N-30D 1 0001.txt BRINSON PARTNERS SEMI-ANNUAL REPORT DATED 12/31/00 [GRAPHIC APPEARS HERE] Global Fund Global Equity Fund Global Technology Fund Global Biotech Fund Global Bond Fund U.S. Balanced Fund U.S. Equity Fund U.S. Large Cap Equity Fund U.S. Large Cap Growth Fund U.S. Small Cap Growth Fund U.S. Bond Fund High Yield Fund International Equity Fund Semi-Annual Report December 31, 2000 [LOGO OF BRINSON] The Brinson Funds Trustees and Officers -------------------------------------------------------------------------------- [LOGO OF BRINSON] Trustees Walter E. Auch Andrew J. O'Reilly Frank K. Reilly, CFA Edward M. Roob Officers Frank K. Reilly, CFA Chairman of the Board Thomas J. Digenan, CFA, CPA President Carolyn M. Burke, CPA Vice President, Secretary and Treasurer David E. Floyd, CPA Assistant Secretary Mark F. Kemper Assistant Secretary Alanna N. Palmer Assistant Secretary ================================================================================ 1 The Funds' Advisor -- Brinson Partners, Inc. -------------------------------------------------------------------------------- [LOGO OF BRINSON] 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 2001, nearly 500 focused investment specialists, located in all of the world's major financial centers, 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. We select investments for all of The Brinson Funds by focusing on long-term investment fundamentals within a framework of integrated capital markets. 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 judgment 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 asset management division of UBS AG. ================================================================================ 2 Table of Contents -------------------------------------------------------------------------------- [LOGO OF BRINSON] To Our Shareholders.............................................................. 4 Global Economic and Market Highlights............................................ 5 U.S. Economic and Market Highlights.............................................. 6 Portfolio Managers' Commentary and Schedule of Investments Global Fund................................................................. 7 Global Equity Fund.......................................................... 17 Global Technology Fund...................................................... 24 Global Biotech Fund......................................................... 28 Global Bond Fund............................................................ 32 U.S. Balanced Fund.......................................................... 38 U.S. Equity Fund............................................................ 44 U.S. Large Cap Equity Fund.................................................. 49 U.S. Large Cap Growth Fund.................................................. 53 U.S. Small Cap Growth Fund.................................................. 57 U.S. Bond Fund.............................................................. 62 High Yield Fund............................................................. 68 International Equity Fund................................................... 75 Statements of Assets and Liabilities............................................. 82 Statements of Operations......................................................... 84 Statement of Cash Flows.......................................................... 86 Statements of Changes in Net Assets.............................................. 88 Financial Highlights............................................................. 93 Notes to Financial Statements.................................................... 106 Special Meeting of Shareholders.................................................. 111
================================================================================ Shareholder Letter -------------------------------------------------------------------------------- [LOGO OF BRINSON] February 26, 2001 Dear Shareholder: If the first year of the new millennium is any indication, we are in for a wild ride in capital markets in the years ahead. The technology, media, and telecommunications (TMT) bubble burst as we had anticipated. This has paid big dividends for our clients. That we "stayed the course" on our key strategies reflects the continuity of our investment philosophy and our dedication to disciplined fundamental research. Maintaining our focus was a critical element of our success in 2000. Our strategic positions involving the expected demise of the TMT sectors, the associated decline in equity markets, the underperformance of the very largest capitalization equities, and the year-end turnaround in the euro helped us to deliver the best performance results in our history relative to our predetermined benchmarks. Our U.S. equity strategies outperformed benchmarks by the widest margins, helped in large part by stock selection decisions. Global and non-U.S. equity strategies benefited similarly. Fixed income returns were less dramatic but still quite positive for the year. Our dedication to our valuation disciplines helped us to weather some heavy crosscurrents in the global fixed income markets this year. Our multi-asset portfolios benefited from our positive results within the equity components, as well as the strategic tilt toward fixed income and away from many overheated equity markets. The evaporation of the euro's weakness in the closing months added further to our strong performance. Throughout the year we also focused on enhancing our research efforts and broadening our investment capabilities. We continue to create and publish important industry-leading research. We are utilizing technology in new ways to enhance our investment decisions, and have in place one of the most robust approaches to risk management in the industry. The year 2000 was an important turnaround year for us. Our goal in 2001 is to put an exclamation point on our performance -- a proof statement confirming our capabilities and talents. Our investment specialists are dedicated to being the best investment managers in the world covering the full, global capital market. Our breadth of capabilities in all major asset classes gives Brinson Funds investors many options for diversification. Whether you choose to invest in the highly specialized Global Technology or Global Biotech funds we launched in 2000, or you prefer a single fund that spreads risk across stocks and bonds in many industries and countries, the Brinson Funds can help you meet your long- term objectives. We look forward to strengthening our relationship with you in 2001. Sincerely, /s/ Jeffrey J. Diermeier, CFA /s/ Thomas J. Digenan, CFA, CPA Jeffrey J. Diermeier, CFA Thomas J. Digenan, CFA, CPA Chief Investment Officer President, The Brinson Funds ================================================================================ 4 Global Economic and Market Highlights -------------------------------------------------------------------------------- [LOGO OF BRINSON] The U.S. economy expanded at a 1.4% annual rate in the fourth quarter, the slowest pace in five years. The U.S. Federal Reserve subsequently cut the target rate on overnight loans to 5.5% amid fears of negative 2001 growth in the U.S. and worldwide. Interest rates in the Eurozone held steady as little evidence presented itself that the U.S. slowdown is affecting Europe; December money supply growth was actually negative for the fourth consecutive month. Inflation also slowed to 2.6% year-on-year as oil prices declined and the euro appreciated against the world basket of currencies. Consensus forecasts for 2001 real GDP growth and consumer price inflation are 2.9% and 2.0%, respectively. U.K. fourth quarter GDP grew at an annual rate of 1.2%, down from 2.8% in the third quarter and the smallest gain since the Asian crisis of 1998. The Bank of England members came within a single vote of raising interest rates, but the base rate remains at 6%, a level at which it has remained for the last eleven months. Unemployment has also held steady at 3.6%, and manufacturing confidence has reached a nine-month high, thanks to increased exports. In Japan, unemployment remained at a high of 4.8% in December as industrial production grew by just 1.5%, less than expected for the sixth consecutive month. Nominal GDP has been declining since 1998, and revised real GDP statistics are expected to be negative for the third quarter and flat for the fourth. As a result, the yen fell to a 15-month low against the euro and an 18- month low against the U.S. dollar in mid-January. Global Environment
6 months 1 year 3 years 5 years Major Markets ended ended ended ended Total Return in U.S. Dollars 12/31/00 12/31/00 12/31/00 12/31/00 ------------------------------------------------------------------------------------------------------------------- U.S. Equity -10.14% -10.89% 10.76% 16.68% International Equities (currency unhedged) -10.80 -13.47 9.47 7.48 International Equities (currency hedged) -6.58 -4.07 14.37 14.77 U.S. Bonds 7.38 11.59 6.35 6.45 International Bonds (currency unhedged) -0.70 -2.64 2.87 1.64 International Bonds (currency hedged) 5.38 9.62 7.95 9.33 U.S. Cash Equivalents 2.94 5.65 4.88 4.89 ------------------------------------------------------------------------------------------------------------------- 6 months 1 year 3 years 5 years Major Currencies ended ended ended ended Percent Change Relative to U.S. Dollars 12/31/00 12/31/00 12/31/00 12/31/00 ------------------------------------------------------------------------------------------------------------------- Yen -7.35% -10.37% 4.42% -2.01% Pound -1.32 -7.32 -3.17 -0.77 Euro -2.06 -6.34 -4.83 -6.95 Canadian Dollar -1.35 -3.38 -1.60 -1.91 -------------------------------------------------------------------------------------------------------------------
All total returns in excess of 1 year are average annualized returns. ================================================================================ 5 U.S. Economic and Market Highlights -------------------------------------------------------------------------------- [LOGO OF BRINSON] Real GDP increased at an annual rate of 1.4% in the fourth quarter of 2000, down from 2.2% in the third quarter. The increase would have been a full percentage point higher if not for the 24% decline in automobile production. Manufacturing output led the way downward in December in declining by 1.1%, the worst month in a decade. Durable goods orders for computers and other equipment also fell by 1.4% to their lowest level in 2 years, and the NAPM factory index fell to its lowest level since March of 1991. The NAPM index is now below the `break-even' level between expansion and recession in the overall economy. Although unemployment in December remained unchanged at 4.0%, consumer confidence plummeted 14.2 points to a level not seen since October of 1990. Retail sales also posted their largest decline in a decade, -2% during the fourth quarter. The Federal Reserve responded by changing its bias in mid-December to economic weakness from inflation protection, and twice cut the overnight discount rate by half a percentage point in January, to its current level of 5.5%. Consensus forecasts of real GDP growth for 2001 remain optimistic at 2.6%, with moderate inflation of 2.7%. The dollar lost ground to all developed-market currencies except the yen, led by its 7% fall against the euro in December. This depreciation did help narrow the trade gap to $33 billion, its second consecutive monthly decline. U.S. Environment -------------------------------------------------------------------------------- Major Markets One Year Ended December 31, 2000 Total Return [GRAPH] U.S. Cash Equivalents 5.65 U.S. Bonds 11.59 U.S. Equities -10.89
Salomon U.S. Treasury Benchmark Returns One Year Ended December 31, 2000 [GRAPH] Total Return
Maturity (Years) 1 7.10 2 7.63 5 11.58 10 14.45 30 19.99
Top Ten Industry Returns Relative to S&P 500 One Year Ended December 31, 2000 [GRAPH]
0 Medical Services 102.78 Drugs 81.05 Energy Services 70.67 Oil Services 67.62 Tobacco 60.38 Defenses & Aerospace 59.57 Securities & Asset Management 58.71 Medical Products 51.34 Electric Utility 42.76 Property/Casualty Insurance 39.59
Bottom Ten Industry Returns Relative to S&P 500 One Year Ended December 31, 2000 [GRAPH]
Internet -55.42 Wireless Telecom -38.14 Motor Vehicles & Parts -31.32 Mining & Metals -29.61 Telephone -29.31 Entertainment -27.46 Department Stores -24.32 Gold -22.87 Computer Hardware -21.24 Media -16.14
================================================================================ 6 Global Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Since its inception on August 31, 1992, the Brinson Global Fund Class I has provided an annualized return of 9.14%, compared to the 11.44% return of the Global Securities Markets Mutual Fund Index. The Fund's 2000 return of 6.52% substantially outpaced the benchmark return of -6.11%. Global equities independent of currency effects fell over 8% over the course of the year, but these results were not evenly distributed. Hardest hit were technology shares and firms with any earnings weakness as equity investors engaged in a flight to quality. The poor equity performance not only rewarded the Fund's large equity underweights, but also proved to be a fruitful environment for security selection efforts. Emerging market equities fell even more significantly. Global fixed income was up strongly yet again in 2000 on a fully hedged basis. Central banks maintained a bias toward tightening monetary policy for much of the year, with only the U.S. Federal Reserve breaking ranks in December as the likelihood of an economic soft landing decreased. Prices of inflation-linked bonds and agency securities outpaced their Treasury counterparts for the second consecutive year. 2000 was a strong year for security selection in the Fund, especially within North American and European equities. U.S. fixed income issue selection was also positive over the course of the year, as higher-quality agency and asset-backed securities performed well. Although the Wilshire 5000 has lost nearly a fifth of its value since its peak earlier in the year, leading us to halve our U.S. equity underweight, there is still a strong possibility of continued declines, and global equities continue to be managed defensively. The market allocation of the Fund was also significantly positive, with the overweight to U.S. fixed income, primarily to Treasury Inflation Protected Securities (TIPS) the best decision. Smaller overweights to emerging market debt bonds denominated in euros also contributed. Developed fixed income has been reduced to fund the recent increase in equities, with the largest reduction to TIPS. Other U.S. fixed income is now neutral, and international fixed income is only slightly overweighted as a result. Currency allocation was close to neutral for the year, with benefits from the underweights to the Japanese yen and the British pound mitigated by consistent weakness to the Australian and New Zealand dollars and mixed results for the European common currency. Although the euro found record lows in 2000, it rebounded smartly late in the year and remains the Fund's largest currency overweight. The Australian overweight remains, and has been augmented by a Canadian dollar overweight. Principal underweights to the Japanese yen and British pound continue. ================================================================================ 7 Global Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Total Return
6 months 1 year 3 years 5 years Inception* ended ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 ------------------------------------------------------------------------------------------------------------------------------ Brinson Global Fund Class I 5.77% 6.52% 5.40% 8.19% 9.14% ------------------------------------------------------------------------------------------------------------------------------ Brinson Global Fund Class N 5.62 6.18 5.08 N/A 4.86 ------------------------------------------------------------------------------------------------------------------------------ GSMI Mutual Fund Index** -5.72 -6.11 8.51 10.44 11.44 ------------------------------------------------------------------------------------------------------------------------------ MSCI World Equity (Free) Index -10.86 -13.08 10.67 12.35 13.09 ------------------------------------------------------------------------------------------------------------------------------ Salomon Smith Barney World Gov't. Bond Index 1.56 1.59 3.89 3.10 5.51 ------------------------------------------------------------------------------------------------------------------------------
* Inception dates of the Brinson Global Fund Class I and Class N are 8/31/92 and 6/30/97, respectively. Performance inception date of each of the Indices is 8/31/92. ** 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 Global; 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, 2000. The performance of Class N shares will vary based upon the different inception dates and class specific expenses. 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]
Brinson GMSI MSCI Solomon Global Fund Mutual Fund World Equity Smith Barney Aug 92 $1,000,000 $1,000,000 $1,000,000 $1,000,000 Dec 93 $1,148,054 $1,179,801 $1,216,971 $1,101,932 Dec 94 $1,126,372 $1,196,582 $1,283,697 $1,127,585 Dec 95 $1,398,239 $1,500,615 $1,557,008 $1,342,275 Dec 96 $1,770,868 $1,930,073 $2,056,062 $1,394,399 Dec 97 $1,918,264 $2,247,617 $2,562,162 $1,607,603 Dec 98 $1,946,875 $2,626,332 $3,205,905 $1,539,087 Dec 00 $2,073,474 $2,465,906 $2,786,564 $1,563,630
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 Global Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Asset Allocation As of December 31, 2000 (Unaudited) Current Benchmark Strategy ------------------------------------------------------------------- U.S. Equities 40.0% 30.5% International Equities 22.0 16.5 Emerging Markets Equities 3.0 4.5 Dollar Bonds 21.0 29.5 High Yield Bonds 3.0 6.5 International Bonds 9.0 9.0 Emerging Markets Debt 2.0 3.5 Cash Equivalents 0.0 0.0 ------------------------------------------------------------------ 100.0% 100.0% Top Ten Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets ------------------------------------------------------------------ 1. Allergan, Inc. 1.33% 2. Burlington Northern Santa Fe Corp. 1.28 3. Wells Fargo & Co. 1.10 4. Electronic Data Systems Corp. 0.97 5. FedEx Corp. 0.95 6. Freddie Mac 0.90 7. Masco Corp. 0.84 8. CIGNA Corp. 0.79 9. First Data Corp. 0.78 10. Alza Corp. 0.77 ------------------------------------------------------------------ Currency Allocation As of December 31, 2000 (Unaudited) Current Benchmark Strategy ---------------------------------------------------------------------------- U.S. 66.0% 53.9% Japan 7.9 0.9 U.K. 5.1 0.0 Euro 12.6 25.7 Other Europe 2.7 2.7 Canada 1.4 5.4 Emerging Markets 3.0 4.5 Asia (Ex-Japan) 0.7 0.2 Australia/New Zealand 0.6 6.7 -------------------------------------------------------------------------- 100.0% 100.0% Top Ten Fixed Income Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets -------------------------------------------------------------------------- 1. U.S. Treasury Inflation Indexed Note, 3.875%, due 04/15/29 5.08% 2. U.S. Treasury Inflation Indexed Note, 3.625%, due 04/15/28 2.39 3. Petro Geo Services FRN, 7.186%, due 03/20/02 1.88 4. U.S. Treasury Note, 5.625%, due 05/15/08 0.69 5. Government of Japan, 3.100%, due 09/20/06 0.62 6. Government of France (OAT), 4.000%, due 10/25/09 0.60 7. Buoni Poliennali Del Tes, 6.750%, due 07/01/07 0.53 8. Government of Spain, 3.250%, due 01/31/05 0.48 9. Government of Canada, Real Return Bond, 4.250%, due 12/01/21 0.47 10. Government of France (OAT), 9.500%, due 01/25/01 0.44 -------------------------------------------------------------------------- ================================================================================ 9 Global Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. Equities Energy.................................... 0.79% Capital Investment Capital Goods............................ 1.65 Electronic Components.................... 2.74 ------ 4.39 Basic Industries Chemicals................................ 1.30 Housing/Paper............................ 0.87 Metals................................... 0.84 ------ 3.01 Computers Software................................. 0.63 Systems.................................. 0.66 ------ 1.29 Consumer Autos/Durables........................... 0.86 Food/House Products...................... 1.08 Health: Drugs............................ 2.68 Health: Non-Drugs........................ 3.10 Leisure/Tourism.......................... 0.57 Retail/Apparel........................... 2.35 Non-Durables............................. 0.24 ------ 10.88 Financial Banks.................................... 3.31 Non-Banks................................ 2.85 ------ 6.16 Telecommunications Equipment................................ 0.14 Services................................. 2.29 ------ 2.43 Transportation............................ 2.39 Services/Miscellaneous.................... 2.65 U.S. Small Capitalization Equity.......... 3.07 Utilities................................. 1.80 ------ Total U.S. Equities................... 38.86* INTERNATIONAL Equities Aerospace and Military................... 0.02 Airlines................................. 0.01 Appliances & Household................... 0.36 Autos/Durables........................... 0.39 Banking.................................. 1.68 Beverages & Tobacco...................... 0.49 Broadcasting & Publishing................ 0.79 Building Materials....................... 0.35 Business & Public Service................ 0.26 Chemicals................................ 0.65 Computer Software........................ 0.01 Construction............................. 0.06 Data Processing.......................... 0.23 Electric Components...................... 0.45 Electronics.............................. 0.33 Energy................................... 1.04 Financial Services....................... 0.81 Food & House Products.................... 0.80 Forest Products.......................... 0.10% Health: Drugs........................... 0.75 Health: Non-Drugs....................... 0.51 Industrial Components.................... 0.20 Insurance................................ 0.74 Leisure & Tourism........................ 0.20 Machinery & Engineering.................. 0.26 Merchandising............................ 0.18 Metals-Non Ferrous....................... 0.18 Metals-Steel............................. 0.06 Mining................................... 0.05 Multi-Industry........................... 0.13 Non-Durables............................. 0.03 Real Estate.............................. 0.26 Recreation............................... 0.13 Retail/Apparel........................... 0.01 Telecommunications....................... 1.49 Transportation........................... 0.44 Utilities................................ 0.61 Wholesale & International Trade.......... 0.03 ------ Total International Equities........ 15.09 EMERGING MARKETS EQUITIES................. 4.03 ------ TOTAL EQUITIES............................ 57.98 U.S. BONDS U.S. Corporate Bonds Airlines................................. 0.17 Building Materials....................... 0.05 Construction............................. 0.05 Consumer................................. 0.05 Energy................................... 1.88 Financial................................ 0.12 Publishing............................... 0.03 Recreation............................... 0.05 Retail/Apparel........................... 0.03 Services/Miscellaneous................... 0.02 Telecommunications....................... 0.21 Utilities................................ 0.17 ------ Total U.S. Corporate Bonds............ 2.83 Asset-Backed.............................. 0.38 Corporate Mortgage-Backed Securities...... 0.76 International Dollar Bonds................ 0.12 U.S. Government Mortgage-Backed Securities 1.81 U.S. Government Obligations............... 8.57 ------ Total U.S. Bonds...................... 14.47* HIGH YIELD BONDS.......................... 6.11 INTERNATIONAL BONDS Foreign Financial Bonds.................. 0.09 Foreign Government Bonds................. 8.73 ------ Total International Bonds............. 8.82 EMERGING MARKETS BONDS.................... 3.55 SHORT-TERM INVESTMENTS.................... 29.15* ------ TOTAL INVESTMENTS......... 120.08 LIABILITIES, LESS CASH AND OTHER ASSETS............................. (20.08) ------ NET ASSETS................................ 100.00% ====== -------------------------------------------------------------------------------- * The Fund held a long position in U.S. Treasury futures on December 31, 2000 which increased U.S. Bond exposure from 14.47% to 29.50%. The Fund held a short position in stock index futures on December 31, 2000 which reduced U.S. Equity exposure from 38.86% to 29.91%. These adjustments result in a net decrease in the Fund's exposure to Short- Term Investments from 29.15% to 23.07%. ================================================================================ 10 Global Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value -------- ----------- Equities -- 57.98% U.S. Equities -- 38.86% Advanced Micro Devices, Inc. (b)...................... 86,400 $ 1,193,400 Allergan, Inc......................................... 25,600 2,478,400 Alza Corp. (b)........................................ 33,900 1,440,750 American General Corp................................. 9,400 766,100 American Standard Cos., Inc. (b)...................... 13,700 675,581 Baxter International, Inc............................. 15,800 1,395,337 Brinson U.S. Small Capitalization Equity Fund (b).............................................. 267,579 5,722,892 Burlington Northern Santa Fe Corp..................... 84,500 2,392,406 Cardinal Health, Inc.................................. 10,900 1,085,912 Carnival Corp., Class A............................... 34,300 1,056,869 Chase Manhattan Corp.................................. 16,900 767,894 CIGNA Corp............................................ 11,200 1,481,760 Citigroup, Inc........................................ 9,607 490,557 Clear Channel Communications (b)...................... 9,000 435,938 CMS Energy Corp....................................... 15,600 494,325 CommScope, Inc. (b)................................... 15,400 255,063 Compaq Computer Corp.................................. 52,800 794,640 Computer Sciences Corp. (b)........................... 2,400 144,300 Compuware Corp. (b)................................... 74,500 465,625 COR Therapeutics, Inc. (b)............................ 13,100 460,956 Delhaize America, Inc................................. 1 18 Dow Chemical Co....................................... 13,300 487,113 Eastman Chemical Co................................... 5,400 263,250 Electronic Data Systems Corp.......................... 31,300 1,807,575 Emerson Electric Co................................... 17,500 1,379,219 Entergy Corp.......................................... 13,700 579,681 Exelon Corp........................................... 12,300 863,583 Exxon Mobil Corp...................................... 10,500 912,844 Federated Department Stores, Inc. (b)................. 12,600 441,000 FedEx Corp. (b)....................................... 44,200 1,766,232 First Data Corp....................................... 27,530 1,450,487 FleetBoston........................................... 26,915 1,010,995 Freddie Mac........................................... 24,300 1,673,662 Gateway, Inc. (b)..................................... 23,900 429,961 GATX Corp............................................. 6,000 299,250 General Mills, Inc.................................... 21,900 975,919 Genzyme General (b)................................... 10,400 935,350 GPU, Inc.............................................. 38,400 1,413,600 GreenPoint Financial Corp............................. 32,500 1,330,469 Household International, Inc.......................... 15,900 874,500 Illinois Tool Works, Inc.............................. 22,100 1,316,331 IMC Global, Inc....................................... 36,000 560,250 Johnson & Johnson Co.................................. 11,900 1,250,244 Johnson Controls, Inc................................. 5,700 296,400 Kimberly-Clark Corp................................... 6,400 452,416 Kroger Co. (b)........................................ 22,900 619,731 Lear Corp. (b)........................................ 24,300 602,944 Lincoln National Corp................................. 6,900 326,456 LSI Logic Corp. (b)................................... 26,200 447,758 Lyondell Chemical Co.................................. 21,000 321,563 Martin Marietta Materials, Inc........................ 13,984 591,523 Masco Corp............................................ 60,900 1,564,369 Mattel, Inc........................................... 66,000 953,040 Mead Corp............................................. 15,900 498,862 Microsoft Corp. (b)................................... 16,300 709,050 Motorola, Inc......................................... 31,430 636,457 National Semiconductor Corp. (b)...................... 35,800 720,475 New York Times Co..................................... 7,500 300,469 Newell Rubbermaid, Inc................................ 34,400 782,600 Nextel Communications, Inc. (b)....................... 37,600 930,600 Pentair, Inc.......................................... 17,996 435,278 PepsiCo, Inc.......................................... 9,100 451,019 PNC Financial Services Corp........................... 13,800 1,008,262 Praxair, Inc.......................................... 18,000 798,750 Raytheon Co., Class B................................. 23,700 736,181 Sara Lee Corp......................................... 41,900 1,029,169 SBC Communications, Inc............................... 27,900 1,332,225 SCI Systems, Inc. (b)................................. 13,000 342,875 St. Jude Medical, Inc................................. 7,200 442,350 Target Corp........................................... 21,400 690,150 Tellabs, Inc. (b)..................................... 16,800 949,200 Texas Instruments, Inc................................ 13,800 653,775 Ultramar Diamond Shamrock Corp........................ 17,402 537,287 UnitedHealth Group, Inc............................... 21,200 1,301,150 Viad Corp............................................. 16,600 381,800 W.W. Grainger, Inc.................................... 19,200 700,800 Wal-Mart Stores, Inc.................................. 17,000 903,125 Wells Fargo and Co.................................... 36,900 2,054,869 XL Capital Ltd........................................ 6,600 576,675 York International Corp............................... 12,700 389,731 ----------- Total U.S. Equities................................... 72,489,622 ----------- International Equities -- 15.09% Australia -- 0.91% Amcor Ltd............................................. 18,220 53,105 Amp Ltd............................................... 7,500 84,276 Boral Ltd............................................. 35,900 41,296 Brambles Industries Ltd............................... 2,070 48,313 Broken Hill Proprietary Co., Ltd...................... 13,110 138,099 Howard Smith Ltd...................................... 8,200 38,277 Lend Lease Corp., Ltd................................. 8,032 74,717 National Australia Bank Ltd........................... 16,127 258,189 News Corp., Ltd....................................... 21,189 164,846 News Corp., Ltd., Preferred........................... 9,236 65,695 QBE Insurance Group Ltd............................... 20,427 112,264 Rio Tinto Ltd......................................... 3,545 57,990 Santos Ltd............................................ 15,690 52,488 Telstra Corp., Ltd.................................... 36,819 131,417 Westpac Banking Corp., Ltd............................ 33,228 243,625 WMC Ltd............................................... 11,340 48,252 Woolworth's Ltd....................................... 16,260 76,080 ----------- 1,688,929 ----------- Austria -- 0.02% Austria Tabakwerke AG................................. 800 44,353 ----------- Belgium -- 0.18% Electrabel S.A........................................ 570 128,869 Fortis B.............................................. 6,287 204,239 ----------- 333,108 ----------- Canada -- 0.54% Alcan Aluminum Ltd.................................... 2,120 72,478 Canadian National Railway Co.......................... 3,820 112,794 Canadian Pacific Ltd.................................. 4,473 127,311 Imperial Oil Ltd...................................... 2,410 63,298 ================================================================================ 11 Global Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------- --------- Nortel Networks Corp..................................... 4,900 $157,407 Nova Chemicals Corp...................................... 5,104 95,488 Royal Bank of Canada..................................... 5,640 190,941 Shaw Communications, Inc., Class B....................... 7,960 185,486 --------- 1,005,203 --------- Finland -- 0.30% Nokia Oyj................................................ 6,290 280,519 Sampo Leonia Insurance, Class A.......................... 1,800 97,176 UPM-Kymmene Corp......................................... 5,420 185,996 --------- 563,691 --------- France -- 1.69% Alcatel S.A.............................................. 4,110 233,461 Aventis S.A., Class A.................................... 2,784 244,399 Axa...................................................... 1,306 188,835 Banque Nationale de Paris................................ 3,799 333,502 Cie de Saint Gobain...................................... 1,697 266,560 Groupe Danone............................................ 2,400 361,888 Lafarge S.A.............................................. 4,060 340,405 Schneider Electric S.A................................... 2,170 158,307 Suez Lyonnaise des Eaux S.A.............................. 410 74,872 Total Fina S.A., Class B................................. 4,092 608,567 Union du Credit-Bail Immobilitier........................ 890 141,805 Valeo SA................................................. 2,580 115,207 Vivendi.................................................. 1,220 80,296 --------- 3,148,104 --------- Germany -- 0.76% Allianz AG............................................... 1,080 407,631 Bayer AG................................................. 7,530 395,207 Continental AG........................................... 3,600 57,460 E.on AG.................................................. 5,489 333,954 Linde AG................................................. 2,100 101,542 Volkswagen AG............................................ 4,250 129,685 --------- 1,425,479 --------- Hong Kong -- 0.06% Giordano International Ltd............................... 25,000 11,539 Henderson Land Development Co., Ltd...................... 19,000 96,706 --------- 108,245 --------- Ireland -- 0.13% Bank of Ireland.......................................... 12,000 120,329 Eircom PLC............................................... 47,500 122,643 --------- 242,972 --------- Italy -- 0.56% ENI Spa.................................................. 82,000 523,529 ENI Spa ADR.............................................. 3,070 197,439 Rinascente Spa........................................... 10,740 63,427 Seat-Pagine Gialle Spa................................... 672 1,498 Telecom Italia Spa....................................... 23,000 254,385 --------- 1,040,278 --------- Japan -- 3.53% Acom Co., Ltd............................................ 1,600 118,109 Asahi Bank Ltd........................................... 13,000 44,282 Bank of Tokyo-Mitsubushi Ltd............................. 15,000 149,343 Benesse Corp............................................. 700 25,989 Bridgestone Corp......................................... 5,000 45,534 Canon, Inc............................................... 7,000 245,184 Dai Nippon Printing Co., Ltd............................. 5,000 74,475 Daikin Kogyo Industries Ltd.............................. 3,000 $ 57,793 Denso Corp............................................... 4,000 86,515 East Japan Railway Co.................................... 17 99,737 Fanuc.................................................... 1,400 95,254 Fuji Photo Film Co., Ltd................................. 4,000 167,426 Fujitsu.................................................. 12,000 176,953 Hitachi Ltd.............................................. 11,000 98,056 Honda Motor Co........................................... 8,000 298,424 Hoya Corp................................................ 1,000 73,555 Ito Yokado Co., Ltd...................................... 3,000 149,737 Kamigumi Co., Ltd........................................ 16,000 71,454 Kao Corp................................................. 4,000 116,287 Kirin Brewery Co., Ltd................................... 7,000 62,706 Kuraray Co., Ltd......................................... 10,000 93,520 Kyocera Corp............................................. 600 65,517 Matsushita Electric Industrial Co........................ 10,000 239,054 Minebea Co., Ltd......................................... 9,000 83,380 Mitsubishi Corp.......................................... 8,000 58,984 Mitsubishi Estate Co., Ltd............................... 11,000 117,513 Mitsubishi Trust and Banking Corp........................ 5,000 34,413 Mizuho Holding, Inc...................................... 26 161,191 Murata Manufacturing Co., Inc............................ 1,000 117,338 NEC Corp................................................. 13,000 237,916 NGK Insulators........................................... 7,000 92,741 Nintendo Corp., Ltd...................................... 1,100 173,284 Nippon Steel Co.......................................... 66,000 109,229 Nippon Telegraph & Telephone Corp........................ 57 410,779 Nomura Securities Co., Ltd............................... 13,000 233,932 Omron Corp............................................... 1,000 20,797 Orix Corp................................................ 1,100 110,385 Rohm Co.................................................. 500 95,009 Sankyo Co., Ltd.......................................... 4,000 95,972 Santen Pharmaceutical Co., Ltd........................... 4,000 79,159 Secom Co., Ltd........................................... 2,000 130,473 Shin-Etsu Chemical Co., Ltd.............................. 2,000 77,058 Softbank Corp............................................ 400 13,905 Sony Corp................................................ 3,900 269,790 Sumitomo Bank............................................ 13,000 133,529 Sumitomo Chemical Co..................................... 25,000 124,124 Takeda Chemical Industries............................... 4,000 236,778 Takefuji Corp............................................ 900 56,743 TDK Corp................................................. 1,500 146,060 Tokio Marine & Fire Insurance Co......................... 9,000 103,161 Tokyo Gas Co., Ltd....................................... 20,000 59,194 Toyota Motor Corp........................................ 6,000 191,769 West Japan Railway Co.................................... 12 53,065 Yamanouchi Pharmaceutical Co., Ltd....................... 1,000 43,257 Yamato Transport Co., Ltd................................ 3,000 55,166 --------- 6,580,998 --------- Netherlands -- 0.77% ABN AMRO Holdings NV..................................... 5,483 124,684 Akzo Nobel NV............................................ 4,300 230,931 Elsevier NV.............................................. 19,770 290,681 ING Groep NV............................................. 3,040 242,839 Koninklijke KPN NV....................................... 3,915 45,065 Philips Electronics NV................................... 5,522 202,302 Wolters Kluwer NV........................................ 10,863 296,186 --------- 1,432,688 --------- ================================================================================ 12 Global Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value -------- ------------ New Zealand -- 0.06% Auckland International Airport Ltd.................. 17,350 $ 24,107 Lion Nathan Ltd..................................... 23,420 52,750 Telecom Corp. of New Zealand Ltd.................... 17,810 37,907 ------------ 114,764 ------------ Portugal -- 0.12% EDP Electricidade de Portugal S.A................... 26,800 88,572 Portugal Telecom.................................... 15,800 144,488 ------------ 233,060 ------------ Singapore -- 0.10% DBS Group Holdings Ltd.............................. 8,000 90,427 Neptune Orient Lines................................ 22,000 17,255 SIA Engineering Co., Ltd. (b)....................... 21,000 16,228 Singapore Airport Terminal Services Ltd. (b)........ 2,000 1,822 Singapore Press Holdings Ltd........................ 1,000 14,764 Singapore Technologies Engineering Ltd.............. 14,000 22,526 United Overseas Bank Ltd............................ 2,116 15,864 ------------ 178,886 ------------ Spain -- 0.14% Banco Popular Espanol S.A........................... 2,676 93,213 Endesa S.A.......................................... 4,653 79,292 Repsol YPF SA....................................... 6,171 98,613 ------------ 271,118 ------------ Sweden -- 0.50% Electrolux AB, B Shares............................. 13,050 169,426 ForeningsSparbanken AB.............................. 17,320 265,247 Nordea AB........................................... 23,696 179,563 Sandvik AB.......................................... 3,300 79,392 Svenska Handelsbanken............................... 7,690 131,624 Swedish Match AB.................................... 26,810 104,563 ------------ 929,815 ------------ Switzerland -- 0.76% Nestle S.A. (Reg.).................................. 129 300,907 Novartis AG (Reg.).................................. 252 445,529 Roche Holding AG (Gen.)............................. 32 326,023 Swisscom AG (Reg.).................................. 588 152,942 Syngenta AG......................................... 281 15,086 Zurich Financial Services AG........................ 292 176,143 ------------ 1,416,630 ------------ United Kingdom -- 3.96% Abbey National PLC.................................. 15,000 273,143 AstraZeneca PLC..................................... 4,002 201,765 Bass PLC............................................ 7,000 76,229 BOC Group PLC....................................... 12,000 182,304 British American Tobacco PLC........................ 24,000 182,753 British Land Company PLC............................ 8,000 56,765 British Telecommunications PLC...................... 38,000 324,694 Charter PLC......................................... 21,676 56,341 De Vere Group PLC................................... 6,899 27,620 Diageo PLC.......................................... 24,209 271,227 GlaxoSmithKline PLC................................. 15,902 448,950 House of Fraser PLC................................. 30,780 28,277 Invensys PLC........................................ 77,000 180,011 Kelda Group PLC..................................... 30,080 174,792 Lattice Group PLC................................... 56,000 126,316 Lloyds TSB Group PLC................................ 25,969 274,652 Marconi PLC......................................... 32,360 347,562 Marks & Spencer PLC................................. 28,060 77,964 Northern Rock PLC................................... 12,000 77,439 Nycomed Amersham PLC................................ 18,844 156,932 P&O Princess Cruises PLC (b)........................ 35,040 148,131 Peninsular & Oriental Steam Navigation Co........... 22,040 104,368 Powergen PLC........................................ 16,000 151,054 Prudential Corp. PLC................................ 15,040 241,968 Reckitt Benckiser PLC............................... 7,000 96,410 Reed International PLC.............................. 14,010 146,498 Rentokil Initial PLC................................ 41,000 141,479 RJB Mining PLC...................................... 26,590 26,215 RMC Group PLC....................................... 12,000 105,582 Rolls-Royce PLC..................................... 10,000 29,615 Royal & Sun Alliance Insurance Group PLC............ 15,884 135,959 Royal Bank of Scotland Group PLC.................... 13,000 307,217 Scottish & Newcastle PLC............................ 27,000 189,564 Scottish & Southern Energy PLC...................... 24,380 225,798 Shell Transport & Trading Co........................ 49,000 401,849 Tesco PLC........................................... 62,190 253,385 Trinity Mirror PLC.................................. 14,815 100,972 Unilever PLC........................................ 34,000 291,024 United News & Media PLC............................. 15,990 203,031 United Utilities PLC................................ 17,000 168,875 Vodafone Group PLC.................................. 100,956 370,236 ------------ 7,384,966 ------------ Total International Equities........................ 28,143,287 ------------ Emerging Markets Equities -- 4.03% Brinson Emerging Markets Equity Fund (b)............ 910,794 7,512,046 ------------ Total Equities (Cost $105,561,572).................. 108,144,955 ------------ Face Amount -------- Bonds -- 32.95% U.S. Bonds -- 14.47% U.S. Corporate Bonds -- 2.83% Avon Products, Inc., 7.150%, due 11/15/09........... $ 85,000 85,427 Capital One Bank, Bank Notes, 8.250%, due 06/15/05............................... 50,000 50,569 Cendant Corp., 7.750%, due 12/01/03................. 100,000 97,359 Centaur Funding Corp., Class B, 144A, 9.080%, due 04/21/20............................... 1,000 182,500 Centex Corp., 9.750%, due 06/15/05.................. 85,000 87,110 Chesapeake & Potomac Tel, MD, 8.000%, due 10/15/29............................... 78,000 80,467 Continental Airlines, Inc., E.E.T.C., 6.320%, due 11/01/08............................... 200,000 194,856 Federated Department Stores 6.300%, due 04/01/09............................... 35,000 31,805 8.500%, due 06/01/10............................... 15,000 15,669 Florida Power & Light Co., 6.875%, due 12/01/05............................... 100,000 102,386 FMR Corp., 144A, 7.570%, due 06/15/29............... 60,000 60,393 KeySpan Corp., 7.625%, due 11/15/10................. 50,000 53,127 Lowe's Cos. Inc., 7.500%, due 12/15/05.............. 100,000 102,009 News America Holdings, 7.750%, due 12/01/45............................... 60,000 51,785 ================================================================================ 13 Global Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Face Amount Value -------- ----------- Nisource Finance Corp., 144A, 7.875%, due 11/15/10.............................. $ 65,000 $ 68,284 Pacific Gas & Electric Co., 7.050%, due 03/01/24.............................. 100,000 75,280 PanAmSat Corp., 6.375%, due 01/15/08............... 145,000 130,519 Petro Geo Services FRN, 7.186%, due 03/20/02.............................. 3,500,000 3,500,343 Pharmacia Corp., 6.600%, due 12/01/28.............. 100,000 94,952 Service Corp. International, 6.000%, due 12/15/05.............................. 60,000 32,700 United Airlines, Inc., E.E.T.C., 7.811%, due 10/01/09.............................. 125,000 125,750 Verizon Global Funding Corp. 144A, 7.750%, due 12/01/30.............................. 50,000 50,876 ----------- 5,274,166 ----------- Asset-Backed -- 0.38% Capital One Master Trust, 7.200%, due 08/15/08.............................. 460,000 481,825 Vanderbilt Mortgage Finance, 8.255%, due 05/07/17.............................. 215,000 229,207 ----------- 711,032 ----------- Corporate Mortgage- Backed Securities -- 0.76% DLJ Commercial Mortgage Corp., 7.300%, due 06/10/09.............................. 145,000 152,679 DLJ Commercial Mortgage Corp., 99-CG2, Class A1B, 7.180%, due 08/10/10................... 125,000 130,924 Morgan Stanley Capital I, 6.710%, due 12/15/31...................................... 100,000 101,752 Norwest Asset Securities Corp., 96-2, Class A9, 7.000%, due 09/25/11.................... 435,000 436,566 Residential Asset Securitization Trust, 7.500%, due 07/25/11.............................. 542,710 547,014 Residential Asset Securitization Trust, 97-A7, Class A1, 7.500%, due 09/25/27.................... 1,218 1,218 Thrift Financial Corp., Class A4,11.250%, due 01/01/16...................................... 39,369 39,988 ----------- 1,410,141 ----------- International Dollar Bonds -- 0.12% Banco Santiago S.A., 7.000%, due 07/18/07...................................... 80,000 74,675 Royal Bank of Scotland Group PLC, 7.816%, due 12/31/05.............................. 150,000 152,951 ----------- 227,626 ----------- U.S. Government Mortgage- Backed Securities -- 1.81% Fannie Mae Whole Loan, 95-W3, Class A, 9.000%, due 04/25/25.............................. 14,945 15,521 Federal Home Loan Mortgage Corp., Gold 5.500%, due 02/01/07.............................. 588,686 571,682 6.500%, due 04/01/29.............................. 824,250 812,805 Federal National Mortgage Association 6.500%, due 03/01/19.............................. 257,549 255,788 7.125%, due 06/15/10.............................. 505,000 546,845 7.500%, due 01/12/30.............................. 645,000 653,668 Government National Mortgage Association 6.000%, due 02/20/29.............................. 272,021 263,058 6.500%, due 01/15/29.............................. 248,701 246,025 9.000%, due 11/15/04.............................. 5,381 5,672 9.000%, due 11/15/04.............................. 1,803 1,900 ----------- 3,372,964 ----------- U.S. Government Obligations -- 8.57% U.S. Treasury Inflation Indexed Note 3.625%, due 04/15/28.............................. 4,225,000 4,460,244 3.875%, due 04/15/29.............................. 8,735,000 9,478,130 U.S. Treasury Note 5.625%, due 05/15/08.............................. 1,260,000 1,294,235 6.625%, due 05/31/02.............................. 670,000 681,491 6.625%, due 02/15/27.............................. 20,000 22,838 7.500%, due 02/15/05.............................. 50,000 54,380 ----------- 15,991,318 ----------- Total U.S. Bonds................................... 26,987,247 ----------- Shares ---------- High Yield Bonds -- 6.11% Brinson High Yield Fund (b)........................ 861,562 11,397,954 ----------- Face Amount ---------- International Bonds -- 8.82% Austria -- 0.47% Republic of Austria 4.300%, due 07/15/03...........................EUR 320,000 298,338 5.500%, due 01/15/10.............................. 600,000 576,869 ----------- 875,207 ----------- Canada -- 1.15% Government of Canada, Real Return Bond 4.250%, due 12/01/21...........................CAD 1,005,000 868,569 4.250%, due 12/01/26.............................. 275,000 229,321 Government of Canada 5.250%, due 12/01/01.............................. 170,000 113,052 7.000%, due 12/01/06.............................. 550,000 396,234 9.000%, due 03/01/11.............................. 500,000 423,203 9.000%, due 06/01/25.............................. 110,000 104,456 ----------- 2,134,835 ----------- Denmark -- 0.92% Depfa Pfandbrief Bank 5.750%, due 03/04/09...........................EUR 815,000 785,440 Kingdom of Denmark 4.000%, due 02/15/01...........................DKK 3,100,000 389,084 7.000%, due 12/15/04.............................. 1,880,000 253,970 7.000%, due 11/10/24.............................. 1,870,000 279,915 ----------- 1,708,409 ----------- France -- 1.47% Government of France (OAT) 4.000%, due 10/25/09...........................EUR 1,270,000 1,117,035 8.500%, due 12/26/12.............................. 650,000 796,419 9.500%, due 01/25/01.............................. 875,000 823,385 ----------- 2,736,839 ----------- ================================================================================ 14 Global Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Face Amount Value ----------- ------------ Germany -- 0.74% Bundesrepublik Deutschland 6.250%, due 04/26/06.......................EUR 475,000 $ 478,751 6.250%, due 01/04/24.......................... 320,000 334,621 8.375%, due 05/21/01.......................... 480,000 456,420 DePfa Deutsche Pfandbriefbank AG, 4.750%, due 03/20/03.......................... 120,000 112,671 ------------ 1,382,463 ------------ Italy -- 1.16% Buoni Poliennali Del Tes 3.250%, due 04/15/04.......................... 450,000 405,070 5.000%, due 05/01/08.......................... 720,000 674,564 6.750%, due 07/01/07.......................... 970,000 993,627 12.000%, due 09/01/02......................... 95,000 99,417 ------------ 2,172,678 ------------ Japan -- 1.58% Government of Japan 2.700%, due 06/20/07.......................JPY 60,000,000 572,652 3.000%, due 09/20/05.......................... 55,000,000 527,238 3.100%, due 09/20/06.......................... 120,000,000 1,165,635 3.900%, due 06/21/04.......................... 70,000,000 674,133 ------------ 2,939,658 ------------ Spain -- 0.69% Government of Spain 3.250%, due 01/31/05.......................EUR 1,000,000 890,694 6.150%, due 01/31/13.......................... 400,001 403,301 ------------ 1,293,995 ------------ Sweden -- 0.33% Government of Sweden 6.750%, due 05/05/14.......................SEK 1,890,000 234,923 10.250%, due 05/05/03......................... 3,200,000 382,972 ------------ 617,895 ------------ United Kingdom -- 0.31% Halifax PLC, Series EMTN, 8.750%, due 07/10/06.......................GBP 100,000 165,535 U.K. Treasury, 6.250%, due 11/25/10............ 250,000 413,925 ------------ 579,460 ------------ Total International Bonds...................... 16,441,439 ------------ Shares ----------- Emerging Markets Bonds -- 3.55% Brinson Emerging Markets Debt Fund (b)......... 245,194 6,625,204 ------------ Total Bonds (Cost $59,033,922)................. 61,451,844 ------------ Short-Term Investments -- 29.15% Investment Companies -- 8.63% Brinson Supplementary Trust U.S. Cash Management Prime Fund.......................... 16,102,318 16,102,318 ------------ U.S. Corporate Bonds -- 9.18% Arrow Electronics, Inc., 7.803%, due 10/05/01.......................... $ 2,500,000 2,499,813 Case Credit Corp., MTN, 5.910%, due 02/19/01.................................. 2,500,000 2,492,050 Centex Corp., 6.951%, due 04/02/01............. 5,000,000 5,000,880 Dominion Resources, Inc., 6.993%, due 01/26/01.......................... 1,723,000 1,723,000 GATX Capital Corp., Series F, MTN, 7.460%, due 04/25/01.......................... 1,000,000 1,000,722 Heller Financial, Inc., 6.471%, due 04/06/01... 2,500,000 2,499,172 Pacific Gas & Electric Co., 144A, 7.059%, due 10/31/01.......................... 2,000,000 1,900,000 ------------ 17,115,637 ------------ U.S. Government Obligations -- 1.71% U.S. Treasury Bill, due 02/08/01............... 3,200,000 3,181,318 ------------ Commercial Paper -- 9.63% Albertson's, Inc., 7.850%, due 02/28/01........ 2,000,000 1,974,706 Alcoa, Inc., 6.500%, due 01/02/01.............. 1,580,000 1,579,715 Boston Scientific Corp., 7.400%, due 01/02/01.......................... 2,000,000 1,999,589 Dial Corp., 8.000%, due 03/02/01............... 2,000,000 1,973,333 Harrah's Operating, 7.600%, due 01/03/01.......................... 2,000,000 1,999,155 Houston Industries Finance, 8.250%, due 01/16/01.......................... 2,000,000 1,993,125 Kansas City Power & Light, 7.200%, due 01/02/01.......................... 2,480,000 2,479,504 MCN Energy Enterprises, 8.100%, due 02/20/01.......................... 2,000,000 1,977,500 Utilicorp United, 8.100%, due 01/19/01......... 2,000,000 1,991,900 ------------ 17,968,527 ------------ Total Short-Term Investments (Cost $54,463,332)............................ 54,367,800 ------------ Total Investments (Cost $219,058,826) -- 120.08% (a)............ 223,964,599 Liabilities, less cash and other assets -- (20.08%)...................... (37,454,272) ------------ Net Assets -- 100%............................. $186,510,327 ============ See accompanying notes to schedule of investments. ================================================================================ 15 Global Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $219,058,826; and net unrealized appreciation consisted of: Gross unrealized appreciation..................... $ 17,996,076 Gross unrealized depreciation..................... (13,090,303) ------------ Net unrealized appreciation................... $ 4,905,773 ============ (b) Non-income producing security E.E.T.C.: Enhanced Equipment Trust Certificate FRN: Floating Rate Note -- The rate disclosed is that in effect at December 31, 2000. MTN: Medium Term 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 buyers. At December 31, 2000, the value of these securities amounted to $2,262,053 or 1.21% of net assets. FORWARD FOREIGN CURRENCY CONTRACTS The Global Fund had the following open forward foreign currency contracts as of December 31, 2000:
Settlement Local Current Unrealized Date Currency Value Gain/(Loss) ---------- ------------- ----------- ------------ Forward Foreign Currency Buy Contracts: Australian Dollar.................................... 02/08/01 26,300,000 $14,619,070 $ (683,322) British Pound........................................ 02/08/01 1,750,000 2,616,001 36,993 Canadian Dollar...................................... 02/08/01 11,000,000 7,329,424 219,439 Euro................................................. 02/08/01 49,600,000 46,652,496 625,443 Japanese Yen......................................... 02/08/01 630,000,000 5,553,189 (465,451) New Zealand Dollar................................... 02/08/01 10,500,000 4,645,668 298,038 Swiss Franc.......................................... 02/08/01 4,000,000 2,477,102 42,828 Forward Foreign Currency Sale Contracts: Australian Dollar.................................... 02/08/01 14,600,000 8,115,530 (71,154) British Pound........................................ 02/08/01 6,300,000 9,417,603 65,157 Euro................................................. 02/08/01 12,500,000 11,757,182 (566,356) Japanese Yen......................................... 02/08/01 1,600,000,000 14,103,337 996,416 Swiss Franc.......................................... 02/08/01 1,800,000 1,114,696 (99,342) ----------- Total.............................................. $ 398,689 ===========
FUTURES CONTRACTS The Global Fund had the following open futures contracts as of December 31, 2000:
Expiration Cost/ Current Unrealized Date Proceeds Value Gain ---------- ----------- ----------- ----------- U.S. Interest Rate Futures Buy Contracts: 5 year U.S. Treasury Notes, 211 contracts.......... March 2001 $21,419,555 $21,851,687 $ 432,132 10 year U.S. Treasury Notes, 45 contracts.......... March 2001 4,609,346 4,718,672 109,326 30 year U.S. Treasury Bonds, 14 contracts.......... March 2001 1,423,036 1,464,750 41,714 Index Futures Sale Contracts: Standard & Poor's 500, 50 contracts................ March 2001 17,454,756 16,687,500 767,256 ----------- Total............................................ $ 1,350,428 ===========
The market value of investments pledged to cover margin requirements for the open futures positions at December 31, 2000 was $3,181,318. ================================================================================ See accompanying notes to financial statements. 16 Global Equity Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] The Brinson Global Equity Fund Class I has provided an annualized return of 10.11% since its performance inception on January 31, 1994 compared to the 11.69% return for its benchmark, the MSCI World Equity (Free) Index. For the year 2000, the Fund achieved a return of -0.08%, outperforming the index's unhedged return of -13.08%. Most regions produced low or negative returns in 2000. The underlying theme driving returns after the end of the first quarter was the deflation of the technology, media and telecommunications (TMT) bubble. The decline of these sectors is evidenced by the enormous disparity between the MSCI World Value Index and the MSCI World Growth Index. These indices returned 4.1% and -23.0% in local currency, respectively. TMT sectors declined globally. Technology declined while defensive or Old Economy sectors outperformed. The Fund was well-positioned for these trends with significant underweights in the technology hardware, software and services and telecommunication services sectors. At year-end 1999 and continuing into the first quarter of 2000, these sectors had achieved valuations that projected high growth prospects into the distant future, thus ignoring the effects of competition and of the economic environment. As the U.S. Federal Reserve increased rates, inducing a slowdown in the U.S. economy, TMT stocks suffered accordingly. Conversely, the Fund was overweighted in sectors that performed well including selected financials, materials, food and beverage and utilities. These lowly valued sectors did well as they became safe havens for investors fleeing technology exposure. The Fund's geographic weightings take into account relative valuations between industrial sectors. We maintain a significant underweight in the U.S., as its equity market contains the largest and most aggressively valued stocks. Similarly, the Fund is underweighted in Japan, because of technology exposure and a very weak economy. The Fund is overweighted in the UK, where we find a number of attractively valued stocks and in Australia and New Zealand, a region with considerable promise. Continental Europe and Asia (Ex-Japan) are close to neutral, reflecting opportunities elsewhere. During the year we maintained an underweight to the Japanese yen with an associated overweight in the Australian and New Zealand dollars and an overweight to the euro with an associated underweight to the British pound. The Fund benefited from the sharp strengthening of the euro at year-end as U.S. markets declined and the Japanese yen fell. Overall, currency was a modest contributor to performance for the year. We are maintaining these positions into 2001. Going forward we are selectively taking advantage of the decline in sector valuations to improve the quality of the Fund without a concomitant increase in valuations. We are also picking over the TMT sectors to identify well-positioned companies whose stocks have fallen to attractive valuations with the sector decline. ================================================================================ 17 Global Equity Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Total Return
6 months 1 year 3 years 5 years Inception* ended ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 --------------------------------------------------------------------------------------------- Brinson Global Equity Fund Class I 2.56% -0.08% 8.74% 10.79% 10.11% --------------------------------------------------------------------------------------------- Brinson Global Equity Fund Class N 2.42 -0.31 8.44 N/A 6.61 --------------------------------------------------------------------------------------------- MSCI World Equity (Free) Index -10.86 -13.08 10.67 12.35 11.69 ---------------------------------------------------------------------------------------------
* Performance inception date of the Brinson Global Equity Fund Class I and MSCI World Equity (Free) Index is 1/31/94 and inception date of Class N is 6/30/97. 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, 2000. The performance of Class N shares will vary based upon the different inception dates and class specific expenses. 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 [GRAPH]
Brinson Global MSCI World Equity Fund Equity (Free) Index Jan 94 $1,000,000 $1,000,000 Dec 94 $ 956,520 989,551 Dec 95 $1,166,324 $1,200,236 Dec 96 $1,367,688 $1,367,286 Dec 97 $1,514,304 $1,584,937 Dec 98 $1,726,828 $1,975,069 Dec 99 $1,949,056 $2,471,305 Dec 00 $1,947,323 $2,148,052
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. ================================================================================ 18 Global Equity Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Market Allocation As of December 31, 2000 (Unaudited) Current Benchmark Strategy -------------------------------------------------------------- U.S. 50.6% 50.4% Australia 1.3 3.2 Austria 0.1 0.0 Belgium 0.4 0.8 Canada 2.4 1.5 Denmark 0.4 0.5 Finland 1.3 2.1 France 5.5 4.2 Germany 4.1 1.5 Hong Kong 1.0 1.2 Ireland 0.3 0.6 Italy 2.2 1.0 Japan 10.6 8.6 Netherlands 2.7 2.8 New Zealand 0.1 0.0 Norway 0.2 0.0 Portugual 0.2 0.6 Singapore 0.5 1.0 Spain 1.4 2.0 Sweden 1.3 1.5 Switzerland 3.4 3.9 United Kingdom 10.0 12.6 Cash Reserves 0.0 0.0 ---------------------------------------------------------------- 100.0% 100.0% Top Ten U.S. Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets -------------------------------------------------------------- 1. Wells Fargo and Co. 1.59% 2. Masco Corp. 1.59 3. Microsoft Corp. 1.47 4. Johnson & Johnson Co. 1.45 5. FedEx Corp. 1.27 6. Wal-Mart Stores, Inc. 1.09 7. Emerson Electric Co. 1.08 8. Praxair, Inc. 1.07 9. First Data Corp. 1.03 10. Exxon Mobil Corp. 1.01 -------------------------------------------------------------- Currency Allocation As of December 31, 2000 (Unaudited) Current Benchmark Strategy -------------------------------------------------------------- U.S. 50.5% 39.6% Australia 1.3 7.3 Canada 2.4 6.4 Denmark 0.4 0.4 Euro 18.4 32.3 Hong Kong 1.0 0.0 Japan 10.6 2.6 New Zealand 0.1 2.1 Norway 0.2 0.2 Singapore 0.5 0.5 Sweden 1.2 1.2 Switzerland 3.4 3.4 United Kingdom 10.0 4.0 -------------------------------------------------------------- 100.0% 100.0% Top Ten International Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets -------------------------------------------------------------- 1. Bayer AG 1.02% 2. Banque Nationale de Paris 0.98 3. Groupe Danone 0.98 4. Orix Corp. 0.94 5. Roche Holding AG 0.91 6. National Australian Bank Ltd., Convertible Preferred, 7.875% 0.90 7. Nokia Oyj 0.89 8. Diageo PLC 0.83 9. UPM-Kymmene Corp. 0.83 10. Nycomed Amersham PLC 0.75 -------------------------------------------------------------- ================================================================================ 19 Global Equity Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. EQUITIES Energy............................................................ 1.95% Capital Investment Capital Goods..................................................... 0.60 Electronic Components............................................. 2.30 Technology........................................................ 1.40 ------- 4.30 Basic Industries Chemicals......................................................... 2.23 Housing/Paper..................................................... 1.41 Metals............................................................ 2.33 ------- 5.97 Computers Services.......................................................... 0.25 Software.......................................................... 2.17 Systems........................................................... 1.38 ------- 3.80 Consumer Autos/Durables.................................................... 0.92 Food & House Products............................................. 1.17 Health: Drugs..................................................... 5.85 Health: Non-Drugs................................................. 2.76 Non-Durables...................................................... 0.52 Recreation........................................................ 0.40 Retail/Apparel.................................................... 2.62 ------- 14.24 Financial Banks............................................................. 3.51 Non-Banks......................................................... 2.10 ------- 5.61 Telecommunications Services........................................ 3.56 Transportation..................................................... 2.21 Services/Miscellaneous............................................. 3.21 Utilities.......................................................... 1.71 ------- Total U.S. Equities............................................ 46.56 INTERNATIONAL EQUITIES Appliances & Households............................................ 0.95% Autos/Durables..................................................... 1.10 Banking............................................................ 6.48 Beverages and Tobacco.............................................. 1.83 Broadcasting & Publishing.......................................... 2.89 Building Materials................................................. 0.60 Business & Public Service.......................................... 0.81 Chemicals.......................................................... 1.45 Construction....................................................... 0.21 Data Processing.................................................... 0.45 Electric Components................................................ 2.65 Electronics........................................................ 0.44 Energy............................................................. 1.61 Financial Services................................................. 3.71 Food & House Products.............................................. 2.05 Forest Products.................................................... 0.83 Health & Personal Care............................................. 3.53 Housing/Paper...................................................... 0.42 Insurance.......................................................... 1.84 Machinery & Engineering............................................ 0.30 Merchandising...................................................... 1.43 Mining............................................................. 0.70 Multi-Industry..................................................... 1.38 Non-Ferrous Metals................................................. 0.27 Real Estate........................................................ 1.25 Recreation......................................................... 0.47 Technology......................................................... 0.12 Telecommunications................................................. 4.32 Textile & Apparel.................................................. 0.74 Transportation..................................................... 0.21 Utilities.......................................................... 2.78 ------- Total International Equities................................... 47.82 SHORT-TERM INVESTMENTS............................................. 1.30 ------- TOTAL INVESTMENTS.............................................. 95.68 CASH AND OTHER ASSETS, LESS LIABILITIES.................................................. 4.32 ------- NET ASSETS......................................................... 100.00% ======= ================================================================================ 20 Global Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value -------- ----------- Equities -- 94.38% U.S. Equities -- 46.56% Abbott Laboratories................................. 8,200 $ 397,188 Advanced Micro Devices, Inc. (b).................... 29,200 403,325 Allergan, Inc....................................... 5,300 513,106 Alza Corp. (b)...................................... 12,600 535,500 American Electric Power Co., Inc.................... 12,780 594,270 American General Corp............................... 4,500 366,750 American Home Products Corp......................... 8,700 552,885 Analog Devices, Inc. (b)........................... 2,600 133,088 Bank of America Corp................................ 9,000 412,875 Baxter International, Inc........................... 6,400 565,200 BellSouth Corp...................................... 10,500 429,844 Bristol-Myers Squibb Co............................. 7,000 517,562 Burlington Northern Santa Fe Corp................... 21,000 594,562 Carnival Corp., Class A............................. 8,200 252,663 Chase Manhattan Corp................................ 6,900 313,519 Citigroup, Inc...................................... 4,500 229,781 Compaq Computer Corp................................ 10,600 159,530 Computer Sciences Corp. (b)......................... 3,500 210,438 Compuware Corp. (b)................................. 31,300 195,625 COR Therapeutics, Inc. (b).......................... 6,000 211,125 Dell Computer Corp. (b)............................. 17,300 301,669 Dominion Resources, Inc............................. 8,700 582,900 E.I. du Pont de Nemours and Co...................... 6,800 328,525 Electronic Data Systems Corp........................ 4,000 231,000 Eli Lilly and Co.................................... 4,300 400,169 Emerson Electric Co................................. 8,600 677,787 Exxon Mobil Corp.................................... 7,300 634,644 Federated Department Stores, Inc. (b)............... 9,000 315,000 FedEx Corp. (b)..................................... 20,000 799,200 First Data Corp..................................... 12,304 648,267 FleetBoston......................................... 5,300 199,081 Ford Motor Company.................................. 11,400 267,188 Gateway, Inc. (b)................................... 10,400 187,096 General Mills, Inc.................................. 6,500 289,656 Genzyme General (b)................................. 2,900 260,819 GPU, Inc............................................ 13,400 493,287 GreenPoint Financial Corp........................... 10,500 429,844 Household International, Inc........................ 8,600 473,000 Illinois Tool Works, Inc............................ 7,800 464,587 International Business Machines Corp................ 1,700 144,500 Johnson & Johnson Co................................ 8,700 914,044 Kimberly-Clark Corp................................. 6,100 431,209 Lucent Technologies, Inc............................ 8,000 108,000 Masco Corp.......................................... 38,900 999,244 Mattel, Inc......................................... 18,000 259,920 McGraw-Hill Companies, Inc.......................... 8,100 474,862 Micron Technology, Inc. (b)......................... 11,900 422,450 Microsoft Corp. (b)................................. 21,300 926,550 Motorola, Inc....................................... 16,015 324,304 National Semiconductor Corp. (b).................... 5,400 108,675 Newell Rubbermaid, Inc.............................. 7,200 163,800 Nextel Communications, Inc. (b)..................... 11,300 279,675 Oracle Corp. (b).................................... 15,200 441,750 PepsiCo, Inc........................................ 6,600 327,113 Pfizer, Inc......................................... 7,000 322,000 PNC Financial Services Corp......................... 3,600 263,025 Praxair, Inc........................................ 15,200 674,500 Raytheon Co., Class B............................... 12,100 375,856 Sapient Corp. (b)................................... 13,100 156,381 Sara Lee Corp....................................... 18,100 444,581 SBC Communications, Inc............................. 10,700 510,925 SCI Systems, Inc. (b)............................... 4,600 121,325 Smurfit-Stone Container Corp. (b)................... 30,500 455,594 Target Corp......................................... 6,900 222,525 Tellabs, Inc. (b)................................... 5,000 282,500 Texas Instruments, Inc.............................. 8,600 407,425 Verizon Communications, Inc......................... 8,200 411,025 Viacom, Inc. (b)................................... 4,560 214,320 W.W. Grainger, Inc.................................. 8,600 313,900 Wal-Mart Stores, Inc................................ 12,900 685,312 Watson Pharmaceutical Co. (b)....................... 4,500 230,344 Wells Fargo and Co.................................. 18,000 1,002,375 XL Capital Ltd...................................... 3,600 314,550 ----------- Total U.S. Equities................................. 29,307,114 ----------- International Equities -- 47.82% Australia -- 3.03% Broken Hill Proprietary Co., Ltd.................... 24,950 262,820 Lend Lease Corp., Ltd............................... 11,294 105,062 National Australia Bank Ltd., Convertible Preferred, 7.875%................................. 19,700 563,912 News Corp., Ltd..................................... 22,540 175,357 News Corp., Ltd., Preferred......................... 35,000 248,954 Rio Tinto Ltd....................................... 10,263 167,884 Westpac Banking Corp., Ltd.......................... 52,645 385,988 ----------- 1,909,977 ----------- Belgium -- 0.79% Electrabel S.A...................................... 1,480 334,608 Fortis B............................................ 5,002 162,494 ----------- 497,102 ----------- Canada -- 1.50% Nortel Networks Corp................................ 12,200 391,911 NOVA Chemicals Corp................................. 14,200 265,659 Shaw Communications, Inc., Class B.................. 12,200 284,288 ----------- 941,858 ----------- Denmark -- 0.19% Tele Danmark A/S.................................... 2,900 118,190 ----------- Finland -- 2.14% Nokia Oyj........................................... 12,500 557,470 Stora Enso Oyj...................................... 22,500 266,177 UPM-Kymmene Corp.................................... 15,200 521,613 ----------- 1,345,260 ----------- France -- 4.91% Alcatel S.A......................................... 4,930 280,040 Aventis S.A., Class A............................... 5,250 460,881 Banque Nationale de Paris........................... 7,062 619,951 Cie de Saint Gobain................................. 876 137,600 Groupe Danone....................................... 4,110 619,734 Schneider Electric S.A.............................. 5,050 368,409 Total Fina S.A., Class B............................ 2,489 370,167 Vivendi............................................. 3,559 234,241 ----------- 3,091,023 ----------- ================================================================================ 21 Global Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value -------- ----------- Germany -- 1.41% Bayer AG............................................. 12,290 $ 645,032 DaimlerChrysler AG................................... 5,750 244,289 ----------- 889,321 ----------- Hong Kong -- 1.25% Cheung Kong Holdings, Ltd............................ 20,000 255,773 Guoco Group Ltd...................................... 93,000 277,215 Hong Kong Electric Holdings.......................... 69,000 254,772 ----------- 787,760 ----------- Ireland -- 0.59% Bank of Ireland...................................... 37,200 373,020 ----------- Italy -- 0.93% ENI Spa.............................................. 69,000 440,530 Telecom Italia Spa................................... 13,000 143,783 ----------- 584,313 ----------- Japan -- 8.80% Acom Co., Ltd........................................ 1,000 73,818 Bank of Tokyo-Mitsubushi Ltd......................... 15,000 149,343 Benesse Corp......................................... 3,600 133,660 Canon, Inc........................................... 8,000 280,210 Fuji Photo Film Co., Ltd............................. 7,000 292,995 Fujitsu.............................................. 5,000 73,730 Honda Motor Co....................................... 12,000 447,636 Hoya Corp............................................ 2,000 147,110 Ito Yokado Co., Ltd.................................. 4,000 199,650 Kao Corp............................................. 4,000 116,287 Minebea Co., Ltd..................................... 27,000 250,140 Mitsubishi Estate Co., Ltd........................... 25,000 267,075 Mizuho Holding, Inc.................................. 56 347,180 Nippon Telegraph & Telephone Corp.................... 44 317,093 Nomura Securities Co., Ltd........................... 24,000 431,874 Orix Corp............................................ 5,900 592,067 Rohm Co.............................................. 900 171,016 Secom Co., Ltd....................................... 2,000 130,473 Sony Corp............................................ 5,800 401,226 Takeda Chemical Industries........................... 5,000 295,972 TDK Corp............................................. 3,000 292,119 West Japan Railway Co................................ 30 132,662 ----------- 5,543,336 ----------- Netherlands -- 2.91% ABN AMRO Holdings NV................................. 16,600 377,485 Aegon NV............................................. 6,806 281,549 Elsevier NV.......................................... 16,600 244,072 ING Groep NV......................................... 58 4,633 Philips Electronics NV............................... 12,067 442,084 TNT Post Group NV.................................... 10,137 245,173 Wolters Kluwer NV.................................... 8,689 236,910 ----------- 1,831,906 ----------- Portugal -- 0.60% EDP Electricidade de Portugal S.A.................... 115,000 380,065 ----------- Singapore -- 0.52% DBS Group Holdings Ltd............................... 13,000 146,943 Singapore Press Holdings Ltd......................... 12,046 177,842 ----------- 324,785 ----------- Spain -- 1.94% Altadis S.A.......................................... 27,724 429,495 Banco Popular Espanol S.A............................ 7,099 247,280 Banco Santander Central Hispano S.A.................. 24,155 258,541 Endesa S.A........................................... 7,814 133,158 Telefonica S.A. (b).................................. 9,171 151,547 ----------- 1,220,021 ----------- Sweden -- 1.56% Electrolux AB, B Shares.............................. 14,950 194,094 Investor AB, B Shares................................ 14,170 211,750 Nordea AB............................................ 49,390 374,266 Swedish Match AB..................................... 51,990 202,770 ----------- 982,880 ----------- Switzerland -- 3.56% Nestle S.A. (Reg.)................................... 119 277,581 Novartis AG (Reg.)................................... 240 424,314 Roche Holding AG (Gen.).............................. 56 570,540 Swiss Reinsurance Co. (Reg.)......................... 170 407,559 Swisscom AG (Reg.)................................... 750 195,079 Zurich Financial Services AG......................... 608 366,563 ----------- 2,241,636 ----------- United Kingdom -- 11.19% Barclays PLC......................................... 5,000 154,759 British Land Company PLC............................. 22,000 156,103 British Telecommunications PLC....................... 31,000 264,882 Diageo PLC........................................... 46,630 522,422 Dixons Group PLC..................................... 26,000 86,999 FKI PLC.............................................. 83,405 274,100 Hanson PLC........................................... 35,000 239,980 HSBC Holdings PLC.................................... 22,000 323,708 International Power PLC.............................. 50,500 189,348 Invensys PLC......................................... 82,000 191,700 Lattice Group PLC (b)................................ 147,000 331,581 Lloyds TSB Group PLC................................. 34,220 361,916 Marconi PLC.......................................... 18,000 193,329 Northern Foods PLC................................... 53,000 109,257 Nycomed Amersham PLC................................. 57,000 474,695 Powergen PLC......................................... 49,000 462,603 Prudential Corp. PLC................................. 19,000 305,678 Reckitt Benckiser PLC................................ 12,000 165,275 Rentokil Initial PLC................................. 53,800 185,648 RMC Group PLC........................................ 15,000 131,978 Scottish & Southern Energy PLC....................... 40,650 376,485 Tesco PLC............................................ 77,250 314,744 The Great Universal Stores PLC....................... 49,000 384,648 Trinity Mirror PLC................................... 21,175 144,318 United News & Media PLC.............................. 24,000 304,737 Vodafone Group PLC................................... 107,188 393,090 ----------- 7,043,983 ----------- Total International Equities......................... 30,106,436 ----------- Total Equities (Cost $53,543,707).................... 59,413,550 ----------- ================================================================================ 22 Global Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value -------- ----------- Short-Term Investments -- 1.30% Investment Companies -- 1.30% Brinson Supplementary Trust U.S. Cash Management Prime Fund (Cost $817,830)...................... 817,830 $ 817,830 ----------- Total Investments (Cost $54,361,537) -- 95.68% (a)..... 60,231,380 Cash and other assets, less liabilities -- 4.32%............ 2,720,043 ----------- Net Assets -- 100%..................... $62,951,423 =========== NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $54,361,537; and net unrealized appreciation consisted of: Gross unrealized appreciation......................... $11,050,716 Gross unrealized depreciation......................... (5,180,873) ----------- Net unrealized appreciation...................... $ 5,869,843 =========== (b) Non-income producing security FORWARD FOREIGN CURRENCY CONTRACTS The Global Equity Fund had the following open forward foreign currency contracts as of December 31, 2000:
Settlement Local Current Unrealized Date Currency Value Gain/(Loss) ---------- ---------- ----------- ------------ Forward Foreign Currency Buy Contracts: Australian Dollar................................................. 06/01/01 4,650,000 $ 2,586,710 $ 154,109 Canadian Dollar................................................... 06/01/01 5,100,000 3,404,108 92,355 Euro.............................................................. 06/01/01 11,900,000 11,236,274 1,098,482 Japanese Yen...................................................... 06/01/01 58,000,000 520,236 (19,425) New Zealand Dollar................................................ 06/01/01 3,100,000 1,374,083 135,261 Swiss Francs...................................................... 06/01/01 750,000 468,358 16,591 Forward Foreign Currency Sale Contracts: British Pound..................................................... 06/01/01 3,500,000 5,237,404 (304,819) Canadian Dollar................................................... 06/01/01 500,000 333,736 (4,281) Euro.............................................................. 06/01/01 1,350,000 1,274,704 (52,854) Hong Kong Dollar.................................................. 06/01/01 5,000,000 642,143 310 Japanese Yen...................................................... 06/01/01 645,000,000 5,785,382 196,367 Swiss Francs...................................................... 06/01/01 750,000 468,358 (45,346) ----------- Total....................................................... $ 1,266,750 ===========
================================================================================ See accompanying notes to financial statements. 23 Global Technology Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Since its performance inception on May 31, 2000, the Brinson Global Technology Fund Class I returned -36.08% compared to a-26.34% return of the Morgan Stanley High Tech Index, the Fund's benchmark. The Fund's overweight positions in Internet, telecommunications services, and computer hardware names hurt performance versus its benchmark. After years of superior gains for technology stock investors, 2000 brought higher volatility and painfully negative performance, reminding investors that technology stocks can decline as well as rise. While technology stocks have always been volatile in the short term, more than a decade had passed without a big down year for major technology-heavy indices such as the Nasdaq Composite and the S&P 500 Technology Sector Index. The year 2000 ended with the Nasdaq Composite Index down over 39%, while the S&P 500 Technology Sector Index dropped more than 40% for the year. Major technology stocks of the decade crumbled in 2000, with Microsoft down 62%, Dell down 65%, Lucent down 79%, Yahoo down 86%, and Amazon down 79%. The year began with a quarter of continued technology stock gains. By March, the tightening of the capital markets began to threaten the viability of many unprofitable new companies whose future success depended on the continued availability of new low cost capital. Making things worse, many of the lock-up agreements that had prevented stock sales by founders and early investors in recently public companies expired. Many high-flying new economy stocks crashed as the artificial scarcity of shares that had been created in many of the hot IPO stocks was reversed. Although many investors nurtured hopes of a year-end recovery, the fourth quarter showed that what appeared initially to be a valuation-driven correction also involved weak demand and declining business fundamentals. Tight credit, a lengthy election dispute, and a falling stock market combined to weaken consumer confidence during the seasonally strongest shopping period, reducing sales of automobiles, personal computers, and other durable goods. Soft personal computer sales combined with the lack of financing for telecommunications equipment weakened semiconductor component orders, leading to severe declines in semiconductor stocks. Many technology stocks have declined to levels that discount a recession in the U.S. over the next quarter or two. While current technology stock valuation levels are much more attractive than those we saw just one year ago, the timing of a change in the tone of the market is always uncertain. If the new administration succeeds in giving an immediate stimulus to the economy and truncating the slowdown early in 2001, we would expect technology stock prices to reflect improving economic prospects rather quickly. Providers of high-tech products and services remain ready and able to deliver the productivity-boosting technological innovations that have fuelled the long global economic expansion as soon as consumer confidence and investor confidence return and rekindle demand. Given the current reduced valuation levels and our optimism about the new administration's efforts to stimulate the economy, we remain very positive on the long-term prospects for technology stocks. ================================================================================ 24 Global Technology Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Total Return 6 months 5/31/00* ended to 12/31/00 12/31/00 ----------------------------------------------------------------------------- Brinson Global Technology Fund Class I -40.78% -36.08% ----------------------------------------------------------------------------- Brinson Global Technology Fund Class N -40.87 -36.18 ----------------------------------------------------------------------------- Morgan Stanley High Tech Index -34.23 -26.34 ----------------------------------------------------------------------------- * Performance inception date of the Brinson Technology Fund Class I and Class N 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 Brinson Global Technology Fund Class I and the Morgan Stanley High Tech Index if you had invested $10,000 on May 31, 2000, and had reinvested all your income dividends and capital gain distributions through December 31, 2000. The performance of Class N shares will vary based upon the different class specific expenses. 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 Technology Fund Class I vs. Morgan Stanley High Tech Index Wealth Value with Dividends Reinvested [GRAPH]
Brinson Technology Morgan Stanley Bond Fund High Tech Index May 31 10000 10000 Jun 30 10793 11199 Jul 31 10277 10858 Aug 31 11557 12311 Sep 30 9656 10485 Oct 31 9083 10231 Nov 30 6753 7814 Dec 31 6392 7366
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 Global Technology Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Top Ten Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets --------------------------------------------------------- 1. EMC Corp. 4.37% 2. Xilinx, Inc. 4.17 3. Tellabs, Inc. 3.95 4. Micron Technology, Inc. 3.79 5. QUALCOMM, Inc. 3.71 6. Palm, Inc. 3.61 7. Electronic Data Systems Corp. 3.56 8. Oracle Corp. 3.46 9. PeopleSoft, Inc. 3.21 10. International Business Machines Corp. 3.14 --------------------------------------------------------- Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. EQUITIES Computers Services..................................................... 8.41% Software..................................................... 12.50 Systems...................................................... 18.88 ------- 39.79 Electronic Components......................................... 22.88 Telecommunications Equipment.................................................... 10.75 Services..................................................... 6.06 ------- 16.81 Internet Services............................................. 9.19 Services/Miscellaneous........................................ 3.92 ------- Total U.S. Equities........................................ 92.59 INTERNATIONAL EQUITIES Computer Systems.............................................. 0.50% Electronic Components......................................... 1.59 Telecommunications Equipment.................................. 2.63 ------- Total International Equities.............................. 4.72 SHORT-TERM INVESTMENTS........................................ 4.87 ------- TOTAL INVESTMENTS......................................... 102.18 LIABILITIES, LESS CASH AND OTHER ASSETS............................................. (2.18) ------- NET ASSETS.................................................... 100.00% ======= -------------------------------------------------------------------------------- ================================================================================ 26 Global Technology Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value -------- ---------- Equities -- 97.31% U.S. Equities -- 92.59% ADC Telecom, Inc. (b)................................... 300 $ 5,438 Advanced Micro Devices, Inc. (b)........................ 1,000 13,812 Agilent Technologies, Inc. (b).......................... 219 11,990 Amazon.com, Inc. (b).................................... 1,500 23,344 America On-Line, Inc. (b)............................... 750 26,100 Amkor Technologies, Inc. (b)............................ 500 7,758 Applied Materials, Inc. (b)............................. 400 15,275 Atmel Corp. (b)......................................... 850 9,881 Automatic Data Processing, Inc.......................... 400 25,325 Avici Systems, Inc. (b)................................. 400 9,850 Broadcom Corp. (b)...................................... 200 16,900 Cisco Systems, Inc. (b)................................. 900 34,425 Compaq Computer Corp.................................... 1,800 27,090 Computer Associates International, Inc.................. 850 16,575 DuPont Photomasks, Inc. (b)............................. 150 7,927 Electronic Data Systems Corp............................ 750 43,312 EMC Corp. (b)........................................... 800 53,200 Emcore Corp. (b)........................................ 300 14,100 eMerge Interactive, Inc. (b)............................ 1,500 5,438 Gateway, Inc. (b)....................................... 500 8,995 Hewlett-Packard Co...................................... 1,150 36,297 I2 Technologies, Inc. (b)............................... 250 13,594 Inprise Corp. (b)....................................... 1,400 7,744 Intel Corp.............................................. 350 10,587 International Business Machines Corp.................... 450 38,250 Intuit, Inc. (b)........................................ 850 33,522 Jabil Circuit, Inc. (b)................................. 400 10,150 JDS Uniphase Corp. (b).................................. 400 16,675 Juniper Networks, Inc. (b).............................. 100 12,606 KLA-Tencor Corp. (b).................................... 400 13,475 Leap Wireless International, Inc. (b)................... 250 6,250 Lucent Technologies, Inc................................ 750 10,125 Micron Technology, Inc. (b)............................. 1,300 46,150 Microsoft Corp. (b)..................................... 300 13,050 Motorola, Inc........................................... 1,200 24,300 Network Plus Corp. (b).................................. 2,350 5,875 Novellus Systems, Inc. (b).............................. 400 14,375 Oracle Corp. (b)........................................ 1,450 42,141 Palm, Inc. (b).......................................... 1,550 43,884 PeopleSoft, Inc. (b).................................... 1,050 39,047 QUALCOMM, Inc. (b)...................................... 550 45,203 Safeguard Scientifics, Inc. (b)......................... 650 4,306 Solectron Corp. (b)..................................... 300 10,170 Sun Microsystems, Inc. (b).............................. 1,250 34,844 Sycamore Networks, Inc. (b)............................. 500 18,625 Tellabs, Inc. (b)....................................... 850 48,025 Texas Instruments, Inc.................................. 700 33,162 Titan Corp. (b)......................................... 900 14,625 Transmeta Corp. (b)..................................... 500 11,750 Uniroyal Technology Corp. (b)........................... 400 2,500 VerticalNet, Inc. (b)................................... 400 2,663 Winstar Communications, Inc. (b)........................ 700 8,181 Xilinx, Inc. (b)........................................ 1,100 50,737 Yahoo!, Inc. (b)........................................ 900 27,155 ---------- Total U.S. Equities..................................... 1,126,778 ---------- International Equities -- 4.72% Canada -- 2.64% Nortel Networks Corp.................................... 1,000 32,063 ---------- France -- 0.88% STMicroelectronics N.V.................................. 250 10,703 ---------- Singapore -- 0.70% Flextronics International Ltd. (b)...................... 300 8,550 ---------- Switzerland -- 0.50% Logitech International S.A., ADR........................ 250 6,063 ---------- Total International Equities............................ 57,379 ---------- Total Equities (Cost $1,596,761)........................ 1,184,157 ---------- Short-Term Investments -- 4.87% Investment Companies -- 4.87% Chase Vista U.S. Government Money Market Fund (Cost $59,258)............................ 59,258 59,258 ---------- Total Investments (Cost $1,656,019) -- 102.18% (a)...................... 1,243,415 Liabilities, less cash and other assets -- (2.18%)............................... (26,490) ---------- Net Assets -- 100%...................................... $1,216,925 ========== NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $1,656,019; and net unrealized depreciation consisted of: Gross unrealized appreciation.................. $ 51,862 Gross unrealized depreciation.................. (464,466) --------- Net unrealized depreciation................ $(412,604) ========= (b) Non-income producing security ================================================================================ See accompanying notes to financial statements. 27 Global Biotech Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Since its performance inception on June 30, 2000, the Brinson Global Biotech Fund Class I has provided a return of -6.40%, compared to a -10.86% return of its benchmark, the Nasdaq Biotech Index. Despite year-end volatility caused by general fears about the U.S. economy, the biotechnology sector ended 2000 with big gains. For 2000, the AMEX and Nasdaq Biotech Index returns were 62% and 23%, respectively. Biotech was in-line with the pharmaceutical sector (Amex Pharmaceutical Index, up 28%), and outperformed the general market (S&P500, down 9%) the small caps market (Russell 2000, down 3%) and the technology sector (Morgan Stanley High Tech, down 27%). Fuel for the biotechnology rally had been increasing for a few years as more biotechnology drugs began to work in humans. However, the spark that set-off the year 2000 biotech rally was Celera's announcement on its progress in mapping the sequence of the first human genome. During the first quarter, unbridled enthusiasm carried investors away until political squabbles over the commercial use of the first sequence popped the bubble in March. Despite volatility, the biotech sector had positive gains in the first, second and third quarters. Excess supply, a few missed revenue expectations, and political uncertainty overshadowed the fabulous data presented at medical meetings during the fourth quarter, resulting in a year-end decline-- but also a return to rational investing. During 2000, 297 of 615 publicly traded biotechnology and related stocks had positive returns. In general, investors broadened their interest in biotechnology companies, however eschewing micro capitalization biotech and related stocks, i.e. stocks with a market capitalization of less than USD 0.25 billion. The year 2000 average return of the 37 large capitalization biotech and related stocks was 79%, with 33 having positive returns. The average return of the 73 mid capitalization biotech stocks was 104%, with 62 having positive returns. The average return of the 140 small capitalization biotech stocks was 44%, with 81 having positive returns. By contrast, the average return of the 362 micro cap biotech stocks was -9%, with only 119 showing positive returns. In 2001, the biotech industry will continue to mature as more companies generate sales and reach profitability. With more than 800 products in clinical trial development, we expect many research breakthroughs in the next few years, particularly in the treatment of cancer, genomics, and diagnostics. In the interim, we expect continued consolidation in this industry. Pharmaceutical companies and large biotechs will keep buying smaller biotechs. Momentum players will come and go in this sector and contribute to short-term volatility, but they will have little impact on the promising long-term picture that is developing in this area. ================================================================================ 28 Global Biotech Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Total Return 6/30/00* to 12/31/00 -------------------------------------------------------------------------------- Brinson Global Biotech Fund Class I -6.40% -------------------------------------------------------------------------------- Brinson Global Biotech Fund Class N -6.49 -------------------------------------------------------------------------------- Nasdaq Biotech Index -10.86 -------------------------------------------------------------------------------- * Performance inception date of the Brinson Global Biotech Fund Class I and Class N is 6/30/00. 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 Brinson Global Biotech Fund Class I and the Nasdaq Biotech Index if you had invested $10,000 on June 30, 2000, and had reinvested all your income dividends and capital gain distributions through December 31, 2000. The performance of Class N shares will vary based upon the different class specific expenses. 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 Biotech Fund Class I vs. Nasdaq Biotech Index Wealth Value with Dividends Reinvested [GRAPH]
Brinson Biotechnology Fund NASDAQ Biotech Index 6/30/2000 $10,000 $10,000 7/31/2000 $ 9,205 $ 9,234 8/31/2000 $11,151 $11,202 9/30/2000 $11,275 $10,809 10/31/2000 $10,439 $ 9,930 11/30/2000 $ 8,742 $ 8,620 12/31/2000 $ 9,360 $ 8,914
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. ================================================================================ 29 Global Biotech Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Top Ten Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets ---------------------------------------------------------------------- 1. Amgen, Inc. 8.34% 2. Idec Pharmaceuticals Corp. 6.18 3. Applera Corp. - Applied Biosystems Group 5.02 4. Serono S.A. 4.75 5. Millennium Pharmaceuticals, Inc. 4.58 6. Genentech, Inc. 4.35 7. Immunex Corp. 3.97 8. Human Genome Sciences, Inc. 3.29 9. Waters Corp. 3.22 10. Genzyme General 3.20 ---------------------------------------------------------------------- Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. EQUITIES Biomedical...................................................... 20.16% Gene............................................................ 2.50 Health: Drugs................................................... 13.41 Health:Non-Drugs................................................ 2.07 Medical Products................................................ 4.23 Technology...................................................... 3.22 Therapeutics.................................................... 10.53 Research and Development........................................ 20.68 -------- Total U.S. Equities.......................................... 76.80 INTERNATIONAL EQUITIES Computer Systems................................................ 0.89% Chemicals....................................................... 0.30 Gene............................................................ 2.92 Health: Drugs................................................... 8.66 Research &Development........................................... 2.62 Technology...................................................... 0.62 Therapeutics.................................................... 1.33 -------- Total International Equities................................. 17.34 SHORT-TERM INVESTMENTS........................................... 3.90 -------- TOTAL INVESTMENTS............................................ 98.04 CASH AND OTHER ASSETS, LESS LIABILITIES................................................ 1.96 -------- NET ASSETS....................................................... 100.00% ======== ================================================================================ 30 Global Biotech Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value Equities -- 94.14% -------- ---------- U.S. Equities -- 76.80% Abgenix, Inc. (b)..................................... 600 $ 35,438 Alexion Pharmaceuticals, Inc. (b)..................... 100 6,494 Alza Corp. (b)........................................ 500 21,250 Amgen, Inc. (b)....................................... 2,200 140,662 Applera Corp-Applied Biosystems Group................. 900 84,656 Applera Corp-Celera Genomics Group (b)................ 400 14,375 Avigen, Inc. (b)...................................... 200 4,150 Biogen, Inc. (b)...................................... 400 24,025 Celgene Corp. (b)..................................... 250 8,125 Cell Therapeutics, Inc. (b)........................... 750 33,797 Cephalon, Inc. (b).................................... 350 22,159 COR Therapeutics, Inc. (b)............................ 350 12,316 Corixa Corp. (b)...................................... 200 5,575 Cryolife, Inc. (b).................................... 225 6,806 CV Therapeutics, Inc. (b)............................. 400 28,300 Digene Corp. (b)...................................... 250 11,172 Genentech, Inc. (b)................................... 900 73,350 GenVec, Inc. (b)...................................... 50 475 Genzyme General (b)................................... 600 53,962 Gilead Sciences, Inc. (b)............................. 300 24,881 Human Genome Sciences, Inc. (b)....................... 800 55,450 Idec Pharmaceuticals Corp. (b)........................ 550 104,259 ImClone Systems (b)................................... 550 24,200 Immunex Corp. (b)..................................... 1,650 67,031 Immunogen, Inc. (b)................................... 100 2,144 Large Scale Biology Corp. (b)......................... 400 3,800 Medarex, Inc. (b)..................................... 700 28,525 Medicines Company (b)................................. 200 4,100 Medimmune, Inc. (b)................................... 1,100 52,456 Millennium Pharmaceuticals, Inc. (b).................. 1,250 77,344 Minimed, Inc. (b)..................................... 450 18,914 Myriad Genetics, Inc. (b)............................. 150 12,413 NPS Pharmaceuticals Inc. (b).......................... 100 4,800 OSI Pharmaceuticals, Inc. (b)......................... 350 28,044 Praecis Pharmaceuticals, Inc. (b)..................... 250 7,313 Protein Design Labs, Inc. (b)......................... 450 39,094 Quest Diagnostics, Inc. (b)........................... 200 28,400 Scios, Inc. (b)....................................... 100 2,225 Texas Biotech Corp. (b)............................... 300 2,577 Titan Pharmaceuticals, Inc. (b)....................... 150 5,306 Transkaryotic Therapies, Inc. (b).................... 700 25,506 Vertex Pharmaceuticals, Inc. (b)...................... 500 35,750 Waters Corp. (b)...................................... 650 54,275 ---------- Total U.S. Equities................................... 1,295,894 ---------- International Equities -- 17.34% Canada -- 1.33% QLT, Inc. (b)......................................... 800 $ 22,400 ---------- Denmark -- 3.82% H. Lundbeck A/S....................................... 150 14,717 Novo Nordisk A/S...................................... 250 44,812 Novozymes A/S (b)..................................... 250 5,000 ---------- 64,529 ---------- Germany -- 0.89% Lion Bioscience AG (b)................................ 200 15,075 ---------- Israel -- 2.17% Teva Pharmaceutical Industries........................ 500 36,625 ---------- Netherlands -- 1.74% Qiagen N.V. (b)....................................... 850 29,405 ---------- Spain -- 0.78% Zeltia S.A. (b)....................................... 900 10,520 Zeltia S.A. Bonus Rights (b).......................... 900 2,603 ---------- 13,123 ---------- Switzerland -- 5.43% Actelion Ltd. (b)..................................... 25 11,354 Serono S.A. (b)....................................... 3,350 80,191 ---------- 91,545 ---------- United Kingdom -- 1.18% Cambridge Antibody Technology Group PLC............... 350 19,867 ---------- Total International Equities.......................... 292,569 ---------- Total Equities (Cost $1,583,835)...................... 1,588,463 ---------- Short-Term Investments -- 3.90% Investment Companies -- 3.90% Chase Vista U.S. Government Money Market Fund (Cost $65,798).......................... 65,798 65,798 ---------- Total Investments (Cost $1,649,633) -- 98.04% (a)..................... 1,654,261 Cash and other assets, less liabilities -- 1.96%........................... 33,071 ---------- Net Assets -- 100%.................................... $1,687,332 ========== NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $1,649,633; and net unrealized appreciation consisted of: Gross unrealized appreciation......................... $ 152,542 Gross unrealized depreciation......................... (147,914) ---------- Net unrealized appreciation...................... $ 4,628 ========== (b) Non-income producing security ================================================================================ See accompanying notes to financial statements. 31 Global Bond Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Since its performance inception on July 31, 1993, the Brinson Global Bond Fund Class I has posted an annualized return of 4.89% compared to the 5.41% return of its benchmark, the Salomon Smith Barney World Government Bond Index. In 2000 the Fund recorded a rise of 1.36% compared to the benchmark's return of 1.59%. Global bonds started the new millennium in the grip of a bear market but by the fourth quarter of the year investor sentiment had turned dramatically, particularly in the U.S. and other dollar bloc markets, and yields fell sharply along the curve. The yields on benchmark 10-year government bonds closed over 50 basis points below their end 1999 levels in Europe and by well over 100 basis points lower in the dollar bloc markets. This improvement in the markets' fortunes was triggered by growing evidence of a rapid slowdown in U.S. economic activity and the realization that official interest rates would peak at lower levels than anticipated earlier in the year. A slowing in economic growth in the major economic blocs also reversed the upward trend in the oil price and dampened any anxieties over a resurgence in inflation. Burgeoning budget surpluses in several countries, most notably the U.S., UK and Sweden, limited the supply of government issuance and helped this sector to outperform corporate and other non-government bonds. The main reason for the relative outperformance of the Fund in 2000 was the market allocation strategy and specifically the large underweight in Japan. Although yields were little changed on the year, Japanese government bonds suffered from the decision by the Bank of Japan to remove its zero-interest-rate policy in the late summer and underperformed other markets. An underweight in the yen, as well as an overweight in the euro, resulted in currency allocation also benefiting relative performance. However, a negative contribution came from bond management primarily through the exposure to non-government bonds in the U.S. component of the Fund. ================================================================================ 32 Global Bond Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON]
Total Return 6 months 1 year 3 years 5 years Inception* ended ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 ----------------------------------------------------------------------------------------------------- Brinson Global Bond Fund Class I 1.81% 1.36% 2.08% 3.39% 4.89% ----------------------------------------------------------------------------------------------------- Brinson Global Bond Fund Class N 1.60 0.94 1.78 N/A 1.76 ----------------------------------------------------------------------------------------------------- Salomon Smith Barney World Gov't Bond Index 1.56 1.59 3.89 3.10 5.41 -----------------------------------------------------------------------------------------------------
* Performance inception date of the Brinson Global Bond Fund Class I and the Salomon Smith Barney World Government Bond Index is 7/31/93, and inception date of Class N is 6/30/97. 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, 2000. The performance of Class N shares will vary based upon the different inception dates and class specific expenses. 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 [GRAPH]
Brinson Global Bond Fund Class I Salomon Smith Barney World Gov't Bond Index 7/31/93 $1,000,000 $1,000,000 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 12/31/2000 $1,425,362 $1,478,485
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. ================================================================================ 33 Global Bond Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Asset Allocation As of December 31, 2000 (Unaudited) Current Benchmark Strategy -------------------------------------------------------------- U.S. 26.1% 26.1% Australia 0.5 0.0 Austria 1.1 4.1 Belgium 2.7 0.0 Canada 2.8 5.3 Denmark 1.1 4.1 Finland 0.5 0.0 France 7.9 12.5 Germany 8.4 6.1 Greece 1.0 0.0 Ireland 0.3 0.0 Italy 8.3 9.8 Japan 26.0 12.5 Netherlands 2.4 0.0 Portugal 0.5 0.0 Spain 3.4 6.0 Sweden 1.1 2.9 Switzerland 0.5 0.0 TIPS 0.0 3.9 U.K. 5.4 2.4 Euro 0.0 4.3 -------------------------------------------------------------- 100.0% 100.0% Currency Allocation As of December 31, 2000 (Unaudited) Current Benchmark Strategy -------------------------------------------------------------- U.S. 26.1% 16.1% Australia 0.5 8.5 Canada 2.8 4.8 Denmark 1.2 1.1 Euro 36.4 49.9 Japan 26.0 18.0 Sweden 1.1 1.1 Switzerland 0.5 0.5 U.K. 5.4 0.0 -------------------------------------------------------------- 100.0% 100.0% Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) ------------------------------------------------------------- U.S. BONDS Corporate Bonds Construction....................................... 0.12% Consumer........................................... 0.40 Energy............................................. 0.52 Financial Services................................. 3.78 Publishing......................................... 0.27 Recreation......................................... 0.25 Retail/Apparel..................................... 0.07 Services/Miscellaneous............................. 0.76 Telecommunications................................. 0.61 Utilities ....................................... 0.33 ------ Total U.S. Corporate Bonds 7.11 Asset-Backed ....................................... 1.87 Corporate Mortgage-Backed Securities................ 4.87 International Dollar Bonds.......................... 1.67 U.S. Government Mortgage-Backed Securities.......... 7.34 U.S. Government Obligations 8.62 ------ Total U.S. Bonds................................ 31.48 INTERNATIONAL BONDS................................. Foreign Government Bonds............................ 64.19 SHORT-TERM INVESTMENTS.............................. 6.31 ------ TOTAL INVESTMENTS .............................. 101.98 LIABILITIES, LESS CASH.............................. AND OTHER ASSETS................................... (1.98) ------ NET ASSETS.......................................... 100.00% ====== ================================================================================ 34 Global Bond Fund -- Schedule of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Face Amount Value ------ ----- Bonds -- 95.67% U.S. Bonds -- 31.48% U.S. Corporate Bonds -- 7.11% Boeing Capital Corp., 7.100%, due 09/27/05........................................ $ 200,000 $ 208,269 Capital One Bank, Bank Note, 8.250%, due 06/15/05........................................ 30,000 30,341 Cendant Corp., 7.750%, due 12/01/03.................. 100,000 97,359 Centaur Funding Corp., Class B, 144A, 0.000%, due 04/21/20 (b)............................ 750 136,875 Centex Corp., 9.750%, due 06/15/05................... 45,000 46,117 Federated Department Stores 6.300%, due 04/01/09................................ 25,000 22,718 8.500%, due 06/01/10................................ 5,000 5,223 Florida Power & Light Co., 6.875%, due 12/01/05........................................ 100,000 102,386 FMR Corp., 144A, 7.570%, due 06/15/29................ 100,000 100,655 KeySpan Corp., 7.625%, due 11/15/10.................. 40,000 42,501 KFW International Finance, 1.000%, due 12/20/04.....................................JPY 120,000,000 1,059,878 Lilly Del Mar, 144A, 7.717%, due 08/01/29........................................ $ 150,000 155,266 News America Holdings, 7.750%, due 12/01/45........................................ 120,000 103,570 Nisource Finance Corp., 144A, 7.875%, due 11/15/10........................................ 55,000 57,779 Sempra Energy, 7.950%, due 03/01/10.................. 100,000 97,335 Southern California Edison, 7.200%, due 11/03/03........................................ 100,000 85,781 USA Waste Services, 7.000%, due 10/01/04........................................ 300,000 293,869 Verizon Global Funding Corp., 144A, 7.750%, due 12/01/30................................ 100,000 101,752 ----------- 2,747,674 ----------- Asset-Backed Securities -- 1.87% Comed Transitional Funding Trust, 98-1, Class A7, 5.740%, due 12/25/10...................... 370,000 359,022 Vanderbilt Mortgage Finance, 98-B, Class 1A2, 6.120%, due 05/07/09..................... 362,039 361,221 ---------- 720,243 ---------- Corporate Mortgage-Backed Securities -- 4.87% DLJ Commercial Mortgage Corp., 99-CG2, Class A1B, 7.180%, due 08/10/10..................... 140,000 146,635 DVI Receivables Corp., 6.808%, due 03/12/04........................................ 35,000 35,304 GE Capital Mortgage Services, Inc., 93-7F, Class FA3, 6.500%, due 09/25/08..................... 46,137 45,895 Heller Financial Commercial Mortgage Assets, 99-PH1, Class A1, 6.500%, due 05/15/31........................................ 372,433 376,685 PNC Mortgage Securities Corp., 94-3, Class A8, 7.500%, due 07/25/24...................... 190,000 195,281 Prudential Home Mortgage Securities, 93-43, Class A9, 6.750%, due 10/25/23............... 189,489 188,553 Prudential Home Mortgage Securities, 96-7, Class A4, 6.750%, due 06/25/11................ 150,000 149,406 Residential Asset Securitization Trust, 97-A7, Class A1, 7.500%, due 09/25/27............... $ 375 $ 375 Residential Asset Securitization Trust, 98-A1, Class A1, 7.000%, due 03/25/28............... 50,708 50,473 Residential Accredit Loans, Inc., 98-QS4, Class AI5, 7.000%, due 03/25/28..................... 400,000 396,214 Structured Asset Securities Corp., 98-RF2, 8.582%, due 07/15/27................................ 265,675 293,246 ---------- 1,878,067 ---------- International Dollar Bonds -- 1.67% Credit Suisse-London, 144A, Resettable Perpetual Preferred, 7.900%......................... 250,000 240,835 Korea Development Bank, 7.125%, due 09/17/01........................................ 150,000 150,267 State of Qatar, 144A, 9.750%, due 06/15/30........................................ 80,000 80,000 United Mexican States Global, 9.875%, due 02/01/10................................ 160,000 171,680 ---------- 642,782 ---------- U.S. Government Mortgage-Backed Securities -- 7.34% Fannie Mae Whole Loan, 95-W3, Class A, 9.000%, due 04/25/25................................ 7,079 7,352 Federal Home Loan Mortgage Corp., 7.000%, due 10/15/13................................ 68,215 69,353 Federal Home Loan Mortgage Corp., Gold 5.500%, due 02/01/07................................ 38,289 37,183 8.500%, due 07/01/30................................ 175,811 181,147 9.000%, due 07/01/30................................ 129,139 133,405 Federal National Mortgage Association 6.500%, due 03/01/19................................ 111,012 110,253 6.875%, due 09/15/10................................ 90,000 95,950 7.000%, due 03/01/29................................ 24,531 24,590 7.125%, due 06/15/10................................ 295,000 319,444 7.500%, due 01/12/30................................ 680,000 689,138 8.000%, due 01/01/31................................ 600,000 613,687 Government National Mortgage Association 7.000%, due 08/15/24................................ 309,820 312,336 7.000%, due 07/15/25................................ 43,921 44,273 7.500%, due 08/15/23................................ 53,183 54,325 7.500%, due 12/15/23................................ 81,800 83,584 7.500%, due 01/15/24................................ 55,459 56,634 ---------- 2,832,654 ---------- U.S. Government Obligations -- 8.62% U.S. Treasury Inflation Indexed Note 3.625%, due 04/15/28................................ 280,000 295,590 3.875%, due 04/15/29................................ 1,390,000 1,508,254 U.S. Treasury Note 5.625%, due 05/15/08................................ 90,000 92,445 5.750%, due 08/15/03................................ 170,000 172,524 6.125%, due 12/31/01................................ 555,000 558,352 6.625%, due 02/15/27................................ 540,000 616,631 7.000%, due 07/15/06................................ 35,000 38,105 7.500%, due 02/15/05................................ 40,000 43,504 ---------- 3,325,405 ---------- Total U.S. Bonds..................................... 12,146,825 ----------
================================================================================ 35 Global Bond Fund -- Schedule of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Face Amount Value ---------- ----------- International Bonds -- 64.19% Austria -- 3.86% Republic of Austria 4.125%, due 01/15/14.......................EUR 550,000 $ 453,691 4.300%, due 07/15/03.......................... 750,000 699,229 5.500%, due 01/15/10.......................... 350,000 336,507 ----------- 1,489,427 ----------- Canada -- 5.23% Government of Canada 5.500%, due 06/01/09.......................CAD 710,000 475,927 6.000%, due 06/01/08.......................... 970,000 669,274 Province of Ontario 6.100%, due 11/19/10.......................... 700,000 476,359 7.500%, due 01/19/06.......................... 550,000 397,249 ----------- 2,018,809 ----------- Denmark -- 7.16% City of Copenhagen, 6.250%, due 03/15/01...............................DKK 2,400,000 302,130 Depfa Pfandbrief Bank, 5.750%, due 03/04/09.......................EUR 1,280,000 1,228,828 Great Belt, 7.000%, due 09/02/03.............DKK 2,800,000 366,395 Kingdom of Denmark 7.000%, due 11/15/07.......................... 1,950,000 272,391 7.000%, due 11/10/24.......................... 2,500,000 374,218 8.000%, due 11/15/01.......................... 1,700,000 218,565 ----------- 2,762,527 ----------- France -- 11.34% Government of France (OAT) 6.500%, due 10/25/06.......................EUR 325,000 334,445 7.500%, due 04/25/05.......................... 1,530,000 1,603,838 8.500%, due 04/25/23.......................... 1,150,000 1,508,757 9.500%, due 01/25/01.......................... 990,000 931,601 ----------- 4,378,641 ----------- Germany -- 6.21% Bundesobligation 118, 5.250%, due 02/21/01.......................... 390,000 366,298 Bundesrepublik Deutschland 6.000%, due 07/04/07.......................... 1,420,000 1,424,293 6.000%, due 06/20/16.......................... 350,000 361,146 International Bank for Reconstruction an Development, 7.125%, due 04/12/05............. 470,000 243,606 ----------- 2,395,343 ----------- Italy -- 9.27% Republic of Italy 3.250%, due 04/15/04.......................... 2,060,000 1,854,323 6.500%, due 11/01/27.......................... 380,000 391,033 7.750%, due 11/01/06.......................... 1,245,000 1,330,870 ----------- 3,576,226 ----------- Japan -- 10.78% Government of Japan 2.200%, due 09/21/20.......................JPY 29,000,000 250,410 4.400%, due 03/21/05.......................... 190,000,000 1,908,153 4.600%, due 03/21/05.......................... 160,000,000 1,617,359 International Bank for Reconstruction & Development, 2.000%, due 02/18/08............. 42,000,000 386,532 ----------- 4,162,454 ----------- Spain -- 5.44% Government of Spain 3.250%, due 01/31/05.......................EUR 860,000 $ 765,998 6.000%, due 01/31/08.......................... 1,350,000 1,335,184 ----------- 2,101,182 ----------- Sweden -- 2.67% Government of Sweden 6.750%, due 05/05/14.......................SEK 2,975,000 369,785 10.250%, due 05/05/03......................... 5,510,000 659,430 ----------- 1,029,215 ----------- United Kingdom -- 2.23% U.K. Treasury 5.750%, due 12/07/09...................... GBP 350,000 554,987 8.500%, due 12/07/05.......................... 180,000 307,444 ----------- 862,431 ----------- Total International Bonds....................... 24,776,255 ----------- Total Bonds (Cost $38,186,442).................. 36,923,080 ----------- Shares ---------- Short-Term Investments -- 6.31% Investment Companies -- 6.31% Brinson Supplementary Trust U.S. Cash Management Prime Fund (Cost $2,437,235)............................. 2,437,235 2,437,235 ----------- Total Investments (Cost $40,623,677) -- 101.98% (a)............. 39,360,315 Liabilities, less cash and other assets -- (1.98%)....................... (764,280) ----------- Net Assets -- 100%.............................. $38,596,035 ===========
See accompanying notes to schedule of investments. ================================================================================ 36 Global Bond Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $40,623,677; and net realized depreciation consisted of: Gross unrealized appreciation................................................... $ 527,714 Gross unrealized depreciation................................................... (1,791,076) ------------ Net unrealized depreciation................................................ $ (1,263,362) ============
(b) Non-income producing security FRN: Floating Rate Note -- The rate disclosed is that in effect at December 31, 2000. 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, 2000, the value of these securities amounted to $873,162 or 2.26% 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, 2000:
Settlement Local Current Unrealized Date Currency Value Gain/(Loss) ---------- ----------- ---------- ------------ Forward Foreign Currency Buy Contracts: Australian Dollar......................... 03/01/01 5,950,000 $ 3,307,724 $ (86,077) British Pound............................. 03/01/01 110,000 164,479 2,724 Canadian Dollar........................... 03/01/01 3,200,000 2,132,992 36,304 Euro...................................... 03/01/01 4,650,000 14,579,925 210,964 Japanese Yen.............................. 03/01/01 348,745,000 3,082,675 (217,849) Forward Foreign Currency Sale Contracts: British Pound............................. 03/01/01 630,000 942,014 (3,881) Canadian Dollar........................... 03/01/01 3,400,000 2,266,304 9,705 Danish Krone.............................. 03/01/01 9,100,000 1,146,736 (46,373) Euro...................................... 03/01/01 900,000 847,186 (39,466) Japanese Yen.............................. 03/01/01 159,000,000 1,406,291 106,820 Swedish Krona............................. 03/01/01 5,600,000 595,802 12,960 --------- Total................................ $ (14,169) =========
================================================================================ See accompanying notes to financial statements. 37 U.S. Balanced Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] The Brinson U.S. Balanced Fund Class I has produced an annualized return of 10.48% since its performance inception on December 31, 1994. Its benchmark, the U.S. Balanced Mutual Fund Index, provided an annual return of 15.88% over the same time period. In 2000, the Fund returned 12.49%, which was substantially above the benchmark return of -3.26%. The equity component of the Fund was well positioned during 2000 to take advantage of market mispricing, especially of young technology companies that began to converge to fair value. The underweight to size and orientation toward value characteristics were rewarded, as were the industry underweights to technology and telecommunications and the overweights to utilities, financials, and transportation stocks. In fixed income, Treasury Inflation Protected Securities (TIPS) benefited from both the market rally in the long end of the yield curve from Treasury repurchases, as well as flattering inflation results and attractive real yields for much of the year. Asset-backed and longer-term agency bonds outperformed conventional bonds for the year, but the U.S. high yield market suffered from poor investor acceptance and an overemphasis on credit risk; both factors influenced the run-up in yields and worse returns in this sector in 2000. Security selection was again the primary determinant of the substantial added value in the Fund this year. U.S. equities provided the bulk of this performance via the underweight to technology stocks and the overweight to the more traditional sectors detailed above. Equities were assisted by the emphasis on the spread sectors in U.S. fixed income. Market allocation was also positive for the year, powered by the fixed income overweight and equity underweight on a passive basis. The overweight to high yield and the underweight to the actively managed equity fund (with significant security selection benefits), however, mitigated some of the positive results. The strategy continues to underweight equities and overweight fixed income, but the degree of the relative weights has lessened as U.S. equities have become more attractively priced. The equity underweight is now 15% smaller than at the start of the year, with the bulk of the reallocation drawing from U.S. bonds and only a small decrease in TIPS. Opportunities in high yield are becoming increasingly compelling, but concerns regarding credit risks in a softening economy have encouraged us to only maintain the Fund's overweight in that asset class. ================================================================================ 38 U.S. Balanced Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Total Return
6 months 1 year 3 years 5 years Inception* ended ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 --------------------------------------------------------------------------------------------------------------------------- Brinson U.S. Balanced Fund Class I 9.22% 12.49% 4.78% 7.71% 10.48% --------------------------------------------------------------------------------------------------------------------------- Brinson U.S. Balanced Fund Class N 9.17 12.16 4.50 N/A 5.50 --------------------------------------------------------------------------------------------------------------------------- U.S. Balanced Mutual Fund Index** -4.11 -3.26 9.65 13.35 15.88 --------------------------------------------------------------------------------------------------------------------------- Salomon Smith Barney Broad Investment Grade (BIG) Bond Index 7.38 11.59 6.35 6.45 8.37 --------------------------------------------------------------------------------------------------------------------------- Wilshire 5000 Index -10.14 -10.89 10.76 16.68 19.76 ---------------------------------------------------------------------------------------------------------------------------
* Performance inception date of the Brinson U.S. Balanced Fund Class I and of each of the indices is 12/31/94 and inception date of Class N is 6/30/97. ** An unmanaged 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, 2000. The performance of Class N shares will vary based upon the different inception dates and class specific expenses. 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 [GRAPH] Brinson U.S. Balanced U.S. Balanced Fund Index Wilshire 5000 Index Salomon Smith Barney BIG Bond Index Fund Class I 12/31/94 $1,000,000 $1,000,000 $1,000,000 $1,000,000 12/31/95 $1,254,813 $1,294,523 $1,364,511 $1,185,544 12/31/96 $1,396,859 $1,487,401 $1,653,954 $1,228,533 12/31/97 $1,581,464 $1,836,885 $2,171,479 $1,346,727 12/31/98 $1,738,302 $2,183,183 $2,680,268 $1,464,146 12/31/99 $1,617,539 $2,503,324 $3,311,735 $1,451,830 12/31/2000 $1,818,946 $2,421,782 $2,950,953 $1,620,131
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 U.S. Balanced Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. EQUITIES Energy........................................ 0.92% Capital Investment Capital Goods................................ 2.24 Electronic Components........................ 2.99 Technology................................... 0.71 ------ 5.94 Basic Industries Chemicals.................................... 1.44 Housing/Paper................................ 1.03 Metals....................................... 1.00 ------ 3.47 Computers Software..................................... 0.44 Systems...................................... 0.78 ------ 1.22 Consumer Autos/Durables............................... 0.98 Food/House Products.......................... 1.26 Health: Drugs................................ 3.15 Health: Non-Drugs............................ 3.67 Leisure/Tourism.............................. 0.67 Non-Durables................................. 0.29 Retail/Apparel............................... 2.78 ------ 12.80 Financial Banks........................................ 3.89 Non-Banks.................................... 3.27 ------ 7.16 Telecommunications Equipment.................................... 0.17 Services..................................... 2.05 ------ 2.22 Transportation................................ 2.85% Services/Miscellaneous........................ 3.46 Utilities..................................... 2.17 ------ Total U.S. Equities....................... 42.21* U.S. BONDS Corporate Bonds Airlines..................................... 0.42 Building Materials........................... 0.43 Consumer..................................... 0.15 Financial Services........................... 0.64 Retail/Apparel............................... 0.22 Technology................................... 0.40 Telecommunications........................... 1.23 Utilities.................................... 0.62 ------ Total U.S. Corporate Bonds................ 4.11 Asset-Backed.................................. 1.54 Corporate Mortgage-Backed Securities.......... 1.33 International Dollar Bonds.................... 1.10 U.S. Gov't. Mortgage-Backed Securities........ 13.80 U.S. Government Obligations................... 28.87 ------ Total U.S. Bonds.......................... 50.75* SHORT-TERM INVESTMENTS........................ 8.08* ------ TOTAL INVESTMENTS......................... 101.04 LIABILITIES, LESS CASH AND OTHER ASSETS........................ (1.04) ------ NET ASSETS.................................... 100.00% ====== -------------------------------------------------------------------------------- *The Fund held a long position in U.S. Treasury futures on December 31, 2000 which increased U.S. Bond exposure from 50.75% to 55.12%. The Fund also held a short position in stock index futures which reduced U.S. Equity exposure from 42.21% to 39.39%. These two adjustments result in a net decrease in the Fund's exposure to Short-Term Investments from 8.08% to 6.53%. Asset Allocation As of December 31, 2000 (Unaudited) Current Benchmark Strategy ---------------------------------------------------------------------- U.S. Equities 65% 40% U.S. Bonds 35 60 ---------------------------------------------------------------------- 100% 100% Top Ten U.S. Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets -------------------------------------------------------------------- 1. Allergan, Inc. 1.55% 2. Burlington Northern Santa Fe Corp. 1.53 3. Wells Fargo and Co. 1.31 4. Electronic Data Systems Corp. 1.17 5. FedEx Corp. 1.11 6. Freddie Mac 1.04 7. Masco Corp. 1.00 8. GPU, Inc. 0.96 9. Alza Corp. 0.93 10. First Data Corp. 0.91 -------------------------------------------------------------------- ================================================================================ 40 U.S. Balanced Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value --------- ---------- U.S. Equities -- 42.21% Advanced Micro Devices, Inc. (b)................. 6,500 $ 89,781 Allergan, Inc.................................... 1,900 183,944 Alza Corp. (b)................................... 2,600 110,500 American General Corp............................ 700 57,050 American Standard Cos., Inc. (b)................. 1,000 49,312 Baxter International, Inc........................ 1,200 105,975 Burlington Northern Santa Fe Corp................ 6,400 181,200 Cardinal Health, Inc............................. 800 79,700 Carnival Corp., Class A.......................... 2,600 80,112 Chase Manhattan Corp............................. 1,300 59,069 CIGNA Corp....................................... 800 105,840 Citigroup, Inc................................... 686 35,029 Clear Channel Communications (b)................. 700 33,906 CMS Energy Corp.................................. 1,200 38,025 CommScope, Inc. (b).............................. 1,200 19,875 Compaq Computer Corp............................. 4,000 60,200 Computer Sciences Corp. (b)...................... 200 12,025 Compuware Corp. (b).............................. 5,600 35,000 COR Therapeutics, Inc. (b)....................... 1,000 35,188 Dow Chemical Co.................................. 1,000 36,625 Eastman Chemical Co.............................. 400 19,500 Electronic Data Systems Corp..................... 2,400 138,600 Emerson Electric Co.............................. 1,300 102,456 Entergy Corp..................................... 1,000 42,313 Exelon Corp...................................... 900 63,189 Exxon Mobil Corp................................. 800 69,550 Federated Department Stores, Inc. (b)............ 900 31,500 FedEx Corp. (b).................................. 3,300 131,868 First Data Corp.................................. 2,058 108,431 FleetBoston...................................... 2,005 75,313 Freddie Mac...................................... 1,800 123,975 Gateway, Inc. (b)................................ 1,800 32,382 GATX Corp........................................ 500 24,938 General Mills, Inc............................... 1,600 71,300 Genzyme General (b).............................. 800 71,950 GPU, Inc......................................... 3,100 114,119 GreenPoint Financial Corp........................ 2,400 98,250 Household International, Inc..................... 1,200 66,000 Illinois Tool Works, Inc......................... 1,700 101,256 IMC Global, Inc.................................. 2,700 42,019 Johnson & Johnson Co............................. 900 94,556 Johnson Controls, Inc............................ 400 20,800 Kimberly-Clark Corp.............................. 500 35,345 Kroger Co. (b)................................... 1,700 46,006 Lear Corp. (b)................................... 1,800 44,662 Lincoln National Corp............................ 500 23,656 LSI Logic Corp. (b).............................. 2,000 34,180 Lyondell Chemical Co............................. 1,600 24,500 Martin Marietta Materials, Inc................... 1,036 43,823 Masco Corp....................................... 4,600 118,162 Mattel, Inc...................................... 5,000 72,200 Mead Corp........................................ 1,200 37,650 Microsoft Corp. (b).............................. 1,200 52,200 Motorola, Inc.................................... 2,415 48,904 National Semiconductor Corp. (b)................. 2,700 $ 54,337 New York Times Co................................ 600 24,038 Newell Rubbermaid, Inc........................... 2,600 59,150 Nextel Communications, Inc. (b).................. 2,800 69,300 Pentair, Inc..................................... 1,400 33,863 PepsiCo, Inc..................................... 700 34,694 PNC Financial Services Corp...................... 1,000 73,062 Praxair, Inc..................................... 1,100 48,812 Raytheon Co., Class B............................ 1,800 55,912 Sara Lee Corp.................................... 3,200 78,600 SBC Communications, Inc.......................... 2,100 100,275 SCI Systems, Inc. (b)............................ 1,000 26,375 St. Jude Medical, Inc. (b)....................... 500 30,719 Target Corp...................................... 1,600 51,600 Tellabs, Inc. (b)................................ 1,300 73,450 Texas Instruments, Inc........................... 1,000 47,375 Ultramar Diamond Shamrock Corp................... 1,290 39,829 UnitedHealth Group, Inc.......................... 1,600 98,200 Viad Corp........................................ 1,200 27,600 W.W. Grainger, Inc............................... 1,400 51,100 Wal-Mart Stores, Inc............................. 1,300 69,062 Wells Fargo and Co............................... 2,800 155,925 XL Capital Ltd................................... 500 43,688 York International Corp.......................... 1,000 30,688 ---------- Total U.S. Equities (Cost $4,662,457)............ 5,011,563 Face ---------- Amount ------ U.S. Bonds -- 50.75% U.S. Corporate Bonds -- 4.11% Capital One Bank, Bank Note, 8.250%, due 06/15/05........................... $ 25,000 25,284 Florida Power & Light Co., 6.875%, due 12/01/05........................... 50,000 51,193 Lowe's Cos., Inc. 7.500%, due 12/15/05........................... 50,000 51,005 8.250%, due 06/01/10........................... 25,000 26,308 News America Holdings, 7.750%, due 12/01/45........................... 20,000 17,262 Pacific Gas & Electric Co., 7.050%, due 03/01/24........................... 30,000 22,584 PanAmSat Corp., 6.000%, due 01/15/03........................... 100,000 96,724 Pharmacia Corp., 6.600%, due 12/01/28........................... 50,000 47,476 Qwest Capital Funding, Inc., 144A, 7.900%, due 08/15/10........................... 25,000 25,644 Sprint Capital Corp., 6.875%, due 11/15/28........................... 30,000 23,998 United Airlines, Inc., E.E.T.C., 7.811%, due 10/01/09........................... 50,000 50,300 Verizon Global Funding Corp., 144A, 7.750%, due 12/01/30........................... 50,000 50,876 --------- 488,654 --------- ================================================================================ 41 U.S. Balanced Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Face Amount Value -------- ------- International Dollar Bonds -- 1.10% Empresa Nacional de Electricidad S.A., 8.125%, due 02/01/97............................ $ 100,000 $ 76,617 United Mexican States Global, 9.875%, due 02/01/10............................ 50,000 53,650 ----------- 130,267 ----------- Asset-Backed Securities -- 1.54% Peco Energy Transition Trust, 99-A3, Class A7, 6.130%, due 03/01/09.................. 110,000 108,606 Vanderbilt Mortgage Finance, 8.255%, due 05/07/17............................ 70,000 74,626 ----------- 183,232 ----------- Corporate Mortgage-Backed Securities -- 1.33% DLJ Commercial Mortgage Corp. 7.300%, due 06/10/09............................ 24,999 26,323 7.340%, due 09/10/09............................ 20,000 21,201 LB Commercial Conduit Mortgage Trust, 99-C1, Class A1, 6.410%, due 08/15/07........... 84,295 85,065 Morgan Stanley Capital I, 6.710%, due 12/15/31............................ 25,000 25,438 ----------- 158,027 ----------- U.S. Government Mortgage- Backed Securities -- 13.80% Federal Home Loan Mortgage Corp., Gold 6.500%, due 04/01/29............................ 743,176 732,857 8.500%, due 05/01/30............................ 37,784 38,931 9.000%, due 07/01/30............................ 258,277 266,808 Federal National Mortgage Assoc., 97-72, Class EG, 0.000%, due 09/25/22 (b)........................ 96,141 92,231 Federal National Mortgage Association, 7.125%, due 06/15/10............................ 170,000 184,086 Government National Mortgage Association 6.000%, due 02/20/29............................ 122,416 118,383 7.000%, due 12/15/23............................ 114,321 115,261 7.500%, due 10/15/29............................ 88,575 90,030 ----------- 1,638,587 ----------- U.S. Government Obligations -- 28.87% U.S. Treasury Inflation Indexed Note, 3.875%, due 04/15/29............................ $1,940,000 $ 2,105,045 U.S. Treasury Note 5.625%, due 05/15/08............................ 390,000 400,597 6.625%, due 05/31/02............................ 665,000 676,405 6.625%, due 02/15/27............................ 120,000 137,029 7.000%, due 07/15/06............................ 100,000 108,870 ----------- 3,427,946 ----------- Total U.S. Bonds (Cost $5,865,869)................ 6,026,713 ----------- Shares -------- Short-Term Investments -- 8.08% Investment Companies -- 5.99% Brinson Supplementary Trust U.S. Cash Management Prime Fund................. 711,147 711,147 ----------- Face Amount -------- U.S. Government Obligations -- 2.09% U.S. Treasury Bill, due 02/08/01.................. $ 250,000 248,540 ----------- Total Short-Term Investments (Cost $959,549)................................. 959,687 ----------- Total Investments (Cost $11,487,875) -- 101.04% (a)............... 11,997,963 Liabilities, less cash and other assets -- (1.04%)......................... (123,714) ----------- Net Assets -- 100%................................ $11,874,249 =========== See accompanying notes to schedule of investments. ================================================================================ 42 U.S. Balanced Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $11,487,875; and net unrealized appreciation consisted of: Gross unrealized appreciation...................................................................... $ 912,634 Gross unrealized depreciation...................................................................... (402,546) --------- Net unrealized appreciation................................................................... $ 510,088 =========
(b) Non-income producing security E.E.T.C.: Enhanced Equipment Trust Certificate 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, 2000, the value of these securities amounted to $76,520 or 0.64% of net assets. FUTURES CONTRACTS The U.S. Balanced Fund had the following open futures contracts as of December 31, 2000:
Expiration Cost/ Current Unrealized Date Proceeds Value Gain ---------- -------- ------- ----------- U.S. Interest Rate Futures Buy Contracts: 5 Year U.S. Treasury Notes, 4 contracts................ March 2001 $411,012 $414,250 $ 3,238 30 Year U.S. Treasury Bonds, 1 contract................ March 2001 104,538 104,625 87 Index Futures Sale Contracts: Standard & Poor's 500, 1 contract...................... March 2001 349,095 333,750 15,345 -------- Total............................................. $ 18,670 ========
The aggregate market value of investments pledged to cover margin requirements for the open futures positions at December 31, 2000 was $248,540. ================================================================================ See accompanying notes to financial statements. 43 U.S. Equity Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Since its performance inception on February 28, 1994, the Brinson U.S. Equity Fund Class I has provided an annualized return of 14.63%, compared to the 17.01% return of its benchmark, the Wilshire 5000 Equity Index. For the year 2000, the Fund's total return of 3.23% compared favorably to the -10.89% return for its benchmark. The U.S. equity market, as measured by the broad Wilshire 5000 Index, had the worst year since 1974, driven by a sharp decline in the largest capitalization stocks and the technology sector. Stock markets around the world have weakened significantly in consideration of what appears to be the first synchronized global slowdown since 1974. Investors are concerned about excess capacity, weak pricing power, credit problems and low or little inflation with episodes of deflation. The year 2000 proved that diversification is important. Investors that were heavily weighted in technology, media and telecommunications (TMT) stocks endured a steep plunge. The Nasdaq Composite declined 39% for the full year and is now back to where it was in 1998, erasing two years of gains. Downward earnings revisions in technology stocks during the fourth quarter made investors realize that they were paying high multiples for what may be peak earnings and margins. The Fund outperformed its benchmark in 2000 with the best year for relative return since its inception in 1994. The sources of this performance include positive attribution from market exposure, risk factors, industry factors and stock selection. Market exposure (average beta of .88) added to the Fund's relative performance in the weak market environment that characterized most of the year 2000. Risk factors added significantly to the Fund's performance for the year. The most significant positive factor was the underexposure to size. Our Fund was very underweighted in the largest stocks that dominate the major market benchmarks. During the year, the disparity between large and small market capitalization stocks that had developed during 1999 and early 2000 began to dissipate as many of the largest capitalization stocks underperformed significantly. Industry factors added to active returns for the year. The most positive industry position was the underweight to the internet sector, which meaningfully underperformed as investors retreated from stocks with very high prices and little, if any, earnings support. Our fund overweight in the medical products industry added to performance for the year, as these stocks benefited from the market rotation into more defensive areas of the economy with good relative earnings prospects. Stock selection had a significant positive impact on active returns for the full year. Among the best large capitalization performers were UnitedHealth Group, Emerson Electric, Carnival Cruise, Cigna and Kimberly-Clark. Poor performers were mainly technology stocks, including Compuware, Gateway, Lexmark and Compaq, and also FedEx. In the intermediate capitalization segment, top performers include Fort James, Alza, Exelon, Southdown, St. Jude and Greenpoint Financial while Unisys, Motorola, Pentair, Circuit City and Owens-Illinois were among the worst. ================================================================================ 44 U.S. Equity Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Total Return
6 months 1 year 3 years 5 years Inception* ended ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 -------------------------------------------------------------------------------------------- Brinson U.S. Equity Fund Class I 8.05% 3.23% 5.50% 12.97% 14.63% -------------------------------------------------------------------------------------------- Brinson U.S. Equity Fund Class N 7.97 2.95 5.17 N/A 6.37 -------------------------------------------------------------------------------------------- Wilshire 5000 Equity Index -10.14 -10.89 10.76 16.68 17.01 --------------------------------------------------------------------------------------------
* Performance inception date of the Brinson U.S. Equity Fund Class I and the Wilshire 5000 Equity Index is 2/28/94, and inception date of Class N is 6/30/97. 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, 2000. The performance of Class N shares will vary based upon the different inception dates and class specific expenses. 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 [GRAPH]
Brinson U.S. Equity Fund Class I Wilshire 5000 Equity Index 2/28/94 999,000 1,000,000 12/31/94 982,692 991,086 12/31/95 1,381,494 1,352,348 12/31/96 1,735,857 1,639,211 12/31/97 2,165,710 2,152,123
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. ================================================================================ 45 U.S. Equity Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. EQUITIES Energy.................. 2.14% Capital Investment Capital Goods.......... 4.56 Electronic Components.. 7.56 ------ 12.12 Basic Industries Chemicals.............. 3.59 Housing/Paper.......... 2.41 Metals................. 2.32 ----- 8.32 Computers Software............... 1.73 Systems................ 1.81 ----- 3.54 Consumer Autos/Durables......... 2.36 Food/House Products.... 2.96 Health: Drugs.......... 7.35 Health: Non-Drugs...... 8.56 Leisure/Tourism........ 1.57% Non-Durables........... 0.67 Retail/Apparel......... 6.87 ------ 30.34 Financial Banks.................. 9.10 Non-Banks.............. 7.84 ------ 16.94 Telecommunications...... 5.68 Transportation.......... 6.57 Services/Miscellaneous.. 7.94 Utilities............... 4.82 ------ Total U.S. Equities.. 98.41* SHORT-TERM INVESTMENTS.. 1.59* ------ TOTAL INVESTMENTS.... 100.00 CASH AND OTHER ASSETS, LESS LIABILITIES....... -- NET ASSETS.............. 100.00% ====== -------------------------------------------------------------------------------- *The Fund held a long position in stock index futures which increased U.S. Equity exposure from 98.41% to 99.80%. This adjustment results in a net decrease in the Fund's exposure to Short-Term Investments from 1.59% to 0.20%. Top Ten U.S. Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets --------------------------------------------------- 1. Allergan, Inc. 3.66% 2. Burlington Northern Santa Fe Corp. 3.54 3. Wells Fargo and Company 3.01 4. Electronic Data Systems Corp. 2.65 5. FedEx Corp. 2.59 6. Freddie Mac 2.48 7. Masco Corp. 2.32 8. CIGNA Corp. 2.19 9. First Data Corp. 2.15 10. Alza Corp. 2.11 --------------------------------------------------- ================================================================================ 46 U.S. Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value ---------- --------- U.S. Equities -- 98.41% Advanced Micro Devices, Inc. (b)................... 183,900 $ 2,540,119 Allergan, Inc...................................... 54,400 5,266,600 Alza Corp. (b)..................................... 71,400 3,034,500 American General Corp.............................. 19,900 1,621,850 American Standard Cos., Inc. (b)................... 29,100 1,434,994 Baxter International, Inc.......................... 33,600 2,967,300 Burlington Northern Santa Fe Corp.................. 179,900 5,093,419 Cardinal Health, Inc............................... 22,700 2,261,487 Carnival Corp., Class A............................ 73,100 2,252,394 Chase Manhattan Corp............................... 36,000 1,635,750 CIGNA Corp......................................... 23,750 3,142,125 Citigroup, Inc..................................... 20,461 1,044,790 Clear Channel Communications (b)................... 19,000 920,313 CMS Energy Corp.................................... 33,150 1,050,441 CommScope, Inc. (b)................................ 32,700 541,594 Compaq Computer Corp............................... 112,500 1,693,125 Computer Sciences Corp. (b)........................ 5,100 306,638 Compuware Corp. (b)................................ 158,500 990,625 COR Therapeutics, Inc. (b)......................... 27,600 971,175 Dow Chemical Co.................................... 28,000 1,025,500 Eastman Chemical Co................................ 11,450 558,188 Electronic Data Systems Corp....................... 66,000 3,811,500 Emerson Electric Co................................ 37,100 2,923,944 Entergy Corp....................................... 29,200 1,235,525 Exelon Corp........................................ 26,300 1,846,523 Exxon Mobil Corp................................... 22,300 1,938,706 Federated Department Stores, Inc. (b).............. 26,900 941,500 FedEx Corp. (b).................................... 93,100 3,720,276 First Data Corp.................................... 58,630 3,089,068 FleetBoston........................................ 57,255 2,150,641 Freddie Mac........................................ 51,700 3,560,837 Gateway, Inc. (b).................................. 50,900 915,691 GATX Corp.......................................... 12,800 638,400 General Mills, Inc................................. 46,500 2,072,156 Genzyme General (b)................................ 22,050 1,983,122 GPU, Inc........................................... 76,000 2,797,750 GreenPoint Financial Corp.......................... 69,100 2,828,781 Household International, Inc....................... 33,600 1,848,000 Illinois Tool Works, Inc........................... 47,100 2,805,394 IMC Global, Inc.................................... 76,700 1,193,644 Johnson & Johnson Co............................... 25,400 2,668,587 Johnson Controls, Inc.............................. 12,100 629,200 Kimberly-Clark Corp................................ 13,650 964,918 Kroger Co. (b)..................................... 48,700 1,317,944 Lear Corp. (b)..................................... 51,650 1,281,566 Lincoln National Corp.............................. 14,400 681,300 LSI Logic Corp. (b)................................ 55,200 943,368 Lyondell Chemical Co............................... 44,750 685,234 Martin Marietta Materials, Inc..................... 29,807 1,260,836 Masco Corp......................................... 129,600 3,329,100 Mattel, Inc........................................ 140,400 2,027,376 Mead Corp.......................................... 33,800 1,060,475 Microsoft Corp. (b)................................ 34,300 1,492,050 Motorola, Inc...................................... 66,923 1,355,191 National Semiconductor Corp. (b)................... 75,400 1,517,425 New York Times Co.................................. 15,600 624,975 Newell Rubbermaid, Inc............................. 73,100 $ 1,663,025 Nextel Communications, Inc. (b).................... 79,200 1,960,200 Pentair, Inc....................................... 38,200 923,962 PepsiCo, Inc....................................... 19,300 956,556 PNC Financial Services Corp........................ 29,300 2,140,731 Praxair, Inc....................................... 38,300 1,699,562 Raytheon Co., Class B.............................. 50,550 1,570,209 Sara Lee Corp...................................... 89,100 2,188,519 SBC Communications, Inc............................ 59,400 2,836,350 SCI Systems, Inc. (b).............................. 27,400 722,675 St. Jude Medical, Inc. (b)......................... 15,400 946,137 Target Corp........................................ 45,500 1,467,375 Tellabs, Inc. (b).................................. 35,600 2,011,400 Texas Instruments, Inc............................. 29,300 1,388,087 Ultramar Diamond Shamrock Corp..................... 37,018 1,142,931 UnitedHealth Group, Inc............................ 45,200 2,774,150 Viad Corp.......................................... 35,350 813,050 W.W. Grainger, Inc................................. 40,700 1,485,550 Wal-Mart Stores, Inc............................... 36,100 1,917,812 Wells Fargo and Co................................. 77,700 4,326,919 XL Capital Ltd..................................... 14,000 1,223,250 York International Corp............................ 27,000 828,563 ------------ Total U.S. Equities (Cost $115,470,917)............ 141,480,943 ============ Short-Term Investments --1.59% Investment Companies -- 0.90% Brinson Supplementary Trust U.S. Cash Management Prime Fund....................... 1,289,380 1,289,380 ------------ Face Amount ------ U.S. Government Obligations -- 0.69% U.S. Treasury Bill, due 02/08/01...................$ 1,000,000 994,162 ------------ Total Short-Term Investments (Cost $2,282,988)................................ 2,283,542 ------------ Total Investments (Cost $117,753,905) -- 100.00% (a)............... 143,764,485 Cash and other assets, less liabilities -- 0.00%........................ 5,579 ------------ Net Assets -- 100%................................. $143,770,064 ============ See accompanying notes to schedule of investments. ================================================================================ 47 U.S. Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $117,753,905; and net unrealized appreciation consisted of: Gross unrealized appreciation............................... $38,426,125 Gross unrealized depreciation............................... (12,415,545) ----------- Net unrealized appreciation............................ $26,010,580 =========== (b) Non-income producing security FUTURES CONTRACTS The U.S. Equity Fund had the following open futures contracts as of December 31, 2000:
Expiration Current Unrealized Date Cost Value Gain ------------- ----------- ----------- ------------ Index Futures Buy Contracts: Standard & Poor's 500, 6 contracts................. March 2001 $1,979,523 $2,002,500 $22,977
The aggregate market value of investments pledged to cover margin requirements for the open futures positions at December 31, 2000 was $994,162. ================================================================================ See accompanying notes to financial statements. 48 U.S. Large Cap Equity Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Since its performance inception on April 30, 1998, the Brinson U.S. Large Cap Equity Fund Class I has provided an annualized return of -1.43%, compared to the 8.04% return of its benchmark, the S&P 500 Equity Index. For the year 2000, the Fund's total return of 2.18% compared favorably to the -9.10% return for its benchmark. The U.S. equity market, as measured by the S&P 500 Index, had the worst year since 1974, driven by a sharp decline concentrated in the largest capitalization stocks and the technology sector. The largest quintile of stocks by market capitalization (73% of the S&P 500) ranked last for the first time in 10 years, and was negative while all other size categories showed positive returns. Technology was the worst performing sector, and dropped from 34% of the S&P 500 Index to 22%. Technology had been regarded as a safe haven with good earnings visibility until several industry leaders such as Intel and IBM issued earnings warnings for the fourth quarter and 2001. These warnings reminded investors that technology stocks are cyclical growth companies with low long-term predictability, and are thus subject to cyclical factors such as the level of capital spending by customers who tend to cut spending when their own cash flow levels are declining. Capital spending could decline sharply, and, if it reverses, will have a greater impact on GDP than in the past. The Fund outperformed its benchmark in 2000 with the best year for relative return since its inception in 1998. The sources of this performance include positive attribution from market exposure, risk factors and stock selection, only offset by slightly negative returns from industry factors. Market exposure (average beta of .92) added to the Fund's relative performance in the weak market environment that characterized most of the year 2000. The most significant positive factor was the underexposure to size. Our Fund was very underweighted in the largest stocks that dominate the major market benchmarks. During the year, the disparity between large and small market capitalization stocks that had developed during 1999 and early 2000 began to dissipate as many of the largest capitalization stocks underperformed significantly. Stock selection had a significant positive impact on active returns for the full year. The strongest contributors were UnitedHealth Group, Emerson Electric, Cigna, SBC Communications and Kimberly-Clark while the worst were Compuware, Gateway, Lexmark, FedEx and Advanced Micro Devices. Industry exposures had a small negative effect on active returns for the year 2000. The underweight to Internet stocks and to the telephone service companies and the overweight to the electric utility industry added positively to performance attribution. This positive effect was more than offset by the negative impact of the Fund underweight to the drug industry. ================================================================================ 49 U.S. Large Cap Equity Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Total Return
6 months 1 year Inception* ended ended to 12/31/00 12/31/00 12/31/00 --------------------------------------------------------------------------- Brinson U.S. Large Cap Equity Fund Class I 10.62% 2.18% -1.43% --------------------------------------------------------------------------- Brinson U.S. Large Cap Equity Fund Class N 10.29 1.65 -1.75 --------------------------------------------------------------------------- S&P 500 Equity Index -8.72 -9.10 8.04 ---------------------------------------------------------------------------
* Performance inception date of the Brinson U.S. Large Cap Equity Fund Class I, Class N and the S&P 500 Equity Index is 4/30/98. 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 Cap 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, 2000. The performance of Class N shares will vary based upon the different class specific expenses. 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 Cap Equity Fund Class I vs. S&P 500 Equity Index Wealth Value with Dividends Reinvested [GRAPH]
Brinson U.S. Large Cap Equity S&P 500 Equity Index Fund Class 1 4/30/98 $1,000,000 $1,000,000 6/30/98 $ 998,652 $1,022,732 2/31/98 $1,058,703 $1,117,132 6/30/99 $1,143,860 $1,255,453 2/31/99 $ 941,729 $1,352,229 6/30/00 $ 869,885 $1,346,506 2/31/00 $ 962,237 $1,229,130
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 U.S. Large Cap Equity Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. EQUITIES Energy..................................... 4.01% Capital Investment Capital Goods............................. 2.77 Electric Components....................... 6.46 ------ 9.23 Basic Industries Chemicals................................. 1.62 Metals.................................... 3.25 ------ 4.87 Computers Software.................................. 2.20 Systems................................... 2.05 ------ 4.25 Consumer Food/House Products....................... 3.28 Health: Drugs............................. 6.69 Health: Non-Drugs......................... 8.82 Leisure/Tourism............................ 2.15% Non-Durables............................... 0.99 Retail/Apparel............................. 8.11 ------ 30.04 Financial Banks..................................... 7.60 Non-Banks................................. 9.40 ------ 17.00 Telecommunications......................... 5.09 Transportation............................. 5.21 Utilities.................................. 1.20 Services/Miscellaneous..................... 7.28 ------ Total U.S. Equities................... 88.18* SHORT-TERM INVESTMENTS..................... 11.88* ------ TOTAL INVESTMENTS..................... 100.06 LIABILITIES, LESS CASH AND OTHER ASSETS.......................... (0.06) ------ NET ASSETS............................ 100.00% ====== -------------------------------------------------------------------------------- * The Fund held a long position in stock index futures which increased U.S. Equity exposure from 88.18% to 93.73%. This adjustment results in a net decrease in the Fund's exposure to Short-Term Investments from 11.88% to 6.33%. Top 10 U.S. Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets ------------------------------------------------------- 1. Freddie Mac 3.43% 2. Wells Fargo and Co. 3.42 3. Baxter International, Inc. 3.38 4. CIGNA Corp. 3.30 5. Masco Corp. 3.25 6. Burlington Northern Santa Fe Corp. 3.15 7. First Data Corp. 2.98 8. Emerson Electric Co. 2.88 9. Johnson & Johnson Co. 2.79 10. Illinois Tool Works, Inc. 2.77 ------------------------------------------------------- ================================================================================ 51 U.S. Large Cap Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value -------- ---------- U.S. Equities -- 88.18% Abbott Laboratories..................... 1,900 $ 92,031 Advanced Micro Devices, Inc. (b)........ 4,700 64,919 Allergan, Inc........................... 1,000 96,812 American Electric Power Co., Inc........ 2,760 128,340 American General Corp................... 1,200 97,800 Baxter International, Inc............... 2,300 203,119 Bristol-Myers Squibb Co................. 1,000 73,938 Burlington Northern Santa Fe Corp....... 6,700 189,694 Cardinal Health, Inc.................... 1,400 139,475 Carnival Corp., Class A................. 4,200 129,412 CIGNA Corp.............................. 1,500 198,450 Citigroup, Inc.......................... 1,246 63,624 Clear Channel Communications (b)........ 1,000 48,438 Compaq Computer Corp.................... 5,200 78,260 Compuware Corp. (b)..................... 9,300 58,125 Electronic Data Systems Corp............ 2,300 132,825 Emerson Electric Co..................... 2,200 173,387 Entergy Corp............................ 1,700 71,931 Exxon Mobil Corp........................ 1,300 113,019 FedEx Corp. (b)......................... 3,100 123,876 First Data Corp......................... 3,400 179,137 FleetBoston............................. 3,385 127,149 Freddie Mac............................. 3,000 206,625 Gateway, Inc. (b)....................... 2,500 44,975 General Mills, Inc...................... 2,000 89,125 Household International, Inc............ 1,400 77,000 Illinois Tool Works, Inc................ 2,800 166,775 Johnson & Johnson Co.................... 1,600 168,100 Kroger Co. (b).......................... 3,600 97,425 Masco Corp.............................. 7,600 195,225 Mattel, Inc............................. 8,200 118,408 Microsoft Corp. (b)..................... 1,700 73,950 Motorola, Inc........................... 2,000 40,500 National Semiconductor Corp. (b)........ 3,700 74,463 Newell Rubbermaid, Inc.................. 4,300 $ 97,825 PepsiCo, Inc............................ 1,200 59,475 PNC Financial Services Corp............. 1,700 124,206 Praxair, Inc............................ 2,200 97,625 Sara Lee Corp........................... 4,400 108,075 SBC Communications, Inc................. 3,200 152,800 Target Corp............................. 2,600 83,850 Tellabs, Inc. (b)....................... 2,000 113,000 Texas Instruments, Inc.................. 1,600 75,800 UnitedHealth Group, Inc................. 2,600 159,575 Wal-Mart Stores, Inc.................... 1,700 90,313 Wells Fargo and Co...................... 3,700 206,044 ---------- Total U.S. Equities (Cost $4,827,214)... 5,304,920 ---------- Short Term Investments -- 11.88% Investment Companies -- 10.23% Chase Vista U.S. Government Money Market Fund..................... 615,420 615,420 ---------- Face Amount U.S. Government Obligations -- 1.65% -------- U.S. Treasury Bill, due 02/08/01........ $100,000 99,416 ---------- Total Short-Term Investments (Cost $714,781)....................... 714,836 Total Investments ---------- (Cost $5,541,995) -- 100.06% (a)...... 6,019,756 Liabilities, less cash and other assets -- (0.06%)............... (3,687) ---------- Net Assets -- 100%...................... $6,016,069 ========== NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $5,541,995; and net unrealized appreciation consisted of: Gross unrealized appreciation............................ $ 956,082 Gross unrealized depreciation............................ (478,321) ---------- Net unrealized appreciation........................... $ 477,761 ========== (b) Non-income producing security FUTURES CONTRACTS The U.S. Large Cap Equity Fund had the following open futures contracts as of December 31, 2000:
Expiration Current Unrealized Date Cost Value Loss ----------- --------- ------------ ---------- Index Futures Buy Contracts: Standard & Poor's 500, 1 contract........... March 2001 $349,107 $333,750 $(15,357)
The aggregate market value of investments pledged to cover margin requirements for the open futures positions December 31, 2000 was $99,416. ================================================================================ See accompanying notes to financial statements. 52 U.S. Large Cap Growth Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] In 2000, the Brinson U.S. Large Cap Growth Fund Class I outperformed the Russell 1000 Growth Index by 632 basis points (-16.10% compared to - 22.42%). Since the Fund's process was revised in mid-1998 and the new benchmark was adopted, the strategy has outperformed its benchmark while taking meaningfully less risk. Since June 30, 1998, the Fund has returned 8.59% compared to the Russell 1000 Growth Index return of 7.22% and the S&P 500 Index return of 7.63%. The Fund has provided an annualized return of 12.32% since its performance inception on October 31, 1997, compared to a 13.91% return of its benchmark. For the first time in several years, growth strategies lagged the general market meaningfully, with the S&P 500 beating the Russell 1000 Growth Index by over 13%. The major factor contributing to this disparity was the substantial correction in the technology sector of the market, which by mid-year of 2000 represented over 55% of the Russell 1000 Growth Index compared to 35% of the S&P 500. As interest rates rose during the year putting pressure on stretched valuations, fundamental growth also began to slow due to a slowing economy and lack of availability of cheap equity capital. This culminated in a series of fundamental earnings and revenue disappointments in many areas including communication equipment, personal computers, and semiconductors. In 2000, with some important growth sectors performing well, such as consumer staples, healthcare and sub-sectors of financials, which had been out of favor for one to two years because they could not compete with the hyper-growth expectations of technology. These companies attracted more attention in 2000 as the economy slowed down and earnings prospects became more defensive. The Fund's performance benefited from the above dichotomies at the end of last year. We positioned it by underweighting technology and overweighting consumer staples, financials, energy and some portions of health care. In addition, our issue selection was an important contributor to outperformance although not as dramatic as in 1999. Our industry weightings and security selection resulted in a fund which had more value and less price momentum than the benchmark at the end of the year, but which also had less risk and thus performed relatively well in a declining market. The year 2001 begins with more disappointments in technology and with new respect for other growth areas. The contrast with the end of last year could not be more dramatic. Furthermore, the market is dealing with a government under pressure to compromise on many issues. The Federal Reserve has shifted gears to halt the economic slide. While we have not yet acted to balance out our sector weights, the market has done some of this job for us. Nevertheless, we would anticipate being more active in this regard as the year wears on because the long-run case for global expansion in technology remains intact, promising to deliver superior earnings growth over time. In the meantime, individual issue selection will be extremely important for the foreseeable future. ================================================================================ 53 U.S. Large Cap Growth Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Total Return
6 months 1 year 3 years Inception* ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 -------------------------------------------------------------------------------------------------------------------------- Brinson U.S. Large Cap Growth Fund Class I -19.34% -16.10% 11.62% 12.32% -------------------------------------------------------------------------------------------------------------------------- Brinson U.S. Large Cap Growth Fund Class N -19.44 -16.31 N/A 5.19 -------------------------------------------------------------------------------------------------------------------------- Russell 1000 Growth Index -25.58 -22.42 12.74 13.91 --------------------------------------------------------------------------------------------------------------------------
* Performance inception date of the Brinson U.S. Large Cap Growth Fund Class I and the Russell 1000 Growth Index is 10/31/97, and inception date of Class N is 12/31/98. 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 Cap Growth Fund Class I 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, 2000. The performance of Class N shares will vary based upon the different inception dates and class specific expenses. 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 Cap Growth Fund Class I vs. Russell 1000 Growth Index Wealth Value with Dividends Reinvested [GRAPH]
Brinson U.S. Large Capitalization Russell 1000 Growth Index Growth Fund Class I 10/31/97 $1,000,000 $1,000,000 12/31/97 $1,039,140 $1,054,153 6/30/98 $1,175,605 $1,268,988 12/31/98 $1,297,885 $1,462,181 6/30/99 $1,524,795 $1,614,973 12/31/99 $1,722,699 $1,947,010 6/30/2000 $1,792,308 $2,029,463 12/31/2000 $1,444,914 $1,510,418
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. ================================================================================ 54 U.S. Large Cap Growth Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) ------------------------------------------------------------ U.S. EQUITIES Energy......................................... 4.26% Capital Investment Electric Components........................... 15.05 Technology.................................... 3.37 ------ 18.42 Computers Services...................................... 2.56 Software...................................... 5.78 Systems....................................... 9.98 ------ 18.32 Consumer Autos/Durables................................ 2.15 Health: Drugs................................. 13.25 Health: Non-Drugs............................. 7.40 Non-Durables.................................. 2.80 Retail/Apparel................................ 9.64 ------ 35.24 Financial Non-Banks..................................... 6.17% Telecommunications............................. 7.72 Services/Miscellaneous......................... 7.78 ------ Total U.S. Equities......................... 97.91 SHORT-TERM INVESTMENTS......................... 0.65 ------ TOTAL INVESTMENTS........................... 98.56 CASH AND OTHER ASSETS, LESS LIABILITIES.............................. 1.44 ------ NET ASSETS..................................... 100.00% ====== ------------------------------------------------------------ Top 10 U.S. Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets ------------------------------------------------------------ 1. Pfizer, Inc. 4.88% 2. General Electric Co. 3.91 3. Cisco Systems, Inc. 3.66 4. Microsoft Corp. 3.04 5. Texas Instruments, Inc. 2.76 6. Schlumberger Ltd. 2.61 7. Wal-Mart Stores, Inc. 2.60 8. EMC Corp. 2.56 9. Intel Corp. 2.50 10. AFLAC, Inc. 2.19 ------------------------------------------------------------ ================================================================================ 55 U.S. Large Cap Growth Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- U.S. Equities -- 97.91% AFLAC, Inc......................................... 2,600 $ 187,687 Agilent Technologies, Inc. (b)..................... 2,000 109,500 Allergan, Inc...................................... 1,100 106,494 Alltel Corp........................................ 1,600 99,900 Alza Corp. (b)..................................... 2,200 93,500 America On-Line, Inc. (b).......................... 4,500 156,600 American Express Co................................ 2,000 109,875 American International Group, Inc.................. 1,337 131,778 Amgen, Inc. (b).................................... 2,300 147,056 Analog Devices, Inc. (b)........................... 1,000 51,188 Anheuser-Busch Cos., Inc., Class A................. 2,900 131,950 Applera Corp-Applied Biosystems Group.............. 900 84,656 Applied Material, Inc. (b)......................... 2,000 76,375 AT&T Corp. - Liberty Media Goup, Inc. (b).......... 7,712 104,594 Avon Products, Inc................................. 3,700 177,137 Boeing Co.......................................... 2,800 184,800 Brocade Communications Systems (b)................. 600 55,088 Cisco Systems, Inc. (b)............................ 8,200 313,650 Citigroup, Inc..................................... 3,233 165,085 Compaq Computer Corp............................... 7,900 118,895 Eli Lilly and Co................................... 1,000 93,063 EMC Corp. (b)...................................... 3,300 219,450 Forest Laboratories, Inc. (b)..................... 300 39,863 Gap, Inc........................................... 3,100 79,050 General Electric Co................................ 7,000 335,562 Halliburton Co..................................... 3,900 141,375 Immunex Corp. (b).................................. 3,700 150,312 Intel Corp......................................... 7,100 214,775 International Business Machines Corp............... 1,600 136,000 JDS Uniphase Corp. (b)............................. 1,600 66,700 Johnson & Johnson Co............................... 1,100 115,569 Kimberly-Clark Corp................................ 1,400 98,966 McGraw-Hill Companies, Inc........................ 1,800 105,525 Merck & Co., Inc................................... 1,600 149,800 Merrill Lynch & Co................................. 1,800 122,737 Micron Technology, Inc. (b)........................ 4,300 152,650 Microsoft Corp. (b)................................ 6,000 261,000 Motorola, Inc...................................... 4,200 85,050 Novellus Systems, Inc. (b)......................... 1,400 50,313 Oracle Corp. (b)................................... 5,500 159,844 Palm, Inc. (b)..................................... 1,900 53,794 Pepsi Bottling Group, Inc.......................... 2,700 $ 107,831 Pfizer, Inc........................................ 9,100 418,600 Pharmacia Corp..................................... 2,800 170,800 QUALCOMM, Inc. (b)................................. 2,100 172,594 RadioShack Corp.................................... 2,100 89,906 Safeway, Inc. (b).................................. 1,900 118,750 Schering Plough Corp............................... 1,500 85,125 Schlumberger Ltd................................... 2,800 223,825 Solectron Corp. (b)................................ 3,400 115,260 Sprint Corp. (b)................................... 1,300 26,569 Sun Microsystems, Inc. (b)......................... 6,400 178,400 Target Corp........................................ 4,300 138,675 Tellabs, Inc. (b).................................. 2,400 135,600 Texas Instruments, Inc............................. 5,000 236,875 Time Warner, Inc................................... 800 41,792 Tyco International Co.............................. 3,000 166,500 VeriSign, Inc. (b)................................. 300 22,256 Veritas Software Corp. (b)......................... 600 52,500 Viacom, Inc. (b)................................... 2,346 109,675 Wal-Mart Stores, Inc............................... 4,200 223,125 Walt Disney Co..................................... 3,000 86,813 XO Communications, Inc. (b)........................ 2,100 37,406 ---------- Total U.S. Equities (Cost $9,203,973).............. 8,396,083 ========== Short-Term Investments -- 0.65% Investment Companies -- 0.07% Chase Vista U.S. Government Money Market Fund....................................... 6,056 6,056 ---------- Face Amount ------ U.S. Government Obligations -- 0.58% U.S. Treasury Bill, due 02/08/01................... $ 50,000 49,688 ---------- Total Short-Term Investments (Cost $55,744)........ 55,744 ---------- Total Investments (Cost $9,259,717) -- 98.56% (a).................. 8,451,827 Cash and other assets, less liabilities -- 1.44%......................... 123,740 ---------- Net Assets -- 100%................................. $8,575,567 ========== NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $9,259,717; and net unrealized depreciation consisted of: Gross unrealized appreciation................ $ 903,663 Gross unrealized depreciation................ (1,711,553) ----------- Net unrealized depreciation............... $ (807,890) =========== (b) Non-income producing security ================================================================================ See accompanying notes to financial statements. 56 U.S. Small Cap Growth Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] The Brinson U.S. Small Cap Growth Fund Class I appreciated 22.44% in 2000, which was well ahead of a 22.43% loss for its benchmark, the Russell 2000 Growth Index. Since its inception on September 30, 1997, the Fund returned 13.91% annually, versus 0.96% for its benchmark. The U.S. equity market went through a wild ride, with most major indices finishing the year near their 12-month low. In this environment, small capitalization stocks outperformed their large capitalization peers for the second consecutive year. Specifically, the small capitalization Russell 2000 declined 3.0%, while the large capitalization S&P 500 fell 9.0%. Within the small capitalization universe the Russell 2000 Growth Index tumbled 22.4%, whereas the Russell 2000 Value Index rose 22.8%. This dispersion of returns of small capitalization value over growth stocks is a record for a calendar year. Small capitalization growth was strong in the first part of 2000, with the Internet craze and a strong IPO market contributing to a sharp run-up in stock prices through mid-March. The subsequent demise of technology, media and telecommunications (TMT) stocks gravely affected the Russell 2000 Growth Index for the remainder of the year, with technology stocks on average down almost 50% by year-end. Since TMT stocks accounted for an average weight of 44% of the Russell 2000 Growth Index in 2000, it is understandable why it was such a challenging year for small capitalization growth managers. Despite the carnage, there were areas of strength in the small capitalization universe, particularly in energy (+104%), health care (+34%), and financials (+25%). The Fund outpaced its benchmark for several reasons. First, stock selection, particularly in technology, financial, and health care, was very effective in 2000, accounting for three-fourths of our outperformance last year. Second, the Fund benefited from good sector selection, in part due to the Fund's underweight in technology stocks after the first quarter. It also benefited from an overweight in the capital goods sector as well as from a number of strong initial public offerings early in the year. Stocks that helped performance in 2000 included Quest Diagnostics, Investors Financial Services, Waters Corp, Shaw Group, Elantec Semiconductor, and Tollgrade Communications. Stocks that detracted from performance included Vicinity, QRS, Spanish Broadcasting, Sykes Enterprises, Whitehall Jewellers, and Peregrine Systems. There were no strong sector themes in the Fund's best or worst stocks, though earnings disappointments were a common theme for most of the Fund's problem stocks. After a tough year for small capitalization stocks in 2000, we look for a better year ahead. Historically, Federal Reserve rate cuts have boosted small capitalization equities. We also think record low relative valuations for small capitalization stocks provide plenty of upside over the next few years. ================================================================================ 57 U.S. Small Cap Growth Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Total Return
6 months 1 year 3 years Inception* ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 -------------------------------------------------------------------------------------------------------------------- Brinson U.S. Small Cap Growth Fund Class I -6.15% 22.44% 17.40% 13.91% -------------------------------------------------------------------------------------------------------------------- Brinson U.S. Small Cap Growth Fund Class N -6.30 22.21 N/A 31.28 -------------------------------------------------------------------------------------------------------------------- Russell 2000 Growth Index -23.37 -22.43 3.96 0.96 --------------------------------------------------------------------------------------------------------------------
* Inception dates of the Brinson U.S. Small Cap Growth Fund Class I and Class N are 9/30/97 and 12/31/98, respectively. Performance inception date of the Russell 2000 Growth Index is 9/30/97. Total return includes reinvestment of all capital gain and income distributions. All total returns in excess of 1 year represent average annualized returns. The Fund invests in IPOs which may have a magnified impact on performance. 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 Cap Growth Fund Class I and the Russell 2000 Growth 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, 2000. The performance of Class N shares will vary based upon the different inception dates and class specific expenses. 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 Cap Growth Fund Class I vs. Russell 2000 Growth Index Wealth Value with Dividends Reinvested [GRAPH]
Brinson U.S. Small Cap Growth Fund Class I Russell 2000 Growth Index 9/30/97 1,000,000 1,000,000 1,000,000 12/31/97 943,800 966,513 918,042 06/30/98 971,100 1,014,141 968,126 12/31/98 880,562 941,913 929,328 6/30/99 918,586 1,029,355 1,048,449 12/31/99 1,247,796 1,142,127 1,329,797 06/30/2000 1,628,039 1,176,807 1,346,105 12/31/2000 1,527,172 1,107,625 1,031,535
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. ================================================================================ 58 U.S. Small Cap Growth Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. EQUITIES Energy............................................. 5.64% Capital Investment Electrical Components............................ 10.63 Technology....................................... 4.12 ------ 14.75 Basic Industries Housing/Paper.................................... 3.21 Computers Services......................................... 3.03 Software......................................... 4.13 Systems.......................................... 0.11 ------ 7.27 Consumer Autos/Durables................................... 9.04 Food/House Products.............................. 1.75 Health: Drugs.................................... 4.35 Health: Non-Drugs................................ 15.68 Retail/Apparel................................... 9.27 ------ 40.09 Financial Banks............................................ 4.69% Non-Banks........................................ 8.76 ------ 13.45 Telecommunications Equipment........................................ 2.30 Services......................................... 1.49 ------ 3.79 Transportation..................................... 4.49 Services/Miscellaneous............................. 5.06 ------ Total U.S. Equities....................... 97.75 SHORT-TERM INVESTMENTS............................. 2.32 ------ TOTAL INVESTMENTS........................... 100.07 LIABILITIES, LESS CASH AND OTHER ASSETS..................................... (0.07) ------ NET ASSETS......................................... 100.00% ====== --------------------------------------------------------------------------- Top 10 U.S. Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets -------------------------------------------------------------- 1. Shaw Group, Inc. 3.42% 2. Investors Financial Services Corp. 3.18 3. Quest Diagnostics, Inc. 3.07 4. Talbots, Inc. 2.50 5. Patterson Dental Co. 2.28 6. Mercury Interactive Corp. 1.99 7. Patterson Energy, Inc. 1.98 8. Expeditors International Washington, Inc. 1.94 9. Career Education Corp. 1.83 10. Forward Air Corp. 1.76 -------------------------------------------------------------- ================================================================================ 59 U.S. Small Cap Growth Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value -------- ---------- U.S. Equities -- 97.75% 3-Dimensional Pharmaceuticals, Inc. (b)............. 3,300 $ 48,881 About.com, Inc. (b)................................. 4,900 131,994 ACT Manufacturing, Inc. (b)......................... 20,500 322,875 Active Power, Inc. (b).............................. 3,300 72,394 Administaff, Inc. (b)............................... 20,600 560,320 Anixter International, Inc. (b)..................... 18,200 393,575 Aurora Biosciences Corp. (b)........................ 8,000 251,500 Blue Martini Software, Inc. (b)..................... 2,200 29,150 BreezeCom Ltd. (b).................................. 4,150 59,397 C & D Technologies, Inc............................. 14,800 639,175 C-COR.net Corp. (b)................................. 21,500 208,953 Career Education Corp. (b).......................... 23,600 923,350 Celeritek, Inc. (b)................................. 15,800 602,375 Cell Therapeutics, Inc. (b)......................... 15,400 693,962 Children's Place Retail Stores, Inc. (b)............ 8,000 162,000 Cognex Corp. (b).................................... 20,900 462,412 Cognizant Technology Solutions Corp. (b)............ 20,300 737,144 Computer Network Technology Corp. (b)............... 5,150 148,384 Copart, Inc. (b).................................... 30,500 655,750 COR Therapeutics, Inc. (b).......................... 10,800 380,025 Cosine Communications, Inc. (b)..................... 4,200 58,275 Cost Plus, Inc. (b)................................. 19,050 559,594 Credence Systems Corp. (b).......................... 18,600 427,800 Cubist Pharmaceuticals, Inc. (b).................... 10,100 292,900 CV Therapeutics, Inc. (b)........................... 7,600 537,700 Cytyc Corp. (b)..................................... 12,000 750,750 Datascope Corp...................................... 11,400 390,450 Decode Genetics, Inc. (b)........................... 2,500 26,250 Dendrite International, Inc. (b).................... 29,950 670,131 Eden Bioscience Corp. (b)........................... 6,250 187,109 Elantec Semiconductor, Inc. (b)..................... 16,200 449,550 Emmis Communications Corp. (b)...................... 8,000 229,500 Equinix, Inc. (b)................................... 10,900 47,688 Exar Corp. (b)...................................... 21,000 650,672 Exfo Electro Optical Engineering, Inc. (b).......... 2,300 60,088 Expeditors International of Washington, Inc......... 18,200 977,112 Flextronics International Ltd. (b).................. 15,126 431,091 Forward Air Corp. (b)............................... 23,800 888,037 Genomica Corp. (b).................................. 15,500 81,859 Graco, Inc.......................................... 16,700 690,962 Greater Bay Bancorp................................. 20,000 820,000 Hain Celestial Group, Inc. (b)...................... 27,090 880,425 Hall Kinion & Associates, Inc. (b).................. 32,200 648,025 Haverty Furniture Cos., Inc......................... 16,700 164,913 HS Resources, Inc. (b).............................. 19,000 805,125 I-Many, Inc. (b).................................... 11,500 143,031 Inamed Corp. (b).................................... 13,800 282,038 Inrange Technologies Corp. (b)...................... 3,000 50,813 Insight Enterprises, Inc. (b)....................... 25,950 465,478 Insituform Technologies, Inc. (b)................... 22,000 877,250 Intersil Holding Corp. (b).......................... 4,000 91,750 Investors Financial Services Corp................... 18,600 1,599,600 Ixia (b)............................................ 2,000 45,750 Jack in the Box, Inc. (b)........................... 23,500 691,781 Kenneth Cole Productions, Inc. (b).................. 20,600 $ 829,150 Kent Electronics Corp. (b).......................... 29,300 483,450 Learning Tree International (b)..................... 13,700 678,150 Marvell Technology Group Ltd. (b)................... 2,400 52,650 Maverick Tube Corp. (b)............................. 25,500 576,937 Meade Instruments Corp. (b)......................... 15,200 99,750 Mercury Interactive Corp. (b)....................... 11,100 1,001,775 Myriad Genetics, Inc. (b)........................... 8,200 678,550 Network Engines, Inc. (b)........................... 2,100 8,794 North Fork Bancorporation, Inc...................... 28,900 709,856 NVR, Inc. (b)....................................... 6,000 741,600 Oakley, Inc. (b).................................... 45,300 611,550 Omnivision Technologies, Inc. (b)................... 2,300 7,475 Pacific Sunwear of California, Inc. (b)............. 19,050 488,156 Parlex Corp. (b).................................... 14,800 200,725 Parthus Technologies ADR (b)........................ 2,600 68,250 Patterson Dental Co. (b)............................ 33,900 1,148,362 Patterson Energy, Inc. (b).......................... 26,800 998,300 Peregrine Systems, Inc. (b)......................... 25,000 493,750 Pericom Semiconductor Corp. (b)..................... 39,000 721,500 Physiometrix, Inc. (b).............................. 17,100 272,531 Planar Systems, Inc. (b)............................ 29,000 721,375 Praecis Pharmaceuticals, Inc. (b)................... 8,800 257,400 Proton Energy Systems, Inc. (b)..................... 2,100 22,050 Proxim, Inc. (b).................................... 12,900 554,700 Quest Diagnostics, Inc. (b)......................... 10,900 1,547,800 Register.com (b).................................... 3,000 21,000 ResMed, Inc. (b).................................... 21,400 853,325 Resonate, Inc. (b).................................. 2,200 20,900 Richmond County Financial Corp...................... 31,900 833,387 Rudolph Technologies, Inc. (b)...................... 1,600 48,300 Saba Software, Inc. (b)............................. 3,150 49,613 Scios, Inc. (b)..................................... 9,100 209,869 Selectica, Inc. (b)................................. 2,000 48,375 Shaw Group, Inc. (b)................................ 34,400 1,720,000 Sipex Corp. (b)..................................... 22,500 538,594 SMTC Corp. (b)...................................... 4,300 58,588 Stone Energy Corp. (b).............................. 11,300 729,415 Stratos Lightwave, Inc. (b)......................... 2,300 39,244 Swift Transportation Co., Inc. (b).................. 19,900 394,269 Syncor International Corp-Del (b)................... 21,000 763,875 Talbots, Inc........................................ 27,600 1,259,250 Tollgrade Communications, Inc. (b).................. 7,900 288,350 Transmeta Corp. (b)................................. 500 11,750 Trico Marine Services, Inc. (b)..................... 42,400 654,550 Triton Network Systems, Inc. (b).................... 2,300 7,188 Triton PCS Holdings, Inc. (b)....................... 8,200 278,288 TTM Technologies, Inc. (b).......................... 3,250 46,109 Vertex Pharmaceuticals, Inc. (b).................... 9,600 686,400 Vicinity Corp. (b).................................. 16,300 48,391 Vintage Petroleum, Inc.............................. 32,900 707,350 Waters Corp. (b).................................... 5,500 459,250 Zebra Technologies Corp., Class A (b)............... 11,900 485,483 Zoll Medical Corp. (b).............................. 15,200 532,950 ----------- Total U.S. Equities (Cost $42,059,835).............. 49,225,762 ----------- ================================================================================ 60 U.S. Small Cap Growth Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value ----------- ----------- Short-Term Investments-- 2.32% Investment Companies -- 2.32% Brinson Supplementary Trust U.S. Cash Management Prime Fund (Cost $1,166,686)....................... 1,166,686 $ 1,166,686 ----------- Total Investments 100.07% (Cost $43,226,521) -- 100.07% (a)....... 50,392,448 Liabilities, less cash and other assets -- (0.07%)....................... (33,201) ----------- Net Assets -- 100%........................ $50,359,247 =========== NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $43,226,521; and net unrealized appreciation consisted of: Gross unrealized appreciation........................... $13,068,081 Gross unrealized depreciation........................... (5,902,154) ----------- Net unrealized appreciation......................... $ 7,165,927 ===========
(b) Non-income producing security ================================================================================ See accompanying notes to financial statements. 61 U.S. Bond Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Since its inception on August 31, 1995, the Brinson U.S. Bond Fund Class I has returned 6.83%, compared to the 7.07% return of its benchmark, the Salomon Smith Barney Broad Investment Grade (BIG) Bond Index. In 2000 the fund posted a return of 10.82% compared to its benchmark's return of 11.59%. This was a strong year for the U.S. bond market, bouncing back from the poor yields in 1999 and outperforming U.S. equities in the process. Early in the year, the Treasury announced plans to buy back approximately USD 30 billion in debt and significantly reduce Treasury issuance. Meanwhile, the Federal Reserve tightened interest rates three times in an effort to reduce inflation risks brought on by the economy's torrid growth rate, which later in the year showed signs of deceleration. The combined effect of these actions caused the yield curve to invert as long rates fell while short rates rose. By the end of the year the long end of the curve had regained its positive slope, and yields of benchmark 10-year and 30-year Treasuries had rallied 133 and 102 basis points, respectively, to finish at 5.11% and 5.45%. 2-year yields finished at 5.09%, down 111 basis points. Treasuries were the lead performers over the year, at the expense of non- Treasury securities (spread sectors). The inversion of the Treasury yield curve caused the yield for spread sectors to disconnect from Treasuries. This phenomenon produced exceptionally poor relative returns for non-Treasury bonds. Volatile equity markets and earnings warnings triggered additional caution regarding these non-Treasury sectors. By the end of the year all spread sectors but asset-backed securities had underperformed duration-neutral Treasuries. Corporate securities were the worst performers, lagging Treasuries by 417 basis points. In general, our overweight to spread products hurt returns. A shift in exposure to the higher-quality sectors proved a helpful strategy as earnings warnings and signs of economic weakness appeared. Issue selection within the mortgage sector was a strong source of value added. Our shorter-than-benchmark duration strategy hurt somewhat, but this was partially offset by exposure to Treasury Inflation Protected Securities. ================================================================================ 62 U.S. Bond Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Total Return
6 months 1 year 3 years 5 years Inception* ended ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 ------------------------------------------------------------------------------------------------ Brinson U.S. Bond Fund Class I 7.21% 10.82% 5.92% 6.16% 6.83% ------------------------------------------------------------------------------------------------ Brinson U.S. Bond Fund Class N 7.14 10.51 5.64 N/A 6.71 ------------------------------------------------------------------------------------------------ Salomon Smith Barney Broad Investment Grade (BIG) Bond Index 7.38 11.59 6.35 6.45 7.07 ------------------------------------------------------------------------------------------------
* Inception dates of the Brinson U.S. Bond Fund Class I and Class N are 8/31/95 and 6/30/97, respectively. Performance inception date of the Salomon Smith Barney BIG Bond Index is 8/31/95. Total return includes reinvestment of all capital gain and income distributions. All total returns in excess of 1 year are averago 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, 2000. The performance of Class N shares will vary based upon the different inception dates and class specific expenses. 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 [GRAPH]
Brinson U.S. Bond Fund Class I Salomon Smith Barney BIG Bond Index 8/31/95 $1,000,000 $1,000,000 12/31/95 $1,054,932 $1,053,220 12/31/96 $1,092,169 $1,091,411 12/31/97 $1,197,458 $1,196,413 12/31/98 $1,297,674 $1,300,726 12/31/99 $1,284,169 $1,289,785 12/31/00 $1,422,783 $1,439,301
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. ================================================================================ 63 U.S. Bond Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. BONDS Corporate Bonds Consumer............................................................ 1.70% Construction........................................................ 0.26 Electric Components................................................. 1.20 Energy.............................................................. 1.20 Financial Services.................................................. 4.54 Health.............................................................. 0.86 Publishing.......................................................... 0.72 Recreation.......................................................... 0.96 Retail/Apparel...................................................... 0.39 Services/Miscellaneous.............................................. 1.96 Telecommunications.................................................. 1.45 Utilities........................................................... 2.07 ------ Total U.S. Corporate Bonds....................................... 17.31 Asset-Backed......................................................... 5.76 Corporate Mortgage-Backed Securities................................. 19.74 International Dollar Bonds........................................... 5.66 U.S. Government Agencies............................................. 2.59 U.S. Government Mortgage-Backed Securities........................... 23.83 U.S. Government Obligations.......................................... 22.79 ------ Total U.S. Bonds................................................. 97.68 SHORT-TERM INVESTMENTS............................................... 1.23 ------ TOTAL INVESTMENTS................................................ 98.91 CASH AND OTHER ASSETS, LESS LIABILITIES................................................. 1.09 ------ NET ASSETS........................................................... 100.00% ====== ================================================================================ 64 U.S. Bond Fund -- Schedule of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Face Amount Value -------- ------- U.S. Bonds -- 97.68% U.S. Corporate Bonds -- 17.31% Capital One Bank, Bank Note, 8.250%, due 06/15/05......................................... $ 250,000 $ 252,844 CBS Corp., 8.625%, due 08/01/12................................ 575,000 638,188 Cendant Corp., 7.750%, due 12/01/03......................................... 600,000 584,155 Centaur Funding Corp., Class B, 144A, 9.080%, due 04/20/20 (b)..................................... 715 741,589 Centaur Funding Corp., Class C, 144A, 0.000%, due 04/20/20 (b)..................................... 1,355 247,288 Centex Corp., 9.750%, due 06/15/05............................. 155,000 158,848 Chesapeake & Potomac Tel, MD, 8.000%, due 10/15/29......................................... 87,000 89,752 Dominion Resources, Inc., Series B, 7.625%, due 07/15/05......................................... 700,000 730,128 Federated Department Stores 6.300%, due 04/01/09......................................... 185,000 168,113 8.500%, due 06/01/10......................................... 65,000 67,897 FMR Corp., 144A, 7.570%, due 06/15/29......................................... 300,000 301,966 GMAC, 9.625%, due 12/15/01..................................... 294,000 302,928 KeySpan Corp., 7.625%, due 11/15/10............................ 250,000 265,634 Lilly Del Mar, 144A, 7.717%, due 08/01/29......................................... 1,000,000 11,035,109 MBNA Global Capital Securities, B, FRN, 7.559%, due 02/01/27......................................... 340,000 285,961 News America Holdings, 7.750%, due 12/01/45......................................... 508,000 438,444 Nisource Finance Corp., 144A, 7.875%, due 11/15/10......................................... 350,000 367,684 NSTAR, 8.000%, due 02/15/10.................................... 665,000 693,065 Pacific Gas & Electric Co., 144A, 7.375%, due 11/01/05......................................... 350,000 292,138 PanAmSat Corp. 6.000%, due 01/15/03......................................... 375,000 362,714 6.375%, due 01/15/08......................................... 200,000 180,027 Pharmacia Corp., 6.600%, due 12/01/28.......................... 550,000 522,235 Sempra Energy, 7.950%, due 03/01/10............................ 750,000 730,013 Service Corp. International, 6.000%, due 12/15/05......................................... 300,000 163,500 Verizon Global Funding Corp. 144A, 7.750%, due 12/01/30......................................... 500,000 508,762 Waste Management, 6.500%, due 12/15/02......................................... 400,000 391,827 ----------- 10,520,809 ----------- Asset-Backed -- 5.76% Citibank Credit Card Issuance Trust, 6.900%, due 10/17/07......................................... $ 195,000 $ 201,169 Comed Transitional Funding Trust, 98-1, Class A6, 5.630%, due 06/25/09................................. 260,000 253,682 Green Tree Financial Corp., 6.160%, due 02/01/31......................................... 1,000,000 991,709 Green Tree Financial Corp., 94-5, Class A5, 8.300%, due 11/15/19................................. 320,000 332,451 Peco Energy Transition Trust, 99-A3, Class A7, 6.130%, due 03/01/09................................. 505,000 498,602 Sears Credit Account Master Trust, 99-3, Class A, 6.450%, due 11/17/09.................................. 1,200,000 1,219,764 ----------- 3,497,377 ----------- Corporate Mortgage-Backed Securities -- 19.74% ABN AMRO Mortgage Corp., 99-3, Class A2, 6.300%, due 05/25/29............................... 1,000,000 989,520 ABN AMRO Mortgage Corp., 99-2, Class IA2, 6.300%, due 04/25/29.............................. 2,100,000 2,095,632 Bank One Mortgage, 2000-2, Class 6A, 6.761%, due 03/15/30......................................... 91,220 91,765 Chemical Mortgage Securities Inc., 93-1, Class A5, 7.450%, due 02/25/23............................... 9,967 9,920 Citicorp Mortgage Securities, Inc., 94-9, Class A8, 5.750%, due 06/25/09............................... 866,868 840,229 DLJ Commercial Mortgage Corp., 7.180%, due 08/10/10......................................... 850,000 890,286 Heller Financial Commercial Mortgage Assets, 99-PH1, Class A1, 6.500%, due 05/15/31......................................... 1,121,786 1,134,592 LB Commercial Conduit Mortgage Trust, 99-C1, Class A1, 6.410%, due 08/15/07........................ 660,308 666,336 PNC Mortgage Securities Corp., 94-3, Class A8, 7.500%, due 07/25/24............................... 375,000 385,422 Prudential Home Mortgage Securities, 93-43, Class A9, 6.750%, due 10/25/23............................... 252,652 251,404 Residential Accredit Loans, Inc., 98-QS4, Class AI5, 7.000%, due 03/25/28.............................. 2,850,000 2,823,027 Residential Asset Securitization Trust, 97-A10, Class A1, 7.250%, due 12/25/27....................... 104,719 104,274 Residential Funding Mortgage, 95-S6, Class A7, 7.500%, due 11/25/25............................... 928,498 940,515 Structured Asset Securities Corp., 98-RF2, 144a, 8.582%, due 07/15/27................................... 115,647 127,648 Thrift Financial Corp., Class A4, 11.250%, due 01/01/16........................................ 22,431 22,784 Vendee Mortgage Trust, 92-1, Class 2Z, 7.750%, due 05/15/22......................................... 597,769 618,307 ----------- 11,991,661 -----------
================================================================================ 65 U.S. Bond Fund -- Schedule of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Face Amount Value -------- ------- International Dollar Bonds -- 5.66% Banco Santiago S.A., 7.000%, due 07/18/07...................................... $ 350,000 $ 326,706 Empresa Nacional de Electricidad S.A., 8.125%, due 02/01/97...................................... 335,000 256,667 Interamer Development Bank, 6.800%, due 10/15/25...................................... 100,000 104,395 Korea Development Bank, 7.125%, due 09/17/01...................................... 500,000 500,889 Pemex Finance Ltd., 8.450%, due 02/15/07...................................... 940,000 960,830 Ras Laffan Liquified Natural Gas Co., Ltd., 144A, 8.294%, due 03/15/14................................ 450,000 430,875 Tyco International Group S.A., 7.000%, due 06/15/28...................................... 500,000 473,388 United Mexican States Global, 9.875%, due 02/01/10...................................... 360,000 386,280 ----------- 3,440,030 ----------- U.S. Government Agencies -- 2.59% Jordan Aid, 8.750%, due 09/01/19............................ 1,330,877 1,577,449 ----------- U.S. Government Mortgage-Backed Securities -- 23.83% Fannie Mae Whole Loan, 95-W3, Class A, 9.000%, due 04/25/25...................................... 92,030 95,577 Federal Home Loan Mortgage Corp., Gold, 8.500%, due 05/01/30................................ 1,771,102 1,824,862 Federal Home Loan Mortgage Corp., 1595, Class D, 7.000%, due 10/15/13............................. 492,125 500,337 Federal Home Loan Mortgage Corp., Gold 7.000%, due 02/15/03...................................... 2,920,000 3,001,094 8.000%, due 11/01/22...................................... 73,845 76,163 8.500%, due 07/01/30...................................... 341,855 352,232 9.000%, due 07/01/30...................................... 138,705 143,287 Federal National Mortgage Assoc., 97-72, Class EG, 0.000%, due 09/25/22 (b)........................ 125,549 120,443 Federal National Mortgage Association 6.000%, due 10/01/14...................................... 221,996 218,983 6.000%, due 03/01/28...................................... 578,499 560,068 6.500%, due 03/01/19...................................... 439,609 436,603 6.500%, due 06/01/28...................................... 640,818 632,647 7.000%, due 12/01/24...................................... 505,483 506,067 7.000%, due 03/01/29...................................... 40,885 40,983 7.125%, due 06/15/10...................................... 115,000 124,529 7.500%, due 12/01/23...................................... 414,407 420,269 7.500%, due 01/01/28...................................... 231,127 235,201 8.000%, due 08/01/08...................................... 413,325 425,354 8.500%, due 06/01/30...................................... 404,182 415,440 Government National Mortgage Association 6.500%, due 10/15/24...................................... $ 3,952,770 $ 3,931,852 7.000%, due 07/15/25...................................... 74,924 75,524 7.500%, due 12/15/22...................................... 179,762 183,716 7.500%, due 01/15/24...................................... 48,303 49,326 7.500%, due 06/15/25...................................... 62,011 63,348 8.000%, due 08/15/22...................................... 35,215 36,294 9.000%, due 11/15/04...................................... 4,738 4,994 9.000%, due 11/15/04...................................... 1,596 1,682 ----------- 14,476,875 ----------- U.S. Government Obligations -- 22.79% U.S. Treasury Inflation Indexed Note 3.625%, due 04/15/28...................................... 1,770,000 1,868,552 3.875%, due 04/15/29...................................... 60,000 65,104 U.S. Treasury Note 5.625%, due 05/15/08...................................... 1,945,000 1,997,848 5.750%, due 08/15/03...................................... 1,685,000 1,710,012 6.125%, due 12/31/01...................................... 1,095,000 1,101,613 6.625%, due 05/31/02...................................... 2,595,000 2,639,504 6.625%, due 05/15/07...................................... 1,310,000 1,412,999 6.625%, due 02/15/27...................................... 1,880,000 2,146,791 7.500%, due 02/15/05...................................... 830,000 902,701 ----------- 13,845,124 ----------- Total Bonds (Cost $58,968,999).............................. 59,349,325 ----------- Shares -------- Investment Companies -- 1.23% Brinson Supplementary Trust U.S. Cash Management Prime Fund (Cost $747,169)........................................... 747,169 747,169 ----------- Total Investments (Cost $59,716,168) -- 98.91% (a).......................... 60,096,494 Cash and other assets, less liabilities -- 1.09%................................. 661,481 ----------- Net Assets -- 100%.......................................... $60,757,975 ===========
See accompanying notes to schedule of investments. ================================================================================ 66 U.S. Bond Fund -- Schedule Of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $59,716,168; and net unrealized appreciation consisted of: Gross unrealized appreciation............................. $1,019,089 Gross unrealized depreciation............................. (638,763) ---------- Net unrealized appreciation............................ $ 380,326 ========== (b) Non-income producing security FRN: Floating Rate Note -- The rate disclosed is that in effect at December 31, 2000. 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, 2000, the value of these securities amounted to $4,053,059 or 6.67% of net assets. ================================================================================ See accompanying notes to financial statements. 67 High Yield Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Since its inception on September 30, 1997, the Brinson High Yield Fund Class I returned 2.87% annualized, versus a return of 1.19% for its benchmark, the Merrill Lynch High Yield Master Index. The Fund returned -5.18% for the year 2000, its benchmark returned -3.79%. The high yield market, affected by a number of factors, suffered its worst return since 1990, the year of the last U.S. recession. Investors concentrated on the expected increase in the default rates. Many reasons were proposed for the increase in the default rate, among them the "seasoning" of the large number of lower quality issues from 1996 to 1998 as well as concern over a slowdown in the U.S. economy. Furthermore, mutual fund outflows equally contributed to the decline of the market. Mutual funds, which account for about 20% of the volume in the high yield market, experienced significant outflows of nearly $10 billion for the year. Collateralized bond obligation activity, another significant source of demand for high yield bonds, also fell. In addition, there was reduced broker-dealer commitment to the high yield business, leading to a very illiquid and difficult market. As a result, high yield spreads were pessimistically high in 2000. According to Merrill Lynch's high yield model, the market priced in a default rate of 14%, while the actual rate in November 2000 was a mere 5.8%. With a flight to quality, the BB sector outperformed the B and CCC rated sectors. The Fund's performance was positively affected by sector allocation and by its overweight in the energy sector, which continues to benefit from high prices; gaming, which has positive industry fundamentals; and broadcasting, which is less affected by a potential downturn in the economy. The Fund also benefited from being underweighted in the steel industry, which continues to be hurt by cheaper foreign imports and an oversupply situation; and retailing, which suffered from slower sales. Conversely, the Fund was hurt by its overweight in telecommunications, with large capital expenditures still unfunded, and the underweight in electric utilities, which performed very well due to their defensive nature. ================================================================================ 68 High Yield Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON]
Total Return 6 months 1 year 3 years Inception* ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 ---------------------------------------------------------------------------------------- Brinson High Yield Fund Class I -3.40% -5.18% 2.32% 2.87% ---------------------------------------------------------------------------------------- Brinson High Yield Fund Class N -3.61 -5.41 N/A -0.57 ---------------------------------------------------------------------------------------- Merrill Lynch High Yield Master Index -2.63 -3.79 0.43 1.19 ----------------------------------------------------------------------------------------
* Inception dates of the Brinson High Yield Fund Class I and Class N are 9/30/97 and 12/31/98, respectively. Performance inception date of the Merrill Lynch High Yield Master Index is 9/30/97. 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, 2000. The performance of Class N shares will vary based upon the different inception dates and class specific expenses. 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 [GRAPH]
Brinson High Yield Fund Class I Merrill Lynch High Yield Master Index 9/30/97 $1,000,000 $1,000,000 12/31/97 $1,023,434 $1,025,816 6/30/98 $1,081,780 $1,072,064 12/31/98 $1,102,713 $1,063,388 6/30/99 $1,134,755 $1,082,094 12/31/99 $1,156,238 $1,080,109 6/30/2000 $1,134,974 $1,067,292 12/31/2000 $1,096,398 $1,039,182
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. ================================================================================ 69 High Yield Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) ---------------------------------------------------------------- U.S. BONDS Corporate Bonds Aerospace......................................... 0.38% Appliances & Household Durables................... 0.65 Autos/Durables.................................... 3.27 Building Materials................................ 0.44 Business &Public Service.......................... 0.43 Cable Television.................................. 1.99 Chemicals......................................... 1.36 Computer Software................................. 0.72 Computer Systems.................................. 0.21 Construction...................................... 1.77 Consumer.......................................... 2.10 Electronics and Electric Components............... 1.03 Energy............................................ 5.29 Financial Services................................ 1.47 Food & House Products............................. 1.93 Health:Drugs...................................... 2.81 Health:Non-Drugs.................................. 0.98 Housing/Paper..................................... 1.60 Leisure &Tourism.................................. 0.60 Non-Durables...................................... 1.40 Publishing........................................ 1.58 Radio Broadcasting................................ 1.92% Recreation........................................ 8.83 Retail............................................ 3.21 Services/Miscellaneous............................ 3.68 Technology........................................ 0.52 Telecommunications - Services..................... 8.32 Telecommunications - Equipment.................... 2.55 Telecommunications - Wireless..................... 5.36 Television Broadcasting........................... 6.20 Transportation.................................... 0.36 Utilities......................................... 1.35 ------ Total U.S. Corporate Bonds..................... 74.31 International Dollar Bonds......................... 5.04 ------ Total U.S. Bonds............................... 79.35 Warrants........................................... 0.02 SHORT-TERM INVESTMENTS............................. 16.43 ------ TOTAL INVESTMENTS.............................. 95.80 CASH AND OTHER ASSETS, LESS LIABILITIES.................................. 4.20 ------ NET ASSETS......................................... 100.00% ====== ---------------------------------------------------------------- Top Ten U.S. Bond Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets ----------------------------------------------------------------- 1. Liberty Group Operating, 9.375%, due 02/01/08.......................... 1.38% 2. Snyder Oil Corp., 8.750%, due 06/15/07.......................... 1.12 3. Cross Timbers Oil Co., 8.750%, due 11/01/09.......................... 1.10 4. Triton PCS, Inc., 0.000%, due 05/01/08.......................... 1.07 5. Bally Total Fitness Corp., Series D, 9.875%, due 10/15/07.......................... 1.00 6. Qwest Communications International, Inc., 0.000%, due 10/15/07.......................... 0.99 7. Energis PLC, 9.750%, due 06/15/09.......................... 0.98 8. Paxson Communications Corp., 11.625%, due 10/01/02......................... 0.98 9. TeleWest Communications PLC, 0.000%, due 10/1/07........................... 0.96 10. Fox/Liberty Networks, 0.000%, due 8/15/07........................... 0.95 ================================================================================ 70 High Yield Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Face Amount Value -------- -------- U.S. Bonds -- 79.35% U.S. Corporate Bonds -- 74.31% Ackerley Group, Inc., Series B, 9.000%, due 01/15/09......................... $100,000 $ 87,500 Adelphia Communications, Inc., Series B, 8.375%, due 02/01/08......................... 210,000 180,600 AES Corp., 9.375%, due 09/15/10............... 350,000 357,875 AirGate PCS, Inc., 0.000%, due 10/01/09 (c)..................... 450,000 256,500 Alamosa PCS Holdings, Inc., 0.000%, due 02/15/10 (c)..................... 150,000 69,750 Allbritton Communications Co., 9.750%, due 11/30/07......................... 250,000 243,750 American Mobile Satellite Corp., 12.250%, due 04/01/08........................ 182,000 67,340 American Restaurant Group, Inc., Series B, 11.500%, due 02/15/03........................ 202,000 181,800 Argosy Gaming Co., 10.750%, due 06/01/09........................ 150,000 156,375 Atrium Cos., Inc., 10.500%, due 05/01/09........................ 175,000 135,625 Aztar Corp., 8.875%, due 05/15/07............. 250,000 241,250 B&G Foods, Inc., 9.625%, due 08/01/07......... 400,000 257,000 Bally Total Fitness Corp., Series D, 9.875%, due 10/15/07......................... 500,000 463,750 Belden & Blake Corp., 9.875%, due 06/15/07 (b)..................... 325,000 281,125 Box USA Holdings, Inc., Series B, 12.000%, due 06/01/06 (b).................... 300,000 288,000 Building Materials Corp., Series B, 7.750%, due 07/15/05......................... 350,000 87,500 Callahan Nordrhein-Westfalen GmbH., 144A, 14.000%, due 07/15/10.................. 235,000 210,325 Centennial Cellular, 10.750%, due 12/15/08........................ 250,000 235,000 Century Communications Corp., 0.000%, due 01/15/08 (c)..................... 425,000 163,625 Charter Communications Holdings, 10.000%, due 04/01/09........................ 450,000 436,500 Chesapeake Energy Corp., 9.125%, due 04/15/06......................... 350,000 352,625 Citadel Broadcasting Co., 9.250%, due 11/15/08......................... 250,000 242,500 Classic Cable, Inc., 10.500%, due 03/01/10........................ 275,000 123,750 Coast Hotels and Casinos, Inc., 9.500%, due 04/01/09......................... 370,000 358,437 Collins & Alkman Corp., 11.500%, due 04/15/06........................ 400,000 312,000 COLT Telecom Group, 0.000%, due 12/15/06 (c)..................... 100,000 90,500 Cross Timbers Oil Co., 8.750%, due 11/01/09......................... 500,000 507,500 Crown Castle International Corp. 0.000%, due 05/15/11 (c)..................... $380,000 $255,550 9.000%, due 05/15/11.......................... 150,000 145,125 CSC Holdings, Inc., 7.625%, due 07/15/18.......................... 350,000 319,009 Cumulus Media, Inc., 10.375%, due 07/01/08........................ 155,000 124,388 Dayton Superior Corp., 13.000%, due 06/15/09........................ 225,000 202,500 Delco Remy International, Inc., 8.625%, due 12/15/07......................... 325,000 260,000 Diamond Triumph Auto, Inc., 9.250%, due 04/01/08......................... 350,000 255,500 Dobson Communications Corp., 144A, 10.875%, due 07/01/10........................ 200,000 197,000 Dobson Sygnet Communications, Inc., 12.250%, due 12/15/08........................ 250,000 246,250 Echostar DBS Corp., 9.375%, due 02/01/09......................... 250,000 242,500 Exodus Communications, Inc., 11.250%, due 07/01/08........................ 200,000 178,000 Exodus Communications, Inc., 144A, 11.625%, due 07/15/10........................ 150,000 133,500 Fedders North America, 9.375%, due 08/15/07......................... 350,000 301,000 Finova Capital Corp., 7.250%, due 11/08/04......................... 70,000 42,037 Fox/Liberty Networks, 0.000%, due 08/15/07 (c)..................... 500,000 440,000 Global Imaging Systems, Inc., 10.750%, due 02/15/07........................ 325,000 230,750 Globix Corp., 12.500%, due 02/01/10........... 260,000 96,200 Golden Sky DBS, Inc., 0.000%, due 03/01/07 (c)..................... 375,000 241,875 Gothic Production Corp., Series B, 11.125%, due 05/01/05........................ 250,000 267,500 Granite Broadcasting Corp., 10.375%, due 05/15/05........................ 200,000 127,000 Hayes Lemmerz International, Inc. 8.250%, due 12/15/08......................... 220,000 141,900 9.125%, due 07/15/07 (b)..................... 250,000 165,000 HCA-The Healthcare Co., 8.750%, due 09/01/10......................... 150,000 158,394 HMH Properties, Series B, 7.875%, due 08/01/08......................... 350,000 336,000 Hollinger International Publishing Corp., 9.250%, due 02/01/06......................... 250,000 250,000 Hollywood Park, Inc., 9.500%, due 08/01/07......................... 140,000 141,400 Horseshoe Gaming Holdings, 8.625%, due 05/15/09......................... 242,000 236,858 Horseshoe Gaming LLC, Series B, 9.375%, due 06/15/07......................... 150,000 150,375 ================================================================================ 71 High Yield Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Face Amount Value -------- -------- Huntsman Corp., 144A, 9.500%, due 07/01/07............................ $400,000 $240,000 ICN Pharmaceuticals, Inc., 9.250%, due 08/15/05............................ 400,000 406,000 Insight Midwest LP/Insight Capital, Inc., 144A, 10.500%, due 11/01/10..................... 220,000 228,250 Integrated Electrical Services, Inc., Series B, 9.375%, due 02/01/09............................ 300,000 267,000 Interep National Radio Sales, Series B, 10.000%, due 07/01/08........................... 130,000 97,500 Intermedia Communications, 0.000%, due 07/15/07 (c)........................ 150,000 90,000 International Game Technology, 8.375%, due 05/15/09............................ 150,000 149,625 Iron Mountain, Inc., 8.750%, due 09/30/09............................ 250,000 245,625 Jackson Products, Inc., Series B, 9.500%, due 04/15/05............................ 300,000 258,000 Lamar Media Corp., 8.625%, due 09/15/07............................ 200,000 200,500 Level 3 Communications, Inc., 0.000%, due 12/01/08 (c)........................ 600,000 324,000 Levi Strauss & Co., 7.000%, due 11/01/06............................ 375,000 294,375 Liberty Group Operating, 9.375%, due 02/01/08............................ 850,000 637,500 Lifepoint Hospital Holdings, Inc., Series B, 10.750%, due 05/15/09........................... 250,000 271,250 LIN Holdings Corp., 0.000%, due 03/01/08 (c)........................ 200,000 146,500 Loral Space & Communications Ltd., 9.500%, due 01/15/06............................ 200,000 134,000 Luigino's, Inc., 10.000%, due 02/01/06.......... 210,000 165,900 Lyondell Chemical Co., Series B, 9.875%, due 05/01/07............................ 400,000 388,000 Mail Well Corp., Class B, 8.750%, due 12/15/08............................ 250,000 175,000 Majestic Star Casino LLC, Series B, 10.875%, due 07/01/06........................... 175,000 150,500 McLeod USA, Inc. 8.125%, due 02/15/09............................ 350,000 301,000 9.250%, due 07/15/07............................ 250,000 228,750 Merrill Corp., Series B, 12.000%, due 05/01/09........................... 325,000 146,250 Metromedia Fiber Network, 10.000%, due 12/15/09........................... 290,000 240,700 MGM Grand, Inc., 9.750%, due 06/01/07............ 200,000 209,000 MGM Mirage, Inc., 8.500%, due 09/15/10........... 150,000 154,379 Mohegan Tribal Gaming Authority, 8.750%, due 01/01/09............................ 350,000 349,562 Motors & Gears, Inc., 10.750%, due 11/15/06........................... 275,000 244,750 MTS, Inc., 9.375%, due 05/01/05.................. 575,000 207,000 Newpark Resources, Inc., Series B, 8.625%, due 12/15/07............................ $450,000 $418,500 Nextel Communications, Inc. 0.000%, due 09/15/07 (c)........................ 200,000 158,000 9.375%, due 11/15/09............................ 170,000 158,525 Nextel International, Inc., 144A, 12.750%, due 08/01/10........................... 350,000 280,000 Nextel Partners, Inc., 11.000%, due 03/15/10........................... 200,000 191,500 Nextel Partners, Inc., 144A, 11.000%, due 03/15/10........................... 100,000 95,750 Nortex, Inc., 9.875%, due 03/01/04............... 350,000 326,375 NTL Communications Inc., Series B, 12.375%, due 10/01/08 (c)....................... 400,000 216,000 NTL, Inc., Series A, 12.750%, due 04/15/05 (c)....................... 150,000 141,000 Nuevo Energy Co., Series B, 9.500%, due 06/01/08............................ 150,000 151,500 Oxford Automotive, Inc., Series D, 10.125%, due 06/15/07........................... 300,000 204,000 Pacifica Papers, Inc., 10.000%, due 03/15/09........................... 300,000 298,500 Packaging Corp. of America, 9.625%, due 04/01/09............................ 250,000 258,125 Pantry, Inc., 10.250%, due 10/15/07.............. 200,000 188,000 Paxson Communications Corp., 11.625%, due 10/01/02 (b)....................... 450,000 454,500 Pegasus Communications Corp., Series B 9.750%, due 12/01/06............................ 150,000 139,500 12.500%, due 08/01/07........................... 300,000 301,500 Perry Ellis International, Inc., 12.250%, due 04/01/06........................... 100,000 81,500 Phillips-Van Heusen, Corp., 9.500%, due 05/01/08............................ 325,000 302,250 Pillowtex Corp., 10.000%, due 11/15/06........... 188,000 7,520 Pioneer Natural Resources Co., 9.625%, due 04/01/10............................ 360,000 384,322 Plains Resources, Inc., 144A, 10.250%, due 03/15/06........................... 200,000 200,000 Plains Resources, Inc., Series B, 10.250%, due 03/15/06........................... 300,000 300,000 Pliant Corp., 13.000%, due 06/01/10.............. 160,000 88,800 Premier Parks, Inc., 0.000%, due 04/01/08 (c)........................ 175,000 120,750 PSINet, Inc. 10.500%, due 12/01/06........................... 150,000 39,000 11.000%, due 08/01/09........................... 86,000 22,360 11.500%, due 11/01/08........................... 450,000 121,500 Quest Diagnostic, Inc., 10.750%, due 12/15/06........................... 280,000 294,700 Qwest Communications International, Inc., 0.000%, due 10/15/07 (c)........................ 500,000 457,850 ================================================================================ 72 High Yield Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Face Amount Value -------- --------- R. H. Donnelley, Inc., 9.125%, due 06/01/08.......................... $190,000 $ 184,775 Radio Unica Communications Corp., 0.000%, due 08/01/06 (c)...................... 400,000 252,000 Rayovac Corp., Class B, 10.250%, due 11/01/06......................... 300,000 303,000 RCN Corp., 10.000%, due 10/15/07.............. 300,000 165,000 Repap New Brunswick, 9.000%, due 06/01/04.......................... 150,000 154,500 Riverwood International Corp., 10.250%, due 04/01/06......................... 260,000 259,350 10.875%, due 04/01/08......................... 150,000 135,000 Samsonite Corp., 10.750%, due 06/15/08......................... 350,000 232,750 SBA Communications Corp., 0.000%, due 03/01/08 (c)...................... 390,000 302,250 Sbarro, Inc., 11.000%, due 09/15/09............ 250,000 250,313 Scotts Co., 144A, 8.625%, due 01/15/09......... 285,000 276,450 Sequa Corp., 9.000%, due 08/01/09.............. 175,000 173,688 Sinclair Broadcast Group, 10.000%, due 09/30/05......................... 250,000 242,500 Sleepmaster LLC, Series B, 11.000%, due 05/15/09......................... 30,000 22,800 Snyder Oil Corp., 8.750%, due 06/15/07......... 500,000 518,750 Spectrasite Holdings, Inc. 0.000%, due 07/15/08 (c)...................... 440,000 270,600 0.000%, due 03/15/10 (c)...................... 190,000 96,900 Spectrasite Holdings, Inc., Series B, 10.750%, due 03/15/10......................... 95,000 88,113 Speedway Motorsports, Inc., 8.500%, due 08/15/07.......................... 350,000 343,437 Station Casinos, Inc., 9.875%, due 07/01/10.......................... 270,000 277,087 Stone Container, 10.750%, due 10/01/02......................... 250,000 254,063 T/SF Communications Corp., Series B, 10.375%, due 11/01/07......................... 250,000 207,500 TeleCorp PCS, Inc., 0.000%, due 04/15/09 (c)...................... 525,000 358,969 Tenet Healthcare Corp., 9.250%, due 09/01/10.......................... 350,000 380,187 Time Warner Telecom, Inc., 9.750%, due 07/15/08.......................... 140,000 128,800 TransWestern Publishing Co., 9.625%, due 11/15/07.......................... 100,000 97,125 Triad Hospitals Holdings, Inc., 11.000%, due 05/15/09......................... 229,000 241,881 Tritel PCS, Inc., 0.000%, due 05/15/09 (c)...................... 200,000 137,000 Triton PCS, Inc., 0.000%, due 05/01/08 (c)...................... 625,000 493,750 US Unwired, Inc., 0.000%, due 11/01/09 (c)...................... $250,000 $ 113,750 Voicestream Wireless Corp., 10.375%, due 11/15/09......................... 267,000 286,024 Weirton Steel Corp., 11.375%, due 07/01/04......................... 200,000 82,000 Westpoint Stevens, Inc., 7.875%, due 06/15/05.......................... 220,000 163,900 Williams Communications Group, Inc., 10.875%, due 10/01/09......................... 160,000 119,200 Winsloew Furniture, Inc., Series B, 12.750%, due 08/15/07......................... 150,000 133,500 Wiser Oil Co., 9.500%, due 05/15/07............ 325,000 260,000 XO Communications, Inc. 0.000%, due 12/01/09 (c)...................... 712,000 320,400 10.500%, due 12/01/09......................... 175,000 140,000 Young Broadcasting, Inc., 10.125%, due 02/15/05......................... 75,000 73,875 Ziff Davis Media, Inc., 144A, 12.000%, due 07/15/10......................... 225,000 176,625 ----------- 34,344,668 ----------- International Dollar Bonds -- 5.04% Clearnet Communications, 0.000%, due 05/01/09 (c)...................... 250,000 196,250 Energis PLC, 9.750%, due 06/15/09.............. 500,000 455,000 Global Crossing Holding Ltd., 9.500%, due 11/15/09.......................... 250,000 236,250 Microcell Telecommunications, Inc., Series B, 0.000%, due 06/01/06 (c)...................... 375,000 358,125 Norampac, Inc., 9.500%, due 02/01/08........... 150,000 150,000 Rogers Communications, Inc., 9.125%, due 01/15/06.......................... 250,000 252,812 TeleWest Communications PLC, 0.000%, due 10/01/07 (c)...................... 500,000 445,000 United Pan-Europe Communications NV, Series B 0.000%, due 02/01/10 (c)...................... 25,000 7,125 11.250%, due 02/01/10......................... 125,000 80,625 11.500%, due 02/01/10......................... 225,000 146,813 ----------- 2,328,000 ----------- Total U.S. Bonds (Cost $41,337,660)............ 36,672,668 ----------- ================================================================================ 73 High Yield Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value -------- ------- Convertible Preferred -- 0.00% Paxson Communications Corp., PIK, 12.500% (b) (Cost $555)................. 1 $ 642 ------- Warrants -- 0.02% Dayton Superior Corp., 144A, expires 06/15/09 (b)......................... 225 4,500 Merrill Corp., 144A, expires 05/01/09 (b)......................... 325 3 Motient Corp., 144A, expires 04/01/08 (b)......................... 182 2,548 Pliant Corp., 144A, expires 06/01/10 (b)......................... 160 1,600 Winsloew Furniture, Inc., 144A, expires 08/15/07 (b)......................... 150 1,500 ------- Total Warrants (Cost $9,560).................. 10,151 ------- Short-Term Investments -- 16.43% Investment Companies -- 16.43% Brinson Supplementary Trust U.S. Cash Management Prime Fund (Cost $7,594,776)........................... 7,594,776 $ 7,594,776 ----------- Total Investments (Cost $48,942,551) -- 95.80% (a)........... 44,278,237 Cash and other assets, less liabilities -- 4.20%................... 1,938,933 ----------- Net Assets -- 100%............................ $46,217,170 =========== NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $48,942,551; and net unrealized depreciation consisted of: Gross unrealized appreciation......................... $ 447,022 Gross unrealized depreciation......................... (5,111,336) ------------ Net unrealized depreciation....................... $ (4,664,314) ============ (b) Non-income producing security (c) Step bonds - coupon rate increases in increments to maturity. Rate disclosed is as of December 31, 2000. Maturity date disclosed is the ultimate maturity date. PIK: Payment In Kind, interest payment in cash or other securities. 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, 2000, the value of these securities amounted to $2,048,051 or 4.43% of net assets. ================================================================================ See accompanying notes to financial statements. 74 International Equity Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] The Brinson International Equity Fund Class I has provided an annualized return of 7.18% since its performance inception on August 31, 1993, compared to the 7.53% return for its benchmark, the MSCI World Ex USA (Free) Index. For the year, the Fund outperformed its benchmark, achieving a return of -9.09% versus - 13.47% for the benchmark. The year 2000 was challenging for equities, with low or negative returns in most regions. The main factor influencing returns was a sharp reversal of fortune for the technology, media and telecommunications (TMT) sectors. With valuations projecting rapid and indefinite growth prospects, the TMT sectors peaked at the end of the first quarter. Investor euphoria wore off as the environment became increasingly difficult. The U.S. Federal Reserve raised and maintained rates because of a fear of inflation. The U.S. economy began to slow by the fourth quarter and many TMT companies posted disappointing earnings leading to rapid and violent compression of P/E ratios. It became clear that many of these companies were vulnerable to a combination of increasing competition and a slowdown in capital spending plans. One sign of the change in sentiment, the MSCIWorld (Ex-U.S.)Value Index returned 6.0% (local currency) in 2000 in contrast to the Growth Index which declined 18.6% (local currency). While the investment environment was problematic, the Fund was well-positioned for these trends with significant underweights in technology hardware, software and services and telecommunication service sectors. Conversely, the Fund was overweighted in sectors that had strong cash flow and low valuations including selected financials, insurance, food and beverage and utilities. These defensive sectors outperformed as investors fled the underperforming TMT sectors. The Fund's geographic weightings are a reflection of our sector views and regional valuations. The Fund is overweighted in the UK, Australia and New Zealand, which we find attractive. The most significant position is our underweight to Japan, where the market is negatively affected by its technology sectors and a very weak economic environment. Europe (Ex-UK) and Asia (Ex-Japan) are close to neutral with the exception of Hong Kong (no exposure) where we find overvalued technology names and a fragile real estate market. During the year we maintained an underweight to the Japanese yen with an associated overweight in the Australian and New Zealand dollars and an overweight to the euro with an associated underweight to the British pound. The Fund benefited from the sharp strengthening of the euro at year-end as U.S. markets declined and the Japanese yen fell. Overall, currency was a modest contributor to performance for the year. We are maintaining these positions into 2001. Going forward we are selectively taking advantage of the decline in sector valuations to improve the quality of the Fund without a concomitant increase in valuations. We are also picking over the TMT sectors to identify well-positioned companies whose stocks have fallen to attractive valuations with the sector decline. ================================================================================ 75 International Equity Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON]
Total Return 6 months 1 year 3 years 5 years Inception* ended ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 ------------------------------------------------------------------------------------------------------------------------ Brinson International Equity Fund Class I** -5.41% -9.09% 7.40% 8.11% 7.18% ------------------------------------------------------------------------------------------------------------------------ Brinson International Equity Fund Class N** -5.56 -9.30 7.11 N/A 3.73 ------------------------------------------------------------------------------------------------------------------------ MSCI World Ex USA (Free) Index -10.80 -13.47 9.47 7.48 7.53 ------------------------------------------------------------------------------------------------------------------------
* Performance inception date of the Brinson International Equity Fund Class I and the MSCI World Ex USA (Free) Index is 8/31/93, and inception date of Class N is 6/30/97. ** Formerly known as the Global (Ex-U.S.) Equity Fund. 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 International 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, 2000. The performance of Class N shares will vary based upon the different inception dates and class specific expenses. 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 International Equity Fund Class I vs. MSCI World Ex USA (Free) Index Wealth Value with Dividends Reinvested [GRAPH]
Brinson International Equity Fund Class I MSCI World Ex USA (Free) Index 8/31/93 $1,000,000 $1,000,000 12/31/93 $ 965,500 $ 988,754 12/31/94 $ 974,540 $1,062,774 12/31/95 $1,126,103 $1,187,456 12/31/96 $1,269,637 $1,271,887 12/31/97 $1,342,509 $1,298,199 12/31/98 $1,535,729 $1,540,540 12/31/99 $1,830,034 $1,968,326 12/31/2000 $1,663,346 $1,703,213
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. ================================================================================ 76 International Equity Fund -------------------------------------------------------------------------------- [LOGO OF BRINSON] Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) ------------------------------------------------------------ INTERNATIONAL EQUITIES Aerospace & Military................................ 0.79% Airlines............................................ 0.74 Appliances & Households............................. 2.62 Autos/Durables...................................... 2.27 Banking............................................. 11.91 Beverages & Tobacco................................. 2.94 Broadcasting & Publishing........................... 4.02 Building Materials.................................. 0.86 Business & Public Service........................... 2.08 Chemicals........................................... 2.85 Computer Software................................... 0.32 Construction........................................ 0.30 Data Processing..................................... 1.48 Electric Components................................. 2.34 Electronics......................................... 2.65 Energy.............................................. 5.26 Financial Services.................................. 5.22 Food & House Products............................... 4.25 Forest Products..................................... 0.84 Health & Personal Care.............................. 9.05 Housing/Paper....................................... 1.04 Industrial Components............................... 0.60 Insurance........................................... 5.48 Leisure & Tourism................................... 1.13 Machinery & Engineering............................. 0.42 Merchandising....................................... 1.05 Metals-Steel........................................ 0.30 Multi-Industry...................................... 1.44 Non-Ferrous Metals.................................. 0.86 Non-Durables........................................ 0.20 Real Estate......................................... 1.78 Services/Miscellaneous.............................. 0.34 Telecommunications.................................. 9.20 Transportation...................................... 1.77 Utilities........................................... 4.82 Wholesale & International Trade..................... 0.17 ------ Total International Equities...................... 93.39 SHORT-TERM INVESTMENTS.............................. 4.22 ------ TOTAL INVESTMENTS............................ 97.61 CASH AND OTHER ASSETS, LESS LIABILITIES.................................. 2.39 ------ NET ASSETS.......................................... 100.00% ====== Market and Currency Strategy As of December 31, 2000 (Unaudited) Fund Benchmark ------------------------- ---------------------- Market Currency Market Currency Strategy Strategy Strategy Strategy -------------------------------------------------------------------------------- Australia 3.3% 8.6% 2.5% 2.5% Austria 0.0 0.0 0.2 0.0 Belgium 1.3 0.0 0.9 0.0 Canada 2.7 4.8 4.8 4.8 Denmark 1.0 0.9 0.9 0.9 Euro 1.3 49.1 0.0 37.1 Finland 3.9 0.0 2.7 0.0 France 10.5 0.0 11.1 0.0 Germany 4.6 0.0 8.4 0.0 Hong Kong 1.6 0.0 2.0 2.0 Ireland 1.5 0.0 0.6 0.0 Italy 2.6 0.0 4.5 0.0 Japan 19.6 11.5 21.5 21.5 Netherlands 7.0 0.0 5.4 0.0 New Zealand 0.5 2.1 0.1 0.1 Norway 0.0 0.4 0.4 0.4 Portugal 1.4 0.0 0.5 0.0 Singapore 1.2 1.0 1.0 1.0 Spain 3.4 0.0 2.8 0.0 Sweden 2.4 2.5 2.5 2.5 Switzerland 6.5 6.8 6.9 6.9 U.K. 23.7 12.3 20.3 20.3 -------------------------------------------------------------------------------- 100.0% 100.0% 100.0% 100.0% Top Ten International Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets ---------------------------------------------------------------------------- 1. GlaxoSmithKline PLC 2.12% 2. Roche Holdings AG (Gen.) 1.63 3. Nokia Oyj 1.61 4. Total Fina S.A., Class B 1.51 5. Novartis AG (Reg.) 1.51 6. Lloyds TSB Group PLC 1.49 7. Elsevier 1.42 8. Vodafone Group PLC 1.33 9. Allianz AG 1.33 10. BP Amoco PLC 1.33 ---------------------------------------------------------------------------- ================================================================================ 77 International Equity Fund -- Schedule Of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Shares Value -------- ------- International Equities -- 93.39% Australia -- 3.23% Amcor Ltd........................................... 224,640 $ 654,747 Amp Ltd............................................. 64,900 729,270 Brambles Industries Ltd............................. 21,340 498,064 Broken Hill Proprietary Co., Ltd.................... 83,320 877,681 Lend Lease Corp., Ltd............................... 54,496 506,945 National Australia Bank Ltd., Convertible Preferred, 7.875%..................... 73,500 2,103,938 News Corp., Ltd..................................... 149,088 1,159,876 News Corp., Ltd., Preferred......................... 141,379 1,005,624 Rio Tinto Ltd....................................... 80,660 1,319,449 Westpac Banking Corp., Ltd.......................... 225,271 1,651,668 ----------- 10,507,262 ----------- Belgium -- 1.32% Electrabel S.A...................................... 7,440 1,682,082 Fortis B............................................ 80,837 2,626,057 ----------- 4,308,139 ----------- Canada -- 2.58% Alcan Aluminum Ltd.................................. 16,440 562,047 BCE, Inc............................................ 56,700 1,634,560 Canadian National Railway Co........................ 32,080 947,236 Canadian Pacific Ltd................................ 39,114 1,113,265 Magna International, Inc., Class A.................. 14,260 597,173 Nortel Networks Corp................................ 85,200 2,736,951 Shaw Communications, Inc., Class B.................. 34,560 805,326 ----------- 8,396,558 ----------- Denmark -- 0.63% Novo Nordisk A/S.................................... 4,500 806,614 Tele Danmark A/S.................................... 30,950 1,261,374 ----------- 2,067,988 ----------- Finland -- 3.84% Nokia Oyj........................................... 117,792 5,253,239 Sampo Leonia Insurance, Class A..................... 35,992 1,943,084 Stora Enso Oyj...................................... 218,600 2,586,059 UPM-Kymmene Corp.................................... 79,289 2,720,935 ----------- 12,503,317 ----------- France -- 10.49% Air France.......................................... 53,210 1,248,967 Air Liquide......................................... 17,905 2,671,259 Alcatel S.A......................................... 51,625 2,932,468 Alcatel S.A. ADR.................................... 25,513 1,427,133 Aventis S.A., Class A............................... 33,122 2,907,676 Axa................................................. 10,771 1,557,380 Banque Nationale de Paris........................... 36,627 3,215,368 Cie de Saint Gobain................................. 10,328 1,622,295 Groupe Danone....................................... 27,472 4,142,415 Schneider Electric S.A.............................. 17,968 1,310,806 Societe Generale.................................... 45,630 2,836,131 Suez Lyonnaise des Eaux S.A......................... 4,726 863,040 Thales S.A.......................................... 31,081 1,489,733 Total Fina S.A., Class B............................ 33,079 4,919,549 Vivendi............................................. 15,432 1,015,683 ----------- 34,159,903 ----------- Germany -- 4.25% Allianz AG.......................................... 11,478 4,332,216 Bayer AG............................................ 33,055 1,734,869 Bayerische Motoren Werke AG......................... 40,860 $ 1,333,125 Continental AG...................................... 44,090 703,731 DaimlerChrysler AG.................................. 34,350 1,459,362 E.on AG............................................. 54,728 3,329,679 SAP AG.............................................. 7,270 846,397 Volkswagen AG....................................... 1,800 95,570 ----------- 13,834,949 ----------- Hong Kong -- 1.45% Cheung Kong Holdings, Ltd........................... 53,000 677,797 Guoco Group Ltd..................................... 420,000 1,251,939 Henderson Land Development Co., Ltd................. 366,000 1,862,870 Hong Kong Electric Holdings......................... 256,000 945,243 ----------- 4,737,849 ----------- Ireland -- 0.99% Bank of Ireland..................................... 167,655 1,681,146 Eircom PLC.......................................... 594,430 1,534,798 ----------- 3,215,944 ----------- Italy -- 2.36% Assicurazioni Generali.............................. 50,446 2,003,479 ENI Spa............................................. 490,000 3,128,403 ENI Spa ADR......................................... 17,052 1,096,657 Telecom Italia Spa.................................. 133,000 1,471,007 ----------- 7,699,546 ----------- Japan -- 19.80% Acom Co., Ltd....................................... 1,600 118,109 Bank of Tokyo-Mitsubushi Ltd........................ 108,000 1,075,271 Benesse Corp........................................ 8,400 311,874 Bridgestone Corp.................................... 45,000 409,807 Canon, Inc.......................................... 73,000 2,556,918 Dai Nippon Printing Co., Ltd........................ 91,000 1,355,438 Daikin Kogyo Industries Ltd......................... 30,000 577,933 Denso Corp.......................................... 39,000 843,520 Fuji Photo Film Co., Ltd............................ 63,000 2,636,953 Fujitsu............................................. 153,000 2,256,147 Hitachi Ltd......................................... 116,000 1,034,046 Honda Motor Co...................................... 74,000 2,760,420 Hoya Corp........................................... 15,000 1,103,327 Ito Yokado Co., Ltd................................. 48,000 2,395,797 Kamigumi Co., Ltd................................... 137,000 611,821 Kao Corp............................................ 58,000 1,686,165 Kirin Brewery Co., Ltd.............................. 61,000 546,436 Kuraray Co., Ltd.................................... 108,000 1,010,017 Matsushita Electric Industrial Co................... 80,000 1,912,434 Minebea Co., Ltd.................................... 195,000 1,806,567 Mitsubishi Corp..................................... 73,000 538,231 Mitsubishi Estate Co., Ltd.......................... 171,000 1,826,795 Mitsubishi Trust and Banking Corp................... 56,000 385,429 Mizuho Holding, Inc................................. 375 2,324,869 NEC Corp............................................ 30,000 549,037 Nippon Steel Co..................................... 606,000 1,002,925 Nippon Telegraph & Telephone Corp................... 561 4,042,933 Nomura Securities Co., Ltd.......................... 123,000 2,213,354 Omron Corp.......................................... 21,000 436,734 Ono Pharmaceutical Co., Ltd......................... 28,000 1,095,972 Orix Corp........................................... 26,600 2,669,317 Rohm Co............................................. 8,900 1,691,156 Sankyo Pharm Co., Ltd............................... 65,000 1,559,545 Secom Co., Ltd...................................... 23,000 1,500,438
================================================================================ 78 International Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value ---------- ------------ Shin-Etsu Chemical Co., Ltd....................... 21,000 $ 809,107 Softbank Corp..................................... 5,600 194,676 Sony Corp......................................... 45,900 3,175,219 Sumitomo Bank..................................... 136,000 1,396,918 Sumitomo Chemical Co.............................. 227,000 1,127,049 Taiheiyo Cement Corp.............................. 600 1,030 Takeda Chemical Industries........................ 37,000 2,190,193 Takefuji Corp..................................... 6,900 435,026 TDK Corp.......................................... 16,000 1,557,968 Tokio Marine & Fire Insurance Co.................. 83,000 951,375 Toyota Motor Corp................................. 36,000 1,150,613 West Japan Railway Co............................. 250 1,105,517 Yamanouchi Pharmaceutical Co., Ltd................ 21,000 908,406 Yamato Transport Co., Ltd......................... 36,000 661,996 ------------ 64,510,828 ------------ Netherlands -- 6.56% ABN AMRO Holdings NV.............................. 188,634 4,289,551 Aegon NV.......................................... 76,384 3,159,837 Akzo Nobel NV..................................... 35,700 1,917,264 Elsevier NV....................................... 313,550 4,610,164 ING Groep NV...................................... 521 41,618 Philips Electronics NV............................ 57,922 2,122,016 TNT Post Group NV................................. 80,970 1,958,338 Wolters Kluwer NV................................. 119,299 3,252,754 ------------ 21,351,542 ------------ New Zealand -- 0.46% Lion Nathan Ltd................................... 250,870 565,040 Telecom Corp. of New Zealand Ltd.................. 436,090 928,184 ------------ 1,493,224 ------------ Portugal -- 1.28% Brisa-Auto Estradas de Portugal S.A............... 139,207 1,241,659 EDP Electricidade de Portugal S.A................. 885,970 2,928,057 ------------ 4,169,716 ------------ Singapore -- 0.61% DBS Group Holdings Ltd............................ 176,000 1,989,389 ------------ Spain -- 3.28% Altadis S.A....................................... 203,021 3,145,160 Banco Popular Espanol S.A......................... 70,015 2,438,837 Banco Santander Central Hispano S.A............... 186,883 2,000,287 Endesa S.A........................................ 58,801 1,002,026 Telefonica S.A. (b)............................... 127,591 2,108,388 ------------ 10,694,698 ------------ Sweden -- 2.42% Electrolux AB, B Shares........................... 139,330 1,808,905 Investor AB, B Shares............................. 108,570 1,622,423 Nordea AB......................................... 369,020 2,796,347 Swedish Match AB.................................. 420,430 1,639,746 ------------ 7,867,421 ------------ Switzerland -- 5.51% Nestle S.A. (Reg.)................................ 1,453 3,389,287 New ABB Ltd....................................... 12,992 1,384,985 Novartis AG (Reg.)................................ 2,780 4,914,965 Roche Holding AG (Gen.)........................... 521 5,308,059 Swisscom AG (Reg.)................................ 4,785 1,244,602 Zurich Financial Services AG...................... 2,823 1,701,988 ------------ 17,943,886 ------------ United Kingdom -- 22.33% BAE Systems PLC................................... 192,000 $ 1,095,619 Barclays PLC...................................... 85,000 2,630,895 BP Amoco PLC...................................... 536,884 4,330,809 British Airways PLC............................... 200,879 1,171,792 British Land Company PLC.......................... 132,000 936,618 British Telecommunications PLC.................... 338,551 2,892,777 Charter PLC....................................... 309,907 805,518 Diageo PLC........................................ 246,322 2,759,684 Dixons Group PLC.................................. 72,000 240,921 GlaxoSmithKline PLC (b)........................... 244,840 6,912,561 Hanson PLC........................................ 174,000 1,193,045 House of Fraser PLC............................... 317,685 291,855 HSBC Holdings PLC................................. 113,884 1,675,690 International Power PLC........................... 304,314 1,141,013 Invensys PLC...................................... 733,000 1,713,615 Kelda Group PLC................................... 312,011 1,813,069 Lattice Group PLC (b)............................. 766,000 1,727,828 Lloyds TSB Group PLC.............................. 458,725 4,851,550 Marconi PLC....................................... 200,269 2,150,985 Marks & Spencer PLC............................... 268,624 746,367 Nycomed Amersham PLC.............................. 212,876 1,772,827 P&O Princess Cruises PLC (b)...................... 245,617 1,038,340 Powergen PLC...................................... 159,812 1,508,764 Prudential Corp. PLC.............................. 196,964 3,168,819 Reckitt Benckiser PLC............................. 147,497 2,031,463 Rentokil Initial PLC.............................. 159,000 548,661 RMC Group PLC..................................... 112,000 985,435 Royal Bank of Scotland Group PLC.................. 158,168 3,737,833 Scottish & Newcastle PLC.......................... 129,000 905,696 Scottish & Southern Energy PLC.................... 248,875 2,304,983 Shell Transport & Trading Co...................... 444,404 3,644,560 Smurfit (Jefferson) Group PLC..................... 416,000 810,959 Tesco PLC......................................... 637,592 2,597,780 Trinity Mirror PLC................................ 138,566 944,397 United News & Media PLC........................... 103,609 1,315,562 Vodafone Group PLC................................ 1,184,309 4,343,215 ------------ 72,741,505 ------------ Total International Equities (Cost $254,688,496)............................. 304,193,664 ------------ Short-Term Investments -- 4.22% Investment Companies -- 4.22% Brinson Supplementary Trust U.S. Cash Management Prime Fund (Cost $13,760,421).............................. 13,760,421 13,760,421 ------------ Total Investments (Cost $268,448,917) -- 97.61% (a)............... 317,954,085 Cash and other assets, less liabilities -- 2.39%....................... 7,784,239 ------------ Net Assets -- 100%................................ $325,738,324 ============ See accompanying notes to schedule of investments. ================================================================================ 79 International Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $268,448,917; and net unrealized appreciation consisted of: Gross unrealized appreciation ........................ $ 66,603,414 Gross unrealized depreciation ........................ (17,098,246) ------------ Net unrealized appreciation .................... $ 49,505,168 ============ (b) Non-income producing security FORWARD FOREIGN CURRENCY CONTRACTS The International Equity Fund had the following open foreign forward currency contracts as of December 31, 2000:
Settlement Local Current Unrealized Date Currency Value Gain/(Loss) ---------- ------------- ----------- ------------ Forward Foreign Currency Buy Contracts: Australian Dollar......................................... 02/08/01 54,800,000 $30,461,029 $ (1,071,431) British Pound............................................. 02/08/01 14,400,000 21,525,951 883,276 Canadian Dollar........................................... 02/08/01 18,600,000 12,393,390 (143,000) Euro...................................................... 02/08/01 103,600,000 97,443,518 3,291,861 Japanese Yen.............................................. 02/08/01 1,628,000,000 14,350,144 (828,676) New Zealand Dollar........................................ 02/08/01 15,600,000 6,902,136 291,947 Singapore Dollar.......................................... 02/08/01 2,700,000 1,563,133 (878) Swedish Krona............................................. 02/08/01 17,200,000 1,827,860 121,917 Swiss Franc............................................... 02/08/01 22,300,000 13,809,846 752,579 Forward Foreign Currency Sale Contracts: Australian Dollar......................................... 02/08/01 26,500,000 14,730,242 (230,322) British Pound............................................. 02/08/01 38,700,000 57,850,992 (136,607) Canadian Dollar........................................... 02/08/01 7,200,000 4,797,441 (41,593) Euro...................................................... 02/08/01 57,100,000 53,706,804 (3,328,543) Hong Kong Dollar.......................................... 02/08/01 32,000,000 4,105,095 2,851 Japanese Yen.............................................. 02/08/01 5,270,000,000 46,452,865 3,518,774 New Zealand Dollar........................................ 02/08/01 3,600,000 1,592,801 (72,701) Swedish Krona............................................. 02/08/01 17,200,000 1,827,860 48,496 Swiss Franc............................................... 02/08/01 17,600,000 10,899,251 (920,572) ------------ Total.................................................... $ 2,137,378 ============
================================================================================ See accompanying notes to financial statements. 80 This page intentionally left blank. 81 The Brinson Funds -- Financial Statements -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2000 (Unaudited)
Global Global Global Global Equity Technology Biotech Global Bond Fund Fund Fund Fund Fund --------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments, at cost: Unaffiliated issuers..................... $ 173,642,213 $ 53,543,707 $ 1,656,019 $ 1,649,633 $ 38,186,442 Affiliated issuers....................... 45,416,613 817,830 -- -- 2,437,235 Foreign currency, at cost.................. 934,662 1,161,661 -- -- -- ------------- ------------- ------------- ------------- ------------- $ 219,993,488 $ 55,523,198 $ 1,656,019 $ 1,649,633 $ 40,623,677 ============= ============= ============= ============= ============= Investments, at value: Unaffiliated issuers..................... $ 176,604,185 $ 59,413,550 $ 1,243,415 $ 1,654,261 $ 36,923,080 Affiliated issuers....................... 47,360,414 817,830 -- -- 2,437,235 Foreign currency, at value................. 958,044 1,196,799 -- -- 10,221 Cash....................................... -- 17 16,379 14,385 809,496 Receivables: Investment securities sold............... 2,455,581 425,708 -- 22,326 -- Due from Advisor......................... -- -- 4,713 6,235 -- Dividends................................ 162,057 95,974 231 34 -- Interest................................. 660,893 2,616 187 292 -- Fund shares sold......................... 137,342 23,700 -- -- 2,650 Variation margin......................... 262,017 -- -- -- -- Other assets............................... 260 Net unrealized appreciation on forward foreign currency contracts........ 398,689 1,266,750 -- -- -- ------------- ------------- ------------- ------------- ------------- TOTAL ASSETS............................. 228,999,482 63,242,944 1,264,925 1,697,533 40,182,682 ------------- ------------- ------------- ------------- ------------- LIABILITIES: Payables: Securities loaned........................ 38,679,342 -- -- -- -- Investment securities purchased.......... 3,572,411 195,350 37,273 -- 1,501,802 Investment advisory fees................. 123,872 37,173 -- -- 18,300 Fund shares redeemed..................... 3,245 -- -- -- -- Variation margin......................... -- -- -- -- -- Due to custodian bank.................... 4,853 -- -- -- -- Accrued expenses......................... 105,432 58,998 10,727 10,201 52,376 Net unrealized depreciation on forward foreign currency contracts................. -- -- -- -- 14,169 ------------- ------------- ------------- ------------- ------------- TOTAL LIABILITIES........................ 42,489,155 291,521 48,000 10,201 1,586,647 ------------- ------------- ------------- ------------- ------------- NET ASSETS.................................. $ 186,510,327 $ 62,951,423 $ 1,216,925 $ 1,687,332 $ 38,596,035 ============= ============= ============= ============= ============= NET ASSETS CONSIST OF: Paid in capital............................ $ 181,268,801 $ 55,254,398 $ 2,222,820 $ 1,706,271 $ 47,809,953 Accumulated undistributed net investment income (loss)................... 2,046,941 108,781 (16,474) (10,250) 814,413 Accumulated net realized gain (loss)....... (3,502,738) 415,714 (576,817) (13,317) (8,776,274) Net unrealized appreciation (depreciation)............................. 6,697,323 7,172,530 (412,604) 4,628 (1,252,057) ------------- ------------- ------------- ------------- ------------- NET ASSETS............................... $ 186,510,327 $ 62,951,423 $ 1,216,925 $ 1,687,332 $ 38,596,035 ============= ============= ============= ============= ============= BRINSON CLASS I: Net Assets................................ $ 178,307,755 $ 38,931,575 $ 356,131 $1,245,583 $ 37,029,724 ============= ============= ============= ============= ============= Shares outstanding........................ 15,869,659 3,401,638 53,323 112,159 4,074,142 ============= ============= ============= ============= ============= Net asset value, offering and redemption price per share............................ $ 11.24 $ 11.44 $ 6.68 $ 11.11 $ 9.09 ============= ============= ============= ============= ============= BRINSON CLASS N: Net Assets................................. $ 211,505 $ 323,969 $ 667 $ 1,131 $ 1,834 ============= ============= ============= ============= ============= Shares outstanding......................... 18,941 28,443 100 102 200 ============= ============= ============= ============= ============= Net asset value, offering and redemption price per share........................... $ 11.17 $ 11.39 $ 6.67 $ 11.09 $ 9.17 ============= ============= ============= ============= ============= UBS INVESTMENT FUNDS CLASS: Net Assets................................. $ 7,991,067 $ 23,695,879 $ 860,127 $ 440,618 $ 1,564,477 ============= ============= ============= ============= ============= Shares outstanding......................... 719,386 2,091,443 129,609 39,870 172,076 ============= ============= ============= ============= ============= Net asset value, offering and redemption price per share........................... $ 11.11 $ 11.33 $ 6.64 $ 11.05 $ 9.09 ============= ============= ============= ============= =============
================================================================================ See accompanying notes to financial statements. 82 The Brinson Funds -- Financial Statements
------------------------------------------------------------------------------------------------------------------------------------ U.S. U.S. U.S. U.S. U.S. Balanced Equity Large Cap Large Cap Small Cap U.S. Bond High Yield International Fund Fund Equity Fund Growth Fund Growth Fund Fund Fund Equity Fund ------------------------------------------------------------------------------------------------------------------------------------ $ 10,776,728 $ 116,464,525 $ 5,541,995 $ 9,259,717 $ 42,059,835 $ 58,968,999 $ 41,347,775 $ 254,688,496 711,147 1,289,380 -- -- 1,166,686 747,169 7,594,776 13,760,421 -- -- -- -- -- -- -- 4,397,176 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- $ 11,487,875 $ 117,753,905 $ 5,541,995 $ 9,259,717 $ 43,226,521 $ 59,716,168 $ 48,942,551 $ 272,846,093 ============= ============= ============= ============= ============= ============= ============= ============= $ 11,286,816 $ 142,475,105 $ 6,019,756 $ 8,451,827 $ 49,225,762 $ 59,349,325 $ 36,683,461 $ 304,193,664 711,147 1,289,380 -- -- 1,166,686 747,169 7,594,776 13,760,421 -- -- -- -- -- -- -- 4,455,189 15,722 16,224 628 199,793 -- 192 -- -- -- -- -- -- 487,431 1,348,480 -- 1,713,029 -- -- 12,618 -- -- -- -- -- 5,530 172,844 7,627 3,634 3,557 -- -- 637,616 60,900 19,184 2,987 1,060 9,085 721,589 913,087 26,236 5,886 -- 70 -- 5,500 -- 1,293,043 1,490,000 4,957 -- -- -- -- -- -- -- -- -- -- -- -- -- -- 2,137,378 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- 12,090,958 143,972,737 6,043,686 8,656,314 50,898,021 62,166,755 46,484,367 328,413,533 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -- -- -- -- -- -- -- -- 169,754 -- -- 11,379 481,559 1,343,908 236,371 2,438,230 2,026 74,468 -- 1,710 37,839 22,014 13,336 210,800 -- -- 22 -- -- -- -- -- -- 27,300 4,550 -- -- -- -- -- -- -- -- -- -- -- -- -- 44,929 100,905 23,045 67,658 19,376 42,858 17,490 26,179 -- -- -- -- -- -- -- -- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- 216,709 202,673 27,617 80,747 538,774 1,408,780 267,197 2,675,209 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- $ 11,874,249 $ 143,770,064 $ 6,016,069 $ 8,575,567 $ 50,359,247 $ 60,757,975 $ 46,217,170 $ 325,738,324 ============= ============= ============= ============= ============= ============= ============= ============= $ 13,298,352 $ 122,508,961 $ 12,005,546 $ 9,612,661 $ 38,657,811 $ 64,722,621 $ 56,673,103 $ 263,255,406 (20,232) 2,441,205 (86,114) (30,101) (140,879) (7,919) 596,345 1,069,734 (1,932,629) (7,213,659) (6,365,767) (199,103) 4,676,388 (4,337,053) (6,387,964) 9,717,175 528,758 26,033,557 462,404 (807,890) 7,165,927 380,326 (4,664,314) 51,696,009 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- $ 11,874,249 $ 143,770,064 $ 6,016,069 $ 8,575,567 $ 50,359,247 $ 60,757,975 $ 46,217,170 $ 325,738,324 ============= ============= ============= ============= ============= ============= ============= ============= $ 10,583,030 $130,143,685 $5,743,599 $ 3,733,658 $ 46,693,029 $ 57,382,820 $ 44,211,349 $ 320,897,024 ============= ============= ============= ============= ============= ============= ============= ============= 1,171,932 8,300,962 710,204 353,731 3,743,245 5,687,870 5,474,392 26,637,365 ============= ============= ============= ============= ============= ============= ============= ============= $ 9.03 $ 15.68 $ 8.09 $ 10.56 $ 12.47 $ 10.09 $ 8.08 $ 12.05 ============= ============= ============= ============= ============= ============= ============= ============= $ 1,209 $ 8,014,732 $ 20,081 $ 1,100 $ 1,721 $ 1,251 $ 992 $ 1,143 ============= ============= ============= ============= ============= ============= ============= ============= 134 513,896 2,463 105 139 124 123 95 ============= ============= ============= ============= ============= ============= ============= ============= $ 9.02 $ 15.60 $ 8.15 $ 10.48 $ 12.38 $ 10.09 $ 8.07 $ 12.03 ============= ============= ============= ============= ============= ============= ============= ============= $ 1,290,010 $ 5,611,647 $ 252,389 $ 4,840,809 $ 3,664,497 $ 3,373,904 $ 2,004,829 $ 4,840,157 ============= ============= ============= ============= ============= ============= ============= ============= 143,842 357,113 31,427 467,843 299,539 335,805 248,061 410,165 ============= ============= ============= ============= ============= ============= ============= ============= $ 8.97 $ 15.71 $ 8.03 $ 10.35 $ 12.23 $ 10.05 $ 8.08 $ 11.80 ============= ============= ============= ============= ============= ============= ============= =============
================================================================================ 83 The Brinson Funds -- Financial Statements -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2000 (Unaudited)
Global Global Global Global Equity Technology Biotech Global Bond Fund Fund Fund Fund Fund ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends..................................... $ 809,847 $ 505,064 $ 1,049 $ 210 $ 3,178 Interest...................................... 2,404,233 36,910 3,315 2,252 998,148 Securities lending-net........................ 71,108 -- -- -- -- Foreign tax withheld.......................... (30,294) (15,775) -- -- (7,997) ----------- ----------- ----------- -------- ----------- TOTAL INCOME................................ 3,254,894 526,199 4,364 2,462 993,329 ----------- ----------- ----------- -------- ----------- EXPENSES: Advisory...................................... 899,931 257,173 13,574 9,739 144,951 Administration................................ 79,219 -- -- -- -- Professional.................................. 53,200 23,552 13,248 13,248 23,822 Printing...................................... 52,688 32,875 2,208 2,208 18,032 Distribution.................................. 27,760 95,896 5,860 1,663 4,872 Custodian..................................... 25,991 11,636 261 214 6,910 Registration.................................. 17,480 16,744 6,072 6,072 25,920 Other......................................... 35,743 15,365 2,295 2,284 10,378 ----------- ----------- ----------- -------- ----------- TOTAL OPERATING EXPENSES.................... 1,192,012 453,241 43,518 35,428 234,885 ----------- ----------- ----------- -------- ----------- Expenses deferred by Advisor................ -- (32,635) (22,680) (22,716) (55,348) Earnings credits............................ (681) (3,188) -- -- (629) ----------- ----------- ----------- -------- ----------- NET OPERATING EXPENSES...................... 1,191,331 417,418 20,838 12,712 178,908 ----------- ----------- ----------- -------- ----------- Interest Expenses........................... 16,622 -- -- -- -- ----------- ----------- ----------- -------- ----------- NET INVESTMENT INCOME (LOSS)................ 2,046,941 108,781 (16,474) (10,250) 814,421 ----------- ----------- ----------- -------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on: Investments................................... 4,180,922 3,327,281 (575,372) 14,052 (35,107) Futures contracts............................. 4,237,856 -- -- -- -- Foreign currency transactions................. (4,110,954) (576,953) -- (5,608) (1,408,125) ----------- ----------- ----------- -------- ----------- Net realized gain (loss).................... 4,307,824 2,750,328 (575,372) 8,444 (1,443,232) ----------- ----------- ----------- -------- ----------- Change in net unrealized appreciation or depreciation on: Investments and foreign currency.............. 1,832,871 (2,382,690) (459,340) (95,579) 1,177,729 Futures contracts............................. 537,004 -- -- -- -- Forward contracts............................. 1,088,824 853,137 -- -- 40,738 Translation of other assets and liabilities denominated in foreign currency............. 20,986 (9,353) -- -- (15,088) ----------- ----------- ----------- -------- ----------- Change in net unrealized appreciation or depreciation............................ 3,479,685 (1,538,906) (459,340) (95,579) 1,203,379 ----------- ----------- ----------- -------- ----------- Net realized and unrealized gain (loss)......... 7,787,509 1,211,422 (1,034,712) (87,135) (239,853) ----------- ----------- ----------- -------- ----------- Net increase (decrease) in net assets resulting from operations............................... $ 9,834,450 $ 1,320,203 $(1,051,186) $(97,385) $ 574,568 =========== =========== =========== ======== ===========
================================================================================ See accompanying notes to financial statements. 84 The Brinson Funds -- Financial Statements --------------------------------------------------------------------------------
U.S. U.S. U.S. U.S. U.S. Balanced Equity Large Cap Large Cap Small Cap U.S. Bond High Yield International Fund Fund Equity Fund Growth Fund Growth Fund Fund Fund Equity Fund ------------------------------------------------------------------------------------------------------------------------------------ $ 32,937 $ 1,052,108 $ 66,270 $ 24,338 $ 45,486 $ 32,460 $ -- $ 2,786,907 255,136 133,443 19,348 14,649 154,453 2,330,600 2,644,544 366,893 -- -- -- -- -- -- -- 20,060 -- -- -- -- -- -- -- (227,905) ---------- ----------- ---------- ----------- ----------- ---------- ----------- ------------ 288,073 1,185,551 85,618 38,987 199,939 2,363,060 2,644,544 2,945,955 ---------- ----------- ---------- ----------- ----------- ---------- ----------- ------------ 41,450 544,628 33,379 39,468 282,392 161,916 142,840 1,453,336 -- -- -- -- -- -- -- 85,181 9,752 36,896 18,558 9,296 10,746 20,018 23,032 63,592 5,454 123,500 17,500 7,928 22,632 34,800 19,009 40,853 3,129 35,443 584 24,088 16,063 8,355 9,454 22,276 148 1,945 119 141 706 810 595 135,875 17,848 -- 13,720 17,112 23,184 20,496 17,112 25,944 3,696 64,849 3,269 3,708 6,283 10,938 6,633 38,132 ---------- ----------- ---------- ----------- ----------- ---------- ----------- ------------ 81,477 807,261 87,129 101,741 362,006 257,333 218,675 1,865,189 ---------- ----------- ---------- ----------- ----------- ---------- ----------- ------------ (30,957) (148,908) (48,358) (32,653) (21,188) (53,686) (42,748) -- -- -- -- -- -- -- -- (26,875) ---------- ----------- ---------- ----------- ----------- ---------- ----------- ------------ 50,520 658,353 38,771 69,088 340,818 203,647 175,927 1,838,314 ---------- ----------- ---------- ----------- ----------- ---------- ----------- ------------ -- -- -- -- -- -- 9,485 37,907 ---------- ----------- ---------- ----------- ----------- ---------- ----------- ------------ 237,553 527,198 46,847 (30,101) (140,879) 2,159,413 2,459,132 1,069,734 ---------- ----------- ---------- ----------- ----------- ---------- ----------- ------------ (25,044) 8,859,418 (260,615) 91,221 5,933,941 (390,292) (2,732,253) 19,794,739 298,469 (123,885) (18,355) 17,119 -- -- -- -- -- -- -- -- -- -- -- (3,065,985) ---------- ----------- ---------- ----------- ----------- ---------- ----------- ------------ 273,425 8,735,533 (278,970) 108,340 5,933,941 (390,292) (2,732,253) 16,728,754 ---------- ----------- ---------- ----------- ----------- ---------- ----------- ------------ 608,149 3,288,910 1,471,709 (2,357,460) (9,076,630) 2,665,592 (1,133,312) (44,566,520) (106,038) 27,399 (7,461) 1,821 -- -- -- -- -- -- -- -- -- -- -- 3,720,288 -- -- -- -- -- -- -- 9,266 ---------- ----------- ---------- ----------- ----------- ---------- ----------- ------------ 502,111 3,316,309 1,464,248 (2,355,639) (9,076,630) 2,665,592 (1,133,312) (40,836,966) ---------- ----------- ---------- ----------- ----------- ---------- ----------- ------------ 775,536 12,051,842 1,185,278 (2,247,299) (3,142,689) 2,275,300 (3,865,565) (24,108,212) ---------- ----------- ---------- ----------- ----------- ---------- ----------- ------------ $1,013,089 $12,579,040 $1,232,125 $(2,277,400) $(3,283,568) $4,434,713 $(1,406,433) $(23,038,478) ========== =========== ========== =========== =========== ========== =========== ============
================================================================================ 85 The Brinson Funds -- Financial Statements -------------------------------------------------------------------------------- STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, 2000 (Unaudited)
Global Fund ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net increase in net assets resulting from operations.............................................. $ 9,834,450 Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities: Net realized and unrealized gain on investments................................................... (7,787,509) Increase in receivable for investment securities sold............................................. (685,522) Decrease in dividends and interest receivable..................................................... 726,969 Decrease in other assets.......................................................................... 2,184 Increase in payable for securities purchased...................................................... 1,262,779 Decrease in payable for investment advisory fee................................................... (70,925) Decrease in accrued expenses...................................................................... (37,548) Increase in variation margin...................................................................... (534,163) Net accretion of discount......................................................................... (390,915) Purchases of investments.......................................................................... (194,751,471) Proceeds from sales of investments................................................................ 321,720,894 Net realized gain on futures contracts............................................................ 4,237,856 Net realized loss on foreign currency transactions................................................ (4,110,954) Change in net unrealized appreciaton or depreciation on futures contracts......................... 537,004 Change in net unrealized appreciation or depreciation on other assets and liabilities............. 20,986 Net increase in foreign currency.................................................................. (703,382) ------------- Net cash provided by operating activities........................................................ 129,270,733 ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net capital shares transactions................................................................... (113,909,267) Net decrease from securities lending.............................................................. (13,012,023) Dividends and capital gain distributions paid..................................................... (2,354,296) ------------- Net cash used for financing activities........................................................... (129,275,586) ------------- Net decrease in cash............................................................................... (4,853) CASH AT BEGINNING OF PERIOD........................................................................ -- ------------- CASH AT END OF PERIOD.............................................................................. $ (4,853) =============
================================================================================ See accompanying notes to financial statements. 86 This page intentionally left blank. 87 The Brinson Funds -- Financial Statements -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS
Global Fund Global Equity Fund ---------------------------------- --------------------------------- Six Months Year Six Months Year Ended Ended Ended Ended December 31, June 30, December 31, June 30, 2000 (Unaudited) 2000 2000 (Unaudited) 2000 ----------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss).......................... $ 2,046,941 $ 7,094,949 $ 108,781 $ 162,257 Net realized gain (loss).............................. 4,307,824 8,976,951 2,750,328 8,474,282 Change in net unrealized appreciation or depreciation......................................... 3,479,685 (21,444,707) (1,538,906) (7,646,954) ------------- ------------- ------------ ------------ Net increase (decrease) in net assets from operations. 9,834,450 (5,372,807) 1,320,203 989,585 ------------- ------------- ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS BY CLASS: Brinson Class I: Distributions from net investment income............ -- (4,971,880) -- (229,745) Distributions from net realized gains............... (9,702,495) (14,468,448) (4,104,553) (3,607,561) ------------- ------------- ------------ ------------ Total Class I distributions........................... (9,702,495) (19,440,328) (4,104,553) (3,837,306) ------------- ------------- ------------ ------------ Brinson Class N: Distributions from net investment income............ -- (18,729) -- (986) Distributions from net realized gains............... (11,339) (59,854) (34,788) (19,859) ------------- ------------- ------------ ------------ Total Class N distributions........................... (11,339) (78,583) (34,788) (20,845) ------------- ------------- ------------ ------------ UBS Investment Funds Class: Distributions from net investment income............ -- (181,202) -- (77,666) Distributions from net realized gains............... (459,422) (720,519) (2,498,356) (3,756,176) ------------- ------------- ------------ ------------ Total UBS Investment Funds Class distributions........ (459,422) (901,721) (2,498,356) (3,833,842) ------------- ------------- ------------ ------------ Decrease in net assets from distributions............. (10,173,256) (20,420,632) (6,637,697) (7,691,993) ------------- ------------- ------------ ------------ CAPITAL SHARE TRANSACTIONS BY CLASS: Brinson Class I: Shares sold......................................... 70,728,394 378,057,007 18,637,769 31,965,448 Shares issued on reinvestment of distributions...... 7,392,619 17,592,753 2,825,455 3,143,195 Shares redeemed..................................... (183,764,443) (556,236,057) (19,904,271) (33,431,209) ------------- ------------- ------------ ------------ Total Brinson Class I transactions.................... (105,643,430) (160,586,297) 1,558,953 1,677,434 ------------- ------------- ------------ ------------ Brinson Class N: Shares sold......................................... 10,199 85,811 99,999 -- Shares issued on reinvestment of distributions...... 3,867 68,059 23,849 20,844 Shares redeemed..................................... (4,319) (1,405,050) -- (1,198) ------------- ------------- ------------ ------------ Total Brinson Class N transactions.................... 9,747 (1,251,180) 123,848 19,646 ------------- ------------- ------------ ------------ UBS Investment Funds Class: Shares sold......................................... 426,770 385,340 284,104 3,098,087 Shares issued on reinvestment of distributions...... 422,475 863,834 2,278,862 3,281,750 Shares redeemed..................................... (1,580,628) (13,120,314) (4,840,133) (18,879,433) ------------- ------------- ------------ ------------ Total UBS Investment Funds Class transactions......... (731,383) (11,871,140) (2,277,167) (12,499,596) ------------- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions.......................... (106,365,066) (173,708,617) (594,366) (10,802,516) ------------- ------------- ------------ ------------ Increase (Decrease) in Net Assets..................... (106,703,872) (199,502,056) (5,911,860) (17,504,924) Net Assets, Beginning of Period....................... 293,214,199 492,716,255 68,863,283 86,368,207 ------------- ------------- ------------ ------------ Net Assets, End of Period............................. $ 186,510,327 $ 293,214,199 $ 62,951,423 $ 68,863,283 ============= ============= ============ ============ Net assets include accumulated undistributed net investment income (loss)........................ $ 2,046,941 $ -- $ 108,781 $ -- ============= ============= ============ ============ Share Transactions: Brinson Class I: Shares sold......................................... 6,300,765 33,602,761 1,537,537 2,577,643 Shares issued on reinvestment of distributions...... 682,606 1,590,665 252,048 257,009 Shares redeemed..................................... (16,369,363) (48,975,929) (1,637,625) (2,721,479) ------------- ------------- ------------ ------------ Total Brinson Class I transactions.................... (9,385,992) (13,782,503) 151,960 113,173 ------------- ------------- ------------ ------------ Brinson Class N: Shares sold......................................... 940 7,386 8,271 -- Shares issued on reinvestment of distributions...................................... 360 6,165 2,139 1,707 Shares redeemed..................................... (394) (127,026) -- (98) ------------- ------------- ------------ ------------ Total Brinson Class N transactions.................... 906 (113,475) 10,410 1,609 ------------- ------------- ------------ ------------ UBS Investment Funds Class: Shares sold......................................... 38,946 33,492 23,935 243,526 Shares issued on reinvestment of distributions...... 39,447 78,388 205,303 268,566 Shares redeemed..................................... (145,395) (1,170,744) (402,318) (1,533,100) ------------- ------------- ------------ ------------ Total UBS Investment Funds Class transactions......... (67,002) (1,058,864) (173,080) (1,021,008) ------------- ------------- ------------ ------------
Commencement of investment operations ================================================================================ See accompanying notes to financial statements. 88 The Brinson Funds -- Financial Statements --------------------------------------------------------------------------------
Global Technology Fund Global Biotech Fund Global Bond Fund U.S. Balanced Fund -------------------------------- ------------------------------ ------------------------------ --------------------------------- Six Months May 26, 2000* Six Months June 2, 2000* Six Months Year Six Months Year Ended Through Ended Through Ended Ended Ended Ended December 31, June 30, December 31, June 30, December 31, June 30, December 31, June 30, 2000 (Unaudited) 2000 2000 (Unaudited) 2000 2000 (Unaudited) 2000 2000 (Unaudited) 2000 ----------------------------------------------------------------------------------------------------------------------------------- $ (16,474) $ (464) $ (10,250) $ (235) $ 814,421 $ 3,527,958 $ 237,553 $ 846,394 (575,372) 1,624 8,444 7,976 (1,443,232) (8,536,498) 273,425 (2,003,095) (459,340) 46,736 (95,579) 100,207 1,203,379 3,924,705 502,111 (2,296,787) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ (1,051,186) 47,896 (97,385) 107,948 574,568 (1,083,835) 1,013,089 (3,453,488) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ -- -- -- -- (331,177) (1,118,342) (393,409) (815,029) (785) -- (22,723) -- -- (82,557) -- (225,248) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ (785) -- (22,723) -- (331,177) (1,200,899) (393,409) (1,040,277) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ -- -- -- -- (11) -- (43) (31) (1) -- (21) -- -- (1) -- (7) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ (1) -- (21) -- (11) (1) (43) (38) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ -- -- -- -- (4,729) (43,991) (42,830) (37,261) (2,011) -- (6,758) -- -- (4,026) -- (10,418) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ (2,011) -- (6,758) -- (4,729) (48,017) (42,830) (47,679) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ (2,797) -- (29,502) -- (335,917) (1,248,917) (436,282) (1,087,994) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ 1,467,050 208,013 1,071,283 87,520 5,149,224 25,700,559 2,336,534 11,292,015 785 -- 22,723 -- 242,044 1,040,704 364,296 1,016,548 (994,930) -- (453,486) -- (12,063,678) (73,843,125) (3,766,827) (34,385,369) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ 472,905 208,013 640,520 87,520 (6,672,410) (47,101,862) (1,065,997) (22,076,806) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ -- -- -- -- 1,554 1,912 -- -- 1 -- 21 -- -- 1 43 38 -- -- -- -- (551) (1,106,396) -- (96) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ 1 -- 21 -- 1,003 (1,104,483) 43 (58) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ 1,444,186 320,741 365,041 144,960 100,019 366,668 200,000 147,189 1,400 -- 6,744 -- 3,519 38,350 42,323 41,422 (226,244) -- (38,545) -- (655,971) (2,630,429) (253,308) (588,978) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ 1,219,342 320,741 333,240 144,960 (552,433) (2,225,411) (10,985) (400,367) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ 1,692,248 528,754 973,781 232,480 (7,223,840) (50,431,756) (1,076,939) (22,477,231) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ 638,265 576,650 846,894 340,428 (6,985,189) (52,764,508) (500,132) (27,018,713) 578,660 2,010 840,438 500,010 45,581,224 98,345,732 12,374,381 39,393,094 ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ $ 1,216,925 $ 578,660 $ 1,687,332 $ 840,438 $ 38,596,035 $ 45,581,224 $ 11,874,249 $ 12,374,381 ============ =========== ============== ========== =============== ============ ================ ============ $ (16,474) $ -- $ (10,250) $ -- $ 814,413 $ 335,909 $ (20,232) $ 178,497 ============ =========== ============== ========== =============== ============ ================ ============ 138,207 19,785 88,564 7,462 590,230 2,835,427 258,682 1,279,917 97 -- 1,959 -- 27,821 113,243 40,886 119,214 (104,767) -- (35,627) -- (1,369,776) (8,240,771) (424,275) (4,112,896) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ 33,537 19,785 54,896 7,462 (751,725) (5,292,101) (124,707) (2,713,765) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ -- -- -- -- 177 210 -- -- -- -- 2 -- -- -- 5 4 -- -- -- -- (63) (118,588) -- (10) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ -- -- 2 -- 114 (118,378) 5 (6) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ 130,532 31,255 29,882 12,140 11,255 40,841 22,321 16,973 173 -- 584 -- 405 4,177 4,782 4,883 (32,451) -- (2,836) -- (75,143) (292,883) (28,497) (68,563) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------ 98,254 31,255 27,630 12,140 (63,483) (247,865) (1,394) (46,707) ------------ ----------- -------------- ---------- --------------- ------------ ---------------- ------------
================================================================================ 89 The Brinson Funds -- Financial Statements -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS
U.S Equity Fund U.S. Large Cap Equity Fund ------------------------------- --------------------------------- Six Months Year Six Months Year Ended Ended Ended Ended December 31, June 30, December 31, June 30, 2000 (Unaudited) 2000 2000 (Unaudited) 2000 ----------------------------------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss)........................... $ 527,198 $ 4,244,116 $ 46,847 $ 268,499 Net realized gain (loss)............................... 8,735,533 11,296,209 (278,970) (4,170,075) Change in net unrealized appreciation or depreciation.. 3,316,309 (145,732,574) 1,464,248 (3,197,720) ------------ ------------- ------------- ------------ Net increase (decrease) in net assets from operations.. 12,579,040 (130,192,249) 1,232,125 (7,099,296) ------------ ------------- ------------- ------------ DISTRIBUTIONS TO SHAREHOLDERS BY CLASS: Brinson Class I: Distributions from net investment income............ (2,153,781) (1,354,937) (127,799) (260,485) Distributions from net realized gains............... (9,027,121) (46,078,258) -- (2,112,124) ------------ ------------- ------------- ------------ Total Brinson Class I distributions..................... (11,180,902) (47,433,195) (127,799) (2,372,609) ------------ ------------- ------------- ------------ Brinson Class N: Distributions from net investment income............. (130,655) (12,687) (320) (3,358) Distributions from net realized gains................ (626,092) (773,650) -- (67,254) ------------ ------------- ------------- ------------ Total Brinson Class N distributions..................... (756,747) (786,337) (320) (70,612) ------------ ------------- ------------- ------------ UBS Investment Funds Class: Distributions from net investment income.............. (41,207) -- (4,842) (854) Distributions from net realized gains................. (471,358) (5,191,383) -- (6,269) ------------ ------------- ------------- ------------ Total UBS Investment Funds Class distributions.......... (512,565) (5,191,383) (4,842) (7,123) ------------ ------------- ------------- ------------ Decrease in net assets from distributions............... (12,450,214) (53,410,915) (132,961) (2,450,344) ------------ ------------- ------------- ------------ CAPITAL SHARE TRANSACTIONS BY CLASS: Brinson Class I: Shares sold.......................................... 33,113,687 122,681,959 1,616,120 20,498,512 Shares issued on reinvestment of distributions....... 10,176,998 46,438,462 106,520 1,882,863 Shares redeemed...................................... (81,199,499) (549,708,344) (12,816,479) (20,540,523) ------------ ------------- ------------- ------------ Total Brinson Class I transactions...................... (37,908,814) (380,587,923) (11,093,839) 1,840,852 ------------ ------------- ------------- ------------ Brinson Class N: Shares sold.......................................... 2,754,157 6,190,218 3 23,427 Shares issued on reinvestment of distributions....... 11,396 39,033 320 70,611 Shares redeemed...................................... (1,770,488) (4,286,205) (17,729) (3,038,230) ------------ ------------- ------------- ------------ Total Brinson Class N transactions...................... 995,065 1,943,046 (17,406) (2,944,192) ------------ ------------- ------------- ------------ UBS Investment Funds Class: Shares sold.......................................... 250,318 885,348 73,377 184,571 Shares issued on reinvestment of distributions....... 398,491 1,938,596 4,842 7,113 Shares redeemed...................................... (7,657,919) (43,062,328) (904) (17,573) ------------ ------------- ------------- ------------ Total UBS Investment Funds Class transactions........... (7,009,110) (40,238,384) 77,315 174,111 ------------ ------------- ------------- ------------ Net increase (decrease) in net assets resulting from capital share transactions............................ (43,922,859) (418,883,261) (11,033,930) (929,229) ------------ ------------- ------------- ------------ Increase (Decrease) in Net Assets....................... (43,794,033) (602,486,425) (9,934,766) (10,478,869) Net Assets, Beginning of Period......................... 187,564,097 790,050,522 15,950,835 26,429,704 ------------ ------------- ------------- ------------ Net Assets, End of Period............................... $143,770,064 $ 187,564,097 $ 6,016,069 $ 15,950,835 ============ ============= ============= ============ Net assets include accumulated undistributed net investment income (loss).......................... $ 2,441,205 $ 4,239,650 $ (86,114) $ -- ============ ============= ============= ============ Share Transactions: Brinson Class I: Shares sold.......................................... 2,084,098 7,021,481 208,793 2,464,710 Shares issued on reinvestment of distributions....... 654,890 2,790,780 13,299 231,926 Shares redeemed...................................... (4,886,444) (32,569,089) (1,618,396) (2,626,652) ----------- ------------- ------------- ------------ Total Brinson Class I transactions...................... (2,147,456) (22,756,828) (1,396,304) 69,984 ----------- ------------- ------------- ------------ Brinson Class N: Shares sold.......................................... 170,302 355,231 -- 952 Shares issued on reinvestment of distributions....... 737 2,356 40 8,644 Shares redeemed...................................... (107,318) (260,962) (2,239) (342,514) ----------- ------------- ------------- ------------ Total Brinson Class N transactions...................... 63,721 96,625 (2,199) (332,918) ----------- ------------- ------------- ------------ UBS Investment Funds Class: Shares sold........................................... 15,589 44,999 9,737 22,263 Shares issued on reinvestment of distributions........ 25,577 116,996 608 884 Shares redeemed....................................... (467,703) (2,612,305) (118) (2,479) ------------ ------------- ------------- ------------- Total UBS Investment Funds Class transactions........... (426,537) (2,450,310) 10,227 20,668 ------------ ------------- ------------- -------------
================================================================================ See accompanying notes to financial statements. 90 The Brinson Funds -- Financial Statements --------------------------------------------------------------------------------
U.S. Large Cap Growth Fund U.S. Small Cap Growth Fund U.S. Bond Fund ------------------------------------- ---------------------------------- -------------------------------------- Six Months Year Six Months Year Six Months Year Ended Ended Ended Ended Ended Ended December 31, June 30, December 31, June 30, December 31, June 30, 2000 (Unaudited) 2000 2000 (Unaudited) 2000 2000 (Unaudited) 2000 --------------------------------------------------------------------------------------------------------------------- $ (30,101) $ (40,633) $ (140,879) $ (283,391) $ 2,159,413 $ 5,580,977 108,340 1,307,241 5,933,941 14,184,229 (390,292) (2,898,299) (2,355,639) 495,586 (9,076,630) 12,102,689 2,665,592 218,149 ----------- ----------- ------------ ------------ ------------ ------------- (2,277,400) 1,762,194 (3,283,568) 26,003,527 4,434,713 2,900,827 ----------- ----------- ------------ ------------ ------------ ------------- -- -- -- -- (3,409,343) (4,678,165) (582,801) (226,909) (8,814,507) -- -- -- ----------- ----------- ------------ ------------ ------------ ------------- (582,801) (226,909) (8,814,507) -- (3,409,343) (4,678,165) ----------- ----------- ------------ ------------ ------------ ------------- -- -- -- -- (71) (71) (173) (80) (322) -- -- -- ----------- ----------- ------------ ------------ ------------ ------------- (173) (80) (322) -- (71) (71) ----------- ----------- ------------ ------------ ------------ ------------- -- -- -- -- (175,167) (374,662) (798,399) (376,172) (707,080) -- -- -- ----------- ----------- ------------ ------------ ------------ ------------- (798,399) (376,172) (707,080) -- (175,167) (374,662) ----------- ----------- ------------ ------------ ------------ ------------- (1,381,373) (603,161) (9,521,909) -- (3,584,581) (5,052,898) ----------- ----------- ------------ ------------ ------------ ------------- 401,874 4,048,482 12,596,449 29,765,229 29,408,013 70,180,980 557,236 217,384 7,277,911 -- 3,119,067 4,552,534 (1,515,173) (1,701,110) (12,354,491) (38,928,066) (34,054,841) (106,749,956) ----------- ----------- ------------ ------------ ------------ ------------- (556,063) 2,564,756 7,519,869 (9,162,837) (1,527,761) (32,016,442) ----------- ----------- ------------ ------------ ------------ ------------- -- -- -- -- -- -- 173 80 322 -- 72 71 -- -- -- -- -- -- ----------- ----------- ------------ ------------ ------------ ------------- 173 80 322 -- 72 71 ----------- ----------- ------------ ------------ ------------ ------------- 510,351 5,084,906 1,743,866 2,415,418 772,156 1,492,544 751,964 376,172 676,885 -- 152,308 310,529 (1,541,352) (4,200,579) (1,424,392) (459,900) (1,136,771) (4,032,375) ----------- ----------- ------------ ------------ ------------ ------------- (279,037) 1,260,499 996,359 1,955,518 (212,307) (2,229,302) ----------- ----------- ------------ ------------ ------------ ------------- (834,927) 3,825,335 8,516,550 (7,207,319) (1,739,996) (34,245,673) ----------- ----------- ------------ ------------ ------------ ------------- (4,493,700) 4,984,368 (4,288,927) 18,796,208 (889,864) (36,397,744) 13,069,267 8,084,899 54,648,174 35,851,966 61,647,839 98,045,583 ----------- ----------- ------------ ------------ ------------ ------------- $ 8,575,567 $13,069,267 $ 50,359,247 $ 54,648,174 $ 60,757,975 $ 61,647,839 =========== =========== ============ ============ ============ ============= $ (30,101) $ -- $ (140,879) $ -- $ (7,919) $ 1,417,249 =========== =========== ============ ============ ============ ============= 28,435 276,574 800,581 2,526,985 2,880,317 6,936,124 48,752 15,996 577,154 -- 312,532 461,106 (108,634) (119,266) (766,694) (3,231,011) (3,318,424) (10,539,673) ----------- ----------- ------------ ------------ ------------ ------------- (31,447) 173,304 611,041 (704,026) (125,575) (3,142,443) ----------- ----------- ------------ ------------ ------------ ------------- -- -- -- -- -- -- 15 6 25 -- 7 7 -- -- -- -- -- -- ----------- ----------- ------------ ------------ ------------ ------------- 15 6 25 -- 7 7 ----------- ----------- ------------ ------------ ------------ ------------- 34,426 363,462 107,026 193,136 75,572 146,887 67,020 27,906 54,720 -- 15,323 31,628 (109,716) (286,213) (90,519) (34,814) (109,946) (411,376) ----------- ----------- ------------ ------------ ------------ ------------- (8,270) 105,155 71,227 158,322 (19,051) (232,861) ----------- ----------- ------------ ------------ ------------ -------------
================================================================================ 91 The Brinson Funds -- Financial Statements -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS
High Yield Fund International Equity Fund ---------------------------- --------------------------------- Six Months Year Six Months Year Ended Ended Ended Ended December 31, June 30, December 31, June 30, 2000 (Unaudited) 2000 2000 (Unaudited) 2000 --------------- ----------- ---------------- ---------------- OPERATIONS: Net investment income......................................... $ 2,459,132 $ 5,274,444 $ 1,069,734 $ 4,208,084 Net realized gain (loss)...................................... (2,732,253) (3,589,002) 16,728,754 41,417,003 Change in net unrealized appreciation or depreciation......... (1,133,312) (1,386,533) (40,836,966) 15,371,143 ------------ ------------ ------------- -------------- Net increase (decrease) in net assets from operations......... (1,406,433) 298,909 (23,038,478) 60,996,230 ------------ ------------ ------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS BY CLASS: Brinson Class I: Distributions from net investment income..................... (3,186,309) (3,997,434) -- (2,727,974) Distributions from net realized gains........................ -- (384,243) (19,686,582) (5,283,152) ------------ ------------ ------------- -------------- Total Brinson Class I distributions........................... (3,186,309) (4,381,677) (19,686,582) (8,011,126) ------------ ------------ ------------- -------------- Brinson Class N: Distributions from net investment income..................... (86) (74) -- -- Distributions from net realized gains........................ -- (7) (68) (13) ------------ ------------ ------------- -------------- Total Brinson Class N distributions........................... (86) (81) (68) (13) ------------ ------------ ------------- -------------- UBS Investment Funds Class: Distributions from net investment income..................... (171,677) (315,019) -- (9,831) Distributions from net realized gains........................ -- (40,374) (307,666) (74,353) ------------ ------------ ------------- -------------- Total UBS Investment Funds Class distributions................ (171,677) (355,393) (307,666) (84,184) ------------ ------------ ------------- -------------- Decrease in net assets from distributions.................... (3,358,072) (4,737,151) (19,994,316) (8,095,323) ------------ ------------ ------------- -------------- CAPITAL SHARE TRANSACTIONS BY CLASS: Brinson Class I: Shares sold.................................................. 68,905,551 75,679,660 573,451,198 1,049,008,547 Shares issued on reinvestment of distributions............... 2,928,367 3,943,554 18,305,757 7,708,071 Shares redeemed.............................................. (73,963,973) (84,709,596) (640,477,366) (1,187,345,955) ------------ ------------ ------------- -------------- Total Brinson Class I transactions............................ (2,130,055) (5,086,382) (48,720,411) (130,629,337) ------------ ------------ ------------- -------------- Brinson Class N: Shares sold.................................................. -- -- -- 373 Shares issued on reinvestment of distributions............... 85 81 68 13 Shares redeemed.............................................. -- -- -- (14,890) ------------ ------------ ------------- -------------- Total Brinson Class N transactions............................ 85 81 68 (14,504) ------------ ------------ ------------- -------------- UBS Investment Funds Class: Shares sold.................................................. 219,872 484,592 847,290 1,895,728 Shares issued on reinvestment of distributions............... 80,217 274,449 307,032 81,724 Shares redeemed.............................................. (197,958) (4,562,131) (1,467,406) (3,506,844) ------------ ------------ ------------- -------------- Total UBS Investment Funds Class transactions................. 102,131 (3,803,090) (313,084) (1,529,392) ------------ ------------ ------------- -------------- Net decrease in net assets resulting from capital share transactions................................... (2,027,839) (8,889,391) (49,033,427) (132,173,233) ------------ ------------ ------------- -------------- Decrease in Net Assets........................................ (6,792,344) (13,327,633) (92,066,221) (79,272,326) Net Assets, Beginning of Period............................... 53,009,514 66,337,147 417,804,545 497,076,871 ------------ ------------ ------------- -------------- Net Assets, End of Period..................................... $ 46,217,170 $ 53,009,514 $ 325,738,324 $ 417,804,545 ============ ============ ============= ============== Net assets include accumulated undistributed net investment income........................................ $ 596,345 $ 1,495,285 $ 1,069,734 $ -- ============ ============ ============= ============== SHARE TRANSACTIONS: Brinson Class I: Shares sold.................................................. 7,558,949 8,072,340 44,736,022 80,245,905 Shares issued on reinvestment of distributions............... 367,885 416,227 1,553,969 575,659 Shares redeemed.............................................. (7,982,065) (8,988,112) (50,007,832) (90,203,629) ------------ ------------ ------------- -------------- Total Brinson Class I transactions............................ (55,231) (499,545) (3,717,841) (9,382,065) ------------ ------------ ------------- -------------- Brinson Class N: Shares sold.................................................. -- -- -- 30 Shares issued on reinvestment of distributions............... 11 9 6 1 Shares redeemed.............................................. -- -- -- (1,174) ------------ ------------ ------------- -------------- Total Brinson Class N transactions............................ 11 9 6 (1,143) ------------ ------------ ------------- -------------- UBS Investment Funds Class: Shares sold.................................................. 23,746 50,427 67,883 146,606 Shares issued on reinvestment of distributions............... 10,064 28,713 26,606 6,167 Shares redeemed.............................................. (21,771) (475,553) (119,684) (269,636) ------------ ------------ ------------- -------------- Total UBS Investment Funds Class transactions................. 12,039 (396,413) (25,195) (116,863) ------------ ------------ ------------- --------------
================================================================================ See accompanying notes to financial statements. 92 Global Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended December 31, 2000 Year Ended June 30, ------------------------------------------------------------ Brinson Class I (Unaudited) 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period........................................ $ 11.25 $ 12.02 $ 12.77 $ 13.13 $ 12.22 $ 11.35 ---------- --------- -------- --------- -------- -------- Income (loss) from investment operations: Net investment income............................. 0.12 0.23* 0.30 0.37 0.38 0.44 Net realized and unrealized gain (loss)........... 0.50 (0.30) 0.25 0.62 1.79 1.37 ---------- --------- -------- --------- -------- -------- Total income (loss)from investment operations................................. 0.62 (0.07) 0.55 0.99 2.17 1.81 ---------- --------- -------- --------- -------- -------- Less distributions: Distributions from net investment income.......... -- (0.18) (0.46) (0.65) (0.61) (0.62) Distributions from net realized gains............. (0.63) (0.52) (0.84) (0.70) (0.65) (0.32) ---------- --------- -------- --------- -------- -------- Total distributions........................... (0.63) (0.70) (1.30) (1.35) (1.26) (0.94) ---------- --------- -------- --------- -------- -------- Net asset value, end of period..................... $ 11.24 $ 11.25 $ 12.02 12.77 13.13 $ 12.22 ========== ========= ======== ========= ======== ======== Total return (non-annualized)...................... 5.77% (0.48)% 4.76% 8.28% 18.79% 16.38% Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 178,308 $ 284,229 $469,080 $ 667,745 $586,667 $457,933 Ratio of total expenses to average net assets..... 1.05%**+ 0.99% 0.96% 0.94% 0.99% 1.04% Ratio of net investment income to average net assets...................................... 1.84%** 1.99% 2.23% 2.70% 3.03% 3.69% Portfolio turnover rate........................... 44% 98% 105% 88% 150% 142% ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended December 31, 2000 Year Ended June 30, ------------------------------ Brinson Class N (Unaudited) 2000 1999 1998 ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period........................................... $ 11.20 $ 11.99 $ 12.75 $ 13.13 -------- --------- ------- ------- Income (loss) from investment operations: Net investment income......................................................... 0.10 0.19* 0.27 0.63 Net realized and unrealized gain (loss)....................................... 0.50 (0.30) 0.25 0.32 -------- --------- ------- ------- Total income (loss) from investment operations............................ 0.60 (0.11) 0.52 0.95 -------- --------- ------- ------- Less distributions: Distributions from net investment income...................................... -- (0.16) (0.44) (0.63) Distributions from net realized gains......................................... (0.63) (0.52) (0.84) (0.70) -------- --------- ------- ------- Total distributions....................................................... (0.63) (0.68) (1.28) (1.33) -------- --------- ------- ------- Net asset value, end of period................................................. $ 11.17 $ 11.20 $ 11.99 $ 12.75 ======== ========= ======= ======= Total return (non-annualized).................................................. 5.62% (0.80)% 4.47% 7.90% Ratios/Supplemental data: Net assets, end of period (in 000s)........................................... $ 212 $ 202 $ 1,576 $ 1,163 Ratio of total expenses to average net assets................................. 1.30%**+ 1.24% 1.21% 1.19% Ratio of net investment income to average net assets.......................... 1.59%** 1.74% 1.98% 2.45% Portfolio turnover rate....................................................... 44% 98% 105% 88% -----------------------------------------------------------------------------------------------------------------------------------
* The net investment income per share data was determined by using average shares outstanding throughout the period. ** Annualized + The ratio of net operating expenses to average net assets for Class I and Class N was 1.03% and 1.28%, respectively. ================================================================================ See accompanying notes to financial statements. 93 Global Equity Fund -- Financial Highlights ------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended December 31, 2000 Year Ended June 30, -------------------------------------------------- Brinson Class I (Unaudited) 2000 1999 1998 1997 1996 ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period......................... $ 12.47 $ 13.42 $ 12.54 $ 12.76 $ 11.57 $ 9.93 -------- ------- -------- ------- ------- ------- Income from investment operations: Net investment income....................................... 0.04* 0.07* 0.14* 0.22 0.16 0.18 Net realized and unrealized gain............................ 0.25 0.27 1.09 0.78 2.14 2.29 -------- ------- -------- ------- ------- ------- Total income from investment operations................. 0.29 0.34 1.23 1.00 2.30 2.47 -------- ------- -------- ------- ------- ------- Less distributions: Distributions from net investment income.................... -- (0.08) (0.17) (0.17) (0.12) (0.14) Distributions from net realized gains....................... (1.32) (1.21) (0.18) (1.05) (0.99) (0.69) -------- ------- -------- ------- ------- ------- Total distributions..................................... (1.32) (1.29) (0.35) (1.22) (1.11) (0.83) -------- ------- -------- ------- ------- ------- Net asset value, end of period............................... $ 11.44 $ 12.47 $ 13.42 $ 12.54 $ 12.76 $ 11.57 ======== ======= ======== ======= ======= ======= Total return (non-annualized)................................ 2.56% 2.69% 10.14% 8.99% 21.26% 25.66% Ratios/Supplemental data: Net assets, end of period (in 000s)......................... $ 38,932 $40,538 $ 42,106 $22,724 $48,054 $27,126 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits......... 1.11%** 1.08% 1.05% 1.02% 1.25% 1.77% 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......... 0.53%** 0.48% 1.05% 1.29% 1.35% 0.57% After expense reimbursement and earnings credits.......... 0.64%** 0.56% 1.10% 1.31% 1.60% 1.34% Portfolio turnover rate..................................... 34% 111% 86% 46% 32% 74% -----------------------------------------------------------------------------------------------------------------------------------
Six Months Ended December 31, 2000 Year Ended June 30, ----------------------------- Brinson Class N (Unaudited) 2000 1999 1998 ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period............................................ $ 12.44 $ 13.40 $ 12.53 $ 12.76 -------- ------- ------- ------- Income from investment operations: Net investment income.......................................................... 0.02* 0.04* 0.10* 0.13 Net realized and unrealized gain............................................... 0.25 0.27 1.09 0.82 -------- ------- ------- ------- Total income from investment operations.................................... 0.27 0.31 1.19 0.95 -------- ------- ------- ------- Less distributions: Distributions from net investment income....................................... -- (0.06) (0.14) (0.13 Distributions from net realized gains.......................................... (1.32) (1.21) (0.18) (1.05 -------- ------- ------- ------- Total distributions........................................................ (1.32) (1.27) (0.32) (1.18 -------- ------- ------- ------- Net asset value, end of period.................................................. $ 11.39 $ 12.44 $ 13.40 $ 12.53 ======== ======= ======= ======= Total return (non-annualized)................................................... 2.42% 2.49% 9.80% 8.60 Ratios/Supplemental data: Net assets, end of period (in 000s)............................................ $ 324 $ 224 $ 220 $ 1 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits............................ 1.36%** 1.33% 1.30% 1.27 After expense reimbursement and earnings credits............................. 1.25%** 1.25% 1.25% 1.25 Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits............................ 0.28%** 0.23% 0.80% 1.04 After expense reimbursement and earnings credits............................. 0.39%** 0.31% 0.85% 1.06 Portfolio turnover rate........................................................ 34% 111% 86% 46 -----------------------------------------------------------------------------------------------------------------------------------
* The net investment income per share data was determined by using average shares outstanding throughout the period. ** Annualized ================================================================================ See accompanying notes to financial statements. 94 Global Technology Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended May 26, 2000* December 31, 2000 Through Brinson Class I (Unaudited) June 30, 2000 -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period.......................... $ 11.30 $ 10.00 ----------- ---------- Income (loss) from investment operations: Net investment loss.......................................... (0.06)** -- Net realized and unrealized gain (loss)...................... (4.55) 1.30 ----------- ---------- Total income (loss) from investment operations........... (4.61) 1.30 ----------- ---------- Less distributions: Distributions from net investment income..................... -- -- Distributions from net realized gains........................ (0.01) -- ----------- ---------- Total distributions...................................... (0.01) -- ----------- ---------- Net asset value, end of period................................ $ 6.68 $ 11.30 =========== ========== Total return (non-annualized)................................. (40.78)% 13.00% Ratios/Supplemental data: Net assets, end of period (in 000s).......................... $ 356 $ 224 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.......... 3.89%*** 13.28%*** After expense reimbursement and earnings credits........... 1.55%*** 1.55%*** Ratio of net investment loss to average net assets: Before expense reimbursement and earnings credits.......... (3.44)%*** (12.26)%*** After expense reimbursement and earnings credits........... (1.10)%*** (0.53)%*** Portfolio turnover rate...................................... 158% 14% -------------------------------------------------------------------------------------------------------------------
Six Months Ended May 26, 2000* December 31, 2000 Through Brinson Class N (Unaudited) June 30, 2000 -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period.......................... $ 11.30 $ 10.00 ----------- ---------- Income (loss) from investment operations: Net investment loss.......................................... (0.07)** -- Net realized and unrealized gain (loss)...................... (4.55) 1.30 ----------- ---------- Total income (loss) from investment operations........... (4.62) 1.30 ----------- ---------- Less distributions: Distributions from net investment income..................... -- -- Distributions from net realized gains........................ (0.01) -- ----------- ---------- Total distributions...................................... (0.01) -- ----------- ---------- Net asset value, end of period................................ $ 6.67 $ 11.30 =========== ========== Total return (non-annualized)................................. (40.87)% 13.00% 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.......... 4.14%*** 13.53%*** After expense reimbursement and earnings credits........... 1.80%*** 1.80%*** Ratio of net investment loss to average net assets: Before expense reimbursement and earnings credits.......... (3.69)%*** (12.51)%*** After expense reimbursement and earnings credits........... (1.35)%*** (0.78)%*** Portfolio turnover rate...................................... 158% 14% --------------------------------------------------------------------------------------------------------------------
* 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. 95 Global Biotech Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended June 2, 2000* December 31, 2000 Through Brinson Class I (Unaudited) June 30, 2000 --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period.................................. $ 12.08 $ 10.00 ----------- ----------- Income (loss) from investment operations: Net investment loss.................................................. (0.07)** --** Net realized and unrealized gain (loss).............................. (0.69) 2.08 ----------- ----------- Total income (loss) from investment operations................... (0.76) 2.08 ----------- ----------- Less distributions: Distributions from net investment income............................. -- -- Distributions from net realized gains................................ (0.21) -- ----------- ----------- Total distributions.............................................. (0.21) -- ----------- ----------- Net asset value, end of period........................................ $ 11.11 $ 12.08 =========== =========== Total return (non-annualized)......................................... (6.40)% 20.80% Ratios/Supplemental data: Net assets, end of period (in 000s).................................. $ 1,246 $ 691 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.................. 3.98%*** 10.10%*** After expense reimbursement and earnings credits................... 1.30%*** 1.30%*** Ratio of net investment loss to average net assets: Before expense reimbursement and earnings credits.................. (3.69)%*** (9.29)%*** After expense reimbursement and earnings credits................... (1.01)%*** (0.49)%*** Portfolio turnover rate.............................................. 127% 19% ---------------------------------------------------------------------------------------------------------------------
Six Months Ended June 2, 2000* December 31, 2000 Through Brinson Class N (Unaudited) June 30, 2000 --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period.................................. $ 12.07 $ 10.00 ----------- ----------- Income (loss) from investment operations: Net investment loss.................................................. (0.08)** (0.01)** Net realized and unrealized gain (loss).............................. (0.69) 2.08 ----------- ----------- Total income (loss) from investment operations................... (0.77) 2.07 ----------- ----------- Less distributions: Distributions from net investment income............................. -- -- Distributions from net realized gains................................ (0.21) -- ----------- ----------- Total distributions.............................................. (0.21) -- ----------- ----------- Net asset value, end of period........................................ $ 11.09 $ 12.07 =========== =========== Total return (non-annualized)......................................... (6.49)% 20.70% 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.................. 4.23%*** 10.35%*** After expense reimbursement and earnings credits................... 1.55%*** 1.55%*** Ratio of net investment loss to average net assets: Before expense reimbursement and earnings credits.................. (3.94)%*** (9.54)%*** After expense reimbursement and earnings credits................... (1.26)%*** (0.74)%*** Portfolio turnover rate.............................................. 127% 19% ---------------------------------------------------------------------------------------------------------------------
* 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. 96 Global Bond Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended December 31, 2000 Year Ended June 30, ---------------------------------------------------- Brinson Class I (Unaudited) 2000 1999 1998 1997 1996 -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period.................. $ 9.01 $ 9.18 $ 9.41 $ 9.64 $ 10.04 $ 10.39 -------- ------- -------- ------- ------- ------- Income (loss) from investment operations: Net investment income................................ 0.19* 0.40* 0.39* 0.43* 0.67 0.84 Net realized and unrealized gain (loss).............. (0.03) (0.43) (0.07) (0.18) 0.08 0.31 -------- ------- -------- ------- ------- ------- Total income (loss) from investment operations... 0.16 (0.03) 0.32 0.25 0.75 1.15 -------- ------- -------- ------- ------- ------- Less distributions: Distributions from net investment income............. (0.08) (0.13) (0.47) (0.31) (0.96) (1.40) Distributions from net realized gains................ -- (0.01) (0.08) (0.17) (0.19) (0.10) -------- ------- -------- ------- ------- ------- Total distributions.............................. (0.08) (0.14) (0.55) (0.48) (1.15) (1.50) -------- ------- -------- ------- ------- ------- Net asset value, end of period........................ $ 9.09 $ 9.01 $ 9.18 $ 9.41 $ 9.64 $ 10.04 ======== ======= ======== ======= ======= ======= Total return (non-annualized)......................... 1.81% (0.34)% 3.13% 2.69% 7.71% 11.50% Ratios/Supplemental data: Net assets, end of period (in 000s).................. $ 37,030 $43,467 $ 92,832 $91,274 $54,157 $41,066 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.. 1.19%** 1.05% 0.90% 0.96% 1.32% 1.65% After expense reimbursement and earnings credits... 0.90%** 0.94%+ N/A 0.90% 0.90% 0.90% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits.. 3.95%** 4.34% 4.05% 4.47% 4.90% 4.98% After expense reimbursement and earnings credits... 4.24%** 4.45% N/A 4.53% 5.32% 5.73% Portfolio turnover rate.............................. 78% 87% 138% 151% 235% 184% --------------------------------------------------------------------------------------------------------------------------------
Six Months Ended December 31, 2000 Year Ended June 30, ---------------------------- Brinson Class N (Unaudited) 2000 1999 1998 ----------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period........................................ $ 9.09 $ 9.16 $ 9.40 $ 9.64 -------- ------- -------- ------- Income (loss) from investment operations: Net investment income...................................................... 0.17* 0.37* 0.37* 0.42* Net realized and unrealized gain (loss).................................... (0.03) (0.43) (0.07) (0.20) -------- ------- -------- ------- Total income (loss) from investment operations......................... 0.14 (0.06) 0.30 0.22 Less distributions: Distributions from net investment income................................... (0.06) -- (0.46) (0.29) Distributions from net realized gains...................................... -- (0.01) (0.08) (0.17) -------- ------- -------- ------- Total distributions.................................................... (0.06) (0.01) (0.54) (0.46) -------- ------- -------- ------- Net asset value, end of period.............................................. $ 9.17 $ 9.09 $ 9.16 $ 9.40 ======== ======= ======== ======= Total return (non-annualized)............................................... 1.60% (0.66)% 2.89% 2.37% Ratios/Supplemental data: Net assets, end of period (in 000s)........................................ $ 2 $ 1 $ 1,085 $ 9 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits........................ 1.44%** 1.30% 1.15% 1.21% After expense reimbursement and earnings credits......................... 1.15%** 1.19%+ N/A 1.15% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits........................ 3.70%** 4.09% 3.80% 4.22% After expense reimbursement and earnings credits......................... 3.99%** 4.20% N/A 4.28% Portfolio turnover rate.................................................... 78% 87% 138% 151% -----------------------------------------------------------------------------------------------------------------------------
* The net investment income per share data was determined by using average shares outstanding throughout the period. ** Annualized + The ratio of net operating expenses to average net assets for Class I and Class N was 0.90% and 1.15%, respectively. N/A Not Applicable ================================================================================ See accompanying notes to financial statements. 97 U.S. Balanced Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended December 31, 2000 Year Ended June 30, ------------------------------------------------------ Brinson Class I (Unaudited) 2000 1999 1998 1997 1996 ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period...................... $ 8.59 $ 9.38 $ 12.24 $ 12.53 $ 11.71 $ 11.23 -------- ------- -------- ------- -------- -------- Income (loss) from investment operations: Net investment income.................................. 0.18* 0.26* 0.34* 0.49* 0.47 0.44 Net realized and unrealized gain (loss)................ 0.61 (0.74) 0.18 0.93 1.29 1.04 -------- ------- -------- ------- -------- -------- Total income (loss) from investment operations... 0.79 (0.48) 0.52 1.42 1.76 1.48 -------- ------- -------- ------- -------- -------- Less distributions: Distributions from net investment income................ (0.35) (0.25) (0.73) (0.77) (0.40) (0.43) Distributions from net realized gains................... -- (0.06) (2.65) (0.94) (0.54) (0.57) -------- ------- -------- ------- -------- -------- Total distributions.............................. (0.35) (0.31) (3.38) (1.71) (0.94) (1.00) -------- ------- -------- ------- -------- -------- Net asset value, end of period............................ $ 9.03 $ 8.59 $ 9.38 $ 12.24 $ 12.53 $ 11.71 ======== ======= ======== ======= ======== ======== Total return (non-annualized)............................. 9.22% (5.07)% 4.74% 12.19% 15.50% 13.52% Ratios/Supplemental data: Net assets, end of period (in 000s)..................... $ 10,583 $11,136 $ 37,603 $80,556 $282,860 $227,829 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..... 1.32%** 1.01% 0.96% 0.81% 0.88% 1.01% After expense reimbursement and earnings credits...... 0.80%** 0.81%+ 0.80% 0.80% 0.80% 0.80% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits...... 3.54%** 2.80% 3.00% 3.88% 3.78% 3.76% After expense reimbursement and earnings credits....... 4.06%** 3.00% 3.16% 3.89% 3.86% 3.97% Portfolio turnover rate.................................. 93% 96% 113% 194% 329% 240% ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended June 30, December 31, 2000 ------------------------------ Brinson Class N (Unaudited) 2000 1999 1998 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period......................................... $ 8.57 $ 9.38 $ 12.27 $ 12.53 -------- ------- -------- -------- Income (loss) from investment operations: Net investment income..................................................... 0.17* 0.23* 0.29* 0.47* Net realized and unrealized gain (loss)................................... 0.61 (0.74) 0.18 0.94 -------- ------- -------- -------- Total income (loss) from investment operations...................... 0.78 (0.51) 0.47 1.41 -------- ------- -------- -------- Less distributions: Distributions from net investment income................................... (0.33) (0.24) (0.71) (0.73) Distributions from net realized gains...................................... -- (0.06) (2.65) (0.94) -------- ------- -------- -------- Total distributions................................................. (0.33) (0.30) (3.36) (1.67) -------- ------- -------- -------- Net asset value, end of period............................................... $ 9.02 $ 8.57 $ 9.38 $ 12.27 ======== ======= ======== ======== Total return (non-annualized)................................................ 9.17% (5.39)% 4.17% 12.15% Ratios/Supplemental data: Net assets, end of period (in 000s)....................................... $ 1 $ 1 $ 1 $ 1 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits....................... 1.57%** 1.26% 1.21% 1.06% After expense reimbursement and earnings credits........................ 1.05%** 1.06%+ 1.05% 1.05% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits....................... 3.29%** 2.55% 2.75% 3.63% After expense reimbursement and earnings credits........................ 3.81%** 2.75% 2.91% 3.64% Portfolio turnover rate................................................... 93% 96% 113% 194% ------------------------------------------------------------------------------------------------------------------------------------
* The net investment income per share data was determined by using average shares outstanding throughout the period. ** Annualized + The ratio of net operating expenses to average net assets for Class I and Class N was 0.80% and 1.05%, respectively. ================================================================================ See accompanying notes to financial statements. 98 U.S. Equity Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended December 31, 2000 Year Ended June 30, -------------------------------------------------------- Brinson Class I (Unaudited) 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period.................. $ 16.07 $ 21.48 $ 19.91 $ 17.64 $ 14.59 $ 11.53 -------- -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income................................ 0.06* 0.16* 0.17* 0.19 0.15 0.17 Net realized and unrealized gain (loss).............. 1.22 (3.75) 2.67 3.39 4.27 3.31 -------- -------- -------- -------- -------- -------- Total income (loss) from investment operations... 1.28 (3.59) 2.84 3.58 4.42 3.48 -------- -------- -------- -------- -------- -------- Less distributions: Distributions from net investment income............. (0.32) (0.05) (0.15) (0.18) (0.14) (0.17) Distributions from net realized gains................ (1.35) (1.77) (1.12) (1.13) (1.23) (0.25) -------- -------- -------- -------- -------- -------- Total distributions............................. (1.67) (1.82) (1.27) (1.31) (1.37) (0.42) -------- -------- -------- -------- -------- -------- Net asset value, end of period........................ $ 15.68 $ 16.07 $ 21.48 $ 19.91 $ 17.64 $ 14.59 ======== ======== ======== ======== ======== ======== Total return (non-annualized)......................... 8.05% (17.00)% 15.22% 21.48% 31.87% 30.57% Ratios/Supplemental data: Net assets, end of period (in 000s).................. $130,144 $167,870 $713,321 $605,768 $337,949 $126,342 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.. 0.99%** 0.84% 0.80% 0.80% 0.89% 1.14% After expense reimbursement and earnings credits... 0.80%** 0.80% N/A N/A 0.80% 0.80% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits.. 0.53%** 0.89% 0.82% 1.12% 1.06% 1.13% After expense reimbursement and earnings credits... 0.72%** 0.93% N/A N/A 1.15% 1.47% Portfolio turnover rate.............................. 28% 55% 48% 42% 43% 36% ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended December 31, 2000 Year Ended June 30, ------------------------- Brinson Class N (Unaudited) 2000 1999 1998 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period.......................................... $ 15.97 $ 21.39 $ 19.88 $ 17.64 -------- -------- -------- -------- Income (loss) from investment operations: Net investment income........................................................ 0.04* 0.13* 0.08* 0.15 Net realized and unrealized gain (loss)...................................... 1.22 (3.75) 2.67 3.37 -------- -------- -------- -------- Total income (loss) from investment operations........................... 1.26 (3.62) 2.75 3.52 -------- -------- -------- -------- Less distributions: Distributions from net investment income..................................... (0.28) (0.03) (0.12) (0.15) Distributions from net realized gains........................................ (1.35) (1.77) (1.12) (1.13) -------- -------- -------- -------- Total distributions...................................................... (1.63) (1.80) (1.24) (1.28) -------- -------- -------- -------- Net asset value, end of period................................................ $ 15.60 $ 15.97 $ 21.39 $ 19.88 ======== ======== ======== ======== Total return (non-annualized)................................................. 7.97% (17.24)% 14.75% 21.10% Ratios/Supplemental data: Net assets, end of period (in 000s).......................................... $ 8,015 $ 7,191 $ 7,563 $ 268 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.......................... 1.24%** 1.09% 1.05% 1.05% After expense reimbursement and earnings credits........................... 1.05%** 1.05% N/A N/A Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits.......................... 0.28%** 0.64% 0.57% 0.87% After expense reimbursement and earnings credits........................... 0.47%** 0.68% N/A N/A Portfolio turnover rate...................................................... 28% 55% 48% 42% -----------------------------------------------------------------------------------------------------------------------------------
* 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. 99 U.S. Large Cap Equity Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended April 6, 1998* December 31, 2000 Year Ended June 30, Through June 30, --------------------- Brinson Class I (Unaudited) 2000 1999 1998 ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period...................... $ 7.48 $ 11.13 $ 9.80 $ 10.00 ----------- ----------- --------- --------- Income (loss) from investment operations: Net investment income.................................. 0.05** 0.09** 0.11** 0.02 Net realized and unrealized gain (loss)................ 0.74 (2.68) 1.31 (0.20) ----------- ----------- --------- --------- Total income (loss) from investment operations... 0.79 (2.59) 1.42 (0.18) ----------- ----------- --------- --------- Less distributions: Distributions from net investment income............... (0.18) (0.11) (0.09) (0.02) Distributions from net realized gains.................. -- (0.95) -- -- ----------- ----------- --------- --------- Total distributions.............................. (0.18) (1.06) (0.09) (0.02) ----------- ----------- --------- --------- Net asset value, end of period............................ $ 8.09 $ 7.48 $ 11.13 $ 9.80 =========== =========== ========= ========= Total return (non-annualized)............................. 10.62% (23.95)% 14.54% (1.83)% Ratios/Supplemental data: Net assets, end of period (in 000s).................... $ 5,744 $ 15,758 $ 22,668 $ 154 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..... 1.81%*** 1.27% 1.29% 1.59%*** After expense reimbursement and earnings credits...... 0.80%*** 0.80% 0.80% 0.80%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits..... (0.02)%*** 0.70% 0.57% 0.52%*** After expense reimbursement and earnings credits...... 0.99%*** 1.17% 1.06% 1.31%*** Portfolio turnover rate................................ 46% 174% 88% 12% -----------------------------------------------------------------------------------------------------------------------
Six Months Ended April 6, 1998* December 31, 2000 Year Ended June 30, Through June 30, ------------------- Brinson Class N (Unaudited) 2000 1999 1998 ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period...................... $ 7.51 $ 11.13 $ 9.78 $ 10.00 ----------- ----------- --------- --------- Income (loss) from investment operations: Net investment income.................................. 0.03** 0.07** 0.09** 0.02 Net realized and unrealized gain (loss)................ 0.74 (2.68) 1.31 (0.23) ----------- ----------- --------- --------- Total income (loss) from investment operations... 0.77 (2.61) 1.40 (0.21) ----------- ----------- --------- --------- Less distributions: Distributions from net investment income............... (0.13) (0.06) (0.05) (0.01) Distributions from net realized gains.................. -- (0.95) -- -- ----------- ----------- --------- --------- Total distributions.............................. (0.13) (1.01) (0.05) (0.01) ----------- ----------- --------- --------- Net asset value, end of period............................ $ 8.15 $ 7.51 $ 11.13 $ 9.78 =========== =========== ========= ========= Total return (non-annualized)............................. 10.29% (24.12)% 14.40% (2.02)% Ratios/Supplemental data: Net assets, end of period (in 000s).................... $ 20 $ 35 $ 3,756 $ 16,033 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..... 2.06%*** 1.52% 1.54% 1.84%*** After expense reimbursement and earnings credits...... 1.05%*** 1.05% 1.05% 1.05%*** Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits..... (0.27)%*** 0.45% 0.32% 0.27%*** After expense reimbursement and earnings credits...... 0.74%*** 0.92% 0.81% 1.06%*** Portfolio turnover rate................................ 46% 174% 88% 12% -----------------------------------------------------------------------------------------------------------------------
* 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. 100 U.S. Large Cap Growth Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months October 14, Six Months Ended Year Ended Ended/3/ Year Ended 1997/1/ Through December 31, 2000 June 30, June 30, December 31, December 31, Brinson Class I (Unaudited) 2000 1999 1998/2/ 1997 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period............. $ 15.28 $ 13.91 $ 11.84 $ 9.92 $ 10.00 ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income (loss).................... (0.03) 0.03/4/ 0.02 0.06 0.02 Net realized and unrealized gain (loss)......... (2.78) 2.29 2.05 2.38 (0.08) ------- ------- ------- ------- ------- Total income (loss) from investment operations................................. (2.81) 2.32 2.07 2.44 (0.06) ------- ------- ------- ------- ------- Less distributions: Distributions from net investment income........ -- -- -- (0.06) (0.02) Distributions from net realized gains........... (1.91) (0.95) -- (0.46) -- ------- ------- ------- ------- ------- Total distributions......................... (1.91) (0.95) -- (0.52) (0.02) ------- ------- ------- ------- ------- Net asset value, end of period................... $ 10.56 $ 15.28 $ 13.91 $ 11.84 $ 9.92 ======= ======= ======= ======= ======= Total return (non-annualized).................... (19.34)% 17.52% 17.48% 24.90% (0.55)% Ratios/Supplemental data: Net assets, end of period (in 000s)............. $ 3,734 $ 5,885 $ 2,947 $ 4,147 $ 4,137 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.............................. 1.38%/5/ 1.86% 2.38%/5/ 2.76% 8.54%/5/ After expense reimbursement and earnings credits.............................. 0.80%/5/ 0.80% 0.80%/5/ 0.99% 1.00%/5/ Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits............................... (0.69)%/5/ (0.97)% (1.26)%/5/ (1.40)%/5/ (6.19)%/5/ After expense reimbursement and earnings credits............................... (0.11)%/5/ 0.09% 0.32%/5/ 0.37% 1.35%/5/ Portfolio turnover rate......................... 31% 86% 51% N/A N/A ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months December 31, 2000 Year Ended Ended Brinson Class N (Unaudited) June 30, 2000 June 30, 1999/6/ ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period................................... $ 15.20 $ 13.88 $ 11.84 ------- ------- ------- Income (loss) from investment operations: Net investment loss................................................... (0.03) (0.02)/4/ (0.01) Net realized andunrealized gain (loss)................................ (2.78) 2.29 2.05 ------- ------- ------- Total income (loss) from investment operations.................... (2.81) 2.27 2.04 ------- ------- ------- Less distributions: Distributions from net realized gains................................. (1.91) (0.95) -- ------- ------- ------- Total distributions............................................... (1.91) (0.95) -- ------- ------- ------- Net asset value, end of period......................................... $ 10.48 $ 15.20 13.88 ======= ======= ======= Total return (non-annualized).......................................... (19.44)% 17.18% $ 17.23% 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................... 1.63%/5/ 2.11% 2.63%/5/ After expense reimbursement and earnings credits.................... 1.05%/5/ 1.05% 1.05%/5/ Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits................... (0.94)%/5/ (1.22)% (1.51)%/5/ After expense reimbursement and earnings credits.................... (0.36)%/5/ (0.16)% 0.07%/5/ Portfolio turnover rate............................................... 31% 86% 51% ------------------------------------------------------------------------------------------------------------------------------------
/1/ Commencement of investment operations /2/ Reflects 10 for 1 share split effective December 9, 1998. /3/ Reflects the Fund's change in fiscal year end from December 31 to June 30. /4/ The net investment income per share data was determined by using average shares outstanding throughout the period. /5/ Annualized /6/ Commencement of Brinson Class N was December 31, 1998. N/A Information is not available for periods prior to the Fund's reorganization. ================================================================================ See accompanying notes to financial statements. 101 U.S. Small Cap Growth Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months September 30, Six Months Ended Year Ended Ended/3/ Year Ended 1997/1/ Through December 31, 2000 June 30, June 30, December 31, December 31, Brinson Class I (Unaudited) 2000 1999 1998/2/ 1997 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period............ $ 16.27 $ 9.18 $ 8.80 $ 9.44 $ 10.00 --------- -------- --------- -------- --------- Income (loss) from investment operations: Net investment loss............................ (0.03) (0.03)/4/ (0.02) (0.02) -- Net realized and unrealized gain (loss)........ (0.94) 7.12 0.40 (0.57) (0.56) --------- -------- --------- -------- --------- Total income (loss) from investment operations................................ (0.97) 7.09 0.38 (0.59) (0.56) --------- -------- --------- -------- --------- Less distributions: Distributions from net realized gains.......... (2.83) -- -- (0.05) -- --------- -------- --------- -------- --------- Total distributions........................ (2.83) -- -- (0.05) -- --------- -------- --------- -------- --------- Net asset value, end of period.................. $ 12.47 $ 16.27 $ 9.18 $ 8.80 $ 9.44 ========= ======== ========= ======== ========= Total return (non-annualized)................... (6.15)% 77.23% 4.32% (6.70)% (5.62)% Ratios/Supplemental data: Net assets, end of period (in 000s)............ $ 46,693 $ 50,975 $ 35,211 $ 22,607 $ 11,954 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..................................... 1.23%/5/ 1.31% 1.32%/5/ 1.69% 3.63%/5/ After expense reimbursement and earnings credits..................................... 1.15%/5/ 1.15% 1.15%/5/ 1.20% 1.20%/5/ Ratio of net investment loss to average net assets: Before expense reimbursement and earnings credits..................................... (0.52)%/5/ (0.76)% (0.62)%/5/ (0.76)% (2.53)%/5/ After expense reimbursement and earnings credits..................................... (0.44)%/5/ (0.60)% (0.45)%/5/ (0.27)% (0.10)%/5/ Portfolio turnover rate........................ 35% 104% 71% N/A N/A -----------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months December 31, 2000 Year Ended Ended Brinson Class N (Unaudited) June 30, 2000 June 30, 1999/6/ ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period..................................... $ 16.20 $ 9.16 $ 8.80 --------- -------- --------- Income (loss) from investment operations: Net investment loss..................................................... (0.05) (0.08)/4/ (0.04) Net realized and unrealized gain (loss)................................. (0.94) 7.12 0.40 --------- -------- --------- Total income (loss) from investment operations......................................................... (0.99) 7.04 0.36 --------- -------- --------- Less distributions: Distributions from net realized gains................................... (2.83) -- -- --------- -------- --------- Total distributions................................................. (2.83) -- -- --------- -------- --------- Net asset value, end of period........................................... $ 12.38 $ 16.20 $ 9.16 ========= ======== ========= Total return (non-annualized)............................................ (6.30)% 76.86% 4.09% Ratios/Supplemental data: Net assets, end of period (in 000s)..................................... $ 2 $ 2 $ 1 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..................... 1.48%/5/ 1.56% 1.57%/5/ After expense reimbursement and earnings credits...................... 1.40%/5/ 1.40% 1.40%/5/ Ratio of net investment loss to average net assets: Before expense reimbursement and earnings credits..................... (0.77)%/5/ (1.01)% (0.87)%/5/ After expense reimbursement and earnings credits...................... (0.69)%/5/ (0.85)% (0.70)%/5/ Portfolio turnover rate................................................. 35% 104% 71% ------------------------------------------------------------------------------------------------------------------------------------
/1/ Commencement of investment operations /2/ Reflects 10 for 1 share split effective December 9, 1998. /3/ Reflects the Fund's change in fiscal year end from December 31 to June 30. /4/ The net investment income per share data was determined by using average shares outstanding throughout the period. /5/ Annualized /6/ Commencement of Brinson Class N was December 31, 1998. N/A Information is not available for periods prior to the Fund's reorganization. ================================================================================ See accompanying notes to financial statements. 102 U.S. Bond Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended August 31, 1995* December 31, 2000 Year Ended June 30, Through June 30, ------------------------------------------ Brinson Class I (Unaudited) 2000 1999 1998 1997 1996 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period.................... $ 10.00 $ 10.28 $ 10.58 $ 10.24 $ 9.93 $ 10.00 --------- ------- --------- ------- ------- -------- Income from investment operations: Net investment income.................................. 0.34** 0.62** 0.58** 0.53 0.51** 0.50 Net realized and unrealized gain (loss)................ 0.37 (0.25) (0.26) 0.53 0.32 (0.14) --------- ------- --------- ------- ------- -------- Total income from investment operations............ 0.71 0.37 0.32 1.06 0.83 0.36 --------- ------- --------- ------- ------- -------- Less distributions: Distributions from net investment income............... (0.62) (0.65) (0.47) (0.58) (0.52) (0.40) Distributions from net realized gains.................. -- -- (0.15) (0.14) -- (0.03) --------- ------- --------- ------- ------- -------- Total distributions................................ (0.62) (0.65) (0.62) (0.72) (0.52) (0.43) --------- ------- --------- ------- ------- -------- Net asset value, end of period.......................... $ 10.09 $ 10.00 $ 10.28 $ 10.58 $ 10.24 $ 9.93 ========= ======= ========= ======= ======= ======== Total return (non-annualized)........................... 7.21% 3.74% 2.97% 10.60% 8.45% 3.60% Ratios/Supplemental data: Net assets, end of period (in 000s).................... $ 57,383 $58,121 $ 92,030 $38,874 $22,421 $ 9,047 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.... 0.76%*** 0.67% 0.61% 0.84% 1.65% 3.63%*** After expense reimbursement and earnings credits..... 0.60%*** 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.... 6.50%*** 6.12% 5.42% 5.61% 5.14% 3.00%*** After expense reimbursement and earnings credits..... 6.66%*** 6.19% 5.43% 5.85% 6.19% 6.03%*** Portfolio turnover rate................................ 90% 170% 260% 198% 410% 363% ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended December 31, 2000 Year Ended June 30, ----------------------------------------------- Brinson Class N (Unaudited) 2000 1999 1998 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period............................... $ 9.99 $ 10.30 $ 10.58 $ 10.24 --------- ------- ------- --------- Income from investment operations: Net investment income............................................. 0.34** 0.58** 0.57** 0.61 Net realized and unrealized gain (loss)........................... 0.37 (0.25) (0.26) 0.42 --------- ------- ------- --------- Total income from investment operations....................... 0.71 0.33 0.31 1.03 --------- ------- ------- --------- Less distributions: Distributions from net investment income.......................... (0.61) (0.64) (0.44) (0.55) Distributions from net realized gains............................. -- -- (0.15) (0.14) --------- ------- ------- --------- Total distributions........................................... (0.61) (0.64) (0.59) (0.69) --------- ------- ------- --------- Net asset value, end of period..................................... $ 10.09 $ 9.99 $ 10.30 $ 10.58 ========= ======= ======= ========= Total return (non-annualized)...................................... 7.14% 3.29% 2.88% 10.30% Ratios/Supplemental data: Net assets, end of period (in 000s)............................... $ 1 $ 1 $ 1 $ 1 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits............... 1.01%*** 0.92% 0.86% 1.09% After expense reimbursement and earnings credits................ 0.85%*** 0.85% 0.85% 0.85% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits............... 6.25%*** 5.87% 5.17% 5.36% After expense reimbursement and earnings credits................ 6.41%*** 5.94% 5.18% 5.60% Portfolio turnover rate........................................... 90% 170% 260% 198% ------------------------------------------------------------------------------------------------------------------------------------
* 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. 103 High Yield Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months September 30, Six Months Ended Year Ended Ended/3/ Year Ended 1997/1/ Through December 31, 2000 June 30, June 30, December 31, December 31, Brinson Class I (Unaudited) 2000 1999 1998/2/ 1997 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period................... $ 9.19 $ 9.96 $ 9.98 $ 10.05 $ 10.00 ------ ------- ------- -------- -------- Income from investment operations: Net investment income................................ 0.48/4/ 0.91/4/ 0.44/4/ 7.30 0.18 Net realized and unrealized gain (loss).............. (0.80) (0.90) (0.15) 0.02 0.05 ------ ------- ------- ------- -------- Total income (loss) from investment operations.................................... (0.32) 0.01 0.29 7.32 0.23 ------ ------- ------- ------- -------- Less distributions: Distributions from net investment income............. (0.79) (0.71) (0.31) (7.33) (0.18) Distributions from net realized gains................ -- (0.07) -- (0.06) -- ------ ------- ------- ------- -------- Total distributions............................ (0.79) (0.78) (0.31) (7.39) (0.18) ------ ------- ------- ------- -------- Net asset value, end of period......................... $ 8.08 $ 9.19 $ 9.96 $ 9.98 $ 10.05 ====== ======= ======= ======= ======== Total return (non-annualized).......................... (3.40)% 0.02% 2.91% 7.75% 2.34% Ratios/Supplemental data: Net assets, end of period (in 000s).................. $44,211 $50,845 $ 60,044 $ 34,900 $ 7,861 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits... 0.92%/5/ 0.86% 0.83%/5/ 1.59% 4.98%/5/ After expense reimbursement and earnings credits.... 0.74%/5/+ 0.70% 0.70%/5/ 0.89% 0.90%/5/ Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits... 10.20%/5/ 9.31% 8.54%/5/ 7.38% 3.15%/5/ After expense reimbursement and earnings credits.... 10.38%/5/ 9.47% 8.67%/5/ 8.08% 7.23%/5/ Portfolio turnover rate............................... 36% 73% 77% N/A N/A ------------------------------------------------------------------------------------------------------------------------------------ Six Months Ended Six Months December 31, 2000 Year Ended Ended Brinson Class N (Unaudited) June 30, 2000 June 30, 1999/6/ ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period.................................. $ 9.18 $ 9.95 $ 9.98 ------- ------- ------- Income from investment operations: Net investment income.............................................. 0.46/4/ 0.90/4/ 0.42/4/ Net realized and unrealized gain (loss)............................ (0.80) (0.90) (0.15) ------- ------- ------- Total income (loss) from investment operations............... (0.34) -- 0.27 ------- ------- ------- Less distributions: Distributions from net investment income........................... (0.77) (0.70) (0.30) Distributions from net realized gains.............................. -- (0.07) -- ------- ------- ------- Total distributions.......................................... (0.77) (0.77) (0.30) ------- ------- ------- Net asset value, end of period........................................ $ 8.07 $ 9.18 $ 9.95 ======= ======= ======= Total return (non-annualized)......................................... (3.61)% (0.13)% 2.71% 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................. 1.17%/5/ 1.11% 1.08%/5/ After expense reimbursement and earnings credits.................. 0.99%/5/+ 0.95% 0.95%/5/ Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits................. 9.95%/5/ 9.06% 8.29%/5/ After expense reimbursement and earnings credits.................. 10.13%/5/ 9.22% 8.42%/5/ Portfolio turnover rate............................................ 36% 73% 77% ------------------------------------------------------------------------------------------------------------------------------------
/1/ Commencement of investment operations /2/ Reflects 10 for 1 share split effective December 9, 1998. /3/ Reflects the Fund's change in fiscal year end from December 31 to June 30. /4/ The net investment income per share data was determined by using average shares outstanding throughout the period. /5/ Annualized /6/ Commencement of Brinson Class N was December 31, 1998. + The ratio of net operating expenses to average net assets for Class I and Class N was 0.70% and 0.95%, respectively. N/A Information is not available for periods prior to the Fund's reorganization. ================================================================================ See accompanying notes to financial statements. 104 International Equity Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended December 31, 2000 Year Ended June 30, ------------------------------------------------------- Brinson Class I (Unaudited) 2000 1999 1998 1997 1996 --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period.................. $ 13.57 $ 12.34 $ 12.15 $ 12.59 $ 11.17 $ 9.68 ---------- -------- ---------- -------- -------- -------- Income (loss) from investment operations: Net investment income................................ 0.04 0.11* 0.16 0.18 0.18 0.18 Net realized and unrealized gain (loss).............. (0.79) 1.33 0.27 0.30 1.97 2.05 ---------- -------- ---------- -------- -------- -------- Total income (loss) from investment operations... (0.75) 1.44 0.43 0.48 2.15 2.23 ---------- -------- ---------- -------- -------- -------- Less distributions: Distributions from net investment income............. -- (0.07) (0.12) (0.18) (0.17) (0.18) Distributions from net realized gains................ (0.77) (0.14) (0.12) (0.74) (0.56) (0.56) ---------- -------- ---------- -------- -------- -------- Total distributions.............................. (0.77) (0.21) (0.24) (0.92) (0.73) (0.74) ---------- -------- ---------- -------- -------- -------- Net asset value, end of period........................ $ 12.05 $ 13.57 $ 12.34 $ 12.15 $ 12.59 $ 11.17 ========== ======== ========== ======== ======== ======== Total return (non-annualized)......................... (5.41)% 11.76% 3.65% 4.78% 20.27% 23.64% Ratios/Supplemental data: Net assets, end of period (in 000s).................. $ 320,897 $411,985 $ 490,322 $439,329 $420,855 $212,366 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.. 1.04%** 1.00%+ 0.99% 1.00% 1.00% 1.20% After expense reimbursement and earnings credits... 1.02%**++ N/A N/A N/A N/A 1.00% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits.. 0.58%** 0.89% 1.35% 1.52% 1.83% 1.67% After expense reimbursement and earnings credits... 0.60%** N/A N/A N/A N/A 1.87% Portfolio turnover rate.............................. 31% 59% 74% 49% 25% 20% ---------------------------------------------------------------------------------------------------------------------------------
Six Months Ended December 31, 2000 Year Ended June 30, --------------------------------- Brinson Class N (Unaudited) 2000 1999 1998 --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period..................................... $ 13.57 $ 12.30 $ 12.14 $ 12.59 ---------- -------- -------- -------- Income (loss) from investment operations: Net investment income................................................... 0.02 0.08* 0.12 0.16 Net realized and unrealized gain (loss)................................. (0.79) 1.33 0.27 0.29 ---------- -------- -------- -------- Total income (loss) from investment operations...................... (0.77) 1.41 0.39 0.45 ---------- -------- -------- -------- Less distributions: Distributions from net investment income................................ -- -- (0.11) (0.16) Distributions from net realized gains................................... (0.77) (0.14) (0.12) (0.74) ---------- -------- -------- -------- Total distributions................................................. (0.77) (0.14) (0.23) (0.90) ---------- -------- -------- -------- Net asset value, end of period........................................... $ 12.03 $ 13.57 $ 12.30 $ 12.14 ========== ======== ======== ======== Total return (non-annualized)............................................ (5.56)% 11.51% 3.30% 4.51% Ratios/Supplemental data: Net assets, end of period (in 000s)..................................... $ 1 $ 1 $ 15 $ 11 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits..................... 1.29%** 1.25%+ 1.24% 1.25% After expense reimbursement and earnings credits...................... 1.27%**++ N/A N/A N/A Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits..................... 0.33%** 0.64% 1.10% 1.27% After expense reimbursement and earnings credits...................... 0.35%** N/A N/A N/A Portfolio turnover rate................................................. 31% 59% 74% 49% ---------------------------------------------------------------------------------------------------------------------------------
* The net investment income per share data was determined by using average shares outstanding throughout the period. ** Annualized + The ratio of net operating expenses to average net assets for Class I and Class N was 0.99% and 1.24%, respectively. ++ The ratio of net operating expenses to average net assets for Class I and Class N was 1.00% and 1.25%, respectively. N/A Not Applicable ================================================================================ See accompanying notes to financial statements. 105 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 thirteen series: Global Fund, Global Equity Fund, Global Technology Fund, Global Biotech Fund, Global Bond Fund, U.S. Balanced Fund, U.S. Equity Fund, U.S. Large Cap Equity Fund, U.S. Large Cap Growth Fund, U.S. Small Cap Growth Fund, U.S. Bond Fund, High Yield Fund and International Equity Fund (formerly 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 Brinson Class I and the Brinson Class N are presented separately. The following is a summary of significant accounting policies followed by the Funds 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 valued at the most recent bid price. Investments in affiliated investment companies are valued at the daily 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. 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. 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 as 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 met the requirements of the Code applicable to regulated investment companies for the six months ended December 31, 2000, 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. ================================================================================ 106 The Brinson Funds -- Notes To Financial Statements -------------------------------------------------------------------------------- H. Earnings Credits: The Funds have entered into an arrangement with their custodian whereby interest earned on uninvested cash balances are used to offset a portion of the Fund's expenses. These amounts are reflected in the statements of operations. I. 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. 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. With respect to Global Technology Fund, Global Biotech Fund, U.S. Large Cap Growth Fund, U.S. Small Cap Growth Fund and High Yield Fund, UBS Asset Management (New York), Inc. ( the "Sub-Advisor") is responsible for managing a portion of these Funds pursuant to a Sub-Investment Advisory Agreement (the "Sub-Advisory Agreement") with the Advisor. The Sub- Advisor receives 0.10% from the Funds under the Sub-Advisory Agreement for providing services to the Advisor. 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. The Advisor may recapture any amounts waived or reimbursed with respect to the Global Technology Fund and Global Biotech Fund subject to the following conditions: (1) the Advisor must request reimbursement within five years from the date on which the waiver and/or reimbursement was made, and (2) the Fund must be able to reimburse the Advisor and remain within the operating expense limits noted in the following chart. No amounts were recaptured by the Advisor during the period ended December 31, 2000. Investment advisory fees and other transactions for the six months ended December 31, 2000, were as follows:
UBS Investment Advisory Brinson Class I Brinson Class N Funds Class Advisory Fees Fund Fee Expense Cap Expense Cap Expense Cap Fees Deferred ---- -------- --------------- --------------- ----------- ---------- -------- Global Fund...................... 0.80% 1.10% 1.35% 1.75% $ 899,931 $ -- Global Equity Fund............... 0.80 1.00 1.25 1.76 257,173 32,635 Global Technology Fund......... 1.40 1.55 1.80 2.55 13,574 22,680 Global Biotech Fund............ 1.15 1.30 1.55 2.30 9,739 22,716 Global Bond Fund............... 0.75 0.90 1.15 1.39 144,951 55,348 U.S. Balanced Fund............. 0.70 0.80 1.05 1.30 41,450 30,957 U.S. Equity Fund............... 0.70 0.80 1.05 1.32 544,628 148,908 U.S. Large Cap Equity Fund..... 0.70 0.80 1.05 1.32 33,379 48,358 U.S. Large Cap Growth Fund..... 0.70 0.80 1.05 1.57 39,468 32,653 U.S. Small Cap Growth Fund..... 1.00 1.15 1.40 1.92 282,392 21,188 U.S. Bond Fund................. 0.50 0.60 0.85 1.07 161,916 53,686 High Yield Fund................ 0.60 0.70 0.95 1.55 142,840 42,748 International Equity Fund...... 0.80 1.00 1.25 1.84 1,453,336 --
================================================================================ 107 The Brinson Funds -- Notes To Financial Statements -------------------------------------------------------------------------------- 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, 2000, were as follows:
Fund Fees Paid ---- --------- Global Fund........................................................ $2,292 Global Equity Fund................................................. 2,208 Global Technology Fund............................................. 1,840 Global Biotech Fund................................................ 1,840 Global Bond Fund................................................... 2,208 U.S. Balanced Fund................................................. 1,496 U.S. Equity Fund................................................... 5,520 U.S. Large Cap Equity Fund......................................... 2,024 U.S. Large Cap Growth Fund......................................... 1,834 U.S. Small Cap Growth Fund......................................... 1,919 U.S. Bond Fund..................................................... 2,196 High Yield Fund.................................................... 2,208 International Equity Fund.......................................... 4,232
The Global Fund invests in shares of certain affiliated investment companies also sponsored by the Advisor. These investments represented 25.39% of the Fund's net assets at December 31, 2000. Amounts relating to those investments at December 31, 2000 and for the six months then ended, were as follows:
Net Change in Sales Realized Net Unrealized Affiliates Purchases Proceeds Gain/(Loss) Gain/(Loss) Value ---------- ---------- ----------- ----------- -------------- ----------- Brinson Small Cap Equity Fund................. $ 2,000,000 $ 5,000,000 $1,758,919 $(1,176,080) $ 5,722,892 Brinson High Yield Fund....................... 1,500,000 5,800,000 235,957 (541,393) 11,397,954 Brinson Emerging Markets Equity Fund.......... 3,500,000 3,500,000 (679,755) (1,751,368) 7,512,046 Brinson Emerging Markets Debt Fund............ -- 5,200,000 1,919,637 (1,337,748) 6,625,204 Brinson Supplementary Trust U.S. Cash Management Prime Fund....................... 106,769,495 92,498,036 -- -- 16,102,318
The following Funds invest in shares of the Brinson Supplementary Trust U.S. Cash Management Prime Fund ("Supplementary Trust"). The Supplementary Trust is an investment company managed by the Advisor. The Supplementary Trust is offered as a cash management option only to mutual funds and other accounts managed by the Advisor. The Supplementary Trust pays 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 December 31, 2000 and for the six months ended December 31, 2000, were as follows:
% of Sales Interest Net Fund Purchases Proceeds Income Value Assets ---- ------------ ------------ -------- ----------- ------- Global Fund................................... $106,769,495 $ 92,498,036 $232,440 $16,102,318 8.63% Global Equity Fund............................ 29,582,930 31,219,041 37,128 817,830 1.30 Global Bond Fund.............................. 17,623,537 20,605,496 60,046 2,437,235 6.31 U.S. Balanced Fund............................ 5,591,402 5,503,947 38,079 711,147 5.99 U.S. Equity Fund.............................. 54,211,837 53,771,871 102,663 1,289,380 0.90 U.S. Large Cap Equity Fund.................... 1,804,337 3,020,319 10,436 -- -- U.S. Small Cap Growth Fund.................... 18,380,796 19,717,751 154,453 1,166,686 2.32 U.S. Bond Fund................................ 48,077,059 47,546,936 77,344 747,169 1.23 High Yield Fund............................... 56,875,953 59,466,373 87,484 7,594,776 16.43 International Equity Fund..................... 440,562,619 431,931,555 390,370 $13,760,421 4.22
================================================================================ 108 The Brinson Funds -- Notes To Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENT TRANSACTIONS Investment transactions for the six months ended December 31, 2000, excluding short-term investments, were as follows:
Sales Fund Purchases Proceeds ---- ------------ ------------ Global Fund........................................ $ 96,655,700 $221,816,951 Global Equity Fund................................. 20,809,288 26,912,784 Global Technology Fund............................. 4,479,144 2,797,571 Global Biotech Fund................................ 2,955,415 1,986,625 Global Bond Fund................................... 28,925,550 34,743,065 U.S. Balanced Fund................................. 10,233,231 11,129,760 U.S. Equity Fund................................... 42,541,102 99,923,146 U.S. Large Cap Equity Fund......................... 3,872,948 14,460,100 U.S. Large Cap Growth Fund......................... 3,306,377 4,220,420 U.S. Small Cap Growth Fund......................... 20,573,909 18,133,634 U.S. Bond Fund..................................... 56,118,737 57,991,227 High Yield Fund.................................... 15,615,741 21,545,023 International Equity Fund.......................... 105,495,850 181,074,203
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 during the six months ended December 31, 2000, was 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 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. ================================================================================ 109 The Brinson Funds -- Notes To Financial Statements -------------------------------------------------------------------------------- 6. SECURITY LENDING The Global Fund and International Equity Fund loaned securities to certain brokers, with the Funds' custodian acting as the Funds' lending agent. The Funds earned negotiated lenders' fees, which are included in securities lending-net in the statements of operations. The Global Fund receives cash and securities as collateral against the loaned securities. The International Equity Fund receives securities as collateral against the loaned securities. The cash collateral received is invested in short-term securities and is included in the schedule of investments. The securities received as collateral are not reflected in the statement of assets and liabilities. The Funds' monitor the market value of securities loaned on a daily basis and initially require 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 foreign securities loaned. The value of loaned securities and related collateral outstanding at December 31, 2000, were as follows:
Value of Loaned Value of Securities Collateral --------------- ------------ Global Fund.............................. $39,001,601 $39,712,697 International Equity Fund................ 22,054,470 22,997,620
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, are as follows as a percentage of the average daily net assets of the UBS Investment Funds Class of each of the Funds:
% of Fund Net Assets ---- ---------- Global Fund........................................................ 0.65% Global Equity Fund................................................. 0.76 Global Technology Fund............................................. 1.00 Global Biotech Fund................................................ 1.00 Global Bond Fund................................................... 0.49 U.S. Balanced Fund................................................. 0.50 U.S. Equity Fund................................................... 0.52 U.S. Large Cap Equity Fund......................................... 0.52 U.S. Large Cap Growth Fund......................................... 0.77 U.S. Small Cap Growth Fund......................................... 0.77 U.S. Bond Fund..................................................... 0.47 High Yield Fund.................................................... 0.85 International Equity Fund.......................................... 0.84
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 plus 0.50%. The Funds pay an annual commitment fee of 0.10% of the average daily balance of the line of credit not utilized. The average borrowings under the agreement for the six months ended December 31, 2000, were as follows:
Average Number of Days Fund Borrowings Outstanding ---- ------------ -------------- Global Fund.................................... $10,550,000 8 High Yield Fund................................ 3,442,857 14 International Equity Fund...................... 8,070,833 24
================================================================================ 110 Special Meeting of Shareholders -------------------------------------------------------------------------------- Voting Results of Special Meeting of Shareholders (Unaudited) The proposals described below were submitted to a vote of shareholders of the U.S. Small Cap Growth Fund, U.S. Large Cap Growth Fund, High Yield Fund, Global Biotech Fund and Global Technology Fund (each a "Fund" and collectively, the "Funds") of Brinson Funds (the "Trust") at a special meeting of shareholders held on December 7, 2000 (the "Meeting"). The outcome of the votes were as follows: Proposal No. 1--Approval of amendments to the Investment Advisory Agreement between the Trust, on behalf of the Funds, and Brinson Partners, Inc. Fund For Against Abstain ---- --- ------- ------- Global Technology Fund............. 108,365 569 16,005 Global Biotech Fund................ 72,684 370 4,768 U.S. Large Cap Growth Fund......... 279,056 1,129 128,366 U.S. Small Cap Growth Fund......... 1,748,776 8,142 40,601 High Yield Fund.................... 2,879,036 18,106 30,664 Proposal No. 2--Approval of the Sub-Advisory Agreement between Brinson Partners Inc. and UBS Asset Management (New York), Inc. with respect to the Funds. Fund For Against Abstain ---- --- ------- ------- Global Technology Fund............. 108,365 569 16,005 Global Biotech Fund................ 72,684 370 4,768 U.S. Large Cap Growth Fund......... 279,352 1,129 128,070 U.S. Small Cap Growth Fund......... 1,750,425 6,493 40,601 High Yield Fund.................... 2,879,512 18,106 30,188 Proposal No. 3a--Approval of the amendment of the Funds' investment restrictions regarding borrowing. Fund For Against Abstain ---- --- ------- ------- Global Technology Fund............. 105,474 1,460 18,005 Global Biotech Fund................ 72,684 370 4,768 U.S. Large Cap Growth Fund......... 273,944 2,875 131,732 U.S. Small Cap Growth Fund......... 1,659,818 10,706 126,994 High Yield Fund.................... 2,071,362 28,991 827,453 Proposal No. 3b--Approval of the amendment of the Funds' investment restrictions regarding underwriting. Fund For Against Abstain ---- --- ------- ------- Global Technology Fund............. 106,365 569 18,005 Global Biotech Fund................ 72,684 370 4,768 U.S. Large Cap Growth Fund......... 275,690 1,129 131,732 U.S. Small Cap Growth Fund......... 1,662,169 8,356 126,994 High Yield Fund.................... 2,086,400 13,953 827,453 ================================================================================ 111 Special Meeting of Shareholders -------------------------------------------------------------------------------- Proposal No. 3c--Approval of the amendment of the Funds' investment restrictions regarding lending. Fund For Against Abstain ---- --- ------- ------- Global Technology Fund.................. 106,365 569 18,005 Global Biotech Fund..................... 72,684 370 4,768 U.S. Large Cap Growth Fund.............. 273,944 2,875 131,732 U.S. Small Cap Growth Fund.............. 1,662,169 8,356 126,994 High Yield Fund......................... 2,071,887 28,466 827,453 Proposal No. 3d--Approval of the amendment of the Funds' investment restrictions regarding investments in real estate. Fund For Against Abstain ---- --- ------- ------- Global Technology Fund.................. 105,474 1,460 18,005 Global Biotech Fund..................... 72,684 370 4,768 U.S. Large Cap Growth Fund.............. 275,690 1,129 131,732 U.S. Small Cap Growth Fund.............. 1,660,772 9,753 126,994 High Yield Fund......................... 2,086,400 13,953 827,453 Proposal No. 3e--Approval of the amendment of the Funds' investment restrictions regarding investments in commodities. Fund For Against Abstain ---- --- ------- ------- Global Technology Fund.................. 105,474 1,460 18,005 Global Biotech Fund..................... 72,684 370 4,768 U.S. Large Cap Growth Fund.............. 275,394 1,424 131,732 U.S. Small Cap Growth Fund.............. 1,660,474 10,014 127,031 High Yield Fund......................... 2,081,112 19,241 827,453 Proposal No. 3f--Approval of the amendment of the Funds' investment restrictions regarding issuing senior securities and short sales. Fund For Against Abstain ---- --- ------- ------- Global Technology Fund.................. 105,474 1,460 18,005 Global Biotech Fund..................... 72,684 370 4,768 U.S. Large Cap Growth Fund.............. 275,394 1,424 131,732 U.S. Small Cap Growth Fund.............. 1,660,474 10,014 126,994 High Yield Fund......................... 2,085,399 14,954 827,453 Proposal No. 3g--Approval of the amendment of the Funds' investment restrictions regarding concentration. Fund For Against Abstain ---- --- ------- ------- U.S. Large Cap Growth Fund.............. 275,394 1,424 131,732 U.S. Small Cap Growth Fund.............. 1,662,169 8,356 126,994 High Yield Fund......................... 2,069,874 30,479 827,453 ================================================================================ 112 Special Meeting of Shareholders -------------------------------------------------------------------------------- Proposal No. 3h--Approval of the amendment of the Funds' investment restrictions regarding diversification. Fund For Against Abstain ---- --- ------- ------- U.S. Small Cap Growth Fund............. 1,662,169 8,356 126,994 High Yield Fund........................ 2,074,161 25,716 827,929 Proposal No. 4a--Approval of the elimination of the Funds' investment restrictions regarding purchasing securities on margin. Fund For Against Abstain ---- --- ------- ------- Global Technology Fund................. 105,474 1,460 18,005 Global Biotech Fund.................... 72,684 370 4,768 U.S. Large Cap Growth Fund............. 276,523 296 131,732 U.S. Small Cap Growth Fund............. 1,660,510 10,014 126,994 High Yield Fund........................ 2,039,508 14,954 873,344 Proposal No. 4b--Approval of the elimination of the Funds' investment restrictions regarding investing in other companies. Fund For Against Abstain ---- --- ------- ------- Global Technology Fund................. 106,365 569 18,005 Global Biotech Fund.................... 72,684 370 4,768 U.S. Large Cap Growth Fund............. 276,523 -- 132,028 U.S. Small Cap Growth Fund............. 1,662,169 8,356 126,994 High Yield Fund........................ 2,085,924 13,953 827,929 Proposal No. 4c--Approval of the elimination of the Funds' investment restrictions regarding investing in oil, gas and minerals. Fund For Against Abstain ---- --- ------- ------- U.S. Large Cap Growth Fund............. 276,523 -- 132,028 U.S. Small Cap Growth Fund............. 1,662,331 8,194 126,994 High Yield Fund........................ 2,085,924 13,953 827,929 ================================================================================ 113 [LOGO OF BRINSON] The Brinson Funds ------------------------------------------------------------ Australia . Austria . Bahrain . Brazil . Dublin . France . Germany . Hong Kong . Italy . Japan Luxembourg . Singapore . Switzerland . Taiwan . United Kingdom . United States 209 South LaSalle Street . Chicago, Illinois 60604-1295 . Tel: (800) 448-2430 [LOGO] UBS Investment Funds Global Fund Global Equity Fund Global Technology Fund Global Biotech Fund Global Bond Fund U.S. Balanced Fund U.S. Equity Fund U.S. Large Cap Equity Fund U.S. Large Cap Growth Fund U.S. Small Cap Growth Fund U.S. Bond Fund High Yield Fund International Equity Fund Semi-Annual Report December 31, 2000 Trustees and Officers -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Trustees Walter E. Auch Andrew J. O'Reilly Frank K. Reilly, CFA Edward M. Roob Officers Frank K. Reilly, CFA David E. Floyd, CPA Chairman of the Board Assistant Secretary Thomas J. Digenan, CFA, CPA Mark F. Kemper President Assistant Secretary Carolyn M. Burke, CPA Alanna N. Palmer Vice President, Assistant Secretary Secretary and Treasurer 1 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 2001, nearly 500 focused investment specialists, located in all of the world's major financial centers, 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. We select investments for all of The Brinson Funds by focusing on long-term investment fundamentals within a framework of integrated capital markets. 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 judgment 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 asset management division of UBS AG. 2 Table of Contents -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds To Our Shareholders............................................... 4 Global Economic and Market Highlights............................. 5 U.S. Economic and Market Highlights............................... 6 Portfolio Managers' Commentary and Schedule of Investments Global Fund.................................................. 7 Global Equity Fund........................................... 17 Global Technology Fund....................................... 24 Global Biotech Fund.......................................... 28 Global Bond Fund............................................. 32 U.S. Balanced Fund........................................... 38 U.S. Equity Fund............................................. 44 U.S. Large Cap Equity Fund................................... 49 U.S. Large Cap Growth Fund................................... 53 U.S. Small Cap Growth Fund................................... 57 U.S. Bond Fund............................................... 62 High Yield Fund.............................................. 68 International Equity Fund.................................... 75 Statements of Assets and Liabilities.............................. 82 Statements of Operations.......................................... 84 Statement of Cash Flows........................................... 86 Statements of Changes in Net Assets............................... 88 Financial Highlights.............................................. 93 Notes to Financial Statements..................................... 106 Special Meeting of Shareholders................................... 111
3 Shareholder Letter -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds February 26, 2001 Dear Shareholder: If the first year of the new millennium is any indication, we are in for a wild ride in capital markets in the years ahead. The technology, media, and telecommunications (TMT) bubble burst as we had anticipated. This has paid big dividends for our clients. That we "stayed the course" on our key strategies reflects the continuity of our investment philosophy and our dedication to disciplined fundamental research. Maintaining our focus was a critical element of our success in 2000. Our strategic positions involving the expected demise of the TMT sectors, the associated decline in equity markets, the underperformance of the very largest capitalization equities, and the year-end turnaround in the euro helped us to deliver the best performance results in our history relative to our predetermined benchmarks. Our U.S. equity strategies outperformed benchmarks, helped in large part by stock selection decisions. Global and non-U.S. equity strategies benefited similarly. Fixed income returns were less dramatic but still quite positive for the year. Our dedication to our valuation disciplines helped us to weather some heavy crosscurrents in the global fixed income markets this year. Our multi- asset portfolios benefited from our positive results within the equity components, as well as the strategic tilt toward fixed income and away from many overheated equity markets. The evaporation of the euro's weakness in the closing months added further to our strong performance. Throughout the year we also focused on enhancing our research efforts and broadening our investment capabilities. We continue to create and publish important industry-leading research. We are utilizing technology in new ways to enhance our investment decisions, and have in place one of the most robust approaches to risk management in the industry. The year 2000 was an important turnaround year for us. Our goal in 2001 is to put an exclamation point on our performance -- a proof statement confirming our capabilities and talents. Our investment specialists are dedicated to being the best investment managers in the world covering the full, global capital market. Our breadth of capabilities in all major asset classes gives UBS Investment Funds investors many options for diversification. Whether you choose to invest in the highly specialized Global Technology or Global Biotech funds we launched in 2000, or you prefer a single fund that spreads risk across stocks and bonds in many industries and countries, the UBS Investment Funds can help you meet your long-term objectives. We look forward to strengthening our relationship with you in 2001. Sincerely, /s/ Hanspeter A. Walder /s/ Raymond Simon Hanspeter A. Walder Raymond Simon Executive Director Managing Director Private Banking Private Banking 4 Global Economic and Market Highlights -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds The U.S. economy expanded at a 1.4% annual rate in the fourth quarter, the slowest pace in five years. The U.S. Federal Reserve subsequently cut the target rate on overnight loans to 5.5% amid fears of negative 2001 growth in the U.S. and worldwide. Interest rates in the Eurozone held steady as little evidence presented itself that the U.S. slowdown is affecting Europe; December money supply growth was actually negative for the fourth consecutive month. Inflation also slowed to 2.6% year-on-year as oil prices declined and the euro appreciated against the world basket of currencies. Consensus forecasts for 2001 real GDP growth and consumer price inflation are 2.9% and 2.0%, respectively. U.K. fourth quarter GDP grew at an annual rate of 1.2%, down from 2.8% in the third quarter and the smallest gain since the Asian crisis of 1998. The Bank of England members came within a single vote of raising interest rates, but the base rate remains at 6%, a level at which it has remained for the last eleven months. Unemployment has also held steady at 3.6%, and manufacturing confidence has reached a nine-month high, thanks to increased exports. In Japan, unemployment remained at a high of 4.8% in December as industrial production grew by just 1.5%, less than expected for the sixth consecutive month. Nominal GDP has been declining since 1998, and revised real GDP statistics are expected to be negative for the third quarter and flat for the fourth. As a result, the yen fell to a 15-month low against the euro and an 18- month low against the U.S. dollar in mid-January. Global Environment
6 months 1 year 3 years 5 years Major Markets ended ended ended ended Total Return in U.S. Dollars 12/31/00 12/31/00 12/31/00 12/31/00 ------------------------------------------------------------------------------------------------- U.S. Equity -10.14% -10.89% 10.76% 16.68% International Equities (currency unhedged) -10.80 -13.47 9.47 7.48 International Equities (currency hedged) -6.58 -4.07 14.37 14.77 U.S. Bonds 7.38 11.59 6.35 6.45 International Bonds (currency unhedged) -0.70 -2.64 2.87 1.64 International Bonds (currency hedged) 5.38 9.62 7.95 9.33 U.S. Cash Equivalents 2.94 5.65 4.88 4.89 ------------------------------------------------------------------------------------------------- 6 months 1 year 3 years 5 years Major Currencies ended ended ended ended Percent Change Relative to U.S. Dollars 12/31/00 12/31/00 12/31/00 12/31/00 ------------------------------------------------------------------------------------------------- Yen -7.35% -10.37% 4.42% -2.01% Pound -1.32 -7.32 -3.17 -0.77 Euro -2.06 -6.34 -4.83 -6.95 Canadian Dollar -1.35 -3.38 -1.60 -1.91 -------------------------------------------------------------------------------------------------
All total returns in excess of 1 year are average annualized returns. 5 U.S. Economic and Market Highlights -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Real GDP increased at an annual rate of 1.4% in the fourth quarter of 2000, down from 2.2% in the third quarter. The increase would have been a full percentage point higher if not for the 24% decline in automobile production. Manufacturing output led the way downward in December in declining by 1.1%, the worst month in a decade. Durable goods orders for computers and other equipment also fell by 1.4% to their lowest level in 2 years, and the NAPM factory index fell to its lowest level since March of 1991. The NAPM index is now below the `break-even' level between expansion and recession in the overall economy. Although unemployment in December remained unchanged at 4.0%, consumer confidence plummeted 14.2 points to a level not seen since October of 1990. Retail sales also posted their largest decline in a decade, -2% during the fourth quarter. The Federal Reserve responded by changing its bias in mid-December to economic weakness from inflation protection, and twice cut the overnight discount rate by half a percentage point in January, to its current level of 5.5%. Consensus forecasts of real GDP growth for 2001 remain optimistic at 2.6%, with moderate inflation of 2.7%. The dollar lost ground to all developed-market currencies except the yen, led by its 7% fall against the euro in December. This depreciation did help narrow the trade gap to $33 billion, its second consecutive monthly decline. U.S. Environment Major Markets One Year Ended December 21, 2000
U.S. Cash Equivalents U.S. Bonds U.S. Equities 12/31/2000 5.65 11.59 -10.89
Salomon U.S. Treasury Benchmark Returns One Year Ended December 31, 2000 1 7.1 2 7.63 5 11.58 10 14.45 30 19.99
Top Ten Industry Returns Relative to S&P 500 One Year Ended December 31, 2000 Medical Services 102.78 Drugs 81.05 Energy Services 70.67 Oil Services 67.62 Tobacco 60.38 Defenses & Aerospace 59.57 Securities & Asset Management 58.71 Medical Products 51.34 Electric Utility 42.76 Property/Casualty Insurance 39.59 Bottom Ten Industry One Year Ended December 31, 2000 Internet -55.42 Wireless Telecom -38.14 Motor Vehicles & Parts -31.32 Mining & Metals -29.61 Telephone -29.31 Entertainment -27.46 Department Stores -24.32 Gold -22.87 Computer Hardware -21.24 Media -16.14 6 Global Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Since its inception on July 31, 1995, the UBS Investment Fund - Global has provided an annualized return of 8.55%, compared to the 10.91% return of the Global Securities Markets Mutual Fund Index. The Fund's 2000 return of 5.83% substantially outpaced the benchmark return of -6.11%. Global equities independent of currency effects fell over 8% over the course of the year, but these results were not evenly distributed. Hardest hit were technology shares and firms with any earnings weakness as equity investors engaged in a flight to quality. The poor equity performance not only rewarded the Fund's large equity underweights, but also proved to be a fruitful environment for security selection efforts. Emerging market equities fell even more significantly. Global fixed income was up strongly yet again in 2000 on a fully hedged basis. Central banks maintained a bias toward tightening monetary policy for much of the year, with only the U.S. Federal Reserve breaking ranks in December as the likelihood of an economic soft landing decreased. Prices of inflation-linked bonds and agency securities outpaced their Treasury counterparts for the second consecutive year. 2000 was a strong year for security selection in the Fund, especially within North American and European equities. U.S. fixed income issue selection was also positive over the course of the year, as higher-quality agency and asset-backed securities performed well. Although the Wilshire 5000 has lost nearly a fifth of its value since its peak earlier in the year, leading us to halve our U.S. equity underweight, there is still a strong possibility of continued declines, and global equities continue to be managed defensively. The market allocation of the Fund was also significantly positive, with the overweight to U.S. fixed income, primarily to Treasury Inflation Protected Securities (TIPS) the best decision. Smaller overweights to emerging market debt bonds denominated in euros also contributed. Developed fixed income has been reduced to fund the recent increase in equities, with the largest reduction to TIPS. Other U.S. fixed income is now neutral, and international fixed income is only slightly overweighted as a result. Currency allocation was close to neutral for the year, with benefits from the underweights to the Japanese yen and the British pound mitigated by consistent weakness to the Australian and New Zealand dollars and mixed results for the European common currency. Although the euro found record lows in 2000, it rebounded smartly late in the year and remains the Fund's largest currency overweight. The Australian overweight remains, and has been augmented by a Canadian dollar overweight. Principal underweights to the Japanese yen and British pound continue. 7 Global Fund ------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Total Return
6 months 1 year 3 years 5 years Inception* ended ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 UBS Investment Fund - Global 5.36% 5.83% 4.71% 7.51% 8.55% -------------------------------------------------------------------------------- GSMI Mutual Fund Index** -5.72 -6.11 8.51 10.44 10.91 -------------------------------------------------------------------------------- MSCI World Equity (Free) Index -10.86 -13.08 10.67 12.35 12.46 -------------------------------------------------------------------------------- Salomon Smith Barney World Gov't. Bond Index 1.56 1.59 3.89 3.10 3.16 --------------------------------------------------------------------------------
* Inception date of the UBS Investment Fund - Global is July 31, 1995. ** 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 Global; 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 MSCI World Equity (Free) Index 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, 2000. 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, MSCI World Equity (Free) Index and Salomon Smith Barney World Gov't. Bond Index Wealth Value with Dividends Reinvested
-------------------------------------------------------------------------------- Salomon Smith MSCI World Barney World UBS Investment GSMI Mutual Equity (Free) Gov't. Bond Date Fund - Global Fund Index Index Index -------------------------------------------------------------------------------- 7/31/95 10,000 10,000 10,000 10,000 12/31/95 10,861 10,665 10,556 10,162 12/31/96 12,332 12,001 12,025 10,531 12/31/97 13,589 13,717 13,939 10,557 12/31/98 14,622 15,974 17,370 12,171 12/31/99 14,743 18,666 21,734 11,652 12/31/2000 15,599 17,525 18,891 11,838
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 Global Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Asset Allocation As of December 31, 2000 (Unaudited) Current Benchmark Strategy ------------------------------------------------------------------- U.S. Equities 40.0% 30.5% International Equities 22.0 16.5 Emerging Markets Equities 3.0 4.5 Dollar Bonds 21.0 29.5 High Yield Bonds 3.0 6.5 International Bonds 9.0 9.0 Emerging Markets Debt 2.0 3.5 Cash Equivalents 0.0 0.0 ------------------------------------------------------------------- 100.0% 100.0% Top Ten Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets ------------------------------------------------------------------- 1. Allergan, Inc. 1.33% 2. Burlington Northern Santa Fe Corp. 1.28 3. Wells Fargo & Co. 1.10 4. Electronic Data Systems Corp. 0.97 5. FedEx Corp. 0.95 6. Freddie Mac 0.90 7. Masco Corp. 0.84 8. CIGNA Corp. 0.79 9. First Data Corp. 0.78 10. Alza Corp. 0.77 ------------------------------------------------------------------- Currency Allocation As of December 31, 2000 (Unaudited) Current Benchmark Strategy ------------------------------------------------------------------- U.S. 66.0% 53.9% Japan 7.9 0.9 U.K. 5.1 0.0 Euro 12.6 25.7 Other Europe 2.7 2.7 Canada 1.4 5.4 Emerging Markets 3.0 4.5 Asia (Ex-Japan) 0.7 0.2 Australia/New Zealand 0.6 6.2 ------------------------------------------------------------------- 100.0% 100.0% Top Ten Fixed Income Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets ------------------------------------------------------------------- 1. U.S. Treasury Inflation Indexed Note, 3.875%, due 04/15/29 5.08% 2. U.S. Treasury Inflation Indexed Note, 3.625%, due 04/15/28 2.39 3. Petro Geo Services FRN, 7.186%, due 03/20/02 1.88 4. U.S. Treasury Note, 5.625%, due 05/15/08 0.69 5. Government of Japan, 3.100%, due 09/20/06 0.62 6. Government of France (OAT), 4.000%, due 10/25/09 0.60 7. Buoni Poliennali Del Tes, 6.750%, due 07/01/07 0.53 8. Government of Spain, 3.250%, due 01/31/05 0.48 9. Government of Canada, Real Return Bond, 4.250%, due 12/01/21 0.47 10. Government of France (OAT), 9.500%, due 01/25/01 0.44 ------------------------------------------------------------------- 9 Global Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. EQUITIES Energy................................................................ 0.79% Capital Investment Capital Goods.................................................... 1.65 Electronic Components............................................ 2.74 ------ 4.39 Basic Industries Chemicals........................................................ 1.30 Housing/Paper.................................................... 0.87 Metals........................................................... 0.84 ------ 3.01 Computers Software......................................................... 0.63 Systems.......................................................... 0.66 ------ 1.29 Consumer Autos/Durables................................................... 0.86 Food/House Products.............................................. 1.08 Health: Drugs.................................................... 2.68 Health: Non-Drugs................................................ 3.10 Leisure/Tourism.................................................. 0.57 Retail/Apparel................................................... 2.35 Non-Durables..................................................... 0.24 ------ 10.88 Financial Banks............................................................ 3.31 Non-Banks........................................................ 2.85 ------ 6.16 Telecommunications Equipment........................................................ 0.14 Services......................................................... 2.29 ------ 2.43 Transportation........................................................ 2.39 Services/Miscellaneous................................................ 2.65 U.S. Small Capitalization Equity...................................... 3.07 Utilities............................................................. 1.80 ------ Total U.S. Equities......................................... 38.86* INTERNATIONAL EQUITIES Aerospace and Military........................................... 0.02 Airlines......................................................... 0.01 Appliances & Household........................................... 0.36 Autos/Durables................................................... 0.39 Banking.......................................................... 1.68 Beverages & Tobacco.............................................. 0.49 Broadcasting & Publishing........................................ 0.79 Building Materials............................................... 0.35 Business & Public Service........................................ 0.26 Chemicals........................................................ 0.65 Computer Software................................................ 0.01 Construction..................................................... 0.06 Data Processing.................................................. 0.23 Electric Components.............................................. 0.45 Electronics...................................................... 0.33 Energy........................................................... 1.04 Financial Services............................................... 0.81 Food & House Products............................................ 0.80 Forest Products.................................................. 0.10% Health: Drugs................................................... 0.75 Health: Non-Drugs............................................... 0.51 Industrial Components............................................ 0.20 Insurance........................................................ 0.74 Leisure & Tourism................................................ 0.20 Machinery & Engineering.......................................... 0.26 Merchandising.................................................... 0.18 Metals-Non Ferrous............................................... 0.18 Metals-Steel..................................................... 0.06 Mining........................................................... 0.05 Multi-Industry................................................... 0.13 Non-Durables..................................................... 0.03 Real Estate...................................................... 0.26 Recreation....................................................... 0.13 Retail/Apparel................................................... 0.01 Telecommunications............................................... 1.49 Transportation................................................... 0.44 Utilities........................................................ 0.61 Wholesale & International Trade.................................. 0.03 ------ Total International Equities................................ 15.09 EMERGING MARKETS EQUITIES............................................. 4.03 ------ TOTAL EQUITIES........................................................ 57.98 U.S. BONDS U.S. Corporate Bonds Airlines......................................................... 0.17 Building Materials............................................... 0.05 Construction..................................................... 0.05 Consumer......................................................... 0.05 Energy........................................................... 1.88 Financial........................................................ 0.12 Publishing....................................................... 0.03 Recreation....................................................... 0.05 Retail/Apparel................................................... 0.03 Services/Miscellaneous........................................... 0.02 Telecommunications............................................... 0.21 Utilities........................................................ 0.17 ------ Total U.S. Corporate Bonds.................................. 2.83 Asset-Backed.......................................................... 0.38 Corporate Mortgage-Backed Securities.................................. 0.76 International Dollar Bonds............................................ 0.12 U.S. Government Mortgage-Backed Securities............................ 1.81 U.S. Government Obligations........................................... 8.57 ------ Total U.S. Bonds............................................ 14.47* HIGH YIELD BONDS...................................................... 6.11 INTERNATIONAL BONDS Foreign Financial Bonds.......................................... 0.09 Foreign Government Bonds......................................... 8.73 ------ Total International Bonds................................... 8.82 EMERGING MARKETS BONDS................................................ 3.55 SHORT-TERM INVESTMENTS................................................ 29.15* ------ TOTAL INVESTMENTS 120.08 LIABILITIES, LESS CASH AND OTHER ASSETS.............................. (20.08) ------ NET ASSETS............................................................ 100.00% ====== -------------------------------------------------------------------------------- * The Fund held a long position in U.S. Treasury futures on December 31, 2000 which increased U.S. Bond exposure from 14.47% to 29.50%. The Fund held a short position in stock index futures on December 31, 2000 which reduced U.S. Equity exposure from 38.86% to 29.91%. These adjustments result in a net decrease in the Fund's exposure to Short-Term Investments from 29.15% to 23.07%. 10 Global Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value ---------- --------- Equities - 57.98% U.S. Equities - 38.86% Advanced Micro Devices, Inc. (b).......... 86,400 $ 1,193,400 Allergan, Inc............................. 25,600 2,478,400 Alza Corp. (b)............................ 33,900 1,440,750 American General Corp..................... 9,400 766,100 American Standard Cos., Inc. (b).......... 13,700 675,581 Baxter International, Inc................. 15,800 1,395,337 Brinson U.S. Small Capitalization Equity Fund (b).............................. 267,579 5,722,892 Burlington Northern Santa Fe Corp......... 84,500 2,392,406 Cardinal Health, Inc...................... 10,900 1,085,912 Carnival Corp., Class A................... 34,300 1,056,869 Chase Manhattan Corp...................... 16,900 767,894 CIGNA Corp................................ 11,200 1,481,760 Citigroup, Inc............................ 9,607 490,557 Clear Channel Communications (b).......... 9,000 435,938 CMS Energy Corp........................... 15,600 494,325 CommScope, Inc. (b)....................... 15,400 255,063 Compaq Computer Corp...................... 52,800 794,640 Computer Sciences Corp. (b)............... 2,400 144,300 Compuware Corp. (b)....................... 74,500 465,625 COR Therapeutics, Inc. (b)................ 13,100 460,956 Delhaize America, Inc..................... 1 18 Dow Chemical Co........................... 13,300 487,113 Eastman Chemical Co....................... 5,400 263,250 Electronic Data Systems Corp.............. 31,300 1,807,575 Emerson Electric Co....................... 17,500 1,379,219 Entergy Corp.............................. 13,700 579,681 Exelon Corp............................... 12,300 863,583 Exxon Mobil Corp.......................... 10,500 912,844 Federated Department Stores, Inc. (b)..... 12,600 441,000 FedEx Corp. (b)........................... 44,200 1,766,232 First Data Corp........................... 27,530 1,450,487 FleetBoston............................... 26,915 1,010,995 Freddie Mac............................... 24,300 1,673,662 Gateway, Inc. (b)......................... 23,900 429,961 GATX Corp................................. 6,000 299,250 General Mills, Inc........................ 21,900 975,919 Genzyme General (b)....................... 10,400 935,350 GPU, Inc.................................. 38,400 1,413,600 GreenPoint Financial Corp................. 32,500 1,330,469 Household International, Inc.............. 15,900 874,500 Illinois Tool Works, Inc.................. 22,100 1,316,331 IMC Global, Inc........................... 36,000 560,250 Johnson & Johnson Co...................... 11,900 1,250,244 Johnson Controls, Inc..................... 5,700 296,400 Kimberly-Clark Corp....................... 6,400 452,416 Kroger Co. (b)............................ 22,900 619,731 Lear Corp. (b)............................ 24,300 602,944 Lincoln National Corp..................... 6,900 326,456 LSI Logic Corp. (b)....................... 26,200 447,758 Lyondell Chemical Co...................... 21,000 321,563 Martin Marietta Materials, Inc............ 13,984 591,523 Masco Corp................................ 60,900 1,564,369 Mattel, Inc............................... 66,000 953,040 Mead Corp................................. 15,900 498,862 Microsoft Corp. (b)....................... 16,300 709,050 Motorola, Inc............................. 31,430 636,457 National Semiconductor Corp. (b).......... 35,800 720,475 New York Times Co......................... 7,500 300,469 Newell Rubbermaid, Inc.................... 34,400 782,600 Nextel Communications, Inc. (b)........... 37,600 930,600 Pentair, Inc.............................. 17,996 435,278 PepsiCo, Inc.............................. 9,100 451,019 PNC Financial Services Corp............... 13,800 1,008,262 Praxair, Inc.............................. 18,000 798,750 Raytheon Co., Class B..................... 23,700 736,181 Sara Lee Corp............................. 41,900 1,029,169 SBC Communications, Inc................... 27,900 1,332,225 SCI Systems, Inc. (b)..................... 13,000 342,875 St. Jude Medical, Inc..................... 7,200 442,350 Target Corp............................... 21,400 690,150 Tellabs, Inc. (b)......................... 16,800 949,200 Texas Instruments, Inc.................... 13,800 653,775 Ultramar Diamond Shamrock Corp............ 17,402 537,287 UnitedHealth Group, Inc................... 21,200 1,301,150 Viad Corp................................. 16,600 381,800 W.W. Grainger, Inc........................ 19,200 700,800 Wal-Mart Stores, Inc...................... 17,000 903,125 Wells Fargo and Co........................ 36,900 2,054,869 XL Capital Ltd............................ 6,600 576,675 York International Corp................... 12,700 389,731 ----------- Total U.S. Equities....................... 72,489,622 ----------- International Equities - 15.09% Australia - 0.91% Amcor Ltd................................. 18,220 53,105 Amp Ltd................................... 7,500 84,276 Boral Ltd................................. 35,900 41,296 Brambles Industries Ltd................... 2,070 48,313 Broken Hill Proprietary Co., Ltd.......... 13,110 138,099 Howard Smith Ltd.......................... 8,200 38,277 Lend Lease Corp., Ltd..................... 8,032 74,717 National Australia Bank Ltd............... 16,127 258,189 News Corp., Ltd........................... 21,189 164,846 News Corp., Ltd., Preferred............... 9,236 65,695 QBE Insurance Group Ltd................... 20,427 112,264 Rio Tinto Ltd............................. 3,545 57,990 Santos Ltd................................ 15,690 52,488 Telstra Corp., Ltd........................ 36,819 131,417 Westpac Banking Corp., Ltd................ 33,228 243,625 WMC Ltd................................... 11,340 48,252 Woolworth's Ltd........................... 16,260 76,080 ----------- 1,688,929 ----------- Austria - 0.02% Austria Tabakwerke AG..................... 800 44,353 ----------- Belgium - 0.18% Electrabel S.A............................ 570 128,869 Fortis B.................................. 6,287 204,239 ----------- 333,108 ----------- Canada - 0.54% Alcan Aluminum Ltd........................ 2,120 72,478 Canadian National Railway Co.............. 3,820 112,794 Canadian Pacific Ltd...................... 4,473 127,311 Imperial Oil Ltd.......................... 2,410 63,298 11 Global Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value ---------- --------- Nortel Networks Corp....................... 4,900 $ 157,407 Nova Chemicals Corp........................ 5,104 95,488 Royal Bank of Canada....................... 5,640 190,941 Shaw Communications, Inc., Class B......... 7,960 185,486 ----------- 1,005,203 ----------- Finland - 0.30% Nokia Oyj.................................. 6,290 280,519 Sampo Leonia Insurance, Class A............ 1,800 97,176 UPM-Kymmene Corp........................... 5,420 185,996 ----------- 563,691 ----------- France - 1.69% Alcatel S.A................................ 4,110 233,461 Aventis S.A., Class A...................... 2,784 244,399 Axa........................................ 1,306 188,835 Banque Nationale de Paris.................. 3,799 333,502 Cie de Saint Gobain........................ 1,697 266,560 Groupe Danone.............................. 2,400 361,888 Lafarge S.A................................ 4,060 340,405 Schneider Electric S.A..................... 2,170 158,307 Suez Lyonnaise des Eaux S.A................ 410 74,872 Total Fina S.A., Class B................... 4,092 608,567 Union du Credit-Bail Immobilitier.......... 890 141,805 Valeo SA................................... 2,580 115,207 Vivendi.................................... 1,220 80,296 ----------- 3,148,104 ----------- Germany - 0.76% Allianz AG................................. 1,080 407,631 Bayer AG................................... 7,530 395,207 Continental AG............................. 3,600 57,460 E.on AG.................................... 5,489 333,954 Linde AG................................... 2,100 101,542 Volkswagen AG.............................. 4,250 129,685 ----------- 1,425,479 ----------- Hong Kong - 0.06% Giordano International Ltd................. 25,000 11,539 Henderson Land Development Co., Ltd........ 19,000 96,706 ----------- 108,245 ----------- Ireland - 0.13% Bank of Ireland............................ 12,000 120,329 Eircom PLC................................. 47,500 122,643 ----------- 242,972 ----------- Italy - 0.56% ENI Spa.................................... 82,000 523,529 ENI Spa ADR................................ 3,070 197,439 Rinascente Spa............................. 10,740 63,427 Seat-Pagine Gialle Spa..................... 672 1,498 Telecom Italia Spa......................... 23,000 254,385 ----------- 1,040,278 ----------- Japan - 3.53% Acom Co., Ltd.............................. 1,600 118,109 Asahi Bank Ltd............................. 13,000 44,282 Bank of Tokyo-Mitsubushi Ltd............... 15,000 149,343 Benesse Corp............................... 700 25,989 Bridgestone Corp........................... 5,000 45,534 Canon, Inc................................. 7,000 245,184 Dai Nippon Printing Co., Ltd............... 5,000 74,475 Daikin Kogyo Industries Ltd................ 3,000 57,793 Denso Corp................................. 4,000 86,515 East Japan Railway Co...................... 17 99,737 Fanuc...................................... 1,400 95,254 Fuji Photo Film Co., Ltd................... 4,000 167,426 Fujitsu.................................... 12,000 176,953 Hitachi Ltd................................ 11,000 98,056 Honda Motor Co............................. 8,000 298,424 Hoya Corp.................................. 1,000 73,555 Ito Yokado Co., Ltd........................ 3,000 149,737 Kamigumi Co., Ltd.......................... 16,000 71,454 Kao Corp................................... 4,000 116,287 Kirin Brewery Co., Ltd..................... 7,000 62,706 Kuraray Co., Ltd........................... 10,000 93,520 Kyocera Corp............................... 600 65,517 Matsushita Electric Industrial Co.......... 10,000 239,054 Minebea Co., Ltd........................... 9,000 83,380 Mitsubishi Corp............................ 8,000 58,984 Mitsubishi Estate Co., Ltd................. 11,000 117,513 Mitsubishi Trust and Banking Corp.......... 5,000 34,413 Mizuho Holding, Inc........................ 26 161,191 Murata Manufacturing Co., Inc.............. 1,000 117,338 NEC Corp................................... 13,000 237,916 NGK Insulators............................. 7,000 92,741 Nintendo Corp., Ltd........................ 1,100 173,284 Nippon Steel Co............................ 66,000 109,229 Nippon Telegraph & Telephone Corp.......... 57 410,779 Nomura Securities Co., Ltd................. 13,000 233,932 Omron Corp................................. 1,000 20,797 Orix Corp.................................. 1,100 110,385 Rohm Co.................................... 500 95,009 Sankyo Co., Ltd............................ 4,000 95,972 Santen Pharmaceutical Co., Ltd............. 4,000 79,159 Secom Co., Ltd............................. 2,000 130,473 Shin-Etsu Chemical Co., Ltd................ 2,000 77,058 Softbank Corp.............................. 400 13,905 Sony Corp.................................. 3,900 269,790 Sumitomo Bank.............................. 13,000 133,529 Sumitomo Chemical Co....................... 25,000 124,124 Takeda Chemical Industries................. 4,000 236,778 Takefuji Corp.............................. 900 56,743 TDK Corp................................... 1,500 146,060 Tokio Marine & Fire Insurance Co........... 9,000 103,161 Tokyo Gas Co., Ltd......................... 20,000 59,194 Toyota Motor Corp.......................... 6,000 191,769 West Japan Railway Co...................... 12 53,065 Yamanouchi Pharmaceutical Co., Ltd......... 1,000 43,257 Yamato Transport Co., Ltd.................. 3,000 55,166 ----------- 6,580,998 ----------- Netherlands - 0.77% ABN AMRO Holdings NV....................... 5,483 124,684 Akzo Nobel NV.............................. 4,300 230,931 Elsevier NV................................ 19,770 290,681 ING Groep NV............................... 3,040 242,839 Koninklijke KPN NV......................... 3,915 45,065 Philips Electronics NV..................... 5,522 202,302 Wolters Kluwer NV.......................... 10,863 296,186 ----------- 1,432,688 ----------- 12 Global Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ------------ New Zealand - 0.06% Auckland International Airport Ltd.................... 17,350 $ 24,107 Lion Nathan Ltd....................................... 23,420 52,750 Telecom Corp. of New Zealand Ltd...................... 17,810 37,907 ------------ 114,764 ------------ Portugal - 0.12% EDP Electricidade de Portugal S.A..................... 26,800 88,572 Portugal Telecom...................................... 15,800 144,488 ------------ 233,060 ------------ Singapore - 0.10% DBS Group Holdings Ltd................................ 8,000 90,427 Neptune Orient Lines.................................. 22,000 17,255 SIA Engineering Co., Ltd. (b)......................... 21,000 16,228 Singapore Airport Terminal Services Ltd. (b).......... 2,000 1,822 Singapore Press Holdings Ltd.......................... 1,000 14,764 Singapore Technologies Engineering Ltd................ 14,000 22,526 United Overseas Bank Ltd.............................. 2,116 15,864 ------------ 178,886 ------------ Spain - 0.14% Banco Popular Espanol S.A............................. 2,676 93,213 Endesa S.A............................................ 4,653 79,292 Repsol YPF SA......................................... 6,171 98,613 ------------ 271,118 ------------ Sweden - 0.50% Electrolux AB, B Shares............................... 13,050 169,426 ForeningsSparbanken AB................................ 17,320 265,247 Nordea AB............................................. 23,696 179,563 Sandvik AB............................................ 3,300 79,392 Svenska Handelsbanken................................. 7,690 131,624 Swedish Match AB...................................... 26,810 104,563 ------------ 929,815 ------------ Switzerland - 0.76% Nestle S.A. (Reg.).................................... 129 300,907 Novartis AG (Reg.).................................... 252 445,529 Roche Holding AG (Gen.)............................... 32 326,023 Swisscom AG (Reg.).................................... 588 152,942 Syngenta AG........................................... 281 15,086 Zurich Financial Services AG.......................... 292 176,143 ------------ 1,416,630 ------------ United Kingdom - 3.96% Abbey National PLC.................................... 15,000 273,143 AstraZeneca PLC....................................... 4,002 201,765 Bass PLC.............................................. 7,000 76,229 BOC Group PLC......................................... 12,000 182,304 British American Tobacco PLC.......................... 24,000 182,753 British Land Company PLC.............................. 8,000 56,765 British Telecommunications PLC........................ 38,000 324,694 Charter PLC........................................... 21,676 56,341 De Vere Group PLC..................................... 6,899 27,620 Diageo PLC............................................ 24,209 271,227 GlaxoSmithKline PLC................................... 15,902 448,950 House of Fraser PLC................................... 30,780 28,277 Invensys PLC.......................................... 77,000 180,011 Kelda Group PLC....................................... 30,080 174,792 Lattice Group PLC..................................... 56,000 126,316 Lloyds TSB Group PLC.................................. 25,969 274,652 Marconi PLC........................................... 32,360 347,562 Marks & Spencer PLC................................... 28,060 77,964 Northern Rock PLC..................................... 12,000 77,439 Nycomed Amersham PLC.................................. 18,844 156,932 P&O Princess Cruises PLC (b).......................... 35,040 148,131 Peninsular & Oriental Steam Navigation Co............. 22,040 104,368 Powergen PLC.......................................... 16,000 151,054 Prudential Corp. PLC.................................. 15,040 241,968 Reckitt Benckiser PLC................................. 7,000 96,410 Reed International PLC................................ 14,010 146,498 Rentokil Initial PLC.................................. 41,000 141,479 RJB Mining PLC........................................ 26,590 26,215 RMC Group PLC......................................... 12,000 105,582 Rolls-Royce PLC....................................... 10,000 29,615 Royal & Sun Alliance Insurance Group PLC.............. 15,884 135,959 Royal Bank of Scotland Group PLC...................... 13,000 307,217 Scottish & Newcastle PLC.............................. 27,000 189,564 Scottish & Southern Energy PLC........................ 24,380 225,798 Shell Transport & Trading Co.......................... 49,000 401,849 Tesco PLC............................................. 62,190 253,385 Trinity Mirror PLC.................................... 14,815 100,972 Unilever PLC.......................................... 34,000 291,024 United News & Media PLC............................... 15,990 203,031 United Utilities PLC.................................. 17,000 168,875 Vodafone Group PLC.................................... 100,956 370,236 ------------ 7,384,966 ------------ Total International Equities.......................... 28,143,287 ------------ Emerging Markets Equities - 4.03% Brinson Emerging Markets Equity Fund (b).............. 910,794 7,512,046 ------------ Total Equities (Cost $105,561,572).................... 108,144,955 ------------ Face Amount ------ Bonds - 32.95% U.S. Bonds - 14.47% U.S. Corporate Bonds - 2.83% Avon Products, Inc., 7.150%, due 11/15/09............. $ 85,000 85,427 Capital One Bank, Bank Notes, 8.250%, due 06/15/05................................ 50,000 50,569 Cendant Corp., 7.750%, due 12/01/03................... 100,000 97,359 Centaur Funding Corp., Class B, 144A, 9.080%, due 04/21/20................................ 1,000 182,500 Centex Corp., 9.750%, due 06/15/05.................... 85,000 87,110 Chesapeake & Potomac Tel, MD, 8.000%, due 10/15/29................................ 78,000 80,467 Continental Airlines, Inc., E.E.T.C., 6.320%, due 11/01/08................................ 200,000 194,856 Federated Department Stores 6.300%, due 04/01/09................................ 35,000 31,805 8.500%, due 06/01/10................................ 15,000 15,669 Florida Power & Light Co., 6.875%, due 12/01/05................................ 100,000 102,386 FMR Corp., 144A, 7.570%, due 06/15/29................. 60,000 60,393 KeySpan Corp., 7.625%, due 11/15/10................... 50,000 53,127 Lowe's Cos. Inc., 7.500%, due 12/15/05................ 100,000 102,009 News America Holdings, 7.750%, due 12/01/45................................ 60,000 51,785 13 Global Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Face Amount Value ---------- ---------- Nisource Finance Corp., 144A, 7.875%, due 11/15/10.............................. $ 65,000 $ 68,284 Pacific Gas & Electric Co., 7.050%, due 03/01/24.............................. 100,000 75,280 PanAmSat Corp., 6.375%, due 01/15/08................ 145,000 130,519 Petro Geo Services FRN, 7.186%, due 03/20/02.............................. 3,500,000 3,500,343 Pharmacia Corp., 6.600%, due 12/01/28............... 100,000 94,952 Service Corp. International, 6.000%, due 12/15/05.............................. 60,000 32,700 United Airlines, Inc., E.E.T.C., 7.811%, due 10/01/09.............................. 125,000 125,750 Verizon Global Funding Corp. 144A, 7.750%, due 12/01/30.............................. 50,000 50,876 ------------ 5,274,166 ------------ Asset-Backed - 0.38% Capital One Master Trust, 7.200%, due 08/15/08.............................. 460,000 481,825 Vanderbilt Mortgage Finance, 8.255%, due 05/07/17.............................. 215,000 229,207 ------------ 711,032 ------------ Corporate Mortgage- Backed Securities - 0.76% DLJ Commercial Mortgage Corp., 7.300%, due 06/10/09.............................. 145,000 152,679 DLJ Commercial Mortgage Corp., 99-CG2, Class A1B, 7.180%, due 08/10/10................... 125,000 130,924 Morgan Stanley Capital I, 6.710%, due 12/15/31...................................... 100,000 101,752 Norwest Asset Securities Corp., 96-2, Class A9, 7.000%, due 09/25/11.................... 435,000 436,566 Residential Asset Securitization Trust, 7.500%, due 07/25/11.............................. 542,710 547,014 Residential Asset Securitization Trust, 97-A7, Class A1, 7.500%, due 09/25/27.................... 1,218 1,218 Thrift Financial Corp., Class A4,11.250%, due 01/01/16...................................... 39,369 39,988 ------------ 1,410,141 ------------ International Dollar Bonds - 0.12% Banco Santiago S.A., 7.000%, due 07/18/07...................................... 80,000 74,675 Royal Bank of Scotland Group PLC, 7.816%, due 12/31/05.............................. 150,000 152,951 ------------ 227,626 ------------ U.S. Government Mortgage- Backed Securities - 1.81% Fannie Mae Whole Loan, 95-W3, Class A, 9.000%, due 04/25/25.............................. 14,945 15,521 Federal Home Loan Mortgage Corp., Gold 5.500%, due 02/01/07.............................. 588,686 571,682 6.500%, due 04/01/29.............................. 824,250 812,805 Federal National Mortgage Association 6.500%, due 03/01/19.............................. 257,549 255,788 7.125%, due 06/15/10.............................. 505,000 546,845 7.500%, due 01/12/30.............................. 645,000 653,668 Government National Mortgage Association 6.000%, due 02/20/29.............................. 272,021 263,058 6.500%, due 01/15/29.............................. 248,701 246,025 9.000%, due 11/15/04.............................. 5,381 5,672 9.000%, due 11/15/04.............................. 1,803 1,900 ------------ 3,372,964 ------------ U.S. Government Obligations - 8.57% U.S. Treasury Inflation Indexed Note 3.625%, due 04/15/28.............................. 4,225,000 4,460,244 3.875%, due 04/15/29.............................. 8,735,000 9,478,130 U.S. Treasury Note 5.625%, due 05/15/08.............................. 1,260,000 1,294,235 6.625%, due 05/31/02.............................. 670,000 681,491 6.625%, due 02/15/27.............................. 20,000 22,838 7.500%, due 02/15/05.............................. 50,000 54,380 ------------ 15,991,318 ------------ Total U.S. Bonds.................................... 26,987,247 ------------ Shares ------ High Yield Bonds - 6.11% Brinson High Yield Fund (b)......................... 861,562 11,397,954 ------------ Face Amount -------- International Bonds - 8.82% Austria - 0.47% Republic of Austria 4.300%, due 07/15/03............................EUR 320,000 298,338 5.500%, due 01/15/10............................... 600,000 576,869 ------------ 875,207 ------------ Canada - 1.15% Government of Canada, Real Return Bond 4.250%, due 12/01/21............................CAD 1,005,000 868,569 4.250%, due 12/01/26............................... 275,000 229,321 Government of Canada 5.250%, due 12/01/01............................... 170,000 113,052 7.000%, due 12/01/06............................... 550,000 396,234 9.000%, due 03/01/11............................... 500,000 423,203 9.000%, due 06/01/25............................... 110,000 104,456 ------------ 2,134,835 ------------ Denmark - 0.92% Depfa Pfandbrief Bank 5.750%, due 03/04/09............................EUR 815,000 785,440 Kingdom of Denmark 4.000%, due 02/15/01............................DKK 3,100,000 389,084 7.000%, due 12/15/04............................... 1,880,000 253,970 7.000%, due 11/10/24............................... 1,870,000 279,915 ------------ 1,708,409 ------------ France - 1.47% Government of France (OAT) 4.000%, due 10/25/09............................EUR 1,270,000 1,117,035 8.500%, due 12/26/12............................... 650,000 796,419 9.500%, due 01/25/01............................... 875,000 823,385 ------------ 2,736,839 ------------- 14 Global Fund - Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Face Amount Value ---------- ------------ Germany - 0.74% Bundesrepublik Deutschland 6.250%, due 04/26/06...........................EUR 475,000 $ 478,751 6.250%, due 01/04/24.............................. 320,000 334,621 8.375%, due 05/21/01.............................. 480,000 456,420 DePfa Deutsche Pfandbriefbank AG, 4.750%, due 03/20/03.............................. 120,000 112,671 ------------ 1,382,463 ------------ Italy - 1.16% Buoni Poliennali Del Tes 3.250%, due 04/15/04.............................. 450,000 405,070 5.000%, due 05/01/08.............................. 720,000 674,564 6.750%, due 07/01/07.............................. 970,000 993,627 12.000%, due 09/01/02............................. 95,000 99,417 ------------ 2,172,678 ------------ Japan - 1.58% Government of Japan 2.700%, due 06/20/07...........................JPY 60,000,000 572,652 3.000%, due 09/20/05.............................. 55,000,000 527,238 3.100%, due 09/20/06.............................. 120,000,000 1,165,635 3.900%, due 06/21/04.............................. 70,000,000 674,133 ------------ 2,939,658 ------------ Spain - 0.69% Government of Spain 3.250%, due 01/31/05...........................EUR 1,000,000 890,694 6.150%, due 01/31/13.............................. 400,001 403,301 ------------ 1,293,995 ------------ Sweden - 0.33% Government of Sweden 6.750%, due 05/05/14...........................SEK 1,890,000 234,923 10.250%, due 05/05/03............................. 3,200,000 382,972 ------------ 617,895 ------------ United Kingdom - 0.31% Halifax PLC, Series EMTN, 8.750%, due 07/10/06...........................GBP 100,000 165,535 U.K. Treasury, 6.250%, due 11/25/10................. 250,000 413,925 ------------ 579,460 ------------ Total International Bonds........................... 16,441,439 ------------ Shares ------ Emerging Markets Bonds - 3.55% Brinson Emerging Markets Debt Fund (b).............. 245,194 6,625,204 ----------- Total Bonds (Cost $59,033,922)...................... 61,451,844 ----------- Short-Term Investments - 29.15% Investment Companies - 8.63% Brinson Supplementary Trust U.S. Cash Management Prime Fund............................. 16,102,318 16,102,318 ----------- U.S. Corporate Bonds - 9.18% Arrow Electronics, Inc., 7.803%, due 10/05/01.............................. 2,500,000 2,499,813 Case Credit Corp., MTN, 5.910%, due 02/19/01...................................... 2,500,000 2,492,050 Centex Corp., 6.951%, due 04/02/01.................. 5,000,000 5,000,880 Dominion Resources, Inc., 6.993%, due 01/26/01.............................. 1,723,000 1,723,000 GATX Capital Corp., Series F, MTN, 7.460%, due 04/25/01.............................. 1,000,000 1,000,722 Heller Financial, Inc., 6.471%, due 04/06/01........ 2,500,000 2,499,172 Pacific Gas & Electric Co., 144A, 7.059%, due 10/31/01.............................. 2,000,000 1,900,000 ------------ 17,115,637 ------------ U.S. Government Obligations - 1.71% U.S. Treasury Bill, due 02/08/01.................... 3,200,000 3,181,318 ------------ Commercial Paper - 9.63% Albertson's, Inc., 7.850%, due 02/28/01............. 2,000,000 1,974,706 Alcoa, Inc., 6.500%, due 01/02/01................... 1,580,000 1,579,715 Boston Scientific Corp., 7.400%, due 01/02/01.............................. 2,000,000 1,999,589 Dial Corp., 8.000%, due 03/02/01.................... 2,000,000 1,973,333 Harrah's Operating, 7.600%, due 01/03/01.............................. 2,000,000 1,999,155 Houston Industries Finance, 8.250%, due 01/16/01.............................. 2,000,000 1,993,125 Kansas City Power & Light, 7.200%, due 01/02/01.............................. 2,480,000 2,479,504 MCN Energy Enterprises, 8.100%, due 02/20/01.............................. 2,000,000 1,977,500 Utilicorp United, 8.100%, due 01/19/01.............. 2,000,000 1,991,900 ------------ 17,968,527 ------------ Total Short-Term Investments (Cost $54,463,332)................................ 54,367,800 ------------ Total Investments (Cost $219,058,826) - 120.08% (a)................. 223,964,599 Liabilities, less cash and other assets - (20.08%)........................... (37,454,272) ------------ Net Assets - 100%................................... $186,510,327 ============ See accompanying notes to schedule of investments. 15 Global Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $219,058,826; and net unrealized appreciation consisted of: Gross unrealized appreciation............................. $ 17,996,076 Gross unrealized depreciation............................. (13,090,303) ------------- Net unrealized appreciation...................... $ 4,905,773 ============= (b) Non-income producing security E.E.T.C.: Enhanced Equipment Trust Certificate FRN: Floating Rate Note - The rate disclosed is that in effect at December 31, 2000. MTN: Medium Term 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 buyers. At December 31, 2000, the value of these securities amounted to $2,262,053 or 1.21% of net assets. FORWARD FOREIGN CURRENCY CONTRACTS The Global Fund had the following open forward foreign currency contracts as of December 31, 2000:
Settlement Local Current Unrealized Date Currency Value Gain/(Loss) ---------- ---------- ------------ ------------- Forward Foreign Currency Buy Contracts: Australian Dollar.............................................. 02/08/01 26,300,000 $ 14,619,070 $ (683,322) British Pound.................................................. 02/08/01 1,750,000 2,616,001 36,993 Canadian Dollar................................................ 02/08/01 11,000,000 7,329,424 219,439 Euro........................................................... 02/08/01 49,600,000 46,652,496 625,443 Japanese Yen................................................... 02/08/01 630,000,000 5,553,189 (465,451) New Zealand Dollar............................................. 02/08/01 10,500,000 4,645,668 298,038 Swiss Franc.................................................... 02/08/01 4,000,000 2,477,102 42,828 Forward Foreign Currency Sale Contracts: Australian Dollar.............................................. 02/08/01 14,600,000 8,115,530 (71,154) British Pound.................................................. 02/08/01 6,300,000 9,417,603 65,157 Euro........................................................... 02/08/01 12,500,000 11,757,182 (566,356) Japanese Yen................................................... 02/08/01 1,600,000,000 14,103,337 996,416 Swiss Franc.................................................... 02/08/01 1,800,000 1,114,696 (99,342) ------------- Total................................................. $ 398,689 =============
FUTURES CONTRACTS The Global Fund had the following open futures contracts as of December 31, 2000:
Expiration Cost/ Current Unrealized Date Proceeds Value Gain ---------- ------------- ------------ ---------- U.S. Interest Rate Futures Buy Contracts: 5 year U.S. Treasury Notes, 211 contracts.......................... March 2001 $ 21,419,555 $ 21,851,687 $ 432,132 10 year U.S. Treasury Notes, 45 contracts.......................... March 2001 4,609,346 4,718,672 109,326 30 year U.S. Treasury Bonds, 14 contracts.......................... March 2001 1,423,036 1,464,750 41,714 Index Futures Sale Contracts: Standard & Poor's 500, 50 contracts................................ March 2001 17,454,756 16,687,500 767,256 ---------- Total..................................................... $1,350,428 ==========
The market value of investments pledged to cover margin requirements for the open futures positions at December 31, 2000 was $3,181,318. See accompanying notes to financial statements. 16 Global Equity Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds The UBS Investment Fund - Global Equity has provided an annualized return of 11.06% since its performance inception on July 31, 1995 compared to the 12.46% return for its benchmark, the MSCI World Equity (Free) Index. For the year 2000, the Fund achieved a return of -0.78%, outperforming the index's unhedged return of -13.08%. Most regions produced low or negative returns in 2000. The underlying theme driving returns after the end of the first quarter was the deflation of the technology, media and telecommunications (TMT) bubble. The decline of these sectors is evidenced by the enormous disparity between the MSCI World Value Index and the MSCI World Growth Index. These indices returned 4.1% and -23.0% in local currency, respectively. TMT sectors declined globally. Technology declined while defensive or Old Economy sectors outperformed. The Fund was well-positioned for these trends with significant underweights in the technology hardware, software and services and telecommunication services sectors. At year-end 1999 and continuing into the first quarter of 2000, these sectors had achieved valuations that projected high growth prospects into the distant future, thus ignoring the effects of competition and of the economic environment. As the U.S. Federal Reserve increased rates, inducing a slowdown in the U.S. economy, TMT stocks suffered accordingly. Conversely, the Fund was overweighted in sectors that performed well including selected financials, materials, food and beverage and utilities. These lowly valued sectors did well as they became safe havens for investors fleeing technology exposure. The Fund's geographic weightings take into account relative valuations between industrial sectors. We maintain a significant underweight in the U.S., as its equity market contains the largest and most aggressively valued stocks. Similarly, the Fund is underweighted in Japan, because of technology exposure and a very weak economy. The Fund is overweighted in the UK, where we find a number of attractively valued stocks and in Australia and New Zealand, a region with considerable promise. Continental Europe and Asia (Ex-Japan) are close to neutral, reflecting opportunities elsewhere. During the year we maintained an underweight to the Japanese yen with an associated overweight in the Australian and New Zealand dollars and an overweight to the euro with an associated underweight to the British pound. The Fund benefited from the sharp strengthening of the euro at year-end as U.S. markets declined and the Japanese yen fell. Overall, currency was a modest contributor to performance for the year. We are maintaining these positions into 2001. Going forward we are selectively taking advantage of the decline in sector valuations to improve the quality of the Fund without a concomitant increase in valuations. We are also picking over the TMT sectors to identify well-positioned companies whose stocks have fallen to attractive valuations with the sector decline. 17 Global Equity Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Total Return
6 months 1 year 3 years 5 years Inception* ended ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 --------------------------------------------------------------------------------------------------- UBS Investment Fund - Global Equity 2.17% -0.78% 7.94% 9.94% 11.06% --------------------------------------------------------------------------------------------------- MSCI World Equity (Free) Index -10.86 -13.08 10.67 12.35 12.46 ---------------------------------------------------------------------------------------------------
*Performance inception date of the UBS Investment Fund - Global Equity is 7/31/95. 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, 2000. 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
Date UBS Global EquityFund MSCI Benchmark 7/31/95 $10,000.00 $10,000.00 12/31/95 $10,993.29 $10,555.55 12/31/96 $12,786.57 $12,024.69 12/31/97 $14,047.58 $13,938.83 12/31/98 $15,897.47 $17,369.87 12/31/99 $17,808.70 $21,734.05 12/31/2000 $17,655.00 $18,891.18
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. 18 Global Equity Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Market Allocation As of December 31, 2000 (Unaudited)
Current Benchmark Strategy ---------------------------------------------------------------------- U.S. 50.6% 50.4% Australia 1.3 3.2 Austria 0.1 0.0 Belgium 0.4 0.8 Canada 2.4 1.5 Denmark 0.4 0.5 Finland 1.3 2.1 France 5.5 4.2 Germany 4.1 1.5 Hong Kong 1.0 1.2 Ireland 0.3 0.6 Italy 2.2 1.0 Japan 10.6 8.6 Netherlands 2.7 2.8 New Zealand 0.1 0.0 Norway 0.2 0.0 Portugual 0.2 0.6 Singapore 0.5 1.0 Spain 1.4 2.0 Sweden 1.3 1.5 Switzerland 3.4 3.9 United Kingdom 10.0 12.6 Cash Reserves 0.0 0.0 ---------------------------------------------------------------------- 100.0% 100.0%
Top Ten U.S. Equity Holdings As of December 31, 2000 (Unaudited)
Percent of Net Assets ---------------------------------------------------------------------- 1. Wells Fargo and Co. 1.59% 2. Masco Corp. 1.59 3. Microsoft Corp. 1.47 4. Johnson & Johnson Co. 1.45 5. FedEx Corp. 1.27 6. Wal-Mart Stores, Inc. 1.09 7. Emerson Electric Co. 1.08 8. Praxair, Inc. 1.07 9. First Data Corp. 1.03 10. Exxon Mobil Corp. 1.01 ----------------------------------------------------------------------
Currency Allocation As of December 31, 2000 (Unaudited)
Current Benchmark Strategy ---------------------------------------------------------------------- U.S. 50.5% 39.6% Australia 1.3 7.3 Canada 2.4 6.4 Denmark 0.4 0.4 Euro 18.4 32.3 Hong Kong 1.0 0.0 Japan 10.6 2.6 New Zealand 0.1 2.1 Norway 0.2 0.2 Singapore 0.5 0.5 Sweden 1.2 1.2 Switzerland 3.4 3.4 United Kingdom 10.0 4.0 ---------------------------------------------------------------------- 100.0% 100.0%
Top Ten International Equity Holdings As of December 31, 2000 (Unaudited)
Percent of Net Assets ---------------------------------------------------------------------- 1. Bayer AG 1.02% 2. Banque Nationale de Paris 0.98 3. Groupe Danone 0.98 4. Orix Corp. 0.94 5. Roche Holding AG 0.91 6. National Australian Bank Ltd., Convertible Preferred, 7.875% 0.90 7. Nokia Oyj 0.89 8. Diageo PLC 0.83 9. UPM-Kymmene Corp. 0.83 10. Nycomed Amersham PLC 0.75 ----------------------------------------------------------------------
19 Global Equity Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. EQUITIES Energy............................................ 1.95% Capital Investment Capital Goods..................................... 0.60 Electronic Components............................. 2.30 Technology........................................ 1.40 ------ 4.30 Basic Industries Chemicals......................................... 2.23 Housing/Paper..................................... 1.41 Metals............................................ 2.33 ------ 5.97 Computers Services.......................................... 0.25 Software.......................................... 2.17 Systems........................................... 1.38 ------ 3.80 Consumer Autos/Durables.................................... 0.92 Food & House Products............................. 1.17 Health: Drugs..................................... 5.85 Health: Non-Drugs................................. 2.76 Non-Durables...................................... 0.52 Recreation........................................ 0.40 Retail/Apparel.................................... 2.62 ------ 14.24 Financial Banks............................................. 3.51 Non-Banks......................................... 2.10 ------ 5.61 Telecommunications Services................................ 3.56 Transportation............................................. 2.21 Services/Miscellaneous..................................... 3.21 Utilities.................................................. 1.71 ------ Total U.S. Equities................................... 46.56 INTERNATIONAL EQUITIES Appliances & Households.................................... 0.95% Autos/Durables............................................. 1.10 Banking.................................................... 6.48 Beverages and Tobacco...................................... 1.83 Broadcasting & Publishing.................................. 2.89 Building Materials......................................... 0.60 Business & Public Service.................................. 0.81 Chemicals.................................................. 1.45 Construction............................................... 0.21 Data Processing............................................ 0.45 Electric Components........................................ 2.65 Electronics................................................ 0.44 Energy..................................................... 1.61 Financial Services......................................... 3.71 Food & House Products...................................... 2.05 Forest Products............................................ 0.83 Health & Personal Care..................................... 3.53 Housing/Paper.............................................. 0.42 Insurance.................................................. 1.84 Machinery & Engineering.................................... 0.30 Merchandising.............................................. 1.43 Mining..................................................... 0.70 Multi-Industry............................................. 1.38 Non-Ferrous Metals......................................... 0.27 Real Estate................................................ 1.25 Recreation................................................. 0.47 Technology................................................. 0.12 Telecommunications......................................... 4.32 Textile & Apparel.......................................... 0.74 Transportation............................................. 0.21 Utilities.................................................. 2.78 ------ Total International Equities.......................... 47.82 SHORT-TERM INVESTMENTS..................................... 1.30 ------ TOTAL INVESTMENTS..................................... 95.68 CASH AND OTHER ASSETS, LESS LIABILITIES......................................... 4.32 ------ NET ASSETS................................................. 100.00% ====== 20 Global Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Shares Value -------- ------------ Equities - 94.38% U.S. Equities - 46.56% Abbott Laboratories................................ 8,200 $ 397,188 Advanced Micro Devices, Inc. (b)................... 29,200 403,325 Allergan, Inc...................................... 5,300 513,106 Alza Corp. (b)..................................... 12,600 535,500 American Electric Power Co., Inc................... 12,780 594,270 American General Corp.............................. 4,500 366,750 American Home Products Corp........................ 8,700 552,885 Analog Devices, Inc. (b).......................... 2,600 133,088 Bank of America Corp............................... 9,000 412,875 Baxter International, Inc.......................... 6,400 565,200 BellSouth Corp..................................... 10,500 429,844 Bristol-Myers Squibb Co............................ 7,000 517,562 Burlington Northern Santa Fe Corp.................. 21,000 594,562 Carnival Corp., Class A............................ 8,200 252,663 Chase Manhattan Corp............................... 6,900 313,519 Citigroup, Inc..................................... 4,500 229,781 Compaq Computer Corp............................... 10,600 159,530 Computer Sciences Corp. (b)........................ 3,500 210,438 Compuware Corp. (b)................................ 31,300 195,625 COR Therapeutics, Inc. (b)......................... 6,000 211,125 Dell Computer Corp. (b)............................ 17,300 301,669 Dominion Resources, Inc............................ 8,700 582,900 E.I. du Pont de Nemours and Co..................... 6,800 328,525 Electronic Data Systems Corp....................... 4,000 231,000 Eli Lilly and Co................................... 4,300 400,169 Emerson Electric Co................................ 8,600 677,787 Exxon Mobil Corp................................... 7,300 634,644 Federated Department Stores, Inc. (b).............. 9,000 315,000 FedEx Corp. (b).................................... 20,000 799,200 First Data Corp.................................... 12,304 648,267 FleetBoston........................................ 5,300 199,081 Ford Motor Company................................. 11,400 267,188 Gateway, Inc. (b).................................. 10,400 187,096 General Mills, Inc................................. 6,500 289,656 Genzyme General (b)................................ 2,900 260,819 GPU, Inc........................................... 13,400 493,287 GreenPoint Financial Corp.......................... 10,500 429,844 Household International, Inc....................... 8,600 473,000 Illinois Tool Works, Inc........................... 7,800 464,587 International Business Machines Corp............... 1,700 144,500 Johnson & Johnson Co............................... 8,700 914,044 Kimberly-Clark Corp................................ 6,100 431,209 Lucent Technologies, Inc........................... 8,000 108,000 Masco Corp......................................... 38,900 999,244 Mattel, Inc........................................ 18,000 259,920 McGraw-Hill Companies, Inc......................... 8,100 474,862 Micron Technology, Inc. (b)........................ 11,900 422,450 Microsoft Corp. (b)................................ 21,300 926,550 Motorola, Inc...................................... 16,015 324,304 National Semiconductor Corp. (b)................... 5,400 108,675 Newell Rubbermaid, Inc............................. 7,200 163,800 Nextel Communications, Inc. (b).................... 11,300 279,675 Oracle Corp. (b)................................... 15,200 441,750 PepsiCo, Inc....................................... 6,600 327,113 Pfizer, Inc........................................ 7,000 322,000 PNC Financial Services Corp........................ 3,600 263,025 Praxair, Inc....................................... 15,200 674,500 Raytheon Co., Class B.............................. 12,100 375,856 Sapient Corp. (b).................................. 13,100 156,381 Sara Lee Corp...................................... 18,100 444,581 SBC Communications, Inc............................ 10,700 510,925 SCI Systems, Inc. (b).............................. 4,600 121,325 Smurfit-Stone Container Corp. (b).................. 30,500 455,594 Target Corp........................................ 6,900 222,525 Tellabs, Inc. (b).................................. 5,000 282,500 Texas Instruments, Inc............................. 8,600 407,425 Verizon Communications, Inc........................ 8,200 411,025 Viacom, Inc. (b).................................. 4,560 214,320 W.W. Grainger, Inc................................. 8,600 313,900 Wal-Mart Stores, Inc............................... 12,900 685,312 Watson Pharmaceutical Co. (b)...................... 4,500 230,344 Wells Fargo and Co................................. 18,000 1,002,375 XL Capital Ltd..................................... 3,600 314,550 ----------- Total U.S. Equities................................ 29,307,114 ----------- International Equities - 47.82% Australia - 3.03% Broken Hill Proprietary Co., Ltd................... 24,950 262,820 Lend Lease Corp., Ltd.............................. 11,294 105,062 National Australia Bank Ltd., Convertible Preferred, 7.875%.............................. 19,700 563,912 News Corp., Ltd.................................... 22,540 175,357 News Corp., Ltd., Preferred........................ 35,000 248,954 Rio Tinto Ltd...................................... 10,263 167,884 Westpac Banking Corp., Ltd......................... 52,645 385,988 ----------- 1,909,977 ----------- Belgium - 0.79% Electrabel S.A..................................... 1,480 334,608 Fortis B........................................... 5,002 162,494 ----------- 497,102 ----------- Canada - 1.50% Nortel Networks Corp............................... 12,200 391,911 NOVA Chemicals Corp................................ 14,200 265,659 Shaw Communications, Inc., Class B................. 12,200 284,288 ----------- 941,858 ----------- Denmark - 0.19% Tele Danmark A/S................................... 2,900 118,190 ----------- Finland - 2.14% Nokia Oyj.......................................... 12,500 557,470 Stora Enso Oyj..................................... 22,500 266,177 UPM-Kymmene Corp................................... 15,200 521,613 ----------- 1,345,260 ----------- France - 4.91% Alcatel S.A........................................ 4,930 280,040 Aventis S.A., Class A.............................. 5,250 460,881 Banque Nationale de Paris.......................... 7,062 619,951 Cie de Saint Gobain................................ 876 137,600 Groupe Danone...................................... 4,110 619,734 Schneider Electric S.A............................. 5,050 368,409 Total Fina S.A., Class B........................... 2,489 370,167 Vivendi............................................ 3,559 234,241 ----------- 3,091,023 -----------
21 Global Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Shares Value -------- ------------ Germany - 1.41% Bayer AG....................................... 12,290 $ 645,032 DaimlerChrysler AG............................. 5,750 244,289 ------------ 889,321 ------------ Hong Kong - 1.25% Cheung Kong Holdings, Ltd...................... 20,000 255,773 Guoco Group Ltd................................ 93,000 277,215 Hong Kong Electric Holdings.................... 69,000 254,772 ------------ 787,760 ------------ Ireland - 0.59% Bank of Ireland................................ 37,200 373,020 ------------ Italy - 0.93% ENI Spa........................................ 69,000 440,530 Telecom Italia Spa............................. 13,000 143,783 ------------ 584,313 ------------ Japan - 8.80% Acom Co., Ltd.................................. 1,000 73,818 Bank of Tokyo-Mitsubushi Ltd................... 15,000 149,343 Benesse Corp................................... 3,600 133,660 Canon, Inc..................................... 8,000 280,210 Fuji Photo Film Co., Ltd....................... 7,000 292,995 Fujitsu........................................ 5,000 73,730 Honda Motor Co................................. 12,000 447,636 Hoya Corp...................................... 2,000 147,110 Ito Yokado Co., Ltd............................ 4,000 199,650 Kao Corp....................................... 4,000 116,287 Minebea Co., Ltd............................... 27,000 250,140 Mitsubishi Estate Co., Ltd..................... 25,000 267,075 Mizuho Holding, Inc............................ 56 347,180 Nippon Telegraph & Telephone Corp.............. 44 317,093 Nomura Securities Co., Ltd..................... 24,000 431,874 Orix Corp...................................... 5,900 592,067 Rohm Co........................................ 900 171,016 Secom Co., Ltd................................. 2,000 130,473 Sony Corp...................................... 5,800 401,226 Takeda Chemical Industries..................... 5,000 295,972 TDK Corp....................................... 3,000 292,119 West Japan Railway Co.......................... 30 132,662 ------------ 5,543,336 ------------ Netherlands - 2.91% ABN AMRO Holdings NV........................... 16,600 377,485 Aegon NV....................................... 6,806 281,549 Elsevier NV.................................... 16,600 244,072 ING Groep NV................................... 58 4,633 Philips Electronics NV......................... 12,067 442,084 TNT Post Group NV.............................. 10,137 245,173 Wolters Kluwer NV.............................. 8,689 236,910 ------------ 1,831,906 ------------ Portugal - 0.60% EDP Electricidade de Portugal S.A.............. 115,000 380,065 ------------ Singapore - 0.52% DBS Group Holdings Ltd......................... 13,000 146,943 Singapore Press Holdings Ltd................... 12,046 177,842 ------------ 324,785 ------------ Spain - 1.94% Altadis S.A.................................... 27,724 429,495 Banco Popular Espanol S.A...................... 7,099 247,280 Banco Santander Central Hispano S.A............ 24,155 258,541 Endesa S.A..................................... 7,814 133,158 Telefonica S.A. (b)............................ 9,171 151,547 ------------ 1,220,021 ------------ Sweden - 1.56% Electrolux AB, B Shares........................ 14,950 194,094 Investor AB, B Shares.......................... 14,170 211,750 Nordea AB...................................... 49,390 374,266 Swedish Match AB............................... 51,990 202,770 ------------ 982,880 ------------ Switzerland - 3.56% Nestle S.A. (Reg.)............................. 119 277,581 Novartis AG (Reg.)............................. 240 424,314 Roche Holding AG (Gen.)........................ 56 570,540 Swiss Reinsurance Co. (Reg.)................... 170 407,559 Swisscom AG (Reg.)............................. 750 195,079 Zurich Financial Services AG................... 608 366,563 ------------ 2,241,636 ------------ United Kingdom - 11.19% Barclays PLC................................... 5,000 154,759 British Land Company PLC....................... 22,000 156,103 British Telecommunications PLC................. 31,000 264,882 Diageo PLC..................................... 46,630 522,422 Dixons Group PLC............................... 26,000 86,999 FKI PLC........................................ 83,405 274,100 Hanson PLC..................................... 35,000 239,980 HSBC Holdings PLC.............................. 22,000 323,708 International Power PLC........................ 50,500 189,348 Invensys PLC................................... 82,000 191,700 Lattice Group PLC (b).......................... 147,000 331,581 Lloyds TSB Group PLC........................... 34,220 361,916 Marconi PLC.................................... 18,000 193,329 Northern Foods PLC............................. 53,000 109,257 Nycomed Amersham PLC........................... 57,000 474,695 Powergen PLC................................... 49,000 462,603 Prudential Corp. PLC........................... 19,000 305,678 Reckitt Benckiser PLC.......................... 12,000 165,275 Rentokil Initial PLC........................... 53,800 185,648 RMC Group PLC.................................. 15,000 131,978 Scottish & Southern Energy PLC................. 40,650 376,485 Tesco PLC...................................... 77,250 314,744 The Great Universal Stores PLC................. 49,000 384,648 Trinity Mirror PLC............................. 21,175 144,318 United News & Media PLC........................ 24,000 304,737 Vodafone Group PLC............................. 107,188 393,090 ------------ 7,043,983 ------------ Total International Equities................... 30,106,436 ------------ Total Equities (Cost $53,543,707).............. 59,413,550 ------------
22 Global Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value --------- ----------- Short-Term Investments - 1.30% Investment Companies - 1.30% Brinson Supplementary Trust U.S. Cash Management Prime Fund (Cost $817,830)...................... 817,830 $ 817,830 ----------- Total Investments (Cost $54,361,537) - 95.68% (a)...... 60,231,380 Cash and other assets, less liabilities - 4.32%............. 2,720,043 ----------- Net Assets - 100%...................... $62,951,423 =========== NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $54,361,537; and net unrealized appreciation consisted of: Gross unrealized appreciation........................... $11,050,716 Gross unrealized depreciation........................... (5,180,873) ----------- Net unrealized appreciation........................ $ 5,869,843 =========== (b) Non-income producing security FORWARD FOREIGN CURRENCY CONTRACTS The Global Equity Fund had the following open forward foreign currency contracts as of December 31, 2000:
Settlement Local Current Unrealized Date Currency Value Gain/(Loss) ---------- ------------ ------------ ------------- Forward Foreign Currency Buy Contracts: Australian Dollar................................ 06/01/01 4,650,000 $ 2,586,710 $ 154,109 Canadian Dollar.................................. 06/01/01 5,100,000 3,404,108 92,355 Euro............................................. 06/01/01 11,900,000 11,236,274 1,098,482 Japanese Yen..................................... 06/01/01 58,000,000 520,236 (19,425) New Zealand Dollar............................... 06/01/01 3,100,000 1,374,083 135,261 Swiss Francs..................................... 06/01/01 750,000 468,358 16,591 Forward Foreign Currency Sale Contracts: British Pound.................................... 06/01/01 3,500,000 5,237,404 (304,819) Canadian Dollar.................................. 06/01/01 500,000 333,736 (4,281) Euro............................................. 06/01/01 1,350,000 1,274,704 (52,854) Hong Kong Dollar................................. 06/01/01 5,000,000 642,143 310 Japanese Yen..................................... 06/01/01 645,000,000 5,785,382 196,367 Swiss Francs..................................... 06/01/01 750,000 468,358 (45,346) ----------- Total....................................... $ 1,266,750 ===========
See accompanying notes to financial statements. 23 Global Technology Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Since its performance inception on May 31, 2000, the UBS Investment Fund - Global Technology returned -36.46% compared to a -26.34% return of the Morgan Stanley High Tech Index, the Fund's benchmark. The Fund's overweight positions in Internet, telecommunications services, and computer hardware names hurt performance versus its benchmark. After years of superior gains for technology stock investors, 2000 brought higher volatility and painfully negative performance, reminding investors that technology stocks can decline as well as rise. While technology stocks have always been volatile in the short term, more than a decade had passed without a big down year for major technology-heavyindices such as the Nasdaq Composite and the S&P 500 Technology Sector Index. The year 2000 ended with the Nasdaq Composite Index down over 39%, while the S&P 500 Technology Sector Index dropped more than 40% for the year. Major technology stocks of the decade crumbled in 2000, with Microsoft down 62%, Dell down 65%, Lucent down 79%, Yahoo down 86%, and Amazon down 79%. The year began with a quarter of continued technology stock gains. By March, the tightening of the capital markets began to threaten the viability of many unprofitable new companies whose future success depended on the continued availability of new low cost capital. Making things worse, many of the lock-up agreements that had prevented stock sales by founders and early investors in recently public companies expired. Many high-flying new economy stocks crashed as the artificial scarcity of shares that had been created in many of the hot IPO stocks was reversed. Although many investors nurtured hopes of a year-end recovery, the fourth quarter showed that what appeared initially to be a valuation-driven correction also involved weak demand and declining business fundamentals. Tight credit, a lengthy election dispute, and a falling stock market combined to weaken consumer confidence during the seasonally strongest shopping period, reducing sales of automobiles, personal computers, and other durable goods. Soft personal computer sales combined with the lack of financing for telecommunications equipment weakened semiconductor component orders, leading to severe declines in semiconductor stocks. Many technology stocks have declined to levels that discount a recession in the U.S. over the next quarter or two. While current technology stock valuation levels are much more attractive than those we saw just one year ago, the timing of a change in the tone of the market is always uncertain. If the new administration succeeds in giving an immediate stimulus to the economy and truncating the slowdown early in 2001, we would expect technology stock prices to reflect improving economic prospects rather quickly. Providers of high-tech products and services remain ready and able to deliver the productivity-boosting technological innovations that have fuelled the long global economic expansion as soon as consumer confidence and investor confidence return and rekindle demand. Given the current reduced valuation levels and our optimism about the new administration's efforts to stimulate the economy, we remain very positive on the long-term prospects for technology stocks. 24 Global Technology Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Total Return 6 months 5/31/00* ended to 12/31/00 12/31/00 -------------------------------------------------------------------------------- UBS Investment Fund - Global Technology -41.08% -36.46% -------------------------------------------------------------------------------- Morgan Stanley High Tech Index -34.23 -26.34 -------------------------------------------------------------------------------- *Performance inception date of the UBS Investment Fund - Global Technology is 5/31/00. 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 - Global Technology and the Morgan Stanley High Tech Index if you had invested $10,000 on May 31, 2000, and had reinvested all your income dividends and capital gain distributions through December 31, 2000. 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 Technology vs. Morgan Stanley High Tech Index Wealth Value with Dividends Reinvested
Date UBS Investment Fund - Global Morgan Stanley High Technology Tech Index 31-May-2000 $10,000 $10,000 30-Jun-2000 $10,783 $11,199 31-Jul-2000 $10,258 $10,858 31-Aug-2000 $11,519 $12,311 30-Sep-2000 $ 9,618 $10,485 31-Oct-2000 $ 9,045 $10,231 30-Nov-2000 $ 6,714 $ 7,814 31-Dec-2000 $ 6,354 $ 7,366
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 Global Technology Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Top Ten Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets ---------------------------------------------------------- 1. EMC Corp. 4.37% 2. Xilinx, Inc. 4.17 3. Tellabs, Inc. 3.95 4. Micron Technology, Inc. 3.79 5. QUALCOMM, Inc. 3.71 6. Palm, Inc. 3.61 7. Electronic Data Systems Corp. 3.56 8. Oracle Corp. 3.46 9. PeopleSoft, Inc. 3.21 10. International Business Machines Corp. 3.14 ---------------------------------------------------------- Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) ---------------------------------------------------------- U.S. EQUITIES Computers Services................................... 8.41% Software................................... 12.50 Systems.................................... 18.88 ------ 39.79 Electronic Components......................... 22.88 Telecommunications Equipment.................................. 10.75 Services................................... 6.06 ------ 16.81 Internet Services............................. 9.19 Services/Miscellaneous........................ 3.92 ------ Total U.S. Equities.................... 92.59 INTERNATIONAL EQUITIES Computer Systems.............................. 0.50% Electronic Components......................... 1.59 Telecommunications Equipment.................. 2.63 ------ Total International Equities........... 4.72 SHORT-TERM INVESTMENTS........................ 4.87 ------ TOTAL INVESTMENTS...................... 102.18 LIABILITIES, LESS CASH AND OTHER ASSETS..................... (2.18) ------ NET ASSETS.................................... 100.00% ====== ----------------------------------------------------------- 26 Global Technology Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- Equities - 97.31% U.S. Equities - 92.59% ADC Telecom, Inc. (b)................................ 300 $ 5,438 Advanced Micro Devices, Inc. (b)..................... 1,000 13,812 Agilent Technologies, Inc. (b)....................... 219 11,990 Amazon.com, Inc. (b)................................. 1,500 23,344 America On-Line, Inc. (b)............................ 750 26,100 Amkor Technologies, Inc. (b)......................... 500 7,758 Applied Materials, Inc. (b).......................... 400 15,275 Atmel Corp. (b)...................................... 850 9,881 Automatic Data Processing, Inc. ..................... 400 25,325 Avici Systems, Inc. (b).............................. 400 9,850 Broadcom Corp. (b)................................... 200 16,900 Cisco Systems, Inc. (b).............................. 900 34,425 Compaq Computer Corp. ............................... 1,800 27,090 Computer Associates International, Inc. ............. 850 16,575 DuPont Photomasks, Inc. (b).......................... 150 7,927 Electronic Data Systems Corp. ....................... 750 43,312 EMC Corp. (b)........................................ 800 53,200 Emcore Corp. (b)..................................... 300 14,100 eMerge Interactive, Inc. (b)......................... 1,500 5,438 Gateway, Inc. (b).................................... 500 8,995 Hewlett-Packard Co. ................................. 1,150 36,297 I2 Technologies, Inc. (b)............................ 250 13,594 Inprise Corp. (b).................................... 1,400 7,744 Intel Corp. ......................................... 350 10,587 International Business Machines Corp. ............... 450 38,250 Intuit, Inc. (b)..................................... 850 33,522 Jabil Circuit, Inc. (b).............................. 400 10,150 JDS Uniphase Corp. (b)............................... 400 16,675 Juniper Networks, Inc. (b)........................... 100 12,606 KLA-Tencor Corp. (b)................................. 400 13,475 Leap Wireless International, Inc. (b)................ 200 6,250 Lucent Technologies, Inc. ........................... 750 10,125 Micron Technology, Inc. (b).......................... 1,300 46,150 Microsoft Corp. (b).................................. 300 13,050 Motorola, Inc. ...................................... 1,200 24,300 Network Plus Corp. (b)............................... 2,350 5,875 Novellus Systems, Inc. (b)........................... 400 14,375 Oracle Corp. (b)..................................... 1,450 42,141 Palm, Inc. (b)....................................... 1,550 43,884 PeopleSoft, Inc. (b)................................. 1,050 39,047 QUALCOMM, Inc. (b)................................... 550 45,203 Safeguard Scientifics, Inc. (b)...................... 650 4,306 Solectron Corp. (b).................................. 300 10,170 Sun Microsystems, Inc. (b)........................... 1,250 34,844 Sycamore Networks, Inc. (b).......................... 500 18,625 Tellabs, Inc. (b).................................... 850 48,025 Texas Instruments, Inc. ............................. 700 33,162 Titan Corp. (b)...................................... 900 14,625 Transmeta Corp. (b).................................. 500 11,750 Uniroyal Technology Corp. (b)........................ 400 2,500 VerticalNet, Inc. (b)................................ 400 2,663 Winstar Communications, Inc. (b)..................... 700 8,181 Xilinx, Inc. (b)..................................... 1,100 50,737 Yahoo!, Inc. (b)..................................... 900 27,155 ----------- Total U.S. Equities.................................. 1,126,778 ----------- International Equities - 4.72% Canada - 2.64% Nortel Networks Corp. ............................... 1,000 32,063 ----------- France - 0.88% STMicroelectronics N.V. ............................. 250 10,703 ----------- Singapore - 0.70% Flextronics International Ltd. (b)................... 300 8,550 ----------- Switzerland - 0.50% Logitech International S.A., ADR..................... 250 6,063 ----------- Total International Equities......................... 57,379 ----------- Total Equities (Cost $1,596,761)..................... 1,184,157 ----------- Short-Term Investments - 4.87% Investment Companies - 4.87% Chase Vista U.S. Government Money Market Fund (Cost $59,258).......................... 59,258 59,258 ----------- Total Investments (Cost $1,656,019) - 102.18% (a).................... 1,243,415 Liabilities, less cash and other assets - (2.18%).... (26,490) ----------- Net Assets - 100%.................................... $ 1,216,925 =========== NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $1,656,019; and net unrealized depreciation consisted of: Gross unrealized appreciation................ $ 51,862 Gross unrealized depreciation................ (464,466) ----------- Net unrealized depreciation................. $ (412,604) =========== (b) Non-income producing security See accompanying notes to financial statements. 27 Global Biotech Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Since its performance inception on June 30, 2000, the UBS Investment Fund - Global Biotech has provided a return of -6.82%, compared to a -10.86% return of its benchmark, the Nasdaq Biotech Index. Despite year-end volatility caused by general fears about the U.S. economy, the biotechnology sector ended 2000 with big gains. For 2000, the AMEX and Nasdaq Biotech Index returns were 62% and 23%, respectively. Biotech was in-line with the pharmaceutical sector (Amex Pharmaceutical Index, up 28%), and outperformed the general market (S&P500, down 9%) the small caps market (Russell 2000, down 3%) and the technology sector (Morgan Stanley High Tech, down 27%). Fuel for the biotechnology rally had been increasing for a few years as more biotechnology drugs began to work in humans. However, the spark that set-off the year 2000 biotech rally was Celera's announcement on its progress in mapping the sequence of the first human genome. During the first quarter, unbridled enthusiasm carried investors away until political squabbles over the commercial use of the first sequence popped the bubble in March. Despite volatility, the biotech sector had positive gains in the first, second and third quarters. Excess supply, a few missed revenue expectations, and political uncertainty overshadowed the fabulous data presented at medical meetings during the fourth quarter, resulting in a year-end decline- but also a return to rational investing. During 2000, 297 of 615 publicly traded biotechnology and related stocks had positive returns. In general, investors broadened their interest in biotechnology companies, however eschewing micro capitalization biotech and related stocks, i.e. stocks with a market capitalization of less than USD 0.25 billion. The year 2000 average return of the 37 large capitalization biotech and related stocks was 79%, with 33 having positive returns. The average return of the 73 mid capitalization biotech stocks was 104%, with 62 having positive returns. The average return of the 140 small capitalization biotech stocks was 44%, with 81 having positive returns. By contrast, the average return of the 362 micro cap biotech stocks was-9%, with only 119 showing positive returns. In 2001, the biotech industry will continue to mature as more companies generate sales and reach profitability. With more than 800 products in clinical trial development, we expect many research breakthroughs in the next few years, particularly in the treatment of cancer, genomics, and diagnostics. In the interim, we expect continued consolidation in this industry. Pharmaceutical companies and large biotechs will keep buying smaller biotechs. Momentum players will come and go in this sector and contribute to short-term volatility, but they will have little impact on the promising long-term picture that is developing in this area. 28 Global Biotech Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Total Return 6/30/00* to 12/31/00 -------------------------------------------------------------------------------- Investment Fund - Global Biotech -6.82% -------------------------------------------------------------------------------- Nasdaq Biotech Index -10.86 -------------------------------------------------------------------------------- *Performance inception date of the UBS Investment Fund - Global Biotech is 6/30/00. 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 - Global Biotech and the Nasdaq Biotech Index if you had invested $10,000 on June 30, 2000, and had reinvested all your income dividends and capital gain distributions through December 31, 2000. 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 Biotech vs. Nasdaq Biotech Index Wealth Value with Dividends Reinvested
UBS Investment Fund - Nasdaq Biotech Global Biotech Index 6/30/2000 $10,000 $10,000 7/31/2000 $ 9,205 $ 9,234 8/31/2000 $11,143 $11,202 9/30/2000 $11,259 $10,809 10/31/2000 $10,414 $ 9,930 11/30/2000 $ 8,716 $ 8,620 12/31/2000 $ 9,318 $ 8,914
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. 29 Global Biotech Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Top Ten Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets ---------------------------------------------------------- 1. Amgen, Inc. 8.34% 2. Idec Pharmaceuticals Corp. 6.18 3. Applera Corp. - Applied Biosystems Group 5.02 4. Serono S.A 4.75 5. Millennium Pharmaceuticals, Inc. 4.58 6. Genentech, Inc. 4.35 7. Immunex Corp. 3.97 8. Human Genome Sciences, Inc. 3.29 9. Waters Corp. 3.22 10. Genzyme General 3.20 ---------------------------------------------------------- Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) ---------------------------------------------------------- U.S. EQUITIES Biomedical....................... 20.16% Gene............................. 2.50 Health: Drugs.................... 13.41 Health: Non-Drugs................ 2.07 Medical Products................. 4.23 Technology....................... 3.22 Therapeutics..................... 10.53 Research and Development......... 20.68 ------ Total U.S. Equities........... 76.80 INTERNATIONAL EQUITIES Computer Systems................. 0.89% Chemicals........................ 0.30 Gene............................. 2.92 Health: Drugs.................... 8.66 Research & Development........... 2.62 Technology....................... 0.62 Therapeutics..................... 1.33 ------ Total International Equities.. 17.34 SHORT-TERM INVESTMENTS............. 3.90 ------ TOTAL INVESTMENTS............. 98.04 CASH AND OTHER ASSETS, LESS LIABILITIES................. 1.96 ------ NET ASSETS......................... 100.00% ====== 30 Global Biotech Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- Equities - 94.14% U.S. Equities - 76.80% Abgenix, Inc. (b)......................................... 600 $ 35,438 Alexion Pharmaceuticals, Inc. (b)......................... 100 6,494 Alza Corp. (b)............................................ 500 21,250 Amgen, Inc. (b)........................................... 2,200 140,662 Applera Corp-Applied Biosystems Group..................... 900 84,656 Applera Corp-Celera Genomics Group (b).................... 400 14,375 Avigen, Inc. (b).......................................... 200 4,150 Biogen, Inc. (b).......................................... 400 24,025 Celgene Corp. (b)......................................... 250 8,125 Cell Therapeutics, Inc. (b)............................... 750 33,797 Cephalon, Inc. (b)........................................ 350 22,159 COR Therapeutics, Inc. (b)................................ 350 12,316 Corixa Corp. (b).......................................... 200 5,575 Cryolife, Inc. (b)........................................ 225 6,806 CV Therapeutics, Inc. (b)................................. 400 28,300 Digene Corp. (b).......................................... 250 11,172 Genentech, Inc. (b)....................................... 900 73,350 GenVec, Inc. (b).......................................... 50 475 Genzyme General (b)....................................... 600 53,962 Gilead Sciences, Inc. (b)................................. 300 24,881 Human Genome Sciences, Inc. (b)........................... 800 55,450 Idec Pharmaceuticals Corp. (b)............................ 550 104,259 ImClone Systems (b)....................................... 550 24,200 Immunex Corp. (b)......................................... 1,650 67,031 Immunogen, Inc. (b)....................................... 100 2,144 Large Scale Biology Corp. (b)............................. 400 3,800 Medarex, Inc. (b)......................................... 700 28,525 Medicines Company (b)..................................... 200 4,100 Medimmune, Inc. (b)....................................... 1,100 52,456 Millennium Pharmaceuticals, Inc. (b)...................... 1,250 77,344 Minimed, Inc. (b)......................................... 450 18,914 Myriad Genetics, Inc. (b)................................. 150 12,413 NPS Pharmaceuticals Inc. (b).............................. 100 4,800 OSI Pharmaceuticals, Inc. (b)............................. 350 28,044 Praecis Pharmaceuticals, Inc. (b)......................... 250 7,313 Protein Design Labs, Inc. (b)............................. 450 39,094 Quest Diagnostics, Inc. (b)............................... 200 28,400 Scios, Inc. (b)........................................... 100 2,225 Texas Biotech Corp. (b)................................... 300 2,577 Titan Pharmaceuticals, Inc. (b)........................... 150 5,306 Transkaryotic Therapies, Inc. (b)........................ 700 25,506 Vertex Pharmaceuticals, Inc. (b).......................... 500 35,750 Waters Corp. (b).......................................... 650 54,275 ---------- Total U.S. Equities....................................... 1,295,894 ---------- International Equities - 17.34% Canada - 1.33% QLT, Inc. (b)............................................. 800 22,400 ---------- Denmark - 3.82% H. Lundbeck A/S........................................... 150 14,717 Novo Nordisk A/S.......................................... 250 44,812 Novozymes A/S (b)......................................... 250 5,000 ---------- 64,529 ---------- Germany - 0.89% Lion Bioscience AG (b).................................... 200 15,075 ---------- Israel - 2.17% Teva Pharmaceutical Industries............................ 500 36,625 ---------- Netherlands - 1.74% Qiagen N.V. (b)........................................... 850 29,405 ---------- Spain - 0.78% Zeltia S.A. (b)........................................... 900 10,520 Zeltia S.A. Bonus Rights (b).............................. 900 2,603 ---------- 13,123 ---------- Switzerland - 5.43% Actelion Ltd. (b)......................................... 25 11,354 Serono S.A. (b)........................................... 3,350 80,191 ---------- 91,545 ---------- United Kingdom - 1.18% Cambridge Antibody Technology Group PLC................... 350 19,867 ---------- Total International Equities.............................. 292,569 ---------- Total Equities (Cost $1,583,835).......................... 1,588,463 ---------- Short-Term Investments - 3.90% Investment Companies - 3.90% Chase Vista U.S. Government Money Market Fund (Cost $65,798)............................... 65,798 65,798 ---------- Total Investments (Cost $1,649,633) - 98.04% (a)........................... 1,654,261 Cash and other assets, less liabilities - 1.96%................................. 33,071 ---------- Net Assets - 100%......................................... $1,687,332 ========== NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $1,649,633; and net unrealized appreciation consisted of: Gross unrealized appreciation ............................. $ 152,542 Gross unrealized depreciation ............................. (147,914) --------- Net unrealized appreciation ....................... $ 4,628 ========= (b) Non-income producing security See accompanying notes to financial statements. 31 Global Bond Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Since its performance inception on July 31, 1995, the UBS Investment Fund - Global Bond has posted an annualized return of 4.00% compared to the 3.16% return of its benchmark, the Salomon Smith Barney World Government Bond Index. In 2000 the Fund recorded a rise of 0.83% compared to the benchmark's return of 1.59%. Global bonds started the new millennium in the grip of a bear market but by the fourth quarter of the year investor sentiment had turned dramatically, particularly in the U.S. and other dollar bloc markets, and yields fell sharply along the curve. The yields on benchmark 10-year government bonds closed over 50 basis points below their end 1999 levels in Europe and by well over 100 basis points lower in the dollar bloc markets. This improvement in the markets' fortunes was triggered by growing evidence of a rapid slowdown in U.S. economic activity and the realization that official interest rates would peak at lower levels than anticipated earlier in the year. A slowing in economic growth in the major economic blocs also reversed the upward trend in the oil price and dampened any anxieties over a resurgence in inflation. Burgeoning budget surpluses in several countries, most notably the U.S., UK and Sweden, limited the supply of government issuance and helped this sector to outperform corporate and other non-government bonds. The main reason for the relative outperformance of the Fund in 2000 was the market allocation strategy and specifically the large underweight in Japan. Although yields were little changed on the year, Japanese government bonds suffered from the decision by the Bank of Japan to remove its zero-interest-rate policy in the late summer and underperformed other markets. An underweight in the yen, as well as an overweight in the euro, resulted in currency allocation also benefiting relative performance. However, a negative contribution came from bond management primarily through the exposure to non-government bonds in the U.S. component of the Fund. 32 Global Bond Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Total Return
6 months 1 year 3 years 5 years Inception* ended ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 ----------------------------------------------------------------------------------------------------------------- UBS Investment Fund - Global Bond 1.61% 0.83% 1.61% 2.90% 4.00% ----------------------------------------------------------------------------------------------------------------- Salomon Smith Barney World Gov't Bond Index 1.56 1.59 3.89 3.10 3.16 -----------------------------------------------------------------------------------------------------------------
*Performance inception date of the UBS Investment Fund - Global Bond is 7/31/95. 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, 2000. 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
UBS Investment Fund - Salomon Smith Barney Global Bond World Gov't Bond Index 7/31/95 $10,000 $10,000 12/31/95 $10,722 $10,162 12/31/96 $11,654 $10,531 12/31/97 $11,791 $10,557 12/31/98 $13,156 $12,171 12/31/99 $12,270 $11,652 12/31/00 $12,370 $11,838
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. 33 Global Bond Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Asset Allocation As of December 31, 2000 (Unaudited) Current Benchmark Strategy -------------------------------------------- U.S. 26.1% 26.1% Australia 0.5 0.0 Austria 1.1 4.1 Belgium 2.7 0.0 Canada 2.8 5.3 Denmark 1.1 4.1 Finland 0.5 0.0 France 7.9 12.5 Germany 8.4 6.1 Greece 1.0 0.0 Ireland 0.3 0.0 Italy 8.3 9.8 Japan 26.0 12.5 Netherlands 2.4 0.0 Portugal 0.5 0.0 Spain 3.4 6.0 Sweden 1.1 2.9 Switzerland 0.5 0.0 TIPS 0.0 3.9 U.K. 5.4 2.4 Euro 0.0 4.3 ----------------------------------------- 100.0% 100.0% Currency Allocation As of December 31, 2000 (Unaudited) Current Benchmark Strategy -------------------------------------------- U.S. 26.1% 16.1% Australia 0.5 8.5 Canada 2.8 4.8 Denmark 1.2 1.1 Euro 36.4 49.9 Japan 26.0 18.0 Sweden 1.1 1.1 Switzerland 0.5 0.5 U.K 5.4 0.0 ----------------------------------------- 100.0% 100.0% Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) ---------------------------------------------------------------------- U.S. BONDS Corporate Bonds Construction............................................... 0.12% Consumer................................................... 0.40 Energy..................................................... 0.52 Financial Services......................................... 3.78 Publishing................................................. 0.27 Recreation................................................. 0.25 Retail/Apparel............................................. 0.07 Services/Miscellaneous..................................... 0.76 Telecommunications......................................... 0.61 Utilities.................................................. 0.33 ------ Total U.S. Corporate Bonds.............................. 7.11 Asset-Backed................................................. 1.87 Corporate Mortgage-Backed Securities......................... 4.87 International Dollar Bonds................................... 1.67 U.S. Government Mortgage-Backed Securities................... 7.34 U.S. Government Obligations.................................. 8.62 ------ Total U.S. Bonds........................................ 31.48 INTERNATIONAL BONDS Foreign Government Bonds..................................... 64.19 SHORT-TERM INVESTMENTS....................................... 6.31 ------ TOTAL INVESTMENTS....................................... 101.98 LIABILITIES, LESS CASH AND OTHER ASSETS...................... (1.98) ------ NET ASSETS................................................... 100.00% ====== 34 Global Bond Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Face Amount Value ------ ----- Bonds - 95.67% U.S. Bonds - 31.48% U.S. Corporate Bonds - 7.11% Boeing Capital Corp., 7.100%, due 09/27/05.................................. $ 200,000 $ 208,269 Capital One Bank, Bank Note, 8.250%, due 06/15/05.................................. 30,000 30,341 Cendant Corp., 7.750%, due 12/01/03............. 100,000 97,359 Centaur Funding Corp., Class B, 144A, 0.000%, due 04/21/20 (b)...................... 750 136,875 Centex Corp., 9.750%, due 06/15/05.............. 45,000 46,117 Federated Department Stores 6.300%, due 04/01/09.......................... 25,000 22,718 8.500%, due 06/01/10.......................... 5,000 5,223 Florida Power & Light Co., 6.875%, due 12/01/05.................................. 100,000 102,386 FMR Corp., 144A, 7.570%, due 06/15/29........... 100,000 100,655 KeySpan Corp., 7.625%, due 11/15/10............. 40,000 42,501 KFW International Finance, 1.000%, due 12/20/04...............................JPY 120,000,000 1,059,878 Lilly Del Mar, 144A, 7.717%, due 08/01/29.................................. $ 150,000 155,266 News America Holdings, 7.750%, due 12/01/45.................................. 120,000 103,570 Nisource Finance Corp., 144A, 7.875%, due 11/15/10.................................. 55,000 57,779 Sempra Energy, 7.950%, due 03/01/10............. 100,000 97,335 Southern California Edison, 7.200%, due 11/03/03.................................. 100,000 85,781 USA Waste Services, 7.000%, due 10/01/04.................................. 300,000 293,869 Verizon Global Funding Corp., 144A, 7.750%, due 12/01/30.......................... 100,000 101,752 ---------- 2,747,674 ---------- Asset-Backed Securities - 1.87% Comed Transitional Funding Trust, 98-1, Class A7, 5.740%, due 12/25/10................ 370,000 359,022 Vanderbilt Mortgage Finance, 98-B, Class 1A2, 6.120%, due 05/07/09............... 362,039 361,221 ---------- 720,243 ---------- Corporate Mortgage-Backed Securities - 4.87% DLJ Commercial Mortgage Corp., 99-CG2, Class A1B, 7.180%, due 08/10/10............... 140,000 146,635 DVI Receivables Corp., 6.808%, due 03/12/04.................................. 35,000 35,304 GE Capital Mortgage Services, Inc., 93-7F, Class FA3, 6.500%, due 09/25/08............... 46,137 45,895 Heller Financial Commercial Mortgage Assets, 99-PH1, Class A1, 6.500%, due 05/15/31.................................. 372,433 376,685 PNC Mortgage Securities Corp., 94-3, Class A8, 7.500%, due 07/25/24................ 190,000 195,281 Prudential Home Mortgage Securities, 93-43, Class A9, 6.750%, due 10/25/23......... 189,489 188,553 Prudential Home Mortgage Securities, 96-7, Class A4, 6.750%, due 06/25/11.......... 150,000 149,406 Residential Asset Securitization Trust, 97-A7, Class A1, 7.500%, due 09/25/27......... 375 375 Residential Asset Securitization Trust, 98-A1, Class A1, 7.000%, due 03/25/28......... 50,708 50,473 Residential Accredit Loans, Inc., 98-QS4, Class AI5, 7.000%, due 03/25/28............... 400,000 396,214 Structured Asset Securities Corp., 98-RF2, 8.582%, due 07/15/27.......................... 265,675 293,246 ---------- 1,878,067 ---------- International Dollar Bonds - 1.67% Credit Suisse-London, 144A, Resettable Perpetual Preferred, 7.900%................... 250,000 240,835 Korea Development Bank, 7.125%, due 09/17/01.................................. 150,000 150,267 State of Qatar, 144A, 9.750%, due 06/15/30.................................. 80,000 80,000 United Mexican States Global, 9.875%, due 02/01/10.......................... 160,000 171,680 ---------- 642,782 ---------- U.S. Government Mortgage-Backed Securities - 7.34% Fannie Mae Whole Loan, 95-W3, Class A, 9.000%, due 04/25/25.......................... 7,079 7,352 Federal Home Loan Mortgage Corp., 7.000%, due 10/15/13.......................... 68,215 69,353 Federal Home Loan Mortgage Corp., Gold 5.500%, due 02/01/07.......................... 38,289 37,183 8.500%, due 07/01/30.......................... 175,811 181,147 9.000%, due 07/01/30.......................... 129,139 133,405 Federal National Mortgage Association 6.500%, due 03/01/19.......................... 111,012 110,253 6.875%, due 09/15/10.......................... 90,000 95,950 7.000%, due 03/01/29.......................... 24,531 24,590 7.125%, due 06/15/10.......................... 295,000 319,444 7.500%, due 01/12/30.......................... 680,000 689,138 8.000%, due 01/01/31.......................... 600,000 613,687 Government National Mortgage Association 7.000%, due 08/15/24.......................... 309,820 312,336 7.000%, due 07/15/25.......................... 43,921 44,273 7.500%, due 08/15/23.......................... 53,183 54,325 7.500%, due 12/15/23.......................... 81,800 83,584 7.500%, due 01/15/24.......................... 55,459 56,634 ---------- 2,832,654 ---------- U.S. Government Obligations - 8.62% U.S. Treasury Inflation Indexed Note 3.625%, due 04/15/28.......................... 280,000 295,590 3.875%, due 04/15/29.......................... 1,390,000 1,508,254 U.S. Treasury Note 5.625%, due 05/15/08.......................... 90,000 92,445 5.750%, due 08/15/03.......................... 170,000 172,524 6.125%, due 12/31/01.......................... 555,000 558,352 6.625%, due 02/15/27.......................... 540,000 616,631 7.000%, due 07/15/06.......................... 35,000 38,105 7.500%, due 02/15/05.......................... 40,000 43,504 ---------- 3,325,405 ---------- Total U.S. Bonds................................ 12,146,825 ---------- 35 Global Bond Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Face Amount Value ------ ----- International Bonds - 64.19% Austria - 3.86% Republic of Austria 4.125%, due 01/15/14....................EUR 550,000 $ 453,691 4.300%, due 07/15/03....................... 750,000 699,229 5.500%, due 01/15/10....................... 350,000 336,507 ----------- 1,489,427 ----------- Canada - 5.23% Government of Canada 5.500%, due 06/01/09....................CAD 710,000 475,927 6.000%, due 06/01/08....................... 970,000 669,274 Province of Ontario 6.100%, due 11/19/10....................... 700,000 476,359 7.500%, due 01/19/06....................... 550,000 397,249 ----------- 2,018,809 ----------- Denmark - 7.16% City of Copenhagen, 6.250%, due 03/15/01............................DKK 2,400,000 302,130 Depfa Pfandbrief Bank, 5.750%, due 03/04/09....................EUR 1,280,000 1,228,828 Great Belt, 7.000%, due 09/02/03..........DKK 2,800,000 366,395 Kingdom of Denmark 7.000%, due 11/15/07....................... 1,950,000 272,391 7.000%, due 11/10/24....................... 2,500,000 374,218 8.000%, due 11/15/01....................... 1,700,000 218,565 ----------- 2,762,527 ----------- France - 11.34% Government of France (OAT) 6.500%, due 10/25/06....................EUR 325,000 334,445 7.500%, due 04/25/05....................... 1,530,000 1,603,838 8.500%, due 04/25/23....................... 1,150,000 1,508,757 9.500%, due 01/25/01....................... 990,000 931,601 ----------- 4,378,641 ----------- Germany - 6.21% Bundesobligation 118, 5.250%, due 02/21/01....................... 390,000 366,298 Bundesrepublik Deutschland 6.000%, due 07/04/07....................... 1,420,000 1,424,293 6.000%, due 06/20/16....................... 350,000 361,146 International Bank for Reconstruction and Development, 7.125%, due 04/12/05............ 470,000 243,606 ----------- 2,395,343 ----------- Italy - 9.27% Republic of Italy 3.250%, due 04/15/04....................... 2,060,000 1,854,323 6.500%, due 11/01/27....................... 380,000 391,033 7.750%, due 11/01/06....................... 1,245,000 1,330,870 ----------- 3,576,226 ----------- Japan - 10.78% Government of Japan 2.200%, due 09/21/20....................JPY 29,000,000 250,410 4.400%, due 03/21/05....................... 190,000,000 1,908,153 4.600%, due 03/21/05....................... 160,000,000 1,617,359 International Bank for Reconstruction & Development, 2.000%, due 02/18/08.......... 42,000,000 386,532 ----------- 4,162,454 ----------- Spain - 5.44% Government of Spain 3.250%, due 01/31/05....................EUR 860,000 765,998 6.000%, due 01/31/08....................... 1,350,000 1,335,184 ----------- 2,101,182 ----------- Sweden - 2.67% Government of Sweden 6.750%, due 05/05/14....................SEK 2,975,000 369,785 10.250%, due 05/05/03...................... 5,510,000 659,430 ----------- 1,029,215 ----------- United Kingdom - 2.23% U.K. Treasury 5.750%, due 12/07/09....................GBP 350,000 554,987 8.500%, due 12/07/05....................... 180,000 307,444 ----------- 862,431 ----------- Total International Bonds.................... 24,776,255 ----------- Total Bonds (Cost $38,186,442)............... 36,923,080 ----------- Shares ------ Short-Term Investments - 6.31% Investment Companies - 6.31% Brinson Supplementary Trust U.S. Cash Management Prime Fund (Cost $2,437,235).......................... 2,437,235 2,437,235 ----------- Total Investments (Cost $40,623,677) - 101.98% (a)........... 39,360,315 Liabilities, less cash and other assets - (1.98%)..................... (764,280) ----------- Net Assets - 100%............................ $38,596,035 ----------- See accompanying notes to schedule of investments. 36 Global Bond Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $40,623,677; and net unrealized depreciation consisted of: Gross unrealized appreciation................... $ 527,714 Gross unrealized depreciation................... (1,791,076) ------------ Net unrealized depreciation................... $(1,263,362) ============ (b) Non-income producing security FRN: Floating Rate Note - The rate disclosed is that in effect at December 31, 2000. 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, 2000, the value of these securities amounted to $873,162 or 2.26% 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, 2000:
Settlement Local Current Unrealized Date Currency Value Gain/(Loss) ---------- ---------- --------- ----------- Forward Foreign Currency Buy Contracts: Australian Dollar........................................... 03/01/01 5,950,000 $ 3,307,724 $ (86,077) British Pound............................................... 03/01/01 110,000 164,479 2,724 Canadian Dollar............................................. 03/01/01 3,200,000 2,132,992 36,304 Euro........................................................ 03/01/01 4,650,000 14,579,925 210,964 Japanese Yen................................................ 03/01/01 348,745,000 3,082,675 (217,849) Forward Foreign Currency Sale Contracts: British Pound............................................... 03/01/01 630,000 942,014 (3,881) Canadian Dollar............................................. 03/01/01 3,400,000 2,266,304 9,705 Danish Krone................................................ 03/01/01 9,100,000 1,146,736 (46,373) Euro........................................................ 03/01/01 900,000 847,186 (39,466) Japanese Yen................................................ 03/01/01 159,000,000 1,406,291 106,820 Swedish Krona............................................... 03/01/01 5,600,000 595,802 12,960 ------------ Total.............................................. $ (14,169) ============
See accompanying notes to financial statements. 37 U.S. Balanced Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds The UBS Investment Fund - U.S. Balanced has produced an annualized return of 8.23% since its performance inception on July 31, 1995. Its benchmark, the U.S. Balanced Mutual Fund Index, provided an annual return of 14.01% over the same time period. In 2000, the Fund returned 11.87%, which was substantially above the benchmark return of -3.26%. The equity component of the Fund was well positioned during 2000 to take advantage of market mispricing, especially of young technology companies that began to converge to fair value. The underweight to size and orientation toward value characteristics were rewarded, as were the industry underweights to technology and telecommunications and the overweights to utilities, financials, and transportation stocks. In fixed income, Treasury Inflation Protected Securities (TIPS) benefited from both the market rally in the long end of the yield curve from Treasury repurchases, as well as flattering inflation results and attractive real yields for much of the year. Asset-backed and longer-term agency bonds outperformed conventional bonds for the year, but the U.S. high yield market suffered from poor investor acceptance and an overemphasis on credit risk; both factors influenced the run-up in yields and worse returns in this sector in 2000. Security selection was again the primary determinant of the substantial added value in the Fund this year. U.S. equities provided the bulk of this performance via the underweight to technology stocks and the overweight to the more traditional sectors detailed above. Equities were assisted by the emphasis on the spread sectors in U.S. fixed income. Market allocation was also positive for the year, powered by the fixed income overweight and equity underweight on a passive basis. The overweight to high yield and the underweight to the actively managed equity fund (with significant security selection benefits), however, mitigated some of the positive results. The strategy continues to underweight equities and overweight fixed income, but the degree of the relative weights has lessened as U.S. equities have become more attractively priced. The equity underweight is now 15% smaller than at the start of the year, with the bulk of the reallocation drawing from U.S. bonds and only a small decrease in TIPS. Opportunities in high yield are becoming increasingly compelling, but concerns regarding credit risks in a softening economy have encouraged us to only maintain the Fund's overweight in that asset class. 38 U.S. Balanced Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Total Return
6 months 1 year 3 years 5 years Inception* ended ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 -------------------------------------------------------------------------------------------------------------------------------- UBS Investment Fund - U.S. Balanced 8.95% 11.87% 4.29% 7.21% 8.23% -------------------------------------------------------------------------------------------------------------------------------- U.S. Balanced Mutual Fund Index** -4.11 -3.26 9.65 13.35 14.01 -------------------------------------------------------------------------------------------------------------------------------- Salomon Smith Barney Broad Investment Grade (BIG) Bond Index 7.38 11.59 6.35 6.45 7.18 -------------------------------------------------------------------------------------------------------------------------------- Wilshire 5000 Index -10.14 -10.89 10.76 18.68 17.34 --------------------------------------------------------------------------------------------------------------------------------
* Performance inception date of the UBS Investment Fund - U.S. Balanced is 7/31/95. ** An unmanaged 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 $10,000 This chart shows the growth in the value of an investment in the UBS Investment Fund - U.S. Balanced, the U.S. Balanced Mutual Fund Index, the Salomon Smith Barney BIG Bond Index and the Wilshire 5000 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, 2000. 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. Balanced vs. U.S. Balanced Mutual Fund Index, Salomon Smith Barney BIG Bond Index and Wilshire 5000 Index Wealth Value with Dividends Reinvested
UBS Investment Funds - U.S. Balanced U.S. Balanced Mutual Fund Index Salomon BIG Index Wilshire 5000 07/31/95 $10,000 $10,000 $10,000 $10,000 12/31/95 $10,841 $10,876 $10,994 $10,653 12/31/96 $12,018 $12,496 $13,326 $11,040 12/31/97 $13,540 $15,433 $17,496 $12,102 12/31/98 $14,835 $18,342 $21,595 $13,157 12/31/99 $13,732 $21,032 $26,683 $13,046 12/31/00 $15,351 $20,347 $23,776 $14,559
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 U.S. Balanced Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. EQUITIES Energy......................................... 0.92% Capital Investment Capital Goods................................ 2.24 Electronic Components........................ 2.99 Technology................................... 0.71 ------ 5.94 Basic Industries Chemicals.................................... 1.44 Housing/Paper................................ 1.03 Metals....................................... 1.00 ------ 3.47 Computers Software..................................... 0.44 Systems...................................... 0.78 ------ 1.22 Consumer Autos/Durables............................... 0.98 Food/House Products.......................... 1.26 Health: Drugs................................ 3.15 Health: Non-Drugs............................ 3.67 Leisure/Tourism.............................. 0.67 Non-Durables................................. 0.29 Retail/Apparel............................... 2.78 ------ 12.80 Financial Banks........................................ 3.89 Non-Banks.................................... 3.27 ------ 7.16 Telecommunications Equipment.................................... 0.17 Services..................................... 2.05 ------ 2.22 Transportation................................. 2.85% Services/Miscellaneous......................... 3.46 Utilities...................................... 2.17 ------ Total U.S. Equities................ 42.21* U.S. BONDS Corporate Bonds Airlines..................................... 0.42 Building Materials........................... 0.43 Consumer..................................... 0.15 Financial Services........................... 0.64 Retail/Apparel............................... 0.22 Technology................................... 0.40 Telecommunications........................... 1.23 Utilities.................................... 0.62 ------ Total U.S. Corporate Bonds........ 4.11 Asset-Backed................................... 1.54 Corporate Mortgage-Backed Securities........... 1.33 International Dollar Bonds..................... 1.10 U.S. Gov't. Mortgage-Backed Securities......... 13.80 U.S. Government Obligations.................... 28.87 ------ Total U.S. Bonds.................. 50.75* SHORT-TERM INVESTMENTS......................... 8.08* ------ TOTAL INVESTMENTS................. 101.04 LIABILITIES, LESS CASH AND OTHER ASSETS........................ (1.04) ------ NET ASSETS..................................... 100.00% ====== -------------------------------------------------------------------------------- *The Fund held a long position in U.S. Treasury futures on December 31, 2000 which increased U.S. Bond exposure from 50.75% to 55.12%. The Fund also held a short position in stock index futures which reduced U.S. Equity exposure from 42.21% to 39.39%. These two adjustments result in a net decrease in the Fund's exposure to Short-Term Investments from 8.08% to 6.53%. Asset Allocation As of December 31, 2000 (Unaudited) Current Benchmark Strategy -------------------------------------------- U.S. Equities 65% 40% U.S. Bonds 35 60 -------------------------------------------- 100% 100% Top Ten U.S. Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets --------------------------------------------------- 1. Allergan, Inc. 1.55% 2. Burlington Northern Santa Fe Corp. 1.53 3. Wells Fargo and Co. 1.31 4. Electronic Data Systems Corp. 1.17 5. FedEx Corp. 1.11 6. Freddie Mac 1.04 7. Masco Corp. 1.00 8. GPU, Inc. 0.96 9. Alza Corp. 0.93 10. First Data Corp. 0.91 ------------------------------------------------- 40 U.S. Balanced Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ ----- U.S. Equities - 42.21% Advanced Micro Devices, Inc. (b)...................... 6,500 $ 89,781 Allergan, Inc......................................... 1,900 183,944 Alza Corp. (b)........................................ 2,600 110,500 American General Corp................................. 700 57,050 American Standard Cos., Inc. (b)...................... 1,000 49,312 Baxter International, Inc............................. 1,200 105,975 Burlington Northern Santa Fe Corp..................... 6,400 181,200 Cardinal Health, Inc.................................. 800 79,700 Carnival Corp., Class A............................... 2,600 80,112 Chase Manhattan Corp.................................. 1,300 59,069 CIGNA Corp............................................ 800 105,840 Citigroup, Inc........................................ 686 35,029 Clear Channel Communications (b)...................... 700 33,906 CMS Energy Corp....................................... 1,200 38,025 CommScope, Inc. (b)................................... 1,200 19,875 Compaq Computer Corp.................................. 4,000 60,200 Computer Sciences Corp. (b)........................... 200 12,025 Compuware Corp. (b)................................... 5,600 35,000 COR Therapeutics, Inc. (b)............................ 1,000 35,188 Dow Chemical Co....................................... 1,000 36,625 Eastman Chemical Co................................... 400 19,500 Electronic Data Systems Corp.......................... 2,400 138,600 Emerson Electric Co................................... 1,300 102,456 Entergy Corp.......................................... 1,000 42,313 Exelon Corp........................................... 900 63,189 Exxon Mobil Corp...................................... 800 69,550 Federated Department Stores, Inc. (b)................. 900 31,500 FedEx Corp. (b)....................................... 3,300 131,868 First Data Corp....................................... 2,058 108,431 FleetBoston........................................... 2,005 75,313 Freddie Mac........................................... 1,800 123,975 Gateway, Inc. (b)..................................... 1,800 32,382 GATX Corp............................................. 500 24,938 General Mills, Inc.................................... 1,600 71,300 Genzyme General (b)................................... 800 71,950 GPU, Inc.............................................. 3,100 114,119 GreenPoint Financial Corp............................. 2,400 98,250 Household International, Inc.......................... 1,200 66,000 Illinois Tool Works, Inc.............................. 1,700 101,256 IMC Global, Inc....................................... 2,700 42,019 Johnson & Johnson Co.................................. 900 94,556 Johnson Controls, Inc................................. 400 20,800 Kimberly-Clark Corp................................... 500 35,345 Kroger Co. (b)........................................ 1,700 46,006 Lear Corp. (b)........................................ 1,800 44,662 Lincoln National Corp................................. 500 23,656 LSI Logic Corp. (b)................................... 2,000 34,180 Lyondell Chemical Co.................................. 1,600 24,500 Martin Marietta Materials, Inc........................ 1,036 43,823 Masco Corp............................................ 4,600 118,162 Mattel, Inc........................................... 5,000 72,200 Mead Corp............................................. 1,200 37,650 Microsoft Corp. (b)................................... 1,200 52,200 Motorola, Inc......................................... 2,415 48,904 National Semiconductor Corp. (b)...................... 2,700 54,337 New York Times Co..................................... 600 24,038 Newell Rubbermaid, Inc................................ 2,600 59,150 Nextel Communications, Inc. (b)....................... 2,800 69,300 Pentair, Inc.......................................... 1,400 33,863 PepsiCo, Inc.......................................... 700 34,694 PNC Financial Services Corp........................... 1,000 73,062 Praxair, Inc.......................................... 1,100 48,812 Raytheon Co., Class B................................. 1,800 55,912 Sara Lee Corp......................................... 3,200 78,600 SBC Communications, Inc............................... 2,100 100,275 SCI Systems, Inc. (b)................................. 1,000 26,375 St. Jude Medical, Inc. (b)............................ 500 30,719 Target Corp........................................... 1,600 51,600 Tellabs, Inc. (b)..................................... 1,300 73,450 Texas Instruments, Inc................................ 1,000 47,375 Ultramar Diamond Shamrock Corp........................ 1,290 39,829 UnitedHealth Group, Inc............................... 1,600 98,200 Viad Corp............................................. 1,200 27,600 W.W. Grainger, Inc.................................... 1,400 51,100 Wal-Mart Stores, Inc.................................. 1,300 69,062 Wells Fargo and Co.................................... 2,800 155,925 XL Capital Ltd........................................ 500 43,688 York International Corp............................... 1,000 30,688 ---------- Total U.S. Equities (Cost $4,662,457)................. 5,011,563 ---------- Face Amount -------- U.S. Bonds - 50.75% U.S. Corporate Bonds - 4.11% Capital One Bank, Bank Note, 8.250%, due 06/15/05................................ $ 25,000 25,284 Florida Power & Light Co., 6.875%, due 12/01/05................................ 50,000 51,193 Lowe's Cos., Inc. 7.500%, due 12/15/05................................ 50,000 51,005 8.250%, due 06/01/10................................ 25,000 26,308 News America Holdings, 7.750%, due 12/01/45................................ 20,000 17,262 Pacific Gas & Electric Co., 7.050%, due 03/01/24................................ 30,000 22,584 PanAmSat Corp., 6.000%, due 01/15/03................................ 100,000 96,724 Pharmacia Corp., 6.600%, due 12/01/28................................ 50,000 47,476 Qwest Capital Funding, Inc., 144A, 7.900%, due 08/15/10................................ 25,000 25,644 Sprint Capital Corp., 6.875%, due 11/15/28................................ 30,000 23,998 United Airlines, Inc., E.E.T.C., 7.811%, due 10/01/09................................ 50,000 50,300 Verizon Global Funding Corp., 144A, 7.750%, due 12/01/30................................ 50,000 50,876 --------- 488,654 --------- 41 U.S. Balanced Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Face Amount Value ------------ ------------ International Dollar Bonds - 1.10% Empresa Nacional de Electricidad S.A., 8.125%, due 02/01/97.................... $ 100,000 $ 76,617 United Mexican States Global, 9.875%, due 02/01/10.................... 50,000 53,650 ------------ 130,267 ------------ Asset-Backed Securities - 1.54% Peco Energy Transition Trust, 99-A3, Class A7, 6.130%, due 03/01/09.......... 110,000 108,606 Vanderbilt Mortgage Finance, 8.255%, due 05/07/17.................... 70,000 74,626 ------------ 183,232 ------------ Corporate Mortgage-Backed Securities - 1.33% DLJ Commercial Mortgage Corp. 7.300%, due 06/10/09.................... 24,999 26,323 7.340%, due 09/10/09.................... 20,000 21,201 LB Commercial Conduit Mortgage Trust, 99-C1, Class A1, 6.410%, due 08/15/07... 84,295 85,065 Morgan Stanley Capital I, 6.710%, due 12/15/31.................... 25,000 25,438 ------------ 158,027 ------------ U.S. Government Mortgage- Backed Securities - 13.80% Federal Home Loan Mortgage Corp., Gold 6.500%, due 04/01/29.................... 743,176 732,857 8.500%, due 05/01/30.................... 37,784 38,931 9.000%, due 07/01/30.................... 258,277 266,808 Federal National Mortgage Assoc., 97-72, Class EG, 0.000%, due 09/25/22 (b)................ 96,141 92,231 Federal National Mortgage Association, 7.125%, due 06/15/10.................... 170,000 184,086 Government National Mortgage Association 6.000%, due 02/20/29.................... 122,416 118,383 7.000%, due 12/15/23.................... 114,321 115,261 7.500%, due 10/15/29.................... 88,575 90,030 ------------ 1,638,587 ------------ U.S. Government Obligations - 28.87% U.S. Treasury Inflation Indexed Note, 3.875%, due 04/15/29.................... 1,940,000 2,105,045 U.S. Treasury Note 5.625%, due 05/15/08.................... 390,000 400,597 6.625%, due 05/31/02.................... 665,000 676,405 6.625%, due 02/15/27.................... 120,000 137,029 7.000%, due 07/15/06.................... 100,000 108,870 ------------ 3,427,946 ------------ Total U.S. Bonds (Cost $5,865,869)......... 6,026,713 ------------ Shares ------------ Short-Term Investments - 8.08% Investment Companies - 5.99% Brinson Supplementary Trust U.S. Cash Management Prime Fund......... 711,147 711,147 ------------ Face Amount ------------ U.S. Government Obligations - 2.09% U.S. Treasury Bill, due 02/08/01........... $ 250,000 248,540 ------------ Total Short-Term Investments (Cost $959,549)......................... 959,687 ------------ Total Investments (Cost $11,487,875) - 101.04% (a)........ 11,997,963 Liabilities, less cash and other assets - (1.04%).................. (123,714) ------------ Net Assets - 100%.......................... $ 11,874,249 ============ See accompanying notes to schedule of investments. 42 U.S. Balanced Fund - Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $11,487,875; and net unrealized appreciation consisted of: Gross unrealized appreciation............................... $ 912,634 Gross unrealized depreciation............................... (402,546) --------- Net unrealized appreciation........................ $ 510,088 =========
(b) Non-income producing security E.E.T.C.: Enhanced Equipment Trust Certificate 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, 2000, the value of these securities amounted to $76,520 or 0.64% of net assets. FUTURES CONTRACTS The U.S. Balanced Fund had the following open futures contracts as of December 31, 2000:
Expiration Cost/ Current Unrealized Date Proceeds Value Gain ---------- ---------- -------- ----------- U.S. Interest Rate Futures Buy Contracts: 5 Year U.S. Treasury Notes, 4 contracts........... March 2001 $ 411,012 $414,250 $ 3,238 30 Year U.S. Treasury Bonds, 1 contract........... March 2001 104,538 104,625 87 Index Futures Sale Contracts: Standard & Poor's 500, 1 contract................. March 2001 349,095 333,750 15,345 ------- Total...................................... $18,670 =======
The aggregate market value of investments pledged to cover margin requirements for the open futures positions at December 31, 2000 was $248,540. See accompanying notes to financial statements. 43 U.S. Equity Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Since its performance inception on July 31, 1995, the UBS Investment Fund - U.S. Equity has provided an annualized return of 13.96%, compared to the 17.34% return of its benchmark, the Wilshire 5000 Equity Index. For the year 2000, the Fund's total return of 2.61% compared favorably to the -10.89% return for its benchmark. The U.S. equity market, as measured by the broad Wilshire 5000 Index, had the worst year since 1974, driven by a sharp decline in the largest capitalization stocks and the technology sector. Stock markets around the world have weakened significantly in consideration of what appears to be the first synchronized global slowdown since 1974. Investors are concerned about excess capacity, weak pricing power, credit problems and low or little inflation with episodes of deflation. The year 2000 proved that diversification is important. Investors that were heavily weighted in technology, media and telecommunications (TMT) stocks endured a steep plunge. The Nasdaq Composite declined 39% for the full year and is now back to where it was in 1998, erasing two years of gains. Downward earnings revisions in technology stocks during the fourth quarter made investors realize that they were paying high multiples for what may be peak earnings and margins. The Fund outperformed its benchmark in 2000 with the best year for relative return since its inception in 1994. The sources of this performance include positive attribution from market exposure, risk factors, industry factors and stock selection. Market exposure (average beta of .88) added to the Fund's relative performance in the weak market environment that characterized most of the year 2000. Risk factors added significantly to the Fund's performance for the year. The most significant positive factor was the underexposure to size. Our Fund was very underweighted in the largest stocks that dominate the major market benchmarks. During the year, the disparity between large and small market capitalization stocks that had developed during 1999 and early 2000 began to dissipate as many of the largest capitalization stocks underperformed significantly. Industry factors added to active returns for the year. The most positive industry position was the underweight to the internet sector, which meaningfully underperformed as investors retreated from stocks with very high prices and little, if any, earnings support. Our fund overweight in the medical products industry added to performance for the year, as these stocks benefited from the market rotation into more defensive areas of the economy with good relative earnings prospects. Stock selection had a significant positive impact on active returns for the full year. Among the best large capitalization performers were UnitedHealth Group, Emerson Electric, Carnival Cruise, Cigna and Kimberly-Clark. Poor performers were mainly technology stocks, including Compuware, Gateway, Lexmark and Compaq, and also FedEx. In the intermediate capitalization segment, top performers include Fort James, Alza, Exelon, Southdown, St. Jude and Greenpoint Financial while Unisys, Motorola, Pentair, Circuit City and Owens-Illinois were among the worst. 44 U.S. Equity Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Fund Total Return
6 months 1 Year 3 Year 5 Year Inception* ended ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 ------------------------------------------------------------------------------------------------------------------------------------ UBS Investment Fund - U.S. Equity 7.76% 2.61% 4.92% 12.37% 13.96% ------------------------------------------------------------------------------------------------------------------------------------ Wilshire 5000 Equity Index -10.14 -10.89 10.76 16.68 17.34 ------------------------------------------------------------------------------------------------------------------------------------
*Performance inception date of the UBS Investment Fund - U.S. Equity is 7/31/95. 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, 2000. 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
UBS Investment Fund - Wilshire 5000 Equity Index U.S. Equity 7/31/95 10,000 10,000 12/31/95 11,335 10,994 12/31/96 14,157 13,326 12/31/97 17,587 17,496 12/31/98 20,737 21,595 12/31/99 19,800 26,683 12/31/2000 20,300 23,776
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. 45 U.S. Equity Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. EQUITIES Energy.................................. 2.14% Capital Investment Capital Goods........................ 4.56 Electronic Components................ 7.56 ------ 12.12 Basic Industries Chemicals............................ 3.59 Housing/Paper........................ 2.41 Metals............................... 2.32 ------ 8.32 Computers Software............................. 1.73 Systems.............................. 1.81 ------ 3.54 Consumer Autos/Durables....................... 2.36 Food/House Products.................. 2.96 Health: Drugs........................ 7.35 Health: Non-Drugs.................... 8.56 Leisure/Tourism...................... 1.57 Non-Durables......................... 0.67 Retail/Apparel....................... 6.87 ------ 30.34 Financial Banks................................ 9.10 Non-Banks............................ 7.84 ------ 16.94 Telecommunications...................... 5.68 Transportation.......................... 6.57 Services/Miscellaneous.................. 7.94 Utilities............................... 4.82 ------ Total U.S. Equities............. 98.41* SHORT-TERM INVESTMENTS.................. 1.59* ------ TOTAL INVESTMENTS............... 100.00 CASH AND OTHER ASSETS, LESS LIABILITIES..................... - ------ NET ASSETS.............................. 100.00% ====== *The Fund held a long position in stock index futures which increased U.S. Equity exposure from 98.41% to 99.80%. This adjustment results in a net decrease in the Fund's exposure to Short-Term Investments from 1.59% to 0.20%. Top Ten U.S. Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets --------------------------------------------------------- 1. Allergan, Inc. 3.66% 2. Burlington Northern Santa Fe Corp. 3.54 3. Wells Fargo and Company 3.01 4. Electronic Data Systems Corp. 2.65 5. FedEx Corp. 2.59 6. Freddie Mac 2.48 7. Masco Corp. 2.32 8. CIGNA Corp. 2.19 9. First Data Corp. 2.15 10. Alza Corp. 2.11 --------------------------------------------------------- 46 U.S. Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------------ ------------ U.S. Equities - 98.41% Advanced Micro Devices, Inc. (b)........... 183,900 $ 2,540,119 Allergan, Inc.............................. 54,400 5,266,600 Alza Corp. (b)............................. 71,400 3,034,500 American General Corp...................... 19,900 1,621,850 American Standard Cos., Inc. (b)........... 29,100 1,434,994 Baxter International, Inc.................. 33,600 2,967,300 Burlington Northern Santa Fe Corp.......... 179,900 5,093,419 Cardinal Health, Inc....................... 22,700 2,261,487 Carnival Corp., Class A.................... 73,100 2,252,394 Chase Manhattan Corp....................... 36,000 1,635,750 CIGNA Corp................................. 23,750 3,142,125 Citigroup, Inc............................. 20,461 1,044,790 Clear Channel Communications (b)........... 19,000 920,313 CMS Energy Corp............................ 33,150 1,050,441 CommScope, Inc. (b)........................ 32,700 541,594 Compaq Computer Corp....................... 112,500 1,693,125 Computer Sciences Corp. (b)................ 5,100 306,638 Compuware Corp. (b)........................ 158,500 990,625 COR Therapeutics, Inc. (b)................. 27,600 971,175 Dow Chemical Co............................ 28,000 1,025,500 Eastman Chemical Co........................ 11,450 558,188 Electronic Data Systems Corp............... 66,000 3,811,500 Emerson Electric Co........................ 37,100 2,923,944 Entergy Corp............................... 29,200 1,235,525 Exelon Corp................................ 26,300 1,846,523 Exxon Mobil Corp........................... 22,300 1,938,706 Federated Department Stores, Inc. (b)...... 26,900 941,500 FedEx Corp. (b)............................ 93,100 3,720,276 First Data Corp............................ 58,630 3,089,068 FleetBoston................................ 57,255 2,150,641 Freddie Mac................................ 51,700 3,560,837 Gateway, Inc. (b).......................... 50,900 915,691 GATX Corp.................................. 12,800 638,400 General Mills, Inc......................... 46,500 2,072,156 Genzyme General (b)........................ 22,050 1,983,122 GPU, Inc................................... 76,000 2,797,750 GreenPoint Financial Corp.................. 69,100 2,828,781 Household International, Inc............... 33,600 1,848,000 Illinois Tool Works, Inc................... 47,100 2,805,394 IMC Global, Inc............................ 76,700 1,193,644 Johnson & Johnson Co....................... 25,400 2,668,587 Johnson Controls, Inc...................... 12,100 629,200 Kimberly-Clark Corp........................ 13,650 964,918 Kroger Co. (b)............................. 48,700 1,317,944 Lear Corp. (b)............................. 51,650 1,281,566 Lincoln National Corp...................... 14,400 681,300 LSI Logic Corp. (b)........................ 55,200 943,368 Lyondell Chemical Co....................... 44,750 685,234 Martin Marietta Materials, Inc............. 29,807 1,260,836 Masco Corp................................. 129,600 3,329,100 Mattel, Inc................................ 140,400 2,027,376 Mead Corp.................................. 33,800 1,060,475 Microsoft Corp. (b)........................ 34,300 1,492,050 Motorola, Inc.............................. 66,923 1,355,191 National Semiconductor Corp. (b)........... 75,400 1,517,425 New York Times Co.......................... 15,600 624,975 Newell Rubbermaid, Inc..................... 73,100 1,663,025 Nextel Communications, Inc. (b)............ 79,200 1,960,200 Pentair, Inc............................... 38,200 923,962 PepsiCo, Inc............................... 19,300 956,556 PNC Financial Services Corp................ 29,300 2,140,731 Praxair, Inc............................... 38,300 1,699,562 Raytheon Co., Class B...................... 50,550 1,570,209 Sara Lee Corp.............................. 89,100 2,188,519 SBC Communications, Inc.................... 59,400 2,836,350 SCI Systems, Inc. (b)...................... 27,400 722,675 St. Jude Medical, Inc. (b)................. 15,400 946,137 Target Corp................................ 45,500 1,467,375 Tellabs, Inc. (b).......................... 35,600 2,011,400 Texas Instruments, Inc..................... 29,300 1,388,087 Ultramar Diamond Shamrock Corp............. 37,018 1,142,931 UnitedHealth Group, Inc.................... 45,200 2,774,150 Viad Corp.................................. 35,350 813,050 W.W. Grainger, Inc......................... 40,700 1,485,550 Wal-Mart Stores, Inc....................... 36,100 1,917,812 Wells Fargo and Co......................... 77,700 4,326,919 XL Capital Ltd............................. 14,000 1,223,250 York International Corp.................... 27,000 828,563 ------------ Total U.S. Equities (Cost $115,470,917).... 141,480,943 ------------ Short-Term Investments -1.59% Investment Companies - 0.90% Brinson Supplementary Trust U.S. Cash Management Prime Fund................. 1,289,380 1,289,380 ------------ Face Amount ----------- U.S. Government Obligations - 0.69% U.S. Treasury Bill, due 02/08/01........... $ 1,000,000 994,162 ------------ Total Short-Term Investments (Cost $2,282,988)....................... 2,283,542 ------------ Total Investments (Cost $117,753,905) - 100.00% (a)....... 143,764,485 Cash and other assets, less liabilities - 0.00%................ 5,579 ------------ Net Assets - 100%.......................... $143,770,064 ============ See accompanying notes to schedule of investments. 47 U.S. Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $117,753,905; and net unrealized appreciation consisted of: Gross unrealized appreciation........................... $ 38,426,125 Gross unrealized depreciation........................... (12,415,545) ------------ Net unrealized appreciation........................ $ 26,010,580 ============ (b) Non-income producing security FUTURES CONTRACTS The U.S. Equity Fund had the following open futures contracts as of December 31, 2000:
Expiration Current Unrealized Date Cost Value Gain ---------- ---------- ---------- ----------- Index Futures Buy Contracts: Standard & Poor's 500, 6 contracts.................... March 2001 $1,979,523 $2,002,500 $22,977
The aggregate market value of investments pledged to cover margin requirements for the open futures positions at December 31, 2000 was $994,162. See accompanying notes to financial statements. 48 U.S. Large Cap Equity Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Since its performance inception on April 30, 1998, the UBS Investment Fund - U.S. Large Cap Equity has provided an annualized return of -1.97%, compared to the 8.04% return of its benchmark, the S&P 500 Equity Index. For the year 2000, the Fund's total return of 1.61% compared favorably to the -9.10% return for its benchmark. The U.S. equity market, as measured by the S&P 500 Index, had the worst year since 1974, driven by a sharp decline concentrated in the largest capitalization stocks and the technology sector. The largest quintile of stocks by market capitalization (73% of the S&P 500) ranked last for the first time in 10 years, and was negative while all other size categories showed positive returns. Technology was the worst performing sector, and dropped from 34% of the S&P 500 Index to 22%. Technology had been regarded as a safe haven with good earnings visibility until several industry leaders such as Intel and IBM issued earnings warnings for the fourth quarter and 2001. These warnings reminded investors that technology stocks are cyclical growth companies with low long-term predictability, and are thus subject to cyclical factors such as the level of capital spending by customers who tend to cut spending when their own cash flow levels are declining. Capital spending could decline sharply, and, if it reverses, will have a greater impact on GDP than in the past. The Fund outperformed its benchmark in 2000 with the best year for relative return since its inception in 1998. The sources of this performance include positive attribution from market exposure, risk factors and stock selection, only offset by slightly negative returns from industry factors. Market exposure (average beta of .92) added to the Fund's relative performance in the weak market environment that characterized most of the year 2000. The most significant positive factor was the underexposure to size. Our Fund was very underweighted in the largest stocks that dominate the major market benchmarks. During the year, the disparity between large and small market capitalization stocks that had developed during 1999 and early 2000 began to dissipate as many of the largest capitalization stocks underperformed significantly. Stock selection had a significant positive impact on active returns for the full year. The strongest contributors were UnitedHealth Group, Emerson Electric, Cigna, SBC Communications and Kimberly-Clark while the worst were Compuware, Gateway, Lexmark, FedEx and Advanced Micro Devices. Industry exposures had a small negative effect on active returns for the year 2000. The underweight to Internet stocks and to the telephone service companies and the overweight to the electric utility industry added positively to performance attribution. This positive effect was more than offset by the negative impact of the Fund underweight to the drug industry. 49 U.S. Large Cap Equity Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Total Return
6 months 1 year Inception* ended ended to 12/31/00 12/31/00 12/31/00 ---------------------------------------------------------------------------------------------------------------- UBS Investment Fund - U.S. Large Cap Equity 10.21% 1.61% -1.97% ---------------------------------------------------------------------------------------------------------------- S&P 500 Equity Index -8.72 -9.10 8.04 ----------------------------------------------------------------------------------------------------------------
*Performance inception date of the UBS Investment Fund - U.S. Large Cap Equity is 4/30/98. 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 Cap 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, 2000. 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 Cap Equity vs. S&P 500 Equity Index Wealth Value with Dividends Reinvested
UBS Investment Fund - S&P 500 Equity Index U.S. Large Cap Equity 4/30/98 10,000 10,000 6/30/98 9,968 10,227 12/31/98 10,529 11,171 6/30/99 11,349 12,555 12/31/99 9,331 13,522 6/30/2000 8,603 13,465 12/31/2000 9,482 12,291
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 U.S. Large Cap Equity Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. EQUITIES Energy.......................... 4.01% Capital Investment Capital Goods................ 2.77 Electric Components.......... 6.46 ------ 9.23 Basic Industries Chemicals.................... 1.62 Metals....................... 3.25 ------ 4.87 Computers Software..................... 2.20 Systems...................... 2.05 ------ 4.25 Consumer Food/House Products.......... 3.28 Health: Drugs................ 6.69 Health: Non-Drugs............ 8.82 Leisure/Tourism.............. 2.15 Non-Durables................. 0.99 Retail/Apparel............... 8.11 ------ 30.04 Financial Banks........................ 7.60 Non-Banks.................... 9.40 ------ 17.00 Telecommunications.............. 5.09 Transportation.................. 5.21 Utilities....................... 1.20 Services/Miscellaneous.......... 7.28 ------ Total U.S. Equities..... 88.18* SHORT-TERM INVESTMENTS.......... 11.88* ------ TOTAL INVESTMENTS....... 100.06 LIABILITIES, LESS CASH AND OTHER ASSETS................. (0.06) ------ NET ASSETS...................... 100.00% ====== -------------------------------------------------------------------------------- * The Fund held a long position in stock index futures which increased U.S. Equity exposure from 88.18% to 93.73%. This adjustment results in a net decrease in the Fund's exposure to Short-Term Investments from 11.88% to 6.33%. Top 10 U.S. Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets ------------------------------------------------- 1. Freddie Mac 3.43% 2. Wells Fargo and Co. 3.42 3. Baxter International, Inc. 3.38 4. CIGNA Corp. 3.30 5. Masco Corp. 3.25 6. Burlington Northern Santa Fe Corp. 3.15 7. First Data Corp. 2.98 8. Emerson Electric Co. 2.88 9. Johnson & Johnson Co. 2.79 10. Illinois Tool Works, Inc. 2.77 ------------------------------------------------- 51 U.S. Large Cap Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value -------- ----------- U.S. Equities - 88.18% Abbott Laboratories..................... 1,900 $ 92,031 Advanced Micro Devices, Inc. (b)........ 4,700 64,919 Allergan, Inc........................... 1,000 96,812 American Electric Power Co., Inc........ 2,760 128,340 American General Corp................... 1,200 97,800 Baxter International, Inc............... 2,300 203,119 Bristol-Myers Squibb Co................. 1,000 73,938 Burlington Northern Santa Fe Corp....... 6,700 189,694 Cardinal Health, Inc.................... 1,400 139,475 Carnival Corp., Class A................. 4,200 129,412 CIGNA Corp.............................. 1,500 198,450 Citigroup, Inc.......................... 1,246 63,624 Clear Channel Communications (b)........ 1,000 48,438 Compaq Computer Corp.................... 5,200 78,260 Compuware Corp. (b)..................... 9,300 58,125 Electronic Data Systems Corp............ 2,300 132,825 Emerson Electric Co..................... 2,200 173,387 Entergy Corp............................ 1,700 71,931 Exxon Mobil Corp........................ 1,300 113,019 FedEx Corp. (b)......................... 3,100 123,876 First Data Corp......................... 3,400 179,137 FleetBoston............................. 3,385 127,149 Freddie Mac............................. 3,000 206,625 Gateway, Inc. (b)....................... 2,500 44,975 General Mills, Inc...................... 2,000 89,125 Household International, Inc............ 1,400 77,000 Illinois Tool Works, Inc................ 2,800 166,775 Johnson & Johnson Co.................... 1,600 168,100 Kroger Co. (b).......................... 3,600 97,425 Masco Corp.............................. 7,600 195,225 Mattel, Inc............................. 8,200 118,408 Microsoft Corp. (b)..................... 1,700 73,950 Motorola, Inc........................... 2,000 40,500 National Semiconductor Corp. (b)........ 3,700 74,463 Newell Rubbermaid, Inc.................. 4,300 97,825 PepsiCo, Inc............................ 1,200 59,475 PNC Financial Services Corp............. 1,700 124,206 Praxair, Inc............................ 2,200 97,625 Sara Lee Corp........................... 4,400 108,075 SBC Communications, Inc................. 3,200 152,800 Target Corp............................. 2,600 83,850 Tellabs, Inc. (b)....................... 2,000 113,000 Texas Instruments, Inc.................. 1,600 75,800 UnitedHealth Group, Inc................. 2,600 159,575 Wal-Mart Stores, Inc.................... 1,700 90,313 Wells Fargo and Co...................... 3,700 206,044 ----------- Total U.S. Equities (Cost $4,827,214)... 5,304,920 ----------- Short Term Investments - 11.88% Investment Companies - 10.23% Chase Vista U.S. Government Money Market Fund.................. 615,420 615,420 ----------- Face Amount -------- U.S. Government Obligations - 1.65% U.S. Treasury Bill, due 02/08/01...... $ 100,000 99,416 ----------- Total Short-Term Investments (Cost $714,781).................... 714,836 ----------- Total Investments (Cost $5,541,995) - 100.06% (a).... 6,019,756 Liabilities, less cash and other assets - (0.06%)............. (3,687) ----------- Net Assets - 100%..................... $ 6,016,069 =========== NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $5,541,995; and net unrealized appreciation consisted of: Gross unrealized appreciation............................... $ 956,082 Gross unrealized depreciation............................... (478,321) --------- Net unrealized appreciation............................. $ 477,761 ========= (b) Non-income producing security FUTURES CONTRACTS The U.S. Large Cap Equity Fund had the following open futures contracts as of December 31, 2000:
Expiration Current Unrealized Date Cost Value Loss ---------- ------- --------- ---------- Index Futures Buy Contracts: Standard & Poor's 500, 1 contract.......................... March 2001 $349,107 $333,750 $(15,357)
The aggregate market value of investments pledged to cover margin requirements for the open futures positions December 31, 2000 was $99,416. See accompanying notes to financial statements. 52 U.S. Large Cap Growth Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds In 2000, the UBS Investment Fund - U.S. Large Cap Growth outperformed its benchmark, the Russell 1000 Growth Index by 561 basis points (-16.81% compared to -22.42%). The Fund has provided an annualized return of 4.64% since its performance inception on December 31, 1998, compared to a 1.64% return of its benchmark. For the first time in several years, growth strategies lagged the general market meaningfully, with the S&P 500 beating the Russell 1000 Growth Index by over 13%. The major factor contributing to this disparity was the substantial correction in the technology sector of the market, which by mid-year of 2000 represented over 55% of the Russell 1000 Growth Index compared to 35% of the S&P 500. As interest rates rose during the year putting pressure on stretched valuations, fundamental growth also began to slow due to a slowing economy and lack of availability of cheap equity capital. This culminated in a series of fundamental earnings and revenue disappointments in many areas including communication equipment, personal computers, and semiconductors. In 2000, with some important growth sectors performing well, such as consumer staples, healthcare and sub-sectors of financials, which had been out of favor for one to two years because they could not compete with the hyper-growth expectations of technology. These companies attracted more attention in 2000 as the economy slowed down and earnings prospects became more defensive. The Fund's performance benefited from the above dichotomies at the end of last year. We positioned it by underweighting technology and overweighting consumer staples, financials, energy and some portions of health care. In addition, our issue selection was an important contributor to outperformance although not as dramatic as in 1999. Our industry weightings and security selection resulted in a fund which had more value and less price momentum than the benchmark at the end of the year, but which also had less risk and thus performed relatively well in a declining market. The year 2001 begins with more disappointments in technology and with new respect for other growth areas. The contrast with the end of last year could not be more dramatic. Furthermore, the market is dealing with a government under pressure to compromise on many issues. The Federal Reserve has shifted gears to halt the economic slide. While we have not yet acted to balance out our sector weights, the market has done some of this job for us. Nevertheless, we would anticipate being more active in this regard as the year wears on because the long-run case for global expansion in technology remains intact, promising to deliver superior earnings growth over time. In the meantime, individual issue selection will be extremely important for the foreseeable future. 53 U.S. Large Cap Growth Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Total Return
6 months 1 year Inception* ended ended to 12/31/00 12/31/00 12/31/00 ----------------------------------------------------------------------------------------------------------------------- UBS Investment Fund - U.S. Large Cap Growth -19.73% -16.81% 4.64% ----------------------------------------------------------------------------------------------------------------------- Russell 1000 Growth Index** -25.58 -22.42 1.64 -----------------------------------------------------------------------------------------------------------------------
*Performance inception date of the UBS Investment Fund - U.S. Large Cap Growth is 12/31/98. 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 Cap Growth 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, 2000. 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 Cap Growth vs. Russell 1000 Growth Index Wealth Value with Dividends Reinvested
UBS Investment Fund - Russell 1000 Growth Index U.S. Large Cap Growth 12/31/98 10,000 10,000 6/30/99 11,698 11,045 12/31/99 13,163 13,316 6/30/2000 13,642 13,880 12/31/2000 10,949 10,330
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. 54 U.S. Large Cap Growth Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. EQUITIES Energy................................................ 4.26% Capital Investment Electric Components................................. 15.05 Technology.......................................... 3.37 ------ 18.42 Computers Services............................................ 2.56 Software............................................ 5.78 Systems............................................. 9.98 ------ 18.32 Consumer Autos/Durables...................................... 2.15 Health: Drugs....................................... 13.25 Health: Non-Drugs................................... 7.40 Non-Durables........................................ 2.80 Retail/Apparel...................................... 9.64 ------ 35.24 Financial Non-Banks........................................... 6.17% Telecommunications.................................... 7.72 Services/Miscellaneous................................ 7.78 ------ Total U.S. Equities....................... 97.91 SHORT-TERM INVESTMENTS................................ 0.65 ------ TOTAL INVESTMENTS......................... 98.56 CASH AND OTHER ASSETS, LESS LIABILITIES............... 1.44 ------ NET ASSETS............................................ 100.00% ====== -------------------------------------------------------------------------------- Top 10 U.S. Equity Holdings As of December 31, 2000 (Unaudited) Percent of Net Assets -------------------------------------------------- 1. Pfizer, Inc. 4.88% 2. General Electric Co. 3.91 3. Cisco Systems, Inc. 3.66 4. Microsoft Corp. 3.04 5. Texas Instruments, Inc. 2.76 6. Schlumberger Ltd. 2.61 7. Wal-Mart Stores, Inc. 2.60 8. EMC Corp. 2.56 9. Intel Corp. 2.50 10. AFLAC, Inc. 2.19 ------------------------------------------------ 55 U.S. Large Cap Growth Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value ------ --------- U.S. Equities - 97.91% AFLAC, Inc............................................ 2,600 $ 187,687 Agilent Technologies, Inc. (b)........................ 2,000 109,500 Allergan, Inc......................................... 1,100 106,494 Alltel Corp........................................... 1,600 99,900 Alza Corp. (b)........................................ 2,200 93,500 America On-Line, Inc. (b)............................. 4,500 156,600 American Express Co................................... 2,000 109,875 American International Group, Inc..................... 1,337 131,778 Amgen, Inc. (b)....................................... 2,300 147,056 Analog Devices, Inc. (b).............................. 1,000 51,188 Anheuser-Busch Cos., Inc., Class A.................... 2,900 131,950 Applera Corp-Applied Biosystems Group................. 900 84,656 Applied Material, Inc. (b)............................ 2,000 76,375 AT&T Corp. - Liberty Media Goup, Inc. (b)............. 7,712 104,594 Avon Products, Inc.................................... 3,700 177,137 Boeing Co............................................. 2,800 184,800 Brocade Communications Systems (b).................... 600 55,088 Cisco Systems, Inc. (b)............................... 8,200 313,650 Citigroup, Inc........................................ 3,233 165,085 Compaq Computer Corp.................................. 7,900 118,895 Eli Lilly and Co...................................... 1,000 93,063 EMC Corp. (b)......................................... 3,300 219,450 Forest Laboratories, Inc. (b)........................ 300 39,863 Gap, Inc.............................................. 3,100 79,050 General Electric Co................................... 7,000 335,562 Halliburton Co........................................ 3,900 141,375 Immunex Corp. (b)..................................... 3,700 150,312 Intel Corp............................................ 7,100 214,775 International Business Machines Corp.................. 1,600 136,000 JDS Uniphase Corp. (b)................................ 1,600 66,700 Johnson & Johnson Co.................................. 1,100 115,569 Kimberly-Clark Corp................................... 1,400 98,966 McGraw-Hill Companies, Inc........................... 1,800 105,525 Merck & Co., Inc...................................... 1,600 149,800 Merrill Lynch & Co.................................... 1,800 122,737 Micron Technology, Inc. (b)........................... 4,300 152,650 Microsoft Corp. (b)................................... 6,000 261,000 Motorola, Inc......................................... 4,200 85,050 Novellus Systems, Inc. (b)............................ 1,400 50,313 Oracle Corp. (b)...................................... 5,500 159,844 Palm, Inc. (b)........................................ 1,900 53,794 Pepsi Bottling Group, Inc............................. 2,700 107,831 Pfizer, Inc........................................... 9,100 418,600 Pharmacia Corp........................................ 2,800 170,800 QUALCOMM, Inc. (b).................................... 2,100 172,594 RadioShack Corp....................................... 2,100 89,906 Safeway, Inc. (b)..................................... 1,900 118,750 Schering Plough Corp.................................. 1,500 85,125 Schlumberger Ltd...................................... 2,800 223,825 Solectron Corp. (b)................................... 3,400 115,260 Sprint Corp. (b)...................................... 1,300 26,569 Sun Microsystems, Inc. (b)............................ 6,400 178,400 Target Corp........................................... 4,300 138,675 Tellabs, Inc. (b)..................................... 2,400 135,600 Texas Instruments, Inc................................ 5,000 236,875 Time Warner, Inc...................................... 800 41,792 Tyco International Co................................. 3,000 166,500 VeriSign, Inc. (b).................................... 300 22,256 Veritas Software Corp. (b)............................ 600 52,500 Viacom, Inc. (b)...................................... 2,346 109,675 Wal-Mart Stores, Inc.................................. 4,200 223,125 Walt Disney Co........................................ 3,000 86,813 XO Communications, Inc. (b)........................... 2,100 37,406 ---------- Total U.S. Equities (Cost $9,203,973)................. 8,396,083 ---------- Short-Term Investments - 0.65% Investment Companies - 0.07% Chase Vista U.S. Government Money Market Fund......................................... 6,056 6,056 ---------- Face Amount ------ U.S. Government Obligations - 0.58% U.S. Treasury Bill, due 02/08/01...................... $50,000 49,688 ---------- Total Short-Term Investments (Cost $55,744)........... 55,744 ---------- Total Investments (Cost $9,259,717) - 98.56% (a)...................... 8,451,827 Cash and other assets, less liabilities - 1.44%............................ 123,740 ---------- Net Assets - 100%..................................... $8,575,567 ========== NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $9,259,717; and net unrealized depreciation consisted of: Gross unrealized appreciation........................ $ 903,663 Gross unrealized depreciation........................ (1,711,553) ----------- Net unrealized depreciation..................... $ (807,890) =========== (b) Non-income producing security See accompanying notes to financial statements. 56 U.S. Small Cap Growth Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds The UBS Investment Fund - U.S. Small Cap Growth appreciated 21.49% in 2000, which was well ahead of a 22.43% loss for its benchmark, the Russell 2000 Growth Index. Since its inception on December 31, 1998, the Fund returned 30.63% annually, versus 5.36% for its benchmark. The U.S. equity market went through a wild ride, with most major indices finishing the year near their 12-month low. In this environment, small capitalization stocks outperformed their large capitalization peers for the second consecutive year. Specifically, the small capitalization Russell 2000 declined 3.0%, while the large capitalization S&P 500 fell 9.0%. Within the small capitalization universe the Russell 2000 Growth Index tumbled 22.4%, whereas the Russell 2000 Value Index rose 22.8%. This dispersion of returns of small capitalization value over growth stocks is a record for a calendar year. Small capitalization growth was strong in the first part of 2000, with the Internet craze and a strong IPO market contributing to a sharp run-up in stock prices through mid-March. The subsequent demise of technology, media and telecommunications (TMT) stocks gravely affected the Russell 2000 Growth Index for the remainder of the year, with technology stocks on average down almost 50% by year-end. Since TMT stocks accounted for an average weight of 44% of the Russell 2000 Growth Index in 2000, it is understandable why it was such a challenging year for small capitalization growth managers. Despite the carnage, there were areas of strength in the small capitalization universe, particularly in energy (+104%), health care (+34%), and financials (+25%). The Fund outpaced its benchmark for several reasons. First, stock selection, particularly in technology, financial, and health care, was very effective in 2000, accounting for three-fourths of our outperformance last year. Second, the Fund benefited from good sector selection, in part due to the Fund's underweight in technology stocks after the first quarter. It also benefited from an overweight in the capital goods sector as well as from a number of strong initial public offerings early in the year. Stocks that helped performance in 2000 included Quest Diagnostics, Investors Financial Services, Waters Corp, Shaw Group, Elantec Semiconductor, and Tollgrade Communications. Stocks that detracted from performance included Vicinity, QRS, Spanish Broadcasting, Sykes Enterprises, Whitehall Jewellers, and Peregrine Systems. There were no strong sector themes in the Fund's best or worst stocks, though earnings disappointments were a common theme for most of the Fund's problem stocks. After a tough year for small capitalization stocks in 2000, we look for a better year ahead. Historically, Federal Reserve rate cuts have boosted small capitalization equities. We also think record low relative valuations for small capitalization stocks provide plenty of upside over the next few years. 57 U.S. Small Cap Growth Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Total Return
6 months 1 year Inception* ended ended to 12/31/00 12/31/00 12/31/00 --------------------------------------------------------------------------------------------------------- UBS Investment Fund - U.S. Small Cap Growth -6.54% 21.49% 30.63% --------------------------------------------------------------------------------------------------------- Russell 2000 Growth Index** -23.37 -22.43 5.36 ---------------------------------------------------------------------------------------------------------
*Inception dates of the UBS Investment Fund - U.S. Small Cap Growth is 12/31/98. Total return includes reinvestment of all capital gain and income distributions. All total returns in excess of 1 year represent average annualized returns. The Fund invests in IPOs which may have a magnified impact on performance. 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 Cap Growth and the Russell 2000 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, 2000. 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 Cap Growth vs. Russell 2000 Growth Index Wealth Value with Dividends Reinvested
UBS Investment Fund - Russell 2000 Growth Index U.S. Small Cap Growth 12/31/98 10,000 10,000 6/30/99 10,386 11,282 12/31/99 14,057 14,309 6/30/00 18,273 14,485 12/31/00 17,065 11,100
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. 58 U.S. Small Cap Growth Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. EQUITIES Energy.................................. 5.64% Capital Investment Electrical Components.......... 10.63 Technology..................... 4.12 ------ 14.75 Basic Industries Housing/Paper.................. 3.21 Computers Services....................... 3.03 Software....................... 4.13 Systems........................ 0.11 ------ 7.27 Consumer Autos/Durables................. 9.04 Food/House Products............ 1.75 Health: Drugs.................. 4.35 Health: Non-Drugs.............. 15.68 Retail/Apparel................. 9.27 ------ 40.09 Financial Banks.......................... 4.69% Non-Banks...................... 8.76 ------ 13.45 Telecommunications Equipment...................... 2.30 Services....................... 1.49 ------ 3.79 Transportation.......................... 4.49 Services/Miscellaneous.................. 5.06 ------ Total U.S. Equities... 97.75 SHORT-TERM INVESTMENTS.................. 2.32 ------ TOTAL INVESTMENTS..... 100.07 LIABILITIES, LESS CASH AND OTHER ASSETS................... (0.07) ------ NET ASSETS.............................. 100.00% ====== -------------------------------------------------------------------------------- Top 10 U.S. Equity Holdings As of December 31, 2000 (Unaudited)
Percent of Net Assets ----------------------------------------------------------- 1. Shaw Group, Inc. 3.42% 2. Investors Financial Services Corp. 3.18 3. Quest Diagnostics, Inc. 3.07 4. Talbots, Inc. 2.50 5. Patterson Dental Co. 2.28 6. Mercury Interactive Corp. 1.99 7. Patterson Energy, Inc. 1.98 8. Expeditors International Washington, Inc. 1.94 9. Career Education Corp. 1.83 10. Forward Air Corp. 1.76 -----------------------------------------------------------
U.S. Small Cap Growth Fund - Schedule of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Shares Value -------- ---------- U.S. Equities - 97.75% 3-Dimensional Pharmaceuticals, Inc. (b)........ 3,300 $ 48,881 About.com, Inc. (b)............................ 4,900 131,994 ACT Manufacturing, Inc. (b).................... 20,500 322,875 Active Power, Inc. (b)......................... 3,300 72,394 Administaff, Inc. (b).......................... 20,600 560,320 Anixter International, Inc. (b)................ 18,200 393,575 Aurora Biosciences Corp. (b)................... 8,000 251,500 Blue Martini Software, Inc. (b)................ 2,200 29,150 BreezeCom Ltd. (b)............................. 4,150 59,397 C & D Technologies, Inc........................ 14,800 639,175 C-COR.net Corp. (b)............................ 21,500 208,953 Career Education Corp. (b)..................... 23,600 923,350 Celeritek, Inc. (b)............................ 15,800 602,375 Cell Therapeutics, Inc. (b).................... 15,400 693,962 Children's Place Retail Stores, Inc. (b)....... 8,000 162,000 Cognex Corp. (b)............................... 20,900 462,412 Cognizant Technology Solutions Corp. (b)....... 20,300 737,144 Computer Network Technology Corp. (b).......... 5,150 148,384 Copart, Inc. (b)............................... 30,500 655,750 COR Therapeutics, Inc. (b)..................... 10,800 380,025 Cosine Communications, Inc. (b)................ 4,200 58,275 Cost Plus, Inc. (b)............................ 19,050 559,594 Credence Systems Corp. (b)..................... 18,600 427,800 Cubist Pharmaceuticals, Inc. (b)............... 10,100 292,900 CV Therapeutics, Inc. (b)...................... 7,600 537,700 Cytyc Corp. (b)................................ 12,000 750,750 Datascope Corp................................. 11,400 390,450 Decode Genetics, Inc. (b)...................... 2,500 26,250 Dendrite International, Inc. (b)............... 29,950 670,131 Eden Bioscience Corp. (b)...................... 6,250 187,109 Elantec Semiconductor, Inc. (b)................ 16,200 449,550 Emmis Communications Corp. (b)................. 8,000 229,500 Equinix, Inc. (b).............................. 10,900 47,688 Exar Corp. (b)................................. 21,000 650,672 Exfo Electro Optical Engineering, Inc. (b)..... 2,300 60,088 Expeditors International of Washington, Inc.... 18,200 977,112 Flextronics International Ltd. (b)............. 15,126 431,091 Forward Air Corp. (b).......................... 23,800 888,037 Genomica Corp. (b)............................. 15,500 81,859 Graco, Inc..................................... 16,700 690,962 Greater Bay Bancorp............................ 20,000 820,000 Hain Celestial Group, Inc. (b)................. 27,090 880,425 Hall Kinion & Associates, Inc. (b)............. 32,200 648,025 Haverty Furniture Cos., Inc.................... 16,700 164,913 HS Resources, Inc. (b)......................... 19,000 805,125 I-Many, Inc. (b)............................... 11,500 143,031 Inamed Corp. (b)............................... 13,800 282,038 Inrange Technologies Corp. (b)................. 3,000 50,813 Insight Enterprises, Inc. (b).................. 25,950 465,478 Insituform Technologies, Inc. (b).............. 22,000 877,250 Intersil Holding Corp. (b)..................... 4,000 91,750 Investors Financial Services Corp.............. 18,600 1,599,600 Ixia (b)....................................... 2,000 45,750 Jack in the Box, Inc. (b)...................... 23,500 691,781 Kenneth Cole Productions, Inc. (b)............. 20,600 829,150 Kent Electronics Corp. (b)..................... 29,300 483,450 Learning Tree International (b)................ 13,700 678,150 Marvell Technology Group Ltd. (b).............. 2,400 52,650 Maverick Tube Corp. (b)........................ 25,500 576,937 Meade Instruments Corp. (b).................... 15,200 99,750 Mercury Interactive Corp. (b).................. 11,100 1,001,775 Myriad Genetics, Inc. (b)...................... 8,200 678,550 Network Engines, Inc. (b)...................... 2,100 8,794 North Fork Bancorporation, Inc................. 28,900 709,856 NVR, Inc. (b).................................. 6,000 741,600 Oakley, Inc. (b)............................... 45,300 611,550 Omnivision Technologies, Inc. (b).............. 2,300 7,475 Pacific Sunwear of California, Inc. (b)........ 19,050 488,156 Parlex Corp. (b)............................... 14,800 200,725 Parthus Technologies ADR (b)................... 2,600 68,250 Patterson Dental Co. (b)....................... 33,900 1,148,362 Patterson Energy, Inc. (b)..................... 26,800 998,300 Peregrine Systems, Inc. (b).................... 25,000 493,750 Pericom Semiconductor Corp. (b)................ 39,000 721,500 Physiometrix, Inc. (b)......................... 17,100 272,531 Planar Systems, Inc. (b)....................... 29,000 721,375 Praecis Pharmaceuticals, Inc. (b).............. 8,800 257,400 Proton Energy Systems, Inc. (b)................ 2,100 22,050 Proxim, Inc. (b)............................... 12,900 554,700 Quest Diagnostics, Inc. (b).................... 10,900 1,547,800 Register.com (b)............................... 3,000 21,000 ResMed, Inc. (b)............................... 21,400 853,325 Resonate, Inc. (b)............................. 2,200 20,900 Richmond County Financial Corp................. 31,900 833,387 Rudolph Technologies, Inc. (b)................. 1,600 48,300 Saba Software, Inc. (b)........................ 3,150 49,613 Scios, Inc. (b)................................ 9,100 209,869 Selectica, Inc. (b)............................ 2,000 48,375 Shaw Group, Inc. (b)........................... 34,400 1,720,000 Sipex Corp. (b)................................ 22,500 538,594 SMTC Corp. (b)................................. 4,300 58,588 Stone Energy Corp. (b)......................... 11,300 729,415 Stratos Lightwave, Inc. (b).................... 2,300 39,244 Swift Transportation Co., Inc. (b)............. 19,900 394,269 Syncor International Corp-Del (b).............. 21,000 763,875 Talbots, Inc................................... 27,600 1,259,250 Tollgrade Communications, Inc. (b)............. 7,900 288,350 Transmeta Corp. (b)............................ 500 11,750 Trico Marine Services, Inc. (b)................ 42,400 654,550 Triton Network Systems, Inc. (b)............... 2,300 7,188 Triton PCS Holdings, Inc. (b).................. 8,200 278,288 TTM Technologies, Inc. (b)..................... 3,250 46,109 Vertex Pharmaceuticals, Inc. (b)............... 9,600 686,400 Vicinity Corp. (b)............................. 16,300 48,391 Vintage Petroleum, Inc......................... 32,900 707,350 Waters Corp. (b)............................... 5,500 459,250 Zebra Technologies Corp., Class A (b).......... 11,900 485,483 Zoll Medical Corp. (b)......................... 15,200 532,950 ----------- Total U.S. Equities (Cost $42,059,835)......... 49,225,762 ===========
59 U.S. Small Cap Growth Fund -- Schedule of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Shares Value -------- ----------- U.S. Equities - 97.75% 3-Dimensional Pharmaceuticals, Inc. (b)........... 3,300 $ 48,881 About.com, Inc. (b)............................... 4,900 131,994 ACT Manufacturing, Inc. (b)....................... 20,500 322,875 Active Power, Inc. (b)............................ 3,300 72,394 Administaff, Inc. (b)............................. 20,600 560,320 Anixter International, Inc. (b)................... 18,200 393,575 Aurora Biosciences Corp. (b)...................... 8,000 251,500 Blue Martini Software, Inc. (b)................... 2,200 29,150 BreezeCom Ltd. (b)................................ 4,150 59,397 C & D Technologies, Inc........................... 14,800 639,175 C-COR.net Corp. (b)............................... 21,500 208,953 Career Education Corp. (b)........................ 23,600 923,350 Celeritek, Inc. (b)............................... 15,800 602,375 Cell Therapeutics, Inc. (b)....................... 15,400 693,962 Children's Place Retail Stores, Inc. (b).......... 8,000 162,000 Cognex Corp. (b).................................. 20,900 462,412 Cognizant Technology Solutions Corp. (b).......... 20,300 737,144 Computer Network Technology Corp. (b)............. 5,150 148,384 Copart, Inc. (b).................................. 30,500 655,750 COR Therapeutics, Inc. (b)........................ 10,800 380,025 Cosine Communications, Inc. (b)................... 4,200 58,275 Cost Plus, Inc. (b)............................... 19,050 559,594 Credence Systems Corp. (b)........................ 18,600 427,800 Cubist Pharmaceuticals, Inc. (b).................. 10,100 292,900 CV Therapeutics, Inc. (b)......................... 7,600 537,700 Cytyc Corp. (b)................................... 12,000 750,750 Datascope Corp.................................... 11,400 390,450 Decode Genetics, Inc. (b)......................... 2,500 26,250 Dendrite International, Inc. (b).................. 29,950 670,131 Eden Bioscience Corp. (b)......................... 6,250 187,109 Elantec Semiconductor, Inc. (b)................... 16,200 449,550 Emmis Communications Corp. (b).................... 8,000 229,500 Equinix, Inc. (b)................................. 10,900 47,688 Exar Corp. (b).................................... 21,000 650,672 Exfo Electro Optical Engineering, Inc. (b)........ 2,300 60,088 Expeditors International of Washington, Inc....... 18,200 977,112 Flextronics International Ltd. (b)................ 15,126 431,091 Forward Air Corp. (b)............................. 23,800 888,037 Genomica Corp. (b)................................ 15,500 81,859 Graco, Inc........................................ 16,700 690,962 Greater Bay Bancorp............................... 20,000 820,000 Hain Celestial Group, Inc. (b).................... 27,090 880,425 Hall Kinion & Associates, Inc. (b)................ 32,200 648,025 Haverty Furniture Cos., Inc....................... 16,700 164,913 HS Resources, Inc. (b)............................ 19,000 805,125 I-Many, Inc. (b).................................. 11,500 143,031 Inamed Corp. (b).................................. 13,800 282,038 Inrange Technologies Corp. (b).................... 3,000 50,813 Insight Enterprises, Inc. (b)..................... 25,950 465,478 Insituform Technologies, Inc. (b)................. 22,000 877,250 Intersil Holding Corp. (b)........................ 4,000 91,750 Investors Financial Services Corp................. 18,600 1,599,600 Ixia (b).......................................... 2,000 45,750 Jack in the Box, Inc. (b)......................... 23,500 691,781 Kenneth Cole Productions, Inc. (b)................ 20,600 829,150 Kent Electronics Corp. (b)........................ 29,300 483,450 Learning Tree International (b)................... 13,700 678,150 Marvell Technology Group Ltd. (b)................. 2,400 52,650 Maverick Tube Corp. (b)........................... 25,500 576,937 Meade Instruments Corp. (b)....................... 15,200 99,750 Mercury Interactive Corp. (b)..................... 11,100 1,001,775 Myriad Genetics, Inc. (b)......................... 8,200 678,550 Network Engines, Inc. (b)......................... 2,100 8,794 North Fork Bancorporation, Inc.................... 28,900 709,856 NVR, Inc. (b)..................................... 6,000 741,600 Oakley, Inc. (b).................................. 45,300 611,550 Omnivision Technologies, Inc. (b)................. 2,300 7,475 Pacific Sunwear of California, Inc. (b)........... 19,050 488,156 Parlex Corp. (b).................................. 14,800 200,725 Parthus Technologies ADR (b)...................... 2,600 68,250 Patterson Dental Co. (b).......................... 33,900 1,148,362 Patterson Energy, Inc. (b)........................ 26,800 998,300 Peregrine Systems, Inc. (b)....................... 25,000 493,750 Pericom Semiconductor Corp. (b)................... 39,000 721,500 Physiometrix, Inc. (b)............................ 17,100 272,531 Planar Systems, Inc. (b).......................... 29,000 721,375 Praecis Pharmaceuticals, Inc. (b)................. 8,800 257,400 Proton Energy Systems, Inc. (b)................... 2,100 22,050 Proxim, Inc. (b).................................. 12,900 554,700 Quest Diagnostics, Inc. (b)....................... 10,900 1,547,800 Register.com (b).................................. 3,000 21,000 ResMed, Inc. (b).................................. 21,400 853,325 Resonate, Inc. (b)................................ 2,200 20,900 Richmond County Financial Corp.................... 31,900 833,387 Rudolph Technologies, Inc. (b).................... 1,600 48,300 Saba Software, Inc. (b)........................... 3,150 49,613 Scios, Inc. (b)................................... 9,100 209,869 Selectica, Inc. (b)............................... 2,000 48,375 Shaw Group, Inc. (b).............................. 34,400 1,720,000 Sipex Corp. (b)................................... 22,500 538,594 SMTC Corp. (b).................................... 4,300 58,588 Stone Energy Corp. (b)............................ 11,300 729,415 Stratos Lightwave, Inc. (b)....................... 2,300 39,244 Swift Transportation Co., Inc. (b)................ 19,900 394,269 Syncor International Corp-Del (b)................. 21,000 763,875 Talbots, Inc...................................... 27,600 1,259,250 Tollgrade Communications, Inc. (b)................ 7,900 288,350 Transmeta Corp. (b)............................... 500 11,750 Trico Marine Services, Inc. (b)................... 42,400 654,550 Triton Network Systems, Inc. (b).................. 2,300 7,188 Triton PCS Holdings, Inc. (b)..................... 8,200 278,288 TTM Technologies, Inc. (b)........................ 3,250 46,109 Vertex Pharmaceuticals, Inc. (b).................. 9,600 686,400 Vicinity Corp. (b)................................ 16,300 48,391 Vintage Petroleum, Inc............................ 32,900 707,350 Waters Corp. (b).................................. 5,500 459,250 Zebra Technologies Corp., Class A (b)............. 11,900 485,483 Zoll Medical Corp. (b)............................ 15,200 532,950 ----------- Total U.S. Equities (Cost $42,059,835)............ 49,225,762 -----------
60 U.S. Small Cap Growth Fund -- Schedule of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Shares Value --------- ----------- Short-Term Investments - 2.32% Investment Companies - 2.32% Brinson Supplementary Trust U.S. Cash Management Prime Fund (Cost $1,166,686)............................. 1,166,686 $ 1,166,686 ------------ Total Investments 100.07% (Cost $43,226,521) - 100.07% (a)............. 50,392,448 Liabilities, less cash and other assets - (0.07%)............................. (33,201) ------------ Net Assets - 100%............................... $ 50,359,247 ============
NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $43,226,521; and net unrealized appreciation consisted of: Gross unrealized appreciation.................... $ 13,068,081 Gross unrealized depreciation.................... (5,902,154) ------------ Net unrealized appreciation.............. $ 7,165,927 ============ (b) Non-income producing security See accompanying notes to financial statements. 61 U.S. Bond Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Since its inception on August 31, 1995, the UBS Investment Fund - U.S. Bond has returned 6.32%, compared to the 7.07% return of its benchmark, the Salomon Smith Barney Broad Investment Grade (BIG) Bond Index. In 2000 the fund posted a return of 10.37% compared to its benchmark's return of 11.59%. This was a strong year for the U.S. bond market, bouncing back from the poor yields in 1999 and outperforming U.S. equities in the process. Early in the year, the Treasury announced plans to buy back approximately USD 30 billion in debt and significantly reduce Treasury issuance. Meanwhile, the Federal Reserve tightened interest rates three times in an effort to reduce inflation risks brought on by the economy's torrid growth rate, which later in the year showed signs of deceleration. The combined effect of these actions caused the yield curve to invert as long rates fell while short rates rose. By the end of the year the long end of the curve had regained its positive slope, and yields of benchmark 10-year and 30-year Treasuries had rallied 133 and 102 basis points, respectively, to finish at 5.11% and 5.45%. 2-year yields finished at 5.09%, down 111 basis points. Treasuries were the lead performers over the year, at the expense of non- Treasury securities (spread sectors). The inversion of the Treasury yield curve caused the yield for spread sectors to disconnect from Treasuries. This phenomenon produced exceptionally poor relative returns for non-Treasury bonds. Volatile equity markets and earnings warnings triggered additional caution regarding these non-Treasury sectors. By the end of the year all spread sectors but asset-backed securities had underperformed duration-neutral Treasuries. Corporate securities were the worst performers, lagging Treasuries by 417 basis points. In general, our overweight to spread products hurt returns. A shift in exposure to the higher-quality sectors proved a helpful strategy as earnings warnings and signs of economic weakness appeared. Issue selection within the mortgage sector was a strong source of value added. Our shorter-than-benchmark duration strategy hurt somewhat, but this was partially offset by exposure to Treasury Inflation Protected Securities. 62 U.S. Bond Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Total Return
6 months 1 year 3 years 5 years Inception* ended ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 12/31/002 ------------------------------------------------------------------------------------------------------------------ UBS Investment Fund - U.S. Bond 6.96% 10.37% 5.41% 5.66% 6.32% ------------------------------------------------------------------------------------------------------------------ Salomon Smith Barney Broad Investment Grade (BIG) Bond Index 7.38 11.59 6.35 6.45 7.07 ------------------------------------------------------------------------------------------------------------------
*Inception dates of the UBS Investment Fund - U.S. Bond is 8/31/95. 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, 2000. 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
UBS Investment Fund - Salomon Smith Barney U.S. Bond BIG Bond Index 8/31/95 10,000.00 10,000.00 11/30/95 10,390.00 10,388.84 12/31/95 10,529.23 10,532.20 12/31/96 10,860.51 10,914.11 12/31/97 11,843.70 11,964.13 12/31/98 12,767.45 13,007.26 12/31/99 12,569.43 12,897.85 12/31/2000 13,869.00 14,393.01
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. 63 U.S. Bond Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Industry Diversification As a Percent of Net Assets As of December 31, 2000 (Unaudited) ------------------------------------------------------------ U.S. BONDS Corporate Bonds Consumer......................................... 1.70% Construction..................................... 0.26 Electric Components.............................. 1.20 Energy........................................... 1.20 Financial Services............................... 4.54 Health........................................... 0.86 Publishing....................................... 0.72 Recreation....................................... 0.96 Retail/Apparel................................... 0.39 Services/Miscellaneous........................... 1.96 Telecommunications............................... 1.45 Utilities........................................ 2.07 ------ Total U.S. Corporate Bonds.............. 17.31 Asset-Backed....................................... 5.76 Corporate Mortgage-Backed Securities............... 19.74 International Dollar Bonds......................... 5.66 U.S. Government Agencies........................... 2.59 U.S. Government Mortgage-Backed Securities......... 23.83 ------ U.S. Government Obligations........................ 22.79 Total U.S. Bonds........................ 97.68 SHORT-TERM INVESTMENTS............................. 1.23 ------ TOTAL INVESTMENTS....................... 98.91 CASH AND OTHER ASSETS, LESS LIABILITIES........................ 1.09 ------ NET ASSETS......................................... 100.00 ------ 64 U.S. Bond Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Face Amount Value ------ ----- U.S. Bonds - 97.68% U.S. Corporate Bonds - 17.31% Capital One Bank, Bank Note, 8.250%, due 06/15/05............................ $ 250,000 $ 252,844 CBS Corp., 8.625%, due 08/01/12................... 575,000 638,188 Cendant Corp., 7.750%, due 12/01/03............................ 600,000 584,155 Centaur Funding Corp., Class B, 144A, 9.080%, due 04/20/20 (b)........................ 715 741,589 Centaur Funding Corp., Class C, 144A, 0.000%, due 04/20/20 (b)........................ 1,355 247,288 Centex Corp., 9.750%, due 06/15/05................ 155,000 158,848 Chesapeake & Potomac Tel, MD, 8.000%, due 10/15/29............................ 87,000 89,752 Dominion Resources, Inc., Series B, 7.625%, due 07/15/05............................ 700,000 730,128 Federated Department Stores 6.300%, due 04/01/09............................ 185,000 168,113 8.500%, due 06/01/10............................ 65,000 67,897 FMR Corp., 144A, 7.570%, due 06/15/29............................ 300,000 301,966 GMAC, 9.625%, due 12/15/01........................ 294,000 302,928 KeySpan Corp., 7.625%, due 11/15/10............... 250,000 265,634 Lilly Del Mar, 144A, 7.717%, due 08/01/29............................ 1,000,000 1,035,109 MBNA Global Capital Securities, B, FRN, 7.559%, due 02/01/27............................ 340,000 285,961 News America Holdings, 7.750%, due 12/01/45............................ 508,000 438,444 Nisource Finance Corp., 144A, 7.875%, due 11/15/10............................ 350,000 367,684 NSTAR, 8.000%, due 02/15/10....................... 665,000 693,065 Pacific Gas & Electric Co., 144A, 7.375%, due 11/01/05............................ 350,000 292,138 PanAmSat Corp. 6.000%, due 01/15/03............................ 375,000 362,714 6.375%, due 01/15/08............................ 200,000 180,027 Pharmacia Corp., 6.600%, due 12/01/28............. 550,000 522,235 Sempra Energy, 7.950%, due 03/01/10............... 750,000 730,013 Service Corp. International, 6.000%, due 12/15/05............................ 300,000 163,500 Verizon Global Funding Corp. 144A, 7.750%, due 12/01/30............................ 500,000 508,762 Waste Management, 6.500%, due 12/15/02............................ 400,000 391,827 ----------- 10,520,809 ----------- Asset-Backed - 5.76% Citibank Credit Card Issuance Trust, 6.900%, due 10/17/07............................ 195,000 201,169 Comed Transitional Funding Trust, 98-1, Class A6, 5.630%, due 06/25/09.................. 260,000 253,682 Green Tree Financial Corp., 6.160%, due 02/01/31............................ 1,000,000 991,709 Green Tree Financial Corp., 94-5, Class A5, 8.300%, due 11/15/19.................. 320,000 332,451 Peco Energy Transition Trust, 99-A3, Class A7, 6.130%, due 03/01/09.................. 505,000 498,602 Sears Credit Account Master Trust, 99-3, Class A, 6.450%, due 11/17/09................... 1,200,000 1,219,764 ----------- 3,497,377 ----------- Corporate Mortgage-Backed Securities - 19.74% ABN AMRO Mortgage Corp., 99-3, Class A2, 6.300%, due 05/25/29.................. 1,000,000 989,520 ABN AMRO Mortgage Corp., 99-2, Class IA2, 6.300%, due 04/25/29................. 2,100,000 2,095,632 Bank One Mortgage, 2000-2, Class 6A, 6.761%, due 03/15/30............................ 91,220 91,765 Chemical Mortgage Securities Inc., 93-1, Class A5, 7.450%, due 02/25/23.................. 9,967 9,920 Citicorp Mortgage Securities, Inc., 94-9, Class A8, 5.750%, due 06/25/09.................. 866,868 840,229 DLJ Commercial Mortgage Corp., 7.180%, due 08/10/10............................ 850,000 890,286 Heller Financial Commercial Mortgage Assets, 99-PH1, Class A1, 6.500%, due 05/15/31............................ 1,121,786 1,134,592 LB Commercial Conduit Mortgage Trust, 99-C1, Class A1, 6.410%, due 08/15/07........... 660,308 666,336 PNC Mortgage Securities Corp., 94-3, Class A8, 7.500%, due 07/25/24.................. 375,000 385,422 Prudential Home Mortgage Securities, 93-43, Class A9, 6.750%, due 10/25/23.................. 252,652 251,404 Residential Accredit Loans, Inc., 98-QS4, Class AI5, 7.000%, due 03/25/28................. 2,850,000 2,823,027 Residential Asset Securitization Trust, 97-A10, Class A1, 7.250%, due 12/25/27.......... 104,719 104,274 Residential Funding Mortgage, 95-S6, Class A7, 7.500%, due 11/25/25.................. 928,498 940,515 Structured Asset Securities Corp., 98-RF2, 144a, 8.582%, due 07/15/27...................... 115,647 127,648 Thrift Financial Corp., Class A4, 11.250%, due 01/01/16........................... 22,431 22,784 Vendee Mortgage Trust, 92-1, Class 2Z, 7.750%, due 05/15/22............................ 597,769 618,307 ----------- 11,991,661 ----------- 65 U.S. Bond Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Face Amount Value ------ ----- International Dollar Bonds - 5.66% Banco Santiago S.A., 7.000%, due 07/18/07............................ $ 350,000 $ 326,706 Empresa Nacional de Electricidad S.A., 8.125%, due 02/01/97............................ 335,000 256,667 Interamer Development Bank, 6.800%, due 10/15/25............................ 100,000 104,395 Korea Development Bank, 7.125%, due 09/17/01............................ 500,000 500,889 Pemex Finance Ltd., 8.450%, due 02/15/07............................ 940,000 960,830 Ras Laffan Liquified Natural Gas Co., Ltd., 144A, 8.294%, due 03/15/14...................... 450,000 430,875 Tyco International Group S.A., 7.000%, due 06/15/28............................ 500,000 473,388 United Mexican States Global, 9.875%, due 02/01/10............................ 360,000 386,280 ----------- 3,440,030 ----------- U.S. Government Agencies - 2.59% Jordan Aid, 8.750%, due 09/01/19.................. 1,330,877 1,577,449 ----------- U.S. Government Mortgage-Backed Securities - 23.83% Fannie Mae Whole Loan, 95-W3, Class A, 9.000%, due 04/25/25............................ 92,030 95,577 Federal Home Loan Mortgage Corp., Gold, 8.500%, due 05/01/30...................... 1,771,102 1,824,862 Federal Home Loan Mortgage Corp., 1595, Class D, 7.000%, due 10/15/13................... 492,125 500,337 Federal Home Loan Mortgage Corp., Gold 7.000%, due 02/15/03............................ 2,920,000 3,001,094 8.000%, due 11/01/22............................ 73,845 76,163 8.500%, due 07/01/30............................ 341,855 352,232 9.000%, due 07/01/30............................ 138,705 143,287 Federal National Mortgage Assoc., 97-72, Class EG, 0.000%, due 09/25/22 (b).............. 125,549 120,443 Federal National Mortgage Association 6.000%, due 10/01/14............................ 221,996 218,983 6.000%, due 03/01/28............................ 578,499 560,068 6.500%, due 03/01/19............................ 439,609 436,603 6.500%, due 06/01/28............................ 640,818 632,647 7.000%, due 12/01/24............................ 505,483 506,067 7.000%, due 03/01/29............................ 40,885 40,983 7.125%, due 06/15/10............................ 115,000 124,529 7.500%, due 12/01/23............................ 414,407 420,269 7.500%, due 01/01/28............................ 231,127 235,201 8.000%, due 08/01/08............................ 413,325 425,354 8.500%, due 06/01/30............................ 404,182 415,440 Government National Mortgage Association 6.500%, due 10/15/24............................ 3,952,770 3,931,852 7.000%, due 07/15/25............................ 74,924 75,524 7.500%, due 12/15/22............................ 179,762 183,716 7.500%, due 01/15/24............................ 48,303 49,326 7.500%, due 06/15/25............................ 62,011 63,348 8.000%, due 08/15/22............................ 35,215 36,294 9.000%, due 11/15/04............................ 4,738 4,994 9.000%, due 11/15/04............................ 1,596 1,682 ----------- 14,476,875 ----------- U.S. Government Obligations - 22.79% U.S. Treasury Inflation Indexed Note 3.625%, due 04/15/28............................ 1,770,000 1,868,552 3.875%, due 04/15/29............................ 60,000 65,104 U.S. Treasury Note 5.625%, due 05/15/08............................ 1,945,000 1,997,848 5.750%, due 08/15/03............................ 1,685,000 1,710,012 6.125%, due 12/31/01............................ 1,095,000 1,101,613 6.625%, due 05/31/02............................ 2,595,000 2,639,504 6.625%, due 05/15/07............................ 1,310,000 1,412,999 6.625%, due 02/15/27............................ 1,880,000 2,146,791 7.500%, due 02/15/05............................ 830,000 902,701 ----------- 13,845,124 ----------- Total Bonds (Cost $58,968,999).................... 59,349,325 ----------- Shares ------ Investment Companies - 1.23% Brinson Supplementary Trust U.S. Cash Management Prime Fund (Cost $747,169)........................ 747,169 747,169 ----------- Total Investments (Cost $59,716,168) - 98.91% (a)................. 60,096,494 Cash and other assets, less liabilities - 1.09%........................ 661,481 ----------- Net Assets - 100%................................. $60,757,975 =========== See accompanying notes to schedule of investments. 66 U.S. Bond Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $59,716,168; and net unrealized appreciation consisted of: Gross unrealized appreciation........................... $ 1,019,089 Gross unrealized depreciation........................... (638,763) ----------- Net unrealized appreciation........................ $ 380,326 =========== (b) Non-income producing security FRN: Floating Rate Note -- The rate disclosed is that in effect at December 31, 2000. 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, 2000, the value of these securities amounted to $4,053,059 or 6.67% of net assets. See accompanying notes to financial statements. 67 High Yield Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Since its inception on December 31, 1998, the UBS Investment Fund - High Yield returned -1.07% annualized, versus a return of -1.14% for its benchmark, the Merrill Lynch High Yield Master Index. The Fund returned -5.97% for the year 2000, its benchmark returned -3.79%. The high yield market, affected by a number of factors, suffered its worst return since 1990, the year of the last U.S. recession. Investors concentrated on the expected increase in the default rates. Many reasons were proposed for the increase in the default rate, among them the "seasoning" of the large number of lower quality issues from 1996 to 1998 as well as concern over a slowdown in the U.S. economy. Furthermore, mutual fund outflows equally contributed to the decline of the market. Mutual funds, which account for about 20% of the volume in the high yield market, experienced significant outflows of nearly $10 billion for the year. Collateralized bond obligation activity, another significant source of demand for high yield bonds, also fell. In addition, there was reduced broker-dealer commitment to the high yield business, leading to a very illiquid and difficult market. As a result, high yield spreads were pessimistically high in 2000. According to Merrill Lynch's high yield model, the market priced in a default rate of 14%, while the actual rate in November 2000 was a mere 5.8%. With a flight to quality, the BB sector outperformed the B and CCC rated sectors. The Fund's performance was positively affected by sector allocation and by its overweight in the energy sector, which continues to benefit from high prices; gaming, which has positive industry fundamentals; and broadcasting, which is less affected by a potential downturn in the economy. The Fund also benefited from being underweighted in the steel industry, which continues to be hurt by cheaper foreign imports and an oversupply situation; and retailing, which suffered from slower sales. Conversely, the Fund was hurt by its overweight in telecommunications, with large capital expenditures still unfunded, and the underweight in electric utilities, which performed very well due to their defensive nature. 68 High Yield Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Total Return
6 months 1 year Inception* ended ended to 12/31/00 12/31/00 12/31/00 -------------------------------------------------------------------------------------------------------------- UBS Investment Fund - High Yield -3.95% -5.97% -1.07% -------------------------------------------------------------------------------------------------------------- Merrill Lynch High Yield Master Index -2.63 -3.79 -1.14 --------------------------------------------------------------------------------------------------------------
*Inception date of the UBS Investment Fund - High Yield is 12/31/98. 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 - 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, 2000. 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
UBS Investment Fund - High Yield Merrill Lynch High Yield Master Index 12/31/98 10,000 10,000 6/30/99 10,261 10,176 12/31/99 10,409 10,157 6/30/2000 10,191 10,037 12/31/2000 9,788 9,772
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. 69 High Yield Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Industry Diversification
As a Percent of Net Assets As of December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- U.S. bonds Corporate Bonds Aerospace............................. 0.38% Appliances & Household Durables....... 0.65 Autos/Durables........................ 3.27 Building Materials.................... 0.44 Business & Public Service............. 0.43 Cable Television...................... 1.99 Chemicals............................. 1.36 Computer Software..................... 0.72 Computer Systems...................... 0.21 Construction.......................... 1.77 Consumer.............................. 2.10 Electronics and Electric Components... 1.03 Energy................................ 5.29 Financial Services.................... 1.47 Food & House Products................. 1.93 Health: Drugs......................... 2.81 Health: Non-Drugs..................... 0.98 Housing/Paper......................... 1.60 Leisure & Tourism..................... 0.60 Non-Durables.......................... 1.40 Publishing............................ 1.58 Radio Broadcasting.................... 1.92% Recreation............................ 8.83 Retail................................ 3.21 Services/Miscellaneous................ 3.68 Technology............................ 0.52 Telecommunications - Services......... 8.32 Telecommunications - Equipment........ 2.55 Telecommunications - Wireless......... 5.36 Television Broadcasting............... 6.20 Transportation........................ 0.36 Utilities............................. 1.35 ------ Total U.S. Corporate Bonds... 74.31 International Dollar Bonds................. 5.04 ------ Total U.S. Bonds............. 79.35 Warrants................................... 0.02 SHORT-TERM INVESTMENTS..................... 16.43 ------ TOTAL INVESTMENTS............ 95.80 CASH AND OTHER ASSETS, LESS LIABILITIES...................... 4.20 ------ NET ASSETS................................. 100.00% ======
-------------------------------------------------------------------------------- Top Ten U.S. Bond Holdings As of December 31, 2000 (Unaudited)
Percent of Net Assets -------------------------------------------------------- 1. Liberty Group Operating, 9.375%, due 02/01/08................... 1.38% 2. Snyder Oil Corp., 8.750%, due 06/15/07................... 1.12 3. Cross Timbers Oil Co., 8.750%, due 11/01/09................... 1.10 4. Triton PCS, Inc., 0.000%, due 05/01/08................... 1.07 5. Bally Total Fitness Corp., Series D, 9.875%, due 10/15/07................... 1.00 6. Qwest Communications International, Inc., 0.000%, due 10/15/07................... 0.99 7. Energis PLC, 9.750%, due 06/15/09................... 0.98 8. Paxson Communications Corp., 11.625%, due 10/01/02.................. 0.98 9. TeleWest Communications PLC, 0.000%, due 10/1/07.................... 0.96 10. Fox/Liberty Networks, 0.000%, due 8/15/07.................... 0.95 ----------------------------------------------------
70 High Yield Fund -- Schedule of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Face Amount Value -------- -------- U.S. Bonds - 79.35% U.S. Corporate Bonds - 74.31% Ackerley Group, Inc., Series B, 9.000%, due 01/15/09........................ $100,000 $ 87,500 Adelphia Communications, Inc., Series B, 8.375%, due 02/01/08........................ 210,000 180,600 AES Corp., 9.375%, due 09/15/10............... 350,000 357,875 AirGate PCS, Inc., 0.000%, due 10/01/09 (c).................... 450,000 256,500 Alamosa PCS Holdings, Inc., 0.000%, due 02/15/10 (c).................... 150,000 69,750 Allbritton Communications Co., 9.750%, due 11/30/07........................ 250,000 243,750 American Mobile Satellite Corp., 12.250%, due 04/01/08....................... 182,000 67,340 American Restaurant Group, Inc., Series B, 11.500%, due 02/15/03....................... 202,000 181,800 Argosy Gaming Co., 10.750%, due 06/01/09....................... 150,000 156,375 Atrium Cos., Inc., 10.500%, due 05/01/09....................... 175,000 135,625 Aztar Corp., 8.875%, due 05/15/07............. 250,000 241,250 B&G Foods, Inc., 9.625%, due 08/01/07......... 400,000 257,000 Bally Total Fitness Corp., Series D, 9.875%, due 10/15/07........................ 500,000 463,750 Belden & Blake Corp., 9.875%, due 06/15/07 (b).................... 325,000 281,125 Box USA Holdings, Inc., Series B, 12.000%, due 06/01/06 (b)................... 300,000 288,000 Building Materials Corp., Series B, 7.750%, due 07/15/05........................ 350,000 87,500 Callahan Nordrhein-Westfalen GmbH., 144A, 14.000%, due 07/15/10................. 235,000 210,325 Centennial Cellular, 10.750%, due 12/15/08....................... 250,000 235,000 Century Communications Corp., 0.000%, due 01/15/08 (c).................... 425,000 163,625 Charter Communications Holdings, 10.000%, due 04/01/09....................... 450,000 436,500 Chesapeake Energy Corp., 9.125%, due 04/15/06........................ 350,000 352,625 Citadel Broadcasting Co., 9.250%, due 11/15/08........................ 250,000 242,500 Classic Cable, Inc., 10.500%, due 03/01/10....................... 275,000 123,750 Coast Hotels and Casinos, Inc., 9.500%, due 04/01/09........................ 370,000 358,437 Collins & Alkman Corp., 11.500%, due 04/15/06....................... 400,000 312,000 COLT Telecom Group, 0.000%, due 12/15/06 (c).................... 100,000 90,500 Cross Timbers Oil Co., 8.750%, due 11/01/09........................ 500,000 507,500 Crown Castle International Corp. 0.000%, due 05/15/11 (c).................... 380,000 255,550 9.000%, due 05/15/11........................ 150,000 145,125 CSC Holdings, Inc., 7.625%, due 07/15/18........................ 350,000 319,009 Cumulus Media, Inc., 10.375%, due 07/01/08....................... 155,000 124,388 Dayton Superior Corp., 13.000%, due 06/15/09....................... 225,000 202,500 Delco Remy International, Inc., 8.625%, due 12/15/07........................ 325,000 260,000 Diamond Triumph Auto, Inc., 9.250%, due 04/01/08........................ 350,000 255,500 Dobson Communications Corp., 144A, 10.875%, due 07/01/10....................... 200,000 197,000 Dobson Sygnet Communications, Inc., 12.250%, due 12/15/08....................... 250,000 246,250 Echostar DBS Corp., 9.375%, due 02/01/09........................ 250,000 242,500 Exodus Communications, Inc., 11.250%, due 07/01/08....................... 200,000 178,000 Exodus Communications, Inc., 144A, 11.625%, due 07/15/10....................... 150,000 133,500 Fedders North America, 9.375%, due 08/15/07........................ 350,000 301,000 Finova Capital Corp., 7.250%, due 11/08/04........................ 70,000 42,037 Fox/Liberty Networks, 0.000%, due 08/15/07 (c).................... 500,000 440,000 Global Imaging Systems, Inc., 10.750%, due 02/15/07....................... 325,000 230,750 Globix Corp., 12.500%, due 02/01/10........... 260,000 96,200 Golden Sky DBS,nc., 0.000%, due 03//07 (c)...................... 375,000 241,875 Gothic Production Corp., Series B, 11.125%, due 05/01/05....................... 250,000 267,500 Granite Broadcasting Corp., 10.375%, due 05/15/05....................... 200,000 127,000 Hayes Lemmerz International, Inc. 8.250%, due 12/15/08........................ 220,000 141,900 9.125%, due 07/15/07 (b).................... 250,000 165,000 HCA-The Healthcare Co., 8.750%, due 09/01/10........................ 150,000 158,394 HMH Properties, Series B, 7.875%, due 08/01/08........................ 350,000 336,000 Hollinger International Publishing Corp., 9.250%, due 02/01/06........................ 250,000 250,000 Hollywood Park, Inc., 9.500%, due 08/01/07........................ 140,000 141,400 Horseshoe Gaming Holdings, 8.625%, due 05/15/09........................ 242,000 236,858 Horseshoe Gaming LLC, Series B, 9.375%, due 06/15/07........................ 150,000 150,375
71 High Yield Fund -- Schedule of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Face Amount Value -------- -------- Huntsman Corp., 144A, 9.500%, due 07/01/07....................... $400,000 $240,000 ICN Pharmaceuticals, Inc., 9.250%, due 08/15/05....................... 400,000 406,000 Insight Midwest LP/Insight Capital, Inc., 144A, 10.500%, due 11/01/10................ 220,000 228,250 Integrated Electrical Services, Inc., Series.B, 9.375%, due 02/01/09....................... 300,000 267,000 Interep National Radio Sales, Series B, 10.000%, due 07/01/08...................... 130,000 97,500 Intermedia Communications, 0.000%, due 07/15/07 (c)................... 150,000 90,000 International Game Technology, 8.375%, due 05/15/09....................... 150,000 149,625 Iron Mountain, Inc., 8.750%, due 09/30/09....................... 250,000 245,625 Jackson Products, Inc., Series B, 9.500%, due 04/15/05....................... 300,000 258,000 Lamar Media Corp., 8.625%, due 09/15/07....................... 200,000 200,500 Level 3 Communications, Inc., 0.000%, due 12/01/08 (c)................... 600,000 324,000 Levi Strauss & Co., 7.000%, due 11/01/06....................... 375,000 294,375 Liberty Group Operating, 9.375%, due 02/01/08....................... 850,000 637,500 Lifepoint Hospital Holdings, Inc., Series B, 10.750%, due 05/15/09...................... 250,000 271,250 LIN Holdings Corp., 0.000%, due 03/01/08 (c)................... 200,000 146,500 Loral Space & Communications Ltd., 9.500%, due 01/15/06....................... 200,000 134,000 Luigino's, Inc., 10.000%, due 02/01/06....... 210,000 165,900 Lyonll Chemical Co., Series B, 9.87, due 05/01/07......................... 400,000 388,000 Mail Well Corp., Class B, 8.750%, due 12/15/08....................... 250,000 175,000 Majestic Star Casino LLC, Series B, 10.875%, due 07/01/06...................... 175,000 150,500 McLeod USA, Inc. 8.125%, due 02/15/09....................... 350,000 301,000 9.250%, due 07/15/07....................... 250,000 228,750 Merrill Corp., Series B, 12.000%, due 05/01/09...................... 325,000 146,250 Metromedia Fiber Network, 10.000%, due 12/15/09...................... 290,000 240,700 MGM Grand, Inc., 9.750%, due 06/01/07........ 200,000 209,000 MGM Mirage, Inc., 8.500%, due 09/15/10....... 150,000 154,379 Mohegan Tribal Gaming Authority, 8.750%, due 01/01/09....................... 350,000 349,562 Motors & Gears, Inc., 10.750%, due 11/15/06...................... 275,000 244,750 MTS, Inc., 9.375%, due 05/01/05.............. 575,000 207,000 Newpark Resources, Inc., Series B, 8.625%, due 12/15/07....................... 450,000 418,500 Nextel Communications, Inc. 0.000%, due 09/15/07 (c)................... 200,000 158,000 9.375%, due 11/15/09....................... 170,000 158,525 Nextel International, Inc., 144A, 12.750%, due 08/01/10...................... 350,000 280,000 Nextel Partners, Inc., 11.000%, due 03/15/10...................... 200,000 191,500 Nextel Partners, Inc., 144A, 11.000%, due 03/15/10...................... 100,000 95,750 Nortex, Inc., 9.875%, due 03/01/04........... 350,000 326,375 NTL Communications Inc., Series B, 12.375%, due 10/01/08 (c).................. 400,000 216,000 NTL, Inc., Series A, 12.750%, due 04/15/05 (c).................. 150,000 141,000 Nuevo Energy Co., Series B, 9.500%, due 06/01/08....................... 150,000 151,500 Oxford Automotive, Inc., Series D, 10.125%, due 06/15/07...................... 300,000 204,000 Pacifica Papers, Inc., 10.000%, due 03/15/09...................... 300,000 298,500 Packaging Corp. of America, 9.625%, due 04/01/09....................... 250,000 258,125 Pantry, Inc., 10.250%, due 10/15/07.......... 200,000 188,000 Paxson Communications Corp., 11.625%, due 10/01/02 (b).................. 450,000 454,500 Pegasus Communications Corp., Series B 9.750%, due 12/01/06....................... 150,000 139,500 12.500%, due 08/01/07...................... 300,000 301,500 Perry Ellis International, Inc., 12.250%, due 04/01/06...................... 100,000 81,500 Phillips-Van Heusen, Corp., 9.500%, due 05/01/08....................... 325,000 302,250 Pillowtex Corp., 10.000%, due 11/15/06....... 188,000 7,520 Pioneer Natural Resources Co., 9.625%, due 04/01/10....................... 360,000 384,322 Plains Resources, Inc., 144A, 10.250%, due 03/15/06...................... 200,000 200,000 Plains Resources, Inc., Series B, 10.250%, due 03/15/06...................... 300,000 300,000 Pliant Corp., 13.000%, due 06/01/10.......... 160,000 88,800 Premier Parks, Inc., 0.000%, due 04/01/08 (c)................... 175,000 120,750 PSINet, Inc. 10.500%, due 12/01/06...................... 150,000 39,000 11.000%, due 08/01/09...................... 86,000 22,360 11.500%, due 11/01/08...................... 450,000 121,500 Quest Diagnostic, Inc., 10.750%, due 12/15/06...................... 280,000 294,700 Qwest Communications International, Inc., 0.000%, due 10/15/07 (c)................... 500,000 457,850
72 High Yield Fund -- Schedule of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Face Amount Value -------- ----------- R. H. Donnelley, Inc., 9.125%, due 06/01/08........................... $190,000 $ 184,775 Radio Unica Communications Corp., 0.000%, due 08/01/06 (c)....................... 400,000 252,000 Rayovac Corp., Class B, 10.250%, due 11/01/06.......................... 300,000 303,000 RCN Corp., 10.000%, due 10/15/07................. 300,000 165,000 Repap New Brunswick, 9.000%, due 06/01/04........................... 150,000 154,500 Riverwood International Corp., 10.250%, due 04/01/06.......................... 260,000 259,350 10.875%, due 04/01/08.......................... 150,000 135,000 Samsonite Corp., 10.750%, due 06/15/08.......................... 350,000 232,750 SBA Communications Corp., 0.000%, due 03/01/08 (c)....................... 390,000 302,250 Sbarro, Inc., 11.000%, due 09/15/09.............. 250,000 250,313 Scotts Co., 144A, 8.625%, due 01/15/09........... 285,000 276,450 Sequa Corp., 9.000%, due 08/01/09................ 175,000 173,688 Sinclair Broadcast Group, 10.000%, due 09/30/05.......................... 250,000 242,500 Sleepmaster LLC, Series B, 11.000%, due 05/15/09.......................... 30,000 22,800 Snyder Oil Corp., 8.750%, due 06/15/07........... 500,000 518,750 Spectrasite Holdings, Inc. 0.000%, due 07/15/08 (c)....................... 440,000 270,600 0.000%, due 03/15/10 (c)....................... 190,000 96,900 Spectrasite Holdings, Inc., Series B, 10.750%, due 03/15/10.......................... 95,000 88,113 Speedway Motorsports, Inc., 8.500%, due 08/15/07........................... 350,000 343,437 Station Casinos, Inc., 9.875%, due 07/01/10........................... 270,000 277,087 Stone Container, 10.750%, due 10/01/02.......................... 250,000 254,063 T/SF Communications Corp., Series B, 10.375%, due 11/01/07.......................... 250,000 207,500 TeleCorp PCS, Inc., 0.000%, due 04/15/09 (c)....................... 525,000 358,969 Tenet Healthcare Corp., 9.250%, due 09/01/10........................... 350,000 380,187 Time Warner Telecom, Inc., 9.750%, due 07/15/08........................... 140,000 128,800 TransWestern Publishing Co., 9.625%, due 11/15/07........................... 100,000 97,125 Triad Hospitals Holdings, Inc., 11.000%, due 05/15/09.......................... 229,000 241,881 Tritel PCS, Inc., 0.000%, due 05/15/09 (c)....................... 200,000 137,000 Triton PCS, Inc., 0.000%, due 05/01/08 (c)....................... 625,000 493,750 US Unwired, Inc., 0.000%, due 11/01/09 (c)....................... 250,000 113,750 Voicestream Wireless Corp., 10.375%, due 11/15/09.......................... 267,000 286,024 Weirton Steel Corp., 11.375%, due 07/01/04.......................... 200,000 82,000 Westpoint Stevens, Inc., 7.875%, due 06/15/05........................... 220,000 163,900 Williams Communications Group, Inc., 10.875%, due 10/01/09.......................... 160,000 119,200 Winsloew Furniture, Inc., Series B, 12.750%, due 08/15/07.......................... 150,000 133,500 Wiser Oil Co., 9.500%, due 05/15/07.............. 325,000 260,000 XO Communications, Inc. 0.000%, due 12/01/09 (c)....................... 712,000 320,400 10.500%, due 12/01/09.......................... 175,000 140,000 Young Broadcasting, Inc., 10.125%, due 02/15/05.......................... 75,000 73,875 Ziff Davis Media, Inc., 144A, 12.000%, due 07/15/10.......................... 225,000 176,625 ---------- 34,344,668 ---------- International Dollar Bonds - 5.04% Clearnet Communications, 0.000%, due 05/01/09 (c)....................... 250,000 196,250 Energis PLC, 9.750%, due 06/15/09................ 500,000 455,000 Global Crossing Holding Ltd., 9.500%, due 11/15/09........................... 250,000 236,250 Microcell Telecommunications, Inc., Series B, 0.000%, due 06/01/06 (c)....................... 375,000 358,125 Norampac, Inc., 9.500%, due 02/01/08............. 150,000 150,000 Rogers Communications, Inc., 9.125%, due 01/15/06........................... 250,000 252,812 TeleWest Communications PLC, 0.000%, due 10/01/07 (c)....................... 500,000 445,000 United Pan-Europe Communications NV, Series B 0.000%, due 02/01/10 (c)....................... 25,000 7,125 11.250%, due 02/01/10.......................... 125,000 80,625 11.500%, due 02/01/10.......................... 225,000 146,813 ---------- 2,328,000 ---------- Total U.S. Bonds (Cost $41,337,660).............. 36,672,668 ----------
73 High Yield Fund -- Schedule of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Shares Value -------- ----------- Convertible Preferred - 0.00% Paxson Communications Corp., PIK, 12.500% (b) (Cost $555).................. 1 $ 642 ----------- Warrants - 0.02% Dayton Superior Corp., 144A, expires 06/15/09 (b).......................... 225 4,500 Merrill Corp., 144A, expires 05/01/09 (b).......................... 325 3 Motient Corp., 144A, expires 04/01/08 (b).......................... 182 2,548 Pliant Corp., 144A, expires 06/01/10 (b).......................... 160 1,600 Winsloew Furniture, Inc., 144A, expires 08/15/07 (b).......................... 150 1,500 ----------- Total Warrants (Cost $9,560).................... 10,151 ----------- Short-Term Investments - 16.43% Investment Companies - 16.43% Brinson Supplementary Trust U.S. Cash Management Prime Fund (Cost $7,594,776)............................. 7,594,776 $ 7,594,776 ----------- Total Investments (Cost $48,942,551) - 95.80% (a)................. 44,278,237 Cash and other assets, less liabilities - 4.20%...................... 1,938,933 ----------- Net Assets - 100%............................... $46,217,170 ===========
NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $48,942,551; and net unrealized depreciation consisted of: Gross unrealized appreciation.................... $ 447,022 Gross unrealized depreciation.................... (5,111,336) ----------- Net unrealized depreciation.............. $(4,664,314) =========== (b) Non-income producing security (c) Step bonds - coupon rate increases in increments to maturity. Rate disclosed is as of December 31, 2000.Maturity date disclosed is the ultimate maturity date. PIK: Payment In Kind, interest payment in cash or other securities. 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, 2000, the value of these securities amounted to $2,048,051 or 4.43% of net assets. See accompanying notes to financial statements. 74 International Equity Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds The UBS Investment Fund - International Equity has provided an annualized return of 8.29% since its performance inception on July 31, 1995, compared to the 7.32% return for its benchmark, the MSCI World Ex USA (Free) Index. For the year, the Fund outperformed its benchmark, achieving a return of -9.84% versus -13.47% for the benchmark. The year 2000 was challenging for equities, with low or negative returns in most regions. The main factor influencing returns was a sharp reversal of fortune for the technology, media and telecommunications (TMT) sectors. With valuations projecting rapid and indefinite growth prospects, the TMT sectors peaked at the end of the first quarter. Investor euphoria wore off as the environment became increasingly difficult. The U.S. Federal Reserve raised and maintained rates because of a fear of inflation. The U.S. economy began to slow by the fourth quarter and many TMT companies posted disappointing earnings leading to rapid and violent compression of P/E ratios. It became clear that many of these companies were vulnerable to a combination of increasing competition and a slowdown in capital spending plans. One sign of the change in sentiment, the MSCI World (Ex-U.S.) Value Index returned 6.0% (local currency) in 2000 in contrast to the Growth Index which declined 18.6% (local currency). While the investment environment was problematic, the Fund was well-positioned for these trends with significant underweights in technology hardware, software and services and telecommunication service sectors. Conversely, the Fund was overweighted in sectors that had strong cash flow and low valuations including selected financials, insurance, food and beverage and utilities. These defensive sectors outperformed as investors fled the underperforming TMT sectors. The Fund's geographic weightings are a reflection of our sector views and regional valuations. The Fund is overweighted in the UK, Australia and New Zealand, which we find attractive. The most significant position is our underweight to Japan, where the market is negatively affected by its technology sectors and a very weak economic environment. Europe (Ex-UK) and Asia (Ex-Japan) are close to neutral with the exception of Hong Kong (no exposure) where we find overvalued technology names and a fragile real estate market. During the year we maintained an underweight to the Japanese yen with an associated overweight in the Australian and New Zealand dollars and an overweight to the euro with an associated underweight to the British pound. The Fund benefited from the sharp strengthening of the euro at year-end as U.S. markets declined and the Japanese yen fell. Overall, currency was a modest contributor to performance for the year. We are maintaining these positions into 2001. Going forward we are selectively taking advantage of the decline in sector valuations to improve the quality of the Fund without a concomitant increase in valuations. We are also picking over the TMT sectors to identify well-positioned companies whose stocks have fallen to attractive valuations with the sector decline. 75 International Equity Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Total Return
6 months 1 year 3 years 5 years Inception* ended ended ended ended to 12/31/00 12/31/00 12/31/00 12/31/00 12/31/00 -------------------------------------------------------------------------------------------------------------------- UBS Investment Fund - International Equity ** -5.87% -9.84% 6.50% 7.24% 8.29% -------------------------------------------------------------------------------------------------------------------- MSCI World Ex USA (Free) Index -10.80 -13.47 9.47 7.48 7.32 --------------------------------------------------------------------------------------------------------------------
*Performance inception date of the UBS Investment Fund - International Equity is 7/31/95. **Formerly known as 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 - International 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, 2000. 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 - International Equity vs. MSCI World Ex USA (Free) Index Wealth Value with Dividends Reinvested
UBS Investment Fund - MSCI World Ex USA (Free) Index International Equity 7/31/95 10,000 10,000 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 17,088 16,941 12/31/00 15,397 14,659
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. 76 International Equity Fund -------------------------------------------------------------------------------- [LOGO] UBS Investment Funds Industry Diversification
As a Percent of Net Assets As of December 31, 2000 (Unaudited) ------------------------------------------------------- International EQUITIES Aerospace & Military..................... 0.79% Airlines................................. 0.74 Appliances & Households.................. 2.62 Autos/Durables........................... 2.27 Banking.................................. 11.91 Beverages & Tobacco...................... 2.94 Broadcasting & Publishing................ 4.02 Building Materials....................... 0.86 Business & Public Service................ 2.08 Chemicals................................ 2.85 Computer Software........................ 0.32 Construction............................. 0.30 Data Processing.......................... 1.48 Electric Components...................... 2.34 Electronics.............................. 2.65 Energy................................... 5.26 Financial Services....................... 5.22 Food & House Products.................... 4.25 Forest Products.......................... 0.84 Health & Personal Care................... 9.05 Housing/Paper............................ 1.04 Industrial Components.................... 0.60 Insurance................................ 5.48 Leisure & Tourism........................ 1.13 Machinery & Engineering.................. 0.42 Merchandising............................ 1.05 Metals-Steel............................. 0.30 Multi-Industry........................... 1.44 Non-Ferrous Metals....................... 0.86 Non-Durables............................. 0.20 Real Estate.............................. 1.78 Services/Miscellaneous................... 0.34 Telecommunications....................... 9.20 Transportation........................... 1.77 Utilities................................ 4.82 Wholesale & International Trade.......... 0.17 ------ Total International Equities.... 93.39 SHORT-TERM INVESTMENTS................... 4.22 ------ TOTAL INVESTMENTS...... 97.61 CASH AND OTHER ASSETS, LESS LIABILITIES................ 2.39 ------ NET ASSETS............................... 100.00% ======
Market and Currency Strategy As of December 31, 2000 (Unaudited) Fund Benchmark --------------------------------------------- Market Currency Market Currency Strategy Strategy Strategy Strategy ------------------------------------------------------------- Australia 3.3% 8.6% 2.5% 2.5% Austria 0.0 0.0 0.2 0.0 Belgium 1.3 0.0 0.9 0.0 Canada 2.7 4.8 4.8 4.8 Denmark 1.0 0.9 0.9 0.9 Euro 1.3 49.1 0.0 37.1 Finland 3.9 0.0 2.7 0.0 France 10.5 0.0 11.1 0.0 Germany 4.6 0.0 8.4 0.0 Hong Kong 1.6 0.0 2.0 2.0 Ireland 1.5 0.0 0.6 0.0 Italy 2.6 0.0 4.5 0.0 Japan 19.6 11.5 21.5 21.5 Netherlands 7.0 0.0 5.4 0.0 New Zealand 0.5 2.1 0.1 0.1 Norway 0.0 0.4 0.4 0.4 Portugal 1.4 0.0 0.5 0.0 Singapore 1.2 1.0 1.0 1.0 Spain 3.4 0.0 2.8 0.0 Sweden 2.4 2.5 2.5 2.5 Switzerland 6.5 6.8 6.9 6.9 U.K 23.7 12.3 20.3 20.3 ------------------------------------------------------------- 100.0% 100.0% 100.0% 100.0%
Top Ten International Equity Holdings As of December 31, 2000 (Unaudited)
Percent of Net Assets ------------------------------------------------------------- 1. GlaxoSmithKline PLC 2.12% 2. Roche Holdings AG (Gen.) 1.63 3. Nokia Oyj 1.61 4. Total Fina S.A., Class B 1.51 5. Novartis AG (Reg.) 1.51 6. Lloyds TSB Group PLC 1.49 7. Elsevier 1.42 8. Vodafone Group PLC 1.33 9. Allianz AG 1.33 10. BP Amoco PLC 1.33 -------------------------------------------------------------
77 International Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- Shares Value -------- ------------- International Equities - 93.39% Australia - 3.23% Amcor Ltd................................. 224,640 $ 654,747 Amp Ltd................................... 64,900 729,270 Brambles Industries Ltd................... 21,340 498,064 Broken Hill Proprietary Co., Ltd.......... 83,320 877,681 Lend Lease Corp., Ltd..................... 54,496 506,945 National Australia Bank Ltd., Convertible Preferred, 7.875%........... 73,500 2,103,938 News Corp., Ltd........................... 149,088 1,159,876 News Corp., Ltd., Preferred............... 141,379 1,005,624 Rio Tinto Ltd............................. 80,660 1,319,449 Westpac Banking Corp., Ltd................ 225,271 1,651,668 ------------ 10,507,262 ------------ Belgium - 1.32% Electrabel S.A............................ 7,440 1,682,082 Fortis B.................................. 80,837 2,626,057 ------------ 4,308,139 ------------ Canada - 2.58% Alcan Aluminum Ltd........................ 16,440 562,047 BCE, Inc.................................. 56,700 1,634,560 Canadian National Railway Co.............. 32,080 947,236 Canadian Pacific Ltd...................... 39,114 1,113,265 Magna International, Inc., Class A........ 14,260 597,173 Nortel Networks Corp...................... 85,200 2,736,951 Shaw Communications, Inc., Class B........ 34,560 805,326 ------------ 8,396,558 ------------ Denmark - 0.63% Novo Nordisk A/S.......................... 4,500 806,614 Tele Danmark A/S.......................... 30,950 1,261,374 ------------ 2,067,988 ------------ Finland - 3.84% Nokia Oyj................................. 117,792 5,253,239 Sampo Leonia Insurance, Class A........... 35,992 1,943,084 Stora Enso Oyj............................ 218,600 2,586,059 UPM-Kymmene Corp.......................... 79,289 2,720,935 ------------ 12,503,317 ------------ France - 10.49% Air France................................ 53,210 1,248,967 Air Liquide............................... 17,905 2,671,259 Alcatel S.A............................... 51,625 2,932,468 Alcatel S.A. ADR.......................... 25,513 1,427,133 Aventis S.A., Class A..................... 33,122 2,907,676 Axa....................................... 10,771 1,557,380 Banque Nationale de Paris................. 36,627 3,215,368 Cie de Saint Gobain....................... 10,328 1,622,295 Groupe Danone............................. 27,472 4,142,415 Schneider Electric S.A.................... 17,968 1,310,806 Societe Generale.......................... 45,630 2,836,131 Suez Lyonnaise des Eaux S.A............... 4,726 863,040 Thales S.A................................ 31,081 1,489,733 Total Fina S.A., Class B.................. 33,079 4,919,549 Vivendi................................... 15,432 1,015,683 ------------ 34,159,903 ------------ Germany - 4.25% Allianz AG................................ 11,478 4,332,216 Bayer AG.................................. 33,055 1,734,869 Bayerische Motoren Werke AG............... 40,860 1,333,125 Continental AG............................ 44,090 703,731 DaimlerChrysler AG........................ 34,350 1,459,362 E.on AG................................... 54,728 3,329,679 SAP AG.................................... 7,270 846,397 Volkswagen AG............................. 1,800 95,570 ------------ 13,834,949 ------------ Hong Kong - 1.45% Cheung Kong Holdings, Ltd................. 53,000 677,797 Guoco Group Ltd........................... 420,000 1,251,939 Henderson Land Development Co., Ltd....... 366,000 1,862,870 Hong Kong Electric Holdings............... 256,000 945,243 ------------ 4,737,849 ------------ Ireland - 0.99% Bank of Ireland........................... 167,655 1,681,146 Eircom PLC................................ 594,430 1,534,798 ------------ 3,215,944 ------------ Italy - 2.36% Assicurazioni Generali.................... 50,446 2,003,479 ENI Spa................................... 490,000 3,128,403 ENI Spa ADR............................... 17,052 1,096,657 Telecom Italia Spa........................ 133,000 1,471,007 ------------ 7,699,546 ------------ Japan - 19.80% Acom Co., Ltd............................. 1,600 118,109 Bank of Tokyo-Mitsubushi Ltd.............. 108,000 1,075,271 Benesse Corp.............................. 8,400 311,874 Bridgestone Corp.......................... 45,000 409,807 Canon, Inc................................ 73,000 2,556,918 Dai Nippon Printing Co., Ltd.............. 91,000 1,355,438 Daikin Kogyo Industries Ltd............... 30,000 577,933 Denso Corp................................ 39,000 843,520 Fuji Photo Film Co., Ltd.................. 63,000 2,636,953 Fujitsu................................... 153,000 2,256,147 Hitachi Ltd............................... 116,000 1,034,046 Honda Motor Co............................ 74,000 2,760,420 Hoya Corp................................. 15,000 1,103,327 Ito Yokado Co., Ltd....................... 48,000 2,395,797 Kamigumi Co., Ltd......................... 137,000 611,821 Kao Corp.................................. 58,000 1,686,165 Kirin Brewery Co., Ltd.................... 61,000 546,436 Kuraray Co., Ltd.......................... 108,000 1,010,017 Matsushita Electric Industrial Co......... 80,000 1,912,434 Minebea Co., Ltd.......................... 195,000 1,806,567 Mitsubishi Corp........................... 73,000 538,231 Mitsubishi Estate Co., Ltd................ 171,000 1,826,795 Mitsubishi Trust and Banking Corp......... 56,000 385,429 Mizuho Holding, Inc....................... 375 2,324,869 NEC Corp.................................. 30,000 549,037 Nippon Steel Co........................... 606,000 1,002,925 Nippon Telegraph & Telephone Corp......... 561 4,042,933 Nomura Securities Co., Ltd................ 123,000 2,213,354 Omron Corp................................ 21,000 436,734 Ono Pharmaceutical Co., Ltd............... 28,000 1,095,972 Orix Corp................................. 26,600 2,669,317 Rohm Co................................... 8,900 1,691,156 Sankyo Pharm Co., Ltd..................... 65,000 1,559,545 Secom Co., Ltd............................ 23,000 1,500,438 78 International Equity Fund -- Schedule of Investments December 31, 2000 (Unaudited) --------------------------------------------------------------------------------
Shares Value -------- ------------ Shin-Etsu Chemical Co., Ltd............. 21,000 $ 809,107 Softbank Corp........................... 5,600 194,676 Sony Corp............................... 45,900 3,175,219 Sumitomo Bank........................... 136,000 1,396,918 Sumitomo Chemical Co.................... 227,000 1,127,049 Taiheiyo Cement Corp.................... 600 1,030 Takeda Chemical Industries.............. 37,000 2,190,193 Takefuji Corp........................... 6,900 435,026 TDK Corp................................ 16,000 1,557,968 Tokio Marine & Fire Insurance Co........ 83,000 951,375 Toyota Motor Corp....................... 36,000 1,150,613 West Japan Railway Co................... 250 1,105,517 Yamanouchi Pharmaceutical Co., Ltd...... 21,000 908,406 Yamato Transport Co., Ltd............... 36,000 661,996 ------------ 64,510,828 ------------ Netherlands - 6.56% ABN AMRO Holdings NV.................... 188,634 4,289,551 Aegon NV................................ 76,384 3,159,837 Akzo Nobel NV........................... 35,700 1,917,264 Elsevier NV............................. 313,550 4,610,164 ING Groep NV............................ 521 41,618 Philips Electronics NV.................. 57,922 2,122,016 TNT Post Group NV....................... 80,970 1,958,338 Wolters Kluwer NV....................... 119,299 3,252,754 ------------ 21,351,542 ------------ New Zealand - 0.46% Lion Nathan Ltd......................... 250,870 565,040 Telecom Corp. of New Zealand Ltd........ 436,090 928,184 ------------ 1,493,224 ------------ Portugal - 1.28% Brisa-Auto Estradas de Portugal S.A..... 139,207 1,241,659 EDP Electricidade de Portugal S.A....... 885,970 2,928,057 ------------ 4,169,716 ------------ Singapore - 0.61% DBS Group Holdings Ltd.................. 176,000 1,989,389 ------------ Spain - 3.28% Altadis S.A............................. 203,021 3,145,160 Banco Popular Espanol S.A............... 70,015 2,438,837 Banco Santander Central Hispano S.A..... 186,883 2,000,287 Endesa S.A.............................. 58,801 1,002,026 Telefonica S.A. (b)..................... 127,591 2,108,388 ------------ 10,694,698 ------------ Sweden - 2.42% Electrolux AB, B Shares................. 139,330 1,808,905 Investor AB, B Shares................... 108,570 1,622,423 Nordea AB............................... 369,020 2,796,347 Swedish Match AB........................ 420,430 1,639,746 ------------ 7,867,421 ------------ Switzerland - 5.51% Nestle S.A. (Reg.)...................... 1,453 3,389,287 New ABB Ltd............................. 12,992 1,384,985 Novartis AG (Reg.)...................... 2,780 4,914,965 Roche Holding AG (Gen.)................. 521 5,308,059 Swisscom AG (Reg.)...................... 4,785 1,244,602 Zurich Financial Services AG............ 2,823 1,701,988 ------------ 17,943,886 ------------ United Kingdom - 22.33% BAE Systems PLC......................... 192,000 1,095,619 Barclays PLC............................ 85,000 2,630,895 BP Amoco PLC............................ 536,884 4,330,809 British Airways PLC..................... 200,879 1,171,792 British Land Company PLC................ 132,000 936,618 British Telecommunications PLC.......... 338,551 2,892,777 Charter PLC............................. 309,907 805,518 Diageo PLC.............................. 246,322 2,759,684 Dixons Group PLC........................ 72,000 240,921 GlaxoSmithKline PLC (b)................. 244,840 6,912,561 Hanson PLC.............................. 174,000 1,193,045 House of Fraser PLC..................... 317,685 291,855 HSBC Holdings PLC....................... 113,884 1,675,690 International Power PLC................. 304,314 1,141,013 Invensys PLC............................ 733,000 1,713,615 Kelda Group PLC......................... 312,011 1,813,069 Lattice Group PLC (b)................... 766,000 1,727,828 Lloyds TSB Group PLC.................... 458,725 4,851,550 Marconi PLC............................. 200,269 2,150,985 Marks & Spencer PLC..................... 268,624 746,367 Nycomed Amersham PLC.................... 212,876 1,772,827 P&O Princess Cruises PLC (b)............ 245,617 1,038,340 Powergen PLC............................ 159,812 1,508,764 Prudential Corp. PLC.................... 196,964 3,168,819 Reckitt Benckiser PLC................... 147,497 2,031,463 Rentokil Initial PLC.................... 159,000 548,661 RMC Group PLC........................... 112,000 985,435 Royal Bank of Scotland Group PLC........ 158,168 3,737,833 Scottish & Newcastle PLC................ 129,000 905,696 Scottish & Southern Energy PLC.......... 248,875 2,304,983 Shell Transport & Trading Co............ 444,404 3,644,560 Smurfit (Jefferson) Group PLC........... 416,000 810,959 Tesco PLC............................... 637,592 2,597,780 Trinity Mirror PLC...................... 138,566 944,397 United News & Media PLC................. 103,609 1,315,562 Vodafone Group PLC...................... 1,184,309 4,343,215 ------------ 72,741,505 ------------ Total International Equities (Cost $254,688,496)................... 304,193,664 ------------ Short-Term Investments - 4.22% Investment Companies - 4.22% Brinson Supplementary Trust U.S. Cash Management Prime Fund (Cost $13,760,421).................... 13,760,421 13,760,421 ------------ Total Investments (Cost $268,448,917) - 97.61% (a)...... 317,954,085 Cash and other assets, less liabilities - 2.39%.............. 7,784,239 ------------ Net Assets - 100%....................... $325,738,324 ============
See accompanying notes to schedule of investments. 79 International Equity Fund - Schedule of Investments December 31, 2000 (Unaudited) -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS (a) Aggregate cost for federal income tax purposes was $268,448,917; and net unrealized appreciation consisted of: Gross unrealized appreciation.................... $ 66,603,414 Gross unrealized depreciation.................... (17,098,246) ------------ Net unrealized appreciation.............. $ 49,505,168 ============ (b) Non-income producing security FORWARD FOREIGN CURRENCY CONTRACTS The International Equity Fund had the following open foreign forward currency contracts as of December 31, 2000:
Settlement Local Current Unrealized Date Currency Value Gain/(Loss) ---------- ------------- ------------ ------------ Forward Foreign Currency Buy Contracts: Australian Dollar......................... 02/08/01 54,800,000 $ 30,461,029 $ (1,071,431) British Pound............................. 02/08/01 14,400,000 21,525,951 883,276 Canadian Dollar........................... 02/08/01 18,600,000 12,393,390 (143,000) Euro...................................... 02/08/01 103,600,000 97,443,518 3,291,861 Japanese Yen.............................. 02/08/01 1,628,000,000 14,350,144 (828,676) New Zealand Dollar........................ 02/08/01 15,600,000 6,902,136 291,947 Singapore Dollar.......................... 02/08/01 2,700,000 1,563,133 (878) Swedish Krona............................. 02/08/01 17,200,000 1,827,860 121,917 Swiss Franc............................... 02/08/01 22,300,000 13,809,846 752,579 Forward Foreign Currency Sale Contracts: Australian Dollar......................... 02/08/01 26,500,000 14,730,242 (230,322) British Pound............................. 02/08/01 38,700,000 57,850,992 (136,607) Canadian Dollar........................... 02/08/01 7,200,000 4,797,441 (41,593) Euro...................................... 02/08/01 57,100,000 53,706,804 (3,328,543) Hong Kong Dollar.......................... 02/08/01 32,000,000 4,105,095 2,851 Japanese Yen.............................. 02/08/01 5,270,000,000 46,452,865 3,518,774 New Zealand Dollar........................ 02/08/01 3,600,000 1,592,801 (72,701) Swedish Krona............................. 02/08/01 17,200,000 1,827,860 48,496 Swiss Franc............................... 02/08/01 17,600,000 10,899,251 (920,572) ------------ Total..................................... $ 2,137,378 ============
See accompanying notes to financial statements. 80 This page intentionally left blank. 81 UBS Investment Funds - Financial Statements -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2000 (Unaudited)
Global Global Global Global Equity Technology Biotech Global Bond Fund Fund Fund Fund Fund ----------------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments, at cost: Unaffiliated issuers................................ $ 173,642,213 $ 53,543,707 $ 1,656,019 $ 1,649,633 $ 38,186,442 Affiliated issuers.................................. 45,416,613 817,830 - - 2,437,235 Foreign currency, at cost............................ 934,662 1,161,661 - - - ------------- ------------ ------------ ------------ ------------ $ 219,993,488 $ 55,523,198 $ 1,656,019 $ 1,649,633 $ 40,623,677 ============= ============ ============ ============ ============ Investments, at value: Unaffiliated issuers................................ $ 176,604,185 $ 59,413,550 $ 1,243,415 $ 1,654,261 $ 36,923,080 Affiliated issuers.................................. 47,360,414 817,830 - - 2,437,235 Foreign currency, at value............................ 958,044 1,196,799 - - 10,221 Cash.................................................. - 17 16,379 14,385 809,496 Receivables: Investment securities sold......................... 2,455,581 425,708 - 22,326 - Due from Advisor................................... - - 4,713 6,235 - Dividends.......................................... 162,057 95,974 231 34 - Interest........................................... 660,893 2,616 187 292 - Fund shares sold................................... 137,342 23,700 - - 2,650 Variation margin................................... 262,017 - - - - Other assets.......................................... 260 Net unrealized appreciation on forward foreign currency contracts.................. 398,689 1,266,750 - - - ------------- ------------ ------------ ------------ ------------ TOTAL ASSETS........................................ 228,999,482 63,242,944 1,264,925 1,697,533 40,182,882 ------------- ------------ ------------ ------------ ------------ LIABILITIES: Payables: Securities loaned.................................. 38,679,342 - - - - Investment securities purchased.................... 3,572,411 195,350 37,273 - 1,501,802 Investment advisory fees........................... 123,872 37,173 - - 18,300 Fund shares redeemed............................... 3,245 - - - - Variation margin................................... - - - - - Due to custodian................................... 4,853 - - - - Accrued expenses................................... 105,432 58,998 10,727 10,201 52,376 Net unrealized depreciation on forward foreign currency contracts......................... - - - - 14,169 ------------- ------------ ------------ ------------ ------------ TOTAL LIABILITIES.................................. 42,489,155 291,521 48,000 10,201 1,586,647 ------------- ------------ ------------ ------------ ------------ NET ASSETS............................................ $ 186,510,327 $ 62,951,423 $ 1,216,925 $ 1,687,332 $ 38,596,035 ============= ============ ============ ============ ============ NET ASSETS CONSIST OF: Paid in capital..................................... $ 181,268,801 $ 55,254,398 $ 2,222,820 $ 1,706,271 $ 47,809,958 Accumulated undistributed net investment income (loss)........................... 2,046,941 108,781 (16,474) (10,250) 814,413 Accumulated net realized gain (loss)................ (3,502,738) 415,714 (576,817) (13,317) (8,776,274) Net unrealized appreciation (depreciation).......... 6,697,323 7,172,530 (412,604) 4,628 (1,252,067) ------------- ------------ ------------ ------------ ------------ NET ASSETS......................................... $ 186,510,327 $ 62,951,423 $ 1,216,925 $ 1,687,332 $ 38,596,095 ============= ============ ============ ============ ============ BRINSON CLASS I: Net Assets.......................................... $ 178,307,755 $ 38,931,575 $ 356,131 $ 1,245,583 $ 37,029,724 ============= ============ ============ ============ ============ Shares outstanding.................................. 15,869,659 3,401,638 53,323 112,159 4,074,142 ============= ============ ============ ============ ============ Net asset value, offering and redemption price per share.................................... $ 11.24 $ 11.44 $ 6.68 $ 11.11 $ 9.09 ============= ============ ============ ============ ============ BRINSON CLASS N: Net Assets.......................................... $ 211,505 $ 323,969 $ 667 $ 1,131 $ 1,834 ============= ============ ============ ============ ============ Shares outstanding.................................. 18,941 28,443 100 102 2 ============= ============ ============ ============ ============ Net asset value, offering and redemption price per share.................................... $ 11.17 $ 11.39 $ 6.67 $ 11.09 $ 9.17 ============= ============ ============ ============ ============ UBS INVESTMENT FUNDS CLASS: Net Assets.......................................... $ 7,991,067 $ 23,695,879 $ 860,127 $ 440,618 $ 1,564,477 ============= ============ ============ ============ ============ Shares outstanding.................................. 719,386 2,091,443 129,609 39,870 172,076 ============= ============ ============ ============ ============ Net asset value, offering and redemption price per share.................................... $ 11.11 $ 11.33 $ 6.64 $ 11.05 $ 9.09 ============= ============ ============ ============ ============
See accompanying notes to financial statements. 82 UBS Investment Funds -- Financial Statements --------------------------------------------------------------------------------
U.S. U.S. U.S. U.S. U.S. Balanced Equity Large Cap Large Cap Small Cap U.S. Bond High Yield International Fund Fund Equity Fund Growth Fund Growth Fund Fund Fund Equity Fund ------------------------------------------------------------------------------------------------------------------------------- $ 10,776,728 $116,484,525 $ 5,541,995 $ 9,259,717 $ 42,059,835 $ 58,968,989 $ 41,347,775 $254,688,496 711,147 1,289,380 - - 1,166,686 747,169 7,594,776 13,760,421 - - - - - - - 4,397,176 -------------- ------------- ------------ ------------ ------------ ------------ ------------- ------------ $ 11,487,875 $117,753,905 $ 5,541,995 $ 9,259,717 $ 43,226,521 $ 59,716,168 $ 48,942,551 $272,846,093 ============== ============= ============ ============ ============ ============ ============= ============ $ 11,286,816 $142,475,105 $ 6,019,756 $ 8,451,827 $ 49,225,762 $ 59,349,325 $ 36,683,461 $304,193,664 711,147 1,289,380 - - 1,166,686 747,169 7,594,776 13,760,421 - - - - - - - 4,455,189 15,722 16,224 628 199,793 - 192 - - - - - - 487,431 1,348,480 - 1,713,029 - - 12,618 - - - - 5,530 172,844 7,627 3,634 3,557 - - 637,616 60,900 19,184 2,987 1,060 9,085 721,589 913,087 26,236 5,886 - 70 - 5,500 - 1,293,043 1,490,000 4,957 - - - - - - - - - - - - - - 2,137,378 -------------- ------------- ------------ ------------ ------------ ------------ ------------- ------------ 12,090,958 143,972,737 6,043,686 8,656,314 50,898,021 62,166,755 46,484,367 328,413,533 -------------- ------------- ------------ ------------ ------------ ------------ ------------- ------------ - - - - - - - - 169,754 - - 11,379 481,559 1,343,908 236,371 2,438,230 2,026 74,468 - 1,710 37,839 22,014 13,336 210,800 - - 22 - - - - - - 27,300 4,550 - - - - - - - - - - - - - 44,929 100,905 23,045 67,658 19,376 42,858 17,490 26,179 - - - - - - - - -------------- ------------- ------------ ------------ ------------ ------------ ------------- ------------ 216,709 202,673 27,617 80,747 538,774 1,408,780 267,197 2,675,209 -------------- ------------- ------------ ------------ ------------ ------------ ------------- ------------ $ 11,874,249 $ 143,770,064 $ 6,016,069 $ 8,575,567 $ 50,359,247 $ 60,757,975 $ 46,217,170 $325,738,324 ============== ============= ============ ============ ============ ============ ============= ============ $ 13,298,352 $ 122,508,961 $ 12,005,546 $ 9,612,661 $ 38,657,811 $ 64,722,621 $ 56,673,103 $263,255,406 (20,232) 2,441,205 (86,114) (30,101) (140,879 (7,919) 596,345 1,069,734 (1,932,629) (7,213,659) (6,365,767) (199,103) 4,676,388 (4,337,053) (6,387,964) 9,717,175 528,758 26,033,557 462,404 (807,890) 7,165,927 380,326 (4,664,314) 51,695,009 -------------- ------------- ------------ ------------ ------------ ------------ ------------- ------------ $ 11,874,249 $ 143,770,064 $ 6,016,069 $ 8,575,567 $ 50,359,247 $ 60,757,975 $ 46,217,170 $325,738,324 ============== ============= ============ ============ ============ ============ ============= ============ $ 10,583,030 $ 130,143,685 $ 5,743,599 $ 3,733,658 $ 46,693,029 $ 57,382,820 $ 44,211,349 $320,897,024 ============== ============= ============ ============ ============ ============ ============= ============ 1,171,932 8,300,962 710,204 353,731 3,743,245 5,687,870 5,474,392 26,637,365 ============== ============= ============ ============ ============ ============ ============= ============ $ 9.03 $ 15.68 $ 8.09 $ 10.56 $ 12.47 $ 10.09 $ 8.08 $ 12.05 ============== ============= ============ ============ ============ ============ ============= ============ $ 1,209 $ 8,014,732 $ 20,081 $ 1,100 $ 1,721 $ 1,251 $ 992 $ 1,143 ============== ============= ============ ============ ============ ============ ============= ============ $ 134 $ 513,896 $ 2,463 $ 105 $ 139 $ 124 $ 123 $ 95 ============== ============= ============ ============ ============ ============ ============= ============ $ 9.02 $ 15.60 $ 8.15 $ 10.48 $ 12.38 $ 10.09 $ 8.07 $ 12.03 ============== ============= ============ ============ ============ ============ ============= ============ $ 1,290,010 $ 5,611,647 $ 252,389 $ 4,840,809 $ 3,664,497 $ 3,373,904 $ 2,004,829 $ 4,840,157 ============== ============= ============ ============ ============ ============ ============= ============ $ 143,842 $ 357,113 $ 31,427 $ 467,843 $ 299,539 $ 335,805 $ 248,061 $ 410,165 ============== ============= ============ ============ ============ ============ ============= ============ $ 8.97 $ 15.71 $ 8.03 $ 10.35 $ 12.23 $ 10.05 $ 8.08 $ 11.80 ============== ============= ============ ============ ============ ============ ============= ============
83 UBS Investment Funds -- Financial Statements -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2000 (Unaudited)
Global Global Global Global Equity Technology Biotech Global Bond Fund Fund Fund Growth Fund ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Dividends ...................................... $ 809,847 $ 505,064 $ 1,049 $ 210 $ 3,178 Interest ....................................... 2,404,233 36,910 3,315 2,252 998,148 Securities lending-net ......................... 71,108 - - - - Foreign tax withheld ........................... (30,294) (15,775) - - (7,997) ------------ ------------ ------------ ------------ ------------ TOTAL INCOME .......................... 3,254,894 526,199 4,364 2,462 993,329 ------------ ------------ ------------ ------------ ------------ EXPENSES: Advisory ....................................... 899,931 257,173 13,574 9,739 144,951 Administration ................................. 79,219 - - - - Professional ................................... 53,200 23,552 13,248 13,248 23,822 Printing ....................................... 52,688 32,875 2,208 2,208 18,032 Distribution ................................... 27,760 95,896 5,860 1,663 4,872 Custodian ...................................... 25,991 11,636 261 214 6,910 Registration ................................... 17,480 16,744 6,072 6,072 25,920 Other .......................................... 35,743 15,365 2,295 2,284 10,378 ------------ ------------ ------------ ------------ ------------ TOTAL OPERATING EXPENSES .............. 1,192,012 453,241 43,518 35,428 234,885 ------------ ------------ ------------ ------------ ------------ Expenses deferred by Advisor .......... - (32,635) (22,680) (22,716) (55,348) Earnings credits ...................... (681) (3,188) - - (629) ------------ ------------ ------------ ------------ ------------ NET OPERATING EXPENSES ................ 1,191,331 417,418 20,838 12,712 178,908 ------------ ------------ ------------ ------------ ------------ Interest Expenses ..................... 16,622 - - - - ------------ ------------ ------------ ------------ ------------ NET INVESTMENT INCOME (LOSS) .......... 2,046,941 108,781 (16,474) (10,250) 814,421 ------------ ------------ ------------ ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on: Investments .................................... 4,180,922 3,327,281 (575,372) 14,052 (35,107) Futures contracts .............................. 4,237,856 - - - - Foreign currency transactions .................. (4,110,954) (576,953) - (5,608) (1,408,125) ------------ ------------ ------------ ------------ ------------ Net realized gain (loss) .............. 4,307,824 2,750,328 (575,372) 8,444 (1,443,232) ------------ ------------ ------------ ------------ ------------ Change in net unrealized appreciation or depreciation on: Investments and foreign currency ............... 1,832,871 (2,382,690) (459,340) (95,579) 1,177,729 Futures contracts .............................. 537,004 - - - - Forward contracts .............................. 1,088,824 853,137 - - 40,738 Translation of other assets and liabilities denominated in foreign currency ........... 20,986 (9,353) - - (15,088) ------------ ------------ ------------ ------------ ------------ Change in net unrealized appreciation or depreciation ........................ 3,479,685 (1,538,906) (459,340) (95,579) 1,203,379 ------------ ------------ ------------ ------------ ------------ Net realized and unrealized gain (loss) ......... 7,787,509 1,211,422 (1,034,712) (87,135) (239,853) ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations ............................... $ 9,834,450 $ 1,320,203 $ (1,051,186) $ (97,385) $ 574,568 ============ ============ ============ ============ ============
See accompanying notes to financial statements 84 UBS Investment Funds -- Financial Statements
------------------------------------------------------------------------------------------------------------------------------------ U.S. U.S. U.S. U.S. U.S. Balanced Equity Large Cap Large Cap Small Cap U.S Bond High Yield International Fund Fund Equity Fund Growth Fund Growth Fund Fund Fund Equity Fund ------------------------------------------------------------------------------------------------------------------------------- $ 32,937 $ 1,052,108 $ 66,270 $ 24,338 $ 45,486 $ 32,460 $ - $ 2,786,907 255,136 133,443 19,348 14,649 154,453 2,330,600 2,644,544 366,893 - - - - - - - 20,060 - - - - - - - (227,905) ------------ ----------- ----------- ------------ ------------ ----------- ------------ ------------ 288,073 1,185,551 85,618 38,987 199,939 2,363,060 2,644,544 2,945,955 ------------ ----------- ----------- ------------ ------------ ----------- ------------ ------------ 41,450 544,628 33,379 39,468 282,392 161,916 142,840 1,453,336 - - - - - - - 85,181 9,752 36,896 18,558 9,296 10,746 20,018 23,032 63,592 5,454 123,500 17,500 7,928 22,632 34,800 19,009 40,853 3,129 35,443 584 24,088 16,063 8,355 9,454 22,276 148 1,945 119 141 706 810 595 135,875 17,848 - 13,720 17,112 23,184 20,496 17,112 25,944 3,696 64,849 3,269 3,708 6,283 10,938 6,633 38,132 ------------ ----------- ----------- ------------ ------------ ----------- ------------ ------------ 81,477 807,261 87,129 101,741 362,006 257,333 218,675 1,865,189 ------------ ----------- ----------- ------------ ------------ ----------- ------------ ------------ (30,957) (148,908) (48,358) (32,663) (21,188) (53,686) (42,748) - - - - - - - - (26,875) ------------ ----------- ----------- ------------ ------------ ----------- ------------ ------------ 50,520 658,353 38,771 69,088 340,818 203,647 175,927 1,838,314 ------------ ----------- ----------- ------------ ------------ ----------- ------------ ------------ - - - - - - 9,485 37,907 ------------ ----------- ----------- ------------ ------------ ----------- ------------ ------------ 237,553 527,198 46,847 (30,101) (140,879) 2,159,413 2,459,132 1,069,734 ------------ ----------- ----------- ------------ ------------ ----------- ------------ ------------ (25,044) 8,859,418 (260,615) 91,221 5,933,941 (390,292) (2,732,253) 19,794,739 298,469 (123,885) (18,355) 17,119 - - - - - - - - - - - (3,065,985) ------------ ----------- ----------- ------------ ------------ ----------- ------------ ------------ 273,425 8,735,533 (278,970) 108,340 5,933,941 (390,292) (2,732,253) 16,728,754 ------------ ----------- ----------- ------------ ------------ ----------- ------------ ------------ 608,149 3,288,910 1,471,709 (2,357,460) (9,076,630) 2,665,592 (1,133,312) (44,566,520) (106,038) 27,399 (7,461) 1,821 - - - - - - - - - - - 3,720,288 - - - - - - - 9,266 ------------ ----------- ----------- ------------ ------------ ----------- ------------ ------------ 502,111 3,316,309 1,464,248 (2,355,639) (9,076,630) 2,665,592 (1,133,312) (40,836,966) ------------ ----------- ----------- ------------ ------------ ----------- ------------ ------------ 775,536 12,051,842 1,185,278 (2,247,299) (3,142,689) 2,275,300 (3,865,565) (24,108,212) ------------ ----------- ----------- ------------ ------------ ----------- ------------ ------------ $ 1,013,089 $ 12,579,040 $ 1,232,125 $ (2,277,400) $ (3,283,568) $ 4,434,713 $ (1,406,433) $(23,038,478) ============= =========== =========== ============ ============ =========== ============ ============
85 UBS Investment Funds -- Financial Statements -------------------------------------------------------------------------------- STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, 2000 (Unaudited)
Global Fund ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net increase in net assets resulting from operations ..................................... $ 9,834,450 Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities: Net realized and unrealized gain on investments .......................................... (7,787,509) Increase in receivable for investment securities sold .................................... (685,522) Decrease in dividends and interest receivable ............................................ 726,969 Decrease in other assets ................................................................. 2,184 Increase in payable for securities purchased ............................................. 1,262,779 Decrease in payable for investment advisory fee .......................................... (70,925) Decrease in accrued expenses ............................................................. (37,548) Increase in variation margin ............................................................. (534,163) Net accretion of discount ................................................................ (390,915) Purchases of investments ................................................................. (194,751,471) Proceeds from sales of investments ....................................................... 321,720,894 Net realized gain on futures contracts ................................................... 4,237,856 Net realized loss on foreign currency transactions ....................................... (4,110,954) Change in net unrealized appreciaton or depreciation on futures contracts ................ 537,004 Change in net unrealized appreciation or depreciation on other assets and liabilities .... 20,986 Net increase in foreign currency ......................................................... (703,382) ------------- Net cash provided by operating activities .............................................. 129,270,733 ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net capital shares transactions .......................................................... (113,909,267) Net decrease from securities lending ..................................................... (13,012,023) Dividends and capital gain distributions paid ............................................ (2,354,296) ------------- Net cash used for financing activities ................................................. (129,275,586) ------------- Net decrease in cash ...................................................................... (4,853) CASH AT BEGINNING OF PERIOD ............................................................... - ------------- CASH AT END OF PERIOD ..................................................................... $ (4,853) =============
See accompanying notes to financial statements. 86 This page intentionally left blank. 87 UBS Investment Funds -- Financial Statements -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS
Global Fund Global Equity Fund ------------------------------ -------------------------------- Six Months Year Six Months Year Ended Ended Ended Ended December 31, June 30, December 31, June 30, 2000 (Unaudited) 2000 2000 (Unaudited) 2000 ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) ................................. $ 2,046,941 $ 7,094,949 $ 108,781 $ 162,257 Net realized gain (loss) ..................................... 4,307,824 8,976,951 2,750,328 8,474,282 Change in net unrealized appreciation or depreciation ........ 3,479,685 (21,444,707) (1,538,906) (7,646,954) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations ........ 9,834,450 (5,372,807) 1,320,203 989,585 ------------- ------------- ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS BY CLASS: Brinson Class I: Distributions from net investment income ........... - (4,971,880) - (229,745) Distributions from net realized gains .............. (9,702,495) (14,468,448) (4,104,553) (3,607,561) ------------- ------------- ------------- ------------- Total Class I distributions .................................. (9,702,495) (19,440,328) (4,104,553) (3,837,306) ------------- ------------- ------------- ------------- Brinson Class N: Distributions from net investment income ........... - (18,729) - (986) Distributions from net realized gains .............. (11,339) (59,854) (34,788) (19,859) ------------- ------------- ------------- ------------- Total Class N distributions .................................. (11,339) (78,583) (34,788) (20,845) ------------- ------------- ------------- ------------- UBS Investment Funds Class: Distributions from net investment income ........... - (181,202) - (77,666) Distributions from net realized gains .............. (459,422) (720,519) (2,498,356) (3,756,176) ------------- ------------- ------------- ------------- Total UBS Investment Funds Class distributions ............... (459,422) (901,721) (2,498,356) (3,833,842) ------------- ------------- ------------- ------------- Decrease in net assets from distributions .................... (10,173,256) (20,420,632) (6,637,697) (7,691,993) ------------- ------------- ------------- ------------- CAPITAL SHARE TRANSACTIONS BY CLASS: Brinson Class I: Shares sold ........................................ 70,728,394 378,057,007 18,637,769 31,965,448 Shares issued on reinvestment of distributions...... 7,392,619 17,592,753 2,825,455 3,143,195 Shares redeemed .................................... (183,764,443) (556,236,057) (19,904,271) (33,431,209) ------------- ------------- ------------- ------------- Total Brinson Class I transactions ........................... (105,643,430) (160,586,297) 1,558,953 1,677,434 ------------- ------------- ------------- ------------- Brinson Class N: Shares sold ........................................ 10,199 85,811 99,999 - Shares issued on reinvestment of distributions...... 3,867 68,059 23,849 20,844 Shares redeemed .................................... (4,319) (1,405,050) - (1,198) ------------- ------------- ------------- ------------- Total Brinson Class N transactions ........................... 9,747 (1,251,180) 123,848 19,646 ------------- ------------- ------------- ------------- UBS Investment Funds Class: Shares sold ........................................ 426,770 385,340 284,104 3,098,087 Shares issued on reinvestment of distributions...... 422,475 863,834 2,278,862 3,281,750 Shares redeemed .................................... (1,580,628) (13,120,314) (4,840,133) (18,879,433) ------------- ------------- ------------- ------------- Total UBS Investment Funds Class transactions ................ (731,383) (11,871,140) (2,277,167) (12,499,596) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from capital share transactions ......................... (106,365,066) (173,708,617) (594,366) (10,802,516) ------------- ------------- ------------- ------------- Increase (Decrease) in Net Assets ............................ (106,703,872) (199,502,056) (5,911,860) (17,504,924) Net Assets, Beginning of Period .............................. 293,214,199 492,716,255 68,863,283 86,368,207 ------------- ------------- ------------- ------------- Net Assets, End of Period .................................... $ 186,510,327 $ 293,214,199 $ 62,951,423 $ 68,863,283 ============= ============= ============= ============= Net assets include accumulated undistributed net investment income (loss) ....................... $ 2,046,941 $ - $ 108,781 $ - ============= ============= ============= ============= Share Transactions: Brinson Class I: Shares sold ........................................ 6,300,765 33,602,761 1,537,537 2,577,643 Shares issued on reinvestment of distributions...... 682,606 1,590,665 252,048 257,009 Shares redeemed .................................... (16,369,363) (48,975,929) (1,637,625) (2,721,479) ------------- ------------- ------------- ------------- Total Brinson Class I transactions ........................... (9,385,992) (13,782,503) 151,960 113,173 ------------- ------------- ------------- ------------- Brinson Class N: Shares sold ........................................ 940 7,386 8,271 - Shares issued on reinvestment of distributions...... 360 6,165 2,139 1,707 Shares redeemed .................................... (394) (127,026) - (98) ------------- ------------- ------------- ------------- Total Brinson Class N transactions ........................... 906 (113,475) 10,410 1,609 ------------- ------------- ------------- ------------- UBS Investment Funds Class: Shares sold ........................................ 38,946 33,492 23,935 243,526 Shares issued on reinvestment of distributions...... 39,447 78,388 205,303 268,566 Shares redeemed .................................... (145,395) (1,170,744) (402,318) (1,533,100) ------------- ------------- ------------- ------------- Total UBS Investment Funds Class transactions ................ (67,002) (1,058,864) (173,080) (1,021,008) ------------- ------------- ------------- -------------
* Commencement of investment operations See accompanying notes to financial statements. 88 UBS Investment Funds -- Financial Statements
------------------------------------------------------------------------------------------------------------------------------------ Global Technology Fund Global Biotech Fund Global Bond Fund U.S. Balanced Fund ----------------------------------- ----------------------------- --------------------------- -------------------------------- Six Months May 26, 2000* Six Months June 2, 2000* Six Months Year Six Months Year Ended Through Ended Through Ended Ended Ended Ended December 31, June 30, December 31, June 30, December 31, June 30, December 31, June 30, 2000 (Unaudited) 2000 2000 (Unaudited) 2000 2000 (Unaudited) 2000 2000 (Unaudited) 2000 ------------------------------------------------------------------------------------------------------------------------------------ $ (16,474) $ (464) $ (10,250) $ (235) $ 814,421 $ 3,527,958 $ 237,553 $ 846,394 (575,372) 1,624 8,444 7,976 (1,443,232) (8,536,498) 273,425 (2,003,095) (459,340) 46,736 (95,579) 100,207 1,203,379 3,924,705 502,111 (2,296,787) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- (1,051,186) 47,896 (97,385) 107,948 574,568 (1,083,835) 1,013,089 (3,453,488) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- - - - - (331,177) (1,118,342) (393,409) (815,029) (785) - (22,723) - - (82,557) - (225,248) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- (785) - (22,723) - (331,177) (1,200,899) (393,409) (1,040,277) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- - - - - (11) - (43) (31) (1) - (21) - - (1) - (7) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- (1) - (21) - (11) (1) (43) (38) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- - - - - (4,729) (43,991) (42,830) (37,261) (2,011) - (6,758) - - (4,026) - (10,418) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- (2,011) - (6,758) - (4,729) (48,017) (42,830) (47,679) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- (2,797) - (29,502) - (335,917) (1,248,917) (436,282) (1,087,994) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- 1,467,050 208,013 1,071,283 87,520 5,149,224 25,700,559 2,336,534 11,292,015 785 - 22,723 - 242,044 1,040,704 364,296 1,016,548 (994,930) - (453,486) - (12,063,678) (73,843,125) (3,766,827) (34,385,369) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- 472,905 208,013 640,520 87,520 (6,672,410) (47,101,862) (1,065,997) (22,076,806) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- - - - - 1,554 1,912 - - 1 - 21 - - 1 43 38 - - - - (551) (1,106,396) - (96) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- 1 - 21 - 1,003 (1,104,483) 43 (58) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- 1,444,186 320,741 365,041 144,960 100,019 366,668 200,000 147,189 1,400 - 6,744 - 3,519 38,350 42,323 41,422 (226,244) - (38,545) - (655,971) (2,630,429) (253,308) (588,978) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- 1,219,342 320,741 333,240 144,960 (552,433) (2,225,411) (10,985) (400,367) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- 1,692,248 528,754 973,781 232,480 (7,223,840) (50,431,756) (1,076,939) (22,477,231) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- 638,265 576,650 846,894 340,428 (6,985,189) (52,764,508) (500,132) (27,018,713) 578,660 2,010 840,438 500,010 45,581,224 98,345,732 12,374,381 39,393,094 ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- $ 1,216,925 $ 578,660 $1,687,332 $ 840,438 $ 38,596,035 $ 45,581,224 $ 11,874,249 $ 12,374,381 ============= ========== ========== ========== ============ ============ ============= ============= $ (16,474) $ - $ (10,250) $ - $ 814,413 $ 335,909 $ (20,232) $ 178,497 ============= ========== ========== ========== ============ ============ ============= ============= 138,207 19,785 88,564 7,462 590,230 2,835,427 258,682 1,279,917 97 - 1,959 - 27,821 113,243 40,886 119,214 (104,767) - (35,627) - (1,369,776) (8,240,771) (424,275) (4,112,896) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- 33,537 19,785 54,896 7,462 (751,725) (5,292,101) (124,707) (2,713,765) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- - - - - 177 210 - - - - 2 - - - 5 4 - - - - (63) (118,588) - (10) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- - - 2 - 114 (118,378) 5 (6) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- 130,532 31,255 29,882 12,140 11,255 40,841 22,321 16,973 173 - 584 - 405 4,177 4,782 4,883 (32,451) - (2,836) - (75,143) (292,883) (28,497) (68,563) ------------- ---------- ---------- ---------- ------------ ------------ ------------- ------------- 98,254 31,255 27,630 12,140 (63,483) (247,865) (1,394) (46,707) ------------- ---------- ---------- ---------- ------------ ------------ ------------- -------------
89 UBS Investment Funds -- Financial Statements -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS
U.S Equity Fund U.S. Large Cap Equity Fund -------------------------------- ----------------------------------- Six Months Year Six Months Year Ended Ended Ended Ended December 31, June 30, December 31, June 30, 2000 (Unaudited) 2000 2000 (Unaudited) 2000 ------------------------------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss)............................... $ 527,198 $ 4,244,116 $ 46,847 $ 268,499 Net realized gain (loss)................................... 8,735,533 11,296,209 (278,970) (4,170,075) Change in net unrealized appreciation or depreciation...... 3,316,309 (145,732,574) 1,464,248 (3,197,720) ------------- ------------- ------------- ------------- Net increase (decrease) in net assets from operations...... 12,579,040 (130,192,249) 1,232,125 (7,099,296) ------------- ------------- ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS BY CLASS: Brinson Class I: Distributions from net investment income................ (2,153,781) (1,354,937) (127,799) (260,485) Distributions from net realized gains................... (9,027,121) (46,078,258) - (2,112,124) ------------- ------------- ------------- ------------- Total Brinson Class I distributions........................ (11,180,902) (47,433,195) (127,799) (2,372,609) ------------- ------------- ------------- ------------- Brinson Class N: Distributions from net investment income................ (130,655) (12,687) (320) (3,358) Distributions from net realized gains................... (626,092) (773,650) - (67,254) ------------- ------------- ------------- ------------- Total Brinson Class N distributions........................ (756,747) (786,337) (320) (70,612) ------------- ------------- ------------- ------------- UBS Investment Funds Class: Distributions from net investment income................ (41,207) - (4,842) (854) Distributions from net realized gains................... (471,358) (5,191,383) - (6,269) ------------- ------------- ------------- ------------- Total UBS Investment Funds Class distributions............. (512,565) (5,191,383) (4,842) (7,123) ------------- ------------- ------------- ------------- Decrease in net assets from distributions.................. (12,450,214) (53,410,915) (132,961) (2,450,344) ------------- ------------- ------------- ------------- CAPITAL SHARE TRANSACTIONS BY CLASS: Brinson Class I: Shares sold............................................. 33,113,687 122,681,959 1,616,120 20,498,512 Shares issued on reinvestment of distributions.......... 10,176,998 46,438,462 106,520 1,882,863 Shares redeemed......................................... (81,199,499) (549,708,344) (12,816,479) (20,540,523) ------------- ------------- ------------- ------------- Total Brinson Class I transactions......................... (37,908,814) (380,587,923) (11,093,839) 1,840,852 ------------- ------------- ------------- ------------- Brinson Class N: Shares sold............................................. 2,754,157 6,190,218 3 23,427 Shares issued on reinvestment of distributions.......... 11,396 39,033 320 70,611 Shares redeemed......................................... (1,770,488) (4,286,205) (17,729) (3,038,230) ------------- ------------- ------------- ------------- Total Brinson Class N transactions......................... 995,065 1,943,046 (17,406) (2,944,192) ------------- ------------- ------------- ------------- UBS Investment Funds Class: Shares sold............................................. 250,318 885,348 73,377 184,571 Shares issued on reinvestment of distributions.......... 398,491 1,938,596 4,842 7,113 Shares redeemed......................................... (7,657,919) (43,062,328) (904) (17,573) ------------- ------------- ------------- ------------- Total UBS Investment Funds Class transactions.............. (7,009,110) (40,238,384) 77,315 174,111 ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from capital share transactions.............................. (43,922,859) (418,883,261) (11,033,930) (929,229) ------------- ------------- ------------- ------------- Increase (Decrease) in Net Assets.......................... (43,794,033) (602,486,425) (9,934,766) (10,478,869) Net Assets, Beginning of Period............................ 187,564,097 790,050,522 15,950,835 26,429,704 ------------- ------------- ------------- ------------- Net Assets, End of Period.................................. $ 143,770,064 $ 187,564,097 $ 6,016,069 $ 15,950,835 ============= ============= ============= ============= Net assets include accumulated undistributed net investment income (loss)............................ $ 2,441,205 $ 4,239,650 $ (86,114) $ - ============= ============= ============= ============= Share Transactions: Brinson Class I: Shares sold............................................. 2,084,098 7,021,481 208,793 2,464,710 Shares issued on reinvestment of distributions.......... 654,890 2,790,780 13,299 231,926 Shares redeemed......................................... (4,886,444) (32,569,089) (1,618,396) (2,626,652) ------------- ------------- ------------- ------------- Total Brinson Class I transactions......................... (2,147,456) (22,756,828) (1,396,304) 69,984 ------------- ------------- ------------- ------------- Brinson Class N: Shares sold............................................. 170,302 355,231 - 952 Shares issued on reinvestment of distributions.......... 737 2,356 40 8,644 Shares redeemed......................................... (107,318) (260,962) (2,239) (342,514) ------------- ------------- ------------- ------------- Total Brinson Class N transactions......................... 63,721 96,625 (2,199) (332,918) ------------- ------------- ------------- ------------- UBS Investment Funds Class: Shares sold............................................. 15,589 44,999 9,737 22,263 Shares issued on reinvestment of distributions.......... 25,577 116,996 608 884 Shares redeemed......................................... (467,703) (2,612,305) (118) (2,479) ------------- ------------- ------------- ------------- Total UBS Investment Funds Class transactions.............. (426,537) (2,450,310) 10,227 20,668 ------------- ------------- ------------- -------------
See accompanying notes to financial statements. 90 UBS Investments Funds -- Financial Statements
-------------------------------------------------------------------------------------------------------------------------- U.S. Large Cap Growth Fund U.S. Small Cap Growth Fund U.S. Bond Fund -------------------------------------- ------------------------------------- ------------------------------------ Six Months Year Six Months Year Six Months Year Ended Ended Ended Ended Ended Ended December 31, June 30, December 31, June 30, December 31, June 30, 2000 (Unaudited) 2000 2000 (Unaudited) 2000 2000 (Unaudited) 2000 ------------------------------------------------------------------------------------------------------------------------- $ (30,101) $ (40,633) $ (140,879) $ (283,391) $ 2,159,413 $ 5,580,977 108,340 1,307,241 5,933,941 14,184,229 (390,292) (2,898,299) (2,355,639) 495,586 (9,076,630) 12,102,689 2,665,592 218,149 ------------- -------------- --------------- ------------- ------------- ------------- (2,277,400) 1,762,194 (3,283,568) 26,003,527 4,434,713 2,900,827 ------------- -------------- --------------- ------------- ------------- ------------- - - - - (3,409,343) (4,678,165) (582,801) (226,909) (8,814,507) - - - ------------- -------------- --------------- ------------- ------------- ------------- (582,801) (226,909) (8,814,507) - (3,409,343) (4,678,165) ------------- -------------- --------------- ------------- ------------- ------------- - - - - (71) (71) (173) (80) (322) - - - ------------- -------------- --------------- ------------- ------------- ------------- (173) (80) (322) - (71) (71) ------------- -------------- --------------- ------------- ------------- ------------- - - - - (175,167) (374,662) (798,399) (376,172) (707,080) - - - ------------- -------------- --------------- ------------- ------------- ------------- (798,399) (376,172) (707,080) - (175,167) (374,662) ------------- -------------- --------------- ------------- ------------- ------------- (1,381,373) (603,161) (9,521,909) - (3,584,581) (5,052,898) ------------- -------------- --------------- ------------- ------------- ------------- 401,874 4,048,482 12,596,449 29,765,229 29,408,013 70,180,980 557,236 217,384 7,277,911 - 3,119,067 4,552,534 (1,515,173) (1,701,110) (12,354,491) (38,928,066) (34,054,841) (106,749,956) ------------- -------------- --------------- ------------- ------------- ------------- (556,063) 2,564,756 7,519,869 (9,162,837) (1,527,761) (32,016,442) ------------- -------------- --------------- ------------- ------------- ------------- - - - - - - 173 80 322 - 72 71 - - - - - - ------------- -------------- --------------- ------------- ------------- ------------- 173 80 322 - 72 71 ------------- -------------- --------------- ------------- ------------- ------------- 510,351 5,084,906 1,743,866 2,415,418 772,156 1,492,544 751,964 376,172 676,885 - 152,308 310,529 (1,541,352) (4,200,579) (1,424,392) (459,900) (1,136,771) (4,032,375) ------------- -------------- --------------- ------------- ------------- ------------- (279,037) 1,260,499 996,359 1,955,518 (212,307) (2,229,302) ------------- -------------- --------------- ------------- ------------- ------------- (834,927) 3,825,335 8,516,550 (7,207,319) (1,739,996) (34,245,673) ------------- -------------- --------------- ------------- ------------- ------------- (4,493,700) 4,984,368 (4,288,927) 18,796,208 (889,864) (36,397,744) 13,069,267 8,084,899 54,648,174 35,851,966 61,647,839 98,045,583 ------------- -------------- --------------- ------------- ------------- ------------- $ 8,575,567 $ 13,069,267 $ 50,359,247 $ 54,648,174 $ 60,757,975 $ 61,647,839 ============= ============== =============== ============= ============= ============= $ (30,101) $ - $ (140,879) $ - $ (7,919) $ 1,417,249 ============= ============== =============== ============= ============= ============= 28,435 276,574 800,581 2,526,985 2,880,317 6,936,124 48,752 15,996 577,154 - 312,532 461,106 (108,634) (119,266) (766,694) (3,231,011) (3,318,424) (10,539,673) ------------- -------------- --------------- ------------- ------------- ------------- (31,447) 173,304 611,041 (704,026) (125,575) (3,142,443) ------------- -------------- --------------- ------------- ------------- ------------- - - - - - - 15 6 25 - 7 7 - - - - - - ------------- -------------- --------------- ------------- ------------- ------------- 15 6 25 - 7 7 ------------- -------------- --------------- ------------- ------------- ------------- 34,426 363,462 107,026 193,136 75,572 146,887 67,020 27,906 54,720 - 15,323 31,628 (109,716) (286,213) (90,519) (34,814) (109,946) (411,376) ------------- -------------- --------------- ------------- ------------- ------------- (8,270) 105,155 71,227 158,322 (19,051) (232,861) ------------- -------------- --------------- ------------- ------------- -------------
91 UBS Investment Funds -- Financial Statements -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS
High Yield Fund International Equity Fund ----------------------------------- ---------------------------------- Six Months Year Six Months Year Ended Ended Ended Ended December 31, June 30, December 31, June 30, 2000 (Unaudited) 2000 2000 (Unaudited) 2000 ---------------- -------- ---------------- -------- OPERATIONS: Net investment income ................................... $ 2,459,132 $ 5,274,444 $ 1,069,734 $ 4,208,084 Net realized gain (loss) ................................ (2,732,253) (3,589,002) 16,728,754 41,417,003 Change in net unrealized appreciation or depreciation ... (1,133,312) (1,386,533) (40,836,966) 15,371,143 ------------- ------------ ------------ --------------- Net increase (decrease) in net assets from operations ... (1,406,433) 298,909 (23,038,478) 60,996,230 ------------- ------------ ------------ --------------- DISTRIBUTIONS TO SHAREHOLDERS BY CLASS: Brinson Class I: Distributions from net investment income ......... (3,186,309) (3,997,434) - (2,727,974) Distributions from net realized gains ............ - (384,243) (19,686,582) (5,283,152) ------------- ------------ ------------ --------------- Total Brinson Class I distributions ..................... (3,186,309) (4,381,677) (19,686,582) (8,011,126) ------------- ------------ ------------ --------------- Brinson Class N: Distributions from net investment income ......... (86) (74) - - Distributions from net realized gains ............ - (7) (68) (13) ------------- ------------ ------------ --------------- Total Brinson Class N distributions ..................... (86) (81) (68) (13) ------------- ------------ ------------ --------------- UBS Investment Funds Class: Distributions from net investment income ......... (171,677) (315,019) - (9,831) Distributions from net realized gains ............ - (40,374) (307,666) (74,353) ------------- ------------ ------------ --------------- Total UBS Investment Funds Class distributions .......... (171,677) (355,393) (307,666) (84,184) ------------- ------------ ------------ --------------- Decrease in net assets from distributions ........ (3,358,072) (4,737,151) (19,994,316) (8,095,323) ------------- ------------ ------------ --------------- CAPITAL SHARE TRANSACTIONS BY CLASS: Brinson Class I: Shares sold ...................................... 68,905,551 75,679,660 573,451,198 1,049,008,547 Shares issued on reinvestment of distributions.... 2,928,367 3,943,554 18,305,757 7,708,071 Shares redeemed .................................. (73,963,973) (84,709,596) (640,477,366) (1,187,345,955) ------------- ------------ ------------ --------------- Total Brinson Class I transactions ...................... (2,130,055) (5,086,382) (48,720,411) (130,629,337) ------------- ------------ ------------ --------------- Brinson Class N: Shares sold ...................................... - - - 373 Shares issued on reinvestment of distributions.... 85 81 68 13 Shares redeemed .................................. - - - (14,890) ------------- ------------ ------------ --------------- Total Brinson Class N transactions ...................... 85 81 68 (14,504) ------------- ------------ ------------ --------------- UBS Investment Funds Class: Shares sold ...................................... 219,872 484,592 847,290 1,895,728 Shares issued on reinvestment of distributions.... 80,217 274,449 307,032 81,724 Shares redeemed .................................. (197,958) (4,562,131) (1,467,406) (3,506,844) ------------- ------------ ------------ --------------- Total UBS Investment Funds Class transactions ........... 102,131 (3,803,090) (313,084) (1,529,392) ------------- ------------ ------------ --------------- Net decrease in net assets resulting from capital share transactions ....................... (2,027,839) (8,889,391) (49,033,427) (132,173,233) ------------- ------------ ------------ --------------- Decrease in Net Assets .................................. (6,792,344) (13,327,633) (92,066,221) (79,272,326) Net Assets, Beginning of Period ......................... 53,009,514 66,337,147 417,804,545 497,076,871 ------------- ------------ ------------ --------------- Net Assets, End of Period ............................... $ 46,217,170 $ 53,009,514 $325,738,324 $ 417,804,545 ============= ============ ============ =============== Net assets include accumulated undistributed net investment income ............................ $ 596,345 $ 1,495,285 $ 1,069,734 $ - ============= ============ ============ =============== SHARE TRANSACTIONS: Brinson Class I: Shares sold ...................................... 7,558,949 8,072,340 44,736,022 80,245,905 Shares issued on reinvestment of distributions.... 367,885 416,227 1,553,969 575,659 Shares redeemed .................................. (7,982,065) (8,988,112) (50,007,832) (90,203,629) ------------- ------------ ------------ --------------- Total Brinson Class I transactions ...................... (55,231) (499,545) (3,717,841) (9,382,065) ------------- ------------ ------------ --------------- Brinson Class N: Shares sold ...................................... - - - 30 Shares issued on reinvestment of distributions.... 11 9 6 1 Shares redeemed .................................. - - - (1,174) ------------- ------------ ------------ --------------- Total Brinson Class N transactions ...................... 11 9 6 (1,143) ------------- ------------ ------------ --------------- UBS Investment Funds Class: Shares sold ...................................... 23,746 50,427 67,883 146,606 Shares issued on reinvestment of distributions.... 10,064 28,713 26,606 6,167 Shares redeemed .................................. (21,771) (475,553) (119,684) (269,636) ------------- ------------ ------------ --------------- Total UBS Investment Funds Class transactions ........... 12,039 (396,413) (25,195) (116,863) ------------- ------------ ------------ ---------------
See accompanying notes to financial statements. 92 Global Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended July 31, 1995* December 31, 2000 Year Ended June 30, Through -------------------------------------------- UBS Investment Funds Class (Unaudited) 2000 1999 1998 1997 June 30, 1996 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period.............. $ 11.17 $ 11.95 $ 12.71 $ 13.05 $ 12.18 $ 11.60 ------- ------- -------- -------- -------- ------- Income (loss) from investment operations: Net investment income........................... 0.07 0.17** 0.20 0.30 0.34 0.39 Net realized and unrealized gain (loss)......... 0.50 (0.30) 0.25 0.61 1.75 1.10 ------- ------- -------- -------- -------- ------- Total income (loss) from investment operations..................... 0.57 (0.13) 0.45 0.91 2.09 1.49 ------- ------- -------- -------- -------- ------- Less distributions: Distributions from and in excess of net investment income......................... 0.00 (0.13) (0.37) (0.55) (0.57) (0.59) Distributions from net realized gains........... (0.63) (0.52) (0.84) (0.70) (0.65) (0.32) ------- ------- -------- -------- -------- ------- Total distributions......................... (0.63) (0.65) (1.21) (1.25) (1.22) (0.91) ------- ------- -------- -------- -------- ------- Net asset value, end of year...................... $ 11.11 $ 11.17 $ 11.95 $ 12.71 $ 13.05 $ 12.18 ======= ======= ======== ======== ======== ======= Total return (non-annualized)..................... 5.36% (1.00)% 3.92% 7.60% 18.13% 13.24% Ratios/Supplemental data: Net assets, end of year (in 000s)............... $ 7,991 $ 8,784 $ 22,060 $ 30,436 $ 26,303 $14,030 Ratio of expenses to average net assets......... 1.70%*** 1.64% 1.61% 1.59% 1.64% 1.69%*** Ratio of net investment income to average net assets......................... 1.19%*** 1.34% 1.58% 2.05% 2.38% 3.04%*** Portfolio turnover rate......................... 44% 98% 105% 88% 150% 142%
* Commencement of UBS Investment Funds Class ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized /1/ The ratio of net operating expenses to average net assets was 1.68%. See accompanying notes to financial statements. 93 Global Equity Fund -- Financial Highlights ------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended July 31, 1995* December 31, 2000 Year Ended June 30, Through -------------------------------------- UBS Investment Funds Class (Unaudited) 2000 1999 1998 1997 June 30, 1996 ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period................ $ 12.41 $ 13.40 $ 12.51 $ 12.73 $ 11.57 $ 10.35 ---------- --------- -------- -------- -------- ---------- Income from investment operations: Net investment income (loss)..................... (0.01)** (0.03)** 0.04 0.07 0.08 (0.01) Net realized and unrealized gain................. 0.25 0.27 1.09 0.83 2.13 1.93 ---------- --------- -------- -------- -------- ---------- Total income from investment operations...................... 0.24 0.24 1.13 0.90 2.21 1.92 ---------- --------- -------- -------- -------- ---------- Less distributions: Distributions from net investment income.......... 0.00 (0.02) (0.06) (0.07) (0.06) (0.01) Distributions from net realized gains............. (1.32) (1.21) (0.18) (1.05) (0.99) (0.69) ---------- --------- -------- -------- -------- ---------- Total distributions......................... (1.32) (1.23) (0.24) (1.12) (1.05) (0.70) ---------- --------- -------- -------- -------- ---------- Net asset value, end of period...................... $ 11.33 $ 12.41 $ 13.40 $ 12.51 $ 12.73 $ 11.57 ========== ========= ======== ======== ======== ========== Total return (non-annualized)....................... 2.17% 1.96% 9.28% 8.15% 20.34% 19.25% Ratios/Supplemental data: Net assets, end of period (in 000s)............... $ 23,696 $ 28,101 $ 44,042 $ 59,147 $ 61,680 $ 33,012 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.......................... 1.87%*** 1.83% 1.81% 1.78% 2.00% 2.53%*** After expense reimbursement and earnings credits.......................... 1.76%*** 1.76% 1.76% 1.76% 1.75% 1.76%*** Ratio of net investment income (loss) to average net assets: Before expense reimbursement and earnings credits......................... (0.23)%*** (0.27)% 0.29% 0.53% 0.60% (0.19)%*** After expense reimbursement and earnings credits......................... (0.12)%*** (0.20)% 0.34% 0.55% 0.85% 0.58%*** Portfolio turnover rate............................ 34% 111% 86% 46% 32% 74%
* 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. 94 Global Technology Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended May 26, 2000* December 31, 2000 Through UBS Investment Funds Class (Unaudited) June 30, 2000 -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period............................................. $ 11.29 $ 10.00 ------- -------- Income (loss) from investment operations: Net investment loss.................................................... (0.09)** (0.01) Net realized and unrealized gain (loss)................................ (4.55) 1.30 ------- -------- Total income (loss) from investment operations.................... (4.64) 1.29 ------- -------- Less distributions: Distributions from net investment income............................... 0.00 0.00 Distributions from net realized gains.................................. (0.01) 0.00 ------- -------- Total distributions............................................... (0.01) 0.00 ------- -------- Net asset value, end of period................................................... $ 6.64 $ 11.29 ======= ======== Total return (non-annualized).................................................... (41.08)% 12.90% Ratios/Supplemental data: Net assets, end of period (in 000s)......................................... $ 860 $ 354 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits...................... 4.89%*** 14.28%*** After expense reimbursement and earnings credits....................... 2.55%*** 2.55%*** Ratio of net investment loss to average net assets: Before expense reimbursement and earnings credits...................... (4.44)%*** (13.26)%*** After expense reimbursement and earnings credits....................... (2.10)%*** (1.53)%*** Portfolio turnover rate..................................................... 158% 14%
* 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. 95 Global Biotech Fund -- Financial Highlights ------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended June 2, 2000* December 31, 2000 Through UBS Investment Funds Class (Unaudited) June 30, 2000 ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period ........................................... $ 12.07 $ 10.00 ---------- ---------- Income (loss) from investment operations: Net investment loss ........................................................ (0.12)** (0.01)** Net realized and unrealized gain (loss) .................................... (0.69) 2.08 ---------- ---------- Total income (loss) from investment operations .......................... (0.81) 2.07 ---------- ---------- Less distributions: Distributions from net investment income ................................... 0.00 0.00 Distributions from net realized gains ...................................... (0.21) 0.00 ---------- ---------- Total distributions ..................................................... (0.21) 0.00 ---------- ---------- Net asset value, end of period ................................................. $ 11.05 $ 12.07 ========== ========== Total return (non-annualized) .................................................. (6.82)% 20.70% Net assets, end of period (in 000s) .......................................... $ 441 $ 148 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits .......................... 4.98%*** 11.10%*** After expense reimbursement and earnings credits ........................... 2.30%*** 2.30%*** Ratio of net investment loss to average net assets: Before expense reimbursement and earnings credits .......................... (4.69)%*** (10.29)%*** After expense reimbursement and earnings credits ........................... (2.01)%*** (1.49)%*** Portfolio turnover rate ...................................................... 127% 19%
* 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. 96 Global Bond Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended July 31, 1995* December 31, 2000 Year Ended June 30, Through ---------------------------------------------- UBS Investment Funds Class (Unaudited) 2000 1999 1998 1997 June 30, 1996 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period............. $ 8.97 $ 9.16 $ 9.39 $ 9.61 $ 10.02 $ 10.56 ------- -------- --------- --------- --------- ---------- Income (loss) from investment operations: Net investment income....................... 0.17** 0.36** 0.34** 0.38** 0.62 0.78 Net realized and unrealized gain (loss)..... (0.03) (0.43) (0.07) (0.18) 0.10 0.15 ------- -------- --------- --------- --------- ---------- Total income (loss) from investment operations................... 0.14 (0.07) 0.27 0.20 0.72 0.93 ------- -------- --------- --------- --------- ---------- Less distributions: Distributions from and in excess of net investment income..................... (0.02) (0.11) (0.42) (0.25) (0.94) (1.37) ------- -------- --------- --------- --------- ---------- Distributions from net realized gains....... - (0.01) (0.08) (0.17) (0.19) (0.10) ------- -------- --------- --------- --------- ---------- Total distributions....................... (0.02) (0.12) (0.50) (0.42) (1.13) (1.47) ------- -------- --------- --------- --------- ---------- Net asset value, end of period................... $ 9.09 $ 8.97 $ 9.16 $ 9.39 $ 9.61 $ 10.02 ======= ======== ========= ========= ========= ========== Total return (non-annualized).................... 1.61% (0.84)% 2.58% 2.28% 7.20% 9.17% Ratios/Supplemental data: Net assets, end of period (in 000s)......... $ 1,564 $ 2,114 $ 4,429 $ 4,377 $ 4,110 $ 3,653 Ratio of expenses to average net assets: Before expense reimbursement and earnings credits.................... 1.68%*** 1.54% 1.39% 1.45% 1.81% 2.14% After expense reimbursement and earnings credits.................... 1.39%*** 1.43% N/A 1.39% 1.39% 1.39% Ratio of net investment income to average net assets: Before expense reimbursement and earnings credits.................... 3.46%*** 3.85% 3.56% 3.98% 4.41% 4.49% After expense reimbursement and earnings credits.................... 3.75%*** 3.96% N/A 4.04% 4.83% 5.24% Portfolio turnover rate.......................... 78% 87% 138% 151% 135% 184%
* Commencement of UBS Investment Funds Class ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized /1/ The ratio of net operating expenses to average net assets was 1.39%. N/A = Not Applicable See accompanying notes to financial statements. 97 U.S. Balanced Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended July 31, 1995* December 31, 2000 Year Ended June 30, Through ---------------------------------------------- UBS Investment Funds Class (Unaudited) 2000 1999 1998 1997 June 30, 1996 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period............. $ 8.52 $ 9.32 $ 12.19 $ 12.46 $ 11.67 $ 11.38 ------- ------- ------- ------- ------- ------- Income (loss) from investment operations: Net investment income.......................... 0.15** 0.22** 0.27** 0.42** 0.38 0.42 Net realized and unrealized gain (loss)........ 0.61 (0.74) 0.18 0.95 1.31 0.86 ------- ------- ------- ------- ------- ------- Total income (loss) from investment operations.............. 0.76 (0.52) 0.45 1.37 1.69 1.28 ------- ------- ------- ------- ------- ------- Less distributions: Distributions from net investment income....... (0.31) (0.22) (0.67) (0.70) (0.36) (0.42) Distributions from net realized gains.......... 0.00 (0.06) (2.65) (0.94) (0.54) (0.57) ------- ------- ------- ------- ------- ------- Total distributions....................... (0.31) (0.28) (3.32) (1.64) (0.90) (0.99) ------- ------- ------- ------- ------- ------- Net asset value, end of period................... $ 8.97 $ 8.52 $ 9.32 $ 12.19 $ 12.46 $ 11.67 ======= ======= ======= ======= ======= ======= Total return (non-annualized).................... 8.95% (5.57)% 4.13% 11.79% 14.99% 11.54% Ratios/Supplemental data: Net assets, end of period (in 000s)............ $ 1,290 $ 1,237 $ 1,789 $ 1,880 $ 1,649 $ 779 Ratio of expenses to average net assets: Before expense reimbursement................. 1.82%*** 1.51% 1.46% 1.31% 1.38% 1.51%*** After expense reimbursement.................. 1.30%*** 1.31% 1.30% 1.30% 1.30% 1.30%*** Ratio of net investment income to average net assets: Before expense reimbursement................. 3.04%*** 2.30% 2.50% 3.38% 3.28% 3.26%*** After expense reimbursement.................. 3.56%*** 2.50% 2.66% 3.39% 3.36% 3.47%*** Portfolio turnover rate........................ 93% 96% 113% 194% 329% 240%
* Commencement of UBS Investment Funds Class ** The net investment income per share data was determined by using average shares outstanding throughout the period. *** Annualized + The ratio of net operating expenses to average net assets was 1.30% See accompanying notes to financial statements. 98 U.S. Equity Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended July 31, 1995* December 31, 2000 Year Ended June 30, Through -------------------------------------------- UBS Investment Funds Class (Unaudited) 2000 1999 1998 1997 June 30, 1996 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period..................... $ 15.95 $ 21.39 $ 19.83 $ 17.59 $ 14.58 $ 11.94 --------- --------- -------- -------- -------- ------- Income (loss) from investment operations: Net investment income................................. 0.01** 0.08** 0.06** 0.09 0.11 0.10 Net realized and unrealized gain (loss)............... 1.22 (3.75) 2.67 3.38 4.22 2.92 --------- --------- -------- -------- -------- ------- Total income (loss) from investment operations..................... 1.23 (3.67) 2.73 3.47 4.33 3.02 --------- --------- -------- -------- -------- ------- Less distributions: Distributions from net investment income.............. (0.12) - (0.05) (0.10) (0.09) (0.13) Distributions from net realized gains................. (1.35) (1.77) (1.12) (1.13) (1.23) (0.25) --------- --------- -------- -------- -------- ------- Total distributions.............................. (1.47) (1.77) (1.17) (1.23) (1.32) (0.38) --------- --------- -------- -------- -------- ------- Net asset value, end of period........................... $ 15.71 15.95 $ 21.39 $ 19.83 $ 17.59 $ 14.58 ========= ========= ======== ======== ======== ======= Total return (non-annualized)............................ 7.76% (17.47)% 14.63% 20.80% 31.28% 25.70% Ratios/Supplemental data: Net assets, end of period (in 000s)................... $ 5,612 $ 12,503 $ 69,167 $ 55,063 $ 35,039 $ 5,387 Ratio of expenses to average net assets: Before expense reimbursement......................... 1.51%*** 1.36 1.32% 1.32% 1.41% 1.66%*** After expense reimbursement.......................... 1.32%*** 1.32 N/A N/A 1.32% 1.32%*** Ratio of net investment income to average net assets: Before expense reimbursement......................... 0.01%*** 0.37 0.30% 0.60% 0.54% 0.61%*** After expense reimbursement.......................... 0.20%*** 0.41 N/A N/A 0.63% 0.95%*** Portfolio turnover rate............................... 28% 55% 48% 42% 43% 36%
* 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. 99 U.S. Large Cap Equity Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended April 6, 1998* December 31, 2000 Year Ended Year Ended Through UBS Investment Funds Class (Unaudited) June 30, 2000 June 30, 1999 June 30, 1998 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period.......................... $ 7.43 $ 11.07 $ 9.79 $ 10.00 ---------- ---------- ---------- --------- Income (loss) from investment operations: Net investment income...................................... 0.02** 0.08** 0.04** 0.02 Net realized and unrealized gain (loss).................... 0.74 (2.68) 1.31 (0.22) ---------- ---------- ---------- --------- Total income (loss) from investment operations........ 0.76 (2.60) 1.35 (0.20) ---------- ---------- ---------- --------- Less distributions: Distributions from net investment income................... (0.16) (0.09) (0.07) (0.01) Distributions from net realized gains...................... - (0.95) - - ---------- ---------- ---------- --------- Total distributions................................... (0.16) (1.04) (0.07) (0.01) ---------- ---------- ---------- --------- Net asset value, end of period................................ $ 8.03 $ 7.43 $ 11.07 $ 9.79 ========== ========== ========== ========= Total return (non-annualized)................................. 10.21% (24.20)% 13.86% (2.06)% Ratios/Supplemental data: Net assets, end of period (in 000s)........................ 252 $ 158 $ 6 $ 1 Ratio of expenses to average net assets: Before expense reimbursement............................. 2.33%*** 1.79% 1.81% 2.11%*** After expense reimbursement.............................. 1.32%*** 1.32% 1.32% 1.32%*** Ratio of net investment income to average net assets: Before expense reimbursement............................... (0.54)%*** 0.18% 0.05% 0.00%*** After expense reimbursement................................ 0.47%*** 0.65% 0.54% 0.79%*** Portfolio turnover rate....................................... 46% 174% 88% 12%
* 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. 100 U.S. Large Cap Growth Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended December 31, 2000 Year Ended Period Ended UBS Investment Funds Class (Unaudited) June 30, 2000 June 30, 1999* --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period.......................................... $ 15.09 $ 13.85 $ 11.84 --------- --------- -------- Income (loss) from investment operations: Net investment loss......................................................... (0.05) (0.10)** (0.04) Net realized and unrealized gain (loss)..................................... (2.78) 2.29 2.05 --------- --------- -------- Total income (loss) from investment operations...................... (2.83) 2.19 2.01 --------- --------- -------- Less distributions: Distributions from net realized gain........................................ (1.91) (0.95) - --------- --------- -------- Total distributions................................................. (1.91) (0.95) - --------- --------- -------- Net asset value, end of period................................................ $ 10.35 $ 15.09 $ 13.85 ========= ========= ======== Total return (non-annualized)................................................. (19.73)% 16.62% 16.98% Ratios/Supplemental data: Net assets, end of period (in 000s)......................................... $ 4,841 $ 7,183 $ 5,136 Ratio of expenses to average net assets: Before expense reimbursement............................................ 2.15%*** 2.63% 3.15%*** After expense reimbursement............................................. 1.57%*** 1.57% 1.57%*** Ratio of net investment loss to average net assets: Before expense reimbursement............................................ (1.46)%*** (1.74)% (2.03)%*** After expense reimbursement............................................. (0.88)%*** (0.68)% (0.45)%*** Portfolio turnover rate..................................................... 31% 86% 51%
* 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. 101 U.S. Small Cap Growth Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended December 31, 2000 Year Ended Period Ended UBS Investment Funds Class (Unaudited) June 30, 2000 June 30, 1999* ----------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period................................ $ 16.08 $ 9.14 $ 8.80 --------- --------- ------- Income (loss) from investment operations: Net investment loss............................................... (0.08) (0.18)** (0.06) Net realized and unrealized gain (loss)........................... (0.94) 7.12 0.40 --------- --------- ------- Total income (loss) from investment operations................. (1.02) 6.94 0.34 --------- --------- ------- Less distributions: Distributions from net realized gains............................. (2.83) - - --------- --------- ------- Total distributions............................................ (2.83) - - --------- --------- ------- Net asset value, end of period...................................... $ 12.23 $ 16.08 $ 9.14 ========= ========= ======= Total return (non-annualized)....................................... (6.54)% 75.93% 3.86% Ratios/Supplemental data: Net assets, end of period (in 000s)............................... $ 3,664 $ 3,671 $ 640 Ratio of expenses to average net assets: Before expense reimbursement................................... 1.99%*** 2.08% 2.09%*** After expense reimbursement.................................... 1.92%*** 1.92% 1.92%*** Ratio of net investment loss to average net assets: Before expense reimbursement................................... (1.28)%*** (1.53)% (1.39)%*** After expense reimbursement.................................... (1.21)%*** (1.37)% (1.22)%*** Portfolio turnover rate........................................... 35% 104% 71%
* 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. 102 U.S. Bond Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended August 31, 1995* December 31, 2000 Year Ended June 30, Through ------------------------------------------------- UBS Investment Funds Class (Unaudited) 2000 1999 1998 1997 June 30, 1996 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period......... $ 9.94 $ 10.23 $ 10.54 $ 10.22 $ 9.92 $ 10.00 -------- -------- -------- -------- -------- -------- Income from investment operations: Net investment income...................... 0.32** 0.58** 0.52** 0.50 0.46** 0.46 Net realized and unrealized gain (loss).... 0.37 (0.25) (0.26) 0.49 0.32 (0.13) -------- -------- -------- -------- -------- -------- Total income from investment operations................ 0.69 0.33 0.26 0.99 0.78 0.33 -------- -------- -------- -------- -------- -------- Less distributions: Distributions from net investment income... (0.58) (0.62) (0.42) (0.53) (0.48) (0.38) Distributions from net realized gains...... - - (0.15) (0.14) - (0.03) -------- -------- -------- -------- -------- -------- Total distributions.................. (0.58) (0.62) (0.57) (0.67) (0.48) (0.41) -------- -------- -------- -------- -------- -------- Net asset value, end of period............... $ 10.05 $ 9.94 $ 10.23 $ 10.54 $ 10.22 $ 9.92 ======== ======== ======== ======== ======== ======== Total return (non-annualized)................ 6.96% 3.33% 2.45% 9.97% 7.91% 3.24% Ratios/Supplemental data: Net assets, end of period (in 000s)........ $ 3,374 $ 3,526 $ 6,015 $ 2,444 $ 1,399 $ 636 Ratio of expenses to average net assets: Before expense reimbursement.............. 1.23%*** 1.14% 1.08% 1.31% 2.12% 4.10%*** After expense reimbursement............... 1.07%*** 1.07% 1.07% 1.07% 1.07% 1.07%*** Ratio of net investment income to average net assets: Before expense reimbursement.............. 6.03%*** 5.65% 4.95% 5.14% 4.67% 2.53%*** After expense reimbursement............... 6.19%*** 5.72% 4.96% 5.38% 5.72% 5.56%*** Portfolio turnover rate.................... 90% 170% 260% 198% 410% 363%
* 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. 103 High Yield Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended December 31, 2000 Year Ended Period Ended UBS Investment Funds Class (Unaudited) June 30, 2000 June 30, 1999* -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period............................. $ 9.17 $ 9.95 $ 9.98 ---------- ------------ ------------- Income (loss) from investment operations: Net investment income......................................... 0.43** 0.84** 0.41** Net realized and unrealized loss.............................. (0.80) (0.90) (0.15) ---------- ------------ ------------- Total income (loss) from investment operations.......... (0.37) (0.06) 0.26 ---------- ------------ ------------- Less distributions: Distributions from net investment income...................... (0.72) (0.65) (0.29) Distributions from net realized gains......................... - (0.07) - ---------- ------------ ------------- Total distributions..................................... (0.72) (0.72) (0.29) ---------- ------------ ------------- Net asset value, end of period................................... $ 8.08 $ 9.17 $ 9.95 ========== ============= ============= Total return (non-annualized).................................... (3.95)% (0.68)% 2.61% Ratios/Supplemental data: Net assets, end of period (in 000s)........................... $ 2,005 $ 2,164 $ 6,292 Ratio of expenses to average net assets: Before expense reimbursement................................ 1.77%*** 1.70% 1.68%*** After expense reimbursement................................. 1.59%*** 1.55% 1.55%*** Ratio of net investment income to average net assets: Before expense reimbursement................................ 9.34%*** 8.47% 7.69%*** After expense reimbursement................................. 9.52%*** 8.62% 7.82%*** Portfolio turnover rate....................................... 36% 73% 77%
* 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 /1/ The ratio of net operating expenses to average net assets was 1.55%. See accompanying notes to financial statements. 104 International Equity Fund -- Financial Highlights -------------------------------------------------------------------------------- The table below sets forth financial data for one share of capital stock outstanding throughout each period presented.
Six Months Ended July 31,1995/1/ December 31, 2000 Year Ended June 30, Through ----------------------------------------------- UBS Investment Funds Class (Unaudited) 2000 1999 1998 1997 June 30, 1996 ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period............ $ 13.37 $ 12.20 $ 12.05 $ 12.49 $ 11.12 $ 10.26 -------- --------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income (loss)................ (0.01) -/2/ 0.05 0.08 0.11 0.12 Net realized and unrealized gain (loss)..... (0.79) 1.33 0.27 0.30 1.93 1.45 -------- --------- -------- -------- -------- -------- Total income (loss) from investment operations.................. (0.80) 1.33 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........ (0.77) (0.14) (0.12) (0.74) (0.56) (0.56) -------- --------- -------- -------- -------- -------- Total distributions....................... (0.77) (0.16) (0.17) (0.82) (0.67) (0.71) -------- --------- -------- -------- -------- -------- Net asset value, end of period.................. $ 11.80 $ 13.37 $ 12.20 $ 12.05 $ 12.49 $ 11.12 ======== ========= ======== ======== ======== ======== Total return (non-annualized)................... (5.87)% 10.94% 2.78% 3.90% 19.32% 15.78% Ratios/Supplemental data: Net assets, end of period (in 000s)......... $ 4,840 $ 5,819 $ 6,739 $ 5,310 $ 7,797 $ 1,262 Ratio of expenses to average net assets: Before expense reimbursement and earnings credit....................... 1.88%/3/ 1.84% 1.83% 1.84% 1.81% 2.04%/3/ After expense reimbursement and earnings credit....................... 1.86%/3/ N/A N/A N/A N/A 1.84%/3/ Ratio of net investment income to average net assets: Before expense reimbursement and earnings credit....................... (0.26)%/3/ 0.05% 0.51% 0.68% 1.02% 0.83%/3/ After expense reimbursement and earnings credit....................... (0.24)%/3/ N/A N/A N/A N/A 1.03%/3/ Portfolio turnover rate..................... 31% 59% 74% 49% 25% 20%
/1/ Commencement of UBS Investment Funds Class /2/ The net investment income per share data was determined by using average shares outstanding throughout the period. /3/ Annualized + The ratio of net operating expenses to average net assets was 1.83%. ++ The ratio of net operating expenses to average net assets was 1.84%. N/A = Not Applicable See accompanying notes to financial statements. 105 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 thirteen series: Global Fund, Global Equity Fund, Global Technology Fund, Global Biotech Fund, Global Bond Fund, U.S. Balanced Fund, U.S. Equity Fund, U.S. Large Cap Equity Fund, U.S. Large Cap Growth Fund, U.S. Small Cap Growth Fund, U.S. Bond Fund, High Yield Fund and International Equity Fund (formerly 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 Brinson Class I and the Brinson Class N are presented separately. The following is a summary of significant accounting policies followed by the Funds 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 valued at the most recent bid price. Investments in affiliated investment companies are valued at the daily 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. 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. 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 as 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 met the requirements of the Code applicable to regulated investment companies for the six months ended December 31, 2000, 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. 106 UBS Investment Funds - Notes To Financial Statements -------------------------------------------------------------------------------- H. Earnings Credits: The Funds have entered into an arrangement with their custodian whereby interest earned on uninvested cash balances are used to offset a portion of the Fund's expenses. These amounts are reflected in the statements of operations. I. 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. 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. With respect to Global Technology Fund, Global Biotech Fund, U.S. Large Cap Growth Fund, U.S. Small Cap Growth Fund and High Yield Fund, UBS Asset Management (New York), Inc. ( the "Sub-Advisor") is responsible for managing a portion of these Funds pursuant to a Sub-Investment Advisory Agreement (the "Sub-Advisory Agreement") with the Advisor. The Sub-Advisor receives 0.10% from the Funds under the Sub-Advisory Agreement for providing services to the Advisor. 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. The Advisor may recapture any amounts waived or reimbursed with respect to the Global Technology Fund and Global Biotech Fund subject to the following conditions: (1) the Advisor must request reimbursement within five years from the date on which the waiver and/or reimbursement was made, and (2) the Fund must be able to reimburse the Advisor and remain within the operating expense limits noted in the following chart. No amounts were recaptured by the Advisor during the period ended December 31, 2000. Investment advisory fees and other transactions for the six months ended December 31, 2000, were as follows:
UBS Investment Advisory Brinson Class I Brinson Class N Funds Class Advisory Fees Fund Fee Expense Cap Expense Cap Expense Cap Fees Deferred ----- ------- --------------- --------------- ----------- -------- -------- Global Fund........................ 0.80% 1.10% 1.35% 1.75% $ 899,931 $ - Global Equity Fund................. 0.80 1.00 1.25 1.76 257,173 32,635 Global Technology Fund............. 1.40 1.55 1.80 2.55 13,574 22,680 Global Biotech Fund................ 1.15 1.30 1.55 2.30 9,739 22,716 Global Bond Fund................... 0.75 0.90 1.15 1.39 144,951 55,348 U.S. Balanced Fund................. 0.70 0.80 1.05 1.30 41,450 30,957 U.S. Equity Fund................... 0.70 0.80 1.05 1.32 544,628 148,908 U.S. Large Cap Equity Fund......... 0.70 0.80 1.05 1.32 33,379 48,358 U.S. Large Cap Growth Fund......... 0.70 0.80 1.05 1.57 39,468 32,653 U.S. Small Cap Growth Fund......... 1.00 1.15 1.40 1.92 282,392 21,188 U.S. Bond Fund..................... 0.50 0.60 0.85 1.07 161,916 53,686 High Yield Fund.................... 0.60 0.70 0.95 1.55 142,840 42,748 International Equity Fund.......... 0.80 1.00 1.25 1.84 1,453,336 -
107 UBS Investment Funds -- Notes To Financial Statements -------------------------------------------------------------------------------- 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, 2000, were as follows: Fund Fees Paid ---- --------- Global Fund...................................................... $2,292 Global Equity Fund............................................... 2,208 Global Technology Fund........................................... 1,840 Global Biotech Fund.............................................. 1,840 Global Bond Fund................................................. 2,208 U.S. Balanced Fund............................................... 1,496 U.S. Equity Fund................................................. 5,520 U.S. Large Cap Equity Fund....................................... 2,024 U.S. Large Cap Growth Fund....................................... 1,834 U.S. Small Cap Growth Fund....................................... 1,919 U.S. Bond Fund................................................... 2,196 High Yield Fund.................................................. 2,208 International Equity Fund........................................ 4,232 The Global Fund invests in shares of certain affiliated investment companies also sponsored by the Advisor. These investments represented 25.39% of the Fund's net assets at December 31, 2000. Amounts relating to those investments at December 31, 2000 and for the six months then ended, were as follows:
Net Change in Sales Realized Net Unrealized Affiliates Purchases Proceeds Gain/(Loss) Gain/(Loss) Value ---------- ------------ ------------ ------------ ------------- ------------ Brinson Small Capitalization Equity Fund.......... $ 2,000,000 $ 5,000,000 $ 1,758,919 $ (1,176,080) $ 5,722,892 Brinson High Yield Fund........................... 1,500,000 5,800,000 235,957 (541,393) 11,397,954 Brinson Emerging Markets Equity Fund.............. 3,500,000 3,500,000 (679,755) (1,751,368) 7,512,046 Brinson Emerging Markets Debt Fund................ - 5,200,000 1,919,637 (1,337,748) 6,625,204 Brinson Supplementary Trust U.S. Cash Management Prime Fund........................... 106,769,495 92,498,036 - - 16,102,318
The following Funds invest in shares of the Brinson Supplementary Trust U.S. Cash Management Prime Fund ("Supplementary Trust"). The Supplementary Trust is an investment company managed by the Advisor. The Supplementary Trust is offered as a cash management option only to mutual funds and other accounts managed by the Advisor. The Supplementary Trust pays 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 December 31, 2000 and for the six months ended December 31, 2000, were as follows:
% of Sales Interest Net Fund Purchases Proceeds Income Value Assets ---- ------------ ------------ -------- ----------- ------ Global Fund........................................ $106,769,495 $ 92,498,036 $232,440 $16,102,318 8.63% Global Equity Fund................................. 29,582,930 31,219,041 37,128 817,830 1.30 Global Bond Fund................................... 17,623,537 20,605,496 60,046 2,437,235 6.31 U.S. Balanced Fund................................. 5,591,402 5,503,947 38,079 711,147 5.99 U.S. Equity Fund................................... 54,211,837 53,771,871 102,663 1,289,380 0.90 U.S. Large Cap Equity Fund......................... 1,804,337 3,020,319 10,436 - - U.S. Small Cap Growth Fund......................... 18,380,796 19,717,751 154,453 1,166,686 2.32 U.S. Bond Fund..................................... 48,077,059 47,546,936 77,344 747,169 1.23 High Yield Fund.................................... 56,875,953 59,466,373 87,484 7,594,776 16.43 International Equity Fund.......................... 440,562,619 431,931,555 390,370 $13,760,421 4.22
108 UBS Investment Funds -- Notes To Financial Statements -------------------------------------------------------------------------------- 3. INVESTMENT TRANSACTIONS Investment transactions for the six months ended December 31, 2000, excluding short-term investments, were as follows: Sales Fund Purchases Proceeds ---- ------------ ------------ Global Fund..................................... $ 96,655,700 $221,816,951 Global Equity Fund.............................. 20,809,288 26,912,784 Global Technology Fund.......................... 4,479,144 2,797,571 Global Biotech Fund............................. 2,955,415 1,986,625 Global Bond Fund................................ 28,925,550 34,743,065 U.S. Balanced Fund.............................. 10,233,231 11,129,760 U.S. Equity Fund................................ 42,541,102 99,923,146 U.S. Large Cap Equity Fund...................... 3,872,948 14,460,100 U.S. Large Cap Growth Fund...................... 3,306,377 4,220,420 U.S. Small Cap Growth Fund...................... 20,573,909 18,133,634 U.S. Bond Fund.................................. 56,118,737 57,991,227 High Yield Fund................................. 15,615,741 21,545,023 International Equity Fund....................... 105,495,850 181,074,203 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 during the six months ended December 31, 2000, was 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 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. 109 UBS Investment Funds -- Notes To Financial Statements -------------------------------------------------------------------------------- 6. SECURITY LENDING The Global Fund and International Equity Fund loaned securities to certain brokers, with the Funds' custodian acting as the Funds' lending agent. The Funds earned negotiated lenders' fees, which are included in securities lending-net in the statements of operations. The Global Fund receives cash and securities as collateral against the loaned securities. The International Equity Fund receives securities as collateral against the loaned securities. The cash collateral received is invested in short-term securities and is included in the schedule of investments. The securities received as collateral are not reflected in the statement of assets and liabilities. The Funds' monitor the market value of securities loaned on a daily basis and initially require 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 foreign securities loaned. The value of loaned securities and related collateral outstanding at December 31, 2000, were as follows:
Value of Loaned Value of Securities Collateral --------------- -------------- Global Fund............................ $39,001,601 $39,712,697 International Equity Fund.............. 22,054,470 22,997,620
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, are as follows as a percentage of the average daily net assets of the UBS Investment Funds Class of each of the Funds:
% of Fund Net Assets ---- ---------- Global Fund...................................................... 0.65% Global Equity Fund............................................... 0.76 Global Technology Fund........................................... 1.00 Global Biotech Fund.............................................. 1.00 Global Bond Fund................................................. 0.49 U.S. Balanced Fund............................................... 0.50 U.S. Equity Fund................................................. 0.52 U.S. Large Cap Equity Fund....................................... 0.52 U.S. Large Cap Growth Fund....................................... 0.77 U.S. Small Cap Growth Fund....................................... 0.77 U.S. Bond Fund................................................... 0.47 High Yield Fund.................................................. 0.85 International Equity Fund........................................ 0.84
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 plus 0.50%. The Funds pay an annual commitment fee of 0.10% of the average daily balance of the line of credit not utilized. The average borrowings under the agreement for the six months ended December 31, 2000, were as follows:
Average Number of Days Fund Borrowings Outstanding ---- ------------ -------------- Global Fund......................... $10,550,000 8 High Yield Fund..................... 3,442,857 14 International Equity Fund........... 8,070,833 24
110 Special Meeting of Shareholders -------------------------------------------------------------------------------- Voting Results of Special Meeting of Shareholders (Unaudited) The proposals described below were submitted to a vote of shareholders of the U.S. Small Cap Growth Fund, U.S. Large Cap Growth Fund, High Yield Fund, Global Biotech Fund and Global Technology Fund (each a "Fund" and collectively, the "Funds") of Brinson Funds (the "Trust") at a special meeting of shareholders held on December 7, 2000 ( the "Meeting"). The outcome of the votes were as follows: Proposal No. 1--Approval of amendments to the Investment Advisory Agreement between the Trust, on behalf of the Funds, and Brinson Partners, Inc.
Fund For Against Abstain ---- ------- ----------- ----------- Global Technology Fund............ 108,365 569 16,005 Global Biotech Fund............... 72,684 370 4,768 U.S. Large Cap Growth Fund........ 279,056 1,129 128,366 U.S. Small Cap Growth Fund........ 1,748,776 8,142 40,601 High Yield Fund................... 2,879,036 18,106 30,664
Proposal No. 2--Approval of the Sub-Advisory Agreement between Brinson Partners Inc. and UBS Asset Management (New York), Inc. with respect to the Funds.
Fund For Against Abstain ---- ------- ----------- ----------- Global Technology Fund............ 108,365 569 16,005 Global Biotech Fund............... 72,684 370 4,768 U.S. Large Cap Growth Fund........ 279,352 1,129 128,070 U.S. Small Cap Growth Fund........ 1,750,425 6,493 40,601 High Yield Fund................... 2,879,512 18,106 30,188
Proposal No. 3a--Approval of the amendment of the Funds' investment restrictions regarding borrowing
Fund For Against Abstain ---- ------- ----------- ----------- Global Technology Fund............ 105,474 1,460 18,005 Global Biotech Fund............... 72,684 370 4,768 U.S. Large Cap Growth Fund........ 273,944 2,875 131,732 U.S. Small Cap Growth Fund........ 1,659,818 10,706 126,994 High Yield Fund................... 2,071,362 28,991 827,453
Proposal No. 3b--Approval of the amendment of the Funds' investment restrictions regarding underwriting
Fund For Against Abstain ---- ------- ----------- ----------- Global Technology Fund............ 106,365 569 18,005 Global Biotech Fund............... 72,684 370 4,768 U.S. Large Cap Growth Fund........ 275,690 1,129 131,732 U.S. Small Cap Growth Fund........ 1,662,169 8,356 126,994 High Yield Fund................... 2,086,400 13,953 827,453
111 Special Meeting of Shareholders -------------------------------------------------------------------------------- Proposal No. 3c--Approval of the amendment of the Funds' investment restrictions regarding lending. Fund For Against Abstain ---- --------- --------- -------- Global Technology Fund................. 106,365 569 18,005 Global Biotech Fund.................... 72,684 370 4,768 U.S. Large Cap Growth Fund............. 273,944 2,875 131,732 U.S. Small Cap Growth Fund............. 1,662,169 8,356 126,994 High Yield Fund........................ 2,071,887 28,466 827,453 Proposal No. 3d--Approval of the amendment of the Funds' investment restrictions regarding investments in real estate, Fund For Against Abstain ---- --------- --------- -------- Global Technology Fund................. 105,474 1,460 18,005 Global Biotech Fund.................... 72,684 370 4,768 U.S. Large Cap Growth Fund............. 275,690 1,129 131,732 U.S. Small Cap Growth Fund............. 1,660,772 9,753 126,994 High Yield Fund........................ 2,086,400 13,953 827,453 Proposal No. 3e--Approval of the amendment of the Funds' investment restrictions regarding investments in commodities. Fund For Against Abstain ---- --------- --------- -------- Global Technology Fund................. 105,474 1,460 18,005 Global Biotech Fund.................... 72,684 370 4,768 U.S. Large Cap Growth Fund............. 275,394 1,424 131,732 U.S. Small Cap Growth Fund............. 1,660,474 10,014 127,031 High Yield Fund........................ 2,081,112 19,241 827,453 Proposal No. 3f--Approval of the amendment of the Funds' investment restrictions regarding issuing senior securities and short sales. Fund For Against Abstain ---- --------- --------- -------- Global Technology Fund................. 105,474 1,460 18,005 Global Biotech Fund.................... 72,684 370 4,768 U.S. Large Cap Growth Fund............. 275,394 1,424 131,732 U.S. Small Cap Growth Fund............. 1,660,474 10,014 126,994 High Yield Fund........................ 2,085,399 14,954 827,453 Proposal No. 3g--Approval of the amendment of the Funds' investment restrictions regarding concentration. Fund For Against Abstain ---- --------- --------- -------- U.S. Large Cap Growth Fund............. 275,394 1,424 131,732 U.S. Small Cap Growth Fund............. 1,662,169 8,356 126,994 High Yield Fund........................ 2,069,874 30,479 827,453 Proposal No. 3h--Approval of the amendment of the Funds' investment restrictions regarding diversification. Fund For Against Abstain ---- --------- -------- -------- U.S. Small Cap Growth Fund............. 1,662,169 8,356 126,994 High Yield Fund........................ 2,074,161 25,716 827,929 112 Special Meeting of Shareholders -------------------------------------------------------------------------------- Proposal No. 4a--Approval of the elimination of the Funds' investment restrictions regarding purchasing securities on margin. Fund For Against Abstain ---- ----------- ----------- --------- Global Technology Fund................. 105,474 1,460 18,005 Global Biotech Fund.................... 72,684 370 4,768 U.S. Large Cap Growth Fund............. 276,523 296 131,732 U.S. Small Cap Growth Fund............. 1,660,510 10,014 126,994 High Yield Fund........................ 2,039,508 14,954 873,344 Proposal No. 4b--Approval of the elimination of the Funds' investment restrictions regarding investing in other companies. Fund For Against Abstain ---- ----------- ----------- --------- Global Technology Fund................. 106,365 569 18,005 Global Biotech Fund.................... 72,684 370 4,768 U.S. Large Cap Growth Fund............. 276,523 -- 132,028 U.S. Small Cap Growth Fund............. 1,662,169 8,356 126,994 High Yield Fund........................ 2,085,924 13,953 827,929 Proposal No. 4c--Approval of the elimination of the Funds' investment restrictions regarding investing in oil, gas and minerals. Fund For Against Abstain ---- ----------- ----------- --------- U.S. Large Cap Growth Fund............. 276,523 -- 132,028 U.S. Small Cap Growth Fund............. 1,662,331 8,194 126,994 High Yield Fund........................ 2,085,924 13,953 827,929 113 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. [LOGO] UBS Investment Funds P.O. Box 2798, Boston, Massachusetts 02208-9915 . Tel: (800) 794-7753