<PAGE>
PAINEWEBBER GROWTH AND INCOME FUND, GROWTH FUND, MID CAP FUND
SEMIANNUAL REPORT
April 16, 1999
PAINEWEBBER
GROWTH AND
INCOME FUND
FUND PROFILE
GOAL:
Current income and capital growth
PORTFOLIO MANAGER:
Mark Tincher, Mitchell Hutchins Asset Management Inc.
TOTAL NET ASSETS:
$1.5 billion as of February 28, 1999
DIVIDEND PAYMENTS:
Semiannually
PAINEWEBBER
GROWTH AND
INCOME FUND
Top Five Sectors*
Consumer Cyclicals
18.8%
Technology 17.4%
Financial Services
16.9%
Utilities 11.4%
Healthcare 10.5%
Dear Shareholder,
We are pleased to present you with the semiannual report for the PaineWebber
Growth and Income Fund, PaineWebber Growth Fund and PaineWebber Mid Cap Fund
for the six-month period ended February 28, 1999.
MARKET REVIEW
The stock market, as measured by S&P 500 Index (the "Index"), gained 30.27%
for the six-month period ended February 28, 1999. As the period began, the
market had just lost 14.45% in August 1998. Stock prices came back through
the period, but endured considerable volatility along the way. The Federal
Reserve reduced short-term interest rates to quell investor anxieties, and
the market -- led by technology stocks -- rebounded with strong gains at the
end of 1998. Prices remained volatile, however, and the Index posted a much
lower gain in January 1999. Investors began to worry that inflation might
heat up and cause interest rates to rise again. Concerns about decreasing
demand for PCs and a potential for year 2000 disruptions hurt technology
stock prices. The Index lost 3.11% in February, its first monthly loss since
August.
OUTLOOK--
The economy is sending mixed signals -- auto sales look strong but airline
traffic has been weak. Unemployment is down, but inflation does not seem to
be rising. We'll be watching for a clear signal on interest rates from the
Federal Reserve, but right now it looks as if monetary policy will remain on
hold.
The stock market has remained volatile since period-end -- the Dow Jones
Industrial Average recently surpassed 10,000 but promptly fell back almost
180 points intraday. Technology stocks are still correcting, and no other
sector has emerged yet as a market leader. This could be good for the
long-term health of the market, in that it may encourage investors to
diversify into other capitalization segments or styles as market volatility
subsides.
PORTFOLIO REVIEWS
PAINEWEBBER GROWTH AND INCOME FUND
PERFORMANCE--
The Fund's total return consists of the change in net asset value with
dividends reinvested. For the six-month period ended February 28, 1999,
without deducting sales charges, Class A shares gained 22.89%, Class B shares
gained 22.42%, Class C shares gained 22.38% and Class Y shares gained 23.03%.
The Fund's total return may be lower for shareowners who purchased or
redeemed Fund shares during the period. After deducting the maximum
applicable sales charges, Class A shares gained 17.35%, Class B shares gained
17.42% and Class C shares gained 21.38%. Class Y shares are not subject to
sales charges.
HIGHLIGHTS--
The Fund began the period in a relatively defensive mode, with a 10%
cash position and reduced weightings in financial services and consumer
cyclical stocks. During the period ended
* Portfolio weightings represent percentages of net assets as of February 28,
1999. The Fund portfolio is actively managed and its composition will vary
over time.
1
<PAGE>
SEMIANNUAL REPORT
February 28, 1999, we further reduced the Fund's weighting in consumer
cyclical stocks (18.8%*), though the Fund was still overweighted compared to
the Index (14.3%). We also further reduced the Fund's weighting in financial
services stocks (16.9%). Technology (17.4%) increased during the period and
healthcare (10.5%) moved into the ranks of the Fund's top five sectors (see
table, "Top Five Sectors"). As the market began to recover, we reduced the
Fund's cash position and redeployed the money into stocks.
OUTLOOK--
We believe consumer cyclical stocks -- such as auto suppliers, media
companies and restaurants -- will remain attractive as long as slow economic
growth, low inflation and low interest rates prevail. Despite weakness toward
the end of the period, we still believe technology stocks can benefit from
continued growth.
PAINEWEBBER
GROWTH FUND
FUND PROFILE
GOAL:
Long-term capital appreciation
PORTFOLIO MANAGER:
Ellen R. Harris, Mitchell Hutchins Asset Management Inc.
TOTAL NET ASSETS:
$429.5 million as of February 28, 1999
DIVIDEND PAYMENTS:
Annually
PAINEWEBBER
GROWTH FUND
Top Five Sectors*
Technology 26.4%
Media/Entertainment
18.2%
Retail 17.5%
Healthcare 10.9%
Financial Services
8.3%
PAINEWEBBER GROWTH FUND
PERFORMANCE--
The Fund's total return consists of the change in net asset value with
dividends reinvested. For the six-month period ended February 28, 1999,
without deducting sales charges, Class A shares gained 38.98%, Class B shares
gained 38.36%, Class C shares gained 38.35% and Class Y shares gained 39.18%.
The Fund's total return may be lower for shareowners who purchased or
redeemed Fund shares during the period. After deducting the maximum
applicable sales charges, Class A shares gained 32.70%, Class B shares gained
33.36% and Class C shares gained 37.35%. Class Y shares are not subject to
sales charges.
HIGHLIGHTS--
The Fund seeks investments in companies that have the potential to show
growth in earnings at a faster rate than that of the market. To that end, we
utilize our proprietary multi-factor growth model to determine a universe of
growth companies. From that universe, using fundamental analysis, we attempt
to identify companies with good longer-term growth potential that are selling
at reasonable valuations.
We also use the model to help us identify companies which we own that
might be good "sell candidates," ones that may no longer be able to show
above average growth. Fundamental analysis of the sell candidates leads to
our "sell selections."
Our emphasis on technology stocks helped the Fund's performance during
the period. "Best-in-class" companies, such as Cisco Systems (2.8%*), EMC
Corp. (2.2%), and America Online (1.9%) were strong performers. The ongoing
convergence of telecommunications and media/entertainment has created good
performers among the Fund's holdings. Notable examples include MCI WorldCom
(2.8%), Time Warner (2.7%) and TeleCommunications, Inc. (2.7%), which
recently was acquired by AT&T. Specialty retailers such as Staples (1.8%),
Home Depot (2.0%) and Costco (1.5%) also were important contributors.
We have tried to maintain a reasonably high average market
capitalization -- about $19 billion -- because investors still favor
liquidity. (Stocks with higher market capitalization tend to have higher
liquidity.) There are plenty of opportunities to own larger-cap growth stocks
selling at what we believe to be reasonable valuations.
OUTLOOK--
We expect to continue focusing the Fund on growth companies -- guided by
our
* Portfolio weightings represent percentages of net assets as of February 28,
1999. The Fund portfolio is actively managed and its composition will vary
over time.
2
<PAGE>
PAINEWEBBER GROWTH AND INCOME FUND, GROWTH FUND, MID CAP FUND
SEMIANNUAL REPORT
model. We think the areas of greatest interest will be technology, consumer
cyclicals and utilities (our sector for telecommunications). We still intend
to underweight the Fund in companies that need strong economic growth or
price increases to provide revenue growth or earnings growth. This will mean
less emphasis, therefore, on commodities and the so-called "heavier
cyclicals" (capital goods).
PAINEWEBBER
MID CAP
FUND
FUND PROFILE
GOAL:
Long-term capital appreciation
PORTFOLIO MANAGERS:
Mark A. Tincher, Christopher G. Altschul and Antony J. Scott, Mitchell
Hutchins Asset Management Inc.
TOTAL NET ASSETS:
$167.3 million as of February 28, 1999
DIVIDEND PAYMENTS:
Annually
PAINEWEBBER
MID CAP FUND
Top Five Sectors*
Technology 26.1%
Consumer Cyclicals
24.0%
Financial Services
13.6%
Capital Goods
11.6%
Healthcare 5.3%
PAINEWEBBER MID CAP FUND
PERFORMANCE--
The Fund's total return consists of the change in net asset value with
dividends reinvested. For the six-month period ended February 28, 1999,
without deducting sales charges, Class A shares gained 29.13%, Class B shares
gained 28.54%, Class C shares gained 28.65% and Class Y shares gained 29.26%.
The Fund's total return may be lower for shareowners who purchased or
redeemed Fund shares during the period. After deducting the maximum
applicable sales charges, Class A shares gained 23.26%, Class B shares gained
23.54% and Class C shares gained 27.65%. Class Y shares are not subject to
sales charges.
HIGHLIGHTS--
During the period we stuck to the Fund's strategy of investing in a
blend of growth and value stocks -- the Fund had a slight tilt toward growth
stocks. The Fund's overweighting in technology (26.1%*) helped performance
during the period. America Online (2.5%) led performance within the
technology sector. Also, the Fund's underweightings in energy (1.7%), basic
materials (3.5%) and healthcare (5.3%) helped performance considerably. Other
positions had a neutral impact on performance: the Fund's overweightings in
capital goods (11.6%) and consumer cyclicals (24.0%), and its underweightings
in financial services (13.6%) and utilities (4.8%).
We made few changes to the Fund's portfolio during the period. We cut
the Fund's Biogen (1.2%) position in half, selling into strength. We reduced
the Fund's exposure to retail stocks after the holiday shopping season ended.
During the period we took advantage of a slight price decline to add to the
Fund's Maytag position (1.5%).
OUTLOOK--
Going forward, we expect to retain the Fund's tilt toward growth stocks.
We think consumer cyclical stocks will remain attractive as long as current
economic conditions hold -- moderate growth, low inflation and low interest
rates. We still like auto suppliers, which are likely to benefit from strong
consumer auto spending and consolidation within the sector. We may increase
the Fund's energy weighting as a value-stock opportunity -- if OPEC members
seem likely to enforce their recent decision to cut oil production. We expect
to reduce the Fund's exposure to technology, and will likely redeploy assets
into relatively more value-oriented sectors.
* Portfolio weightings represent percentages of net assets as of February 28,
1999. The Fund portfolio is actively managed and its composition will vary
over time.
3
<PAGE>
SEMIANNUAL REPORT
Our ultimate objective in managing your investments is to help you
successfully meet your financial goals. We thank you for your continued
support and welcome any comments or questions you may have.
For a QUARTERLY REVIEW on PaineWebber Growth and Income Fund,
PaineWebber Growth Fund, PaineWebber Mid Cap Fund or another fund in the
PaineWebber Family of Funds,(1) please contact your Financial Advisor.
Sincerely,
/s/ MARGO ALEXANDER
MARGO ALEXANDER
Chairman and Chief
Executive Officer
Mitchell Hutchins
Asset Management Inc.
/s/ MARK A. TINCHER
MARK A. TINCHER
Managing Director and Chief
Investment Officer--Equities
Portfolio Manager,
PaineWebber Growth and Income
Fund and PaineWebber
Mid Cap Fund
/s/ ELLEN R. HARRIS
ELLEN R. HARRIS
Managing Director
Portfolio Manager,
PaineWebber Growth Fund
/s/ CHRISTOPHER G. ALTSCHUL
CHRISTOPHER G. ALTSCHUL
First Vice President
Portfolio Manager/
Research Analyst,
PaineWebber Mid Cap Fund
/s/ ANTONY J. SCOTT
ANTONY J. SCOTT
First Vice President
Portfolio Manager/
Research Analyst,
PaineWebber Mid Cap Fund
This letter is intended to assist shareholders in understanding how the Funds
performed during the six-month period ended February 28, 1999, and reflects
our views at the time of its writing. Of course, these views may change in
response to changing circumstances. We encourage you to consult your
Financial Advisor regarding your personal investment program.
(1) Mutual funds are sold by prospectus only. The prospectuses for the funds
contain more complete information regarding risks, charges and expenses, and
should be read carefully before investing.
4
<PAGE>
PAINEWEBBER GROWTH & INCOME FUND
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN(1)
--------------------------------------- --------------------------------
12 MONTHS 6 MONTHS
02/28/99 08/31/98 02/28/98 ENDED 02/28/99 ENDED 02/28/99
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Class A Shares $31.16 $26.92 $31.70 4.64% 22.89%
- -----------------------------------------------------------------------------------------------------------
Class B Shares 30.94 26.77 31.56 3.84 22.42
- -----------------------------------------------------------------------------------------------------------
Class C Shares 30.99 26.82 31.61 3.83 22.38
- -----------------------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS A SHARES
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED 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
- -----------------------------------------------------------------------------------------------------------
1997 24.37 29.29 2.6664 0.2064 31.86
- -----------------------------------------------------------------------------------------------------------
1998 29.29 32.46 1.7755 0.1707 17.97
- -----------------------------------------------------------------------------------------------------------
01/01/99-02/28/99 32.46 31.16 -- -- (4.00)
- -----------------------------------------------------------------------------------------------------------
Totals: $14.0204 $6.6197
- -----------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/28/99: 598.67%
- -----------------------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS B SHARES
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED 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
- -----------------------------------------------------------------------------------------------------------
1997 24.32 29.20 2.6508 0.0044 30.79
- -----------------------------------------------------------------------------------------------------------
1998 29.20 32.26 1.7755 -- 17.02
- -----------------------------------------------------------------------------------------------------------
01/01/99-02/28/99 32.26 30.94 -- -- (4.09)
- -----------------------------------------------------------------------------------------------------------
Totals: $10.2016 $0.5429
- -----------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/28/99: 164.12%
- -----------------------------------------------------------------------------------------------------------
</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 would
be lower if sales charges were included. Total investment return for periods of
less than one year has not been annualized.
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>
PAINEWEBBER GROWTH & INCOME FUND
PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
<TABLE>
<CAPTION>
PERFORMANCE SUMMARY CLASS C SHARES
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED 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
- -----------------------------------------------------------------------------------------------------------
1997 24.39 29.24 2.6664 0.0318 30.77
- -----------------------------------------------------------------------------------------------------------
1998 29.24 32.32 1.7755 -- 17.06
- -----------------------------------------------------------------------------------------------------------
01/01/99-02/28/99 32.32 30.99 -- -- (4.12)
- -----------------------------------------------------------------------------------------------------------
Totals: $10.2172 $0.5051
- -----------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/28/99: 135.34%
- -----------------------------------------------------------------------------------------------------------
</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 would
be lower if sales charges were included. Total investment return for periods of
less than one year has not been annualized.
AVERAGE ANNUAL TOTAL 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 03/31/99 1.14% 0.35% 0.38% (3.41)% (4.38)% (0.57)%
- ------------------------------------------------------------------------------------------------
Five Years Ended 03/31/99 19.55 18.62 18.63 18.45 18.41 18.63
- ------------------------------------------------------------------------------------------------
Ten Years Ended 03/31/99 13.86 N/A N/A 13.34 N/A N/A
- ------------------------------------------------------------------------------------------------
Commencement of Operations
Through 03/31/99+ 13.62 13.47 13.65 13.28 13.47 13.65
- ------------------------------------------------------------------------------------------------
</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 operation 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 investors, including
participants in certain investment programs that are sponsored by
PaineWebber and that may invest in PaineWebber mutual funds. For the six
months ended February 28, 1999 and since inception, February 12, 1992
through February 28, 1999, Class Y shares had a total return of 23.03% and
141.01%, respectively. For the one year and five year periods ended March
31, 1999 and since inception through March 31, 1999, Class Y shares have
an average annual total return of 1.43%, 19.88% and 13.26%, 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>
PAINEWEBBER MID CAP FUND
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN(1)
--------------------------------------- --------------------------------
12 MONTHS 6 MONTHS
02/28/99 08/31/98 02/28/98 ENDED 02/28/99 ENDED 02/28/99
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Class A Shares $ 9.61 $ 7.97 $14.40 (2.22)% 29.13%
- -----------------------------------------------------------------------------------------------------------
Class B Shares 9.59 7.99 14.48 (3.06) 28.54
- -----------------------------------------------------------------------------------------------------------
Class C Shares 8.66 7.26 13.52 (3.03) 28.65
- -----------------------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS A SHARES
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
04/07/92-12/31/92 $ 9.55 $10.50 -- -- 9.95%
- -----------------------------------------------------------------------------------------------------------
1993 10.50 12.19 -- -- 16.10
- -----------------------------------------------------------------------------------------------------------
1994 12.19 11.98 $ 0.0433 -- (1.36)
- -----------------------------------------------------------------------------------------------------------
1995 11.98 14.67 0.7480 -- 28.79
- -----------------------------------------------------------------------------------------------------------
1996 14.67 14.92 2.3244 -- 17.87
- -----------------------------------------------------------------------------------------------------------
1997 14.92 13.55 3.4608 -- 15.14
- -----------------------------------------------------------------------------------------------------------
1998 13.55 10.34 4.5107 -- 11.81
- -----------------------------------------------------------------------------------------------------------
01/01/99-02/28/99 10.34 9.61 -- -- (7.06)
- -----------------------------------------------------------------------------------------------------------
Total: $11.0872 $0.0000
- -----------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/28/99: 128.69%
- -----------------------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS B SHARES
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
04/07/92-12/31/92 $10.00 $10.93 -- -- 9.30%
- -----------------------------------------------------------------------------------------------------------
1993 10.93 12.59 -- -- 15.19
- -----------------------------------------------------------------------------------------------------------
1994 12.59 12.28 $ 0.0433 -- (2.03)
- -----------------------------------------------------------------------------------------------------------
1995 12.28 14.94 0.7480 -- 27.73
- -----------------------------------------------------------------------------------------------------------
1996 14.94 15.11 2.3244 -- 17.01
- -----------------------------------------------------------------------------------------------------------
1997 15.11 13.64 3.4608 -- 14.28
- -----------------------------------------------------------------------------------------------------------
1998 13.64 10.33 4.5107 -- 10.85
- -----------------------------------------------------------------------------------------------------------
01/01/99-02/28/99 10.33 9.59 -- -- (7.16)
- -----------------------------------------------------------------------------------------------------------
Total: $11.0872 $0.0000
- -----------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/28/99: 117.47%
- -----------------------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS C SHARES
<CAPTION>
NET ASSET VALUE
---------------------- CAPITAL GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED PAID RETURN(1)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
07/02/92-12/31/92 $ 8.89 $10.46 -- -- 17.66%
- -----------------------------------------------------------------------------------------------------------
1993 10.46 12.05 -- -- 15.20
- -----------------------------------------------------------------------------------------------------------
1994 12.05 11.75 $ 0.0433 -- (2.13)
- -----------------------------------------------------------------------------------------------------------
1995 11.75 14.26 0.7480 -- 27.82
- -----------------------------------------------------------------------------------------------------------
1996 14.26 14.31 2.3244 -- 16.98
- -----------------------------------------------------------------------------------------------------------
1997 14.31 12.74 3.4608 -- 14.39
- -----------------------------------------------------------------------------------------------------------
1998 12.74 9.33 4.5107 -- 10.82
- -----------------------------------------------------------------------------------------------------------
01/01/99-02/28/99 9.33 8.66 -- -- (7.18)
- -----------------------------------------------------------------------------------------------------------
Total: $11.0872 $0.0000
- -----------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/28/99: 133.48%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Figures assume reinvestment of all dividends and distributions, if any, at
net asset value on the payable dates and do not include sales charges; results
for each class would be lower if sales charges were included. Total investment
return for periods of less than one year has not been annualized.
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>
PAINEWEBBER MID CAP FUND
AVERAGE ANNUAL TOTAL 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 03/31/99 (3.10)% (3.94)% (3.92)% (7.48)% (7.23)% (4.55)%
- ------------------------------------------------------------------------------------------------------
Five Years Ended 03/31/99 14.11 13.22 13.23 13.07 13.01 13.23
- ------------------------------------------------------------------------------------------------------
Commencement of Operations
Through 03/31/99+ 13.08 12.27 13.90 12.34 12.27 13.90
- ------------------------------------------------------------------------------------------------------
</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 date are April 7, 1992 for Class A and Class B
shares and July 2, 1992 for Class C shares.
Note: The Fund offers Class Y shares to a limited group of investors, including
participants in certain investment programs that are sponsored by
PaineWebber and that may invest in PaineWebber mutual funds. For the six
months ended February 28, 1999 and since inception March 17, 1998 through
February 28, 1999, Class Y shares had a total return of 29.26% and
(5.41)%, respectively. For the year ended March 31, 1999 and since
inception March 17, 1998 through March 31, 1999, Class Y shares have an
average annual total return of (3.01)% and (2.36)%, 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>
PAINEWEBBER GROWTH FUND
PERFORMANCE RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
NET ASSET VALUE TOTAL RETURN(1)
-------------------------------------- --------------------------------
12 MONTHS 6 MONTHS
02/28/99 08/31/98 02/28/98 ENDED 02/28/99 ENDED 02/28/99
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Class A Shares $25.74 $20.08 $23.29 19.82% 38.98%
- ----------------------------------------------------------------------------------------------------------
Class B Shares 23.35 18.44 21.48 18.78 38.36
- ----------------------------------------------------------------------------------------------------------
Class C Shares 23.64 18.65 21.72 18.80 38.35
- ----------------------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS A SHARES
<CAPTION>
NET ASSET VALUE CAPITAL
---------------------- GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED 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
- ----------------------------------------------------------------------------------------------------------
1997 24.24 21.24 6.7819 -- 17.01
- ----------------------------------------------------------------------------------------------------------
1998 21.24 25.85 2.0057 -- 31.95
- ----------------------------------------------------------------------------------------------------------
01/01/99-02/28/99 25.85 25.74 -- -- (0.43)
- ----------------------------------------------------------------------------------------------------------
Totals: $18.4862 $0.5872
- ----------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/28/99: 656.19%
- ----------------------------------------------------------------------------------------------------------
PERFORMANCE SUMMARY CLASS B SHARES
<CAPTION>
NET ASSET VALUE CAPITAL
---------------------- GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED 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
- ----------------------------------------------------------------------------------------------------------
1997 23.02 19.62 6.7819 -- 16.17
- ----------------------------------------------------------------------------------------------------------
1998 19.62 23.48 2.0057 -- 30.76
- ----------------------------------------------------------------------------------------------------------
01/01/99-02/28/99 23.48 23.35 -- -- (0.55)
- ----------------------------------------------------------------------------------------------------------
Totals: $15.0602 $0.0037
- ----------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/28/99: 201.68%
- ----------------------------------------------------------------------------------------------------------
</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 would
be lower if sales charges were included. Total investment return for periods of
less than one year has not been annualized.
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.
9
<PAGE>
PAINEWEBBER GROWTH FUND
PERFORMANCE RESULTS (UNAUDITED) (CONCLUDED)
<TABLE>
<CAPTION>
PERFORMANCE SUMMARY CLASS C SHARES
NET ASSET VALUE CAPITAL
---------------------- GAINS DIVIDENDS TOTAL
PERIOD COVERED BEGINNING ENDING DISTRIBUTED 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
- ----------------------------------------------------------------------------------------------------------
1997 23.21 19.83 6.7819 -- 16.13
- ----------------------------------------------------------------------------------------------------------
1998 19.83 23.77 2.0057 -- 30.84
- ----------------------------------------------------------------------------------------------------------
01/01/99-02/28/99 23.77 23.64 -- -- (0.55)
- ----------------------------------------------------------------------------------------------------------
Totals: $14.4599 $0.0000
- ----------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN AS OF 02/28/99: 165.94%
- ----------------------------------------------------------------------------------------------------------
</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 would
be lower if sales charges were included. Total investment return for periods of
less than one year has not been annualized.
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.
AVERAGE ANNUAL TOTAL 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 03/31/99 20.83% 19.83% 19.82% 15.39% 14.83% 18.82%
- ------------------------------------------------------------------------------------------------
Five Years Ended 03/31/99 18.72 17.78 17.80 17.63 17.57 17.80
- ------------------------------------------------------------------------------------------------
Ten Years Ended 03/31/99 16.32 N/A N/`A 15.79 N/A N/A
- ------------------------------------------------------------------------------------------------
Commencement of Operations
Through 03/31/99+ 15.93 16.09 16.50 15.55 16.09 16.50
- ------------------------------------------------------------------------------------------------
</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 investors, including
participants in certain investment programs that are sponsored by
PaineWebber and that may invest in PaineWebber mutual funds. For the six
months ended February 28, 1999 and since inception, August 26, 1991
through February 28, 1999, Class Y shares had a total return of 39.18% and
195.33%, respectively. For the one year and five year periods ended March
31, 1999 and since inception through March 31, 1999, Class Y shares have
an average annual total return of 21.15%, 19.06 and 16.12%, 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.
10
<PAGE>
PAINEWEBBER GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
COMMON STOCKS--89.37%
AIRLINES--0.36%
110,800 US Airways Group, Inc.*....... $ 5,249,150
-------------
APPAREL, RETAIL--1.35%
700,000 TJX Companies, Inc............ 19,993,750
-------------
APPAREL, TEXTILES--0.30%
176,000 Westpoint Stevens Inc.*....... 4,488,000
-------------
BANKS--4.98%
297,400 Bank of New York Co. Inc...... 10,390,413
373,800 Bank One Corp................. 20,091,750
286,800 Mellon Bank Corp.............. 19,394,850
298,700 The Chase Manhattan Corp...... 23,783,987
-------------
73,661,000
-------------
BROADCASTING & PUBLISHING--0.22%
140,000 Infinity Broadcasting
Corp.*...................... 3,325,000
-------------
COMPUTER HARDWARE--6.62%
180,000 Cisco Systems, Inc.*.......... 17,606,250
650,000 Compaq Computer Corp.......... 22,912,500
243,000 Dell Computer Corp.*.......... 19,470,375
308,000 Hewlett-Packard Co............ 20,462,750
103,000 International Business
Machines.................... 17,510,000
-------------
97,961,875
-------------
COMPUTER SOFTWARE--4.78%
400,000 Autodesk, Inc................. 16,050,000
150,000 BMC Software, Inc.*........... 6,131,250
373,200 Cadence Design Systems,
Inc.*....................... 8,980,125
150,000 Compuware Corp.*.............. 8,390,625
342,550 Network Associates Inc.*...... 16,099,850
260,000 Sterling Software Inc.*....... 6,630,000
280,000 Unisys Corp.*................. 8,347,500
-------------
70,629,350
-------------
CONSTRUCTION, REAL PROPERTY--0.35%
161,000 Lafarge Corp.................. 5,131,875
-------------
CONSUMER DURABLES--1.45%
207,700 Furniture Brands International
Inc.*....................... 4,439,587
247,500 Maytag Corp................... 13,875,469
185,800 Miller Herman Inc. ........... 3,158,600
-------------
21,473,656
-------------
DEFENSE/AEROSPACE--2.11%
306,200 Allied-Signal, Inc............ 12,669,025
260,000 Lockheed Martin Corp.......... 9,798,750
175,500 Newport News Shipbuilding
Inc......................... 5,078,531
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
</TABLE>
DEFENSE/AEROSPACE--(CONCLUDED)
<TABLE>
<C> <S> <C>
100,000 Precision Castparts Corp...... $ 3,712,500
-------------
31,258,806
-------------
DIVERSIFIED RETAIL--3.87%
399,250 Dayton Hudson Corp............ 24,978,078
412,300 Family Dollar Stores Inc...... 8,246,000
327,500 Federated Department Stores,
Inc.*....................... 12,465,469
179,400 Fred Meyer Inc.*.............. 11,526,450
-------------
57,215,997
-------------
DRUGS & MEDICINE--9.07%
206,300 Amerisource Health Corp.*..... 15,395,138
206,700 Biogen Inc.*.................. 19,869,037
75,000 Bristol-Myers Squibb Co....... 9,445,313
136,950 Cardinal Health, Inc.......... 9,886,078
152,000 Elan Corp. L/C ADR*........... 11,656,500
141,000 Pharmacia & Upjohn, Inc....... 7,684,500
268,000 Schering-Plough Corp.......... 14,991,250
400,000 Warner Lambert Co............. 27,625,000
363,400 Watson Pharmaceuticals,
Inc.*....................... 17,556,762
-------------
134,109,578
-------------
ELECTRIC UTILITIES--3.31%
297,500 AES Corp...................... 11,063,281
155,000 Carolina Power & Light Co..... 6,180,625
170,000 Consolidated Edison of New
York, Inc................... 7,947,500
123,600 Duke Energy Co................ 7,029,750
110,500 Energy East Corp.............. 5,925,563
197,200 Unicom Corp................... 7,012,925
111,000 Utilicorp United Inc.......... 3,815,625
-------------
48,975,269
-------------
ELECTRICAL EQUIPMENT--0.45%
215,000 SCI Systems Inc.*............. 6,651,562
-------------
ENERGY RESERVES & PRODUCTION--0.84%
150,000 Mobil Corp.................... 12,478,125
-------------
ENTERTAINMENT--0.91%
72,000 Fox Entertainment Group
Inc.*....................... 1,872,000
131,500 Viacom Inc., Class B*......... 11,621,313
-------------
13,493,313
-------------
ENVIRONMENTAL SERVICES--1.01%
225,000 Allied Waste Industries
Inc.*....................... 4,387,500
214,500 Waste Management, Inc......... 10,483,688
-------------
14,871,188
-------------
</TABLE>
11
<PAGE>
PAINEWEBBER GROWTH & INCOME FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
</TABLE>
COMMON STOCKS--(CONTINUED)
<TABLE>
<C> <S> <C>
FINANCIAL SERVICES--1.69%
204,396 Associates First Capital
Corp........................ $ 8,303,587
277,000 CIT Group Inc................. 8,171,500
84,800 General Electric Co........... 8,506,500
-------------
24,981,587
-------------
FOOD RETAIL--1.07%
295,000 Food Lion Inc................. 2,811,719
200,000 Kroger Co.*................... 12,937,500
-------------
15,749,219
-------------
FOREST PRODUCTS, PAPER--1.11%
350,000 Fort James Corp............... 10,456,250
322,800 United Stationers Inc.*....... 5,911,275
-------------
16,367,525
-------------
GAS UTILITY--0.64%
187,500 Columbia Energy Group......... 9,468,750
-------------
INDUSTRIAL PARTS--0.72%
117,000 American Standard Companies,
Inc.*....................... 3,926,813
117,300 SPX Corp.*.................... 6,700,762
-------------
10,627,575
-------------
INDUSTRIAL SERVICES/SUPPLIES--1.63%
60,000 Delphi Automotive Systems
Corp........................ 1,106,250
308,050 Tyco International Ltd. ...... 22,930,472
-------------
24,036,722
-------------
INFORMATION & COMPUTER SERVICES--1.22%
200,000 Computer Sciences Corp.*...... 13,325,000
98,300 Valassis Communications
Inc.*....................... 4,718,400
-------------
18,043,400
-------------
LEISURE--1.15%
257,000 Eastman Kodak Co.............. 17,010,188
-------------
LIFE INSURANCE--2.93%
155,300 American General Corp......... 11,375,725
355,000 Conseco Inc................... 10,627,812
65,000 Lincoln National Corp......... 6,154,688
175,000 Protective Life Corp.......... 6,037,500
200,000 Reliastar Financial Corp...... 9,075,000
-------------
43,270,725
-------------
LONG DISTANCE & PHONE COMPANIES--7.38%
212,500 AT&T Corp..................... 17,451,562
400,600 BellSouth Corp................ 18,527,750
100,000 Century Telephone Enterprises,
Inc......................... 6,175,000
NUMBER OF
SHARES VALUE
- ------------- -------------
</TABLE>
LONG DISTANCE & PHONE COMPANIES--(CONCLUDED)
<TABLE>
<C> <S> <C>
240,000 GTE Corp...................... $ 15,570,000
334,300 MCI WorldCom Inc.*............ 27,579,750
450,000 SBC Communications, Inc....... 23,793,750
-------------
109,097,812
-------------
MANUFACTURING-GENERAL--4.87%
305,800 Ingersoll Rand Co. ........... 14,525,500
382,000 Lucasvarity L/C ADR........... 17,309,375
358,700 Mettler-Toledo International
Inc.*....................... 9,169,269
250,700 United Technologies Corp. .... 31,055,462
-------------
72,059,606
-------------
MEDIA--0.36%
76,000 Comcast Corp., Class A........ 5,391,250
-------------
MEDICAL PRODUCTS--0.51%
300,000 St. Jude Medical, Inc.*....... 7,537,500
-------------
MEDICAL PROVIDERS--0.80%
202,500 Tenet Healthcare Corp.*....... 3,986,719
100,000 Wellpoint Health Networks
Inc.*....................... 7,887,500
-------------
11,874,219
-------------
MINING & METALS--0.41%
118,200 Martin Marietta Materials
Inc......................... 6,065,138
-------------
MOTOR VEHICLES--1.82%
142,600 Borg Warner Automotive,
Inc......................... 6,212,012
348,000 Ford Motor Co................. 20,640,750
-------------
26,852,762
-------------
OIL REFINING--1.74%
191,283 BP Amoco L/C, ADR............. 16,259,055
200,000 Coastal Corp.................. 6,400,000
147,000 K N Energy, Inc. ............. 3,077,813
-------------
25,736,868
-------------
OTHER INSURANCE--5.06%
286,600 ACE Ltd....................... 7,809,850
401,942 Allstate Corp................. 15,072,825
127,500 Ambac Financial Group Inc..... 7,140,000
116,000 American International Group
Inc......................... 13,216,750
45,000 Loews Corp.................... 3,518,438
225,000 MBIA Inc...................... 13,851,562
255,000 Travelers Property Casualty
Corp........................ 9,674,062
73,900 Xl Capital Ltd. .............. 4,526,375
-------------
74,809,862
-------------
</TABLE>
12
<PAGE>
PAINEWEBBER GROWTH & INCOME FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
</TABLE>
COMMON STOCKS--(CONCLUDED)
<TABLE>
<C> <S> <C>
RESTAURANTS--2.20%
230,000 Brinker International Inc.*... $ 6,655,625
231,000 CKE Restaurants, Inc.......... 6,135,937
150,000 Outback Steakhouse Inc.*...... 6,581,250
250,000 Starbucks Corp.*.............. 13,218,750
-------------
32,591,562
-------------
SECURITIES & ASSET MANAGEMENT--0.92%
150,000 Morgan Stanley Dean Witter &
Co.......................... 13,575,000
-------------
SEMICONDUCTOR--3.53%
350,000 Applied Materials, Inc.*...... 19,468,750
210,500 Intel Corp.................... 25,246,844
85,000 Uniphase Corp.*............... 7,490,625
-------------
52,206,219
-------------
SPECIALTY RETAIL--3.45%
225,000 Home Depot Inc................ 13,429,687
55,000 Lowe's Companies Inc.......... 3,262,188
360,400 Office Depot Inc.*............ 12,861,775
260,550 Staples, Inc.*................ 7,661,798
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
</TABLE>
SPECIALTY RETAIL--(CONCLUDED)
<TABLE>
<C> <S> <C>
247,000 Williams Sonoma Inc.*......... $ 8,444,313
160,000 Zale Corp.*................... 5,300,000
-------------
50,959,761
-------------
THRIFT--1.19%
400,500 Dime Bancorp Inc.............. 9,912,375
250,000 Greenpoint Financial Corp..... 7,671,875
-------------
17,584,250
-------------
TOBACCO--0.99%
375,000 Philip Morris Companies
Inc......................... 14,671,875
-------------
Total Common Stocks (cost--$1,026,187,377)..... 1,321,536,869
-------------
PREFERRED STOCK--0.62%
MOTOR VEHICLES--0.62%
158,000 Federal Mogul Financing Trust#
(cost--$7,900,000).......... 9,223,250
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
- ------------- ------------- -------------
<C> <S> <C> <C> <C>
CONVERTIBLE BONDS--2.55%
FINANCIAL SERVICES--1.16%
$ 16,100 Bell Atlantic Financial
Services Inc.#.............. 09/15/05 4.250% 17,146,500
-------------
MEDICAL PROVIDERS--0.29%
4,700 Omnicare, Inc.#............... 12/01/07 5.000 4,230,000
-------------
SPECIALTY RETAIL--1.10%
5,900 Amazon.Com Incorporated# ..... 02/01/09 4.750 5,959,000
4,000 Home Depot Inc. .............. 10/01/01 3.250 10,300,000
-------------
16,259,000
-------------
Total Convertible Bonds (cost--$30,550,000).... 37,635,500
-------------
</TABLE>
13
<PAGE>
PAINEWEBBER GROWTH & INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES VALUE
- ------------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENTS--7.57%
$ 40,000 Repurchase agreement dated
02/26/99 with Bear Stearns &
Co., collateralized by
$39,595,000 U.S. Treasury
Notes, 5.875% due 11/30/01
(value--$40,822,445);
proceeds: $40,015,767....... 03/01/99 4.73% $ 40,000,000
50,000 Repurchase agreement dated
02/26/99 with Societe
Generale, collateralized by
$37,091,000 U.S. Treasury
Bonds. 9.250% due 02/15/16
(value--$51,000,125);
proceeds: $50,019,792....... 03/01/99 4.75 50,000,000
21,978 Repurchase agreement dated
02/26/99 with State Street
Bank and Trust Co.,
collateralized by
$15,345,000 U.S. Treasury
Bonds, 12.000% due 08/15/13
(value-- $22,422,881);
proceeds: $21,986,645....... 03/01/99 4.72 21,978,000
-------------
Total Repurchase Agreements
(cost--$111,978,000)......................... 111,978,000
-------------
Total Investments
(cost--$1,176,615,377)--100.11%.............. 1,480,373,619
Liabilities in excess of other
assets--(0.11)%................................ (1,689,146)
-------------
Net Assets--100.00%............................ $1,478,684,473
-------------
-------------
</TABLE>
- -------------
* Non-Income producing security.
# Security exempt from registration under 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
ADR American Depositary Receipt.
See accompanying notes to financial statements
14
<PAGE>
PAINEWEBBER MID CAP FUND
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
COMMON STOCKS--98.42%
AIRLINES--0.83%
40,000 Continental Airlines Inc.* ... $ 1,385,000
-------------
BANKS--6.39%
52,500 Commerce Bancorp, Inc. ....... 2,336,250
4,000 M & T Bank Corp.* ............ 1,903,000
60,000 Unionbancal Corp. ............ 1,886,250
60,000 Westamerica BanCorp. ......... 2,010,000
40,000 Zions Bancorporation. ........ 2,560,000
-------------
10,695,500
-------------
BROADCASTING & PUBLISHING--0.66%
46,500 Infinity Broadcasting
Corp.* ..................... 1,104,375
-------------
CHEMICALS--1.90%
77,000 Crompton & Knowles Corp. ..... 1,424,500
130,000 W.R. Grace & Co.* ............ 1,746,875
-------------
3,171,375
-------------
COMPUTER HARDWARE--4.57%
46,900 Ascend Communications,
Inc.* ...................... 3,608,369
21,000 EMC Corp.* ................... 2,149,875
100,000 Maxtor Corp.*(1) ............. 825,000
110,000 Western Digital Corp.*(1) .... 1,058,750
-------------
7,641,994
-------------
COMPUTER SOFTWARE--9.92%
70,000 Autodesk, Inc.(1) ............ 2,808,750
45,000 BMC Software, Inc.*(1) ....... 1,839,375
123,600 Cadence Design Systems
Inc.* ...................... 2,974,125
40,000 Clarify, Inc.* ............... 1,085,000
29,000 Compuware Corp.* ............. 1,622,187
90,000 Network Associates Inc.* ..... 4,230,000
15,000 Smith-Gardner & Associates
Inc.* ...................... 191,250
70,000 Sterling Software Inc.* ...... 1,785,000
1,000 Vignette Corp. ............... 54,250
-------------
16,589,937
-------------
CONSTRUCTION--1.34%
35,000 Centex Corp.(1) .............. 1,288,437
40,000 Pulte Corp. .................. 962,500
-------------
2,250,937
-------------
CONSUMER DURABLES--2.14%
45,000 Maytag Corp. ................. 2,522,813
40,000 Masco Corp. .................. 1,050,000
-------------
3,572,813
-------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
DEFENSE/AEROSPACE--4.23%
25,000 Gulfstream Aerospace
Corp.* ..................... $ 1,118,750
20,000 Litton Inds Inc.* ............ 1,122,500
40,000 Newport News Shipbuilding
Inc. ....................... 1,157,500
30,000 Sundstrand Corp. ............. 2,030,625
35,000 TRW, Inc. .................... 1,653,750
-------------
7,083,125
-------------
DIVERSIFIED RETAIL--2.03%
80,000 Family Dollar Stores Inc. .... 1,600,000
50,000 Saks Inc.*(1) ................ 1,796,875
-------------
3,396,875
-------------
DRUGS & MEDICINE--4.08%
20,000 Amerisource Health Corp.* .... 1,492,500
20,000 Biogen Inc.* ................. 1,922,500
28,860 McKesson HBOC, Inc. .......... 1,962,480
30,000 Watson Pharmaceuticals,
Inc.* ...................... 1,449,375
-------------
6,826,855
-------------
ELECTRIC UTILITIES--5.35%
50,000 AES Corp.* ................... 1,859,375
30,000 Carolina Power & Light Co. ... 1,196,250
40,000 Energy East Corp. ............ 2,145,000
55,000 Minnesota Power & Light
Co. ........................ 2,210,312
100,000 Public Service Co. of New
Mexico ..................... 1,537,500
-------------
8,948,437
-------------
ELECTRICAL EQUIPMENT--5.50%
20,000 Gemstar Group Ltd.* .......... 1,280,000
60,000 Jabil Circuit Inc.* .......... 1,957,500
66,000 SCI Systems Inc.* ............ 2,041,875
60,000 Solectron Corp.* ............. 2,681,250
26,000 Teradyne Inc.* ............... 1,238,250
-------------
9,198,875
-------------
ENVIRONMENTAL SERVICES--1.17%
100,000 Allied Waste Industries
Inc.*(1) ................... 1,950,000
-------------
FINANCIAL SERVICES--1.53%
37,000 CIT Group Inc. ............... 1,091,500
40,000 Mutual Risk Management
Ltd. ....................... 1,462,500
-------------
2,554,000
-------------
FOOD RETAIL--1.48%
260,000 Food Lion Inc.(1) ............ 2,478,125
-------------
FOREST PRODUCTS, PAPER--0.72%
66,000 United Stationers Inc.* ...... 1,208,625
-------------
</TABLE>
15
<PAGE>
PAINEWEBBER MID CAP FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
</TABLE>
COMMON STOCKS--(CONTINUED)
<TABLE>
<C> <S> <C>
HOUSEHOLD PRODUCTS--0.95%
50,000 Premark International Inc. ... $ 1,596,875
-------------
INDUSTRIAL PARTS--2.46%
40,000 American Standard Companies
Inc.* ...................... 1,342,500
35,000 PRI Automation Inc.*(1) ...... 1,050,000
30,000 SPX Corp.* ................... 1,713,750
-------------
4,106,250
-------------
INDUSTRIAL SERVICES/SUPPLIES--1.55%
101,000 Mettler Toledo International
Inc.* ...................... 2,581,812
-------------
INFORMATION & COMPUTER SERVICES--5.19%
51,900 A.C. Nielson Corp.* .......... 1,349,400
46,000 America Online Inc.* ......... 4,091,125
18,300 Computer Sciences Corp.* ..... 1,219,238
1,000 Ebay Inc.*(1) ................ 334,000
33,850 Fiserv Inc.* ................. 1,590,950
1,000 Geocities* ................... 97,750
-------------
8,682,463
-------------
LIFE INSURANCE--2.23%
60,000 Conseco Inc. ................. 1,796,250
30,000 Reinsurance Group of America,
Inc. ....................... 1,933,125
-------------
3,729,375
-------------
LONG DISTANCE & PHONE COMPANIES--0.99%
20,000 MCI WorldCom, Inc.* .......... 1,650,000
-------------
MANUFACTURING-GENERAL--0.35%
30,000 Helix Technology Corp. ....... 590,625
-------------
MANUFACTURING-HIGH TECHNOLOGY--1.18%
50,000 ASM Lithography Holdings
N.V.* ...................... 1,981,250
-------------
MEDIA--3.74%
35,000 Chancellor Media Corp.* ...... 1,531,250
31,200 Comcast Corp. Class A ........ 2,213,250
40,000 Tele-Communications,
Inc.*(1) ................... 2,512,500
-------------
6,257,000
-------------
MEDICAL PRODUCTS--1.18%
60,000 Steris Corp.* ................ 1,972,500
-------------
MINING & METALS--0.89%
29,000 Martin Marietta Materials
Inc. ....................... 1,488,063
-------------
MOTOR VEHICLES--3.28%
35,000 Borg Warner Automotive,
Inc.(1) .................... 1,524,687
40,000 Dura Automotive Systems,
Inc.* ...................... 1,137,500
17,000 Federal Mogul Corp. .......... 836,188
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
</TABLE>
MOTOR VEHICLES--(CONCLUDED)
<TABLE>
<C> <S> <C>
30,000 Lear Corp.* .................. $ 1,059,375
50,000 Tower Automotive Inc.* ....... 931,250
-------------
5,489,000
-------------
OIL REFINING--0.33%
100,000 R & B Falcon Corp.* .......... 550,000
-------------
OIL SERVICES--1.38%
40,000 Cooper Cameron Corp.* ........ 925,000
80,000 Ensco International Inc. ..... 710,000
40,000 EVI Weatherford Inc.* ........ 680,000
-------------
2,315,000
-------------
OTHER INSURANCE--1.07%
32,000 Ambac Financial Group Inc. ... 1,792,000
-------------
RESTAURANTS--3.18%
40,000 Brinker International
Inc.* ...................... 1,157,500
77,000 CKE Restaurants, Inc.(1) ..... 2,045,312
40,000 Starbucks Corp.* ............. 2,115,000
-------------
5,317,812
-------------
SECURITIES & ASSET MANAGEMENT--0.79%
25,000 Lehman Brothers Holdings,
Inc. ....................... 1,325,000
-------------
SEMICONDUCTOR--4.38%
41,300 Maxim Integrated Productions
Inc.* ...................... 1,721,694
31,000 Micron Technology, Inc.* ..... 1,786,375
51,800 MMC Networks Inc.* ........... 728,437
35,000 Uniphase Corp.* .............. 3,084,375
-------------
7,320,881
-------------
SPECIALTY RETAIL--4.70%
100,000 Borders Group Inc.* .......... 1,381,250
25,000 Lowe's Companies Inc.(1) ..... 1,482,812
60,000 Office Depot Inc.* ........... 2,141,250
35,000 Williams Sonoma Inc.* ........ 1,196,563
50,000 Zale Corp.* .................. 1,656,250
-------------
7,858,125
-------------
TELECOMMUNICATIONS--1.40%
110,000 Advanced Fibre
Communications* ............ 893,750
2,000 Broadcast Common Inc.* ....... 167,625
2,500 Covad Communications Group
Inc.* ...................... 101,250
20,000 Global Crossing Ltd.* ........ 1,180,000
-------------
2,342,625
-------------
THRIFT--1.79%
65,000 Dime Bancorp Inc. ............ 1,608,750
</TABLE>
16
<PAGE>
PAINEWEBBER MID CAP FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
</TABLE>
COMMON STOCKS--(CONCLUDED)
THRIFT--(CONCLUDED)
<TABLE>
<C> <S> <C>
45,000 Greenpoint Financial Corp. ... $ 1,380,938
-------------
2,989,688
-------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------- -------------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
TOBACCO--1.57%
50,000 Gallaher Group PLC ........... $ 1,393,750
45,000 Universal Corp. .............. 1,223,438
-------------
2,617,188
-------------
Total Common Stocks (cost--$143,544,243)....... 164,610,380
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000) MATURITY DATE INTEREST RATE VALUE
- ------------- ------------- ------------- -------------
REPURCHASE AGREEMENT--3.84%
<C> <S> <C> <C> <C>
$ 6,424 Repurchase Agreement dated
02/26/99 with Deutsche Bank,
collateralized by $6,465,000
U.S. Treasury Notes, 6.875%
due 07/31/99
(value--$6,552,536);
proceeds: $6,426,532........ 03/01/99 4.730% 6,424,000
-------------
Total Investments
(cost--$149,968,243)--102.26%................ 171,034,380
Liabilities in excess of other
assets--(2.26)%.............................. (3,779,526)
-------------
Net Assets--100.00%............................ $ 167,254,854
-------------
-------------
</TABLE>
- -----------------
* Non-Income producing security.
(1) Security, or portion thereof, was on loan at February 28, 1999.
See accompanying notes to financial statements
17
<PAGE>
PAINEWEBBER GROWTH FUND
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
COMMON STOCKS--94.47%
AGRICULTURE, FOOD & BEVERAGE--0.71%
78,000 Keebler Foods Co............................................... $ 3,042,000
------------
AIRLINES--1.11%
36,000 AMR Corp.*..................................................... 1,995,750
80,000 Continental Airlines Inc.*..................................... 2,770,000
------------
4,765,750
------------
ALCOHOL--0.45%
25,000 Anheuser-Busch Companies, Inc.................................. 1,917,188
------------
APPAREL, RETAIL--1.06%
31,500 Abercrombie and Fitch Co.*..................................... 2,394,000
76,000 TJX Companies, Inc............................................. 2,170,750
------------
4,564,750
------------
BANKS--0.53%
15,000 Bank One Corp.................................................. 806,250
22,500 Fifth Third Bancorp............................................ 1,486,406
------------
2,292,656
------------
BROADCASTING & PUBLISHING--1.30%
112,500 Capstar Broadcasting Corp.*.................................... 2,271,094
140,000 Infinity Broadcasting Corp.*................................... 3,325,000
------------
5,596,094
------------
CHEMICALS--0.87%
60,000 Aptargroup Inc................................................. 1,642,500
45,000 Hoechst AG, ADR................................................ 2,115,000
------------
3,757,500
------------
COMPUTER HARDWARE--9.72%
54,000 Apple Computer, Inc.* (1)...................................... 1,879,875
123,000 Cisco Systems, Inc.*........................................... 12,030,937
65,000 Compaq Computer Corp........................................... 2,291,250
153,000 Dell Computer Corp.*........................................... 12,259,125
90,000 EMC Corp.*..................................................... 9,213,750
42,000 Sun Microsystems Inc.*......................................... 4,087,125
------------
41,762,062
------------
COMPUTER SOFTWARE--4.60%
65,000 Autodesk, Inc.................................................. 2,608,125
60,000 BMC Software, Inc.*............................................ 2,452,500
100,000 Cadence Design Systems, Inc.*.................................. 2,406,250
36,000 Compuware Corp.*............................................... 2,013,750
27,000 Microsoft Corp.*............................................... 4,053,375
60,450 Network Associates Inc.* (1)................................... 2,841,150
130,000 Sterling Commerce Inc.*........................................ 3,380,000
------------
19,755,150
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
CONSUMER DURABLES--0.43%
70,000 Masco Corp..................................................... $ 1,837,500
------------
DEFENSE/AEROSPACE--0.39%
45,000 Precision Castparts Corp....................................... 1,670,625
------------
DIVERSIFIED RETAIL--5.09%
80,000 Costco Co. Inc.* (1)........................................... 6,425,000
50,000 Dayton Hudson Corp............................................. 3,128,125
50,000 Federated Department Stores, Inc.*............................. 1,903,125
40,000 Kohl's Corp.*.................................................. 2,760,000
80,000 Saks Inc.*..................................................... 2,875,000
55,000 Wal-Mart Stores, Inc........................................... 4,750,625
------------
21,841,875
------------
DRUGS & MEDICINE--7.18%
40,000 Amerisource Health Corp.*...................................... 2,985,000
49,312 Cardinal Health, Inc........................................... 3,559,710
45,000 Elan Corp. PLC, ADR* (1)....................................... 3,450,938
66,600 McKesson HBOC, Inc............................................. 4,528,800
70,000 Pharmacyclics Inc.*............................................ 1,330,000
80,000 Schering-Plough Corp........................................... 4,475,000
30,000 Warner Lambert Co.............................................. 2,071,875
175,000 Watson Pharmaceuticals, Inc.*.................................. 8,454,687
------------
30,856,010
------------
ELECTRICAL EQUIPMENT--2.19%
17,000 KLA-Tencor Corp. *............................................. 880,813
27,000 Lucent Technologies, Inc....................................... 2,742,188
50,000 SCI Systems Inc.*.............................................. 1,546,875
35,000 Tellabs, Inc.*................................................. 2,802,187
30,000 Teradyne Inc.*................................................. 1,428,750
------------
9,400,813
------------
ENTERTAINMENT--4.14%
125,000 Carnival Corp.................................................. 5,562,500
200,000 Cinar Films Inc.*.............................................. 4,150,000
90,000 Fox Entertainment Group Inc.*.................................. 2,340,000
65,000 Viacom, Inc. Class B*.......................................... 5,744,375
------------
17,796,875
------------
ENVIRONMENTAL SERVICES--1.08%
98,100 Republic Services Inc.*........................................ 1,710,619
60,000 Waste Management, Inc.......................................... 2,932,500
------------
4,643,119
------------
FINANCIAL SERVICES--2.92%
61,000 CIT Group, Inc................................................. 1,799,500
80,000 Federal Home Loan Mortgage Corp................................ 4,710,000
</TABLE>
18
<PAGE>
PAINEWEBBER GROWTH FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
COMMON STOCKS--(CONTINUED)
FINANCIAL SERVICES--(CONCLUDED)
<TABLE>
<C> <S> <C>
50,000 Federal National Mortgage Association.......................... $ 3,500,000
105,000 MBNA Corp...................................................... 2,546,250
------------
12,555,750
------------
FOOD RETAIL--3.21%
75,000 American Stores Co............................................. 2,531,250
85,000 Kroger Co.* (1)................................................ 5,498,438
100,000 Safeway Inc.*.................................................. 5,775,000
------------
13,804,688
------------
FOREST PRODUCTS, PAPER--0.45%
105,000 Louisiana Pacific Corp......................................... 1,929,375
------------
HOTELS--0.25%
125,000 Extended Stay America Inc.*.................................... 1,093,750
------------
INDUSTRIAL PARTS--0.54%
90,000 Mettler Toledo International Inc.*............................. 2,300,625
------------
INDUSTRIAL SERVICES/SUPPLIES--2.73%
100,500 Cendant Corp.*................................................. 1,664,531
150,000 Republic Industries Inc.*...................................... 1,837,500
200,000 Staffing Resources, Inc.* (2).................................. 1,050,000
96,266 Tyco International Ltd......................................... 7,165,800
------------
11,717,831
------------
INFORMATION & COMPUTER SERVICES--7.21%
90,000 America Online Inc.*........................................... 8,004,375
15,000 CMG Information Services Inc.* (1)............................. 1,839,375
30,000 Computer Sciences Corp.*....................................... 1,998,750
65,000 Keane Inc.*.................................................... 2,010,937
40,000 Omnicom Group Inc.............................................. 2,650,000
281,250 Outdoor Systems Inc.*.......................................... 7,857,422
100,000 Paychex, Inc................................................... 4,237,500
48,800 Valassis Communications Inc.*.................................. 2,342,400
------------
30,940,759
------------
LIFE INSURANCE--1.05%
30,000 American General Corp.......................................... 2,197,500
44,000 Conseco Inc.................................................... 1,317,250
16,700 Hartford Life Inc. ............................................ 968,600
------------
4,483,350
------------
LONG DISTANCE & PHONE COMPANIES--4.79%
40,000 AT&T Corp. (1)................................................. 3,285,000
35,000 France Telecom, ADR (1)........................................ 3,195,937
145,000 MCI WorldCom Inc.*............................................. 11,962,500
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
LONG DISTANCE & PHONE COMPANIES--(CONCLUDED)
<TABLE>
<C> <S> <C>
40,000 SBC Communications, Inc........................................ $ 2,115,000
------------
20,558,437
------------
MANUFACTURING-GENERAL--1.36%
45,000 Ingersoll Rand Co.............................................. 2,137,500
30,000 United Technologies Corp....................................... 3,716,250
------------
5,853,750
------------
MEDIA--12.77%
134,000 Clear Channel Communications* (1).............................. 8,040,000
80,000 Comcast Corp. Class A.......................................... 5,675,000
70,500 Getty Images Inc.* (1)......................................... 1,348,312
120,000 Liberty Media Group, Series A*................................. 6,465,000
40,000 Media One Group, Inc.*......................................... 2,180,000
182,800 Tele-Communications, Inc. Class A*............................. 11,482,125
180,000 Time Warner, Inc............................................... 11,610,000
100,000 USA Networks, Inc.*............................................ 3,975,000
108,000 Young & Rubicam Inc.*.......................................... 4,077,000
------------
54,852,437
------------
MEDICAL PRODUCTS--1.33%
100,000 Guidant Corp................................................... 5,700,000
------------
OIL REFINING--0.43%
35,000 Repsol S.A., ADR............................................... 1,837,500
------------
OTHER INSURANCE--1.39%
35,000 Ambac Financial Group Inc...................................... 1,960,000
35,350 American International Group Inc............................... 4,027,691
------------
5,987,691
------------
PUBLISHING--0.76%
125,000 News Corp. Ltd., ADR........................................... 3,281,250
------------
RESTAURANTS--0.62%
50,000 Starbucks Corp.*............................................... 2,643,750
------------
SEMICONDUCTOR--2.27%
15,000 Altera Corp.*.................................................. 729,375
15,000 Applied Materials, Inc.*....................................... 834,375
30,000 Intel Corp..................................................... 3,598,125
40,000 Uniphase Corp.*................................................ 3,525,000
15,000 Xilinx Inc.*................................................... 1,046,250
------------
9,733,125
------------
SPECIALTY RETAIL--8.14%
62,500 99 Cents Only Stores*.......................................... 2,957,031
60,000 Borders Group Inc.*............................................ 828,750
13,500 CDW Computer Centers Inc.*..................................... 939,938
</TABLE>
19
<PAGE>
PAINEWEBBER GROWTH FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
COMMON STOCKS--(CONCLUDED)
SPECIALTY RETAIL--(CONCLUDED)
<TABLE>
<C> <S> <C>
96,400 General Nutrition Companies, Inc.*............................. $ 1,289,350
140,000 Home Depot, Inc. (1)........................................... 8,356,250
58,500 Lowe's Companies, Inc. (1)..................................... 3,469,781
35,000 Office Depot Inc.*............................................. 1,249,063
270,000 Staples, Inc.*................................................. 7,939,687
60,000 Tiffany & Co................................................... 3,431,250
140,000 Walgreen Co.................................................... 4,480,000
------------
34,941,100
------------
TELECOMMUNICATIONS--0.65%
9,200 Covad Communications Group Inc.*............................... 372,600
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
TELECOMMUNICATIONS--(CONCLUDED)
<TABLE>
<C> <S> <C>
41,000 Global Crossing Ltd.*.......................................... $ 2,419,000
------------
2,791,600
------------
THRIFT--0.43%
75,000 Dime Bancorp, Inc.............................................. 1,856,250
------------
WIRELESS TELECOMMUNICATIONS--0.32%
15,000 Airtouch Communications, Inc.*................................. 1,365,938
------------
Total Common Stocks (cost--$223,291,580)..................................... 405,728,923
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MATURITY INTEREST
(000) DATES RATES
- --------- ---------- --------
<C> <S> <C> <C> <C>
REPURCHASE AGREEMENTS--5.80%
$12,917 Repurchase Agreement dated 02/26/99 with
Deutsche Bank, collateralized by
$12,995,000 U.S. Treasury Notes, 6.375% due
07/15/99 (value--$13,175,371)
proceeds: $12,922,091...................... 03/01/99 4.730% 12,917,000
12,000 Repurchase Agreement dated 02/26/99 with
Dresdner Bank AG, collateralized by
$11,701,000 U.S. Treasury Notes, 6.205% due
10/31/01 (value--$12,240,533)
proceeds: $12,004,730...................... 03/01/99 4.730 12,000,000
------------
Total Repurchase Agreements (cost--$24,917,000).............................. 24,917,000
------------
Total Investments (cost--$248,208,580)--100.27%.............................. 430,645,923
(1,167,851)
Liabilities in excess of other assets--(0.27)%...............................
------------
Net Assets--100.00%.......................................................... $429,478,072
------------
------------
</TABLE>
- -------------
* Non-Income producing security.
ADR American Depositary Receipt.
(1) Security, or portion thereof, was on loan at February 28, 1999.
(2) Illiquid securities representing 0.24% of net assets.
See accompanying notes to financial statements
20
<PAGE>
PAINEWEBBER
STATEMENTS OF ASSETS AND LIABILITIES FEBRUARY 28, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
GROWTH
& INCOME MID CAP GROWTH
FUND FUND FUND
--------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost--$1,176,615,377, $149,968,243,
and $248,208,580, respectively)....... $ 1,480,373,619 $ 171,034,380 $ 430,645,923
Investments of cash collateral received
for securities loaned, at value
(cost--$0, $15,006,600 and
$34,784,900, respectively)............ -- 15,006,600 34,784,900
Cash.................................... -- 2,888 360
Receivable for investments sold......... 6,267,542 1,039,365 736,337
Receivable for shares of beneficial
interest sold......................... 1,550,602 30,864 464,705
Dividends and interest receivable....... 2,138,527 88,029 148,356
Other assets............................ 210,918 38,126 108,484
--------------- --------------- ---------------
Total assets............................ 1,490,541,208 187,240,252 466,889,065
--------------- --------------- ---------------
LIABILITIES
Payable for investments purchased....... 7,269,154 4,053,463 1,505,564
Collateral for securities loaned........ -- 15,006,600 34,784,900
Payable to affiliates................... 1,405,575 205,358 397,843
Payable for shares of beneficial
interest repurchased.................. 3,084,947 664,182 501,939
Accrued expenses and other
liabilities........................... 97,059 55,795 220,747
--------------- --------------- ---------------
Total liabilities....................... 11,856,735 19,985,398 37,410,993
--------------- --------------- ---------------
NET ASSETS
Beneficial interest--$0.001 par value
(unlimited amount authorized)......... 1,130,588,804 144,419,948 231,564,046
Accumulated net investment loss......... (1,023,818) (926,328) (1,302,851)
Accumulated net realized gains from
investment transactions............... 45,361,245 2,695,097 16,779,534
Net unrealized appreciation of
investments........................... 303,758,242 21,066,137 182,437,343
--------------- --------------- ---------------
Net assets.............................. $ 1,478,684,473 $ 167,254,854 $ 429,478,072
--------------- --------------- ---------------
--------------- --------------- ---------------
CLASS A:
Net assets.............................. $ 853,913,388 $ 103,863,798 $ 276,729,427
--------------- --------------- ---------------
Shares outstanding...................... 27,405,483 10,809,876 10,751,341
--------------- --------------- ---------------
Net asset value and redemption value per
share................................. $31.16 $9.61 $25.74
--------------- --------------- ---------------
--------------- --------------- ---------------
Maximum offering price per share (net
asset value plus sales charge of 4.50%
of offering price).................... $32.63 $10.06 $26.95
--------------- --------------- ---------------
--------------- --------------- ---------------
CLASS B:
Net assets.............................. $ 370,054,357 $ 45,781,986 $ 89,405,992
--------------- --------------- ---------------
Shares outstanding...................... 11,961,654 4,775,166 3,828,447
--------------- --------------- ---------------
Net asset value and offering price per
share................................. $30.94 $9.59 $23.35
--------------- --------------- ---------------
--------------- --------------- ---------------
CLASS C:
Net assets.............................. $ 182,191,528 $ 17,407,128 $ 31,821,049
--------------- --------------- ---------------
Shares outstanding...................... 5,878,412 2,010,876 1,346,197
--------------- --------------- ---------------
Net asset value and offering price per
share................................. $30.99 $8.66 $23.64
--------------- --------------- ---------------
--------------- --------------- ---------------
CLASS Y:
Net assets.............................. $ 72,525,200 $ 201,942 $ 31,521,604
--------------- --------------- ---------------
Shares outstanding...................... 2,327,363 20,992 1,185,011
--------------- --------------- ---------------
Net asset value, offering price and
redemption value per share............ $31.16 $9.62 $26.60
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
See accompanying notes to financial statements
21
<PAGE>
PAINEWEBBER
STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999(UNAUDITED)
<TABLE>
<CAPTION>
GROWTH & MID CAP
INCOME FUND FUND GROWTH FUND
------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding
tax).................................. $ 7,211,784 $ 514,514 $ 637,686
Interest................................ 3,333,381 277,531 706,673
------------- ------------- -------------
10,545,165 792,045 1,344,359
------------- ------------- -------------
EXPENSES:
Investment advisory and
administration........................ 4,938,791 883,593 1,427,851
Service fees -- Class A................. 991,412 130,066 281,032
Service and distribution fees -- Class
B..................................... 1,875,127 270,509 414,780
Service and distribution fees -- Class
C..................................... 861,845 92,248 135,492
Custody and accounting.................. 373,325 55,606 117,532
Transfer agency and service fees........ 355,367 102,782 137,222
Reports and notices to shareholders..... 83,530 51,523 46,658
Federal and state registration.......... 55,545 40,067 26,718
Legal and audit......................... 41,010 53,429 44,315
Amortization of organizational
expenses.............................. -- -- 5,854
Trustees' fees.......................... 6,750 6,750 6,750
Other expenses.......................... 1,205 31,800 3,006
------------- ------------- -------------
9,583,907 1,718,373 2,647,210
------------- ------------- -------------
Net investment income (loss)............ 961,258 (926,328) (1,302,851)
------------- ------------- -------------
REALIZED AND UNREALIZED GAINS FROM
INVESTMENT TRANSACTIONS:
Net realized gains from Investment
transactions.......................... 28,048,803 2,749,698 13,365,998
Net change in unrealized
appreciation/depreciation of
Investments........................... 249,532,185 43,311,398 109,506,654
------------- ------------- -------------
NET REALIZED AND UNREALIZED GAINS FROM
INVESTMENT TRANSACTIONS............... 277,580,988 46,061,096 122,872,652
------------- ------------- -------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $ 278,542,246 $ 45,134,768 $ 121,569,801
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See accompanying notes to financial statements
22
<PAGE>
PAINEWEBBER GROWTH & INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
FEBRUARY 28, ENDED
1999 AUGUST 31,
(UNAUDITED) 1998
------------- -------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income................... $ 961,258 $ 4,845,333
Net realized gains from investment and
options transactions.................. 28,048,803 109,163,741
Net change in unrealized
appreciation/depreciation of
investments........................... 249,532,185 (198,547,739)
------------- -------------
Net increase (decrease) in net assets
resulting from operations............. 278,542,246 (84,538,665)
------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income -- Class A........ (2,152,840) (4,317,455)
Net investment income -- Class B........ -- --
Net investment income -- Class C........ -- (62,373)
Net investment income -- Class Y........ (274,465) (565,972)
Net realized gains from investment
transactions -- Class A............... (45,342,437) (42,191,521)
Net realized gains from investment
transactions -- Class B............... (21,458,879) (32,083,048)
Net realized gains from investment
transactions -- Class C............... (9,905,709) (8,161,061)
Net realized gains from investment
transactions -- Class Y............... (4,000,922) (4,314,878)
------------- -------------
Total dividends and distributions to
shareholders.......................... (83,135,252) (91,696,308)
------------- -------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares.... 238,575,764 784,608,161
Cost of shares repurchased.............. (272,125,701) (405,755,914)
Proceeds from dividends reinvested...... 78,095,718 85,907,754
------------- -------------
Net increase in net assets from
beneficial interest transactions...... 44,545,781 464,760,001
------------- -------------
Net increase in net assets.............. 239,952,775 288,525,028
NET ASSETS:
Beginning of period..................... 1,238,731,698 950,206,670
------------- -------------
End of period (including undistributed
net investment income of $442,229 at
August 31, 1998)...................... $1,478,684,473 $1,238,731,698
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to financial statements
23
<PAGE>
PAINEWEBBER MID CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE FIVE FOR THE
FEBRUARY 28, MONTHS ENDED YEAR ENDED
1999 AUGUST 31, MARCH 31,
(UNAUDITED) 1998 1998
------------- ------------- -------------
<S> <C> <C> <C>
FROM OPERATIONS:
Net investment loss..................... $ (926,328) $ (964,427) $ (4,452,123)
Net realized gains from investment
transactions.......................... 2,749,698 50,055,407 58,100,065
Net change in unrealized
appreciation/depreciation of
investments........................... 43,311,398 (113,176,825) 35,069,089
------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations............. 45,134,768 (64,085,845) 88,717,031
------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains from investment
transactions -- Class A............... (7,165,732) (33,325,298) (19,367,061)
Net realized gains from investment
transactions -- Class B............... (3,684,717) (21,180,778) (29,491,494)
Net realized gains from investment
transactions -- Class C............... (1,501,190) (6,615,466) (5,842,338)
Net realized gains from investment
transactions -- Class Y............... (6,732) (10,624) --
------------- ------------- -------------
Total distributions to shareholders..... (12,358,371) (61,132,166) (54,700,893)
------------- ------------- -------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from the sale of shares.... 34,712,318 32,729,553 37,895,804
Cost of shares repurchased.............. (74,421,487) (75,586,995) (87,095,316)
Proceeds from dividends reinvested...... 11,619,786 58,037,907 51,574,852
------------- ------------- -------------
Net increase (decrease) in net assets
from beneficial interest
transactions.......................... (28,089,383) 15,180,465 2,375,340
------------- ------------- -------------
Net increase (decrease) in net assets... 4,687,014 (110,037,546) 36,391,478
NET ASSETS:
Beginning of period..................... 162,567,840 272,605,386 236,213,908
------------- ------------- -------------
End of period........................... $167,254,854 $ 162,567,840 $ 272,605,386
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See accompanying notes to financial statements
24
<PAGE>
PAINEWEBBER GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
FEBRUARY 28, ENDED
1999 AUGUST 31,
(UNAUDITED) 1998
------------- -------------
<S> <C> <C>
FROM OPERATIONS:
Net investment loss..................... $ (1,302,851) $ (2,449,774)
Net realized gains from investment
transactions.......................... 13,365,998 55,757,294
Net change in unrealized
appreciation/depreciation of
investments........................... 109,506,654 (37,036,941)
------------- -------------
Net increase in net assets resulting
from operations....................... 121,569,801 16,270,579
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains from investment
transactions -- Class A............... (19,967,578) (52,257,695)
Net realized gains from investment
transactions -- Class B............... (7,360,795) (28,007,650)
Net realized gains from investment
transactions -- Class C............... (2,428,166) (6,619,090)
Net realized gains from investment
transactions -- Class Y............... (2,076,520) (4,929,080)
------------- -------------
Total distributions to shareholders..... (31,833,059) (91,813,515)
------------- -------------
FROM BENEFICIAL INTEREST TRANSACTIONS:
Net proceeds from sale of shares........ 50,692,117 49,298,324
Cost of shares repurchased.............. (60,612,580) (102,850,579)
Proceeds from dividends reinvested...... 30,161,764 86,299,182
------------- -------------
Net increase in net assets from
beneficial interest transactions...... 20,241,301 32,746,927
------------- -------------
Net increase (decrease) in net assets... 109,978,043 (42,796,009)
NET ASSETS:
Beginning of period..................... 319,500,029 362,296,038
------------- -------------
End of period........................... $429,478,072 $319,500,029
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to financial statements
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
PaineWebber Growth and Income Fund ("Growth & Income Fund"), PaineWebber Mid
Cap Fund ("Mid Cap Fund") and PaineWebber Growth Fund ("Growth Fund")
(collectively, the "Funds") are diversified series of PaineWebber America Fund,
PaineWebber Managed Assets Trust and PaineWebber Olympus Fund (the "Trusts"),
respectively. The three 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. At a meeting held on August 19, 1998, the Mid Cap Fund's board of
trustees elected to change the Trust's fiscal year end from March 31st to August
31st, effective August 31, 1998.
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 structures,
ongoing service and distribution charges and certain transfer agency expenses.
In addition, Class B shares and all corresponding reinvested dividend shares
automatically convert to Class A shares approximately six years after 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 by Mitchell Hutchins Asset Management Inc. ("Mitchell
Hutchins"), a wholly-owned asset management 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, Inc. ("Nasdaq") are valued at the
last available sale price, or last bid price available if no sale occurs, on
Nasdaq prior to the time of valuation. Where market quotations are readily
available, debt securities are valued thereon, provided such quotations
adequately reflect the fair value of the securities in the judgment of Mitchell
Hutchins. When market quotations are not readily available, securities are
valued based upon appraisals derived from information concerning those
securities or similar securities received from recognized dealers in those
securities. All other securities are valued at fair value as determined in good
faith by, or under the direction of, each Trust's board of trustees. The
amortized cost method of valuation is used to value short-term debt securities
with sixty days or less remaining to maturity, unless each Trust's board of
trustees determines that this does not represent fair value.
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, each Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation.
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 the trade date. Realized gains and losses from investment
transactions are calculated using the identified cost method. Interest income is
recorded on an accrual basis. Dividend income is recorded on the ex-dividend
date. Discounts are accreted and premiums are amortized as adjustments to
interest income and 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.
OPTION WRITING--When a Fund writes a call or a put option, an amount equal to
the premium received by the Fund is included in the Fund's Statement of Assets
and Liabilities as an asset and as an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current market value
of the option written. If an option which the Fund has written either expires on
its stipulated expiration date or the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or loss if the cost of a closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a call option which the
Fund has written is exercised, the Fund realizes a capital gain or loss
(long-term or short-term, depending on the holding period of the underlying
security) from the sale of the underlying security and the proceeds from the
sale are increased by the premium originally received. If a put option which a
Fund has written is exercised, the amount of the premium originally received
reduces the cost of the security which the Fund purchases upon exercise of the
option. There were no options written for the Funds during the six months ended
February 28, 1999.
DIVIDENDS AND DISTRIBUTIONS--Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions are
determined in accordance with federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification.
INVESTMENT ADVISER AND ADMINISTRATOR
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, Mid Cap
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%, 1.00% and 0.75%, respectively, of each Funds' average daily net
assets. At February 28, 1999, Growth & Income Fund, Mid Cap Fund and Growth Fund
owed Mitchell Hutchins $807,773, $133,210 and $250,362, respectively, in
investment advisory and administration fees.
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
For the six months ended February 28, 1999, Growth & Income Fund, Mid Cap Fund
and Growth Fund paid $13,500, 17,022, and $16,020, 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 service and/or distribution pertaining to 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, 1999, Growth &
Income Fund, Mid Cap Fund and Growth Fund owed Mitchell Hutchins $597,677,
$71,062 and $145,810, 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, 1999, it earned $851,711, $59,370, and $98,537 in sales charges for
the Growth & Income Fund, Mid Cap Fund and Growth Fund, respectively.
SECURITY LENDING
Each Fund may lend securities 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 $11,179, $9,700, and $9,378
for Growth & Income Fund, Mid Cap Fund and Growth Fund, respectively, in
compensation from the Funds in that capacity for the six months ended February
28, 1999. At February 28, 1999, Growth & Income Fund, Mid Cap Fund and Growth
Fund owed PaineWebber $125, $1,086, and $1,671, respectively, in compensation.
As of February 28, 1999 the Growth and Mid Cap Fund held cash and/or cash
equivalents as collateral for market value of securities loaned as follows:
<TABLE>
<CAPTION>
COLLATERAL MARKET VALUE
FOR OF
SECURITIES SECURITIES
LOANED LOANED
------------ ------------
<S> <C> <C>
Mid Cap Fund............................................................................ $15,006,600 $14,210,728
Growth.................................................................................. $34,784,900 $33,807,875
</TABLE>
28
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
As of February 28, 1999 the Funds invested the collateral in the following
money market funds:
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES/ VALUE
- ----------- -----------
<C> <S> <C>
MID CAP FUND
4,102,030 Janus Money Market Institutional Shares................................................................ $ 4,102,030
1,159,165 Liquid Assets Portfolio................................................................................ 1,159,165
7,500,000 MH Money Market Fund LLC............................................................................... 7,500,000
2,245,405 Prime Portfolio........................................................................................ 2,245,405
-----------
Total investments of cash collateral for securities loaned (cost--$15,006,600)...................................... $15,006,600
-----------
-----------
GROWTH FUND
16,374,674 Janus Money Market Institutional Shares................................................................ $16,374,674
2,857,314 Liquid Assets Portfolio................................................................................ 2,857,314
15,552,803 MH Money Market Fund LLC............................................................................... 15,552,803
109 Prime Portfolio........................................................................................ 109
-----------
Total investments of cash collateral for securities loaned (cost--$38,784,900)...................................... $34,784,900
-----------
-----------
</TABLE>
BANK LINE OF CREDIT
Each Fund may participate with other funds managed by Mitchell Hutchins in a
$200 million committed credit facility ("Facility") to be utilized for temporary
financing until the settlement of sale or purchase of portfolio securities, the
repurchase or redemption of shares of each Fund at the request of the
shareholders and other temporary or emergency purposes. In connection therewith,
each Fund has agreed to pay a commitment fee, pro rata, based on the relative
asset size of the Funds in the Facility. Interest is charged to each Fund at
rates based on prevailing market rates in effect at the time of borrowings. For
the six months ended February 28, 1999, the Funds did not borrow under the
Facility.
TRANSFER AGENCY SERVICE FEES
PaineWebber provides transfer agency related services to the Funds pursuant to
a delegation of authority from PFPC, Inc., the Fund's transfer agent, and is
compensated for these services by PFPC, Inc., not the Funds. For the six months
period ended February 28, 1999, PaineWebber received approximately 55%, 57% and
56% of the total transfer agency service fees collected by PFPC, Inc. from
Growth & Income Fund, Mid Cap Fund and Growth Fund, respectively.
INVESTMENTS IN SECURITIES
For federal income tax purposes, the cost of securities owned at February 28,
1999 was substantially the same as the cost of securities for financial
statement purposes.
At February 28, 1999, the components of net unrealized appreciation of
investments were as follows:
<TABLE>
<CAPTION>
GROWTH &
INCOME FUND MID CAP FUND GROWTH FUND
------------- ------------- -------------
<S> <C> <C> <C>
Gross appreciation (investments having an excess of value over cost)..... $ 347,458,986 $ 36,695,088 $ 190,924,078
Gross depreciation (investments having an excess of cost over value)..... (43,700,744) (15,628,951) (8,486,735)
------------- ------------- -------------
Net unrealized appreciation of investments............................... $ 303,758,242 $ 21,066,137 $ 182,437,343
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
For the six months ended February 28, 1999, total aggregate purchases and
sales of portfolio securities, excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
GROWTH & MID CAP
INCOME FUND FUND GROWTH FUND
-------------- ------------- -------------
<S> <C> <C> <C>
Purchases......................................................... $ 425,906,217 $ 69,306,076 $ 79,613,322
Sales............................................................. $ 468,788,159 $ 103,450,755 $ 82,763,832
</TABLE>
FEDERAL TAX STATUS
Each Fund intends to distribute substantially all of its taxable income and to
comply with the other requirements of the Internal Revenue Code applicable to
regulated investment companies. Accordingly, no provision for federal income
taxes is required. In addition, by distributing during each calendar year,
substantially all of its net investment income, capital gains and certain other
amounts, if any, each Fund intends not to be subject to any federal excise tax.
30
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
BENEFICIAL INTEREST
There was an unlimited amount of $0.001 par value shares of beneficial
interest authorized. Transactions in shares of benefical 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 28, 1999
Shares sold............. 5,087,393 $153,938,606 1,244,945 $ 37,592,545 884,543 $ 26,979,447 658,249 $ 20,065,166
Shares repurchased...... (5,978,782) (180,988,199) (1,210,089) (36,481,276) (895,962) (27,232,749) (906,296) (27,423,477)
Shares converted from
Class B to Class A.... 1,910,739 58,624,803 (1,923,057) (58,624,803) -- -- -- --
Dividends reinvested.... 1,477,072 44,548,497 659,253 19,770,993 316,470 9,509,920 141,503 4,266,308
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease)............ 2,496,422 $ 76,123,707 (1,228,948) $(37,742,541) 305,051 $ 9,256,618 (106,544) $ (3,092,003)
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
YEAR ENDED AUGUST 31,
1998:
Shares sold............. 12,026,995 $384,579,894 7,040,942 $219,400,226 3,720,225 $116,019,841 2,051,111 $ 64,608,200
Shares repurchased...... (8,401,975) (271,585,856) (1,741,560) (55,665,850) (1,191,640) (37,412,993) (1,306,458) (41,091,215)
Shares converted from
Class B to Class A.... 5,402,974 170,099,068 (5,473,938) (170,099,068) -- -- -- --
Dividends reinvested.... 1,444,371 43,459,036 991,533 29,715,205 262,925 7,880,006 161,288 4,853,507
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase............ 10,472,365 $326,552,142 816,977 $ 23,350,513 2,791,510 $ 86,486,854 905,941 $ 28,370,492
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
MID CAP FUND
SIX MONTHS ENDED
FEBRUARY 28, 1999
Shares sold............. 3,131,297 $ 30,744,920 174,425 $ 1,687,251 237,838 $ 2,156,903 12,673 $ 123,244
Shares repurchased...... (5,771,537) (55,823,796) (1,321,317) (12,480,791) (706,921) (6,110,770) (591) (6,130)
Shares converted from
Class B to Class A.... 1,336,080 12,964,606 (1,335,808) (12,964,606) -- -- -- --
Dividends reinvested.... 735,220 6,844,898 372,644 3,469,312 154,440 1,298,844 722 6,732
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease)............ (568,940) $ (5,269,372) (2,110,056) $(20,288,834) (314,643) $ (2,655,023) 12,804 $ 123,846
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
FOR THE FIVE MONTHS
ENDED AUGUST 31, 1998
Shares sold............. 2,182,101 $ 24,315,812 354,492 $ 3,832,818 383,808 $ 4,499,817 7,738 $ 81,106
Shares repurchased...... (4,267,087) (50,849,996) (1,267,833) (16,289,937) (687,258) (8,417,661) (2,894) (29,401)
Shares converted from
Class B to Class A.... 3,641,925 52,669,649 (3,596,252) (52,669,649) -- -- -- --
Dividends reinvested.... 3,041,806 31,817,286 1,903,180 19,983,663 652,656 6,226,334 1,016 10,624
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease)............ 4,598,745 $ 57,952,751 (2,606,413) $(45,143,105) 349,206 $ 2,308,490 5,860 $ 62,329
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
</TABLE>
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------------------------ ------------------------ ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
MID CAP FUND (CONCLUDED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED
MARCH 31, 1998
Shares sold............. 1,152,078 $ 18,144,195 435,394 $ 7,043,465 876,575 $ 12,661,915 3,103 $ 46,229
Shares repurchased...... (2,175,121) (33,257,452) (2,312,967) (35,407,408) (1,284,257) (18,418,905) (775) (11,551)
Shares converted from
Class B to Class A.... 658,362 10,279,880 (653,737) (10,279,880) -- -- -- --
Dividends reinvested.... 1,422,364 18,376,942 2,125,930 27,658,352 455,931 5,539,558 -- --
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease)............ 1,057,683 $ 13,543,565 (405,380) $(10,985,471) 48,249 $ (217,432) 2,328 $ 34,678
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
GROWTH FUND
SIX MONTHS ENDED
FEBRUARY 28, 1999
Shares sold............. 477,569 $ 11,754,561 221,533 $ 5,015,158 1,093,702 $ 24,858,983 358,678 $ 9,063,415
Shares repurchased...... (1,005,027) (24,245,157) (276,857) (6,035,797) (1,014,877) (22,991,957) (295,195) (7,339,669)
Shares converted from
Class B to Class A.... 413,094 9,930,983 (451,975) (9,930,983) -- -- -- --
Dividends reinvested.... 794,422 18,931,080 318,639 6,898,545 102,902 2,255,619 84,377 2,076,520
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease)............ 680,058 $ 16,371,467 (188,660) $ (4,053,077) 181,727 $ 4,122,645 147,860 $ 3,800,266
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
YEAR ENDED AUGUST 31,
1998
Shares sold............. 250,025 $ 6,168,232 293,191 $ 6,570,230 932,368 $ 22,361,890 564,489 $ 14,197,972
Shares repurchased...... (1,634,676) (40,028,657) (1,037,642) (23,385,942) (1,095,911) (25,896,378) (531,157) (13,539,602)
Shares converted from
Class B to Class A.... 1,252,439 30,472,358 (1,350,669) (30,472,358) -- -- -- --
Dividends reinvested.... 2,428,222 49,098,643 1,398,245 26,119,234 325,859 6,152,224 237,204 4,929,081
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease)............ 2,296,010 $ 45,710,576 (696,875) $(21,168,836) 162,316 $ 2,617,736 270,536 $ 5,587,451
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
</TABLE>
32
<PAGE>
(This page has been left blank intentionally.)
33
<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,
1999 ---------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
-------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $ 26.92 $ 30.60 $ 24.35 $ 22.52 $ 20.43 $ 20.86
-------------- --------- --------- --------- --------- ---------
Net investment income................. 0.06 0.19 0.23 0.22 0.24 0.28
Net realized and unrealized gains
(losses) from investments and
options............................. 6.04 (0.99) 9.29 3.46 3.18 (0.41)
-------------- --------- --------- --------- --------- ---------
Total increase (decrease) from
investment operations............... 6.10 (0.80) 9.52 3.68 3.42 (0.13)
-------------- --------- --------- --------- --------- ---------
Dividends from net investment
income.............................. (0.08) (0.21) (0.25) (0.34) (0.12) (0.27)
Distributions from net realized gains
from investment transactions........ (1.78) (2.67) (3.02) (1.51) (1.21) (0.03)
-------------- --------- --------- --------- --------- ---------
Total dividends and distributions to
shareholders........................ (1.86) (2.88) (3.27) (1.85) (1.33) (0.30)
-------------- --------- --------- --------- --------- ---------
Net asset value, end of period........ $ 31.16 $ 26.92 $ 30.60 $ 24.35 $ 22.52 $ 20.43
-------------- --------- --------- --------- --------- ---------
-------------- --------- --------- --------- --------- ---------
Total investment return (1)........... 22.89% (3.51)% 42.42% 17.40% 18.30% (0.58)%
-------------- --------- --------- --------- --------- ---------
-------------- --------- --------- --------- --------- ---------
Ratios/Supplemental data:
Net assets, end of period (000's)..... $ 853,913 $ 670,606 $ 441,699 $ 276,016 $ 187,057 $ 222,432
Expenses to average net assets........ 1.07%* 1.07% 1.15% 1.20%(2) 1.19% 1.20%
Net investment income (loss) to
average net assets.................. 0.42%* 0.71% 0.88% 0.98%(2) 1.07% 1.29%
Portfolio turnover rate............... 32% 62% 70% 112% 111% 94%
</TABLE>
- -----------------
* Annualized.
(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 for periods of less than one
year has not been annualized.
(2) These ratios include non-recurring acquisition expenses of 0.04%.
34
<PAGE>
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31,
1999 -------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
-------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $ 26.77 $ 30.46 $ 24.26 $ 22.37 $ 20.37 $ 20.78
-------------- --------- --------- --------- --------- ---------
Net investment income................. (0.06) (0.02) 0.04 0.04 0.06 0.10
Net realized and unrealized gains
(losses) from investments and
options............................. 6.01 (1.02) 9.23 3.45 3.18 (0.37)
-------------- --------- --------- --------- --------- ---------
Total increase (decrease) from
investment operations............... 5.95 (1.04) 9.27 3.49 3.24 (0.27)
-------------- --------- --------- --------- --------- ---------
Dividends from net investment
income.............................. -- -- (0.05) (0.09) (0.03) (0.11)
Distributions from net realized gains
from investment transactions........ (1.78) (2.65) (3.02) (1.51) (1.21) (0.03)
-------------- --------- --------- --------- --------- ---------
Total dividends and distributions to
shareholders........................ (1.78) (2.65) (3.07) (1.60) (1.24) (0.14)
-------------- --------- --------- --------- --------- ---------
Net asset value, end of period........ $ 30.94 $ 26.77 $ 30.46 $ 24.26 $ 22.37 $ 20.37
-------------- --------- --------- --------- --------- ---------
-------------- --------- --------- --------- --------- ---------
Total investment return (1)........... 22.42% (4.28)% 41.33% 16.49% 17.38% (1.31)%
-------------- --------- --------- --------- --------- ---------
-------------- --------- --------- --------- --------- ---------
Ratios/Supplemental data:
Net assets, end of period (000's)..... $ 370,054 $ 353,150 $ 376,840 $ 277,753 $ 247,543 $ 289,290
Expenses to average net assets........ 1.85%* 1.87% 1.93% 1.99%(2) 1.97% 1.97%
Net investment income (loss) to
average net assets.................. (0.36)%* (0.08)% 0.11% 0.17%(2) 0.29% 0.51%
Portfolio turnover rate............... 32% 62% 70% 112% 111% 94%
<CAPTION>
CLASS C
-----------------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31,
1999 -------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $ 26.82 $ 30.53 $ 24.33 $ 22.43 $ 20.42 $ 20.83
------------ --------- --------- --------- --------- ---------
Net investment income................. (0.05) 0.01 0.05 0.05 0.06 0.11
Net realized and unrealized gains
(losses) from investments and
options............................. 6.00 (1.03) 9.24 3.46 3.19 (0.38)
------------ --------- --------- --------- --------- ---------
Total increase (decrease) from
investment operations............... 5.95 (1.02) 9.29 3.51 3.25 (0.27)
------------ --------- --------- --------- --------- ---------
Dividends from net investment
income.............................. -- (0.02) (0.07) (0.10) (0.03) (0.11)
Distributions from net realized gains
from investment transactions........ (1.78) (2.67) (3.02) (1.51) (1.21) (0.03)
------------ --------- --------- --------- --------- ---------
Total dividends and distributions to
shareholders........................ (1.78) (2.69) (3.09) (1.61) (1.24) (0.14)
------------ --------- --------- --------- --------- ---------
Net asset value, end of period........ $ 30.99 $ 26.82 $ 30.53 $ 24.33 $ 22.43 $ 20.42
------------ --------- --------- --------- --------- ---------
------------ --------- --------- --------- --------- ---------
Total investment return (1)........... 22.38% (4.23)% 41.30% 16.52% 17.37% (1.29)%
------------ --------- --------- --------- --------- ---------
------------ --------- --------- --------- --------- ---------
Ratios/Supplemental data:
Net assets, end of period (000's)..... $ 182,192 $ 149,458 $ 84,922 $ 43,148 $ 30,468 $ 37,287
Expenses to average net assets........ 1.84%* 1.85% 1.92% 1.99%(2) 1.98% 1.94%
Net investment income (loss) to
average net assets.................. (0.34)%* (0.07)% 0.10% 0.18%(2) 0.28% 0.54%
Portfolio turnover rate............... 32% 62% 70% 112% 111% 94%
</TABLE>
- -----------------
* Annualized.
(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 for periods of less than one
year has not been annualized.
(2) These ratios include non-recurring acquisition expenses of 0.04%.
35
<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
SIX
MONTHS
ENDED
FEBRUARY FOR THE YEARS ENDED AUGUST 31,
28, 1999 ------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
--------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 26.92 $ 30.59 $ 24.35 $ 22.54 $ 20.42 $ 20.86
--------- --------- -------- -------- -------- --------
Net investment income............................. 0.11 0.30 0.32 0.30 0.30 0.33
Net realized and unrealized gains (losses) from
investments and options.......................... 6.03 (1.02) 9.26 3.45 3.18 (0.40)
--------- --------- -------- -------- -------- --------
Total increase (decrease) from investment
operations....................................... 6.14 (0.72) 9.58 3.75 3.48 (0.07)
--------- --------- -------- -------- -------- --------
Dividends from net investment income.............. (0.12) (0.28) (0.32) (0.43) (0.15) (0.34)
Distributions from net realized gains from
investment transactions.......................... (1.78) (2.67) (3.02) (1.51) (1.21) (0.03)
--------- --------- -------- -------- -------- --------
Total dividends and distributions to
shareholders..................................... (1.90) (2.95) (3.34) (1.94) (1.36) (0.37)
--------- --------- -------- -------- -------- --------
Net asset value, end of period.................... $ 31.16 $ 26.92 $ 30.59 $ 24.35 $ 22.54 $ 20.42
--------- --------- -------- -------- -------- --------
--------- --------- -------- -------- -------- --------
Total investment return (1)....................... 23.03% (3.24)% 42.74% 17.77% 18.66% (0.31)%
--------- --------- -------- -------- -------- --------
--------- --------- -------- -------- -------- --------
Ratios/Supplemental data:
Net assets, end of period (000's)................. $ 72,525 $ 65,518 $ 46,745 $ 22,942 $ 14,680 $ 14,690
Expenses to average net assets.................... 0.78%* 0.80% 0.88% 0.92%(2) 0.89% 0.90%
Net investment income to average net assets....... 0.72%* 0.99% 1.14% 1.26%(2) 1.39% 1.60%
Portfolio turnover rate........................... 32% 62% 70% 112% 111% 94%
</TABLE>
- -----------------
* Annualized.
(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 or program fees; results would be lower if sales charges or
program fees were included. Total investment return for periods of less than
one year has not been annualized.
(2) These ratios include non-recurring acquisition expenses of 0.04%.
36
<PAGE>
PAINEWEBBER MID CAP FUND
FINANCIAL HIGHLIGHTS
Selected data for a beneficial interest outstanding throughout each period is
presented below:
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------------
FOR THE
SIX FOR THE
MONTHS FIVE
ENDED MONTHS
FEBRUARY 28, ENDED FOR THE YEARS ENDED MARCH 31,
1999 AUGUST 31, ----------------------------------
(UNAUDITED) 1998# 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 7.97 $ 15.00 $ 13.44 $ 15.61
--------------- ------- --------------- -------
Net investment loss..................... (0.03) (0.03) (0.13) (0.17)
Net realized unrealized gains (losses)
from investments....................... 2.33 (3.15) 5.15 0.32
--------------- ------- --------------- -------
Net increase (decrease) from
investment operations.................. 2.30 (3.18) 5.02 0.15
--------------- ------- --------------- -------
Distributions from net realized gains
from investments....................... (0.66) (3.85) (3.46) (2.32)
--------------- ------- --------------- -------
Net asset value, end of period.......... $ 9.61 $ 7.97 $ 15.00 $ 13.44
--------------- ------- --------------- -------
--------------- ------- --------------- -------
Total investment return (1)............. 29.13% (27.31)% 41.50% (0.21)%
--------------- ------- --------------- -------
--------------- ------- --------------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 103,864 $ 90,650 $ 101,698 $ 76,909
Expenses to average net assets.......... 1.58%* 1.48%* 1.51% 1.60%
Net investment loss to average net
assets................................. (0.69)%* (0.61)%* (1.16)% (1.20)%
Portfolio turnover...................... 41% 80% 64% 56%
<CAPTION>
1996 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Net asset value, beginning of period.... $ 12.81 $ 11.65 $ 10.53
------- ------- -------
Net investment loss..................... (0.16) (0.09) (0.09)
Net realized unrealized gains (losses)
from investments....................... 3.71 1.29 1.21
------- ------- -------
Net increase (decrease) from
investment operations.................. 3.55 1.20 1.12
------- ------- -------
Distributions from net realized gains
from investments....................... (0.75) (0.04) --
------- ------- -------
Net asset value, end of period.......... $ 15.61 $ 12.81 $ 11.65
------- ------- -------
------- ------- -------
Total investment return (1)............. 28.16% 10.36% 10.64%
------- ------- -------
------- ------- -------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... 76,558 $ 62,673 $ 58,523
Expenses to average net assets.......... 1.58% 1.58% 1.54%
Net investment loss to average net
assets................................. (1.11)% (0.79)% (0.84)%
Portfolio turnover...................... 57% 42% 60%
</TABLE>
- -----------------
* Annualized.
# Effective May 1, 1998, Mitchell Hutchins took over day-to-day management of
the Fund's assets.
(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, if any, at net asset value on the payable dates, and a sale at
net asset value on the last day of each period reported. The figures do not
include sales charges, results would be lower if sales charges were included.
Total investment return for period of less than one year has not been
annualized.
37
<PAGE>
PAINEWEBBER MID CAP FUND
FINANCIAL HIGHLIGHTS
Selected data for a beneficial interest outstanding throughout each period is
presented below:
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------------------------------
FOR THE
SIX FOR THE
MONTHS FIVE
ENDED MONTHS
FEBRUARY ENDED
28, AUGUST FOR THE YEARS ENDED MARCH 31,
1999 31, -------------------------------------------------------------
(UNAUDITED) 1998# 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 7.99 $ 15.07 $ 13.59 $ 15.88 $ 13.11 $ 12.02 $ 10.94
--------- --------- --------- --------- --------- --------- ---------
Net investment loss..................... (0.09) (0.07) (0.31) (0.31) (0.29) (0.20) (0.17)
Net realized and unrealized gains
(losses) from investments.............. 2.35 (3.16) 5.25 0.34 3.81 1.33 1.25
--------- --------- --------- --------- --------- --------- ---------
Net increase (decrease) from investment
operations............................. 2.26 (3.23) 4.94 0.03 3.52 1.13 1.08
--------- --------- --------- --------- --------- --------- ---------
Distributions from net realized gains
from investments....................... (0.66) (3.85) (3.46) (2.32) (0.75) (0.04) --
--------- --------- --------- --------- --------- --------- ---------
Net asset value, end of period.......... $ 9.59 $ 7.99 $ 15.07 $ 13.59 $ 15.88 $ 13.11 $ 12.02
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Total investment return (1)............. 28.54 (27.54)% 40.39% (0.99)% 27.28% 9.46% 9.87%
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Ratios/Supplemental Data:
Net assets, end of period (000's)....... $ 45,782 $ 54,978 $ 143,058 $ 134,495 $ 157,021 $ 139,302 $ 133,828
Expenses to average net assets.......... 2.49%* 2.32%* 2.28% 2.36% 2.34% 2.34% 2.30%
Net investment loss to average net
assets................................. (1.59)%* (1.48)%* (1.92)% (1.95)% (1.87)% (1.56)% (1.60)%
Portfolio turnover...................... 41% 80% 64% 56% 57% 42% 60%
</TABLE>
- -----------------
* Annualized.
# Effective May 1, 1998, Mitchell Hutchins took over day-to-day management of
the Fund's assets.
+ 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, if any, at net asset value on the payable dates, and a sale at
net asset value on the last day of each period reported. The figures do not
include sales charges or program fees; results would be lower if sales
charges or program fees were included. Total investment return for period of
less than one year has not been annualized.
38
<PAGE>
<TABLE>
<CAPTION>
CLASS C CLASS Y
--------------------------------------------------------------------------------------- -----------------------------------
FOR THE FOR THE
SIX FOR THE SIX FOR THE
MONTHS FIVE MONTHS FIVE FOR THE
ENDED MONTHS ENDED MONTHS PERIOD
FEBRUARY ENDED FEBRUARY ENDED MARCH 17,
28, AUGUST FOR THE YEARS ENDED MARCH 31, 28, AUGUST 1998+ TO
1999 31, ------------------------------------------------------------- 1999 31, MARCH 31,
(UNAUDITED) 1998# 1998 1997 1996 1995 1994 (UNAUDITED) 1998# 1998
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 7.26 $ 14.07 $ 12.87 $ 15.14 $ 12.54 $ 11.50 $ 10.47 $ 7.97 $ 15.00 $ 14.90
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
(0.07) (0.06) (0.26) (0.29) (0.27) (0.19) (0.10) (0.01) (0.01) 0.00
2.13 (2.90) 4.92 0.34 3.62 1.27 1.13 2.32 (3.17) 0.10
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
2.06 (2.96) 4.66 0.05 3.35 1.08 1.03 2.31 (3.18) 0.10
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
(0.66) (3.85) (3.46) (2.32) (0.75) (0.04) -- (0.66) (3.85) --
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
$ 8.66 $ 7.26 $ 14.07 $ 12.87 $ 15.14 $ 12.54 $ 11.50 $ 9.62 $ 7.97 $ 15.00
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
28.65% (27.58)% 40.46% (0.91)% 27.16% 9.45% 9.84% 29.26% (27.31)% 0.67%
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
$ 17,407 $ 16,875 $ 27,814 $ 24,810 $ 27,601 $ 24,993 $ 29,884 $ 202 $ 65 $ 35
2.40%* 2.28%* 2.29% 2.37% 2.36% 2.35% 2.28% 1.38%* 1.23%* 1.22%*
(1.50)%* (1.42)%* (1.94)% (1.97)% (1.89)% (1.57)% (1.58)% (0.48)%* (0.29)%* 0.00%*
41% 80% 64% 56% 57% 42% 60% 41% 80% 64%
</TABLE>
39
<PAGE>
PAINEWEBBER GROWTH FUND
FINANCIAL HIGHLIGHTS
Selected data for a 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,
1999 ---------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
-------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $ 20.08 $ 25.94 $ 24.37 $ 22.27 $ 20.04 $ 20.60
-------------- --------- --------- --------- --------- ---------
Net investment income (loss).......... (0.05) (0.09) (0.08)+ (0.12) 0.01 --
Net realized and unrealized gains from
investments......................... 7.72 1.01 3.76+ 4.06 2.25 0.51
-------------- --------- --------- --------- --------- ---------
Total increase from investment
operations.......................... 7.67 0.92 3.68 3.94 2.26 0.51
-------------- --------- --------- --------- --------- ---------
Distributions from net realized gains
from investment transactions........ (2.01) (6.78) (2.11) (1.84) (0.03) (1.07)
-------------- --------- --------- --------- --------- ---------
Net asset value, end of period........ $ 25.74 $ 20.08 $ 25.94 $ 24.37 $ 22.27 $ 20.04
-------------- --------- --------- --------- --------- ---------
-------------- --------- --------- --------- --------- ---------
Total investment return (1)........... 38.98% 3.37% 15.85% 18.43% 11.28% 2.33%
-------------- --------- --------- --------- --------- ---------
-------------- --------- --------- --------- --------- ---------
Ratios/Supplemental data:
Net assets, end of period (000's)..... $ 276,729 $ 202,253 $ 201,725 $ 203,882 $ 183,958 $ 141,342
Expenses to average net assets........ 1.18%* 1.19% 1.27% 1.28% 1.28%(2) 1.21%
Net investment income (loss) to
average net assets.................. (0.47)%* (0.39)% (0.32)% (0.49)% 0.19%(2) 0.06%
Portfolio turnover.................... 22% 52% 86% 60% 36% 24%
</TABLE>
- -----------------
* Annualized.
(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 for periods of less than one
year has not been annualized.
(2) These ratios include non-recurring acquisition expenses of 0.06%.
+ Calculated using the average shares outstanding for the year.
40
<PAGE>
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31,
1999 -------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
-------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $ 18.44 $ 24.51 $ 23.30 $ 21.53 $ 19.53 $ 20.25
-------------- --------- --------- --------- --------- ---------
Net investment income (loss).......... (0.14) (0.30) (0.26)+ (0.39) (0.02) (0.06)
Net realized and unrealized gains from
investments......................... 7.06 1.01 3.58+ 4.00 2.05 0.41
-------------- --------- --------- --------- --------- ---------
Total increase from investment
operations.......................... 6.92 0.71 3.32 3.61 2.03 0.35
-------------- --------- --------- --------- --------- ---------
Distributions from net realized gains
from investment transactions........ (2.01) (6.78) (2.11) (1.84) (0.03) (1.07)
-------------- --------- --------- --------- --------- ---------
Net asset value, end of period........ $ 23.35 $ 18.44 $ 24.51 $ 23.30 $ 21.53 $ 19.53
-------------- --------- --------- --------- --------- ---------
-------------- --------- --------- --------- --------- ---------
Total investment return (1)........... 38.36% 2.55% 14.98% 17.48% 10.40% 1.55%
-------------- --------- --------- --------- --------- ---------
-------------- --------- --------- --------- --------- ---------
Ratios/Supplemental data:
Net assets, end of period (000's)..... $ 89,406 $ 74,094 $ 115,529 $ 140,551 $ 152,357 $ 97,272
Expenses to average net assets........ 1.99%* 1.99% 2.06% 2.06% 2.06%(2) 2.00%
Net investment income (loss) to
average net assets.................. (1.28)%* (1.18)% (1.12)% (1.27)% (0.60)%(2) (0.66)%
Portfolio turnover.................... 22% 52% 86% 60% 36% 24%
<CAPTION>
CLASS C
-----------------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
FEBRUARY 28, FOR THE YEARS ENDED AUGUST 31,
1999 -------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $ 18.65 $ 24.71 $ 23.48 $ 21.68 $ 19.67 $ 20.38
------------ --------- --------- --------- --------- ---------
Net investment income (loss).......... (0.13) (0.27) (0.27)+ (0.34) (0.10) (0.08)
Net realized and unrealized gains from
investments......................... 7.13 0.99 3.61+ 3.98 2.14 0.44
------------ --------- --------- --------- --------- ---------
Total increase from investment
operations.......................... 7.00 0.72 3.34 3.64 2.04 0.36
------------ --------- --------- --------- --------- ---------
Distributions from net realized gains
from investment transactions........ (2.01) (6.78) (2.11) (1.84) (0.03) (1.07)
------------ --------- --------- --------- --------- ---------
Net asset value, end of period........ $ 23.64 $ 18.65 $ 24.71 $ 23.48 $ 21.68 $ 19.67
------------ --------- --------- --------- --------- ---------
------------ --------- --------- --------- --------- ---------
Total investment return (1)........... 38.35% 2.59% 14.95% 17.50% 10.37% 1.59%
------------ --------- --------- --------- --------- ---------
------------ --------- --------- --------- --------- ---------
Ratios/Supplemental data:
Net assets, end of period (000's)..... $ 31,821 $ 21,714 $ 24,760 $ 29,923 $ 30,608 $ 28,561
Expenses to average net assets........ 1.98%* 1.99% 2.07% 2.07% 2.05%(2) 1.98%
Net investment income (loss) to
average net assets.................. (1.28)%* (1.19)% (1.13)% (1.28)% (0.57)%(2) (0.65)%
Portfolio turnover.................... 22% 52% 86% 60% 36% 24%
</TABLE>
- -----------------
* Annualized.
(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 for periods of less than one
year has not been annualized.
(2) These ratios include non-recurring acquisition expenses of 0.06%.
+ Calculated using the average shares outstanding for the year.
41
<PAGE>
PAINEWEBBER GROWTH FUND
FINANCIAL HIGHLIGHTS
Selected data for a beneficial interest outstanding throughout each period is
presented below:
<TABLE>
<CAPTION>
CLASS Y
-------------------------------------------------------------------------------
FOR THE
SIX MONTHS
ENDED
FEBRUARY FOR THE YEARS ENDED AUGUST 31,
28, 1999 ------------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $20.67 $ 26.46 $ 24.74 $ 22.53 $ 20.22 $ 20.71
---------- ---------- --------- --------- --------- ---------
Net investment income (loss)............ (0.02) (0.03) (0.01)+ (0.02) 0.24 0.03
Net realized and unrealized gains from
investments............................ 7.96 1.02 3.84+ 4.07 2.10 0.55
---------- ---------- --------- --------- --------- ---------
Total increase from investment
operations............................. 7.94 0.99 3.83 4.05 2.34 0.58
---------- ---------- --------- --------- --------- ---------
Distributions from net realized gain
from investment transactions........... (2.01) (6.78) (2.11) (1.84) (0.03) (1.07)
---------- ---------- --------- --------- --------- ---------
Net asset value, end of period.......... $26.60 $ 20.67 $ 26.46 $ 24.74 $ 22.53 $ 20.22
---------- ---------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- ---------
Total investment return (1)............. 39.18% 3.61% 16.24% 18.72% 11.58% 2.67%
---------- ---------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- ---------
Ratios/Supplemental data:
Net assets, end of period (000's)....... $31,522 $21,440 $ 20,281 $ 21,409 $ 20,948 $ 30,521
Expenses to average net assets.......... 0.89%* 0.91% 1.00% 1.02% 0.97%(2) 0.94%
Net investment income (loss) to average
net assets............................. (0.18)%* (0.12)% (0.05)% (0.23)% 0.53%(2) 0.40%
Portfolio turnover...................... 22% 52% 86% 60% 36% 24%
</TABLE>
- -----------------
* Annualized.
+ Calculated using the average shares outstanding for the year.
(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, if any, at net asset value on the payable dates, and a sale at
net asset value on the last day of each period reported. The figures do not
include program fees; results would be lower if program fees were included.
Total investment return for period of less than one year has not been
annualized.
(2) These ratios include non-recurring acquisition expenses of 0.05%.
42
<PAGE>
TRUSTEES
E. Garrett Bewkes, Jr.
CHAIRMAN
Margo N. Alexander
Richard Q. Armstrong
Richard R. Burt
Mary C. Farrell
Meyer Feldberg
George W. Gowen
Frederic V. Malek
Carl W. Schafer
PRINCIPAL OFFICERS
Margo N. Alexander
PRESIDENT
Victoria E. Schonfeld
VICE PRESIDENT
Dianne E. O'Donnell
VICE PRESIDENT AND SECRETARY
Paul H. Schubert
VICE PRESIDENT AND TREASURER
Mark A. Tincher
VICE PRESIDENT
Ellen R. Harris
VICE PRESIDENT
INVESTMENT ADVISER,
ADMINISTRATOR AND DISTRIBUTOR
Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019
THIS REPORT IS NOT TO BE USED IN CONNECTION WITH THE OFFERING OF SHARES OF
THE FUNDS UNLESS ACCOMPANIED OR PRECEDED BY AN EFFECTIVE PROSPECTUS.
THE FINANCIAL INFORMATION INCLUDED HEREIN IS TAKEN FROM THE RECORDS OF THE
FUNDS WITHOUT EXAMINATION BY INDEPENDENT AUDITORS WHO DO NOT EXPRESS AN
OPINION THEREON.
A PROSPECTUS CONTAINING MORE COMPLETE INFORMATION FOR ANY OF THE
FUNDS LISTED ON THE BACK COVER CAN BE OBTAINED FROM A PAINEWEBBER FINANCIAL
ADVISOR OR CORRESPONDENT FIRM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
<PAGE>
PaineWebber offers a family of 27 funds which
encompass a diversified range of investment goals.
BOND FUNDS
- - High Income Fund
- - Investment Grade Income Fund
- - Low Duration U.S. Government Income Fund
- - Strategic Income Fund
- - U.S. Government Income Fund
TAX-FREE BOND FUNDS
- - California Tax-Free Income Fund
- - Municipal High Income Fund
- - National Tax-Free Income Fund
- - New York Tax-Free Income Fund
STOCK FUNDS
- - Financial Services Growth Fund
- - Growth Fund
- - Growth and Income Fund
- - Mid Cap Fund
- - Small Cap Fund
- - S&P 500 Index Fund
- - Tax-Managed Equity Fund
- - Utility Income Fund
ASSET ALLOCATION FUNDS
- - Balanced Fund
- - Tactical Allocation Fund
GLOBAL FUNDS
- - Asia Pacific Growth Fund
- - Emerging Markets Equity Fund
- - Global Equity Fund
- - Global Income Fund
MITCHELL HUTCHINS PORTFOLIOS
- - Aggressive Portfolio
- - Moderate Portfolio
- - Conservative Portfolio
PAINEWEBBER MONEY MARKET FUND
[LOGO]
- -C-1999 PaineWebber Incorporated
Member SIPC
[LOGO]
SEMIANNUAL REPORT
GROWTH AND
INCOME FUND
MID CAP FUND
GROWTH FUND
FEBRUARY 28, 1999
