(FORTUNE Magazine) – Like excitement? We've certainly had our share lately: Markets from Wall Street to London have been rocked by the financial turmoil in Asia. So where should you turn for reliable growth? You'd do best to pick from our list, containing the best performers from Morningstar's universe of more than 8,600 mutual funds. Most of our top funds have an impressive one-year performance, but that's not why they were chosen. Our criteria are based on five-year returns through mid-November, which encompass the bull market's dip in '94 and the roller-coaster ride this fall. More important, these funds are ranked on five-year returns after sales loads and taxes (on distributions), so you know what you actually get. The new Taxpayer Relief Act of 1997 will lower the capital gains tax rate to 20%, from the previous 28%, for fund distributions that reflect long-term investments. But that means taxes will still take at least one-fifth of your return, so they bear watching. Speaking of taxes, you'll notice that we've starred the funds that won't declare capital gains in the final weeks of December. As for the rest of our funds, you may want to wait till January to buy, so that you don't get part of your principal immediately handed back to you as a taxable capital gain.

With financial markets looking as wild and woolly as ever, we've also included something to help you match your tolerance for risk with the appropriate fund. Look to the column containing standard deviation, basically a historical measure of how much each fund's return has bounced around. If you are looking for a smooth ride, you'd do best to focus on stock funds that have a standard deviation below 12; for bond funds, look to keep it below 5.5.

For consistency, we've required that the same manager (or at least one manager from a team) be at the helm of a fund for all five years. We've also required that the funds be available in at least 25 states, hold at least $25 million in net assets, and have a minimum initial investment of less than $25,000.

U.S. STOCK FUNDS

It's been a great market for investors, but a frustrating one for mutual fund managers. Only 49 of the funds listed beat the S&P's 19.8% average annual five-year return, and that's before subtracting sales loads and taxes. Even the very best fund on our list, PBHG Growth, had a tricky time of it. The fund boasts a terrific five-year adjusted return of 24.8%, but that masks a horrible stretch over the past year, when PBHG was down 4% compared with the overall market's 20% gain. "We take more style risk than most," explains manager Gary Pilgrim, referring to his style of picking only the fastest-growing companies. Pilgrim adds that investors in his fund, or those with similar objectives, need to think very long term. Says he: "Funds that follow a highly stylized strategy run the risk of underperforming over shorter time periods. Because of that, you need to think long term--at least five or six years--or go someplace else."

The big question for most investors is which type of fund to buy--big-cap growth, small company, maybe even a balanced fund. Market analysts we talked with increasingly point to the small-cap sector as the one with the brightest prospects. That view gets a ringing endorsement from small-cap manager Robert Killen of the Berwyn fund. "We see short-term interest rates coming down and a continuing positive period for smaller-cap stocks," he says. Small caps do best when the economy is growing and inflation is mild, he notes, but he warns that they do poorly in disinflationary periods since they are the first to be cut off by lending institutions.

The outlook for large-cap stocks is mixed. Says Larry Auriana of the Kaufmann fund: "Valuations for S&P are at the top of their historical range. Large caps are at the end of their run." There is a safer way to play this sector: Legg Mason Value Trust, No. 2 in the Growth category, with a 38.8% year-on-year return, buys stocks with strong fundamentals that have suffered some temporary setback. Says manager Bill Miller: "The market way overreacts to bad news. We focus on down valuations, and go in and buy when everyone is selling." His current list of unpopulars include some unlikely bedfellows--HMOs and tobacco stocks.

AGGRESSIVE GROWTH HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 15.9% 14.5% 14.0%

PUTNAM NEW OPPORTUNITIES A3 800-225-1581 23.8% 13.6% 22.1%

KAUFMANN* 800-237-0132 21.4% 12.4% 20.9%

STEIN ROE CAPITAL OPPORTUNITIES* 800-338-2550 18.5% -7.3% 18.3%

PRINCOR EMERGING GROWTH A* 800-247-4123 19.4% 28.0% 17.8%

AMERICAN CENTURY-20TH CENTURY ULTRA 800-345-2021 18.4% 14.9% 17.8%

VALUE LINE LEVERAGED GROWTH INVESTORS 800-223-0818 19.2% 20.7% 17.4%

AIM CONSTELLATION A 800-347-4246 18.2% 13.4% 16.4%

OPPENHEIMER CAPITAL APPRECIATION A 800-525-7048 18.8% 24.5% 15.5%

SMITH BARNEY AGGRESSIVE GROWTH A 800-451-2010 17.6% 32.6% 15.5%

CRABBE HUSON SPECIAL PRIMARY CLASS 800-541-9732 16.0% 23.7% 15.3%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[PUTNAM NEW OPPORTUNITIES A3] 5.75% 1.06% 22.7 $8,117 D. Miller/C.McMullen

[KAUFMANN*] 0.20% 1.93% 19.6 $6,349 L. Auriana/H. Utsch

[STEIN ROE CAPITAL OPPORTUNITIES*] NONE 1.22% 21.8 $1,007 G. Santella/E. Maddix

[PRINCOR EMERGING GROWTH A*] 4.75% 1.32% 12.7 $347 Michael R. Hamilton

[AMERICAN CENTURY-20TH CENTURY ULTRA] NONE 1.00% 21.7 $21,670 J. Stowers III/B. Wimberly

[VALUE LINE LEVERAGED GROWTH INVESTORS] NONE 0.88% 17.0 $424 Multiple managers

[AIM CONSTELLATION A] 5.50% 1.14% 19.0 $14,245 Multiple managers

[OPPENHEIMER CAPITAL APPRECIATION A] 5.75% 1.09% 14.3 $1,193 J. Putnam/R. Doll Jr.

[SMITH BARNEY AGGRESSIVE GROWTH A] 5.00% 1.30% 21.6 $375 Richard A. Freeman

[CRABBE HUSON SPECIAL PRIMARY CLASS] NONE 1.37% 13.9 $413 J. Crabbe/J. Johnson

SMALL COMPANY HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 17.4% 23.2% 15.5%

FRANKLIN SMALL CAP GROWTH I 800-342-5236 25.4% 22.0% 23.1%

BARON ASSET 800-992-2766 23.2% 30.0% 22.9%

HOMESTATE PENNSYLVANIA GROWTH 800-232-0224 22.8% 29.8% 20.9%

FIDELITY LOW-PRICED STOCK 800-544-8888 21.4% 31.5% 18.5%

MANAGERS SPECIAL EQUITY 800-835-3879 20.1% 24.8% 18.1%

BABSON ENTERPRISE II 800-422-2766 19.1% 38.7% 18.0%

WARBURG PINCUS EMERGING GROWTH 800-927-2874 18.5% 20.0% 17.9%

GABELLI SMALL CAP GROWTH 800-422-3554 19.0% 37.1% 17.7%

BERWYN 800-992-6757 19.3% 31.9% 17.6%

T. ROWE PRICE SMALL-CAP STOCK 800-638-5660 20.8% 28.9% 17.6%

VANGUARD INDEX SMALL CAP STOCK 800-992-0414 18.4% 27.5% 17.3%

VANGUARD INDEX EXTENDED MARKET 800-992-0414 18.0% 25.3% 17.1%

ACORN 800-922-6769 18.6% 24.6% 17.1%

ROYCE MICRO-CAP 800-221-4268 18.4% 33.1% 16.8%

ECLIPSE EQUITY 800-872-2710 19.4% 37.2% 16.8%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[FRANKLIN SMALL CAP GROWTH I] 4.50% 0.92% 21.3 $2,555 F. Jamieson/N. Moore

[BARON ASSET] NONE 1.40% 16.6 $3,340 Ronald Baron

[HOMESTATE PENNSYLVANIA GROWTH] 4.75% 1.77% 18.3 $108 Kenneth G. Mertz II

[FIDELITY LOW-PRICED STOCK] 3.00%[4] 1.01% 10.9 $10,215 Joel C. Tillinghast

[MANAGERS SPECIAL EQUITY] NONE 1.43% 15.6 $678 Multiple managers

[BABSON ENTERPRISE II] NONE[5] 1.38% 13.3 $79 L. James/P. Schliemann

[WARBURG PINCUS EMERGING GROWTH] NONE 1.27% 18.2 $1,510 Multiple managers

[GABELLI SMALL CAP GROWTH] NONE 1.58% 12.3 $288 Mario J. Gabelli

[BERWYN] 1.00%[6,7] 1.21% 14.2 $105 Robert E. Killen

[T. ROWE PRICE SMALL-CAP STOCK] NONE 1.07% 13.0 $753 Gregory A. McCrickard

[VANGUARD INDEX SMALL CAP STOCK] NONE[8] 0.25% 14.8 $2,627 Gus Sauter

[VANGUARD INDEX EXTENDED MARKET] NONE[8] 0.25% 13.6 $2,730 Gus Sauter

[ACORN] NONE 0.57% 13.7 $3,634 R. Wanger/C. McQuaid

[ROYCE MICRO-CAP] 1.00%[6,9] 1.79% 11.3 $194 Charles M. Royce

[ECLIPSE EQUITY] NONE 1.15% 13.5 $190 W. McCain/K. O'Connor

*Fund will not declare capital gains Dec. 7-31, 1997. [1]Performance is through Nov. 14, 1997, and net of annual expenses, brokerage costs, and sales loads; also net of taxes, assuming the new 20% long-term rate for capital gains and income distributions. [2]Average annual return for all funds tracked by Morningstar in each category. [3]Investors must make systematic investments. [4]Additional 1.5% redemption fee on shares held less than 90 days. [5]New money must stay in fund for 15 days before withdrawal. [6]Additional 1% redemption fee on shares held for the first 12 months. [7]Redemption limit is $5,000. [8]Telephone exchange privileges available only on IRA accounts. [9]Telephone redemptions are limited to less than $50,000.

GROWTH HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 16.8% 22.6% 14.8% PBHG GROWTH 800-433-0051 26.1% -4.2% 24.8%

LEGG MASON VALUE TRUST 800-577-8589 25.2% 38.8% 24.4%

ROBERTSON STEPHENS VALUE+GROWTH A* 800-766-3863 24.9% 18.4% 24.3%

VANGUARD/PRIMECAP 800-992-0414 24.5% 39.9% 23.7%

FRANKLIN CALIFORNIA GROWTH I 800-342-5236 26.4% 20.0% 23.6%

OAKMARK* 800-625-6275 23.5% 29.1% 22.4%

TORRAY 800-443-3036 23.0% 30.9% 22.3%

WHITE OAK GROWTH STOCK 888-462-5386 22.2% 23.1% 22.1%

MERRILL LYNCH GROWTH B 800-637-3863 23.3% 27.1% 21.7%

SAFECO GROWTH NO LOAD 800-426-6730 24.0% 51.4% 21.2%

T. ROWE PRICE MID-CAP GROWTH 800-638-5660 21.6% 14.7% 21.0%

MFS EMERGING GROWTH B 800-637-2929 21.4% 16.9% 21.0%

SPECTRA 800-711-6141 25.7% 21.7% 20.2%

GUARDIAN PARK AVENUE A 800-221-3253 23.0% 31.7% 20.1%

FIRST EAGLE FUND OF AMERICA* 800-451-3623 22.5% 25.6% 20.0%

THIRD AVENUE VALUE* 800-443-1021 20.6% 29.2% 20.0%

HARBOR CAPITAL APPRECIATION 800-422-1050 20.9% 27.0% 19.7%

STRONG SCHAFER VALUE* 800-368-1030 21.0% 31.4% 19.7%

SOUND SHORE 800-551-1980 21.9% 37.3% 19.6%

ENTERPRISE GROWTH A 800-432-4320 21.6% 26.7% 19.0%

PAPP AMERICA-ABROAD 800-421-4004 19.4% 28.1% 18.9%

MAINSTAY CAPITAL APPRECIATION B 800-624-6782 19.1% 19.0% 18.7%

VANGUARD INDEX GROWTH 800-992-0414 19.2% 30.6% 18.7%

NEUBERGER & BERMAN PARTNERS 800-877-9700 21.0% 30.1% 18.6%

DAVIS GROWTH OPPORTUNITY B 800-279-0279 19.7% 36.2% 18.6%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[PBHG GROWTH] NONE 1.25% 29.0 $5,794 Gary L. Pilgrim

[LEGG MASON VALUE TRUST] NONE 1.77% 16.9 $3,518 William H. Miller III

[ROBERTSON STEPHENS VALUE+GROWTH A*] NONE 1.51% 23.5 $802 Ronald E. Elijah

[VANGUARD/PRIMECAP] NONE 0.59% 16.3 $7,811 Multiple managers

[FRANKLIN CALIFORNIA GROWTH I] 4.50% 1.08% 16.6 $535 C. Herrmann/N. Moore

[OAKMARK*] NONE 1.18% 12.6 $6,615 Robert J. Sanborn

[TORRAY] NONE 1.25% 13.2 $478 R. Torray/D. Eby

[WHITE OAK GROWTH STOCK] NONE 0.95% 21.2 $361 J. Oelschlager/D. MacKay

[MERRILL LYNCH GROWTH B] 4.00%[3] 1.82% 16.4 $4,707 Stephen Johnes

[SAFECO GROWTH NO LOAD] NONE[4] 1.02% 20.9 $435 Thomas M. Maguire

[T. ROWE PRICE MID-CAP GROWTH] NONE 1.04% 14.7 $1,705 Brian W.H. Berghuis

[MFS EMERGING GROWTH B] 4.00% 2.00% 21.8 $5,217 John W. Ballen

[SPECTRA] NONE 2.52% 23.3 $76 David Alger

[GUARDIAN PARK AVENUE A] 4.50% 0.79% 13.4 $2,145 Charles E. Albers

[FIRST EAGLE FUND OF AMERICA*] NONE 1.80% 14.6 $254 D. Cohen/H. Levy

[THIRD AVENUE VALUE*] NONE 1.21% 11.4 $1,644 Martin J. Whitman

[HARBOR CAPITAL APPRECIATION] NONE 0.75% 18.4 $2,798 Spiros Segalas

[STRONG SCHAFER VALUE*] NONE 1.27% 12.4 $1,318 David K. Schafer

[SOUND SHORE] NONE 1.15% 12.3 $1,116 H. Burn III/G. Kane Jr.

[ENTERPRISE GROWTH A] 4.75% 1.53% 16.4 $388 Ronald E. Canakaris

[PAPP AMERICA-ABROAD] NONE 1.25% 14.9 $269 L.R. Papp/R. Papp

[MAINSTAY CAPITAL APPRECIATION B] 5.00% 1.60% 17.7 $1,792 R. Carryl/E. Spelman

[VANGUARD INDEX GROWTH] NONE 0.20% 13.7 $2,133 Gus Sauter

[NEUBERGER & BERMAN PARTNERS] NONE 0.84% 13.7 $3,167 M. Kassen/R. Gendelman

[DAVIS GROWTH OPPORTUNITY B] 4.00%[3] 2.25% 23.0 $61 Graham Y. Tanaka

GROWTH AND INCOME[5] HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 17.5% 24.8% 15.5%

BABSON VALUE 800-422-2766 21.5% 27.2% 20.4%

DODGE & COX STOCK 800-621-3979 21.3% 28.6% 20.2%

MUHLENKAMP 800-860-3863 20.2% 30.2% 20.0%

KEMPER-DREMAN HIGH RETURN EQUITY A 800-621-1048 21.9% 27.4% 19.7%

VANGUARD INDEX VALUE 800-992-0414 20.3% 25.8% 19.3%

VANGUARD INDEX 500 800-992-0414 19.8% 28.4% 19.2%

AARP GROWTH & INCOME 800-322-2282 20.3% 29.2% 19.1%

VANGUARD/WINDSOR II 800-992-0414 20.2% 27.5% 18.8%

HOMESTEAD VALUE 800-258-3030 19.6% 24.5% 18.8%

DREYFUS DISCIPLINED STOCK 800-373-9387 20.1% 28.4% 18.8%

T. ROWE PRICE EQUITY INDEX 800-638-5660 19.6% 28.1% 18.8%

PREFERRED VALUE 800-662-4769 19.4% 24.2% 18.8%

VANGUARD GROWTH & INCOME 800-992-0414 20.6% 29.8% 18.7%

SCUDDER GROWTH & INCOME 800-225-2470 20.1% 28.9% 18.6%

STAR RELATIVE VALUE 800-677-3863 20.2% 27.5% 18.5%

VANGUARD INDEX TOTAL STOCK MARKET 800-992-0414 18.8% 27.4% 18.2%

DOMINI SOCIAL EQUITY 800-762-6814 18.6% 30.1% 18.2%

SMITH BREEDEN EQUITY PLUS* 800-221-3138 21.0% 28.4% 18.2%

PELICAN 800-447-3167 19.8% 25.7% 18.1%

MERRILL LYNCH BASIC VALUE B 800-637-3863 19.4% 25.9% 18.1%

HIGHMARK VALUE MOMENTUM 800-433-6884 19.9% 25.5% 17.9%

STAGECOACH CORPORATE STOCK 800-222-8222 18.7% 27.1% 17.9%

JOHN HANCOCK INDEPENDENCE EQUITY A 800-225-5291 19.7% 24.9% 17.9%

T. ROWE PRICE EQUITY INCOME 800-638-5660 19.4% 23.8% 17.8%

LEGG MASON TOTAL RETURN TRUST 800-577-8589 19.2% 33.6% 17.8%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[BABSON VALUE] NONE[6] 0.96% 11.5 $1,332 Nick Whitridge

[DODGE & COX STOCK] NONE 0.59% 12.0 $3,847 Multiple managers

[MUHLENKAMP] NONE 1.56% 13.3 $110 Ronald H. Muhlenkamp

[KEMPER-DREMAN HIGH RETURN Equity A] 5.75%[7] 1.25% 13.5 $1,232 David N. Dreman

[VANGUARD INDEX VALUE] NONE[8] 0.20% 12.2 $1,648 Gus Sauter

[VANGUARD INDEX 500] NONE[8] 0.20% 12.5 $45,872 Gus Sauter

[AARP GROWTH & INCOME] NONE 0.69% 11.3 $6,605 Multiple managers

[VANGUARD/WINDSOR II] NONE 0.39% 11.4 $22,568 Multiple managers

[HOMESTEAD VALUE] NONE 0.73% 10.6 $362 S. Teach/P. Morris

[DREYFUS DISCIPLINED STOCK] NONE 0.90% 12.8 $1,475 Bert J. Mullins

[T. ROWE PRICE EQUITY INDEX] NONE[9] 0.40%[10] 12.5 $1,734 Richard T. Whitney

[PREFERRED VALUE] NONE 0.85% 12.0 $385 John G. Lindenthal

[VANGUARD GROWTH & INCOME] NONE[8] 0.38% 13.3 $1,944 John J. Nagorniak

[SCUDDER GROWTH & INCOME] NONE 0.78% 11.3 $6,425 Multiple managers

[STAR RELATIVE VALUE] 4.50% 1.04% 12.5 $35 Joe Belew

[VANGUARD INDEX TOTAL STOCK MARKET] NONE[8] 0.22% 12.2 $4,621 Gus Sauter

[DOMINI SOCIAL EQUITY] NONE 0.98% 12.9 $236 Multiple managers

[SMITH BREEDEN EQUITY PLUS*] NONE 0.88% 12.6 $64 John Sprow

[PELICAN] NONE 1.10% 11.0 $200 Richard A. Mayo

[MERRILL LYNCH BASIC VALUE B] 4.00%[3] 1.58% 10.8 $4,377 Paul M. Hoffmann

[HIGHMARK VALUE MOMENTUM] 4.50% 0.89% 11.7 $24 Richard Earnest

[STAGECOACH CORPORATE STOCK] NONE 1.01% 12.3 $491 Multiple managers

[JOHN HANCOCK INDEPENDENCE EQUITY A] 5.00% 1.30% 12.2 $61 Multiple managers

[T. ROWE PRICE EQUITY INCOME] NONE 0.81% 8.8 $11,764 Brian C. Rogers

[LEGG MASON TOTAL RETURN TRUST] NONE 1.93% 12.2 $533 Nancy T. Dennin

*Fund will not declare capital gains Dec. 7-31, 1997. [1]Performance is through Nov. 14, 1997, and net of annual expenses, brokerage costs, and sales loads; also net of taxes, assuming the new 20% long-term rate for capital gains and income distributions. [2]Average annual return for all funds tracked by Morningstar in each category. [3]Deferred sales charge, which declines over time. [4]Limited to four exchanges per year to deter market timing. [5]Includes growth-and-income and equity-income funds. [6]New money must stay in fund for 15 days before withdrawal. [7]Additional 1% redemption fee on shares held for the first 12 months. [8]Telephone exchange privileges available only on IRA accounts. [9]Additional 0.5% fee on shares held less than six months. [10]Carries $10 annual administrative fee.

INTERNATIONAL FUNDS: BETTER THAN YOU THINK

The International arena hasn't been particularly rewarding over the past five years because of wretched returns in Japan. But take Japan out of the mix, and "the markets would look a lot like the U.S. and a whole lot better," says Morningstar President Don Phillips. Europe in particular has benefited from ongoing privatization and deregulation, as well as a significant reduction in interest rates. A study by Hotchkis & Wiley, a Los Angeles-based money manager, shows that over this time period the U.S. ranked as one of the top five major stock markets only in '92 and '94, and never topped the list.

We have become "desensitized as American investors because our markets have been so phenomenal over the past five years," says Gus Sauter, who manages Vanguard's International Equity European Index and International Equity Index Pacific, among others, "but international markets look attractive on a relative basis because they are less expensive." Of course, the recent events in Asia have made those markets cheaper still. While the situation is still too dicey for most, a number of fund managers are taking note of the bargains in Japan. Harry Hartford of Hotchkis & Wiley International holds 11% of his portfolio in Japan, including household names like Sony, Toyota, and Canon--companies, he says, that are strong enough to survive the turmoil. Since these are big exporting companies, they should also benefit from the weaker yen. As for the rest of Asia, tread carefully. Stock prices have come down sharply, but so too have the growth rates of many Asian economies. John Horseman, manager of the top-ranked Gam International fund as well as the No. 2-ranked Gam Global fund, says the bets are still better in Europe. Of course, one of the joys of owning a fund is that you can leave those big decisions to the managers.

REPORTER ASSOCIATE Maura Griffin Solovar

INTERNATIONAL HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 13.2% 5.5% 12.1%

GAM INTERNATIONAL A 800-426-4685 21.0% 21.4% 18.1%

FIDELITY DIVERSIFIED INTERNATIONAL* 800-544-8888 17.1% 12.4% 16.5%

PUTNAM INTERNATIONAL GROWTH A 800-225-1581 17.8% 16.6% 16.1%

HOTCHKIS & WILEY INTERNATIONAL 800-236-4479 16.4% 9.0% 15.8%

OAKMARK INTERNATIONAL 800-625-6275 16.2% 9.1% 15.2%

PREFERRED INTERNATIONAL 800-662-4769 15.7% 8.7% 15.2%

MANAGERS INTERNATIONAL EQUITY 800-835-3879 14.9% 8.7% 14.4%

USAA INTERNATIONAL 800-382-8722 15.0% 9.4% 14.2%

VANGUARD INTERNATIONAL GROWTH 800-992-0414 14.2% 2.4% 13.7%

AIM INTERNATIONAL EQUITY A 800-347-4246 14.9% 4.5% 13.2%

WARBURG PINCUS INTL. EQUITY 800-927-2874 12.9% -2.9% 12.4%

T. ROWE PRICE INTERNATIONAL STOCK 800-638-5660 12.4% 0.6% 11.6%

SCUDDER INTERNATIONAL 800-225-2470 12.3% 5.9% 11.5%

SIT INTERNATIONAL GROWTH 800-332-5580 12.0% 1.2% 11.4%

TEMPLETON FOREIGN I 800-342-5236 14.1% 10.0% 11.4%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[GAM INTERNATIONAL A] 5.00% 1.56% 19.7 $1,614 John R. Horseman

[FIDELITY DIVERSIFIED INTERNATIONAL*] NONE 1.27% 13.4 $1,504 Gregory Fraser

[PUTNAM INTERNATIONAL GROWTH A] 5.75% 1.74% 15.0 $1,000 Multiple managers

[HOTCHKIS & WILEY INTERNATIONAL] NONE 1.00% 13.0 $1,020 Multiple managers

[OAKMARK INTERNATIONAL] NONE 1.32% 16.0 $1,647 D. Herro/M. Welsh

[PREFERRED INTERNATIONAL] NONE 1.25% 14.2 $236 Peter F. Spano

[MANAGERS INTERNATIONAL EQUITY] NONE 1.53% 12.0 $385 W. Holzer/J. Reinsberg

[USAA INTERNATIONAL] NONE 1.09% 14.0 $659 Multiple managers

[VANGUARD INTERNATIONAL GROWTH] NONE 0.57% 14.9 $6,982 Richard R. Foulkes

[AIM INTERNATIONAL EQUITY A] 5.50% 1.57% 15.1 $1,543 Multiple managers

[WARBURG PINCUS INTL. EQUITY] NONE 1.37% 17.2 $2,316 Richard H. King

[T. ROWE PRICE INTERNATIONAL STOCK] NONE 0.88% 14.3 $10,005 Multiple managers

[SCUDDER INTERNATIONAL] NONE 1.15% 13.5 $2,659 Multiple managers

[SIT INTERNATIONAL GROWTH] NONE 1.50% 15.3 $89 A. Kim/E. Sit

[TEMPLETON FOREIGN I] 5.75% 1.12% 10.7 $14,182 Mark G. Holowesko

GLOBAL/WORLD HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 13.8% 9.7% 12.0%

JANUS WORLDWIDE 800-525-8983 19.9% 16.8% 18.9%

GAM GLOBAL A 800-426-4685 22.4% 29.0% 18.9%

SELIGMAN HENDERSON GLB. SMALLER CO. A* 800-221-2450 19.8% 4.2% 17.8%

IDEX GLOBAL A 888-233-4339 19.4% 16.5% 17.3%

FIDELITY WORLDWIDE 800-544-8888 15.0% 11.6% 14.3%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[JANUS WORLDWIDE] NONE 1.01% 13.3 $10,304 Helen Young Hayes

[GAM GLOBAL A] 5.00% 2.26% 20.7 $49 John R. Horseman

[SELIGMAN HENDERSON GLB. SMALLER CO. A*] 4.75%[3] 1.75% 14.4 $434 I. Clark/A. Mrakovcic

[IDEX GLOBAL A] 5.50% 2.06% 14.7 $217 Helen Young Hayes

[FIDELITY WORLDWIDE] NONE 1.18% 12.1 $1,141 Penelope A. Dobkin

*Fund will not declare capital gains Dec. 7-31, 1997. [1]Performance is through Nov. 14, 1997, and net of annual expenses, brokerage costs, and sales loads; also net of taxes, assuming the new 20% long-term rate for capital gains and income distributions. [2]Average annual return for all funds tracked by Morningstar in each category. [3]Sales load is waived on purchases greater than $1 million but is subject to an additional 1% fee on shares held less than 18 months.

GLOBAL/WORLD (CONT.) HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 YRS. 1 YR. 5 YRS.

OPPENHEIMER GLOBAL A 800-525-7048 17.1% 19.5% 14.3%

SCUDDER GLOBAL DISCOVERY 800-225-2470 14.8% 7.5% 14.3%

TEMPLETON GROWTH I 800-342-5236 17.6% 18.4% 14.1%

SMALLCAP WORLD 800-421-4120 16.9% 16.4% 13.9%

FORTIS GLOBAL GROWTH A* 800-800-2638 14.9% 6.4% 13.8%

NEW PERSPECTIVE 800-421-4120 16.1% 13.5% 13.6%

FOUNDERS WORLDWIDE GROWTH 800-525-2440 14.1% 11.5% 13.5%

SCUDDER GLOBAL 800-225-2470 14.3% 13.3% 13.5%

MFS WORLD EQUITY B 800-637-2929 14.7% 14.2% 13.3%

PRUDENTIAL WORLD GLOBAL B 800-225-1852 13.9% 3.9% 13.2%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[OPPENHEIMER GLOBAL A] 5.75% 1.17% 14.2 $3,185 William L. Wilby

[SCUDDER GLOBAL DISCOVERY] NONE 1.60% 13.0 $347 Multiple managers

[TEMPLETON GROWTH I] 5.75% 1.08% 11.3 $12,233 Mark G. Holowesko

[SMALLCAP WORLD] 5.75% 1.09% 13.2 $8,899 Multiple managers

[FORTIS GLOBAL GROWTH A*] 4.75% 1.51% 15.7 $125 J. Byrd/S. Poling

[NEW PERSPECTIVE] 5.75% 0.82% 11.6 $15,954 Multiple managers

[FOUNDERS WORLDWIDE GROWTH] NONE 1.53% 13.1 $347 Michael W. Gerding

[SCUDDER GLOBAL] NONE 1.34% 11.3 $1,532 Multiple managers

[MFS WORLD EQUITY B] 4.00% 2.45% 12.1 $263 David R. Mannheim

[PRUDENTIAL WORLD GLOBAL B] 5.00% 2.12% 15.0 $334 Multiple managers

REGIONAL HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 8.2% -9.5% 7.1% PUTNAM EUROPE GROWTH A 800-225-1581 19.9% 22.2% 17.8%

VANGUARD INTL. EQUITY INDEX EUROPEAN 800-992-0414 18.2% 21.5% 17.6%

T. ROWE PRICE EUROPEAN STOCK 800-638-5660 17.9% 16.0% 17.5%

FIDELITY EUROPE* 800-544-8888 18.6% 19.1% 17.1%

INVESCO EUROPEAN 800-525-8085 15.5% 12.5% 14.5%

EUROPACIFIC GROWTH 800-421-4120 14.7% 7.9% 12.4%

TEMPLETON DEVELOPING MARKETS I 800-342-5236 13.0% -2.6% 11.0%

MERRILL LYNCH LATIN AMERICA B 800-637-3863 8.9% 12.0% 8.5%

PUTNAM ASIA PACIFIC GROWTH A 800-225-1581 8.9% -15.5% 7.1%

MERRILL LYNCH PACIFIC B 800-637-3863 7.3% -9.2% 6.5%

MONTGOMERY EMERGING MARKETS 800-572-3863 6.6% -8.9% 6.3%

GOVETT EMERGING MARKETS A* 800-821-0803 6.9% -9.9% 4.8%

JOHN HANCOCK PACIFIC BASIN EQUITIES A 800-225-5291 4.4% -26.3% 3.1%

GAM PACIFIC BASIN A 800-426-4685 4.9% -26.1% 2.2%

VANGUARD INTL. EQUITY INDEX PACIFIC 800-992-0414 2.1% -30.4% 1.8%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[PUTNAM EUROPE GROWTH A] 5.75% 1.47% 13.5 $386 Multiple managers

[VANGUARD INTL. EQUITY INDEX EUROPEAN] NONE[3] 0.35% 13.3 $2,287 Gus Sauter

[T. ROWE PRICE EUROPEAN STOCK] NONE 1.12% 12.5 $984 Multiple managers

[FIDELITY EUROPE*] 3.00%[4] 1.27% 12.5 $916 Sally E. Walden

[INVESCO EUROPEAN] NONE 1.36% 13.5 $310 Steven Chamberlain

[EUROPACIFIC GROWTH] 5.75% 0.90% 12.7 $18,831 Multiple managers

[TEMPLETON DEVELOPING MARKETS I]5.75% 2.03% 18.6 $3,860 J. Mark Mobius

[MERRILL LYNCH LATIN AMERICA B] 4.00%[5] 2.54% 28.6 $691 Grace Pineda

[PUTNAM ASIA PACIFIC GROWTH A] 5.75% 1.54% 17.8 $442 D. Thomas/P. Warren

[MERRILL LYNCH PACIFIC B 4.00%[5] 1.90% 16.4 $1,144 Stephen I. Silverman

[MONTGOMERY EMERGING MARKETS NONE 1.67% 19.6 $1,027 B. Sudweeks/J. Jimenez

[GOVETT EMERGING MARKETS A* 4.95%[6] 2.38% 22.2 $37 Rachael Maunder

[JOHN HANCOCK PACIFIC BASIN EQUITIES A] 5.00% 1.97% 20.9 $28 Multiple managers

[GAM PACIFIC BASIN A] 5.00% 1.76% 19.7 $38 Michael S. Bunker

[VANGUARD INTL. EQUITY INDEX PACIFIC] NONE[7] 0.35% 21.0 $927 Gus Sauter

*Fund will not declare capital gains Dec. 7-31, 1997. [1]Performance is through Nov. 14, 1997, and net of annual expenses, brokerage costs, and sales loads; also net of taxes, assuming the new 20% long-term rate for capital gains and income distributions. [2]Average annual return for all funds tracked by Morningstar in each category. [3]Telephone exchange privileges available only on IRA accounts. [4]Additional 1% redemption fee on shares held for less than 90 days. [5]Deferred sales charge, which declines over time. [6]Signature guarantee required on redemptions greater than $50,000. [7]No telephone withdrawals.

HYBRID FUNDS: A SAFER WAY TO PLAY STOCKS

Unwilling to put all your eggs into the stock market, but turned off by the lower returns from bonds? Then a hybrid fund may be the perfect compromise. Balanced funds, for example, classically consist of a 60-40 equity-to-bond split--an especially high-octane blend over the past year. Since most of the bonds they carry are taxable, balanced funds are perfectly suited for 401(k) investors, says Ken Olivier, a portfolio manager at Dodge & Cox Balanced fund. Balanced funds are also appropriate for people who want exposure to the stock market's growth but not its volatility. One look at the standard deviation on these funds makes that point clear--most show standard deviations under ten, while pure stock funds are almost always higher. Another alternative to a straight stock play is a convertible bond fund. Convertibles are "stocks with shock absorbers," says Michael Rosen at Oppenheimer Bond Fund for Growth. That is, they will respond to moves in the underlying stocks, but in a down-market they perform better than stocks because of their bondlike yields. In general, converts are expensive now, so their upside is limited. But they still make for a nice cushion.

BALANCED HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 12.8% 17.0% 10.9%

FLAG INVESTORS VALUE BUILDER A 800-767-3524 17.8% 24.4% 15.9%

DODGE & COX BALANCED 800-621-3979 16.2% 20.4% 15.1%

GREENSPRING 800-366-3863 16.5% 24.7% 14.7%

GABELLI/WESTWOOD BALANCED 800-422-3554 17.7% 21.5% 14.6%

ECLIPSE BALANCED* 800-872-2710 15.1% 21.5% 13.3%

VANGUARD BALANCED INDEX 800-992-0414 14.1% 19.4% 13.3%

VAN ECK/CHUBB TOTAL RETURN 800-452-4822 15.6% 24.7% 13.0%

MAINSTAY TOTAL RETURN B 800-624-6782 13.5% 14.6% 12.7%

VISTA BALANCED A 800-348-4782 14.8% 19.1% 12.6%

T. ROWE PRICE BALANCED 800-638-5660 13.5% 16.3% 12.5%

COLUMBIA BALANCED 800-547-1707 13.7% 17.0% 12.3%

CGM MUTUAL 800-345-4048 14.1% 13.9% 12.3%

THOMPSON PLUMB BALANCED 800-999-0887 14.1% 22.7% 12.2%

KEYSTONE BALANCED (K-1)* 800-343-2898 12.7% 16.0% 11.5%

HOTCHKIS & WILEY BALANCED INCOME 800-236-4479 13.2% 14.9% 11.4%

NEW ENGLAND BALANCED A* 800-225-5478 14.5% 16.9% 11.4%

VANGUARD/WELLESLEY INCOME 800-992-0414 13.0% 16.4% 11.3%

SUNAMERICA BALANCED ASSETS B 800-858-8850 13.7% 18.3% 11.3%

AMERICAN BALANCED 800-421-4120 14.2% 18.8% 11.2%

PARNASSUS INCOME BALANCED 800-999-3505 12.7% 13.2% 11.2%

PAX WORLD 800-767-1729 11.9% 18.0% 10.8%

USAA GROWTH & TAX STRATEGY 800-382-8722 11.8% 14.3% 10.6%

IDS MUTUAL A 800-328-8300 13.6% 18.2% 10.5%

DELAWARE A 800-523-4640 13.4% 20.2% 10.5%

IAI BALANCED 800-945-3863 12.1% 24.3% 10.4%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[FLAG INVESTORS VALUE BUILDER A] 4.50% 1.27% 9.0 $382 Hobart C. Buppert III

[DODGE & COX BALANCED] NONE 0.56% 8.4 $5,307 Multiple managers

[GREENSPRING] NONE 1.04% 6.7 $170 Charles v.K. Carlson

[GABELLI/WESTWOOD BALANCED] NONE 1.32% 8.3 $70 S. Byrne/P. Fraze

[ECLIPSE BALANCED*] NONE 0.80% 7.6 $86 W. McCain/J. Sabella

[VANGUARD BALANCED INDEX] NONE[3] 0.20% 8.1 $1,172 Multiple managers

[VAN ECK/CHUBB TOTAL RETURN] 5.00% 1.08% 9.7 $47 M. O'Reilly/R. Witkoff

[MAINSTAY TOTAL RETURN B] 5.00% 1.60% 10.7 $1,180 Multiple managers

[VISTA BALANCED A] 4.50% 1.25% 7.8 $93 G. Adams/P. Quilty Jr.

[T. ROWE PRICE BALANCED] NONE 0.87% 7.7 $1,200 Richard T. Whitney

[COLUMBIA BALANCED] NONE 0.66% 7.2 $790 Michael W. Powers

[CGM MUTUAL] NONE 0.87% 12.4 $1,218 G. Kenneth Heebner

[THOMPSON PLUMB BALANCED] NONE 1.45% 10.5 $35 Thomas G. Plumb

[KEYSTONE BALANCED (K-1)*] 4.00%[4] 1.69% 8.3 $1,596 Walter T. McCormick

[HOTCHKIS & WILEY BALANCED INCOME] NONE 0.98% 6.1 $96 Multiple managers

[NEW ENGLAND BALANCED A*] 5.75% 1.33% 8.6 $231 Multiple managers

[VANGUARD/WELLESLEY INCOME] NONE 0.31% 7.7 $7,436 E. McEvoy/J. Ryan

[SUNAMERICA BALANCED ASSETS B] 4.00%[4] 2.12% 9.8 $172 Multiple managers

[AMERICAN BALANCED] 5.75% 0.67% 7.1 $4,901 Multiple managers

[PARNASSUS INCOME BALANCED] NONE 0.80% 7.9 $36 Jerome L. Dodson

[PAX WORLD] NONE 0.89% 7.6 $593 Anthony S. Brown

[USAA GROWTH & TAX STRATEGY] NONE 0.74% 6.1 $202 Multiple managers

[IDS MUTUAL A] 5.00%[5] 0.87% 7.7 $3,198 E. Labenski Jr./T. Medcalf

[DELAWARE A] 4.75% 0.99% 8.3 $555 G. Burwell/G. Reed

[IAI BALANCED] NONE 1.25% 10.1 $51 L. Hill/D. Hoelting

CONVERTIBLE BOND HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 12.8% 17.8% 10.6%

DAVIS CONVERTIBLE SECURITIES A 800-279-0279 18.4% 32.0% 15.7%

OPPENHEIMER BOND FUND FOR GROWTH M 800-525-7048 15.4% 18.1% 13.2%

FRANKLIN CONVERTIBLE SECURITIES I* 800-342-5236 16.0% 20.3% 13.0%

PUTNAM CONVERTIBLE INCOME-GROWTH A 800-225-1581 15.4% 20.4% 12.0%

VALUE LINE CONVERTIBLE 800-223-0818 14.0% 15.7% 11.6%

SMITH BARNEY CONVERTIBLE B 800-451-2010 11.1% 17.9% 10.0%

VAN KAMPEN AMERICAN CAPITAL HARBOR A* 800-421-5666 11.7% 16.1% 8.5%

PHOENIX CONVERTIBLE A 800-243-4361 10.6% 15.7% 7.8%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[DAVIS CONVERTIBLE SECURITIES A] 4.75% 1.05% 10.8 $73 Andrew A. Davis

[OPPENHEIMER BOND FUND FOR GROWTH M] 3.25% 1.58% 7.8 $295 Michael S. Rosen

[FRANKLIN CONVERTIBLE SECURITIES I*] 4.50% 1.02% 8.8 $213 E. Jamieson/M. Cone

[PUTNAM CONVERTIBLE INCOME-GROWTH A] 5.75% 1.06% 8.1 $1,168 C. Pohl/E. Shadek Jr.

[VALUE LINE CONVERTIBLE] NONE 1.01% 7.6 $87 Multiple managers

SMITH BARNEY CONVERTIBLE B] 5.00%[4] 1.90% 6.8 $42 Robert E. Swab

[VAN KAMPEN AMERICAN CAPITAL HARBOR A*] 5.75% 1.09% 8.5 $401 J. Behrmann/C. Drusch

[PHOENIX CONVERTIBLE A] 4.75% 1.17% 6.4 $207 John Hamlin

*Fund will not declare capital gains Dec. 7-31, 1997. [1]Performance is through Nov. 14, 1997, and net of annual expenses, brokerage costs, and sales loads; also net of taxes, assuming the new 20% long-term rate for capital gains and income distributions. [2]Average annual return for all funds tracked by Morningstar in each category. [3]Telephone exchange privileges available only on IRA accounts. [4]Deferred sales charge, which declines over time. [5]Telephone redemption requests must be between $100 and $50,000.

BOUNTIFUL BONDS

One look at the double-digit returns below, and you might think that we were featuring hot stock market funds. Fact is, bond funds have been steamy investments in their own right, especially those venturing into lower-quality fare--junk funds returned 11.4% annually, on average, over the past five years. Thank a healthy economy and low inflation for that largesse: Not only have bond yields declined, generating capital gains, but the economic expansion has helped many companies achieve credit upgrades, further boosting bond prices. Analysts expect bond funds to continue offering a good alternative to stocks, but if you venture into this sector, make sure your fund stays true to its name. Bond funds have been known to wander far from their home turf in the quest for better returns. Says Nathan Grant of Value Line Aggressive Income Trust: "There's concern right now that there is a ton of assets chasing high yields." The best way to heed that warning is to read the prospectus carefully before you buy. Finally, in bond funds it pays to find those with low or no sales loads and average annual expenses below the bond fund average of around 1.0%.

CORPORATE: GENERAL HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 7.1% 7.2% 5.3%

STRONG CORPORATE BOND* 800-368-1030 11.2% 10.3% 9.6%

SMITH BARNEY INVESTMENT GRADE BOND B 800-451-2010 10.4% 10.7% 8.7%

VANGUARD PREFERRED STOCK 800-992-0414 10.0% 11.3% 8.4%

MANAGERS BOND 800-835-3879 9.7% 9.6% 7.9%

IVY BOND A 800-456-5111 9.6% 11.2% 6.7%

IDS BOND A 800-328-8300 9.5% 8.8% 6.6%

HARBOR BOND 800-422-1050 8.2% 7.6% 6.6%

WARBURG PINCUS FIXED INCOME 800-927-2874 7.9% 8.5% 6.5%

LEGG MASON INVESTMENT GRADE INCOME* 800-577-8589 7.8% 8.4% 6.1%

FPA NEW INCOME 800-982-4372 8.4% 8.0% 5.9%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[STRONG CORPORATE BOND*] NONE 1.00% 5.6 $464 J. Koch/J. Bender

[SMITH BARNEY INVESTMENT GRADE BOND B] 4.50%[3] 1.54% 10.8 $240 George E. Mueller Jr.

[VANGUARD PREFERRED STOCK] NONE 0.39% 5.9 $320 Earl E. McEvoy [MANAGERS BOND] NONE 1.36% 7.6 $38 Daniel J. Fuss

[IVY BOND A] 4.75% 1.56% 5.3 $103 Leslie A. Ferris

[IDS BOND A] 5.00%[4] 0.84% 5.2 $2,673 Frederick Quirsfeld

[HARBOR BOND] NONE 0.70% 4.6 $362 William H. Gross

[WARBURG PINCUS FIXED INCOME] NONE 0.75% 3.5 $264 D. Christensen/M.A. van Daalen

[LEGG MASON INVESTMENT GRADE INCOME*] NONE 0.88% 5.0 $110 Kent S. Engel

[FPA NEW INCOME] 4.50% 0.63% 2.5 $530 Robert L. Rodriguez

CORPORATE: JUNK HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 11.4% 13.6% 8.7%

NORTHEAST INVESTORS TRUST* 800-225-6704 14.9% 15.7% 12.8%

VALUE LINE AGGRESSIVE INCOME* 800-223-0818 13.4% 16.6% 11.4%

SELIGMAN HIGH-YIELD BOND A* 800-221-2783 13.8% 15.6% 10.5%

FIDELITY ADVISOR HIGH-YIELD T* 800-522-7297 13.1% 15.1% 10.2%

STATE STREET RESEARCH HIGH-INCOME A 800-882-0052 13.1% 15.4% 9.8%

VANGUARD F/I HIGH-YIELD CORPORATE 800-992-0414 11.2% 12.6% 9.3%

SMITH BARNEY HIGH-INCOME B* 800-451-2010 11.1% 13.8% 9.1%

FRANKLIN AGE HIGH INCOME I* 800-342-5236 12.0% 13.7% 8.9%

FIRST INVESTORS FUND FOR INCOME A* 800-423-4026 12.4% 12.0% 8.9%

AIM HIGH-YIELD A 800-347-4246 12.2% 14.1% 8.9%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[NORTHEAST INVESTORS TRUST*] NONE 0.66% 5.8 $2,073 E. Monrad/B. Monrad

[VALUE LINE AGGRESSIVE INCOME*] NONE 1.10% 4.9 $121 Multiple managers

[SELIGMAN HIGH-YIELD BOND A*] 4.75%[5] 1.16% 5.2 $676 Daniel J. Charleston

[FIDELITY ADVISOR HIGH-YIELD T*] 3.50% 1.11% 5.3 $2,197 Margaret Eagle

[STATE STREET RESEARCH HIGH-INCOME A] 4.50% 1.10% 5.3 $702 Bartlett R. Geer

[VANGUARD F/I HIGH-YIELD CORPORATE] 1.00%[6] 0.29% 4.8 $4,387 Earl E. McEvoy

[SMITH BARNEY HIGH-INCOME B*] 4.50%[3] 1.59% 5.2 $702 John C. Bianchi

[FRANKLIN AGE HIGH INCOME I*] 4.25% 0.71% 4.9 $2,880 C. Molumphy/M. Wiskemann

[FIRST INVESTORS FUND FOR INCOME A*] 6.25% 1.16% 4.2 $437 Nancy W. Jones

[AIM HIGH-YIELD A] 4.75% 0.97% 4.8 $1,608 J. Pessarra/K. Rogers

GOVERNMENT: GENERAL HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 5.8% 6.5% 4.1%

AMERICAN CENTURY-BENHAM L-T TREASURY 800-345-2021 9.4% 10.5% 7.8%

STRONG GOVERNMENT SECURITIES* 800-368-1030 8.1% 8.0% 6.5%

HEARTLAND U.S. GOVERNMENT SECURITIES 800-432-7856 7.7% 8.2% 6.0%

SIT U.S. GOVERNMENT SECURITIES 800-332-5580 6.7% 7.6% 5.2%

GRADISON GOVERNMENT INCOME* 800-869-5999 6.4% 6.9% 5.0%

STATE STREET RESEARCH GOV. INCOME A 800-882-0052 7.2% 7.7% 4.9%

FIDELITY SPARTAN LIMITED MATURITY GOV. 800-544-8888 6.2% 6.8% 4.8%

VAN ECK/CHUBB GOVERNMENT SECURITIES 800-452-4822 7.0% 7.4% 4.8%

DEAN WITTER U.S. GOV. SECURITIES B 800-869-6397 6.3% 7.1% 4.8%

DEAN WITTER FEDERAL SECURITIES B 800-869-6397 6.2% 6.9% 4.7%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[AMERICAN CENTURY-BENHAM L-T TREASURY] NONE 0.60% 9.5 $117 David W. Schroeder

[STRONG GOVERNMENT SECURITIES*] NONE 0.90% 4.7 $810 B. Tank/J. Bender

[HEARTLAND U.S. GOVERNMENT SECURITIES] NONE 1.06% 6.5 $46 P. Retzer/D. Rogers

[SIT U.S. GOVERNMENT SECURITIES] NONE 0.80% 2.0 $91 M. Brilley/B. Doty

[GRADISON GOVERNMENT INCOME*] NONE 0.90% 4.0 $154 M. Link/S. Wesselkamper

[STATE STREET RESEARCH GOV. INCOME A] 4.50% 1.09% 4.2 $524 John H. Kallis

[FIDELITY SPARTAN LIMITED MATURITY GOV.] NONE 0.38% 2.7 $745 Curtis Hollingsworth

[VAN ECK/CHUBB GOVERNMENT SECURITIES] 3.00%[3] 0.93% 4.7 $31 Ned Gerstman

[DEAN WITTER U.S. GOV. SECURITIES B] 5.00%[3] 1.24% 4.1 $5,573 Rajesh K. Gupta

[DEAN WITTER FEDERAL SECURITIES B] 5.00%[3] 1.52% 5.1 $623 Rajesh K. Gupta

*Fund will not declare capital gains Dec. 7-31, 1997. [1]Performance is through Nov. 14, 1997, and net of annual expenses, brokerage costs, and sales loads; also net of taxes, assuming the new 20% long-term rate for capital gains and income distributions. [2]Average annual return for all funds tracked by Morningstar in each category. [3]Deferred sales charge, which declines over time. [4]Telephone redemption requests must be between $100 and $50,000. [5]Sales load is waived on purchases greater than $1 million but is subject to an additional 1% fee on shares held less than 18 months. [6]Additional 1% redemption fee on shares held for the first 12 months.

GOVERNMENT: MORTGAGE HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 6.4% 7.2% 4.5%

SMITH BREEDEN INTERM.-DUR. U.S. GOV.* 800-221-3138 8.0% 7.9% 6.3%

LEXINGTON GNMA INCOME* 800-526-0056 7.5% 8.7% 6.1%

ACCESSOR MORTGAGE SECURITIES 800-759-3504 7.1% 8.8% 5.8%

T. ROWE PRICE GNMA 800-638-5660 6.9% 7.9% 5.4%

WRIGHT CURRENT INCOME 800-888-9471 6.7% 7.1% 5.3%

PRINCOR GOV. SECURITIES INCOME A* 800-247-4123 7.3% 7.7% 4.8%

SAFECO GNMA 800-426-6730 6.2% 7.9% 4.8%

ADVANTUS MORTGAGE SECURITIES INCOME A 800-665-6005 7.2% 8.4% 4.5%

FRANKLIN U.S. GOVERNMENT SECURITIES I* 800-342-5236 6.9% 8.2% 4.5%

SMITH BARNEY MANAGED GOVERNMENTS A* 800-451-2010 6.7% 7.3% 4.4%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[SMITH BREEDEN INTERM.-DUR. U.S. GOV.*] NONE 0.88% 4.1 $48 Daniel C. Dektar

[LEXINGTON GNMA INCOME*] NONE 1.05% 3.5 $150 Denis P. Jamison

[ACCESSOR MORTGAGE SECURITIES] NONE[3] 0.95% 3.5 $107 Multiple managers

[T. ROWE PRICE GNMA] NONE 0.74% 4.0 $1,022 Peter Van Dyke

[WRIGHT CURRENT INCOME] NONE 0.90% 4.1 $76 Multiple managers

[PRINCOR GOV. SECURITIES INCOME A*] 4.75% 0.81% 5.3 $250 Martin J. Schafer

[SAFECO GNMA] NONE[4] 1.03% 4.0 $39 Paul A. Stevenson

[ADVANTUS MORTGAGE SECURITIES INCOME A] 5.00% 1.26% 4.5 $28 Kent R. Weber

[FRANKLIN U.S. GOVERNMENT SECURITIES I*] 4.25% 0.61% 3.6 $9,336 Jack Lemein

[SMITH BARNEY MANAGED GOVERNMENTS A*] 4.50% 1.04% 4.3 $397 James E. Conroy

GOVERNMENT: TREASURY HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 6.9% 6.8% 5.4%

VANGUARD F/I LONG-TERM U.S. TREASURY 800-662-7447 9.7% 9.4% 7.8%

T. ROWE PRICE U.S. TREASURY LONG-TERM 800-638-5660 8.7% 10.0% 7.1%

WRIGHT U.S. TREASURY 800-888-9471 8.1% 6.8% 6.7%

VANGUARD F/I INTERM. U.S. TREASURY 800-992-0414 7.4% 6.7% 5.9%

ISI TOTAL RETURN U.S. TREASURY 800-955-7175 7.9% 7.6% 5.2%

T. ROWE PRICE U.S. TREASURY INTERM. 800-638-5660 6.2% 6.4% 4.9%

AMER. CENTURY-BENHAM INTERM. TREAS.* 800-345-2021 6.1% 6.7% 4.7%

STAGECOACH U.S. GOV. ALLOCATION A 800-222-8222 7.1% 5.8% 4.6%

WARBURG PINCUS INTERM. MATURITY GOV. 800-927-2874 6.2% 6.2% 4.5%

VANGUARD F/I SHORT-TERM U.S. TREASURY 800-992-0414 5.7% 5.9% 4.5%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[VANGUARD F/I LONG-TERM U.S. TREASURY] NONE 0.25% 9.0 $955 I. MacKinnon/R. Auwaerter

[T. ROWE PRICE U.S. TREASURY LONG-TERM] NONE 0.80% 8.5 $161 Peter Van Dyke

[WRIGHT U.S. TREASURY] NONE 0.90% 8.0 $72 Multiple managers

[VANGUARD F/I INTERM. U.S. TREASURY] NONE 0.25% 5.4 $1,422 Multiple managers

[ISI TOTAL RETURN U.S. TREASURY] 4.45% 0.81% 6.4 $295 R.A. Medaugh/E. Hyman

[T. ROWE PRICE U.S. TREASURY INTERM.] NONE 0.64% 3.7 $193 Charles P. Smith

[AMER. CENTURY-BENHAM INTERM. TREAS.*] NONE 0.51% 3.6 $361 David W. Schroeder

[STAGECOACH U.S. GOV. ALLOCATION A] 4.50% 1.12% 5.6 $82 Multiple managers

[WARBURG PINCUS INTERM. MATURITY GOV.] NONE 0.60% 3.5 $48 D. Christensen/M.A. van Daalen

[VANGUARD F/I SHORT-TERM U.S. TREASURY] NONE 0.25% 2.3 $983 Multiple managers

*Fund will not declare capital gains Dec. 7-31, 1997. [1]Performance is through Nov. 14, 1997, and net of annual expenses, brokerage costs, and sales loads; also net of taxes, assuming the new 20% long-term rate for capital gains and income distributions. [2]Average annual return for all funds tracked by Morningstar in each category. [3]Additional fee for checks issued. [4]Limited to four exchanges per year to deter market timing.

MUNICIPAL: NATIONAL HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 6.5% 6.7% 5.9%

EXCELSIOR LONG-TERM TAX-EXEMPT* 800-446-1012 9.0% 7.7% 8.3%

UNITED MUNICIPAL HIGH-INCOME A 800-366-5465 8.7% 10.4% 7.7%

SCUDDER HIGH-YIELD TAX-FREE* 800-225-2470 7.8% 10.7% 7.7%

FRANKLIN HIGH YIELD TAX-FREE INCOME I* 800-342-5236 8.6% 9.2% 7.6%

SMITH BARNEY MANAGED MUNICIPALS A* 800-451-2010 9.2% 8.7% 7.6%

SCHWAB LONG-TERM TAX-FREE BOND 800-435-4000 7.5% 8.3% 7.4% SIT TAX-FREE INCOME 800-332-5580 7.5% 8.7% 7.4%

VANGUARD MUNICIPAL LONG-TERM 800-992-0414 7.6% 7.4% 7.4%

VANGUARD MUNICIPAL HIGH-YIELD 800-992-0414 7.6% 7.6% 7.4%

SAFECO MUNICIPAL BOND NO LOAD 800-426-6730 7.4% 8.3% 7.3%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[EXCELSIOR LONG-TERM TAX-EXEMPT*] NONE 0.74% 7.3 $130 Kenneth J. McAlley

[UNITED MUNICIPAL HIGH-INCOME A] 4.25% 0.81% 4.4 $478 John M. Holliday

[SCUDDER HIGH-YIELD TAX-FREE*] NONE 0.91% 6.2 $323 P. Condon/D. Carleton

[FRANKLIN HIGH YIELD TAX-FREE INCOME I*] 4.25% 0.62% 4.1 $5,066 T. Kenny/S. Amoroso

[SMITH BARNEY MANAGED MUNICIPALS A*] 4.00% 0.68% 6.9 $2,208 Joseph P. Deane

[SCHWAB LONG-TERM TAX-FREE BOND] NONE 0.49% 6.5 $49 J. Larkin/S. Ward

[SIT TAX-FREE INCOME] NONE 0.79% 3.5 $432 M. Brilley/D. Sit

[VANGUARD MUNICIPAL LONG-TERM] NONE 0.19% 6.4 $1,246 I. MacKinnon/C. Ryon

[VANGUARD MUNICIPAL HIGH-YIELD] NONE 0.19% 6.1 $2,247 I. MacKinnon/R. Smith

[SAFECO MUNICIPAL BOND NO LOAD] NONE[3] 0.54% 7.2 $492 Stephen C. Bauer

WORLD HERE'S WHAT YOU GET AFTER LOADS AND TAXES[1] RETURNS RETURN AVG. ANNUAL AVG. ANNUAL 5 yrs. 1 yr. 5 yrs.

GROUP AVG.[2] 6.8% 3.0% 4.8%

GLOBAL TOTAL RETURN A 800-225-1852 10.4% 4.9% 7.4%

PAYDEN & RYGEL GLOBAL FIXED-INCOME A 800-572-9336 8.1% 8.0% 6.5%

WARBURG PINCUS GLOBAL FIXED INCOME 800-927-2874 8.0% 4.5% 6.4%

IDS GLOBAL BOND A 800-328-8300 8.6% 3.8% 6.0%

CAPITAL WORLD BOND 800-421-4120 8.2% 0.7% 5.8%

DEAN WITTER WORLD WIDE INCOME B 800-869-6397 7.4% 5.9% 5.7%

GOLDMAN SACHS GLOBAL INCOME A 800-526-7384 8.1% 8.7% 5.5%

ALLIANCE NORTH AMERICAN GOV. INCOME B 800-227-4618 7.2% 9.2% 4.7%

KEMPER GLOBAL INCOME A 800-621-1048 7.3% 2.7% 4.6%

PAINE WEBBER GLOBAL INCOME A 800-647-1568 6.7% 3.8% 4.3%

FEES RISK ASSETS [FUND] SALES ANNUAL STANDARD $ MANAGER LOAD EXPENSES DEVIATION MILLIONS

[GLOBAL TOTAL RETURN A] 4.00% 1.33% 5.7 $192 S. Wells/G. Irwin

[PAYDEN & RYGEL GLOBAL FIXED-INCOME A] NONE 0.53% 4.2 $536 Multiple managers

[WARBURG PINCUS GLOBAL FIXED INCOME] NONE 0.95% 4.7 $195 D. Christensen/L. Bhandari

[IDS GLOBAL BOND A] 5.00%[4] 1.20% 6.2 $748 Ray S. Goodner

[CAPITAL WORLD BOND] 4.75% 1.09% 5.2 $752 Multiple managers

[DEAN WITTER WORLD WIDE INCOME B] 5.00%[5] 1.93% 5.0 $95 V.Tran/P. Seeley

[GOLDMAN SACHS GLOBAL INCOME A] 4.50% 1.16% 4.4 $173 S. Fitzgerald/A. Wilson

[ALLIANCE NORTH AMERICAN GOV. INCOME B] 3.00% 3.05% 17.0 $1,347 Wayne D. Lyski

[KEMPER GLOBAL INCOME A] 4.50% 1.48% 5.3 $75 Gordon Johns

[PAINE WEBBER GLOBAL INCOME A] 4.00% 1.27% 3.8 $486 Stuart Waugh

*Fund will not declare capital gains Dec. 7-31, 1997. [1]Performance is through Nov. 14, 1997, and net of annual expenses, brokerage costs, and sales loads; also net of taxes, assuming the new 20% long-term rate for capital gains and income distributions. [2]Average annual return for all funds tracked by Morningstar in each category. [3]Limited to four exchanges per year to deter market timing. [4]Telephone redemption requests must be between $100 and $50,000. [5]Deferred sales charge, which declines over time.

INDEX

AARP Growth & Income 124 Accessor Mortgage Securities 134 Acorn 123 Advantus Mtg. Securities Inc. A 134 AIM Constellation A 123 AIM High-Yield A 132 AIM International Equity A 126 Alliance North Amer. Gov. Inc. B 136 American Balanced 130 Amer. Century-Benham Intermediate Treasury 134 American Century-Benham Long-Term Treasury 132 American Century-20th Cent. Ultra 123 Babson Enterprise II 123 Babson Value 124 Baron Asset 123 Berwyn 123 Capital World Bond 136 CGM Mutual 130 Columbia Balanced 130 Crabbe Huson Spec. Primary Class 123 Davis Convertible Securities A 130 Davis Growth Opportunity B 124 Dean Witter Fed. Securities B 132 Dean Witter U.S. Gov. Securities B 132 Dean Witter World Wide Income B 136 Delaware A 130 Dodge & Cox Balanced 130 Dodge & Cox Stock 124 Domini Social Equity 124 Dreyfus Disciplined Stock 124 Eclipse Balanced 130 Eclipse Equity 123 Enterprise Growth A 124 EuroPacific Growth 128 Excelsior Long-Term Tax-Exempt 136 Fidelity Advisor High-Yield T 132 Fidelity Diversified International 126 Fidelity Europe 128 Fidelity Low-Priced Stock 123 Fidelity Spartan Ltd. Maturity Gov. 132 Fidelity Worldwide 126 First Eagle Fund of America 124 First Investors Fund for Income A 132 Flag Investors Value Builder A 130 Fortis Global Growth A 128 Founders Worldwide Growth 128 FPA New Income 132 Franklin AGE High Income I 132 Franklin California Growth I 124 Franklin Convertible Securities I 130 Franklin High Yield Tax-Free Income I 136 Franklin Small Cap Growth I 123 Franklin U.S. Gov. Securities I 134 Gabelli Small Cap Growth 123 Gabelli/Westwood Balanced 130 GAM Global A 126 GAM International A 126 GAM Pacific Basin A 128 Global Total Return A 136 Goldman Sachs Global Income A 136 Govett Emerging Markets A 128 Gradison Government Income 132 Greenspring 130 Guardian Park Avenue A 124 Hancock (John) Independence Equity A 124 Hancock (John) Pacific Basin Equity A 128 Harbor Bond 132 Harbor Capital Appreciation 124 Heartland U.S. Gov. Securities 132 HighMark Value Momentum 124 HomeState Pennsylvania Growth 123 Homestead Value 124 Hotchkis & Wiley Balanced Income 130 Hotchkis & Wiley International 126 IAI Balanced 130 Idex Global A 126 IDS Bond A 132 IDS Global Bond A 136 IDS Mutual A 130 Invesco European 128 ISI Total Return U.S. Treasury 134 Ivy Bond A 132 Janus Worldwide 126 Kaufmann 123 Kemper-Dreman High Return Eq. A 124 Kemper Global Income A 136 Keystone Balanced (K-1) 130 Legg Mason Investment Grade Inc. 132 Legg Mason Total Return Trust 124 Legg Mason Value Trust 124 Lexington GNMA Income 134 MainStay Capital Appreciation B 124 MainStay Total Return B 130 Managers Bond 132 Managers International Equity 126 Managers Special Equity 123 Merrill Lynch Basic Value B 124 Merrill Lynch Growth B 124 Merrill Lynch Latin America B 128 Merrill Lynch Pacific B 128 MFS Emerging Growth B 124 MFS World Equity B 128 Montgomery Emerging Markets 128 Muhlenkamp 124 Neuberger & Berman Partners 124 New England Balanced A 130 New Perspective 128 Northeast Investors Trust 132 Oakmark 124 Oakmark International 126 Oppenheimer Bond for Growth M 130 Oppenheimer Capital Apprec. A 123 Oppenheimer Global A 128 Paine Webber Global Income A 136 Papp America-Abroad Fund 124 Parnassus Income Balanced 130 Pax World 130 Payden & Rygel Global F-I A 136 PBHG Growth 124 Pelican 124 Phoenix Convertible A 130 Preferred International 126 Preferred Value 124 Price (T. Rowe) Balanced 130 Price (T. Rowe) Equity Income 124 Price (T. Rowe) Equity Index 124 Price (T. Rowe) European Stock 128 Price (T. Rowe) GNMA 134 Price (T. Rowe) International Stock 126 Price (T. Rowe) Mid-Cap Growth 124 Price (T. Rowe) Small-Cap Stock 123 Price (T. Rowe) U.S. Treas. Interm. 134 Price (T. Rowe) U.S. Treasury L-T 134 Princor Emerging Growth A 123 Princor Gov. Securities Income A 134 Prudential World Global B 128 Putnam Asia Pacific Growth A 128 Putnam Convertible Inc.-Growth A 130 Putnam Europe Growth A 128 Putnam International Growth A 126 Putnam New Opportunities A 123 Robertson Stephens Value+Growth A 124 Royce Micro-Cap 123 Safeco GNMA 134 Safeco Growth No Load 124 Safeco Municipal Bond No Load 136 Schwab Long-Term Tax-Free Bond 136 Scudder Global 128 Scudder Global Discovery 128 Scudder Growth & Income 124 Scudder High-Yield Tax-Free 136 Scudder International 126 Seligman Henderson Global Small Company A 126 Seligman High-Yield Bond A 132 Sit International Growth 126 Sit Tax-Free Income 136 Sit U.S. Government Securities 132 Smallcap World 128 Smith Barney Aggressive Growth A 123 Smith Barney Convertible B 130 Smith Barney High-Income B 132 Smith Barney Invest. Grade Bond B 132 Smith Barney Managed Gov. A 134 Smith Barney Managed Muni A 136 Smith Breeden Equity Plus 124 Smith Breeden Intermediate Duration U.S. Gov. 134 Sound Shore 124 Spectra 124 Stagecoach Corporate Stock 124 Stagecoach U.S. Gov. Allocation A 134 Star Relative Value 124 State Street Research Gov. Inc. A 132 State St. Research High-Income A 132 Stein Roe Capital Opportunities 123 Strong Corporate Bond 132 Strong Government Securities 132 Strong Schafer Value 124 SunAmerica Balanced Assets B 130 Templeton Developing Markets I 128 Templeton Foreign I 126 Templeton Growth I 128 Third Avenue Value 124 Thompson Plumb Balanced 130 Torray 124 United Municipal High-Income A 136 USAA Growth & Tax Strategy 130 USAA International 126 Value Line Aggressive Income 132 Value Line Convertible 130 Value Line Leveraged Growth 123 Van Eck/Chubb Gov. Securities 132 Van Eck/Chubb Total Return 130 Vanguard Balanced Index 130 Vanguard F/I High-Yield Corporate 132 Vanguard F/I Interm. U.S. Treas. 134 Vanguard F/I Long-Term U.S. Treas. 134 Vanguard F/I Short-Term U.S. Treas. 134 Vanguard Growth & Income 124 Vanguard Index Extended Market 123 Vanguard Index 500 124 Vanguard Index Growth 124 Vanguard Index Small Cap Stock 123 Vanguard Index Total Stock Market 124 Vanguard Index Value 124 Vanguard International Growth 126 Vanguard Intl. Eq. Index European 128 Vanguard Intl. Equity Index Pacific 128 Vanguard Municipal High-Yield 136 Vanguard Municipal Long-Term 136 Vanguard Preferred Stock 132 Vanguard/Primecap 124 Vanguard/Wellesley Income 130 Vanguard/Windsor II 124 Van Kampen Amer. Cap. Harbor A 130 Vista Balanced A 130 Warburg Pincus Emerging Growth 123 Warburg Pincus F-I 132 Warburg Pincus Global F-I 136 Warburg Pincus Interm. Maturity Gov. 134 Warburg Pincus Intl. Equity 126 White Oak Growth Stock 124 Wright Current Income 134 Wright U.S. Treasury 134