<PAGE>
PaineWebber
================================================================================
S&P 500
INDEX
FUND
SEMIANNUAL REPORT
NOVEMBER 30, 1999
<PAGE>
PAINEWEBBER S&P 500 INDEX FUND SEMIANNUAL REPORT
January 15, 2000
Dear Shareholder,
We are pleased to present you with the semiannual report for PaineWebber S&P 500
Index Fund (the "Fund") for the six-month period ended November 30, 1999.
MARKET REVIEW
================================================================================
[GRAPHIC OMITTED]
All of the major equity markets gained during the period but none more than the
NASDAQ Composite, which, propelled by technology stocks, rocketed up by about
35%. The Dow Jones Industrial Average (Dow) and Standard and Poor's 500 Index
(S&P 500) saw modest gains of 3.9% and 7.4%, respectively. As in the first half
of the fiscal year, a relatively small number of stocks led the charge. During
the period, market breadth fell to a three-year low. In ever-greater numbers,
investors chased technology stocks, where earnings growth and positive earnings
surprises have been strong. This earnings momentum in technology is likely to
continue in 2000. Current valuations, however, may leave little room for
disappointment, and 1999's success will make for difficult earnings comparisons
in 2000.
The stock market could fare reasonably well in 2000, given expected corporate
earnings growth of 10-12%. This positive scenario assumes that the market can
absorb an interest-rate increase of limited magnitude.
PORTFOLIO REVIEW
================================================================================
PERFORMANCE--TOTAL % RETURNS FOR SIX MONTHS ENDED 11/30/99
Before Sales After Maximum
Charges Sales Charges
- --------------------------------------------------------------------------------
Class A Shares 7.06 4.37
Class C Shares 6.73 5.73
Class Y Shares 7.23 7.23
S&P 500 Index 7.36 7.36
- --------------------------------------------------------------------------------
The Fund's total return consists of the change in net asset value with any
dividends reinvested. For shareowners who purchased or redeemed Fund shares
during the period, the Fund's total return may be lower because of applicable
sales charges. Class Y shares are not subject to sales charges.
PAINEWEBBER
S&P 500 INDEX FUND
Investment Goal:
Replicate the total return of the S&P 500 Index before fees and expenses
Portfolio Managers:
T. Kirkham Barneby and Frank Vallario, Mitchell Hutchins Asset Management Inc.
Commencement:
October 2, 1998 (Class A), October 7, 1998 (Class C), December 31, 1997 (Class
Y)
Dividend Payments:
Annually
1
<PAGE>
SEMIANNUAL REPORT
PORTFOLIO HIGHLIGHTS
[GRAPHIC OMITTED]
The Fund attempts to match the performance of the S&P 500 Index, before
consideration of Fund-related fees and expenses, by buying and holding
substantially all the common stocks comprising the Index. The Fund may also
invest in options and futures contracts in order to simulate full investment in
the S&P 500 Index, while retaining a cash balance for portfolio management
purposes, to facilitate trading and to reduce transaction costs.
Characteristics* 11/30/99 5/31/99
- --------------------------------------------------------------------------------
Net Assets ($mm) $70.4 $49.2
Number of Stocks 472 467
Stocks 95.0% 84.8%
Cash 5.0% 15.2%
- --------------------------------------------------------------------------------
PaineWebber S&P 500 Index Fund--Top Ten Holdings*
As of 11/30/99 % As of 5/31/99 %
- --------------------------------------------------------------------------------
Microsoft Corp. 3.8 Microsoft Corp. 3.2
General Electric Co. 3.5 General Electric Co. 2.7
Cisco Systems Inc. 2.4 IBM Corp. 1.7
Exxon/Mobil Corp. 2.3 Exxon Corp. 1.6
Wal Mart Stores, Inc. 2.1 Wal Mart Stores, Inc. 1.5
Intel Corp 2.1 AT&T Corp. 1.4
Lucent Technologies, Inc. 1.8 Cisco Systems Inc. 1.4
Citigroup, Inc. 1.5 Intel Corp 1.4
IBM Corp. 1.5 Merck & Co., Inc. 1.3
Merck & Co., Inc. 1.5 Lucent Technologies, Inc. 1.2
- --------------------------------------------------------------------------------
Total 22.5 Total 17.4
During the six months ended November 30, 1999, some 29 companies were added to,
and an equal number dropped from, the group of 500 companies that comprises the
S&P 500 Index. Mirroring the changes in the face of American business, 13
technology and communications companies were added to the Index, including
Global Crossing (Nasdaq: GBLX--global telecommunications facilities and
services), Xilink, Inc. (Nasdaq: XLNX--advanced integrated circuit design and
engineering services) and QUALCOMM (Nasdaq: QCOM--digital wireless
communications products). The well-known Internet portal/new media company,
Yahoo! Inc. (Nasdaq: YHOO) was added to the Index in December. Technology
companies now hold five of the top ten spots in the S&P 500 Index's
capitalization rankings, compared with only one spot ten years ago.
* Weightings represent percentages of portfolio assets as of November 30,
1999, unless indicated otherwise. Portfolio composition will vary over
time.
2
<PAGE>
PAINEWEBBER S&P 500 INDEX FUND SEMIANNUAL REPORT
PaineWebber S&P 500 Index Fund--Top Five Sectors*
As of 11/30/99 % As of 5/31/99 %
- --------------------------------------------------------------------------------
Technology 25.5 Technology 18.0
Financial Services 16.7 Financial Services 15.3
Consumer Cyclical 12.5 Consumer Cyclical 11.5
Healthcare 10.3 Healthcare 9.4
Utilities 10.3 Utilities 9.2
- --------------------------------------------------------------------------------
Total 75.3 Total 63.4
On September 30, 1999, Frank Vallario joined Kirk Barneby as a co-manager
of the Fund. Mr. Vallario has been a member of Mr. Barneby's Quantitative
Investment Team, which manages over $3.7 billion in client assets, since 1997,
and he has been with the firm since March 1996. He holds a BS in Finance from
Lehigh University and an MBA in Finance from Rutgers Graduate School of
Management.
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,(1) please contact your Financial Advisor.
Sincerely,
/s/ Margo Alexander /s/ Brian M. Storms
MARGO ALEXANDER BRIAN M. STORMS
Chairman and Chief Executive Officer President and Chief Operating Officer
Mitchell Hutchins Asset Management Inc. Mitchell Hutchins Asset Management Inc.
/s/ T. Kirkham Barneby /s/ Frank A. Vallario
T. KIRKHAM BARNEBY FRANK A. VALLARIO
Managing Director and Portfolio Manager, PaineWebber
Chief Investment Officer-- S&P 500 Index Fund
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 six-month period ended November 30, 1999, and
reflects our views at the time of its writing. Of course, these views may
change in response to changing circumstances. We encourage you to consult
your Financial Advisor regarding your personal investment program.
* Weightings represent percentages of portfolio assets as of November 30,
1999, unless indicated otherwise. Portfolio composition will vary over
time.
(1) 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
PERFORMANCE RESULTS (unaudited)
<TABLE>
<CAPTION>
Net Asset Value Total Return(1)
------------------------------ -------------------------------
12 Months 6 Months
11/30/99 05/31/99 11/30/98 Ended 11/30/99 Ended 11/30/99
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares* $17.90 $16.72 $15.12 20.12% 7.06%
- ------------------------------------------------------------------------------------------
Class C Shares* 17.76 16.64 15.10 19.22 6.73
- ------------------------------------------------------------------------------------------
</TABLE>
Performance Summary Class A Shares
<TABLE>
<CAPTION>
Net Asset Value
-------------------- Capital Gains Total
Period Covered Beginning Ending Distributed Dividends Paid Return(1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10/02/98-12/31/98 $12.83 $15.75 $0.1000 $0.1186 24.56%
- -----------------------------------------------------------------------------------------------
01/01/99-11/30/99 15.75 17.90 -- -- 13.65
- -----------------------------------------------------------------------------------------------
Total: $0.1000 $0.1186
- -----------------------------------------------------------------------------------------------
Cumulative Total Return as of 11/30/99: 41.56%
- -----------------------------------------------------------------------------------------------
</TABLE>
Performance Summary Class C Shares
<TABLE>
<CAPTION>
Net Asset Value
-------------------- Capital Gains Total
Period Covered Beginning Ending Distributed Dividends Paid Return(1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10/07/98-12/31/98 $12.80 $15.73 $0.1000 $0.1031 24.57%
- -----------------------------------------------------------------------------------------------
01/01/99-11/30/99 15.73 17.76 -- -- 12.91
- -----------------------------------------------------------------------------------------------
Total: $0.1000 $0.1031
- -----------------------------------------------------------------------------------------------
Cumulative Total Return as of 11/30/99: 40.64%
- -----------------------------------------------------------------------------------------------
</TABLE>
Average Annual Total Return(1)
<TABLE>
<CAPTION>
% Return After Deducting
% Return Without Sales Charge Maximum Sales Charge
----------------------------- ------------------------
Class Class
----------------------------- ------------------------
A* C* Y* A* C* Y*
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Twelve Months Ended 12/31/99 20.10% 19.24% 20.37% 17.12% 18.24% 20.37%
- ---------------------------------------------------------------------------------------------------------
Five Years Ended 12/31/99 N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------
Ten Years Ended 12/31/99 N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------
Commencement of Operations through 12/31/99 38.04 37.74 24.06 35.26 36.99 24.06
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Figures assume reinvestment of all dividends at net asset value on the
payable dates and do not include sales charges; results for each class
would be lower if sales charges were included. Total return for periods of
less than one year has not been annualized.
* Commencement of operations for Class A and Class C shares are October 2,
1998 and October 7, 1998, respectively.
Note: The Fund offers Class Y shares to a limited group of investors,
including participants in certain investment programs that are sponsored
by PaineWebber and that may invest in PaineWebber mutual funds. For the
six months ended November 30, 1999 and since inception, December 31, 1997
through November 30, 1999, Class Y shares have a total return of 7.23% and
45.71%, respectively. Class Y shares do not have initial or contingent
deferred sales charges or ongoing distribution and service fees.
The data above represents past performance of the Fund's shares, which is
no guarantee of future results. The principal value of an investment in
the Fund will fluctuate, so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
4
<PAGE>
PAINEWEBBER S&P 500 INDEX FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1999 (unaudited)
Number of
Shares Value
- ---------- ----------
COMMON STOCKS--94.64%
Agriculture, Food & Beverage--3.44%
3,700 Archer-Daniels-Midland Co. ................... $ 46,019
1,600 Bestfoods Co. ................................ 87,700
2,500 Campbell Soup Co. ............................ 111,562
2,500 Coca-Cola Enterprises, Inc. .................. 52,969
2,800 Conagra, Inc. ................................ 67,550
1,800 General Mills, Inc. .......................... 67,838
2,100 Heinz, H. J. and Co. ......................... 87,937
800 Hershey Foods Corp. .......................... 39,300
2,300 Kellogg Co. .................................. 77,912
8,500 Pepsico, Inc. ................................ 293,781
800 Quaker Oats Co. .............................. 52,200
2,000 RJR Nabisco Group Holdings Corp. ............. 23,125
5,200 Sara Lee Corp ................................ 126,100
900 Supervalue, Inc. ............................. 17,494
1,900 Sysco Corp. .................................. 72,319
14,300 The Coca-Cola Co. ............................ 962,569
3,300 Unilever N.V ................................. 179,644
700 Wrigley, Wm. Jr. Co. ......................... 58,231
----------
2,424,250
----------
Airlines--0.22%
900 AMR Corp.* ................................... 54,788
800 Delta Air Lines, Inc. ........................ 39,400
2,900 Southwest Airlines Co. ....................... 47,306
400 US Airways Group, Inc.* ...................... 11,175
----------
152,669
----------
Alcohol--0.49%
2,700 Anheuser-Busch Companies, Inc. ............... 201,994
400 Brown Forman Corp. ........................... 25,075
200 Coors Adolph Co. ............................. 9,950
2,500 Seagram Co. Ltd. ............................. 108,906
----------
345,925
----------
Apparel, Retail--0.49%
5,000 Gap, Inc. .................................... 202,500
1,300 Limited, Inc. ................................ 55,169
400 Liz Claiborne ................................ 14,975
800 Nordstrom, Inc. .............................. 22,250
1,900 TJX Companies, Inc. .......................... 49,756
----------
344,650
----------
Apparel, Textiles--0.13%
1,600 Nike, Inc. ................................... 73,600
700 V. F. Corp. .................................. 20,913
----------
94,513
----------
Banks--6.76%
2,300 Amsouth BanCorpation ......................... 51,894
4,200 Bank of New York Co. Inc. .................... 167,475
6,800 Bank One Corp. ............................... 239,700
10,000 BankAmerica Corp. ............................ 585,000
1,900 BB & T Corp. ................................. 61,037
19,600 Citigroup, Inc. .............................. 1,055,950
900 Comerica, Inc. ............................... 47,700
1,700 Fifth Third Bancorp .......................... 119,000
5,500 First Union Corp. ............................ 212,781
5,701 Firstar Corp. ................................ 148,226
1,400 Huntington Bancshares, Inc. .................. 38,763
2,600 KeyCorp ...................................... 70,200
3,000 Mellon Financial Corp. ....................... 109,312
1,000 Morgan, (J.P.) & Co., Inc. ................... 131,500
3,600 National City Corp. .......................... 89,775
600 Northern Trust Corp. ......................... 58,087
1,800 PNC Bank Corp. ............................... 100,350
1,300 Regions Financial Corp. ...................... 35,669
600 Republic New York Corp. ...................... 42,412
1,000 SouthTrust Corp. ............................. 38,813
900 State Street Corp. ........................... 66,094
1,100 Summit Bancorp, Inc. ......................... 35,888
1,900 Suntrust Banks, Inc. ......................... 132,762
1,600 Synovus Financial Corp. ...................... 32,000
4,800 The Chase Manhattan Corp. .................... 370,800
900 Union Planters Corp. ......................... 38,363
4,200 US Bancorp, Inc. ............................. 143,587
1,200 Wachovia Corp. ............................... 92,925
9,500 Wells Fargo and Co.* ......................... 441,750
----------
4,757,813
----------
Chemicals--2.13%
1,300 Air Products & Chemicals, Inc. ............... 42,087
500 Ashland, Inc. ................................ 16,875
700 Avery Dennison Corp. ......................... 41,562
1,300 Dow Chemical Co. ............................. 152,262
6,000 DuPont (E.I.) de Nemours & Co. ............... 356,625
500 Eastman Chemical Co. ......................... 19,438
800 Ecolab, Inc. ................................. 27,700
800 Engelhard Corp. .............................. 13,450
200 FMC Corp.* ................................... 9,700
900 Goodyear Tire & Rubber Co. ................... 30,375
400 Great Lakes Chemical Corp. ................... 13,275
600 Hercules, Inc. ............................... 14,250
1,500 Illinois Tool Works, Inc. .................... 97,125
500 Kerr-McGee Corp. ............................. 28,625
2,300 Minnesota Mining & Manufacturing Co. ......... 219,794
3,700 Monsanto Co. ................................. 156,094
1,000 PPG Industries, Inc. ......................... 58,562
900 Praxair, Inc. ................................ 40,163
1,300 Rohm & Haas Co. .............................. 47,612
500 Sealed Air Corp.* ............................ 23,500
1,000 Sherwin-Williams Co. ......................... 21,438
800 Union Carbide Corp. .......................... 46,800
600 Vulcan Materials Co. ......................... 24,150
----------
1,501,462
----------
5
<PAGE>
PAINEWEBBER S&P 500 INDEX FUND
Number of
Shares Value
- ---------- ----------
COMMON STOCKS--(continued)
Computer Hardware--6.98%
600 Adaptec Inc.* ................................ $ 32,325
900 Apple Computer, Inc.* ........................ 88,087
1,000 Cabletron Systems, Inc.* ..................... 22,938
18,800 Cisco Systems Inc.* .......................... 1,676,725
9,900 Compaq Computer Corp. ........................ 241,931
2,100 Computer Corp.* .............................. 83,606
14,700 Dell Computer Corp.* ......................... 632,100
5,900 EMC Corp.* ................................... 493,019
1,800 Gateway, Inc.* ............................... 137,475
5,900 Hewlett-Packard Co. .......................... 559,762
800 Lexmark International Group, Inc.* ........... 66,400
400 Network Appliance, Inc.* ..................... 47,075
1,600 Pitney Bowes, Inc. ........................... 76,700
1,300 Seagate Technology, Inc.* .................... 48,100
1,200 Silicon Graphics, Inc.* ...................... 11,325
4,500 Sun Microsystems, Inc.* ...................... 595,125
3,900 Xerox Corp. .................................. 105,544
----------
4,918,237
----------
Computer Software--6.98%
700 Adobe Systems, Inc. .......................... 48,081
1,400 BMC Software, Inc.* .......................... 101,938
3,100 Computer Associates International, Inc. ...... 201,500
2,100 Compuware Corp.* ............................. 71,006
10,500 IBM Corp. .................................... 1,082,156
29,600 Microsoft Corp.* (2) ......................... 2,694,987
2,000 Novell, Inc.* ................................ 39,125
8,300 Oracle Systems Corp.* ........................ 562,844
1,600 Parametric Technology Corp.* ................. 36,300
1,400 Peoplesoft, Inc.* ............................ 26,338
1,800 Unisys Corp.* ................................ 51,750
----------
4,916,025
----------
Construction--0.15%
300 Armstrong World Industries, Inc. ............. 10,050
400 Centex Corp. ................................. 9,500
500 Fluor Corp. .................................. 21,031
2,600 Masco Corp. .................................. 65,650
----------
106,231
----------
Consumer Durables--0.19%
500 Black & Decker Corp. ......................... 22,437
600 Grainger, W.W., Inc. ......................... 28,275
1,200 Leggett & Platt, Inc. ........................ 25,725
500 Maytag Corp. ................................. 23,844
60 Water Pik Technologies Inc. .................. 443
500 Whirlpool Corp. .............................. 30,500
----------
131,224
----------
Defense & Aerospace--0.94%
3,200 Allied-Signal, Inc. .......................... 191,400
5,600 Boeing Co. ................................... 228,550
1,200 General Dynamics Corp. ....................... 61,875
700 Goodrich, B.F. Co. ........................... 15,794
2,300 Lockheed Martin Corp. ........................ 45,712
400 Northrop Grumman Corp. ....................... 22,475
2,000 Raytheon Co. ................................. 61,375
171 Teledyne Technologies Inc.* .................. 1,511
700 TRW Inc. ..................................... 36,531
----------
665,223
----------
Diversified Retail-- 3.57%
1,300 Costco Wholesale Corp.* ...................... 119,194
2,600 Dayton Hudson Corp. .......................... 183,462
700 Dillard Department Stores, Inc. .............. 13,213
1,200 Federated Department Stores, Inc.* ........... 56,475
3,000 K Mart Corp.* ................................ 29,812
900 Kohls Corp.* ................................. 64,969
2,000 May Department Stores Co.* ................... 67,250
1,600 Penney, (J.C.), Inc. ......................... 35,700
2,200 Sears Roebuck & Co. .......................... 75,212
9,517 Tyco International Ltd. ...................... 381,275
25,800 Wal Mart Stores, Inc. ........................ 1,486,725
----------
2,513,287
----------
Drugs & Medicine--7.20%
400 Allergan, Inc. ............................... 39,350
7,600 American Home Products Corp. ................. 395,200
6,000 Amgen, Inc.* ................................. 273,375
11,500 Bristol-Myers Squibb Co. ..................... 840,219
1,600 Cardinal Health, Inc. ........................ 83,700
6,300 Lilly, Eli & Co. ............................. 452,025
1,700 McKesson HBOC, Inc. .......................... 39,737
13,600 Merck & Co., Inc. ............................ 1,067,600
22,400 Pfizer, Inc. ................................. 810,600
2,900 Pharmacia & Upjohn, Inc., ADR ................ 158,594
8,500 Schering-Plough Corp. ........................ 434,562
600 Sigma-Aldrich Corp. .......................... 17,175
4,900 Warner Lambert Co. ........................... 439,469
600 Watson Pharmaceuticals, Inc.* ................ 22,313
----------
5,073,919
----------
Electric Utilities--1.65%
1,200 AES Corp.* ................................... 69,525
800 Ameren Corp. ................................. 27,700
1,100 American Electric Power, Inc. ................ 34,513
900 Carolina Power & Light Co. ................... 27,113
1,200 Central & South West Corp. ................... 24,000
900 Cinergy Corp. ................................ 22,781
700 CMS Energy Corp. ............................. 23,275
1,300 Consolidated Edison of New York, Inc. ........ 44,850
900 Constellation Energy Group, Inc. ............. 26,494
1,100 Dominion Resources, Inc. ..................... 49,912
900 DTE Energy Co. ............................... 29,756
2,100 Duke Energy Corp. ............................ 106,444
2,000 Edison International, Inc. ................... 53,000
1,400 Entergy Corp. ................................ 38,587
1,400 First Energy Corp. ........................... 32,638
600 Florida Progress Corp. ....................... 25,650
1,000 FPL Group, Inc. .............................. 43,750
700 General Public Utilities Corp. ............... 22,400
700 New Century Energies Inc. .................... 22,006
1,200 Niagara Mohawk Holdings, Inc.* ............... 18,000
6
<PAGE>
PAINEWEBBER S&P 500 INDEX FUND
Number of
Shares Value
- ---------- ----------
COMMON STOCKS--(continued)
Electric Utilities--(concluded)
900 Northern States Power Co. .................... $ 18,394
1,100 PECO Energy Co. .............................. 36,231
900 Pennsylvania Power & Light Co. ............... 20,756
2,200 PG&E Corp. ................................... 49,225
500 Pinnacle West Capital Corp. .................. 16,594
1,300 Public Service Enterprise Group, Inc. ........ 45,500
1,700 Reliant Energy, Inc. ......................... 42,181
3,900 Southern Co. ................................. 91,162
1,600 Texas Utilities Co. .......................... 57,300
1,300 Unicom Corp. ................................. 41,519
----------
1,161,256
----------
Electrical Equipment--5.16%
900 ADC Telecommunications Inc.* ................. 47,981
400 Comverse Technology Inc.* .................... 48,350
1,400 Corning, Inc. ................................ 131,163
800 Danaher Corp. ................................ 39,300
1,200 Dover Corp. .................................. 52,050
400 Eaton Corp. .................................. 30,975
1,000 General Instrument Corp.* .................... 65,500
700 Honeywell, Inc. .............................. 78,356
500 Johnson Controls, Inc. ....................... 27,250
500 KLA-Tencor Corp. * ........................... 42,281
17,700 Lucent Technologies, Inc. .................... 1,293,206
300 Millipore Corp. .............................. 9,844
1,000 Molex Inc. ................................... 50,500
3,500 Motorola, Inc. ............................... 399,875
7,700 Nortel Networks Corp. ........................ 569,800
600 PE Corp. ..................................... 48,975
900 Qualcomm, Inc.* .............................. 326,081
400 Scientific-Atlanta, Inc. ..................... 23,325
1,600 Solectron Corp.* ............................. 131,800
300 Tektronix, Inc. .............................. 10,200
2,300 Tellabs, Inc.* ............................... 149,213
900 Teradyne Inc.* ............................... 39,206
1,000 Thermo Electron Corp.* ....................... 15,000
----------
3,630,231
----------
Electrical Power--0.36%
600 Cooper Industries, Inc. ...................... 25,763
300 Cummins Engine Co., Inc. ..................... 12,150
2,500 Emerson Electric Co. ......................... 142,500
1,100 Rockwell International Corp. ................. 54,587
400 Thomas & Betts Corp. ......................... 16,400
----------
251,400
----------
Energy Reserves & Production--4.47%
600 Amerada Hess Corp. ........................... 34,763
800 Anadarko Petroleum Corp. ..................... 24,100
700 Apache Corp. ................................. 25,069
1,900 Atlantic Richfield Co. ....................... 183,112
1,100 Burlington Resources, Inc. ................... 36,988
3,800 Chevron Corp. ................................ 336,537
18,500 Exxon/Mobil Corp. ............................ 1,579,781
2,100 Occidental Petroleum Corp. ................... 46,069
1,500 Phillips Petroleum Co. ....................... 71,719
12,400 Royal Dutch Petroleum Co., ADR ............... 719,200
900 Tosco Corp. .................................. 24,356
1,500 Union Pacific Resources Group, Inc. .......... 19,594
1,400 Unocal Corp. ................................. 46,462
----------
3,147,750
----------
Entertainment-- 0.50%
3,500 Carnival Corp. ............................... 154,438
4,000 Viacom, Inc., Class B* ....................... 199,000
----------
353,438
----------
Environmental Services--0.10%
1,200 Allied Waste Industries Inc.* ................ 9,750
3,600 Waste Management, Inc. ....................... 58,500
----------
68,250
----------
Financial Services--6.38%
2,600 American Express Co. ......................... 393,412
1,500 AON Corp. .................................... 53,531
4,200 Associates First Capital Corp. ............... 139,650
600 Block, H&R, Inc. ............................. 25,800
1,100 Capital One Financial Corp. .................. 51,219
4,200 Cendant Corp.* ............................... 69,563
700 Countrywide Credit Industries, Inc. .......... 19,688
900 Equifax, Inc. ................................ 22,275
4,000 Federal Home Loan Mortgage Corp. ............. 197,500
5,900 Federal National Mortgage Association ........ 393,087
5,300 FleetBoston Financial Corp. .................. 200,406
19,000 General Electric Co. ......................... 2,470,000
2,800 Household International, Inc. ................ 110,775
1,500 Marsh & McLennan Companies, Inc. ............. 117,937
4,600 MBNA Corp. ................................... 116,150
800 Providian Corp. .............................. 63,300
900 SLM Holding Corp. ............................ 44,606
----------
4,488,899
----------
Food Retail--0.44%
2,400 Albertson's, Inc. ............................ 76,650
4,800 Kroger Co.* .................................. 102,300
3,000 Safeway, Inc.* ............................... 110,625
900 Winn Dixie Stores, Inc. ...................... 23,569
----------
313,144
----------
Forest Products, Paper--0.92%
300 Bemis, Inc. .................................. 9,450
400 Boise Cascade Corp. .......................... 13,850
600 Champion International Corp. ................. 33,262
1,300 Fort James Corp. ............................. 37,375
1,000 Georgia-Pacific Corp. ........................ 39,812
2,400 International Paper Co. ...................... 125,250
3,100 Kimberly Clark Corp. ......................... 198,012
700 Louisiana Pacific Corp. ...................... 8,575
600 Mead Corp. ................................... 21,413
1,100 Pactiv Corp.* ................................ 11,275
300 Temple-Inland, Inc. .......................... 17,175
600 Westvaco Corp. ............................... 18,113
1,400 Weyerhaeuser Co. ............................. 85,750
700 Willamette Industries, Inc. .................. 28,963
----------
648,275
----------
7
<PAGE>
PAINEWEBBER S&P 500 INDEX FUND
Number of
Shares Value
- ---------- ----------
COMMON STOCKS--(continued)
Freight, Air, Sea & Land-- 0.12%
1,700 FDX Corp.* ................................... $ 71,719
2,200 Laidlaw, Inc. ................................ 13,475
----------
85,194
----------
Gas Utility--0.22%
500 Columbia Energy Group ........................ 31,375
600 Consolidated Natural Gas Co. ................. 38,475
1,300 El Paso Energy Corp. ......................... 50,050
300 NICOR, Inc. .................................. 10,406
1,400 Sempra Energy ................................ 25,900
----------
156,206
----------
Heavy Machinery--0.09%
1,400 Deere & Co. .................................. 60,113
----------
Hotels--0.15%
800 Harrah's Entertainment, Inc.* ................ 22,100
1,600 Hilton Hotels Corp. .......................... 16,100
1,500 Marriott International, Inc. ................. 48,844
1,200 Mirage Resorts, Inc.* ........................ 15,375
----------
102,419
----------
Household Products--2.22%
1,500 Avon Products, Inc. .......................... 54,656
1,400 Clorox Co. ................................... 62,387
3,400 Colgate-Palmolive Co. ........................ 186,575
1,000 Fortune Brands, Inc. ......................... 34,188
6,300 Gillette Co. ................................. 253,181
600 International Flavors and Fragrances ......... 22,088
300 National Service Industries, Inc. ............ 8,869
1,700 Newell Rubbermaid, Inc. ...................... 55,781
7,700 Procter & Gamble Co. ......................... 831,600
1,900 Ralston Purina Co. ........................... 56,406
----------
1,565,731
----------
Industrial Parts--0.73%
200 Briggs & Stratton Corp. ...................... 10,688
2,100 Caterpillar, Inc. ............................ 97,387
500 Crane Co. .................................... 9,188
1,100 Genuine Parts Co. ............................ 28,325
1,000 Ingersoll Rand Co. ........................... 48,437
600 ITT Industries, Inc. ......................... 20,925
800 Pall Corp. ................................... 18,750
600 Parker-Hannifin Corp. ........................ 28,238
400 Snap-On, Inc. ................................ 12,100
600 Stanley Works ................................ 18,675
900 Textron, Inc. ................................ 63,956
2,800 United Technologies Corp. .................... 158,200
----------
514,869
----------
Industrial Services/Supplies--0.01%
500 Ryder Systems, Inc. .......................... 11,281
----------
Information & Computer Services--2.53%
12,800 America Online Inc.* ......................... 930,400
3,600 Automatic Data Processing, Inc. .............. 177,750
900 Ceridian Corp.* .............................. 19,463
900 Computer Sciences Corp.* ..................... 58,725
1,000 Dun & Bradstreet Corp. ....................... 27,000
2,900 Electronic Data Systems Corp. ................ 186,506
2,500 First Data Corp. ............................. 108,125
1,800 IMS Health, Inc. ............................. 42,412
1,600 Interpublic Group Companies, Inc. ............ 75,200
1,000 Omnicom Group, Inc. .......................... 88,125
1,400 Paychex, Inc. ................................ 55,912
600 Quintiles Transnational Corp.* ............... 13,238
----------
1,782,856
----------
Leisure--0.26%
600 Brunswick Corp. .............................. 13,088
1,800 Eastman Kodak Co. ............................ 111,375
1,200 Hasbro, Inc. ................................. 25,875
2,500 Mattel, Inc. ................................. 35,781
----------
186,119
----------
Life Insurance--0.68%
800 Aetna Life & Casualty Co. .................... 43,700
1,500 AFLAC, Inc. .................................. 71,813
1,400 American General Corp. ....................... 102,637
1,200 CIGNA Corp. .................................. 98,700
1,900 Conseco, Inc. ................................ 38,475
1,200 Lincoln National Corp. ....................... 50,025
800 Torchmark, Inc. .............................. 25,400
1,400 UnumProvident Corp. .......................... 45,588
----------
476,338
----------
Long Distance & Phone Companies--7.40%
18,500 AT&T Corp. ................................... 1,033,687
9,000 Bell Atlantic Corp. .......................... 569,813
10,900 BellSouth Corp. .............................. 503,444
800 Century Telephone Enterprises, Inc. .......... 36,800
4,400 Global Crossing Ltd.* ........................ 191,950
5,700 GTE Corp. .................................... 416,100
10,900 MCI WorldCom Inc.* ........................... 901,294
19,800 SBC Communications, Inc. ..................... 1,028,362
5,000 Sprint Corp. ................................. 346,875
2,900 U.S. West, Inc. .............................. 179,981
----------
5,208,306
----------
Media--2.46%
4,424 CBS Corp.* ................................... 230,048
2,000 Clear Channel Communications* ................ 160,750
4,300 Comcast Corp., Class A ....................... 194,306
11,900 Disney, Walt Co. ............................. 331,712
3,500 Mediaone Group, Inc.* ........................ 277,375
300 Meredith Corp. ............................... 11,344
7,500 Time Warner, Inc. ............................ 462,656
1,400 Tribune Co. .................................. 67,288
----------
1,735,479
----------
Medical Products--2.57%
8,800 Abbott Laboratories .......................... 334,400
600 Alza Corp.* .................................. 25,913
300 Bard, C.R., Inc. ............................. 16,294
300 Bausch & Lomb, Inc. .......................... 16,444
1,700 Baxter International, Inc. ................... 114,856
1,500 Becton, Dickinson & Co. ...................... 40,875
700 Biomet, Inc. ................................. 22,181
2,400 Boston Scientific Corp.* ..................... 50,700
8
<PAGE>
PAINEWEBBER S&P 500 INDEX FUND
Number of
Shares Value
- ---------- ----------
COMMON STOCKS--(continued)
Medical Products--(concluded)
1,700 Guidant Corp. ................................ $ 85,000
7,800 Johnson & Johnson ............................ 809,250
400 Mallinckrodt Group, Inc. ..................... 13,300
6,800 Medtronic, Inc. .............................. 264,350
500 St. Jude Medical, Inc.* ...................... 13,281
----------
1,806,844
----------
Medical Providers-- 0.35%
3,300 Columbia/HCA Healthcare Corp. ................ 89,925
700 HCR Manor Care Inc. .......................... 14,044
2,600 HEALTHSOUTH Corp.* ........................... 14,788
1,700 Service Corp. International .................. 12,856
1,900 Tenet Healthcare Corp.* ...................... 42,394
1,000 United Healthcare Corp. ...................... 51,937
400 Wellpoint Health Networks, Inc.* ............. 23,025
----------
248,969
----------
Mining & Metals--0.51%
1,300 Alcan Aluminum Ltd. .......................... 44,200
2,100 Alcoa, Inc. .................................. 137,550
600 Allegheny Technologies Inc. .................. 15,113
800 Crown Cork & Seal, Inc. ...................... 16,300
1,200 Inco Ltd.* ................................... 22,050
500 Nucor Corp. .................................. 25,219
900 Owens Illinois, Inc.* ........................ 21,544
490 Phelps Dodge Corp. ........................... 25,480
400 Reynolds Metals Co. .......................... 25,025
600 USX-U.S. Steel Group, Inc. ................... 15,187
600 Worthington Industries, Inc. ................. 9,600
----------
357,268
----------
Motor Vehicles--1.05%
1,000 DANA Corp. ................................... 27,750
3,400 Delphi Automotive Systems Corp. .............. 53,550
7,000 Ford Motor Co. ............................... 353,500
3,700 General Motors Corp. ......................... 266,400
400 Navistar International Corp.* ................ 14,875
500 PACCAR, Inc. ................................. 20,562
----------
736,637
----------
Oil Refining--0.91%
1,300 Coastal Corp. ................................ 45,825
3,600 Conoco, Inc. ................................. 94,275
4,100 Enron Corp. .................................. 156,056
600 Sunoco, Inc. ................................. 15,338
3,200 Texaco, Inc. ................................. 195,000
1,800 USX-Marathon Group ........................... 47,587
2,500 Williams Companies, Inc. ..................... 84,375
----------
638,456
----------
Oil Services--0.49%
2,000 Baker Hughes, Inc. ........................... 50,500
2,600 Halliburton Co. .............................. 100,588
3,200 Schlumberger Ltd. ............................ 192,200
----------
343,288
----------
Other Insurance--2.04%
4,600 Allstate Corp. ............................... 120,462
9,000 American International Group Inc. ............ 929,250
1,000 Chubb Corp. .................................. 53,562
1,000 Cincinnati Financial Corp. ................... 33,500
1,300 Hartford Financial Services Group, Inc. ...... 60,694
600 Jefferson-Pilot Corp. ........................ 40,725
700 Loews Corp. .................................. 44,800
600 MBIA Inc. .................................... 30,000
600 MGIC Investment Corp. ........................ 33,900
800 SAFECO Corp. ................................. 18,950
1,300 St. Paul Companies, Inc. ..................... 39,244
400 The Progressive Corp. ........................ 32,225
----------
1,437,312
----------
Precious Metals--0.16%
2,300 Barrick Gold Corp. ........................... 41,400
1,000 Freeport-McMoran Copper & Gold, Inc.* ........ 15,813
1,600 Homestake Mining Co. ......................... 13,200
1,000 Newmont Mining Corp. ......................... 23,687
1,900 Placer Dome, Inc. ............................ 21,613
----------
115,713
----------
Publishing--0.51%
500 American Greetings Corp., Class A ............ 11,781
500 Deluxe Corp. ................................. 13,094
800 Donnelley, R.R. & Sons Co. ................... 19,200
500 Dow Jones & Co., Inc. ........................ 30,313
1,600 Gannett, Inc. ................................ 114,500
500 Harcourt General, Inc. ....................... 16,563
500 Knight Ridder, Inc. .......................... 27,281
1,100 McGraw-Hill Companies, Inc. .................. 62,356
1,000 New York Times Co., Class A .................. 38,437
400 Times Mirror Co. ............................. 25,825
----------
359,350
----------
Railroads--0.40%
2,700 Burlington Northern Santa Fe, Inc. ........... 78,300
1,300 CSX Corp. .................................... 46,231
700 Kansas City Southern Industries, Inc. ........ 41,694
2,200 Norfolk Southern Corp. ....................... 47,025
1,400 Union Pacific Corp. .......................... 65,888
----------
279,138
----------
Restaurants--0.59%
800 Darden Restaurants, Inc. ..................... 14,250
7,800 McDonalds Corp. .............................. 351,000
900 Tricon Global Restaurants, Inc.* ............. 37,350
700 Wendy's International, Inc. .................. 15,444
----------
418,044
----------
Securities & Asset Management--1.31%
840 Bear Stearns Co., Inc. ....................... 34,283
4,800 Charles Schwab Corp. ......................... 182,100
1,500 Franklin Resources, Inc. ..................... 47,156
700 Lehman Brothers Holdings, Inc. ............... 53,463
2,200 Merrill Lynch & Co., Inc. .................... 177,375
3,300 Morgan Stanley Dean Witter & Co. ............. 398,062
9
<PAGE>
PAINEWEBBER S&P 500 INDEX FUND
Number of
Shares Value
- ---------- ----------
COMMON STOCKS--(concluded)
Securities & Asset Management--(concluded)
800 T Rowe Price & Associates Inc. ............... $ 28,800
----------
921,239
----------
Semiconductor--3.53%
900 Advanced Micro Devices, Inc.* ................ 25,425
1,000 Analog Devices Inc.* ......................... 57,438
2,200 Applied Materials, Inc.* ..................... 214,362
19,100 Intel Corp. .................................. 1,464,731
900 LSI Logic Corp.* ............................. 54,394
1,500 Micron Technology, Inc.* ..................... 100,687
1,000 National Semiconductor Corp.* ................ 42,500
300 Perkinelmer, Inc. ............................ 12,338
4,500 Texas Instruments, Inc. ...................... 432,281
900 Xilinx Inc.* ................................. 80,550
----------
2,484,706
----------
Specialty Retail--2.11%
900 Autozone, Inc.* .............................. 24,806
800 Bed, Bath & Beyond Inc.* ..................... 25,000
1,200 Best Buy Co. Inc.* ........................... 75,000
1,200 Circuit City Stores, Inc. .................... 58,200
700 Consolidated Stores Corp.* ................... 11,025
2,300 CVS Corp. .................................... 91,281
1,300 Dollar General Corp. ......................... 31,850
8,600 Home Depot, Inc. ............................. 679,937
2,200 Lowe's Companies, Inc. ....................... 109,588
2,200 Office Depot Inc.* ........................... 24,475
1,600 Rite Aid Corp. ............................... 12,100
2,700 Staples, Inc.* ............................... 63,450
1,100 Tandy Corp. .................................. 84,288
1,500 Toys R Us, Inc.* ............................. 26,250
5,800 Walgreen Co. ................................. 168,925
----------
1,486,175
----------
Thrift--0.18%
300 Golden West Financial Corp. .................. 30,281
3,400 Washington Mutual, Inc. ...................... 98,600
----------
128,881
----------
Tobacco--0.55%
13,800 Philip Morris Companies, Inc. ................ 363,113
1,000 UST, Inc. .................................... 26,625
----------
389,738
----------
Wireless Telecommunications--0.84%
1,800 Alltel Corp. ................................. 155,700
2,100 Nextel Communications, Inc.* ................. 208,162
2,500 Sprint Corp.* (1) ............................ 229,375
----------
593,237
----------
Total Common Stocks (cost--$59,248,608) ....................... 66,637,977
----------
<TABLE>
<CAPTION>
Principal
Amount Maturity Interest
(000) Date Rate
- --------- -------- --------
<S> <C> <C> <C>
Short Term Government Securities--5.02%
$ 2,000 Federal Home Loan Mortgage Corp. Discount Notes ............. 12/15/99 5.40% 1,995,800
1,541 Federal National Mortgage Association Discount Notes ........ 12/01/99 5.61 1,541,000
-----------
Total Short Term Government Securities (cost--$3,536,800)........................................ 3,536,800
-----------
Total Investments (cost--$62,785,408)--99.66%.................................................... 70,174,777
Other assets in excess of liabilities--0.34%..................................................... 237,654
-----------
Net Assets--100.0%....................................................................... $70,412,431
===========
</TABLE>
- ----------
*Non-income producing security
ADR American Depositary Receipt
(1) Security or portion thereof, was on loan at November 30, 1999.
(2) A portion pledged as collateral for open futures contracts.
FUTURES CONTRACTS
Number of Expiration Unrealized
Contracts Date Appreciation
- ------------ ---------- ------------
Long Contracts
---------------
38 S&P 500 Index Futures............ Dec-99 $ 27,213
=========
See accompanying notes to financial statements
10
<PAGE>
PAINEWEBBER S&P 500 INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES NOVEMBER 30, 1999 (unaudited)
<TABLE>
<S> <C>
Assets
Investments in securities, at value (cost--$62,785,408) .......................................... $70,174,777
Investments of cash collateral received for securities loaned, at value (cost--$211,200) ......... 211,200
Cash ............................................................................................. 545
Receivable for shares of beneficial interest sold ................................................ 320,485
Dividends receivable ............................................................................. 85,023
Deferred organizational expenses ................................................................. 77,751
Receivable for investments sold .................................................................. 34,177
Other assets ..................................................................................... 45,317
-----------
Total assets ..................................................................................... 70,949,275
-----------
Liabilities
Payable for cash collateral ...................................................................... 211,200
Payable for shares of beneficial interest repurchased ............................................ 140,891
Payable for investments purchased ................................................................ 50,500
Payable for variation margin ..................................................................... 35,910
Payable to affiliates ............................................................................ 35,046
Accrued expenses and other liabilities ........................................................... 63,297
-----------
Total liabilities ................................................................................ 536,844
-----------
Net assets
Beneficial interest--$0.001 par value (unlimited amount authorized) .............................. 61,697,445
Undistributed net investment income .............................................................. 234,757
Accumulated net realized gains from investment and futures transactions .......................... 1,063,647
Net unrealized appreciation of investments and futures ........................................... 7,416,582
-----------
Net assets ....................................................................................... $70,412,431
===========
Class A:
Net assets ....................................................................................... $25,690,210
-----------
Shares outstanding ............................................................................... 1,435,077
-----------
Net asset value and redemption value per share ................................................... $17.90
===========
Maximum offering price per share (net asset value plus sales charge of 2.50% of offering price) .. $18.36
===========
Class C:
Net assets ....................................................................................... $35,007,913
-----------
Shares outstanding ............................................................................... 1,971,539
-----------
Net asset value and offering price per share ..................................................... $17.76
===========
Class Y:
Net assets ....................................................................................... $ 9,714,308
-----------
Shares outstanding ............................................................................... 541,302
-----------
Net asset value, offering price and redemption value per share ................................... $17.95
===========
</TABLE>
See accompanying notes to financial statements
11
<PAGE>
PAINEWEBBER S&P 500 INDEX FUND
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six
Months Ended
November 30, 1999
(unaudited)
-----------------
<S> <C>
Investment income:
Dividends and interest (net of foreign withholding tax of $1,737) .. $ 403,206
-----------
Expenses:
Investment advisory and administration ............................. 60,683
Service fees --Class A ............................................. 28,438
Service and distribution fees --Class C ............................ 149,240
Federal and state registration ..................................... 40,060
Legal and audit .................................................... 36,051
Reports and notices to shareholders ................................ 32,039
Custody and accounting ............................................. 19,032
Transfer agency .................................................... 16,456
Amortization of organizational expense ............................. 7,547
Trustees' fees ..................................................... 5,250
Other expenses ..................................................... 16,471
-----------
411,267
Less: Fee waivers and expense reimbursements from adviser .......... (128,051)
-----------
Net expenses ....................................................... 283,216
-----------
Net investment income .............................................. 119,990
-----------
Realized and unrealized gains from investment activities:
Net realized gains from:
Investment transactions .......................................... 299,867
Futures contracts ................................................ 31,843
Net change in unrealized appreciation/depreciation of:
Investments ...................................................... 3,150,014
Futures .......................................................... 317,026
-----------
Net realized and unrealized gains from investment activities ....... 3,798,750
-----------
Net increase in net assets resulting from operations ............... $ 3,918,740
===========
</TABLE>
See accompanying notes to financial statements
12
<PAGE>
PAINEWEBBER S&P 500 INDEX FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year
November 30, 1999 Ended
(unaudited) May 31, 1999
----------------- ------------
<S> <C> <C>
From operations:
Net investment income .............................................................................. $ 119,990 $ 190,247
Net realized gains from investment and futures transactions ........................................ 331,710 1,096,431
Net change in unrealized appreciation/depreciation of investments and futures ...................... 3,467,040 2,743,704
------------ ------------
Net increase in net assets resulting from operations ............................................... 3,918,740 4,030,382
------------ ------------
Dividends and distributions to shareholders from:
Net investment income--Class A ..................................................................... -- (73,805)
Net investment income--Class C ..................................................................... -- (25,116)
Net investment income--Class Y ..................................................................... -- (49,729)
Net realized gains from investment transactions--Class A ........................................... -- (62,231)
Net realized gains from investment transactions--Class C ........................................... -- (24,361)
Net realized gains from investment transactions--Class Y ........................................... -- (41,894)
------------ ------------
Total dividends and distributions to shareholders .................................................. -- (277,136)
------------ ------------
From beneficial interest transactions:
Net proceeds from the sale of shares ............................................................... 27,108,277 54,058,949
Cost of shares repurchased ......................................................................... (9,828,520) (22,528,886)
Proceeds from dividends reinvested ................................................................. -- 249,577
------------ ------------
Net increase in net assets from beneficial interest transactions ................................... 17,279,757 31,779,640
------------ ------------
Net increase in net assets ......................................................................... 21,198,497 35,532,886
Net assets:
Beginning of period ................................................................................ 49,213,934 13,681,048
------------ ------------
End of period (including undistributed net investment income of $234,757 and $114,767, respectively) $ 70,412,431 $ 49,213,934
============ ============
</TABLE>
See accompanying notes to financial statements
13
<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 on 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 $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 Yshares. 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--The Fund calculates its net asset value based on
the current market value for the portfolio securities. The Fund normally obtains
market values for its securities from independent pricing sources. Independent
pricing sources may use reported last sale prices, current market quotations or
valuations from computerized "matrix" systems that derive values based on
comparable securities. Securities traded in the over-the-counter ("OTC") market
and listed on The Nasdaq Stock Market, Inc. ("Nasdaq") normally are valued at
the last sale price on Nasdaq prior to valuation. Other OTC securities are
valued at the last bid price available prior to valuation. Securities which are
listed on U.S. and foreign stock exchanges normally are valued at the last sale
price on the day the securities are 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 as the
primary market by Mitchell Hutchins. If a market value is not available from an
independent pricing source for a particular security, that security, is valued
at fair value as determined in good faith by or under the direction of the
Trust's board of trustees (the "board"). The amortized cost method of valuation,
which approximates market value, generally is used to value short-term debt
instruments with sixty days or less remaining to maturity, unless the board
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
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
adjustments to interest income and the identified cost of investments.
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 as an alternative to investing
directly in the underlying securities or for hedging purposes. However,
imperfect correlations between futures contracts and the portfolio securities
being hedged, or market disruptions, do not permit full control of these risks
at all times.
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, 1999, 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 Class 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.
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, 1999, it earned $89,337 in sales charges.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
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, 1999, PaineWebber received from PFPC, Inc., not the Fund,
approximately 49% of the total transfer agency and related service fees
collected by PFPC, Inc. from the Fund.
SECURITY LENDING
The Fund may lend securities up to 331 1/43% 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. The Fund's lending agent is
PaineWebber, who earned $34 in compensation from the Fund in that capacity for
the six months ended November 30, 1999. At November 30, 1999, the Fund owed
PaineWebber $14 in compensation.
As of November 30, 1999, the Fund held cash and/or cash equivalents having
an aggregate value of $211,200 as collateral for portfolio securities loaned
having a market value of $201,850 which was invested in the following money
market fund:
Number of
Shares Value
- --------- --------
49,865 Liquid Assets Portfolio..................................... $ 49,865
160,935 Mitchell Hutchins Private Money Market Fund LLC............. 160,935
400 Prime Portfolio............................................. 400
--------
Total Investments of cash collateral received for
securities on loan (cost--$211,200)......................... $211,200
========
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, 1999, the Fund did not borrow
under the Facility.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at November
30, 1999 was substantially the same as the cost of securities for financial
statement purposes. At November 30, 1999, the components of net unrealized
appreciation of investments (excluding futures contracts) were as follows:
Gross appreciation (investments having an excess of
value over cost) $10,614,975
Gross depreciation (investments having an excess of
cost over value) (3,225,606)
-----------
Net unrealized appreciation of investments...... $ 7,389,369
===========
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
For the six months ended November 30, 1999, total aggregate purchases and
sales of portfolio securities, excluding short-term securities, were as follows:
Purchases....................................... $23,040,517
Sales........................................... $ 1,482,559
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.
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 Class Y
------------------------ ------------------------ -----------------------
Shares Amount Shares Amount Shares Amount
-------- ------------ -------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
For the six months ended November 30, 1999:
Shares sold ................................ 531,577 $ 9,199,840 807,580 $ 13,842,605 231,751 $ 4,065,832
Shares repurchased ......................... (228,425) (3,898,095) (266,925) (4,563,906) (77,649) (1,366,519)
-------- ------------ -------- ------------ ------- ------------
Net increase ............................... 303,152 $ 5,301,745 540,655 $ 9,278,699 154,102 $ 2,699,313
======== ============ ======== ============ ======= ============
</TABLE>
<TABLE>
<CAPTION>
Class A* Class C**
------------------------- ----------------------------
Shares Amount Shares Amount
--------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
For the year ended May 31, 1999:
Shares sold ............................... 1,409,840 $ 21,361,104 1,620,838 $ 25,846,090
Shares repurchased ........................ (285,423) (4,514,742) (193,103) (3,095,455)
Dividends reinvested ...................... 7,508 111,868 3,149 46,857
Shares converted from Class X to Class Y .. -- -- -- --
--------- ------------ ------------ ------------
Net increase (decrease) ................... 1,131,925 $ 16,958,230 1,430,884 $ 22,797,492
========= ============ ============ ============
<CAPTION>
Class X*** Class Y
---------------------------- ----------------------------
Shares Amount Shares Amount
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
For the year ended May 31, 1999:
Shares sold ............................... 171,810 $ 2,361,185 295,702 $ 4,490,570
Shares repurchased ........................ (28,956) (398,536) (1,026,540) (14,520,153)
Dividends reinvested ...................... -- -- 6,097 90,852
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) (526,125) $ (7,311,036)
============ ============ ============ ============
</TABLE>
- ----------
* Commencement of issuance of shares--October 2, 1998
** Commencement of issuance of shares--October 7, 1998
*** Shares of former Class A were renamed Class X and then converted into
Class Y on September 30, 1998.
17
<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
-------------------------- ----------------------------
For the For the
For the Period For the Period
Six Months October 2, Six Months October 7,
Ended 1998+ Ended 1998+
November 30, through November 30, through
1999 May 31, 1999 May 31,
(unaudited) 1999 (unaudited) 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 16.72 $ 12.83 $ 16.64 $ 12.80
---------- ---------- ---------- ----------
Net investment income .................... 0.06* 0.08* -- 0.02*
Net realized and unrealized gains
(losses) from investments and futures .. 1.12* 4.03* 1.12* 4.02*
---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations .................. 1.18 4.11 1.12 4.04
---------- ---------- ---------- ----------
Dividends from net investment income ..... -- (0.12) -- (0.10)
Distributions from net realized gains
from investment transactions ........... -- (0.10) -- (0.10)
---------- ---------- ---------- ----------
Total dividends and distributions to
shareholders ........................... -- (0.22) -- (0.20)
---------- ---------- ---------- ----------
Net asset value, end of period ........... $ 17.90 $ 16.72 $ 17.76 $ 16.64
========== ========== ========== ==========
Total investment return (1) .............. 7.06% 32.23% 6.73% 31.77%
========== ========== ========== ==========
Ratios/Supplemental Data:
Net assets, end of period (000's) ........ $ 25,690 $ 18,920 $ 35,008 $ 23,813
Expenses to average net assets
net of waivers and reimbursements
from adviser ........................... 0.60%** 0.60%** 1.35%** 1.35%**
Expenses to average net assets
before waivers and reimbursements
from adviser ........................... 1.03%** 1.52%** 1.77%** 2.24%**
Net investment income (loss) to average
net assets net of waivers and
reimbursements from adviser ............ 0.74%** 0.87%** (0.01)%** 0.17%**
Net investment income (loss) to average
net assets before waivers and
reimbursements from adviser ............ 0.31%** (0.06)%** (0.43)%** (0.73)%**
Portfolio turnover rate ................ 3% 62% 3% 62%
</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.
18
<PAGE>
<TABLE>
<CAPTION>
Class X Class Y
--------------------------- -----------------------------------------
For the For the
For the Period For the Period
Period December 31, Six Months For the December 31,
June 1, 1998 1997+ Ended Year 1997+
through through November 30, Ended through
September 30, May 31, 1999 May 31, May 31,
1998++ 1998 (unaudited) 1999 1998
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 14.11 $ 12.50 $ 16.74 $ 14.12 $ 12.50
---------- ---------- ---------- ---------- ----------
Net investment income .................... 0.05* 0.03 0.09* 0.16* 0.06
Net realized and unrealized gains
(losses) from investments and futures .. (0.94)* 1.58 1.12* 2.68* 1.56
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations .................. (0.89) 1.61 1.21 2.84 1.62
---------- ---------- ---------- ---------- ----------
Dividends from net investment income ..... -- -- -- (0.12) --
Distributions from net realized gains
from investment transactions ........... -- -- -- (0.10) --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions to
shareholders ........................... -- -- -- (0.22) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ........... $ 13.22 $ 14.11 $ 17.95 $ 16.74 $ 14.12
========== ========== ========== ========== ==========
Total investment return (1) .............. (6.31)% 12.88% 7.23% 20.30% 12.96%
========== ========== ========== ========== ==========
Ratios/Supplemental Data:
Net assets, end of period (000's) ........ $ 0 $ 789 $ 9,714 $ 6,480 $ 12,892
Expenses to average net assets
net of waivers and reimbursements
from adviser ........................... 0.40%** 0.40%** 0.35%** 0.35% 0.35%**
Expenses to average net assets
before waivers and reimbursements
from adviser ........................... 1.29%** 2.25%** 0.77%** 1.29% 2.22%**
Net investment income (loss) to average
net assets net of waivers and
reimbursements from adviser ............ 1.19%** 1.26%** 0.98%** 1.12% 1.41%**
Net investment income (loss) to average
net assets before waivers and
reimbursements from adviser ............ 0.29%** (0.60)%** 0.56%** 0.18% (0.46)%**
Portfolio turnover rate ................ 73% 1% 3% 62% 1%
</TABLE>
19
<PAGE>
[This page intentionally left blank]
<PAGE>
[This page intentionally left blank]
<PAGE>
[This page intentionally left blank]
<PAGE>
================================================================================
TRUSTEES
E. Garrett Bewkes, Jr. Meyer Feldberg
Chairman
George W. Gowen
Margo N. Alexander
Frederic V. Malek
Richard Q. Armstrong
Carl W. Schafer
Richard R. Burt
Brian M. Storms
Mary C. Farrell
PRINCIPAL OFFICERS
Margo N. Alexander Paul H. Schubert
President Vice President and Treasurer
Victoria E. Schonfeld T. Kirkham Barneby
Vice President Vice President
Dianne E. O'Donnell
Vice President and Secretary
INVESTMENT ADVISER,
ADMINISTRATOR AND DISTRIBUTOR
Mitchell Hutchins Asset Management Inc.
51 West 52nd Street
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 financial advisor 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 28 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 Strategy 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
PaineWebber
(Copyright)2000 PaineWebber Incorporated
Member SIPC
All rights reserved
