------------------------------------------------
4/30/97 $13,067 $12,460
- ----------------------------------------------------
5/31/97 $13,832 $13,231
- ----------------------------------------------------
6/30/97 $14,351 $13,889
- ----------------------------------------------------
7/31/97 $14,813 $14,531
- ----------------------------------------------------
8/31/97 $14,125 $13,547
- ----------------------------------------------------
9/30/97 $14,711 $14,284
- ----------------------------------------------------
10/31/97 $13,900 $13,534
- ----------------------------------------------------
11/30/97 $13,888 $13,771
- ----------------------------------------------------
12/31/97 $14,048 $13,939
- ----------------------------------------------------
1/31/98 $14,271 $14,330
- ----------------------------------------------------
2/28/98 $15,138 $15,299
- ----------------------------------------------------
3/31/98 $15,757 $15,943
- ----------------------------------------------------
4/30/98 $15,720 $16,099
- ----------------------------------------------------
5/31/98 $15,658 $15,904
- ----------------------------------------------------
6/30/98 $15,520 $16,276
- ----------------------------------------------------
7/31/98 $15,433 $16,251
- ----------------------------------------------------
8/31/98 $13,734 $14,085
- ----------------------------------------------------
9/30/98 $13,932 $14,335
- ----------------------------------------------------
10/31/98 $14,850 $15,634
- ----------------------------------------------------
11/30/98 $15,408 $16,565
- ----------------------------------------------------
12/31/98 $15,897 $17,370
- ----------------------------------------------------
1/31/99 $15,897 $17,752
- ----------------------------------------------------
2/28/99 $15,404 $17,280
- ----------------------------------------------------
3/31/99 $15,885 $17,997
- ----------------------------------------------------
4/30/99 $16,960 $18,709
- ----------------------------------------------------
5/31/99 $16,340 $18,020
- ----------------------------------------------------
6/30/99 $16,960 $18,858
- ----------------------------------------------------
</TABLE>
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
23
<PAGE>
Global Equity Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Market Allocation
As of December 31, 1999 (Unaudited)
Current
Benchmark Strategy
- -----------------------------------------------------------
U.S. 49.0% 38.0%
Australia 1.2 3.8
Austria 0.1 0.0
Belgium 0.4 0.7
Canada 2.1 1.2
Denmark 0.4 0.3
Finland 1.5 1.9
France 5.0 5.8
Germany 5.1 4.1
Hong Kong 1.1 0.2
Ireland 0.2 0.0
Italy 2.1 1.4
Japan 13.4 23.1
Netherlands 2.6 2.0
New Zealand 0.1 0.0
Norway 0.2 0.0
Portugual 0.2 0.2
Singapore 0.5 0.7
Spain 1.3 2.6
Sweden 1.3 2.6
Switzerland 2.8 1.9
United Kingdom 9.4 9.5
Cash Reserves 0.0 0.0
- -----------------------------------------------------------
100.0% 100.0%
Top Ten U.S. Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- -------------------------------------------------------------
1. New York Times Co. 1.79%
2. CIGNA Corp. 1.75
3. First Data Corp. 1.54
4. FDX Corp. 1.41
5. General Instrument Corp. 1.37
6. Compuware Corp. 1.34
7. Burlington Northern Santa Fe Group 1.29
8. St. Jude Medical, Inc. 1.10
9. Electronic Data Systems Corp. 1.07
10. Allergan, Inc. 0.99
- -------------------------------------------------------------
Currency Allocation
As of December 31, 1999 (Unaudited)
Current
Benchmark Strategy
- -------------------------------------------------------------
U.S. 49.0% 46.1%
Australia 1.2 7.3
Canada 2.1 2.1
Denmark 0.4 0.4
Euro 18.5 28.5
Hong Kong 1.1 0.0
Japan 13.4 5.4
New Zealand 0.1 0.0
Norway 0.2 0.2
Singapore 0.5 0.5
Sweden 1.3 5.3
Switzerland 2.8 2.8
United Kingdom 9.4 1.4
- -------------------------------------------------------------
100.0% 100.0%
Top Ten Global (Ex-U.S.) Equity Holdings
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- -------------------------------------------------------------
1. Sony Corp. 2.39%
2. Fujitsu 1.54
3. Banque Nationale de Paris 1.53
4. Seven-Eleven Japan Co., Ltd. 1.33
5. TDK Corp. 1.33
6. Nippon Telegraph & Telephone Corp. 1.24
7. Bayer AG 1.22
8. Orix Corp. 1.16
9. Murata Manufacturing Co., Ltd. 1.13
10. Siemens AG 1.09
- -------------------------------------------------------------
================================================================================
24
<PAGE>
Global Equity Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- --------------------------------------------------------------------
U.S. EQUITIES
Capital Investment
Capital Goods................................. 1.81%
Technology.................................... 6.37
------
8.18
Basic Industries
Chemicals..................................... 0.80
Housing/Paper................................. 3.04
Metals........................................ 1.39
------
5.23
Consumer
Non-Durables.................................. 0.84
Retail/Apparel................................ 1.22
Autos/Durables................................ 1.45
Health: Drugs................................. 2.83
Health: Non-Drugs............................. 2.25
------
8.59
Financial
Banks......................................... 2.58
Non-Banks..................................... 2.52
------
5.10
Utilities
Electric...................................... 2.87
Telephone..................................... 1.62
------
4.49
Transportation................................. 2.70
Services/Misc.................................. 3.97
------
Total U.S. Equities........................ 38.26*
GLOBAL (EX-U.S.) EQUITIES
Aerospace & Military........................... 0.36%
Airlines....................................... 0.43
Appliances & Households........................ 2.91
Autos/Durables................................. 1.07
Banking........................................ 7.41
Beverages and Tobacco.......................... 1.32
Broadcasting & Publishing...................... 2.88
Building Materials............................. 0.23
Business & Public Service...................... 3.45
Chemicals...................................... 2.20
Data Processing................................ 2.40
Electric Components............................ 2.78
Electronics.................................... 5.26
Energy......................................... 0.86
Financial Services............................. 3.31
Food & House Products.......................... 1.80
Forest Products................................ 0.99
Health & Personal Care......................... 3.33
Industrial Components.......................... 0.61
Insurance...................................... 1.40
Merchandising.................................. 2.11
Multi-Industry................................. 0.28
Non-Ferrous Metals............................. 0.30
Real Estate.................................... 0.88
Recreation..................................... 0.98
Telecommunications............................. 6.16
Transportation................................. 1.64
Utilities...................................... 2.53
------
Total Global (Ex-U.S.) Equities.... 59.88
SHORT-TERM INVESTMENTS......................... 0.49*
------
TOTAL INVESTMENTS.................. 98.63
CASH AND OTHER ASSETS,
LESS LIABILITIES............................. 1.37
------
NET ASSETS........................ 100.00%
======
- --------------------------------------------------------------------
* The Fund held a long position in stock index futures on December 31, 1999
which increased U.S. Equity exposure from 38.26% to 39.15%. This adjustment
resulted in a net decrease in the Fund's exposure to Short-Term Investments
from 0.49% to (0.40)%.
- --------------------------------------------------------------------------------
25
<PAGE>
Global Equity Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
-------- -----------
<S> <C> <C>
Equities -- 98.14%
U.S. Equities -- 38.26%
Advanced Micro Devices, Inc. (b)............. 9,000 $ 260,438
Allergan, Inc. (b)........................... 16,600 825,850
Alza Corp. (b)............................... 6,800 235,450
American Standard Cos., Inc. (b)............. 9,100 417,463
Baxter International, Inc.................... 9,500 596,719
Burlington Northern Santa Fe Corp............ 44,300 1,074,275
Central & South West Corp.................... 31,600 632,000
Champion International Corp.................. 7,600 470,725
CIGNA Corp................................... 18,000 1,450,125
Compaq Computer Corp......................... 27,300 738,806
Computer Sciences Corp. (b).................. 8,500 804,312
Compuware Corp............................... 29,800 1,110,050
Corning, Inc................................. 4,400 567,325
Delhaize America, Inc........................ 33 670
Dial Corp.................................... 15,100 367,119
Dominion Resources, Inc...................... 12,800 502,400
Electronic Data Systems Corp................. 13,300 890,269
Eli Lilly and Co............................. 3,500 232,750
Emerson Electric Co.......................... 12,600 722,925
FDX Corp. (b)................................ 28,500 1,166,719
Federal-Mogul Corp........................... 16,900 340,113
Federated Department Stores, Inc............. 4,500 227,531
First Data Corp.............................. 26,004 1,282,322
Fleet Boston Financial Corp.................. 16,829 585,860
Fort James Corp.............................. 15,300 418,838
Gateway, Inc................................. 5,400 389,138
General Instrument Corp. (b)................. 13,400 1,139,000
Genzyme Corp. (b)............................ 3,600 162,000
GreenPoint Financial Corp.................... 14,200 338,138
Household International, Inc................. 14,300 532,675
Illinois Tool Works, Inc..................... 10,600 716,162
Kimberly-Clark Corp.......................... 12,500 815,625
Lafarge Corp................................. 4,800 132,600
Lear Corp. (b)............................... 10,600 339,200
Lexmark International Group, Inc............. 2,900 262,450
Lincoln National Corp........................ 6,200 248,000
Lockheed Martin Corp......................... 12,902 282,231
Masco Corp................................... 17,300 438,987
Mattel, Inc.................................. 19,200 252,000
Monsanto Co.................................. 12,100 431,063
New York Times Co............................ 30,200 1,483,575
Newell Rubbermaid, Inc....................... 9,100 263,900
Nextel Communications, Inc. (b).............. 5,700 587,812
Peco Energy Co............................... 15,110 525,072
Pentair, Inc................................. 4,700 180,950
Philip Morris Companies, Inc................. 14,100 326,944
PNC Bank Corp................................ 7,200 320,400
Praxair, Inc................................. 8,100 407,531
Raytheon Co., Class B........................ 17,900 475,469
Reliaster Financial Corp..................... 4,000 156,750
SBC Communications, Inc...................... 15,700 765,375
Southdown, Inc............................... 5,176 267,211
St. Jude Medical, Inc. (b)................... 29,700 911,419
Torchmark Corp............................... 8,200 238,313
U.S. Bancorp................................. 11,363 270,581
Unisys Corp.................................. 6,700 213,981
United Healthcare Corp....................... 3,700 $ 196,563
W.W. Grainger, Inc........................... 11,000 525,937
Watson Pharmaceutical Co..................... 17,400 623,137
Wells Fargo and Co........................... 15,500 626,781
-----------
Total U.S. Equities.......................... 31,768,024
-----------
Global (Ex-U.S.) Equities -- 59.88%
Australia -- 3.46%
Broken Hill Proprietary Co., Ltd............. 32,150 420,800
Lend Lease Corp., Ltd........................ 12,394 173,081
National Australia Bank Ltd.................. 40,875 623,241
News Corp., Ltd.............................. 69,640 674,015
QBE Insurance Group Ltd...................... 28,778 133,709
Rio Tinto Ltd................................ 11,763 251,876
Westpac Banking Corp., Ltd................... 70,045 481,613
Woolworth's Ltd.............................. 32,600 111,787
-----------
2,870,122
-----------
Belgium -- 0.71%
Electrabel S.A............................... 1,170 381,161
Fortis B..................................... 5,752 206,530
-----------
587,691
-----------
Canada -- 1.30%
Agrium, Inc.................................. 6,200 47,847
Canadian National Railway Co................. 9,000 236,891
Newbridge Networks Corp. (b)................. 16,900 379,036
Potash Corporation of Saskatchewan, Inc...... 3,000 142,631
Shaw Communications, Inc., Class B........... 8,400 275,794
-----------
1,082,199
-----------
Denmark -- 0.30%
Tele Danmark A/S............................. 3,400 251,414
-----------
Finland -- 1.81%
Nokia Oyj.................................... 2,500 451,078
Sampo Insurance Co., Ltd., Series A.......... 6,500 226,090
UPM-Kymmene Corp............................. 20,600 825,974
-----------
1,503,142
-----------
France -- 5.28%
Accor S.A.
Air Liquide.................................. 1,478 246,232
Alcatel Alsthom.............................. 420 95,989
Banque Nationale de Paris.................... 13,792 1,266,374
Carrefour S.A................................ 1,360 249,613
Cie de Saint Gobain.......................... 1,026 192,013
CSF Thomson (b).............................. 9,095 298,940
France Telecom S.A........................... 5,480 721,248
Groupe Danone................................ 1,110 260,362
Michelin, Class B............................ 2,741 107,155
Rhone-Poulenc, Class A....................... 7,110 411,230
Total Fina S.A., Class B (b)................. 2,209 293,394
Vivendi...................................... 2,719 244,342
-----------
4,386,892
-----------
Germany -- 3.89%
Bayer AG..................................... 21,390 1,012,027
Continental AG............................... 19,950 398,956
DaimlerChrysler AG (b)....................... 2,325 181,552
Mannesmann AG................................ 1,450 349,415
</TABLE>
- --------------------------------------------------------------------------------
26
<PAGE>
Global Equity Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
-------- -----------
<S> <C> <C>
Siemens AG.................................. 7,120 $ 906,406
Veba AG..................................... 7,910 384,554
-----------
3,232,910
-----------
Hong Kong -- 0.19%
Henderson Land Development Co., Ltd......... 25,000 160,481
-----------
Italy -- 1.12%
San Paolo-imi Spa........................... 17,811 240,846
Telecom Italia Mobile Spa................... 42,800 475,789
Telecom Italia Spa.......................... 15,000 210,503
-----------
927,138
-----------
Japan -- 23.94%
Acom Co., Ltd............................... 4,500 440,086
Bank of Tokyo-Mitsubushi Ltd................ 36,000 500,845
Benesse Corp................................ 2,400 576,816
Canon, Inc.................................. 18,000 713,986
Dai-Ichi Kangyo Bank........................ 47,000 438,523
East Japan Railway Co....................... 51 274,545
Fanuc....................................... 7,000 889,747
Fujitsu..................................... 28,000 1,274,779
Honda Motor Co.............................. 19,000 705,388
Hoya Corp................................... 4,000 314,591
Kao Corp.................................... 17,000 484,148
Mitsubishi Estate Co., Ltd.................. 41,000 399,365
Murata Manufacturing Co., Inc............... 4,000 937,912
NEC Corp.................................... 35,000 832,641
Nintendo Corp., Ltd......................... 4,900 812,877
Nippon Telegraph & Telephone Corp........... 60 1,025,841
Nomura Securities Co., Ltd.................. 37,000 666,944
NTT Mobile Communications................... 10 383,958
Orix Corporation............................ 4,300 967,085
Santen Pharmaceutical Co., Ltd.............. 14,000 230,472
Secom Co., Ltd.............................. 6,000 659,470
Seven-Eleven Japan Co., Ltd................. 7,000 1,107,909
Softbank Corp............................... 400 382,199
Sony Corp................................... 6,700 1,983,391
Sumitomo Chemical Co........................ 80,000 375,165
Takeda Chemical Industries.................. 15,000 740,071
TDK Corp.................................... 8,000 1,102,828
Yamato Transport Co., Ltd................... 17,000 657,711
-----------
19,879,293
-----------
Netherlands -- 1.85%
ING Groep NV................................ 11,220 674,138
Koninklijke KPN NV.......................... 5,313 516,063
TNT Post Group NV........................... 12,000 342,218
-----------
1,532,419
-----------
Portugal -- 0.22%
EDP Electricidade de Portugal S.A........... 10,400 180,664
-----------
Singapore -- 0.72%
Singapore Press Holdings Ltd................ 16,046 347,695
United Overseas Bank........................ 28,512 251,577
-----------
599,272
-----------
Spain -- 2.49%
Banco Popular S.A........................... 8,673 $ 562,922
Banco Santander Central Hispano, S.A........ 29,081 327,653
Endesa S.A.................................. 9,397 185,659
Tabacalera S.A.............................. 35,268 502,005
Telefonica S.A.............................. 19,674 489,094
-----------
2,067,333
-----------
Sweden -- 2.31%
Electrolux AB, B Shares..................... 17,250 432,108
Ericsson, B Shares.......................... 7,490 479,578
Investor AB, B Shares....................... 16,510 231,909
Nordbanken Holding AB....................... 94,570 553,494
Swedish Match AB............................ 62,670 217,874
-----------
1,914,963
-----------
Switzerland -- 1.82%
Adecco S.A.................................. 852 660,011
Nestle S.A. (Reg.).......................... 175 318,907
Novartis AG (Reg.).......................... 249 363,692
Roche Holding AG (Gen.)..................... 14 165,303
-----------
1,507,913
-----------
United Kingdom -- 8.47%
Allied Zurich PLC (b)....................... 13,975 164,310
AstraZeneca PLC............................. 4,639 192,002
British Airways PLC......................... 55,000 358,121
British Telecommunications PLC.............. 24,000 585,243
Diageo PLC.................................. 46,630 374,267
FKI PLC..................................... 98,405 380,640
Glaxo Wellcome PLC.......................... 9,620 271,331
HSBC Holdings PLC........................... 29,000 403,362
Lloyds TSB Group PLC........................ 40,220 502,053
National Power PLC.......................... 54,500 314,900
Nycomed Amersham PLC........................ 63,000 391,427
Peninsular & Oriental Steam Navigation Co... 11,475 191,047
Powergen PLC................................ 33,000 236,679
Prudential Corp. PLC........................ 22,000 432,582
Reckitt & Colman PLC........................ 14,000 130,984
Reed International PLC...................... 73,000 545,329
Scottish & Southern Energy PLC.............. 52,650 419,403
Tesco PLC................................... 93,250 282,924
Trinity Mirror PLC.......................... 17,175 182,972
Unilever PLC................................ 41,000 300,994
United News & Media PLC..................... 29,000 368,775
-----------
7,029,345
-----------
Total Global (Ex-U.S.) Equities............. 49,713,191
-----------
Total Equities (Cost $65,016,878)........... 81,481,215
-----------
</TABLE>
================================================================================
27
<PAGE>
Global Equity Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
-------- -----------
<S> <C> <C>
Short-Term Investments -- 0.49%
Investment Companies -- 0.49%
Brinson Supplementary Trust U.S. Cash
Management Prime Fund
(Cost $411,539)............................. 411,539 $ 411,539
-----------
Total Investments
(Cost $65,428,417) -- 98.63% (a)............ 81,892,754
Cash and other assets,
less liabilities -- 1.37%................... 1,134,027
-----------
Net Assets -- 100%........................... $83,026,781
===========
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $65,428,417; and net
unrealized appreciation consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation.................................. $ 20,104,252
Gross unrealized depreciation.................................. (3,639,915)
------------
Net unrealized appreciation............................. $ 16,464,337
============
</TABLE>
(b) Non-income producing security.
(c) Denominated in U.S. dollars
FORWARD FOREIGN CURRENCY CONTRACTS
The Global Equity Fund had the following open forward foreign currency contracts
as of December 31, 1999:
<TABLE>
<CAPTION>
Settlement Local Current Unrealized
Date Currency Value Gain/(Loss)
------------ ---------- --------- ------------
<S> <C> <C> <C> <C>
Forward Foreign Currency Buy Contracts
British Pound........................... 06/02/00 4,250,000 6,847,880 (46,945)
Japanese Yen............................ 06/02/00 1,290,000,000 12,922,930 94,245
Forward Foreign Currency Sale Contracts
Australian Dollar....................... 06/02/00 5,200,000 3,407,311 92,050
British Pound........................... 06/02/00 700,000 1,127,886 (1,802)
Canadian Dollar......................... 06/02/00 800,000 553,235 7,979
Euro.................................... 06/02/00 5,800,000 5,880,564 (29,007)
Swedish Krona........................... 06/02/00 24,200,000 2,860,950 (9,921)
Swiss Franc............................. 06/02/00 1,200,000 763,174 (5,318)
---------
Total.............................. $ 101,281
=========
</TABLE>
FUTURES CONTRACTS
The Brinson Global Equity Fund had the following open futures contracts as of
December 31, 1999:
<TABLE>
<CAPTION>
Expiration Current Unrealized
Date Cost Value Gain
------------ ---------- --------- ------------
<S> <C> <C> <C> <C>
Index Futures Buy Contracts
S&P 500 Index, 2 contracts.............. March 2000 $ 714,839 $ 742,100 $ 27,261
</TABLE>
The market value of investments pledged to cover margin requirements for the
open futures positions at December 31, 1999 was $75,000.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
28
<PAGE>
Global Equity Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $65,016,878).................................................... $81,481,215
Affiliated issuers (Cost $411,539)......................................................... 411,539
Foreign currency, at value (Cost $972,985)................................................... 970,107
Cash......................................................................................... 75,727
Receivables:
Dividends................................................................................... 99,356
Interest.................................................................................... 3,394
Variation margin............................................................................ 1,340
Net unrealized appreciation on forward foreign currency contracts............................ 101,281
-----------
TOTAL ASSETS.............................................................................. 83,143,959
-----------
LIABILITIES:
Payables:
Investment advisory fees.................................................................... 49,888
Accrued expenses............................................................................ 67,290
-----------
TOTAL LIABILITIES......................................................................... 117,178
-----------
NET ASSETS.................................................................................... $83,026,781
===========
NET ASSETS CONSIST OF:
Paid in capital.............................................................................. $65,630,618
Accumulated undistributed net investment income.............................................. 8,384
Accumulated net realized gain................................................................ 799,117
Net unrealized appreciation.................................................................. 16,588,662
-----------
NET ASSETS................................................................................ $83,026,781
===========
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share
(Based on net assets of $40,734,080 and 3,182,445 shares issued
and outstanding)......................................................................... $ 12.80
===========
Brinson Class N:
Net asset value, offering price and redemption price per share
(Based on net assets of $231,676 and 18,131 shares issued and
outstanding)............................................................................. $ 12.78
===========
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share
(Based on net assets of $42,061,025 and 3,291,032 shares issued
and outstanding)......................................................................... $ 12.78
===========
</TABLE>
See accompanying notes to financial statements.
================================================================================
29
<PAGE>
Global Equity Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $23,473 for foreign taxes withheld)................................. $ 571,589
Interest.............................................................................. 25,947
-----------
TOTAL INCOME...................................................................... 597,536
-----------
EXPENSES:
Advisory.............................................................................. 335,604
Distribution.......................................................................... 161,840
Printing.............................................................................. 37,929
Professional.......................................................................... 17,780
Other................................................................................. 49,361
-----------
TOTAL EXPENSES.................................................................... 602,514
Expenses deferred by Advisor...................................................... (18,447)
Earnings credits.................................................................. (1,001)
-----------
NET EXPENSES...................................................................... 583,066
-----------
NET INVESTMENT INCOME............................................................. 14,470
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments......................................................................... 5,365,679
Futures contracts................................................................... 28,781
Foreign currency transactions....................................................... (1,663,061)
-----------
Net realized gain................................................................. 3,731,399
-----------
Change in net unrealized appreciation or depreciation on:
Investments and foreign currency.................................................... 230,903
Futures contracts................................................................... 27,261
Forward contracts................................................................... (29,467)
Translation of other assets and liabilities denominated in foreign currency......... 1,575
-----------
Change in net unrealized appreciation or depreciation............................. 230,272
-----------
Net realized and unrealized gain...................................................... 3,961,671
-----------
Net increase in net assets resulting from operations.................................. $ 3,976,141
===========
</TABLE>
See accompanying notes to financial statements.
================================================================================
30
<PAGE>
Global Equity Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year
December 31, 1999 Ended
(Unaudited) June 30, 1999
------------------ ---------------
<S> <C> <C>
OPERATIONS:
Net investment income........................................................... $ 14,470 $ 497,109
Net realized gain............................................................... 3,731,399 5,596,677
Change in net unrealized appreciation or depreciation........................... 230,272 1,132,303
------------ -------------
Net increase in net assets resulting from operations............................ 3,976,141 7,226,089
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income:
Brinson Class I................................................................ (229,745) (384,423)
Brinson Class N................................................................ (985) (2,181)
UBS Investment Funds Class..................................................... (77,667) (219,326)
Distributions from net realized gain:
Brinson Class I................................................................ (3,607,591) (352,100)
Brinson Class N................................................................ (19,859) (2,950)
UBS Investment Funds Class..................................................... (3,756,305) (713,059)
------------ -------------
Total distributions to shareholders............................................ (7,692,152) (1,674,039)
------------ -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold..................................................................... 7,577,518 34,808,631
Shares issued on reinvestment of distributions.................................. 6,445,851 1,462,446
Shares redeemed................................................................. (13,648,784) (37,326,928)
------------ -------------
Net increase (decrease) in net assets resulting from capital share
transactions................................................................ 374,585 (1,055,851)
------------ -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................................... (3,341,426) 4,496,199
------------ -------------
NET ASSETS:
Beginning of period............................................................. 86,368,207 81,872,008
------------ -------------
End of period (including accumulated undistributed net investment income of
$8,384 and $302,311, respectively)............................................. $ 83,026,781 $ 86,368,207
============ =============
</TABLE>
See accompanying notes to financial statements.
================================================================================
31
<PAGE>
Global Equity Fund -- Financial Highlights
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended July 31. 1995*
December 31, 1999 Year Ended June 30, Through
-------------------------------
UBS Investment Funds Class (Unaudited) 1999 1998 1997 June 30, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $ 13.40 $ 12.51 $ 12.73 $ 11.57 $ 10.35
--------- ------- ------- ------- --------
Income from investment operations:
Net investment income........................... (0.03)** 0.04** 0.07 0.08 (0.01)
Net realized and unrealized gain................ 0.64 1.09 0.83 2.13 1.93
--------- ------- ------- ------- --------
Total income from investment
operations................................. 0.61 1.13 0.90 2.21 1.92
--------- ------- ------- ------- --------
Less distributions:
Distributions from net investment
income........................................ (0.02) (0.06) (0.07) (0.06) (0.01)
Distributions from and in excess of net
realized gain................................. (1.21) (0.18) (1.05) (0.99) (0.69)
--------- ------- ------- ------- --------
Total distributions......................... (1.23) (0.24) (1.12) (1.05) (0.70)
--------- ------- ------- ------- --------
Net asset value, end of period..................... $ 12.78 $ 13.40 $ 12.51 $ 12.73 $ 11.57
========= ======= ======= ======= ========
Total return (non-annualized)...................... 5.00% 9.28% 8.15% 20.34% 19.25%
Ratios/Supplemental data:
Net assets, end of period (in 000s)............... $ 42,061 $44,042 $59,147 $61,680 $ 33,012
Ratio of expenses to average net assets:
Before expense reimbursement and
earnings credits.............................. 1.81%*** 1.81% 1.78% 2.00% 2.53%***
After expense reimbursement and
earnings credits.............................. 1.76%*** 1.76% 1.76% 1.75% 1.76%***
Ratio of net investment income to
average net assets:
Before expense reimbursement and
earnings credits.............................. (0.39)%*** 0.29% 0.53% 0.60% (0.19)%***
After expense reimbursement and
earnings credits.............................. (0.34)%*** 0.34% 0.55% 0.85% 0.58%***
Portfolio turnover rate........................... 57% 86% 46% 32% 74%
</TABLE>
* Commencement of UBS Investment Funds Class
** The net investment income per share data was determined by using average
shares outstanding throughout the period
*** Annualized
See accompanying notes to financial statements.
================================================================================
32
<PAGE>
Global Bond Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
Since its performance inception on July 31, 1995, the UBS Investment Fund -
Global Bond has recorded an annualized return of 4.74%, versus the 3.52% return
of its benchmark, the Salomon Smith Barney World Government Bond Index. This
performance record was achieved with significantly less risk or volatility than
the benchmark; 4.82% versus 5.65%, respectively. In calendar year 1999 the Fund
posted a decline of 6.74% compared to the benchmark's decline of 4.26%.
1999 proved to be the worst year for global government bonds since 1994. Yields
rose (and prices therefore fell) in every major market, apart from Japan, by up
to 200 basis points. The main factor behind this development was the growing
momentum of world economic growth, led by the continuing strength of economic
activity in the U.S. As well as encouraging investors to look for higher real
returns, this also gave rise to fears (which were ultimately fulfilled) that
central banks would raise official rates to counter rising inflation risks. The
weakness in government bonds was accentuated by the unwinding of last year's
move to low-risk investments in the aftermath of the Russian default.
The main reason for the relative underperformance of the Fund was market
allocation strategy, specifically a large underweight to the Japanese market.
Despite very low nominal yields, Japanese government bond prices were supported
by the Bank of Japan's "zero interest rate" policy, an attempt to stimulate the
lackluster domestic economy and limit the strength of the yen. In currencies,
underweights to the yen and the pound sterling also hurt performance. However,
active bond management helped, with positions in inflation-linked bonds in
Canada and good relative performance from non-government bonds in the U.S.
component of the Fund.
================================================================================
33
<PAGE>
Global Bond Fund
- --------------------------------------------------------------------------------
[LOGO]
Total Return
<TABLE>
<CAPTION>
6 months 1 year 3 years 7/31/95*
ended ended ended to
12/31/99 12/31/99 12/31/99 12/31/99
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
UBS Investment Fund -- Global Bond -0.07% -6.74% 1.73% 4.74%
- -------------------------------------------------------------------------------------------------------------------------
Salomon Smith Barney World Gov't Bond Index 3.13 -4.26 3.43 3.52
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Performance inception date of the UBS Investment Fund -- Global Bond.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns.
Illustration of an Assumed Investment of $10,000
This chart shows the growth in the value of an investment in the UBS Investment
Fund -- Global Bond and the Salomon Smith Barney World Government Bond Index if
you had invested $10,000 on July 31, 1995, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
UBS Investment Fund -- Global Bond
vs. Salomon Smith Barney World Gov't Bond Index
Wealth Value with Dividends Reinvested
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
LABEL A B
- ---------------------------------------------------------------------------------------------------------------------------
Label UBS Investment Fund Global Bond Salomon Smith Barney World Gov't Bond Index
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 7/31/95 $10,000 $10,000
2 8/31/95 $10,104 $ 9,656
3 9/30/95 $10,218 $ 9,871
4 10/31/95 $10,388 $ 9,944
5 11/30/95 $10,587 $10,057
6 12/31/95 $10,722 $10,162
7 1/31/96 $10,776 $10,037
8 2/29/96 $10,658 $ 9,986
9 3/31/96 $10,701 $ 9,972
10 4/30/96 $10,808 $ 9,932
11 5/31/96 $10,829 $ 9,934
12 6/30/96 $10,917 $10,013
13 7/31/96 $11,036 $10,205
14 8/31/96 $11,113 $10,245
15 9/30/96 $11,287 $10,287
16 10/31/96 $11,527 $10,479
17 11/30/96 $11,734 $10,617
18 12/31/96 $11,654 $10,531
19 1/31/97 $11,484 $10,250
20 2/28/97 $11,484 $10,173
21 3/31/97 $11,313 $10,096
22 4/30/97 $11,240 $10,007
23 5/31/97 $11,569 $10,279
24 6/30/97 $11,703 $10,402
25 7/31/97 $11,654 $10,321
26 8/31/97 $11,606 $10,314
27 9/30/97 $11,837 $10,534
28 10/31/97 $11,984 $10,753
29 11/30/97 $11,825 $10,589
30 12/31/97 $11,791 $10,557
31 1/31/98 $11,892 $10,659
32 2/28/98 $11,968 $10,746
33 3/31/98 $11,829 $10,639
34 4/30/98 $11,980 $10,810
35 5/31/98 $11,968 $10,834
36 6/30/98 $11,970 $10,851
37 7/31/98 $11,957 $10,865
38 8/31/98 $12,097 $11,160
39 9/30/98 $12,671 $11,754
40 10/31/98 $12,938 $12,102
41 11/30/98 $12,849 $11,931
42 12/31/98 $13,156 $12,171
43 1/31/99 $13,130 $12,059
44 2/28/99 $12,717 $11,672
45 3/31/99 $12,691 $11,701
46 4/30/99 $12,717 $11,697
47 5/31/99 $12,478 $11,500
48 6/30/99 $12,278 $11,299
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
================================================================================
34
<PAGE>
Global Bond Fund
- --------------------------------------------------------------------------------
[LOGO] UBS
Investment Funds
<TABLE>
<CAPTION>
Asset Allocation
As of December 31, 1999 (Unaudited)
Current
Benchmark Strategy
- ------------------------------------------------------------
<S> <C> <C>
U.S. 27.1% 33.1%
Australia 0.6 5.1
Austria 0.9 0.0
Belgium 2.4 0.0
Canada 2.9 5.0
Denmark 1.2 4.2
Finland 0.7 0.0
France 7.5 9.2
Germany 7.9 5.7
Ireland 0.3 0.0
Italy 8.1 2.8
Japan 26.6 7.6
Netherlands 2.6 5.6
Portugal 0.4 0.0
Spain 3.3 4.4
Sweden 1.3 6.8
Switzerland 0.4 0.0
TIPS 0.0 1.8
U.K. 5.8 5.8
Euro 0.0 2.9
- ------------------------------------------------------------
100.0% 100.0%
</TABLE>
<TABLE>
<CAPTION>
Currency Allocation
As of December 31, 1999 (Unaudited)
Current
Benchmark Strategy
- -------------------------------------------------------------
<S> <C> <C>
U.S. 27.1% 23.1%
Australia 0.6 6.6
Canada 2.9 2.9
Denmark 1.2 1.2
Euro 34.0 41.9
Japan 26.6 18.6
Sweden 1.3 5.3
Switzerland 0.4 0.4
U.K. 5.9 0.0
- -------------------------------------------------------------
100.0% 100.0%
</TABLE>
<TABLE>
<CAPTION>
Industry Diversification
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- -------------------------------------------------
U.S. BONDS
<S> <C>
Corporate Bonds
Airlines................................ 0.84%
Asset-Backed............................ 2.51
Consumer................................ 1.10
Financial Services...................... 1.44
Food and Housing Products............... 0.31
Publishing.............................. 0.65
Services/Miscellaneous.................. 0.95
Utilities............................... 0.09
------
7.89
------
International Dollar Bonds.............. 4.01
Corporate Mortgage-Backed Securities.... 8.12
U.S. Government Agencies................ 1.12
U.S. Gov't Mortgage-Backed Securities... 5.70
U.S. Government Obligations............. 5.48
------
24.43
------
Total U.S. Bonds..................... 32.32
------
GLOBAL (EX-U.S.) BONDS
Foreign Financial Bonds.................. 7.21
Foreign Government Bonds................. 56.20
------
Total Global (Ex-U.S.) Bonds......... 63.41
SHORT-TERM INVESTMENTS................... 0.58
------
TOTAL INVESTMENTS.................... 96.31
CASH AND OTHER ASSETS,
LESS LIABILITIES........................ 3.69
------
NET ASSETS.......................... 100.00%
======
</TABLE>
================================================================================
35
<PAGE>
Global Bond Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Face
Amount Value
---------- ---------
Bonds -- 95.73%
U.S. Bonds -- 32.32%
U.S. Corporate Bonds -- 7.89%
Cendant Corp., 7.750%, due 12/01/03........... $ 500,000 $ 499,264
Centaur Funding Corp., 144A,
0.000%, due 01/01/80......................... 1,021 398,288
Centaur Funding Corp., 144A,
9.080%, due 01/01/80......................... 153 115,110
Chase Manhattan Auto Owner Trust,
Series 96-C, Class A4,
6.150%, due 03/15/02......................... 125,000 124,798
Comed Transitional Funding Trust,
Series 98-1, Class A7,
5.740%, due 12/25/10......................... 370,000 333,614
Continental Airlines, Inc.,
Series 99-2, 7.056%, due 09/15/09............ 710,000 675,750
Countrywide Capital, Inc.,
8.000%, due 12/15/26......................... 250,000 224,977
Fidelity Investments,
7.570%, due 06/15/29......................... 450,000 432,660
First Bank Corporate Card Master Trust,
97-1, Class A, 6.400%, due 02/15/03.......... 240,000 237,650
Lilly Del Mar, 144A,
7.17%, due 08/01/29.......................... 350,000 348,314
News America Holdings,
7.750%, due 12/01/45......................... 575,000 524,273
Noram Energy Corp.,
6.375%, due 11/01/03......................... 75,000 71,335
Peco Energy Transition Trust,
6.130%, due 03/01/09......................... 540,000 496,876
Premier Auto Trust, Series 96-3,
Class A4, 6.750%, due 11/06/00............... 163,308 163,434
Safeway Inc, 7.250%, due 09/15/04............. 250,000 248,528
The Money Store, Series 98-B, Class AF2,
6.115%, due 05/15/10......................... 4,089 4,089
Time Warner Cos., Inc.,
7.570%, due 02/01/24......................... 560,000 538,668
UCFC Home Equity Loan,
Series 97-C, Class A8,
FRN, 5.6375%, due 09/15/27................... 78,696 78,787
USA Waste Services,
7.000%, due 10/01/04......................... 300,000 270,446
Vanderbilt Mortgage Finance, 98-B,
Class 1A2, 6.120%, due 05/07/09.............. 600,000 593,694
-----------
6,380,555
-----------
Corporate Mortgage-Backed
Securities -- 8.12%
ABN Amro Mortgage Corp., Series 99-2 IA2,
6.300%, due 04/25/29......................... 345,000 328,302
Bear Stearns Mortgage Securities, Inc., 96-7,
Class A4, 6.000%, due 01/28/09............... 200,000 191,924
First Union Lehman Brothers, 97-C2,
Class A2, 6.600%, due 05/18/07............... 240,000 230,009
GE Capital Mortgage Services, Inc., 93-7F,
Class FA3, 6.500%, due 09/25/08.............. 145,184 144,352
Heller Financial Commercial Mortgage
Assets, Series 99-PH1 A1,
6.500%, due 05/15/61......................... 399,560 386,446
LB Commercial Conduit Mortgage
Trust, Series 99-C1 A1,
6.410%, due 08/15/07......................... $ 548,619 $ 528,583
Norwest Asset Securities Corp.,
Series 98-25, Class A5,
6.000%, due 12/25/28......................... 965,000 906,048
PNC Mortgage Securities Corp.,
Series 94-3, Class A8,
7.500%, due 07/25/24......................... 190,000 182,210
Prudential Home Mortgage Securities
Series 96-7, Class A4,
6.750%, due 06/25/11......................... 150,000 143,793
Series 93-43, Class A9,
6.750%, due 10/25/23......................... 201,221 193,428
Residential Accredit Loans, Inc.
Series 98-QS4, Class AI5, 7.000%,
due 03/25/28................................. 625,000 623,656
Series 96-QS4, Class Al10,
7.900%, due 08/25/26......................... 400,000 377,052
Residential Asset Securitization Trust
Series 97-A11, Class A2,
7.000%, due 01/25/28......................... 32,378 32,288
Series 97-A11, Class A6,
7.000%, due 01/25/28......................... 430,000 405,339
Series 98-A1, Class A1,
7.000%, due 03/25/28......................... 72,972 72,562
Series 97-A7, Class A1,
7.250%, due 12/25/27......................... 335,000 321,453
Series 97-A7, Class A1,
7.500%, due 09/25/27......................... 56,102 56,041
Structured Asset Securities Corp.
Series 98-RF2, 144A,
8.582%, due 07/15/27......................... 315,780 324,464
Series 98-RF1, Class A,
8.712%, due 03/15/27......................... 208,384 214,701
Structured Mortgage Asset Residential
Trust, Series 96-5C, Class CI,
7.150%, due 03/25/23......................... 925,000 904,363
-----------
6,567,014
-----------
International Dollar Bonds -- 4.01%
National Australia Bank, FRN,
6.40%, due 12/10/07.......................... 640,000 623,858
Petroleos de Venezuela S.A.,
8.750%, due 02/15/04......................... 500,000 488,159
Banco Santiago S.A.,
7.000%, due 07/18/07......................... 400,000 358,889
Empresa National Electric,
7.875%, due 10/01/69......................... 500,000 385,159
Korea Development Bank,
7.125%, due 09/17/01......................... 300,000 297,672
Banque Centrale de Tunisie,
8.250%, due 09/19/27......................... 400,000 325,500
Credit Suisse-London, 144A, 7.900%,
Resettable Perpetual Preferred,
7.900%, due 05/01/07......................... 500,000 475,729
Royal Bank of Scotland, Resettable
Perpetual Preferred,
7.375%, due 04/29/49......................... 300,000 286,081
-----------
3,241,047
-----------
================================================================================
36
<PAGE>
Global Bond Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- -------------------------------------------------------------------------------
Face
Amount Value
---------- -----------
U.S. Gov't Mortgage-Backed Securities -- 5.70%
Fannie Mae Whole Loan,
Series 95-W3, Class A,
9.000%, due 04/25/25.......................... $ 8,912 $ 9,204
Federal Home Loan Mortgage Corp.
7.000%, due 10/15/13.......................... 68,215 64,952
7.238%, due 05/01/26.......................... 17,453 17,519
Federal Home Loan Mortgage Corp. Gold
8.000%, due 05/01/23.......................... 42,505 43,004
9.000%, due 03/01/24.......................... 116,158 121,609
Federal National Mortgage Association
6.000%, due 01/01/29.......................... 155,793 142,632
6.500%, due 03/01/19.......................... 120,439 115,057
6.500%, due 02/01/29.......................... 593,700 559,748
7.000%, due 12/01/24.......................... 402,571 389,346
7.000%, due 03/01/29.......................... 27,267 26,390
7.500%, due 07/01/10.......................... 762,377 768,657
7.500%, due 12/01/23.......................... 317,354 314,030
7.500%, due 05/18/25.......................... 250,000 246,780
7.500%, due 12/01/27.......................... 638,881 632,189
7.890%, due 04/01/26.......................... 175,960 178,991
8.000%, due 03/01/11.......................... 68,243 69,622
8.500%, due 07/01/22.......................... 7,930 8,213
Federal National Mortgage Association Strips,
0.000%, due 02/01/28.......................... 141,218 91,645
8.000%, due 08/01/23.......................... 185,330 56,967
FNCI, 8.000%, due 02/01/13...................... 72,365 73,827
Government National Mortgage Association,
7.000%, due 08/15/24.......................... 352,905 343,816
7.000%, due 07/15/25.......................... 49,590 48,300
7.500%, due 08/15/23.......................... 60,521 60,204
7.500%, due 12/15/23.......................... 94,179 93,718
7.500%, due 01/15/24.......................... 65,741 65,368
----------
4,541,788
----------
U.S. Government Agencies -- 1.12%
Jordan Aid, 8.750%, due 09/01/19................ 452,530 486,597
Tennesse Valley Authority,
6.375%, due 06/15/05.......................... 500,000 481,834
----------
968,431
----------
U.S. Government Obligations -- 5.48%
U.S. Treasury Bond,
8.000%, due 11/15/21.......................... 1,985,000 2,251,734
8.750%, due 05/15/17.......................... 300,000 358,125
U.S. Treasury Inflation Indexed Note,
3.625%, due 04/15/28.......................... 570,000 529,754
U.S. Treasury Note
5.625%, due 05/15/08.......................... 640,000 602,000
5.750%, due 08/15/03.......................... 700,000 685,344
-----------
4,426,957
-----------
Total U.S. Bonds................................ 26,125,792
-----------
Global (Ex-U.S.) Bonds -- 63.41%
Australia -- 5.19%
International Bank for Recon & Dev
5.500%, due 05/14/03.......................AUD 1,800,000 $ 1,131,331
Queensland Treasury Corp.-
Global Note
6.500%, due 06/14/05.......................... 1,130,000 723,572
8.000%, due 09/14/07.......................... 3,400,000 2,338,654
-----------
4,193,557
-----------
Canada -- 6.85%
Government of Canada
4.250%, due 12/01/21.......................CAD 3,730,000 2,996,234
6.000%, due 06/01/08.......................... 2,030,000 1,378,316
Province of Ontario,
7.500%, due 01/19/06........................... 1,600,000 1,161,056
-----------
5,535,606
-----------
Denmark -- 6.66%
City of Copenhagen,
6.250%, due 03/15/01........................DKK 2,400,000 329,368
Depfa Pfandbrief Bank,
5.750%, due 03/04/09........................EUR 2,250,000 2,284,710
Great Belt, 7.000%, due 09/02/03.............DKK 3,650,000 515,097
Kingdom of Denmark
7.000%, due 11/15/07........................... 1,400,000 206,067
7.000%, due 11/10/24........................... 4,800,000 718,927
8.000%, due 11/15/01........................... 9,300,000 1,326,531
-----------
5,380,700
-----------
France -- 7.74%
Government of France (BTAN),
7.750%, due 04/12/00.......................EUR 609,796 618,470
Government of France (OAT)
4.000%, due 10/25/09........................... 200,000 178,537
6.000%, due 10/25/25........................... 400,000 403,364
7.500%, due 04/25/05........................... 902,368 1,005,385
7.500%, due 04/25/05........................... 1,097,632 1,222,942
8.500%, due 04/25/23........................... 1,350,000 1,786,540
9.500%, due 01/25/01........................... 990,000 1,039,807
-----------
6,255,045
-----------
Germany -- 6.09%
Bundesrepublik Deutschland,
5.250%, due 02/21/01.......................... 390,000 396,838
5.625%, due 01/04/28.......................... 380,000 362,817
6.250%, due 04/26/06.......................... 1,850,000 1,969,963
International Bank of Recon & Dev,
7.125%, due 04/12/05.......................... 2,019,603 2,196,114
-----------
4,925,732
-----------
Italy -- 2.07%
Republic of Italy (BTP),
7.750%, due 11/01/06.......................... 930,000 1,053,475
9.000%, due 10/01/03.......................... 550,001 617,477
-----------
1,670,952
-----------
Japan -- 7.28%
Government of Japan
3.000%, due 09/20/05.......................JPY 110,000,000 1,175,712
4.600%, due 09/20/04.......................... 415,000,000 4,712,564
-----------
5,888,276
-----------
================================================================================
37
<PAGE>
Global Bond Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
- -------------------------------------------------------------------------------
Face
Amount Value
-------- -------
Netherlands -- 5.70%
LKB Baden-Wuerttemberg Finance,
6.500%, due 09/15/08.................EUR 818,067 $ 861,807
Netherlands Government
3.000%, due 02/15/02.................... 2,650,000 2,584,627
5.500%, due 01/15/28.................... 1,050,000 980,945
7.500%, due 04/15/10.................... 160,000 184,681
-----------
4,612,060
-----------
Spain -- 3.90%
Bonos Y Oblig Del Estado,
3.250%, due 01/31/05.................... 1,400,000 1,283,999
Government of Spain,
7.350%, due 03/31/07.................... 1,670,000 1,871,762
-----------
3,155,761
-----------
Sweden -- 6.32%
Government of Sweden
6.000%, due 02/09/05.................SEK 3,500,000 419,113
6.750%, due 05/05/14.................... 12,400,000 1,561,420
10.250%, due 05/05/03................... 23,300,000 3,131,517
-----------
5,112,050
-----------
United Kingdom -- 5.61%
Abbey National Treasury Service,
6.500%, due 03/05/04.................GBP 450,000 $ 712,141
British Gas PLC,
8.125%, due 03/31/03.................... 195,000 320,537
UK Treasury
7.250%, due 12/07/07.................... 820,000 1,441,866
5.750%, due 12/07/09.................... 1,250,000 2,056,942
-----------
4,531,486
-----------
Total Global (Ex-U.S.) Bonds............. 51,261,225
-----------
Total Bonds (Cost $82,090,416)........... 77,387,017
-----------
Shares
--------
Short-Term Investments -- 0.58%
Investment Companies -- 0.58%
Brinson Supplementary Trust U.S. Cash
Management Prime Fund
(Cost $469,060)......................... 469,060 $ 469,060
-----------
Total Investments
(Cost $82,559,476) -- 96.31%............ 77,856,077
Cash and other assets,
less liabilities -- 3.69%............... 2,986,424
-----------
Net Assets -- 100%....................... $80,842,501
===========
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $82,559,476; and net
unrealized depreciation consisted of:
Gross unrealized appreciation....................... $ 331,039
Gross unrealized depreciation....................... (5,034,438)
-----------
Net unrealized depreciation.................... $(4,703,399)
===========
(b) Non-income producing security.
FRN: Floating Rate Note
TBA: Security is subject to delayed delivery.
144A: 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. At December 31,
1999, the value of these securities amounted to $2,094,881 or 2.59% of net
assets.
Resettable Perpetual Preferred: A bond with either no maturity date or a
maturity date that is so far in the future that the bond will pay interest
indefinitely.
The issuer generally retains the right to call such a bond.
FORWARD FOREIGN CURRENCY CONTRACTS
The Global Bond Fund had the following open forward foreign currency contracts
as of December 31, 1999:
<TABLE>
<CAPTION>
Settlement Local Current Unrealized
Date Currency Value Gain/(Loss)
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Forward Foreign Currency Buy Contracts
British Pound........................... 03/01/00 5,650,000 $ 9,106,441 $ (57,066)
Canadian Dollar......................... 03/01/00 4,700,000 510,169 (86,143)
Danish Kroner........................... 03/01/00 19,500,000 2,637,430 152,269
Euro.................................... 03/01/00 3,200,000 3,222,298 108,261
Japanese Yen............................ 03/01/00 650,000,000 7,249,634 (62,649)
Swedish Krona........................... 03/01/00 12,000,000 1,410,533 51,099
Forward Foreign Currency Sale Contracts
Australian Dollar....................... 03/01/00 2,200,000 1,440,724 23,329
British Pound........................... 03/01/00 2,850,000 4,593,514 (16,514)
Euro.................................... 03/01/00 13,10,000 13,191,284 (769,386)
Japanese Yen............................ 03/01/00 1,620,000,000 28,187,534 1,021,604
----------
Total.............................. $ 364,804
==========
</TABLE>
See accompanying notes to financial statements.
================================================================================
38
<PAGE>
Global Bond Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $82,090,416)....................................................................... $ 77,387,017
Affiliated issuers (Cost $469,060)............................................................................ 469,060
Cash............................................................................................................ 931
Foreign currency, at value (Cost $893,716)...................................................................... 887,157
Receivables:
Investment securities sold.................................................................................... 14,677
Interest...................................................................................................... 1,786,202
Net unrealized appreciation on forward foreign currency contracts............................................... 364,804
-------------
TOTAL ASSETS................................................................................................ 80,909,848
-------------
LIABILITIES:
Payables:
Investment advisory fees...................................................................................... 44,481
Accrued expenses.............................................................................................. 22,866
-------------
TOTAL LIABILITIES........................................................................................... 67,347
-------------
NET ASSETS....................................................................................................... $ 80,842,501
=============
NET ASSETS CONSIST OF:
Paid in capital................................................................................................ $ 88,899,967
Accumulated undistributed net investment income................................................................ 1,916,511
Accumulated net realized loss.................................................................................. (5,588,837)
Net unrealized depreciation.................................................................................... (4,385,140)
-------------
NET ASSETS.................................................................................................. $ 80,842,501
=============
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share (Based on net assets of
$77,217,107 and 8,533,100 shares issued and outstanding)..................................................... $ 9.05
=============
Brinson Class N:
Net asset value, offering price and redemption price per share
(Based on net assets of $1,162 and 127 shares issued and outstanding)........................................ $ 9.15
=============
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share
(Based on net assets of $3,624,232 and 401,023 shares issued and outstanding)................................ $ 9.04
=============
</TABLE>
See accompanying notes to financial statements.
================================================================================
39
<PAGE>
Global Bond Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest (net of $32,604 for foreign taxes withheld)....................................................... $ 2,338,848
Dividends.................................................................................................. 25,477
-----------
TOTAL INCOME............................................................................................ 2,364,325
-----------
EXPENSES:
Advisory................................................................................................... 339,912
Registration............................................................................................... 39,560
Professional............................................................................................... 25,362
Distribution............................................................................................... 11,340
Other...................................................................................................... 42,182
-----------
TOTAL OPERATING EXPENSES.............................................................................. 458,356
Expenses deferred by Advisor.......................................................................... (38,065)
Earnings credits...................................................................................... (63)
-----------
NET OPERATING EXPENSES................................................................................ 420,228
Interest Expense...................................................................................... 27,240
-----------
NET INVESTMENT INCOME................................................................................. 1,916,857
-----------
NET REALIZED ANDUN REALIZED GAIN (LOSS):
Net realized loss on:
Investments............................................................................................... (1,315,340)
Foreign currency transactions............................................................................. (2,284,183)
-----------
Net realized loss....................................................................................... (3,599,523)
-----------
Change in net unrealized appreciation or depreciation on:
Investments and foreign currency.......................................................................... 298,082
Forward contracts......................................................................................... 1,689,713
Translation of other assets and liabilities denominated in foreign currency............................... 7,206
-----------
Change in net unrealized appreciation or depreciation................................................... 1,995,001
-----------
Net realized and unrealized loss........................................................................... (1,604,522)
-----------
Net increase in net assets resulting from operations....................................................... $ 312,335
===========
</TABLE>
See accompanying notes to financial statements.
================================================================================
40
<PAGE>
Global Bond Fund -- Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year
December 31, 1999 Ended
(Unaudited) June 30, 1999
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................................. $ 1,916,857 $ 5,139,936
Net realized gain (loss).......................................................... (3,599,523) 1,499,627
Change in net unrealized appreciation or depreciation............................. 1,995,001 (6,052,418)
----------------- -----------------
Net increase in net assets resulting from operations.............................. 312,335 587,145
----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income:
Brinson Class I.................................................................. (1,118,349) (5,705,972)
Brinson Class N.................................................................. -- (13,166)
UBS Investment Funds Class....................................................... (43,991) (180,397)
Distributions from net realized gain:
Brinson Class I.................................................................. (82,557) (925,451)
Brinson Class N.................................................................. (1) (811)
UBS Investment Funds Class....................................................... (4,026) (35,005)
----------------- -----------------
Total distributions to shareholders............................................... (1,248,924) (6,860,802)
----------------- -----------------
Capital share transactions:
Shares sold....................................................................... 10,208,441 115,882,090
Shares issued on reinvestment of distributions.................................... 1,080,310 4,872,310
Shares redeemed................................................................... (27,855,393) (111,795,220)
----------------- -----------------
Net increase (decrease) in net assets resulting from capital share transactions... (16,566,642) 8,959,180
----------------- -----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS....................................... (17,503,231) 2,685,523
----------------- -----------------
NET assets:
Beginning of period............................................................... 98,345,732 95,660,209
----------------- -----------------
End of period (including accumulated undistributed net investment income of
$1,916,511 and $1,161,994, respectively)......................................... $ 80,842,501 $ 98,345,732
================= =================
</TABLE>
See accompanying notes to financial statements.
================================================================================
41
<PAGE>
Global Bond Fund -- Financial Statements
- --------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended July 31, 1995*
December 31, 1999 Year Ended June 30, Through
---------------------------------------
UBS Investment Funds Class (Unaudited) 1999 1998 1997 June 30, 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $ 9.16 $ 9.39 $ 9.61 $ 10.02 $ 10.56
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income........................... 0.19** 0.34** 0.38** 0.62 0.78
Net realized and unrealized gain (loss)......... (0.19) (0.07) (0.18) 0.10 0.15
-------- -------- -------- -------- --------
Total income from investment operations....... -- 0.27 0.20 0.72 .93
-------- -------- -------- -------- --------
Less distributions:
Distributions from and in excess of
net investment income......................... (0.11) (0.42) (0.25) (0.94) (1.37)
Distributions from net realized gain............ (0.01) (0.08) (0.17) (0.19) (0.10)
-------- -------- -------- -------- --------
Total distributions........................... (0.12) (0.50) (0.42) (1.13) (1.47)
-------- -------- -------- -------- --------
Net asset value, end of period..................... $ 9.04 $ 9.16 $ 9.39 $ 9.61 $ 10.02
======== ======== ======== ======== ========
Total return (non-annualized)...................... (0.07)% 2.58% 2.28% 7.20% 9.17%
Ratios/Supplemental data:
Net assets, end of period (in 000s)............... $ 3,624 $ 4,429 $ 4,377 $ 4,110 $ 3,653
Ratio of expenses to average net assets:
Before expense reimbursement and
earnings credits.............................. 1.53%*** 1.39% 1.45% 1.81% 2.14%
After expense reimbursement and
earnings credits****.......................... 1.45%*** N/A 1.39% 1.39% 1.39%
Ratio of net investment income to average net assets:
Before expense reimbursement and
earnings credits.............................. 3.67%*** 3.56% 3.98% 4.41% 4.49%
After expense reimbursement and
earnings credits.............................. 3.81%*** N/A 4.04% 4.83% 5.24%
Portfolio turnover rate........................... 35% 138% 151% 235% 184%
</TABLE>
* Commencement of UBS Investment Funds Class
** The net investment income per share data was determined by using average
shares outstanding throughout the year
*** Annualized
**** The ratio of net operating expenses to average net assets for the six
months ended December 31, 1999, was 1.39%.
N/A = Not Applicable
See accompanying notes to financial statements.
================================================================================
42
<PAGE>
UBS Investment Funds -- Notes To Financial Statements
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
The Brinson Funds (the "Trust") is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended, as a series
company. The Trust currently offers shares of eleven series: Global Fund, Global
Equity Fund, Global Bond Fund, U.S. Balanced Fund, U.S. Equity Fund, U.S. Large
Capitalization Equity Fund, U.S. Large Capitalization Growth Fund, U.S. Small
Capitalization Growth Fund, U.S. Bond Fund, High Yield Fund and Global (Ex-U.S.)
Equity Fund (each a "Fund" and collectively, the "Funds"). Each Fund has three
classes of shares outstanding, Brinson Class I, Brinson Class N and UBS
Investment Funds Class. There are an unlimited number of shares of each class
with par value of $0.001 authorized. Each share represents an identical interest
in the investments of the Funds and has the same rights. The financial
highlights of the UBS Investment Funds Class are presented separately. The
following is a summary of significant accounting policies consistently followed
by the Global Fund, Global Equity Fund and Global Bond Fund in the preparation
of their financial statements.
A. Investment Valuation: Securities for which market quotations are readily
available are valued at the last available sales price on the exchange or market
on which they are principally traded, or lacking any sales, at the last
available bid price on the exchange or market on which such securities are
principally traded. U.S. equity securities traded over-the-counter are priced at
the most recent bid price. Securities for which market quotations are not
readily available, including restricted securities which are subject to
limitations on their sale, are valued at fair value as determined in good faith
by or under the direction of the Trust's Board of Trustees. Investments in
affiliated investment companies are valued each day based on the closing net
asset value of the respective fund. Debt securities are valued at the most
recent bid price by using market quotations or independent pricing services.
Futures contracts are valued at the settlement price established each day on the
exchange on which they are traded. Forward foreign currency contracts are valued
daily using quoted forward exchange rates. Short-term obligations with a
maturity of 60 days or less are valued at amortized cost, which approximates
market value.
B. Foreign Currency Translation: Investment securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollars
using the WM/Reuters closing spot rates as of 4:00 p.m. London time. Purchases
and sales of portfolio securities, commitments under forward foreign currency
contracts and income receipts are translated at the prevailing exchange rate of
the date of each transaction. Realized and unrealized foreign exchange gains or
losses on investments are included as a component of net realized and unrealized
gain or loss on investments in the statement of operations.
C. Investment Transactions: Investment transactions are accounted for on a
trade date basis. Gains and losses on securities sold are determined on an
identified cost basis.
D. Investment Income: Interest income, which includes the amortization of
premiums and discounts, is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date, except that certain dividends from foreign
securities are recorded as the information becomes available.
E. Federal Income Taxes: It is the policy of the Funds to comply with all
requirements of the Internal Revenue Code (the "Code") applicable to regulated
investment companies and to distribute substantially all of their taxable income
to their shareholders. The Funds have met the requirements of the Code
applicable to regulated investment companies for the six months ended December
31, 1999, therefore, no federal income tax provision was required.
F. Distributions to Shareholders: It is the policy of the Funds to distribute
their respective net investment income on a semi-annual basis and net capital
gains, if any, annually. Distributions to shareholders are recorded on the ex-
dividend date. Income and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments for foreign currency transactions. Differences in dividends per share
between the classes are due to distribution expenses.
G. Income and Expense Allocation: All income earned and expenses incurred by
each Fund will be borne on a pro rata basis by each of the classes, except that
the Brinson Class I will not incur any of the distribution expenses of the
Brinson Class N nor the UBS Investment Funds Class.
================================================================================
43
<PAGE>
UBS Investment Funds -- Notes To Financial Statements
- --------------------------------------------------------------------------------
H. Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results may differ from those
estimates.
I. Earnings Credits: The Funds have entered into an arrangement with their
custodian whereby interest earned on uninvested cash balances was used to offset
a portion of the Fund's expenses. This amount is reflected in the statement of
operations.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Brinson Partners, Inc. (the "Advisor"), a registered investment advisor,
provides the Funds with investment management services. As compensation for
these services, each Fund pays the Advisor a monthly fee based on each Fund's
respective average daily net assets. The Advisor has agreed to waive its fees
and reimburse each Fund to the extent that total annualized operating expenses
exceed a specified percentage of each Fund's respective average daily net
assets. Investment advisory fees for the six months ended December 31, 1999,
were as follows:
<TABLE>
<CAPTION>
UBS Investment
Advisory Brinson Class I Brinson Class N Funds Class Advisory Fees
Fee Expense Cap Expense Cap Expense Cap Fees Deferred
-------- --------------- --------------- -------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Global Fund...................... 0.80% 1.10% 1.35% 1.75% $1,641,535 $ --
Global Equity Fund............... 0.80 1.00 1.25 1.76 335,604 18,447
Global Bond Fund................. 0.75 0.90 1.15 1.39 339,912 38,065
</TABLE>
Certain officers of the Funds are also officers and directors of the Advisor.
All officers serve without direct compensation from the Funds. Trustees' fees
paid to unaffiliated trustees for the six months ended December 31, 1999 were
$4,268, $2,230 and $2,208 for the Global Fund, Global Equity Fund and Global
Bond Fund, respectively.
The Global Fund invests in shares of certain affiliated investment companies
also sponsored by the Advisor. These investments represented 21.15% of the
Fund's total net assets at December 31, 1999. Activity for the six months ended
December 31, 1999 was as follows:
<TABLE>
<CAPTION>
Net Change in
Sales Realized Net Unrealized Interest
Affiliates Purchases Proceeds Gain/(Loss) Gain/(Loss) Income Value
- ---------- ------------ ------------ ------------ -------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Brinson Post-Venture Fund............... $ -- $ -- $ -- $ 80,510 $ -- $ 7,740,955
Brinson High Yield Fund................. -- 6,000,000 1,029,066 (749,294) -- 8,501,106
Brinson Emerging Markets Equity Fund.... -- 2,728,450 (620,659) 4,132,636 -- 18,326,811
Brinson Emerging Markets Debt Fund...... -- 4,000,000 769,030 2,514,137 -- 23,996,711
Brinson Supplementary Trust U.S. Cash
Management Prime Fund.................. 214,667,924 234,755,971 -- -- 300,209 12,006,635
</TABLE>
The Global Equity Fund and Global Bond Fund also invest in shares of the Brinson
Supplementary Trust U.S. Cash Management Prime Fund ("Supplementary Trust"). The
Supplementary Trust is managed by the Advisor and is offered as a cash
management option to mutual funds and other accounts managed by the Advisor. The
Supplementary Trust charges no management fees. Distributions received from the
Supplementary Trust are reflected as interest income in the statement of
operations. Amounts relating to those investments at the six months ended
December 31, 1999 were as follows:
<TABLE>
<CAPTION>
% of
Sales Interest Net
Affiliates Purchases Proceeds Income Value Assets
- ---------- ---------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Global Equity Fund..... $15,177,471 $15,788,120 $ 24,988 $411,539 0.49%
Global Bond Fund....... 20,533,527 26,203,701 45,065 469,060 0.58
</TABLE>
================================================================================
44
<PAGE>
UBS Investment Funds -- Notes To Financial Statements
- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Investment transactions for the six months ended December 31, 1999, excluding
short-term investments, were as follows:
Proceeds
Purchases From Sales
------------ ------------
Global Fund........................... $142,746,662 $283,169,079
Global Equity Fund.................... 47,047,973 56,616,119
Global Bond Fund...................... 31,227,121 62,903,677
4. FORWARD FOREIGN CURRENCY CONTRACTS
The Funds may engage in portfolio hedging with respect to changes in currency
exchange rates by entering into forward foreign currency contracts to purchase
or sell currencies. Forward foreign currency contracts are also used to achieve
currency allocation strategies. A forward foreign currency contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. Risks associated with such contracts include movement
in the value of the foreign currency relative to the U.S. dollar and the ability
of the counterparty to perform. The unrealized gain, if any, represents the
credit risk to each Fund on a forward foreign currency contract. Fluctuations in
the value of forward foreign currency contracts are recorded daily as net
unrealized gains or losses. The Funds realize a gain or loss upon settlement of
the contracts. The statement of operations reflects net realized and net
unrealized gains and losses on these contracts. The counterparty to all forward
foreign currency contracts at and for the six months ended December 31, 1999,
was an affiliate of the Funds' custodian.
5. FUTURES CONTRACTS
The Funds may purchase or sell exchange-traded futures contracts, which are
contracts that obligate the Funds to make or take delivery of a financial
instrument or the cash value of a securities index at a specified future date at
a specified price. The Funds enter into such contracts to hedge a portion of
their portfolio. Risks of entering into futures contracts include the
possibility that there may be an illiquid market or that a change in the value
of the contract may not correlate with changes in the value of the underlying
securities. Upon entering into a futures contract, the Funds are required to
deposit either cash or securities (initial margin). Subsequent payments
(variation margin) are made or received by the Funds, generally on a daily
basis. The variation margin payments are equal to the daily changes in the
contract value and are recorded as net unrealized gains or losses. The Funds
recognize a realized gain or loss when the contract is closed or expires. The
statement of operations reflects net realized and net unrealized gains and
losses on these contracts.
6. SECURITY LENDING
The Global Fund loaned securities to certain brokers, with the Fund's custodian
acting as the Fund's lending agent. The Fund earned negotiated lenders' fees,
which are included in interest income in the statement of operations. The Fund
monitors the market value of securities loaned on a daily basis and initially
requires collateral against the loaned securities in an amount at least equal to
102% of the value of domestic securities loaned and 105% of the value of non-
U.S. securities loaned. The cash collateral received is invested in interest-
bearing securities and is included in the schedule of investments. The value of
loaned securities and related collateral outstanding at December 31, 1999 were
as follows:
Value of Loaned Cash Collateral
Securities Received
--------------- ---------------
Global Fund ....................... $56,204,165 $57,479,350
=============== ===============
7. DISTRIBUTION PLANS
The Trust has adopted distribution plans (the "Plans") pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, for the Brinson Class N
and the UBS Investment Funds Class. Each Plan governs payments made for the
expenses incurred in the promotion and distribution of the Brinson Class N and
the UBS Investment Funds Class. Annual fees under the Brinson Class N Plan shall
not exceed 0.25% of the average daily net assets of the Brinson Class N of each
of the Funds. Annual fees under the UBS Investment Funds Plan, which include a
0.25% service fee, total 0.65%, 0.76% and 0.49% of the average daily net assets
of the UBS Investment Funds Class of the Global Fund, Global Equity Fund and
Global Bond Fund, respectively.
8. LINE OF CREDIT
The Trust has entered into an agreement with Chase Manhattan Bank to provide a
364-day $100 million committed line of credit to the Funds. Borrowings will be
made for temporary purposes. Interest on amounts borrowed is calculated based on
the Federal Funds Rate
================================================================================
45
<PAGE>
UBS Investment Funds -- Notes To Financial Statements
- --------------------------------------------------------------------------------
plus 0.50%. The Funds pay an annual commitment fee of 0.08% of the average daily
unutilized balance of the line of credit. During the six months ended December
31, 1999, the Global Fund and Global Bond Fund had total borrowings of
$9,500,000 and $31,000,000 outstanding for two days and six days under the
agreement, respectively. The Global Equity Fund had no borrowings under the
agreement.
9. CAPITAL TRANSACTIONS
Capital stock transactions were as follows:
<TABLE>
<CAPTION>
Global Fund
--------------------------------------------------
Six Months Ended Year Ended
December 31, 1999 June 30, 1999
------------------------ ------------------------
Shares Value Shares Value
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I.................... 13,313,712 $154,829,980 33,634,272 $404,497,836
Brinson Class N.................... 5,699 67,133 31,878 401,372
UBS Investment Funds Class......... 26,354 307,397 469,115 5,622,287
---------- ------------ ---------- ------------
Total Sales....................... 13,345,765 $155,204,510 34,135,265 $410,521,495
========== ============ ========== ============
Dividend Reinvestment:
Brinson Class I.................... 1,590,665 $ 17,592,753 3,914,936 $ 45,438,730
Brinson Class N.................... 6,165 68,059 12,826 148,599
UBS Investment Funds Class......... 78,388 863,834 201,293 2,326,850
---------- ------------ ---------- ------------
Total Dividend Reinvestment....... 1,675,218 $ 18,524,646 4,129,055 $ 47,914,179
========== ============ ========== ============
Redemptions:
Brinson Class I.................... 25,452,650 $297,617,004 50,809,625 $617,784,220
Brinson Class N.................... 23,828 280,466 4,388 53,226
UBS Investment Funds Class......... 670,655 7,672,100 1,220,493 14,718,874
---------- ------------ ---------- ------------
Total Redemptions................. 26,147,133 $305,569,570 52,034,506 $632,556,320
========== ============ ========== ============
<CAPTION>
Global Equity Fund
--------------------------------------------------
Six Months Ended Year Ended
December 31, 1999 June 30, 1999
------------------------ ------------------------
Shares Value Shares Value
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I.................... 415,195 $ 5,374,301 2,413,314 $ 30,206,170
Brinson Class N.................... -- -- 15,911 200,000
UBS Investment Funds Class......... 169,249 2,203,217 352,164 4,402,461
---------- ------------ ---------- ------------
Total Sales....................... 584,444 $ 7,577,518 2,781,389 $ 34,808,631
========== ============ ========== ============
Dividend Reinvestment:
Brinson Class I.................... 257,009 $ 3,143,195 54,126 $ 661,376
Brinson Class N.................... 1,707 20,844 426 5,130
UBS Investment Funds Class......... 268,571 3,281,812 66,261 795,940
---------- ------------ ---------- ------------
Total Dividend Reinvestment....... 527,287 $ 6,445,851 120,813 $ 1,462,446
========== ============ ========== ============
Redemptions:
Brinson Class I.................... 626,264 $ 8,104,601 1,142,595 $ 14,484,716
Brinson Class N.................... -- -- -- --
UBS Investment Funds Class......... 432,319 5,544,183 1,860,700 22,842,212
---------- ------------ ---------- ------------
Total Redemptions................. 1,058,583 $ 13,648,784 3,003,295 $ 37,326,928
========== ============ ========== ============
</TABLE>
================================================================================
46
<PAGE>
UBS Investment Funds -- Notes To Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Global Bond Fund
--------------------------------------------------
Six Months Ended Year Ended
December 31, 1999 June 30, 1999
------------------------ ------------------------
Shares Value Shares Value
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I.................... 1,096,853 $ 10,137,515 11,338,295 $110,539,879
Brinson Class N.................... 129 1,195 117,021 1,120,104
UBS Investment Funds Class......... 7,546 69,731 432,357 4,222,107
---------- ------------ ---------- ------------
Total Sales....................... 1,104,528 $ 10,208,441 11,887,673 $115,882,090
========== ============ ========== ============
Dividend Reinvestment:
Brinson Class I.................... 113,380 $ 1,041,959 484,490 $ 4,679,150
Brinson Class N.................... -- 1 579 5,581
UBS Investment Funds Class......... 4,178 38,350 19,366 187,579
---------- ------------ ---------- ------------
Total Dividend Reinvestment....... 117,558 $ 1,080,310 504,435 $ 4,872,310
========== ============ ========== ============
Redemptions:
Brinson Class I.................... 2,795,101 $ 25,880,953 11,403,020 $107,591,860
Brinson Class N.................... 118,466 1,105,323 90 871
UBS Investment Funds Class......... 94,125 869,117 434,492 4,202,489
---------- ------------ ---------- ------------
Total Redemptions................. 3,007,692 $ 27,855,393 11,837,602 $111,795,220
========== ============ ========== ============
</TABLE>
================================================================================
47
<PAGE>
Distributed by:
Funds Distributor, Inc.
60 State Street
Boston, MA 02109
This report is submitted for the general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors in the
Funds unless preceded or accompanied by an effective Prospectus which includes
details regarding the Funds' objectives, policies, expenses and other
information.
<PAGE>
[UBS LOGO APPEARS HERE]
P.O. Box 2798, Boston, Massachusetts 02208-2798 . Tel: (800) 794-7753
<PAGE>
[LOGO] UBS
Investment Funds
Global (Ex-U.S.) Equity Fund
Semi-Annual Report
December 31, 1999
<PAGE>
Trustees and Officers
[LOGO] UBS
Investment Funds
Trustees
Walter E. Auch
Frank K. Reilly, CFA
Edward M. Roob
Frank K. Reilly, CFA
Chairman of the Board
E. Thomas McFarlan
President
Thomas J. Digenan, CFA, CPA
Vice President
Debra L. Nichols
Vice President
Carolyn M. Burke, CPA
Secretary and Treasurer
David E. Floyd, CPA
Assistant Secretary
Mark F. Kemper
Assistant Secretary
1
<PAGE>
The Fund's Advisor -- Brinson Partners, Inc.
[LOGO] UBS
Investment Funds
Since the founding of our organization nearly twenty years ago, we have focused
our collective energy on two goals: creating meaningful value-added investment
performance; and providing our clients with individualized client relationships
of the highest quality.
Now, in 2000, more than 1,200 employees located in 11 countries around the world
continue to deliver investment strategies that meet our clients' needs. With an
unrelenting focus on our goals, we have grown into one of the world's premier
investment management organizations, and a recognized leader in our industry. In
North America, we make our investment capabilities available to institutions and
individual investors through the Brinson Family of Funds. The Brinson Funds are
no-load, institutionally priced mutual funds that provide investors convenient
access to our global investment expertise and capabilities.
Within a framework of integrated capital markets, we select portfolio
investments by focusing on long-term investment fundamentals. Investment
performance for our clients is maximized within and across asset classes through
a comprehensive understanding of global investment markets and their
interrelationships. We apply a systematic, disciplined approach to valuing
investments and combine the seasoned judgement of our global investment teams to
construct optimal portfolios--balancing considerations for both risk and return.
Brinson Partners, Inc. is a member of the UBS Asset Management, the
institutional asset management division of UBS AG.
2
<PAGE>
Table of Contents
[LOGO] UBS
Investment Funds
Shareholder Letter................................ 4
Global Economic and Market Highlights............. 5
Global (Ex-U.S.) Equity Fund...................... 6
Schedule of Investments........................... 9
Financial Statements.............................. 13
Financial Highlights.............................. 16
Notes to Financial Statements..................... 17
3
<PAGE>
Shareholder Letter
[LOGO] UBS
Investment Funds
January 27, 2000
Dear Shareholder:
We are pleased to present the semi-annual report for the UBS Investment Funds
for the six-months ended December 31, 1999. This report provides a discussion on
the current U.S. and International Economic outlook. We will also provide our
current portfolio strategies and performance updates for our international
mutual fund.
The decade of the 1990s ended with a particularly challenging year. We continued
to apply our proven value-based investment process across all of our portfolios,
but our investment results varied substantially. In some areas, such as fixed
income, our performance was excellent relative to both the market and our peers.
In other areas, most notably multi-asset and equity portfolios, results were
disappointing.
Throughout 1999, our asset allocation strategies continued to focus on reducing
exposure to the risks presented by equity prices that have been driven far above
even optimistic estimates of underlying value. While the risk hedge in balanced
portfolios had little net effect on performance through most of the year, the
surge in equity prices late in the year hampered the returns relative to the
benchmarks.
The broad array of our equity portfolios, with the exception of the growth
portfolios, significantly lagged their benchmarks in 1999. Some degree of
underperformance was unavoidable as the U.S. market was increasingly driven by
momentum, which in turn focused more tightly on narrow technology and e-commerce
stocks. In such a market, the fundamental price/value discrepancies that are the
core of our investment process are effectively ignored in the market. In
addition, our stock selection was uncharacteristically weak and a meaningful
source of the underperformance of our U.S. and Global Equity portfolios.
In fixed income our U.S. Bond and High Yield portfolios outpaced the market and
ranked highly in their respective universes of active managers. However, outside
the U.S., our Global Bond portfolio generally underperformed, due almost
entirely to strength in both the Japanese bond market and the yen, where we are
underweighted.
Our fundamental assessments across markets have been both accurate and
perceptive, but momentum rather than the reality of fundamental value has
continued to drive equity markets, particularly in the U.S. We have seen this
phenomenon historically and it has always proven to be a sign of danger, that
ultimately ends badly for the market in general and the momentum players in
particular. Over time, these styles ebb and flow but momentum driven approaches
have no lasting link to underlying fundamentals and always fail to deliver when
viewed over meaningful horizons. It is these concerns which underlie our current
asset allocation and equity portfolio strategies.
2000 will be a challenging year, but we are confident that remaining true to our
investment disciplines will in the long run accrue to our shareholders' benefit.
As always, we welcome your thoughts and comments, and appreciate your continued
trust and the confidence you have placed in the UBS Investment Funds.
Sincerely,
/s/ Hanspeter A. Walder /s/ Raymond Simon
Hanspeter A. Walder Raymond Simon
Executive Director Managing Director
Private Banking Private Banking
4
<PAGE>
Global Economic and Market Highlights
[LOGO] UBS
Investment Funds
As the negative effects of the Asian crisis gradually wane and domestic demand
continues to remain robust, the expansion in Euroland gains speed. In late
December 1999, the German government announced cuts in corporate and personal
tax rates, and initiated cross-party talks about reforms of the country's
burdened pension system. So far, however, neither the ruling coalition parties
nor the opposition has managed to communicate its position in the pension debate
in a transparent way, as the political system is being absorbed by allegations
of funding fraud against the Christian democrats. As in the United States, pan-
European inflation has accelerated in the wake of surging energy prices, whereas
inflation excluding food and energy has moved sideways. While headline inflation
figures will be heavily impacted by energy prices, core inflation is unlikely to
accelerate much, given economy-wide over-capacities and disinflationary forces
arising from continued deregulation of utility and telecom sectors.
In Japan, real GDP declined in the third quarter of 1999, largely as a result of
a phasing out of public spending programs, weak private capital expenditures and
stagnating consumer spending. A sustainable recovery will hinge on healthy gains
in private demand. Should the trend in economic growth continue to be
disappointing, the government may adopt additional stimulative fiscal measures.
The Bank of Japan has sterilized, and will probably continue to sterilize,
expansionary foreign exchange market operations. Hopes that meaningful
quantitative easing steps are around the corner remain premature.
Global (Ex-U.S.) Equity Environment
<TABLE>
<CAPTION>
6 months 1 year 3 years 7/31/95*
Major Markets ended ended ended to
Total Return in U.S. Dollar Hedged Terms 12/31/99 12/31/99 12/31/99 12/31/99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MSCI World Ex USA (Free) Index 19.89% 36.98% 21.89% 20.82%
Europe Ex U.K. 28.38 40.04 37.84 32.80
U.K. 7.16 15.34 18.33 17.46
Canada 27.60 45.99 21.46 21.81
Japan 16.37 54.31 10.18 11.73
Asia Ex Japan 20.68 61.12 -1.29 4.47
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
6 months 1 year 3 years 7/31/95*
Major Currencies ended ended ended to
Percent Change Relative to U.S. Dollars 12/31/99 12/31/99 12/31/99 12/31/99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Yen 18.26% 10.20% 4.28% -3.35%
Pound 2.25 -3.13 -1.98 0.16
Euro** -2.80 -14.64 -7.56 -7.09
Canadian Dollar 1.98 5.84 -1.89 -1.74
- --------------------------------------------------------------------------------
</TABLE>
*Performance inception date of the UBS Investment Fund -- Global (Ex-U.S.)
Equity
**Deutschemark prior to 1/1/99
All total returns in excess of 1 year are average annualized total returns
5
<PAGE>
Global (Ex-U.S.) Equity Fund
[LOGO] UBS
Investment Funds
The UBS Investment Fund -- Global (Ex-U.S.) Equity has provided an annualized
return of 12.88% since its inception on July 31, 1995. Over the same period, its
benchmark, the MSCI World Ex USA (Free) Index, has produced a return of 12.68%.
The Fund's performance was achieved with a volatility or risk of 12.91%,
considerably below the 14.26% volatility of the benchmark. For the full year
period, the Fund increased 18.15%, lagging the index's unhedged return of
27.77%. Most regions experienced strong performance in dollar-hedged terms, led
by Asia (Ex-Japan), Japan and Europe (Ex-U.K.). The Fund benefited from our mid-
year decision to increase Japan to neutral and then to an overweight, as well as
from European market allocation. However, returns were hurt by the overweight to
Australia and underweight to Asia (Ex-Japan). Currency management reduced
returns, due to the underweight of the yen and overweight of the euro, but
holding an overweight position in the strong-performing Australian dollar helped
the Fund's performance.
Earlier in the year, traditional value stocks, encompassing such sectors as
transportation, materials, basic industry and other economically sensitive
areas, regained favor in Europe. At that time, our overweight in these sectors
gave a lift to relative performance. By mid-year, however, investor sentiment
changed sharply, as investors began to shun value stocks in order to flock to
large capitalization, growth and momentum industries and stocks. Following in
the footsteps of the U.S. market, investors in Japan, Southeast Asia, Australia,
Europe and the U.K. rushed to stocks engaged in information technology,
telecommunications and Internet-related businesses. By year-end, stocks with a
growth tilt had significantly overtaken value on a global basis. In our view,
many of these stocks have risen to levels that far exceed underlying value.
Consequently, stock selection in our U.K. and European portfolios, which are
underweight these securities, was hurt. These portfolios are positioned in
industries and stocks that command more reasonable valuations and, in our view,
offer greater upside potential.
The Pacific (Ex-Japan) region has begun to rebound from last year's currency and
banking crises. Japan has exhibited tentative signs of an economic revival,
fueled by government spending packages and extremely low interest rates.
Consolidation in the banking and financial sectors is easing fears of a
financial meltdown, while encouraging signs of restructuring in other businesses
have begun to surface. Our Japanese stock holdings are geared toward companies
that are actively restructuring.
6
<PAGE>
Global (Ex-U.S.) Equity Fund
[LOGO] UBS
Investment Funds
Total Return
<TABLE>
<CAPTION>
6 months 1 year 3 years 7/31/95*
ended ended ended to
12/31/99 12/31/99 12/31/99 12/31/99
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UBS Investment Fund -- Global (Ex-U.S.) Equity 15.83% 18.15% 12.07% 12.88%
- --------------------------------------------------------------------------------------
MSCI World Ex USA (Free) Index 22.45 27.77 15.67 12.68
- --------------------------------------------------------------------------------------
</TABLE>
* Performance inception date of the UBS Investment Fund -- Global (Ex-U.S.)
Equity
Performance is net of withholding taxes on dividends.
Total return includes reinvestment of all capital gain and income distributions.
All total returns in excess of 1 year are average annualized returns
Illustration of an Assumed Investment of $10,000
This chart shows the growth in the value of an investment in the UBS Investment
Fund -- Global (Ex-U.S.) Equity and the MSCI World Ex USA (Free) Index if you
had invested $10,000 on July 31, 1995, and had reinvested all your income
dividends and capital gain distributions through December 31, 1999. No
adjustment has been made for any income taxes payable by shareholders on income
dividends and capital gain distributions. Past performance is no guarantee of
future results. Share price and return will vary with market conditions;
investors may realize a gain or loss upon redemption.
UBS Investment Fund -- Global (Ex-U.S.) Equity
vs. MSCI World Ex USA (Free) Index
Wealth Value with Dividends Reinvested
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
UBS Investment Fund -- MSCI World Ex USA
Global (Ex-U.S.) Equity (Free) Index
----------------------- -----------------
<S> <C> <C>
12/31/95 $10,858 $10,220
12/31/96 $12,140 $10,947
12/31/97 $12,750 $11,174
12/31/98 $14,463 $13,259
12/31/99 $17,075 $16,941
</TABLE>
Fund returns are net of all fees and costs, while the Index returns are based
solely on market returns without deduction for fees or transaction costs for
rebalancing.
7
<PAGE>
Global (Ex-U.S.) Equity Fund
[LOGO] UBS
Investment Funds
Industry Diversification
<TABLE>
<S> <C>
As a Percent of Net Assets
As of December 31, 1999 (Unaudited)
- ------------------------------------------------
GLOBAL (EX-U.S.) EQUITIES
Aerospace & Military................... 0.70%
Airlines............................... 0.65
Appliances & Households................ 3.81
Autos/Durables......................... 2.89
Banking................................ 11.30
Beverages & Tobacco.................... 2.24
Broadcasting & Publishing.............. 3.55
Building Materials..................... 0.72
Business & Public Service.............. 5.05
Chemicals.............................. 2.84
Construction........................... 0.36
Data Processing........................ 2.96
Electric Components.................... 4.12
Electronics............................ 7.16
Energy................................. 3.94
Financial Services..................... 4.10
Food & House Products.................. 2.95
Forest Products........................ 1.13
Health & Personal Care................. 5.95
Industrial Components.................. 1.64
Insurance.............................. 5.19
Leisure & Tourism...................... 0.24
Machinery & Engineering................ 0.22
Merchandising.......................... 3.10
Metals--Steel.......................... 0.42
Multi-Industry......................... 1.05
Non-Ferrous Metals..................... 1.24
Real Estate............................ 0.91
Recreation............................. 0.82
Telecommunications..................... 13.61
Transportation......................... 1.51
Utilities.............................. 3.85
Wholesale & International Trade........ 0.22
------
Total Global (Ex-U.S.) Equities... 100.44
CONVERTIBLE BONDS...................... 0.03
SHORT-TERM INVESTMENTS................. 0.52
------
TOTAL INVESTMENTS................. 100.99
LIABILITIES, LESS CASH
AND OTHER ASSETS.................. (0.99)
------
NET ASSETS............................. 100.00%
======
</TABLE>
Market and Currency Strategy
<TABLE>
<CAPTION>
As of December 31, 1999 (Unaudited)
Fund Benchmark
------------------ ------------------
Market Currency Market Currency
Strategy Strategy Strategy Strategy
- ----------------------------------------------------
<S> <C> <C> <C> <C>
Australia 4.19% 8.19% 2.35% 2.35
Austria 0.11 0.00 0.21 0.00
Belgium 1.12 0.00 0.86 0.00
Canada 2.57 4.17 4.17 4.17
Denmark 0.46 0.75 0.75 0.75
Euro 0.00 44.52 0.00 36.29
Finland 3.35 0.00 2.85 0.00
France 9.89 0.00 9.83 0.00
Germany 9.27 0.00 10.04 0.00
Hong Kong 0.54 0.00 2.24 2.24
Ireland 0.00 0.00 0.40 0.00
Italy 3.13 0.00 4.05 0.00
Japan 31.29 18.29 26.29 26.29
Netherlands 4.61 0.00 5.02 0.00
New Zealand 0.31 0.31 0.15 0.15
Norway 0.00 0.36 0.36 0.36
Portugal 0.68 0.00 0.44 0.00
Singapore 0.92 1.02 1.02 1.02
Spain 3.09 0.00 2.59 0.00
Sweden 3.28 6.58 2.57 2.57
Switzerland 3.94 5.45 5.45 5.45
U.K. 17.25 10.36 18.36 18.36
- ----------------------------------------------------
100.00% 100.00% 100.00% 100.00%
</TABLE>
Top Ten Global (Ex-U.S.) Equity Holdings
<TABLE>
<CAPTION>
As of December 31, 1999 (Unaudited)
Percent of
Net Assets
- --------------------------------------------------
<S> <C>
1. Sony Corp. 2.16%
2. Fujitsu 2.09
3. Nippon Telegraph & Telephone Corp. 1.95
4. Siemens AG 1.66
5. France Telecom S.A. 1.50
6. Nokia Oyj 1.48
7. Ericsson, B Shares 1.42
8. ING Groep NV 1.38
9. Fanuc 1.36
10. British Telecommunications PLC 1.26
</TABLE>
8
<PAGE>
Global (Ex-U.S.) Equity Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
-------- -----------
<S> <C> <C>
Global (Ex-U.S.) Equities -- 100.44%
Australia -- 4.16%
Amcor Ltd................................ 89,740 $ 418,950
Amp Ltd.................................. 100,900 1,111,265
Boral Ltd................................ 285,000 440,149
Brambles Industries Ltd.................. 26,140 720,555
Broken Hill Proprietary Co., Ltd......... 145,720 1,907,275
CSR Ltd.................................. 252,190 610,622
Lend Lease Corp., Ltd.................... 84,196 1,175,786
National Australia Bank Ltd.............. 161,648 2,464,727
News Corp., Ltd.......................... 261,488 2,530,827
News Corp., Ltd., Preferred.............. 96,879 827,337
Qantas Airways Ltd....................... 124,238 308,945
QBE Insurance Group Ltd.................. 174,980 812,998
Rio Tinto Ltd............................ 67,260 1,440,211
Santos Ltd............................... 208,461 566,129
Telstra Corp., Ltd....................... 631,110 3,419,621
Westpac Banking Corp., Ltd............... 303,941 2,089,828
WMC Ltd.................................. 85,970 472,573
Woolworth's Ltd.......................... 218,560 749,453
-----------
22,067,251
-----------
Austria -- 0.11%
Austria Tabakwerke AG.................... 11,600 558,134
-----------
Belgium -- 1.15%
Electrabel S.A........................... 5,310 1,729,885
Fortis (B)............................... 114,367 4,106,440
KBC Bancassurance Holding................ 4,410 236,500
-----------
6,072,825
-----------
Canada -- 1.92%
Agrium, Inc.............................. 71,280 550,083
Alcan Aluminum Ltd....................... 24,040 983,929
Bank of Montreal......................... 14,710 499,692
Canadian National Railway Co............. 32,880 865,442
Canadian Pacific Ltd..................... 44,214 945,941
Corus Entertainment Inc.................. 8,326 169,239
Hudson's Bay Co.......................... 64,320 762,285
Imasco Ltd............................... 23,900 657,896
Imperial Oil Ltd......................... 21,460 458,389
Magna International, Inc., Class A....... 14,060 595,804
Newbridge Networks Corp. (b)............. 31,510 706,712
NOVA Chemicals Corp...................... 27,121 527,919
Potash Corporation of Saskatchewan, Inc.. 8,860 421,236
Royal Bank of Canada..................... 23,420 1,024,716
Shaw Communications, Inc., Class B....... 19,980 655,996
TransCanada Pipelines Ltd................ 18,876 162,578
Westcoast Energy, Inc.................... 13,220 210,875
-----------
10,198,732
-----------
Denmark -- 0.48%
Tele Danmark A/S......................... 34,710 2,566,644
-----------
Finland -- 3.16%
Merita Ltd., Class A..................... 350,334 2,054,364
Nokia Oyj................................ 43,489 7,846,774
Sampo Insurance Co., Ltd., Series A...... 94,154 3,274,971
UPM-Kymmene Corp......................... 89,016 3,569,170
-----------
16,745,279
-----------
France -- 9.72%
Air France (b)........................... 89,252 1,699,851
Air Liquide.............................. 23,423 3,902,229
Alcatel.................................. 10,160 2,322,030
Axa...................................... 13,200 1,831,257
Banque Nationale de Paris................ 69,648 6,395,041
Carrefour S.A............................ 13,001 2,386,186
Cie de Saint Gobain...................... 14,848 2,778,763
CSF Thomson.............................. 89,814 2,952,056
France Telecom S.A....................... 60,419 7,952,020
Groupe Danone............................ 10,572 2,479,775
Michelin, Class B........................ 26,793 1,047,430
Rhone-Poulenc, Class A................... 55,005 3,181,392
Schneider S.A............................ 26,479 2,068,983
Societe Generale......................... 16,407 3,799,097
Total Fina S.A., Class B................. 33,219 4,412,062
Vivendi.................................. 25,445 2,286,609
-----------
51,494,781
-----------
Germany -- 9.09%
Allianz AG............................... 12,638 4,224,870
Bayer AG................................. 127,756 6,044,530
Bayerische Motoren Werke AG.............. 60,350 1,842,060
Continental AG........................... 84,370 1,687,214
DaimlerChrysler AG....................... 43,183 3,372,015
Deutsche Bank AG......................... 47,611 4,011,292
Deutsche Telekom AG...................... 60,380 4,227,647
Dresdner Bank AG......................... 46,450 2,509,653
Mannesmann AG............................ 22,330 5,380,993
SAP AG................................... 3,680 1,800,142
Siemens AG............................... 68,910 8,772,536
Veba AG.................................. 86,078 4,184,785
Volkswagen AG............................ 1,800 101,041
-----------
48,158,778
-----------
Hong Kong -- 0.20%
Henderson Land Development Co., Ltd...... 165,000 1,059,175
-----------
Italy -- 3.00%
Assicurazioni Generali................... 72,446 2,381,922
Beni Stabili Spa......................... 222,610 78,100
ENI Spa.................................. 589,000 3,223,645
ENI Spa ADR.............................. 10,650 587,081
La Rinascente Spa........................ 198,140 1,265,176
San Paolo-imi, Spa....................... 194,610 2,631,578
Telecom Italia Mobile Spa................ 312,000 3,468,369
Telecom Italia Spa....................... 161,000 2,259,400
-----------
15,895,271
-----------
Japan -- 32.62%
Acom Co., Ltd............................ 27,200 2,660,075
Asahi Bank Ltd........................... 231,000 1,421,816
Bank of Tokyo-Mitsubushi Ltd............. 238,000 3,311,143
Benesse Corporation...................... 8,700 2,090,958
Bridgestone Corp......................... 74,000 1,626,691
Canon, Inc............................... 117,000 4,640,907
Dai Nippon Printing Co., Ltd............. 81,000 1,289,922
Dai-Ichi Kangyo Bank Ltd................. 141,000 1,315,568
Daiichi Pharmaceutical Co., Ltd.......... 70,000 908,896
Daikin Industries Ltd.................... 86,000 1,167,896
Denso Corp............................... 64,000 1,525,671
</TABLE>
9
<PAGE>
Global (Ex-U.S.) Equity Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
-------- ------------
<S> <C> <C>
Japan -- continued
East Japan Railway Co................... 413 $ 2,223,272
Fanuc................................... 56,700 7,206,946
Fuji Bank Ltd........................... 109,000 1,057,467
Fujitsu................................. 243,000 11,063,260
Honda Motor Co.......................... 102,000 3,786,820
Hoya Corp............................... 32,000 2,516,731
Ito Yokado Co., Ltd..................... 25,000 2,711,152
Kamigumi Co. Ltd........................ 213,000 894,827
Kaneka Corp............................. 21,000 268,155
Kao Corp................................ 88,000 2,506,180
Kirin Brewery Co., Ltd.................. 157,000 1,648,918
Kokuyo.................................. 44,000 584,632
Kuraray Co., Ltd........................ 168,000 1,698,793
Matsushita Electric Industrial Co....... 165,000 4,562,063
Mitsubishi Corp......................... 150,000 1,156,270
Mitsubishi Estate Co., Ltd.............. 262,000 2,552,040
Murata Manufacturing Co., Inc........... 13,000 3,048,215
NEC Corp................................ 204,000 4,853,109
NGK Insulators.......................... 150,000 1,112,305
Nintendo Corp., Ltd..................... 26,300 4,362,992
Nippon Steel Co......................... 963,000 2,248,615
Nippon Telegraph & Telephone Corp....... 603 10,309,706
Nissin Food Products Co................. 46,300 1,087,895
Nomura Securities Co., Ltd.............. 242,000 4,362,171
NTT Mobile Communications............... 121 4,645,889
Obayashi Corp........................... 230,000 1,085,340
Orix Corporation........................ 26,500 5,959,943
Osaka Gas Co............................ 632,000 1,518,949
Rohm Co................................. 6,000 2,462,019
Sankyo Co., Ltd......................... 104,000 2,133,750
Santen Pharmaceutical Co., Ltd.......... 54,000 888,965
Secom Co., Ltd.......................... 51,000 5,605,491
Sekisui House Ltd....................... 96,000 848,811
Seven-Eleven Japan Co., Ltd............. 19,000 3,007,181
Softbank Corp........................... 3,900 3,726,442
Sony Corp............................... 38,700 11,456,304
Sumitomo Bank........................... 165,000 2,255,239
Sumitomo Chemical Co.................... 351,000 1,646,036
Sumitomo Electric Industries............ 96,000 1,107,674
Taiheiyo Cement Corp.................... 600 1,143
Takeda Chemical Industries.............. 86,000 4,243,076
Takefuji Corp........................... 11,300 1,412,017
TDK Corp................................ 30,000 4,135,607
Tokio Marine & Fire Insurance Co........ 128,000 1,494,407
Tokyo Electric Power.................... 57,200 1,531,220
Tokyo Electron Ltd...................... 18,000 2,462,019
Toyota Motor Corp....................... 128,000 6,190,220
Yamato Transport Co., Ltd............... 85,000 3,288,555
-----------
172,888,374
-----------
Netherlands -- 4.89%
ABN AMRO Holdings NV.................... 100,579 2,500,335
Elsevier NV............................. 263,090 3,127,723
ING Groep NV............................ 121,722 7,313,496
Koninklijke KPN NV...................... 61,722 5,995,190
Royal Dutch Petroleum Co................ 51,220 3,124,204
TNT Post Group NV....................... 66,040 1,883,339
Unilever NV............................. 35,903 1,973,637
-----------
25,917,924
-----------
New Zealand -- 0.36%
Auckland International Airport Ltd...... 150,310 227,321
Carter Holt Harvey Ltd.................. 239,240 311,908
Fletcher Challenge Paper................ 343,600 240,111
Lion Nathan Ltd......................... 175,270 406,744
Telecom Corp. of New Zealand Ltd........ 156,290 733,545
-----------
1,919,629
-----------
Norway -- 0.27%
Norske Skogindustrier ASA............... 27,490 1,429,704
-----------
Portugal -- 0.67%
EDP Electricidade de Portugal S.A....... 96,837 1,682,206
Portugal Telecom........................ 170,300 1,859,010
-----------
3,541,216
-----------
Singapore -- 0.93%
Singapore Press Holdings Ltd............ 129,975 2,816,385
United Overseas Bank Ltd. (Frgn.)....... 236,360 2,085,529
-----------
4,901,914
-----------
Spain -- 3.17%
Banco Popular Espanol S.A............... 51,692 3,355,075
Banco Santander Central Hispano, S.A.... 275,710 3,106,405
Endesa S.A.............................. 88,995 1,758,294
Tabacalera S.A.......................... 273,008 3,886,001
Telefonica S.A. (b)..................... 188,477 4,685,428
-----------
16,791,203
-----------
Sweden -- 3.26%
Electrolux AB, B Shares................. 166,670 4,175,041
Ericsson, B Shares...................... 117,490 7,522,771
Investor AB, B Shares................... 158,130 2,221,187
Nordbanken Holding AB................... 207,940 1,217,020
Swedish Match AB........................ 617,820 2,147,870
-----------
17,283,889
-----------
Switzerland -- 3.90%
Adecco S.A.............................. 2,957 2,290,673
Nestle S.A. (Reg.)...................... 2,345 4,273,358
Novartis AG (Reg.)...................... 3,624 5,293,254
Roche Holding AG (Gen.)................. 460 5,431,374
Swisscom AG (Reg.)...................... 8,386 3,373,889
-----------
20,662,548
-----------
United Kingdom -- 17.38%
Allied Zurich PLC....................... 173,348 2,038,123
AstraZeneca Group PLC................... 55,422 2,293,842
Barclays PLC............................ 87,244 2,505,702
BP Amoco PLC............................ 635,108 6,371,962
British Aerospace PLC................... 111,502 736,805
British Airways PLC..................... 224,518 1,461,904
British Telecommunications PLC.......... 273,287 6,664,140
Charter PLC............................. 406,151 1,734,681
Diageo PLC.............................. 400,290 3,212,849
FKI PLC................................. 989,328 3,826,817
Glaxo Wellcome PLC...................... 179,998 5,076,822
Greenalls Group PLC..................... 261,946 1,245,432
House of Fraser PLC..................... 496,141 607,722
HSBC Holdings PLC....................... 170,000 2,364,536
Lloyds TSB Group PLC.................... 453,067 5,655,488
Marconi PLC............................. 260,038 4,591,297
Marks & Spencer PLC..................... 431,185 2,048,348
</TABLE>
10
<PAGE>
Global (ex-U.S.) Equity Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Value
-------- ------------
<S> <C> <C>
United Kingdom -- continued
National Power PLC......................... 464,673 $ 2,684,867
Nycomed Amersham PLC....................... 329,161 2,045,121
Peninsular & Oriental Steam Navigation Co.. 98,277 1,636,208
Powergen PLC............................... 270,798 1,942,190
Prudential Corp. PLC....................... 224,436 4,413,047
Reckitt & Colman PLC....................... 146,450 1,370,181
Reed International PLC..................... 379,419 2,834,360
Rio Tinto Ltd.............................. 152,015 3,662,805
RJB Mining PLC............................. 398,768 205,663
Royal & Sun Alliance Insurance Group PLC... 238,659 1,813,618
Scottish & Southern Energy PLC............. 376,917 3,002,469
Tesco PLC.................................. 947,770 2,875,571
Thames Water PLC........................... 128,560 1,599,592
Trinity Mirror PLC......................... 212,105 2,259,636
Unilever PLC............................... 265,759 1,951,024
United News & Media PLC.................... 281,079 3,574,305
Yorkshire Water PLC........................ 316,361 1,784,585
------------
92,091,712
------------
Total Global (Ex-U.S.) Equities
(Cost $381,218,232)...................... 532,244,983
------------
</TABLE>
<TABLE>
<CAPTION>
Face
Amount
---------
<S> <C> <C>
Convertible Bonds -- 0.03%
Australia -- 0.03%
Burns, Philp Treasury,
7.50%, due 08/14/03................AUD 1,228,664 160,808
Burns, Philp & Co., Ltd., Warrants (b).. 1,228,664 --
------------
Total Convertible Bonds (Cost $147,071). 160,808
------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
--------- ------------
<S> <C> <C>
Short-Term Investments -- 0.52%
Investment Companies -- 0.52%
Brinson Supplementary Trust U.S. Cash
Management Prime Fund
(Cost $2,771,329)...................... 2,771,329 $ 2,771,329
------------
Total Investments
(Cost $384,136,632) -- 100.99% (a)..... 535,177,120
Liabilities, less cash and
other assets -- (0.99%)................ (5,250,763)
------------
Net Assets -- 100%....................... $529,926,357
============
</TABLE>
See accompanying notes to schedule of investments.
11
<PAGE>
Global (Ex-U.S.) Equity Fund -- Schedule of Investments
December 31, 1999 (Unaudited)
NOTES TO SCHEDULE OF INVESTMENTS
(a) Aggregate cost for federal income tax purposes was $384,136,632; and net
unrealized appreciation consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation....................... $168,110,291
Gross unrealized depreciation....................... (17,069,803)
------------
Net unrealized appreciation.................... $151,040,488
============
</TABLE>
(b) Non-income producing security
FORWARD FOREIGN CURRENCY CONTRACTS
The Global (Ex-U.S.) Equity Fund had the following open forward foreign currency
contracts as of December 31, 1999:
<TABLE>
<CAPTION>
Settlement Local Current Unrealized
Date Currency Value Gain/(Loss)
---------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Forward Foreign Currency Buy Contracts
Australian Dollar............................. 02/17/00 31,200,000 $20,430,748 $ 139,239
British Pound................................. 02/17/00 11,000,000 17,729,353 (360,513)
Canadian Dollar............................... 02/17/00 11,400,000 7,863,696 140,584
European Union................................ 02/17/00 66,800,000 67,201,867 (3,525,088)
Japanese Yen.................................. 02/17/00 670,000,000 6,596,631 204,600
Swedish Krona................................. 02/17/00 142,600,000 16,748,255 (741,167)
Swiss Franc................................... 02/17/00 12,100,000 7,601,648 (513,130)
Forward Foreign Currency Sale Contracts
British Pound................................. 02/17/00 32,900,000 53,026,884 7,564
European Union................................ 02/17/00 21,100,000 21,226,937 1,321,718
Japanese Yen.................................. 02/17/00 6,640,000,000 65,375,565 (4,361,020)
Swedish Krona................................. 02/17/00 22,600,000 2,654,352 97,718
-----------
Total.................................... $(7,589,495)
===========
</TABLE>
FUTURES CONTRACTS
The Global (Ex-U.S.) Equity Fund had the following open futures contracts as of
December 31, 1999:
<TABLE>
<CAPTION> Expiration Current Unrealized
Date Cost Value Gain
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Index Futures Buy Contracts
CAC 40 10 Euro Index, 53 Contracts.............. March 2000 $3,077,992 $3,192,720 $114,728
FTSE 100 Index, 27 Contracts.................... March 2000 1,849,400 1,883,790 34,390
--------
$149,118
========
</TABLE>
The aggregate market value of investments pledged to cover margin requirements
for the open futures positions at December 31, 1999 was $160,808.
See accompanying notes to financial statements.
12
<PAGE>
Global (Ex-U.S.) Equity Fund -- Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value:
Unaffiliated issuers (Cost $381,365,303).................................................... $532,405,791
Affiliated issuers (Cost $2,771,329)........................................................ 2,771,329
Foreign currency, at value (Cost $1,738,121).................................................. 1,737,556
Receivables:
Investment securities sold.................................................................. 12,859,880
Dividends................................................................................... 508,371
Interest.................................................................................... 61,567
Variation margin.............................................................................. 325,534
------------
TOTAL ASSETS............................................................................ 550,670,028
------------
LIABILITIES:
Payables:
Due to custodian bank....................................................................... 12,540,000
Investment advisory fees.................................................................... 347,426
Accrued expenses............................................................................ 266,750
Net unrealized depreciation on forward foreign currency contracts............................. 7,589,495
------------
TOTAL LIABILITIES....................................................................... 20,743,671
------------
NET ASSETS...................................................................................... $529,926,357
============
NET ASSETS CONSIST OF:
Paid in capital............................................................................... $378,247,079
Accumulated undistributed net investment income............................................... 801,068
Accumulated net realized gain................................................................. 7,267,983
Net unrealized appreciation................................................................... 143,610,227
------------
NET ASSETS.............................................................................. $529,926,357
============
OFFERING PRICE PER SHARE:
Brinson Class I:
Net asset value, offering price and redemption price per share (Based on net assets of
$522,620,905 and 37,007,803 shares issued and outstanding)................................ $ 14.12
============
Brinson Class N:
Net asset value, offering price and redemption price per share (Based on net assets of
$1,258 and 89 shares issued and outstanding).............................................. $ 14.13
============
UBS Investment Funds Class:
Net asset value, offering price and redemption price per share (Based on net assets of
$7,304,194 and 523,037 shares issued and outstanding)..................................... $ 13.96
============
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
Global (Ex-U.S.) Equity Fund -- Financial Statements
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $232,250 for foreign taxes withheld)............................ $ 2,962,580
Interest (including securities lending income of $42,550)......................... 325,478
-----------
TOTAL INCOME................................................................ 3,288,058
-----------
EXPENSES:
Advisory.......................................................................... 1,997,182
Administrative.................................................................... 187,236
Custodian......................................................................... 137,485
Distribution...................................................................... 28,818
Other............................................................................. 140,059
-----------
TOTAL EXPENSES.............................................................. 2,490,780
Earnings credits............................................................ (3,421)
-----------
NET EXPENSES................................................................ 2,487,359
-----------
NET INVESTMENT INCOME....................................................... 800,699
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments..................................................................... 13,306,773
Futures contracts............................................................... 117,870
Foreign currency transactions................................................... (1,622,233)
-----------
Net realized gain........................................................... 11,802,410
-----------
Change in net unrealized appreciation or depreciation on:
Investments and foreign currency.................................................. 73,363,341
Forward contracts................................................................. (7,108,205)
Futures contracts................................................................. 149,118
Translation of other assets and liabilities denominated in foreign currency....... 44,141
-----------
Change in net unrealized appreciation or depreciation....................... 66,448,395
-----------
Net realized and unrealized gain.................................................... 78,250,805
-----------
Net increase in net assets resulting from operations................................ $79,051,504
===========
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
Global (Ex-U.S.) Equity Fund -- Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended Year
December 31, 1999 Ended
(Unaudited) June 30, 1999
----------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income.............................................................. $ 800,699 $ 6,208,221
Net realized gain (loss)........................................................... 11,802,410 (1,916,922)
Change in net unrealized appreciation or depreciation.............................. 66,448,395 19,559,006
------------ -------------
Net increase in net assets resulting from operations............................... 79,051,504 23,850,305
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income:
Brinson Class I.................................................................. (2,727,974) (4,564,403)
Brinson Class N.................................................................. -- (121)
UBS Investment Funds Class....................................................... (9,831) (23,356)
Distributions from net realized gain:
Brinson Class I.................................................................. (5,283,152) (4,498,729)
Brinson Class N.................................................................. (13) (126)
UBS Investment Funds Class....................................................... (74,353) (52,439)
------------ -------------
Total distributions to shareholders................................................ (8,095,323) (9,139,174)
------------ -------------
CAPITAL SHARE TRANSACTIONS:
Shares sold........................................................................ 366,304,838 842,598,303
Shares issued in connection with acquisition of UBS International Equity Fund...... -- 21,515,034
Shares issued on reinvestment of distributions..................................... 7,789,808 8,583,385
Shares redeemed.................................................................... (412,201,341) (834,980,130)
------------ -------------
Net increase (decrease) in net assets resulting from capital share transactions.... (38,106,695) 37,716,592
------------ -------------
TOTAL INCREASE IN NET ASSETS.................................................. 32,849,486 52,427,723
------------ -------------
NET ASSETS:
Beginning of period................................................................ 497,076,871 444,649,148
------------ -------------
End of period (including accumulated undistributed net investment income of
$801,068 and $2,738,174, respectively)........................................... $529,926,357 $ 497,076,871
============ =============
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
Global (Ex-U.S.) Equity Fund -- Financial Highlights
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
Six Months Ended Year Ended June 30, July 31, 1995*
December 31, 1999 ------------------------------ Through
UBS Investment Funds Class (Unaudited) 1999 1998 1997 June 30, 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............ $12.20 $12.05 $12.49 $11.12 $10.26
------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss)................ (0.03) 0.05 0.08 0.11 0.12
Net realized and unrealized gain............ 1.95 0.27 0.30 1.93 1.45
------ ------ ------ ------ ------
Total income from investment operations... 1.92 0.32 0.38 2.04 1.57
------ ------ ------ ------ ------
Less distributions:
Distributions from investment income........ (0.02) (0.05) (0.08) (0.11) (0.15)
Distributions from net realized gain........ (0.14) (0.12) (0.74) (0.56) (0.56)
------ ------ ------ ------ ------
Total distributions....................... (0.16) (0.17) (0.82) (0.67) (0.71)
------ ------ ------ ------ ------
Net asset value, end of period.................. $13.96 $12.20 $12.05 $12.49 $11.12
====== ====== ====== ====== ======
Total return (non-annualized)................... 18.15% 2.78% 3.90% 19.32% 15.78%
Ratios/Supplemental data:
Net assets, end of period (in 000s)........... $7,304 $6,739 $5,310 $7,797 $1,262
Ratio of expenses to average net assets:
Before expense reimbursement and
earnings credits.......................... 1.82%** 1.83% 1.84% 1.81% 2.04%**
After expense reimbursement and
earnings credits.......................... N/A N/A N/A N/A 1.84%**
Ratio of net investment income to average
net assets:
Before expense reimbursement and
earnings credits.......................... (0.51)%** 0.51% 0.68% 1.02% 0.83%**
After expense reimbursement and
earnings credits.......................... N/A N/A N/A N/A 1.03%**
Portfolio turnover rate....................... 32% 74% 49% 25% 20%
</TABLE>
* Commencement of UBS Investment Funds Class
** Annualized
N/A = Not Applicable
See accompanying notes to financial statements.
16
<PAGE>
Global (Ex-U.S.) Equity Fund -- Notes To Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
The Brinson Funds (the "Trust") is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended, as a series
company. The Trust currently offers shares of eleven series: Global Fund, Global
Equity Fund, Global Bond Fund, U.S. Balanced Fund, U.S. Equity Fund, U.S. Large
Capitalization Equity Fund, U.S. Large Capitalization Growth Fund, U.S. Small
Capitalization Growth Fund, U.S. Bond Fund, High Yield Fund and Global (Ex-
U.S.) Equity Fund (each a "Fund" and collectively, the "Funds"). Each Fund has
three classes of shares outstanding, Brinson Class I, Brinson Class N and UBS
Investment Funds Class. There are an unlimited number of shares of each class
with par value of $0.001 authorized. Each share represents an identical interest
in the investments of the Funds and has the same rights. The financial
highlights of the UBS Investment Funds Class are presented separately.
On December 19, 1998, the Global (Ex-U.S.) Equity Fund (the "Fund") acquired all
the net assets of the UBS International Equity Fund pursuant to a plan of
reorganization approved by shareholders on December 11, 1998. The acquisition
was accomplished by a tax-free exchange of 1,827,955 Brinson Class I shares of
the Global (Ex-U.S.) Equity Fund for the shares of UBS International Equity Fund
outstanding on December 18, 1998. The net assets of the UBS International
Equity Fund, including $38,003 of net unrealized appreciation, were combined
with those of the Fund. The aggregate net assets of the Global (Ex-U.S.) Equity
Fund and the UBS International Equity Fund immediately before the merger were
$463,315,718 and $21,515,034, respectively.
The following is a summary of significant accounting policies consistently
followed by the Global (Ex-U.S.) Equity Fund in the preparation of its
financial statements.
A. Investment Valuation: Securities for which market quotations are readily
available are valued at the last available sales price on the exchange or market
on which they are principally traded, or lacking any sales, at the last
available bid price on the exchange or market on which such securities are
principally traded. Securities for which market quotations are not readily
available, including restricted securities which are subject to limitations on
their sale, are valued at fair value as determined in good faith by or under
the direction of the Trust's Board of Trustees. Investments in affiliated
investment companies are valued each day based on the closing net asset value
of the respective fund. Debt securities are valued at the most recent bid price
by using market quotations or independent pricing services. Futures contracts
are valued at the settlement price established each day on the exchange on which
they are traded. Forward foreign currency contracts are valued daily using
quoted forward exchange rates. Short-term obligations with a maturity of 60 days
or less are valued at amortized cost, which approximates market value.
B. Foreign Currency Translation: Investment securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollars
using the WM/Reuters closing spot rates as of 4:00 p.m. London time. Purchases
and sales of portfolio securities, commitments under forward foreign currency
contracts and income receipts are translated at the prevailing exchange rate on
the date of each transaction. Realized and unrealized foreign exchange gains or
losses on investments are included as a component of net realized and
unrealized gain or loss on investments in the statement of operations.
C. Investment Transactions: Investment transactions are accounted for on a
trade date basis. Gains and losses on securities sold are determined on an
identified cost basis.
D. Investment Income: Interest income, which includes the amortization of
premiums and discounts, is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date, except that certain dividends from foreign
securities are recorded as the information becomes available.
E. Federal Income Taxes: It is the policy of the Fund to comply with all
requirements of the Internal Revenue Code (the "Code") applicable to regulated
investment companies and to distribute substantially all of its taxable income
to its shareholders. The Fund has met the requirements of the Code applicable to
regulated investment companies for the six months ended December 31, 1999,
therefore, no federal income tax provision was required.
F. Distributions to Shareholders: It is the policy of the Fund to distribute
its net investment income on a semi-annual basis and net capital gains, if any,
annually. Distributions to shareholders are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing tax treatments for foreign
currency transactions. Differences in dividends per share between the classes
are due to distribution expenses.
17
<PAGE>
Global (Ex-U.S.) Equity Fund -- Notes To Financial Statements
G. Income and Expense Allocation: All income earned and expenses incurred by
the Fund will be borne on a pro rata basis by each of the classes, except that
the Brinson Class I will not incur any of the distribution expenses of the
Brinson Class N nor the UBS Investment Funds Class.
H. Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results may differ from those
estimates.
I. Earnings Credits: The Funds have entered into an arrangement with their
custodian whereby interest earned on uninvested cash balances was used to offset
a portion of the Fund's expenses. This amount is reflected in the statement of
operations.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Brinson Partners, Inc. (the "Advisor"), a registered investment advisor,
provides the Fund with investment management services. As compensation for
these services, the Fund pays the Advisor a monthly fee based on the Fund's
average daily net assets. The Advisor has agreed to waive its fees and reimburse
the Fund to the extent total annualized operating expenses exceed a specified
percentage of the Fund's average daily net assets. The expense cap is 1.00%,
1.25% and 1.84% of the average daily net assets of the Brinson Class I, Brinson
Class N and UBS Investment Funds Class, respectively. Investment advisory fees
for the six months ended December 31, 1999, were as follows:
<TABLE>
<CAPTION>
Advisory Advisory
Fee Fees
-------- ----------
<S> <C> <C>
Global (Ex-U.S.) Equity Fund................................. 0.80% $1,997,182
</TABLE>
Certain officers of the Fund are also officers of the Advisor. All officers
serve without direct compensation from the Fund. Trustees' fees paid to
unaffiliated trustees for the six months ended December 31, 1999 were $4,078.
The Fund invests in shares of the Brinson Supplementary Trust U.S. Cash
Management Prime Fund ("Supplementary Trust"). The Supplementary Trust is
managed by the Advisor. The Supplementary Trust is offered as a cash management
option to mutual funds and other accounts managed by the Advisor. The
Supplementary Trust charges no management fees. Distributions received from the
Supplementary Trust are reflected as interest income on the statement of
operations. Amounts relating to those investments at December 31, 1999 were as
follows:
<TABLE>
<CAPTION>
% of
Sales Interest Net
Purchases Proceeds Income Value Assets
------------ ------------ -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Global (Ex-U.S.) Equity Fund.......... $312,583,848 $314,113,357 $279,916 $2,771,329 0.52%
</TABLE>
3. INVESTMENT TRANSACTIONS
Investment transactions for the six months ended December 31, 1999, excluding
short-term investments, were as follows:
<TABLE>
<CAPTION>
Proceeds
Purchases From Sales
------------ ------------
<S> <C> <C>
Global (Ex-U.S.) Equity Fund........................ $159,076,213 $189,257,631
</TABLE>
4. FORWARD FOREIGN CURRENCY CONTRACTS
The Fund engages in portfolio hedging with respect to changes in currency
exchange rates by entering into forward foreign currency contracts to purchase
or sell currencies. Forward foreign currency contracts are also used to achieve
currency allocation strategies. A forward foreign currency contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. Risks associated with such contracts include movement
in the value of the foreign currency relative to the U.S. dollar and the ability
of the counterparty to perform. The unrealized gain, if any, represents the
credit risk to the Fund on a forward foreign currency contract. Fluctuations in
the value of forward foreign currency contracts are recorded daily as net
unrealized gains or losses. The Fund realizes a gain or loss upon settlement of
the contracts. The statement of operations reflects net realized and net
unrealized gains and losses on these contracts. The counterparty to all forward
foreign currency contracts at and for the six months ended December 31, 1999,
was an affiliate of the Fund's custodian.
5. FUTURES CONTRACTS
The Fund may purchase or sell exchange-traded futures contracts, which are
contracts that obligate the Fund to make or take delivery of a financial
instrument or the cash value of a securities index at a specified future date at
a specified price. The Fund enters into such contracts
18
<PAGE>
Global (Ex-U.S.) Equity Fund -- Notes To Financial Statements
to hedge a portion of its portfolio. Risks of entering into futures contracts
include the possibility that there may be an illiquid market or that a change in
the value of the contract may not correlate with changes in the value of the
underlying securities. Upon entering into a futures contract, the Fund is
required to deposit either cash or securities (initial margin). Subsequent
payments (variation margin) are made or received by the Fund, generally on a
daily basis. The variation margin payments are equal to the daily changes in the
contract value and are recorded as unrealized gains or losses. The Fund
recognizes a realized gain or loss when the contract is closed or expires. The
statement of operations reflects net realized and net unrealized gains and
losses on these contracts.
6. SECURITY LENDING
The Fund loaned securities to certain brokers with the Fund's custodian acting
as the Fund's lending agent. The Fund earned negotiated lenders' fees, which
are included in interest income in the statement of operations. The Fund
receives securities, which are not reflected in the statement of assets and
liabilities, as collateral against the loaned securities. The Fund monitors the
market value of securities loaned on a daily basis and initially requires
collateral against the loaned securities in an amount at least equal to 105% of
the value of global (ex-U.S.) securities loaned. The value of loaned securities
and related collateral at December 31, 1999 was $2,606,682 and $3,193,500,
respectively.
7. DISTRIBUTION PLANS
The Trust has adopted distribution plans (the "Plans") pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended, for the Brinson Class N
and the UBS Investment Funds Class. Each Plan governs payments made for the
expenses incurred in the promotion and distribution of the Brinson Class N and
the UBS Investment Funds Class. Annual fees under the Brinson Class N Plan shall
not exceed 0.25% of the daily net assets of the Brinson Class N. Annual fees
under the UBS Investment Funds Plan, which include a 0.25% service fee, shall
not exceed 0.84% of the average daily net assets of the UBS Investment Funds
Class.
8. LINE OF CREDIT
The Trust has entered into an agreement with Chase Manhattan Bank to provide a
364 day $100 million committed line of credit to the Funds. Borrowings will be
made for temporary purposes. Interest on amounts borrowed is based on the
Federal Funds rate plus 0.50% per year. The Funds pay a commitment fee of 0.08%
per year of the average daily unutilized balance of the line of credit. During
the six months ended December 31, 1999, the Global (Ex-U.S.) Equity Fund had
borrowings of $19,700,000 outstanding for 1 day under the agreement.
9. CAPITAL TRANSACTIONS
Capital stock transactions were as follows:
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1999 Year Ended
(Unaudited) June 30, 1999
------------------------ ------------------------
Shares Value Shares Value
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sales:
Brinson Class I 28,442,308 $365,506,747 72,650,740* $857,199,838
Brinson Class N 30 373 365 4,263
UBS Investment Funds Class 63,305 797,718 587,229 6,909,236
---------- ------------ ---------- ------------
Total Sales 28,505,643 $366,304,838 73,238,334 $864,113,337
========== ============ ========== ============
Dividend Reinvestment:
Brinson Class I 575,659 $ 7,708,071 726,832 $ 8,514,975
Brinson Class N 1 13 21 247
UBS Investment Funds Class 6,168 81,724 5,917 68,163
---------- ------------ ---------- ------------
Total Dividend Reinvestment 581,828 $ 7,789,808 732,770 $ 8,583,385
========== ============ ========== ============
Redemptions:
Brinson Class I 31,747,436 $410,927,152 69,803,887 $829,422,705
Brinson Class N 1,174 14,890 41 487
UBS Investment Funds Class 98,658 1,259,299 481,376 5,556,938
---------- ------------ ---------- ------------
Total Redemptions 31,847,268 $412,201,341 70,285,304 $834,980,130
========== ============ ========== ============
</TABLE>
*Includes shares issued in connection with acquisition of UBS International
Equity Fund.
19
<PAGE>
Distributed by:
Funds Distributor, Inc.
60 State Street
Boston, MA 02109
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective Prospectus which includes
details regarding the Fund's objectives, policies, expenses and other
information.
<PAGE>
[LOGO] UBS
Investment Funds
P.O. Box 2798, Boston, Massachusetts 02208-2798 . Tel: (800) 794-7753
