<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN/1/
-------------------------- -----------------------------
12 MONTHS 6 MONTHS
02/28/97 08/31/96 02/29/96 ENDED 02/28/97 ENDED 02/28/97
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $25.48 $24.35 $23.77 21.59% 18.24%
- ------------------------------------------------------------------------
Class B Shares 25.39 24.26 23.70 20.65 17.79
- ------------------------------------------------------------------------
Class C Shares 25.46 24.33 23.77 20.66 17.77
- ------------------------------------------------------------------------
</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
- ----------------------------------------------------------------------------
1996 22.39 24.37 3.0247 0.2584 23.46
- ----------------------------------------------------------------------------
01/01/97 - 02/28/97 24.37 25.48 -- -- 4.55
- ----------------------------------------------------------------------------
Totals: $9.5785 $6.2426
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
02/28/97: 389.17%
- ----------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------
1996 22.35 24.32 3.0247 0.0643 22.55
- ----------------------------------------------------------------------------
01/01/97 - 02/28/97 24.32 25.39 -- -- 4.40
- ----------------------------------------------------------------------------
Totals: $5.7753 $0.5385
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
02/28/97: 85.51%
- ----------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------
1996 22.42 24.39 3.0247 0.0781 22.55
- ----------------------------------------------------------------------------
01/01/97 - 02/28/97 24.39 25.46 -- -- 4.39
- ----------------------------------------------------------------------------
Totals: $5.7753 $0.4733
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
02/28/97: 67.37%
- ----------------------------------------------------------------------------
</TABLE>
/1/
Figures assume reinvestment of all dividends and other distributions 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.
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.
5
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
Average Annual Return
<TABLE>
<CAPTION>
% RETURN WITHOUT DEDUCTING % RETURN AFTER DEDUCTING
MAXIMUM SALES CHARGE MAXIMUM SALES CHARGE
----------------------------- ---------------------------
CLASS A* B** C*** A* B** C***
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Twelve Months Ended
03/31/97 17.32% 16.41% 16.43% 12.02% 11.41% 15.43%
- ------------------------------------------------------------------------------
Five Years Ended
03/31/97 10.98 10.13 N/A 9.96 9.85 N/A
- ------------------------------------------------------------------------------
Ten Years Ended
03/31/97 10.22 N/A N/A 9.72 N/A N/A
- ------------------------------------------------------------------------------
Commencement of
Operations Through
03/31/97+ 12.43 10.72 10.71 12.04 10.62 10.71
- ------------------------------------------------------------------------------
</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 5.0% 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 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 shares, respectively.
Note: The Fund offers Class Y shares to a limited group of eligible investors,
including the trustee of the PaineWebber Savings Investment Plan and INSIGHT
Investment Advisory Program participants. For the six months ended February
28, 1997 and since inception, February 12, 1992 through February 28, 1997,
Class Y shares had a total return of 18.39% and 67.91%, respectively. For
the year ended March 31, 1997, and since inception through March 31, 1997,
Class Y shares have an average annual return of 17.65% and 9.96%,
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.
6
<PAGE>
GROWTH FUND
PAINEWEBBER
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN/1/
-------------------------- -----------------------------
12 MONTHS 6 MONTHS
02/28/97 08/31/96 02/29/96 ENDED 02/28/97 ENDED 02/28/97
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares $24.19 $24.37 $23.65 11.32% 8.03%
- ------------------------------------------------------------------------
Class B Shares 22.94 23.30 22.70 10.46 7.61
- ------------------------------------------------------------------------
Class C Shares 23.13 23.48 22.88 10.42 7.60
- ------------------------------------------------------------------------
</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
- ----------------------------------------------------------------------------
1996 23.12 24.24 2.1056 -- 14.11
- ----------------------------------------------------------------------------
01/01/97 - 02/28/97 24.24 24.19 -- -- (0.21)
- ----------------------------------------------------------------------------
Totals: $9.6986 $0.5872
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
02/28/97: 390.83%
- ----------------------------------------------------------------------------
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 $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
- ----------------------------------------------------------------------------
1996 22.22 23.02 2.1056 -- 13.24
- ----------------------------------------------------------------------------
01/01/97 - 02/28/97 23.02 22.94 -- -- (0.35)
- ----------------------------------------------------------------------------
Totals: $6.2726 $0.0037
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
02/28/97: 96.44%
- ----------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------
1996 22.40 23.21 2.1056 -- 13.18
- ----------------------------------------------------------------------------
01/01/97 - 02/28/97 23.21 23.13 -- -- (0.34)
- ----------------------------------------------------------------------------
Totals: $5.6723 --
- ----------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF
02/28/97: 75.39%
- ----------------------------------------------------------------------------
</TABLE>
/1/
Figures assume reinvestment of all dividends and other distributions 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.
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.
7
<PAGE>
GROWTH FUND
PAINEWEBBER
PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
Average Annual Return
<TABLE>
<CAPTION>
% RETURN WITHOUT DEDUCTING % RETURN AFTER DEDUCTING
MAXIMUM SALES CHARGE MAXIMUM SALES CHARGE
----------------------------- -------------------------------
CLASS A* B** C*** A* B** C***
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Twelve Months
Ended 03/31/97 3.04% 2.19% 2.22% (1.58)% (2.81)% 1.22%
- -------------------------------------------------------------------------------
Five Years Ended
03/31/97 10.16 9.29 N/A 9.15 9.01 N/A
- -------------------------------------------------------------------------------
Ten Years Ended
03/31/97 11.16 N/A N/A 10.65 N/A N/A
- -------------------------------------------------------------------------------
Commencement of
Operations
Through
03/31/97+ 13.47 11.10 10.92 13.04 10.99 10.92
- -------------------------------------------------------------------------------
</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 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 shares, respectively.
Note: The Fund offers Class Y shares to a limited group of eligible investors,
including the trustee of the PaineWebber Savings Investment Plan and INSIGHT
Investment Advisory Program participants. For the six months ended February
28, 1997 and since inception, August 26, 1991 through February 28, 1997,
Class Y shares had a total return of 8.24% and 90.71%, respectively. For the
year ended March 31, 1997, and since inception through March 31, 1997, Class
Y shares have an average annual return of 3.33% and 10.85%, 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.
8
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - 86.34%
Agriculture, Food & Beverage - 3.18%
125,000 Phillip Morris Companies Incorporated................. $ 16,890,625
180,000 RJR Nabisco Holdings Corporation...................... 6,592,500
------------
23,483,125
------------
Airlines - 1.42%
125,000 Continental Airlines Incorporated*(1)................. 3,578,125
70,000 UAL Corporation*...................................... 3,972,500
150,000 USAir Group, Incorporated*............................ 2,962,500
------------
10,513,125
------------
Apparel, Retail - 0.85%
150,000 TJX Companies, Incorporated........................... 6,262,500
------------
Apparel, Textiles--0.97%
120,000 Nine West Group, Incorporated*........................ 5,640,000
44,000 Westpoint Stevens Incorporated*....................... 1,518,000
------------
7,158,000
------------
Banks - 9.97%
100,000 Bank of Boston Corporation............................ 7,537,500
130,000 Bank of New York Company Incorporated................. 5,037,500
80,000 BankAmerica Corporation............................... 9,100,000
200,000 Barnett Banks Incorporated............................ 9,250,000
101,800 Citicorp.............................................. 11,885,150
64,000 First Union Corporation............................... 5,616,000
80,000 Greenpoint Financial Corporation...................... 4,800,000
135,000 NationsBank Corporation............................... 8,083,125
75,000 Southern National Corporation......................... 2,915,625
93,600 The Chase Manhattan Corporation....................... 9,371,700
------------
73,596,600
------------
Chemicals - 3.99%
92,500 Allied-Signal, Incorporated........................... 6,683,125
50,000 Dow Chemical Company.................................. 4,050,000
90,500 DuPont (E.I.) de Nemours & Company.................... 9,706,125
50,000 IMC Global Incorporated............................... 1,743,750
50,000 Occidental Petroleum Corporation...................... 1,275,000
150,000 Olin Corporation...................................... 6,000,000
------------
29,458,000
------------
Computer Hardware - 5.45%
125,000 Cisco Systems Incorporated*........................... 6,953,125
120,000 Compaq Computer Corporation*.......................... 9,510,000
120,000 Dell Computer Corporation*............................ 8,535,000
28,000 International Business Machines....................... 4,025,000
80,000 Seagate Technology, Incorporated*..................... 3,780,000
240,000 Sun Microsystems Incorporated*........................ 7,410,000
------------
40,213,125
------------
</TABLE>
9
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
Computer Software - 1.99%
136,600 Cadence Design Systems Incorporated*.................. $ 5,037,125
75,000 Computer Associates International Incorporated........ 3,262,500
92,630 Sterling Commerce Incorporated*....................... 2,686,270
130,000 Sterling Software Incorporated*....................... 3,721,250
------------
14,707,145
------------
Construction, Real Property - 2.00%
65,000 Chelsea GCA Realty Incorporated....................... 2,218,125
65,000 Equity Residential Properties Trust................... 2,941,250
75,000 Oakwood Homes Corporation............................. 1,481,250
45,000 Spieker Properties Incorporated....................... 1,636,875
90,000 Starwood Lodging Corporation.......................... 3,521,250
100,000 Wellsford Residential Property........................ 2,925,000
------------
14,723,750
------------
Defense/Aerospace - 6.92%
1,444 Boeing Company........................................ 146,927
157,000 ITT Industries Incorporated........................... 4,082,000
130,000 Lockheed Martin Corporation........................... 11,505,000
268,200 Loral Corporation*.................................... 4,324,725
176,400 McDonnell Douglas Corporation......................... 11,201,400
80,000 Precision Castparts Corporation....................... 3,920,000
168,600 Raytheon Company...................................... 7,945,275
105,000 United Technologies Corporation....................... 7,901,250
------------
51,026,577
------------
Diversified Retail - 1.59%
175,500 Dayton Hudson Corporation............................. 7,371,000
125,000 Federated Department Stores, Incorporated*............ 4,343,750
------------
11,714,750
------------
Drugs & Medicine - 3.97%
50,000 Bergen Brunswig Corporation........................... 1,606,250
41,700 Bristol-Myers Squibb Company.......................... 5,441,850
60,000 Cardinal Health Incorporated.......................... 3,690,000
72,800 Pfizer, Incorporated.................................. 6,670,300
100,000 Schering-Plough Corporation........................... 7,662,500
96,000 Watson Pharmaceuticals, Incorporated*(1).............. 4,188,000
------------
29,258,900
------------
Energy Reserves & Production - 2.31%
13,138 British Petroleum Plc................................. 1,739,143
66,200 Mobil Corporation..................................... 8,126,050
18,500 Royal Dutch Petroleum Company......................... 3,200,500
40,000 Texaco, Incorporated.................................. 3,955,000
------------
17,020,693
------------
</TABLE>
10
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
Financial Services - 1.84%
43,800 American Express Company.............................. $ 2,863,425
168,000 Dean Witter, Discover & Company....................... 6,447,000
40,000 Student Loan Marketing Association.................... 4,235,000
------------
13,545,425
------------
Forest Products, Paper - 0.13%
50,000 Champion International Corporation*................... 968,750
------------
Food Retail - 1.39%
100,000 Albertson's, Incorporated............................. 3,525,000
140,000 Safeway Incorporated*(1).............................. 6,737,500
------------
10,262,500
------------
Gas Utility - 0.80%
100,000 Columbia Gas System, Incorporated..................... 5,875,000
------------
Heavy Machinery - 1.27%
120,000 Caterpillar, Incorporated............................. 9,405,000
------------
Hotels - 1.22%
200,000 Hilton Hotels Corporation............................. 5,025,000
75,000 Marriott International, Incorporated.................. 3,975,000
------------
9,000,000
------------
Household Products - 0.35%
159,800 Viad Corporation*..................................... 2,556,800
------------
Leisure - 0.46%
75,000 Philips Electronics N.V.(1)........................... 3,375,000
------------
Life Insurance - 5.48%
80,000 Chubb Corporation..................................... 4,690,000
48,000 CIGNA Corporation..................................... 7,338,000
80,000 Equitable of Iowa Companies........................... 4,250,000
100,000 Reliastar Financial Corporation....................... 6,200,000
157,600 SunAmerica Incorporated............................... 7,229,900
200,000 Travelers Group Incorporated.......................... 10,725,000
------------
40,432,900
------------
Manufacturing - General - 4.35%
240,000 ADT Limited*.......................................... 5,220,000
146,000 Case Corporation...................................... 7,573,750
150,000 Crane Company......................................... 4,893,750
42,400 General Electric Company.............................. 4,361,900
100,000 Ingersoll Rand Company................................ 4,750,000
69,000 Lucasvarity Plc*...................................... 2,259,750
80,000 Stanley Works......................................... 3,060,000
------------
32,119,150
------------
Manufacturing - High Technology - 2.11%
48,000 Johnson Controls, Incorporated........................ 4,044,000
120,000 KLA Instruments Corporation*.......................... 5,002,500
</TABLE>
11
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
Manufacturing - High Technology - (concluded)
80,000 SCI Systems Incorporated*............................. $ 4,280,000
75,000 Waters Corporation*................................... 2,259,375
------------
15,585,875
------------
Medical Products - 1.63%
75,000 Johnson & Johnson..................................... 4,321,875
88,000 Mentor Corporation.................................... 2,189,000
202,500 Tenet Healthcare Corporation*......................... 5,492,812
------------
12,003,687
------------
Medical Providers - 2.01%
200,000 HEALTHSOUTH Corporation*(1)........................... 8,050,000
125,000 Humana Incorporated*.................................. 2,453,125
100,000 Lincare Holdings Incorporated*........................ 4,312,500
------------
14,815,625
------------
Mining & Metals - 0.92%
100,000 Freeport-McMoran Copper & Gold, Incorporated.......... 3,400,000
48,000 Phelps Dodge Corporation.............................. 3,432,000
------------
6,832,000
------------
Motor Vehicles and Parts - 1.93%
100,000 Borg Warner Automotive Incorporated................... 3,950,000
149,400 Breed Technologies Incorporated....................... 3,268,125
90,000 Echlin, Incorporated.................................. 3,116,250
100,000 Lear Corporation*..................................... 3,900,000
------------
14,234,375
------------
Oil Refining - 2.44%
100,000 Coastal Corporation................................... 4,550,000
38,000 Repsol S.A., ADR...................................... 1,444,000
15,000 Shell Transport & Trading Plc(1)...................... 1,520,625
137,500 Tejas Gas Corporation*................................ 6,015,625
35,000 Total S.A.(1)......................................... 1,386,875
80,000 Unocal Corporation.................................... 3,090,000
------------
18,007,125
------------
Oil Services - 4.26%
114,000 Camco International Incorporated(1)................... 4,403,250
100,000 Diamond Offshore Drilling Incorporated*(1)............ 5,900,000
96,000 Ensco International Incorporated*..................... 4,164,000
100,000 Global Marine Incorporated*........................... 1,862,500
150,000 Halliburton Company................................... 9,693,750
165,000 Nabors Industries Incorporated*....................... 2,536,875
118,900 Reading & Bates Corporation*.......................... 2,883,325
------------
31,443,700
------------
Other Insurance - 5.79%
125,000 ACE Limited........................................... 8,125,000
200,971 Allstate Corporation.................................. 12,736,537
</TABLE>
12
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - (CONCLUDED)
Other Insurance - (concluded)
50,600 Ambac Incorporated.................................... $ 3,377,550
85,200 American International Group Incorporated............. 10,309,200
160,000 Everest Reinsurance Holdings Incorporated............. 5,040,000
41,500 ITT Hartford Group, Incorporated...................... 3,112,500
------------
42,700,787
------------
Publishing - 0.60%
100,000 New York Times Company, Class A....................... 4,450,000
------------
Semiconductor - 1.37%
102,000 Applied Materials, Incorporated*...................... 5,163,750
35,000 Intel Corporation..................................... 4,965,625
------------
10,129,375
------------
Specialty Retail - 1.14%
175,469 Dollar General Corporation(1)......................... 4,978,926
67,200 Waban Incorporated*................................... 1,923,600
80,000 Zale Corporation *.................................... 1,480,000
------------
8,382,526
------------
Tobacco - 0.24%
100,000 BAT Industries Plc(1)................................. 1,762,500
------------
Total Common Stocks (cost - $489,062,461)........................ 637,024,390
------------
PREFERRED STOCKS - 4.45%
Banks - 0.84%
108,800 BCP International Limited............................. 6,174,400
------------
Financial Services - 0.44%
53,000 Devon Financing Trust#................................ 3,279,375
------------
Forest Products, Paper - 0.66%
102,000 International Paper Capital Trust#.................... 4,832,250
------------
Life Insurance - 0.71%
125,000 SunAmerica Incorporated............................... 5,265,625
------------
Mining & Metals - 0.39%
60,000 Timet Capital Trust I................................. 2,880,000
------------
Other Insurance - 0.60%
80,000 Frontier Financing Trust.............................. 4,440,000
------------
Precious Metals - 0.38%
144,000 Coer d' Alene Mines Corporation....................... 2,790,000
------------
Thrift - 0.43%
60,000 Tosco Financing Trust................................. 3,202,500
------------
Total Preferred Stocks (cost - $30,278,745)...................... 32,864,150
------------
</TABLE>
13
<PAGE>
GROWTH & INCOME FUND
PAINEWEBBER
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------- -------- ------------
CONVERTIBLE BOND - 0.54%
<C> <S> <C> <C> <C> <C>
Specialty Retail - 0.54%
$ 4,000 Home Depot Incorporated
(cost - $4,000,000)......... 10/01/01 3.250% $ 4,000,000
------------
REPURCHASE AGREEMENTS - 9.18%
25,000 Repurchase agreement dated
02/28/97, with Daiwa
Securities America, Inc.,
collaterized by $22,031,000
U.S. Treasury Bond, 8.125%
due 05/15/21; proceeds:
$25,011,146................. 03/03/97 5.350 25,000,000
30,000 Repurchase agreement dated
02/28/97, with Dredner
Securities (USA), Inc.,
collateralized by
$21,066,000 U.S. Treasury
Bond, 11.25% due 02/15/15;
proceeds: $30,013,325....... 03/03/97 5.330 30,000,000
12,737 Repurchase agreement dated
02/28/97, with First Chicago
National Bank, Inc.,
collateralized by
$12,190,000 U.S. Treasury
Note, 7.50% due 11/15/01;
proceeds: $12,742,679....... 03/03/97 5.350 12,737,000
------------
Total Repurchase Agreements (cost -
$67,737,000)........................... 67,737,000
------------
<CAPTION>
NUMBER OF
SHARES
(000)
---------
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED - 4.94%
<C> <S> <C> <C> <C> <C>
Money Market Funds--4.94%
18,424 Liquid Assets Portfolio......................... 18,424,159
18,027 TempFund Portfolio.............................. 18,026,991
------------
Total Investments of Cash Collateral for Securities Loaned
(cost - $36,451,150)...................................... 36,451,150
------------
Total Investments (cost - $627,529,356) - 105.45%......... 778,076,690
Liabilities in excess of other assets - (5.45)%........... (40,227,339)
------------
Net Assets - 100.00%...................................... $737,849,351
============
</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.
(1) Security, or portion thereof, was on loan at February 28, 1997
ADR--American Depositary Receipt
See accompanying notes to financial statements
14
<PAGE>
GROWTH FUND
PAINEWEBBER
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - 91.48%
Agriculture, Food & Beverage - 1.54%
100,000 The Coca-Cola Company................................. $ 6,100,000
------------
Apparel, Textiles - 1.45%
80,000 Nike Incorporated..................................... 5,750,000
------------
Banks - 2.60%
50,000 Bank of Boston Corporation............................ 3,768,750
25,000 First Union Corporation............................... 2,193,750
43,680 The Chase Manhattan Corporation....................... 4,373,460
------------
10,335,960
------------
Chemicals - 3.11%
70,000 IMC Global Incorporated............................... 2,441,250
115,762 Mark IV Industries Incorporated....................... 2,691,467
175,000 Sealed Air Corporation*............................... 7,196,875
------------
12,329,592
------------
Computer Hardware - 4.68%
140,000 Cisco Systems Incorporated*........................... 7,787,500
28,000 Dell Computer Corporation*............................ 1,991,500
100,000 EMC Corporation*...................................... 3,600,000
45,000 Seagate Technology, Incorporated*..................... 2,126,250
100,000 Sun Microsystems Incorporated*........................ 3,087,500
------------
18,592,750
------------
Computer Software - 3.70%
80,000 Epic Design Technology, Incorporated*................. 2,130,000
430,000 Excalibur Technologies Corporation*................... 3,440,000
100,000 Smallworldwide, plc, ADR*............................. 1,625,000
159,260 Sterling Commerce Incorporated*....................... 4,618,540
100,000 Sterling Software Incorporated*....................... 2,862,500
------------
14,676,040
------------
Construction, Real Property - 0.74%
75,000 Starwood Lodging Corporation.......................... 2,934,375
------------
Defense/Aerospace - 2.56%
125,000 Kellstrom Industries Incorporated*(1)................. 1,546,875
30,000 McDonnell Douglas Corporation......................... 1,905,000
45,000 Precision Castparts Corporation....................... 2,205,000
60,000 United Technologies Corporation....................... 4,515,000
------------
10,171,875
------------
Drugs & Medicine - 7.32%
141,300 Columbia Laboratories, Incorporated*.................. 2,154,825
60,000 Elan Corporation, plc, ADS*(1)........................ 2,077,500
230,000 Entremed Incorporated*................................ 3,450,000
120,000 Global Pharmaceutical Corporation*.................... 960,000
130,000 Pharmacyclics Incorporated*........................... 2,567,500
20,000 R.P. Scherer Corporation*............................. 1,155,000
172,000 Teva Pharmaceutical Industries Limited, ADS........... 10,631,750
</TABLE>
15
<PAGE>
GROWTH FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
Drugs & Medicine - (concluded)
50,000 Triangle Pharmaceuticals Incorporated*................ $ 1,018,750
115,000 Watson Pharmaceuticals, Incorporated*................. 5,016,875
------------
29,032,200
------------
Energy Reserves & Production - 0.30%
75,000 Lomak Petroleum Incorporated*......................... 1,200,000
------------
Entertainment - 6.68%
245,000 Cinar Films Incorporated*............................. 6,125,000
240,000 Florida Panthers Holdings Incorporated*............... 5,985,600
333,334 N2K Incorporated*..................................... 1,000,002
270,000 Ticketmaster Group Incorporated*...................... 3,645,000
188,000 Time Warner Incorporated.............................. 7,708,000
70,000 Young Broadcasting Incorporated*...................... 2,038,750
------------
26,502,352
------------
Environmental Services - 4.07%
455,000 Republic Industries, Incorporated*.................... 16,152,500
------------
Financial Services - 3.50%
80,000 Federal Home Loan Mortgage Corporation................ 2,380,000
155,000 Federal National Mortgage Association................. 6,200,000
50,000 Student Loan Marketing Association.................... 5,293,750
------------
13,873,750
------------
Forest Products, Paper - 0.95%
30,000 Fibreboard Corporation*............................... 1,001,250
195,000 Universal Forest Products, Incorporated............... 2,754,375
------------
3,755,625
------------
Food Retail - 1.22%
100,000 Dominicks Supermarkets Incorporated*.................. 1,850,000
62,500 Safeway Incorporated*(1).............................. 3,007,813
------------
4,857,813
------------
Heavy Machinery - 0.33%
56,250 Corestaff Incorporated*............................... 1,328,906
------------
Hotels - 4.92%
465,000 Extended Stay America, Incorporated*.................. 9,183,750
120,000 HFS, Incorporated*.................................... 8,220,000
85,000 Hilton Hotels Corporation............................. 2,135,625
------------
19,539,375
------------
Industrial Services/Supplies - 1.41%
230,000 Data Documents Incorporated*.......................... 2,386,250
200,000 Staffing Resources, Incorporated*..................... 3,200,000
------------
5,586,250
------------
</TABLE>
16
<PAGE>
GROWTH FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
Information & Computer Services - 1.39%
50,000 First Data Corporation................................ $ 1,831,250
84,375 Paychex, Incorporated................................. 3,670,313
------------
5,501,563
------------
Leisure - 2.36%
250,000 Activision, Incorporated*............................. 3,343,750
200,000 Marker International*................................. 1,050,000
225,000 Norwood Promotional Products, Incorporated*........... 3,937,500
114,700 Rawlings Sporting Goods Company, Incorporated*........ 1,032,300
------------
9,363,550
------------
Life Insurance - 3.28%
35,000 Equitable of Iowa Companies........................... 1,859,375
280,000 International Alliance Services Incorporated*(2)...... 3,430,000
150,000 PennCorp Financial Group, Incorporated................ 5,250,000
40,000 Reliastar Financial Corporation....................... 2,480,000
------------
13,019,375
------------
Long Distance & Phone Companies - 6.21%
45,000 Brooks Fiber Properties, Incorporated*................ 956,250
345,096 ICG Communications, Incorporated*..................... 4,443,111
77,000 Intermedia Communications of Florida, Incorporated*... 1,376,375
75,000 International CableTel Incorporated*.................. 1,453,125
62,500 McLeod Incorporated*.................................. 1,117,187
150,000 Smartalk Teleservices Incorporated*................... 2,137,500
135,000 Teleport Communications*.............................. 4,050,000
135,000 Viatel Incorporated*.................................. 1,046,250
302,400 WorldCom, Incorporated*............................... 8,051,400
------------
24,631,198
------------
Manufacturing - General - 0.33%
45,000 Watsco Incorporated................................... 1,305,000
------------
Manufacturing - High Technology - 3.65%
183,500 Belden, Incorporated.................................. 6,537,187
200,000 Noel Group, Incorporated*............................. 1,400,000
100,000 Superior Telecom Incorporated*........................ 2,512,500
134,000 Waters Corporation*................................... 4,036,750
------------
14,486,437
------------
Media - 5.26%
277,500 Ascent Entertainment Group Incorporated*.............. 3,676,875
125,000 Bell CableMedia plc*.................................. 1,734,375
257,500 Comcast Corporation, Class A Special.................. 4,602,812
185,000 Four Media Company*................................... 1,873,125
196,875 Liberty Media Group*.................................. 4,134,375
67,500 Outdoor Systems Incorporated*......................... 2,025,000
67,500 Universal Outdoor Holdings Incorporated*.............. 1,822,500
30,000 Univision Communications Incorporated................. 990,000
------------
20,859,062
------------
</TABLE>
17
<PAGE>
GROWTH FUND
PAINEWEBBER
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<C> <S> <C>
COMMON STOCKS - (CONCLUDED)
Medical Products - 0.95%
170,000 VISX, Incorporated*................................... $ 3,782,500
------------
Medical Providers - 3.96%
112,500 Columbia/HCA Healthcare Corporation(1)................ 4,725,000
198,000 Phycor Incorporated*.................................. 6,014,250
171,000 Service Corporation International..................... 4,959,000
------------
15,698,250
------------
Mining & Metals - 1.50%
60,000 Freeport-McMoran Copper & Gold, Incorporated.......... 2,040,000
50,000 Potash Corporation of Saskatchewan Incorporated....... 3,931,250
------------
5,971,250
------------
Motor Vehicles and Parts - 0.17%
28,000 Dura Automotive Systems, Incorporated*................ 672,000
------------
Oil Services - 1.82%
70,000 Camco International Incorporated(1)................... 2,703,750
70,000 Ensco International Incorporated*..................... 3,036,250
80,000 Global Marine Incorporated*........................... 1,490,000
------------
7,230,000
------------
Other Insurance - 0.52%
65,000 Everest Reinsurance Holdings Incorporated............. 2,047,500
------------
Publishing - 0.85%
205,000 Getty Communications Systems Incorporated*............ 3,382,500
------------
Semiconductor - 1.07%
30,000 Intel Corporation..................................... 4,256,250
------------
Specialty Retail - 6.20%
150,000 Corporate Express, Incorporated*...................... 2,812,500
200,000 General Nutrition Companies, Incorporated*............ 3,600,000
40,000 Gucci Group N.V.*..................................... 2,585,000
460,405 Staples, Incorporated*(1)............................. 9,956,258
240,000 Viking Office Products, Incorporated*................. 5,670,000
------------
24,623,758
------------
Thrift - 0.18%
13,500 Washington Mutual Incorporated*....................... 713,813
------------
Wireless Telecommunications - 0.70%
32,000 Millicom International Cellular, S.A.*................ 1,232,000
90,000 Omnipoint Corporation*................................ 1,541,250
------------
2,773,250
------------
Total Common Stocks (cost - $238,447,628)........................ 363,036,619
------------
</TABLE>
18
<PAGE>
GROWTH FUND
PAINEWEBBER
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
--------- -------- -------- ------------
REPURCHASE AGREEMENTS - 8.84%
<C> <S> <C> <C> <C>
$17,108 Repurchase agreement dated
02/28/97 with Daiwa Securities
America, Inc., collateralized by
$14,130,000 U.S. Treasury Bonds,
10.000% due 05/15/10; proceeds:
$17,115,627..................... 03/03/97 5.350% $ 17,108,000
18,000 Repurchase agreement dated
02/28/97 with State Street Bank
and Trust Company,
collateralized by $16,865,000
U.S. Treasury Bonds, 7.875%, due
11/15/07; proceeds: $18,007,965. 03/03/97 5.310 18,000,000
------------
Total Repurchase Agreements (cost -
$35,108,000)............................... 35,108,000
------------
<CAPTION>
NUMBER OF
SHARES
(000)
---------
INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED - 5.50%
<C> <S> <C> <C> <C>
Money Market Funds - 5.50%
17,678 Liquid Assets Portfolio.......... 17,678,377
4,141 TempFund Portfolio............... 4,140,823
------------
Total Investments of Cash Collateral for
Securities Loaned (cost - $21,819,200)...... 21,819,200
------------
Total Investments (cost - $295,374,828) -
105.82%.................................... 419,963,819
Liabilities in excess of other assets -
(5.82)% ................................... (23,105,662)
------------
Net Assets - 100.00%........................ $396,858,157
============
</TABLE>
- -------
* Non-Income producing
(1) Security, or portion thereof, was on loan at February 28, 1997
(2) With an additional 280,000 warrants attached expiring 12/30/99 with no
market value
ADS--American Depositary Shares
ADR--American Depositary Receipt
See accompanying notes to financial statements
19
<PAGE>
PAINEWEBBER
STATEMENTS OF ASSETS AND LIABILITIES FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
GROWTH
& INCOME GROWTH
FUND FUND
------------ ------------
<S> <C> <C>
Assets
Investments in securities, at value (cost -
$627,529,356 and $295,374,828, respectively)....... $778,076,690 $419,963,819
Receivable for investments sold..................... 10,560,110 1,838,489
Dividends and interest receivable................... 1,052,432 171,220
Receivable for shares of beneficial interest sold... 980,430 162,414
Other assets........................................ 116,428 199,553
------------ ------------
Total assets........................................ 790,786,090 422,335,495
------------ ------------
Liabilities
Collateral for securities loaned.................... 36,451,150 21,819,200
Payable for investments purchased................... 14,307,195 2,220,228
Payable for shares of beneficial interest
repurchased........................................ 1,043,331 766,068
Payable to affiliate................................ 765,986 418,223
Accrued expenses and other liabilities.............. 369,077 253,619
------------ ------------
Total liabilities................................... 52,936,739 25,477,338
------------ ------------
Net Assets
Beneficial interest - $0.001 par value (unlimited
amount authorized)................................. 561,133,022 238,007,032
Accumulated undistributed net investment income
(loss)............................................. 436,808 (1,821,946)
Accumulated net realized gains from investment
transactions....................................... 25,732,187 36,084,080
Net unrealized appreciation of investments.......... 150,547,334 124,588,991
------------ ------------
Net assets.......................................... $737,849,351 $396,858,157
============ ============
Class A:
Net assets.......................................... $329,888,253 $211,015,149
------------ ------------
Shares outstanding.................................. 12,948,501 8,722,549
------------ ------------
Net asset value and redemption value per share...... $25.48 $24.19
============ ============
Maximum offering price per share (net asset value
plus sales charge of 4.50% of offering price)...... $26.68 $25.33
============ ============
Class B:
Net assets.......................................... $317,586,121 $134,516,414
------------ ------------
Shares outstanding.................................. 12,509,493 5,862,970
------------ ------------
Net asset value and offering price per share........ $25.39 $22.94
============ ============
Class C:
Net assets.......................................... $ 57,097,374 $ 28,889,515
------------ ------------
Shares outstanding.................................. 2,242,919 1,248,827
------------ ------------
Net asset value and offering price per share........ $25.46 $23.13
============ ============
Class Y:
Net assets.......................................... $ 33,277,603 $ 22,437,079
------------ ------------
Shares outstanding.................................. 1,306,772 910,764
------------ ------------
Net asset value, offering price and redemption value
per share.......................................... $25.47 $24.64
============ ============
</TABLE>
See accompanying notes to financial statements
20
<PAGE>
PAINEWEBBER
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
GROWTH
& INCOME GROWTH
FUND FUND
------------ -----------
<S> <C> <C>
Investment income:
Dividends............................................ $ 4,961,335 $ 715,046
Interest............................................. 2,647,086 800,321
------------ -----------
7,608,421 1,515,367
------------ -----------
Expenses:
Investment advisory and administration............... 2,387,510 1,533,955
Service fees--Class A................................ 349,827 244,760
Service and distribution fees--Class B............... 1,503,737 712,758
Service and distribution fees--Class C............... 249,919 154,244
Transfer agency and service fees..................... 268,012 220,631
Reports and notices to shareholders.................. 175,851 144,245
Custody and accounting............................... 180,450 122,923
Legal and audit...................................... 87,836 88,715
Federal and state registration....................... 49,008 56,624
Trustees' fees....................................... 7,875 7,875
Other expenses....................................... 59,566 50,583
------------ -----------
5,319,591 3,337,313
------------ -----------
Net investment income (loss)......................... 2,288,830 (1,821,946)
------------ -----------
Realized and unrealized gains (losses) from invest-
ment activities:
Net realized gains from investment transactions...... 41,866,383 37,191,952
Net change in unrealized appreciation/depreciation of
investments......................................... 67,414,748 (4,058,823)
------------ -----------
Net realized and unrealized gains from investment ac-
tivities............................................ 109,281,131 33,133,129
------------ -----------
Net increase in net assets resulting from operations. $111,569,961 $31,311,183
============ ===========
</TABLE>
See accompanying notes to financial statements
21
<PAGE>
PAINEWEBBER GROWTH & INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE
FEBRUARY 28, 1997 YEAR ENDED
(UNAUDITED) AUGUST 31, 1996
----------------- ---------------
<S> <C> <C>
From operations:
Net investment income....................... $ 2,288,830 $ 3,272,065
Net realized gains from investment
transactions............................... 41,866,383 86,725,439
Net change in unrealized
appreciation/depreciation of investments... 67,414,748 (1,953,419)
------------ ------------
Net increase in net assets resulting from
operations................................. 111,569,961 88,044,085
------------ ------------
Dividends and distributions to shareholders
from:
Net investment income--Class A.............. (1,858,246) (3,309,904)
Net investment income--Class B.............. (534,799) (985,947)
Net investment income--Class C.............. (104,190) (142,026)
Net investment income--Class Y.............. (208,280) (323,508)
Net realized gains from investment
transactions--Class A...................... (34,230,420) (14,113,535)
Net realized gains from investment
transactions--Class B...................... (34,198,889) (16,674,335)
Net realized gains from investment
transactions--Class C...................... (5,668,031) (2,139,119)
Net realized gains from investment
transactions--Class Y...................... (3,062,641) (1,066,345)
------------ ------------
Total dividends and distributions to
shareholders............................... (79,865,496) (38,754,719)
------------ ------------
From beneficial interest transactions:
Net proceeds from the sale of shares........ 74,493,222 86,569,299
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.................. (62,627,599) (109,425,591)
Proceeds from dividends reinvested.......... 74,420,791 35,992,186
------------ ------------
Net increase in net assets from beneficial
interest transactions...................... 86,286,414 90,821,230
------------ ------------
Net increase in net assets.................. 117,990,879 140,110,596
Net assets:
Beginning of period......................... 619,858,472 479,747,876
------------ ------------
End of period (including undistributed net
investment income of $436,808 and $853,493,
respectively).............................. $737,849,351 $619,858,472
============ ============
</TABLE>
See accompanying notes to financial statements
22
<PAGE>
PAINEWEBBER GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE
FEBRUARY 28, 1997 YEAR ENDED
(UNAUDITED) AUGUST 31, 1996
----------------- ---------------
<S> <C> <C>
From operations:
Net investment loss.......................... $ (1,821,946) $ (3,284,126)
Net realized gains from investment
transactions................................ 37,191,952 53,608,241
Net change in unrealized
appreciation/depreciation of investments.... (4,058,823) 15,049,708
------------ ------------
Net increase in net assets resulting from
operations.................................. 31,311,183 65,373,823
------------ ------------
Distributions to shareholders from:
Net realized gains from investment
transactions--Class A....................... (17,185,494) (14,736,470)
Net realized gains from investment
transactions--Class B....................... (12,089,644) (11,773,021)
Net realized gains from investment
transactions--Class C....................... (2,625,574) (2,425,155)
Net realized gains from investment
transactions--Class Y....................... (1,819,441) (1,487,963)
------------ ------------
Total distributions to shareholders.......... (33,720,153) (30,422,609)
------------ ------------
From beneficial interest transactions:
Net proceeds from sale of shares............. 22,856,617 33,439,586
Cost of shares repurchased................... (51,149,757) (89,217,437)
Proceeds from dividends reinvested........... 31,795,484 28,720,783
------------ ------------
Net increase (decrease) in net assets from
beneficial interest transactions............ 3,502,344 (27,057,068)
------------ ------------
Net increase in net assets................... 1,093,374 7,894,146
Net assets:
Beginning of period.......................... 395,764,783 387,870,637
------------ ------------
End of period................................ $396,858,157 $395,764,783
============ ============
</TABLE>
See accompanying notes to financial statements
23
<PAGE>
PAINEWEBBER NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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.
Currently each Fund offers Class A, Class B, Class C and Class Y shares. Each
class 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 dividend reinvested shares
automatically convert to Class A shares approximately six years after initial
issuance. All classes of shares have equal voting privileges except that each
class has exclusive voting rights with respect to its service and/or
distribution plan.
The preparation of financial statements in accordance with generally accepted
accounting principles requires Fund management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates. The following is
a summary of significant accounting policies:
Valuation of Investments - Securities 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 Nasdaq Stock Market ("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 for which market quotations are not readily available
(including restricted securities subject to limitations as to their sale) are
valued at fair value as determined in good faith by a management committee
under the direction of each Trust's board of trustees.
24
<PAGE>
PAINEWEBBER
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 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.
ACQUISITIONS
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.
25
<PAGE>
PAINEWEBBER
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 net unrealized appreciation of
investments of $5,986,801 were combined with those of Growth & Income Fund.
INVESTMENT ADVISER AND ADMINISTRATOR
Each 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
Funds. In accordance with the Advisory Contracts, Growth & Income Fund and
Growth Fund pay Mitchell Hutchins an investment advisory and administration
fee, which is accrued daily and paid monthly, at the annual rate of 0.70% and
0.75%, respectively, of each Funds average daily net assets. At February 28,
1997, Growth & Income Fund and Growth Fund owed Mitchell Hutchins $399,687 and
$238,079, respectively, in investment advisory and administration fees.
For the six months ended February 28, 1997, Growth & Income Fund and Growth
Fund paid $30,690 and $18,019, respectively, in brokerage commissions to
PaineWebber for transactions executed on behalf 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 distribution pertaining to the Class A, Class B and Class C
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 0.75% of the average
daily net assets on Class B and Class C shares. At February 28, 1997, Growth &
Income Fund and Growth Fund owed Mitchell Hutchins $349,074 and $169,966,
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 by shareholders 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 28, 1997, it earned $498,053 and $172,712 in sales charges for the
Growth & Income Fund and Growth Fund, respectively.
26
<PAGE>
PAINEWEBBER
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 for the six months ended February 28, 1997,
PaineWebber earned $102,438 and $62,472 from Growth & Income Fund and Growth
Fund, respectively. At February 28, 1997, Growth & Income Fund and Growth Fund
owed PaineWebber $17,225 and $10,178, respectively, for transfer agency service
fees.
SECURITY LENDING
Each fund may lend up to 33 1/3% of its total assets to qualified institutions.
The loans are secured at all times by cash or U.S. government securities 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. Each
Fund will regain record ownership of loaned securities to exercise certain
beneficial rights, however, each Fund may bear the risk of delay in recovery
of, or even loss of rights in, the securities loaned should the borrower fail
financially. Each Fund receives compensation, which is included in interest
income, 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. Each Fund's lending
agent is PaineWebber, who received no compensation from the Funds in that
capacity for the six months ended February 28, 1997.
As of February 28, 1997, each Fund's custodian held cash and cash equivalents
having an aggregate value of $36,451,150 and $21,819,200 as collateral for
portfolio securities loaned having a market value of $34,877,163 and
$21,052,838 for Growth & Income Fund and Growth Fund, respectively.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at February 28,
1997, was substantially the same as the cost of securities for financial
statement purposes.
At February 28, 1997, 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).................................. $157,134,392 $133,113,322
Gross depreciation (investments having an excess of
cost over value).................................. (6,587,058) (8,524,331)
------------ ------------
Net unrealized appreciation of investments......... $150,547,334 $124,588,991
============ ============
</TABLE>
27
<PAGE>
PAINEWEBBER
For the six months ended February 28, 1997, total aggregate purchases and sales
of portfolio securities, excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
GROWTH &
INCOME FUND GROWTH FUND
------------ ------------
<S> <C> <C>
Purchases............................................. $285,952,481 $131,906,537
Sales................................................. $253,602,944 $175,249,090
</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.
28
<PAGE>
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> <C>
GROWTH & INCOME FUND
SIX MONTHS ENDED
FEBRUARY 28,
1997:
Shares sold....... 783,015 $20,012,539 1,003,708 $ 25,749,435 487,212 $12,528,724 631,571 $16,202,524
Shares
repurchased...... (770,751) (20,004,591) (1,020,019) (26,133,197) (239,703) (6,206,292) (400,148) (10,283,519)
Shares converted
from Class B to
Class A.......... 231,580 5,933,363 (232,408) (5,933,363) -- -- -- --
Dividends
reinvested....... 1,370,524 33,632,674 1,309,993 32,081,721 221,786 5,444,854 133,070 3,261,542
---------- ----------- ---------- ------------ -------- ----------- -------- -----------
Net increase...... 1,614,368 $39,573,985 1,061,274 $ 25,764,596 469,295 $11,767,286 364,493 $ 9,180,547
========== =========== ========== ============ ======== =========== ======== ===========
YEAR ENDED AUGUST
31, 1996:
Shares sold....... 1,129,631 $26,796,965 1,730,871 $ 40,860,505 586,203 $13,785,499 215,504 $ 5,126,330
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...... (1,907,414) (44,519,365) (2,302,787) (53,544,909) (361,631) (8,422,118) (125,157) (2,939,199)
Shares converted
from Class B to
Class A.......... 204,193 4,892,665 (204,905) (4,892,665) -- -- -- --
Dividends
reinvested....... 728,678 16,107,474 744,676 16,323,941 98,756 2,173,217 62,781 1,387,554
---------- ----------- ---------- ------------ -------- ----------- -------- -----------
Net increase ..... 3,027,396 $66,739,834 382,448 $ 7,888,872 415,419 $ 9,573,176 291,054 $ 6,619,348
========== =========== ========== ============ ======== =========== ======== ===========
GROWTH FUND
SIX MONTHS ENDED
FEBRUARY 28,
1997:
Shares sold....... 211,449 $ 5,335,806 163,726 $ 3,968,432 317,737 $ 7,848,686 222,216 $ 5,703,693
Shares
repurchased...... (742,928) (18,832,900) (699,859) (14,806,417) (452,036) (11,053,253) (251,734) (6,457,187)
Shares converted
from Class B to
Class A.......... 206,454 5,202,752 (132,671) (5,202,752) -- -- -- --
Dividends
reinvested....... 679,736 16,198,119 499,211 11,302,141 108,492 2,475,783 74,998 1,819,441
---------- ----------- ---------- ------------ -------- ----------- -------- -----------
Net increase
(decrease)....... 354,711 $7,903,777 (169,593) $ (4,738,596) (25,807) $ (728,784) 45,480 $ 1,065,947
========== =========== ========== ============ ======== =========== ======== ===========
YEAR ENDED AUGUST
31, 1996:
Shares sold....... 514,293 $12,445,673 548,531 $ 12,529,149 189,909 $ 4,324,908 172,505 $ 4,139,856
Shares
repurchased...... (1,557,212) (36,779,779) (1,643,121) (35,301,053) (434,895) (9,869,571) (302,302) (7,267,034)
Shares converted
from Class B to
Class A.......... 527,377 12,303,931 (454,796) (12,303,931) -- -- -- --
Dividends
reinvested....... 623,918 13,988,235 505,415 10,896,749 108,096 2,347,836 65,491 1,487,963
---------- ----------- ---------- ------------ -------- ----------- -------- -----------
Net increase
(decrease)....... 108,376 $ 1,958,060 (1,043,971) $(24,179,086) (136,890) $(3,196,827) (64,306) $(1,639,215)
========== =========== ========== ============ ======== =========== ======== ===========
</TABLE>
29
<PAGE>
PAINEWEBBER GROWTH & INCOME FUND
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 28, FOR THE YEARS ENDED AUGUST 31,
1997 ----------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 24.35 $ 22.52 $ 20.43 $ 20.86 $ 20.48 $ 19.26
-------- -------- -------- -------- -------- --------
Net investment income... 0.22 0.22 0.24 0.28 0.28 0.24
Net realized and
unrealized gains
(losses) from
investments............ 4.10 3.46 3.18 (0.41) 0.37 1.25
-------- -------- -------- -------- -------- --------
Total increase
(decrease) from
investment operations.. 4.32 3.68 3.42 (0.13) 0.65 1.49
-------- -------- -------- -------- -------- --------
Dividends from
investment income...... (0.17) (0.34) (0.12) (0.27) (0.27) (0.27)
Distributions from net
realized gains on
investment
transactions........... (3.02) (1.51) (1.21) (0.03) -- --
-------- -------- -------- -------- -------- --------
Total dividends and
distributions to
shareholders........... (3.19) (1.85) (1.33) (0.30) (0.27) (0.27)
-------- -------- -------- -------- -------- --------
Net asset value, end of
period................. $ 25.48 $ 24.35 $ 22.52 $ 20.43 $ 20.86 $ 20.48
======== ======== ======== ======== ======== ========
Total investment
return(1).............. 18.24% 17.40% 18.30% (0.58)% 3.15% 7.78%
======== ======== ======== ======== ======== ========
Ratios/Supplemental
Data:
Net assets, end of
period (000's)......... $329,888 $276,016 $187,057 $222,432 $359,073 $358,643
Expenses to average net
assets................. 1.17%* 1.20%(2) 1.19% 1.20% 1.13% 1.22%
Net investment income to
average net assets..... 1.06%* 0.98%(2) 1.07% 1.29% 1.33% 1.26%
Portfolio turnover...... 41% 112% 111% 94% 37% 16%
Average commission rate
paid(3)................ $ 0.0598 $ 0.0598 -- -- -- --
</TABLE>
- -------
* Annualized
+ 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
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 would be lower if sales charges were
included. Total investment return information for periods of less than one
year has not been annualized.
(2) These ratios include non-recurring acquisition expenses of 0.04%.
(3) Effective for fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose the average commission rate paid per share of
common stock investments purchased or sold.
30
<PAGE>
<TABLE>
<CAPTION>
CLASS B
- ------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31,
1997 ----------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 24.26 $ 22.37 $ 20.37 $ 20.78 $ 20.41 $ 19.23
-------- -------- -------- -------- -------- --------
0.12 0.04 0.06 0.10 0.12 0.13
4.08 3.45 3.18 (0.37) 0.36 1.20
-------- -------- -------- -------- -------- --------
4.20 3.49 3.24 (0.27) 0.48 1.33
-------- -------- -------- -------- -------- --------
(0.05) (0.09) (0.03) (0.11) (0.11) (0.15)
(3.02) (1.51) (1.21) (0.03) -- --
-------- -------- -------- -------- -------- --------
(3.07) (1.60) (1.24) (0.14) (0.11) (0.15)
-------- -------- -------- -------- -------- --------
$ 25.39 $ 24.26 $ 22.37 $ 20.37 $ 20.78 $ 20.41
======== ======== ======== ======== ======== ========
17.79% 16.49% 17.38% (1.31)% 2.34% 6.99%
======== ======== ======== ======== ======== ========
$317,586 $277,753 $247,543 $289,290 $461,389 $386,275
1.95%* 1.99%(2) 1.97% 1.97% 1.90% 1.97%
0.28%* 0.17%(2) 0.29% 0.51% 0.57% 4.90%
41% 112% 111% 94% 37% 16%
$ 0.0598 $ 0.0598 -- -- -- --
<CAPTION>
CLASS C
- -----------------------------------------------------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS SIX MONTHS PERIOD
ENDED ENDED JULY 2,
FEBRUARY 28, FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31, 1992+ TO
1997 1997 --------------------------------------- AUGUST 31,
(UNAUDITED) (UNAUDITED) 1996 1995 1994 1993 1992
- ------------- ------------ ----------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 24.26 $ 24.33 $ 22.43 $ 20.42 $ 20.83 $ 20.47 $ 20.95
- ------------- ------------ ----------- -------- --------- -------- -----------
0.12 0.10 0.05 0.06 0.11 0.11 0.02
4.08 4.11 3.46 3.19 (0.38) 0.37 (0.44)
- ------------- ------------ ----------- -------- --------- -------- -----------
4.20 4.21 3.51 3.25 (0.27) 0.48 (0.42)
- ------------- ------------ ----------- -------- --------- -------- -----------
(0.05) (0.06) (0.10) (0.03) (0.11) (0.12) (0.06)
(3.02) (3.02) (1.51) (1.21) (0.03) -- --
- ------------- ------------ ----------- -------- --------- -------- -----------
(3.07) (3.08) (1.61) (1.24) (0.14) (0.12) (0.06)
- ------------- ------------ ----------- -------- --------- -------- -----------
$ 25.39 $ 25.46 $ 24.33 $ 22.43 $ 20.42 $ 20.83 $ 20.47
============= ============ =========== ======== ========= ======== ===========
17.79% 17.77% 16.52% 17.37% (1.29)% 2.35% 2.85%
============= ============ =========== ======== ========= ======== ===========
$317,586 $57,097 $43,148 $30,468 $37,287 $61,869 $13,019
1.95%* 1.94%* 1.99%(2) 1.98% 1.94% 1.87% 1.73%*
0.28%* 0.28%* 0.18%(2) 0.28% 0.54% 0.61% 0.94%*
41% 41% 112% 111% 94% 37% 16%
$ 0.0598 $0.0598 $0.0598 -- -- -- --
</TABLE>
31
<PAGE>
PAINEWEBBER GROWTH & INCOME FUND
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 PERIOD
SIX MONTHS FOR THE YEARS FEBRUARY
ENDED ENDED 12,
FEBRUARY 28, AUGUST 31, 1992+ TO
1997 -------------------------------------- AUGUST 31,
(UNAUDITED) 1996 1995 1994 1993 1992
------------ ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 24.35 $ 22.54 $ 20.42 $ 20.86 $ 20.48 $ 20.95
------- ------- ------- ------- ------- -------
Net investment income... 0.30 0.30 0.30 0.33 0.33 0.16
Net realized and
unrealized gains
(losses) from
investments............ 4.05 3.45 3.18 (0.40) 0.37 (0.49)
------- ------- ------- ------- ------- -------
Total increase
(decrease) from
investment operations.. 4.35 3.75 3.48 (0.07) 0.70 (0.33)
------- ------- ------- ------- ------- -------
Dividends from
investment income...... (0.21) (0.43) (0.15) (0.34) (0.32) (0.14)
Distributions from net
realized gains on
investment
transactions........... (3.02) (1.51) (1.21) (0.03) -- --
------- ------- ------- ------- ------- -------
Total dividends and
distributions to
shareholders........... (3.23) (1.94) (1.36) (0.37) (0.32) (0.14)
------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 25.47 $ 24.35 $ 22.54 $ 20.42 $ 20.86 $ 20.48
======= ======= ======= ======= ======= =======
Total investment
return(1).............. 18.39% 17.77% 18.66% (0.31)% 3.44% (1.15)%
======= ======= ======= ======= ======= =======
Ratios/Supplemental
Data:
Net assets, end of
period (000's)......... $33,278 $22,942 $14,680 $14,690 $17,005 $10,560
Expenses to average net
assets................. 0.90%* 0.92%(2) 0.89% 0.90% 0.86% 0.93%*
Net investment income to
average net assets..... 1.33%* 1.26%(2) 1.39% 1.60% 1.62% 1.56%*
Portfolio turnover...... 41% 112% 111% 94% 37% 16%
Average commission rate
paid (3)............... $0.0598 $0.0598 -- -- -- --
</TABLE>
- -------
* Annualized
+ 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
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 investment
return information for periods of less than one year has not been
annualized.
(2) These ratios include non-recurring acquisition expenses of 0.04%.
(3) Effective for fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose the average commission rate paid per share of
common stock investments purchased or sold.
32
<PAGE>
[This Page Intentionally Left Blank]
33
<PAGE>
PAINEWEBBER GROWTH FUND
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 28, FOR THE YEARS ENDED AUGUST 31,
1997 ----------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $24.37 $22.27 $ 20.04 $ 20.60 $ 16.78 $ 17.50
-------- -------- -------- -------- -------- --------
Net investment income
(loss)................. (0.07) (0.12) 0.01 -- 0.07 --
Net realized and
unrealized gains
(losses) from
investments............ 2.00 4.06 2.25 0.51 4.37 (0.11)
-------- -------- -------- -------- -------- --------
Net increase (decrease)
from investment
operations............. 1.93 3.94 2.26 0.51 4.44 (0.11)
-------- -------- -------- -------- -------- --------
Dividends from
investment income...... -- -- -- -- -- (0.01)
Distributions from net
realized gains from
investment
transactions........... (2.11) (1.84) (0.03) (1.07) (0.62) (0.60)
-------- -------- -------- -------- -------- --------
Total dividends and
distributions to
shareholders........... (2.11) (1.84) (0.03) (1.07) (0.62) (0.61)
-------- -------- -------- -------- -------- --------
Net asset value, end of
period................. $ 24.19 $ 24.37 $ 22.27 $ 20.04 $ 20.60 $ 16.78
======== ======== ======== ======== ======== ========
Total investment
return(1).............. 8.03% 18.43% 11.28% 2.33% 26.97% (0.85)%
======== ======== ======== ======== ======== ========
Ratios/supplemental
data:
Net assets, end of
period (000's)......... $211,015 $203,882 $183,958 $141,342 $130,353 $102,640
Expenses to average net
assets................. 1.31%* 1.28% 1.28%(2) 1.21% 1.22% 1.43%
Net investment income
(loss) to average net
assets................. (0.57)%* (0.49)% 0.19%(2) 0.06% 0.38% 0.00%
Portfolio turnover rate. 34% 60% 36% 24% 36% 32%
Average commission rate
paid(3)................ $ 0.0598 $ 0.0598 -- -- -- --
</TABLE>
- -------
* Annualized
+ 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
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 investment return information for periods of
less than one year has not been annualized.
(2) These ratios include non-recurring acquisition expenses of 0.06%.
(3) Effective for fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose the average commission rate per share of
common stock investments purchased or sold.
34
<PAGE>
<TABLE>
<CAPTION>
CLASS B
- ------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31,
1997 ----------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
- ------------ -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 23.30 $ 21.53 $ 19.53 $ 20.25 $ 16.64 $ 17.48
-------- -------- -------- ------- ------- -------
(0.19) (0.39) (0.02) (0.06) (0.05) (0.06)
1.94 4.00 2.05 0.41 4.28 (0.18)
-------- -------- -------- ------- ------- -------
1.75 3.61 2.03 0.35 4.23 (0.24)
-------- -------- -------- ------- ------- -------
-- -- -- -- -- --
(2.11) (1.84) (0.03) (1.07) (0.62) (0.60)
-------- -------- -------- ------- ------- -------
(2.11) (1.84) (0.03) (1.07) (0.62) (0.60)
-------- -------- -------- ------- ------- -------
$ 22.94 $ 23.30 $ 21.53 $ 19.53 $ 20.25 $ 16.64
======== ======== ======== ======= ======= =======
7.61% 17.48% 10.40% 1.55% 25.91% (1.58)%
======== ======== ======== ======= ======= =======
$134,516 $140,551 $152,357 $97,272 $60,280 $35,867
2.10%* 2.06% 2.06%(2) 2.00% 2.02% 2.20%
(1.36)%* (1.27)% (0.60)%(2) (0.66)% (0.46)% (0.70)%
34% 60% 36% 24% 36% 32%
$ 0.0598 $ 0.0598 -- -- -- --
<CAPTION>
CLASS C
- ----------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
SIX MONTHS SIX MONTHS PERIOD
ENDED ENDED JULY 2,
FEBRUARY 28, FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31, 1992+ TO
1997 1997 ------------------------------------------ AUGUST 31,
(UNAUDITED) (UNAUDITED) 1996 1995 1994 1993 1992
- ------------- ------------- --------- ------------ --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 23.30 $ 23.48 $ 21.68 $ 19.67 $ 20.38 $ 16.75 $17.04
- ------------- ------------- --------- ------------ --------- --------- -----------
(0.19) (0.18) (0.34) (0.10) (0.08) (0.06) (0.01)
1.94 1.94 3.98 2.14 0.44 4.31 (0.28)
- ------------- ------------- --------- ------------ --------- --------- -----------
1.75 1.76 3.64 2.04 0.36 4.25 (0.29)
- ------------- ------------- --------- ------------ --------- --------- -----------
-- -- -- -- -- -- --
(2.11) (2.11) (1.84) (0.03) (1.07) (0.62) --
- ------------- ------------- --------- ------------ --------- --------- -----------
(2.11) (2.11) (1.84) (0.03) (1.07) (0.62) --
- ------------- ------------- --------- ------------ --------- --------- -----------
$ 22.94 $ 23.13 $ 23.48 $ 21.68 $ 19.67 $ 20.38 $16.75
============= ============= ========= ============ ========= ========= ===========
7.61% 7.60% 17.50% 10.37% 1.59% 25.86% (2.95)%
============= ============= ========= ============ ========= ========= ===========
$134,516 $28,890 $29,923 $30,608 $28,561 $16,474 $2,275
2.10%* 2.11%* 2.07% 2.05%(2) 1.98% 2.06% 1.98%*
(1.36)%* (1.37)%* (1.28)% (0.57)%(2) (0.65)% (0.69)% (0.65)%*
34% 34% 60% 36% 24% 36% 32%
$ 0.0598 $0.0598 $0.0598 -- -- -- --
</TABLE>
35
<PAGE>
PAINEWEBBER GROWTH FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT EACH PERIOD IS PRESENTED BELOW:
<TABLE>
<CAPTION>
CLASS Y
-------------------------------------------------------------
FOR THE
SIX MONTHS FOR THE YEARS
ENDED ENDED
FEBRUARY 28, AUGUST 31,
1997 -----------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 24.74 $ 22.53 $ 20.22 $ 20.71 $ 16.83 $ 17.50
------- ------- ------- ------- ------- -------
Net investment income
(loss)................. (0.06) (0.02) 0.24 0.03 0.08 0.05
Net realized and
unrealized gains
(losses) from
investments............ 2.07 4.07 2.10 0.55 4.42 (0.11)
------- ------- ------- ------- ------- -------
Net increase (decrease)
from investment
operations............. 2.01 4.05 2.34 0.58 4.50 (0.06)
------- ------- ------- ------- ------- -------
Dividends from
investment income...... -- -- -- -- -- (0.01)
Distributions from net
realized gains from
investment
transactions........... (2.11) (1.84) (0.03) (1.07) (0.62) (0.60)
------- ------- ------- ------- ------- -------
Total dividends and
distributions to
shareholders........... (2.11) (1.84) (0.03) (1.07) (0.62) (0.61)
------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 24.64 $ 24.74 $ 22.53 $ 20.22 $ 20.71 $ 16.83
======= ======= ======= ======= ======= =======
Total investment
return(1).............. 8.24% 18.72% 11.58% 2.67% 27.26% (0.52)%
======= ======= ======= ======= ======= =======
Ratios/supplemental
data:
Net assets, end of
period (000's)......... $22,437 $21,409 $20,948 $30,521 $20,706 $11,581
Expenses to average net
assets................. 1.04%* 1.02% 0.97%(2) 0.94% 0.95% 1.12%
Net investment income
(loss) to average net
assets................. (0.29)%* (0.23)% 0.53%(2) 0.40% 0.60% 0.38%
Portfolio turnover rate. 34% 60% 36% 24% 36% 32%
Average commission rate
paid(3)................ $0.0598 $0.0598 -- -- -- --
</TABLE>
- -------
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each period reported, reinvestment of all dividends and
distributions at net asset value on the payable dates, and a sale at net
asset value on the last day of each period reported.
(2) These ratios include non-recurring acquisition expenses of 0.05%.
(3) Effective for fiscal years beginning on or after September 1, 1995, the
Fund is required to disclose the average commission rate per share of
common stock investments purchased or sold.
36
<PAGE>
[This Page Intentionally Left Blank]
37
<PAGE>
[This Page Intentionally Left Blank]
38
