<PAGE>
PaineWebber
S&P 500 Index Fund
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PROSPECTUS
SEPTEMBER 30, 1999
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This prospectus offers Class A, Class C and Class Y shares of PaineWebber S&P
500 Index Fund. Each class has different sales charges and ongoing expenses. You
can choose the class that is best for you based on how much you plan to invest
and how long you plan to hold your fund shares. Class Y shares are available
only to certain types of investors.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the fund's shares or determined whether this prospectus
is complete or accurate. To state otherwise is a crime.
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PaineWebber S&P 500 Index Fund
Contents
THE FUND
<TABLE>
<S> <C> <C>
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What every investor 3 S&P 500 Index Fund
should know about 6 More About Risks and Investment Strategies
the fund
YOUR INVESTMENT
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Information for 7 Managing Your Fund Account
managing your fund -- Flexible Pricing
account -- Buying Shares
-- Selling Shares
-- Exchanging Shares
-- Pricing and Valuation
ADDITIONAL INFORMATION
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Additional important 12 Management
information about 13 Dividends and Taxes
the fund 14 Financial Highlights
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Where to learn more Back Cover
about PaineWebber
mutual funds
</TABLE>
The fund is not a complete or
balanced investment program.
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Prospectus Page 2
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PaineWebber S&P 500 Index Fund
PaineWebber S&P 500 Index Fund
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
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FUND OBJECTIVE
To replicate the total return of the S&P 500 Index, before fees and expenses.
PRINCIPAL INVESTMENT STRATEGIES
The fund invests primarily in common stocks issued by companies in the Standard
& Poor's 500 Composite Stock Price Index. The fund ordinarily invests in at
least 450 stocks that are represented in the Index in proportion to their
weighting in the Index. The fund also invests, to a lesser extent, in related
derivatives, such as options and futures contracts, that simulate investment in
the Index.
The S&P 500 Index is composed of 500 common stocks that are selected by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ('S&P'). Most of these
500 stocks trade on the New York Stock Exchange. These stocks represent
approximately 75% of the market value of all U.S common stocks but do not
necessarily represent the largest companies. S&P selects the component stocks
included in the Index with the aim of achieving a distribution that is
representative of the various industry components of the U.S. market for common
stocks. S&P also considers aggregate market value and trading activity in the
selection process. Each stock in the Index is weighted by its total market value
relative to the total market value of all securities in the Index.
The fund's investment adviser, Mitchell Hutchins Asset Management Inc., uses a
'passive' investment approach in attempting to replicate the investment
performance of the S&P 500 Index rather than actively buying and selling stocks,
some of which might not be included in the S&P 500 Index, in an effort to 'beat'
the market. Mitchell Hutchins may use options and futures and other derivatives
in strategies intended to simulate full investment in the S&P 500 Index stocks
while retaining a cash balance for fund management purposes. Mitchell Hutchins
also may use these instruments to reduce the risk of adverse price movements
while investing cash received when investors buy fund shares, to facilitate
trading and to reduce transaction costs.
The fund is not sponsored, endorsed, sold or promoted by S&P, and S&P makes no
representation regarding the advisability of investing in the fund. S&P 500'r'
is a trademark of the McGraw-Hill Companies, Inc. and has been licensed for use
by Mitchell Hutchins.
PRINCIPAL RISKS
An investment in the fund is not guaranteed; you may lose money by investing in
the fund.
Common stocks, which are the fund's main type of investment, generally fluctuate
in value more than other investments. The fund expects a close correlation
between its performance and that of the S&P 500 Index in both rising and falling
markets. The fund's performance, however, generally will not be identical to
that of the Index because of the fees and expenses borne by the fund and
investor purchases and sales of fund shares, which can occur daily.
More information about these and other risks of an investment in the fund is
provided below in 'More About Risks and Investment Strategies.' In particular,
see the following headings:
Equity Risk
Index Tracking Risk
Derivatives Risk
Foreign Securities Risk
Information on the fund's investment strategies and recent holdings can be found
in its current annual/semi-annual reports (see back cover for information on
ordering such reports).
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Prospectus Page 3
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PaineWebber S&P 500 Index Fund
PERFORMANCE
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RISK/RETURN BAR CHART AND TABLE
The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.
The bar chart shows how the fund's performance has varied from year to year. The
chart shows Class Y shares because they have the longest performance history of
any class of fund shares. Unlike the other classes of shares, Class Y shares
have no sales charges.
The table that follows the chart shows the average annual returns over several
time periods for the fund's Class Y shares. The fund's other classes of shares
have not been outstanding for a full calendar year. The table compares fund
returns to returns on the S&P 500 Index, a broad-based market index that is
unmanaged and that, therefore, does not include any expenses.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
TOTAL RETURN ON CLASS Y SHARES (1998 IS THE FUND'S FIRST FULL CALENDAR YEAR OF
OPERATIONS.)
[PERFORMANCE GRAPH]
YEAR PERCENTAGES
- ---- -----------
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998 27.93%
Total return January 1, 1999 to June 30, 1999 -- 12.12%
Best quarter during years shown: 4th quarter 1998 -- 20.87%
Worst quarter during years shown: 3rd quarter 1998 -- (10.00)%
AVERAGE ANNUAL TOTAL RETURNS*
as of December 31, 1998
<TABLE>
<CAPTION>
CLASS Y S&P 500
CLASS (12/31/97) INDEX
(INCEPTION DATE) ---------- -----
<S> <C> <C>
One Year.................................................. 27.93% 28.60%
Life of Class............................................. 27.93% 28.60%
</TABLE>
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* Average annual total returns are not shown for Class A and Class C shares
because those shares were not in existence for a full calendar year.
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Prospectus Page 4
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PaineWebber S&P 500 Index Fund
EXPENSES AND FEE TABLES
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FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investments)
<TABLE>
<CAPTION>
CLASS A CLASS C CLASS Y
------- ------- -------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a % of
offering price)........................................... 2.5% None None
Maximum Contingent Deferred Sales Charge (Load) (CDSC)
(as a % of offering price)................................ None 1% None
Exchange Fee................................................ None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
<CAPTION>
CLASS A CLASS C CLASS Y
------- ------- -------
<S> <C> <C> <C>
Management Fees............................................. 0.20% 0.20% 0.20%
Distribution and/or Service (12b-1) Fees.................... 0.25 1.00 0.00
Other Expenses.............................................. 1.07 1.04 1.09
---- ---- ----
Total Annual Fund Operating Expenses........................ 1.52% 2.24% 1.29%
---- ---- ----
---- ---- ----
Expense Reimbursements*..................................... 0.92 0.89 0.94
---- ---- ----
Net Expenses*............................................... 0.60% 1.35% 0.35%
---- ---- ----
---- ---- ----
</TABLE>
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* The fund and Mitchell Hutchins have entered into an expense reimbursement
agreement. Mitchell Hutchins has agreed to reimburse the fund to the extent that
the fund's expenses through the end of the current fiscal year otherwise would
exceed the 'Net Expenses' rates for each class shown above. The fund has agreed
to repay Mitchell Hutchins for those reimbursed expenses if it can do so over
the following three years without causing the fund's expenses in any of those
three years to exceed those 'Net Expenses' rates.
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
This example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods unless
otherwise stated. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same, except for the
one year period when the fund's expenses are lower due to its reimbursement
agreement with Mitchell Hutchins. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A................................................. $310 $630 $ 973 $1,941
Class C (assuming sale of all shares at end of
period)............................................... 237 615 1,119 2,505
Class C (assuming no sale of shares).................... 137 615 1,119 2,505
Class Y................................................. 36 316 617 1,474
</TABLE>
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Prospectus Page 5
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PaineWebber S&P 500 Index Fund
MORE ABOUT RISKS
AND INVESTMENT STRATEGIES
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PRINCIPAL RISKS
The main risks of investing in the fund are described below. Other risks of
investing in the fund, along with further detail about some of the risks
described below, are discussed in the fund's Statement of Additional Information
('SAI'). Information on how you can obtain the SAI is on the back cover of this
prospectus.
Equity Risk. The prices of common stocks and other equity securities generally
fluctuate more than those of other investments. They reflect changes in the
issuing company's financial condition and changes in the overall market. Common
stocks generally represent the riskiest investment in a company. The fund may
lose a substantial part, or even all, of its investment in a company's stock.
Index Tracking Risk. The fund expects a close correlation between its
performance and that of the S&P 500 Index in both rising and falling markets.
While the fund attempts to replicate, before deduction of fees and operating
expenses, the investment results of the Index, the fund's investment results
generally will not be identical to those of the Index. Deviations from the
performance of the Index may result from shareholder purchases and sales of
shares that can occur daily. In addition, the fund must pay fees and expenses
that are not borne by the Index.
Derivatives Risk. The value of 'derivatives' -- so-called because their value
'derives' from the value of an underlying asset, reference rate or index -- may
rise or fall more rapidly than other investments. For some derivatives, it is
possible for the fund to lose more than the amount it invested in the
derivative. Derivatives include options and futures contracts that may be used
to simulate full investment in the S&P 500 Index.
Foreign Securities Risk. The S&P 500 Index includes some U.S. dollar-denominated
foreign securities. Foreign securities involve risks that normally are not
associated with securities of U.S. issuers. These include risks relating to
political, social and economic developments abroad and differences between U.S.
and foreign regulatory requirements and market practices.
ADDITIONAL RISKS
Year 2000 Risk. The fund could be adversely affected by problems relating to the
inability of computer systems used by Mitchell Hutchins and the fund's other
service providers to recognize the year 2000. While year 2000-related computer
problems could have a negative effect on the fund, Mitchell Hutchins is working
to avoid these problems with respect to its own computer systems and to obtain
assurances from service providers that they are taking similar steps.
Similarly, the companies in which the fund invests and trading systems used by
the fund could be adversely affected by this issue. The ability of a company or
trading system to respond successfully to the issue requires both technological
sophistication and diligence, and there can be no assurance that any steps taken
will be sufficient to avoid an adverse impact on the fund.
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Prospectus Page 6
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PaineWebber S&P 500 Index Fund
MANAGING YOUR FUND ACCOUNT
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FLEXIBLE PRICING
The fund offers three classes of shares -- Class A, Class C and Class Y. Each
class has different sales charges and ongoing expenses. You can choose the class
that is best for you, based on how much you plan to invest and how long you plan
to hold your fund shares. Class Y shares are only available to certain types of
investors.
The fund has adopted a plan under rule 12b-1 for its Class A and Class C shares
that allows it to pay service and (for Class C shares) distribution fees for the
sale of its shares and services provided to shareholders. Because the 12b-1
distribution fees for Class C shares are paid out of the fund's assets on an
ongoing basis, over time they will increase the cost of your investment and may
cost you more than if you paid a front-end sale charge.
CLASS A SHARES
Class A shares have a front-end sales charge that is included in the offering
price of the Class A shares. This sales charge is not invested in the fund.
Class A shares pay an annual 12b-1 service fee of 0.25% of average net assets,
but they pay no 12b-1 distribution fees. The ongoing expenses for Class A shares
are lower than for Class C shares.
The Class A sales charges for the fund are described in the following table.
CLASS A SALES CHARGES
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF: DISCOUNT TO SELECTED DEALERS AS
AMOUNT OF INVESTMENT OFFERING PRICE NET AMOUNT INVESTED PERCENTAGE OF OFFERING PRICE
- -------------------- -------------- ------------------- -------------------------------
<S> <C> <C> <C>
Less than $100,000........................ 2.50% 2.56% 2.25%
$100,000 to $249,999...................... 2.00 2.04 1.75
$250,000 to $499,999...................... 1.50 1.52 1.25
$500,000 to $999,999...................... 1.00 1.01 0.75
$1,000,000 and over(1).................... None None 0.50(2)
</TABLE>
(1) A contingent deferred sales charge of 0.50% of the shares' offering price or
the net asset value at the time of sale by the shareholder, whichever is
less, is charged on sales of shares made within one year of the purchase
date. Class A shares representing reinvestment of dividends are not subject
to this 0.50% charge. Withdrawals in the first year after purchase of up to
12% of the value of the fund account under the fund's Systematic Withdrawal
Plan are not subject to this charge.
(2) Mitchell Hutchins pays 0.50% to PaineWebber.
Sales Charge Reductions and Waivers. You may qualify for a lower sales charge if
you already own Class A shares of a PaineWebber mutual fund. You can combine the
value of Class A shares that you own in other PaineWebber funds and the purchase
amount of the Class A shares of the PaineWebber fund that you are buying.
You may also qualify for a lower sales charge if you combine your purchases with
those of:
your spouse, parents or children under age 21;
your Individual Retirement Accounts (IRAs);
certain employee benefit plans, including 401(k) plans;
a company that you control;
a trust that you created;
Uniform Gifts to Minors Act/Uniform Transfers to Minors Act accounts created by
you or by a group of investors for your children; or
accounts with the same adviser.
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Prospectus Page 7
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PaineWebber S&P 500 Index Fund
You may qualify for a complete waiver of the sales charge if you:
Are an employee of PaineWebber or its affiliates or the spouse, parent or child
under age 21 of a PaineWebber employee;
Buy these shares through a PaineWebber Financial Advisor who was formerly
employed as an investment executive with a competing brokerage firm that was
registered as a broker-dealer with the SEC, and
-- you were the Financial Advisor's client at the competing brokerage firm;
-- within 90 days of buying shares in the fund, you sell shares of one or
more mutual funds that were principally underwritten by the competing
brokerage firm or its affiliates, and you either paid a sales charge to
buy those shares, pay a contingent deferred sales charge when selling
them or held those shares until the contingent deferred sales charge was
waived; and
-- you purchase an amount that does not exceed the total amount of money you
received from the sale of the other mutual fund;
Acquire these shares through the reinvestment of dividends of a PaineWebber
unit investment trust;
Are a 401(k) or 403(b) qualified employee benefit plan with 50 or more eligible
employees in the plan or at least $1 million in assets;
Are a participant in the PaineWebber Members Only'sm' Program. For investments
made pursuant to this waiver, Mitchell Hutchins may make payments out of its
own resources to PaineWebber and to participating membership organizations in
a total amount not to exceed 1% of the amount invested; or
Acquire these shares through a PaineWebber InsightOne'sm' Program brokerage
account.
Note: See the fund's SAI for some other sales charge waivers. If you think you
qualify for any sales charge reductions or waivers, you will need to provide
documentation to PaineWebber or the fund. For more information, you should
contact your PaineWebber Financial Advisor or correspondent firm or call
1-800-647-1568. If you want information on the fund's Systematic Withdrawal
Plan, see the SAI or contact your PaineWebber Financial Advisor or correspondent
firm.
CLASS C SHARES
Class C shares have a level load sales charge in the form of ongoing 12b-1
distribution fees. When you purchase Class C shares, we will invest 100% of your
purchase in fund shares.
Class C shares pay an annual 12b-1 distribution fee of 0.75% of average net
assets, as well as an annual 12b-1 service fee of 0.25% of average net assets.
Over time these fees will increase the cost of your investment and may cost you
more than if you paid a front-end sales charge. Class C shares do not convert to
another class of shares. This means that you will pay the 12b-1 fees for as long
as you own your shares.
Class C shares also have a contingent deferred sales charge. You may have to pay
the deferred sales charge if you sell your shares within one year of the date
you purchased them. We calculate the deferred sales charge on sales of Class C
shares by multiplying 1.00% by the lesser of the net asset value of the Class C
shares at the time of purchase or the net asset value at the time of sale. We
will not impose the deferred sales charge on Class C shares representing
reinvestment of dividends or on withdrawals in the first year after purchase, of
up to 12% of the value of your Class C shares under the Systematic Withdrawal
Plan.
You may be eligible to sell your shares without paying a contingent deferred
sales charge if you:
Are a 401(k) or a 403(b) qualified employee benefit plan with less than 100
eligible employees or less than $1 million in assets; or
Are eligible to invest in certain offshore investment pools offered by
PaineWebber, your shares are sold before March 31, 2000, and the proceeds are
used to purchase interests in one or more of these pools.
Note: If you want information on the fund's Systematic Withdrawal Plan, see the
SAI or contact your PaineWebber Financial Advisor or correspondent firm.
CLASS Y SHARES
Class Y shares have no sales charge. Only specific types of investors can
purchase Class Y shares. You may be eligible to purchase Class Y shares if you:
Buy shares through PaineWebber's PACE Multi-Advisor Program;
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Prospectus Page 8
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PaineWebber S&P 500 Index Fund
Buy $10 million or more of PaineWebber fund shares at any one time;
Are a qualified retirement plan with 5,000 or more eligible employees or $50
million in assets; or
Are an investment company advised by PaineWebber or an affiliate of
PaineWebber.
Class Y shares do not pay ongoing distribution or service fees or sales charges.
The ongoing expenses for Class Y shares are the lowest for all the classes.
BUYING SHARES
If you are a PaineWebber client, or a client of a PaineWebber correspondent
firm, you can purchase fund shares through your Financial Advisor. Otherwise,
you can invest in the funds through the fund's transfer agent, PFPC Inc. You can
obtain an application by calling 1-800-647-1568. You must complete and sign the
application and mail it, along with a check, to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
If you wish to invest in other PaineWebber Funds, you can do so by:
Contacting your Financial Advisor (if you have an account at PaineWebber or at
a PaineWebber correspondent firm);
Mailing an application with a check; or
Opening an account by exchanging shares from another PaineWebber fund.
You do not have to complete an application when you make additional investments
in the same fund.
The fund and Mitchell Hutchins reserve the right to reject a purchase order or
suspend the offering of shares.
MINIMUM INVESTMENTS
<TABLE>
<S> <C>
To open an account................. $1,000
To add to an account............... $ 100
</TABLE>
The fund may waive or reduce these amounts for:
Employees of PaineWebber or its affiliates; or
Participants in certain pension plans, retirement accounts, unaffiliated
investment programs or the funds' automatic investment plans.
Frequent Trading The interests of the fund's long-term shareholders and its
ability to manage its investments may be adversely affected when its shares are
repeatedly bought and sold in response to short-term market fluctuations --
also known as 'market timing.' When large dollar amounts are involved, the fund
may have difficulty implementing long-term investment strategies, because it
cannot predict how much cash it will have to invest. Market timing also may
force the fund to sell portfolio securities at disadvantageous times to raise
the cash needed to buy a market timer's fund shares. These factors may hurt the
fund's performance and its shareholders. When Mitchell Hutchins believes
frequent trading would have a disruptive effect on the fund's ability to manage
its investments, Mitchell Hutchins and the fund may reject purchase orders and
exchanges into the fund by any person, group or account that Mitchell Hutchins
believes to be a market timer. The fund may notify the market timer that a
purchase order or an exchange has been rejected after the day the order is
placed.
SELLING SHARES
You can sell your fund shares at any time. If you own more than one class of
shares, you should specify which class you want to sell. If you do not, the fund
will assume that you want to sell shares in the following order: Class A, then
Class C and last, Class Y.
If you want to sell shares that you purchased recently, the fund may delay
payment until it verifies that it has received good payment. If you purchased
shares by check, this can take up to 15 days.
If you have an account with PaineWebber or a PaineWebber correspondent firm, you
can sell shares by contacting your Financial Advisor.
If you do not have an account at PaineWebber or a correspondent firm, and you
bought your shares through the transfer agent, you can sell your shares by
writing to the fund's transfer agent. Your letter must include:
Your name and address;
The fund's name;
The fund account number;
The dollar amount or number of shares you want to sell; and
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Prospectus Page 9
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PaineWebber S&P 500 Index Fund
A guarantee of each registered owner's signature. A signature guarantee may be
obtained from a financial institution, broker, dealer or clearing agency that
is a participant in one of the medallion programs recognized by the
Securities Transfer Agents Association. These are: Securities Transfer Agents
Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) and the
New York Stock Exchange Medallion Signature Program (MSP). The fund will not
accept signature guarantees that are not a part of these programs.
Mail the letter to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
If you sell Class A shares and then repurchase Class A shares of the fund within
365 days of the sale, you can reinstate your account without paying a sales
charge.
It costs the fund money to maintain shareholder accounts. Therefore, the fund
reserves the right to repurchase all shares in any account that has a net asset
value of less than $500. If the fund elects to do this with your account, it
will notify you that you can increase the amount invested to $500 or more within
60 days. The fund will not repurchase shares in accounts that fall below $500
solely because of a decrease in the fund's net asset value.
EXCHANGING SHARES
You may exchange Class A or Class C shares of the fund for shares of the same
class of most other PaineWebber funds. You may not exchange Class Y shares.
You will not pay either a front-end sales charge or a deferred sales charge when
you exchange shares. However, you may have to pay a deferred sales charge if you
later sell the shares you acquired in the exchange. A fund will use the date
that you purchased the shares in the first fund to determine whether you must
pay a deferred sales charge when you sell the shares in the acquired fund.
Other PaineWebber funds may have different minimum investment amounts. You may
not be able to exchange your shares if your exchange is not as large as the
minimum investment amount in that other fund.
You may exchange shares of one fund for shares of another fund only after the
first purchase has settled and the first fund has received your payment.
PaineWebber Clients. If you bought your shares through PaineWebber or a
correspondent firm, you may exchange your shares by placing an order with your
PaineWebber Financial Advisor.
Other Investors. If you are not a PaineWebber client, you may exchange your
shares by writing to the fund's transfer agent. You must include:
Your name and address;
The name of the fund whose shares you are selling and the name of the fund
whose shares you want to buy;
Your account number;
How much you are exchanging (by dollar amount or by number of shares to be
sold); and
A guarantee of your signature. (See 'Buying Shares' for information on
obtaining a signature guarantee.)
Mail the letter to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
A fund may modify or terminate the exchange privilege at any time.
PRICING AND VALUATION
The price at which you may buy, sell or exchange fund shares is based on net
asset value per share. The fund calculates net asset value on days that the New
York Stock Exchange is open. The fund calculates net asset value separately for
each class as of the close of regular trading on the NYSE (generally, 4:00 p.m.,
Eastern time). The NYSE normally is not open, and the fund does not price its
shares, on national holidays and on Good Friday. If trading on the NYSE is
halted for the day before 4:00 p.m., Eastern time, the fund's net asset value
per share will be calculated as of the time trading was halted.
Your price for buying, selling or exchanging shares will be based on the net
asset value that is next calculated after the fund accepts your order. If you
place your order through PaineWebber, your PaineWebber Financial Advisor is
responsible for
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Prospectus Page 10
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PaineWebber S&P 500 Index Fund
making sure that your order is promptly sent to the fund.
You should keep in mind that a front-end sales charge may be applied to your
purchase if you buy Class A shares. A deferred sales charge may be applied when
you sell Class C shares.
The fund calculates its net asset value based on the current market value for
its portfolio securities. The fund normally obtains market values for its
securities from independent pricing services that use reported last sales
prices, current market quotations or valuations from computerized 'matrix'
systems that derive values based on comparable securities. If a market value is
not available from an independent pricing source for a particular security, that
security is valued at a fair value determined by or under the direction of the
fund's board. The fund normally uses the amortized cost method to value bonds
that will mature in 60 days or less.
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Prospectus Page 11
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PaineWebber S&P 500 Index Fund
MANAGEMENT
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INVESTMENT ADVISER
Mitchell Hutchins Asset Management Inc. is the fund's investment adviser and
administrator. Mitchell Hutchins is located at 51 West 52nd Street, New York,
New York, 10019, and is a wholly owned asset management subsidiary of
PaineWebber Incorporated, which is wholly owned by Paine Webber Group Inc., a
publicly owned financial services holding company. On August 31, 1999, Mitchell
Hutchins was adviser or sub-adviser of 33 investment companies with 75 separate
portfolios and aggregate assets of approximately $47.8 billion.
PORTFOLIO MANAGERS
T. Kirkham Barneby and Frank Vallario are responsible for the day-to-day
management of the fund's portfolio.
Mr. Barneby assumed his responsibilities for the fund at its inception on
December 31, 1997. He is a managing director and chief investment officer of
quantitative investments of Mitchell Hutchins. Mr. Barneby rejoined Mitchell
Hutchins in 1994 after being with Vantage Global Management for one year. During
the eight years that Mr. Barneby was previously with Mitchell Hutchins, he was a
senior vice president responsible for quantitative management and asset
allocation models.
Mr. Vallario assumed his responsibilities for the fund on September 30, 1999. He
is a vice president of Mitchell Hutchins and a member of its quantitative
investments group. Prior to joining Mitchell Hutchins in March 1996, Mr.
Vallario worked at PaineWebber in its capital markets section (since June 1995).
ADVISORY FEES
The fund paid advisory fees to Mitchell Hutchins at the effective rate of 0% of
its average daily net assets because Mitchell Hutchins waived all of its
advisory fees. The contractual rate for the fund's advisory fees to Mitchell
Hutchins is 0.20% of the fund's average daily net assets.
OTHER INFORMATION
The fund has received an exemptive order from the SEC that permits the board to
appoint and replace sub-advisers and to amend sub-advisory contracts without
obtaining shareholder approval. Shareholders must approve this policy before the
board may implement it. As of the date of this prospectus, the fund has not
asked shareholders to do so.
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Prospectus Page 12
<PAGE>
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PaineWebber S&P 500 Index Fund
DIVIDENDS AND TAXES
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DIVIDENDS
The fund normally declares and pays dividends and distributes any gains
annually.
Classes with higher expenses are expected to have lower dividends. For example,
Class C shares are expected to have the lowest dividends of any class of the
fund's shares, while Class Y shares are expected to have the highest.
You will receive dividends in additional shares of the same class unless you
elect to receive them in cash. Contact your Financial Advisor at PaineWebber or
one of its correspondent firms if you prefer to receive dividends in cash.
TAXES
The dividends that you receive from the fund generally are subject to federal
income tax regardless of whether you receive them in additional fund shares or
in cash. If you hold fund shares through a tax-exempt account or plan, such as
an IRA or 401(k) plan, dividends on your shares generally will not be subject to
tax.
When you sell fund shares, you generally will be subject to federal income tax
on any gain you realize. If you exchange the fund's shares for shares of another
PaineWebber mutual fund, the transaction will be treated as a sale of the first
fund's shares, and any gain will be subject to federal income tax.
The fund expects that its dividends will include distributions of both ordinary
imcome and capital gain. A distribution of capital gains will be taxed at a
lower rate than ordinary income if the fund held the assets that generated the
gains for more than 12 months. The fund will tell you how you should treat its
dividends for tax purposes.
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Prospectus Page 13
<PAGE>
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PaineWebber S&P 500 Index Fund
FINANCIAL HIGHLIGHTS
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The following financial highlights table is intended to help you understand the
fund's financial performance for the life of each class. Certain information
reflects financial results for a single fund share. In the tables, 'total
investment return' represents the rate that an investor would have earned (or
lost) on an investment in the fund (assuming reinvestment of all dividends).
This information in the financial highlights has been audited by Ernst & Young
LLP, independent auditors, whose report, along with the fund's financial
statements, is included in the fund's Annual Report to Shareholders. The Annual
Report may be obtained without charge by calling 1-800-647-1568.
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Prospectus Page 14
<PAGE>
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PaineWebber S&P 500 Index Fund
FINANCIAL HIGHLIGHTS
(Continued)
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<TABLE>
<CAPTION>
CLASS A CLASS C CLASS Y
----------- ----------- -----------------------------
FOR THE FOR THE FOR THE
PERIOD PERIOD PERIOD
OCTOBER 2, OCTOBER 7, DECEMBER 31,
1998'D' 1998'D' FOR THE 1997'D'
THROUGH THROUGH YEAR ENDED THROUGH
MAY 31, MAY 31, MAY 31, MAY 31,
1999 1999 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 12.83 $ 12.80 $14.12 $ 12.50
------- ------- ------ -------
Net investment income.................................... 0.08* 0.02* 0.16* 0.06
Net realized and unrealized gains (losses) from
investments and futures................................ 4.03* 4.02* 2.68* 1.56
------- ------- ------ -------
Net increase (decrease) from investment operations....... 4.11 4.04 2.84 1.62
------- ------- ------ -------
Dividends from net investment income..................... (0.12) (0.10) (0.12) --
Distributions from net realized gains from investment
transactions........................................... (0.10) (0.10) (0.10) --
------- ------- ------ -------
Total dividends and distributions to shareholders........ (0.22) (0.20) (0.22) --
------- ------- ------ -------
Net asset value, end of period........................... $ 16.72 $ 16.64 $16.74 $ 14.12
------- ------- ------ -------
------- ------- ------ -------
Total investment return(1)............................... 32.23% 31.77% 20.30% 12.96%
------- ------- ------ -------
------- ------- ------ -------
Ratios/Supplemental Data:
Net assets, end of period (000's)........................ $18,920 $23,813 $6,480 $12,892
Expenses to average net assets net of waivers and
reimbursements from adviser............................ 0.60%** 1.35%** 0.35% 0.35%**
Expenses to average net assets before waivers and
reimbursements from adviser............................ 1.52%** 2.24%** 1.29% 2.22%**
Net investment income to average net assets net of
waivers and reimbursements from adviser................ 0.87%** 0.17%** 1.12% 1.41%**
Net investment income (loss) to average net assets before
waivers and reimbursements from adviser................ (0.06)%** (0.73)%** 0.18% (0.46)%**
Portfolio turnover rate.................................. 62% 62% 62% 1%
</TABLE>
- ------------------------
* Calculated using average daily shares outstanding for the period
** Annualized
'D' Commencement of issuance of shares
(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 returns for periods
of less than one year have not been annualized.
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Prospectus Page 15
<PAGE>
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PaineWebber S&P 500 Index Fund
<TABLE>
<S> <C> <C>
TICKER SYMBOL: S&P 500 Index Fund Class: A : None
C : PWSPX
Y : None
</TABLE>
If you want more information about the fund, the following documents are
available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS
Additional information about the fund's investments is available in the fund's
annual and semi-annual reports to shareholders. In the fund's annual report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the fund's performance during the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI provides more detailed information about the fund and is incorporated by
reference into this prospectus.
You may discuss your questions about the fund by contacting your PaineWebber
Financial Advisor. You may obtain free copies of annual and semi-annual reports
and the SAI by contacting the fund directly at 1-800-647-1568.
You may review and copy information about the fund, including shareholder
reports and the SAI, at the Public Reference Room of the Securities and Exchange
Commission. You can get text-only copies of reports and other information about
the fund and about the operations of the SEC's Public Reference Room:
For a fee, by writing to or calling the SEC's Public Reference Room,
Washington, D.C. 20549-6009
Telephone: 1-800-SEC-0330
Free, from the SEC's Internet website at: http://www.sec.gov
PaineWebber Index Trust
- -- PaineWebber S&P 500 Index Fund
Investment Company Act File No. 811-08229
'c'1999 PaineWebber Incorporated
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STATEMENT OF DIFFERENCES
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The registered trademark symbol shall be expressed as ................... 'r'
The dagger symbol shall be expressed as ................................. 'D'
The copyright symbol shall be expressed as .............................. 'c'
The service mark symbol shall be expressed as............................ 'sm'
