<PAGE>
PaineWebber Growth Fund
PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund
PaineWebber Small Cap Fund
------------------------------------------
PROSPECTUS
DECEMBER 1, 1999
------------------------------------------
This prospectus offers shares in four of PaineWebber's stock funds. Each fund
offers four classes of shares, Classes A, B, C and Y. Each class has different
sales charges and ongoing expenses. You can choose the class that is best for
you based on how much you plan to invest and how long you plan to hold your fund
shares. Class Y shares are available only to certain types of investors.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved any fund's shares or determined whether this prospectus
is complete or accurate. To state otherwise is a crime.
<PAGE>
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------------------------------
PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
Contents
THE FUNDS
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
What every investor 3 PaineWebber Growth Fund
should know about 6 PaineWebber Growth and Income Fund
the funds 9 PaineWebber Mid Cap Fund
12 PaineWebber Small Cap Fund
15 More About Risks and Investment Strategies
YOUR INVESTMENT
- ----------------------------------------------------------------------------------------------------------------
Information for 17 Managing Your Fund Account
managing your fund -- Flexible Pricing
account -- Buying Shares
-- Selling Shares
-- Exchanging Shares
-- Pricing and Valuation
ADDITIONAL INFORMATION
- ----------------------------------------------------------------------------------------------------------------
Additional important 23 Management
information about 25 Dividends and Taxes
the funds 26 Financial Highlights
- ----------------------------------------------------------------------------------------------------------------
Where to learn more Back Cover
about PaineWebber
mutual funds
</TABLE>
The funds are not complete or
balanced investment programs.
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Prospectus Page 2
<PAGE>
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------------------------------
PaineWebber Growth Fund
PaineWebber Growth Fund
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
- --------------------------------------------------------------------------------
FUND OBJECTIVE
Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
The fund invests primarily in common stocks that Mitchell Hutchins Asset
Management Inc., its investment adviser, believes have substantial potential for
capital growth.
The fund generally invests in larger capitalization companies but has the
flexibility to invest in companies having any market capitalization. Some of the
fund's investments may be in U.S. dollar denominated securities of foreign
issuers and the fund also may invest in bonds. The fund may (but is not required
to) use options, futures contracts and other derivatives as part of its
investment strategy or to help manage portfolio risks.
In buying and selling stocks for the fund, Mitchell Hutchins uses its own
Multi-Factor Growth Model to identify companies that appear to have potential
for above-average growth in earnings, cash flow and/or book value. The model
ranks companies based on 'growth' factors such as earnings momentum, stock price
movement, economic sensitivity and industry performance forecasts. Mitchell
Hutchins then applies fundamental analysis to select specific stocks from among
those identified by the model. When investing in smaller companies, Mitchell
Hutchins also considers the trading volume of the company's stock.
PRINCIPAL RISKS
An investment in the fund is not guaranteed; you may lose money by investing in
the fund.
Common stocks, which are the fund's main type of investment, generally fluctuate
in value more than other investments. The fund could lose all of its investment
in a company's stock. The value of the fund's foreign investments may fall due
to adverse political, social and economic developments abroad.
More information about these and other risks of an investment in the fund is
provided below in 'More About Risks and Investment Strategies.' In particular,
see the following headings:
Equity Risk
Foreign Securities Risk
Derivatives Risk
Information on the fund's investment strategies and recent holdings can be found
in its current annual/semi-annual reports (see back cover for information on
ordering those reports).
---------------
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Prospectus Page 3
<PAGE>
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------------------------------
PaineWebber Growth Fund
PERFORMANCE
- --------------------------------------------------------------------------------
RISK/RETURN BAR CHART AND TABLE
The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.
The bar chart shows how the fund's performance has varied from year to year. The
chart shows Class A shares because they have the longest performance history of
any class of fund shares. The chart does not reflect the effect of sales
charges; if it did, the total returns shown would be lower.
The table that follows the chart shows the average annual returns over several
time periods for each class of the fund's shares. That table does reflect fund
sales charges. The table compares fund returns to returns on a broad-based
market index that is unmanaged and that, therefore, does not include any sales
charges or expenses.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
TOTAL RETURN ON CLASS A SHARES
<TABLE>
<CAPTION>
[GRAPH]
Calendar
Years Percentages
-------- -----------
<S> <C>
1989 34.27%
1990 -7.72%
1991 47.61%
1992 4.15%
1993 19.17%
1994 -10.90%
1995 33.02%
1996 14.11%
1997 17.01%
1998 31.95%
</TABLE>
Total return January 1 to September 30, 1999 -- 5.07%
Best quarter during years shown: 4th quarter, 1998 -- 29.99%
Worst quarter during years shown: 3rd quarter, 1990 -- (19.03)%
AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1998
<TABLE>
<CAPTION>
CLASS A CLASS B* CLASS C CLASS Y S&P 500
CLASS (3/18/85) (7/1/91) (7/2/92) (8/26/91) INDEX
(INCEPTION DATE) --------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
One Year.......................................... 26.01% 25.76% 29.84% 32.28% 28.60%
Five Years........................................ 14.80% 14.71% 14.95% 16.19% 24.05%
Ten Years......................................... 16.30% N/A N/A N/A 19.19%
Life of Class..................................... 15.44% 15.91% 16.33% 15.92% **
</TABLE>
- ------------
* Assumes conversion of Class B shares to Class A after six years.
** Average annual total returns for the S&P 500 Index for the life of each class
were as follows:
Class A -- 18.37%; Class B -- 20.19%; Class C -- 21.27%; Class Y -- 19.57%.
---------------
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Prospectus Page 4
<PAGE>
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------------------------------
PaineWebber Growth Fund
EXPENSES AND FEE TABLES
- --------------------------------------------------------------------------------
FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price)................................ 4.5% None None None
Maximum Contingent Deferred Sales Charge (Load) (CDSC)
(as a % of offering price)................................ None 5% 1% None
Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees. 0.75% 0.75% 0.75% 0.75%
Distribution and/or Service (12b-1) Fees.................... 0.25 1.00 1.00 0.00
Other Expenses.............................................. 0.16 0.21 0.19 0.11
---- ---- ---- ----
Total Annual Fund Operating Expenses........................ 1.16% 1.96% 1.94% 0.86%
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods unless
otherwise stated. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A................................................. $563 $802 $1,060 $1,796
Class B (assuming sale of all shares at end of
period)............................................... 699 915 1,257 1,888
Class B (assuming no sale of shares).................... 199 615 1,057 1,888
Class C (assuming sale of all shares at end of
period)............................................... 297 609 1,047 2,264
Class C (assuming no sale of shares).................... 197 609 1,047 2,264
Class Y................................................. 88 274 477 1,061
</TABLE>
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Prospectus Page 5
<PAGE>
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------------------------------
PaineWebber Growth and Income Fund
PaineWebber Growth and Income Fund
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
- --------------------------------------------------------------------------------
FUND OBJECTIVE
Current income and capital growth.
PRINCIPAL INVESTMENT STRATEGIES
The fund invests in a combination of securities to obtain both growth and
income. To obtain growth, the fund invests in stocks that Mitchell Hutchins
Asset Management Inc., its investment adviser, believes have substantial
potential for capital growth. To obtain current income, the fund invests in
dividend paying stocks and, to a lesser extent, convertible bonds and money
market instruments.
The fund generally invests in large capitalization companies. Some of the fund's
investments may be in U.S. dollar denominated securities of foreign issuers. The
fund may (but is not required to) use options, futures contracts and other
derivatives as part of its investment strategy or to help manage portfolio
risks.
In buying and selling stocks for the fund, Mitchell Hutchins uses its own Factor
Valuation Model to identify stocks with growth potential that appear to be
undervalued. The model ranks companies based on 'value' factors such as
dividends, cash flows, earnings and book values, as well as on 'growth' factors,
such as earnings and price momentum and industry performance forecasts. Mitchell
Hutchins then applies fundamental analysis to select specific stocks from among
those identified by the model.
PRINCIPAL RISKS
An investment in the fund is not guaranteed; you may lose money by investing in
the fund.
Common stocks, which are the fund's main type of investment, generally fluctuate
in value more than other investments. The fund could lose all of its investment
in a company's stock. The value of the fund's foreign investments may fall due
to adverse political, social and economic developments abroad.
More information about these and other risks of an investment in the fund is
provided below in 'More About Risks and Investment Strategies.' In particular,
see the following headings:
Equity Risk
Foreign Securities Risk
Derivatives Risk
Information on the fund's investment strategies and recent holdings can be found
in its current annual/semi-annual reports (see back cover for information on
ordering those reports).
---------------
- --------------------------------------------------------------------------------
Prospectus Page 6
<PAGE>
- --------------------------------------------------------------------------------
------------------------------
PaineWebber Growth and Income Fund
PERFORMANCE
- --------------------------------------------------------------------------------
RISK/RETURN BAR CHART AND TABLE
The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.
The bar chart shows how the fund's performance has varied from year to year. The
chart shows Class A shares because they have the longest performance history of
any class of fund shares. The chart does not reflect the effect of sales
charges; if it did, the total returns shown would be lower.
The table that follows the chart shows the average annual returns over several
time periods for each class of the fund's shares. That table does reflect fund
sales charges. The table compares fund returns to returns on a broad-based
market index that is unmanaged and that, therefore, does not include any sales
charges or expenses.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
TOTAL RETURN ON CLASS A SHARES
<TABLE>
<CAPTION>
[GRAPH]
Calendar
Years Percentages
-------- -----------
<S> <C>
1989 24.59%
1990 -1.01%
1991 35.34%
1992 3.90%
1993 -2.59%
1994 -5.87%
1995 33.21%
1996 23.46%
1997 31.86%
1998 17.97%
</TABLE>
Total return January 1 to September 30, 1999 -- (3.54)%
Best quarter during years shown: 4th quarter, 1998 -- 20.96%
Worst quarter during years shown: 3rd quarter, 1998 -- (13.95)%
AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1998
<TABLE>
<CAPTION>
CLASS A CLASS B* CLASS C CLASS Y S&P 500
CLASS (12/20/83) (7/1/91) (7/2/92) (2/12/92) INDEX
(INCEPTION DATE) ---------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
One Year.......................................... 12.67% 12.02% 16.06% 18.28% 28.60%
Five Years........................................ 18.13% 18.07% 18.29% 19.55% 24.05%
Ten Years......................................... 14.54% N/A N/A N/A 19.19%
Life of Class..................................... 13.75% 14.43% 14.80% 14.28% **
</TABLE>
- ------------
* Assumes conversion of Class B shares to Class A after six years.
** Average annual total returns for the S&P 500 Index for the life of each class
were as follows:
Class A -- 17.88%; Class B -- 20.19%; Class C -- 21.27%; Class Y -- 20.07%.
---------------
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Prospectus Page 7
<PAGE>
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------------------------------
PaineWebber Growth and Income Fund
EXPENSES AND FEE TABLES
- --------------------------------------------------------------------------------
FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price)................................ 4.5% None None None
Maximum Contingent Deferred Sales Charge (Load) (CDSC)
(as a % of offering price)................................ None 5% 1% None
Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees. 0.70% 0.70% 0.70% 0.70%
Distribution and/or Service (12b-1) Fees.................... 0.25 1.00 1.00 0.00
Other Expenses.............................................. 0.13 0.16 0.15 0.09
---- ---- ---- ----
Total Annual Fund Operating Expenses........................ 1.08% 1.86% 1.85% 0.79%
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods unless
otherwise stated. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A................................................. $555 $778 $1,019 $1,708
Class B (assuming sale of all shares at end of
period)............................................... 689 885 1,206 1,789
Class B (assuming no sale of shares).................... 189 585 1,006 1,789
Class C (assuming sale of all shares at end of
period)............................................... 288 582 1,001 2,169
Class C (assuming no sale of shares).................... 188 582 1,001 2,169
Class Y................................................. 81 252 439 978
</TABLE>
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Prospectus Page 8
<PAGE>
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------------------------------
PaineWebber Mid Cap Fund
PaineWebber Mid Cap Fund
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
- --------------------------------------------------------------------------------
FUND OBJECTIVE
Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
The fund invests primarily in common stocks of medium capitalization ('mid cap')
companies that Mitchell Hutchins Asset Management Inc., its investment adviser,
believes have substantial potential for capital growth. The fund considers
companies with market capitalizations of between $750 million and $8 billion to
be mid cap.
The fund also invests, to a lesser extent, in stocks of larger and smaller
companies and in bonds and money market instruments. Some of the fund's
investments may be in U.S. dollar denominated securities of foreign issuers. The
fund may (but is not required to) use options, futures contracts and other
derivatives as part of its investment strategy or to help manage portfolio
risks.
In buying and selling stocks for the fund, Mitchell Hutchins uses its own Factor
Valuation Model to identify stocks with growth potential that appear to be
undervalued. The model ranks companies based on 'value' factors such as
dividends, cash flows, earnings and book values, as well as on 'growth' factors,
such as earnings and price momentum and industry performance forecasts. Mitchell
Hutchins then applies fundamental analysis to select specific stocks from among
those mid cap companies identified by the model.
PRINCIPAL RISKS
An investment in the fund is not guaranteed; you may lose money by investing in
the fund.
Common stocks, which are the fund's main type of investment, generally fluctuate
in value more than other investments. This risk is greater for the common stocks
of mid cap companies because they generally are more vulnerable than larger
companies to adverse business or economic developments, and they may have more
limited resources. The fund could lose all of its investment in a company's
stock. The value of the fund's foreign investments may fall due to adverse
political, social and economic developments abroad.
More information about these and other risks of an investment in the fund is
provided below in 'More About Risks and Investment Strategies.' In particular,
see the following headings:
Equity Risk
Limited Capitalization Risk
Foreign Securities Risk
Derivatives Risk
Information on the fund's investment strategies and recent holdings can be found
in its current annual/semi-annual reports (see back cover for information on
ordering those reports).
---------------
- --------------------------------------------------------------------------------
Prospectus Page 9
<PAGE>
- --------------------------------------------------------------------------------
------------------------------
PaineWebber Mid Cap Fund
PERFORMANCE
- --------------------------------------------------------------------------------
RISK/RETURN BAR CHART AND TABLE
The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.
The bar chart shows how the fund's performance has varied from year to year. The
chart shows Class A shares because they have as long a performance history as
any class of fund shares. The chart does not reflect the effect of sales
charges; if it did, the total returns shown would be lower.
The table that follows the chart shows the average annual returns over several
time periods for each class of the fund's shares. That table does reflect fund
sales charges. The table compares fund returns to returns on a broad-based
market index of mid-cap companies that is unmanaged and that, therefore, does
not include any sales charges or expenses.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
TOTAL RETURN ON CLASS A SHARES (1993 IS THE FUND'S FIRST FULL CALENDAR YEAR OF
OPERATIONS)
<TABLE>
<CAPTION>
[GRAPH]
Calendar
Years Percentages
-------- -----------
<S> <C>
1989 N/A
1990 N/A
1991 N/A
1992 N/A
1993 16.10%
1994 -1.36%
1995 28.79%
1996 17.87%
1997 15.14%
1998 11.81%
</TABLE>
Total return January 1 to September 30, 1999 -- 4.55%
Best quarter during years shown: 4th quarter, 1998 -- 27.43%
Worst quarter during years shown: 3rd quarter, 1998 -- (18.10)%
AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1998
<TABLE>
<CAPTION>
CLASS A CLASS B* CLASS C CLASS Y S&P MIDCAP 400
CLASS (4/7/92) (4/7/92) (7/2/92) (3/17/98) INDEX
(INCEPTION DATE) -------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
One Year.................................... 6.76% 7.06% 10.13% N/A 18.30%
Five Years.................................. 12.99% 12.95% 13.16% N/A 18.70%
Life of Class............................... 13.52% 13.44% 15.24% 1.77% **
</TABLE>
- ------------
* Assumes conversion of Class B shares to Class A after six years.
** Average annual total returns for the S&P MidCap 400 Index for the life of
each class were as follows: Class A -- 17.90%; Class B -- 17.90%;
Class C -- 19.23%; Class Y -- 7.30%.
---------------
- --------------------------------------------------------------------------------
Prospectus Page 10
<PAGE>
- --------------------------------------------------------------------------------
------------------------------
PaineWebber Mid Cap Fund
EXPENSES AND FEE TABLES
- --------------------------------------------------------------------------------
FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price)................................ 4.5% None None None
Maximum Contingent Deferred Sales Charge (Load) (CDSC)
(as a % of offering price)................................ None 5% 1% None
Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees. 1.00% 1.00% 1.00% 1.00%
Distribution and/or Service (12b-1) Fees.................... 0.25 1.00 1.00 0.00
Other Expenses.............................................. 0.35 0.55 0.43 0.36
---- ---- ---- ----
Total Annual Fund Operating Expenses........................ 1.60% 2.55% 2.43% 1.36%
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods unless
otherwise stated. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A................................................ $605 $ 932 $1,282 $2,265
Class B (assuming sale of all shares at end of
period).............................................. 758 1,094 1,555 2,439
Class B (assuming no sale of shares)................... 258 794 1,355 2,439
Class C (assuming sale of all shares at end of
period).............................................. 346 758 1,296 2,766
Class C (assuming no sale of shares)................... 246 758 1,296 2,766
Class Y................................................ 138 431 745 1,635
</TABLE>
---------------
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Prospectus Page 11
<PAGE>
- --------------------------------------------------------------------------------
------------------------------
PaineWebber Small Cap Fund
PaineWebber Small Cap Fund
INVESTMENT OBJECTIVE, STRATEGIES AND RISKS
- --------------------------------------------------------------------------------
FUND OBJECTIVE
Long-term capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
The fund invests primarily in common stocks of small capitalization ('small
cap') companies that Mitchell Hutchins Asset Management Inc., its investment
adviser, believes have substantial potential for capital growth. The fund
considers companies with market capitalizations of up to $1.5 billion to be
small cap.
The fund also invests, to a lesser extent, in stocks of larger companies and in
bonds and money market instruments. Some of the fund's investments may be in
U.S. dollar denominated securities of foreign issuers. The fund may (but is not
required to) use options, futures contracts and other derivatives as part of its
investment strategy or to help manage portfolio risks.
In buying and selling stocks for the fund, Mitchell Hutchins uses its own Factor
Valuation Model to identify stocks with growth potential that appear to be
undervalued. The model ranks companies based on 'value' factors such as
dividends, cash flows, earnings and book values, as well as on 'growth' factors,
such as earnings and price momentum and industry performance forecasts. Mitchell
Hutchins then applies fundamental analysis to select specific stocks from among
those small cap companies identified by the model.
PRINCIPAL RISKS
An investment in the fund is not guaranteed; you may lose money by investing in
the fund.
Common stocks, which are the fund's main type of investment, generally fluctuate
in value more than other investments. This risk is greater for the common stocks
of small cap companies because they generally are more vulnerable than large or
mid cap companies to adverse business or economic developments, and they may
have more limited resources. The fund could lose all of its investment in a
company's stock. The value of the fund's foreign investments may fall due to
adverse political, social and economic developments abroad.
More information about these and other risks of an investment in the fund is
provided below in 'More About Risks and Investment Strategies.' In particular,
see the following headings:
Equity Risk
Limited Capitalization Risk
Foreign Securities Risk
Derivatives Risk
Information on the fund's investment strategies and recent holdings can be found
in its current annual/semi-annual reports (see back cover for information on
ordering those reports).
---------------
- --------------------------------------------------------------------------------
Prospectus Page 12
<PAGE>
- --------------------------------------------------------------------------------
------------------------------
PaineWebber Small Cap Fund
PERFORMANCE
- --------------------------------------------------------------------------------
RISK/RETURN BAR CHART AND TABLE
The following bar chart and table provide information about the fund's
performance and thus give some indication of the risks of an investment in the
fund.
The bar chart shows how the fund's performance has varied from year to year. The
chart shows Class A shares because they have as long a performance history as
any class of fund shares. The chart does not reflect the effect of sales
charges; if it did, the total returns shown would be lower.
The table that follows the chart shows the average annual returns over several
time periods for each class of the fund's shares. That table does reflect fund
sales charges. The table compares fund returns to returns on two broad based
market indices of small cap companies that are unmanaged and, therefore, do not
include any sales charges or expenses.
The fund's past performance does not necessarily indicate how the fund will
perform in the future.
TOTAL RETURN ON CLASS A SHARES (1994 IS THE FUND'S FIRST FULL CALENDAR YEAR OF
OPERATIONS)
<TABLE>
<CAPTION>
[GRAPH]
Calendar
Years Percentages
-------- -----------
<S> <C>
1989 N/A
1990 N/A
1991 N/A
1992 N/A
1993 N/A
1994 -1.20%
1995 16.81%
1996 17.45%
1997 27.38%
1998 -6.75%
</TABLE>
Total return January 1 to September 30, 1999 -- (11.69)%
Best quarter during years shown: 3rd quarter, 1997 -- 21.53%
Worst quarter during years shown: 3rd quarter, 1998 -- (26.69)%
AVERAGE ANNUAL TOTAL RETURNS
as of December 31, 1998
<TABLE>
<CAPTION>
RUSSELL 2000
CLASS A CLASS B* CLASS C CLASS Y S&P SMALLCAP 600 [SMALL CAP]
CLASS (2/1/93) (2/1/93) (2/1/93) (7/26/96) INDEX** INDEX***
(INCEPTION DATE) -------- -------- -------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
One Year...................... (10.96)% (11.65)% (8.32)% (6.49)% (1.30)% (2.60)%
Five Years.................... 8.99% 8.86% 9.14% N/A 13.20% 11.90%
Life of Class................. 8.90% 8.79% 8.90% 14.16% ** ***
</TABLE>
- ------------
* Assumes conversion of Class B shares to Class A after six years.
** Average annual total returns for the S&P SmallCap 600 Index for the life of
each class were as follows: Class A -- 13.83%; Class B -- 13.83%; Class
C -- 13.83%; Class Y -- 0.71%.
*** Average annual total returns for the Russell 2000 [Small Cap] Index for the
life of each class were as follows:
Class A -- 12.56%; Class B -- 12.56%; Class C -- 12.56%; Class Y -- 1.06%.
---------------
- --------------------------------------------------------------------------------
Prospectus Page 13
<PAGE>
- --------------------------------------------------------------------------------
------------------------------
PaineWebber Small Cap Fund
EXPENSES AND FEE TABLES
- --------------------------------------------------------------------------------
FEES AND EXPENSES These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a % of offering price)................................ 4.5% None None None
Maximum Contingent Deferred Sales Charge (Load) (CDSC)
(as a % of offering price)................................ None 5% 1% None
Exchange Fee................................................ None None None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from fund assets)
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees. 1.00% 1.00% 1.00% 1.00%
Distribution and/or Service (12b-1) Fees.................... 0.25 1.00 1.00 0.00
Other Expenses.............................................. 0.34 0.43 0.39 0.31
---- ---- ---- ----
Total Annual Fund Operating Expenses........................ 1.59% 2.43% 2.39% 1.31%
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods unless
otherwise stated. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A................................................ $604 $ 929 $1,277 $2,254
Class B (assuming sale of all shares at end of
period).............................................. 746 1,058 1,496 2,368
Class B (assuming no sale of shares)................... 246 758 1,296 2,368
Class C (assuming sale of all shares at end of
period).............................................. 342 745 1,275 2,726
Class C (assuming no sale of shares)................... 242 745 1,275 2,726
Class Y................................................ 133 415 718 1,579
</TABLE>
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Prospectus Page 14
<PAGE>
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------------------------------
PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
MORE ABOUT RISKS
AND INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
PRINCIPAL RISKS
The main risks of investing in one or more of the funds are described below. Not
all of these risks apply to each fund. You can find a list of the main risks
that apply to a particular fund by looking under the 'Investment Objective,
Strategies and Risks' heading for that fund.
Other risks of investing in a fund, along with further detail about some of the
risks described below, are discussed in the funds' Statement of Additional
Information ('SAI'). Information on how you can obtain the SAI is on the back
cover of this prospectus.
Derivatives Risk. The value of 'derivatives' -- so-called because their value
'derives' from the value of an underlying asset, reference rate or index -- may
rise or fall more rapidly than other investments. For some derivatives, it is
possible for a fund to lose more than the amount it invested in the derivative.
Options and futures contracts are examples of derivatives. If a fund uses
derivatives to adjust or 'hedge' the overall risk of its portfolio, it is
possible that the hedge will not succeed. This may happen for various reasons,
including unexpected changes in the value of the derivatives that are not
matched by opposite changes in the value of the rest of the fund's portfolio.
Equity Risk. The prices of common stocks and other equity securities generally
fluctuate more than those of other investments. They reflect changes in the
issuing company's financial condition and changes in the overall market. A fund
may lose a substantial part, or even all, of its investment in a company's
stock.
Foreign Securities Risk. Foreign securities involve risks that normally are not
associated with securities of U.S. issuers. These include risks relating to
political, social and economic developments abroad and differences between U.S.
and foreign regulatory requirements and market practices.
Limited Capitalization Risk. Securities of mid and small cap companies generally
involve greater risk than securities of larger companies because they may be
more vulnerable to adverse business or economic developments. Mid and small cap
companies also may have limited product lines, markets or financial resources,
and they may be dependent on a relatively small management group. Securities of
mid and small cap companies may be less liquid and more volatile than securities
of larger companies or the market averages in general. In addition, small cap
companies may not be well-known to the investing public, may not have
institutional ownership and may have only cyclical, static or moderate growth
prospects. In general, all of these risks are greater for small cap companies
than for mid cap companies.
ADDITIONAL RISKS
Credit and Interest Rate Risks. Each fund is authorized to invest in bonds and
other income-producing securities. These securities are subject to credit risk
and interest rate risk.
Credit risk is the risk that the issuer of a bond will not make principal or
interest payments when they are due. Even if an issuer does not default on a
payment, a bond's value may decline if the market believes that the issuer has
become less able, or less willing, to make payments on time. Even high quality
bonds are subject to some credit risk. However, credit risk is higher for lower
quality bonds. Bonds that are not investment grade involve high credit risk and
are considered speculative. Lower quality bonds may fluctuate in value more than
higher quality bonds and, during periods of market volatility, may be more
difficult to sell at the time and price a fund desires.
The value of bonds can be expected to fall when interest rates rise and to rise
when interest rates fall. Interest rate risk is the risk that interest rates
will rise, so that the value of a fund's investments in bonds will fall. Because
interest rate risk is the primary risk presented by U.S. government and other
very high quality bonds, changes in interest rates may actually have a larger
effect on the value of those bonds than on lower quality bonds.
Year 2000 Risk. The funds could be adversely affected by problems relating to
the inability of
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Prospectus Page 15
<PAGE>
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------------------------------
PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
computer systems used by Mitchell Hutchins and the funds' other service
providers to recognize the year 2000. While year 2000-related computer problems
could have a negative effect on the funds, Mitchell Hutchins is working to avoid
these problems with respect to its own computer systems and to obtain assurances
from service providers that they are taking similar steps.
Similarly, the companies in which the funds invest and trading systems used by
the funds could be adversely affected by this issue. The ability of a company or
trading system to respond successfully to the issue requires both technological
sophistication and diligence, and there can be no assurance that any steps taken
will be sufficient to avoid an adverse impact on the funds.
ADDITIONAL INVESTMENT STRATEGIES
Defensive Positions; Cash Reserves. In order to protect itself from adverse
market conditions, a fund may take a temporary defensive position that is
different from its normal investment strategy. This means that the fund may
temporarily invest a larger-than-normal part, or even all, of its assets in cash
or money market instruments. Since these investments provide relatively low
income, a defensive position may not be consistent with achieving a fund's
investment objective. Each of the funds may invest up to 35% of its total assets
in cash or money market instruments as a cash reserve for liquidity or, except
in the case of Growth Fund, as part of its ordinary investment strategy.
Portfolio Turnover. Each fund may engage in frequent trading to achieve its
investment objective. Frequent trading can result in portfolio turnover of 100%
or more (high portfolio turnover).
Frequent trading may increase the portion of a fund's capital gains that are
realized for tax purposes in any given year. This may increase the fund's
taxable dividends in that year. Frequent trading also may increase the portion
of a fund's realized capital gains that are considered 'short-term' for tax
purposes. Shareholders will pay higher taxes on dividends that represent
short-term gains than they would pay on dividends that represent long-term
gains. Frequent trading also may result in higher fund expenses due to
transaction costs.
The funds do not restrict the frequency of trading in order to limit expenses or
the tax effect that the fund's dividends may have on shareholders.
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Prospectus Page 16
<PAGE>
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PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
MANAGING YOUR FUND ACCOUNT
- --------------------------------------------------------------------------------
FLEXIBLE PRICING
The funds offer four classes of shares -- Class A, Class B, Class C and
Class Y. Each class has different sales charges and ongoing expenses. You can
choose the class that is best for you, based on how much you plan to invest and
how long you plan to hold your fund investment. Class Y shares are only
available to certain types of investors.
Each fund has adopted a plan under rule 12b-1 for its Class A, Class B and Class
C shares that allows it to pay service and (for Class B and Class C shares)
distribution fees for the sale of its shares and services provided to
shareholders. Because the 12b-1 distribution fees for Class B and Class C shares
are paid out of a fund's assets on an ongoing basis, over time they will
increase the cost of your investment and may cost you more than if you paid a
front-end sales charge.
CLASS A SHARES
Class A shares have a front-end sales charge that is included in the offering
price of the Class A shares. This sales charge is not invested in the fund.
Class A shares pay an annual 12b-1 service fee of 0.25% of average net assets,
but they pay no 12b-1 distribution fees. The ongoing expenses for Class A shares
are lower than for Class B and Class C shares.
The Class A sales charges for each fund are described in the following table.
CLASS A SALES CHARGES
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF: DISCOUNT TO SELECTED DEALERS AS
AMOUNT OF INVESTMENT OFFERING PRICE NET AMOUNT INVESTED PERCENTAGE OF OFFERING PRICE
- -------------------- -------------- ------------------- -------------------------------
<S> <C> <C> <C>
Less than $50,000......................... 4.50% 4.71% 4.25%
$50,000 to $99,999........................ 4.00 4.17 3.75
$100,000 to $249,999...................... 3.50 3.63 3.25
$250,000 to $499,999...................... 2.50 2.56 2.25
$500,000 to $999,999...................... 1.75 1.78 1.50
$1,000,000 and over(1).................... None None 1.00(2)
</TABLE>
(1) A contingent deferred sales charge of 1% of the shares' offering price or
the net asset value at the time of sale by the shareholder, whichever is
less, is charged on sales of shares made within one year of the purchase
date. Class A shares representing reinvestment of dividends are not subject
to this 1% charge. Withdrawals in the first year after purchase of up to 12%
of the value of the fund account under the funds' Systematic Withdrawal Plan
are not subject to this charge.
(2) Mitchell Hutchins pays 1% to PaineWebber.
Sales Charge Reductions and Waivers. You may qualify for a lower sales charge if
you already own Class A shares of a PaineWebber mutual fund. You can combine the
value of Class A shares that you own in other PaineWebber funds and the purchase
amount of the Class A shares of the PaineWebber fund that you are buying.
You may also qualify for a lower sales charge if you combine your purchases with
those of:
your spouse, parents or children under age 21;
your Individual Retirement Accounts (IRAs);
certain employee benefit plans, including 401(k) plans;
a company that you control;
a trust that you created;
Uniform Gifts to Minors Act/Uniform Transfers to Minors Act accounts created by
you or by a group of investors for your children; or
accounts with the same adviser.
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Prospectus Page 17
<PAGE>
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PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
You may qualify for a complete waiver of the sales charge if you:
Are an employee of PaineWebber or its affiliates or the spouse, parent or child
under age 21 of a PaineWebber employee;
Buy these shares through a PaineWebber Financial Advisor who was formerly
employed as an investment executive with a competing brokerage firm that was
registered as a broker-dealer with the SEC; and
-- you were the Financial Advisor's client at the competing brokerage firm;
-- within 90 days of buying shares in a fund, you sell shares of one or more
mutual funds that were principally underwritten by the competing
brokerage firm or its affiliates, and you either paid a sales charge to
buy those shares, pay a contingent deferred sales charge when selling
them or held those shares until the contingent deferred sales charge was
waived; and
-- you purchase an amount that does not exceed the total amount of money you
received from the sale of the other mutual fund.
Acquire these shares through the reinvestment of dividends of a PaineWebber unit
investment trust;
Are a 401(k) or 403(b) qualified employee benefit plan with 50 or more eligible
employees in the plan or at least $1 million in assets;
Are a participant in the PaineWebber Members OnlySM Program. For investments
made pursuant to this waiver, Mitchell Hutchins may make payments out of its
own resources to PaineWebber and to participating membership organizations in
a total amount not to exceed 1% of the amount invested; or
Acquire these shares through a PaineWebber InsightOneSM Program brokerage
account.
Note: See the funds' SAI for some other sales charge waivers. If you think you
qualify for any sales charge reductions or waivers, you will need to provide
documentation to PaineWebber or the fund. For more information, you should
contact your PaineWebber Financial Advisor or correspondent firm or call
1-800-647-1568. If you want information on the funds' Systematic Withdrawal
Plan, see the SAI or contact your PaineWebber Financial Advisor or correspondent
firm.
CLASS B SHARES
Class B shares have a contingent deferred sales charge. When you purchase Class
B shares, we invest 100% of your purchase in fund shares. However, you may have
to pay the deferred sales charge when you sell your fund shares, depending on
how long you own the shares.
Class B shares pay an annual 12b-1 distribution fee of 0.75% of average net
assets, as well as an annual 12b-1 service fee of 0.25% of average net assets.
If you hold your Class B shares for six years, they will automatically convert
to Class A shares, which have lower ongoing expenses.
If you sell Class B shares before the end of six years, you will pay a deferred
sales charge. We calculate the deferred sales charge by multiplying the lesser
of the net asset value of the Class B shares at the time of purchase or the net
asset value at the time of sale by the percentage shown below:
<TABLE>
<CAPTION>
PERCENTAGE BY WHICH THE
IF YOU SELL SHARES' NET ASSET
SHARES WITHIN: VALUE IS MULTIPLIED:
-------------- --------------------
<S> <C>
1st year since purchase... 5%
2nd year since purchase... 4
3rd year since purchase... 3
4th year since purchase... 2
5th year since purchase... 2
6th year since purchase... 1
7th year since purchase... None
</TABLE>
We will not impose the deferred sales charge on Class B shares representing
reinvestment of dividends or on withdrawals in any year of up to 12% of the
value of your Class B shares under the Systematic Withdrawal Plan.
To minimize your deferred sales charge, we will assume that you are selling:
First, Class B shares representing reinvested dividends, and
Second, Class B shares that you have owned the longest.
Sales Charge Waivers. You may qualify for a waiver of the deferred sales charge
on a sale of shares if:
You participate in the Systematic Withdrawal Plan;
You are older than 59 1/2 and are selling shares to take a distribution from
certain types of retirement plans;
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Prospectus Page 18
<PAGE>
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- ------------------------------
PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
You receive a tax-free return of an excess IRA contribution;
You receive a tax-qualified retirement plan distribution following retirement;
The shares are sold within one year of your death and you owned the shares
either (1) as the sole shareholder or (2) with your spouse as a joint tenant
with the right of survivorship; or
You are eligible to invest in certain offshore investment pools offered by
PaineWebber, your shares are sold before March 31, 2000, and the proceeds are
used to purchase interests in one or more of those pools.
Note: If you think you qualify for any of these sales charge waivers, you will
need to provide documentation to PaineWebber or the fund. For more information,
you should contact your PaineWebber Financial Advisor or correspondent firm or
call 1-800-647-1568. If you want information on the Systematic Withdrawal Plan,
see the SAI or contact your PaineWebber Financial Advisor or correspondent firm.
CLASS C SHARES
Class C shares have a level load sales charge in the form of ongoing 12b-1
distribution fees. When you purchase Class C shares, we will invest 100% of your
purchase in fund shares.
Class C shares pay an annual 12b-1 distribution fee of 0.75% of average net
assets, as well as an annual 12b-1 service fee of 0.25% of average net assets.
Class C shares do not convert to another class of shares. This means that you
will pay the 12b-1 fees for as long as you own your shares.
Class C shares also have a contingent deferred sales charge. You may have to pay
the deferred sales charge if you sell your shares within one year of the date
you purchased them. We calculate the deferred sales charge on sales of Class C
shares by multiplying 1.00% by the lesser of the net asset value of the Class C
shares at the time of purchase or the net asset value at the time of sale. We
will not impose the deferred sales charge on Class C shares representing
reinvestment of dividends or on withdrawals in the first year after purchase, of
up to 12% of the value of your Class C shares under the Systematic Withdrawal
Plan.
You may be eligible to sell your shares without paying a contingent deferred
sales charge if you:
Are a 401(k) or 403(b) qualified employee benefit plan with fewer than 100
employees or less than $1 million in assets; or
Are eligible to invest in certain offshore investment pools offered by
PaineWebber, your shares are sold before March 31, 2000, and the proceeds are
used to purchase interests in one or more of those pools.
Note: If you think you qualify for any of these sales charge waivers, you will
need to provide documentation to PaineWebber or the fund. For more information,
you should contact your PaineWebber Financial Advisor or correspondent firm or
call 1-800-647-1568. If you want information on the funds' Systematic Withdrawal
Plan, see the SAI or contact your PaineWebber Financial Advisor or correspondent
firm.
CLASS Y SHARES
Class Y shares have no sales charge. Only specific types of investors can
purchase Class Y shares. You may be eligible to purchase Class Y shares if you:
Buy shares through PaineWebber's PACESM Multi Advisor Program;
Buy $10 million or more of PaineWebber fund shares at any one time;
Are a qualified retirement plan with 5,000 or more eligible employees or $50
million in assets; or
Are an investment company advised by PaineWebber or an affiliate of PaineWebber.
The trustee of PaineWebber's 401(k) Plus Plan for its employees is also eligible
to purchase Class Y shares.
Class Y shares do not pay ongoing distribution or service fees or sales charges.
The ongoing expenses for Class Y shares are the lowest for all the classes.
BUYING SHARES
If you are a PaineWebber client, or a client of a PaineWebber correspondent
firm, you can purchase fund shares through your Financial Advisor. Otherwise,
you can invest in the funds through the funds' transfer agent, PFPC Inc. You can
obtain an application by calling 1-800-647-1568. You must
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Prospectus Page 19
<PAGE>
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PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
complete and sign the application and mail it, along with a check, to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
If you wish to invest in other PaineWebber Funds, you can do so by:
Contacting your Financial Advisor (if you have an account at PaineWebber or at a
PaineWebber correspondent firm);
Mailing an application with a check; or
Opening an account by exchanging shares from another PaineWebber fund.
You do not have to complete an application when you make additional investments
in the same fund.
The funds and Mitchell Hutchins reserve the right to reject a purchase order or
suspend the offering of shares.
MINIMUM INVESTMENTS
<TABLE>
<S> <C>
To open an account............... $1,000
To add to an account............. $ 100
</TABLE>
Each fund may waive or reduce these amounts for:
Employees of PaineWebber or its affiliates; or
Participants in certain pension plans, retirement accounts, unaffiliated
investment programs or the funds' automatic investment plans.
Frequent Trading. The interests of a fund's long-term shareholders and its
ability to manage its investments may be adversely affected when its shares are
repeatedly bought and sold in response to short-term market fluctuations -- also
known as 'market timing'. When large dollar amounts are involved, the fund may
have difficulty implementing long-term investment strategies, because it cannot
predict how much cash it will have to invest. Market timing also may force the
fund to sell portfolio securities at disadvantageous times to raise the cash
needed to buy a market timer's fund shares. These factors may hurt the fund's
performance and its shareholders. When Mitchell Hutchins believes frequent
trading would have a disruptive effect on a fund's ability to manage its
investments, Mitchell Hutchins and the fund may reject purchase orders and
exchanges into the fund by any person, group or account that Mitchell Hutchins
believes to be a market timer. A fund may notify the market timer that a
purchase order or an exchange has been rejected after the day the order is
placed.
SELLING SHARES
You can sell your fund shares at any time. If you own more than one class of
shares, you should specify which class you want to sell. If you do not, the fund
will assume that you want to sell shares in the following order: Class A, then
Class C, then Class B and last, Class Y.
If you want to sell shares that you purchased recently, the fund may delay
payment until it verifies that it has received good payment. If you purchased
shares by check, this can take up to 15 days.
If you have an account with PaineWebber or a PaineWebber correspondent firm, you
can sell shares by contacting your Financial Advisor.
If you do not have an account at PaineWebber or a correspondent firm, and you
bought your shares through the transfer agent, you can sell your shares by
writing to the fund's transfer agent. Your letter must include:
Your name and address;
The fund's name;
The fund account number;
The dollar amount or number of shares you want to sell; and
A guarantee of each registered owner's signature. A signature guarantee may be
obtained from a financial institution, broker, dealer or clearing agency that
is a participant in one of the medallion programs recognized by the Securities
Transfer Agents Association. These are: Securities Transfer Agents Medallion
Program (STAMP), Stock Exchanges Medallion Program (SEMP) and the New York
Stock Exchange Medallion Signature Program (MSP). The funds will not accept
signature guarantees that are not a part of these programs.
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Prospectus Page 20
<PAGE>
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PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
Mail the letter to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
If you sell Class A shares and then repurchase Class A shares of the same fund
within 365 days of the sale, you can reinstate your account without paying a
sales charge.
It costs each fund money to maintain shareholder accounts. Therefore, the funds
reserve the right to repurchase all shares in any account that has a net asset
value of less than $500. If a fund elects to do this with your account, it will
notify you that you can increase the amount invested to $500 or more within 60
days. A fund will not repurchase shares in accounts that fall below $500 solely
because of a decrease in the fund's net asset value.
EXCHANGING SHARES
You may exchange Class A, Class B or Class C shares of each fund for shares of
the same class of most other PaineWebber funds. You may not exchange Class Y
shares.
You will not pay either a front-end sales charge or a deferred sales charge when
you exchange shares. However, you may have to pay a deferred sales charge if you
later sell the shares you acquired in the exchange. Each fund will use the date
that you purchased the shares in the first fund to determine whether you must
pay a deferred sales charge when you sell the shares in the acquired fund.
Other PaineWebber funds may have different minimum investment amounts. You may
not be able to exchange your shares if your exchange is not as large as the
minimum investment amount in that other fund.
You may exchange shares of one fund for shares of another fund only after the
first purchase has settled and the first fund has received your payment.
PaineWebber Clients. If you bought your shares through PaineWebber or a
correspondent firm, you may exchange your shares by placing an order with your
PaineWebber Financial Advisor.
Other Investors. If you are not a PaineWebber client, you may exchange your
shares by writing to the fund's transfer agent. You must include:
Your name and address;
The name of the fund whose shares you are selling and the name of the fund whose
shares you want to buy;
Your account number;
How much you are exchanging (by dollar amount or by number of shares to be
sold); and
A guarantee of your signature. (See 'Buying Shares' for information on obtaining
a signature guarantee.)
Mail the letter to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
A fund may modify or terminate the exchange privilege at any time.
PRICING AND VALUATION
The price at which you may buy, sell or exchange fund shares is based on net
asset value per share. Each fund calculates net asset value on days that the New
York Stock Exchange is open. Each fund calculates net asset value separately for
each class as of the close of regular trading on the NYSE (generally,
4:00 p.m., Eastern time). The NYSE normally is not open, and the funds do not
price their shares, on most national holidays and on Good Friday. If trading on
the NYSE is halted for the day before 4:00 p.m., Eastern time, the fund's net
asset value per share will be calculated as of the time trading was halted.
Your price for buying, selling or exchanging shares will be based on the net
asset value that is next calculated after the fund accepts your order. If you
place your order through PaineWebber, your PaineWebber Financial Advisor is
responsible for making sure that your order is promptly sent to the fund.
You should keep in mind that a front-end sales charge may be applied to your
purchase if you buy Class A shares. A deferred sales charge may be applied when
you sell Class B or Class C shares.
Each fund calculates its net asset value based on the current market value for
its portfolio securities. The funds normally obtain market values for their
securities from independent pricing services that use
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Prospectus Page 21
<PAGE>
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PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
reported last sales prices, current market quotations or valuations from
computerized 'matrix' systems that derive values based on comparable securities.
If a market value is not available from an independent pricing source for a
particular security, that security is valued at a fair value determined by or
under the direction of the fund's board. The funds normally use the amortized
cost method to value bonds that will mature in 60 days or less.
Judgment plays a greater role in valuing thinly traded securities, including
many lower-rated bonds, because there is less reliable, objective data
available.
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Prospectus Page 22
<PAGE>
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PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Mitchell Hutchins Asset Management Inc. is the investment adviser and
administrator of the funds. Mitchell Hutchins is located at 51 West 52nd Street,
New York, New York, 10019-6114, and is a wholly owned asset management
subsidiary of PaineWebber Incorporated, which is wholly owned by Paine Webber
Group Inc., a publicly owned financial services holding company. On October 31,
1999, Mitchell Hutchins was adviser or sub-adviser of 33 investment companies
with 76 separate portfolios and aggregate assets of approximately $48.9 billion.
PORTFOLIO MANAGERS
Growth Fund. Ellen R. Harris has been primarily responsible for the day-to-day
management of the fund's portfolio since its inception. Ms. Harris is a managing
director of Mitchell Hutchins and has been with Mitchell Hutchins since 1983.
Growth and Income Fund. Mark A. Tincher is primarily responsible for the
day-to-day management of the fund. Mr. Tincher has held his management
responsibilities for the fund since April 1995. Mr. Tincher is a managing
director and chief investment officer of equities of Mitchell Hutchins,
responsible for overseeing the management of equity investments. Prior to
joining Mitchell Hutchins in April, 1995, Mr. Tincher was a vice president at
Chase Manhattan Private Bank, where he directed the U.S. funds management and
equity research area and oversaw the management of all Chase U.S. equity funds.
Mr. Tincher was the sole portfolio manager of Vista Growth and Income Fund
('Vista Fund'), with full discretionary authority over the selection of
investments, from July, 1991 through March 16, 1995. Vista Fund's investment
objectives of long-term capital appreciation and dividend income were
substantially similar to Growth and Income Fund's investment objective of
current income and capital growth. Mr. Tincher used and relied upon the same
valuation model and analytical methods when managing the Vista Fund as he now
uses for Growth and Income Fund.
The cumulative total return for Vista Fund for the period it was managed by Mr.
Tincher was 46.18%; 39.24% after deducting that Fund's maximum sales charge of
4.75%. As of March 31, 1995, the Vista Fund had $1.6 billion in net assets. The
chart below shows calendar year total returns for Vista Fund; the 1991 return
represents the period from July 31, 1991, when Mr. Tincher took over day-to-day
management of the Vista Fund, through December 31, 1991. Sales charges have not
been deducted from total returns. Returns would be lower if sales charges were
deducted.
<TABLE>
<CAPTION>
[GRAPH]
Calendar
Date Percentages
-------- -----------
<S> <C>
7/31/91-12/31/91 9.69%
1992 15.11%
1993 12.99%
1994 -3.41%
</TABLE>
Average annual returns both before and after deducting the maximum sales charges
are shown in the table below. Average annual returns are for the one- and
three-year periods ended December 31, 1994 and the entire period during which
Mr. Tincher managed the Vista Fund (July 31, 1991 through March 16, 1995) and
are compared with the performance of the S&P 500 Index for each of those
periods.
---------------
- --------------------------------------------------------------------------------
Prospectus Page 23
<PAGE>
- --------------------------------------------------------------------------------
------------------------------
PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
<TABLE>
<CAPTION>
VISTA S&P 500
FUND(1) INDEX(2)
------- --------
<S> <C> <C>
Mr. Tincher's Term as Manager
7/31/91 through 3/16/95
Before deducting
maximum sales charges.......... 11.04% 10.17%
After deducting
maximum sales charges.......... 9.56% 10.17%
Three Years Ended 12/31/94
Before deducting maximum
sales charges.................. 7.90% 6.26%
After deducting maximum
sales charges.................. 6.16% 6.26%
One Year Ended 12/31/94
Before deducting maximum
sales charges.................. (3.41)% 1.31%
After deducting maximum
sales charges.................. (8.00)% 1.31%
</TABLE>
- ------------
1. Average annual returns are for Class A shares and reflect, where applicable
the deduction of the maximum sales charge of 4.75%, changes in share prices,
reinvestment of dividends and are net of fund expenses. For the fiscal years
ended October 31, 1991 and October 31, 1992, expenses in the amount of 0.51%
and 0.03%, respectively, were waived or reimbursed.
2. The S&P 500 Index is an unmanaged index of common stocks that is considered
to be generally representative of the United States stock market. It is
adjusted to reflect reinvestment of dividends. No sales charges are
applicable.
- ------------
Historical performance is not indicative of future performance. Vista Fund is a
separate fund and its historical performance is not indicative of the past or
future performance of Growth and Income Fund. S&P 500 Index and Vista Fund
performance information calculated by Lipper Analytical Services Inc.; used with
permission.
Mid Cap Fund. Mark A. Tincher, Christopher G. Altschul and Antony J. Scott have
been primarily responsible for the day-to-day portfolio management of the Fund
since May 1, 1998. Information regarding Mr. Tincher's background may be found
under 'Growth and Income Fund.' Mr. Altschul is a first vice president of
Mitchell Hutchins and is responsible for its quantitative equity valuation
model. Prior to joining Mitchell Hutchins in April, 1995, Mr. Altschul was an
equity analyst at Chase Manhattan Bank. Mr. Scott is a first vice president of
Mitchell Hutchins and is an equity analyst responsible for the technology,
media, entertainment and medical products industries. Prior to joining Mitchell
Hutchins in May, 1996, Mr. Scott was a research analyst with Morgan Stanley &
Co.
Small Cap Fund. Donald R. Jones has been primarily responsible for the
day-to-day management of the fund since April, 1996. Mr. Jones is a senior vice
president of Mitchell Hutchins. Prior to joining Mitchell Hutchins in February
1996, he was a vice president in the Asset Management Group of First Fidelity
Bancorporation.
ADVISORY FEES
The funds paid advisory fees to Mitchell Hutchins for the most recent fiscal
year at the following rate of average daily net assets:
<TABLE>
<S> <C>
Growth Fund.................... 0.75%(1)
Growth and Income Fund......... 0.70%
Mid Cap Fund................... 1.00%(1)
Small Cap Fund................. 1.00%(2)
</TABLE>
- ------------
(1) During the year ended August 31, 1999 Mitchell Hutchins waived a portion of
its advisory and administration fees. The percentages exluding the waiver
are the same since the fee waiver represents less than 0.005%.
(2) During the year ended July 31, 1999 Mitchell Hutchins waived a portion of
its advisory and administration fees. The percentages excluding the waiver
would be the same since the fee waived represents less than 0.005%.
OTHER INFORMATION
The funds have received an exemptive order from the SEC that permits their
boards to appoint and replace sub-advisers and to amend sub-advisory contracts
without obtaining shareholder approval. A fund's shareholders must approve this
policy before its board may implement it. As of the date of this prospectus, the
funds have not asked their shareholders to do so.
---------------
- --------------------------------------------------------------------------------
Prospectus Page 24
<PAGE>
- --------------------------------------------------------------------------------
------------------------------
PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
DIVIDENDS AND TAXES
- --------------------------------------------------------------------------------
DIVIDENDS
Growth and Income Fund normally pays semi-annual dividends and distributes any
gains annually. The other funds normally declare and pay dividends and
distribute any gains annually.
Classes with higher expenses are expected to have lower dividends. For example,
Class B shares and Class C are expected to have the lowest dividends of any
class of a fund's shares, while Class Y shares are expected to have the highest.
You will receive dividends in additional shares of the same class unless you
elect to receive them in cash. Contact your Financial Advisor at PaineWebber or
one of its correspondent firms if you prefer to receive dividends in cash.
TAXES
The dividends that you receive from a fund generally are subject to federal
income tax regardless of whether you receive them in additional fund shares or
in cash. If you hold fund shares through a tax-exempt account or plan, such as
an IRA or 401(k) plan, dividends on your shares generally will not be subject to
tax.
When you sell fund shares, you generally will be subject to federal income tax
on any gain you realize. If you exchange any fund's shares for shares of another
PaineWebber mutual fund, the transaction will be treated as a sale of the first
fund's shares, and any gain will be subject to federal income tax.
Growth and Income Fund expects that its dividends will include both ordinary
income and capital gain distributions. The other funds expect that their
dividends will be comprised primarily of capital gain distributions. The
distribution of capital gains will be taxed at a lower rate than ordinary income
if the fund held the assets that generated the gains for more than 12 months.
Your fund will tell you how you should treat its dividends for tax purposes.
---------------
- --------------------------------------------------------------------------------
Prospectus Page 25
<PAGE>
- --------------------------------------------------------------------------------
- ------------------------------
PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following financial highlights tables are intended to help you understand
the funds' financial performance for the past 5 years. Shorter periods are shown
for classes of fund shares that have existed for less than 5 years. Certain
information reflects financial results for a single fund share. In the tables,
'total investment return' represents the rate that an investor would have earned
(or lost) on an investment in a fund (assuming reinvestment of all dividends).
This information in the financial highlights has been audited by Ernst & Young
LLP, independent auditors (or for Small Cap Fund, PricewaterhouseCoopers LLP,
independent accountants), whose reports, along with the funds' financial
statements, are included in the funds' Annual Reports to Shareholders. Annual
Reports may be obtained without charge by calling 1-800-647-1568.
PAINEWEBBER GROWTH FUND
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
FOR THE YEARS ENDED AUGUST 31,
----------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year... $ 20.08 $ 25.94 $ 24.37 $ 22.27 $ 20.04
-------- -------- -------- -------- --------
Net investment income (loss)......... (0.10) (0.09) (0.08)'D' (0.12) 0.01
Net realized and unrealized gains
from investments.................... 8.88 1.01 3.76'D' 4.06 2.25
-------- -------- -------- -------- --------
Total increase from investment
operations.......................... 8.78 0.92 3.68 3.94 2.26
-------- -------- -------- -------- --------
Distributions from net realized gains
from investment transactions........ (2.01) (6.78) (2.11) (1.84) (0.03)
-------- -------- -------- -------- --------
Net asset value, end of year......... $ 26.85 $ 20.08 $ 25.94 $ 24.37 $ 22.27
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return(1)........... 44.97% 3.37% 15.85% 18.43% 11.28%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios/Supplemental data:
Net assets, end of year (000's)...... $295,906 $202,253 $201,725 $203,882 $183,958
Expenses to average net assets, net
of waivers from adviser(3).......... 1.15% 1.19% 1.27% 1.28% 1.28%(2)
Net investment income (loss) to
average net assets, net of waivers
from adviser(3)..................... (0.41)% (0.39)% (0.32)% (0.49)% 0.19%(2)
Portfolio turnover................... 38% 52% 86% 60% 36%
<CAPTION>
CLASS B
--------------------------------------------------
FOR THE YEARS ENDED AUGUST 31,
--------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year... $ 18.44 $ 24.51 $ 23.30 $ 21.53 $ 19.53
------- ------- -------- -------- --------
Net investment income (loss)......... (0.30) (0.30) (0.26)'D' (0.39) (0.02)
Net realized and unrealized gains
from investments.................... 8.13 1.01 3.58 'D' 4.00 2.05
------- ------- -------- -------- --------
Total increase from investment
operations.......................... 7.83 0.71 3.32 3.61 2.03
------- ------- -------- -------- --------
Distributions from net realized gains
from investment transactions........ (2.01) (6.78) (2.11) (1.84) (0.03)
------- ------- -------- -------- --------
Net asset value, end of year......... $ 24.26 $ 18.44 $ 24.51 $ 23.30 $ 21.53
------- ------- -------- -------- --------
------- ------- -------- -------- --------
Total investment return(1)........... 43.75% 2.55% 14.98% 17.48% 10.40%
------- ------- -------- -------- --------
------- ------- -------- -------- --------
Ratios/Supplemental data:
Net assets, end of year (000's)...... $85,576 $74,094 $115,529 $140,551 $152,357
Expenses to average net assets, net
of waivers from adviser(3).......... 1.96% 1.99% 2.06% 2.06% 2.06%(2)
Net investment income (loss) to
average net assets, net of waivers
from adviser(3)..................... (1.22)% (1.18)% (1.12)% (1.27)% (0.60)%(2)
Portfolio turnover................... 38% 52% 86% 60% 36%
</TABLE>
- ------------
'D' 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 year 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 year reported. The figures do not
include sales charges; results for each class would be lower for Class A, B
and C shares if sales charges were included.
(2) These ratios include non-recurring acquisition expenses of 0.06% (0.05% for
Class Y shares).
(3) During the year ended August 31, 1999 Mitchell Hutchins waived a portion of
its advisory and administration fees. The ratios excluding the waiver are
the same since the fee waiver represents less than 0.005%.
---------------
- --------------------------------------------------------------------------------
Prospectus Page 26
<PAGE>
- --------------------------------------------------------------------------------
PAINEWEBBER GROWTH FUND
<TABLE>
<CAPTION>
CLASS C CLASS Y
------------------------------------------------------- -----------------------------------------------
FOR THE YEARS ENDED AUGUST 31, FOR THE YEARS ENDED AUGUST 31,
------------------------------------------------------- -----------------------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 18.65 $ 24.71 $ 23.48 $ 21.68 $ 19.67 $ 20.67 $ 26.46 $ 24.74 $ 22.53 $ 20.22
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(0.26) (0.27) (0.27)'D' (0.34) (0.10) (0.03) (0.03) (0.01)'D' (0.02) 0.24
8.18 0.99 3.61 'D' 3.98 2.14 9.16 1.02 3.84'D' 4.07 2.10
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
7.92 0.72 3.34 3.64 2.04 9.13 0.99 3.83 4.05 2.34
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(2.01) (6.78) (2.11) (1.84) (0.03) (2.01) (6.78) (2.11) (1.84) (0.03)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
$ 24.56 $ 18.65 $ 24.71 $ 23.48 $ 21.68 $ 27.79 $ 20.67 $ 26.46 $ 24.74 $ 22.53
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
43.74% 2.59% 14.95% 17.50% 10.37% 45.40% 3.61% 16.24% 18.72% 11.58%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
$35,793 $21,714 $24,760 $29,923 $30,608 $33,383 $21,440 $20,281 $21,409 $20,948
1.94% 1.99% 2.07% 2.07% 2.05%(2) 0.86% 0.91% 1.00% 1.02% 0.97%(2)
(1.20)% (1.19)% (1.13)% (1.28)% (0.57)%(2) (0.12)% (0.12)% (0.05)% (0.23)% 0.53%(2)
38% 52% 86% 60% 36% 38% 52% 86% 60% 36%
</TABLE>
---------------
- --------------------------------------------------------------------------------
Prospectus Page 27
<PAGE>
- --------------------------------------------------------------------------------
- ------------------------------
PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
PAINEWEBBER GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------
FOR THE YEARS ENDED AUGUST 31,
------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year............................... $ 26.92 $ 30.60 $ 24.35 $ 22.52 $ 20.43
-------- -------- -------- -------- --------
Net investment income............... 0.13 0.19 0.23 0.22 0.24
Net realized and unrealized gains
(losses) from investments and
options............................ 6.88 (0.99) 9.29 3.46 3.18
-------- -------- -------- -------- --------
Total increase (decrease) from
investment operations.............. 7.01 (0.80) 9.52 3.68 3.42
-------- -------- -------- -------- --------
Dividends from net investment
income............................. (0.08) (0.21) (0.25) (0.34) (0.12)
Distributions from net realized
gains from investment
transactions....................... (1.78) (2.67) (3.02) (1.51) (1.21)
-------- -------- -------- -------- --------
Total dividends and distributions to
shareholders....................... (1.86) (2.88) (3.27) (1.85) (1.33)
-------- -------- -------- -------- --------
Net asset value, end of year........ $ 32.07 $ 26.92 $ 30.60 $ 24.35 $ 22.52
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return(1).......... 26.48% (3.51)% 42.42% 17.40% 18.30%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios/Supplemental data:
Net assets, end of year (000's)..... $844,415 $670,606 $441,699 $276,016 $187,057
Expenses to average net assets...... 1.08% 1.07% 1.15% 1.20%(2) 1.19%
Net investment income (loss) to
average net assets................. 0.41% 0.71% 0.88% 0.98%(2) 1.07%
Portfolio turnover.................. 57% 62% 70% 112% 111%
<CAPTION>
CLASS B
------------------------------------------------------
FOR THE YEARS ENDED AUGUST 31,
------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
year............................... $ 26.77 $ 30.46 $ 24.26 $ 22.37 $ 20.37
-------- -------- -------- -------- --------
Net investment income............... (0.15) (0.02) 0.04 0.04 0.06
Net realized and unrealized gains
(losses) from investments and
options............................ 6.88 (1.02) 9.23 3.45 3.18
-------- -------- -------- -------- --------
Total increase (decrease) from
investment operations.............. 6.73 (1.04) 9.27 3.49 3.24
-------- -------- -------- -------- --------
Dividends from net investment
income............................. -- -- (0.05) (0.09) (0.03)
Distributions from net realized
gains from investment
transactions....................... (1.78) (2.65) (3.02) (1.51) (1.21)
-------- -------- -------- -------- --------
Total dividends and distributions to
shareholders....................... (1.78) (2.65) (3.07) (1.60) (1.24)
-------- -------- -------- -------- --------
Net asset value, end of year........ $ 31.72 $ 26.77 $ 30.46 $ 24.26 $ 22.37
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return(1).......... 25.51% (4.28)% 41.33% 16.49% 17.38%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios/Supplemental data:
Net assets, end of year (000's)..... $306,557 $353,150 $376,840 $277,753 $247,543
Expenses to average net assets...... 1.86% 1.87% 1.93% 1.99%(2) 1.97%
Net investment income (loss) to
average net assets................. (0.37)% (0.08)% 0.11% 0.17%(2) 0.29%
Portfolio turnover.................. 57% 62% 70% 112% 111%
</TABLE>
- ------------
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each year 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 year reported. The figures do not
include sales charges; results for Class A, B and C shares would be lower if
sales charges were included.
(2) These ratios include non-recurring acquisition expenses of 0.04%.
---------------
- --------------------------------------------------------------------------------
Prospectus Page 28
<PAGE>
- --------------------------------------------------------------------------------
PAINEWEBBER GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
CLASS C CLASS Y
---------------------------------------------------- -----------------------------------------------
FOR THE YEARS ENDED AUGUST 31, FOR THE YEARS ENDED AUGUST 31,
---------------------------------------------------- -----------------------------------------------
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 26.82 $ 30.53 $ 24.33 $ 22.43 $ 20.42 $ 26.92 $ 30.59 $ 24.35 $ 22.54 $ 20.42
-------- -------- -------- -------- -------- ------- ------- ------- ------- -------
(0.12) 0.01 0.05 0.05 0.06 0.24 0.30 0.32 0.30 0.30
6.86 (1.03) 9.24 3.46 3.19 6.86 (1.02) 9.26 3.45 3.18
-------- -------- -------- -------- -------- ------- ------- ------- ------- -------
6.74 (1.02) 9.29 3.51 3.25 7.10 (0.72) 9.58 3.75 3.48
-------- -------- -------- -------- -------- ------- ------- ------- ------- -------
-- (0.02) (0.07) (0.10) (0.03) (0.12) (0.28) (0.32) (0.43) (0.15)
(1.78) (2.67) (3.02) (1.51) (1.21) (1.78) (2.67) (3.02) (1.51) (1.21)
-------- -------- -------- -------- -------- ------- ------- ------- ------- -------
(1.78) (2.69) (3.09) (1.61) (1.24) (1.90) (2.95) (3.34) (1.94) (1.36)
-------- -------- -------- -------- -------- ------- ------- ------- ------- -------
$ 31.78 $ 26.82 $ 30.53 $ 24.33 $ 22.43 $ 32.12 $ 26.92 $ 30.59 $ 24.35 $ 22.54
-------- -------- -------- -------- -------- ------- ------- ------- ------- -------
-------- -------- -------- -------- -------- ------- ------- ------- ------- -------
25.49% (4.23)% 41.30% 16.52% 17.37% 26.82% (3.24)% 42.74% 17.77% 18.66%
-------- -------- -------- -------- -------- ------- ------- ------- ------- -------
-------- -------- -------- -------- -------- ------- ------- ------- ------- -------
$165,948 $149,458 $ 84,922 $ 43,148 $ 30,468 $65,104 $65,518 $46,745 $22,942 $14,680
1.85% 1.85% 1.92% 1.99%(2) 1.98% 0.79% 0.80% 0.88% 0.92%(2) 0.89%
(0.36)% (0.07)% 0.10% 0.18%(2) 0.28% 0.70% 0.99% 1.14% 1.26%(2) 1.39%
57% 62% 70% 112% 111% 57% 62% 70% 112% 111%
</TABLE>
---------------
- --------------------------------------------------------------------------------
Prospectus Page 29
<PAGE>
- --------------------------------------------------------------------------------
- ------------------------------
PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
PAINEWEBBER MID CAP FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------------------------------------- -----------------------
FOR THE FOR THE
FOR THE FIVE FOR THE FIVE
YEAR MONTHS YEAR MONTHS
ENDED ENDED FOR THE YEARS ENDED MARCH 31, ENDED ENDED
AUGUST 31, AUGUST 31, -------------------------------------- AUGUST 31, AUGUST 31,
1999 1998# 1998 1997 1996 1995 1999 1998#
---- ----- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 7.97 $ 15.00 $ 13.44 $ 15.61 $ 12.81 $ 11.65 $ 7.99 $ 15.07
-------- ------- -------- ------- ------- ------- ------- -------
Net investment loss..... (0.07) (0.03) (0.13) (0.17) (0.16) (0.09) (0.27) (0.07)
Net realized unrealized
gains (losses) from
investments............ 3.43 (3.15) 5.15 0.32 3.71 1.29 3.53 (3.16)
-------- ------- -------- ------- ------- ------- ------- -------
Net increase (decrease)
from investment
operations............. 3.36 (3.18) 5.02 0.15 3.55 1.20 3.26 (3.23)
-------- ------- -------- ------- ------- ------- ------- -------
Distributions from net
realized gains from
investments............ (0.66) (3.85) (3.46) (2.32) (0.75) (0.04) (0.66) (3.85)
-------- ------- -------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 10.67 $ 7.97 $ 15.00 $ 13.44 $ 15.61 $ 12.81 $ 10.59 $ 7.99
-------- ------- -------- ------- ------- ------- ------- -------
-------- ------- -------- ------- ------- ------- ------- -------
Total investment
return(1).............. 43.38% (27.31)% 41.50% (0.21)% 28.16% 10.36% 41.95% (27.54)%
-------- ------- -------- ------- ------- ------- ------- -------
-------- ------- -------- ------- ------- ------- ------- -------
Ratios/Supplemental
Data:
Net assets, end of
period (000's)......... $113,126 $90,650 $101,698 $76,909 76,558 $62,673 $28,077 $54,978
Expenses to average net
assets, net of waivers
from adviser(2)........ 1.60% 1.48%* 1.51% 1.60% 1.58% 1.58% 2.55% 2.32%*
Net investment loss to
average net assets, net
of waivers from
adviser(2)............. (0.64)% (0.61)%* (1.16)% (1.20)% (1.11)% (0.79)% (1.61)% (1.48)%*
Portfolio turnover...... 79% 80% 64% 56% 57% 42% 79% 80%
<CAPTION>
CLASS B
-----------------------------------------
FOR THE YEARS ENDED MARCH 31,
-----------------------------------------
1998 1997 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 13.59 $ 15.88 $ 13.11 $ 12.02
-------- -------- -------- --------
Net investment loss..... (0.31) (0.31) (0.29) (0.20)
Net realized unrealized
gains (losses) from
investments............ 5.25 0.34 3.81 1.33
-------- -------- -------- --------
Net increase (decrease)
from investment
operations............. 4.94 0.03 3.52 1.13
-------- -------- -------- --------
Distributions from net
realized gains from
investments............ (3.46) (2.32) (0.75) (0.04)
-------- -------- -------- --------
Net asset value, end of
period................. $ 15.07 $ 13.59 $ 15.88 $ 13.11
-------- -------- -------- --------
-------- -------- -------- --------
Total investment
return(1).............. 40.39% (0.99)% 27.28% 9.46%
-------- -------- -------- --------
-------- -------- -------- --------
Ratios/Supplemental
Data:
Net assets, end of
period (000's)......... $143,058 $134,495 $157,021 $139,302
Expenses to average net
assets, net of waivers
from adviser(2)........ 2.28% 2.36% 2.34% 2.34%
Net investment loss to
average net assets, net
of waivers from
adviser(2)............. (1.92)% (1.95)% (1.87)% (1.56)%
Portfolio turnover...... 64% 56% 57% 42%
</TABLE>
- ------------
* Annualized.
# Effective May 1, 1998, Mitchell Hutchins took over day-to-day management of
the Fund's assets.
'D' 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; results for Class A, B and C shares would be
lower if sales charges were included. Total investment return for period of
less than one year has not been annualized.
(2) During the year ended August 31, 1999 Mitchell Hutchins waived a portion of
its advisory and administration fees. The ratios excluding the waiver are
the same since the fee waiver represents less than 0.005%.
---------------
- --------------------------------------------------------------------------------
Prospectus Page 30
<PAGE>
- --------------------------------------------------------------------------------
PAINEWEBBER MID CAP FUND
<TABLE>
<CAPTION>
CLASS C CLASS Y
--------------------------------------------------------------- ------------------------------------
FOR THE FOR THE FOR THE
FOR THE FIVE FOR THE FIVE PERIOD
YEAR MONTHS YEAR MONTHS MARCH 17,
ENDED ENDED FOR THE YEARS ENDED MARCH 31, ENDED ENDED 1998'D' TO
AUGUST 31, AUGUST 31, ------------------------------------- AUGUST 31, AUGUST 31, MARCH 31,
1999 1998# 1998 1997 1996 1995 1999 1998# 1998
---- ----- ---- ---- ---- ---- ---- ----- ----
<C> <C> <C> <C> <C> <C> <C> <C> <C>
7.26
$ $ 14.07 $ 12.87 $ 15.14 $ 12.54 $ 11.50 $ 7.97 $15.00 $14.90
------- ------- ------- ------- ------- ------- ------ ------ ------
(0.15) (0.06) (0.26) (0.29) (0.27) (0.19) (0.02) (0.01) 0.00
3.12 (2.90) 4.92 0.34 3.62 1.27 3.41 (3.17) 0.10
------- ------- ------- ------- ------- ------- ------ ------ ------
2.97 (2.96) 4.66 0.05 3.35 1.08 3.39 (3.18) 0.10
------- ------- ------- ------- ------- ------- ------ ------ ------
(0.66) (3.85) (3.46) (2.32) (0.75) (0.04) (0.66) (3.85) --
------- ------- ------- ------- ------- ------- ------ ------ ------
9.57
$ $ 7.26 $ 14.07 $ 12.87 $ 15.14 $ 12.54 $10.70 $ 7.97 $15.00
------- ------- ------- ------- ------- ------- ------ ------ ------
------- ------- ------- ------- ------- ------- ------ ------ ------
42.17% (27.58)% 40.46% (0.91)% 27.16% 9.45% 43.77% (27.31)% 0.67%
------- ------- ------- ------- ------- ------- ------ ------ ------
------- ------- ------- ------- ------- ------- ------ ------ ------
$16,594 $16,875 $27,814 $24,810 $27,601 $24,993 $ 290 $ 65 $ 35
2.43% 2.28%* 2.29% 2.37% 2.36% 2.35% 1.36% 1.23%* 1.22%*
(1.47)% (1.42)%* (1.94)% (1.97)% (1.89)% (1.57)% (0.36)% (0.29)%* 0.00%*
79% 80% 64% 56% 57% 42% 79% 80% 64%
</TABLE>
---------------
- --------------------------------------------------------------------------------
Prospectus Page 31
<PAGE>
- --------------------------------------------------------------------------------
- ------------------------------
PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
PAINEWEBBER SMALL CAP FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
----------------------------------------------- -----------------------------------------------
FOR THE YEARS ENDED JULY 31, FOR THE YEARS ENDED JULY 31,
----------------------------------------------- -----------------------------------------------
1999 1998 1997 1996# 1995 1999 1998 1997 1996# 1995
---- ---- ---- ----- ---- ---- ---- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 13.34 $ 13.42 $ 10.22 $ 11.30 $ 10.27 $ 12.78 $ 13.00 $ 9.98 $ 11.15 $ 10.22
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net investment income
(loss)....................... (0.08) (0.13) (0.14) 0.00@ 0.05 (0.29) (0.22) (0.23) (0.09)@ (0.04)
Net realized and unrealized
gains (losses) from
investments.................. (1.18) 1.22 3.75 0.50@ 1.50 (1.02) 1.17 3.66 0.50@ 1.49
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease) from
investment operations........ (1.26) 1.09 3.61 0.50 1.55 (1.31) 0.95 3.43 0.41 1.45
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Distributions from net
realized gains from
investments.................. (1.11) (1.17) (0.41) (1.58) (0.52) (1.11) (1.17) (0.41) (1.58) (0.52)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period....................... $ 10.97 $ 13.34 $ 13.42 $ 10.22 $ 11.30 $ 10.36 $ 12.78 $ 13.00 $ 9.98 $ 11.15
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total investment return(1).... (8.95)% 8.45% 36.11% 4.69% 15.80% (9.79)% 7.60% 35.16% 3.90% 14.86%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of year
(000's)...................... $46,680 $47,589 $32,968 $30,675 $20,494 $18,361 $54,639 $40,749 $36,612 $46,142
Expenses to average net
assets, net of waivers from
adviser(2)................... 1.59% 1.56% 2.00% 2.11% 1.98% 2.43% 2.33% 2.75% 2.90% 2.74%
Net investment income (loss)
to average net assets, net of
waivers from adviser(2)...... (0.77)% (0.99)% (1.16)% 0.02% 0.41% (1.62)% (1.75)% (1.91)% (0.78)% (0.35)%
Portfolio turnover rate....... 61% 45% 54% 84% 19% 61% 45% 54% 84% 19%
</TABLE>
- ------------
# Effective April 1, 1996, Mitchell Hutchins took over day-to-day management of
the Fund's assets.
'D' For the period July 26, 1996 (commencement of offering shares) to July 31,
1996.
@ Calculated using the average monthly shares outstanding for the period.
(1) Total investment return is calculated assuming a $1,000 investment on the
first day of each year 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 year reported. The figures do not
include sales charges; results for Class A, B and C shares would be lower if
sales charges were included.
(2) During the year ended July 31, 1999 Mitchell Hutchins waived a portion of
its advisory and administration fees. The ratios excluding the waiver would
be the same since the fee waiver represents less than 0.005%.
---------------
- --------------------------------------------------------------------------------
Prospectus Page 32
<PAGE>
- --------------------------------------------------------------------------------
PAINEWEBBER SMALL CAP FUND
<TABLE>
<CAPTION>
CLASS C CLASS Y
----------------------------------------------- ------------------------------------------------------
FOR THE YEARS ENDED JULY 31, FOR THE YEARS ENDED JULY 31, FOR THE
----------------------------------------------- ------------------------------ PERIOD ENDED
1999 1998 1997 1996# 1995 1999 1998 1997 JULY 31, 1996'D'
---- ---- ---- ----- ---- ---- ---- ---- ----------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 12.76 $ 12.98 $ 9.97 $ 11.14 $ 10.22 $13.42 $13.46 $10.21 $10.23
------- ------- ------- ------- ------- ------ ------ ------ ------
(0.20) (0.21) (0.24) (0.08)@ (0.05) (0.07) (0.07) (0.11) 0.00@
(1.09) 1.16 3.66 0.49@ 1.49 (1.17) 1.20 3.77 (0.02)@
------- ------- ------- ------- ------- ------ ------ ------ ------
(1.29) 0.95 3.42 0.41 1.44 (1.24) 1.13 3.66 (0.02)
------- ------- ------- ------- ------- ------ ------ ------ ------
(1.11) (1.17) (0.41) (1.58) (0.52) (1.11) (1.17) (0.41) --
------- ------- ------- ------- ------- ------ ------ ------ ------
$ 10.36 $ 12.76 $ 12.98 $ 9.97 $ 11.14 $11.07 $13.42 $13.46 $10.21
------- ------- ------- ------- ------- ------ ------ ------ ------
------- ------- ------- ------- ------- ------ ------ ------ ------
(9.63)% 7.61% 35.09% 3.90% 14.76% (8.73)% 8.74% 36.65% (0.20)%
------- ------- ------- ------- ------- ------ ------ ------ ------
------- ------- ------- ------- ------- ------ ------ ------ ------
$18,913 $32,174 $18,812 $18,606 $13,263 $5,044 $7,169 $2,768 $2,801
2.39% 2.32% 2.77% 2.91% 2.73% 1.31% 1.39% 1.72% 1.72%*
(1.59)% (1.75)% (1.93)% (0.77)% (0.34)% (0.50)% (0.83)% (0.88)% 0.07%*
61% 45% 54% 84% 19% 61% 45% 54% 84%
</TABLE>
---------------
- --------------------------------------------------------------------------------
Prospectus Page 33
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
- --------------------------------------------------------------------------------
------------------------------
PaineWebber Growth Fund PaineWebber Growth and Income Fund
PaineWebber Mid Cap Fund PaineWebber Small Cap Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
TICKER SYMBOL: Growth Fund Class: A: PGRAX Growth and Income Fund Class: A: PDGAX
PGRBX PDGBX
B: B:
PGRDX PWDDX
C: C:
PGRYZ PWGYX
Y: Y:
Mid Cap Fund Class: PWCAX Small Cap Fund Class: PSCAX
A: A:
PWCBX PSCBX
B: B:
PWCDX PSCDX
C: C:
None None
Y: Y:
</TABLE>
If you want more information about the funds, the following documents are
available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS
Additional information about the funds' investments is available in the funds'
annual and semi-annual reports to shareholders. In the funds' annual reports,
you will find a discussion of the market conditions and investment strategies
that significantly affected the funds' performance during the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI provides more detailed information about the funds and is incorporated
by reference into this prospectus.
You may discuss your questions about the funds by contacting your PaineWebber
Financial Advisor. You may obtain free copies of annual and semi-annual reports
and the SAI by contacting the funds directly at 1-800-647-1568.
You may review and copy information about the funds, including shareholder
reports and the SAI, at the Public Reference Room of the Securities and Exchange
Commission. You can get text-only copies of reports and other information about
the funds and about the operations of the SEC's Public Reference Room:
For a fee, by writing to or calling the SEC's Public Reference Room,
Washington, D.C. 20549-6009
Telephone: 1-800-SEC-0330
Free, from the SEC's Internet website at: http://www.sec.gov
PaineWebber Olympus Fund
-- PaineWebber Growth Fund
Investment Company Act File No. 811-4180
PaineWebber America Fund
-- PaineWebber Growth and Income Fund
Investment Company Act File No. 811-3502
PaineWebber Managed Assets Trust
-- PaineWebber Mid Cap Fund
Investment Company Act File No. 811-6376
PaineWebber Securities Trust
-- PaineWebber Small Cap Fund
Investment Company Act File No. 811-7374
*1999 PaineWebber Incorporated. All rights reserved. Member SIPC.
---------------
- --------------------------------------------------------------------------------
STATEMENT OF DIFFERENCES
------------------------
The service mark symbol shall be expressed as......................... 'sm'
The dagger symbol shall be expressed as............................... 'D'
The copyright symbol shall be expressed as............................ 'c'
