<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN/1/
-------------------------- -----------------------------
12 MONTHS 6 MONTHS
02/29/96 08/31/95 02/28/95 ENDED 02/29/96 ENDED 02/29/96
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $23.77 $22.52 $19.15 34.26% 14.16%
- -------------------------------------------------------------------------
Class B Shares 23.70 22.37 19.10 33.19 13.72
- -------------------------------------------------------------------------
Class C Shares# 23.77 22.43 19.15 33.15 13.74
- -------------------------------------------------------------------------
</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>
12/20/83 - 12/31/84 $12.65 $13.21 -- $1.0800 13.72%
- ----------------------------------------------------------------------------
1985 13.21 14.97 $0.1950 0.8850 22.36
- ----------------------------------------------------------------------------
1986 14.97 15.04 1.1380 0.6830 12.68
- ----------------------------------------------------------------------------
1987 15.04 12.05 2.3027 0.7366 (3.16)
- ----------------------------------------------------------------------------
1988 12.05 13.67 -- 0.5120 17.83
- ----------------------------------------------------------------------------
1989 13.67 16.32 0.1675 0.5178 24.59
- ----------------------------------------------------------------------------
1990 16.32 15.85 -- 0.3030 (1.01)
- ----------------------------------------------------------------------------
1991 15.85 21.17 -- 0.2526 35.34
- ----------------------------------------------------------------------------
1992 21.17 21.74 -- 0.2432 3.90
- ----------------------------------------------------------------------------
1993 21.74 20.86 0.0310 0.2818 (2.59)
- ----------------------------------------------------------------------------
1994 20.86 18.18 1.2111 0.2417 (5.87)
- ----------------------------------------------------------------------------
1995 18.18 22.39 1.5085 0.2475 33.21
- ----------------------------------------------------------------------------
01/01/96 - 02/29/96 22.39 23.77 -- -- 6.16
- ----------------------------------------------------------------------------
Totals: $6.5538 $5.9842
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
02/29/96: 302.31%
- ----------------------------------------------------------------------------
Performance Summary Class B Shares
<CAPTION>
NET ASSET VALUE
---------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/01/91 - 12/31/91 $18.04 $21.14 -- $0.1074 17.85%
- ----------------------------------------------------------------------------
1992 21.14 21.69 -- 0.0992 3.09
- ----------------------------------------------------------------------------
1993 21.69 20.82 $0.0310 0.1193 (3.31)
- ----------------------------------------------------------------------------
1994 20.82 18.15 1.2111 0.0768 (6.62)
- ----------------------------------------------------------------------------
1995 18.15 22.35 1.5085 0.0715 32.18
- ----------------------------------------------------------------------------
01/01/96 - 02/29/96 22.35 23.70 -- -- 6.04
- ----------------------------------------------------------------------------
Totals: $2.7506 $0.4742
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
02/29/96: 53.75%
- ----------------------------------------------------------------------------
Performance Summary Class C Shares #
<CAPTION>
NET ASSET VALUE
---------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/02/92 - 12/31/92 $19.96 $21.75 -- $0.1160 9.58%
- ----------------------------------------------------------------------------
1993 21.75 20.87 $0.0310 0.1308 (3.30)
- ----------------------------------------------------------------------------
1994 20.87 18.20 1.2111 0.0756 (6.61)
- ----------------------------------------------------------------------------
1995 18.20 22.42 1.5085 0.0728 32.21
- ----------------------------------------------------------------------------
01/01/96 - 02/29/96 22.42 23.77 -- -- 6.02
- ----------------------------------------------------------------------------
Totals: $2.7506 $0.3952
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
02/29/96: 38.71%
- ----------------------------------------------------------------------------
</TABLE>
# Formerly Class D shares.
/1/ Figures assume reinvestment of all dividends and capital gains distributions
at net asset value on the payable dates, and do not include sales charges;
results would be lower for each class if sales charges were included.
1
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
Average Annual Return
<TABLE>
<CAPTION>
% RETURN AFTER DEDUCTING
% RETURN WITHOUT SALES CHARGE MAXIMUM SALES CHARGE
--------------------------------------------------------
CLASS CLASS
--------------------------------------------------------
A* B** C*** A* B** C***
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Twelve Months Ended
03/31/96 30.77% 29.75% 29.72% 24.89% 24.75% 28.72%
- -----------------------------------------------------------------------------
Five Years Ended
03/31/96 9.52 N/A N/A 8.51 N/A N/A
- -----------------------------------------------------------------------------
Ten Years Ended
03/31/96 9.93 N/A N/A 9.43 N/A N/A
- -----------------------------------------------------------------------------
Commencement of
Operations Through
03/31/96+ 12.04 9.56 9.24 11.62 9.26 9.24
- -----------------------------------------------------------------------------
</TABLE>
* Maximum sales charge for Class A shares is 4.5% of the public offering
price. Class A shares bear ongoing 12b-1 service fees.
**Maximum contingent deferred sales charge for Class B shares is 5% and is
reduced to 0% after 6 years. Class B shares bear ongoing 12b-1 distribution
and service fees.
***
Maximum contingent deferred sales charge for Class C (formerly Class D
shares) is 1% and is reduced to 0% after 1 year. Class C shares bear ongoing
12b-1 distribution and service fees.
+ Commencement of operations dates are December 20, 1983, July 1, 1991 and
July 2, 1992 for Class A, Class B and Class C, respectively.
The data above represents past performance of the Fund's shares, which is no
guarantee of future results. The investment return and 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.
Note: The Fund offers Class Y (formerly Class C) shares to the INSIGHT
Investment Advisory Program and to the trustees of the PaineWebber Savings
Investment Plan. For the six months ended February 29, 1996 and since
inception, February 12, 1992 through February 29, 1996, Class Y shares had a
total return of 14.35% and 37.71%, respectively. For the twelve months ended
March 31, 1996 and for the period since inception through March 31, 1996,
Class Y shares have an average annual return of 31.10% and 8.18%,
respectively. Class Y shares do not have initial or contingent deferred
sales charges or ongoing distribution and service fees.
2
<PAGE>
GROWTH FUND
PAINEWEBBER
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN/1/
-------------------------- -----------------------------
12 MONTHS 6 MONTHS
02/29/96 08/31/95 02/28/95 ENDED 02/29/96 ENDED 02/29/96
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares 23.65 22.27 19.21 33.24% 14.93%
- -------------------------------------------------------------------------
Class B Shares 22.70 21.53 18.65 32.13 14.45
- -------------------------------------------------------------------------
Class C Shares# 22.88 21.68 18.78 32.18 14.50
- -------------------------------------------------------------------------
</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>
03/18/85 - 12/31/85 $ 9.15 $10.55 -- $0.1275 16.87%
- ----------------------------------------------------------------------------
1986 10.55 10.86 $0.4064 0.1042 7.64
- ----------------------------------------------------------------------------
1987 10.86 9.81 1.4051 0.0847 4.34
- ----------------------------------------------------------------------------
1988 9.81 11.87 -- 0.1011 22.05
- ----------------------------------------------------------------------------
1989 11.87 14.79 1.1520 -- 34.27
- ----------------------------------------------------------------------------
1990 14.79 12.98 0.4625 0.1625 (7.72)
- ----------------------------------------------------------------------------
1991 12.98 18.53 0.6003 0.0072 47.61
- ----------------------------------------------------------------------------
1992 18.53 18.66 0.6235 -- 4.15
- ----------------------------------------------------------------------------
1993 18.66 21.14 1.0734 -- 19.17
- ----------------------------------------------------------------------------
1994 21.14 18.81 0.0258 -- (10.90)
- ----------------------------------------------------------------------------
1995 18.81 23.12 1.8440 -- 33.02
- ----------------------------------------------------------------------------
01/01/96 - 02/29/96 23.12 23.65 -- -- 2.29
- ----------------------------------------------------------------------------
Totals: $7.593 $0.5872
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
02/29/96: 340.92%
- ----------------------------------------------------------------------------
</TABLE>
Performance Summary Class B Shares
<TABLE>
<CAPTION>
NET ASSET VALUE
---------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/01/91 - 12/31/91 $15.63 $18.47 $0.6003 $0.0037 22.18%
- ----------------------------------------------------------------------------
1992 18.47 18.44 0.6235 -- 3.30
- ----------------------------------------------------------------------------
1993 18.44 20.71 1.0734 -- 18.26
- ----------------------------------------------------------------------------
1994 20.71 18.28 0.0258 -- (11.61)
- ----------------------------------------------------------------------------
1995 18.28 22.22 1.8440 -- 31.95
- ----------------------------------------------------------------------------
01/01/96 - 02/29/96 22.22 22.70 -- -- 2.16
- ----------------------------------------------------------------------------
Totals: $4.167 $0.0037
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
02/29/96: 77.84%
- ----------------------------------------------------------------------------
Performance Summary Class C Shares #
<CAPTION>
NET ASSET VALUE
---------------- CAPITAL GAINS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED DIVIDENDS PAID RETURN/1/
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/02/92 - 12/31/92 $17.04 $18.57 $0.6235 -- 12.73%
- ----------------------------------------------------------------------------
1993 18.57 20.85 1.0734 -- 18.19
- ----------------------------------------------------------------------------
1994 20.85 18.41 0.0258 -- (11.58)
- ----------------------------------------------------------------------------
1995 18.41 22.40 1.8440 -- 32.00
- ----------------------------------------------------------------------------
01/01/96 - 02/29/96 22.40 22.88 -- -- 2.14
- ----------------------------------------------------------------------------
Totals: $3.5667 --
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
02/29/96: 58.84%
- ----------------------------------------------------------------------------
</TABLE>
# Formerly Class D shares.
/1/ Figures assume reinvestment of all dividends and capital gains distributions
at net asset value on the payable dates, and do not include sales charges;
results would be lower for each class if sales charges were included.
3
<PAGE>
GROWTH FUND
PAINEWEBBER
PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
Average Annual Return
<TABLE>
<CAPTION>
% RETURN AFTER DEDUCTING
% RETURN WITHOUT SALES CHARGE MAXIMUM SALES CHARGE
--------------------------------------------------------
CLASS CLASS
--------------------------------------------------------
A* B** C*** A* B** C***
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Twelve Months Ended
03/31/96 30.49% 29.55% 29.49% 24.63% 24.55% 28.49%
- -----------------------------------------------------------------------------
Five Years Ended
03/31/96 12.61 N/A N/A 11.58 N/A N/A
- -----------------------------------------------------------------------------
Ten Years Ended
03/31/96 11.81 N/A N/A 11.29 N/A N/A
- -----------------------------------------------------------------------------
Commencement of
Operations Through
03/31/96+ 14.47 13.07 13.37 13.99 12.80 13.37
- -----------------------------------------------------------------------------
</TABLE>
* Maximum sales charge for Class A shares is 4.5% of the public offering
price. Class A shares bear ongoing 12b-1 service fees.
**Maximum contingent deferred sales charge for Class B shares is 5% and is
reduced to 0% after 6 years. Class B shares bear ongoing 12b-1 distribution
and service fees.
***
Maximum contingent deferred sales charge for Class C (formerly Class D
shares) is 1% and is reduced to 0% after 1 year. Class C shares bear ongoing
12b-1 distribution and service fees.
+ Commencement of operations dates are March 18, 1985, July 1, 1991 and July
2, 1992 for Class A, Class B and Class C, respectively.
The data above represents past performance of the Fund's shares, which is no
guarantee of future results. The investment return and 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.
Note: The Fund offers Class Y (formerly Class C) shares to the INSIGHT
Investment Advisory Program and the trustees of the PaineWebber Savings
Investment Plan. For the six months ended February 29, 1996, and since
inception, August 26, 1991 through February 29, 1996, Class Y shares had a
total return of 15.08% and 70.78%, respectively. For the twelve months ended
March 31, 1996 and for the period since inception through March 31, 1996,
Class Y shares have an average annual return of 30.83% and 12.55%,
respectively. Class Y shares do not have initial or contingent deferred
sales charges or ongoing distribution and service fees.
4
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
PORTFOLIO OF INVESTMENTS FEBRUARY 29, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
COMMON STOCKS - 89.39%
<C> <S> <C>
Aerospace - 2.66%
130,000 Lockheed Martin Corporation........................... $ 9,912,500
68,200 McDonnell Douglas Corporation......................... 6,018,650
------------
15,931,150
------------
Agriculture, Food - 2.72%
188,700 Con Agra Incorporated................................. 7,948,987
70,000 IBP, Incorporated..................................... 1,750,000
66,850 Philip Morris Companies Incorporated.................. 6,618,150
------------
16,317,137
------------
Air Transport - 2.06%
100,000 America West Airlines Inc.*........................... 2,062,500
100,000 AMR Corporation Delaware*............................. 8,775,000
100,000 Western Pacific Airlines Inc.*........................ 1,525,000
------------
12,362,500
------------
Apparel, Textiles - 0.85%
100,000 Jones Apparel Group Incorporated*..................... 4,137,500
15,000 Nike Incorporated..................................... 973,125
------------
5,110,625
------------
Banks - 7.18%
200,000 Bank of New York Company Incorporated................. 10,375,000
100,000 Barnett Banks Incorporated............................ 6,250,000
40,000 Chase Manhattan Corporation........................... 2,980,000
101,800 Citicorp.............................................. 7,940,400
100,000 CoreStates Financial Corporation...................... 4,300,000
10,000 First Empire State Corporation........................ 2,410,000
67,500 NationsBank Corporation............................... 4,978,125
100,000 UJB Financial Corporation............................. 3,800,000
------------
43,033,525
------------
Beverages - 1.06%
100,000 Pepsico, Incorporated................................. 6,325,000
------------
Business Machines - 7.84%
125,000 3Com Corporation*..................................... 6,109,375
208,000 Cisco Systems, Incorporated*.......................... 9,880,000
100,000 Compaq Computer Corporation*.......................... 5,062,500
68,000 Hewlett-Packard Company............................... 6,851,000
25,000 International Business Machines Corporation........... 3,065,625
100,000 Seagate Technology, Incorporated*..................... 6,525,000
100,000 Sun Microsystems Incorporated*........................ 5,250,000
32,700 Xerox Corporation..................................... 4,259,175
------------
47,002,675
------------
Chemicals - 3.17%
50,000 Cabot Corporation..................................... 3,025,000
9,850 Dow Chemical Company.................................. 790,462
90,500 DuPont (EI) de Nemours & Company...................... 6,923,250
</TABLE>
5
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
COMMON STOCKS - (CONTINUED)
Chemicals -- (concluded)
<C> <S> <C>
50,000 IMC Global Incorporated............................... $ 2,062,500
75,000 Olin Corporation...................................... 6,206,250
------------
19,007,462
------------
Consumer Durables - 0.87%
100,000 Premark International Incorporated.................... 5,237,500
------------
Containers - 0.74%
110,000 Temple-Inland Incorporated............................ 4,427,500
------------
Domestic Petroleum Reserves - 0.92%
6,100 Atlantic Richfield Company............................ 667,950
430,000 Forest Oil Corporation*............................... 4,837,500
------------
5,505,450
------------
Drugs, Medicine - 6.85%
8,900 American Home Products Corporation.................... 876,650
83,400 Bristol-Myers Squibb Company.......................... 7,099,425
134,500 Johnson & Johnson..................................... 12,575,750
107,800 Pfizer Incorporated................................... 7,101,325
57,200 Rhone-Poulenc Rorer Incorporated...................... 3,660,800
100,000 Schering Plough Corporation........................... 5,612,500
75,000 Smithkline Beecham, PLC............................... 4,106,250
------------
41,032,700
------------
Electric Utilities - 0.94%
100,000 FPL Group Incorporated................................ 4,462,500
28,000 Norsk Hydro A S Sponsored ADR*........................ 1,193,500
------------
5,656,000
------------
Electronics - 7.36%
100,000 Avnet Incorporated.................................... 4,987,500
113,300 Intel Corporation..................................... 6,663,456
150,000 Kemet Corporation*.................................... 3,525,000
268,200 Loral Corporation..................................... 12,638,925
7,200 Microsoft Corporation*................................ 710,550
168,600 Raytheon Company...................................... 8,451,075
125,000 Rockwell International Corporation.................... 7,125,000
------------
44,101,506
------------
Gas Utilities - 0.60%
125,000 Panhandle Eastern Corporation......................... 3,578,125
------------
Healthcare (Non-drug) - 4.70%
110,000 Beckman Instruments Incorporated New.................. 3,987,500
106,300 Becton Dickinson & Company............................ 8,716,600
100,000 HEALTHSOUTH Corporation*.............................. 3,500,000
150,000 Horizon/CMS Healthcare*............................... 3,562,500
79,200 Medtronic Incorporated................................ 4,544,100
150,000 Ornda Healthcorp*..................................... 3,843,750
------------
28,154,450
------------
</TABLE>
6
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
Hotels, Restaurants - 0.97%
125,000 Mirage Resorts, Incorporated*......................... $ 5,796,875
------------
International Oil - 4.03%
13,138 British Petroleum PLC................................. 1,318,727
161,600 Chevron Corporation................................... 8,989,000
21,800 Exxon Corporation..................................... 1,733,100
66,200 Mobil Corporation..................................... 7,257,175
50,000 Occidental Petroleum Corporation...................... 1,150,000
18,500 Royal Dutch Petroleum Company......................... 2,548,375
35,000 Total S.A. ........................................... 1,150,625
------------
24,147,002
------------
Iron & Steel - 0.55%
100,000 USX-U.S. Steel Group, Incorporated.................... 3,275,000
------------
Leisure, Luxury - 0.44%
80,000 Mattel Incorporated................................... 2,660,000
------------
Life Insurance - 1.09%
100,600 Equitable of Iowa Companies........................... 3,885,675
55,000 Reliastar Financial Corporation....................... 2,640,000
------------
6,525,675
------------
Miscellaneous Finance - 0.34%
43,800 American Express Company.............................. 2,014,800
------------
Misc. Mining & Metals - 1.04%
100,000 Freeport McMoran Copper & Gold Company................ 3,262,500
40,000 Potash Corporation Saskatchewan Incorporated.......... 2,970,000
------------
6,232,500
------------
Mortgage Financing - 1.09%
100,000 HGI Reality Incorporated.............................. 2,125,000
100,000 Irvine Apartment Communities Incorporated............. 2,012,500
100,000 Oasis Residential Incorporated........................ 2,375,000
------------
6,512,500
------------
Motor Vehicles - 0.75%
79,800 Chrysler Corporation.................................. 4,498,725
------------
Oil Refining, Distribution - 1.04%
100,000 Coastal Corporation................................... 3,675,000
38,000 Repsol, S.A., ADR* ................................... 1,377,500
15,000 Shell Transport & Trading PLC......................... 1,177,500
------------
6,230,000
------------
Oil Service - 1.15%
50,000 Camco International Incorporated...................... 1,418,750
100,000 Haliburton Company.................................... 5,487,500
------------
6,906,250
------------
</TABLE>
7
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
Other Insurance - 7.81%
125,000 ACE Limited........................................... $ 5,843,750
112,600 AFLAC Incorporated.................................... 5,221,825
200,971 Allstate Corporation.................................. 8,616,632
85,200 American International Group Incorporated............. 8,232,450
40,000 Chubb Corporation..................................... 3,885,000
37,500 CIGNA Corporation..................................... 4,443,750
17,000 ITT Hartford Group, Incorporated*..................... 875,500
170,700 St. Paul Companies, Incorporated...................... 9,665,887
------------
46,784,794
------------
Paper - 1.57%
70,100 Champion International Corporation.................... 2,804,000
78,000 Kimberly Clark Corporation*........................... 5,957,250
23,300 Westvaco Corporation.................................. 675,700
------------
9,436,950
------------
Producers Goods - 7.92%
158,250 Deere & Company....................................... 6,191,531
60,000 Dover Corporation..................................... 2,670,000
42,400 General Electric Company.............................. 3,201,200
100,000 Global Industrial Technologies Incorporated*.......... 2,337,500
100,000 Ingersoll Rand Company................................ 4,087,500
134,800 Kulicke & Soffa Industries, Incorporated*............. 2,797,100
192,000 Pentair Incorporated.................................. 5,088,000
100,000 Textron Incorporated.................................. 7,875,000
29,495 United States Robotics Corporation*................... 3,657,380
53,800 United Technologies Corporation....................... 5,783,500
100,000 Varity Corporation*................................... 3,775,000
------------
47,463,711
------------
Publishing - 1.17%
185,900 Reynolds & Reynolds Company, Class A.................. 7,040,963
------------
Railroads, Transit - 1.20%
100,000 Consolidated Rail Incorporated........................ 7,212,500
------------
Real Property - 1.71%
100,000 Avalon Properties Incorporated........................ 2,237,500
65,000 Chelsea GCA Realty Incorporated....................... 1,933,750
65,000 Equity Residential Properties Trust................... 2,063,750
50,000 Starwood Lodging Trust................................ 1,718,750
100,000 Wellsford Residential Property........................ 2,262,500
------------
10,216,250
------------
Retail (All Other) - 2.92%
125,000 Consolidated Stores Corporation*...................... 3,250,000
95,000 Eckerd Corporation*................................... 4,263,125
170,219 Sears, Roebuck & Company.............................. 7,723,687
100,000 Waban Incorporated*................................... 2,250,000
------------
17,486,812
------------
</TABLE>
8
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
COMMON STOCKS - (CONCLUDED)
<C> <S> <C>
Services - 1.70%
14,500 Ceridian Corporation*................................. $ 623,500
67,050 Computer Associates International Incorporated........ 4,609,688
150,000 Computervision Corporation*........................... 1,593,750
50,000 Sterling Software Incorporated*....................... 3,331,250
-----------
10,158,188
-----------
Telephone, Telegraph - 0.38%
11,900 AT&T Corporation...................................... 757,138
100,000 NYNEX CableComms Group PLC, ADR*...................... 1,537,500
-----------
2,294,638
-----------
Total Common Stocks (cost - $418,406,557)........................ 535,677,438
-----------
PREFERRED STOCK - 0.76%
Paper - 0.76%
102,000 International Paper Capital Trust+ (cost -
$4,441,245).......................................... 4,539,000
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
--------- -------------------- --------------
CONVERTIBLE BONDS - 1.05%
<C> <S> <C> <C> <C>
Air Transport - 0.48%
$ 2,500 AMR Corporation
Delaware............... 11/01/24 6.125% 2,850,000
------------
Business Machines - 0.57%
3,500 Quantum Corporation+.... 03/01/03 5.000 3,438,750
------------
Total Convertible Bonds (cost -
$6,100,000)........................ 6,288,750
------------
U.S. GOVERNMENT OBLIGATIONS - 6.63%
40,000 United States Treasury
Bills (cost -
$39,754,400)........... 04/04/96 to 04/25/96 5.098 to 5.134@ 39,754,400
------------
REPURCHASE AGREEMENT - 0.94%
5,617 Repurchase agreement
dated 02/29/96, with
State Street Bank and
Trust Company,
collateralized by
$5,555,000 U.S.
Treasury Notes, 6.125%
due 05/15/98; proceeds:
$5,617,827 (cost -
$5,617,000)............ 03/01/96 5.300 5,617,000
------------
Total Investments (cost -
$474,319,202) - 98.77%............ 591,876,588
Other assets in excess of
liabilities - 1.23%................ 7,371,915
------------
Net Assets - 100.00%............... $599,248,503
============
</TABLE>
- -------
*Non-income producing security
+ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
@Yield to maturity at date of purchase.
ADR--American Depository Receipts
See accompanying notes to financial statements
9
<PAGE>
GROWTH FUND
PAINEWEBBER
PORTFOLIO OF INVESTMENTS FEBRUARY 29, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
Common Stocks - 90.85%
Aerospace - 0.21%
125,000 Kellstrom Industries Incorporated*.................... $ 859,375
------------
Apparel, Textiles - 0.88%
193,900 Norwood Promotional Products, Incorporated*........... 3,538,675
------------
Banks - 2.73%
35,000 Bank of New York Company Incorporated................. 1,815,625
40,000 Barnett Banks Incorporated............................ 2,500,000
57,000 Chase Manhattan Corporation........................... 4,246,500
15,000 First Interstate Bancorp.............................. 2,450,625
------------
11,012,750
------------
Beverages - 1.20%
60,000 The Coca Cola Company................................. 4,845,000
------------
Business Machines - 5.92%
60,000 3Com Corporation*..................................... 2,932,500
68,400 Bay Networks Incorporated............................. 2,787,300
210,000 Cisco Systems, Incorporated*.......................... 9,975,000
20,000 Hewlett-Packard Company............................... 2,015,000
55,000 Seagate Technology, Incorporated*..................... 3,588,750
50,000 Sun Microsystems Incorporated*........................ 2,625,000
------------
23,923,550
------------
Chemicals - 1.00%
50,000 IMC Global Incorporated............................... 2,062,500
30,000 Vigoro Corporation.................................... 1,987,500
------------
4,050,000
------------
Containers - 1.93%
264,000 Sealed Air Corporation*............................... 7,788,000
------------
Drugs, Medicine - 5.50%
64,900 Columbia Laboratories Incorporated*................... 730,125
52,500 Elan Corporation, PLC, ADS*........................... 3,045,000
120,000 Global Pharmaceutical Corporation*.................... 1,365,000
130,000 Pharmacyclics Incorporated*........................... 1,852,500
50,000 R.P. Scherer Corporation*............................. 2,200,000
172,000 Teva Pharmaceutical Industries Ltd., ADS*............. 7,439,000
130,000 Watson Pharmaceuticals, Incorporated*................. 5,590,000
------------
22,221,625
------------
Electronics - 6.52%
100,000 Amphenol Corporation, Class A*........................ 2,437,500
183,500 Belden, Incorporated.................................. 5,413,250
80,000 Epic Design Technology Incorporated*.................. 2,645,000
</TABLE>
10
<PAGE>
GROWTH FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
Electronics - (continued)
22,500 Glenayre Technologies, Incorporated*................... $ 992,813
100,000 Hummingbird Communications Ltd.*....................... 3,775,000
60,000 Hyperion Software Corporation*......................... 1,095,000
100,000 Lattice Semiconductor Corporation*..................... 3,287,500
150,000 Microcom Incorporated*................................. 4,537,500
25,000 Silicon Graphics, Incorporated*........................ 625,000
56,250 Thermo Instrument Systems Incorporated*................ 1,539,843
-----------
26,348,406
-----------
Forest Products - 0.41%
195,000 Universal Forest Products Incorporated................. 1,657,500
-----------
Healthcare (Non-Drug) - 4.03%
155,000 Ornda Healthcorp*...................................... 3,971,875
132,000 Phycor Incorporated*................................... 6,006,000
187,854 VISX, Incorporated*.................................... 6,293,109
-----------
16,270,984
-----------
Hotels, Restaurants - 3.57%
200,000 HFS, Incorporated*..................................... 9,300,000
110,000 Mirage Resorts, Incorporated*.......................... 5,101,250
-----------
14,401,250
-----------
Leisure, Luxury - 5.15%
250,000 Activision Incorporated*............................... 3,687,500
165,000 Cinar Films Incorporated*.............................. 2,475,000
125,000 Grand Casinos Incorporated*............................ 3,984,375
200,000 Marker International*.................................. 1,825,000
140,000 Mattel Incorporated.................................... 4,655,000
130,400 Mountasia Entertainment International Incorporated*.... 423,800
229,500 Rawlings Sporting Goods Company, Incorporated*......... 1,893,375
80,000 Syratech Corporation*.................................. 1,860,000
-----------
20,804,050
-----------
Life Insurance - 0.34%
35,000 Equitable of Iowa Companies............................ 1,351,875
-----------
Media - 11.23%
280,000 Ascent Entertainment Group Incorporated*............... 4,060,000
160,000 British Sky Broadcasting Group, PLC*................... 5,760,000
105,000 Comcast Corporation, Class A........................... 2,021,250
257,500 Comcast Corporation, Class A Special................... 5,053,437
125,000 Comcast UK Cable Partners Ltd.*........................ 1,562,500
61,000 Infinity Broadcasting Corporation, Class A*............ 2,516,250
56,250 Liberty Media Group Series A*.......................... 1,553,907
</TABLE>
11
<PAGE>
GROWTH FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
COMMON STOCKS - (CONTINUED)
<C> <S> <C>
Media - (continued)
Metromedia International
100,000 Group*................. $ 1,375,000
News Corporation
190,000 Limited................ 3,800,000
Savoy Pictures
Entertainment,
200,000 Incorporated*.......... 1,050,000
Tele Communications
100,000 International*......... 2,150,000
Tele Communications,
225,000 Incorporated, Class A*. 4,725,000
Time Warner
188,000 Incorporated........... 8,037,000
United International
Holdings Incorporated,
100,000 Class A*............... 1,687,500
------------
45,351,844
------------
Misc. Mining & Metals - 0.92%
Potash Corporation of
Saskatchewan
50,000 Incorporated........... 3,712,500
------------
Mortgage Financing - 2.92%
Federal Home Loan
39,500 Mortgage Corporation... 3,258,750
Federal National
270,000 Mortgage Association... 8,538,750
------------
11,797,500
------------
Oil Service - 0.49%
Camco International
70,000 Incorporated........... 1,986,250
------------
Other Insurance - 3.02%
60,000 ACE Limited............. 2,805,000
25,000 CIGNA Corporation....... 2,962,500
PennCorp Financial
150,000 Group, Incorporated.... 4,912,500
Prudential Reinsurance
61,400 Holdings Incorporated.. 1,504,300
------------
12,184,300
------------
Paper - 0.52%
Abitibi Price
150,000 Incorporated........... 2,100,000
------------
Photographic, Optical - 0.73%
Noel Group,
430,000 Incorporated*.......... 2,929,375
------------
Pollution Control - 2.92%
Republic Industries
400,000 Incorporated*.......... 11,800,000
------------
Producers Goods - 3.87%
Champion Road Machinery
200,000 Ltd. .................. 1,550,000
40,000 Kaydon Corporation...... 1,320,000
Kulicke & Soffa
Industries
110,000 Incorporated*.......... 2,282,500
Mark IV Industries
110,250 Incorporated........... 2,205,000
United Technologies
30,000 Corporation............ 3,225,000
250,000 Waters Corporation*..... 5,062,500
------------
15,645,000
------------
</TABLE>
12
<PAGE>
GROWTH FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
COMMON STOCKS - (CONCLUDED)
<C> <S> <C>
Railroads, Transit - 2.09%
72,500 Burlington Northern Incorporated...................... $ 5,800,000
117,900 Railtex Incorporated*................................. 2,652,750
------------
8,452,750
------------
Retail (Food) - 1.68%
300,000 General Nutrition Companies Incorporated*............. 6,787,500
------------
Retail (All Other) - 5.37%
110,000 Corporate Express Incorporated*....................... 3,272,500
60,000 Eckerd Corporation*................................... 2,692,500
20,000 Micro Warehouse Incorporated*......................... 950,000
306,937 Staples, Incorporated*................................ 7,941,995
120,000 Viking Office Products, Incorporated*................. 6,825,000
------------
21,681,995
------------
Services - 10.84%
40,000 Business Objects, S.A.*............................... 2,990,000
70,000 Ceridian Corporation*................................. 3,010,000
95,000 Computervision Corporation*........................... 1,009,375
25,000 Corestaff Incorporated*............................... 1,056,250
230,000 Data Documents Incorporated*.......................... 2,357,500
430,000 Excalibur Technologies Corporation*................... 11,717,500
40,000 First Data Corporation................................ 2,770,000
165,000 Netstar Incorporated*................................. 3,423,750
30,000 Oracle Corporation*................................... 1,560,000
56,250 Paychex, Incorporated................................. 3,100,781
85,500 Service Corporation International..................... 3,879,563
200,000 Staffing Resources Incorporated*...................... 2,566,000
65,000 Sterling Software Incorporated*....................... 4,330,625
------------
43,771,344
------------
Telephone, Telegraph - 4.86%
125,000 Bell Cablemedia PLC, ADR*............................. 1,906,250
191,250 IntelCom Group, Incorporated*......................... 3,083,906
77,000 Intermedia Communications of Florida, Incorporated*... 1,443,750
75,000 International CableTel Incorporated*.................. 1,875,000
72,000 MFS Communications Company, Incorporated*............. 4,356,000
32,000 Millicom International Cellular, S.A.*................ 1,212,000
90,000 NYNEX CableComms Group PLC, ADR*...................... 1,383,750
40,000 Omnipoint Corporation*................................ 1,080,000
70,000 Paging Network Incorporated*.......................... 1,855,000
70,000 TeleWest Communications PLC, ADR*..................... 1,443,750
------------
19,639,406
------------
Total Common Stocks (cost - $229,083,792)........................ 366,912,804
------------
</TABLE>
13
<PAGE>
GROWTH FUND
PAINEWEBBER
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------- -------- ------------
<C> <S> <C> <C> <C>
CORPORATE BOND - 0.09%
Domestic Petroleum Reserves - 0.09%
$1,500 Garnet Resources Corporation (cost
- $1,500,000)..................... 12/21/98 9.500% $ 375,000
------------
CONVERTIBLE BOND - 0.59%
Telephone, Telegraph - 0.59%
2,320 IntelCom Group, Incorporated (cost
- $2,320,000)..................... 09/17/98 8.000 2,398,205
------------
REPURCHASE AGREEMENTS - 8.34%
19,000 Repurchase agreement dated 02/29/96
with Daiwa Bank, collateralized by
$14,395,000 U.S. Treasury Bond
11.375%, due 11/15/12: proceeds:
$19,002,861 (cost - $19,000,000).. 03/01/96 5.420 19,000,000
14,686 Repurchase agreement dated 02/29/96
with State Street Bank and Trust
Company, collateralized by
$14,520,000 U.S. Treasury Notes
6.125%, due 05/15/98; proceeds:
$14,688,162 (cost - $14,686,000).. 03/01/96 5.300 14,686,000
------------
Total Repurchase Agreements (cost -
$33,686,000).................................. 33,686,000
------------
Total Investments (cost - $266,589,792) -
99.87%........................................ 403,372,009
Other assets in excess of liabilities - 0.13%. 511,292
------------
Net Assets - 100.00%.......................... $403,883,301
============
</TABLE>
- -------
*Non-income producing
ADS-American Depository Shares
ADR-American Depository Receipts
See accompanying notes to financial statements
14
<PAGE>
PAINEWEBBER
STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 29, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
GROWTH
& INCOME GROWTH
FUND FUND
------------ ------------
<S> <C> <C>
Assets
Investments at value (cost - $474,319,202 and
$266,589,792, respectively)........................ $591,876,588 $403,372,009
Cash................................................ 3,500,994 --
Receivable for investments sold..................... 14,027,190 2,065,028
Dividends and interest receivable................... 1,005,415 229,321
Receivable for shares of beneficial interest sold... 668,092 88,514
Other assets........................................ 127,662 379,836
------------ ------------
Total assets........................................ 611,205,941 406,134,708
------------ ------------
Liabilities
Payable for investments purchased................... 9,965,381 915,800
Payable for shares of beneficial interest
repurchased........................................ 1,068,065 829,586
Payable to affiliates............................... 645,661 431,019
Accrued expenses and other liabilities.............. 278,331 75,002
------------ ------------
Total liabilities................................... 11,957,438 2,251,407
------------ ------------
Net Assets
Beneficial interest--$0.001 par value (unlimited
amount authorized)................................. 469,280,977 254,240,192
Accumulated undistributed net investment income
(loss)............................................. 128,963 (1,383,297)
Accumulated net realized gains from investments .... 12,281,177 14,244,189
Net unrealized appreciation of investments.......... 117,557,386 136,782,217
------------ ------------
Net assets.......................................... $599,248,503 $403,883,301
============ ============
Class A:
Net assets.......................................... $268,308,144 $201,562,919
------------ ------------
Shares outstanding.................................. 11,288,522 8,524,288
------------ ------------
Net asset value and redemption value per share...... $23.77 $23.65
============ ============
Maximum offering price per share (net asset value
plus sales charge of 4.50% of offering price)...... $24.89 $24.76
============ ============
Class B:
Net assets.......................................... $272,542,747 $149,909,245
------------ ------------
Shares outstanding.................................. 11,500,493 6,603,368
------------ ------------
Net asset value and offering price per share........ $23.70 $22.70
============ ============
Class C:
Net assets.......................................... $ 38,254,805 $ 30,783,699
------------ ------------
Shares outstanding.................................. 1,609,538 1,345,701
------------ ------------
Net asset value and offering price per share........ $23.77 $22.88
============ ============
Class Y:
Net assets.......................................... $ 20,142,807 $ 21,627,438
------------ ------------
Shares outstanding.................................. 847,922 901,933
------------ ------------
Net asset value, offering price and redemption value
per share.......................................... $23.76 $23.98
============ ============
</TABLE>
See accompanying notes to financial statements
15
<PAGE>
PAINEWEBBER
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
GROWTH
& INCOME GROWTH
FUND FUND
----------- -----------
<S> <C> <C>
Investment income:
Dividends.............................................. $ 4,032,949 $ 850,312
Interest............................................... 1,890,670 780,277
----------- -----------
5,923,619 1,630,589
----------- -----------
Expenses:
Investment advisory and administration................. 1,915,566 1,455,823
Service fees--Class A.................................. 274,581 218,453
Service and distribution fees--Class B................. 1,285,130 738,886
Service and distribution fees--Class C................. 169,319 151,618
Transfer agency and service fees....................... 289,791 80,197
Fund acquisition expenses.............................. 215,034 --
Reports and notices to shareholders.................... 121,640 26,853
Custody and accounting................................. 92,219 37,851
Legal and audit........................................ 75,930 21,397
Federal and state registration fees.................... 55,443 69,450
Trustees' fees......................................... 10,706 8,081
Other expenses......................................... 15,768 9,942
----------- -----------
4,521,127 2,818,551
----------- -----------
Net investment income (loss)........................... 1,402,492 (1,187,962)
----------- -----------
Realized and unrealized gains from investment activi-
ties:
Net realized gains from investment transactions........ 38,364,438 31,794,897
Net change in unrealized appreciation/depreciation of
investments........................................... 32,471,381 23,184,111
----------- -----------
Net realized and unrealized gains from investment ac-
tivities.............................................. 70,835,819 54,979,008
----------- -----------
Net increase in net assets resulting from operations... $72,238,311 $53,791,046
=========== ===========
</TABLE>
See accompanying notes to financial statements
16
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED FOR THE YEAR
FEBRUARY 29, 1996 ENDED
(UNAUDITED) AUGUST 31, 1995
------------------ ---------------
<S> <C> <C>
From operations:
Net investment income....................... $ 1,402,492 $ 3,038,055
Net realized gains from investment
transactions............................... 38,364,438 17,636,364
Net change in unrealized
appreciation/depreciation of investments... 32,471,381 52,701,413
------------ -------------
Net increase in net assets resulting from
operations................................. 72,238,311 73,375,832
------------ -------------
Dividends and distributions to shareholders
from:
Net investment income--Class A.............. (2,241,645) (1,163,754)
Net investment income--Class B.............. (790,304) (457,553)
Net investment income--Class C.............. (103,224) (53,897)
Net investment income--Class Y.............. (215,598) (102,452)
Net realized gains from investment
transactions--Class A...................... (14,113,535) (11,701,555)
Net realized gains from investment
transactions--Class B...................... (16,674,335) (15,518,597)
Net realized gains from investment
transactions--Class C...................... (2,139,119) (1,953,255)
Net realized gains from investment
transactions--Class Y...................... (1,066,345) (828,242)
------------ -------------
(37,344,105) (31,779,305)
------------ -------------
From beneficial interest transactions:
Net proceeds from the sale of shares........ 33,485,350 30,582,369
Proceeds from the issuance of shares from
the acquisition of Mitchell
Hutchins/Kidder, Peabody Equity Income
Fund....................................... 60,522,138 --
Proceeds from the issuance of shares from
the acquisition of PaineWebber Global
Energy Fund................................ 17,163,198 --
Cost of shares repurchased.................. (61,236,302) (185,758,645)
Proceeds from dividends reinvested.......... 34,672,037 29,628,162
------------ -------------
Net increase (decrease) in net assets from
beneficial interest transactions........... 84,606,421 (125,548,114)
------------ -------------
Net increase (decrease) in net assets....... 119,500,627 (83,951,587)
Net assets:
Beginning of period......................... 479,747,876 563,699,463
------------ -------------
End of period (including undistributed net
investment income of $128,963 and
$12,910,318, respectively)................. $599,248,503 $ 479,747,876
============ =============
</TABLE>
See accompanying notes to financial statements
17
<PAGE>
GROWTH FUND
PAINEWEBBER
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED FOR THE YEAR
FEBRUARY 29, 1996 ENDED
(UNAUDITED) AUGUST 31, 1995
------------------ ---------------
<S> <C> <C>
From operations:
Net investment loss......................... $ (1,187,962) $ (331,823)
Net realized gains from investment
transactions............................... 31,794,897 17,051,928
Net change in unrealized
appreciation/depreciation of investments... 23,184,111 7,109,490
------------ ------------
Net increase in net assets resulting from
operations................................. 53,791,046 23,829,595
------------ ------------
Distributions to shareholders from:
Net realized gains from investment
transactions--Class A...................... (14,736,470) (170,322)
Net realized gains from investment
transactions--Class B...................... (11,773,021) (120,995)
Net realized gains from investment
transactions--Class C...................... (2,425,155) (33,706)
Net realized gains from investment
transactions--Class Y...................... (1,487,963) (37,136)
------------ ------------
(30,422,609) (362,159)
------------ ------------
From beneficial interest transactions:
Net proceeds from sale of shares............ 16,674,855 29,210,160
Proceeds from the issuance of shares from
the acquisition of PaineWebber
Communications & Technology Growth Fund.... -- 62,703,777
Proceeds from the issuance of shares from
the acquisition of PaineWebber Blue Chip
Growth Fund................................ -- 86,500,222
Cost of shares repurchased.................. (52,751,411) (112,053,043)
Proceeds from dividends reinvested.......... 28,720,783 345,390
------------ ------------
Net increase (decrease) in net assets from
beneficial interest transactions........... (7,355,773) 66,706,506
------------ ------------
Net increase in net assets.................. 16,012,664 90,173,942
Net assets:
Beginning of period......................... 387,870,637 297,696,695
------------ ------------
End of period............................... $403,883,301 $387,870,637
============ ============
</TABLE>
See accompanying notes to financial statements
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
PAINEWEBBER
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Growth & Income Fund ("Growth & Income Fund") and PaineWebber
Growth Fund ("Growth Fund") (collectively, the "Funds") are diversified series
of PaineWebber America Fund and PaineWebber Olympus Fund (the "Trusts"),
respectively. The two Trusts were organized under separate Declarations of
Trust and are registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended, as diversified open-end investment
companies.
Each fund offers Class A, Class B, Class C (formerly Class D) and Class Y
(formerly Class C) Shares. Effective November 10, 1995, the Funds began using
industry standardized nomenclature and the former Class C shares were renamed
Class Y shares and the former Class D shares were renamed Class C shares. Class
Y shares are offered for sale to participants in the INSIGHT Investment
Advisory Program, and to the trustee of the PaineWebber Savings Investment Plan
on behalf of that Plan. Each class of shares represents interests in the same
assets of the applicable Fund, and the classes are identical except for
differences in their sales charge structure, ongoing service/distribution
charges and certain transfer agency expenses. In addition, Class B shares and
all corresponding reinvested dividends shares automatically convert to Class A
shares approximately six years after initial issuance. All classes of shares
have equal rights as to voting privileges, except that Class A, Class B, and
Class C shares have exclusive voting rights with respect to their distribution
plans.
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.
Valuation of Investments - Securities which are listed on stock exchanges are
valued at the last sale price on the day the securities are being valued or,
lacking any sales on such day, at the last available bid price. In cases where
securities are traded on more than one exchange, the securities are valued on
the exchange designated as the primary market by Mitchell Hutchins Asset
Management Inc. ("Mitchell Hutchins"), an affiliate and wholly owned subsidiary
of PaineWebber Incorporated ("PaineWebber") and investment adviser,
administrator and distributor of the Funds. Securities traded in the over-the-
counter ("OTC") market and listed on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") are valued at the last sale price
on NASDAQ prior to the time of valuation; other OTC securities are valued at
the last bid price available in the OTC market prior to the time of valuation.
The amortized cost method of valuation is used to value short-term debt
instruments with sixty days or less remaining to maturity. Securities and
assets for which market quotations are not
19
<PAGE>
PAINEWEBBER
readily available (including restricted securities subject to limitations as to
their sale) are valued at fair value as determined in good faith by or under
the direction of each Trust's Board of Trustees.
Repurchase Agreements - Each 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. Each 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 trade date. Realized gains and losses from investment transactions
are calculated using the identified cost method. Interest income is recorded on
an accrual basis and dividend income is recorded on the ex-dividend date.
Premiums are amortized and discounts are accreted as adjustments to interest
income and 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.
Dividends and Distributions - Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions
from net investment income and net realized capital gains 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 reclassifications. Dividends and distributions which exceed net
investment income and net realized capital gains for financial reporting
purposes but not for tax purposes are reported as dividends in excess of net
investment income or distributions in excess of net realized capital gains. To
the extent they exceed net investment income and net realized capital gains for
tax purposes, they are reported as distributions of paid-in-capital.
20
<PAGE>
PAINEWEBBER
ACQUISITION
Effective October 13, 1995, Growth & Income Fund acquired all of the net assets
of PaineWebber Global Energy Fund ("Global Energy Fund") in a tax free exchange
for shares of Growth & Income Fund. The acquisition was accomplished by a tax-
free exchange of 338,423 Class A, 414,593 Class B and 24,548 Class C shares of
Growth & Income Fund for 680,852 Class A, 832,585 Class B and 50,070 Class C
shares, respectively, of Global Energy Fund outstanding. Global Energy Fund's
net assets at that date, valued at $17,163,198 including accumulated net
realized losses of $2,079,189 and net unrealized appreciation of investments of
$653,059, were combined with those of Growth & Income Fund.
Effective October 13, 1995, Growth & Income Fund acquired all of the net assets
of Mitchell Hutchins/Kidder, Peabody Equity Income Fund ("MH/KP Equity Income
Fund") in a tax free exchange for shares of Growth & Income Fund. The
acquisition was accomplished by a tax-free exchange of 2,533,885 Class A,
137,926 Class Y and 67,543 Class C shares of Growth & Income Fund for 2,816,987
Class A, 153,429 Class Y and 75,614 Class B shares, respectively, of MH/KP
Equity Income Fund outstanding. MH/KP Equity Income Fund's net assets at that
date, valued at $60,522,138 including accumulated net realized losses of
$384,848 and net unrealized appreciation of investments of $5,986,801 were
combined with those of Growth & Income Fund.
INVESTMENT ADVISER AND ADMINISTRATOR
The Funds each have an Investment Advisory and Administration Contract
("Advisory Contract") with Mitchell Hutchins. In accordance with the Advisory
Contract, Growth & Income Fund and Growth Fund pay Mitchell Hutchins an
investment advisory and administration fee of 0.700% and 0.750%, respectively
as a percentage of average daily net assets, which is accrued daily and paid
monthly. At February 29, 1996, Growth & Income Fund and Growth Fund owed
Mitchell Hutchins $332,752 and $239,716, respectively, in investment advisory
and administration fees.
For the six months ended February 29, 1996, Growth & Income Fund and Growth
Fund paid $16,769 and $10,200, respectively, in brokerage commissions to
PaineWebber for transactions executed on behalf of the Funds.
In compliance with applicable state securities laws, Mitchell Hutchins will
reimburse the Funds if and to the extent that the aggregate operating expenses
in any fiscal year, exclusive of taxes, distribution fees, interest, brokerage
fees and extraordinary expenses, exceed limitations imposed by various state
regulations. Currently, the most restrictive limitation applicable to the Funds
is 2.5% of the first $30 million of average daily net assets, 2.0% of the next
$70 million and 1.5% of
21
<PAGE>
PAINEWEBBER
any excess over $100 million. For the six months ended February 29, 1996, no
reimbursements were required pursuant to the above limitation for any of the
Funds.
DISTRIBUTION PLANS
Mitchell Hutchins is the distributor of each Fund's shares and has appointed
PaineWebber as the exclusive dealer for the sale of those shares. Under
separate plans of service/distribution pertaining to the Class A, Class B and
Class C (formerly Class D) shares, the Funds pay Mitchell Hutchins monthly
service fees at the annual rate of up to 0.25% of the average daily net assets
of Class A, Class B and Class C shares and monthly distribution fees at the
annual rate of up to 0.75% of the average daily net assets on Class B and Class
C shares. At February 29, 1996, Growth & Income Fund and Growth Fund owed
Mitchell Hutchins $295,668 and $180,084, respectively, in service and
distribution fees.
Mitchell Hutchins also receives the proceeds of the initial sales charges paid
upon the purchase of Class A shares and the contingent deferred sales charges
paid upon certain redemptions of Class A, Class B and Class C shares. Mitchell
Hutchins has informed each Fund that for the six months ended February 29,
1996, it received $485,860 and $327,821 in sales charges relating to Growth &
Income Fund and Growth Fund, respectively.
TRANSFER AGENCY SERVICE FEES
Each Fund pays PaineWebber an annual fee of $4.00 per active PaineWebber
shareholder account for certain services not provided by the Fund's transfer
agent. For these services during the six months ended February 29, 1996,
PaineWebber earned $103,253 and $69,638 from Growth & Income Fund and Growth
Fund, respectively. At February 29, 1996, PaineWebber was owed $17,241 and
$11,219 by Growth & Income Fund and Growth Fund, respectively, for transfer
agency service fees.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at February 29,
1996, was substantially the same as the cost of securities for financial
statement purposes.
22
<PAGE>
PAINEWEBBER
At February 29, 1996, the components of net unrealized appreciation of
investments were as follows:
<TABLE>
<CAPTION>
GROWTH &
INCOME FUND GROWTH FUND
------------ ------------
<S> <C> <C>
Gross appreciation (investments having an excess of
value over cost).................................... $122,218,381 $145,858,757
Gross depreciation (investments having an excess of
cost over value).................................... 4,660,995 9,076,540
------------ ------------
Net unrealized appreciation of investments........... $117,557,386 $136,782,217
============ ============
For the six months ended February 29, 1996, total aggregate purchases and sales
of portfolio securities, excluding short-term securities, were as follows:
<CAPTION>
GROWTH &
INCOME FUND GROWTH FUND
------------ ------------
<S> <C> <C>
Purchases............................................ $322,743,213 $126,907,924
Sales................................................ $327,615,132 $161,677,047
</TABLE>
FEDERAL TAX STATUS
Each Fund intends to distribute 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, each Fund intends not to be subject to any federal excise tax.
The Growth Fund has a net capital loss carryforward of $3,785,329 at August 31,
1995 pursuant to its acquisition of PaineWebber Blue Chip Growth Fund and
PaineWebber Communications & Technology Growth Fund. This loss carryforward is
available as a reduction, to the extent provided in the regulations, of future
net capital gains realized, and will expire in 2002.
23
<PAGE>
PAINEWEBBER
SHARES OF BENEFICIAL INTEREST
There is an unlimited amount of $0.001 par value shares of beneficial interest
authorized. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------------------------ ------------------------ --------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH & INCOME FUND
SIX MONTHS ENDED
FEBRUARY 29,
1996:
Shares sold..... 424,190 $ 9,740,033 689,111 $ 15,696,077 276,566 $ 6,318,251 75,669 $ 1,730,989
Shares issued in
connection with
the acquisition
of:
MH/KP Equity
Income Fund... 2,533,885 55,983,774 -- -- 67,543 1,493,701 137,926 3,044,663
PaineWebber
Global Energy
Fund.......... 338,423 7,478,321 414,593 9,142,000 24,548 542,877 -- --
Shares
repurchased.... (1,059,768) (24,029,824) (1,349,077) (30,621,404) (214,579) (4,871,637) (75,283) (1,713,437)
Shares converted
from Class B to
Class A........ 57,030 1,293,103 (57,209) (1,293,103) -- -- -- --
Dividends
reinvested..... 688,025 15,111,874 737,304 16,143,771 97,255 2,136,436 58,385 1,279,956
---------- ------------ ---------- ------------ -------- ----------- -------- -------------
Net increase ... 2,981,785 $ 65,577,281 434,722 $ 9,067,341 251,333 $ 5,619,628 196,697 $ 4,342,171
========== ============ ========== ============ ======== =========== ======== =============
YEAR ENDED
AUGUST 31,
1995:
Shares sold..... 406,738 $ 8,281,477 791,571 $ 16,018,352 142,739 $ 2,898,240 169,458 $ 3,384,300
Shares
repurchased.... (3,712,415) (73,393,874) (4,676,193) (92,319,141) (715,856) (14,159,528) (288,614) (5,886,102)
Shares converted
from Class B to
Class A........ 72,134 1,428,360 (72,367) (1,428,360) -- -- -- --
Dividends
reinvested..... 653,877 11,890,156 821,955 14,887,430 105,724 1,919,882 51,195 930,694
---------- ------------ ---------- ------------ -------- ----------- -------- -------------
Net decrease.... (2,579,666) $(51,793,881) (3,135,034) $(62,841,719) (467,393) $(9,341,406) (67,961) $ (1,571,108)
========== ============ ========== ============ ======== =========== ======== =============
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------------------------ ------------------------ --------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND
SIX MONTHS ENDED
FEBRUARY 29,
1996:
Shares sold..... 242,173 $ 5,696,502 284,107 $ 6,339,581 108,485 $ 2,416,705 95,095 $ 2,222,067
Shares
repurchased.... (921,226) (21,254,571) (940,261) (20,777,969) (282,403) (6,298,258) (188,243) (4,420,614)
Shares converted
from Class B to
Class A........ 319,961 7,251,873 (322,427) (7,251,873) -- -- -- --
Dividends
reinvested..... 623,918 13,988,235 505,415 10,896,748 108,095 2,347,836 65,491 1,487,963
---------- ------------ ---------- ------------ -------- ----------- -------- -------------
Net increase
(decrease)..... 264,826 $ 5,682,039 (473,166) $(10,793,513) (65,823) $(1,533,717) (27,657) $ (710,584)
========== ============ ========== ============ ======== =========== ======== =============
YEAR ENDED
AUGUST 31,
1995:
Shares sold..... 343,756 $ 6,797,998 593,500 $ 11,354,188 184,507 $ 3,593,377 373,860 $ 7,464,597
Shares issued in
connection with
the acquisition
of:
PaineWebber Communications
& Technology
Growth Fund.... 533,772 11,895,983 2,011,998 43,342,827 343,927 7,464,967 -- --
PaineWebber
Blue Chip
Growth Fund... 2,348,128 52,326,034 1,425,501 30,724,310 159,005 3,449,878 -- --
Shares
repurchased.... (2,089,914) (41,666,293) (1,875,647) (36,501,877) (729,746) (14,263,697) (955,791) (19,621,176)
Shares converted
from Class B to
Class A........ 63,558 1,245,674 (65,425) (1,245,674) -- -- -- --
Dividends
reinvested..... 8,698 161,962 6,276 113,599 1,793 32,693 1,975 37,136
---------- ------------ ---------- ------------ -------- ----------- -------- -------------
Net increase
(decrease)..... 1,207,998 $ 30,761,358 2,096,203 $ 47,787,373 (40,514) $ 277,218 (579,956) $ (12,119,443)
========== ============ ========== ============ ======== =========== ======== =============
</TABLE>
24
<PAGE>
[This Page Intentionally Left Blank]
25
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT EACH PERIOD IS PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
FEBRUARY 29, FOR THE YEARS ENDED AUGUST 31,
1996 -------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 22.52 $ 20.43 $ 20.86 $ 20.48 $ 19.26 $ 15.87
-------- -------- -------- -------- -------- --------
Net investment income... 0.10 0.24 0.28 0.28 0.24 0.19
Net realized and
unrealized gains
(losses) from
investment
transactions........... 2.91 3.18 (0.41) 0.37 1.25 3.50
-------- -------- -------- -------- -------- --------
Total increase
(decrease) from
investment operations.. 3.01 3.42 (0.13) 0.65 1.49 3.69
-------- -------- -------- -------- -------- --------
Dividends from
investment income...... (0.25) (0.12) (0.27) (0.27) (0.27) (0.30)
Distributions from
realized gains on
investments............ (1.51) (1.21) (0.03) -- -- --
-------- -------- -------- -------- -------- --------
Total dividends and
distributions.......... (1.76) (1.33) (0.30) (0.27) (0.27) (0.30)
-------- -------- -------- -------- -------- --------
Net asset value, end of
period................. $ 23.77 $ 22.52 $ 20.43 $ 20.86 $ 20.48 $ 19.26
======== ======== ======== ======== ======== ========
Total investment
return(1).............. 14.16% 18.30% (0.58)% 3.15% 7.78% 23.62%
======== ======== ======== ======== ======== ========
Ratios/Supplemental
Data:
Net assets, end of
period (000's)......... $268,308 $187,057 $222,432 $359,073 $358,643 $232,555
Ratio of expenses to
average net assets..... 1.23%*(2) 1.19% 1.20% 1.13% 1.22% 1.42%
Ratio of net investment
income to average net
assets................. 0.95%*(2) 1.07% 1.29% 1.33% 1.26% 1.79%
Portfolio turnover...... 65% 111% 94% 37% 16% 52%
Average commission rate
paid per share of
common stock
investments
purchased/sold(3)...... $0.0596 -- -- -- -- --
</TABLE>
- -------
* Annualized
** Formerly Class D shares
+ Commencement of issuance of shares
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
capital gain distributions at net asset value on the payable date, and a
sale at net asset value on the last day of each period reported. The
figures do not include sales charges; results would be lower if sales
charges were included. Total investment return information for periods less
than one year is not annualized.
(2) These ratios include non-recurring reorganization expenses of 0.08% for
each Class.
(3) Disclosure effective for fiscal years beginning on or after September 1,
1995.
26
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
<TABLE>
<CAPTION>
CLASS B CLASS C**
- ------------------------------------------------------------------- ------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
SIX MONTHS FOR THE YEARS PERIOD SIX MONTHS FOR THE YEARS PERIOD
ENDED ENDED JULY 1, ENDED ENDED JULY 2,
FEBRUARY 29, AUGUST 31, 1991+ TO FEBRUARY 29, AUGUST 31, 1992+ TO
1996 --------------------------------------- AUGUST 31, 1996 -------------------------- AUGUST 31,
(UNAUDITED) 1995 1994 1993 1992 1991 (UNAUDITED) 1995 1994 1993 1992
- ------------ -------- -------- -------- -------- ---------- ------------ ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$22.37 $ 20.37 $ 20.78 $ 20.41 $ 19.23 $ 18.04 $ 22.43 $ 20.42 $ 20.83 $ 20.47 $ 20.95
-------- -------- -------- -------- -------- ------- ------- ------- ------- ------- -------
0.01 0.06 0.10 0.12 0.13 0.02 0.02 0.06 0.11 0.11 0.02
2.90 3.18 (0.37) 0.36 1.20 1.17 2.90 3.19 (0.38) 0.37 (0.44)
-------- -------- -------- -------- -------- ------- ------- ------- ------- ------- -------
2.91 3.24 (0.27) 0.48 1.33 1.19 2.92 3.25 (0.27) 0.48 (0.42)
-------- -------- -------- -------- -------- ------- ------- ------- ------- ------- -------
(0.07) (0.03) (0.11) (0.11) (0.15) -- (0.07) (0.03) (0.11) (0.12) (0.06)
(1.51) (1.21) (0.03) -- -- -- (1.51) (1.21) (0.03) -- --
-------- -------- -------- -------- -------- ------- ------- ------- ------- ------- -------
(1.58) (1.24) (0.14) (0.11) (0.15) -- (1.58) (1.24) (0.14) (0.12) (0.06)
-------- -------- -------- -------- -------- ------- ------- ------- ------- ------- -------
$ 23.70 $ 22.37 $ 20.37 $ 20.78 $ 20.41 $ 19.23 $ 23.77 $ 22.43 $ 20.42 $ 20.83 $ 20.47
======== ======== ======== ======== ======== ======= ======= ======= ======= ======= =======
13.72% 17.38% (1.31)% 2.34% 6.99% 6.60% 13.74% 17.37% (1.29)% 2.35% 2.85%
======== ======== ======== ======== ======== ======= ======= ======= ======= ======= =======
$272,543 $247,543 $289,290 $461,389 $386,275 $57,539 $38,255 $30,468 $37,287 $61,869 $13,019
2.04%*(2) 1.97% 1.97% 1.90% 1.97% 2.10%* 2.04%*(2) 1.98% 1.94% 1.87% 1.73%*
0.11%*(2) 0.29% 0.51% 0.57% 4.90% 1.18%* 0.12%*(2) 0.28% 0.54% 0.61% 0.94%*
65% 111% 94% 37% 16% 52% 65% 111% 94% 37% 16%
$0.0596 -- -- -- -- -- $0.0596 -- -- -- --
</TABLE>
27
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT EACH PERIOD IS PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS Y**
--------------------------------------------------------
FOR THE FOR THE
SIX MONTHS FOR THE YEARS PERIOD
ENDED ENDED FEBRUARY 12,
FEBRUARY 29, AUGUST 31, 1992+ TO
1996 -------------------------- AUGUST 31,
(UNAUDITED) 1995 1994 1993 1992
------------ ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 22.54 $ 20.42 $ 20.86 $ 20.48 $ 20.95
------- ------- ------- ------- -------
Net investment income... 0.15 0.30 0.33 0.33 0.16
Net realized and
unrealized gains
(losses) from
investment
transactions........... 2.89 3.18 (0.40) 0.37 (0.49)
------- ------- ------- ------- -------
Total increase
(decrease) from
investment operations.. 3.04 3.48 (0.07) 0.70 (0.33)
------- ------- ------- ------- -------
Dividends from
investment income...... (0.31) (0.15) (0.34) (0.32) (0.14)
Distributions from
realized gains on
investments............ (1.51) (1.21) (0.03) -- --
------- ------- ------- ------- -------
Total dividends and
distributions.......... (1.82) (1.36) (0.37) (0.32) (0.14)%
------- ------- ------- ------- -------
Net asset value, end of
period................. $ 23.76 $ 22.54 $ 20.42 $ 20.86 $ 20.48
======= ======= ======= ======= =======
Total investment
return(1).............. 14.35% 18.66% (0.31)% 3.44% (1.15)%
======= ======= ======= ======= =======
Ratios/Supplemental
Data:
Net assets, end of
period (000's)......... $20,143 $14,680 $14,690 $17,005 $10,560
Ratio of expenses to
average net assets..... 0.96%*(2) 0.89% 0.90% 0.86% 0.93%*
Ratio of net investment
income to average net
assets................. 1.22%*(2) 1.39% 1.60% 1.62% 1.56%*
Portfolio turnover...... 65% 111% 94% 37% 16%
Average commission rate
paid per share of
common stock
investments
purchased/sold(3)...... $0.0596 -- -- -- --
</TABLE>
- -------
* Annualized
** Formerly Class C shares
+ Commencement of issuance of shares
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
capital gain distributions at net asset value on the payable date, and a
sale at net asset value on the last day of each period reported. Total
investment return information for periods less than one year is not
annualized.
(2) These ratios include non-recurring acquisition expenses of 0.08%.
(3) Disclosure effective for fiscal years beginning on or after September 1,
1995.
28
<PAGE>
[This Page Intentionally Left Blank]
29
<PAGE>
GROWTH FUND
PAINEWEBBER
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT EACH PERIOD IS PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
FEBRUARY 29, FOR THE YEARS ENDED AUGUST 31,
1996 --------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------ -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $22.27 $ 20.04 $ 20.60 $ 16.78 $ 17.50 $ 13.43
-------- -------- -------- -------- -------- -------
Net investment income
(loss)................. (0.04) 0.01 -- 0.07 -- 0.02
Net realized and
unrealized gains
(losses) from
investment
transactions........... 3.26 2.25 0.51 4.37 (0.11) 4.68
-------- -------- -------- -------- -------- -------
Net increase (decrease)
from investment
operations............. 3.22 2.26 0.51 4.44 (0.11) 4.70
-------- -------- -------- -------- -------- -------
Dividends from
investment income...... -- -- -- -- (0.01) (0.17)
Distributions from
realized gains on
investments............ (1.84) (0.03) (1.07) (0.62) (0.60) (0.46)
-------- -------- -------- -------- -------- -------
Total dividends and
distributions.......... (1.84) (0.03) (1.07) (0.62) (0.61) (0.63)
-------- -------- -------- -------- -------- -------
Net asset value, end of
period................. $ 23.65 $ 22.27 $ 20.04 $ 20.60 $ 16.78 $ 17.50
======== ======== ======== ======== ======== =======
Total investment
return(1).............. 14.93% 11.28% 2.33% 26.97% (0.85)% 37.02%
======== ======== ======== ======== ======== =======
Ratios/Supplemental
Data:
Net assets, end of
period (000's)......... $201,563 $183,958 $141,342 $130,353 $102,640 $96,796
Ratio of expenses to
average net assets..... 1.11%* 1.28%(2) 1.21% 1.22% 1.43% 1.56%
Ratio of net investment
income (loss) to
average net assets..... (0.27)%* 0.19%(2) 0.06% 0.38% 0.00% 0.10%
Portfolio turnover...... 42% 36% 24% 36% 32% 29%
Average commission rate
paid per share of
common stock
investments
purchased/sold(3)...... $ 0.0595 -- -- -- -- --
</TABLE>
- -------
* Annualized
** Formerly Class D shares
+ Commencement of offering of shares
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
capital gain distributions 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; results for each class would be lower
if sales charges were included. Total return information for periods less
than one year is not annualized.
(2) These ratios include non-recurring acquisition expenses of 0.06%, 0.06% and
0.05% for Class A, B and C, respectively.
(3) Disclosure effective for fiscal years beginning on or after September 1,
1995.
30
<PAGE>
GROWTH FUND
PAINEWEBBER
<TABLE>
<CAPTION>
CLASS B CLASS C**
- -------------------------------------------------------------------- -------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
SIX MONTHS FOR THE YEARS PERIOD SIX MONTHS FOR THE YEARS PERIOD
ENDED ENDED JULY 1, ENDED ENDED JULY 2,
FEBRUARY 29, AUGUST 31, 1991+ TO FEBRUARY 29, AUGUST 31, 1992+ TO
1996 ----------------------------------------- AUGUST 31, 1996 ---------------------------- AUGUST 31,
(UNAUDITED) 1995 1994 1993 1992 1991 (UNAUDITED) 1995 1994 1993 1992
- ------------ -------- ------- ------- ------- ---------- ------------ ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 21.53 $ 19.53 $ 20.25 $ 16.64 $ 17.48 $15.63 $ 21.68 $ 19.67 $ 20.38 $ 16.75 $17.04
-------- -------- ------- ------- ------- ------ ------- ------- ------- ------- ------
(0.15) (0.02) (0.06) (0.05) (0.06) (0.02) (0.13) (0.10) (0.08) (0.06) (0.01)
3.16 2.05 0.41 4.28 (0.18) 1.87 3.17 2.14 0.44 4.31 (0.28)
-------- -------- ------- ------- ------- ------ ------- ------- ------- ------- ------
3.01 2.03 0.35 4.23 (0.24) 1.85 3.04 2.04 0.36 4.25 (0.29)
-------- -------- ------- ------- ------- ------ ------- ------- ------- ------- ------
-- -- -- -- -- -- -- -- -- -- --
(1.84) (0.03) (1.07) (0.62) (0.60) -- (1.84) (0.03) (1.07) (0.62) --
-------- -------- ------- ------- ------- ------ ------- ------- ------- ------- ------
(1.84) (0.03) (1.07) (0.62) (0.60) -- (1.84) (0.03) (1.07) (0.62) --
-------- -------- ------- ------- ------- ------ ------- ------- ------- ------- ------
$ 22.70 $ 21.53 $ 19.53 $ 20.25 $ 16.64 $17.48 $ 22.88 $ 21.68 $ 19.67 $ 20.38 $16.75
======== ======== ======= ======= ======= ====== ======= ======= ======= ======= ======
14.45% 10.40% 1.55% 25.91% (1.58)% 11.84% 14.50% 10.37% 1.59% 25.86% (2.95)%
======== ======== ======= ======= ======= ====== ======= ======= ======= ======= ======
$149,909 $152,357 $97,272 $60,280 $35,867 $3,804 $30,784 $30,608 $28,561 $16,474 $2,275
1.88%* 2.06%(2) 2.00% 2.02% 2.20% 2.24%* 1.88%* 2.05%(2) 1.98% 2.06% 1.98%*
(1.04)%* (0.60)%(2) (0.66)% (0.46)% (0.70)% (0.81)%* (1.04)%* (0.57)%(2) (0.65)% (0.69)% (0.65)%*
42% 36% 24% 36% 32% 29% 42% 36% 24% 36% 32%
$0.0595 -- -- -- -- -- $0.0595 -- -- -- --
</TABLE>
31
<PAGE>
GROWTH FUND
PAINEWEBBER
<TABLE>
<CAPTION>
CLASS Y++
---------------------------------------------------
FOR THE
SIX MONTHS FOR THE YEARS
ENDED ENDED
FEBRUARY 29, AUGUST 31,
1996 -------------------------------------
(UNAUDITED) 1995 1994 1993 1992
------------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................ $ 22.53 $ 20.22 $ 20.71 $ 16.83 $ 17.50
------- ------- ------- ------- -------
Net investment income
(loss)................... 0.00 0.24 0.03 0.08 0.05
Net realized and
unrealized gains (losses)
from investment
transactions............. 3.29 2.10 0.55 4.42 (0.11)
------- ------- ------- ------- -------
Net increase (decrease)
from investment
operations............... 3.29 2.34 0.58 4.50 (0.06)
------- ------- ------- ------- -------
Dividends from investment
income................... -- -- -- -- (0.01)
Distributions from
realized gains on
investments.............. (1.84) (0.03) (1.07) (0.62) (0.60)
------- ------- ------- ------- -------
Total dividends and
distributions............ (1.84) (0.03) (1.07) (0.62) (0.61)
------- ------- ------- ------- -------
Net asset value, end of
period................... $ 23.98 $ 22.53 $ 20.22 $ 20.71 $ 16.83
======= ======= ======= ======= =======
Total investment
return(1)................ 15.08% 11.58% 2.67% 27.26% (0.52)%
======= ======= ======= ======= =======
Ratios/Supplemental Data:
Net assets, end of period
(000's).................. $21,627 $20,948 $30,521 $20,706 $11,581
Ratio of expenses to
average net assets....... 0.86%* 0.97%(2) 0.94% 0.95% 1.12%
Ratio of net investment
income (loss) to average
net assets............... (0.02)%* 0.53%(2) 0.40% 0.60% 0.38%
Portfolio turnover........ 42% 36% 24% 36% 32%
Average commission rate
paid per share of common
stock investments
purchased/sold(3)........ $0.0595 -- -- -- --
</TABLE>
- -------
* Annualized
++ A per share breakdown for Class Y shares (formerly Class C) has been omitted
for the period August 26, 1991 (commencement of operations) to August 31,
1991 due to immaterial amounts.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
capital gain distributions at net asset value on the payable dates, and a
sale at net asset value on the last day of each period reported. Total
return information for period less than one year is not annualized.
(2) These ratios include non-recurring acquisition expenses of 0.06%.
(3) Disclosure effective for fiscal years beginning on or after September 1,
1995.
32
