<PAGE>
PaineWebber S&P 500 Index Fund Semiannual Report
January 15, 1999
Dear Shareholder,
We are pleased to present you with the semiannual report for the PaineWebber
S&P 500 Index Fund (the "Fund"), for the six-month period ended November 30,
1998.
Market Review
The financial markets became extremely volatile in August as investors reacted
to heightened global uncertainty by moving money out of stocks. Concerns about
exposure to over-leveraged hedge funds and emerging markets caused a sell-off
in financial stocks as investors backed away from potential credit quality and
liquidity problems. Weakness in global markets also hurt U.S. companies
sensitive to export growth.
The stock market rallied, however, after the Federal Reserve cut interest rates
three times and other central banks around the globe followed suit in
anticipation of the new euro currency. Many of the sectors that had lagged from
August through October -- primarily technology and financial services --
rebounded by November 30. The rate cuts allayed investor concerns about the
market decline and its economic impact. As measured by the S&P 500 Index (the
"Index"), the rally produced one of the best year-end quarters ever and a
fourth straight year of market gains over 20%. In addition, the rally broadened
beyond the largest 20 or so stocks in the Index to include some mid- to
small-capitalization stocks.
Portfolio Review
Performance
The Fund's total return consists of the change in net asset value with
dividends reinvested, if any. Class A shares commenced issuance on October 2,
1998; from commencement through November 30, 1998, Class A shares gained 17.85%
without deducting sales charges. Class C shares commenced issuance on October
7, 1998; from commencement through November 30, 1998, Class C shares gained
17.97% without deducting sales charges. For the six months ended November 30,
1998, Class Y shares gained 7.08%.
The Fund's total return may be lower for shareowners who purchased or redeemed
Fund shares during the period. After deducting the maximum applicable sales
charges, Class A shares gained 14.89% and Class C shares gained 16.97%. Class Y
shares are not subject to sales charges.
Portfolio Highlights
The Fund's objective is to replicate the total return of the Index before fees
and expenses. To achieve this objective the Fund invests substantially all of
its assets in common stocks issued by companies in the Index and in related
instruments that simulate investment in the Index.
PaineWebber
S&P 500 Index Fund
FUND PROFILE
Goal:
(arrow) Replicate the total return of the
S&P 500 Index before fees and expenses
(arrow) Portfolio Manager:
T. Kirkham Barneby
Mitchell Hutchins Asset Management Inc.
(arrow) Total Net Assets:
$18.7 million as of November 30, 1998
(arrow) Dividend Payments:
Annually
1
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Semiannual Report
Sector Weightings(1)
PaineWebber S&P 500 Index Fund vs. S&P 500 Index
Fund Index
- --------------------------------------------------------------------------------
Basic Materials 4.75% 4.74%
Commercial Services 1.79 1.84
Consumer Cyclical 7.70 7.77
Consumer Noncyclical 11.32 11.32
Consumer Services 5.05 5.04
Energy 6.48 6.47
Financial Services 18.43 18.50
Healthcare 12.31 12.29
Industrials 3.08 3.07
Technology 17.62 17.53
Telecommunications 7.93 7.88
Transportation 0.98 0.99
Utilities 2.56 2.56
Total 100.00% 100.00%
Top Ten Holdings(1)
PaineWebber S&P 500 Index Fund
- --------------------------------------------------------------------------------
Microsoft Corp. 3.23%
General Electric Co. 3.12
Merck & Co. Inc. 1.97
Exxon Corp. 1.95
Intel Corp. 1.94
Coca Cola Co. 1.86
Wal Mart Stores Inc. 1.80
International Business Machines 1.66
Pfizer Inc. 1.54
Philip Morris Companies Inc. 1.45
(1) All weightings represent percentages of portfolio assets as of November
30, 1998, unless noted otherwise. All weightings are subject to change.
2
<PAGE>
Semiannual Report
Outlook
(Graphic)
Our expectations for 1999 are a little more subdued than 1998's results. We
look for slowing economic growth around 2%, inflation below 2% and corporate
earnings growth in the 4-5% range -- a stable rate after declines for most of
1998. Taking these expectations into consideration, we think the market is
about 5% above fair value, well within its normal range.
For the stock market rally to sustain itself, it will have to continue
broadening and include more small- to mid-size companies. For calendar year
1998, the S&P 500 Index's 28.60% return surpassed the returns of more than
87% of equity mutual funds in the Lipper Inc. universe.(2)
Our ultimate objective in managing your investments is to help you
successfully meet your financial goals. We thank you for your continued
support and welcome any comments or questions you may have.
For a Quarterly Review on PaineWebber S&P 500 Index Fund or another fund in
the PaineWebber Family of Funds,3 please contact your investment executive.
Sincerely,
/s/ Margo Alexander /s/ T. Kirkham Barneby
Margo Alexander T. Kirkham Barneby
President Managing Director, Chief
Mitchell Hutchins Asset Investment Officer--
Management Inc. Quantitative Investments
Mitchell Hutchins Asset
Management Inc.
Portfolio Manager, PaineWebber
S&P 500 Index Fund
This letter is intended to assist shareholders in understanding how the Fund
performed during the period ended November 30, 1998, and reflects our views
at the time of writing this report. Of course, these views may change in
response to changing circumstances. We encourage you to consult your
investment executive regarding your personal investment program.
(2) Source: Lipper Inc., used with permission. The S&P 500 Index return
ranked 765th in a universe of 6,078 mutual funds that invest in stocks.
(3) Mutual funds are sold by prospectus only. The prospectuses for the funds
contain more complete information regarding risks, charges and expenses,
and should be read carefully before investing.
3
<PAGE>
PaineWebber S&P 500 Index Fund
Portfolio of Investments November 30, 1998 (unaudited)
Number of
Shares Value
- --------- ------------
COMMON STOCKS--100.37%
Agriculture, Food & Beverage--5.32%
1,200 Archer-Daniels-Midland Co. .................. $ 22,050
600 Bestfoods Co. ............................... 34,875
900 Campbell Soup Co. ........................... 51,412
800 Coca-Cola Enterprises Inc. .................. 30,250
1,000 Conagra, Inc. ............................... 31,437
300 General Mills, Inc. ......................... 22,650
700 Heinz, H. J. and Co. ........................ 40,819
300 Hershey Foods Corp. ......................... 20,175
800 Kellogg Co. ................................. 29,300
3,000 Pepsico, Inc. ............................... 116,062
500 Pioneer Hi-Bred International, Inc. ......... 14,969
300 Quaker Oats Co. ............................. 18,413
700 RJR Nabisco Holdings Corp. .................. 20,169
900 Sara Lee Corp. .............................. 52,537
200 Supervalue, Inc. ............................ 5,163
700 Sysco Corp. ................................. 18,856
5,000 The Coca-Cola Co. ........................... 350,312
1,300 Unilever N.V ................................ 100,506
200 Wrigley, Wm. Jr. Co. ........................ 17,625
------------
997,580
------------
Airlines--0.35%
400 AMR Corp.* .................................. 26,375
300 Delta Air Lines, Inc. ....................... 16,106
600 Southwest Airlines Co. ...................... 12,900
200 US Airways Group, Inc.* ..................... 10,400
------------
65,781
------------
Alcohol--0.49%
1,000 Anheuser-Busch Companies, Inc. .............. 60,625
100 Brown Forman Corp. .......................... 7,275
700 Seagram Co. Ltd. ............................ 24,019
------------
91,919
------------
Apparel, Retail-0.55%
800 Gap, Inc. ................................... 58,850
500 Limited, Inc. ............................... 14,469
300 Nordstrom, Inc. ............................. 11,175
600 TJX Companies, Inc. ......................... 15,375
300 Venator Group Inc. .......................... 2,362
------------
102,231
------------
Apparel, Textiles--0.22%
200 Fruit of the Loom, Inc.* .................... 2,950
100 Liz Claiborne, Inc. ......................... 3,388
600 Nike Inc. ................................... 24,000
100 Reebok International Ltd.* .................. 1,594
200 V. F. Corp. ................................. 9,812
------------
41,744
------------
Number of
Shares Value
- --------- ------------
Banks--7.06%
1,500 Bank of New York Co. Inc. ................... $ 51,375
2,286 Bank One Corp. .............................. 117,300
3,466 BankAmerica Corp. ........................... 225,940
600 BankBoston Corp. ............................ 24,975
200 Bankers Trust New York Corp. ................ 17,400
600 BB & T Corp. ................................ 22,162
300 Comerica, Inc. .............................. 19,350
500 Fifth Third Bancorp ......................... 33,187
1,900 First Union Corp. ........................... 115,425
1,100 Fleet Financial Group, Inc. ................. 45,856
400 Huntington Bancshares, Inc. ................. 11,850
900 KeyCorp ..................................... 27,619
500 Mellon Bank Corp. ........................... 31,469
300 Mercantile Bancorporation, Inc. ............. 13,219
400 Morgan, (J.P.) & Co., Inc. .................. 42,750
700 National City Corp. ......................... 47,075
200 Northern Trust Corp. ........................ 16,150
600 PNC Bank Corp. .............................. 30,937
400 Regions Financial Corp. ..................... 15,500
200 Republic New York Corp. ..................... 9,350
300 State Street Corp. .......................... 20,588
400 Summit Bancorp, Inc. ........................ 16,725
400 Suntrust Banks, Inc. ........................ 27,925
500 Synovus Financial Corp. ..................... 11,031
1,700 The Chase Manhattan Corp. ................... 107,844
300 Union Planters Corp. ........................ 14,288
1,500 US Bancorp, Inc. ............................ 55,219
400 Wachovia Corp. .............................. 34,925
3,200 Wells Fargo & Co. ........................... 115,200
------------
1,322,634
------------
Chemicals--2.64%
500 Air Products & Chemicals, Inc. .............. 19,062
1,100 Allied-Signal, Inc. ......................... 48,400
200 Ashland, Inc. ............................... 9,725
200 Avery Dennison Corp. ........................ 9,588
500 Dow Chemical Co. ............................ 48,687
2,300 DuPont (E.I.) de Nemours & Co. .............. 135,125
200 Eastman Chemical Co. ........................ 11,587
300 Ecolab, Inc. ................................ 9,281
300 Engelhard Corp. ............................. 5,794
100 Great Lakes Chemical Corp. .................. 3,994
200 Hercules, Inc. .............................. 6,575
800 Minnesota Mining & Manufacturing Co. ........ 64,250
300 Morton International, Inc. .................. 8,831
100 Nalco Chemical Co. .......................... 3,344
700 Occidental Petroleum Corp. .................. 14,175
400 PPG Industries, Inc. ........................ 24,475
300 Praxair, Inc. ............................... 11,456
400 Rohm & Haas Co. ............................. 13,975
200 Sealed Air Corp.* ........................... 8,825
300 Sherwin Williams Co. ........................ 8,513
300 Tenneco, Inc. ............................... 10,687
300 Union Carbide Corp. ......................... 13,425
200 Westvaco Corp. .............................. 5,625
------------
495,399
------------
4
<PAGE>
PaineWebber S&P 500 Index Fund
Number of
Shares Value
- --------- ------------
COMMON STOCKS--(continued)
Computer Hardware--7.02%
700 3Com Corp.* ................................. $ 27,081
300 Apple Computer, Inc.* ....................... 9,581
400 Ascend Communications Inc.* ................. 22,475
300 Cabletron Systems, Inc.* .................... 4,200
1,700 Cendant Corp.* .............................. 32,300
3,100 Cisco Systems, Inc.* ........................ 233,663
3,500 Compaq Computer Corp. ....................... 113,750
2,500 Dell Computer Corp.* ........................ 152,031
1,000 EMC Corp.* .................................. 72,500
300 Gateway Inc.* ............................... 16,838
2,100 Hewlett-Packard Co. ......................... 131,775
300 Ikon Office Solutions Inc. .................. 2,925
1,900 International Business Machines ............. 313,500
500 Pitney Bowes, Inc. .......................... 28,000
500 Seagate Technology, Inc.* ................... 14,750
400 Silicon Graphics, Inc.* ..................... 4,900
800 Sun Microsystems Inc.* ...................... 59,250
700 Xerox Corp. ................................. 75,250
------------
1,314,769
------------
Computer Software--4.27%
100 Adobe Systems, Inc. ......................... 4,475
100 Autodesk, Inc. .............................. 3,638
400 BMC Software Inc.* .......................... 20,425
1,100 Computer Associates International Inc. ...... 48,675
5,000 Microsoft Corp.* ............................ 610,000
700 Novell, Inc.* ............................... 11,594
2,000 Oracle Systems Corp.* ....................... 68,500
500 Parametric Technology Corp.* ................ 8,500
500 Peoplesoft Inc.* ............................ 10,281
500 Unisys Corp.* ............................... 14,250
------------
800,338
------------
Construction, Real Property--0.23%
100 Armstrong World Industries, Inc. ............ 6,663
100 Centex Corp. ................................ 3,569
200 Fluor Corp. ................................. 8,562
700 Masco Corp. ................................. 20,212
100 Owens-Corning Fiberglass .................... 3,731
------------
42,737
------------
Consumer Durables--0.18%
200 Black & Decker Corp. ........................ 10,838
200 Maytag Corp. ................................ 10,825
200 Whirlpool Corp. ............................. 11,200
------------
32,863
------------
Defense/Aerospace--1.04%
2,000 Boeing Co. .................................. 81,250
300 General Dynamics Corp. ...................... 17,419
200 Goodrich, B.F. Co. .......................... 7,588
400 Lockheed Martin Corp. ....................... 41,500
100 Northrop Grumman Corp. ...................... 8,125
700 Raytheon Co. ................................ 38,762
------------
194,644
------------
Number of
Shares Value
- --------- ------------
Diversified Retail--3.04%
400 Costco, Companies Inc.* ..................... $ 25,100
900 Dayton Hudson Corp. ......................... 40,500
200 Dillard Department Stores, Inc. ............. 6,875
400 Federated Department Stores, Inc.* .......... 16,675
1,000 K Mart Corp.* ............................... 15,250
300 Kohls Corp.* ................................ 14,756
500 May Department Stores Co. ................... 30,156
300 Meyer (Fred), Inc.* ......................... 15,263
500 Penney (J.C.), Inc. ......................... 27,500
800 Sears Roebuck & Co. ......................... 37,950
4,500 Wal Mart Stores, Inc. ....................... 338,906
------------
568,931
------------
Drugs & Medicine--9.22%
100 Allergan, Inc. .............................. 6,088
200 Alza Corp.* ................................. 10,450
2,600 American Home Products Corp. ................ 138,450
500 Amgen, Inc.* ................................ 37,625
2,000 Bristol-Myers Squibb Co. .................... 245,125
400 Cardinal Health Inc. ........................ 27,450
2,300 Lilly, Eli & Co. ............................ 206,281
2,400 Merck & Co., Inc. ........................... 371,700
1,200 Monsanto Co. ................................ 54,375
2,600 Pfizer, Inc. ................................ 290,225
1,000 Pharmacia and Upjohn Inc. ADR ............... 52,063
1,500 Schering-Plough Corp. ....................... 159,562
200 Sigma-Aldrich Corp. ......................... 6,425
1,600 Warner Lambert Co. .......................... 120,800
------------
1,726,619
------------
Electric Utilities--2.58%
400 AES Corp.* .................................. 18,300
300 Ameren Corp. ................................ 12,356
400 American Electric Power, Inc. ............... 18,550
300 Baltimore Gas & Electric Co. ................ 9,206
300 Carolina Power and Light Co. ................ 13,912
400 Central & South West Corp. .................. 11,000
300 Cinergy Corp. ............................... 10,369
500 Consolidated Edison of New York, Inc. ....... 25,406
400 Dominion Resources, Inc. .................... 18,475
300 DTE Energy Co. .............................. 13,088
700 Duke Energy Corp. ........................... 43,794
700 Edison International, Inc. .................. 19,250
500 Entergy Corp. ............................... 14,656
500 Firstenergy Corp. ........................... 15,469
400 FPL Group, Inc. ............................. 24,500
300 General Public Utilities Corp. .............. 13,144
600 Houston Industries, Inc. .................... 18,975
200 New Century Energies Inc. ................... 9,613
400 Niagara Mohawk Power Corp.* ................. 6,150
300 Northern States Power Co. ................... 8,156
600 PacifiCorp .................................. 11,250
400 PECO Energy Co. ............................. 16,050
300 Pennsylvania Power & Light Co. .............. 8,194
800 PG&E Corp. .................................. 24,750
500 Public Service Enterprise Group, Inc. ....... 19,500
1,400 Southern Co. ................................ 41,300
5
<PAGE>
PaineWebber S&P 500 Index Fund
Number of
Shares Value
- --------- ------------
COMMON STOCKS--(continued)
Electric Utilities--(concluded)
500 Texas Utilities Co. ......................... $ 22,281
400 Unicom Corp. ................................ 15,075
------------
482,769
------------
Electrical Equipment--2.66%
500 Corning, Inc. ............................... 20,062
100 Eaton Corp. ................................. 6,831
200 Harris Corp. ................................ 7,588
300 Honeywell, Inc. ............................. 23,981
300 General Instrument Corp.* ................... 8,438
200 Johnson Controls, Inc. ...................... 11,575
200 KLA-Tencor Corp. * .......................... 6,813
2,600 Lucent Technologies Inc. .................... 223,762
1,200 Motorola Inc. ............................... 74,400
1,400 Northern Telecommunications Ltd. ............ 65,363
100 Perkin Elmer Corp. .......................... 9,325
200 Raychem Corp. ............................... 6,812
200 Scientific-Atlanta, Inc. .................... 3,875
100 Tektronix, Inc. ............................. 2,681
400 Tellabs, Inc.* .............................. 21,625
300 Thermo Electron Corp.* ...................... 5,062
------------
498,193
------------
Electrical Power--0.71%
474 AMP, Inc. ................................... 22,930
200 Andrew Corp.* ............................... 3,200
200 Cooper Industries, Inc. ..................... 9,825
900 Emerson Electric Co. ........................ 58,500
200 Grainger, W.W., Inc. ........................ 8,450
100 Phelps Dodge Corp. .......................... 5,669
400 Rockwell International Corp. ................ 19,575
100 Thomas & Betts Corp. ........................ 4,331
------------
132,480
------------
ENERGY RESERVES & PRODUCTION--5.99%
200 Amerada Hess Corp. .......................... 11,100
1,900 Amoco Corp. ................................. 111,981
200 Anadarko Petroleum Corp. .................... 5,637
200 Apache Corp. ................................ 4,600
600 Atlantic Richfield Co. ...................... 39,900
400 Burlington Resources, Inc. .................. 14,250
1,300 Chevron Corp. ............................... 108,712
4,900 Exxon Corp. ................................. 367,806
100 Kerr-Mcgee Corp. ............................ 3,950
1,600 Mobil Corp. ................................. 137,900
200 Oryx Energy Co.* ............................ 2,763
100 Pennzoil Co. ................................ 3,713
500 Phillips Petroleum Co. ...................... 21,000
4,300 Royal Dutch Petroleum Co. ................... 202,100
1,100 Texaco, Inc. ................................ 63,319
500 Union Pacific Resources Group Inc. .......... 5,594
500 Unocal Corp. ................................ 16,937
------------
1,121,262
------------
Number of
Shares Value
- --------- ------------
Entertainment--0.01%
100 King World Productions, Inc.* ............... $ 2,725
------------
Environmental Services--0.34%
400 Browning Ferris Industries, Inc. ............ 11,800
1,200 Waste Management Inc. ....................... 51,450
------------
63,250
------------
Financial Services--6.38%
900 American Express Co. ........................ 90,056
300 AON Corp. ................................... 17,288
700 Associates First Capital Corp. .............. 54,513
200 Block, H&R, Inc. ............................ 8,988
100 Capital One Financial Corp. ................. 11,000
200 Countrywide Credit Industries, Inc. ......... 9,900
300 Dun & Bradstreet Corp. ...................... 9,056
300 Equifax Inc. ................................ 12,450
1,400 Federal Home Loan Mortgage Corp. ............ 84,700
2,100 Federal National Mortgage Association ....... 152,775
6,500 General Electric Co. ........................ 588,250
1,000 Household International, Inc. ............... 39,125
500 Marsh & McLennan Companies, Inc. ............ 29,094
1,500 MBNA Corp. .................................. 34,031
200 Providian Corp. ............................. 18,362
300 SLM Holding Corp. ........................... 13,200
300 Textron Inc. ................................ 23,306
------------
1,196,094
------------
Food Retail--0.75%
500 Albertson's, Inc. ........................... 28,531
600 American Stores Co. ......................... 20,138
500 Kroger Co.* ................................. 26,531
1,000 Safeway Inc.* ............................... 52,812
300 Winn Dixie Stores, Inc. ..................... 12,094
------------
140,106
------------
Forest Products, Paper--0.93%
100 Bemis, Inc. ................................. 3,781
100 Boise Cascade Corp. ......................... 3,169
200 Champion International Corp. ................ 8,312
400 Fort James Corp. ............................ 15,650
200 Georgia-Pacific Corp. ....................... 11,350
600 International Paper Co. ..................... 26,062
1,100 Kimberly Clark Corp. ........................ 57,887
200 Louisiana Pacific Corp. ..................... 3,400
200 Mead Corp. .................................. 6,063
100 Temple-Inland, Inc. ......................... 5,369
100 Union Camp Corp. ............................ 6,469
400 Weyerhaeuser Co. ............................ 20,050
200 Willamette Industries, Inc. ................. 6,988
------------
174,550
------------
Freight, Air, Sea & Land--0.14%
300 FDX Corp.* .................................. 19,463
700 Laidlaw Inc. ................................ 6,956
------------
26,419
------------
6
<PAGE>
PaineWebber S&P 500 Index Fund
Number of
Shares Value
- --------- ------------
COMMON STOCKS--(continued)
Gas Utility--0.21%
200 Columbia Energy Corp. ....................... $ 11,350
200 Consolidated Natural Gas Co. ................ 10,863
100 NICOR, Inc. ................................. 4,206
500 Sempra Energy ............................... 12,531
------------
38,950
------------
Heavy Machinery--0.34%
200 Case Corp. .................................. 4,850
700 Caterpillar, Inc. ........................... 34,606
100 Cummins Engine Co., Inc. .................... 3,713
500 Deere & Co. ................................. 17,469
100 McDermott International, Inc. ............... 2,681
------------
63,319
------------
Hotels--0.11%
200 Harrah's Entertainment Inc.* ................ 3,113
500 Hilton Hotels Corp. ......................... 10,875
400 Mirage Resorts, Inc.* ....................... 5,950
------------
19,938
------------
Household Products--2.69%
100 Alberto Culver Co. .......................... 2,563
500 Avon Products Inc. .......................... 20,313
200 Clorox Co. .................................. 22,212
600 Colgate-Palmolive Co. ....................... 51,375
400 Fortune Brands Inc. ......................... 13,625
2,300 Gillette Co. ................................ 105,656
200 International Flavors and Fragrances ........ 8,375
300 Newell Co. .................................. 13,275
2,700 Procter & Gamble Co. ........................ 236,587
600 Ralston Purina Co. .......................... 20,888
300 Rubbermaid, Inc. ............................ 9,919
------------
504,788
------------
Industrial Parts--1.30%
100 Crane Co. ................................... 3,231
300 Danaher Corp. ............................... 13,687
500 Dover Corp. ................................. 17,812
500 Illinois Tool Works, Inc. ................... 31,781
300 Ingersoll Rand Co. .......................... 14,044
300 Pall Corp. .................................. 6,975
200 Parker-Hannifin Corp. ....................... 6,950
100 Snap-On, Inc. ............................... 3,400
200 Stanley Works ............................... 6,113
100 Timken Co. .................................. 1,925
1,276 Tyco International Ltd. ..................... 83,977
500 United Technologies Corp. ................... 53,594
------------
243,489
------------
Industrial Services/Supplies--0.03%
200 Ryder Systems, Inc. ......................... 5,713
------------
Information & Computer Services--1.21%
600 Automatic Data Processing, Inc. ............. 46,200
100 Ceridian Corp.* ............................. 6,506
300 Computer Sciences Corp.* .................... 17,137
Number of
Shares Value
- --------- ------------
Information & Computer Services--(concluded)
1,000 Electronic Data Systems Corp. ............... $ 39,000
900 First Data Corp. ............................ 24,019
900 HBO & Co. ................................... 22,444
300 IMS Health Inc. ............................. 19,912
300 Interpublic Group Companies, Inc. ........... 20,625
300 Omnicom Group ............................... 16,031
300 Paychex, Inc. ............................... 14,925
------------
226,799
------------
Leisure--0.46%
200 Brunswick Corp. ............................. 4,400
700 Eastman Kodak Co. ........................... 50,794
300 Hasbro, Inc. ................................ 10,519
600 Mattel Inc. ................................. 20,737
------------
86,450
------------
Life Insurance--1.18%
300 Aetna Life & Casualty Co. ................... 23,194
500 American General Corp. ...................... 35,219
400 CIGNA Corp. ................................. 31,125
600 Conseco Inc. ................................ 19,875
200 Jefferson-Pilot Corp. ....................... 13,650
200 Lincoln National Corp. ...................... 16,737
300 Provident Cos Inc. .......................... 11,531
400 SunAmerica Inc. ............................. 31,700
300 Torchmark, Inc. ............................. 11,400
100 Transamerica Corp. .......................... 10,625
300 UNUM Corp. .................................. 16,163
------------
221,219
------------
Long Distance & Phone Companies--7.47%
600 Alltel Corp. ................................ 31,800
2,200 Ameritech Corp. ............................. 119,075
3,600 AT&T Corp. .................................. 224,325
3,100 Bell Atlantic Corp. ......................... 172,437
2,000 BellSouth Corp. ............................. 174,500
300 Frontier Corp. .............................. 9,038
1,900 GTE Corp. ................................... 117,800
3,600 MCI Worldcom Inc.* .......................... 212,400
3,900 SBC Communications, Inc. .................... 186,956
900 Sprint Corp. ................................ 65,475
1,000 U.S. West Inc. .............................. 62,250
800 Williams Companies, Inc. .................... 23,050
------------
1,399,106
------------
Media--2.73%
1,400 CBS Corp.* .................................. 41,737
500 Clear Channel Communications* ............... 23,375
700 Comcast Corp., Class A ...................... 33,950
4,100 Disney, Walt, Co. ........................... 131,969
1,200 Mediaone Group Inc.* ........................ 48,600
1,100 Tele-Communications, Inc.* .................. 46,475
1,200 Time Warner Inc. ............................ 126,900
200 Tribune Co. ................................. 12,825
700 Viacom, Inc., Class B* ...................... 46,594
------------
512,425
------------
7
<PAGE>
PaineWebber S&P 500 Index Fund
Number of
Shares Value
- --------- ------------
COMMON STOCKS--(continued)
Medical Products--3.01%
3,100 Abbott Laboratories ......................... $ 148,800
100 Bard, C.R. Inc. ............................. 4,581
100 Bausch & Lomb, Inc. ......................... 5,550
600 Baxter International, Inc. .................. 38,137
500 Becton, Dickinson & Co. ..................... 21,250
200 Biomet, Inc. ................................ 7,650
400 Boston Scientific Corp.* .................... 19,800
300 Guidant Corp. ............................... 25,744
2,700 Johnson & Johnson ........................... 219,375
200 Mallinckrodt Group, Inc. .................... 6,462
900 Medtronic, Inc. ............................. 60,919
200 St. Jude Medical, Inc.* ..................... 5,813
------------
564,081
------------
Medical Providers--0.59%
1,300 Columbia/HCA Healthcare Corp. ............... 32,012
200 HCR Manor Care Inc.* ........................ 6,350
900 HEALTHSOUTH Corp.* .......................... 12,094
300 Humana Inc.* ................................ 5,944
500 Service Corp. International ................. 18,687
600 Tenet Healthcare Corp.* ..................... 17,738
400 United Healthcare Corp. ..................... 18,050
------------
110,875
------------
Mining & Metals--0.58%
500 Alcan Aluminum Ltd. ......................... 13,312
400 Allegheny Teldyne, Inc. ..................... 8,225
400 Aluminum Co. of America ..................... 29,650
300 Bethlehem Steel Corp.* ...................... 2,475
300 Crown Cork & Seal, Inc. ..................... 10,125
300 Cyprus Amax Minerals Co. .................... 3,413
400 Freeport-McMoran Copper & Gold, Inc. ........ 5,225
400 Inco Ltd. ................................... 4,625
200 Nucor Corp. ................................. 8,400
300 Owens Illinois Inc.* ........................ 9,637
100 Reynolds Metals Co. ......................... 5,488
300 USX-U.S. Steel Group, Inc. .................. 7,331
------------
107,906
------------
Motor Vehicles & Parts--1.60%
200 Cooper Tire & Rubber Co. .................... 3,912
300 DANA Corp. .................................. 11,700
2,400 Ford Motor Co. .............................. 132,600
1,300 General Motors Corp. ........................ 91,000
400 Genuine Parts Co. ........................... 13,175
300 Goodyear Tire & Rubber Co. .................. 17,025
200 ITT Industries Inc. ......................... 7,200
100 Navistar International Corp.* ............... 2,588
200 PACCAR, Inc. ................................ 9,100
200 TRW, Inc. ................................... 11,012
------------
299,312
------------
Oil Refining--0.43%
400 Coastal Corp. ............................... 13,950
700 Enron Corp. ................................. 36,794
200 Sonat, Inc. ................................. 5,938
Number of
Shares Value
- --------- ------------
Oil Refining--(concluded)
200 Sunoco Inc. ................................. $ 6,775
600 USX-Marathon Group .......................... 17,025
------------
80,482
------------
Oil Services--0.48%
600 Baker Hughes, Inc. .......................... 10,988
900 Halliburton Co. ............................. 26,437
100 Helmerich & Payne Inc. ...................... 1,725
200 Rowan Companies, Inc.* ...................... 1,963
1,100 Schlumberger Ltd. ........................... 49,156
------------
90,269
------------
Other Insurance--2.54%
1,700 Allstate Corp. .............................. 69,275
2,100 American International Group Inc. ........... 197,400
300 Chubb Corp. ................................. 21,019
300 Cincinnati Financial Corp. .................. 11,719
200 General Re Corp. ............................ 46,700
500 Hartford Financial Services Group Inc. ...... 27,594
200 Loews Corp. ................................. 20,000
200 MBIA Inc. ................................... 12,950
200 MGIC Investment Corp. ....................... 8,787
300 SAFECO Corp. ................................ 12,881
500 St. Paul Companies, Inc. .................... 17,625
200 The Progressive Corp. ....................... 29,675
------------
475,625
------------
Precious Metals--0.18%
700 Barrick Gold Corp. .......................... 14,000
500 Battle Mountain Gold Co. .................... 2,344
400 Homestake Mining Co. ........................ 4,300
300 Newmont Mining Corp. ........................ 5,963
500 Placer Dome, Inc. ........................... 7,281
------------
33,888
------------
Publishing--0.71%
100 American Greetings Corp., Class A ........... 4,231
200 Deluxe Corp. ................................ 6,950
300 Donnelley, R.R. & Sons Co. .................. 12,731
200 Dow Jones & Co., Inc. ....................... 9,563
600 Gannett Inc. ................................ 38,738
100 Harcourt General, Inc. ...................... 5,175
200 Knight Ridder, Inc. ......................... 10,288
200 McGraw-Hill Companies, Inc. ................. 17,900
100 Meredith Corp. .............................. 3,881
400 New York Times Co., Class A ................. 12,425
200 Times Mirror Co. ............................ 11,725
------------
133,607
------------
Railroads--0.50%
900 Burlington Northern Santa Fe, Inc. .......... 30,600
400 CSX Corp. ................................... 16,675
700 Norfolk Southern Corp. ...................... 21,263
500 Union Pacific Corp. ......................... 24,312
------------
92,850
------------
8
<PAGE>
PaineWebber S&P 500 Index Fund
Number of
Shares Value
- --------- ------------
COMMON STOCKS--(concluded)
Restaurants--0.73%
300 Darden Restaurants, Inc. .................... $ 4,744
500 Marriott International Inc. ................. 14,687
1,400 McDonalds Corp. ............................. 98,087
300 Tricon Global Restaurants Inc.* ............. 13,669
300 Wendy's International, Inc. ................. 6,000
------------
137,187
------------
Securities & Asset Management--2.31%
200 Bear Stearns Co. Inc. ....................... 8,400
500 Charles Schwab Corp. ........................ 28,187
4,550 Citigroup, Inc. ............................. 228,353
500 Franklin Resources Inc. ..................... 21,375
200 Lehman Brothers Holdings Inc. ............... 9,988
700 Merrill Lynch & Co., Inc. ................... 52,500
1,200 Morgan Stanley Dean Witter & Co. ............ 83,700
------------
432,503
------------
Semiconductor--2.60%
300 Advanced Micro Devices, Inc.* ............... 8,306
700 Applied Materials, Inc.* .................... 27,125
3,400 Intel Corp. ................................. 365,925
300 LSI Logic Corp.* ............................ 4,650
400 Micron Technology, Inc.* .................... 16,525
300 National Semiconductor Corp.* ............... 4,313
800 Texas Instruments, Inc. ..................... 61,100
------------
487,944
------------
Specialty Retail--1.95%
300 Autozone Inc.* .............................. $ 9,038
200 Circuit City Stores, Inc. ................... 7,238
200 Consolidated Stores Corp.* .................. 4,300
800 CVS Corp. ................................... 39,500
375 Dollar General Corp. ........................ 8,930
3,000 Home Depot Inc. ............................. 149,250
700 Lowe's Companies Inc. ....................... 29,575
500 Rite Aid Corp. .............................. 23,187
600 Staples, Inc.* .............................. 20,962
200 Tandy Corp. ................................. 9,013
500 Toys R Us, Inc.* ............................ 9,875
1,000 Walgreen Co. ................................ 53,687
------------
364,555
------------
Thrift--0.30%
100 Golden West Financial Corp. ................. 9,469
1,200 Washington Mutual, Inc. ..................... 46,500
------------
55,969
------------
Tobacco--1.54%
4,900 Phillip Morris Cos. Inc. .................... 274,094
400 UST, Inc. ................................... 13,900
------------
287,994
------------
Wireless Telecommunications--0.47%
1,100 Airtouch Communications, Inc.* .............. 62,906
600 Nextel Communications Inc.* ................. 12,900
800 Sprint Corp.* ............................... 12,800
------------
88,606
------------
Total Common Stocks (cost--$16,686,582) ..................... 18,801,886
------------
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Date Rate
- --------- -------- --------
Repurchase Agreements--0.29%
<S> <C> <C>
$ 55 Repurchase agreement dated 11/30/98 with State
Street Bank and Trust Co., collateralized by
$29,726 U.S. Treasury Bills, 6.750%, due 05/31/99
(value--$30,024) and $25,274 U.S. Treasury Notes,
7.250%, due 05/15/04 (value--$28,338); proceeds:
$55,006 (cost--$55,000) .......................... 12/01/98 4.00% 55,000
-------------
Total Investments (cost--$16,741,582)--100.66% ............... 18,856,886
Liabilities in excess of other assets--(0.66)% ............... (123,980)
-------------
Net Assets--100.00% .......................................... $ 18,732,906
-------------
-------------
</TABLE>
- -------------
* Non-income producing security
See accompanying notes to financial statements
9
<PAGE>
PaineWebber S&P 500 Index Fund
Statement of Assets and Liabilities November 30, 1998 (unaudited)
Assets
Investments in securities, at value
(cost--$16,741,582) ...................................... $18,856,886
Cash ....................................................... 4,649
Receivable for shares of beneficial interest sold .......... 101,568
Dividends and interest receivable .......................... 25,867
Deferred organizational expenses ........................... 61,516
Other assets ............................................... 33,240
-----------
Total assets ............................................... 19,083,726
-----------
Liabilities
Payable for investments purchased .......................... 248,187
Payable to affiliate ....................................... 51,977
Accrued expenses and other liabilities ..................... 50,656
-----------
Total liabilities .......................................... 350,820
-----------
Net assets
Beneficial interest--$0.001 par value
(unlimited amount authorized) ............................ 16,241,458
Undistributed net investment income ........................ 145,041
Accumulated net realized gains from investment
and futures transactions ................................. 231,103
Net unrealized appreciation of investments ................. 2,115,304
-----------
Net assets ................................................. $18,732,906
-----------
-----------
Class A:
Net assets ................................................. $ 9,252,031
-----------
Shares outstanding ......................................... 611,824
-----------
Net asset value and redemption value per share ............. $15.12
------
------
Maximum offering price per share (net asset value
plus sales charge of 2.50% of offering price) ............ $15.51
------
------
Class C:
Net assets ................................................. $ 3,199,705
-----------
Shares outstanding ......................................... 211,959
-----------
Net asset value and offering price per share ............... $15.10
------
------
Class Y:
Net assets ................................................. $ 6,281,170
-----------
Shares outstanding ......................................... 415,351
-----------
Net asset value, offering price and redemption
value per share .......................................... $15.12
------
------
See accompanying notes to financial statements
10
<PAGE>
PaineWebber S&P 500 Index Fund
Statement of Operations
For the Six
Months Ended
November 30, 1998
(unaudited)
---------------
Investment income:
Dividends and interest .................................... $ 117,344
-----------
Expenses:
Investment advisory and administration .................... 15,408
Service fees--Class A ..................................... 2,403
Service and distribution fees--Class C .................... 2,826
Legal and audit ........................................... 27,290
Reports and notices to shareholders ....................... 16,049
Federal and state registration ............................ 11,183
Amortization of organizational expense .................... 7,547
Trustees' fees ............................................ 5,264
Custody and accounting .................................... 4,623
Transfer agency ........................................... 4,500
Other expenses ............................................ 8,389
-----------
105,482
Less: Fee waivers and expense reimbursements
from adviser ............................................ (74,160)
-----------
Net expenses .............................................. 31,322
-----------
Net investment income ..................................... 86,022
-----------
Realized and unrealized gains from investment
activities:
Net realized gains from investment transactions ........... 211,133
Net change in unrealized appreciation/depreciation
of investments .......................................... 909,466
-----------
Net realized and unrealized gains from
investment activities ................................... 1,120,599
-----------
Net increase in net assets resulting
from operations ......................................... $ 1,206,621
-----------
-----------
See accompanying notes to financial statements
11
<PAGE>
PaineWebber S&P 500 Index Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six For the Period
Months Ended December 31,
November 30, 1998 1997+ through
(unaudited) May 31, 1998
------------ ------------
<S> <C> <C>
From operations:
Net investment income ........................................... $ 86,022 $ 59,019
Net realized gains from investment and futures transactions ..... 211,133 19,970
Net change in unrealized appreciation/depreciation
of investments ................................................ 909,466 1,205,838
------------ ------------
Net increase in net assets resulting from operations ............ 1,206,621 1,284,827
------------ ------------
From beneficial interest transactions:
Net proceeds from the sale of shares ............................ 15,905,297 12,314,605
Cost of shares repurchased ...................................... (12,060,060) (18,384)
------------ ------------
Net increase in net assets from beneficial interest transactions 3,845,237 12,296,221
------------ ------------
Net increase in net assets ...................................... 5,051,858 13,581,048
Net Assets:
Beginning of period ............................................. 13,681,048 100,000
------------ ------------
End of period (including undistributed net investment income of
$145,041 and $59,019, respectively) ........................... $ 18,732,906 $ 13,681,048
------------ ------------
------------ ------------
</TABLE>
- ------
+ Commencement of operations
See accompanying notes to financial statements
12
<PAGE>
Notes to Financial Statements (unaudited)
Organization and Significant Accounting Policies
PaineWebber S&P 500 Index Fund (the "Fund")is a series of PaineWebber Index
Trust (the "Trust") and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as an
open-end, diversified management investment company. Organizational costs have
been deferred and are being amortized using the straight line method over a
period not to exceed 60 months from the date the Fund commenced operations.
Prior to the commencement of operations, December 31, 1997, the Fund had no
activity other than the sale of 4,000 Class X ( formerly Class A) shares and
4,000 Class Y shares for a total amount of $100,000, on October 6, 1997 to
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), the investment
adviser, administrator and distributor, and a wholly owned asset management
subsidiary of PaineWebber Incorporated ("PaineWebber").
Currently, the Fund offers Class A, Class C and Class Y shares. Each class
represents interests in the same assets of the Fund, and the classes are
identical except for differences in ongoing service charges and certain
transfer agency expenses. All classes of shares have equal voting privileges
except that Class A and Class C shares have exclusive voting rights with
respect to their service and/or distribution plan. Class Y shares have no
service or distribution plan.
The preparation of financial statements in accordance with generally
accepted accounting principles requires Fund management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The following is
a summary of significant accounting policies:
Valuation of Investments--Securities that are listed on stock exchanges are
valued at the last sale price on the day the securities are being valued or,
lacking any sales on such day, at the last available bid price. In cases where
securities are traded on more than one exchange, the securities are valued on
the exchange designated by Mitchell Hutchins. Securities traded in the
over-the-counter ("OTC") market and listed on the Nasdaq Stock Market, Inc.
("Nasdaq") are valued at the last available sale price, or last bid price
available if no sale occurs, on Nasdaq prior to the time of valuation. Where
market quotations are readily available, debt securities are valued thereon,
provided such quotations adequately reflect the fair value of the securities in
the judgment of Mitchell Hutchins. When market quotations are not readily
available, securities are valued based upon appraisals derived from information
concerning those securities or similar securities received from recognized
dealers in those securities. All other securities are valued at fair value as
determined in good faith by, or under the direction of, the Trust's board of
trustees. The amortized cost method of valuation is used to value short-term
debt securities with sixty days or less remaining to maturity, unless the
Trust's board of trustees determines that this does not represent fair value.
Repurchase Agreements--The Fund's custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that the value,
including accrued interest, is at least equal to the repurchase price. In the
event of default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings. The Fund occasionally
participates in joint repurchase agreement transactions with other funds
managed by Mitchell Hutchins.
Investment Transactions and Investment Income--Investment transactions are
recorded on the trade date. Realized gains and losses from investment
transactions are calculated using the identified cost method. Interest income
is recorded on an accrual basis. Dividend income is recorded on the ex-dividend
date. Discounts are accreted and premiums are amortized as adjustments to
interest income and the identified cost of investments.
13
<PAGE>
Notes to Financial Statements (unaudited)
Income, expenses (excluding class-specific expenses) and realized/unrealized
gains/losses are allocated proportionately to each class of shares based upon
the relative net asset value of outstanding shares (or the value of
dividend-eligible shares, as appropriate) of each class at the beginning of the
day (after adjusting for current capital share activity of the respective
classes). Class-specific expenses are charged directly to the applicable class
of shares.
Futures Contracts--Upon entering into a financial futures contract, the Fund
is required to pledge to a broker an amount of cash and/or U.S. securities
equal to a certain percentage of the contract amount. This amount is known as
the "initial margin." Subsequently, payments, known as "variation margin," are
made or received by the Funds each day, depending on the daily fluctuations in
the value of the underlying financial futures contracts. Such variation margin
is recorded for financial statement purposes on a daily basis as unrealized
gain or loss until the financial futures contract is closed, at which time the
net gain or loss is reclassified to realized.
Using financial futures contracts involves various market risks. The maximum
amount at risk from the purchase of a futures contract is the contract value.
The Fund uses financial futures contracts in strategies intended to enhance
income or for hedging purposes. However, imperfect correlations between futures
contracts and the portfolio securities being hedged or, market disruptions, do
not normally permit full control of these risks at all times. There were no
open futures contracts at November 30, 1998.
Dividends and Distributions--Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification.
Investment Adviser and Administrator
The Trust's board of trustees has approved an Investment Advisory and
Administration Contract ("Advisory Contract") with Mitchell Hutchins, under
which Mitchell Hutchins serves as investment adviser and administrator of the
Fund. In accordance with the Advisory Contract, the Fund pays Mitchell Hutchins
an investment advisory and administration fee, which is accrued daily and paid
monthly, at an annual rate of 0.20% of the Fund's average daily net assets. For
the six months ended November 30, 1998, Mitchell Hutchins has voluntarily
undertaken to waive all advisory fees and reimburse a portion of other
expenses.
Distribution Plans
Mitchell Hutchins is the distributor of the Fund's shares and has appointed
PaineWebber as the exclusive dealer for the sale of those shares. There is no
distribution plan with respect to the Fund's Y shares. Under separate plans of
service and/or distribution pertaining to Class A and Class C shares, the Fund
pays Mitchell Hutchins monthly service fees at the annual rate of 0.25% of the
average daily net assets of Class A and Class C and monthly distribution fees
at the annual rate of 0.75% of the average daily net assets of Class C. At
November 30, 1998, the Fund owed Mitchell Hutchins $3,451 in service and
distribution fees.
Mitchell Hutchins also receives the proceeds of the initial sales charge
paid by the shareholders upon the purchase of Class A shares and the contingent
deferred sales charge paid by shareholders upon certain redemptions of Class C
shares. Mitchell Hutchins has informed the Fund that for the six months ended
November 30, 1998, it earned $2,165 in sales charges.
Transfer Agency Service Fees
PaineWebber provides transfer agency related services to the Fund pursuant
to a delegation of authority from PFPC, Inc., the Fund's transfer agent, and is
compensated for the services by PFPC, Inc., not the Fund. For the six months
ended November 30, 1998, PaineWebber received from PFPC, Inc., not the Fund,
approximately 22% of the total transfer agency and related service fees
collected by PFPC, Inc. from the Fund.
14
<PAGE>
Notes to Financial Statements (unaudited)
Security Lending
The Fund may lend securities up to 331/3% of its total assets to qualified
institutions. The loans are secured at all times by cash, U.S. government
securities or irrevocable letters of credit that meet certain guidelines
established by Mitchell Hutchins, in an amount at least equal to the market
value of the securities loaned, plus accrued interest, determined on a daily
basis and adjusted accordingly. The Fund will regain record ownership of loaned
securities to exercise certain beneficial rights, however, the Fund may bear
the risk of delay in recovery of, or even loss of rights in, the securities
loaned should the borrower fail financially. The Fund receives compensation for
lending its securities from interest earned on the cash or U.S. government
securities held as collateral, net of fee rebates paid to the borrower plus
reasonable administrative and custody fees. During the six months ended
November 30, 1998, the Fund did not lend securities.
Bank Line of Credit
The Fund may participate with other funds managed by Mitchell Hutchins in a
$200 million committed credit facility ("Facility") to be utilized for
temporary financing until the settlement of sale or purchase of portfolio
securities, the repurchase or redemption of shares of the Fund at the request
of the shareholders and other temporary or emergency purposes. In connection
therewith, the Fund has agreed to pay a commitment fee, pro rata, based on the
relative asset size of the funds in the Facility. Interest is charged to the
Fund at rates based on prevailing market rates in effect at the time of
borrowings. For the six months ended November 30, 1998, the Fund did not borrow
under the Facility.
Investments in Securities
For federal income tax purposes, the cost of securities owned at November
30, 1998 was substantially the same as the cost of securities for financial
statement purposes.
At November 30, 1998, the components of net unrealized appreciation of
investments were as follows:
Gross appreciation (investments having
an excess of value over cost) ..................... $2,270,172
Gross depreciation (investments having
an excess of cost over value) ..................... (154,868)
----------
Net unrealized appreciation of investments .......... $2,115,304
----------
----------
For the six months ended November 30, 1998, total aggregate purchases and
sales of portfolio securities, excluding short-term securities, were as
follows:
Purchases ........................................... $15,699,032
Sales ............................................... $11,435,131
Federal Tax Status
The Fund intends to distribute substantially all of its taxable income and
to comply with the other requirements of the Internal Revenue Code applicable
to regulated investment companies. Accordingly, no provision for federal income
taxes is required. In addition, by distributing during each calendar year,
substantially all of its net investment income, capital gains and certain other
amounts, if any, the Fund intends not to be subject to a federal excise tax.
15
<PAGE>
Notes to Financial Statements (unaudited)
Beneficial Interest
There is an unlimited number of $0.001 par value shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Class A* Class C**
--------------------------------------------------------
Shares Amount Shares Amount
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
For the six months ended
November 30, 1998:
Shares sold ........... 612,589 $ 8,372,812 211,959 $ 2,929,125
Shares repurchased .... (765) (10,948) -- --
Shares converted from
Class X to Class Y .. -- -- -- --
----------- ----------- ----------- -----------
Net increase (decrease) 611,824 $ 8,361,864 211,959 $ 2,929,125
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<CAPTION>
Class X*** Class Y
--------------------------------------------------------
Shares Amount Shares Amount
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
For the six months ended
November 30, 1998:
Shares sold ........... 171,810 $ 2,361,185 157,623 $ 2,242,175
Shares repurchased .... (28,956) (398,536) (854,213) (11,50,576)
Shares converted from
Class X to Class Y .. (198,767) (2,627,695) 198,616 2,627,695
----------- ----------- ----------- -----------
Net increase (decrease) (55,913) $ (665,046) (497,974) $(6,780,706)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
For the period
December 31,
1997+ through
May 31, 1998:
Shares sold ............... 51,913 $725,507 910,607 $11,589,098
Shares repurchased ........ -- -- (1,282) (18,384)
----------- ----------- ----------- -----------
Net increase .............. 51,913 $725,507 909,325 $11,570,714
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
* Commencement of operations--October 2, 1998
** Commencement of operations--October 7, 1998
*** Former Class A
+ Commencement of operations
16
<PAGE>
PaineWebber S&P 500 Index Fund
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each
period is presented below:
<TABLE>
<CAPTION>
Class A Class C Class X Class Y
------------ ------------- -------------------------- -------------------------
For the For the For the
Period Period Period For the For the For the
October 2, October 7, June 1, Period Six Months Period
1998+ to 1998+ to 1998 to December 31, Ended December 31
November 30, November 30, September 30, 1997+ November 1997+
1998 1998 1998++ through 30, 1998 through
(unaudited) (unaudited) (unaudited) May 31, 1998 (unaudited) May 31, 1998
----------- ----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 12.83 $ 12.80 $ 14.11 $ 12.50 $ 14.12 $ 12.50
-------- ------- ------- -------- ------- ---------
Net investment income .......................... 0.02* 0.01* 0.05* 0.03 0.09* 0.06
Net realized and unrealized gains (losses)
from investments and futures ................. 2.27* 2.29* (0.94*) 1.58 0.91* 1.56
-------- ------- ------- -------- ------- ---------
Net increase (decrease) from investment
operations ................................... 2.29 2.30 (0.89) 1.61 1.00 1.62
-------- ------- ------- -------- ------- ---------
Net asset value, end of period ................. $ 15.12 $ 15.10 $ 13.22 $ 14.11 $ 15.12 $ 14.12
-------- ------- ------- -------- ------- ---------
-------- ------- ------- -------- ------- ---------
Total investment return (1) .................... 17.85% 17.97% (6.31)% 12.88% 7.08% 12.96%
-------- ------- ------- -------- ------- ---------
-------- ------- ------- -------- ------- ---------
Ratios/Supplemental Data:
Net assets, end of period (000's) .............. $ 9,252 $ 3,200 $ 0 $ 789 6,281 $ 12,892
Expenses to average net assets net of
waivers and reimbursements from adviser ...... 0.60%** 1.35%** 0.40%** 0.40%** 0.35%** 0.35%**
Expenses to average net assets before
waivers and reimbursements from adviser ...... 1.67%** 2.43%** 1.29%** 2.25%** 1.29%** 2.22%**
Net investment income to average net assets
net of waivers and reimbursements from
adviser ...................................... 0.99%** 0.38%** 1.19%** 1.26%** 1.17%** 1.41%**
Net investment income (loss) to average net
assets before waivers and reimbursements
from adviser ................................. (0.09)%** (0.83)%** 0.29%** (0.60)%** 0.23%** (0.46)%**
Portfolio turnover rate ........................ 73% 73% 73% 1% 73% 1%
</TABLE>
- ------
* Calculated using average daily shares outstanding for the period
** Annualized
+ Commencement of issuance of shares
++ Shares of former Class A were renamed Class X and then converted into
Class Y on September 30, 1998
(1) Total investment return is calculated assuming a $1,000 investment on
the first day of the period reported, reinvestment of all dividends and
distributions, if any, at net asset value on the payable dates and a
sale at net asset value on the last day of each period reported. The
figures do not include sales charges or program fees; results would be
lower if sales charges or program fees were included. Total investment
return for the periods of less than one year has not been annualized.
17
<PAGE>
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Trustees
E. Garrett Bewkes, Jr.
Chairman
Margo N. Alexander
Richard Q. Armstrong
Richard R. Burt
Mary C. Farrell
Meyer Feldberg
George W. Gowen
Frederic V. Malek
Carl W. Schafer
Principal Officers
Margo N. Alexander
President
Victoria E. Schonfeld
Vice President
Dianne E. O'Donnell
Vice President and Secretary
Paul H. Schubert
Vice President and Treasurer
T. Kirkham Barneby
Vice President
Investment Adviser,
Administrator and Distributor
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
A prospectus containing more complete information for any of the Funds listed
on the back cover can be obtained from a PaineWebber investment executive or
corresponding firm. Read the prospectus carefully before investing.
The financial information included herein is taken from the records of the
Fund without examination by independent auditors who do not express an
opinion thereon.
This report is not to be used in conjunction with the offering of shares of
the Fund unless accompanied or preceded by an effective prospectus.
<PAGE>
PaineWebber offers a family of 27 funds which
encompass a diversified range of investment goals.
Bond Funds
o High Income Fund
o Investment Grade Income Fund
o Low Duration U.S. Government Income Fund
o Strategic Income Fund
o U.S. Government Income Fund
Tax-Free Bond Funds
o California Tax-Free Income Fund
o Municipal High Income Fund
o National Tax-Free Income Fund
o New York Tax-Free Income Fund
Stock Funds
o Financial Services Growth Fund
o Growth Fund
o Growth and Income Fund
o Mid Cap Fund
o Small Cap Fund
o S&P 500 Index Fund
o Tax-Managed Equity Fund
o Utility Income Fund
Asset Allocation Funds
o Balanced Fund
o Tactical Allocation Fund
Global Funds
o Asia Pacific Growth Fund
o Emerging Markets Equity Fund
o Global Equity Fund
o Global Income Fund
Mitchell Hutchins Portfolios
o Aggressive Portfolio
o Moderate Portfolio
o Conservative Portfolio
PaineWebber Money Market Fund
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(Copyright)1999 PaineWebber Incorporated
Member SIPC
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S&P 500
Index
Fund
SEMIANNUAL REPORT
November 30, 1998
